TITLE: B-297378; B-297378.2, Meggitt Safety Systems, Inc., January 12, 2006
BNUMBER: B-297378; B-297378.2
DATE: January 12, 2006
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B-297378; B-297378.2, Meggitt Safety Systems, Inc., January 12, 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: Meggitt Safety Systems, Inc.

   File: B-297378; B-297378.2

   Date: January 12, 2006

   Richard B. Oliver, Esq., McKenna Long & Aldridge LLP, for the protester.

   Robert R. Fleck, Esq., and Robert E. Vollmar II, Esq., U.S. Army Materiel
   Command, for the agency.

   Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest challenging agency's sole-source acquisition of urgently required
   automatic fire suppression systems is denied where record shows agency
   adequately investigated protester's capabilities, and reasonably concluded
   that protester would not be able to timely meet agency's requirements.

   DECISION

   Meggitt Safety Systems, Inc. protests the Department of the Army's award
   of contract No. W56HZV-05-C-0773 to Kidde Technologies, Inc., dba Kidde
   Dual Spectrum (KDS), for a quantity of automatic fire suppression systems
   (AFSS) to be installed in the U.S. Marine Corps's light armored vehicles.
   Meggitt asserts that the agency improperly awarded the contract on a
   sole-source basis.

   We deny the protest.

   The Marine Corps employs a family of light armored vehicles (LAV) used in
   various military missions throughout the world. Based on experience during
   the war in Iraq, it was determined that the LAVs required a survivability
   upgrade consisting of upgraded armor plating and installation of AFSS on
   all vehicles currently in the agency's inventory, as well as a number of
   additional LAVs that the agency intends to field in support of additional
   Marine Corps companies.[1] (The survivability upgrade also includes an
   upgrade to the vehicles' suspension systems to accommodate the additional
   weight of the new components, as well as the replacement of certain
   vehicles' gun turrets.)

   While the agency had concluded by the beginning of 2005 that the
   survivability upgrade would be necessary, it did not have any funding with
   which to pursue the acquisition. Nonetheless, in an effort to obtain
   market research data to determine the availability of the AFSS, the agency
   issued a request for information (RFI), with responses due by February 28,
   2005. The agency received four responses by the deadline, including the
   protester's and KDS's (a fifth response was submitted by another concern
   in April). Contracting Officer's (CO) Statement at 2-3. The agency
   evaluated the responses to ascertain the technology readiness level (TRL),
   or "maturity," of each firm's AFSS. The RFI specified an AFSS with a
   minimum TRL rating of at least 8 as necessary to meet the agency's
   requirements, and also expressed, as an objective, an AFSS with a TRL
   rating of 9. TRL ratings are established consistent with guidance outlined
   in the Department of Defense Technology Readiness Assessment Deskbook,
   May, 2005, which describes TRL ratings ranging from 1 to 9, with the TRL 8
   rating being defined as "actual system completed and qualified through
   test and demonstration," and a TRL rating of 9 defined as "actual system
   proven through successful mission operations." Agency Report (AR), exh.
   15, at 3-15.

   The agency determined that the KDS AFSS merited a TRL rating of between 8
   and 9. Specifically, the agency found that variants of the KDS AFSS had
   been fielded on numerous other military vehicles (including the Stryker or
   LAV 3 vehicles, as well as LAV 2 vehicles furnished under various foreign
   military sales agreements) and was rated as TRL 9 for those vehicles.
   However, [deleted] for the LAV A2s, the agency concluded that the TRL
   rating for the KDS AFSS was essentially somewhere between a TRL rating of
   8 and 9. AR, exh. 16, at 4-5; Tr. at 44-45. The record shows that the
   agency also gave some consideration to the fact that KDS had a current
   production capability that was adequate to meet the needs of the
   requirement.

   Tr. at 43.

