CGI gets second shot at Navy CANES contract

CGI Federal didn’t win all its arguments, but it won enough of them to earn a second shot at the Navy CANES contract to modernize ship-based networks.

CGI was left out of the awards that went to five others: BAE Systems, General Dynamics C4, Global Technical Systems, Northrop Grumman and Serco.

CGI filed a protest claiming that the price evaluations and price realism analysis were flawed. They also said that Navy failed to conduct equal discussions with bidders, and that past performance ratings were flawed.

Of those protest points, the Government Accountability Office only sided with CGI on the price evaluations, but that was enough to get GAO to recommend that the Navy amend its methodology, ask bidders to submit revised prices and then make a new source selection decision.

Of course, this is no guarantee that CGI will ultimately land an award, but at least it has another bite at the apple.

On the point that CGI won, GAO found that requirements changed after proposals were due but before awards were made, which made the Navy’s price evaluation unreasonable.

The Navy originally intended to award three contracts. It asked for pricing that covered three to four task orders a year with the delivery of 15 units per task order. A unit includes 15 to 18 servers, switch, media and data storage racks, 80 applications and service for 106 to 126 workstations. A force level platform is even larger with 38 to 49 racks, 120 applications and 450 to 960 workstations.

During the source selection process, the Navy decided to increase the number of awards and lower the number of units expected in each task order. They made this change because they felt it increased competition.

But the Navy ended up making price evaluations by comparing prices for quantities it knew it wouldn’t be ordering. Making an evaluation under those circumstances isn’t reasonable, GAO wrote, so the Navy has to redo the evaluations.

But GAO ruled against CGI in the areas of price realism, unbalanced pricing, unequal discussions and past performance.

The argument of the unequal discussions was an interesting one in that the Navy told both BAE and Global Technical Systems that their proposed prices were so high that they would be unlikely to win an award.

Both companies submitted significantly lower prices in their final proposals as did Northrop Grumman. The moves by those companies put CGI in the position of having the highest prices. CGI made little change in its final pricing.

The Navy told GAO that CGI’s price only became an obstacle to award during the source selection process when it was weighed against other factors. On its face, it was competitive, the Navy said.

GAO said that because CGI’s initial pricing was competitive, the Navy didn’t need to warn CGI. The Navy acted reasonably and wasn’t obligated to reopen discussions with CGI after final prices moved CGI from third-highest price to highest, and its price became the determining factor in it not getting an award.

But what I find interesting about this is that while GAO said the Navy didn’t have to reopen the pricing, GAO’s decision on the price evaluation does just that. It has recommended that the Navy ask all the bidders to resubmit their pricing.

On top of that, all the bidders now know what the other bidders bid. CGI knows it was the highest at $129 million, but it also knows that Northrop Grumman was the lowest with an $85 million bid.

This is certainly a quandary for the winning bidders. Do they now lower their best and final prices even more?

Will this force the Navy to keep all the winning bidders and simply add CGI? You can argue that the competition for task orders will sort out who can do the work for the best price.

The Navy will likely open itself up to more protests if it knocks off one or two of the current winners. That will cause more delays to the program and further delay upgrades that will help the warfighter.

And that in a nutshell sums up how procurement mistakes make a real impact on the government’s mission.

I call this a procurement mistake because if the Navy had made the adjustments when it realized that its pricing parameters were no longer realistic, CGI would have lost on all of its protest points and the Navy would be moving forward.

Instead, it's just more delays.