TITLE: B-297022.4; B-297022.5, Alion Science & Technology Corporation, September 26, 2006
BNUMBER: B-297022.4; B-297022.5
DATE: September 26, 2006
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B-297022.4; B-297022.5, Alion Science & Technology Corporation, September 26, 2006

   DOCUMENT FOR PUBLIC RELEASE
   The decision issued on the date below was subject to a GAO Protective
   Order. This redacted version has been approved for public release.

   Decision

   Matter of: Alion Science & Technology Corporation

   File: B-297022.4; B-297022.5

   Date: September 26, 2006

   L. James D'Agostino, Esq., Richard L. Moorhouse, Esq., David T. Hickey,
   Esq., Hannah Brody, Esq., and Andrew J. Belofsky, Esq., Greenberg Traurig,
   LLP; J. Scott Hommer III, Esq., Kier X. Bancroft, Esq., and Peter A.
   Riesen, Esq., Venable LLP, for the protester.

   Thomas C. Papson, Esq., Jason N. Workmaster, Esq., and Kara M. Klaas,
   Esq., McKenna Long & Aldridge LLP, for Advanced Engineering & Sciences, a
   division of ITT Industries, Inc., an intervenor.

   Flayo O. Kirk, Esq., Defense Information Systems Agency, for the agency.

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

   DIGEST

   Where agency previously failed to meaningfully consider potential
   conflicts of interest created by awardee's contract performance of
   electromagnetic spectrum engineering services that could affect awardee's
   other spectrum-related interests, agency's corrective actions adequately
   remedied the prior procurement flaws, where the agency performed and
   documented its review of the spectrum-related products and services
   produced or provided by the awardee and the awardee's competitors,
   identified the awardee's customers of spectrum-related products and
   services, considered the impact that performance of the contract
   requirements may have on awardee's spectrum-related interests, and
   reasonably concluded that awardee's plan to perform conflicted portions of
   the contract requirements through use of "firewalled" subcontractors will
   adequately avoid, neutralize, or mitigate the potential conflicts of
   interest with minimal impact on performance quality.

   DECISION

   Alion Science & Technology Corporation protests various Defense
   Information Systems Agency (DISA) actions taken in connection with the
   award of a contract to Advanced Engineering & Sciences (AES), a division
   of ITT Industries, Inc. (ITT), pursuant to request for proposals (RFP)
   No. HC1047-05-R-4009 to provide electromagnetic spectrum engineering
   services for DISA's Joint Spectrum Center (JSC).[1] Alion protests that
   the agency failed to reasonably consider the potential organizational
   conflicts of interest (OCI) created by ITT's performance of the contract
   requirements.

   We deny the protest.

   BACKGROUND

   In February 2005, DISA issued RFP No. HC1047-05-R-4009, seeking proposals
   to "provide the JSC with Electromagnetic Spectrum Engineering (ESE)
   services to facilitate improved mission effectiveness." RFP at 4.[2] The
   solicitation laid out a comprehensive list of the various activities the
   contractor will be required to perform.[3] Offerors were advised that
   proposals would be evaluated on the basis of technical factors, past
   performance, and cost/price, and that award would be based on the proposal
   offering the "best overall value" to the government. RFP at 62.

   In April 2005, proposals were submitted by three offerors, including Alion
   and ITT.[4] Thereafter, discussions were conducted, proposal revisions
   submitted, and final proposals evaluated. In July 2005, ITT's proposal was
   selected for award.

   In August 2005, Alion filed its first protest, challenging the award to
   ITT on various bases, including that the agency failed to reasonably
   consider the OCIs created by ITT's performance of the contract
   requirements. Thereafter, the agency advised this Office that it was
   taking corrective action, to include an amendment of the RFP's OCI
   provisions[5] and a request that offerors submit revised OCI plans. We
   dismissed Alion's August 2005 protest pending completion of the agency's
   corrective actions.

