Government Contracts Monitor

Beware “Incumbentitis” – It Can Be Fatal

November 11, 2014

By: Eric Whytsell

Despite all the alarming news about Ebola in the press these days, government contractors face another ailment that’s also scary and, unfortunately, far more common. Known as incumbentitis, this disease all too often prevents contractors from winning renewals of their existing contracts. The symptoms include overconfidence based on past performance; an inability to notice changes in an agency’s requirements, and a tendency to omit important information from a proposal in the belief the agency already knows it. These symptoms are easy to spot in hindsight but surprisingly difficult to recognize while in the midst of responding to a solicitation.

The recent Government Accountability Office (GAO) decision in SunGard Data Systems, Inc., B-410025 (October 10, 2014) provides a stark example of the dangers of incumbentitis. The case involved a Department of Labor (DOL) solicitation for mainframe computer services in support of the Bureau of Labor Statistics (BLS). DOL had previously procured the services in question as part of a larger, agency-wide contract for IT services under which SunGard Data Systems, Inc. (SunGard) was the incumbent. However, DOL decided to break out the BLS mainframe services and procure them separately to better address BLS-unique requirements.

The new solicitation provided that award would be made on a best-value basis considering three factors (listed in descending order of importance): technical evaluation, experience/past performance and price. The technical evaluation factor consisted of four sub-factors (again listed in descending order of importance): technical approach, transition approach, management approach and key personnel.

After evaluating the proposals it received in response to the RFP, DOL awarded the contract to Data Management Associates (DMA), the only offeror other than the incumbent, SunGard. In addition to having a significantly lower price and receiving the same “significant confidence” rating for the experience/past performance factor, DMA differentiated itself with an “outstanding” technical capability rating, as opposed to SunGard’s “good” rating. SunGard’s lower rating reflected a “good” score on the technical approach sub-factor and an “acceptable” score for transition approach.

SunGard protested, arguing among other things that DOL had improperly evaluated its proposal under the transition approach sub-factor. Unfortunately for SunGard, incumbentitis doomed that argument to failure.

SunGard asserted that, as the incumbent contractor, it did not need a transition plan and that the agency unreasonably concluded that the firm had only a “minimal understanding” of the transition requirements. However, as GAO noted, “an agency’s evaluation is dependent upon information furnished in a proposal, and it is the [offeror’s] burden to submit an adequately written proposal for the agency to evaluate.” Here, the solicitation required offerors to (i) demonstrate “an in-depth understanding of the nature of the risks associated with the transition process and describe the specific tasks associated with phasing in the new contract”; and (ii) include in the transition approach narrative “details on plans and approaches for implementing the transition tasks and a detailed timeline identifying timeframes for key deliverables and milestones that must be met during the transition process.”

In response, SunGard’s proposal stated simply, “[a]s the incumbent Contractor, no Transition Plan in anticipated.” Based on this submission, the agency awarded an “acceptable” rating for transition approach, and explained, “while the offeror is the incumbent and generally would not need a robust transition plan, the offeror did not address any of the criteria requested in the solicitation.” It went on to point out that “this solicitation has significantly reduced and simplified requirements from the current mainframe services contract, but the offeror did not address how they would incorporate these changes as they transition onto the new contract.” GAO found the “acceptable” rating reasonable because “SunGard’s proposal did not demonstrate its understanding or provide details of its transition approach, and instead, simply stated that it need not propose a transition plan because it was the incumbent.”

To be sure, SunGard presents an extreme case of incumbentitis, but the basic symptoms are all there: overconfidence, failure to notice requirement changes, and omission of important information. Not all contractors suffering from the disease will be so bold as to simply assert that an RFP requirement does not apply to them, but less extreme manifestations of the same dynamics occur much too often: getting under a page limitation by stripping out information “the agency already knows about our technology”; proposing the current solution to the original problem despite the RFP’s use of different language to describe the problem or the agency’s goals; or simply forgetting or explaining away the tell-tale signs of agency disappointment with current contract performance.

Successful contractors consciously fight against incumbentitis during contract performance as well as proposal preparation. While performing contracts, they conduct regular, ongoing, and honest assessments of their performance against the contract requirements – and they solicit and listen carefully to feedback from their customers. When it comes time to respond to a solicitation, such contractors use procedures such as “red teams” and third-party reviews to ensure that their proposals have not overlooked or glossed over RFP requirements that differ from their conception of the agency’s needs. Staying “healthy” in this way requires a full-time commitment, but learning to spot the warning signs and avoiding the symptoms is well worth the effort.

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