GAO Issues Annual Bid Protest Report to Congress for FY 2017
Government Contracts Update
Date: November 15, 2017
On November 13, 2017, the U.S. Government Accountability Office released its GAO Bid Protest Annual Report to Congress for Fiscal Year 2017, which shows a slight decrease in the total number of cases filed and a slight increase in the “effectiveness rate,” which reached a record-high figure.
GAO reports that it sustained 17 percent of the bid protests resolved on the merits during FY 2017, and that the effectiveness rate was 47 percent, up from last year’s 46 percent and a new record high. The recent effectiveness rates indicate that, including agency corrective actions, a GAO bid protest may have close to a 50/50 chance of resulting in some kind of relief for the protester and/or responsive corrective actions taken by the agency as reported to GAO.
The report, which includes GAO’s bid protest statistics for Fiscal Years 2013-2017, shows that cases filed were down 7 percent from FY 2016, but remained higher than the number of cases filed in FY 2014. In FY 2017 GAO issued 581 decisions on the merits, of which 99 were sustained. The “sustain rate” of 17 percent was close to the average over the past five years. GAO reports that during FY 2017, it received 2,596 cases, consisting of 2,433 protests, 77 cost claims and 86 requests for reconsideration. It closed 2,672 cases during FY 2017, consisting of 2,471 protests, 107 cost claims and 94 requests for reconsideration.
GAO states that of the 2,672 cases closed, 256 were cases relating to task orders. In the annual report for FY 2016, it reported closing 375 cases relating to task orders. Last year’s National Defense Authorization Act (NDAA) increased the jurisdictional threshold from $10 million to $25 million for protests of task order awards issued by the Department of Defense (DoD). The change to GAO’s jurisdiction was clearly intended to reduce protests against DoD task order awards, and the numbers indicate this change may have had a measurable effect.
The most important number in the annual report may be the effectiveness rate, which GAO notes is “based on a protester obtaining some form of relief from the agency, as reported to GAO, either as a result of voluntary agency corrective action or our Office sustaining the protest.” GAO also noted that “this figure is a percentage of all protests closed this fiscal year.” With 2,672 cases closed in FY 2017, the reported effectiveness rate of 47 percent means that GAO protesters received corrective action (or a sustained decision) in about 1,256 cases. As always, GAO notes that many protests do not reach a decision on the merits due to voluntary corrective action by agencies, and that “agencies need not, and do not, report any of the myriad reasons they decide to take voluntary corrective action.”
The effectiveness rate has slowly increased from 33 percent in FY 2001, the first year for which GAO reported the statistic, to record highs of 46 percent last year and 47 percent this year, reflecting a combination of corrective action and sustained decisions, and highlighting the importance of corrective action. When pursuing a protest, contractors are more likely to receive relief through corrective action (for example, an agency’s decision to re-evaluate a proposal, permit revised proposals or reinstate a proposal into a competitive range) than a sustained decision. Depending on the agency’s actions taken during corrective action and on the final result, the protester might not consider the ultimate outcome to be a victory — but a protest resulting in corrective action does give the protester a chance to have its arguments heard, and often, its proposal reconsidered by the agency.
As required by statute, GAO also reports the “most prevalent reasons for sustaining protests” during the preceding fiscal year. For FY 2017 this familiar list of sustained grounds included:
- unreasonable technical evaluation;
- unreasonable past performance evaluation;
- unreasonable cost or price evaluation;
- inadequate documentation of the record; and
- flawed selection decision.
This list shows that while GAO will not sustain a protest based on “mere disagreement” with an agency evaluation, it will fairly consider a protester’s arguments based on an unreasonably flawed evaluation, including, as most frequently sustained last year, an unreasonable technical evaluation.
As we recently reported, the Conference Report for the FY 2018 National Defense Authorization Act contains significant reforms to DoD debriefings and protests. The NDAA contains a provision for “Enhanced Post-Award Debriefing Rights,” which requires disclosure of a redacted source selection award determination for an award greater than $100 million and an option to request this disclosure for small businesses or nontraditional contractors for awards greater than $10 million. This also provides enhanced opportunities for follow-up questions after a debriefing.
The NDAA also requires a DoD pilot program on payment of costs for denied GAO bid protests, to begin in two years and last for three years. The intent of these reforms, in addition to the improved transparency of the enhanced debriefings, is to limit and reduce bid protests, but it remains to be seen what the ultimate impacts will be on the DoD contracting and GAO protest systems.
In addition to these recent developments, last year’s NDAA, among its many provisions addressing procurement issues, adopted a requirement for a comprehensive and far-reaching study of the bid protest system as it affects DoD, including protests to agencies, GAO and the U.S. Court of Federal Claims, to be conducted by an independent entity. DoD hired Rand Corporation to conduct the study, which is expected to be released soon. Given the comprehensive Rand study and Congress’s interest in reforming the bid protest system, contractors and agencies can expect the system to receive continued scrutiny as the DoD begins to implement the NDAA’s most recent reforms.
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