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Monday, March 19, 2018

Procurement Controversy du jour - Australian government 'consultants'

Experts flag lack of accountability in procurement contracts
Current contract arrangements often prevent consultants from being held accountable for the advice they give to government while ambiguous reporting makes it difficult to determine the value for money of outsourced work. That’s according to the Melbourne School of Government, which has told a parliamentary committee into government procurement contract arrangements that the commercial-in-confidence privileges often attached to consultants’ work has given rise to concerns about accountability and transparency.

“This is different to advice provided by, for instance, a government department, which forms part of the public record,” the school says in its submission to the inquiry.

Last week Government News reported on calls for the Department of Finance to carry out a detailed investigation into whether there is “systematic flouting” of the procurement rules, given the high use of government contracts below $80,000, which are not required to be put to market. The Melbourne School of Government said the way in which value for money is reported by Commonwealth agencies is not specified under procurement contracts and often remains unclear. “This means it is not possible to understand the ways in which value-for-money was assessed for specific consultant engagements, and the extent to which a particular engagement did, in fact, deliver that value.”

The school also pointed out the lack of formal accreditation for becoming a consultant or professional body ensuring practitioners meet basic professional or ethical standards.

“This means that there are no generally accepted rules regarding who can legitimately call themselves a consultant,” it said.

The school also highlighted that more than two-thirds of the public service’s consulting work is completed by five organisations, four of these being the Big Four accounting firms. “It would be helpful to understand why exactly this is.”

Dean of engagement at Griffith Business School, Professor Anne Tiernan, who has been involved in several projects examining public service capability, said successive “reforms” had eroded institutional memory and capacity for long-term thinking.

KPMG, which earned $620 million in government contracts from 2012 to 2017 according to the national auditor, argued it was unrealistic to expect public service to possess in-house the myriad technical skills needed to meet rising demands. Departments and agencies required specialist skills including data and analytics, artificial intelligence and business and technology transformation, it said.

While only the primary organisation in a contract is currently reported, the consultancy argued that the reporting of subcontractors would provide an increased level of transparency, particularly for smaller enterprises working as part of a consortium. KPMG also proposed that AusTender should provide information on other companies and consultants that unsuccessfully tendered for a contract, and not just the winner, to provide “an additional level of transparency” to the procurement process.
Read more at the link.

Sunday, March 18, 2018

Putting brakes on a mule. Whoa, Mule!!

US military says robotic pack mules are too noisy to use (2015)
The US military has reportedly shelved development of its robotic pack mule — the Boston Dynamics-built Legged Squad Support System or LS3. According to a report from, there are no "future experiments or upgrades planned" for the mechanical beast of burden, with the program in need of new contracts or support from senior military figures before it can be resurrected. And the reason for this parting of ways? LS3 was apparently too noisy to make a good soldier. Over the course of its development, LS3 was given updates to make it more autonomous, able to automatically follow humans and even respond to basic voice commands like "follow," "sit," and "stay." But, it seems it never really became all that quiet. In videos of the barrel-chested robot in action during military trials last summer, it sounds as loud as a sit-on lawnmower — definitely not the sort of companion you'd want bumbling alongside you on a nighttime patrol.

Army on Accelerated Path to Buy as Many as 5,700 Robotic Mules (2/9/2018)
Requirements for robotic mules go back at least to 2001 when the now canceled Future Combat Systems was conceived.An autonomous multifunctional utility logistics and equipment vehicle survived the FCS cancelation and was transferred to the follow-on Brigade Combat Team Modernization program, but that effort was eventually scrapped as well. Since then, development of robotic mules continued, with four of the vehicles reaching Afghanistan in 2012 for a battlefield assessment. The Lockheed Martin-built squad mission support system was deployed there for about five months. When the Army put out a call for robotic mules to take part in a vendor solution assessment in September and October, seven robot manufacturers were able to bring technically mature, off-the-shelf robotic mules.

After more than a decade of experimenting with robotic mules designed to take the load off overburdened foot soldiers, the service is on an accelerated path to field up to 5,700 squad multi-purpose equipment transport robotic vehicles in a winner-takes-all competition that may wrap up as early as 2019. Over the course of its development, LS3 was given updates to make it more autonomous, able to automatically follow humans and even respond to basic voice commands like "follow," "sit," and "stay." But, it seems it never really became all that quiet. In videos of the barrel-chested robot in action during military trials last summer, it sounds as loud as a sit-on lawnmower — definitely not the sort of companion you'd want bumbling alongside you on a nighttime patrol.

