B-227070, Aug 31, 1987, 87-2 CPD 209

B-227070: Aug 31, 1987

Additional Materials:

Contact:

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

 

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

PROCUREMENT - Noncompetitive Negotiation - Use - Justification - Urgent needs DIGEST: Protest against sole-source award based on unusual and compelling urgency is sustained because agency failed to explain the procurement's urgency despite the fact that the award was not made until 8 months after the justification and approval was executed and. The first unit is not to be delivered until 16 months after the contract award and the final units are not to be delivered until more than 4 years after award. Such a determination is incompatible with the agency's 8 month delay in awarding the contract and with the contract's schedule under which deliveries start 16 months after award and do not end until 52 months after award.

B-227070, Aug 31, 1987, 87-2 CPD 209

PROCUREMENT - Noncompetitive Negotiation - Use - Justification - Urgent needs DIGEST: Protest against sole-source award based on unusual and compelling urgency is sustained because agency failed to explain the procurement's urgency despite the fact that the award was not made until 8 months after the justification and approval was executed and, under the contract, the first unit is not to be delivered until 16 months after the contract award and the final units are not to be delivered until more than 4 years after award.

Honeycomb Company of America:

Honeycomb Company of America (HCA) protests the award of a contract to the Northrop Corporation, under request for proposals (RFP) No. F41608-86- R-5356, issued by the Department of the Air Force for 317 right landing gear door assemblies and 246 left landing gear door assemblies for the T- 38 aircraft. The Air Force issued the solicitation only to Northrop, the original manufacturer of the T-38 aircraft, based on a determination that an unusual and compelling urgency for the parts existed and that only Northrop could supply the assemblies without undue delay. The protester, a previous supplier of the assemblies, principally argues that the agency improperly excluded it.

While we do not agree with the protester that no basis existed for the urgency determination relating to at least some of these parts, we believe that without some explanation, such a determination is incompatible with the agency's 8 month delay in awarding the contract and with the contract's schedule under which deliveries start 16 months after award and do not end until 52 months after award. We therefore sustain the protest.

BACKGROUND

The T-38 aircraft has replaceable landing gear door assemblies which are made of an aluminum alloy sheet with a honeycomb metal core. According to the agency, contracts for various honeycomb spare parts have been awarded to a number of firms other than Northrop, including HCA, but those firms have had production and quality control problems. Two of these contractors, California Aero Dynamics Corporation (CADC) and Canada Air, both failed to produce acceptable first articles. Also, in September 1984, the Air Force awarded HCA a "kit contract" for various honeycomb spare parts. The Air Force terminated that contract for the convenience of the government in March 1986. HCA currently is pursuing a claim against the Air Force under the Contract Disputes Act of 1978, 41 U.S.C. Sec. 601-613 (1982), regarding the termination. The Air Force maintains that it has attempted to expand competition for many honeycomb spare parts, including landing gear door assemblies by, for instance, providing engineers and production experts to interested firms to assist them in producing acceptable items.

On June 20, 1986, contracting officials received an emergency purchase request for 317 right and 246 left landing gear door assemblies with delivery required in July 1986. The purchase request indicated that early delivery was paramount and that failure to achieve the required schedule would impact critically on the flying mission of the T-38 aircraft. accordance with 10 U.S.C. Sec. 2304(f)(1) (Supp. III 1985), a justification and approval was issued on July 30, for use of other than full and open competitive procedures due to an unusual and compelling urgency. 10 U.S.C. Sec. 2304(c)(2).

The justification lists Northrop as the only approved source capable of providing the assemblies on an urgent basis and explains that Northrop is the only firm to successfully produce the items in a timely manner and that other firms cannot be expected to demonstrate their capability to produce the items in time to meet the urgent requirement. The Air Force indicated in the justification that 45 aircraft were grounded due to the failure of various honeycomb spare parts, including landing gear door assemblies. The cost of the grounded aircraft was estimated at $38,000 per day. The justification explains that a number of firms, including HCA, have been awarded contracts to provide honeycomb spare parts, but all the firms have thus far failed to produce acceptable first articles. According to the Air Force, due to the urgency of this requirement, there is insufficient time to permit first article production, testing and approval, so only Northrop, which does not need first article approval, can promptly provide the parts.

The RFP originally required delivery of all 317 right and 246 left landing gear door assemblies in July 1986. The delivery schedule was later changed so that, under Northrop's contract, awarded March 30, 1987, deliveries are to begin 16 months after award, in July 1988 and end 52 months after award in July 1991.

