Protest challenging solicitation terms as unduly restrictive is denied. The protester argued that a provision that required offerors to have access to a manufacturer’s technical manuals was anticompetitive. But the court found the requirement was necessary to preserve the manufacturer’s data rights. The protester also contended that the manual requirement was a noncompetitive procedure, which, under the FAR, the agency should have justified in writing. The court, however, determined that the manual provision was simply a technical capability requirement, not an unjustified noncompetitive procedure. The protester further argued that a solicitation provision requiring the use of certain tools was unduly restrictive because it  required offerors to furnish brand name material in violation of the FAR and contravened customary commercial practices. The court ruled that the brand name prohibition only applied to end-products, not tools an offeror uses in providing services. Moreover, without sufficient evidence in the record, the court declined to infer whether the tool requirement conflicted with commercial practices.
The Navy issued a solicitation for the overhaul of LM2500 gas turbine engines. The LM2500 engines are manufactured by General Electric. Thus, the solicitation required that offerors be GE licensed commercial depots. Chromalloy San Diego Corporation, which was not a GE licensed facility, filed a GAO protest challenging the licensing requirement as unduly restrictive. In response to the protest, the Navy took corrective action to revise the proposal. The revised solicitation provided that in lieu of a GE license, offerors had to demonstrate they could provide GE parts, and that they had special tools to overhaul the engine.
The revised solicitation did not sit well with GE. GE asked the Navy to suspend the solicitation, contending that offerors without a GE license would not be able to provide GE parts. GE was particularly concerned about its technical manuals. The Navy had told offerors that it would provide LM2500 technical manuals to the awardee. GE alleged, however, that the manuals contained proprietary information. If the Navy provided manuals to an awardee that did not have a GE license, it would be violate GE’s intellectual property rights.
The Navy took GE concern’s under advisement but went ahead the competition. Chromalloy and two offerors, who had GE licenses, submitted proposals. During discussions, the Navy identified deficiencies in Chromalloy’s proposal due to a failure to demonstrate access to GE parts and to overhaul tools required by the solicitation. As part of discussions, the Navy—perhaps mindful of GE’s concerns—amended the solicitation to require that offerors also demonstrate that they had access GE’ LM25000 technical manuals. The Navy allowed Chromalloy to address these deficiencies in a revised proposal.
Chromalloy filed a second GAO protest alleging that the requirements for technical manuals and tooling were unduly restrictive. GAO denied the protest noting that the restrictions were justified in light of GE’s intellectual property rights.
Shortly after the GAO decision, the Navy made award to the GE-licensed offerors Chromalloy’s revised proposal was deemed technically unacceptable.
Chromalloy filed a protest with the COFC challenging the manuals and tools requirements as unduly restrictive. It also alleged that the tool requirement violated the Federal Acquisition Streamlining Act. Chromalloy later amended its protest to add allege that the Navy’s evaluation of Chromalloy under the parts requirement was unreasonable. GE intervened in the protest, and all the parties moved for judgment on the administrative record.
Before addressing the merits of the Chromalloy’s protest, the court addressed a challenge to Chromalloy’s standing. GE contended that because the Navy had determined that Chromalloy was ineligible for award, it did not have a substantial chance of receiving award and thus lacked standing to protest.
But the court opined that GE was misconstruing Chromalloy’s protest as a post-award protest. Chromalloy, however, had first challenged the terms of the solicitation with GAO. While that protest was pending, Chromalloy submitted its final proposal revisions believing it could satisfy the requirement it was challenging. While the Navy had rejected Chromalloy’s proposal, it had found the company ineligible under the very requirements Chromalloy was challenging. The court believed, therefore, that the protest was best viewed as a pre-award protest of the terms of the solicitation. To have standing in a pre-award protest, a protester needs to show that it suffered a non-competitive injury. Chromalloy satisfied this standard by alleging that it was eligible for the contract had the Navy not included the restrictions on manuals and tools.
As to the substance of the protest, Chromalloy argued that the Navy had improperly required offerors to have independent access to technical manuals without first determining whether independent access was necessary to satisfy the Navy’s minimum needs. Chromalloy asserted that the Navy did not need independent access if the agency already possessed data rights in the manuals. Chromalloy contended that had the Navy researched its data rights, it would have found that the government had funded the development of the LM2500, so the Navy already possessed data rights in the manuals.
The court, however, found that the Navy performed some research into its data rights. The court noted that the Navy could have performed more research. For instance, instead of researching whether the government helped fund development of the LM2500, the Navy simply took GE’s word for it. Nevertheless, the court reasoned that its task was not to determine whether the Navy took all possible investigatory actions, but only whether the investigation was reasonable. Here, the investigation was reasonable, so the requirement for independent access to manuals was reasonable.
Chromalloy also argued that the technical manual requirement was an unjustified noncompetitive procedure. Agencies are required to use competitive procedures in procuring goods and services. Noncompetitive procedures may only be used in certain circumstance—like when an agency only has limited data rights. An agency may not use noncompetitive procedures unless the contracting officers justifies the use of such procedures in writing. Chromalloy contended that the technical manual requirement amounted to a non-competitive procedure, and that the Navy had not adequately justified use of that procedure.
Citing National Government Services, Inc. v United States, 923 F.3d 977 (Fed. Cir. 2019), the court noted that there is a difference between a solicitation requirement that has the effect of excluding offeror who can’t satisfy it, and a requirement that is not tailored to the agency’s needs but instead evinces an attempt to influence the market. In this case, the court found that the manual requirement was simply a technical capability requirement. An offeror overhauling the engines would have to use the Navy’s technical manuals, and those manuals incorporate proprietary information. Thus, an offeror’s ability to perform the contract depended in part on having access to GE technical data. This was a requirement tailored to the Navy’s needs, not a noncompetitive procedure that needed to be justified.
The court determined that the technical manual requirement was not unduly restrictive. Chromalloy also acknowledged that it could not satisfy this requirement. The court reasoned that Chromalloy’s inability to satisfy the requirement was fatal to is protest. Still, the court considered Chromalloy’s other challenge.
Chromalloy contended in its complaint that the requirement to use special tools was unduly restrictive because the FAA accepts equivalent tools, and the Navy had previously procured similar services without a tool requirement. But the court found that Chromalloy had waived this protest ground by abandoning it its motion for judgment on the administrative record. In its motion, Chromalloy argued that the tool requirement was restrictive because the FAR prohibits agencies from requiring brand-name products. Not only was this a new argument, it was also wrong. The FAR’s prohibition on brand-name products only applies to end products; it does not prohibit agencies from requiring offerors to demonstrate access to brand-name products as a factor in determining technical capability.
Chromalloy also argued that the tool requirement violated the Federal Acquisition Streamlining Act. FASA requires agencies to purchase commercial items under commercial terms. Chromalloy contended that the use of equivalent tools was a customary commercial practice. But the court found there was no evidence in the record that the use of equivalent tools is standard commercial practice in overhauling LM2500 engines. The record demonstrated that Chromalloy had only overhauled other engines for private companies. The court refused to infer that those engines were LM2500 engines or that Chromalloy had used equivalent tools in overhauling them.
The court concluded that even if it had found Chromalloy’s protest viable on the merits, it still would not have granted Chromalloy’s requested injunctive relief. An injunction would adversely affect national security. Chromalloy could not show that the balance of harms favored injunctive relief.
Chromalloy is represented by Paul F. Khoury. The intervenor, GE, is represented by Jason A. Carey. The government is represented by William J. Grimaldi of the U.S. Department of Justice.
