Air Force Procurement
Protests Challenging Role of Biased Official Sustained Gao ID: GAO-05-436T April 14, 2005Darlene Druyun, a former high-ranking Air Force procurement official convicted of violating a post-employment statute, admitted to bias in favor of The Boeing Company on various procurements. GAO subsequently received protests from other firms challenging the alleged improper influence of Mrs. Druyun regarding contracts awarded by the Air Force under the small diameter bomb program and the C-130 avionics modernization upgrade program. The Competition in Contracting Act of 1984 provides statutory authority for GAO's bid protest function. Consistent with standard practices, GAO reviewed all available documentation, held hearings to receive testimony from witnesses, considered arguments from all interested parties, and issued decisions on each of the protests.
The Federal Acquisition Regulation (FAR) provides that government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. The documents supporting Mrs. Druyun's criminal conviction establish that she was biased in favor of Boeing. Where, as here, the record establishes that a procurement official was biased in favor of one offeror, the need to maintain the integrity of the procurement process requires that GAO sustain the protests unless there is compelling evidence that the bias did not prejudice the protesters. In the case of the C-130, the record established that Mrs. Druyun functioned as the lead procurement official throughout the procurement. GAO rejected the Air Force's assertion that there was no evidence that Mrs. Druyun influenced the source selection evaluation team. Similarly, in light of the failure to treat offerors fairly during contract negotiations, GAO rejected the Air Force's assertion that the evaluation process had been conducted properly. Finally, because (1) the contracting officer directed the evaluators to destroy portions of the evaluation record, (2) the agency failed to have meaningful discussions with all of the offerors, and (3) the evidence showed Druyun's biased influence throughout the source selection process, GAO could not reasonably determine which of the four proposals should have been selected for award. The record therefore failed to establish that any one of the protesters was not prejudiced as a result of the various procurement flaws. Accordingly, GAO sustained the C-130 protests. In the case of the small diameter bomb protest, the position of the Air Force was that the protester was not prejudiced by Mrs. Druyun's acknowledged bias in favor of Boeing because she "did not play a significant role" in the decision to change technical requirements. Contrary to the position of the Air Force, however, the record showed that Mrs. Druyun was significantly involved in the decisionmaking process that culminated in changes to technical requirements and the deletion of related evaluation criteria. In light of Mrs. Druyun's acknowledged bias in favor of Boeing and GAO's conclusion that she was materially involved in the decisionmaking process, GAO concluded that the record failed to establish that Druyun's bias did not prejudice the protester. Accordingly, GAO sustained the protest.
GAO-05-436T, Air Force Procurement: Protests Challenging Role of Biased Official Sustained
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Testimony:
Before the Subcommittee on Airland, Committee on Armed Services, U. S.
Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Thursday, April 14, 2005:
Air Force Procurement:
Protests Challenging Role of Biased Official Sustained:
Statement of Daniel I. Gordon, Managing Associate General Counsel for
Procurement Law:
GAO-05-436T:
GAO Highlights:
Highlights of GAO-05-436T, a testimony to the Airland Subcommittee,
Senate Committee on Armed Services:
Why GAO Did This Study:
Darlene Druyun, a former high-ranking Air Force procurement official
convicted of violating a conflict of interest statute, admitted to bias
in favor of The Boeing Company on various procurements. GAO
subsequently received protests from other firms challenging the alleged
improper influence of Mrs. Druyun regarding contracts awarded by the
Air Force under the small diameter bomb program and the C-130 avionics
modernization upgrade program.
The Competition in Contracting Act of 1984 provides statutory authority
for GAO‘s bid protest function. Consistent with standard practices, GAO
reviewed all available documentation, held hearings to receive
testimony from witnesses, considered arguments from all interested
parties, and issued decisions on each of the protests.
What GAO Found:
The Federal Acquisition Regulation (FAR) provides that government
business shall be conducted in a manner above reproach and, except as
authorized by statute or regulation, with complete impartiality and
with preferential treatment for none. The documents supporting Mrs.
