If there’s one thing that industry stakeholders and government procurement officials can agree on, it’s that the federal acquisition process is too complex to work effectively for the 21st century.
How exactly to fix the problem is a matter of debate.
The statutory framework on which the acquisition process is built allows the government to request information on a service it wants, accept bids for that service and determine from which contractor it would like to buy.
But the longstanding tradition of ensuring a fair and transparent acquisition process is butting more and more against a need to acquire new technologies and cybersecurity solutions quickly, and one arena where the balance is growing more contentious is the discussion of contract protests.
While the gauntlet of bidding for a federal contract can take industry stakeholders months or even years of investment, the protest process can set the clock back to zero if there are grounds for a contract award to be overturned.
And while the competition for government contracts continues to grow, the examination layer of the protest process that may have once seemed like an overtime period in sports has now become a normal facet of the game.
“Right now, we are planning that the protest cycle will be the longest part of the acquisition cycle,” said Tiffany Hixson, assistant commissioner for Professional Services and Human Capital Categories at the General Services Administration, said in an Aug. 2, 2016 panel discussion hosted by the Association for Federal Information Resource Management.
“I’m just resigned to that this is how it’s going to be.”
But while number of protests filed have increased more than 12 percent from fiscal 2012 to fiscal 2016, according a Government Accountability Office report, only a fraction of them are deemed to have merit. An even smaller portion, some 22.56 percent, are sustained in favor of the contractor who filed the protests.
“There is $400 billion worth of contract spending. There are several hundreds of thousands of dollars in procurement transactions, large dollar-value transactions and millions of individual contract awards,” said Alan Chvotkin, executive vice president and counsel of the Professional Services Council.
“So the percentage of protests of all spend is actually very low.”
There is more pressure, however, on both agencies and industry to develop and deliver new services on time. And as technology challenges government to provide services in new and innovative ways, ensuring that contract protests don’t slow momentum on plans for progress has become paramount.
The GAO — which evaluates and rules on the disputes — also notes that “a significant number of protests” filed with its office never reached the merit decision stage, often because the agencies who have been protested don’t defend against them and seek to resolve the issue on their own.
And while GSA and other agencies are trying to head off a potential proliferation of protests filed by increasing their communication with industry through all steps of the contracting process, private sector stakeholders note that they often originate because of a breakdown in the bid process.
“Protests are a pain in the butt, but the agencies should win all of them,” Chvotkin said. “What we see on the other hand, looking at some on the sustained cases by GAO, three things happen: either the agency agrees in the face of a filed protest to take corrective action or a case will go all the way to decision and the protest will be denied and the company will have just eaten up time on the clock or the agency will have been found to have made errors in their evaluation and have to review them.”
How it works
According to the GAO’s Guide on the protests process, a written protest must be filed by an “interested party” — either a contractor competing for the bid in question or “an offeror with direct economic interest in the procurement.”
Once the protest is filed with the agency in question, it must submit a report to GAO responding to the protest and provide a copy to the interested party, who will have the opportunity to submit comments back to GAO. If another party with an interest wants to intervene, they may also receive a copy of the report and have a chance to comment.
During the process, GAO may hold informal conferences “to resolve procedural matters and to obtain information material to the disposition of the protest” or call pretrial hearings. Once a hearing is held — which can include witness testimony — all parties are allowed to file written comments on the proceedings.
If the case goes as far as a GAO ruling, the judgment will come down no later than 100 days from the date of the filing. GAO may also dismiss the protest without reviewing it or provide alternative dispute resolution, if requested — such as negotiation assistance with a GAO attorney or outcome prediction, where a GAO attorney advises on the likely outcome of a protest decision.
During the process, agencies can take corrective action to resolve the protest prior to a decision. Likewise, if the outcome looks bad for a party, they can seek a dispute resolution. Contractors who have won a contract under protest can also participate in the hearing as an intervenor, if they choose.
In fiscal 2016, 2,789 protests were filed. Of the cases, 616 were deemed of merit, with 139 sustained. Only 2.5 percent of the cases received a hearing.
What it can cost
Sometimes, a protest can take form of an oversight and play out in a lengthy process for both the agency and the contractor involved.
On May 31, a $1.6 billion Department of Homeland Security cloud computing contract was halted when GAO sustained a contractor protest.
The protest was filed by Reston, Va.-based cloud service provider Knight Point Systems, LLC, over a blanket purchase agreement contract through GSA’s IT Schedule 70.
GAO ruled that DHS had improperly taken Knight Point out of competition for the contract because its cloud services subcontractors were not on IT Schedule 70.
Knight Point Systems was among four candidates competing for a commercial Infrastructure-as-a-Service contract based off a June 2016 request for quotation.
DHS initially awarded Knight Point a spot on the three-to-five vendor contact on Nov. 13, 2016, but later eliminated it from competition during a reevaluation on Feb. 13, 2017 — determining that only one of the provider’s IaaS subcontractor services were offered in IT Schedule 70, and approved by the Federal Risk Authorization and Management Program (FedRAMP).
But the RFQ allowed contractors to submit bids from GSA Multiple Award Schedules Contractor Teaming Arrangement or as a GSA Prime Contractor/Subcontractor arrangement, which only required the prime contractor to be on IT Schedule 70 and wouldn’t allow it to offer services where it doesn’t hold a schedule contract.
