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in the “Management Structure” category. As shown on Chart 30R, TWA was evaluated very high in this category, while Boeing was evaluated nearly as high and Pan American was evaluated much lower. The difference in ranking on this factor more than offset Pan American's lead in the technical ranking as shown on Chart 30R, so that the final overall ranking was reported to the Administrator in Chart 38L on October 28, as follows: Firm:

Adjective grade TWA -------

Excellent Boeing (basic) ---

Good Pan American ---

Good Boeing (alternate)

Good DOW ------

Satisfactory Mason-Rust

Satisfactory Additionally, the special problems associated with labor relations under the various proposals were communicated to the source selection official orally during the Board's presentation, accompanied by Chart 27R entitled "Labor Relations Plans", and on page 48 of the Board report dated October 22, which, in pertinent part, states :

"The Labor Relations Report prepared by the KSC Labor Consultant, Mr. Oliver Kearns, has a significant impact on the findings of this Board. A copy of the report in its entirety is affixed ..."

Accordingly, the issues involving the differences in the proposed labor rates and the possibilities for achieving the same, so far as the Board was able to ascertain, were presented to the source selection official.

As reported in the Administrator's Selection Statement dated December 28, the Board's analysis of the labor situation at KSC as it affected the realism of the proposed contract costs was considered, and, as reported in the last paragraph of this statement, beginning on the bottom of page 6, it was the judgment of the source selection official that:

"... the selection of Boeing's basic proposal would give the Government the best promise of good technical performance and reasonable cost."

The Administrator announced the selection of Boeing on November 23, 1970, and the present protests ensued. With the above recitation as background, a discussion of TWA's individual contentions is now in order.

TWA's letter of December 11, argues primarily that the Boeing proposal was nonresponsive in view of the significant differences in their proposed costs. Arcording to this argument, a proposal in order to be responsive must be premised upon existing collective bargaining agreements and wage rates applicable to the incumbent labor force. Significantly, TWA does not cite any provision of the RFP as dictating this result. Rather, it relies on KSC answers to questions raised at the prepoposal conference, and asserts that any other interpretation would be contrary to "the national labor policy".

The law dealing with the succession of one employer to the recognition of labor agreements of another is in a state of flux. We do not think it appropriate for VASA, as a procuring agency, to attempt to pass judgment on the controversial legal issues involved as they affect our support service contractors. At the same time, in order to assure continuity of services to the extent feasible and to avoid disruption of other activities at the Center, it is important for NASA management to be informed of the way respective contractors view their labor relations, the prospects for achieving the results claimed in their proposals, and the compatibility of their arrangements with the maintenance of industrial peace. The RFP is consistent with this approach. since it requires each offeror to explain its proposed collective bargaining arrangements and set forth its understanding of the effect existing collective bargaining agreements would have on its operations, if any (RFP, page 54, Item 2.c., as amended by Amendment No. 1). Clearly, the RFP does not require every offeror to treat itself as a successor to existing collective bargaining agreements. Rather, it nuts the burden on the prospective contract(le to analyze the law in relation to their prospective operations.

Nothing in the answer to the questions at the pre-proposal conference is inconsistent with this provision of the RFP or imposes any different require. ments on the offerors.

TWA's contention that Boeing's proposal was not responsive in light of the KSC answer to Question 56 can only result from taking an excerpt from the KSC response out of its context, for the entire statement simply reported a series of NLRB cases bearing on the question of successorship, and advised that

*offerors make themselves familar with the NLRB cases covering this issue." Specifically contradicting TWA's contention, the succeeding paragraph stated :

"2. The Offeror will have to apply the NLRB's reasoning in the previousmentioned cases to the scope of the RFP in relation to method in which the work has been performed and to its own intended mode of operation.”

The matter of Question 56 was also raised in TWA's telegram of November 25, which stated that TWA was misled into assuming that any responsive contractor “must assume the predecessor's collective bargaining agreement." However, in view of the context from which the TWA quote was taken, as explained above, the assumption which TWA suggests would appear to be the result of a misreading on TWA's part rather than an ambiguity in the language of the solicitation taken as a whole.

