TITLE: B-311308, Advanced Seal Technology, Inc., June 5, 2008
BNUMBER: B-311308
DATE: June 5, 2008
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B-311308, Advanced Seal Technology, Inc., June 5, 2008

   Decision

   Matter of: Advanced Seal Technology, Inc.

   File: B-311308

   Date: June 5, 2008

   Thomas Doepker for the protester.
   Mike Walters, Esq., Defense Logistics Agency, for the agency.
   Eric M. Ransom, Esq., and Christine S. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest that offeror was deprived of a reasonable opportunity to qualify
   its alternate item is denied where, although the procuring agency failed
   to promptly notify offeror of deficiencies in its item, the record shows
   that the offeror did not suffer competitive prejudice as a result.

   DECISION

   Advanced Seal Technology, Inc. (AST) protests the issuance of an order to
   Quality Control Corporation by the Defense Logistics Agency (DLA), Defense
   Supply Center Columbus (DSCC), under request for quotations No. (RFQ)
   SPM7M3-07-T-D027 for seal assemblies, National Stock Number
   4320-01-276-0822 (NSN 0822).

   We deny the protest.

   NSN 0822 is a critical application item,[1] thus, a designated Engineering
   Support Activity (ESA) is required to approve all sources. DLA Instruction
   3200.1. In this case, the Naval Surface Warfare Center, Carderock Division
   is the ESA responsible for approval. The approval process consists of the
   evaluation of a technical data package (TDP) supplied by the potential
   offeror which, if found satisfactory, results in conditional approval
   pending an installation test to ensure the fit and function of the
   proposed alternate item. If the installation test is also satisfactory,
   the alternate item is approved and the offeror is listed as a qualified
   source. The only sources currently approved to supply NSN 0822 are
   Blackmer Inc., the original equipment manufacturer, and Quality Control
   Corporation, an approved alternate item manufacturer.

   In December 2005, in response to three DSCC solicitations for NSN 0822,
   AST attempted to submit a TDP for its proposed alternate item,
   PFS-0822-21A. AST was unable to submit its TDP because of various
   technical issues at DSCC. AST then filed agency-level protests regarding
   each of the solicitations and, as a result, DSCC accepted AST's TDP on
   January 6, 2006, and forwarded it to the ESA.

   In March 2006, while AST's TDP was under evaluation at the ESA, DSCC
   issued an order for NSN 0822 to another firm at a price higher than that
   quoted by AST. Concerned with the issuance of the order, AST enlisted the
   support of an agency contact that had assisted AST in becoming approved as
   a qualified source for various other NSNs. Comments at 2. Shortly
   thereafter the order was cancelled, and on May 15, AST's TDP was approved
   by the ESA.

   On July 10, DSCC again issued an order to another firm at a price higher
   than that quoted by AST. AST protested that order at the agency level,
   arguing that, because its proposed alternate item had been conditionally
   approved, it should have been given an installation test before the order
   was issued to another firm. AST's agency-level protest was sustained, and
   the order was cancelled.

   On October 12, DSCC issued an order to AST under which AST was required to
   submit two sample units of PFS-0822-21A for use in a first article test
   (FAT), to serve as the installation test of the alternate item. Even
   though the order included a FAT requirement, the FAT requirement was not
   added to the DSCC FAT monitor's tracking system. Agency Report (AR), Tab
   4, Affidavit, at 2. As a result, the FAT was never scheduled and the
   contract administrator, believing that the alternate item was approved,
   directed AST to expedite delivery of the entire 145 unit order. Id. AST
   delivered the entire order to the agency on December 8. Comments at 3.
   However, because the FAT never occurred, AST was not approved as a
   qualified source.

