TITLE: B-298864; B-298864.2, Barnes Aerospace Group, December 26, 2006
BNUMBER: B-298864; B-298864.2
DATE: December 26, 2006
***************************************************************
B-298864; B-298864.2, Barnes Aerospace Group, December 26, 2006
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: Barnes Aerospace Group
File: B-298864; B-298864.2
Date: December 26, 2006
Jason A. Carey, Esq., Todd J. Canni, Esq., Kara M. Klaas, Esq., and John
G. Horan, Esq., McKenna Long & Aldridge, for the protester.
Randall W. Sweeney for Ferrotherm Corporation, an intervenor.
Capt. Christopher M. Schumann, Department of the Air Force, for the
agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protester's contention that the agency unreasonably delayed acting on
the protester's request to become an approved source is denied where the
record shows that the delay was not unreasonable.
2. Protest challenging sole-source procurement justified on the ground
that only one source is available is sustained where the record shows that
the presolicitation notice generated an expression of interest from a
second source that has made significant progress towards becoming an
approved source under the agency's source approval rules, and the
remaining time required for approval is not long; as a result, a
sole-source award, without considering the viability of the second source
as part of the justification and approval process, is improper.
3. Protest is sustained where the record shows that the agency treated
offerors unequally with respect to the application of its qualification
requirements by
requiring that a source seeking approval follow qualification rules while
ignoring requalification requirements in those same rules for a previously
approved source.
DECISION
Barnes Aerospace Group protests the decision of the Department of the Air
Force to award a sole-source contract to Ferrotherm Corporation under
request for proposals (RFP) No. FA8104-06-R-0276, issued to procure the
repair of certain F100 engine parts. Barnes argues that the Air Force
unreasonably delayed review of Barnes' request for source approval, and
awarded to Ferrotherm at an unreasonable price. In a supplemental protest,
Barnes argues that the agency has unfairly required Barnes to comply with
the agency's source approval rules, while ignoring requalification
requirements in those same rules with regard to Ferrotherm.
We sustain the protest.
BACKGROUND
On March 1, 2006, the Air Force posted a presolicitation notice on the
FedBizOpps website for repair of the third-stage air sealing ring segments
(hereinafter, the "ring segments") for the F100 engine. The notice advised
that the solicitation for the repair of approximately 18,900 ring segments
would soon be issued. The notice indicated that award would only be made
to an offeror qualified as an approved source by the date of award, and
that Ferrotherm Corporation was the only approved source for these
repairs. In this regard, the notice also indicated that:
The government is not required to delay contract award to review pending
Source Approval Requests (SARs). Therefore, offerors are encouraged to
submit SAR[s] as soon as possible. If the government has not completed
review of a SAR when the contract is awarded, the SAR will be retained and
the source will be reviewed for possible source approval for future
awards.
Agency Report (AR), Tab 8, at 2. Five days later, by letter dated March 6,
Barnes asked to be approved as a source for repair of the ring segments.
Shortly thereafter, Barnes submitted the requisite information to begin
the SAR process. AR, Tab 32.
Prior to issuance of the presolicitation notice, the Air Force executed a
justification and approval (J&A) document authorizing a sole-source
purchase of repairs for the ring segment, citing the authority at 10
U.S.C. sect. 2304(c)(1) (2000), and Federal Acquisition Regulation (FAR)
sect. 6.302-1(b)(1).[1] AR, Tab 7, at 3. The J&A indicated that the ring
segment is considered an "aviation safety critical item," that its repair
could only be undertaken by an approved source, and that Ferrotherm was
the only approved source.[2] Id. at 3. Of relevance here, the J&A also
indicated that "[t]his is the first contract repair for the [ring
segments] . . . [and that] repair was previously done in house at [the
Oklahoma City Air Logistics Center]." Id. While the J&A justified a
sole-source award to Ferrotherm for a 2-year base period, followed by
three 1-year options, it provided that:
Should a source other than Ferrotherm become approved or qualified during
the performance of the contract authorized by this J&A, this J&A shall not
be used as the authority for other than full and open competition for the
exercise of any option subsequent to approval of the additional source.
