TITLE:  Interstate Electronics Corporation, B-286466; B-286466.2, January 12, 2001
BNUMBER:  B-286466; B-286466.2
DATE:  January 12, 2001
**********************************************************************
Interstate Electronics Corporation, B-286466; B-286466.2, January 12, 2001

Decision

Matter of: Interstate Electronics Corporation

File: B-286466; B-286466.2

Date: January 12, 2001

Jessica C. Abrahams, Esq., Carl A. Gebo, Esq., Curtis J. Romig, Esq., and
William R. Joiner, Esq., Powell, Goldstein, Frazer & Murphy, for the
protester.

Kerri A. Cox, Esq., Judith L. Richardson, Esq., and Gregory H. Petkoff,
Esq., Department of the Air Force, for the agency.

Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Where solicitation incorporated a Critical Requirements List (CRL) and
expressly advised offerors that the CRL reflected the agency's minimum
requirements, and agency further reminded protester during oral presentation
and in subsequent written evaluation notices that all CRL items must be met,
protester's assertion that the solicitation "[did] not indicate in any way
that the CRL will be considered in source selection" is without basis.

2. Agency reasonably rejected protester's proposal as "not technically sound
or failing to meet the agency's needs" where protester's proposal failed to
provide adequate assurance that the protester's contract performance would
comply with several aspects of the solicitation's minimum requirements.

3. Agency's discussions with protester were meaningful where written
evaluation notices advised protester of multiple portions of its proposal
which failed to comply with solicitation's minimum requirements.

DECISION

Interstate Electronics Corporation (IEC) protests the Department of the Air
Force's rejection of a proposal IEC submitted in response to Program
Research and Development Announcement (PRDA) No. 00-32, [1] which sought
proposals to conduct research and development related to global positioning
system (GPS) ground receiver capabilities. [2] IEC complains that the agency
improperly evaluated its proposal as being not technically sound, [3] and
failed to conduct meaningful discussions.

We deny the protest.

BACKGROUND

Over the last several years, the Department of Defense (DOD) has conducted
market research and investigated acquisition alternatives aimed at replacing
its current inventory of precision lightweight GPS receivers (PLGR). [4]
These activities led to DOD's preparation of a draft performance
specification for the Defense Advanced GPS Receiver (DAGR), which reflects
DOD's requirements for both handheld and "integrated" use of GPS receivers.
[5]

The PRDA at issue here was published on June 20, 2000 and expressed the
agency's intent to select at least two offerors to conduct research on, and
perform development of, both "higher end" and "lower end" GPS receiver
solutions during the 14-month period following contract award. [6] The PRDA
provided that offerors' proposals must identify specific solutions for which
research and development was proposed, stating: "Each proposal may contain a
maximum of one Higher End receiver solution and two Lower End receiver
solutions." PRDA at 4. The PRDA further provided that, "[i]f an offeror
proposes multiple receiver solutions, the price proposal shall separately
price each solution (Higher End, Lower End)" and "shall include a Statement
of Work (SOW) for each proposed receiver solution." PRDA at 5.

The PRDA incorporated a "Critical Requirements List" (CRL), dated April 4,
2000, advising offerors that the CRL reflected "the minimum requirements for
the Higher End receiver solution," PRDA at 2, and further directing offerors
as follows:

Offerors proposing a Higher End GPS Ground Receiver solution shall provide a
technical description of how the proposed receiver best meets or exceeds the
Critical Requirements List, dated 04 Apr 00, found in the Bidders Library.
For further definition of the Government's interpretation of a Higher End
GPS Ground Receiver, Offerors should refer to [the Draft DAGR Performance
Specification] MIL-PRF-DAGR-600, Ver. 4.0, dated 29 Feb 00. Offerors
proposing a Lower End solution shall provide a technical description of
their proposed receiver(s) and identify, at a minimum, which requirements
found in the Critical Requirements List, dated 04 Apr 00, will be met.

