B-177463, APR 6, 1973

B-177463: Apr 6, 1973

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TO ENVIRONMENTAL TECTONICS CORPORATION: REFERENCE IS MADE TO YOUR TELEFAX OF NOVEMBER 16. THE SOLICITATION IS FOR THE COMPLETION OF A STUDY ON FIELD STERILIZATION OF MEDICAL AND SURGICAL SUPPLIES. THIS EARLIER REPORT WAS BASED ON A STUDY OF THE REQUIREMENTS FOR AND FEASIBILITY OF A NEW FIELD STERILIZATION SYSTEM. WHICH WAS CONDUCTED UNDER A PRIOR PROCUREMENT BY ARTHUR D. YOU ASSERT THAT THE COMPANIES INVOLVED IN THE PHASE I STUDY "WERE PRIVY TO INFORMATION WHICH GAVE THEM A CLEAR COMPETITIVE ADVANTAGE OVER ANY OTHER FIRM THAT WOULD PARTICIPATE" IN THE WORK CALLED FOR BY THE RFP. WHICH IS INCLUDED IN ASPR AS APPENDIX G. APPLICATION OF RULE 3 IS DESCRIBED IN EXAMPLE A TO THE RULE. INDICATES THAT "ITS PROHIBITIONS ARE NOT IMPOSED ON DEVELOPMENT CONTRACTORS.

B-177463, APR 6, 1973

BID PROTEST - EFFECT OF DOD DIRECTIVE V. CONTRACT CLAUSE DIRECTIVE CANNOT OF ITSELF IMPOSE ANY OBLIGATIONS ON THE CONTRACTOR; SUCH OBLIGATIONS MUST BE IMPOSED BY A CONTRACT CLAUSE DESIGNED TO CARRY OUT THE INTENT OF THE DIRECTIVE. IN ABSENCE OF RESTRICTIVE CLAUSES IN PHASE I CONTRACT NONE CAN BE IMPOSED. PROTEST DENIED.

TO ENVIRONMENTAL TECTONICS CORPORATION:

REFERENCE IS MADE TO YOUR TELEFAX OF NOVEMBER 16, 1972, AND LETTER OF NOVEMBER 27, 1972, PROTESTING THE POSSIBLE AWARD OF A CONTRACT TO CERTAIN FIRMS UNDER REQUEST FOR PROPOSALS NO. DADA17-73-R-3650, ISSUED BY THE UNITED STATES ARMY MEDICAL RESEARCH AND DEVELOPMENT COMMAND, WASHINGTON, D.C.

THE SOLICITATION IS FOR THE COMPLETION OF A STUDY ON FIELD STERILIZATION OF MEDICAL AND SURGICAL SUPPLIES, AND CALLS FOR THE CONTRACTOR TO "DESIGN, DEVELOP, TEST AND EVALUATE FUNCTIONAL PROTOTYPE MODELS" OF SELECTED EQUIPMENT SYSTEMS IDENTIFIED IN AN EARLIER REPORT. THIS EARLIER REPORT WAS BASED ON A STUDY OF THE REQUIREMENTS FOR AND FEASIBILITY OF A NEW FIELD STERILIZATION SYSTEM, WHICH WAS CONDUCTED UNDER A PRIOR PROCUREMENT BY ARTHUR D. LITTLE, INCORPORATED, AND ITS SUBCONTRACTOR, THE CASTLE COMPANY. BOTH THESE FIRMS SUBMITTED PROPOSALS UNDER THE INSTANT RFP, AND WE UNDERSTAND THAT CASTLE HAS BEEN SELECTED FOR THE AWARD.

YOU CLAIM THAT AN AWARD "TO ANY FIRM THAT PARTICIPATED IN THE PHASE I STUDY" WOULD BE IN VIOLATION OF ASPR, APPENDIX G, ENTITLED "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST." YOU ASSERT THAT THE COMPANIES INVOLVED IN THE PHASE I STUDY "WERE PRIVY TO INFORMATION WHICH GAVE THEM A CLEAR COMPETITIVE ADVANTAGE OVER ANY OTHER FIRM THAT WOULD PARTICIPATE" IN THE WORK CALLED FOR BY THE RFP. YOU ALSO CLAIM THAT CASTLE, UNDER ITS CONTRACT WITH LITTLE, HAD ACCESS TO PROPRIETARY INFORMATION WHICH GAVE IT AN ADDITIONAL COMPETITIVE EDGE, SO THAT AN AWARD TO IT WOULD BE CONTRARY TO APPENDIX G.

