TITLE: PEMCO World Air Services, B-284240.3; B-284240.4; B-284240.5, March 27, 2000
BNUMBER: B-284240.3; B-284240.4; B-284240.5
DATE: March 27, 2000
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PEMCO World Air Services, B-284240.3; B-284240.4; B-284240.5, March 27, 2000
Decision
Matter of: PEMCO World Air Services
File: B-284240.3; B-284240.4; B-284240.5
Date: March 27, 2000
Ronald K. Henry, Esq., and Larry J. Gusman, Esq., Kaye, Scholer, Fierman,
Hays & Handler, for the protester.
Ellen D. Washington, Esq., Rosalind Woolbright, Esq., and Daniel D.
Pangburn, Esq., Naval Air Systems Command, for the agency.
Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. In evaluating past performance, agency reasonably downgraded incumbent
contractor because of specific documented problems attributed to incumbent
contractor's performance of predecessor contract.
2. Where solicitation advised offerors that agency intended to award
contract on the basis of initial proposals, agency reasonably concluded that
award could not be made to protester on the basis of a proposal that
contained conflicting information regarding compliance with a material
contract requirement.
3. Agency's intent to obtain required Defense Security Cooperation Agency's
(DSCA) determination prior to issuing task orders for foreign military sales
customers, rather than prior to award of requirements contract, does not
provide a basis to sustain protest, where agency's approach is consistent
with the advice and direction of DSCA.
DECISION
PEMCO World Air Services protests the Department of the Navy's award of a
contract to Canadian Commercial Corporation (CCC) on behalf of IMP Group
Limited [1] under request for proposals (RFP) No. N00019-98-R-0011 to
provide depot-level maintenance services for various Navy and foreign
military sales (FMS) customers' helicopters. PEMCO, the incumbent
contractor, protests various aspects of the agency's evaluation of
proposals, focusing primarily on the agency's negative assessments of
PEMCO's past performance and its ability to perform certain contract
requirements.
We deny the protest.
BACKGROUND
The solicitation, issued on April 22, 1999, sought depot-level inspection
and maintenance services for U.S. Navy H-3 helicopters and FMS customers'
AS-61, MK-1, MK-2 and H-3 helicopters for a 1-year base period with four
1-year option periods. The contract is a follow-on contract to one awarded
to PEMCO in 1994.
As in the predecessor procurement, this RFP contemplated award of a
fixed-price, requirements-type contract with certain cost-reimbursement
provisions. Offerors were required to propose fixed prices for performing
"standard depot-level maintenance" (SDLM), which consisted of the basic work
generally required for all helicopters, [2] and fixed hourly labor rates to
perform work that was considered to be "over and above" the SDLM
requirements. RFP sect. B. The RFP stated that proposals would be evaluated on
the basis of technical capability, past performance and price, with
technical capability and past performance "significantly more important than
Price," RFP sect. M-2, and advised offerors that the Navy intended to award a
contract on the basis of initial proposals without conducting discussions.
RFP sect. L-12(f)(4), at 88.
With respect to the evaluation of technical capability, the RFP listed eight
equally weighted evaluation factors, [3] and advised offerors that the
agency would assign a qualitative rating and a proposal risk rating for each
technical evaluation factor. [4] Regarding past performance, the RFP stated
that the agency would evaluate offerors' experience in reworking "the same
or similar rotary wing aircraft" and would assign a performance risk rating
based on the agency's assessment of that experience. RFP sect. M-2.
Proposals were submitted by five offerors, including PEMCO and CCC/IMP, by
the July 9 closing date. Oral presentations and facility visits were
conducted between July 29 and August 11. Thereafter the offerors' proposals
were evaluated by a technical evaluation team (TET), a past performance
evaluation team (PPET) and a price evaluation team (PET).
PEMCO's proposed price of $53,303,191 was the second highest; its past
performance risk was rated "very high"; [5] and its technical capability was
rated "unsatisfactory" [6] with "high" [7] risk. Overall, the evaluation by
the individual teams resulted in the following ratings of the offerors'
proposals:
Offeror Technical Capability Past Total
Evaluated
Qualitative Proposal Performance
Price
Rating Risk Risk
CCC/IMP Highly Low Very Low $52,323,253
Satisfactory
Offeror A Highly Low Very Low $52,563,458
Satisfactory
Offeror B Highly Medium Low $53,725,147
Satisfactory
Offeror C Satisfactory Medium Unknown $40,254,330
PEMCO Unsatisfactory High Very High $53,303,191
Agency Report at 6.
