those which increase the victim's litigation expenses, lower the amount of any damage award, and reduce the probability that a victim will prevail in court.26
The detailed enforcement obligations of the GPA, subject to multilateral dispute settlement, certainly help to reduce the barriers to private litigation. The role of private parties in deterring illegal activity is thus likely to expand. However, in one respect the Agreement is somewhat weak: it provides for compensation which may be related, not to the profits foregone, but to the costs incurred. Thus, the Agreement stipulates that "challenge procedures shall provide for correction of the breach of the Agreement or compensation for the loss or damages suffered, which may be limited to costs for tender preparation or protest" (Article XX:7(c), emphasis added). In the light of this provision, the anticipated gain from private action, and hence the incentives for it, may not be very high.27
However, it must also be recognized that the scope for private legal action that the GPA has instituted need not always be beneficial. Studies of the efficacy of private protests in deterring and correcting decisions by procurement officials, reveal that protests may be an imperfect deterrent to malfeasance by procurement officials (Marshall et al., 1994a). While protests occur to correct bad decisions, there are also a variety of frictional costs induced by protest activity. On the one hand, proper procurement decisions are protested, imposing delay and protest costs. On the other hand, overdeterrence is possible so that the risk of protest biases the procurement method away from the optimal one. For instance, competitive procurement may be chosen even though tax-payers would prefer a sole-source procurement to avoid cost of administering the procurement process or switching from one product or seller to another. The bid-challenge mechanism of the GPA is too new to enable an assessment of the empirical significance of these issues.
It is also relevant, in this context, to consider the implications of the common practice of settlement, i.e. the exchange of a cash payment in return for a promise by the protester to drop its suit. It is ironic that the GPA, a product of a system in which settlements of various types flourish, is completely silent on this issue. This silence may not be inconsequential because recent research reveals that, in contrast to typical private litigation where settlement
(See Ramseyer (1985), for instance, on the barriers to litigation in Japan
(The importance of private enforcement of anti-trust in the United States, relative to other countries, is often explained by the fact that triple-damages are awarded to successful complainants in antitrust cases in the United States while only single-damages are awarded in other countries.