B-180913, AUG 12, 1974, 54 COMP GEN 97

B-180913: Aug 12, 1974

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CONTRACTING OFFICER'S BELIEF THAT FUEL SHORTAGES REQUIRE PROCUREMENT OF MORE ECONOMICAL TURBOPROPS IS NOT OBJECTIONABLE. THE FACT THAT PROTESTER'S TURBOFAN JETS WERE FOUND MOST COST EFFECTIVE UNDER 1972 CANCELED REQUEST FOR PROPOSALS DOES NOT DEMONSTRATE UNREASONABLENESS OF 1974 DETERMINATION AND FACT THAT RECEIPT OF SINGLE ACCEPTABLE OFFER RESULTS IN SOLE-SOURCE PROCUREMENT DOES NOT PROVE SPECIFICATIONS WERE DRAFTED TO CAUSE THIS RESULT. AFTER REASONABLE TIME HAS ELAPSED PROTESTER IS CHARGED WITH NOTICE OF ADVERSE AGENCY ACTION. FILED WHEN RESOLICITATION IS ISSUED 13 MONTHS LATER. IS UNTIMELY IN REGARD TO PORTIONS ASSERTING INVALIDITY OF CANCELLATION. GAO CONSIDERATION OF UNTIMELY ISSUES IS NOT JUSTIFIED UNDER GOOD CAUSE AND SIGNIFICANT ISSUE PROVISIONS OF 4 CFR 20.2(B).

B-180913, AUG 12, 1974, 54 COMP GEN 97

BIDS - TWO-STEP PROCUREMENT - DISCONTINUANCE AND CONTRACT NEGOTIATED - PROPRIETY DETERMINATION TO LIMIT 1974 UTILITY AIRCRAFT TWO-STEP PROCUREMENT TO TURBOPROP AIRCRAFT, BASED ON AGENCIES' DETERMINATION OF MINIMUM NEEDS, GUIDANCE FROM CONGRESSIONAL COMMITTEES, AND CONTRACTING OFFICER'S BELIEF THAT FUEL SHORTAGES REQUIRE PROCUREMENT OF MORE ECONOMICAL TURBOPROPS IS NOT OBJECTIONABLE. THE FACT THAT PROTESTER'S TURBOFAN JETS WERE FOUND MOST COST EFFECTIVE UNDER 1972 CANCELED REQUEST FOR PROPOSALS DOES NOT DEMONSTRATE UNREASONABLENESS OF 1974 DETERMINATION AND FACT THAT RECEIPT OF SINGLE ACCEPTABLE OFFER RESULTS IN SOLE-SOURCE PROCUREMENT DOES NOT PROVE SPECIFICATIONS WERE DRAFTED TO CAUSE THIS RESULT. CONTRACTS - PROTESTS - TIMELINESS - TWO-STEP PROCUREMENT WHERE OFFEROR SELECTED FOR AWARD UNDER 1972 NEGOTIATED UTILITY AIRCRAFT PROCUREMENT MAKES TIMELY ORAL PROTEST TO AGENCY AFTER JANUARY 29, 1973, CANCELLATION OF REQUEST FOR PROPOSALS (RFP) BUT AGENCY NEITHER SUSTAINS NOR RESPONDS TO PROTEST, AFTER REASONABLE TIME HAS ELAPSED PROTESTER IS CHARGED WITH NOTICE OF ADVERSE AGENCY ACTION. SUBSEQUENT PROTEST TO GENERAL ACCOUNTING OFFICE (GAO), FILED WHEN RESOLICITATION IS ISSUED 13 MONTHS LATER, IS UNTIMELY IN REGARD TO PORTIONS ASSERTING INVALIDITY OF CANCELLATION, RESULTING INVALIDITY OF RESOLICITATION, AND PROTESTER'S DEMAND FOR AWARD UNDER 1972 CANCELED RFP. MOREOVER, GAO CONSIDERATION OF UNTIMELY ISSUES IS NOT JUSTIFIED UNDER GOOD CAUSE AND SIGNIFICANT ISSUE PROVISIONS OF 4 CFR 20.2(B).

IN THE MATTER OF CESSNA AIRCRAFT COMPANY; BEECH AIRCRAFT CORPORATION, AUGUST 12, 1974:

BACKGROUND

THE PROTEST OF CESSNA AIRCRAFT COMPANY DEALS WITH A SERIES OF THREE PROCUREMENT ACTIONS CONDUCTED BY THE DEPARTMENT OF THE ARMY OVER THE PAST 2 YEARS IN AN ATTEMPT TO OBTAIN A QUANTITY OF UTILITY AIRCRAFT FOR THE ARMY AND THE AIR FORCE. THE AIRCRAFT IN QUESTION ARE SMALL, TWIN ENGINE AIRPLANES, CAPABLE OF CARRYING ABOUT 6-10 PASSENGERS AND/OR LIGHT CARGO. THE FIRST PROCUREMENT TOOK PLACE IN LATE 1972 AND WAS CONDUCTED ON A COMPETITIVE NEGOTIATED BASIS. THE CESSNA PROPOSAL, WHICH OFFERED AN AIRCRAFT POWERED BY TURBOFAN ENGINES, WAS SELECTED BY THE SOURCE SELECTION AUTHORITY (SSA) FOR AWARD; HOWEVER, THE REQUEST FOR PROPOSALS (RFP) WAS CANCELED IN JANUARY 1973. THE SECOND, A TWO STEP ADVERTISED PROCUREMENT, COMMENCED WITH THE ISSUANCE OF AN INVITATION FOR BIDS (IFB) ON MARCH 15, 1974, AND WAS LIMITED TO TURBOPROP AIRCRAFT. IN THE FIRST STEP, ONLY ONE ACCEPTABLE TECHNICAL PROPOSAL, SUBMITTED BY BEECH AIRCRAFT CORPORATION (BEECH), WAS RECEIVED AND THIS SOLICITATION WAS ALSO CANCELED. THE THIRD PROCUREMENT, WHICH IS ONGOING AT THE PRESENT TIME, IS ON A SOLE-SOURCE NEGOTIATED BASIS WITH BEECH. THE ARMY IS WITHHOLDING AWARD UNTIL CESSNA'S PROTEST IS RESOLVED.

CESSNA'S PROTEST TO OUR OFFICE WAS FILED ON MARCH 25, 1974, IMMEDIATELY AFTER THE ISSUANCE OF THE TWO-STEP IFB. CESSNA HAS MAINTAINED THAT THIS SOLICITATION, AND THE SUBSEQUENT SOLE-SOURCE NEGOTIATION WITH BEECH, ARE INVALID. THE RELIEF REQUESTED IS BASICALLY THAT EITHER AWARD BE MADE TO CESSNA UNDER THE 1972 CANCELED RFP, OR THAT THE PRESENT PROCUREMENT BE SUSPENDED AND THE ARMY REQUIRED TO REJUSTIFY ITS ACTIONS TO THE CONGRESS. CESSNA CONTENDS THAT THE CANCELLATION OF THE 1972 RFP WAS INVALID FOR TWO REASONS - FIRST, BECAUSE THE SECRETARY OF THE ARMY'S ACTION IN DIRECTING THAT THE PROCUREMENT BE CANCELED WAS IMPROPER AND OUTSIDE HIS AUTHORITY, AND SECOND, BECAUSE THE ARMY VIOLATED VARIOUS PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) IN FAILING TO NOTIFY CESSNA OF THE REASONS FOR THE PURPORTED CANCELLATION. NEXT, CESSNA ARGUES THAT THE SPECIFICATIONS IN THE MARCH 1974 TWO-STEP IFB WERE UNDULY RESTRICTIVE AND CALCULATED TO ELIMINATE ALL BUT ONE OFFEROR. LASTLY, CESSNA BELIEVES THAT THE CURRENT NONCOMPETITIVE PROCUREMENT FROM BEECH RUNS CONTRARY TO THE EXPRESS BASIS FOR THE CONGRESSIONAL AUTHORIZATION TO PROCURE UTILITY AIRCRAFT.

THE COMPLEX BACKGROUND FACTS UNDERLYING THE PRESENT PROTEST, AND VARYING INTERPRETATIONS OF THEM, ARE SET FORTH IN A NUMBER OF CONGRESSIONAL DOCUMENTS, REPORTS FROM THE PROCURING AGENCY, AND WRITTEN SUBMISSIONS TO OUR OFFICE FROM CESSNA AND BEECH. AT THE OUTSET, IT IS NECESSARY TO DISCUSS A TECHNICAL POINT. THE CONTROVERSY REFLECTED IN THE RECORD, REDUCED TO ITS SIMPLEST TERMS, INVOLVES A QUESTION OF WHETHER COMPETITION FOR THE UTILITY AIRCRAFT REQUIREMENT SHOULD HAVE BEEN LIMITED TO TURBOPROP AIRCRAFT, OR WHETHER COMPETITION SHOULD HAVE INCLUDED TURBOJET AND TURBOFAN POWERED AIRCRAFT AS WELL. THE RECORD DOES NOT PROVIDE ANY AUTHORITATIVE TECHNICAL DEFINITION OF THESE TYPES. AS WE UNDERSTAND IT, IN A TURBOPROP THE JET ENGINE IS UTILIZED TO DRIVE A PROPELLER; IN OTHER WORDS, TURBOPROPS ARE PROPELLER-DRIVEN AIRCRAFT. TURBOJETS AND TURBOFANS FALL INTO THE GENERIC CATEGORY OF "JETS" AS THAT TERM IS COMMONLY UNDERSTOOD - THAT IS, THE PROPULSION IS CAUSED BY THE REARWARD-DIRECTED THRUST OF HOT GASES. CESSNA DRAWS THE FURTHER DISTINCTION THAT ITS TURBOFAN ENGINES, UTILIZING A TURBINE TO DRIVE A FAN WHICH FORCES AIR AROUND AND THROUGH THE COMPRESSOR, ARE MORE EFFICIENT AND ADVANCED THAN TURBOJETS.

THE CIRCUMSTANCES LEADING TO THE INITIATION OF THE 1974 PROCUREMENT WERE DISCUSSED IN A HEARING BEFORE THE SUBCOMMITTEE ON DEFENSE, HOUSE COMMITTEE ON APPROPRIATIONS, ON FEBRUARY 13, 1974. THE REPORT OF THIS HEARING CONTAINS THE FOLLOWING PERTINENT STATEMENTS BY CONGRESSMAN SIKES OF THE SUBCOMMITTEE AND GENERAL OLENCHUK, THE ARMY WITNESS:

MR. SIKES.

