GAO Bid Protest Filings Down in FY 2020; Effectiveness Rate Reaches Record High
Government Contracts Update
Date: January 06, 2021
The U.S. Government Accountability Office released its “GAO Bid Protest Annual Report to Congress for Fiscal Year 2020,” which shows that new protest filings reached the lowest number in more than a decade, while the effectiveness rate rose to 51%, the highest number on record. The FY 2020 effectiveness rate indicates that a protester has about a 50/50 chance of its protest resulting in either agency corrective action or a sustained decision, although these forms of relief do not necessarily lead to a contract award for the protester.
In its December 23, 2020, report, GAO stated that during FY 2020, it received 2,149 cases, including 2,052 protests, 56 cost claims and 41 requests for reconsideration. It closed 2,137 cases, including 2,024 protests, 66 cost claims and 47 requests for reconsideration. Of the 2,137 cases closed, 417 involved task order protests, more than any prior year.
Counting by B-number, GAO sustained 84 protests out of 545 merit decisions, or 15% of those decisions. Cases using ADR increased significantly, from 40 last year to 124 this year, perhaps reflecting pandemic logistics.
GAO stated that the most prevalent reasons for sustaining protests during FY 2020 were: “(1) unreasonable technical evaluation; (2) flawed solicitation; (3) unreasonable cost or price evaluation; and (4) unreasonable past performance evaluation.” This is the first year that GAO has included “flawed solicitation” as a prevalent ground.
Drop in Cases Filed
The numbers of cases closed and cases filed in FY 2020 were each the lowest since FY 2009. While only slightly lower than last year, the numbers represent a significant drop from recent years, including a high of 2,789 cases filed in FY 2016. Last year, we wrote that one reason for lower protests in FY 2019 might have been the relatively high levels of total expenditures on government contracts.
We wrote in Law360 that fewer protests closing in FY 2020 would reflect in part the COVID-19 pandemic’s impact on the protest system, which included a slowing of litigation filings and disputes in general during 2020. In addition, fewer protests might also reflect relatively high total federal contract spending in FY 2020, which may set a record as a result of the pandemic, and related spending to fight the coronavirus and support the economy. When more contracting opportunities are available to companies with government business, the pressure to protest may be lower. Protest numbers may rise if total spending falls in future years.
Increase in Task Order Cases
Meanwhile, the number of task order cases continued to increase, reaching a new high of 417. By comparison, in FY 2008 GAO first reported 49 task order cases, due to newly enacted jurisdiction over task orders resulting from the NDAA for FY 2008. The number of task order cases has increased in most years since then, likely reflecting the increasing reliance on this common procurement method by federal agencies.
Significant Chance of Relief for Protesters
The most important number in the annual report may be the effectiveness rate, which reached a record high this year, and 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 GAO sustaining the protest. The record effectiveness rate this year may also be related to the relatively high levels of total federal contract spending in FY 2020, putting pressure on government agency personnel.
GAO also notes that “this figure is a percentage of all protests closed this fiscal year.” With 2,024 protests closed in FY 2020, the reported effectiveness rate of 51% means that GAO protesters received corrective action or a sustained decision in about 1,032 protests. GAO reported that, counting by B-number, 84 protests were sustained in FY 2020. By comparison, more than 10 times that number received corrective action.
The recent effectiveness rates (on average, 46% over the last five years) indicate that, including corrective actions and sustained decisions, a GAO bid protest has a significant chance of resulting in some kind of relief for the protester. As always, GAO notes that many protests do not reach a decision on the merits due to voluntary corrective action, and that “agencies need not, and do not, report any of the myriad reasons they decide to take voluntary corrective action.” The outcome of corrective action does not always favor the protester and does not necessarily lead to a contract award.
The effectiveness rate has slowly increased from 33% in FY 2001, the first year for which GAO reported the statistic, to the recent highs of 46% in FY 2016 and 47% in FY 2017, 44% in FY 2018 and FY 2019, and the record high of 51% this year, reflecting the combination of corrective action and sustained decisions and highlighting the importance of corrective action as a potential remedy.
As we wrote last year, when pursuing a protest, a contractor is more likely to receive relief through corrective action (for example, an agency’s decision to reevaluate a proposal, permit revised proposals or reinstate a proposal into a competitive range) than a sustained decision. Depending on the actions the agency takes during corrective action and the final result, the protester may or may not consider the ultimate outcome a victory – but a protest resulting in corrective action does give the protester a chance to have its arguments heard and, often, to have the agency reconsider its proposal. Thus, protesters should pursue their arguments with potential agency corrective action remedies in mind.
The Most Common Sustained Grounds
GAO stated that the most prevalent reasons for sustaining protests during FY 2020 were technical evaluations, flawed solicitations, cost or price evaluations, and past performance evaluations.
As we noted last year, an unreasonable technical evaluation has been the most commonly sustained ground, according to GAO annual reports in each year since FY 2016. This list again demonstrates 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 in each of the last five years, an unreasonable technical evaluation.
As we explained in Law360, in most years, most sustained decisions involved a post-award protest concerning proposal evaluation. Among these, in FY 2020 at least 18 sustained decisions (not counting by B-number) involved technical evaluations in a sustained ground; at least eight involved past performance or a similar corporate experience factor; and at least eight involved cost or price factors. Often these decisions involved multiple sustained grounds, which might encompass multiple evaluation factors.
The GAO’s decisions in FY 2020 reflect the general principles that while it will not reevaluate proposals, any aspect of a proposal evaluation may be found to be inconsistent with the solicitation, evaluation criteria or applicable regulations, or otherwise not reasonably based, unequally applied or undocumented by the record. The evaluation criteria should guide offerors through their proposals, agencies through their evaluations and GAO through its protest decisions. Part 1 of our Law360 article explains more about the GAO decisions on flawed proposal evaluations.
Solicitation challenges in FY 2020 also resulted in a relatively high number of written decisions that reflect a more commonly filed protest issue and highlight the opportunity for offerors to improve the solicitations to which they respond by protesting the terms. The sustained grounds in FY 2020 also included significant decisions on key personnel, conflict of interest, corrective action, and the scope of contract award or awardee eligibility.
GAO’s decisions in FY 2020 also show that agency corrective action is an increasingly important protest issue. GAO often defers to agency discretion when corrective action is protested. But in its decisions last year, GAO demonstrated a willingness to sustain corrective action protests under certain circumstances.
Part 2 of our Law360 article provides more details about the GAO decisions on solicitation challenges, corrective action, conflict of interest, key personnel, and the scope of contract award or awardee eligibility.
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