[B-288030; B-288030.2] Sabreliner Corporation, B-288030; B-288030.2, September 13, 2001
in...@www.gao.gov
TITLE: Sabreliner Corporation, B-288030; B-288030.2, September 13, 2001
BNUMBER: B-288030; B-288030.2
DATE: September 13, 2001
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Sabreliner Corporation, B-288030; B-288030.2, September 13, 2001
Decision
Matter of: Sabreliner Corporation
File: B-288030; B-288030.2
Date: September 13, 2001
Kenneth B. Weckstein, Esq., Shlomo D. Katz, Esq., and Tammy Hopkins, Esq.,
Epstein Becker & Green, for the protester.
Christine S. Trafford, Esq., and John L. Rice, Esq., Miller & Chevalier, for
Rolls-Royce, Corporation, the intervenor.
Vera Meza, Esq., Rachel M. Howard, Esq., and Wade Brown, Esq., Department of
the Army, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency's proposed award of a sole-source contract for engineering and
overhaul services for helicopter engines, on the basis that only one firm is
capable of meeting the agency's needs, is not reasonably based where the
justification and approval prepared in support of the proposed sole-source
award, other agency documentation, and the agency's submissions prepared in
response to this protest as well as the testimony of the agency
representatives at the hearing held at our Office in connection with this
protest, are inconsistent and inaccurate.
DECISION
Sabreliner Corporation protests the proposed award of a contract on a
sole-source basis to Rolls-Royce, Corporation under request for proposals
(RFP) No. DAAH23-01-R-0067, issued by the Army Aviation and Missile Command,
Department of the Army, for certain engineering services and the overhaul of
helicopter engines.
We sustain the protest.
BACKGROUND
The T63-A-720 engines to be overhauled under the Army's proposed sole-source
contract to Rolls-Royce are used in the Army's OH-58 "Kiowa" helicopter.
Agency Supplemental Report (Aug. 6, 2001) at 2. The Kiowa helicopter has
been in service for approximately 30 years. Hearing Transcript (Tr.) at 14.
Up until the mid-1990s, the Army had an "organic" (i.e., in-house) ability
to overhaul the engines.
Agency Supplemental Report at 2; Tr. at 15-16.
As part of its in-house ability, the Army maintained an "instruction manual
describing the operations, procedures, and practices required to overhaul
the engines." Agency Supplemental Report at 2. This instruction manual,
called a "Depot Maintenance Work Requirement" (DMWR), also listed the
required tooling and test equipment to perform the overhauls. Id. The Army
maintained and updated the DMWR through amendments made by its own
engineers, as well as through its receipt of commercial engine bulletins
from the original equipment manufacturer (OEM) of the T63 engine. [1] Tr. at
19-20. The DMWR was also used to competitively procure engine overhaul
services from commercial vendors, with the last such contract being let in
1993. Agency Report, Tab B, Justification and Approval for Other than Full
and Open Competition (J&A) (Jan. 2, 2001) at 4; Tr. at 24, 145-46.
The Army decided in the mid-1990s to phase out the Kiowa helicopter in 2004,
and stopped maintaining its DMWR as of 1993. Tr. at 21, 144, 146, 394. The
last overhauls of the engines were performed in-house in 1997 using the DMWR
and available updates. Tr. 25-27, 146-47. The agency states that it needs to
procure the engineering services from Rolls-Royce because the Army's DMWR is
out of date, and it needs to procure the overhaul services from Rolls-Royce
because the Army has divested itself of the tooling and equipment needed to
overhaul the engines. [2]
Agency Supplemental Report at 3 n.1; Tr. at 16.
On January 13, 2001, the Army published a notice in the Commerce Business
Daily (CBD) of its intention to award a sole-source contract to Rolls-Royce.
The CBD referenced solicitation No. DAAH23-01-R-0067, and stated, among
other things, that the contractor would be required to "furnish all
depot-level labor, facilities, special tooling, test equipment, and
materials for the maintenance, overhaul/repair modification" of up to 300 of
the engines, and that "[t]he contractor will also upgrade Engine
configuration to commercial and provide all technical data to identify the
engineering changes." Agency Report, Tab E, CBD Notice.
