B-297648.3, Yardney Technical Products, Inc.--Costs, March 28, 2006
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Protest was not clearly meritorious, and reimbursement of protest costs following agency corrective action therefore is not warranted, where additional record development and substantial further analysis would have been required to resolve protest.
Yardney Technical Products, Inc. requests that we recommend that it be reimbursed the costs of filing and pursuing its protest challenging the award of a contract to Quallion, LLC under broad agency announcement (BAA) No. BAA-04-08-PKM Call 8, issued by the Department of the Air Force for establishment of a domestic supplier of spacecraft-quality rechargeable lithium-ion batteries.
The BAA identified three program objectives: establish U.S.-owned domestic trusted source(s) of cathode materials; strengthen U.S.-owned domestic industrial base for true prismatic lithium-ion cells and batteries for spacecraft use; and establish U.S.-owned domestic trusted source(s) of other base cell components and their precursors. Proposals were to be evaluated under three factors, listed in descending order of importance--business and technical aspect, cost/price, and proposal risk assessment. Proposals were to be rated as category I--well conceived and technically sound (recommended for acceptance); category II--technically sound, but requires further development (recommended for acceptance but at a lower priority than the first category); and category III--not technically sound or does not meet agency needs. The BAA contemplated the possibility of awarding multiple contracts, depending upon the evaluated order of merit of competing proposals and the availability of funding.
Four offerors, including Yardney and Quallion, submitted proposals, which were evaluated by the technical team. Both Yardney’s and Quallion’s proposals were determined to be in category I, with Quallion’s considered first in order of merit based on its superior, low-risk technical approach, which included $7 million in cost sharing. Yardney’s proposal was evaluated as acceptable but high-risk, due to uncertainties associated with its technical approach; it did not provide for cost sharing. Since funding ultimately was available for only one award, the agency selected Quallion for award.
In its protest, Yardney alleged that the agency evaluated
the proposals based on factors outside the stated evaluation scheme, that its
proposal should have been rated superior because it had greater experience and
existing manufacturing capability than Quallion, and that Quallion’s approach
to developing and supplying the raw material was flawed. Yardney further asserted that one of the
evaluators was biased in favor of Quallion and had unduly influenced the source
selection team. In support of this claim,
Yardney cited the fact that the evaluator had traveled to
The Air Force filed an agency report that addressed all of
Yardney’s arguments and included a sworn statement from the allegedly biased evaluator,
who was the program manager for battery technology at the National
Reconnaissance Office. Agency Report,
Tab 10, Statement of Program Manager.
The program manager denied any improper influence over the evaluators in
favor of Quallion’s proposal. Statement
of Program Manager, at 3. With regard to
After receipt of the agency report, Yardney retained outside counsel, who filed a supplemental protest challenging the propriety of the program manager’s meeting with the Japanese firm and Quallion. Specifically, Yardney asserted that (1) the BAA improperly failed to identify technology transfer as the favored approach; (2) the meeting was outside “formal procedures” and gave Quallion favored treatment; (3) Quallion obtained inside information and an unfair competitive advantage from the meeting; (4) Quallion’s unfair advantage resulted in its elevated--and Yardney’s lower--ratings in the evaluation; and (5) the program manager’s actions--accepting Quallion’s “technical services” through the introductory meeting, failing to ensure a level playing field in the procurement, and providing Quallion with unequal access to information--violated applicable statutes and regulations. Yardney also challenged the evaluation of Quallion’s proposed cost share as a strength, arguing that it was “illusory,” and asserted that the agency ignored Yardney’s significant investment in battery development.
Before our Office obtained a supplemental agency report responding to Yardney’s supplemental arguments, the Air Force announced that it was taking corrective action by canceling the current BAA and resoliciting for its requirements. The Air Force noted that the new solicitation would likely state a preferred/lowest risk solution, and that the program manager would not be part of the new evaluation team or selection process. We advised Yardney not to submit its comments on the original agency report, and dismissed its protest as academic.
Yardney requests that we recommend that it be reimbursed the reasonable costs of filing and pursuing its protests, including reasonable attorneys’ fees. Yardney asserts that its protest grounds were clearly meritorious and the agency unduly delayed taking corrective action, as evidenced by its failure to do so until after it filed the agency report on the original protest and Yardney had filed its supplemental protest.  Request for Reimbursement at 4. Yardney further asserts that, while the agency took corrective action shortly after the supplemental protest was filed, the corrective action should be viewed as unduly delayed with regard to the supplemental protest because the supplemental protest issues overlapped those raised in the original protest.
Under the Competition in Contracting Act of 1984, our
Office may recommend that protest costs be reimbursed only where we find that
an agency’s action violated a procurement statute or regulation. 31 U.S.C. sect. 3554(c)(1) (2000). Our Bid Protest Regulations provide that,
where the contracting agency decides to take corrective action in response to a
protest, we may recommend that the protester be reimbursed the costs of filing
and pursuing its protest, including reasonable attorneys’ fees. 4 C.F.R. sect. 21.8(e) (2005). This does not mean that costs should be
reimbursed in every case in which an agency decides to take corrective action;
rather, we will recommend reimbursement only where an agency unduly delayed its
decision to take corrective action in the face of a clearly meritorious
protest. Griner’s-A-One Pipeline
Servs., Inc.--Entitlement to Costs, B-255078.3,
We find that reimbursement is not appropriate in this case since, even if we agreed with Yardney that the agency’s corrective action was not prompt, the protest was not clearly meritorious. In its original protest, Yardney asserted that the evaluation of Quallion’s proposal as superior was flawed, that Quallion enjoyed an unfair competitive advantage, as evidenced by the program manager’s trip to Japan with the firm, and that the program manager unduly influenced the evaluation panel in favor of Quallion. The Air Force asserts that its response (detailed above) constitutes a defensible legal position with regard to the evaluation and unfair advantage issues based in part on the pre-existing business relationship between the awardee and the Japanese firm. Which party’s position is correct is not apparent from the record as it stands. Rather, in order to reach a decision on the matter, we would have required, at a minimum (as was our intention prior to being notified of the corrective action), a supplemental report from the agency and comments on that report by Yardney. Following this further development of the record, we would have had to conduct substantial further analysis of the parties’ positions. In such cases, we do not consider the protest grounds to be clearly meritorious. New England Radiation Therapy Mgmt, Servs., Inc.--Costs, B‑297397.3, Feb. 2, 2006, 2006 CPD para. 30 at 4; LENS, JV--Costs, B-295952.4, Dec. 12, 2005, 2006 CPD para. 9 at 5; East Penn Mfg. Co., Inc.--Costs, B-291503.4, Apr. 10, 2003, 2003 CPD para. 83 at 2-3 (protest not clearly meritorious where decision would have required further steps to complete and clarify the record). We therefore decline to recommend reimbursement of Yardney’s protest costs.
Yardney also asserts that it is entitled to reimbursement of its proposal preparation costs. In this regard, Yardney argues that its initial proposal was “wasted” work because the new solicitation--which was expected to identify technology transfer as the preferred solution--represents a solution different from the one it originally proposed, thus requiring it to completely rewrite its proposal. Request for Reimbursement at 5.
Where we have sustained a protest, we may recommend
reimbursement of proposal preparation costs when changed circumstances render a
previously-submitted proposal no longer relevant. See COBRO Corp., B-287578.2,
The request that we recommend reimbursement of costs is denied.
Anthony H. Gamboa
 In addition, while Yardney never filed comments, it asserts that the comments were substantially completed when it was notified of the corrective action.
 Notwithstanding Yardney’s assertions, moreover, it is not clear to what extent its original solution would have no value under the resolicitation.