1019-00003 · Whitmore Aerospace LLC · ADR and Hearing

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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

TO: File — Matter No. 1019-00003

FROM: Claudia Merritt, Partner, Calderwood & Harkness LLP

DATE: December 9, 2023

RE: Outcome Prediction ADR Conference — GAO Case No. B-422187; B-422187.2, Whitmore Aerospace LLC (Protest of Award under Solicitation No. FA8222-23-R-0087)

I. Purpose

This memorandum memorializes the outcome prediction alternative dispute resolution ("ADR") conference call conducted on Friday, December 8, 2023, by the United States Government Accountability Office ("GAO") in connection with the above-referenced bid protest. The conference was convened pursuant to GAO's established ADR procedures, which provide parties with a preliminary, non-binding assessment of the likely outcome of a protest in order to facilitate resolution without the need for a formal written decision. The outcome prediction conference was conducted by Senior Attorney Angela M. Palermino of the Procurement Law Division, who has been assigned as the lead attorney on this matter throughout the protest proceedings.

The conference call included counsel for all three parties to the protest. Calderwood & Harkness LLP appeared on behalf of the protester, Whitmore Aerospace LLC ("Whitmore" or "WAL"). The Department of the Air Force (the "Agency") was represented by Captain Lucas M. Hargrove, United States Air Force, Judge Advocate General's Corps, and Miriam T. Castellano of the Office of the General Counsel, Department of the Air Force, Acquisition Law and Litigation Division (SAF/GCQ). The intervenor, Halcyon Defense Systems Inc. ("Halcyon" or "HDS"), was represented by Theodore J. Dunaway and Rachel N. Sorensen of Kessler, Pratt & Dunaway LLP.

The Calderwood & Harkness participants on the call were the undersigned, Claudia Merritt (Partner and lead counsel for Whitmore), Lt. Col. (Ret.) Nathan Yardley (Of Counsel), and Megan Zhao (Senior Associate). No client representatives were present on the call. Donald R. Stokes, Vice President of Government Contracts at Whitmore Aerospace LLC, was briefed separately by telephone following the conclusion of the ADR conference. Mr. Stokes's concurrence with the decision reached during the conference is documented below in Section VIII of this memorandum.

II. Background and Procedural Posture

This section sets forth the factual background and procedural posture of the protest as of the date of the ADR conference, to provide context for the GAO attorney's preliminary assessment and the parties' respective positions discussed during the call.

Filing and Timeliness. Whitmore Aerospace LLC filed its protest with GAO on September 26, 2023, which was four calendar days after the enhanced debriefing conducted by the Air Force on September 22, 2023. The enhanced debriefing was conducted pursuant to 10 U.S.C. § 3304, which provides for post-award debriefings of unsuccessful offerors in Department of Defense procurements. Whitmore's protest was filed well within the 10-day post-debriefing filing deadline prescribed by 4 C.F.R. § 21.2(a)(2), and the timeliness of the protest has not been challenged by either the Agency or the intervenor.

The Challenged Award. The protest challenges the Air Force's September 15, 2023 award of Contract No. FA8222-23-D-0193 to Halcyon Defense Systems Inc. The contract is an indefinite-delivery/indefinite-quantity ("IDIQ") contract with a maximum contract ceiling of $387.5 million for the design, development, production, and sustainment of advanced infrared countermeasure ("IRCM") pod assemblies. The solicitation, Solicitation No. FA8222-23-R-0087, was issued by the Air Force Life Cycle Management Center, Armament Directorate, Eglin Air Force Base, Florida. The procurement was conducted as a competitive negotiated procurement under FAR Part 15.

CICA Automatic Stay. The Competition in Contracting Act ("CICA") automatic stay of contract performance, required by 31 U.S.C. § 3553(c)(1), has been in effect since September 27, 2023, the day after the protest was filed at GAO. To date, neither the Agency nor the intervenor has sought an override of the automatic stay, and the Contracting Officer has not made a finding under 31 U.S.C. § 3553(c)(2) that urgent and compelling circumstances would not permit waiting for GAO's decision before proceeding with contract performance.

Intervention. Halcyon Defense Systems Inc. intervened in the protest on October 2, 2023, through its outside counsel, Kessler, Pratt & Dunaway LLP. Halcyon's intervention was timely under 4 C.F.R. § 21.0(b).

Agency Report and Related Filings. The Agency Report ("AR") was filed on October 30, 2023, and consisted of 47 tabs (AR Tabs 1–47), including the Contracting Officer's Statement of Facts, the Memorandum of Law, the solicitation, proposals, evaluation records, the Source Selection Evaluation Board ("SSEB") report, and the Source Selection Decision Document ("SSDD"). Protective-order versions of the Agency Report, with appropriate redactions for proprietary and source-selection sensitive information, were distributed to counsel for all parties on October 31, 2023.

Production Order. On November 9, 2023, GAO issued an order requiring the Agency to produce unredacted versions of AR Tabs 22 and 28, which contained internal SSEB evaluation notes and assessments that had been partially redacted in the initial production. GAO denied Whitmore's request for production of AR Tab 23 on the ground that the information sought therein was cumulative of material already in the record.

Briefing and Supplemental Filings. Whitmore's Comments on the Agency Report were filed on November 17, 2023. Halcyon's Intervenor's Comments were filed on November 22, 2023. The Air Force's Supplemental Agency Report was filed on November 27, 2023, addressing certain arguments raised in Whitmore's Comments. Whitmore's Supplemental Comments were filed on December 4, 2023, responding to the Supplemental Agency Report.

Hearing. A telephonic hearing on Ground 3 of the protest (the organizational conflict of interest allegation) is currently scheduled for January 4, 2024. GAO determined that a hearing was necessary to resolve disputed factual questions related to the OCI ground, and the hearing order was issued on November 15, 2023.

Protest Grounds. As of the date of the ADR conference, four protest grounds remain pending:

Ground 1: The Air Force's best-value tradeoff analysis was unreasonable and inadequately documented, in violation of FAR 15.308 and the terms of the solicitation.

Ground 2: The Air Force conducted materially unequal discussions among offerors, in violation of FAR 15.306(d)(1) and (e).

Ground 3: Halcyon has an unmitigated organizational conflict of interest arising from a prior Analysis of Alternatives study that informed the solicitation requirements.

Ground 4: The Air Force failed to evaluate the realism of Halcyon's proposed labor rates under CLIN 0002, as required by the solicitation.

None of these grounds have been dismissed. The case is fully briefed on all grounds except Ground 3, which will be further developed at the January 4 hearing.

III. Summary of GAO's Preliminary Assessment

During the ADR conference, Ms. Palermino provided GAO's preliminary, non-binding assessment of the likely outcome of each protest ground. Ms. Palermino emphasized, as is customary in GAO outcome prediction conferences, that the assessment was preliminary and based on the record as currently developed, that it did not constitute a final determination, and that the assigned decision-maker retains full discretion to reach a different conclusion after completing the analysis. With those caveats noted, the substance of Ms. Palermino's assessment on each ground is summarized below.

A. Ground 1 — Unreasonable Best-Value Tradeoff Analysis (FAR 15.308)

Ms. Palermino indicated that GAO's preliminary view is that Ground 1 — Whitmore's challenge to the reasonableness of the Air Force's best-value tradeoff analysis — has substantial merit.

Ms. Palermino directed the parties' attention to the Source Selection Decision Document (SSDD), which was authored by the Source Selection Authority ("SSA"), Brigadier General Harlan T. Jeffcoat, USAF. Ms. Palermino observed that the SSDD, in documenting the SSA's basis for selecting Halcyon's higher-priced proposal over Whitmore's lower-priced proposal, merely restated the adjectival ratings assigned by the SSEB to each offeror's proposal under the evaluated factors and subfactors. The SSDD did not identify specific technical benefits or discriminators in Halcyon's proposal that warranted the selection of a higher-priced offer. In Ms. Palermino's assessment, this was a significant deficiency in the tradeoff documentation.

