TITLE: Lockheed Martin Corporation, B-295402, February 8, 2005
BNUMBER: B-295402
DATE: February 8, 2005
**********************************************************************
Decision
Matter of: Lockheed Martin Corporation
File: B-295402
Date: February 18, 2005
Marcia G. Madsen, Esq., David F. Dowd, Esq., Michael E. Lackey, Jr., Esq.,
IlanaA Z.A Sultan, Esq., and William L. Olsen, Esq., Mayer, Brown, Rowe &
Maw, for the protester.
Rand L. Allen, Esq., Paul F. Khoury, Esq., Scott M. McCaleb, Esq., Daniel
P. Graham, Esq., and Michael S. Caldwell, Esq., Wiley Rein & Fielding, for
The Boeing Company, an intervenor.
Bryan R. O'Boyle, Esq., Michael J. O'Farrell, Jr., Esq., and P. Alan
Luthy, 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
Where the record shows that performance requirements, and associated
evaluation criteria, were altered to delete a significant requirement and
an evaluation factor under which the protester was viewed as having an
advantage, and a senior procurement official, who was involved in
discussions that culminated in the deletion of the requirement, has
acknowledged bias in favor of the ultimate awardee, the protest is
sustained on the basis that the agency has failed to demonstrate that the
senior official's acknowledged bias did not prejudice the protester and
that the integrity of the procurement process was not compromised.
DECISION
Lockheed Martin Corporation protests various procurement actions taken by
the Department of the Air Force in connection with the small diameter bomb
(SDB) program under request for proposals (RFP) No. F08635-03-R-0038.
Specifically, Lockheed Martin maintains that Darleen Druyun, in her
capacity as the Air Force's Principal Deputy Assistant Secretary for
Acquisition, improperly manipulated certain program requirements and the
related evaluation factors in a manner that favored The Boeing Company and
that, as a result, Boeing won the competition to perform system design and
development (SDD) work under the SDB program.
We sustain the protest.
BACKGROUND
Lockheed Martin's protest relates, generally, to activities that took
place between September 2001 (when Boeing and Lockheed Martin were each
awarded component advanced development contracts under the SDB program)
and August 2003 (when Boeing was selected for award of the SDD contract).
However, the primary focus of the protest relates to activities that took
place during the first few months of 2002 and culminated in the Air
Force's decision to make significant changes to the SDB requirements and
associated evaluation criteria--specifically, the deletion of phaseA II
requirements for capabilities against moving targets.[2]
As a procedural matter, our Office's timeliness rules generally preclude
consideration of protests challenging agency actions, such as these, that
occurred in the relatively distant past. See Bid Protest Regulations, 4
C.F.R. S 21.2 (2004). Here, however, Lockheed Martin's protest is based
on information it first obtained in October 2004 due to the public
disclosure at that time of documents relating to Darleen Druyun's criminal
conviction and sentencing for violation of the conflict of interest
provisions codified at 18A U.S.C. S 208(a) (2000).[3] Since Lockheed
Martin had no reason to previously know of the information disclosed in
those documents, we view the protest as timely.
Druyun's Bias in Favor of Boeing
The record establishes that, in 2000, Druyun contacted personnel at Boeing
to request that Boeing employ her daughter and future son-in-law. Agency
Report, TabA 69, Statement of Facts, at 3-4; Agency Report, Tab 71,
Supplemental Statement of Facts, at 2-4. The record is also clear that,
in response to Druyun's requests, Boeing created a position for Druyun's
daughter and hired both the daughter and future son-in-law in the fall of
2000. In her supplemental statement of facts, signed by both Druyun and
her attorney, and submitted to the Court in connection with her October
2004 criminal plea, Druyun stated:
Defendant acknowledges that Boeing's employment of her future sona**in-law
and her daughter in 2000, at the defendant's request, along with the
defendant's desire to be employed by Boeing, influenced her government
decisions in matters affecting Boeing.
Agency Report, Tab 71, Supplemental Statement of Facts, at 2.
In a footnote referenced at the end of the preceding quotation, that
document further states:
The defendant also acknowledges contacting a senior official of Boeing in
2002 concerning the continued employment of her daughter by Boeing. The
defendant had been told by her daughter that she feared termination by
Boeing for employment performance issues. The defendant contacted a
senior official of Boeing, with whom she was negotiating the KC 767A
tanker lease, to prevent any adverse action by Boeing against her
daughter. The daughter was not terminated and instead was transferred to
a new position. This same senior Boeing official routinely updated the
defendant concerning the daughter's employment with Boeing, for example
advising the defendant of pay increases received by the daughter.[[4]]
Changes to the SDB Performance Requirements and Related Evaluation
Criteria
As discussed above, the agency awarded component advanced development
(CAD) contracts under the SDB program to Boeing and Lockheed Martin in
SeptemberA 2001.[5] The contractors were advised that, during the
24-month performance period of the CAD contracts, the agency intended to
conduct a "rolling downselect evaluation" during which Boeing and Lockheed
Martin would compete, on the basis of their performance under the CAD
contracts, for award of the SDD contract. Agency Report, Tab 12, Source
Selection Plan (Nov. 5, 2001), at 1. Boeing and Lockheed Martin were
advised of the criteria on which the SDD selection would be made; these
criteria included, among others, a factor focusing on the evaluation of
the contractor's capabilities with regard to the phase I fixed target
requirements and a factor focusing on the evaluation of the contractor's
capabilities with regard to the phase II moving target requirements. Id.
at 20-21.
