When the Defense Information Systems Agency sought a new satellite services acquisition on behalf of the Navy, it included a spreadsheet so bidders could fill in their prices. But the spreadsheet included the prices from the current contract, which were supposed to be inaccessible. For how things turned out, Smith Pachter McWhorter procurement attorney Joe Petrillo joined Federal Drive with Tom Temin.
Insight by ProPricer: During this webinar James Woolsey, the president of the Defense Acquisition University, Frank Kelley, the vice president of the Defense Acquisition University and Michelle Currier, the professor of contract management at the Defense Acquisition University, will discuss the future of DoD contracting, pricing and acquisition. In addition, Michael Weaver, the professor of contract management at ProPricer will provide an industry perspective.
Tom Temin: Joe, tell us about this crazy case.
Joe Petrillo: Sure. This is another excel spreadsheet disaster, and we talked about one a few weeks ago. It involved an acquisition of satellite telecom services for the Navy’s Military Sealift Command. It was an acquisition of commercial satellite telecommunications services. And they were divided into both bandwidth and non-bandwidth services. And the contract would be able to run to for up to 10 years in duration. Part of the contract, as you said, was an excel spreadsheet of the various different line items with blanks for offers to include their price. Unfortunately, this spreadsheet had hidden tabs, 19 hidden tabs, and those included, among other things, historical pricing information from the current contract. So Inmarsat, which was the incumbent contractor, holding that contract, notified the government and said, look you’ve disclosed our pricing information, do something about it. So the government deleted the offending spreadsheet from the SAM.gov website. But they understood and this was the case, third party aggregators had already downloaded it, and it was out there, it was available.
Tom Temin: Is pricing on a current contract public information in the first place?
Joe Petrillo: Unit pricing usually is not. There’s a series of cases that indicates that unit pricing can be protected from release under the Freedom of Information Act. There’s complications to that. And things have changed a bit with a new Supreme Court case. But there’s a body of case law out there that supports keeping unit pricing confidential. This particular spreadsheet, however, was out there, and the government looked at what had happened – they did a couple of things. They changed the CLIN structure somewhat So it wasn’t exactly the same as the existing contract. They added a certification saying that bidders would have to say that they hadn’t relied on or use that information in proposal preparation, because of its quote, unreliability, unquote. In the whole, they thought it wasn’t all that important. So Inmarsat felt that that wasn’t enough, and they protested the matter to GAO. And GAO ultimately upheld the protest. GAO relied on its prior case law, saying it was improper to disclose proprietary information during acquisition. And they referenced also regulations on organizational conflict of interest which overlapped in this area.
Tom Temin: And as the incumbent, Inmarsat was also a bidder for the follow on then also – correct?
Joe Petrillo: Yes, clearly, clearly a bidder from the following. There was a presumption that that release would be harmful. But, you can rebut the presumption if the information was stale, or adequate measures were taken care over the release.
Tom Temin: Because these prices do change over time. I mean, like telecom services, often there’s a downward trend in price over time. So year old or two year old prices may or may not be helpful in bidding for what’s ahead.
Joe Petrillo: Well, that interestingly was a factor in this case. As I mentioned, they’re both non-bandwidth and bandwidth pricing. And with regard to bandwidth pricing, GAO denied the protest and held that the release of the information was not prejudicial. First of all, because there was a showing that prices in that sector varied a lot, there was a lot of volatility. And secondly, because the pricing that was released was partial and fairly old, so there was no harm done there. But the situation was different for non-bandwidth pricing. There, GAO found that those prices were likely to be a key basis for differentiating between proposals. It was unimpressed with the changes made to the solicitation, which was reorganizing CLINs, but the same items were there, they were just put together differently. And they felt that the certification was inadequate, in part because it was directed at the issue of unreliability rather than understanding who had what information and what was done with it.
Tom Temin: We’re speaking with Joseph Petrillo, he’s a procurement attorney with Smith Pachter McWhorter. Yeah, that term unreliable is kind of vague, I guess, on the government’s part, when everyone saw what the prices were for the incumbent, that’s pretty cut and dried. So the protest was upheld – what happened next?
Joe Petrillo: Well, what happens is the government has to go back and revise the solicitation to find a better way to mitigate the harm caused by the inadvertent release. This case is different from the one we’ve described a few weeks ago, called Tetra Tech. That was an interesting case, but it involved a much more limited release. Simply the profit margin for one of the option years and the incumbent contract. And secondly, the case, simply discussed whether or not that information was covered by the Procurement Integrity Act. This one discussed matters in a much broader legal context.
Tom Temin: Yeah, so that means that if someone receives information about a competing bid as a company, then you kind of have a couple of choices. Either just throw it out, send it back stamped, we receive this but did not look at it and certify it with the CEO or something. But in this case, the government sent out the information. And once you’ve seen it, you can’t unsee it basically.
Joe Petrillo: Right. The decision does relate the tale of what happened in this particular case, where one of the offerors noticed that it had improper information. And they segregated it and made sure it was not further disseminated. They determined who had seen it, there were two people. And they, on their own, said that they were going to keep those two people from further participation in the procurement, which they felt kind of bitter about because there were key staff and they wanted to use them and proposal for it.
Tom Temin: But that’s the ethical way to do it as a company.
Joe Petrillo: Right. They stepped up and did it the right way. And I think it didn’t look good that the government hadn’t done as much as one of the other offerors.
Tom Temin: All right. And the other question is, what kind of operational controls are in place at DISA, in this case, that they would send a spreadsheet out full of pricing information?
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Joe Petrillo: Well, that’s something they’re going to have to look at as well, I’m sure.
Tom Temin: Because there’s many stories of controls and locks put on PDFs and so forth that are easily undone in the early days of these types of technologies, where the government tried to redact, but the redaction was easily undone by the recipient. In this case, why include it at all even if it is locked files, because anyone can unlock anything if you’re so inclined in a spreadsheet.
Joe Petrillo: As technology advances, we’re always learning, always learning.
Tom Temin: Joseph Petrillo is a procurement attorney with Smith Pachhter McWhorter. Thanks so much.
Joe Petrillo: Thank you, Tom.