B-243038, Jun 19, 1991, 91-1 CPD ***

B-243038, Jun 19, 1991, 91-1 CPD ***

PROCUREMENT - Noncompetitive Negotiation - Contract awards - Sole sources - Propriety DIGEST: Although record demonstrates that limited opportunity for competition exists due to harsh environmental factors and a 90-day operational service requirement, protest that agency acted improperly in opening procurement to full and open competition rather than proceeding with its initial plan to make a sole-source award is denied where the agency's decision was based on protester's representations, after being advised of agency's stringent requirements, that it could compete.

Electra:

Electra protests the requirements of request for proposals (RFP) No. DCA200-91-R-0002, issued by the Defense Communications Agency, Defense Commercial Communications Office (DCA-DECCO), for a digital communication service between the Consolidated Space Test Center located at Onizuka Air Force Base (AFB), Sunnyvale, California, and the Thule Tracking Station located at Thule Air Base, Greenland. The RFP contemplates a firm, fixed- price contract for a 1-year base period with four 1-year options; under the RFP, the service is required to be fully operational 90 days after contract award. In its protest, Electra contends that the terms of the RFP result in a de facto sole source procurement to GE American Communications, Inc. (GE Americom.)

We sustain the protest.

BACKGROUND

On August 23, 1990, DCA-DECCO advertised this requirement in the Commerce Business Daily (CBD); although the synopsis indicated that the procurement was being conducted on a sole source basis, five contractors-- including Electra-- contacted the agency and expressed interest in the procurement. /1/ On September 6, the agency's communications specialist contacted each of the five vendors to discuss the requirement; according to the communications specialist, each vendor was advised of the construction peculiarities associated with the arctic environment of the Thule site as well as the agency's intent to negotiate the requirement on a sole-source basis.

As a result of these discussions, four of the vendors decided not to compete under the RFP. Electra, however, informed the communications specialist that it still wished to submit a proposal. After a second phone call confirming Electra's interest in the procurement, the contracting officer determined that Electra's interest prevented a sole source negotiation; after synopsizing the requirement in the CBD on September 23 as a full and open competition, DCA-DECCO issued the RFP on November 9. On December 4, by amendment No. 0001, the agency indefinitely extended the RFP's original January 4, 1991, closing date; on January 9, by amendment No. 0002, the agency set the RFP's closing date for February 8.

Under the RFP, offerors were "urged and expected to inspect the site where services are to be performed"; the agency arranged for a preproposal site survey at both the Onizuka AFB and Thule locations. The site survey for Thule was held during the week of January 15; only Electra and GE Americom attended.

After the survey, by letter dated February 4, Electra filed an agency- level protest arguing that the solicitation was biased in favor of GE Americom, an on-site contractor who currently provides telecommunications to Greenland under several DCA-DECCO contracts; Electra also argued that several of the RFP's specifications were noncompetitive and misleading. By letter dated February 7, relying on our decision in Information Ventures, Inc., B-240925.2, Jan. 15, 1991, 91-1 CPD Para. 39, DCA-DECCO asserted that it was not required to equalize any physical advantage which GE Americom enjoyed as the incumbent contractor since these advantages did not result from preference or unfair action by the agency. By letter dated February 8, Electra reiterated its initial protest and challenged the agency's reliance on Information Ventures, Inc.; Electra maintained that DCA DECCO had improperly used the terms of a sole-source solicitation in the guise of full and open competition to favor GE Americom. By letter dated February 8, the contracting officer again denied Electra's protest; on February 21, Electra filed the instant protest with our Office.

Under the RFP, the contractor is to establish a telecommunication service between the Thule J-Site in Greenland /2/ and Onizuka AFB in California. Specifically, this requirement involves taking the signal from the patch panel at the Thule J-site and transmitting it to Onizuka AFB. It also involves reception, at that same J-site patch panel, of a signal sent from Onizuka AFB. /3/

The RFP provides that a vendor may provide this service via satellite, microwave, fiber optic cable and/or copper cable-- or any combination of these systems. Of these three systems, a satellite system-- consisting of an earth station terminal accessing an orbiting satellite-- is the fastest to configure; however, because of Thule's arctic environment, DCA-DECCO concedes that the 90-day operational service date eliminates all competitors seeking to construct a new earth station. /4/ Similarly, neither the microwave or cable system is a viable option since each system requires a construction period well beyond the 90 days afforded under the RFP. Unlike a satellite system that can operate from one earth station, a microwave system requires construction of numerous terminals operating in a line-of sight transmission path; similarly, cable-- which must be laid underground (or underwater to fulfill the instant requirement)-- requires an extensive construction period.

