BNUMBER:  B-258679.4
DATE:  November 28, 1995
TITLE:  AAI ACL Technologies, Inc.

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Matter of:AAI ACL Technologies, Inc.

File:     B-258679.4

Date:     November 28, 1995

Thomas J. Madden, Esq., and Kevin M. Kordziel, Esq., Venable, Baetjer, 
Howard & Civeletti, LLP, and Joanne F. Cantonese, Esq., AAI 
Corporation, for the protester.
Dale H. Oliver, Esq., Quinn, Emanuel, Urquhart & Oliver, for Dayton T. 
Brown, Inc., an interested party.
Vera Meza, Esq., and Tony K. Vollers, Esq., Department of the Army,  
for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency's decision to procure four hydraulic test stands and central 
computer system by means of a sole source award is proper where:  (1) 
agency's minimum needs require system to be compatible with existing 
hydraulic test station; and (2) only one source can provide compatible 
equipment since the software necessary to implement and run the system 
is proprietary and not available to the government for use in a 
competitive procurement.

DECISION

AAI ACL Technologies, Inc. protests the Department of the Army's sole 
source award of contract No. DAAJ09-94-C-0597 to Dayton T. Brown, Inc. 
(DTB) for four hydraulic helicopter component test stands and an 
integrating central computer system.
 
We deny the protest.

BACKGROUND

This equipment is being procured for the Corpus Christi Army Depot 
(CCAD) located at the Naval Air Station in Corpus Christi, Texas.  
CCAD is responsible for the repair and overhaul of hydraulic 
helicopter components--i.e., pumps, motors and actuators.  With the 
exception of one test stand--which, as explained below, was procured 
from DTB under a January 1994 sole source procurement--the testing 
equipment currently used by CCAD is approximately 30 to 35 years old, 
and does not meet the agency's repair and testing demands.  (Tr. at 
14.)[1]  In fact, because of the current equipment's age, some of the 
required tests for newer hydraulic helicopter parts cannot be 
performed on CCAD's current machines.  (Tr. at 112.)

In late 1990, the Army began conducting an engineering survey to study 
its hydraulic component testing equipment requirements to ascertain 
what steps could be taken towards modernizing and overhauling the CCAD 
facility.  (Tr. at 14-15.)  Although it did not yet have funding for 
this requirement, in 1992 the Army recognized that due to various and 
repetitive equipment failures, as well as the ongoing modernization 
and technological developments in helicopter aircraft, changes in the 
CCAD facility were necessary to better implement its mission and 
resolve critical backlogs of helicopter components awaiting repair.  
As a result of this engineering study, CCAD determined that its 
minimum needs required it ultimately to replace the existing, manually 
operated stand-alone testing stations with automated testing 
stations--also referred to as testing "stands"--that could be 
integrated via a computerized network into a unified testing system.  
(Tr. at 22; 102.)

Although CCAD concluded that it needed to upgrade the entire 
facility--and drafted a "concept" of what equipment units would 
comprise the ultimate testing system assembly--CCAD nonetheless 
recognized that its "money situation didn't allow [it] to go out with 
one package to procure it all competitively from one manufacturer."  
(Tr. at 22.)  Consequently, CCAD decided to prioritize its testing 
needs, and procure each part of the equipment system on an as-needed 
basis, according to available funding allowances.  

In late 1992, as a result of Operation Desert Storm, the Army was 
faced with a critical backlog of unrepaired UH-60 helicopter hydraulic 
pumps--and a downed fleet of UH-60 helicopters--which required 
immediate action by CCAD.  After conducting a market survey of 
available commercial hydraulic helicopter component testing equipment 
manufacturers, CCAD determined that a testing station meeting its 
minimum needs was available from only one source, DTB.  Consequently,  
on October 8, 1992, CCAD published a synopsis of its intended 
sole-source award to DTB in the Commerce Business Daily (CBD).  Of 
significance to this protest, the CBD synopsis stated that the Army 
required a "hydraulic test stand with adapters and software for the 
UH-60, CH-47, and AH-54 Aircraft,"[2] and that:

     "Offerors must meet a prequalification requirement in order to be 
     eligible for award.  The Government does not own specifications 
     and drawings to permit full and open competition--Firms that 
     recognize and can produce the required item(s) described above 
     are encouraged to identify themselves to the Contracting Officer 
     who can provide additional information regarding the 
     qualification requirements--Information on meeting the 
     qualification may also be obtained from [the Army] . . . all 
     responsible sources may submit an offer that shall be considered 
     by the agency."

