BNUMBER: B-274175; B-274246.2; B-274287
DATE: November 25, 1996
TITLE: Datacom, Inc.--Protests and Request for Costs
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Matter of:Datacom, Inc.--Protests and Request for Costs
File: B-274175; B-274246.2; B-274287
Date:November 25, 1996
Joseph A. Camardo, Jr., Esq., and Robert D. Somerset, for the
protester.
Sophia L. Rafatjah, Esq., for Tracor, Inc., an intervenor.
Nike Nihiser, Esq., Bradley S. Adams, Esq., Gregory H. Petkoff, Esq.,
and Marian E. Sullivan, Esq., Department of the Air Force, for the
agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest that two sole source awards--one via a contract, one via a
modification to an existing contract--are improper and result from
poor planning on the part of the agency is denied where the record
shows that the agency: (1) properly justified its use of sole source
authority; (2) was not responsible for the delay that occurred due to
high-level political intervention in the procurement; and (3) limited
the amount of the purchases to a quantity reasonably calculated to
extend to the beginning of deliveries under a new contract to be
awarded using full and open competition.
2. Request for recommendation that protester be permitted to recover
reasonable costs associated with pursuing an earlier protest is denied
where the record shows that the protest in that case was rendered
academic by a change in statute, not by agency corrective action.
DECISION
Datacom, Inc. protests the Department of the Air Force's decision both
to award a contract (F09603-96-C-52442), and to issue a contract
modification (modification P00156 to F33657-88-C-0026), on a
sole-source basis to Tracor, Inc. for the purchase of the AN/ALE-47
Countermeasures Dispenser System. The contract award involves
quantities of spare parts related to this system for use on F-16
aircraft for the National Guard and the Air Force Reserve; the
modification involves 22 AN/ALE-47 shipsets to be split between
already-deployed C-17 aircraft earmarked for use in the Bosnia pullout
scheduled to begin December 1996 (12 shipsets), and new C-17 aircraft
where the items are needed as government-furnished equipment by
January 31, 1997 (10 shipsets). Datacom argues that the stated bases
for these two sole source decisions do not withstand scrutiny and
constitute an improper use of sole source procedures because the Air
Force engaged in poor planning. Datacom also requests that our Office
recommend that it recover the reasonable costs of filing and pursuing
an earlier protest related to those at issue here.
We deny the protests and deny Datacom's request for its earlier
protest costs.
BACKGROUND
The AN/ALE-47 Countermeasures Dispenser System (CMDS) is an electronic
warfare system used by the Army, Navy, and Air Force to protect
aircraft from hostile missile attacks.[1] The system discharges chaff
cartridges and decoy flares that distract ground-launched missiles
aimed at aircraft. Five distinct line replaceable units (LEU)
comprise the system in varying numbers and configurations depending on
the aircraft involved.
The original manufacturer of this equipment, Tracor, was awarded a
contract for lots I to III of this system in 1988. The record shows
that the Air Force anticipated to "breaking out" the remaining need
for these parts (lots IV to VII) and procuring the parts
competitively. However, before the Air Force could hold a competition
for the parts included in lots IV to VII, various forces intervened
and derailed the procurement. A chronology of these events is set
forth below.
On March 17, 1994, the Air Force published in the Commerce Business
Daily (CAD) a notice seeking potential new sources for production lots
IV to VII of the CMDS. After receiving several expressions of
interest, the Air Force, on January 30, 1995, released a draft RFP for
the remaining production quantities of the system. Prior to
finalization of the RFP, the procuring center's small business
representative recommended that the acquisition be set aside for small
business competition. After the contracting officer rejected the
set-aside recommendation, and the decision was appealed to the head of
the contracting activity--who also rejected the set-aside
recommendation--the Secretary of the Air Force decided, on September
12, 1995, that the procurement was appropriate for a total small
business set-aside. The Secretary's decision was based, in part, on a
conclusion that there were at least six small businesses capable of
producing this system.
The Secretary's decision calling for a total small business set-aside
resulted in extensive congressional interest. First, by letter dated
November 21, 1995, a U.S. senator requested that the procurement be
held in abeyance until the Air Force evaluated the impact of the
decision to proceed with a small business set-aside on cost, risk, and
industrial mobilization preparedness. On January 22, 1996, report
language in the National Defense Authorization Act for Fiscal Year
1996 Conference Report, H.R. Conf. Rep. No. 104-450, 104th Congress,
2d Sess. 617 (1996), directed the Air Force "to delay any procurement
action regarding lots IV through VII of the AN/ALE-47 until 14 days
after the date on which the Air Force has provided the congressional
defense committees with a report that assesses the cost and
acquisition strategy related to the introduction of new suppliers for
the system."
