NASA Adminsitrator bounced by an unusually cozy relationship with federal regulators

Although federal procurement directives are moving towards acquisitions of supplies and services described in terms of common commercial standards, some needs of the government can only be met by particularized specifications and contractors. Take, for instance, spaceships (although we are now seeing the development of private sector contractors even in the space field, a circumstance not dreamed of when space exploration began in the era of Sputnik).

Why commercial standards? In a word, competition. As the American Bar Association Model Procurement Code elucidates,

"Fair and open competition is a basic tenet of public procurement. Such competition reduces the opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically." Code § 3-201, Commentary 3.

Indeed, an fundamental purpose and policy of the Model Procurement Code is "to foster effective broad-based competition within the free enterprise system". §1-101((2)(g). And, this is not a mere aspiration. "It is the general policy of this [State] to procure standard commercial products whenever practicable. In developing specifications, accepted commercial standards shall be used and unique requirements shall be avoided, to the extent practicable." MPC Regulation § R4-201.01.2 "All specifications shall seek to promote overall economy for the purposes intended and encourage competition in satisfying the [State's] needs, and shall not be unduly restrictive." MPC § 4-205. Further, in general, "Correction or withdrawal of a bid because of an inadvertent, non-judgmental mistake in the bid requires careful consideration to protect the integrity of the competitive bidding system, and to assure fairness. If the mistake is attributable to an error in judgment, the bid may not be corrected." MPC § R3-202.11.1

One of the big impediments to preferring standard commercial products and standards is the pushback and lobbying of entrenched contractors, the "good old boy" network. The basis for such a network is understandable from the standpoint of preferring the devil we know, but it runs foul of the demands of procurement when we become enamored of those well-known devils.

This post, and the article from the Washington Post that inspired it, illustrate the kind of relationship that can, and often does, call such discrimination into question. Once again, I caution that I slice and dice, rearrange, omit, and shade original articles to fit the didactic intent and space of this blawg, to be read as a hypothetical for educational purposes, and not as evidence or insinuation of guilt or wrongdoing. So, you are IMPLORED to link to and read the source material cited, and do not to rely on the rendition here.

Boeing tried to amend bid after guidance from NASA official, raising concerns it received inside information

After a top NASA official contacted a senior Boeing executive about a bid to win a contract potentially worth hundreds of millions of dollars, the company attempted to amend its proposal past the deadline for doing so, according to the article. That raised alarm bells inside the space agency, where officials were concerned that Boeing was attempting to take advantage of inside information. The conversation at the root of the investigation was between Loverro and Jim Chilton, the senior vice president of Boeing’s space and launch division, putting one of the company’s top executives in the middle of the probe.

Federal procurement regulations encourage the government to communicate with contractors about their bids to help agencies get the products and services that best fit their requirements. “The question becomes when is it okay to have those discussions, and more importantly, whether you have to have the exact same discussions with all potential bidders,” said David Berteau, the president and chief executive of the Professional Services Council, a trade group that represents federal contractors. According to the article, a person with direct knowledge of the matter who spoke on the condition of anonymity because of the ongoing investigation said: “I can tell you with 100 percent confidence that no laws were broken. What we are talking about are conversations that occurred outside the normal dictated channels but didn’t violate the sanctity of the procurement process.”

According to a congressional aide with knowledge of the matter, NASA procurement officials grew concerned earlier this year when Boeing contacted the agency, saying it wanted to change parts of its bid for the lunar lander contract. Not only was it late in the process, but the specificity of Boeing’s proposed changes raised “red flags” inside NASA that the company had received inside information improperly. NASA officials wondered, “How did they know to raise this issue or try to fix this issue?” according to the aide, who spoke on the condition of anonymity because of the ongoing investigation.

NASA officials have stressed that the agency has gone to great lengths to ensure the integrity of the contract awards, worth $1 billion combined, that went to teams led by Jeff Bezos’s Blue Origin and Dynetics, as well as Elon Musk’s SpaceX.

Ultimately, the matter was referred to NASA’s inspector general office, and NASA’s leadership last month forced Doug Loverro to resign from his position as the associate administrator of NASA’s human spaceflight directorate. In his resignation letter, Loverro wrote that he took “a risk earlier in the year because I judged it necessary to fulfill our mission. Now, over the balance of time, it is clear that I made a mistake in that choice for which I alone must bear the consequences.” The inspector general investigation could be another headache for Boeing, under fire for having an unusually cozy relationship with federal regulators, especially if it identifies wrongdoing on the part of Boeing senior executives.

In an interview with The Post last month, Loverro said he was trying to speed up the Artemis moon program to meet a White House mandate to return astronauts to the lunar surface by 2024. “It had to do with moving fast on Artemis, and I don’t want to characterize it in any more detail than that,” he said.

But the probe is also focusing on Boeing, officials said. “This certainly goes both ways. It’s one thing to have a mistake that violated the Integrity in Procurement Act,” the aide said. “It’s another if the company took that information and acted on it.”

FURTHER READING:

• Special Compliance Requirements for Government Contractors Part 1, and Part 2

• FAR 52.203-13 Contractor Code of Business Ethics and Conduct.

No emergency, just a desire to act quickly, like business

The procurement issues here raise issues of noncompetitive acquisitions, the requirement to obtain a fair and reasonable price before acquiring anything, even by sole source, and the contrast between government acquisition and private business. Government contracting requires market research to have independent knowledge of source alternatives in the market, prices and costs, as part of the acquisition process before a selection process is even chosen.

The governance policies of government acquisition are intended to assure transparency and the pursuit of effective competition within the free enterprise system. It is meant to avoid the secretive and arbitrary selection of colleagues and strong-arm "horse trading" linked to matters far afield from the instant acquisition that is the norm in private business ("you scratch my back and I'll scratch yours").

Government procurement is concerned with public confidence, fair and equitable treatment of market participants, maximization of public funds, and safeguards to establish and maintain a contracting system of integrity with accountability to the public. It's not meant to trade products or services for votes or favors or other "godfather offers".

In these respects, government procurement is intentionally designed to be the antithesis of private business, especially private business whose only concern is the welfare of the business owner. Not that there is anything wrong with that in the context of people betting their own money in their own smoke-filled rooms or out on the golf course or the box seat of some entertainment venue. 

But, private business has no concern about other people's money, whereas government must be concerned with other people's money or face a fractious public, as well as a mutinous supply of vendors. 
 
Again, I advise readers of articles I present to read the articles themselves, at the link provided. I omit, rearrange, slice, dice, paraphrase, editorialize and generally use the general fact situation of articles to provide teachable moments concerning procurement practice and principle. My version may or may not reflect the article's author's intent, and likely do not to my re-working of the following story, so read the original; click the link at the title.


No competition, no cost estimate as Kansas City firm picked for coveted VA contract McClatchy Washington Bureau

The federal government typically awards contracts to private companies after a competitive bidding process in order to keep costs low and avoid conflicts of interest. “When you have competitive bidding it prevents government officials from throwing contracts to their friends or keeping them from people they don’t like,” said Richard Painter, chairman of the board of Citizens for Responsibility and Ethics in Washington, a nonpartisan watchdog group.

But, the Trump administration picked Kansas City-based Cerner Corp. for a coveted contract to modernize veterans health records, and there will be no competition for the taxpayer-funded project. Cerner partnered with defense technology contractor Leidos, Accenture Federal Services and Intermountain Healthcare in its bid for the $4.3 billion, 10-year defense contract. Other health IT companies didn’t have a chance.

VA Secretary David Shulkin told reporters his decision to waive competition and acquire Cerner’s software directly was motivated by President Donald Trump’s desire to act quickly. “From the outset that when the president selected me to be secretary, he made clear to me that he expected us to act with faster decisions, to act like business, and to really make sure that we are really doing the right thing to change veterans’ health care. And that's exactly what we’re trying to do today,” Shulkin said.

Shulkin said there was a “public interest exception” to allow awarding the Cerner contract without a “full and open competition.” The VA still must draw up a justification for waiving open and public competition, and Tester’s office will be following up with VA for those documents, said his spokesman, Dave Kuntz.