BY WAY OF BACKGROUND, IN FISCAL YEAR 1973 THE ARMY BUDGETED $12.7 MILLION FOR 20 U-21F TYPE UTILITY AIRCRAFT AND THE AIR FORCE BUDGETED $8.4 MILLION FOR 14 CX-X EXECUTIVE-TYPE AIRCRAFT. A TOTAL OF $20.4 MILLION WAS AUTHORIZED AND THE ARMY AND AIR FORCE WERE DIRECTED TO UNDERTAKE A COMPETITIVE PROCUREMENT OF A SINGLE AIRCRAFT THAT WOULD ELICIT BIDS FROM A NUMBER OF AIRCRAFT MANUFACTURERS. THE FUNDS WERE APPROPRIATED BY CONGRESS WITH THIS UNDERSTANDING.

IN JANUARY 1973, THE PROPOSED COMPETITIVE PROCUREMENT WAS CANCELED AFTER A RECOMMENDATION WAS MADE TO THE SECRETARY OF THE ARMY THAT A JET AIRCRAFT BE APPROVED FOR AWARD. DURING CONSIDERATION OF THE FISCAL YEAR 1974 BUDGET, THE HOUSE AND SENATE ARMED SERVICES COMMITTEES DIRECTED THAT THE FISCAL YEAR 1973 BUY BE LIMITED TO TURBOPROP AIRCRAFT ONLY. THE APPROPRIATIONS COMMITTEES OF THE HOUSE AND SENATE IN CONFERENCE DIRECTED THAT THE FISCAL YEAR 1973 BUY BE HELD IN ABEYANCE UNTIL THIS PROGRAM IS REJUSTIFIED TO CONGRESS. WE HAVE CALLED FOR THIS HEARING TODAY TO HAVE THIS REJUSTIFICATION MADE.

CONGRESS RECOGNIZES THE NEED FOR THE AIRCRAFT WHICH ARE UNDER CONSIDERATION, AND WANTS A DETERMINATION MADE AND AGREEMENT BETWEEN THE SERVICES ON WHAT IS CONSIDERED DESIRABLE AND SATISFACTORY.

GENERAL OLENCHUK.

AS YOU KNOW, DURING THE FISCAL YEAR 1973 BUDGET HEARINGS THE ARMY AND THE AIR FORCE REQUESTED FUNDS FOR U-X AND CX-X AIRCRAFT RESPECTIVELY. THE ARMY ASKED FOR $12.7 MILLION FOR 20 UTILITY AIRCRAFT TO BE PROCURED COMPETITIVELY. ARMY WITNESSES ALSO MADE CLEAR IN TESTIMONY THAT A U 21F TYPE TURBOPROP (ALSO REFERRED TO AS PROPELLER DRIVEN) AIRCRAFT WOULD FULLY SATISFY ITS OPERATIONAL NEEDS ***. DURING THE HEARINGS, THE AIR FORCE ALSO REQUESTED $8.4 MILLION FOR THE PROCUREMENT OF 14 MEDIUM WEIGHT EXECUTIVE TRANSPORT AIRCRAFT ***. IN TESTIMONY, THE POSSIBILITY OF COMBINED ARMY/AIR FORCE PROCUREMENT WAS DISCUSSED. AS A RESULT, THE ARMY AND THE AIR FORCE AGREED ON PROCEEDING JOINTLY ***.

IN THE HOUSE ARMED SERVICES COMMITTEE (HASC) REPORT NO. 92-1149 OF JUNE 19, 1972, THE COMMITTEE APPROVED BOTH THE ARMY REQUEST FOR U-X AIRPLANES AND THE AIR FORCE REQUEST FOR CX-X AIRCRAFT; AND RECOMMENDED THAT THE ARMY NEGOTIATE A CONTRACT FOR BOTH SERVICES WITH OPTIONS FOR PROCUREMENT IN FISCAL YEAR 1974. THE SENATE ARMED SERVICES COMMITTEE YEAR 1974. THE SENATE ARMED SERVICES COMMITTEE REPORT (SASC) NO. 92 962 OF JULY 14, 1972, RECOMMENDED DENIAL OF ALL EXECUTIVE-TYPE AIRCRAFT PENDING A REEVALUATION OF THE REQUIREMENTS OF ALL SERVICES. THE SASC ALSO RECOMMENDED AND STRONGLY URGED THAT THE ARMY AND AIR FORCE REEXAMINE THE REQUIREMENT FOR AN AIRCRAFT IN THE $600,000 PRICE RANGE AND, IN ANY CASE, UNDERTAKE A COMPETITIVE PROCUREMENT THAT WOULD ELICIT BIDS FROM A NUMBER OF AIRCRAFT MANUFACTURERS. IN THE CONFERENCE REPORT OF H.R. 92-1388 OF SEPTEMBER 11, 1972, THE SENATE RECEDED FROM ITS POSITION AND AGREED TO RESTORATION OF THE SERVICE REQUEST WITH AN AMENDMENT REDUCING THE ARMY'S REQUEST TO $12 MILLION. DURING THE CONFERENCE, ASSURANCE WAS RECEIVED FROM THE MILITARY DEPARTMENTS THAT THE ARMY AND AIR FORCE AIRCRAFT WOULD BE A COMMON PROCUREMENT OF A SINGLE AIRCRAFT AND THAT PROCUREMENT PROCEDURES WOULD ADDRESS THEMSELVES TO THE RECOMMENDATIONS MADE BY THE SENATE. THE HOUSE APPROPRIATIONS COMMITTEE (HAC) REPORT NO. 92-1389 OF SEPTEMBER 11, 1972, AND THE SENATE APPROPRIATIONS COMMITTEE (SAC) REPORT NO. 92-1243 OF SEPTEMBER 29, 1972, RECOMMENDED APPROPRIATION OF FUNDS TO BUY THE U X AND CX-X AIRCRAFT, AMENDING THE ARMY REQUEST TO $12 MILLION TO CONFORM TO THE RECOMMENDED AUTHORIZATIONS, AFTER WHICH CONGRESS APPROPRIATED THE FUNDS. THE ARMY AND AIR FORCE THEN AGREED TO PROCEED WITH A COMPETITIVE NEGOTIATED PROCUREMENT USING JOINTLY DEVELOPED SPECIFICATIONS INCORPORATING REQUIRED AND DESIRED AIRCRAFT PERFORMANCE CHARACTERISTICS. ACCORDINGLY, THE ARMY ISSUED A REQUEST FOR PROPOSALS ON OCTOBER 6, 1972.

THE REQUEST FOR PROPOSALS WAS ISSUED WITHOUT ANY CONSTRAINTS AS TO THE TYPE OF PROPULSION SYSTEM, THAT IS, TURBOPROP OR TURBOFAN (COMMONLY REFERRED TO AS JETS). FOUR COMPANIES SUBMITTED EIGHT PROPOSALS ***. THESE PROPOSALS WERE EVALUATED AND IN LATE JANUARY 1973, A RECOMMENDATION WAS MADE TO THE SECRETARY OF THE ARMY, THAT A JET AIRCRAFT BE APPROVED FOR AWARD. ON JANUARY 29, 1973, AFTER EVALUATION OF THE RECOMMENDATIONS, THE SECRETARY OF THE ARMY, ROBERT F. FROEHLKE, CANCELED THE PROCUREMENT BECAUSE, AMONG OTHER REASONS, THE ARMY HAD CONTINUOUSLY REPRESENTED TO CONGRESS THAT IT REQUIRED AND INTENDED TO PROCURE A U-21F TURBOPROP TYPE AIRCRAFT AND HAD NOT JUSTIFIED A REQUIREMENT FOR A JET AIRCRAFT.

AFTER CANCELLATION OF THIS NEGOTIATED PROCUREMENT, THE ARMY AND THE AIR FORCE MET TO REACH AGREEMENT ON JOINT SPECIFICATIONS BEFORE PROCEEDING WITH REPROCUREMENT. THE ARMY DID NOT MODIFY ITS REQUIRED AIRCRAFT PERFORMANCE CHARACTERISTICS; HOWEVER, THE AIR FORCE REQUIREMENTS, DICTATED BY SAFETY CONSIDERATIONS, WERE HIGHER IN SINGLE ENGINE SERVICE CEILING. *** TO ACCOMMODATE THE AIR FORCE REQUIREMENT AND THEREBY MAINTAIN A JOINT COMPETITIVE PROCUREMENT SECRETARY FROEHLKE *** DECIDED IN APRIL 1973 THAT THE JOINT SPECIFICATIONS SHOULD BE REVISED UPWARD TO PROVIDE FOR SAFE FLIGHT OPERATIONS OVER THE MORE EXTENSIVE ROUTE STRUCTURE, INCLUDING REMOTE AND MOUNTAINOUS REGIONS, WHICH THE AIR FORCE MUST FLY. SINCE THESE REVISIONS WOULD EXCLUDE THE U-21F TURBOPROP AIRCRAFT FROM THE COMPETITION, SECRETARY FROEHLKE DETERMINED NOT TO PROCEED UPON THIS BASIS UNTIL YOUR COMMITTEE AND THE OTHER CONCERNED COMMITTEES OF CONGRESS HAD BEEN ADVISED OF THE REVISION AND HAD AN OPPORTUNITY TO COMMENT.

IN RESPONSE, YOUR COMMITTEE AND THE SENATE ARMED SERVICES AND SENATE APPROPRIATIONS COMMITTEES EXPRESSED THEIR CONCERN AS TO THE PROPOSED UPWARD REVISION IN PERFORMANCE REQUIREMENTS. IN SUM THE ARMY WAS ADVISED THAT IF THE PROCUREMENT WAS NOT BASED UPON PERFORMANCE CHARACTERISTICS WHICH WOULD INCLUDE THE U-21F TURBOPROP AIRCRAFT, THE PROCUREMENT SHOULD BE DEFERRED PENDING FURTHER CONGRESSIONAL REVIEW AND CONSIDERATION. CONSEQUENTLY, THE PROCUREMENT WAS STYMIED. ON THE ONE HAND, WE HAD CLEAR AND UNEQUIVOCAL CONGRESSIONAL AND DEFENSE DIRECTIONS TO MAKE A JOINT COMPETITIVE PROCUREMENT; AND ON THE OTHER HAND, THE ARMY AND AIR FORCE HAD DIFFERENT MINIMUM PERFORMANCE REQUIREMENTS STEMMING FROM OPERATIONAL NECESSITY.

