WT Business Beat

More protests for NetCents 2 NetOps

Two more companies have filed protests with the Government Accountability Office objecting to the NetCents 2 Network Operations and Infrastructure contract.

Abacus Technology Co. and D&S Consultants Inc. have joined Intelligent Decisions in asking the Air Force to reconsider the awards it has made under the $5.8 billion contract.

The Air Force made 12 awards on March 27, but had received bids from 29 companies. The expectation is that more protests likely will be filed.

The NetCents program, which includes multiple parts being awarded under separate competitions, has been plagued by bid protests. The protests have caused numerous delays.

The latest protests involve the small business awards under the network operations portion of the procurement. Large business awards in this portion of the contract have yet to be awarded.

The Air Force went through multiple rounds of protests and corrective actions to get the NetCents 2 Products contract up and running when it essentially gave the contract awards to all protesters.

It’s much too early to predict that the Air Force is headed down a similar path with the NetOps contract. Hopefully, the Air Force learned some lessons from the earlier troubles.

For now, it looks like the more typical strategy from the contractor perspective of protesting a loss of a large multiple-award contract instead of an accusation of poor decision making on the government part.

We’ll know a lot more in the next week or so when the window closes on filing protests.

It won’t look good for the Air Force if there are protests from all the 17 losing bidders. It also won’t look good if the Air Force takes a corrective action quickly.

If all the protests are in by next Friday, the Air Force will have about 30 days to respond, so we should have a good idea what’s going to happen by mid-May.

Posted on Apr 09, 2014 at 8:13 AM0 comments

Do Wal-Mart's pricing pressures offer lessons for contractors?

There’s an interesting bit of analysis in the Washington Post today about Wal-Mart losing its low pricing edge to competitors like Target and Kroger.

As the Post’s Lydia Depillis explains, Wal-Mart has lived and thrived by the formula EDLC=EDLP, or Every Day Low Costs equal Every Day Low Prices.

They probably could swap in Higher Profits for the Lower Prices portion of the calculation as well.

The focus on cost and how it relates to pricing is something I think a lot of contractors have been getting more familiar with in the government market these days.

One executive recently told me: “You used to just gather your costs and add your fee and bill the government.” But it’s not that way anymore. Life is much more complicated.

Wal-Mart has earned a reputation – both positive and negative – of how it used its purchasing power to force suppliers to offer it lower prices. The government has definitely moved in this direction with initiatives such as strategic sourcing and enterprise software licenses.

According to the charts in the Post story, Wal-Mart still holds a pricing advantage, but in some cases, it is so small that the consumer might not feel the difference.

Depillis tells one story that really got me thinking about the parallels between Wal-Mart and the government market.

Kroger has been able to gain some ground on Wal-Mart by using analytics to determine when to discount certain items so that it pulls in the highest number of customers. It’s also using a high-tech restocking system to absorb some of the costs of lower prices.

Meanwhile, Wal-Mart has a labor-intensive process for restocking. It’s been trying to trim costs by cutting hours, resulting in some empty shelves, according to the Post story.

The big thing that came to mind for me was Kroger’s use of analytics and technology to close a competitive gap.

I know there is a limit to how far to push the parallels because the markets are so different, but I think it is always worth looking at industry leaders and their challengers.

Posted on Apr 09, 2014 at 9:19 AM0 comments

First NetCents NetOps protest filed

We’ve been keeping track of the calendar and figured that some of the losing bidders would start filing protests this week over the Air Force NetCents2 Network Operations and Infrastructure Solutions contract, worth $5.8 billion.

The first out of the gate is Intelligent Decisions, which filed its protest on Monday.

Because the Air Force picked 12 winners out of 29 bids, the expectation has been that there will be plenty of protests, as many as 17.

But the clock is ticking. The awards were made March 27, and the debriefings likely began last week. Companies have 10 days to file a protest following the debriefs.

So, I would expect the bulk of protests to be filed this week and next. After that, it’ll be interesting to watch how the Air Force handles the protests.

With the products portion of the NetCents 2 vehicle, there were multiple rounds of protests and corrective actions until the Air Force basically gave all the winners a contract under that vehicle.

Given the amount of time and money wasted with the products contract, the hope is that the Air Force has learned some lessons.

The last thing they need is to repeat that debacle. We’ll be watching.

Posted on Apr 08, 2014 at 10:42 AM1 comments

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