PRDA at 5. [7]

The CRL listed multiple specific requirements, the first of which was: "Be
at least as operationally capable as the system it is replacing (PLGR
family)." Agency Report, Tab 9, CRL. The CRL also established minimum
requirements regarding, among other things, size, battery life, and
interface protocols/data message formats. Offerors were advised that
proposed solutions would be evaluated on the basis of the following
criteria, listed in descending order of importance: approach to meeting the
PRDA objectives, past performance, proposal risk, and price. Regarding
evaluation under the most important factor, approach to meeting the PRDA
objectives, the PRDA stated that the agency would consider the proposal's
"soundness" and "creativity," explaining that "soundness" meant a proposed
solution is, among other things, "based on valid reasoning; sensible;
thorough; [and] complete." PRDA at 8.

Proposals were submitted by six offerors, including IEC, by the August 7,
2000 closing date. IEC's proposal stated: "The IEC-[deleted] team[ [8]] is
offering a single, high end, all-in-one solution." Agency Report, Tab 23,
IEC Technical Proposal, at 1-1. Consistent with offering only a single, high
end solution, IEC's proposal contained a single statement of work and a
single price proposal. IEC's proposed solution [deleted]. IEC Technical
Proposal at 1-1, 2-15.

In its proposal, IEC also included a chart listing each one of the CRL items
and summarizing the extent to which each component of its proposed solution
complied with the CRL requirements. IEC Technical Proposal, Figure 2-25.
This chart indicated that for a number of requirements, IEC's proposed
solution was only "partially compliant subject to CAIV analysis." [9]

On August 9, IEC provided an oral presentation to the agency during which it
discussed its proposed approach and responded to oral questions. During the
oral presentation, the agency reminded IEC that proposals for a higher end
solution must comply with all of the PRDA requirements, including all CRL
items.

The agency subsequently evaluated offerors' proposals by dividing the PRDA's
minimum requirements into several functional groups. The offerors' proposed
approaches to meeting the stated requirements were then evaluated for
technical soundness and creativity. Specifically, as stated in the PRDA,
proposals for higher end solutions were evaluated to determine the
thoroughness and completeness with which each proposal demonstrated that the
specifications to be delivered would comply with all of the stated
requirements. Based on their evaluations and internal discussions,
"evaluation notices" (ENs) were prepared for each offeror regarding aspects
of the proposals for which additional information was desired.

Specifically, the agency prepared thirty-two ENs for IEC, telecopying those
ENs to IEC on August 28. Agency Report, Tab 27, Evaluation Notices. The ENs
identified multiple portions of IEC's proposal about which the evaluators
had specific concerns regarding IEC's ability or intent to meet the stated
requirements. Specifically, various ENs identified concern that IEC would
not comply with the CRL requirements regarding size and battery life, and
the requirement that the proposed solution be as capable as the PLGR system
it would replace--particularly with regard to ICD-GPS-153 messaging
requirements. [10] Agency Report, Tab 27, EN Nos. 190, 252, 264, 310, 314.
Finally, EN No. 598 summarized the agency's overall concerns, stating:

During numerous discussions, including the Oral presentation on 9 Aug 00,
the government made it very clear that proposed solutions, in the high-end
configuration [deleted] would be subject to meeting all Critical
requirements . . . .

. . . . .

After reviewing your proposal, there is a concern that many of the required
critical requirements were erroneously discarded as not required because of
the proposed design, and hence, became CAIV [cost as an independent
variable] candidates.

Because many of the Critical requirements have been marked as "partially
compliant," deemed "not applicable," or identified as CAIV studies, it is
necessary to ask for clarification on your approach for this solution and
potential CAIV activities. In addition, there are several other Critical
Requirements marked in Figure 2-25 as being compliant, which actually are
not fully compliant.

Please explain whether you do or do not intend to achieve the Critical
requirements for a High End solution during or by the end of the PRDA.

If not, when you identify a potential CAIV study, as related to the critical
requirements list, does this mean you are essentially asking the government
to waive/reduce that requirement?

Agency Report, Tab 27, Evaluation Notice No. 598.

Upon receiving the ENs, IEC initiated a telephone conference call with
agency personnel. Despite the express PRDA language establishing minimum
requirements, and the unequivocal reiteration of those requirements in the
ENs along with the direct admonishment that IEC's proposal failed to meet
the requirements, IEC represents that, during the conference call, agency
personnel "verbally assur[ed] IEC that there was nothing wrong with its
proposal." Protest at 34. IEC states that "[t]hese assurances [during the
conference call] convinced IEC that the ENs . . . did not indicate AFMC
concerns with deficiencies or weaknesses in the proposal." [11] Id.

