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Sunday, May 31, 2015

Procurement too difficult, to a degree

Bill would change procurement rules for public universties, including NIU
House Bill 4215, the Illinois College Procurement Reform Act, would allow public university boards of higher education to develop their own procurement rules. As it is, universities are required to follow regulatory processes outlined in the Illinois Procurement Code. State Rep. Mark Batinick has filed the house bill.

The procurement process is complicated and often requires universities to jump through administrative hoops, Batinick said. Some of the regulations include a strict approval process and competitive bidding requirements, Batinick said.

Paul Palian, NIU director of media and public relations said university officials would like to see the process streamlined to conserve time and resources and allow the school to attract the best options for business partners.
You Paid For It: Univ. purchase rules cost millions
A law to prevent corruption has had some unexpected consequences, and it could be costing taxpayers millions. State Senator Chapin Rose (R-Champaign) said it’s gotten so bad, universities take advantage of opportunities to buy out of state.

The university’s deputy comptroller Mike Bass said the university could run a cheaper, more efficient purchasing system on its own. He said it would still comply with all of the states transparency and ethics requirements. [But not competition, compliance and accountability ones?] "We should operate in the most nimble fashion that we can to get the job done for our constituents,” Bass said.

He said colleges often take higher bidders because of lower ones forget or have trouble filling out the dozens of forms required or because the system delays the actual purchase and prices go up. [Have you ever tried to apply to get in a college, or register, or change a class? Or teach, get tenure, get permission to obtain a grant in one? Educational institutions are amongst the most bureaucratic, yet authoritarian, institutions in the country, yet they can't run a simple procurement regime like the rest of government?]

Bass said colleges often take higher bidders because of lower ones forget or have trouble filling out the dozens of forms required or because the system delays the actual purchase and prices go up. "The whole procurement process can extend and when you do that, not only could the price point change but you could lose other competition,” Bass said.

Chief Procurement Officer for Higher Education Ben Bagby said there has been nothing to back up university claims of million dollar losses. He said the state is attempting to give exemptions for time sensitive grants. He said he isn’t convinced the university proposal will actually save money.

“We should be doing things right,” Bagby said. “The universities have not shown that moving to a separate procurement office will save money.”

"Those folks should be allowed to control their own destinies. Who cares that somebody in Springfield has to sign off a piece of paper to buy a pencil. Buy the pencil,” Sen. Rose said.
I feel pretty sure it's not about the pencil.

Virginia's road project got PPP'd on

How Virginia paid more than $250 million for a road that never got built
The problems help explain why top officials in Gov. Terry McAuliffe’s administration have recently increased scrutiny of public-private partnership deals, a sharp shift in tone in a state that has for 20 years been a national leader in pushing such projects. Transportation Secretary Aubrey Layne said this month that the I-66 project should not be ceded to private investors for “ideological” reasons, as might have happened in the past. Keeping the construction of toll and carpool lanes under state control could generate hundreds of millions of dollars for additional transportation projects, he said, and avoid a repeat of cases in which the state was left “holding the bag.”

Virginia officials are trying to get back tens of millions of dollars from a private company that was supposed to build a 55-mile toll road in southeastern Virginia. State officials had been sending the company multimillion-dollar installments each month to build the road. But the state lacked federal construction permits, so the road wasn’t built. And now the commonwealth is out about $256 million.

Virginia officials governed the project using the state’s Public-Private Transportation Act, which went into effect 20 years ago and gave officials extraordinary flexibility in pairing public projects with private firms. The idea was to try to tap the construction expertise, business acumen and cost-consciousness of private companies, with the benefits flowing to shareholders and state taxpayers. If Virginia officials didn’t have the stomach to set aside large sums to add long stretches of highway, they could lure private investors to put up much of the money. Companies would cover project costs and company profits with the decades of toll revenues they collected.

Among the critical problems, Layne said, was a sort of automatic payment plan, which sent millions to the firm monthly starting in early 2013. Those routine payments were in addition to funds sent to cover specific work that was completed. "Payments continued to go to the contractor for things they knew couldn’t possibly be accomplished, because they didn’t even have a permit,” Layne said. Del. S. Chris Jones (R-Suffolk), chairman of the House Appropriations Committee, said, “I can’t think of a worse contract that I have seen in my years of public service.” Jones said that the deal was rushed to avoid political scrutiny.

Layne said he was not seeking to disparage state representatives, but noted that they emerged from a more “process oriented” background within state agencies and lacked the entrepreneurial and negotiating experience and resources of private firms. Private negotiators had often been doing a much better job than their well-meaning state counterparts. “These guys are buying the best attorneys in the world.”

Layne said the company negotiated in good faith. It is the commonwealth’s responsibility to protect its interests, he argued. “I don’t think they’ve done anything that wasn’t allowed in the contract,” Layne said. But, “I’m not saying it was a good contract.” “I don’t blame them for taking the money. It was a negotiated payment schedule,” Layne said. “They didn’t ask to stop getting payments. . . . If I were them, I wouldn’t either.”

