B-241010, B-241010.2, Dec 19, 1990, 70 Comp.Gen. 142

B-241010, B-241010.2, Dec 19, 1990, 70 Comp.Gen. 142

PROCUREMENT - Noncompetitive Negotiation - Contract awards - Sole sources - Propriety Protest challenging sole-source award of two interim contracts for automated data processing services based on unusual and compelling urgency is denied where, as a result of protests filed against long term contract, contracting agency makes a series of short-term awards to incumbent whom agency reasonably believes to be only firm capable of timely fulfilling agency's requirements.

Attorneys

Unified Industries, Inc.:

Unified Industries, Inc. protests the issuance of modification Nos. 14 and 15 to contract N00600-85-D-0477. The modifications were issued to RGI, Inc. by the Department of the Navy for continued performance of RGI's 1985 contract for automated data processing (ADP) services for the Naval Military Personnel Command (NMPC). Unified argues that the modifications were improperly issued on a sole-source basis and that the Navy erred in not soliciting an offer from Unified.

We deny the protests.

On February 27, 1989, the Navy issued request for proposals (RFP) No. N00600-89-R-1017 for the acquisition of ADP support services for the NMPC. The RFP called for an indefinite quantity, indefinite delivery, time and materials contract and called for performance to begin on October 1, 1989, for a 90-day base period with four 1-year options. The procurement required the contractor to continue to develop and maintain the source data system (SDS), a worldwide automated pay and personnel management system. Five proposals were received. Both RGI and Unified were found technically acceptable, but with some weaknesses. Award on initial offers was made to RGI as the technically superior, low evaluated cost offeror. Unified subsequently protested the award to RGI. Unified argued that the Navy improperly evaluated offers. On April 2, 1990, we sustained Unified's protest because the record did not demonstrate that the award on initial offers had been made to the low-cost offeror. recommended solicitation of best and final offers. Unified Indus. Inc., B-237868, Apr. 2, 1990, 90-1 CPD Para. 346. On April 9, RGI filed a request for reconsideration. On August 13, 1990, we affirmed our decision. /1/ RGI, Inc.-- Recon., B-237868.2, Aug. 13, 1990, 90-2 CPD Para. 120. While the reconsideration was pending, on July 16, Unified filed a second protest in which it asserted that the technical evaluation which resulted in a finding that RGI was technically superior was the result of bias and a conflict of interest. The Navy subsequently advised us that it was investigating this matter and intended to conduct a new evaluation with a new evaluation panel. Based on this proposed corrective action, we dismissed the protest as academic on August 23, 1990. Since award on the follow-on contract was not made by October 1, 1989, and performance under the last option under the original contract expired on September 30, 1989, the Navy issued modification No. 11 on December 11, extending RGI's 1985 contract through December 31, 1989. Modification Nos. 12 and 13 extended the contract to March 31, 1990, and June 30, 1990, respectively. Modifications Nos. 14 and 15, which Unified protests here, extended the contract to September 30, 1990, and December 31, 1990, respectively. Modification No. 15 contains three 1 month options, extending contract coverage through March 1991.

The modifications are supported by justifications and approval (J A) for the contract extensions. The J A cites 10 U.S.C. Sec. 2304(c)(2) (1988), providing for noncompetitive awards on the basis of unusual and compelling urgency. With regard to modification No. 14, the J&A, signed July 17, 1990, stated that if the contract was not extended, the support of SDS programs would not be provided and this would adversely impact support to Navy pay and personnel offices in the continental United States. states that providing the services in-house is not feasible due to manpower shortages and that use of an alternative source is also not feasible due to high transition costs and the critical need to maintain continuity of services. The J&A further states that after the protest is resolved, the new contract will be competitively awarded. The J&A also states that the services possibly could be performed in-house. The J&A for modification 15, signed September 27, 1990, and also based on urgent circumstances, states that the support to Navy pay and personnel offices will be adversely affected and will prevent SDS from supporting ongoing mission critical requirements for operation "Desert Shield." It further states that any interruption of services cannot be tolerated at this time. The J&A also advises that the Navy expects to award the new contract by January 1991.

The protester argues that the two modifications in question are improper sole-source awards to RGI. Specifically, the protester argues that the Navy improperly failed to solicit a proposal from it since, in conducting a procurement using other than full and open competitive procedures pursuant to 10 U.S.C. Sec. 2304(c)(2), agencies are required to solicit proposals from as many potential sources as is practicable under the circumstances. Unified points out that the Navy had previously found it technically acceptable under the RFP issued for the follow-on contract to perform identical services. In addition, Unified states that the base period called for under that RFP was 90 days which is the same as the period of performance under each of the modifications being protested. The firm also states that it had developed a detailed transition plan during the pendency of its earlier protest which would enable it to assume responsibility for the work in question within 1 week without disruption of any of the required services. In support of this latter assertion, Unified has submitted an affidavit executed by its vice president which describes in detail the extent and nature of the firm's transition plan and a copy of the plan. Finally, Unified argues that the agency, given the prior and current status of the follow-on acquisition process, was and continues to be aware of its ongoing requirement for the services in question and, consequently, had sufficient time in which to plan and conduct a limited competition for the work called for under the modifications. In this respect, Unified states that the Navy was well aware of the firm's continuing interest in competing for the work.

