BNUMBER:  B-274201; B-274202
DATE:  November 26, 1996
TITLE:  New Breed Leasing Corporation

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

Matter of:New Breed Leasing Corporation

File:     B-274201; B-274202

Date:November 26, 1996

Matthew A. Simchak, Esq., Philip J. Davis, Esq., and Phillip H. 
Harrington, Esq., Wiley, Rein & Fielding, for the protester.
William E. Franczek, Esq., Vandeventer, Black, Meredith & Martin, an 
intervenor.
Dana N. Smith, Esq., and Anita D. Polen, Esq., Department of the Navy, 
for the agency.
Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protests are sustained where agency's failure to recognize and correct 
obvious flaws in prior solicitations and contracts constituted lack of 
advance planning which precluded meaningful competition for 
requirements and resulted in sole source extensions of concededly 
flawed contracts with the incumbent contractor. 

DECISION

New Breed Leasing Corporation protests the Department of the Navy's 
cancellation of solicitation Nos. N00189-94-R-0304 and 
N00189-94-R-0315 (hereinafter "R-0304" and "R-0315") for material 
handling and logistics support services at various sites throughout 
the world,[1] and the sole source extensions of contract Nos. 
N-00189-94-D-0003 and N-00189-94-D-0006 (hereinafter "D-0003" and 
"D-0006")  for those services.  The solicitations were issued as small 
business set-asides; the incumbent contractor, Management Consulting, 
Inc. (Mancon) is a large business, not eligible to compete under the 
canceled solicitations.  New Breed maintains there is no rational 
basis for the cancellation of the solicitations or for the sole source 
extensions of Mancon's contracts, and that the agency's actions 
resulted from a lack of advance planning.   

We sustain the protests on the basis that the agency's actions 
resulted from a lack of advance planning.

BACKGROUND

The requirements at issue are sought by the Department of the Navy's 
Fitting Out and Supply Support Assistance Center (FOSSAC), which 
provides logistical and material support services to the Department of 
Defense (DOD) and other federal agencies throughout the world under 
the Intra-Fleet Supply Support Operations Program (ISSOP).[2]  
Mancon's contracts were awarded in October 1993, for a base year with 
2 option year periods extending through September 30, 1996.  On July 
5, 1994, FOSSAC submitted requisitions to the Fleet and Industrial 
Supply Center (FISC), Norfolk Acquisition Group to initiate follow-on 
procurements for the ISSOP support provided under Mancon's contracts.  
The requirements for the east coast solicitation (RFP No. R-0304) and 
west coast solicitation (RFP No. R-0315) were synopsized in the 
Commerce Business Daily (CBD) on September 5 and 6, 1994, 
respectively.  Acquisition plans were approved approximately 7 months 
later, on April 25 and June 6, 1995, respectively; the two 
solicitations were subsequently issued in June of 1995.  

Each solicitation contained a total of 112 contract line item numbers 
(CLINs), broken down into 75 firm, fixed-price CLINs, 26 
time-and-materials CLINs, and 
11 direct reimbursement CLINs.  Each CLIN had sub-CLINs for the 
specific sites to be serviced.[3]  For each of the 75 fixed-price 
CLINs, offerors were required to propose fixed prices, reflecting 
differing labor rate mixes, for the performance of various tasks.[4]  
The solicitation provided for award on the basis of the low-priced, 
technically acceptable offer.  Solicitation No. R-0304 was amended 
three times and solicitation No. R-0315 was amended twice.  None of 
the solicitation amendments significantly altered the description of 
tasks to be performed and, as amended, solicitation Nos. R-0304 and 
R-0315 required that proposals be submitted by September 21, and 
October 5, 1995, respectively.  

