Matter of: General Electric Aerospace Electronic Systems File: B-250514 Date: February 4, 1993
B-250514: Feb 4, 1993
PROCUREMENT Bid Protests GAO procedures Protest timeliness 10-day rule Adverse agency actions Where grounds of protest concerning alleged lack of meaningful discussions are based on information contained in report filed by contracting agency in response to the protest. Comments raising these new grounds of protest are untimely when filed by the protester more than 10 working days after it received the agency report. The IRST is intended for installation on the Air Force's next generation fighter. The program is an outgrowth of the Advanced Tactical Fighter (ATF) program. The Air Force determined that the IRST requirements were achievable. The Acquisition Plan also stated that "little or no production data will be provided.".
Matter of: General Electric Aerospace Electronic Systems File: B-250514 Date: February 4, 1993
PROCUREMENT Competitive Negotiation Offers Evaluation Cost data Request for proposals for research and development effort that only contained a single reference to evaluation of "overall program" costs did not reasonably contemplate the evaluation of present and future anticipated costs of rights in numerous technical data items in components not yet developed. PROCUREMENT Bid Protests GAO procedures Protest timeliness 10-day rule Adverse agency actions Where grounds of protest concerning alleged lack of meaningful discussions are based on information contained in report filed by contracting agency in response to the protest, comments raising these new grounds of protest are untimely when filed by the protester more than 10 working days after it received the agency report.
DECISION General Electric Aerospace Electronic Systems (GE) protests the award of a cost-plus-fixed-fee contract to Martin Marietta Electronic Systems (MMES) under request for proposals (RFP) No. F33615-92-R-1021, issued by the Department of the Air Force for the development and demonstration of an Advanced Infrared Search and Track (IRST) avionics subsystem for use on military aircraft. GE principally contends that the agency, during its cost evaluation, failed to upwardly adjust or otherwise penalize MMES' cost proposal which allegedly "offered" the agency only "limited rights" in various technical data to be developed under the contract.
We deny the protest in part and dismiss it in part.
By way of background, the IRST is intended for installation on the Air Force's next generation fighter, the F-22. The system design has four major components and presents unique technical challenges because it must operate within a low observable design frame at supersonic speed. The program is an outgrowth of the Advanced Tactical Fighter (ATF) program. Under that program, both GE and MMES, effectively serving in a teaming arrangement, had subcontracts to build an IRST sensor subsystem. Prior to the conclusion of this phase, the agency determined that technical, cost, and schedule risks for the subsystem did not then justify inclusion of the IRST in the ATF avionics system. To reduce the risk of integrating the IRST into the ATF, the Air Force then initiated a 9-month technical effort by tasking both GE and MMES to demonstrate their ability to meet stringent requirements in a laboratory environment. Based upon the results of this phase, the Air Force determined that the IRST requirements were achievable. The Acquisition Plan, adopted November 25, 1991, generally contemplated a research and development effort, but recognized that part of the responsibilities of the successful contractor under the proposed contract would be to "develop and document plans and requirements for Engineering and Manufacturing Development (EMD)," including EMD planning data. While recognizing that EMD planning data would be generated, the Acquisition Plan also stated that "little or no production data will be provided."
The RFP, issued April 3, 1992, provided that the agency would select the best overall offer based on technical merit and cost with technical merit more important than cost. The government specifically reserved the right to award the contract to other than the offeror with the highest technical merit or the offeror with the lowest cost. The RFP's statement of work included the development and documentation of plans and requirements for EMD, including defining the system concept design to meet various specifications and requirements.
The RFP contained the following technical evaluation factors in descending order of importance: (1) soundness of approach (with 7 listed subfactors or "elements"); (2) understanding the problem (with 5 subfactors); (3) compliance with requirements (with 5 subfactors); and (4) special technical factors (with 5 subfactors). Concerning cost, the RFP stated that cost proposals would be evaluated for reasonableness, realism, and completeness. The RFP further stated as follows:
"In some instances, the Government may perform a Government Cost Review of all pertinent costs associated with this acquisition and overall pro- gram to which it pertains. Cost/price, inclusive of proposed acquisition costs, fly-away cost estimates, and the Government's Most Probable Cost [(MPC)] evaluation, will be considered in determining the offer most advantageous to the Government."
The RFP also contained a clause entitled "Preaward Notification of Data Rights" which required offerors, as relevant here, "to notify the Government of any asserted restrictions" on the government's right to use or disclose technical data concerning items, components, or processes that have been developed exclusively at private expense or have been developed in part at private expense. In addition, the RFP contained several standard clauses, discussed below, relating to data rights as well as a provision entitled "List of Data To Be Provided With Other Than Unlimited Rights" which required each offeror to list technical data to be furnished with other than unlimited rights.
