B-182844, JAN 31, 1975

B-182844: Jan 31, 1975

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PROTEST BASED UPON CONTENTION THAT SUCCESSFUL OFFEROR SHOULD HAVE BEEN EXCLUDED FROM CONSIDERATION BECAUSE OF CONFLICT OF INTEREST AND UNFAIR COMPETITIVE ADVANTAGE POSSIBILITIES WAS TIMELY UNDER GAO BID PROTEST RULES (4 C.F.R. 20.2(A)) WHERE FILED WITH GAO DAY AFTER SELECTION EVEN THOUGH PROTESTER KNEW SUCCESSFUL FIRM WAS COMPETING AS NO BASIS FOR PROTEST EXISTED UNTIL SELECTION ANNOUNCEMENT. 2. RECORD DOES NOT SUPPORT PROTEST BASED UPON ALLEGATION THAT SUCCESSFUL OFFEROR SHOULD HAVE BEEN EXLUDED FROM CONSIDERATION BECAUSE OF CONFLICT OF INTEREST AND UNFAIR COMPETITIVE ADVANTAGE FACTORS. AS GAO IS NOT AWARE OF ANY LAW OR CASE TO SUPPORT PROPOSITION THAT. " IS NOT VALID AS CITED REGULATION IS NOT APPLICABLE TO SITUATION WHICH DOES NOT INVOLVE A PRODUCTION CONTRACT AND WHERE PROPOSED AWARDEE DID NOT HAVE A PREVIOUS CONTRACT CONTAINING A RESTRICTIVE CLAUSE PURSUANT TO SUCH REGULATION. 4.

B-182844, JAN 31, 1975

1. PROTEST BASED UPON CONTENTION THAT SUCCESSFUL OFFEROR SHOULD HAVE BEEN EXCLUDED FROM CONSIDERATION BECAUSE OF CONFLICT OF INTEREST AND UNFAIR COMPETITIVE ADVANTAGE POSSIBILITIES WAS TIMELY UNDER GAO BID PROTEST RULES (4 C.F.R. 20.2(A)) WHERE FILED WITH GAO DAY AFTER SELECTION EVEN THOUGH PROTESTER KNEW SUCCESSFUL FIRM WAS COMPETING AS NO BASIS FOR PROTEST EXISTED UNTIL SELECTION ANNOUNCEMENT. 2. RECORD DOES NOT SUPPORT PROTEST BASED UPON ALLEGATION THAT SUCCESSFUL OFFEROR SHOULD HAVE BEEN EXLUDED FROM CONSIDERATION BECAUSE OF CONFLICT OF INTEREST AND UNFAIR COMPETITIVE ADVANTAGE FACTORS, AS GAO IS NOT AWARE OF ANY LAW OR CASE TO SUPPORT PROPOSITION THAT, ABSENT PROVISION THEREFOR IN SOLICITATION OR APPLICABLE CONTRACT, THAT FIRM SHOULD BE EXCLUDED FROM COMPETITION SIMPLY ON BASIS OF THEORETICAL OR POTENTIAL CONFLICT OF INTEREST. 3. CONTENTION THAT PROPOSED AWARD OF CONTRACT WOULD VIOLATE ASPR APPENDIX G, "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST," IS NOT VALID AS CITED REGULATION IS NOT APPLICABLE TO SITUATION WHICH DOES NOT INVOLVE A PRODUCTION CONTRACT AND WHERE PROPOSED AWARDEE DID NOT HAVE A PREVIOUS CONTRACT CONTAINING A RESTRICTIVE CLAUSE PURSUANT TO SUCH REGULATION. 4. NAVY'S PREQUALIFICATION OF FIRMS TO OPERATE SONOBUOY TESTING PROGRAM AND FACILITIES THROUGH COMMERCE BUSINESS DAILY SYNOPSIS APPEARS TO BE UNDULY RESTRICTIVE OF COMPETITION AND SHOULD NOT BE USED IN FUTURE IN ABSENCE OF APPROPRIATE JUSTIFICATION BEYOND ADMINISTRATIVE EXPEDIENCY FOR ITS INCLUSION.

