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Are Protests the New Way to Win?

Since 2008, the government contracting community has seen several billion-dollar protests yield dividends.  Most recently, Boeing’s protest of the Air Force’s KC-X refueling tanker contract seems to have paid off, as Northrop Grumman and EADS have withdrawn their bid leaving Boeing the apparent winner of the contract.

It has become much easier since May 2008 when section 843 of the Defense Authorization Act took effect.  The section, named the Acquisition Improvement and Accountability Act of 2007, enables contractors to protest any task order worth more than $10 million, a more relaxed criteria than the old rule that contractors could only protest when “the order increases the scope, period, or maximum value of the contract under which the order is issued.”

But the trend didn’t start in ’08: protests have been up year-over-year since at least 2001.  Check out this graph below, compiled by Rich Wilkinson of Deltek from the GAO’s annual bid protest reports given to Congress.

protest-filingsWhat’s interesting about these numbers is that, even though the number of total filings has almost doubled, the number of “sustained” protests is actually slightly down from 2001 levels.  The success rate is less than three percent for protests.

The reasons for the increased number of protests is obvious: it costs a company very little to file a protest, and it’s easier than ever to file one.  You can even file one by e-mail.

Also, protesting can pay off even if you don’t win the contract.  For example, according to Forbes, IBM protested the FBI’s 2008 award of a $1 billion contract to Lockheed Martin (NYSE: LMT), but dropped its dispute two months later when Lockheed announced it would use IBM as a subcontractor.

Another reason protesting can be a good idea is that it buys you time to establish or re-establish a relationship with a customer.  Simply delaying the process can give you a chance to talk to the customer that rejected your bid, and refine your offerings to better meet their needs.  Even a failed protest gives you valuable, specific data about how to cure problems with your product or improve service delivery.

So since you don’t even have to win the protest to improve your business, look for the upward trend in protests to continue for the foreseeable future.

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