Thereafter, IEC submitted its responses to the ENs. IEC states generally
that it "did not . . . attempt to significantly revise its proposal" because
of its purported understanding that the ENs "did not indicate AFMC
concerns." Protest at 34. In responding to the agency's specific question in
EN No. 598, which asked whether IEC "intend[ed] to achieve the Critical
requirements," IEC responded by asserting, without explanation, "Our intent
is to provide an All-in-One solution, High End as defined by the PRDA, that
complies with the Critical Requirements List." Agency Report, Tab 47, IEC
Responses to EN No. 598. Nonetheless, the next sentence of IEC's response
stated that: "it is our expectation that results of the CAIV will result in
trade-offs of selected Critical Requirements." Id.

In short, the agency's ENs expressly reiterated the PRDA requirement that
IEC's solution must comply with all CRL requirements, advised IEC that its
proposal did not meet many of these requirements, and expressed concern that
IEC's references to "CAIV studies" were viewed as requests to waive or
reduce the minimum requirements. In response, IEC opted not to significantly
revise its proposal and confirmed the agency's perception that IEC intended
that its CAIV studies "will result in trade-offs of selected Critical
Requirements."

Upon reviewing IEC's responses, which did not substantantively respond to
many of the deficiencies, the agency concluded, "We are still very concerned
about [IEC's] ability and degree of interest in modifying their solution."
Agency Report, Tab 47, Response to ENs and Agency Dispositions. Overall, the
agency concluded that IEC's proposal was category III--that is, "not
technically sound or do[es] not meet agency needs"--and, by letter dated
September 25, advised IEC that its proposal had not been selected for award,
stating:

After evaluating your proposal and response to evaluation notices, your
proposal was determined to fall into Category III . . . . This determination
was based on the following:

  1. Design did not support multiple requirements, including:

  a. As capable as PLGR
  b. Compliance with GPS-ICD-153
  c. Battery Life
  d. Size

Letter from Contracting Officer to IEC (Sept. 25, 2000).

Upon receipt of this notification, IEC requested a debriefing, which the
agency provided on October 2. This protest was filed on October 9.

DISCUSSION

IEC first protests that it was improper for the agency to reject IEC's
proposal based on the agency's perception that IEC's proposed solution would
not comply with the CRL requirements because, according to IEC, "the PRDA
does not indicate in any way that the CRL will be considered in source
selection." Protest at 29. [12]

As discussed above, the PRDA specifically described the CRL requirements as
"the minimum requirements for the Higher End receiver solution," PRDA at 2,
and further directed that offerors proposing high end solutions "shall
provide a technical description of how the proposed receiver best meets or
exceeds the Critical Requirements List." Id. at 5. In the unlikely event
that IEC could have been confused regarding these unambiguous provisions,
the agency's written evaluation notices reminded IEC that "[d]uring numerous
discussions, including the Oral presentation on 9 Aug 00, the government
made it very clear that proposed solutions, in the high-end configuration
[deleted] would be subject to meeting all Critical requirements." EN No.
598. On this record we find no basis for IEC's contention that the PRDA
"does not indicate in any way" that the agency would consider the CRL items
in its source selection determination, and decline to further consider its
arguments in this regard.

IEC further challenges the agency's technical evaluation with regard to
IEC's compliance with specific CRL requirements. For example, CRL item No.
32 provided that the proposed solution must be designed "to fit in breast
BDU [battle dress uniform] pocket." In its protest, IEC states: "The
measurements of an actual BDU breast pocket indicate maximum usable
dimensions of 6" x 4" x 2.25"." Protest at 15. IEC's protest then states
that combining the [deleted] of its solution [deleted] "results in the
following dimensions: [deleted]." Id. Notwithstanding the fact that its own
representation regarding the dimensions of its proposed solution exceed what
IEC, itself, describes as the "maximum usable dimensions" of a BDU breast
pocket, IEC then inexplicably represents that "IEC conducted trials with the
[deleted] that showed that both configurations do fit into the BDU breast
pocket." Id. A simple review of the face of IEC's protest provides clear
evidence that IEC's solution did not comply with the CRL requirement
regarding size. [13]

Similarly, IEC complains that the agency's evaluation of its proposal with
regard to battery life requirements was unreasonable. In this regard, CRL
item No. 21 provided that higher end solutions must provide for 12 hours of
"continuous" operation without changing batteries.

