IG flags flaws in railroad agency e-mail award

IG flags flaws in railroad agency e-mail award


The Federal Railroad Administration inappropriately awarded a three-year, $760,000 schedule contract to replace its e-mail system, the Transportation Department inspector general has concluded.

The administration used flawed selection criteria to award the contract to USinternetworking Inc. of Annapolis, Md., and did not determine whether the company was financially qualified to perform the work, the IG said in a May report, E-Mail System Replacement Contracts.

Last year, the railroad agency decided to replace its Novell GroupWise e-mail system with Microsoft Exchange. In September, it awarded two contracts: one for conversion work and a second for support services.

The agency awarded USi the contract to support the new messaging system and a $120,000 contract to Intellisys Technology Corp., now known as PlanetGov, of Chantilly, Va., for the migration phase. The agency plans to complete the transition by July.

One criterion that the agency used in selecting a vendor to handle the support work was whether the would-be contractor categorized itself as an application service provider. Before selecting USi, the agency confirmed with the General Services Administration that USi was the only company among schedule vendors that identified itself as an ASP, according to the IG's report.

The agency then concluded that no additional search or competition was needed, the IG said.

But the IG found other Information Technology Schedule contractors that provide e-mail services, even though they did not identify themselves as ASPs. Consequently, the agency failed to open the contract to fair competition when there were other vendors capable of providing the services, the IG said.

The use of the ASP criterion to justify the contract was flawed and inappropriately excluded other vendors from consideration, the IG said. The DOT auditors said the problem arose because FRA's procurement officials did not understand the technical service requirements.

The IG also questioned the agency's failure to check out the company's performance. USi stock was posted at $70 in March of last year but had dropped to $10 at the time of the award in September. By May 1, USi stock had hit $1.69.

The report also noted that the railroad agency failed to check with other agencies that had used USi's services. For instance, the agency was not aware that the Federal Aviation Administration was using USi.

'As the report relates to intergovernmental matters, we will not comment on it,' said Chris Walker, the company's director of corporate communications. He described USi as the world's largest ASP and said its viability is a nonissue that would not affect the company's ability to carry out the contract.

The IG recommended that the agency consider terminating the contract with USi. If that is not possible, then it should solicit new bids after the contract's one-year base period.

The agency also should work with Transportation's chief information officer to identify training that would improve the procurement staff's basic IT knowledge, the IG suggested.

Check out bidders

Additionally, the IG said the agency must remember to better check out the performance and financial viability of prospective contractors.

In a written response, FRA said it would not terminate the contract but would renew competition for the services at the end of its base year. The agency said it was entitled to order services from any vendor on the schedule.

The railroad agency also balked at the training recommendation for its contracting staff: 'Such technical expertise is the responsibility of IT professionals. We do acknowledge that procurement and program personnel should work more closely together.'


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