Cost-Benefit Analysis of Bid Protests: A Representative Bidder Model
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Most 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 the U.S. Federal Government and European Union generally reflects these two goals. The hypothesis is that allowing disappointed bidders to protest public procurements serves as a decentralized oversight mechanism that increases transparency and accountability, which encourages vendor participation. This study offers a cautionary tale for any government agency, country, or international institution that relies on, and/or promotes, bid protests to improve public procurement outcomes. The goal is to explore costs and benefits of bid protests for governments and taxpayers. As a first step, a probabilistic, micro-economic, partial equilibrium, representative bidder model is developed to help evaluate protest systems. The model reveals multiple unintended consequences of protest systems and suggests alternative approaches to improve public procurement outcomes.2
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 NumberSYM-AM-18-072
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Grimes, Dennis R. (Monterey, California. Naval Postgraduate School, 1991-03);The General Services Administration's Board of Contract Appeals (GSBCA) is a significant venue for Federal Automated Data Processing Equipment (ADPE) protests. Since the GSBCA was granted jurisdiction over Brooks Act ADPE ...
Melese, Francois; Angelis, Diana; Coughlan, Peter; Franck, Raymond; Kidalov, Max; LaCivita, C.J.; Gates, William (Monterey, California. Naval Postgraduate School, 2010-08-02); NPS-CM-10-159The 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 ...
Benishek, Paul R.; Sheinman, Benjamin L. (Monterey, California: Naval Postgraduate School, 2009-12);This project examines bid protest prevention and resolution strategies to shed light on ways to save the government money and time. Successful resolutions of protests depends on a number of factors, including government ...