GSA, DoD to take corrective action on protested DEOS contract

The Defense Department and the General Services Administration have decided to withdraw their multibillion dollar contract award to build a suite of cloud-based office and productivity tools for DoD users.

The Defense Office Enterprise Solutions (DEOS) contract had been the subject of two separate bid protests by Perspecta, a losing contender in the competition. The company had claimed GSA and DoD evaluated bids improperly when they decided in August to award the 10-year blanket purchase agreement to General Dynamics Information Technology.

But according to multiple sources familiar with the protest litigation, GSA notified the Government Accountability Office late last week that it intends to take “corrective action” in response to the protest, and asked GAO to dismiss the protest so it could do so. The agencies’ decision to revise the contract was first reported by Nextgov.

It remained unclear on Monday what specific corrective actions the government planned to take. A spokeswoman for the Defense Department referred questions to GSA. A GSA spokeswoman said the agency could not comment because DEOS is still the subject of active litigation.

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But the actions could be substantial. One source said GSA plans to revise the contract’s requirements, investigate alleged organizational conflicts of interest, revise the DEOS solicitation, and then ask bidders to submit entirely new proposals.

After several years of planning, DoD awarded the contract to GDIT via GSA’s IT Schedule 70 on Aug. 29. The Pentagon intends for DEOS to be a department-wide implementation of Microsoft’s Office 365, and wants to use the software-as-a-service offering to replace its legacy email, collaboration and other productivity applications.

GSA initially estimated the cost of the 10-year BPA at $7.6 billion. But protest documents submitted to GAO claimed the actual potential value was $12.6 billion. The exact reasons for the discrepancy remain unclear, and it is not clear whether that discrepancy is part of what caused GSA and DoD to change course. But a person familiar with the contract’s structure said the $12.6 billion figure represented the combination of several different pricing scenarios that would not occur in reality.

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