TITLE: B-298099.3, Overlook Systems Technologies, Inc.--Costs, October 5, 2006
BNUMBER: B-298099.3
DATE: October 5, 2006
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B-298099.3, Overlook Systems Technologies, Inc.--Costs, October 5, 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: Overlook Systems Technologies, Inc.--Costs

   File: B-298099.3

   Date: October 5, 2006

   Drew A. Harker, Esq., Matthew H. Solomson, Esq., and Chad E. Miller, Esq.,
   Arnold & Porter LLP, for the protester.

   Michael J. O'Farrell, Jr., Esq., Department of the Air Force, 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

   Protester is not entitled to reimbursement of the costs of filing and
   pursuing its protests where the agency decides to take corrective action
   in response to the protests, and the protests, which concerned alleged
   organizational conflicts of interest, the agency's evaluation of
   proposals, and its best value decision, were not clearly meritorious.

   DECISION

   Overlook Systems Technologies, Inc. requests that we recommend that it be
   reimbursed the costs of filing and pursuing its protest challenging the
   award of a contract to LinQuest Corporation under request for proposals
   (RFP) No. FA2550-05-R-2000, issued by the Department of the Air Force for
   services in support of the operation of the Global Positioning System
   (GPS) Operations Center (GPSOC) located at the 2^nd Space Operations
   Squadron at Schriever Air Force Base, Colorado. We dismissed the protest
   as academic on June 13, 2006 based on the Air Force's statement that it
   would evaluate an organizational conflict of interest (OCI) allegation
   raised by Overlook in its protest.

   We deny the request.[1]

   The RFP, issued on December 22, 2005 as a small business set-aside,
   contemplated the award of a fixed-price incentive fee contract for a base
   period of 6 months and four 1-year option periods for services in support
   of the GPSOC, which has the mission of operating, maintaining, and
   employing GPS, "the world's premier satellite-based Position, Velocity,
   and Timing (PVT) information system," "in support of military, civil, and
   allied operations across the full spectrum of conflict." RFP, Statement of
   Work, at 3. In support of the GPSOC, the contractor is to provide
   sufficient personnel to operate the GPSOC on a 24-hour, 7-day-a-week basis
   "to ensure optimal data, products and services support to GPS users." Id.

   Award was to be made on a best value basis, with proposals evaluated under
   the following three factors: (1) technical acceptability; (2) past
   performance; and (3) price. Technical acceptability was to be evaluated
   solely on a pass/fail basis. Only those offerors whose proposals were
   found technically acceptable were evaluated under the past performance
   factor, which was considered significantly more important than cost or
   price. RFP at 53. Regarding the evaluation of past performance, the RFP
   explained that the Air Force would consider "recent and relevant" past
   performance information, including customer past performance
   questionnaires, contractor assessment surveys, Contract Performance
   Assessment Reporting System (CPARS) records, and "any other information
   available." RFP at 53. The RFP defined "recent" contracts as those
   completed within the last 3 years and "relevant" contracts as those
   calling for "performance of efforts involving mission analysis of the GPS
   constellation or relevant system that are similar or greater in scope,
   magnitude and complexity than the effort described in this solicitation."
   RFP at 54. In addition, the RFP defined three different "degrees of
   relevance" for the purpose of evaluating past performance--relevant,
   somewhat relevant, and not relevant--and indicated that the government
   reserved the right to give greater consideration to information on those
   contracts deemed "most relevant to the effort described in the RFP." Id.
   As it relates to the protests, "relevant" was defined by the RFP as
   efforts involving "much of the magnitude of effort and complexities this
   solicitation requires," and "somewhat relevant" as efforts involving "some
   of the magnitude of effort and complexities [] this solicitation
   requires." Id.

   The solicitation provided that, based on its evaluation of an offeror's
   past performance information, the Air Force would assign the offeror a
   performance confidence assessment (PCA) rating of high confidence,
   significant confidence, satisfactory confidence, unknown confidence,
   little confidence, or no confidence. Id. With regard to price, which was
   to be evaluated for reasonableness and realism, the RFP required offerors
   to propose "all target costs, target profits, target prices, ceiling
   prices and sharing ratios for overruns/underruns (i.e. example format
   80/20 refers to, contractor's share of 80%/government's share of 20%)."
   RFP at 51.