Ms. Palermino noted that the solicitation's Section M (Evaluation Criteria) stated that the technical and non-price evaluation factors, when combined, were "significantly more important" than price, and that price was described as the "least important" evaluation factor. However, Ms. Palermino emphasized that this relative weighting scheme does not relieve the SSA of the well-established obligation to document a substantive, qualitative rationale for paying a price premium when selecting a higher-priced, higher-rated offeror over a lower-priced competitor. The solicitation's weighting language establishes only the permissibility of paying a price premium where justified — it does not excuse the absence of an explanation of why the premium is justified in the particular circumstances.

Ms. Palermino highlighted the following key data point from the evaluation record: Whitmore's evaluated total price was $343,800,000, while Halcyon's evaluated total price was $361,200,000 — a differential of $17,400,000, or approximately 4.82 percent of Whitmore's proposed price. While this differential may or may not be deemed significant in the abstract, the critical issue is the absence of documented analysis explaining what the Air Force was getting for the additional $17.4 million.

As to the substance of the SSDD's rationale, Ms. Palermino noted that the SSA identified Halcyon's "Outstanding" adjectival rating under Factor 1(b) (Manufacturing Readiness) as compared to Whitmore's "Acceptable" rating under the same subfactor as the primary basis for the tradeoff decision. However, the SSDD did not explain what specific technical advantages flowed from the rating differential — that is, the SSDD did not identify the particular strengths, innovations, or risk-mitigating features of Halcyon's Manufacturing Readiness approach that warranted a $17.4 million price premium. The document simply stated that Halcyon's higher rating reflected a superior approach, without elaboration.

Ms. Palermino stated that this pattern is consistent with a well-established line of GAO precedent requiring source selection authorities to articulate a qualitative rationale that goes beyond the recitation of adjectival ratings. She noted that GAO has repeatedly held that adjectival ratings are merely guides for the SSA's decision-making, not substitutes for the SSA's independent judgment about the relative merits of competing proposals. The SSA must identify specific discriminators — particular strengths, features, or advantages in the winning proposal — and explain why those discriminators justify a price premium. The failure to do so renders the tradeoff analysis unreasonable.

Preliminary Assessment: Likely to sustain.

B. Ground 2 — Materially Unequal Discussions

Ms. Palermino indicated that Ground 2 — Whitmore's allegation that the Air Force conducted materially unequal discussions — also appears to have merit based on the record developed to date.

Ms. Palermino reviewed the discussion record, which reflects that during the August 14–25, 2023 discussion period, the Air Force issued two Evaluation Notices ("ENs") to Whitmore: EN-WAL-001 and EN-WAL-002. Both Evaluation Notices identified alleged weaknesses in Whitmore's Manufacturing Readiness subfactor (Factor 1(b)), and both required Whitmore to address specific aspects of its manufacturing approach in its revised proposal. Whitmore addressed both ENs in its Final Proposal Revision, but the discussion topics are fairly characterized as having put Whitmore on notice that its Manufacturing Readiness approach was viewed as deficient in certain respects.

Ms. Palermino then turned to the treatment of Halcyon's proposal during the same discussion period. She noted that the Air Force did not issue any Evaluation Notices to Halcyon regarding its Supply Chain Risk Management subfactor (Factor 3(b)), which was rated only "Acceptable" — the lowest rating above "Unacceptable." The question raised by the protest is whether the Air Force was required to raise the Meridian Semiconductor supply chain issue with Halcyon during discussions, given the SSEB's documented concern about this aspect of Halcyon's proposal.

Ms. Palermino stated that the unredacted versions of AR Tabs 22 and 28, which were produced pursuant to GAO's November 9, 2023 production order, contain internal SSEB evaluation notes authored by Dr. Yolanda R. Fenn (the SSEB Chair) and other members of the evaluation team. These evaluation notes document what the SSEB characterized as a "significant concern" about Halcyon's reliance on Meridian Semiconductor GmbH, a sole-source foreign subcontractor based in Dresden, Germany, for the supply of critical gallium arsenide (GaAs) sensor wafers. The GaAs sensor wafers are a key component of the IRCM pod assembly, and the SSEB's notes reflect that the evaluators were concerned about the risks associated with sole-source dependency on a foreign supplier for this critical component — including supply chain disruption risk, potential ITAR and export control complications, and the absence of an identified domestic alternative supplier.

Despite identifying this as a "significant concern" in the evaluation record, the SSEB did not raise the issue with Halcyon during discussions and did not issue an Evaluation Notice to Halcyon on this topic. Ms. Palermino stated that the SSEB's use of the phrase "significant concern" — and the substantive nature of the concern documented in the evaluators' notes — reads in context as the functional equivalent of a weakness or deficiency, which would have obligated the Air Force to raise the issue during discussions under FAR 15.306(d)(3) (requiring agencies to discuss with each offeror "deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond").

Ms. Palermino acknowledged that the Air Force, in its Supplemental Agency Report filed November 27, 2023, has defended its treatment of the Meridian Semiconductor issue by arguing that the concern documented in the evaluation notes was merely an "observation" or informational notation that did not rise to the level of a weakness or deficiency requiring discussion. Ms. Palermino expressed skepticism about this characterization, noting that the SSEB's own language — particularly the use of the phrase "significant concern" — is difficult to reconcile with the position that the issue was not a weakness. She further observed that the contrast between the Air Force's treatment of Whitmore (which received two ENs on a comparable subfactor topic) and its treatment of Halcyon (which received no ENs despite the documented "significant concern") reinforces the appearance of materially unequal discussions.

Preliminary Assessment: Likely to sustain.

C. Ground 3 — Organizational Conflict of Interest (OCI)

Ms. Palermino indicated that Ground 3 — Whitmore's allegation that Halcyon has an unmitigated organizational conflict of interest — faces significant evidentiary challenges.

Whitmore's OCI allegation is based on the following factual predicate: Halcyon's subsidiary, Halcyon Analytical Services LLC ("HAS"), performed a prior Analysis of Alternatives ("AoA") study under Contract No. FA8222-21-C-0018, a study contract valued at approximately $2.3 million. Whitmore alleges that the AoA study informed the IRCM pod requirements that were incorporated into the solicitation at issue, thereby creating an unequal access to information OCI — that is, that Halcyon, through its subsidiary, gained access to competitively useful, non-public information during the AoA study that provided it with an unfair competitive advantage in the subsequent procurement.

Ms. Palermino acknowledged that the factual predicate for this allegation — the prior AoA study performed by a Halcyon subsidiary, which informed the requirements in the solicitation — is not in dispute. What is in dispute is whether the AoA study provided Halcyon with competitively useful, non-public information that was not otherwise available to other offerors through the solicitation itself and its amendments. Ms. Palermino noted that the Air Force implemented an OCI mitigation plan, which is described in detail in the Contracting Officer's Statement of Facts (AR Tab 1), and that the question of whether the mitigation plan was adequate is a factual determination that depends on the specific information at issue and the effectiveness of the information barriers described in the plan.

GAO's preliminary view, as conveyed by Ms. Palermino, is that Whitmore has not yet carried its burden of demonstrating that the AoA study provided Halcyon with competitively useful, non-public information that was not otherwise available to all offerors through the solicitation documents and amendments. Ms. Palermino cautioned, however, that this assessment is preliminary and that the Ground 3 record is not yet fully developed. She noted that this is fundamentally a factual question that may be further developed at the January 4, 2024 telephonic hearing, at which testimony is expected from three witnesses: Donald R. Stokes (VP, Government Contracts, Whitmore Aerospace LLC); Greta M. Holloway (Senior Vice President, Halcyon Defense Systems Inc.); and Colonel Diane W. Prescott, USAF (the Contracting Officer for the procurement at issue). The hearing testimony may shed additional light on the specific information that Halcyon Analytical Services obtained during the AoA study, the extent to which that information was incorporated into the solicitation requirements, and the effectiveness of the OCI mitigation plan in preventing the flow of AoA information to the Halcyon proposal team.

Preliminary Assessment: Uncertain, but burden on protester is high.

D. Ground 4 — Failure to Evaluate Halcyon's CLIN 0002 Labor Rate Realism

Ms. Palermino indicated that if Grounds 1 and 2 are sustained, GAO would likely not reach Ground 4 on the merits. The rationale is straightforward: if GAO sustains Grounds 1 and 2, the recommended corrective action would encompass a reevaluation of proposals and a new best-value tradeoff decision. Such corrective action would necessarily include reevaluation of pricing, including labor rate realism under CLIN 0002, rendering the labor rate realism challenge academic in the context of the GAO decision.