The program is using an “other transaction authority” contracting vehicle to rapidly transition the technology from experiments to a program of record. OTAs are normally used to bring in nontraditional contractors to make prototypes. The Army is in the middle of selecting a contractor after bringing in seven vendors with eight different vehicles in 2017 to perform operational tests. “That is significantly faster than we have been able to do previous efforts,” Maj. Gen. John George, director for force development, Army G-8, told reporters. “That is the beauty of the new OTA process. If you have a competition though OTA, you can go to procurement and turn it into a program of record,” George said. A typical program of this kind would take upwards of 10 years, he said. “The Army wants to go faster. It wants and needs to go faster,” he added.

But this is a “good news story,” he said. “We are doing that because we have learned to hack our own system” and by using the revised other transaction authority rules. “What has changed is that the transition mechanism provided in 10 USC 2371b (h), added by the 2016 NDAA, provides a greatly simplified way of transitioning the contracting. The follow-on production effort after a successful prototype OT can be executed as a production OT or awarded as a non-competitive procurement contract,” according to Richard Dunn, founder and consultant with the Strategic Institute for Innovation in Government Contracting.
Army Revamps Strategy to Acquire Robotic Mules (3/24/2017)
The Army intends to buy 20 robotic mules from manufacturers and send them out with brigades for a year-long operational test and evaluation, the service’s program manager in charge of unmanned ground systems said March 23. Bryan McVeigh, project manager for force protection, said a recent Army Requirements Oversight Council looking at the squad multipurpose equipment transport (SMET) vehicle put the breaks on the program, which was heading for fielding in the early 2020s. The council said, “Wait a minute guys, You’re laying out a standard program of record. This is taking too long. This is way too much testing. We’re not even sure this is what we want,” McVeigh said. Chief of Staff of the Army Gen. Mark Milley instructed the PEO to go back and look at the things that really matter and get rid of the rest, McVeigh said.

Earlier in the conference, a senior service official said the proposed prices they had seen for SMETs had given officials “sticker shock.” “I’m not telling you what to bid on your price. But I am telling what we think it should cost,” McVeigh said. The vehicle after it reaches its assembly point will then have to switch over to an unmanned mode. “How do I pull what seems to be mutually exclusive design characteristics together?” McVeigh asked. That will be a tough problem for the manufacturers, he acknowledged.

The Army wants two basic configurations: one similar to the vehicles that have been tested and another that will have a seat and steering wheel so it can be optionally manned, he said. The reason for the optionally manned version is one of logistics. “How do I get from an airport to an assembly area? That kind of leads me to an optionally manned solution. There are not enough prime movers to tow all the systems that are supposed to be issued to the brigade,” he said.PEO force protection will proceed with an SMET rodeo as early as August, McVeigh said at the National Defense Industrial Association’s Robotic Capabilities conference in Springfield, Virginia. How is it going to be operated? Will it use a cord, a joystick or follow soldiers using breadcrumbs? Can it be towed at 20, 30 or 50 miles per hour without flipping over? The more capability the robot makers offer, the higher the score on their evaluation, he said.

A request for information will be published “shortly,” he said. “I need your feedback to make sure what I have in mind is executable. This is absolutely critical.” He needs to know how long it will take to get a prototype built. As for delivering the models by August: “I need you to tell me if I’m on drugs,” he said. Companies participating will be reimbursed for their expenses.

There are four possible scenarios, McVeigh said. The first is that one of the manufacturers “hits it out of the park” and gives the Army exactly what it wants. He has the authority to then go into limited production with a traditional acquisition contract. Another scenario is that a couple of the models do well, but are not quite right. There would be new requirements written, some changes, and then a down-select to one vendor. The third outcome is: “Thank you all for playing. Pick up your trophies on the way out. We learned that what we were asking for isn’t in the art of the doable.” The Army would return to an engineering, manufacturing and development phase and open up the contract again. The fourth option simply is that the Army decides it doesn’t need this capability, he said.
A note to newbies to this blog: I almost always slice and dice articles, leave out critical material, paraphrase, and add comment for purposes of turning real life situations into teachable procurement examples. Do not rely on my renditions to know the full story, or intent, of the article -- read the original at the link(s) provided.

Wednesday, February 21, 2018

Procurement Controversy du Jour: Malta

Investigation finds ‘flagrant breach’ of rules in €469,000 PBS car lease deal
The Public Broadcasting Services board and CEO John Bundy, a political appointee, locked horns over Bundy’s profligate spending, with the car leasing contract – which totals at least €469,000 when including VAT – becoming the subject of an internal inquiry by auditors RSM.

In late September, the PBS’s board of directors unanimously passed a motion of no confidence, after directors accused Bundy of showing a “lack of awareness of what the relationship should be between CEO and the board of directors.” They accused Bundy of taking arbitrary decisions, which were presented to the board as a fait accompli, and the directors were faced with threats of legal action against them personally and the company.” The investigation’s decision will vindicate a decision by the PBS board of directors to sack John Bundy, a veteran television presenter appointed to the PBS job in 2016 without a public call for appointment.

