BNUMBER: B-275587.5; B-275587.6
DATE: October 14, 1997
TITLE: Pemco Aeroplex, Inc. --Reconsideration and Costs, B-275587.5;
B-275587.6, October 14, 1997
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Matter of:Pemco Aeroplex, Inc.--Reconsideration and Costs
File: B-275587.5; B-275587.6
Date:October 14, 1997
Kevin P. Connelly, Esq., and G. Matthew Koehl, Esq., Seyfarth, Shaw,
Fairweather & Geraldson, for the protester.
Thomas G. Jeter, Esq., and Suzanne L. Karbarz, Esq., McKenna & Cuneo,
for Aero Corporation, an intervenor.
Gregory H. Petkoff, Esq., and John E. Lariccia, Esq., Department of
the Air Force, for the agency.
John Van Schaik, Esq., and Michael Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
General Accounting Office recommends that protester be reimbursed the
costs of filing and pursuing protest, notwithstanding the agency's
promise of corrective action in response to the protest and the
dismissal of the protest as academic, where, without explanation,
after more than 4 months the agency has apparently not taken the first
steps to implement the promised corrective action.
DECISION
Pemco Aeroplex, Inc. requests reconsideration of our dismissal of its
protest concerning the award of a contract to Aero Corporation under
request for proposals (RFP) No. F09603-95-R-13032, issued by the Air
Force for programmed depot level maintenance (PDM) of the C-130
aircraft. We dismissed that protest based on the Air Force's promise
of corrective action; Pemco now argues that we should "reinstate" that
protest as a result of the Air Force's failure to promptly take the
promised corrective action. Alternatively, Pemco argues that we
should recommend that the firm be reimbursed its costs of filing its
protest, including attorneys' fees. Pemco also protests that the Air
Force has improperly canceled the solicitation and challenges the
agency's decision to perform the work covered by the solicitation at
the Warner-Robins Air Logistics Center using government personnel.
We recommend that Pemco be reimbursed the costs of filing and pursuing
its protest, including attorneys' fees, and the costs of filing and
pursuing this action. We deny Pemco's protest that the RFP has been
canceled and dismiss as premature Pemco's contention concerning the
Air Force's decision to perform PDM work on the C-130 aircraft
in-house.
Pemco initially protested to this Office on April 28, 1997. In that
protest, and a supplemental protest filed on May 2, Pemco, the
incumbent contractor, argued that the Air Force had improperly
evaluated proposals and improperly selected Aero for award.
By letter of May 19, the Air Force requested that we dismiss Pemco's
protest. The Air Force explained that it had determined that the
evaluation of the offerors' past performance appeared to be
inadequate. As a result, the Air Force explained that it would take
corrective action, including revising the solicitation, conducting
discussions with offerors, soliciting best and final offers (BAFO),
reevaluating proposals, and making a new source selection decision.
By decision of May 19, we dismissed the protest, since the Air Force's
corrective action rendered the protest academic.
Also on May 19, in a letter to the Commander of the Air Force Materiel
Command (AFMC), the Air Force's Principal Deputy Assistant Secretary
(Acquisition and Management) directed the agency to take the
corrective action described to this Office.[1] That letter provided
the following additional direction: "[I]n view of emerging changes in
depot workloads[,] re-evaluate the C-130 PDM requirement." In a May
28 memorandum, the Commander of AFMC explained that the agency had
developed a timetable for taking corrective action to resolicit and
make a new award. In addition, that memorandum stated:
An aggressive schedule to accomplish those tasks would not result
in new awards until 6 Oct 1997, with subsequent induction of the
first aircraft on 5 Jan 1998. Thus, it becomes obvious that we
will not be able to accomplish any of the scheduled FY 97 PDM . .
. under contract.
. . . . . .
Therefore, [Warner-Robins] plans to organically perform the FY 97
workload and the first two aircraft from the FY 98 workload. In
order to perform the work organically, we need to be able to
release the customer money which is currently obligated on the
[Aero contract]. I have been advised by my Legal staff that due
to requirements of the Anti-Deficiency Act, the only proper way
to deobligate those funds which are currently obligated against
firm FY 97 contract requirements is to terminate the [Aero
contract] for the convenience of the Government.
. . . . . .
