BNUMBER:  B-272067
DATE:  September 16, 1996
TITLE:  Kitco, Inc.

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Matter of:Kitco, Inc.

File:     B-272067

Date:September 16, 1996

Randall Finley for the protester.
Eric A. Lile, Esq., Department of the Navy, for the agency.
Robert Arsenoff, Esq., and Paul I. Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Language in synopsis of proposed source approved procurement 
inviting potential offerors to submit source approval requests did not 
guarantee that agency possessed data from the original equipment 
manufacturer sufficient to determine whether protester's reverse 
engineered product would be equivalent to the approved product.

2.  Protest that delay in providing details of the reasons for 
disapproving protester's source approval request resulted in 
competitive prejudice is denied where protester alleges only that, had 
it known the reasons earlier, it would have pursued commercial markets 
for its product in lieu of attempting to supply the product to the 
government.

DECISION

Kitco, Inc. protests the award of a contract to the Sundstrand 
Corporation under request for quotations (RFQ) No. N00383-96-Q-F018, 
issued by the Department of the Navy for pump diaphragm assemblies.  
The protester alleges that the agency unduly delayed in providing 
detailed reasons for the denial of Kitco's source approval request 
(SAR) and that this delay competitively prejudiced Kitco.

We deny the protest.

BACKGROUND

The proposed acquisition was synopsized in the Commerce Business Daily 
(CBD) on January 16, 1996.  The synopsis advised potential offerors 
that the pump diaphragm assemblies had to be obtained from 
Sundstrand--the only currently approved source for this flight 
critical item.  The synopsis further provided that, although the time 
required for approval of new sources is normally such that award 
cannot be delayed pending approval of a SAR, requests for approval 
could be submitted by firms other than Sundstrand.  On January 27, the 
RFQ was issued to Sundstrand for a quantity of 293 pump assemblies.  
Kitco requested and received a copy of the RFQ, submitted a quotation 
and submitted a SAR for a reverse engineered assembly.  Following the 
denial of the firm's SAR, Kitco filed this protest.  Award was 
subsequently made to Sundstrand for 144 assemblies on the basis of 
urgency, notwithstanding the pendency of the protest.

On August 29, 1994, Kitco had submitted a SAR to the Navy for the 
assemblies in question, indicating that source approval based on 
reverse engineering efforts had previously been granted by the Air 
Force to a predecessor firm which Kitco had acquired.  At about the 
same time, Kitco submitted a SAR to the Air Force which was 
disapproved in March of 1995 because the agency lacked detailed 
drawings and a data package which are proprietary to Sundstrand and 
which are necessary for the analysis of an SAR based on a reverse 
engineering effort; the record indicates that Kitco disagreed with the 
Air Force's decision.  Shortly after this decision, the Air Force 
terminated a contract with Kitco that included the pump assemblies in 
question.

During the course of its own investigation, the Navy made internal 
inquiries as to the availability of the drawings, sought without 
success to obtain them from the manufacturer and, because Kitco had 
referenced the Air Force approval in its SAR submitted to the Navy, 
contacted Air Force officials regarding the matter.  On May 1, 1995, 
the contracting activity forwarded the matter, together with the 
materials obtained from the Air Force, to the Naval Air Systems 
Command (NAVAIR), the design control activity for Naval aircraft, 
which has exclusive authority to perform final engineering reviews for 
flight critical components.  On August 16, NAVAIR advised the 
contracting activity that the SAR had been disapproved; Kitco was 
advised of the disapproval in a letter dated September 15 which did 
not provide any specific reasons for the disapproval.

Thereafter, Kitco made several inquiries seeking the details for the 
disapproval of its SAR, including a Freedom of Information Act (FOIA) 
request dated January 3, 1996.  The Navy responded on February 15, 
providing responsive records including a technical data package review 
checklist which summarily set forth deficiencies in the SAR which 
contributed to its disapproval.  On February 20, Kitco sought further 
information which was provided to the firm by letter dated February 
29.

In the February 29 letter, the Navy advised Kitco of the details for 
disapproval of its SAR noting:  (1) Kitco's failure to provide 
complete dimensional data for the assembly, a failure of Kitco's 
drawings to include complete dimensions and process data for all 
components in the assembly and a failure of the assembly drawing to 
provide detailed manufacturing data which, if not equivalent to the 
approved source's part, could have an adverse effect on reliability 
and durability; (2) that because the Navy does not possess the 
complete data package for the current approved item, a determination 
of the validity of the dimensions to include critical tolerances could 
not be made; (3) that without the details of the processes required 
for the manufacture and test of the current approved part and without 
the details of Kitco's and its subcontractors' processes which will be 
used to manufacture and test the item, a determination cannot be made 
that Kitco parts would be equally reliable and durable as Sundstrand 
parts; and (4) that because the Navy does not possess the detailed 
test requirements used to qualify the Sundstrand part, it cannot 
perform a prequalification test which would be necessary in order to 
ensure that Kitco's product would be equivalent to Sundstrand's.