At the hearing conducted by our Office in connection with this protest,[6]
JudyA Stokley, who initially served as the source selection advisory
council (SSAC) chair and was designated as the source selection authority
(SSA) in June 2002, testified that, at least initially, the agency
"envisioned" the use of [deleted] to perform the phase II moving target
requirements. Hearing Transcript (Tr.) atA 396a**98; Agency Report, Tab
31, at 2.[7] The record indicates that early in 2002, Lockheed Martin was
viewed as having an advantage over Boeing with regard to [deleted]. [8]
Further, early in the procurement process, this advantage was interpreted
as a "strength in Phase II" for Lockheed Martin. Specifically, in a
document titled "SDB Program Office Comments," dated January 25, 2002,
that was produced by the Air Force less than 3 weeks before GAO's
statutory deadline for resolution of the protest,[9] the following
statements appear:
ISSUES
.A A A A A A A Users (XOR [Commander, Operational Requirements] Included,
Maybe not CSAF [Air Force Chief of Staff]) See Phase II as Key . . .
Phase I Stepping Stone
.A A A A A A A Lockheed Bid After Seeing 2 Year CAD
--Catch Up on Phase I
--Strength is Phase II
.A A A A A A A Boeing Weak on Phase II
--[deleted]
--[deleted]
Agency Report, Jan. 31, 2005 Document Production, at 6.[10]
Similarly, in briefing documents prepared by the SDB program manager in
connection with briefings given to the Air Force Chief of Staff and the
Secretary of the Air Force on March 12 and March 18, respectively, there
are separate columns for Boeing and Lockheed Martin under the heading
"Relative Contractor Strength (Today)." These documents contain check
marks in Lockheed Martin's column, indicating relative strengths, beside
the terms "[deleted] (Spiral II)" and "[deleted] (Spiral II)." Agency
Report, Tab 23, at 2; Agency Report, Tab 24, at 2. [11]
In May 2002, following several months of meetings, briefings, and
discussions within the Air Force, the Secretary of the Air Force approved
various recommended changes to the SDB program--including the deletion of
phase II requirements regarding moving targets. Agency Report, Tabs 31,
33. [12] Thereafter, the evaluation criteria applicable to the selection
of an SDD contractor were similarly revised to eliminate consideration of
the deleted requirements. Agency Report, Tabs 36(a), 36(b), 41, 43,
111.[13]
In August 2003, Boeing was selected for award of the SDD contract. Agency
Report, Tabs 58-59. Also in August 2003, the Air Force discovered that
"surplus funding may exist" that would facilitate reinstatement of the
phase II requirements related to moving targets. In a Memorandum to the
SDB program office, the Air Force's Director of Requirements stated:
As you are aware, ACC [Air Combat Command] had to defer execution of the
SDB phase II program due to funding constraints within the FY [fiscal
year]A 04 POM [program objective memorandum]. Our position was to pursue
the baseline program to address fixed and stationary targets and defer
mobile, time sensitive targets to the FY 06 POM. My staff has informed me
that surplus funding may exist in the SDB program. My position is to
apply this surplus funding towards the next spiral of SDB, which could
incorporate a terminal seeker, Weapons Data Link (WDL), or both to engage
moving targets.
Agency Report, Tab 55.
In November 2003, the Air Force executed a justification and approval
(J&A) providing for the addition, on a sole-source basis, of the phase II
moving target requirements to Boeing's SDD contract. Agency Report, Tab
62, at 2. [14]
As discussed above, Druyun's admissions regarding her bias in favor of
Boeing were released to the public on or about October 1, 2004. On
October 12, 2004, Lockheed Martin filed various agency-level protests with
the Air Force, challenging the agency's actions in this and other
procurements on the basis that "Druyun acted to favor Boeing . . . in
return for benefits improperly conferred by Boeing at her specific
request." Agency Report, Tab 3(a), at 3. By letter dated November 9, the
Assistant Secretary of the Air Force for Acquisition advised Lockheed
Martin that "[t]he Air Force is of the opinion that the protests . . . are
more appropriately considered by the Government Accountability Office
(GAO)" and that "the Air Force will not decide the protests." Agency
Report, Tab 3(c). Lockheed Martin then filed this protest with our Office
on November 10.[15]
DISCUSSION
In light of the information first learned by Lockheed Martin in October
2004, the firm protests that Druyun "directed or contributed to the
deletion of Phase II with the specific intention of benefiting Boeing,"
and adds that the Air Force's pending action to add phase II to Boeing's
SDD contract on a sole-source basis exacerbates the harm to Lockheed
Martin. Protest at 4.
The Air Force responds that "Druyun did not play any significant role in
the MayA 2002 decision by [the] Secretary [of the Air Force] to change the
SDB technical requirements." Agency Report, Legal Memorandum, at 3. In
our view, as discussed below, the record fails to establish that Druyun
had no significant involvement in the decisionmaking process that
culminated in the changes to the SDB requirements.
The Federal Acquisition Regulation (FAR) provides as follows:
Government business shall be conducted in a manner above reproach and,
except as authorized by statute or regulation, with complete impartiality
and with preferential treatment for none. Transactions relating to the
expenditure of public funds require the highest degree of public trust and
an impeccable standard of conduct. The general rule is to avoid strictly
any conflict of interest or even the appearance of a conflict of interest
in Government-contractor relationships.