PROTEST GROUNDS

HCA principally complains that the Air Force violated the Competition in Contracting Act of 1984 (CICA) by making a noncompetitive award to Northrop. HCA argues that there was no bona fide urgency to support the sole-source award and that even if the urgency was justified, the agency still was required by 10 U.S.C. Sec. 2304(e), to request an offer from HCA, a known potential source. Also, regardless of the urgency, according to HCA, the agency was required by 15 U.S.C. Sec. 637(e), to synopsize the requirement in the Commerce Business Daily (CBD). Further, HCA argues that if there was a bona fide urgency it was caused by a lack of advance planning which cannot provide, under 10 U.S.C. Sec. 2304(f)(5)(A), a basis for the use of other than competitive procedures. Finally, according to HCA, even if there is an urgent requirement for replacement landing gear door assemblies, the award to Northrop far exceeds the quantity which is actually needed urgently.

ANALYSIS

Under CICA, an agency may use other than competitive procedures to procure goods or services where the agency's needs are of such an unusual and compelling urgency that the government would be seriously injured if the agency is not permitted to limit the number of sources from which it solicits proposals. 10 U.S.C. Sec. 2304(c)(2). When citing an unusual and compelling urgency, the agency is required to request offers from "as many potential sources as is practicable under the circumstances." U.S.C. Sec. 2304(e). An agency, however, has the authority under 10 U.S.C. Sec. 2304(c)(2), to limit the procurement to the only firm it reasonably believes can properly perform the work in the available time. Arthur Young & Co., B-221879, June 9, 1986, 86-1 CPD Para. 536. addition, an agency is not required to synopsize such urgent contract actions. 41 U.S.C. Sec. 416(a)(2) (Supp. III 1985); Arthur Young & Co., B-221879, supra. We will object to the agency's determination to limit competition based on an unusual and compelling urgency where we find that the agency's decision lacks a reasonable basis. Dynamic Instruments, Inc., B-220092, et al., Nov. 25, 1985, 85-2 CPD Para. 596.

The record supports the agency's position (which the protester does not effectively dispute) that there is a substantial backlog of orders for these parts (as of July 1986, 204 right assemblies and 169 left assemblies); that backlog orders will increase; and that aircraft have been and will be grounded as a result. HCA also does not dispute that aircraft and aircrews are at risk if these parts fail due to age or improper production and that HCA and other contractors have had significant problems in producing acceptable parts. While these factors alone could justify a determination of unusual and compelling urgency for a sufficient number of assemblies to resupply the agency's depleted stocks, the agency fails to explain the procurement's urgency in the face of the fact that the original justification and approval was executed in June 1986, but the award was not made until 8 months later, on March 30, 1987.

Further, according to the Northrop contract, the first unit is not to be delivered until 16 months after the contract award, in July 1988, and the final units are not to be delivered until more than 4 years after award. While it appears from the record that these parts are difficult to manufacture and, therefore, it is reasonable that there would be a delay between the order of the first parts and their delivery, we do not think that the time lapses here are compatible with the urgency determination, which was on a purchase request specifying that delivery was needed in July 1986. In this respect, an urgency justification does not support the procurement of more than a minimum quantity needed to satisfy the immediate urgent requirement and should not continue for more than a minimum time. Command, Control and Communications Corp., B-210100, Oct. 12, 1983, 83-2 CPD Para. 448. What is justifiable initially may soon cease to be justifiable, particularly in light of the obvious advantages to be gained from competitive pricing and the wisdom, from a managerial point of view, of developing more than one source. International Harvester Co., B-205073, May 14, 1982, 82-1 CPD Para. 459.

Here, the agency has offered no explanation of the relationship of the award date and the delivery schedule to its urgency determination contained in its justification and approval. In the absence of such an explanation, we cannot find that its determination to make a sole source award for the entire quantity of parts was reasonable. We therefore sustain the protest and recommend that the Air Force review this procurement and determine which of 317 right landing gear doors and 246 left landing gear doors are in fact urgently required. It should accept that number under the current contract with Northrop. The Northrop contract should be terminated as to those items not properly within the urgency determination. The remaining doors should be the subject either of a fully competitive procurement or of one which uses less than fully competitive procedures but which is properly justified under CICA. Further, in its urgency justification, the Air Force says that it plans to improve the drawings for these parts, particularly with respect to loft/contour data, and purchase master tooling from Northrop for a number of honeycomb construction spare parts. We recommend that these actions be taken promptly so that they may enhance competition for the remaining non- urgent parts.

Finally, we find that Honeycomb is entitled to recover the costs of filing the protest, including attorney's fees. Bid Protest Regulations, 4 C.F.R. Sec. 21.6(e) (1987). The protester should submit its claim for such costs directly to the agency. 4 C.F.R. Sec. 21.6(f).

The protest is sustained.