Bundy had only raised the issue once at board level on 18 January, when he sought advice on replacing PBS’s ageing car fleet. But the contract itself was never green-lit by the board.

Suspiciously, the person actually responsible for procurement at PBS, corporate services manager Edmund Tabone, was completely side-lined and left in the dark about the deal. Instead, it was left up to Mario Micallef, the manager for advertising sales, to gather the quotations.

Although MaltaToday reported a total of 14 different contracts signed for a car lease, the contracts investigation dealt with 13 cars, all leased for a total of eight years, varying from the cheapest for €230 monthly (plus VAT), to the highest being €600 (plus VAT), which was meant to be Bundy’s car.

One of the more curious aspects of the deal was that – according to board minutes seen by MaltaToday – one of the cars was for the exclusive use of Natalino Fenech, the former PBS head of news, who in 2013 stepped down from his position after Labour’s election. According to the directors’ minutes, Fenech was “still on PBS’ payroll with all perks and allowances”, despite his secondment to the University of Malta as a lecturer.

An investigation by the Department of Contracts has found a “flagrant breach” of procurement rules when the Public Broadcasting Services – on former CEO John Bundy’s watch – took out a €398,000 car leasing contract for eight years. “There are sufficient grounds to determine that procurement regulations have been blatantly breached and that such breaches irremediably vitiated the award of this procurement process. Consequently, it is being decided that, given the breaches are of a serious nature, the contracts awarded in terms of these class for quotations are terminated with immediate effect.”

The new investigation confirms previous reports by MaltaToday that PBS ignored clear rules to issue a public call for tenders, and instead obtained quotations from leasing suppliers. But it has now emerged that meetings were held with the prospective supplier, Burmarrad Commercials, before the company submitted its ‘winning’ quotation. “It is clear that the conduct by [PBS] seems, a prima facie, to have been focused to advantage the award of the quotations to Burmarrad Commercials. This is in flagrant breach of the procurement regulations.”

It was only after a meeting with Burmarrad Commercials’ representatives at PBS, that the company’s final quotation was actually submitted. In an email, the representative later told PBS employees: “…It was a great pleasure meeting you this morning. As discussed please find attached the revised quotations for the leasing of a fleet of vehicles for PBS.” Contracts Department director-general Anthony Cachia said the email and the fact the company had submitted its winning quotation after the meeting, meant Burmarrad Commercials was “an accomplice” in PBS’s breach of rules.

“This by its very essence breaches the principle of equal treatment and transparency. Apart from the fact that it is very unorthodox that quotations are subject to discussions, especially if such discussions took place with one of the potential suppliers, such conduct is clearly in breach of the fundamental principle which should underlie each procurement process.”

There was an additional breach: the €398,000 contract was artificially split into 13 individual contracts, each representing the cars being leased – one of which was for John Bundy.

Sunday, February 18, 2018

An army of one can get government contract

FEMA Contract Called for 30 Million Meals for Puerto Ricans. 50,000 Were Delivered.
For this huge task, FEMA tapped Tiffany Brown, an Atlanta entrepreneur with no experience in large-scale disaster relief and at least five canceled government contracts in her past. FEMA awarded her $156 million for the job, and Ms. Brown, who is the sole owner and employee of her company, Tribute Contracting LLC, set out to find some help.

Ms. Brown, who is adept at navigating the federal contracting system, hired a wedding caterer in Atlanta with a staff of 11 to freeze-dry wild mushrooms and rice, chicken and rice, and vegetable soup. She found a nonprofit in Texas that had shipped food aid overseas and domestically, including to a Houston food bank after Hurricane Harvey.

By the time 18.5 million meals were due, Tribute had delivered only 50,000. And FEMA inspectors discovered a problem: The food had been packaged separately from the pouches used to heat them. FEMA’s solicitation required “self-heating meals.” “Do not ship another meal. Your contract is terminated,” Carolyn Ward, the FEMA contracting officer who handled Tribute’s agreement, wrote to Ms. Brown in an email dated Oct. 19 that Ms. Brown provided to The New York Times. “This is a logistical nightmare.”

Ms. Brown described herself in an interview as a government contractor — “almost like a broker,” she said — who does not keep employees or specialize in any field but is able to procure subcontracted work as needed, and get a cut of the money along the way. She claims a fashion line and has several self-published books, and describes herself on Twitter as “A Diva, Mogul, Author, Idealist with scars to prove it.”

After Tribute’s failure to provide the meals became clear, FEMA formally terminated the contract for cause, citing Tribute’s late delivery of approved meals. Ms. Brown is disputing the termination. On Dec. 22, she filed an appeal, arguing that the real reason FEMA canceled her contract was because the meals were packed separately from the heating pouches, not because of their late delivery. Ms. Brown claims the agency did not specify that the meals and heaters had to be together.