Sen. Jon Tester of Montana, the top Democrat on Senate’s Veterans Affairs Committee, was supportive of Shulkin’s announcement but his spokesman said he has some questions and concerns about timing and costs that the secretary did not answer. Neither Cerner nor the Department of Veterans Affairs could say how much the contract will cost, however.

“The challenge here is that by giving up competition, the VA has given up all control to the company” when it comes to price, said Phillip Carter, a senior fellow at the Center for a New American Security who teaches government contracts law at Georgetown University Law Center. “At the end of the day ... they’re probably going to pay whatever Cerner asks,” Carter said.

The new VA health records system won’t be identical to the Defense Department’s, but its core will be Cerner’s Millennium software, Shulkin said on Monday. He said Cerner’s work on the Pentagon’s system, now known as MHS Genesis, pushed his decision in Cerner’s favor. Adoption of the same system “will ultimately result in all patient data residing in one common system,” the secretary said.

To me, adopting a system that will ultimately result in "all data residing in one common" (but proprietary) software will assure everyone else will become locked out. There are historical precedents, such as Motorola's lock on emergency radio systems, and Microsoft's lock on desktop software systems. See, Sure, Kid, first one's free.


The US government has been trying hard to break free of such locks.  This procurement seems to also go against the US Government's Federal Source Code Policy: Achieving Efficiency, Transparency, and Innovation through Reusable and Open Source Software:

When Federal agencies are unable to identify an existing Federal or commercial software solution that satisfies their specific needs, they may choose to develop a custom software solution on their own or pay for its development. When agencies procure custom-developed source code, however, they do not necessarily make their new code (source code or code) broadly available for Federal Government-wide reuse.

Even when agencies are in a position to make their source code available on a Government-wide basis, they do not make such code available to other agencies in a consistent manner. In some cases, agencies may even have difficulty establishing that the software was produced in the performance of a Federal Government contract.
These challenges may result in duplicative acquisitions for substantially similar code and an inefficient use of taxpayer dollars.

This policy seeks to address these challenges by ensuring that new custom-developed Federal source code be made broadly available for reuse across the Federal Government. This is consistent with the Digital Government Strategy’s “Shared Platform” approach, which enables Federal employees to work together—both within and across agencies—to reduce costs, streamline development, apply uniform standards, and ensure consistency in creating and delivering information. Enhanced reuse of custom-developed code across the Federal Government can have significant benefits for American taxpayers, including decreasing duplicative costs for the same code and reducing Federal vendor lock-in.

Note also the internationally informed Open Source for Government component of the Open Spouse Initiative.

Other article(s) on this topic: VA to dump Vista for DOD's electronic health record system

The anti-competitive multiplier effect of having no effective scope of contract change limitations

Canberra outsourcing deal quadruples to $390 million

The Australian Department of Agriculture signed a technology support deal with EDS in 2009 for $96 million. Since then, EDS has been acquired by HP Australia, and HP has twisted and turned and split and merged to become HPE , HP Inc, or DXC Australia.

The comprehensive managed services arrangement runs the gamut of IT services. When Agriculture took the work to market back in August 2008, it envisioned the contract would cover managed desktop, desktop LAN, midrange, storage area networks, helpdesk, Macs, and project services.

Work orders signed in December last year have now taken the value of the deal to over $390 million, more than four times its original value. And this figure is likely to keep growing until 2022 when the present iteration of the deal expires, at which point it will be 13 years old.

Despite a recent clause added to the deal which allows the department to take it back to market at any time it wants “if the performance of the services does not meet clearly defined and agreed requirements or if the value for money requirement is no longer being met”, a spokesperson for the department told iTnews there were no foreseeable plans to market-test the nearly $400 million deal.

The Department of Finance confirmed that the Commonwealth procurement rules don’t place any cap on the number or value of amendments that can be applied to a federal government contract.

"In order to ensure transparency in government procurement activities, entities are required to report contract amendments and variations on AusTender, including any increases to the total contract value," Finance said. Since 2009, Agriculture has published 227 such variations on the procurement website.

The rules also dictate “any variation to a procurement contract should not significantly change the scope of the contract”.

The procurement rules do, further, insist that “officials must achieve value for money in procurement”.

Agriculture insists it is doing so - even in the absence of any real competition. It called in procurement consultants, who calculated it would cost the agency more to run a new approach to market than it stood to save.

“The review found that the third party service provider was delivering the services to the expected level for a price that was market competitive at that time," a spokesperson said.

IT outsourcing has long been a point of controversy in Canberra, where the cost of running complex and highly regulated multi-year procurement programs often convinces agencies to stay with the same supplier for many years.

In 2015 the Department of Health switched to Datacom after 15 years with IBM.

And the Department of Defence continues to insist it is too busy to refresh its paired distributed computing deals with Unisys and Fujitsu, which are nearing the 20-year mark.

In the US, the concept of scope of the contract is taken a bit more strictly. While not necessarily determinate, a "large" price increase raises the suspicion of a change beyond the scope of the contract.

Plus, the scope of the contract is examined in the context of the contract's intent as the time it was solicited, not during some evolutionary period of the services actually performed. A comparison of the actual services presently being rendered in comparison to those actually solicited in the original contract may reveal a change in the nature, scope and character of the service of such magnitude that the government, and taxpayers, would be better served if it went back out to bid.

Also, in a rapidly changing time of technology, when the field of competition could be expected to provide newer technology at more competitive rates, the change in the field of competition can also influence what is meant by a "significant" change in the scope of the contract.

Too often, the cozy arrangements with an incumbent and a procurement staff not wanting to be bothered to "foster effective competition", as the American Bar Association Model Procurement Code mandates, results in situations like this, where there is rampant contract price inflation. No appraisal (which is what the third party review was in reality) is as tell-worthy as good old-fashioned competition. A dozen expert opinions of a horse will not tell a winner from a loser better than the race.

Contract administrators must not only monitor the services rendered and paid for, they must also monitor the services contracted.

The tenacity - and audacity - of incumbent legacy

Although not part of the ABA Model Procurement Code which is Guam's model for its own Procurement Act, 5 GCA 5210, which summarizes the various authorized procurement methods, says "(a) Unless other wise authorized by law, all territorial contracts shall be awarded by competitive sealed bidding [except as authorized by other specified procurement methods. (b) Nothing in this Section requiring competitive bidding shall prohibit the development of specifications which require compatibility with existing supplies, equipment or data processing systems."

On the face of it, such compatibility seems rational enough. The Guam drafters of this provision thought so, commenting "In the past, some problems have arisen due to the requirement for competitive bidding for equipment which should have been, but was not, compatible with existing equipment. The reason alleged was that the lowest bidder had to be chosen. Of course, the proper writing of specifications could have prevented the problem and Subsection (b) makes clear that compatibility may be a legitimate part of the specifications."

Fortunately, the provisions on specifications, in Article 4 of the procurement law, is not part of "this Section", so are not, on the face of the provision, restricted by it, and the provisions of Article 4 are replete with requirements for competition, saying nothing of compatibility. This become important when one stops to consider that compatibility is a substitute for legacy, old school technology and creative destruction.

Which brings me back to yet another Motorola case, this one decided by the federal GAO, related to Motorola's lock on the radio communications market. As always, read the cases and articles in the original, and don't rely on my creative destruction of them in my rendering.

Matter of: Harris IT Services Corporation B-411699; B-411796, October 2, 2015

Harris IT Services Corporation protests the terms of two requests for proposal issued by the Department of Justice, Federal Bureau of Investigation (FBI), to acquire land mobile radio (LMR) equipment through the issuance of a single delivery order under each RFP. Harris maintains that both of these RFPs improperly contemplate the issuance of a single, second-tier, indefinite-delivery, indefinite-quantity (IDIQ) instrument (labelled by the FBI as a delivery order), under which the agency will place subsequent delivery orders for this equipment without providing Harris a fair opportunity to compete for those orders, in violation of the statute authorizing the use of multiple-award IDIQ contracts. Harris also argues that the RFPs contemplate the issuance of orders that potentially exceed the scope of the underlying multiple-award IDIQ contract program, and include unduly restrictive specifications.

We sustain the protests.

