The Air Force’s decision to cancel its $355 million Light Air Support (LAS) contract with Sierra Nevada Corp. (SNC) and resolicit proposals from SNC and competitor Hawker Beechcraft Defense Corp. (HBDC) under amended terms was a reasonable response to evidence of bias towards SNC uncovered in the Air Force’s initial investigative efforts, a federal judge ruled Oct. 15.
“The record to date at the time the Air Force decided to cancel the contract award to SNC suggested bias toward SNC by the Source Selection Evaluation Team (SSET), the Program Manager (PM) and the Program Contracting Officer (PCO). As observed by Lt. Gen. (Wendy) Masiello, that bias manifested itself in the documentation used to support the procurement decision,” U.S. Court of Federal Claims Judge Christine O.C. Miller wrote in a redacted version of her decision, which was unsealed Nov. 1. “It thus appears that the deficiencies in the LAS procurement, as understood by the Air Force at the time it decided to cancel the contract award, pertained to the evaluation of the offerors’ proposals.
“Given that the Air Force’s initial investigation had uncovered evidence of bias in favor of SNC, it was reasonable at the time for the Air Force to consider that such bias likely affected not only the evaluation of the offerors’ proposals, but also the post-proposal discussions and the offerors’ responses thereto…Thus, the Air Force’s decision to cancel the contract award to SNC and resolicit proposals was reasonable and rational and should stand.”
The Air Force originally awarded SNC and teammate Embraer [ERJ] of Brazil a contract over HBDC to produce 20 of Embraer’s A-29 Super Tucano turboprop aircraft as part of the LAS for Afghanistan contract. HBDC protested the decision with the Government Accountability Office (GAO) in November 2011, but GAO dismissed its protest as untimely. The same day, the Air Force awarded the contract to SNC.
The Air Force, surprisingly, canceled the contract in February, citing documentation issues. The service then re-opened the bidding to original bidder HBDC and its AT-6. SNC then sued the Air Force in June to have the original contract reinstated.
The court estimated a LAS contract award date of January 2013, which an industry source said has been pushed back to February. Air Force spokesman Ed Gulick said yesterday the service expects a source selection decision in early 2013.
“Sierra Nevada Corporation appreciates the court’s thorough review of the LAS procurement to ensure a fair and open LAS competition,” a SNC spokeswoman said yesterday in a statement. “Our goal has been, and remains, to provide the right LAS capability to those who need it in the most expeditious manner. It is increasingly important that these aircraft are provided quickly to enable the expeditious transition of security operations from U.S. forces to those of Afghanistan. SNC is offering the combat-proven A-29, which has excelled for years in the LAS mission across the globe. We are proud to present an overall solution that meets or exceeds the requirements of our warfighters and allies on the ground in Afghanistan today.
“The focus of our team remains the ongoing evaluation process and demonstrating the superior capability and value of our light air support solution for the benefit of our country’s military efforts.”
HBDC yesterday declined to comment. An employee with the Court of Federal Claims, who declined to give his name, said parties have 60 days from the date judgment is entered to appeal to the U.S. Court of Appeals for the Federal Circuit.
The court ruling is a blow to SNC’s quest to have the original contract award reinstated. Much like the KC-46 tanker acquisition and European Aeronautic Space and Defense Co.’s (EADS) bid for the contract, lawmakers could be turned off by SNC teaming with a foreign company in Embraer while HBDC would have its planes manufactured in the United States. Gulick said since the court ruling upheld the service’s decision to take corrective action, or re-open the procurement, the Air Force will comply with the court’s direction regarding declaratory relief. The court said declaratory relief is the Air Force’s duty to evaluate the offerors’ new proposals against the language regarding government funding for development contained in the amended solicitation’s provisions on pricing.
The court also found evidence of the Air Force not cooperating, and at the most extreme, interfering, with a Justice Department (DoJ) investigation into how the service came to its decision to award SNC with the original contract.
“The record reflects an uphill battle by DoJ and agency counsel in working with Air Force personnel to assemble the administrative record. The court found that agency counsel ordered the Air Force’s program manager to include in the record an email between high-ranking Air Force personnel and after the program manger would not readily produce the email. When pressed by DoJ counsel, the program manager asked “What would happen if we didn’t put it in?”