The CBD synopsis also advised offerors that the proposed sole source 
award to DTB was authorized under Federal Acquisition Regulation (FAR)  
6.302-1; that provision implements 10 U.S.C.  2304(c) (1994), which 
permits procurement on a sole source basis where the required item is 
available from only one source.

Although AAI ACL saw the CBD synopsis, the firm chose not to "solicit 
or try and bid" since, according to AAI ACL's president, "it was right 
at the time the company was being acquired."  (Tr. at 166.)  AAI ACL 
states that had it known that the agency hoped for a total facility 
upgrade--and consequently, would require all subsequently procured 
equipment to be compatible with the UH-60 hydraulic test stand and 
software--the firm "would probably have offered" to compete for that 
sole source requirement.  (Tr. at 167.)

On March 18, 1993, the Army issued a sole source solicitation to DTB 
for the UH-60 hydraulic test stand and associated adapters and 
software; on January 25, 1994, the UH-60 contract was awarded to DTB 
in the amount of $955,044.

This Requirement

In 1994, CCAD obtained enough funding to enable it to procure four 
more hydraulic test stands as well as a centralized computer system to 
link each of its automated hydraulic test stands--including the UH-60 
test stand procured from DTB--into an integrated network system.  
Because CCAD had already procured one test stand from DTB--which was 
being used on a stand-alone basis--and because no other source's 
equipment was compatible with the DTB software which ran this station, 
CCAD decided to sole source the requirement for the four test stands 
and integrating computer system to DTB under the authority of FAR  
6.302-1.

On July 21, CCAD synopsized the proposed sole source award in the CBD.  
In response to the synopsis, AAI ACL requested a copy of the 
solicitation, which was issued on August 18, and received by AAI ACL 
on August 26.

On August 31, AAI ACL filed an agency-level protest with the Army 
challenging the specification for DTB equipment as unduly restrictive.  
By decision dated September 16, the Army denied this protest on the 
grounds that only DTB equipment would serve its needs and advised the 
protester that contract award was being made to DTB.  On September 30, 
AAI ACL filed a protest at this Office reiterating its challenge to 
the proposed award to DTB.   AAI ACL maintained that it had equipment 
which was differently configured, but which was otherwise equivalent 
to the DTB items specified in the RFP.  During the course of that 
protest, AAI ACL and the Army began to discuss ways in which AAI ACL's 
equipment might satisfy the agency's integration requirements.  As a 
result of these discussions, AAI ACL offered to withdraw its protest 
if the Army would evaluate its proposed alternate equipment items.  
Consequently, on February 13, 1995, this Office dismissed AAI ACL's 
protest as academic, in accordance with the express agreement of all 
parties.

On February 28, the Army sent several CCAD technical engineers to AAI 
ACL's California facility to evaluate the firm's proposed "equivalent" 
equipment, and to conduct a site survey.  The CCAD technical engineers 
also traveled to McClellan Air Force Base in California where they 
surveyed older AAI ACL equipment models.  After completing their 
technical evaluation, the CCAD technicians advised the contracting 
officer that AAI ACL's proposed equipment would not meet the agency's 
needs since it was not compatible with the existing DTB UH-60 test 
stand.

By letter dated March 7, the contracting officer advised DTB to 
continue with contract performance.  On March 28, the contracting 
officer advised AAI ACL that the firm's proposed equipment did not 
meet the Army's requirements for a variety of technical reasons, 
including noncompatibility with the existing DTB test stand.  On March 
31, AAI ACL filed this protest at our Office.[3]  On October 5, we 
conducted a hearing to explore the Army's technical evaluation of AAI 
ACL's equipment.  On October 19, AAI ACL amended its protest based on 
information first learned at the hearing.

PROTESTER'S CONTENTIONS

AAI ACL contends that the current sole source award to DTB is improper 
because CCAD improperly split a large requirement into smaller pieces 
in order to avoid the requirement for full and open competition.  That 
is, AAI ACL maintains that the initial sole source award for the first 
DTB test stand was conducted by CCAD in order to ensure that DTB would 
receive the current award for the remaining four test stands and 
centralized computer system.  Alternatively, AAI ACL contends that the 
current sole source to DTB is improper because it is the result of a 
lack of advance planning.