Both solicitations have been issued under the Department of Homeland Security’s (DHS) tactical communications (TacCom) IDIQ multiple award contracts program and competition has been limited to concerns that previously have been awarded contracts under the DHS TacCom program. The underlying DHS TacCom multiple award IDIQ contract program solicitation contemplated the award of IDIQ contracts for a full array of communications equipment and services ("commodity products, infrastructure and services"). "DHS seeks to establish a multi-vendor approach to implementing fully interoperable solutions to support mission critical, public safety communications." In effect, the equipment to be purchased using the TacCom program is required to employ open systems architecture so that each contractor’s equipment will “interoperate” with equipment manufactured by other concerns.

The current RFPs represent the FBI’s second attempt to meet its requirements for the equipment being solicited. The first attempt sought the award of a sole-source contract for these requirements, and supported its solicitation with a justification and approval ("J&A"; aka "determination")) document maintaining that only one source--Motorola--was capable of meeting its requirements. After protests, this approach was abandoned.

This is the second attempt. RFP 68 is for the acquisition of “subscriber base radio” LMR equipment and is valued at approximately $200 million. RFP 81 is for the acquisition of infrastructure LMR equipment and is valued at approximately $135 million. Both RFPs contemplate the issuance of what the FBI characterizes as a single delivery order for a base year, with 4 one-year options.

The Federal Acquisition and Streamlining Act of 1994 (FASA) provided agencies with express authority to award task and delivery order type contracts. Broadly speaking, the statutory and regulatory framework favors the award of multiple task or delivery order contracts for the same requirements, rather than the award of a single task or delivery order contract for an agency’s requirements.

The drafters of this federal law said the use of task order contracts for advisory and assistance services and establishing a requirement that solicitations for such contracts shall ordinarily provide for multiple awards and for fair consideration of each awardee for task orders issued under the contracts; indiscriminate use of task order contracts for broad categories of ill-defined services unnecessarily diminishes competition and results in the waste of taxpayer dollars; in many cases, this problem can effectively be addressed, without significantly burdening the procurement system, by awarding multiple task order contracts for the same or similar services and providing reasonable consideration to all such contractors in the award of such task orders under such contracts; and, all federal agencies should move to the use of multiple task order contracts, in lieu of single task order contracts, wherever it is practical to do so.

[Similarly, see Guam procurement regulations: 2 GAR 3122(b): A multiple award is an award of an indefinite quantity contract for one or more similar supplies or services to more than one bidder or offeror when the territory is obligated to order all of its actual requirements for the specified supplies or services from those contractors. A multiple award may be made when award to two or more bidders or offerors for similar products is necessary for adequate delivery, service, or product compatibility.]

The statutory and regulatory framework contemplates that, where an agency is issuing task or delivery orders using a multiple-award IDIQ contract program, it is not required to engage in full and open competition, and may instead confine its competition to firms that have been awarded an underlying multiple-award IDIQ contract. However, those same provisions require agencies to give each contractor that has been awarded a contract a “fair opportunity” to be considered for each task or delivery order in excess of $3,500, and to provide for “enhanced competition” for orders in excess of $5.5 million. Finally, each task or delivery order must specify all of the services to be performed or all the property to be delivered under the order.

Harris first argues that the RFPs impermissibly call for the issuance of what amounts to IDIQ instruments to the successful contractor for a 5-year period. The protester maintains that the RFPs effectively remove the agency’s requirements from further competition for an extended period and amount to an impermissible “downselect” to a single vendor. Harris maintains that this is inconsistent with the terms of the underlying TacCom contracts, as well as applicable statutes and regulations which, the protester maintains, require the FBI to permit all of the eligible TacCom vendors to compete for every delivery order that the FBI may issue to meet its requirements.

The FBI explains that it elected to take this approach to meet its ongoing and future, geographically diverse, requirements in the most streamlined manner possible. According to the agency, its approach will allow it to avoid individually having to compete potentially dozens of delivery orders for varying quantities of equipment over a 5-year period. According to the agency, the latter approach--competing potentially dozens of separate delivery orders--“would place an enormous administrative burden on the FBI.” Legal Memorandum at 5. The agency states that its approach will result in substantial savings of both time and money over the contemplated 5-year period of the delivery orders.

As set forth below [sorry: you're going to have to read the case decision], we conclude that the FBI’s solicitations contemplate the award of what, in effect, would amount to single, multi-year, second-tier IDIQ instruments that are not permitted under the requirements discussed above. The FBI’s contemplated award of a 5-year second-tier IDIQ instrument to a single contractor is inconsistent with the requirements of the applicable statutes and FAR provisions regarding what constitutes a “delivery order.” Those requirements are, at a minimum, that the delivery order be defined as to quantity, place of delivery and schedule.

[Compare Guam's definition of an "incremental" contract, which is distinct from the "multiple award" contract mentioned earlier, in 2 GAR 3122(a). An incremental award is an award of portions of a definite quantity requirement to more than one contractor. Each portion is for a definite quantity and the sum of the portions is the total definite quantity required. An incremental award may be used only when awards to more than one bidder or offeror for different amounts of the same item are necessary to obtain the total quantity or the required delivery. The right to make such an award and the criteria for award shall be stated in the solicitation. Thus, multiple awards, for indefinite quantities, and incremental awards, for definite quantities, are limited to cases where awards to more than one contractor are necessary to obtain the total quantity of the required delivery.]

In essence, the two orders contemplated under these RFPs will deprive all the other TacCom contractors of a fair opportunity to compete for each of the delivery orders that will be issued in the future, despite their aggregate value of approximately $335 million. We therefore sustain this aspect of Harris’s protest.

Harris also maintains that the RFPs impermissibly include a period of performance that exceeds the period of performance of the underlying TacCom contracts. In this connection the FBI’s RFPs contemplate the issuance of delivery orders until August 31, 2020 (whereas the TacCom contracts only allow for issuance of delivery orders until March 25, 2019), and contemplate fulfilling those delivery orders by August 31, 2021 (whereas the TacCom contracts contemplate fulfilling all delivery orders by May 25, 2021). The FBI notes in connection with this allegation that both RFPs incorporate the terms of the underlying TacCom IDIQ contracts and provide that, in the event of a conflict, the terms of the underlying TacCom contracts control. According to the agency, to the extent its RFPs specify a period of performance longer than that contemplated under the TacCom contracts, the terms of the TacCom contracts supersede the terms of its RFPs.

We agree with Harris that the RFPs seek impermissibly to increase the scope of the underlying TacCom contracts. As noted, the agency does not deny that its contemplated delivery schedules vary from, and increase the period of performance beyond, the terms of the underlying TacCom contracts. Rather, the FBI merely asserts that the terms of the TacCom contracts will supersede the inconsistent terms of its solicitations. However, the fact remains that the RFPs expressly contemplate a period of performance longer than the period of performance included in the TacCom contracts.

In addition, and more fundamentally (as discussed above), neither RFP includes a maximum quantity, but, rather, specifies only an estimated quantity. As we conclude above, there essentially is no limit on the quantities the agency could order under the second-tier IDIQ instruments contemplated by the RFPs. It follows that the agency could order quantities that exceed not only the estimated quantities specified in the RFPs, but also the maximum value of the underlying TacCom contracts. In view of the foregoing, we conclude that the FBIs RFPs contemplate delivery orders that potentially are beyond the scope of the underlying TacCom contracts. We therefore sustain this aspect of Harris’s protest.

As a final matter, Harris’s protests that certain specifications are unduly restrictive and are designed to result in the award of the delivery orders to Motorola. Because we recommend below that the agency cancel the RFPs and consider alternatives to how it intends to meet its requirements, we need not consider these allegations in great detail. Nonetheless, we discuss several obvious solicitation requirements that even the agency concedes call for Motorola-specific products.

RFP 68 requires that all radios provided be compatible with a standards based radio system called “SmartNet.” In a similar vein, RFP 68 calls for providing radios that can be reprogrammed using “over-the-air-rekeying” when used with a “key variable loader.”

Harris maintains that these requirements are proprietary to Motorola and that, for all intents and purposes, they limit competition under RFP 68 to products made by Motorola. Harris also maintains that specifying such requirements is inconsistent with the overarching requirement of the TacCom contracts to provide equipment that is interoperable and that meets the P25 open architecture standards.

