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