We are continuing with the re-evaluation of the C-130 PDM
requirements for FY 98 and beyond. However, to accomplish the
required FY 97 PDM requirements, with inputs beginning 16 June
1997, I intend to proceed with the terminations and I request
your concurrence.
The course of action described in the May 28 memorandum was approved
by AFMC in a memorandum dated June 24. Also on June 24, the Air Force
notified Pemco as follows:
The Air Force is re-evaluating the . . . C-130 PDM effort to
determine the best approach to ensure readiness and
sustainability of the C-130 weapon system. As a result, the FY97
and a portion of the FY98 workload will be performed organically.
The [Aero contract] will be terminated for the convenience of the
government. A decision on the remainder of the C-130 PDM
workload for FY98 and beyond will be announced at the conclusion
of the reevaluation. After completion of the requirements
review, an updated plan will be provided.
On July 3, Pemco filed the current matter with this Office.
PEMCO'S CONTENTIONS
Pemco argues that the Air Force's June 24 correspondence demonstrates
that the Air Force has disregarded its promised corrective action and
has removed the basis for our decision to dismiss the protest. As a
result, Pemco argues, its original protest should be reinstated and a
decision rendered on the firm's objections to the Air Force's handling
of the C-130 procurement. Alternatively, Pemco argues that it should
be awarded the costs of filing and pursuing its protest based on the
Air Force's failure to promptly implement the corrective action it
promised, and upon which we based the dismissal of Pemco's original
protest.
Pemco also argues that the Air Force has effectively canceled the
solicitation and on that basis Pemco is entitled to recover the cost
of preparing its proposal. According to Pemco, the period of interim
C-130 contract performance, which was originally estimated at 7
months, surely has grown longer, so that it may well exceed 1 year--or
the base period of the contract under the solicitation. Pemco argues
that, in these circumstances, the Air Force should be viewed as
effectively canceling the solicitation. Under the circumstances,
according to Pemco, since its efforts and expense preparing its
proposal were wasted, it is entitled to recover its proposal
preparation costs.
Finally, Pemco argues that, in addition to failing to implement the
promised corrective action, the Air Force has violated applicable
procurement laws and regulations by deciding to perform the C-130 PDM
work in-house. In this respect, Pemco argues that 10 U.S.C. sec. 2462
(1994) requires that the PDM work on the C-130 be performed by a
private sector source, as opposed to government personnel, if a
private sector source can perform at a lower cost, and also requires a
realistic and fair cost comparison to determine which would be the
lower cost source.
Pemco argues that 10 U.S.C. sec. 2462 has been implemented by regulations
published at 32 C.F.R. sec. 169 (1996), "Commercial Activities Program."
Those regulations call for a comparison of the cost of contracting
with the cost of in-house performance in order to determine which
source would provide "the best value for the Government," 32 C.F.R. sec.
169a.4(d), and also provide for notification and development of a
performance work statement. 32 C.F.R. sec. 169a.15(d).
Pemco notes that by her June 24 memorandum, the contracting officer
announced an intent that 1 to 2 years of the C-130 PDM work would be
done in-house, and argues that, under applicable laws and regulations,
the Air Force cannot legally transfer work being performed by a
commercial depot contractor facility to a government depot without
first determining through a fair and reasonable cost comparison that
the government depot can perform the services at a lower price. Pemco
argues that no such comparison was performed by the Air Force.
ANALYSIS
We first address Pemco's allegation that the Air Force has canceled
the RFP. Although Pemco argues that, as a result of the delay in
amending the RFP, the RFP should be viewed as effectively canceled,
the Air Force reports that it is currently revising the RFP to correct
the evaluation scheme. Accordingly, we will not consider this
allegation at this time. In addition, since the basis of Pemco's
claim for entitlement to proposal preparation costs was its allegation
that the RFP has been canceled, we do not recommend reimbursement of
those costs.[2]
We next address Pemco's request that we reconsider our dismissal of
its earlier protest. As explained, Pemco argues that the Air Force
has failed to implement the promised corrective action and removed the
basis for our decision to dismiss the protest. As a result, Pemco
requests that its original protest be reinstated and a decision
rendered on its objections to the Air Force's handing of the C-130
procurement.
