TITLE:  PURVIS Systems, Inc., B-293807.3; B-293807.4, August 16, 2004
BNUMBER:  B-293807.3; B-293807.4
DATE:  August 16, 2004
**********************************************************************
   Decision

   Matter of:   PURVIS Systems, Inc.

   File:            B-293807.3; B-293807.4

   Date:              August 16, 2004

   William L. Walsh, Jr., Esq., J. Scott Hommer, III, Esq., Benjamin A.
Winter, Esq., and Julia M. Kiraly, Esq., Venable, for the protester.

   Anne B. Perry, Esq., John W. Chierichella, Esq., and Aleksander Lamvol,
Esq., Sheppard, Mullin, Richter & Hampton, for Northrop Grumman Mission
Systems, Inc., an intervenor. 

   John McC. Treanor, Esq., Department of the Navy, 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

   Protest is sustained where agency failed to reasonably consider or
evaluate potential conflicts of interest that will be created by awardee*s
involvement in evaluating the performance of undersea warfare systems that
have been manufactured by the awardee or by the awardee*s
competitors.     

   DECISION

   PURVIS Systems, Inc. protests the Department of the Navy*s award of a
contract to Northrop Grumman Defense Mission Systems, Inc. under request
for proposals (RFP) No. N00189-03-R-0038 to provide analytical and
technical support for two Navy programs--the Ship Anti-submarine Warfare
Readiness Effectiveness Measuring (SHAREM) program and the Mine Readiness
Effectiveness Measuring (MIREM) program.  PURVIS protests that the agency
failed to properly evaluate potential organizational conflicts of interest
and conducted misleading discussions.

   We sustain the protest.

   BACKGROUND

   The SHAREM and MIREM programs are anti-submarine and anti-mine programs,
sponsored by the Chief of Naval Operations (CNO), that assess the
readiness and effectiveness of the Navy*s surface forces.  RFP at 79.  The
SHAREM and MIREM programs involve at-sea exercises, during which one or
more naval battle groups are tested and evaluated with regard to their
effective employment of anti-submarine and anti-mine warfare techniques. 
The RFP states that the at-sea exercises are used *to evaluate the
performance of surface, air, and subsurface USW [undersea warfare] systems
and techniques to develop new tactics and improve existing fleet and unit
USW tactics.*  Id. at 79-80. 

   The solicitation at issue here was issued in October 2003, seeking
proposals to *provide analytical and technical support services* for the
SHAREM and MIREM programs during a base period and four 1-year option
periods.  Id. at 79.  The solicitation*s statement of work (SOW)
identified *typical tasks or areas of work,* including:  exercise planning
and preparation,[2] conducting and observing an exercise,[3] exercise
summary review and message preparation,[4] exercise

   reconstruction and analysis,[5] program analysis,[6] and program
intermediary and longa**range planning.[7]  Id. at 80a**83. 

   Section M of the solicitation advised offerors that proposals would be
evaluated against the following factors, listed in descending order of
importance:  technical performance plan,[8] past performance,[9] cost, and
socioeconomic factors.  Offerors were further advised that, in evaluating
the non-cost evaluation factors, the agency would apply adjectival ratings
of *outstanding,* *highly acceptable,* *acceptable,* *marginal,* and
*unacceptable.*[10]  Id. at 153-55. 

   On December 1, 2003, three offerors, including PURVIS and Northrop
Grumman, submitted proposals.[11]  Each offeror made an oral presentation
to the agency, and the proposals were subsequently evaluated by the
agency*s technical evaluation board (TEB) with the following results: 

   +------------------------------------------------------------------------+
|A                              |      PURVIS       |Northrop Grumman    |
|-------------------------------+-------------------+--------------------|
|Technical Performance Plan     |[deleted]          |[deleted]           |
|-------------------------------+-------------------+--------------------|
|    --Oral Presentation        |     [deleted]     |    [deleted]       |
|-------------------------------+-------------------+--------------------|
|    --Resumes                  |     [deleted]     |    [deleted]       |
|-------------------------------+-------------------+--------------------|
|Past Performance               |2 [deleted][12]    |1 [deleted][13]     |
|-------------------------------+-------------------+--------------------|
|Cost                           |[deleted]          |[deleted]           |
|-------------------------------+-------------------+--------------------|
|Socioeconomic Factors          |[deleted]          |[deleted]           |
+------------------------------------------------------------------------+

   Agency Report, Tab 11, at 15-18.

