Justice delayed
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A surprising lesson for govcon outsiders is that bid protests can be strategically valuable for incumbents, even if they lose a protest.
Suppose you're a government contractor delivering a contract for $10 million a year. And further suppose that you lose the recompete for that contract to your archnemesis competitor (boo!). If you protest, however, that might delay the award to your competitor, and the government might extend your contract in the meantime.
During a 100-day protest window, that might equate to over $2 million in revenue. Even with modest margins, that should more than justify the cost of your lawyer. Plus, you get to deprive your archnemesis competitor some revenue. Win-win as the incumbent, even if you lose.
From the competitor's perspective, then, lengthy protests have a measurable "cost of delay." The important lesson here is that, typically, delay is not neutral in government contracts: someone benefits and someone loses.
Usually, the government prefers to avoid delays. After all, if the competitor is priced more competitively than the incumbent, a protest has a measurable cost to the government.
But this isn't always the case. And last week, we saw an interesting example of some, uh, strategic stalling on the government's part.
Here's the backstory. In August 2024, the Air Force put out a solicitation for "comprehensive maintenance, repair, and inspection services for Vertical Transportation Equipment (VTE) at Holloman Air Force Base, New Mexico" and set aside the solicitation for small businesses.[1] In December 2024, the Air Force awarded the contract to Pelican Residences, LLC. A week later, Veteran Elevated Solutions (VES) brought a size protest to the SBA Area Office, arguing that Pelican violated the "ostensible subcontractor rule" because the work was basically going to be performed by Otis Elevator Company, which is very much not a small business.
During the protest, Pelican told the SBA that "it was not certified to perform elevator maintenance and repair in New Mexico" and that "Otis would be performing the work, and that Pelican would perform the administrative functions." And yet, the SBA Area Office concluded in January 2025 that Pelican did not violate the ostensible subcontractor rule.
A few months later, on appeal, the SBA OHA reviewed the facts of the case, vacated the SBA's size determination, and remanded the matter back to the SBA Area Office for a new size determination.
But, the case wasn't closed because, um, I guess the SBA never bothered to make a new size determination? After waiting for something to happen, VES filed a claim in January 2026 with the OHA that "nine months later, the Area Office has yet to issue the new size determination required by OHA's decision." And wouldn't you know it that Pelican (i.e., Otis) had been "performing" the contract the whole time!
Suffice to say that the OHA judge was unamused and sent a show cause order to the SBA. The SBA ignored that order, too. So, the judge himself – in a pretty unusual decision – "declared" Pelican to be ineligible for award.
Truly remarkable stuff. But, it also speaks to incentives at play.
After all, in the initial proceedings, Pelican casually remarked that "Otis has been maintaining these VTE since last 10 years and base staff was pleased with the performance." Pelican, Otis, Air Force, and the SBA Area Office all were perfectly fine with the status quo. The only party meaningfully affected by delay was the one party without any actual control over the timeline. And, notably, even though Pelican is (probably) out of the running now, there's still no guarantee that VES is going to win anything for its effort.
In some respects, this case is the mirror image of the typical incumbent win-win. If you're the incumbent, delay can be on your side. But if you're the protestor, you can do everything right, have a strong bid, and prevail on appeal. And still, more than a year might go by while you watch your competitor perform the contract.
Sure, the judge might rule in your favor, but the damage has already been done. Turns out that, in govcon, sometimes justice delayed isn't just justice denied: it's accounts receivable.
[1] You may be wondering, what the hell is a "Vertical Transportation Equipment"? Based on what I can discern, it is better known as an elevator.