Have you noticed that on larger contracts there appears to be strong profit incentive for an incumbent to protest? For example: the profit made during a 100-day stay of performance with GAO far outweighs the cost filing and preparing a protest. Light research suggests the average cost to protest utilizing outside counsel is between $15K – $70K, depending on the complexity of the acquisition, and if there is prolonged back-and-forth. The profit generated during a 100-day stay of performance on a larger contract would be many times more than the litigation/legal fees. Even if the protesting incumbent loses their case, they may still receive tremendous benefit from the stay of performance. Assuming that many corporate decision-makers have come to the same conclusion, and they do not have a strong ethical objection to doing so, there appears to be a substantial profit incentive to protest.
While no quantitative analysis of ratios has been performed, from personal observation it is almost a guarantee that the incumbent will protest on a contract recompete if they are not the awardee when over $100M TCV.
If the automatic profit incentive to protest for an incumbent is removed, incumbent protest rates will decrease, as frivolous questionable arguments will not be brought forth as often.
Create a clause that effectively changes the contract type when the incumbent protests to something akin to a cost-type contract (understanding that this occurs in commercial contracts as well), with fee known and controlled. The incumbent does not receive payment of fee until after the protest is resolved.
1. If the protest is upheld, or the agency takes corrective action, the protesting incumbent receives the fee + cost was reimbursed throughout performance.
2. If the protest is denied, the protesting incumbent receives no fee. Only cost will be reimbursed (throughout performance).
What do you think? Way off?