Interview transcript:
Terry Gerton You testified recently before Congress on bid protest reform, and your testimony focused quite a bit on the potential impact to small businesses, so I want to dig into that with you this morning. Let’s start with the basics. Why do you think small businesses file such a large share of the protests?
Zach Prince Part of it, I think, is that small businesses feel that there is a lot of challenge being taken seriously against some of the large established primes. Smaller businesses, fewer resources, protests are a way to force agencies to take them seriously. Sometimes it’s a way to force agencies to enforce the small business preferences also. So there is good incentive there.
Terry Gerton Well, we usually think about a bid protest as being a large prime against a large prime. And so how is the system supportive or not supportive of small businesses?
Zach Prince It can be tough for small businesses that don’t have sophisticated counsel, which might account for some percentage of the small business protests. That is, you’re disappointed you didn’t get the contract, you don’t have an attorney really on hand, and you just know about this protest thing, and you just go ahead and file a protest without maybe doing enough research into how it works. So, there is definitely some percentage of protests, particularly at GAO, that are filed by businesses that are situated in that way and those really do largely account for some of the frivolous ones that get thrown out.
Terry Gerton But there’s still a pretty good share of success, right?
Zach Prince Yeah, there is. So overall, protests are effective in 50% or more of the time. So what that means is that either GAO rules in favor of the protester or the agency takes corrective action.
Terry Gerton So you mentioned frivolous protest. One of the proposals that’s been talked about is a loser-pays rule to discourage those. But for small business, that could be a big risk, right?
Zach Prince Yeah, it definitely can, and I think frivolous is a loaded term and I probably shouldn’t have used it, but the loser-pays rule would be very challenging for small businesses and I don’t think it’s necessary. So in a frivolus, whatever we define that ultimately to mean, type protest, GAO is going to kick that quickly. That’s not going to consume real resources. And then if you’ve got a protest that loses on the merits, it’s very challenging to say whether that was frivolous from the outset or not, or it was maybe just something that required probing the evidence and figuring out what was going on. The costs of protests are already really expensive, so to add on top of that fees for the other side, especially where DoD and the government doesn’t really know what their fees are, what their costs are, it gets challenging.
Terry Gerton Would there be any kind of change that might actually reduce that kind of inapplicable challenge?
Zach Prince Well, I’m not sure that we really need to, because we already are kicking them out pretty fast. GAO has proposed an enhanced pleading standard, and they did that because Congress told them they had to. But I’m not sure it really changes the rules very much, and GAO has already had somewhat of an inconsistency in how they interpret their own rules. So, this would clarify, perhaps, rather than just raise a new barrier for entry. So GAO is already doing a good job of kicking protests out when they have nothing. They’re just reciting some of the basic things of unfair and disparate treatment and et cetera that we see in a lot of protests. So to get these types of baseless protests out, I think what we need to do is provide better information on the front end to contractors and disappointed offerors so that they know when the agency has really considered issues properly and thoroughly.
Terry Gerton So you talked in your testimony about better debriefings and more transparency. Say a little bit more about that and specifically how that would support small business.
Zach Prince Sure, so it’s been very effective. The enhanced debriefings have been the rule at the Department of Defense for close on a decade now. And I found them to be remarkably helpful in helping a protestor or a potential protestor decide not to go forward, as if they’ve gotten into the record or their outside counsel has, depending on the level of detail that is being given, and they see that there’s really nothing there. The agency spent over 100 pages thoroughly documenting its analysis and comparing it to the solicitation terms, they’re not going to want to throw more money after a protest process, particularly because they can see the customer has invested time in it. And so even if they think they’re right, the customer is going to be particularly annoyed.
Terry Gerton I’m speaking with procurement attorney Zach Prince. He’s a partner at Haynes Boone. Well, you mentioned that DoD’s gotten really good at the debriefing process. How are the rest of the federal agencies doing?
Zach Prince Not as good, and it’s been an issue. And so one of the proposals that I made to Congress was they consider expanding the enhanced debriefing requirement to civilian agencies as well. It can be tough with civilian agencies when you get explanations for awards that are, paltry is probably the nicest thing I can say about some of these, and we’re talking about big contracts, tens or hundreds of millions of dollars. Companies spend a lot of time and money preparing proposals for these types of things. Now set aside that for a small business, losing your $100 million incumbent contract might be fatal to the business. They need to understand what they did wrong and what they can do better.
Terry Gerton One of the other topics that you talked about in your testimony was task order protests. Obviously on a really big contract, small businesses may be part of the task order process as opposed to being a prime. How do task order protests play out and why are they so important to small business?
Zach Prince So task order protests can only be brought currently at GAO. So what that effectively means is that there’s no judicial review beyond the GAO decision. The government orders a lot of stuff through task orders and delivery orders, and a lot of small businesses are competing for these task and delivery order contracts. So you can’t challenge to the Court of Federal Claims when GAO maybe got it wrong as a matter of law or have a review from the federal circuit, which you would in any other type of protest. There’s also a dollar value threshold, so you can’t protest any DoD task or delivery order unless it’s $35 million or greater. So that’s a pretty arbitrary bar in my view, particularly because the civilian agency bar is substantially lower. It would be better, again, in my views, for a matter of efficiency and justice, fairness, to have it the same way you do any other protest, it can be brought, regardless of dollar value, at the Court of Federal Claims or at GAO. There’s often reasons to go to the Court of Federal Claim, those protests are much rarer. And then at that point, you have a judicial review beyond that from the federal circuit. We’ve had all these disputes over the last couple of years of where the task order bar really ends. And that’s just a huge waste of resources to argue about jurisdictional contours instead getting down to the substance of the arguments.
Terry Gerton You’ve been on both sides of the bid protest table, I know. If you were sitting with Congress now while they were drafting protest reforms, what would you push for?
Zach Prince I would urge them to be very careful. As far as I’m aware, having looked at the RAND Report from 2018 and all the research that Congress has requested industry do, directed industry to do, there’s not a lot to say that incumbents are abusing the system, which is one of the quote-unquote “fixes” that’s in the House version of the 2026 National Defense Authorization Act. It doesn’t seem like a real problem currently, so don’t put something in that’s going to be burdensome to implement, potentially harmful to small businesses, when there maybe isn’t a problem that we’re aware of, other than people don’t like these things. I get that. I don’t like when I’m representing an awardee and the incumbent or anybody else says, ‘No, no, no, you shouldn’t have gotten it.’ But of course, on the other side of the table, I feel very differently. But it’s an important mechanism for oversight of the system, and the data aren’t showing abuses.
Terry Gerton So if it’s not broken, don’t fix it.
Zach Prince That’s a great summary.
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