Id.
On April 14, the Air Force issued the solicitation announced by the March
1 notice. The RFP anticipated the award of a fixed-price contract, also
with a 2-year base period, and up to three 1-year option periods, to the
lowest-priced, technically acceptable offeror. RFP at 5-8, 39. Both Barnes
and Ferrotherm submitted offers by the May 15 due date.
The SAR process that Barnes initiated shortly after the publication of the
presolicitation notice is covered by an internal set of Air Force rules
entitled, "Repair Qualification Requirements for Parts Requiring Source
Demonstration" (hereinafter, the "RQRs"). AR, Tab 32. The RQRs identify a
two-part process for review of an SAR. Part I of the SAR process involves
submission of documentation, including proof of satisfactory repair of
production quantities of similar items; Part II involves a demonstration
of capability through contractor repair and Air Force inspection of the
repaired part. AR, Tab 32, RQRs at 4-9. Barnes submitted its documentation
for Part I of the SAR process on March 29.
On April 19, an Air Force engineer made a preliminary recommendation that
Barnes' Part I SAR be approved. Supplemental (Supp.) AR, Declaration of
Cognizant Engineer, Nov. 14, 2006, at 1. Three months later, on July 20,
the cognizant engineer approved that preliminary recommendation. Barnes
advises that it received preliminary notification that it had received
Part I approval through receipt, on August 10, of an August 8 memorandum
from the Engineering Section Chief. Protester's Final Comments, Nov. 6,
2006, at 8. More formal notice was provided by letter dated August 23 from
the Air Force Small Business Office, Source Development Specialist. AR,
Tab 23. To date, the Air Force has not provided a part for Barnes to
repair so that it can complete the second part of the approval process.
On September 13, the Air Force made award to Ferrotherm, pursuant to the
pending RFP. Barnes was not provided notice of the award decision, but
discovered an announcement of the award on the FedBizOpps website on
September 14. This protest followed.
DISCUSSION
Barnes argues in its initial protest that the agency unreasonably delayed
approval of the company to be a qualified source for the repair of these
parts, and failed to engage in sufficient advance planning to permit
enough time for new sources to become approved.[3] Barnes' argument that
Ferrotherm does not appear to be currently qualified as a source was
raised as a supplemental protest issue after receipt of the agency report.
We turn first to the initial protest issues.
Reasonable Opportunity to Qualify and Advance Planning
The Competition in Contracting Act of 1984 (CICA) requires that an agency
obtain full and open competition in its procurements through the use of
competitive procedures. 10 U.S.C. sect. 2304(a)(1)(A). An exception to
this general requirement is where there is only one responsible source
able to meet the agency's requirements. 10 U.S.C. sect. 2304(c)(1); HEROS,
Inc., B-292043, June 9, 2003, 2003 CPD para. 111 at 6. This is the
exception cited in the J&A here.
CICA further mandates, however, that noncompetitive procedures may not be
used due to a lack of advance planning by contracting officials. 10 U.S.C.
sect. 2304(f)(5); New Breed Leasing Corp., B-274201, B-274202, Nov. 26,
1996, 96-2 CPD para. 202 at 6; TeQcom, Inc., B-224664, Dec. 22, 1986, 86-2
CPD para. 700 at 5. Our Office has recognized that the requirement for
advance planning does not mean that such planning must be completely
error-free, see, e.g., WorldWide Language Resources, Inc.; SOS Int'l Ltd.,
B-296984 et al., Nov. 14, 2005, 2005 CPD para. 206 at 12, but, as with all
actions taken by an agency, the advance planning required under 10 U.S.C.
sect. 2304 must be reasonable. Id.
In addition, when a contracting agency restricts a contract to an approved
product or source, and uses a qualification requirement, it must give
other offerors a reasonable opportunity to qualify. Lambda Signatics,
Inc., B-257756, Nov. 7, 1994, 94-2 CPD para. 175 at 4; Advanced Seal
Tech., B-250199, Jan. 5, 1993, 93-1 CPD para. 9 at 3; see 10 U.S.C.
sect. 2319(b). This opportunity to qualify includes ensuring that an
offeror is promptly informed as to whether qualification has been attained
and, if not, promptly furnishing specific information why qualification
was not attained. Advanced Seal Tech., supra. Failure to act upon a
potential offeror's request for approval within a reasonable period of
time deprives the requester of a reasonable chance to compete and is
inconsistent with the CICA mandate that agencies obtain full and open
competition through the use of competitive procedures. Lambda Signatics,
Inc., supra; Advanced Seal Tech., supra.
