IG criticizes NASA noncompetitive acquisition

Lawmakers, SARA panel also target sole-source and other acquisition issues

IG memo on NASA’s acquisition approach

Federal procurement rules allow noncompetitive acquisitions under certain circumstances, but agencies must comply with the government’s policies that regulate those special circumstances.

NASA’s inspector general has criticized agency managers’ attempt to noncompetitively renew a software vendor’s licenses on a long-term basis despite protests regarding the initial acquisition. NASA had promised to issue a new competitive solicitation.

The IG’s involvement in an ongoing dispute is unusual and could open more doors for complaints about agency decisions, said Alan Chvotkin, senior vice president and counsel at the Professional Services Council.

“This could portend an additional avenue for an aggrieved party to pursue reviews of agency action, whether in the context of a bid protest or not,” he said. However, he added, IG offices will still have the final say about whether to get involved in controversies.

Policy-makers are continuing efforts to improve competition for federal contracts. The Acquisition Advisory Panel, created under the Service Acquisition Reform Act, has issued several recommendations intended to improve competition among service contractors.

In Congress, Rep. Henry Waxman (D-Calif.) directly addressed certain types of sole-source contracting in legislation he introduced earlier this month.

An Aug. 23 IG memo to NASA’s chief engineer, general counsel and the Johnson Space Center’s procurement officer states that NASA reneged on assurances that it would fix improper purchasing practices. NASA is trying to make a particular vendor’s products standard agencywide without justification, according to the memo.

It also cites complaints that the vendor’s products could potentially harm some of NASA’s major space missions.

The memo was issued in response to multiple complaints about NASA’s acquisition of Parametric Technology Corp.’s (PTC) mechanical computer-aided design (MCAD) and data management engineering software tools.

Those tools support the Space Shuttle, International Space Station and the next-generation Orion spacecraft programs, among others.

According to the IG memo, the allegations state that establishing PTC’s products as an across-the-board standard could be catastrophic to NASA’s programs.

“The complaints allege that the PTC MCAD and data management products do not provide a technically robust or stable platform for design and development applications and, therefore, would present significant additional risk,” states the memo, written by Evelyn Klemstine, NASA’s assistant IG for auditing.

NASA officials had previously told the Government Accountability Office that the protested procurement order was only temporary, until they could conduct a new competitive acquisition. But NASA appears to be disregarding its promise and instead is planning to go ahead with a noncompetitive long-term renewal of the PTC licenses, Klemstine wrote.

Additionally, the critics say that implementing PTC products as the standard without proper justification violates federal procurement regulations.

The IG office takes the technical claims seriously, but the Aug. 23 audit only addressed allegations regarding the acquisition process, not the technical performance of the software, said NASA IG Executive Officer Madeline Chulumovich.

Countdown to controversy
Johnson Space Center officials conducted a competitive procurement in August 2005 to renew the agency’s 301 existing PTC MCAD product licenses across multiple NASA centers and acquire 50 additional licenses for the Marshall Space Flight Center.

In September 2005, NASA awarded PTC a $5.2 million delivery order for the required licenses. In October 2005, UGS and Enterprise Solutions Corp. filed protests with GAO, challenging NASA’s decision.

At the time, a NASA senior attorney in the Office of the General Counsel said NASA intended to take corrective action rather than defend the protests. The attorney said NASA would conduct a new competitive acquisition, following a “thorough scrub of agency requirements.”

Since then, however, NASA’s actions seem to be at odds with the senior attorney’s statements, Klemstine wrote in the IG memo.

“We learned that the agency has not conducted — and currently does not intend to conduct — a competitive acquisition for its MCAD software requirements,” the memo states. “Further, we found no evidence that a ‘thorough scrub of agency requirements’ was completed.”

IG changes protest equation
That memo could prompt litigation, Chvotkin said. The companies that protested the original award could go back to GAO and point to the IG’s letter as evidence that NASA was not sincere in the corrective actions it vowed to take, he said.

“I think GAO has ammunition to look more favorably at the protest grounds,” Chvotkin added. “At a minimum, GAO, in evaluating the protests, would look more favorably at awarding protest fees to the protester.”

The IG is now recommending that the Office of the Chief Engineer undertake an assessment of NASA’s agencywide requirements for the MCAD and data management software tools.

She also recommends that the Johnson Space Center’s procurement officer suspend procurement activity for long-term licensing of PTC products, pending completion of the assessment.

Finally, she wants the Office of the General Counsel to notify GAO in writing of any deviations from the corrective actions that the agency promised in 2005.

In a written response to a draft of the IG memo, NASA officials agreed with the first recommendation to perform an assessment. But NASA management was silent on the recommendation that the Johnson Space Center stop purchasing PTC products. NASA officials declined to fulfill the third recommendation, which was to notify GAO.

The IG responded to NASA’s comments by requesting more information on why the agency will not suspend procurement activities. The IG also asked NASA management to provide additional rationale for its decision not to formally write to GAO.

“Since the prior protests were dismissed based on GAO’s reliance on NASA’s stated corrective action, this new information may cause the protest to be reopened. In any event, not notifying GAO could harm NASA’s credibility and expose the agency to increased risk in future litigation,” the IG wrote in response to NASA’s comments.

On Sept. 12, the day the requested additional information was due, Chulumovich said the OIG’s preliminary review indicated that NASA had addressed the IG’s recommendations. The OIG had not made a final determination yet.

That same day, NASA spokesman David Steitz said NASA’s Office of the Chief Engineer had asked the NASA Engineering Safety Center to lead an expanded study in line with the IG’s first recommendation. He said it was premature to comment on NASA’s responses to the other recommendations.

Procurement experts say the IG memo could be damaging for NASA management because of its strong language and unusual circumstances.

Federal agencies should view this incident as a warning, Chvotkin said.

“They can learn two things: First of all, somebody’s watching everything that you do,” he said. “If you make a commitment, honor it. Those seem pretty basic to me but very important. There’s nothing secret in government.”

As of Sept. 6, NASA had not notified GAO of deviations from the corrective actions NASA said it would take in 2005, according to OIG officials.

PTC defends its products

While NASA works through criticism from an inspector general report over a decision to renew a vendor’s licenses without competition, the vendor, Parametric Technology Corp. (PTC), is defending the value of its products.

Two competitors, UGS and Enterprise Solutions Corp., protested a $5.2 million contract that NASA awarded PTC in 2005. Although they contested the way NASA handled the contract award, they also raised doubts about the ability of PTC’s products to meet NASA’s needs.

“PTC has many installations in the aerospace and defense agencies,” said PTC spokeswoman Nicole Rowe. “The fact that our competitors are questioning the technical superiority of these products is probably PTC’s greatest concern.”

UGS officials said they could not speculate at this point whether they would file another protest. UGS has other contracts with NASA.

“We are certainly pleased with the [IG] report,” said UGS spokeswoman Mendi Paschal.

“If NASA does not do the right thing, as the IG recommended, then certainly a protest would be in order,” Paschal said. “Our plans are to help NASA understand the robustness of UGS’ software and services and continue our working relationship.”

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