By Derek R. Mullins, Esq., Sheppard Mullin law firm. (http://www.sheppardmullin.com/)
This article is reprinted with permission from the Sheppard Mullin Quarterly Review.
On November 18, 2014, the U.S. Government Accountability Office (“GAO”) published its Annual Report to Congress (B-158766, November 18, 2014), which contains the statistics for bid protests filed at GAO in FY 2014. Frankly, it’s a mixed bag – protests are up, sustained protests are down, but the overall “effectiveness rate” (where the agency grants some type of remedy or corrective action for a protestor) remains flat. Because there are many who think that the bid protest process is broken, it might be worth a closer look at some of the statistics to see if bid protests are being abused (as some in Government might claim) or if the process is working.
Here are the statistics taken from the report (along with those for FYs 2010-2013):
|FY 2014||FY 2013||FY 2012||FY 2011||FY 2010|
|Cases Filed||2,561(up 5%)||2,429(down 2%)||2,475(up 5%)||2,353(up 2%)||2,299(up 16%)|
|Merit (Sustain + Deny) Decisions||556||509||570||417||441|
|Number of Sustains||72||87||106||67||82|
|ADR Success Rate||83%||86%||80%||82%||80%|
|Hearings||4,70%(42 cases)||3.36%(31 cases)||6.17%(56 cases)||8%(46 cases)||10%(61 cases)|
- Protests Filed – UP! The number of protests filed at GAO rose 5% from FY 2013, to 2,561. While FY 2013 saw a 2% drop, 2014’s increase is consistent with a noticeable upward trend in the number of protest filings. In this regard, overall, new protests are up 10% from FY 2010. It will be interesting to monitor this trend in light of several developments that could impact spending on Government contracts, including the partial easing of sequestration and a shift in power on Capitol Hill. Stay tuned.
- Protests Sustained – DOWN! … BUT… Effectiveness Rate – FLAT. Notably, and likely of particular interest to readers, the Sustain Rate plummeted to 13% – a 4% decrease from FY 2013. While the Sustain Rate saw a substantial decrease, the Effectiveness Rate, which captures not only sustains but also voluntary agency corrective action, remained constant at 43%. In fact, that number has remained at either 42 or 43% since FY 2010. So, while protesters faced a decreased likelihood of success on the merits in a final decision from the GAO, agencies appeared to be slightly more inclined to take corrective action than in years past. In the end, nearly half of all protesters were afforded some type of relief. If you are a protestor, those are pretty good odds, so keep that in mind. Also notable is the sharp decline in the use of GAO’s Alternative Dispute Resolution (“ADR”) procedures. But given the dramatic fluctuation of this number over the past five years, it may be difficult for contractors and practitioners to read anything into this.
- Reasons for Sustained Protests – Visibility! For the first time last year, GAO was required to include in its annual report a “summary of the most prevalent grounds for sustaining protests.” Once again, “failure to follow the evaluation criteria” represented the most common rationale for sustaining a protest, followed by “flawed selection decision,” “unreasonable technical evaluation,” and “unequal treatment.” What this data does not include is the majority of protests (those that do not reach a decision on the merits due to voluntary corrective action), which are captured in the “effectiveness rate” discussed above. In our experience, corrective action is commonly taken because of flaws in evaluating a proposal, so potential protestors should be especially aware of this ground when seeking information through post-award debriefings. Government evaluators should also be especially careful here, ensuring that things are done correctly in the first place.
One other interesting point worth noting, not reflected in the statistics above: the Annual Report documented the impact of the 16-day Government shutdown that took place in October 2013. At the time of the shutdown on October 1, 2013, there were 280 active protests on GAO’s docket. Because of the shutdown, GAO extended the 100-day protest deadline in each of these protests for 16 days. Notwithstanding the extension, GAO made an effort to decide all 280 pending protests within 100 calendar days of filing. GAO was able to resolve all but 39 of those cases within that time frame and only 5 of those remaining 39 took the full additional 16 days to resolve. So kudos to the GAO’s Office of General Counsel who kept on working hard, even when Congress pulled the rug out from under them.
About the Author:
Derek Mullins is an attorney in the Government Contracts, Investigations and International Trade Practice Group in Sheppard Mullin law firm’s Washington, D.C. office.
2099 Pennsylvania Avenue, N.W.
Washington, DC 20006-6801
This article is published in ConstructionRisk.com Report, Vol. 17, No. 2 (February 2015).
Copyright 2015, ConstructionRisk, LLC