   On May 11, 2007, DSCC issued another RFQ for NSN 0822. Because AST's
   alternate item had still not undergone an installation test, AST was not
   listed as a qualified source on the RFQ. Nevertheless, on May 21,
   believing that it had been approved, AST filed a protest with our Office,
   challenging DSCC's failure to list it in the RFQ. Through the development
   of that protest, AST eventually learned that its alternate item had never
   been subjected to an installation test. In settlement of the protest, DSCC
   and AST, through its attorney, entered into an agreement under which DSCC
   would abstain from issuing orders under the RFQ until the ESA completed an
   installation test of AST's alternate item.

   In August 2007, DSCC received an initial response from the ESA indicating
   that AST's alternate item had failed the installation test. Id. DSCC then
   notified AST's attorney by telephone that the item had failed testing. Id.
   On November 5, DSCC received the ESA's official test report, and on
   November 27, forwarded that report to AST's attorney. AR at 2. During this
   time period the attorney, who had represented AST in its previous
   protests, was no longer retained by AST and did not inform the firm of the
   test results. Protest at 2. According to the protester, the attorney did
   inform DSCC that he no longer represented AST, but DSCC never sent the
   ESA's test report directly to AST, and AST never received the test
   results. Id. The agency disputes AST's assertion that its former attorney
   advised DSCC that his representation of AST had ended, but agrees that the
   test report was not sent directly to AST. AR, Tab 4, Affidavit, at 4.

   On December 20, DSCC publicized the issuance of an order to another firm
   under the RFQ at issue here, at a price higher than that quoted by AST. On
   December 21, AST inquired as to why its lower-priced quotation had not
   been considered and was informed for the first time that its proposed
   alternate item had failed the installation test in August, 4 months
   before. AST then asked why it had not been informed of the test results
   earlier and was told that DSCC believed that AST had been notified.
   Protest at 1.

   On December 28, DSCC sent AST a copy of the ESA's test report. On December
   29, AST filed an agency-level protest, asserting that it had been denied
   the opportunity to respond to the adverse technical evaluation of its
   proposed alternate item due to the agency's failure to promptly notify AST
   of the installation test results.

   By January 9, 2008, AST had modified its alternate item and sent a revised
   TDP to DSCC, which promptly forwarded it to the ESA. On February 21, AST's
   agency-level protest was denied, and on February 29, AST filed this
   protest with our Office. On April 1, AST's revised TDP was rejected as
   incomplete and insufficient. In its protest here, AST argues that DSCC
   improperly denied it the opportunity to qualify its alternate item.

   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) (2000). Accordingly,
   when a contracting agency restricts contract award to an approved product
   and imposes a qualification requirement, it must give nonapproved sources
   a reasonable opportunity to qualify. Newgard Indus., Inc., B-257052, Aug.
   11, 1994, 94-2 CPD para. 70 at 2. AST argues that in view of the
   historical record of its efforts to qualify its alternate item, it is
   clear that the internal process at DSCC is "broken" and that as a result
   AST has been denied a reasonable opportunity to qualify. Comments at 10.

   While the cumulative effect of repeated shortcomings in the qualification
   process may deny an offeror a reasonable opportunity to qualify, Advanced
   Seal Tech., Inc., B-249855.2, Feb. 15, 1993, 93-1 CPD para. 137 at 5-6, we
   do not agree that the record supports such a conclusion here. With regard
   to the period preceding the specific procurement at issue in the protest,
   while the record shows that certain issues arose in processing the
   qualification testing of AST's alternative item, each prior procurement
   was the subject of a protest by AST, and each of those protests was
   sustained by the agency, or resulted in corrective action or settlement.
   As a result, DSCC has not, until now, issued an order for NSN 0822 to any
   firm other than AST since AST began its effort to qualify PFS-0822-21A.
   Under these circumstances, while we do not condone the agency's failure to
   facilitate AST's request for product approval, we fail to see how AST was
   prejudiced by any prior shortcomings in the qualification process. REEP,
   Inc., B-290688, Sept. 20, 2002, 2002 CPD para. 158 at 2 (competitive
   prejudice is an essential element of every viable protest, and unless
   another firm is actually selected for an award, a protester has not
   suffered competitive prejudice).

