Legal Digest: GAO Bid Protest Report Out – You’re Gonna Like It

Happy ProtesterThere have been a lot of complaints, lately, about bid protests: They slow down the process … They favor incumbents … There are way too many of them. But, in the midst of that, the GAO has some good news.

1) Bid Protest Sustain Rates Skyrocket

The GAO’s annual report to Congress on bid protests came out in mid-December. For FY 2015, the sustain rate was 22.56% — almost double that of the previous year.

Negotiation 2In FY 2015, only 12 percent of bid protests were upheld, which was the lowest sustain rate since 2001. (See chart below.)

Protest filings have increased almost every year during that 15-year span. But, so has the overall effectiveness rate – jumping from 1-in-3 in 2001 to almost half (46%) in FY 2016.

Peter F. Garvin, III, et al, notes:

The reasons for the sharp increase in GAO’s sustain rate are not immediately discernible. There has been no sea change in GAO’s procedures or its substantive views on bid protest issues. GAO has continued to apply the same standard of review, which generally involves an examination of the record to determine whether agencies’ decisions were reasonable and complied with the terms of the solicitation and procurement law, rule, or regulation. Given that the effectiveness rate changed by only 1 percent this year, the large increase in the sustain rate indicates that agencies did not take corrective action in response to meritorious protests as frequently as they have in the past. Instead, agencies allowed a much higher percentage of cases to proceed all the way through the protest process to a written decision sustaining the protest.”

The GAO’s effectiveness rate represents the percentage of protests in which a protester obtained some form of relief — either through a decision sustaining the protest or through an agency voluntarily taking corrective action.

FY 2016′s 46% is the highest since the GAO began reporting this statistic.

SOURCE: Mondaq/Jones Day

SOURCE: Mondaq/Jones Day

There’s no clear reason for the rise in effectiveness either.

Here are some other key stats:

  • GAO received 2,789 cases, which is a 6% increase from FY 2015, and continues a year-to-year increase in cases filed at GAO since FY 2013.  This number includes 2,621 protests, 80 claims for costs, and 88 requests for reconsideration.
  • GAO closed 2,734 cases in FY 2016, which includes 2,586 protests, 61 claims for costs, and 87 requests for reconsideration.
  • GAO issued 616 merit decisions (either a sustain or deny), meaning 22.5% of all the cases closed resulted in a merit decision.
  • GAO issued 139 sustains, for a 22.56% sustain rate when compared to the number of merit decisions issued. This number is more than double the number of sustains in FY 2015 (68) and represents the highest number of sustains in the past five fiscal years.
  • GAO’s effectiveness rate, which is based on a protestor obtaining some form of relief from the agency such as corrective action or GAO sustaining a protest, was 46% (1,190 of all protests filed and closed this fiscal year). This rate is a percentage of all protests closed in FY 2016 and represents a 1% increase from FY 2015. In fact, the effectiveness rate has remained relatively stable over the past five fiscal years, measuring between 42-46% from FY 2012 to FY 2016.

One bit of insight, provided by Scott Freling and John Sorrenti, is a list of the most common reasons the GAO sustained a protest:

SOURCE: Nat'l Law Review/Covington & Burling, LLP

SOURCE: Nat’l Law Review/Covington & Burling, LLP

So … Contractors are doing a much better job of making their cases deciding when to protest. That pretty much guarantees protests aren’t going down any time soon.

Other Contracting News
  • Regarding the Defense Innovation Unit (DIUx)The DoD’s experimental technology operation awarded $36 million in contracts during FY 2016 and currently has 20 more projects under review. Though the unit is not expected to look at anything new until mid-March, DUIx should still be of interest to contractors, considering: contracts can be awarded within 60 days, with limited or no competition, to companies presenting viable technologies that address solutions to stated government problems. [Aronson Blog]

2) Indefinite Deliver Contracts Under the Microscope

Last issue, we reported that NDAA 2017 was basically pushing LPTA contracts toward extinction. Now, it’s looking like indefinite delivery vehicles may also be heading in that direction.

MobiusThe issue is simple: indefinite delivery works for the convenience of the CO, but it limits competition.

So, the NDAA calls for the GAO to examine indefinite delivery contracts from FY 2015-2017 and report the results to Congress.

The report is to focus on five categories of information. Two are statistical — volume of such contracts, etc.

