Protest of RFP Cancellation

A company protested the award of a subcontract to a competitor as the second source for the Cruise Missile inertial guidance subsystem. One of the policies to be followed by the Cruise Missile Program was to encourage subsystem/second source competitive procurement. Due to time limitations a memorandum of agreement was drafted to establish a subsidiary of the prime contractor as the second source for the guidance subsystem. The protester contended that there were procedural shortcomings in the request for proposals (RFP) and the reasons given to justify the cancellation of the RFP and the sole source award to the subsidiary were invalid. The basic question presented by the protest was whether the ongoing competition based solely on form, fit and function proposals was properly canceled in favor of a sole source contract based on a licensing arrangement. While the form, fit and function approach appeared to satisfy the Government's needs at the time the RFP was issued, the complexion of the procurement changed when the possibility of licensing was presented. The lower technical risk, which would better insure delivery within the Government's 1982 schedule and allow competition between the prime contractor and the subcontractor for the production quantities at an earlier date, would justify the sole source award to the subcontractor. Since there was nothing improper in the selection of the licensing approach, no purpose would have been served by amending the RFP and requesting best and final offers. The protester also asserted a claim for proposal preparation costs. The protest and claim were denied.