The agency does not challenge Harris’s fundamental assertion, but nonetheless maintains that these requirements are necessary in order for the radios that it acquires to meet the agency’s needs for data security, and in order for them to be useable with state and local law enforcement entities that still use legacy radio systems that depend on the Motorola-proprietary standards specified.

Where an agency seeks to issue a task or delivery order to acquire items peculiar to one manufacturer, it must execute a J&A in support of its specification for the task or delivery order, unless it has otherwise executed a J&A for other than full and open competition. Here, the agency concedes that it has specified Motorola-specific requirements. However, the record does not include the required J&A, and the agency has offered no explanation regarding its failure to execute such a J&A.

The agency previously attempted to meet its requirements on a sole-source basis, but concluded that the J&A prepared in connection with that acquisition was inadequate to support its attempted sole-source acquisition of Motorola products. Here, the agency again is attempting to acquire Motorola-specific products, but has not executed the required J&A, or even, for that matter, explained or demonstrated why it is not required to execute the J&A. Under the circumstances, we conclude that the RFPs include specifications for products that are specific to Motorola, and that the agency has failed to justify its inclusion of such requirements. We agree with Harris that the agency’s attempt to acquire Motorola-specific equipment appears fundamentally inconsistent with the underlying interoperability objective of the TacCom IDIQ contract program.

We recommend that the FBI cancel the solicitations.

Incumbency as a double edged sword

Aha, aha, mmm, hmm, mmm, hmm

Gonna get along without you now

Aha, aha, mmm, hmm, mmm, hmm

Gonna get along without you now

Got along without you before I met you

Gonna get along without you now

Gonna find somebody that's as twice as cute

'Cause I didn't like you anyhow

--- Popularized by Patience and Prudence, lyrics by MetroLyrics

This is a decision of the GAO. It involved the eventually unsuccessful protest of a best value award of a contract to provide security-rated linguists. It was noted in the RFP that the grant of security status was not under the control of the using agency, and experience in passing though that minefield, and managing the flow of applicants through the process, would be essential.

The protester is "SIG", the incumbent under the existing contract. The award was made to "CWU". As usual, this is not a complete or necessarily accurate rendition of the decision and you are most encouraged to read the original at the link below rather than rely on the presentation here. There are other interesting comments and issues in the decision not here presented.

Matter of: Strategic Intelligence Group, LLC, B-410881.3, June 23, 2015

The RFP provided for award on a best-value basis, considering the following factors (in descending order of importance): (1) technical, including subfactors for technical approach and management approach; (2) past performance; and (3) cost/price.

The final evaluation matrix looked like this:

In comparing the proposals, the SSA ("source selection authority") noted that SIG’s proposal was the second highest-priced proposal and one of the lowest-rated proposals, while CWU’s and another offeror’s proposals were both higher-rated and lower-priced than SIG’s.  The SSA selected CWU’s proposal for award, noting with respect to SIG’s proposal that “it would not be in the best interest of the Government to justify paying a higher price [for SIG’s proposal] than proposals that were rated as OUTSTANDING and are lower priced.”

With regard to past performance, the solicitation specified that the agency would assign a performance confidence assessment based on the relevancy and quality of offerors’ performance on recent efforts.

CWU’s proposal was rated overall outstanding under the technical factor based upon an outstanding rating under the technical approach subfactor and a good rating under the management approach subfactor. CWU’s outstanding technical approach rating was based on several evaluated strengths. The SSA concluded that CWU's“[e]xceeding the minimum requirements to facilitate security processing identifies a level of preparedness to ensure successful transition and to maintain a higher pipeline capacity.”

In contrast, SIG’s proposal received only a single strength under the technical approach subfactor, based on SIG’s approach to transition (that is, start-up and continuity of services in transition from an existing contract to the new contract). Specifically, the SSA noted that, since SIG is the incumbent contractor, transition would involve minimal phase-in activities. Thus, SIG’s proposal was rated only acceptable under the technical factor overall.

SIG challenges the agency’s evaluation under each of the evaluation factors, and argues that the resulting selection decision was unreasonable because it was based on a flawed evaluation. In reviewing protests challenging an agency’s evaluation of proposals, our Office does not independently evaluate proposals; rather, we review the agency’s evaluation to ensure that it is consistent with the terms of the solicitation and applicable statutes and regulations. In this regard, the evaluation of proposals is a matter within the discretion of the procuring agency; we will question the agency’s evaluation only where the record shows that the evaluation does not have a reasonable basis or is inconsistent with the RFP. Here, we find the evaluation and source selection decision to be reasonable.

As an initial matter, SIG challenges the agency’s equal rating of both SIG’s and CWU’s past performance as satisfactory confidence, asserting that the past performance evaluation was unreasonable and failed to recognize differences in the offerors’ past performance. Our Office will examine an agency’s evaluation of an offeror’s past performance only to ensure that it was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations, since determining the relative merit of an offeror’s past performance is primarily a matter within the agency’s discretion. While an agency may provide for an evaluation of relevance, the agency is not required to evaluate the past performance of the incumbent contractor as superior to its competitors simply because the incumbent has the most relevant past performance.

Here, we find the agency’s past performance evaluation to be reasonable. Of the several contracts cited by SIG for proof of its past performance, only the incumbent contract was rated as relevant, because of the gross difference between the price (well over $100 million) of the new contract compared to the other proposed contracts. And, in considering the past performance of the incumbent contract, it was noted that the performance was less than stellar. For example, when asked whether SIG satisfied performance requirements, the reviewer stated:

Overall, I find this vendor’s performance acceptable. That said, as discussed below there were, are, and continue to be both cost and schedule concerns associated with executing this effort, however at this time they have not risen to the level of unacceptability.

Likewise, in the area of meeting required performance schedules, the reviewer stated as follows:

Rated overall acceptable, however this vendor is on the low end of the scale [with regard to] fulfilling all CME [Contract Manpower Equivalent] requirements under this task order. The government did issue the vendor a letter of concern to ensure an acceptable number of candidates was routinely submitted for government consideration. That said, the untimely nature of government security vetting processes continues to be a major impediment to vendor success

.
Similarly, when asked whether SIG stayed within cost estimates, the reviewer stated:

Rated overall acceptable, however this vendor is on the low end of the scale [with regard to] cost performance under this firm fixed price contract. While the government arguably neglected to articulate a number of issues in the solicitation that ultimately required an equitable adjustment, at the same time, the government was forced to take action (above and beyond the equitable adjustment issues) to facilitate the vendor’s ability to maintain their current level of performance (see schedule above) by providing increased contract reimbursable compensation to their employees. One could argue that the vendor proposed less than market competitive compensation rates to win the solicitation.

SIG does not challenge the agency’s conclusion that its performance under the “very relevant” incumbent contract merited a rating of satisfactory confidence.

With regard to the disregard of the other proposed contracts, deemed to be less than relevant, even if the agency erred in its evaluation of SIG’s non-incumbent contracts, there is no basis to question the agency’s overall rating of SIG’s past performance as satisfactory confidence given SIG’s performance problems on its “very relevant” incumbent linguist contract.

In any case, prejudice is an essential element of every viable protest, and we will not sustain a protest when it is clear from the record that a protester has suffered no prejudice as a result of an agency evaluation error.

SIG also challenges the agency’s evaluation under the technical factor, which included an evaluation "to determine the extent to which successful performance is contingent upon proven devices and techniques.

SIG complains that the agency unreasonably failed to assign a strength to SIG’s technical proposal as a result of its experience as the incumbent contractor. Specifically, SIG contends that it deserved a strength due to its “well-developed process and procedures for recruiting, qualifying, and retaining linguists,” that were developed through its incumbency. SIG further argues that the agency erred by failing to recognize that the firm is “uniquely positioned” as the incumbent to process linguists using an approach the firm developed under the incumbent contract, and that SIG’s “significant experience” as an incumbent indicated a better understanding of the recruitment and approval cycle. The protester also contends that the agency engaged in unequal treatment by assigning a strength to CWU’s proposal for its “robust pipeline” of qualified linguist candidates while ignoring the fact that SIG already has many of the needed linguists vetted and in place due to its incumbency.

