Booz Allen loses incumbent IRS contract

Booz Allen Hamilton fought hard to keep a $57 million contract with the Internal Revenue Service, but the Government Accountability Office shot down its arguments at every turn.

According to a recently released GAO decision, Booz Allen filed its protest of the award to Accenture,= claiming that Accenture received too high a rating for its technical approach, and that Booz Allen’s score was too low.

Booz Allen was the incumbent on the contract to provide IT and financial management services to the IRS. The agency was running a best-value competition under The Treasury Department’s Total Information Processing Support Services 4 contract.

Accenture’s technical score should have been lower because the IRS found that Accenture’s labor rates were not realistic because they were too low, Booz Allen argued.

The company contended that the lower labor rates represented a higher risk to the IRS.

But GAO agreed with the IRS that the Accenture proposal showed that it understood the requirements and the labor mix needed to accomplish the work even if its pricing was unrealistic. The low labor rates didn’t show a lack of understanding of the requirements of the contract, GAO said.

“While Accenture might need to pay more to obtain its proposed staff, there was no basis for questioning its proposed technical approach,” GAO wrote. “We find nothing in [Booz Allen’s] protest which provides a basis for questioning this determination.”

GAO also rejected Booz Allen’s argument that the Defense Contract Audit Agency and the Defense Contract Management Agency findings that Accenture lacked certain audit controls represented a risk. Accenture had already been found a responsible party when it won the TIPSS-4 contract originally, GAO said.

Because of the concerns with the low labor rates, the IRS evaluation team increased Accenture’s bid by $8 million to $56.6 million, but that was still lower than Booz Allen’s $58.2 million bid.

Accenture also had higher technical scores. Here, Booz Allen argued that its technical proposal should have been rated excellent rather than good, but GAO and the IRS disagreed with Booz Allen’s interpretation of what made for an excellent rating according to the criteria described in the solicitation.

To get an excellent rating, a bidder had to show that it was offering a low-risk technical approach that also demonstrated an excellent understanding of the requirements “in that the approach significantly exceeded performance or capability standards,” according to GAO.

Booz Allen’s proposal received an exceptional strength because the company is the incumbent and wouldn’t need an extensive ramp up period. But “evaluators didn’t find that BAH’s approach significantly exceeded the solicitation performance or capability standards,” GAO said.

The IRS also found that Booz Allen failed to demonstrate an exceptional understanding of the requirement.

That’s a pretty harsh criticism of an incumbent’s proposal and should be a warning not to be complacent when submitting a recompete, advice I heard recently from a panel of proposal managers.

Booz Allen also argued that the evaluation of Accenture’s technical proposal and Booz Allen’s proposal were unequal.

But GAO agreed with the IRS that there were qualitative differences in the proposals. Details of the differences are deleted in the GAO report on its decision.

This is the second protest Booz Allen has lost this month. Earlier in March, the company failed to persuade GAO that a FDA contract that Lockheed Martin won was improper. SRA International also protested that contract, but Lockheed prevailed.