On the merits of Ground 4 itself, Ms. Palermino did not provide a detailed assessment. She noted, however, that the issue was "not without some basis," and that the solicitation's labor rate realism evaluation provisions could be read as requiring the Air Force to evaluate the realism of proposed labor rates on a CLIN-by-CLIN basis. She did not elaborate further.

Preliminary Assessment: Likely academic if Grounds 1 and 2 are sustained.

IV. Agency's Position

Following Ms. Palermino's preliminary assessment, counsel for the Air Force was given the opportunity to respond.

Captain Hargrove stated that the Air Force maintains its position that the Source Selection Decision Document adequately documented the SSA's tradeoff rationale. Capt. Hargrove argued that the significant disparity in adjectival ratings under Factor 1 (Technical Approach), where Halcyon received an overall rating of "Outstanding" compared to Whitmore's overall rating of "Good," was itself a meaningful basis for the SSA's decision. He further argued that the solicitation's explicit statement in Section M that technical factors were "significantly more important" than price provided further support for the SSA's decision to select the higher-rated, higher-priced offeror. Capt. Hargrove did not, however, point to any specific technical discriminators documented in the SSDD beyond the adjectival ratings themselves.

On the unequal discussions ground, Capt. Hargrove reiterated the position set forth in the Agency's Supplemental Agency Report — namely, that the SSEB's notation about Meridian Semiconductor GmbH was characterized by the evaluation team as an "observation" rather than a weakness or deficiency, and that, as an observation, the agency had no obligation to raise it with Halcyon during discussions. Capt. Hargrove maintained that the SSEB's use of the phrase "significant concern" did not, in the agency's view, elevate the notation to the level of a weakness requiring discussion under FAR 15.306(d).

Capt. Hargrove referenced the Agency's Supplemental Agency Report of November 27, 2023, which had addressed these arguments in detail, and stated that the Air Force stood on the record as developed in the briefing.

The Agency declined to offer voluntary corrective action at this stage of the proceedings. Capt. Hargrove did not elaborate on the reasons for this decision beyond stating that the Air Force believes its evaluation and award decision were reasonable and consistent with applicable law and regulation.

Ms. Castellano (SAF/GCQ) did not substantively comment during the call.

V. Intervenor's Position

Theodore J. Dunaway, speaking on behalf of intervenor Halcyon Defense Systems Inc., stated that Halcyon agrees with the Agency's positions on all grounds of the protest.

On Ground 1, Mr. Dunaway argued that the $17.4 million evaluated price differential between Whitmore and Halcyon — which represents approximately 4.82 percent of Whitmore's proposed price — was modest relative to the total contract ceiling of $387.5 million and was easily justified by Halcyon's superior Manufacturing Readiness rating under Factor 1(b). Mr. Dunaway contended that in a procurement where technical factors were designated as "significantly more important" than price, a price premium of less than five percent should not require an elaborate narrative justification, particularly where the rating differential between the two offerors was substantial (Outstanding vs. Acceptable under the relevant subfactor).

On Ground 2, Mr. Dunaway argued that the Meridian Semiconductor supply chain issue was not a weakness because Halcyon had addressed manufacturing capacity and supply chain considerations in the narrative of its proposal under Factor 3(b). Mr. Dunaway asserted that the SSEB's notation was consistent with an evaluator observation — a recognition of a risk factor that had already been addressed by the offeror — and that the Air Force had no obligation to raise the issue in discussions because it did not constitute a weakness or deficiency.

On Ground 3, Mr. Dunaway asserted that Halcyon Analytical Services LLC maintained strict information barriers between its personnel who worked on the AoA study and the Halcyon Defense Systems Sensor Solutions Division personnel who prepared the proposal in response to the solicitation. Mr. Dunaway stated that no AoA study information flowed to the Halcyon proposal team, that the OCI mitigation plan documented by the Contracting Officer was comprehensive and effective, and that Whitmore had offered nothing more than speculation to support its OCI allegation.

Mr. Dunaway stated that Halcyon would vigorously oppose any corrective action recommendation and expressly reserved the right to seek relief at the United States Court of Federal Claims ("COFC") if the protest were sustained by GAO. This statement was noted by all parties on the call.

Rachel N. Sorensen did not speak substantively during the call.

VI. Whitmore's Position and Response

Following the Agency's and the intervenor's statements, the undersigned stated on behalf of Whitmore Aerospace LLC that Whitmore believes the record strongly supports sustaining Grounds 1 and 2 of the protest. The undersigned further stated that Whitmore declines any resolution short of a GAO decision on the merits — that is, Whitmore is not interested in settlement, and there is no basis for voluntary withdrawal of the protest given the favorable preliminary assessment from GAO.

Lt. Col. (Ret.) Nathan Yardley then emphasized the following substantive points in support of Whitmore's position:

On Ground 1 (Unreasonable Tradeoff): The SSDD's tradeoff analysis under FAR 15.308 is plainly deficient. The document identifies no specific technical discriminators — no particular strengths, innovations, features, or risk-mitigating qualities — in Halcyon's proposal that would justify paying a $17.4 million price premium over Whitmore's lower-priced offer. Instead, the SSA merely recited the adjectival ratings assigned by the SSEB and stated that Halcyon received higher ratings, without explaining the qualitative advantages underlying those ratings. This is precisely the type of conclusory tradeoff documentation that GAO has consistently found unreasonable. The intervenor's argument that the price differential was modest relative to the contract ceiling is irrelevant to the question of whether the SSA adequately documented the rationale for the tradeoff; the issue is not whether the premium was justified, but whether the SSA articulated why it was justified.

On Ground 2 (Unequal Discussions): The unequal discussions are documented in the Agency's own evaluation records, which are now part of the protest record. The SSEB characterized Halcyon's reliance on Meridian Semiconductor GmbH as a sole-source foreign subcontractor for critical GaAs sensor wafers as a "significant concern" — language that tracks the regulatory definition of a weakness under FAR 15.001 (defining a "weakness" as "a flaw in the proposal that increases the risk of unsuccessful contract performance"). Despite this documented significant concern, the SSEB never raised the issue with Halcyon during the discussion period and never issued an Evaluation Notice. This stands in stark contrast to the Air Force's treatment of Whitmore, which received two Evaluation Notices on comparable subfactor issues under Factor 1(b) (Manufacturing Readiness). The juxtaposition speaks for itself: the Agency raised issues with Whitmore on a related subfactor while failing to raise a documented "significant concern" with Halcyon on a parallel subfactor. This is the paradigm case of materially unequal discussions.

On Ground 3 (OCI): Whitmore acknowledges the evidentiary burden associated with the OCI ground and recognizes that the record as currently developed may not be sufficient to carry that burden. However, Whitmore believes that the January 4, 2024 telephonic hearing will develop additional facts — particularly through cross-examination of Greta M. Holloway and Col. Diane W. Prescott — that may strengthen the OCI ground. Whitmore does not rely on Ground 3 as a necessary component of its case, given the strength of Grounds 1 and 2, but will continue to pursue the OCI allegation through the hearing.

The undersigned concluded by stating that Whitmore sees no basis for settlement or voluntary withdrawal of the protest given GAO's favorable preliminary assessment on the two primary grounds, and that Whitmore elects to proceed to a decision on the merits.

VII. Whitmore's Decision: Decline Resolution, Proceed to Decision

After receiving the preliminary assessment from Ms. Palermino and hearing the positions of all parties, the undersigned requested a brief off-the-record break to confer with co-counsel. During the break, Calderwood & Harkness's team — Claudia Merritt, Nathan Yardley, and Megan Zhao — conferred and confirmed the recommendation that Whitmore should decline resolution and proceed to a GAO decision on the merits. This recommendation was consistent with the pre-call strategy discussed with Mr. Stokes and was based on the factors set forth in Section VIII below.

Upon returning to the call, the undersigned confirmed on behalf of Whitmore Aerospace LLC that the protester declines resolution and elects to proceed to a GAO decision on the merits. All three parties — protester, agency, and intervenor — confirmed this outcome to Ms. Palermino.

