B-183648, MAY 27, 1975

B-183648: May 27, 1975

Additional Materials:

Contact:

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

 

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

CONCERNED EXCLUSIVELY WITH EVENTS INVOLVED IN PRIME'S REJECTION OF SUBCONTRACT OFFER CANNOT BE CONSIDERED BY GENERAL ACCOUNTING OFFICE SINCE PROCURING AGENCY'S INVOLVEMENT IN REJECTION OF SUBCONTRACT OFFER WAS MINIMAL. CLAIMS BY SUBCONTRACTOR THAT PRIME CONTRACTOR MAY IMPROPERLY DISCLOSE PROPRIETARY DATA IN COURSE OF PRIME'S PERFORMANCE OF GOVERNMENT CONTRACT AND THAT PRIME WILL NOT COMPLY WITH PRIME CONTRACT PROVISION CONCERNING OBLIGATION TO ACCOMPLISH MAXIMUM AMOUNT OF SMALL BUSINESS SUBCONTRACTING ARE NOT FOR CONSIDERATION SINCE FIRST CLAIM INVOLVES DISPUTE SOLELY BETWEEN PRIVATE PARTIES AND SECOND CLAIM RELATES TO CONTRACT ADMINISTRATION. A PROTEST WAS RECEIVED FROM PSC TECHNOLOGY. IT IS OUR VIEW THAT THE PROTEST IS NOT FOR CONSIDERATION.

B-183648, MAY 27, 1975

1. PROTEST BY POTENTIAL SUBCONTRACTOR REJECTED BY PRIME CONTRACTOR NOMINALLY DIRECTED AGAINST AWARD OF RELATED PRIME CONTRACT, BUT CONCERNED EXCLUSIVELY WITH EVENTS INVOLVED IN PRIME'S REJECTION OF SUBCONTRACT OFFER CANNOT BE CONSIDERED BY GENERAL ACCOUNTING OFFICE SINCE PROCURING AGENCY'S INVOLVEMENT IN REJECTION OF SUBCONTRACT OFFER WAS MINIMAL, AND DID NOT "CAUSE OR CONTROL" REJECTION OF OFFER SO AS TO PERMIT CONSIDERATION OF PROTEST UNDER ONE OF THE CRITERIA ADVANCED IN OPTIMUM SYSTEMS, INCORPORATED, B-183039, MARCH 19, 1975, 54 COMP. GEN. . 2. CLAIMS BY SUBCONTRACTOR THAT PRIME CONTRACTOR MAY IMPROPERLY DISCLOSE PROPRIETARY DATA IN COURSE OF PRIME'S PERFORMANCE OF GOVERNMENT CONTRACT AND THAT PRIME WILL NOT COMPLY WITH PRIME CONTRACT PROVISION CONCERNING OBLIGATION TO ACCOMPLISH MAXIMUM AMOUNT OF SMALL BUSINESS SUBCONTRACTING ARE NOT FOR CONSIDERATION SINCE FIRST CLAIM INVOLVES DISPUTE SOLELY BETWEEN PRIVATE PARTIES AND SECOND CLAIM RELATES TO CONTRACT ADMINISTRATION.

PSC TECHNOLOGY, INC.:

ON APRIL 15, 1975, A PROTEST WAS RECEIVED FROM PSC TECHNOLOGY, INC. (PSC), "PROTESTING THE AWARD OF ANY CONTRACT TO AAI CORPORATION" UNDER RFP F19628-73-R-0081 ISSUED BY THE DEPARTMENT OF THE AIR FORCE.

OUR OFFICE INITIALLY ADVISED PSC THAT ITS PROTEST WOULD BE PROCESSED. FURTHER REFLECTION, HOWEVER, IT IS OUR VIEW THAT THE PROTEST IS NOT FOR CONSIDERATION.

ALTHOUGH THE PROTEST IS EXPRESSLY DIRECTED AGAINST AWARD TO AAI CORPORATION (AAI), THE SUBSTANCE OF THE PSC COMPLAINT RELATES, IN THE MAIN, TO EVENTS CULMINATING IN AAI'S ALLEGED REJECTION OF PSC AS A POSSIBLE SUBCONTRACTOR TO AAI UNDER ANY PRIME CONTRACT AWARDED BY THE DEPARTMENT PURSUANT TO THE SUBJECT RFP.

THUS PSC ASSERTS THAT THERE WERE IRREGULARITIES IN THE WAY AAI "SOLICITED AND HANDLED BIDS FOR THE (POSSIBLE SUBCONTRACT)." PSC FURTHER ALLEGES THAT AAI'S ULTIMATE DECISION TO REJECT ALL SUBCONTRACT PROPOSALS, INCLUDING PSC'S OFFER, NECESSARILY MEANS THAT AAI'S OFFER WILL BE DEFICIENT IN PRICING AND TECHNICAL AREAS. THIS IS SO, PSC ASSERTS, BECAUSE AAI SIMPLY DOES NOT HAVE ADEQUATE ABILITY TO CARRY OUT ON ITS OWN THE REQUIREMENTS THAT AAI ORIGINALLY PLANNED TO SUBCONTRACT.

