The prospect of losing out in a major competition and the fear of acquisition officials of protests by losing bidders is influencing a number of aspects of the acquisition process by both the Defense Department and industry, according to a former DoD and industry official.
There is a lot of time, energy and cost associated with bid protests, Sean O’Keefe, who is currently a professor at Syracuse Univ. and a senior adviser to the Center for Strategic and International Studies (CSIS), said during a panel discussion hosted by CSIS on effects of bid protests on the acquisition system.
In the administration of George H.W. Bush, O’Keefe was the Pentagon’s comptroller and later Secretary of the Navy. And in the early 2000’s he served as the deputy director of the Office of Management and Budget and as the administrator of NASA. From 2009 to 2014 O’Keefe headed the North American subsidiary of the former European Aerospace Defence and Space Co., which was renamed Airbus Group.
O’Keefe said that for Defense Department acquisition personnel, the bid protest environment has led to a process limiting the sharing of information with industry during development of the Request for Proposals, which runs counter to the need for dialogue that enhances clarity and reduces the chance for misinterpretation and ultimately might lead to fewer protests.
“As a mechanism to avoid any misinterpretation, the number of lawyers…outnumber the contracting officers and acquisition officials in the room when these dialogues are underway,” O’Keefe said. “And, as a result, it is structured purposely to say that there be nothing that could be possibly interpreted and therefore you’re driven more often than not to saying as little as possible. So, therefore, you’ve just defeated the objective of what could be one of the best preventative measures to working through this just because of the litigious nature of those who feel they didn’t get a fair shot at this or they heard it wrong and want to use that as evidence as part of the protest as well.”
These changes in behavior at DoD are “becoming more and more evident over time,” O’Keefe said.
Another aspect of the bid protest environment has been the Pentagon’s “flirting with” low price technically acceptable proposals, O’Keefe said. In this case contracting officials establish a low baseline of performance and beyond that it’s “all about price” and “it takes a lot of the ambiguity out of the interpretation,” he said. “It makes the front end of the process much cleaner to the contracting officer, to the acquisition officials.”
Driving these protests by losing bidders are the small number of competitive large scale program opportunities, O’Keefe said.
Given the few major systems acquisitions, companies often see their market positions at stake if they lose, O’Keefe said.
“So, as a result, many companies, primes are who we are referring to largely, are looking at the opportunity as ‘this is betting the company, or coming close to it.’ Otherwise you’re looking at an alternative future where your company needs to go if you don’t win.”
O’Keefe said that in his experience, which he described as more anecdotal than analytical, as companies piece together a bid, in parallel they are preparing a protest in case they lose.
“This is a frequent circumstance where there is not a major program that has come through that I have not gotten a very clear sense, either from the prime contractors involved, or in the time I spent in industry doing this, that there isn’t the concurrent, at the same time you’re preparing a proposal, a concurrent effort to develop all the documentation necessary to launch a protest in the event you lose,” O’Keefe said. “So just the sheer amount of indirect cost, overhead expense, wasted time frankly that goes into that effort in anticipation that ‘if I lose I want to have another shot at this,’ is frankly what is occurring much more extensively across the industry than probably any other form of behavior.”
Jay Carey, a lawyer who represents either bid protestors or winning contractors attempting to fend off a protest for the firm Covington & Burling LLP, said that protests are important to “fix the process” and presented briefing slides that showed that current protest levels aren’t as bad as 25 to 30 years ago when nearly 3,400 protests were docked in one year with Government Accountability Office (GAO) versus just over 2,600 in 2015. In 2001, 1,146 protests were lodged with the audit agency, he said.
Carey also said that protests drive accountability in the contracting process. Another of his slides showed that of the 2,647 protests filed with GAO last year, 68 were sustained and 1,123 resulted in the contracting agency deciding to take corrective action. That’s 46 percent effectiveness rate and demonstrates the value of protesting activity, he said.
Of the protests filed in 2015, 519 were denied and 937 were either withdrawn or dismissed, Carey said.
Carey also said that the protest process strikes a delicate balance between ensuring accountability of the acquisition system and not unduly disrupting or delaying the acquisition process. He pointed out that unlike litigation in the court system, which typically takes years, protests have to be filed with the GAO in five or 10 days depending on activity and the GAO must decide within 100 days.
Elliot Branch, the Navy’s deputy assistant secretary for Acquisition and Procurement, said he “likes the protest process,” describing it as a “feedback loop” for the acquisition community. Based on his readings of GAO decisions, he said the agency typically decides against the contracting officer over three things, including when they get it wrong procedurally, they didn’t follow the guidance they gave in the RFP, and they didn’t hold “meaningful discussions.”
Branch also said that the GAO always mentions that “’We will give great deference to the judgment of agency officials’” when reviewing a protest.
Unlike O’Keefe’s concerns with protests of large acquisition programs, Branch said his biggest concern is with the smaller programs, because that’s “where contracting officers live every day.”
Branch also said that one of the contributing factors to protests is when requirements aren’t done right. This is often because of barriers to communication between government and industry “over what the requirement ought to be” and because industry often doesn’t engage in dialogue about the requirement but rather how their solution meets the requirement.
Ultimately, the conversation needs to be around a collaborative approach to create business models that align supply and demand between industry and government, and “in the interests of the taxpayer,” Branch said.