TITLE:  INRAD, Inc., B-284021, February 4, 2000
BNUMBER:  B-284021
DATE:  February 4, 2000
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INRAD, Inc., B-284021, February 4, 2000

Decision

Matter of: INRAD, Inc.

File: B-284021

Date: February 4, 2000

Warren Ruderman for the protester.

Thomas C. Papson, Esq., and Richard P. Castiglia, Jr., Esq., McKenna &
Cuneo, for Sanders, A Lockheed Martin Company, an intervenor.

Deborah Muldoon, Esq., Department of the Air Force, for the agency.

David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency's decision not to fund protester's proposal in response to Program
Research and Development Announcement (PRDA) for furthering development of
nonlinear optical crystals was unobjectionable where decision was consistent
with terms of the PRDA and did not violate applicable statutes or
regulations; rather, record shows decision was based principally on fact
that, while PRDA called for an approach feasible for advanced development,
as demonstrated by offeror's prior research or exploratory development,
protester instead proposed a technique that had not been applied to its
proposed crystal material.

DECISION

INRAD, Inc. protests the Department of the Air Force's rejection of its
proposal submitted under Program Research and Development Announcement
(PRDA) No. 99-2-MLK, for Advanced Development of Far-Infrared Conversion
Materials. INRAD maintains that the Air Force improperly evaluated proposals
and alleges bad faith on the part of contracting officials.

We deny the protest.

The PRDA, synopsized in the Commerce Business Daily (CBD) on May 10, 1999,
stated that the Air Force Research Laboratory, Materials and Manufacturing
Directorate, was soliciting research and development proposals for the
purpose of furthering development of nonlinear optical (NLO) crystals for
utilization in optical parametric oscillators, second harmonic generators,
and other wavelength conversion devices, the applications for which include
infrared countermeasures for protecting aircraft and standoff detection for
chemical and biological defense. [1] The PRDA cautioned that

[m]aterial candidates that are proposed under this solicitation must have
been previously investigated such that the Air Force can be reasonably
certain of the candidate's potential for meeting the program requirements.
The successful offeror must demonstrate a clear understanding of the
materials problems and propose an approach demonstrated by the offeror to be
feasible for advanced development by the offeror's prior research or
exploratory development. Possible candidates include, but are not limited
to, cadmium germanium arsenide, gallium selenide, and silver gallium indium
selenide.

PRDA sect. A.1. The contractor is to "conduct research and develop processes
that increase the NLO crystals' size, improve the optical quality of the
crystals' bulk and surfaces, and better the reliability of the materials'
growth and processing techniques." Id.

The PRDA provided for proposals to be evaluated based on technical aspect,
ranked first in priority, and cost, ranked second. The technical aspect
factor included the following four subfactors (of equal importance): (1) the
offeror shall propose an approach demonstrated by the offeror to be feasible
for advanced development;
(2) the proposal shall demonstrate a clear and thorough understanding of the
problem; (3) the proposal shall demonstrate that the personnel and principal
investigator are technically qualified to perform the work; and (4) the
proposal shall demonstrate how the equipment and facilities necessary to run
the program will be utilized by the offeror. PRDA sect. D.

Under the evaluation procedures for PRDAs, proposals are evaluated and
ranked for technical merit as Category I, Category II, or Category III. AFMC
FAR Supp. sect.sect. 5335.016-90(d), 5335.9003(b). Proposals in Category I are well
conceived, scientifically and technically sound, and pertinent to the
program goals and objectives; such proposals are the most highly rated and
are recommended for acceptance. Category II proposals are scientifically or
technically sound proposals, but require further development; they may be
recommended for acceptance, but have a lower priority than Category I
proposals. Category III proposals are not technically sound or do not meet
agency needs, and are rejected. AFMC FAR Supp. sect. 5335.016-90(d).

The Air Force received and evaluated three proposals. One proposal,
submitted by Sanders, A Lockheed Martin Company, was rated as Category I and
was recommended for funding. A second proposal was rated as Category III.
The third proposal, submitted by INRAD, was rated as Category II. Although
the Air Force determined that INRAD had proposed "a very good overall
approach" which had value, the agency considered the proposal to be high
risk and determined that funds were not currently available to fund INRAD's
proposed effort. Agency Report, Tab 10, Technical Evaluation at 1 and
attach. 2, at 1.