   With regard to the specific procurement challenged here, AST argues that
   DSCC's failure to inform it of the results of the installation test of
   PFS-0822-21A denied AST a reasonable opportunity to qualify its alternate
   item before the issuance of the order. By statute and regulation, agencies
   imposing qualification requirements must fulfill specific
   responsibilities. As relevant here, they must provide offerors a prompt
   opportunity to demonstrate their qualification and must ensure that any
   offeror seeking qualification is promptly informed as to whether
   qualification has been attained, and if not, promptly furnish specific
   information on why qualification was not attained. 10 U.S.C. sect.
   2319(b)(4), (6); FAR sect. 9.202(a)(2)(ii), (4).

   In response to AST's argument, DSCC contends that it fulfilled the
   requirements of 10 U.S.C. sect. 2319(b)(6) by notifying the attorney who
   had represented AST in the protest that led to the installation test. DSCC
   also argues that, even assuming it failed to properly notify AST of the
   result of the installation test, AST was not prejudiced because, even if
   it had been promptly notified of the results, the firm could not have
   successfully qualified in time to compete for this order. [2]

   In our view, even assuming that notification of the attorney who
   represented AST in its previous protests was sufficient to constitute
   notice to AST, DSCC's notification of AST's former attorney was
   unreasonably delayed, contrary to the requirements in 10 U.S.C. sect.
   2319(b)(6). The installation test was completed on August 22 and the test
   report was completed on September 19, but the report was not forwarded to
   AST's former attorney until November 27. Whether this more than 2-month
   delay between the completion of the test report and formal notification
   was attributable to DSCC or the ESA, we conclude that it did not
   constitute prompt notice as required under 10 U.S.C. sect. 2319(b)(6).

   However, we also conclude that AST was not prejudiced by DSCC's failure to
   promptly notify it of the results of the installation test. AST first
   received the results of the installation test on December 28. By January
   9, AST had modified its alternative item and sent a revised TDP to DSCC.
   DSCC forwarded the revised TDP to the ESA, which conducted an evaluation
   and notified AST on April 1 that its revised TDP was rejected because it
   was incomplete and contained insufficient information to determine if the
   modified design would work. The period of time from when AST learned of
   the result of the installation test to when it was notified that its
   revised TDP was rejected was 94 days.

   Based on that 94-day time period and the ultimate rejection of AST's
   revised TDP, it is clear that AST would not have had a reasonable chance
   of receiving the order even if it had been promptly notified of the
   results of the installation test. Assuming that AST was officially
   notified of the results of the installation test on September 19, based on
   the 94-day time period, AST would have received notice that its revised
   TDP was rejected on December 22, 2 days after DSCC publicized the issuance
   of the order to another firm.

   Moreover, because AST's revised TDP was rejected, AST could not have
   qualified in time for the order even if the evaluation of the TDP had
   taken substantially less time. If AST had been notified that its revised
   TDP was rejected even well ahead of the date the order was issued, AST
   would have been required to revise its TDP for a second time and submit it
   for reevaluation before it would have had a chance of again becoming
   conditionally approved.[3] In our view, there was not a reasonable chance
   that AST could have become a qualified source in time to receive the
   order.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] A critical application item is an item the failure of which could
   injure personnel or jeopardize a vital agency mission. Federal Acquisition
   Regulation (FAR) sect. 46.203.

   [2] A contracting officer need not delay a proposed order in order to
   provide a potential offeror with an opportunity to demonstrate its ability
   to meet the standards specified for qualification. FAR sect. 9.202(e).

   [3] DSCC also notes in its report that it delayed the issuance of the
   order due to its inability to notify AST of the results of the
   installation test before November 27. DSCC argues that, had AST been
   notified on September 19, the order would have been issued earlier than
   December 18. AR at 5.