With respect to Barnes' allegation that the Air Force unreasonably delayed
approving the company as a source of these repairs, we think the record
does not support this conclusion. As indicated above, the presolicitation
notice was published on March 1 and Barnes expressed interest in becoming
an approved source on March 6. In response, the Air Force provided Barnes
with instructions for becoming an approved source, and Barnes made its
initial SAR submission on March 29.
Barnes argues that an unreasonable amount of time elapsed between
preliminary approval of its Part I SAR submission on April 19, and the
final approval of the Part I submission by the cognizant engineer[4] on
July 20, which was not formally communicated to Barnes until a month
later, on August 23. In response to Barnes' contention, the Air Force
provided a sworn declaration from its cognizant engineer detailing the
events between the April 19 preliminary approval and the engineer's final
approval of Barne's Part I SAR submission on July 20.
In his declaration, the cognizant engineer provides details regarding
higher-priority assignments between mid-April and mid-July that delayed
his review of Barnes' SAR submission. Supp. Memorandum of Law, Declaration
of Cognizant Engineer, Nov. 14, 2006, at 1-2. While we have concerns about
the relatively low priority the cognizant engineer placed on reviewing
Barnes' SAR submission--especially given the requirement that agencies
complete such reviews as expeditiously as possible--several of the items
identified by the agency's engineer as causes for his delay also involved
serious and important matters. Declaration at 2.
We are similarly concerned about the unexplained lapse of time between the
cognizant engineer's completion of his review on July 20, and the ultimate
communication of the results to Barnes on August 23. Under the Air Force
RQRs, a source seeking approval generally must receive notice that its
documentation has been approved before it can move to the demonstration
phase of the approval process. AR, Tab 32, RQRs at 3, 8. This lapse in
providing notice of Part I approval--even more than the engineer's
delay--suggests that the Air Force could improve its performance in
processing requests such as these. Nonetheless, given the explanations in
the record from the engineer, and the relatively short amount of delay for
which there is no explanation, we are not prepared to conclude, on this
record, that the agency has acted unreasonably in processing Barnes' SAR.
With respect to Barnes' argument that the agency failed to conduct
adequate planning for this procurement, we again think the record does not
support such a conclusion. In Barnes' view, the agency essentially
concedes it failed to conduct advance planning because it acknowledges[5]
that the time required to become an approved source of this part will
likely be longer than the time available to procure it. We think Barnes'
contention is incorrect. Where, as here, the approval process involves an
aviation critical safety item, there is no dispute that the review process
can be quite involved. In apparent recognition of situations like this,
the applicable statute and regulations expressly provide that agencies
need not delay proposed procurements in order to provide potential
offerors enough time to become qualified. 10 U.S.C. sect. 2319(c)(5); FAR
sect. 9.202(e). The absence of a requirement to delay a procurement while
waiting for a potential offeror to become qualified, together with the
opportunity to become qualified independent of a pending procurement
action, leads us to conclude that an agency's inability to withhold award
until completion of the approval process, on its own, is not sufficient
evidence to conclude that the agency unreasonably failed to conduct
adequate advance planning.
Moreover, the record shows that past repairs of this part were done
in-house (by Air Force personnel) at the Oklahoma City Air Logistics
Center, but that "in-house resources are unable to repair [this part] in
the quantity required." AR, Tab 7, J&A at 2. While the protester correctly
points out that estimates of the agency's repair needs for these parts
have existed for several years, we think the workload capacity of the Air
Logistics Center gives an added layer of complexity to the planning
issues. Specifically, the need to now procure these items commercially
(rather than repair them in-house), without waiting for completion of the
SAR process, has been generated by both the need for the parts themselves,
and limitations in the Air Logistics Center's ability to meet that need
in-house. We have reviewed the information in the record, and the
arguments raised by the protester, and under the circumstances here, we
cannot conclude that the need to now procure these parts resulted from a
failure of adequate planning.
