TITLE: Day & Zimmermann Pantex Corporation, B-286016; B-286016.2; B-286016.3; B-286016.4, November 9, 2000
BNUMBER: B-286016; B-286016.2; B-286016.3; B-286016.4
DATE: November 9, 2000
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Day & Zimmermann Pantex Corporation, B-286016; B-286016.2; B-286016.3;
B-286016.4, November 9, 2000
Decision
Matter of: Day & Zimmermann Pantex Corporation
File: B-286016; B-286016.2; B-286016.3; B-286016.4
Date: November 9, 2000
Richard J. Conway, Esq., Jacob B. Pankowski, Esq., and Denis W. Kohl, Esq.,
Dickstein, Shapiro, Morin & Oshinsky, for the protester.
John W. Chierichella, Esq., Anne B. Perry, Esq., and Marjorie D. Purcell,
Esq., Fried, Frank, Harris, Shriver & Jacobson, for BWXT Pantex, LLC, an
intervenor.
Gena E. Cadieux, Esq., Joseph A. Lenhard, Esq., Wilfred E. Maez, Esq., and
Keith R. Landolt, Esq., Department of Energy, 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
Protest against agency past performance evaluation rating protester, the
incumbent contractor at nuclear weapons plant, as only satisfactory overall
when awardee was rated as outstanding overall is denied, where record
supports agency determination that protester has had continuing, significant
problems in ensuring that plant is fully able to perform critical mission,
necessary to ensure the safety and reliability of the United States nuclear
weapons stockpile, of assembling and disassembling nuclear weapons in
support of nuclear stockpile life extension and evaluation programs, while
the awardee's team has a very good performance record under a number of
relevant contracts.
DECISION
Day & Zimmermann Pantex Corporation (DZX) protests the Department of
Energy's (DOE) award of a contract to BWXT Pantex, LLC under request for
proposals (RFP) No. DE-RP04-00AL66620, for management and operation of DOE's
Pantex Plant near Amarillo, Texas. DZX, the incumbent contractor (after
acquiring the prior contractor, Mason & Hanger Corporation, on June 1,
1999), primarily challenges the evaluation of the offerors' past
performance.
We deny the protest.
BACKGROUND
The solicitation contemplated the award of a cost-plus-award-fee contract,
with a 5-year base period with the option to extend the contract for an
additional 5 years, to manage and operate the Pantex Plant. The Pantex
Plant, which includes 730 buildings on more than 10,000 thousand acres, is
the only United States plant for the assembly and disassembly of nuclear
weapons. The plant is primarily used for (1) the maintenance, assessment and
refurbishment of nuclear weapons in the active inventory, and (2) the
dismantlement of nuclear weapons to be retired from the active inventory.
The solicitation's statement of work (SOW) provided for the continued
performance of national defense missions assigned and to be assigned to the
Pantex Plant, including such specific weapons program work as the assembly
and disassembly of nuclear weapons in support of DOE's stockpile life
extension and stockpile evaluation programs, repair and modification of
nuclear weapons, components, and related devices, and the disassembly of
nuclear weapons and related devices no longer required in the military
stockpile. More generally, the SOW established a number of overall
performance objectives, including requirements to "[e]nsure the full set of
manufacturing and evaluation operations can safely be performed on any
weapon at any time"; "[i]mplement world class technical business practices
and safety management to establish and sustain a state of readiness that
will improve . . . mission performance"; implement new diagnostic techniques
that will provide high quality data on the safety and reliability of the
nuclear weapons stockpiles by FY [fiscal year] 2006; and "[e]ffectively use
advanced design and manufacturing technologies and systems to design and
produce products on short cycle times, with quality that approaches zero
defects, by FY 2006." SOW sect.sect. C.1.2, C.1.3. The SOW provided further that,
"[i]n order to achieve the above results, the Contractor is expected to move
to a higher level of performance throughout the term of the Contract by
making the following process enhancements: Demonstrate a culture of
continuous improvement for plant disciplines (such as disassembly and
assembly of nuclear weapons, quality, meeting schedule, cost controls,
authorization bases) . . . ." SOW sect. C.1.3.
Award was to be made to the responsible offeror whose proposal conformed to
the solicitation and represented the best value to the government. The
solicitation provided for proposals to be evaluated based on the following
six factors: (1) environmental safety and health (ES&H) in nuclear facility
operations (NFO), including (among other evaluation elements) "the degree to
which the Offeror's proposal instills a system of continuous improvement,
with technical support from the Offeror's parent organization" (worth 200 of
1,000 available technical/business points); (2) management and organization,
including subfactors for organization plan and key personnel (300 points);
(3) approach for technical and business functions, including (among other
evaluation elements) "the degree the Pantex Plant will be operated to meet
overall Corporate expectations for continuous improvement, the application
of new business practices, and quality initiatives" (250 points);
(4) experience and past performance "in managing operations similar to the
Pantex Plant with emphasis on nuclear facility operations" (150 points);
(5) transition and implementation plans (100 points); and (6) cost, defined
for evaluation purposes as the sum of the proposed maximum available fee for
FY 2001 through FY 2010, the evaluated cost for the transition period, and
the evaluated cost of Key Personnel for the first 2 years of contract
performance after the transition period. RFP sect. M.4. [1] Cost was
"significantly less important than the Technical and Business Management
Evaluation Criteria." RFP sect.sect. M.3(b), M.4.
Four proposals were received in response to the RFP; only BWXT's and DZX's
were included in the competitive range. DOE conducted discussions with BWXT
and DZX, obtaining written responses to questions pertaining to their
initial written proposals and affording them an opportunity for a second
oral presentation with respect to questions pertaining to their initial oral
presentation. BWXT and DZX also were afforded an opportunity otherwise to
revise their proposals. The results were as follows:
Maximum BWXT DZX
TECHNICAL/BUSINESS
ES&H in NFO 150 143 O 135 O
Written 50 20 S 35 G
Oral Hypothetical
Management and Organization 100 85 E 75 E
Organization 200 190 O 170 E
Key personnel
Approach for Technical and 200 180 O 190 O
Business Functions 50 40 E 45 O
Written
Oral Hypothetical
Experience 75 75 O 75 O
Past Performance 75 68 O 30 S
Transition and Implementation 100 85 E 85 E
TOTAL 1,000 886 840
EVALUATED COST $186,977,126 [DELETED]
(O-Outstanding; E-Excellent; G-Good; S-Satisfactory)
Although both proposals were rated excellent overall, the source selection
official (SSO) determined that there were important differences between them
such that BWXT's proposal was technically superior. Specifically, the SSO
noted that BWXT's proposal offered a "significant advantage" in its focus on
continuous improvement and the application of modern quality principles,
which were expected to yield significant operating cost reductions. Source
Selection Decision (SSD) at 7. In this regard, the SSO considered BWXT's
emphasis on continuous improvement and operational excellence to be credible
because of BWXT's detailed and comprehensive discussion of its proposed
methods and procedures and because of the experience demonstrated by the
BWXT team--including Honeywell Corporation, which the agency viewed as a
recognized national leader in quality improvements--in using these methods.
Source Evaluation Board (SEB) Final Report at II-A 13. The SSO indicated
that he also was impressed by the outstanding quality of BWXT's key
personnel, who were high quality managers with significant positive
experience in the areas emphasized under the solicitation. In particular,
focusing on the proposed overall managers, a position described by the RFP
as significantly more important than any of the other key personnel, the SSO
determined that the difference between the proposed general managers was a
basis for distinguishing the proposals; according to the SSO, BWXT's
proposed general manager had significant experience in NFO, whereas DZX's
proposed (and incumbent) general manager had only the NFO experience he had
acquired since assuming that position in January 2000. SSD at 8.
