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.”

Sure, Kid, first one's free

In the face of rising new technologies, it is tempting to place mission critical facilities into the hands of the apparent rising star. Think Microsoft's early DOS, for instance. Or, more pertinent to this post, Motorola's emergency radio system. 

Microsoft's DOS and its Windows progeny, and Motorola and its hand-held radios are ubiquitous, not because they are the best in show now, but because they were best in show when the curtains went up on the show. And like Vaudevillians, they refuse to retire gracefully, even in the face of newly emerging and disruptive technologies offering more effective and economic solutions. If only they would embrace an open source system. By doggedly hanging on they loose their luster and prestige; they become speed bumps in the race to the future.

I think, to foster competition (which is a fundamental principle and requirement of US federal and local procurement laws based on the ABA Model Procurement Code), no technology should be purchased with government funds for what is or is likely to become a standard and commonly used piece of equipment (or software) unless the vendor offers to submit its proprietary rights in the equipment to open sourcing after a limited period of time: say, five years. They don't have to sell to the government if they don't want to. And rising technologies bring out competition, so the government would not long be left out of the loop.

I have mentioned the Motorola example before, here and here. But it's a story that won't go away, as seen below. The the full stories at the links.

Want government reform? Idea #3: A new public safety communication strategy

Have you ever noticed how police officers carry both a cellular phone and a hand-held radio? It might surprise you to learn that you are paying hundreds of times more for the radio than the cell phone. And you’re about to pay millions more unless we have the courage to change course.

Today there are as many mobile phones as people, prices have fallen and consumers have benefitted from innovation that led to iPhones, Windows Mobile, Droid and other robust platforms. The change has been technically disruptive and positive. In that same time, the nation’s public safety community—law enforcement, fire, EMS—has also spent billions of public tax dollars on new infrastructure and yet the quality, cost and functionality of their expensive, proprietary, two-way radios has not materially improved since the 1970s.

The uncomfortable truth is that for city, county and state governments public safety radio equipment costs between 10x and 100x more than it does in most other countries, despite the U.S. leadership position for wireless technologies such as smartphones, WiFi, WiMax and more. The reason is that the nation’s public safety communications market does not enjoy healthy, vibrant, market-based competition in any way comparable to consumer mobile services.

Our nation’s first responders and 9-1-1 dispatchers aggressively moved to establish an industry standard for first responders called “P25” to get better radios at lower prices, to break the monopoly of the current structure. Unfortunately, more than 25 years later, P25 is still not available, still not implemented and even the Chairman of the FCC recently jolted Members of Congress by acknowledging “…[P25] has taken more than 20 years to develop and is still not complete” and “the protracted development of P25 has allowed vendors to take advantage of selling proprietary solutions.”

If our state’s march toward P25 continues, it will be more business as usual – and first responder radios will still cost $5,000 each. Just one P25 radio for one police officer costs $5,000 and yet it has less processing power and functionality than an iPhone, Windows Mobile or Droid phone. Public safety is building their own mirror system to commercial services. A mirror system that is on track to be proprietary, closed, and expensive like our existing first responder radio systems.

We should stop buying P25 radios at literally $5,000 per radio and start buying TETRA radios. TETRA is similar to P25, but it is truly open standard radio used by police and fire departments in Europe and Asia . They offer more features and are tested around the globe… and cost less than $500 each. They are essentially “Nextel-like” in their capability but are a fraction of the cost of the non-open standard P25. We should absolutely back a national broadband plan – but not this one. Not until it is legally bound to an open, public standard that enables true, free market participation from any and all vendors. Not a penny of federal or state funding should go towards any proprietary 4G/LTE solutions.

Faced with a tech tsunami, Motorola fights to preserve cop-com franchise

As Chicago cops braced for protests in advance of the NATO and G-8 summits in 2012, hometown radio giant Motorola made what seemed like a grand gesture. The company, which for years has used tenacious marketing and clout to reign over the emergency radio business, donated to the city $1.8 million worth of telecom equipment that could beam data and videos to law enforcement officers shielding the world leaders. Motorola Vice President John Molloy said the company also could operate a network for the city as a “test platform” until year end and provide Chicago’s public safety agencies entrée to the world of emergency broadband LTE – the new global standard for transmitting huge amounts of data at rocket speed.

Motorola’s gift was designed to keep on giving.

From Mississippi to Texas and California, the company now known as Motorola Solutions Inc. has reshaped its business strategy in the face of a technology tsunami that threatens to upend its decades-long hold on the emergency communications market. While fighting to preserve its immense walkie-talkie franchise, Motorola has maneuvered to become a player in broadband, where it must contend with new and bigger competitors in a scrum for billions of dollars of taxpayer funds pledged for a coast-to-coast emergency data delivery network.

Motorola’s aggressive push into broadband, however, is a cause for consternation among officials of the First Responder Network Authority, or FirstNet, the Commerce Department agency tasked with building the first nationwide public-safety communications system. To garner broadband business, Motorola has relied on many of the same strategies and deep customer relationships that helped it capture more than 80 percent of the radio market.

