Pulling the blanket back

The following story is interesting for illustrating the issues when a government agency cancels a solicitation. While there is a great deal of latitude allowed to do so, the discretion to do so is not without limits. As will be discussed below, the regulations under the ABA Model Procurement Code that Guam has adopted places conditions on cancellation of bids and offers, which differ depending on when the the process the cancellation is done.

It is unfortunate that we get so little fact from the story. It is not the fault of the reporting, however, but of the redaction made in releasing it. Who would have thought that a simple moving contract should be so secretive? As usual I have edited the story to suit myself and make the use of it as a hypothetical more convenient. Always read the story at the link to reveal the original story line.

A parade of protests as FBI scraps moving contract

The FBI issued four blanket purchase awards to four companies that it hired to provide relocation and moving services. The FBI first awarded BPAs to three companies — Allegiance Relocation Services, Lexicon and WHR Group — on March 15. One week later, another company, Brookfield Relocation Inc., filed a protest with the Government Accountability Office. GAO dismissed the protest as academic when the FBI issued a BPA to Brookfield. The substance of Brookfield’s complaint remains unclear because of redactions in the complaint filed by Lexicon.

The hiring of Brookfield, however, did little to keep bid protest lawyers at bay. In fact, the move only prompted more protests. TRC Global Solutions protested the Brookfield award, though the GAO dismissed that complaint, saying the company couldn’t prove it was next in line for award. Likewise, Capitol Relocation Services filed a protest over the Brookfield award.

Weeks later, on July 16, the FBI canceled all of the BPA’s, telling GAO that it planned to start all over. Lexicon Government Services filed a complaint Monday in U.S. Court of Federal Claims, arguing that the FBI’s decision to scrap the procurement and start all over again was “arbitrary, capricious and contrary to law.”

“The FBI’s proposed corrective action to cancel Lexicon’s award and the solicitation was arbitrary and capricious because there has not been any legitimate change in the FBI’s needs that would merit the cancellation,” Lexicon argued in its Federal Claims Court complaint Monday. The company wants a judge to keep the FBI from canceling the award to Lexicon, according to the complaint.

So, what is a BPA? A Blanket Purchase Agreement is a method of source selection whereby the government establishes open accounts with a variety of vendors or service providers for specified commonly needed goods or services, to avoid repetitive competitive acquisition of these products.

The model regulations adopted on Guam at 2 GAR § 3112.1 define a BPA as

"a simplified method of filling anticipated repetitive needs for supplies or services by establishing “charge accounts” with qualified sources of supply and is to be used only if the services or supplies cannot be properly identified as to the quantity and the type of services or supplies required."

Further, Guam law limits the use of BPAs to the dollar limits applicable to "small purchases", generally under $15,000. Emphasizing the repetitive nature of the need, the regulations illustrate the circumstances justifying a BPA:

The following are circumstances under which BPAs may be approved:

1. If there is a wide variety of items in a broad class of goods (e.g. hardware) that are generally purchased but the exact items, quantities, and delivery requirements are not known in advance
and may vary considerably.
2. In any other case in which the writing of numerous purchase orders can be avoided through the use of this procedure.

They are essentially an indefinite quantity, indefinite delivery requirements contract.

One of the conditions for use of a BPA is the "all competitive sources should be given an equal opportunity to furnish supplies or services under BPAs. Therefore, if not impossible, then to the extent practical, BPAs for items of the same type should be placed concurrently with at least three separate suppliers to assure equal opportunity."

So, now, what about that cancellation issue?

The regulation regarding cancellation of solicitations is found at the same link as mentioned for BPAs above, at § 3115. The central principle applicable to cancellation of solicitations is that

"Preparing and distributing a solicitation requires the expenditure of government time and funds. Businesses likewise incur expense in examining and responding to solicitations. Therefore, although issuance of a solicitation does not compel award of a contract, a solicitation is to be cancelled only when there are cogent and compelling reasons to believe that the cancellation of the solicitation is in the territory's best interest."

The conditions allowed for cancellation of a solicitation differ depending of whether the cancellation is made before the opening of bids or offers, or afterwards.   In fact, a solicitation may only be cancelled before opening.

Conditions allowed for cancellation before opening are

"that such action is in the territory's best interest for reasons including but not limited to:
(i) the territory no longer requires the supplies, services, or construction;
(ii) the territory no longer can reasonably expect to fund the procurement; or
(iii) proposed amendments to the solicitation would be of such magnitude that a new solicitation is desirable."

After opening and before award, cancellation is not allowed, however a similar result might be reached if all bids or offers can properly be rejected in whole.  

Rejection of all bids is conditioned on a determination

"that such action is in the territory's best interest for reasons including, but not limited to:
(i) the supplies, services, or construction being procured are no longer required;
(ii) ambiguous or otherwise inadequate specifications were part of the solicitation;
(iii) the solicitation did not provide for consideration of all factors or significance to the territory;
(iv) prices exceed available funds and it would not be appropriate to adjust quantities to come within available funds;
(v) all otherwise acceptable bids or proposals received are at clearly unreasonable prices; or
(vi) there is reason to believe that the bids or proposals may not have been independently arrived at in open competition, may have been collusive, and may have been submitted in bad faith."