Druyun‘s criminal conviction establish that she was biased in favor of
Boeing. Where, as here, the record establishes that a procurement
official was biased in favor of one offeror, the need to maintain the
integrity of the procurement process requires that GAO sustain the
protests unless there is compelling evidence that the bias did not
prejudice the protesters.
In light of the admission by Mrs. Druyun that she was biased in favor
of Boeing, we sustained the protests challenging the C-130 contract
award and the protest challenging the small diameter bomb because the
Air Force failed to show that her bias did not affect the contract
award decisions, or otherwise prejudice the protesters.
In the case of the C-130, the record established that Mrs. Druyun
functioned as the lead procurement official throughout the procurement.
GAO rejected the Air Force‘s assertion that there was no evidence that
Mrs. Druyun influenced the source selection evaluation team. Similarly,
in light of the failure to treat offerors fairly during contract
negotiations, GAO rejected the Air Force‘s assertion that the
evaluation process had been conducted properly. Finally, because (1)
the contracting officer directed the evaluators to destroy portions of
the evaluation record, (2) the agency failed to have meaningful
discussions with all of the offerors, and (3) the evidence showed
Druyun‘s biased influence throughout the source selection process, GAO
could not reasonably determine which of the four proposals should have
been selected for award. The record therefore failed to establish that
any one of the protesters was not prejudiced as a result of the various
procurement flaws. Accordingly, GAO sustained the C-130 protests.
In the case of the small diameter bomb protest, the position of the Air
Force was that the protester was not prejudiced by Mrs. Druyun‘s
acknowledged bias in favor of Boeing because she ’did not play a
significant role“ in the decision to change technical requirements.
Contrary to the position of the Air Force, however, the record showed
that Mrs. Druyun was significantly involved in the decisionmaking
process that culminated in changes to technical requirements and the
deletion of related evaluation criteria. In light of Mrs. Druyun‘s
acknowledged bias in favor of Boeing and GAO‘s conclusion that she was
materially involved in the decisionmaking process, GAO concluded that
the record failed to establish that Druyun‘s bias did not prejudice the
protester. Accordingly, GAO sustained the protest.
What GAO Recommends:
GAO recommended that the Air Force recompete the installation phase of
the C-130 contract. GAO also recommended that the Air Force conduct a
thorough analysis of the possibility of recompeting the entire contract
effort.
As to the small diameter bomb, GAO recommended that the Air Force
conduct a competitive procurement for its moving target requirement.
www.gao.gov/cgi-bin/getrpt?GAO-05-436T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Daniel I. Gordon at 202-
512-8219 or gordond@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to be here today to discuss the bid
protest decisions recently issued by the Government Accountability
Office (GAO) in response to protests challenging the actions of the Air
Force under two programs--the C-130 avionics modernization upgrade
(AMP) program and the small diameter bomb program. The protests were
based on information disclosed by Darlene Druyun, formerly the Air
Force's Principal Deputy Assistant Secretary for Acquisition, in
connection with her October 2004 criminal conviction for violation of
the statutory conflict of interest provisions codified at 18 U.S. C. §
208(a) (2000).
The Competition in Contracting Act of 1984 (CICA) provides statutory
authority for GAO's bid protest function. GAO has issued implementing
regulations establishing the procedural framework for our bid protest
forum in Title 4, Part 21, of the Code of Federal Regulations. GAO
provides an objective, independent, and impartial forum for the
resolution of disputes concerning the awards of federal contracts. Our
procedures provide all interested parties--the protester, the awardee
and the contracting agency--an opportunity to present their positions
prior to GAO's resolution of the protest.
GAO's bid protest decisions differ from the reports GAO issues in
connection with its program audits and reviews. In this regard, our
protest decisions do not address broad programmatic issues such as
whether or not a weapons program is being managed effectively or
consistent with best practices; instead, our bid protest decisions
address specific allegations raised by unsuccessful offerors
challenging particular procurement actions as contrary to procurement
laws and regulations. Our protest decisions are necessarily limited to
the record as we developed it, largely shaped by the allegations raised
by the protesters and the responses but forward by the agency and
awardee.
