ITES-2S on hold again

Army contracting methods prompt new rounds of protests

Fresh protests from all five losing bidders will delay the Army’s efforts to develop a global network under its Information Technology Enterprise Solutions 2 Services (ITES-2S) contract.

In both rounds of protests, the unsuccessful bidders contend that the Army chose the awards based on best price rather than best value. The Army had said price would not be the primary determinant.

Some analysts believe the Army made mistakes in the process of awarding the contract that gave bidders a reason to protest.

For example, the Army held four rounds of consultations that made it possible for all bidders to submit essentially identical bids in the nonprice areas of mission support and performance risk, said Robert Guerra, a partner at Guerra Kiviat.

“If everybody meets or exceeds the standards, then all you have left is price,” he said. “So the government kind of boxed themselves in.”

The protest documents show that all the awardees got satisfactory ratings on nonprice issues. The winning bids for pricing were in a narrow range, between $12.9 billion and $14.6 billion. Booz Allen Hamilton had the lowest price among the winners, and Science Applications International Corp. had the highest.

The new protests were partly sparked by the Army’s handling of the first round.

According to one protest filing that Federal Computer Week obtained, the Army reconsidered only one factor before reissuing the awards: the financial data that was used to evaluate a contractor’s performance risk.

The Program Executive Office for Enterprise Information Systems’ (PEO-EIS) Army Small Computer Program and the Army Contracting Agency’s IT, E-Commerce and Commercial Contracting Center and Network Enterprise Technology Command issued the awards.

The growing frequency of protests shows that the Army’s policy needs to be adjusted, Guerra said. “If everybody who lost protested, then it kind of says there is something fundamentally wrong,” he added.

But the Army contends that protests are increasing in tandem with the increasing size and scope of major contract vehicles, such as ITES-2S. This is compounded by pressure in the Defense Department to use only DOD contracts for purchasing, said Kevin Carroll, program executive officer for PEO-EIS.

DOD customers are discouraged from going outside to the General Services Administration and other agencies, Carroll said. As a result, losing vendors that used to have alternative selling options face the possibility of being locked out of DOD business for long periods of time, he added.

ITES-2S is a $20 billion, nine-year contract vehicle meant to be the cornerstone of the service’s IT procurement for the next decade. It is a follow-on to the $1 billion ITES-EMS3 contract issued in 2003.

The Army originally issued ITES-2S awards to 11 large and small contractors on April 14. Five companies protested to the Government Accountability Office in May. Later that month, the Army withdrew the awards. On July 13, the Army reissued the awards to the same 11 companies.

The five companies that protested before — BAE Systems North America, Northrop Grumman, NCI Information Systems, Multimax and Pragmatics — have filed new protests.

GAO has 100 calendar days to issue a ruling on the protests, making Oct. 25 the last day for a decision. But the agency could issue a ruling sooner. Most cases are decided in 70 or 80 days, said Daniel Gordon, chief of and associate general counsel at GAO’s Bid Protest Division.

The ITES-2S large-business awards went to Booz Allen Hamilton, CACI-Information Systems Support, Computer Sciences Corp., EDS, General Dynamics, IBM, Lockheed Martin Integrated Systems and SAIC. Apptis, QSS and STG won the small-business prizes.

The ongoing saga of ITES-2SNo task orders on the $20 billion Information Technology Enterprise Solutions 2 Services contract can be issued until the latest protests are resolved. This could delay the initiative by as many as six months.

Here is a timeline of the conflict between the Defense Department and the bidding contractors.

April 14
The Army issued awards to 11 companies — eight large and three small businesses.

May 1-5
All five losing bidders filed protests with the Government Accountability Office, claiming the Army did not use its stated evaluation criteria.

May 12
The Army withdrew the awards without giving a reason.

July 13
The Army reissued the awards to the same 11 companies, stating that new information did not change their decision.

July 17-21
All five losing bidders filed new protests, claiming the Army did not reconsider the major issues in its second round of awards.

Oct. 25
Deadline for GAO to decide the case.

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