As is often the case, the rules in US federal government contracting are different, though principles may be the same or similar, as illustrated in the following GAO Decisions.

Matter of: Rand & Jones Enterprises Company, Inc., File: B-296483, Date: August 4, 2005

The RFP provided for the award of a fixed-price contract for the expansion and renovation of the VA’s Medical Center in Northport. Offerors were requested to propose fixed prices for a base contract line item number (CLIN) and other items.

The RFP incorporated the standard “Instructions to Offerors--Competitive Acquisition” clause of Federal Acquisition Regulation (FAR) sect. 52.215-1 that informed offerors that the agency would award a contract to the responsible offeror whose proposal represented the best value to the government considering the factors and subfactors identified in the solicitation. But, no technical or non-price related evaluation factors were identified in the solicitation.

[As an aside, I find this amusing, since GovGuam often checks the box in the general terms that says bidders must supply substantiating documentation for a bid item "as specified", but never actually specifies anything -- and then complains that substantiating documentation was not provided.]

On September 2, the contracting officer was notified by VA’s Acquisition Assistance Division that the RFP did not provide any technical evaluation factors. Thereafter, the RFP was amended to require the submission of a bid bond. The agency did not, however, amend the solicitation to provide any technical evaluation factors.

VA received proposals from four firms, including Rand & Jones and Arrow Construction/BKC, Inc. VA publicly opened the proposals and disclosed the firms’ proposed prices. VA again amended the RFP to provide a new set of construction drawings (but did not add technical evaluation factors) and to establish March 24 as a new closing date for submission of offers.

VA received revised proposals from the four firms, and again publicly opened the proposals and disclosed the firms’ proposed prices. Rand & Jones was found to have proposed the lowest price for the base CLIN. Arrow, which submitted the second lowest price for the base CLIN, protested to VA, but subsequently “withdrew” the challenge. Instead, the contracting officer cancelled the RFP because it failed to contain any technical evaluation factors and informed the offerors that the agency would issue an invitation for bids (IFB) for this requirement.

This protest by Rand & Jones of the cancellation of, and the failure to make award under, the RFP followed.

As a general rule, in a negotiated procurement the contracting agency need only demonstrate a reasonable basis to cancel a solicitation after receipt of proposals, as opposed to the “compelling reason” required to cancel an IFB where the bids have been opened. See FAR sect. 14.404-1(a)(1). The standards differ because, in procurements using sealed bids, competitive positions are exposed as a result of the public opening of bids, while in negotiated procurements there is no public opening.

In situations like this one, our Office has stated that cancellation of an RFP, even after one or more of the offerors’ prices have been revealed, is proper where the agency has a reasonable basis to cancel, and the record contains plausible evidence or a reasonable possibility that a decision not to cancel would be prejudicial to the government or the integrity of the procurement system.

Here, the record contains no evidence, or even argument, that the government or the integrity of the procurement system would be prejudiced if the RFP were not cancelled and award were made thereunder. VA’s only asserted basis for cancellation is that the RFP did not contain evaluation factors.[6] However, where, as here, a negotiated procurement does not provide technical evaluation factors, award is to be made to the responsible offeror with the lowest-priced, technically acceptable offer. Thus, the competition for award under the RFP was solely based on price.

The agency does not assert that it will change any of its requirements but will issue an IFB, under which the sole basis for award is price, for the same requirements. Thus, since the basis for award under the RFP and IFB would be the same, the agency lacks a reasonable basis to cancel the RFP. Moreover, not only is neither the government nor the integrity of the competitive procurement system prejudiced by not cancelling the RFP here, but Rand & Jones, whose low competitive price for this same requirement has been been publicly disclosed, would be prejudiced if this requirement were recompeted on the basis of price.

We sustain the protest.

See also, Matter of: Gonzales-McCaulley Investment Group, Inc., File: B-299936.2, Date: November 5, 2007:

Agency’s decision to cancel a solicitation, after a protest was filed, due to a lack of valid delegated procurement authority, was essentially pretextual when no other solicitations issued under the invalid delegation were cancelled. GMIG protested that the agency’s decision to cancel the solicitation was solely for the purpose of having its protest dismissed. In response, the agency argued that its decision to cancel was reasonable because the acquisition was unauthorized as it was conducted under an invalid delegation of acquisition authority and that the reason for cancellation was not pretextual.

A contracting agency need only establish a reasonable basis to support a decision to cancel a request for quotations. So long as there is a reasonable basis for doing so, an agency may cancel a solicitation, no matter when the information precipitating the cancellation first arises, even if it is not until quotations have been submitted and evaluated.

As here, however, where a protester has alleged that the agency’s rationale for cancellation is but a pretext to avoid awarding a “contract” on a competitive basis or to avoid the resolution of a protest, we will closely examine the reasonableness of the agency’s actions in canceling the solicitation.

