Sole source Forest Service airtanker contract voided by GAO

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A sole source contract the Forest Service made with a firefighting airtanker leasing company fell short of the criteria needed to justify it, says a federal contracting oversight agency.

The Forest Service should attempt to properly re-award the contract, or simply terminate it, says the Government Accountability Office in a March 31 decision.

Forest Service efforts to secure long-term and exclusive leases for large airtankers capable of dropping thousands of gallons of fire retardant have been subjected to repeated protests for nearly two years now.

This latest round occurred when three competitors of Montana-based Neptune Aviation Services objected when the company received in December a putatively $141 million sole source contract for providing two next generation airtankers for up to nine years.

The Forest Service justified the contract, which in the fine print was actually worth $496 million, by citing an "industrial mobilization" exception to competition requirements in federal code. It allows sole-source contracts when agencies determine that a vital supplier might go out of business.

Its real reason was that the Forest Service was executing its half of a deal offered to get Neptune to withdraw an earlier airtanker contract protest, the GAO says.

Neptune filed a protest in mid-2013 after it wasn't offered a slot on a rolling contract lasting up to a decade for modern air-tanker leasing.

Neptune presented the Forest Service with financial projections showing that a leasing contract for two modern airtankers was the only way it could obtain a positive net income over the next five years. The Forest Service also relied on verbal statements from Neptune's CEO regarding the company's financial health. The GAO points out that the CEO was familiar to the Forest Service, since he was head of the acquisition management component until leaving government service in 2010.

Those financial projections led to the Forest Service offering a written deal to Neptune for a sole-source contract in exchange for its withdrawing the protest, which it did before the GAO had a chance to rule on its merits.

A mid-level official at the Agriculture Department held up the contract, and employed an external auditor to examine Neptune's books, rather than just rely on its projections. The auditors found a much different picture and concluded by August that existing Forest Service leasing contracts for older airtankers would keep Neptune financially viable at least through December 2016.

The Forest Service went over the official's head and got the contract approved by the USDA assistant secretary for administration. By then, however, the "industrial mobilization" basis that would make it legal had been disproven, says the GAO.

Some evidence suggests that another argument rose within the Forest Service in support of the Neptune contract, namely concern over whether its rolling contract leasers were capable of providing airtankers in time for the 2014 wildfire season.

The Forest Service sent four of those leasing companies notices in September ordering improvements. The GAO notes that one company made an airtanker available shortly thereafter, and the other three came to an agreement with the Forest Service. Nothing the agency submitted demonstrated that it had to sole source airtanker services to Neptune, the GAO says.

The Forest Service since 2011 has had the goal of replacing the Korean War-vintage fleet of P2V aircraft it's used as tankers with 18 to 28 modern airtankers that have a larger minimum gallon carrying capacity – and hopefully are less prone to fatal crashes.

The goal isn't without its detractors. The Rand Corp. noted in a 2012 report commissioned by the Forest Service that there is "a dearth of empirical evidence that aircraft are effective against already large fires." Many firefighters call the aerial retardant sprays "CNN drops," valuable mostly as public relations.

Rand suggested the Forest Service rely more on smaller and considerably cheaper "scooper" planes capable of stocking up on water directly from lakes.

The scooper planes are easier to dispatch so can get to fires at early stages while an air-dropped water payload is still useful. Because they can grab water directly from a source, scoopers can deliver considerable volumes of it, Rand also found, adding that roughly 60 percent of all fires are within 10 miles of a potentially scooper-accessible body of water.

For more:
- download the GAO bid protest decision, B-409356.2, B-409356.3, B-409356.4, B-409356.5, B-409356.6 (pdf)

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