Cancellation of Alliant 2 Small Business caps a rough few months for small firms

This story has been updated to include a comment from GSA about 8(a) STARS II.

It was a rough last few months for small businesses wanting to contract with the federal government.

Between the 8(a) STARS II ceiling challenges and the ongoing protests of the Second Generation IT Services (2GIT), and now the cancellation of the Alliant 2 Small Business contract, the General Services Administration is facing an unusual amount of contracting setbacks.

Late on Thursday, just before the three-day weekend, GSA announced it would cancel the Alliant 2 Small Business program that has been in the works for almost four years.

This decision comes after GSA made two sets of awards in 2017 and 2018 before facing protests and taking corrective action twice.

But if that was their only challenge, it would’ve been enough.

Now we learn that the 2GIT program, another large multiple award IT products contract which some estimate to be worth $5.5 billion, is taking corrective action after two sets of protests. Industry sources say GSA is revamping the entire self-scoring approach that decides if vendors are qualified.

If that was their only challenge, it would’ve been enough. But wait, there’s more.

We also are learning that GSA and the Small Business Administration slipped one over agency customers and small businesses when they increased the 8(a) STARS II ceiling by $7 billion to $22 billion. GSA alerted vendors two days after that announcement that the ordering period for any task orders awarded after July 1 would only be until June 30, 2022 — more than two full years shorter than originally set in the governmentwide acquisition contract when the agency established it in 2011.

Taken altogether, while it’s never easy to be a small business government contractor, the last few months has to make you question your life decisions even more.

The amount of time, money and resources wasted across all three of these contracting efforts isn’t just frustrating, it’s why federal procurement gets such a bad rap.

Three-year saga ends sadly

Let’s start with Alliant 2 Small Business. The first contract, which expired in August 2019, was successful to the tune of more than $8.4 billion obligated over 10 years, according to Bloomberg Government.

Alliant 2 Small Business was on track to follow suit. Almost 500 vendors submitted bids and GSA made awards to 61 companies in December 2017 and faced protests. It pulled back the awards, took corrective action and re-awarded 81 companies a spot on the GWAC in February 2018.

Read more: Contracting News

It faced protests again only to rescind all 81 awards in March 2019. Then in August 2019, GSA took corrective action again and reopened competition only for those vendors who initially bid, causing another set of protests.

GSA hasn’t moved on Alliant 2 Small Business since August, leaving vendors in limbo and frustrated over delays and missed opportunities.

Now GSA plans to cancel the entire contract and basically start over.

“Plans are underway for a new and enhanced small business GWAC program that better reflects the changing landscape and addresses the needs of agencies to access the expertise of small businesses. The changes will support recent developments in cybersecurity, emerging technologies, and supply chain risk management,” GSA said in a release. “Following additional market research with customer agencies and small business stakeholders, the future GWAC program strategy will include new solicitations aimed to develop pools of qualified small businesses including those from multiple socioeconomic categories such as women-owned, HUBzone, service-disabled veteran-owned, and 8(a) small businesses.”

Laura Stanton, GSA’s acting assistant commissioner in the Office of Information Technology Category in the Federal Acquisition Service, said in the release that the goal of the new strategy is to maximize opportunities for all small businesses.

“We are working to expand the number of master contract awards to highly qualified small businesses on our GWACs, while focusing on technology requirements that support our customer agencies for future mission success,” she said.

The problem, of course, is awards are at least a year or more away. And then the question becomes, will GSA learn any lessons from the Alliant 2 Small Business debacle and let the competition happen at the task order level instead of the contract level?

Limiting STARS III period of performance

Part of that GWAC program strategy that GSA is referring to is 8(a) STARS III.

GSA released that solicitation on July 6 and expects to make awards in spring 2021. And with expected protests, that GWAC may not be in place for another year or more.

In the meantime, 8(a) STARS II received some good news with a $7 billion increase in the contract ceiling to $22 billion. But then industry sources say the additional room came with a price — two fewer years on the contract.

