1019-00003 · Whitmore Aerospace LLC · Decision and Corrective Action

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law 1750 K Street NW, Suite 1100 Washington, D.C. 20006

January 31, 2024

Mr. Marcus J. Whitmore Chief Executive Officer Whitmore Aerospace LLC 2400 Dominion Ridge Parkway, Suite 800 Herndon, Virginia 20171

Re: GAO Decision in Whitmore Aerospace LLC, B-422187; B-422187.2 — Protest Sustained; Recommended Corrective Action and Next Steps

Engagement No.: 1019-00003 Solicitation No.: FA8222-23-R-0087 Contract No.: FA8222-23-D-0193

Dear Marcus:

1. Purpose and Summary of Favorable Outcome

The purpose of this letter is to formally confirm the favorable outcome of the bid protest filed on behalf of Whitmore Aerospace LLC ("Whitmore" or the "Company") before the U.S. Government Accountability Office ("GAO") and to outline in detail the recommended corrective action, the next steps your team should consider, and the action items that will require your attention in the coming weeks.

On January 29, 2024, GAO issued its decision in the matter of Whitmore Aerospace LLC, B-422187; B-422187.2, sustaining Whitmore's protest challenging the U.S. Department of the Air Force's award of an indefinite-delivery/indefinite-quantity ("IDIQ") contract — Contract No. FA8222-23-D-0193, with a ceiling value of $387,500,000 over a five-year ordering period — for advanced infrared countermeasure ("IRCM") pod assemblies to Halcyon Defense Systems Inc. ("Halcyon"). The decision was authored by Kenneth R. Woodley, Managing Associate General Counsel, Procurement Law Division.

This is a significant victory for Whitmore. A GAO sustain remains a relatively infrequent outcome — historically, only a small percentage of protests filed at GAO are sustained on the merits — and it reflects the strength of the legal and factual record we developed over the course of this engagement. More importantly, the decision positions the Company favorably for the anticipated reevaluation and new source selection that the Air Force has been recommended to undertake. We are optimistic about Whitmore's competitive posture going forward and believe the Company's proposal will fare well in a properly conducted evaluation.

The balance of this letter summarizes the GAO decision, describes the recommended corrective action, identifies key next steps and action items for both our firm and Whitmore, and addresses several related matters including the protest cost claim and engagement status.

2. Summary of the GAO Decision

The GAO decision addressed four protest grounds. GAO sustained the protest on two grounds, denied one ground, and did not reach the fourth ground. We summarize each below.

2.1 Ground 1 — Unreasonable Best-Value Tradeoff Analysis (Sustained)

GAO found that the Source Selection Authority ("SSA"), Brigadier General Harlan T. Jeffcoat, failed to provide a substantive rationale in the Source Selection Decision Document ("SSDD") for why Halcyon's "Outstanding" rating under Factor 1(b) (Manufacturing Readiness) justified paying a $17,400,000 price premium — representing approximately 4.82% — over Whitmore's lower-priced, technically acceptable proposal. As the record established, Whitmore's evaluated total price was $343,800,000, while Halcyon's evaluated total price was $361,200,000.

GAO's analysis focused on the content of the SSDD itself. The decision found that the SSDD merely restated the adjectival ratings assigned to each offeror by the Source Selection Evaluation Board ("SSEB") without identifying any specific technical benefits, discriminators, or advantages associated with Halcyon's proposal that would warrant paying the substantial price premium. This approach was inconsistent with the requirements of Federal Acquisition Regulation ("FAR") § 15.308, which requires the SSA to document the rationale for any tradeoff, including the benefits associated with additional costs, and with the solicitation's own stated evaluation methodology.

The solicitation, at Section M, stated that technical and non-price evaluation factors, when combined, were "significantly more important" than price. However, Section M also made clear that price would nonetheless be evaluated and that the SSA was required to document the tradeoff rationale, particularly where a higher-priced proposal was selected over a lower-priced one. GAO emphasized that even under an evaluation scheme that assigns greater weight to technical and non-price factors, the SSA may not simply invoke the relative weighting of factors as a substitute for articulating a reasoned basis for paying a premium. The absence of such a reasoned basis rendered the best-value determination unreasonable.

This finding is consistent with a well-established line of GAO precedent, and the decision cites several foundational cases in this area. The sustain on Ground 1 alone would have been sufficient to warrant corrective action.

