BNUMBER: B-275034
DATE: January 17, 1997
TITLE: Lockheed Martin Fairchild Systems
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Matter of:Lockheed Martin Fairchild Systems
File: B-275034
Date:January 17, 1997
Ronald K. Henry, Esq., and Mark A. Riordan, Esq., Kaye, Scholer,
Fierman, Hays & Handler, LLP, for the protester.
John R. Tolle, Esq., and Monica C. Gray, Esq., Barton, Mountain &
Tolle, LLP,
for Universal Systems & Technology, Inc., an intervenor.
Kathy B. Cowley, Esq., Andrew Miller, Esq., and Brian Murphy,
Department of the Navy, for the agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
The issuance of a delivery order for the modernization of precision
gunnery training systems and the acquisition of additional systems
under an existing contract for automated data processing systems
integration and support services is within the scope of the tasks
called for in that contract, which specifically include the
manufacture and integration of components in developing new or
modifying existing training systems and the manufacture of prototype
and production units of weapons system trainers.
DECISION
Lockheed Martin Fairchild Systems protests the Department of the
Navy's issuance of a delivery order to Universal Systems & Technology,
Inc. (UNITECH), for the modernization of the Marine Corps's TOW
Precision Gunnery Training System (PGTS) and the acquisition of new
PGTS units under UNITECH's existing level-of-effort, indefinite
quantity contract No. N00600-95-D-1367 for automated data processing
(ADP) systems integration and support services. Lockheed contends
that the delivery order is beyond the scope of UNITECH's contract.
We deny the protest.
The PGTS is an interactive computer-based simulator, which replicates
the operating characteristics of the TOW anti-tank weapon and allows
TOW operators to conduct tactical anti-armor training by simulating
the fire and tracking of TOW missiles using different target scenarios
contained on a video disk and displayed on a monitor. The PGTS
provides feedback to both the trainee gunner and the instructor on the
gunner's performance and consists of a student station with a TOW
weapon with computer link and an instructor operator station with a
computer display that allows for instructor evaluation.
Lockheed is the prime contractor under a 1987 fixed-price Navy
contract No. N61339-87-C-0056 for the development and supply of TOW
PGTS to the United States Army and the Marine Corps. Subsequently,
the computer, monitor, and other components of the PGTS were
discontinued by the original equipment manufacturers or became
outdated, and the Army issued a firm, fixed-price modification for the
Lockheed contract, based on a Lockheed engineering change proposal,
for upgrading the Army's PGTS with up-to-date computers, monitors, and
other components.
The Marine Corps also has a need to modernize its TOW PGTS, and the
Navy has determined to obtain this work through UNITECH's
level-of-effort, indefinite quantity contract for ADP systems
integration and support services. While the Navy also considered
obtaining this work under Lockheed's contract, the Navy believed that
UNITECH, which it considered to be an experienced and capable
contractor, offered a lower cost to the government with a faster
delivery schedule than Lockheed.
The UNITECH contract was awarded to that firm on June 9, 1995, under
request for proposals (RFP) No. N00600-95-R-1367, pursuant to section
8(a) of the Small Business Act, as amended, 15 U.S.C. sec. 637(a)
(1994),[1] for a base period of 12 months with four yearly options.
The contract was for the support of the Weapons Simulation and
Information Services departments of the Indian Head Division, Naval
Sea Systems Command, which, according to the Navy, have a specific
mission to design, develop, modify, document, implement and
logistically support training/simulation systems for the Navy,
including the Marines Corps, and other sponsored Department of Defense
programs.