TO RESOLVE THIS DILEMMA*** DISCUSSIONS CONTINUED BETWEEN OUR SERVICES. *** THE U21-F TYPE AIRCRAFT SATISFIED THE ARMY'S MINIMUM OPERATIONAL REQUIREMENTS. HOWEVER, THE AIR FORCE NEEDED AN ADDITIONAL CAPABILITY IN THE CX-X TO SATISFY THEIR MINIMUM SAFETY OF FLIGHT PERFORMANCE REQUIREMENTS. BECAUSE OF THIS DILEMMA, THE UNDER SECRETARY OF THE ARMY, *** BY LETTER OF JUNE 18, 1973, PROPOSED TO YOUR COMMITTEE AND THE OTHER CONCERNED COMMITTEES THAT A BASIS FOR JOINT PROCUREMENT DID NOT EXIST. REQUESTED *** TO RESOLICIT INDUSTRY IN A TWO-STEP FORMALLY ADVERTISED COMPETITIVE PROCUREMENT FOR AN AIRCRAFT TO SATISFY THE ARMY'S MINIMUM PERFORMANCE REQUIREMENTS ***. THE AIR FORCE ALSO PLANNED A SEPARATE COMPETITIVE PROCUREMENT ***.

*** YOUR COMMITTEE DESIRED THAT NEITHER THE ARMY NOR THE AIR FORCE TAKE ANY ACTION TO INITIATE SEPARATE PROCUREMENT OF FISCAL YEAR 1973 AIRCRAFT UNTIL THEY THOROUGHLY REVIEWED THE MATTER WITH ARMY AND AIR FORCE OFFICIALS DURING CONSIDERATION OF THE FISCAL YEAR 1974 BUDGET.

IN THE REVIEW OF THE FISCAL YEAR 1974 BUDGET, THE HASC (H.R. NO. 93 383) ON JULY 18, 1973, AUTHORIZED THE ARMY REQUEST FOR 20 AIRCRAFT AT $12.2 MILLION; HOWEVER, "THE COMMITTEE WAS NOT CONVINCED THAT THE AIR FORCE JUSTIFIED A HIGHER SPECIFICATION THAN THE ARMY FOR THE USES TO WHICH THESE AIRCRAFT ARE TO BE PUT. THEREFORE, THE COMMITTEE RECOMMENDS THAT THE AIR FORCE REQUEST FOR 16 CX-X ATTACHE AIRCRAFT, IN THE AMOUNT OF $9.6 MILLION, BE DISAPPROVED." THE SASC (S.R. NO. 93 385) REPORT OF SEPTEMBER 6, 1973, DENIED BOTH THE ARMY AND AIR FORCE REQUESTS SINCE THE AIRCRAFT AUTHORIZED FOR FISCAL YEAR 1973 HAD NOT YET BEEN PURCHASED. FURTHER, THE COMMITTEE COULD FIND NO VALID JUSTIFICATION FOR INCREASING PERFORMANCE SPECIFICATION REQUIREMENTS OVER THOSE ORIGINALLY APPROVED AND RECOMMENDED PROCUREMENT OF THE FISCAL YEAR 1973 AUTHORIZED AIRCRAFT "BE LIMITED TO PROPELLER DRIVEN AIRCRAFT ONLY." THE SASC AND THE HASC IN THE OCTOBER JOINT CONFERENCE REPORT ON THE FISCAL YEAR 1974 BUDGET (H.R. NO. 93-588) DENIED BOTH THE ARMY AND AIR FORCE REQUESTS. ALSO, THE CONFERENCE COMMITTEE DIRECTED

"THAT THE ARMY AND THE AIR FORCE ENTER INTO A JOINT PROCUREMENT FOR THE 34 AIRCRAFT APPROVED BY THE CONGRESS FOR FISCAL YEAR 1973; THAT THE BID PROPOSALS BE LIMITED TO TURBOPROP AIRCRAFT ONLY; AND THAT THE PERFORMANCE REQUIREMENTS OF THE SELECTED AIRCRAFT BE SUCH AS TO SATISFY THE NEEDS OF BOTH THE ARMY AND THE AIR FORCE." THE HAC REPORT (H.R. 93-662) OF NOVEMBER 26, 1973, STATED THAT THE -

"COMMITTEE DID NOT HAVE THE UNDERSTANDING LAST YEAR THAT THE JOINT COMPETITIVE PROCUREMENT WOULD BE RESTRICTED TO TURBOPROP AIRCRAFT ONLY AND THAT THE PERFORMANCE REQUIREMENTS OF THE SELECTED AIRCRAFT BE SUCH SO AS TO SATISFY THE NEEDS OF BOTH THE ARMY AND THE AIR FORCE."

THE COMMITTEE DIRECTED THAT THE FISCAL YEAR 1973 BUY OF UTILITY AIRCRAFT SPECIFY THAT THE AIRCRAFT MAY BE "POWERED EITHER BY TURBOPROP OR TURBOFAN ENGINES" SO THAT ALL QUALIFIED MANUFACTURERS COULD BID. ON DECEMBER 12, 1973, THE SAC IN THEIR REPORT ON THE FISCAL YEAR 1974 BUDGET (S.R. NO. 93- 617) WAS NOT IN AGREEMENT WITH THE HAC POSITION. INSTEAD, THE SAC APPROVED THE DIRECTIONS IN THE CONFERENCE REPORT ON THE FISCAL YEAR 1974 PROCUREMENT AUTHORIZATION BILL WHICH DIRECTED THAT THE JOINT PROCUREMENT FOR THE 34 AIRCRAFT IN THE FISCAL YEAR 1973 BUDGET BE LIMITED TO TURBOPROP AIRCRAFT ONLY. SUBSEQUENTLY, ON DECEMBER 19, 1973, THE JOINT CONFERENCE REPORT (H.R. 93-741) ON THE FISCAL YEAR 1974 DEFENSE PROCUREMENT APPROPRIATION BILL STATED THAT THE FUNDS ALREADY APPROPRIATED FOR FISCAL YEAR 1973 PROCUREMENT FOR THE ARMY U-X AND AIR FORCE CX-X UTILITY AIRCRAFT "BE HELD IN ABEYANCE UNTIL THIS PROGRAM IS REJUSTIFIED TO CONGRESS."

BASED ON THE FOREGOING, WE HAVE AGAIN JOINTLY REEXAMINED OUR PERFORMANCE REQUIREMENTS FOR THE U-X/CX-X AND HAVE EXECUTED A JOINT SPECIFICATION WHICH WE PROPOSE TO USE FOR THE PROCUREMENT OF BOTH AIRCRAFT. *** IT IS OUR PLAN, SUBJECT TO THE APPROVAL OF YOUR COMMITTEE AND THE OTHER CONCERNED COMMITTEES, TO SOLICIT INDUSTRY FOR A COMMERCIAL, FAA CERTIFICATED TURBOPROP USING A TWO-STEP FORMALLY ADVERTISED COMPETITIVE PROCUREMENT. DURING OUR VIEW OF THE PERFORMANCE REQUIREMENTS FOR THIS AIRCRAFT, IT WAS DETERMINED THAT A TURBOPROP WOULD MEET ALL MISSION REQUIREMENTS AND EFFECT A CONSIDERABLE SAVINGS IN FUEL CONSUMPTION. THUS SUPPORTING OUR NATIONAL ENERGY POLICIES. TURBOPROP AIRCRAFT CHARACTERISTICALLY USE SIGNIFICANTLY LESS FUEL AND HAVE LOWER MAINTENANCE COSTS.

IN THIS PERIOD OF FUEL SHORTAGES AND RISING PRICES, TURBOPROP AIRCRAFT HAVE PROVEN TO BE MOST COST EFFECTIVE. WE PROPOSE THAT SPECIFICATIONS FOR THE AIRCRAFT BE LIMITED TO U.S. DESIGN AND EXPECT THIS TO RESULT IN COMPETITIVE BIDS FROM AT LEAST TWO UNITED STATES MANUFACTURERS. BELIEVE OUR PROPOSED ACTION WILL RESULT IN MAXIMUM COMPETITION AND THE LOWEST COST FOR AN AIRCRAFT MEETING OUR JOINT REQUIREMENTS. ***

THE SUBSTANCE OF THIS PROCUREMENT PLAN WAS DETAILED IN A LETTER DATED FEBRUARY 4, 1974, FROM THE SECRETARY OF THE ARMY TO THE CHAIRMEN OF THE HOUSE APPROPRIATIONS COMMITTEE AND THE HOUSE AND SENATE ARMED SERVICES COMMITTEES. IN A LETTER TO THE SECRETARY DATED FEBRUARY 27, 1974, THE CHAIRMAN OF THE HOUSE APPROPRIATIONS COMMITTEE STATED THAT THE COMMITTEE HAD NO OBJECTION TO THE PROPOSED PROCUREMENT UNDER THE CONDITIONS SET FORTH IN THE SECRETARY'S FEBRUARY 4 LETTER. WE UNDERSTAND THAT THE OTHER COMMITTEE CHAIRMEN ALSO APPROVED THE PROCUREMENT PLAN.

BY LETTER DATED MAY 20, 1974, THE SECRETARY ADVISED THE CHAIRMAN THAT ALTHOUGH SEVEN COMPANIES HAD BEEN SOLICITED IN THE TWO-STEP IFB, ONLY BEECH HAD SUBMITTED TECHNICAL PROPOSALS. THIS LETTER STATES:

SINCE THERE IS ONLY ONE RESPONDENT TO THE SOLICITATION, WE INTEND TO CANCEL THE FORMAL SOLICITATION AND NEGOTIATE THE PRICE PURSUANT TO THE ARMED SERVICES PROCUREMENT REGULATION. OUR OBJECTIVE CONTINUES TO BE TO OBTAIN THE LOWEST PRICE FOR AN AIRCRAFT MEETING THE MINIMUM JOINT REQUIREMENTS OF THE ARMY AND AIR FORCE.

WE UNDERSTAND THAT SIMILAR LETTERS WERE SENT TO THE CHAIRMEN OF THE SENATE APPROPRIATIONS COMMITTEE AND THE HOUSE AND SENATE ARMED SERVICES COMMITTEES.

THE CONTRACTING OFFICER REPORTS THAT IN ACCORDANCE WITH ASPR 2 503.1(H) AND 3-210.2(III), THE TWO-STEP INVITATION WAS CANCELED AND RFP DAAJ01-74-R -0694 WAS ISSUED ON A SOLE-SOURCE BASIS TO BEECH.

1974 PROCUREMENT ACTIONS

WE WILL FIRST ADDRESS THE PORTIONS OF CESSNA'S PROTEST DEALING WITH THESE MOST RECENT ARMY PROCUREMENT ACTIONS - THE ISSUANCE OF THE TWO STEP IFB ON MARCH 15, 1974, AND THE SUBSEQUENT CANCELLATION OF THIS SOLICITATION AND INITIATION OF A SOLE-SOURCE NEGOTIATED PROCUREMENT WITH BEECH.

