lJnit,wi States General Accounting Office GAO Report to Commanding Officer, Naval Regional Contracting Center, San Diego May IWO DEFENSE PROCUREMENT Solicitation for Contract Support Services Limited Competition - GAO/NSIAD90-I 50 United States GAO General Accounting Office Los Angeles Regional Office Los Angeles World Trade Center 350 South Figueroa Street B-233855 Suite 1010 Los Angeles, CA 90071 May 22,199O Captain Robert L. Ketts CommandingOfficer Naval Regional Contracting Center, San Diego 937 North Harbor Drive San Diego, California 921325106 Dear Captain Ketts: As requested by Senator Mitch McConnell,we reviewed the TERRIER Guided Missile Launching System (MK-10) field engineering services contract (N00123-89-D-0120) that the Naval Regional Contracting Center Detachment in Long Beach, California, awarded to the Naval Sys- tems Division of the FMC Corporation of Minneapolis, Minnesota, in June 1989. We have briefed Senator McConnell’sstaff on the results of that review. While conducting the review, factors came to our attention that indicated the need for certain actions to ensure full and open competition. The Navy’s initial solicitation for this procurement restricted full and Results in Brief open competition, even after the Detachment amendedit. The Navy eventually achieved competition for a substantial portion of the work, but only becauseof a potential competitor’s protest, Competition advo- cates are responsible for challenging overly restrictive requirements in solicitations, However, Detachment procedures did not require a compe- tition advocate review of this solicitation or its amendment.We believe that such a review could have resulted in competition being achieved before the protest. The Competition in Contracting Act of 1984, as amended(10 USC. 2304 Background and 41 USC. 263) and the implementing Federal Acquisition Regula- tion, with certain limited exceptions, call for full and open competition in soliciting offers and awarding government contracts. Federal agencies are required to specify agency needs and solicit offers in a manner that allows all responsible sourcesto compete for a contract award. The Office of Federal Procurement Policy Act requires each executive agency to ap.point a competition advocate for the agency and for each procuring activity within the agency. The basic role of competition advocates is to challenge barriers to and promote full and open competition. Page 1 GAO/NSLAIMO-160 Competition for Support Services E-222266 Versions of the MK-10 Launching System are installed on many Navy ships. Previous field engineeringservices contracts for this system had not achieved competition, This report concernsone procurement of such services. During this period of contract performance, the Navy will be modifying this launching system by installing a new solid state control subsystem. The specifications in the Navy’s June 1987 request for proposal (RFP) Initial Solicitation restricted full and open competition, At least two contractors were will- Restricted Competition ing and apparently able to competefor a significant portion of the work required under this solicitation. However, restrictive provisions in the RFP allowed only one contractor to qualify for any of the work. The restrictive requirements called for engineershaving knowledge of and experience with the new solid state control subsystem.At the time of the solicitation only FMC, which had designedand built the new sub- system, had personnel with such knowledge and experience. In August 1987,the Detachment amendedthe RFP becauseof a com- Amended Solicitation plaint by Ships Missile SystemsConsultants, Inc., of Louisville, Ken- Still Restricted tucky, about the restrictive requirements. However, the restrictions Competition were not removed becauseof a breakdown in communications between contracting personnel in the Detachment and requisitioning personnel at the Engineering Station. According to Detachment officials, the Engineering Station, as the requisitioner, was responsible for establishing procurement require- ments associatedwith technical issues.Consequently,when the Detach- ment received the complaint from Consultants about the restrictive requirements, its staff called the Engineering Station’s contracting office and stated that if the experiencerequirement had to remain, the pro- curement would have to be processedunder sole-sourceprocedures. The Engineering Station’s contracting office passedthis information along to Station technical staff. The Detachment sent no document to the Engi- neering Station explaining the problem. Engineering Station technical personnel told us that they had under- stood that the Detachment had said that the original RFT'S requirement for 2 years of experiencewith the new subsystemwas too long. Conse- quently, they authorized a modification to the RlWthat shortened the number of years of experiencerequired by contractor personnel. They Page 2 GA0/N%4D-9O-150 Competition for Support Servicee B-233656 said, however, that they still wanted and neededpeople having knowl- edgeof