State Department easier fight than Pentagon for U.S. contractors

December 30, 2012

Federal contractors win just 13 percent of protests against the Pentagon. Taking on the State Department, they are nearly four times as likely to prevail.

Protests are successful in about 19 percent of decisions that come before the Government Accountability Office, which arbitrates contract disputes, data provided by the office show. That rate varies greatly depending on which federal agency is defending the case, according to records that go back to 2006.

While companies base their decisions about whether to challenge a decision mainly on the facts of their case, they also consider an agency’s track record at the GAO, said Mike Mason, a partner at Hogan Lovells US.

“We all have our experiences with the different agencies, and we all have a sense as to which agencies typically do a better job than others,’’ he said.

Among agencies that received at least 100 protests between fiscal 2006 and the fiscal year that ended Sept. 30, 2012, the Pentagon had the second-best record in defending itself.


State Dept. loses half of contract disputes

The Defense Department represents more than two-thirds of all federal contract spending. It ranked behind the much smaller Agriculture Department, which lost 12 percent of cases decided by the GAO, according to the data.

The State Department had the worst record, with contractors prevailing in 50 percent of its cases, followed by Housing and Urban Development, which lost 47 percent of protests decided by the GAO, the data show.

The data include only cases in which the GAO issued a written decision. Eighty-two percent of cases are dismissed or withdrawn.

The Pentagon “does not wish to speculate’’ about whether it does a better job than civilian agencies in defending itself against protests, Air Force Lt. Col. Melinda Morgan said in an ­e-mail.

While the Pentagon seeks to settle disputes “when appropriate,’’ it doesn’t believe that accounts for its successful record defending protests, Morgan said.

The State Department and the Agriculture Department did not provide comments for this article.

Ralph White, head of the GAO’s bid protest division, said the differences in agencies’ statistics “may say more about the experience of the agency lawyers defending protests than they say about whether there are more or fewer problems in an agency’s procurements.’’

Part of the Pentagon’s success in GAO decisions may be that it is more likely to settle cases it does not think it can win, said Paul Khoury, a partner in Wiley Rein’s government contracts practice.

A successful protest he handled for Verizon Communications against the General Services Administration over work valued at $1.6 billion illustrates that point, Khoury said.

He was rebuffed when he sought a settlement for his client. The agency’s attitude was, “If I’m going to be wrong, I want GAO to say I’m wrong in a decision,’’ Khoury said. “That is less likely to happen’’ when dealing with the Defense Department, he said.

GAO sided with New York-based Verizon, agreeing that the competition was flawed because the rules were not in line with common commercial practices for buying communications devices and services, according to the decision published in September.

Attorneys at the GAO found the GSA’s defense to be “almost completely devoid of specific examples or citations in support’’ of its argument, the decision said.

The GSA, which handles purchases for other government agencies, did not immediately respond to an e-mail request for comment.

— Bloomberg Government

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