B-181616, NOV 8, 1974

B-181616: Nov 8, 1974

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WHERE PROTEST CONCERNING FAILURE OF REQUEST FOR PROPOSALS TO INCLUDE PROVISIONS PRESCRIBED BY ASPR CONCERNING CONFLICTS OF INTEREST IS RECEIVED IN GAO AFTER AWARD OF CONTRACT. PROTEST IS UNTIMELY AND WILL NOT BE CONSIDERED SINCE UNDER 20.2(A) OF GAO INTERIM BID PROTEST PROCEDURES AND STANDARDS SUCH PROTESTS MUST BE FILED IN THIS OFFICE PRIOR TO CLOSING DATE FOR RECEIPT OF PROPOSALS. 2. GAO WILL NOT INTERFERE WITH AGENCY'S JUDGMENT IN THIS REGARD SINCE NO LAW OR REGULATION GOVERNED THE PRESOLICITATION PROCEDURE AND THE RFP INCLUDED NO RELEVENT PROVISION CONCERNING CONFLICT OF INTEREST QUALIFICATION. PREQUALIFICATION OF POTENTIAL CONTRACTORS IS AN UNWARRANTED RESTRICTION ON COMPETITION AND RESOLUTION OF CONFLICT OF INTEREST MATTER SHOULD BE ACCOMPLISHED IN FUTURE PROCUREMENTS AFTER BID OPENING AND BEFORE AWARD PURSUANT TO APPROPRIATE PROVISION IN SOLICITATION.

B-181616, NOV 8, 1974

1. WHERE PROTEST CONCERNING FAILURE OF REQUEST FOR PROPOSALS TO INCLUDE PROVISIONS PRESCRIBED BY ASPR CONCERNING CONFLICTS OF INTEREST IS RECEIVED IN GAO AFTER AWARD OF CONTRACT, PROTEST IS UNTIMELY AND WILL NOT BE CONSIDERED SINCE UNDER 20.2(A) OF GAO INTERIM BID PROTEST PROCEDURES AND STANDARDS SUCH PROTESTS MUST BE FILED IN THIS OFFICE PRIOR TO CLOSING DATE FOR RECEIPT OF PROPOSALS. 2. WHERE PROTEST CONCERNS AGENCY'S PRESOLICITATION DETERMINATION REGARDING ULTIMATE SUCCESSFUL OFFEROR'S POTENTIAL FOR CONFLICT OF INTEREST, GAO WILL NOT INTERFERE WITH AGENCY'S JUDGMENT IN THIS REGARD SINCE NO LAW OR REGULATION GOVERNED THE PRESOLICITATION PROCEDURE AND THE RFP INCLUDED NO RELEVENT PROVISION CONCERNING CONFLICT OF INTEREST QUALIFICATION. HOWEVER, PREQUALIFICATION OF POTENTIAL CONTRACTORS IS AN UNWARRANTED RESTRICTION ON COMPETITION AND RESOLUTION OF CONFLICT OF INTEREST MATTER SHOULD BE ACCOMPLISHED IN FUTURE PROCUREMENTS AFTER BID OPENING AND BEFORE AWARD PURSUANT TO APPROPRIATE PROVISION IN SOLICITATION.

LOGICON, INC.: ON JUNE 25, 1974, LOGICON, INC., PROTESTED TO THIS OFFICE THE AWARD OF CONTRACT NO. N00123-74-C-0295 TO MELLONICS SYSTEMS DEVELOPMENT DIVISION OF LITTON SYSTEMS, INC. (MELLONICS), BY THE NAVAL REGIONAL PROCUREMENT OFFICE, LONG BEACH, CALIFORNIA. IN ESSENCE, IT IS ALLEGED BY THE PROTESTER THAT MELLONICS WAS NOT ELIGIBLE FOR AWARD OF THE SUBJECT CONTRACT BASED ON A CONFLICT OF INTEREST.

THE SUBJECT NEGOTIATED PROCUREMENT HAD BEEN SYNOPSIZED IN THE COMMERCE BUSINESS DAILY (CBD) ON JULY 24, 1973, WITH AMENDMENTS ON AUGUST 13 AND 16, 1973. THE CBD, AS AMENDED, AND AS PERTINENT HERE, NOTIFIED INTERESTED PROSPECTIVE CONTRACTORS OF THE FOLLOWING:

"PERFORM TASKS IN SUPPORT OF ANTISHIP MISSILE DEFENSE (ASMD), AEGIS, AND HARPOON RESEARCH, DEVELOPMENT, TEST, AND EVALUATION AND SYSTEMS INTEGRATION PROJECTS.

"IMPORTANT: - TO AVOID POSSIBLE ORGANIZATION CONFLICT OF INTERESTS, THE SUCCESSFUL CONTRACTOR MUST NOT BE A MAJOR SUPPLIER OF MAJOR COMBAT SYSTEM ELEMENTS FOR NAVAL SURFACE WARFARE SYSTEMS IN THE AREAS OF ASMD, AEGIS, AND HARPOON. A MAJOR COMBAT SYSTEM ELEMENT IS DEFINED AS A MISSILE, LAUNCHER, GUN, RADAR, COMMAND AND CONTROL COMPUTER, ECM DEVICE, ESM DEVICE OR OPERATIONAL PROGRAM.

