A good design for bid-protest systems?fora where dissatisfied bidders can challenge procurement decisions of a public authority?is generally perceived as the central core of meaningful reforms in public procurement. And yet, the existence of a credible bid-protest system may not be a prerequisite to obtaining membership in the WTO?s plurilateral Agreement on Government Procurement (GPA).
Canada, for instance, despite being a founding member of the GPA, lacks a reliable and effective bid-protest system, as observed in studies by Canadian lawyers themselves. Amongst other GPA members, South Korea and England & Wales have the bid-protest function located in normal courts, and lack any specialised administrative or quasi-judicial fora for the purpose. Brazil has specialised ?audit courts?, and China?a country that is likely to negotiate entry into the GPA mainly on the strength of its smart negotiating strategies?allows basic supervision over government contracts by its ?department for supervision over public procurement?. Germany is perhaps the only important GPA member-state that has a two-tier regulatory regime in the shape of its ?awards chambers? and ?awards senates?.
Amongst all GPA member-states, the US has perhaps the strongest and most effective bid-protest systems?a rather predictable situation given its history of strong, transparent and effective enforcement of contracts in general, and public procurement contracts, in particular. But even the US does not have 2-tier structures for bid-protests, and outside of the court system, there is just one single agency to handle complaints, viz the government accountability office or the GAO. The GAO, interestingly, is an office of the US Congress, and even though it can only make recommendations to executive agencies with regard to their procurement decisions, there has been just one case in the last five years when its recommendations have not been accepted. The court system in the US for handling bid-protests, namely, the court of federal claims (COFC), the court of appeals for the federal circuit (COAFC), and the US Supreme Court, have all displayed extreme maturity in handling public procurement disputes. One, there has been a great deference to executive decision-making and the onus of proof is squarely on the complainant, quite unlike the inherently suspicious attitudes in many other country systems; and two, court decisions are always narrowly focussed on the issues actually in dispute amongst the parties represented before the court, instead of orders or judgments on hypothetical issues without the affected parties ever being represented or heard in court.
The US regulatory system has also displayed an equal amount of maturity and jurisdictional self-restraint. The GAO, for instance, will not hear complaints against the ?small business? nature of bidders competing for contracts, and will always defer to the Small Business Administration for a finding on this count?a situation very different from that evidenced in most other countries.
The US also has the most interesting and effective remedy system for successful complainants amongst all GPA members. The GAO?a comparatively low-cost forum?can grant relief for bid preparation costs and the cost of the bid-protest; while any party wanting to obtain lost profits as a legal remedy must necessarily approach the courts. The relationship between the GAO and the COFC has been a consistently healthy one, and competition between these two fora has generally been on the quality of their findings and the time taken to reach these findings. Dissatisfied bidders usually take a business call when choosing the bid-protest forum; the GAO system offers lower costs of litigation and generally quicker processes, but offers limited monetary remedies, while the COFC comes with much higher litigation costs but with added prospects of winning lost profits. Bidders also take a call based on the GAO?s automatic suspension of the public procurement systems versus the onerous requirements in the COFC for obtaining a stay against decisions of government contracting officers.
A survey of country procurement systems reveals yet another standard industry practice: that the normal integrity institutions in most countries also deal with instances of violations of integrity in public procurement. In the US, for instance, the FBI deals with anti-corruption matters in public procurement just as in other areas of government or private activity, without entering the domain of either the GAO or the COFC to deal with procedural violations of the US federal acquisition regulation.
Some of the lessons to be drawn from international experiences for designing bid-protest systems are therefore as follows. One, if efficiency in public procurement is to be preserved, the degree to which a country?s public procurement systems open up to external scrutiny must necessarily take into account the maturity of its regulatory and oversight systems. Two, that a multi-tier regulatory system is not an international gold standard in public procurement, and multiple layers of adjudication are likely to result in endless loops of remands and jurisdictional overlaps between tier regulators and enforcement agencies, severely compromising efficiency of public procurement in the process. Three, the design of bid-protest systems is a complex and challenging task by itself, and must remain focused on establishing a credible, efficient and transparent process of handling complaints. Finally, and rather interestingly, the existence of a credible bid-protest system is not a necessary prerequisite to obtaining GPA-membership, the corollary being that a country?s negotiating strategy is more important than the strength of its procurement frameworks.
The author established http://www.BuyLawsIndia.com, a website dedicated to fostering state-of-the-art research in this area. Views are personal