Ms. Palermino acknowledged the parties' positions and stated that the case would proceed on the existing briefing schedule. She confirmed that the January 4, 2024 telephonic hearing on Ground 3 (OCI) remains as previously scheduled, and that a written decision by GAO would follow in due course after the hearing and the completion of any post-hearing briefing ordered by the decision-maker.

VIII. Rationale for Recommendation to Proceed

Calderwood & Harkness recommended that Whitmore Aerospace LLC decline settlement and proceed to a GAO decision on the merits for the following reasons:

1. Strength of Grounds 1 and 2. GAO's preliminary assessment signals a likely sustain on both of the protester's primary grounds — the unreasonable best-value tradeoff analysis (Ground 1) and the materially unequal discussions (Ground 2). A sustain on these grounds would result in a GAO recommendation for corrective action requiring the Air Force to reevaluate proposals and conduct a new, properly documented best-value tradeoff analysis. This is the most favorable outcome realistically available to Whitmore in this proceeding, and proceeding to decision allows Whitmore to obtain this outcome with the full weight of a written GAO decision.

2. Corrective Action Scope. A GAO sustain would result in a recommended corrective action that is likely broader in scope than any voluntary corrective action the Agency might undertake unilaterally. Specifically, a GAO decision sustaining both Grounds 1 and 2 would recommend reevaluation under both Factors 1 and 3 (at minimum) and a new, fully documented tradeoff decision. The Air Force would also be required to reopen discussions and conduct them on a level playing field — ensuring that all offerors receive equitable treatment in any future discussion round. This scope of corrective action provides a more comprehensive remedy for Whitmore than any partial or limited corrective action the Agency might volunteer outside the context of a GAO decision.

3. Protest Cost Recovery. Under 4 C.F.R. § 21.8(d)(1), a sustained protest entitles the protester to reimbursement of the costs of filing and pursuing the protest, including reasonable attorneys' fees. Based on fees incurred through the date of the ADR conference call and projected fees through the completion of the January 4 hearing and any post-hearing briefing, Calderwood & Harkness estimates that Whitmore's total recoverable protest costs will be in the range of approximately $365,000 to $370,000 in fees and costs. This amount falls within the $425,000 voluntary fee cap established in Calderwood & Harkness's engagement agreement with Whitmore (Engagement Letter dated September 24, 2023). Proceeding to decision and obtaining a sustain would make this cost recovery available to Whitmore as a matter of right.

4. Precedential Positioning. A written GAO decision sustaining the protest on the tradeoff and unequal discussions grounds would create a documented record that significantly strengthens Whitmore's position in several important respects. First, the decision would establish GAO's findings regarding the specific deficiencies in the Air Force's evaluation, which would constrain the scope and direction of any reevaluation. Second, the decision would serve as precedent in any subsequent protest that Whitmore might need to file if the reevaluation were conducted improperly. Third, a written decision carries greater weight than a voluntary corrective action, which is typically undertaken without any formal finding of error.

5. No Credible Settlement Offer. Neither the Agency nor the intervenor proposed any specific corrective action, settlement terms, or other resolution during the ADR conference. The Agency affirmatively declined to offer voluntary corrective action. In the absence of any concrete proposal for resolution, there is nothing for Whitmore to evaluate or accept. Whitmore's only path to a meaningful remedy is through a GAO decision on the merits.

6. Manageable Risk on Ground 3. Even if Ground 3 (the OCI allegation) is denied following the January 4 hearing, a sustain on Grounds 1 and 2 would be independently dispositive and would require comprehensive corrective action. The outcome of the OCI ground, while potentially additive to Whitmore's position, is not necessary for Whitmore to obtain the full relief sought in this protest. The risk that Ground 3 may not be sustained does not diminish the benefit of proceeding to decision on the grounds where GAO has indicated likely sustain.

Donald R. Stokes, Vice President of Government Contracts at Whitmore Aerospace LLC, was briefed on these recommendations by telephone immediately following the conclusion of the ADR conference call. Mr. Stokes concurred with the decision to proceed to a GAO decision on the merits and authorized Calderwood & Harkness to proceed accordingly. A contemporaneous attendance note memorializing the post-call briefing with Mr. Stokes has been placed in the matter file.

IX. Next Steps

The following action items and anticipated events are noted for purposes of matter management and case preparation:

1. Hearing Preparation — Ground 3 (OCI). The firm must prepare for the January 4, 2024 telephonic hearing on Ground 3. Witness preparation for Donald R. Stokes, who will testify on behalf of Whitmore, is being led by Senior Associate Megan Zhao. A separate witness preparation memorandum will follow under separate cover. Mr. Stokes's preparation sessions are tentatively scheduled for December 18 and December 28, 2023.

2. Anticipated Opposing Witnesses. At the January 4 hearing, we anticipate testimony from Greta M. Holloway of Halcyon Defense Systems Inc. and Colonel Diane W. Prescott, USAF (the Contracting Officer for the procurement). Cross-examination outlines for both witnesses should be finalized by December 29, 2023.

3. Pre-Hearing Brief. A pre-hearing brief on Ground 3 must be prepared and filed in advance of the January 4 hearing. The filing deadline for pre-hearing submissions has not yet been set by GAO but is anticipated to be approximately five business days before the hearing date (i.e., on or about December 28, 2023).

4. Monitoring for Voluntary Corrective Action. Although the Agency's posture at the ADR conference strongly suggests that voluntary corrective action is unlikely, we should continue to monitor for any late-stage decision by the Air Force to take corrective action. Under GAO precedent, the agency retains the discretion to take voluntary corrective action at any time prior to the issuance of GAO's decision. If corrective action is taken, we would need to evaluate its scope and determine whether it renders the protest academic or whether a supplemental protest challenging the adequacy of the corrective action is warranted.

5. Fee Tracking. We must continue to track fees and costs against the $425,000 voluntary fee cap established in the engagement agreement. As of the date of this memorandum, approximately $268,000 in fees have been billed under engagement number 1019-00003. This leaves approximately $157,000 in remaining fee cap capacity, which should be sufficient to cover the hearing preparation, hearing, and post-hearing briefing through completion of the GAO decision. We will continue to provide monthly fee reports to Mr. Stokes consistent with the firm's engagement procedures.

6. Anticipated Decision Timeline. Based on the current procedural posture, we anticipate that GAO will issue its written decision approximately 30 to 60 days following the January 4, 2024 hearing, consistent with the 100-day statutory decision framework prescribed by 31 U.S.C. § 3554(a)(1). The 100-day statutory clock began running on or about September 27, 2023 (the date of filing), and the clock has been tolled during various periods for supplemental briefing and hearing preparation. Accounting for the tolling periods, a decision in late January or February 2024 is a reasonable estimate.

X. Distribution

This memorandum is filed internally within Calderwood & Harkness LLP and is designated as attorney work product prepared in anticipation of litigation. This memorandum reflects the mental impressions, conclusions, opinions, and legal theories of Calderwood & Harkness attorneys and is protected from disclosure by the work product doctrine.

This memorandum is not to be distributed to the client, Donald R. Stokes, or any other representative of Whitmore Aerospace LLC, or to any third party. The memorandum contains internal assessments, strategic evaluations, and candid counsel that are intended solely for the firm's internal file. Mr. Stokes was briefed on the factual developments and the decision to proceed, as documented above, but the specific strategic assessments and internal recommendations set forth in this memorandum were not shared with the client in their entirety.

Attorney-client privilege and work product protection are asserted with respect to the entirety of this memorandum and all attachments, if any.

All references to protected material received under the GAO Protective Order issued October 12, 2023 — including references to the contents of AR Tabs 22 and 28 and other competitively sensitive information — have been handled in accordance with the firm's internal protective order procedures memorandum dated October 13, 2023 (distributed to all Calderwood & Harkness team members working on this matter). No protected material has been disclosed outside the terms of the Protective Order.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document is not intended for distribution outside Calderwood & Harkness LLP.