Here, it appears from the record that HHS is correct in its assertion that the GETA acquisition authority had not been validly delegated to HHS-U. We believe that this lack of authority would ordinarily provide a reasonable basis to cancel a solicitation. However, based on our review of HHS’s actions here, we conclude that the cancellation of this solicitation was pretextual. The record shows that this was the only acquisition, out of the hundreds that had been conducted by HHS-U without properly delegated authority, that was cancelled when HHS became aware of the lack of authority, even though a number of the other HHS‑U acquisitions were ongoing.

Nevertheless, even where the cancellation of a solicitation was a pretext to avoid further scrutiny and review of a protest, we will not sustain a protest of the cancellation on this basis unless the protester was prejudiced, for example, if its initial protest would have been sustained but for the cancellation. While it may be that there was a reason that GMIG should not have been selected to provide these courses, the record here shows that HHS-U’s Center Manager did not attempt to reasonably investigate her suspicions of plagiarism prior to rescinding GMIG’s selection and, on this record, we find the rescission was not reasonably based.

See also, Matter of: Superlative Technologies, Inc., File: B-310489; B-310489.2, Date: January 4, 2008

Agency did not have a reasonable basis for canceling solicitation where agency states that cancellation was necessitated by the agency’s disclosure of source selection information, which the agency believed gave an “unfair advantage” to at least one offeror, and where the agency subsequently awarded a sole-source contract to a contracting team that included the same contractor to whom the source selection information was disclosed.

The solicitation contemplated award of a contract for a 12‑month base period, with four 12-month option periods, and a total estimated value of $13.5 million. The solicitation provided for award based on the proposal “most advantageous to OJP,” and established various technical and cost/price evaluation factors, stating that “technical merit is more important than cost or price.” Proposals were submitted by three offerors, including SuperTec and ManTech. Thereafter, the agency determined that, although ManTech’s proposal “came the closest” to meeting the solicitation requirements, none of the initial proposals met all of the solicitation requirements, and that discussions were necessary.

the ITSD director, who was also the contracting officer’s technical representative (COTR) and had been involved in developing the statement of work (SOW) for this solicitation, sent an email to the contracting officer and the deputy chief information officer stating that she (the COTR) should be “recused from further proceedings.” The email revealed that, prior to submission of proposals, the COTR had “consulted with ManTech and [the third offeror]” regarding “requirements, pricing and labor categories,” and that her communications “may have provided an unfair advantage to ManTech and [the third offeror] because they had an idea what the labor categories might be in advance.” She concluded that she “needed to disclose what [she] had done in order to protect the reputation of OJP as well as [her own] reputation as Director of ITSD.”

Thereafter, the contracting officer cancelled the solicitation, summarizing the basis for cancellation as follows: "Prior to receipt of revised proposals, [I] learned of a potential procurement integrity issue that occurred during market research activities. The COTR, an OCIO employee, engaged in activity that appeared to raise concerns about the integrity of the pending procurement because of the disclosure of information about pricing and labor categories to the offerors."

the agency states that it “conducted additional market research in order to identify other schedules and procurement vehicles.” In this regard, the record contains an email from the COTR to the contracting officer in which, under the heading of “Contract Vehicles,” the COTR lists various existing contracts--all of which are ManTech contracts.

On August 24, the agency issued RFQ No. 2007Q-045, which contained a SOW virtually identical to the SOW contained in the cancelled solicitation.

On September 19, in response to a request from SuperTec regarding the status of the procurement, the agency advised SuperTec that the contract “will be a directed source...." [Sole sourced, essentially.]

SuperTec protests, among other things, that the agency’s cancellation of RFQ No. 2007Q-025 was merely a pretext to avoid conducting a competitive procurement and resolving a potential bid protest. Because we find, based on the specific facts presented, that the cancellation was improper, we sustain the protest on this basis.

We recognize that contracting agencies generally enjoy broad discretion in determining whether to cancel a solicitation, and need only have a reasonable basis for doing so. In this regard, a contracting agency’s determination that the integrity of a procurement has been compromised may form a reasonable basis for cancellation.

Nonetheless, where a protester has alleged that an agency’s rationale for cancellation is but a pretext, that is, the agency’s actual motivation is to avoid awarding a contract on a competitive basis or to avoid resolving a protest, we will closely examine the reasonableness of the agency’s actions in canceling the acquisition. Further, in considering a protest raising that concern, we view an agency’s discretion, though broad, as not unfettered. In that regard, the overarching guidance of the FAR has direct relevance:

Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.

Based on the record here, we conclude that the agency did not have a reasonable basis for canceling the RFQ. Specifically, as explained above, the COTR disclosed information to ManTech that she believed may have provided ManTech with an “unfair advantage.” Thereafter, the agency cancelled the procurement citing concerns about “the integrity of the pending procurement,” “potential organizational conflicts of interest,” and “a possible bid protest”--but then awarded a sole-source contract for the canceled requirements to a contracting team that included ManTech. Further, the sole-source award was based on a ManTech-developed proposal that was substantially similar to the earlier ManTech proposal for which the COTR suggested ManTech had obtained an “unfair advantage.”

What's in a (brand) name? Unreasonable favoritism.

