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By Nick Wakeman

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Nick Wakeman

Army fights on with ITES-3H bid protests

It looks like the Army is sticking to its guns and will stay the course as it faces an onslaught of protests for its downselect decisions for the $5 billion ITES-3H contract.

After the Army eliminated a large number of companies from the competitive process for the hardware and related services contract, 19 companies, including heavy hitters Dell and Hewlett-Packard, filed bid protests. Most of the companies are objecting to how the Army evaluated past performance and the bidders ability to perform.

Now, more than a month after many of those protests were filed, there are still 17 active protests.

What this tells me is that the Army is standing by its decision to eliminate these bidders from the competition.

Agencies have 30 days after a protest is filed to submit a response to the Government Accountability Office. Most corrective actions – where the agency pulls back a contract to re-evaluate its decision – occur during that 30-day window. Not that a corrective action can’t happen later, but chances diminish greatly.

The Army has filed its response to the protests with no corrective actions. But just because there are no corrective actions and the Army is fighting on doesn’t mean there aren’t problems with the procurement.

One problem seems to be with the design of the program. The Army is conducting a phased approach where it downselected from a larger group of bidders to a smaller group from which it will pick the final winners. The expectation is that the Army will make four large business awards and four small.

The idea behind the phased approach was to shorten the procurement cycle, but it hasn’t worked out that way.

First, the Army made downselects earlier this year and was hit by 17 protests and took a corrective action, which led to its second attempt at winnowing field, which is what has landed us here.

So, instead of shortening the procurement cycle, it has been lengthened. We are now nearly two years out from the release of the solicitation for ITES-3H. It has been 700 days as of Sept. 25.

As one source told me, the phased approach means that there are decision gates and the gates allow for more scrutiny and protests, particularly in today’s environment of constant protests.

Another problem is that the delays have an impact on initial pricing and best and final offer pricing submissions. It is similar to some of the problems when the Air Force NetCents 2 Products contract was trying to get out from under a slew of protests.

Because of the delays, bidders are submitting prices for products no longer available from the manufacturers. Initial pricing wasn’t required for ITES-3H until a year after the initial product lists were proposed.

If the Army asks for best and final offering pricing, those submissions won’t come in until at least two years after the initial product submission.

“This introduces price gaming and also gives a distinct advantage to bidders who are manufacturers,” my source said.

There also is a cascading effect on other contracts such as ITES-3S, the Army’s services contract. Final awards there likely won’t come until late 2017.

For many companies with limited bid and proposal dollars, the delays drive the cost of bidding too high. Companies won’t see a return on those dollars for years. “B&P dollars are better spent elsewhere,” my source said.

It is still perplexing to me why these contracts are so fraught with problems. These are commercial products the Army is trying to buy, not a weapons platform or specialized command and control system.

It shouldn’t be this hard.

Posted by Nick Wakeman on Sep 26, 2014 at 9:23 AM

Reader Comments

Mon, Sep 29, 2014 GreggD

EZ, it is not their money. This is the taxpayers getting fleeced for war.

Mon, Sep 29, 2014

The very premise of the contract is questionable. Why do you need a long-term vehicle for product buys? How would you ever buy the "next big thing" if you are locked into a (for example) 9th year of a product contract? How can the Army buy (for example) the latest generation of the Hadoop-big-data ESB, recently released by the largest Hadoop vendor? They don't hold an ITES-2H. And, if there are loopholes for the Army to buy that product if they wanted to, what is the point of the contract in the first place? For a pure "product" buy (not services), one has to question whether this kind of large IDIQ is even necessary. Procure products just-in-time via full & open, and drive long-term price decreases through volume discounts and other incentives. LPTA on a product buy is not as toxic and risky as LPTA on a services buy.

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