DEPARTMENT OF DEFENSE (DOD) DIRECTIVE 5500.10, JUNE 1, 1963, WHICH IS INCLUDED IN ASPR AS APPENDIX G, SETS FORTH VARIOUS RULES TO PREVENT A DOD RESEARCH AND DEVELOPMENT CONTRACTOR FROM OBTAINING AN UNFAIR COMPETITIVE ADVANTAGE FOR FUTURE PROCUREMENTS. RULE 2 PROVIDES THAT A CONTRACTOR FURNISHING COMPLETE SPECIFICATIONS COVERING NONDEVELOPMENTAL ITEMS TO BE USED IN A COMPETITIVE PROCUREMENT SHALL NOT BE ALLOWED TO FURNISH THE ITEMS IN THE INITIAL PROCUREMENT, BUT EXCEPTS CONTRACTS FOR DEVELOPMENTAL OR PROTOTYPE ITEMS. RULE 3 PROHIBITS A COMPANY FROM FURNISHING, IN A COMPETITIVE PROCUREMENT, A SYSTEM OR SERVICES FOR WHICH IT PROVIDED MATERIAL LEADING "DIRECTLY, PREDICTABLY, AND WITHOUT DELAY TO A STATEMENT OF WORK ***." APPLICATION OF RULE 3 IS DESCRIBED IN EXAMPLE A TO THE RULE, WHICH INDICATES THAT A COMPANY WHICH, UNDER CONTRACT TO DOD, DEFINED THE DETAILED PERFORMANCE CHARACTERISTICS TO BE USED FOR COMPETITIVE PROCUREMENT OF A NEW TYPE OF FUEL CANNOT BID ON THE PROCUREMENT FOR DEVELOPMENT OR PRODUCTION OF THE FUEL. RULE 4 PROHIBITS A COMPANY HAVING ACCESS TO PROPRIETARY DATA UNDER A CONTRACT TO PERFORM A STUDY FROM USING THE DATA TO MAKE FURTHER STUDIES OR TO SUPPLY THE ITEMS BEING PROCURED AS A RESULT OF THE STUDY.

RULE 3, LIKE RULE 2, INDICATES THAT "ITS PROHIBITIONS ARE NOT IMPOSED ON DEVELOPMENT CONTRACTORS, SINCE IT IS RECOGNIZED THAT IN DEVELOPMENT WORK IT IS NORMAL TO SELECT FIRMS WHICH HAVE DONE THE MOST ADVANCED WORK IN THE FIELD" AND THAT SUCH FIRMS "WILL DESIGN AND DEVELOP AROUND THEIR OWN PRIOR KNOWLEDGE." EXAMPLE A TO RULE 3 SHOWS, HOWEVER, A CONTRACTOR WHO WAS INVOLVED IN PREPARING A STATEMENT OF WORK COULD NOT THEN BID ON A FOLLOW- ON PROCUREMENT CALLING FOR EITHER THE PRODUCTION OR DEVELOPMENT OF A PRODUCT IN ACCORDANCE WITH THAT WORK STATEMENT. ON THE OTHER HAND, EXAMPLE C OF RULE 3 PROVIDES THAT A COMPANY PREPARING A FEASIBILITY STUDY OF A NEW WEAPONS SYSTEM WITHOUT PROPOSING IN DETAIL THE CHARACTERISTICS OF A POSSIBLE FINAL DEVICE MAY BID TO PRODUCE THE SYSTEM. ALTHOUGH YOU CLAIM THAT RULE 3 IS APPLICABLE TO THIS SITUATION BECAUSE THE PHASE I STUDY ESTABLISHED DETAILED PERFORMANCE CHARACTERISTICS TO BE MET BY THE PROTOTYPE TO BE DEVELOPED UNDER THIS PROCUREMENT, THE RECORD DOES NOT SUPPORT YOUR ASSERTION. TABLE 7-7 OF THE PHASE I STUDY REPORT, WHICH YOU STATE SETS FORTH THESE PERFORMANCE CHARACTERISTICS, ACTUALLY LISTS QUANTIFIABLE CHARACTERISTICS OF SEVERAL TYPES OF EQUIPMENT THAT WERE EXAMINED AS PART OF THE STUDY. THE RFP DOES NOT LIST SPECIFIC PERFORMANCE CHARACTERISTICS FOR THE PROTOTYPES. IN FACT, SECTION D OF THE RFP, WHICH SETS FORTH EVALUATION FACTORS FOR AWARD, INDICATES THAT ONE SUCH FACTOR IS "INNOVATION; CREATIVENESS IN CONCEPTS OF SYSTEM DESIGN, INTERFACES AND PERFORMANCE CHARACTERISTICS." IN ADDITION, YOU WERE INFORMED BY THE CONTRACTING OFFICER, PRIOR TO THE DATE SET FOR RECEIPT OF PROPOSALS, THAT THE PART I STUDY "WAS NOT INTENDED TO ACT AS A LIMITING FACTOR," THAT THERE WAS "NO REQUIREMENT THAT THE PROPOSED SOLUTION BE BASED ON INFORMATION GENERATED BY THE PART I STUDY OR THAT IT INVOLVE EQUIPMENT IDENTICAL TO" THAT MENTIONED IN THE STUDY, AND THAT AN ALTERNATE "APPROACH OR DESIGN/CONCEPT" COULD BE USED.

