Continue maturation of the LRASM subsystems and system design that Lockheed Martin has developed under the current contract awarded in 2009 after full and open competition. The follow-on effort will conduct further sensor and avionics hardware development based on previous results achieved under the current contract. It will also provide for fabrication of missile hardware to enable additional flight tests.

AR, Tab 17, Sole-Source Notice, at 1. Similarly, the DARPA J&A contains a statement of requirements providing that:

Under the follow-on effort [Lockheed] will provide specialized services for continuing technology maturation work on the LRASM subsystems and system design. [Lockheed] will also continue to mature technologies developed under the current R&D contract for the air-launched anti-surface warfare (ASuW) LRASM.

AR, Tab 3, J&A, at 1. The J&A also further specified six specific areas of LRASM technological development to be pursued during the follow-on contract, including: the long range target sensor; sensor algorithms and software; missile control unit; electro-optical terminal target sensor hardware; missile autonomy and situation awareness software; and weapon data link.

We see nothing unreasonable or misleading in the agency’s statement of its requirement. Pursuant to the 2008 BAA, DARPA has invested substantially in the research and development of the LRASM technologies proposed by Lockheed in its response to the 2008 BAA. Related to this effort, DARPA has now identified a need to devote additional resources in order to complete the maturation of Lockheed’s specific LRASM technologies. We view this need, as identified in DARPA’s sole-source notice and J&A, as reasonable and within DARPA’s broad discretion as the DOD agency tasked with developing new technologies, without regard to whether the Navy, or DOD, has an operational requirement for similar capabilities in this area.  (Raytheon Company and Kongsberg Defence & Aerospace AS, B-409615, B-409615.2: Jun 24, 2014)  (pdf)

As a preliminary matter, USDA argues that the Coulson and Minden protests should be dismissed because these protesters are not interested parties. Specifically, the agency contends that Coulson and Minden did not have additional large airtankers available at the time the J&A was signed that would be capable of performing the requirements of the Neptune sole-source contract (which has an April 28, 2014, start date).[31] The USDA contends, citing to our decision in Merlin Int’l, Inc., B-310611, Jan. 2, 2008, 2008 CPD ¶ 66, that a protester is not an interested party to challenge a sole-source award unless it can meet all of the agency’s requirements at the time of the sole-source determination.

Coulson and Minden respond that they are interested parties to protest here because they have a direct economic interest that would be affected by the award of a sole-source contract to Neptune. Coulson points to the fact that in October 2013 it offered to provide the Forest Service with two additional large airtankers under the NextGen contract, and argues it would be available and ready to perform by an April 28, 2014, start date (as established by the contract awarded to Neptune). Coulson Protest, Dec. 20, 2013, at 7-8; Coulson Protest, Feb. 10, 2014, at 4. Likewise, Minden states that it owns a second aircraft (BAe-146) that it is converting into an airtanker, and would be able to submit a proposal should the Forest Service conduct another competitive procurement. Minden Protest, Feb. 10, 2014, at 2-3. Both Coulson and Minden also point to the fact that the sole-source award to Neptune makes it less likely that the Forest Service would execute airtanker options under the competitively-awarded NextGen contract.

(section deleted)

The Settlement Agreement

The protesters contend that the sole-source award to Neptune was improper, insofar as the agency promised to enter into the contract in exchange for Neptune withdrawing its protests of the NextGen contract awards. In this regard, the protesters claim that the agency’s actions have been motivated by the desire to fulfill the terms of a settlement agreement and to avoid a lawsuit by Neptune for allegedly breaching that agreement. The protesters argue that the agency “put the cart before the horse,” and agreed to settle Neptune’s protest before properly determining that the promised sole-source award complied with CICA. Coulson Protest, Feb. 10, 2014, at 55. The protesters also point to the fact that the only legitimate financial analysis conducted (the analysis by FI) demonstrated that Neptune did not require a sole-source contract to remain viable, as recognized by the agency’s SPE, who refused to approve the J&A. 10 Tanker Protest, Feb. 10, 2014, at 120-35.

The USDA does not dispute that its consideration of a noncompetitive award to Neptune was motivated by its promise of a sole-source contract in exchange for Neptune withdrawing its bid protest and thereby ending the CICA stay that then precluded the Forest Service from fielding NextGen large airtankers for the 2013 fire season. See AR, Jan. 31, 2014, at 55. Nevertheless, USDA argues that it did not act improperly because the sole-source award complied with all applicable procurement statutes and regulations. Id. at 55‑56.