   The agency assigned the Meggitt AFSS a TRL rating of 7. (A TRL rating of 7
   is defined as "system prototype demonstration in an operational
   environment." AR, exh. 15, at 3-15.) The agency stated the basis for this
   rating as follows:

   Meggitt has not supplied an AFSS to a U.S. military ground vehicle.
   Meggitt has supplied components and systems to the commercial aviation
   industry and to some U.S. military aircraft. The system Meggitt is
   proposing [deleted] requires establishment of production facilities to
   support the [Marine Corps's] LAV requirements. Due to the lack of
   integration into a LAV or similar ground vehicles, the TRL is considered
   to be 7.

   AR, exh. 16, at 5.

   As noted, the receipt of responses to the RFI and the TRL ratings occurred
   prior to the time that the agency received funding for the requirement.
   The agency finally received funding authority for the requirement on June
   1, and on June 16 the Marine Corps provided the Army with its direction
   regarding how, specifically, the funding should be allocated for the
   survivability upgrade. Tr. at 11. Thereafter, on August 18, the agency
   executed a justification and approval (J&A) to make a sole-source award to
   KDS, citing unusual and compelling urgency, 10 U.S.C. sect. 2304(c)(2)
   (2000), as the basis for its decision. AR, exh. 10. On September 15, the
   agency issued a solicitation for the requirement to KDS, AR, exh. 11, and
   on September 29 the agency entered into a letter contract with KDS for a
   quantity of [deleted] AFSS kits. AR, exh. 2.

   On October 7, Meggitt filed this protest with our Office, challenging the
   sole-source award to KDS. Thereafter, on November 9, the agency executed a
   second J&A that reduced the quantity of AFSS kits covered by the
   justification from [deleted] to [deleted], again citing unusual and
   compelling urgency as the basis for the sole-source award for the smaller
   quantity. AR, exh. 36. The agency notified our Office of its intent to
   partially terminate the KDS contract for the convenience of the
   government, AR, exh. 21, and notified KDS to continue performance of the
   contract notwithstanding Meggitt's protest, but only for [deleted] units.
   AR, exh. 20.

   Meggitt's challenge to the sole-source award to KDS focuses primarily on
   the interval of time between the agency's market survey activities and the
   point at which it made award to KDS. We have considered all of Meggitt's
   arguments and find them to be without merit. We discuss the most
   significant arguments below.

   The Competition in Contracting Act (CICA), 10 U.S.C. sect. 2304(c)(2),
   permits an agency to use other than competitive procedures in acquiring
   goods or services where the agency's requirement is of such an unusual and
   compelling urgency that the government would be seriously injured unless
   the agency is permitted to limit the number of sources from which it
   solicits proposals. Moreover, while CICA requires that agencies solicit
   offers from as many potential sources as is practicable when using the
   unusual and compelling urgency exception to limit competition, 10 U.S.C.
   sect. 2304(e), an agency nonetheless may limit a procurement to the only
   firm it reasonably believes can properly perform the work in the time
   available. McGregor Mfg. Corp., B-285341, Aug. 18, 2000, 2000 CPD para.
   151 at 6. In this regard, a military agency's assertion that there is a
   critical need that is related to human safety and affects military
   operations carries considerable weight. Id. at 7. The reasonableness of
   the contracting activity's judgments must be considered in the context of
   the time when they were made and the information that was available at
   that time. Equa Indus., Inc., B-257197, Sept. 6, 1994, 94-2 CPD para. 96
   at 3 n.1.

   Meggitt asserts that the agency improperly failed to engage in adequate
   advance planning. In this regard, Meggitt asserts that, after obtaining
   the responses to the RFI, the agency essentially did nothing for a period
   of approximately 6 months before eventually making its sole-source award
   to KDS. Meggitt maintains that, among other things, the agency declined
   its offer, included in its response to the RFI, to perform testing of its
   product at the firm's own expense, AR, exh. 8, at 5, and also unreasonably
   declined its offer, in an April 28 e-mail, to update its RFI response in
   April. AR, exh. 35, at 1.