The initial concept was that a private firm would pay to build the toll road and control it for decades, a major undertaking with significant risk. The Public-Private Transportation Act allowed many of the state’s basic procurement rules to be bypassed, Layne said, a feature intended to give the state flexibility to find the best deal.

But private firms balked at taking long-term control of the road because traffic tallies and resulting toll revenues were projected to be too low. So state officials changed course. They decided they wanted to hire a company whose primary responsibilities would be to design and build the road. But in a quirk of the transportation act, the state’s basic procurement rules — which limit certain types of financing arrangements and require more rigorous oversight — did not kick back in, even after the nature of the project shifted radically.

State officials then failed to invite a wider group of firms to vie for the business. That left just the three groups that had been competing for the original public-private partnership, Layne said.

Officials “continued to negotiate with a group that was really set up to do something else,” Layne said, noting that only a few large firms had the needed financial heft and inclination to finance, design, build and operate the project as it was initially envisioned. “Had they opened it up, they would have had many more firms willing to bid on this particular project,” Layne said. “It was basically, ‘Build the road and turn it over.’ ”

And more competition could have brought a better deal, he argued.

Project executives with the two firms that make up 460 Mobility – Ferrovial Agroman, a major multinational construction and engineering concern with roots in Spain, and a Pennsylvania-based building firm now known as Allan Myers – declined to comment. “Our employees and contractors have been professional and accommodating throughout the commonwealth’s reconsideration of this project,” said Shannon Moody, 460 Mobility’s public relations manager.

Wednesday, May 13, 2015

Giving the fox the keys to the chicken house?

This evening I come to you with a message of leave-taking and farewell, and to share a few final thoughts with you, my countrymen. 

We face a hostile ideology -- global in scope, atheistic in character, ruthless in purpose, and insidious in method. Unhappily the danger is poses promises to be of indefinite duration. To meet it successfully, there is called for, not so much the emotional and transitory sacrifices of crisis, but rather those which enable us to carry forward steadily, surely, and without complaint the burdens of a prolonged and complex struggle -- with liberty the stake. Only thus shall we remain, despite every provocation, on our charted course toward permanent peace and human betterment.

Crises there will continue to be. In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties. A huge increase in newer elements of our defense; development of unrealistic programs to cure every ill in agriculture; a dramatic expansion in basic and applied research -- these and many other possibilities, each possibly promising in itself, may be suggested as the only way to the road we wish to travel.

But each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage -- balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration.

A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction.

Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea.

Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific/technological elite.

It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system -- ever aiming toward the supreme goals of our free society.

--Farewell address of President Dwight D. Eisenhower



In House bill, arms makers wrote their own rules (Read the full story at the link.)
In his bill set to pass this week to overhaul how the Pentagon buys weapons, the new chairman of the House Armed Services Committee relied heavily on those with most at stake: the nation’s arms makers.

Defense contractors played a major role in crafting the proposal by Rep. Mac Thornberry designed to reform the Pentagon acquisition system, according to a POLITICO comparison of the legislation and industry proposals. Some of the provisions in the Texas Republican’s bill could end up boosting company profits — at the expense of taxpayers.

For example, the bill would weaken the power of the Pentagon’s chief weapons tester, an independent watchdog who answers directly to the secretary of defense and often uncovers flaws in big-ticket weapon systems. That was a provision proposed by the Aerospace Industries Association, which represents the nation’s leading defense and aerospace firms.

The legislation would encourage the defense secretary make sure contracting officials use the the standard of lowest price when choosing winning bids only in “appropriate circumstances” — potentially giving officials wide latitude to bypass a less expensive solution. That provision can be traced back to the National Defense Industrial Association, another influential trade group funded by Pentagon contractors. Thornberry’s staff also received input from major defense contractors like Boeing and Raytheon and trade groups like the Professional Services Council and the Information Technology Industry Council.

Some industry players aren’t bashful about the extent to which they shaped the bill.

“There were, literally, 10 provisions of Chairman Thornberry’s Agile Acquisition bill that had some kind of direct or indirect lineage from our recommendations,” said Will Goodman, a former Senate aide who’s now vice president of policy at NDIA. “They were tightly aligned and in some cases were word-for-word adaptations.”

For his part, Thornberry pushes back on the idea that industry played too much of a role in crafting the legislation. “Obviously if you want to improve a system, you’ve got to get the viewpoint of the people who work in the system every day, and that in this case includes the industry.”

But a number of experts and watchdog groups were wary of the industry role if not outright critical of its influence — especially given that six of the congressman’s top 10 sources of campaign contributions are defense contractors, according to the Center for Responsive Politics.

A particular area of concern is whether the changes will chip away at the power of the Pentagon’s testing office, which puts new weapons through rigorous inspections to ensure they’d work as advertised in combat. The office has long been a thorn in the side of contractors and Pentagon program managers. Its testing regimens often turn up major problems that need to be corrected, such as flaws in the software that controls the new F-35 fighter jet.

