GAO Bid Protests and Sustain Rate Increase in FY 2012

November 14, 2012

On November 13, 2012, the Government Accountability Office (“GAO”) submitted to Congress its annual Bid Protest Report, which included bid protest statistics for fiscal year 2012. According to the Report, the number of protests filed in fiscal year 2012 increased by five percent to 2,475, and the protest sustain rate increased from 16 percent to 18.6 percent. Although both the number of protests and the sustain rate increased in 2012, the Report indicates that the effectiveness rate, combining protest sustains and agency corrective action, has remained constant at 42 percent for the last three years.  Interestingly, the number of decisions on the merits, 570, is almost double the number of decisions issued in 2008, a remarkable jump in only four years.

Moreover, the Report shows a decrease in the amount of protests that utilize the GAO’s alternative dispute resolution (“ADR”) procedures. For fiscal year 2012, the number of ADR cases is down by about 25 percent from fiscal year 2011, and down by 33 percent  from fiscal year 2010. The ADR success rate, however, remained relatively constant at 80 percent for fiscal year 2012, which is just two percent lower than the ADR success rate for 2011. 

In addition to the statistics discussed above, much of the GAO’s report addresses the Veterans Administration's (“VA”) continuing use of Federal Supply Schedule (“FSS”) procedures to meet its requirements, rather than setting aside contracts for service-disabled veteran-owned (“SDVO”) or veteran-owned small business (“VOSB”) concerns under the “rule of two”, despite GAO decisions finding that such set-asides are required by law.  The “rule of two” mandates that where an agency has a reasonable expectation that offers will be obtained from at least two responsible small business concerns, and award will be made at a fair market price, the contracting officer must set aside the acquisition for small business participation. See FAR 19.502-2(b). 

We believe that the increase in bid protests filed and the decrease in ADR procedures, reflects the increase in competition that has resulted from the shrinking future federal procurement budget. As a result of this increase in competition, contractors should be prepared to challenge contract awards where they are unsuccessful as well as intervene and vehemently defend against protests to their successful awards. We believe that vigilance for both successful and unsuccessful contractors is critical in the current contracting landscape as the federal budget crisis casts doubt on the amount of future government spending.       

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