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Each of the above three points will be addressed separately and in the order presented.
1. Allegation Number One-TWA and Boeing not proposing on the same work.
a. Both firms received RFP 2-370–0, as well as amendment numbers 1, 2 and 3 thereto. Both firms attended the preproposal conference and both received the Procurement Officer's letter dated July 31, 1970, which transmitted the synopsis of questions and answers at the preproposal conference.
b. As previously mentioned in the Background, the RFP specified that all firms must propose on 1,859 fixed positions, plus as many variable positions (management and administrative) as each proposer considered necessary. TWA proposed a work force of 2,128 and Boeing proposed 2,078. The Government's independent estimate of the number of positions required was 1,859 fixed, 396 variables, for a total headcount of 2,255.
Thus, it is evident that both firms were bidding on the same work and that both were responsive proposers in this area. The only difference was that Boeing proposed 50 less variable positions than TWA.
2. Allegation Number TwoBoeing was using labor rates that indicated they were going against existing union agreements and therefore contrary to law and national policy.
a. Both Boeing and TWA are represented by the IAM. Boeing proposes to absorb a large portion of the TWA work force and cover these people under their existing agreement with the IAM. The Boeing agreement has lower labor rates than the TWA agreement which basically accounts for a significant portion of the difference in cost between TWA and Boeing's proposal. (See pages 40 41 and 50-51 of the Report of the SEB.) The SEB felt that classification of jobs and skills under the existing aircraft/aerospace oriented Boeing/IAM agreement more accurately depicts the labor classifications for this type of effort than does the airlines operation TWA/IAM agreement.
b. There is no known law or national policy, as such, that specifically prohibits Boeing from proceeding as they propose or KSC from accepting their proposed course of action.
c. Boeing's proposal not only offered lower cost, due primarily to lower wage rates, but also proposed $891,000 (4.5%) maximum fee for the first year versus $1,317,000 (5.4%) maximum fee proposed by TWA. In other words, over $425,000 of the difference in first year cost between Boeing's and TWA's proposals is attributable to Boeing's lower fee.
3. Allegation Number Three-The Boeing proposal is not responsive to the guidelines for competition, in particular, to the NASA answer to question number 56.
a. The NASA response to question number 56 offered information as to recent NLRB cases and cited certain cases for reference. However, the NASA answer also pointed out that offerors would have to apply NLRB's reasoning to their own intended mode of operation.
b. Three of the other four proposers in the competitive range proposed various alternate approaches which proves they did indeed apply the NLRB decisions to their own proposed course of action, thereby establishing without question that KSC did not mislead the proposers.
c. Boeing did not believe that the collective bargaining agreement between District 142 of the IAM and TWA could be legally applied to them. Since they too had a collective bargaining agreement with Local Lodge 2061 of District Lodge 166 of the IAM and AW, which covered their production and maintenance employees of Brevard County, Florida, they felt that the incumbent employees of TWA they retained could be absorbed under their agreement since it was the same union. Boeing's agreement with Lodge 2061 has lower wage rates than the TWA/IAM agreement. Boeing's approach was generally accepted by the IAM with a certain amount of local negotiations recognized as necessary to consider local labor rates. The probability of Boeing realizing the proposed wage rates was rated as very good by the Labor Relations Consultant and the SEB. Boeing anticipates retaining the majority of the Security and Fire personnel and to accept their respective bargaining agreements (Pages 40–41 and 50–51 of the Report of the SEB and page 3–31 of the Boeing proposal.)
d. Therefore, Boeing has complied with the Request for Proposal and, by utilizing their own agreement with the IAM in lieu of the TWA agreement with the IAM, they have offered the Government the most advantageous proposal.
2. PAA'S PROTEST
a. On November 27, 1970, Mr. R. M. Barnes, Vice President of Pan American World Airways, Inc., Aerospace Services Division, submitted a letter of protest to the Procurement Officer of the Kennedy Space Center. There were no other recipients of the PAA protest.
b. The essence of PAA's protest was that not only was their proposed first year's cost lower than Boeing's, but they also felt that they were better qualified technically to perform the effort called for. They offered some data to justify the realism of their costs proposed, such as no cost overruns in 17 years of managing Government contracts.
