Vendors who file frivolous bid protests will now be held more accountable under a provision in the 2026 defense authorization bill.
The “loser pays” language is trying to actively discourage incumbent contractors from filing protests just to keep getting paid.
But experts say new data from the Government Accountability Office shows vendors are becoming more discerning when it comes to filing complaints, seemingly making this new language less necessary.
“The fact that the bid protest effectiveness rate is higher than 50% and has been for the last four years, is compelling evidence to me that the GAO protest process is working as it’s supposed to, and that frivolous protests aren’t a significant problem,” Hunter Bennett, a government contracts lawyer with Covington and Burling, said in an interview with Federal News Network. “Most government contractors don’t hold only one contract, this is their business and the agencies are their customers. The idea that you would just file a frivolous protest and risk ticking off your customer and engendering all sorts of bad will going forward, I think does not square with my experience with the contractors we work with. They take protesting very seriously and they only do it when they have a real concern and feel as though they’re not being heard.”
In its annual bid protest report to Congress released last week, GAO found the number of protests filed decreased year over year. Vendors filed 1,688 protests in fiscal 2025, which is 6% fewer than in 2024. It’s down 17% over the last two years.
Source: GAO bid protest report to Congress for fiscal 2025.
The effectiveness rate is the percentage of vendors who file protests and get some sort of relief, whether the agency pulls back the award and reopens considerations or GAO decides on the case for the protestor.
Bennett said another reason why frivolous protests are less of a concern is agencies are more often offering debriefings to losing bidders.
“For a long time, agencies thought that if we don’t tell them anything during the debriefing, they’ll just go away. When, in fact, they would take that approach, then the contractors would get kind of suspicious and be like, they must be hiding something, even if they weren’t. They would say, ‘We’ve got to file a protest so we can find out what’s really going on here,’” Bennett said. “The enhanced debriefing process for the DoD agencies has, I think by and large, been successful. It’s been something that has reduced the number of protests that are being filed, and I think it’s actually been helpful in terms of building more trust between agencies and disappointed offerors.”
DoD to develop new rules
Despite the decrease in protests for much of the past five years, with only 2023 being an outlier, lawmakers added a provision to the defense authorization bill to create the “loser’s pay” statute.
In Section 875 of the NDAA, which President Donald Trump signed into law on Dec. 18, Congress mandated that DoD update their acquisition regulations by May to establish procedures for a contracting officer to withhold payment of not greater than five percent of the total amount to be paid to an incumbent contractor during the protest period. Then, if GAO finds that the protest lacked any “reasonable legal or factual basis,” the contractor would lose that money that DoD withheld.
Bennett said the idea of a “loser’s pay” provision isn’t a new one, but something lawmakers have tried to include in the NDAA or through other bills several times over the past five years or so.
There is a lot still to be determined because Congress is leaving a lot of discretion to DoD as it creates the regulations.
In the meantime, Bennett said that while the GAO report provided few surprises, there are some interesting data points.
For example, the number of task or delivery order protests came in at 359, which is in line with what GAO has seen over the last decade since Congress gave it the authority to entertain certain task order protests. In 2024, GAO received 346 task or delivery order protests.
The effectiveness rate came in at 52% for the second year in a row. GAO says it’s been fairly consistent that vendors are more likely than not to gain some sort of relief if they file a complaint over the last five years.
“[The effectiveness rate] tells me that the protest process is working exactly as it should. I think disappointed offerors are coming to GAO with valid concerns and agencies are taking those concerns seriously, and they’re willing to address those problems in their, any problems they see in their procurements by taking voluntary corrective action, whether that, rather than digging in their heels and continuing to litigate,” Bennett said. “When a client comes to me, what I would tell them is, ‘Let’s talk about what your concerns are.’ Then, if we can boil them down into the type of concern that GAO typically takes seriously, and it looks like a real concern, I would say it’s definitely worth filing a protest and getting your hands on the agency report and seeing whether your concerns have legs.”
Bennett said the number of sustained protests, which came in at 53 and is the lowest in the last five years, was also interesting. GAO only decided the merits of 380 cases, which too was the lowest number in five years.
He said the sustained protests were interesting because of the reasons why GAO decided in favor of the vendor.
GAO says the top 3 reasons for a sustained protest were:
Unreasonable technical evaluation;
Unreasonable cost or price evaluation;
Unreasonable rejection of proposal
Bennett said GAO gives agencies a lot of discretion when it comes to evaluating proposals because it’s, in many ways, an overly subjective process. He said these three reasons mean the protests are based on objective or factual reasons.
“That the number one protest ground is an unreasonable technical evaluation might, to the people that don’t do a whole lot of protest work, might suggest to them that if you just say, ‘Hey, our proposal was great and you evaluated it as not being as good as we think it was,’ that is a virtually impossible claim to win,” he said. “I think when you take a look at those actual, at the facts of those unreasonable technical evaluation cases where GAO sustains, what you’ll find is that there is some sort of aspect of the technical evaluation that the agency was supposed to look at that it didn’t look at. So in other words, it’s much more of a process or procedural problem than one where the agency didn’t assign the right rating.”
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