Tribute has been awarded dozens of government contracts since 2013, including one in 2015 for $1.2 million in mattresses for the Defense Logistics Agency, which supports military combat troops, federal spending databases show. Tribute delivered the mattresses, according to the agency. The databases offer only a fragmented picture of federal contracts. The government has also canceled Tribute contracts on at least five occasions.

Four cancellations involved the Federal Prison System, which found that Tribute failed to deliver meat, bakery, cereal and other food products to various correctional institutions. A fifth termination involved the Government Publishing Office, which terminated a contract for 3,000 tote bags after Tribute failed to print the Marine Corps logo on both sides of the bags.

An investigation by the office’s inspector general found that Tribute “altered and submitted a false shipping document and subcontracted the predominant production function on two contracts without proper authorization,” according to a 2015 report submitted to Congress. The report did not name Tribute, but a Government Publishing Office spokesman confirmed that it was the Georgia company mentioned in the document. The office awarded Tribute 14 contracts totaling more than $80,000 from 2014-15, and the company “routinely delivered late,” the report said.

As a result of the botched tote-bag job, the Government Publishing Office prohibited the award of any contracts over $35,000 to Tribute until January 2019. But that exclusion applied only to that office, not to any other federal agency.

Tribute has had three indefinite contracts with FEMA for hygiene kits since 2013, but none of them have been activated.

Asked about the cancellations, Ms. Brown offered explanations for each case, including that she had supplier trouble with the prison meals. She could have fought the Government Publishing Office on the tote bags contract, she said, but could not afford to at the time.

The bid protest could slow down the Pentagon’s cloud acquisition effort.
A $7 million sole-source cloud support contract awarded by the Defense Department to a company with one employee in January has come under bid protest.

Interoperability Clearinghouse filed the protest with the Government Accountability Office on Feb. 5, and contends the Defense Department failed to conduct a reasonable responsibility determination of Eagle Harbor Solutions LLC’s capabilities and resources. Eagle Harbor Solutions is an Alaska Native-owned 8(a) small disadvantaged business that federal contracting database records indicate has an annual revenue of $91,005, a single employee and few past government contracts.

The protest also alleges a conflict of interest due to Eagle Harbor Solutions being a subsidiary of Koniag Government Services and its parent company, Koniag Inc., which provides cloud services to the Defense Department through the Army’s ACCENT contract. A $7 million sole-source cloud support contract awarded by the Defense Department to a company with one employee in January has come under bid protest.

Interoperability Clearinghouse filed the protest with the Government Accountability Office on Feb. 5, and contends the Defense Department failed to conduct a reasonable responsibility determination of Eagle Harbor Solutions LLC’s capabilities and resources. Eagle Harbor Solutions is an Alaska Native-owned 8(a) small disadvantaged business that federal contracting database records indicate has an annual revenue of $91,005, a single employee and few past government contracts.

The protest also alleges a conflict of interest due to Eagle Harbor Solutions being a subsidiary of Koniag Government Services and its parent company, Koniag Inc., which provides cloud services to the Defense Department through the Army’s ACCENT contract.

The Defense Department previously said the contract “is for program office support services,” and that Eagle Harbor Solutions “is serving in a support capacity only by providing a small team of highly skilled individuals.” In a press release, Eagle Harbor Solutions said it would provide the Defense Department “a full range of infrastructure engineering, software engineering, acquisition, strategic communications, business operations, cost estimation, and budgetary expertise.”

The Defense Department previously said the contract “is for program office support services,” and that Eagle Harbor Solutions “is serving in a support capacity only by providing a small team of highly skilled individuals.” In a press release, Eagle Harbor Solutions said it would provide the Defense Department “a full range of infrastructure engineering, software engineering, acquisition, strategic communications, business operations, cost estimation, and budgetary expertise.”
How can these contracts possibly be justified? Bid contracts are awarded (or meant to be) to the lowest priced responsive bid of a responsible bidder. A bidder who offers a product or service conforming materially to all solicitation requirements can, with a low bid, be considered to have presented a responsive bid.

But that is only half the story. The bidder must also be responsible.  Responsibility and responsive are not at all the same thing.  They are often, wrongly, conflated.  See, Responsivebility.

How can a small shop win a contract for a complex job?

Responsibility is a matter of judgment, involving the weighed consideration of several factors, which the ABA Model Procurement Code calls "Standards of Responsibility". A bidder's responsibility is to be determined before award, and is most often not considered until after bids are opened.

The standards include, a satisfactory record of performance. That is only useful if governments keep such records and share them amongst its various arms. The record can include non-government contract, particularly important for new entrants to the field of competition. Similarly a satisfactory record of integrity is a factor.