The contract's statement of work (SOW) requires UNITECH to provide
software, equipment/materials, contractor support services and
personnel required for the performance of a broad variety of ADP
systems integration and support service tasks to be ordered via
individual delivery orders, including "the assessment, design,
development, test and evaluation, manufacture and documentation of
technical training systems." Under various tasks listed in the SOW,
the contractor is to develop training system support documentation;
perform on-site training; design and develop hardware and software to
develop new integrated systems or modernize or upgrade existing
systems (including utilizing commercial-off-the shelf hardware
components wherever possible); develop and provide complete life-cycle
integrated logistics support to integrated systems and training
programs; and install and test developed or modified training programs
and integrated devices at government sites. One of the tasks,
entitled "training simulator/device manufacturing," requires that:
"[t]he contractor shall manufacture and integrate components as
required in developing new or modifying existing training systems
and devices. The contractor shall be required to manufacture
prototype and production units to include flight simulators,
operator trainers, maintenance trainers, weapon system trainers,
part task trainers, crew training aids, and interactive PC
[personal computer] based devices."
The cost-plus-fixed-fee contract contains a schedule of supplies or
services with line items stating not-to-exceed estimated costs for
performance in accordance with the contract's SOW, as well as other
direct costs for travel, materials/supplies, and subcontracting, and
the contractor's fixed fee. The contract established an estimated
level of effort in manhours, including authorized subcontract labor,
broken down by labor category. The total estimated and ceiling cost
of the contract for the base year and the option years is $25 million.
For the Marine Corps's TOW PGTS modernization effort, the Navy issued
a delivery order to UNITECH on September 30, 1996, in the amount of
$5,340,955.23 (later increased to $5,442,658) for the modernization of
37 existing indoor training systems and the acquisition of 43
additional new indoor training systems and 17 outdoor training
systems.[2] With regard to the PGTS modernization work, the delivery
order specified that:
"[t]he contractor shall rehost the instructor operator station
(IOS) with a modern commercially-available PC, utilizing the
existing video disc player. The contractor shall be responsible
for the redesign of the IOS to remove the current Commodore
computer and replace it with a commercial IBM compatible PC, and
a larger IOS display. The contractor's design responsibilities
include proper interfacing to the existing video disc player; all
interfaces within the existing IOS cabinet; and proper interfaces
and operation with the existing Commodore computer shall be
removed and returned to the Government for disposition. The
contractor is responsible for assuring that modifications are
compatible with the existing 37 student stations."
"The contractor shall update logistic and technical documentation
to ensure the documentation reflects the new configuration. . . .
The Contractor is responsible for re-engineering the current
indoor training system software baseline to operate properly on
the new IBM compatible PC based IOS, while ensuring the
functionality of the software remains unchanged."
According to its proposal for the work, UNITECH will upgrade the
existing PGTS units at its own facilities using modern
commercial-off-the-shelf components, as well as with software
developed by the original equipment manufacturer (OEM). UNITECH will
subcontract the actual design and production of the 43 new indoor
training systems to the OEM and will subcontract the manufacture of
the outdoor training systems to another firm. The delivery order also
requires UNITECH to deliver and install the training systems and
provide technical documentation,
on-site training, spare parts, and logistical and maintenance support.
Lockheed contends that the Navy's acquisition of a significant number
of new and retrofitted TOW trainers and related supplies and services
is beyond the scope of, and cannot be ordered, under the UNITECH
contract.[3]
In determining whether a delivery order issued under an existing
contract is beyond the contract's scope of work, we look to whether
there is a material difference between the contract, as modified by
the delivery order, and the original contract. Indian and Native Am.
Employment and Training Coalition, 64 Comp. Gen. 460 (1985), 85-1 CPD para.
432; Dynamac Corp., B-252800, July 19, 1993, 93-2 CPD para. 37. As to the
materiality of a modification, we consider factors such as the extent
of any changes in the type of work, performance period and costs
between the contract as awarded and as modified by the delivery order,
as well as whether the original contract solicitation adequately
advised offerors of the potential for the type of delivery order
issued. Data Transformation Corp., B-274629, Dec. 19, 1996, 97-1 CPD para.
.
