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By Nick Wakeman

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Nick Wakeman

PAE offers lessons in dangers faced by incumbents

If you want to get a sense of the pressure incumbent contractors are under in today’s market, look no further than PAE.

The company has lost four incumbent contracts since September that carry an aggregate value of $3.8 billion. The bulk of that value is tied up in one $3.6 billion contract, the Air Force Range Support Services II contract won by URS Federal. PAE is protesting that award.

A second contract worth $105 million with the Army also was won by URS and the Government Accountability Office denied PAE’s protest.

The third was an incumbent contract won by Fluor worth $33.5 million to support Army field training. PAE protested the $33.5 million award. That protest was dismissed in November, which usually means that the agency is taking a corrective action. So PAE could still be in the running for that award.

And now this week, PAE filed a protest for a $97.3 million Air Force award that went to Vectrus for base operations support at Keesler Air Force Base in Mississippi.

PAE declined to comment on the protests or the contracts. But it was quick to point out that it has won several other incumbent contracts in recent months, including the Rapid Expert Assistance Cooperation Team III contract, also known as REACT. This State Department contract allows PAE to put together teams of people to quickly respond to needs of the Organization for Security and Cooperation in Europe.

That five-year contract is worth $75 million and it is the fourth time PAE has won the work.

The company also said it retained its incumbent contract with Eglin Air Force Base to support aircraft maintenance, a three-year contract worth $44.5 million. PAE also kept a State Department contract worth more than $10 million involving corrections systems work. The company has held that contract for 11 years.

It is interesting to note that the $105 million contract PAE lost to URS was competed as a lowest price, technically acceptable contract with twist on past performance. The winner bidder needed the lowest price with a substantial confidence rating for past performance.

PAE’s bid was $10 million higher and they received a satisfactory confidence rating for its past performance. The past performance rating was the crux of PAE’s protest. PAE argued that URS received preferential treatment and should have had a lower past performance score. GAO rejected that argument.

So it is a mixed bag as I’m sure many companies experience these days. But it definitely sends a signal that incumbents are under pressure.

Posted by Nick Wakeman on Apr 28, 2017 at 9:38 AM

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