TITLE: B-297342, Alion Science & Technology Corporation, January 9, 2006
BNUMBER: B-297342
DATE: January 9, 2006
*****************************************************************
B-297342, Alion Science & Technology Corporation, January 9, 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-297342
Date: January 9, 2006
L. James D'Agostino, Esq., Richard L. Moorhouse, Esq., David T. Hickey,
Esq., John G. Stafford, Esq., and Andrew Belofsky, Esq., Greenberg
Traurig, LLP; J. Scott Hommer III, Esq., and Kier X. Bancroft, 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., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest is sustained where record does not support the agency's conclusion
that awardee's conflicts of interest will be minimal, with limited impact
on quality of contract performance, where awardee, a manufacturer of
spectrum-dependent products, will perform analysis and evaluation and
exercise subjective judgment regarding formulation of policies and
regulations that may affect the sale or use of spectrum-dependent products
manufactured by the awardee or the awardee's competitors, and those
deployed by the awardee's customers.
DECISION
Alion Science & Technology Corporation protests the Defense Information
System Agency's (DISA) award of a contract to Advanced Engineering &
Sciences, a division of ITT Industries, Inc. (ITT), under request for
quotations (RFQ) No. HC1047-05-R-4018 to provide spectrum engineering
support services. Alion protests that, in light of ITT's significant
involvement in the manufacture and marketing of spectrum-dependent
products, the agency failed to reasonably consider the extent of
organizational conflicts of interest (OCI) that are likely to impair ITT's
objectivity in performing the contract requirements.
We sustain the protest.
BACKGROUND
On March 15, 2005, DISA issued RFQ No. HC1047-05-R-4018 seeking quotations
from holders of federal supply schedule (FSS) contracts[1] to provide
spectrum engineering services to support DISA's Defense Spectrum Office
(DSO) and to "facilitate improved DSO mission effectiveness." RFQ at 16.
The solicitation advised contractors of DSO's "vision" to be recognized as
the Department of Defense's (DOD) "focal point and expert" with regard to
various policy-making activities including: "the establishment of
policies, strategies, regulations and procedures to support the
implementation and integration of spectrum efficient technologies into
military systems"; "the establishment of plans and strategies, based on
regulatory activities and technology development, to foster the
development of DOD spectrum management policies"; and "the development of
. . . spectrum allocation and reallocation long-term strategies." Id.
The RFQ contained the following description of activities that the agency
contemplated the contractor will perform:
(1) perform technical studies and mathematical modeling and simulation of
current and future operational environments to develop long-term spectrum
allocation and reallocation strategies that are favorable to DOD
operational needs: (2) devise long-term plans and strategies based on
regulatory activities and technology development to foster the development
of DOD policies; (3) advocate, based on technical analytical studies, and
lead all DOD national/international technical and technology outreach
efforts primarily when it relates to the NTIA [National Telecommunications
and Information Administration] and FCC [Federal Communication Commission]
forums and committees, International Telecommunication Union (ITU)
activities, including future World Radiocommunication Conferences (WRCs)
and other national/international efforts, in order to promulgate DOD
spectrum policy and objectives that are linked to Joint Vision 2020 and
are fully integrated in the DOD spectrum architecture; (4) develop and
integrate enabling, spectrum efficient technologies into military systems
to maximize spectrum utilization and to enable full spectrum
transformation; (5) develop recommendations, based on technical analytical
studies, for policies, strategies, regulations, and procedures to support
the implementation and integration of emerging technologies to enhance
spectrum utilization; (6) devise DOD spectrum management architecture
based on proposed spectrum management transition strategies and a
comprehensive roadmap to achieve this objective end-state.
RFQ at 16-17.
The solicitation asked FSS contractors to provide proposed solutions in
the form of performance work statements (PWS) addressing the
solicitation's stated objectives. As described by the contracting officer,
the PWS provided by any contractor responding to this solicitation was
anticipated to "identify the technical, functional and performance
characteristics of agency requirements." Contracting Officer's Statement
at 4.
With regard to the basis for award, the solicitation stated, "The
Government intends to award one GSA task order without discussions" and
advised offerors that source selection would be made on a "best value"
basis. In this regard, the RFQ established the three following evaluation
factors: quality of service,[2] past performance and price. RFQ at 40-44.
