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)

                     lJnit,wi   States   General   Accounting   Office

GAO                  Report to Commanding Officer, Naval
                     Regional Contracting Center, San Diego

May   IWO
                     Solicitation for
                     Contract Support
                     Services Limited

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
                   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

                   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

                   Page 1                         GAO/NSLAIMO-160   Competition   for Support Services

                         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

                         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

                        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

           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.

           GeorgeE. Grant

(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