   On February 26, the agency selected Northrop Grumman for award and
notified PURVIS of that selection.  Following a debriefing, PURVIS filed a
protest with our Office, asserting, among other things, that the agency
had failed to give any consideration to potential organizational conflicts
of interest that will be created by Northrop Grumman*s involvement,
pursuant to the contract requirements, in evaluating various undersea
warfare systems, including several systems manufactured by Northrop
Grumman.[14] 

   By letter to our Office dated March 16, the agency acknowledged that
corrective action was required, and advised our Office that it would
terminate Northrop Grumman*s contract, revise the solicitation, conduct
discussions, request proposal revisions, and make a new source selection
decision.  Based on the agency*s stated intent to take corrective action,
we dismissed PURVIS*s protest. 

   By letters to the offerors dated March 17, the agency issued an amendment
to the solicitation and opened discussions.  Among other things, the
amended solicitation required that each offeror submit an organizational
conflict of interest (OCI) mitigation plan, and provided that such plans
would be evaluated as a subfactor under the technical performance plan
factor.[15]  Agency Report, Tab 24, RFP amend.A 5, atA 6.  With the
solicitation amendment, the agency also sent each offeror detailed agency
comments regarding the prior evaluation of their respective proposals; the
agency*s comments identified various evaluated strengths and weaknesses in
each proposal.   

   Although the amended solicitation precluded any revisions to proposed
costs, and stated *[n]ew oral presentations will not be conducted,* it
also provided that *[e]ach offeror will be permitted to submit revised
material (e.g., PowerPoint slides) in response to the Government*s
comments, plus one page of explanatory text . . . for each
revised/resubmitted PowerPoint Slide.*  Id. at 4.  The amended
solicitation further stated that an offeror could submit *an entire set of
materials* provided there was *clear and specific identification of those
material[s] that are revised, changed, new, or otherwise different from
those originally presented to the Government.*  Id.   

   On March 29, PURVIS submitted written questions to the agency regarding
what offerors were permitted to submit.  Specifically, PURVIS referenced
the solicitation provision permitting submission of *revised, changed,
new, or otherwise different* material, and asked: 

   Does this mean that additional (new) PowerPoint Slides or material, not
merely revisions to what was originally submitted, may be provided to
clarify identified weaknesses and deficiencies in an offeror*s proposal?

   Agency Report, Tab 27, at 2.

   In a response provided only to PURVIS, the agency responded:

   No.  *Additional* slides are not permitted.  *New* and *revised*
PowerPoint slides are substitutes for (and corrections/improvements of)
existing PowerPoint slides.  The purpose of reopening the solicitation for
discussions is to permit offerors an opportunity to address and correct
weaknesses, not to submit an entirely new proposal.  The amended
solicitation clearly demonstrates that the Government does not intend to
evaluate entirely new proposals.  This is evidenced by the fact that oral
presentations will not be reopened, and that offerors must identify
PowerPoint materials that have been changed or substituted.

   Agency Report, Tab 28, at 7.

   In a subsequent RFP amendment, the agency added the following provision: 
*The word *new* does not mean additional PowerPoint slides or material. 
The number of slides originally submitted shall not increase.*  Agency
Report, Tab 31, RFP amend.A 6, at 3.

