SAP challenges Oracle's Air Force contract

Germany's SAP asks the GAO to review the $88 million contract, potentially putting it up for grabs.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
3 min read
Germany's SAP lodged a complaint with the U.S. Government Accountability Office on Friday, challenging an $88.5 million contract awarded to Oracle by the U.S. Air Force.

SAP's complaint ultimately could put the lucrative contract up for grabs. The complaint comes as Oracle and SAP, the world's biggest maker of business software, increasingly have engaged in public combat--from a wrestling match over acquisition of Retek to verbal barbs between the CEOs--amid a rapidly shrinking market for enterprise software applications.

"SAP firmly believes that the Oracle proposal does not reflect the best value and lowest risk solution," Steve Peck, SAP Public Services president, said in a statement. "We look forward to a formal review of the process, procedures and selection criteria for this award."

SAP alleges that the Air Force Expeditionary Combat Support System (ECSS) bid proposal called for technology that had the best features for--and relevance to--the agency's mission and the lowest risk.

"The U.S. Air Force wanted a 'best value' solution based on mission capability and lowest risk which, when combined, are significantly more important than price," according to a statement SAP issued.

SAP noted the Air Force's written evaluation of the bids stated SAP "far exceeded Oracle in the required mission capability criteria and was rated the lowest risk offer."

A representative from the Air Force was not immediately available to comment.

Bob Wynne, an Oracle spokesman, said in a statement regarding SAP's complaint to the GAO: "We are excited to be the product platform selected for ECSS after the Air Force's exhaustive evaluation...We're looking forward to working successfully with the Air Force and their implementation partners to achieve the program's vision."

The Air Force is required to submit a report to the GAO by Nov. 30, outlining their bid evaluation process. Oracle and SAP will receive part of the report, or its entirety, when the document goes to the GAO, said Daniel Gordon, associate general counsel and head of the bid protest unit for the GAO.

The companies will have 10 days to respond to the Air Force's comments, and the GAO must issue its recommendation by Feb. 6.

The GAO does not have the legal authority to require a federal agency, such as the Air Force, to act in any particular manner. But in practical terms, agencies typically follow the GAO's recommendations, Gordon said.

"The GAO could ask the Air Force to fix the problem and redo the competition, but it is rare that they would ask the agency to award the contract to a competitor," Gordon said.

He noted that one-third of protests filed with the GAO tend to dissolve in the first month, usually due to a protester withdrawing the complaint, the agency rescinding the contract award and restructuring the bid request, or the GAO dismissing the protest.

By the second month, another third of the complaints tend to drop off for similar reasons, he added. As a result, the GAO usually finds that of the 1,000 protests filed annually, only 250 usually require its recommendations each year.

"Of these cases, the protesters win about 22 percent of the time," Gordon said.

For Oracle, the ECSS contract is a large addition to its existing work with the Air Force, Charles Phillips, Oracle's president, said at a recent analysts luncheon in New York.

"This (ECSS contract) is an important win because now we're already doing (the Air Force's) financial management and we're already doing human resources and now we're doing the entire supply chain," Phillips said. ECSS is the resource planning tool for the Air Force.