   Although the record shows that the agency did not respond to Meggitt's
   April 28 e-mail, the agency's Chief of the Marine Corps Program Division
   testified that this was because, due to the lack of funding at that time,
   the agency did not think it was appropriate to cause any of the
   respondents to expend further effort in preparing materials or
   information. Tr. at 63. In a similar vein, he testified that he never
   specifically declined Meggitt's offer to perform testing at its own
   expense, but that, again, the agency was reluctant to encourage additional
   expenditures by Meggitt or other concerns in the absence of program
   funding. Tr. at 109-11.

   We find nothing unreasonable in the agency's actions. Simply stated, the
   agency acted in a manner that was prudent under the circumstances, since
   there were no funds available and no firm basis for the agency to conclude
   that it would be able to perform the upgrade. As noted, the question for
   our Office is whether the contracting activity's judgments, considered in
   the context of the time when they were made and the information that was
   available at that time, appear reasonable. Equa Indus., Inc., supra.
   Further, regarding Meggitt's offer to perform testing at its own expense,
   in the absence of agency direction not to perform such testing, there is
   no basis to find that the agency somehow unreasonably precluded Meggitt
   from conducting such testing. Meggitt has not shown why it could not have
   performed such testing at its own expense (and provided the agency with
   its results), and thereby possibly positioned itself differently with
   respect to the agency's urgent requirement. In effect, Meggitt's decision
   to refrain from such testing was a matter of its own business judgment,
   not improper agency action. We note that the agency's witness testified
   that he would have at least considered the results of such testing. Tr.
   at 116-17.[2]

   Meggitt argues that, at the point in time that the agency did receive
   funding for the requirement, Meggitt already had unreasonably been
   excluded from further consideration. Meggitt points out two considerations
   in connection with this assertion. First, the record includes testimony
   showing that by late April the agency had essentially determined that
   Meggitt would not be a viable source for the requirement. Tr. at 119-20.
   Meggitt argues that this was unreasonable because, as events turned out,
   it could have met the agency's requirement. Second, the record shows that
   at the point in time when the agency did receive funding, it decided to
   pursue a sole-source award to KDS because it had concluded that any other
   offeror would need approximately 13 months from contract award to first
   production delivery. Tr. at 23-25. Meggitt maintains that this 13-month
   estimate is erroneous, and that it could begin production deliveries
   within the time frame under KDS's contract (approximately 6 months after
   award).

   We find the agency's actions unobjectionable. First, the record shows
   that, at the time of the agency's assigning TRL ratings, Meggitt had not
   previously fielded its AFSS on Department of Defense ground vehicle
   platforms.[3] While Meggitt did state in its response to the RFI that its
   AFSS was a mature product that had been installed on over 10,000 vehicles
   worldwide, AR, exh. 8, at 3, the record shows that, in fact, Spectronix
   (the firm with which Meggitt had entered into a licensing agreement to
   manufacture its components in the United States), and not Meggitt itself,
   had manufactured and installed the units in question.

   Second, in its response to the RFI, Meggitt proposed to establish a
   production facility to fabricate the Spectronix components that it was
   licensed to manufacture. The agency was concerned that the establishment
   of a new production facility to manufacture components that Meggitt had
   not previously produced introduced an element of risk that was
   unacceptable in light of the agency's urgent requirement. Tr. at 17-19. We
   find nothing unreasonable in the agency's conclusion, given that Meggitt
   did not have a production capability at the time it responded to the RFI;
   indeed, it was this consideration, primarily, that led the agency to
   assign Meggitt a TRL rating of only 7.[4]

   Finally, we do not find the agency's 13-month estimate of the time
   necessary from contract award to production unit deliveries unreasonable.
   The agency's witness testified as follows:

   Q: Do you recall how that 13 months was established? Can you break that
   out at all?

   A: I can, based on our experience in developing systems and subsystems for
   application to the Marine Corps LAV fleet. We find that the typical
   timeline requires some three months for development of the design, the
   initial design, production of the prototypes for test, approximately five
   to six months to conduct thorough testing to include reliability,
   availability, maintainability testing, performance testing, environmental
   tests, and operational tests in the evaluation, five to six months for
   those activities. And then once the design has been validated through that
   series of testing, the contractors would be authorized to begin
   production. And in a situation like this, it would be expected to take
   about five months to acquire the raw materials, establish the
   manufacturing processes, produce the components, do the production
   testing, and package them for delivery.