CALDERWOOD & HARKNESS LLP

By: ________

Claudia Merritt, Partner

Date: December 9, 2023

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
MEMORANDUM
TO: File — Matter No. 1019-00003
FROM: Claudia Merritt, Partner, Calderwood & Harkness LLP
DATE: December 9, 2023
RE: Outcome Prediction ADR Conference — GAO Case No. B-422187; B-422187.2, Whitmore Aerospace LLC (Protest of Award under Solicitation No. FA8222-23-R-0087)
I. Purpose
This memorandum memorializes the outcome prediction alternative dispute resolution ("ADR") conference call conducted on Friday, December 8, 2023, by the United States Government Accountability Office ("GAO") in connection with the above-referenced bid protest. The conference was convened pursuant to GAO's established ADR procedures, which provide parties with a preliminary, non-binding assessment of the likely outcome of a protest in order to facilitate resolution without the need for a formal written decision. The outcome prediction conference was conducted by Senior Attorney Angela M. Palermino of the Procurement Law Division, who has been assigned as the lead attorney on this matter throughout the protest proceedings.
The conference call included counsel for all three parties to the protest. Calderwood & Harkness LLP appeared on behalf of the protester, Whitmore Aerospace LLC ("Whitmore" or "WAL"). The Department of the Air Force (the "Agency") was represented by Captain Lucas M. Hargrove, United States Air Force, Judge Advocate General's Corps, and Miriam T. Castellano of the Office of the General Counsel, Department of the Air Force, Acquisition Law and Litigation Division (SAF/GCQ). The intervenor, Halcyon Defense Systems Inc. ("Halcyon" or "HDS"), was represented by Theodore J. Dunaway and Rachel N. Sorensen of Kessler, Pratt & Dunaway LLP.
The Calderwood & Harkness participants on the call were the undersigned, Claudia Merritt (Partner and lead counsel for Whitmore), Lt. Col. (Ret.) Nathan Yardley (Of Counsel), and Megan Zhao (Senior Associate). No client representatives were present on the call. Donald R. Stokes, Vice President of Government Contracts at Whitmore Aerospace LLC, was briefed separately by telephone following the conclusion of the ADR conference. Mr. Stokes's concurrence with the decision reached during the conference is documented below in Section VIII of this memorandum.
II. Background and Procedural Posture
This section sets forth the factual background and procedural posture of the protest as of the date of the ADR conference, to provide context for the GAO attorney's preliminary assessment and the parties' respective positions discussed during the call.
Filing and Timeliness. Whitmore Aerospace LLC filed its protest with GAO on September 26, 2023, which was four calendar days after the enhanced debriefing conducted by the Air Force on September 22, 2023. The enhanced debriefing was conducted pursuant to 10 U.S.C. § 3304, which provides for post-award debriefings of unsuccessful offerors in Department of Defense procurements. Whitmore's protest was filed well within the 10-day post-debriefing filing deadline prescribed by 4 C.F.R. § 21.2(a)(2), and the timeliness of the protest has not been challenged by either the Agency or the intervenor.
The Challenged Award. The protest challenges the Air Force's September 15, 2023 award of Contract No. FA8222-23-D-0193 to Halcyon Defense Systems Inc. The contract is an indefinite-delivery/indefinite-quantity ("IDIQ") contract with a maximum contract ceiling of $387.5 million for the design, development, production, and sustainment of advanced infrared countermeasure ("IRCM") pod assemblies. The solicitation, Solicitation No. FA8222-23-R-0087, was issued by the Air Force Life Cycle Management Center, Armament Directorate, Eglin Air Force Base, Florida. The procurement was conducted as a competitive negotiated procurement under FAR Part 15.
CICA Automatic Stay. The Competition in Contracting Act ("CICA") automatic stay of contract performance, required by 31 U.S.C. § 3553(c)(1), has been in effect since September 27, 2023, the day after the protest was filed at GAO. To date, neither the Agency nor the intervenor has sought an override of the automatic stay, and the Contracting Officer has not made a finding under 31 U.S.C. § 3553(c)(2) that urgent and compelling circumstances would not permit waiting for GAO's decision before proceeding with contract performance.
Intervention. Halcyon Defense Systems Inc. intervened in the protest on October 2, 2023, through its outside counsel, Kessler, Pratt & Dunaway LLP. Halcyon's intervention was timely under 4 C.F.R. § 21.0(b).
Agency Report and Related Filings. The Agency Report ("AR") was filed on October 30, 2023, and consisted of 47 tabs (AR Tabs 1–47), including the Contracting Officer's Statement of Facts, the Memorandum of Law, the solicitation, proposals, evaluation records, the Source Selection Evaluation Board ("SSEB") report, and the Source Selection Decision Document ("SSDD"). Protective-order versions of the Agency Report, with appropriate redactions for proprietary and source-selection sensitive information, were distributed to counsel for all parties on October 31, 2023.
Production Order. On November 9, 2023, GAO issued an order requiring the Agency to produce unredacted versions of AR Tabs 22 and 28, which contained internal SSEB evaluation notes and assessments that had been partially redacted in the initial production. GAO denied Whitmore's request for production of AR Tab 23 on the ground that the information sought therein was cumulative of material already in the record.
Briefing and Supplemental Filings. Whitmore's Comments on the Agency Report were filed on November 17, 2023. Halcyon's Intervenor's Comments were filed on November 22, 2023. The Air Force's Supplemental Agency Report was filed on November 27, 2023, addressing certain arguments raised in Whitmore's Comments. Whitmore's Supplemental Comments were filed on December 4, 2023, responding to the Supplemental Agency Report.
Hearing. A telephonic hearing on Ground 3 of the protest (the organizational conflict of interest allegation) is currently scheduled for January 4, 2024. GAO determined that a hearing was necessary to resolve disputed factual questions related to the OCI ground, and the hearing order was issued on November 15, 2023.
Protest Grounds. As of the date of the ADR conference, four protest grounds remain pending:
Ground 1: The Air Force's best-value tradeoff analysis was unreasonable and inadequately documented, in violation of FAR 15.308 and the terms of the solicitation.
Ground 2: The Air Force conducted materially unequal discussions among offerors, in violation of FAR 15.306(d)(1) and (e).
Ground 3: Halcyon has an unmitigated organizational conflict of interest arising from a prior Analysis of Alternatives study that informed the solicitation requirements.
Ground 4: The Air Force failed to evaluate the realism of Halcyon's proposed labor rates under CLIN 0002, as required by the solicitation.
None of these grounds have been dismissed. The case is fully briefed on all grounds except Ground 3, which will be further developed at the January 4 hearing.
III. Summary of GAO's Preliminary Assessment
During the ADR conference, Ms. Palermino provided GAO's preliminary, non-binding assessment of the likely outcome of each protest ground. Ms. Palermino emphasized, as is customary in GAO outcome prediction conferences, that the assessment was preliminary and based on the record as currently developed, that it did not constitute a final determination, and that the assigned decision-maker retains full discretion to reach a different conclusion after completing the analysis. With those caveats noted, the substance of Ms. Palermino's assessment on each ground is summarized below.
A. Ground 1 — Unreasonable Best-Value Tradeoff Analysis (FAR 15.308)
Ms. Palermino indicated that GAO's preliminary view is that Ground 1 — Whitmore's challenge to the reasonableness of the Air Force's best-value tradeoff analysis — has substantial merit.
Ms. Palermino directed the parties' attention to the Source Selection Decision Document (SSDD), which was authored by the Source Selection Authority ("SSA"), Brigadier General Harlan T. Jeffcoat, USAF. Ms. Palermino observed that the SSDD, in documenting the SSA's basis for selecting Halcyon's higher-priced proposal over Whitmore's lower-priced proposal, merely restated the adjectival ratings assigned by the SSEB to each offeror's proposal under the evaluated factors and subfactors. The SSDD did not identify specific technical benefits or discriminators in Halcyon's proposal that warranted the selection of a higher-priced offer. In Ms. Palermino's assessment, this was a significant deficiency in the tradeoff documentation.
Ms. Palermino noted that the solicitation's Section M (Evaluation Criteria) stated that the technical and non-price evaluation factors, when combined, were "significantly more important" than price, and that price was described as the "least important" evaluation factor. However, Ms. Palermino emphasized that this relative weighting scheme does not relieve the SSA of the well-established obligation to document a substantive, qualitative rationale for paying a price premium when selecting a higher-priced, higher-rated offeror over a lower-priced competitor. The solicitation's weighting language establishes only the permissibility of paying a price premium where justified — it does not excuse the absence of an explanation of why the premium is justified in the particular circumstances.
