GD gets second shot at NAVSEA contract

General Dynamics and Lockheed Martin were going head to head in a lowest price competition for acquisition support for the Naval Sea Systems Command.

NAVSEA wanted support for shipboard electronic warfare capabilities that would bring early detection, analysis and threat detection of anti-ship missiles. The work would include testing and engineering services.

The competition became a price shoot out once both companies were deemed to be technically acceptable.

Lockheed won the competition with a bid of $24.95 million, compared to GD’s bid of $24.96 million, a difference of just $10,000.

But that wasn’t the price GD bid. As is common, the Navy conducted a price realism evaluation and increased GD’s bid. It had concluded the adjustment was needed because of the amount of uncompensated overtime the Navy thought was included in its proposal.

When GD saw this, they filed a protest with the Government Accountability Office, and GAO has now come back saying GD is right and that the Navy needs to pull the award to Lockheed and conduct a new cost realism evaluation.

There is little ambiguity in the GAO decision. The Navy made a mistake.

GD had included a document as an attachment to its proposal that was a uncompensated overtime summary, but GAO found that the document was clearly marked that it was not part of the proposed hours in the proposal.  

“The uncompensated overtime spreadsheet as a whole was provided only as additional substantiation of the realism of [GD’s] proposed labor rates,” GAO writes.

The Navy’s use of that document was “misplaced,” according to the decision.

In other words, the Navy shouldn’t have used the document for the cost realism evaluation, and thus, increasing GD’s bid was a mistake.

Interestingly, GD did not challenge the cost realism evaluation of Lockheed’s bid, so documentation of that process was not part of the record that GAO looked at.

But you have to bet that if Lockheed loses the competition, that’s the first question they are going to ask in their debrief.