Peraton is suing the government over a $655 million, six-year contract to support the Air Force’s satellite ground systems.
The legal action comes on the heels of a June 11 Government Accountability Office decision that the massive contract had been awarded improperly to Engility Corporation in January, a decision that came about because of a protest Peraton had filed in March. With the Engility contract now set to end June 20—more than five years earlier than the Air Force expected—and the contract with current service provider Lockheed Martin due to expire July 5, the Air Force was in a bind. Service leaders claimed that Engility was the only company capable of continuing the work past that July 5 deadline, and on June 21 Air Force leaders awarded the company a potentially $40 million bridge contract that could last up to a year.
On June 26, Peraton filed a claim in federal claims court.
The company is asking the court to intervene, putting a stop to the bridge contract and then forcing the Air Force to either award the original contract to one of the existing proposals, under which Engility would be ineligible, or fully reopening the competition to revised proposals.
When asked for comment, a Peraton spokesman pointed to its recent court filings. Engility, which was acquired by Science Applications International Corp. in January, did not return a request for comment.
The current dilemma can be traced back to the Air Force’s original request for submissions in May 2018. The service wanted a contractor who could provide engineering, development, integration and sustainment services in support of its satellite ground systems and begin the transition from the current ground systems to enterprise ground systems. The contract is part of the Air Force’s efforts to move its satellite ground systems to a common architecture.
After reviewing proposals last summer, the Air Force narrowed the competition to Engility, Peraton and a third competitor the GAO declined to name.
While Peraton’s bid was lower than Engility’s, with a proposed price of $57 million compared to Engility’s $80 million, the Air Force ultimately determined that Engility’s proposal demonstrated “clear technical advantages” that outweighed the lower prices. The six-year, $655 million contract was awarded to Engility Jan. 31. According to a court document, the Air Force directed Engility to begin work Feb. 6.
After a debriefing with the Air Force, Peraton filed a protest with the GAO in March, challenging the Air Force’s evaluation of the proposals. Then in April, the company filed a supplemental claim Engility had failed to meet the small business requirements of the contract.
The original request included a requirement that a minimum 25 percent of its subcontracting on the project go to small businesses. While Engility stated in their submission that 27 percent of their subcontracting would go to small businesses, Peraton argued that the company had incorrectly calculated the percentage and the correct figure was actually 23.8 percent.
Despite the protest, the Air Force moved forward with the Engility contract, claiming that the need for the services was too urgent to wait for the protest process to play out. In its court filing, Peraton claims that the Air Force said in its justification for that action that Engility would only work on transition efforts, not on taking over the efforts handled by Lockheed Martin.
In a document supporting the bridge contract in June, the Air Force claims that the GAO protest has already put some projects behind schedule. The Air Force claims that the ground system for two Test & Evaluation Technologies for Ranges, Armaments & Spectrum program missions are behind schedule due to the protest, and any further delay risks that start of successful operation in 2020. Likewise, the ground system for the Long Duration ESPA missions is behind schedule. The bridge contract specifically allows work to continue on those projects to avoid delays.
The GAO ultimately agreed with Peraton that Engility was in fact ineligible for funding under the small business requirement and sustained the protest bid June 11. The GAO recommended that the Air Force either terminate its contract with Engility and award the contract to whichever of the other competitors had the best proposal, or alter its original request and seek revised proposals.
The Air Force faced a dilemma.
Its current contract was set to expire July 5 and the follow-on $655 million contract with Engility was now set to end June 20. On June 21, the Air Force awarded the sole source $40 million bridge contract to Engility to continue providing the services while it works to correct the issues raised in the GAO report. According to the Air Force document supporting the bridge contract, Engility’s work over the past three months made them the only company capable of providing the necessary services in such a short time frame. But in documents filed with the court by Peraton, the company argued that the Air Force should have worked to ensure the current contractor, Lockheed Martin, would be able to continue providing services under a contract extension until the GAO had made its decision and a new contract was firmly in place. The Air Force had done so previously, awarding a $47 million bridge contract to Lockheed Martin to continue services through January 2019, and then awarded a further $52 million extension to continue services through July 5, 2019.
In its lawsuit, Peraton claims that the Air Force’s actions are not in the spirit of the GAO decision and are designed not to reopen competition for the original contract, but to simply continue on with Engility after a few tweaks to their small business participation portion of the contract. Furthermore, they claim the bridge contract is “irrational, arbitrary and capricious, and not supported by law.”
A hearing on the case has yet to be scheduled.
Nathan Strout is the staff editor at C4ISRNET where he covers the intelligence community.