The PPET's assessment of PEMCO's "very high" past performance risk was based
primarily on PEMCO's performance under the predecessor contract and, more
specifically, on PEMCO's work on Navy helicopters under that contract. [8]
The agency states that the rating was based on consideration of reported
quality defects, schedule slippages, negative contractor performance
assessment report (CPAR) ratings, and the comments of Navy personnel who
dealt directly with PEMCO under the prior contract. Agency Report at 6.
Regarding PEMCO's rating of "unsatisfactory" under technical capability, the
TET identified a deficiency in PEMCO's technical proposal regarding the
evaluation factor "ability to meet the 40 day requirement for a complete
teardown, inspection, evaluation and estimation of the required over and
aboves." RFP sect. M-2. Specifically, RFP sect. L-13 required offerors to address
how they would comply with the requirement to identify, within 40 days after
aircraft induction, 80 to 90 percent of the material and labor that would be
necessary for each aircraft. [9] With its oral presentation, PEMCO presented
charts which led the TET to conclude that PEMCO's initial inspections to
identify the labor and material necessary for each aircraft would not be
completed within the first 40 days following aircraft induction.
Accordingly, the TET evaluated PEMCO's proposal as failing to satisfactorily
demonstrate that it would comply with the RFP's 40-day report requirement.
On November 9, the agency's competitive award panel (CAP) convened, reviewed
the reports submitted by the individual evaluation teams, and discussed each
offeror's proposal with representatives of the evaluation teams. Based on
the reports and discussions, the CAP made the following statements regarding
PEMCO's past performance:
Under the current H-3 contract, [the Navy program office] has experienced
numerous schedule delays, quality problems and cost issues primarily on the
USN H-3 aircraft. No systemic improvements were proposed or have been
implemented to date. The CPARS data and other Quality Deficiency Reports
document PEMCO's performance during the life of the contract. . . . Extreme
doubt exists that PEMCO will successfully perform.
Agency Report, Tab 18b, Memorandum from CAP Chair to SSA 5 (Nov. 10, 1999).
Regarding PEMCO's technical proposal, the CAP stated, "PEMCO did not
demonstrate its ability to comply with the 40-day report." Id. at 4.
Overall, the CAP concluded that "[a]ward could not be made to PEMCO without
discussions." Id. at 8.
In contrast, the CAP made the following determinations regarding CCC/IMP's
proposal:
IMP's technical proposal was rated Highly Satisfactory [HS] overall with a
Low proposal risk. The HS rating was assigned as a result of several noted
strengths: IMP has extensive experience on the H-3 [deleted]; IMP has
superior crew spaces; [deleted]; IMP has extensive experience in developing
repair estimates, historical database for the H-3 [deleted]; IMP can draw
upon a very large artisan/engineering base, if needed; IMP has extensive
rotary wing engineering and artisan experience [deleted]. IMP's response to
the sample task was considered to be a strength as it showed how it is able
to apply its existing experience in performing upgrades [deleted].
. . . . .
IMP was assigned a Very Low performance risk rating. This was due to their
extensive and successful depot level experience with Canadian H-3's and with
reworking components. IMP has delivered numerous aircraft and thousands of
components on time, within cost, and with excellent quality. The few
problems encountered on the various programs were quickly resolved and
systemic improvements put into place to prevent future occurrences.
Essentially no doubt exists that IMP will successfully perform.
Id. at 3, 5.
Based on the above information, the CAP determined that award could be made
to CCC/IMP without discussions, and that "IMP's price is the lowest
realistic offer." Id. at 7. After considering all of the information
presented by the evaluation teams, the CAP concluded that "IMP's proposal
represents the best value to the Government and recommends that award of the
H-3 SDLM contract be made to IMP upon the basis of its initial offer." Id.
at 8.
Based on the CAP's recommendation, no discussions were conducted with the
offerors, and the source selection authority selected CCC/IMP for contract
award on November 15. This protest followed.
DISCUSSION
Past Performance
PEMCO first protests the agency's assessment of "very high" past performance
risk. [10] PEMCO expresses disagreement with various aspects of the agency's
evaluation, concluding that "a proper past performance evaluation of the
PEMCO proposal would have found that PEMCO presents very low risk." [11]
Protest at 21.
