In recent turns of events, the Government Accountability Office (GAO) has slammed a proposal in the 2025 National Defense Authorization Act that would force losing bid protesters to cover government and contractor costs in procurement reform efforts. GAO’s General Counsel, Edda Emmanuelli Perez, argues this cost-sharing plan could sabotage procurement reform by discouraging competition and destabilizing the federal acquisition system. The NDAA directed GAO to explore cost-sharing, but the agency firmly rejects it, emphasizing that current procurement reform rules already effectively handle frivolous protests. GAO warns that penalizing unsuccessful protesters could deter small businesses, which filed over 60% of procurement reform protests between 2020 and 2024, from participating in the process. This could reduce transparency, limit competition, and drive up costs as fewer firms vie for government contracts, undermining procurement reform’s core goals.
Procurement Reform Risks and Realities
GAO’s accompanying report underscores the impracticality of cost-sharing, noting the absence of data to establish fair reimbursement rates. Protest costs vary widely based on case complexity, not contract size, making standardized benchmarks unfeasible. The Department of Defense, a major stakeholder in procurement reform, also opposes the idea, aligning with GAO’s stance. With procurement reform protests down 32% over the past decade 48% for DOD, GAO argues there’s no need for such a disruptive change. The agency supports NDAA’s push for stricter pleading standards to eliminate baseless claims without harming procurement reform’s integrity. However, cost-sharing could lead contractors to inflate prices to hedge against financial risks, ultimately burdening taxpayers. Delivered to key congressional committees, including Armed Services and Appropriations, GAO’s position challenges lawmakers to rethink this procurement reform misstep. Will Congress heed the warning and preserve the fairness of the federal acquisition system, or push forward with a plan that could chill competition?