On or before the April 14, 2005 closing date, the agency received
quotations from Alion and ITT. The submissions were evaluated and compared
by a source selection evaluation board, source selection advisory council,
and source selection authority.[3] Contracting Officer's Statement at 9.
With regard to the quality of service evaluation factor, Alion's quotation
was rated [deleted]; ITT's quotation was rated [deleted]. Contracting
Officer's Statement at 10. With regard to the past performance factor,
Alion's quotation was rated [deleted]; ITT's quotation was rated
[deleted]. Id. Alion's evaluated price was [deleted]; ITT's evaluated
price was $33,801,702. Id.[4]
On August 31, the contracting officer requested that Alion and ITT submit
OCI mitigation plans.[5] With regard to potential conflicts, publicly
available information, including information contained on ITT's own
Internet website, leaves no doubt that ITT has multiple financial
interests with regard to manufacturing and marketing of spectrum-dependent
products to the U.S. government, to foreign governments, and to commercial
customers worldwide.[6] Further, ITT's own statements make clear that its
financial interests and the success of its company are affected by a
variety of factors, including both domestic and foreign government
regulations.[7]
Upon receipt and review of ITT's OCI mitigation plan, the contracting
officer determined that ITT intends to segregate the contract requirements
which create impaired-objectivity OCIs and have those requirements
performed by "firewalled" subcontractors. Thereafter, the agency performed
an assessment of ITT's proposed PWS with the stated objective of
determining the extent of ITT's conflicts. Agency Report, Tab 10, Offeror
B OCI Evaluation. Based on this assessment, the contracting officer
concluded that "an impaired objectivity OCI [is] likely to occur [for ITT]
approximately 7.3 percent of the time over the entire contract effort."
Contracting Officer's Statement at 16. Based on the agency's assessment
regarding the limited extent of OCIs, and ITT's stated intent to rely on
"firewalled" subcontractors to perform conflicted portions of the
contract, the contracting officer concluded that ITT's OCI mitigation plan
was acceptable.
On September 27, the contracting officer awarded a task order valued at
more than $33 million to ITT. Alion was subsequently notified of the
award; this protest followed.
DISCUSSION
Alion protests that the agency failed to reasonably recognize the extent
of conflicts that will impair ITT's objectivity in performing the contract
requirements, and failed to reasonably consider the effect that relying on
"firewalled" subcontractors to perform conflicted portions of the contract
will have on the quality of service that ITT provides. We agree.
Contracting officers are required to identify and evaluate potential
conflicts of interest as early in the acquisition process as possible.
Federal Acquisition Regulation (FAR) sect. 9.504. The FAR provides that an
OCI exists when, because of activities or relationships with other persons
or organizations, a person or organization is unable or potentially unable
to render impartial assistance or advice to the government. See FAR sect.
2.101. Situations that create potential OCIs are further discussed in FAR
subpart 9.5 and the decisions of our Office; specifically, what is
frequently referred to as an "impaired objectivity" OCI is created when a
contractor's judgment and objectivity in performing the contract
requirements may be impaired due to the fact that the substance of the
contractor's performance has the potential to affect other interests of
the contractor. Id.; 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; Aetna Govt. Health Plans, Inc.;
Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995,
95-2 CPD para. 129 at 13.
In reviewing this protest, we considered the contract requirements, as
reflected in the solicitation and ITT's proposed PWS tasks, and the basis
for the agency's assessment that ITT was likely to experience
impaired-objectivity OCIs only "7.3 percent of the time over the entire
contract effort."[8] As discussed below, the agency's assessment regarding
the extent and impact of OCIs with regard to ITT's contract performance is
not reasonably supported by the record.
The technical portion of ITT's submission responding to the solicitation
was divided into [deleted] PWS tasks: [deleted]. Agency Report, Tab 14, at
1-19, 1-33, 1-52, 1-89, 1-119, 1-133. Each proposed PWS task contained a
narrative description of the activities that are anticipated.[9]
ITT's PWS Task [deleted]
With regard to ITT's proposed PWS task [deleted], ITT's submission
responding to the solicitation states that ITT will perform the following
activities:
Develop recommendations based on technical analytical studies, for
policies, strategies, regulations, and procedures to support the
implementation and integration of emerging technologies . . .
Devise DOD Spectrum management architecture . . .
