TITLE: B-299918, Nautical Control Solutions, LP, October 1, 2007
BNUMBER: B-299918
DATE: October 1, 2007
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B-299918, Nautical Control Solutions, LP, October 1, 2007

   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: Nautical Control Solutions, LP

   File: B-299918

   Date: October 1, 2007

   Dayle C. Pugh, Esq., and Kyle A. Spelman, Esq., Bateman Pugh LLP, for the
   protester.

   Andrew Saunders, Esq., Department of the Navy, for the agency.

   Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest challenging procuring agency's decision not to fund proposal under
   phase I of the Department of Defense, Small Business Innovation Research
   Program is denied where the record shows that the agency reasonably
   evaluated the proposal.

   DECISION

   Nautical Control Solutions, LP protests the decision of the Department of
   the Navy, Naval Sea Systems Command, not to fund Nautical's phase I
   proposal under Department of Defense (DOD), Small Business Innovation
   Research (SBIR) program solicitation No. FY07.1.[1]

   We deny the protest.

   The solicitation included Navy Topic N07-060, "Shipboard Energy
   Conservation and Fuel Management Decision Tools." The objective of this
   topic was to "[d]emonstrate an approach that will provide a quantitative
   energy conservation and fuel management analysis and decision tool for the
   purposes of optimizing a ship's operating profile." The Navy explains that
   in light of escalating fuel prices since 2004, the Navy has placed
   critical importance on developing energy conservation and fuel management
   analysis tools. Toward this end, the topic sought proposals to develop an
   automated approach to quantitatively collect, analyze, and present data to
   enable the ship's force to utilize energy conservation and fuel management
   solutions based on dynamic real-time, ship-specific variables. The tool
   was required to be able to interface with the Integrated Condition
   Assessment System (ICAS) for the purposes of obtaining machinery system
   performance data; to identify other ship sensors that could provide ship
   performance and weather data as the development of the tool progressed;
   and to be based on the use of open architecture principles. See Agency
   Report, Tab 2, Topic N07-060, at 76-77.

   The solicitation contemplated multiple awards of fixed-priced contracts
   for Phase I, under which the contractors were required to do the
   following:

     Demonstrate the feasibility of an approach for an automated energy
     conservation and fuel management tool for shipboard use. Establish
     validation goals and metrics to analyze the feasibility of the proposed
     solution(s). Provide a Phase II development approach and schedule that
     contains discrete milestones for product development.

   Id. at 77.

   The Navy received 14 proposals in response to the solicitation for this
   topic. The proposals were evaluated by three evaluators based upon a
   100-point scale considering the following evaluation criteria:

    a. The soundness, technical merit, and innovation of the proposed
       approach and its incremental progress toward topic or subtopic
       solution [40 points].
    b. The qualifications of the proposed principal/key investigators,
       supporting staff, and consultants [30 points].
    c. The potential for commercial (Government or private sector)
       application and the benefits expected to accrue from this
       commercialization [30 points].

   Solicitation at 11.

   Nautical's proposal for this topic, which was based upon its commercially
   available and patented technology product (FuelTrax) that provides fuel
   monitoring and optimization to commercial marine fleets, received the
   seventh highest score of 64 points.[2] With respect to Nautical, the Navy
   found as follows:

     Proposal was not recommended for award based on overall scoring. Scoring
     between the three evaluators appeared consistent. Needs much more
     technical detail in regard to interfacing with ship systems. Fair
     discussion of FuelTrax (existing product), but lacks details as to fit
     for Naval ship systems. Lack of significant commitment or partnering
     with commercialization candidate for a finished product. Also lack of
     transition plan to Naval ships. Limited Experience with Naval Ship
     Systems.

   Agency Report, Tab 4, Evaluation Summary, at 1. After Nautical's
   agency-level protest of its failure to receive a Phase I award was denied,
   this protest to our Office followed.

   Nautical challenges the agency's evaluation of its proposal.[3] Where an
   agency is conducting an SBIR procurement, it has substantial discretion to
   determine which proposals it will fund. RDAS Corp., B-294848, Dec. 23,
   2004, 2004 CPD para. 253 at 2. In light of this discretion, our review of
   an SBIR procurement is limited to determining whether the agency violated
   any applicable regulations or solicitation provisions, or acted in bad
   faith. Id. Based on our review of the record, we have no basis to conclude
   that the agency acted improperly in deciding not to select Nautical's
   proposal for funding.

