Silence of protesters' bark signals new era

In a well-known Sherlock Holmes novel, the great detective solves a crime based on a dog that did not bark. The dog normally would have been expected to bark, and the fact that it did not do so during the night of the crime gave the detective key information for the case.

In the federal information technology marketplace, a "dog" has not barked for two huge IT awards. As in the Sherlock Holmes novel, this absence provides key information about the changing nature of the relationship between the government and IT vendors.

First, the Internal Revenue Service awarded to Computer Sciences Corp. a $6 billion contract to modernize its tax system. The IRS chose CSC over Lockheed Martin Corp., which did not protest the IRS decision. Second, the General Services Administration awarded two contracts for telecommunications services, together worth an estimated $5 billion, to Sprint and MCI WorldCom. Recently, the losing vendor, AT&T, announced it would not protest.

Anybody who has been around the government IT market would agree that, in the "olden days" (that is, before the elimination of the bid protest jurisdiction of the General Services Board of Contract Appeals in 1996), the chances that a losing vendor would not have protested procurements of that size were approximately zero.

Of particular note is AT&T's decision not to protest. AT&T is, of course, the incumbent on the FTS 2000 contract, with the largest market share of federal telecommunications services. The loss on FTS 2001 was a particularly strong blow. Furthermore, in the olden days AT&T was the epitome of the bid protest culture, seeking to win government business through litigation at the drop of a hat. AT&T also led the political battle in Congress against the elimination of the GSBCA. We often talk about how difficult it is to achieve cultural change in government, but it is not particularly easier in a large corporation. Given all this, AT&T's decision not to protest is genuinely bold and courageous.

What's wrong with bid protests? They are time-consuming and expensive. To add insult to injury, when agencies lost appeals they had to pay huge vendor lawyer bills out of the taxpayer's pockets. But it is a big mistake just to focus on the direct time and cost of bid protests, because the most serious problems they create are different ones. For example, if an agency loses a bid protest, it is a blot on the career of a civil servant, and even when the government wins, the prospect of being deposed as a civil servant by high-priced legal talent trying to destroy you is harrowing, to say the least. In addition, bid protests opened up to some companies the potential of winning business not by satisfying their customers but through litigation, a spectacle contrary to the principles by which commercial business operates.

These features of bid protests produced pernicious effects. First, bid protests made agencies excessively risk-averse, bureaucratic and slow in source selection, seeking redundant documentation and objectification of every decision to be able to defend themselves in the event of protest. Better choose the wrong vendor, many appeared to believe, than to choose the right one based on "subjective" or less than exhaustively documented grounds.

Second, bid protests had a devastating effect on a spirit of partnership between government and vendors, because efforts at partnership appeared to create grounds for protest based on "favoritism" and because the system forced agencies into business relationships with companies who sued at every occasion.

The Lockheed Martin and AT&T decisions to not protest are good news because they presage the end of the era of bid protests and the birth of a more constructive government/vendor environment, where federal IT contract shops concentrate on selecting vendors based on who can deliver results, reasonable prices and who can make a good partner to achieve those results. The decisions presage an era where the crucial initials are neither DPA (delegation of procurement authority) nor GSBCA but ROI—return on investment.

Agencies need to take their share of responsibility for putting bid protests behind us. The old days of procedural trivia and of a bureaucratic process driving agencies willy-nilly into nonsensical source selection decisions are happily gone. But the need for common sense and an open mind about deciding which vendor represents the best deal for the government remains, not only to avoid protests but to make the best business decision for the government as well.

Vendors could take other steps to bury deeper the era of bid protests. Recently, in its bid on the GSA Millennium contract, Andersen Consulting made an upfront, voluntary promise, consistent with the firm's philosophy of customer partnership, not to protest whatever award decision GSA makes. Other firms should follow Andersen's lead.

The sooner we stop worrying about litigation and start focusing on delivering value for the government's IT investments, the better off government and vendors will be.

--Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.