Hands up anyone happy with Uncle Sam's $50B IT mega-job. Anyone?
Record number of gripes from suppliers vying for slice of this procurement pie
The US government's efforts to spend $50 billion on IT services continues to be hit by challenges owning to the size and complexity of the procurement.
Late last month, Systems Plus, an IT consulting and services biz, was the latest among around 180 companies to complain about the procurement process, according to a protest it filed with the US Government Accountability Office (GAO).
The move signals ongoing difficulties over the giant contract, the award of which has already been delayed since December. We understand the contract is a multi-award, multi-vendor affair, with lots of suppliers vying for a slice of it.
The number of protests related to the contract, dubbed CIO-SP4 in government speak, has reached record levels, according to legal news publisher Law 360.
The work being bid for stems from May 2021, when the National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) launched a solicitation inviting interest in the deal.
The Request for Proposal said the contract was intended to provide IT solutions and services to health, biomedical, scientific, administrative, operational, managerial, and information systems requirements. "The contract also includes general IT services because medical systems are increasingly integrated within a broader IT architecture. This broader IT architecture may require sound infrastructure systems approaches to their implementation and operation," it said.
In December, the NITAAC informed the GAO — the legislative branch government agency — that it would begin corrective action on the CIO-SP4 deal after 119 protests were filed with watchdog.
Of those protests, GAO dismissed 117, and will decide in the coming weeks whether to drop or allow the remaining two protests to carry on. NITAAC told the government budget watchdog that it would review the self-scoring cut-off line and identify the highest-rated vendors that will move to the second phase of the competition, according to reports.
Although procurements of this size might have the advantage of driving bigger chunks of spending through fewer suppliers — arguably driving down costs — they can also cut smaller suppliers out of government work, eliminating competitive pressure from the market. Meanwhile, the complexity of such a large-scale tending process can add to the dis-economies of scale.
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Speaking to Law360, Ian Patterson, a government contract expert at advisors Schoonover & Moriarty said: "Maybe what we're seeing is that these are just a little bit too unwieldy. If the government wants to go down this road of doing these large scale contracts, maybe we have found the limit of what is administratively feasible for various agencies to be able to handle without moving to something that’s a little bit more economical and accommodating.”
However, the NITAAC said its approach had been lauded by the Office of Management and Budget and Congress as providing a streamlined approach, and reducing the administrative burden.
In software, large-scale government contracting can also lead to vendor lock-in. Research published last month found Oracle and Microsoft – two companies receiving most of the US government's off-the-shelf software spending over the last decade – get at least 25 percent and 30 percent of their respective government revenue through purchase processes that are not competitive. ®