In addition, the SSO noted that the most significant difference in point
scores between the offers was in the area of past performance. In this
regard, the SSO contrasted BWXT's consistent high marks for extremely
relevant and varied past performance, resulting in an overall outstanding
rating for past performance, with DZX's past performance with respect to
NFO, which the RFP indicated would be emphasized in the past performance
evaluation, and where DZX had not been a strong performer. The SSO
specifically observed that DZX's most relevant past performance as the
incumbent contractor was the source of its weakness in the past performance
area. In this regard, noted the SSO, mainly as a result of problems in NFO,
DZX had received only approximately 30 percent of the available award fee in
the most recent, FY 1999, award fee determination for its Pantex contract.
Further, according to the SSO, while DZX had "shown improvement since they
acquired Mason & Hanger and since the most recent performance evaluation,
and, I believe, has a strong corporate ethic for continued improvement . . .
the degree of performance improvement has been less than desired, and does
not show the continuous improvement potential of the BWXT Pantex proposal."
SSD at 6, 8-9. As a result, DZX received a weakness in NFO past performance
which, when combined with a minor strength for other than NFO past
performance, yielded only an overall satisfactory rating for past
performance.
In determining that BWXT's proposal represented the best value to the
government, the SSO emphasized that the RFP provided that technical and
business management criteria were significantly more important than cost;
according to the SSO, this emphasis on technical capabilities was
particularly appropriate in light of the fact that the Pantex Plant was a
high-risk, technically complex production facility that was the only United
States facility with the capability for the assembly and disassembly of
nuclear weapons. In these circumstances, found the SSO, the technical
superiority of BWXT's proposal was worth the additional $29.5 million
evaluated cost of the proposal. The SSO added that: "Moreover, BWXT Pantex's
technical proposal included an approach for continuous improvement to
achieve operating efficiencies and overall operational cost savings that
should significantly overshadow the differences that exist in the evaluated
costs." SSD at 9. Upon learning of the resulting award to BWXT (on July 20,
2000), and after being debriefed by the agency, DZX filed this protest.
PAST PERFORMANCE
DZX primarily challenges the evaluation of both its and BWXT's past
performance. According to the protester, in assigning a weakness to DZX's
proposal with respect to NFO past performance, the agency ignored DZX's NFO
performance before and after FY 1999 (when it received a low award fee
percentage). Further, according to the protester, in assigning a strength to
BWXT's proposal with respect to NFO past performance, the agency failed to
account for numerous weaknesses in BWXT's performance. DZX essentially
argues that its past performance was no worse than BWXT's, such that it was
improper for DOE to rate DZX as only satisfactory overall in this area while
rating BWXT as outstanding overall.
Our Office will examine an agency's past performance evaluation only to
ensure that it was reasonable and consistent with the stated evaluation
criteria and applicable statutes and regulations, since determining the
relative merit of an offeror's past performance is primarily a matter within
the contracting agency's discretion. Pacific Ship Repair and Fabrication,
Inc., B-279793, July 23, 1998, 98-2 CPD para. 29 at 3-4. Further, in conducting
a past performance evaluation, an agency has discretion to determine the
scope of the offerors' performance histories to be considered, provided all
proposals are evaluated on the same basis and consistent with the
solicitation requirements. Ideal Electronic Sec. Co., Inc., B-283398, Nov.
10, 1999, 99-2 CPD para. 87 at 4; Federal Envtl. Servs., Inc., B-250135.4,
May 24, 1993, 93-1 CPD para. 398 at 12. An agency may base its evaluation of
past performance upon its reasonable perception of inadequate prior
performance, even where the contractor disputes the agency's interpretation
of the facts, KELO, Inc., B-284601.2, June 7, 2000, 2000 CPD para. 110 at 3;
PEMCO World Air Servs., B-284240.3 et al., Mar. 27, 2000, 2000 CPD para. 71 at
7, and a protester's mere disagreement with the agency's judgment is not
sufficient to establish that the agency acted unreasonably. KELO, Inc.,
supra; Coffman Specialties, Inc., B-284546, B-284546.2, May 10, 2000,
2000 CPD para. 77 at 5. Furthermore, in establishing its requirements and
assessing offerors' relative abilities to perform those requirements, an
agency's judgment in matters related human safety and national defense
carries considerable weight. PEMCO World Air Servs., supra.
Based on our review of the record, we find that the agency reasonably
evaluated DZX's past performance in the NFO area as a weakness and BWXT's
NFO performance as a strength. Further, given the RFP's emphasis on NFO and
DZX's evaluated relative weakness in this area, we find no basis to question
the agency's overall evaluation of BWXT as having outstanding past
performance and DZX as having only satisfactory past performance.
DZX Past Performance
DZX challenges the evaluation of its past performance on the basis that DOE
improperly ignored its FY 1997 and FY 1998 NFO performance and failed to
take into account the fact that it had either corrected by June 2000, or
made significant progress toward correcting, the major perceived
deficiencies with respect to NFO cited in the FY 1999 award fee report. [2]
The overall evaluation of DZX's past performance was reasonable. In this
regard, the RFP required offerors to submit information for no more than
five contracts that are currently being performed or have been completed
within the past 3 years, and which are "related to operations similar to the
Pantex Plant with emphasis on managing nuclear facility operations." RFP sect.
L.4(d). In addition, offerors were advised that they "may also provide
information on problems encountered on the identified contracts and the
Offeror's corrective actions." Id.
Although DZX designated three of the five contracts for which it submitted
past performance information as NFO contracts, DOE determined that only one
of the five contracts, its incumbent contract for managing and operating the
Pantex Plant, in fact was a qualifying NFO contract. With respect to the
Pantex contract, DOE obtained a response to a detailed past performance
questionnaire from two DOE sources--[DELETED] and [DELETED]--who were
familiar with DZX's performance primarily in non-NFO areas and provided
positive evaluations, Agency Report, Tab 12 at 12-22; AR at 21; reviewed the
last 3 years of award fee determinations, AR, Tabs 20-22; issued a
discussion question to DZX concerning its Pantex performance; reviewed
databases for enforcement actions against DZX; reviewed a May 25, 2000 draft
of a report by an independent DOE oversight office on procedures for
conducting nuclear weapons work at Pantex, AR, Tab 41, Follow-up Evaluation
of Authorization Basis at the Pantex Plant, June 2000 (May 25, 2000 draft);
reviewed a draft letter to DZX (never sent) which addressed DZX's recent
performance, AR, Tab 23; and, just before the source selection decision was
made, discussed DZX's recent past performance with DOE's Amarillo Area
Office Manager, DOE's Albuquerque, New Mexico Operations Office Manager
(whose office has oversight over Pantex and the Amarillo office), and other
DOE officials. AR at 16-25.
Based on the above information, DOE determined that, while DZX had performed
well with respect to non-NFO at the Pantex Plant and elsewhere, it had not
performed well in NFO at the Pantex Plant, and that its continuing failures
in this regard had adversely affected the ability of the United States to
perform the nuclear weapons disassembly and assembly operations which are a
fundamental part of the Pantex Plant's mission and are necessary to ensure
the safety and reliability of the nuclear weapons stockpile. We find that
the record supports this determination.