FAR S 3.101-1.
In addressing organizational conflicts of interest, our Office has held
that, where the record establishes that a conflict exists, we will presume
that the protester was prejudiced, unless the record establishes the
absence of prejudice. See The Jones/Hill Joint Venture, B-286194.4 et
al., Dec. 5, 2001, 2001 CPD P 194; TDF Corp., B-288392, Ba**288392.2, Oct.
23, 2001, 2001 CPD P 178. Similarly, where, as here, the record
establishes that a procurement official was biased in favor of one
offeror, and was a significant participant in agency activities that
culminated in the decisions forming the basis for protest, we believe that
the need to maintain the integrity of the procurement process requires
that we sustain the protest unless there is compelling evidence that the
protester was not prejudiced. See Department of the Air Force--Request
for Recon., B-234060, Ba**234060.2, Sept. 12, 1989, 89-2 CPD PA 228. As
discussed below, the agency has failed to provide compelling evidence that
Druyun's bias in favor of Boeing did not influence the various decisions
leading to the award of the SDD contract to Boeing.
In an effort to establish that Druyun was not materially involved in the
changes made to the SDB requirements, Dr. Marvin Sambur, former Assistant
Secretary of the Air Force for Acquisition and Druyun's immediate
supervisor during the period in which the changes were made, submitted a
declaration to our Office, stating: "To the best of my knowledge, Mrs.
Druyun had nothing to do with the changes to the SDB requirements."
Agency Report, Tab 79, Sambur Declaration, at 2. Various other
procurement officials submitted similar declarations and, along with the
Assistant Secretary, provided testimony at the GAO hearing.[16] In our
view, the record contradicts the agency's assertion that Druyun was not
materially involved in the process that culminated in the May 2002
changes; to the contrary, the contemporaneous record shows significant
involvement by her in that process.
In addressing the issue of Druyun's involvement, we first consider the
formal matter of who was functioning as SSA--that is, the lead procurement
official for this procurement--during the period leading up to the changes
at issue. Until FebruaryA 2002, Druyun was designated as the SSA for this
procurement. Agency Report, Tab 12, Draft Source Selection Plan (Nov. 5,
2001). [17] At the GAO hearing, Sambur, the former Assistant Secretary,
testified that in February 2002, he removed Druyun as the SSA, designating
himself as the SSA in her place. Tr. at 37; Agency Report, TabA 79 at 1.
Sambur further testified that, in June 2002, he appointed Stokley,
previously the SSAC chair, to be the SSA. Tr. at 38; Agency Report, Tab
79, at 2. Notwithstanding his own designation as the SSA, Sambur
acknowledged during the GAO hearing that: "I never acted as an SSA, never
made any decisions in that part." Tr. at 55. Rather, Sambur maintained
that Stokley was actually functioning as the SSA after February 2002.[18]
However, Stokley's testimony regarding her activities prior to June 2002
conflicts with Sambur's. Specifically, Stokley testified that she
functioned as the SSAC chair from February through June 2002, that Sambur
was the SSA, and that she was "very surprised" when Sambur advised her,
during a meeting in June, that he did not want to be the SSA. She further
testified that she considered her appointment to the SSA position in June
to be a "major change"[19] and that, as a result of that appointment, she
"had a much different level of responsibility." Tr.A atA 266-71.
In short, the record shows that Sambur believed Stokley was performing the
SSA duties from February through June 2002, while Stokley believed Sambur
was performing those duties during this period.[20] In reality, the
contemporaneous record suggests that, in the absence of either Sambur or
Stokley stepping into the SSA's role and performing the functions of the
lead acquisition official during that period, Druyun continued to perform
those functions--in much the same manner as she had before
FebruaryA 2002.[21]
Specifically, the record demonstrates multiple examples of Druyun's
significant involvement in activities during the period leading up to the
May 2002 SDB changes. For example, in late January 2002, Druyun received
a briefing from Boeing regarding the potential to accelerate the SDB
performance requirements. Agency Report, TabA 14, Boeing Briefing Slides.
[22] Following that meeting, Druyun issued a "tasker" to the source
selection evaluation team chair to "put together an accelerated program
for SDB to present to [the Air Force Chief of Staff] by the end of
[February]." Agency Report, Tab 19. [23] The SDB program office
subsequently complied with Druyun's "tasker" without further checking with
Sambur. Tr. at 699a**700.
Notwithstanding her formal removal as the SSA in February, Druyun met with
Lockheed Martin personnel in early March to discuss their capabilities to
accelerate the SDB program. Agency Report, Tab 21, Lockheed Martin
Briefing Slides. Despite the fact that program acceleration was a
"massive priority," Sambur was unaware of the meeting between Druyun and
Lockheed Martin. Tr. at 83. The record further shows that Druyun
reviewed an advance version of the acceleration briefing provided by the
SDB Program Director to the Air Force Chief of Staff, before it was
presented to Sambur and, again, that Sambur was unaware that Druyun had
been so briefed. Agency Report, Tab 112; Tr. at 109-10.