A settlement agreement promising award of a contract on a sole-source basis in exchange for abandoning ongoing litigation, such as a bid protest, is not a permissible basis for restricting competition and excluding potential offerors. Earth Prop. Servs., Inc., B-237742, Mar. 14, 1990, 90-1 CPD ¶ 273 at 4-5, aff’d, B-237742.2, June 11, 1990, 90-1 CPD ¶ 546; Techplan Corp., B-234161, May 12, 1989, 89-1 CPD ¶ 452 at 5. For example, our Office upheld a protest of a sole‑source award where an agency justified its failure to conduct a full and open competition on the basis that it had entered a settlement agreement promising the award of a contract in exchange for abandoning a threatened contract claim. Earth Prop. Servs., Inc., supra. Quite simply, the existence of a settlement agreement does not permit a contracting agency to act in ways not otherwise permitted by applicable statutes and regulations. Id. at 5; see York Int’l Corp., B-244748, Sept. 30, 1991, 91-2 CPD ¶ 282 at 4-5 (settlement agreements will not be enforceable if they fail to comply with applicable statutes and regulations).

As detailed below, the Forest Service entered into a settlement agreement with Neptune on the basis that the award of a sole-source, NextGen-type contract was necessary to maintain Neptune as a vital source of large airtankers. The independent financial analysis subsequently performed by FI on behalf of USDA concluded that Neptune did not require the award of a sole-source contract to remain financially viable. Nothing in the record refutes FI’s conclusions, nor is there any evidence to suggest that Neptune intends to go out of business now merely because its future prospects appear uncertain. In sum, while the agency may not have entered into a settlement agreement promising to disregard applicable procurement statutes and regulations, the agency’s subsequent decision to award a sole-source contract to Neptune so as to comply with the terms of the settlement agreement and avoid a Neptune-threatened lawsuit was without a reasonable basis.

Sole-Source Award Justification

As set forth above, agencies are generally required to conduct procurements using procedures designed to obtain full and open competition. 41 U.S.C. § 3301(a)(1); FAR § 6.101. One exception to this requirement is where an agency determines that it is necessary to maintain a vital source of supply for industrial mobilization. In relevant part, the FAR states as follows:

(2) Full and open competition need not to be provided for when it is necessary to award the contract to a particular source or sources in order--

(i) To maintain a facility, producer, manufacturer, or other supplier available for furnishing supplies or services in case of a national emergency or to achieve industrial mobilization.

FAR § 6.302-3(a).

The protesters generally do not dispute that the Forest Service requires additional large airtankers to perform its firefighting mission. Rather, the protesters challenge the reasonableness of the agency’s determination that the sole-source contract here is necessary to maintain a vital source of supply. Specifically, the protesters argue that: (1) Neptune is not a vital supplier such that the large airtanker industrial base can be maintained without resorting to noncompetitive procurements; and (2) Neptune does not require a sole-source contract to remain a source of large airtankers.

In responding to the protests, the agency has acknowledged that it was initially concerned that Neptune would “immediately go out of business in during [sic] the 2013 fire season, leaving the Forest Service without any of the Legacy air tankers Neptune supplied under the contract awarded March 27, 2013.” Agency Post- Hearing Comments, Mar. 18, 2014, at 5. The agency admits, however, that ultimately it concluded there was no concern with Neptune’s present viability, but only with its viability after 2017. Id. at 6-7. Consequently, the agency argues, the J&A was not grounded on the agency’s belief that Neptune would immediately go out of business without a NextGen contract, but was based on its concern with Neptune’s continued availability as a large airtanker supplier after 2017 when its Legacy contract expired. AR, Feb. 19, 2014, at 3-7. However, changing its focus during the course of the protests, the agency has also argued that its actual concern is whether it could obtain sufficient NextGen airtankers for the 2014 fire season. See Agency Post-Hearing Comments, Mar. 18, 2014, at 9-10, 21; see also Tr. at 657-693. In this regard, the agency maintains that it cannot tolerate any further delay in acquiring additional NextGen airtankers for the 2014 fire season. Agency Post-Hearing Comments, Mar. 18, 2014, at 28. The Forest Service contends that this immediate need for additional NextGen airtankers provided it with “an industrial mobilization need in December 2013” when it decided to award Neptune a sole‑source, 9-year contract for NextGen airtanker services. Id. at 32.

Based upon on our review of the record, including the J&A, its supporting documentation, the agency’s submissions in response to these protests, and the testimony of the agency’s representatives at the hearing held at our Office, the agency has failed to demonstrate that Neptune requires a sole-source contract to remain a source of large airtanker services for the Forest Service. Although the J&A documents the agency’s belief that Neptune is, presently, a vital supplier of large airtanker services under Neptune’s Legacy contract,[35] the J&A is devoid of evidence or analysis supporting the need to provide Neptune with a sole-source award for the firm to remain a viable source of supply. Rather, the record demonstrates, as acknowledged by the agency, that Neptune is presently financially viable and is expected to remain financially viable through the term of its Legacy airtanker contract (2017). Moreover, apart from Neptune’s own unsupported statements and the anecdotal views of various agency officials, the record contains no analysis or evidence of Neptune’s financial condition after 2017.