The Air Force provided its report to Congress on May 3, 1996, and
advised that it would continue with a total small business set-aside
for the remaining portion of the production quantities of the system.
The record shows that the Air Force report generated letters of
opposition from at least four additional senators, and one
representative. The record also shows that several members of
Congress expressed support for the decision to set aside this
procurement for small business.
In addition to expressions of interest by letter, on June 11, 1996,
the Fiscal Year 1997 House Appropriations Committee Report, H.R. Rep.
No. 104-617, 104th Cong., 2d Sess. 214 (1996), directed the Air Force
not to introduce any new supplier for this system. In conference with
the Senate, the House position was modified to require instead that
the Air Force drop its plans for a small business set-aside.
Specifically, on September 30, 1996, the President signed the
Department of Defense Appropriations Act, 1997, Pub. L. No. 104-208,
___ Stat. ___ (1996), which provides at section 8107 that:
"Notwithstanding any other provision of law, the Air Force shall
not introduce any new supplier for the remaining production units
for the AN/ALE-47 Countermeasures Dispenser System without
conducting a full and open competition that will include, but not
be limited to, small businesses."
Meanwhile, the Secretary of the Air Force reversed her earlier
decision, and decided on July 17, 1996, to pursue a full and open
competition in lieu of a small business set-aside. By memorandum
dated July 26, Air Force acquisition personnel were authorized to
proceed with the competition for the procurement of lots IV to VII,
but were advised that:
"In the event urgent requirements exist for the AN/ALE-47 (such
as C-17 or National Guard [line replacement units] requirements),
you are authorized to develop an alternate strategy (using either
new or existing contractual vehicles) to meet these requirements,
subject to any statutory or regulatory approvals."
Memorandum from Maj. Gen. John W. Hawley to Warner Robins Air
Logistics Center acquisition personnel, July 26, 1996.
Datacom's protests challenge the use of sole source procedures to meet
the two requirements identified in the July 26 memorandum.[2]
The National Guard and Air Force Reserve Procurements
The record here shows that as early as March 1994, the Air Force F-16
program office identified a need for AN/ALE-47 parts for the National
Guard and Air Force Reserve above the anticipated levels covered by
the lots III and IV procurements. At that time, the F-16 program
office asked that steps be taken to increase the purchase levels in
those lots. As set forth above, no progress was made in the overall
procurement for subsequent production parts because of the controversy
over how the parts would be procured.
In December 1995, amidst the debate over the appropriate method for
procuring these parts, agency acquisition personnel received a request
to procure 133 of 1 of the LRUs for the AN/ALE-47 system, the
dispenser, for the National Guard and Air Force Reserve. After
issuing a solicitation, the Air Force received 11 proposals (including
one from Datacom) prior to the January 19, 1996, deadline for proposal
submission. On January 24, the Air Force buyer was directed to cancel
the solicitation, and was advised that the program office had
decreased its need substantially, and would fill any remaining need
from existing stock. The solicitation was formally canceled on
February 23.
On August 2, one week after the July 26 direction to proceed with
procurements of AN/ALE-47 parts, the Air Force buyer received a new
purchase request from the F-16 program office for three AN/ALE-47
LRUs--i.e., spare parts--for the National Guard and Air Force Reserve.
This request sought 274 dispensers, 191 safety switches, and 21 Flight
Line Payload Simulators (FLPS). According to the request, these items
are to be provided as government-furnished material for the Electronic
Warfare Management System modification for the F-16 National Guard/Air
Force Reserve Theater Airborne Reconnaissance System pod.
On August 7, the Air Force published a CBD notice indicating the
agency would award a sole source contract to Tracor for these items.
A justification and approval (J&A) document was prepared citing the
authority set forth at 10 U.S.C. sec. 2304(c)(1) (1994), permitting the
use of other than competitive procedures when the supplies or services
needed by the agency are available from only one responsible source,
and no other product will satisfy the agency's needs. Datacom's first
protest followed.
The C-17 Procurement
The Air Force's inability to move forward on its competitive
procurement also impacted its ability to outfit C-17 aircraft with
AN/ALE-47 systems. In the agency report, the contracting officer
explained that the initial C-17 requirement was for 44 shipsets, but
only 22 had been funded at the time the agency negotiated its lot III+
procurement from Tracor in December 1995.[3] The Air Force explains
that the negotiations for the lot III+ procurement had to be complete
by the end of December 1995 to avoid a break in production. Thus, the
22 shipsets sought here were not purchased as part of the lot III+ buy
and the contracting officer hoped that the items might be addressed
through the upcoming competitive procurement.