The record further shows that, on April 24, the ACC's representative for
the SDB program provided separate briefings to Druyun and Sambur regarding
the pending changes to the SDB requirements. Druyun was briefed first,
early in the morning; Sambur received the same briefing later in the day.
Agency Report, Tab 124, at 51; Tr. at 583-84. Among other things, those
briefings stated that Lockheed Martin's [deleted]; one of the slides from
this briefing states: [deleted]. Agency Report, Tab 127, at 14, Air
Force Briefing Slides. [24]
As noted above, an independent technical review of the [deleted] was
conducted; despite the fact that Druyun no longer had any formal
responsibility with regard to this procurement, she initiated that
review. Agency Report, Contracting Officer's Statement, at 8; Agency
Report, TabA 126, at 4; Tr. at 310, 674, 719. [25] Although the specific
results of that evaluation are "highly classified," Tr. at 740, and were
not reviewed in the context of our Office's bid protest proceedings, at
the hearing Stokley testified that the independent review concluded that
Lockheed Martin's technology [deleted],[26] and that the [deleted] was
communicated to Druyun prior to the time the changes were made to the SDB
requirements. Tr. at 311, 313.
The record further indicates that the Druyun-directed technical evaluation
was the basis for imposing an accuracy requirement of "4 meters or better"
into the evaluation criteria, and that this requirement was imposed over
the objections of ACC officials, that is, the user community. Tr. at
619-20. [27] Specifically, in a Memorandum for the Record created by the
SDB program manager summarizing the final decision regarding the changes
to the requirements, the program manager states:
Several changes were directed:
. . . .
Bring more accuracy to Phase I . . . . Pursuant to a previous independent
tech[nical] eval[uation] by [deleted] (Ex DARPA consultant) and Mrs.
Darleen Druyun, based on risk, this number was decided to be 4 meters or
better Total Weapon System Delivery Accuracy.
Agency Report, Tab 126, at 4.[28]
Finally, the record indicates that Druyun contacted Raytheon and requested
that Raytheon communicate with Boeing, and that subsequently Boeing
proposed to include Raytheon in its efforts to meet the SDB
requirements.[29] The record indicates that, in fact, Raytheon provided
support to Boeing in proposing to meet the SDB requirements. A Boeing
presentation to the Air Force, made in September 2002, included the
following statements:
.A A A A A A A Raytheon Involvement
--Independent Confirmation of our Trades
--Additional Resources and Expertise will be Brought
to the SDB Program
Agency Report, Tab 91(c), at 2.
Based on the record discussed above, we reject the agency's assertion that
Druyun was not materially involved or influential in the process leading
up to the SDB program changes made in May 2002.[30]
CONCLUSION
We briefly summarize here the key points that the record establishes in
this protest: Druyun felt "indebted" to Boeing; the SDB program initially
contemplated an evaluation of the offerors' capabilities against moving
targets; early in the process, Lockheed Martin was perceived as having a
"strength" and Boeing was considered "weak" with regard to the moving
target requirements; most of the requirements associated with moving
targets and the associated evaluation factors were subsequently deleted;
Druyun had significant involvement in the decisionmaking process that
culminated in the deletion of the moving target requirements; Boeing was
selected for award without consideration of its capabilities regarding the
deleted requirements; and the agency is in the process of adding the
previouslya**deleted requirements to Boeing's contract on a sole-source
basis.
As noted above, where, as here, the record establishes that a procurement
official was biased in favor of one offeror, our Office believes that the
need to preserve the integrity of the procurement process requires that
the agency demonstrate that the protester was not prejudiced by the
procurement official's bias in order for our Office to deny the protest.
Here, in defending against Lockheed Martin's protest, the agency has
maintained that Druyun had no significant involvement or influence in the
agency's decisionmaking process leading up to the May 2002 changes and,
further, that only the ACC, the user community--not the acquisition
community of which Druyun was a part--was in a position to make
determinations regarding the contract requirements. As discussed above,
the record in this case does not provide persuasive support for either
position.[31]
On this record, the agency has failed to demonstrate that Lockheed Martin
was not prejudiced by Druyun's acknowledged bias. The protest is
sustained.
[32]
With regard to the phase I requirements, Lockheed Martin notes that a
substantial portion of the contract has already been performed;
accordingly, Lockheed Martin requests that we recommend that Lockheed
Martin be reimbursed for the proposal preparation costs it expended in
competing for the SDD contract.[33] As explained below, we decline to
recommend recovery of Lockheed Martin's proposal preparation costs at this
time.
In reviewing the record submitted by the agency in response to Lockheed
Martin's protest, counsel for Boeing expressed concern regarding potential
conflict of interest issues relating to a Lockheed Martin employee, former
Air Force Brigadier General [deleted]. Until [deleted] 2001, [deleted]
was the [deleted], for the user community for the SDB program. In
[deleted] 2001, [deleted] retired from the AirA Force and immediately
thereafter began employment with Lockheed Martin. In [deleted] 2002,
[deleted] was appointed [deleted] for Lockheed Martin's [deleted], where
he was responsible for supervising Lockheed Martin's efforts to [deleted]
and "regularly attended briefings and meetings with Air Force officials
regarding the SDB program." Tr. at 537; Lockheed Martin's Comments on
Agency Report, exh. 7, Declaration of [deleted], at P 2. In light of his
SDB-related responsibilities prior to retiring from the Air Force in
[deleted] 2001, and his SDB-related role on behalf of Lockheed Martin
after [deleted] 2002, GAO requested that he appear and testify at the
hearing conducted in connection with this protest.
