B-181448, OCT 15, 1974

B-181448: Oct 15, 1974

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

IS NOT UNDULY RESTRICTIVE OF COMPETITION SINCE CONTRACTING AGENCIES MAY IMPOSE REASONABLE RESTRICTIONS DICTATED BY NATURE OF PROCUREMENT. 2. RFP PROVISION WHICH EXCLUDES FROM COMPETITION CERTAIN COMPANIES BECAUSE OF POSSIBLE CONFLICT OF INTEREST WITH RESPECT TO WORK REQUIRED BY 9 OF 25 TASKS CALLED FOR BY RFP IS NOT UNDULY RESTRICTIVE BECAUSE IT IS NOT PRACTICAL TO DIVIDE PROCUREMENT INTO TWO OR MORE SOLICITATIONS SO AS TO ALLOW DISQUALIFIED COMPANIES TO COMPETE. SECTION D OF THE RFP STATED THAT "THE PREDOMINANT WORK REQUIRED WILL DIRECTLY INVOLVE THE TORPEDO MARK 48 WEAPON SYSTEM AND ASSOCIATED SUBMARINE SYSTEMS. WILL NOT BE CONSIDERED QUALIFIED FOR THIS CONTRACT DUE TO THE NECESSITY FOR AVOIDING ANY APPEARANCE OF BIAS IN THE NAVY'S TEST ANALYSIS OF THIS HARDWARE.".

B-181448, OCT 15, 1974

1. RFP PROVISION, WHICH EXCLUDES PRIME PRODUCTION CONTRACTORS FROM CONSIDERATION FOR AWARD OF A CONTRACT FOR TECHNICAL SUPPORT SERVICES INVOLVING FINAL ACCEPTANCE TESTING OF MARK 48 TORPEDOS FURNISHED UNDER PRODUCTION CONTRACTS BECAUSE OF POSSIBLE CONFLICT OF INTEREST, IS NOT UNDULY RESTRICTIVE OF COMPETITION SINCE CONTRACTING AGENCIES MAY IMPOSE REASONABLE RESTRICTIONS DICTATED BY NATURE OF PROCUREMENT. 2. RFP PROVISION WHICH EXCLUDES FROM COMPETITION CERTAIN COMPANIES BECAUSE OF POSSIBLE CONFLICT OF INTEREST WITH RESPECT TO WORK REQUIRED BY 9 OF 25 TASKS CALLED FOR BY RFP IS NOT UNDULY RESTRICTIVE BECAUSE IT IS NOT PRACTICAL TO DIVIDE PROCUREMENT INTO TWO OR MORE SOLICITATIONS SO AS TO ALLOW DISQUALIFIED COMPANIES TO COMPETE.

GOULD, INC., ADVANCED TECHNOLOGY GROUP:

THIS PROTEST INVOLVES THE DEPARTMENT OF NAVY'S USE OF A RESTRICTIVE SOLICITATION CLAUSE DESIGNED TO PRECLUDE A POSSIBLE CONFLICT OF INTEREST ON THE PART OF CERTAIN NAVY PRIME CONTRACTORS BY EXCLUDING THOSE CONTRACTORS FROM CONSIDERATION FOR AWARD OF A TECHNICAL SERVICES CONTRACT.

REQUEST FOR PROPOSALS (RFP) NO. N00406-74-R-1552, ISSUED MAY 7, 1974, SOLICITED OFFERS TO FURNISH TECHNICAL SUPPORT SERVICES TO THE NAVAL TORPEDO STATION, KEYPORT, WASHINGTON. SECTION D OF THE RFP STATED THAT "THE PREDOMINANT WORK REQUIRED WILL DIRECTLY INVOLVE THE TORPEDO MARK 48 WEAPON SYSTEM AND ASSOCIATED SUBMARINE SYSTEMS, TARGETS, AND TEST EQUIPMENT." IT FURTHER PROVIDED THAT:

"CONTRACTORS WITH CURRENT DIRECT HARDWARE INVOLVEMENT AS A PRIME CONTRACTOR WITH TORPEDO MARK 48 OR TARGET MARK 30, HOWEVER, WILL NOT BE CONSIDERED QUALIFIED FOR THIS CONTRACT DUE TO THE NECESSITY FOR AVOIDING ANY APPEARANCE OF BIAS IN THE NAVY'S TEST ANALYSIS OF THIS HARDWARE."

