Leidos' $728M Air Force cloud bid nixed by subcontractor OCI

Leidos was knocked out of the competition for a $728.2 million Air Force cloud migration contract after the government ruled one of the company's subcontractors had an unmitigated organizational conflict of interest.

Leidos was knocked out of the competition for a $728.2 million Air Force cloud contract because it had an unmitigated conflict of interest through a subcontractor on the team.

Science Applications International Corp. was picked for the Air Force Common Computing Environment Cloud contract.

The Air Force wants to transform how it buys and manages IT resources, which involves a move to an enterprise IT as a service model. Three programs are part of that initiative, as is a contract for advisory and assistance services.

One of Leidos' subcontractors in the CCE bid had the same role on that A&AS contract, according to a Dec. 17 Government Accountability Office decision unsealed Monday.

Leidos argued the subcontractor would not be offering advice and guidance on the CCE program, also known as Cloud One. That subcontractor submitted a mitigation plan that the Air Force deemed inadequate.

That plan only addressed unequal access to information and not impaired objectivity, according to the Air Force.

The subcontractor provides a variety of services to the Air Force that are related to the shift to EITaaS. These included strategic planning, metrics and architecture documentation, road maps and evaluation of technical approaches.

The subcontractor argued none of its current work involved making recommendations or providing advice with respect to the Cloud One program.

Leidos did not submit its own organizational conflict of interest plan or information on how the subcontractor helped prepare its proposal.

When questioned by the Air Force, Leidos said the team had no conflict of interest because no one with access to protected information participated in preparing the proposal. Nor will any with inside knowledge participate in the performance of the contract.

Leidos also stated it adopted the subcontractor’s mitigation plan and said that company would recuse itself if an issue arose.

But the Air Force didn’t accept this approach and ruled that Leidos was “not responsible,” and hence not eligible for the contract.

GAO in its ruling agreed with the Air Force, finding that the subcontractor had impaired objectivity.

Per the decision, it is likely that the CCE and EITaas programs will be merged into a single effort sometime in the future. Leidos and the subcontractor argued the merger would be years in the future, but that didn’t really matter to the Air Force or GAO.

Both the Air Force and GAO determined the subcontractor would be offering advice on that path and would have a conflict. Neither Leidos or the subcontractor did enough to mitigate this issue.

In reading the decision, it seems the Air Force and GAO have set a high bar. I’m not saying that is a good thing or a bad thing, but access to customers is often the currency companies trade when forming teams. That makes this decision definitely one that is worth reading.

Leidos did not respond to a request for comment.

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