At the hearing before our Office, [deleted] testified that, before
retiring from the Air Force, he requested and received what is referred to
as a "30-day letter" regarding post-employment restrictions from the Air
Force Staff Judge Advocate (SJA).[34] In that letter the SJA provided
certain opinions and advice regarding the statutory provisions of 41
U.S.C. S 423 (2000) and 18 U.S.C. S 207(c), (f) (2000).[35] In addition,
following the SJA's discussion of those statutes, the "30-day letter"
stated:
Restrictions under other laws that have not been addressed in this opinion
may apply to you (Attachment).[[36]] In particular, the facts contained
in your letter suggest that the post-government employment restrictions of
Title 18, United States Code, Section 207(a)(1) and/or Section 207(a)(2)
may apply to you with respect to your employment with any company.[[37]]
If you have any questions regarding conflict of interest or
post-retirement provisions, you may contact us or your nearest
installation staff judge advocate for assistance.
Letter from Air Force SJA to [deleted] ([deleted] 2001).
At the GAO hearing, [deleted] testified that, notwithstanding the
above-quoted advice within the "30-day letter" that "Restrictions under
other laws that have not been addressed in this opinion may apply to you"
and that notwithstanding the specific reference to the restrictions of 18
U.S.C. S 207(a)(1), (a)(2), he was subsequently advised, orally, by the
SJA "not to worry about it," and that these provisions were only put into
the letter to "Cover their butt." Tr. at 495. [38]
[deleted] also testified that, to his recollection, Lockheed Martin never
requested that he identify the particular matters in which he was
personally and substantially involved, or which were under his official
responsibility during the period preceding his retirement from the Air
Force, nor did Lockheed Martin raise the issue of his compliance with the
requirements of 18 U.S.C. S 207(a)(1) and (a)(2) in any way. Tr.A at
497-98.
Subsequently, at the GAO hearing, counsel for Boeing questioned [deleted]
regarding attendance at an Acquisition Strategy Planning (ASP) meeting for
the SDB program that was conducted by Druyun on April 10, 2001. [deleted]
testified that he was not sure whether he attended this meeting, but he
did recall attending a meeting with Druyun in which the small diameter
bomb was discussed. With regard to that meeting, [deleted] testified, "I
did not participate in that discussion." Tr. at 500.
Following the GAO hearing, the agency produced a document titled
"Acquisition Strategy Panel (ASP) Minutes[,] Small Diameter Bomb (SDB)[,]
10 April 2001, SAF/AQ Conference Room." Agency's Jan. 31, 2005 Document
Production, at 1a**3. Under the heading, "Major Discussion Items," this
document states: "The purpose of the ASP was to review the acquisition
strategy for the Small Diameter Bomb program. These minutes will follow
the sequence of the slides as presented, but will only address those
slides where significant discussion occurred, or where action items were
assigned." ASP Minutes at 1. Following this statement, the following
entries appear:
Slide 7: General [deleted] discussed the possibility of identifying
weapon effectiveness as a Key Performance Parameter (KPP), in addition to
loadout and interoperability. Given the stage of the program, however, it
was determined that staying with just the two KPPs would be the best
strategy.
. . . .
Slide 25: . . . Gen [deleted] indicated that the Navy will not have
internal carriage capabilities for several years and if the Navy
determines that there is a need to integrate SDB on the F-14 or F-18, the
external integration would not be significantly different than that of the
F-15 or F-16.
. . . .
Slide 28: Gen [deleted] reiterated that weapon effectiveness will remain
a requirement, but will not be designated as a KPP.
. . . .
Slide 31: Gen [deleted] expressed an interest in moving the Phase I
schedule to the end of FY05, but realizes the funding and production
ramp-rate are limiting an earlier production date.
. . . .
Slide 38: Gen [deleted] indicated that a combined DT and OT for SDB will
be moved to Eglin, and that there will be no duplication in OT of tests
completed in DT.
ASP Minutes at 1-2.
Whether or not [deleted] violated the post-employment restrictions of
18A U.S.C. S 207 is not within the purview of our bid protest regulations,
because 18A U.S.C. S 207 is a criminal statute and its interpretation and
enforcement, and the interpretation and enforcement of related
regulations, are matters for the procuring agency and the Department of
Justice. Technology Concepts and Design, Inc., Ba**241727, Feb. 6, 1991,
91-1 CPD P 132 at 4. Based on all of the above, however, we have concerns
regarding the propriety of [deleted] involvement in Lockheed Martin's
efforts to win the SDD contract; his allegation that the Air Force SJA
told him "not to worry" about the post-employment restrictions imposed by
18 U.S.C. SA 207(a)(1), (a)(2); and his statement that Lockheed Martin
failed to discuss posta**employment restriction issues with [deleted].
Accordingly, we recommend that the Air Force perform a thorough review of
this matter and report its findings back to this Office. Pending our
receipt of that review, we decline to recommend reimbursement of Lockheed
Martin's proposal preparation costs. We will entertain a renewed request
from Lockheed Martin regarding payment of such costs following our receipt
of the Air Force review of this matter. However, we do recommend that
Lockheed Martin be reimbursed its costs of filing and pursuing this
protest, including reasonable attorneys' fees. Lockheed Martin should
submit its certified claim for costs, detailing the time expended and
costs incurred, directly to the contracting agency within 60 days after
the receipt of this decision. Bid Protest Regulations, 4A C.F.R. S
21.8(f)(1).