Because Knight Point bid under a Prime Contractor/Subcontractor arrangement, GAO said that DHS had incorrectly eliminated it from competition.
“Here, as we explain below, we sustain the protest because the record demonstrates that DHS did not reasonably consider whether the cloud services offered by Knight Point through its subcontractors were within the scope of Knight Point’s GSA schedule contract,” the protest decision said.
“Rather, the agency considered only whether the cloud systems offered by Knight Point were listed by brand name on Knight Point’s GSA schedule contract, which was not a requirement of the solicitation.”
As a result, GAO recommended that DHS do both a new technical evaluation and source selection in addition to reimbursing the contractor for attorney’s fees and protests costs, effectively moving Knight Point’s contract evaluation – and the entire process – back to square one.
What can be done?
How to reform the acquisition process to make it flow more smoothly has been a spirited discussion on both sides of the debate, especially on the IT side of business.
Gathered at the American Council for Technology and Industry Advisory Council’s (ACT-IAC) Management of Change conference on May 22, a panel of procurement officials honed in on how to make the process more innovative and often came back to the same point: the breakdown is the result of execution.
“Theoretically, I run an organization that shouldn’t exist,” said Chris Hamm, director of the Federal Systems Integration and Management Center — a GSA office that advises agencies and contractors on complex acquisition projects.
“Every service, every civil agency has an acquisition arm and multiple components within it, and when that ultimately doesn’t meet the outcome that they are seeking, sometimes they will go seek an alternative acquisition provider. Sometimes that’s a vehicle and sometimes that’s actually doing the contracting.”
Hamm said that while there may be too many acquisition rules, FEDSIM has gained a reputation for being innovative by working within them.
“I don’t really need regulatory relief,” he said. “Everyone keeps saying it, and it’s annoying that acquisition takes so long … If you wanted to do something about acquisition, then it’s written out on how you want to do it.
“If you wanted to do a simple order using a schedule, how you evaluate it under [Federal Acquisition Regulation Subpart 8.4] is pretty easy. If you want to do an [indefinite delivery/indefinite quantity], under FAR 16.505, you can pretty much invent the majority of your procedures under that and still be able to withstand a protest.”
Hamm said that FEDSIM provides agencies with a “robust acquisition process” that provides their playbook, market research procedures and guidance on interacting with industry based on the FAR that can reach award in six to seven months, instead of the 600 days it takes the Army to acquire services worth more than $50 million, for instance.
“If you want to buy the service, I guarantee you will have an outcome here in six or seven months, that it won’t take two years; I guarantee you if it gets protested that we will withstand the protest and in post-award we’ll actually deliver the thing that you wanted to buy.”
Hamm said FEDSIM handles about $5 million in acquisition services for both civilian and Department of Defense agencies. For an overall evaluation of DoD spend, the 2016 National Defense Authorization Act formed a panel of acquisition experts called the Section 809 Panel to evaluate how to make defense buying more efficient.
The Section 809 Panel released its interim report on May 17, detailing areas that it thinks acquisition can be improved, including by simplifying the process and focusing more on mission outcomes.
“What many of us observed, at least in our experience, is that we can use the rules we have today to do anything. It’s a question of leadership at the very top, knowledge throughout the workforce and experience that reflects that knowledge,” said David Drabkin, a Section 809 Panel commissioner, at the ACT-IAC conference.
Drabkin added that the Section 809 Panel would be examining the entire acquisition process at DoD — including protests — and will deliver recommendations within two years.
But regardless of whether acquisition can be more streamlined in terms of time, its rules made more clear or agencies’ contracting staff made more innovative, the time it takes to resolve a protest may still hamstring the process.
On May 2, Mary Davie, assistant commissioner for Office of Information Technology Category in GSA’s Federal Acquisition Service, posted a blog detailing the high points of a recent discussion she had with 50 representatives from IT companies about federal acquisition.
On the topic of protests, Davie said industry asked for more communication, but the government representatives at the discussion “didn’t quite buy it.”
“They pointed to cases in which those things were taking place and yet we still received protests. There was clear agreement from both government and industry that protests are often used as a strategy by an incumbent company to buy more time and income,” she said in the blog post.
Davie added that a proposal was floated to have contractors pay a fee for lost protests as a way to ensure that disputes centered on stronger issues with a contract.
But Chvotkin said he was against such penalties, because GAO already has the power to dismiss a frivolous protest.
“The purpose of the protests process is to hold agencies accountable for following the procurement rules,” he said. “The motive of the company is irrelevant to the procurement. It is all about whether the agency disclosed about how they are going to evaluate an award and did they follow their procedures in doing so.”
He added that even a failed contract protest might still have had merit.
While there is debate over why the process has become so cumbersome, there’s little disagreement on its impact.
“The cost to the system is huge,” Hamm said. “It harms the ability for the acquisition professional to interact with industry, to do any meaningful things like actually have discussions and negotiations and it harms our ability to execute … That extra 120 days is another procurement we could have done.
“The protest has an absolute role in the procurement system and it does provide material feedback and drives quality, but the incentives need to be aligned in some kind of way that they currently aren’t aligned in.