CESSNA CONTENDS THAT THE 1974 PROCUREMENT ACTIONS ARE INVALID BECAUSE THE CANCELLATION OF THE 1972 RFP WAS INVALID. FOR REASONS TO BE INDICATED INFRA, WE WILL EXPLAIN WHY THIS CONTENTION WILL NOT BE CONSIDERED. ADDITION, CESSNA HAS PRESENTED OTHER OBJECTIONS GOING TO THE MERITS OF THE CURRENT PROCUREMENT ACTIONS. IN ITS LETTER DATED APRIL 8, 1974, TO THE GENERAL ACCOUNTING OFFICE (GAO), THE PROTESTER ORIGINALLY VOICED THE OBJECTION THAT THE TWO-STEP IFB SPECIFICATIONS WERE UNDULY RESTRICTIVE BECAUSE THEY EXCLUDED JETS AND EXPRESSED FEARS THAT A SOLE-SOURCE PROCUREMENT WOULD RESULT. LATER, CESSNA AMPLIFIED ITS POSITION BY CONTENDING THAT THE TWO-STEP SPECIFICATIONS WERE WRITTEN SO THAT ONLY ONE AIRCRAFT COULD QUALIFY. CESSNA MAINTAINS THAT THE RESULT IS A SOLE-SOURCE BUY, IN CONTRAVENTION OF THE EXPRESS BASIS FOR CONGRESSIONAL AUTHORIZATION OF THE PROCUREMENT - NAMELY, THE BELIEF THAT THE PROCUREMENT WOULD BE COMPETITIVE WITH AT LEAST TWO CONCERNS SUBMITTING OFFERS.

CESSNA BELIEVES THE ARMY IS BUYING THE BEECH KING AIR 200, AN AIRCRAFT CLOSELY COMPETITIVE IN PRICE WITH CESSNA'S. MOREOVER, THE PROTESTER POINTS TO THE IRONY OF THE ARMY'S PURCHASING THE BEECH KING AIR 200, A HIGHER PERFORMANCE AIRCRAFT THAN THE ONE OFFERED BY BEECH IN 1972, WHEN ONE OF THE BASES FOR THE CANCELLATION OF THE ORIGINAL PROCUREMENT WAS THAT THE ARMY, IN PURCHASING A CESSNA JET, WOULD BE BUYING AIRCRAFT IN EXCESS OF ITS MINIMUM NEEDS.

IN ADDITION, CESSNA DISPUTES THE ALLEGATION THAT TURBOPROPS ARE MORE ECONOMICAL THAN JETS AS A JUSTIFICATION FOR LIMITING COMPETITION IN THE 1974 PROCUREMENT. IN ITS JULY 3, 1974, LETTER TO GAO, CESSNA PRESENTED COST DATA INDICATING THAT THE CESSNA JET'S YEARLY OPERATING COSTS ARE SIGNIFICANTLY LESS THAN THE BEECH KING AIR 200'S.

FROM THE PERTINENT LEGISLATIVE HISTORY DISCUSSED, SUPRA, IT SEEMS CLEAR THAT THE DECISION TO PROCURE BY MEANS OF A TWO-STEP IFB LIMITED TO TURBOPROP AIRCRAFT REPRESENTED THE CONSIDERED JUDGMENT OF THE ARMY AND AIR FORCE THAT THIS METHOD WOULD ASSURE THAT AIRCRAFT MEETING THEIR MINIMUM NEEDS WOULD BE PROCURED IN A COMPETITIVE ENVIRONMENT. MOREOVER, THE SERVICES, IN MAKING THIS DETERMINATION, HAD THE BENEFIT OF THE GUIDANCE OF CONGRESSIONAL COMMITTEES. CESSNA'S ALLEGATION THAT THE TWO-STEP IFB SPECIFICATIONS WERE DRAFTED SO THAT ONLY ONE AIRCRAFT COULD QUALIFY HAS NOT BEEN SUBSTANTIATED. THE FACT THAT ONLY ONE ACCEPTABLE TECHNICAL OFFER WAS RECEIVED, WHEN AT LEAST TWO OFFERS WERE ANTICIPATED, DOES NOT ESTABLISH A CASE OF RESTRICTIVE, NONCOMPETITIVE SPECIFICATIONS.

MOREOVER, WE NOTE THAT THE SUBSEQUENT SOLE-SOURCE NEGOTIATION WITH BEECH WAS UNDERTAKEN IN ACCORDANCE WITH THE ABOVE-CITED ASPR PROVISIONS. ADDITION, WE UNDERSTAND THAT THE CHAIRMEN OF THE VARIOUS COMMITTEES, THOUGH INFORMED OF THE SOLE-SOURCE NEGOTIATION, HAVE NOT RAISED ANY OBJECTIONS TO THE PROCUREMENT PLAN. IN THIS LIGHT, WE SEE NO BASIS FOR THE PROTESTER'S ALLEGATION THAT THE CURRENT PROCUREMENT RUNS CONTRARY TO THE EXPRESS INTENT OF THE CONGRESS. THE AUTHORIZATION ACT (PUBLIC LAW 92- 436, SEPTEMBER 26, 1972, 86 STAT. 734, 10 U.S.C. 133 NOTE) AND THE APPROPRIATION ACT (PUBLIC LAW 92-570, OCTOBER 26, 1972, 86 STAT. 1184, 1190, 1193) SPOKE ONLY OF FUNDS TO PROCURE "AIRCRAFT," ATTACHING NO SPECIFIC CONDITIONS. THE PERTINENT LEGISLATIVE HISTORY IS GERMANE FOR THE PURPOSE OF INDICATING WHETHER THE SERVICES HAVE MADE A SOUND DETERMINATION OF MINIMUM NEEDS AND PROCUREMENT PROCEDURES TO SATISFY THE NEEDS. BELIEVE THAT IN THE ABSENCE OF CONGRESSIONAL OBJECTIONS, NO BASIS EXISTS TO QUESTION THE SOUNDNESS OF THE 1974 PROCUREMENT PLAN.

THE ONLY REMAINING OBJECTION TO THE 1974 PROCUREMENT ACTIONS IS CESSNA'S ALLEGATION THAT ITS TURBOFAN JETS ARE MORE ECONOMICAL TO OPERATE THAN TURBOPROPS - IN OTHER WORDS, THAT CESSNA'S AIRCRAFT CAN PERFORM THE REQUIRED MISSION AND CAN DO SO IN A MORE COST-EFFECTIVE MANNER. IN ITS JULY 3, 1974, LETTER TO GAO, CESSNA PRESENTED COST DATA INDICATING THAT, BASED ON 600 HOURS OF FLIGHT PER YEAR, BOTH THE DIRECT COSTS AND THE FIXED ANNUAL COSTS OF ITS "CITATION" TURBOFAN ARE SUBSTANTIALLY LOWER THAN THOSE OF THE BEECH KING AIR 200. SPECIFICALLY, CESSNA ALLEGED THAT ITS COSTS AMOUNT TO $1.07 PER NAUTICAL MILE AND $0.93 PER STATUTE MILE, AS COMPARED TO $1.26 AND $1.10, RESPECTIVELY, FOR THE BEECH KING AIR 200.

WE PROVIDED BOTH PARTIES WITH A FURTHER OPPORTUNITY TO ADDRESS THIS ISSUE. THE ARMY AND BEECH FURNISHED INFORMATION SERIOUSLY DISPUTING CESSNA'S ANALYSIS. AMONG OTHER THINGS, THE ARMY'S RESPONE STATES THAT THE BEECH KING AIR 200 WAS NOT OFFERED IN RESPONSE TO THE 1974 SOLICITATION. ACCORDING TO THE ARMY, THE BEECH MODEL ACTUALLY OFFERED HAS A LOWER HORSEPOWER AND MORE ECONOMICAL ENGINE THAN THE KING AIR 200. IN ADDITION, THE ARMY'S RESPONSE POINTS OUT THAT THE PROPER SELECTION OF AIRCRAFT TYPE DEPENDS ON THE MISSION TO BE PERFORMED AND UPON THE AIRCRAFT SPEED. TURBOPROPS ARE MORE EFFICIENT AT RELATIVELY LOW SPEEDS, WHILE TURBOJETS AND TURBOFANS ARE MORE EFFICIENT AT RELATIVELY HIGHER SPEEDS. A WELL- DESIGNED TURBOPROP, OPERATING AT RELATIVELY LOWER SPEEDS, WILL CONSUME LESS FUEL THAN A SIMILAR TURBOJET OR TURBOFAN OPERATING AT HIGHER SPEEDS. THE HIGHER SPEED OF A TURBOFAN WILL TO SOME EXTENT OFFSET ITS HIGHER HOURLY OPERATING COSTS; HOWEVER, IF SPEED IS REDUCED TO CONSERVE FUEL, THE ECONOMIC ADVANTAGE OF THE TURBOFAN IS REDUCED. IN THIS CONNECTION, WE NOTE THAT THE CONTRACTING OFFICER HAS CITED THE ENERGY CRISIS AND FUEL SHORTAGES, WHICH HAVE UNFOLDED IN THE PERIOD SINCE THE CANCELLATION OF THE 1972 RFP, AS A JUSTIFICATION FOR LIMITING THE 1974 PROCUREMENT TO THE MORE ECONOMICAL TURBOPROP AIRCRAFT.

CESSNA WAS ALSO PROVIDED WITH THE OPPORTUNITY TO FURTHER DOCUMENT ITS CONTENTION THAT ITS TURBOFANS ARE MORE COST EFFECTIVE THAN TURBOPROPS. ITS JULY 23, 1974, LETTER, THE PROTESTER INDICATED THAT IT WOULD NOT PROVIDE FURTHER DETAILS, ESSENTIALLY FOR THE REASON THAT A PROPER EVALUATION OF THE ISSUE WOULD CALL FOR A WHOLE NEW SOURCE SELECTION EFFORT, INVOLVING CONSIDERABLE TIME AND THE ASSISTANCE OF TECHNICAL EXPERTS. INSTEAD, CESSNA RELIES ON THE FINDINGS MADE BY THE SOURCE SELECTION AUTHORITY UNDER THE 1972 CANCELED RFP, I.E., THAT THE CESSNA AIRCRAFT WAS THE MOST COST EFFECTIVE OF THOSE AIRCRAFT BELOW THE GOVERNMENT TARGET COST OF $600,000.