Develop integrated planning and support the development of long-term
strategies . . .
Enhance the ability to assess current and evolving spectrum policies,
regulations, processes, and strategies that incorporate emerging spectrum
technology. . . .
Perform technical studies and mathematical modeling and simulation of
current and future operational environments to develop long-term spectrum
allocation and reallocation strategies . . . .
Devise long-term plans and strategies based on regulatory activities and
technology development . . .
Foster Spectrum Management initiatives by evaluating the activities and
trends in national and international government and non-government
spectrum management policies, procedures, and plans to determine potential
opportunities and obstacles regarding DOD's global access to the Spectrum.
Agency Report, Tab 14, at 1-36 through 1-37.
More specifically, ITT states that [deleted]. Further, ITT states that
there is a close relationship between performance of PWS task [deleted]
and performance of other proposed PWS tasks, elaborating that "close
coordination with the [deleted] task [deleted] is an essential part of our
technical approach [deleted], as well as coordination with the [deleted]
tasks [deleted]. Agency Report, Tab 14, at 1-37.
In assessing the potential for impaired-objectivity OCIs, the agency
concluded that none of the work anticipated under PWS [deleted], created
any potential OCIs for ITT. Agency Report, Tab 10, Offeror B OCI
Evaluation, at 3. The record does not support the agency's conclusion in
this regard.
There is no dispute that, in recent years, the use of spectrum in wireless
applications has expanded dramatically and that, with the increased
demand, the spectrum has become crowded, leading to sometimes contentious
disputes between government and commercial users over access to
spectrum.[10] At the GAO hearing, the contracting officer referred to this
situation, testifying that DOD competes with "the entire world" for
spectrum access.[11] Nonetheless, the agency's procurement record is
devoid of any meaningful analysis regarding the scope of
spectrum-dependent products manufactured by ITT, the scope of such
products manufactured by ITT's competitors, or any consideration of the
composition of ITT's customer base, including foreign governments, and the
spectrum-management interests of those customers. Rather, the entire
documentation supporting the conclusion that ITT is likely to experience
impaired-objectivity OCIs only "7.3 percent of the time over the entire
contract effort" is a three-page document, consisting primarily of summary
conclusions. Indeed, in that document, the agency expressly disclaims any
specific knowledge of ITT's activities, stating that the agency's
conclusions are based on "the SSEB [source selection evaluation board]
members' knowledge of the SOO [statement of objectives] and limited
knowledge of . . . Offeror B [ITT], their subcontractors, and their
industry as a whole." Agency Report, Tab 10, Offeror B OCI Evaluation.
Here, it is clear that ITT manufactures and markets multiple
spectrum-dependent products to the U.S. government, foreign governments,
and commercial customers worldwide. Further, where DOD is competing for
spectrum access with "the entire world," it is clear that DOD's policies,
strategies, regulations and procedures regarding contentious
spectrum-related issues are likely to affect the sales or use of
spectrum-dependent products manufactured by ITT or ITT's competitors, as
well as such products deployed by ITT customers, including foreign
governments. As discussed above, under this contract, ITT will "[d]evelop
recommendations . . . for policies, strategies, regulations, and
procedures," "[p]erform technical studies . . . to develop long-term
spectrum allocation and reallocation strategies," "[d]evise long-term
plans and strategies based on regulatory activities and technology
development," and "evaluate[] the activities and trends in national and
international government and non-government spectrum management policies,
procedures, and plans to determine potential opportunities and obstacles
regarding DOD's global access to the Spectrum." Agency Report, Tab 14, at
1-36 through 1-37. It is clear that all of these activities involve ITT's
exercise of subjective judgment, and that the results of such judgments
may have a positive or negative effect on the sale or use of
spectrum-dependent products manufactured by ITT, those manufactured by
ITT's competitors, and those deployed by ITT customers, including foreign
governments. On this record, we find no reasonable basis for the agency's
conclusion that performance of such activities creates no potential for
impaired-objectivity OCIs for ITT. Further, because of the interrelated
nature of the activities involved, they do not appear, on this record, to
reasonably lend themselves to segregation for performance by "firewalled"
subcontractors.