Although our Office will review an agency's evaluation of past performance
to ensure that it was conducted reasonably and in accordance with the terms
of the solicitation, H.F. Henderson Indus., B-275017, Jan. 17, 1997, 97-1
CPD para. 27 at 3, the evaluation of an offeror's past performance is a matter
primarily within the discretion of the contracting agency, since it is the
agency that must bear the burden of any difficulties resulting from a
defective evaluation, and we will not substitute our judgment for a
reasonably based past performance rating. Chem-Services of Indiana, Inc.,
B-253905, Oct. 28, 1993, 93-2-CPD para. 262 at 2-3. Further, an agency's
assessment of past performance may be based upon the procuring agency's
reasonable perception of inadequate prior performance, even where the
contractor disputes the agency's interpretation of the underlying facts.
Quality Fabricators, Inc., B-271431, B-271431.3, June 25, 1996, 96-2 CPD para.
22 at 7. Finally, in establishing its requirements and assessing offerors'
relative abilities to perform those requirements, an agency's judgment in
matters related to human safety and national defense carries considerable
weight. BlueStar Battery Sys. Corp., B-270111.2, B-270111.3, Feb. 12, 1996,
96-1 CPD para. 67 at 3; Tucson Mobilephone, Inc., B-250389, Jan. 29, 1993, 93-1
CPD para. 79 at 5.
Here, the record shows that the PPET obtained information regarding PEMCO's
past performance from a variety of sources including discussions with the
Navy's program managers for both domestic and FMS aircraft, and a review of
various documents, including quality deficiency reports and the CPAR
resulting from PEMCO's prior contract. At a hearing conducted by GAO in
connection with this protest, the PPET chair testified that he relied most
heavily on input from the Navy program managers responsible for the aircraft
serviced under PEMCO's predecessor contract. Hearing Transcript (Tr.) at
56-57.
The Navy program manager responsible for domestic aircraft provided an
overview of his office's assessment of PEMCO's performance under the prior
contract, testifying at the GAO hearing as follows:
Q. How would you describe PEMCO's performance under the prior H-3
contract?
A. Below average.
Q. And could you elaborate more on that; in what areas are they lacking?
A. Mainly looking through the CPAR, the number of quality deficiency
reports written against the aircraft that were delivered to the fleet.
I think we had a lot of issues with the 40-day report that never got
resolved that could have been resolved.
. . . . .
Q. How would you describe PEMCO's willingness to work with the PMA in
resolving problems?
A. Absolutely, I would say, the worst I have witnessed in any dealings
with a contractor. . . . I just have never witnessed this type of
adversarial relationship between a contractor and the government.
Tr. at 187-89.
The Navy's deputy program manager provided more extensive testimony
regarding specific aspects of PEMCO's past performance that were considered
deficient. First, he discussed the Navy's discovery of a crack in the frame
of an aircraft that had been delivered to the Navy following PEMCO's
completion of its work, testifying as follows:
The one critical [discrepancy] that stands out in my mind . . . I think it
was the third aircraft that we had down there, NA-3 sequence number. There's
a structure back there, some hinge fittings that hold the tail on. Once the
aircraft flew back to the squadron . . . when the maintenance personnel
[went] out and they look[ed] the aircraft over, they discovered a major
crack in one of the frames. They immediately called engineering. I
dispatched some people up there to take a look at it. We found that it was
cracked very severely. So we replaced that. We did a metallurgical analysis
on that particular crack. It was cracked approximately 75 percent through.
If that hinge would have broken, we would have lost the aircraft and the
crew aboard.
Tr. at 91.
The deputy program manager went on to discuss the test and evaluation
activities the Navy performed in determining that the crack had been present
when PEMCO performed its maintenance of the aircraft, testifying as follows:
Now, the question that we had to answer was, how long had that crack been
there, because from [PEMCO's facility in] Dothan, Alabama to [the Navy
squadron in] Norfolk, Virginia where this aircraft ultimately went [and the
crack was discovered], was probably five, six hours flight . . . . So[,]
taking a look at the crack, there's several ways that you can ascertain how
long the crack has been there. One of the first things that jumped out at us
was that there was corrosion in the crack. That led us to believe that the
crack had been there for quite some time. And there was paint in the crack.
As part of the rework procedure, the contractor . . . actually strip[s] the
paint off this particular component. . . . The area in which the crack was
formed was within the zone area that the contractor was supposed to inspect.
