Intellectual Properties, Inc., B-280803.2, May 10, 1999

B-280803.2 May 10, 1999 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Agency's determination not to award the protester phase II funding for a project proposed under the Department of Defense Small Business Innovation Research program on the basis that the proposal is not innovative and lacks technical merit was not reasonably justified where the contemporaneous documentation references only the negative comments of the evaluators. IPI contends that its proposal to perform research on "Passive Multistatic Hitchhiking Array for Search and Track" was improperly evaluated. The SBIR program is conducted pursuant to the Small Business Innovation Development Act. The program is made up of three phases. The program description set forth in the solicitation provided that "[p]hase I is to determine. View Decision Matter of: Intellectual Properties, Inc. File: B-280803.2 Date: May 10, 1999 DIGEST Attorneys DECISION Intellectual Properties, Inc. (IPI) protests the Ballistic Missile Defense Organization's (BMDO) determination not to award it phase II funding for a project IPI proposed under the Department of Defense (DOD) Small Business Innovation Research (SBIR) program. IPI contends that its proposal to perform research on "Passive Multistatic Hitchhiking Array for Search and Track" was improperly evaluated. We sustain the protest. The SBIR program is conducted pursuant to the Small Business Innovation Development Act, 15 U.S.C. Sec. 638 (1994 & Supp. II 1996), which requires certain federal agencies to reserve a portion of their research and development funds for awards to small businesses. The program is made up of three phases. The program description set forth in the solicitation provided that "[p]hase I is to determine, insofar as possible, the scientific, technical, and commercial merit and feasibility of ideas submitted under the SBIR program." DOD Fiscal Year 1997 SBIR Program Solicitation 97.1 at 1. The solicitation added with regard to phase I that "[p]roposals should concentrate on that research or research and development which will significantly contribute to proving the scientific, technical, and commercial feasibility of the proposed effort, the successful completion of which is a prerequisite for further DOD support in Phase II." Id. Firms that receive phase I awards may submit proposals for further development work under phase II of the SBIR program. The solicitation's program description provided that "[s]ubsequent Phase II awards will be made to firms on the basis of results of their Phase I effort and the scientific, technical, and commercial merit of the Phase II proposal." Id. Phase III contemplates that non-SBIR funds will be used to pursue commercial applications of research and development. 15 U.S.C. Sec. 638(e)(4)(C); Microexpert Sys., Inc., B-233892, Apr. 13, 1989, 89-1 CPD Para. 378 at 1. Specifically, the program description on page 1 of the solicitation stated with regard to phase III that "[u]nder Phase III, the small business is expected to use non-federal capital to pursue private sector applications of the research or development." Section 4.3 of the solicitation set forth the following evaluation criteria for phase II proposals: a. The soundness and technical merit of the proposed approach and its incremental progress toward topic or subtopic solution. b. The potential for commercial (government or private sector) application and the benefits expected to accrue from this commercialization. c. The adequacy of the proposed effort for the fulfillment of requirements of the research topic. d. The qualifications of the proposed principal/key investigators supporting staff and consultants. Qualifications include not only the ability to perform the research and development but also the ability to commercialize the results. IPI received a phase I award for its proposal submitted under the BMDO topic entitled "sensors," and subsequently submitted a proposal seeking phase II funding. The record of the agency's initial evaluation of IPI's phase II proposal consisted of two completed evaluation forms. One of the evaluators recommended the acceptance of IPI's phase II proposal for funding, and the other evaluator recommended the rejection of IPI's proposal. IPI was subsequently informed by letter from the cognizant BMDO Program Manager that its phase II proposal had not been approved for funding. After requesting and receiving a debriefing, IPI filed a protest with our Office, arguing that the agency did not properly apply the evaluation criteria stated in the SBIR program solicitation in determining not to fund IPI's phase II proposal. Specifically, IPI argued that BMDO's decision not to fund IPI's proposal was based solely on IPI's lack of private sector funding for its phase II proposal, rather than a reasoned evaluation of IPI's proposal under the criteria set forth in the SBIR program solicitation. In Intellectual Properties, Inc., B-280803, Nov.