TWA's letter of December 11, on pages 8 and 9, also cites the NASA Procurement Regulations apparently intimating that the selection violated the regulations by placing undue emphasis on cost considerations. The regulations cited do not mean that cost, insofar as we are able to estimate it, must be ignored. In any case where the superior technical offer carries a higher cost, and the selection official is satisfied that the cost differential is real, he is faced with the inescapable question of judgment whether the anticipated superior technical performance is worth the anticipated additional cost. Comptroller General Decision B-169148, 50 Comp. Gen. - (October 6, 1970), highlights the necessity for such judgment as follows:

“We view the award to TI as evidencing à determination that the cost premium involved in making an award to SRL, based on its slight technical superiority over TI, would not be justified in light of the acceptable level of effort and accomplishment expected of TI at a lower cost.” (Decision letter, page 4).

As to the contention, on page 11 of the TWA letter of December 11, that Boeing's proposal is not responsive to the RFP because its labor agreement with the IAM is "spurious", we have no evidence to substantiate such an allegation, and none has been presented by TWA.

With respect to the argument that Boeing's agreement does not commit TWA's labor force, it does not purport to do such. Rather, the agreement is an undertaking of that union to represent such employees as choose to be employed by Boeing at the time it begins operations at KSC, which employees will presumably be a mixture of ex-TWA employees, Boeing employees from other locations, and new hires.

TWA also contends on page 11 of its letter of December 11, that Boeing's proposal is nonresponsive because it has failed to disclose Boeing's plans to subcontract a portion of the work. TWA fails to provide any information which would tend to support this charge, and we know of no circumstances that would support it.

In its initial telegram of protest dated November 23, TWA raised two issues which its later correspondence deals with only incidentally to its allegation that the Boeing proposal was not fully responsive to the terms of the solicitation. The first of these is that because of the difference in wage rates between TWA's proposal and Boeing's proposal, award to Boeing is improper in that:

*... The purchasing power of the Government would thereby be used as an instrument to deprive organized employees of an incumbent contractor of the wages and other benefits gained through collective bargaining, a result contrary to national labor policy and Government procurement policy."

If TWA's reference to federal labor policy is intended to indicate that the line of cases which hold that prior labor agreements bind successor contractors control under the facts of this procurement, then we do not necessarily agree. We recognize that the Burns case and those other cases noted in the KSC answer to question 56 at the preproposal conference represent an expansion of the successorship doctrine. However this line of cases provides questionable snpport for TWA's position. The lead case, Burns, decided by the National Labor Relations Board only last May, is relatively untried. The more recent case of Potter v. Emerald Maintenance, Civil Action 70-L-36, S.D. Tex. (October 29, 1970), expresses serious doubt as to its validity. Furthermore, there will be a realignment of functions under the new support service contract at KSC, which makes questionable the application of this doctrine.

Additionally, because Boeing's present employees at KSC and elsewhere are already represented by the IAM under a company-wide agreement, Boeing argues forcefully that its newly acquired work force at KSC will be as an

accretion to its existing company-wide bargaining unit. Further, Boeing falls within the purview of the National Labor Relations Act, while the incumbent, TWA, is under the Railway Labor Act. Certain of TWA's contract provisions under the RLA could not apply to a Boeing agreement under the NLRA, such as the union shop provision (Florida's right to work law being valid under the NLRA) and the inclusion of guards in the bargaining unit.

Boeing's letter of December 3, to this Agency in suport of its position, together with its supplemental memorandum delivered at a later date (TAB D), discuss in detail the court cases, the NLRA decisions and other rulings which support the validity of its contemplated operation of the KSC support services under its labor agreement with Local 2061 of the IAM.

As to the Pan American proposal, while its labor agreements appear to be simi. lar to Boeing's in many respects, particularly in relation to the accretion principle, Pan American has negotiated separate wage scales for this work which are lower than the wages being paid by Pan American elsewhere and lower than those paid by Pan American at the Air Force Eastern Test Range at Cape Kennedy. Additionally, it has been our experience that the relationships between certain of the international unions here involved have been strained and inharmonious, so that Pan American's attempted change would probably be resisted by litigation with uncertain outcome, strikes, and picketing.

Additionally, with respect to the question of labor policy, we feel that NASA operations and missions are more closely related to the aerospace industry than the airline industry and that the rates proposed by Boeing are comparable to other aerospace companies both locally and nationally. Therefore, the individual rates in Boeing's proposal are not considered substandard when compared to the local economy or national aerospace standards.

In balance, it was the conclusion of NASA management that, when all practical and legal aspects of the labor situation were taken into account, along with the other controlling factors, the Boeing proposed offered the most likely combination of technical proficiency and cost savings.