The contracting officer further explained that in April or May 1996,
it became apparent that the competitive procurement would not occur in
time to meet the remaining requirements for shipsets for the C-17. In
June, Air Force procurement personnel concluded that an additional
purchase for these items would be required. This need became even
more acute because of a decision to use the C-17 to support the Bosnia
pullout (originally ordered by the President to start in December
1996). Thus, the Air Force determined that it needed 12 shipsets by
November 30 to retrofit the previously-delivered C-17 aircraft slated
for use in the pullout but lacking the CMDS. Agency officials also
included an additional 10 shipsets needed for delivery by January 31,
1997, to assure that C-17 aircraft in production would be combat-ready
when delivered.
To meet these needs the Air Force prepared a J&A to support its
decision to procure the 22 shipsets via a modification, if possible,
to Tracor's existing contract. The J&A cited the authority set forth
at 10 U.S.C. sec. 2304(c)(2), permitting other than competitive
procedures when the agency's need is of such an unusual and compelling
urgency that the government would be seriously injured unless the
agency is permitted to limit the number of sources. Here, the J&A set
forth the urgent need to support missions in Bosnia and, potentially,
the Far East. In addition, the J&A limited the buy to Tracor on the
basis that only Tracor could meet the accelerated delivery schedule,
and then only by using existing materials to build the items. The Air
Force awarded the contract modification on August 30, and Datacom's
second protest followed.
DISCUSSION
In both of these protests, Datacom essentially argues that the Air
Force is barred from using sole source procedures because it has not
performed the proper planning to ensure that its needs will be met
using competitive procedures. For the reasons set forth below, we
disagree with Datacom's general challenge, as well as with its
specific challenges to each procurement.
In general, the overriding mandate of the Competition in Contracting
Act (CICA)
is for "full and open competition" in government procurements, which
is obtained through the use of competitive procedures. 10 U.S.C. sec.
2304(a)(1)(A). With respect to the spare parts needed for the
National Guard and the Air Force Reserve, the Air Force used the
exception to full and open competition authorized by 10 U.S.C. sec.
2304(c)(1)--i.e., that there is only one source capable of meeting the
agency's needs. Marconi Dynamics, Inc., B-252318, June 21, 1993, 93-1
CPD para. 475; Sperry Marine, Inc., B-245654, Jan. 27, 1992, 92-1 CPD para.
111. To use noncompetitive procedures under 10 U.S.C. sec. 2304(c)(1),
the agency must execute a written J&A with sufficient facts and
rationale to support the use of the specific authority,
10 U.S.C. sec. 2304(f)(1)(A),(B); Federal Acquisition Regulation (FAR) sec.
6.302-1(d)(1); 6.303; 6.304, and publish a notice in the CBD to permit
potential competitors to challenge the agency's intent to procure
without full and open competition.
10 U.S.C. sec. 2304(f)(1)(C). Our review of an agency's decision to
conduct a sole source procurement focuses on the adequacy of the
rationale and conclusions set forth in the J&A. When the J&A sets
forth reasonable justifications for the agency's actions, we will not
object to the award. Turbo Mechanical, Inc., B-231807, Sept. 29,
1988, 88-2 CPD para. 299.
With respect to the 22 shipsets needed for the C-17, the Air Force
relies on different authority, and the requirements that flow from
that authority are slightly different. Where an agency's needs are of
such an unusual and compelling urgency that the government would be
seriously injured if the agency is not permitted to limit the number
of sources from which it solicits bids or proposals, the agency may
use noncompetitive procedures pursuant to the authority set forth at
10 U.S.C. sec. 2304(c)(2). All Points Int'l, Inc., B-260134, May 22,
1995, 95-1 CPD para. 252. This authority is limited by 10 U.S.C. sec.
2304(e), which requires agencies to request offers from as many
sources as practicable. An agency may limit a procurement to only one
firm if it reasonably determines that only that firm can properly
perform the work in the available time. Lundy Technical Center, Inc.,
70 Comp. Gen. 588 (1991), 91-1 CPD para. 609. Although an agency is
required to prepare a J&A to support its claims of unusual and
compelling urgency, it may do so after contract award when preparation
and approval would unreasonably delay the acquisition. FAR sec.
6.302-2(c)(1); 6.303-1(e). We will object to the agency's
determination only where the decision lacks a reasonable basis. All
Points Int'l, Inc., supra.
We first consider Datacom's contention that the Air Force's failure to
complete a competitive procurement of these items is due to poor
planning by agency personnel. In this regard, 10 U.S.C. sec.