The Army responds that at the time it procured the first UH-60 DTB 
test stand in 1993, it did so because that was the maximum amount of 
equipment for which it had funds available, and because it had a 
near-urgent priority for a test stand for the UH-60 hydraulic 
helicopter components.  The Army reports that while it knew that it 
ultimately sought to upgrade the entire CCAD facility to an integrated 
automated facility, it did not have the budget or authority to proceed 
with such a procurement at that time.  (Tr. at 109.)  The Army readily 
admits that if it had had the funding for a total package upgrade, it 
would have solicited competitive proposals for a seven-test stand 
upgrade from a number of companies, including AAI ACL.  (Tr. at 108; 
246.)  However, the Army maintains that it has been forced to upgrade 
its facility on an essentially piecemeal basis because its 
requirements are increasing faster than it "can buy equipment for and 
get funded for."  (Tr. at 240.)

ANALYSIS

When an agency uses noncompetitive procedures, it must execute a 
written justification and approval (J&A) with sufficient facts and 
rationale to support the use of the specific statutory authority 
cited, in this case, 10 U.S.C.  2304(c)(1).   See FAR  6.302-1(c); 
6.303; 6.304.  When the J&A sets forth reasonable justifications for 
the agency's actions, we will not object to the award.  See Sperry 
Marine, Inc., B-245654, Jan. 27, 1992, 92-1 CPD  111.

Here, the J&A--dated March 10, 1994--states, in relevant part:

     "AUTHORITY CITED - 10 U.S.C. [] 2304(c)(1), FAR [] 6.302-1.  
     Only one responsible source and no other supplies or services 
     will satisfy agency requirements.

     "REASONS FOR AUTHORITY CITED - The proposed acquisition requires 
     use of the cited statutory authority because the data required to 
     produce this Depot Maintenance Plant Equipment (DPME) is not 
     available within the Government.  This data exists only at [DTB].  
     Procurement of this data by the Government in order to allow 
     competition would exceed Government cost limitations and would 
     not be feasible within the required time for scheduled Army Force 
     Modernization pilot programs mandated by Deputy Chief of Staff 
     for Logistics (DCSLOG) and Joint Depot Maintenance Advisory Group 
     (JDMAG) decisions.

     "[A Market Survey] resulted in a determination that the units 
     produced by [DTB] are the only units compatible with Army 
     requirements, particularly with regard to interfacing with 
     existing equipment at CCAD (i.e. [the DTB UH-60 test stand]."

We recognize that the explanation in the J&A is somewhat general.  For 
example, the J&A describes the basis for the sole source award in 
terms of the lack of "data required to produce" the equipment, instead 
of more precisely describing the need for software compatibility.  
Nevertheless, as explained below, we think the J&A adequately conveyed 
the rationale for the sole source award, and that this rationale is 
reasonable.

The rationale set forth in the J&A, although brief, is consistent with 
the detailed technical testimony provided by the Army at the hearing 
in this case.  As explained by the Army, the "data" referenced in the 
J&A is the software which runs the DTB equipment.  This software is 
unique to DTB and, because DTB owns the exclusive rights to the 
software, it cannot be reproduced by AAI ACL or any other hydraulic 
test stand manufacturer without a complete reverse engineering 
effort.[4] (Tr. at 84.)

Further, the Army states that given the current CCAD backlog of 
hydraulic components requiring testing and repair, a reverse 
engineering effort is not feasible in this case because of the time 
required to reverse engineer the software--and the resulting 
interruption to the current production line, the greater expense to 
the government of purchasing a software developed by means of a 
research and development effort, and finally, the potential risk that 
even if reverse--engineered, the resulting software solution might not 
be completely interchangeable with or equivalent to the DTB software 
which is currently used to run the UH-60 test stand.  (Tr. at 83; 
86-89.)

As explained by the CCAD officials, the unification of automated 
hydraulic test stands through a centralized computer system will 
improve the efficiency of testing and repairs, and will enable the 
government to "save hundreds of thousands of dollars" because of the 
speed of testing production and the ability to share software, and 
track repairs and test results through the depot system.  (Tr. at 83.)  
The manual stand-alone testing stations do not offer this capability.  
There is no dispute by any of the parties that the Army's desire for 
an integrated automated hydraulic testing station system is improper.  
Nor does the protester disagree that, absent a reverse-engineering 
effort, only DTB software will run DTB equipment.

Under these circumstances, given the risk and cost associated with a 
reverse-engineering effort, and the Army's uncontested need for a 
centralized automated testing system, we find the current sole source 
award to DTB to be reasonably based and unobjectionable.[5]  See 
Midwest Dynamometer & Eng'g Co., B-257323, Sept. 2, 1994, 94-2 CPD  
91 (sole source award for engine test system is unobjectionable where 
agency reasonably determined that only one source could provide a test 
system compatible with existing software); Sperry Marine, Inc., supra, 
(sole source award for navigational radar systems to be used for 
instructional purposes is not objectionable where agency needed a 
particular radar system that was the same as the system already in 
place at the school).