As detailed above, the agency had two financial analyses of Neptune conducted after the company alleged it would go out of business without a NextGen contract award. First, RUS’s conclusion, that Neptune needed a NextGen contract to remain viable, was based entirely on unverified financial projections as provided by Neptune. By contrast, the second analysis conducted by FI--which did not simply accept Neptune’s projections--found that Neptune’s revenue projections were inconsistent with the terms of the Legacy contract, that Neptune’s expected costs were lower than the company had itself projected, and that Neptune did not require a NextGen contract to remain viable through the term of the Legacy contract. At no time before the J&A was approved were FI’s conclusions disputed or shown to be in error. Moreover, while FI’s conclusions were limited to the period through 2017, at no time did the agency conduct any other analysis to determine Neptune’s financial viability after 2017. Tr. at 735; Agency Post-Hearing Comments, Mar. 18, 2014, at 7. Accordingly, while the agency contends that the J&A did not rely on the FI financial analysis to assess Neptune’s long-term viability, neither did the agency rely on any other information when making such an assessment. In fact, there is simply no record--in the J&A or otherwise--of any assessment by the agency of Neptune’s long-term viability.

Additionally, the agency’s apparent belief that an immediate need for NextGen airtankers in 2014 justified the award of a sole-source, 9-year contract on the basis of industrial mobilization is not supported and has no rational basis. The industrial mobilization exception to competition requirements may be used where an agency determines that “it is necessary to award the contract to a particular source . . . in order . . . [t]o maintain a . . . [vital] supplier . . . .” FAR § 6.302-3(a)(2)(i). As noted above, no reasoned analysis has been presented to support a determination that a 9-year, sole-source contract was required to maintain Neptune as a source. To the extent the agency believed an urgent need for large airtanker services would justify a noncompetitive 9-year contract, there is no analysis or explanation in the record demonstrating that this is so.

We find it both premature and unreasonable for USDA to determine that Neptune requires a sole-source contract now in order to maintain Neptune as a source of large airtanker services after 2017. In addition to its current Legacy contract (including options for more airtankers being placed under the Legacy contract), Neptune is not precluded from competing on work--Forest Service or otherwise--in the coming years. The record also reflects that the NextGen contracts represent the primary, but not only, means by which the Forest Service plans to meet its modernization strategy goal of 18-28 modern large airtankers. In fact, the ASA testified that the agency plans to conduct additional competitions in the coming years under which Neptune is eligible to compete and could receive awards. Tr. at 735-36. Moreover, given the contract options available to the Forest Service under the competitively-awarded NextGen contracts, Neptune may no longer represent a vital source that must be maintained by the Forest Service after 2017. While agencies have authority to make noncompetitive awards when necessary to maintain vital sources, they do not have authority to make noncompetitive awards merely because an offeror is unsuccessful in a competitively-conducted procurement, or because such action was promised in a settlement agreement. See York Int’l Corp., supra; Department of the Army--Recon., B-237742.2, June 11, 1990, 90-1 CPD ¶ 546.

Accordingly, while the J&A may demonstrate that the Forest Service needs more large airtanker services than it currently has under contract, the J&A completely fails to demonstrate that Neptune must be the supplier of such services or that Neptune currently requires a 9-year sole-source contract to keep it in business as a vital supplier for the agency’s post-2017 needs. Just as an agency is not permitted to make a noncompetitive award that exceeds the size or duration of an identified urgency, see FAR § 6.302-2(d), an agency is also not permitted to make a noncompetitive award for industrial mobilization reasons where, as here, there has been no showing that the award is presently necessary to maintain a supplier even if deemed vital. NI Indus., Inc., Vernon Div., supra. Neptune would undoubtedly prefer the financial security that would accompany a long-term NextGen contract, but this is simply not the standard by which an agency is permitted to make a noncompetitive award for industrial mobilization purposes. See FAR § 6.302-3.

Inaccuracies in J&A

As a final matter, in addition to the fundamental lack of support for the J&A’s premise that Neptune now requires a 9-year sole-source contract in order to maintain the firm in the future as a vital supplier of aircraft, the record reflects that the J&A was premised on materially inaccurate information. As stated above, our review of an agency’s decision to conduct a noncompetitive procurement focuses on the adequacy of the rationale and conclusions set forth in the J&A. The adequacy of the rationale and conclusions set forth in the J&A is dependent on the completeness and accuracy of the information included in the J&A. See Sabreliner Corp., supra. We find the J&A to be incomplete and inaccurate in certain key regards.

