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

We examine the relation 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 due to lengthy dispute resolutions. Overall, we provide the first analysis of corporate interactions with the United States government bid-protest system.