Vendors say agencies abuse rules

Several vendors that have protested the award of large orders to General Services Administration schedule holders believe that in the past couple of months agencies using the program are operating under the maxim made famous years ago by Cole Porter: Anything goes.

These companies which have repeatedly lost the protests they have filed with the General Accounting Office charge that agencies are abusing the reformed less regulated acquisition process.

"I don't have any problems with agencies running what are essentially auctions but even auctions have rules " said Sid Wilson an account executive with L.A. Systems Inc. a company that lost a protest decision by GAO this month.

Wilson is no stranger to procurement indiscretions. In the late 1980s he led the so-called "Group of Six " an informal coalition of hardware vendors which brought attention to the Navy's bias for IBM Corp. hardware. The group's accusations caught the attention of congressional oversight committee members who acted to correct the partiality.

Now Wilson is fighting the new looser procurement environment. In the latest protest that L.A. Systems filed GAO ruled that the Defense Information Technology Contracting Organization acted properly when it awarded a task order for a robotics tape library system to GSA schedule vendor Severn Companies Inc. even though as the decision noted "it is clear that Severn's proposed system was noncompliant with the express technical requirements of [DITCO's] request for pricing."

Despite its ruling that DITCO bought equipment that did not adhere to its specifications GAO found that the agency did nothing illegal. The decision infuriated Wilson. "If an agency wants to buy a Cadillac and a vendor offers it a Chevrolet and the agency decides to buy it the agency should go back to the other guys who bid Cadillacs and ask them for a Chevrolet too " he said. "If you don't you didn't have competition on the model you selected."

In another example the Justice Department last year solicited bids from a field of GSA schedule vendors for thousands of Pentium PCs. In a move that had losing competitors shaking their heads the department allowed the lowest bidder to adjust its prices upward more than $120 per machine to only a few dollars less than the price that competitors said they bid.

According to a letter faxed to DOJ 10 minutes after bids on the PCs were due Aug. 12 1996 an official from winning vendor Win Laboratories Ltd. wrote that his discussions with a DOJ procurement specialist alerted him to the fact that his company's bid did not include the price of operating system software for Microsoft Corp.'s DOS 6.22 Windows 3.11 or Windows 95.

Consequently Win increased its bid by $153 for its 133 MHz machine and $125 for its 166 MHz machine - a few dollars less than its competitors' bids and enough to win the business according to an industry source involved in the procurement.

It remains unclear why Win did not include in its original bid the price of the operating systems which come bundled in its GSA schedule offerings.

An Van Nguyen former vice president of Win and the official who submitted the Aug. 12 letter to DOJ no longer works for the company. Other officials at Win did not respond to phone calls requesting comment.One competitor Intelligent Decisions Inc. (ID) protested the $6 million deal with Win. But GAO ruled that DOJ did nothing illegal and rejected the complaint. Last month GAO refused a request from the company to reconsider its decision.

Ironically the vendors that file these protests are schedule holders themselves. Consequently they are loathe to criticize GSA instead they direct their anger toward agencies they say are misusing the program.One vendor who recently failed in an attempt to win a blanket purchase agreement from a Cabinet agency said the buyers "wired the deal" to a specific vendor. The agency used the GSA acquisition process as a "smoke screen" to undertake improper action the vendor charged.

"There was never any intention for this kind of thing to happen under the GSA schedule program " he said. "This is an individual agency using the system in an inappropriate way."

Despite the charges and complaints none of the vendors interviewed for this story said they would support a move to turn back the clock to the days of greater central oversight of federal procurement. "Every situation requires you take the good with the bad " said another vendor who lost a protest involving a GSA schedule contract. "It is becoming a bit like a Wild West show out there but I think it is like a pendulum. Someone is going to get caught doing something really dumb and the hammer will come down."

Sources at federal agencies wholeheartedly support the procurement reforms that have made the GSA schedules easier to use. Mark Boster deputy assistant attorney general for information resources management at DOJ said his organization would continue to use the GSA schedule program despite the criticism leveled at it by ID.

"What a huge business advantage it has for us " Boster said of the GSA program. "The amount of resources we devote to it is much less the process is much cleaner and we get our products much quicker than we used to. We're very supportive of the program but we're also very careful."

Doug Hanson manager of implementation for NASA's Scientific and Engineering Workstation Procurement also supports freer use of GSA schedule contracts. "The whole idea of the removal of the Brooks Act was to give agencies freedom to do this " he asserted. "I feel that things have been very above-board and appropriate."

Wilson disagreed saying agencies have been given a huge amount of freedom without the training they need to ensure they do not abuse their new responsibilities. "Procurement people really don't have access to independent technical thinking when they need it " he said. "They are most likely to go for advice to the people they are buying the stuff for."

Wilson and others said users are likely to have a specific vendor in mind with whom they have done business in the past.

As a result procurements may end up wired to a particular vendor regardless of the proposals submitted. And although this certainly happened in the past losing bidders at least had some legal recourse vendors said.

Carl Peckinpaugh a procurement attorney with the Washington D.C. law firm of Winston & Strawn and a Federal Computer Week columnist said that recourse no longer exists. "All of the rules applicable to contracting actions don't apply to schedule purchases " he said. "I think [DOJ's actions] are outrageous but I don't think they violated the rules. It's awfully hard to violate rules that don't exist."

Bob Dornan senior vice president of market research firm Federal Sources Inc. McLean Va. said accusations from vendors that have not benefited from the less restrictive schedules environment have become commonplace although most companies support GSA's changes to the program. "I'm hearing constant complaints " he said. "If you get business it's a wonderful streamlined process. But if you lose your only recourse is to whine."

Dornan added that the recent GAO rulings illustrate the trend of the government emulating commercial acquisition practices. "This ruling would not be a headline-grabber in the commercial world " Dornan said.

"That's how we do things like decide who will build our driveways. Things have changed and vendors will have to go through a learning curve and experience some culture shock."