FAR § 6.303-2 identifies information required for an agency’s justification of a noncompetitive procurement, stating, among other things, that the J&A “shall include . . . [a] description of the supplies or services required to meet the agency’s needs (including the estimated value),” “[a] demonstration that the . . . nature of the acquisition requires use of the authority cited,” and “[a] description of the market research conducted . . . and the results or a statement of the reason market research was not conducted.” FAR § 6.303-2(b)(3), (5), (8). Here, the Forest Service’s description in its J&A of its noncompetitive requirements, as well as its consideration of alternative sources of supply, is inaccurate.

Specifically, the J&A describes the services to be provided by Neptune as two NextGen large airtankers for up to 9 years, at a total estimated value of $141 million. AR, Tab 49, J&A, Dec. 9, 2013, at 1. The record shows, however, that the contract subsequently awarded to Neptune included the option of five additional large airtankers, for up to 9 years each, at a total estimated value of approximately $496 million--more than three times greater than what was approved. See AR, Tab 54, Contract No. AG-024B-C-14-9000, at B-1. Thus, the agency’s J&A inaccurately described the services to be obtained from Neptune on a noncompetitive basis. This is significant because where, as here, an agency proposes to award a sole-source contract under the industrial mobilization exception to the general competition requirements, the amount being ordered must meet--not exceed--the objectives of this authority. See FAR § 6.302‑3(b)(iii) (when the quantity required is substantially larger than the quantity that must be awarded in order to meet the objectives of this authority, that portion not required to meet such objectives will be acquired by providing for full and open competition); Honorable Dan Burton, B-265884, Nov. 7, 1995, 1995 U.S. Comp. Gen. LEXIS 735 at *12. Alternatively, if the J&A was accurate here, then the contract awarded to Neptune impermissibly exceeded what the ASA had approved.

Similarly, when considering alternative sources and the market research regarding such sources, the J&A states that “[t]here are no certified [large airtankers] currently available that aren’t already under contract with the Forest Service. Aircraft capable of meeting these standards and requirements are not readily available and would take a considerable amount of time to be developed and operationally ready for service.” AR, Tab 49, J&A, Dec. 9, 2013, at 4. This statement is also factually inaccurate insofar as 10 Tanker had a certified large airtanker currently available, which the Forest Service actually contracted for in 2013. The J&A also failed to consider the additional large airtankers that Coulson had offered to make available to the Forest Service. The fact that the J&A was inaccurate with regard to alternative sources is also important because where, as here, an agency proposes to award a sole-source contract premised on the vital nature of a supplier, it must accurately consider whether the industrial base can be maintained without resorting to noncompetitive procurements. While the agency argues the fact that other contractors may have airtankers available to perform Neptune’s contract to be irrelevant here, AR, Jan. 31, 2014, at 52, we fail to see how the agency can reasonably find Neptune to be a vital source without accurately considering all sources. See FAR § 6.302-3; see also Lance Ordnance Co. Inc.; Martin Elecs., Inc., B-246849, B-246952, Mar. 31, 1992, 92-2 CPD ¶ 29 at 3-4.  (Coulson Aviation (USA) Inc.; 10 Tanker Air Carrier, LLC; Minden Air Corp., B-409356.2, B-409356.3, B-409356.4, B-409356.5, B-409356.6: Mar 31, 2014)

Among the reasons identified by the Navy for its decision to issue a sole-source contract to DIT-MCO is the fact that its existing AWAs (which are manufactured by DIT-MCO) use software that is proprietary to DIT-MCO. The agency’s J&A explains that the upgraded AWA, if purchased from DIT-MCO, will maintain commonality and compatibility with the agency’s other AWAs. Additionally, the agency’s J&A explains that the aircraft’s original equipment manufacturer (OEM), Northrup Grumman Corporation, uses a DIT-MCO proprietary software known as test assistance II (TA2) software for purposes of generating test programs. The agency’s J&A explains that procuring a DIT-MCO AWA allows the agency to standardize design information exchange between the agency’s engineers and the OEM, and also allows the agency to use the OEM’s existing data and test programs; the upgraded AWA will be able to utilize all legacy test programs previously written for the agency. AR, exh. 1, Agency J&A, at 2-3.

The Navy’s J&A also notes that the agency has developed a host of customized applications and utilities that were developed around the unique hardware and software architecture of the DIT-MCO AWA, and that these customized tools will not be compatible with another manufacturer’s AWA. The agency estimate of the cost of duplicating these customized tools was an added consideration in deciding to procure an AWA upgrade on a sole-source basis from DIT-MCO. AR, exh. 1, Agency J&A, at 2.

The Navy’s J&A goes on to explain that, in order for other manufacturers to be able to provide an AWA that is interoperable with the agency’s existing hardware and software, it would be necessary for them to develop software patches and use additional hardware in order to communicate with the aircraft’s software. In that connection, the agency’s J&A specifically notes that the agency previously had awarded Eclypse a contract for an AWA, but that the AWA that was provided was not compatible with the agency’s existing AWAs software. AR, exh. 1, Agency J&A, at 3.