Proposals were received from GE and MMES by the May 19, 1992, initial closing date. In its initial proposal, GE identified certain technical data in which it asserted limited rights; MMES' list of data in which it asserted limited rights was missing from its initial proposal. An initial evaluation was conducted by the Source Selection Evaluation Team (SSET). As a result of a deficiency in its proposal, GE was assigned an initial technical rating of unacceptable; MMES was assigned an initial technical rating of exceptional. Both proposals were included in the competitive range, and Clarification Requests (CRs), identifying the aspects of each proposal which required clarification, and Deficiency Reports (DRs), identifying deficiencies in each proposal, were sent to both offerors. MMES was specifically advised to furnish its list of data in which it asserted limited rights.
Both offerors submitted responses to the technical inquiries which were again evaluated. Discussions on cost and contract terms continued until best and final offers (BAFO) were requested. Both offerors then submitted BAFOs. GE's technical rating increased from unacceptable to marginal; the technical rating of MMES remained unchanged at exceptional. In addition, the SSET performed a risk assessment in connection with the technical evaluation. GE's proposal was assigned an overall risk rating of "high," while MMES' proposal was assessed as a "moderate" risk.
Cost proposals were evaluated by employing an MPC analysis which considered labor and overhead rates obtained from field pricing organizations, as well as cost risk and other government costs. MMES proposed a total program cost of $51,330,898 in its BAFO. Based upon projected labor rates and indirect expense rates as well as cost risk, the agency estimated the cost for MMES to complete the proposed effort at $50.7 million. The addition of other government costs in the amount of $11 million raised the estimated cost of the MMES proposal to $61.7 million. GE proposed costs of $39,637,243. The agency's estimates of the costs of GE performance was $46 million, due to increased labor and indirect expense rates, and increased cost risk. The addition of $10.7 million in other government costs gave GE a most probable cost of $56.7 million.
The results of the technical evaluation, risk assessment, and cost evaluation costs were provided to the Source Selection Authority (SSA) in a briefing on August 19, 1992. The SSA selected MMES for award. The contract as awarded contained the "List of Data To Be Provided With Other Than Unlimited Rights," in which MMES had asserted "limited rights" with respect to 33 design data items. This protest followed.
In its initial protest, GE complained that the "Air Force entered into a contract with MMES that permitted MMES to retain rights in the data that MMES [will develop] under this contract." GE argued that since the data was intended to be used in follow-on programs, including EMD and produc- tion purposes, the Air Force should have "ascrib[ed] an additional cost" to MMES' proposal during the agency's cost analysis. According to GE, the value of the "retained rights" was approximately $25 million. In its lengthy comments, principally devoted to this protest ground, GE argues that the Air Force "accepted" these data limitations when it executed the contract and that these design data items represent critical details of the IRST system-allegedly more than 50 percent of the engineering effort needed to complete the requirements.
GE argues that MMES' reservation of limited rights in data places it in a sole source position for the next phases of the IRST acquisition, Engineering and Manufacturing Development and production. According to GE, in order to avoid sole source acquisitions, the Air Force will either have to purchase the rights that MMES has reserved or pay another contractor to "catch up" with the firm. GE concludes that since the RFP included a reference to the review of the "overall program" costs as part of the cost evaluation criteria, and since the cost of obtaining the rights in technical data developed under this contract is an element in the government's "overall program" cost, the Air Force should have evaluated such costs.
Although the record is not conclusive, we accept GE's assertion that MMES' proposal notifies the Air Force that, under its proposed development approach, technical data the firm plans to provide under the contract will include a substantial amount of data subject to limited rights. The question, then, is whether GE reasonably read the solicitation to provide that possible future costs to the government of obtaining unlimited rights in EMD and production data would be included in making the source selection.
First, the agency had no reasonable basis to evaluate the cost of obtaining unlimited data rights. The RFP contemplated an advanced research and development effort to demonstrate an Advanced IRST system with little or no production data to be supplied. Such a system is not currently defined and merely holds a "promise" for improving the air-to-air combat performance of military fighter aircraft. For example, the RFP's SOW, under systems engineering, requires the successful contractor to define the system concept; define the system architecture, system segment specification, and configuration requirements; define and develop the hardware and software requirements, interfaces, and configuration items; and provide oversight of all assembly and support equipment developments. In addition to requiring an initial listing of items, components, processes or computer software subject to limited rights, the RFP contemplated that this initial list would be updated during the life of the contract to incorporate additional assertions of limited rights and the results of government reviews and challenges to these continuing assertions. Because the proposed contract is developmental in nature and the fact that the RFP contemplated a continuous revision of items, components, or processes which could be furnished with limited rights, we think the record fully supports the view that such limited data costs are not currently quantifiable and cannot reasonably be evaluated. In short, we agree with the Air Force that the "alleged cost impacts of these limited rights are speculative, at best."
