B-400650; B-400650.2, Spaltudaq Corp., January 6, 2009
Protest that agency unreasonably discontinued negotiations under a Broad Agency Announcement is denied, where the agency reasonably determined, after four months of negotiations, that the parties could not reach agreement on contract terms concerning intellectual property rights.
Spaltudaq Corp. protests the Defense Threat Reduction Agency’s (DTRA) decision to terminate negotiations with the firm and to not award Spaltudaq a contract under Broad Agency Announcement (BAA) No. HDTRA1-CBMEDICAL-TMTI-BAA, for medical research and development program support.
DTRA’s Chemical Biological Technologies Directorate
manages and integrates the development, demonstration, and transition of
chemical and biological defense solutions for the Department of Defense. The Directorate includes a Medical Science
and Technology Division, which issued the BAA here. The BAA sought proposals to “span a wide
spectrum of possible technical and business solutions” in response to the
specific technology topics that were listed in the BAA. BAA at 85. The topics related to advancing
innovative chemical and biological defense medical countermeasures to pathogens
and other threat agents, and included such things as developing a “threat agent
spectral database,” developing therapeutic countermeasures against Centers for
Disease Control “Category A and B” threat agents, and developing systems
biology platforms for the determination of therapeutic targets.
The BAA announced that proposals would be evaluated under
the following evaluation criteria:
scientific and technical merit, relevance to program goals, offeror
capabilities, and cost realism and reasonableness.
The BAA contemplated multiple
awards, each for a 3-year duration.
Extensive negotiations between Spaltudaq, its legal counsel, and the agency took place from June until September. The record shows that there were continuing issues with Spaltudaq’s failure to provide adequate proposal information for DCAA to perform an audit, and continuing negotiations about intellectual property rights. With regard to the DCAA audit, the agency advised Spaltudaq repeatedly in June and July that its proposal remained inadequate for audit. Although Spaltudaq provided DCAA with requested information on July 21, the firm revised its proposal on July 23 to increase the proposal cost to $31,470,873, which was approximately 20 percent over the cost of the original proposal. Contracting Officer’s Statement at 8-12.
With regard to intellectual property rights, the record
shows that the agency and Spaltudaq discussed numerous revised clauses and
negotiation positions. Spaltudaq
proposed several approaches to retain rights to certain intellectual property,
to which the government objected; for example, Spaltudaq proposed contract
provisions that defined certain work to be excluded from the contract and
allocated rights in intellectual property by stating how certain work would be
in order for the Government to continue negotiations, Spaltudaq must accept the attached modified [intellectual property] clauses and list all the technical data and computer software which will be delivered with less than unlimited rights. Further, Spaltudaq must list all of its background inventions which may be used under the proposed contract.
AR, Tab 21, Letter from Contracting Officer to Spaltudaq (
On August 13, Spaltudaq responded and reduced its proposal
cost to $25,356,409, accepted the agency’s proposed intellectual property
rights clauses, and provided the requested lists of background inventions and
technical data to be delivered with less than unlimited rights. However, Spaltudaq also attached an “amended”
statement of work that reflected two revisions:
(1) that performance under the contract would be complete upon “
On September 18, DTRA advised Spaltudaq that it was
discontinuing negotiations. The agency
stated that this “decision is based primarily on unacceptable changes to the
statement of work both from programmatic and cost standpoints and intellectual
property rights not in the best interests of the Government.” The agency explained that the “reduced” scope
of work was unacceptable because it eliminated “most of the utility” of
Spaltudaq’s proposal and adversely affected the intellectual property rights to
which the government would be entitled.
In addition, the agency noted that Spaltudaq’s final proposal was inadequate
for DCAA audit. AR, Tab 27, Letter from
Contracting Officer to Spaltudaq (
Upon receipt of DTRA’s letter, Spaltudaq revised the
statement of work by “reverting to the original language” and expressed a
desire to continue with negotiations.
AR, Tab 28, Letter from Spaltudaq to Contracting Officer (
Spaltudaq contends that the agency failed to engage the
firm in meaningful discussions. More
specifically, it complains that it was misled about the agency’s requirements
regarding intellectual property rights, and denied a fair and reasonable
opportunity to correct proposal deficiencies that led to the agency’s decision
to terminate negotiations. The protester
asserts that the requirement for meaningful discussions, as articulated in
Federal Acquisition Regulation (FAR) part 15, applies to the evaluation of
proposals under a BAA. Protest at 11-12
(citing Interstate Elec. Corp., B-286466, B-286466.2,
It is true that in prior cases we have looked to FAR part 15 for guidance in reviewing the agency’s conduct of discussions under a BAA when an agency uses negotiated procedures as part of the selection process, in which case the discussions must be meaningful. See Interstate Elec. Corp., supra, at 11. Here, however, the negotiations that occurred between Spaltudaq and the agency were not part of the evaluation and selection process, but occurred after the evaluation had been completed and Spaltudaq’s proposal had been selected for award. As discussed more fully below, by the BAA’s terms, the negotiations were not intended as discussions as defined in FAR part 15. Thus, the requirement for meaningful discussions as stated in FAR part 15, and in the cases interpreting that part, does not apply.
That is not to say that the agency’s conduct of
post-selection negotiations under a BAA is not reviewable. Although we find that DTRA had no obligation
to follow the specific requirements for discussions set forth in FAR Part 15,
agencies may not conduct themselves in an arbitrary manner, and they must
negotiate in good faith and in a manner consistent with the BAA. See Health Servs. Mktg. & Dev.
As stated above, the BAA provided for post-selection
negotiations with firms that were selected for award. The BAA permitted the agency to discontinue
discussions if an offeror failed to provide necessary information in a timely
manner, or if the parties failed to reach agreement on contract terms within a
reasonable time. Here, the record shows
that over a 4-month period, the parties engaged in good faith negotiations in
an attempt to reach agreement over the parties’ rights to intellectual
property, but that no agreement could be reached. The record shows that Spaltudaq proposed a
number of approaches that limited or restricted the government’s rights, and
the agency repeatedly objected to these approaches. The agency articulated its “final negotiation
position” regarding intellectual property in its
The protester contends that it was “misinformed” about the
agency’s intellectual property requirements, specifically with regard to
While the record shows that there were several
communications between the agency’s
counsel and Spaltudaq’s
counsel concerning the I-
The protest is denied.
Gary L. Kepplinger
 A BAA is a contracting method by which agencies can acquire basic and applied research to fulfill requirements for scientific study and experimentation directed towards advancing the state of the art or increasing knowledge and understanding, rather than focusing on a specific system or hardware solution.
 Page citations refer to the “bates” numbers listed on the record documents.
 When it notified Spaltudaq that its proposal was not selected but was placed on the reserve list, the agency also provided Spaltudaq with a summary of its proposal evaluation and a written debriefing. Contracting Officer’s Statement at 7.
In the request for information, the contracting officer stated that this was
“not an opportunity to revise other portions of [Spaltudaq’s] proposal.” Agency Report (AR), Tab 15, Email from
Contracting Officer to Spaltudaq (
 In its letter, Spaltudaq asserted that these revisions were based on prior conversations that Spaltudaq or its counsel had with the agency. However, there is nothing in the record that shows that the agency’s counsel agreed with or solicited these revisions.
As a second basis to discontinue negotiations, the agency concluded that
Spaltudaq’s proposal remained “inadequate” for DCAA to an audit. AR, Tab 27, Letter from Contracting Officer
to Spaltudaq (