. . . [T]he paint that was sprayed back over the area that was stripped was
found inside the crack. So that led us to conclude that corrosion in the
crack, that the paint, the same chemical makeup as the paint on the exterior
surface of the hinge fitting, was there. Certainly, if it's in the crack,
the crack had to precede the application of the paint.
Tr. 92-93.
A quality deficiency report (QDR) was prepared for this incident, and PEMCO
received that QDR on January 21, 1997. PEMCO responded, stating that it was
"unable [to] provide answers to your questions . . . until the Government's,
and the contractor's, investigation of the subject discrepancy is complete."
Letter from PEMCO to the Administrative Project Management Office (January
30, 1997). On March 24, 1998, PEMCO provided its final response to the QDR,
generally denying fault in the matter, arguing that the crack was "just
outside or, at best, on the fringe surfaces of the area normally stripped,"
and concluding: "PEMCO can not positively confirm nor deny that a crack
pre-existed on the port side of the lower pylon fitting at the time of the
SDLM performance." PEMCO Quality Assurance Investigation Results Relative to
QDR Number V09212-96-0016, Mar. 24, 1998, at 2. PEMCO's response did not
meaningfully address the presence of corrosion or paint inside the crack.
The Navy's deputy program manager testified that, in connection with the
incident involving the crack, he went to PEMCO's facility and found
additional evidence that PEMCO's quality assurance (QA) procedures were
flawed, testifying:
I went down – I was the system engineer at the time when that
happened, so I went down and talk[ed] with the QAR, quality assurance rep,
for DCMC. They had pulled all the documentation, the records that were used
to verify the work done on that particular component. In the course of that
NDI [nondestructive inspection] inspection, there's some rework that they do
on that component also, and it takes anywhere from 40 to 56 hours to effect
repair. And there are certain subsequent steps that the artisan goes
through, and then the QA checks to make sure that he does those correct,
before he proceeds. Well, when I looked at–there was oh, probably 20,
30 pages of rework instructions there, what struck me immediately when I
read that was there are about six or seven days stamped off by the artisan
doing the work. When I looked at the section for the QA for PEMCO on the
other side, it had the same date on it. So the artisan has worked five or
six days on this component, with the individual dates stamped
on that, but the QA guy that's supposed to come and ensure that these steps
are done properly has all got the same date.
Tr. 96-97.
Finally, the deputy program manager testified about various other
deficiencies in PEMCO's prior performance, [12] specifically discussing at
length problems with PEMCO's delivery of the SDLM evaluation report,
generally referred to as the 40-day report. He explained that the 40-day
report's timely identification of necessary parts and material was, and is,
critical to keeping contract performance on schedule. Tr. at 75-77. He then
criticized PEMCO's delivery of 40-day reports under the prior contract,
testifying as follows:
Q. What is your opinion concerning PEMCO's performance of the inspection and
documentation of the inspection in the 40-day report?
A. This, I think, has been-we've been on record for quite some time, if you
look back throughout the program management review meetings and things like
that. That has been the largest bone of contention on this entire contract.
It's so crucial in order for us to maintain cost and schedule and
performance, knowing which components we need to provide as
government-furnished equipment to the contractor, it's there in the time
that he needs it so we don't have any work slippages. We have received
numerous 40-day reports [from PEMCO] . . . that are generally one page. Now,
if you were to go and look at the material list, which was ordered on that
aircraft, at the end, you will see pages and pages. So now . . . that was
our bone of contention. . . . The list [in the 40-day report] should have
been extensive. So we constantly stress[ed] to the contractor, this-you're
delivering a report but it doesn't have the information in it that we need
in order to get the material to you in a timely fashion. We need a list of
what type of material you're going to need and the estimate of man-hours
that you're going to need so we can go grab that funding if necessary, if
we're short, to make this program work on schedule and within cost. We have
yet to get that, except for two FMS aircraft, where we feel they actually
provided an adequate 40-day report.
Tr. at 105-06.
The record shows that the content of PEMCO's 40-day reports was, in fact, an
ongoing issue between PEMCO and the Navy during performance of the prior
contract. For example, the agency's minutes of a program review meeting,
conducted at PEMCO's facility in October 1997, contain the following
statements:
A general discussion of the time frame to identify requirements to repair
the aircraft occurred. The Govt feels that the 40 Day Report is not properly
identifying the parts required, that some of the logistics problems we are
all encountering are due to improper use of the 40 day reports, and that 40
day reports should cover 80% of the items needed for over & above work. Govt
also concedes that problems with funding prevent obtaining parts on time in
some cases.