   Thereafter, ITT and Alion submitted revised OCI plans,[6] and the agency
   performed an assessment regarding the potential for conflicts of interest
   to arise. With regard to contract performance by ITT, the agency concluded
   that there was a "maximum potential" for 15 percent of the contract
   requirements to create conflicts, but stated that it considered this
   estimate to be "high" and that actual OCIs were expected to be
   "significantly lower." Addendum to Source Selection Authority Decision,
   Sept. 22, 2005, at 2. Based on the agency's OCI assessment, and ITT's
   intent to rely on "firewalled" subcontractors for performance of the
   potentially conflicted portions of the contract requirements, the agency
   concluded that ITT's OCI plan was acceptable and, in September 2005, again
   selected ITT's proposal for award.[7]

   In September 2005, Alion filed another protest challenging the agency's
   source selection decision, again asserting, among other things, that the
   agency's OCI assessment was flawed.

   Our review of the procurement record, provided in response to Alion's
   September 2005 protest, established that the agency's OCI assessment
   failed to meaningfully consider the scope and extent of ITT's
   spectrum-related interests. Specifically, the agency's assessment failed
   to meaningfully address the fact that ITT, as well as ITT's competitors,
   manufacture and market multiple spectrum-dependent products, and that
   these products are sold to, and used by, multiple customers, including
   various departments within the U.S. government, foreign governments, and
   commercial customers worldwide. Additionally, the agency's assessment
   appeared to assume that only performance of acquisition-related activities
   under the contract would create potential OCIs--failing to recognize that
   OCIs are created any time contract performance involves a contractor's
   exercise of judgment with regard to matters that have the potential to
   affect other contractor-related interests. See FAR sections 9.505, 9.508.
   In sum, the agency's OCI assessment failed to recognize that ITT's
   performance of various contract activities could significantly affect the
   spectrum-related interests of ITT, ITT's competitors, and ITT's customers.
   In January 2006, our Office issued a decision sustaining Alion's protest.
   Alion Sci. & Tech. Corp., B-297022.3, Jan. 9, 2006, 2006 CPD para. 2.

   In our January 2006 decision, we recommended that the agency reconsider
   the extent and potential impact on contract performance resulting from
   ITT's spectrum-related interests. Specifically, we recommended that the
   agency fully identify ITT's involvement with spectrum-related products and
   services and similarly identify ITT's competitors and customers with
   spectrum-related interests. We further recommended that, upon
   identification of the spectrum-related interests of ITT, ITT's
   competitors, and ITT's customers, the agency reconsider the potential OCIs
   reasonably created by ITT's performance of the various contract
   requirements.[8] Finally, we recommended, upon consideration of the full
   extent of potential OCIs, that the agency also consider the impact that
   ITT's reliance on "firewalled" subcontractors would have on contract
   performance.

   Following receipt of our January 2006 decision, the agency stated that it
   would implement our recommendations. In May 2006, the agency completed its
   report documenting the actions taken in response to our January 2006
   decision. As discussed in more detail below, the agency's reconsideration
   of the factors creating potential OCIs for ITT resulted in the agency's
   recognition that ITT's performance of the contract requirements will
   create a higher level of potential OCIs than the agency had previously
   believed.[9] Nonetheless, after considering the impact that the higher
   level of potential OCIs will have on contract performance, the agency
   again concluded that award to ITT will result in the best overall value to
   the government.

   In June 2006, the agency notified Alion that ITT had again been selected
   for contract award. On June 20, Alion filed this protest challenging that
   selection. As discussed below, we deny the protest.

   DISCUSSION

   Alion's June 2006 protest references various portions of this Office's
   January 2006 decision, asserting generally that the agency failed to
   reasonably implement the recommendations contained therein. Alion Protest,
   June 20, 2006, at 3. More specifically, Alion maintains that the agency's
   reconsideration of ITT's potential OCIs is still unreasonably low, and
   that the agency has not reasonably considered the impact that ITT's use of
   "firewalled" subcontractors will have on contract performance. Id. at
   4-5.[10] Alion requests that this Office recommend that DISA "declare ITT
   disqualified and ineligible to receive any award under the subject
   Solicitation," and that DISA "immediately reaward the JSC spectrum
   engineering services requirements to Alion." Id. at 8-9. We reject Alion's
   arguments and requests.