Second, given the nature of the contemplated contract, we do not find that the solicitation can be reasonably read to require evaluation of the costs of ultimately obtaining EMD and production data with unlimited rights. In appropriate circumstances, preaward notification of an intention to deliver limited data rights may be used in the source selec- tion process by, for example, evaluating the "life cycle cost" of an item. DFARS Sec. 227.403-70(a)(2)(iii). In this case, we do not find that the RFP apprised potential offerors that such estimated costs would be considered. Section M of the RFP states that the agency will evaluate cost reasonableness ("whether the offeror has an acceptable estimating methodology"), cost realism (whether "the cost and scope of estimate" are compatible), and completeness (whether all items are costed). The RFP goes on to state the "Cost/price, inclusive of proposed acquisition costs, fly- away cost estimates, and the Government's Most Probable Cost evaluation, will be considered in determining the offer most advantageous to the Government."
The only language in the RFP referring to broader cost considerations, and upon which GE bases its argument, is not clear: "In some instances, the Government may perform a Government Cost Review of all pertinent costs associated with this acquisition and overall program to which it pertains." (Emphasis supplied.) The agency did not describe what it meant by "overall program," which among other things, could mean the ATF avionics system. In that case, the agency might have meant that it would review costs related to use of a new IRST sensor subsystem, not the costs of acquiring the subsystem itself. Also, the RFP does not explain in what instances the agency might review such costs. Whatever the above-quoted sentence was intended to mean, we do not find that it reasonably requires- -or even permits--consideration in the source selection decision of possible future costs of obtaining unlimited rights in data. Accordingly, we deny this protest ground.
Next, GE, in its initial protest, identified four areas of "deficiencies" which the Air Force failed to disclose to the firm during discussions. This assertion that meaningful discussions were not conducted relates to only four subfactors of one factor, "soundness of approach." No other deficiencies were identified by GE.
Because the record clearly shows the overwhelming technical superiority of the MMES proposal, we conclude that even if the agency had advised the firm of these four subfactor areas during discussions, the selection decision would not have been affected. For example, the "soundness of approach" criterion had seven subfactors, and GE was rated as "marginal" for each one and for the factor as a whole. MMES was rated as "exceptional" for that factor with almost all subfactors also rated as "exceptional." For the technical factor, "understanding the problem," GE was again rated as "marginal" for each subfactor and for that factor as a whole. MMES was rated "exceptional." For the technical factor, "compliance with requirements," GE was again rated "marginal," with four of five subfactors also rated as "marginal." For the technical factor, "special technical factors," GE was rated marginal for each of the five subfactors and for the factor as a whole; MMES was rated as "exceptional" for four of five subfactors. MMES was given an overall technical rating of "exceptional," and GE was given an overall rating of "marginal." Simply put, because of MMES' more mature design and the superior technical strength of its proposal, we think it is inconceivable that the selection decision would have been affected by discussion questions in four subfactor areas of one factor. Indeed, the protester's own technical expert would only have rated GE as "acceptable" and would have rated MMES as "exceptional." Both the chairman of the Air Force's technical evaluation team and the source selection authority examined GE's proposed responses to the discussion questions and found that the overall technical ranking of the firms would not have been affected. We therefore conclude that GE was not deprived of an award by lack of meaningful discussions because of the four areas it identified in its initial protest. See generally Naho Constr., Inc., B-244226, Sept. 12, 1991, 91-2 CPD Para. 241.
In its comments on the agency report, GE raised new grounds of protest concerning several additional areas of deficiencies that allegedly were not pointed out to the firm during discussions. These issues were discovered upon receipt of the agency report and documents included with the report, such as the individual raters' evaluation sheets. Thus, the protester knew, or should have known, of these additional protest grounds no later than the date it received the agency report. The protester failed to raise these supplemental issues within 10 working days of its receipt of the report, and they are, consequently, untimely. They are dismissed. See 4 C.F.R. Sec. 21.2(a)(2) (1992); A-Com, Inc., B-245246.2, Feb. 13, 1992, 92-1 CPD Para. 183.
The protest is denied in part and dismissed in part.