   Thereafter, both offerors submitted final revised proposals.  Each
proposal contained an OCI plan.  Northrop Grumman also submitted new past
performance data sheets for additional contracts that had not previously
been identified for evaluation purposes.  The final proposals were
reviewed and evaluated with the following results:

   +------------------------------------------------------------------------+
|A                              |      PURVIS       |Northrop Grumman    |
|-------------------------------+-------------------+--------------------|
|Technical Performance Plan     |[deleted]          |[deleted]           |
|-------------------------------+-------------------+--------------------|
|    --Oral Presentation        |     [deleted]     |     [deleted]      |
|-------------------------------+-------------------+--------------------|
|    --Resumes                  |     [deleted]     |     [deleted]      |
|-------------------------------+-------------------+--------------------|
|    --Quality Assurance        |     [deleted]     |     [deleted]      |
|-------------------------------+-------------------+--------------------|
|    --OCI Mitigation Plan      |     [deleted]     |     [deleted]      |
|-------------------------------+-------------------+--------------------|
|Past Performance               |2 [deleted]        |3 [deleted][16]     |
|-------------------------------+-------------------+--------------------|
|Cost                           |[deleted]          |$17,764,362         |
|-------------------------------+-------------------+--------------------|
|Socioeconomic Factors          |[deleted]          |[deleted]           |
+------------------------------------------------------------------------+

   Agency Report, Tab 39, at 4-5. 

   Based on this evaluation, Northrop Grumman*s proposal was again selected
for award.  In making the source selection determination, the contracting
officer expressly concluded that the two proposals were equal with regard
to the technical performance plan factor; that Northrop Grumman*s proposal
was superior with regard to past performance; that the proposed costs were
essentially equal;[17] and that PURVIS* proposal was superior with regard
to socioeconomic factors.  Agency Report, Tab 39, at 7.  Because the past
performance factor, under which Northrop Grumman*s proposal was considered
superior, was more important than the socioeconomic factor, under which
PURVIS*s proposal was considered superior, the contracting officer
concluded that Northrop Grumman*s proposal offered the best overall
value.  This protest followed. 

   DISCUSSION

   PURVIS protests that the agency failed to properly evaluate Northrop
Grumman*s proposal with regard to potential conflicts of interest.  More
specifically, PURVIS maintains that both Northrop Grumman*s OCI plan and
the agency*s evaluation of that plan, failed to reasonably recognize or
evaluate various situations creating potential conflicts of interest for
Northrop Grumman, including the conflict created by Northrop Grumman*s
significant involvement in evaluating the performance of undersea warfare
systems that Northrop Grumman has manufactured.   

   Contracting officers are required to identify and evaluate potential
conflicts of interest as early in the acquisition process as possible. 
Federal Acquisition Regulation (FAR) S 9.504.  Situations that create
potential conflicts of interest include situations in which a firm*s work
under a government contract entails evaluating itself or its own
products.  FAR SS 9.505, 9.508; Engineered Air Sys., Inc., Ba**230878,
July 25, 1988, 88-2 CPD P 77 at 2-3.  The concern in such situations is
that a firm*s ability to render impartial advice to the government will be
undermined by its relationship to the product or service being evaluated;
accordingly such situations are frequently referred to as *impaired
objectivity* conflicts of interest.  See Aetna Gov*t. Health Plans, Inc.;
Foundation Health Fed. Servs., Inc., Ba**254397.15 et al., JulyA 27, 1995,
95-2 CPD P129 at 13.  

   As a threshold matter, the agency asserts that the contract requirements
at issue here do not involve subjective input or judgments on the part of
the contractor--that is, only objective data measurement will be involved;
accordingly, because only objective data measurement activities are
required, there are no *impaired objectivity* OCI issues.  Specifically,
at the GAO hearing conducted in connection with this protest,[18] the TEB
Chair repeatedly testified that the contract requirements involve only
objective data measurements, not subjective input or assessments.  Hearing
Transcript (Tr.) at 23-24, 47-49, 58, 61a**62, 70-71, 77, 84, 89,
126a**28, 166-72.  For example, the TEB Chair testified:

   The whole purpose of the program is measurements.  Everything is backed up
by measurements.  We don*t say we think or we like or we dislike.  We say
this system performed this way and here is the measurement.  So, when I
bend it like that, I can*t see where there*s subjective activity there.

   Tr. at 128. 