2.2 Ground 2 — Materially Unequal Discussions (Sustained)

GAO also sustained Whitmore's protest on the ground that the Air Force conducted materially unequal discussions during the August 14–25, 2023, discussion period.

The record established the following: During discussions, the Air Force issued two Evaluation Notices to Whitmore — EN-WAL-001 and EN-WAL-002 — identifying alleged weaknesses in Whitmore's Manufacturing Readiness subfactor (Factor 1(b)). Whitmore responded to both Evaluation Notices in its Final Proposal Revision ("FPR"), addressing the identified concerns.

However, the Air Force failed to issue any Evaluation Notices to Halcyon regarding its Supply Chain Risk Management subfactor (Factor 3(b)), despite the fact that Halcyon received only an "Acceptable" rating under that subfactor — the lowest passing rating — and despite the fact that internal SSEB evaluation notes, authored under the supervision of SSEB Chair Dr. Yolanda R. Fenn, identified a "significant concern" about Halcyon's heavy reliance on a sole-source foreign subcontractor, Meridian Semiconductor GmbH, located in Dresden, Germany, for critical gallium arsenide (GaAs) sensor wafers essential to the IRCM pod's targeting and tracking subsystem.

This finding was materially supported by documentary evidence that our team obtained through the protest process. Specifically, the unredacted Agency Report Tabs 22 and 28 — which Calderwood & Harkness successfully obtained through our November 6, 2023, document production request to agency counsel — were instrumental in establishing this ground. Those documents revealed that the SSEB's internal evaluation narrative characterized Halcyon's sole-source reliance on Meridian Semiconductor as a "significant concern" and noted the risk of supply chain disruption in the event of export restrictions, geopolitical events, or capacity constraints affecting the foreign subcontractor. Despite these documented concerns, the Air Force did not raise the issue with Halcyon during discussions or provide Halcyon with an opportunity to address it.

GAO applied the well-settled standard that agencies are not required to conduct all-encompassing discussions, but when they do engage in discussions, they must do so meaningfully and not in a manner that is materially unequal. The failure to raise a documented "significant concern" with Halcyon while simultaneously issuing Evaluation Notices to Whitmore on a different subfactor constituted materially unequal treatment that prejudiced Whitmore's competitive position.

The sustain on Ground 2, in combination with Ground 1, provides a robust basis for the corrective action that GAO has recommended.

2.3 Ground 3 — Organizational Conflict of Interest (Denied)

GAO denied Whitmore's allegation that Halcyon had an impaired objectivity or unequal access to information organizational conflict of interest ("OCI") arising from a prior Analysis of Alternatives ("AoA") study. That AoA study had been performed by Halcyon Analytical Services LLC, a wholly owned subsidiary of Halcyon, under Contract No. FA8222-21-C-0018, valued at approximately $2,300,000, and addressed various alternative approaches to the Air Force's next-generation IRCM capability, including the very requirement that was subsequently the subject of Solicitation No. FA8222-23-R-0087.

Whitmore argued that the AoA study provided Halcyon with competitively useful, non-public information — including insight into the Air Force's prioritization of manufacturing readiness and supply chain resilience — that gave Halcyon an unfair competitive advantage during the proposal process. We developed this ground through witness testimony at the January 4, 2024, telephonic hearing, during which GAO heard testimony from Donald R. Stokes (Whitmore's Vice President for Government Contracts), Greta M. Holloway (Halcyon's Senior Vice President for Strategic Programs), and Contracting Officer Colonel Diane W. Prescott.

Despite the factual record we assembled, GAO found insufficient evidence that the AoA study provided Halcyon with competitively useful non-public information that was not otherwise available to all offerors through the solicitation and its amendments. GAO also credited the Air Force's OCI mitigation plan, which included an information firewall between Halcyon Analytical Services LLC and Halcyon's proposal team, a certification by Halcyon's corporate ethics officer, and the Contracting Officer's independent review.

While this outcome is disappointing, and we continue to believe the facts supported a closer call than the decision reflects, it does not diminish the force or practical significance of the sustain on Grounds 1 and 2. The corrective action recommended by GAO fully addresses the evaluation deficiencies that most directly affected the award outcome.

