TITLE:  Scot, Incorporated, B-292580, October 3, 2003
BNUMBER:  B-292580
DATE:  October 3, 2003
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Scot, Incorporated, B-292580, October 3, 2003

   Decision
    
    
Matter of:   Scot, Incorporated
    
File:            B-292580
    
Date:              October 3, 2003
    
Barron J. Daly and Bob LaFrance for the protester.
Michael R. Lund, Esq., Department of the Air Force, for the agency.
Henry J. Gorczycki, Esq., John L. Formica, Esq., and James A. Spangenberg,
Esq., Office of the General Counsel, GAO, participated in the preparation
of the decision.
DIGEST
    
Agency*s prior approval of the awardee for inclusion on a qualified source
list for impulse cartridges, without pre-award testing, is reasonable,
where the awardee had acquired a firm that was already a qualified source
at one facility and had requested qualification at a recently acquired
facility to which it was transferring technology and assets from the
qualified source that had designed and produced the impulse cartridge, the
recently acquired facility had previously manufactured similar impulse
cartridges, and the solicitation included a provision permitting waiver of
any or all qualification requirements for firms with experience producing
the same or similar cartridges.
DECISION
    

   Scot, Incorporated protests the award of a contract to Pac Sci Quantic
under request for proposals (RFP) No. F42630-03-R-3233, issued by the
Department of the Air Force, for BBU-63/B impulse cartridges. Scot
contends that Pac Sci Quantic is not a qualified source for the cartridges
as required by the RFP.
    

   We deny the protest.
    
The RFP, issued March 12, 2003, contemplated the award of a fixed-price
contract for base and option quantities.  The RFP contained the standard
*Qualifications Requirements* clause, as set forth in Federal Acquisition
Regulation (FAR) S: 52‑209‑1, which provided notice that the
award was limited to firms offering to meet certain qualification
requirements.  The clause states in part that (1) products, manufacturers,
or sources must be qualified at the time of award whether or not the
product, manufacturer, or source is actually included on the appropriate
list and (2) if, after award, the contracting officer learns that an
applicable qualification requirement has not been met at the time of
award, the contracting officer may either terminate the contract for
default or allow performance if that is in the government*s best interest
and adequate consideration is offered.[2]  RFP at 14-15; FAR
S: 52‑209-1 (b) and (d).  The clause also provides:
    
Any change in location or ownership of the plant where a previously
qualified product or service was manufactured or performed requires
reevaluation of the qualification.  Similarly, any change in location or
ownership of a previously qualified manufacturer or source requires
reevaluation of the qualification.  The reevaluation must be accomplished
before the date of award.
RFP at 14-15; FAR S: 52‑209-1(f).
    
The RFP incorporated the source qualification statement for this cartridge
that provides for the waiver of the qualification requirements as follows:
    
Any offeror who has had previous experience in the production of
Cartridges or other similar item may apply to the design control activity
for a waiver of all or part of the [qualification] requirements.  A waiver
will be granted only if the design control activity can establish the
qualification of the offeror from previous knowledge/interface or from
written inputs from the offeror.
Agency Report, Tab 3e, Source Qualification Statement, S: C P: 12. 
    
Offerors were advised that the agency would *utilize the Performance Price
Trade‑Off . . . technique* to arrive at a *best value* award
decision.  The application of this technique here involved determining the
acceptability of each offeror*s proposal (determined here by ascertaining
whether the offeror *has been notified by the Government that they are a
qualified source*), ranking all acceptable proposals by evaluated price,
and assigning the proposals a past performance risk rating of high
confidence, significant confidence, confidence, unknown confidence, little
confidence, or no confidence.  The solicitation added that if the lowest
priced proposal had a *high confidence* past performance risk rating, then
that proposal was to be considered the best value for award; otherwise,
the agency would make a tradeoff determination considering the differences
in past performance and price to determine which proposal represented the
best value to the government.  RFP at 31‑32. 
    
The agency received proposals from Scot and Pac Sci Quantic.  The agency
evaluators referred to the agency*s *Screening Analysis Worksheet* for the
cartridges, which is the agency*s internal list of qualified sources, and
found that both Scot and Pac Sci Quantic were listed.[3]  Agency Report,
Tab 10, Best Value Memorandum (Apr. 28, 2003), at 1.  The agency thus
evaluated both proposals as technically acceptable.  The agency next
determined that although Pac Sci Quantic*s past performance rating was
slightly higher than Scot*s, the difference was negligible.  The agency
concluded that Pac Sci Quantic*s proposal represented the best value to
the government, given its significantly lower price.  Id. at 2-3.
    