Authorization Basis
Of particular importance to the agency's determination was DZX's perceived
failures with respect to ensuring that there was the required authorization
basis (AB) for performing nuclear weapons assembly and disassembly
operations. The record indicates that the ability to disassemble, inspect
and reassemble nuclear weapons is necessary to ensure the safety and
reliability of the United States nuclear weapon stockpile, and that the
inability to perform this mission potentially could adversely affect DOE's
and the Department of Defense's required annual certification of the safety
and reliability of the nuclear weapon stockpile. Declaration of the DOE
Manager of the Albuquerque Operations Office, Oct. 3, 2000, at 1-2; Hearing
Transcript (Tr.) at I-89 to I-91, I-273 to I-277, I-287 to I-288, I-294 to
I-297; I-351 to I-353; DOE Comments, Oct. 3, 2000, at 19-22; DOE
Post-Hearing Comments at 2-3, 7-8.
The record further indicates that nuclear weapons are never more hazardous
than when in a partially assembled (or disassembled) state, without their
special safety and security features in place; it is at this time that they
are most vulnerable to natural phenomena (lightning, earthquake, etc.) and
to operational accidents. As a result, special DOE safety authorizations are
required before the contractor can work on nuclear weapons. AR at 1-2. As
defined by DOE, this required AB consists of those aspects of the facility
design basis and operational requirements relied upon by DOE to authorize
operation. Specifically, the contractor must analyze the general operational
hazards associated with the operation of Pantex Plant nuclear facilities,
including the degree of protection provided to nuclear weapons from natural
hazards (in particular lightning), as well as the hazards introduced by the
unique features of each weapon type. Once these hazards and their potential
consequences are analyzed, the contractor must develop a set of engineering
and management controls that can be kept in place while weapon operations
are occurring. These safety analyses and controls are documented in detailed
technical reports (e.g., safety analysis reports, hazard analysis reports,
and technical safety requirements) which are provided to DOE for approval
with a contractor assertion that the weapon operations can be performed
safely. This collection of technical information comprises the AB for the
performance of work on each weapon type. [3] As noted by DOE's independent
Office of Oversight, the AB is an essential part of a safety management
program because it identifies and analyzes hazards, identifies and
establishes controls needed to ensure safety, and analyzes and accepts
residual risks associated with hazardous material operations. Evaluation of
Authorization Basis Management Systems and Processes at the Pantex Plant,
DOE Office of Oversight, Environment, Safety and Health, Aug. 2000, at 4; AR
at 2.
Although there appears to have been an approved AB at one time for every
nuclear weapon at Pantex, the record indicates that, at the time of award on
July 20, 2000, the AB for three of the seven nuclear weapons in the active
nuclear stockpile had expired, and a new AB, compliant with current safety
standards, to perform the required work had not been approved. In this
regard, the record indicates that, under prior practice, an AB was
developed, in part, with reliance on an expert-based approach, in which
experienced technical and safety personnel determine that operations are
sufficiently safe. However, DOE is transitioning to a standards-based under
which decisions about the adequacy of safety practices are based on rigorous
processes for systematically identifying hazards, detailed technical
analysis, and clear standards. Id. While DZX has been revising its AB
documents to meet these enhanced, more disciplined and rigorous safety
requirements, its failure to obtain approval for a revised AB, and the
expiration of the prior AB, resulted in an inability at the time of award to
disassemble, inspect and/or refurbish and reassemble three of the seven
nuclear weapons in the active inventory. (One of the three weapons can be
disassembled but not reassembled; the other two cannot even be
disassembled.) Declaration of the DOE Manager of the Albuquerque Operations
Office, Oct. 3, 2000, at 2; Hearing Transcript (Tr.) at I-87 to I-93, I-277
to I-278, I-287 to I-288, I-294 to I-297, I-349 to I-357, I-532; DOE
Comments, Oct. 3, 2000, at 19; DOE Post-Hearing Comments at 2-3, 7-8.
Further, the record indicates that DOE attributed to DZX significant
responsibility for performance deficiencies under the Pantex contract,
including deficiencies with respect to AB. DOE Post-Hearing Comments at
9-11; Declaration of the DOE Manager of the Albuquerque Operations Office,
Oct. 3, 2000, at 2-3. According to DOE's Manager of the Albuquerque
Operations Office, DZX was "substantially accountable" for delays with
respect to the inability to disassemble and assemble of nuclear weapons in
the active inventory. Tr. at I-298. According to this manager:
There are a number of places I can attribute the factors that caused us not
to be able to work on the weapon, not to have a defensible case for why we
know it's safe enough. Some of those are solely within the responsibility of
Mason & Hanger/Day & Zimmerman. And primarily it's been the inability to
deliver good quality technical work on time and have it approvable the first
time.
Tr. at I-288 to I-289. Thus, while DZX received an overall rating of
satisfactory in DOE's December 2, 1999 award fee determination for FY 1999,
DZX's performance was rated as marginal with respect to effectively managing
the startup of new weapon processes in support of the enduring stockpile and
dismantlement; unsatisfactory for effectively managing the BIO upgrade
projects; and unsatisfactory for developing and implementing the unreviewed
safety question program. [4] Overall, the agency noted:
In contrast to prior year award fee determinations where factors outside
[DZX's] control contributed substantially to performance deficiencies, the
significant drop in the FY 1999 award fee represents the Department's
conclusion that [DZX's] inabilities to meet key Department expectations are
now driven by factors within [DZX's] control.
AR, Tab 22, Award Fee Determination for Pantex Contract for FY 1999
(Oct. 1, 1998 to Sept. 30, 1999), Dec. 2, 1999, at Cover Letter, 3, 25-26.
As a result, DOE initially calculated an award fee amounting to only
17.6 percent of the available award fee. (However, the fee determination
official determined that the agency "decision that performance deficiencies
previously attributed to other organizations are now within [DZX's] control
constitutes a significant increase in expectations," and thus increased the
award fee by $2 million, yielding an overall award fee amounting to 30.3
percent of the available award fee. Id. at Cover Letter.
Although DZX has not disputed that there were performance problems in FY
1999, it has suggested that the agency's imposition of additional
responsibilities for which there was inadequate funding was a factor in its
FY 1999 performance. DZX Post-Hearing Comments, Oct. 24, 2000, at 16-18.
However, DZX's own proposal, in discussing the "operational problems"
encountered in the past few years at Pantex, specifically noted an
"[i]nability to deliver quality AB documents on time." DZX Proposal, attach.
E, Past Performance Package, at 11. Likewise, when questioned during
discussions about the FY 1999 unsatisfactory and marginal performance
ratings, DZX explained that "[o]verall, the evaluations showed that
insufficient technical resources were allocated to the projects to achieve
DOE expectations"; "expectations for safety basis documentation were not
well understood, and delays and poor quality in weapon hazards analyses were
slowing the startup of new weapon programs"; and "there was an inadequate
focus on program management as well as inexperienced program managers on
staff." DZX Response to Discussions, June 26, 2000, at 2-1 to 2-4.
Corrective Action
While DZX also does not dispute that DZX's performance still needs
improvement, DZX Post-Hearing Comments, Oct. 24, 2000, at 18 n.25, it
claimed in its proposal and during discussions, and argues in its protest,
that it has undertaken corrective action to address the evaluated problems
in its performance. For example, DZX stated during discussions that "[w]ith
respect to the AB program, [DZX] initiated efforts to apply modern project
management techniques, [DELETED] and create AB documents in full compliance
with DOE orders." Id. at 2-2.
