GSA to Take Corrective Action on DEOS Cloud Contract

The General Services Administration has opted to take “corrective action” on the multibillion-dollar Defense Enterprise Office Solutions cloud contract, which it awarded in late August to CSRA, a managed affiliate of General Dynamics Information Technology.

GSA’s decision to amend its original request for quotations follows a bid protest filed through the Government Accountability Office by competitor Perspecta Enterprise Solutions on Sept. 9.

According to multiple sources familiar with GSA’s decision, the agency—which partnered with the Defense Department on the DEOS blanket purchase agreement—will make changes to the acquisition’s statement of work and requirements to address issues raised in the bid protest. 

Once GSA amends the RFQ, it will be released again to the bidders. It is unclear how that might affect the contract’s timeline. 

Bid protest documents indicate both companies' bids came in far higher than the $8 billion that GSA’s estimated for the contract, which aims to provide cloud-based tools like email, word processing, spreadsheets and file-sharing across the Defense Department through Microsoft’s Office 365 platform. GDIT’s bid came in with an estimated value of $12.4 billion; Perspecta’s was $10.5 billion. According to a source familiar with the evaluation process, the evaluated prices put forth by bidders are actually a summation of three bid scenarios GSA requested in the evaluation. One of those scenarios sought cost estimates from bidders for a full deployment of more than 3 million users, and the total evaluation prices reflected deployment of more than 5 million users.

The price discrepancy in bids between GDIT and Perspecta is curious given the primary component of both company’s bids were Microsoft 365 licenses for up to 3 million users. 

GSA declined to comment to Nextgov due to ongoing litigation regarding DEOS. Attorneys for Perspecta and GDIT did not respond to requests for comment from Nextgov. 

DEOS is one of two multibillion-dollar Pentagon cloud contracts now under litigation. The other, Joint Enterprise Defense Infrastructure, is currently under review by Defense Secretary Mark Esper after surviving bid protests and a legal challenge in federal court, which the challenging company Oracle is appealing. 

Editor's note: This story was updated to include context regarding the contract's estimated value.