UNCLASSIFIED

US Army Materiel Command Providing America’s Warfighters with the Decisive Edge GAO Bid Protest Statistics FY FY 2011FY 2010FY 2009FY 2008FY 2007 Cases filed2,353 (up 2%) 2,299 (up 16%) 1,989 (up 20%) 1,652 (up 17%) 1,411 (up 6%) Cases Closed2,2922,2261,9201,5821,394 Merit (Sustain + Deny) Decisions Number of Sustains Sustain Rate16%19%18%21%27% Effectiveness Rate 42% 45%42%38% ADR (case Used) ADR Success Rate 82%80%93%78%85% Hearings8% (46 cases)10% (61 cases)12% (65 cases)6% (32 cases)8% (41 cases) 2

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge HQ, AMC Bid Protest Statistics FY 2012 GAO Protests: FY 12 Total 1 st Qtr = 29Total 2 nd Qtr = 28Total 3 rd Qtr = 40Total 4 th Qtr = 39 Corr Action: 13Corr Action: 11Corr Action: 9 Corr Action: 1 Sustained: 1Sustained: 1Sustained: 1 (costs) Sustained: 4 AMC-Level Protests: FY 12 Total 1 st Qtr = 17Total 2 nd Qtr = 9Total 3 rd Qtr = 13Total 4 th Qtr = 9 Corr Action: 5Corr Action: 2Corr Action: 1 Corr Action: 0 Sustained: 0Sustained: 0Sustained: 0Sustained: 0 COFC Protests: FY 12 Total 1 st Qtr = 0 Total 2 nd Qtr = 2Total 3 rd Qtr = 0Total 4 th Qtr = 0 Corr Action: 0Corr Action: 0Corr Action: 0Corr Action: 0 Sustained: 0Sustained: 0Sustained: 0Sustained: 0 1st Qtr Statistics are as of 26 October Total # of Pending Protests: -- GAO = 20; AMC = 3; COFC = 0 3

UNCLASSIFIED TRADE OFF ANALYSIS What’s missing? –The Trade Off –The Analysis US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 4

UNCLASSIFIED TRADE OFF ANALYSIS The record here provides no basis to support the agency's determination that NikSoft's level of effort or labor mix was insufficient to perform the first call, or to support its determination that NikSoft's level of effort should be increased to the same level of effort proposed by LS3. Specifically, apart from the agency's conclusion that NikSoft's level of effort is insufficient and that LS3's level of effort is sufficient, there is no analysis or explanation in the agency's price evaluation and source selection decision to support these determinations. Nor has the agency provided any explanation or support for these conclusions in response to NikSoft's protest. NikSoft Systems Corporation, B , August 14, 2012, 2012 CPD ¶ 233. US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 5

UNCLASSIFIED TRADE OFF ANALYSIS Moreover, we have previously held that a best value analysis necessarily encompasses consideration of an offeror's price or cost since, to be meaningful, a best value determination requires a weighing of the value and benefits associated with a firm's approach against their associated cost to the government. In a best value procurement, it is the function of the source selection authority to perform a tradeoff between price and non-price factors, that is, to determine whether one proposal's superiority under the non-price factor is worth a higher price. Cyberdata Technologies, Inc., B , August 8, 2012, 2012 CPD ¶ 230. US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 6

UNCLASSIFIED OCI Turner Construction Co., Inc. v. United States, 645 F.3d 1377 (July 14, 2011). – In a protest of a construction contract for a hospital, GAO found that the Army Corps of Engineers (COE) erroneously concluded that there was no OCI. B.L. Harbert-Brasfield & Gorrie, JV, B , 2010 WL (Comp. Gen. Feb. 16, 2010) – GAO recommended re-procurement without participation by the successful bidder – In a protest filed at COFC by the contractor that lost the award, the court found no “hard facts” but mere suspicion and innuendo that an unnamed employee may have had access to certain information – COFC found COE’s decision to follow the GAO recommendation to recompete without participation of the awardee irrational. (Turner Construction Co., Inc. v. United States, 94 Fed.Cl. 561 (2010). The Federal Circuit affirmed. US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 7

UNCLASSIFIED OCI VSE Corporation, B , Nov. 21, 2011 –VSE initially awarded the contract for Professional Staffing Support for the Army’s Rapid Equipping Force (REF) –CACI filed Agency-level protest claiming VSE gained unfair competitive advantage by hiring former REF Deputy Program Manager (DPM) –CO conducted an OCI investigation and concluded VSE’s hiring of the former REF DPM created an appearance of impropriety; CO terminated VSE’s contract and awarded to the offeror next-in-line for award –VSE filed a GAO protest challenging the termination of its contract –Following a hearing, the GAO issued a decision sustaining VSE’s protest: The CO’s determination that an appearance of impropriety existed was based on assumptions rather than “hard facts” The CO relied on an incorrect understanding of the statutes and regulations that apply to post- government employment GAO recommended that CO conduct new review/investigation of former DPM’s activities related to the solicitation to determine whether award to VSE should be terminated US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 8

UNCLASSIFIED Tension Between GAO & Court of Federal Claims Systems Applications & Technologies, Inc. v. United States, No (SA-TECH). Kratos Defense & Security Solutions, Inc., filed a protest at GAO challenging the source selection decision. The GAO attorney handling the protest requested information from the parties several times and then sent an to all parties indicating that GAO would likely sustain with reasons. The Army proposed to take corrective action in accordance with the GAO guidance by terminating the contract, amending the solicitation, and allowing revisions to proposals. A new source selection decision would follow. SA-TECH (Plaintiff) filed its protest at CoFC claiming that the GAO was wrong and that its contract should not be cancelled. CoFC decided that the Army’s decision to take corrective action “arbitrary, capricious, an abuse of discretion, and unlawful, and therefore constitutes a significant error in the procurement process.” US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 9