DOE recognized that there had been an improvement in performance at the
Pantex Plant, with the SSO noting both improvement since FY 1999 and "a
strong corporate ethic for continued improvement." SSD at 9. However, the
SSO considered that "the degree of performance improvement has been less
than desired," such that significant problems remained. Id. In this regard,
DOE's manager of the Albuquerque Operations Office testified that DZX had
added in a senior position, a competent authorization basis manager. They
have not addressed the weaknesses in the staff that reports to that manager.
But we have seen products requiring one or two rounds of rework in lieu of
the three or four or five rounds of rework we were getting prior to the
arrival of the new manager.
Tr. at I-368 to I-369. Further, according to DOE's Albuquerque manager,
the performance has not yet gotten to the point where the operating
contractor has been able to deliver acceptable technical work without help
from the government.
So the documents that we've been able to approve have been approvable in
large part because of the technical staff in the DOE area office or in
Albuquerque who have helped identify the weaknesses in the proposal and
helped get them corrected.
Tr. at I-284. The Albuquerque manager stated further that
my staff is pointing out where the change needs to be made and what has to
be different. And then the contractor's management is figuring out how to
get it there. What I need is a contractor management who . . . knows
themselves what it needs to be and can make it happen so that I can get my
staff back into the independent oversight role.
Tr. at I-370 to I-372. As explained by the Albuquerque manager, his staff
"can't do an independent review if they're helping to do the job"; "[i]f my
staff at the area office is helping prepare the document, there isn't
anybody to check to see if they messed it up." Tr. at I-289.
Likewise, DOE's April 24, 2000 mid-FY 2000 performance assessment for the
Pantex contract, cited by DZX as support for its claim of improved
performance, reported that the "[q]uality of W76 and W88 [nuclear weapons]
initial Authorization Basis submittals [was] not sufficient for approval,"
and that "[t]he general quality of deliverables in the area of safety
documentation has been inadequate." Performance Evaluation Mid-Year
Assessment, Apr. 24, 2000, at Core Mission/P.O.-1/P.E.-1b, Corporate
Management/P.O.-8/P.E.-8a. Indeed, the record indicates that by June 2000, a
draft memorandum to DZX had been prepared by DOE staff in which DZX was to
be warned that "the continued lack of action and performance by [DZX]
management is reflected in missed mission critical milestones that affect
our DoD customer requirements"; characterizing DZX's performance as
"unsatisfactory," the draft letter indicated that the award fee associated
with missed deliverable dates for two of the warheads had been eliminated,
and warned that continued missed deliverable dates could result in complete
elimination of the management award fee. (While the draft memorandum
ultimately was never sent, the concerns expressed in the memorandum were
raised with DZX in a June 28, 2000 meeting. AR at 19, 24 n.21; Tr. at I-66
to I-68.)
The May 25, 2000 draft report by DOE's independent Office of Oversight on AB
management and processes at Pantex was somewhat more favorable, stating that
there had been improvements in AB activities--including clarifying and
centralizing previously dispersed responsibilities for the AB process by
reassigning responsibilities to site management, leaving DZX responsible for
development of all AB documents--and that recently developed AB documents
were thorough and exhibited few deficiencies. However, the report noted
continuing problems at the Pantex Plant. For example, the report indicated
that "the contractor's technical capability still does not match its
increased responsibility for [AB] development; the ongoing efforts to
enhance technical capabilities in this area is critical to success." AR,
Tab 41, Follow-up Evaluation of Authorization Basis at the Pantex Plant,
June 2000 (May 25, 2000 draft), at 9, 11.
In any case, as noted above, at the time of award, the AB for three of the
seven nuclear weapons in the active nuclear stockpile had expired and a new
AB, compliant with current safety standards and permitting performance of
the full cycle of disassembly and assembly, had not been approved. The
record supports DOE's position that DZX bore at least some responsibility
for this failure. Further, given the continuing weaknesses in DZX's
technical capability, as made evident by its continuing inability to deliver
acceptable technical work without help from the government, we find that the
evaluators here reasonably concluded that DZX had not yet corrected the
weaknesses in its performance that led the Pantex contracting officials
first to significantly reduce DZX's award fee, and then to consider
eliminating it altogether.
FY 1997/FY 1998 NFO
We recognize that DZX also claims that DOE ignored its FY 1997 and FY 1998
NFO performance in rating DZX satisfactory overall for past performance. As
noted by the agency, however, although DZX received overall good ratings and
was awarded a higher percentage of award fees in FY 1997 and FY 1998 (60
percent and 59.1 percent of the available award fee, respectively) than in
FY 1999 (17.6 percent initially, subsequently increased to 30.3 percent),
DOE had already begun to express concerns about DZX's performance in
important contract areas. For example, in DZX's FY 1997 award fee
determination, DOE noted that an "inability to plan and integrate projects
across organizational lines impacted high priority projects," and
characterized as a notable deficiency the fact that "[p]roposed changes to
authorization basis documentation contained insufficient technical
justification for first time approval by DOE." AR, Tab 20, Pantex FY 1997
Award Fee Determination (Oct. 1, 1996 to Sept. 30, 1997), at 3, 9. Likewise,
in DZX's FY 1998 award fee determination, DOE noted that DZX "management has
not yet met DOE's expectation in assuming a strong leadership role to
identify and implement safety improvements." AR, Tab 21, Pantex FY 1998
Award Fee Determination (Oct. 1, 1997 to Sept. 30, 1998), at 5. More
importantly, even accepting that DZX's performance at Pantex in FY 1997 and
FY 1998 was markedly better than its performance in FY 1999, we believe that
the agency could reasonably assign greater weight to the significant
deficiencies in DZX's more recent performance at Pantex, deficiencies which
affected Pantex's ability to meet its vital national security mission.
BWXT Past Performance
DZX primarily argues that the strength assigned to BWXT's proposal with
respect to NFO past performance is inconsistent with numerous weaknesses in
BWXT's performance.
DOE determined that four of the five contracts for which BWXT had submitted
past performance information were NFO contracts, but was only able to obtain
performance information for three of the contract efforts: (1) BWXT's
contracts to operate the Naval Nuclear Fuel Division in Lynchburg, Virginia,
which [DELETED]; (2) BWXT of Ohio's performance (commencing in October 1997)
managing and operating DOE's Miamisburg Environmental Management Project
(known as Mound), which is a former nuclear weapons component production
site in Ohio where the primary task is decontaminating the site for eventual
transfer to the community for commercial use, but at which BWXT also makes
power sources from encapsulated plutonium-- a NFO production function--for
National Aeronautical and Space Administration (NASA) space missions; and
(3) the contract of Bechtel Nevada, a joint venture in which Bechtel, a BWXT
team member, is the principal partner, to manage and operate the Nevada Test
Site, which has low-level nuclear waste disposal facilities, assembly and
test facilities for plutonium experiments, and environmental monitoring and
remediation programs associated with a former underground nuclear test
program. DOE was unable to obtain performance information relative to a
fourth contract, Bechtel BWXT Idaho's contract to manage and operate the
Idaho National Environmental and Engineering Laboratory (INEEL), since that
contract had only been awarded on July 1, 1999, the award fee performance
evaluation for the first 6 months of the contract was still underway, and
contract officials offered little useful information on performance there.