VAST, INC.:

REQUEST FOR QUOTATIONS (RFQ) NO. N00019-75-Q-0025, WAS ISSUED SEPTEMBER 19, 1974, BY DEPARTMENT OF THE NAVY, NAVAL AIR SYSTEMS COMMAND, FOR THE SELECTION OF A CONTRACTOR TO OPERATE AND MANAGE THE NAVY'S SONOBUOY QUALITY ASSURANCE TESTING PROGRAMS AND FACILITIES. THE TERM "SONOBUOY" REFERS TO UNDERWATER LISTENING DEVICES WHICH ARE USED IN THE NAVY'S ANTISUBARINE WARFARE PROGRAM. MORE SPECIFICALLY, THE INSTANT RFQ CALLS FOR PERFORMANCE OF TESTING OF VARIOUS MANUFACTURERS' SONOBUOYS, BATHYTHERMOGRAPHIC TRANSMITTER SETS, AND SONOBUOY LAUNCH CONTAINERS. ADDITION TO DATA REQUIREMENTS AND REFURNISHING OF EXPENDED UNITS, THE RFQ CALLS FOR THE FURNISHING OF A CREW FOR THE OPERATION AND MAINTENANCE OF TWO P-3 GOVERNMENT-FURNISHED AIRCRAFT. ALSO, THE RFQ CALLS FOR THE FURNISHING OF TWO "OCEAN-GOING" VESSELS WITH CREWS, AND A THIRD CREW FOR ONE GOVERNMENT-FURNISHED VESSEL. FINALLY, THE RFQ REQUIRES THE OPERATION AND MAINTENANCE OF THE GOVERNMENT-OWNED NAVAL INDUSTRIAL RESERVE PLANT AT RUTHERFORD ISLAND, SOUTH BRISTOL, MAINE, AND THE GOVERNMENT-OWNED "HAM- BLUFF" SONOBUOY QUALITY ASSURANCE FACILITY AT ST. CROIX IN THE VIRGIN ISLANDS.

ON DECEMBER 12, 1974, VAST, INC. (VAST), ONE OF TWO FIRMS WHICH ULTIMATELY SUBMITTED PROPOSALS FOR THE NAVY REQUIREMENT, PROTESTED TO THIS OFFICE THAT THE OTHER OFFEROR "SHOULD BE EXCLUDED FROM CONSIDERATION FOR AWARD BECAUSE OF (1) A CONFLICT OF INTEREST, AND (2) UNFAIR COMPETITIVE ADVANTAGE." SINCE 1959 VAST HAS BEEN THE SOLE CONTRACTOR FOR THIS NAVY SONOBUOY PROGRAM.

A CHRONOLOGICAL HISTORY OF THE NAVY PROCUREMENT SHOWS THE FOLLOWING: THE INSTANT RFQ WAS DERIVED FROM A JUNE 5, 1974, NAVY PROCUREMENT REQUEST, WHICH WAS SYNOPSIZED IN THE JUNE 13, 1974, EDITION OF THE COMMERCE BUSINESS DAILY (CBD). THE CBD SYNOPSIS REQUESTED ANYONE INTERESTED IN OPERATING THE SONOBUOY TESTING PROGRAM AND FACILITIES, TO SUBMIT TO THE NAVY RESUMES OF THEIR CAPABILITIES. BASED ON RESPONSES TO THE CBD SYNOPSIS THE NAVY DETERMINED THAT SEVEN FIRMS WERE QUALIFIED TO OPERATE THE TESTING PROGRAM AND FACILITIES. THUS, ON SEPTEMBER 19, 1974, THE SEVEN QUALIFIED FIRMS WERE ISSUED THE SUBJECT RFQ. NOTICE OF THE ISSUANCE OF THE SOLICITATION AND THE LISTING OF THE NAMES OF THE SEVEN QUALIFIED FIRMS WAS CARRIED IN THE CBD ON THAT DATE. ON SEPTEMBER 26, 1974, REPRESENTATIVES OF FIVE FIRMS ATTENDED A PREPROPOSAL CONFERENCE WITH THE NAVY. FOLLOWING THIS PREPROPOSAL CONFERENCE, THREE INTERESTED OFFERORS VISITED THE TWO TEST SITES ON OCTOBER 3, 1974, AND OCTOBER 8, 1974. OCTOBER 24, 1974, THE DATE SPECIFIED IN THE RFQ FOR RECEIPT OF PROPOSALS, TWO PROPOSALS WERE RECEIVED, ONE FROM THE PROTESTER AND THE OTHER FROM TRACOR MARINE, INC. (TRACOR). AFTER DISCUSSIONS WERE HELD ON NOVEMBER 25, 1974, WITH BOTH OFFERORS, THE NAVY REQUESTED BEST AND FINAL OFFERS ON DECEMBER 4, 1974. BEST AND FINAL OFFERS WERE RECEIVED BY THE NAVY ON DECEMBER 10, 1974, AND WERE OPENED ON DECEMBER 11, 1974, BY THE NAVY'S PROCUREMENT REVIEW BOARD (PRB). THE PRB SELECTED TRACOR AS THE SUCCESSFUL OFFEROR.

