The company's bid understated costs by presuming it would get government workspace, watchdog says.
The Government Accountability Office has recommended pulling a $25 million task order the Defense Information Systems Agency awarded Booz Allen Hamilton to enable the transmission of data between secure Defense Department computer networks.
The major defense and technology contractor fudged the likely cost of its employees' workspace, artificially lowering its bid when competing for the work, according to an April 6 decision by GAO that was released in a redacted form Friday.
The contract to help DISA develop and manage its secure data transmissions was initially awarded in September to the smaller technology contractor Solers Inc., located in Arlington, Va., GAO said.
But the agency agreed to pull back the contract after Booz Allen asserted that contracting officials hadn't sufficiently reviewed all the bids, the decision said.
The Defense agency then looked at revised bids and awarded the contract to Booz Allen in December 2010. The Solers bid was still technically superior, the agency said, but not worth a price hike of about 12 percent.
The Solers bid was about $27.4 million compared with the Booz Allen bid of about $24.6 million.
Solers objected to the Booz Allen award, saying the larger company hadn't abided by a contract provision requiring a stable, fixed-price bid.
Booz Allen said in its bid that it was presuming more of its engineers would be able to use government workspace than the agency's request for proposal had indicated.
Using government workspace would save money for both the contractor and the government, Booz Allen said. But the contractor noted that, if the agency declined to give the engineers government workspace, that would likely raise the contract price.
Booz Allen and DISA both claimed this quibble didn't violate the contract's fixed-price provision. It merely indicated Booz Allen might request an adjustment to its fixed price in the future, they said.
GAO disagreed, saying the "collective effect" of Booz Allen's statements about government workspace added up to its offered price being "conditional, not firm."
GAO also upheld Solers' claims that the contracting officer hadn't sufficiently evaluated the feasibility of Booz Allen's proposal or looked closely enough at its past performance.
GAO recommended that DISA reevaluate bids for the project or reopen the bidding entirely. It also recommended that the agency reimburse Solers for the cost of its protest.
Calls by Nextgov to Solers and Booz Allen were not returned Friday afternoon.