To Neptune Aviation Services’ competitors, it seemed as though the company had landed a sweetheart deal: In exchange for dropping a bid protest and threats of lawsuits, Neptune would be awarded a huge, noncompetitive contract by the U.S. Forest Service, worth as much as a half-billion dollars.
The senior procurement executive for the Agriculture Department, which oversees the Forest Service, tried to stop the deal, saying the contract should not have been awarded without competition. But high-level officials at the department overruled her, granting the sole-source award to Neptune, whose chief executive had formerly served as the Forest Service’s acquisitions director.
On Wednesday, though, the Government Accountability Office ruled that the agency’s decision to award the contract without competition was improper.
Awarding the contract to “avoid a Neptune-threatened lawsuit was without a reasonable basis,” the GAO found — and it recommended that the department reassess its decision.
The battle began last year, after Neptune, based in Montana, bid on a contract to provide the Forest Service with air tankers to fight forest fires. Neptune was not awarded one of the contracts, and soon afterward the company threatened to file a protest “unless an ‘acceptable solution’ could be worked out,” the GAO’s decision said.
The company followed through on its threat and soon started negotiating with USDA officials, according to the GAO’s decision.
In June, the Forest Service agreed to grant Neptune a sole-source contract for two air tankers “in exchange for Neptune withdrawing its protest.” But the USDA senior procurement executive refused to sign off on the deal, saying there wasn’t enough evidence to justify a noncompetitive award.
The Forest Service then offered Neptune a contract of less than $62.5 million, which would have been “of such size that it could be approved below the level” of the procurement executive, the GAO wrote. The company balked at the lower-value contract and again threatened to sue, according to the GAO.
Still, the procurement executive — who was not named in the GAO report — remained adamant that the contract be competitively bid.
Federal contracting regulations “promote competition to ensure a fair playing field for firms interested in doing business with the federal government,” she wrote in a memo to her superiors, according to the GAO. “Competition encourages innovation and lower prices.”
But the USDA’s chief acquisitions officer disagreed, saying a sole-source award was justified because it is allowed to keep vital suppliers in business “in the event of a national emergency.” And the undersecretary for natural resources and the environment urged the award of the contract, saying the tankers, which fly over forest fires and dump thousands of gallons of fire retardant, were needed ahead of the upcoming fire season.
The agency has been criticized for maintaining an older fleet of tankers that needed updating as forest fire season has grown and the fires have been more intense.
Sen. Ron Wyden (D-Ore.) has called the “lack of resources” an “urgent threat to America’s national forests.” And in 2012, he introduced legislation to help the Forest Service speed up the acquistion of air tankers.
But the award was quickly protested by three other companies — Coulson Aviation, 10 Tanker Air Carrier and Minden Air — who argued that they should have been allowed to bid.
In its ruling, the GAO agreed and rejected the argument that Neptune needed the contract to continue to supply firefighting resources to the Forest Service. There is no “evidence to suggest that Neptune intends to go out of business now merely because its future prospects remain uncertain,” it said.
The USDA responded that “the U.S. Forest Service is committed to ensuring that we have all of the resources we need to fight wildland fire and protect the lives and property of the American people. Air tankers are an important part of our efforts and we are currently reviewing the GAO recommendation.”
Sen. John Tester (D-Mont.) hailed the December decision to award the work to Neptune. With the GSA’s ruling this week, a spokeswoman said Tester “remains concerned about the flawed contracting process at the Forest Service. After three years, the agency still has little to show for its efforts other than higher costs to taxpayers.”
Neptune chief executive Ronald Hooper said: “Obviously we are disappointed in the decision. . . . We have aircraft available, and we had hoped to get them under contract this year.”
He said it was proper to offer to settle after the company did not receive the initial contract. Now it’s up to the Forest Service to make the next move.
“We’re back at a state of limbo, waiting to see what the agency is going to do,” Hooper said.