"THIS IS NOT A REQUEST FOR PROPOSALS AND SOLICITATION OF THE REQUIREMENTS SHALL BE MADE ONLY FROM THOSE FIRMS DEEMED ACCEPTABLE FOR THE PURPOSE OF SUBMITTING A PROPOSAL. ***"

IN CONSONANCE WITH THE QUALIFICATION CRITERIA SET FORTH IN THE CRD, THE NAVY DETERMINED ON OCTOBER 10, 1973, THAT 25 OF 30 RESPONDING FIRMS WERE CONSIDERED QUALIFIED AND THUS WERE FURNISHED COPIES OF RFP N00123 74-R- 0295. THE RFP ITSELF CONTAINED NO MENTION OF THE CONFLICT OF INTEREST QUALIFICATION CRITERIA SET FORTH IN THE CBD.

ON DECEMBER 4, 1973, A PREPROPOSAL CONFERENCE WAS HELD AT WHICH TIME LOGICON AND ALL OTHER ATTENDEES WERE NOTIFIED THAT ALL FIRMS PRESENT WERE QUALIFIED AND HAD PASSED THE CBD CONFLICT OF INTEREST TEST.

FOLLOWING THE NAVY'S RECEIPT OF 13 PROPOSALS, MELLONICS AND LOGICON WERE DETERMINED TO BE THE OFFERORS WITHIN THE COMPETITIVE RANGE. ON MAY 16, 1974, NEGOTIATIONS WERE HELD WITH THE TWO OFFERORS AND BEST AND FINAL PROPOSALS WERE REQUESTED. AS A RESULT OF EVALUATION, MELLONICS WAS DETERMINED TO BE THE SUCCESSFUL OFFEROR AND WAS AWARDED THE SUBJECT CONTRACT ON JUNE 11, 1974. THEREUPON LOGICON PROTESTED THE AWARD TO THE AGENCY AND THEN PROTESTED TO THIS OFFICE AFTER THE AGENCY DENIED ITS PROTEST.

THE PROTESTER CONTENDS THAT THE RFP WAS DEFECTIVE BECAUSE IT DID NOT INCLUDE THE CLAUSES CONCERNING CONFLICT OF INTEREST PRESCRIBED BY APPENDIX G AND SECTION 1-113.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). SINCE THE ABSENCE OF THESE PROVISIONS WAS APPARENT PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS, LOGICON'S PROTEST AFTER AWARD WAS UNTIMELY. 4 C.F.R. 20.2(A)(1974). FURTHERMORE, THE DEFENSE DEPARTMENT'S "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST," ASPR APPENDEX G, ARE NOT APPLICABLE HERE. 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). MOREOVER, 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, THERE IS NO ALLEGATION THAT MELLONICS WAS AWARDED A PRIOR CONTRACT CONTAINING SUCH RESTRICTIVE CLAUSE, AND THE PRESENT PROCUREMENT DOES NOT INVOLVE A PRODUCTION CONTRACT. THUS, THE PRESENT PROCUREMENT DOES NOT INVOLVE THE KIND OF SITUATION OT WHICH ASPR APPENDIX G IS DIRECTED AND IT IS NOT THEREFORE APPLICABLE.

FINALLY, LOGICAN DISAGREES STRONGLY WITH THE AGENCY'S CONCLUSION THAT DESPITE MELLONIC'S PRIOR EXPERIENCE AND AFFILIATION WITH LITTON INDUSTRIES IT WAS NOT DISQUALIFIED FROM COMPETING UNDER THE CRITERIA SET FORTH IN THE COMMERCE BUSINESS DAILY. IN THIS CONNECTION, LOGICON HAS FURNISHED SPECIFIC AND DETAILED INFORMATION WHICH IT CONSIDERS DISQUALIFYING UNDER THE STATED CRITERIA. ON THE OTHER HAND, THE AGENCY HAS RESPONDED WITH INFORMATION TO SUPPORT THE OPPOSIT CONCLUSION. IT IS OUR VIEW THAT SINCE THE SOLICITATION INCLUDED NO RELEVANT PROVISION CONCERNING CONFLICT OF INTEREST QUALIFICATIONS, THERE IS NO BASIS FOR OUR OFFICE TO QUESTION THE AGENCY'S DETERMINATION IN THIS REGARD.

WE QUESTION THE PREQUALIFICATION PROCEDURE EMPLOYED IN THIS PROCUREMENT. THE STATUTES AND REGULATIONS APPLICABLE TO GOVERNMENT PROCURMENTS REQUIRE SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE NEEDS OF THE AGENCY CONCERNED. WE HAVE HELD THAT THE PREQUALIFICATION OF BIDDERS UNDER FORMAL ADVERTISING OR PREQUALIFICATION OF OFFERORS UNDER PROCUREMENTS RESULTS IN AN UNWARRANTED RESTRICTION ON THE FREE AND FULL COMPETITION CONTEMPLATED BY THE APPLICABLE LAWS. 52 CIMP. GEN. 569 (1973); ID. 987 (1973). WHILE THE NOTIFICATION OF THE CONFLICT OF INTEREST CONCERN WAS PROPERLY INCLUDED IN THE CBD, WE DO NOT THINK THAT THE SOLICITATION SHOULD HAVE BEEN WITHHELD FROM PARTIES CONSIDERED NOT TO HAVE MET THE CONFLICT OF INTEREST TEST. RATHER, AN APPROPRIATE PROVISION SHOULD HAVE BEEN INCLUDED IN THE SOLICITATION AND AN OFFEROR'S ACCEPTABILITY UNDER THE PROVISION DECIDED AFTER PROPOSAL SUBMISSION AND BEFORE AWARD. 52 COMP. GEN. 569, SUPRA. ALTHOUGH WE HAVE NOT CONCLUDED THAT THIS DEFICIENCY REQUIRES DISTURBING THE AWARD, WE ARE ADVISING THE SECRETARY OF THE NAVY OF THIS IMPROPRIETY TO PRECLUDE A RECURRENCE.

FOR THE FOREGOING REASONS, THE PROTEST IS DENEID.