Matter of: Desktop Alert, Inc., File: B-408196, Date: July 22, 2013 (Chopped, pasted and extracted; if the particulars of this case are critically important to you, read the Decision at the link.)

The protester asserts that the solicitation, which limits the competition to brand name items, is unduly restrictive of competition. We sustain the protest. Solicitation for an emergency mass notification system, telephony and training that was limited on a brand name basis is overly restrictive where the agency fails to demonstrate a reasonable basis for the brand name restriction.

DCMA awarded a Small Business Administration 8(a) set-aside contract on April 11, 2009, to Reliable Government Solutions, Inc., of Silver Spring, Maryland, to provide a product known as the AtHoc Mass Notification System. Among other things, this contract included requirements for: software; licenses; core system; software assurance; upgrades and technical support; 50 dedicated phone lines for transmitting alerts; system installation and set-up; and a back-up system. Contracting Officer’s Statement at 2. This contract ended on April 12, 2013.

On March 12, 2013, DCMA posted the RFQ for the instant procurement on the General Services Administration’s (GSA) e-Buy website. The solicitation was limited under the FSS procedures of FAR § 8.405-6 on a brand name basis to AtHoc products and services. The solicitation sought AtHoc software, upgrades, security patches, software assurance, technical support, communication services, telephony[1] and training.

A limited source procurement under the FSS, such as a brand name limitation, requires a justification that describes the reasons for limiting the competition. On March 7, prior to issuing the RFQ, the contracting officer signed a limited source justification for an AtHoc Mass Notification System. The justification explains the reason for limiting the acquisition to the AtHoc brand name system, as follows:

AtHoc is already installed in the DCMA Infrastructure and is in use by all Contracting Regions across DCMA. By using existing assets, and trained Operator and Administration personnel, DCMA saves money and time. Most of the emergency management force has already been trained on the AtHoc System, and the cost to retrain personnel is substantially lower than other systems. . . . These conditions all point to cost, time, and human resource savings by using the existing AtHoc brand software.

With regard to market research, the justification provides the following assessment, which addressed DCMA’s views of the merits of the AtHoc system:

Based upon the market research conducted, the purchase of the AtHoc brand name represents the best value solution as this product, a) exceeds the technical specifications required for this type of emergency warning system, b) reduces training, as this system is already widely utilized within all DCMA, c) the configuration of this system allows the Agency’s Emergency Management Personnel to provide quick alerts and operability within the Agency, and d) provides a high level ease-of-use for the customers at a very competitive price.

The justification also cites AtHoc’s favorable past performance--both in terms of product reliability and customer service--and states that “AtHoc is the only mass notification application on the [Defense Information Systems Agency (DISA)] Approved Product List (APL).”

On March 20, in response to the e-Buy solicitation, DCMA received one quotation, from Reliable, an AtHoc reseller. Reliable advised in its quotation that at least four of the RFQ’s contract line item numbers (CLINs) for training were listed as open market items in its quotation, because those items are not available on the FSS. On March 29, DCMA re-issued the RFQ on FedBizOpps, via amendment 0001 to the solicitation.

On April 3, Desktop Alert submitted a pre-award protest to DCMA, arguing that the solicitation’s limitation of sources to AtHoc brand name items is unduly restrictive of competition, and that the solicitation fails to describe the agency’s minimum requirements. The protester also asserted that DCMA failed to consider mass notification systems offered by other vendors. In its protest, Desktop Alert notified DCMA that it provides mass notification solutions to DOD and other government and commercial customers.

On April 9, DCMA denied the protest, stating: “[W]e limited our solicitation for support to the AtHoc system [because] it’s the system we currently use and it’s the system we seek to continue to use.”

On April 11, Desktop Alert filed a pre-award protest with our Office arguing the same grounds as its agency level protest. On April 12, the head of the relevant DCMA contracting activity executed a justification and approval, pursuant to FAR
§ 33.104, authorizing award of the contract notwithstanding the stay triggered by the protest to our Office, on the basis that urgent and compelling circumstances did not permit awaiting a GAO decision before proceeding with contract award. That same day, DCMA awarded contract No. S5121A-13-F-0007 to Reliable in the amount of $84,472.50, for the base year, with a total estimated contract value of $540,260.52, inclusive of the base and all option years. Reliable was the only company that submitted a quotation in response to the RFQ.

The protester argues that the solicitation fails to describe the salient characteristics of the agency’s requirement.[4] For this reason, the protester contends that the RFQ is unduly restrictive of competition and does not permit other potentially qualified vendors of similar software systems to compete. Desktop Alert also argues that DCMA’s limited source justification was unreasonable because it failed to describe the agency’s requirements, and did not consider other qualified software systems when justifying its determination to limit the solicitation on a brand name basis.

As discussed below, we find that DCMA failed to justify the use of the restrictive brand name requirements for this procurement. Specifically, we conclude that the agency’s justification is deficient because DCMA failed to adequately define the supplies or services required to meet its needs, or any essential feature of the supplies or services that is unique to the AtHoc brand name. We also conclude that the justification is deficient because the agency failed to document adequately its market research of other vendors’ similar products. For these reasons, we conclude that the solicitation was overly restrictive, and sustain the protest.

