Incumbent | The Contracting Education Academy

August 7, 2017 By cs

Contract protests up, contract awards down — what to do?

Recent data indicates that protests have increased overall by approximately 17 percent since 2012, exceeded only by the decrease in government contract spending over that same time.

The resulting increase in pre-award costs derived from protests for all parties concerned requires a step back to analyze what is driving this not-so-encouraging trend, and what, if anything, should be done about it.

Most involved in government contracting today understand the recent trends of a declining overall market. Topping out at almost $600 billion a few years ago, the current federal budget has been squeezed by such things as the Budget Control Act of 2011, automatic budget sequestration, mandatory cuts, spending caps, and overall drawdown of U.S. military operations worldwide. Contractors are now competing for ever fewer dollars, as the government’s “mandatory” spending — in areas such as healthcare and retirement — continues to shrink the “discretionary” dollars available for everything else. This has resulted in many contractors leaving the federal market, either through mergers or simply going out of business, or diversifying into other business lines.

Keep reading this commentary at: http://www.federaltimes.com/opinions/2017/07/25/contract-protests-up-contract-awards-down-what-to-do-commentary/

August 29, 2016 By cs

Incumbent vendors and IT modernization: Help or hindrance?

Modernizing the federal government’s aging legacy systems is a top priority of the Office of Management and Budget, Congress, and just about every agency.

Incumbent Influence on IT Modernization 08.2016 However, identifying, prioritizing and successfully executing modernization projects remains a consistent challenge across the government.

Public Spend Forum and Censeo Consulting Group launched a joint study to explore the root causes hindering modernization efforts across federal agencies. In our first look at the initial findings, we focused on the impact of structural risk aversion on managerial decisions around IT modernization projects. In this article, we focus on another interesting finding from the survey: the role of incumbent vendors in determining the modernization solution.

Keep reading this article at: http://www.federaltimes.com/articles/incumbent-vendors-and-it-modernization-help-or-hindrance

December 22, 2011 By cs

IG: VA structured $133 million security contract to favor incumbent

The Veterans Affairs Department structured the requirements for a 2010 information security contract to give the incumbent a leg up, VA’s inspector general found in a report released Wednesday, Dec. 21, 2012.

The Office of Acquisition, Logistics and Construction used a technical evaluation process for the Sept. 28, 2010, award that favored “the incumbent, Booz Allen Hamilton, based on its performance as the VA’s Information Assurance and Information Technology contractor,” the IG said.

Booz Allen submitted a $133 million bid for providing support services to the chief information security officer, 22 percent above the least expensive competing proposal of $108.9 million and 16 percent higher than the other bid of $115 million, auditors said.

The acquisition office decided to forgo lower cost in favor of inside knowledge of VA’s procedures and practices, the report said. Organizational knowledge can be a key factor in evaluation of contract proposals, the watchdog added. But Federal Acquisition Regulations state, “such knowledge should not be a justification for assigning strengths and weaknesses without first identifying the criteria as a significant evaluation factor” in procurement documents.

In their evaluation of the competing bids, acquisition officials credited Booz Allen with nine significant strengths, six of which related to its knowledge of VA practices and procedures. Lack of such knowledge was assessed as a weakness in evaluation of the other proposals, the IG report said.

Inconsistencies in proposal evaluation also “appeared to promote the [contract] award in favor” of Booz Allen, the IG report said. Another bidder suggested using of a suite of network monitoring tools that included Sourcefire, Netwitness and Arcsite, and was penalized because VA did not use such tools and officials deemed them a risk to the department’s networks, the IG report said. Yet Booz Allen included the same network monitoring systems in its proposal and the “technical evaluation panel did not identify these tools as potential risks” the report said.

The acquisition office also did not provide a labor-cost rate analysis to justify the premium price paid to Booz Allen. “Such an analysis would have compared the labor rates of all proposals and determined whether Booz Allen Hamilton’s labor rates were reasonable,” the report stated.

