In its protest of the Navy’s $3.5 billion NGEN award to Hewlett-Packard, Harris Corp. claims that the Navy didn’t properly evaluate its pricing and didn’t conduct a thorough investigation of a program manager’s affair with another contractor.
But the Government Accountability Office didn’t buy either argument and denied the Harris’ protest. The way is now clear for HP to begin the transition from the current Continuity of Services contact to the new Next Generation Enterprise Network contract. HP is the incumbent contractor.
The five-year contract will support 400,000 seats and 800,000 users.
Just days before the Navy awarded the contract, it relieved the program manager of his duties “due to a loss of confidence in his ability to lead.”
The program manager, Capt. Shawn Hendricks, had an affair with an employee of Booz Allen Hamilton. In published reports, Hendricks said the two had fallen in love.
Booz Allen had been hired by the Navy to support the selection process for NGEN, and its here that Harris made its argument that the relationship may have affected the integrity of the procurement.
Harris complained that the Navy did not review whether the conduct extended beyond the relationship. The company wanted the Navy to investigate whether Hendricks or the Booz Allen employee (now a former employee) would benefit if HP won the contract.
GAO knocked down this argument because Harris could not produce any submissions that drew a logical connection between the relationship and the award decision.
The unsupported allegations of an impact on the award decision “amount to mere speculation [and] are insufficient to form a basis for a protest,” GAO wrote.
The pricing allegations are a bit more complicated. Harris says that HP’s price was too low. The combined bid by Computer Sciences Corp. and Harris had a $3.6 billion price tag. CSC also protested, but withdrew its objections before a final ruling was made.
Harris also argued that the Navy failed to perform an adequate balancing analysis in connection with its price evaluation.
GAO found no merit to either claim.
In reaching its decision, GAO had access to the Navy’s “extensive contemporaneous evaluation record,” the watchdog agency wrote.
The Navy conducted numerous rounds of discussions with all the bidders before picking HP.
“Nothing in Harris’ protests meaningfully suggests that Hewlett Packard does not understand the contract requirements or that Hewlett Packard’s proposal does not offer to meet those requirements,” GAO wrote.
Harris complained that the Navy didn’t prepare an independent government estimate, consult price lists or conduct market research.
Instead, the Navy conducted extensive analysis of the pricing among the bidders, determining averaged proposed prices, high and low ranges and compared pricing to the existing contract, GAO wrote.
Interestingly, GAO’s report describes how, when all the bidders submitted their proposals in August 2012, the Navy found them all to have “material deficiencies.”
From that point, the Navy conducted multiple rounds of written questions, face-to-face sessions and telephone discussions. A lot of the questions revolved around pricing.
Final proposal revisions were submitted in April, and these also had problems, and more discussions were held.
Another round of final proposals were submitted in June, and all were determined to be technically acceptable.
It was the record built through these rounds of discussions that the Navy used to fight off the Harris protest.
In multiple places in the decisions, GAO refers to the evaluation record the Navy built.
When the award to HP was announced in June, Sean J. Stackley, assistant secretary of the Navy for research, development and acquisition, was asked about the prospect of a protest.
He said he couldn’t prevent a protest from being filed, but felt that the way the Navy developed the requirements, and then mapped them to the solicitation, and then mapped those to the evaluation process gave him confidence that they could withstand a protest.
Looks like his confidence was justified.
Posted on Nov 01, 2013 at 12:31 PM0 comments
It seems that everyone has either heard the stories of partnerships gone bad, or has one of their own.
And in today’s market of budget cuts, delayed projects and general uncertainty, the pressure is on when it comes to the partnership between prime contractors and their subs.
As we developed our research for our second WT Insider Report with our partner Lodestar, we wanted to explore this question, so we asked if the primes thought the relationship was getting harder or easier.
A solid 51 percent said they thought the relationship hadn’t changed, that it had stayed about the same.
And there is more good news. Twenty-three percent said it had become somewhat easier, compared to 18 percent who thought it was somewhat more difficult. Only 3 percent thought it was much more difficult, compared to 6 percent who said it had become much easier.
The easy conclusion to draw is that partnerships are in good shape, but I’m not sure we can put all 51 percent of those saying the relationship had stayed the same in the positive category. A certain percentage may think the relationship hasn’t changed, but they certainly don’t think it is a good relationship.
The reason I’m comfortable saying this is because the open-ended question on this topic pulled in 100 responses.
A few point the finger at the subcontractors:
- Have learned more about the weaknesses/shortcomings of the subcontractor over time.
- Less working together as strategic partners…less long-term patience.
- Subcontractors are more demanding in regards to commitments, but not willing to be as accommodating when offering reciprocal commitments.
