Page images
PDF
EPUB

Question 56, and that such NASA answer led TWA and possibly other bidders to assume that any successor quote must assume the predecessor's collective bargaining agreement. If this is not to be required, TWA states, then they were not afforded the opportunity to compete on the same basis and the procurement must be recompeted. TWA feels that it should not be reserved to Boeing alone to negotiate with TWA's work force for the reductions in rates of pay and fringe benefits that this group would be willing to accept, and that the wages and fringe benefits of organized workers are established by agreement btween the workers and their employer and not under the terms of an agreement with the United States.

In accordance with NASA Procurement Regulation 2.407X8, the original protest and the additional TWA request have been referred to NASA Headquarters for the NASA reply. As stated in our November 25, 1970, letter, however, any information from you in regard to this matter should be sent to this office.

FRED BOLES, Contracting Officer.

NOVEMBER 27, 1970. Mr. L. E. SMART, Senior Vice President, Trans World Airlines, Inc., New York, N.Y.

DEAR MR. SMART: Your message dated November 23, 1970, protesting the prospective award to The Boeing Company of Installation and Technical Support Services at the Kennedy Space Center is hereby acknowledged. Also acknowledged is Mr. Fletcher's message dated November 26, 1970, relative to the same matter.

In accordance with NASA Procurement Regulation 2.407-8, this protest has been referred to NASA Headquarters. Therefore, any data that can be provided will be furnished by NASA Headquarters. Sincerely,

FRED BOLES,

Deputy Procurement Officer. THE BOEING Co., Cocoa Beach, Fla. Attention of Mr. D. L. Moorehead.)

Trans World Airlines, Inc., New York, New York, has filed a protest with the Contracting Officer and the Comptroller General of the United States against the prospective award of a contract to your company for Installation Support Services at the Kennedy Space Center.

TWA contends in their protest that the difference in the proposed cost for the first year between your proposal and theirs indicates that either (a) they or you were not proposing on the same work and that one or both proposals were, therefore, nonresponsive or (b) that an award is being contemplated principally on anticipated differences in wages to be paid individual nonmanagement workers. TWA alleges that if award is on the latter basis it would not be advantageous to the Government and could not be lawfully made 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. This, TWA states, is contrary to national labor policy and Government procurement policy.

This notice of TWA'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 opportunity 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.

FRED BOLES

NEW YORK, N.Y., November 23, 1970. JOHN F. KENNEDY SPACE CENTER, NASA Procurement Office AD PRO 23, Kennedy Space Center, Fla.

In order that Trans World Airlines, Inc. may be afforded a fair opportunity to be heard and to present evidence for the consideration of the Agency pursuant to NASA Procurement Regulation 2.407-8, it is hereby requested without prejudice to the making of further requests that NASA make available to TWA the

average hourly rates including fringe benefits proposed by the Boeing Company for each nonmanagement job classification in the fixed staffing called out in RFP 2-370-0, as amended. In support of such request, 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 collectivebargaining agreements, a failure which not only casts serious doubt on the credibility of Boeing's cost proposal but, more importantly, constitutes nonresponsiveness to the guidelines for competition in this area which were established by NASA's reply to question 10.56 posed at the pre proposal bidder's conference.

The Boeing Company has stated that it will employ some 90 percent of the TWA work force now on this project and further that they expect to bring on site only a small management group. As was stated that the first year cost plus AAARD fee of The Boeing proposal is estimated at twenty million dollars. Boeing's and NASA's objectives cannot be accomplished unless the present TWA work force is to receive substantially less wage and fringe benefits, For only ten months the cost in the TWA proposal was about 26 million dollars. A substantial reduction in the wages and fringe benefits paid to the TWA work force must of necessity have been anticipated in the proposal of the Boeing Company. A Boeing proposal on such basis is not responsive to the guidelines for competition, in particular to the NASA answer to question 56. Such NASA answer led TWA and possibly other bidders to assume that any successor quote must assume the predecessor's collective-bargaining agreement unquote. If this is not to be required then TWA was not afforded the opportunity to compete on the same basis and the procurement must be recompeted. Obviously it should not be reserved to Boeing alone to negotiate with TWA's work force for the reductions in rates of pay and fringe benefits that this group would be willing to accept, it goes without saying that the wages and fringe benefits of organized workers are established by agreement between the workers and their employer and not under the terms of an agreement with the United States.

