TITLE:   ATA Defense Industries, Inc.--Costs, B-282511.6, March 14, 2000
BNUMBER:  B-282511.6
DATE:  March 14, 2000
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ATA Defense Industries, Inc.--Costs, B-282511.6, March 14, 2000

Decision

Matter of: ATA Defense Industries, Inc.--Costs

File: B-282511.6

Date: March 14, 2000

Claude P. Goddard, Jr., Esq., Wickwire Gavin, for the protester.

Jeffrey I. Kessler, Esq., and Caridad Ramos, Esq., Department of the Army,
for the agency.

Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Request for recommendation that protest costs be reimbursed is denied where
agency decides to take corrective action in response to protest, but the
issue on which the corrective action was based was a "close question," and
cannot be viewed as clearly meritorious.

DECISION

ATA Defense Industries, Inc. requests that our Office recommend that it
recover the costs, including attorneys' fees, incurred in connection with
its protest challenging proposed corrective action by the Department of the
Army in response to our decision in ATA Defense Indus., Inc., B-282511,
B-282511.2, July 21, 1999, 99-2 CPD para. 33, which sustained ATA's protest of a
contract award to Caswell International Corporation under request for
proposals (RFP) No. DAAE20-98-R-0215, issued by the Army's Tank-Automotive
and Armaments Command for the Intermediate New Generation Army Targetry
System (INGATS). After ATA filed its challenge to the Army's proposed
corrective action, and prior to our decision, the Army abandoned its
proposed approach and adopted an approach consistent with one suggested by
ATA in its protest.

We deny the request.

The disputes in this procurement, set forth in greater detail in the
above-referenced decision, spring from a unique feature of the Army's scheme
for evaluating INGATS proposals. In particular, the Army used adjectival
ratings to assess an offeror's ability to achieve certain performance
characteristics related to the solicitation's most important technical
sub-element --i.e., hit detection. The ratings of excellent and good are
relevant here. The rating of excellent was reserved for offerors whose hit
detection device (HDD) was able to accurately calculate "the location of
hits . . . to within 60 mm of where the round actually penetrated the plane
of the target . . . ." RFP amend. 0007, at 3-4. The next highest rating,
good, was reserved for offerors whose device could locate hits to within 120
mm, as opposed to the 60 mm accuracy required for an excellent rating.

Our decision sustaining ATA's initial protest found that the tolerances
identified in Caswell's proposal for its non-contact HDD could report hits
located more than 60 mm from the point where the round penetrated the target
plane. ATA Defense Indus., Inc., supra, at 11. Thus, the decision held that
Army's assessment of the Caswell device as excellent under this technical
sub-element, rather than good, violated the RFP's evaluation scheme.
Accordingly, we recommended that the Army re-evaluate the proposals in
accordance with the stated evaluation scheme, and make a new best value
determination. Id. at 15.

By letter dated August 18, the Army advised ATA that rather than re-evaluate
the proposals as written, it intended to reopen discussions limited to the
subject of hit detection. The letter also indicated that any revisions to
proposals would be similarly limited to the area of hit detection, and that
revisions to other areas, or to price, would not be allowed.

On August 25, ATA filed a protest with our Office alleging that the Army's
decision to reopen discussions limited to hit detection--rather than simply
re-evaluate as our decision recommended--was unreasonable and could only
result in confirming the initial award to Caswell. In support of its
argument, ATA pointed out that: (1) Caswell's proposed approach to hit
detection complied with the solicitation's requirements and did not contain
weaknesses which required discussions; and that (2) ATA's proposal, which
was already rated excellent in the area of hit detection, could not receive
a higher rating if discussions were limited as planned. Thus, ATA argued
that reopening discussions was not justified under these circumstances. For
relief, ATA asked that the Army be required to simply re-evaluate the
proposals, as our Office had recommended, or alternatively, permit complete
discussions and unlimited proposal revisions before making a new best value
determination.

On September 29, the Army submitted an agency report defending its decision
to conduct limited discussions rather than to re-evaluate proposals. In
particular, the Army cited our decision in Rel-Tek Sys. & Design,
Inc.--Modification of Remedy, B-280463.7, July 1, 1999, 99-1 CPD para. 1, for
the proposition that agency corrective action in response to an earlier
sustained protest need not mirror our recommendation, but must simply remedy
the impropriety that was the basis for our decision. Army Report, Sept. 29,
1999, at 4. In addition, the Army report identified the specific reasons for
the agency's decision to reopen discussions on a limited basis.

On October 4, ATA supplemented its initial protest by challenging each of
the reasons set forth in the Army's report for reopening limited
discussions, and arguing that none of them were supported by the record. In
ATA's view, since none of the offered reasons for reopening discussions were
valid, and since only Caswell could improve its standing by the limited
reopening envisioned by the agency, the decision to reopen was an abuse of
agency discretion.