Shortly after the CBD notice was published, Sabreliner and two other firms
requested copies of the solicitation. Contracting Officer's Statement at 1;
Agency Report, Tab F, Sabreliner's Letter to Agency (Jan. 19, 2001). The
agency did not respond to the firms' requests, but rather, the contracting
officer continued to meet with, and receive proposals from, Rolls-Royce with
the intent of awarding Rolls-Royce a sole-source contract. After receiving
approval to issue a letter contract to Rolls-Royce on May 4, the contracting
officer states that "it was discovered that three sources had requested a
copy of the solicitation based upon the synopsis," and that "[t]his was the
first time that the Contracting Officer was made aware of these requests."
Contracting Officer's Statement at 1.
The contracting officer responded by providing each of the three firms,
including Sabreliner, a letter stating that "a formal solicitation is not
available," but providing each of the firms with a statement of work (SOW)
setting forth the agency's needs. Agency Report, Tab G, Contracting
Officer's Letter (May 10, 2001), attach., SOW-Overhaul/Upgrade & Engineering
Services on T-63-A-720 Engines and Components. The letter and SOW were
provided to each of the firms by facsimile transmission at approximately 1
p.m on May 10, with the letter informing the firms that "[a] Firm Fixed
Price Proposal and supporting documentation as well as a Small Business
Subcontracting Plan, if required, is due to this office [by] 10 May, 2001,
4:00 p.m." Agency Report, Tab G, Contracting Officer's Letter (May 10,
2001), at 3.
Sabreliner filed a protest with the agency on May 10, complaining, among
other things, that the 3 hours the agency provided Sabreliner to prepare its
proposal was inadequate, and that the proposed sole-source improperly
"bundled" the engineering and overhaul services. Sabreliner asserted that it
is authorized, and has the ability, to overhaul the engines, and that
because of this, it should be permitted to compete for those services.
Protest, Tab 2, Agency-Level Protest, at 2.
The agency states that in an effort to resolve Sabreliner's agency-level
protest, it contacted Sabreliner and asked whether the protest could be
resolved by providing Saberliner with additional time to prepare its
proposal. The agency states that it was informed by Sabreliner that "only a
separation of the overhaul from the data requirements and the overhaul
portion being solicited competitively would satisfy Sabreliner." The agency
explains that it had another discussion with Sabreliner, and "agreed to
further consult with the government technical personel and have a later
conference with Sabreliner." The contracting officer states that after
discussing the matter with the agency's technical personnel, she determined
that the agreed upon conference with Sabreliner "would not be fruitful," and
informed Sabreliner on June 7 that there would be no conference. Contracting
Officer's Statement at 2. Sabreliner filed its protest with our Office the
following day.
PROTEST
Sabreliner protests the selection of Rolls-Royce for award of this
sole-source contract on the grounds that the Army improperly determined that
Rolls-Royce was the only responsible source capable of meeting the
government's needs with regard to both the engineering and overhaul
services. Sabreliner argues in the alternative that if the agency properly
determined that only Rolls-Royce, as the OEM, is capable of performing the
engineering services, the agency nevertheless lacks a reasonable basis for
requiring that both the engineering and overhaul services be performed by
Rolls-Royce, contending that if need be, the agency should procure the
engineering services from Rolls-Royce on a sole-source basis, and then
compete the overhaul services. [3]
ANALYSIS
Legal Standard
Although the overriding mandate of the Competition in Contracting Act of
1984 (CICA) is for "full and open competition" in government procurements,
obtained through the use of competitive procedures, 10 U.S.C. sect.
2304(a)(1)(A) (1994 & Supp. IV 1998), CICA does permit noncompetitive
acquisitions in certain circumstances. 10 U.S.C. sect. 2304(c). One of those
circumstances or exceptions to the mandate that competitive procedures be
used--that only one responsible source and no other supplies or services
will satisfy the agency's requirements--was cited by the Army as the
authority for its proposed sole-source award to Rolls-Royce. [4] Agency
Report, Tab B, J&A, at 2; 10 U.S.C. sect. 2304(c)(1); Federal Acquisition
Regulation (FAR) sect. 6.302-1.