Adequacy of the J&A
Although Barnes was not aware of the J&A here when it first filed its
protest, its argument about lack of advance planning relates more to the
adequacy of the agency's sole-source J&A, than to its argument that the
agency unreasonably delayed approving its SAR submission. In its comments,
Barnes complains that the J&A was improperly prepared before the agency
issued its presolicitation notice--not to mention before potential
offerors were given a reasonable opportunity to become qualified sources.
In addition, Barnes questions the agency's commitment to approving new
sources to obtain competition given that it had already prepared and
executed a sole-source J&A claiming that there was only one responsible
source for these repairs.
As set forth in greater detail below, while it is not improper per se for
agencies to execute sole-source J&As on the basis that there is only one
responsible source available before the time they have received
expressions of interest and capability from potential offerors, the record
here shows that the agency failed to consider the information that was
generated as a result of the presolicitation notice. In our view, the
failure of the Air Force to consider Barnes as a potential source renders
unreasonable the conclusions on which the J&A is based.
There is no dispute in this record that the sole-source J&A here was
prepared and executed before potential offerors were invited to
demonstrate their capabilities. The J&A is dated February 28, 2006; the
signature of the Competition Advocate on the J&A is dated March 10. AR,
Tab 7. The presolicitation notice was published March 1, and companies
interested in being considered as sources for the repair of these parts
were given until April 14 to express interest in the upcoming procurement.
AR, Tab 8, at 1.
The statutory authorization at 10 U.S.C. sect. 2304(c)(1) to use other
than full and open competition when there is only one responsible source
is implemented in the FAR by section 6.302-1. This implementing regulation
provides that "[f]or contracts awarded using this authority, the
[required] notices . . . shall have been published and any bids and
proposals must have been considered." FAR sect. 6.302-1(d)(2). There is
also no dispute that the presolicitation notice issued here--inviting
potential offerors to establish their qualifications to be approved
sources for these repairs--is a required notice.
We think agencies undercut their credibility when they prepare and execute
sole-source J&As on the basis that there is only one responsible source
available, before the time they have received expressions of interest and
capability from potential offerors. The entire purpose of issuing notices
seeking expressions of interest and capability is to avoid the need for
such sole-source procurements, if possible. Thus, we agree with Barnes
that the timing of the J&A here was inconsistent with a request for
potential offerors to establish their qualifications to compete. M.D.
Thompson Consulting, LLC; PMTech, Inc., B-297616, B-297616.2, Feb. 14,
2006, 2006 CPD para. 41 at 5 n.6.
That said, FAR sect. 6.302-1(d)(2) states only that these notices shall
have been published for contracts awarded using this authority, and that
any bids and proposals must have been considered. As a result, we cannot
say that the Air Force's actions in preparing and executing its
sole-source J&A before receiving and considering expressions of interest
and capability violate a statute or regulation.[6] See WSI Corp.,
B-220025, Dec. 4, 1985, 85-2 CPD para. 626 at 3 ("While notice of the
agency's intent to issue a sole source contract generally is to precede
preparation of the justification under [CICA]," issuance of the
notification after the justification is prepared does not affect the
validity of the justification.).
Although there may be no legal restriction against executing a J&A on the
grounds that only one source is available in advance of seeking and
considering expressions of interest, we think doing so may increase the
risk that an agency's market survey, and other bases for its sole-source
decision, will ultimately be shown to be unreasonable. In fact, the record
here presents just such a situation.