And this is where it gets a bit non-intuitive to the uninitiated. Although a bidder is required to have "available the appropriate financial, material, equipment, facility, and personnel resources and expertise" to indicate its capability to meet all contractual requirements, it is also deemed responsible if the bidder has "the ability to obtain them". There are some organizations who have become very adept at understanding a new opportunity and marshaling the stuff necessary to perform the job. These bidders can also win a government contract.

Another example of such a case is provided by the Hawaiian case, BROWNING-FERRIS INDUSTRIES OF HAWAll, INC. It was an administrative hearing before the Department of Commerce and Consumer Affairs of the State of Hawaii. It involved an award to provide rubbish collection services at the Honolulu airport. It did not have trucks, containers, personnel, drivers, collection facility or practically anything else, but did show, to the satisfaction of the Procurement Officer, that it had the ability to obtain all of it. 

Note that, in the Eagle Harbor situation, there was an additional element: whether the bidder was a bona fide, qualified Alaska Native-owned 8(a) small disadvantaged business, or whether it was a front for its much larger owner, which provided the resources it lacked.

Wednesday, January 3, 2018

Protest must be timely and protestor must show prejudice, and a footnote about issue of contract dispute vs solicitation dispute

The following is from a protest decision of the GAO. This protest involved two protests from two protestors in the same solicitation. One protest illustrates by example when a protest is not "timely". The other illustrates a protestor's lack of prejudice, and thereby standing to protest.

Bear in mind my proclivity to re-work the original articles, leave out critical citations, paraphrase and so on, so read the original decision at the link if you need to rely on it.

Matter of: AeroSage, LLC; SageCare, Inc., File: B-415607; B-415607.2; B-415607.3, January 3, 2018 AeroSage, LLC, and SageCare, Inc., protest the award of a contract to Tayrona Oil, Inc., issued by the Defense Logistics Agency (DLA), for 5,000 gallons of fuel to the Milwaukee Veterans Administration Medical Center (MVAMC).

The protesters primarily allege that DLA unreasonably modified the purchase request's delivery schedule without issuing an amendment. We dismiss SageCare's protest and deny AeroSage's protest.

MVAMC placed a purchase request with DLA for 5,000 gallons of fuel for delivery. The request (1) represented that the procurement was being conducted as a small business set-aside, (2) confirmed that delivery was for 5,000 gallons of fuel on Friday, October 13, (3) requested quotations by no later than 11:30 a.m. on Thursday, October 12, and (4) provided that award would be made on a lowest-priced, technically-acceptable basis. DLA timely received quotations from the three firms that it had solicited, Tayrona, AeroSage, and SageCare. Tayrona submitted the lowest-priced quotation of $2.3487 per gallon.

The contracting specialist represents that he notified Tayrona via telephone on the morning of October 12 that its quotation was selected for award. Shortly after contacting the awardee, however, the contracting specialist represents that he was contacted via telephone by an official with the Department of Veterans Affairs indicating that the delivery had to be rescheduled for Tuesday, October 17. The contracting specialist contacted Tayrona via telephone to confirm whether the company would agree to the revised delivery schedule at the same awarded price, and the awardee confirmed.

Following that telephone conversation, the contracting specialist then emailed Tayrona to confirm that DLA was going to award the order to Tayrona and indicated that the delivery date was now Tuesday, October 17. The contracting specialist then emailed AeroSage and SageCare respectively to indicate that neither firm submitted the lowest-priced, technically acceptable quotation. Those emails also indicated that the delivery date was now Tuesday, October 17.

AeroSage's protest:

Following receipt of the notice, AeroSage filed an agency-level protest with DLA on October 12. The primary protest allegation raised by AeroSage was that [t]he contracting officer solicited the RFQ for requirement delivery for Oct[ober] 13, 2017, but awarded the purchase order for delivery four days later, October 17, 2017 thus prejudicing the protester by changing the date, and thereby creating pricing uncertainty on the new delivery date. On Monday, October 23, AeroSage filed the instant protest with our Office.

AeroSage's protest decision:

AeroSage argues that the agency unreasonably changed the solicitation's delivery schedule without amending the solicitation and allowing all offerors to compete against the new schedule. The protester contends that "[a] four day change in a solicitation time can both dramatically impact price/availability and the risks quoters are able to accept to provide best prices to [the] government." "AeroSage was prejudiced in this solicitation with a significant change in the solicitation prior to award."

We have generally recognized that when the government changes its requirements prior to award, it must notify all offerors of the changed requirements and to afford them an opportunity to respond to the revised requirements. Moreover, a contract's period of performance is generally considered to be a material solicitation requirement.

Our Office will not sustain a protest, however, unless the protester demonstrates a reasonable possibility of prejudice, that is, unless the protester demonstrates that, but for the agency's actions, it would have had a substantial chance of receiving the award. Here, the protester has offered no evidence that it was in fact prejudiced by the agency's failure to amend the delivery schedule by four days through the issuance of an amendment. The protester has not asserted that, let alone substantiated how, it would have reduced its unit pricing by an amount that would have overcome the awardee's price advantage. AeroSage's unsupported speculation that the change in delivery schedule could have impacted its proposed price is insufficient to establish competitive prejudice.

