Choose Your Battles Wisely: The Consequences of Protesting Government Procurement Contracts

50 Pages Posted: 26 Dec 2018

See all articles by Mehmet Canayaz

Mehmet Canayaz

Pennsylvania State University - Smeal College of Business

Jess Cornaggia

Pennsylvania State University - Department of Finance

Kimberly Rodgers Cornaggia

Pennsylvania State University - Department of Finance

Date Written: December 1, 2018

Abstract

Firms that successfully protest a government agency’s conduct or terms of a procurement contract lose future business opportunities with the government. Their chance of receiving procurement contracts from the contested government agencies during the following four years drops by 68%, and they experience significant reductions in sales growth and employee growth. They receive fewer contracts also from other, non-contested, government agencies. Despite widespread belief, successful bid protestors do not delay the government procurement process due to lengthy dispute resolutions. Overall, we provide the first analysis of how firms interact with the government bid-protest system in the United States. Our results demonstrate the consequences of legitimate bid protests on firms and raise questions about the efficacy of the government bid-protest system.

Keywords: Bid Protests, Government Procurement, Competition

JEL Classification: G38, H57, P16

Suggested Citation

Canayaz, Mehmet and Cornaggia, Jess and Cornaggia, Kimberly Rodgers, Choose Your Battles Wisely: The Consequences of Protesting Government Procurement Contracts (December 1, 2018). Available at SSRN: https://ssrn.com/abstract=3286711

Mehmet Canayaz (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States

Jess Cornaggia

Pennsylvania State University - Department of Finance ( email )

University Park, PA 16802
United States

HOME PAGE: http://jesscornaggia.com

Kimberly Rodgers Cornaggia

Pennsylvania State University - Department of Finance ( email )

306 Business Bldg
University Park, PA 16802
United States
814-865-2243 (Phone)
814-865-3362 (Fax)

HOME PAGE: http://directory.smeal.psu.edu/kjr15

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