TITLE:  RGB Display Corporation, B-284699, May 17, 2000
BNUMBER:  B-284699
DATE:  May 17, 2000
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RGB Display Corporation, B-284699, May 17, 2000

Decision

Matter of: RGB Display Corporation

File: B-284699

Date: May 17, 2000

Kelli Lazalier for the protester.

Geoffrey D. Chun, Esq., Department of the Navy, for the agency.

Andrew T. Pogany, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

General Accounting Office will not consider protest of an award of a
subcontract as "by" the government where the item being procured is a
component of the end item to be delivered under a supply contract and is
being incorporated into the end item pursuant to a legitimate change order
that is necessary to ensure that a compliant end item will be delivered.

DECISION

RGB Display Corporation protests the award of a subcontract to Diamond
Visionics Company by Lockheed Martin Information Systems (LMIS), pursuant to
a change order issued by the Department of the Navy under prime contract No.
N61339-93-C-0004, for close combat tactical trainers (CCCT) for use by the
Department of the Army.

We dismiss the protest.

The Navy awarded the prime contract to LMIS on November 20, 1992. Agency
Report (AR) at 2, and attach. 1. The CCCT simulates a 360-degree view of the
battlefield that a tank commander would have by peering out the top hatch of
the vehicle. In the technology being replaced by the subcontract at issue,
this "Commander's Popped Hatch" employed a circle of 10 26-inch monitors,
with every other monitor placed at a higher level and turned downward
instead of toward the center of the circle. The images of the five
downward-facing monitors each reflected off of a mirrored surface (the
beamsplitter) at approximately a 45-degree angle toward the center of the
circle. This had the effect of creating a (virtually) seamless 360-degree
image for the commander. Supplemental Agency Letter (SAL), Apr. 11, 2000, at
1. The 26-inch monitors, which were Cathode Ray Tube (CRT)-based, were
manufactured by the protester, an LMIS vendor, using Mitsubishi
Corporation's commercial off-the-shelf CRTs. During the course of
performance, Mitsubishi discontinued production of the 26-inch CRTs. AR at
1.

With no currently available technical alternative identified by LMIS for the
26-inch monitors, the agency turned to the Department of Defense's (DOD)
Small Business Innovation Research (SBIR) program on May 1, 1996. The Marine
Corps awarded a competitively solicited phase 1 contract to Diamond
Visionics on November 4, 1996 for a study to determine the scientific and
technical merit and feasibility of alternatives to the 26-inch monitor. AR
at 2-3, and attach. 5. A phase 2 award, for an initial prototype design,
followed on August 13, 1997. AR at 3, and attachs. 6 and 7.

Diamond Visionics proposed digital display units (DDUs). The DDU does not
use the traditional CRT technology. Rather, it uses a new chip technology
made by Texas Instruments that is widely used in projectors. Diamond
Visionics' initial prototype DDU design was a form/fit/function replacement
for the 26-inch monitor, but required the use of a beamsplitter. Diamond
Visionics subsequently determined that 10 DDUs could be placed in a circle
(edge to edge) and provide the same virtually seamless 360-degree image
without a beamsplitter. SAL at 2. Diamond Visionics was then awarded a phase
3 SBIR contract to produce a prototype DDU design without the beamsplitter,
with options for production units. AR at 3, and attach. 9.

By the end of phase 2 of the SBIR contract, LMIS had almost depleted its
inventory of 26-inch monitors. After an extensive trade study, the agency
found that two different technologies existed to replace the 26-inch
monitors: the DDU, and a modified 27-inch monitor proposed by the protester.
When LMIS depleted its inventory of 26-inch monitors (prior to award of the
phase 3 contract), the DDU was still in development, so LMIS purchased the
protester's modified 27-inch monitors. AR at 3, and attachs. 10-16. After
Diamond Visionics completed phase 3, an integrated product team (IPT) that
included the agency, LMIS, and the end-users evaluated the DDU and the
modified 27-inch monitor and conducted a life-cycle cost comparison. The IPT
considered technical, safety, and human factors, as well as integrated
logistics support, production readiness, configuration management,
qualification testing, cost and risk factors. AR at 1, 3. Both technologies
were found to have some problems, but the DDU was found to offer
significantly higher performance and growth potential. The DDU also was
found to offer excellent supportability through elimination of the expensive
beamsplitter and elimination of the troublesome color alignment required due
to shadow mask magnetization that characterizes the 26-inch monitor. AR at
3. In addition, the IPT determined that, although the DDU had a higher
acquisition cost, it had a significantly lower life cycle cost because of
lower annual maintenance and replacement spare acquisition costs. AR attach.
16. The agency selected the DDU technology and had LMIS negotiate with
Diamond Visionics to establish pricing and terms and conditions. AR at 4. On
March 23, 2000, the agency incorporated a change order into LMIS's contract
directing the prime contractor to use the DDU as the monitor component for
the CCCT. AR at 4, and attachs. 20-21. This protest followed.