TWA also argues that it may not have been bidding upon the same work as was Boeing, in view of the significant differences in their proposed costs. In this respect, an examination of the REP shows that all offerors were instructed to propose a minimum fixed level of manning for each of the particular job categories specified, with additional positions, termed "variable" to be proposed as the offeror deemed necessary. See page 109 of the RFP, paragraph 4, which states that offerors "must propose and price the fixed staffing" shown in the tables in Appendix II, page 58, which are entitled “Employee Phase-in Schedule."

This same paragraph 4, page 109, also provides that:

"If the individual rates are not proposed, the offeror is requested to propose the composite rate paid to employees within any given labor category.”

Thus, prospective contractors were free to propose varying rates within the particular labor categories listed, and report the composite of those rates for evaluation purposes.

We recognize the fact that the nature of TWA's union agreements, which are specifically tailored to air carrier operations, may have made it difficult for TWA to respond competitively in such a manner. However, this factor is not an adequate basis to bar the Government's consideration of more advantageous wage structures offered by TWA's competitors who operate under differing labor agreements. We believe that the RFP countenanced either approach, and the Government was free to select that labor rate structure which satisfied its minimum requirements in the least costly manner, if otherwise appropriate.

Pan American, in its letter of December 14, contends that NASA's act of including labor considerations in its evaluation, particularly the matter of possible labor strife, was improper. Specifically, Pan American argues that the evaluation factors stated in the RFP did not apprise prospective contractors that such considerations as labor rates, union agreements, labor relations and the like would be a factor in evaluation. Pan American made essentially this same argument during written and oral discussions but did not at that time carry it to the point of protest. (See SEB Report, page 53.)

As shown in the recitation of facts contained herein, the RFP, the questions at the preproposal conference and the written questions directed by NASA to Pan American all made explicit and, in the latter case detailed, reference to the labor relations aspects of the work to be performed. This circumstance should have made Pan American aware of the fact that its proposed labor arrangements were of interest to NASA and were to be a factor in evaluation.

The RFP also assigned significant weight to the realism of cost factor, which factor directly reflects the credibility of costs proposed under the offerors' labor agreements, and directed offerors to state the rationale of their proposed wage rates (RFP, page 109). Accordingly, although the credibility of labor costs was not specifically identified in the five evaluation factors, since this element is a primary determinant of overall cost realism in the present situation, offerors had reason to know that NASA would consider this factor in its evaluation of cost realism. For the same reason, Pan American should have been aware that the possibility of labor strife under the proposed union agreements would be a factor for consideration in evaluation, both because such strife might well prevent Pan American from achieving its stated labor goals and because labor strife can result in work stoppages, work slowdowns, picketing, and other problems which are costly in and of themselves.

Additionally, Pan American asserts its cost was lower than Boeing's. But if second year cost and maximum award fee are included in the comparison, Boeing is lower. Clearly Pan American enjoyed no cost advantage that would lend any substance to its protest.

In summary, we believe that this decision, to make award to Boeing as a well qualified offeror technically, whose proposed costs are reasonably anticipated to be less than either of the other two firms whose proposals were also found to be technically well qualified, is supportable as within the discretion of the source selection official,

In view of the above conclusion, it is recommended that both TWA's and Pan American's protests be denied. We request that the SEB Report of October 22, 1970, the SEB Briefing Charts, and the SEB Proceedings Volumes II, III, IV and V, be protected from disclosure. Further, the contractors' cost proposals, which contain proprietary information should also be protected. Please return these protected documents, together with the rest of the documentation forwarded with this report, when they have served your purposes.

Because of the requirement for a 60 day phase-in under the new contract, and because the new contractor must be in full operation by April 1, 1971, at which time the incumbent's contract will have expired, we request that your office act on this protest so as to permit award action on or before January 31, 1971. Negotiations leading to contract award are being conducted with Boeing on this basis.

Sincerely yours,

(Acting for George J. Vecchietti, Director of Procurement).

JOHN F. KENNEDY SPACE CENTER, NASA,

Kennedy Space Center, Fla., December 2, 1970. To: NASA Headquarters.

Attention : Acting Chief, Inquiries Division, KDA-2.
From : Director.
Subject: Protests by Trans World Airlines, Incorporated (TWA) and Pan

American World Airways, Incorporated (PAA) to the Selection of The
Boeing Company for Negotiations under RFP 2-370-0 for Installation Sup-

port Services at the Kennedy Space Center. Subject firms have protested the selection, by the Administrator, of The Boeing Company for negotiations of a contract for Installation Support Services at the Kennedy Space Center. Both protests were directed to this Center with TWA also protesting to the Comptroller General.

