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What's behind the increasing number of bid protests?

I don’t want this to be a rant, but can someone explain to me what’s going on with bid protests?

I’m not trying to bash any individual companies. I respect Unisys Corp. and General Dynamics. I think they do good work and have good people working for them.

I’m sure, too, that they used sound business principles when they decided to protest the Transportation Security Administration’s award of its infrastructure contract to Computer Sciences Corp.

But my question is, what has changed in the market that makes protesting a lost bid more attractive? What makes a filing protest a good business decision?

Even in a down economy, spending continues to grow, though at a slower pace. But you would think there are opportunities to win new business to offset any losses. So I don’t think fear of lost business is the main motivator.

The change has happened over the last two years, according to Government Accountability Office data. In fiscal 2008, GAO received 1,652 bid protests, up 17 percent from the 1,411 the year before. Part of that increase was from GAO’s increased jurisdiction, but even if you took those cases out, the increase is still 10.9 percent.

In 2007, protests were up 6 percent. But in 2006 and 2005, protests were down 2 percent and 9 percent, respectively.

So what happened? Did contractors suddenly become sore losers? Or is there something else at work when executives make the decision to protest?

We’ve seen some cases where the protester gets added to the prime’s team as way of resolving the dispute. That’s what Lockheed Martin and IBM did with the huge FBI fingerprint contract last year.

So I guess a protest could be a ploy to grab a share of the prize because the winner is often motivated by the desire to get work and start the revenue stream.

But I don’t get the sense that a lot of protests are resolved that way. If I’m wrong, let me know.

Consultant Bob Guerra wrote a column earlier this year about a company offering a seminar on bid protests as part of a company's strategy. Apparently, according to the seminar, there are different types of losses, and there are some kinds of losses a company should always protest. Huh?

So I go back to my original question. What gives? To misquote Shakespeare, Why doth thou protest so much?

Posted by Nick Wakeman on Oct 26, 2009 at 12:14 PM


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