In the most recent chapter of a long running battle to resolve a contested contract, PAE’s joint venture, DZSP 21, is going to federal court to resolve a base support services award in Guam that it ultimately lost to Fluor [FLR].
The companies have a dispute over base operations support services worth over $490 million at Joint Region Marianas, Guam. Fluor protested a Navy decision to award the contract to DZSP three separate times and after the final protest the service awarded the contract to Fluor.
On Jan. 17, DZSP moved its protest of this decision to the U.S. Court of Federal Claims, PAE said in a statement.
PAE is the majority partner in the DZSP joint venture, which was created in 2005 to provide the services in Guam.
PAE said the case raises “significant questions about the role of protests in the procurement process,” since the Navy awarded the contract to Fluor after multiple protests.
“We are disappointed that the Government Accountability Office denied DZSP 21’s protest. We hope to continue our long record of providing outstanding service to the military on Guam, particularly in these tenuous geopolitical times,” the company said in a statement.
DZSP is the incumbent on the contract.
PAE said that in the wake of this almost five-year procurement history “and the significant operational and strategic developments of the past several years, the existing solicitation may not meet current needs.”
Initially the Government Accountability Office (GAO) sustained a protest by Fluor when DZSP won the contract, based on the Navy’s evaluations of proposals and conduct of discussions connected to the acquisition. The office recommended the Navy reopen discussions with offers and eventually make a new source selection decision.
The Navy implemented GAO’s recommendations and selected DZSP a second time for the contract. Fluor then filed a second protest.
The GAO eventually advised the parties the Navy overlooked features in DZSP’s cost in balancing its exempt employee compensation costs and would likely sustain the second protest.
A GAO report said the Navy advised the office it intended to take corrective action to address the concerns, so the second protest was dismissed “as academic.”
Next, the Navy started limited discussions with both companies and solicited, obtained, and evaluated revised proposals yet again. Then the Navy chose DZSP for the third time and Fluor protested again.
Last week, the GAO sustained the protest in Fluor’s favor.
The conflict went back and forth over whether DZSP accurately estimated its costs as being up to $7 million lower than Fluor. Before the last protest, the Navy awarded the contract to DZSP because it’s bid cost about $2.6 million less than Fluor, even while the latter was technically superior.
The Navy is awarding this contract based on both cost and non-cost bases, with Fluor being rated outstanding on the technical approach factor while DZSP was rated good. On other non-cost factors the companies both received the highest ratings.
In the last protest, the GAO found the Navy evaluated the offerors disparately under a staffing and resources factor. The office found the Navy criticized Fluor’s proposed approach as potentially involving a risk of not being able to recruit the incumbent workforce but did not consider if a similar risk was associated with DZSP.