TITLE: B-296860.3, Honeywell Technology Solutions, Inc.--Costs, December 27, 2005
BNUMBER: B-296860.3
DATE: December 27, 2005
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B-296860.3, Honeywell Technology Solutions, Inc.--Costs, December 27, 2005

   Decision

   Matter of: Honeywell Technology Solutions, Inc.--Costs

   File: B-296860.3

   Date: December 27, 2005

   Anne B. Perry, Esq., and Charmaine A. Howson, Esq., Sheppard Mullin
   Richter & Hampton LLP, for the protester.

   Charles G. Steenbuck, Esq., and Greggory L. Edefsen, Esq., Department of
   the Navy, for the agency.

   Edward Goldstein, Esq., and Christine S. Melody, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Where Government Accountability Office (GAO) attorney, in conducting
   outcome prediction alternative dispute resolution (ADR), advised parties
   that protest issue related to organizational conflict of interest would
   likely be sustained (which led agency to take corrective action that
   rendered entire protest academic), but GAO attorney did not address other,
   separate issues raised by protest, GAO does not recommend reimbursement of
   costs associated with the unresolved issues, which were severable from the
   organizational conflict of interest issue addressed during ADR.

   DECISION

   Honeywell Technology Solutions, Inc. requests that our Office recommend
   that it be reimbursed the costs of filing and pursuing an initial and a
   supplemental protest challenging the award of a contract to Assurance
   Technology Corporation (ATC) under request for proposals (RFP) No.
   N00173-04-R-LS02, issued by the Department of the Navy, Naval Research
   Laboratory, for technical and engineering support services. Because the
   agency has agreed to pay the costs associated with one of the bases of
   protest, which our Office's attorney identified as clearly meritorious in
   the context of an "outcome prediction" alternative dispute resolution
   (ADR) conference, the issue for our Office is whether the protester's
   reimbursement should be limited to that single issue.

   We deny the request.

   Honeywell filed a timely protest with our Office challenging the Navy's
   award of the technical and engineering support services contract to ATC.
   In its protest, Honeywell raised numerous challenges to the agency's award
   decision including: (1) ATC had material organizational conflicts of
   interest (OCI) that ATC failed to disclose and the Navy failed to identify
   or evaluate; (2) the Navy failed to properly evaluate proposals in
   accordance with the evaluation factors; (3) the Navy's price realism
   analysis was unreasonable; and (4) as a consequence of these errors, the
   Navy's price/technical tradeoff was flawed.

   With regard to the OCI concerns, Honeywell raised two issues stemming from
   ATC's performance of a separate Navy space systems development department
   (SSDD) contract, No. N00173-01-C-2006. First, Honeywell asserted that ATC
   had obtained non-public proprietary cost and technical data in connection
   with Honeywell's performance as the incumbent contractor for the technical
   and engineering support services contract, which provided ATC with an
   unfair competitive advantage in the procurement at issue. According to
   Honeywell, ATC learned this information as a result of ATC's program
   management activities under the SSDD contract. Second, Honeywell
   maintained that in performing the SSDD contract, ATC would be required to
   supervise a significant portion of its own work under the technical and
   engineering support services contract, thus creating an "impaired
   objectivity" conflict of interest. Protest at 13. With regard to the
   second OCI issue, Honeywell argued that the Navy's technical and price
   evaluation were compromised because the Navy did not consider the impact
   associated with mitigating ATC's conflict. Id. at 17.

