Pricing challenge falls short in $1.3B Treasury cloud competition

The Government Accountability Office’s decision to deny protests by Leidos and Booz Allen Hamilton over a $1.3 billion cloud contract at the Treasury Department is the newest example of where price had little to do with the agency’s evaluation.

In a separate protest we highlighted on Wednesday, ICF argued that the Army should have evaluated the pricing proposed by STS International differently.

ICF claimed that STS' low price indicated a lack of understanding of the technical requirements. GAO ruled that the solicitation didn’t require the Army to conduct such an evaluation.

We saw a different argument regarding the Treasury's contract called TCloud, but on the same topic of price. The same result happened: GAO denied the protests by Leidos and Booz Allen against the Treasury's choice of Science Applications International Corp.

For the contract called TCloud, SAIC will act as the lead broker for Treasury to acquire cloud services provided by the major hyperscale providers. Treasury wants to adopt a multi-cloud environment as part of its digital transformation agenda.

GAO denied the TCloud protests in a June 20 decision that is now unsealed and provides insights into why Treasury went with SAIC.

Leidos argued that Treasury didn’t conduct a price realism analysis and that the department would have discovered performance risks if it had.

But GAO ruled that because the contract is fixed-price, Treasury only had to determine if the prices were fair and reasonable.

“In a fixed-price environment, procuring agencies do not necessarily have to consider price realism when evaluating quotations because fixed-price vehicles place the risk of loss on the contractor rather than on the government,” GAO wrote.

Booz Allen and Leidos also were unsuccessful in their challenges of how Treasury officials evaluated the competitors' technical and management factors. Booz Allen argued that its scores should have been higher because of other work it is doing at Treasury.

Treasury countered that Booz Allen was essentially asking for “extra credit" without much regard for what TCloud's requirements and scope are.

“The contracting officer explains that the solicitation was concerned with the type of experience demonstrated, not where the experience was earned,” GAO wrote.

SAIC is now moving forward with the TCloud contract with the protests in its rear-view mirror.