As McClatchy reported in a series of articles last year, the industry giant has landed scores of sole-source radio contracts and wielded enough pricing power to sell its glitzy handsets for as much as $7,000 apiece, at a taxpayer cost of hundreds of millions, if not billions, of dollars that could have been saved in a more competitive market.

Motorola rival charges FBI’s new radio deal also biased

For the second time in a year, the FBI’s attempt to replace its 30-year-old two-way radio network could be stalled because of accusations that the bureau is skewing its bid solicitation to favor Motorola Solutions Inc., the emergency communications industry’s dominant player.

Last year, the bureau scrapped a plan to hand Illinois-based Motorola a sole-source contract worth up to $500 million, including upgrades for other law enforcement agencies, after four competing vendors filed protests.

Now the FBI has sought competitive bids for a contract limited to modernizing its own network at a cost of about $200 million, but the action is still drawing allegations of bias from Motorola’s biggest rival, Harris Corp., which has formally protested. The conflict offers the latest evidence of how difficult it will be to break one company's market power over a multibillion-dollar business underwritten solely by taxpayers.

The FBI’s dilemma is that it wants its agents’ radios to be able to connect with all of the thousands of law enforcement agencies nationwide. But many state and local systems use older Motorola equipment with proprietary designs that cannot interact with other manufacturers’ products, meaning that Motorola’s rivals cannot meet the bureau’s requirement.

Motorola Solutions’ monopoly on radio systems needs to end

In 2005 San Francisco Sheriff, Warren Rupf, and Alameda Sheriff, Charlie Plummer, decided that because of the failures of communication during 9/11, they wanted to implement a new digital two-way radio system so that all of their first responders could talk to each other.

Unfortunately, Motorola Solutions stood in the way. Motorola had no interest in allowing for any competitive bidding process. Before the Sheriff’s could try to solicit bids for such a radio system, they were told that any plan must include the first $5.7 million going towards a master controller made by Motorola and any equipment must connect with the older, antiquated Motorola SmartNet II system.

A seven-month McClatchy investigation found that local and state politicians around the country have helped Motorola secure an estimated 80 percent of all the emergency telecommunications business in America. The politicians help Motorola by giving them noncompetitive contracts, modifying years-old contracts to acquire new systems or by crafting bid specifications to Motorola’s advantage. [Read the story for more on this study.]

In 2004, a Sept. 11 commission recommended that the nation’s public safety community adopt measures to improve interoperability, meaning that all radios must interact no matter their manufacturer. Yet, Motorola has continued to fight such interoperability. In Colorado, Louisiana, Kansas and other states, Motorola has found ways to insert software encryption that serve no purpose other than to not allow rival companies to interact with them. John Powell, a former chairman of a National Public Safety Telecommunications Council panel, criticized federal agencies for failing to put enough “teeth in those grant guidance documents” to ensure against proprietary features, such as Motorola’s encryption.

Et cetera

The pork in the piggy backs

I have had so many posts about the abuse of the so-called "cooperative purchasing" method of source selection see, eg, here and here and here, of which "piggy-backing" is one type, that I've decided to start a new tag/label: "Cooperative purchasing".

Please read the entire article below at the link; I tend to cut and rearrange and alter the context, so you really must read the original. It's hard to believe (or is it?), and don't take my word for it.

Dropped jaws, protests over another no-bid Motorola contract

The broadband deal that Motorola secured in Harris County, Texas, offers a case study in how the company almost magically avoids head-to-head bidding on many contracts.

“I would never have thought Motorola could do this, but Motorola came in and told me such a great story, I couldn’t not go with them,” said Harris County systems architect John Chaney, according to two attendees, who were not authorized to speak for the record.

In the audience were representatives of Motorola competitors who didn’t get a chance to tell their stories.

A county attorney winced and shook her head, then tried to explain why the contract was open and fair under Texas law, even though no other company was invited to bid, the attendees said.

In a recent phone interview, county officials contended that the $7.5 million contract (the county put up 20 percent of the money) was competitively bid because it was added to a two-way radio contract awarded by the Houston-Galveston Council of Governments that Motorola won competitively in 2007.

Piggybacking on competitively bid contracts in different jurisdictions – even in other states – has become an accepted mechanism for local governments to bypass potentially lengthy and contentious procurement processes. The Houston-Galveston contract also was used by Fort Worth and Washington, D.C., to award Motorola deals worth tens of millions of dollars without taking bids from other vendors.

n the fall of 2011, Florida-based Harris Corp. and another cellular broadband player, Alcatel-Lucent USA, filed formal protests over the contract award with Texas Attorney General Greg Abbott.

To buy “wholly new technology” without inviting bids is “doing so illegally to the detriment of taxpayers,” Steve Marschilok, president of Harris’ Public Safety and Professional Communications unit, wrote Abbott.

Marschilok also said that other cities and counties were proposing to purchase broadband networks via the old Houston-Galveston contract, according to a copy of the protest obtained by McClatchy.

