Northrop Grumman Systems Corporation

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.

Decision

Matter of:  Northrop Grumman Systems Corporation

File:  B-414312; B-414312.2; B-414312.3

Date:  May 1, 2017

DIGEST

1.  Source selection authority reasonably concluded that the risks and benefits associated with awardee’s proposed solution offered a better value to the government than the risks and benefits associated with the protester’s proposed solution, and reasonably rejected the lower-level evaluators’ recommendation to select the protester for award. 

2.  There is no merit in protester’s assertion that the agency’s discussions were less than meaningful where protester’s proposed solution contained no evaluated significant weaknesses or deficiencies and the agency’s discussions advised the protester of the agency’s concerns regarding the schedule risk associated with the protester’s proposed solution. 

3.  Agency’s consideration of issues related to, and encompassed by, the stated evaluation criteria did not constitute application of unstated evaluation factors.

Northrop Grumman Systems Corporation, of Rolling Meadows, Illinois, protests the Department of the Air Force’s award of a contract to BAE Systems Information and Electronic Systems Integration, Inc., of Nashua, New Hampshire, pursuant to request for proposals (RFP) No. FA8523-14-R-30015 related to the agency’s radio frequency countermeasures (RFCM) program.  Northrop challenges various aspects of the agency’s evaluation and source selection process, including the assertion that the agency’s source selection authority improperly rejected the agency’s lower‑level evaluators’ award recommendation.   

We deny the protest.

BACKGROUND

The purpose of this procurement is to provide radio frequency countermeasures for Special Operations Forces AC-130J and MC-130J aircraft.[1]  The solicitation was initially issued in November 2014, and contemplated a “phased” acquisition process.  AR, Tab 2, Contracting Officer’s Statement, Feb. 23, 2017, at 2, 9-11.  In this regard, a competition for system design contracts was completed in November 2015, at which time BAE and Northrop Grumman were each awarded system design contracts.  Id.  Following the November 2015 awards, BAE and Northrop Grumman engaged in a series of activities/milestones under those contracts, including:  system requirements reviews (SRR); preliminary design reviews (PDR); critical technology demonstrations (CTD); and critical design reviews (CDR).  Id.  These activities/milestones led to, and provided the basis for, the downselect competition that is the subject of this protest.[2]   

As amended, sections L-901 and M-901 of Northrop Grumman’s and BAE’s contracts provided that the downselect decision would be made on a best-value basis, and established the following evaluation factors:  engineering and cost/price.[3]  AR, Tab 5, Evaluation Basis, at 300.  Under the engineering factor, there were two equally-weighted subfactors:  system performance[4] and aircraft integration.[5]  Id.  The contractors were advised that the agency would assign separate technical ratings and technical risk ratings under each evaluation subfactor.[6]  Id.   

In August 2016, BAE and Northrop Grumman completed their respective CDRs (critical design reviews) and CTDs (critical technology demonstrations) and, in September, submitted, or updated, their cost/price data.[7]  Contracting Officer’s Statement, Feb. 23, 2017, at 11-12.  Thereafter, the agency evaluated the proposed solutions and sent each contractor evaluation notices (ENs).[8]  The contractors’ solutions, along with their responses to the ENs, were evaluated as follows:

	Northrop Grumman	BAE
Engineering
System Performance:  Technical Rating    Risk Rating	Outstanding Moderate	Outstanding Moderate
Aircraft Integration:  Technical Rating   Risk Rating	Acceptable Low	Acceptable Low
Cost/Price	$384,581,475	$359,141,129

AR, Tab 13, Proposal Analysis Report, at 7-10.

In assigning a moderate risk rating to Northrop Grumman’s solution under the system performance subfactor,[9] the agency’s technical evaluation report (TER) expressed concern regarding the incomplete status of Northrop Grumman’s software, firmware, and hardware development.  Specifically, the TER stated, “[Northrop Grumman’s] design material presented in support of CDR highlighted [that] a fair amount of hardware and software work still remains,” and expressed concern that Northrop Grumman would be “[u]nable to provide an RFCM production-representative system by the start of Design Verification Test (DVT).”[10]  Protest, Jan. 24, 2017, attach. 1, Unclassified Excerpts from Classified TER, at 12.  The TER elaborated that:

