BNUMBER: B-276434; B-276434.2
DATE: June 12, 1997
TITLE: Marvin Land Systems, Inc., B-276434; B-276434.2, June 12,
1997
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DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:Marvin Land Systems, Inc.
File: B-276434; B-276434.2
Date:June 12, 1997
William A. Roberts III, Esq., Lee P. Curtis, Esq., and Richard P.
Castiglia Jr., Esq.,
Howrey & Simon, for the protester.
Joel R. Feidelman, Esq., Anne B. Perry, Esq., and Nancy R. Wagner,
Esq., Fried,
Frank, Harris, Shriver & Jacobson, for Napco International, Inc., an
intervenor.
Vera Meza, Esq., and Robert A. Maskery, Esq., Department of the Army,
for the
agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Where protester challenges exclusion from consideration for the award
of a
reprocurement contract, protest is denied as to base quantity, because
agency
reasonably determined that only the awardee could satisfy its
requirements for the
base quantity within the time required.
DECISION
Marvin Land Systems, Inc. protests the sole source award of contract
No. DAAE07-
97-C-X065 to Napco International, Inc. by the U.S. Army
Tank-automotive and
Armaments Command (TACOM) for M113A3 conversion kits. The contract is
a
reprocurement of a requirement that had been previously awarded to Kit
Pack
Company; Kit Pack's contract was terminated for default. Marvin
contends that the
agency had no reasonable basis to exclude it from consideration for
award of this
requirement.
We deny the protest.
The M113A3 conversion kits are necessary to support ongoing upgrades
at Anniston
Army Depot, Alabama, and Bokuk Industries, Guji, Korea of the M113
Family of
Vehicles (the M113 Armored Personnel Carrier, M577 Command Post
Vehicle,
M1068 Standard Integrated Command Post Systems, M58 Smoke, Opposing
Forces
Surrogate Vehicle, and M1064 120MM Mortar System). The kits contain
more than
1,100 different parts, several of which (such as the armor plate,
transmission
controller, and variable speed fan drive) are long-lead items.
These kits were the subject of an earlier competitive procurement.
FMS
Corporation submitted the lowest-priced offer under that procurement,
but was
found nonresponsible and was denied a certificate of competency from
the
Small Business Administration. The next low-priced offeror withdrew
its offer.
Kit Pack submitted the third low-priced offer and Napco the fourth
low-priced offer.
A contract was awarded to Kit Pack on October 30, 1995, for 764 kits,
with delivery
of 50 kits per month to begin October 21, 1996. On November 1, 1996,
Kit Pack's
contract was terminated for default because of Kit Pack's failure to
make delivery
due to its financial condition.[1]
FMS, which had delivered more than 2,300 M113A3 conversion kits to the
Army
since 1987, filed for bankruptcy in June 1995. On August 30, 1995,
Marvin
purchased all of FMS's operational facilities, equipment, and
machinery and retained
most of FMS's key operational management personnel. After this date,
Marvin
expressed to the Army its interest in supplying kits to the agency.
Two of FMS's
contracts--a Field Artillery Ammunition Supply Vehicle (FAASV) kit
contract and an
M113-related kit contract--were novated to Marvin; Marvin did not
agree, however,
to the novation of three other M113-related kit contracts because the
agency would
not agree to price increases for those contracts. Marvin also won a
limited
competition to provide conversion kits for the Bradley Fighting
Vehicle.
After the termination of Kit Pack's contract, Marvin again expressed
interest in
supplying the M113A3 conversion kits. However, on February 26, 1997,
the Army
noncompetitively awarded a reprocurement contract with a total
estimated value of
$19,086,617 to Napco for 401 conversion kits with an option for 258
additional kits
at a unit price of $28,963 per kit.[2] Napco is to begin delivery of
60 kits per month
on September 26, 1997; delivery of the option quantity is to begin
immediately after
delivery of the basic quantities--exercise of the contract option is
required to be
within 240 days of contract award.
The Army's sole source award to Napco was supported by a written
"Justification
and Approval" that found that only Napco could provide the required
659 conversion kits within the time required. Specifically, the Army
found that
Napco, which was delivering this kit under other contracts, was the
only source
with the production expertise and current production line capable of
meeting the
Army's urgent requirement for the kits. The Army noted that:
"[h]istorically, procurement lead time for a competitive
solicitation for
kits that are this large has been 7-12 months. TACOM Production
Division has established the production lead time for this kit at
360 days. Napco, because of their active production status,
could
begin delivery within 210 days after award. Thus, a letter
contract
award to Napco would result in kit deliveries beginning in 210
days,
with completion in 11 months as opposed to deliveries starting in
576 days for a competitive, fixed price contract. If a
competitive
procurement for this requirement was issued, the [g]overnment
would
encounter a 15 month break in production at two separate
production
facilities at the cost of approximately $500K each per month.
Even
with the letter contract to Napco, the [g]overnment may encounter
a
three month break in production at the Anniston production
facility
which is still substantially better than a 15 month production
break for
a competitive procurement."
