BNUMBER: B-274694.2
DATE: March 12, 1997
TITLE: Phoenix Technical Services Corporation, B-274694.2, March 12,
1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:Phoenix Technical Services Corporation
File: B-274694.2
Date:March 12, 1997
Christopher M. Wawack, Esq., and Joseph A. Camardo, Jr., Esq., Law
Offices of Joseph A. Camardo, Jr., for the protester.
Marian E. Sullivan, Esq., and Gregory Petkoff, Esq., Department of the
Air Force, for the agency.
Katherine I. Riback, Esq., Glenn Wolcott, Esq., and Paul Lieberman,
Esq., Office of the General Counsel, GAO, participated in the
preparation of the decision.
DIGEST
1. Procuring agency's decision to combine engineering support
services for various electrical and avionics systems primarily on the
C-130 and the C-141 aircraft is reasonable where agency has shown that
the combination represents its minimum needs to obtain necessary
systems integration.
2. Protest that procurement for various engineering support services
should have been set aside for exclusive small business participation
is denied where the record shows that the contracting officer did not
abuse his discretion in determining that there was not a reasonable
expectation of receiving proposals from at least two responsible small
business offerors.
DECISION
Phoenix Technical Services Corporation protests the terms of request
for proposals (RFP) No. F09603-96-R-13361, issued by the Department of
the Air Force for avionics engineering services at Warner Robins Air
Logistics Center (ALC). The solicitation is for engineering support
services for various electrical and avionics systems primarily on the
C-130 and the C-141 aircraft, otherwise known as the
electrical/avionics systems engineering support (EASES) program.
Phoenix, a small business concern, challenges the agency's combining
various engineering services into one requirement as unduly
restrictive of competition and maintains that the procurement should
be set aside for exclusive small business participation.
We deny the protest.
BACKGROUND
The agency has previously procured electrical and avionics engineering
support services for the C-130 and C-141 aircraft at the Warner Robins
ALC by entering into sole source contracts under a basic ordering
agreement with Arinc Research Corporation, which is not a small
business. The agency established the EASES program to provide the
government with access to highly qualified engineers with the wide
variety of expertise required to support electrical and avionics
systems from more than one vendor. The EASES solicitation at issue is
structured to allow award of up to five indefinite delivery,
indefinite quantity (IDIQ) contracts to firms who will then compete
for individual task orders. Once a firm is successful in obtaining an
IDIQ contract, and then receives a task order for a specific project,
that firm will organize and manage a project team to work with minimal
government interaction.[1]
The EASES program primarily involves engineering support for
electrical or avionics modification programs which requires expertise
in many different areas such as aircraft power systems design and
analyses, aircraft structural modifications and analyses, and
real-time software design and analyses. In addition to the expertise
required to support modification programs in general, specific
programs often involve state-of-the-art designs in radar systems,
aircraft instruments, and aircraft display systems. Along with the
support of modification programs, the EASES program includes
requirements to support independent studies, analyses,
C-130 production aircraft, test programs, and special modification
programs.[2]
On June 30, 1995, the agency published a synopsis of the solicitation
in the Commerce Business Daily (CBD) and received 50 inquiries in
response. In July, the Warner Robins Small and Disadvantaged Business
Utilization (SADBU) Office initiated a market survey to assess the
capability of the potential offerors to meet the government's
requirements. Respondents to the market survey were asked to identify
and describe their experience in five broad categories of requirements
that would be part of the EASES program and describe their experience
in performing technical evaluations of the design and integration for
the eight primary systems found on most aircraft.[3] The agency
received 21 responses to the market survey, including 2 from firms
eligible for contract awards under section 8(a) of the Small Business
Act, 15 U.S.C. sec. 637(a) (1994), 3 from other small disadvantaged
firms, 5 from small businesses, and 11 from large businesses. The
responses to the market survey were evaluated by engineers from the
C-130 and the C-141 programs and a representative from the agency's
SADBU Office. Of the nine small business respondents to the market
survey, four potential offerors were considered capable of performing
more than 50 percent of the work; however, of these four, only
one--TCS Design and Management Services--was identified as capable
because it had experience in all of the basic areas.
Based on the foregoing, the contracting officer determined that the
RFP should not be issued as a total small business set-aside. On
December 8, the Small Business Administration (SBA) procurement
representative at Warner Robins appealed the contracting officer's
decision to the Head of Contracting Activity at Warner Robins, who
denied the appeal and upheld the contracting officer's decision. The
SBA then appealed to the agency head and on May 22, 1996, the Under
Secretary of the Air Force denied the appeal, but directed that the
solicitation be issued as a partial small business set-aside in which
50 percent of the value of the EASES program would be set aside for
small business.
The agency conducted a pre-solicitation conference on September 24.[4]
On November 19, the agency issued the RFP as a partial small business
set-aside, with a closing date of December 2, which was subsequently
extended to December 3. On December 2, Phoenix filed this protest in
our Office arguing that the agency improperly "bundled" its various
engineering support requirements in the EASES RFP and maintaining that
the EASES requirements should be set aside exclusively for small
businesses.