The presolicitation notice here, once issued, generated an expression of
interest from a second source, Barnes, that completed the first stage of
the agency's two-stage approval process before the award was made. Barnes
has advised that as soon as the Air Force provides it a part to repair, it
will complete the repair and return the part for inspection within 10
weeks; the Air Force has not contested this representation or suggested
that the timeframe is unrealistic. In addition, there is no indication in
this record that Barnes is an offeror that will not be able to
successfully complete this process.[7] The record here shows that the Air
Force could have a second source approved for the repair of these parts in
a matter of months.[8] As a result, we think it was unreasonable for the
Air Force to justify this award for a two-year base period. We also think
the J&A unreasonably concluded that Ferrotherm is the only approved
source, since the agency failed to address the potentially imminent
qualification of Barnes as an approved source before proceeding with the
sole-source award to Ferrotherm. In other words, the agency proceeded on
the basis of a J&A that did not include any consideration of Barnes'
status as a viable source, as reflected by its expression of interest and
completion of Part I of the source approval process. We, therefore,
sustain the protest on this ground. Cf. ABA Indus., Inc., B-250186, Jan.
13, 1993, 93-1 CPD para. 38 at 6-7 (although agency was not required to
delay award until protester could become qualified, it was unreasonable to
deprive the protester of an opportunity to compete for any portion of the
procurement that could await completion of the protester's qualification
review).
Equal Treatment of Offerors under the RQRs
We think there is an additional problem with the J&A's designation of
Ferrotherm as the only approved source for the repair of these parts which
renders the J&A defective. Barnes' final contention, raised after receipt
of the agency report in this protest, is that the Air Force has provided
no evidence showing that Ferrotherm remains a qualified source under the
Air Force qualification procedures. Based on our review of the record--and
after twice inviting the Air Force to supplement the record with evidence
to refute the contention that Ferrotherm's status as a qualified source
appears to have lapsed under the Air Force RQRs--we agree. The reasons for
our conclusion are set forth below.
Barnes' initial protest filing requested all documents related to the
qualification of Ferrotherm to provide these parts. The CO responded to
this request as follows:
Ferrotherm was qualified while the F100 engineering area was still at
Kelly [Air Force Base]. Those records were lost in the move to Tinker. See
Tab 33 for the letter sent to contracting with the purchase request.
CO's Statement, Nov. 8, 2006, at 10. The referenced letter, provided at
Tab 33 in the agency's report, was dated August 16, 2005. The text of the
letter is set forth below in its entirety:
1. The following are approved sources for repair of the 3^rd Stage Air
Sealing Ring Segments.
Ferrotherm, Cleveland, Ohio (Cage 01993)
2. The above sources are approved to repair the following items
NOUN: 3^RD Stage Air Sealing Ring Segments
P/N: 4083716
NSN: 2840-01-445-4017NZ
3. Source approval was based on these companies satisfactorily repairing
the subject items.
4. Questions concerning this matter should be addressed to [omitted].
AR, Tab 33.
In a supplemental inquiry, filed after receipt of the agency report,
Barnes asked if the Air Force had any other information, from any source,
regarding the process by which Ferrotherm was qualified, and how long it
took to complete that process. In reply, the Air Force advised that it had
no such documents and detailed the extent of its search. In addition, the
agency answered:
Other than the Qualified Repair Source List (QRSL) listing indicating
Ferrotherm was in fact qualified and the date of their qualification, the
Agency was unable to locate any additional information concerning the
Ferrotherm repair approval process for the 3^rd stage ring segment, P/N
4083716-01, NSN 2840-01-445-4017. This approval was performed by San
Antonio-ALC on 19 Jun 00 during the transition of the F100 Engineering
Office from SA-ALC (Kelly AFB, TX) to Oklahoma City-ALC (Tinker AFB OK).
Letter from the Air Force to GAO, Nov. 1, 2006.
As described above, Barnes supplemented its earlier protest on November 6.
In this filing, Barnes argued that, based on the record, it did not appear
that Ferrotherm had ever been requalified--or in the words of the RQRs,
"resubstantiated"--since the company was approved to repair this part in
June 2000. Barnes argued that it was unfair to require its strict
compliance with the qualification rules, and not apply those rules to
Ferrotherm.
Upon receipt of Barnes' supplemental protest filing, our Office reviewed
the RQRs that had been provided with the agency report. Just as these
rules contain stringent requirements for source approval, they also
establish standards governing how an approved source retains its status.