Although the agency agrees that construction of a new facility does not present a viable option for competition under this solicitation, DCA-DECCO argues that firms could nonetheless compete with the incumbent by leasing telecommunication facilities already in existence at Thule. In this regard, DCA-DECCO contends that during the September 6 telephone discussions, Electra represented that it could perform the requirement through leasing arrangements rather than construction; according to DCA- DECCO, it decided to open the procurement up to full and open competition based on Electra's proposed non-construction alternatives. According to Electra, however, non-construction alternatives were discussed only with respect to the Onizuka AFB site.

The agency's decision to conduct this procurement on a competitive basis apparently was based on a misunderstanding of the conversation between the agency's communications specialist and Electra: the specialist concluded that Electra could propose an unspecified alternative approach not involving new construction at Thule which would allow Electra to compete despite the 90-day operational service date requirement in the RFP, while Electra maintains that it was referring only to its plan for service at Onizuka AFB. Whatever the agency's expectation for competition from this procurement based on the conversation with Electra-- and it appears that the agency decided to compete this requirement in good faith-- it is clear from the record that there is no reasonable expectation of competition from any party other than GE Americom.

The record shows that while several vendors have facilities, which might be used to support a digital communication service, with the exception of GE Americom-- which owns two earth stations located at the J-site-- no other Thule vendor currently has the capability to service the J-site. /5/ Accordingly, the only means available for Electra-- or any other offeror-- to compete under the instant requirement is to lease the J-site earth station facilities from GE Americom. As explained below, GE Americom's control over access to its facilities-- either physical access or the tariffs charged for use of the facilities - effectively prevents any other offeror from competing.

Under the Federal Communications Act of 1934, the Federal Communications Commission (FCC) is to ensure the availability to United States users of "rapid, efficient, nation-wide, and world-wide wire and radio communication services with adequate facilities at reasonable charges." See 47 U.S.C. Sec. 151 (1988). To carry out its directive, by regulation, the FCC has established two classes of common communications carriers: dominant and nondominant. See International Competitive Carrier Policies, 102 FCC 2d 812 (1985). Dominant carriers are those carriers who because of their size and strength are considered as "having market power"; nondominant carriers are defined as those carriers lacking market power, and thus lacking the ability to set prices in ways that would be contrary to the goals of the Federal Communications Act of 1934. Id.Unlike dominant carriers, regulatory requirements for nondominant carriers are reduced or "streamlined." Under streamlining, the FCC presumes the tariff filings of non-dominant carriers to be lawful since the carrier cannot control the market; accordingly, tariffs subject to streamlining may take effect on 14 days notice (rather than up to 90 days' notice for dominant carriers) and need not be accompanied by the economic support data, which dominant carriers must furnish. Id.

Because of its overseas location in a world market, GE Americom is classified as a nondominant streamlined carrier with respect to the operation of its Thule, Greenland, facilities. See id. Accordingly, while GE Americom's J-site earth stations are potentially available for lease by the public at the tariff rate filed with the FCC, GE Americom's control over the tariff rate has an anti-competitive effect; even if Electra or another offeror were to bid without attempting to make a profit and submitted a pricing proposal relying on GE Americom's published tariff rate, once notified of Electra's interest, GE Americom could effectively propose a reduced tariff that would become effective at the time of contract award. /6/ Similarly, GE Americom could increase the tariff charged to its competitors, thereby ensuring its own cost advantage.

Moreover, although GE Americom asserts that its satellite services are available to the public, there is no guarantee of Electra's access to GE Americom's facilities; under the terms of GE Americom's tariff currently on file with the FCC:

"All service is subject to the availability of facilities. The Company reserves the right to limit the length of communications or discontinue furnishing facilities when necessary because of the lack of satellite capacity, local channel facilities, or any other causes beyond its control."