INRAD challenges the agency's determination that its proposed effort is high
risk, and concludes that its proposal should have been funded.

We have accorded agencies substantial discretion in determining which
proposals to fund under experimental and creative procurement programs
where, as under the PRDA program, see AFMC FAR Supp. sect. 5335.9001, the
agencies' requirements are based, not on design or performance
specifications for existing equipment, but on new and creative research or
development solutions to scientific or engineering problems. See I.S. Grupe,
Inc., B-278839, Mar. 20, 1998, 98-1 CPD para. 86 at 3 (Small Business Innovation
Research (SBIR) procurement); but cf. Energy and Envtl. Research Corp.,
B-261422, B-261422.2, Aug. 23, 1995, 95-2 CPD para. 81 at 4 (PRDA award reviewed
for reasonableness). Accordingly, it is our view that the Air Force had
substantial discretion in deciding which proposal to fund under the PRDA in
issue here. Where an agency has such discretion, we limit our review to
determining whether the agency violated any applicable statute, regulation,
or solicitation provision, or acted in bad faith. Cf. Virginia Accelerators
Corp., B-271066, May 20, 1996, 97-2 CPD para. 13 at 2 (SBIR procurement).

The agency's determination not to fund INRAD's proposal was consistent with
the PRDA, and we find no violation of applicable statutes or regulations.
INRAD proposed to develop cadmium germanium arsenide, so as to make possible
industrial-scale production of high optical-quality, large and uniform
single crystals with reduced optical absorption. Agency Report, Tab 6, INRAD
Technical Proposal, at 5. Although the Air Force viewed cadmium germanium
arsenide as appropriate for advanced development, it noted that two issues
must be addressed with this material: (1) the offeror must improve the
homogeneity of the material so as to avoid such problems as poor optical
transparency, and (2) the offeror must minimize the effects of various types
of crystal point defects that lead to poor optical transparency. Agency
Report, Tab 10, Technical Evaluation, attach. 2, at 1. Recognizing the
"serious problem . . . [of] severe electrical and optical nonuniformity of
[cadmium germanium arsenide] crystals," Agency Report, Tab 6, INRAD
Technical Proposal, at 4, INRAD proposed to investigate two solutions that
the agency evaluated as increasing the risk of its proposed effort.

In evaluating whether INRAD had proposed an approach demonstrated by the
offeror to be feasible for advanced development, one of the technical
evaluation subfactors, the Air Force characterized as high risk INRAD's
proposal to solve the problem of poor homogeneity in cadmium germanium
arsenide crystals by [DELETED]. The Air Force recognized that the approach
had proven useful with certain other semiconductor crystals, but considered
it as high risk here because (to the agency's knowledge) it had never been
applied to cadmium germanium arsenide crystals or to any closely-related
crystals. In addition, the agency was concerned that the use of [DELETED]
could seriously complicate [DELETED]. Agency Report, Tab 10, Technical
Evaluation, attach. 2, and Tab 13, Debriefing Agenda, at 9.

INRAD claims that good results have been achieved [DELETED] and that its
approach addresses the agency's concerns with respect to [DELETED]. However,
INRAD does not deny that the technique has not been applied to cadmium
germanium arsenide crystals, and the president of INRAD concedes that he
does not know how much of an improvement in homogeneity can be expected from
applying the technique to cadmium germanium arsenide crystals. Protest at 2.
Given that the PRDA required "an approach demonstrated by the offeror to be
feasible for advanced development by the offeror's prior research or
exploratory development," PRDA sect. A.1, the agency's conclusion that INRAD's
approach was high risk was consistent with the PRDA and otherwise
unobjectionable.