At the hearing, and in its comments on the hearing, AAI ACL stated 
that if it were given the opportunity to compete for this requirement, 
it would offer its own UH-60 test stand--to replace the existing DTB 
test stand--at no extra cost to the Army.  Under this scenario, the 
Army would have a completely integrated five-stand AAI ACL system, 
plus an extra DTB stand which could be used on a stand-alone basis.  
Based on this offer, AAI-ACL contends that the Army should have 
realized that competition is feasible, and therefore competitively 
procured the additional four test stands and integrating computer 
system.

As noted above, the price of the UH-60 test stand under the 1994 sole 
source procurement to DTB was $955,944.  The price of the equipment 
under the current sole source contract at issue in this protest is 
$1,875,167; the price of the pending Air Force buy is $1,719,107.  We 
do not think that the Army was required to speculate that for 
equipment worth in total less than $5 million, potential competitors 
might offer approximately $1 million dollars in replacement equipment 
at no cost in exchange for the opportunity to compete.

AAI ACL next argues that the sole source award to DTB is improper 
since the noncompetitive basis for the procurement arose from a lack 
of advance planning.  As noted above, the record shows that in 1990, 
the Army conducted an engineering survey to study what upgrades were 
necessary to improve its production and testing/repair mission.  
Because the agency knew by 1992 that it ultimately needed to upgrade 
the entire facility, AAI ACL argues that the agency was required to 
procure all its equipment needs at the same time, under a total 
package procurement.  In making this argument, AAI ACL relies on FAR  
6.301(c)--which provides that the expiration of appropriated funds 
does not constitute a basis for procuring under a sole source award to 
save time--and contends that the Army's apparent lack of funding does 
not provide a reasonable justification for the current sole source.

Unlike the situation addressed by FAR  6.301(c), CCAD here was not 
faced with expiring funds--rather, it had insufficient funds available 
to satisfy its entire long-term needs.  That is, while the Army 
clearly had planned and devised an engineering concept for updating 
its facility to a centralized automated system of seven hydraulic test 
stands of varying capabilities, it was simply not in a position to 
procure these items until it received adequate funding.  When it 
obtained some funding, it chose--we think,  properly--to procure its 
most critical need first, the UH-60 hydraulic component testing 
stand.[6]

AAI ACL also suggests that the Army was required to include an 
addendum in the  1992 sole source CBD synopsis advising prospective 
offerors that any follow-on equipment would be required to be 
compatible with the DTB equipment.   We think this would be an 
unreasonable burden to impose on the agency in light of the fact that 
the Army did not know when--or in fact whether--it could obtain 
funding for any remaining equipment upgrades.  In any event, given the 
integrated capabilities which automated hydraulic testing equipment 
offers, we think a manufacturer experienced in the field--such as AAI 
ACL--should have recognized that if the Army were procuring an 
automated test stand, the compatibility of this test stand with future 
pieces of equipment would certainly be a consideration in future 
procurements.[7]

Finally, AAI ACL argues that this procurement is improper because the 
Army did not obtain a delegation of procurement authority (DPA) from 
the General Services Administration (GSA) to conduct the acquisition.  
Since, according to the protester, the requirement here is for the 
acquisition of automated data processing equipment (ADPE), a DPA was 
required under the Brooks Act, 40 U.S.C.  759 (1988).

Even assuming that these test stands and associated computer system 
are ADPE, we will not consider this contention further as it is 
untimely.[8]  Our Bid Protest Regulations require that protests based 
upon alleged improprieties in a solicitation which are apparent before 
the closing time for receipt of initial proposals must be filed before 
that time.  See 4 C.F.R.  21.2(a)(1) (1995); Engelhard Corp., 
B-237824, Mar. 23, 1990, 90-1 CPD  324.  In this case, the Army's 
failure to obtain a DPA was apparent before the closing time for 
receipt of initial proposals since the RFP did not include a clause 
describing any type of DPA, as required by the Federal Information 
Resources Management Regulation, 41 C.F.R.  201-39.106-4; 
201-39.5202-3 (1995).  Because this clause was not included in the 
solicitation, the protester knew or should have known that the Army 
had not obtained a DPA to conduct this procurement.  See Source 
Diversified, Inc., B-259034, Mar. 1, 1995, 95-1 CPD  119; Ebon 
Research Sys., B-253833 et al., Nov. 3, 1993, 93-2 CPD  270.