[5] BWXT also submitted past performance information for the contract of
Honeywell International, Inc., a BWXT team member, to manage and operate
DOE's Kansas City (Missouri) Plant, which manufactures non-nuclear
components for nuclear weapons; DOE determined that, although this contract
involved operations similar to those at the Pantex Plant, Honeywell's work
did not involve NFO. (Honeywell's Kansas City Plant contract was the only
BWXT contract evaluated as a non-NFO contract.)
Mound
DZX primarily argues that the information available to the agency indicated
that there were significant deficiencies and problems in BWXT's performance
at Mound, weaknesses that allegedly were not taken into account in the
evaluation of BWXT's past performance and called for a lower past
performance rating. For example, DZX notes that the past performance
questionnaire documenting the response from the [DELETED] at Mound indicated
that "[p]roject control and financial management was poor," with "weaknesses
in project control and high management involvement"; that, while the
contractor had been cooperative in resolving issues, its response had been
slow; and that the [DELETED], when questioned about whether he had
reservations concerning future awards, had responded "[s]uggest project and
financial control be looked at closely." AR, Tab 12, at 57-59. Likewise, as
indicated in his past performance questionnaire, the [DELETED] at Mound
advised that "[d]uring the first two years of this contract there has been
problems with the baseline, schedule, and cost management activities." Id.
at 52. In addition, DZX alleges that there have been significant
deficiencies with respect to BWXT's implementation of the required bioassay
testing program, that is, the testing of samples from Mound workers to
detect the excessive uptake of radioactive elements.
DOE maintains that there are no significant deficiencies in BWXT's
performance at Mound. Based on our review of the record, we conclude that
the information relied upon by the agency in its past performance
evaluation, the accuracy of which was confirmed in testimony by DOE's
director for Mound, reasonably supports the agency's evaluation of BWXT's
performance.
As noted by the agency, the past performance questionnaire for DOE's
[DELETED] for Mound, cited by DZX, also indicated that the contractor has
"assembled a very high quality team"; project planning and accounting "have
recently been strengthened"; and "[a]t this point we believe that the
management team has adjusted to correct these problems," that is, the
problems with the baseline, schedule, and cost management during the first
two years of the contract. AR, Tab 12, at 52-53. Further, the [DELETED]
reported that "[t]echnical work has been performed at or above
expectations," and that the contractor "has been extremely cooperative and
responsive in resolving issues" and "very willing to work together with the
government." Id. at 51-53. The [DELETED] added that he had "[n]o
reservations at all" about recommending a future contract award. Id. at 53.
Likewise, DOE's director for Mound confirmed in his testimony that, while
there had been "[d]uring the first year of the contract . . . issues related
to the financial control systems that were being utilized by the contractor
organization and its ability to integrate and communicate with the project
side of the house," the contractor had replaced personnel and there had been
"marked improvements in that area." Tr. at II-37 to II-38. Furthermore, the
record indicates that BWXT is performing "exceptionally well" with respect
to making power sources for space missions from encapsulated plutonium,
which is the only NFO production function performed at Mound (as opposed to
the general environmental remediation effort that is underway there). Tr. at
II-69 to II-70.
In addition, DOE's [DELETED] for Mound reported that BWXT "has a strong
safety program," while DOE's [DELETED] indicated that "safety has made [a]
dramatic improvement." AR, Tab 12, at 52, 58. Likewise, DOE's [DELETED] for
Mound has stated that safety and health was "one of [BWXT's] strong areas of
performance," with the contractor having accumulated an "exemplary" safety
record of approximately 4.3 million hours without a lost time accident.
Tr. at II-60; Declaration of DOE [DELETED] for Mound Oct. 3, 2000. Indeed,
the [DELETED] noted that BWXT had developed an innovative basis for
evaluation of the physical and chemical nature of stable tritiated compounds
that would facilitate the safe decontamination of the Mound site. Tr. at
II-61 to II-65. [6]
With specific regard to the bioassay program at Mound, DOE's director for
Mound testified that there had been a legacy problem dating back to around
1994 and a prior contractor, which involved retaining bioassay samples too
long before having them tested, which can affect the ability to determine an
accurate dose rate. Depending upon which nucleotides are involved, the
timeframe for testing differs--some nucleotides are left to grow for
60-90 days before testing while others take less time. The record indicates
that it is more difficult to perform bioassay surveys at Mound because, as a
result of its former use as a production and research and development
facility, there is a much broader range of elements that may be encountered
and need to be searched for, and some uncertainty over which elements are
present at any particular location. However, the director testified that
BWXT had turned the bioassay program around such that there was not a
continuing bioassay problem at Mound on July 20, 2000, when the Pantex award
was made. The director specifically testified that he would not have
disagreed with a statement, made by BWXT in its proposal with respect to the
problems with the bioassay program, that BWXT had "resolved all issues." Tr.
at II-41 to II-60; BWXT Proposal, Vol. II, Past Performance, at II-12/D-12.
[7]
DZX further argues that, given the reports of performance problems in the
past performance questionnaires, DOE was required to inquire further as to
BWXT's performance at Mound and obtain DOE's award fee reports for that
contract. These reports, asserts the protester, revealed serious problems in
BWXT's performance at Mound, which were inconsistent with DOE's past
performance evaluation here.
DZX's argument is not persuasive. Even accepting its contention that the
agency should have obtained the award fee reports for Mound, we see no basis
for concluding that this would have warranted a different overall evaluation
result. It already was apparent from the past performance questionnaires for
DOE's [DELETED] and [DELETED] at Mound that BWXT's performance there had not
been without problems. The question, therefore, is whether the award fee
reports revealed any additional problems or more severe problems that could
have called into question DOE's evaluation of BWXT's overall past
performance as outstanding. We find no basis for such conclusion.
First, we find reasonable the position of DOE's director for Mound that the
award fee reports are not inconsistent with the past performance survey
results for Mound as reported to the Pantex evaluation team. Tr. at II-29 to
II-30. In this regard, while the extremely detailed award fee reports for
the first and second part of FY 1999, in excess of 30 pages each, indicate a
number of performance problems, they also indicate numerous accomplishments.
Thus, while report No. 99-1 (for the period Oct. 1, 1998 through Jan. 31,
1999) listed 4 notable deficiencies, it also listed 9 significant
achievements and 13 (less significant) notable achievements. AR, Tab 17,
Performance Evaluation Report, Miamisburg Environmental Management Project,
Oct. 1, 1998 through Jan. 1, 1999. Likewise, while report No. 99-2 (for the
period Feb. 1, 1999 through Sept. 30, 1999) listed 4 significant
deficiencies and 7 (less significant) notable deficiencies, it also listed
8 significant achievements and 32 notable achievements. AR, Tab 18,
Performance Evaluation Report, Miamisburg Environmental Management Project,
Feb. 1, 1999 through Sept. 30, 1999. Further, while BWXT received a grade of
C in both periods for financial/business management and for program
accomplishments in FY 99-2, the contractor received an overall grade of B+
for both periods in the much more important category of environmental safety
and health, a B+ for management practices and stakeholder outreach in FY
99-2, and Bs otherwise for both periods. Finally, BWXT received award fees
of 70.25 percent in FY 99-1 and 74.5 percent in FY 99-2, both significantly
in excess of the 30.3 percent received by DZX in its most recent performance
evaluation for the Pantex contract.