Orders placed under the FSS, while streamlined, are considered to satisfy the full and open competition requirements of FAR Part 6. 41 U.S.C. § 152(3) (2006 & Supp. V); FAR § 6.102(d)(3). Moreover, orders or blanket purchase agreements established under the FSS are exempt from the specific requirements in FAR Part 6, including the requirements for justifying restrictions to full and open competition. FAR § 8.405-6. However, to limit sources in FSS orders--such as a brand name requirement--ordering activities are required to justify the restriction in accordance with the procedures set out in FAR § 8.405-6. Id. § 8.405-6(b)(2).

As an initial matter, DCMA argues, in essence, that Desktop Alert is not an interested party to challenge the terms of the solicitation. In this regard, DCMA contends that the RFQ sought maintenance and upgrades for its existing AtHoc system, and did not seek a new mass notification system. AR at 1 (“DCMA did not want to procure a new system or switch to another system; it only wanted to maintain and upgrade the system currently in place.”). The agency asserts that its decision to limit the competition to FSS vendors who are authorized resellers of AtHoc mass notification systems is reasonable because “[b]uying software upgrades and maintenance on a system the agency already owns is far more reasonable than scrapping a functioning system and purchasing a completely new system.” Id. at 2. The agency therefore argues that because the protester requests an opportunity to provide its own mass notification system rather than maintain the existing AtHoc system, it is not an interested party.

The record, however, does not show that the RFQ is merely seeking maintenance or upgrades to the same AtHoc software system that DCMA purchased in 2009. Supp. AR at 2. As the agency’s response to the protest acknowledges, the RFQ seeks a newer version of the AtHoc system with expanded functionality. Id. For example, the newer version of the software “increas[es] the functionality” and “increas[es] the type of methods that may be used to send out warning messages, such as adding capability to provide alerts over Twitter® and using computer desktop alerts (a desktop alert is a message that shows up on a window on the employee’s computer monitor, in addition to telephonic and email alerts).” While the agency will receive “software patches and bug fixes to correct any errors discovered in the software after purchase,” this maintenance appears to be for the newer version of the software purchased, not the 2009 version of the software. Id. Moreover, more than half of the total contract value consists of training and telephony, unrelated to the particular brand name system being purchased. While an agency might reasonably limit a competition to a brand name source where it is simply upgrading an existing system, the record here does not show that the agency has sufficiently justified the limitation for this procurement.

based on our review of the record, we conclude that the agency does not adequately describe its requirements for a mass notification system, or why AtHoc is essential to the government’s requirements. The limited source justification states that “DCMA requires an emergency notification management system . . . to notify DCMA end users on short notice via phone, pager, email, etc. of continuity of operations (COOP), natural disasters, circuit and enterprise application outages, and a myriad of other scenarios that may occur on day-to-day basis.” This general description, however, fails to identify unique features of the AtHoc software system particular to the agency’s needs.

DCMA also argues that its requirement is “to maintain the current AtHoc brand since a large percentage of its workforce was already trained and using this system on a regular basis.” Essentially, the agency raises a circular argument: only the AtHoc system meets the agency’s needs, because the agency does not want to change from the AtHoc system it currently uses. Other than this general rationale, however, the record does not include a definition of DCMA’s requirement or needs that supports the agency’s assertion that the agency’s needs can be met only by the AtHoc software system.

Neither the justification, nor the record submitted in response to this protest, however, state any rationale explaining why the AtHoc software system is the only system that can meet DCMA’s requirement.

The record also fails to support the agency’s contention that limiting the acquisition to AtHoc software is reasonable because its staff has already been trained on the software. the agency concedes that although the agency currently has approximately 300 personnel who have been trained on the 2009 version of the AtHoc software, the “DCMA workforce is not static,” and that training for new personnel will be required: As new personnel join the agency and others depart there exists a requirement that these new employees receive training,” and that “the use of [the AtHoc software] is a perishable skill and employees who were trained on this system in previous years could benefit from refresher training provided by the vendor. Given the amount of training that the contract requires, in combination with the agency’s recognition that it will be required to re-train its staff even if it purchases the AtHoc software system, we find that the agency’s justification limiting the procurement on this basis is insufficient and unreasonable.

Another reason stated in the limited source justification for limiting the competition is that DCMA will save costs and time by upgrading its existing AtHoc system and relying on personnel already trained for that system. FAR subpart 8.4, however, does not cite cost or time savings as a basis for restricting sources. Moreover, the agency has not provided any support for this rationale, either in the justification or its response to the protest. In contrast, the protester asserts that it can provide an upgrade to DCMA’s current installed software by replacing the software system with its current software, and that based on its published FSS pricing, its Desktop Alert software system would cost the Government 20 percent less than the award price to the intervenor. The protester argues that since the original award in 2009, mass notification systems have improved significantly, and generally, the cost has been decreasing.