COUNSEL FOR TRACOR AND THE NAVY HAVE STRENUOUSLY ARGUED THAT UNDER THE TIME LIMITATIONS OF OUR "INTERIM BID PROTEST PROCEDURES AND STANDARDS" (4 C.F.R. SEC. 20.2(A) (1974)) VAST'S PROTEST WAS NOT TIMELY FILED WITH THIS OFFICE. IT IS CONTENDED THAT THE PROTEST IS UNTIMELY UNDER THE FOLLOWING UNDERLINED PORTION OF THE INTERIM BID PROTEST PROCEDURES AND STANDARDS, SUPRA:

"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 KNOWN, WHICHEVER IS EARLIER. ***"

IN THIS CONNECTION, IT IS ARGUED THAT VAST KNEW OR SHOULD HAVE KNOWN LONG BEFORE ITS PROTEST WAS FILED THAT TRACOR WAS OR WOULD BE UNDER CONSIDERATION FOR AWARD BECAUSE OF THE FOLLOWING: THE CBD OF SEPTEMBER 19, 1974, INCLUDED NOTICE THAT TRACOR WAS AMONG THE FIRMS CONSIDERED QUALIFIED FOR THE PROCUREMENT AND WOULD BE SOLICITED; THAT TRACOR WAS PRESENT AT TWO TEST SITES ON OCTOBER 3 AND 8, 1974. IN THESE CIRCUMSTANCES, IT IS CONTENDED THAT A PROTEST NOT FILED UNTIL DECEMBER 12, 1974, IS UNTIMELY.

THE CRITICAL ISSUE WITH RESPECT TO THIS ASPECT OF THE PROTEST IS THE DATE WHEN VAST KNEW OR SHOULD HAVE KNOWN THAT TRACOR WAS BEING CONSIDERED FOR AWARD CONTRARY TO ITS BELIEF THAT IT SHOULD BE EXCLUDED FROM SUCH CONSIDERATION BECAUSE OF THE CONFLICT OF INTEREST AND UNFAIR COMPETITIVE ADVANTAGE POSSIBILITIES. WE BELIEVE THAT VAST SHOULD NOT BE HELD TO HAVE SUCH KNOWLEDGE UNTIL DECEMBER 11, 1974, WHEN IT WAS NOTIFIED THAT THE PRB HAD SELECTED TRACOR AS THE SUCCESSFUL OFFEROR. WHILE COUNSEL FOR TRACOR AND THE NAVY HAVE CORRECTLY POINTED OUT THAT CERTAIN FACTS SHOULD HAVE INDICATED TO THE PROTESTER THAT TRACOR WAS COMPETING UNDER THE RFQ, WE DO NOT BELIEVE THAT IT MAY REASONABLY BE SAID THAT SUCH KNOWLEDGE WAS SUFFICIENT TO PUT THE PROTESTER ON NOTICE THAT TRACOR HAD ACTUALLY SUBMITTED AN OFFER AND WAS BEING CONSIDERED FOR AWARD. IN THE ABSENCE OF SPECIFIC KNOWLEDGE TO THE CONTRARY, WE BELIEVE THAT AN OFFEROR MAY REASONABLY ASSUME THAT A PROCUREMENT WILL BE CONDUCTED IN A FAIR AND EQUITABLE MANNER IN ACCORDANCE WITH APPLICABLE LAW AND SHOULD NOT BE REQUIRED TO ANTICIPATE POSSIBLE VIOLATION THEREOF BY THE PROCURING OFFICIALS. THUS, WE CANNOT CONCLUDE THAT VAST'S PROTEST OF DECEMBER 12, 1974, WAS NOT TIMELY FILED WITH THIS OFFICE.

AS NOTED ABOVE, THE FIRST MAJOR ISSUE RAISED BY VAST IS THAT TRACOR SHOULD BE EXCLUDED FROM CONSIDERATION FOR AWARD BECAUSE OF A CONFLICT OF INTEREST. THE PROTESTER CONTENDS IN ESSENCE THAT, UNDER THE PRESENT RFQ, TRACOR SEEKS TO PERFORM THE ACTUAL SONOBUOY TESTING, WHILE AT THE SAME TIME ANALYZING THE RESULTS OF ITS OWN TESTS TO DETERMINE COMPLIANCE WITH THE TEST PROCEDURES IT ASSISTED IN WRITING UNDER SUPPORT SERVICE CONTRACTS. FURTHERMORE, IT IS CONTENDED THAT AS AN "INSIDER," TRACOR WAS IN AN ADVANTAGEOUS POSITION IN PREPARING ITS PROPOSAL BECAUSE IT PLAYED A ROLE IN FORMULATING FORTHCOMING CHANGES IN THE SONOBUOY PROGRAM.

