Bid Protests for Small Businesses

by Bilzin Sumberg
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A bid protest is a method for a bidder for a government contract to formally challenge the government’s selection process or decision.  Bid-protest procedures vary from jurisdiction to jurisdiction, but there is generally an opportunity to submit a written petition that explains why the protestor believes the government made an unfair or unlawful decision, following by a hearing before an official authorized to decide the dispute (sometimes a judge or equivalent and sometimes an administrator).  In some situations, a bid protest resembles a civil trial and can take weeks or months to resolve, and in other situations it is far less formal and can be resolved rapidly.  The expense of a bid protest often increases with the formality and length of the proceedings.

Earlier this month, the RAND Corporation made public its comprehensive report commissioned by Congress on the federal bid-protest system.  Although the report overall concluded that bid protests were serving their intended function to find and correct errors in the procurement process (approximately 40% of federal protests yielded a change in the outcome), RAND did conclude that the system was too costly for small contracts and small businesses.  RAND recommended an alternative, expedited process for small contracts, as well as changes to make the system easier for small businesses.  Because the federal system requires essentially the same time and expense, regardless of the size of the contract or the resources of the protestor, protests can in some cases be too burdensome on both the governments and the protestor. 

Fortunately, many local governments in South Florida already have measures in place that can, in many cases, reduce the cost of filing or defending a bid protest for a smaller contract.  Miami-Dade County, for example, has informal bid-protest procedures for contracts valued at less than $250,000, and the Miami-Dade County School Board similarly offers informal protest procedures for certain contracts.  Other local jurisdictions, such as the City of Miami Beach, rely upon more informal procedures for virtually all contracts.  Although there are still examples where the procedures are too costly or time-consuming for the contract or business at issue, South Florida is fortunately a step ahead of the federal government in this area and offers many opportunities for small businesses to protect their rights in a cost-effective manner.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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