Next, we conclude that the justification also fails to adequately comply with the market research requirement of FAR § 8.405-6, which requires documentation of the agency’s finding that “other companies’ similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency’s needs.” FAR § 8.405-6(b)(1). Specifically, the justification fails to show whether DCMA conducted market research concerning other companies’ products. Instead, the agency’s justification merely states that, based upon market research, “the purchase of the AtHoc brand name represents the best value solution” as it exceeds the technical specifications, reduces training, allows the agency to provide quick alerts, and provides a high level ease-of-use at a very competitive price. AR, Tab E, Justification at 1. This analysis does not support the brand name restriction, because, for example, it does not discuss any “technical specifications” that the AtHoc software system exceeds.

DCMA did not adequately define its requirements or specify any special features of the AtHoc supplies and services that make this brand name essential to the agency’s needs. DCMA also did not demonstrate with adequate market research or otherwise that it considered whether other companies’ similar products, or products lacking a particular feature, do not meet, or cannot be modified to meet, the agency’s needs. We find the agency’s limited source justification fails to comply with requirements of FAR § 8.405-6, and is therefore unreasonable.

Because DCMA failed to adequately justify its limitation of the procurement on a brand name basis, the award to Reliable was improper. However, because DCMA moved forward with contract award due to urgent and compelling circumstances, we do not recommend the termination of the contract with Reliable. Instead, we recommend that the options under Reliable’s contract not be exercised and that the agency assess and define its requirements for an emergency notification management system, and either properly justify its need to limit competition to a single brand name system, or recompete its requirement beyond the base year. We further recommend that the agency reimburse the protester the costs of filing and pursuing its protest, including reasonable attorneys’ fees.

Another jurisdiction up in the procurement air over airport administration and blames prior government

Aviation Stakeholders Berate House over Airport Contracts

Stakeholders in Nigeria’s aviation industry have frowned on the position of the House of Representatives on the ongoing airport remodelling contracts being undertaken by the Ministry of Aviation. The legislators alleged that the contracts did not pass due process.

According to the stakeholders, the committee should have intervened at the beginning when the programme was started, instead of attempting to terminate the projects that were already at advanced stage. Captain Usman Balarabe said it was quite shocking for any person from Nigeria who has utilised the airports for the past 30 years and had noticed the rot in infrastructure to voice any protest given the magnitude of the rehabilitation that has so far been undertaken in just over two years.

President of Centre for Aviation Safety and Research (CASR), Sheri Kyari, told THISDAY that when the minister started the airports remodelling programme, the House did not raise issues with due process until now the ministry had reached advanced stage with the projects, stressing that the programme should not be aborted.

“As far as I am concerned, let them not do anything that will stop the on-going development in the aviation industry. They are talking about due process now, and we know that to them due process is what will enter their pockets. They were all there when the woman started the development programme and they want to stop it now that it has reached advanced stage. I don’t agree with them,” Kyari, an aircraft engineer said.

A senior official of the ministry explained that all contracts for the remodelling of the airports and other critical infrastructure/equipment followed all due processes prescribed by the relevant law of the Public Procurement Act 2007. “It has to be noted that Selective Tendering is a lawful procurement procedure as enunciated in the Act,” the official said.

He explained the ministry opted for the selective tendering option because, “The present administration met aviation infrastructure, especially the terminals in a terrible state of dilapidation. Understandably, a state of emergency of sorts with regard to rehabilitating the derelict and decrepit infrastructure required a lot of urgency which the selective tendering provision in the Act suited quite aptly.”

The official explained that security related contracts are not subject to open competitive bidding in order not to compromise the process. “Secondly, the security equipment required and ordered by the

ministry is not an off-the shelf item. The equipment is to be custom-made and manufactured specifically to suit our purposes."

Small service contractors deserted by OASIS?

Is OASIS too complex?

GSA released the RFPs for the next-generation One Acquisition Solution for Integrated Services (OASIS) contract on July 31. The contract was designed to be a one-stop management and consulting, professional engineering, logistics, and finance services contracting vehicle that would provide more uniformity and less redundancy.

GSA said it worked closely with industry to draft the RFPs. But, in doing all that spade work, some industry stakeholders said the GSA produced RFPs that are innovative but possibly a little too complex. Roger Waldron, president of the Coalition for Government Procurement, cited a vendor-scoring table as an example of needless complexity. While providing detailed criteria that could be useful, its 15 categories of evaluation that use 40 specific questions to award points for favorability might be too much information for some to digest.

On the other hand, said Alan Chvotkin, executive vice president and general counsel at the Professional Services Council, the table provides a "self-test, or open book test for companies" that want to bid on the contract. "It will eliminate some of the mystery around their actual capabilities." With various pools of potential providers, the selection and contracting process isn't as straightforward as ordering off of a schedule, Chvotkin said. "Ordering agencies will have to do some work" in drawing up contracts under OASIS. "There are some advantages over ordering off a schedule, but this is not the easiest multiple award vehicle to work with."

Larry Allen, president of Allen Federal Business Partners, predicted the detailed responses would serve a useful purpose: they'll "make it obvious to companies whether they should bid or go no-bid."

The good, the bad and the corrupt-ish

Taiwan Is Angry But Is It Also Corrupt?