THESE ALLEGED DEFICIENCIES, THEREFORE, ARE SEEN BY PSC AS EXCLUSIVELY STEMMING FROM AAI'S REJECTION OF PSC'S OFFER. CONSEQUENTLY, WE MUST VIEW PSC'S PROTEST, ALTHOUGH NOMINALLY DIRECTED AGAINST AWARD TO AAI, TO BE, IN FACT, CONCERNED WITH AAI'S REJECTION OF THE PSC SUBCONTRACT OFFER.

GENERALLY, GAO WILL NOT CONSIDER PROTESTS INVOLVING SUBCONTRACTS TO BE AWARDED BY PRIME CONTRACTORS UNLESS CERTAIN CONDITIONS ARE PRESENT. OPTIMUM SYSTEMS, INCORPORATED, B-183039, MARCH 19, 1975, 54 COMP. GEN. . CHIEF AMONG THESE CONDITIONS IS A REQUIREMENT THAT THE GOVERNMENT MUST HAVE ACTIVELY OR DIRECTLY PARTICIPATED IN THE SUBCONTRACTOR SELECTION. THE GOVERNMENT'S PARTICIPATION MUST BE SUCH THAT IT HAD THE NET EFFECT OF CAUSING OR CONTROLLING POTENTIAL SUBCONTRACTORS' REJECTION OR SELECTION.

BUT PSC'S PROTEST CORRESPONDENCE STATES THAT AAI TOLD IT THAT "*** PSC'S NAME WASN'T EVEN MENTIONED TO THE AIR FORCE EXCEPT IN PASSING" DURING THE NEGOTIATIONS BETWEEN AAI AND THE DEPARTMENT CONCERNING THE PROPOSED PRIME CONTRACT AWARD. CONSEQUENTLY, IT SEEMS TO US THAT THE AIR FORCE'S INVOLVEMENT IN THE REJECTION OF PSC'S SUBCONTRACT OFFER WAS MINIMAL AND CANNOT BE SEEN AS CAUSING OR CONTROLLING THE REJECTION OF PSC'S OFFER. THUS WE CANNOT CONSIDER PSC'S ALLEGATIONS ABOUT PRICING AND TECHNICAL DEFECTS IN AAI'S OFFER CAUSED BY AAI'S REJECTION OF PSC'S SUBCONTRACT OFFER WHETHER THESE ALLEGATIONS ARE CONSIDERED A NOMINAL PROTEST AGAINST AWARD TO AAI OR AN INDIRECT PROTEST AGAINST AAI'S REJECTION OF PSC'S OFFER.

PSC ALSO CLAIMS THAT AAI MAY IMPROPERLY "*** DISCLOSE PROPRIETARY DATA OF PSC TO THE AIR FORCE TO COMPLETE THE SUBJECT CONTRACT ***." THEREFORE, "PSC INTENDS TO USE APPROPRIATE LEGAL PROCESSES TO PREVENT THE DISCLOSURE AND USE OF SUCH DATA." WE ASSUME THIS STATEMENT IS MEANT TO SHOW THAT PSC WILL PURSUE THIS CLAIM IN A FORUM OTHER THAN THE GENERAL ACCOUNTING OFFICE SINCE OUR OFFICE IS NOT AUTHORIZED TO RESOLVE CLAIMS SOLELY BETWEEN PRIVATE PARTIES.

LASTLY, PSC ASSERTS THAT AAI IS NOT COMPLYING WITH THE "REQUIREMENTS IN THE RFP FOR AWARDING SUBCONTRACTS TO SMALL BUSINESS CONTRACTORS" CONTRARY TO ARMED SERVICES PROCUREMENT REGULATION SEC. 7-104.14(A) (1974 ED.). THE CLAUSE REQUIRED TO BE INSERTED BY THE CITED REGULATION PROVIDES THAT THE "CONTRACTOR AGREES TO ACCOMPLISH THE MAXIMUM AMOUNT OF SUBCONTRACTING TO SMALL BUSINESS CONCERNS THAT THE CONTRACTOR FINDS TO BE CONSISTENT WITH THE EFFICIENT PERFORMANCE OF THIS CONTRACT."

SINCE THE REQUIREMENT IS ONLY IMPOSED ON THE CONTRACTOR, AS DISTINGUISHED FROM OFFERORS, THE QUESTION WHETHER AAI IS OR WILL BE ACCOMPLISHING A "MAXIMUM AMOUNT OF SUBCONTRACTING TO SMALL BUSINESS CONCERNS" IS A MATTER OF CONTRACT ADMINISTRATION FOR THE AIR FORCE, AND NOT GAO, TO CONSIDER.

CONSEQUENTLY, WE WILL NOT FURTHER CONSIDER THE PROTEST.