2304(f)(5)(A) prohibits award of a contract using other than
competitive procedures as a result of a lack of advance planning by
contracting officials. Honeycomb Co. of Am., B-225685, June 8, 1987,
87-1 CPD para. 579, aff'd, B-225685.2, Sept. 29, 1987, 87-2 CPD para. 313. On
both of these procurements, the protester correctly points out that
the Air Force was aware of its needs at least as early as 1994.
As an initial matter, there is no dispute with the protester's
contention that the Air Force could have avoided these two sole source
purchases if it had proceeded as originally planned in late 1994 and
early 1995. However, we do not agree that the circumstances here
support a conclusion that the Air Force has failed to plan
sufficiently to meet its needs. Rather, it appears that the Air Force
would have completed this procurement but for concerns about the
utilization of small business which led to intervention from outside
the agency.
The record shows, for example, that nearly 2 years ago, Air Force
personnel appropriately identified the possibility that the AN/ALE-47
system could be set aside for a small business competition, and set
out to compete the procurement. The record also shows, however, that
this procurement has been the subject of two separate decisions by the
Secretary of the Air Force regarding its suitability for a small
business set-aside; several instances of report language and statutory
changes imposed by congressional oversight committees; and significant
input from key members of Congress offering their respective views on
how the procurement should be handled.[4]
In our view, the Air Force's efforts here are in marked contrast to
the situations where we have sustained protests of sole source
procurements on the basis that the agency failed to complete advance
procurement planning. For example, in TeQcom, Inc., B-224664, Dec.
22, 1986, 86-2 CPD para. 700, and Freund Precision, Inc., 66 Comp. Gen. 90
(1986), 86-2 CPD para. 543, agency officials failed to take steps to allow
potential offerors to qualify as competitors when there was sufficient
time to do so. Instead, the situation here is analogous to the one
discussed in our recent decision in Sprint Communications Co., L.P.,
B-262003.2, Jan. 25, 1996, 96-1 CPD para. 24. In the Sprint decision, the
agency made extensive efforts to complete a competitive procurement,
but despite its best efforts, outside events--specifically, tremendous
changes in the nature of the telecommunications industry--interrupted
and stymied the agency's ability to proceed with a competition, making
an interim sole-source purchase necessary. In this case, the Air
Force's procurement efforts were made against a backdrop of
congressional inquiry and legislative actions. Simply put, we cannot
fault the Air Force for failure to complete its procurement in the
face of congressional report language directing the agency to go no
further in its effort to hold a competition of any kind. Thus, while
we understand Datacom's frustration with the course of this
procurement, we do not agree that the Air Force has acted improperly.
With respect to Datacom's specific allegations regarding the decision
to purchase the F-16 parts for the National Guard and Air Force
Reserve, the protester argues that the agency incorrectly concluded
that technical data are unavailable for the FLPS; unreasonably stated
that only Tracor could produce the items in the time required; failed
to conduct a market survey; and failed to negotiate a fair market
price for the parts. We have reviewed Datacom's arguments and
conclude that they raise issues irrelevant or immaterial to the Air
Force's conclusion that a sole source contract is needed.
For example, the Air Force does not base its decision here on the lack
of available data. It is based on the conclusion that none of the
potential offerors would be able to produce a first article for
approval and then production articles within the time by which the Air
Force would need these items. The purchase here is for parts needed
between March and December 1997. The Air Force J&A estimates that
potential offerors would need 180 days to produce a first article for
testing, plus 90 days government evaluation time, plus 120 days for
delivery of production items.
Although Datacom argues it could produce its first articles in less
time than the government estimate, the Air Force defends its estimate
on the basis that the estimate was a good faith attempt to quantify
the time required to produce the items and that none of the small
businesses seeking to produce this system has yet produced it. Under
the circumstances here, since the Air Force is proceeding with a full
and open competition, and since it seeks to purchase only a limited
number of items to meet its needs until completion of its competitive
buy, we have no basis to overturn this procurement based solely on
Datacom's claim that it can build the items more quickly.
Similarly, with respect to Datacom's specific challenge to the
purchase of these parts for installation in C-17 aircraft--more than
half of which need to be installed before the C-17s could be used in
the Bosnia pullout originally scheduled for December 1996--we conclude
the Air Force's justification for this purchase is even more sound.