The Aerospace Industries Association, which advocates for more than 300 aerospace and defense companies, urged Thornberry to hold the Pentagon’s testing office “accountable for program delays and cost increases attributable to their actions.”

The bill would do exactly that, requiring the Pentagon’s director of operational test and evaluation to “take appropriate action to ensure that the conduct of operational test and evaluation activities do not unnecessarily impede program schedules or increase program costs.”

“We think this would make it more likely that testing could be deferred due to cost, and we would prefer problems be found during testing instead of on the battlefield,” said Mandy Smithberger, who directs the Straus Military Reform Project at the Project On Government Oversight, a non-profit watchdog group. “Contractors don’t like the testing office because it’s the office that finds out when there are deficiencies in their systems, and it provides Congress some of the best ammunition for performing oversight of their systems.”

Efforts to reform the military’s acquisition bureaucracy date back at least to the Civil War, when congressional investigators turned up “mismanagement in defense acquisitions that resulted in the government buying weapons that did not work, horses that were diseased, and food that was rotten,” as the Congressional Research Service explained in a 2013 report.

The sweeping proposal, which was put together in coordination with the House Armed Services Committee’s ranking Democrat, Adam Smith of Washington state, would cut the paperwork required of Pentagon program managers. It would also make it easier for program managers to decide which types of contracts to use, reversing rules that give preference to fixed-price contracts — which require contractors, not the government, to cover unexpected cost growth in their contracts.

Not all provisions are designed to help contractors. The bill would, for example, make permanent a training fund that expires in 2018 to help Pentagon managers negotiate more successfully with contractors.

Thornberry said he looked for proposals that could be considered low-hanging fruit — drawing support from the Pentagon, industry and think tanks. He maintains that he sought the views of experts and think tanks, such as the Center for Strategic and International Studies and the American Enterprise Institute, as well as watchdog groups such as Citizens Against Government Waste. In addition, the Pentagon submitted a number of proposals — many of which were included in the final bill, which was unveiled in March and rolled it into this year’s National Defense Authorization Act, a massive annual measure that sets defense policy and is being considered on the House floor this week.

But contractors appear to have been especially influential in getting their suggestions included in the final measure. For instance, it would raise the threshold for simplified acquisitions from $100,000 to $500,000 — a provision requested by the Aerospace Industries Association. Under such acquisitions, contracts can be awarded through a streamlined procurement process.

Thornberry’s bill would also require studies on why losing contractors dispute the bidding process and who should own the intellectual-property rights for government-sponsored research — both of which were requested by industry associations.

Another proposal in Thornberry’s bill would make it easier for military products to be labeled “commercial,” a designation that comes with fewer oversight requirements — and a change advocated by the global technology firm Honeywell, which ranks among the Pentagon’s top 30 contractors.

Goodman, the vice president of policy at NDIA, said his group’s suggestions to Thornberry were about advancing “good public policy,” explaining that “good public policy is good for the defense industry.”

The committee report accompanying Thornberry’s bill even cites NDIA, which represents more than 1,600 military contractors and suppliers. The bill notes that the trade group recommended that acquisition laws should be given expiration dates — and reviewed on a rolling basis to determine if they should be renewed.

“The committee is interested in examining this approach,” the report says.

Pentagon acquisition expert Andrew Hunter, of the Center for Strategic and International Studies, noted there’s an inherent “tension” between the industry and the government.

“You need to pay attention to industry’s concerns, for sure,” said Hunter, the former head of the Pentagon’s Joint Rapid Acquisition Cell. But, he noted, defense companies are “also obviously motivated by the profit motive, and their interests with the government don’t always fully align.”

Thornberry, too, acknowledges the inherent conflict.

“They have their perspective, absolutely, and you have to know that every step of the way,” he said of the defense industry. “They’re looking after their company’s interest or their shareholder interests, and that company or shareholder interest, it may not be the same as the taxpayer’s interest or the Department of Defense’s bureaucratic interests, or the national interest.”

Senate Armed Services Chairman John McCain (R-Ariz.), who will be working with Thornberry to craft the final version of the acquisition-reform proposal during House-Senate negotiations, said he planned to include some reforms of his own in the Senate version of the defense authorization measure.

And he promised they wouldn’t be industry-friendly.

“You’re gonna see some very tough stuff out of our bill,” he said. “We’ll be glad to get feedback from anybody, but I guarantee you it is tough.”
For mine, some of the suggestions are not as dubious as implied, but the devil is always in the details: the regulations. So, we'll see.

Protest of too little time to submit offer after amendments

Matter of: Financial Asset Management Systems, Inc., B-409722.9, April 24, 2015
Financial Asset Management Systems, Inc. (FAMS), of Atlanta, Georgia, protests a request for proposals (RFP) issued by the Department of Education for student loan debt collection and administrative resolution services. FAMS contends that the agency failed to provide sufficient time to prepare proposals. [There was another more substantive issue raised, but this is the one considered important for this post.]