ITT's PWS task [deleted]
With regard to proposed PWS task [deleted], ITT's submission responding to
the solicitation states that the overall objective of this proposed task
is to be an "advocate" and to "lead all DOD . . . outreach efforts" with
regard to various controversial issues, and to "build strategic alliances
with national and international spectrum management bodies, government
agencies and Congress, industry and academia." Agency Report, Tab 14, at
1-52, 1-54. More specifically, ITT acknowledges that the targets of its
outreach efforts will include "DOD contractors developing new spectrum
access technologies and other companies with similar interests in
flexible, real-time access to additional spectrum." Agency Report, Tab 14,
at 1-53.
As discussed during the GAO hearing, it is clear that DOD's interests, the
interests of other government agencies, the interests of industry and
various components within industry, and the interests of foreign
governments--all of whom compete for spectrum access--may be widely
divergent. Tr. at 847, 852, 914-15, 924-27, 932-33.[12] Further, the
agency engineer responsible for assessing the extent of ITT's OCIs
testified that it was possible ITT's activities under PWS task [deleted]
will involve situations in which the ITT personnel performing this
contract are responsible for advocating DOD positions to industry
personnel--including to other ITT personnel who represent positions
contrary to those of DOD. Tr. 934.[13] The agency engineer further
testified that the agency expects ITT to provide "on the fly"
responses--that is, immediate responses--to issues raised during meetings
with various "outreach" groups. Tr. at 919-20. The record contains no data
regarding the basis for the agency's conclusions that such situations will
rarely occur, nor any indication of how the agency could reasonably
anticipate, or segregate, "outreach" activities in which such OCIs will
occur.
In addition to its "outreach" activities, ITT states that, in performing
PWS task [deleted], it will "evaluate[] activities and trends in national
and international government and commercial spectrum management policies,
procedures, and plans to determine potential opportunities and obstacles
regarding DOD's global access to the Spectrum." Agency Report, Tab 14, at
1-55. In this regard, ITT states that it will "assess [NTIA initiatives
that are [deleted]] . . . [and] develop draft positions on such
initiatives." Id. at 1-56. ITT further states "[o]ne of the other agencies
that we will actively monitor and evaluate is the FCC, whose activities
cover . . . granting commercial licenses," and that ITT envisions a
"proactive role in . . . [deleted]. Id. at 1-57.[14] Finally, ITT
anticipates that, under PWS task [deleted], it will "identify potential
technologies that could impact DOD systems," stating that "[a]ny
technologies that are identified as part of this subtask will be provided
to the [deleted] task [deleted] for further evaluation." Id. at 1-58.[15]
In assessing ITT's potential OCIs, the agency concluded that most of the
activities discussed above would create no OCIs for ITT. Agency Report,
Tab 10, Offeror B OCI Evaluation, at 3. Specifically, the agency concluded
that, in performing all of the outreach and evaluation activities
anticipated under PWS task [deleted], ITT will experience
impaired-objectivity OCIs less than 8 percent of the time. Agency Report,
Tab 10, Offeror B OCI Evaluation, at 2, 3.[16] Further, the agency
concludes that, in those limited instances where OCIs occur, they can be
reasonably mitigated through contract performance by ITT's "firewalled"
subcontractors.
As noted above, the record provides no indication that, in projecting a
minimal potential for OCIs, the agency considered the scope of the
spectrum-dependent products manufactured and marketed by ITT, or ITT's
competitors, or the identity and spectrum-management interests of ITT's
customers--whose ongoing satisfaction is a significant factor affecting
ITT's financial success. Further, the agency record provides no meaningful
explanation with regard to how the agency intends to reasonably
anticipate--and more important, rationally segregate and successfully
perform--the conflicted portions of the contract.[17] In light of the
nature of activities anticipated under this task, which clearly require
analysis, evaluation, and subjective judgment in areas where widely
divergent interests are likely to exist, we find no reasonable basis in
the record for the agency's assessment that impaired-objectivity OCIs will
occur with minimal frequency. Further, in light of both the scope of
activities and the expressly acknowledged relationship between this task
and other tasks, on the record here, it appears unrealistic to conclude
that activities which create OCIs for ITT can be reasonably identified
prior to performance, rationally segregated, and successfully performed by
a "firewalled" subcontractor.
ITT's PWS Task [deleted]
With regard to proposed PWS task [deleted], ITT's submission responding to
the solicitation states that, in performing this task, ITT will:
Assess market and technology trends and determine the operational impact
to DOD . . . .