There is another teachable moment in footnote 6: The Government argued that the change in delivery schedule was a matter of contract administration, and thus not a proper subject for a protest dispute. As discussed above, however, the change occurred after proposals were submitted and evaluated, but before the contract award was formally made on October 13. Therefore, we do not find that the schedule change can reasonably be considered as a matter of contract administration, and therefore would be proper subject matter for a protest, if only the protestor had standing.

AeroSage's protest is denied.

SageCare's protest:

On November 22, SageCare filed a request to intervene in AeroSage's protest. On the same day, our Office denied the request to intervene on the basis that SageCare was a disappointed offeror, not the awardee of the protested contract.[3] We further explained that "[t]o the extent that SageCare, a disappointed offeror, believes that there were errors in the procurement, SageCare must file its own protest subject to our Bid Protest Regulations." SageCare subsequently filed its protest on November 24.

DLA moved to dismiss SageCare's November 24 protest as untimely because it was filed more than 10 days after the protester's owner and president had actual knowledge that SageCare had not been selected for award and of the change to the delivery schedule. Our Bid Protest Regulations contain strict rules for the timely submission of protests. Under these rules, a protest based on other than alleged improprieties in a solicitation must be filed no later than 10 calendar days after the protester knew, or should have known, of the basis for protest, whichever is earlier.

SageCare's protest decision:

SageCare seems to measure the timeliness of its protest from when SageCare's president received the awardee's price information through the agency report submitted in response to AeroSage's protest. DLA's October 12 notice to SageCare's president, however, clearly indicated that the protester's quotation was not the lowest-priced, technically-acceptable quotation, and that delivery was moved to Tuesday, October 17. Thus, the protester was aware of the material facts relevant to its asserted protest ground related to the modification of the delivery schedule as of October 12. Its November 24 protest, filed more than 40 days later, is untimely, and therefore the protest is dismissed.

SageCare's protest is dismissed.

Methinks they do protest too much about frivolous protests

Whenever there are contracts to be had or performed, there will be disputes. Thus, procurement protests are endemic to government contracts and contracting.

And, since government contracting is the means by which most of our tax money is spent, the government provides an administrative process to resolve the disputes more expediently than available by courts, which is where private contract disputes usually end up, absent some form of ADR (alternative dispute resolution) process the circumvents court action. In this light, the administrative dispute process is another form of ADR.

It must also be added that the procurement dispute process is the only means of assuring our tax moneys are being spent properly (if not wisely) by policing the system in real time (as contrasted with an audit some years hence).

I feel quite certain that the boring and routine procurement protest system would receive no more attention than the run-of-the-mill ADR procedure but for two things: it provides a "train wreck" story for the media to monetarize; and, it provides a platform for politicians to politicize. The theme in both cases is by question and answer. Question: why is this procurement being held up when the need is obvious and immediate? Answer: because of the frivolous action of a disreputable vendor.

In this blawg, I have often posted about frivolous protests, because the issue is so constantly being brought up. See, here, here, here, here, here, and here, for example.

And it is only being brought up because it is "good" (money making) media and "good" (vote and/or attention-getting) politics. It is not being brought up because it is a real problem, and to the extent it may be some kind of problem it blown all out of proportion to the seriousness of the matter.  It is not brought up in good faith to address a real issue.  It is simply a concocted drama.

Here is another illustration of the meme from Bloomberg. As always, read the original article at the link. I can end up taking extreme liberties and artistic license to the subject for my own didactic purposes, and you cannot rely on this blawg to provide the full, accurate, true-to-form, or intended iteration. So, go on, read the original.

Pentagon Contract Protests Aren't Frivolous, Rand Study Finds, by Anthony Capaccio, January 4, 2018
The Defense Department’s process for buying weapons, goods and services isn’t being overwhelmed or delayed by frivolous contract protests filed by major defense contractors as critics have contended, according to a study mandated by Congress. Instead, “bid protests are exceedingly uncommon for DoD procurements,” the report by the Rand Corp.’s federally funded National Defense Research Institute said. The report was based on a review protests in years fiscal 2008 through 2016.

Congress directed the study to examine 14 areas, including how much the government spends on manpower to defend its actions. Rand said it was unable to quantify those costs for lack of data. This lack of data could undercut a provision in this year’s defense policy bill that requires the Pentagon set up a three-year pilot program in 2019 requiring losing protesters to pay the Defense Department’s costs for handling GAO challenges.

More than half of challenges were brought by small businesses, it said, and the protest process was more effective than generally realized at compelling a military service to change its initial contract solicitation terms or its decision after a protest was filed.