Four offerors, including New Breed, timely submitted proposals for 
both solicitations which were subsequently evaluated by FISC Norfolk 
personnel.  Technical evaluation of proposals under both solicitations 
was completed by November 17, 1995; all four proposals were determined 
to be technically acceptable.  Evaluation of cost/price proposals 
under RFP No. R-0304 was completed in March 1996, and for proposals 
under RFP No. R-0315, in June 1996.  By memoranda dated April 16 and 
July 10, FISC Norfolk personnel sought authority from Headquarters, 
Naval Supply Systems Command (NAVSUP), to proceed with the procurement 
by conducting discussions with all offerors.  The memoranda stated 
that the evaluators had found significant disparities in prices among 
offerors, noting that the disparities were particularly prevalent 
among the 75 fixed-price CLINs. 

On July 30, NAVSUP personnel met with FISC Norfolk personnel to 
discuss concerns regarding the procurement.  NAVSUP personnel 
expressed specific concern that the RFP "lacked definitive [task] 
descriptions."  Following this meeting, the contracting officer 
acknowledged that the solicitation was fundamentally flawed, stating:  

     "Although a separate statement of work was provided for each of 
     the firm fixed contract line items, these statements lacked the 
     basic information required for the proper use and reasonable 
     pricing of, firm fixed price items.  For example, the thirteen 
     line items . . . requiring the movement of material do not 
     provide information relative to the type, size, weight and 
     quantity of the material, or the distance or location that the 
     material is to be moved . . . .  Without the information relative 
     to what is to be moved, where it is to be moved, and how much is 
     to be moved, unacceptable performance uncertainties exist in the 
     statement of work, rendering them unsuitable for a firm fixed 
     pricing arrangement."
  
On August 8, the agency canceled the solicitations, stating that it 
intends to completely revise them.  Specifically, the agency states 
that it intends to perform "a thorough and comprehensive review and 
rewrite of the statements of work [for each line item]," noting that 
"because of the many sites serviced under these contracts, suitable 
statements of work would have to address the peculiarities of each 
location."  The agency also states that it intends to change the 
source selection criterion from award of a contract based on the 
technically acceptable, low cost proposal, to a "best value" approach 
which will give greater weight to technical capability, management, 
and past experience.[5]  In light of the magnitude of the proposed 
changes, the agency intends to use the entire amount of time normally 
allocated under Navy guidelines for processing a procurement of this 
size and type.[6] 
Accordingly, since Mancon's contracts expired on September 30, agency 
officials concluded that those contracts would have to be extended on 
the basis of "urgent and compelling circumstances."[7]  10 U.S.C.  sec.  
2304(c)(2) (1994).  Because of the uncertainty resulting from the 
solicitation specifications, the agency states that it is "impossible 
to determine" whether extensions of Mancon's contracts will be more 
expensive to the government than award of a contract to one of the 
actual offerors.  
DISCUSSION

New Breed protests that there is no rational basis for either the 
agency's cancellation of the solicitations or the sole source 
extensions of Mancon's contracts, and that the sole source award 
resulted from a lack of advance planning.  As discussed below, we 
conclude that the agency's cancellation of the solicitations was 
appropriate, but we sustain the protest on the basis that the need for 
the sole source extension of Mancon's contracts was created by the 
agency's failure to engage in advance planning.[8]

Based on our review of the record, we agree with the agency that the 
solicitations were fundamentally flawed.  Among other things, the 
solicitations required the movement of material on a fixed-price 
basis, but failed to provide information regarding the type, size, 
weight, and quantity of the material, or the distance or location that 
the material is to be moved.  Absent this information, the agency 
could reasonably believe that offerors did not have a clear or common 
basis for pricing their offers and that the awardee would not 
necessarily understand what it would be obligated to do during 
contract performance.[9]  On this record, we have no basis to disagree 
with the agency's belief that cancellation of the solicitations was 
appropriate.[10]    

We next consider New Breed's assertion that the Navy's sole source 
extensions of Mancon's contracts are the result of a lack of advance 
planning by the Navy.  In responding to this issue, the contracting 
officer asserts:

     "The determination that the solicitations' requirements were not 
     adequately defined was not anticipated, and not realized until 
     the end of July 1996.  Therefore, the need for the extension is 
     not due to lack of planning, [but] rather, to an unanticipated 
     need for changes realized in the execution of the Navy's 
     planning."

