GAO Bid Protests by Small Business: Analysis of Perceived and Reported Outcomes in Federal Contracting

The purpose of this research is to better understand GAO bid protest outcomes, if they are perceived as effective by stakeholders particularly small businesses, and what implications perceptions of outcomes have for small businesses. As a small business owner in the U.S. Federal government contracting space, the rationale for this research improves my business’s performance and inform other small business practitioners of the practical utility of GAO protests. The GAO protest system is well intended American innovation in accountability of government agencies’ acquisition of supplies and services. The GAO reports protest outcome rates are reflected as moderately effective at approximately 45% based on a protester obtaining some form of relief from the agency either because of voluntary agency corrective action or GAO sustaining the protest. However, the reported success rate of protest outcomes where the GAO sustains the alleged impropriety and recommends relief is an order of magnitude lower indicating minimal effective outcomes for protestors. This success or effectiveness rate is negligible for many small business protestors and is perceived as such. The minimal practical effectiveness caused some businesses to believe the GAO protest system has become a façade for fair, independent adjudication of acquisition improprieties. This analysis of how these reported outcomes is perceived by the government contracting community stakeholders, particularly small businesses concerns, is the subject of this paper. The overall objective of the bid protest system is instilling confidence in the Federal acquisition process ensuring full and open competition within the guidelines of national policy objective and provide an accountability venue for contractors. Understanding the stakeholder’s perceptions of these outcomes is the most important element in meeting this objective. The empirical research of stakeholder interviews and protest action research indicates that protest perceptions range across three interactive spectra: the cost-benefit tradeoff, fairness, communications, and are impacted by a fourth element, emotions. Some stakeholder perceptions tend to reinforce the GAO narrative of moderate effectiveness where the benefits outweigh the costs. However, evidence that small business stakeholders are more attune to the minimal effectiveness of the reported outcomes reinforces the small business perceptions of limited utility. Years of action research by the researcher supports the proposition that this accountability façade is real. The appearance of moderate protest success covers up the serious challenges small businesses face in pursuing GAO protests. The research concludes that businesses and more specifically, small businesses should only rarely consider filing GAO protests