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By Nick Wakeman

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Nick Wakeman

No protests for huge Leidos health record contract

It looks like IBM and Computer Sciences Corp. have both taken a pass on filing bid protests following Leidos’ winning the $4.3 billion Defense Department electronic health systems contract.

The company and its core team of Accenture and Cerner won the contract on July 29 in a competition with IBM and CSC. Following their debriefs by the Defense Department, the companies declined to file protests. Our sister publication, FCW, had a story on Friday.

IBM declined to comment when asked why they didn’t protest, and CSC didn’t directly give a reason in a statement it issued.

A CSC spokesman said that the company gave “careful consideration” to a protest after its debrief, but declined. “CSC is a long standing partner to the Department of Defense and a strong support of military personnel and their families. As such we wish the program much success and move forward focused on the future,” the statement read.

This is good news for Leidos and DOD, which can move forward without months of delays.

Unfortunately, it still leaves us somewhat in the dark about how Leidos was picked. The big question in my mind is whether the competition, which was designed as a best-value procurement, actually came down to a price war with the Leidos bidding the lowest price.

The contract was originally estimated to be worth $11 billion over 15 years. Leidos’ bid was $4.3 billion over 10 years.

In announcing the award, Frank Kendall, undersecretary of Defense for acquisition, technology and logistics, said that the choice of Leidos was “clear best value.”

But price still plays a big role in best value, particularly if the technical scores among the three competitors were even or close to even. When that happens, it does come down to price.

Even if one of the other teams had slightly better technical scores but a higher price, DOD could still be justified in picking the lower price and lower technical score. The argument that I’ve seen made is that a technically superior proposal doesn’t always justify the premier price.

The other argument we could have seen in a bid protest would be that Leidos’ bid was too low and should have been deemed unreasonable or unrealistic. In other words, a protester would argue that the price was too low to deliver the technical solutions that was bid.

But that is a hard argument to win. From the bid protests I have reviewed, I’ve come away with the impression that agencies don’t hesitate to tell companies that they think their bid is too low and will even increase the price of the bid.

So, the unfortunate thing is that without a bid protest, we’ll never know any of these details. We won’t know the perceived weaknesses and strengths of the competing bids. The companies and DOD won’t talk about it.

Leidos is moving forward on the project and IBM and CSC are moving on.

Posted by Nick Wakeman on Aug 17, 2015 at 12:30 PM


Reader Comments

Mon, Aug 17, 2015

You would be wise to examine the competing prices. It would be surprising if the winner had not gone perilously low. As it is not a FFP contract, the idea is to find ways to add on and extend the contract and to catch the government's undoubtedly clumsy attempts to add scope under task orders. Also, the structure of the losing teams suggests some relatively high-cost team members, who would have kept the pricing on the high side.

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