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The right to protest … but at what cost?

July 15, 2014

The quality and integrity of procurement is a big subject for many organizations right now. They are struggling to strike a balance between a rigid, savings-focused process, versus the need to have managers who use discretion and make good judgments.

Nowhere is this dilemma more pronounced than in Government. Public procurement rules mandate standards of fairness and objectivity that enshrine the right for protest – and the fear of protest often drives the use of narrow assessment criteria that result in a loss of possible value and, on occasion, the selection of the wrong supplier.

Just how prevalent are protests and to what extent do they have merit? I met last week with Nate Nash, CEO at GovTribe, Inc. Nate and his team collect data and provide analysis – offering some great insights to the world of public procurement. A recent report covered the subject of protests against US Federal contract awards.

Overall, I was surprised to see how few complaints are actually made. Most are in the defense sector. But perhaps even more surprising is the extent to which a few companies seem to monopolize the process – there are some serial protesters. Their success rate is generally not high. In fact, only one company stands out as having a significant rate of sustainment and that is Alvedra, a small, minority owned business providing food and medical supplies. Otherwise, less than 2% of protests are successful. Indeed, in some cases it may be they are driven more by ill-will than merit. It is worth remembering that in the US, anyone can protest an award; it is not limited to unsuccessful bidders.

Beyond the obvious costs of investigation, the impact of protest on the average citizen is potentially significant. Not only does a protest delay contract performance, but of far more importance is the effect it has on overall contract and procurement standards. The fear of protest has contributed to a narrow focus on process and avoiding criteria for supplier selection that might be challenged. This often results in the absence of qualitative criteria and consequent loss of discretion or judgment. Hence it is quite possible that the performance or capability of the winning supplier may leave much to be desired.

It is right that there is openness and transparency in the use of public money; but does this current right of protest serve us well? It appears to have a cost that outweighs its value. Surely the process of audit should be sufficient to monitor the integrity of public sector acquisition.

 

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