WE UNDERSTAND THAT THE EVALUATION UNDER THE 1972 RFP WAS JUDGMENTAL, INVOLVING TRADEOFFS OF PERFORMANCE AND COST FACTORS. THE FACT THAT CESSNA MAY HAVE BEEN MOST COST EFFECTIVE IN THAT PROCUREMENT DOES NOT PROVE THAT THE SERVICES' NEEDS UNDER THE 1974 PROCUREMENT WERE UNDULY RESTRICTIVE IN LIMITING COMPETITION TO TURBOPROP AIRCRAFT. TO SHOW UNDUE RESTRICTIVENESS, WE BELIEVE CESSNA MUST PRESENT EVIDENCE CLEARLY DEMONSTRATING THAT THE CONTRACTING OFFICER'S DECISION TO LIMIT COMPETITION TO TURBOPROPS IN THE 1974 PROCUREMENT WAS WITHOUT A REASONABLE FACTUAL BASIS. THE CONTRACTING OFFICER'S DETERMINATION THAT THE PROCUREMENT SHOULD BE LIMITED TO THE MORE ECONOMICAL TURBOPROP AIRCRAFT IS SUPPORTED BOTH BY THE TECHNICAL COMMENTS DISCUSSED ABOVE AND MATERIAL PRESENTED BY THE ARMY AT THE FEBRUARY 13, 1974, ABOVE QUOTED HEARINGS. UNDER THE CIRCUMSTANCES, WE SEE NO BASIS ON THE RECORD TO CONCLUDE THAT THE CONTRACTING OFFICER'S JUDGMENT WAS AN ABUSE OF PROCUREMENT DISCRETION.

CANCELLATION OF 1972 SOLICITATION - THE ISSUE OF TIMELINESS OF PROTEST

RPF DAAJ01-73-R-0198 WAS ISSUED ON OCTOBER 6, 1972, AND CALLED FOR OFFERS ON 20 UX (ARMY) AND 14 CX-X (AIR FORCE) AIRCRAFT, WITH OPTIONS FOR ADDITIONAL QUANTITIES.

AWARD SELECTION WAS TO BE MADE ON THE BASIS OF VARIOUS CRITERIA DESIGNED TO DETERMINE WHICH PROPOSAL OFFERED THE BEST PROSPECT FOR ACCOMPLISHING THE GOVERNMENT'S NEEDS, AS THEN DEFINED, CONSIDERING BOTH REQUIRED AND DESIRED FEATURES. THE EVALUATION CRITERIA WERE, IN ORDER OF IMPORTANCE: (1) ABILITY OF THE PROPOSED AIRCRAFT TO MEET THE TECHNICAL AND OPERATIONAL REQUIREMENTS; (2) ABILITY OF THE OFFEROR TO PROVIDE AND MANAGE THE REQUIRED LOGISTICS SUPPORT; (3) THE TOTAL COST TO THE GOVERNMENT; AND (4) THE OFFEROR'S PROPOSED DELIVERY SCHEDULE.

CESSNA, BEECH AND TWO OTHER CONCERNS TIMELY SUBMITTED PROPOSALS, WHICH WERE EVALUATED DURING THE PERIOD FROM NOVEMBER 8, 1972, TO JANUARY 6, 1973. ON JANUARY 16, 1973, THE SOURCE SELECTION AUTHORITY (SSA) SELECTED THE CESSNA PROPOSAL FOR AWARD:

1. PURSUANT TO AUTHORITY DELEGATED THE UNDERSIGNED AS DESIGNATED SOURCE SELECTION AUTHORITY, A FINAL DECISION HAS BEEN MADE.

2. AN EXTENSIVE NEGOTIATION AND EVALUATION PROCESS WAS CONDUCTED WITH EACH OF THE FOUR COMPETING CONTRACTORS - BEECH AIRCRAFT CORPORATION; CESSNA AIRCRAFT COMPANY, WALLACE DIVISION; SWEARINGEN AVIATION CORPORATION; AND GATES LEARJET CORPORATION. ALL OF THE PROPOSALS WERE OF A HIGH CALIBER OF RESPONSIVENESS AND PROVIDED THE SOURCE SELECTION EVALUATION BOARD DETAILED DATA UPON WHICH TO BASE AN INTENSIVE EVALUATION. AFTER REVIEWING THE RESULTS OF THIS EVALUATION, THE SOURCE SELECTION ADVISORY COUNCIL REVIEWED THE SIGNED CONTRACTS WHICH EACH CONTRACTOR HAD SUBMITTED AS THE FINAL OFFER. THE COUNCIL EVALUATION WAS THAT THE CONTRACTS BEST MET THE SERVICES' REQUIREMENTS IN THE ORDER OF CESSNA AIRCRAFT COMPANY, WALLACE DIVISION, SWEARINGEN AVIATION CORPORATION, GATES LEARJET CORPORATION, AND BEECH AIRCRAFT CORPORATION. THIS EVALUATION WAS A CAREFULLY CONSIDERED ANALYSIS AND BALANCE OF ALL THE KEY ELEMENTS OF OPERATIONAL CAPABILITY, SUPPORT AND TOTAL COSTS. 3. AFTER FULL CONSIDERATION OF BOTH THE BOARD AND COUNCIL'S EVALUATIONS I HAVE SELECTED THE CESSNA AIRCRAFT COMPANY, WALLACE DIVISION. KEY REASONS FOR THIS CHOICE ARE: (1) THIS AIRCRAFT IS THE MOST COST EFFECTIVE OF THOSE AIRCRAFT WHICH WERE BELOW THE GOVERNMENT TARGET COST OF $600,000 OVER THE REQUIRED RANGE OF UP TO 1,000 NM; (2) THE AIRCRAFT REPRESENTS MODERN TECHNOLOGY PARTICULARLY WITH ITS FANJET ENGINE, AND HAS THE BEST FLYING QUALITIES AND CREW STATION DESIGN OF ALL OFFERED; (3) SIGNIFICANT SAFETY ADVANTAGES EXIST THRU ITS CERTIFICATION TO TRANSPORT CATEGORY FAA STANDARDS AND ITS EXCELLENT PERFORMANCE AND EASE OF HANDLING WITH ONE ENGINE INOPERATIVE; (4) THE CESSNA LOGISTICAL PLAN WAS THE BEST OF ALL OFFERED.

THE CONTRACTING OFFICER STATES THAT THE PROCUREMENT HAD BEEN DESIGNATED TO BE FORWARDED FOR DEPARTMENTAL PREAWARD REVIEW AND SECRETARIAL NOTATION IN ACCORDANCE WITH ARMY PROCUREMENT PROCEDURE 1 403.54(II), AND THAT THE PROCUREMENT WAS SO REVIEWED. ON JANUARY 29, 1973, THE SECRETARY OF THE ARMY ANNOUNCED THE CANCELLATION OF THE PROCUREMENT. AN ANNOUNCEMENT GAVE THE FOLLOWING REASONS FOR THE CANCELLATION:

1. THE ARMY DURING THE FY 72 BUDGET HEARINGS CONTINUOUSLY REPRESENTED TO THE CONGRESS THAT IT REQUIRED AND INTENDED TO PROCURE A TURBO PROP U-21F TYPE AIRCRAFT. THE REPORTS OF BOTH THE HOUSE AND SENATE ARMED SERVICES COMMITTEES MAKE THIS ABUNDANTLY CLEAR. TO ALTER THIS POSITION AT THIS TIME AND TO ATTEMPT TO PROCURE A JET AIRCRAFT SERIOUSLY AND ADVERSELY REFLECTS UPON THE ARMY'S CREDIBILITY WITH THE CONGRESS. THIS CANNOT BE PERMITTED. WE BELIEVE THAT THE CONGRESS HAS A RIGHT TO RELY UPON THE ACCURACY OF THE INFORMATION THEY ARE FURNISHED BY THE ARMY; AND THE ARMY IN TURN HAS AN OBLIGATION TO ACT IN ACCORDANCE WITH THE ADVICE FURNISHED TO THE CONGRESS.

2. FURTHER, IT WAS NOT CLEAR THAT THE ARMY HAD COMPLETELY JUSTIFIED THE REQUIREMENTS FOR A JET AIRCRAFT. MANY OF THE ARMY'S MISSIONS CAN BE ADEQUATELY ACCOMPLISHED WITH A TURBO-PROP AIRCRAFT OF THE U-21 TYPE. CONSEQUENTLY, IT WAS DETERMINED THAT THE ARMY MAY HAVE OVERSPECIFIED ITS REQUIREMENTS WITH THE RESULT THAT IT WAS PROPOSING TO PAY FOR ADDED PERFORMANCE NOT NECESSARY TO ACCOMPLISH ITS DEFINED MISSION.

3. ADDITIONALLY, DESPITE THE FACT THAT A FINAL DECISION ON THE AWARD AND CONTRACT HAD NOT BEEN MADE, SPECIFIC DETAILS AS TO THE EVALUATION AND RANKING OF THE VARIOUS OFFERORS WERE KNOWN IN SEVERAL QUARTERS. ALTHOUGH IT IS UNCLEAR HOW THIS INFORMATION BECAME KNOWN, ITS RELEASE CLEARLY AFFECTS THE INTEGRITY OF THE PROCUREMENT PROCESS AND PERMITS QUESTIONS AS TO THE VALIDITY OF THE SOURCE SELECTION AUTHORITY ITSELF. THIS MAY NOT BE PERMITTED. THE SOURCE SELECTION PROCESS CANNOT BE COMPROMISED. IT MUST BE COMPLETELY FREE FROM EVEN THE SLIGHTEST QUESTION OR DOUBT AS TO ITS OBJECTIVITY. WHENEVER INFORMATION OF THIS NATURE BECOMES COMPROMISED THE ARMY MUST ACT POSITIVELY AND PROMPTLY TO REMEDY THE SITUATION - INCLUDING CANCELLATION OF THE COMPETITION.

EACH OF THE FOREGOING FACTORS IN AND OF ITSELF WOULD BE SUFFICIENT TO CREATE MAJOR CONCERN AS TO THE PROPRIETY OF THE PROPOSED U-X/CX-X PROCUREMENT. HOWEVER, WHEN CONSIDERED TOGETHER THERE WAS NO CHOICE BUT TO CANCEL THE COMPETITION, RECONSIDER THE REQUIREMENTS AND RESOLICIT. IT IS ESSENTIAL THAT THE CONGRESS CONTINUE TO RESPECT THE INTEGRITY AND CREDIBILITY OF THE ARMY.

IT IS EQUALLY ESSENTIAL THAT THE PROCUREMENT PROCESS NOT BE COMPROMISED IN ANY FASHION; AND PARTICULARLY IN THIS DAY OF SHRINKING BUDGETS, THE ARMY MUST INSURE THAT IT IS NOT STATING EXCESSIVE REQUIREMENTS BUT ONLY PROCURING THAT WHICH IS NECESSARY TO THE FULFILLMENT OF ITS MISSION.

ACCORDINGLY, THE SECRETARY OF THE ARMY HAS DECIDED THAT THE CURRENT COMPETITION FOR PROCUREMENT SHOULD BE CANCELLED, AND THAT THE ARMY'S REQUIREMENTS BE RECONSIDERED, AND INDUSTRY RESOLICITED.