Agency Report, Tab 37, H-3 Program Review, Oct. 22-23, 1997, at 2.
Again, in the portion of the minutes relating to PEMCO's performance of work
on FMS aircraft under the predecessor contract, the minutes stated:
Forty Day Reports were discussed. The criticism leveled at PEMCO was that
all the 40 Day Reports were nearly identical. Additionally, parts
requirements are not being provided to the Govt quickly enough.
Id. at 14.
During PEMCO's performance of the prior contract, the agency formally
documented its dissatisfaction with various aspects of PEMCO's performance,
including the content of PEMCO's 40-day reports, through the CPAR process.
See Federal Acquisition Regulation (FAR) Subpart 42.15. A CPAR was issued in
July 1999, [13] which stated, among other things: "[deleted]." [14] Agency
Report, Tab 39, Contractor Performance Assessment Report, June 30, 1999, at
4. In conjunction with preparing the CPAR, the agency gave PEMCO an
opportunity to provide its input and comments on the agency's assessment of
its performance. [15] These input comments
were considered by the authorized reviewing official who concluded: "It is
my assessment that the Government evaluation . . . is an accurate assessment
of PEMCO's performance." Id. at 3.
Finally, following the GAO hearing, the Navy submitted a printout of a
computer file maintained by the Navy Inventory Control Point, regarding
PEMCO's requisition of parts and material under the predecessor contract,
along with a declaration from the Navy's assistant deputy program manager
summarizing the data in the file. The printout and declaration indicate
that, for the sixth, seventh and eighth Navy aircraft inducted under PEMCO's
prior contract, there were a total of 210 requisitions during the first 45
days following aircraft induction, and a total of 1,880 requisitions after
the first 45 days following aircraft induction. [16] Declaration of
Assistant Deputy Program Manager, Feb. 29, 2000.
In pursuing this protest, PEMCO submitted documents and provided testimony
addressing the issue of whether the agency's past performance evaluation,
including the prior CPAR determinations, was reasonable and accurate. In
reviewing PEMCO's protest, we considered all of the documents and testimony
submitted by the parties. [17] We also considered the fact that the Navy
contemporaneously documented its concerns and its ongoing dissatisfaction
with PEMCO's prior performance, including use of the CPAR process, that it
provided PEMCO an opportunity to address those concerns in an ongoing
manner, and subjected the final CPAR to review by an authorized official at
a level above the program manager. On the basis of the record as a whole, we
see no basis to conclude that the agency's past performance evaluation is
inadequately documented, contains significant error, or is otherwise
unreasonable. Accordingly, there is no basis to sustain PEMCO's protest
challenging its past performance evaluation.
Technical Capability
PEMCO next protests the agency's technical evaluation of "unsatisfactory"
and "high" proposal risk regarding PEMCO's ability to comply with the RFP's
40-day report requirements. As discussed above, the RFP provided that "[t]he
Government will evaluate . . . the offeror's ability to meet the 40 day
requirement for a complete teardown, inspection, evaluation and estimation
of the required over-and-aboves." RFP sect. M-2. PEMCO complains that the
agency's evaluation was flawed because its proposal "repeatedly demonstrated
its commitment to completing the inspection by the 38th day and submitting a
report in the 38th-and 40th-day time period." Protest at 11.
The agency states that, based on conflicting information which PEMCO
provided with its oral presentation, [18] the agency could not determine
that PEMCO's 40-day reports would provide the required level of specificity
regarding identification of the labor and material necessary for each
individual aircraft. [19] The agency refers to specific slides PEMCO
presented with its oral presentation which indicated that PEMCO's initial
inspections to identify necessary labor and material would extend well
beyond the 40th day following induction of each aircraft. In particular,
[deleted]. Agency Report, Tab 10b, at 48. [deleted]. [20] Id.
The agency was concerned that PEMCO's proposal indicated that inspections
necessary for submission of the 40-day reports would not be completed by the
time the reports were submitted. However, consistent with the agency's
intent to award a contract on the basis of initial proposals, [21] the
agency was careful not to engage in communications that would constitute
discussions--which would have required that it similarly conduct discussions
with, and permit proposal revisions from, all other offerors. Accordingly,
during oral presentations, the agency sought clarification from PEMCO
regarding this aspect of its proposal, referencing slide 4-5 and asking
PEMCO to clarify how that chart "matches up" with another specific PEMCO
chart, which indicated that all initial inspections would be completed prior
to submission of the 40-day reports. Agency Report, Tab 18g, Clarification
Questions and Answers from Oral Presentation - PEMCO. PEMCO's response did
not address the inconsistency between the two charts. Id. Accordingly, the
agency concluded that, without conducting discussions, it could not
satisfactorily determine that PEMCO would comply with the 40-day report
requirements. [22]
The evaluation of technical proposals is a matter within the contracting
agency's discretion, since the agency is responsible for defining its needs
and the best method of accommodating them. Loral Sys. Co., B-270755, Apr.