The Air Force characterized as an overall medium risk INRAD's proposal to
compensate for crystal point defects in cadmium germanium arsenide crystals
primarily by irradiating the crystals with fast electrons. In this regard,
INRAD's proposal stated that "[i]n order to be optically transparent,
[cadmium germanium arsenide] crystals must be electrically compensated. As a
main type of compensation we will use irradiation with fast electrons. We
will also explore annealing/quenching and doping." INRAD Technical Proposal
at 41. The agency recognized that INRAD had shown that fast electron
irradiation improves the transparency of cadmium germanium arsenide
crystals. However, the agency determined that thermal annealing would be
required to eliminate undesired side effects of radiation; the agency was
concerned that low temperature annealing could eliminate the beneficial
effects of irradiation and it noted that INRAD itself had indicated that the
results with high temperature annealing were inconsistent and confusing. [2]
Id. at 22. According to the evaluation, the risk associated with irradiation
itself was high, but in light of the additional, secondary approaches
(annealing and quenching, and doping) proposed by INRAD to compensate for
crystal point defects, the agency concluded that the overall risk in this
regard was only "moderate" or "moderately high." Agency Report, Tab 10,
Technical Evaluation, attach. 2, at 2, and Tab 13, Debriefing Agenda, at
7-8, 10.

INRAD argues in its comments on the agency report that it simply proposed to
study the effects of annealing on cadmium germanium arsenide crystals; the
protester claims that it indicated in its proposal that it would use it only
if a positive result were observed. INRAD Comments, Dec. 10, 1999, at 2.
However, INRAD's argument ignores the agency's finding that--INRAD's
commitment aside--thermal annealing would be required in order to eliminate
undesired side effects of irradiation. The agency's conclusion thus has not
been shown to be inconsistent with the PRDA, and it is not otherwise
objectionable. [3]

In addition, the Air Force assigned a weakness to INRAD's proposal under the
technical evaluation subfactor with respect to whether the proposal
demonstrated how the equipment and facilities necessary to run the program
will be utilized by the offeror. Specifically, the agency concluded that the
risk associated with INRAD's proposed effort was increased by the following:
(1) INRAD lacked a number of critical pieces of equipment that it would have
to acquire; and (2) INRAD, located in New Jersey, had proposed a California
subcontractor for laser testing and characterization--this could hamper
close interaction between the subcontractor and INRAD's researchers and thus
increase technical and schedule risk--and had failed to describe the
subcontractor's equipment and facilities in the proposal. INRAD contends
that it has previously successfully conducted research in conjunction with
west coast organizations, and that the agency was familiar with its proposed
subcontractor's equipment. Even if INRAD is correct, however, the agency's
determination--that the necessity for INRAD to obtain a number of
additional, critical pieces of equipment, and the distance between it and a
critical subcontractor, increased the risk associated with INRAD's proposed
effort--was not inconsistent with the PRDA and was not otherwise
objectionable.

INRAD alleges that the Air Force Research Laboratory has demonstrated a
history of bias in favor of Sanders, as evidenced by several prior awards to
Sanders. However, a history of awards to a competitor in no way demonstrates
improper bias by an agency. See J. A. Jones Grupo de Servicios, SA,
B-283234, Oct. 25, 1999, 99-2 CPD para. 40 at 5 (allegation of agency bias must
be supported by credible evidence showing both the alleged bias, and that
any bias translated into action that unfairly affected protester's
competitive position); Dynamic Aviation--Helicopters, B-274122, Nov. 1,
1996, 96-2 CPD para. 166 at 4.

The protest is denied.

Comptroller General
of the United States

Notes

1. A PRDA is a publication in the CBD of a requiring activity's "interest in
new and creative research or development solutions to scientific or
engineering problems." Air Force Materiel Command Federal Acquisition
Regulation Supplement (AFMC FAR Supp.) sect. 5335.9001.

2. The Air Force also expressed concern that the temperatures required for
antireflection coating deposition would be sufficiently high to anneal out
some of the beneficial effects of irradiation. Agency Report, Tab 10,
Technical Evaluation,
attach. 2, at 2. While INRAD claims to have demonstrated the low-temperature
application of antireflection coating, this does not show that the agency's
overall concern with thermal annealing was misplaced.

3. Although INRAD in its initial protest also generally asserted that
thermal annealing was not required in order to eliminate undesired side
effects of radiation in cadmium germanium arsenide, INRAD Protest at 3,
INRAD has offered no evidence to refute the agency's determination to the
contrary and, indeed, has not argued this point in its comments on the
agency report. Rather, INRAD asserts in its comments only that it had
obtained favorable results with a different material than cadmium germanium
arsenide "as a result of a combination of irradiation with pre- and
post-irradiation annealing." INRAD Comments at 2.