Areas of concern include:  Software:  [redacted] percent [redacted] of [redacted] code is either new or modified (equating to [redacted] lines of code).  Although [Northrop Grumman] indicates that some coding (of the [redacted]) is identified as “complete,” [redacted] of the [redacted] is not yet complete.  Firmware:  [redacted] percent [redacted] of [redacted] firmware is either new or modified (equating to [redacted] logic changes).  The contractor indicates that a significant portion of the firmware is complete, but [redacted] percent [redacted] of the new/modified programming has not completed integration, while over [redacted] of the [redacted] resides in a firmware component [redacted]  that has not completed coding.  Hardware:  Re-design of [redacted] still require design, build and test.  [redacted] sub-assemblies [redacted] scheduled production deliveries of Dec 2016 provide limited to no management reserve to overcome integration and test issues.  Both increase risk to support DVT start.

Id. at 12-13.

In assigning a moderate risk rating to BAE’s solution, the agency expressed concern regarding the “limited [redacted],” and noted that this could “lead[] to a possible reduction in [redacted]” extending over the life of the contract.  AR, Tab 13, Proposal Analysis Report, at 9; Tab 14, Comparative Analysis Report, at 4.  The evaluators concluded that this risk was somewhat reduced by BAE’s use of additional hardware resources that [redacted].  Contracting Officer’s Statement, Feb. 23, 2017, at 15.   

In December, the source selection advisory council (SSAC) prepared a report for the source selection authority (SSA),[11] noting that because the adjectival ratings showed the two systems as being equally rated by the source selection evaluation board (SSEB), “a compelling case could potentially be made to award to either offeror.”  AR, Tab 14, Comparative Analysis Report, at 6, 8.  Nonetheless, based on its own assessment, the SSAC concluded that Northrop Grumman’s solution was superior to BAE’s under the system performance subfactor,[12] while the SSAC considered BAE’s solution to be “minimally, but discernably” superior to Northrop Grumman’s under the equally-weighted aircraft integration subfactor.[13]  Id. at 9.  The SSAC also noted the moderate risk ratings assigned to both contractors’ solutions under the system performance subfactor, acknowledging that BAE’s solution “leverag[ed] . . . mature hardware, software, and firmware” and reflected high manufacturing and technology readiness levels, while Northrop Grumman’s incomplete design used mature system architecture to “a lesser extent” and reflected a “maturity-based” schedule risk.  Id. at 3‑4. 

Overall, the SSAC expressed the view that the potential benefits of Northrop Grumman’s solution outweighed the benefits of BAE’s solution, recommending that the SSA select Northrop Grumman.  Id. at 10.  However, the SSAC report also stated: 

We do recognize that a different body of stakeholders with similar experience and knowledge could reach an entirely different recommendation based on the same data.  For example, we chose to assign greater value to the [Northrop Grumman] [redacted] design strength together with the BAE [redacted] risk.  Another group may have chosen to assign greater value to BAE’s system architecture strength taken together with [Northrop Grumman’s] design maturity risk; thereby reaching a different, but equally acceptable recommendation under the source selection criteria. 

Id. at 8.   

The record establishes that, in making his source selection decision, the SSA reviewed all of the source selection documentation, including classified and unclassified technical evaluation reports;[14] the proposal analysis report; the comparative analysis report; and the price report.  AR, Tab 21, SSDD, at 1-5; AR, Tab 23, SSA’s Affidavit, Feb. 23, 2017, at 2.  In addition, the SSA conducted multiple discussions, via video teleconference and telephone, with various agency experts involved in the source selection process.  Id.

Based on his review and discussions, the SSA concluded that BAE’s solution “will provide a more stable technical baseline (system maturity and high levels of hardware/software reuse).”  AR, Tab 21, SSDD, at 5.  In documenting his decision, the SSA specifically discussed various aspects of the SSAC’s recommendation, noting BAE’s “leveraging of mature hardware, software, and firmware design solutions” and its “extensive” reuse of hardware, firmware, and software.  Id. at 3.  The SSA also acknowledged various strengths associated with Northrop Grumman’s solution, including its “exceptional and substantially higher [redacted],” and noted multiple aspects of Northrop Grumman’s solution that achieved “objective-level” capabilities[15] to a greater extent than BAE’s solution, referring to Northrop Grumman’s “superior [redacted] Capability.”  Id. at 3‑4.  The SSA further documented his acknowledgment of the risk associated with BAE’s more limited [redacted] “leading to a possible reduction in [redacted] performance” and recognized that this risk “could affect system performance across the lifecycle” of contract performance.  Id. at 4.   