   Similarly, the TEB Chair testified as follows:

   TEB Chair:  [I]n terms of the contract, I don*t foresee that there is an
OCI issue.

   GAO:  Why is that ?

   TEB Chair:  Because they*re measuring the system.  The Government is with
them as they*re measuring the system.  I think numbers are objective
inherently.

   GAO:  Don*t let me mischaracterize your testimony.  I*m understanding your
testimony to be that the basis for the conclusion . . . that there is not
a conflict of interest is -- rests on your conclusion that there is no
evaluation [or] subjective assessment that Northrop Grumman would perform
with regard to, for example, the AQS-20 system; is that correct?

   TEB Chair:  Yes, sir.  It*s measured. 

   GAO:  That it is just completely measurement, objectively measuring data .
. . ?

   TEB Chair:  That*s the whole purpose of the execution contract, yes, sir.

   Tr. at 166-67.

   In short, the agency maintains that there is no potential for Northrop
Grumman to experience *impaired objectivity* when it performs the contract
requirements involving evaluation of any undersea warfare systems because
there is no subjective input or assessments involved in contract
performance.[19]  In our view, the record is to the contrary. 

   As noted above, the solicitation*s SOW lists numerous activities that
either expressly or inherently involve analysis, evaluation, and judgment
on the part of the contractor.  For example, under the task area *exercise
planning and preparation,* the SOW establishes that the contractor is
responsible for *drafting scenarios to test specific tactics* and
*recommending settings for mine simulators.*  Agency Report, Tab 3, RFP at
80-81 (italics added). With regard to the task area *conducting and
observing an exercise,* the contractor is required to *present
first-impression reports.*  Id. at 81 (italics added).  Under the task
area *exercise reconstruction and analysis,* the contractor is required to
*conduct in-depth analysis of exercise data* to include *detection
capability evaluation,* *sensor effectiveness assessment,* and *tactical
effectiveness assessment.*  Id. at 81 (italics added).  Under the task
area *program analysis,* the contractor*s responsibilities include
*evaluating and comparing data* and *selecting and analyzing MOEs
[measures of effectiveness].*  Id. at 81 (italics added).  Finally, under
the task area *program intermediary and longa**range planning, the
contractor is responsible for *assisting the SHAREM and MIREM officers in
devising, presenting and implementing their 6-year plans.*  Id.A atA 82
(italics added).  We view all of the above activities as requiring varying
amounts of subjective analysis and judgment on the part of the contractor
that go beyond *objectively measuring data.*

   The agency record regarding the evaluation of Northrop Grumman*s proposal
further supports the conclusion that contract performance will
require--and that the agency values--subjective contractor input and
judgment.  For example, in evaluating Northrop Grumman*s technical
performance plan with regard to the task area, [deleted], the agency rated
Northrop Grumman*s proposal [deleted], specifically noting that, in their
proposal, [deleted].  Agency Report, Tab 36, atA 6.  Similarly, in
evaluating Northrop Grumman*s technical performance plan with regard to
the task area [deleted], the agency concluded that Northrop Grumman
*specifically proposed [deleted],* and further noted that Northrop
Grumman*s proposed performance approach includes [deleted].  Id. at 9.  We
view the agency*s evaluation assessments identified above as reflecting
the agency*s expectation--and desire--that the contractor will provide
subjective input and judgment in performing the contract.

   Finally, as part of our Office*s review, and after notifying all of the
parties of our intent, we independently accessed the SIPRNET[20] where the
classified reports produced under prior contract performance are
electronically retained.  Because of the classified nature of these
reports, our decision today does not discuss their substance. 
Nonetheless, our review of the classified reports did not alter our views,
discussed above, regarding the requirements of this contract.  

   In sum, the agency*s determination that Northrop Grumman*s performance of
the contract requirements create no *impaired objectivity* OCIs because
those requirements involve only objective data measurements lacks a
reasonable basis.  Thus, the agency failed to properly consider the
potential that Northrop Grumman will experience impaired objectivity in
performing this contract and failed in its obligation under the FAR to
identify and evaluate potential conflicts of interest.  Science
Applications Int*l. Corp., B-293601 et al., May 3, 2004, 2004 CPD PA ___
at 4. 

