GAO: Bid Protest Activity Fell Again, But Protester "Effectiveness Rate" Increased

The U.S. Government Accountability Office (GAO) issued its annual Bid Protest Report to Congress for Fiscal Year 2022 on Nov. 1, 2022. The annual report is a requirement of the Competition in Contracting Act and an opportunity for GAO to provide data concerning its overall protest filings for the fiscal year. The following are some of our takeaways from this year's report.

Protesters Obtained Some Form of Relief in More Than Half of Cases. The proportion of final decisions by GAO to sustain protests has remained steady at between 13 percent and 15 percent over the past five years. But GAO stated that the "effectiveness rate" of protests in FY 2022 was 51 percent. This is the percentage of cases in which the protester obtained some sort of relief — either GAO issued a decision sustaining the protest or the agency voluntarily took corrective action in response to the protest. In the past three years, the effectiveness rate has been between 48 percent and 51 percent, up from 44 percent in each of FY 2018 and FY 2019. Given that GAO sustained only 59 protests in FY 2022, the 51 percent effectiveness rate is overwhelmingly made up of instances in which the agency voluntarily took corrective action (more than 800 protests).

GAO's Data Shows that Agencies Are Adept at Screening and Assessing Protests. Although agencies voluntarily took corrective action in more than 800 protests, they chose to defend and fully litigate 455 protests — with the result that GAO issued a "sustain" or "deny" decision on the merits. When agencies made the judgment to litigate to a final decision, they were right in their assessment 85 percent of the time. Of the 455 protests that concluded with a GAO decision on the merits, only 59 (or 15 percent) resulted in sustained protests. GAO issued protest denials in the remaining 396 merit decisions.

A Steady Decline in the Number of Protests Filed Continued. The number of cases filed in FY 2022 was down 12 percent from FY 2021, which itself was down from 12 percent from the prior year. In fact, the number of cases filed at GAO has decreased 41 percent since FY 2016 — from a high of 2,789 in FY 2016 to just 1,658 in FY 2022. The number of cases filed was routinely in the range of 2,500 to 2,800 per year from FY 2014 to FY 2018, then began to drop in FY 2019.

GAO's report does not opine on why the number of protests filed has decreased so dramatically. Some recent developments may be having an effect:

• Agencies may be pushing more small dollar-value procurements into unprotestable task-order or delivery-order vehicles. A task order or delivery order under an indefinite-delivery, indefinite quantity (IDIQ) contract may be protested at GAO only if the order's value exceeds $25 million for Department of Defense procurements or $10 million for all other federal procurements. With the federal government's focus on using "best in class" government-wide acquisition contracts and other multiple-award IDIQs, agencies may be using these vehicles more, thereby shielding more small dollar-value procurements from the protest process.
• Debriefings may be increasing in quality, resulting in better-informed unsuccessful offerors. The DoD began offering "enhanced debriefings" during FY 2018, and some other agencies have begun to offer similar processes, at least occasionally. Under the "enhanced debriefing" process, disappointed offerors often obtain more information regarding why they lost the competition, which could be resulting in fewer dissatisfied offerors resorting to the protest process due to the absence of meaningful information.
• Contractors may be utilizing other protest venues more frequently. It is important to keep in mind that GAO's report is limited to bid protests filed at GAO. Contractors have two other venues in which to file bid protests — with the contracting agency itself, or with the U.S. Court of Federal Claims.

The Report Also Addresses Reasons for Sustained Protests. GAO's report states that the most prevalent reasons for sustaining protests in FY 2022 were: 1) unreasonable technical evaluation; 2) flawed selection decision; and 3) flawed solicitation. In past annual reports, prevalent reasons for sustaining protests have included flawed discussions, unequal treatment, unreasonable cost or price evaluation, unreasonable past performance evaluation, and inadequate documentation of the record, among others.

For the First Time in Seven Years, an Agency Told GAO It Would Not Follow GAO's Recommendation. GAO's decisions sustaining protests are technically "recommendations" that the agency take corrective action in response to an identified error. However, agencies almost always take corrective action when GAO recommends it. Agencies are required by law to inform GAO when they will not follow its recommendation, and GAO is required to report such instances to Congress. The last time GAO reported an agency's failure to follow GAO's recommendation was in 2015.

However, in FY 2022, an agency declined to follow GAO's recommendation. GAO reported that the Department of the Navy, Naval Air Systems Command, declined to follow GAO's recommendation in the protest of Northrop Grumman Sys. Corp.—Mission Sys., B-419560.6, Aug. 18, 2021, 2021 CPD ¶ 330. In that decision, GAO found that the Navy's evaluation of the awardee's proposal was inconsistent with the solicitation and recommended that the Navy either reopen discussions or amend the solicitation to reflect updated specifications and request revised proposals. In a rare act, the Navy informed GAO that it believed GAO had ruled incorrectly and that the Navy would not follow the recommendation. As it happens, this bold move did not work out as the agency had hoped. GAO's report notes that the protester subsequently protested at the Court of Federal Claims, which has the power to legally enjoin agency action. GAO reports that the Navy lost again at the Court of Federal Claims and ultimately agreed to take corrective action that was consistent with GAO's original recommendation.

Conclusion

GAO's report confirms, again, that offerors with legitimate protest grounds have a fair chance of obtaining relief through the protest process. Holland & Knight's Government Contracts Group can help contractors make informed decisions on whether to pursue a protest based on their individual circumstances. Please feel free to reach out to your Holland & Knight attorney if you have any questions.