TRANS WORLD AIRLINES, INC.,
RAYMOND R. FLETCHER, Jr.,
Vice President and General Counsel.

NASA, JOHN F. KENNEDY SPACE CENTER,

November 24, 1970. PROCUREMENT OFFICE AD PRO 23, Kennedy Space Center, Fla., Attention: Wm. M. Lohse, Contracting Officer, Comptroller General of the United

States, Washington, D.C. Pursuant to NASA Procurement Regulation 2.407-8, Trans World Airlines Inc. does hereby protest the prospective award to the Boeing Company of a contract to provide installation and technical support services at John F. Kennedy Space Center on the grounds that the anticipated first year cost of the contemplated contract with Boeing estimated by NASA at twenty million dollars when compared with the first year cost of the TWA's bid ; namely approximately twenty four million dollars, shows either that TWA and Boeing were not bidding on the same work and that one or both bids were, therefore, not responsive, or that an award is being contemplated principally on anticipated differences in wages to be paid individual non management workers; an award on the latter basis is not advantageous to the Government and cannot lawfully be made 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.

TRANS WORLD AIRLINES, INC.,
L. E. SMART,

Senior Vice President.

SELECTION OF CONTRACTOR FOR INSTALLATION SUPPORT SERVICES, KENNEDY SPACE

CENTER On October 28, 1970, Dr. Newell, Mr. Shapley, and I, along with other senior officials from NASA Headquarters and the Kennedy Space Center, met with members of the Source Evaluation Board appointed to evaluate proposals for installation support services for the John F. Kennedy Space Center. The work involves test support management, plant engineering and maintenance, logistics, docu

mentation support, fire prevention and protection, quality assurance, security services, and training.

This work is presently being performed under three service contracts. The incumbent companies are Trans World Airlines, Inc., Service Technology Corporation, and the Bendix Corporation. This new consolidated procurement will take the form of a cost-plus-award-fee contract. The proposed contract will be for one year beginning February 1, 1971. In addition there will be provisions in the contract for a firm option for the second year's performance and three additional one-year extensions to the contract if the parties agree on such extensions. The Board solicited proposals from 42 firms. Seventeen additional firms asked for the request for proposals and were furnished the copies. The following firms submitted proposals :

The Boeing Company Chromalloy American Corporation Dow Chemical Company KDI Corporation Pan American World Airways, Inc. Mason & Hanger-Silas Mason Company, Inc., and The Rust Engineering Company as a joint venture

Trans World Airlines, Inc. The Board evaluated the proposals on the basis of criteria established by it prior to receipt of proposals. The Board appointed a Technical Evaluation Committee and a Business Evaluation Committee to assist it in its evaluation of proposals.

The Board also used the services of consultants to assist in evaluation of the proposals. The Board carried out its evaluation under the three major categories of technical performance; realism of estimated cost and award fee; and company experience and performance, key personnel, and management structure. The RFP contained a general statement of the relative importance of the three categories. As is customary in proceedings of this nature the total estimated costs as proposed were not scored in the Board's evaluation. The two committees evaluated all the proposals received and presented written reports to the Board concerning their evaluation. At this point the Board discussed the Chromalloy American proposal and decided to remove it from further consideration. The proposal contained no identification of a management team and did not demonstrate an understanding of the work to be performed or of the current labor agreements involving the work force.