   PURVIS argues that Northrop Grumman*s OCI plan also fails to demonstrate a
reasonable understanding of situations that create *impaired objectivity*
concerns and, similarly, that the agency*s [deleted] rating of Northrop
Grumman*s OCI plan lacks a reasonable basis.  We agree. 

   As amended, the solicitation advised offerors that OCI plans would be
evaluated as follows: 

   The Government will evaluate the Offeror*s Organizational Conflict of
Interest (OCI) Plan for an understanding of the problems relating to OCI
and potential OCI in the program; identification of current OCI issues
related to the programs: a method(s) of identifying OCI and potential OCI
issues in the future; and specific methods of avoiding or mitigating OCI
issues that might currently exist, or occur in the future. 

   Agency Report, Tab 24, RFP amend. 5, at 20.

   Northrop Grumman*s OCI plan lists 59 undersea warfare systems that are
currently in the Navy inventory and subject to testing and evaluation
under the SHAREM/MIREM programs.  Agency Report, Tab 34, Northrop Grumman
OCI Mitigation Plan, at attach. 4.  The Northrop Grumman OCI plan further
acknowledges that 12 of these 59 systems were manufactured by Northrop
Grumman,[21] and that at least 30 of the remaining systems were
manufactured by four contractors--Lockheed Martin, Raytheon, Allied
Signal, and Hughes Aircraft.[22]  Id.  Finally, the OCI plan identified
[deleted] systems that Northrop Grumman is currently in the process of
researching, developing, or testing.[23]  Id. at attach. 6.  

   Despite recognizing that Northrop Grumman is the manufacturer of a
significant portion of the systems to be tested and that the vast majority
of the remaining systems are manufactured by companies with whom Northrop
Grumman competes, Northrop Grumman*s OCI plan concludes:  *we have
determined that an actual OCI .A . . does not currently exist for the
envisioned work to be performed under the Contract,* adding that
*[m]ature, fielded USW systems in use in the fleet do not pose an OCI
issue.*  Agency Report, Tab 24, Northrop Grumman OCI Plan, atA 8. 
Northrop Grumman*s conclusion that no OCI issues are created by Northrop
Grumman*s evaluation of its own *mature, fielded* systems--or similar
systems manufactured by potential competitors--appears to be based on the
premise that the work performed under this contract is not *part of the
procurement process.*[24]  

   Even if Northrop Grumman*s assertion, that the work performed and reports
produced under this contract are not *part of the procurement process,*
was factually accurate--which it is not[25]--we reject Northrop Grumman*s
apparent assumption that impaired objectivity OCIs can arise only within
the procurement process.  To the contrary, we view a situation where, as
here, a company is responsible for assessing the performance of systems it
has manufactured as a classic example of an *impaired objectivity*
OCI--without regard to whether the evaluation occurs as *part of the
procurement process.*  See, e.g., Engineered Air Sys., Inc., supra, at 3
(contract to test and evaluate products that awardee manufactured was
improper).  In such situations, the firm risks having its objectivity
impaired by a bias in favor of its own systems* performance.  Similarly, a
company manufacturing systems that are, as a practical matter, competing
with similar systems produced by other manufacturers, risks having a
negative bias regarding the performance of the competing systems.  This is
particularly true where, as here, the contract requirements clearly
anticipate comparisons between the performance of similar systems
manufactured by competing firms. 

   Finally, Northrop Grumman*s OCI plan acknowledges that--in contrast to the
broad assertion that no OCIs are created by Northrop Grumman*s evaluation
of *mature, fielded* systems--evaluation of systems that are *under
development* by Northrop Grumman *could cause the perception of a
potential OCI issue.*  Id. at 19-20. 

   Accordingly, the OCI plan provides that, in situations where a
*developmental* Northrop Grumman system is being evaluated, Northrop
Grumman will [deleted].[26]  Id.   