C. The Procurement Officer acknowledged PAA's protest and advised that the protest had been transmitted to NASA Headquarters for resolution.
d. The cost comparison between the Boeing proposal and PAA's proposal is as follows:
1 PAA's cost shown includes $20,264 above the cost on their DD Form 633 due to an update to add $20,264 for guard uniforms that was omitted from their original proposal and discovered during orals. This fact was confirmed by their letter dated Oct. 8, 1970.
2 The amount of fee shown for PAA is computed at the 8-percent maximum award fee proposed by PAA in lieu of the 4 percent midpoint figure used by PAA on their DD Form 633, This was done in order to get PAA's proposal on the same basis as all competitive proposers. Page 1X-35 of pt. B of the PAA proposal specified 8 percent as their maximum fee which was reconfirmed by PAA during the oral discussions. (Specific question No. 24 with PAA, P. 50 of attachments to PAA letter dated Oct. 8, 1970.)
d. Thus, after adjusting PAA's cost to include the additional amount of $20,264 for guard uniforms and their fee to reflect maximum fee in the same manner as the other four competitive proposals; the comparative positions are as follows:
: TOTAL COST AND FEE PROPOSED
While PAA's proposal is $502,000 lower for the first year, it should be noted that the contract will provide for both a first year cost, as well as a priced second year cost with the Government having the unilateral right to exercise the second year option. Therefore, the two year cost comparisons are more valid than the first year comparison and was used by the SEB in its evaluation process. Boeing's proposal for the two year period is $162,000 lower than PAA's.
e. The difference in cost between Boeing's and PAA's proposal was not considered significant. The significant aspect is that the Labor Relations consultants and the SEB could foresee a severe labor impact and a serious disruption of the harmonious labor relations at KSC in the PAA proposed approach.
f. It should be noted that the figure $19,275,252, as contained in PAA's letter of protest, is misleading. This figure failed to include the additional $20,264 they agreed should be added to their costs for guard uniforms and used a midpoint of target fee (4.0%) in lieu of maximum target fee (8.0%).
THE BOEING CO.,
Seattle, Wash., December 3, 1970. To: John F. Kennedy Space Center, National Aeronautics and Space Administra
tion, Kennedy Space Center, Florida. Attention : AD-PRO, Mr. Fred Boles. Subject: Trans World Airlines, Inc., Protest on RFP 2–370–2.
1. This letter is in response to your two letters of November 25 and 30, advising The Boeing Company of the protests filed by TWA.
2. The proposal submitted by The Boeing Company was prepared based on the existing collective bargaining agreement between The Boeing Company and the International Association of Machinists and Aerospace Workers, AFL-CIO. The Boeing Company believes that the acquisition of additional work, upon receipt of the award, falls under the scope of the afore-stated existing bargaining agreement which is binding not only on The Boeing Company but also upon the IAM. The International Association of Machinists, certified by the National Labor Relations Board, is currently recognized under this agreement as the exclusive bargaining representative for "all production and maintenance employees in Brevard County ... employed by the company ...."
3. TWA, in its protest, alleges that the Boeing proposal is not responsive to the guidelines for competition, and in particular the NASA answer to Question 56. In the answer to Question 56, NASA said:
“Under a recent series of cases, the NLRB has held that the successor-employer must assume the predecessor's collective bargaining agreement...."
In response to the answer to Question 56 requiring the offeror to apply the reasoning of such cases, The Boeing Company in its proposal stated that the collective bargaining agreements covering security guards and fire service personnel, employees who were employed by subcontractors of TWA, would be applicable to The Boeing Company.
