Matter of: Essex Electro Engineers, Inc. File: B-250437 Date: January 28, 1993
B-250437: Jan 28, 1993
PROCUREMENT Noncompetitive Negotiation Use Justification Industrial mobilization bases PROCUREMENT Noncompetitive Negotiation Use Justification Urgent needs Agency's decision to limit urgent noncompetitive procurement for diesel engine electric power plants to one source was reasonable and not the result of a lack of advance procurement planning where the power plants were urgently needed to correct an unacceptable level of military readiness in the Patriot Missile System. The power plants were readily available from only one source and. Any delay on the part of the agency in initiating the acquisition was the result of reasonable deliberation that resulted in limiting the acquisition to the minimum number of power plants necessary to satisfy the urgent requirements.
Matter of: Essex Electro Engineers, Inc. File: B-250437 Date: January 28, 1993
PROCUREMENT Noncompetitive Negotiation Use Justification Industrial mobilization bases PROCUREMENT Noncompetitive Negotiation Use Justification Urgent needs Agency's decision to limit urgent noncompetitive procurement for diesel engine electric power plants to one source was reasonable and not the result of a lack of advance procurement planning where the power plants were urgently needed to correct an unacceptable level of military readiness in the Patriot Missile System, the power plants were readily available from only one source and, any delay on the part of the agency in initiating the acquisition was the result of reasonable deliberation that resulted in limiting the acquisition to the minimum number of power plants necessary to satisfy the urgent requirements.
DECISION Essex Electro Engineers, Inc. protests a sole-source award to Lechmotoren GmbH of letter contract No. DAAK01-92-C-0231 by the Department of the Army, Aviation and Troop Command (ATCOM) for 14 150-kilowatt (KW) diesel engine electric power plants (EPP) for use in the Patriot Missile System.
We deny the protest.
The Army's requirement for the diesel engine EPPs arose out of the poor operational performance of the gas turbine engine EPPs used during the Desert Shield/Storm Operation in Southwest Asia from August 1990 through March 1991. The EPP is the portable electric power source used to operate the Patriot System when a fixed power source is unavailable.
Since the Army relies upon the Patriot System to monitor and defend against enemy missile attacks, the Patriot System must have a reliable power source 100 percent of the time. Therefore, the EPP was designed with two generator sets so that the EPP would always have an alternate generator set on which it could rely should the one providing power develop problems. During Operation Desert Storm, the Army did not have a fixed power source and had to rely on the EPPs for power 24 hours a day.
Under these conditions, the Army began experiencing extreme problems with the operation of the gas turbine engines in the EPPs; the failure rate of the engines was in excess of 51 percent. This was unacceptable to the Army in terms of military readiness and, the Army reports, it was required to take extraordinary steps to ensure that power was supplied to the Patriot System throughout Operation Desert Storm.
Shortly after Operation Desert Storm, in July 1991, the Army convened a Joint Working Group, referred to as the "Tiger Team," to consider all the alternative remedies to the EPP performance problem. The Tiger Team's review of remedies included, but was not limited to, (1) improvements to the existing gas turbine engine EPP; (2) development of a new EPP; and (3) acquisition of a commercially available diesel engine EPP that could satisfy the current EPP specifications.
On August 13, 1991, as part of the Tiger Team's review of alternative remedies, the Army conducted a market survey through the Commerce Business Daily (CBD) requesting responses from contractors with a commercially available diesel engine EPP suitable for replacing the gas turbine engine EPP. The Army received 19 responses from both domestic and foreign firms. Essex did not respond to this announcement. Although none of the responses indicated that there was a commercially available EPP on the market that met every one of the EPP requirements, Lechmotoren's response indicated that it was currently producing a diesel engine EPP that, with few exceptions, met the EPP requirements. In fact, this model was successfully in use with the German Patriot Missile System, and was successfully used by a United States Patriot unit deployed in Israel during Operation Desert Storm. The Tiger Team concluded that the Army could use the Lechmotoren EPP immediately, without modification, and that this was the only EPP readily available to cure the Army's readiness problem. The Tiger Team's recommended solution was to purchase the Lechmotoren diesel engine EPPs.