Perhaps as a result of those complaints, Harris County elected to invite bids for the network’s eventual expansion to cover the full county, a project that could be worth much more money.

But Motorola now had new advantages. The company not only had put together the pilot network, but it also was operating the system’s $3.3 million core, stationed at Texas A&M University. A core’s operator usually writes software rules determining what kind of equipment can work with a network and, perhaps more importantly, which equipment can’t, government and industry officials said.

When Harris County invited bids for the larger project, only one company responded: Motorola.

Motorola’s Schassler said that the county has yet to move forward with expanding the network.

Read more here: http://www.bellinghamherald.com/2015/01/27/4100927/dropped-jaws-protests-over-another.html#storylink=cpy

McClatchy has been following this story-line for a while, as has your blawger.

See this.

Protest busting solicitation busted on technicallity -- and a short history of bid protesting

The following story is very roughly related to a prior recent post, Open sourcing sole sourced contracts. It is a very readable column, and you should take the short time needed to click the link and read it. I've only provided a taste teaser for the whole piece.

When it comes to GAO bid protests, pay careful attention to the web of procedure

Bid protests, especially at the Government Accountability Office, can involve many procedural, non-substantive issues — the timing of the protest, the content of the protest, and the like. Sometimes, if you are not careful, you can find yourself caught up in this web of procedure and get bounced out of the protest before the GAO can ever consider the merits of the protest. That’s what happened to Harris Corp. in this case.

In this case, Harris proposed to provide a Motorola radio and, during the first protest, Motorola proved that it did not and would not provide Harris with permission to offer its radio on the procurement. The GAO recommended the existing proposals be re-evaluated, which the Army did. The Army found the Harris proposal to be non-compliant and awarded the contract to Motorola. Harris then filed this new protest.

Harris first argued that the RFP requirement to include an explicit agreement with the manufacturer was overly restrictive and not necessary to meet the agency’s needs. Harris also alleged that it believed the Motorola proposal also failed to meet the RFP requirements. The GAO dismissed both protest claims on procedural grounds.

First, the Harris allegation that the RFP is overly restrictive of the needs of the agency relates to the terms of the RFP itself. The GAO rules clearly state that any challenge to the terms of the RFP must be filed prior to the time for proposal submissions. Since the Harris protest was well after that fact, Harris failed to meet the procedural requirement for challenging the terms of the RFP.

The remaining allegation, that Harris thought the Motorola proposal failed to include sufficient agreements to document the parts of the radio system that Motorola did not manufacture, is more interesting and more frustrating for the protester. The GAO dismissed this allegation as mere speculation and not sufficient to meet the requirements of a well-founded protest. In particular, the GAO held that “speculation, without more, does not meet the requirements of our Bid Protest Regulations that a protest include a detailed statement of the legal and factual grounds for protest.”

More interestingly, the GAO noted that Harris, as the awardee, had failed to participate as an intervenor under the GAO rules in the first protest. An awardee is always allowed to participate in a protest against its award, to protect its own interests during the protest. The GAO noted that “while Harris was not required to intervene in the earlier protest, if Harris had participated, it would have had an opportunity to review the Motorola proposal as part of the record, and could have advanced any and all challenges to the acceptability of the Motorola proposal at that time.” In other words, had they participated in the first protest and reviewed the Motorola proposal, they would have had a reasonable basis to raise the issue in the second protest.

You can read the whole GAO opinion here.

The protest procedure was begun less than 100 years ago with an eye to facilitate government expenditure accountability (more on that in a moment). But, the government also has a blind eye. Whether your protest gets the careful, prophylactic gaze of the good eye, or the short shrift of the blind eye, depends on your understanding and compliance with the technicalities required to place your problem before the reviewing agency or court, be that GAO or any other reviewing authority. The represents a balancing of the need to police government expenditures in real time before badly spent money flies out the door, and the need to make sure that the government wheels keep turning however poorly the money has been spent. I would point out that this balance also depends on how well the government back-stops the protest process with critically meaningful audit review and enforcement procedures to make sure that those poorly spent dollars are uncovered and the error of those ways corrected, albeit after the fact.

The history of bid protests is outlined by Daniel I. Gordon, the Associate Dean for Government Procurement Law Studies at The George Washington University Law School and the former Administrator for Federal Procurement Policy, in his paper, "Bid Protests: The Costs are Real, But the Benefits Outweigh Them", published in 42:3 Pub. Contract L.J., Spring 2013, and available through the Faculty Scholarship at Scholarly Commons online here. The history noted below and the paper from which is comes has been noted before on this blawg, but bears repeating. As usual, I selectively cut, rearrange, paraphrase and paste, including deleting footnotes and citations, to suit myself, so read the source.

He explains,

In 1924, a few companies began writing to the then relatively new General Accounting Office (GAO) to complain that agencies had improperly awarded contracts to their competitors. There was hesitation within the GAO about the appropriateness of considering complaints by private firms about the federal procurement process. Ultimately, the GAO decided to consider the complaints as part of its responsibility to ensure that funds appropriated by Congress are lawfully spent, which is also known as the Office’s account settlement function.

