Following Bid Protest, DISA Re-Releases $17.5B Contract

The Defense Department’s IT arm is again accepting bids for its controversial Encore III contract that could buy as much as $17.5 billion worth of IT services to support the Pentagon’s modernization effort.

Contractors now have until Sept. 30 to revise and submit proposals for Encore III, which has been updated by DISA to adhere to recommendations the Government Accountability Office made in sustaining spring protests by CACI and Booz Allen Hamilton.

Encore III earned ire from industry groups earlier this year because it sought “lowest price, technically acceptable” solutions for potentially complex services, which many felt contradicted a directive from Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall. That directive outlined situations when it would be OK to use LPTA, such as commodity hardware purchases.

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However, GAO’s beef with DISA wasn’t with LPTA, according to a full bid protest decision released this week. Instead, DISA’s mistake was failing “to provide a reasonable basis to compare the cost of competing proposals,” and in “excluding from competition any proposals with a total proposed price 50 percent below the trimmed average total proposed price.”

DISA’s initial Encore III request for proposal stated it wanted the lowest possible labor rates available, comparing bids to create the trimmed average, a theoretical barometer by which to eliminate bids that came in 50 percent above or below that average. GAO said companies wouldn’t have known if their proposed labor rates were too high or low until after the contract was awarded.

GAO also said DISA couldn’t adequately explain why the “50 percent price floor” approach made sense and shouldn’t have been used.