Agency: Department of the Army
Disposition: Protest Denied
Decided: July 9, 2019
Keywords: Sole-Source Award, Competition in Contracting Act
General Counsel P.C. Highlight:
A protest of proposed award of a sole-source contract for highly specialized equipment will be denied where the agency reasonably concludes that only one firm possesses the necessary data rights to produce the item and is capable of meeting the agency’s needs, and award to any other source would cause unacceptable delay in fulfilling the agency’s requirements.
Summary of Facts
Wamore, Inc. protests the intended sole-source award of a contract to Airborne Systems North America (Airborne) under an RFP issued by the Department of the Army, Army Contracting Command – Warren, for the supply of joint precision aerial delivery systems (JPADS) for foreign military sales (FMS) to Norway and Jordan. The JPADS is a guided, high-altitude capable, precision airdrop system used to accurately deliver payloads by aircraft to soldiers on the ground.
In March 2007, the Army competitively awarded a contract to Airborne for the design, development, manufacture, and testing of the JPADS 2K system and Wamore was a subcontractor under this contract. In 2009, the Army and Airborne entered into a special license agreement (SLA) whereby the Army purchased rights in the JPADS 2K technical data for government purpose, which stated that “government purpose” did not include FMS. Airborne also entered into a “rights purchase agreement” with Wamore, which stated that Wamore transferred all of its “worldwide rights, title and interest in and to the Components” to Airborne.
In June 2011, under the original contract, Airborne submitted an engineering change proposal (ECP) to the Army for a configuration change to the JPADS 2K. Under the ECP, Wamore provided configuration change drawings for Modular Airborne Guidance Units (MAGU) to the Army. In 2016, the Army received a “letter of offer and acceptance” (LOA) from the Jordanian Armed Forces and Norway for JPADS 2K units. In December 2016, the Army posted a notice on the Federal Business Opportunities (FBO) portal seeking sources that could produce JPADS 2K units for FMS purposes. Airborne and Wamore submitted responses. Airborne claimed it owned full data rights to all JPADS 2K systems, and that limited use data rights had been sold to the Army for U.S. government, but not FMS, purposes. Wamore claimed that it was the original equipment manufacturer of the JPADS 2K MAGU and holder of all non-government use data rights.
After receiving additional information from Airborne and Wamore, the contracting officer determined that Wamore had not provided sufficient information to support its claim that it was able to compete for the FMS JPADS 2K requirements. In June 2018, the Army prepared a Justification and Approval (J&A) for the proposed sole-source award to Airborne, which stated the agency’s conclusion that there is only one responsible source and no other supplies or services will satisfy the agency’s requirements. The Army determined that under the SLA, the Army’s data rights in the JPADS did not extend to FMS requirements and that awarding a contract to a source other than Airborne would result in substantial delays to fill the FMS requirements. On March 5, 2019, the Army issued the subject RFP, which stated that the Army planned to award a contract on a sole-source basis to Airborne for FMS JPADS 2K units. Wamore filed its protest challenging the Army’s planned sole-source contract award to Airborne.
Basis of Protest
Wamore’s main argument is that the Army’s intended sole-source contract award to Airborne is improper, because the Army’s belief that only Airborne possesses the necessary data rights for the procurement here is in incorrect and, instead, Wamore can meet the agency’s requirements. The Army responds that its sole-source award to Airborne Systems is proper because the agency conducted a reasonable inquiry and concluded that Wamore did not possess data rights to competitively procure the JPADS 2K units for FMS purposes.
The Competition in Contracting Act (CICA) “requires agencies to obtain full and open competition in their procurements through the use of competitive procedures.” However, there is an exception “where the supplies or services required by an agency are available from only one responsible source, and no other type of supplies or services will satisfy agency requirements.” Under CICA, “property or services may be deemed to be available only from the original source and may be procured through procedures other than competitive procedures” when it is likely that award to an alternative source would result in substantial duplication of cost to the U.S. or unacceptable delays in fulfilling the agency’s needs.
When an agency uses noncompetitive procedures, it must prepare a J&A with sufficient facts and explanation to support the use of the specific authority. The GAO’s review of an agency’s decision to conduct a sole-source procurement “focuses on the adequacy of the rationale and conclusions set forth in the J&A.” Additionally, the GAO has previously concluded that where an agency does not possess adequate data rights to conduct a competitive procurement, there is a proper basis for a sole-source.
The GAO explained that the dispute between Airborne and Wamore regarding data rights in the MAGU, which is now in arbitration, is a dispute between private parties that it will not consider. The GAO ultimately determined that the Army “conducted a reasonable inquiry” and determined that only Airborne held the data rights to the JPADS (including the MAGU) for FMS procurements. The GAO concluded that the Army’s position is “unobjectionable” and, therefore, “Wamore’s protest essentially relates to a dispute between two private parties as to which court action, rather than a protest to our Office, is the appropriate remedy.”
The GAO also determined that the adequacy of the Army’s rationale and conclusions of the sole-source award determination are reasonable. The GAO noted that the contracting officer considered that: under the SLA, the Army did not acquire government purpose rights in the JPADS 2K units for FMS purposes; in advance of the SLA, Airborne purchased Wamore’s “worldwide rights, title and interest” to the relevant property; because the MAGU represented an updated version of the AGU, obtained by ECP change order, any data rights in the MAGU would also be governed by the SLA; and the Army maintained privity of contract with only Airborne for the MAGU and did not fund Wamore’s work on the MAGU. Based on those findings, the GAO determined the Army’s justification for determining that Airborne was the only responsible source for the FMS JPADS 2K procurement was reasonable. For these reasons, the GAO denied the protest.