Nonetheless, the SSA rejected the SSAC’s recommendation, stating:

In my opinion, however, BAE’s system architecture strength in Subfactor One [system performance], combined with the additional identified risks of the [Northrop Grumman] Subfactor Two Aircraft Integration approach, substantially (negatively) offset the benefits of [Northrop Grumman’s] superior Subfactor One [redacted] solution given that BAE’s system meets all threshold requirements.  As a result, I have reached a different conclusion from the SSAC and do not agree that these [redacted] capability strengths are sufficient to form the basis for a best value tradeoff decision award to [Northrop Grumman].

Id.

The SSA elaborated that BAE’s system architecture “carries considerable weight in my decision,” noting that BAE’s “leveraging of MRL [manufacturing readiness level] [redacted] and TRL [technology readiness level] [redacted] hardware, software, and firmware[[16]] as well as high levels of associated reuse increase the likelihood of having a production representative system available on schedule to support DVT, which is on the critical path for the Fiscal Year 2019 Initial Operational Capability user requirement.”  Id. at 4-5.  The SSA concluded that he believed that “the BAE solution will provide a more stable technical baseline” and “can be more easily integrated into the AC/MC‑130J Recap fleets at lower risk.”  Id. at 5.  Finally, the SSA noted that BAE’s total price of $359,141,129 “is approximately 7 percent lower than [Northrop Grumman’s] proposed $384,581,475 price” and concluded that, overall, BAE’s solution reflected the best value to the government.  Id.   

On January 7, Northrop Grumman was notified of BAE’s selection for award; thereafter, Northrop Grumman requested and received a debriefing.  This protest followed. 

DISCUSSION

Northrop Grumman’s protest challenges various aspects of the agency’s evaluation and source selection process, including assertions that the SSA unreasonably rejected the SSAC’s award recommendation; that the agency failed to conduct meaningful discussions; and that the agency applied unstated evaluation factors.  As discussed below, we find no merit in these complaints.[17]

SSA’s Source Selection Decision

First, Northrop Grumman asserts that it was “unreasonable” for the SSA to reject the SSAC’s award recommendation.  Protest, Jan. 24, 2017, at 58-64; 2nd Supp. Protest, Mar. 6, 2017, at 6-28.  In this context, Northrop Grumman acknowledges that “[t]he SSA did not disagree with the technical evaluation and conclusions reached by the SSEB and SSAC,” Protest, Jan. 24, 2017, at 41, but asserts that SSA “ignored” the “short‑term” nature of Northrop Grumman’s evaluated schedule risk and failed to properly consider that BAE’s performance risk could extend throughout the life of the contract.  Id. at 2.   

In responding to Northrop Grumman’s assertion that the SSA unreasonably rejected the SSAC’s recommendation, the agency maintains that the SSA reasonably and properly considered all of the relative risks and benefits associated with the two solutions and properly exercised his own authority to reach a conclusion that differed from that of the lower-level evaluators.  Specifically, the agency references the SSA’s extensive review of all source selection documentation, as well as his subsequent discussions with multiple agency personnel.  The agency further points out that the SSA properly considered, and applied, the stated weight of the evaluation factors and documented his conclusions, yet--consistent with the SSAC’s express acknowledgement that “a compelling case could potentially be made to award to either offeror” and that, based on the design maturity risk inherent in Northrop Grumman’s solution, one could make an “equally acceptable” decision to select BAE--the SSA, in fact, reasonably selected BAE for award. 

The agency explains that the SSA placed great emphasis on ensuring that the government have RFCM capability for the MC/AC-130J aircraft prior to the user requirement of initial operating capability (IOC) in 2019 and, in that context, was more concerned than the SSAC regarding the risk associated with the incomplete status of Northrop Grumman’s software, firmware, and hardware development.  In this regard, the agency notes that, besides completing the software/firmware coding and hardware development, Northrop Grumman would have to successfully perform testing, integration, and potential rework flowing from its yet-to-be-completed work. 