Proudly democratic Taiwan with the world’s 26th largest economy is demanding that the graft-detection group Transparency International do a recount after placing it on the NGO's corruption list. It has also sent the Berlin-based NGO two letters of protest. But Transparency International, which calls its barometer the biggest ever survey on global public opinion on corruption, says it stands by its findings and has no plans to scrap or redo its research on graft in Taiwan.

The standoff between Taiwan and Transparency International leaves open the question of how corrupt this global exporter in the West Pacific really is. Public records laws let the public see a lot of government in action. The news media have ample freedom. No one is charging the government with systematically stealing wads of public money to spend on itself. Taiwan’s leaders are no African kleptocrats.

At the same time, despite the liberal democratic reforms put in motion since martial law was lifted in 1987, Taiwan is hardly free of corruption. Based on local news reports and discussions with lawyers, it’s safe to call payoffs and unholy alliances core part of government business. Government procurement is considered shady. And it’s widely suspected that contractors pay officials under the table and that some don’t even need contracts.

Some projects are so “off the wall” that the public must imagine a hidden financial motive, says Robin Winkler, who founded his Taipei-based law firm in 2002. He says lawmakers may also raise construction bid prices to get more from themselves and others in their camp.

Buying local in the far Northwest Territories

Protest over contract to south

The city of Yellowknife recently awarded the contract to build Yellowknife's new water treatment facility to Ontario-based NAC Contractors Ltd. which submitted a $30,280,950 bid for the project. Northern companies Det'on Cho Nahanni Construction Ltd. and Clark Builders put in respective bids of $30,978,876 and $31,153,755, but because the procurement for the project had gone through an invitation to tender, the contract had to legally be awarded to the lowest bidder.

"I don't believe the city does enough to ensure this work stays North," said Bob Doherty, president of the NWT and Nunavut Construction Association. "They just take this attitude that we have to follow the provisions of this inter-provincial trade agreement, so we can't do anything, when in fact they can," said Doherty.

"The bottom line is that Northern companies should get Northern contracts," added Leslie Campbell, executive director of the Yellowknife Chamber of Commerce. "We've developed a construction industry that is second to none. These companies know what it's like to build in the North, they understand our local labour force, they are facing higher costs, and they understand the cost of doing business here," said Campbell.

Campbell said while there is no point dwelling on the water treatment facility, the city should look at finding ways to keep future contracts from going south. "The point is what can council do going forward to make sure this doesn't happen again," said Campbell. "It's time to take a look at this."

The greatest barrier to the city's ability to give preference to local contractors is the Agreement on Internal Trade (AIT), which was an inter-provincial agreement signed by all Canadian provinces and territories in 1995. The purpose of the agreement is to reduce and eliminate barriers to free trade within Canada.

In 1999 all provinces and territories, except for the Yukon and Nunavut, signed Annex 502.4 of the AIT, which binds municipalities to the agreement and prevents them from showing preference toward local businesses when they award contracts. The GNWT, however, has an exemption written into the AIT, which allows it to apply its Business Incentive Policy (BIP) to the tendering process for territorial projects.

The policy, which was adopted in 1976 and was subsequently grandfathered into the AIT, was created to level the playing field for Northern businesses by compensating contractors for the higher costs associated with operating a business in the North. "There's a recognition that it is a relatively high cost place to operate. And if you have a bigger domestic business sector it gives a lot of spinoffs in terms of jobs and training and experience. It's a good thing," said Kevin Todd, director of investment and economic analysis with GNWT's Department of Industry, Tourism and Investment.

The BIP allows for a set of fixed percentages to be applied to adjust the cost of bids based on the territorial and local content of certain contracts to a maximum of $500,000.

Procurement controversies -- Daytona Beach, Florida

There is a lot to this story, and much more including a larger story than extracted here, so you should probably best just click the link and go straight to it. I've decided to categorize this as another in the procurement controversies series because it seems such a common drama as to almost represent a genre of procurement controversy in which undue influence and conflict of interest, or the appearance of it, becomes central. 

But remember, I do not validate or imply the veracity of these stories, using them only as hypothetical contexts in which procurement issues can be dissected and studied.

If it is not obvious at the start, bear in mind that this involves a public hospital, thus public contracting principles are involved.

Vendor sues Halifax Health over bid

Hospital denies vendor claim of favoritism, and says the goal is to save money

The enabling act that governs the public hospital’s procedures requires purchases over $10,000 to be subject to competitive bidding.

John Johnson, board chairman, said Halifax Health’s administration has an obligation to look for ways to reduce costs, and Johnson believes that’s what the hospital is trying to do in this case. “My highest priority has always been patient care, and I do not see that this particular issue is impacting that,” Johnson added.

Spinal Resources Inc. alleges Halifax Health has illegally steered business to an entrepreneur with ties to the hospital’s biggest donor. The company requested the injunction to stop the planned purchase of spinal implants and instrumentation by Halifax Health. Spinal Resources Inc. allege in their legal filing that the hospital shut out their company and others in favor of a startup launched five months ago called Cognitive Kinetics. The startup may receive more than $1 million from the deal, while becoming the main supplier of spinal implants to Halifax Health, according to documents The News-Journal obtained as part of a public-records request.

