Seymour stated, it has been NAVAIR's position that competition limited to LGC and SDLM contractors would be "competition for competition's sake," C.R. 94 at 73, and would be inadvisable when compared to wider competition within the aerospace industry. C.R. 94 at 73-79. The record thus shows that NAVAIR did not consider with any specificity the costs and potential benefits of such limited competition.
15. At the September 25 hearing, the Court explored with the procurement officer the basis for his preference for industry-wide competition over a more limited competition. NAVAIR evidently considered valuable the "certification" LGC could be required to provide with the fully detailed and tooled mil-spec kits that would be furnished for industry-wide competition. See C.R. 94 at 33-35, 75-77, Final Report §§ 8.1, 8.2.1, 8.2.3, 8.4. That certification, as Admiral Seymour indicated, would act as a remote warranty that the ultimate SLEP accomplishment by the contractor actually using LGC's kits would be adequate. See C.R. 94 at 75-77. Such a remote warranty might not be available from LGC if less extensive kits were purchased, the Admiral implied. C.R. 94 at 77. The procurement officer also indicated, however, that NAVAIR had not considered whether requiring a direct warranty of fitness as to SLEP accomplishment on a given aircraft by the SLEP contractor that performed SLEP overhaul on the aircraft would be obtainable and, if it were, whether that warranty would be adequate or would be enhanced by an overlapping remote warranty. C.R. 94 at 75-78. If, of course, NAVAIR assumed that it would expect to purchase full mil-spec kits even if the SLEP contract went to an experienced SDLM contractor, there would be no advantage-in terms of kit requirements-in limiting competition to SDLM contractors and LGC. Apart from that preference for a remote warranty by LGC that SLEP would be properly accomplished using its kits, NAVAIR's other basis for avoidance of limited competition stemmed from acceptance, as an axiom, of a principle that competition should be as broad-based as possible. C.R. 94 at 70, 73-74.
16. No study commissioned by NAVAIR has ever assessed the costs and time needed to prepare kits specifically designed for use by experienced C-130 SDLM contractors. No study commissioned by NAVAIR has ever assessed the costs and time needed to prepare the AFC required by experienced C-130 SDLM contractors. No study commissioned by NAVAIR, therefore, has ever determined whether SLEP accomplishment on any number of aircraft under the established NAVAIR timetable for SLEP of the C-130 would be possible through competitive negotiation limited to LGC and other experienced SDLM contractors. NAVAIR never weighed the costs of such a limited competition against the savings that might be achieved through such a competitive procurement.
17. NAVAIR received the mil-spec-based ECP it had ordered from LGC on November 30, 1981. While the ECP was being studied by members of Admiral Seymour's APRB, the APRB also received a report from the Naval Air Rework Facility ("NARF") at Cherry Hill, North Carolina, on prospects for competitive SLEP procurement. Both the ECP and the NARF advice were considered at an APRB meeting held January 14, 1982. Evaluation of the ECP confirmed, in NAVAIR's view, the procurement officer's testimony that the Navy's critical schedule needs for SLEP could not be satisfied through a kit-based competition. The NARF recommendation took a different approach to the same result: officials at NARF, upon reading the ECP prepared by LGC, reported to the APRB that the "complexity" of SLEP was "beyond the scope of a retrofit kit competitive procurement approach." AIR-01 Memorandum dated Jan. 18, 1982 (minutes of APRB meeting) (filed January 19, 1982). The APRB, after examining NARF's position, rejected it, and concluded that competitive kit-based procurement was not technically infeasible, but (as the procurement officer had advised the Court in September 1981) that it was impossible under the current SLEP schedule. As the minutes of the APRB state:
... (T)he Board concluded that the risks associated with the ECP were not technical risks inherent in the ECP itself, but rather in the impact of the associated risks on the program schedule.
Id. at 1. The APRB consequently determined to advise the NAVAIR commander not to pursue further competitive procurement for substantially the reasons offered by the NAVAIR commander in his testimony in these proceedings. On the same day that the APRB met, the procurement officer accepted the APRB's advice that "the established SLEP program should continue to completion." Id. at 3. The minutes of the APRB offer no indication that the competitive options discussed in the GAO opinions or in proceedings before the Court-including use of "tailored" kits-were considered at the APRB meeting.
Factors Affecting the Procurement Decision
18. In NAVAIR's own estimation, LGC is not the only source capable of satisfying the Navy's technical requirements for SLEP accomplishment if parts and kits are available. NAVAIR's judgment on the technical-risk factor,
most recently embodied in the minutes of the January 14, 1982, APRB, appears to be based principally on the Final Report of the Review Team assigned to monitor SLEP and to evaluate Hayes and Aero. From the Review Team's Final Report and other parts of the record, these facts have been established:
a. NAVAIR, in evaluating technical capabilities of LGC and other possible SLEP contractors, requires "a high probability of technical success" from any firm awarded a SLEP contract.
The Team commissioned to evaluate LGC's early SLEP performance and the capabilities of Hayes and Aero focussed on four broad considerations: the engineering staffs of each of the three firms it examined, the three firms' physical facilities for overhaul work, the availability of parts needed in SLEP accomplishment, and the availability of technical data.