As Ian Patterson explains, the other three categories are more intriguing:

  • The report is to provide a comprehensive review of the DoD’s policies for entering into indefinite delivery contracts, including a discussion of what guidance, if any, DoD contracting officers are given regarding “the appropriate number of vendors that should receive multiple award indefinite delivery contracts.”
  • The report is to include specific case studies of indefinite delivery contracts. These studies are to specifically address “whether any such contracts may have limited future opportunities for competition for the services or items required.”
  • The report is to provide guidance and recommendations for revising existing laws, regulations and guidance to enhance competition with respect to indefinite delivery contracts.

Nothing will happen in the near future, since the report isn’t due until March 31, 2018.

Still, contractors that have historically depended on servicing indefinite delivery vehicles should begin planning for increased competition.

3) The Burden of Constructing a Proper Proposal Is All on the Contractor’s Shoulders

At first glance, this may seem obvious. But, it’s worth reminding businesses wanting to do business with the federal government that the courts and agencies that adjudicate lawsuits and protests take a dim view of contractors who don’t follow the rules.

Classroom 2bTo illustrate the point, Nicholas Solosky examined the GAO’s decision regarding the protest of Herndon, Virginia-based Teracore, Inc. after failing to win a Homeland Security contract.

In this case, DHS issued an RFP for program management services that was put together as a set-aside for service‑disabled veteran‑owned small businesses (SDVOSB).

One key requirement was to submit a sample of past performance projects detailing a number of technical capabilities of the interested companies.

DHS received over 250 proposals for the contract, so competition was intense.

Offerors were to submit sample relevant projects for each area of concern outlined in the RFP. By mistake, Teracore submitted one project twice. As a result the company’s proposal was given the following scores:

SOURCE: GAO

SOURCE: GAO

Given the competition level, Teracore lost the bid.

Furious, Teracore quickly submitted a protest alleging its proposal had been rated unfairly and argued that part of the blame rested with Homeland Security’s proposal submission website.

The GAO was unimpressed. The agency noted that DHS “specifically warned contractors that heavy website traffic close to the due date for proposals could cause server lag time – so contractors should not wait until the last minute the submit.   GAO also anecdotally noted that the protestor was the only contractor – out of over 150 offerors – to encounter an alleged website problem that materially affected a proposal.”

As is often the case, the moral of this story is agencies will not be holding any hands. Companies either follow the rules or reap the consequences.

Other Rules and Regulations
  • Speaking of following the rulesOne contractor trying to win a VA contract for executive driver transportation services got shot down because its proposal exceeded the agency’s email file size limit. The VA tagged the submission as untimely. The contractor protested. But, the GAO was an unsympathetic as it was to the contractor above: “It is an offeror’s responsibility to delivery its proposal to the proper place at the proper time.” Protest denied. [SmallGovCon Blog]

Labor News

  1. Provisions of the Privacy Act of 1974, including penalties for violations;
  2. Appropriate handling and safeguarding of PII;
  3. Authorized and official use of a system of records or any other PII;
  4. Restrictions on the use of unauthorized equipment to create, collect, use, process, store, maintain, disseminate, disclose, dispose, or otherwise access, or store PII;
  5. Prohibition against the unauthorized use of a system of records or unauthorized disclosure, access, handling, or use of PII or systems of records; and
  6. Procedures to be followed in the event of a potential or confirmed breach.

 

And, finally …

You say your memory is bad?

An elderly couple is sitting on a park bench in front of a large pond. On the other side of the pond are vendors sell all types of food. The wife turned to her husband and said, “I could really go for an ice cream cone.” He replied, “Well, I’ll go get you one.” She said, “But, you’ll forget, you better write it down.” He indignantly said, “No I won’t. What do you want?” She said, “Get me a strawberry cone with chocolate sprinkles.” He repeated, “Strawberry cone with chocolate sprinkles. I got it.” And, off he went.

Several hours pass and, finally, the hubby returned. The wife asks him, “What took you so long, did you get lost?” He replied, “No, and I got what you wanted.” The wife opened the bag to discover a cheeseburger and fries! Wife says, “I knew you you should have written the order down!” “What’re you talking about? It’s all right there.” To which the wife replies, “No, it’s not … Look — you forgot the pickles!”

Well, we got just what you need

Visual linking –  a technique so simple that anyone can have a great memory with just a little practice.

Now, where the heck did we put those keys …

Posted under: Congress, Dept. of Homeland Security, Federal Acquisition Regulations, GAO, Labor, Legal, Management, Protests, Small Business Contracting, Veterans Affairs

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