and experiencewith the new subsystembecausesuch qualifica- tions would be neededto adequately perform many of the work orders that would be issued under the contract. Three contractors respondedto the amendedsolicitation. In October 1988,the Detachmentnotified the responding contractors that it had awarded the contract to FMC, and it sent a proposed contract to FMC for signature. The two unsuccessfulcontractors were told that they lacked the necessaryknowledge and experienceto perform the contract. FMC did not sign the contract but asked that it be changed.Before the Detachment decidedwhether to accept the requestedchanges,Consul- tants protested on the basis that the restrictive requirements should have been eliminated by the August 1987 amendmentto the HFP. After the protest, the Navy rescindedthe award decision, split the work Requirements Split to required under the original RFP into two new RFPS, and resolicited the Provide Competition procurement, The first of these new RFPS covered that portion of the work under the original solicitation that did not require personnel hav- ing knowledge of and experiencewith the new subsystem.It was issued competitively in March 1.989.Three contractors respondedto the new competitive RFP. In June 1989,the Navy awarded the contract to FMC basedon cost and technical competition. The secondRFP covered the portion that did require such knowledge and experience.It was being processedon a sole-sourcebasis to FMC at the time of our review. According to Secretary of the Navy Instruction 4210.10, competition No Competition advocatesare responsiblefor ensuring that opportunities for competi- Advocate Review of tion are not lost due to restrictive requirements. Naval RegionalCon- Procurement Request tracting Center, San Diego,Instruction 4205.4, which establishedthe Center’s competition advocacy program, states that the advocates should review all noncompetitive procurement requests for possible removal of impediments to competition. Such a review was not made of the original solicitation becauseit was processedas a competitive procurement, and proceduresonly required review of noncompetitive requests. However, since competition had not been achieved in previous MK-10 field engineeringservices contracts, we believe such a review should have been made. Page 3 GAO/NSIAD-90-160 Competition for Support Services EngineeringStation contracting officials, including the competition advocate at that location, said they did not review or approve the modi- fication to the original specifications.They said that their involvement at the time of this changemight have resulted in a splitting of require- ments as eventually was done after the protest by Consultants,particu- larly if they knew the reason behind the change.They believed that they should be involved with any modification to a solicitation that might affect the extent of competition. Current EngineeringStation pro- cedures,however, do not call for such involvement. We recommendthat, to promote full and open competition, you ensure Recommendations that competition advocatesat the Detachmentreview competitive pro- curement requestsfor which little or no competition has existed in the past, including changesto these solicitations. We conductedour work at the Detachmentin Long Beach and at the Scopeand EngineeringStation in Port Hueneme,California. We reviewed procure- Methodology ment laws and regulations, examined contract files, and interviewed Navy officials and an official of one of the firms that competedfor the award. We gave a draft of this report to Naval RegionalContracting Center, San Diego,officials and incorporated their commentswhere appropriate. Theseofficials were in general agreementwith our conclu- sions and recommendations.We performed this review from September 1989 to January 1990 in accordancewith generally acceptedgovern- ment auditing standards. We are sending copiesof this report to SenatorMitch McConnell;the Officer-in-Charge,Naval RegionalContracting Center Detachment,Long Beach,California; and the CommandingOfficer, Naval Ships Weapon SystemsEngineeringStation, Port Hueneme,California. I would appreciate being informed of any actions you take in responseto these recommendations.Pleasecontact me at (213) 894-3812if you or your staff have any questions.Other major contributors to this report Page 4 GAO/NSIAD-PO-130 Competition for Support Services B-233856 are Patrick S. Donahue,Assistant Director, National Security and Inter- national Affairs Division, Washington,D.C.;and Larry W . Aldrich, Evaluator-in-Charge,and D. StephenKauffman, Evaluator, Los Angeles RegionalO ffice. Sincerelyyours, GeorgeE. Grant RegionalManager (3B4336) Page I5 GAO/NSIAD-90460 CompetItSon for Support Sedcw IJ.S. Gtweral Accounting Off& Posl. Office 130x 6015 Gaithersbrrrg, Maryland 20877 ‘l’elt~phont? 202-275-6241
Defense Procurement: Solicitation for Contract Support Services Limited Competition
Published by the Government Accountability Office on 1990-05-22.
Below is a raw (and likely hideous) rendition of the original report. (PDF)