The record here simply does not support the contracting officer's 
assertion that the fundamental flaws in these solicitations were not 
reasonably anticipated or realized "until the end of July 1996."  

Specifically, the record shows that the solicitation requirements were 
identified by FOSSAC in July 1994 and synopsized in the CBD in 
September of that year.  The agency then spent 7 and 9 months 
respectively preparing acquisition plans for each solicitation; a plan 
for RFP No. R-0304 was approved on April 27, and for RFP 
No. R-0315 on June 6.  More time elapsed before each solicitation was 
issued:  RFP No. R-0304 was issued on June 19; RFP No. R-0315 was 
issued on June 28.  The solicitations were amended three and two 
times, respectively.  Proposals responding to RFP No. R-0304 were 
submitted on September 21, and proposals responding to RFP No. R-0315 
were submitted on October 5.  While both sets of technical proposals 
were evaluated by November 17, the agency absorbed another 6 months 
evaluating the cost/price proposals under RFP No. R-0304, and 8 months 
evaluating the cost/price proposals under RFP No. R-0315, completing 
those tasks in March and June 1996, respectively.  Another month 
elapsed before business clearance memoranda, dated April 29, for RFP 
No. R-0304 and July 10 for RFP No. R-0315, were prepared and sent to 
NAVSUP.  These memoranda noted significant pricing disparities among 
the proposals.  

On this record, we agree with New Breed's position that the agency's 
sole source extensions of Mancon's contracts just 2 months prior to 
their expiration resulted from a lack of advance planning. 

The Competition in Contracting Act (CICA) permits noncompetitive 
acquisitions in specified circumstances, such as when the agency's 
need for the services is of unusual and compelling urgency, and they 
are available from only one responsible source.  10 U.S.C.  sec.  
2304(c)(2)(1994).  However, under no circumstances may noncompetitive 
procedures be used due to a lack of advance planning by contracting 
officials.  10 U.S.C.  sec.  2304(f)(5);  TeQcom, Inc., B-224664, Dec. 22, 
1986, 86-2 CPD  para.  700.

Our Office has recognized that the requirement for advance planning is 
not a requirement that such planning be entirely error-free or that 
such planning be successful.  See, e.g., Sprint Communications Co., 
L.P., B-262003.2, Jan. 25, 1996, 96-1 CPD  para.  24.  Nonetheless, as with 
all actions taken by an agency, the advance planning required under 10 
U.S.C.  sec.  2304 must be reasonable.  In enacting CICA, Congress 
explained: "Effective competition is predicated on advance procurement 
planning and an understanding of the marketplace."  S. Rep.  No. 50, 
98th Cong., 2d Sess. 18 (1984), reprinted in 1984 U.S.C.C.A.N. 2191.  
The Senate Report also quoted with approval the following testimony 
regarding the need for advance planning:

     "Opportunities for obtaining or improving competition have often 
     been lost because of untimely, faulty, or the total lack of 
     advance procurement planning.  Noncompetitive procurement or 
     inadequate competition also has resulted many times from the 
     failure to develop specifications . . . .  By requiring effective 
     competition, Congress will serve notice on the agencies that they 
     will need to do more than the minimum to comply with the 
     statute."  S. Rep. No. 50, 98th Cong., 2d Sess. 19 (1984), 
     reprinted in 1984 U.S.C.C.A.N. 2192.

