Alert
Alert
02.28.18
The GAO has just announced its denial of three protests, filed by disappointed offerors Enterprise Services LLC, Accenture Federal Services LLC and CSRA LLC challenging the Social Security Administration’s award of an IT contract to Lockheed Martin Corp. (Protests of Enterprise Services, LLC Accenture Federal Services LLC and CSRA LLC, B-415368.2, et al., Jan. 4, 2018.) The protests challenged the award on numerous grounds, all of which the GAO denied. One of the case’s notable lessons concerns a proposal’s approach toward an impending corporate transaction that might impact contract performance.
The proposal evaluation process can be a long one, and numerous changes can occur to offerors while waiting for the agency’s award decision. One of those changes could be the sale of all or relevant parts of the offeror’s business. In this recent protest decision, Lockheed Martin anticipated the sale of its IT (IS&GS) business segment to Leidos in its proposal and addressed the impact of the transaction in its proposal. Of importance, Lockheed Martin proposed a series of steps it and Leidos would take to minimize any adverse impact of the transaction on the customer.
Here are the eight elements of Lockheed Martin’s disclosure, presented in its price proposal, according to GAO: “(1) Lockheed had announced in January 2016 that it entered into a definitive agreement to separate and combine its IS&GS business with Leidos; (2) the transaction is subject to certain regulatory and shareholder approvals and is expected to close in the third or fourth quarter of 2016; (3) IS&GS will continue to operate as a Lockheed business until the transaction is closed; (4) the government IT business that submitted the proposal and that would perform any resulting contract is part of the IS&GS business encompassed within the transaction; (5) Lockheed structured the proposal so that the transaction would not have a material impact on performance of any resulting contract; (6) Lockheed personnel, equipment, technology or services identified in proposal would be converted to subcontract or supply agreements with Leidos, covering the same products, services and capabilities in the same quantities and on consistent schedules and pricing terms; (7) Leidos and Lockheed had agreed that certain human resources, benefits, IT and other back-office functions that are not included with the IS&GS business segment would continue to be provided by Lockheed for a transition period following the transaction; and (8) the transition period would provide sufficient time for a seamless transition to Leidos’ systems so that the business performing any resulting contract maintains continuity of operations and the support necessary to fully meet its contractual obligations without disruption.”
The contracting office excerpted this portion of the price proposal and gave it to the technical evaluators, who then assessed the transaction’s effect on contract performance and concluded there would be no material impact.
The three protesters disagreed and contended that Lockheed Martin’s disclosure was too vague and that the evaluators’ assessment was inadequate, but GAO deferred to the judgment of the evaluators and denied the protests.
For companies that may experience a change of ownership, a spinoff, or even a merger, the lesson of this case is to, first, assess and plan to minimize the impact on future work and, second, to disclose that plan, in as much detail as possible, to win over the evaluators and arm them with the information they need to defend a favorable evaluation of your proposal.