Lockheed Martin Corporation, B-293679; B-293679.2; B-293679.3, May 27, 2004

Lockheed Martin Corporation, B-293679; B-293679.2; B-293679.3, May 27, 2004 TITLE: Lockheed Martin Corporation, B-293679; B-293679.2; B-293679.3, May 27, 2004 BNUMBER: B-293679; B-293679.2; B-293679.3 DATE: May 27, 2004 ********************************************************************** Lockheed Martin Corporation, B-293679; B-293679.2; B-293679.3, May 27, 2004 DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release. Decision Matter of: Lockheed Martin Corporation File: B-293679; B-293679.2; B-293679.3 Date: May 27, 2004 Marcia G. Madsen, Esq., David F. Dowd, Esq., Michael J. Farley, Esq., and William L. Olsen, Esq., Mayer, Brown, Rowe & Maw, for the protester. John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Sophia R. Zetterlund, Esq., and Erin R. Karsman, Esq., Smith Pachter McWhorter & Allen, for Alliant Techsystems, Inc., an intervenor. Maj. Tami L. Dillahunt, and Lawrence M. Brady, Esq., Department of the Army, for the agency. Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Agency failed to conduct meaningful discussions where it did not advise protester that *contractor-specific* cost savings included in protester*s initial proposal would not be considered in the agency*s evaluation. 2. Where agency provided protester with information during discussions that the agency knew to be erroneous, and protester relied on that information to its detriment, the agency*s discussions were misleading and call into question the reasonableness of the source selection decision. 3. Agency*s evaluation of awardee*s proposal was not reasonable where, notwithstanding the proposal*s failure to address the minimally required description of features necessary to meet the performance requirements, agency credited awardee*s proposal with meeting those requirements based on an agency advisor*s perceptions regarding the capabilities of awardee*s proposed subcontractor. DECISION Lockheed Martin Corporation protests the Department of the Army*s award of a contract to Alliant Techsystems Inc. (ATK) under request for proposals (RFP) No. DAAE30-03-R-0312 to perform system development and demonstration (SDD) and low-rate initial production (LRIP) of the XM395 precision guided mortar munition (PGMM). Lockheed protests, among other things, that the agency failed to conduct meaningful discussions with regard to projected ownership costs, and improperly credited ATK*s proposal with performance that ATK did not propose. We sustain the protest. BACKGROUND In February 2003, the agency published the solicitation at issue here, seeking proposals for the SDD phase and LRIP phase of the PGMM program.[2] The RFP advised offerors that the agency intended to award a contract on the basis of the proposal offering the *best value* to the government, and established the following evaluation factors, listed in descending order of importance: technical, program plan/critical processes, costs, past performance, and small disadvantaged business (SDB) participation. RFP S:S: M.1.1, M.1.3, at 78. Under the most important evaluation factor, technical, the RFP identified the following subfactors, listed in descending order of importance: ownership costs; maturity/complexity; performance; and logistics training, supportability, safety and growth.[3] Id. With regard to evaluation of ownership costs, one of the two most important elements of the most important technical evaluation factor, the RFP provided for the agency*s assessment of average unit production cost (AUPC)--that is, the average cost, per round, associated with the follow-on production contract--and provided that the AUPC of *[t]he offeror*s proposed munition* would be evaluated based on an assessment of *the bidders* production costs estimates.* RFP S: M.3.1.1.1, at 79. More specifically, the RFP provided that the AUPC of *[t]he offeror*s proposed munition* would be evaluated for *desirability* and indicated that the *bidders* production cost estimates* would be subject to a cost realism assessment, including an assessment of whether the proposal offered *creative yet realistic* solutions. Id. On April 15, 2003, initial proposals were submitted by four offerors, including Lockheed and ATK. Regarding Lockheed*s proposed AUPC for follow-on production, Lockheed*s proposal specifically advised the Army that its costs were based, in part, on establishment of [deleted].[4] Lockheed Initial Proposal, Exec. Summary, at 1, 12. In this context, Lockheed*s proposal referenced a [deleted].[5] Id.