In the factual context presented here, the solicitation flaws--as 
described and explained by the agency itself--are so fundamental as to 
indicate an unreasonable attempt at advance planning.  As noted above, 
the agency agrees that the statements of work for individual CLINs 
lacked "basic information" such as "the type, size, weight and 
quantity of the material, or the distance or location that the 
material is to be moved."  The agency further agrees that "[w]ithout 
the information relative to what is to be moved, where it is to be 
moved, and how much is to be moved," meaningful competition is 
impossible.  Nonetheless, the contracting officer asserts that these 
fundamental flaws were "unanticipated and not realized until the end 
of July, 1996."  The agency could not have engaged in reasonable 
advance planning, yet first have realized that the solicitation was 
fundamentally flawed more than a year after the solicitations were 
issued and more than 8 months after proposals were submitted.

The rudimentary omissions in the agency's preparation for this 
procurement are not limited to a failure to provide competitors with 
"basic information" regarding the tasks to be performed.  In July 
1996, agency officials concluded that, rather than awarding a contract 
on the basis of the technically acceptable proposal offering the 
lowest cost, the procurement should be awarded on a "best value" 
basis.  In a memorandum dated July 30, 1996, the agency notes that 
"prior ISSOP contracts were awarded using best value," but 
concludes--without further explanation--"we can only speculate why 
best value was not used in these solicitations."  The acquisition 
plans for both procurements were approved by June 6, 1995.  It was not 
reasonable for the agency to take nearly 13 months to reach the 
conclusion that the solicitation was materially flawed regarding the 
basis for contract award.  

Finally, the extraordinary length of the sole source extension to 
Mancon's contract demonstrates that the agency's activities leading up 
to that extension were entirely ineffective with regard to meaningful 
preparation for a competitive award.  The agency maintains that the 
sole source modification of Mancon's contract must extend for an 
entire year because the solicitation must undergo "a thorough and 
comprehensive review and rewrite."  Issuance of the revised 
solicitations is not anticipated before February 1997, and the agency 
maintains it will be unable to make a competitive award "until June 
1997 at the earliest."  In the event discussions are conducted and 
best and final offers submitted, the agency does not anticipate award 
until August 1997.  The agency asserts that this schedule "is an 
ambitious one," noting that its internal guidelines contemplate a 
period of 310 days to completely perform a procurement of this size 
and type.  Clearly, the agency's need to use the entire time period 
normally required to complete planning for and implementation of this 
type of procurement provides further support for our conclusion that 
its prior planning activities were inadequate. 

Based on the record summarized above, we conclude that the Navy used 
non-competitive procedures because of a lack of reasonable advance 
planning by its officials, thereby violating 10 U.S.C.  sec.  2304(f)(5).  
In short, the agency's failure to provide the basic information 
required for meaningful competition, the fact that the solicitations' 
basis for award was not sound, and the fact that the agency 
contemplates using at least the entire 10-month period normally 
allotted for conducting a procurement of this type, leads to the 
conclusion that the agency failed in its obligation to engage in 
reasonable advance planning as required by CICA.  See Freund 
Precision, Inc., 66 Comp. Gen. 90 (1986), 86-2 CPD  para.  543; 
Techno-Sciences, Inc., B-257686; B-257686.2, Oct. 31, 1994, 94-2 CPD  para.  
164; K-Whit Tools, Inc., B-247081, Apr. 22, 1992, 92-1 CPD  para.  382; 
TeQcom, Inc., supra.

The protests are sustained.

RECOMMENDATION

In view of the agency's undisputed need for the services at issue, we 
do not recommend that Mancon's contracts be immediately terminated.  
However, we do recommend that the agency make expeditious efforts to 
finalize competitive procurements for these requirements and terminate 
Mancon's contracts upon award of those contracts.  We also recommend 
that New Breed recover its cost of filing and pursuing these protests 
including reasonable attorneys' fees.  Bid Protest Regulations,  sec.  
21.8(d)(1), 61 Fed. Reg. 39045, 39046 (July 26, 1996) (to be codified 
at 4 C.F.R. 21.8(d)(1)).  The protester should submit its certified 
claim for such costs, detailing the time expended and costs incurred, 
directly to the agency within 60 days after receipt of this decision.  
Bid Protest Regulations, supra 

Comptroller General
of the United States

1. Solicitation No. R-0304 covers services for sites in the eastern 
half of the United States, Europe, Africa, the Middle East, and the 
Caribbean.  Solicitation No. R-0315 covers services for sites in the 
western half of the continental United States, Hawaii, Guam, and 
Japan.  

