COMMENTARY

Bring accountability to contract protests

Jaime Gracia is president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm.

An article in the November/December 2010 issue of Defense Acquisition University’s Defense AT&L magazine discussed why companies file protests against contract awards and illustrated the realities of the federal contracting environment. Budgets are tightening, competition for those shrinking dollars is ferocious, and protests have seemingly become standard operating procedure. Further exacerbating the issue are poorly trained acquisition workers and poor government communications. So what are we to do in this environment?

The issue hinges on the seemingly endless cycle of protests with no consequences or accountability on the part of government or industry. More protests mean an even higher rate of program disruption, with the result that users and warfighters will continue not getting the products and services they need to perform their missions. Industry often looks at protests in terms of return on investment and might find it worthwhile to fight a contract award that a competitor wins. Given the risk-averse nature of government, that approach can open additional revenue sources or further opportunities for a company to compete.

Nonetheless, the government does make mistakes and should be accountable because the point of a protest is to prevent the government from causing harm to the protesting firm.

There needs to be a measure of accountability on both sides. A protest should not be taken lightly. It is typically a disruptive and costly matter. Although a company expects to win and files its protest accordingly, the number of protests that are upheld remains less than 25 percent. Some firms file just to see what will happen. What if a firm loses repeatedly? We need a measure of financial accountability to recoup the costs borne by the government from repeat offenders. By holding companies accountable for fishing expeditions, agencies could ensure that the protest process is used for its intended purpose: ensuring fair competition.

The government also has gotten into the habit of not wanting to upset firms that have a history of protesting awards. Indeed, some procurement officials automatically award contracts to such companies to avoid the cost of resolving disputes if the company were to protest and the government were to lose. Procurement officials must be held accountable for that behavior. And firms should be reimbursed for protests that are upheld to help put the pressure on the government to award contracts fairly.

Protesting is a right that industry must continue to have. But it must be weighed against the real costs when accountability is finally added into the equation. Furthermore, the government must stop allowing itself to be bullied into awarding contracts to firms with a history of protests. And more importantly, the government must be held accountable for following procedures and executing sound acquisition strategies to ensure that protests don’t happen in the first place.

We can accomplish all that if reform actions match the rhetoric coming out of the 112th Congress. However, without some much-needed accountability, we can expect to see a continued rise in protests, to the detriment of all involved.

About the Author

Jaime Gracia is president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm.

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Reader comments

Wed, Feb 2, 2011 Jaime Gracia Washington, DC

@Steve raises some valid points. However, end users who continue to have capabilities and requirements not met through contract protests would disagree that the process works well. Further, corrective actions (15%) occur as a result of sustained protests (the 25% which is from GAO), so adding to that statistic seems like double counting. Nonetheless, protests are not just for a few bad apples anymore. Protesting contract awards is on the rise, and will continue this trend with budget cuts and freezes espoused by the Obama Administration. End users can expect more delays and frustrations with continuing their respective missions in this environment without a balanced review of the process.

Sat, Jan 29, 2011 Ray Alabama

The FAR needs to be changed, that if you protest a contract, or if a group of companies, protest a contract award, they each should have to pay for the protest in full, with no right of recouping the cost, or adding it to the contract later. These are tax payers dollars, that companies are wasting in frivolous protests.

Fri, Jan 28, 2011 Interested Party

Carlos--I agree that having the Contracting Officer decide a protest is pointless, however, if that is truely happening, there is a bigger problem at that agency than one CO. Agency Protests are to be decided at a level ABOVE the CO. That having been said, you can always decide to go direct to GAO. As for the assertion that COs NEVER are disciplined, while they may not generally get fired, losing a protest that involves any misconduct does result in serious career damage for a CO. There may be individual cases where this may not happen, but most times it does. My 30+ years CO experience has shown me that the Government DOES make some mistakes and protests are an important part of keeping COs (and other Gov. staff) between the lines. My point is that there are a significant number of firms out there that are now protesting EVERYTHING regardless of merit. That practice needs to be curbed by ensuring there is a cost (not necessarily money). I don't think we would risk the industrial base by charging for losses, but I kind of like Mark Boster's idea if there were a good way to implement it.

Thu, Jan 27, 2011 Steve Washington DC

Mr. Gracia's article suggests that bid protests are the problem, when in fact, it is a few companies abusing the process--typically, incumbents who file frivolous protests simply to gain a few extra months of performance time--that are the real issue. In suggesting that the protest process requires reform, Mr. Gracia makes some key omissions. First, his statement that protests are only successful 25% of the time is misleading. The 25% figure accounts for protests that the GAO sustains on the record. However, in many cases, agencies take corrective action when they realize a meritorious protest has been filed--essentially, ceding victory to the protester. The combination of sustain decisions and corrective actions exceeded 40% last year. That's a lot of meritorious protests. Mr. Gracia also neglects to mention that agencies have a tool available to them--the override--to address the problems caused by the automatic stay when a particular procurement is especially important. Finally, the GAO has a statutory mandate to decide cases in 100 days (and often does it even quicker). That sounds like a long time, but compare it to courts, where cases can drag on for years, and it becomes evident that the government understands the need to resolve protests quickly. By and large, the protest process works well. Of course, it can be frustrating for a contractor to have its award protested, And yes, a few bad apples are out there, and they are the ones that get the attention. But they should not be seen as spoiling the barrel. The protest process may need a tweak or two to ensure it runs smoothly, but it does not require the dramatic overhaul Mr. Gracia seems to suggest is necessary.

Thu, Jan 27, 2011 Carlos MD

I am a small business owner and a govt contractor. I don't agree that losers should protest. However, I do see major problems in the current protest model. First, the initial protest is ruled on by the Contracts Officer. That in itself is a conflict of interest. Recently, I have been dealing with rogue CO who does what he wants. While I have had problems with him in the past, at the end of FY10, he awarded me a $2mil contract. 3 weeks after I started work, the award was protested by a loser. The loser was right to protest since it had been misinformed by his office. And of course the CO rejected the protest and defended its behavior. To me, COs have loo much power, there is not enough oversight of them, and it seems that they are acting with more arrogance each year. COs never get in trouble for their behavion. I've never hear of one being fired, but I can assure you that such behavior, generating lawsuits, would not be tolerated in the private sector.

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