Employee-industry partnership wins A-76

The award of a $900 million IT services contract to a partnership of Energy Department employees and private companies has stirred controversy because of the lack of bidders from the private sector.

The seven-year contract award resulted from a Circular A-76 study, which typically pits an employee organization in competition with the private sector.

In this case, the federal employees formed a 'most efficient operation' team and lined up a number of small businesses as partners to receive prime contracts, including 1 Source Consulting Inc. of Seabrook, Md., and RS Information Systems Inc. of McLean, Va.

The contract covers IT support services at 26 department sites across the country.

Stan Soloway, president of the Professional Services Council, is among those criticizing the handling of the contract.

'This ... study generated zero competition,' Soloway said. 'They've got good companies that do good work, who did the right business thing to join the MEO team, given the circumstances. But we don't know that anything has been optimized, because DOE has deprived itself of any of the benefits of real competition. And we knew this a year ago.'

Soloway said the award didn't reflect competition. 'This is a consolidation with existing contractors.'

An Energy Department IT official, who asked that his name not be used because the department has not made a public announcement about the contract, said Energy officials tried to get companies to bid on the opportunity.

'We had an open competition. We held two industry days. We sent 99 vendors the [performance work statement], and when it was done we sent surveys out asking, 'Why didn't you bid?' ' the official said. 'Thirty-three people responded. They said it was too much risk; they made a business decision.'

As for the complaint that this was more a contract consolidation vehicle than a true A-76 study, the official acknowledged that there are some incumbent contractors on the MEO team. But he defended the department's decision to conduct an A-76 study rather than a more customary request-for-proposal process.

'If we have to do it, what's the best way to do it?' he asked. 'Is it like every other Dick-and-Jane A-76? No, ... it looked at services performed across the department, [and] we had people who thought outside the box.'

By putting together a partnership with several small businesses'that have relationships with large integrators as their subcontractors'the MEO team will be better equipped to support the department's far-flung operations, he said. If IT services are needed in the state of Washington, for instance, the team will work with a small local firm to provide them.

According to the official, 94 percent of DOE's workforce already is provided by contractors. This contract affects 172 federal employees and more than 1,100 contract employees.

'We're going to have a 40 percent reduction' in the overall IT workforce, the Energy official said. 'We expect to save over $300 million over the seven years.'

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