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.