4. Like the TWA subcontractors, The Boeing Company is subject to the National Labor Relations Act. TWA is governed by the Railway Labor Act-an Act which is applicable to "carriers" only. Therefore, The Boeing Company, since it is not a carrier, is not and cannot be subject to the Railway Labor Act. The collective bargaining agreement between the incumbent contractor and the IAM is, in the language of the agreement, "in accordance with the provisions of the Railway Labor Act, as amended ...." Therefore, in addition to the fact that the overall contract is "carrier" oriented for application under and pursuant to the Railway Labor Act, there are specific provisions of the agreement which are of questionable legal validity or practicability as applied to The Boeing Company. An example is the requirement of the TWA agreement that District Lodge 142 of the IAM admit to membership guards employed by TWA. This requirement, while lawful under the Railway Labor Act, would prevent District 142 of the IAM from being certified under the National Labor Relations Act (Section 9(b)). as the bargaining agent for the employees of The Boeing Company in the bargaining unit set forth in the TWA agreement. Likewise, the National Labor Relations Act, contrary to the Railway Labor Act and the provisions of the TWA contract with District Lodge 142, contemplates the intervention of state "right to work" laws (which Florida has) on contractual requirements relating to union shop. Accordingly, the application by The Boeing Company of the union shop provisions of the TWA contract would be, at the least, of legally questionable validity at KSC. Further, many provisions of the TWA contract contemplate the application of the provisions of the Railway Labor Act (i.e., setting up a system board of adjustment, utilization of Section 6 procedures of the Railway Labor Act, etc.), and, thus, could not be applied to or by The Boeing Company which is not subject to the Railway Labor Act.
5. As to the comment in the protest on policy considerations, the award of the contract to The Boeing Company would not be contrary to national labor policy or deprive employees of collectively bargained benefits because The Boeing Company based its proposal on existing rates and benefits applicable to The Boeing Company, which have been established through collective bargaining with the same international union that has an agreement with the incumbent contractor. The Boeing Company submits that the national procurement policy of effecting economic savings in the use of public monies is not comprised where the same international union is involved as the bargaining agent for The Boeing Company
and the incumbent contractor. This factor also renders unlikely the existence of
C. R. MØGEHEE,
NOVEMBER 30, 1970. Attention : Mr. D. L. Moorehead, Cocoa Beach, Florida. The Boeing Co.:
Pan American World Airways, Inc., Cocoa Beach, Florida, by letter dated November 27, 1970, has filed a protest with the Contracting Officer against the prospective award of a contract to your company for Installation Support Services at the Kennedy Space Center.
Pan American states that their proposed costs and fee for the first year of operation were significantly lower than the approximately $20,000,000 announced by NASA as the costs proposed by the company selected for contract negotiations. Pan American alleges that their proposed costs fully qualify under the Request for Proposals evaluation criterion "Reasonableness of Cost and Fee" because they are based upon executed labor agreements, existing salaries, and comprehensive reviews of the local labor market/wage rates by knowledgeable industry personnel and Government agencies. Further, Pan American states that they have consistently demonstrated their ability to perform satisfactorily within their cost estimates and in accordance with the terms and conditions of separate union agreements specifically covering work at the Kennedy Space Center.
Pan American contends that for these reasons, and others, they do not believe that the decision to negotiate with your company followed the evaluation criteria set forth in the Request for Proposals and they specifically challenge the implication that the accepted proposal was more advantageous to the Government than the one they submitted.
This notice of Pan American's protest in no way relieves you of any obligation to enter into negotiations or other administrative actions leading to a final contract. This is intended to give you notice of the protest so that you can take appropriate action on your behalf. You are hereby given an opportunty to be heard by, and to present evidence for consideration of the agency who will render a decision in this case. Any information should be submitted to this office. This protest has been referred to NASA Headquarters for a NASA reply.
WILLIAM M. LOHSE,
NOVEMBER 30, 1970. Mr. R. M. BARNES, Pan American World Airways, Inc., Aerospace Services Division, Cocoa Beach, Fla.
DEAR MR. BARNES: Your letter dated November 27, 1970, protesting the prospective award of a contract to The Boeing Company for Installation Support Services at the Kennedy Space Center is hereby acknowledged.
In accordance with NASA PR 2.407-8(a) (2) (iii) we have referred your protest to NASA Headquarters. I can assure you that your protest will be given a timely and complete investigation. At this time I do not expect an award to be made until your protest is resolved, however, we are proceeding with administrative actions leading to award.