Specifically, these rules state:
Engineering source approval shall be valid for three years from the date
of the OC-ALC letter notifying the contractor of engineering source
approval. Approved sources will be required to resubstantiate their
capability every three years. Resubstantiation shall involve documenting
that no significant changes to process location, sequence, or parameters
have occurred, the offeror has the applicable current drawings, latest
technical orders, and specifications, and no significant quality
deficiencies are awaiting corrective action. Significant changes or
unresolved quality deficiencies may result in additional testing, or
revocation of source approval status, depending on the nature and extent
of the changes and/or quality deficiencies. Resubstantiation is valid for
three years from the date approval would expire and may be submitted six
months prior to previous approval expiration or up to 2 years after.
Resubstantiation outside of this limit is not allowed without cognizant
engineering authority waiver which is not normally granted. If
resubstantiation is not allowed a full SAR per this RQR is required.
AR, Tab 32, RQR Rules at 4.
On November 7, our Office asked the Air Force to respond to Barnes' single
supplemental protest issue. Noting the lack of evidence in the record on
this issue, we asked:
What is the Air Force position regarding when and whether the intervenor,
Ferrotherm, was approved and requalified to provide these services? See
Barnes Comments, Nov. 6, 2006, at 3, 11-12. On this subject, since
Ferrotherm is an intervenor here, it may be able to provide evidence of
its requalification to the Air Force to help the agency answer this
question.
GAO Facsimile to All Parties, Nov. 7, 2006, at 2.
In a supplemental filing the Air Force addressed the protester's comments
and the newly-raised protest issue. On the subject of Ferrotherm's
qualification, the agency advised only that Ferrotherm, in response to the
inquiry from our Office, had provided it with a copy of a Technical Order
(TO) containing maintenance instructions for the F100 engine. The TO, on
its face, identifies Ferrotherm as an approved source for repairs of the
part at issue here, and indicates that Ferrotherm was approved on June 19,
2000. Air Force Supp. Memorandum of Law, Nov. 15, 2006, attach. 1, at 5.
In addition, the Air Force argued that the August 16, 2005, letter signed
by the Chief Engineer indicating that Ferrotherm is an approved
source--the same letter provided with the agency report at Tab 33, and
quoted in its entirety above--indicates "that as of that date Ferrotherm
was in fact an approved source." Air Force Supp. Memorandum of Law, Nov.
15, 2006, at 8.
In our view, the August 16, 2005, letter signed by the Chief Engineer did
not establish "that as of that date Ferrotherm was in fact an approved
source." Id. As set forth above, the Air Force RQRs require that after 3
years, and not more than 5 years, the agency will resubstantiate its
approved sources by documenting: (1) that no significant changes to
process location, sequence, or parameters have occurred; (2) that the
offeror has the applicable current drawings, latest technical orders, and
specifications; and (3) that no significant quality deficiencies are
awaiting corrective action. Instead of providing any reference to these
concrete requirements, the August 16, 2005, letter, is, in essence, a form
letter where engineering personnel identify for contracting personnel the
approved sources for needed parts. As quoted above, the letter is written
broadly to allow the engineers to identify one source or many. Engineering
personnel also identify the name of the part, its part number and its
stock number.
On December 11, during a status conference with all the parties to this
protest, our Office again pointed out that none of the information
provided to date indicated that Ferrotherm had ever been resubstantiated
on this part since its approval in June 2000. In response, the Air Force
provided a final filing, dated December 13, and a second declaration from
its cognizant engineer. On the subject of whether the agency ever applied
its RQRs to Ferrotherm, the cognizant engineer points out four facts that
he contends "were considered to resubstantiate Ferrotherm's approval."
Letter from the Air Force to GAO, Dec. 13, 2006, Declaration of Cognizant
Engineer at 1. These facts are that:
(1) Ferrotherm is listed on the qualified repair source list which shows
its initial approval on June 19, 2000;
(2) "Ferrotherm was resubstantiated as a qualified source on the similar
F100-220 4th stage ring segment on 9 February 2004";
(3) "Ferrotherm is currently repairing the similar F100-229 3rd and 4th
stage air sealing ring segments for Pratt and Whitney"; and
(4) "Ferrotherm is licensed for and repairs the subject parts for Pratt
and Whitney."
