BNUMBER: B-276334.2
DATE: October 27, 1997
TITLE: Atlantic Scientific & Technology Corporation, B-276334.2,
October 27, 1997
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Matter of:Atlantic Scientific & Technology Corporation
File: B-276334.2
Date:October 27, 1997
Edward J. Hoffman, Esq., and Robert G. Fryling, Esq., Blank, Rome,
Comisky & McCauley, for the protester.
George W. Griffith, Esq., Department of the Navy, for the agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protester's request that General Accounting Office recommend
reimbursement of proposal preparation costs and bid protest costs
(incurred in pursuing a contract under a solicitation which it alleges
was issued with the intent to make award only if award could be made
to a particular firm) is denied where the protester has made no
showing of bad faith on the part of the government and where the
contracting agency's decision not to resolicit the requirements, after
having canceled the prior award in response to a protest, was not
improper.
DECISION
Atlantic Scientific & Technology Corporation (AS&T) protests the
Department of the Navy's decision not to resolicit requirements which
had been set forth under request for proposals (RFP) No.
N00421-96-R-5177. The Navy canceled this solicitation as part of its
corrective action taken in response to an earlier protest filed by
AS&T. After being advised that the Navy had reassessed its needs and
determined that no additional contractor support services would be
needed in the near term, AS&T filed the instant protest arguing that
the procurement was a "sham" from its inception.
We deny the protest.
The RFP was issued on October 21, 1996, for systems engineering and
technical assistance services in support of the Navy's P-3 VP Special
Projects Program (which includes two P-3 Orion Aircraft Patrol
Squadrons). The solicitation set forth three general tasks: imagery
research and development, telecommunications connectivity, and
operational/maintenance planning. The annual estimated level of
effort was 6,000 hours for six labor categories, and the government
estimated the total value of the 5-year contract at approximately $2.8
million.
Two firms submitted proposals, AS&T and Newlink Corporation.
Newlink's proposal was evaluated as representing the best value to the
government, and award was made to the firm on February 11, 1997. At
its debriefing, AS&T raised three allegations which were repeated in
its February 26 protest to this Office: (1) Newlink was ineligible
for award as a result of an organizational conflict of interest
because one of its employees allegedly assisted in preparing the
solicitation's statement of work (SOW); (2) Newlink and the Navy
violated procurement integrity rules because the Navy allegedly
disclosed AS&T's price to Newlink; and (3) the Navy's source selection
decision was flawed because the proposed contract's program manager,
Mr. John Rastatter, allegedly pressured the source selection panel to
make award to Newlink.
The Navy investigated these allegations while preparing the agency
report in response to AS&T's protest. One week before the agency
report was due, the Navy advised that its investigation had been
completed and that the contracting officer had determined that a
Newlink employee had assisted in preparing the solicitation's SOW. As
to the remaining allegations, the contracting officer found that,
although it appeared that government personnel outside of the
evaluation process learned of a price difference in the proposals,
AS&T's allegation regarding the release of its pricing information to
Newlink was uncorroborated. The contracting officer could not
substantiate AS&T's allegation that the source selection board was
pressured by Mr. Rastatter into recommending award to Newlink, but
determined that Mr. Rastatter's impatient attitude and apparent
preference for Newlink were improper.
The Navy concluded that it would not be prudent to continue with the
acquisition and proposed to terminate Newlink's contract for
convenience; cancel the solicitation; review the agency's requirements
and draft a new SOW; issue a new solicitation; and remove Mr.
Rastatter from any role in the reprocurement. In view of the proposed
corrective action, our Office dismissed AS&T's protest as academic on
March 25.
Newlink's contract was terminated for convenience the next day. Since
drafting a new SOW and beginning a new competitive procurement are
time-consuming processes, and since the requiring activity was
pressuring the Navy for completion of work encompassed by at least one
of the tasks in the prior solicitation, the Navy attempted to issue
two sole-source simplified acquisition procedure actions for the
immediate work at issue, one to Newlink and one to AS&T. The
sole-source action to Newlink was synopsized in the Commerce Business
Daily on April 24 while the documents for the sole-source action to
AS&T were being prepared. AS&T objected to both of these actions in
late April, complaining that the work should be incorporated in a
competitive resolicitation of the requirements as indicated by the
Navy's prior proposed corrective action.