After filing an agency-level protest (which was dismissed in part and
denied in part), Scot protested to our Office.  Scot argues that Pac Sci
Quantic is not a qualified source for the cartridges, and that the award
to Pac Sci Quantic was thus improper.
    
The purpose of the qualification requirements system is to allow the
efficient procurement of items that require substantial testing to
demonstrate compliance with specification requirements.  The procurement
of qualified products is a two‑step process in which (1) a firm*s
products or services are tested for compliance with the specifications
and, if found in compliance, are included on the appropriate list, and (2)
products on the list may then be procured.  The system is intended to be
used prior to, and independent of, the specific procurement action.  See
FAR S: 9.203(a); Goodyear Tire & Rubber Co., B-247363.6, Oct. 23, 1992,
92-2 CPD P: 315 at 5.
    
Under the applicable statute, contracting officers have the authority to
determine that an offeror or an offered product meets (or will meet) the
qualification requirement by the time of award regardless of whether the
offeror or product is actually listed on the qualified source list, or has
been formally approved by an authorized agency activity.  10 U.S.C.
S: 2319(c)(3) (2000); Phaostron Instrument & Elec. Co., B-284456, Apr. 20,
2000, 2000 CPD P: 65 at 2-3.  We will review an agency*s actions under
this authority, in the context of a protest under a solicitation, to
determine whether the actions are reasonable and consistent with the
solicitation and applicable statutes and regulations.  See Goodyear Tire &
Rubber Co., supra, at 5-17; Hiltronics Corp., B-241450 et al., Jan. 18,
1991, 91-1 CPD P: 57 at 3; Automated Power Sys., Inc., B-236545, Nov. 7,
1989, Nov. 7, 1989, 89-2 CPD P: 439 at 2.
    
Here, the record reflects that the agency did not require Pac Sci Quantic
to produce and test a qualification article, but rather approved Pac Sci
Quantic as a qualified source at its Hollister, California facility, based
on, among other things, Pacific Scientific*s corporate experience with the
BBU-63/B cartridge, previous production of similar cartridges at the
Hollister facility, and an RFP requirement for first article testing.  As
discussed below, we find that the agency*s approval was reasonable and
consistent with applicable law and regulation, as well as the terms of the
RFP.
    
The contracting history of this cartridge is relevant to the agency*s
actions.  In 1997, the Air Force awarded a contract to an aircraft
manufacturer for this cartridge as well as the bomb ejector rack.  The
aircraft manufacturer subsequently contracted with Scot to design and
manufacture the cartridge and rack, and Scot subcontracted the work on the
cartridge to SDI (SDI was the parent corporation of Scot at that time). 
Contracting Officer*s Statement at 2.  Following approval of the cartridge
developed by Scot and SDI, the Air Force purchased the technical data
package (TDP) for the cartridge.  Agency Report, Tab 5, Affidavit of
Project Engineer (July 28, 2003), at 2.
    
In April 2001, Pacific Scientific acquired SDI, and in August 2001,
Pacific Scientific acquired Quantic.[4]  Contracting Officer*s Statement
at 2; Agency Report, Tab 9, Pacific Scientific Proposal, Technical
Proposal, at 8, and App. D at 2.  The record reflects that in the spring
of 2002, Pac Sci Quantic approached the agency about being qualified as a
source for the BBU-63/B cartridge.  Contracting Officer*s Statement at 2.
    
The cognizant project engineer explains that she considered the
above-described history in reviewing Pac Sci Quantic*s request that its
facility be approved as a qualified source.  That is, according to the
project engineer, she considered that SDI had been acquired by Pacific
Scientific, that SDI had extensive experience in building the BBU-63/B
cartridge, and that SDI*s technology and assets related to the BBU-63/B
cartridge were being transferred to the Pac Sci Quantic facility in
Hollister.[5]  Agency Report, Tab 5, Affidavit of Project Engineer (July
28, 2003), at 1-2.
    
The project engineer also considered that the Hollister facility included
manufacturing, testing, and machine shop space, as well as the fact that
similar cartridges had been previously manufactured by Quantic at that
facility.  In this regard, the Hollister facility has regularly produced
over nine different impulse cartridges for the military that are basically
the same as the BBU-63/B cartridge.  Additionally, the project engineer
noted that the cartridge is of proven design, that the government owns the
TDP, that future contracts will not require any new design, but rather
only *building to print* using the government TDP, and that under the next
scheduled acquisition (i.e., the present RFP), a first article test would
be required.  Based upon all of the above, the project engineer approved
Pac Sci Quantic as a qualified source for the BBU-63/B cartridge.  Agency
Report, Tab 5, Affidavit of Project Engineer (July 28, 2003), at 1-2.
    