Ms. Palermino highlighted the following key data point from the evaluation record: Whitmore's evaluated total price was $343,800,000, while Halcyon's evaluated total price was $361,200,000 — a differential of $17,400,000, or approximately 4.82 percent of Whitmore's proposed price. While this differential may or may not be deemed significant in the abstract, the critical issue is the absence of documented analysis explaining what the Air Force was getting for the additional $17.4 million.
As to the substance of the SSDD's rationale, Ms. Palermino noted that the SSA identified Halcyon's "Outstanding" adjectival rating under Factor 1(b) (Manufacturing Readiness) as compared to Whitmore's "Acceptable" rating under the same subfactor as the primary basis for the tradeoff decision. However, the SSDD did not explain what specific technical advantages flowed from the rating differential — that is, the SSDD did not identify the particular strengths, innovations, or risk-mitigating features of Halcyon's Manufacturing Readiness approach that warranted a $17.4 million price premium. The document simply stated that Halcyon's higher rating reflected a superior approach, without elaboration.
Ms. Palermino stated that this pattern is consistent with a well-established line of GAO precedent requiring source selection authorities to articulate a qualitative rationale that goes beyond the recitation of adjectival ratings. She noted that GAO has repeatedly held that adjectival ratings are merely guides for the SSA's decision-making, not substitutes for the SSA's independent judgment about the relative merits of competing proposals. The SSA must identify specific discriminators — particular strengths, features, or advantages in the winning proposal — and explain why those discriminators justify a price premium. The failure to do so renders the tradeoff analysis unreasonable.
Preliminary Assessment: Likely to sustain.
B. Ground 2 — Materially Unequal Discussions
Ms. Palermino indicated that Ground 2 — Whitmore's allegation that the Air Force conducted materially unequal discussions — also appears to have merit based on the record developed to date.
Ms. Palermino reviewed the discussion record, which reflects that during the August 14–25, 2023 discussion period, the Air Force issued two Evaluation Notices ("ENs") to Whitmore: EN-WAL-001 and EN-WAL-002. Both Evaluation Notices identified alleged weaknesses in Whitmore's Manufacturing Readiness subfactor (Factor 1(b)), and both required Whitmore to address specific aspects of its manufacturing approach in its revised proposal. Whitmore addressed both ENs in its Final Proposal Revision, but the discussion topics are fairly characterized as having put Whitmore on notice that its Manufacturing Readiness approach was viewed as deficient in certain respects.
Ms. Palermino then turned to the treatment of Halcyon's proposal during the same discussion period. She noted that the Air Force did not issue any Evaluation Notices to Halcyon regarding its Supply Chain Risk Management subfactor (Factor 3(b)), which was rated only "Acceptable" — the lowest rating above "Unacceptable." The question raised by the protest is whether the Air Force was required to raise the Meridian Semiconductor supply chain issue with Halcyon during discussions, given the SSEB's documented concern about this aspect of Halcyon's proposal.
Ms. Palermino stated that the unredacted versions of AR Tabs 22 and 28, which were produced pursuant to GAO's November 9, 2023 production order, contain internal SSEB evaluation notes authored by Dr. Yolanda R. Fenn (the SSEB Chair) and other members of the evaluation team. These evaluation notes document what the SSEB characterized as a "significant concern" about Halcyon's reliance on Meridian Semiconductor GmbH, a sole-source foreign subcontractor based in Dresden, Germany, for the supply of critical gallium arsenide (GaAs) sensor wafers. The GaAs sensor wafers are a key component of the IRCM pod assembly, and the SSEB's notes reflect that the evaluators were concerned about the risks associated with sole-source dependency on a foreign supplier for this critical component — including supply chain disruption risk, potential ITAR and export control complications, and the absence of an identified domestic alternative supplier.
Despite identifying this as a "significant concern" in the evaluation record, the SSEB did not raise the issue with Halcyon during discussions and did not issue an Evaluation Notice to Halcyon on this topic. Ms. Palermino stated that the SSEB's use of the phrase "significant concern" — and the substantive nature of the concern documented in the evaluators' notes — reads in context as the functional equivalent of a weakness or deficiency, which would have obligated the Air Force to raise the issue during discussions under FAR 15.306(d)(3) (requiring agencies to discuss with each offeror "deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond").
Ms. Palermino acknowledged that the Air Force, in its Supplemental Agency Report filed November 27, 2023, has defended its treatment of the Meridian Semiconductor issue by arguing that the concern documented in the evaluation notes was merely an "observation" or informational notation that did not rise to the level of a weakness or deficiency requiring discussion. Ms. Palermino expressed skepticism about this characterization, noting that the SSEB's own language — particularly the use of the phrase "significant concern" — is difficult to reconcile with the position that the issue was not a weakness. She further observed that the contrast between the Air Force's treatment of Whitmore (which received two ENs on a comparable subfactor topic) and its treatment of Halcyon (which received no ENs despite the documented "significant concern") reinforces the appearance of materially unequal discussions.
Preliminary Assessment: Likely to sustain.
C. Ground 3 — Organizational Conflict of Interest (OCI)
Ms. Palermino indicated that Ground 3 — Whitmore's allegation that Halcyon has an unmitigated organizational conflict of interest — faces significant evidentiary challenges.
Whitmore's OCI allegation is based on the following factual predicate: Halcyon's subsidiary, Halcyon Analytical Services LLC ("HAS"), performed a prior Analysis of Alternatives ("AoA") study under Contract No. FA8222-21-C-0018, a study contract valued at approximately $2.3 million. Whitmore alleges that the AoA study informed the IRCM pod requirements that were incorporated into the solicitation at issue, thereby creating an unequal access to information OCI — that is, that Halcyon, through its subsidiary, gained access to competitively useful, non-public information during the AoA study that provided it with an unfair competitive advantage in the subsequent procurement.
Ms. Palermino acknowledged that the factual predicate for this allegation — the prior AoA study performed by a Halcyon subsidiary, which informed the requirements in the solicitation — is not in dispute. What is in dispute is whether the AoA study provided Halcyon with competitively useful, non-public information that was not otherwise available to other offerors through the solicitation itself and its amendments. Ms. Palermino noted that the Air Force implemented an OCI mitigation plan, which is described in detail in the Contracting Officer's Statement of Facts (AR Tab 1), and that the question of whether the mitigation plan was adequate is a factual determination that depends on the specific information at issue and the effectiveness of the information barriers described in the plan.
GAO's preliminary view, as conveyed by Ms. Palermino, is that Whitmore has not yet carried its burden of demonstrating that the AoA study provided Halcyon with competitively useful, non-public information that was not otherwise available to all offerors through the solicitation documents and amendments. Ms. Palermino cautioned, however, that this assessment is preliminary and that the Ground 3 record is not yet fully developed. She noted that this is fundamentally a factual question that may be further developed at the January 4, 2024 telephonic hearing, at which testimony is expected from three witnesses: Donald R. Stokes (VP, Government Contracts, Whitmore Aerospace LLC); Greta M. Holloway (Senior Vice President, Halcyon Defense Systems Inc.); and Colonel Diane W. Prescott, USAF (the Contracting Officer for the procurement at issue). The hearing testimony may shed additional light on the specific information that Halcyon Analytical Services obtained during the AoA study, the extent to which that information was incorporated into the solicitation requirements, and the effectiveness of the OCI mitigation plan in preventing the flow of AoA information to the Halcyon proposal team.
Preliminary Assessment: Uncertain, but burden on protester is high.
D. Ground 4 — Failure to Evaluate Halcyon's CLIN 0002 Labor Rate Realism
Ms. Palermino indicated that if Grounds 1 and 2 are sustained, GAO would likely not reach Ground 4 on the merits. The rationale is straightforward: if GAO sustains Grounds 1 and 2, the recommended corrective action would encompass a reevaluation of proposals and a new best-value tradeoff decision. Such corrective action would necessarily include reevaluation of pricing, including labor rate realism under CLIN 0002, rendering the labor rate realism challenge academic in the context of the GAO decision.
