'What Are The Implications?': Foxx Asks Experts For Ways To Prevent 'Frivolous' Bid Protests

5 months ago

During a House Oversight Committee hearing in July, Rep. Virginia Foxx (R-NC) asked a panel about ways to reform the bid protest system.

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00:00The gentleman yields back her time.

00:03Thank you very much.

00:05We now move to the distinguished gentleman, Dr. Fox.

00:08Dr. Fox, you're recognized for five minutes.

00:11Thank you, Mr. Chairman, and I thank our witnesses for being here.

00:15This is a question for each of the witnesses, and I do have several questions, so I'll ask

00:20you to be as succinct as possible.

00:23Under current law, bid protests may be filed in one of three venues.

00:27The GAO, the contracting agency itself, or the U.S. Court of Federal Claims, COFC.

00:33However the data shows that most protests are filed with the GAO or an agency, but not

00:39with the COFC.

00:41Why is this the case and what are the implications of this, quote, venue shopping?

00:48We'll start here, Mr. Pat.

00:53We don't actually have data to determine why individuals shop or move between forms,

01:00and as I mentioned earlier, one of the benefits of the GAO system is that you get an automatic

01:04stay of contract performance.

01:07That is an easy way to stop.

01:09If you go to the court, you may have to litigate that.

01:11Okay.

01:12Mr. Prince.

01:13Yeah.

01:14The one advantage of GAO is the agency is still in charge of the way the protest proceeds.

01:21So if there's corrective action to be taken, they might take it quicker.

01:25But the record also is more truncated.

01:27So you might just go to the court if you think you're going to get piecemeal record and you

01:31really need something bigger.

01:32Ma'am, Mr. Prince alluded to this before, but in response to the study that GAO is doing

01:39under Section 885 of the Defense Authorization Act, GAO asked the bar how much it cost for

01:47an awardee to defend the protest.

01:48As Mr. Prince alluded to, the data, it's very gross, it's very high-level, it's not enormously

01:55precise, but it was about $100,000 for GAO and about $200,000 for the Court of Federal Claims.

02:01So a contractor is facing twice as many costs if they decide to go to the Court of Federal

02:07Claims.

02:08And that's one of the major reasons that they decide to go to GAO instead.

02:11Okay.

02:12I understand the lack of data, but you just mentioned the cost.

02:18Is there any data to tell us whether there's a more favorable outcome at one of those places

02:30than another?

02:31The best outcome, and there's been academic studies on this, ma'am, that the best outcome

02:38for a, it's actually not to win a protest.

02:41Because if you win a protest, you actually, you, at that point the agency is so angry at

02:45you that you're not likely to win the contract.

02:47The best outcome is to come in hard and strong at GAO and get corrective action taken by the

02:53agency.

02:54But statistically, that's the optimal outcome.

02:57Okay.

02:58I'm going to submit my next question for the record.

03:02Mr. Prince, what information would be helpful for contractors, particularly small businesses, to understand the merits

03:09of a potential bid protest?

03:11So I think the most effective thing to do would be to provide a unredacted source selection document.

03:20That is, a document providing to outside counsel or to in-house counsel under a protective order or a nondisclosure

03:27agreement, clear information on the deliberative process.

03:30Transparency is always good.

03:34In your opinion, if the federal government were to provide additional information to bid protesters, such as enhanced

03:40debriefs, would the number of frivolous bid protests decrease?

03:45I think generally yes, and I think that's part of why it's gone down over the last decade.

03:50And again, I'll ask this question of all three of you, if we don't have time, then I'll ask you to submit your answers for the record.

03:59What are your suggestions for bid protest reforms that can reduce costs to frivolous protests?

04:06And how can these reforms ensure that legitimate protests are allowed to proceed?

04:11Mr. Patton.

04:13I would say that the agencies need to collect data and determine whether or not they think a protest is meritless or not,

04:20and provide that data to the Congress.

04:22Mr. Prince.

04:24I think greater access to information at the outset to potential protesters.

04:29I agree in terms of enhanced debriefings.

04:33One of the important things to understand, Madam, is that ours is a very concentrated system.

04:36We have a concentrated defense department, very concentrated market.

04:39The bar, there's only, in Hungary, they have 2,000 procurement lawyers.

04:44In the United States, the federal level, we only have about 500.

04:47It's not because the Hungarians are smarter.

04:49It's because we work as a very tight community, and people act very responsibly as a result.

04:56So if we had more information through debriefings, responsible, well-trained lawyers will be working with responsible, well-trained contractors,

05:04and they'll decide not to protest.

05:06Thank you, Mr. Chairman.

05:07I yield back.

05:08Thank you, Mr. Chairman.

05:09I yield back.

'What Are The Implications?': Foxx Asks Experts For Ways To Prevent 'Frivolous' Bid Protests

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