The Board then performed an initial grading and ranked the proposals as follows:

1. TWA
2. Pan American
3. Boeing (basic proposal)
4. Mason-Rust
5. Dow
6. Boeing (alternate proposal)

7. KDI The Board discussed the proposals in order to determine those that had a reasonable chance for award. The Board determined that the proposal submitted by KDI did not represent a reasonable initial effort to address itself to the essential requirements of the RFP; the proposal clearly demonstrated that KDI did not understand the requirements of the RFP and had insufficient experience in the types of work needed. The Board decided to eliminate the KDI proposal from further consideration. With the elimination of the two proposals from Chromalloy American and KDI Corporation, the initial competitive range was established. The Board then undertook oral and written discussions with respect to the six proposals of the remaining five firms. The primary subjects of the oral discussions were the weaknesses and areas of concern identified by the Committees and the Board.

At the conclusion of each session of oral discussions, the Board performed a second grading of the proposal that had just been discussed. The purpose of the second grading was to document the impressions and conclusions of the Board members immediately following the discussions. The second ranking placed the proposals in the following order of merit:

1. TWA
2. Boeing (basic proposal)
3. Pan American
4. Mason-Rust
5. Dow

The second grading of the Boeing alternate proposal was deferred so that supplemental data presented by Boeing could be evaluated by the technical committee.

Following the discussions, all proposers revised their proposals. Upon review of the additional information submitted, the Board proceeded to its final evaluation, ranking the proposals in the following order of merit:

1. TWA
2. Boeing (basic)
3. Pan American
4. Boeing (alternate)
5. Dow (tie)

Mason-Rust (tie) TWA received the highest score and a rating of excellent. TWA is an incumbent contractor and now performs most of this work. TWA offered an excellent plan for technical management, a sound organizational structure, excellent key personnel, and good labor relations. As an incumbent contractor TWA has been performing in a very good to excellent manner for the past six years. Its only drawback was its high cost.

Boeing received the second highest score and a rating of good. Its proposal showed good understanding of the work, excellent support from the corporation, a strong group of key personnel who had worked together as a team, and a good understanding of the local labor situation. On the other hand Boeing has limited experience in providing support services. It presented an attractive cost proposal and made a prima facie case for its ability to achieve the labor rates upon which its cost estimate was based.

Boeing proposed on the basis of wage rates which are lower than those being paid by TWA and more comparable to the prevailing rates in the local area. Boeing already has an agreement with a different local of the same international union which now represents the TWA employees. Both the Boeing and the TWA union agreements are nationwide. Boeing proposes to extend its existing agreement to cover its operations at KSC, and to pay at a wage scale applicable to the Boeing agreement; these rates of pay are generally lower than those under the TWA agreement. Boeing has had good relations with the union, and the Board expressed the opinion that Boeing has a good probability of realizing its objectives in this area. Because it is expected that the majority of employees to be hired by Boeing are now incumbent employees working for TWA, the selection of Boeing would mean that individual workers might earn less money than under TWA. However, it was reported that the Boeing proposed wage rates are competitive in the KSC area, while the rates paid by TWA are higher than those prevailing in the area.

Pan American was ranked third with a rating of good. Pan American showed excellent understanding of the technical requirements, excellent experience, highly qualified key personnel, an excellent work plan, and excellent support from the corporation. In fact, in the technical area the Pan American proposal was rated essentially equal to that of the highest ranking firm, TWA. However, in the business evaluation Pan American was marked down because the Board believed that the wage rates proposed were not realistic.

Pan American's employees nationally are represented by unions different from those now representing TWA employees. Pan American proposed to transfer these employees to its bargaining units and pay them lower wage rates. These rates would also be lower than those now paid by Pan American at the USAF Eastern Test Range.

The Board felt that the company's attempt to transfer the incumbent employees to its bargaining units might well fail as a result of a representation election or as a result of litigation. If the Pan American plan should fail, and it should be required to succeed to the obligations of TWA under TWA's union contracts, then Pan American's costs would approximate those estimated in the TWA proposal. We were advised that there is no way to determine through contract negotiations whether Pan American's plan can succeed. The Board considered this a serious weakness, which would likely give rise to labor problems and disruption of work. Litigation or elections would take place only after award, at which time it would be too late to select a different contractor.

