Unhappy bidders claim CIO-SP4 unfairly favors small firms with big business partners

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Small businesses are receiving, and reacting negatively to, unsuccessful bid notices they received from the National Institutes of Health's IT acquisition arm regarding this $50 billion vehicle.

The $50 billion CIO-SP4 contract vehicle's small business portion is moving forward and leaving some unhappy companies in its wake.

Certain companies have learned they failed to make the cut for phase 2 of the selection process. CIO-SP4 is the National Institutes of Health's flagship government-wide vehicle for IT products and services.

For this fourth iteration, NIH's Acquisition and Assessment Center is using a self-assessment process where companies assign themselves points for different requirements. That appears to be what many rejected small businesses are taking issue with.

Small businesses that made the cut apparently all are part of joint ventures or mentor-protégé relationships with a large business. Under the structure of the solicitation -- and in accordance with Small Business Administration rules -- the small business bidder can use the capabilities of the large business for the scoring aspect.

That was especially helpful in the CIO-SP4 competition because NIH assigned points for having an earned value management system as well as a cost estimating system. One industry source told me a majority of small businesses can’t afford those kinds of systems and there wasn’t much need for them under CIO-SP3.

The maximum number of points a bidder could earn was 10,000. The largest number of points -- 4,500 -- went to corporate experience. Technology experience followed at 1,800 and then multiple-award experience at 1,200.

Point totals fall drastically to 300 or lower for other aspects of the scoring.

Earned value management systems, estimating systems, a level 2 CMMI appraisal level and certain ISO certifications all get 300 points each. While that number may appear small, some companies may have moved ahead and others got held back.

CIO-SP4's solicitation makes it clear that any portion of or all those points can come from a partner.

All of which appears to be the rub for many and a dilemma. One small business CEO I contacted is being urged to file a protest, but is not sure what exactly to challenge because of how everything is laid out in the solicitation. The time to protest the terms of the solicitation have passed, that CEO said.

I’ve heard from several other sources that protests are in the works, though none have been filed with the Government Accountability Office as of this story's publication.

The CIO-SP4 contract has been widely-debated on LinkedIn over the past week as NITAAC has been sending notices out.

Brad Barker, president of business development and capture consulting firm 8M Services, kicked off the discussion when he asked for comments from companies that received an unsuccessful notice when they had a score above 9,700.

Barker also asked if those that did not get a notice were willing to share their point total.

One HUBZone small business said it was rejected with a score of 9,720 out of a possible 10,000.

From what Barker collected,  bidders under 9,800 received unsuccessful notices. He asked for direct messages so he could keep companies anonymous.

Companies are still somewhat in the dark because NITAAC has not yet started debriefings because of the volume of requests. That may explain why there are no filed protests yet. There may be a difference between the scores companies gave themselves and those NITAAC verified.

Barker’s thread on LinkedIn set off several philosophical questions about the future of independent small businesses on these large, government-wide contract vehicles.

Self-scoring procurements seem to skew the competition in favor of the mentor-protégé joint ventures so what does that mean for the small businesses that prefer to go it alone? How are they expected to compete?

One executive I contacted sees a fairness issue here that SBA’s rules seem to have missed. That executive supported the inclusion of mentor-protégé points when they were first allowed two years ago, but now sees CIO-SP4 as showing the unintended consequences.

A responder to Barker’s post suggested SBA be lobbied to allow a mentor-protégé lane on contract vehicles, which would let independent small businesses to compete against other small businesses. That person said SBA would not have to change any rules.

This other alternative was presented: lobby or force SBA to change its small business rules because the current rules restrict fair and open competition between those companies. A class-action lawsuit may be needed.

Passions are running high around CIO-SP4 well before any official awards, which are expected at the end of the year.

This one is far from over. Expect protests to the Government Accountability Office at a minimum and perhaps the U.S. Court of Federal Claims as well.

For the record, I reached out to NITAAC for comment but have not yet received a response.