The following data is hereby submitted :

Enclosure Number 1-RFP 2–370–0 with amendment numbers one, two and three thereto.

Enclosure Number 2—Contracting Officer's letter dated July 31, 1970, with attachments thereto.

Enclosure Number 3—The Boeing Company's proposal.
Enclosure Number 4 TWA's proposal.
Enclosure Number 5-PAA's proposal.
Enclosure Number 6-Miscellaneous Correspondence.
Enclosure Number 7-Evaluation of TWA's and PAA's protest.
Enclosure Number 8—Technical Committee Report (SEB).
Enclosure Number 9—Business Committee Report (SEB).
Enclosure Number 10—Miscellaneous Papers/Documents (SEB).
Enclosure Number 11–Minutes of the Source Evaluation Board.

TWA requested that the Procurement Officer make available to them, the average hourly rates, including fringe benefits, proposed by Boeing for each nonmanagement job classification in the fixed staffing called out in the Request for Proposal. TWA was informed that any information to be provided would be furnished by NASA Headquarters. I recommended that TWA not be furnished the rates proposed by Boeing since this information was provided this Center in confidence and should be protected as company confidential.

The evaluation of TWA's and PAA's protest forwarded herewith (Enclosure Number 7) only addresses the points raised by the protesting firms. Ans details relative to the basis for selection will have to be developed at the Headquarters level.

Personnel at the Kennedy Space Center are available for any assistance that you might require in preparing the NASA position.

KURT H. DEBUS.

NOVEMBER 30, 1970. EVALUATION OF TWA'S AND PAA's PROTEST TO THE SELECTION OF THE BOEING

COMPANY FOR NEGOTIATIONS AS A RESULT OF KSC RFP 2-37040 FOR INSTALLATION SUPPORT SERVICES

BACKGROUND

KSC issued RFP 2–370-0 on June 30, 1970, for Installation Support Services at the Kennedy Space Center, The Statement of Work in this request contained work that had previously been furnished in part under contract with TWA (Base Support); STC (Information Support); and, Bendix (Launch Support). the bulk of which was under the TWA Base Support contract. Some effort under these existing contracts were not consolidated into the new Statement of Work. but were set aside for small or minority business. A total of 59 firins were furnished copies of the RFP. All offerors were required to submit a basic proposal based upon fixed staffing in the RFP. Alternates were encouraged, however, and could be based upon organization and staffing other than that indicated in the RFP. Seven firms submitted proposals with Boeing submitting both a basic and an alternate.

A Source Evaluation Board was appointed in accordance with NPC 402. The Board evaluated the proposals in strict accordance with existing procedures and preestablished criteria and weights.

Two of the proposers were elminated as not being within the competitive range and oral discussions were held with the five remaining proposers.

The Source Evaluation Board presented its findings to the Acting Administrator on October 28, 1920, and on November 23, 1970, the Administrator announced that The Boeing Company had been selected for negotiations. 1. TWA's Protest

a. KSC and the Comptroller General received a protest message dated November 24, 1970, addressed to the Contracting Officer and the Comptroller General of the U.S. signed by Mr. L. E. Smart, Senior Vice President of Trans World Airlines was received by KSC on November 24, 1970. The Boeing Company was informed of TWA's protest on November 25, 1970, by KSC.

b. On November 26, 1970, Mr. Raymond Fletcher, Jr., Vice President and General Counsel of TWA requested data pertaining to labor rates proposed by The Boeing Company and took issue with KSC's answer to question number 56 of the Question and Answer portion of the Preproposal Conference. TWA was notified on November 27, 1970, that their protest had been referred to NASA Headquarters and that all information to be provided would be furnished by NASA Headquarters.

c. Mr. Smart, in his TWX message, alleges essentially that either (a) TWA and Boeing were not proposing on the same work; or, (b) that Boeing was using labor rates that indicated they were going against existing union agreements and therefore contrary to law and national policy

Mr. Fletcher contended that Boeing did not propose in accordance with the answer to question number 56 and therefore. "WA. lv fo! (wins hie gil delinas of the answer, was not competitive with Boeing. He further requested that KSC provide TWA the average hourly rates including fringe benefits proposed by Boeing for each nonmanagement job in the fixed staffing called for in the RFP.

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