BNUMBER:  B-260977.2; B-260977.3
DATE:  November 2, 1995
TITLE:  Nomura Enterprise, Inc.--Request for
Reconsideration and Protest

**********************************************************************

Matter of:Nomura Enterprise, Inc.--Request for 
            Reconsideration and Protest

File:      B-260977.2; B-260977.3

Date:   November 2, 1995                

John W. Reimers and Al Weed, Esq., for the protester.
Caridad Ramos, Esq., and Jeffrey I. Kessler, Esq., Department of the 
Army, for the agency. 
Laurence Schor, Esq., Smith, Somerville & Case, for Barnes & Reinecke, 
Inc., an interested party.
M. Penny Ahearn, Esq., and David A. Ashen, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest against award of sole source contract for engineering support 
services related to the M109 self-propelled howitzer is denied where 
agency reasonably concluded that unacceptable delays would occur if 
award were made to another source prior to completion of current 
production due to massive amount of materials and equipment which 
would have to be transferred to new contractor.

DECISION

Nomura Enterprise, Inc. (1) requests reconsideration of our May 5, 
1995 dismissal of its protest against the intended award by the 
Department of the Army, Army Materiel Command, of a sole source 
contract to Barnes & Reinecke, Inc. (BRI), and (2) protests the 
subsequently issued solicitation--request for proposals (RFP)       
No. DAAE20-95-R-0101--for a sole source award to BRI, for engineering 
support services related to the M109 self-propelled howitzer.  The 
Army justifies the proposed sole source award to BRI on the basis that 
only BRI can provide the services without unacceptable delays and 
substantial duplication of costs that will not be recovered through 
competition.  Nomura challenges both of these conclusions.  

We dismiss the request for reconsideration as academic and deny the 
protest.

BACKGROUND

The M109 howitzer provides artillery support to armored/mechanized 
infantry divisions for the Army and several foreign military sales 
customers.  The services being procured include:  engineering and 
maintenance of the M109 technical data package, technical manuals, and 
depot maintenance work requirements; development and incorporation of 
engineering change proposals; engineering studies; failure analysis; 
and life-cycle engineering.   

The original "class" justification and approval (J&A) for use of other 
than full and open competitive procedures concluded that a sole source 
award to BRI was justified under the authority of 10 U.S.C.  
2304(c)(1), on the basis that the firm was the only known source that 
could supply the services.  It provided that BRI was to perform the 
services for a period of approximately 5 years.  The J&A recognized 
Nomura as an interested source, but concluded that the firm would need 
at least an 18- to 24-month start-up period, a delay the M109 program 
could not then accommodate.  

On March 21, 1995, a synopsis of the intended award to BRI was 
published in the Commerce Business Daily (CBD).  On April 3, Nomura 
protested the sole source procurement, alleging that it could perform 
the work based on its past performance of a technical support contract 
for the M110 self-propelled howitzer.  (At the time of the protest, 
the firm did not have a copy of the J&A, and thus did not specifically 
challenge it.)  On May 5, we dismissed Nomura's protest (B-260977) as 
premature, based on the agency's representation that the sole source 
award to BRI was under consideration and had not yet received the 
necessary approvals.  If and when the procurement approval was made on 
a sole source basis, the Army indicated it intended to resynopsize the 
procurement in the CBD.  In response, Nomura first requested 
reconsideration of our dismissal and then, after issuance of the 
solicitation for a sole source award to BRI, protested the agency's 
rationale for a sole source procurement.

Subsequently, on August 3, the Army issued amendment No. 1 to the 
original class J&A.  The amended J&A concluded that a sole source 
award to BRI, the developer of the M109 howitzer, was necessary 
because a competitive procurement would result in program delays of 6 
to 10 months and duplication of costs not expected to be recovered 
through competition in the amount of $2,000,000.  The amendment 
decreased the dollar value of the contract contemplated in the 
original J&A by almost half and the 5-year term of the original J&A to 
1 year plus two 6-month options.  It also provided for competition for 
future M109 engineering services in the near future; the agency 
expects to issue a competitive solicitation by February 1996 and 
estimates a resulting award by October 1996.  