On October 7, our Office requested an alternative dispute resolution (ADR)
meeting with representatives of the Army, ATA, and Caswell, and
simultaneously, we placed a hold on the requirement that ATA submit comments
on the agency report. The meeting was held on October 13. [1]

During the course of this meeting, our Office advised the parties that the
dispute here appeared to be different from the dispute in our decision in
Rel-Tek Sys. & Design, Inc.--Modification of Remedy, supra. We also
discussed with the parties a likely approach for analyzing ATA's pending
protests, and indicated that it was not clear that the agency would prevail,
as it did in the above-cited Rel-Tek case. At the same time, we explained
that if ATA prevailed, it would be the first instance of which we were aware
in which we would conclude that reopening discussions after a GAO decision
sustaining an earlier protest was an abuse of agency discretion. At the
conclusion of the meeting, the Army elected to amend its proposed corrective
action in response to the ATA protest, rather than continue to litigate its
decision to hold limited discussions.

Five days after the ADR meeting, on October 18, the Army provided our Office
and the parties with written confirmation of its intent to reopen the
competition without limitations. By letter dated October 19, ATA agreed that
the Army's actions addressed its concerns, but requested that it be
reimbursed the costs, including attorneys' fees, of pursuing its challenge
to the Army's proposal to hold limited discussions. On October 22, given the
Army's intended approach, and ATA's concurrence, our Office dismissed ATA's
protest as academic. This decision addresses ATA's request for the costs of
pursing its protest.

When an agency takes corrective action prior to our issuing a decision on
the merits, we may recommend that the protester recover the reasonable costs
of filing and pursuing the protest. 4 C.F.R. sect. 21.8(e) (1999). Under this
provision, we will recommend recovery of protest costs where, based on the
circumstances of the case, we conclude that the agency unduly delayed taking
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. For a protest to be clearly

meritorious, the issue involved must not be a close question. J.F. Taylor,
Inc.--Entitlement to Costs, B-266093.3, July 5, 1996, 96-2 CPD para. 5 at 3.
Rather, the record must establish that the agency prejudicially violated a
procurement statute or regulation. Tri-Ark Indus., Inc.--Declaration of
Entitlement, B-274450.2, Oct. 14, 1997, 97-2 CPD para. 101 at 3. The fact that
an agency decides to take corrective action does not establish that a
statute or regulation clearly has been violated. J.F. Taylor,
Inc.--Entitlement to Costs, supra.

Here, we conclude that it is not appropriate to recommend that ATA recover
its protest costs because ATA's protest was not clearly meritorious. As
stated above, ATA's protest contended that the Army's proposed corrective
action in response to an earlier sustained protest was improper. To succeed
in this challenge, ATA would have had to convince our Office that limiting
discussions in the reopened procurement was an abuse of agency discretion.
While our Office was actively considering the merits of ATA's protest--as
opposed to agreeing with the Army that its approach was consistent with our
decision in Rel-Tek--and while we communicated our openness to the outcome
ATA was urging during the ADR conference, ATA's battle was not yet won.

As a general matter, the details of implementing our recommendations for
corrective action are within the sound discretion and judgment of the
contracting agency. Serv-Air, Inc., B-258243.4, Mar. 3, 1995, 95-1 CPD para. 125
at 2-3. In addition, we have allowed agencies to remedy procurement
improprieties with limited, rather than unlimited, discussions. Rel-Tek Sys.
& Design, Inc.--Mod. of Remedy, supra, at 5; System Planning Corp.,
B-244697.4, June 15, 1992, 92-1 CPD para. 516 at 4. Moreover, our Office is
unaware of any decision, by any forum, holding that an agency's decision to
reopen discussions, or to do so on a limited basis, to remedy a specific
procurement impropriety was an abuse of agency discretion--nor has the
protester provided such a decision. Similarly, we will not conclude that the
Army's decision to alter its approach to reopening this procurement, rather
than litigate the question of the validity of the approach, means that the
approach violated a statute or regulation. J.F. Taylor, Inc.--Entitlement to
Costs, supra.

In conclusion, given the discretion allowed agencies attempting to correct
procurement improprieties, we think that ATA's contention that the reopening
of discussions here was an abuse of agency discretion, must be characterized
as a "close question." As such, the protest was not clearly meritorious and
does not warrant the award of costs. Network Software Assocs., Inc.--Request
for Declaration of Entitlement to Costs, B-250030.4, Jan. 15, 1993, 93-1 CPD
para. 46 at 4.

Comptroller General
of the United States

Notes

1. This meeting was also attended by a third offeror, Fidelity Technologies
Corp., which also filed a protest of the Army's proposed corrective action 2
days prior to submission of the Army's report in response to ATA's protest.