As acknowledged by the protester, Pacific Scientific and SDI were already
qualified sources at other locations, and Pac Sci Quantic*s request for
qualifying its Hollister facility was based in part on the recent
acquisition of SDI and the transfer of that qualified source*s technology
and assets to the Hollister facility.  Thus, the qualification of Pac Sci
Quantic concerned both a change in ownership and location of a previously
qualified source. 
    
The applicable qualification requirements provision states that a change
in ownership or location of a previously qualified source requires
reevaluation of the qualification.  FAR S: 52‑209-1(f); RFP at 15. 
Our Office recognizes that an agency has broad discretion under this
provision (and the related regulation, FAR S: 9.207(b)) and, absent a
showing that the agency*s judgment lacks a reasonable basis, we will not
object to an agency*s approval of a qualified source without retesting
under such circumstances.  Master Power, Inc., B-238468.2, Nov. 28, 1990,
90-2 CPD P: 434 at 4; Automated Power Sys., Inc., supra.  In our view, as
detailed above, the project engineer*s rationale presents a reasonable
basis for approving Pac Sci Quantic as a qualified source without
requiring pre-award production and testing of a qualification item. 
Furthermore, in this case, the applicable source qualification statement
also permits a waiver of any or all of the qualification requirements,
including the testing requirement, for any offer that has previously
produced the same or similar cartridge, regardless of whether the offeror
is a previously qualified source at another location or under prior
ownership.  Since the agency approved Pac Sci Quantic based (in part) on
Quantic*s production of similar cartridges and on SDI*s experience on the
same cartridge, the agency*s judgment here is reasonable and consistent
with the RFP and the applicable regulations.
    
The protester contends that, in any event, the award to Pac Sci Quantic
was improper because Pac Sci Quantic had not been approved as a qualified
source prior to award as required.  Specifically, Scot alleges that a
handwritten entry on the Screening Analysis Worksheet identifying the
awardee as an approved source was not made prior to Scot*s protests, and
thus Pac Sci Quantic was not on the qualified source list before award. 
    
The agency*s qualified source list is compiled on the Screening Analysis
Worksheet for this cartridge.  The worksheet, dated June 17, 2002, lists
four approved sources, including Scot and Pacific Scientific.  All of the
approved sources except Pacific Scientific are further identified by
location.  In the space next to Pacific Scientific*s name appears the
following handwritten entry:  *(Quantic).* 
    
The *Quantic* entry is the only handwritten entry on the Screening
Analysis Worksheet, so it may be reasonable to assume, as the protester
alleges, that the handwritten entry was not entered on the same date as
the other information.  However, although there is nothing in the record
that conclusively establishes the precise date when the *Quantic* entry
was made, as explained below, the record does establish that the entry was
made prior to the selection decision.
    
As mentioned previously, in the spring of 2002, Pac Sci Quantic approached
the Air Force about qualifying its Hollister facility as a source for the
cartridge.  Contracting Officer*s Statement at 2.  The agency*s project
engineer responsible for maintaining the qualified source list states that
she had reviewed Pac Sci Quantic*s information and had determined that the
source was qualified to produce the cartridge.  Agency Report, Tab 5,
Affidavit of Project Engineer (July 28, 2003), at 1.  She did not state,
however, when the *Quantic* entry was added to the worksheet.[6] 
Nevertheless, the source selection decision for this acquisition, dated
April 28, 2003, specifically states that *Quantic* is listed on the
worksheet.  Agency Report, Tab 10, Best Value Memorandum (Apr. 28, 2003),
at 1.  As such, the record shows that at some date between June 17, 2002
(the date of the worksheet) and April 28, 2003 (the date of the source
selection here), the worksheet was updated to reflect that Pac Sci Quantic
was an approved source for this cartridge.[7]  Regardless of when the
facility was added to the list, the record establishes that Pac Sci
Quantic was approved by the agency as a qualified source prior to award.
    