RGB challenges the agency's "directive" requiring LMIS to purchase unproven
displays rather than the protester's modified 27-inch monitors. The
protester claims that the visual quality and performance of its monitor is
far superior to that of the unproven display, while its cost is much lower
than the DDU's. Protest at 1-2. In its comments on the agency report, RGB
claims it has developed additional advanced technological features for its
monitor. Comments at 2-3. The protester requests that our Office direct that
a fair competition be conducted by an unbiased agency based on cost,
performance, and long-term availability.

Under the Competition in Contracting Act of 1984 (CICA), our Office has
jurisdiction to resolve bid protests concerning solicitations and contract
awards that are issued "by a Federal agency." 31 U.S.C. sect. 3551(1)(A) (1994).
Pursuant to our authority under CICA, we initially took jurisdiction over
subcontract awards by prime contractors to the federal government where, as
a result of the government's involvement in the award process, or the
contractual relationship between the prime contractor and the government,
the subcontract in effect was awarded on behalf of--i.e., "by or for"--the
government, and federal procurement laws and regulations otherwise would
apply. See Compugen, Ltd., B-261769, Sept. 5, 1995, 95-2 CPD para. 103 at 3-4.
However, consistent with the holding in U.S. West Communications Servs.,
Inc. v. United States, 940 F.2d 622 (Fed. Cir. 1991), it now is our view
that our jurisdiction generally does not extend to awards made by others but
"for" the government; we therefore no longer review protests of such
subcontract awards where, as here, the agency involved has not requested in
writing that we do so. See 4 C.F.R. sect.sect. 21.5(h), 21.13(a) (2000); see also
Compugen, Ltd., supra, at 4-5.

We continue to take jurisdiction where the subcontract is "by" the
government. See Peter Bauwens Bauunternehmung GmbH & Co. KG, B-277734 et
al., Oct. 8, 1997, 97-2 CPD para. 98 at 2-3. Generally, we have reviewed
subcontract procurements where the government's involvement in the award
process was so pervasive that the subcontract in effect was awarded "by" the
government. We have considered a subcontract procurement to be "by" the
government where the agency handled substantially all the substantive
aspects of the procurement and, in effect, "took over" the procurement,
leaving to the prime contractor only the procedural or ministerial aspects
of the procurement, i.e., issuing the subcontract solicitation and receiving
proposals. See St. Mary's Hosp. and Med. Ctr. of San Francisco, California,
B-243061, June 24, 1991, 91-1 CPD para. 597 at 5-6; University of Mich.;
Industrial Training Sys. Corp., B-225756, B-225756.2, June 30, 1987, 87-1
CPD para. 643 at 5-6. In such cases, the prime contractor's role in the
procurement was essentially ministerial, such that it was merely acting as a
conduit for the government. On the other hand, we have found subcontractor
procurements were not "by" the government, even where the agency effectively
directed the subcontractor selections, where the prime contractor handled
other meaningful aspects of the procurement. See Kerr-McGee Chemical
Corp.--Recon., B-252979.2, Aug. 25, 1993, 93-2 CPD para. 120 at 4; ToxCo, Inc.,
B-235562, Aug. 23, 1989, 89-2 CPD para. 170 at 4-5.

There was no procurement "by" the government here. Our "by" jurisdiction to
consider protests of subcontract awards does not encompass legitimate change
orders--such as the one in issue here--issued by an agency pursuant to its
contract administration responsibility to ensure that the agency will obtain
a product compliant with the specifications. In this regard, it is
significant that the subcontract supply of monitors is integral to--rather
than discrete from--LMIS's obligation under its own supply contract to
deliver compliant CCCTs; LMIS cannot perform its contract without the
monitors. Further, the agency has no independent need for the monitors apart
from the CCCTs; rather, the monitors were merely components to be
incorporated into the end items to be delivered to the agency. Issuing a
change order to specify a component under these circumstances, in our view,
is part of legitimate contract administration, and does not constitute a
procurement "by" the agency. See Kerr-McGee Chemical Corp.--Recon., supra,
at 6, comparing Edison Chouest Offshore, Inc.; Polar Marine Partners,
B-230121.2, B-230121.3, May 19, 1988, 88-1 CPD para. 477 (prime contractor was
not a mere conduit where the subcontract work needed to be integrated by the
prime contractor with its other functions to perform the prime contract)
with University of Mich.; Industrial Training Sys. Corp., supra,
(subcontracted services were discrete from any of the prime contractor's
responsibilities under its prime contract). Such contract administration
matters fall outside of our bid protest jurisdiction. 4 C.F.R. sect. 21.5(a)
(2000).

Moreover, even if the protester were correct that the agency's actions were
in the nature of a procurement, this was not a situation where the agency
essentially "took over" the procurement such that the prime contractor was a
mere conduit, with no substantive responsibilities. Rather, LMIS was a
substantial participant in the technical evaluation of the competing
proposals and also negotiated price and terms and conditions.

The protest is dismissed.

Comptroller General
of the United States