When an agency uses noncompetitive procedures under 10 U.S.C. sect. 2304(c)(1),
it is required to execute a written J&A with sufficient facts and rationale
to support the use of the cited authority, and publish a notice in the CBD
to permit potential competitors to challenge the agency's intent to procure
without full and open competition. See 10 U.S.C. sect. 2304(f)(1)(A), (B); FAR
sect.sect. 6.302-1(d)(1), 6.303, 6.304; Marconi Dynamics, Inc., B-252318, June
21,
1993, 93-1 CPD para. 475 at 5. Our Office will closely scrutinize sole-source
procurements conducted under the exceptions to full and open competition
authorized by 10 U.S.C. sect. 2304(c), with our review focusing on the adequacy
of the rationale and conclusions set forth in the J&A. National Aerospace
Group, Inc., B-282843, Aug. 30, 1999, 99-2 CPD para. 43 at 5; Marconi Dynamics,
Inc., supra.
Agency's Failure to Justify Sole-Source Award
As explained below, the J&A and its supporting documentation, as well as the
agency's submissions prepared in response to this protest and the testimony
of the agency representatives at the hearing held at our Office in
connection with this protest, contain so many inconsistencies and
inaccuracies that they cannot reasonably justify the agency's intended award
of a sole-source contract to Rolls-Royce. Specifically, the J&A inaccurately
describes the overhaul services to be acquired, the dollar value of the
services to be acquired, and the length of time for which the services will
be needed. Additionally, the record does not support the J&A's statement
that only Rolls-Royce is capable of providing either the engineering or
overhaul services, and similarly, fails to support the agency's position, as
reflected in the J&A and argued by the agency during this protest, that the
engineering and overhaul services must be performed by the same contractor
(Rolls-Royce).
Incorrect Description of Services in J&A and CBD Announcement
Section 6.303-2 of the FAR, which sets forth the required content of a J&A,
states, among other things, that the J&A "shall include . . . [a]
description of the supplies or services required to meet the agency's needs
(including the estimated value)."
FAR sect. 6.303-2(a)(3). The agency's J&A here is deficient in that, as concede
d
by the agency, the required "description of the supplies or services" is
inaccurate. Tr. at 125, 138-39, 254-56, 265-67, 270-71, 332.
Specifically, the record here includes a memorandum prepared by an Army
official identifying the need for the services to overhaul the engines in
question, which states that the agency "has made the decision to overhaul
the T63-A-720 military engines to a 250-C20B commercial configuration as
documented by the existing commercial manual. The commercial configuration
would fill anticipated . . . demands." Agency Report, Tab I, Memorandum
(Oct. 2, 2000), at 1. This language describing the work to be performed as
overhauling the agency's military engines to a specific commercial
configuration--the 250-C20B--was repeated verbatim in the J&A.
Agency Report, Tab B, J&A at 1. Additionally, the notice published in the
CBD also described the work required as overhauling the agency's military
engines to a commerical configuration, stating among other things that
"[t]he contractor will also upgrade the Engine configuration to commercial."
Agency Report, Tab E, CBD Notice.
Nevertheless, the agency representatives testified at the hearing held at
our Office in connection with this protest that the repeated statement that
the contractor would be required to overhaul the T63 engines to a commercial
configuration using the existing commercial manuals is inaccurate. Tr. at
125, 138-39, 254-56, 265-67, 270-71, 332. That is, the agency
representatives testified, and the agency now concedes, that the agency's
requirement is for the T63 military engines to be overhauled to the latest
T63 military configuration, rather than to the existing 250-C20B commercial
configuration, rendering the J&A and CBD announcement inaccurate and thus
deficient with regard to a fundamental requirement--the description of the
supplies or services required. [5]
The fact that the J&A was inaccurate with regard to the description of the
services required is important because where, as here, an agency proposes to
award a sole-source contract on the basis that only one source can satisfy
its requirements, it is required to provide other prospective sources notice
of its intentions, and an
opportunity to respond to the agency's requirements. 10 U.S.C. sect. 2304(f);
Lockheed Martin Sys. Integration-Owego, B-287190.2, B-287190.3, May 25,
2001, 2001 CPD para. ___ at 13. It is implicit in this that the agency
adequately apprise other prospective sources of its needs, so that the
prospective sources have a meaningful opportunity to demonstrate their
ability to provide what the agency seeks to purchase. Lockheed Martin Sys.
Integration-Owego, supra. Although CICA does not specifically address
this point, the legislative history of the statute does. In this regard, the
conference report states:
In situtations where competition is not anticipated and solicitation
packages have not been prepared, agencies shall provide potential
competitors who do respond [to the CBD announcement of the agency's intent
to award a sole-source contract] with solicitation packages or comparable
information.