Under the Competition in Contracting Act of 1984 (CICA), an agency may use other than fully 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 bids or proposals. 10 U.S.C. Sec. 2304(c)(2). However, this authority does not automatically justify a sole-source award. Rather, the authority is limited by 10 U.S.C. Sec. 2304(e), which requires agencies to request offers from as many potential sources as practicable under the circumstances. Consequently, sole-source awards are proper only where the agency reasonably believes that only one firm promptly and properly can perform the required work, due to the urgent circumstances. Data Based Decisions, Inc., B-232663; B-232663.2, Jan. 26, 1989, 89-1 CPD Para. 87.

The Navy argues that it reasonably made award of the two modifications to RGI on a sole-source basis. Specifically, the agency asserts that only RGI as the incumbent was in position to properly perform the work and that Unified could not meet the agency's requirements without a lengthy transition and could not provide the agency with the required services necessary to timely and adequately render contract performance. The Navy asserts that the possibility that Unified might not successfully complete its transition in the 1 week in which the firm states it can accomplish it, posed an unacceptable risk to the SDS program and mission critical requirements. In this regard, the Navy also states that it was unaware of Unified's 1-week transition plan prior to the time when Unified filed its current protest. Finally, the agency alleges that the delays occasioned by the various protests filed by Unified in connection with the follow-on procurement rather than lack of advanced planning resulted in the agency being unable to solicit a proposal from Unified.

While we are concerned about the fact that the Navy has made noncompetitive awards to RGI for more than a year, we decline, for the reasons stated below, to find that the agency has acted unreasonably here. Under CICA, agencies are required in certain specified circumstances to either stay the award of a contract or suspend performance of a contract which has been awarded during the pendency of a protest to our Office. 31 U.S.C. Sec. 3553 (1988). The fact that a protest has been filed in our Office, however, does not necessarily affect an agency's continuing need for the goods or services to be acquired, and frequently a protested procurement action is timed to provide for the award of a contract at or near the time when a prior contract is due to expire. Under these circumstances, agencies have typically satisfied their continuing need for the goods or services in question by executing short-term modifications to the predecessor contract. In our view, such action on the part of a contracting agency is consistent with the overall purpose of CICA, since it preserves for the protester an opportunity to obtain meaningful relief in the event that we sustain the protest.

Given the nature of the protest process, agencies are faced with uncertainty regarding the amount of time necessary to reach an ultimate resolution of the matter; a protest filed in our Office can take up to 90 working days to be resolved and, if sustained, an indeterminate amount of additional time may be necessary to effectively implement any corrective action recommended by our Office. During this time, agencies must have some method by which they can reliably meet ongoing requirements and at the same time preserve the opportunity for meaningful relief for the protester.

We conclude that the particular circumstances of this acquisition provided the agency with a reasonable basis to make award of the subject modifications on a sole-source basis to RGI. We view the agency's initial three extensions of the subject contract (modification Nos. 11, 12 and 13, which are not at issue in this case) as reasonably necessary in order for the agency to continue to receive the required services during the pendency of Unified's initial protest. In this regard we point out that all three of those modifications were executed prior to our initial decision on April 2, 1990, and that, until receipt of our first decision, the agency had no basis to question the validity of its initial determination to make award of the follow-on contract to RGI. As to modifications Nos. 14 and 15, both were executed after the agency's receipt of our first decision sustaining Unified's initial protest, and during the time when the Navy was determining what course to take in response to our recommendation for corrective action. In addition, in response to Unified's second protest, the Navy agreed to take corrective action. However, this further delayed the follow-on acquisition because the corrective action involved a review of the agency evaluators' apparent conflict of interest, a matter necessitating investigation by the Navy Inspector General and requiring that the evaluation panel be replaced.

We also do not think that the agency acted unreasonably in making award of the modifications to RGI without first soliciting a proposal from Unified. In this regard, we think the agency, based upon the requirements of the follow-on RFP as well as the proposals submitted in response to that RFP, reasonably concluded that a transition period of approximately 3 months would be necessary in order for another contractor to achieve full performance of the requirement. We note as well that the Navy was unaware of Unified's 1-week transition plan at the time it executed the protested modifications. Given the time frame of the initial Unified protests as well as our recommendation for corrective action, we think the agency's action with respect to the modifications reflected a good faith effort to limit the award of noncompetitive contracts to the period of time directly related to the original protest and the time required for the agency to implement our recommendation. In taking such action, we think that the Navy acted in a fashion which permitted it to acquire necessary services while at the same time preserving for the protester an opportunity to receive meaningful relief in the event that the protest was sustained.

In these circumstances, the demands of 10 U.S.C. Sec. 2304(e) to obtain competition "to the maximum extent practicable" did not require that an agency conduct what would amount to a limited competitive acquisition for requirements that were reasonably expected to be both short-term and uncertain as to duration. Thus, we think that the Navy acted reasonably in extending RGI's contract. We therefore deny the protests.

/1/ RGI filed a second request for reconsideration (B-237868.4) which we denied on November 13, 1990.