The solicitation, issued on July 30, 2013, provided for a 2-phase procurement for the award of multiple indefinite‑delivery/indefinite-quantity contracts for a 5-year base period and a 5-year option period for student debt collection and administrative services. Phase I was completed in April 2014; 42 firms were selected to submit phase II proposals. This protest concerns phase II of the procurement. As relevant, the agency issued amendment No. 17 to the solicitation on December 19, 2014, which revised the evaluation criteria. At that time, the closing date for receipt of proposals was January 16, 2015. On January 13, the agency issued amendment 20, which provided answers to 359 questions submitted by the offerors; the January 16 closing date, however, remained unchanged.

Thirty-seven firms, including FAMS, an incumbent contractor, submitted timely proposals.

The protester contends that the agency was required to extend the closing date for the receipt of proposals in order to afford offerors adequate time to prepare their proposals, but failed to do so. In this regard, the protester points to the fact that amendment No. 20 included agency answers to 359 offeror questions only 3 days before the RFP’s closing date, and that the agency provided incumbent contractors with completed past performance questionnaires for their incumbent contracts with the agency only 2 days before the closing date.

The determination of what constitutes a sufficient amount of time for proposal preparation is a matter committed to the discretion of the contracting officer; we will not object to that determination unless it is shown to be unreasonable.

FAMS generally suggests that the “type and quantity of questions” that were answered in amendment No. 20 required additional proposal preparation time. Comments at 10. The protester, however, has not identified specific questions or answers that required additional proposal response time, nor has it identified any change to the solicitation’s terms effected by the amendment. Moreover, we fail to find the sheer number of questions and answers alone to be persuasive proof of a need for more than 3 days of proposal preparation time, especially where, as here, the answers did not revise solicitation terms and several questions were repetitious.

Similarly, regarding the fact that FAMS--along with all other incumbent contractors--received its completed past performance questionnaire from the agency only 2 days prior to the closing date, the protester fails to identify information in that questionnaire that the firm did not already have from the agency and its CPCS data months earlier. The protester has failed to show that it could not have reasonably prepared its proposal, including an explanatory narrative of its past performance, within the 28 days between amendment No. 17’s provision of the revised past performance evaluation terms and the closing date for the receipt of proposals. In sum, the protester has provided no basis to establish that the agency acted unreasonably by not extending the solicitation closing date due to the issuance of answers to offeror questions or the release of past performance questionnaires to the incumbent contractors.

The protest is denied.
The protestor simply did not convince GAO, or provide convincing evidence, that it was prejudiced in its preparation of its proposal, since 36 other offerors had no trouble adequately meeting the deadline, and FAMS did also submit a timely proposal, if one shown to be deficient when the submissions were opened and evaluated. 

It might have helped the protestor's cause had it protested the timing issue rather than submit a proposal, since GAO generally rejects protests about the nature of the solicitation after submission of offers or bids when the protester also submitted one; it seems to feel that gives the protester two bites at the apple.

Further, the solicitation had already dragged out almost two years from issuance, no doubt due to the multiple questions and amendments necessitated from the crowd of interested parties.

It may have been a factor in the result that there was more than ample competition from numerous other offerors; thus, the admonishment to foster competition was not pertinent.

And, the result may have been influenced by the fact that the substantive reason given to protest had no traction. It's hard to win a protest if you don't have something going for you that invites the compassion of the adjudicator that you've been unfairly dealt with.

Tuesday, May 5, 2015

Many a crocodile tear has to fall, but it's all in the game

Defense bill asks if contractors are gaming bid protests
Lawmakers want to know if Defense Department contractors are gaming the bid protest process, according to language included in the National Defense Authorization Act.

The NDAA, which passed out of House Armed Services Committee on a 60 to 2 vote April 30, instructs DoD to commission a study regarding how Defense Department contractors use - and possibly manipulate - the bid protest process.

The NDAA asks DoD to analyze:

• If contractors who currently have a DoD contract enter a bid protest to delay the implementation of new contracts that would draw business away from the old one. The Government Accountability Office has up to 100 days to review a bid protest and render a decision.

• The extent to which companies file bid protests even when they do not believe the Defense Department made an error in order to delay or otherwise disrupt the process.

• Whether there are net benefits for companies filing a protest or indicating they plan on filing a protest.

Bid protests across government increased in fiscal 2014 to 2,561 – up from 2,429 in fiscal 203. The Government Accountability Office only upheld about 13 percent of bid protests filed by companies that year.

But the effectiveness rate – when an agency and contractor come to a settlement either before GAO makes a decision or after it sustains a protest – held steady at 43 percent of all cases.
I'm certainly looking forward to the results of such a study, assuming it will be a study.  It will go some way towards answering the validity of cries over the "frivolity" of protests.   I disagree with many protests, and other actions taken in the course of solicitations, but agree that any colorable claim of material irregularity is ripe for adjudication; otherwise, lumps in the rug will grow from all that gets swept under.

Unusual confluence of 3 separate GAO protests, all involving one contractor

You can View Recent Bid Protest Decisions of the GAO on its website. My recent visit to the site came up with the unusual coincidence of three separate protests, each involving one contractor, SupplyCore Inc. 