UNCLASSIFIED Tension Between GAO & Court of Federal Claims Department of Justice appealed the COFC decision arguing that COFC did not have jurisdiction because the issue was not yet ripe. The Army had not carried out the corrective action, so there was not a final agency action. Oral arguments were held in the Court of Appeals for the Federal Circuit on 5 June The Court of Appeals upheld the COFC decision. The Army’s notification to GAO that it would take corrective action was considered a final agency action. US Army Materiel Command Providing America’s Warfighters with the Decisive Edge 10

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge REIMBURSEMENT OF PROTEST COSTS AFTER CORRECTIVE ACTION Two cases with opposite results: Glevum Associates, LLC, April 23, 2012, B Costs recommended because initial protest was clearly meritorious – in GAO’s opinion. Corrective action was not taken until after the supplemental protest. Kingdomware Technologies, May 10, 2012, B Protester is not entitled to reimbursement of protest costs after the agency took corrective action where protest was not clearly meritorious. Corrective action was not taken until after the protester had submitted comments. 11

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge UNINTENDED CONSEQUENCES PRICE REALISM Price Realism ≠ Price Reasonableness FAR , Pricing Policy, requires Contracting Officers to purchase supplies and services at a fair and reasonable price. FAR , Proposal Analysis Techniques, lists a number of methods to determine whether a price is reasonable. Price Realism is not one of those techniques. (Do not confuse price realism with cost realism that is required for cost contracts.) 12

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge UNINTENDED CONSEQUENCES PRICE REALISM FAR (d)(3): Cost realism analyses may also be used on competitive fixed-price incentive contracts or, in exceptional cases, on other competitive fixed-price-type contracts when new requirements may not be fully understood by competing offerors, there are quality concerns, or past experience indicates that contractors’ proposed costs have resulted in quality or service shortfalls. Results of the analysis may be used in performance risk assessments and responsibility determinations. However, proposals shall be evaluated using the criteria in the solicitation and the offered prices shall not be adjusted as a result of the analysis. 13

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge UNINTENDED CONSEQUENCES PRICE REALISM GAO’s standard for price realism: Where, as here, a fixed-price contract is to be awarded, the agency generally is not required to conduct a realism analysis; this is because a fixed-price (as opposed to a cost-type) contract, places the risk and responsibility for loss on the contractor. WorldTravelService, B– , Mar. 26, 2001, 2001 CPD ¶68 at 3. However, an agency may, as it did here, provide for the use of a price realism analysis to measure an offeror's understanding of the requirements or to assess the risk inherent in a proposal. The nature and extent of such an analysis are matters within the discretion of the agency, and our review of a realism analysis is limited to determining whether it was reasonable and consistent with the terms of the solicitation. Id. Rust Consulting, Inc., B , May 18, 2012, 2012 CPD ¶173.WorldTravelService, B– CPD ¶68 at 3. 14

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge UNINTENDED CONSEQUENCES PRICE REALISM The other side of the coin: If you have not indicated that you will perform a price realism analysis, you may not spring one on the unsuspecting offerors. While it is within an agency’s discretion to provide for a price realism analysis in awarding a fixed-price contract to assess understanding or risk, see FAR § (d)(3), offerors competing for such an award must be given reasonable notice that a business decision to submit low pricing will be considered as reflecting on their understanding or the risk associated with their proposals. Emergint Technologies, Inc., B , October 18,

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge UNINTENDED CONSEQUENCES PRICE REALISM Lessons Learned: Although price realism is not required in a fixed price solicitation, if the solicitation calls for price realism, then you are required to conduct a price realism analysis. If the solicitation says that you are going to analyze prices to determine if they are “realistic,” then you have obligated yourself to do a price realism analysis. If the solicitation says that to be technically acceptable, your prices must be realistic for the work proposed, then you have obligated yourself to do a price realism analysis. 16

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge CONDUCT OF DEBRIEFINGS Don’t inadvertently encourage the filing of a protest by discussing the strengths of the disappointed offeror’s proposal. The goal is not to spare the offeror’s feelings What must be discussed? See FAR (d) Deficiencies and significant weaknesses of proposal Ratings of disappointed offeror’s and awardee’s proposal Total evaluated cost/prices, including unit prices Overall ranking of proposals, if done Summary of rationale for award decision 17

UNCLASSIFIED US Army Materiel Command Providing America’s Warfighters with the Decisive Edge REVERSE AUCTIONS If using FEDBID, a commercial reverse auction site, guard against overreliance on the site without Government oversight. No Gatekeeping Functionality Late Proposals? You better find out before the protest! Limited Choices in Tool (for example, “Award Type Options” consist of Purchase Order, Delivery Order, and Purchase Card) Handling of Offeror Questions (Funneled through FedBid’s contractor support) Inadequate Format for Discussions and Revised Proposals (Cancel/Repost) Temptation to Over-rely on FedBid and Ignore FAR-Mandated KO Roles Ability to Award at the Click of a Button without complete Technical Evaluations Must ensure consideration of Responsibility (sometimes a concern in a Dynamic Pricing environment). Can the offeror perform as promised? 18