Then in 1925, a company wrote to the GAO alleging that Panama Canal officials had issued a solicitation with specifications for a truck that were “wired” to a particular brand name and that thereby unfairly precluded the complaining firm from fair consideration for the contract. The GAO requested the agency’s views on the matter, and, when the Canal authorities admitted that they had used the specifications of one company’s truck in the solicitation, the GAO issued the first published bid protest decision, ruling that the challenged solicitation was unlawful.

For many years, courts did not consider bid protests, so that the GAO (and the contracting agencies themselves) represented the only place to file a protest.14 Then, for three decades U.S. district courts had bid protest jurisdiction, beginning with the U.S. Court of Appeals for the District of Columbia Circuit’s decision in Scanwell Laboratories, Inc. v. Shaffer.

Meanwhile, from the enactment of the Competition in Contracting Act of 1984 (CICA) until its jurisdiction ended pursuant to section 5101 of the Clinger Cohen Act of 1996, there was another administrative forum with jurisdiction over bid protests that pertained to information technology: the General Services Administration’s Board of Contract Appeals. Finally, a statutory change in 1996 resulted in the Court of Federal Claims, which had only pre-award protest jurisdiction for many years, later gaining post-award jurisdiction as well.

Consequently, for more than a decade now, the only places outside the contracting agency where disappointed bidders have been able to file protests have been the GAO and the Court of Federal Claims. From time to time there are differences between the GAO and the Court of Federal Claims, with respect to both process and outcome. The author views occasional differences between the two fora as inevitable. That is particularly the case where, as here, one forum is administrative and the other is judicial. In any event, having two fora hear bid protests may be healthy for the procurement system.

The protest process has received substantial attention around the world in recent years. More than ever, a protest system has come to be seen as a required part of a good public procurement regime. As evidence of this trend, the U.S. includes a bid protest provision in the free trade agreements it negotiates. The World Trade Organization’s (WTO) Agreement on Government Procurement (GPA) likewise includes a provision requiring that WTO members that accede to the GPA have a forum to hear protests (called a domestic review procedure). Finally, there is a protest provision in Chapter VIII of the model procurement law of the United Nations Commission on International Trade Law (UNCITRAL).

Perhaps most interesting is the attention bid protests have received during the past twenty years in the European Union (EU). Not mentioned in the EU’s Public Procurement Directives, protests were first addressed by the European Commission in what is known as the Remedies Directive. Initially issued in 1989, the Remedies Directive was revised in 2007. The Remedies Directive has had an enormous impact, requiring all member states to have a forum that considers protests. Furthermore, the Court of Justice of the European Union has also issued decisions that have reshaped the protest process in the EU. Of particular importance was the Alcatel decision that led to the requirement (codified in Article 2a of the 2007 revision to the Remedies Directive) that there be a “standstill” period (typically ten days) between the announcement of a potential awardee and contract signing to allow a window for filing protests. Bid protest procedures have therefore received important consideration from the international community.

Many posts on this blawg have referred to the EU rules and the interplay of EU and Member State rules of procurement, e.g., here and here and here. 

As well, this blawg carries many procurement stories from elsewhere around the globe, including Canada, Caribbean nations, Africa, India and Southeast Asia. Procurement is a work in progress, and there is much to be learned from looking around.

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.

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.

Chicago sole source emergency contract questioned

Chicago emergency officials skirted bidding rules on Motorola deal, city watchdog says

City officials circumvented competitive bidding rules to steer a $23 million digital-radio contract to Schaumburg-based Motorola, according to City Hall's top watchdog and documents obtained by the Tribune.

Inspector General Joseph Ferguson concluded that officials at Chicago's 911 center falsified paperwork to justify giving the contract to a preselected firm.

Office of Emergency Management and Communications officials said using Motorola would preserve "the city's prior investment of nearly $2 million" in Motorola equipment bought earlier. But the city actually paid only $350,000 for that equipment, according to Ferguson's report.

When investigators began asking questions, they had trouble determining "who was responsible, because of the debilitating combination at (emergency management) of high turnover, endemic finger-pointing, poor or nonexistent internal controls and missing paperwork," the report stated.

The agency justified not going through a formal bidding process in May 2005 when Ron Huberman was executive director. Huberman, a longtime lieutenant to Mayor Richard Daley who is now chief of the Chicago Public Schools, said Monday in a telephone interview that he led the department for only 13 months.

In a follow-up written statement, Huberman said he "was disappointed" that employees of his at the time did not follow proper procedure. "I regret that some of this misconduct occurred during my tenure," he said.

The request to award the contract without bidding was approved by the city's Sole Source Review Board, and Ferguson recommends in his report that the board's meetings be public. The Department of Procurement Services, which oversees that board, rejected that idea, the report states.

Market research in R&D must be integrated with needs assesment and specification crafting

Procurement Reforms Reignite Feud Between Weapon Buyers and Testers

Pentagon procurement chief Frank Kendall is proposing changes in how weapon systems are tested. He suggests tests should be performed earlier in the design cycle than is customarily done.