On October 31, the Tiger Team presented its findings and recommendation to ATCOM. ATCOM accepted the Tiger Team's recommendation and decided to replace the current fleet of 58 gas turbine engine EPPs, plus spares, with Lechmotoren's diesel engine EPPs. ATCOM determined that this acquisition was urgent because the poor performance experienced during Operation Desert Storm demonstrated that the current EPP fleet could not be maintained at an acceptable level of military readiness to support the Patriot System in wartime. Since this requirement was urgent and Lechmotoren was the only source that could satisfy the agency's immediate requirement, ATCOM determined that this acquisition should be a noncompetitive one pursuant to the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. Sec. 2304(c)(2) (1988).
Between October 1991 and July 1992, the Army staffing process, up through the level of the Under Secretary, reviewed ATCOM's decision and questioned the agency's urgent need to replace the entire EPP fleet. The Army determined that the urgent acquisition should be limited to the number of EPPs needed to support a contingency force deployment in a "Go To War" scenario, such as Operation Desert Storm. A contingency force requires two Patriot battalions; the number of EPPs needed to support two battalions is 12, plus 1 spare EPP per battalion, for a total of 14 EPPs. The Army also determined that the ultimate replacement of the entire fleet of gas turbine engine EPPs with diesel engine EPPs could be done over a longer time period that would allow for product development and, therefore, was appropriate for competitive procurement procedures.
On September 3, ATCOM awarded a letter contract to Lechmotoren for 14 diesel engine EPPs. Under the contract, delivery of the units is to begin in April 1993 and be completed in June 1993. ATCOM also began planning a competitive procurement for a diesel engine EPP to replace the entire fleet of gas turbine engine EPPs; ATCOM projects issuance of this solicitation on January 31, 1993.
Essex protested to our Office on September 21, 1992, alleging that ATCOM's acquisition of EPPs for a contingency force amounts to an acquisition for EPPs to be placed in storage for use only in the event of some future war; Essex argues that there cannot be an unusual and compelling urgency for such a procurement. Essex also alleges that the length of time the Army waited before making the award shows that the agency's urgency representation is insincere and, even if urgent circumstances truly do exist, the urgency was caused by the agency's inadequate procurement planning. In this regard, Essex alleges that ATCOM knew as early as 1989 of the need to replace the gas turbine engine EPPs and had an existing purchase description from which it could have prepared a solicitation and initiated the development process. Essex argues that the sole-source award cannot be justified here since the urgency would not have arisen if the agency would have promptly initiated competitive procedures.
Under CICA, an agency may use other than competitive procedures to procure goods or services where the agency's requirements are of such an unusual and compelling urgency that the government would be seriously injured if the agency was not permitted to limit the number of sources from which it seeks bids or proposals. 10 U.S.C. Sec. 2304(c)(2). This authority is limited by the requirement of 10 U.S.C. Sec. 2304(e) that agencies seek offers from as many potential sources as is practicable under the circumstances. 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. Forster Enters., Inc., B-237910, Apr. 5, 1990, 90-1 CPD Para. 363; Logics, Inc., B-237411, Feb. 1, 1990, 90-1 CPD Para. 140; Factech Corp., B-225989, Mar. 26, 1987, 87-1 CPD Para. 350. Award of a contract using other than competitive procedures, however, may not be made where the urgent need for the requirement has been brought about by a lack of advance planning by contracting officials. 10 U.S.C. Sec. 2304(f)(5)(A) (1988); see K-Whit Tools, Inc., B-247081, Apr. 22, 1992, 92-1 CPD Para. 382; Service Contractors, B-243236, July 12, 1991, 91-2 CPD Para. 49.
The record shows that ATCOM reasonably determined that an unusual and compelling urgency existed that justified a sole-source award to Lechmotoren. Also, there is no evidence of a lack of procurement planning by the agency.
Prior to Operation Desert Storm, the performance of the gas turbine EPP fleet was apparently adequate to sustain the readiness of the Patriot System. However, once the Patriot System was deployed during Operation Desert Storm, the EPPs were relied upon to supply power 24 hours a day and the gas turbine engines began failing at such a high rate that the military readiness of the Patriot System was seriously threatened under wartime conditions. In order to ensure that the Patriot System had a continuous power supply, the Army had to institute extraordinary supply and maintenance procedures to ensure the timely repair of the failing EPPs. These procedures included moving numerous gas turbine EPPs from the remaining fleet to Southwest Asia to use as backups, borrowing generators from the United Arab Emirates and connecting them to power converters in order to provide an acceptable power source, and using the Lechmotoren diesel engine EPPs. Although the Lechmotoren EPP performed without incident, the agency wants to avoid again having to engage in those extraordinary efforts which in any event it does not consider to be an appropriate approach for military readiness requirements. Thus, until it can acquire some number of diesel engine EPPs, a high risk of failure in future wartime scenarios remains. We therefore think it is reasonable for the agency to consider this requirement to be urgent. See Dayton-Granger, Inc., B-245450, Jan. 8, 1992, 92-1 CPD Para. 37 (acquisition to maintain military readiness of combat equipment reflects an unusual and compelling urgency); Factech Corp., supra (same).