IEC's proposal states that its receiver would operate [deleted]. In
evaluating IEC's proposal, the agency declined to consider operation in
[deleted] mode as meeting the CRL requirement for "continuous" operation,
noting that the reference to "continuous" operation contemplated
"uninterrupted tracking." Contracting Officer's Statement at 14.

IEC complains that the agency should have considered operation in [deleted]
mode--and its concomitant tracking of [deleted]--as meeting the requirement
for continuous operation. We disagree. Not only does common usage of the
term "continuous" reasonably connote "uninterrupted," a dictionary
definition of the word specifically defines it to mean "uninterrupted
extension in space, time, or sequence." Webster's Ninth New Collegiate
Dictionary (1985). Very simply, operation in [deleted] mode does not provide
uninterrupted tracking of all GPS signals. On this record we find no merit
in IEC's assertion that the agency unreasonably evaluated its proposal with
regard to the solicitation's battery life requirements.

Next, IEC challenges the agency's assessment that its proposal failed to
comply with the CRL requirements regarding support for ICD-GPS-153 interface
protocols/data message formats. As noted above, CRL No. 1 required that
proposed solutions "[b]e at least as operationally capable as the [PLGR]
system it is replacing," and CRL No. 15 stated:

Capability to be integrated with existing navigation, C4I systems, external
sensors and meet security policy requirements of integrated systems

  a. Receiver will not cause interference or failures to other systems

and not be susceptible to interference or failures due to other systems

b. Utilize ICD-GPS-153 and ICD-GPS-154 as applicable

CRL No. 15. [14]

In addressing this requirement, IEC's proposal contained a table listing
[deleted] ICD-GPS-153 message codes. For each message, IEC's proposal
indicated whether support was provided by its existing components. With
regard to [deleted] of the [deleted] messages, the proposal stated that
support was not provided, and further stated, "CAIV study to support this
functionality." IEC Technical Proposal, Figure 2-12.

In EN No. 190, the agency advised IEC that its proposal "[d]oes not support
all ICD-153 messages used by existing integrations," further noting that
some ICD-GPS-153 messages were not even included in IEC's table, and
concluding, "The proposed receiver is not viable for retrofit of existing
PLGR integrations, unless this implementation is changed." Agency Report,
Tab 32, EN No. 190, IEC Response and Agency Disposition. IEC responded to
this EN stating, "[t]he precise list of message support will be refined and
validated under the PRDA as part of a CAIV analysis and as results from
testing with PLGR dictate." Id. Upon reviewing IEC's response, the agency
concluded: "The response does not discuss an approach to achieving a
complete ICD-GPS-153 implementation." Id.

After reviewing all of IEC's responses to the ENs, including its response to
EN No. 598 in which IEC stated that it "expect[ed]" that its CAIV analysis
"will result in trade-offs of selected Critical Requirements," along with
IEC's response to EN No. 190 which indicated that several of the ICD-GPS-153
messaging requirements would be subject to "CAIV analysis," the agency
concluded that IEC's proposal failed to provide adequate assurance that its
proposed solution would, in fact, support all ICD-GPS-153 messages and,
therefore, that IEC's solution would not be as operationally capable as the
existing PLGR receivers.

In pursuing this protest, IEC argues that "the PRDA required only a
demonstration of ICD-GPS-153 protocols," Protest at 18, [15] and therefore
asserts that the agency erred in its conclusion that IEC's proposal failed
to meet the message format requirements. We disagree.

