Bid protests jumped by 16% in 2010, according to a report released last week by the Government Accountability Office, continuing a trend in recent years whereby companies have been increasingly apt to sue over the award of federal contracts.
The GAO received a total of 2,299 bid protests in fiscal year 2010, compared to 1,989 protests in 2009. In 2008, there were 1,652 protests.
According to the GAO, companies filing protests received some form of relief 42% of the time, consistent with results for the past five years. Of the 441 cases that GAO decided on the merits, protestors won 19% of the time, up slightly from last year, but down from a high of 29% in fiscal year 2006.
Wiley Rein government contracts partner Rand Allen said he expects the number of protests to remain high as the government cuts spending overall and reduces the number of outside contracts.
“Whenever uncertainty about new contracts downstream becomes high, companies are more inclined to fight harder for the ones in front of them,” he said. “The next one might not be as certain. And it’s only going to get worse.”
Some of the increase in bid protests can also be attributed to a change in the law that expanded the types of bids that can be protested. As of May 2008, companies may protest task-and-delivery orders in excess of $10 million — that is, contracts used to acquire supplies or services when the government does not know exact quantities or delivery dates in advance.
In 2010, there were 189 protests over such orders, but Fried, Frank, Harris, Shriver & Jacobson partner James McCullough noted that the law will sunset on May 28, 2011 unless Congress takes affirmative action.
“Literally hundreds of protests we saw this year would go away,” he said, adding that some companies have lobbied Congress not to extend the law.
“There has been an amazing increase in protests over the last four years,” he said. “But it’s a mixed outlook for next year.”