A New Paradigm to Address Bid Protests
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The goal of this study is to offer senior decision-makers a useful framework to evaluate, articulate, and recommend modifications of the government''s bid protest policy to improve procurement outcomes. Most countries allow disappointed bidders to protest public procurement decisions as an oversight mechanism to minimize fraud and errors by procurement officials. The expectation is that allowing bid protests increases transparency and accountability and encourages competition, reducing the cost of public purchases. A key contribution of this study is to add an economics dimension to a bid protest process that is mostly thought of in legal terms. The economics approach suggests firms are likely to use the protest process strategically to improve their competitive bargaining position and will be equally strategic in their decision to protest an award. The conclusion is that a firm''s responsibility to its shareholders can lead it to undertake protests for reasons substantially different from, and fundamentally opposed to, the government''s objectives. The economics approach suggests minimizing the risk of protests that result in cost overruns, schedule delays, and performance gaps, while preserving the benefits offered by protests to promote competition and ensure the integrity, transparency, and accountability of the procurement process. Adopting an economics perspective reveals two other crucial insights: firms can exploit protests to extract concessions (Fed Mail), and risk-averse officials can overreact in attempts to achieve protest-proof procurements (Buy-offs). In recognizing costs as well as benefits of a protest system, the economics approach invites a review of alternative portfolios of governance mechanisms that complement bid protests (internal audits, external audits, independent investigations, alternative dispute resolution, increased training and incentives, etc.), to improve procurement outcomes.
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RightsThis publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
NPS Report NumberNPS-CM-10-159
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Melese, Francois (Taylor & Francis Group, 2020);The goal of any procurement process is to obtain ‘value for money.’ Bid protest systems are intended to help. The U.S. Department of Defense, NATO, the EU, UN, OECD, and WTO, all authorize losing bidders to protest public ...
Melese, Francois (Monterey, California. Naval Postgraduate School, 2018-04-30); SYM-AM-18-072Most countries allow disappointed bidders1 to protest public procurements. The dual goal is to reduce favoritism, reduce fraud and errors, and increase competition. The legal literature that underpins protest systems for ...
ELEMENTS THAT LEAD TO GOVERNMENT BID PROTEST AND WHETHER UNCERTAINTY IN THE PROCUREMENT ENVIRONMENT IS A CONTRIBUTING FACTOR Brescini, Jeffrey A.; Giacalone, Nick J. (Monterey, CA; Naval Postgraduate School, 2020-06);The project focuses on the procurement elements that lead to Government Accountability Office (GAO) protests of Navy contract actions. The project provides quantitative analysis and defines variables, which correlate with ...