WILLIAM M. LOHSE,
PAN AMERICAN WORLD AIRWAYS, INC.,
Cocoa Beach, Fla., November 27, 1970. Reference: RFP 2-370-0, Installation Support Services. Mr. WILLIAM M. LOHSE, Contracting Officer, NASA, KSC, AD-PRO, KSC Headquarters Building, Kennedy Space Center, Fla.
DEAR MR. LOHSE: Pan American World Airways, Inc. protests the selection of the proposal submitted by Boeing for negotiations leading to the award of a contract to provide Installation Support Services at Kennedy Space Center. We
respectfully request immediate reconsideration of this procurement action based upon the following major considerations.
Pan Am's proposed costs and fee for the first year of operation totaled $19,275,252. This amount is significantly lower than the approximately $20,000,000 announced by NASA as the costs proposed by the company selected for contract negotiations.
Our proposed costs fully qualify under the RFP evaluation criterion, "Reasonableness of Cost and Fee" because they are based upon executed labor agreements, existing salaries and comprehensive reviews of the local labor market/wage rates by knowledgeable industry personnel and Government agences. Further, Pan Am has consistently demonstrated its ability to perform satisfactorily within its cost estimates and in accordance with the terms and conditions of separate union agreements specifically covering work at the Kennedy Space Center.
In the last 17 years, our Aerospace Services Division has administered the expenditure of approximately $1.5 billion of Federal funds under various Government contracts and has never experienced an overrun. This fact is presented as hard evidence that our cost estimates are realistic and reasonable. This record specifically includes performance for NASA at KSC under the current Engineering Support Services contract.
Pan Am's experience in directly related work and its long record of performance as an O&M contractor eminently qualifies the company under the RFP) evaluation criterion, "Experience and Past Performance." We do not believe the selected contractor offers comparable credentials.
For the stated reasons, and others, we do not believe the decision to negotiate with the selected contractor followed the evaluation" criteria set forth in the Request for Proposal and we specifically challenge the implication that the accepted proposal was more advantageous to the Government than the one sub-' mitted by Pan American World Airways, Inc.
It is our understanding that under the Code of Federal Regulations, Title 4, Part 20, the procedure for protest may require that a contractor transmit a letter or telegram to the Comptroller General of the United States. We have not taken this step as we have been advised that an appeal directly to the Contracting Officer may be sufficient to suspend further action on a disputed procurement until the matter is heard and resolved.
We seek your guidance as to whether this protest must be carried further to assure a timely and complete investigation. Very truly yours,
• R. M. BARNES, Vice President.
NOVEMBER 30, 1970. The Boeing Co., Cocoa Beach, Fla. (Attention of Mr. D. L. Moorehead.)
My letter dated November 25, 1970, informed you of the protest of Trans World Airlines, Inc., on RFP 2-370-0.
On November 27, 1970, we received a request from TWA that NASA made available to TWA the average hourly rates including fringe benefits proposed by The Boeing Company for each non-management job classification in the fixed staffing called out in RFP 2-370-0, as amended. It is TWA's position that the substantial price disparity between the two offers could not have been achieved but for the failure on the part of Boeing to take account of the wage rates and fringe benefits applicable to the work under existing collective bargaining agreements. TWA states that this failure not only casts serious doubt on the credibility of Boeing's cost proposal but, more importantly, constitutes non-responsiveness to the guidelines for competition in this area which were established by NASA's reply to Question Number 56 posed at the preproposal bidder's conference.
TWA pointed out that The Boeing Company has stated that it will employ some 90 percent of the TWA work force now on this project, and expects to bring onsite only a small management group and that NASA has stated that the first year cost plus award fee of the Boeing proposal is estimated at twenty million dollars. TWA concludes, therefore, that Boeing's and NASA's objectives cannot be accomplished unless the present TWA work force is to receive substantially less wage and fringe benefits and that the Boeing proposal must have anticipated this. TWA alleges that a Boeing proposal on such basis is not responsive to the guidelines for competition, in particular to the NASA answer to