Eclypse asserts that it has a software conversion tool that will allow it to easily make its AWA compatible with the agency’s existing systems. However, in response to Eclypse’s allegation, the agency’s engineer explains that the Navy based its decision to procure the AWA on a sole-source basis from DIT-MCO, in part, because of personal knowledge of problems associated with the Eclypse software’s compatibility that arose under the earlier contract awarded to Eclypse.[2] AR exh. 7, Declaration of the Agency’s Engineer, at 3. The agency’s engineer goes on to explain that Eclypse’s software conversion tool is only semi-automatic and requires manual intervention for any software conversion or development effort, such that it requires manual input of much of the necessary data, and that this process would have to be performed by agency personnel. Id. at 4-5.

We conclude that the Navy’s concerns associated with software compatibility and commonality among its AWAs provide a reasonable basis for its decision to award the contract on a sole-source basis. We also conclude that the agency’s concern with maintaining that compatibility and commonality with the aircraft’s OEM provides further support for the agency’s decision. While Eclypse disagrees with the agency’s position, and contends that it has what it characterizes as a straightforward conversion solution, the record supports the agency’s reservations with Eclypse’s conversion approach based on its actual experience. In addition, the record shows that the agency also would have to expend significant funds in order to recreate the custom tools it has developed in-house that function with the DIT-MCO AWA; Eclypse has not rebutted this conclusion on the part of the agency.  (Eclypse International Corporation B-408795, Nov 25, 2013)  (pdf)

The protester argues that when the Air Force transferred the operation of mission essential food services at Barksdale AFB and Dyess AFB to the [Air Force Mission Essential Feeding Fund] AFMEFF, it was required to do so through a competitive procurement process under CICA, and, having failed to obtain competition, the Air Force’s transfer of this requirement to the [Nonappropriated Fund Instrumentality] NAFI essentially constituted an improper sole-source award in violation of CICA. The Air Force maintains that it has special authority under 10 U.S.C. § 2492 (2006) to obtain the services in question from the AFMEFF through a MOA, and that, as a consequence, CICA was inapplicable. As explained below, we conclude that section 2492 does not provide authority for the Air Force to transfer the provision of mission essential food services to a NAFI. By its terms, section 2492 limits such agreements to those in support of morale, welfare, and recreation (MWR). Because mission essential food services--supported entirely with appropriated funds--are not within the [Morale, Welfare, and Recreation] MWR system, the transfer of such requirements to AFMEFF without obtaining competition, or justifying an award to the NAFI on a sole-source basis, was in contravention of CICA and FAR.

The statutory provision upon which the Air Force relies, 10 U.S.C. § 2492, provides as follows:

An agency or instrumentality of the Department of Defense that supports the operation of the exchange system, or the operation of a morale, welfare, and recreation system, of the Department of Defense may enter into a contract or other agreement with another element of the Department of Defense or with another Federal department, agency, or instrumentality to provide or obtain goods and services beneficial to the efficient management and operation of the exchange system or that morale, welfare, and recreation system.

As an initial matter, we note that Air Force does not appear to take the position that the mission essential food services, which are at issue in this case, fall within the ambit of the MWR system. We specifically asked the Air Force to address this point and, instead, it provided a rather lengthy discussion of how the FTI program operates, and the advantages and efficiencies to be achieved through the consolidation of these programs. We take the Air Force’s non-answer in this regard to be an implicit recognition that such requirements do not fall within the MWR system. In any event, to the extent the Air Force’s own characterization of the requirements as “mission essential” does not settle the point, the conclusion that these services do not fall within the MWR system is inescapable, where they are paid for entirely with appropriated funds, there is no indication that they have ever previously been considered to fall within the MWR system, and they do not fit within any reasonable understanding of the DoD’s definition of Class C MWR food services activities.

Since mission essential food services do not fall within the MWR system, it appears that the Air Force has taken the position that section 2492 gives it the authority to consolidate management and accounting for its mission essential and non-mission essential MWR food serving operations so long as consolidation will benefit the efficient management and operation of its MWR food operations. See Agency Response to GAO Questions, July 18, 2012, at 2. Thus, the agency’s argument, as we understand it, is that section 2492 authorizes the AFMEF, a NAFI, to provide mission essential feeding services to the Air Force because it is of benefit to the MWR system for the Air Force to acquire both operation of essential food service facilities and operation of non-essential food services facilities (such as officers’ clubs) from the same contractor.

