GAO: Northrop faces competitive disadvantage. So what?

Northrop Grumman won a $109.9 million contract with DISA for software development and integration services earlier this year. The victory wasn’t a huge surprise given that they were the incumbent.

But a pair of bid protests and a corrective action wiped out that victory.

Corrective actions aren’t unusual, but Northrop Grumman filed its own protest because they felt that this corrective action went too far and gave its competitors - Solers Inc. and Pragmatics Inc. - an unfair advantage.

Because of their debriefs, the two companies had more information about Northrop’s pricing and technical scores proposal -- insights that Northrop Grumman didn’t have about theirs.

Northrop also complained that as DISA went through the corrective action plan, which included reopening the competition, Solers and Pragmatics were given extra feedback on the short comings of their proposals.

Northrop didn’t get that feedback because Northrop’s proposal was deemed “realistic,” according to a decision by the Government Accountability Office.

Northrop’s protest argued the corrective action was unreasonable and prejudiced against the company.

GAO denied that protest, and here’s what I find interesting about that: neither GAO nor DISA really refute Northrop’s contention that reopening the competition put Northrop a disadvantage.

“DISA readily acknowledges that the disclosure of Northrop Grumman’s winning price puts the protester at a competitive disadvantage,” GAO wrote in its decision. 

Of course, a statement like that is usually followed by a “but,” and so it is the case here.

GAO agreed with DISA that the Northrop’s competitive disadvantage didn’t outweigh the need to correct mistakes made during the first competition.

DISA major mistake was a failure to document its cost/price evaluation.

Northrop argued that the mistake could have been easily handled with limited discussions rather than the broader approach DISA took.

But GAO ruled that DISA’s approach was reasonable and that agencies have “considerable discretion” in how they handle these kinds of situations.

So, fixing their mistake outweighed the hit Northrop has taken in the competition.

But don’t cry for Northrop; they still very well might win the contract. They are the incumbent, and despite the challenges incumbents have faced in winning recompetes, incumbency is still an advantage.

This competition also is best value and not lowest price. Apparently, one of the struggles DISA had was that the bidders all had very different technical approaches to what the agency wanted.

As the incumbent, you would think this also gives an advantage to Northrop because of the customer intimacy.

So, stayed tuned and we’ll see how this one turns out.