   As noted above, in response to this Office's January 2006 decision, DISA
   performed and documented a review of the potential OCIs that ITT's
   performance of the contract requirements would create. Impaired
   Objectivity (IO) Organizational Conflict of Interest Assessment of ITT
   Industries, Inc., May 31, 2006. In connection with this review, the agency
   sought and received additional information from both ITT and Alion
   regarding their respective spectrum-related interests. Following receipt
   of the additional offeror-provided information, the agency conducted its
   own research and analysis regarding the scope of the offerors'
   spectrum-related interests[11] and, in the context of those interests,
   assessed the extent to which performance of the various contract
   requirements would create potential OCIs.

   In assessing ITT's potential OCIs, the agency first identified ITT's
   various business groups, and the divisions within those groups, reviewing
   the types of products and services produced or provided by each group
   generally and, within the groups, the products and services of each
   division specifically.[12] With regard to the divisions that are involved
   with spectrum-related products or services, the agency further identified
   the specific products and services those divisions produce or provide.[13]
   Id. at 6-15. The agency also identified ITT's competitors,[14] as well as
   its worldwide customers and teaming partners,[15] in the various markets.
   Id. The agency's analysis also identified where ITT's various
   spectrum-related products and services are generally used or deployed. Id.
   at 11. Finally, the agency's analysis took into consideration the
   organizations and entities, including foreign governments, with which DOD
   competes for electromagnetic spectrum access. Id. at 15-19.

   Upon completing its research regarding the scope of ITT's spectrum-related
   interests, the agency reconsidered the nature of the contract activities
   to be performed, as identified in the solicitation, focusing on the extent
   to which the anticipated activities could create OCIs for ITT. Id. at
   20-26. In conjunction with the agency's review of the activities listed in
   the solicitation, the agency also performed a review of all JSC projects
   that were performed under Alion's incumbent contract during the
   immediately preceding fiscal year, making judgments as to the potential
   OCIs that such activities would create for ITT, and calculating the dollar
   value of such potentially conflicted work. Id. at 27-39. Finally, the
   agency considered the effect that ITT's reliance on "firewalled"
   subcontractors to perform potentially conflicted portions of the contract
   requirements would have on the quality of contract performance. Id. at
   33-39.

   Based on all of the above research and analysis, the agency concluded that
   the level of potential OCIs that ITT is likely to experience under the
   contract is, indeed, higher than what the agency had initially believed.
   As noted above, the agency now estimates that nearly one-third of the
   total contract effort could create OCIs for ITT.[16] CO Statement at 5,
   15. Nonetheless, the agency concluded that the contract activities
   creating potential OCIs for ITT could be reasonably segregated, and
   adequately avoided, neutralized, or mitigated, through contract
   performance by "firewalled" subcontractors. Accordingly, the agency
   determined that ITT's proposal still offered the best overall value to the
   government.

   Alion continues to assert, as it has in its various prior protest
   submissions, that the agency's OCI assessment is inaccurate or otherwise
   unreasonable. Based on our review of the current record, we do not agree.

   Contracting officers are required to identify potential conflicts of
   interest as early in the acquisition process as possible, and to avoid,
   neutralize, or mitigate such conflicts to prevent the existence of
   conflicting roles that might impair a contractor's objectivity. In
   assessing potential OCIs, the FAR directs the contracting officer to
   examine each contracting situation individually on the basis of its
   particular facts and the nature of the proposed contract, and to exercise
   common sense, good judgment, and sound discretion with regard to whether a
   conflict exists and, if so, the appropriate means for resolving it; the
   primary responsibility for determining whether a conflict is likely to
   arise, and the resulting appropriate action, rests with the contracting
   agency. FAR sect. 9.505; RMG Sys., Ltd., B-281006, Dec. 18, 1998, 98-2 CPD
   para. 153 at 4; Epoch Eng'g, Inc., B-276634, July 7, 1997, 97-2 CPD para.
   72 at 5. Once an agency has given meaningful consideration to potential
   conflicts of interest, our Office will not sustain a protest challenging a
   determination in this area unless the determination is unreasonable or
   unsupported by the record. SRS Techs., B-258170.3, Feb. 21, 1995, 95-1 CPD
   para. 95 at 9.