Accordingly, the agency reasons that Northrop Grumman’s risk of failing to meet the DVT requirement placed at risk all subsequent milestones--including installation of the systems on the aircraft.  The agency further explains that any delay in fielding of the RFCM systems threatens not only successful execution of national security missions, but also threatens the lives of the aircrews flying those missions.  The agency concludes that any RFCM solution, no matter how potentially impressive, “does the warfighter no good until it can be integrated onto their aircraft.” [18]  AR, Tab 23, Affidavit of SSA, at 5.  Accordingly, the agency maintains that the SSA properly considered that:  BAE’s solution held a greater likelihood of being integrated onto the aircraft in a timely manner; BAE’s system met all of the requirements; and BAE offered a less expensive solution.  On this basis, the agency maintains that the SSA properly and reasonably determined that BAE’s solution represented the best value to the government.  We agree.

An SSA has broad discretion in determining the manner and extent to which lower-level evaluation results are used, and must use his/her own judgment to determine what the underlying differences between proposals may mean to successful contract performance.  In this regard, the SSA may disagree with, or expand upon, the findings of lower-level evaluators provided the basis for the evaluation is reasonable and documented.  Applied Physical Sciences Corp., B‑406167, Feb. 23, 2012, 2012 CPD ¶ 102 at 6; All Points Int’l Distribs., Inc., B-402993, B-402993.2, Sept. 3, 2010, 2010 CPD ¶ 209 at 3; KPMG Consulting LLP, B-290716, B-290716.2, Sept. 23, 2002, 2002 CPD ¶ 196 at 13-14; Information Network Sys., Inc., B‑284854, B-284854.2, June 12, 2000, 2000 CPD ¶ 104 at 12; Brisk Waterproofing Co., Inc., B-276247, May 27, 1997, 97-1 CPD ¶ 195 at 2 n.1. 

Further, in reviewing an agency’s evaluation of proposals and source selection decision, it is not our role to reevaluate submissions; rather, we examine the supporting record to determine whether the decision was reasonable, consistent with the stated evaluation criteria, and adequately documented.  Trofholz Techs., Inc., B‑404101, Jan. 5, 2011, 2011 CPD ¶ 144 at 3; Johnson Controls World Servs., Inc., B‑289942, B-289942.2, May 24, 2002, 2002 CPD ¶ 88 at 6.  A protester’s disagreement with the agency’s evaluation judgments, or with the agency’s determination as to the relative merits of competing proposals, does not establish that the evaluation or the source selection decision was unreasonable.  Smiths Detection, Inc.; Am. Sci. and Eng’g, Inc., B-402168.4et al., Feb. 9, 2011, 2011 CPD ¶ 39 at 6-7; ITW Military GSE, B-403866.3, Dec. 7, 2010, 2010 CPD ¶ 282 at 5.

Here, we have reviewed the entire evaluation record and find no basis to question the reasonableness or documentation of the SSA’s source selection decision.  That is, the record is clear that the SSA performed a comprehensive review of:  the contractors’ proposed solutions; the lower-level evaluators’ assessments of those solutions; and the risks and potential benefits associated with each.  Based on that review, the SSA concluded that the risks and potential benefits associated with BAE’s solution offered the superior choice when compared to the risks and potential benefits associated with Northrop Grumman’s solution.  As discussed above, the record shows that the SSA was concerned with both Northrop Grumman’s incomplete software/firmware coding and hardware design, as well as the necessary testing/integration and potential rework that could be required following completion of Northrop Grumman’s unfinished efforts.  In this regard, the SSAC, itself, expressly acknowledged that consideration of BAE’s more mature system architecture, along with Northrop Grumman’s “design maturity risk” could lead to the reasonable selection of BAE’s solution.  AR, Tab 14, Comparative Analysis Report, at 6, 8. 

We note that a significant portion of Northrop Grumman’s protest is based on the assertion that its schedule risk was necessarily “short-term” and would be quickly retired following Northrop Grumman’s prompt completion of the “minimal” software/firmware coding and hardware design that remained.[19]  Protest at 2, 50.  Even accepting Northrop Grumman’s representation regarding the amount of unfinished coding, we are unpersuaded that it was unreasonable for the SSA to be concerned by the potential for more significant delays flowing from the necessity to successfully test and integrate the yet-to-be-finished coding and hardware design.

