GAO Considers Rebidding Major Treasury Dept. Contract
In a major govt. contracting development, the GAO said the Treasury Dept. must reopen negotiations on a marquee $1 billion telecom contract that AT&T won from the Treasury Dept. The move is a setback for AT&T and a win for other bidders, who may have another chance to win the contract. “This is a big deal,” said Warren Suss, a consultant and expert on govt. contracting issues. “This is the Dept. of Treasury’s core communications network. A lot of important stuff goes over it, particularly the IRS data.”
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The GAO report hasn’t been released. Sources said the next step is uncertain, but the development is seen as embarrassing to Treasury and IRS officials who approved the Treasury Communications Enterprise (TCE) contract. The contract covers 3 base years and 7 annual extensions, with an overall value as high as $1 billion. The companies that filed protests are Broadwing Communications, Level 3, MCI, Northrup Grumman Information Technology and Qwest Govt. Services. Sprint, another bidder, didn’t file a protest.
“Until we see the GAO report, we really don’t know what action they're saying the Treasury must carry out,” said consultant John Okay. “There’s about 3 actions the GAO could tell them to pursue. One is to tell Treasury to start all over again. That would be very expensive, very time-consuming for all the bidding companies. Another would be to hold discussion with all the bidders and give the Treasury and bidders a chance to share information…. The 3rd step may be to call for best and final offers,” known as BAFOs. Okay said at the least the GAO will demand another BAFO round. “I've heard anecdotally that a point of contention from some of the participants was the fact that they didn’t hold discussions,” he said. “On a project of this scope and dollar magnitude it’s unusual not to hold discussion.”
Suss said the Treasury Dept. contract was especially significant as the telecom industry reshapes itself. “It attracted both integrators and carriers to the competition,” he said. “We're seeing a clash of the titans where the integrators and carriers are going head to head…. Will the integrators be the ones to put the solutions together or will the carriers put the solutions together and leave the integrators out in the cold?”
AT&T said it would defend the contract. “We're disappointed in the GAO’s decision but we fully intend to compete vigorously to retain this award as the Treasury Dept. amends it and collects additional information from bidders,” said Lou Addeo, pres. of AT&T Govt. Solutions. “We strongly believe we submitted far and away a superior solution to Treasury’s networking needs and we look forward to making our case again to Treasury.”
“Our faith in the fairness of the federal procurement process is affirmed by this decision,” Level 3 said. “Level 3 looks forward to the opportunity to present our solution to Treasury, and we remain confident that Level 3 provides the best value to the government-through our combination of quality managed services at competitive prices.” Qwest said it was “proud of its record of performance that has resulted in cost savings for Treasury under the current contract.” Qwest added: “We look forward to continuing to work with the agency to evolve their communications infrastructure.”