RULE 4, WHICH ENCOMPASSES ADDITIONAL STUDY WORK AS WELL AS PRODUCTION, CONCERNS THE USE MADE OF PROPRIETARY DATA BY A PRIME CONTRACTOR, BUT DOES NOT EXPLICITLY DEAL WITH THE USE OF SUCH DATA OBTAINED FROM THE PRIME CONTRACTOR BY A SUBCONTRACTOR. THE RECORD DOES NOT ESTABLISH, HOWEVER, WHAT ADVANTAGE, IF ANY, CASTLE RECEIVED FROM PROPRIETARY DATA MADE AVAILABLE TO IT UNDER THE EARLIER STUDY. WE DO RECOGNIZE THAT CASTLE, BY VIRTUE OF ITS WORK UNDER THE EARLIER CONTRACT, MAY HAVE GAINED SOME ADVANTAGE OVER OTHER FIRMS IN PREPARING ITS PROPOSAL. HOWEVER, IN VIEW OF THE CONTRACTING OFFICER'S STATEMENT THAT ALL INFORMATION DEEMED PERTINENT TO ENSURE ADEQUATE RESPONSE TO THE RFP HAD BEEN DISSEMINATED TO PROSPECTIVE OFFERORS AND THAT PROPOSALS SUBMITTED BY THE PHASE I CONTRACTORS WOULD BE "CAREFULLY SCRUTINIZED TO DETERMINE THAT NO UNFAIR ADVANTAGE HAD BEEN GAINED," WE CANNOT CONCLUDE THAT WHATEVER ADVANTAGE CASTLE DID HAVE WAS ESSENTIALLY UNFAIR. 51 COMP. GEN. 621 (1972).

FINALLY, WE NOTE THAT ASPR 1.113-2 STATES THAT DOD DIRECTIVE 5500.10 "CANNOT OF ITSELF IMPOSE ANY OBLIGATIONS ON THE CONTRACTOR; SUCH OBLIGATIONS MUST BE IMPOSED BY A CONTRACT CLAUSE DESIGNED TO CARRY OUT THE INTENT OF THE DIRECTIVE." THE RECORD INDICATES THAT THE PHASE I CONTRACT CONTAINED NO CLAUSE RESTRICTING THE CONTRACTOR'S ACTIVITY ON LATER PROCUREMENTS. ASPR 1.113-2(C) STATES THAT THE CONTRACTING OFFICER "SHALL NOT IMPOSE RESTRICTIONS UNDER THE DIRECTIVE IN FOLLOW-ON PROCUREMENTS ON ANY PROSPECTIVE CONTRACTOR IN THE ABSENCE OF A SPECIFIC CONTRACTUAL AGREEMENT WITH THAT CONTRACTOR." SINCE THE "CONTRACT CLAUSE IS THE CONTROLLING FACTOR," IT IS CLEAR THAT THE DIRECTIVE CANNOT BE APPLIED IN THIS PROCUREMENT AND THAT AN AWARD TO EITHER LITTLE OR CASTLE WOULD NOT VIOLATE THE PROVISIONS OF ASPR APPENDIX G. 49 COMP. GEN. 463, 468 (1970); 50 ID. 54 (1970).

FOR THE FOREGOING REASONS, YOUR PROTEST IS DENIED.