SIG’s arguments are without merit. As noted, the evaluation was to include consideration of whether offerors had proposed “proven devices and techniques.” The record reflects that SIG has struggled to meet the requirements of the incumbent contract, thus belying the claim in its proposal that “our current pipeline . . . along with continued recruiting efforts, is sufficient to meet the . . . levels required.”  For example, SIG’s technical proposal acknowledged that, under SIG’s incumbent contract, there are currently unfilled category III linguist positions.   Given SIG’s acknowledged, significant shortfall in satisfying the linguist requirements under its incumbent contract, we find that the agency reasonably concluded that SIG’s proposed approach, based on its incumbent contract, did not exceed the solicitation’s requirements so as to warrant the assignment of a strength.

In contrast, the evaluators found that CWU’s proposal provided “very detailed information” demonstrating its ability to meet the solicitation’s requirement to provide the required number of linguists. For example, CWU’s proposal indicated that the firm already has linguists that have been security vetted and would be available to perform under the contract. The evaluators also noted that the awardee’s proposal indicated that CWU’s pipeline of linguists contains hundreds of linguists who previously held or currently hold security clearance. In addition, CWU’s proposal stated that the firm anticipated hiring some of the incumbent workforce. In these circumstances, we find that the agency reasonably concluded that, although CWU is not the incumbent, its proposal exceeded the solicitation’s requirements for filling the linguist positions required under this contract.

Next, SIG challenges the agency’s decision to assign equal strengths to both SIG and CWU in evaluating offerors’ transition risk. In this regard, SIG contends that its proposal was superior because only SIG, as the incumbent, could offer a "no-risk" transition. The protester contends that the agency’s assignment of a strength to CWU’s proposal for offering a low risk transition essentially and unreasonably treated SIG’s transition risk as equivalent to CWU’s transition risk.

Evaluation ratings and the number of strengths and weaknesses assessed are merely a guide to, and not a substitute for, intelligent decision making in the procurement process.   The relevant question is whether the record shows that the agency fully considered the actual qualitative differences in vendors’ proposals.

Here, the record provides no support for the protester’s challenge to the agency’s assessment of strengths for both offerors’ transition approaches. First, the evaluation report and selection decision show that the evaluators and the SSA were aware of, and acknowledged, the differences in the offerors’ proposals with regard to transition. Specifically, with regard to SIG, the evaluators acknowledged that as the incumbent, it would have minimal transition risk, which SIG described as a “no risk” solution. With regard to CWU, the agency concluded that CWU’s detailed proposals increased the likelihood of an early transition without any degradation of service, thereby exceeding the solicitation requirements such as to merit a strength. While SIG may disagree with the agency’s assessment that this proposed approach to transition merited a strength, the protester has failed to demonstrate that the agency’s evaluation in this regard was unreasonable or inconsistent with the record.

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.

Are we hard wired to corrupt our procurement systems?

The following article is, in original form, quite long, and a compelling story.  This extract is only a taste, and you really would do well to read the whole piece at the link.  It is a fine example of the difficulties government has in outsourcing services to private contractors.  

No worries; some day robots will provide all our services, and surely they will be much more uniformly competent, reasonable, selfless, up-datable to the latest technology and software, and unobtrusive, as well as inexpensive and non-proprietary?

Insiders’ rules: How government ‘wires’ contracts to get the people it wants

In this trial, one of the largest ever involving alleged white-collar crime, Canadians have been afforded rare glimpses into a government procurement system that is billed as competitive, open and fair but is actually riddled with tweaks and quirks that give bureaucrats significant power to determine outcomes.

It’s why the accused formed bidding alliances that are now a central issue in the ongoing trial in the Ottawa courtroom of Superior Court Judge Bonnie Warkentin. A 14-member jury is left to sort out whether those alliances were made known to federal contract officials, as required by the Competition Act.

While events leading to the trial occurred nearly a decade ago, little fundamental about the system has changed, the Citizen has determined through dozens of interviews with consultants, suppliers and former government contracting officials.

Suppliers have lived with the reality of rigid bureaucratic control for so long, it seems almost normal. They no longer think it odd that when departments issue a call for bids or proposals, the first order of business is to analyze the documents for evidence of ‘wiring.’

They’re looking for signs the government has already identified the winner or a preferred candidate. If it has, there’s usually no point in wasting time and money preparing a proposal that can easily run to 100 pages for something as simple as providing a few computer technology experts under contract.

“We see it all the time,” says the vice-president of a firm that has secured more than $100 million dollars worth of technology services contracts over the past decade from the federal government. “If it’s wired, we just move on to the next bid.”

Potential suppliers can tell if a request for bids is wired because the documents demand skills or experience so specific that only one or two firms can meet the minimum standard. Often these skills bear startling similarity to those possessed by contractors already on the job.

This is the real clue as to what’s behind this complex process — and the reason for it is simple: There’s an inherent conflict between running competitions and the desire of federal departments to solve practical problems by purchasing the services of specific, experienced consultants.

a central objective for many public servants is to ensure that important departmental projects get done on time and within budget. Whether this involves refurbishing the House of Commons or upgrading computer networks, government managers keen to avoid scandal want the best professionals possible on the job.

Thanks to many years of government downsizing, public service managers can no longer count on finding them in-house. So they purchase the know-how from the private sector. An estimated 60,000 private contractors or consultants are on the job at any given moment including about 25,000 in the National Capital Region alone. Not only do many of them work alongside full-time government employees, the departments involved have come to rely on them heavily.

This was certainly the case at the Canada Border Services Agency, which issued eight of the requests for proposals that are at the heart of the trial into alleged bid rigging.

“Because of their skills, consultants were actually the team leaders in the design and architecture (of computer systems),” Daniel Imbeau, a former manager with the CBSA, testified earlier this month. “A lot of times they were training our employees.”

The consultants, though, operate under finite contracts. When these come up for renewal, the CBSA and other departments are left to figure out how to make sure the right consultants – the incumbents — return.

The complication of course is that the government cannot – as a matter of sheer practicality – negotiate contracts with tens of thousands of individual consultants. They need to sign up with a corporate supplier such as Veritaaq, which in turn holds a contract with the government.

What we end up with is this world of artificial or constrained competition – in which federal departments make clear which consultants the suppliers should put forward during competitions. In many ways, consultants are just an extension of the public service. If they were employees, there would be no confusion about roles and no need to conduct competitions for their services.

Departments have every right to insist on certain types of experience and training, as long as they don’t cross the line and break the rules while they’re bending them in the direction they want.

Such was the case for instance with a major moving services contract sought by Envoy. The government last month revealed it had finally settled out of court, after agreeing to pay Envoy $35 million in lost profits and other damages. Envoy lost competitions against Royal Lepage Relocation Services (now Brookfield Global Relocation Services) in 2002 and 2004 – thanks to a rigged request for proposals.

Superior Court Justice Peter Innis noted in a ruling last year that the government “had acted intentionally to unfairly favour Royal Lepage Relocation Services, the incumbent.” Public Works officials had done so, he added, by weighting the technical aspects more heavily and, most crucially, by misleading Envoy about the true costs of providing property management services.

Innis concluded that Royal Lepage had used its insiders’ knowledge to reflect the fact hardly anyone actually used property management services while Envoy bid “using the grossly over-estimated values of PMS” described in the bid documents.” The inevitable result: Envoy lost.

The $1-billion-a-year informatics niche – which includes more than 200 firms in the Ottawa area alone — provides uniquely fertile ground for wiring. In part this is because its job descriptions are so complex. Knowledgeable bureaucrats can and do exclude consultants by requiring one extra computer language or one additional year of experience in an obscure software application among the compulsory features of a bid.

The level of detail in the requests for proposals is extraordinary. For example, CBSA last year published a 404-page RFP that listed nearly 100 technologies at play in the agency’s communications systems. The document noted that CBSA wanted to fill or renew hundreds of positions for information technology consultants involving 43 different categories of technical expertise.

On top of that, a supplier had to have done at least five information technology contracts each worth in excess of $1 million during the previous five years. Three of them had to have involved a government client.

The requirements prompted a lot of angst.