Id. In addition, the cognizant engineer contends that the August 16, 2005,
letter to agency contracting personnel (identifying the needed part number
and the qualified source) represented a waiver decision by the Air Force.
Specifically, he states:
The engineer determined that these facts were enough substantiation to
list Ferrotherm as an approved and qualified source. According to [the
RQRs], a waiver is required for an organization that has not repaired the
subject item within the last 5 years for the government. This is the case
for Ferrotherm. The engineer determined that Ferrotherm was an approved
source based on the above information and generated the approval letter.
This approval letter waivers [sic] the requirements of [the RQRs].
Id.
The process described by the cognizant engineer is not consistent with the
requirements of the RQRs in several ways.[9] Most importantly, the waiver
provision in the RQRs' resubstantiation requirements permits a waiver of
the time allowed for resubstantiation, not the need for it. The relevant
portion of the RQRs state:
Resubstantiation is valid for three years from the date approval would
expire and may be submitted six months prior to previous approval
expiration or up to 2 years after. Resubstantiation outside of this time
limit is not allowed without cognizant engineering authority waiver which
is not normally granted. If resubstantiation is not allowed a full SAR per
this RQR is required.
AR, Tab 32, RQRs at 4 (emphasis added). To the extent the Air Force wants
to waive the time limits required for resubstantiating Ferrotherm's status
as an approved source--and we read the cognizant engineer's declaration to
indicate that it does--the Air Force may elect to do so. The fact remains,
however, that nothing in this record--and none of the facts identified in
the cognizant engineer's second declaration--meets the Air Force's own
standards for resubstantiation. These standards require documenting: (1)
that no significant changes to process location, sequence, or parameters
have occurred; (2) that the offeror has the applicable current drawings,
latest technical orders, and specifications; and (3) that no significant
quality deficiencies are awaiting corrective action. Id. Only when the Air
Force completes these actions will Ferrotherm have been resubstantiated as
an approved source for these parts.[10]
In our view, the Air Force treated these offerors unequally with respect
to the application of its qualification requirements. While we think the
Air Force can reasonably insist that Barnes follow every step required to
becoming an approved source under the agency's RQRs, we do not think the
agency can disregard those requirements as they apply to Ferrotherm's
status as an approved source. It is a fundamental principal of government
procurement law that an agency must treat all offerors equally and
evaluate them consistently. Infrared Techs. Corp--Recon., B-255709.2,
Sept. 14, 1995, 95-2 CPD para. 132 at 4. Since we think the Air Force
abandoned that principle here, we sustain Barnes' protest.
RECOMMENDATION
Although we conclude that the J&A here was flawed, we recognize the
agency's need to obtain these repairs from approved sources. As the record
here reflects, however, the status of both Ferrotherm and Barnes as
approved sources for the repair of these parts is unresolved.
We recommend that the Air Force proceed with approving sources for the
repair of these parts. With respect to Ferrotherm, the Air Force should
ascertain the firm's precise status, and either resubstantiate Ferrotherm
as a source for these repairs in accordance with its own rules, or require
the company to undergo the source approval process in the same manner as
Barnes. The Air Force should also proceed as expeditiously as possible
with providing a part for repair to Barnes so the process can be
completed. At the conclusion of the source approval process, the Air Force
should proceed, if appropriate, with a competition to meet its needs.
Because we conclude that the current sole-source award to Ferrotherm was
not properly justified, we recommend that the Air Force terminate this
award. If the Air Force has an urgent need for repair of some number of
these parts (which has not been asserted during this protest), and if the
agency cannot meet that need by repairing the parts in-house (which it has
done for several years), we recommend that it prepare a new justification
and award a contract for any urgently-needed portion of the repairs.
We also recommend that the agency reimburse the protester the costs of
filing and pursuing the protest, including reasonable attorneys' fees. Bid
Protest Regulations, 4 C.F.R. sect. 21.8(d)(1) (2006). As required by
section 21.8(f) of our Regulations, Barnes' claim for such costs,
detailing the time expended and the cost incurred, must be submitted
directly to the agency within 60 days of receiving this decision.