Naval Nuclear Fuel Division
Second, whatever weaknesses there may have been in BWXT's performance at
Mound, we find reasonable DOE's position that the Mound contract was a less
relevant contract for purposes of predicting future performance at Pantex
than the other NFO contracts evaluated for BWXT, contracts for which DOE had
very favorable past performance reports. In this regard, DOE apparently
considered BWXT's Naval Nuclear Fuel Division (NNFD) contracts, [DELETED],
to be the most relevant of BWXT's three evaluated NFO contracts because of
the similarities between the required efforts at NNFD and Pantex. BWXT's
contract at Mound involved a smaller scale, [DELETED]-worker, self-contained
site cleanup effort, performed on a building-by-building basis, without the
challenge of complex scheduling and performance demands characteristic of an
integrated production process. In contrast, both NNFD and Pantex involve
significantly larger scale efforts (approximately [DELETED] workers), in
which the contractor must undertake a significant integrated production
process, integrating deliveries from outside with on-going production or
assembly/disassembly that is performed to schedule, and must meet similar
NFO technical requirements for safety analysis, hazard analysis and
management control systems. Tr. at I-109 to I-113, I-117 to I-118; DOE
Post-Hearing Comments at 25, 35-36.
DOE evaluators received favorable reviews of BWXT's performance at NNFD. In
his past performance questionnaire, the DOE [DELETED] for the NNFD DOE work
reported that BWXT "[DELETED] high quality [DELETED] in a time frame which
supports program needs," and has "no specific weak points." AR, Tab 12, at
16-18. [8] Likewise, the contract performance reports for the NNFD contracts
indicated that BWXT "continues [DELETED] high quality [DELETED] in a
time-frame which supports program needs," and rated BWXT's performance as
either 3 or, for one contract, 4 on a scale of 1 to 5. AR, Tab 16. In
addition, the Nuclear Regulatory Commission, which licenses operation of
NNFD, reported that, based on its review of BWXT's licensed activities at
NNFD, it had determined that BWXT "continued to operate the facility safely
and demonstrated a number of strengths in chemical safety, criticality
safety, plant operations, fire safety, radiation protection, emergency
preparedness, and licensing." AR, Tab 12, at 27-28.
Nevada Test Site
DOE evaluators also received favorable reviews of the performance of the
joint venture (Bechtel Nevada), of which Bechtel (part of the BWXT team) is
the principal partner, in operating the Nevada Test Site (NTS). DOE
maintains performance of this contract is relevant to the Pantex contract
because of similarities between operations and conditions at NTS and Pantex.
According to the agency, NTS is the only other place in the United States
that has facilities exactly like some of those at Pantex; the facilities
were built for the assembly of nuclear test devices, which use the same
management controls as the nuclear weapon assembly at Pantex. DOE further
reports that NTS facilities are currently used for subcritical experiments,
involving high explosives and plutonium, where the plutonium cannot go
critical, and that there are similar safety issues associated with handling
plutonium at Pantex and NTS. Tr. at I-167 (NTS performance reports
considered in past performance evaluation), I-257 to II-259; DOE
Post-Hearing Comments at 27-28.
In his past performance questionnaire, the NTS [DELETED] rated Bechtel
Nevada's performance as "excellent" and without weak points; according to
the [DELETED], "Bechtel provides outstanding support. They are customer
focused and technically competent. I highly recommend them for addition[al]
contracts." AR, Tab 12, at 68-70. Another reference also advised that
Bechtel Nevada is "cooperative and maintain[s] a good working relationship
with the environmental regulator." Id. at 71. Further, in DOE's fee
determination for the period ending March 31, 1999, the fee determination
official stated that he "continue[d] to be encouraged by [Bechtel Nevada]
senior management and Bechtel corporate commitment to enhancing the
operational safety culture at the NTS"; recognized Bechtel Nevada's "senior
management['s] strong commitment towards strengthening business management
systems and processes"; and noted that Bechtel Nevada had provided
"outstanding technical support" for certain sub-critical experiments. Id. at
63-64. As a result, Bechtel Nevada, which received an award fee of 81.8
percent in FY 1998, received an overall award fee of 84.5 percent in FY
1999. DOE Post-Hearing Comments at 43-44.
Kansas City Plant
BWXT's overall outstanding past performance rating, as well as the assigned
minor strength for other than NFO past performance, also was based on
reports of Honeywell's strong performance managing and operating DOE's
Kansas City Plant, which manufactures non-nuclear components for nuclear
weapons. In this regard, in [DELETED] past performance questionnaire, DOE's
[DELETED], reported that Honeywell
has consistently achieved delivery performance of near 100% for the past
five years. They have also demonstrated continuous improvement in quality
measures such as cost of non-conformance, and percent accepted trouble free.
In general, the contractor has been able to achieve significant productivity
gains, allowing them to increase output, while reducing costs.
AR, Tab 12, at 89. Further, reported the [DELETED], Honeywell "has always
had a very strong safety program," and "has developed an Environmental,
Safety, and Health Program that is a model for industry for light
manufacturing facilities." Id. Further still, according to the [DELETED],
Honeywell "has effectively incorporated an integrated safety management
system into the workplace"; has been "proactive in taking lessons learned
and taking corrective action to assure" that safety problems are not
repeated; and has "consistently achieved world class safety statistics,
including [a] lost workday case rate of less than one." Id. Similarly, DOE's
Kansas City Area [DELETED] noted that Honeywell is "proactive in resolving
problems"; "effective in its management and use of the workforce"; has a
"strong emphasis on quality and continuous improvement"; and has been "able
to achieve significant productivity gains which, in turn, led to cost
reductions." AR, Tab 12, at 97-98. According to the [DELETED], there were no
significant weaknesses in Honeywell's performance at the Kansas City Plant.
Id. at 98. [9]
Summary
In summary, we find that the record supports DOE's determination that DZX
has had continuing, significant problems in ensuring that the Pantex Plant
is fully able to perform the critical mission, necessary to ensure the
safety and reliability of the United States nuclear weapons stockpile, of
disassembling and reassembling nuclear weapons in support of DOE's stockpile
life extension and stockpile evaluation programs. In contrast, the record
supports DOE's determination that the BWXT team has a very good performance
record with respect to a number of contracts, especially those most relevant
to operations at the Pantex plant. We conclude that DOE reasonably
determined BWXT's past performance to be superior to DZX's, and we find no
basis to question the overall evaluation in this regard.
CONTINUOUS IMPROVEMENT
DZX challenges DOE's evaluation of continuous improvement. As noted above,
the SSO determined that BWXT's proposal offered a significant advantage in
its focus on continuous improvement and the application of modern quality
principles, which were expected to yield significant operating cost
reductions. SSD at 7. In this regard, the SSO noted a number of the
efficiencies and improvements proposed by BWXT, including his understanding
that BWXT was proposing to increase productive output by 50 percent by the
end of 5 years, and stated:
These efficiency and operational improvements would yield significant
operating cost reductions, or allow the reapplication of savings to
currently unfunded high priority activities. BWXT's detailed and
comprehensive discussion of its proposed methods and procedures, the
experience demonstrated by BWXT in using these methods, and its past
performance in operating plants which demonstrate these principles, gives me
confidence that BWXT Pantex would successfully initiate improvements to the
current operating procedures at the Pantex Plant.
Id. [10] Then, having determined that the technical superiority of BWXT's
proposal was worth the additional $29.5 million evaluated cost of the
proposal, the SSO stated that BWXT's approach for continuous improvement to
achieve operating efficiencies and operational cost savings should yield
overall savings that significantly overshadow the differences in the
evaluated costs. Id. at 9; SEB Final Report, II-A 2, 3, and 9.