   By the RFP's amended closing date, the Air Force had received proposals
   from several offerors, including Overlook (the incumbent contractor) and
   LinQuest. As relevant to the protest issues raised by Overlook, LinQuest
   proposed to perform the GPSOC contract using as a team member General
   Dynamics Advanced Information Systems (GDAIS), a business unit of General
   Dynamics Corporation. In its evaluation, the Air Force rated both
   Overlook's and LinQuest's proposals as technically acceptable. Under the
   past performance factor, with regard to Overlook, the Air Force considered
   four past performance questionnaires completed by Overlook customers and
   three contractor assessment surveys, and concluded that Overlook's past
   performance information was "relevant" and that the questionnaires and
   surveys reflected a majority of ratings in the exceptional category, with
   no ratings in the unsatisfactory or marginal category. As a consequence,
   the agency assigned Overlook the highest PCA rating of "high confidence."

   With regard to LinQuest's past performance, and that of its subcontractors
   and team members, the Air Force considered a total of 15 past performance
   customer questionnaires, 12 contractor assessment surveys, and two CPARS
   records, and concluded that its past performance was "somewhat relevant,"
   since LinQuest's team did not have any experience performing some of the
   particular types of tasks required under the contract. As with Overlook,
   however, the questionnaires, surveys, and CPARS records reflected a
   majority of scores in the exceptional category, with no unsatisfactory or
   marginal ratings. Based on this information, the Air Force assigned
   LinQuest the second highest PCA rating of "significant confidence."

   The Air Force determined that the prices proposed by both Overlook and
   LinQuest were reasonable and realistic. Overlook proposed a target price
   of $14,046,552, a ceiling price of $14,546,000, and an equal 50/50 share
   between the contractor and the government for both cost underruns and
   overruns. LinQuest submitted a target price of $12,860,409, a ceiling
   price of $14,500,000, and, from the government's perspective, a more
   advantageous contractor/government cost overrun share ratio of 70/30, and
   a cost underrun share ratio of 30/70 contractor/government.

   Based on a tradeoff between past performance and price, the Air Force
   concluded that LinQuest's proposal represented the best value to the
   government. After learning of this decision and receiving a debriefing,
   OverLook filed a protest with our Office on March 16, 2006 raising several
   issues.

   In its initial protest, Overlook argued that LinQuest was precluded from
   performing the GPSOC contract due to an OCI stemming from LinQuest's
   inclusion of GDAIS as a member of its team. Overlook alleged that the
   objectivity of GDAIS would be compromised in those instances where it was
   called upon to evaluate problems and the performance of GPS in systems
   manufactured by General Dynamics or those of its competitors. As described
   by Overlook, General Dynamics "manufactures GPS equipment . . . as well as
   commercial aircraft . . . and many multi-million dollar weapon systems and
   munitions that depend upon GPS for their proper operation." Protest at 6.
   In addition, Overlook argued that the agency improperly evaluated
   LinQuest's past performance since LinQuest did not have any relevant
   experience, and that the Air Force's best value decision was arbitrary.[2]

   On April 14, the Air Force filed its report addressing the issues raised
   by Overlook. With regard to the OCI issue, the Air Force maintained that
   because performance of the GPSOC contract does not require the LinQuest
   team to analyze the performance of its own weapons systems or those of its
   competitors, the alleged OCI issue was unfounded. According to the Air
   Force, the GPSOC contractor is responsible solely for analyzing and
   evaluating problems with the GPS signal as caused by satellite issues,
   signal strength, signal gaps, or environmental issues, such as
   interference and space weather, or "some outside cause such as the
   receiver failure, operator error, etc." Agency Report (AR), Legal
   Memorandum, at 7. Regarding the reasonableness of its past performance
   evaluation of LinQuest, the Air Force set forth its basis for assigning
   LinQuest a PCA score of "significant confidence." In this regard, the Air
   Force provided our Office with the record of its evaluation of LinQuest's
   past performance, which reflected the Air Force's consideration of the
   degree of relevance of LinQuest's past performance information. In its
   report, the Air Force explained that while LinQuest's record of contract
   performance was largely exemplary, its team's experience was considered
   only "somewhat relevant" based on the fact that it lacked experience in "a
   very small number of the areas related to performance of the GPSOC
   contract." AR, Memorandum of Law, at 12. The agency also disputed
   Overlook's allegation that its best value determination was unreasonable.

