With a rule first proposed in 2016 by the Government Accountability Office (GAO), and more DOD contracting regulations in the National Defense Authorization Act (NDAA) for Fiscal Year 2018, contractors filing bid protests may soon have to pay processing fees to the agencies. While the GAO fees will apply as an administrative necessity to every protest, the proposed DOD protest fees will have a number of limiting factors that may have less of an impact on small businesses. EZGovOpps describes these factors below.
GAO has been planning and building a new web-based Electronic Protest Docketing System (EPDS), which would handle all protest filing and automatically notify agencies of submitted bid protests. Once the the EPDS is up and running, all bid protests will have to be filed through the new system. Per section 1501 of the Consolidated Appropriations Act for 2014, GAO will require the filer of the protest to pay a filing fee, which will reimburse the original establishment of the system, as well as pay for its future upkeep. According to GAO, the fee that fits these needs will be $350 per protest.
While the idea of this new filing fee (specifically for system operations and maintenance) has been codified since 2014, some in the industry have put forward the argument that the filing fee is really intended to discourage frivolous bid protests, and that the new fee may end up preventing small businesses from protesting. Only time will tell if this does end up limiting the number of protests after implementation, and EZGovOpps will keep a close look at the number of bid protests filed after the new system is in place.
EZGovOpps extensively covered some of the contracting regulations codified in the NDAA in prior years (ranging from subcontracting rules to major authorities), and the FY18 NDAA is similarly situated to impact Federal contracting. In section 827, the new NDAA mandates that the Secretary of Defense begin a pilot program to “determine the effectiveness of requiring contractors to reimburse the Department of Defense for costs incurred in processing covered protest.” Although this may sound like an all-encompassing fee-collection effort by DOD, the NDAA also outlines a clear definition of what constitutes a “covered protest,” which would be eligible for the collection of protest fees:
- “[the bid protest was] denied in an opinion issued by the Government Accountability Office”
- “[the protest was] filed by a party with revenues in excess of $250,000,000 (based on fiscal year 2017 constant dollars) during the previous year”
- “[the protest was] filed on or after October 1, 2019 and on or before September 30, 2022” (This is the time period set for the pilot program)
While the NDAA for FY18 has yet to be signed by the President, and the rules around this provision would be more clearly codified later in the process, it seems at this time that the DOD collection effort would be limited in scope, and may have less of an impact on small businesses than the GAO filing fee.
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Published November 21, 2017