THE NAVY HAS RESPONDED TO THESE ALLEGATIONS BY STATING THAT ANY FUNCTION PRESENTLY PROVIDED THE NAVY BY TRACOR WOULD IN NO WAY CONFLICT WITH OPERATION OF THE SONOBUOY TEST FACILITIES UNDER THE SUBJECT PROCUREMENT. IN COMMENTS FURNISHED OUR OFFICE BY THE NAVY, THE RELATIONSHIP BETWEEN TRACOR'S CURRENT PROJECTS AND THE SONOBUOY TEST FACILITY WORK WAS EXPLAINED AS FOLLOWS:

"WE HAVE REVIEWED THE WORK STATEMENT OF EACH CONTRACT SINCE THE BEGINNING OF FY-73 UNDER WHICH TRACOR HAS PROVIDED ENGINEERING SUPPORT SERVICES TO THE NAVAIR SONOBUOY PROGRAM AND WE HAVE INTERVIEWED COGNIZANT NAVAIR TECHNICAL PERSONNEL. BASED UPON THIS INVESTIGATION, IT IS CLEAR THAT TRACOR IS NOT REQUIRED TO EVALUATE, NOR HAS IT EVALUATED, ANY TEST DATA PRODUCED BY VAST FOR THE PURPOSE OF ASSESSING THE QUALITY OF THE TESTING DONE BY THE TEST FACILITY OPERATOR. THIS FUNCTION IS PERFORMED ENTIRELY BY GOVERNMENT PERSONNEL FROM THE NAVAL AMMUNICATION DEPOT, CRANE, INDIANA, WHILE TRACOR'S EFFORTS UNDER THE CONTRACTS ARE CONFINED TO EVALUATING THE QUALITY OF THE HARDWARE BEING TESTED. IT IS CLEAR, THEREFORE, THAT SUCH FUNCTIONS PERFORMED BY TRACOR FOR THE NAVY AND THE OPERATION OF THE SONOBUOY TEST FACILITIES WOULD NOT CONSTITUTE AN ORGANIZATION CONFLICT OF INTEREST IF PERFORMED BY THE SAME CONTRACTOR."

OUR REVIEW OF EACH STATEMENT OF WORK IN TRACOR'S PRESENT CONTRACTS REASONABLY SUPPORTS THE NAVY'S POSITION AS EXPRESSED ABOVE. HOWEVER, THE PROTESTER POINTS OUT THAT PREPRODUCTION SAMPLE TESTING AND ENGINEERING TESTING, AS WELL AS PRODUCTION LOT TESTING, ARE INVOLVED IN THE SUBJECT CONTRACT, AND THE NAVY HAS FAILED TO RESPOND TO ITS CONTENTION OF A POSSIBLE CONFLICT OF INTEREST IN THESE AREAS. WHILE IT IS TRUE THAT THE NAVY HAS FAILED TO RESPOND AS INDICATED, WE FAIL TO NOTE A SPECIFIC INSTANCE WHERE WORK ITEMS IN TRACOR'S PRESENT CONTRACTS IN CONJUNCTION WITH THE WORK BEING CALLED FOR IN THE SUBJECT RFQ, WOULD RESULT IN A CONFLICT OF INTEREST, AND VAST HAS FAILED TO PROVIDE MORE THAN MERE ALLEGATIONS IN THIS REGARD.

VAST ALSO CONTENDS THAT AWARD TO TRACOR WOULD VIOLATE ASPR APPENDIX G, THE DEFENSE DEPARTMENT'S "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST." 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 ADVANTAGE - FROM PARTICIPATING IN THE COMPETITION FOR A PRODUCTION CONTRACT." 51 COMP. GEN. 397, 400 (1972), SEE ALSO 49 ID. 463, 466, SUPRA. HERE, THERE IS NO ALLEGATION THAT TRACOR WAS AWARDED A PRIOR CONTRACT CONTAINING SUCH A RESTRICTIVE CLAUSE, AND THE PRESENT PROCUREMENT DOES NOT INVOLVE A PRODUCTION CONTRACT. THUS, THE PRESENT PROCUREMENT DOES NOT INVOLVE THE KIND OF SITUATION TO WHICH ASPR APPENDIX G IS DIRECTED AND IT IS NOT THEREFORE APPLICABLE.