In short, we find nothing unreasonable in the SSA’s consideration of all the risks and benefits associated with both solutions, including the risks associated with the incomplete status of Northrop Grumman’s software, firmware, and hardware development.  Neither do we question the SSA’s conclusion that any RFCM system provides no value in protecting missions or aircrew lives until it is successfully integrated onto the aircraft.  On the record here, while Northrop Grumman clearly wishes that the competing factors considered, and judgments made, by the SSA had led to a different selection decision, it has wholly failed to establish that the SSA’s judgments and conclusions were unreasonable or contrary to the stated evaluation factors.  Northrop Grumman’s protest challenging the SSA’s source selection decision is denied.

Meaningful Discussions

Next, Northrop Grumman asserts that the agency’s discussions were less than meaningful.  In this regard, Northrop Grumman complains that the discussions failed to inform Northrop Grumman that:  its evaluated schedule risk “was significantly more important to the Air Force than [BAE’s evaluated performance risk]”; its unfinished software/firmware coding created moderate risk; and/or that BAE’s mature system architecture would be viewed more favorably than Northrop Grumman’s “enhanced system capability.”  Protest, Jan. 24, 2017, at 54-56.

The agency responds that Northrop Grumman was, in fact, advised during discussions of the agency’s concern regarding Northrop Grumman’s ability to meet the DVT availability requirement.  Contracting Officer’s Statement, Feb. 23, 2017, at 35-36.  In any event, the agency points out that there were no evaluated significant weaknesses or deficiencies in Northrop Grumman’s proposed solution and, accordingly, the agency met its obligation to conduct meaningful discussions. 

Although discussions, when conducted, must be meaningful--that is, they must identify deficiencies and significant weaknesses that exist in an offeror’s proposal--that requirement is satisfied when an agency leads an offeror into the areas of its proposal that require amplification or revision.  See, e.g., Epsilon Systems Solutions, Inc., B‑409720, B-409720.2, July 21, 2014, 2014 CPD ¶ 230 at 16.  In this regard, we have repeatedly noted that an agency is not obligated to “spoon‑feed” an offeror as to the particular manner in which each and every item could be revised.  See, e.g., ITT Indus. Space Sys., LLC, B‑309964, B-309964.2, Nov. 9, 2007, 2007 CPD ¶ 217 at 12; OMV Med., Inc., B‑281490, Feb. 16, 1999, 99-1 CPD ¶ 38 at 7.

Here, as noted above, Northrop Grumman’s solution was evaluated as outstanding under the systems performance evaluation factor and acceptable under the aircraft integration subfactor.  The record is clear that the agency’s evaluation did not assign  any significant weaknesses or deficiencies to Northrop Grumman’s proposed solution.  The record further establishes that, during discussions, the agency expressed concern regarding the likelihood that Northrop Grumman would meet the DVT availability requirement.  On this record, we find no merit in Northrop Grumman’s assertion that the agency failed to conduct meaningful discussions.

Unstated Evaluation Factors

Finally, Northrop Grumman asserts that the agency improperly considered, and compared, the power usage of the contractors’ proposed solutions, asserting that this constituted application of an unstated evaluation factor.  Comments/Supp. Protest, Mar. 6, 2017, at 4.   

The agency responds that consideration of power consumption was reasonably related to, and encompassed by, the stated evaluation criteria for assessing installation, non‑interference, and airworthiness under the aircraft integration subfactor, noting that power consumption impacts overall systems performance. 

Although agencies are required to identify in a solicitation all major evaluation factors, they are not required to identify all areas of each factor that might be taken into account in an evaluation, provided that the unidentified areas are reasonably related to, or encompassed by, the stated factors.  Information Ventures, Inc., B‑401448.5, B‑401448.6, May 13, 2010, 2010 CPD ¶ 180 at 7.

Here, the contractors were clearly advised that the agency would assess whether the contractor’s design would “enable successful integration/installation of the RFCM System” into the aircraft.  AR, Tab 5, Evaluation Basis, at 302.  Consistent with that stated criterion, the agency concluded that BAE’s lower power consumption was advantageous because it would “reduc[e] impact on existing systems operations, requiring inherently less cooling and retain[] more available excess power capacity for other aircraft systems.”  AR, Tab 14, Comparative Analysis Report, at 5.  These issues were clearly related to and encompassed by the stated evaluation criteria; Northrop Grumman’s assertions to the contrary are without merit. 

The protest is denied.

Susan A. Poling
General Counsel

---