   In its comments on the agency report, Overlook challenged the agency's
   assertion that the GPSOC contract does not require the awardee to analyze
   or evaluate the performance of General Dynamics' GPS-dependent systems or
   those of its competitors. According to Overlook, the OCI inherent in
   LinQuest's reliance on GDAIS in performing the GPSOC contract results from
   the fact that the contractor will be required to determine the cause of
   GPS signal failures, which are ultimately attributed to failure of either
   the GPS signal or the GPS-dependent system itself. Overlook argued that,
   by having GDAIS make this fault determination, its objective assessment of
   the problem would be compromised in those situations where it would be
   evaluating GPS performance in connection with one of General Dynamics'
   systems or the system of one of its competitors since it would have a
   vested interest in the outcome of the determination. In support of its
   contention, Overlook submitted a declaration by its chief engineer, who
   served as the program manager and chief engineer for the GPSOC on
   Overlook's incumbent contract. Overlook's chief engineer indicated that to
   evaluate problems with GPS signal failure, the contractor utilizes a
   specific checklist to evaluate issues such as status of the satellites,
   space weather conditions, atmospheric conditions, terrain, etc. After all
   the items on the checklist have been excluded, the weapon system itself
   becomes the subject of further investigation. Protester's Comments, Tab 1,
   Declaration of Chief Engineer for Overlook, Apr. 27, 2006, at 3.

   In addition, based on new information gleaned from the agency's report,
   Overlook elaborated on its initial general protest arguments regarding the
   Air Force's evaluation of LinQuest's past performance and the agency's
   best value determination, and filed a supplemental basis of protest
   raising a new OCI issue. As to the Air Force's evaluation of LinQuest's
   past performance and its best value determination, Overlook argued with
   greater specificity why, in its view, the record did not substantiate
   LinQuest's PCA rating of "significant confidence," why LinQuest's
   experience was not relevant to the tasks required under the GPSOC
   contract, and that the Air Force failed to conduct a proper trade-off
   analysis since it failed to consider significant weaknesses in LinQuest's
   past performance information and failed to adequately document its
   trade-off analysis.

   Overlook's supplemental OCI protest issue concerned the reasonableness of
   the Air Force's analysis of potential OCI issues resulting from GDAIS's
   and General Dynamics' involvement in five other GPS-related procurements.
   In this regard, the record reflected that LinQuest had submitted a letter
   to the Air Force to provide information regarding potential OCI issues. In
   this letter, LinQuest represented that GDAIS "does not believe it has any
   OCI issues, but has disclosed involvement in GPS related procurements,"
   which were identified and discussed in the letter. AR, Tab 29, Letter,
   Subject: LinQuest Team Potential OCI Issues, Jan. 3, 2006. The record
   further reflected that the contracting officer considered LinQuest's
   letter and determined that, based on the information provided by LinQuest,
   no further action by LinQuest was necessary regarding OCI issues.

   The Air Force then filed a supplemental report which further addressed
   Overlook's initial OCI protest allegation regarding GDAIS's impaired
   objectivity, the supplemental OCI allegation raised by Overlook, and the
   specific concerns raised by Overlook regarding the evaluation of
   LinQuest's past performance and the trade-off analysis. Regarding the
   impaired objectivity OCI issue, the Air Force reiterated that in its view
   no impaired objectivity OCI exists with respect to GDAIS's performance
   under the contract because the GPSOC contract does not require GDAIS to
   analyze or evaluate the performance of any equipment or technology of
   General Dynamics or its competitors. Rather, according to the Air Force,
   it is the GPS signal that is being analyzed under the GPSOC contract, not
   the system using the signal. In support of its position, the Air Force
   submitted statements from the contracting officer and the Commander of the
   2^nd Operations Squadron.

   After reviewing the record, our Office held a hearing with the parties on
   June 5-6, in order to more fully understand the contractor's
   responsibilities under the GPSOC contract and address the specific
   question of whether the awardee would be placed in the position of
   assessing whether a GPS receiver, which General Dynamics has incorporated
   in equipment it has provided to the government, is or is not the cause of
   a GPS failure. After the hearing, but before post-hearing comments were
   due to our Office, the Air Force notified our Office and the parties that
   it was taking corrective action by further evaluating the impaired
   objectivity OCI issue raised by Overlook to determine "whether the Air
   Force should take appropriate steps to avoid, neutralize or mitigate any
   significant potential conflicts of interest before contract award . . . ."
   Air Force Letter to GAO, June 9, 2006. Based on this proposed corrective
   action, our Office dismissed Overlook's protest as academic on June 13.