DZX argues that the agency's emphasis on continuous improvement was
inconsistent with the solicitation. Further, according to the protester, the
extent of the savings and increased efficiencies proposed by BWXT was
unrealistic, a fact that the protester asserts should have been apparent to
the agency because of BWXT's poor past performance.
We find no basis to question DOE's evaluation of the proposals in this area.
First, given the RFP's repeated references to desired
improvements--continuous and otherwise--in performance, it cannot be said
that the agency's emphasis in the evaluation on proposed approaches to
continually improving operations at the Pantex Plant was inconsistent with
the RFP. As noted, the SOW specifically provided that, "[i]n order to
achieve the [overall performance objectives of the contract], the Contractor
is expected to move to a higher level of performance throughout the term of
the Contract by making the following process enhancements: Demonstrate a
culture of continuous improvement for plant disciplines (such as disassembly
and assembly of nuclear weapons, quality, meeting schedule, cost controls,
authorization bases)." SOW sect. C.1.3. Likewise, under the evaluation factor
for ES&H in NFO, the RFP specifically provided for consideration of "the
degree to which the Offeror's proposal instills a system of continuous
improvement, with technical support from the Offeror's parent organization."
RFP sect. M.4(a). In addition, under the evaluation factor for approach to
technical and business functions, the RFP specifically provided for
consideration of "the degree the Pantex Plant will be operated to meet
overall Corporate expectations for continuous improvement, the application
of new business practices, and quality initiatives." RFP sect. M.4(c)(1). More
generally, the RFP provided for evaluation, under the management and
organization factor, of the "ability to rapidly implement proposed
organizational improvements," and key personnel's ability to "cause overall
positive change; improve performance"; and for evaluation, under the
approach to technical and business functions factor, of "the feasibility and
reasonableness for achieving greater operating efficiencies." RFP sect.sect. M.4(b),
(c)(1).
In any case, where an RFP provides for evaluation of an offeror's proposed
approach to performance, we think it is implicit that the agency will
consider whether the proposed approach will result in improved, more
efficient ways of performing the SOW requirements. In these circumstances,
there is no basis for concluding that offerors could have been misled, to
their competitive prejudice, as to the agency's intention to consider
continuous improvement when preparing their proposals.
Second, we find no basis to question the reasonableness of DOE's
determination that BWXT's approach to ensuring continuous improvement was
more likely to yield continuing significant increased efficiencies than
DZX's. In this regard, the record supports DOE's position that BWXT based
its approach to performing the contract and ensuring continuous improvement
on specific structured, continuous improvement management processes with
which the agency was familiar and which it was aware had been successfully
implemented by members of the BWXT team and others. BWXT explained in detail
how it would apply these management techniques to improving performance at
the Pantex Plant. Foremost among the management techniques on which BWXT
based its proposal was the "assess, improve and modernize" (AIM) approach, a
structured management approach with which the chairman of the SEB--who had
been involved in training nuclear weapons production management teams in
continuous improvement processes--was familiar and which he believed was
very credible. The AIM approach is a [DELETED]. Tr. at I-122 to I-129. BWXT
proposed providing [DELETED]. BWXT Proposal at II-2/A-2. BWXT described in
detail its implementation of an AIM-based approach to performing the
contract, including applying AIM principles to improve the AB process (an
area in which the incumbent contractor, DZX, had had significant performance
problems). BWXT Proposal at II-1/A-1 to II-4/A-4, II-8/A-8 to II-12/A-12,
II-17/A-17 to II-18/A-18, II-73/C-1 to II-81/C-9, and II-88/C-16 to
II-90/C-18.
In addition, BWXT explained that it would use Six Sigma quality
methodologies to improve quality at the Pantex Plant. According to BWXT, it
would [DELETED]. BWXT Proposal at II-73/C-1 to II-74/C-2, II-87/C-15 to
II-90/C-18. The Albuquerque Area manager, who has oversight authority for
the Kansas City and Pantex Plants, described Six Sigma as an "effective
management tool," developed by Allied Signal (Honeywell), that is one of a
number of "very good ways to approach continuous process improvement." Tr.
at I-302 to I-305.
Further, as noted by the SSO, BWXT team members have successfully
implemented continuous improvement approaches to achieve significant
efficiencies under other contracts. Again, DOE's Kansas City Area manager,
with oversight responsibility for the Kansas City Plant, reported that
Honeywell had "demonstrated continuous improvement in quality measures such
as cost of non-conformance, and percent accepted trouble free" such that,
while achieving delivery performance of nearly 100 percent, it was "able to
achieve significant productivity gains, allowing them to increase output,
while reducing costs." AR, Tab 12, at 89. Likewise, DOE's Kansas City Area
program secretarial officer noted that Honeywell has a "strong emphasis on
quality and continuous improvement" and has been "able to achieve
significant productivity gains which, in turn, led to cost reductions." AR,
Tab 12, at 97-99. The agency also took into account BWXT's implementation,
as described in its proposal, of continuous improvement techniques at NNFD,
a contract for which (as discussed above) the agency had received favorable
performance evaluation reports. Tr. at I-263 to I-265; BWXT Proposal at
II-4/D-4.
While the agency credited DZX with proposing continuous improvement
techniques (such as Six Sigma), and determined that they would have "a
positive effect on plant operations," the agency essentially concluded that
a management approach for continuous improvement was not fundamental to
DZX's proposal in the same manner as it was to BWXT's, and that no more than
a minor strength in this regard was warranted. SEB Final Report at II-B
10-11; Tr. at I-265 to I-266. Given the fundamental role continuous
improvement processes played in BWXT's approach to performing the contract,
as explained in detail in its proposal, and the success of the members of
BWXT's team in implementing continuous improvement processes, there is no
basis to question DOE's determination that BWXT's proposal afforded the
agency a significant advantage in this regard. This is the case even if DZX
is correct that some of BWXT's forecasts of future savings and increased
efficiencies may be unduly optimistic; it remains that the agency had a
reasonable basis for anticipating that BWXT's more systematic approach to
continuous improvement would yield greater savings and efficiencies than
DZX's.
OTHER ARGUMENTS
DZX asserts that an organizational conflict of interest with respect to the
activities of the president of Omicron Safety and Risk Technologies, Inc.
resulted in a procurement process "improperly infected" by "tainted Omicron
evaluations." DZX Comments, Oct. 12, 2000, at 8. In this regard, the record
indicates that the president of Omicron was an initial member of a safety
basis review team reviewing proposed AB documents submitted by DZX for a
nuclear weapon. After submission of the team's comments, including criticism
by Omicron's president of the adequacy of DZX's fire hazards analysis, DZX
advised the agency on or before February 16, 2000, that Omicron had been
hired by a competitor in the Pantex procurement. DOE reports that when
Omicron subsequently (on February 19 or 20) advised DOE, in response to the
agency's inquiry, that it intended to accept an offer to work for a
competitor of DZX (not BWXT), the agency immediately removed Omicron's
president from the AB review process, conducted a factual accuracy review of
the team's findings in conjunction with DZX, and ultimately declined to
adopt any of the team's findings as a precondition (condition of approval)
to commencement of operations on the nuclear weapon in question. (Instead,
some of the findings were to remain open or were to be considered in other,
site-wide contexts.) DOE Supplemental Report, Oct. 3, 2000, at 1-7. It is
DOE's position, which DZX disputes, that Omicron's comments did not affect
the evaluation under the Pantex solicitation.
Where the record does not demonstrate that the protester would have a
reasonable chance of receiving award, but for the agency's actions, we will
not sustain the protest, even if a deficiency in the procurement is found.