On May 6, the project engineer asked the contract specialist to cancel
the sole-source request for Newlink as its engineering expertise was
no longer required. The contracting officer was advised that the new
director of the Special Programs Division, Captain Eric Arrowood, had
concluded that the revised requirement could be performed in-house.
Newlink and AS&T were advised that the requirements under the canceled
solicitation had been reviewed and that no additional contractor
support services would be needed in the near term; this protest
followed.
AS&T alleges that the Navy did not need these requirements; that Mr.
Rastatter initiated the solicitation solely to provide Newlink with a
contract vehicle; and that the "evaporation" of the requirements after
the "Rastatter-Newlink connection" was broken shows that the
procurement was a sham from its inception. As relief, AS&T requests
payment of the proposal preparation costs and protest costs it
expended in an effort to secure a contract which, AS&T asserts, the
agency planned to award only if it could do so to Newlink. AS&T
alternatively argues that, to the extent the need for these
requirements exists, it could have been filled by awarding AS&T the
contract under the prior solicitation or by resoliciting the
requirements.
A prerequisite to our Office's recommending reimbursement of proposal
preparation costs and bid protest costs based on an allegation that
the agency solicited proposals knowing it would only make award if it
could do so to a particular offeror is a showing that the government
acted in bad faith in issuing the solicitation. See Restorations
Unlimited, Inc. et al., B-221862, May 28, 1986, 86-1 CPD para. 493 at 4,
aff'd, B-221862.2, July 11, 1986, 86-2 CPD para. 57 at 2; Computer
Resource Tech. Corp., B-218292.2, July 2, 1985, 85-2 CPD para. 14 at 2.
There is no such showing here.
As an initial matter, AS&T's allegation that the procurement was a
sham from its inception relies upon the assertions it made during the
prior protest concerning Mr. Rastatter. However, the statements from
the individuals named in the prior protest, obtained as a result of
the Navy's investigation, do not support this allegation. Instead,
they confirm the Navy's position that Mr. Rastatter was impatient and
exhibited an improper preference for Newlink. In response to AS&T's
allegation that the Navy did not need these requirements, Mr. Francis
Chamberlain, the project engineer under the prior solicitation until
he replaced Mr. Rastatter as the project manager, specifically states
that the original requirements were real at the time of award and real
through May.
AS&T points to the cancellation of the RFP and the decision not to
resolicit as further support for its contention that the agency issued
the RFP in bad faith, since AS&T alleges that the Navy had no
intention of making award to any offeror except Newlink. Our Office
conducted a fact-finding hearing to ascertain the reasons for and
circumstances surrounding the Navy's decision not to resolicit the
requirements contemplated under the canceled solicitation. Our review
of the entire record, including the hearing testimony, provides us
with no basis to conclude that the Navy's decision supports AS&T's
allegation that the procurement was a sham from its inception.
Captain Arrowood assumed his new position in early May and immediately
reviewed the Special Program Division's requirements. Hearing Video
Transcript (VT) 10:49:50. One of these requirements concerned the
data connections between aircraft, ground stations, and the joint
broadcast system (JBS). In short, aircraft observing targets at sea
and ashore transmit their data to ground stations, and these
transmissions need to be sent from ground stations to the JBS for
worldwide dissemination of the information. The aircraft operate in a
UNIX environment, and the Navy anticipated converting the JBS work to
the same UNIX environment. VT 10:56:55. The project manager, Mr.
Chamberlain, testified that this requirement was work encompassed
under the second task of the canceled solicitation and that it
constituted a significant portion of the effort. VT 11:13:20; 35:00;
37:11-37:48. Mr. Chamberlain further testified that the Navy did not
have in-house UNIX capability. VT 12:24:08-24:20.
In his previous assignment, Captain Arrowood had encountered technical
issues similar to those posed by this requirement because his former
office built the JBS network in Europe and he had become familiar with
the government agencies and engineers that had done this type of work.
