BNUMBER:  B-276030.2 
DATE:  September 12, 1997
TITLE: Spar Applied Systems--Declaration of Entitlement, B-276030.2,
September 12, 1997
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Matter of:Spar Applied Systems--Declaration of Entitlement

File:     B-276030.2

Date:September 12, 1997

Rodney A. Grandon, Esq., Patton Boggs, for the requestor.
Michael S. Roys, Esq., Department of the Navy, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Request for recommendation that costs of filing and pursuing protest 
be reimbursed is denied, even though the agency decides to take 
corrective action in response to the protest, where protest that the 
terms of a solicitation were ambiguous was not clearly meritorious.  

DECISION

Spar Applied Systems requests that we recommend that it be reimbursed 
the costs of filing and pursuing its protest against the terms of 
request for proposals (RFP) No. N65236-97-0301, issued by the 
Department of the Navy for a Scaled Integrated Voice Communications 
System (SIVCS). 

We deny the request.

The RFP provided for the award of a contract for the design, 
fabrication, installation support, and test of a SIVCS.  The SIVCS 
will be installed on Navy aircraft carriers and used as a prototype 
for the next generation of Navy integrated interior voice, video, and 
data communication systems.  The RFP informed offerors that the 
statement of work (SOW) and an "attached specification . . . form the 
definition of the Navy's intent to procure a hardware set that 
addresses and improves the ever-growing problem of voice communication 
and information flow within and from a U.S. Navy attack carrier."  The 
RFP added that the purpose of the SOW
     is to articulate a statement of the problem the Navy is 
     attempting to address and to define a set of parameters which 
     define key operational needs.  The attached specification has 
     been constructed to represent one possible approach that may 
     satisfy those needs.  Within this context the Navy expects that 
     offerors will propose alternative technological and business 
     approaches that respond to the perception of the Navy's needs 
     with imagination and innovation.  Multiple proposals from 
     individual vendors are encouraged.

The RFP included the "attached specification" not as an attachment, 
but as a 31-page section of the SOW.

On December 12, the agency issued amendment No. 0001 to the RFP, which 
deleted the specification from the SOW and added it to the RFP as 
Exhibit A with the following notation:

     This specification is not a mandatory specification for this 
     procurement.  It is included for information only, as an example 
     of one possible way to solve the problem.  Portions of this 
     specification are referred to by the [SOW].

On January 17, 1997, the agency issued amendment No. 0003 to the RFP, 
which, among other things, "recognized that different vendors may 
propose very different designs based on differing architectures, 
interface details, etc.," and established a "strawman" system "in 
order to provide a common basis for price comparison."  Specifically, 
amendment No. 0003 requested that "[f]or purposes of price comparison 
only, offerors shall submit an itemized estimate for a total of three 
complete systems," and provided list of components that each system 
was to consist of.  On January 20, the agency issued amendment No. 
0004 to the RFP, which modified one aspect of the RFP's "strawman 
system," and one aspect of the evaluation scheme.

Spar filed its protest against the terms of the RFP with our Office on 
January 23, 1 day prior to the January 24 closing date for receipt of 
initial proposals.  In its protest Spar asserted:
 
     The fundamental problem with this procurement is that the Navy 
     has created an internally inconsistent set of "rules" which 
     offerors are to follow in responding to the RFP.  Many provisions 
     of the RFP indicate that the technical requirement is intended to 
     be a performance/functional specification under which offerors 
     have wide latitude to develop solutions.  Other portions of the 
     RFP convey the opposite message, that is, that there are specific 
     design-type features which, if not included in the offeror's 
     proposed solution, will result in the Navy determining that the 
     technical solution is unacceptable.

Spar provided examples of provisions in the RFP which, in its view, 
supported a "flexible technical approach," and others which it 
asserted were "mandatory design-type requirements."  For example, Spar 
pointed out that the RFP provided that "[t]he Government will award a 
contract resulting from this solicitation to the responsible offeror 
whose offer conforming to the solicitation will be most advantageous 
to the Government, price and other factors considered," and complained 
that this provision "requires that proposals conform to the entire 
solicitation, without permitting exceptions for imaginative or 
innovative solutions that may vary from mandatory requirements 
scattered throughout the RFP."  Spar concluded that, in its view, the 
"fundamental ambiguity in the RFP lies in the relationship between the 
Exhibit A specification, the SOW, and the evaluation methodology."

The agency explained in its report on Spar's protest that it

     [had] endeavored to provide offerors with wide latitude as to how 
     they construct their solution to the communication needs/issues 
     raised in the SOW.  However, at the same time the government set 
     forth certain, limited, minimum parameters . . . which must be 
     met by the proposed system(s) in order for it to operate with 
     current communication equipment on board any naval ship.  A 
     system incapable of dealing with current communication equipment 
     is simply not a viable option.

The agency asserted that Spar's argument that the solicitation was 
ambiguous was "premised on a selective look at the solicitation [and] 
taking material out of context."  The agency asserted that the RFP, as 
amended and read as a whole, was simply not susceptible to two or more 
reasonable interpretations, and thus was not ambiguous.  The agency 
pointed to numerous sections, statements, and provisions in the RFP 
which it argued clearly established the relationship between the 
Exhibit A specification, the SOW, and the evaluation methodology.  For 
example, the agency pointed out that section 3.1 of the specification 
provided that the specification was "only one of the many possible 
architectural and conceptual approaches to the task," and the RFP 
specifically stated that section 4 of the specification was "provided 
as guidance only, to indicate test procedures which may be necessary 
to conclusively demonstrate compliance with performance requirements."  
The agency did note that in preparing its report it had determined 
that two subsections of the RFP "may raise some confusion about 
pricing," and that it would therefore issue an amendment to delete the 
two referenced subsections from the RFP.  