REQUEST FOR RECONSIDERATION

In its request for reconsideration, Nomura argues that its initial 
protest was against the original J&A and not the then unapproved sole 
source procurement, as we interpreted the protest, and that its 
protest therefore in fact was not premature.  Even if we were to agree 
with this interpretation of the protest, which we do not, since the 
original J&A has now been superseded and substantially changed by 
amendment No. 1, any protest against the original J&A is of purely 
academic interest.  Consequently, the request for reconsideration on 
the basis of the original J&A is also academic.  Since it is not our 
practice to consider academic questions, see East West Research, 
Inc.--Recon., B-233623.2, Apr. 14, 1989, 89-1 CPD
 379, we dismiss the request for reconsideration. 

PROTEST OF SOLE SOURCE PROCUREMENT

Nomura argues that the amended J&A fails to support the sole source 
procurement.  Nomura claims that it has done work similar to that 
covered by the procurement.  The protester questions the Army's 
estimate of the costs associated with conducting a competitive 
procurement, and asserts that any delays that might be experienced as 
a result of pursuing a competitive procurement are the result of the 
Army's lack of foresight and planning.  

Because the overriding mandate of the Competition in Contracting Act 
of 1984 (CICA) is for "full and open competition" in government 
procurements obtained through the use of competitive procedures, 10 
U.S.C.  2304(a)(1)(A), we will closely scrutinize sole source 
procurements conducted under the exception to that mandate authorized 
by 10 U.S.C.  2304(c)(1).  Test Sys. Assocs., Inc., 71 Comp. Gen. 33, 
(1991), 91-2 CPD  367, aff'd, B-244007.3, Mar. 17, 1992, 92-1 CPD  
287.  Sole source awards are authorized by 10 U.S.C.  2304(c)(1) 
where the agency reasonably concludes that only one known source can 
meet the government's needs.  Sperry Marine, Inc., B-245654, Jan. 27, 
1992, 92-1 CPD  111.[1]  In this regard, 10 U.S.C.  2304(d)(1)(B), 
as implemented by Federal Acquisition Regulation  6.302-1(a)(2)(iii), 
provides that for purposes of applying subsection (c)(1), highly 
specialized services may be deemed to be available only from the 
original source and procured through other than competitive procedures 
(1) when it is likely that award to any other source would result in 
substantial duplication of cost to the government that would not be 
recovered through competition, or (2) where a competition would result 
in unacceptable delays in fulfilling the agency's needs.

We find that, consistent with the above authority, the Army has 
reasonably justified a sole source award to BRI for the interim period 
pending the competitive procurement of these services.    

The amended J&A concluded that BRI, the developer and custodian of the 
M109 howitzer technical drawings and data, technical manuals, and 
provisioning data, is the only known contractor who has the expertise, 
technical production facility, configuration control, and overall 
management capability to satisfy the agency's requirements for 
uninterrupted services.  This conclusion was based in part on the 
agency's determination that a competitive procurement would result in 
unacceptable program delays of 6 to 10 months due to the massive 
volume of data which would have to be moved to a new contractor and 
the associated start-up time.  According to the J&A, the estimate of a 
6- to 10-month delay is consistent with the observed historical 
start-up times for new contractors of 8 to 12 months due to time lost 
because of the transfer of technical drawings and government-furnished 
equipment.  Here, specifically, the expected delay reflects the fact 
that the materials to be moved include 15,000 original mylar drawings, 
1,000,000 associated configuration management documents and files, 11 
vehicles (ranging in unit weight from 32,000 to 55,000 pounds), 13 
spare engines, 2 transmissions, and approximately  2,500 miscellaneous 
items, including file cabinets and spare parts.  The data in the 
project files includes engineering calculations, test data 
correspondence, video tapes, still photographs, and computer tape 
backup of original technical and publication data.  The J&A estimated 
that a minimum of 10,000 man-hours would be required to catalogue, 
package and transport an inventory of this magnitude and an additional 
several weeks would be required for the receiving contractor to 
inventory and set up the equipment.  Furthermore, the J&A states that 
18 to 24 months would be required for the new contractor to 
familiarize itself with the configuration and associated documentation 
and otherwise develop the high level of expertise necessary to support 
full production and provide a level of support similar to the present 
level.   

