The Navy has taken steps to level the playing field in the competition for the successor program to the Navy Marine Corps Intranet (NMCI), but incumbent bidder Hewlett-Packard [HPQ] will still be at an advantage to win the lucrative contracts, the program manager said Friday.
Capt. Shawn Hendricks said the draft request for proposals (RFP) utilizes the lowest-price technically-acceptable (LPTA) acquisition strategy, which calls for the award to be given to the lowest-cost bidder that meets the minimum technical requirements. He said that gives more opportunities for potential HP challengers to show greater innovation that can lower costs over the five-year contracts for the Next Generation Enterprise Network (NGEN).
“Our goal has been to make it as fair as possible,” Hendricks said. “One of the things that does that is lowest-price technically-acceptable.”
But HP’s experience on NMCI translates into an advantage in competing for NGEN because of the company’s superior knowledge, and employee familiarity with the system and processes, Hendricks told reporters on the sidelines of industry day to answer questions from potential bidding companies.
“We will not level everything. The incumbent will have an advantage,” he told the industry gathering. “That is recognized.”
Hendricks said going too far to even the competition could put the government at a disadvantage in obtaining the best possible system at the best cost.
“I want the right product for the right price,” he said.
NGEN is intended to provide secure, net-centric data and services to the Navy and Marine Corps personnel. It’s the follow-on to the network originally consolidated in 2000 under NMCI, which is the largest U.S. government information technology program. It represents about 70 percent of all Navy information technology operations and serves more than 700,000 users and 384,000 workstations and laptop computers. NGEN will be about the same size, Hendricks said.
HP acquired the NMCI program when it bought Electronic Data Systems in 2008. EDS had won the contract eight years earlier. Harris Corp. [HRS], which has been a subcontractor on NMCI, is the only company so far to announce it will compete as a prime contractor.
The total value of the contracts over the five-year period is expected to be $10 billion if all four options are exercised annually, Hendricks said. The Navy is competing two separate contracts under the program, one for enterprise services and the other for transport services, but it’s possible one bidding team can win both.
The Navy Space and Warfare Systems Command (SPAWAR), which is the acquisition and contracting authority for NGEN, is slated to release its final RFP on Dec. 21 and announce a winner by the end of 2012. The Navy wants to complete the transition to NGEN no later than the end of April 2014. “We can’t miss it,” Hendricks said.
HP has previously expressed concerns about the LPTA acquisition model, saying it leaves little flexibility to account for the need to insert new technology into the NGEN over time, counter emerging or unforeseen cyber threats, and adapt to changing environments, which could lead to added costs in future years (Defense Daily, Oct. 6 2011).
HP believes the award should instead be guided by the best value source selection option, which allows the Navy and Marine Corps to trade off between cost and technical capability.
Hendricks said that option is unnecessary because the Navy already has a firm hand on the requirements and does not need additional capabilities that are not clearly defined or priced.
“How do I price something that I don’t know what it is and what it’s worth? LPTA is used when the requirement is fairly well known,” he said, acknowledging there is a risk to both acquisition models.
“You can find examples where neither of them worked great or both of them worked fantastic. There’s no one size fits all,” he added. “We believe that in this commercial environment … that it makes the most sense and it levels the playing field the most. That’s generally the feedback that we’ve gotten.”