The sooner the testing, he says, the sooner the Pentagon will catch problems before the military sinks huge amounts of money into a program. This would help avert expensive redesigns and modifications — a costly lesson the Pentagon learned over the past decade from the F-35 fighter program.

Kendall also believes that earlier "developmental" testing can help reduce the cost of "operational" testing — realistic live-fire drills that are mandated by law before any weapon systems goes into production.

"We are trying to have more efficient test programs overall, get the data out before we make production decisions. That's critical to design stability," Kendall told National Defense after delivering a speech at a recent conference on acquisition reform. Program managers should have more data about how their systems perform before they begin operational tests, Kendall said. "We will continue to try to blend operational testing and developmental testing."

Kendall's deputy, Darlene Costello, in a speech to a test-and-evaluation industry conference last month, explained the rationale for planned changes related to weapon tests. There is now a "big emphasis on what we do before an RFP goes out. ... Testing is a big part of that," said Costello, who is director of program and acquisition management.

But the Pentagon's plan to wring out more "efficiency" from testing has stirred old animosities between the procurement shop and the office of the director of operational test and evaluation — which operates independently from the procurement office and reports directly to the secretary of defense. DOT&E, as the testing office is known, has been a thorn in the side of many big-ticket weapon programs. Kendall's comments are raising fears in the testing community that their budgets will be gutted.

For many years, program managers have sought to have more control over test reports before DOT&E releases them to Congress and the news media. Procurement officials would rather have test results reported directly to them and have greater say in what information is disclosed.

After operational testers gave the Navy’s littoral combat ship a scathing review in their fiscal year 2012 annual report to Congress, service officials were unprepared for the political damage the report would cause. Testers concluded the ship lacked firepower and was not survivable in high intensity conflict.

Speaking at the same conference, Director of Operational Test and Evaluation J. Michael Gilmore pushed back on the notion that testing costs should be treated as expendable overhead. "How are you going to compress testing in this era of constrained budgets? I think it's a mistake. It accepts the premise that testing is driving increased cost," he said. "The facts don't support that premise. We want to make sure we do testing as rigorously and as often as we can."

Infighting between program officers and testers is par for the course at the Defense Department. Kendall's predecessor Ashton Carter commissioned an independent team in 2011 to probe complaints that developmental and operational testing contribute to excessive cost and schedule slippages in programs.

At the root of the problems that have plagued major Pentagon programs is the way the military services define their requirements, said Gilmore. "Oftentimes requirements are defined in technical specifications. That's OK, but insufficient to ensure a system provides military utility." He cited the Navy's P-8 maritime surveillance aircraft as a case in point. In operational tests last year, the aircraft showed it could fly, but it was not able to perform key missions like wide-area antisubmarine surveillance. Gilmore blamed the flap on the Navy because it had not specified antisubmarine warfare as a "key performance parameter."

Poorly written requirements continue to haunt programs, he said. "In this wonderful town, common sense doesn't play a role." Gilmore said many of the key parameters for the F-35 joint strike fighter relate to aircraft performance and payload capacity. "If we were just going to test KPPs, we would not fly combat missions, we would not penetrate air defenses, we would just fly off the carrier and back. ... How meaningful are these requirements?"

The Army, he said, wasted billions of dollars on a future combat system and on digital radios that never materialized. Its leaders were guilty of "approving requirements that are not achievable." Some programs get to operational testing and still don't have concepts for how they will operate, he said. "If the testing community played a more prominent role in requirements — and that's a big if — perhaps we could have avoided these mistakes," Gilmore said.

Gilmore suggested major programs should have a firm "test and evaluation master plan" before an RFP is written. "I have never understood when I am told we cannot do a T&E master plan until we get a response back from contractors. How can you generate a meaningful RFP without a draft test plan? Just as importantly, how can you evaluate the responses industry provides? I don't get it. What I fear is that some of these RFP evaluations are check mark exercises. I hope that's not the case."

The handy DAU ACQuipedia site (I trust it if my browser baulks; up to you) describes market research in the federal acquisition arena, probably a good best practices guide.

This is only an excerpt, which I, as usual, may feel free to cut, paste, rearrange, omit, etc.: read the whole piece at the link.

To understand the subject of market research we must begin within its definition of being described as a “continuous process for gathering data.” That process takes shape from both a strategic and a tactical vantage point. Strategic market research is that overarching process of market “surveillance” that will take place continuously throughout the entire acquisition lifecycle. From the early stages of the Material Solution Analysis Phase through to the final steps in the Operations and Support Phase; acquisition workforce members in all disciplines are engaged at varying degrees of market research to remain knowledgeable in market developments that may meet government requirements.