As always in the blawg, do not rely on the rendition of the cited piece presented; read the full piece at the link provided, to keep me honest, first of all, and to learn more than what is presented, secondly, including internal citations. I cut, rearrange, paraphrase and generally conduct mayhem with the material to suit my own purpose in presenting a view point for a teachable moment; for right or wrong.

Matter of: SupplyCore Inc., File: B-409418.4; B-409418.5; B-409418.6, April 16, 2015
DIGEST: Protest challenging the agency’s decision to cancel a solicitation is denied where the agency reasonably concluded that continued in-house performance would result in cost savings and efficiencies.

DECISION: SupplyCore Inc., of Rockford, Illinois, protests the Defense Logistics Agency’s (DLA) cancellation of request for proposals (RFP) No. SPM7LX-14-R-0029, for supply chain integration and management of lead-acid batteries. SupplyCore contends that DLA’s decision to cancel the solicitation was unreasonable. We deny the protest.

DLA issued the RFP with the intent of eliminating and reducing its current inventory of lead-acid batteries through attrition, and transfer of the responsibility for supply chain management functions such as forecasting, acquisition, storage, distribution, and transportation to a supply chain integrator. The RFP solicited proposals for a supply chain integrator to manage and perform all responsibilities required under the supply chain for worldwide support of current and future Department of Defense lead-acid batteries customers.

Based upon the agency’s evaluation of the offerors’ final proposal revisions, the SSAC and the contracting officer unanimously recommended the award of a contract to an offeror other than SupplyCore. Thereafter, the agency sent the presumptive awardee’s price information to a DLA business analyst to conduct an acquisition business case analysis (BCA) in accordance with DLA procedures. The final analysis found that it would cost the agency $13.8 million more to award a contract as compared to keeping the requirement in house. DLA also requested a BCA be performed by a private firm, which used a proprietary methodology distinct from the VSRM model used by DLA. The private firm’s BCA found an approximately $7 million cost of awarding the contract, as compared to continuing in-house performance, after accounting for transportation and contract costs. Thereafter, the agency determined that it would cancel the solicitation.

SupplyCore challenges the agency’s decision to cancel the procurement. The protester contends that the agency’s rationale for cancelling the RFP is pretextual because DLA does not want to award it a contract. SupplyCore alleges that the cancellation is unreasonable because the final BCA was based on faulty information and improper assumptions. Based upon our review of the record, we find that the agency’s cancellation was reasonable.[5]

As a general rule, our Office does not review agency decisions to cancel procurements and instead perform the work in-house, since such decisions are a matter of executive branch policy. However, where, as here, a protester argues that the agency’s rationale for cancellation is but a pretext -- that the agency’s actual motivation is to avoid awarding a contract -- we will examine the reasonableness of the agency’s actions in cancelling the procurement.

The protester makes three primary assertions in support of its allegation: the BCA improperly relied upon the price of the presumptive awardee, instead of SupplyCore’s lower-priced proposal; the BCA unreasonably assumed a 10‑percent decrease in demand; and the BCA failed to consider that the contract would be awarded on a fixed-price basis without an economic price adjustment, while the agency’s costs of in-house performance are not fixed. SupplyCore contends that these flaws led the agency to skew its cost analysis in favor of in‑house performance.

With regard to SupplyCore’s first assertion -- that it was unreasonable for the BCA to use the presumptive awardee’s price, while there may have been other methodologies the agency could have chosen to calculate costs for its final BCA, had the final BCA recommendation used the lowest-priced offer instead of the best-value offeror as the protester argues, such analysis would have been of little value to the agency given the solicitation’s best‑value award criteria, which placed significantly more importance on the non‑price factors. We find nothing unreasonable about the agency’s decision.

With regard to SupplyCore’s challenge to the agency’s assumed decrease in demand, we likewise find the agency’s evaluation unobjectionable. In this regard, the agency states that offerors were provided with demand history and briefing charts from an industry day, which showed declining demands and divestiture schedules. The agency also explains that its BCA included a sensitivity analysis that covered a range of demand scenarios, including a 10-percent increase in demand, which demonstrates that a savings would not be realized even if the BCA assumption of a 10-percent reduction was removed.

Finally, we also find unpersuasive SupplyCore’s argument that the final BCA did not consider differences between the fixed-price nature of the contract and in-house performance costs that would not be fixed. In fact, the BCA cost analysis summary clearly notes that the absence of an economic price adjustment in the fixed-price contract is “a further cost benefit” of contract award.

Matter of: Al Raha Group for Technical Services, Inc.; Logistics Management International, Inc., File: B-411015.2; B-411015.3, April 22, 2015
DIGEST: 1. Protests challenging the agency’s evaluation of the awardee’s past performance are sustained where the record shows that the evaluation was inconsistent with the terms of the solicitation and not adequately documented.

2. Protests challenging the agency’s evaluation of the protesters’ past performance are sustained in part, where the record shows that, for one protester, the agency unreasonably failed to consider information verifying the protester’s claimed past performance, and where the agency did not have a reasonable basis to discount positive past performance references.