Make recommendations for long-term plans and strategies based on emerging
spectrum technologies . . . .
Develop enabling, spectrum efficient technologies for integration into
military systems . . . .
Perform technical analytical studies for policies, strategies,
regulations, and procedures to support the implementation and integration
of emerging technologies . . . .
Agency Report, Tab 14, at 1-121.
More specifically, ITT states that, in performing these activities, it
will "[deleted] the entire field of spectrum related technologies to
identify potentially significant technology advances," and, among other
things, that ITT will [deleted] to identify the most significant spectrum
technologies to [deleted]." Agency Report, Tab 14, at 1-123, 1-124.
Further, ITT states that the criteria that will be used to select
particular technologies for [deleted] will incorporate determinations as
to whether a developing technology is "detrimental" or "beneficial" to DOD
operations. Agency Report, Tab 14, at 1-124.
In assessing the potential for impaired-objectivity OCIs, the agency
concluded that ITT was likely to experience conflicts in performing this
task only 20 percent of the time. Agency Report, Tab 10. As with the PWS
tasks discussed above, the record contains no data supporting this
assessment, nor does the record reflect any meaningful consideration
regarding the potential spectrum-management interests of ITT, ITT's
competitors, or ITT's global customers, including foreign governments.
Here, it is clear that performance of PWS task [deleted] anticipates the
ongoing monitoring and assessment of emerging technologies, including
technologies being developed by ITT or by ITT's competitors. The ongoing
monitoring, assessments and determinations as to which technologies
incorporate "significant technology advances," the comparative
determinations regarding which technologies are "most significant" so as
to warrant [deleted], and the assessments regarding whether a developing
technology is "detrimental" or "beneficial" all incorporate subjective
judgments with regard to a universe of technology in which ITT and ITT's
competitors have direct financial interests. Further, it is clear that the
monitoring and assessments are inextricably intertwined; that is, the
assessments are, of necessity, performed as part of the ongoing monitoring
process. Accordingly, segregation and performance by a subcontractor do
not appear reasonable or realistic. On this record, we find no reasonable
support for the agency's conclusion that performance of this task will
create only minimal OCIs for ITT, or that such OCIs can be reasonably
addressed by use of subcontractors.
Overall, as discussed above, the agency maintains that "an impaired
objectivity OCI [is] likely to occur [for ITT] approximately 7.3 percent
of the time over the entire contract effort." Contracting Officer's
Statement at 16. Based on our review of the record, discussed above, the
agency's assessment is not reasonably supported by the record.
Specifically, the aggregate level of effort proposed with regard to only
the PWS tasks discussed above make up more than [deleted] percent of the
total level of effort proposed. Agency Report, Tab 10.[18] As discussed
above, a significant portion of the activities described under each of the
PWS tasks addressed above involve analysis, evaluation, and subjective
judgment with regard to matters in which DOD, ITT, ITT's competitors, and
ITT's customers are likely to have direct, and likely divergent,
interests. Further, in light of the interrelated nature of the activities
both within tasks and between tasks, it does not appear from the record
here that the agency, or ITT, can expect to meaningfully identify
potential conflicts prior to the time the specific activities are
performed, rationally segregate such conflicted portions of the contract,
and successfully perform those requirements with "firewalled"
subcontractors.
In short, the record shows that the agency failed to reasonably identify
and evaluate the extent of OCIs associated with ITT's performance of this
contract, as well as the effect of potential OCIs on contract
performance.[19]
The protest is sustained.[20]
RECOMMENDATION
We recommend that the agency reconsider its assessment regarding the
extent of ITT's impaired-objectivity OCIs, taking into consideration the
spectrum-management interests of ITT and ITT's competitors that flow from
their manufacture and marketing of various spectrum-dependent products,
along with the potential spectrum-management interests of ITT's customer
base, and document its conclusions in that regard. We further recommend
that the agency evaluate the reasonable impact on quality of service, in
the context of the activities anticipated under this solicitation, that
will be caused by an OCI mitigation plan that relies on "firewalled"
subcontractors for performance of conflicted contract requirements.
Following such reconsideration and evaluation, we recommend that the
agency make a new source selection decision. We further recommend that the
agency reimburse Alion for the costs of filing and pursuing its protest,
including reasonable attorneys' fees. Alion's certified claim for costs,
detailing the time spent and costs incurred, must be submitted to the
agency within 60 days of receiving this decision. 4 C.F.R. sect.
