B-246849; B-246952, Mar 31, 1992

B-246849,B-246952: Mar 31, 1992

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Protest challenging proposed sole-source award to a mobilization base producer on the basis that item sought under solicitation is not critical is denied where record shows that the item was properly classified as critical. 2. Protest that the agency's decision to make a sole-source award to one of two mobilization base producers rather than allowing both producers to compete for the award is denied where the record shows that the decision to restrict the award to one firm was reasonably based on the agency's need to keep a producer active. Martin argues that since it is also a mobilization base producer. The Army reports that the signal is considered to be a critical item with mobilization requirements from the Department of the Navy and the United States Marine Corps.

B-246849; B-246952, Mar 31, 1992

DIGEST: 1. Protest challenging proposed sole-source award to a mobilization base producer on the basis that item sought under solicitation is not critical is denied where record shows that the item was properly classified as critical. 2. Protest that the agency's decision to make a sole-source award to one of two mobilization base producers rather than allowing both producers to compete for the award is denied where the record shows that the decision to restrict the award to one firm was reasonably based on the agency's need to keep a producer active.

Attorneys

Lance Ordnance Company Inc.; Martin Electronics, Inc.:

Lance Ordnance Company Inc.; Martin Electronics, Inc. protest the proposed sole-source award of a contract to Kilgore Corporation under request for proposals (RFP) No. DAAA09-92-R-0017, issued by the United States Army Armament, Munitions and Chemical Command, for MK124 smoke and illumination signals. Both protesters object to the agency's decision to limit competition to only one of the two mobilization base producers. Lance contends that the restrictive solicitation deprives the firm of the ability to compete for the contract; therefore, the solicitation should be canceled and should be reissued on an unrestricted basis. Martin argues that since it is also a mobilization base producer, it should be allowed to compete with Kilgore for the award of the contract.

We deny the protests.

The Army reports that the signal is considered to be a critical item with mobilization requirements from the Department of the Navy and the United States Marine Corps. The Army synopsized a notice of the procurement in the Commerce Business Daily on September 6, 1991. The synopsis stated that the procurement was a mobilization base acquisition restricted to two firms, Martin and Kilgore. Lance then filed a protest with our Office. In response, the contracting officer, on September 23, decided to reconsider the agency's acquisition strategy; the protest was dismissed as premature. In its review, the Army found that with respect to current contracts Kilgore would be completing its contract for this item a year and half sooner than Martin. /1/ The Army therefore decided that it should make a sole source award to Kilgore in order to keep Kilgore in production and active for mobilization needs. On November 27, 1991, the Army issued the solicitation for a quantity of 81,948 MK124 smoke and illumination signals with competition restricted on a sole-source basis to Kilgore. These protests followed.

Lance's Protest

Lance contends that the proposed sole-source award to Kilgore is improper because the smoke and illumination signals are not critical items that need to be manufactured only by mobilization base producers.

Military agencies need not obtain full and open competition where a procurement is conducted for industrial mobilization purposes and may use other than competitive procedures where it is necessary to award the contract to a particular source or sources. Oto Melara, S.p.A., B-225376, Jan. 6, 1987, 87-1 CPD Para. 15. Since decisions as to which and how many producers should be included in the mobilization base involve discretionary judgments by the military agencies, Minowitz Mfg. Co., B-228502, Jan. 4, 1988, 88-1 CPD Para. 1; Right Away Foods Corp., B-219676.2; B-219676.3, Feb. 25, 1986, 86-1 CPD Para. 192, we will question those decisions only if the record shows that the agency has abused its discretion. Martin Elecs., Inc., 65 Comp.Gen. 59 (1985), 85-2 CPD Para. 504.

The crux of Lance's contention-- that the item is not critical-- rests on its belief that the equipment required to manufacture the item are of a "general type configuration and do not require any abnormal or inordinate lead time or tooling." However, the determination of whether an item is critical is made on an assessment of a number of factors, including consideration of whether the item is essential for combat effectiveness, the existence of sustained mobilization requirements, and the general availability of the item. The protester's argument ignores the fact that the item here is not generally available and that the Army needs to maintain vital suppliers in business to ensure the item's availability in the event of a national emergency. Further, the item has certain attributes which in turn result in its characterization as critical. For example, the item must be manufactured on equipment which is designed and tooled for production of hazardous items and must be equipped to meet Department of Defense explosive safety requirements; in addition, the contractor must use government-furnished gauge and test equipment. Moreover, personnel manufacturing the item must be trained and experienced in loading and handling explosive materials. Here, the agency has not determined that Lance or other contractors do not have the capability to manufacture the signals; rather, the Army has determined that it is necessary that the agency maintain its mobilization base for this item. The fact that Lance disagrees with the agency's judgment and argues that the item is not critical does not demonstrate that the agency abused its discretion.

Martin's Protest

Martin contends that the Army's decision to make a sole-source award to Kilgore is improper because by restricting the competition in this way rather than allowing both mobilization base producers to compete for the award, the Army is deviating from normal procurement practices. Martin also argues that the agency's justification that the award to Kilgore is necessary to keep the firm as a vital supplier is "tainted and must be questioned," since Kilgore currently has a contract to supply the signals.

The Army prepared a justification and approval (J&A) for the use of other than full and open competition as required by the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. Sec. 2304(f) (1988). The J&A cited the authority of 10 U.S.C. Sec. 2304(c)(3), which allows the head of a military agency to use other than competitive procedures in awarding a contract to a particular source or sources when such action is necessary to maintain a facility, producer, manufacturer, or other supplier available for furnishing property or services in case of a national emergency or to achieve industrial mobilization.

The J&A explains that currently Martin and Kilgore are the only two mobilization producers of the item and that both have ongoing production contracts. The document further notes that Kilgore will assume inactive status unless Kilgore receives award of sufficient quantities to keep it in production. Since the loss of Kilgore's facilities and critical skills would cause a delay in furnishing the item at the rate required for mobilization, the agency decided to restrict the competition to Kilgore in order to ensure availability in the event of national emergency.

Decisions whether facilities must be kept active or whether mobilization needs will allow certain facilities to be inactivated and the work force released are the responsibility of the military agencies. This Office will question those decisions only if the record shows that the agency has acted unreasonably. EMCO, Inc., B-244649, Oct. 28, 1991, 91-2 CPD Para. 382.

Here, the agency has supplied a "constraining rate analysis" /2/ which reveals a need for two mobilization base producers. For this reason, the agency decided to restrict competition for this contract to Kilgore rather than to Kilgore and Martin because of the status of their current contracts. Specifically, deliveries under Kilgore's contract are scheduled to end 1 year before deliveries under Martin's contract, and Kilgore's current contract calls for a significantly smaller quantity of signals than Martin's current contract. Since the agency's decision to restrict the award was based on the premise that this action was necessary to maintain the maximum number of active producers, we find the position reasonable and in accordance with 10 U.S.C. Sec. 2304(c)(3).

The protests are denied.

/1/ Some changes in the ongoing contract schedules have taken place since the Army initially reviewed its acquisition strategy: for example, delivery under Martin's contract was extended to January 1994 and delivery under Kilgore's contract was extended to January 1993. As a result, Kilgore will be completing its contract for this item 1 year before Martin.

/2/ This analysis compares the maximum capability of the mobilization base producers to the actual mobilization requirements to determine if there is a mobilization base shortfall. The figures contained in the analysis are confidential.