Improper disclosure not enough to nix competitor's bid

S&K Aerospace lost its bid to disqualify a competitor in a battle for a $4.2 billion Air Force logistics contract.

The exposure of proprietary pricing information wasn’t enough to win a protest for S&K Aerospace as it competes to hang on to a $4.2 billion contract to provide logistics support for the Air Force.

The company is still in the running to win the 15-year Parts and Repairs Ordering System after its pre-award protest was denied by the Government Accountability Office.

S&K is the incumbent on the contract and provides the Air Force with logistics supply support, maintenance support and analytical/technical services for foreign military sales.

The Air Force plans to make a single award, and one of S&K’s competitors for the new contract is URS Federal, now part of AECOM.

The protest hinges on access AECOM gained to pricing information on S&K’s current contract. AECOM notified the Air Force of the inadvertent access, and the company and the Air Force took several steps to mitigate the damage.

But S&K didn’t think it was enough, and wanted the solicitation canceled and/or AECOM disqualified. GAO disagreed, saying that was not a competitive disadvantage.

With the denied protest, the Air Force can move ahead with its award, so S&K and AECOM are still competing for this huge prize.

While I’m sure S&K would disagree, the protest decision illustrates the lengths companies and agencies go to mitigate mistakes.

In this case, the AECOM employee was working on the price proposal for the contract and was trying to transfer important data from the Air Force pricing matrix into AECOM’s pricing model. She wanted to import the data rather than manually copy and risk a mistake.

To gain access to the data in a way to download it, she had to defeat a password, which she did. But once she downloaded the data into Excel, she noticed several hidden tabs, and when she looked in those tabs, she realized that they might contain government cost or price data.

She quickly closed the application and didn’t save the file she downloaded. She also told her superior. AECOM told the Air Force that her access to the information lasted no more than four or five minutes.

The disclosure to the Air Force kicked off another string of actions, according to the GAO decision.

AECOM moved the employee off the proposal team and was told not discuss what she saw. She eventually signed a non-disclosure agreement.

The Air Force discovered that the information in the pricing matrix was S&K’s cancellation feeds for the current contract and were four years old. As part of its investigation, the Air Force also found another inadvertent disclosure of other fees involving the current PROS contract held by S&K.

As a result, the Air Force changed how bidders would calculate cancellation fees. S&K also requested and the Air Force agreed that all bidders needed to sign a statement saying that they did not possess or have access to S&K proprietary information.

The investigation found that the disclosures of the information were unintentional. The Air Force concluded that there was no harm to S&K, and that the information was four years old. The changes to the solicitation also reduced the value of possessing that information.

As a result, the Air Force said the disclosures were sufficiently mitigated, and so the competition could continue.

S&K disagreed with that conclusion and filed a protest, saying it suffered competitive harm and that the disclosure of the proprietary pricing information was a violation of the Procurement Integrity Act. GAO dismissed the Procurement Integrity Act claim because the disclosed information was for the previous contract and was several years old. Therefore, it didn’t fall under the provisions of the law.

One of the company’s arguments used past decisions where GAO supported the cancellation of a contract or disqualification of a bidder who gained access to proprietary information. But GAO said that those cases hinged on whether the agencies acted reasonably and GAO concluded they did. The decisions didn’t prove that agencies are required to cancel or disqualify.

The same can be said in this case – it was reasonable for the Air Force to not cancel the contract or disqualify AECOM. At least that is GAO’s conclusion.

The lesson is that if the agency can logically explain its actions and point to laws or regulations that support those actions, GAO is more likely than not to uphold the agency’s decision.

S&K is still in the running, and it can still file a protest if it fails to win. So with $4.2 billion over 15 years at stake, this battle likely isn’t over.