Datacom cannot argue that it can produce the AN/ALE-47 shipsets in
time for their use in the aircraft destined for Bosnia, but instead
challenges the Air Force's decision to use the C-17 in this operation,
and challenges the inclusion of the 10 shipsets for installation in
new aircraft. With respect to the first issue, neither Datacom, nor
our Office, can dictate military policy. The bid protest function has
no role in a decision about which aircraft will best suit the
government's needs in this upcoming operation. With respect to
Datacom's argument that the Air Force has unreasonably included in
this purchase an additional 10 shipsets to assure that newly
manufactured C-17 aircraft arrive combat ready, we again agree with
the Air Force. In our view, the inclusion of these additional subsets
in this limited purchase to assure the readiness of aircraft to be
manufactured between now and the time the agency can procure
additional parts via a full and open competition, is a reasonable
exercise of the agency's statutory authority to make such purchases.
In sum, given that the record shows that the Air Force issued its RFP
to procure its upcoming needs for the AN/ALE-47 on August 30, 1996,
and has made a reasonable effort to limit the sole source procurements
here to its interim requirements, and given our conclusion that the
delay is not the result of poor agency planning, we deny Datacom's
challenge to the agency's use of sole source procedures for these two
purchases.
Request for Reimbursement of Costs
Datacom requests a ruling from our Office that it be permitted to
recover the reasonable costs of filing and pursuing its earlier
protest of the July 17 decision by the Secretary of the Air Force to
rescind her earlier decision to procure lots IV to VII of the
AN/ALE-47 using a small business set-aside. Datacom argues that the
passage of section 8107 of the Department of Defense Appropriations
Act, 1997, Pub. L. No. 104-208, ___ Stat. ___ (1996)--which made its
protest academic and resulted in dismissal of the protest by our
Office--was corrective action by the agency.
Under our Bid Protest Regulations, when an agency takes corrective
action in response to a clearly meritorious protest, prior to our
issuing a decision on the merits, we may declare the protester to be
entitled to recover reasonable costs of filing and pursuing its
protest, including attorneys' fees. Bid Protest Regulations, section
21.8(e), 61 Fed. Reg. 39,039, 39,047 (1996) (to be codified at 4
C.F.R. sec. 21.8(e)). We will make such a recommendation only where an
agency unduly delays taking such corrective action. Oklahoma Indian
Corp.--Claim for Costs, 70 Comp. Gen. 558 (1991), 91-1 CPD para. 558. A
protester is not entitled to costs where, under the facts and
circumstances of a given case, the agency has taken reasonably prompt
action. Dynair Elecs., Inc.--Request for Declaration of Entitlement
to Costs, B-244290.2, Sept. 18, 1991, 91-2 CPD para. 260.
In this case, however, the protest became academic for reasons
unrelated to the protest allegations. The record shows that the
matter here was under consideration by the Congress well before the
time Datacom filed its protest, and the Congress, not the Air Force,
passed a new law with specific application to this procurement. It
was this law that rendered the protest academic, not corrective action
by the Air Force. In fact, we fail to understand how Datacom can
argue that the statute here was corrective action, when the statute
ensured that Datacom could not prevail in its protest. Where a
protest is rendered academic by actions outside the control of the
agency, we have no basis to conclude that the agency took corrective
action in response to the protest, and no basis for awarding costs
under section 21.8. Red River Service Corp.--Entitlement to Costs,
B-259462.2, Sept. 11, 1995, 95-2 CPD para. 106.
Datacom also argues that our Office should assess costs against the
Air Force as a sanction because the agency failed to advise both the
protester, and our Office, of the pending language in the
Appropriations Act that would render this protest academic. We do not
interpret our authority to recommend award of protest costs in
corrective action cases to extend to assessing protest costs as a
sanction against agency behavior unrelated to corrective action. See
H. Watt & Scott General Contractors, Inc.--Request for Declaration of
Entitlement to Costs, B-257776.3, Apr. 6, 1995, 95-1 CPD para. 183 (award
of protest costs not available as a sanction against an agency's 2
month delay in providing requested documents).
The protests and the request for costs are denied.
Comptroller General
of the United States
1. The following aircraft use this system: F-16, HH-60, C-130, C-141,
C-17, C-4, F/A-18, MH-47, VH-60 VH-3, V-22 and the E-8.
2. Datacom also protested the July 17 decision by the Secretary of the
Air Force to rescind her earlier decision to procure lots IV to VII of
the AN/ALE-47 using a small business set-aside. This protest,
B-274246, was dismissed on October 16, 1996, as academic after the
President signed the Fiscal Year 1997 Department of Defense
Appropriations Act on September 30, which directed the Air Force not
to use a small business set-aside for this procurement.
3. In addition to the purchase lots originally anticipated, the Air
Force procured an interim lot, lot III+, directly from Tracor in early
1996, to cover the gap between Tracor's deliveries and deliveries from
whichever source received award from either the small business
competition or the full and open competition.
4. For example, the letters from members of Congress include a letter
from the chairman and ranking minority member of one of the defense
oversight committees.