   After receipt of the agency report, Honeywell filed its comments, in which
   it continued to argue the issues raised in its initial protest and also
   raised a supplemental basis of protest--that the Navy had improperly
   conducted pre-award discussions only with ATC. At the request of our
   Office, the agency filed a supplemental agency report addressing the
   supplemental protest issue as well as the arguments raised in Honeywell's
   comments. After receipt of Honeywell's comments on the supplemental
   report, our Office held what we refer to as an "outcome prediction"
   alternative dispute resolution (ADR) conference, in which the GAO attorney
   told the parties that it was his view that the protest was likely to be
   sustained with regard to the first OCI issue. At the conference, the GAO
   attorney expressed the view that the record demonstrated that ATC had
   obtained Honeywell's proprietary information in connection with
   Honeywell's performance of the incumbent technical and engineering support
   services contract and that this information was obtained as a consequence
   of ATC's performance of its SSDD contract. The record further indicated
   that the agency did not recognize this issue until after Honeywell had
   filed its protest and that no measures had been taken to mitigate the
   conflict. The parties were advised that we have found awards improper
   where agencies have failed to recognize conflicts and failed in their
   obligations under the Federal Acquisition Regulation to identify and
   evaluate potential conflicts and to take appropriate measures to resolve
   them. See Purvis Sys., Inc., B-293807.3, B-293807.4, Aug. 16, 2004, 2004
   CPD para. 177; Science Applications Int'l Corp., B-293601 et al., May 3,
   2004, 2004 CPD para. 96.

   In addition, during the ADR conference, the GAO attorney identified areas
   of concern, which, in the event the case proceeded to a written decision,
   would require further development through a hearing. Specifically, the GAO
   attorney indicated that a hearing would be required to more fully develop
   the record concerning the second OCI issue, as well as particular
   technical evaluation and price realism issues raised by Honeywell. Because
   further development of the record was required, no opinion was given
   regarding the likely outcome of these issues, although the GAO attorney
   framed his concerns regarding these issues for the parties in the event a
   hearing proved necessary.[1] No other issues were discussed.

   After the ADR conference, the Navy submitted a letter to our Office
   indicating that it would take corrective action by conducting "a
   supplemental review of the proposals . . . . Particular regard will be
   given to the issues of: organizational conflicts of interest (OCI) (of
   both the "unfair competitive advantage" and "impaired objectivity"
   types)[.]" Letter from Navy to GAO, Sept. 26, 2005. In addition, the
   letter indicated that the supplemental review of the proposals would also
   consider the technical and price realism issues specifically discussed
   during the ADR conference, which, as noted above, would have required
   further development by our Office, in the absence of the Navy's corrective
   action. Based on the proposed corrective action, we dismissed the protests
   as academic.[2]

   As a general rule, we consider a successful protester entitled to costs
   incurred with respect to all issues pursued, not merely those upon which
   it prevails. In our view, limiting recovery of protest costs in all cases
   to only those issues on which the protester prevailed would be
   inconsistent with the broad, remedial Congressional purpose behind the
   cost reimbursement provisions of the Competition in Contracting Act. AAR
   Aircraft Servs.--Costs, B-291670.6, May 12, 2003, 2003 CPD para. 100 at 9;
   TRESP Assocs., Inc.--Costs, B-258322.8, Nov. 3, 1998, 98-2 CPD para. 108
   at 2. Nevertheless, failing to limit the recovery of protest costs in all
   instances of partial or limited success by a protester may result in an
   unjustified windfall to the protester and cost to the government.
   Accordingly, in appropriate cases we have limited the recommended
   reimbursement of protest costs where a part of the costs is allocable to a
   losing protest issue that is so clearly severable as to essentially
   constitute a separate protest. See, e.g., ProTech Corp., B-294818, Dec.
   30, 2004, 2005 CPD para. 73 at 7 n.10; TRW, Inc.--Costs, supra; Interface
   Floorings Sys., Inc.--Claim for Attorneys' Fees, B-225439.5, July 29,
   1987, 87-2 CPD para. 106 at 2-3.

   In determining whether protest issues are so clearly severable as to
   essentially constitute separate protests, we consider, among other things,
   the extent to which the claims are interrelated or intertwined--i.e., the
   successful and unsuccessful claims share a common core set of facts, are
   based on related legal theories, or are otherwise not readily severable.
   See Department of the Army--Modification of Remedy, B-292768.5, Mar. 25,
   2004, 2004 CPD para. 74 at 2-3; Sodexho Mgmt., Inc.--Costs, B-289605.3,
   Aug. 6, 2003, 2003 CPD para. 136 at 29; Department of the Navy--Recon. and
   Modification of Remedy, B-246784.4, Feb. 17, 1993, 93-1 CPD para. 147 at
   6-7.