We do not find this to be a reasonable reading of the statute. While section 2492 authorizes a NAFI such as the AFMEFF to enter into an agreement with the Air Force to provide services beneficial to the efficient management and operation of the MWR system, there is nothing to suggest that it authorizes an agreement between the NAFI and the Air Force for the provision of mission essential services on the theory that consolidating such activities under the MWR system may provide a benefit the MWR system. Such an application would constitute a radical departure from the general understanding that DoD NAFIs are established to engage in MWR related activities. See DoD Instruction 1015.15, supra (stating that “NAFIs shall be established for military morale, welfare, and recreation (MWR) programs”). We also find the Air Force’s interpretation particularly strained in this instance where, by all reasonable measures, the value of the mission essential services to be provided by the NAFI under its agreement with the Air Force substantially exceeds the value of any non-mission essential food (i.e., MWR-related) services, which are the traditional bailiwick of NAFIs and to which section 2492 is expressly directed. See, e.g., AR, Tab 26, RFQ F41999-10-Q-0495, Portfolio I, FTI Schedule of Services (reflecting that historical usage associated with mission essential food services at airbases has been much greater than MWR, NAFI operated food activities).

Without authority under section 2492, the only way that the Air Force could have properly transferred appropriated funds to the NAFI for the provision of mission essential food services would have been through a competitive procurement process. In this regard, although NAFIs are considered to be instrumentalities of the United States government, obtaining services from a NAFI is “tantamount to obtaining services from nongovernment commercial sources”; therefore, NAFIs are required to compete to provide goods or services to agencies through the usual procurement process mandated by CICA, and implemented in the FAR. See University Research Corp., B-228895, Dec. 29, 1987, 87-2 CPD ¶ 636 at 5-6.

Thus, before restricting competition for the mission essential food services to a single source (i.e., the AFMEFF), the Air Force was required to comply with statutory requirements pertaining to competition, including preparing a Justification & Approval (J&A) for the use of other than competitive procedures and publishing notice of its intention to use other than competitive procedures on the FedBizOpps website. 10 U.S.C. § 2304(f)(1); FAR Subpart 6.3. Because the Air Force failed to comply with these mandates, we sustain Asiel’s protest.  (Asiel Enterprises, Inc., B-406780, B-406836, Aug 28, 2012)  (pdf)

Sikorsky argues that this RFP improperly restricts competition because the D&F does not set forth an adequate basis for specifying the Mi-17 helicopter. The protester primarily argues that the statements set forth in the D&F regarding the required effort and associated delay associated with transitioning the Afghanistan Air Force from the Mi-17 helicopter to a different helicopter platform are not reasonable, and also argues that it can offer a variant of the Sikorsky S-61 helicopter that can meet the same altitude performance requirements as the Mi-17.

As indicated above, the FAR requires the public interest exception be justified by a D&F that "set[s] forth enough facts and circumstances to clearly and convincingly justify the specific determination made." FAR sect. 1.704. Our review of an agency's invocation of the public interest exception is based on this regulatory requirement implementing CICA's public interest exception. In this regard, we note that the Court of Federal Claims has reviewed the invocation of the public interest exception on this basis. See Spherix v. United States, 58 Fed. Cl. 514, 515 (2003); Spherix v. United States, 58 Fed. Cl. 351, 358 (2003). Our review of a D&F issued by an agency in support of the public interest exception to full and open competition addresses whether the D&F provides, on its face, a clear and convincing justification that the restricted competition furthers the public interest identified. We will consider a protester's arguments that the D&F relies on facts that have no relation to the stated public interest, or that the D&F relies on materially inaccurate information. We will not, however, sustain a protest based on the protester's mere disagreement with the conclusions set forth in the D&F. See Raytheon Co.–Integrated Def. Sys., B-400610 et al., Dec. 22, 2008, 2009 CPD para. 8 at 6.

Here, Sikorsky does not challenge the D&F's identification of the public interest furthered by the limited competition, i.e., the requirement to support the development of the Afghanistan Air Force and its need for a multipurpose helicopter. AR, Tab 21, D&F, at 1-2. Instead, the protester argues that the facts set forth in the D&F do not support the Acting Secretary of the Navy's conclusion that limiting the competition to the Mi-17 is necessary to meet the identified public interest. Specifically, the protester argues that the facts set forth in the D&F concerning the training requirements associated with providing other than Mi-17 helicopters, and the performance requirements of the Mi-17 with regard to altitude do not support the D&F. For the reasons discussed below, we conclude that Sikorsky does not demonstrate that the D&F was defective.

