IG Says Army Contract Is Improperly Bundled The Defense Department inspector general’s office has found that the Army improperly bundled its $20 billion Information Technology Enterprise Solutions-2 Services (ITES-2S) contract. In addition, the IG said the Army chose an improper NAICS code for the contract, shutting out many small firms from competing. The Army rejected the IG’s findings and recommendations. The Army said ITES-2S was a follow-on to a previous ITES contract and was not bundled. But the IG said the previous contract had a $500 million ceiling and 14 task areas, while ITES-2S has a $20 billion ceiling and 95 task and sub-task areas. “As a result, ITES-2S is a bundled contract that improperly restricted small business competition and was unsuitable for small business award,” the report by the assistant inspector general for auditing said. “Bundling a contract without justification violates United States Code and Federal regulations.” The IG said the Army competed ITES-2S under NAICS code 517110, wired telecommunications carrier, with a size standard of 1,500 employees. Auditors said the “most appropriate” code would have been 54151, computer system design and related services, with a size standard of $23 million, which would have allowed many more small businesses to compete. The Army disagreed with that finding, as well. The IG said it is too late to re-compete the contract, because task orders have already been issued. It recommended changing the NAICS code. It asked the Army to respond by Sept. 9. IG Disputes Air Force Contract In a separate report, the Defense IG’s office said the Air Force improperly used the telecommunications NAICS code in its $9 billion Network-Centric Solutions (NetCents) contract. As in the Army case, the IG said the appropriate code was 54151, computer systems design and related services. The Air Force rejected the finding.