Market research is conducted by all members of the acquisition team including contracting (business advisors), program managers, engineers, logisticians, legal staff, test and evaluation personnel, cost specialists, the customer, etc. Though each may focus attention toward specific aspects, their ultimate goal is to pull together the necessary information to be analyzed so an informed decision can be achieved. While it is necessary for every acquisition as stated earlier, the extent of research that may be required is dependent on five variables which are, the complexity of the acquisition, how urgent the need, the estimated dollar value, how readily information is available, and past experience with the product or service being acquired.

In most occupations, they say “the job isn’t done til the paperwork’s complete!” Well, in contracting that axiom is especially true. There are a number of functions and tasks contracting professionals must engage in to exercise prudent use of taxpayer dollars and in many instances the trail of logic must be fully supported and documented for the official record to stand up to the possible scrutiny of public interest. Market research is one such task that the FAR both suggests and requires documentation.

I tend to think of R&D as practical market research: since the need is fuzzy to begin with, it requires a constant information loop to assure what the need is at the time of acquisition, what the market has, what the market has the ability to provide if it doesn't have it, and what's it going to cost (is it "worth" it?). 

It is certainly not a check-the-box exercise, as Director Gilmore mentioned. And it should never be one, even if acquiring routinely used products, such as the portable radio equipment the FBI had decided to purchase from Motorola on a sole-source basis.

Risky business

Is government spending meant to be risky? Is it meant to facilitate "creative destruction"? Or, is it meant to minimize risk to a manageable, even prudent, degree?

Consider the following articles (which I've cut up, rephrased or otherwise hashed to my own end -- so read the article itself at the links for accuracy of its message).

Defense Spending Red Tape Endangers Cybersecurity

The Navy is using Windows XP because complicated spending rules have prevented a better upgrade. [I only quit using XP recently at home because my computer crashed -- and I couldn't buy a new one with it.   It was not a spending rule that prevented me; it was the industry that didn't want me to go there notwithstanding my serenity with what I already had.]

The Navy renewed its contract to operate its computers using Windows XP.  But, the Navy entered into a $9 million contract with Microsoft to continue to provide security patches for it. [What would the cost have been to upgrade its entire computer architecture to, say, Windows 8?]

The government is moving too slowly to fund and acquire the latest technology, which could not only waste taxpayer dollars but also endanger federal cybersecurity. A panel of experts on Monday noted that the conservative procurement practices of the federal government can't keep up with the high-risk culture of tech industry startups, which innovate at a rapid pace and are increasingly a target for acquisition by larger businesses.

Cybersecurity is one area in which agencies appear to have failed to take advantage of private sector innovation. “Products for IT get overlapped by new software within six months,” Erica McCann, director of federal procurement for the Information Technology Alliance for the Public Sector tech trade association, explains. Agencies like the Defense Department use outdated software because procurement rules at the General Services Administration require programs to be on the market for two years to be eligible for government use, she said.

“Selling to the federal government is so arcane that many companies opt out, especially start-ups or newer IT companies that are used to a much faster pace,” James Lewis, a cybersecurity researcher at the Center for Strategic and International Studies, says. “Funding for start-ups runs into problems over who owns the intellectual property. [Intellectual property] is the single biggest asset for most startups and federal rules can put it at risk, making it unattractive to do business with the U.S. government.” Startups have to be particularly patient when working with the government since receiving funding can take months or years, as can the process of meeting government regulations, he says.

“The political system is not good at making long-run investments with uncertain impacts,” Ben Bernanke, former chairman of the Federal Reserve said during the panel discussion. Michael O’Hanlon, a research director at the Brookings Institution think tank, said “the overall system is not fundamentally broken; there are parts of it that are broken, in my mind.” Congress and agencies, however, are working harder than ever to make it easier to buy products from the tech sector, McCann says.

Defense Secretary Ashton Carter has recently tried to attract programmers to work with the government to boost its IT staff instead of taking a higher paying job at a private sector firm. These efforts included opening a full-time DoD outreach office in Silicon Valley, called the Defense Innovation Unit Experimental.

Defense Department's New Definition of "Commercial Item" Will Save Money

The Department of Defense (DoD) is taking a major step in stopping the waste of taxpayer dollars. DoD sent a legislative proposal to Congress to narrow the definition of a "commercial item" to mean goods or services that are actually sold to the general public in "like quantities." This proposal is a huge improvement over the current definition, a broadly worded definition open to abuse because it includes good or services “of a type” that are “offered” for sale or lease.

Why does this matter? Once a good or service is considered “commercial,” the government has little to no information about the relative cost of a good or service, and has little ability to audit the numbers behind the cost that the government is paying. If the new definition becomes law, DoD will no longer have to buy C-17s, C-130Js, or billions of dollars of specialized weapons-related subsystems (see pages 8-10) as commercial items. This should yield savings for taxpayers, as it has in the past. In 2006, for example, the conversion of the C-130J from a commercial item, which caused the repricing of 39 aircraft, resulted in “institutional net savings of $168 [million]” — thank you, Senator John McCain (R-AZ, who was credited with the Air Force’s actions).