With that background, my testimony today will summarize our two
recently issued decisions concerning allegations of improper influence
by Darlene Druyun. Our testimony is based on the public version of our
decisions. A limited amount of information that is proprietary to the
protesters, source selection sensitive, or law enforcement sensitive
has been redacted from these decisions, but none of the redacted
information is critical to understanding the decisions.
The Protest Decision Regarding the C-130 Avionics Modernization Program
(AMP):
Background:
As was widely publicized, in October 2004 Darleen Druyun pled guilty to
violating the conflict of interest provisions of 18 U.S.C. § 208(a)
based on the fact that she engaged in employment negotiations with The
Boeing Company while she was negotiating on behalf of the Air Force for
the lease of 100 Boeing KC 767A tanker aircraft. In addition to her
employment negotiations, documents submitted by Druyun in connection
with the criminal proceedings establish that, in 2000, Druyun contacted
Boeing personnel to request that Boeing provide employment for both
Druyun's daughter and the daughter's boyfriend (who subsequently became
Druyun's son-in-law). In response to these requests, Boeing created a
position for Druyun's daughter and hired both her daughter and future
son-in-law in the fall of 2000. In the documents filed in the criminal
proceedings, Druyun further states that her decisions in matters
affecting Boeing were "influenced by her perceived indebtedness to
Boeing for employing her future son-in-law and daughter," and that with
regard to the contract awarded in the C-130 AMP procurement, "an
objective selection authority may not have selected Boeing."
Following Druyun's disclosures in October 2004, agency-level protests
were filed at the Air Force by the three offerors who unsuccessfully
competed for the C-130 contract: Lockheed Martin Aeronautics Company, L-
3 Communications Integrated Systems, (the successor-in-interest to
Raytheon Company Aircraft Integration Systems), and BAE Systems
Integrated Defense Solutions, Inc. The Assistant Secretary of the Air
Force for Acquisition subsequently advised each of the protesters that
"the Air Force is of the opinion that the protest is more appropriately
considered by the Government Accountability Office," and that "the Air
Force will not decide the protest." Each of the companies subsequently
filed protests with our Office maintaining that Druyun's recently
disclosed bias in favor of Boeing, along with the information
previously disclosed to the protesters regarding the agency's purported
bases for rejecting their proposals, demonstrated that their proposals
were not evaluated in a fair and unbiased manner.
In response to the protests, the Air Force argued that notwithstanding
Druyun's acknowledged bias in favor of Boeing, the award to Boeing was
proper because "there is no evidence that Mrs. Druyun influenced the
SSET [source selection evaluation team]" and that, overall, "the
evaluation process was conducted properly and in accordance with the
evaluation criteria."
The Legal Standard:
The Federal Acquisition Regulation (FAR), § 3.101-1, provides that:
Government business shall be conducted in a manner above reproach and,
except as authorized by statute or regulation, with complete
impartiality and with preferential treatment for none. Transactions
relating to the expenditure of public funds require the highest degree
of public trust and an impeccable standard of conduct. The general rule
is to avoid strictly any conflict of interest or even the appearance of
a conflict of interest in Government-contractor relationships.
Where, as was the case here, the record establishes that a procurement
official was biased in favor of one offeror, we believe that the need
to maintain the integrity of the procurement process requires that we
sustain the protests unless the agency demonstrates that the bias did
not affect the contract award decision--in legal terms, that the bias
did not prejudice the protesters.
GAO's Review of the Record:
As discussed above, the documents supporting Druyun's criminal
conviction establish that she was biased in favor of Boeing. In
reviewing the protest allegations, GAO conducted a 3-day hearing on the
record during which testimony was provided by nine government
witnesses. The record developed by GAO, including the hearing
testimony, established the following key points. First, Druyun
functioned as the lead procurement official throughout this procurement
and employed a forceful management style. In this particular
procurement, she left no doubt about who was in control from the
outset. Before the evaluators had even completed their initial proposal
review, Druyun requested that they come to Washington, D.C. to discuss
the "status" of their evaluations; this meeting was subsequently
referred to as the "15 September massacre." From September 15, 2000
through the first request for final proposal revisions in February
2001, Druyun had the evaluators come to Washington five times to brief
her on the ongoing evaluations; during these briefings, Druyun
expressly or implicitly directed multiple changes to the evaluators'
ratings, many of which favored Boeing. In our decision, we identify
specific examples of Druyun's directions regarding each of the
offerors' proposals.