DECISION: Al Raha Group for Technical Services, Inc. (RGTS), of Riyadh, Saudi Arabia, and Logistics Management International, Inc. (LMI), of Eastman, Georgia, protest the award of a Foreign Military Sales contract to SupplyCore, Inc., of Rockford, Illinois, by the United States Air Force under request for proposals (RFP) No. FA8505‑13‑R-31138, for F‑15 fighter jet transportation support services (TSS) for the Royal Saudi Air Force (RSAF). RGTS and LMI challenge the agency’s evaluation of the offerors’ past performance, and LMI challenges the agency’s tradeoff determination. We sustain the protests in part, and deny them in part.

The RFP sought proposals for comprehensive fleet management for various special-purpose vehicles and trailers to support base stand-ups and continued RSAF operation of F-15s. The contractor will provide all transportation and support services required to source, procure, track, warehouse, and deliver assets needed within the Kingdom of Saudi Arabia to support RSAF F-15 operations.

For purposes of award, the Air Force was to evaluate proposals under the following three factors: technical; past performance; and cost/price. With regard to past performance, the Air Force was to assess an offeror’s ability to successfully accomplish the proposed effort based on its demonstrated present and past work record. In addition to the present/past performance FACTS sheets prepared by offerors for four past performance references and the associated past performance questionnaires (PPQ) obtained by offerors, the agency also expressly reserved the right to obtain performance information from other sources. The RFP further provided that the agency was to evaluate the number and severity of performance problems, the appropriateness and effectiveness of corrective actions taken, and the overall work record; the solicitation warned that prompt corrective action in isolated instances might not outweigh overall negative performance trends.

The RFP advised offerors that the Air Force would evaluate the recency and relevance of each past performance reference. Recency was defined as active or completed efforts performed within the past 5 years from the issuance date of the RFP. For purposes of evaluating relevance, the RFP provided that the Air Force would evaluate the scope, magnitude of effort, and complexities for each reference. The RFP provided that the evaluation would include logistical and programmatic considerations, including but not limited to, the quantity procured, length of effort, complexity of the required delivery timeline, and dollar values of efforts submitted. The relevance rating was dependent on the degree to which the past performance references reflected similar scope, magnitude of effort, and complexities as compared to the solicitation’s requirements. For example, if the submitted contract met essentially the same technical complexities, but involved only some of the programmatic and logistical scope and magnitude of effort, a lesser relevancy rating was to be assigned.

the Air Force was also to evaluate whether an offeror’s past performance references demonstrated experience with the following: (1) foreign military sales or direct commercial sales material procurement; (2) procurement negotiations; (3) electronic asset visibility tracking and reporting; (4) subcontractor management; (5) international teaming agreements and/or international operations management; (6) packing, handling, shipping, and transportation management; and (7) quality assurance management. The RFP stated that the relevance rating for each reference would be based on the scope, magnitude, and complexity of the effort, and whether the reference demonstrated experience in the seven enumerated areas of experience.

Under the technical factor, the Air Force was to evaluate an offeror’s proposal for acceptability--essentially, a pass/fail evaluation. Among the technically acceptable proposals, the Air Force was then to make a best value tradeoff between past performance and cost/price, wherein past performance was to be significantly more important than cost/price.

After evaluating the recency, relevance, and quality of an offeror’s past performance, the Air Force was to assign an overall past performance confidence assessment using the following ratings: Substantial Confidence, Satisfactory Confidence, Limited Confidence, No Confidence, and Unknown Confidence (Neutral). The following matrix was established:


The Source Selection Authority (SSA) determined that SupplyCore’s proposal, based on its “Substantial” confidence past performance assessment, warranted paying a price premium of 4.18 percent over LMI’s proposal and 2.15 percent over RGTS’s proposal, both of which received “Limited” confidence assessments. Based on the tradeoff, the SSA determined that SupplyCore’s proposal offered the best value to the government, and selected the proposal for award.

 RGTS and LMI both challenge the Air Force’s evaluation of SupplyCore’s past performance as warranting a “substantial confidence” assessment, and each separately challenges the agency’s evaluation of its past performance as warranting a “limited confidence” assessment.

As a general matter, the evaluation of an offeror’s past performance is within the discretion of the contracting agency, and we will not substitute our judgment for reasonably based past performance ratings.   However, we will question an agency’s evaluation conclusions where they are unreasonable or undocumented.  The critical question is whether the evaluation was conducted fairly, reasonably, and in accordance with the solicitation’s evaluation scheme.  Here, we find that the agency’s evaluation with respect to SupplyCore’s and LMI’s past performance was unreasonable, inconsistent with the terms of the RFP, and not adequately documented and sustain these protest arguments.  We find that the agency’s evaluation with respect to RGTS’s past performance was reasonable and in accordance with the terms of the RFP and deny these protest arguments.