Having been advised he didn’t have a choice, on Jan. 10, the Bullet Background Paper on LAS Personnel Problems records that the Program Manager told agency counsel that he had been “burned” by DoJ and that he “would have not told them about (the email) if he had known they were going to make him put it in the record.” The program manager did produce the email on Jan. 17, but again asked if the email just be included in the administrative record. Agency counsel again informed him that he could not “pick and choose” what information was included in the administrative record.
HBDC filed the administrative record on Jan. 17, but quickly discovered that approximately 1,000 pages, later submitted, had been omitted from the record on file. DoJ counsel informed the program manager on Jan. 19 to not allow people to pick and choose what should be included.
“DO NOT allow anyone on the team to make determinations as to what is appropriate for conclusion,” DoJ counsel wrote. “This is not their job and will only lead to trouble later if relevant documents are found to be omitted.”
The Bullet Background Paper LAS Personnel Problems (BBP) also noted concerns about potential bias arising from actions by the program contracting officer (PCO). In response to comments from agency counsel that the PCO’s proposed Competitive Range Determination (CRD), which eliminated HBDC, was unsatisfactory, the PCO stated that she was not qualified to write it and after submission of SNC’s Final Proposal Revision (FPR), the PCO stated that she needed to reopen discussions with SNC for administrative purposes. Despite being instructed that she must prepare a formal letter to reopen discussions, the PCO did not do so, contributing to an appearance of favoritism toward SNC. The PCO also was instructed to cease discussions with SNC during the pendency of HBDC’s bid protest.
DoJ lawyers also discovered the Air Force destroyed records during the agency’s investigation. The same day HBDC filed its motion for judgment on Feb. 14, a DoJ lawyer learned that some records had been destroyed and took it upon herself to begin examining the relevant archives and shared hard drives for documents, discovering roughly 200 gigabytes of data, some of which was duplicative of the administrative record, some of which were not. DoJ counsel then emailed the program manager instructing him to obtain the hard drives for the data so that they could be analyzed to determine whether they should be produced for the administrative record.
The program manager was uncooperative.
“I am concerned if we are providing information that is not relevant to the motion filed last night,” the program manager wrote Feb. 15. “Information like the cost workbooks and [cost] analysis that was used by the Government to assure we were paying a fair price but was not otherwise used in the source selection decision or as a basis to eliminate HBDC and is not addressed in the motion filed last night—why would we want to now try and add that to the record?”
This prompted the Air Force to begin considering whether to take corrective action. Deputy Assistant Secretary for Contracting, Office of the Assistant Secretary of the Air Force for Acquisition Maj. Gen. Wendy Masiello on Feb. 23 forwarded observations to Air Force Materiel Command chief Lt. Gen. Thomas Owen regarding the procurement and HBDC’s protest, finding, among others: “poorly assembled Administrative record inconsistent with Federal Rules; The court said the Commander Directed Investigation (CDI) report revealed evidence of bias in favor of SNC. Air Force Materiel Command chief Gen. Donald Hoffman initiated the CDI report in February to investigate agency compliance with the acquisition policies, practices and guidance in the LAS procurement. The court said although the CDI report found “substantial documentation” of the deficiencies of HBDC’s proposal, “the record could possibly be viewed as thin or lacking” with regard to SNC, such that “the depth of analysis was not readily apparent.”
The court said evaluation under the primary “Measure of Merit” (MoM) was problematic as it provided two separate paths through which a proposal could be found satisfactory. The court said this “immediately [brought] into question the viability of conducting a truly equitable evaluation, and frankly, whether a true competitive environment ever actually existed for either offeror.”
The court said the CDI report also revealed further evidence of bias in favor of SNC in communications between the PCO and SNC. The court said first the PCO appeared to have attempted to “broker redactions and/or release of SNC information” during the collection of the administrative record for HBDC’s protest. The court said secondly, SNC had submitted its FPR without having received a response regarding its complaint about an alleged unfair competitive advantage held by HBDC, suggesting that SNC may have been notified that it was the only offeror in the competitive range. The court said thirdly, despite an agreed plan to notify the offerors of elimination and FPR requests by mail, the PCO also sent an FPR notification to SNC by email, whereas the PCO sent notice of elimination to HBDC by mail to the wrong address, resulting in a delay that prevented HBDC from timely requesting a debrief.
