Should the Pentagon Reform Its Bid-Protest Rules?

Microsoft's president told senators yes, but bid protests hit a 10-year low last year.

After years of pain over the legal battles related to the Joint Enterprise Defense Infrastructure cloud contract, Microsoft is calling on Congress to take a look at the protest process.

During a Tuesday Senate Armed Services Committee hearing on emerging technologies and national security, Microsoft President Brad Smith said it’s time to examine the protest process because it does not keep up with the speed of technological innovation. Smith’s remarks come as continuing legal troublesthreaten to sink JEDI, which Microsoft was re-awarded in September. 

“We all want to ensure fairness,” Smith said. “And that includes a fair right to be heard. But we could definitely benefit from an accelerated timeline to do so.” 

The Defense Department conceived the $10 billion JEDI concept around four years ago, but implementation has been held back because of multiple legal challenges from Oracle, IBM and Amazon Web Services throughout the procurement. Oracle recently filed a petition with the Supreme Court for a review of a decision on its own pre-award JEDI protest. As it stands, a decision from a federal judge on a motion filed by Microsoft and DOD on portions of AWS’s protest alleging improper political influence in the award process by administration officials is pending

Despite Smith’s concerns, the Government Accountability Office reported bid protests were down by 2% in 2020, representing a 10-year low in bid protests. 

Still, other high-profile Defense Department contracts have faced bid protest trouble, particularly with single-award contracts like JEDI. In October, DOD and the General Services Administration re-awarded General Dynamics Information Technology the Defense Enterprise Office Solutions contract, another cloud project, after Perspecta filed multiple bid protests

Both JEDI and DEOS were marred by acquisition mistakes: for DEOS, procurement officials shared Perspecta’s bid information with GDIT, and for JEDI the DOD inspector general found Pentagon officials  “improperly disclosed source selection and proprietary information” from Microsoft to AWS. 

Smith didn’t elaborate on what changes, exactly, would help smooth out the protest process. During the course of the hearing, Smith and other experts testifying emphasized that the hub of technological innovation is no longer government, and if government wants to be able to keep up with private sector innovation to be able to compete with countries like China, it has to move at a pace much closer to industry’s. But the bid protest process is one roadblock preventing this, Smith said. 

“I do think there's a real opportunity to look at the process, streamline it, put in place some tighter deadlines, consider legal reforms that would apply those deadlines to the judicial aspects as well,” Smith said. “We don’t think that others should be denied an opportunity to protest, maybe for better and worse, that is part of the American way to some degree, but it sure would be beneficial if it could move faster.”

Bid protests were just one area witnesses at the Senate hearing as well as witnesses at the inaugural hearing of the House Armed Services Subcommittee on Cyber, Innovative Technologies, and Information Systems said needed reforms. Uniting various concerns over specific technologies—like 5G and semiconductors—and troubling incidents—namely, the recent SolarWinds hack—was a common refrain that innovation is possible for DOD if only it can figure out how to get to the deployment phase more effectively. 

“We are having a hard time ingesting the technology innovation that we have,” Klon Kitchen, a resident fellow at the American Enterprise Institute, said during the House hearing. “We're actually being flooded with new technologies, whether they be completely new or even just recombinant innovations. And so the key barrier to entry is our ability to, again, ingest that information.” 

Retired Gen. Hawk Carlisle and former Google chief executive Eric Schmidt, who testified at the Senate hearing, both raised concerns about the two-year budgeting cycle that creates a “valley of death” between pilot program and program of record status, a time period particularly challenging for small businesses. Becoming a program of record allows for line-item funding in the DOD budget. 

“A small business can't survive two years on a promise,” Carlisle said, adding the Small Business Innovation Research program, which helps fund research, experimental, or developmental work for government projects, is “incredibly important.” SBIR is set to expire in 2022. 

When asked by Rep. Elissa Slotkin, D-Mich., what concrete actions Deputy Defense Secretary Kathleen Hicks could hypothetically take in the next two weeks to address incorporation of technologies at DOD, former acting Deputy Secretary of Defense Christine Fox said she would handpick experienced service and acquisition community members and bring them together with industry. 

“I would give them the task of figuring out how to start designing these programs from the beginning to be upgradable, rapidly upgradable so that we don’t get these systems that stay sort stuck,” Fox said. 

Fox currently works as the assistant director for policy and analysis at the Johns Hopkins Applied Physics Laboratory. She added she would then ask the group to start identifying systems to which a new framework could be immediately applied. 

“Then I would start to work with Congress to understand if there are any new legislation capabilities that we would need to implement those plans,” Fox said. “I'm not sure there are, there [is] actually a fair amount of flexibility now. It's a question of figuring out how to put this together with this forward-looking vision from the very beginning.”