The agency received 11 proposals by the proposal due date, 6 from
large businesses, and 5 from small businesses.[5] The rates offered
by the lowest-priced, technically acceptable small business offerors
are approximately 30 percent higher than the rates offered by the two
lowest-priced, technically acceptable large businesses. The agency
has withheld making any awards under this solicitation pending the
outcome of this protest.
DISCUSSION
Combining The Contract Requirements
Phoenix argues that the agency has improperly "bundled" its
requirements for engineering support services for the C-130 program
and the C-141 program. In short, Phoenix asserts that the agency
should compete its requirements under several different solicitations
to permit participation by companies with experience performing some,
but not all, of the solicitation requirements.
The agency responds that the aircraft systems supported by this
procurement are totally integrated and, as a consequence, even when a
contractor is given a project that involves only a single system, the
contractor must complete the required modifications and then perform
an assessment on how the modifications will affect the other aircraft
systems. Thus, each contractor must have expertise in all of the
systems to be supported under this contract, and a contractor with
knowledge and experience concerning only one system would pose an
unacceptable technical risk which could be "potentially disastrous."
Video Transcript (VT) 11:10.
The Air Force further explains that in designing the EASES
solicitation, it explored the options of individually competing each
task as it arose, competing each task by system categories, (i.e.,
radar systems, navigation systems), or separately competing each
function of the EASES requirement (i.e., test programs, software
requirements), but concluded that such separate competitions were not
realistically possible. The agency noted that in the past it procured
support services for individual flight tests, but concluded that the
quality of the services received were not uniformly up to the required
professional standards. The agency points out that there is a very
short time period in which action must be taken after a necessary
modification is identified and states that procuring the EASES
requirements by the various divisions outlined above would shift the
burden for total system integration from the contractors to the
agency, requiring a coordination effort that would simply exceed the
capability of its seven-person contracting office. VT 11:19.
The agency also states that it considered making only one award for
all of the EASES requirements, thereby ensuring the integrity of the
integrated systems and eliminating coordination problems. The agency
noted that it currently has essentially this situation in its contract
with Arinc, and that the disadvantages associated with this approach
are that it makes the agency too dependent on a single contractor and
provides no competition or back-up source for the services.
In short, the agency determined that procuring the engineering support
services from multiple contractors, each of which is capable of
supporting all aircraft systems, will reduce costs while preserving
the integrity of the integrated systems, potentially increase future
competition, and provide the agency with alternative sources for these
services. The agency states that under the EASES requirement as it is
currently formulated, a contractor will perform a project from start
to finish, including all system integration calculations, and the
agency only has to coordinate these various projects among the EASES
contractors.
The Competition in Contracting Act of 1984 (CICA), 10 U.S.C. sec.
2305(a)(1) (1994), generally requires that solicitations permit full
and open competition, and contain restrictive provisions and
conditions only to the extent necessary to satisfy the needs of the
agency. Since consolidated procurements combine separate, multiple
requirements into one contract, they have the potential for
restricting competition by excluding firms that can only furnish a
portion of the requirement. We review such solicitations to determine
whether the approach is reasonably required to satisfy the agency's
minimum needs. National Customer Eng'g, 72 Comp.
Gen. 132 (1993), 93-1 CPD para. 225. Because procurements involve unique
situations, contracting officers must base their decisions whether to
consolidate certain requirements on the individual facts. The Sequoia
Group, Inc., B-252016, May 24, 1993, 93-1 CPD para. 405. We have upheld
the consolidation of requirements where agencies have provided a
reasonable basis for using such an approach. See Titan Dynamics
Simulations, Inc., B-257559, Oct. 13, 1994, 94-2 CPD para. 139 (agency
properly combined requirements for pyrotechnic simulators with
laser-based training devices); Resource Consultants, Inc., B-255053,
Feb. 1, 1994, 94-1 CPD para. 59 (agency properly combined several tasks to
support a modification to a weapon trainer system).
Here, for the reasons advanced by the agency above, we believe the
agency reasonably combined its requirements for various engineering
support services for the C-130 program, the C-141 programs and the
339th test squadron. In light of the integrated nature of the systems
being supported and the agency's legitimate concerns in maintaining
the integrity of these systems, we find reasonable the agency's
determination that severing the contract requirements could negatively
affect the safety of the aircraft. In this instance, we also conclude
that the agency reasonably considered the capability of its
contracting office when it structured this RFP. In appropriate
circumstances, the agency's staffing resources can and should be
properly considered in fashioning contracts that will satisfy the
government's minimum requirements at the lowest reasonable cost
considering the nature of the property or services procured. The
Sequoia Group, Inc., supra.
Total Small Business Set-Aside
Phoenix contends that this RFP should be exclusively set aside for
small businesses because there are a number of small business concerns
capable of performing this contract. Phoenix also contends that the
Air Force did not undertake a reasonable effort to ascertain the
capabilities of the small businesses that expressed an interest in
this solicitation. Specifically, Phoenix argues that the agency
should have asked proposed offerors in the market survey how they
would "supplement their technical skills by learning or
subcontracting."
