After reading a recent federal GAO decision to suspend a company from protesting for one-year after it had filed 150 protests over the course of 12 months (and an additional 296 protests over the last five years), I started wondering how Arizona fared in terms of protests. While Arizona has nowhere near the thousands of protests filed at the federal level, the data did surprise me.
Even with state procurement reform efforts and ADOA’s desire to partner with industry before, during and after the bidding process, protests filed with the State of Arizona are at a three-year high.
According to Traversant Group’s market analysis, bid protests have increased by 27 percent between FY2014 and FY2016 and a whopping 68 percent between FY2015 and FY2016. In FY2016, bidders filed 37 protests, compared to 22 in FY2015.
The number of protests appealed to the State Procurement Office also doubled over the last two years. Fourteen percent of the appeals were successful in FY2016. That is an increase from FY2015, when only 5 percent were sustained by ADOA.
Assuming that FY2017 continues the trend in the number of protests, here are some important takeaways to keep in mind.
Protests Protect the Integrity of the Process
Bid protests protect the integrity of the competitive process. While officials could complain that protests get in the way of acquiring goods and services quickly and efficiently, we can’t forget that the state is spending taxpayer dollars. This is not the private sector where there is no recourse to challenge the fairness of a company’s purchasing decision. When the state buys products or services, it is accountable to the taxpayers for the quality and integrity of the decision. So, even though the procurement process might not be perfect, it provides transparency and review of an agency’s procurement power.
Engaging Industry May Help Avoid Bid Protests
If the number of bid protests continues to increase, it may encourage state procurement officials to communicate more with industry. Hosting pre-RFP meetings to gather industry data could be beneficial. Communicating requirements early on to correct mistakes in the solicitation may also help. Overall, pre-bid discussions can help procurement officials learn things that could suggest an approach different from what was planned – an approach that increases competition, lowers prices, clarifies requirements and provides more value.
Most Procurements Are Not Protested
Keep in mind, even though ADOA has reported an increase in the number of protest filings, it still represents a fraction of the solicitations released during the year. According to ProcureAZ, the state issued approximately 410 bids in FY2016. Using that data, only nine percent of bids were protested.
An Unsuccessful Protest Is Not a Waste of Time
Very few protests are “frivolous” in the legal sense. Just because a protestor does not prevail does not mean that the claims were pursued in bad faith. There is a big difference between a frivolous legal action and an unsuccessful protest.
If you want to learn more about protests, please read our past blog post written by Kiersten Murphy, an attorney at Henze Cook & Murphy, PLLC: Procurement Law at a Glance: Bid Protests. Traversant Group works with many vendors to sort out whether a protest is the best option – we would be happy to work with you.