Pricing leak taints $1.9 billion Air Force contract award, GAO says

The Government Accountability Office found that it was hard to believe that leaked pricing data didn’t have an impact on the competition for a $1.9 billion Air Force contract.

During the competition for the Elgin Operations and Maintenance Services II contract, the Air Force inadvertently disclosed pricing information to one bidder. That kicked off bid protests and a corrective action by the Air Force when they decided to release the pricing data to all the bidders to level the playing field so to speak.

The Air Force argued that the pricing leak played a minimal role in the decision to award the Strategic Test Solutions joint venture the contract for research, development, testing and training support services at Elgin Air Force Base in Florida.

But Fluor Corp. filed a fresh protest arguing that the Air Force violated the Procurement Integrity Act and GAO agreed.

Now the public version of the decision has been released offering more details on the protest and GAO decision, including how statements by the Air Force worked against it.

For example, after the pricing information was released, STS lowered its pricing by $72 million, reducing it to less than Fluor’s proposed price. STS told GAO that it couldn’t determine how the disclosure influenced its pricing because it was already considering a price reduction. The Air Force also concluded that the disclosure had no impact in part because STS said it was already considering a price reduction before it received the leaked information.

Because of an earlier protest and corrective action, the Air Force investigated the issue twice.

The GAO found that the Air Force’s conclusion was unreasonable because the Air Force had no way to determine the impact of the leak on STS’s pricing.

And given that STS itself said it couldn’t quantify the impact of the pricing information, “the agency’s conclusion to the contrary – that there was no impact – strains credulity,” GAO said.

GAO also criticized the Air Force’s decision to release the pricing data to all bidders to make up for the lead to one bidder.

“The agency’s reliance on one disclosure (to all offerors) to mitigate an earlier disclosure (to one offeror) is unavailing,” GAO wrote.

To resolve the problems GAO identified, it wants the Air Force to pick one of two choices – reevaluate the impact of the leak and made a new award decision. Or cancel the solicitation and start over to restore the “integrity of the procurement.”