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FAR
12.101: Conducting market research to determine whether
commercial items or nondevelopmental items are available |
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Comptroller
General - Key Excerpts |
Palantir argues that the agency failed to conduct market
research in accordance with the statutory and regulatory
preference for the use of commercial items. According to the
protester, this resulted in an unduly restrictive solicitation
that prevents offerors of commercial products, such as Palantir,
from competing for a prime contract. While the protester does
not argue that it could provide a commercial solution that would
meet all of the agency’s needs, the protester argues that the
agency should have used a phased approach for this procurement,
whereby the agency would acquire a commercial data integration,
visualization, and analytics platform from an offeror like
Palantir, followed by separate procurements for integration and
development services needed to obtain, integrate, and/or enhance
individual capabilities in the DCGS-A2 system. Based on our
review of the record, as well as information gathered during a
hearing convened by our Office on April 26, 2016, we find the
protester’s argument to be without merit.
The Federal Acquisition Streamlining Act of 1994 established,
among other things, a preference and specific requirements for
the acquisition of commercial items that are sufficient to meet
the needs of an agency. Federal Acquisition Streamlining Act of
1994 (FASA), Pub. L. No. 103-355 § 8104, 108 Stat. 3243
(codified, as amended, at 10 U.S.C. § 2377). This section of
FASA is implemented in FAR part 12, and allows agencies to use
solicitation terms, and other procedures, that more closely
resemble the commercial marketplace when procuring commercial
items. Section 12.101 of the FAR directs agencies to, among
other things, conduct market research to determine whether
commercial items or nondevelopmental items are available that
could meet the agency’s requirements. Section 2377 of Title 10
of the United States Code directs agencies to use the results of
market research to determine whether there are commercial items
that: (1) meet the agency’s requirements; (2) could be modified
to meet the agency’s requirements; or (3) could meet the
agency’s requirement if those requirements were modified to a
reasonable extent. 10 U.S.C. § 2377(c)(2). Determining whether a
product or service is a commercial item is largely within the
discretion of the contracting agency, and such a determination
will not be disturbed by our Office unless it is shown to be
unreasonable. Aalco Forwarding, Inc., et al., B-277241.8,
B-277241.9, Oct. 21, 1997, 97-2 CPD ¶ 110 at 11.
Prior to the issuance of the solicitation here, the agency
conducted market research to inform its acquisition strategy.
The market research included consideration of the availability
of commercial items to meet the agency’s needs. There were two
studies completed that addressed DCSG-A2 requirements in
relation to commercially available solutions: (1) the Data
Integration, Visualization and Analytics (DIVA) market study;
and (2) a trade space analysis (TSA). The DIVA study was
intended to provide situational awareness and information about
market trends regarding the “state-of-the-practice” within the
commercial DIVA software platform landscape, and possible uses
of commercial DIVA software in the DCGS‑A2 context. AR, Tab AQ,
DIVA Study, at 2. The study described a number of potential
approaches involving the use of commercial DIVA software,
including the approach favored by the protester, whereby the
agency could first acquire the commercial software platform
necessary for DCGS-A2 data integration, visualization, and
analysis capabilities, and could then acquire, separately, the
systems integration and development or enhancement work
necessary to provide or supplement other DCGS-A2 requirements.
Id., at 30. In addition to the two studies mentioned above, the
agency performed market research by reaching out to industry,
including Palantir, through requests for information, industry
day events, and industry government one-on-one meetings. AR at
9.
While the market research revealed that commercial items were
available to meet some of the DCGS-A2 requirements, the agency
concluded that there was no commercial solution that could meet
all the requirements of DCGS-A2. As the agency explained in its
report, the DCGS-A2 contractor will need to do a great deal of
development and integration work, which will include importing
capabilities from DCGS-A1 and designing mature interfaces for
them. AR at 44. Because the agency concluded that significant
portions of the anticipated DCSG-A2 scope of work were not
available as a commercial product, the agency determined that
the DCGS-A2 development effort could not be procured as a
commercial product under FAR part 12 procedures. AR, Tab AG,
Market Research Report, at 50. The protester has failed to show
that the agency’s determination in this regard was unreasonable.