Here, the delivery order did not change the nature or purpose of
UNITECH's contract for ADP systems integration and support services,
and was clearly within the scope of that contract. As described
above, the Navy broadly specified in the SOW in the UNITECH contract a
series of tasks it required to support its mission, including
manufacturing and integrating components in developing new or
modifying existing training systems, and manufacturing prototype and
production units of weapons system trainers.[4] Although the UNITECH
contract did not refer to the PGTS or other specific components or
systems by name, under the terms of the SOW it reasonably encompasses
the upgrade and production of existing training systems, such as the
PGTS, as well as the associated installation, training, documentation,
and logistical and maintenance support. The Navy did not raise the
total cost ceiling of the contract by virtue of this delivery order,
nor was the term of the contract extended. Accordingly, we conclude
that the issuance of a delivery order under the UNITECH contract was
proper. See Astronautics Corp. of Am., 70 Comp. Gen. 554 (1991), 91-1
CPD para. 531.
Lockheed contends that the delivery order violates the subcontracting
limitation clause, Federal Acquisition Regulation (FAR) sec. 52.219-14,
contained in UNITECH's contract. Contrary to Lockheed's contention,
this clause, by its terms, only applies to the contract as a whole and
does not require that each delivery order placed under the contract
satisfy the requirements of that clause. Whether a contractor
complies with the subcontracting limitation in performing a contract
is a matter of contract administration which is within the ambit of
the contracting agency, not our Office.[5] Bid Protest Regulations, sec.
21.5(a), 61 Fed. Reg. 39039, 39045 (1996) (to be codified at 4 C.F.R. sec.
21.5(a)); Corvac, Inc., B-254757, Jan. 11, 1994, 94-1 CPD para. 14.
Lockheed also contends that the delivery order was improperly issued
on a cost-plus-fixed fee basis, rather than a fixed-price basis, in
violation of FAR sec. 16.301-2, which provides that cost reimbursement
contracts should only be used where a fixed-price contract cannot be
used. However, here too, by its terms, FAR
sec. 16.301-2 only applies to contracts, not to delivery orders under
contracts. Since the UNITECH contract is of a cost-plus-fixed fee
type, there is no basis to object to the issuance of a delivery order
on a cost-plus-fixed fee basis. See Astronautics Corp. of Am., supra.
Finally, Lockheed contends that the Navy is not obligating the proper
funds to this delivery order. Since we find that the delivery order
was within the scope of UNITECH's contract, the Navy's funding of this
delivery order is also a matter of contract administration, not
appropriate for our review. Bid Protest Regulations, sec. 21.5(a),
supra.
The protest is denied.
Comptroller General
of the United States
1. Section 8(a) authorizes the Small Business Administration to enter
into contracts with government agencies and to provide for the
performance through subcontracts with socially and economically
disadvantaged small business concerns.
2. The outdoor training systems also consist of a TOW weapon platform
with instructor station, but with a firing simulation system and
modifications for live target engagements. One version can be mounted
on a light armored vehicle.
3. The agency initially argued that Lockheed's protest was untimely
filed under section 21.2(a)(2) of our Bid Protest Regulations, 61 Fed.
Reg. 39039, 39043 (1996) (to be codified at 4 C.F.R. sec. 21.2(a)(2))
because it advised Lockheed in July 1996 that it intended to place
this order with UNITECH, but Lockheed did not protest to our Office
until October 9. However, the record shows that in response to
Lockheed's inquiries on the matter in July, the Navy advised Lockheed
that it was still "currently investigating potential acquisition
strategies" and would advise Lockheed some time in the future of its
"formal decision" in the matter, and that Lockheed protested to our
Office within 10 days of being apprised of the agency's placement of
the delivery order.
4. Other documentation in the record evidences that the UNITECH
contract was specifically developed and negotiated for the design,
development, modification, documentation and implementation of
training systems.
5. Likewise, whether UNITECH's apparent use of foreign personnel in
performing the delivery order contravenes the terms of the original
contract is a contract administration matter.