Why did bid protests to GAO rise sharply in fiscal 2023?

Contractors brought protests to the Government Accountability Office (GAO) more than 2,000 times last year, up more than 20% from fiscal 2022. GAO sustained them at more than twice the rate of the year earlier, siding with contractors in about a third of the cases. For what’s going on, Federal Drive Host Tom Temin talked with GAO’s Managing Associate General Counsel, Kenneth Patton.

GAO Report

Interview Transcript:

Tom Temin And it looks like there’s been this well, there has been a huge increase relative to, you know, the shrinkage of the last couple of years in protest cases. But there’s actually one source of why this is up. Tell us what’s going on.

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Kenneth Patton Sure. As you know, every year, GAO reports the number of cases that it receives to Congress. And over the last five or so years, as you’ve mentioned, we’ve seen a trend of cases filed going down. This past fiscal year, we had a number of protests from a single procurement, and that is the National Institutes of Health CIO SP4.

Tom Temin That’s one of four competing, one of four or five competing government wide contracts for services and products in the information technology area.

Kenneth Patton That’s correct. The CIO, SP4 procurement, as you might imagine, was a very large procurement. Each one of the potential contract awards comprised $50 billion ceiling, and [National Institutes of Health (NIH)] attended to award over 200 contracts. And so when you have a very large multiple award procurement such as the CIO was before, a number of contractors want to participate because if you don’t get in the initial award, you are precluded from receiving any of the task order awards that would be competed underneath that contract.

Tom Temin These were filed at the pre award stage, correct? That is, they didn’t like the solicitation, so they took it to GAO.

Kenneth Patton We actually had pre award and post award challenges back in the early part of the fiscal year. We had a number of contractors that challenged the methodology that the agency intended to use. And then we had a number of contractors who challenged their elimination from the competition. And we needed to resolve them throughout the fiscal year. And that’s contributed to the number of cases that we had in total. We didn’t resolve all of our cases dealing with CIO SP4 in one big crunch throughout the year.

Tom Temin Right. So sometimes you don’t get to a case in a particular fiscal year. So there’s a little bit of spillover, but you don’t have much of a backlog either. Correct?

Kenneth Patton We don’t have much of a backlog. That is correct. We have 100 calendar days to resolve each protest. And so it’s 100 days whenever it’s filed, whether it’s in the prior fiscal year or the current fiscal year.

Tom Temin And getting back to CIO-SP4 for then of those protests that were filed for it. How many did you find in favor of the contractor? And how many did you find in favor of the agency?

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Kenneth Patton Well, in total, we sustained over 119 protests, and the agency in that context would need to go back and take another look at the procurement and try to find a way to explain or justify why it made the decisions that it did. In terms of what we didn’t find or we denied, it’s a very mixed bag. There were a number of reasons why we resolve cases certain ways. Some cases were resolved with what we call corrective action, meaning the agency decided to take the procurement back and take a look at it again and make another decision. So when those cases are resolved, the corrective action, they’re dismissed rather than denied. We had a number of instances where contractors actually withdrew their protest, meaning that they took a look at the substance of their allegations and the agency’s explanation and decided, you know, we probably don’t have as strong a case as we thought we did, so we just withdraw the protest. There were some we decided that were untimely, meaning they didn’t file within the required timeframe under our regulations. GAO has very strict regulatory timing requirements, as you can imagine, because we only have 100 calendar days to resolve protest. And so if you don’t file within those timeframes, GAO is not going to consider your protest and it will be dismissed. So we had a number of cases in a wide variety of postures that got resolved differently. So it’s a little bit of a challenge to say that we denied or sustain because there was a mixed bag of how the ones that weren’t sustained were resolved.

Tom Temin We’re speaking with Kenneth Patton. He is one of the managing associate general counsel at the Government Accountability Office. So to summarize, there were 2,041 cases closed in fiscal 2023 versus 1,655 the year before. How many actually was the total that came in from CIO-SP4?

Kenneth Patton I think we had over 300 or so cases that came in from CIO-SP4. And our total number of cases filed in fiscal year 2023 was 225, and for fiscal year 22 it was 1,658. And so we typically try not to break down by specific procurements what numbers are ascribed to those numbers, because they get resolved in a number of different ways. We don’t want to give false numbers or imprecise numbers, and so we generally stick away from trying to say it was this number of that, that number of this. In the case of sustain, it’s easy to know exactly how many were sustained because we can look at the allegations, some them up.

Tom Temin But in the case of CIO-SP if it hadn’t been for that blob of protests, you would have been roughly the same numbers, more or less level with 22.

Kenneth Patton We anticipate we might have had about a 3% increase over the fiscal year 2022. That’s a back of the envelope sort of sort of look, it’s not something that we are required to include in our annual report, so we don’t calculate those numbers. But just looking at the numbers from a high level, that’s what we project, that we would have seen an increase.

Tom Temin But outside of that, then the trend has been pretty much down. And so what do you attribute that to the long term trend that protests seem to be trending down? Aside from that bump from one procurement.

Kenneth Patton Sure. That’s a very good question, and we get that question often. Unfortunately, what we have to tell people is we can’t answer a negative. And so we really don’t know why people decide not to protest. There are a number of theories about why people are protesting. One theory is that government procurement spending is up. Over the last number of years, the government has spent a lot of money, a lot of it attributed to COVID, some of it attributed to Ukraine spending and other defense priorities. And so when you have an increase in spending, you’re spending more on government contracts. And so the one theory is that contractors are getting a piece of the pie, and as a result, they’re less likely to protest because they are getting something out of it. Another theory is that the government has seen an increase in the number of multiple award IDIQ contracts, which the CIO-SP4 was one of. And once you get one of those contracts, you have a very good chance of receiving one of the task orders. And again, your incentive to protest is slightly reduced because the universe of potential competitors is small. And then that context will say that over the last five or six years, while the trend, the number of filings has actually gone down, the trend in the number of tasks and delivery or protest filed at the Government Accountability Office has been trending up. And that’s significant because GAO is the only forum that can hear protests of task and delivery order contracts. And those are the vehicles that are awarded under these multiple award IDIQI contracts. And so we’ve seen an increase in a trend line increase filings regarding task delivery on a protest at the same time we’ve seen a decrease or a trend going downward in the number of overall filings. So there could be more at play in these tasking delivery or contracts.

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Tom Temin And some prime contractor or non task order types of protests also can go to the court of federal claims and not to GAO. So you might be not getting your full load versus the courts.

Kenneth Patton That’s absolutely true. That might be the case. I will say the number of filings that have gone over to the court versus the number or a percent decline at GAO, there’s a delta there. So you couldn’t very well say that all the cases that have come to GAO have gone over to the court. They just aren’t being filed either at GAO or at the court. So, again, it’s a hard answer to really explain why someone has decided not to file a protest.

Tom Temin Is it also possible that the 1102 contracting workforce is getting better over time?

Kenneth Patton Absolutely. It’s entirely possible. The contracting workforce may have you see a number of issues and problems that are taking place and are making their procurements better. And one of the things that we track in GAO is what we call the effectiveness rate, and that is a measure of the number of sustains and the number of corrective actions that take place when people file a protest at GAO. And as you can see from our annual report, the effectiveness rate for this past fiscal year was 57%. And obviously a lot of that is attributed to the CIO-SP4 procurement. And if you look at the sustained rate over the number of years, it’s been fairly consistent and we would estimate that the sustained rate for fiscal year 23 without CIO-SP4 would fall within that range of anywhere between 12-14%. So that’s a measure of the procurement community looking at their issues, looking at the strength of their cases, looking at potential mistakes and deciding to take it back and take another look at it.

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