   Here, Alion's protest has not identified any material aspect of the
   agency's review and analysis that renders the agency's conclusions
   unreasonable. Specifically, Alion has not identified any material aspect
   of ITT's involvement in producing or providing spectrum-related products
   and services that the agency has overlooked or otherwise ignored. Based on
   the discussion above, we believe the agency has reasonably identified the
   scope and extent of ITT's involvement with spectrum-related products and
   services, as well as reasonably identified ITT's competitors and
   customers, including foreign governments, that possess spectrum-related
   interests.

   Further, the agency's consideration of each particular contract activity
   listed in the solicitation, along with consideration of every contract
   project performed during the preceding fiscal year, appears to be thorough
   and complete. To the extent Alion has expressed disagreement with various
   agency judgments regarding the various solicitation activities and/or
   performance of particular past projects that could create OCIs for ITT,
   Alion's arguments fail to identify any material flaws that would render
   the agency's overall conclusions unreasonable. A protester's mere
   disagreement with an agency's judgment does not establish that the
   judgment was unreasonable. See, e.g., Hanford Envtl. Health Found.,
   B-292858, B-292858.2, Apr. 7, 2004, 2004 CPD para. 164 at 4. On this
   record, we find no basis to question the reasonableness of the agency's
   conclusion regarding the portion of contract requirements that could
   create OCIs for ITT.[17]

   Alion next protests that the agency failed to meaningfully address the
   impact that ITT's reliance on "firewalled" subcontractors for performance
   of conflicted contract requirements would have on the quality of ITT's
   contract performance. We do not agree.

   As noted above, in its actions responding to this Office's January 2006
   decision, the agency specifically considered the effect that ITT's
   reliance on "firewalled" subcontractors would have on the quality of
   contract performance. Impaired Objectivity (IO) Organizational Conflict of
   Interest Assessment of ITT Industries, Inc., May 31, 2006, at 33-39. In
   performing its analysis of this issue, the agency first noted that,
   pursuant to the task ordering process to be used in performing this
   contract, separate task orders will be issued for activities where there
   are potential OCIs. Id. at 33-34. The agency noted that in ITT's September
   2005 proposal and OCI plan, ITT specifically recognized that certain
   activities would create potential OCIs which would be performed by
   "firewalled" subcontractors, and that its proposal specifically
   contemplated that ITT's subcontractors would perform up to [deleted]
   percent of the total contract effort. Id. at 34. In reviewing this matter,
   the agency considered the projected breakout of work to be performed by
   the various subcontractors, concluding that "the overlapping of
   competencies between ITT and its firewalled subcontractors is sufficient
   to resolve all the cases of IO [impaired objectivity] OCI," and noting
   that "[e]ven in those functional task areas where the percentage of
   conflicted work is high, using firewalled subcontractors should be
   workable within the construct of the original ITT Technical Proposal." Id.
   at 34-35. The agency's report follows up this conclusion with a more
   detailed analysis addressing which of ITT's proposed subcontractors could
   perform conflicted work under each of the various task areas. Id. In
   concluding that the quality of contract performance would not be
   materially affected by the higher level of potential OCIs, the agency
   specifically considered various factors affecting quality, including
   subcontractor competence, cost, and timeliness. Based on its consideration
   of these issues, the agency concluded that "[t]he overall effect of
   segregating tasks and using firewalled subcontractors to perform them has
   minimal impact on cost, timeliness, and quality." Id. at 38.

   Alion complains that the agency cannot, and should not, trust ITT to
   properly identify all OCIs during contract performance. Alion's protest on
   this issue suggests that ITT's input with regard to potential OCIs during
   contract performance will be dispositive. The record is to the contrary.
   Specifically, although the agency intends for ITT to be actively involved
   in identifying potential conflicts during contract performance, the record
   is clear that the agency will--and in our view, must--independently review
   each task order for potential OCIs on an ongoing basis.[18]

   Here, based on the record as discussed above, the agency reasonably
   considered the impact on the quality of performance caused by ITT's
   reliance on "firewalled" subcontractors to perform conflicted contract
   requirements, concluding that the impact would be minimal. Although Alion
   disagrees with that judgment, it has not persuasively identified any
   material basis for concluding that the agency's judgment is unreasonable.
   In this regard, procuring agencies are generally in the best position to
   determine their actual requirements and the best method for meeting them.
   In reviewing protests challenging an agency's assessments with regard to a
   particular performance approach, our Office will not substitute our
   judgment for that of the agency; rather, we will review the record to
   determine whether the judgments are reasonable and consistent with the
   solicitation criteria. See, e.g., RMS Indus., B-247233, B-247234, May 1,
   1992, 92-1 CPD para. 412. On this record, we find no basis to sustain
   Alion's protest challenging the reasonableness of the agency's
   consideration and analysis regarding the impact of ITT's reliance on
   "firewalled" subcontractors to perform conflicted requirements.

