The U.S. Department of the Interior has big plans to implement a major cloud-based information technology program, with a potential investment of US$1 billion over 10 years. However, those plans will have to be put on hold a little longer.
One of the potential contractors for the project, CenturyLink, is taking the department to federal court in a challenge to the contracting terms for the project.
The original project proposal was issued in July 2012, calling for the award of one or more fixed-price contracts for specified services, using an “indefinite delivery, indefinite quantity” (ID/IQ) contract vehicle. Interior reported that it received 26 responses to a request for information from vendors.
The E-Commerce Times has learned that CenturyLink has filed a legal challenge to the terms of the Interior Department’s request for proposals. The appeal, filed in the U.S. Court of Federal Claims, addresses what the company feels are significant flaws in the DoI contract proposal.
The company’s first attempt to challenge DoI was filed with the General Accountability Office, which ruled in favor of the Interior Department in a March 7, 2013, decision.
Foundation Hosting IT Service
The proposed contract calls for vendors to provide “foundation cloud hosting services” to implement the Interior Department’s Strategic Information Technology Transformation program.
The scope of the initiative includes storage services, secure file transfer services, virtual machine services, database hosting services, web hosting services, development and test environment hosting services, and SAP application hosting services.
The legal basis and court filings for CenturyLink’s court action are not available. “The case has been filed under seal with the court so I cannot provide any information,” Thomas Mason, an attorney with the Cooley law firm, which represented the company in the GAO proceeding, told the E-Commerce Times.
CenturyLink’s corporate office, through spokesperson Linda Johnson, also declined to comment for this story.
Under federal law, both the GAO and the court of federal claims can be used to challenge contracting issues, and companies are free to seek redress at both venues on separate and independent tracks. The claims court will process the CenturyLink case on a fresh start, or de novo basis, apart from the GAO ruling.
As a result “there will be no GAO filing, reply or defense at the court,” Ralph White, GAOmanaging associate general counsel for procurement law, told the E-Commerce Times.
Given the legal options available to CenturyLink, the company’s likely position in the court of federal claims can be gleaned from the bid protest it filed with the GAO.
CenturyLink contended that the contract solicitation failed to provide enough specificity in its requirements for an adequate vendor response. The GAO decision also indicated that the company had concerns about the risk involved in bidding on the project as a result of insufficient contract terms.
CenturyLink Claims Risky Terms
For example, CenturyLink said the DoI specifications for virtual machine use were inadequately presented. GAO determined that Interior’s use description, including the portion of Windows, Unix, and Linux components and other contract terms, fulfilled the criteria for providing reasonable levels of information. GAO dismissed the company’s similar concerns about storage requirements.
CenturyLink also had difficulties with the fixed price terms associated with the contract, but GAO found that the pricing element was fairly stated by the department.
“The solicitation includes pricing matrixes that offerors can use in pricing the representative use cases that included details about the agency’s requirement,” the GAO said. “Given the details provided with respect to the representative use cases, we believe the solicitation provides sufficient information to allow a common basis for evaluating offerors’ proposed prices.”
Ultimately, the department’s solicitation provided sufficient information on which vendors could “compete intelligently and on a relatively equal basis,” GAO general counsel Susan Poling said in her ruling on the case.
“While we appreciate that the solicitation here imposes risk on the contractor by requiring fixed prices,” she said, “we do not find, on the record before us, that the solicitation exposes offerors to unacceptable or undue risk.”
Challenges in Protest Process
Companies engaging in federal contract challenges face an uphill climb, according to one expert specializing in contract litigation.
“GAO rulings are not always satisfactory, and in many cases they fall short of adequately considering the contractor’s position,” Lee Dougherty, a partner at Fluet Huber and Hoang, told the E-Commerce Times.
“First and foremost, reading a GAO decision will never give you all the facts or even accurate facts,” Dougherty said. “The GAO has no appellate forum to review its decisions for accuracy or completeness and therefore it selects only those facts that are most advantageous to its position and it will almost never give a fact that might indicate that there was a debate about the issue.”
While he could not speak directly to the CenturyLink case, Dougherty observed that “generally GAO is inclined to defer to the government agency’s expertise, and if the agency presents some material demonstrating there was adequate information for potential contractors to submit bids, GAO will accept the agency’s position.”
However, often agency contracting and legal personnel handling a challenge do not have sufficient technical expertise, nor does the legal staff at the GAO, he added. This works to the disadvantage of the vendor protesting the contract.
The result, in a case like the CenturyLink protest, is that contractors take a major risk in attempting to win the business. “For Interior to say, as it did in this case, that because it received offers from several vendors it must have done something right, is completely off point,” Dougherty said. “Some vendors are willing to roll the dice to get the contract, but that doesn’t mean the bid process was proper.”
The ID/IQ vehicle complicates the bidding process since the duration of the contract can be so long, he noted. “The ID/IQ vehicles serve a purpose and can be a valuable way to contract for goods and service when used as intended.Where ID/IQs are abused is where they are used primarily to discourage competition over a long period. I see many ID/IQs where only one contract is awarded.”
The ID/IQ can become a vehicle to sole-source awards, Dougherty said. “When you create an environment where competition is stymied over the course of 10 years, it is not conducive to innovation and it defies fair and open competition.”
Since the court of federal claims is also available to CenturyLink, that venue might be somewhat better.
The court will start without any presumption that the GAO decision was either right or wrong, and as a judicial proceeding it may be a better forum. Even so, outcomes from the court of claims tilt towards the government, Dougherty contends.
“By rule both forums are deferential to the government. In order to uphold a protest, the GAO or the court of claims must find that the decision of the government was not reasonable,” he said. “One COFC judge likes to use the word irrational. That is a large hurdle for a protestor to overcome.”
Google successfully used the court of federal claims process on a major IT contract, which coincidentally involved the Interior Department.
Google challenged the department’s original 2010 indication that Microsoft’s technology was its preferred choice for a major email system. The search company contended that Interior’s basis for that choice was flawed.
The court of claims ruled in favor of Google, and the Interior Department then revised the contract terms and reevaluated proposals. In May of 2012 Interior awarded the $34.9 million contract to Onix Networks for an email system featuring Google’s technology.