H.R.Conf. Rep. No. 98-861 at 1427 (1984), reprinted in 1984 U.S.C.C.A.N.
1445, 2115.
Although there is no requirement that an agency express its needs by any
particular means, the expression of the agency's needs nevertheless must be
as accurate as possible and cannot be misleading. Lockheed Martin Sys.
Integration-Owego, supra. Here, as noted above, the CBD notice and the J&A
were inaccurate, in that they described the services required as the
overhaul and upgrade of the T63 military engines to a commercial
configuration.
Compounding these errors is the fact that the agency, although aware that
the J&A and CBD notice were incorrect as early as February or March 2001,
made no effort to correct this inaccuracy prior to Sabreliner's protest, nor
during the protest in either its agency report or supplemental report. Tr.
at 255. As such, our Office and the protester first became aware that the
agency's actual requirement is to overhaul the engines to the most current
military configuration, rather than to an existing commercial configuration,
through the testimony of the agency representatives at the hearing held in
connection with this protest.
Because of this, Sabreliner pursued its protest in part by arguing and
submitting evidence of its ability to overhaul and upgrade the T63-A-720
military engines to a 250-C20B commercial configuration as indicated by the
CBD and J&A. For example, Sabreliner provided evidence that it has performed
a contract for the Department of the Navy for the overhaul and upgrade of
two of its T63 engines to the 250-C20B commercial configuration, and it was
agreed that one of the issues to be addressed at the hearing was
Sabreliner's capabilities to overhaul and upgrade the T63 engines to the
commercial configuration. Protester's Supplemental Comments, Tab 5,
Procedures for T63 Overhaul/Reconfiguration. Because the agency waited until
the hearing to inform Sabreliner and our Office that the J&A was inaccurate
in that the agency's needs were not for the overhaul and upgrade of its T63
engines to the
250-C20B commercial configuration, but rather, were for the upgrade and
overhaul to the latest T63 configuration, Sabreliner has never been afforded
any real opportunity to demonstrate its capabilities to meet the agency's
actual needs.
See Lockheed Martin Sys. Integration-Owego, supra.
Incorrect Statement of the Duration of the Sole-Source in the J&A
In support of the J&A, the agency prepared a "Technical Justification and
Certification for Proposed Other than Full and Open Competitive Acquisition"
(Justification Memorandum), purporting to describe why only Rolls-Royce is
capable of meeting the agency's needs with regard to the engineering and
overhaul services. Agency Report, Tab C, Justification Memorandum. The
Justification Memorandum explains, under the heading "Action taken to remove
or overcome any barriers to competition before acquisition," that because
the Kiowa helicopters which require the overhauled engines will be
"phase[d]-out" in 2004, and accordingly, overhauled engines will not be
needed after that date, the agency does not plan to acquire or develop any
data or other information on which future competitive acquisitions could be
based. [6] Id. at 3. This memorandum was signed on October 5, 2000 by the
cognizant competition management officer, the individual responsible in this
instance for determining whether the agency had a reasonable basis for
proceeding with the proposed sole-source award. Id. at 3; Tr. at 44, 198.
The J&A, under the heading "Other Factors," repeated much of the information
included in the Justification Memorandum. Specifically, under "Other
Factors,"
the J&A stated that the proposed sole-source was reasonable, given that the
Kiowa helicopters needing the overhauled engines were to be phased out in
2004, and because of this (and presumably because the proposed sole-source
award to Rolls-Royce is for a 3-year contract) "it would not be in the best
interest" to acquire or develop any data or other information on which
future competitive acquisitions could be based. Agency Report, Tab B, J&A,
at 3.
The record reflects, however, that the agency was aware as of January or
February 2001 that the phase-out date of the Kiowa helicopter had been
changed from 2004 to 2020. Tr. at 196. Despite being aware of this in
January or February, the agency made no effort to amend either the
Justification Memorandum or the J&A, nor for that matter did it correct this
inaccuracy in its agency report to our Office. Rather, the agency waited
until it filed its supplemental report to correct the record, informing our
Office and the protester of "the Army's decision to change the phase out
date of the Kiowa from 2004 to 2020." [7] Agency Supplemental Report at 4.
