SAIC's lost $1.8B protest points to flaws in the system

In a recently released protest decision, the Government Accountability Office methodically goes through the reasons for denying Science Applications International Corp.’s protest.

SAIC complained that it wasn’t one of the six winners of the $1.8 billion Judiciary Multiple Award Services contract. After all, the company had strong past performance and key personnel scores. But its price was $30 million higher than the next highest company, according to the GAO decision.

GAO explains the rationale that the Administrative Office of the United States Courts used, and why GAO supports the reasoning.

And there isn’t anything on the face of the GAO decision that I can poke holes in, except that I think they got it wrong, and that what they got wrong says more about the system than the decision.

The JMAS contract is a multiple award task order contract. The companies that won – AT&T Government Solutions, Camber Corp., CRGT Inc., Actionet Inc., Intelligent Decisions and SRA International (now CSRA) – will compete for task orders.

The agency argued in the protest that SAIC’s higher scores didn’t justify the higher price. To me, that’s the big flaw – if SAIC is really more expensive than the others, that will be born out in the competition for task orders.

The competition for task orders will likely push prices lower than what was bid in the competition to get on the contract.

It seems to me that price shouldn’t be the deciding factor on a contract where the competition for task orders will set the ultimate price paid by the customer.

The Administrative Office of the U.S. Courts said that price was the least important factor, but SAIC argued that they picked the six bidders with the lowest prices. To SAIC, that makes it an lowest price contract and not a best value contract.

GAO didn’t buy that argument, but I still go back to asking why the price is there? Why not make it all about management, technical scores, personnel and past performance?

The ultimate buyer can be the one to decide whether a premium price is worth it.

Because in looking at this decision, SAIC lost because its prices were deemed too high, yet these are prices that no one is going to pay anyway. And that’s a flaw in the system.

By the way, another bidder, IndraSoft, also lost its bid protest, but that decision hasn't been released yet. It's going to take a while for GAO and the companies involved to agree on a public version of the two decisions.

GAO denied the protests in June, but a redacted version isn't available yet. SAIC's was released on Friday. IndraSoft's is probably not far off.