IBM loses last shot at DHS data center contract

IBM has lost its bid to win a Homeland Security Department contract where the company's proposal was nearly $170 million less than the winner’s in Accenture Federal Services.

IBM argued three main points in its protest:

• DHS did not properly investigate an alleged organizational conflict-of-interest.
• DHS improperly evaluated technical proposals.
• The best-value tradeoff was unreasonable.

DHS is using the contract to consolidate several contracts for data center support services (DCSS) into one.

In the area of an organizational conflict-of-interest, IBM argued that DHS did not properly consider that one of Accenture’s subcontractors in Deloitte is doing work for DHS’ investment management and budget planning services.

Deloitte also is doing work with requirements that overlap DCSS under the EAGLE II contract. This work gives Deloitte unique insight into the contract, IBM said.

But DHS said it had multiple contacts with Deloitte to talk about a possible conflict even before the solicitation for DCSS was released and found no conflicts. And after IBM’s protest, the contracting officer again looked at the issue and came to the same conclusion.

GAO ruled that DHS took the necessary steps to determine whether or not there was a conflict.

In the other areas, two things worked against IBM. Its low price and a lack of detail in its proposal on how it would meet the requirements.

Accenture bid $307.2 million for the contract and IBM’s bid came in at $139.3 million, a 54-percent difference.

Both companies were rated "High Confidence" for mission suitability. But IBM only received "Some Confidence" for its technical-management score and for its overall rating.

Accenture was scored as "High Confidence" in both of those criteria.

The source selection authority or SSA said IBM’s bid was deemed too risky by the technical evaluation team.

IBM is an incumbent on an existing contract that represents about 70 percent of the work under the new DCSS contract.

But the new contract has “brand new requirements not seen in any existing/data center contracts,” the SSA wrote, according to GAO.

Whether the winner is an incumbent or not, there would still be a need to recruit, transition, hire and onboard people for the new scope of work.

DHS found that IBM’s proposal did not have the information to make the agency comfortable that it could do the work.

“IBM provided insufficient details in their innovative approach to justify the low number of hours and labor mix,” the SSA wrote.

That lack of detail made it impossible for the cost and technical teams to make any adjustments to the most probable cost for the work.

“The lack of detail and low hours and labor mix/skill levels creates such high risk that no amount of potential cost savings would be acceptable in conducting this trade-off analysis,” the SSA wrote.

GAO said it could find “no basis to question the reasonableness or rationality of the agency’s source selection decision.”

IBM declined to comment on GAO’s decision.