   We find Northrop Grumman*s proposal to mitigate conflicts of interest in
such limited circumstances to be materially inadequate.  In addition to
ignoring potential conflicts regarding *mature, fielded* systems, Northrop
Grumman*s mitigation plan fails to address necessary mitigation actions
with regard to the evaluation of systems that Northrop Grumman*s
*developmental* systems may replace or otherwise affect.  Similar to the
principles discussed above, where a company is in the process of
developing new systems, the production of which may, as a practical
matter, affect the continued use of existing systems, the manufacturer of
the developmental systems risks having a positive bias regarding the
performance of its own developmental system and a negative bias regarding
the existing system that its developmental system may replace or otherwise
affect. 

   In summary, we find Northrop Grumman*s OCI plan to be fundamentally
flawed.  Specifically, Northrop Grumman*s OCI plan fails to recognize or
otherwise address the multiple situations, discussed above, that create
potential *impaired objectivity* OCI concerns. 

   Similarly, we find no reasonable basis for the agency*s [deleted] rating
of Northrop Grumman*s OCI plan in that the agency*s rating fails to
reflect consideration of the multiple conflict of interest situations the
OCI plan does not address.  Specifically, the TEP chair testified that he
did not compare the particular systems produced by Northrop Grumman to
each of the other particular systems in the Navy*s inventory to determine
which systems are, in any sense, competing.  Tr. at 161-63.  Similarly,
the TEB chair testified that he did not consider the functions that
Northrop Grumman*s developmental systems would perform, nor make any
determination regarding the impact production of such systems would have
on any existing systems that Northrop Grumman could be evaluating under
this contract.  Tr. at 88a**94, 163.  Finally, the TEB chair acknowledged
that the agency gave no consideration to the frequency with which OCI
issues requiring mitigation, neutralization or other action are likely to
arise during Northrop Grumman*s contract performance, nor the impact that
such required neutralization or mitigation measures will have on the
quality of Northrop Grumman*s performance.  Tr. at 116.  For all of these
reasons, we find no reasonable basis for the agency*s assessment that
Northrop Grumman*s OCI plan was [deleted].      

   The protest is sustained.[27]

   RECOMMENDATION

   In developing the protest record in this matter, the agency has provided
information suggesting that PURVIS*s OCI plan may contain flaws, similar
to those discussed above, because it fails to identify potential OCI
issues regarding a PURVIS subcontractor.  In light of the substantial
flaws in Northrop Grumman*s OCI plan,  the agency*s flawed evaluation of
that plan, and the agency*s concerns with PURVIS*s OCI plan, we recommend
that the agency reopen discussions with both offerors and seek revised
proposals, including revised OCI plans identifying all potential OCIs for
which mitigation, neutralization, or other action will be required,
thereby providing a basis for the agency to assess potential OCI issues
with respect to both Northrop Grumman*s and PURVIS*s performance of this
contract.  We recommend that the agency meaningfully consider, evaluate,
and document the frequency with which OCI issues will likely occur for
each offeror, the actions necessary to address such issues, and the impact
such actions will have on the quality of the offeror*s performance.  As
noted above, we also recommend that the agency permit the offerors to
submit additional past performance contracts for the agency*s relevance
assessment and evaluation.  Based on the offerors* revised submissions,
and the agency*s evaluation of those submissions, we recommend that the
agency make a new source selection decision.  We further recommend that
the agency reimburse PURVIS for the costs of filing and pursuing its
protest, including reasonable attorneys* fees.  PURVIS*s certified claim
for costs, detailing the time spent and cost incurred, must be submitted
to the agency within 60 days of receiving this decision.  4 C.F.R. S
21.8(f)(1)(2004).     

   Anthony H. Gamboa

   General Counsel

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

   [1] PURVIS has raised bases for protest other than those discussed in this
decision; we have considered them and conclude they are without merit. 

