Watchdog snubs General Dynamics' gripe over Navy's $8bn IT network overhaul sub-contract decision

What time is it? Time to pore over contested multibillion-dollar US military tech deals


General Dynamics IT (GDIT) has had its complaint about the handling of the $7.7bn rebuild of the US Navy’s networking infrastructure thrown out by a watchdog.

The protest claim – rejected last week by the Government Accountability Office (GAO) – is just the latest in a battle over the monster five-year contract, called NGEN-R, that aims to modernize the armed force’s IT systems and covers what the Navy claims is the world’s largest intranet. Another challenge from the second of three bidders that also missed out on the contract is also due to be decided this week.

The GAO has yet to release its full report into the GDIT challenge, though judging from an interim statement, it is expected to find that, contrary to GDIT's assertions, the Navy did in fact do everything fairly and within the relevant guidelines. GDIT claimed the Navy failed to give it meaningful notice of pricing assumptions, and also questioned the technical evaluations and the Navy’s scoring on its past performance.

The other challenge comes from incumbent contract holder Perspecta, which depends on the contract for 20 per cent of its revenues. Perspecta made many of the same claims as GDIT but raised eyebrows when it claimed that there was also a conflict-of-interest claim against the contract winner, Leidos.

Currently none of the complaints, evaluation nor reports are publicly available so much of the detail has been provided by the same companies lodging the complaints. Perspecta has reportedly claimed that Leidos has an unfair advantage in the contract because it had access to information that the other two didn’t.

The massive contract covers network support for the entire IT infrastructure of the Navy and Marines – amounting to 400,000 devices and 650,000 users. The network is being overhauled and unified, and the hardware part of the contract has been signed off. The Navy awarded the support contract to Leidos in February, and the hardware contract – worth $1.4bn – to HP Inc back in October.

Enter challengers

The support contract decision was immediately challenged by both GDIT and Perspecta. GDIT claims the Navy didn’t give it sufficient information about price assumptions, claiming that if the Navy had done so, it would have changed its bid and won the contract. That was a step too far for the GAO, and it rejected the argument. We should find out this week what the GAO makes of Perspecta's claim that winner Leidos had access to extra information.

This is not the only contract that these same companies are battling – and appealing. Perspecta also appealed the loss of a roughly $200m IT contract by the US Department of Justice earlier this year and parts of its complaint in that case was upheld: the department was found to have treated Perspecta differently to the other bidders when it came to the experience of its workers, and it was found to have discovered and pointed out weaknesses in Perspecta’s bid that it missed in others’ bids.

But Perspecta overall came out looking worse after the GAO report in that case found that it had been scored lower than others because it couldn’t show why its services were better while charging far more for them. Worse, the justice department found that Perspecta was dangerously lacking in skills and tools when it came to cybersecurity.

“We see no basis to conclude that correcting the errors discussed above would have resulted in Perspecta’s higher-priced proposal being evaluated as technically superior to the proposal of any of the five awardees,” the GAO said.

And another

Then there is the battle between GDIT and Leidos over another armed forces contract, in this case the Department of Defense's Defense Information Systems Agency (DISA) – again for global solutions management.

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Leidos also won that contract and GDIT also challenged the decision. In that case, the GAO rejected [PDF] GDIT's claim that Leidos has an unfair advantage as it had hired a former agency official. It also rejected GDIT's price claims – which are similar to the ones made in the ongoing battle over the Navy contract.

In the meantime, GDIT and Perspecta are also sparring over yet another government contract – this time the $7.6bn cloud contract for the Defense Department. That DEOS contract [PDF] – Defense Enterprise Office Solution – has been revisited not once but twice following formal complaints from Perspecta, which was unhappy at being beaten out by GDIT.

The General Services Administration was found to have provided sensitive bid information to GDIT and, the second challenge prompted it to effectively reopen the entire contract all over again.

That contract will support the Defense Department’s email and cloud services – which will essentially scrap a range of different back-office systems in preference to a single unified Microsoft Office 365 setup.

If all this sounds like a mess, it is still nothing compared to the SNAFU that is the $10bn winner-takes-all JEDI contract. ®


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