The Army has found a solution to the protests surrounding its largest contract vehicle, much like the biblical King Solomon did when two women both claimed to be the mother of a baby. The Army is dividing the prize among all the competitors.
The Army has decided to allow the five losing bidders that successfully protested the Information Technology Enterprise Solutions-2 Services (ITES-2S) to join the contract. 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-Enterprise Mission Support Services Solutions contract issued in 2003.
Settlement agreements with five companies — BAE Systems North America, Northrop Grumman, NCI Information Systems, Multimax and Pragmatics — were signed last week, and the Army will issue a new contract award soon, said Kevin Carroll, chief of the Program Executive Office for Enterprise Information Systems. PEO-EIS and the Army’s IT, E-Commerce and Commercial Contracting Center administer ITES-2S.
As full participants in ITES-2S, the companies will compete for task orders throughout the life of the contract, Carroll said. Army customers could begin ordering services using ITES-2S early next month, he said.
As part of the settlement agreements, the Army will not reimburse the protest companies for legal fees and other costs associated with the protest process, Carroll said.
The settlement will create increased competition for task orders, which is good, said Lee Harvey, Carroll’s deputy at PEO-EIS. However, administrative and logistical challenges will increase, he said.
The Army originally issued ITES-2S awards to 11 large and small contractors April 14. The five companies protested to the Government Accountability Office in May. Later that month, the Army withdrew the awards, making the protests moot. The Army reissued the awards July 13 to the same 11 companies. The same five companies filed new protests in July. Last month, GAO sustained the new protests and recommended that the Army re-evaluate the awards.
GAO agreed with the protesters’ assertions that the Army’s evaluation of proposed labor rates were unreasonable and that the contracting agency failed to conduct meaningful discussions with bidders, according to the GAO decision. “We’re delighted with the settlement,” said Carlton Jones, president of Multimax. The Army chose the best way to get the contract moving again, he said.
The new awardees will initially have higher price points, but discounts are likely during individual task-order competitions, Jones said. Also, industry consolidation in the next few years is likely to reduce the number of ITES-2S companies, he added.
The Army’s contracting methods exacerbated the problems that plagued the award process, said Robert Guerra, partner at Guerra Kiviat. The Army held too many rounds of clarification, allowing all of the bidders to match one another on evaluation factors other than price, he said.
The original 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 Science Applications International Corp. Apptis, QSS and STG won the small-business prizes.
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