The importance of the change in the phase-out date for the Kiowa helicopter
to any consideration of the reasonableness of the agency's proposed sole
source award of a contract to Rolls-Royce is readily apparent. As explained
by the agency, because the Kiowa helicopter will be in use through 2020, the
agency will continue to require overhauled engines for approximately 16 or
17 years after the current proposed sole-source contract (which is for a
3-year period) expires. Tr. at 67. Because of this, and the fact that the
agency has no current plans to acquire or develop any data or other
information on which future competitive acquisitions could be based, the
agency concedes that it will have to continually procure the required engine
overhaul services from Rolls-Royce on a sole-source basis for the next 19
years. Tr. at 67, 69-70, 72-73, 259.
We first note that there is nothing in the record that states or otherwise
suggests that either the cognizant competition management officer, who
signed the Justification Memorandum supporting the J&A, or the Executive
Director of the Acquisition Center, who signed the J&A, was ever made aware
of the change to the phase-out date of the Kiowa helicopter, or the
above-discussed impact of this, which the agency now concedes could
effectively result in a sole-source of the engine overhaul requirements to
Rolls-Royce for the next 19 years. Tr. at 67, 69-70, 72-73. Moreover, there
is nothing in the record here that justifies, in our view, the agency's
intention to award this and the follow-on contracts for the overhaul
services covering the next 19 years to Rolls-Royce on a sole-source basis.
See National Aerospace Group, Inc., supra, at 8 (contracting officials must
act affirmatively to obtain and safeguard competition and cannot take a
docile approach and remain in a sole-source situation where they can
reasonably take steps to enhance competition).
Understated Value of the Sole-Source Contract in the J&A
The protester also challenges the accuracy of the dollar value of the
proposed sole-source contract with Rolls-Royce as set forth in the J&A. In
this regard, the
J&A estimated the total value of the contract at $27.7 million. Although the
J&A anticipated the award of a 3-year,
indefinite-delivery/indefinite-quantity contract, with Rolls-Royce
overhauling 150 to 300 engines, the J&A provides that the estimated $27.7
million total value was primarily based upon Rolls-Royce overhauling 300
engines at a price of $92,000 each. [8] Agency Report, Tab B, J&A, at 1-2.
However, as pointed out by Sabreliner, the record evidences that
Rolls-Royce's proposed price for the overhaul services ranges (based upon
contract year) from $[DELETED] to $[DELETED] per engine, so that the cost to
the agency for the 300 engine overhauls will total $[DELETED]. Agency
Report, Tab J, Rolls-Royce's Revised Proposal.
The agency's response to this aspect of Sabreliner's protest does nothing to
alleviate concerns that the estimates set forth in the J&A are substantially
understated. First, the agency's explanation that the J&A's estimate for the
overhaul services is based upon outdated data simply confirms the
protester's contention. Agency Supplemental Report, attach. 1, at 3. While
the agency also notes that it is still negotiating with Rolls-Royce over the
final price, the fact is that the record as it is reflects a proposed price
that is [DELETED] what the J&A estimates. Id. Finally, the agency statement
that "even if Rolls-Royce's proposed unit price were the final agreed price,
it would not cause the Army to exceed the total estimated value of $27.6
million for the overhaul/upgrade work if only 150 T63[] engines are
overhauled/upgraded" only addresses the protester's contention by [DELETED]
upon which the J&A's estimate was based. In sum, based upon this record, the
J&A failed to set forth an accurate estimate of the value of the proposed
sole-source contract, as required. FAR sect. 6.303-2(a)(3); see Marconi
Dynamics, Inc., supra,
at 17 n.13.
Agency's Failure to Identify Documentation Justifying Sole-Source Award
The agency has also failed to reasonably demonstrate that only Rolls-Royce
has the capability to perform the engineering and overhaul services
required. First, with regard to the engineering services, the SOW for this
requirement provides that in performing the overhauls, "[t]he following
[Rolls-Royce] RR 250-C20 publications shall be utilized: 10W2 (Operations &
Maintenance Manual), 10W3 (Overhaul Manual), 10W4 (Illustrated Parts
Catalog) and other applicable Rolls Royce approved documentation as provided
in Appendix B-8." Agency Report, Tab H, SOW, at 1.
The agency concedes that the Operations & Maintenance and Overhaul manuals
as well as the Illustrated Parts Catalog are commercially available, but
maintains that only Rolls-Royce has the necessary proprietary data to
perform the engineering services. In support of this assertion, the agency
points to the statement in the SOW that the contractor must use "other
applicable Rolls Royce approved documentation as provided by Appendix B-8."
