The competition for the Air Force’s next-generation air-refueling tanker contract is one of the most lucrative procurements the service has ever conducted. Despite the high-profile and extensive precautions, a contracting officer still managed to mistakenly provide bidders The Boeing Co. and European Aeronautic Defence & Space Co. NV (EADS) with selected information about each other’s proposals during the typical technical exchanges between the Air Force and bidders.
Many people say what’s the big deal? Why not give competitors access to each other’s bidding information?
Well, here’s why: While some might think sharing this information will level the playing field, in reality it puts the government and all bidders in a worse position.
It is a basic tenet of the federal acquisition process that bidders must submit independent proposals and the government must evaluate each proposal only against the criteria in its solicitation. Another core principle of the acquisition system is maintaining the fairness of the process for all parties.
Companies invest significant time and money developing proprietary products and services and training their employees to sell them to the government. There are also significant costs and risks incurred simply by trying to enter the government market.
Thus, companies carefully protect these investments in the bidding process, often through elaborate steps such as isolated “war rooms” and restricted access to technical designs and pricing algorithms.
In government procurements, particularly for services or solutions, the system encourages bidders to bring their most innovative solutions and the best competitive pricing to the bid. But why invest in an innovative solution if your top competitors get a peek under the tent at your offering?
There are also long-standing statutory and regulatory requirements designed to prevent collusion to rig prices or markets, and bidders must certify they independently arrived at their bids. In numerous successful bid protests, the Government Accountability Office found that bids were not submitted independently, and dozens of criminal convictions have resulted from bidders sharing key information, particularly prices.
In addition, under a decades-old procurement integrity law, it is illegal for a contractor to improperly obtain government source selection information or another company’s proprietary information during the conduct of a federal procurement.
That same procurement integrity law prohibits government officials from improperly releasing government source selection information or any bidder’s proprietary information during the conduct of that procurement to prevent bidders from gaining an unfair competitive advantage or being put at a competitive disadvantage.
Furthermore, during the government’s evaluation of offers, if the contracting officer has any reason to believe the bids were not independently developed, the officer must refer those facts to the Justice Department or the agency’s inspector general.
In addition, after the agency’s initial award determination, each bidder is entitled to a debriefing to better understand the government’s evaluation and award decision and, under certain circumstances, may challenge those agency decisions.
Sharing bidders’ information would put this competition-preserving, innovation-fueling independence and fairness at risk.
Some companies might choose not to compete because they fear their trade secrets would be shared and their technological edge stolen. Others might simply not offer their best solutions for similar reasons. And the government could find itself the victim of bid rigging due to the release of otherwise protected data.
None of those outcomes benefits the government or the interested bidders. There is also damage to the sense of confidence that the federal bidding process is fair to all.
Providing untimely access to the bid information of competitors during a federal procurement is an idea whose time should never come.
— by Alan Chvotkin – Jan. 28, 2011 – Washington Business Journal