When it comes to bid protests, Section 809 panel should follow data

Eric Crusius, a partner with Holland & Knight law firm, details why the Section 809 panel shouldn’t tinker too much with bid protest rules.

The Section 809 Panel released its first of three reports in January aimed at improving and streamlining Defense Department acquisition across the government. The initial report was well-received for good reason. Through a careful analysis, it recommended bold and much-needed reform to the regulations underpinning everything DoD buys.

These recommendations ranged from reducing the regulations that encumber contracts for commercial products and services to making DoD’s treatment of contractors’ intellectual property more consistent with the commercial marketplace.

For the uninitiated, the Section 809 Panel, whose members were appointed by DoD and represent experts across the government contracting field, derives its name from the section in the 2016 National Defense Authorization (NDAA) that created the panel. Among the panel’s mandates is to streamline the acquisition process while protecting “the best interests of the Department of Defense.”

It is no secret that the Section 809 Panel also is looking at the bid protest system as part of its mandate. And it is also no secret that DoD takes a dim view of the current bid protest system. It is not a stretch to believe that, in DoD’s view, significant changes to protests would be in its “best interest.”

That would be a mistake.

For one, bid protests provide a meaningful “check and balance” to help ensure the government consistently acts both in its best interests and in accordance with applicable procurement regulations. This is important to maintain the perception (and reality) that the federal contracting marketplace is characterized by open, robust competition.

Without some third-party mechanism to review whether procurements are conducted reasonably and in accordance with federal procurement law, nontraditional federal contractors or established government contractors without established track records at particular agencies could come to view the federal marketplace as a de facto oligarchy of a few companies favored by specific agencies.

The promise of contractor-financed government oversight via the protest process gives companies comfort (especially when utilizing enormous and scarce resources) that their bids will be evaluated fairly and in accordance with the guidelines set forth by the agency in the solicitation. Without such a system, companies the government relies on will turn their backs on this marketplace to everyone’s detriment.

Those looking to change the system argue that protests are prolific, disruptive, and unnecessarily slow procurements. These arguments, however, have largely been debunked with the recent release of the most comprehensive study of the protest system in a generation by the RAND Corporation (through its National Defense Research Institute).

Among other things, the RAND Report found that protests are not at all prevalent when viewed against the backdrop of overall DoD procurement activity. The report found just 0.3 percent of DoD contract actions were protested, and most GAO protests are resolved in just over a month–hardly indicative of a system that causes governmentwide disruption.

To make these conclusions, RAND studied 21,186 contract actions at GAO (average of 2,354 per year) and 475 cases filed at the Court of Federal Claims (average of 53 per year).

With respect to GAO, the data set (which runs from fiscal 2008 through fiscal 2016) showed that, while protests had increased, the effectiveness rate of protests (which is approximately 45 percent) remained steady throughout that time leading RAND to conclude that protesters were largely filing protests that had merit. The RAND study also found that 50 percent of protest actions at GAO are resolved within 30 days, and fully 70 percent of cases are resolved within 60 days.

Based on this data, RAND cautioned policy makers from tinkering substantively with GAO’s and COFC’s current bid protest jurisdiction, timelines and procedures.

RAND recommended against shortening GAO’s process to under the current 100 days, based on the data showing the vast majority of cases are resolved much sooner and that GAO reasonably needs additional time for more complex cases.

RAND also recommended against reducing GAO’s task order jurisdiction, noting that those protests are more successful, on average, than non-task order protests.

The RAND report did make some recommendations for reform, which were closely aligned with the evidence it painstakingly collected and analyzed. For one, nearly 10 percent of protests at GAO are for procurements valued under $100,000. A streamlined protest process would benefit the quick adjudication of these protests (such, as RAND noted, a small claims-type procedure or mandatory ADR at GAO).

Second, RAND found that small businesses file more than 50 percent of protests though they account for 15-to-20 percent of contract dollars. While this may be because the average contract awarded to small businesses is smaller than large businesses, small businesses may benefit to a dedicated enhanced debriefing process and outside counsel or help from the SBA because protests where outside counsel is present and the underlying source selection record is reviewed lead to better outcomes for protesters with a higher success rate. Counsel are also bound by their ethical obligations to only file non-frivolous pleadings.

The current bid protest system plays an irreplaceable role in enhancing confidence in the integrity of federal procurement, which fosters a more robust marketplace with more participants offering greater innovation to federal agencies. The data in the RAND report shows that current jurisdiction and timelines result in effective, non-frivolous use of the bid protest mechanism by disappointed offerors without undue disruption or delay. While larger procurements are more susceptible to protest, these big dollar procurements are exactly what tax payers and policy makers should want to be the focus of the bid protest system.

Like with everything else, the Section 809 Panel’s recommendations with respect to the bid protest system should be based in fact. Thankfully, with the RAND report, the panel has those facts close at hand.

Eric Crusius is a partner Holland & Knight in Washington, D.C. and focuses on government contract law.


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