On July 10, 2017, the U.S. Senate placed the FY 2018 National Defense Authorization Act on its Legislative Calendar. This action means the historically must-pass legislation is now ready for amendment and debate. Just as it did last year, the Senate Armed Services Committee (“SASC”) has included two provisions focused on bid protest reform.  Given the absence of these bid protest reform provisions from the House version of the bill, and the SASC press release and summary touting the Senate bill’s strengths, these provisions are unlikely to make it through to the final version of the bill.  Nonetheless, larger government contractors should take heed of the inclusion of the proposed bid protest provisions, consider appropriately lodging their disagreement with the provisions, and work to ensure they are not included in future legislation – House or Senate.

These provisions would penalize contractors that file unsuccessful bid protests in DoD procurements. First, section 821 would require any defense contractor with revenues of greater than $100 million over the past year, which loses a protest, to pay the government’s costs of processing that protest.  Second, the proposed Senate bill would require incumbent DoD contractors that file protests to have their payments above incurred costs withheld on any bridge or temporary contracts issued, if their protest resulted in the delay requiring a bridge or temporary contract.  Such DoD contractors could then receive the withheld funding if the solicitation is cancelled by the agency or if the GAO upholds the incumbent’s protest.

Chairman McCain has long been known for his borderline antipathy toward defense contractors. On their face, these provisions seem to discourage serial protestors or incumbent protesters that know they may obtain an additional 100 days of revenue while their protest is pending.  If that were the goal, though, the proposed Senate legislation would be better supported by the bill’s report language.  As it stands, the report language does not indicate why the bill would only punish protestors who have more than $100 million in revenue over the previous year.  It does not claim, nor could it show, that contractors with more than $100 million in revenue in the previous year pose an undue burden on the Government Accountability Office, or the DoD generally, in comparison with smaller contractors.  On an operational level, the legislative language is silent as to how one would quantify the government’s cost in processing a protest – a clearly difficult task that may be outright impossible.

One can understand this provision’s intent – after all, bid protests can slow down the procurement process; they add time and expense to an already inefficient and unwieldy system. But this is exactly why Congress should nix these provisions and do more to support bid protests – bid protests force the executive branch to pay more attention to how taxpayer dollars are spent, and to craft requests for proposals more fairly.  In fact, bid protests support Congress’ essential oversight function.  Bid protests give Congress and industry an inside look into government procurement; contractors should consider educating Congress about the value of the procurement transparency that bid protests  actually provide, and how the practice can help to deter government waste, fraud, and abuse.  Similarly, government contractors working with the DoD should be aware that the Congress, and the Senate in particular, are observing bid protests closely.  As the number of bid protests continues to climb, so may the scrutiny of the bid protest processes currently available to contractors.