Read more: Reporter’s Notebook

GSA wrote in the ordering guide, which Federal News Network obtained, published at the end of June “in order to increase the STARS II ceiling to $22B, GSA and SBA agreed to a limited task order period of performance effective July 1, 2020.”

This means any award period of performance made through 8(a) STARS II after July 1 can’t extend beyond June 30, 2022. Meanwhile, the period of performance for any award made before July 1 can extend to the end of the contract, Aug. 30, 2024.

One industry source, who requested anonymity in order to talk about the contract and not jeopardize their future work, said GSA gave vendors the contract modification on June 26 and asked for it back by June 30.

The source said agency customers didn’t know about the change in period of performance until it was way too late to award before July 1 and now is causing major changes and delays.

“We’ve seen the Defense Department pull a $40 million solicitation that was already in review because they couldn’t put it on a smaller period of performance. Now they are taking it out of the 8(a) program and put it on another vehicle,” the source said. “Another customer asked us to reprice our bid because it was originally a five-year contract and now it can only be 18 months. It’s costing us $25 million. It will be a challenge for agencies to keep periods of performance to just 18 months so I think they will end up pulling a lot of contracts out of the 8(a) program and put it somewhere else to get that longer period of performance.”

A GSA spokesperson said although the period of performance has been limited for new awards, this ceiling increase provides continued opportunities for small businesses until the 8(a) STARS III GWAC is awarded in 2021.

As a strong advocate for small business and the 8(a) Program, GSA instituted a two-year POP to minimize potential overlap with 8(a) STARS III and maximize opportunities for 8(a) program participants. Two years has been the average duration of a task order award on 8(a) STARS II,” the spokesperson said. “It should be noted that 538 of the 787 firms on STARS II have graduated from the 8(a) program, yet remain eligible to receive directed orders (sole-source awards) under $4 million on STARS II until August 30, 2021. The STARS II ceiling increase and POP are intended to provide those graduated companies with opportunities and assistance as they transition out of the 8(a) program and make room for the next generation of 8(a) businesses on STARS III. While we realize this might not be a total solution for all customers and vendors, this ceiling increase will help agencies address their immediate requirements while at the same time assisting small businesses in recovering from the economic effects of the COVID-19 national emergency.”

Redo on 2GIT

With the saga of 8(a) STARS II and Alliant 2 Small Business far from complete, GSA looks to be heading down a similar path with the 2GIT program.

While not exclusively for small businesses, 2GIT is facing a similar award, protest and take corrective action cycle that Alliant 2 Small Business couldn’t escape.

Since GSA began the program in 2017, it has faced 14 protests. While the agency came out ahead on the pre-award protest, it has struggled with the post award challenges.

Read more: GSA News

GSA awarded 75 vendors, 54 of which were small firms, a spot on 2GIT in November, only to face a bevy of protests. The agency took corrective action only to face more protests.

The Government Accountability Office dismissed the latest set of protests on June 15 when GSA told them it would take corrective action by amending the solicitation to allow for revised quotations, reevaluating, and making a new award determination.

Rick Vogel, the federal government sales manager for Coast-to-Coast Computer Products in Simi Valley, California, confirmed GSA reached out to bidders and asked for comments on the draft amendment by July 7.

He said GSA has rewritten the award methodology and criteria, blending the self-scoring system to include the “go, no-go” approach with one that includes price factors.

“The question in my mind now that they have changed it is whether they are opening 2GIT up to every interested party or just existing bidders?” said Vogel, who considers Coast-to-Coast an interested party and a possible bidder as a teaming partner.

While the new timeline for 2GIT is still to be determined, it’s clear this contract, too, is six-to-nine months from completion and likely will face protests unless GSA goes with the “all bidder in” approach.

What all three of these contract messes continue to show — and a lesson few if any agencies have or want to learn — is while large multiple award contracts may be full of convenience and potentially cost savings, they also are burdened by contractors more than ever believing in the “win at all costs” mantra. The question that continues to arise, and one no one in government wants to answer, after 25 years of GWACs and multiple award contracts, it is time to reimagine this approach and figure out how to break the award-protest-award-protest cycle?

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