VT 10:51:00-10:55:35. In contrast, Captain Arrowood testified that
his predecessor did not understand JBS connectivity very well and did
not understand what government resources were already available to
perform the work. VT 10:58:55-59:15; 11:26:40.
Captain Arrowood's knowledge of the JBS led him to conclude that the
conversion of the JBS work to a UNIX environment was not necessary
because another operating system was preferable. VT 10:57:45;
11:24:20. Since this aspect of the work was no longer needed, a
substantial portion of the funding was redirected to another,
unrelated effort. VT 11:02:10-03:00. Some JBS connectivity work was
still urgently needed, but Captain Arrowood's familiarity with this
type of work and the resources available to perform it led him to
determine that the government already had the resources available to
complete this work, both in-house and through some existing contract
vehicles. VT 10:57:45-58:40. In this regard, the subcontractor that
had been proposed by AS&T under the canceled solicitation was given
approximately $20,000 worth of work under an existing contract to
perform tasks related to those contemplated under the original
solicitation. VT 11:59:10-59:15. As to the remainder of the work
encompassed under the original solicitation, Mr. Chamberlain testified
that the work under the first task--research and development work
concerning digital camera technology--will be done either in-house or
under new contracts in the future, VT 12:15:28-18:03, and that the
work under the third task--training and documentation related
principally to the JBS connectivity work--will be completed in the
future either in-house or through existing contract vehicles. VT
11:37:54-11:40:00; 12:16:45-45:52.
AS&T's assertion that even Captain Arrowood did not understand why
there was a contract here, VT 11:13:31, overlooks the fact that
Captain Arrowood apparently approached these requirements with the
benefit of substantially greater knowledge than did his predecessor.
This fact does not, however, mean that the Navy acted in bad faith by
issuing this solicitation, see Honeywell Info. Sys., Inc.--Recon.,
B-193177.2, Jan. 19, 1981, 81-1 CPD para. 26 at 5, or entitle AS&T to
recover its proposal preparation and protest costs. Restorations
Unlimited, Inc. et al., supra. In view of the Navy's explanations of
the events at issue here, and in the absence of any objective evidence
to the contrary, AS&T's allegation that this was a sham procurement is
not supported. See Science Applications, Inc., B-197099, May 20,
1980, 80-1 CPD para. 348 at 16.
Instead, the record shows that the Navy's assessment of its needs in
this area changed and that the agency determined that its best
interests were not served by resoliciting the requirements set forth
in the canceled solicitation in the near term. We have found no
evidence that this determination was unreasonable; instead, we view it
as similar to the cancellation of a negotiated procurement, which is
justified where an agency determines that it is not in the
government's best interest to proceed with a particular procurement.
See Federal Acquisition Regulation sec. 15.608(b)(4); Waste Management
Envtl. Servs., Inc., B-252553, July 12, 1993, 93-2 CPD para. 14 at 5
(cancellation was proper where government's needs substantially
changed). Moreover, as a general rule, our Office does not review
agency decisions to cancel procurements and instead perform the work
in-house, since such decisions are a matter of executive branch
policy. Mastery Learning Sys., B-258277.2, Jan. 27, 1995, 95-1 CPD para.
54 at 2.
AS&T alternatively argues that some of the needs expressed under the
original solicitation remain and could have been satisfied by awarding
the original contract to AS&T since the subcontractor it had proposed
performed some of the work, or by resoliciting. While the Navy could
have pursued one of those options, it was not required to do so, given
the different technical approach it took to its requirements, which
resulted in a substantially diminished need to meet these requirements
through a new contract vehicle. We note in this regard that the Navy
indicates that it will have some need in the future for the imagery
research and development support and may solicit for those needs. VT
12:16:45-16:52.
Since AS&T has made no showing that the agency originally issued the
solicitation in bad faith, or that its decision not to resolicit was
improper, the protester's proposal preparation costs and bid protest
costs are not recoverable. Asbestos Abatement of Am., Inc., B-221891,
B-221892, May 7, 1986, 86-1 CPD para. 441 at 7-8.
The protest is denied.
Comptroller General
of the United States