CESSNA BELIEVES THIS RATIONALE CANNOT SUPPORT THE CANCELLATION, AND THAT THE REAL REASONS FOR THE CANCELLATION HAVE NEVER BEEN DISCLOSED. THE PROTESTER IN ITS SUBMISSIONS HAS REVIEWED IN DETAIL THE LEGISLATIVE HISTORY OF THE ACTS WHICH AUTHORIZED AND APPROPRIATED FUNDS FOR THE UTILITY AIRCRAFT PROCUREMENT, AND BELIEVES THAT NOTHING IS CONTAINED THEREIN TO INDICATE THAT THE ARMY INTENDED TO LIMIT THE PROCUREMENT TO TURBOPROPS, OR THAT THE CONGRESS, IN DIRECTING THE ARMY TO UNDERTAKE A JOINT PROCUREMENT FOR ITSELF AND THE AIR FORCE, INTENDED TO ESTABLISH SUCH A LIMITATION. IN ADDITION, CESSNA CITES AN UNDATED MEMORANDUM SENT FROM THE COMMANDING GENERAL, ARMY MATERIEL COMMAND (AMC), TO THE SECRETARY AFTER THE RFP CANCELLATION, WHICH DESCRIBES HOW THE ARMY AND AIR FORCE WORKED TOGETHER DURING 1972 TO ESTABLISH JOINT SPECIFICATIONS PERMITTING COMPETITION BY TURBOPROPS AND JETS. THIS MEMORANDUM CONCLUDES BY STATING:

LOOKING BACK OVER THIS CHRONOLOGY AND CONSIDERING THE NUMBER AND THE ORGANIZATIONAL LEVELS OF THOSE WHO PARTICIPATED IN SHAPING THE COURSE OF EVENTS, IT IS INTERESTING THAT THE FINAL RECOMMENDATION OF THE SOURCE SELECTION GROUP COULD COME AS A SURPRISE IN ANY OFFICIAL QUARTER.

IN VIEW OF THESE CONSIDERATIONS, AND THE FACT THAT THE PROCUREMENT HAD BEEN UNDERWAY FOR 4 MONTHS, WITH NEGOTIATIONS CONDUCTED WITH CONCERNS OFFERING BOTH TURBOPROPS AND JETS, CESSNA CONTENDS IT IS IMPOSSIBLE TO UNDERSTAND HOW THE SECRETARY COULD ORDER A CANCELLATION BASED ON THE BELIEF THAT ONLY A PROCUREMENT OF TURBOPROPS WAS CONTEMPLATED, OR HOW ANY MISREPRESENTATION TO THE CONGRESS COULD BE CHARGED IF AWARD OF A CONTRACT FOR JETS WERE MADE. CESSNA POINTS OUT THAT THESE ALLEGED JUSTIFICATIONS FOR CANCELLATION HAD EXISTED FOR SOME TIME BEFORE SOURCE SELECTION, YET IT WAS ONLY AFTER A JET WAS SELECTED FOR AWARD THAT THE CANCELLATION WAS MADE. CESSNA ARGUES THAT THE SECRETARY'S ELEVENTH-HOUR CANCELLATION, OVERRIDING THE CONCLUSIONS OF THE TECHNICAL EXPERTS WHO EVALUATED THE PROPOSALS, MUST BE REGARDED AS ARBITRARY.

IN ADDITION, CESSNA BELIEVES THE SECRETARY'S SECOND GROUND FOR CANCELLATION - THAT THE AIRCRAFT SELECTED MAY HAVE EXCEEDED THE ARMY'S NEEDS - IS WITHOUT SUBSTANCE SINCE THE RFP SPECIFICATIONS WERE DRAWN SO AS TO ALLOW OFFERS OF HIGHER PERFORMANCE AIRCRAFT. ALSO, CESSNA BELIEVES THE THIRD GROUND FOR CANCELLATION, THE ALLEGED LEAKS OF INFORMATION REGARDING THE EVALUATION AND RANKING OF THE OFFERS, WAS SIMPLY A "FANTASY" DESIGNED TO OBFUSCATE THE REAL REASONS FOR CANCELLATION.

IN VIEW OF THE FOREGOING, CESSNA BELIEVES THAT THE ACTION OF THE SECRETARY IN CANCELING THE RFP IS NOT ONLY WITHOUT PRIOR PRECEDENT, BUT ALSO INVALID BECAUSE IT WAS BEYOND THE SECRETARY'S AUTHORITY. CESSNA POINTS OUT THAT THE AUTHORITY TO ENTER INTO OR TERMINATE CONTRACTS IS VESTED IN THE CONTRACTING OFFICER (ASPR 1-201.3, 1-402) NOT THE SECRETARY. MOREOVER, EVEN IF THE SECRETARY POSSESSED THE AUTHORITY TO CANCEL, IT WAS WRONGFULY EXERCISED, SINCE CANCELLATION OF A SOLICITATION SHOULD NOT BE PERMITTED EXCEPT FOR COGNENT REASONS, CITING MASSMAN CONSTRUCTION CO. V. UNITED STATES, 102 CT. CL. 699, 719 (1949), AND SEVERAL DECISIONS OF OUR OFFICE.

ALSO, CESSNA BELIEVES THE PURPORTED CANCELLATION WAS INVALID BECAUSE NEITHER THE SECRETARY NOR THE ARMY EVER OFFICIALLY NOTIFIED CESSNA OF THE REASONS FOR THIS ACTION. IN THIS REGARD, CESSNA CITES ASPR 2 404.1(B) AND 2-404.3, WHICH STATE THAT WHEN AN INVITATION IS CANCELED OR ALL BIDS ARE REJECTED, THE CONTRACTING OFFICER SHALL, IN HIS DETERMINATION, STATE THE REASON FOR SUCH ACTIONS. CESSNA ARGUES THAT ACTIONS IN VIOLATION OF THESE PROVISIONS MUST BE DEEMED NULL AND VOID.

IT IS THE ARMY'S POSITION THAT CESSNA'S OBJECTION TO THE CANCELLATION OF THE RFP IS UNTIMELY. THE ARMY'S JUNE 14, 1974, REPORT STATES:

*** BY TELEGRAM DATED 1 FEBRUARY 1973, CESSNA WAS NOTIFIED THAT THE SECRETARY OF THE ARMY HAD CANCELLED THE RFP, AND THAT A NEW PROCUREMENT WOULD BE ISSUED. TO INDICATE THE WIDE PUBLICITY GIVEN THIS ACTION, AND THE REASONS THEREFOR, WE HAVE INCLOSED A COPY OF A PRESS RELEASE DATED 30 JANUARY 1973, AS WELL AS A FACT SHEET SUBMITTED TO MEMBERS OF CONGRESS DATED 29 JANUARY 1973. WE CAN ASSERT CATEGORICALLY THAT, AS OF 1 FEBRUARY 1973, CESSNA KNEW OF THE REASONS FOR CANCELLATION. IF CESSNA HAD ANY DOUBTS CONCERNING THE VALIDITY OF THE CANCELLATION, OR THE AUTHORITY OF THE SECRETARY OF THE ARMY TO TAKE THIS ACTION, IT WAS INCUMBENT UPON THEM TO PROTEST THE ACTION TO YOUR OFFICE WITHIN 5 WORKING DAYS AFTER RECEIPT OF THE NOTIFICATION OF THE CANCELLATION. NOW, MORE THAN ONE YEAR LATER, CESSNA SEEKS TO QUESTION THE VALIDITY OF THE CANCELLATION. AT THIS LATE DATE CESSNA SHOULD NOT NOW BE PERMITTED TO LITIGATE THIS ISSUE. SUPPORT OF THIS POSITION WE REFER TO YOUR DECISIONS B-180464, FEBRUARY 15, 1974, AND B-179925, FEBRUARY 22, 1974, WHERE PROTESTS AGAINST CANCELLATIONS WERE DISMISSED BECAUSE OF UNTIMELINESS.

IN THE CITED CASES, THE PROTESTS WERE FILED WITH OUR OFFICE 12 DAYS AND ABOUT 6 1/2 MONTHS, RESPECTIVELY, AFTER THE CANCELLATIONS.

IN RESPONSE TO THIS, CESSNA HAS VIGOROUSLY ARGUED THAT NOT ONLY IS ITS PROTEST AGAINST THE CANCELLATION TIMELY, BUT THAT, IN ADDITION, IT WOULD BE IMPROPER FOR OUR OFFICE TO REFUSE TO CONSIDER THE SUBSTANTIVE ISSUES INVOLVED. THE PROTESTER'S JULY 23, 1974, LETTER STATES:

CESSNA'S PROTEST, ASSERTING THE INVALIDITY OF THE CANCELLATION OF THE RFP, WAS TIMELY FILED FOR SEVERAL REASONS: THE FIRST RESTS ON THE FACT THAT THE CHAIRMAN OF THE CESSNA AIRCRAFT COMPANY, MR. WALLACE, VEHEMENTLY PROTESTED THE MERITS AND VALIDITY OF THE SECRETARY'S JANUARY 29, 1973 CANCELLATION IN STATEMENTS MADE TO BOTH THE SECRETARY HIMSELF AND THE ASSISTANT SECRETARY FOR I&L ON JANUARY 30, 1973. *** CESSNA'S VIEW OF THE ENTIRE MATTER COULD NOT HAVE BEEN MADE PLAINER ANY SOONER, AND WAS NEVER FORMALLY ANSWERED BY THE ARMY.

IN ADDITION, THE CANCELLATION, WHEN IT WAS MADE, WAS BASED, IN PART, ON THE ARMY'S STATED INTENT TO PUBLISH A NEW SOLICITATION "ON RESTATED PROCUREMENT OBJECTIVES." FROM THAT POINT IN TIME, UNTIL THE NEW IFB WAS ISSUED, THE ENTIRE UTILITY AIRCRAFT PROCUREMENT WAS IN A STATE OF CONFUSION. IN LIGHT OF THIS FACT, THERE WAS NO PRACTICAL REASON TO CHALLENGE THE CANCELLATION OF A PROCUREMENT WHICH WAS EXPRESSLY INTENDED TO BE REDEFINED.