There is no legal basis for reopening and rendering a decision on the
earlier protest, in which Pemco challenged the original evaluation and
selection. The Air Force has effectively conceded that the evaluation
of proposals was performed in a manner inconsistent with the RFP and
that the solicitation itself was flawed. Since the original
evaluation and selection no longer are valid in light of the
corrective action--which will necessitate a new evaluation based on
the revised solicitation and revised proposals--there no longer is any
current basis for Pemco's allegations; those allegations have been
rendered academic by the corrective action. See VSE Corp.--Recon. and
Entitlement to Costs, B-258204.3, B-258204.4, Dec. 28, 1994, 94-2 CPD para.
260 at 2.
Alternatively, Pemco argues that it should be reimbursed its costs of
filing and pursuing its protest based on the Air Force's failure to
promptly implement the corrective action it promised and upon which we
based the dismissal of Pemco's original protest. Pemco argues that
more than 4 months have passed since the Air Force committed to
corrective action and the agency has failed to take the first step in
its proposed schedule of corrective action. Specifically, the Air
Force has not issued an RFP amendment, solicited BAFOs, or conducted
discussions and, according to Pemco, the agency is no closer to
accomplishing the proposed corrective action than it was in May.
Pemco argues that the Air Force's unexplained, unjustified failure to
implement the promised corrective action frustrates the protest
process and entitles Pemco to recover its costs of pursuing its
protest, including attorneys' fees.
We agree with Pemco. Generally, where we determine that a
solicitation, proposed award, or award does not comply with statute or
regulation, we recommend that the protester be reimbursed the
reasonable costs of filing and pursuing the protest; this is to
relieve parties with valid claims of the burden of vindicating the
public interests which Congress seeks to promote. Hydro Research
Science, Inc.--Claim for Costs, 68 Comp. Gen. 506, 508 (1989), 89-1
CPD para. 572 at 3. In addition, under section 21.8(e) of our Bid Protest
Regulations, we may recommend that a protester be reimbursed the costs
of filing and pursuing a protest where the contracting agency decides
to take corrective action in response to the protest. 4 C.F.R. sec.
21.8(e) (1997). This provision reflects our concern that in some
cases agencies take longer than necessary to initiate corrective
action in the face of clearly meritorious protests, thereby causing
protesters to expend unnecessary time and resources to make further
use of the protest process in order to obtain relief. Our intent
under this provision is to recommend the award of costs where, based
on the circumstances of the case, we find that the agency unduly
delayed taking corrective action in the face of a clearly meritorious
protest. Oklahoma Indian Corp.--Claim for Costs, 70 Comp. Gen. 558,
559 (1991), 91-1 CPD para. 558 at 2.
Here, Pemco's protest was clearly meritorious. The corrective action
was taken in response to Pemco's protest that the Air Force had
improperly evaluated its proposal, and more specifically that its
proposal had been improperly evaluated with respect to past
performance. As the Air Force concedes, "This decision to revise the
solicitation and re-compete the requirement for C-130 [PDM] was taken
in direct response to Pemco's initial protest."
The Air Force, nonetheless, argues that there is no basis for a
recommendation of the payment of costs because we have made no
determination that the Air Force's actions violated statute or
regulation and "there is no support in the record for such a
determination." On the contrary, the Air Force itself has conceded
facts which establish a violation of applicable procurement
regulations. Specifically, the Air Force's Principal Deputy Assistant
Secretary (Acquisition and Management) stated in her May 19 letter
that
the Air Force Selection Team failed to follow the language of the
solicitation in evaluating proposals. Specifically, the RFP
advised offerors that past performance would be evaluated at the
factor level when it actually was evaluated at the area level.
Thus, although the Air Force argues that there was no statutory or
regulatory violation, the Air Force's evaluation of proposals on a
basis inconsistent with the solicitation violated Federal Acquisition
Regulation sec. 15.608(a) (1997), which requires that agencies "evaluate
competitive proposals solely on the factors specified in the
solicitation." We therefore conclude that the protest was clearly
meritorious.
We also conclude that the corrective action has been unduly delayed.