Anthony H. Gamboa
General Counsel
------------------------
[1] At the time of inception, the SDB program contemplated development of
a "miniature munition" weapon system to provide fighter and bomber
aircraft with aira**to-surface capabilities to attack "fixed and
mobile/relocatable targets." Agency Report, Tab 82, Draft Operational
Requirements Document, at 1. Consistent with the initial intent to use
the SDB against both fixed and moving targets, the agency's initial source
selection plan contemplated a two-phase effort, stating: "The Phase 1
variant will provide a capability against fixed targets, while the Phase 2
variant will provide a capability against mobile/relocatable targets."
Agency Report, Tab 12, Source Selection Plan (Nov. 5, 2001), at 1.
[2] Lockheed Martin maintains that it agreed to participate in the SDB
competition only after being assured that the program would include a
moving target variant. Lockheed Martin's Comments on Agency Report, exh.
2, [deleted].
[3] In April 2004, Druyun initially pled guilty in the United States
District Court for the Eastern District of Virginia to violating the
provisions of 18 U.S.C. SA 208(a), which prohibit an officer or employee
of the United States Government from "participat[ing] personally and
substantially as a Government officer or employee . . . in a .A . .
contract . . . in which, to his knowledge . . . [an] organization with
whom he is negotiating or has any arrangement concerning prospective
employment, has a financial interest." Agency Report, Tabs 67-70. In
connection with that April 2004 plea agreement, Druyun submitted a
statement of facts disclosing that, in OctoberA 2002, Druyun met with a
Boeing executive to negotiate Druyun's subsequent employment by Boeing.
(Druyun retired from the Air Force in November 2002 and began employment
with Boeing in January 2003.) At the time of the October 2002 secret
meeting, Druyun was also negotiating with Boeing on behalf of the Air
Force for the lease of 100 Boeing KC 767A tanker aircraft. Agency Report,
Tab 70, at 30. In submitting her April 2004 plea, Druyun's position, as
subsequently described by the Court, was that her actions constituted
"more or less a technical violation [of the law]" in that she had always
acted in the best interests of the United States. Agency Report, Tab 72,
Sentencing Hearing Transcript (Oct. 1, 2004), at 13. Nonetheless, as part
of her April 2004 plea agreement, Druyun agreed to take a polygraph
examination. Following that examination, Druyun's position regarding the
nature of her actions changed dramatically, as discussed in more detail
below. On October 1, 2004, Druyun again submitted a plea agreement in
connection with her violation of 18A U.S.C. S 208(a); with that plea, she
submitted a supplemental statement of facts. Agency Report, Tabs 71-72.
Various documents associated with the October 2004 criminal proceedings,
including the supplemental statement of facts, were released to the public
on October 1 or shortly thereafter.
[4] In addition to the statements quoted above, documents associated with
the October 2004 criminal proceeding reflect Druyun's statements that, in
negotiating the lease agreement for the Boeing KC 767A tanker aircraft,
Druyun "agreed to a higher price for the aircraft than she believed was
appropriate," Agency Report, Tab 71, Supplemental Statement of Facts, at
2-3; that as "chairperson for the NATO Airborne Early Warning and Control
Program Management Board of Directors," Druyun "negotiated a payment of
100 million dollars to Boeing" although "she believed a lower amount to be
an appropriate settlement," explaining that Druyun's agreement to the $100
million settlement payment "was influenced by her daughter's and
sona**ina**law's relationship with Boeing," id. at 3; that in selecting
Boeing for award of a contract to upgrade the avionics of the C-130
aircraft, Druyun was "influenced by her perceived indebtedness to Boeing
for employing her future son-in-law and daughter," id.; and that Druyun's
agreement to pay approximately $412 million in connection with a
settlement with Boeing concerning "the Ca**17 H22 contract clause .A . .
was influenced by Boeing's assistance to [Druyun]." Id. at 3-4.
[5] Award of the CAD contracts to Boeing and Lockheed Martin resulted from
a procurement conducted as a full and open competition.
[6] In resolving this protest, our Office conducted a hearing, on the
record, at GAO headquarters in Washington, DC on January 11 and 12, 2005.
At the hearing, five government witnesses and one Lockheed Martin witness
provided testimony.
[7] Stokley explained that a [deleted].
[8] In this regard, the SDB program manager testified that "Lockheed would
have more inherent knowledge of [deleted]. Tr.A atA 707. In addition to
Lockheed Martin's "more inherent knowledge" regarding [deleted], the
record indicates that Lockheed Martin possessed alternative technology,
referred to as [deleted].
[9] This document is one of several the agency failed to produce in a
timely manner. The protest was filed on November 10, 2004 and, consistent
with GAO's Bid Protest Regulations, all of the agency's documents relevant
to the protest issues were required to be submitted by December 13.
Competition in Contracting Act of 1984, 31 U.S.C. S 3553(b)(2)(A) (2000);
4 C.F.R. S 21.3(c). Although this document was in the possession of the
SDB program manager, who testified at the hearing, this particular
document, along with a significant number of additional documents, was not
produced to GAO and to counsel for the protester until January 31,
2005--nearly 2A weeks after the conclusion of the GAO hearing. The result
was that counsel for the protester was unable to meaningfully question the
agency witnesses regarding this and many other late-produced documents.