MOREOVER, AND JUST AS IMPORTANT, THE LACK OF DIRECTION TO THE PROCUREMENT WAS A PRODUCT OF THE ARMY'S AND THE AIR FORCE'S INABILITY TO AGREE ON COMMON SPECIFICATIONS AND OBTAIN THE NECESSARY APPROVAL FROM THE CONGRESS. THE PROCUREMENT WAS GOING NOWHERE DURING THIS PERIOD. FOR EXAMPLE, IT WAS UNCLEAR AS TO WHETHER THE ARMY AND AIR FORCE WOULD PROCURE THE AIRCRAFT SEPARATELY, OR WHETHER TURBOFANS WOULD BE INCLUDED OR LEFT OUT. COMMUNICATIONS WERE MADE TO CONGRESS DURING THIS PERIOD IN WHICH BOTH OF THESE POSSIBILITIES WERE RAISED, WITHOUT FORMAL RESOLUTION. *** IT WOULD BE INCREDIBLE FOR THE ARMY TO CONTEND THAT THEY WERE IN ANY WAY PREJUDICED BY CESSNA'S DECISION NOT TO PROTEST TO THE GAO IN EARLY 1973. HAD TURBOFANS BEEN LEFT IN THE PROCUREMENT, OR IF THE ARMY AND AIR FORCE HAD DECIDED TO MOVE SEPARATELY, THE WORK DONE, COSTS INCURRED, AND EVALUATIONS MADE UNDER THE FIRST RFP WOULD STILL HAVE BEEN VALID AND EFFECTIVE. CESSNA WOULD HAVE HAD LITTLE, IF ANY, PRACTICAL BASIS FOR PROTESTING TO THE GAO. CESSNA COMPLIED WITH THE ENCOURAGEMENT CONTAINED IN 4 C.F.R. SEC. 20.2(A) THAT PROTESTS BE FIRST MADE TO THE PROCURING AGENCY IN AN EFFORT TO WORK THE MATTER OUT AT THAT LEVEL.

BY FEBRUARY OF 1974, THE PROCUREMENT APPEARED TO BE MOVING TOWARD A NEW SOLICITATION; ONE IN WHICH EVERTHING UNDER THE INITIAL RFP WOULD BE SCRAPPED. IN RESPONSE, MR. WALLACE ADDRESSED A LETTER, DATED FEBRUARY 25, 1974, TO SECRETARY CALL AWAY, IN WHICH HE STRONGLY REASSERTED CESSNA'S CONTENTION THAT THE CANCELLATION HAD BEEN IMPROPER AND ILLEGAL, AND AFFIRMED CESSNA'S INTENT TO CARRY THE PROTEST FURTHER. THIS LETTER WAS WRITTEN TWO DAYS BEFORE CHAIRMAN MAHON GAVE HIS FINAL APPROVAL FOR THE PROCUREMENT. THE ARMY'S ANSWER TO THIS LETTER, FROM UNDERSECRETARY FOR I&L, BERG, WAS NOT RECEIVED UNTIL MARCH 21, 1974, A DAY AFTER THE IFB WAS RECEIVED BY CESSNA. CESSNA'S WRITTEN PROTEST WAS HAND DELIVERED TO THE GAO ON MARCH 25, 1974.

CESSNA'S ACTIONS IN PROTESTING THE CANCELLATION COMPLY WITH THE REQUIREMENTS STATED IN 4 C.F.R. SEC. 20.2(A). THE RECEIPT OF THE MARCH 20, 1974 IFB WAS CESSNA'S FIRST CLEAR, FORMAL NOTICE THAT THE SUBMISSIONS AND EVALUATIONS MADE UNDER THE OCTOBER 6, 1972 RFP WERE NO LONGER TO BE GIVEN ANY WEIGHT. THE PROTEST WAS FILED WITHIN FIVE DAYS OF THAT DATE. MOREOVER, CESSNA'S PROTEST WAS FILED WITHIN FIVE DAYS OF THE RECEIPT OF UNDERSECRETARY BERG'S LETTER NOTING FINAL AGENCY ACTION ON THE MATTER. UNDER EITHER VIEW, CESSNA HAS FILED A TIMELY PROTEST WITHIN THE LANGUAGE OF 4 C.F.R. SEC. 20.2(A).

SECTION 20.2 OF GAO'S INTERIM BID PROTEST PROCEDURES AND STANDARDS PROVIDES IN PERTINENT PART:

(A) PROTESTORS ARE URGED TO SEEK RESOLUTION OF THEIR COMPLAINTS INITIALLY WITH THE CONTRACTING AGENCY. PROTESTS BASED UPON ALLEGED IMPROPRIETIES IN ANY TYPE OF SOLICITATION WHICH ARE APPARENT PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS SHALL BE FILED PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS. IN OTHER CASES, BID PROTESTS SHALL BE FILED NOT LATER THAN 5 DAYS AFTER THE BASIS FOR PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOW, WHICHEVER IS EARLIER. IF A PROTEST HAS BEEN FILED INITIALLY WITH THE CONTRACTING AGENCY, ANY SUBSEQUENT PROTEST TO THE GENERAL ACCOUNTING OFFICE FILED WITHIN 5 DAYS OF NOTIFICATION OF ADVERSE AGENCY ACTION WILL BE CONSIDERED PROVIDED THE INITIAL PROTEST TO THE AGENCY WAS MADE TIMELY. *** (B) THE COMPTROLLER GENERAL, FOR GOOD CAUSE SHOWN, OR WHERE HE DETERMINES THAT A PROTEST RAISES ISSUES SIGNIFICANT TO PROCUREMENT PRACTICES OR PROCEDURES, MAY CONSIDER ANY PROTEST WHICH IS NOT FILED TIMELY.

THE BASES FOR CESSNA'S PROTEST AGAINST THE CANCELLATION ARE THAT IT WAS INVALID BECAUSE THE SECRETARY EXCEEDED HIS AUTHORITY AND THE ARMY NEVER NOTIFIED CESSNA OF THE REASONS FOR THE CANCELLATION. INITIALLY, WE OBSERVE THAT THE PROTESTER COMPLIED WITH OUR TIMELINESS RULES TO THE EXTENT THAT ITS CHAIRMAN OF THE BOARD PRESENTED ORAL OBJECTIONS TO THE SECRETARY OF THE ARMY IMMEDIATELY AFTER THE CANCELLATION - THAT IS, CESSNA IN THE FIRST INSTANCE ATTEMPTED TO RESOLVE THE MATTER WITH THE CONTRACTING AGENCY. THIS MATTER WAS FIRST BROUGHT TO OUR OFFICE'S ATTENTION AT THE JULY 16, 1974, CONFERENCE ON THE PROTEST. IN VIEW OF ITS IMPORTANCE, WE REQUESTED CESSNA AND THE ARMY TO DOCUMENT ANY AND ALL ORAL OR WRITTEN PROTESTS MADE DURING THE PERIOD BETWEEN THE CANCELLATION AND THE 1974 RESOLICITATION. THE FOLLOWING DISCUSSION IS BASED ON INFORMATION FURNISHED IN RESPONSE TO THAT REQUEST. CESSNA'S CHAIRMAN HAS STATED HE TOLD THE SECRETARY OF THE ARMY THE CANCELLATION WAS A FLAGRANT BREACH OF FAITH, AND THAT HE DEMANDED TO KNOW THE REAL REASONS FOR THE CANCELLATION. THERE IS NO INDICATION THAT ANY SPECIFIC ACTION WAS REQUESTED OF THE SECRETARY. HOWEVER, WE BELIEVE THAT THIS ORAL OBJECTION MUST BE REGARDED AS IN THE NATURE OF A PROTEST TO THE CONTRACTING AGENCY WITHIN THE MEANING OF SECTION 20.2(A) OF OUR STANDARDS. 53 COMP. GEN. 780 (1974).

THE RECORD DOES NOT SHOW THAT THE ORAL PROTEST WAS COMMUNICATED TO THE CONTRACTING OFFICER; THAT IT WAS DEVELOPED IN ACCORDANCE WITH THE DOD PROTEST PROCEDURES OF ASPR 2-407.8; OR THAT THE ARMY MADE ANY REPLY TO IT. THE NEXT MANIFESTATION OF CESSNA'S PROTEST TO THE ARMY IS A LETTER TO THE SECRETARY DATED FEBRUARY 25, 1974, MORE THAN 1 YEAR LATER. THIS LETTER REVIEWED THE HISTORY OF THE PROCUREMENT AND THE RFP CANCELLATION AND THREATENED SUIT TO RECOVER $1,838,607 IN LOST PROFITS. THE UNDER SECRETARY OF THE ARMY REJECTED CESSNA'S CLAIM IN A LETTER DATED MARCH 18, 1974, WHICH WAS APPARENTLY RECEIVED BY CESSNA ON MARCH 21. AT ABOUT THE SAME TIME, CESSNA RECEIVED NOTICE OF THE ISSUANCE OF THE TWO-STEP IFB.

UNDER OUR RULES, WHERE A TIMELY PROTEST IS MADE TO THE AGENCY, ANY SUBSEQUENT PROTEST TO OUR OFFICE MUST BE FILED WITHIN 5 WORKING DAYS OF NOTIFICATION OF ADVERSE AGENCY ACTION. ADVERSE AGENCY ACTION CAN REFER TO A SPECIFIC ACTION, SUCH AS THE AWARD OF A CONTRACT DURING THE PENDENCY OF A PROTEST. 52 COMP. GEN. 20 (1972). IT CAN ALSO REFER TO A COURSE OF CONDUCT PREJUDICIAL TO THE COMPLAINING PARTY OVER A PERIOD OF TIME. SEE, FOR EXAMPLE, 52 COMP. GEN. 792 (1973), A CASE WHERE THE PROTESTER'S LETTERS TO THE AGENCY WERE IGNORED, AND CONTRACT PERFORMANCE PROCEEDED FOR 3 MONTHS BEFORE A PROTEST WAS FILED WITH OUR OFFICE. OUR DECISION HELD THAT BECAUSE THE PROTESTER HAD REASON TO KNOW OF THE AGENCY'S ACQUIESCENCE IN AND ACTIVE SUPPORT OF CONTINUED AND SUBSTANTIAL CONTRACT PERFORMANCE, IT WAS CHARGED WITH NOTIFICATION OF THIS ADVERSE ACTION.

WE MUST TAKE CESSNA AT ITS WORD THAT ITS PROTEST AGAINST THE CANCELLATION WAS BASED ON THE FACT THAT THIS ACTION WAS INVALID, AND THAT AWARD MUST BE MADE TO IT UNDER THE 1972 CANCELED RFP. CESSNA DID NOT REQUEST REOPENING OF THE 1972 PROCUREMENT TO FURTHER COMPETITION, NOR WAS ITS PROTEST DIRECTED AT ASSURING IT A COMPETITIVE POSTURE IN ANY RESOLICITATION. ITS PROTEST WAS PROSPECTIVE ONLY IN THE SENSE THAT IT WANTED AWARD MADE UNDER THE PAST PROCUREMENT. IN THESE CIRCUMSTANCES, WE THINK THAT AT SOME POINT IN TIME AFTER THE CANCELLATION, CESSNA MUST BE CHARGED WITH NOTICE OF ADVERSE AGENCY ACTION - THE FACT THAT THE ARMY NEITHER SUSTAINED THE PROTEST NOR RESPONDED TO IT. WHILE IT IS NOT POSSIBLE IN THESE CIRCUMSTANCES TO FIX A PRECISE POINT IN TIME WHEN THE PROTESTER MUST BE CHARGED WITH NOTICE OF ADVERSE AGENCY ACTION, WE BELIEVE CESSNA SHOULD HAVE FOLLOWED UP ITS ORAL PROTEST TIMELY TO DETERMINE WHETHER A RESPONSE WOULD BE FORTHCOMING. IF NO RESPONSE WAS RECEIVED WITHIN A REASONABLE PERIOD OF TIME, THE PROTESTER SHOULD PROMPTLY HAVE FILED A PROTEST WITH OUR OFFICE.