   The protest is denied. [19]

   Gary L. Kepplinger

   General Counsel

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

   [1] Alion, or one of its predecessor entities, has been the incumbent
   contractor for the requirements at issue here for over 40 years.

   [2] Since issuance of the solicitation, the JSC has been consolidated with
   DISA's Defense Spectrum Office and is now a "field office" within DISA's
   Defense Spectrum Organization. See www.disa.mil/main/prodsol/dso.html.

   [3] The solicitation identified six task areas--"Operational Spectrum
   Support," "E3 [electromagnetic environmental effects] and Spectrum
   Engineering," "Modeling and Simulation," "Information Management,"
   "Research and Evaluate Emerging Technologies," and "Technical Advice"--and
   listed particular activities the contractor will be expected to perform
   under each area. RFP at 4. The listed activities included "analyz[ing]
   incidents of electromagnetic interference (EMI), determine causes, and
   recommend methods of resolution," "coordinating electromagnetic
   compatibility (EMC) standards," "analyzing equipment and systems for
   potential E3 problems and recommending solutions," "assisting the
   acquisition community by assessing E3," "providing assistance in acquiring
   host nation approval for equipment operation," "determining
   electromagnetic spectrum implications and opportunities for exploitation
   by DOD [Department of Defense]," and "analyzing national and international
   electromagnetic spectrum issues and advising executive decisionmakers on
   the technical viability of policy and implementation options." Id.

   [4] The third offeror's proposal was subsequently eliminated from
   consideration, is not relevant to Alion's protest, and is not further
   discussed in this decision.

   [5] As ultimately amended, the RFP provided that offerors' proposals with
   regard to OCI issues would be assessed as acceptable or unacceptable
   pursuant to subpart 9.5 of the Federal Acquisition Regulation (FAR).

   [6] ITT's plan identified various potential OCIs that could be encountered
   in performing the contract requirements and stated that, in instances
   where potential OCIs are identified, the conflicted requirements would be
   assigned to an ITT subcontractor and a "firewall" would be created between
   ITT and the subcontractor. ITT OCI Plan, Sept. 9, 2005, at 14.

   [7] ITT's proposal was rated higher than Alion's proposal with regard to
   the technical evaluation factors and offered a slightly lower evaluated
   cost/price.

   [8] As noted above, the solicitation specifically contemplates a wide
   range of activities that could affect various organizations'
   spectrum-related interests, including: providing policy advice to DOD on
   spectrum-related matters; analyzing specific equipment and systems for
   potential electromagnetic environmental effect problems and recommending
   solutions; analyzing specific instances of electromagnetic interference
   and recommending solutions; and providing assistance to DOD in acquiring
   host nation approval for operation of spectrum-related equipment.
   RFP at 4.

   [9] As noted above, the agency initially concluded that significantly less
   than 15 percent of the total contract requirements would create potential
   OCIs for ITT. The agency has now concluded that nearly one-third of the
   contract requirements will create potential OCIs for ITT. Contracting
   Officer's (CO) Statement at 5, 15.

   [10] Alion asserts that "no amount of revisions to ITT's plan could
   successfully mitigate or neutralize [ITT's] pervasive OCI[s]." Protest at
   6.

   [11] In identifying the offerors' spectrum-related interests, the agency
   relied on a variety of information sources, including: the offerors' final
   revised OCI plans, ITT's annual reports, Securities and Exchange
   Commission (SEC) 10-K filings, marketing brochures, the offerors' internet
   sites, trade journals, and the subject matter expertise of JSC's
   engineering and project management staff. Id. at 3.

