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Monday, November 1, 2010

The (unfair) power of incumbency

Google Sues Agency Over Microsoft-only Cloud Deal
Google and a reseller of its products have filed a lawsuit against the U.S. Department of the Interior after the agency solicited bids for cloud-based e-mail and messaging services specifying that bidders must use Microsoft products.

The contract, for up to US$59.3 million over five years, tells bidders they must deploy Microsoft's Business Productivity Online Suite-Federal (BPOS) package to deliver the services.

The Microsoft requirement is "unduly restrictive of competition" and violates federal contracting law, Google and Onix said in their complaint.

Google Files Suit Against U.S. Govt. Over Contracts
Because of Microsoft's long history of providing government solutions, the suit alleges that the DOI established Microsoft Office as a departmental standard, which was affirmed in an updated decision in July 2010.

Google sues US gov for picking Microsoft
Google's suit was first turned up by Santa Clara law professor and tech law blogger Eric Goldman.
According to the suit, Google repeatedly tried to engage the Department of the Interior in "substantive discussions," hoping to convince the agency that it should consider Google Apps, Mountain View's suite of online business tools.

At one meeting in April, the suit says, the department told Google that a "path forward has already been chosen" and that Google would not be able to compete for the contract because its services didn't meet the department's security needs.

During the meeting, Google claims, the department did not define its security requirements.

Comment: Guam procurement regulations (modeled on the American Bar Association Model Procurement Code regulations) implicitly recognize, and attempt to alleviate, the advantages that an incumbent contractor has. For instance, 2 GAR § 3121(e)(2), dealing with long, multi-term contracts, states, when making an award "[c]are should be taken when evaluating multi-term prices against prices for the first fiscal period that award on the basis of prices for the first period does not permit the successful bidder or offeror to "by in", that is, give such bidder or offeror an undue advantage in subsequent procurement."

Of course, that provision only speaks to pricing advantages to incumbents, not specification advantages. In the Google case, the issue is whether the specifications have been so drawn that they are, in effect, a sole source procurement. The Guam procurement law has several policies and requirements regarding the promotion of competition through competitive and non-proprietary specification drafting. See, for instance, 5 GCA § 5268.

The Procurement Act policy to "ensure the fair and equitable treatment of all persons who deal with the procurement system" would also count as a directive that government should not favor incumbents, regardless, and perhaps especially because, of familiarity with the product.

I am reminded of a proposal evaluation done in a procurement matter I handled in the CNMI. The evaluators were meant to evaluate the bidders' experience, but the bid evaluation page only labeled the category "experience". My client was up against the incumbent and felt wrongly done by when the evaluators' comments read, "I have had good experience with [the incumbent's] products".

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