2.4 Ground 4 — Labor Rate Realism (Not Reached)

GAO declined to reach Whitmore's fourth protest ground — that the Air Force failed to conduct an adequate evaluation of the realism of Halcyon's proposed labor rates under CLIN 0002 (Engineering Support Services) — because the sustain on Grounds 1 and 2 already required corrective action encompassing a full reevaluation of proposals. GAO noted that the recommended corrective action would provide the agency an opportunity to address any deficiencies in its price or cost realism analysis as part of the reevaluation.

This is a common outcome in cases where GAO sustains on substantive evaluation grounds. The practical effect is that the Air Force will be expected to conduct a thorough and properly documented evaluation in all respects during the corrective action, which may encompass renewed scrutiny of labor rate realism.

3. GAO's Recommended Corrective Action

Pursuant to its sustain on Grounds 1 and 2, GAO recommended the following corrective action, to be completed within sixty (60) days of the date of the decision — that is, by approximately March 29, 2024:

1. Reevaluation of Proposals. The Air Force shall reevaluate proposals under Factor 1 (Technical Approach) and Factor 3 (Management Approach), including all subfactors, consistent with the findings and analysis set forth in the GAO decision.

2. New Best-Value Tradeoff Analysis. The Air Force shall conduct a new best-value tradeoff analysis with a documented rationale that identifies specific technical discriminators justifying any price premium paid for a higher-rated but higher-priced proposal. The new tradeoff analysis must comply with FAR § 15.308 and the evaluation methodology stated in Section M of the solicitation.

3. Potential Termination of Halcyon's Contract. If Whitmore is selected for award following the reevaluation, the Air Force shall terminate Halcyon's existing contract (Contract No. FA8222-23-D-0193) for the convenience of the Government and make award to Whitmore.

4. Reimbursement of Protest Costs. The Air Force shall reimburse Whitmore's reasonable protest costs, including attorneys' fees, in accordance with 31 U.S.C. § 3554(c)(1) and 4 C.F.R. § 21.8(d).

We are pleased to report that the February 5, 2024, notification from the Contracting Officer, Colonel Diane W. Prescott, to GAO indicates that the Air Force intends to implement the recommended corrective action in full. Under GAO's rules, the agency was required to notify GAO within sixty days of whether it intends to implement the recommendation, and the Air Force has responded well ahead of that deadline, signaling its acceptance. This is a very positive development and suggests that the corrective action will proceed without the need for further litigation at this stage.

4. Next Steps and Action Items

With the GAO decision now in hand and the Air Force's stated intent to implement corrective action, there are several important next steps and action items that require attention from both our team and the Company.

4.1 Monitoring the Air Force's Corrective Action

Calderwood & Harkness will actively monitor the Air Force's implementation of the recommended corrective action within the sixty-day timeline. Prompt and faithful implementation is critical to protecting Whitmore's interests, and we will be vigilant in tracking the agency's progress.

To that end, we will maintain regular contact with agency counsel — Captain Lucas M. Hargrove, USAF, JAG, and Senior Attorney Miriam T. Castellano, SAF/GCQ — to obtain updates on the corrective action schedule, the composition of any reconstituted evaluation panel, and the scope of the reevaluation the Air Force intends to conduct. While the Air Force is not required to provide Whitmore with advance notice of every step, agency counsel has historically been responsive to reasonable inquiries during the corrective action process, and we expect to receive periodic updates.

There are several key risks and issues that we will monitor closely during this period:

(a) Scope of the Reevaluation. We will monitor whether the reevaluation truly encompasses both Factor 1 (Technical Approach) and Factor 3 (Management Approach) and all subfactors within each, as GAO recommended. A narrowly scoped reevaluation that does not address the full breadth of the identified deficiencies could itself be subject to challenge.

(b) Whether Discussions Are Reopened. A critical question is whether the Air Force will open new discussions with all offerors or will limit the corrective action to a reevaluation of existing Final Proposal Revisions. If the Air Force reopens discussions, Whitmore will have an opportunity to strengthen its proposal, particularly in the areas identified in EN-WAL-001 and EN-WAL-002. If the Air Force does not reopen discussions, the reevaluation will be based on the existing record, and the outcome will depend on the quality of the new tradeoff analysis. We will advocate for the reopening of discussions if we believe it is in Whitmore's interest.