On the merits of Ground 4 itself, Ms. Palermino did not provide a detailed assessment. She noted, however, that the issue was "not without some basis," and that the solicitation's labor rate realism evaluation provisions could be read as requiring the Air Force to evaluate the realism of proposed labor rates on a CLIN-by-CLIN basis. She did not elaborate further.
Preliminary Assessment: Likely academic if Grounds 1 and 2 are sustained.
IV. Agency's Position
Following Ms. Palermino's preliminary assessment, counsel for the Air Force was given the opportunity to respond.
Captain Hargrove stated that the Air Force maintains its position that the Source Selection Decision Document adequately documented the SSA's tradeoff rationale. Capt. Hargrove argued that the significant disparity in adjectival ratings under Factor 1 (Technical Approach), where Halcyon received an overall rating of "Outstanding" compared to Whitmore's overall rating of "Good," was itself a meaningful basis for the SSA's decision. He further argued that the solicitation's explicit statement in Section M that technical factors were "significantly more important" than price provided further support for the SSA's decision to select the higher-rated, higher-priced offeror. Capt. Hargrove did not, however, point to any specific technical discriminators documented in the SSDD beyond the adjectival ratings themselves.
On the unequal discussions ground, Capt. Hargrove reiterated the position set forth in the Agency's Supplemental Agency Report — namely, that the SSEB's notation about Meridian Semiconductor GmbH was characterized by the evaluation team as an "observation" rather than a weakness or deficiency, and that, as an observation, the agency had no obligation to raise it with Halcyon during discussions. Capt. Hargrove maintained that the SSEB's use of the phrase "significant concern" did not, in the agency's view, elevate the notation to the level of a weakness requiring discussion under FAR 15.306(d).
Capt. Hargrove referenced the Agency's Supplemental Agency Report of November 27, 2023, which had addressed these arguments in detail, and stated that the Air Force stood on the record as developed in the briefing.
The Agency declined to offer voluntary corrective action at this stage of the proceedings. Capt. Hargrove did not elaborate on the reasons for this decision beyond stating that the Air Force believes its evaluation and award decision were reasonable and consistent with applicable law and regulation.
Ms. Castellano (SAF/GCQ) did not substantively comment during the call.
V. Intervenor's Position
Theodore J. Dunaway, speaking on behalf of intervenor Halcyon Defense Systems Inc., stated that Halcyon agrees with the Agency's positions on all grounds of the protest.
On Ground 1, Mr. Dunaway argued that the $17.4 million evaluated price differential between Whitmore and Halcyon — which represents approximately 4.82 percent of Whitmore's proposed price — was modest relative to the total contract ceiling of $387.5 million and was easily justified by Halcyon's superior Manufacturing Readiness rating under Factor 1(b). Mr. Dunaway contended that in a procurement where technical factors were designated as "significantly more important" than price, a price premium of less than five percent should not require an elaborate narrative justification, particularly where the rating differential between the two offerors was substantial (Outstanding vs. Acceptable under the relevant subfactor).
On Ground 2, Mr. Dunaway argued that the Meridian Semiconductor supply chain issue was not a weakness because Halcyon had addressed manufacturing capacity and supply chain considerations in the narrative of its proposal under Factor 3(b). Mr. Dunaway asserted that the SSEB's notation was consistent with an evaluator observation — a recognition of a risk factor that had already been addressed by the offeror — and that the Air Force had no obligation to raise the issue in discussions because it did not constitute a weakness or deficiency.
On Ground 3, Mr. Dunaway asserted that Halcyon Analytical Services LLC maintained strict information barriers between its personnel who worked on the AoA study and the Halcyon Defense Systems Sensor Solutions Division personnel who prepared the proposal in response to the solicitation. Mr. Dunaway stated that no AoA study information flowed to the Halcyon proposal team, that the OCI mitigation plan documented by the Contracting Officer was comprehensive and effective, and that Whitmore had offered nothing more than speculation to support its OCI allegation.
Mr. Dunaway stated that Halcyon would vigorously oppose any corrective action recommendation and expressly reserved the right to seek relief at the United States Court of Federal Claims ("COFC") if the protest were sustained by GAO. This statement was noted by all parties on the call.
Rachel N. Sorensen did not speak substantively during the call.
VI. Whitmore's Position and Response
Following the Agency's and the intervenor's statements, the undersigned stated on behalf of Whitmore Aerospace LLC that Whitmore believes the record strongly supports sustaining Grounds 1 and 2 of the protest. The undersigned further stated that Whitmore declines any resolution short of a GAO decision on the merits — that is, Whitmore is not interested in settlement, and there is no basis for voluntary withdrawal of the protest given the favorable preliminary assessment from GAO.
Lt. Col. (Ret.) Nathan Yardley then emphasized the following substantive points in support of Whitmore's position:
On Ground 1 (Unreasonable Tradeoff): The SSDD's tradeoff analysis under FAR 15.308 is plainly deficient. The document identifies no specific technical discriminators — no particular strengths, innovations, features, or risk-mitigating qualities — in Halcyon's proposal that would justify paying a $17.4 million price premium over Whitmore's lower-priced offer. Instead, the SSA merely recited the adjectival ratings assigned by the SSEB and stated that Halcyon received higher ratings, without explaining the qualitative advantages underlying those ratings. This is precisely the type of conclusory tradeoff documentation that GAO has consistently found unreasonable. The intervenor's argument that the price differential was modest relative to the contract ceiling is irrelevant to the question of whether the SSA adequately documented the rationale for the tradeoff; the issue is not whether the premium was justified, but whether the SSA articulated why it was justified.
On Ground 2 (Unequal Discussions): The unequal discussions are documented in the Agency's own evaluation records, which are now part of the protest record. The SSEB characterized Halcyon's reliance on Meridian Semiconductor GmbH as a sole-source foreign subcontractor for critical GaAs sensor wafers as a "significant concern" — language that tracks the regulatory definition of a weakness under FAR 15.001 (defining a "weakness" as "a flaw in the proposal that increases the risk of unsuccessful contract performance"). Despite this documented significant concern, the SSEB never raised the issue with Halcyon during the discussion period and never issued an Evaluation Notice. This stands in stark contrast to the Air Force's treatment of Whitmore, which received two Evaluation Notices on comparable subfactor issues under Factor 1(b) (Manufacturing Readiness). The juxtaposition speaks for itself: the Agency raised issues with Whitmore on a related subfactor while failing to raise a documented "significant concern" with Halcyon on a parallel subfactor. This is the paradigm case of materially unequal discussions.
On Ground 3 (OCI): Whitmore acknowledges the evidentiary burden associated with the OCI ground and recognizes that the record as currently developed may not be sufficient to carry that burden. However, Whitmore believes that the January 4, 2024 telephonic hearing will develop additional facts — particularly through cross-examination of Greta M. Holloway and Col. Diane W. Prescott — that may strengthen the OCI ground. Whitmore does not rely on Ground 3 as a necessary component of its case, given the strength of Grounds 1 and 2, but will continue to pursue the OCI allegation through the hearing.
The undersigned concluded by stating that Whitmore sees no basis for settlement or voluntary withdrawal of the protest given GAO's favorable preliminary assessment on the two primary grounds, and that Whitmore elects to proceed to a decision on the merits.
VII. Whitmore's Decision: Decline Resolution, Proceed to Decision
After receiving the preliminary assessment from Ms. Palermino and hearing the positions of all parties, the undersigned requested a brief off-the-record break to confer with co-counsel. During the break, Calderwood & Harkness's team — Claudia Merritt, Nathan Yardley, and Megan Zhao — conferred and confirmed the recommendation that Whitmore should decline resolution and proceed to a GAO decision on the merits. This recommendation was consistent with the pre-call strategy discussed with Mr. Stokes and was based on the factors set forth in Section VIII below.
Upon returning to the call, the undersigned confirmed on behalf of Whitmore Aerospace LLC that the protester declines resolution and elects to proceed to a GAO decision on the merits. All three parties — protester, agency, and intervenor — confirmed this outcome to Ms. Palermino.
Ms. Palermino acknowledged the parties' positions and stated that the case would proceed on the existing briefing schedule. She confirmed that the January 4, 2024 telephonic hearing on Ground 3 (OCI) remains as previously scheduled, and that a written decision by GAO would follow in due course after the hearing and the completion of any post-hearing briefing ordered by the decision-maker.