The Afghanistan Air Force's Familiarity with the Mi-17 Helicopter

(Sections deleted)

Altitude Performance Requirements

(Sections deleted)

Buy American Act and Balance of Payments Program

(Sections deleted)

(Sikorsky Aircraft Corporation, B-403471; B-403471.3, November 5, 2010)  (pdf)

Although the overriding mandate of the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. sect. 2304(a)(1)(A) (2000), is for full and open competition in government procurements, obtained through the use of competitive procedures, it permits noncompetitive acquisitions in certain circumstances. 10 U.S.C. sect. 2304(c). The agency’s J&A cites one of the exceptions to the mandate that competitive procedures be used, namely, that there is only one responsible source and no other supplies or services will satisfy the agency’s requirements. J&A, citing 10 U.S.C. sect. 2304(c)(1). The J&A must contain sufficient facts and rationale to support the use of the chosen exception. See 10 U.S.C. sect. 2304(f)(1)(A), (B); Federal Acquisition Regulation (FAR) sections 6.302-1(d)(1), 6.303, 6.304; Marconi Dynamics, Inc., B-252318, June 21, 1993, 93-1 CPD para. 475 at 5. Our review of the agency’s decision to conduct a sole-source procurement focuses on the adequacy of the rationale and conclusions set forth in the J&A. When the J&A sets forth a reasonable justification for the agency’s actions, we will not object to the award. Global Solutions Network, Inc., B‑290107, June 11, 2002, 2002 CPD para. 98 at 6; Diversified Tech. and Servs. of Virginia, Inc., B‑282497, July 19, 1999, 99-2 CPD para. 16 at 3.

We conclude that the rationale advanced by the agency in the J&A--in essence, the critical benefits from weapon standardization--is sufficient to support the decision to procure the Glock pistol on a sole-source basis. Specifically, the agency asserts that prior wide use of the Glock pistol by the fighting forces mentioned above has created “a baseline of standardization of operations and support that is critical to be continued.” J&A at 1. Procuring more of the same pistol would lessen the logistical burden on the Pakistan Army, the agency states, in part by reducing the effort required for spare parts administration; retraining the various forces also would be unnecessary if the same pistol were procured.

In its challenge to the agency’s rationale, the protester points out that the J&A does not support a conclusion that the Pakistanis cannot effectively defend themselves if they procure a pistol other than the Glock that they use now. The protester also maintains that the disassembly and cleaning of the Glock and the proposed Smith & Wesson firearms are identical; that, given its worldwide popularity, there is no shortage of spare parts for the protester’s pistol; and that personnel are typically trained to service and repair or replace the parts for many different types of semi-automatic weapons. The protester also asserts that the difference between the trigger pulls of the two weapons--the protester’s pistol has a heavier trigger pull and a longer trigger travel--are at best minor distinctions that would have no impact on the war fighting capabilities of the Pakistani forces.

As an initial matter, to the extent that the protester argues that the J&A is inadequate because it does not show that the Glock pistol is indispensable to the forces who would use it, its argument is based on a flawed premise. As discussed above, the standard is not whether the item being procured is indispensable, or even whether the Glock performs better than the selected pistol, but whether the agency has offered sufficient facts and rationale to support the decision to procure it on a sole- source basis. The protester’s claim that many organizations with armed personnel train them on several different firearms is unpersuasive; what is at issue here is the level of training received by the Pakistani fighting forces and not, as in one example offered by the protester, the training regimen of metropolitan cities in this country. There is nothing in the record to suggest that the forces that would be supplied with a different pistol than the current Glock would easily adapt to a change in firearms.

It is undisputed that the parties using these weapons do so under extremely hazardous and unstable conditions. Under these circumstances, we conclude that the benefits to the fighting forces cited in the J&A from procuring the same pistol currently in use, such as avoiding the need for retraining on a different model or the need to stockpile spare parts for different models, are sufficient to support the agency’s decision to procure the pistols on a sole-source basis.  (Smith & Wesson, Inc., B-400479, November 20, 2008)  (pdf)

Turning to the July 2005 sole-source award to OSS for expansion of the BBA-SME requirement, we find that the agency’s J&A in support of the sole-source award to OSS was flawed because it was premised on the unsupported conclusion that OSS was the only contractor capable of meeting the BBA-SME requirement in a timely and cost-effective manner. We therefore sustain the protesters’ challenge to this second sole-source award as well. The July 2005 J&A, which nominally cited “unusual and compelling urgency” as the justification for the sole-source award to OSS, was in fact prepared based on the exception to full and open competition set forth in 10 U.S.C. sect. 2304(c)(1), which applies when the agency concludes that required services are only available from one responsible source. Specifically, the contracting officer testified with regard to the July J&A as follows: “I wrote this J&A, believing that I was going to use one responsible source. . . . I think the situation in Iraq is urgent, but it was written for [‘only] one responsible source’.” Tr. at 277. Moreover, the reasoning set forth in the J&A is consistent with the “only one responsible source” exception. The J&A expressly asserts that OSS is “the only provider [deleted]. They are the only provider that can perform the contract without significant additional start-up costs and recruitment delays.” AR, Tab 1.b.1., J&A at para. 5. (WorldWide Language Resources, Inc.; SOS International Ltd., B-296984; B-296984.2; B-296984.3; B-296984.4; B-296993; B-296993.2; November 14, 2005) (pdf)