   [12] ITT is divided into several business groups. The agency determined
   that the business divisions involved with spectrum-dependent products and
   services are all within the Defense Electronics and Services group; these
   divisions include AES (the division that submitted the proposal here), the
   Aerospace/Communications division, the Electronics Systems division, the
   Space Systems division, and the Systems division. Id. at 6. The agency
   states that the Defense Electronics and Services group generated
   approximately $2.4 billion in revenues (35% of ITT's total revenues) in
   fiscal year 2004. Id. at 16.

   [13] For example, products or services provided by ITT's AES division
   include "Missile Defense Research," "Remote Control Programs and
   Products," "Sensor Technology," Specific Emitter Identification Systems,"
   "Electronic Warfare Support," "Air Traffic Controls Systems Engineering
   Services," "GPS Systems Engineering," "Microwave Systems," "Spectrum
   Engineering and Management," and "Telecommunication Acquisition Management
   Support." Id. at 6-7. Similarly, specific spectrum-related products
   produced by ITT's Aerospace/Communications division include single channel
   ground and airborne radio systems, tactical radio networks, voice data
   switches, fiber optics transmission systems, and secure communications
   terminals; this division is also involved in developing next generation
   wireless networking radios, including the Joint Tactical Radio System, and
   with producing precision military and commercial GPS receivers. Id. at
   7-8. Products produced by other divisions within ITT's Defense Electronics
   and Services business group include electronic warfare products, advanced
   radar systems, payloads/components for GPS satellites, and ground-based
   jamming equipment. Id. at 8-10.

   [14] The agency states that ITT's competitors with spectrum-related
   interests include, "General Dynamics, Lockheed-Martin, Northrop Grumman,
   Boeing, Raytheon, Honeywell, Computer Sciences Corporation, Science
   Applications International Corporation, Anteon, International Corporation,
   Alion Science and Technology, Booz, Allen, Hamilton, Inc., [and] CACI
   International, Inc.," along with "Astrium, Alcatel, [and] Ball Aerospace,"
   as well as foreign competitors, including "Alenia Spazio, Alenia Marconi
   Systems, EADS, Ericsson, Hindustan Aeronautics, Indra Sistemas, NEC, Selex
   Sistemi, Telsa, Toshiba, and Thales." Id. at 8-10.

   [15] Customers of ITT's divisions involved with spectrum-dependent
   products or services include commercial organizations worldwide, as well
   as the governments of "Brazil, UK, Sweden, Egypt, Singapore, South Korea,
   and 32 other countries." Id. at 9.

   [16] The agency's calculation with regard to the percentage of potential
   OCIs is based on the agency's review of every project completed under the
   incumbent contract during the preceding fiscal year, identification of
   those projects that would create potential OCIs for ITT, and calculation
   of the total dollars spent on such projects, as a percentage of the total
   contract dollars spent during the fiscal year.

   [17] Alion makes much of the fact that, following submission of this
   protest and Alion's subsequent arguments regarding prior performance of
   particular projects, the agency increased its calculation of potential
   OCIs from 29 percent to 32 percent of the total contract effort. Alion
   Comments, Aug. 7, 2006, at 5-7. We do not view this adjustment in the
   agency's assessment as a basis for sustaining the protest. In this regard,
   we do not view an agency's projection of potential OCIs to be an exact
   science, nor do we expect that an OCI projection will be calculated to a
   mathematical certainty. Rather than requiring a precisely calculated
   forecast of future OCIs, FAR subpart 9.5 mandates that an agency
   reasonably and realistically recognize and consider the potential for
   OCIs. Here, the agency has met its obligation.

   [18] In testifying before this Office during the hearing we conducted in
   connection with Alion's September 2005 protest, the contracting officer
   stated: "We will not rely on ITT's analysis alone. We will independently
   perform that analysis, and only after we're satisfied that there are no
   OCI issues[,] or that - if an OCI issue is identified, that a proper
   mitigation strategy is incorporated in that task order when we issue the
   task order." Hearing Transcript, Dec. 1, 2005, at 26-27.

   [19] In its various protest submissions, Alion made various additional
   allegations regarding the agency's selection of ITT, including the
   assertion that the agency's source selection authority and/or other agency
   personnel were biased against Alion due to Alion's long-time incumbency.
   We have reviewed the entire record, considering all of Alion's various
   allegations, and find no basis for sustaining the protest.