Carlson Wagonlit sues the federal government after losing $1.3 billion contract to Concur

Carlson Wagonlit Travel is suing the federal government over the General Services Administration’s decision last year to award a 15-year, $1.3 billion government travel contract to just one provider, Concur, Skift has exclusively learned.

In suing the United States government over the contract to handle the travel of 70 civilian government agencies. CWT Sato Travel alleges that the GSA award was an “unlawful decision” that leaves Concur with no incentive to improve services or lower prices.

“Winner-take-all single-award scenarios are by definition non-competitive,” the suit alleges.

The bid-protest complaint, in which Concur subsequently became a “defendant-intervenor” to protect its commercial interests and reputation, actually was filed October 18, 2012, but hasn’t been publicized until now. A hearing in the U.S. Court of Federal Claims in Washington, D.C., is slated for February 14.

The dispute revolves around the new, Web-based ETS-2 (E-Gov Travel Services 2.0) online booking system.

It is a a successor to ETS1, which had CWT and Northrup Grumman providing 70% of the travel management services to federal government civilian agencies, along with EDS as the third provider. CWT, with Northrup Grumman as a partner, was the only other bidder, besides Concur, but the GSA “erroneously” found that only Concur was “qualified and capable of performing the work,” the suit alleges.

CWT alleges that the federal government is obliged to award at least two contracts for projects worth more than $103 million, and the GSA arbitrarily invoked an exception.

CWT cites its own 8-year experience handling EST1 and alleges that Concur has no experience integrating its travel management services with federal government agencies, and will “require a substantial learning curve.”

CWT seeks judgments declaring that the GSA’s action was unlawful and unfair, requiring that a second contract for EST2 be awarded to CWT.

The lawsuit comes as Concur proceeds with migrating federal government agencies to EST2 — with CWT among three travel management companies losing the work.

Concur is the sole contractor to power federal government civilian agencies’ online booking, voucher processings, and travel authorizations through the new system.

In a conference call detailings its fiscal first quarter earnings earlier this week, Concur stated that it had expected to sign the first federal agency contracts in the second half of 2013, but that “a number of agency contracts,” large and small, have already been signed, and the signings were “more than we had anticipated we would sign at this time.”

The federal government travel work isn’t expected to translate into much revenue to Concur this year, but in the future the company forecasts operating margins of 16% to 19%, and strong revenue growth in 2014.

The GSA responded to the suit with a cross-motion, but this and many other documents in the case are sealed or redacted.

The GSA didn’t immediately provide comment to Skift, and Concur referred to a statement from CEO Steve Singh in it earnings press release, which stated, in part:

“Our federal government business is off to a strong start with our first agency signings, which in combination with the continued momentum in our private sector business provides the foundation for continued strong revenue growth in fiscal 2014 and the years ahead.

CWT gave Skift a statement, which reads in part:

“We filed the lawsuit because we believe the award is inconsistent with federal law and federal procurement policy and not in accordance with the solicitation’s stated evaluation criteria and that the evaluation conducted by GSA was unfair and flawed which adversely affected the award decision.

 

“We strongly believe, consistent with the Federal Acquisition Regulations, that Federal agencies should have choices and enjoy the benefits of competition and multiple sources associated with an ETS-2 award to two service providers—both Concur and CWTSatoTravel.

 

We believe that each federal agency should have an opportunity to make task order decisions on both product quality and price as they address their unique service requirements along with those provided in the master ETS-2 solicitation.