Turning to the propriety of the sole-source bridge contract with EG&G, we first find that the sole-source award was improper because it is not supported by a written J&A. In this regard, when an agency uses noncompetitive procedures, such as 41 U.S.C. 253(c)(1) (2000), which authorizes the use of noncompetitive procedures when the property or services are available from only one responsible source, the contracting officer is required to execute a written justification with sufficient facts and rationale to support the use of the authority, certify its accuracy and completeness, and obtain approval of the action from the cognizant agency official prior to making an award. See 41 U.S.C. 253(f)(1)(A), (B), (C); Federal Acquisition Regulation (FAR) 6.303, 6.304. The only exception to this requirement is where the agency uses noncompetitive procedures because the agency's need for the property or services is of such an unusual and compelling urgency that the government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals. See 41 U.S.C. 253(c)(2), (f)(2). Here, the agency did not execute a J&A prior to awarding the letter contract, as required by the statute. While a draft J&A has been provided during the course of our consideration of this protest, the agency advises that this document is only the agency's "deliberative processes" until a final document is issued. See Agency Letter, Apr. 1, 2003, at 1. In fact, despite our requests, the agency still has not provided an executed and approved J&A. Thus, the agency's letter contract award to EG&G constitutes an improper sole-source award. See Saltwater, Inc.--Recon. and Costs , B-294121.3, B-294121.4, Feb. 8, 2005, 2005 CPD 33 at 3. (VSE Corporation; Johnson Controls World Services, Inc., B-290452.3; B-290452.4; B-290452.5, May 23, 2005) (pdf)

When an agency uses noncompetitive procedures under 10 U.S.C. § 2304(c)(1), it is required to execute a written J&A with sufficient facts and rationale to support the use of the cited authority, and publish a notice to permit potential competitors an opportunity to challenge the agency’s decision to procure without full and open competition. See 10 U.S.C. § 2304(f)(1)(A), (B); Federal Acquisition Regulation §§ 6.302-1(d)(1), 6.303, 6.304; Marconi Dynamics, Inc., B-252318, June 21, 1993, 93‑1 CPD ¶ 475 at 5. Our review of the agency’s decision to conduct a sole-source procurement focuses on the adequacy of the rationale and conclusions set forth in the J&A. When the J&A sets forth a reasonable justification for the agency’s actions, we will not object to the award. Global Solutions Network, Inc., B-290107, June 11, 2002, 2002 CPD ¶ 98 at 6; Diversified Tech. and Servs. Of Virginia, Inc., B‑292497, July 19, 1999, 99-2 CPD ¶ 16 at 3. Here, based on our review of the record, we find no basis to question SSP’s overall determination that only Draper could satisfy the agency’s need for the establishment and certification of an ISF for the MK 6 guidance system. As documented in its J&A justifying award to Draper, SSP determined that only Draper could establish and certify the ISF SSP because, while individual ISCs were familiar with their particular individual subsystems, only Draper, as the design and development agent for the MK 6 guidance system, as well as for the fleet ballistic missile guidance systems generally, had (1) “comprehensive knowledge” of “all critical elements unique to the guidance system’s performance,” and (2) “comprehensive knowledge” of “the interrelationships of these elements with the entire Trident II weapon system.” J&A at 2. SSP concluded that Draper’s “overall systems engineering knowledge and technical expertise in the MK 6 guidance system is unmatched as a result of over forty years as sole design and development agent on the [fleet ballistic missile] guidance systems.” Id. We conclude that SSP reasonably determined that Draper’s overall knowledge of all of the critical components of the MK 6 guidance system, including the IMU, electronic assembly/IMUEs, and 10-PIGA, was essential in view of the broad scope of the requirement to establish and certify the ISF. (Kearfott Guidance & Navigation Corporation, B-292895.2, May 25, 2004) (pdf)

As explained below, the J&A and its supporting documentation, as well as the agency's submissions prepared in response to this protest and the testimony of the agency representatives at the hearing held at our Office in connection with this protest, contain so many inconsistencies and inaccuracies that they cannot reasonably justify the agency's intended award of a sole-source contract to Rolls-Royce. Specifically, the J&A inaccurately describes the overhaul services to be acquired, the dollar value of the services to be acquired, and the length of time for which the services will be needed. Additionally, the record does not support the J&A's statement that only Rolls-Royce is capable of providing either the engineering or overhaul services, and similarly, fails to support the agency's position, as reflected in the J&A and argued by the agency during this protest, that the engineering and overhaul services must be performed by the same contractor (Rolls-Royce).  (Sabreliner Corporation, B-288030; B-288030.2, September 13, 2001)

Agency's justification for sole-source procurement is inadequate where the documentation does not reasonably show that only this exact product will satisfy the agency's needs, and does not show that the agency's need for the item is of unusual and compelling urgency that was not created by a lack of advance planning.  (National Aerospace Group, Inc., B-282843, August 30, 1999)