In its annual report (.pdf) to Congress under the Competition in Contracting Act of 1984, 31 U.S.C. § 3554(e)(2), GAO disclosed the following bid protest statistics for FYs 2005-2009.
|FY 2009||FY 2008||FY 2007||FY 2006||FY 2005|
|Cases Filed||1,989 (up 20%)||1,652 (up 17%)||1,411 (up 6%)||1,326 (down 2%)||1,356 (down 9%)|
|Merit (Sustain + Deny Decisions)||315||291||335||251||306|
|Number of Sustains||57||60||91||72||71|
|Effectiveness Rate (reported)||45%||42%||38%||39%||37%|
|ADR (cases used)||149||78||62||91||103|
|ADR Success Rate||93%||78%||85%||96%||91%|
|Hearings||12% (65 cases)||6% (32%)||8% (41 cases)||11% (51 cases)||8%(41 cases)|
Perhaps the most glaring trend evident from this data is the steady rise in bid protests filed at GAO since FY 2007. After dropping 2% in FY 2006, the number of GAO protests rose by 6%, 17%, and 20% in FYs 2007 thru 2009, respectively. Although the increase in FY 2007 was modest, the spikes in FYs 2008 and 2009 were substantial. There are several possible explanations for this significant rise in GAO bid protests, but the two greatest drivers are as follows:
First, expansion of GAO’s protest jurisdiction. Of the 1,989 cases filed in FY 2009, 168 can be attributed to GAO’s expanded bid protest jurisdiction over task orders (139 filings); A-76 protests (16 filings), and Transportation Security Administration protests (13 filings). These 168 filings represent 50% of the total increase in filings from FY 2008 to FY 2009 (337 filings).
Second, the severe economic downturn. As corporate revenues and profits fall, the importance of each contract award has a more significant impact on the bottom line. Many companies can no longer afford a “we’ll get the next one” attitude, and protests have seemingly become the last resort in corporate business capture strategy.
With the sharp rise in protests, it would be reasonable to assume a corresponding increase in the number of decisions on the merits and sustains. We all know about why one should never assume, and that holds true here. Indeed, the number of GAO merit decisions was actually lower in both FYs 2008 (291) and 2009 (315) as compared with FY 2007 (335). The same is true for the number of sustains – there were 91 sustains in FY 2007 versus 60 sustains in FY 2008 and 57 in FY 2009. How can that be so? Again, there are a number of potential explanations, but here are two most likely culprits:
First, GAO has managed its growing docket by increasing resort to a unique form of alternative dispute resolution (“ADR”) — “outcome prediction.” Under this ADR process, the GAO decision attorney informs the parties (typically after the record is closed) about how GAO is likely to rule if forced to draft a decision. More often than not, the party facing a likely adverse decision voluntary “does the right thing.” GAO used ADR in 149 protests in FY 2009, as compared with 78 in FY 2008 and 62 in FY 2007. This spike in the use of “outcome prediction” not only accounts for at least a portion of the drop in the number of written decisions, but also sustains (many of the cases in which GAO uses outcome prediction would have resulted in sustains if GAO had issued a written decision).
Second, agencies are increasingly taking corrective action before even producing the agency report. Rather than digging-in and litigating, agencies have become more willing to voluntarily “pull the plug” and implement corrective measures when faced with potentially meritorious protests. Corrective action takes the matter out of GAO’s hands (at least temporarily), thereby negating the need for a written decision.
A final note, and a good news bulletin for protesters, GAO’s “effectiveness rate” has climbed to 45%. The “effectiveness rate” reflects cases where the protester obtained some form of relief by the agency, either by virtue of a sustain or an agency’s decision to take corrective action. As such, in nearly half of the protests filed in FY 2009, the protestor apparently received some form of relief.