The protest is sustained.
Gary L. Kepplinger
General Counsel
------------------------
[1] The J&A document is dated February 28, 2006, on each page; the
signature of the Competition Advocate, who appears to be the final
signature authority, is dated March 10, 2006. AR, Tab 7, at 1. Thus, the
J&A was prepared prior to publication of the March 1 presolicitation
notice, and approved before the April 14 due date for expressions of
interest in answer to the notice.
[2] We interpret the J&A's use of the term "aviation safety critical item"
to be a reference to an "aviation critical safety item," which means
the part, assembly, or equipment contains a characteristic any failure,
malfunction, or absence of which could cause a catastrophic or critical
failure resulting in the loss of or serious damage to the aircraft or
weapon system, an unacceptable risk of personal injury or loss of life, or
an uncommanded engine shutdown that jeopardizes safety.
10 U.S.C. sect. 2319(g)(1).
[3] Barnes also argued initially that the agency failed to prepare a
justification for what was, in essence, a sole-source contract, and that
the agency awarded at an unreasonable price. The record shows that the Air
Force did, in fact, prepare a J&A for this procurement; thus, other than
arguments in the protester's comments about the adequacy of the J&A, this
challenge need not be considered further. In addition, Barnes made no
further mention in its comments, or supplemental comments, of its
contention that award was made at an unreasonable price; accordingly, we
view this issue as abandoned.
[4] When a potential offeror seeks to become an approved source to provide
or repair an "aviation critical safety item," approval authority rests not
with the contracting authority, but with the head of the design control
activity for the item. 10 U.S.C. sect. 2319(c)(3).
[5] Contracting Officer's (CO) Statement, Nov. 8, 2006, at 6.
[6] In addition, the Air Force recognized that subsequent events might
change the validity of its J&A. As noted above, the J&A indicated that if
other sources became approved or qualified during performance of this
contract, the J&A could not be used to justify the exercise of any options
after a second source was approved. AR, Tab 7, J&A at 3.
[7] In fact, during a conference call with all parties, Ferrotherm's
representative spoke highly of Barnes' capability, and indicated that the
two companies sometimes work together. He also indicated that while
Ferrotherm is a licensed repair source for Pratt and Whitney, Barnes is a
licensed repair source for General Electric (GE). Seeking to confirm his
representation, we reviewed Barnes' website (www.barnesaero.com), which
indicates that Barnes is certified to repair aircraft engines for Pratt
and Whitney, Rolls Royce, GE, American Airlines, United Airlines,
Northwest Airlines, U.S. Airways, and Delta. Simply put, nothing in the
record suggests that either of these companies lacks the capability to
repair, and cannot qualify to repair, Air Force engine parts--even those
parts considered critical for aviation safety.
[8] In fact, the Air Force could have already completed this process.
Substantially more than 10 weeks have elapsed since the Air Force approved
Barnes' Part I submission on July 20, and the agency has yet to provide
Barnes with a part to repair so that it can complete the approval process.
[9] For example, in the quote above the cognizant engineer incorrectly
explains that resubstantiation (or a waiver of it) is required when a firm
has not repaired the item for the government within the last 5 years. In
fact, even if an organization has repaired an item throughout the last 5
years, the RQRs still require that approved sources be resubstantiated.
AR, Tab 32, RQRs at 8.
[10] Barnes also argues that our Office should conclude that the Air Force
has not established that Ferrotherm was ever properly qualified as a
source for these parts. Although we agree that neither the Air Force nor
Ferrotherm has conclusively established that the initial approval was
completed--or was accomplished under rules similar to those here--we will
not reach such a conclusion based on this record. We note in this regard
that the Air Force has advised that its records were lost when the
previous Air Logistics Center that performed this function was closed and
its functions transferred to the Oklahoma City Air Logistics Center. CO's
Statement, Nov. 8, 2006, at 10. Since we recognize that Ferrotherm is a
licensee of Pratt and Whitney for the repair of these parts, and since
there are several documents in this record that include the same precise
date (June 19, 2000) when Ferrotherm was apparently approved as a source,
we will not question further whether Ferrotherm's initial approval was
proper.