Our most recent recommendation to alter the definition of a commercial item came in 2011, when we asked Congress to re-establish the taxpayer-protection checks and balances that have been removed from the contracting system, including requiring contractors to provide cost or pricing data to the government for all contracts except those where the actual goods or services being provided are sold in substantial quantities in the commercial marketplace.

Unfortunately, many government commercial item purchases have been awash in wasteful spending based on the elasticity of the current definition. Items with little or no commercial market availability were easily labeled as commercial, and were purchased on a sole source basis (i.e., non-competitive contracting) with no objections by government acquisition staff or reviews by auditors. The “commercial item” definition was developed by industry and enacted into law in the 1990s (as part of so-called “acquisition reform”) precisely in order to prevent the contracting agencies from obtaining cost or pricing data when adequate price competition—which exists in real commercial markets—does not exist. The law should more accurately have been called the “sole source contracting without cost or pricing data act.”

Not surprisingly, the contracting industry is opposing DoD’s proposal, claiming that competition will suffer as certain companies won’t do business with the federal government because of stricter contracting rules. The benefit of the current definition—for contractors at least—is that it permits sole source without cost or pricing data. This is because once an item or service is labeled as “commercial,” (under an extraordinarily creative definition), the government is legally denied access to certified cost or pricing data which is used to ensure that the items or services being purchased are reasonably priced.

Years ago, a DoD Inspector General (IG) audit report about an $860 million contract for spare parts used on weapon systems found that “higher prices were paid for commercial items” because “there was no competitive commercial market to ensure the reasonableness of prices.” According to the report, the contractor, Hamilton Sundstrand Corporation, “refused to provide [Defense Logistics Agency] contracting officers with ‘uncertified’ cost or pricing data for commercial catalog items, and terminated Government access to the Sundstrand cost history system”; and “guidance on commercial items qualified any item ‘offered for sale … to the general public’ as a commercial item without clearly addressing commercial pricing concerns, particularly when DoD was the primary customer procuring significantly larger quantities than other commercial customers.”

The DoD proposal would put an end to the kinds of disputes highlighted in that report. In fact, DoD’s analysis states:

For example, GAO Report 06-838R dated July 7, 2006, cites “adequate pricing” as one of five key area vulnerabilities of the DoD. In part, the report states that “Also, DoD sometimes uses commercial item procedures to procure items that are misclassified as commercial items and therefore not subject to the forces of a competitive marketplace. While the use of commercial item procedures is an acceptable practice, misclassification of items as commercial can leave DoD vulnerable to accepting prices that are not the best value for the department.”

These amendments of the law would prompt commensurate adjustments of the Federal Acquisition Regulation and ensure that commercial goods and services are acquired by the DoD and other Federal agencies only at fair and reasonable prices consistent with comparable sales actually observed in the competitive marketplace.

Further reading:

GAO: Commercial Item Test Program Beneficial, but Actions Needed to Mitigate Potential Risks

the Coast Guard's Aviation Logistics Center used the test program for 139 of 370 new awards that fell within test program thresholds, whereas its Headquarters Contract Operations used the test program for only 3 of 164 new awards. Coast Guard officials explained that the commercial nature of the parts and services bought by the Aviation Logistics Center lends itself to using the test program, while the headquarters office used existing contracts, which can be another means to fulfill recurring needs for commercial supplies such as information technology services.

DOD: Commercial Item Handbook

DOD: Guidebook for the Acquisition of Services

GSA/DOD: Improving Cybersecurity and Resilience through Acquisition

The cost of not using basic cybersecurity measures would be a significant detriment to contractor and Federal business operations, resulting in reduced system performance and the potential loss of valuable information. It is also recognized that prudent business practices designed to protect an information system are typically a common part of everyday operations. As a result, the benefit of protecting and reducing vulnerabilities to information systems through baseline cybersecurity requirements offers substantial value to contractors and the Government.

The baseline should be expressed in the technical requirements for the acquisition and should include performance measures to ensure the baseline is maintained and risks are identified throughout the lifespan of the product or service acquired. Due to resource constraints and the varying risk profiles of Federal acquisitions, the government should take an incremental, risk-based approach to increasing cybersecurity requirements in its contracts beyond the baseline.

THE Department of Defense Cyber Strategy April 2015

Over the last ten years Internet access increased by over two billion people across the globe. Yet these same qualities of openness and dynamism that led to the Internet’s rapid expansion now provide dangerous state and non-state actors with a means to undermine U.S. interests. We are vulnerable in this wired world.

The Internet was not originally designed with security in mind, but as an open system to allow scientists and researchers to send data to one another quickly. Without strong investments in cybersecurity and cyber defenses, data systems remain open and susceptible to rudimentary and dangerous forms of exploitation and attack.

Governments, companies, and organizations must carefully prioritize the systems and data that they need to protect, assess risks and hazards, and make prudent investments in cybersecurity and cyber defense capabilities to achieve their security goals and objectives. Behind these defense investments, organizations of every kind must build business continuity plans and be ready to operate in a degraded cyber environment where access to networks and data is uncertain. To mitigate risks in cyberspace requires a comprehensive strategy to counter and if necessary withstand disruptive and destructive attacks.