The protester next argues that the agency failed to adequately
consider whether a commercial product could meet the agency’s
requirement if those requirements were modified to a reasonable
extent. In this regard, the protester contends that, rather than
awarding a single-award IDIQ contract in conjunction with a
cost‑reimbursement type task order, the agency should have
sought to meet the DCGS-A2 requirements using a phased approach
that would have allowed offerors of commercial solutions, like
Palantir, to compete to provide the commercial software platform
necessary for DCGS-A2 data integration, visualization, and
analysis capabilities, possibly at a fixed-price. The protester
argues that the agency could then acquire, separately, the
systems integration and development or enhancement work
necessary to provide or supplement other DCGS-A2 requirements.
A contracting agency has the discretion to determine its needs
and the best method to accommodate them. General Electrodynamics
Corporation, B-298698, B‑298698.2, November 27, 2006, 2006 CPD ¶
180 at 3. In preparing a solicitation, a contracting agency is
required to specify its needs in a manner designed to achieve
full and open competition, and may include restrictive
requirements only to the extent they are necessary to satisfy
the agency’s legitimate needs. Id. When an agency seeks to
procure separate and multiple requirements under a single
contract, there is potential for restricting competition by
excluding firms that furnish only a portion of the requirement;
we therefore review challenges to such solicitations to
determine whether the approach is reasonably required to satisfy
the agency’s needs. See Northrop Grumman Tech. Servs. Inc.,
B‑406523, June 22, 2012, 2012 CPD ¶ 197 at 7. A protester’s mere
disagreement with the agency’s judgment concerning the agency’s
needs and how to accommodate them does not show that the
agency’s judgment is unreasonable. General Electrodynamics
Corporation, supra.
Here, the record shows that the agency reasonably decided on its
approach of having a single contractor, who would be responsible
for selecting all the components of DCGS-A2, and who would bear
the responsibility for making certain that those components are
integrated, in contrast to the phased approach favored by
Palantir. In the written justification for the agency’s use of a
single-award IDIQ contract for this procurement, the Senior
Procurement Executive explained that the “data integration layer
requires unified systems engineering and agile software
development activities by a single contractor. Ad hoc or
independently developed software activities cause technical
risks, concerns and significant schedule risk and cost
uncertainty . . . To separate the systems engineering, software
development, and integration activities would only undermine the
cohesive development of a new data management and software
architecture.” AR, Tab AT, Determination and Findings for use of
Single Source IDIQ Contract, at 2.
At the hearing GAO conducted in connection with this protest,
the executive director and principal assistant responsible for
contracting (PARC) at Aberdeen Proving Ground provided greater
explanation regarding the need to have a single contractor with
responsibility for selecting the components that would be
assembled to meet the DCGS-A2 requirements, and writing the
software that would be needed in order to integrate the
different components and make them interoperable. Tr. at 203.
According to the PARC, the strategy would require the contractor
to “be responsible for ensuring that all of the components that
are selected . . . interoperate and to ensure that the code
associated with that was made available to the government,
because it would have been developed at the government expense,
therefore ensuring that we had the capability of supporting it
in the post‑production environment.” Tr. at 203-204. The PARC
further explained that, if the government were to buy some of
the components and then provide them to a separate system
integrator for integration, it would shift risk to the
government that the items might not work or might not be able to
be integrated. Id. According to the PARC, that approach “puts
the government in the middle of selecting certain components and
certain pieces, thereby implicitly warranting not only that they
will work but they are able to be integrated by the integrator,
who would be separate and different.” Id. at 204.
Here, the agency’s approach is reasonably related to its need
for a fully integrated and interoperable system made up of a
number of specific capabilities, some of which are commercially
available and some of which are not. While the agency considered
several potential approaches to this procurement, including the
phased approach favored by the protester, the agency ultimately
concluded that it would have a greater likelihood of success (in
that it could avoid certain technical risks, concerns and
significant schedule risk and cost uncertainty) by opting to
have a single contractor serve as the system integrator in
charge of developing and selecting the components and making
sure that they can be successfully integrated. AR, Tab AT,
Determination and Findings for Use of Single Source IDIQ
Contract, at 2. As such, we have no reason to question the
approach chosen by the agency or to conclude that the
solicitation is unduly restrictive of competition. (Palantir
USG, Inc. B-412746: May 18, 2016) (pdf) |
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Comptroller
General - Listing of Decisions |
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For
the Government |
For
the Protester |
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Palantir USG, Inc. B-412746: May
18, 2016 (pdf) |
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U.
S. Court of Federal Claims- Key Excerpts |
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U.
S. Court of Federal Claims - Listing of Decisions |
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For
the Government |
For
the Protester |
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