VAST'S SECOND MAJOR CONTENTION IS THAT TRACOR SHOULD BE EXCLUDED FROM COMPETITION BECAUSE OF AN UNFAIR COMPETITIVE ADVANTAGE. AT THE HEART OF VAST'S ARGUMENT CONCERNING THIS ALLEGATION IS THE FOLLOWING:

1. TRACOR HAS BEEN PRESENT AS AN AGENT OF THE NAVY INSIDE VAST'S FACILITIES.

2. TRACOR HAS BEEN PRESENT INSIDE NAVY OFFICES DURING THE PROCESSING AND EVALUATION OF PROPOSALS UNDER THE SUBJECT RFQ.

VAST ALLEGES THAT BECAUSE TRACOR ENGINEERS HAVE VISITED THE TWO TEST FACILITIES OPERATED BY VAST IN THE COURSE OF OTHER NAVY WORK, THAT TRACOR HAD THE OPPORTUNITY BY OBSERVATION TO OBTAIN INFORMATION RELATIVE TO VAST'S ENTIRE OPERATION AND THEREFORE SENSITIVE TO THE PREPARATION OF ITS PROPOSAL.

THE NAVY ADMITS THAT TRACOR EMPLOYEES HAVE VISITED THE TWO SITES ON OTHER OFFICIAL NAVY BUSINESS, BUT CONCLUDES THAT SUCH VISITS COULD NOT HAVE BENEFITED TRACOR AT THE EXPENSE OF ANY OTHER COMPETITOR. IN SUMMARY, THE NAVY HAS EXPLAINED THAT EACH CONTRACTOR IS RESPONSIBLE FOR PROTECTING ITS OWN BUSINESS DATA; THAT TRACOR'S AUTHORIZATION TO VISIT THE SITES ON NAVY BUSINESS DID NOT GRANT TRACOR PERSONNEL "CARTE BLANCHE TO ROAM THROUGH THE CLASSIFIED FACILITY BROWSING HERE AND THERE AT WILL;" AND THAT ANYTHING TRACOR PERSONNEL COULD HAVE SEEN ON THEIR OFFICIAL VISITS WAS APPARENT TO EVERYONE WHO VISITED THE TEST SITES DURING THE SITE INSPECTION TOURS.

ALTHOUGH THE PROTESTER HAS SUBMITTED TO THIS OFFICE NUMEROUS PAGES ATTEMPTING TO SUPPORT THE POSSIBILITY THAT TRACOR BENEFITED FROM ITS OFFICIAL VISITS TO THE TWO TEST SITES, VAST ADMITS IT CANNOT ISOLATE ANY SPECIFIC INSTANCES OF WRONGDOING OR IMPROPRIETY. THEREFORE, BASED ON THE NAVY'S ASSURANCES THAT NOTHING TRACOR COULD HAVE OBSERVED ON ITS MISSIONS INSIDE VAST'S FACILITIES COULD LEAD TO AN UNFAIR COMPETITIVE ADVANTAGE, AND THE PROTESTER'S LACK OF ANY SPECIFIC ALLEGATION OF WRONGDOING OR IMPROPRIETY, WE ARE UNABLE TO DETERMINE THAT THERE WAS ANY ILLEGAL OR PROHIBITED COMPETITIVE ADVANTAGE GAINED BY TRACOR WHILE VISITNG VAST'S FACILITIES.

VAST NEXT CONTENDS THAT AN UNFAIR COMPETITIVE ADVANTAGE WAS GAINED BY TRACOR ON THE BASIS OF ITS PRESENCE INSIDE NAVY OFFICES DURING THE PROCESSING AND EVALUATION OF PROPOSALS UNDER THE INSTANT RFQ.

THE NAVY HAS RESPONDED TO THE PROTESTER'S ALLEGATION BY AGREEING THAT TRACOR PERSONNEL HAVE VISITED NAVY OFFICES FOR LEGITIMATE PURPOSES RELATING TO THEIR RESPONSIBILITIES UNDER NAVY ENGINEERING SUPPORT SERVICE CONTRACTS. THE NAVY, HOWEVER, STATES THAT FOLLOWING AN INTENSIVE INVESTIGATION THAT IT IS SATISFIED THAT SECURITY DURING THE DIFFERENT PROCUREMENT STAGES HAD BEEN WELL KEPT.