   In its request for costs, Honeywell has asked our Office to recommend that
   the Navy pay the costs associated with all the protest issues it pursued.
   The Navy concedes Honeywell's entitlement to costs for the single OCI
   issue identified by our Office's attorney as clearly meritorious during
   the ADR session. According to the Navy, the other issues are not clearly
   meritorious and are severable from the OCI issue which prompted corrective
   action, and, as a consequence, Honeywell should not recover its costs for
   these other issues. We agree with the agency.

   In our view, the OCI issue raised by Honeywell concerning ATC's access to
   Honeywell's proprietary information was the only clearly meritorious issue
   raised in Honeywell's protest and this issue is severable from Honeywell's
   other grounds for protest.[3] In reaching this conclusion we note that
   this OCI issue arose in connection with Honeywell's and ATC's performance
   of separate Navy contracts and had no bearing on the agency's technical or
   price evaluation of either Honeywell's or ATC's proposals. As a
   consequence, this OCI issue did not share a common core of relevant facts
   with those underpinning Honeywell's challenge to the Navy's technical and
   price evaluation, nor did it relate to the improper discussions issue,
   which concerned ATC's submission of supplemental subcontractor
   information.

   Moreover, while we recognize that Honeywell raised two OCI issues, both of
   which relate to ATC's performance of its SSDD contract (No.
   N00173-01-C-2006), we find it appropriate to distinguish between these
   bases of protest as well. As explained above, Honeywell alleged both that
   ATC had gained access to Honeywell's proprietary information, as a
   consequence of ATC's performance of its SSDD contract--resulting in an
   improper and unfair competitive advantage--and that the Navy failed to
   properly consider and evaluate the impaired objectivity associated with
   ATC's performance under the SSDD contract, since ATC's performance under
   the SSDD contract would result in ATC supervising its own performance
   under the technical and engineering support services contract. While both
   issues stem from ATC's performance of the SSDD contract, that fact alone
   is not controlling. The first OCI issue turns on the exchange of Honeywell
   information in connection with the SSDD contract, ATC's potential use of
   the information, and the agency's consideration of this conflict. The
   second issue, unlike the first, turns on the nature of ATC's obligations
   under the SSDD contract, its obligations under the technical and
   engineering support services contract, and whether those duties intersect
   in a way to create a potential conflict of interest, as well as the
   agency's efforts to evaluate and mitigate any conflict. Since the facts
   and legal analysis supporting these OCI issues are separate and distinct,
   we conclude that the issues are severable for the purpose of limiting
   Honeywell's costs to the one clearly meritorious OCI issue raised in its
   protest.

   The request is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] The GAO attorney characterized his discussion of the other issues as
   relating to the parties' "litigation risk," another kind of ADR that GAO
   also uses.

   [2] In response to concerns raised by Honeywell regarding the sufficiency
   of the agency's proposed corrective action, the Navy indicated that it
   would continue to suspend ATC's performance under the contract until it
   had fully implemented corrective action.

   [3] We consider a protest to be "clearly meritorious" when a reasonable
   agency inquiry into the protester's allegations would show that the agency
   lacked a defensible legal position, that is, that the protest does not
   involve a close question. East Penn Mfg. Co., Inc.--Costs, B-291503.4,
   Apr. 10, 2003, 2003 CPD para. 83 at 3. During the ADR session, only one
   OCI issue was identified as clearly meritorious--no opinion was rendered
   regarding the other issues. Rather, resolving the other issues would have
   required substantial further case development through a hearing. As such,
   these other issues did not constitute "clearly meritorious" bases of
   protest.