MAC protests are all the rage

I am going to go out on a limb here and make a prediction: when NASA issues its long awaited solicitation for SEWP VI—a 10-year multiple-award contract (MAC) for value-added resellers—it will be protested. How about that for a bold prediction?

Last week, NASA issued a draft of the SEWP VI solicitation and indicated the following timeline:

The current planned release date for the Final Request for Proposal (RFP) is on or about February 2024, with proposals being due approximately 60 calendar days later. The anticipated contract award date is October 2024, with a May 1, 2025, contract effective date.

I am writing this in September 2023, which means that the anticipated solicitation date is months away and the anticipated award date is over a year from now. I can't predict very much about what else will happen by Thankgiving in 2024, but I am highly confident in this prediction of a protest.

What's notable, though, is that — given the timelines described by NASA — it sure seems NASA is also pretty confident that SEWP VI will be protested. How else can you explain an effective date more than 6 months post-award?

To justify my confidence of the likelihood of a protest, perhaps we can examine some priors. This year alone, we've seen successful protests to the GSA Polaris GWAC. We've seen successful protests of the NIH CIO-SP4 GWAC. This week, we learned that GSA'S OASIS+ multiple award contract is now under protest with Government Accountability Office. So, protests are par for the course.

But why are these protests so common? Is it because the contracting officers responsible are just terrible? Is it that incumbents are trying to ruin a good thing for everyone else? Is it because the procurement rules are too subject to protest?

Nah, my theory is that it's just the math of large-dollar contracts. To explain, let's make some fairly conservative assumptions:

  1. The total spending on SEWP VI will be over $100 billion during the course of its 10-year period of performance.[1]
  2. The 100th vendor on the list will win 0.2% of the value of that contract (~$200 million).[2]
  3. There's a 1% chance of winning a protest.[3]

This suggests that, as long as the cost of a protest is $2 million or less, it's a reasonable investment in hiring some lawyers to protest.

Which brings me to the 4th conservative assumption:

4. The legal fees for a protest will be less than $2 million.

Sure. Lawyers are expensive, but legal fees will definitely come in under $2 million.

Ok. That's the math. But what do these numbers suggest?

For one, it means that agencies who have also done this math have already factored litigation into their timelines. For two, it means that the cost of bidding goes up because vendors — encouraged by counsel, no doubt—will ask many many questions creating the potential for future protest. And there will be multiple iterations of solicitations that you will need to track and adjust your proposal strategy accordingly, increasing the budget for consultants and proposal teams. For three, it means that the cost of winning will go up because, in the event you win, your award will be subject to protest and you might need a lawyer.

It's also a bit of an ouroboros. To reduce the likelihood of success on protests, agencies go through lengthy pre-solicitation industry engagement processes and still expect protests in the end. This further increases the cost of bidding for all potential awardees, which maybe then reduces the amount of bid-and-proposal budget left over for the future lawyers? Which maybe reduces the eventual number of protests? Who knows. My head hurts thinking about it too much.

But one thing I do know is that, as long as MACs continue to grow in total spending, you should bet on MAC protests to be the norm. If any one is up for friendly wager on a protest by Thanksgiving 2024, I'd put the odds well above 20:1.

[1] This is actually a very conservative estimate. From 2014 to 2022, SEWP funding has had an average annual growth rate of 3.55%. Given the FY22 SEWP spending at $9 billion and assuming the same growth rate over the life of SEWP VI, we could anticipate total spending for SEWP VI to be ~$120 billion.

[2] According to the data I've seen, the 100th lowest vendor won 0.236% of the total.

[3] The lawyers will hint that there's a much greater chance of success. They're also paid either way.

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