“As currently structured this RFP has the potential to prevent a notable majority of the vendors presently providing these services to CBSA to qualify,” one potential supplier wrote to the officials running the competition. “Will the Crown consider re-issuing this RFP?” the firm continued.

“No,” was the response from Public Works, the central agency that negotiates contracts on behalf of most federal departments.

CBSA last year whittled its list of informatics suppliers to fewer than 20 from nearly 50. The only new ones were the giants of the industry – IBM Corp. of New York and CGI Group of Montreal, both of which employ thousands of technical experts and could therefore meet the very difficult minimum requirements having to do with sheer volume. Smaller suppliers left out in the cold believe this was the point of the exercise.

When it comes to wiring bids, there are many shades of gray. For instance, a technical requirement that eliminates a consultant or supplier could very well reflect a rare set of skills essential for upgrading very old government computers – and not a deliberate desire to knock out the competition.

A former government official who has worked both sides of the street notes there is often a fine line in establishing technical requirements.

“You don’t want to set them so low that you’re faced with evaluating a ton of bidders,” he says, “on the other hand, you don’t want to make them so difficult you wind up with no competition.”

“We gave up trying,” said a senior executive with a large national firm that provides real estate advice and services. “The rules of the competitions kept changing and it always seemed as though conversations were taking place that we were never part of.”

Open sourcing sole sourced contracts

Note:  See new updates below.

Protest delays FBI's huge sole-source deal with Motorola (this McClatchy article is available here and here.)

FBI contracting officials contend that proprietary features embedded in their emergency communications contract with its existing Motorola network preclude its interaction with non-Motorola products. Citing a 15-year-old estimate that replacing the entire system from another vendor's product would cost $1.2 billion, they said in a formal notice this month that they can save $300 million in equipment by continuing an exclusive relationship with Motorola.

The bureau circulated the proposal two weeks ago, just as three senior House Democrats asked the Department of Homeland Security's internal watchdog to investigate whether Motorola's contracting tactics have led state and local governments to squander millions of taxpayer dollars on its pricey equipment.

On July 15, Reps. Henry Waxman and Anna Eshoo of California, along with Colorado Rep. Diana DeGette, asked Homeland Security Inspector General John Roth to investigate findings in a recent McClatchy series delving into Motorola's dominance.

The series detailed how Motorola, with help from state and local officials, has outmaneuvered competitors in nearly all of the nation's 20 biggest cities, in many cases through noncompetitive contracts, slanted bid specifications and proprietary features in existing systems.

The company has cashed in on a gusher of grants from Washington aimed at avoiding a recurrence of communications breakdowns that cost lives after the terrorist attacks of Sept. 11, 2001, and Hurricane Katrina's battering of the Gulf Coast in 2005.

The quality of Motorola's radio equipment, widely recognized for its durability and reliability, is not in question. Rather, it's the price of its products cities have paid as much as $7,500 for a single handset and the stunted competition that have drawn consternation.

RELM Wireless Corp., a Florida-based radio manufacturer with $30 million in annual revenues, promptly challenged the FBI proposal on grounds that it "unjustly bars competition" for the sale of radios. The firm sells walkie-talkies with the same functions specified by the FBI for about $1,700, compared with Motorola's average price of $4,200, said Ken Klyberg, RELM's vice president for sales. He said in a telephone interview that RELM is preparing to file a formal protest with the Government Accountability Office.

Bureau spokesman Chris Allen said that "the FBI is reviewing the sole-source" proposal to determine whether it's warranted.

The FBI proposal is the latest development showing that Motorola still maintains an advantage with many public safety agencies, despite efforts to standardize manufacturers' equipment designs so that every first responder's radio can interact with all others.

While standardization has invited increasing competition, Motorola has found ways to hold onto its estimated 80 percent share of the U.S. market.

Besides financing a nationwide system upgrade, the FBI's proposal would allot up to about $170 million to agencies within the Homeland Security and Justice departments for purchase of Motorola equipment, as needed, over the next five years.

Other vendors also voiced strong objections to the decision to keep them from bidding on the FBI upgrade, saying that technology exists to connect Motorola's older system with their own equipment if Motorola cooperates.

"This seems like a bunch of baloney," Larry Emmett, director of bids and proposals for Texas-based EF Johnson Technologies, said after reading the FBI's five-page "Justification for Brand Name Only Acquisition."

"Just saying there is no other option and going down the sole-source path is not justifiable," said Karthik Rangarajan, the company's vice president for sales.

Motorola's largest competitor, Florida-based Harris Corp., has "advanced technologies to interconnect legacy, current and next-generation solutions across multiple vendor systems," even those with proprietary software, said company spokeswoman Victoria Dillon.

Steve Koman, who served as an emergency communications consultant for the city of Charlotte, N.C., called the FBI proposal "half-baked" and said it adds to "the risk to the public that they will continue to overpay for public safety radio communications equipment."

In contrast to the FBI, the U.S. Secret Service took a much different approach in administering the procurement of tactical communications upgrades for its agents and more than a dozen other Homeland Security agencies beginning in 2012. It qualified 30 vendors to compete for a series of contracts for up to $3 billion in "mission critical" radio equipment.

While McClatchy's stories focused on Motorola's state and local contracts, the company is also king of the federal walkie-talkie market, where rival vendors accuse the firm of similar marketing tactics even since the new design standards, known as P25, to improve communications between disparate radio equipment took hold around 2005. One of the P25 standards requires each manufacturer to develop electronic gateways that can overcome proprietary features and connect their systems with other P25-compliant systems.

Anytime that FBI agents make "wideband" transmissions that interfere with another agency's "narrowband" communications, the FBI said, the bureau could be directed to end use of that frequency within 180 days. "Therefore, every location where the FBI continues to operate wideband communications is at risk," the procurement team wrote.

The proposed contract, they said, gradually will eliminate wideband transmissions and employ Motorola equipment that can interface with the bureau's current blend of a 1980s-era Motorola SmartNet network with newer, P25 equipment. Switching to a different contractor, they said, would cause "significant disruption" to communications, risk emergency failures and require the bureau's "over-tasked" staff of technicians to maintain two systems until the new one is ready.

But staying with Motorola, they said, would save $300 million in equipment and extend the system's life by 10 to 15 years. They did not explain how they derived their equipment valuation.

Further, the FBI officials said, such a change would mean that the bureau's 420 electronics technicians would each have to undergo 200 hours of training on the new system.

"After 32 years procuring radios from only one primary vendor," they wrote, "changing that business model would create significant funding, logistical and training challenges."

Both Emmett and RELM's Klyberg scoffed at the bureau's estimates of how long it would take to retrain the FBI's technicians on another vendor's system.

Klyberg said "they didn't blink an eye" when they had to train agents on use of Motorola's latest radio models.

On its face, the bureau's justification "sounds reasonable," said Joe Boucher, chief technology officer for Connecticut-based Mutualink, a firm that uses software gateways to interconnect two-way radio networks. "But it's impossible to tell without knowing the supporting details."

Boucher said that Motorola is well known in the industry for making it "prohibitively expensive" for a customer to acquire software that can join its Motorola system with another vendor's. Providing such a hookup "would be inviting competition," he said. Boucher said, one feature in the FBI system may be "difficult to overcome": Motorola's SmartNet software version that enables special agents to periodically change, over the air, the codes for their encryption programs that ensure secure communication.

If Motorola provided such gateways to the FBI's system, "pretty much anybody on the planet can sell them radios for that," said EF Johnson's Emmett.

The bureau seems to be basing its decision on the need to buy Motorola "to keep continuity," according to RELM's Klyberg. "The federal government's not supposed to be allowed to do that," he said. "They're supposed to get best value for the taxpayer dollars."

On Guam, in 2006, the local Department of Homeland Security sought to acquire an emergency telecommunications system by sole source, with the "justification for sole source procurement based on interoperability and standardization of the existing equipment". The Guam Public Auditor years disallowed the sole source procurement in a Decision on a protest of the solicitation, in the Appeal of L. P. Ganacias Enterprises, Inc. dba RadioCom, OPA-PA-06-003.

In 2007, Guam was awarded a Public Safety Interoperable Communications Grant in the amount of $2.6 Million, about 10% of which was allocated for "Emergency Project 25 (P25) Radio Cache to Support Island wide response to Natural or Man-made Disasters".