   [2] Under this task area, the SOW provides greater detail regarding the
required tasks/deliverables, including:  *[o]btaining or performing
preexercise modeling and/or system performance prediction,* *drafting
scenarios to test specific tactics,* *participating in exercise planning
meetings and conferences,* *incorporating testing and tactical evaluation
of new systems and procedures in the exercise test plan,* and *[p]lanning
minefields and recommending settings for mine simulators.*  Id. 80-81.  

   [3] Under this task area, the SOW provided that the contractor will: 
*[o]versee activities of participating units* data collection officers,*
*take notes on all exercise events,* *present first-impression reports,*
*participate in post-exercise hot washup conferences,* and *draft
post-exercise quick look messages.*  Id. at 81.

   [4] Under this task area, the SOW provided that *[w]ithin 20 days after
the completion of conducting and observing the exercise, the contractor
will produce a draft Exercise Summary Message* which must contain, among
other things, *highlights of the exercise and a preliminary assessment of
results based on observer notes [and additional data gathered during the
exercise].*  Id. at 81.   

   [5] Under this task area, the SOW provided that the contractor will
*combine[] technical expertise and contributions from participating
activities and conduct[] ina**depth analysis of exercise data,* and that
such analysis will include *[d]etection capability evaluation,* *[s]ensor
effectiveness assessment,* and *[t]actical effectiveness assessment.*  Id.
at 82.

   [6] Under this task area, the SOW provided that the contractor*s
responsibilities will include *[e]valuating and comparing data,* and
*selecting and analyzing [measures of effectiveness] MOEs,* and further
states that the contractor  will *draft[] overall program reports for
presentation to program sponsors and at flag level briefings.*  Id. at 83.

   [7] Under this task area, the SOW provided that the contractor will
*meet[] with activity representatives throughout the year to determine the
specific program*s direction for the upcoming year,* and *assist[] the
SHAREM and MIREM officers in devising, presenting and implementing their
6-year plans.*  Id. at 83.

   [8] As initially issued, the solicitation established two subfactors under
the technical performance plan evaluation factor:  oral presentation and
resumes.

   [9] The solicitation directed the offerors to submit contractor
performance data sheets for a maximum of three recent contracts for
services similar to those required under this solicitation.  Id. at
147-48.  Offerors were advised that only *relevant* contracts, as
determined by the agency based on consideration of  scope, complexity and
magnitude, would be considered, and that the number of contracts evaluated
as relevant would be reflected in each offeror*s past performance rating. 
Id. at 157-59.     

   [10] A *neutral* rating could also be assigned under the past performance
factor.

   [11] The third proposal was subsequently withdrawn and is not discussed in
this decision. 

   [12] The number *2* in the rating indicates that only two of the three
contracts Purvis submitted were considered relevant.

   [13] The number *1* in the rating indicates that only one of the three
contracts Northrop Grumman submitted was considered relevant.

   [14] Purvis also protested that the agency*s application of a *(+)* to
adjectival ratings was not consistent with the solicitation provisions. 

   [15] The agency also added quality assurance as a subfactor under the
technical performance plan evaluation factor, and amended the solicitation
to expressly provide for application of a *(+)* or *(-)* to the adjectival
ratings.

   [16] The *3* in the rating indicates that, based on Northrop Grumman*s
submission of new contracts for consideration, all three contracts were
considered relevant.

   [17] The contracting officer noted that Northrop Grumman*s cost was
approximately [deleted] percent lower than PURVIS*s but concluded that,
due to *transition cost risk,* they were considered *absolutely equal* for
cost evaluation purposes.  Agency Report, Tab 39, at 7. 

   [18] In resolving this protest, GAO conducted a hearing on the record,
during which testimony was provided by various government, PURVIS and
Northrop Grumman witnesses, including:  the two contracting officers
involved in this procurement, the TEB Chair, PURVIS* proposed project
manager, Northrop Grumman*s proposed project manager, and another PURVIS
employee.

   [19] At the GAO hearing, the contracting officer who awarded this contract
testified that she relied on the evaluation of the TEB with regard to the
OCI issues.  Tr.A atA 384a**86.

   [20] Secret Internet Protocol Router Network.