[10] Notwithstanding the clear statement that Lockheed Martin's "Strength
is Phase II" and that "Boeing [is] Weak on Phase II," the agency now
maintains that neither offeror was ever perceived as having an advantage
with regard to the phase II requirements. See, e.g., Tr. at 755-56.
Based on our review of the entire record, we give greater weight to this
and other contemporaneous documents discussed here than to the agency's
posta**protest position.
[11] There is no dispute that the term "spiral II" refers to the phase II
requirements of the SDB program. See, e.g., Tr. at 705-08.
[12] The September 11, 2001 terrorist attacks precipitated various changes
to the Department of Defense's (DOD) prioritization of various programs.
At the direction of DOD, following the terrorist attacks, the Air Force
scrutinized various programs, including the SDB program, in anticipation
of reduced available funding. The agency states that the May 2002 changes
to the SDB program reflected a $385 million projected funding shortfall,
due to the DOD-directed reprioritization. Agency Report, Tabs 75-76, 79.
At the time the phase II requirements were deleted, the Air Force also
changed the carriage system from a six-place rack to a four-place rack,
deleted the Ba**1 bomber from the program, and imposed a phase I accuracy
requirement. Agency Report, Tab 33, E-mail from SDB Program Manager.
[13] The revised evaluation criteria considered the offerors' provision of
a path to a moving target attack capability on a pass/fail basis. Agency
Report, Tab 41.
[14] In June 2003, the agency had executed a "class J&A," that provided
for the solea**source award of "future spiral development activities," but
did not refer to moving targets. Agency Report, Tab 50.
[15] On November 10, Lockheed Martin also submitted a protest challenging
various actions regarding the Air Force procurement to upgrade the
avionics of the C-130 aircraft. We are addressing the issues raised in
that protest in a separate decision.
[16] In contrast to the clear recollection that agency witnesses fairly
uniformly had that Druyun had no significant input to, or material
involvement in, the decisionmaking process that culminated in the changes
at issue here, those witnesses frequently were unable, when confronted
with documentary evidence indicating Druyun's apparent input or
involvement, to recall specific details surrounding various meetings,
briefings or other communications. See, e.g., Tr.A atA 73, 83, 86-87, 89,
111, 297-98, 301, 303, 317, 324, 325-26, 341, 353, 627, 702, 710, 716-17,
728, 746. The witnesses' limited ability to recall specific information
regarding the ultimate conclusions they assert leads our Office to place
correspondingly limited weight on their unsupported conclusory
assertions. Our decision primarily relies on the contemporaneous records
that have been produced to date, including e-mails, notes, and memoranda,
which indicate Druyun was materially involved in the decisionmaking
process.
[17] Druyun had been the SSA for the preceding CAD procurement.
[18] In this regard, Sambur testified as follows:
Sambur: I actually did nothing with making any decision in terms of who
was selected in any shape or form.
GAO: Okay. But other than the final source selection decision, an SSA is
involved in the procurement prior to that time.
Sambur: But Judy Stokley was basically--Judy Stokley was doing all of the
SSA work.
. . . .
GAO: So it's your testimony that from February 2002 on, Judy Stokley was,
in effect, the SSA?
Sambur: In effect, she held the meetings, and she reported to me if she
felt there was anything unusual.
GAO: And you did not--again, just to summarize your testimony, you did
not perform any SSA functions during that period?
Sambur: No.
Tr. at 55-56.
[19] She elaborated, "I was sitting there with my brain spinning." Tr. at
270.
[20] Druyun was Stokley's immediate supervisor during this period. Tr. at
276.
[21] It is clear that Druyun was not reluctant to assert herself. Sambur
testified that Druyun performed her duties in a "very unique" manner,
elaborating that she had a "dictatorial management style" and "was not the
[kind of] person who usually said [*]mother, may I[?']" Tr. at 76, 169.
[22] Lockheed Martin was subsequently given a similar opportunity.
[23] The contracting officer describes this action, stating that Druyun
"directed" the SDB program office to "determine if both Lockheed Martin
and Boeing had acceleration strategies." Agency Report, Contracting
Officer's Statement, at 7.
[24] In an e-mail dated April 25, sent by Stokley to a recipient list that
began with Druyun, Stokley attached a proposed memorandum to be sent to
the Secretary of the Air Force and his Chief of Staff summarizing the
then-potential changes to the SDB requirements and asking the e-mail
recipients to "Please let me know if I have missed any key points." Among
other things, the draft memorandum to the Secretary and the Chief of Staff
stated: "[W]e also conducted an independent review of the [deleted] that
[deleted] Lockheed currently has . . . . Our review determined that
[deleted]. Agency Report, TabA 120, at 39. On April 26, the memorandum
was sent to the Secretary of the Air Force summarizing the proposed
changes; however, the above-quoted portion of the draft memorandum was
changed to read as follows: "[W]e also conducted an independent review of
the [deleted] that [deleted] Lockheed currently has . . . . Our review
determined that [deleted]. Agency Report, Tab 120, at 6-7. At the GAO
hearing, none of the witnesses could recall who was responsible for this
change.