   Tr. at 24-25. Meggitt takes issue with this testimony, arguing that the
   agency's estimates are inflated and that a more expedited delivery could
   be achieved. However, Meggitt has furnished no evidence establishing that
   the agency's timeline is not at least roughly accurate. Moreover, again,
   Meggitt has not established that it had the capability to begin
   performance at the time of the award to KDS. Given that the delivery
   schedule for KDS's contract calls for initial deliveries no later than 6
   months after contract award, and given that, in order to meet the agency's
   delivery requirement here Meggitt would essentially have to make initial
   deliveries in less than one-half the time the agency estimates it would
   need, we find no basis to question the agency's determination that Meggitt
   was not in a position to perform the contract.

   Meggitt asserts that the agency's partial corrective action, that is, its
   reduction in the number of units to be produced by KDS from [deleted] to
   [deleted], is inadequate because Meggitt eventually will be in a position
   to manufacture at least some of the remaining [deleted] units, even
   assuming the agency's 13-month estimate is roughly correct.[5] In this
   regard, the record shows that KDS's deliveries under the contract commence
   180 days after the September 29 award date and continue until 360 days
   after award. AR, exh. 2, at 5; exh. 20. However, since the delivery
   schedule under the KDS contract contemplates that all quantities will be
   delivered in just under 12 months after award, and since, as discussed,
   there is nothing unreasonable in the agency's conclusion that Meggitt
   could need as much as 13 months to begin deliveries, there is no basis for
   us to question the number of units remaining under KDS's contract.

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] The vehicles at issue here are designated as LAV A2; this designation
   is being assigned to these vehicles to connote that they have received the
   survivability upgrade at issue. Previously, these vehicles were designated
   as LAV A1. Hearing Transcript (Tr.) at 6-7. The family of LAV A2 vehicles
   includes some seven different variants of LAVs. Tr. at 42. In addition,
   the record includes periodic references to the LAV 3, or Stryker vehicle,
   which is distinct from the LAV A2.

   [2] Similarly, it is not apparent why Meggitt could not have simply
   furnished the agency with any updated information it deemed relevant to
   establishing its capabilities.

   [3] The record shows that Meggitt, [deleted] for purposes of conducting
   limited performance testing, Tr. at 18, 19, 94, but there are no other
   instances identified in the record where the Meggitt system has been
   installed or tested in a Department of Defense ground vehicle platform.

   [4] Although the issue of whether Meggitt has this production capability
   has been prominent throughout the development of the protest record,
   Meggitt has tendered no detailed evidence relating to even a current
   capability to manufacture its AFSS as proposed. The only evidence provided
   is an affidavit in which Meggitt's Director of Advanced Development only
   generally avers, without supporting documentation or references, that
   Meggitt has established a production facility that is capable of meeting
   the agency's delivery requirements. Meggitt Affidavit, Dec. 2, 2005, at 1.
   This lack of supporting evidence is significant in light of testimony by
   an agency witness relating to another contract awarded to Meggitt to
   manufacture its AFSS for installation in certain other Department of
   Defense vehicles (Humvees). That witness testified that Spectronix, rather
   than the protester, had manufactured some of the components under that
   contract. Tr. at 89-91. Meggitt has tendered no evidence to rebut this
   testimony which suggests that it lacks a current capability to manufacture
   its AFSS as proposed in its response to the RFI, notwithstanding the
   centrality of the issue during our consideration of the case.

   [5] Meggitt also complains that the agency has made no commitment
   regarding whether it intends to hold a competition for the remaining
   [deleted] units. However, to the extent that Meggitt is asserting that the
   agency intends improperly to acquire these remaining units without using
   competitive procedures, Meggitt's allegation merely anticipates improper
   agency action; as such, this aspect of Meggitt's protest is speculative
   and premature, and therefore not for our consideration at this time. Sun
   Chem. Corp., B-288466 et al., Oct. 17, 2001, 2001 CPD para. 185 at 13.