That startup’s founder is Bill Christy, a longtime executive in the medical supply field. He’s also known locally to have a personal association with Lesa France Kennedy, the CEO of International Speedway Corp., which owns Daytona International Speedway and 12 other tracks across the United States. The France family made the largest donation in Halifax Health’s history when they gave $10 million in 2009 to build a 10-story tower that bears the family name.

In its legal filing, Spinal Resources alleges the invitations to bid “were developed and issued with no actual intention of fairly considering the bids.” Halifax Health had already decided well in advance in favor of Cognitive Kinetics, the complaint alleges. Although Cognitive Kinetics was notified about the bid process, other vendors were not, and the specifications for the bid were written with information provided by Cognitive Kinetics, the legal filing states.

In the complex world of hospital finance, where lives are at stake and the pressure to hold down costs is immense, hospital officials said they feel a responsibility to explore every opportunity that helps them meet both goals. Reducing the number of vendors and giving the hospital more control over the process is an example of that, and Christy was the best man to pull it together, said John Guthrie, a spokesman for Halifax Health. “It’s driven by the fact we need to find a new cost model,” Guthrie said.

Spinal Resources’ legal filing claims Halifax Health’s neurosurgeons were told in May or early June by top-level administrators, including Halifax Health CEO Jeff Feasel, that they would no longer be able to use their preferred vendors because the hospital had already selected a new vendor for spinal implants.

Christy dismissed Spinal Resources as a “disgruntled vendor” that is disparaging a community leader in “a desperate attempt to throw as many allegations against the wall” as possible. France Kennedy was never involved in any discussions regarding Cognitive Kinetics or business at the hospital, he said.

Christy said Tom Beall, Halifax Health’s director of supply chain management, approached him in the fall of 2012 when the hospital was exploring how to reduce costs and streamline the process of spinal implant surgeries. Christy incorporated Cognitive Kinetics on Feb. 22 and signed a nondisclosure agreement with Halifax Health three days later. Although doctors are “strongly encouraged” to use Cognitive Kinetics, they are not being forced to use a specific company, Guthrie said.

In a Feb. 27 email on the subject, Beall wrote that hospital officials were interested in “a totally different type of relationship” in which the hospital or one of its corporations would partner with private investors and perhaps physicians to create a distributorship for spinal and orthopedic implants. “It is a very unique type of corporation which really has not been done anywhere in the country that I am aware of but it has the potential to save us millions in supply costs,” Beall wrote in an email to Shelly Shiflet, the hospital’s assistant general counsel. “Mr. Christy has ties to manufacturers and venture capitalists that would be crucial to the success of this type of venture.”

In a May 22 letter to the health system’s chief financial officer — labeled “personal and confidential” — Christy outlined “preliminary understandings and good faith intentions” on the potential purchase of an ownership interest by Halifax Health in his company. The News-Journal obtained the letter as part of a public records request. According to the letter, Halifax Health would have the option to purchase 85 percent of Cognitive Kinetics’ units of membership for $1.15 million, which would be paid in cash immediately upon transfer of the ownership interest.

Guthrie said the hospital planned to submit the details of a potential partnership with Christy to the Board of Commissioners once the details were ironed out.

Cognitive Kinetics also began holding training sessions at the hospital before bidding had closed, according to schedules obtained by The News-Journal. three days before the bid process closed – on July 5 – the hospital signed an agreement with Cognitive Kinetics

A contract cover sheet indicates the hospital planned to purchase $461,448.65 in implants and $109,259 in instruments. Halifax Health is eligible to receive a rebate equal to 50 percent of Cognitive Kinetics’ earnings before interest and taxes, according to the agreement. Guthrie said that while the hospital bought the implants from Cognitive Kinetics, it has not purchased the instrumentation.

On July 17 – days after Spinal Resources raised questions about the bid process – Halifax Health reissued the bid to include both spinal instrumentation and implants, according to the legal filing. That call for bids closed last Friday. Guthrie said Halifax Health doesn’t need to competitively bid purchases of implants, although it must bid purchases for instruments. Halifax Health chose to extend its bid to include implants to give every vendor a chance to win the hospital’s business, Guthrie said. For the most part, instruments are implant-specific and can only be used with a specific manufacturer’s products.

Halifax Health banished Spinal Resources and two other vendors from the hospital before bidding closed. In a July 24 letter, the hospital criticized the vendors for removing “critical instrumentation” without notifying operating room staff or senior management, an action the hospital considered “unethical” and potentially jeopardizing patient safety. As a result, Beall wrote in the letter, Halifax Health would no longer do business with the vendors.

“The evidence in this case is overwhelming,” said Smith, who filed the complaint in Circuit Court. “I think this is a classic case of favoritism in the bid process and is exactly why we have case law in Florida that prevents this kind of bid steering.”

For the hospital and Christy, it isn’t a case of bid steering. It’s about protecting the taxpayers and patients. “We are really interested in reducing these costs — that’s the bottom line,” Guthrie said. “If it’s the right thing to do for safety and expense for the hospital we’ve got to do it.”