BNUMBER:  B-266039.3
DATE:  July 5, 1996
TITLE:  J.F. Taylor, Inc.--Entitlement to Costs

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Matter of:J.F. Taylor, Inc.--Entitlement to Costs

File:     B-266039.3

Date:July 5, 1996

Jacob B. Pompan, Esq., Pompan, Ruffner & Werfel, for the protester.
Damon Martin, Esq., Department of the Navy, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protester is not entitled to reimbursement of the costs of filing and 
pursuing its protests where the agency decides to take corrective 
action in response to the protests, and the protests, which concerned 
the proper interpretation of the solicitation's requirements and the 
awardee's compliance with the requirements, were not clearly 
meritorious. 

DECISION

J.F. Taylor, Inc. requests that we declare it entitled to 
reimbursement of the costs of filing and pursuing its protests against 
the award of a contract to Hughes Training, Inc. (HTI) under request 
for proposals (RFP) No. N61339-95-R-0008, issued by the Naval Air 
Systems Command, Department of the Navy, for the modification of two 
weapons systems trainers used to train personnel in the operation of 
the AH-1W SuperCobra helicopter.

We deny the request.

The RFP, issued on November 23, 1994, provided for the award of a 
firm, fixed-price contract to the offeror submitting the 
lowest-priced, technically acceptable proposal.  The solicitation 
provided detailed instructions for the preparation of proposals, and 
among other things, informed offerors that during technical 
discussions they would be required to demonstrate the "major 
components" of their proposed visual system for the weapons systems 
trainers.

The agency received seven proposals from five offerors, ranging in 
price from $7,234,138 to $13,502,147.  The proposals were evaluated, 
discussions were held, and best and final offers were requested from 
HTI and Taylor.  The proposals of HTI and Taylor, priced at $8,700,017 
and $11,352,190 respectively, were determined technically acceptable, 
and on August 30, 1995, the agency awarded the contract to HTI.

On September 8, Taylor protested the award to our Office, arguing that 
HTI's proposal should have been rejected as technically unacceptable.  
Taylor argued that based upon its knowledge of the industry, HTI could 
not have demonstrated a visual system compliant with the RFP's 
specifications regarding the visual system's "update rate" and 
"infrared" capability.[1]  After requesting summary dismissal of the 
protest on procedural grounds and having its request denied, the 
agency submitted its report in response to the protest on October 17.  
The agency argued in response to the protest that the protester had 
misinterpreted the requirements of the RFP and that HTI's proposal was 
in fact compliant with the RFP's specifications.

The protester timely commented on the agency report, and on October 30 
filed a supplemental protest with our Office in which it raised more 
specific arguments concerning HTI's proposed approach to meeting the 
RFP's requirements regarding the visual system's update rate and 
infrared capability, and HTI's ability to demonstrate compliance with 
the requirements.  Taylor also requested a hearing pursuant to 4 
C.F.R.  sec.  21.5 (1995), to address what the protester characterized as 
"inconsistencies" in the record.

Based on a telephone conference held November 11, the agency was to 
submit its report in response to the supplemental protest by November 
20, and the protester to submit its comments on the agency report by 
November 27.  The parties were informed during this telephone 
conference that our Office anticipated holding a hearing in early 
December, during which the issues raised by the protester in its 
initial and supplemental protests would be addressed.

On November 17, the agency submitted a request that Taylor's protests 
be dismissed because in the agency's view, they were predicated on 
Taylor's misunderstanding of the RFP's requirements.  The agency added 
that if the protests were not summarily dismissed, it would "initiate 
appropriate corrective action and resolicit proposals."  Our Office 
informed the agency on November 22 that the protests would not be 
summarily dismissed, and later that day received from the agency a 
request that the protests be dismissed as academic because the agency 
intended to "amend the solicitation involved in this protest to 
clarify proposal and evaluation information, and resolicit offers."  
Our Office dismissed the protests as academic on November 27.[2]  By 
letter of December 5, Taylor requests that we find it entitled to the 
costs of filing and pursuing its initial and supplemental protests.

Under the Competition in Contracting Act of 1984, our Office may find 
an entitlement to costs only where we find that an agency's action 
violated a statute or regulation.  31 U.S.C.  sec.  3554(c)(1) (1988).  Our 
Bid Protest Regulations provide that a protester may be entitled to 
the reimbursement of its costs of filing and pursuing its protest 
where the contracting agency decides to take corrective action in 
response to the protest.  4 C.F.R.  sec.  21.6(e) (1995).  This does not 
mean that costs are due in every case in which an agency decides to 
take corrective action; rather, a protester is entitled to costs where 
an agency unduly delayed its decision to take corrective action in the 
face of a clearly meritorious protest.  Oklahoma Indian Corp.--Claim 
for Costs, 70 Comp. Gen. 558 (1991), 91-1 CPD  para.  558.  Thus, as a 
prerequisite to entitlement to costs where a protest has been settled 
by corrective action, not only must the protest have been meritorious, 
but it also must have been clearly meritorious, i.e., not a close 
question.  Baxter Healthcare Corp.--Entitlement to Costs, B-259811.3, 
Oct. 16, 1995, 95-2 CPD  para.  174; GVC Cos.--Entitlement to Costs, 
B-254670.4, May 3, 1994, 94-1 CPD  para.  292.  The mere fact that an agency 
decides to take corrective action does not establish that a statute or 
regulation clearly has been violated.  Network Software Assocs., 
Inc.--Request for Declaration of Entitlement to Costs, 72 Comp. Gen. 
78 (1993), 93-1 CPD  para.  46.

Here, we find that Taylor's protests do not provide a basis for a 
finding that it is entitled to be reimbursed for the costs of filing 
and pursuing its protests.  With regard to the issue of HTI's 
proposal's compliance with the solicitation's requirements, Taylor 
advances one interpretation of the solicitation--that offerors were 
required to demonstrate the compliance of their proposed visual 
systems, including their systems' infrared capabilities, at the update 
rate specified in the RFP in order to be found technically acceptable.  
The agency advances another--that the demonstrations, while required, 
were for information and illustration purposes only, and that the 
inability to successfully demonstrate all of the RFP's visual system 
requirements did not, in and of itself, render a proposal technically 
unacceptable.

Whether either interpretation is correct or whether the specifications 
were ambiguous is not readily apparent, but instead would require 
substantial further analysis, as indicated, in part, by our Office's 
statement during the pendency of the protest that it intended to hold 
a hearing to clarify and complete the protest record.  In other words, 
the proper interpretation of the RFP's requirements, and whether HTI's 
proposal complied with the requirements, were close questions.  As 
such, Taylor's protests were not clearly meritorious, and do not 
warrant the award of costs.  Id.

The request for declaration of entitlement to costs is denied.

Comptroller General
of the United States

1. According to the agency, "update rate" in lay terms "is the speed 
at which successive images are computed in order to be subsequently 
displayed," while "infrared" capability involves "calculating the heat 
(radiance) given off by an object."  

2. Taylor protested this proposed corrective action on December 8, 
asserting that it should receive the award.  Taylor withdrew this 
protest on January 29, 1996.