Not Worth the Risk

When news first spread about the cost comparison study at Offutt Air Force Base, large defense contractors started to sharpen their pencils. With nearly 1,500 jobs, and a five-year contract with three one-year options up for grabs, who could resist? The contract was valued at more than $330 million.

Firms ranging from Boeing Services Co. to Raytheon showed considerable interest at first. After Cindy Beyer, a contracting specialist at Offutt, posted a draft version of the performance requirements document on a public Web site, she received more than 1,200 questions and comments from interested parties. An industry seminar at the base attracted a number of potential bidders, as did a pre-proposal conference, according to Beyer.

"It was a mixed bag of infrastructure, base maintenance, and aircraft repairs," says John Delane, president of Del-Jen Inc., a subsidiary of Fluor Enterprises Inc., and a base operations contractor. "That's a nice mixture of jobs to have."

But as firms took a closer look at the requirements document, interest waned, Delane says, adding that his firm decided it could not go after the contract. Why not? "It was a bad procurement," argues Stan Soloway, president of the Professional Services Council, an Arlington, Va.-based contractors association. "What bothers me is not that the in-house team won-that is going to happen. But I don't think the requirement was well designed."

Industry sources say the base's requirements document was weighted toward keeping the jobs in-house. Two things in particular raised red flags: lumping aircraft maintenance with overall base operations and demanding that 40 percent of the work be subcontracted to a small business. The industry average is somewhere between 20 percent and 30 percent, says Delane.

"Since infrastructure was the bulk of the work, about 60 percent of the contract, the part you would naturally want to peel off to subcontract, is the aircraft repairs," Delane explains. "But there are not many credible small businesses that can do aircraft maintenance, so partnering up with someone was too difficult."

When it came time for contractors to participate in the first phase of the competition, to see who would go up against the in-house team, only DynCorp stepped forward. DynCorp officials declined to comment for this story.

Beyer counters the argument that competition was slanted toward the in-house team. She says companies could have formed partnerships or teamed up with a small business. The 40 percent subcontracting goal was based on an analysis of Offutt's current contracts with small businesses. Officials from the Small Business Administration helped craft the requirement to assure that it was attainable, Beyer says. She shared those analyses with interested parties during the industry conference.

Offutt officials point to the fact that DynCorp did not protest or appeal the decision on the competition as a sign that it was well crafted and run. That might be so, says Soloway. But it also might be that DynCorp didn't see a big enough return on investment to spend the extra time and money challenging the contract. The competition already had taken 42 months to complete.

"So often, there is a series of process fouls or mistakes," Soloway says. "If you can't find a legal basis for those mistakes, it usually isn't worth the effort to appeal."