Contractors Annoyed After DHS Scraps $675M Cyber Contract

Mark J. Terrill/AP File Photo

The group said each team of contenders had spent hundreds of thousands of dollars preparing proposals

A trade group representing federal contractors says it is frustrated the Department of Homeland Security has left vendors in the dark after scrapping a 2-year competition for cybersecurity support jobs.

The explanation for the cancellation of the Cyber Centric Mission Support Services program, according to the Professional Services Council, had to do with DHS changing work requirements and needing less assistance. Little else is known about why Homeland Security called off the contract, says the group's vice president, Alan Chvotkin.

A bidding war began in December 2013 among some 160 interested parties for the multiple-award venture worth up to $675 million.

The group said each team of contenders had spent hundreds of thousands of dollars preparing proposals for the 5-year contract that entailed responsibilities running the gamut from clerical work to technical assistance.

The acquisition began before DHS Secretary Jeh Johnson took office and subsequently launched a "Unity of Effort" initiative to harmonize operations across the department's offices.

Still, the department continued to refine the 2013 request for proposals, answer vendor questions, hold industry briefings, and evaluate proposals up until posting a cancellation notice on the website Feb. 8, the group says.

DHS explained to council members it was in the best interest of the government to cancel the procurement because of changes in DHS Office of Cybersecurity & Communications needs, the scope of the contract and the availability of other contract tools that might fit better, Chvotkin said.

"Either they overestimated in the beginning what they would need" and did not realize the miscalculation until now or "they have a different way they want to provide this support," Chvotkin said.

If there is a new estimated workload or a different contract in the offing, that would be nice for DHS suppliers to know, he said.

Ten council member companies were vying for the award and all were surprised the plan was scuttled, Chvotkin said.

Organizational changes do not override "the reasonable expectation of the bidders and the agency users that, in the face of such an impactful decision, more transparency and insight would be provided to all offerors and to the program offices that use those covered services,” he wrote in a Feb. 19 letter to several DHS officials responsible for contract decision-making.

Nextgov has requested comment from Homeland Security.

There have been other instances in recent years where the federal government has scrubbed a business opportunity before even reading proposals.

A $475 million U.S. Cyber Command solicitation issued to contractors last April for help planning hacks and network defense was briefly floated and then cancelled the next month. At least one small company told Nextgov it spent $9,000 on personnel to prepare a pitch. A revised solicitation with different requirements was issued last fall.

In February 2014, the Office of Personnel Management terminated a 15-month competition for a potentially $5 billion training and human resources contract.

"The risk of losing is inherent in the business of federal contracting, but the sudden cancellation of such a high-profile contract with no explanation struck many as an unnecessarily secretive and bad way of doing business," The Washington Post reported at the time.