Inside the Air Force’s latest NetCents II decisions

When the Air Force made its third attempt at awards for the $6.9 billion NetCents II Products contract, it left a few people, myself included, scratching our heads.

In round two, the Air Force made eight awards, and just like with round one, they were flooded with protests from the losing bidders. And also just like round one, they pulled the awards back and said they’d try again.

When they did that, they told the Government Accountability Office that they would amend the solicitation, hold limited discussions with bidders, issue a new request for proposals and make new awards.

But they had a little caveat in that statement to GAO: They would do those things “as necessary.”

And that term gave them the cover to do what they ultimately did with round three awards – nothing. No corrective action was taken. They kept the eight awards from round two and added the next eight lowest bidders for a total of 16.

Washington Technology obtained a copy of the Air Force’s source selection decision document for round three, and it goes into the reasoning for this decision to take no corrective action:

Their concerns included:

• Previous winners might be unfairly disadvantaged by reopened discussions because their product lists and prices were disclosed to competitors during the debriefs.
• Reopening discussions with bidders presented “significant drawbacks,” including bidders making changes to their product lists and prices, and “those changes could become substantial in some cases.” Changes would require new technical evaluations and up-to-date Trade Agreements Act certification and analysis.

Those are the two main points in the document as I read it. The Air Force was concerned about being fair to successful bidders, and that reopening the competition with a new solicitation would cause the Air Force to go back and do everything over again, including recertifying compliance with the Trade Agreements Act.

That last part is most concerning to me, especially in this era of heightened security concerns and issues around counterfeit components.

Instead of getting fresh pricing and up-to-date compliance certificates, the Air Force is going with old information and obsolete products that they even admit in their source selection document would be hard to certify as TAA compliant.

How is that a good idea?

The decision seems to be dismissive of TAA, which is odd because it was concerns about compliance with the law that led to the Air Force to pull back its awards after announcing the first two rounds of winners.

Another issue discussed in the document is the number of awards. The original plan, when the Air Force issued the RFP in 2010, was to make no more than nine awards. This, the Air Force felt, was a reasonable number; more than that would be a burden on users of the contract.

Now, 16 is the right number. Again, the Air Force cites fairness.

This gets a little convoluted, so bear with me.

The Air Force wanted to be fair to the first nine winners who received awards in round one in 2012 because they were displaced when the Air Force took corrective action and restarted the competition.

When the Air Force made its round two awards, several of the winners from round one were not picked. They, of course, protested, as did others, and the round two awards were pulled back.

So, for round three, the Air Force decided not to reopen the competition. They kept all the winners from round two, and added back in the winners from round one who didn’t make it in round two.

This move created a pool of 15 companies. The Air Force added a 16th company because the price difference between 15 and 16 was very small - $200,000. After 16, the prices soar, the Air Force says in the source selection document.

The Air Force considered and dismissed the notion of making awards to all the bidders because the remaining eight bidders had pricing that was too high. Also, that many bidders would be unwieldy.

But, remember, that was nearly the same rationale that the Air Force originally used when it said would limit the number to nine winners.

So, how will they handle 16? Again, the source selection document provides an answer:

“In order to accommodate twice as many awardees, the program office has reported that it is going to cut program reviews and other contract administration in half.”

Wow, that really fills me with confidence that this will be a well-run procurement once task orders start flowing.

The Air Force says the cuts are not optimal, but fairness to the displaced bidders in rounds one and two was a higher consideration.

So, there in a nutshell is the Air Force’s rationale for round three. Does it work? I’m not sure.

Five protests have been filed, but I think the Air Force is going to stick with its decision.

In the statement they emailed me they said:

The Air Force applied significant efforts to plan and review each step of the corrective action and re-award for the NETCENTS 2 Products awards.  We understand the disappointment of offerors not selected for award, but continue to believe that the corrective action and award decisions are sound.

The ball is in your court GAO. A ruling is expected by December.