The agency notes that this is the first time it has attempted to
competitively procure these various engineering support services;
previously these services were obtained by entering into sole source
contracts under a basic ordering agreement with one large business.
The agency states that the market survey respondents were given credit
for engineering experience on any of the eight primary aircraft
systems, regardless of the type of aircraft involved. VT 11:30.
However, in order to be determined capable of performing the EASES
requirements, the agency required that respondents have experience in
all of these basic areas because of the integrated nature of the
C-130 and the C-141 systems to be supported.
Of the nine small business respondents to the market survey, only one
potential offeror, TCS, was identified by evaluators as capable. TCS
was determined to have experience in 95 percent of the basic
requirements and, more importantly, to have experience in all of the
basic areas through its work on helicopters. The other small
business respondents to the market survey were found not to be capable
of performing the EASES requirements because they each lacked
experience in several of the basic areas.
The agency then explored whether the small businesses that were found
incapable of performing the EASES requirements could become capable by
subcontracting out the work in the areas in which they lacked
experience. The agency determined that a prime contractor could not
become "capable" by subcontracting out basic areas in which it had no
experience. The agency concluded that the prime contractor must have
some "basic competency" in an area before it could subcontract out the
work in that area, so that the prime contractor would know the steps
that the subcontractor must perform, the level of general knowledge
and level of detail required, and have an understanding of what the
subcontractor must produce as a result of the effort. VT 12:22.
Therefore, after reviewing the market survey responses the contracting
officer determined not to set this RFP aside exclusively for small
businesses because there was only one responsible small business.
Thereafter, the agency received proposals on the EASES RFP and found
that the rates offered by the lowest-priced, technically acceptable
small business offerors are approximately 30 percent more than the
rates offered by the two lowest-priced, technically acceptable large
businesses.[6] The contracting officer states that the rates proposed
by small businesses are unreasonably high and, therefore, had the
solicitation been set aside for small businesses, the set aside would
have been withdrawn.[7]
A procurement must be set aside for exclusive small business
participation when there is a reasonable expectation of receiving
offerors from at least two responsible small business concerns and
award will be made at a fair market price. FAR sec. 19.502-2(b) (FAC
90-43). A contracting officer must make reasonable efforts to
ascertain whether it is likely that offers will be received from at
least two small businesses with the capabilities to perform the work.
Espey Mfg. & Elecs. Corp., B-254738.3, Mar. 8, 1994, 94-1 CPD para. 180.
An agency's determination concerning whether to set a particular
procurement aside basically involves a business decision within the
broad discretion of contracting officials, and our review generally is
limited to ascertaining whether those officials have abused that
discretion. FKW Inc., B-249189, Oct. 22, 1992, 92-2 CPD para. 270.
The record establishes that the contracting officer did not abuse his
discretion in issuing the RFP as a partial set-aside, rather than as a
total small business set-aside. In light of the fact that the basic
systems on the C-130 and the C-141 are completely integrated, the
agency reasonably required each offeror to have "basic competency" in
each of the key areas. The information available to the contracting
officer indicated that only one small business met that requirement;
it therefore provided a reasonable basis for the decision not to set
aside the entire procurement.[8]
The protest is denied.
Comptroller General
of the United States
1. The statement of work (SOW) states that the project team "shall be
capable of performing the project without government interaction
except for: coordination of related activities; and, approval of
plans, procedures, reports and documents generated by the project
team."
2. Support for the 339th test squadron, which performs test flights at
the conclusion of repairs or modifications, was also included in the
EASES solicitation.
3. The eight primary aircraft systems are communications systems,
navigation systems, radar systems, flight director/autopilot systems,
aircraft instruments and display systems, cockpit management systems,
aircraft lighting systems, and aircraft power systems.
4. Phoenix initially protested the agency's decision not to issue the
solicitation as a total small business set-aside before the
solicitation was issued. This protest was dismissed by our Office as
premature.
5. Phoenix did not submit a proposal in response to this solicitation.
6. The contracting officer determined that rates proposed by small
businesses are higher because they are paying higher rates for their
proposed subcontractors. VT 13:56.
7. A contracting officer is authorized to withdraw a set-aside before
award based upon a determination that award to a small business
concern would be detrimental to the public interest, because, for
example, the award would be made at more than a fair market price.
Federal Acquisition Regulation (FAR) sec. 19.506.
8. The contracting officer's determination that the "rule of two" did
not obtain here was confirmed by the proposals received in response to
this solicitation as the agency determined that it cannot make award
to any of the small business offerors at a reasonable price. Further,
because the information obtained as a result of the evaluation of
proposals provides a basis for the withdrawal of the partial
set-aside, we fail to see how Phoenix was prejudiced by the
contracting officer's determination not to conduct the procurement as
a total small business set-aside.