   Under the first criterion, involving the soundness, technical merit and
   innovation of the approach, Nautical's proposal received 28 of the 40
   possible points. The record shows that the reason that Nautical's proposal
   to enhance its already commercially available product was not scored more
   favorably by the Navy was because the evaluators found that developing an
   energy conservation and fuel management tool for a Navy ship is different
   than an energy and conservation tool for a commercial vessel. As this
   record shows, there are unique requirements applicable only to Navy ships.
   The evaluators found that Nautical's proposal contained limited
   information regarding how Nautical would modify and integrate its existing
   system for use on Navy ships. For example, the Navy explains that in the
   case of Navy ships energy conservation is not limited to main ship
   propulsion, but must also address other unique Navy ship requirements,
   such as electrical generation to support combat systems; that a technical
   solution, in addition to integration with the ICAS, must account for Navy
   specific hull, mechanical, and electrical, propulsion and combat system
   requirements; and that Nautical's proposal "[d]id not demonstrate a strong
   understanding" of these aspects of Navy ship systems. See Agency Report at
   6; Tab 4, Evaluation Summary, at 2. Nautical has provided no reason to
   question the Navy's evaluation and assessment of its technical approach as
   lacking necessary detail.

   With regard to the second criterion, involving key personnel and staff,
   Nautical's proposal received 21 of the 30 possible points. Nautical argues
   that its proposal was unfairly scored for lack of experience with Navy
   ships because this failed to account for its proposed use, as a
   consultant, a firm with extensive experience with ICAS, Navy propulsion
   system design, maintenance and operation, as well as experience working
   with the Navy and DOD. Here, the record shows that the evaluators
   recognized that Nautical had several key personnel with strong educational
   backgrounds and that two key personnel employed by the consultant firm had
   Navy experience, but found that the remainder of the key personnel had
   limited experience in Naval ship systems. Agency Report at 9; Agency
   Report, Tab 4, Evaluation Summary at 2-3. Here too, Nautical has not shown
   that this evaluation was unreasonable.

   Finally, under the third criterion, involving potential for
   commercialization, Nautical's proposal received 15 of the possible 30
   points. Nautical questions this evaluation primarily because it has
   already marketed and sold its own fuel management tool to the commercial
   industry. The record evidences that the evaluators noted that the proposal
   included a good discussion of the commercialization approach for its own
   product and that Nautical had "demonstrated product commercialization
   capability in similar markets." See Agency Report, Tab 4, at 2-3. However,
   Nautical's proposal was found to be devoid of a detailed discussion of
   follow-on funding from the private sector, DOD prime contractors, non-SBIR
   DOD programs or other sources concerning commercializing the product to be
   develop under the topic. The Navy explains that the proposal lacked detail
   on such things as the amount of additional future investment and
   anticipated sales revenue, beyond cursory references to potential investor
   interest in funding future phases and expectation of selling its own
   existing commercial product. Nautical does not show that its proposal
   contains this requested information or that its proposal should not have
   been downgraded under this criterion.

   In sum, we find that the record shows that the Navy reasonably evaluated
   its proposal and reasonably concluded that it should not be funded because
   it was not among the highest ranked proposals.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] The SBIR program is conducted pursuant to the Small Business
   Innovation

   Development Act, 15 U.S.C. sect. 638 (2000), which requires certain
   federal agencies to reserve a portion of their research and development
   funds for awards to small businesses. Under the program, firms first apply
   for a 6-month phase I award to test the scientific, technical, and
   commercial merit and feasibility of a certain concept. If phase I is
   successful, the firm may be invited to apply for a phase II award to
   further develop the concept. After the completion of phase II, firms are
   expected to obtain funding from the private sector and/or non-SBIR
   government sources to develop the concept into a product for sale in
   private sector and/or military markets. This protest involves the award of
   Phase I contracts.

   [2] The three highest scored proposals for this topic, which had scores of
   93 points, 89 points, and 88 points, were recommended for award of Phase I
   contracts.

   [3] Nautical's protest primarily challenged the propriety of the Navy
   utilizing the SBIR program to obtain a fuel management tool similar to its
   own product and Nautical's comments reiterated this concern. However, we
   previously dismissed this aspect of the protest, since this allegation
   involved an alleged impropriety in the solicitation that should have been
   protested before the closing time for the receipt of proposals. Bid
   Protest Regulations, 4 C.F.R. sect. 21.2(a)(1) (2007).