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.