17, 1996, 96-1 CPD para. 241 at 5. In reviewing an agency's technical
evaluation, GAO will not reevaluate the proposal, but will examine the
record to ensure that the evaluation was reasonable, in accordance with
stated evaluation criteria, and not in violation of procurement laws and
regulations. Ogden Support Serv., Inc., B-270354.2, Oct. 29, 1996, 97-1 CPD
para. 135 at 3. The offeror has the burden of submitting an adequately written
proposal, and an offeror's mere disagreement with the agency's judgment
concerning the adequacy of the proposal is not sufficient to establish that
the agency acted unreasonably. Caldwell Consulting Assocs., B-242767,
B-242767.2, June 5, 1991, 91-1 CPD para. 530 at 6.
Here, we do not find unreasonable the agency's determination regarding
PEMCO's compliance with the 40-day report requirement. In light of the past
and ongoing disagreements between PEMCO and the agency on this precise
issue, [23] we find it remarkable that PEMCO would submit conflicting
information regarding this aspect of its proposal, and we find reasonable
the agency's particular concern in this regard when, upon being directed to
that particular slide during its oral presentation, PEMCO failed to clarify
the apparent inconsistency. We have reviewed all of PEMCO's proposal,
including the particular portions triggering the agency's concerns and,
particularly in the context of PEMCO's prior performance of this contract,
do not find unreasonable the agency's uncertainty regarding how PEMCO was
proposing to comply with the 40-day report requirements. In light of the
agency's clearly stated intent to award a contract on the basis of initial
proposals, we conclude that the agency acted reasonably, both with regard to
its evaluation and in the clarifications that it sought. PEMCO's protest
regarding the agency's evaluation of its technical capability is denied.
[24]
Arms Export Control Act
Finally PEMCO protests that the agency has failed to comply with certain
provisions of the Arms Export Control Act (AECA). [25] Specifically, PEMCO
references a portion of the AECA which provides that "[f]unds made available
under this Chapter may be used for procurement outside the United States
only if the President determines that such procurement will not result in
adverse effects on the economy of the United States or the industrial
mobilization base." [26] 22 U.S.C. sect. 2791(c). PEMCO complains that the
determination is required prior to the agency's award to a Canadian company,
but has not yet been made.
The agency responds that PEMCO's protest on this issue is misplaced, because
the determination required by the AECA need only be made prior to issuance
of task orders for FMS work. [27] The agency states that, consistent with
the directions of DSCA, the Navy "fully intends to comply with [the AECA] in
connection with any task orders issued against the contract using AECA
funds," and will obtain the required determinations prior to issuing any FMS
task orders. Agency Memorandum in Support of Request for Partial Summary
Dismissal, Jan. 5, 2000, at 2.
The Navy's position on the required timing of the determination is supported
by DSCA. In a letter provided by the Navy as part of the protest record,
DSCA directly addresses the issue, stating:
In the case of the requirements contract to Canadian Commercial Corporation
of Ottawa, Ontario, Canada for H-3 helicopter depot level inspection and
maintenance services for the U.S. Navy and other FMS customers, including
the Government of Egypt, the waiver must be in place before FMF [foreign
military financing] funds may be obligated for task orders under the
contract. In the case of a requirements contract, however, the waiver does
not have to be obtained prior to the award of the contract.
Letter from DSCA General Counsel to Department of the Navy (Dec. 29, 1999).
Based on the statutory language regarding the DSCA determination, along with
DSCA's own unambiguous statement regarding the point in time at which DSCA's
determination must be obtained, PEMCO's assertion that the Navy was required
to obtain the DSCA determination prior to awarding CCC/IMP the requirements
contract provides no basis for sustaining the protest. Cf. Matter of
Accounting for Reports of Discrepancy under Foreign Military Sales Program,
B-222666, Jan. 11, 1988.
The protest is denied.