   [21] Specifically, the following systems are manufactured by Northrop
Grumman:    AN/AQS-14 Dipping Sonar; AN/SLQ-25B TAS Towed Array Sensor;
AN/SLX-1 MSTRAP Multi-Sensor Torpedo Recognition and Alertment Processor;
An/SQQ-28 Sonobuoy Signal Processor; AN/SQR-19 TACTAS Surface Ship Towed
Array Sonar; LWWAA Lightweight Wide Aperture Array; RAMICS Rapid Airborne
Mine Clearance System; ALMDS Airborne Laser Mine Detection System; COBRA
Coastal Battlefield Reconnaissance and Analysis; AN/AQS-14 Side looking
Sonar; LLSS Laser Line Scan System.  Id.  

   [22] We view it as a matter of public record that Northrop Grumman has
competed with some or all of these four firms, or their successors in
interest, with some frequency. 

   [23] Under the heading *USW Projects under Development by Northrop Grumman
Corporation,* the OCI plan listed the following developmental systems: 
[deleted]. 

   [24] Specifically, Northrop Grumman states that it *does not believe there
is any real *impaired objectivity* conflict because the [SHAREM/MIREM]
exercises do not evaluate the performance of [undersea warfare] systems as
part of the procurement process.*  Id.A atA 4.

   [25]  The record here establishes that the SHARE/MIREM reports are *a data
point* in the procurement process and that *the acquisition community* is
a *customer* of the SHAREM/MIREM programs.  Tr. at 192.  Further, at the
hearing conducted by GAO in connection with this protest, the TEB chair
testified that the SHAREM/MIREM reports *have value [to] and should be
considered by the procurement community.*  Tr. at 338.  Finally, Northrop
Grumman*s OCI plan assumes that *mature, fielded* systems are, by
definition, outside of the procurement process.  The record here reflects
the reality that even *mature, fielded* systems may be subject to the
procurement process.  In this regard, the TEB Chair acknowledged during
the GAO hearing that such systems may be subject to *improvements.*  Tr.
at 97.

   [26] Northrop Grumman*s acknowledgement regarding potential OCI*s created
by evaluation of its *developmental* systems provides further support for
our conclusion, discussed above, that the contract requirements involve
significantly more than objective data measurements.  If the agency*s
assertion in this regard were valid, no OCI concerns would be created even
when Northrop Grumman*s *developmental* systems are being evaluated.

   [27] PURVIS also protests that the agency conducted misleading discussions
by advising PURVIS that it could not submit new material with its final
revised proposal.  Based on this advice, PURVIS maintains that it did not
submit information regarding additional contracts not previously
identified for evaluation under the past performance factor, and was
prejudiced by the fact that the agency permitted Northrop Grumman to
submit additional contracts for evaluation.  We agree that the discussions
were misleading and prejudicial.  As discussed above, PURVIS specifically
asked the agency during discussions whether it could submit *additional
(new) PowerPoint Slides or material, not merely revisions to what was
originally submitted.*  Agency Report, Tab 27, at 2 (italics added).  In a
response provided only to PURVIS, the agency replied *No.*  Agency Report,
Tab 28, at 7.  Although the agency*s response also discussed, in detail,
the agency*s concern with regard to additional PowerPoint slides, its
negative response to PURVIS*s question was not limited to submission of
those slides.  Further, in its subsequent solicitation amendment
addressing this precise matter, the agency specifically stated:  *The word
*new* does not mean additional Power Point slides or material.*  Agency
Report, TabA 31, RFP amend. 6, at 3 (italics added).  On this record,
PURVIS reasonably concluded that it was prohibited from submitting
additional contracts for the agency*s relevance determination.  As
discussed above, the record establishes that the additional contracts
submitted by Northrop Grumman ultimately formed the basis for selection of
Northrop Grumman*s proposal for award.  In light of our recommendation
that the agency reopen discussions with the offerors and seek revised
proposals regarding OCI issues, we recommend that the agency also clearly
advise the offerors that additional past performance contracts may be
submitted for evaluation.