IT Facility Servs.--Joint Venture, B-285841, Oct. 17, 2000, 2000 CPD para. ___
at 12-13; see 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).
As discussed above, the agency's evaluation of significant deficiencies in
DZX's performance at the Pantex Plant was based on extensive evidence of
continuing, unsatisfactory performance over a period of time, which
adversely affected accomplishment of a core, nationally important mission of
the facility. In these circumstances, there simply is no basis for
concluding that any input from the president of Omicron had a material
impact on DZX's past performance evaluation.
DZX also alleges a violation of 41 U.S.C. sect. 423(d)(1) (1994), which
prohibits, among other conduct, a former official of a federal agency from
accepting compensation from a contractor as an employee, officer, director,
or consultant of the contractor within a period of 1 year after the former
official either (1) served as the program manager, deputy program manager,
or administrative contracting officer for a contract in excess of
$10,000,000 awarded to that contractor, or (2) personally made for the
federal agency a decision to approve issuance of a contract payment or
payments in excess of $10,000,000 to that contractor. Here, according to the
protester, a former DOE employee [DELETED] approved a contract payment of
$10.7 million to Bechtel Nevada sometime after October 1998, and then, while
employed by a consulting firm, began furnishing consulting services to BWXT
in August 1999.
The interpretation and enforcement of post-employment restrictions are
primarily within the ambit of the Department of Justice and the procuring
agency. Our general interest within the confines of a bid protest is to
determine whether any action of the former government employee may have
resulted in prejudice for, or on behalf of, the awardee. See Proteccion
Total/Magnum Sec., S.A., B-278129.4, May 12, 1998, 98-1 CPD para. 137 at 3;
Guardian Techs. Int'l, B-270213 et al., Feb. 20, 1996, 96-1 CPD para. 104 at 6;
FHC Options, Inc., B-246793.3, Apr. 14, 1992, 92-1 CPD para. 366 at 4-5. DZX has
not alleged, nor does the record demonstrate, that the actions of the former
DOE employee afforded BWXT an unfair competitive advantage in this
procurement.
Based on our review of the record, including the arguments made by the
protester, we conclude that DOE reasonably determined that BWXT's proposal
offered significant advantages over DZX's, both with respect to the proposed
approach to performing the contract and the likelihood of successful
performance, as indicated by BWXT's past performance record. We find no
basis to question the agency's determination that these significant
advantages were worth the additional cost of BWXT's proposal.
The protest is denied.
Anthony H. Gamboa
Acting General Counsel
Notes
1. The RFP defined "nuclear facilities" as "those that conduct activities or
operations that involve radioactive and/or fissionable materials in such
form and quantity that a nuclear hazard potentially exists to the employees
or the general public," and stated that ES&H in NFO referred to "those
management and technical functions necessary to safely operate nuclear
facilities in the U.S. to current standards." RFP sect. L.4.
2. References to the performance of DZX prior to June 1, 1999, when it
acquired Mason & Hanger, refer to Mason & Hanger.
3. Because the completion of all of the above analyses can take several
years, at times DOE has asked that more preliminary justifications be
provided prior to the completion of all analyses. These interim
authorization documents are called a Basis for Interim Operations (BIO). AR
at 2.
4. The unreviewed safety questions process is a method of change control for
NFO used when new technical information is obtained that suggests that
current safety standards may be inadequate. AR at 18 n.14.
5. On June 26, 2000, subsequent to DOE's inquiry to INEEL contracting
officials, Bechtel BWXT Idaho was awarded 90.6 percent of the available
award fee; according to the award fee determination, faced with "inherited
numerous legacy issues from the previous contractor" which "presented
complex challenges in all aspects of contract performance," the contractor
"placed high quality personnel in critical management positions," and its
overall performance "exceeded expectations." Performance Evaluation Report,
Bechtel BWXT Idaho, Oct. 1, 1999, through Mar. 31, 2000, at 2-3.
6. While DZX points to findings by DOE's Office of Oversight of deficiencies
in the emergency management program at Mound, we note that a report which
DZX produced prior to the hearing in this regard not only details
criticisms, but also notes that "[t]he significant programmatic improvements
that DOE and [BWXT] have achieved since July 1998 provide a solid foundation
for the [Mound] emergency management program and have positioned the site
well for the eventual transfer to the community." Independent Oversight
Follow-up Review of the MEMP Emergency Management Program, DOE Office of
Oversight, Office of Environment, Safety and Health, Oct. 1999, at 3.
Further, given the favorable assessment by DOE officials with direct
oversight responsibility for Mound of BWXT's overall safety record at the
site, we find no basis to question the agency's position that there are no
significant deficiencies in BWXT's performance at Mound. See Tr. at I-156 to
I-162.
7. DZX notes the discovery by BWXT, in July 2000, of approximately 127
bioassay samples taken by the prior contractor in 1995 but not tested; it
asserts that this indicates a problem at Mound that should have been taken
into account in the evaluation. However, BWXT's director of environment,
safety, health and quality at Mound has submitted a sworn declaration
explaining that it was only after an inventory conducted on July 24,
2000--that is, 4 days after award--and subsequent review that it was
determined that some of the samples, which had been assumed to be duplicate
backup samples not requiring analysis, in fact were not duplicate
samples--they were samples which had never undergone the required analysis.
BWXT Comments, Tab 25, Declaration of BWXT Director of Environment, Safety,
Health and Quality. Furthermore, the record indicates that DOE officials at
Mound, and most certainly DOE source selection officials for the Pantex
procurement, were not aware of this discovery until after award. Tr. at
I-248, II-72 to II-76; DOE Comments, Oct. 3, 2000, at 4-5, and attached
Declarations of Source Selection Officials. In any case, there is no basis
to question DOE's position that this discovery of legacy, 5-year old
untested samples does not indicate a significant current (as of July 20,
2000) problem with the bioassay program at Mound that would call into
question DOE's favorable evaluation of BWXT's performance in this regard.
Tr. at I-248 to I-249.
8. In addition, the Bettis Atomic Power Laboratory's [DELETED] reported that
BWXT was a "good manufacturer with [a] strong engineering staff," whose
strength was the "delivery of high-quality products on time," and whose
overall performance at NNFD was "very satisfactory." AR, Tab 12, at 14.
Further, according to the [DELETED], when a problem arose, BWXT "[a]pplied
focused attention, developed state-of-the-art tools to diagnose the problem,
and proceeded to implement the fixes." Id. at 13. The chairman of the SEB
testified that the fact that the reference was from a person [DELETED]
"cautioned" him, but he noted that [DELETED]. Tr. at I-261.
9. Honeywell received overall performance ratings of good in its FY 1997, FY
1998 and FY 1999 award fee reports. Further, Honeywell received 88 percent
of the maximum available award fee (with a weighted grade of 94) for FY
1999; a 65.6-percent award fee (with a weighted grade of 90.7) for FY 1998;
and a 75-percent award fee (with a weighted grade of 92) for FY 1997. AR,
Tab 13, Performance Evaluation Report, FY 1997 (Oct. 1, 1996 to Sept. 30,
1997), Tab 14, Performance Evaluation Report, FY 1998 (Oct. 1, 1997 to Sept.
30, 1998), Tab 15, Performance Evaluation Report, FY 1999 (Oct. 1, 1998 to
Sept. 30, 1999).
10. BWXT's proposal anticipated an average annual increase in productive
output of [DELETED]. BWXT Proposal at II-74/C-2, II-76/C-4.