Also, the record shows that following the request for final proposal
revisions, but before the source selection process was complete, the
contracting officer sent an e-mail to a recipient list that included
virtually everyone involved in the source selection process, directing
that the recipients "clean up" and "delete" various portions of the
evaluation record. Specifically, this e-mail directed the recipients to
"delete any comments where evaluators/advisors have suggested ratings,"
explaining that "[i]f the rating doesn't match the suggestion, we have
protest fodder." The e-mail also specifically directed the evaluators
to "[d]elete any derogatory or exceedingly glowing comments."
The first round of final proposal revisions was submitted on March 2.
On March 9, the contracting officer reopened discussions and requested
a second round of proposal revisions. At the GAO hearing, the
contracting officer unambiguously testified that discussions were
reopened to permit Boeing to "take care of" a "problem" in its cost
proposal, explaining that, at that point, Boeing's proposal failed to
comply with instructions the agency had previously given the offerors.
No substantive questions were asked of any other offeror during these
discussions. Nonetheless, during the GAO hearing, agency witnesses
identified specific aspects of the protesters' final proposals that
should have been brought to their attention, including aspects of the
protesters' proposals that appear very similar to the "problem" Boeing
was permitted to "take care of."
The second round of final proposal revisions was submitted on March 19.
Thereafter, the source selection evaluation team briefed Druyun on the
evaluations of final proposals. During this briefing the cost team was
directed to review their analysis to "assure its accuracy." Upon
receiving that direction, the cost team reduced Boeing's evaluated
price and increased Lockheed's evaluated price. Additionally, in a
subsequent meeting with Druyun, the source selection evaluation team
described a specific approach to performance that Boeing had proposed
as one "which tends to induce problems." Druyun directed that this
description be crossed out of the evaluation record and replaced with
the words: "Boeing will work out details post award."
Based on the record discussed above, we rejected the Air Force's
assertion that there was no evidence that Mrs. Druyun influenced the
source selection evaluation team. Similarly, in light of the failure to
treat offerors fairly regarding discussions, we rejected the Air
Force's assertion that the evaluation process had been conducted
properly. Finally, because the contracting officer directed the
evaluators to destroy various portions of the evaluation record and the
agency failed to conduct meaningful discussions with all of the
offerors, along with the evidence of Druyun's influence throughout the
source selection process, we could not reasonably determine which of
the four proposals should have been selected for award. We concluded
that the record failed to establish that any one of the protesters was
not prejudiced by the various procurement flaws. Accordingly, we
sustained the protests.
Recommendation:
Ordinarily, where our Office finds fundamental flaws in an agency
procurement, we will recommend that the agency reopen negotiations with
all competitive range offerors, conduct meaningful discussions, request
final revised proposals, and evaluate those proposals in a fair and
unbiased manner. Here, however, the contract was awarded more than 3
years ago, and performance has been ongoing since that time. In the
course of developing the protest record, the Air Force reported that
while recompetition of the installation phase of the contract is
feasible, recompetition of the entire contract would not be in the best
interests of the taxpayer or consistent with national security
concerns.
Based on the Air Force's acknowledgment that recompetition of the
installation phase of the contract was feasible, we recommended that
the agency recompete those requirements. In light of the broader
concerns raised by the Air Force, we were reluctant to recommend
recompetition of the entire contract effort. Nonetheless, we had some
concern that the Air Force's position regarding recompetition of the
entire effort was forged in the heat of litigation, and may not reflect
a completely objective review. Accordingly, we recommended that the
agency conduct and document a thorough analysis of the competing
concerns and provide that analysis to our Office. In the event the
agency ultimately determines that the broader concerns preclude
recompetition of the entire contract effort, we recommended that each
of the protesters be reimbursed the costs incurred in preparing and
submitting their proposals. We also recommended that the protesters be
reimbursed for their costs of filing and pursuing the protests.