WE HAVE CAREFULLY CONSIDERED CESSNA'S ALLEGATION THAT BECAUSE THE INTERIM PERIOD BETWEEN THE JANUARY 1973 RFP CANCELLATION AND THE MARCH 1974 RESOLICITATION WAS CONFUSED AND UNCERTAIN, IT WAS POINTLESS TO PROTEST UNTIL THE RESOLICITATION WAS ISSUED. THIS ARGUMENT, WHILE SUPERFICIALLY PERSUASIVE, CONFLICTS WITH THE PROTESTER'S CENTRAL CONTENTION THAT THE CANCELLATION WAS INVALID AND STILL IS, AND THAT ANY RESOLICITATION IS A NULLITY. IF THIS IS THE OBJECTION, WE CANNOT SEE THE LOGIC OF WAITING FOR THE RESOLICITATION BEFORE PRESSING A PROTEST. IT WOULD SEEM THAT THE NATURE OF ANY RESOLICITATION IS IRRELEVANT TO THE CONTENTION AS PRESENTED. WE BELIEVE THE PROTESTER HAD BUT TWO ALTERNATIVES - TO ACCEPT THE CANCELLATION AND SUBSEQUENTLY OBJECT TO THE TERMS OF A RESOLICITATION, OR TO OBJECT TO THE CANCELLATION ITSELF. IT CANNOT RELY ON THE FORMER COURSE OF ACTION TO SUBSEQUENTLY ESTABLISH THE TIMELINESS OF THE LATTER. NOR CAN THE PROTESTER NOW CITE THE INVALIDITY OF THE CANCELLATION AS ONE OF THE REASONS WHY THE CURRENT SOLICITATIONS ARE DEFECTIVE, AND THUS OBTAIN CONSIDERATION ON THE MERITS OF MATTERS LONG SINCE REGARDED AS CLOSED. TO ALLOW CIRCUMVENTION OF OUR TIMELINESS STANDARDS HERE WOULD RENDER THEM VIRTUALLY MEANINGLESS. CONSIDERING ALL OF THE FOREGOING CIRCUMSTANCES, WE BELIEVE IT IS CLEAR THAT THE PROTEST AGAINST THE RFP CANCELLATION IS UNTIMELY.

4 CFR 20.2(B) PROVIDES THAT UNTIMELY PROTESTS MAY BE CONSIDERED IF "GOOD CAUSE" IS SHOWN OR IF OUR OFFICE DETERMINES THAT "ISSUES SIGNIFICANT TO PROCUREMENT PRACTICES OR PROCEDURES" ARE INVOLVED. THE FORMER EXCEPTION HAS REFERENCE TO SOME COMPELLING REASON, BEYOND THE PROTESTER'S CONTROL, WHICH PREVENTED IT FROM FILING A TIMELY PROTEST. THE LATTER REFERS TO THE PRESENCE OF A PROCUREMENT PRINCIPLE OF WIDESPREAD INTEREST. SEE 52 COMP. GEN. 20, SUPRA.

FOR THE REASONS ALREADY INDICATED, WE DO NOT FIND ANY COMPELLING REASON WHICH PREVENTED CESSNA FROM FILING A TIMELY PROTEST TO THE CANCELLATION. MOREOVER, WE DO NOT BELIEVE A SIGNIFICANT ISSUE IS INVOLVED. WE NOTE THAT AN ALLEGATION THAT THE FACTUAL CIRCUMSTANCES ARE WITHOUT PRECEDENT OR UNIQUE DOES NOT NECESSARILY MEAN THAT THE ISSUE IS SIGNIFICANT. SEE 53 COMP. GEN. 932 (1974). THE SIZE AND DOLLAR VALUE OF A CANCELED PROCUREMENT IS NOT A CRITERION FOR DETERMINING "SIGNIFICANCE," AND WE SEE NO REASON TO APPLY THE EXCEPTION IN THIS INSTANCE.

CESSNA HAS ALSO EXPRESSED THE VIEW THAT EVEN IF ITS PROTEST AGAINST THE CANCELLATION IS UNTIMELY AND NOT FOR CONSIDERATION, IT WOULD BE IMPROPER FOR OUR OFFICE TO DECLINE TO CONSIDER THIS ISSUE ON A TECHNICALITY.

WE DO NOT REGARD OUR TIMELINESS STANDARDS AS TECHNICALITIES. TO RAISE A LEGAL OBJECTION TO THE AWARD OF A GOVERNMENT CONTRACT IS A SERIOUS MATTER. AT STAKE ARE NOT ONLY THE RIGHTS AND INTERESTS OF THE PROTESTER, BUT THOSE OF THE CONTRACTING AGENCY AND OTHER INTERESTED PARTIES. EFFECTIVE AND EQUITABLE PROCEDURAL STANDARDS ARE NECESSARY SO THAT PARTIES HAVE A FAIR OPPORTUNITY TO PRESENT THEIR CASES AND PROTESTS CAN BE RESOLVED IN A REASONABLY SPEEDY MANNER. SEE 53 COMP. GEN. 932, SUPRA. IN THIS CONTEXT, OUR RULES IMPOSE STRICT TIME STANDARDS AND ARE STRICTLY CONSTRUED. SEE, FOR EXAMPLE, B-181005, B 181006, MAY 21, 1974, AND B- 181127, MAY 16, 1974, WHERE PROTESTS FILED 6 WORKING DAYS AFTER KNOWLEDGE OF THE BASIS OF PROTEST WERE REJECTED AS UNTIMELY. IN SHORT, WE SEE NO MERIT IN THE PROTESTER'S ARGUMENT THAT THE ISSUE INVOLVED JUSTIFIES DIREGARDING OUR TIMELINESS STANDARDS.

OBJECTION TO GAO REFUSAL TO EXTEND TIME TO COMMENT

THE PARTIES' FINAL WRITTEN COMMENTS WERE DUE JULY 23, 1974. ALL PARTIES WERE SIMILARLY ADVISED OF THIS DUE DATE AND NO OBJECTIONS WERE NOTED. CESSNA'S ORAL REQUEST OF JULY 19 FOR AN ADDITIONAL 10 WORKING DAYS TO MAKE FURTHER COMMENTS WAS DENIED, AND THE PROTESTER HAS TAKEN EXCEPTION TO THIS DENIAL. WE UNDERSTAND THAT THE PRINCIPAL REASON FOR THE EXTENSION WAS TO UNABLE CESSNA TO OBTAIN CERTAIN ARMY DOCUMENTS FOR EVALUATION AND COMMENT. BY LETTER DATED JULY 19, 1974, CESSNA FILED A FREEDOM OF INFORMATION ACT REQUEST WITH THE ARMY, SEEKING GENERALLY ANY AND ALL CORRESPONDENCE PRODUCED BY THE SECRETARY OR HIS STAFF RELATED TO THE CANCELLATION OF THE RFP, AND ALSO A REPORT OR MEMORANDUM PREPARED BY AN AMC AUDIT TEAM WHICH EVALUATED THE WORK DONE BY THE SOURCE SELECTION GROUP UNDER THE 1972 RFP. THE ARMY IS PRESENTLY CONSIDERING THIS REQUEST.

IT APPEARS THAT THE INFORMATION REQUESTED RELATES TO AN ISSUE WHICH WE HAVE DETERMINED TO BE UNTIMELY AND NOT FOR CONSIDERATION - THE CANCELLATION OF THE 1972 RFP. GIVEN THE POSTURE OF THE PRESENT PROTEST - BEFORE AWARD - AND THE NATURE OF THE INFORMATION SOUGHT, WE DO NOT BELIEVE THAT OUR DENIAL OF THE TIME EXTENSION WAS UNREASONABLE OR UNWARRANTED.

CONTINGENT FEE

LASTLY, CESSNA HAS RAISED A QUESTION CONCERNING THE COMPENSATION OF AN INDIVIDUAL WHO REPRESENTED BEECH DURING THE COURSE OF THE PROTEST. THIS PERSON HAS BEEN DESCRIBED TO OUR OFFICE AS A BEECH "CONSULTANT." CESSNA BELIEVES IT IS POSSIBLE THAT THIS INDIVIDUAL IS BEING PAID ON A COMMISSION BASIS, AND THAT HE IS THEREFORE DERIVING A FEE CONTINGENT UPON OBTAINING A FEDERAL CONTRACT IN VIOLATION OF 10 U.S.C. 2306(B).

WE NOTE THAT THE CITED STATUTORY PROVISION PROVIDES THAT NEGOTIATED CONTRACTS SHALL CONTAIN A PROVISION WHEREBY THE CONTRACTOR WARRANTS THAT IT HAS EMPLOYED OR RETAINED NO PERSON OR SELLING AGENCY TO SOLICIT OR OBTAIN THE CONTRACT UNDER AN UNDERSTANDING OR AGREEMENT FOR A COMMISSION, PERCENTAGE, BROKERAGE, OR CONTINGENT FEE, EXCEPT A BONA FIDE EMPLOYEE OR ESTABLISHED COMMERCIAL OR SELLING AGENCY MAINTAINED BY HIM TO OBTAIN BUSINESS. WE HAVE NO REASON TO BELIEVE THAT THE CONTEMPLATED CONTRACT WITH BEECH DOES NOT INCLUDE THE REQUIRED WARRANTY, OR THAT THE ARMY IS INCAPABLE OF ASSERTING THE GOVERNMENT'S RIGHTS UNDER THE WARRANTY IN THE EVENT A BREACH BY THE CONTRACTOR IS DETECTED. SEE PART 5, SECTION 1, ASPR.

WE HAVE THOROUGHLY REVIEWED BOTH THE GENESIS AND BASES OF THIS PROTEST AND, ON THE ENTIRE RECORD DEVELOPED, WE DO NOT FIND A LEGAL BASIS OR THE EXISTENCE OF OTHER OVERRIDING CONSIDERATIONS WHICH WOULD REQUIRE OUR OFFICE TO OBJECT TO THE PROPOSED AWARD TO BEECH.