As discussed above, our Office will question an agency’s past performance evaluation where the record indicates that the agency either failed to evaluate, or otherwise unreasonably considered, the relevance of past performance references in accordance with the solicitation’s stated evaluation criteria. As relevant here, an agency’s evaluation of an offeror’s past performance is unreasonable where the solicitation requires the agency to consider the value of the offerors’ references as compared to the value of the solicited requirement, and the agency fails to reasonably explain why comparatively small-value references provide a basis to justify a high past performance rating, or in this case the highest possible rating.

Additionally, where an agency fails to document or retain evaluation materials, it bears the risk that there may not be an adequate supporting rationale in the record for us to conclude that the agency had a reasonable basis for its source selection decision.

 In sum, based on the fact that SupplyCore’s past performance submitted for evaluation was with respect to references that were small fractions of the size of the effort required by the RFP and the Air Force’s reliance on other past performance information did not adequately evaluate relevance pursuant to the RFP’s applicable criteria, the agency’s decision to assign SupplyCore the highest past performance confidence assessment of “substantial confidence” is not supported by the record.

Notwithstanding that the past performance information claimed for LMI’s CEO was verified by knowledgeable agency officials in the written PPQs,  the Air Force effectively elected to “verify” the verification set forth in the PPQs by seeking further information from the subsequent program manager.  That individual, who was not the program manager for two of the three cited references, could not verify certain aspects of the LMI CEO’s performance. The agency, however, has failed to advance any reasonable explanation for how the subsequent program manager’s inability to verify the LMI CEO’s performance negates the verification provided by knowledgeable agency officials in the PPQs.   We have held that an agency is required to consider PPQs in its possession.  The agency’s wholesale discounting of the verification provided by the PPQs, on the basis that it could not confirm LMI’s past performance information through yet an additional source, was unreasonable.  As a consequence, the Air Force failed to meaningfully consider available agency information regarding LMI’s past performance of similar requirements for the Air Force, and therefore we sustain the protest on this basis.

 In summary, we find that the Air Force’s evaluation of SupplyCore’s past performance was inconsistent with the relevancy requirements of the RFP and not adequately documented. Because the reevaluation of SupplyCore’s past performance could result in a new rating for that offeror, which could in turn require a new source selection decision, we conclude that RGTS and LMI, both of whom submitted lower-priced offers, were prejudiced by this error.  We also find that the agency unreasonably failed to consider information regarding LMI’s past performance on similar efforts for the agency, and that the protester was also prejudiced by this error.

We recommend that the Air Force, consistent with our decision, reevaluate offerors’ past performance information. Based on that reevaluation, we recommend that the agency make a new source selection determination. We also recommend that the agency reimburse the protesters their respective costs associated with filing and pursuing their protests, including reasonable attorneys’ fees.

[Note:  there is a considerable amount of fact and application of particular elements of the RFP requirements that is analyzed to reach the decision made.  You have to look to the source cited above to read it.]

Matter of: Dalma Tech2 Company, B-411015, April 22, 2015
DIGEST: 1. Protest challenging the agency’s evaluation of the awardee’s proposal as technically acceptable is denied where the agency’s evaluation was reasonable and consistent with the terms of the solicitation.

2. Protest challenging the agency’s evaluation of the awardee’s past performance is denied where the evaluation was reasonable and consistent with the terms of the solicitation.

DECISION: Dalma Tech2 Company (DTC), of Riyadh, Saudi Arabia, protests the award under request for proposals for F‑15 fighter jet transportation support services (TSS) for the Royal Saudi Air Force (RSAF). DTC challenges the agency’s determination that SupplyCore’s proposal was technically acceptable, and the agency’s evaluation of DTC’s past performance. We deny the protest.

DTC challenges the Air Force’s determination that SupplyCore’s proposal was technically acceptable, arguing that SupplyCore failed to meet In-Kingdom licensing and facility requirements. The protester also challenges the agency’s evaluation of its past performance as warranting only a “satisfactory confidence” assessment. For the reasons that follow, we find that none of DTC’s challenges provides a basis to sustain the protest.

DTC alleges that SupplyCore cannot satisfy the RFP’s requirement to present a valid Saudi Arabian business license because SupplyCore is not a registered company or legally affiliated with an agent, distributor, joint venture partner, or teaming partner under Saudi Arabian law. See Protest at 2; Comments at 2.

Ordinarily, a solicitation requirement for a contractor to warrant that it possesses, or will otherwise obtain prior to performance, licenses required to conduct business in a foreign country is a matter concerning a contractor’s responsibility. In most cases, responsibility is determined based on standards set forth in Federal Acquisition Regulation (FAR) § 9.104-1, and involves subjective business judgments that are within the broad discretion of the contracting activities. Our Office generally will not consider a protest challenging an agency’s affirmative determination of an offeror’s responsibility.