The court said, ultimately, the CDI report found that the problems in the procurement arose due to shortcomings in the evaluation process that were driven, in large part, by the complexity of the solicitation:
“Failure in the LAS source selection lies primarily with the execution by the people involved,” the court said of CDI report. “Even subsequent changes to policy would most likely not have fully mitigated the shortfalls given the poor execution as clearly successful source selections have routinely been conducted and protest sustained under old policy and procedures such as those directed in MP5315.3. The CDI concluded the failure of this source selection resulted from a combination of a lack of experience, incomplete training, questionable competency of some, fractured team relationships and a general breakdown in effective communication, especially during key phases of the acquisition. As an example of incompetency, the PCO admitted to legal counsel that she was not qualified to write the Competitive Range Determination Document (CRDD), a fundamental PCO task.”
Following the Air Force’s decision to cancel the contract and reopen the competition, SNC filed a complaint alleging: The Air Force’s decision to terminate the LAS contract and solicit new proposals was “arbitrary and capricious,” Amendment 0008 to the new solicitation was not targeted to the flaws of the procurement and the Air Force demonstrated bias in favor of HBDC by failing to eliminate HBDC from competition due to HBDC’s receipt of government funding and inside information. Amendment 0008 was a number of revisions to the new solicitation, with the most significant one removing the system demonstration requirement. SNC argued that the flight demonstration was eliminated solely for the purpose of ensuring HBDC’s inclusion, but in the end the court ruled the Air Force’s removal of the flight demonstration requirement from the risk assessment evaluation was reasonable in the circumstances.
SNC argued the decision to reinstate HBDC to the competition was not rational because HBDC should have been disqualified in the first place due to its receipt of government funding that purportedly was used for development prior to the award. From fiscal years 2008-10, members of the Kansas congressional delegation (HBDC is based in Wichita) earmarked funds “to look at light attack technologies on the AT-6.” Some of the funds were used by the Air National Guard (ANG) in an annual Air Force-directed experiment known as the Joint Expeditionary Forces eXperiment (JEFX). As part of JEFX 2010, HBDC was paid to install in HBDC AT-6 aircraft a mission computer and its associated communications and datalink capabilities previously developed for its AT-10C aircraft. Air Force pilots flew the aircraft and developed the system.
In September and October 2010, the ANG conducted an operational assessment (OA) of light attack technologies in a variety of scenarios. Air Force, ANG and Air Force Reserve Corps pilots flew HBDC AT-6 aircraft in those tests. Following the OA, the ANG used the HBDC AT-6 in a succession of tactics development and weapons tests conducted in October 2010, early winter 2011, fall 2011 and winter 2012.
The court said an April 11 bullet background paper on the ANG’s relationship with HBDC: “The ANG executed a Congressionally-directed demonstration of light attack capabilities utilizing a [HBDC] AT-6B. The demonstration and aircraft modification were funded entirely through Congressional adds and [HBDC] funding. While Congressional language directed the use of [HBDC] AT-6 aircraft for this demonstration, the ANG’s objective was to develop platform agnostic lessons learned to inform the [Air Force’s] long-term light attack requirements development and possible acquisition strategy . . . ANG was always aware of [Air Force] and Congressional sensitivities surrounding the LAS/LAAR acquisition and related light attack projects and made every attempt to maintain a platform-neutral approach. The use of the AT-6B was Congressionally directed.”
The LAS program office responded to SNC’s concerns about the funding in an April 30 memo: “With respect to the allegations of unfair competitive advantage, the Government does not share your view. An offeror is free to include within its proposal information that might be the result of company funded, commercial or US Government or foreign government activity that has occurred or is ongoing.”
Despite the memo, SNC did score a small victory in the ruling. The court ruled SNC was entitled to a declaration that the source selection decision must take into account the government funding and development language contained in Section L 6.3 of the amended solicitation, which states: “the Government will not fund any development associated with the offerors’ proposed solution. All such costs are the sole responsibility of the offeror.”
View the court ruling here: http://1.usa.gov/TVPlke