The U.S. Government Accountability Office (GAO) says New Mexico-based Strategic Management Solutions Inc. (SMSI) failed to provide hard evidence Enterprise Technical Assistance Services (E-TAS) should not have won a $137 million technical services contract for Energy Department’s Portsmouth/Paducah Project Office due to a conflict of interest.
It is not enough to infer that Oak Ridge, Tenn.-based E-TAS has an organizational conflict of interest, the GAO said in its order on SMSI’s bid protest. While denial of the protest was announced Dec. 17, the 19-page ruling was not available until Dec. 30.
The Energy Department awarded the contract to the Pro2Serve subsidiary on Aug. 22. Strategic Management Solutions received a debriefing from the agency on Sept. 5, and filed this protest on Sept. 9.
It marked the second time in two years the Pro2Serve unit was named winner of the Portsmouth/Paducah business, which was then subject an SMSI bid protest. Enterprise Technical Assistance Services originally won the business on June 29, 2018. But DOE withdrew the award a couple months later after the rival’s protest filed with the Government Accountability Office.
This time around a selection panel for DOE found E-TAS, a Pro2Serve subsidiary, had both the lowest price at slightly less than $137 million and no other bidder had a superior package in terms of issues like technical support, key personnel, and experience. While SMSI rated equally well in those areas its offer was nearly $143 million, GAO said.
Given the quality of E-TAS and SMSI proposals were “substantially equal” and the former was much cheaper, the selection committee decided it provided better value for the government, GAO said in the order drafted by its general counsel Thomas Armstrong.
The GAO was also unconvinced by SMSI’s argument the E-TAS price estimate was based on unusually low labor rates, which could potentially jeopardize the quality of work. The GAO said the Energy Department was not required to do a price realism analysis for the contract.
The new contract from the DOE Office of Environmental Management will combine different agreements for technical and administration support services at the Portsmouth Site in Ohio, the Paducah Site in Kentucky, along with a third one for depleted uranium hexafluoride conversion (DUF6) operations at the two former gaseous diffusion plants along with the PPPO headquarters office in Lexington, Ky.
The business is now split between E-TAS parent Pro2Serve at Paducah; Oak Ridge-based RSI EnTech at Portsmouth; and SMSI for the Lexington, Ky., technical services and oversight contract, which includes the DUF6 operations.
Strategic Management claims E-TAS had a conflict because E-TAS parent Pro2Serve has a $36 million subcontract to support Fluor-BWXT Portsmouth with deactivation and decommissioning at the Piketon, Ohio site. The protester said this potential conflict makes it tough for E-TAS to provide contract management support at Portsmouth.
The Energy Department reviewed the issue and found E-TAS would not suffer “impaired objectivity,” according to GAO.
The GAO said E-TAS submitted a significant “mitigation plan” for the potential conflict of interest. The Energy Department can “self-perform” certain tasks that entail potential conflicts.
The Government Accountability Office also said DOE was justified at looking at the past performance E-TAS parent Pro2Serve given that the subsidiary is a relatively new entity.
Despite losing its bid protest, SMSI is getting another contract extension through March 31, which is expected to be the last one before E-TAS takes over the Portsmouth/Paducah complex technical services.