THE ADVANCED TECHNOLOGY GROUP OF GOULD, INC. (GOULD), A PRIME CONTRACTOR FOR THE MARK 48 TORPEDO, PROTESTED TO THE NAVY THAT THE SOLICITATION WAS UNDULY RESTRICTIVE AS TO IT. THE NAVY DENIED THE PROTEST, AND GOULD FILED ITS PROTEST HERE.

GOULD RAISES TWO ISSUES. FIRST, IT ASSERTS THAT THE RULES GOVERNING ORGANIZATIONAL CONFLICTS OF INTEREST, APPENDIX G TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), CANNOT PROPERLY BE APPLIED TO GOULD ON THIS PROCUREMENT AND, THEREFORE, THERE IS NO BASIS FOR USING THE RESTRICTIVE PROVISION. SECOND, IT CLAIMS THAT EVEN IF THE PROVISION IS OTHERWISE PROPER, ITS APPLICATION HERE IS UNDULY RESTRICTIVE BECAUSE A POSSIBLE CONFLICT OF INTEREST COULD ARISE ONLY IN CONNECTION WITH 8 OR 9 OF THE 25 TASKS DETAILED IN THE STATEMENT OF WORK. IT THEREFORE SUGGESTS THAT THE COMPETITION MANDATED BY 10 U.S.C. 2304(G) CAN BE EFFECTED ONLY BY CANCELLATION OF THE RFP AND REISSUANCE OF TWO SOLICITATIONS: ONE COVERING THE TASKS ON WHICH GOULD COULD POSSIBLY BE DISQUALIFIED BECAUSE OF A POTENTIAL CONFLICT OF INTEREST, AND ONE COVERING THE REMAINING TASKS.

THE RECORD INDICATES THAT GOULD HAS PREVIOUSLY BEEN AWARDED CONTRACTS FOR THE DEVELOPMENT, PRODUCTION, AND LOGISTICAL SUPPORT OF THE MARK 48 TORPEDO AND THAT NONE OF THESE CONTRACTS CONTAINS A PROVISION RESTRICTING GOULD'S OPPORTUNITY TO SEEK SUBSEQUENT CONTRACTS INVOLVING THE MARK 48 TORPEDO. THE DEFENSE DEPARTMENT'S "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST," ASPR APPENDIX G, ORIGINALLY RELIED ON BY THE CONTRACTING OFFICER TO SUPPORT THE USE OF THE RESTRICTIVE CLAUSE, CLEARLY ARE NOT APPLICABLE TO THIS PROCUREMENT. AS WE HAVE OFTEN POINTED OUT, THE APPENDIX G PROVISIONS ARE NOT SELF EXECUTING, BUT PURSUANT TO ASPR 1- 113.2(A) CAN ONLY BE APPLIED AGAINST A CONTRACTOR IF A PROVISION RELATING TO POSSIBLE CONFLICT OF INTEREST RESTRICTIONS FOR FUTURE PROCUREMENTS IS INCLUDED IN A PRIOR CONTRACT. 49 COMP. GEN. 463 (1970); 50 ID. 54 (1970). FURTHERMORE, THE INTENT OF THE APPENDIX G PROVISIONS IS "TO PROHIBIT THE SUCCESSFUL CONTRACTOR IN THE RESEARCH AND DEVELOPMENT EFFORT - WHO HAS GAINED AN UNAVOIDABLE COMPETITIVE ADVANTAGE - FROM PARTICIPATING IN THE COMPETITION FOR A PRODUCTION CONTRACT." 51 COMP. GEN. 397, 400 (1972); SEE ALSO 49 ID. 463, 466, SUPRA. HERE, OF COURSE, GOULD WAS AWARDED PRODUCTION CONTRACTS NOT CONTAINING SUCH RESTRICTIVE CLAUSE AND IS NOW SEEKING A TECHNICAL SUPPORT SERVICES CONTRACT. THUS, THE PRESENT PROCUREMENT DOES NOT INVOLVE THE KIND OF COMPETITIVE ADVANTAGE TO WHICH ASPR APPENDIX G IS DIRECTED AND IT IS NOT THEREFORE APPLICABLE.