IN COMMENTS FURNISHED OUR OFFICE, THE NAVY EXPLAINS WHY TRACOR HAD NO INFLUENCE IN THE DEVELOPMENT OF THE RFQ OR ADVANCE KNOWLEDGE OF ITS CONTENTS, AS FOLLOWS:

"*** AFTER CONSIDERABLE INVESTIGATION INTO THIS POINT WE ARE ENTIRELY SATISFIED THAT TRACOR HAD NO ROLE OR INFLUENCE WHATSOEVER IN THE DEVELOPMENT OF THE RFQ. FOR ONE, THE COMPANY HAD NO SUCH RESPONSIBILITY OR EVEN RELATED RESPONSIBILITY UNDER ANY OF ITS CONTRACTS. MORE IMPORTANTLY, THE SALIENT PORTIONS OF THIS SOLICITATION AND CONTRACT WERE ESSENTIALLY COPIES OF OLDER ONES. ATTACHMENT 5 DISPLAYS THE SIMILARITY BETWEEN THE WORK STATEMENT OF THIS RFQ AND THAT OF THE CURRENT VAST CONTRACT. IT ALSO SHOWS THAT THE EVALUATION CRITERIA IN THE 1970 COMPETITION AND THIS PROCUREMENT ARE ALL BUT IDENTICAL. THUS IT IS OBVIOUS NOT ONLY THAT TRACOR COULD HAVE HAD NO KNOWLEDGE OF THESE MATTERS ANY EARLIER THAN VAST, BUT THAT NO OPPORTUNITY EXISTED FOR TRACOR TO EXERT ANY INFLUENCE OVER THEIR PREPARATION."

IN RESPONSE TO VAST'S ALLEGATION THAT TRACOR PERSONNEL MAY HAVE HAD ACCESS TO OR INFLUENCED THE DEVELOPMENT OF EVALUATION OF SUB-CRITERIA, THE NAVY HAS EXPLAINED AS FOLLOWS: "*** THESE CRITERIA WERE DRAFTED BY ONE NAVAIR EMPLOYEE, MR. SODERHOLM. AFTER CAREFUL REVIEW OF HIS ACTIONS IN DRAFTING THEM, WE ARE QUITE SATISFIED THAT NO OPPORTUNITY AROSE FOR THEIR INADVERTENT DISCLOSURE. AND HERE AGAIN WE SERIOUSLY DOUBT THAT TRACOR COULD HAVE INFLUENCED THEIR PREPARATION BECAUSE MR. SODERHOLM SIMPLY ADOPTED THE SUB-CRITERIA USED IN THE PREVIOUS COMPETITION IN 1970 - WITH ONLY INCONSEQUENTIAL CHANGES - AND DISCUSSED THEM WITH ONLY ONE OTHER NAVAIR EMPLOYEE, MR. MOELLER, WHO WAS ALSO A MEMBER OF THE PRB. ***"

FINALLY, IN REFERENCE TO THE POSSIBILITY OF TRACOR PERSONNEL BEING PRESENT DURING PROPOSAL EVALUATION, THE NAVY STATES: "*** THE IMPRUDENCE OF CONDUCTING ANY PORTION OF THE EVALUATION IN OFFICE SPACE FREQUENTED BY THE EMPLOYEES OF EITHER OFFEROR, VAST OR TRACOR, SERIOUSLY CONCERNED NAVAIR PERSONNEL EARLY IN THIS PROCUREMENT AND APPROPRIATE MEASURES WERE TAKEN TO AVOID EVEN THE APPEARANCE OF IMPROPRIETY. VAST ARGUES, HOWEVER, THAT ACTUAL PHYSICAL REMOVAL OF THE EVALUATION PROCESS FROM THE ASW OFFICE TO THE NAVAIR CONTRACTS GROUP CONFERENCE ROOM IN A DIFFERENT BUILDING WAS NOT ENOUGH AND SUGGESTS THAT THE NAVAIR EVALUATION TEAM MIGHT HAVE ENGAGED IN SOME CARELESS TALK WITH TRACOR PERSONNEL. WE NOTE THAT ONE ACTION TAKEN BY NAVAIR WAS SPECIFICALLY TO INSTRUCT THE EVALUATORS TO DISCUSS THE COMPETITION WITH NO ONE OTHER THAN THE EVALUATION TEAM AND NOT EVEN WITH THEM OUTSIDE THE CONTRACTS GROUP CONFERENCE ROOM USED FOR THE EVALUATION."