Final Report §§ 9.4-9.5.
b. Taking account of all the relevant technical considerations, including parts and technical-data availability, the Review Team prepared at the conclusion of its study a "Technical Risk Assessment" for each of the firms it had evaluated. See Final Report §§ 5.1-5.6.5. LGC received the highest score of the three and obtained an "excellent" overall rating. Final Report § 9.5.1. Hayes received an "adequate" rating if furnished kits, and Aero a "questionably satisfactory" rating if furnished kits. Final Report §§ 9.5.2, 9.5.3. Hayes' rating varied from that of LGC principally because, in the Team's opinion, "unplanned parts"-parts discovered to be needed only after overhaul of a given aircraft had begun-were relatively more difficult for Hayes to obtain than for LGC to obtain. Aero's less favorable rating than Hayes and LGC appears to have resulted from that firm's lack of any substantial cadre of experienced and fully-trained engineers; both Hayes and LGC scored well above Aero in that respect. Nevertheless, the Team was not able-perhaps owing to its knowledge of Aero's work as a SDLM contractor, see Finding of Fact 18(d) infra-to find that Aero was an unsatisfactory candidate for SLEP of the C-130. Moreover, the Final Report does not consider the effect of possible changes in the firms' engineering staffs on their relative technical competence or the possibility of NAVAIR's requiring such changes as condition for a SLEP contract award.
c. In sum, it appears from the evidence that while LGC is the firm whose performance of SLEP presents the least risk of technical failure, it is not, according to NAVAIR's criteria and assessment, the only firm technically qualified for the work if kits are available.
Final Report § 11.1. The principal technical consideration in which LGC compares favorably to Hayes is parts availability;
the principal technical criteria in which LGC exceeds Aero are parts availability and present engineering staff.
d. This assessment by NAVAIR that LGC is superior but has not been proven to be the only firm capable of SLEP accomplishment is not a reversal of a prior position that only LGC could perform the work. It was evident before the Team had prepared its final report that other firms would probably be found to have the technical capability to accomplish SLEP, if provided parts and kits for their installation. Team members noted in 1980 that firms other than LGC at that time did "more replacement of SLEP type items" than did LGC itself.
They also indicated, in 1980, that the Team "has seen no technical data so complicated during the SLEP on (the first two aircraft inducted for SLEP) that it would create any risks of a technical nature."
They commented that other firms had much of the tooling needed for SLEP already on hand.
Thus at the time NAVAIR was developing a procurement program for SLEP of the C-130 aircraft scheduled for induction in the later years of the program, NAVAIR presumably was guided by an assumption confirmed by the Team's final report: LGC might be technically superior, but it was not proven to be the only known source capable of SLEP accomplishment.
The SLEP monitoring study by the Review Team, commenced in the summer of 1980, was NAVAIR's most extended and systematic attempt to evaluate possible SLEP procurement sources. There is nothing in the record indicating that defendant earlier had assumed that technical considerations forbade competition; defendant's position since the beginning has simply been that technical factors required kits.
19. As already noted, NAVAIR has never determined the cost and period of time required for preparation and delivery of kits specifically designed to permit SLEP accomplishment, in a technically satisfactory manner and with acceptable results, by experienced SDLM contractors. See Finding of Fact 16, supra. However, the following facts, relevant to the calculation of time and cost for kits, are established by the record:
a. LGC, the probable manufacturer of the kits, has completed SLEP on a number of aircraft and has thus performed work on each of the three principal model classes on which later SLEP overhaul has been planned.
b. With regard to technical directives and warrantable written commitments by SLEP contractors that work will be performed in particular ways and with certain results, Aero, as a Navy SDLM contractor, has experience in generating apparently complete and valid descriptions of the tasks required in the SDLM process.
There has been no determination and apparently no attempt to determine whether Hayes, as an Air Force C-130 SDLM contractor, has equivalent experience in generating working-papers that also would be useful in stating overhaul warranty terms.
20. GAO undertook what it described as long and careful review of every timetable submitted to it by the Navy regarding the time needed to prepare kits needed for a limited competition among the SDLM contractors and LGC. It also considered Aero's claim that Aero did not need kits to perform SLEP on the C-130. GAO made the following findings:
a. As to the dispute on whether kits were required for SLEP accomplishment by Aero, GAO found that Aero had not demonstrated that the Navy lacked a rational basis for the kit requirement. See Finding of Fact 7, supra.
b. As to the time required to prepare the appropriate kits, GAO found that close examination of the record before it indicated that the Navy had overstated various periods needed for kit design and fabrication. In the June 5, 1981 opinion, the Acting Comptroller-General summarized his conclusions in the following statement:
We do not agree with the Navy that the record shows that it is impossible to complete kit preparation in less than three to four years.
Our analysis of the work required to perform SLEP as disclosed by the Navy's reports indicates that, although preparatory work remains to be done, the Navy as a result of its SLEP monitoring effort now has a fairly broad understanding of the technical problems which may be encountered, generally knows what equipment and locating tooling (tooling used to align parts during assembly) is needed, and has identified much of the technical data which may be necessary to compete its requirements. The record indicates that there is some information which the Navy does not yet have, particularly so-called "fit-up/clamp-up" criteria describing acceptable tolerances, torque to be applied to bolts and similar information concerning the assembly of the parts to be installed in SLEP.