TO HOLD APPENDIX G INAPPLICABLE TO THIS PROCUREMENT, HOWEVER, DOES NOT MEAN THAT THE RESTRICTIVE CLAUSE IS IMPROPER. IT IS WELL SETTLED THAT A CONTRACTING AGENCY MAY IMPOSE A VARIETY OF RESTRICTIONS, NOT EXPLICITLY PROVIDED FOR IN ASPR OR OTHER APPLICABLE REGULATIONS, WHEN THE NEEDS OF THE AGENCY OR THE NATURE OF THE PROCUREMENT DICTATE THE USE OF SUCH RESTRICTIONS. THUS, WHEN THEY HAVE BEEN PROPERLY AND ADEQUATELY JUSTIFIED, WE HAVE UPHELD THE USE OF RESTRICTIVE PROVISIONS DEALING WITH SUCH DIVERSE MATTERS AS GEOGRAPHIC REQUIREMENTS, 53 COMP. GEN. 102 (1973); STATE AND LOCAL LICENSES, 53 COMP. GEN. 51 (1973); EXPERIENCE REQUIREMENTS OF PRODUCTS AND MANUFACTURERS, 52 COMP. GEN. 647 (1973), AND CASES CITED THEREIN; REQUIREMENTS TO DISCLOSE SOURCES OF FRESH PRODUCE PRIOR TO AWARD, 53 COMP. GEN. 112 (1973); POSSESSION OF A "NEW DRUG APPLICATION," B- 176081, JANUARY 16, 1973; AND AUTHORIZATION FOR ACCESS TO FOREIGN MILITARY BASES, B-176038(1), SEPTEMBER 6, 1972. ALSO, IN A MATTER BEARING MORE DIRECTLY ON THE CASE AT HAND, WE RECOGNIZED THE VALIDITY OF A CLAUSE WHICH DISQUALIFIED CERTAIN FIRMS FROM RECEIVING AN AWARD BECAUSE OF THE "CONFLICTS OF INTEREST *** INHERENT IN THE PROGRAM CONTEMPLATED." COMP. GEN. 397, SUPRA. IN THAT CASE, THE RFP EXCLUDED LARGE COMPUTER FIRMS FROM BEING CONSIDERED FOR A CONTRACT FOR MANAGEMENT AND TECHNICAL SERVICES FOR THE DEVELOPMENT OF A MARINE COMPUTER AIDED OPERATIONAL RESEARCH CENTER.

HERE, THE NAVY REPORTS THAT THE CONTRACTOR WILL BE REQUIRED TO PERFORM FINAL PROOF AND TEST ANALYSIS ON GOULD'S MARK 48 TORPEDOS AND TO MAKE RECOMMENDATIONS WITH RESPECT TO WHETHER EACH MARK 48 TORPEDO SHOULD RECEIVE FINAL ACCEPTANCE. THE NAVY THEREFORE BELIEVES THAT IT WOULD BE "UNDESIRABLE," AND WOULD INVOLVE THE POSSIBILITY OF "BIAS," FOR GOULD AS THE PRIME PRODUCTION CONTRACTOR TO BE AWARDED A CONTRACT FOR FINAL ACCEPTANCE TESTING OF WHAT GOULD FURNISHES UNDER THE PRODUCTION CONTRACTS. WE THINK THE NAVY'S POSITION IN THIS REGARD IS REASONABLE. WITHOUT THE RESTRICTIVE CLAUSE, THE NAVY COULD FIND ITSELF IN THE POSITION OF HAVING TO AWARD A CONTRACT TO GOULD PURSUANT TO WHICH GOULD WOULD ULTIMATELY ADVISE THE NAVY AS TO THE ACCEPTABILITY OF GOULD'S TORPEDOS. IN OUR VIEW, THE POSSIBILITY FOR BIAS, OR AT LEAST THE APPEARANCE OF IT, AS WELL AS THE POTENTIAL CONFLICT OF INTEREST, IS READILY APPARENT IN THIS SITUATION. WHILE NEITHER THE NAVY NOR ANYONE ELSE ALLEGES THAT GOULD WOULD BE BIASED IN THE PERFORMANCE OF THE TECHNICAL SERVICES CONTRACT, WE THINK THE NAVY'S USE OF THE CLAUSE IS CONSISTENT WITH PRESERVING THE INTEGRITY OF THE PROCUREMENT PROCESS AND IS WARRANTED UNDER THE REPORTED CIRCUMSTANCES. ACCORDINGLY, WE CANNOT CONCLUDE THAT THE NAVY DOES NOT HAVE A REASONABLE BASIS FOR USING THE DISQUALIFICATION CLAUSE OR THAT THE CLAUSE IS UNDULY RESTRICTIVE.