   Overlook requests that we recommend that it be reimbursed the reasonable
   costs of filing and pursuing its protest, including reasonable attorneys'
   fees. Overlook asserts that all of its protest grounds were clearly
   meritorious and the Air Force unduly delayed taking corrective action, as
   evidenced by its failure to do so until after filing an initial agency
   report and a supplemental report, and after a hearing was held in the
   case.

   Under the Competition in Contracting Act of 1984, our Office may recommend
   that protest costs be reimbursed only where we find that an agency's
   action violated a procurement statute or regulation. 31 U.S.C. sect.
   3554(c)(1) (2000). Our Bid Protest Regulations provide that, where the
   contracting agency decides to take corrective action in response to the
   protest, we may recommend that the protester be reimbursed the costs of
   filing and pursuing its protest, including reasonable attorneys' fees. 4
   C.F.R. sect. 21.8(e) (2006). That does not mean that costs should be
   reimbursed in every case in which an agency decides to take corrective
   action; rather, we will recommend reimbursement only where an agency
   unduly delayed its decision to take corrective action in the face of a
   clearly meritorious protest. CSL Birmingham Assocs.; IRS
   Partners-Birmingham-- Entitlement to Costs, B-251931.4, B-251931.5, Aug.
   29, 1994, 94-2 CPD para. 82 at 3. Thus, as a prerequisite to our
   recommending the reimbursement of costs where a protest has been settled
   by corrective action, not only must the protest have been meritorious, but
   it also must have been clearly meritorious, i.e., not a close question.
   PADCO, Inc.--Costs, B-289096.3, May 3, 2002, 2002 CPD para. 135 at 3. A
   protest is "clearly meritorious" where a reasonable agency inquiry into
   the protester's allegations would reveal facts showing the absence of a
   defensible legal position. First Fed. Corp.--Costs, B-293373.2, Apr. 21,
   2004, 2004 CPD para. 94 at 2. The mere fact that an agency decides to take
   corrective action does not establish that a statute or regulation clearly
   has been violated. Spar Applied Sys.--Declaration of Entitlement,
   B-276030.2, Sept. 12, 1997, 97-2 CPD para. 70 at 5.

   We conclude that reimbursement is not appropriate in this case since
   Overlook's protest allegations were not clearly meritorious. Regarding the
   OCI issue raised in Overlook's initial protest--the alleged impaired
   objectivity of GDAIS--this basis of protest was premised on Overlook's
   understanding of the solicitation as requiring the GPSOC contractor, in
   the context of evaluating GPS signal failures, to analyze and evaluate the
   performance of GPS equipment and the operation of equipment that utilizes
   GPS technology. The Air Force, however, maintained that the contract does
   not require this type of analysis and instead argued that the contract
   merely requires the GPSOC contractor to evaluate and analyze problems
   relating to the GPS signal itself. Because our Office could not determine
   which party's position was correct from the record, we held a hearing to
   more fully develop the matter. Since the ultimate resolution of this
   matter required substantial further analysis as indicated, in part, by our
   Office's scheduling of a hearing to more fully develop the protest record
   regarding this issue, the protest, in our view, presented a close
   question, and therefore was not clearly meritorious. See Honeywell Tech.
   Solutions, Inc.--Costs, B-296860.3, Dec. 27, 2005, 2005 CPD para. 226 at 4
   n.3.

   Similarly, the other issues raised in Overlook's protest were not clearly
   meritorious. In challenging the Air Force's evaluation of LinQuest's past
   performance, Overlook principally argued that LinQuest's PCA rating of
   "significant confidence" was unreasonable given LinQuest's lack of
   experience with GPS. The agency, however, defended its evaluation, noting
   that the solicitation did not require GPS experience per se, but rather
   defined relevant past performance information to include performance of
   efforts "that are similar or greater in scope, magnitude and complexity
   than the effort described in this solicitation." RFP at 54. Moreover, the
   record reflected that the Air Force rated LinQuest's past performance as
   only "somewhat relevant" since its past performance information reflected
   only "some of the magnitude of effort and complexities" required under the
   RFP. Given its largely exceptional performance, however, the Air Force
   concluded that LinQuest deserved a PCA rating of "significant confidence."
   Based on this record, we think that the agency's response constituted a
   colorable defense to the issues in the protest, and we thus cannot
   conclude that Overlook's challenge in this regard was "clearly
   meritorious."