While the Air Force has repeatedly insisted that it has "prudently
proceeded with the announced corrective action," the record does not
support this assertion. As explained above, after the Air Force
notified this Office in May that it would take corrective action in
response to Pemco's protest, the agency decided upon a detailed
schedule of corrective action. That schedule called for issuance of
an RFP amendment in June and receipt of responses to the amendment in
July, with evaluations, discussions, BAFOs and a contract awarded by
October 6. As of September 30, the Air Force had not taken even the
first step in this plan--amending the RFP.
In response to Pemco's contention that the planned corrective action
has been unduly delayed, the Air Force simply argues that it would be
"unwise" to implement the schedule more quickly. According to the Air
Force, it "must ensure that the evaluation of proposals is reasonable
and accomplished in accordance with the terms of the solicitation and
the procurement regulations. This deliberative process cannot be
accomplished in undue haste."
It may be that some slippage in the announced schedule could be
justified. Nonetheless, the Air Force has shown no progress in
meeting that schedule and has provided no explanation as to why it has
failed to accomplish even the first milestone on the schedule--issuing
an amendment--when that milestone is within the agency's control. As
a result of the delay, Pemco has been denied an opportunity to compete
for a portion of the work and has been forced to expend unnecessary
time and resources to make further use of the protest process in order
to obtain relief.
In our view, allowing more than 4 months to pass without revising the
solicitation is not reasonable, particularly where the agency has
offered no meaningful explanation for the delay. A protest is not
resolved, where, as here, an agency does not timely implement the
promised corrective action that caused us to dismiss a meritorious
protest. Commercial Energies, Inc.--Recon. and Declaration of
Entitlement to Costs, 71 Comp. Gen. 97, 101 (1991), 91-2 CPD para. 499 at
6.[3] Accordingly, we recommend that Pemco be reimbursed its protest
costs under 4 C.F.R. sec. 21.8(e).
Pemco also argues that, consistent with 10 U.S.C. sec. 2462, and the
implementing regulations, the Air Force should have performed a cost
comparison concerning the interim work. We decline to reach that
issue at this time because, although work is being performed in-house
on an interim basis, the Air Force has not disavowed the promised
corrective action, has not canceled the RFP, and has not made a
decision as to how the PDM work on the C-130 ultimately will be
satisfied. When the Air Force makes a decision as to how the PDM work
on the C-130 will be performed, if Pemco is not satisfied with that
decision, it will be free to protest at that time. At this time, it
would be premature to consider Pemco's allegations concerning a
decision that has not yet been made. Consequently, we dismiss Pemco's
allegation concerning the Air Force's decision to perform C-130 PDM
work in-house.
In summary, we deny Pemco's reconsideration request and its allegation
that the RFP has been canceled. We deny Pemco's request for a
recommendation of entitlement to the costs of preparing its proposal
and we dismiss as premature the allegation that the Air Force has
improperly decided to perform C-130 PDM work in-house. We recommend
that the Air Force pay Pemco the costs of filing and pursuing the
protest, including reasonable attorneys' fees. This recommendation
includes Pemco's cost for filing and pursuing the current matter
before our Office. Pemco should submit its certified claim for costs,
detailing the time expended and costs incurred, directly to the agency
within 60 working days of receipt of this decision.
Comptroller General
of the United States
1. That letter was not made available to Pemco or this Office until
after the original protest was dismissed and the current action was
filed.
2. Pemco also argues that the agency's actions have been calculated to
deprive Pemco of the award in order to punish Pemco for filing its
earlier protest. Pemco has offered no evidence to support this
allegation, and we will not attribute prejudicial motives to agency
officials on the basis of unsupported allegations, inference, or
supposition. Atherton Constr., Inc., B-266345, Feb. 8, 1996, 96-1 CPD para.
51 at 6.
3. The Air Force argues that Commercial Energies, supra, is
distinguishable because in that case the firm improperly awarded the
contract was permitted to continue to perform, while here the Air
Force terminated Aero's contract and the work is being performed
in-house by Air Force personnel. We do not see why this distinction
should make a difference; in Commerical Energies, as here, a protester
saw its protest dismissed because an agency committed to taking
corrective action that would afford the protester meaningful relief
and the agency then failed to do so. Regardless of whether the work
is performed in the interim by Aero or by government personnel, as a
result of Air Force delays in implementing the promised corrective
action, Pemco has not had the opportunity to compete for that work.