Boeing's alternate proposal was ranked fourth with a rating of good. This proposal reflected the same general strengths as the basic Boeing proposal. The Board was inclined to agree that some of the organizational changes proposed in Boeing's alternate may have merit. But it found the staff reductions as proposed not to have been amply demonstrated. The staffing for plant engineering

and maintenance and documentation services was unacceptable. Furthermore, Boeing's proposed staff reductions were based on assumptions of reduced work load and of increased productivity for which no convincing evidence was put forth.

Dow was placed in a tie for the lowest score, with a rating of satisfactory. Dow as a company presented good experience and excellent support for the local operation. Dow provided a good phase-in plan and showed good understanding of the work. However, the Board considered its supervision and administrative staffing to be minimal. Furthermore, the Dow proposal as to cost was considered to be unrealistically low. Dow planned to negotiate lower wage rates with the unions now representing the TWA employees, but it had not contacted the unions or otherwise indicated how it would achieve this goal.

Mason-Rust was placed in a tie for the lowest score, with a rating of satisfactory. It was weak in its understanding of the requirements and in its work plans, which were vague. Its project team for this job did not appear to have the strength which exists in the two companies, and the Board thought it questionable whether the project team would have sufficient local autonomy, Futhermore, Mason-Rust's proposal for its labor arrangements indicates a lack of understanding of the local labor situation and casts doubt on its ability to obtain union agreements at the rates proposed.

In cost, the Boeing alternate proposal based on reduced staffing levels was the lowest submitted. The next lowest, and very close together, were Pan American and the Boeing basic proposal. Dow was next, with Mason-Rust and TWA rather close together at a substantially higher level. The cost spread was substantial, with the high proposal exceeding the low proposal by about 50 percent, when compared on the basis of the first year. The Board considered that Boeing had not shown sufficient justification for the reduced staffing levels upon which its alternate was based. It found the Boeing basic proposal to be realistic. However, the Pan American cost estimate was evaluated as very uncertain because of the potential that the premises on which it is based could be successfully attacked in litigation and because labor disputes and unrest are likely to be encountered. The Dow estimate and even the high Mason-Rust estimate were also considered doubtful because of the uncertainties of their labor approaches. The TWA estimate, highest of the group, was considered realistic on the basis of the recent three-year agreement TWA has signed with its principal unions.

Following the presentation of the Source Evaluation Board, we met with a small group of key personnel who had heard the presentation and who carry responsibilities related to the procurement. Their views on the presentation and findings were solicited and given. They then withdrew.

Dr. Newell, Mr. Shapley, and I carefully considered the presentation and the comments of the key personnel involved. We decided that more information should be obtained about the labor relations problem before reaching a decision. We requested Mr. Moritz and Mr. Hosenball to obtain additional information and provide us with advice as to the effects of this procurement on future consolidations of KSC and Eastern Test Range service contracts and the objectives that might be met by conducting final negotiations with one or more different firms. We also sought the advice of Mr. Beresford, Mr. McCurdy, and Mr. King with respect to the labor relations situation.

After receiving additional information we met again on November 20. Mr. McCurdy was present at our invitation. We concluded that the technical superiority of the TWA proposal did not justify its acceptance if a lower cost arrangement could be achieved with Boeing, whose technical proposal was entirely acceptable. We decided that Pan American proposal should not be accepted because of its risk of labor unrest, particularly with the launching of Apollo 14 due in January; and because we seriously questioned whether the low labor rates proposed by Pan American could be realized under the labor plan that it proposed. We were satisfied that the selection of Boeing's basic proposal would give the Government the best promise of good technical performance and reasonable cost. Final negotiations would give Boeing an opportunity to demonstrate that it can achieve the cost upon which it has based its proposal, by obtaining agreements with the labor unions representing the employees concerned. For these reasons we selected the Boeing Company for award of the contract. I directed that negotiations be conducted with Boeing to reach full agreement on a contract signed by the Company and ready for acceptance by the Government, the negotiations to be based on the labor plan reflected in the Boeing proposal. I also directed that

« PreviousContinue »