The Army states that given its shortage of kits at its production
facilities, the
delivery of kits after May 1997 will adversely affect its M113
production line, which
in turn adversely impacts its schedule in fielding vehicles.
Marvin challenges the Army's noncompetitive award, asserting that,
because of its
acquisition of FMS's assets and key personnel, Marvin is qualified and
capable of
providing the conversion kits within the time required. The Army
responds that
Marvin does not have the capability to timely meet the agency's needs.
Generally, in the case of a reprocurement after default, the statutes
and regulations
governing regular federal procurements are not strictly applicable.
TSCO, Inc.,
65 Comp. Gen. 347, 350 (1986), 86-1 CPD para. 198 at 5. Under Federal
Acquisition
Regulation (FAR) sec. 49.402-6(b), the agency may use any terms and
acquisition
method deemed appropriate for repurchase of not more than the required
quantity,
provided it obtains as reasonable a price as practicable and
competition to the
maximum extent practicable. We review the reprocurement to determine
whether
the agency acted reasonably under the circumstances. Barrett and
Blandford Assocs., Inc., B-250926, Feb. 2, 1993, 93-1 CPD para. 95 at 3.
The question here is whether the Army reasonably concluded that Marvin
could not meet the agency's needs within the exigent time
requirements. We find that the agency did.
The record establishes that the Army has an urgent requirement for
conversion kits.
As noted above, kits are necessary to support ongoing production lines
at two
separate production facilities where the M113 Family of Vehicles are
being
upgraded; upgrade of these vehicles, which support "Force Package I"
(first-to-fight)
combat units, presents important national defense considerations. If
Kit Pack had
satisfactorily performed its contract requirements, the agency would
have begun
receiving 50 kits per month in October 1996. Kit Pack's contract,
however, was
terminated for default on November 1, 1996, and the Army received no
deliveries
from Kit Pack. It is unrebutted that the Army's production lines to
support the
M113A3 conversion upgrades will be adversely affected if conversion
kits are not
acquired by May 1997 (which will not happen even under the
noncompetitive
award). As of September 1997, when the Army is to receive the first
delivery of
kits from Napco, the Army will have experienced a shortage of nearly
600 kits from
that anticipated under the agency's original acquisition plan.
Aside from the time necessary to conduct even a limited competition
for the
reprocurement, the production lead time for the M113A3 conversion kits
is fairly
lengthy. Specifically, the Army states that the production lead time
for this kit is
generally 360 days. Napco, however, because of its active production
status, could
begin delivery within 210 days after award. Even this expedited
delivery schedule
would not satisfy the agency's exigent requirement for kits. While
the record
supports Marvin's contention that its acquisition of FMS's operational
assets and
key operational management personnel provided Marvin with the
capability of
producing the M113A3 conversion kits, the record does not establish
that Marvin
could provide kits on the accelerated basis Napco will provide. In
this regard,
Marvin has presented no evidence to rebut the agency's contention that
it would
take Marvin at least 360 days after award to begin delivery of kits.
Given the
agency's acute need for conversion kits, we find the agency acted
reasonably in
acquiring kits from Napco;[3] we do not find, as Marvin suggests, that
the agency
should further delay this acquisition because the agency could not
acquire kits from
any source by May 1997--the date by which it first needed delivery of
kits.
As noted by the protester, we have questioned the inclusion of options
in
noncompetitive awards where they are not separately justified. See
Master Sec.,
Inc., B-235711, Oct. 4, 1989, 89-2 CPD para. 303 at 4. However, based on
this record,
we find that the inclusion of the option quantity in the reprocurement
contract was
not improper. As indicated, the agency justified the exigent need for
the entire
quantity of M113A3 conversion kits, including options, which exigency
was caused
by the prior contractor's failure to deliver the kits. While delivery
of the option
quantities was to commence after delivery of the base quantity in
April 1998, the
record does not show that Marvin could meet that delivery schedule,
considering
the undisputed 360-day production lead time and the time necessary to
conduct
even a limited competition.
The protest is denied.
Comptroller General
of the United States
1. Kit Pack failed to meet the first scheduled delivery date.
2.[DELETED]. The balance of the Army's requirements from the
terminated contracts (105 kits) was placed with the Red River and
Anniston Army Depots.
3. Marvin also argues that acquisition of the kits noncompetitively
from Napco was improper because the agency did not conduct appropriate
advance planning in conducting its reprocurement. While the
Competition in Contracting Act of 1984 provides that an agency cannot
justify a noncompetitive award that is due to an agency's lack of
advance planning, see 10 U.S.C. sec. 2304(f)(5)(A) (1994), this concept
is not applicable to an agency's reprocurement for the account of a
defaulted contractor. See Performance Textiles, Inc., B-256895, Aug.
8, 1994, 94-2 CPD para. 65 at 3 n.1. In any event, the record here does
not evidence any lack of advance planning by the Army, which awarded a
reprocurement contract within 90 days of the termination of Kit Pack's
contract.