According to the J&A, such significant delays are unacceptable since 
continuity of services is critical to ensuring timely and successful 
production and any break in support would threaten production and 
present an unacceptable level of program risk.  In this regard, the 
amended J&A stated that the government is currently involved in a 
number of ongoing M109 howitzer production programs, which will 
continue through February 1996, all of which are considered high 
priority and require substantial engineering support, including 
constant updating of drawings.  According to the J&A, a transfer of 
drawings and associated documentation to a new contractor would 
require a "freeze" on the technical data package (TDP) with the result 
that no revisions could be made to the drawings during the transfer 
period.  As a result, the government would be forced to utilize an 
outdated and fragmented TDP which would prevent the incorporation of 
required revisions to prevent or correct fit and/or functional 
problems.

Consequently, concluded the amended J&A, a competitive procurement 
could not be accommodated until February 1996, with contemplated award 
in October 1996, when current production obligations are completed and 
a scheduled design freeze (where no further nonemergency engineering 
change proposals will be introduced into the configuration) will be in 
place.  (According to the amended J&A, while delay as a result of 
transitioning and development of expertise will still be a concern, 
such delays can more easily be tolerated when full production is not 
underway and a design freeze is in place.)   

We find that this determination is reasonable on its face, and that 
Nomura has not shown otherwise.  Nomura argues that the "Department of 
Defense has many engineering services contracts with more volume 
and/or technical complexity than the M109 program that are competed 
and transitioned regularly" and that any purported delays here are due 
to the agency's lack of planning.  In effect, the protester is arguing 
that, contrary to the agency's assertions, a competitive procurement 
could be undertaken during production without resulting in 
unacceptable delays.  However, the protester has not rebutted the 
agency's specific findings here that a minimum of 10,000 man-hours 
would be required for the transitioning of materials and equipment and 
that such a massive transition effort would cause unacceptable delays 
in current production of from 6 to 10 months.  Nor has it established 
that there were any specific planning or steps that the agency could 
have previously undertaken which would have permitted the agency to 
competitively procure the requirement during production without 
causing unacceptable disruption to production.  General pronouncements 
to the effect that a competitive procurement can "be structured to 
address the technical and schedule concerns" provide us with no basis 
to disagree with the Army's determination that unacceptable delays 
would occur if the services were competitively procured during current 
production and prior to the scheduled February 1996 competition, when 
production will be completed.  Further, while the protester may 
believe that the services can be competed on a more expedited schedule 
than the agency now plans, nothing in the record indicates this.  

Finally, contrary to the protester's argument, the record indicates 
that the Army did in fact investigate the severability of the 
requirement as a means to promote competition.  The amended J&A stated 
that breakout of the engineering effort was determined not to be 
feasible because it would entail establishment of portions of the 
original drawings at both the present and new contractor facilities 
and the resulting overlap in time, funding, administration, and 
government-furnished equipment would create an unmanageable and 
inefficient situation, resulting in delays for both contractors which 
would put the M109 program in jeopardy.  The protester has not 
specifically rebutted this determination, nor is there anything in the 
record which shows it to be unreasonable.[2]

Given our conclusion that the Army reasonably determined that a 
competition now would result in unacceptable delays in fulfilling the 
agency's needs, we need not decide whether a sole source procurement 
was also justified by the need to avoid the substantial duplication 
costs not expected to be recovered through competition.   See 
Allied-Signal, Inc., B-247272, May 21, 1992, 92-1 CPD  461.

The protest is denied.

Comptroller General
of the United States

1. CICA specifically provides, however, that agencies may not justify 
the use of noncompetitive procedures on the basis of a lack of advance 
planning.  10 U.S.C.  2304(f)(5); TeQcom, Inc., B-224664, Dec. 22, 
1986, 86-2 CPD  700.  

2. The protester complains that the agency did not conduct a market 
survey before reaching its sole source determination.  However, since 
the record shows that the Army was well aware of Nomura's 
qualifications, but nevertheless reasonably concluded that a sole 
source procurement was warranted, Nomura was in any way prejudiced by 
the agency's failure to undertake a formal market survey.