VIII. Rationale for Recommendation to Proceed
Calderwood & Harkness recommended that Whitmore Aerospace LLC decline settlement and proceed to a GAO decision on the merits for the following reasons:
1.  Strength of Grounds 1 and 2. GAO's preliminary assessment signals a likely sustain on both of the protester's primary grounds — the unreasonable best-value tradeoff analysis (Ground 1) and the materially unequal discussions (Ground 2). A sustain on these grounds would result in a GAO recommendation for corrective action requiring the Air Force to reevaluate proposals and conduct a new, properly documented best-value tradeoff analysis. This is the most favorable outcome realistically available to Whitmore in this proceeding, and proceeding to decision allows Whitmore to obtain this outcome with the full weight of a written GAO decision.
2.  Corrective Action Scope. A GAO sustain would result in a recommended corrective action that is likely broader in scope than any voluntary corrective action the Agency might undertake unilaterally. Specifically, a GAO decision sustaining both Grounds 1 and 2 would recommend reevaluation under both Factors 1 and 3 (at minimum) and a new, fully documented tradeoff decision. The Air Force would also be required to reopen discussions and conduct them on a level playing field — ensuring that all offerors receive equitable treatment in any future discussion round. This scope of corrective action provides a more comprehensive remedy for Whitmore than any partial or limited corrective action the Agency might volunteer outside the context of a GAO decision.
3.  Protest Cost Recovery. Under 4 C.F.R. § 21.8(d)(1), a sustained protest entitles the protester to reimbursement of the costs of filing and pursuing the protest, including reasonable attorneys' fees. Based on fees incurred through the date of the ADR conference call and projected fees through the completion of the January 4 hearing and any post-hearing briefing, Calderwood & Harkness estimates that Whitmore's total recoverable protest costs will be in the range of approximately $365,000 to $370,000 in fees and costs. This amount falls within the $425,000 voluntary fee cap established in Calderwood & Harkness's engagement agreement with Whitmore (Engagement Letter dated September 24, 2023). Proceeding to decision and obtaining a sustain would make this cost recovery available to Whitmore as a matter of right.
4.  Precedential Positioning. A written GAO decision sustaining the protest on the tradeoff and unequal discussions grounds would create a documented record that significantly strengthens Whitmore's position in several important respects. First, the decision would establish GAO's findings regarding the specific deficiencies in the Air Force's evaluation, which would constrain the scope and direction of any reevaluation. Second, the decision would serve as precedent in any subsequent protest that Whitmore might need to file if the reevaluation were conducted improperly. Third, a written decision carries greater weight than a voluntary corrective action, which is typically undertaken without any formal finding of error.
5.  No Credible Settlement Offer. Neither the Agency nor the intervenor proposed any specific corrective action, settlement terms, or other resolution during the ADR conference. The Agency affirmatively declined to offer voluntary corrective action. In the absence of any concrete proposal for resolution, there is nothing for Whitmore to evaluate or accept. Whitmore's only path to a meaningful remedy is through a GAO decision on the merits.
6.  Manageable Risk on Ground 3. Even if Ground 3 (the OCI allegation) is denied following the January 4 hearing, a sustain on Grounds 1 and 2 would be independently dispositive and would require comprehensive corrective action. The outcome of the OCI ground, while potentially additive to Whitmore's position, is not necessary for Whitmore to obtain the full relief sought in this protest. The risk that Ground 3 may not be sustained does not diminish the benefit of proceeding to decision on the grounds where GAO has indicated likely sustain.
Donald R. Stokes, Vice President of Government Contracts at Whitmore Aerospace LLC, was briefed on these recommendations by telephone immediately following the conclusion of the ADR conference call. Mr. Stokes concurred with the decision to proceed to a GAO decision on the merits and authorized Calderwood & Harkness to proceed accordingly. A contemporaneous attendance note memorializing the post-call briefing with Mr. Stokes has been placed in the matter file.
IX. Next Steps
The following action items and anticipated events are noted for purposes of matter management and case preparation:
1.  Hearing Preparation — Ground 3 (OCI). The firm must prepare for the January 4, 2024 telephonic hearing on Ground 3. Witness preparation for Donald R. Stokes, who will testify on behalf of Whitmore, is being led by Senior Associate Megan Zhao. A separate witness preparation memorandum will follow under separate cover. Mr. Stokes's preparation sessions are tentatively scheduled for December 18 and December 28, 2023.
2.  Anticipated Opposing Witnesses. At the January 4 hearing, we anticipate testimony from Greta M. Holloway of Halcyon Defense Systems Inc. and Colonel Diane W. Prescott, USAF (the Contracting Officer for the procurement). Cross-examination outlines for both witnesses should be finalized by December 29, 2023.
3.  Pre-Hearing Brief. A pre-hearing brief on Ground 3 must be prepared and filed in advance of the January 4 hearing. The filing deadline for pre-hearing submissions has not yet been set by GAO but is anticipated to be approximately five business days before the hearing date (i.e., on or about December 28, 2023).
4.  Monitoring for Voluntary Corrective Action. Although the Agency's posture at the ADR conference strongly suggests that voluntary corrective action is unlikely, we should continue to monitor for any late-stage decision by the Air Force to take corrective action. Under GAO precedent, the agency retains the discretion to take voluntary corrective action at any time prior to the issuance of GAO's decision. If corrective action is taken, we would need to evaluate its scope and determine whether it renders the protest academic or whether a supplemental protest challenging the adequacy of the corrective action is warranted.
5.  Fee Tracking. We must continue to track fees and costs against the $425,000 voluntary fee cap established in the engagement agreement. As of the date of this memorandum, approximately $268,000 in fees have been billed under engagement number 1019-00003. This leaves approximately $157,000 in remaining fee cap capacity, which should be sufficient to cover the hearing preparation, hearing, and post-hearing briefing through completion of the GAO decision. We will continue to provide monthly fee reports to Mr. Stokes consistent with the firm's engagement procedures.
6.  Anticipated Decision Timeline. Based on the current procedural posture, we anticipate that GAO will issue its written decision approximately 30 to 60 days following the January 4, 2024 hearing, consistent with the 100-day statutory decision framework prescribed by 31 U.S.C. § 3554(a)(1). The 100-day statutory clock began running on or about September 27, 2023 (the date of filing), and the clock has been tolled during various periods for supplemental briefing and hearing preparation. Accounting for the tolling periods, a decision in late January or February 2024 is a reasonable estimate.
X. Distribution
This memorandum is filed internally within Calderwood & Harkness LLP and is designated as attorney work product prepared in anticipation of litigation. This memorandum reflects the mental impressions, conclusions, opinions, and legal theories of Calderwood & Harkness attorneys and is protected from disclosure by the work product doctrine.
This memorandum is not to be distributed to the client, Donald R. Stokes, or any other representative of Whitmore Aerospace LLC, or to any third party. The memorandum contains internal assessments, strategic evaluations, and candid counsel that are intended solely for the firm's internal file. Mr. Stokes was briefed on the factual developments and the decision to proceed, as documented above, but the specific strategic assessments and internal recommendations set forth in this memorandum were not shared with the client in their entirety.
Attorney-client privilege and work product protection are asserted with respect to the entirety of this memorandum and all attachments, if any.
All references to protected material received under the GAO Protective Order issued October 12, 2023 — including references to the contents of AR Tabs 22 and 28 and other competitively sensitive information — have been handled in accordance with the firm's internal protective order procedures memorandum dated October 13, 2023 (distributed to all Calderwood & Harkness team members working on this matter). No protected material has been disclosed outside the terms of the Protective Order.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document is not intended for distribution outside Calderwood & Harkness LLP.
CALDERWOOD & HARKNESS LLP
By: ________
Claudia Merritt, Partner
Date: December 9, 2023

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

CALDERWOOD & HARKNESS LLP

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