The data-driven assessment is significant because it’s likely to be the basis of future congressional and Pentagon decisions on improving the process that lets bidders that have complaints before an award or those who lose a competition file appeals to the Government Accountability Office. The report underscores that most challenges are routine, unlike the few that end up in the spotlight.

“Policymakers should avoid drawing overall conclusions or assumptions about trends from one case when it comes to the efficacy of the bid protest system,” Rand said. The percentage of contracts protested is very small -- less than 0.3 percent per billion dollars of military contract spending, Rand said.

The report also described “a lack of trust on each side” between the defense industry and the Pentagon’s acquisition bureaucracy about the protest process. For example, military personnel say the rules allow “protesters to make excessive numbers of ‘weak allegations,’” it said. The report concluded that “firms are not likely to protest without merit,” debunking the notion that losing incumbents protest a loss merely to extend their contracts for a few months while the case is open, according to Daniel Snyder, an analyst with Bloomberg Government.

While the GAO sustained 2.6 percent of defense protests filed since fiscal 2008, the study found that’s not the whole measure of effectiveness. “The majority of relief to protesters takes the form of corrective actions” by the contracting agency while a challenge is pending before the GAO or withdrawn based on the potential for solving issues short of a decision, the study said. “Roughly 40 percent of all protest actions result in some change to the initial procurement decision or terms,” Rand said.

Rand concluded the steady record of effectiveness it documented “refutes the claim that meritless protests (some use the term frivolous)” account for the increased challenges.

Methinks we doth not protest so much after all?
Doth we protest too much? Methinks not

Monday, December 25, 2017

Crikey! Wot a rort!

I remind my reader to click the links to the articles presented and read the originals, as I slice and dice the material for didactic purposes in order to try to present a "teachable moment". These posts are mostly to be considered as hypothetical procurement case studies, not news or other literary content, and omit, paraphrase and rearrange a lot of original material. You've been warned, again.

Allegations of systemic fraud sparked Defence Department internal audit
Confidential documents drafted by a senior defence department investigator reveal allegations of systemic fraud spanning several years inside the government's biggest spender. The 10-month investigation, which finished in February this year, was prompted by an anonymous disclosure about fraud and corruption made to the department in April 2016.

One of the most concerning aspects involved the department awarding companies contracts without a competitive tender process and only a flimsy justification they met "value for money" requirements. In other cases the department was unable to tell whether a contract breached procurement rules or not because important paper work could not be found.

In 2015-16 the Department of Defence reported the largest yearly contract spend of any agency within the public service. The department dialled-up a bill of $30.5 billion on contracts, amounting to 54 per cent of total government contractor spending.

The investigation raised serious questions about the department's use of "single source" tenders, where a single company is awarded a contract without having to compete against other providers. "It is questionable whether true value for money is achieved when [redacted] continually conduct single source limited tenders," Dr Clarke wrote. "Whilst there is less administration and quicker decision making with this approach, it provides limited opportunity for Defence to achieve the best possible outcome. "Single source limited tenders increase the risk of contractor underperformance and corruption."
Defence spending data unreliable, incomplete, national audit office says
Transparency and accountability for billions of dollars of annual defence spending remains suspect despite recent reforms, the Australian National Audit Office (ANAO) has found.

Last year, the Defence Department spent $8.3 billion on keeping its equipment in working order, known as "sustainment" in military jargon. Yet, the audit office found that despite small recent improvements, information about where that money went and whether it was being spent wisely was often unreliable or not available.

The report also questions a claim from Defence that reforms to its sustainment policies had saved $2 billion. "Defence has not been able to provide the ANAO with adequate evidence to support this claim, nor an account of how $360 million allocated as 'seed funding' for Smart Sustainment initiatives was used," it read.

Auditors were also critical of inconsistencies between figures given to the Government during the budget process and those provided in the department's annual report. "It's absolutely not good enough," Andrew Davies, director of defence and strategy at the Australian Strategic Policy Institute, told AM.
Oz military megahack
An Australian Signals Directorate (ASD) presentation to the Australian Information Security Association (AISA) conference yesterday detailed the hack. Suffice to say that a medium-sized defence contractor was breached and gigabytes of aerospace data and commercial arrangements for military aircraft and naval vessels were delivered into the hands of the attackers. The ASD used it as a case study for the AISA conference yesterday.

The government has since said the information was commercial-in-confidence, but not classified. This is not an isolated incident: in Australia, as elsewhere, attackers thwarted by a network's defences then seek out third-party contractors as an easier mark.

This suggests a problem in sub-contractor oversight – you can win a government contract without proving you have adequate network security.

Minister for Defence Industry Christopher Pyne seems to agree. This morning, he told Radio National's Breakfast programme that the government can't be held responsible for a contractor's lax security.
Fat and mismanaged public sector is eating us alive
In a Crikey article, carried by the Community and Public Services Union, Eric Beecher chronicles appalling mismanagement in service delivery.