The Protest Decision Regarding the Small Diameter Bomb:
We turn now to the Air Force's award of a contract to Boeing under the
small diameter bomb program. Lockheed Martin Corporation was the only
competitor for this effort, and following the October 2004 disclosure
of Druyun's bias, filed a protest alleging that Druyun improperly
manipulated certain program requirements and the related evaluation
factors in a manner that favored Boeing.
In addition to Druyun's feeling of "indebtedness" to Boeing due to
Boeing's employment of her daughter and future son-in-law, the record
we developed, which included a hearing at GAO during which five
government witnesses and one Lockheed Martin witness testified,
established the following key points. The small diameter bomb program
initially contemplated an evaluation of offerors' capabilities against
both fixed and moving targets; early in the procurement process (during
the first few months of 2002), Lockheed Martin was perceived as having
a "strength" with regard to the moving target requirements and Boeing
was considered "weak" in this area; in May 2002, most of the
requirements associated with moving targets and the associated
evaluation factors were deleted; thereafter, Boeing was selected for
award without consideration of its capabilities regarding the deleted
moving target requirements. At the time our decision was issued, the
Air Force was in the process of adding the previously deleted
requirements to Boeing's contract on a sole-source basis.
The Agency's Position and GAO's Conclusion:
In responding to Lockheed's protest, the Air Force maintained that
Druyun "did not play any significant role" in the decision to change
the small diameter bomb's technical requirements and, therefore,
Lockheed was not prejudiced by Druyun's acknowledged bias in favor of
Boeing.
Contrary to the agency's assertion, the contemporaneous record
established that Druyun was significantly involved in the
decisionmaking process that culminated in the May 2002 changes to the
technical requirements and deletion of the related evaluation criteria.
As discussed in our decision, Druyun was the de facto lead acquisition
official during the period in which the changes were made. In that
capacity, she received briefings from the competing offerors, directed
the source selection evaluation team to perform various activities,
directed an independent technical review of Lockheed Martin's
technology applicable to moving targets, was directly involved in other
changes made to the requirements for fixed targets, and contacted
Raytheon to request that Raytheon communicate with Boeing. Following
Druyun's contact, Raytheon provided support to Boeing in its efforts to
meet the small diameter bomb requirements.
On the basis of our review of the protest record, we rejected the Air
Force's assertion that Druyun was not materially involved in the
process culminating in the May 2002 changes to the technical
requirements.
The Legal Standard and Conclusion:
As discussed above, the FAR provides that procuring agencies must
strictly avoid conflicts of interest or even the appearance of
conflicts in Government-contractor relationships and, where, as here,
the record establishes that a procurement official was biased in favor
of one offeror, the need to maintain the integrity of the procurement
process requires that we sustain the protest unless the agency
demonstrates that the bias did not prejudice the protester.
In light of Druyun's acknowledged bias in favor of Boeing and our
determination that she was materially involved in the decisionmaking
process culminating in deletion of the moving target requirements,
along with the fact that Lockeed Martin was perceived as having a
"strength" and that Boeing was "weak" regarding the deleted
requirements, we concluded that the record failed to establish that
Druyun's bias did not prejudice the protester. Accordingly, we
sustained the protest.
Our Recommendation:
At the time our decision was issued, the Air Force had not yet amended
Boeing's contract to add the previously deleted requirements regarding
moving targets. Accordingly, we recommended that the Air Force conduct
a competitive procurement to meet those requirements. Consistent with
the provisions of CICA, we also recommended that Lockheed Martin be
reimbursed its costs of filing and pursuing the protest.
Finally, Lockheed requested that we recommend reimbursement of the
proposal preparation costs Lockheed incurred in competing for the
contract awarded to Boeing. As discussed in our decision, we deferred
ruling on that request, pending the Air Force's review of certain
concerns regarding potential conflict of interest issues relating to a
former Brigadier General who, after leaving the Air Force, was involved
in Lockheed's proposal preparation efforts.
Mr. Chairman, this concludes our prepared statement. I would be happy
to respond to any questions regarding our bid protest decisions that
you or other Members of the Subcommittee may have.
