Challenges to federal contracts up 17% in 2008

There were more challenges to federal contracts in 2008 than in any other year in the last decade as companies fought over fewer multibillion-dollar projects.

Though federal auditors found errors in few government decisions, more than $70 billion in military contracts alone were delayed this year because of losing bidders filing protests.

More than 1,600 protests were filed by U.S. businesses with federal auditors this year. That’s up 17% from last year and the highest level since 1998, according an annual report released Tuesday by the Government Accountability Office.

With multiyear deals at stake and a likely downturn in military spending on the horizon, companies can’t afford to be cut out of the market for several years, said Alan Chvotkin, senior vice president of the Professional Services Council, which represents more than 300 federal contractors.

“All of a sudden a couple of million dollars on a protest pales in comparison to the opportunity to win a multimillion-dollar program,” he said.

Although they acknowledge that competition has increased, GAO officials attribute the rise in protests to Congress’ decision to let companies dispute task orders on major contracts, and other changes. But even without counting those protests, the total still rose 11% from last year.