Suppliers will protest.^[2] While a supplier can always seek relief in the courts, there should be some simple administrative process for resolving these differences. This remedy should not involve the courts; it should be fast, inexpensive and defensible. Furthermore, the administrative approach should be able to solve the problem quietly, without attracting the harsh glare of publicity.   

In these harsh economic times, protests will arise as suppliers compete more vigorously for fewer dollars. Shrinking budgets, more complex organizations, and changing paradigms all contribute to the difficult environment in which procurement officers must work. 

The reasons for protests are straightforward: 

(1) There are always more losers than winners, so the odds favour protests being initiated. Losing suppliers often find fault with the process or the requirements. Sometimes, they are right and the protest helps ensure that the problem is corrected on the next RFP.

(2) Mistakes will occur. No matter how knowledgeable or well trained a procurement officer is, mistakes will occur. Suppliers will be aggrieved, or think that an error has occurred and some of them will launch protests.

 (4) Suppliers have been known to initiate protests to delay the award of a contract, or as a tactic to have the RFP cancelled and re-issued in a modified form.  

There are many reasons cited for protesting an award. The usual reasons established in laws or regulations can be found in the Model Procurement Code^[3] published by the American Bar Association almost twenty years ago: 

1. The purchasing official fails to comply with rules or regulations.

2. The purchasing official’s actions unfairly limit a suppliers opportunity to win. For example, an arbitrary requirement to have an office in White Rock, B.C, or eight years of experience. 

3. The RFPs requirements were unduly restrictive and failed to promote fair and open competition. For example, features were identified but were not necessary to achieve reasonable functionality and were available from only one supplier. 

4. One supplier was favoured by the requirements, evaluation process or criteria. 

The Litigation Mentality 

There are many different ways to discuss protests. They can be viewed from different perspectives; for example, through a supplier's eyes, or those of a procurement officer or a staff lawyer. Each view is heavily influenced by the particular person's own objectives.

Protests are a fact of life — a consequence of doing business in the public sector. They can't be avoided. Unfortunately, there is no foolproof way to completely avoid any protest. Contractors generally invest a great deal of time and effort in the preparation and submission of a proposal, and often believe the additional investment in making a formal protest is worth the effort.

"Should you lose your protest, but still feel that you have been victimized by improper procurement actions or defective documents, you still have the right to bring formal legal action ¼ At this point, of course, a suitably qualified lawyer is a necessity."^[4] Law suits are rare due to their cost and complexity. Only a small percentage of procurements result in legal actions. However, "it has been long recognized by the courts that they [bidding statutes] are enacted for the benefit of the public and not for bidders," so even if your regulations prohibit some specific act, that act can be overturned by the courts. Legal actions do proceed and suppliers do win. 

The laws, regulations and policies present a complex web of inter-related items that require special expertise to fathom. Not surprisingly, there are legal firms that specialize in government contracts — federal, state and local. These firms provide advice and counsel related to dispute resolution before the various administrative bodies and the courts. Often, these firms are highly specialized, having the necessary skills to handle large, technically complex protests. 

Differing Attitudes 

Protests bring out the best and the worst in a purchasing organization. Here are four cases illustrating different approaches to dispute resolution. They have been simplified and attenuated to illustrate some issues.

The first case is the "we don't care and we have no process" scenario. In this situation, the purchasing organization is arrogant, insular or insensitive. It doesn't really want to deal with suppliers' concerns. Their attitude is basically "we're always right! You can talk to us, but we won't listen or do very much!" Organizations adopting this tactic usually have no published policy about RFPs or protests. They often offer suppliers a debriefing but then indicate that almost all of the information is confidential or protected by legislation. They do not willingly provide evidence of their own shortcomings to suppliers feeling aggrieved. In extreme cases, the RFP actually contains a phrase excluding the possibility of a debriefing. Obviously, this case is, for the most part, imaginary - existing only in the author’s mind. However, part of it, certainly the attitude, can be found in some organizations.

The second is the "we care and we have an informal process" approach. The organization does want to deal with suppliers' concerns. These organizations often provide suppliers with lots of information and genuinely try to deal with complaints in a business-like manner. Where these organizations fall short is that there is no appeal from the decision of the purchasing officer, other than the courts or the politicians. This approach is differentiated from the first by the attitude of the procurement officials and, sometimes, by the procedures themselves. This is the approach adopted in many smaller jurisdictions and can work quite well much of the time. 