Comptroller General
of the United States
Notes
1. Pursuant to Defense Federal Acquisition Regulation Supplement (DFARS)
sect. 225.870-3, contracts with Canadian firms generally are to be made with the
CCC, which then subcontracts performance of the contract to a specific firm.
In this case, CCC's proposed subcontractor is IMP Group Limited.
2. SDLM includes all "unconditional" requirements to be performed on each
aircraft. The RFP provided detailed guidance regarding the costs and
activities covered by SDLM, stating: "The offeror shall include all labor,
burdens, profit, COM and indirect material in the fixed-unit price for the
inspection and unconditional depot maintenance (see Attachment (1) SOW for
definition of ‘unconditional') requirements to be performed under this
CLIN." RFP sect. B, at 16.
3. The factors were: understanding of the work to be performed; proposed
facilities and equipment; qualifications of the personnel; ability to meet
the 40-day requirement for a complete teardown, inspection, evaluation, and
estimation of the required "over-and-aboves"; reporting requirements;
facility certification requirements; contractual delivery requirements; and
response to sample task. RFP sect. M-2.
4. The RFP also advised that assessment of offerors' technical capabilities
would be based on the offerors' oral presentations and facility visits. RFP
sect.sect. L-13(c)(ii), M-2.
5. The agency's system for rating past performance employed adjectival
ratings ranging from "very low" to "very high." The definition of a "very
high" performance risk rating was: "Based on the offeror's performance and
systemic improvement record, extreme doubt exists that the offeror will
successfully perform the required effort." Agency Report at 5.
6. The agency's system for qualitatively rating technical capability
employed adjectival ratings ranging from "outstanding" to "unsatisfactory."
The definition for an "unsatisfactory" rating was: "Proposal does not comply
substantially with requirements." Agency Report at 4.
7. The agency's system for rating proposal risk employed adjectival ratings
ranging from "low" to "high." The definition of "high" proposal risk was:
"Likely to cause significant serious disruption of schedule, increase in
cost, or degradation of performance, even with special contractor emphasis."
Agency Report at 4.
8. Similar to what is contemplated under this solicitation, PEMCO's prior
contract required performance of depot-level maintenance on both Navy and
FMS customers' helicopters.
9. The RFP's statement of work provided as follows: "The SDLM Evaluation
Report (CDRL A00C) is due not later than 40 calendar days following
induction. To complete this report, the contractor shall: conduct a
comprehensive initial inspection and identify 80% to 90% (80% for the first
two inducted aircraft and 90% for every aircraft thereafter) of the over and
above work and material required to complete the DLM." RFP Statement of
Work, sect. 3.1.1.
10. PEMCO also asserts that the agency "erred" in its past performance
evaluation by failing to consider PEMCO's experience with regard to fixed
wing aircraft. Protest at 21. As noted above, the RFP specifically advised
offerors that past performance would be evaluated on the basis of experience
in reworking "the same or similar rotary wing aircraft." RFP sect. M-2
(emphasis added). PEMCO's post-award protest challenging this unambiguous
solicitation provision is untimely and not for consideration on the merits.
4 C.F.R. sect. 21.2(a)(1) (1999).
11. Under the agency's past performance evaluation scheme, "very low risk"
was defined as follows: "Based on the offeror's performance and systemic
improvement record, essentially no doubt exists that the offeror will
successfully perform the required effort." Agency Report at 5.
12. He testified that there were instances when the Navy found loose bolts
in the electronic flight control system of a completed aircraft, Tr. at 98,
documentation errors in the logbooks, Tr. at 100, and foreign object debris
in the electronics bay of another completed aircraft. Tr. at 101.
13. This CPAR was applicable to PEMCO's performance from November 1997
through November 1998.
14. The CPAR also contained negative assessments--that is "[deleted]" or
"[deleted]" ratings-- with regard to PEMCO's: [deleted]. Agency Report, Tab
39, Contractor Performance Assessment Report, at 4.
15. PEMCO asserted that it should not have received any negative
("[deleted]" or "[deleted]") ratings except with regard to [deleted]. With
regard to that element of the CPAR, PEMCO acknowledged that it [deleted].
Agency Report, Tab 39, at 5. ([deleted].)
16. The declaration states that, for the first five Navy aircraft,
requisition numbers were not identified with a particular aircraft;
accordingly, it was not possible to determine the time period within which
particular requisitions were made.