Although the Army expects to consign the diesel engine EPPs to a storage depot upon delivery, this does not negate the urgency of the acquisition. According to the Army, upon consignment to a depot, the EPPs will be maintained in a state of readiness for a contingency deployment and when a Patriot System contingency force is deployed, the EPPs will be deployed simultaneously to that same location for immediate use by the Patriot unit. Under this plan, the Army will deploy the EPPs in a contingency situation regardless of which Patriot unit is deployed. This plan, as allowed for by this acquisition, addresses the urgent military readiness problem; although the 14 EPPs will not immediately solve the readiness problem for any particular Patriot unit, it will solve the readiness problem for a contingency force deployment in a wartime scenario.
The record further supports the agency's determination that Lechmotoren was the only firm which could quickly supply a diesel engine EPP for a contingency force while ATCOM conducted a competitive procurement for the remaining requirement. The Lechmotoren diesel engine EPP is produced commercially and can be delivered within months of award. Its use during Operation Desert Storm demonstrated that it could support the Patriot System successfully without any modification. The Army's market survey, and its general knowledge of the products available from sources not responding to the survey, showed that there was no other diesel engine EPP that could support the Patriot System without further development. Although the agency was aware that there are a number of sources which could develop an acceptable diesel engine EPP, its experience shows that development would take from 3 to 5 years after award before delivery could occur, which would not address the urgent need for a contingency force that can maintain military readiness.
Furthermore, Essex does not allege that it, or any other source, has a nondevelopmental product which would meet the agency's urgent requirements. Accordingly, in light of ATCOM's decision to limit this acquisition to the minimum quantity necessary to address the current deficiency in military readiness, ATCOM reasonably restricted the procurement to Lechmotoren. See Forster Enters., Inc., supra (sole-source award for 100 KW generators was justified where only one contractor had completed First Article Testing at the time the urgent requirement arose); Logics, Inc., supra (solesource award for the only readily available product that would meet agency's urgent requirement is justified even where the agency has received proposals for development of an acceptable product); Factech Corp., supra (sole-source award for the only readily available product is justified where the award is limited to a quantity that would satisfy the agency's urgent requirements).
The agency's urgent requirement here was not due to a lack of advance procurement planning. Although ATCOM, as early as 1989, had been exploring the possibility of replacing the gas turbine engine EPPs with diesel engine EPPs for reasons of cutting operating and maintenance costs, there was no clear prior need for replacement as the readiness of the Patriot System was not determined to be in jeopardy. In fact, no decision to replace the gas turbine engine EPPs was made, nor considered warranted, until military readiness became a critical concern as a result of the EPP's poor performance under wartime conditions. Within months of the conclusion of Operation Desert Storm, the agency had assembled the Tiger Team to examine the options. Immediately after the Tiger Team presented its recommendation, ATCOM made the decision to replace the EPPs. This decision then received several months of high level review, which resulted in significant modifications before the ultimate decision was made to procure the minimum quantity of EPPs necessary to address the unacceptable level of military readiness and to proceed with a competitive solicitation for the ultimate replacement of the gas turbine EPP. ATCOM made the urgent sole-source award within days of receiving funds for the acquisition, and is also proceeding to complete a competitive solicitation for the replacement of the current EPP fleet.
The total time elapsed from the Tiger Team's recommendation to go with the diesel engine EPP to the date of award was less than 1 year, and the total time from recommendation to the initial delivery is 18 months.
Although Essex argues that this is a long time frame and should itself demonstrate that inadequate planning created the urgent requirement, the agency's activity during this period actually evidences a detailed and continuous planning and review process. We think that the Army acted reasonably here in exploring the alternative remedies for curing the weakness in a technically advanced, strategic defense system and limiting its procurement decision to the minimum quantity necessary to satisfy the urgent requirement, see generally Factech Corp., supra, and that the time required for this deliberative process was reasonable. The resulting delay in award therefore does not indicate, as Essex alleges, that ATCOM's determination of urgency was either insincere or unreasonable.
The protest is denied.