Tr. at 111-13.
However, when questioned during the hearing, the agency representatives
conceded that there is no "Appendix B-8." That is, they admit that Appendix
B-8 has not been developed, that the agency does not have any of the
documents that are to comprise Appendix B-8, and that the agency cannot, in
fact, even identify what documents are to comprise Appendix B-8. Tr. at
111-13, 289-90. Although the agency representatives testified that there
must be some documents proprietary to Rolls-Royce that are needed to perform
the engineering services, given the agency's view that it no longer has in
its possession all of the data it believes is necessary to overhaul the
engines, Tr. at 293-97, this assertion, however credible, remains
unsupported by any documentary evidence. Under these circumstances, the
agency's assertion that only Rolls-Royce can perform the engineering
services purportedly required to update the agency's data, so that the T63
engines can be successfully overhauled to the most current T63
configuration, cannot be found reasonable.
Agency's Failure to Justify Combining Engineering and Overhaul Services into
a Sole-Source Contract
Despite arguing in its agency report that the overhaul services could not be
separated from the engineering services, the agency represented for the
first time at the hearing that it had competitively acquired the overhaul
services in the past, and that it could develop data sufficient to permit
the overhaul services to be competed here in 8 to 10 months at "the
outside." [9] Tr. at 24, 32, 145-46, 150-51, 157, 200-01. Specifically, the
agency representatives explained that such an effort could be accomplished
by updating the DMWR internally (the document it had previously used to
perform the overhaul services in-house), and by entering into an engineering
services arrangement with Rolls-Royce in order to obtain any information
proprietary to Rolls-Royce which the agency is lacking. Tr. at 29-31, 69-70.
In this regard, the agency representative testified that "[Rolls-Royce]
would let the Army purchase [the data] to update [the] DMWR." [10] Tr. at
69. Given that the agency concedes that it could develop data in 8 to 10
months that would be sufficient to permit the overhaul services to be
competed, we see no reason why, even if the agency were correct in its
assertion that only Rolls-Royce could provide the engineering services
necessary to develop that data, Rolls-Royce need also perform the overhaul
services.
CONCLUSION
In sum, the J&A and its supporting documentation, as well as the agency's
submissions in response to this protest and the testimony of the agency
representatives at the hearing held at our Office, are so replete with
errors and inconsistencies that we cannot find the agency's justification of
a proposed award of a contract to Rolls-Royce on a sole-source basis
reasonable.
Accordingly, we recommend that the agency first reassess whether a
sole-source contract with Rolls-Royce is necessary to meet its needs with
regard to the engineering services. If the agency reasonably determines that
the award of a contract on a sole-source basis to Rolls-Royce is necessary
for the engineering services, the agency should execute a properly reasoned
and accurate J&A for the sole-source award, and properly synopsize its
requirement. In addition, if, upon further review, it is the agency's
position that it could develop data in 8 to 10 months that would be
sufficient to permit the overhaul services to be competed among commercial
vendors, and that based upon current information the agency will require
overhaul services for the next 19 years, we recommend that it develop the
data sufficient to permit the overhaul services to be competed, and then
competitively procure the overhaul services. We also recommend that the
agency reimburse Sabreliner for the reasonable costs associated with filing
and pursuing this protest, including reasonable attorneys' fees. Bid Protest
Regulations, 4 C.F.R.
sect. 21.8(f)(1) (2001). Sabreliner's certified claim for costs, detailing the
time spent and the costs incurred, must be submitted to the agency within 60
days of its receiving our decision.
The protest is sustained.
Anthony H. Gamboa
General Counsel
Notes
1. Allison Engine Co., Inc., a division of General Motors Corp., was the OEM
of the T63-A-720 engine. The Allison group was acquired by Rolls-Royce in
the mid-1990s. Tr. at 139, 350. Accordingly, Rolls-Royce is in essence the
OEM of the engine.
2. The engineering services being acquired are to develop and obtain the
data to allow field-level maintenance by the Army. Although during the
course of the protest the agency indicated that it was obtaining this data
to allow for depot-level maintenance and overhaul of the engine (that is,
developing a document similar to the DMWR), Agency Supplemental Report at 4,
the hearing testimony established that this was not the case. Tr. at 63,
77-78, 364, 402.