The last I remember, the controversy over the acquisition of communications equipment was still evolving and winding its way through the courts.

UPDATES: MORE ON THIS STORY...

August 8, 2014
Second contractor protests FBI’s no-bid, $500 million deal with Motorola 

The Harris Corp. has become the second contractor to formally protest the FBI’s plans to award a no-bid contract worth up to $500 million to Motorola Solutions Inc., calling the bureau’s proposal to forgo competitive bidding “factually unsound, legally unwarranted and wholly unnecessary.” The FBI gave other vendors only a couple of weeks’ notice late last month that it planned to hand the contract to Illinois-based Motorola Solutions.

“Harris’ infrastructure and portable radio equipment can work with legacy Motorola equipment until such legacy equipment is replaced,” they wrote. Indeed, the FBI already owns two Harris “cores,” or controllers, that have connected with Motorola equipment for years, they said.

It was Harris, Motorola’s biggest rival in the domestic market, that installed infrastructure under a contract to upgrade two-way radios for multiple departments in the nation’s capital in 2007. Hence, Harris lawyers wrote, if the FBI seeks to justify a “follow-on” contract, it selected the wrong company.

On its face, Harris said, the FBI proposal also must be scrapped because it seeks to allow 11 other agencies within the Justice and Homeland Security departments to buy up to about $170 million in Motorola equipment off of the contract over the next five years. Harris said that proposal “renders improper any sole-source award to Motorola,” because those agencies are already using Harris equipment.

Harris’ protest also took issue with the FBI’s assertions that two of its procurement officials spoke with other vendors at a trade show and concluded that none could overcome the proprietary barriers of Motorola’s legacy equipment, noting there was no visit to Harris’ booth.

This last issue, about speaking to vendors other than the bidder about the bidder's compliance, resonated with me when I read it.

A few years back, the company employing me bid on a contract to provide copier machines. It was low bidder, so the higher bid competitor, who had been sole sourcing the machines for years (illegally), sent a "confidential" letter to the head of the department, with whom there was an established business relationship by this time.  The competitor should have formally protested the matter to have it contested, but it chose to poison the well, a fact that was not discovered until much later.

The letter said the machines were nonresponsive because they did not natively provide certain tracking information specified, quoting an employee of the competitor saying he was familiar with the machines and had discussed the tracking issue with a person with experience with our company's machines. This letter had the desired effect, and the award was never made.  

It should be noted that the IFB did not require that any documentation be provided with the bid to evidence responsiveness; it relied on the bidder's responsibility to provide a machine that met the specifications.  In fact, the purchasing agency never raised the question.

The company protested the failure to award and, despite never raising the issue of the alleged non-compliance, the matter proceeded to appeals. I raised the nonresponsible impropriety of the subversive communications and failure to raise the issue by protest, but found no fertile field on appeal for the argument. 

Nevertheless, the company won the appeal but with the proviso that the government specifically decide that the bid of the machines was responsive. It was obvious, then, that the tainted message had infected the appeal, too. 

So the company judicially appealed that part of the decision since the responsiveness of the bid was never asserted by the purchasing agency as an issue; it was pursued only by the competing bidder.  The inference was that the bid was responsive and the only grounds to not award the contract were internal administrative issues, such as lack of funding.

The aggravating thing was, and remains, that had the government actually asked the question whether the machine was noncompliant as "confidentially" alleged by the competitor, and sought assurance of compliance, the company could have and would have answered that, though the machine itself was noncompliant, the company intended to provide common third party software with the machine, which performed the same function as the competitor's imbedded software, and made the bid compliant even if the machine, standing alone, may not have been.


September 4, 2014
FBI Scraps $500 Million Potential Deal With Motorola Solutions Following Protests

The FBI has canceled plans to award a potential $500 million, five-year sole-source contract to Motorola Solutions, following protests from competitors RELM Wireless Corporation, Harris Corporation and E.F. Johnson Technologies. It is unclear how the FBI intends to go ahead with the infrastructure equipment and mobile radios contract now, with the agency saying that it will “reassess its requirements, as well as the acquisition strategy for meeting them.”

Bundle bungle leads to huge up front cost savings

Being an incumbent can have its advantages, amongst them knowledge of how the contract administration process runs after the contract performance begins. This knowledge can at times give the incumbent a price advantage at bid opening, but the onus then is great on the government to contain performance cost increases.

On Guam, the government had lapsed into the habit of awarding, often without any competition, and usually with unduly specifications, copier contracts to one of a couple of competitors. 

When after at least a decade of such behavior, one large agency was forced to open the work to competitive bids, the incumbent shocked the competition with a bid roughly 50% lower than it had been getting under prior contracts.  But, in a review of the contract performance under the new award, the OPA found that the running costs under the new contract had shot up so much that those costs dwarfed the bid price.

This case concerns the competition, if it can be called that, between Motorola and Raytheon for emergency communications equipment. Read the whole article at the link, as usual, because I truncate and often rearrange the excerpts, and leave out some really good stuff; the related and linked stories mentioned in the article add valuable context, too.

How Motorola bested Raytheon and captured L.A. County’s emergency radio contract

Rather than signaling a new burst of competition in a taxpayer-financed market, the outcome is another reminder of how difficult it’s been for competitors to overcome Motorola’s dominance.

It looked in the summer of 2011 as if electronics giant Raytheon Corp. had gained a major foothold in the U.S. emergency communications market long dominated by one company: Motorola. Raytheon had been selected as the prime contractor for a sprawling, $600 million communications system connecting Los Angeles County’s public safety agencies with those of Los Angeles and more than 80 other cities in the county, two school districts and UCLA via the latest in two-way radio and high-speed broadband technology.

Like large urban areas across the country, Los Angeles County spent years working to meet a drumbeat of interoperability edicts from Washington. The goal was to unite local first responders in a seamless communication system that could withstand a terrorist strike, an earthquake, a wildfire or some other disaster.

In 2010, the newly formed Los Angeles Regional Interoperable Communications System, or LA-RICS, solicited bid proposals for a two-way radio system and a new broadband network. Raytheon’s negotiating team only needed to work out the design details with a joint government authority. Raytheon and the joint powers authority were in a final exclusive bargaining period when things got tangled.

A Los Angeles County attorney declared that the procurement violated an arcane state law because it bundled the radio and broadband systems with the construction of towers in a single “turn-key” contract. Under the law, construction projects had to be bid separately, the attorney reported. Motorola, however, had for years built turn-key projects in California that mingled tower construction and radio electronics.

Patrick Mallon, the executive director of LA-RICS, said in a phone interview that if the authority had proceeded, construction bids would have had to have been taken for each of 300 towers, posing “astronomical risks” if anything went wrong. The state legislature rushed a legislative fix into law, but LA-RICS started the process anew anyway, breaking the radio and broadband networks into separate contracts.

In the final round, the radio system was revised to end Los Angeles’ use of a commercial television band width and shift to a 700-megahertz band set aside for emergency communications. Motorola’s winning bid was a jaw-dropper: $280 million, or about half of its first-round bid and $135 million below Raytheon’s price of $415 million.

The question is, will contract modifications raise Motorola’s price?

For example, public records show that LA-RICS’ subject matter experts concluded that many of Motorola’s towers exceeded government height limits, a characterization that Mallon disputed. If shorter towers must be built, more towers costing up to $1 million each will be required, because their signals don’t extend as far. The authority has agreed to hold Motorola responsible for no more than $2 million of any additional tower costs.

Raytheon also announced that it was dropping out of the broadband competition and left empty handed.

That ain't the way we do it

New Rules Don’t Fit: Council Questions City Engineer Selection Process

The city attempted to follow its new 2012 City Procurement Rules to update the city engineering services contract, but ran into a glitch with changes to the new rules. City procurement rules are required by state law; the city’s previous engineering contract is not in compliance with state law.

In the past, “we had experience with one person doing everything,” Councilor Bill DiMarco said. “Now with the new state rules and with our procurement rules, those are probably two different jobs, and maybe we can’t wisely or even legally do that anymore.”