[25] At the GAO hearing, the SDB program manager testified that [deleted]
. . . after the contractors departed . . . she [Druyun] had us stick
around, and she directed that we hire a guy named [deleted] to go do an
independent [evaluation]. That is my recollection." Tr. at 720. At the
hearing, Stokley testified that independent technical reviews are "quite
typical," maintaining "we have lots of independent reviews and independent
assessments." Tr. at 315. Stokley was, however, unable to identify any
other independent technical review that had been conducted during the SDB
procurement. Tr. at 316.
[26] Similarly, the ACC representative for the SDB program testified that
the independent technical review concluded that [deleted]. Tr. at 618.
[27] At the GAO hearing, the ACC representative testified that there was a
"disagreement" over the imposition of the 4-meter CEP requirement and that
this "has been a touchy subject for some time." Tr. at 619, 622. The
user community believed that an alternative measure for accuracy, referred
to as "weapons effectiveness," should have been used. Id.
[28] In the context of maintaining that Druyun was not materially involved
or influential with regard to the SDB program changes, the Air Force has
argued that the user community, that is, the ACC, was solely responsible
for determining the SDB requirements, and since Druyun was not part of the
ACC, she could not have influenced the requirements. Tr. at 31-35. While
it may be true that the user community generally determines requirements,
it appears this principle was not strictly followed with regard to the SDB
requirements. The above discussion regarding the imposition of the
4-meter accuracy requirement "[p]ursuant to" the Druyun-directed technical
evaluation--over the disagreement of the ACC user community--demonstrates
the inaccuracy of the agency's assertion that Druyun could not have
affected the requirements because she was not part of the ACC user
community.
[29] At the GAO hearing, the SDB program manager testified as follows:
Counsel: Do you have any knowledge of a contact by Mrs. Druyun to
Raytheon regarding an accuracy approach for Boeing for SDB?
Program Manager: I have--I received a phone call from the Boeing program
manager asking why would Druyun be calling them--or asking Raytheon to
come talk to Boeing. . . .
Tr. at 745.
[30] The record includes an additional document suggesting that Druyun was
involved in the SDB procurement. In responding to Lockheed Martin's
protest to our Office, the Air Force forwarded to us a letter [deleted].
[31] We agree that the record does not establish that, but for Druyun's
involvement, the May 2002 changes would not have been made or that, absent
the changes, Lockheed Martin would have won the competition.
[32] In light of the passage of time, it may be that offerors other than
Lockheed Martin and Boeing have capabilities to meaningfully compete for
these requirements; accordingly, our recommendation does not reflect any
position on whether the competition should be limited to Lockheed Martin
and Boeing. Rather, at this point, we defer to the agency's reasonable
discretion to determine whether inclusion of other potential competitors
is feasible and otherwise appropriate.
[33] We note that, because the source selection decision regarding the SDD
contract was based on Boeing's and Lockheed Martin's performance under
their respective CAD contracts, and that Lockheed Martin has already been
compensated for its CAD performance, there is some question as to what
additional costs, if any, would be properly recoverable.
[34] In [deleted] letter to the SJA, requesting the "30-day letter,"
[deleted] stated: "In no case in the last year have I personally been
involved with a source selection nor has anyone who reports to me directly
been involved with a source selection." Letter from [deleted] to Air
Force ([deleted] 2001) at 2.
[35] There does not appear to be any issue regarding [deleted] compliance
with the requirements of 41 U.S.C. S 423 and 18 U.S.C. S 207(c), (f),
which impose 1-year restrictions on certain activities.
[36] At the bottom of the letter, the following notation appeared:
"Attachment: Pre- and Post-Employment Restrictions." At the GAO hearing,
[deleted] testified "I do not recall getting an attachment [with the
letter]." Tr. at 496.
[37] The provisions of 18 U.S.C. S 207(a)(1) impose a permanent
restriction with regard to an officer or employee of the United States
who, after termination of his or her employment with the United States,
makes any communication intended to influence a United States government
employee in connection with "a particular matter" in which the former
officer or employee "participated personally and substantially as such
officer or employee" and "which involved a specific party or specific
parties at the time of such participation." Similarly, the provisions of
18 U.S.C. S 207(a)(2) impose a 2-year restriction with regard to an
officer or employee of the United States who makes a communication
intended to influence a United States government employee in connection
with a "particular matter" which the former officer or employee "knows or
reasonably should know was actually pending under his or her official
responsibility as such officer or employee within a period of 1 year
before the termination of his or her service or employment with the United
States," and "which involved a specific party or specific parties at the
time it was so pending."
[38] In this regard, [deleted] testified as follows:
GAO: Then the next paragraph says "Restrictions under other laws that
have not been addressed in this opinion may apply to you (attachment)."
What did you think that sentence meant?
[deleted]: When I asked [the SJA] about that, my recollection of the
conversation was that is a paragraph that we have to put in there to cover
their--I don't know how to put this politely.
GAO: You're thinking the word "butt"? . . . .
[deleted]: Cover their butt because of the breadth of this code. He told
me--I was advised not to worry about it.
GAO: So your interpretation was that this sentence had no application to
you?
[deleted]: That's correct, that once I got through the one year
[restrictions imposed by 41 U.S.C. S 423 and 18 U.S.C. S 207(c) (f)],
there were no other known restrictions.
Tr. at 494-95.