2. Examples of the services provided through the ISSOP include 
material offload/backload, relocation, distribution, 
packing/packaging, requisitioning, excess material processing, 
receiving, stowing, inventorying, data entry, preparing and updating 
financial records, word processing/document preparation, sorting/ 
distributing packages/mail, repairing, testing or modifying 
microcomputers, and witnessing household good reweighs.

3. In solicitation No. R-0304 each CLIN had five sub-CLINS for:  
Charleston; Europe, Africa & MidEast; Mayport; Philadelphia; and 
Portsmouth.  In solicitation No. R-0315 each CLIN had six sub-CLINs 
for:  Bremerton; Guam; Yokosuka; Oakland; Pearl Harbor; and San Diego.  

4. For example, under CLIN 001 each offeror was required to propose a 
price per ton to "offload material from ships individual storerooms or 
complete offload to warehouse."  Under CLIN 002, each offeror was 
required to propose a price per ton to "load material from warehouse 
ashore to storerooms aboard ship."  

5. In a "memorandum for the record," dated July 30, 1996, the 
contracting officer states:

            "The evaluation criteria was the final topic of discussion 
            [in the meeting between NAVSUP personnel and FISC Norfolk 
            personnel], and NAVSUP advised [that] best value was the 
            appropriate form of evaluation.  Prior ISSOP contracts 
            were awarded using best value.  Since none of the same 
            contracting specialists are processing the solicitation 
            this time, we can only speculate why best value was not 
            used in these solicitations."  

6. The agency refers to Navy Instruction 4200, dated November 27, 
1995, entitled "Fiscal Year 1996 Customer Procurement Planning Guide," 
which contemplates "a period of 310 days to process competitively 
solicited requirements in excess of $1 million in which the evaluation 
is performed on a best value basis."

7. The agency states that there are currently more than 400 delivery 
orders being performed at more than 400 different locations, involving 
an estimated 1,700 contractor employees performing services that are 
critical to the ongoing interests of the United States.  The protester 
does not dispute the government's ongoing critical need for the 
services at issue here.  

8. The agency argues that New Breed is not an interested party for 
purposes of filing this protest because its initial proposal did not 
offer the lowest price.  However, that concern is obviously irrelevant 
to this issue.  See, e.g., Tri Tool Inc., B-229932, Mar. 25, 1988, 
88-1 CPD  para.  310; Free State Reporting, Inc.; Neal R. Gross and Co., 
Inc., B-225531 et al., Jan. 13, 1987, 87-1 CPD  para.  54.

9. We find unpersuasive New Breed's assertion that, because Mancon has 
successfully performed the prior contracts awarded under similarly 
defective specifications, the agency must now award a contract to a 
new contractor on the same basis.  The fact that Mancon has been able 
to successfully perform the contracts pursuant to similar flawed 
specifications provides no assurance that a new contractor will 
experience similar success.

10. The agency states that, notwithstanding the flawed specifications, 
Mancon has demonstrated its capability to successfully perform the 
contract.  At New Breed's request, the agency produced all change 
orders issued under Mancon's prior contracts.  Those documents 
demonstrated that virtually no change orders had been issued under 
Mancon's prior contracts.  As New Breed, itself, recognizes, "in a 
world-wide ISSOP program valued well in excess of $100 million . . . 
the Navy has paid a total of $13,226.97 in claims [to Mancon] . . . .  
To put the claims in perspective, in total those claims represent 
.0091 percent of the contract value."