The third approach ("We care and we have a formal process.”) is based on the organization wanting to address suppliers' concerns to the satisfaction of the suppliers. These organizations provide suppliers as much information as possible. In addition, they provide the suppliers with a well-defined, publicized appeal process. These organizations have a written procedure as part of RFP policy which provides for an initial attempt to resolve disputes internally, then through an objective third party. In some of these organizations, the seriousness of an event is reflected in the policy and practice of not awarding, or suspending, the contract until the protest is resolved. 

The fourth case has emerged as part of the current round of procurement reform. Massachusetts has adopted an approach which reduces the administrative burden of debriefings and protests. Under their new law, regulations, procedures and supplier debriefings are now an option of the agency and not an entitlement of a bidder. Furthermore, there is now no provision for protests as an administrative process. Vendors must use the courts to seek any remedies. 

Key Elements in a Protest Procedure 

Procurement officials can do much to mitigate complaints. They can offer explanations or clarifications to suppliers. They can remove ambiguities and resolve conflicts and errors in the RFP documents. 

A supplier's first recourse should be a discussion with the procurement officer. Procurement officers must be accessible. They must be willing to at least listen to suppliers. They must exhibit some sensitivity to the supplier who feels aggrieved. Remember, it can cost a supplier tens of thousands of dollars to prepare a formal proposal. Suppliers do this because they believe that the business is potentially theirs. If they suspect that they have been treated unfairly, and they cannot get any level of information, empathy, explanation or resolution from the procurement official, they may decide to protest. (There is an obvious conflict of interest in having the procurement officer who is running the process evaluating a protest based on his or her apparent error.) 

Suppliers do not protest an award without much thought and deliberation. Protests consume large amounts of corporate time and energy and, in many jurisdictions, suppliers know that to protest is to forego future business. Procurement officials, both in the public and private sectors, are "only human" and are often influenced by past dealings with suppliers. 

There are four key elements to consider when revising your organization's procedure: the protest mechanism, who is permitted to protest, acceptable grounds for a protest, and available remedies. 

Most suppliers would like the process to be simple, inexpensive, quick and fair. They would like anyone with an interest in selling to government to be able to protest for any reason. They would like remedies which, if the protest is upheld, compensate them for their costs in preparing a bid and the protest, plus a new competition for the work. 

Most purchasers want to resolve the issue quickly and discretely — without a lot of publicity. They would like a simple, straightforward way to resolve issues and either accept or reject protests. They would like to restrict the right to protest and limit the remedies. They would like to reduce the delays (often months and sometimes a year in duration) in completing the procurement caused by the protest procedure. Ideally, they would not have to cancel a contract or re-issue a bid package. 

As you will see in the next section of this book, there is no consistent approach to these four elements. Some organizations have no protest mechanism; some permit protests but only to the procurement officer. Still others have a multi-step process with an appeal to an independent body. 

Valid reasons for a protest, or rather reasons acceptable to the purchasing organization, range from any reason at all to a small list of pre-defined reasons. Typically, the pre-defined reasons include errors in the bid documents and restrictive requirements. 

Remedies also vary from undefined through cancellation of the contact, award of damages and re-issuing the bid documents. 

Procurement Reform 

In many U.S. states, the protest process doesn't work well. It's complex, expensive, subject to abuse, and often serves only to frustrate the completion of major initiatives.  But procurement reform is happening. In the last few years, many organizations have set out to streamline their procurement practices. New improved protest procedures are emerging. While a full discussion of procurement reform is beyond the scope of this book, it should be noted that reform is causing an examination of protest policies, laws, regulations and procedures. 

Here are two illustrative initiatives dealing with reform of protest procedures, one from the U.S. federal government, the other from the state of Alaska. 

U.S. Federal Government 

There are many elements that go into the design of an effective process for resolving supplier complaints and protests. In 1995, as part of its procurement reform initiative, the President's advisors reviewed this issue and created an executive order to give direction to the government departments and agencies. This directive dealt with attitudes, approaches, who can initiate actions and types of remedies. While most federal departments and agencies are vastly larger than state and local governments, much of the expertise contained in the order can be applied.  Section 1 of this Order is reproduced below. ^[5]

State of Alaska

In 1995, Alaska began an aggressive reform program which is designed to "target and reengineer non-responsive or dysfunctional procurement practices.” ^[6] Their "Concepts for Change" document identified 52 objectives for reform. Two of these dealt with protests:

As a result of the review, the Procurement Code and the Regulations have been modified significantly. Changes included limiting the protester's damages to reasonable bid or proposal preparation costs, permitting the commission to set up a simplified procedure for protests of small procurements, and requiring that hearings be recorded. 

Procurement reform and the accompanying reform of protest procedures is occurring in many other jurisdictions, including Massachusetts, ^[7] which has implemented some innovative approaches.