   With regard to the Air Force's award decision, Overlook asserted that the
   agency improperly converted the source selection decision from a best
   value determination to one based on technical acceptability and low price
   in contravention of the terms of the RFP as reflected by the Air Force's
   failure to consider significant weaknesses in LinQuest's past performance
   information, and the lack of any substantive analysis in the trade-off
   between past performance and price. The Air Force argued that it followed
   the selection criteria set forth in the RFP and adequately documented its
   best value decision in favor of LinQuest's lower-priced proposal as
   reflected in its source selection decision, and further supported its
   position through a declaration from the SSA. Thus, the record reflected
   that, in making the award decision, the SSA considered, at a minimum, the
   offerors' proposals and the past performance evaluations, including
   LinQuest's rating of "significant confidence," the determination that its
   information was "somewhat relevant," and the fact that its performance
   reflected an overall exceptional level of customer satisfaction, as well
   as Overlook's status as the incumbent, its relevant past performance
   information, and its past performance evaluation rating of "high
   confidence." Since the agency advanced a colorable argument in defense of
   its best value decision, which was not inconsistent with the record, we
   have no basis on the record here to conclude that Overlook's challenge to
   the best value decision was clearly meritorious.

   As a final matter, regarding Overlook's supplemental protest allegation
   that the Air Force failed to adequately analyze potential OCIs resulting
   from the involvement of GDAIS and General Dynamics in several other
   GPS-related procurements which were disclosed by LinQuest in its proposal,
   we find that this issue also was not clearly meritorious. The record
   reflects that LinQuest informed the Air Force of contracts which either
   GDAIS or General Dynamics C4 Systems (GD-C4S), a separate business unit of
   GD, were performing [deleted]. LinQuest further indicated that GDAIS had
   been supporting the GPS Joint Program Office for 9 years and had been
   operating under an approved OCI plan for several years, that it was in the
   process of updating that plan, and that an OCI mitigation plan would be in
   place for the GPS Joint Program Office support as well as the GPSOC
   effort. AR, Tab 29, supra. Moreover, LinQuest explained that the GDAIS
   business unit involved with the GPS Joint Program Office was separate from
   the unit proposed for the GPSOC contract. During the hearing held by our
   Office, the contracting officer testified that he had discussed LinQuest's
   disclosures regarding GDAIS's involvement in the GPS Joint Program Office
   contracts with a technical expert in the GPSOC who further discussed the
   issue with other technical experts in the GPSOC, and advised the
   contracting officer that the 2^nd Space Operations Squadron did not
   perceive the possibility of an OCI. Ultimately, the contracting officer
   concluded, in part, that given GDAIS's history of successfully supporting
   the GPS Joint Program Office under approved OCI plans, there was no reason
   to conclude that the disclosed GPS Joint Program Office contracts gave
   rise to impermissible conflicts.

   The record, albeit limited and in some instances incomplete, was not
   inconsistent with the Air Force's contention that the contracting officer
   had considered GDAIS's involvement under the GPS Joint Program Office
   contracts as they related to the GPSOC contracts, and determined that such
   involvement did not present an impermissible conflict. Further, the record
   did not clearly establish that GDAIS's involvement under the GPS Joint
   Program Office contracts presented an impermissible conflict (i.e., a
   conflict resulting from impaired objectivity, unequal access to
   information, or biased ground rules, the three circumstances, broadly
   speaking, which create the potential for OCI concerns, see Government
   Scrap Sales, B-295585, Mar. 11, 2005, 2005 CPD para. 60 at 3). As a
   result, we cannot conclude that Overlook's challenge in this regard was
   clearly meritorious.

   The request that we recommend reimbursement of costs is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] Prior to our issuance of this decision resolving Overlook's request
   for costs, the agency implemented its corrective action and the protester
   filed a new protest challenging the results of the corrective action. In
   this new protest the protester raises essentially the same bases of
   protest that were raised in its initial protest. The fact that we have
   denied the protester's request for costs does not reflect a judgment
   regarding the merits of the new protest filed by Overlook, given that the
   request for costs and the protest are subject to different standards of
   review based on different records.

   [2] Overlook also challenged the Air Force's determination that LinQuest's
   proposal was technically acceptable. After receipt of the agency report,
   however, Overlook expressly withdrew this basis of protest.