WITH RESPECT TO THE SECOND ISSUE, THE NAVY REPORTS THAT 9 OF THE 25 TASKS DELINEATED IN THE RFP FOR CONTRACTOR PERFORMANCE "ARE RELATED TO THE MARK 48 TORPEDO GOVERNMENT FINAL ACCEPTANCE PROCESS AND AN ADDITIONAL 4 TASKS INCLUDE OTHER MARK 48 FUNCTIONS." THE NAVY STATES THAT IT "WOULD NOT BE FEASIBLE TO SEPARATE THE MARK 48 TORPEDO REQUIREMENTS FROM THE REMAINING TASKS," AND THAT A "BREAKOUT OF MARK 48 REQUIREMENTS WOULD RESULT IN INCREASED EXPENDITURES OF GOVERNMENT FUNDS" AND WOULD REQUIRE THE USE OF ADDITIONAL CONTRACT ADMINISTRATION PERSONNEL. MORE SPECIFICALLY, THE NAVY REPORT DETAILS THE NEED FOR REPORT COMPATIBILITY WITH RESPECT TO ALL TASKS AND SPELLS OUT VARIOUS ADMINISTRATIVE AND TECHNICAL PROBLEMS THAT WOULD RESULT FROM HAVING MORE THAN ONE CONTRACTOR TO PERFORM THOSE TASKS. ALTHOUGH THE PROTESTER ASSERTS THAT THESE MATTERS MERELY INDICATE IT WOULD BE "INCONVENIENT" TO THE NAVY TO SPLIT THE RFP REQUIREMENTS, WHICH WOULD NOT BE COMPATIBLE WITH THE "MAXIMUM" COMPETITION REQUIREMENTS OF 10 U.S.C. 2304(G), WE THINK THE NAVY HAS ADEQUATELY DOCUMENTED THE NONFEASIBILITY OF AWARDING MORE THAN ONE CONTRACT. IN THIS RESPECT, IT MUST BE POINTED OUT THAT WHILE MAXIMUM COMPETITION IS THE TOUCHSTONE OF GOVERNMENT PROCUREMENT, THE STATUTE DOES NOT REQUIRE MORE THAN THE SOLICITATION OF PROPOSALS "FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED." STATED DIFFERENTLY, WHAT IS REQUIRED IS THAT "NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT." ASPR 3- 102(C). IN VIEW OF THE NAVY'S STATEMENTS, AND THE ABSENCE OF ANY SUBSTANTIVE EVIDENCE IN THE RECORD TO THE CONTRARY, IT APPEARS THAT IT WOULD NOT BE PRACTICAL FOR THE NAVY TO DIVIDE THE TASK REQUIREMENTS OF THE RFP INTO TWO OR MORE SOLICITATIONS SO AS TO PERMIT GOULD TO PARTICIPATE IN THE PROCUREMENT. ACCORDINGLY, IT IS OUR BELIEF THAT THE RFP REQUIREMENT COMPLAINED OF IS NOT UNDULY RESTRICTIVE AND IS NOT CONTRARY TO 10 U.S.C. 2304(G).

FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.