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

Mehmet I. Canayaz, Jess Cornaggia, Kimberly Cornaggia

Management Science · 2025 · Volume 71 · Issue 10

DOI: 10.1287/mnsc.2021.02055

Abstract

We examine the relationship between a firm’s successful protest of a government agency’s conduct or terms of a procurement contract and the amount of business the firm conducts with the government going forward. We find firms receive fewer and less valuable government contracts, face more contract cancellations, and experience significant reductions in sales growth and employee growth. Despite widespread belief, successful bid protesters do not delay government procurement because of lengthy dispute resolutions. Overall, we provide the first analysis of corporate interactions with the United States government bid protest system. This paper was accepted by Tomasz Piskorski, finance. Supplemental Material: The internet appendix and data files are available at https://doi.org/10.1287/mnsc.2021.02055 .

Keywords

bid protests, contracting, government contracts

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