SAP files protest over Air Force deal with Oracle

SAP is formally protesting the U.S. Air Force's decision to award an $88.5 million contract for a new logistics system to Oracle Corp.

SAP said Monday it has filed a formal bid protest against the U.S. Air Force's decision to award an US$88.5 million contract for a new logistics system to Oracle, a hard-fought deal Oracle announced last week that it had won.

The multiyear software and services contract is for the Air Force's Expeditionary Combat Support System, a new system intended to replace a plethora of legacy applications with one integrated procurement and supply-chain management system. Oracle's triumph over SAP surprised some analysts that had been tracking the deal. "We thought SAP was in a strong position to win this business, given its strength in logistics and previous wins in both Army and Navy logistics," Morgan Stanley analyst Ross MacMillan wrote in a note to clients.

The loss also surprised SAP. An SAP spokesman said last week that the company had scheduled a briefing with the Air Force to find out how its proposal fell short of Oracle's.

SAP filed its bid protest Friday with the U.S. Government Accountability Office (GAO). "According to the written evaluation issued by the U.S. Air Force after award of the contract, SAP far exceeded Oracle in the required mission capability criteria and was rated the lowest risk offer," SAP said in a written statement describing its protest. "SAP also believes that it presented the U.S. Air Force with the most realistic cost to support the program."

SAP declined further comment on the grounds for its protest. A spokesman for the GAO said the agency does not comment on protests before they are adjudicated.

GAO regulations require the contracting agency -- in this case, the Air Force -- to file a report on the protest within 30 days of notification about the dispute. GAO is supposed to issue a decision on the protest within 100 days. In some circumstances, it can require the contracting agency to suspend work and payments under the contract until a decision is issued.

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