- Less loyalty to you as prime.
- More and more, they do not fully understand nor fulfill some of the documentation requirements.
- More demands…less cooperation.
But I have to say, the complaints directed at subcontractors represent the minority of the comments.
In many ways, the comments are a harsh critique of the current market conditions, including the budget, compliance requirements, delays and uncertainty.
“Many subs are less flexible now because of the overall downturn in the economy. Relationships and agreements are more 'make or break' than ever before,” wrote one commentator.
The problems with the budget are at the heart of many of the comments, including concerns about cost and pricing pressures, budget uncertainty, economic pressures, fewer opportunities and, of course, sequestration.
According to Lodestar’s analysis of the written comments, 25 percent blame market forces and the budget, 24 percent blame government administration and compliance, and 24 percent blame pricing, costs and work share.
Only 15 percent of the comments blamed declines in subcontractor performance. Another 12 percent of the comments went into the miscellaneous bucket.
If you’d like a copy of all the comments, let me know, and I’ll email them to you.
The high ranking for compliance was a surprise to me, and fits with many of the conversations I’ve had with executives around the market.
It seems any effort these days to reform the procurement process actually increases the compliance burden because more reporting requirements are heaped on agencies and contractors.
As I heard one person describe it, Congress loves reporting requirements because it shows they care.
And finally, to revisit the theme of using these reports to your strategic advantage, I think the written comments highlight several areas that subcontractors can focus on if they want to be a preferred partner.
One is compliance and understanding how, as a subcontractor, you can support the prime.
There were several comments focused on being flexible, though this could be the primes' code for the need for subs to take less work.
There also are comments that indicate some of the critical skills that primes are looking for, which include business development, proposal writing and human resources support.
Competition is intense for skilled niche providers, so understanding your business and developing unique technical competencies are another way to make your company stand out.
Next, I’ll look at the bright side of the equation, and explore what the primes say is working well in their relationship with their subcontractors.
Posted on Nov 01, 2013 at 10:00 AM0 comments
Hewlett-Packard got something a little extra in its Halloween goody bag Thursday as the Government Accountability Office denied a protest from Harris Corp. over HP’s winning of the $3.5 billion Navy Next Generational Enterprise Network contract.
The contract is the follow-on to the Navy-Marine Corps Intranet contract and converts the massive network to a government-owned and operated system with 400,000 seats and 800,000 users.
HP was the incumbent on NMCI and has been running the network since 2000 when EDS Corp. won the contract. EDS was later acquired by HP.
To win NGEN, HP faced off against a team led by Harris and Computer Sciences Corp.
Both of those companies filed protests, but CSC withdrew its protest in August after reading the Navy’s response to its protest.
CSC declined to comment on why they withdrew their protest, but generally, when companies withdraw after reading the agency’s response to their protest, it is because they realize their prospects of prevailing are slim.
Harris also declined to comment on the protest.
GAO made its ruling on Thursday, but the details of the ruling were not available. A redacted version should be available by Friday, so we’ll have a more detailed story tomorrow.
HP proudly put out a statement that it was pleased with the results.
“The Navy has selected the right team for the challenges ahead, bringing to Sailors and Marines new and innovative thinking coupled with more than a decade of experience building and operating the network,” the company said via email.
HP’s team consists of AT&T, IBM, Lockheed Martin and Northrop Grumman. Click here for an analysis of HP's team.
NMCI has a colorful and troubled history. EDS quickly ran into problems with the contract. The costs the company had to carry to deliver what the Navy wanted nearly bankrupted EDS.
In fact, it weakened the company to the point where it was an easy takeover target for HP.
But as the contract turnaround occurred, it became what is called a “referenceable account.” In other words, HP would use NMCI as an example of the good work it does as it bid on other projects.
Once NMCI expired, HP continued to support the network through the Continuity of Service contract, which became quite lucrative, pulling in $1 billion a year for HP. That contract will run for about another year as the Navy transitions from NMCI to NGEN. Ironically, Harris is a teammate of HP's on NMCI and the Continuity of Service contract.
Costs under NGEN are expected to be much lower, and the five-year contract is expected to be worth about $3.5 billion. It also was competed as a lowest price, technically acceptable contract.
The contract has one base year and four one-year options, and gives the Navy the option of recompeting portions of it as it sees fit.
That kind of competitive pressure will likely keep HP on its toes, which is what the Navy wants.
The contract was awarded in late June, but the protests have held up the start of the contract. With GAO’s ruling, work can now begin.
“Together with the Navy, the team at HP is excited to move the throttle forward on NGEN and take this network into the future,” the company said in its statement.
Posted on Oct 31, 2013 at 2:07 PM3 comments