21.8(f)(1) (2005).
Anthony H. Gamboa
General Counsel
------------------------
[1] DISA conducted this procurement under Part 8 of the Federal
Acquisition Regulation (FAR) and relied on the "GSA E-Buy" website to
publicize the RFQ.
[2] With regard to quality of service, the solicitation established three
subfactors: technical excellence, personnel qualifications, and management
capability. RFQ at 42-43.
[3] The agency used a color rating/narrative assessment scheme to evaluate
the quotations with regard to quality of service and past performance.
With regard to quality of service, the following color ratings and
associated narrative assessments were applied: "Blue" ("excellent
understanding of objectives and approach significantly exceeds performance
or capability"); "Green" ("demonstrates good understanding of objectives
and approach exceeds objectives"); "Yellow" ("demonstrates an acceptable
understanding of objectives and approach meets performance or
capability"); "Orange" ("demonstrates a shallow understanding of the
objectives and approach that only marginally meets performance or
capability"); and "Red" ("fails to meet performance or capability.
Objectives can only be met with major changes to the proposal"). RFQ at
40-41. With regard to past performance, the following color ratings and
associated narrative assessments were applied: "Blue" ("Highly
relevant/very recent past performance in all proposed task order areas;
predominantly excellent performance ratings"); "Green" ("Relevant/somewhat
recent past performance in all proposed task order areas; acceptable
performance ratings"); "Yellow" ("Somewhat relevant/not very recent past
performance; mostly acceptable performance ratings"); "Orange" ("Little
relevant/old past performance; mostly unacceptable performance ratings");
"Red" ("Little relevant past performance; almost all unacceptable
performance ratings"); and "White ("No past performance history"). Id.
[4] The agency also performed a risk assessment with regard to quality of
service and and price. Alion's quotation was rated [deleted]; ITT's
quotation was rated [deleted]. Contracting Officer's Statement at 10.
[5] This request was made following Alion's submission of another protest,
raising OCI issues, that challenged DISA's award of another spectrum
management contract to ITT under a different solicitation.
[6] By way of example, ITT states that it provides single channel ground
and airborne radios (SINCGAR), spectrum management systems, and several
types of radar systems to DOD. Agency Report, Tab 20, ITT OCI Mitigation
Plan, at 10-11. Additionally, ITT states that: "ITT Industries is a global
engineering and industrial manufacturing company with leading positions in
the markets that it serves. The company is a major supplier of
sophisticated military defense systems, and provides advanced technical
and operational services to a broad range of government agencies."
www.itt.com/downloads/defense12pg.pdf. ITT elaborates that it has
provided, or is providing, "Night vision equipment for Australian Defence
Forces," "Imagers for Japanese weather satellites," "Airborne
Self-Protection Jammers (ASPJ) for Republic of Korea," "Tactical
communications systems for U.K. armed forces," and "Air traffic control
radar systems for Brazilian Air Force." Id. ITT also states that it
markets a variety of spectrum-dependent products to commercial customers.
Id.
[7] In a publication dated March 5, 2005, under the heading
"Forward-Looking Statements," an ITT representative stated that ITT's
future performance will be affected by various factors, including
"government regulations and compliance therewith," "local regulations in
the countries in which the Company conducts its businesses," "changes in
technology," and "changes in . . . the identity of significant customers."
Presentation of Hank Driesse, President, ITT Defense (Mar. 3, 2005),
www.itt.com/ir/downloads/fbr_conference_05.pdf. More specifically, ITT
stated: "Our Defense Electronics & Services business will be affected by
factors including the level of defense funding by domestic and foreign
governments; our ability to receive contract awards; and our ability to
develop and market products and services for customers outside of
traditional markets." Id.
[8] As part of our review in this matter, we conducted a hearing at GAO
during which testimony was provided by, among others, the contracting
officer and agency engineer responsible for calculating the extent of OCIs
that ITT will likely experience.
[9] The contracting officer testified that a single task order has been
awarded to ITT, [deleted]. Finally, the contracting officer testified that
subcontractor payments are made by ITT, with no agency involvement, and
that ITT is not required to provide the terms of its subcontracts to the
agency. Tr. at 872-75.
