GAO sustains protest in National Guard IT contract

The Government Accountability Office upheld the protest of an incumbent vendor who lost a contract award in a case that points to the high level of complexity involved in IT and government contracting.

The case involves a 2015 IT services contract on behalf of the National Guard, under a procurement conducted by the Department of the Interior under the agency's franchise fund authority. Incumbent NCI Information Systems protested the award of the contract to HP Enterprise Services.

The contract involved network and telephone management, desktop support including on classified systems, cybersecurity, software engineering and virtual desktop and server management for 6,500 Army National Guard users in the National Capitol Region.

The solicitation was designed to be fielded by companies on the Information Technology Enterprise Solutions 2 contract – an acquisition vehicle managed by the Army's Computer Hardware Enterprise Software and Solutions office.

An independent government estimate put the value of the contract at just over $112 million.

Incumbent NCI bid on the contract, as did Hewlett Packard Enterprise Services. The problem, from NCI's point of view, was that HP was in the midst of plans to separate into two publicly traded companies, one focusing on services and the other on hardware. HPES filed a "mitigation plan" with its bid designed to allay concerns about conflict of interest that could occur if the services company was in a position to select and purchase products from its sibling manufacturing company, specifically printers and copiers.

The contact went to HPES, which according to the GAO decision bid about $54 million for the work. NCI's bid was $97 million, much closer to the independent government estimate. NIC argued that the HPES bid was not realistic.

In its protest, NCI also argued that "no firewall procedure could adequately mitigate" the potential conflict. The firm also took issue with the technical evaluation panel's rating of the HPES management approach as "satisfactory." In their argument, NCI officials cited a note from the panel, saying, "We do not believe that it is possible for this vendor to correct all of the significant weaknesses before the contract is awarded, should it be awarded to them… there is still great risk with the staffing plan."

In an Oct. 14 ruling released on Nov. 8, GAO sustained the protest.

GAO decided in favor of NCI on the grounds that the contracting agency did not establish in the record that it "meaningfully considered" potential conflicts on the part of the vendor or proposed mitigation plans. Additionally, GAO found that NCI's complaints that its rival's bid was too low to support the work at realistic market rates.