Senate Armed Services Committee to Bid Protesters: If You Lose, You Pay

Published: July 27, 2017

Acquisition ReformDEFENSENational Defense Authorization ActPolicy and Legislation

Once again, the Senate Armed Forces Committee (SASC) wants to establish a strong deterrent for bid protesters by hitting them where it hurts: the bottom line.

The SASC’s version of the FY 2018 National Defense Authorization Act includes some punitive measures they believe will slow growth in the number of bid protests. Government-wide bid protest numbers have been increasing, which has not escaped the notice of the SASC. The number of cases filed in FY 2016 is up 6% from the previous year. On average, only 22% of filed cases are deemed to have sufficient merit to face a GAO sustain or deny decision.  However, the effectiveness rate, which reflects protesters gaining some form of favorable action (either an agency taking voluntary action or a GAO sustain decision), is typically over 40%. Those odds are good enough for some contractors.

The FY 2018 NDAA includes several provisions addressing bid protests that were originally included and then stripped from the FY 2017 NDAA. The SASC language in the FY 2018 NDAA is designed to crack down on DOD contract protesters with provisions that cost them money, one way or another. If a contractor with over $100M in previous-year revenues:

  • Files a protest to a DOD contract and loses the protest in whole, the company must reimburse DOD for the costs incurred to process the protest.
  • Is an incumbent and files a protest that results in a delay of the award, the company will not be paid for any bridge contracts or temporary contract extensions above incurred costs unless the solicitation is cancelled and no follow-up RFP is released, or GAO upholds any part of the protest grounds.
  • Is an incumbent that loses the protest in whole, all withheld payments above incurred costs will be awarded to the contractor that was awarded the contract prior to the protest. If there was no contractor award prior to protest, the payments go to DOD to use to offset the costs of other protests.

The SASC version also includes a requirement that DOD revise the DFAR to require that post-award written and oral debriefings, on contracts and task order valued at $10M or above, provide “detailed and comprehensive statements of the agency’s rating for each evaluation criteria and of the agency’s overall award decision.” Note: One of the elements that remained in the FY 2017 NDAA was the increase in GAO’s jurisdiction over DOD task order award protests from $10M to $25M, but the SASC-proposed debriefing guidance applies to awards and task order at or above $10M.  Protests on DOD awards under civilian GWACS are subject to the civilian threshold of $10M, and there is no dollar threshold on protests to awards under Federal Supply Schedules.

The SASC response to the bid protest environment does not appear to address the other elephant in the data, which is the number and percentage of protests being sustained by GAO.  Although the number of protests increased 6% in FY 2016, the number of sustained cases increased almost as much (5%), and the percentage of protests sustained nearly doubled from 12% in FY 2015 to 23% in FY 2016. This suggests that the issue isn’t just protest-happy contractors, but legitimate problems in the solicitations themselves that make them more easily protested and sustained.   

The final FY 2017 NDAA took a more measured approach by requiring DOD to commission an in-depth study on the drivers and impacts of protests, from both the government and contractor perspectives. DOD was required to brief the Senate and House Armed Service Committees on interim study findings by March 1, 2017, with the final report due one year after enactment (so no later than December 23, 2017). Assuming that DOD met the March 2017 deadline, the SASC’s inclusion of these provisions – again – may indicate that the SASC received the interim results, and didn’t like what they saw. Even so, it’s not clear whether this strategy will have a better fate in the FY 2018 NDAA than it did in FY 2017.