Spar maintained in its comments on the report that it was confused as 
to the relationship between those sections of the RFP which, as stated 
in the solicitation and explained by the agency in its report, 
appeared to set forth "minimum parameters which must be met by the 
proposed system(s)" and other assertedly conflicting statements, most 
notably that the Exhibit A specification was for "information only, as 
an example of one possible way to solve the problem."

After Spar filed its comments on the agency report with our Office, 
the agency issued a draft amendment to the solicitation which deleted 
two of the RFP's subsections concerning pricing.  This draft amendment 
also addressed a number of other sections of the RFP, and the agency 
invited all firms which had submitted proposals in response to the 
solicitation, including Spar, to submit comments on the draft 
amendment.  These comments were received, and the final version of the 
amendment was issued on April 15 as amendment No. 0005. 

Our Office requested and received Spar's comments on the draft and 
final versions of the amendment.  Consistent with our earlier 
representations to the parties, our Office, on April 18, issued a 
"Confirmation of Hearing/Conference."  This notice informed the 
parties that a "hearing/conference" would be conducted at GAO on April 
21 in connection with Spar's protest.  Although the hearing/conference 
was convened in GAO's hearing room, and a video transcript of the 
proceedings was prepared, the parties and the GAO hearing official 
agreed that the matter would initially proceed using alternative 
dispute resolution (ADR) techniques, with the proceedings reverting to 
a formal hearing should the attempt at ADR fail.  Because the parties 
were able to resolve the protest to their mutual satisfaction through 
the use of ADR techniques, with the agency agreeing to amend the RFP 
to address the protester's concerns, a formal hearing was not convened 
and Spar's protest was dismissed by our Office as academic on April 
22.

Spar requests that we recommend that it be reimbursed the reasonable 
cost of filing and pursuing its protest, including reasonable 
attorneys' fees.
 
Under the Competition in Contracting Act of 1984, our Office may 
recommend that protest costs be reimbursed only where we find that an 
agency's action violated a
procurement statute or regulation.  31 U.S.C.  sec.  3554(c)(1) (1994).  
Our Bid Protest Regulations provide that where the contracting agency 
decides to take corrective action in response to a protest, we may 
recommend that the protester be reimbursed the costs of filing and 
pursuing its protest, including reasonable attorneys' fees.  4 C.F.R.  sec.  
21.8(e) (1997).  This does not mean that costs should be reimbursed in 
every case in which an agency decides to take corrective action; 
rather, a protester should be reimbursed its costs where an agency 
unduly delayed its decision to take corrective action in the face of a 
clearly meritorious protest.  Griner's-A-One Pipeline Servs., 
Inc.--Entitlement to Costs, B-255078.3, July 22, 1994, 94-2 CPD  para.  41 
at 5; LB&M Assocs., Inc.,--Entitlement to Costs, B-256053.4, Oct. 12, 
1994, 94-2 CPD  para.  135 at 4.  Thus, as a prerequisite to our 
recommending that costs be reimbursed where a protest has been settled 
by corrective action, not only must the protest have been meritorious, 
but it also must have been clearly meritorious, i.e., not a close 
question.  J.F. Taylor, Inc.--Entitlement to Costs, B-266039.3, July 
5, 1996, 96-2 CPD  para.  5 at 3; Baxter Healthcare Corp.--Entitlement to 
Costs, B-259811.3, Oct. 16, 1995, 95-2 CPD  para.  174 at 4-5; GVC 
Cos.--Entitlement to Costs, B-254670.4, May 3, 1994, 94-1 CPD  para.  292 at 
3.  A protest is "clearly meritorious" when a reasonable agency 
inquiry into the protester's allegations would show facts disclosing 
the absence of a defensible legal position.  Department of the 
Army--Recon., B-270860.5, July 18, 1996, 96-2 CPD  para.  23 at 3; Tuscon 
Mobilephone, Inc.--Request for Entitlement, 73 Comp. Gen. 71, 73 
(1994), 94-1 CPD  para.  12 at 4.  The mere fact that an agency decides to 
take corrective action does not establish that a statute or regulation 
clearly has been violated.  Network Software Assocs., 
Inc.--Entitlement to Costs, B-250030.4, Jan. 15, 1993, 93-1 CPD  para.  46 
at 3.

Here, we find that Spar's protest does not provide a basis for 
recommending that it be reimbursed for the costs of filing and 
pursuing its protest.  Spar advances one interpretation of the 
solicitation--that it did not "clearly differentiate between the 
mandatory elements the offerors had to satisfy in their proposal and 
the permissive or desirable elements the Navy preferred," and was thus 
ambiguous.  The agency advances another--that the solicitation, read 
as a whole, provided offerors with wide latitude as to how to 
construct their respective solutions to the communication needs/issues 
raised in the SOW, while clearly setting forth certain limited, 
minimum parameters that the proposed systems must meet in order for 
the systems to operate with the Navy's current communication 
equipment.

Which party's position was correct was not readily apparent, and 
reaching a conclusion in that regard would have required substantial 
further analysis, as indicated, in part, by our Office's scheduling of 
a hearing/conference to complete and clarify the protest record.[1]  
As such, determining the propriety of the contested RFP provisions 
was, in our view, and contrary to the respective positions of the 
agency and protester, a close question.  Spar's protest was therefore 
not clearly meritorious and does not warrant a recommendation that 
Spar be reimbursed the costs of filing and pursuing its protest.

The request that we recommend the reimbursement of costs is denied.

Comptroller General 
of the United States

1. As indicated previously, a formal hearing was not held as the 
parties were able to resolve the protest to their mutual satisfaction 
through the use of ADR techniques.