Because the J-site earth stations are privately owned by GE Americom, DCA -DECCO has no authority to compel GE Americom's cooperation with Electra or any other offeror. Accordingly, since GE Americom controls and owns the only access to the Thule J-site, we find that there is no reasonable expectation of obtaining competition for performance of the instant requirement; thus, a de facto sole-source procurement exists in favor of GE Americom. See Sun Refining and Marketing Co.; Barrett Refining Corp., B-239973; B-239973.2, Oct. 17, 1990, 90-2 CPD Para. 305.

Although the Competition in Contracting Act of 1984 (CICA) generally requires agencies to obtain full and open competition through the use of competitive procedures, 10 U.S.C. Sec. 2304(a)(1)(A) (1988), noncompetitive purchases are not objectionable when that is the only way the agency's needs can be satisfied. See Ricoh Corp., 68 Comp.Gen. 531 (1989), 89-2 CPD Para. 3. Here, since no reasonable expectation of competition exists due to the fact that the service must be operational 90 days after contract award, we find that a sole-source award to GE Americom for the instant requirement is justified. /7/ We therefore recommend that DCA-DECCO comply with the statutory and regulatory requirements for using noncompetitive procedures to procure the telecommunication services called for by the RFP. We also find that Electra is entitled to recover its protest costs. /8/4 C.F.R. Sec. 21.6(b)(1) (1991).

The protest is sustained.

Craig Brooks for the protester.

Virginia G. Farrier, Esq., Defense Communications Agency, for the agency.

Alexander P. Humphrey IV, Esq., for GE American, Communications, Inc., an interested party.

Behn Miller and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

/1/ The synopsis in the CBD made reference to CBD Note 22 which states in part:

"The proposed contract action is for supplies or services for which the Government intends to solicit and negotiate with only one source under authority of Federal Acquisition Regulation Sec. 6.302. Interested persons may identify their interest and capability to respond to the requirement or submit proposals. This notice of intent is not a request for competitive proposals."

/2/ The J-site is the name given to a mountain location approximately 12 miles from Thule Air Base that affords a satellite earth station the best straight line view of a satellite in a stationary orbit over the equator.

/3/ The patch panel is a device that uses a system of plugs and jacks to enable the quick connection/disconnection of electronic equipment and/or signal lines; located in the J-site, the patch panel is the demarcation point where the vendor equipment/signal interfaces with the government equipment/signal. From this point, the government takes the vendor's signal and routes it to a fiber optic link with the Thule tracking station.

/4/ An earth station houses the antennas, receivers, transmitters and electronic equipment needed on the ground to transmit and receive signals from an orbiting satellite; the record shows that construction of any new facilities is limited to the months of May through September.

/5/ As noted above, the RFP's 90-day operational service date coupled with Thule's arctic conditions prevent any construction attempts to link another vendor's facility with the J-site; moreover, even assuming these other facilities were available for lease, the prohibitive cost of configuring these alternate facilities to service the J-site-- estimated to be at least three times any GE Americom expense-- would result in exclusion of an offeror's proposal from the competitive range.

/6/ Each tariff represents a privately negotiated contract between the carrier and a commercial or government customer; while commercial tariffs are automatically available for other commercial users, government tariff rates are not similarly guaranteed for non-government users. The Thule facilities are listed under a government tariff; accordingly, although GE Americom has suggested that Electra could access the service at the government rate, as a commercial customer, Electra has no automatic right to lease the Thule system at the current rates indicated in the government tariff.

/7/ Electra contends that the agency is obligated to eliminate the advantage that GE Americom has by virtue of its status as a current contractor in place at Thule by taking such steps as purchasing an unused earth station at Thule and making it available to offerors. The agency has no such obligation; a particular offeror may possess unique advantages and capabilities due to its prior experience under a government contract or otherwise and the government is not required to attempt to equalize competition to compensate for it, unless there is evidence of preferential treatment or other improper action. Information Ventures, Inc., B-240925.2, supra.

/8/ While Electra also seeks to recover the costs of its site visit to Thule, we see no basis for such a recovery. Electra was aware of the restrictions imposed by the RFP-- such as the 90-day operational service date, the arctic environment, and the fact that there was a proposed sole source which presumably was already capable of meeting the agency's needs as defined in the RFP-- when it decided to attend the site survey. There is no indication that Electra was improperly induced to incur the site visit costs by being misled as to the agency's requirements; rather, bearing the costs of the site visit was a risk that Electra assumed when it expressed interest in competing.