IEC does not dispute that the current PLGR receivers support all ICD-GPS-153
messages. On the basis of the record discussed above, the agency had more
than an adequate basis to conclude that IEC failed to provide adequate
assurance that it intended to, or that its proposal solution would in fact,
support all ICD-GPS-153 message formats while also complying with the other
stated requirements. In fact, as indicated above, in response to the EN
concerning IEC's failure to support ICD-GPS-153 messages, IEC stated it
would determine the precise list of message support as part of CAIV analysis
and testing. This certainly falls short of a commitment to provide support
for all messages. Accordingly, we find no merit in IEC's assertions that the
agency improperly determined that IEC's proposal failed to meet the message
format requirements and, thus, would not be as capable as the existing
receivers. [16]

Finally, IEC protests that the agency failed to engage in meaningful
discussions. Specifically, IEC complains that the agency "failed miserably
to bring to IEC's attention alleged weaknesses or deficiencies in [its]
proposal," IEC Comments, Nov. 20, 2000, at 2, and--referring to the
conference call initiated by IEC after receiving the evaluation
notices--maintains that the agency "misled" IEC by "verbally assuring IEC
that there was nothing wrong with its proposal." Protest at 34.

Where discussions are conducted in negotiated procurements, [17] those
discussions must be meaningful. That is, agencies are required to lead
offerors generally into those areas of their proposals requiring
amplification or revision. [18] PeopleSoft USA, Inc., B-283497, Nov. 30,
1999, 2000 CPD para. 25 at 4-6. Nonetheless, where an agency's discussions
convey its overriding concern that an offeror will not comply with all of
the solicitation's requirements and identifies multiple proposal
deficiencies which, if uncorrected, properly supports rejection of the
proposal, the agency has met its obligations in this regard. Id.

Here, in addition to identifying specific concerns regarding size, see EN
No. 264, battery life, see EN Nos. 310, 314, and support of ICD-GPS-153
messages, see EN Nos. 190, 252, the agency also expressly advised IEC of its
overall concern that IEC intended to eliminate various stated requirements
through "CAIV studies." See EN No. 598. As discussed above, IEC's failure to
provide adequate assurance that it would, in fact, deliver a product meeting
the agency's requirements provided more than an adequate basis for the
agency to reject IEC's proposal. On this record, the agency's communications
clearly met the standard for meaningful discussions. [19]

Finally, regarding IEC's assertion that it was "misled" into believing that
the agency considered its proposal as meeting the solicitation's
requirements, in light of the

multiple, written statements contained in the ENs unambiguously advising IEC
to the contrary, IEC's assertion that it was "misled" is simply not
credible.

The protest is denied.

Anthony H. Gamboa

Acting General Counsel

Notes

1. The Air Force describes a PRDA as "an Air Force-developed procedure" that
is "very similar" to a broad agency announcement (BAA) (see Federal
Acquisition Regulation (FAR) sect.35.016), in that, like a BAA, a PRDA is a
publication in the Commerce Business Daily announcing a requiring activity's
interest in obtaining research and development solutions to scientific or
engineering problems. Air Force Research Laboratory BAA and PRDA Industry
Guide, July 2000, at 1.

2. GPS receivers provide real time position, velocity, and timing (PVT)
information to tactical, strategic and other organizations in stand-alone
and integrated configurations. Agency Report, Tab 11, PRDA at 2.

3. Pursuant to Air Force Regulations, proposals submitted in response to
PRDAs are evaluated as "category I," "catgory II," or "category III"
proposals. Proposals determined to be "category I" are those which are "well
conceived, scientifically and technically sound," and "offered by a
responsible contractor." Proposals designated as "category II" are those
which are "[s]cientifically or technically sound," but "require[] further
development." Proposals designated as "category III" are those which are
"not technically sound or do not meet agency needs." AFMC FAR Supp.
sect. 5335.016-90(d)(2).

4. DOD's Operation Requirements Document (ORD) for GPS Tactical Receivers,
dated October 3, 1997, states: "As the current inventory of GPS receivers
becomes obsolete, a replacement system is needed to satisfy operational
requirements created by digitization of the battlefield." Agency Report, Tab
57, ORD for GPS Tactical Receivers, at 2.

