Procurement Process Problems: Inevitable, Interminable Protests

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Procurement Process Problems: Inevitable, Interminable Protests

By Joe Scott, Senior Vice President, Contracts and Pricing

This is the second in a series of articles highlighting problems in federal government procurement, with the goal of presenting possible solutions.

Years ago, protest rules were valuable tools because they allowed government contractors to make sure the government played it straight, following the rules and regulations set out for procurement. If you were not the awardee because the government made a mistake, you had a forum; a place to file a protest. Furthermore, this protest did not have to be filed at the agency that made the alleged mistake, but at an administrative law body (the GSBCA, or General Services Board of Contract Appeals) that reported to the GSA and was specifically set up for IT-related protests, with the GSA making final approvals on decisions. This was effective. But it has been done away with effective January 6, 2007.

Today, protests for IT procurement are handled in the same place as procurements for toilet paper. A one-size-fits all environment that privileges low-cost procurement over best value (see my previous article on this problem) should not be utilized for IT services. With the federal courts a last option for IT protests (too time-consuming and expensive), we are left with a situation ripe for protest process abuse. And that is what we have today: inevitable, interminable protests.

If you are an incumbent on a contract that you don’t win on a re-bid, you have the incentive to protest in order to delay losing your revenue stream. Each protest that you file could extend your revenue over three months or more. This could result in millions of dollars of continued revenue over the course of the protest(s), with subsequent protests potentially delaying it even further! Plus, there is always the chance you could win the protest and get another chance at winning a proposal. It is no wonder the process is completely bogged down; agencies cannot get anything done.

There will always be some decisions that should be protested, but agencies can quickly become overwhelmed and unable to do their jobs, thereby defeating the purpose of protests overall. And as I previously discussed, in a protest-rich environment, the incentive on both sides is to use LPTA as the basis for decisions instead of best value — even though it is inappropriate for IT system procurements – because LPTA is easier to defend. Therefore, contractors end up offering mediocre (satisfactory) solutions as they are more likely to win, and the government loses out on more innovative and effective technology implementations.

So, what are the options for overhauling this perverse situation? One solution is if you lose your protest, you are supposed to forego your profit. The problem with this is that small businesses, in particular, don’t have approved accounting systems and support systems in place, so years can pass while you argue about what the profit was.

Another proposed solution is to force protesting companies to put up a bond in order to show seriousness and intent. If the protest is found to be frivolous, the company loses the money. This has potential, but only if the bond is a percentage of the contract. If it is set at a $10K – $50K range, this is far too low, considering the revenue stream saved via protest can be in the millions of dollars.

Today, we also see serial protest companies, protesting the same procurement again and again with new reasons, sometimes up to a dozen times! I believe that there should be a limit to the number of protests a company can file on a given procurement.

These are just a few suggestions, but we need to take action on this soon. The situation is counterproductive at heart – and getting worse – resulting in agencies using up valuable resources that should be better applied to meeting their missions rather than tying up the GAO and the courts. Today, the only winners are the lawyers.

Next up: Challenges for Small Businesses