[10] See generally Interdepartment Radio Advisory Committee - IRAC
Representative Effectively Coordinate Federal Spectrum but Lack Seniority
to Advise on Contentious Policy Issues, GAO-04-1028, September 2004;
Spectrum Management - Better Knowledge Needed to Take Advantage of
Technologies that May Improve Spectrum Efficiency, GAO-04-666, May 2004.
[11] Specifically, the following exchange took place:
Q. Who are the United States forces competing with . . . for spectrum
access?
A. The entire world.
Q. And that would include industry users of anything that operates via
radio frequencies, is that correct?
A. As well as international, all the foreign governments.
Q. Both in terms of their commercial as well as military use of the
spectrum?
A. And any other governmental use. There's just so much bandwidth.
Tr. at 843.
[12] In discussing spectrum access generally, ITT provides a candid
assessment of current situation: "At the same time that DOD's spectrum
access requirements are increasing, demands on spectrum access by non-DOD
users is also rapidly increasing." Agency Report, Tab 14, at 1-119. The
agency engineer that testified at the GAO hearing described ITT's proposed
outreach efforts as involving a "technical adversary." Tr. at 921.
[13] On the record here, it appears equally possible that ITT personnel
performing "outreach" efforts may be responsible for advocating DOD
positions to representatives of ITT's competitors who represent interests
that conflict with both those of DOD and ITT. See id.
[14] By way of example, ITT states that it anticipates "engagement [of]
the FCC on troublesome issues such as [deleted]. Id. at 1-57.
[15] With regard to the relationship of PWS task [deleted] to ITT's other
proposed efforts under this contract, ITT states that "this task will be
fully integrated and coordinated with the [deleted] task [deleted] and
[deleted] . . . . The [deleted] task [deleted] will provide additional
technical analysis expertise as required to help advocate[] DOD positions
in national and international spectrum management forums." Agency Report,
Tab 14, at 1-53.
[16] At the GAO hearing, the agency engineer responsible for this
calculation acknowledged that there is no empirical data to support this
or the other agency projections regarding the portion of requirements
under each proposed task that will create OCIs for ITT; rather, the agency
engineer testified that the calculation was the product of the agency's
experience gained, in part, under prior support contracts. Tr. at 956,
958-61, 980-81, 1021-22, 1024-26. However, in this regard, the
solicitation expressly described the activities contemplated under this
solicitation as materially different from those performed under prior
contracts. RFQ at 18. Similarly, the contracting officer specifically
stated that "[t]hese objectives differ greatly from previous contract
support efforts." Contracting Officer's Statement at 2. Accordingly, it is
not clear that the agency's experience under prior support contracts
provides a reliable basis for the agency's calculation.
[17] In addition to the agency's failure to consider information that
appears necessarily relevant to a meaningful assessment of potential OCIs,
the record appears inconsistent regarding the portion of the contract
effort that the agency anticipates will have to be subcontracted. In this
regard, the contracting officer specifically stated that an
impaired-objectivity OCI for ITT is "likely to occur approximately 7.3
percent of the time over the entire contract effort," and that ITT could
effectively mitigate such occurrences by subcontracting the conflicted
portions of the contract requirements. Contracting Officer's Statement at
16-17. In contrast, the engineer appearing on behalf of the agency at the
GAO hearing testified that the agency's calculation of "7.3 percent" does
not reflect the portion of conflicted contract requirements that will be
subcontracted, Tr. at 959-61; rather, the engineer testified that this
calculation was "just a probability assessment" regarding the likelihood
that an OCI will occur. Tr. at 1022.
[18] We do not view our discussion regarding PWS tasks [deleted] as a
comprehensive analysis of all contract activities. In particular, our
decision does not address any potential conflicts that may occur under the
proposed tasks for [deleted].
[19] We note that the FAR anticipates situations in which application of
the OCI provisions contained in FAR subpart 9.5 may not be in the
government's interest, and authorizes the waiver of such provisions by an
authority at a level not lower than head of the contracting activity. FAR
sect. 9.503. Here, no waiver was requested or approved.
[20] Alion has also challenged the procurement on the basis of matters
other than those related to the agency's OCI assessment, discussed above.
We have considered all of Alion's assertions, and find no bases for
sustaining the protest other than as discussed above.