The protester also points out that the BBU-63/B cartridge is used in a
nuclear certified ejector rack, and argues that because of this, the
qualification of Pac Sci Quantic should be subject to the concurrence of
the agency*s Nuclear Certification Board and other offices within the
agency.  In response, the agency explains that the cartridge itself is not
nuclear certified and qualification is not subject to a broader review and
approval than was done here.  The agency adds that any agency requirement
for concurrence of the Nuclear Certification Board concerns internal
agency policy and is not for review by our Office.  Additionally, the
agency has presented statements from the Nuclear Weapons Directorate and
the Air to Surface Munitions Directorate indicating that this matter did
not require further review by their offices.[8]  Agency Report, Tab 5a,
E-mail Messages.  Given that the protester has not supported its position
or refuted the agency*s arguments, and the record does not otherwise
indicate that the agency acted improperly, we deny this aspect of Scot*s
protest.
    
Finally, Scot argues that because it was subjected to testing prior to
qualification, the waiver of the testing requirement for Pac Sci Quantic
was unfair to Scot and perhaps to other potential offerors that are
presently not qualified sources.  The agency acknowledges that Scot
underwent a more rigorous qualification process.  The agency explains
that, unlike Pac Sci Quantic, Scot was qualified based on a new design, so
the qualification process at that time needed to include testing of a
qualification item.  Since the agency*s actions here were proper, and the
opportunity for waiver was clearly announced, this is not an example of
unfair or unequal treatment of offerors.[9]  See Dash Eng*g, Inc.;
Engineered Fabrics Corp.-Recon., B‑246304.12, B-246304.13, Sept. 27,
1993, 93-2 CPD P: 184 at 5 n.5 (where waiver of a
statutory restriction on competition is permitted, waiver does not
constitute unequal treatment of offerors, and allegations of prejudice to
the protester are not to be considered).
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    

   ------------------------

   [1] These cartridges are used on the B-2 aircraft bomb ejector rack to
jettison bombs.
[2] On the same date that the RFP was issued, the agency published a
synopsis of the RFP identifying the following qualified sources:  Scot,
Pacific Scientific, and Special Devices, Inc. (SDI).  Agency Report at 2,
Tab 6, Synopsis of RFP (Mar. 12, 2003), at 2.
[3] Pac Sci Quantic*s proposal stated that it would produce the cartridges
at its facility in Hollister, California.  This facility was previously
that of Quantic Industries, Inc., which was acquired by Pacific Scientific
in 2001; it is now referred to as *Pac Sci Quantic* or *Quantic.*  Agency
Report, Tab 9, Pac Sci Quanitic Proposal, Technical Proposal, at 3. 
[4] Scot was not part of these acquisitions.
[5] The transfer was completed prior to submission of Pac Sci Quantic*s
proposal in response to this RFP.  Agency Report, Tab 9, Pac Sci Quantic*s
Proposal, Technical Proposal, at 12.
[6] The project engineer did state that the worksheet is one of many
qualification lists maintained, and that it is not always possible to keep
all worksheets current; when a question arises about whether a source is
qualified, the matter is resolved by the agency personnel involved in the
matter.  Agency Report, Tab 5, Affidavit of Project Engineer (July 28,
2003), at 3.
[7] As Scot also points out, the most recent synopsis of the RFP on March
4, 2003 only identified Pacific Scientific, and not Pac Sci Quantic, as a
qualified source.  Scot alleges that the synopsis thus shows that Pac Sci
Quantic was not added to the list until after the synopsis was issued. 
Although that could be the case, the date of the synopsis is earlier than
the evaluation and source selection decision, and is thus not inconsistent
with our finding here.  Moreover, the synopsis did not identify a specific
location for any of the qualified sources that were listed, and thus does
not definitively indicate whether the Pac Sci Quantic facility was or was
not qualified on the date of the synopsis.
[8] In addition to stating that the cartridge was not a nuclear certified
item, these agency offices stated that first article testing would be
appropriate.  Agency Report, Tab 5a, E-mail Messages.  In its comments on
the agency report, Scot alleges that first article testing is unnecessary
for properly qualified cartridges.  We note that the agency*s use of first
article testing in conjunction with a qualification requirement is
generally not improper.  See Hiltronics Corp., supra; Diemaster Tool,
Inc., B-241239, B-241239.2, Jan. 30, 1991, 91-1 CPD P: 89 at 4-6. 
Additionally, the RFP required first article testing for all offerors and
Scot did not take exception to this requirement or otherwise request a
waiver.  Agency Report, Tab 8, Scot Proposal, at 6.  Therefore, Scot*s
belated objection to the first article test requirement is at best an
untimely protest of the terms of the RFP.  4 C.F.R. S: 21.2(a)(1) (2003).
[9] There is no suggestion that the agency denied any waiver requested by
the protester, or by any other potential offerors with circumstances
similar to Pac Sci Quantic*s.