GAO Report Provides Hope to ARM Agencies that Might Protest ED RFP Selections

On December 15, 2016 the Government Accountability Office (GAO) issued to Congress its annual bid protest report. While this report does not specifically relate to the recently announced Department of Education (ED) debt collection contract awards, it provides some very interesting and encouraging information for 41 accounts receivable management companies that were not selected.

insideARM wrote about the RFP selections on December 10, 2016 and again on December 12, 2016. Earlier this week, on December 19, we suggested that many of the 41 unsuccessful bidders would likely seek a formal debriefing from ED and that multiple formal protests were likely to follow.

The most interesting item in the GAO report was this statistic:

“Of the protests resolved on the merits during fiscal year 2016, our office (GAO) sustained over 22 percent of those protests.”  (Emphasis added.)

The report also provides a chart of historical statistics for comparison purposes.  For example, in fiscal year 2015, GAO sustained only 12 percent of the protests resolved on the merits. In fiscal years 2014, 2013, and 2012 the sustain rates were 13%, 17%, and 18.6% respectively.

The report also provides this statement regarding reasons for sustaining protests:

“Our review shows that the most prevalent reasons for sustaining protests during the 2016 fiscal year were: (1) unreasonable technical evaluation; (2) unreasonable past performance evaluation; (3) unreasonable cost or price evaluation; and 4) flawed selection decision.” 

Finally, the report states:

“It is important to note that a significant number of protests filed with our Office do not reach a decision on the merits because agencies voluntarily take corrective action in response to the protest rather than defend the protest on the merits. Agencies need not, and do not, report any of the myriad reasons they decide to take voluntary corrective action.”

insideARM Perspective

As noted above, insideARM has heard from several industry experts that, after the debriefings, multiple protests are likely. There are significant dollars at stake. The volume of accounts for placement to private collection agencies continues to grow.  

Per the GAO website on Bid Protests, (See: http://www.gao.gov/legal/bid-protests/search) there have been two protests filed already, one by Pioneer Credit Recovery, Inc. and the other by General Revenue Corporation. Both were filed on December 19th. Both of those companies are wholly owned subsidiaries of Naviant Corporation.

insideARM will continue to monitor this important story and report developments.