The Sewer and Streets Committee formed a City Engineering Request for Qualifications (RFQ) Selection Committee to review the RFQs submitted. Each committee member was tasked to review the RFQ proposals and score them based on preset criteria. The committee would then forward the top two scoring proposals to the Council for consideration.

Based on scoring results submitted by four of five committee members, the top two scores were HBH Engineering with 729 out of 800 points followed by Westech Engineering - the current city engineer - with 630 points.

DiMarco’s understanding of this RFP was that it was to hire a plain city engineer, whose job is separate from project manager, state negotiator or state facilitator. “My impression is that it is not wise anymore to combine them in one person,” he said. “Westech is very highly regarded,” dissenting evaluator and Councilor Christensen said. “I would like them to be the engineer on record and do the sewer project.”

Councilor Randy Nelson did not feel comfortable letting a handful of people on a committee make an important decision like this for the City Council. “I want to know how we got there and what we can do legally to change it if we can,” Nelson said.
The Council tabled the topic until July 23 to give councilors a chance to review the scoring process and seek legal counsel.

Adjustment to open, fair and competitive procurement processes is a large pill to swallow for those accustomed to calling the shots.

Procurement controversies -- The Philippines

Among other factors, the emphasis on best value in government contracting, and its high reliance on proven past performance, is driven by bureaucratic survival techniques such as risk aversion and inertia. Too much risk aversion impacts adversely on fostering competition, and creates an atmosphere of perceived if not actual favoritism and "old boy networking", a bad image for any government any where.

Of course, it is not always risk aversion or inertia that leads to old boy networks. The following story poses the possibility of other factors at work, perhaps more pernicious, though that may be debatable if the result is the same in either event.

Corruption in procurement process of firefighting equipment exposed

After failing to get satisfactory answers and actions from both the Bureau of Fire Protection (BFP) and the Department of Interior and Local Government (DILG) officials, Bayan Muna lawmaker Teddy Casiño now wants Congress to investigate what he said as the “dubious termination” of a government contract amounting to P243 million ($5.65 million) for fire fighting equipment allegedly to favor some regular suppliers of the BFP.

“It’s highly irregular for Perez to have delayed the awarding of the contract; and it’s more dubious still for him to have arbitrarily declared a failure of bidding on technical grounds belatedly raised in mere letters to him by two losing bidders who happen to be regular suppliers of the BFP,” he said.

In October 2010, the BFP opened for bidding various fire-fighting gears, namely helmets, coats and trousers, gloves and boots. On February 11, 2011, the BFP informed Kolonwel Trading that it won the bidding, having submitted the lowest calculated bid of P242,806,753.00. This was the first time the company participated and won in a BFP bidding.

Kolonwel Trading was then asked to submit various post-qualification papers. The company complied, but on April 20, 2011, the BFP again asked for additional documents. A month later, an additional request for test results on the quality and safety of their products was made. After submitting the pertinent documents, the Bids and Awards Committee (BAC) of the BFP finally came out with a resolution on October 17, 2011 and signed by DILG secretary
Jesse Robredo awarding the procurement of said Personal Protective Equipment (PPE) to Kolonwel Trading.

Two losing bidders, Panpisco Technologies, Inc. and 911 Alarm, both long-time suppliers of the BFP then wrote Perez, and soon after he withheld the awarding of the contract to Kolonwel Trading. He later on declared a failure of bidding, but this was two months after the BFP BAC issued its resolution in favor of Kolonwel.

According to Casiño, the said suppliers did not avail of the prescribed protest mechanism as prescribed by the Procurement Law (RA 9184) but raised their concerns through mere letters to BFP Officer in Charge Samuel Perez.

That last statement resonates with me. In a still unresolved controversy I have been involved with, the low bidder's award was also delayed during an interim in which the incumbent higher bidder, rather than protesting, after bid opening sent unsubstantiated, "confidential" communications to the procurement officer intending specifically to undermine the low bid's responsiveness to specifications.

Had the matter been duly raised by protest, it could have been shown that, first, the bid specifications did not require that substantiating material be provided with the bid therefore it was not error for the low bid to not provide it, and, second, that the incumbent's claims were unfounded since third party add-ons, to be provided by the low bidder, rectified any alleged shortfalls.

Protestations to the agency and administrative review authority that such unfair and ex-party communications should not be considered went unheeded. In the result, the claims, never properly brought therefore improperly considered, tainted and poisoned the protest.

Trading on inside information unfair to competition

The Office of Inspector General of the US Dept. of Veterans Affairs has determined that it was unfair to award a contract to an incumbent based on an evaluation that gave the incumbent points for its knowledge of the existing system and reduced points for bidders who lacked that knowledge. File this under leveling the playing field.

Final Report: Review of Secure VA-Chief Information Security Officer Support Services Acquisition Process

The technical evaluation process favored awarding the contract to the incumbent, Booz-Allen Hamilton, based on its performance as VA’s Information Assurance and Information Technology Security Services contractor for the past two years.

Documentation shows that the panel considered knowledge or unfamiliarity of VA procedures and practices as “strengths” or “weaknesses” in assessing the “understanding of the problem” requirement in the RFQ. As a result, the panel assigned nine “significant strengths” to the Booz-Allen Hamilton proposal; six of those “strengths” made specific references to knowledge of VA procedures and practices.

However, the lack of knowledge of VA procedures and practices was identified as a weakness in the evaluation of other offerors. The strengths and weaknesses associated with knowledge of VA procedures and practices were key factors in the decision to award the contract to Booz-Allen Hamilton.

VA traded off lower cost in favor of vendors’ technical knowledge of VA procedures and practices in evaluating the offers. If knowledge of VA procedures and practices had not been used as a key evaluation factor, another vendor might have won the contract at lower cost to the Government.

Booz-Allen Hamilton’s proposal was the highest cost option; however, the weighting of its knowledge and experience with VA procedures and practices was a key factor in Booz-Allen Hamilton winning the technical evaluation and ultimately the contract award decision.

We disagree with Management’s contention that Booz-Allen Hamilton’s nine significant strengths justified selecting it for contract award despite the fact that it was the highest bidder. As noted in the Source Selection Decision Document, Booz-Allen Hamilton’s cost of approximately $133 million reflected a premium of 16 percent ($18 million) and 22 percent ($24 million) over the two other offerors.

VA justified this premium because of the perceived significant strength and low technical risk from Booz-Allen Hamilton’s extensive knowledge, understanding, experience, and expertise in support of VA’s enterprise-wide information security and risk management program.

Further, although it would have been helpful to substantiate the selection decision, Management did not provide a labor-rate cost analysis justifying the premium price paid for the contract award. Such an analysis would have compared the labor rates of all proposals and determined whether Booz-Allen Hamilton’s labor rates were reasonable.

While the award decision may have resulted in a low risk to the Government and a decreased learning curve as Management asserted, VA should not have paid a premium price for the incumbent’s knowledge.

In our opinion, favoring the incumbent during the selection process did not promote full and open competition in accordance with the Federal Acquisition Regulation.

This practice puts VA at risk of awarding future “de-facto” sole source contracts at greater expense to the Government because of reduced competition.

Management based its assertion on a GAO ruling that “It is common for an incumbent to possess and receive evaluation credit for unique advantages which the government is not required to neutralize, and this advantage does not constitute an unfair competitive advantage or represent preferential treatment by the agency.”

We agree that organizational knowledge can be a key consideration in evaluating offers and a deciding factor when multiple bids are indistinguishable.

[Subtext: Here, bids were distinguishable by significant price differentials, without justification the price paid was reasonable.]

However, this ruling as well as another GAO decision cited by Management further emphasized the importance of disclosing in the RFQ how relative experience will be evaluated during the selection process and when giving credit to the incumbent. As such, VA should have identified such knowledge as a significant evaluation factor in the RFQ before using it as criteria for rating purposes. We maintain that the Department’s failure to disclose knowledge of VA practices as a significant evaluation factor prevented all vendors from submitting comparable proposals to emphasize their specific VA experience, placing potential contractors at a disadvantage in the bidding process.

Therefore, we will evaluate VA’s contract award decisions in future audits to determine if evaluation panels assess vendor proposals based solely on evaluation factors stated in the solicitations.