TITLE: B-298232.2, Waltron LLC--Costs, August 18, 2006
BNUMBER: B-298232.2
DATE: August 18, 2006
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B-298232.2, Waltron LLC--Costs, August 18, 2006

   Decision

   Matter of: Waltron LLC--Costs

   File: B-298232.2

   Date: August 18, 2006

   Leigh T. Hansson, Esq., and Kurt D. Ferstl, Esq., Reed Smith LLP, for the
   protester.

   Benjamin G. Perkins, Esq., Defense Logistics Agency, for the agency.

   Nora K. Doolin, 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 the cost of filing and pursuing its protests
   where the agency did not unduly delay implementing the promised corrective
   action.

   DECISION

   Waltron LLC requests that our Office recommend that it be reimbursed the
   costs of filing and pursuing its protests concerning request for
   quotations (RFQ) Nos. SP0406-05-R-4095, SP0400-06-T-6790,
   SP0400-06-T-9491, and SP0400-06-T-H400, issued by the Defense Logistics
   Agency (DLA), Defense Supply Center Richmond (DSCR), for a liquid cooling
   system corrosion inhibitor.

   We deny the request.

   Background

   On September 30, 2005, DLA issued RFQ No. SP0406-05-R-4095 for liquid
   cooling system corrosion inhibitor packaged in 55 gallon drums and 5
   gallon drums.[1] The solicitation listed Nalcool 2000, an inhibitor
   manufactured by NALFLEET, Inc., as the only approved product. Waltron
   filed a protest with our Office on October 19, arguing that the RFQ should
   also have included Waltron's inhibitor (AQ-701) as an approved product. On
   November 16, the agency provided notice that it was canceling the RFQ
   because it discovered, in reviewing the protest, that it had not given
   Waltron notice of its product's removal from the acquisition item
   description (AID) as required by Federal Acquisition Regulation (FAR)
   sect. 9.207(b).[2] DSCR stated that it would delay issuance of a new
   solicitation for the item until it provided Waltron written notification
   with specific information about the basis for removal of its product from
   the AID. In view of the cancellation of the RFQ, we dismissed Waltron's
   protest as academic.

   On December 16, DSCR issued solicitation No. SP0400-06-T-6790, again
   identifying Nalcool 2000 as the only approved product. Waltron protested
   to our Office on December 21, again objecting to the omission of its
   product from the AID in the RFQ, and arguing that DSCR had failed to
   implement the corrective action promised in response to its prior protest.
   At that time, Waltron had not yet received written notice as to why its
   product had been removed from the AID. On January 4, 2006, DSCR notified
   our Office that it was canceling the RFQ, explaining that it had been
   inadvertently issued by DSCR's automated procurement system before the
   required notice to Waltron had been sent. We then dismissed Waltron's
   second protest as academic.

   On the same date our Office dismissed Waltron's second protest, January 4,
   Waltron received a letter from DSCR notifying it that its AQ-701 product
   had been removed from the AID for the inhibitor. The letter further
   detailed that in June 2004, the Navy had informed DLA that Waltron's
   product was chemically incompatible with the approved product the Navy was
   using and therefore was not acceptable. At the Navy's request, DSCR
   subsequently removed Waltron's product as a source of supply for the two
   sizes of the product (2 quarts and 55 gallons) used by the Navy.

   With respect to the other two sizes of the product (1 quart and 5
   gallons), the letter explained that in November 1987 Waltron's inhibitor
   was erroneously added to the AID as an approved product. According to
   DSCR, these two sizes of the product are used exclusively by the Air
   Force, which had accepted Waltron's product as an acceptable alternative
   to NALFLEET'S Nalcool 2000. DSCR concluded by informing Waltron that since
   the Air Force no longer requires these items, and since Waltron's product
   does not meet the Navy's requirements, Waltron's product has been removed
   from the AID. The letter included a separate section advising Waltron on
   the steps to become approved as a source of supply for the item.

   On January 14, DSCR issued a third RFQ, No. SP0400-06-T-9491, for the same
   product called for in the previous two solicitations. On January 23,
   Waltron protested to our Office, objecting to the omission of its product
   from the AID in the RFQ and asserting that the corrective action promised
   by DSCR had not been implemented because the January 4 letter from DSCR
   provided no documentation in support of its conclusion that Waltron's
   product is chemically incompatible with the approved product. On February
   3, DSCR provided notice that it was canceling the RFQ because the Navy no
   longer had a need for the items. We subsequently dismissed Waltron's
   protest as academic.