17. At the GAO hearing, testimony was provided by the Navy program manager;
the Navy's deputy program manager; the Navy's PPET chair; the administrative
contracting officer, who is a Defense Logistics Agency (DLA) employee; a
former DLA industrial specialist; PEMCO's contracts manager; and PEMCO's
military planning manager.
18. As noted above, the RFP provided that assessment of offerors' technical
capabilities would be based on the offerors' oral presentations and facility
visits. RFP sect.sect. L-13(c)(2), M-2.
19. As noted above, the RFP's statement of work provided that, within the
first 40 days, the contractor was required to identify 80 percent of all
work and material that would be necessary to complete the required
maintenance on the first two aircraft and 90 percent for every aircraft
thereafter.
20. At the time of PEMCO's oral presentation, the agency also expressed
concern about [deleted]," (identified on the chart as "Engines, Gearboxes,
Rotor Heads, Drive Shaft Inspe[ction]") [deleted]. Agency Report, Tab 10b,
at 46. At the hearing, the Navy's deputy program manager agreed that other
portions of PEMCO's initial proposal indicated that the individual subtasks
to be performed at [deleted] included activities other than initial
inspections and, therefore, that this chart did not necessarily establish
that PEMCO would fail to complete the required inspections by the 40th day.
Tr. at 162-72.
21. As noted above, the RFP advised offerors that the agency intended to
award a contract on the basis of initial proposals. RFP sect. L-12(f)(4).
Additionally, the agency reminded PEMCO of this intention at the beginning
of PEMCO's oral presentation. Videotape of PEMCO's Oral Presentation.
22. Regarding the agency's clarification request, PEMCO complains that,
"[t]o the extent that the [agency] remained confused about so fundamental a
point as the incumbent contractor's willingness to comply with a requirement
that it had met for the preceding five years, the [agency] had an obligation
to seek clarification or open discussions." Protest at 12. First, PEMCO's
assertion regarding its "willingness to comply with a requirement that it
had met for the preceding five years" ignores the substantial, documented
disagreement between the parties on this precise issue. Further, to the
extent PEMCO is asserting that the agency "had an obligation . . . to open
discussions," PEMCO is mistaken as a matter of law. Where, as here, an
agency states its intention to award on the basis of initial proposals,
there is no requirement to conduct discussions in order to remedy defects in
an otherwise unacceptable proposal. FAR sect. 15.306(a); Kahn Instruments, Inc.,
B-277973, Dec. 15, 1997, 98-1 CPD para. 11 at 8. Finally, as discussed above,
the agency did seek clarification regarding the inconsistency in PEMCO's
submission, but PEMCO's response failed to eliminate the inconsistency.
23. PEMCO had previously argued that "the [prior] contract does not state
that the SDLM effort or a portion of the requirements thereof, must be
accomplished within 40 days of aircraft induction." Letter from PEMCO to
Commanding Officer, Naval Air Systems Command (June 11, 1998). During
PEMCO's oral presentation, PEMCO's Director of Military Programs referred to
"intense" meetings between PEMCO and the agency in connection with the CPAR
process. Videotape of PEMCO's Oral Presentation.
24. PEMCO also protests various other aspects of the agency's evaluation of
its technical capability, arguing that it should have received credit for
various other technical "strengths." We have reviewed all of PEMCO's
additional assertions and find that they constitute mere disagreement with
the agency's judgment and fail to establish that the agency's evaluation was
unreasonable. See Caldwell Consulting Assocs., supra. In any event, in light
of our determination that the agency reasonably evaluated PEMCO's past
performance and its ability to comply with the 40-day report requirement,
there is no potential prejudice flowing from PEMCO's arguments, since higher
ratings in other portions of its proposal could not have made it eligible
for award. Prejudice is an essential element of every viable protest and our
Office will not sustain a protest if there is no reasonable possibility that
the protester was prejudiced by the agency's actions. McDonald-Bradley,
B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3; see Statistica, Inc. v.
Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).
25. The AECA authorizes the President to sell defense articles and defense
services to eligible foreign countries. 22 U.S.C. sect. 2761 (1994).
26. The parties agree that the authority to make the required determination
has been delegated to the Director of the Defense Security Cooperation
Agency (DSCA).
27. The agency further explains that determination of the type of funding
that will be used for FMS task orders--which triggers the statutory
requirement--was not established at the time the contract was awarded.
Agency Memorandum in Support of Request for Partial Summary Dismissal, Jan.
5, 2000, at 2 n.8.