IN RESPONSE TO THESE STATEMENTS, THE PROTESTER ARGUES THAT THE LEGITIMATE REASONS FOR TRACOR'S PRESENCE INSIDE NAVY OFFICES IN AND OF ITSELF HAS GIVEN TRACOR AN UNFAIR COMPETITIVE ADVANTAGE. AS EVIDENCE OF THIS CONCLUSION, VAST OUTLINES VARIOUS TRACOR WORK PROJECTS WITH THE NAVY. FOLLOWING CLOSE SCRUTINY OF THE MATERIAL SUBMITTED BY VAST CONCERNING THE NAVY-TRACOR PROJECTS, WE FIND NO BASIS TO CONCLUDE THAT SUCH WORK HAS GIVEN TRACOR AN IMPERMISSIBLE COMPETITIVE ADVANTAGE IN THE PRESENT PROCUREMENT. MORE PRECISELY, THE SUBMITTED MATERIAL TENDS ONLY TO SHOW TRACOR'S PRESENT PROJECTS AND EXPERIENCE IN THE AREA OF ANTISUBMARINE WAREFARE AND THE SONOBUOY PROJECT IN GENERAL.

WITH REFERENCE TO THE NAVY'S PRECAUTIONS TO INSURE THE SECURITY OF ALL THE PRE-AWARD STAGES IN THE SUBJECT PROCUREMENT, VAST HAS STATED THAT "THE NAVY'S PRECAUTIONS CAME TOO LATE." IN THIS REGARD WE MUST POINT OUT THAT THE RESPONSIBILITY FOR SUCH SECURITY IS A MATTER LARGELY WITHIN THE DISCRETION OF THE CONTRACTING AGENCY. AS VAST HAS BEEN UNABLE TO SHOW A SPECIFIC INSTANCE OF HOW TRACOR HAS BENEFITED FROM A LACK OF NAVY SECURITY, WE FIND IT INAPPROPRIATE TO CONSIDER THE TIMELINESS OF THE NAVY'S PRECAUTIONARY MEASURES.

VAST HAS CITED TWO OF OUR DECISIONS AS SUPPORTIVE OF ITS CONTENTIONS THAT THAT TRACOR SHOULD BE EXCLUDED FROM COMPETITION IN THE INSTANT PROCUREMENT. WE FIND NEITHER OF THESE DECISIONS TO BE ANALOGOUS TO THE PRESENT SITUATION. IN MATTER OF WILLAMETTE - WESTERN CORPORATION, B 179582, B-179328, NOVEMBER 14, 1974, WE RECOMMENDED RECOMPETITION OF A CONTRACT BECAUSE THE EVALUATION FACTORS USED IN SELECTING THE CONTRACTOR WERE NOT LIMITED TO THOSE INCLUDED IN THE SOLICITATION AND BECAUSE THE FACTORS ACTUALLY USED WERE NOT EQUALLY APPLIED. WE ALSO NOTED IN OUR DECISION, AS A FURTHER INDICATION OF LACK OF OBJECTIVITY, THE CLEARLY ESTABLISHED FACT THAT AN INCUMBENT CONTRACTOR HAD BEEN GIVEN AN RFP TO STUDY BEFORE ITS FORMAL ISSUANCE.

THE SECOND CASE CITED BY THE PROTESTER (MATTER OF GOULD, INC., ADVANCED TECHNOLOGY GROUP, B-181448, OCTOBER 15, 1974), INVOLVED A CASE WHERE WE UPHELD AN RFP PROVISION WHICH RESTRICTED TORPEDO PRODUCTION CONTRACTORS FROM RECEIVING A CERTAIN SUPPORT CONTRACT. IN THAT SITUATION, THE EXCLUSION CLAUSE KEPT PRODUCTION CONTRACTORS FROM COMPETING FOR THE SUPPORT CONTRACT WHICH WOULD HAVE REQUIRED PROOF AND TEST ANALYSIS WITH RESPECT TO WHETHER ITS OWN TORPEDOES SHOULD RECEIVE FINAL ACCEPTANCE BY THE GOVERNMENT. RELATIVE TO THE GOULD DECISION THE NAVY STATES:

"*** THERE THE ISSUE WAS THE OBJECTIVITY OF A MANUFACTURER APPROVING HIS OWN HARDWARE. HERE, AS NOTED EARLIER, VAST IS MISTAKEN IN BELIEVING THAT TRACOR HAS IN THE PAST BEEN 'TESTING' OR JUDGING VAST'S RANGE OPERATION WORK AND THUS WOULD BE DOING THE SAME ON ITSELF IF AWARDED THIS CONTRACT. SUCH HAS NOT BEEN TRACOR'S SUPPORT CONTRACT ROLE HERETOFORE, AND UNDER THE AWARD FEE TYPE OF CONTRACT CONTEMPLATED HERE WE MOST ASSUREDLY WOULD NOT PERMIT IT TO BECOME THE CASE IN THE FUTURE."