The IG concluded, “while the award decision may have resulted in a low risk to the government and a decreased learning curve . . . VA should not have paid a premium price for the incumbent’s knowledge. In our opinion, favoring the incumbent during the selection process did not promote full and open competition in accordance with the Federal Acquisition Regulation. This practice puts VA at risk of awarding future ‘de facto’ sole source contracts at greater expense to the Government because of reduced competition.”

Belinda Finn, assistant VA inspector general, said the IG “will evaluate VA’s contract award decisions in future audits to determine if evaluation panels assess vendor proposals based solely on evaluation factors stated in the solicitations.”

Glenn Haggstrom, executive director of VA’s Office of Acquisition, Logistics and Construction, said in a reply to the IG report that Booz Allen was selected for the contract because it received an “outstanding” rating on its technical proposals, which justified the price premium. He added that seven of the nine significant strengths for Booz Allen made limited or no mention of its experience with VA.

James Fisher, a Booz Allen spokesman said, “the OIG report was not directly focused on actions by Booz Allen itself, and we have no comment on its conclusions.”

— by By Bob Brewin – NextGov.com – 12/21/11 – http://www.nextgov.com/nextgov/ng_20111221_6590.php?oref=rss?zone=NGtoday

May 11, 2011 By cs

Mega-contractors don’t dominate DOD

With the rampant merger and acqusition activity in the market, the conventional wisdom might say that the defense industry will be dominated by a few mega-players.

But not so says a new study from the Center for Strategic and International Studies.

“There is little evidence in the data that the defense industry is consolidating into an oligopoly dominated by a small number of incumbent firms,” the center’s Defense Industrial Initiatives Group wrote in a report released on May 6. The report analyzed DOD’s contract spending and its supplier base.

In fact, the report states, contractors have been coming and going throughout in the past decade, despite the fact that the top five defense contractors retained their position from 1999 to 2009.

“There were dynamic changes in the composition of the top 20 contractors in the industry” during the past decade, the report said.

However, another expert said it can be misleading to analyze the market by looking at a list of leading contractors. Instead, the true makeup of the market emerges by digging into specific types of goods and services. he said. The trends in competition and contractors emerge when looking at the number of companies capable of handling projects such as building unmanned aerial vehicles or surveillance satellites.

“Gross tabulations like ranking lists have never been effective predictors of the erosion happening to the defense industrial base,” said Bruce Williamson, an economist at the National Defense Business Institute at the University of Tennessee in Knoxville.

Either way, defense officials are concerned about the consolidation of companies.

“The department [DOD] is very conscious that the top tiers of the defense industry have already consolidated significantly,” Frank Kendall, principal deputy undersecretary of defense for acquisition, technology, and logistics, told the Senate Armed Services Committee on Emerging Threats and Capabilities Subcommittee on May 3.

And officials are predicting more merger and acquisition activity.

“We do expect some increased activity at the middle and lower tiers — activity that we will monitor closely,” Kendall said.

In further studying procurement data, CSIS found heath care companies rose closer to the top of DOD’s suppliers with the strong overall services contracts and energy companies and ground vehicle producers grew in the products side.

The services sector was the fastest growing sector, and the list of contractors changed significantly from 1999 to 2009.

“This indicates that there is a healthy circulation of contractors in and out of the top positions by value of contracts awarded,” the report states.

CSIS also found the mid-sized companies still were squeezed by larger corporations and small firms.

About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week. This article appeared 5/6/2011 at http://washingtontechnology.com/articles/2011/05/06/csis-defense-industrial-base-market-changes.aspx?s=wtdaily_090511

Recent data indicates that protests have increased overall by approximately 17 percent since 2012, exceeded only by the decrease in government contract spending over that same time.

Modernizing the federal government’s aging legacy systems is a top priority of the Office of Management and Budget, Congress, and just about every agency.

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