Federal bid protests: Is the tail wagging the dog?
| Date | 01 March 2016 |
| Published date | 01 March 2016 |
| DOI | https://doi.org/10.1108/JOPP-16-02-2016-B001 |
| Pages | 152-190 |
| Author | Timothy G. Hawkins,Cory Yoder,Michael J. Gravier |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 16, ISSUE 2, 152-190 SUMMER 2016
FEDERAL BID PROTESTS: IS THE TAIL WAGGING THE DOG?
Timothy G. Hawkins, Cory Yoder and Michael J. Gravier*
ABSTRACT. The fear of receiving a bid protest is said to affect acquisition
strategies, yet it has not been empirically explored. Based on the Public
Value Framework and interviews with contracting personnel, this resea rch
tests a model of antecedents to and consequences of the fear of a protest.
Survey data was obtained from a sample of 350 contracting personnel. The
fear of protest is mitigated by having sufficient procurement lead time and
by source selection experienc e, and increased by protest risk. Fear of
protest increases comp romised technical evaluations, added procurement
lead time, and transaction costs, while it decreases contracting officer
authority and is associated with source selection method inappropriateness.
Compromised technical evaluations, in turn, decrease contractor
performance while contracting officer authority increases contractor
performance. Thus, findings suggest that, indeed, the tail is wagging the
dog. Th e research concludes with several managerial implications, study
limitations and future research directions.
INTRODUCTION
A central tenet of a public contracting system is to maintain the
public’s trust via instilled integrity, fairness, and openness. A bid
protest is a corrective mechanism to ensure integrity and fairness by
providing an interested party with a process to air complaints and
obtain relief (Manuel & Schwartz, 2011). A protest is a written
objection that can occur at any stage of the contract award process
(see Table 1). Most commonly, protests result from alleged errors or
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* Timothy G. Hawkins, Lt Col (ret), USAF, Ph.D., CPCM, C.P.M ., is an
Assistant Professor, Departmen t of Marketing, Western Kentucky University.
His current research interest is in public procurement. E. Cory Yoder, USN
(Ret.), MA, MS, is a Senior Lecturer and Academic Associate, Naval
Postgraduate School. His current research interest is in public procurem ent.
Michael J. Gravier, Ph.D., C.T.L., is Associate Professor, B ryant University. His
research interest is in supply management and public procurement.
Copyright © 2016 by PrAcademics Press
FEDERAL BID PROTESTS: IS THE TAIL WAGGING THE DOG? 153
TABLE 1
Federal Acquisition Regulation (FAR 33.101) Definition of a Protest
“Protest” means a written objection by an interested party to any of
the following:
(1) a solicitation or other request by an agency for offers for a
contract for the procurement of property or services,
(2) the cancellation of the solicitation or other request,
(3) an award or proposed award of the contract, or
(4) a termination or cancellation of an award of the contract, if the
written objection contains an allegation that the termination or
cancellation is based in whole or in part on improprieties
concerning the award of the contract.
mistakes committed by the agency. The most common errors cited in
protests are: poorly written or vague contract requirements, failure to
follow the process or criteria laid out in the request for proposals, and
failure to adequately document findings (GAO, 2014; Rumbaugh,
2010).
Increasingly, protests are being filed for business reasons rather
than to correct mistakes or errors. Between 2009 and 2013, protests
grew from 1,989 to 2,429—a 22% increase during a period of
increased federal austerity. When measured against the number of
opportunities to protest from 2011 to 2013, the number of protests
increased 29% (from 0.014% to 0.019% of contract actions, including
delivery orders). The protests have also increased their disruptive
power. Of those protest cases that made it to a decision in 2013 (i.e.,
the few that were not dismissed, settled, or withdrawn), 17% were
sustained, and 43% of all protest cases were effective (either
sustained or resulted in corrective action by the agency prior to
decision). Evidence from one military department reveals that bid
protest effectiveness increased from 37.9% in 2005 to 43.9% in
2010; more disturbingly, when controlling for the number of
protestable contract actions, the rate for effective protests went from
0.65 to 1.59 per 1,000 actions, a 144% increase (FPDS-NG).
154 HAWKINS, YODER & GRAVIER
Acquisition officials loathe the receipt of a bid protest. The
potential to receive a bid protest drives agencies to incur costs to: (1)
prevent a protest (e.g., thoroughly documenting and substantiating
proposal evaluations and trade-off decisions), (2) to defend against
an actual protest lodged, and (3) to take corrective actions. At best,
an agency’s voluntary corrective action means the competition is
reopened, and proposals are allowed to be revised necessitating
further evaluations and delaying the contract award. At worst, an
authority such as the Government Accountability Office sustains the
protest meaning that the procurement process must often start anew.
This adds even more time and delays receipt of needed goods and
services resulting in significant rework. The end users bear costs as
well, since their requirements are delayed or go unfulfilled.
Hereinafter, we refer to the severely negative attitude toward
receiving a bid protest as a “fear of protest.” Evidence suggests that
agencies sometimes change their acquisition strategies due to fear of
protests. For example, fear of a protest could prompt officials to try to
structure a procurement in a manner they deem less likely to be
protested, such as using lowest-price, technically-acceptable (LPTA)
source selection method instead of a full tradeoff method (Schwartz
et al., 2013). Other reactions include awarding more contracts than
intended to avoid a protest (e.g., Littoral Combat Ship).
While scholars and the GAO have identified these deleterious
effects of bid protests on the government (Gordon, 2013), no
research to date has quantified them. Specifically, we do not know
the magnitude of fear of protests. Neither do we know the extent and
manner that fear of a protest affects acquisition strategies or the
lengths that acquisition professionals will go to avoid a protest. The
purpose of this research, therefore, is to quantify the magnitude of
protest fear, and to explore the antecedents and consequences of
protest fear.
The remainder of this research is organized as follows. First, we
present a background on bid protests. Second, the study discusses
the conceptual framework and proposed hypotheses. The Public
Value Framework is consulted to illuminate the relevant antecedents
and consequences (Figure 1). Next, the study presents the research
design and methodology. Then the study provides an analysis of the
proposed models and reports the findings. Lastly, the study offers a
summary discussion, including conclusions and implications.
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