5. "Integrated" refers to the physical integration of a GPS receiver into a
platform such as a military vehicle. In describing the objective of the DAGR
program, the performance specification states: "The DAGR Program will
procure small commercial palmheld, pocket stored NAVSTAR GPS receivers
modified to support military combat operations and military and civil
operations other than war," and provides that the receivers "shall be . . .
suitable for palmheld use and for installation and integration in vehicles
and facilities." Agency Report, Tab 59, Draft DAGR Performance
Specification, MIL-PRF-DAGR-600 Version 4.0, Feb. 29, 2000 para.para.1.2, 3.1.

6. The PRDA explained that "Higher End solutions shall be oriented towards
an ‘All-in-One' solution supporting both integrated and handheld
users, whereas Lower End solutions can be oriented towards either integrated
users or handheld users." PRDA at 2.

7. The PRDA provided that awardees must deliver non-proprietary
specifications for each proposed solution by the end of the contract
performance period, also requiring delivery of a technical report supporting
the analysis, demonstrations, inspections or tests that the awardee had
performed to validate the specifications, and a "CAIV [cost as an
independent variable] report," describing potential trades which may be made
between performance, cost and schedule. PRDA at 2. Nothing in the PRDA
suggested that the required submission of the "CAIV report" effectively
negated the statements regarding minimum requirements for proposed higher
end solutions.

8. IEC proposed [deleted].

9. IEC's proposal indicated that [deleted].

10. ICD-GPS-153 refers to interface protocols for data messaging
capabilities between receivers.

11. The agency personnel participating in this conference call disagree with
IEC's description of the conversation. The agency's Project Manager
summarizes her disagreement, stating: "Under no circumstances did the
Government during the telephone conversation lead [IEC] to the conclusion
that insufficient response to the ENs would be acceptable." Agency Report,
Tab 55, Declaration of DAGR Project Manager, at 3.

12. In a similar vein, IEC also states that "the PRDA never indicated that
CRL items would form the basis for award." Protest at 10.

13. The DAGR Performance Specification, to which the PRDA expressly directed
offerors "[f]or further definition of the Government's interpretation of a
Higher End [solution]," PRDA at 5, also provided that "[t]he DAGR shall not
exceed a displacement of 38 cubic inches." DAGR Performance Specification para.
3.5.2. IEC's own submissions further state that, even after reducing the
dimension of its proposed solution from those originally proposed, its
solution would still result in a receiver with a volume/displacement of
slightly more than [deleted] cubic inches--that is, more than [deleted]
percent greater than the maximum volume specified. IEC Comments, Nov. 20,
2000, at 30.

14. There is no dispute that the existing PLGR receivers support ICD-GPS-153
data messaging.

15. Inconsistently, IEC expressly acknowledges that the DAGR performance
specification (which was provided to offerors to define a higher end
solution) "impose[s] a requirement to comply with ICD-GPS-153 messaging."
Id.

16. IEC also protests that, in evaluating proposals, the agency divided the
solicitation's requirements into several functional groups which were
labeled "subfactors." IEC complains that such labeling reflected the
agency's consideration of unstated evaluation factors. We disagree. Based on
our review of the record, it is clear that the agency's consideration of the
stated requirements in functional groups did not introduce any additional
evaluation criteria that had not been clearly disclosed in the CRL and the
PRDA. Accordingly, IEC's complaint that the agency evaluated proposals on
the basis of unstated evaluation factors is without merit.

17. This acquisition was clearly conducted as a negotiated procurement. The
Air Force's own Industry Guide states that PRDAs are issued "with the intent
to solicit competitive proposals," Air Force Industry Guide for BAAs and
PRDAs, at 1, and the express terms of this PRDA stated that "award decisions
will be based on a competitive selection of proposals." PRDA at 8.

18. In defending against this protest, the agency has argued, among other
things, that the ENs constituted "requests for technical clarifications,"
rather than discussions. In light of the multiple proposal deficiencies the
ENs identified, the communications clearly constituted discussions,
triggering the requirement that the discussions be meaningful.

19. In the debriefing, the agency identified various additional areas of
IEC's proposal that constituted weaknesses/deficiencies. IEC complains that
some of these areas were not covered by the 31 ENs it received. Since it is
clear that the agency identified the multiple deficiencies discussed above,
which constituted ample basis for rejecting IEC's proposal, even if IEC were
correct that its proposal contained additional deficiencies that were not
identified, that fact would not provide a basis for sustaining IEC's
protest.