   On March 28, Waltron received a second letter from DSCR. The purpose of
   this letter was to inform Waltron of the testing protocol developed by the
   Navy for determining the compatibility of the inhibitors. It further
   stated that Navy could not mix incompatible chemicals in its systems and
   advised that alternative products would need to be tested to ensure
   compatibility. DSCR's letter then provided the guidelines for testing
   Waltron's product and listed a contact number for questions and/or to
   begin test initiation.

   On April 5, DSCR issued RFQ No. SP0400-06-T-H400, for the same product. On
   April 21, Waltron protested to our Office, reiterating the grounds raised
   in its prior protests and arguing that the March 28 letter from DSCR
   lacked adequate justification for its decision to exclude Waltron's
   product. On May 24, DSCR filed its report responding to the protest,
   arguing that the Navy's decision to require compatibility testing is
   reasonable, that the solicitation complies with competition requirements,
   and that DSCR took the promised corrective action. On June 9, Waltron
   withdrew its protest and we closed our file on June 12.

    

   Waltron now requests that our Office recommend that DSCR reimburse it for
   the costs of filing and pursuing its four previous protests. As explained
   below, we deny Waltron's request.

   Discussion

   Our Office may recommend that protest costs be reimbursed where we find
   that an agency's action violated a procurement statute or regulation. 31
   U.S.C. sect. 3554(c)(1) (2000); 4 C.F.R. sect. 21.8(d) (2006). If an
   agency decides to take corrective action in response to a protest, our
   Office may recommend that the agency pay the protester its costs of filing
   and pursuing the protest. 4 C.F.R. sect. 21.8(e). However, we will
   recommend reimbursement only where the agency unduly delays taking
   corrective action in the face of a clearly meritorious protest. Birmingham
   Assocs.; IRS Partners-Birmingham--Entitlement to Costs, B-251931.4,
   B-251931.5, Aug. 29, 1994, 94-2 CPD para. 82 at 3. When an agency proposes
   corrective action, we consider it implicit that it will undertake a good
   faith effort to implement the corrective action and to address all issues
   raised by the protester that are meritorious. Louisiana Clearwater,
   Inc.--Recon. and Costs, B-283081.4, B-283081.5, Apr. 14, 2000, 2000 CPD
   para. 209 at 6. As a general rule, so long as an agency takes corrective
   action in response to a protest by the due date of its protest report, we
   regard such action as prompt and decline to consider favorably a request
   to recommend reimbursement of protest costs. Alaska Structures,
   Inc.--Costs, B-298156.2, July 17, 2006, 2006 CPD para. 109. We have
   recognized that the reimbursement of protest costs may be appropriate
   where an agency does not timely implement the promised corrective action;
   the mere promise of action, without reasonably prompt implementation, has
   the obvious effect of circumventing the goal of the bid protest system of
   effecting the economic and expeditious resolution of bid protests.
   Louisiana Clearwater, Inc.-Recon. and Costs, supra.

   Waltron argues that it should recover its costs because the agency's
   actions show a failure to timely implement the corrective action the
   agency promised in response to the initial protest--providing specific
   information about the basis for removal of its product from the AID. We
   disagree. On November 16, prior to the date set for filing the agency
   report, DSCR withdrew the RFQ and advised that it would take corrective
   action by notifying Waltron of the reasons its product was removed from
   the AID. DSCR implemented its corrective action as promised on January 4,
   the date Waltron received DSCR's notification letter. While DSCR did issue
   another RFQ just before sending its notification letter to Waltron, which
   was the basis of Waltron's second protest, the agency promptly withdrew
   that RFQ and reasonably explained that this issuance was due to an error
   with DSCR's automated procurement system. Since Waltron received the
   notice of its product's removal from the AID less than 2 months after the
   agency advised that it would take correction action, we see no basis to
   regard the agency's action as unduly delayed.

   Waltron also argues that DSCR's corrective action, as implemented in the
   January 4 letter, was inadequate because it did not specifically inform
   Waltron why its product had been removed. Again, we disagree. DSCR's
   January 4 letter adequately explained the reason for removal--chemical
   incompatibility with the approved product. The letter further advised that
   since Waltron's product did not meet the Navy's requirements and had been
   removed from the AID, Waltron would have to become approved as a source of
   supply for the item to be placed back on the AID, which would require
   testing. The letter concluded with an explanation of the steps required
   for Waltron's product to become approved. In sum, the letter clearly
   constituted adequate, and timely, implementation of the corrective action
   promised in response to Waltron's protest.

   The request for a recommendation that the agency reimburse Waltron's
   protest costs is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] DLA is conducting this procurement on behalf of the Navy, the user
   activity.

   [2] FAR sect. 9.207(b) requires an agency, after removal of a product or
   source, to promptly notify the affected parties, providing specific
   information about why the product or source no longer meets the
   qualification requirements.