Despite its untimeliness, AAI ACL contends that we should consider its 
protest under the significant issue exception to the timeliness rules.  
See 4 C.F.R.  21.2(c).  Our Office will review an untimely protest 
under the significant issue exception only if the matter raised is of 
widespread interest to the procurement community and has not been 
considered on the merits in a previous decision.  DynCorp, 70 Comp. 
Gen. 38 (1990), 90-2 CPD  310.  Whether a DPA should have been 
obtained from GSA under the Brooks Act for a particular procurement 
has been considered by this Office in a variety of prior decisions, 
see our discussion in Source Diversified, Inc., supra, and we do not 
view the issue of whether a delegation should have been obtained for a 
particular procurement to be of widespread interest to the procurement 
community.[9] Id.

The protest is denied.

Comptroller General
of the United States

1. References to the transcript of the hearing held in this case are 
identified by "Tr."

2. The UH-60 test stand can test other helicopter components; however, 
its primary purpose is to test UH-60 hydraulic component repairs.

3. The contracting officer and CCAD technical engineers testified that 
they delayed informing AAI ACL at the same time DTB was ordered to 
continue contract performance because they needed to prepare a 
detailed, technical statement for the protester.  (Tr. at 151 - 154.)

4. Each hydraulic test stand manufacturer uses a unique proprietary 
equipment configuration and software; there is no universal software 
which will operate all equipment systems.

5. AAI ACL argues that the J&A is defective because it states that "no 
follow-on procurement is anticipated."  Because the record shows that 
the Air Force is currently in the process of procuring two additional 
test stands needed by CCAD to complete its seven-test stand upgrade 
goal established in 1992, AAI ACL argues that this portion of the J&A 
is incorrect, and therefore merits sustaining its protest on the 
ground that the J&A is defective.  The CCAD technical engineer 
testified that his purpose in using the J&A statement referenced above 
was to convey that this equipment would not need to be replaced. (Tr. 
at 238-240.)  The CCAD technical engineer further acknowledged that at 
the time of this procurement, he recognized that it was possible that 
the Army might be "adding" more test stands to the system procured 
under the current DTB sole source award--as it ultimately did through 
the Air Force procurement.  Given that the J&A otherwise adequately 
conveyed the basis for this sole source award--the need for software 
compatibility--we do not think that the inclusion of the "no follow-on 
buy" phrase presents a basis to conclude that the J&A is fatally 
defective so as to justify sustaining the challenge to the award to 
DTB.

6. To the extent AAI ACL challenges the 1993 sole source award as 
improper, its protest is untimely.  AAI ACL admittedly saw the 1992 
CBD synopsis of the first sole source award, but chose not to respond 
or challenge the procurement.  Consequently, its current attempt in 
this protest to have our Office invalidate the initial sole source for 
the UH-60 test stand as improper, more than 2 years later, is 
untimely.  See Navigation Services Corp., B-255241, Feb. 10, 1994, 
94-1 CPD  99.  AAI ACL chose to ignore the synopsis which expressly 
sought responses from interested sources; consequently, it must abide 
by that decision.

7. In its comments, AAI ACL contends that the Army violated FAR  
7.202(a)(1), which requires agencies to "procure supplies in such 
quantity as will result in the total cost and unit cost most 
advantageous to the [g]overnment, where practicable."  We find this 
contention without merit.  As discussed above, because the Army did 
not have sufficient funding available, it was not possible to procure 
the entire system under one procurement.

8. AAI ACL first learned that the Army had a total facility upgrade 
requirement at the October 5 hearing held in this case.  Based on this 
information, AAI ACL argues that the Army was required to obtain a 
total package DPA from GSA--and since this ground is filed within 10 
working days of the October 5 hearing, this particular protest 
contention is timely.  As discussed above, we conclude that the Army 
properly procured its test stands on an as-needed basis--and that 
under the financial circumstances present in this case, a total 
package procurement for an entire facility equipment upgrade was not 
possible.  Since we conclude that a total package procurement was not 
required, we need not consider AAI ACL's contention that the Army was 
required to obtain a total package DPA from GSA.

9. GSA reports that on June 19, 1995, it established a "new specific 
agency [DPA]" for the Army for acquiring ADPE resources.  This DPA 
allows the Army to procure up to $100 million in ADPE resources from 
one or several sources without obtaining the prior approval of GSA.  
GSA also reports that it has granted a $100 million DPA for ADPE 
resources to all executive agencies--including the Air Force.