Here, however, the Performance Work Statement in the RFP (PWS) explicitly required that offerors “include [a] copy of [an] actual Saudi business license” with their In-Kingdom Execution Plans, effectively imposing what amounted to a “definitive responsibility” criterion. Definitive responsibility criteria are specific and objective standards designed to measure a prospective contractor’s ability to perform the contract. Such criteria, which must be met as a precondition to award, limit the class of contractors to those meeting specified qualitative and quantitative qualifications necessary for adequate performance, e.g., unusual expertise or specialized facilities. Where an agency includes a definitive responsibility criterion in a solicitation, we will review the record to ascertain whether evidence of compliance has been submitted from which the contracting officer reasonably could conclude that the criterion has been met; generally, a contracting agency has broad discretion in determining whether offerors meet definitive responsibility criteria since the agency must bear the burden of any difficulties experienced in obtaining the required performance.

Based on our review of the record, we find nothing objectionable about the Air Force’s determination that SupplyCore met the RFP’s licensing requirement. The RFP did not require that the offeror itself have a Saudi Arabian business license. Rather, the RFP specifically contemplated that an offeror could satisfy the licensing requirement by maintaining a sponsorship or teaming effort with a Saudi Arabian company. SupplyCore’s proposal states that the awardee’s proposed subcontractor, Arwadh Establishment, is a Saudi Arabian company licensed in accordance with applicable Saudi law. SupplyCore’s proposal included copies of Arwadh’s business licenses. Id. The Air Force found that Arwadh will conduct the In-Kingdom TSS requirements, and the SupplyCore team will utilize Arwadh’s stand-alone In-Kingdom Operations department to ensure that the company maintains and adheres to the local laws and customs for Saudi Arabia and to ensure that foreign personnel maintain a legal work status. Thus, the agency reasonably concluded that SupplyCore demonstrated compliance with the RFP’s licensing requirement through its teaming arrangement with a licensed, Saudi Arabian company.

To the extent DTC argues that the teaming agreement between the awardee and its subcontractor is inconsistent with Saudi Arabian law, the protester’s argument is misplaced. Our focus is limited to whether SupplyCore met the eligibility requirements under the terms of the RFP. In this regard, the RFP did not require offerors to demonstrate that their proposed teaming approaches were approved under Saudi Arabian law; rather, the RFP required evidence of an “actual Saudi business license,” which, as noted above, SupplyCore provided through its subcontractor, Arwadh. Under these circumstances, we find that the Air Force reasonably found that SupplyCore satisfied the RFP’s licensing requirement.
















Monday, May 4, 2015

Wasted days and wasted contracts: guess the state

This story may, or hopefully may not, sound familiar to you, wherever you are. 

Guess the state. It, and the link to this story (the whole story; more than appears here), will be revealed at the end.

The Investigators: Is there waste in [this State's] government contracts?
From designing traffic patterns to funding services for people with disabilities, the state negotiates and operates thousands of personal, professional and governmental service contracts and agreements.

According to the State Transparency and Accountability database in the state's Office of Contractual Review, there are 12,457 total current contracts and agreements. Administration representatives said the database may list duplicates or expired contracts and the actual total number is 6,173.

State Treasurer John Kennedy said the number is much higher and he believes there are more that go unreported. "I'm not saying that all consultants are bad," Kennedy said. "Some of them do add value, but we have way, way, way too many of them who don't."

Kennedy said the state wastes millions of dollars in unnecessary contracts and agreements. "Every dollar we spend on a consultant is a dollar less we have to spend on our universities, roads and on coastal restoration," Kennedy explained. Kennedy believes while the state may have made some reductions, there are still too many that waste money.

"Contract 672113 - this is with a California consultant 'to provide assistance to students to learn valuable social skills through organized play on their recess and lunch periods.' Most kids don't have problems with recess or lunch. They don't need a consultant from California to help them," Kennedy said. The contract, which was worth $94,000, expired in 2009.

Government contract 734975 to the University of Tennessee, which is worth $189,000, is listed as "monitoring the state Black Bear population; continued health of the population, monitoring adult female survival and continue hair-snare work in the Texas and Upper Atchafalaya population." Personal contract 734230, which is worth $258,000, is listed as to "supervise, restore and mount the Albrizio Mosaic Mural and deliver it to the Capitol Park Museum." There was also consulting contract 730926, which is worth $3.4 million, to a company called BBR Creative. It's listed to "provide assistance in developing and executing a strategic marking and communication program for LED."

When taxpayers were shown some of the contracts, they said they weren't surprised. "They say they don't have any money, then why have a consultant if you can't build a bridge?" asked Ronald Rome. "They hire all of these consultants and they all say the same thing and nothing gets done." "All you need in the state to get a contract is to know somebody and that's just not right," Kennedy added.

Commissioner of Administration Kristy Nichols said there are regulations, checks and balances in the contracting process and it's all overseen by the state's Office of Contractual Review.

In 2014, a bill to tighten the regulations on how state contracts are awarded passed the legislature unanimously, but it was vetoed by the Governor. This session, there are at least two bills that bring contract regulations back to the table and legislators hope that now, in a different financial situation, the governor has a change of mind.
The State? Louisiana. The article link? The Investigators: Is there waste in Louisiana government contracts?