To succeed in its missions the Defense Department must operate in partnership with other Departments and Agencies, international allies and partners, state and local governments, and, most importantly, the private sector.

The Future is Coming Much Faster than we Think, Here’s Why

Samsung Unveils The World's Largest Hard Drive, Boasting 16 TB In A 2.5-Inch Case

This is a pretty significant announcement. Flash memory is generally faster than its disc-spinning counterpart, although it generally doesn't offer the highest amounts of storage. This drive, however, offers much more than the largest conventional drives made by Western Digital or Seagate, which max out at around 10 TB.

So how is Samsung able to make such a large hard drive – its actual capacity clocks in at 15.36 TB? The secret is the company's new 256-GB NAND flash die, which is two times as impressive as the 128 GB NAND dies that were put into commercial use by storage makers last year. Samsung announced the new tech by showing off a server with 48 of these new hard drives at the summit in California. It is able to handle up to 2 million input/output operations each second.

The Flash Storage Revolution Is Here

You’ve likely heard about Samsung’s 16TB hard drive, by far the world’s largest. That is an eye-popping number, a large enough leap forward that it’s difficult to fully process. And the most exciting thing about that 16TB hard drive? It’s just a hint of what’s coming next.  It won’t be long at all, though, before they find their way into personal computers, even laptops. “I would expect in three to five years, for a 2.5-inch 16TB SSD to be in a workstation-class notebook,” says Patrick Moorhead, president and principal analyst of Moor Insights & Strategy.

Moorhead notes that despite our recent migration to the cloud, hard drives of that magnitude would obviate much of the need to borrow some massive, faceless tech company’s digital locker to stash our stuff. That amount of room could enable localized smart home solutions that offer more privacy and security than leaning on the cloud currently does.

Intel and Micron recently announced that they’re working on something quite similar, though they don’t expect to produce consumer devices based on the technology until early next year. Toshiba has dabbled in 3D NAND, with products expected by the end of next year. All of them have the systems in place to produce equally, if not more, impressive drives. Samsung left the starting block first, but that may not matter much in a race that will be measured in years.

The implications of storage breakthroughs like this go beyond data centers and laptops, though. “Memory and storage are the two things that are holding up huge innovations in biotech, in design, and for that matter even artificial intelligence,” Moorhead says. “They’ve become a fundamental building block for moving the industry forward. These big innovations at the top trickle their way down into cars, into phones, over a five to seven year period.”

As exciting as a 16TB SSD may be, it still represents an iterative step, a manufacturing trick that found new ways to stuff the same basic pieces into increasingly smaller spaces.

The potentially much bigger breakthrough? Intel and Micro’s 3D XPoint (pronounced “crosspoint”) technology, which completely rethinks the way we’ve been making memory for years. “I think the design change is more exciting,” says Moorhead. “It’s a radical, different design that nobody has, versus taking your memory to the next node, which is essentially Moore’s Law.”

Rather than rely on transistors to store information, as traditional flash memory does, 3D Xpoint deploys a microscopic mesh of wires, coordinated by something called a “selector” that can be stacked on top of one another.

The result is “non-volatile” storage, meaning it holds onto its data even when the power’s off, that’s 1,000 times faster than NAND flash, and 10 times denser than the volatile DRAM (dynamic random access memory) that PCs use to keep track of temporary data. In other words, it’s a single solution that can handle both memory and storage, and do both better, in most ways, than anything currently available. “Any artificial intelligence or object recognition you want to have on a device works a lot better with XPoint … The more you can put into that really fast memory space, the better your artificial intelligence is going to be,” says Moorhead.

Intel has said not to expect any 3D Xpoint products until next year, but when they appear they’ll be in a position to transform multiple industries, from the esoteric to the squarely consumer-focused.

Intel, Micron develop 3D XPoint as an eventual successor to NAND flash memory

This development comes at a crucial time during these early days of the Internet of Things. 3D XPoint, which can write up to 40 terabytes per day; SSD NAND, which can write up to 40 gigabytes in a day. 

Memory speeds were already proving to be a constraint on processor operations in 2013, when the world generated a total of 4.4 zettabytes, or the equivalent of 1,000,000,000,000,000,000,000 bytes.  By 2020, that annual global data generation rate is expected to climb to 44 zettabytes, an increase by a power of 10. By 2050, when it is expected that 50 billion devices will be outfitted with computing processors for digital services, the amount of data generated every year could skyrocket. , will be much more suited for that atmosphere than

Imagine the impact this will have on robotics (drones), holographics, down range autonomy and basic research and modeling, 3D printing, sending intelligent machines to the stars. And imagine how quickly that will make redundant whatever it is we buy today.  Anything we buy that's based on proprietary hardware or software is likely to be more ball and chain than progress.  Think Motorola.  

Government technology buyers must approach issues prudently, which means not betting the house on any one gambit.  Standardization perhaps should give way to some nodes of autonomous experimentation and incrementalism, however more expensive that may be in the near term. 

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