On March 13, Kitco protested this decision to the Navy.  On March 29, 
the firm submitted a new SAR including additional dimensional 
information and a report of its reverse engineering results.  By 
letter dated May 1, the Navy denied the protest on the basis that the 
agency could not obtain the data necessary to evaluate Kitco's SAR.[1]  
This protest followed. 

PROTEST AND ANALYSIS

Kitco makes two principal allegations:  (1) the language of the CBD 
notice inviting offerors to submit SARs for consideration precludes 
the government from disapproving a SAR based on a lack of proprietary 
data from the only approved manufacturer; and (2) the protester was 
prejudiced by a delay in learning the reasons for the rejection of its 
original SAR.[2]

When a contracting agency restricts contract award to an approved 
product, and imposes a qualification requirement, it must give 
unapproved sources a reasonable opportunity to qualify.  This 
opportunity to qualify includes ensuring that an offeror is promptly 
informed as to whether qualification has been obtained and, if not, 
promptly furnishing specific information why qualification was not 
obtained.  Electro-Methods, Inc., B-255023.3; B-255023.4, Mar. 4, 
1994, 94-1 CPD  para.  173.  The lack of a technical data package sufficient 
to complete necessary testing is a proper reason for not approving a 
SAR.  Id.

With regard to the first issue, Kitco argues that Electro-Methods is 
inapplicable to this procurement because the agency in that case 
restricted award to currently approved sources and advised that there 
was not enough time to qualify new sources.  By contrast, Kitco argues 
that in the protested procurement, the synopsis effectively bars the 
agency from using its lack of a technical data package to disapprove 
an SAR noting that its language "suggested that the government would 
consider any proposal submitted within the specified time and there 
was clearly enough time for a potential supplier to be qualified on 
the part."

Kitco's distinction is erroneous.  The CBD announcements in both cases 
are virtually identical in all material respects.  Each stated that 
the Navy did not possess sufficient technical data to support full and 
open competition for a flight critical item and each stated that award 
would be restricted to approved sources.  While each indicated that 
other potential sources might be considered if they submitted SARs, 
each also cautioned offerors that the time required for source 
approval is normally such that award cannot be delayed pending 
approval of a new source.  We, therefore, find no reason to draw the 
distinction urged by the protester, and we have no basis to conclude 
that the agency was precluded from relying on the lack of a technical 
data package to disapprove Kitco's SAR.  Moreover, we note that Kitco 
appears to have been aware since March of 1995 when its Air Force SAR 
was rejected that the government lacked sufficient technical 
information to process it.

With regard to the second issue, in its initial protest Kitco argued 
that the delay in providing the firm with the detailed reasons for the 
rejection of its SAR from September of 1995 until February of 1996 
prejudiced the firm because it precluded the protester from 
redirecting "its own efforts in defining alternative source approval 
solutions."  In its comments on the agency report, Kitco elaborated:

     "Had Kitco been informed immediately that there was no way it 
     could process Kitco's SAR due to lack of data, Kitco would have 
     begun the process of getting qualified through the FAA for PMA so 
     that we could at least compete in the commercial aircraft market.  
     Kitco was prejudiced by delay.  We were following the more 
     beneficial course.  Had we been able to receive approval through 
     the Navy then Kitco would be in a position to supply the part to 
     the larger of the two markets. . . .  We made a strategic 
     decision to attempt approval with the military."

Kitco seems to be arguing that, had it known in September that the 
Navy lacked the requisite technical data, the firm would have 
abandoned its qualification pursuits with the government altogether.  
This is tantamount to saying that early disclosure would have 
foreclosed Kitco's attempted participation under the protested RFQ 
altogether.  Accordingly, we fail to see how the delay in question 
caused competitive prejudice with respect to this procurement--a 
necessary element of a viable protest.  Lithos Restoration, Ltd., 71 
Comp. Gen. 367 (1992), 92-1 CPD  para.  379.  Further, the record does not 
support Kitco's contention that it expended any resources attempting 
to qualify between September and February.  Accordingly, this aspect 
of the protest is without merit.

The protest is denied.

Comptroller General
of the United States

1. On March 11, the Navy offered to purchase the proprietary data from 
Sundstrand; Sundstrand refused the offer on April 2.

2. Kitco has also suggested that, knowing that source approval was 
rendered impossible by a lack of Sundstrand data, the agency was 
remiss in not attempting to develop alternative methods of testing 
alternative products without the data.  In the initial protest Kitco 
made several suggestions as to alternative methods of testing which 
were addressed in the agency report in detail.  The Navy specifically 
pointed out why Kitco's proposed methods were inadequate and described 
why Sundstrand data was necessary to design reliable alternative 
qualification tests.  In its comments on the agency report, the 
protester specifically acknowledged that its proposed tests were 
incomplete and did not address the agency's rationale supporting the 
need for the proprietary data.  Accordingly, we have no basis for 
questioning the Navy's judgment not to develop alternative testing.