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Nick Wakeman

SAIC hangs onto $404M Army support contract

The Government Accountability Office’s decision upholding a $404 million Army award to Science Applications International Corp. has left me scratching my head.

The Army used GSA’s OASIS vehicle to award a contract for systems and computer resource engineering support services. The contract supports the Army’s Aviation and Missile Research, Development and Engineering Center. Services would include virtual, interactive and multimedia system engineering support.

General Dynamics filed a protest complaining that the Army misevaluated proposals and made an unreasonable source selection decision.

GAO rejected GD’s protest, so the award to SAIC stands.

But what started my head scratching was how GAO described the evaluation process the Army used.

The award was made as a best-value tradeoff and the agency used something called "quality-infused pricing" methodology.

From the description in the decision, it appears that GAO doesn’t think much about this way of evaluating prices. From GAO:

“This methodology amounts to a convoluted evaluation scheme that, in essence, reduces the agency’s best-value source selection to the outcome of a mathematical computation, rather than the exercise of informed judgment on the part of the source selection authority.”

Here is how it works: the agency calculates several numeric values for things such as past performance and the quality of its oral presentations. These values are multiplied and added together at different stages arrive at the quality-infused price.

I’ve greatly simplified the process because as GAO said, it is convoluted. It looks like a nightmare calculus equation. You multiple cPQR and cSVI by their assigned weights of 0.75 and 0.25 and then you add them together to get your cQAF. You then multiple the cQAF by the bidders' total evaluated price to reach the quality-infused price.

The Army’s goal seems to be to remove as much subjective judgement as possible from the evaluation process.

But here is the real head scratching part of the protest – GD didn’t object to it. The bulk of their protest focuses on the usual suspects of improperly evaluated past performance and technical proposals and a flawed cost realism analysis.

GAO rejected all of those complaints.

But the quality-infused pricing methodology only gets mentioned by GAO and they clearly don’t like it but if no one raised an objection and it isn’t wrong legally on its face, then I guess there isn’t much GAO can do.

What the evaluation did to GD’s proposal was take it from being $3 million higher than SAIC’s to $36 million higher.

Interestingly, GD did complain how the agency arrived at its probable cost. The company claimed its cost should have been $456.5 million compared to $458.4 million for SAIC.

But there was still the final step of the quality-infused price evaluation, which GD didn’t complain about. So even if the Army used the numbers GD claims to be correct, its final price still would have been higher because of that final step. In that final step, the agency multiplies the total evaluated price by the non-cost evaluation values to arrive at what they called Total Assessed Value.

The Army determined that the total assessed value of each bid was $424.6 million for GDIT and $388.4 million for SAIC.

But again, GD didn’t raise any issues about the quality-infused methodology and maybe they couldn’t after the award was made. The time to protest an evaluation methodology is generally during the pre-award stage right after the solicitation is released.

In essence, by submitting their bids, the companies indicated they were OK with the quality-infused methodology.

After plowing through the decision, I can easily see why GAO called the methodology convoluted. In fact, I can probably thing of quite a few stronger adjectives that also apply.

Posted by Nick Wakeman on Jun 14, 2017 at 10:22 AM


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