3. As an initial matter, the agency argues that Sabreliner's protests should
be dismissed as untimely because Sabreliner did not respond to Note 22
included in the CBD notice. Note 22 gives potential sources 45 days to
submit expressions of interest showing their ability to meet the agency's
stated requirements. Our Office generally requires that a protester respond
to the CBD notice with a timely expression of interest in fulfilling the
agency's requirement, and must receive a negative response as a prerequisite
of filing a protest challenging an agency's sole-source decision. Magnavox
Elec. Sys. Co., B-258037, B-258037.2, Dec. 8, 1994, 94-2 CPD para. 227 at 6.
Under the circumstances here, where it turns out that the CBD did not
describe the services being noncompetitively acquired (as described below)
and where Sabreliner promptly responded to the CBD notice and requested a
copy of the solicitation referenced in the notice, and filed its protest
promptly after the agency provided Sabreliner with the SOW and informed
Sabreliner that it had only
3 hours to submit a proposal, we cannot find Sabreliner's protest untimely.
See id. at 7; Julie Research Labs., Inc., B-218593, Aug. 29, 1985, 85-2 CPD
para. 246 at 2.
4. While there is some testimony and file documentation suggesting that some
Army officials believe the requirement is urgent, the agency denies that
this sole-source acquisition is justified on the basis of urgency.
Supplemental Report at 5, n.4; attach. at 5.
5. The agency argued for the first time at the hearing, and then argued in
its post-hearing comments, that contractors, including Sabreliner, should
have known that the J&A and CBD notice were in error in that the
"input/output" national stock numbers set forth on those documents were the
same, and would have been different if the agency's intent was to have the
engines overhauled from a military to a commercial configuration. Tr. at
277-78; Agency's Post-Hearing Comments at 4-5. We disagree. As pointed out
above, both the CBD notice and J&A provided narratives describing the work
required as military to commercial configuration overhauls, and the agency
has conceded these narratives are incorrect. Accordingly, the agency's
argument here, at best, demonstrates that the J&A was not only inaccurate as
to its description of the services needed, but also internally inconsistent.
6. The agency supplemental report erroneously represented, in arguing that
the J&A was reasonably based, that the agency would acquire through its
proposed sole-source contract with Roll-Royce "data for future competitive
acquisitions." Agency Supplemental Report at 4. At the subsequent hearing,
agency and Rolls-Royce representatives testified that this statement was
inaccurate, in that the agency will not acquire through its proposed
sole-source contract with Rolls-Royce any data that will allow the agency to
procure the services competitively in the future. Tr. at 63, 77-78, 364,
402.
7. The agency argues in its post-hearing comments that the Army now has a
"goal" of phasing out the Kiowa helicopter in 2004, and supports this
assertion with copies of post-hearing e-mail exchanges between Army
personnel (which do not clearly state this). Agency Post-Hearing Comments at
3. In light of the Army's specific statement in its supplemental report that
the Army plans to phase out the Kiowa in 2020, and the testimony provided by
the agency representatives at the hearing that supports this date, we give
the agency's post-hearing assertion that it now has a "goal" of phasing out
the Kiowa by 2004 little weight.
8. As indicated, the estimated price for the overhaul services accounts for
the majority of the estimated total value of the contract ($92,000 x 300 =
$27.6 million).
9. The agency argues in its post-hearing comments that, contrary to its
representatives' testimony at the hearing, it would actually take longer
than 10 months to update the DMWR. Agency Post-Hearing Comments at 3. In
light of the specific and detailed testimony of the agency representatives
at the hearing that the DMWR could be updated in 8 to 10 months, we give the
agency's post-hearing assertion that it would take longer to update the DMWR
little weight.
10. The agency representative's testimony here is consistent with
Rolls-Royce's previous position, as evidenced by its statement to the agency
made sometime prior to the filing of this protest that "Rolls-Royce is open
to discuss updating the current US Army Depot Technical Manual (the Army
version of the commercial overhaul manual)." Agency Report, Tab J,
Rolls-Royce Responses to Agency Questions (June 7, 2001). We note, however,
that, in its post-hearing comments, Rolls-Royce has provided a declaration
signed by the Rolls-Royce representative, who testified at the hearing,
stating that "Rolls-Royce is not inclined to sell its proprietary data to
the Army in order for the Army to update its DMWR." Intervenor's
Post-Hearing Comments, Tab D, Declaration.