IN SUMMATION OF ITS POSITION CONCERNING WHY TRACOR SHOULD BE DISQUALIFIED, THE PROTESTER STATES:

"*** THE UNFAIR COMPETITIVE ADVANTAGE AND THE CONFLICT OF INTEREST BOTH AROSE THROUGH OTHERWISE LEGITIMATE CHANNELS. AND THE HEART OF OUR PROTEST IS THE FACT THAT TRACOR NOW SEEKS TO CONVERT WHAT IT OBTAINED IN AN OTHERWISE LEGITIMATE WAY INTO AN UNFAIR AND IMPERMISSIBLE KIND OF COMPETITION AGAINST VAST. *** AS WE HAVE INDICATED, THE GIST OF THE EVIL HERE IS THAT THE CLOAK OF LEGITIMACY GRANTED TO TRACOR WOULD MAKE IT IMPOSSIBLE FOR US TO ISOLATE ANY SPECIFIC INSTANCE OF WRONGDOING OR IMPROPRIETY, IF ONE HAD OCCURRED. ***"

WE ARE NOT AWARE OF ANY LAW OR CASES TO SUPPORT THE PROPOSITION THAT, ABSENT PROVISION THEREFOR IN THE SOLICITATION OR APPLICABLE CONTRACT, A FIRM SHOULD BE EXCLUDED FROM COMPETITION SIMPLY ON THE BASIS OF A THEORETICAL OR POTENTIAL CONFLICT OF INTEREST. WE ALSO ARE NOT AWARE OF BASIS FOR EXCLUDING A COMPETITOR FROM CONVERTING LEGITIMATELY OBTAINED KNOWLEDGE INTO A COMPETITIVE ADVANTAGE. SEE MATTER OF EXOTECH SYSTEMS, B- 181416, NOVEMBER 22, 1974, 54 COMP. GEN. , WHERE WE WERE UNABLE TO CONCLUDE THAT A CONTRACT AWARD WAS ILLEGAL, NOTWITHSTANDING A POTENTIAL CONFLICT OF INTEREST, SINCE NEITHER THE APPLICABLE PROCUREMENT REGULATIONS NOR THE RFP CONTAINED ANY PROVISION REGARDING SUCH A CONFLICT OF INTEREST.

FOR THE FOREGOING REASONS, VAST'S PROTEST IS DENIED.

HOWEVER, WE QUESTION THE PREQUALIFICATION PROCEDURE EMPLOYED IN THIS PROCUREMENT. WE HAVE HELD THAT ANY SYSTEM FOR PREQUALIFICATION OF OFFERORS, OR OTHERWISE LIMITING THE NUMBER OF OFFERORS, IS TO SOME DEGREE IN DEROGATION OF THE PRINCIPAL TENET OF THE COMPETITIVE SYSTEM THAT BIDS OR PROPOSALS BE SOLICITED IN SUCH A MANNER AS TO PERMIT THE MAXIMUM AMOUNT OF COMPETITION CONSISTENT WITH THE NATURE AND EXTENT OF THE SERVICES OR ITEMS TO BE PROCURED. 53 COMP. GEN. 209 (1973). THE QUESTION TO BE ANSWERED IN DETERMINING THE VALIDITY OF ANY PROCEDURE LIMITING THE EXTENT OF COMPETITION IS NOT WHETHER IT RESTRICTS COMPETITION PER SE, BUT WHETHER IT UNDULY RESTRICTS COMPETITION. IN THE INSTANT CASE, SINCE THE VALIDITY OF THE PROCEDURE WAS NOT CHALLENGED AND WE ARE NOT AWARE THAT FIRMS WERE EXCLUDED FROM COMPETING ON THE BASIS OF THEIR NONCOMPLIANCE WITH THE PREQUALIFICATION PROCEDURE, WE HAVE NOT CONCLUDED THAT THE PROCUREMENT SHOULD BE DISTURBED. HOWEVER, WE ARE ADVISING THE SECRETARY OF THE NAVY OF THIS IMPROPRIETY TO PRECLUDE A RECURRENCE.