Then there’s the $11 billion spent by the Defence Department managing 119 bases around Australia which the ANAO says is well in excess of the $9.3bn “expected value” of the 10 services contracts, signed in 2014, to do the work. The department has defended its performance, saying the vast project to renegotiate the contracts has delivered value for money, when considered against increased service demands and changing expectations of the ADF. Yet a new $120 million IT system, meant to manage contracts ­between Defence and the private companies servicing the bases, was $39m over budget and five years late.

There’s also the flawed tendering and contracting processes overseen by the Immigration ­Department, which resulted in the waste of “tens and possibly, hundreds of millions of dollars”. Given these practices were subject to a scathing ANAO report, they could hardly be ignored.

We’re reminded of last year’s Australian Bureau of Statistics census “stuff-up”, the Australian Taxation Office’s massive and damaging IT outage, the Department of Health’s decade-long mismanagement of e-health records, and the embarrassing release of identifiable Medicare information. There’s also the Department of Finance’s lax oversight of ministerial travel arrangements. But not raised is the $576m public service travel bill — a blowout of $75m in just four years.

While this shocking record is acknowledged, Beecher argues the blame lies mainly with outsourcing to powerful private contractors.
Outsourcing failures expose weaknesses in both government and business
The problems of dealing with private sector providers and contractors are a persistent theme in the analysis of government shortcomings. For example, recent Australian National Audit Office reports highlighted contracting problems in Air Services Australia, the Defence Department and the Immigration Department. Contract management issues were at the heart of last year's failed online census and have been a constant factor in the turbulent administration of Australia's controversial offshore detention centres. Over-reliance on contracted consultants was a major cause of the botched home insulation scheme.

Given the extent to which governments rely on private contractors for a large range of goods and services, it is unsurprising that contractors are often in the frame when things go wrong. But many of the recurring issues arise out of factors specific to the contracting process.

A common complaint is that the use of contractors has caused agencies to run down their in-house expertise and technical resources. As a result, it can be argued, agencies lack the capacity to assess whether the contracts they are agreeing to give the government and taxpayer adequate value for money. Without their own professional judgment, grounded in technical knowledge and practical experience of the area in question, public service managers are ill-equipped to decide matters of all-round quality. Instead, they tend to fall back on generic checklists of assessment criteria that emphasise easily specifiable factors, such as cost and timeliness.

Alternatively, if funds allow and time permits, they may contract in an external consultant or commissioner to give an expert opinion on a proposed contract. But such advice carries the risks of perverse incentives attached to all forms of external contracting and consulting. The consultants' objective is to gain future contracts, which encourages them to say what they think governments want to hear in preference to what they ought to hear. Once again, without the professional judgment to tell the difference and without their own in-house, trusted staff to advise them, public service managers are at the mercy of self-interested outsiders. This vulnerability is compounded by the lack of transparency that surrounds contracting. Overuse of commercial-in-confidence provisions has shielded public servants from the bracing effects of public scrutiny.

The lack of in-house capacity can affect not only the initial process of drawing up contracts but also the oversight of how contracts are implemented. However, as the constant stream of scandals illustrates, many commercial providers are more interested in profit than in good service and cannot be trusted to do the right thing. As a result, governments are being driven to impose tighter controls and regulations. Even then, in the face of determined rorting and corner-cutting, most government agencies lack the resources to prevent opportunistic contractors from wrongfully expropriating public funds.

After two decades of wholesale outsourcing, some general conclusions are clear. Contracting out is an efficient and effective alternative to in-house provision where the objectives are clear and easily monitored, and where there is a competitive market of alternative providers. It also works well for more complex services where providers can be trusted to pursue public-interest objectives for their own reasons. However, where these conditions of either simplicity or trust do not apply, the risks that governments will not receive value for money start to build. Moreover, extensive experience with outsourcing has itself compounded these risks by reducing governments' capacity to effectively draw up and monitor outsourcing contracts. Some complex service contracts that could have been safely contemplated a generation ago are now beyond the professional expertise of public servants to administer.

politicians need to recognise that outsourcing complex government services requires the development of trust between the parties, which means looking beyond the short-term bottom line and not always preferring the cheapest option. In addition, successful contracting depends on well-resourced government agencies with the skills and experience necessary to manage ongoing relationships with contractors. Running down government staffing levels while relying more on private contractors is a recipe for continuing policy failure.

Contractors, for their part, must earn the right to be treated as trusted partners. They must be prepared for the long haul and willing to learn from experience. They must also be ready to submit to the level of public scrutiny and accountability that public servants take for granted. Indeed, given that the commercial private sector is not imbued with the same commitment to serving the public interest, there is a case for subjecting private contractors to more scrutiny than the public service, not less.