(c) Potential Challenge by Halcyon. We will also monitor whether Halcyon Defense Systems Inc. or its counsel, Theodore J. Dunaway at Kessler, Pratt & Dunaway LLP, seeks to challenge the GAO decision by filing a post-award protest at the U.S. Court of Federal Claims ("COFC") under 28 U.S.C. § 1491(b). While such challenges are infrequent and face a high standard of review — a protester at COFC must demonstrate that the GAO decision was arbitrary, capricious, or otherwise not in accordance with law — the possibility cannot be ruled out given the size and strategic significance of this procurement. If Halcyon files at COFC, we will promptly advise you and discuss our response options, which could include intervention in the COFC action.

We will prepare a separate, detailed corrective action monitoring memorandum for internal use, and we will keep you and Donald Stokes apprised of all material developments on a real-time basis.

4.2 Protest Cost Claim Preparation

GAO's recommendation includes the reimbursement of Whitmore's reasonable protest costs, including attorneys' fees, pursuant to 31 U.S.C. § 3554(c)(1) and the implementing regulation at 4 C.F.R. § 21.8(d). This is a meaningful benefit of a sustained protest.

We are currently preparing a certified protest cost claim for submission to the Contracting Officer. We anticipate finalizing the claim within the coming days and submitting it promptly thereafter, as the regulations require the claim to be filed within sixty days of GAO's recommendation.

The claim will include the following categories of costs:

• Attorneys' Fees. Fees incurred by Calderwood & Harkness LLP during the course of this engagement for legal services directly related to the prosecution of the protest. These fees will be submitted in a manner consistent with the voluntary fee cap of $425,000 established in our engagement letter dated September 26, 2023, and will be supported by contemporaneous time records, billing rates, and narrative descriptions of services performed.

• Consultant Fees. Fees charged by Ridgeline Consulting Group LLC, our proposal evaluation and technical consulting firm, for the services of its principal, Janet K. Overmeyer, in connection with her review of the evaluation record, analysis of the SSEB evaluation narratives, and preparation of expert declarations filed in support of the protest.

• Hearing Transcript Costs. Costs associated with the preparation and delivery of the transcript of the January 4, 2024, telephonic hearing before GAO.

• Travel Expenses. Travel expenses incurred by Calderwood & Harkness attorneys for document inspection at the Air Force Materiel Command's offices in Dayton, Ohio, including airfare, hotel accommodations, ground transportation, and per diem costs.

• Electronic Filing and Reproduction Costs. Costs associated with the electronic filing of protest submissions, reproduction of hearing exhibits, and related document production expenses.

• Courier and Delivery Charges. Costs for overnight courier delivery and other expedited delivery charges incurred in connection with the protest.

We will provide you with a complete copy of the claim for your review and approval prior to submission. Please note that the claim will require certification by Donald R. Stokes in his capacity as Vice President, Government Contracts, attesting to the accuracy and completeness of the cost data submitted. We will coordinate with Mr. Stokes directly on the certification process.

4.3 Preparation for Proposal Reevaluation

We strongly recommend that Whitmore begin preparing now for the possibility — indeed, the likelihood — that the Air Force may request updated or revised proposal submissions as part of the corrective action. Even if the Air Force limits the corrective action to a reevaluation of existing FPRs, the Company should be prepared to respond promptly if discussions are reopened or if the Air Force requests updated information.

Specifically, we recommend the following preparatory steps:

• Review and Update Proposal Volumes. Whitmore's technical and management proposal volumes should be reviewed and updated, with particular attention to the Manufacturing Readiness subfactor (Factor 1(b)) and the Supply Chain Risk Management subfactor (Factor 3(b)). These are the two subfactors most directly implicated by the GAO decision. With respect to Factor 1(b), Whitmore should be prepared to address the evaluation weaknesses identified in EN-WAL-001 and EN-WAL-002 during the original discussion period. We recommend developing strengthened narrative addressing production line maturity, manufacturing process controls, and transition planning. With respect to Factor 3(b), Whitmore should consider proactively reinforcing its supply chain risk mitigation strategy, given that GAO's decision highlighted supply chain risk management as a significant evaluation issue.

• Coordinate with Key Subcontractors. Whitmore should coordinate promptly with Pinnacle Precision Manufacturing Inc. ("Pinnacle"), located in Beavercreek, Ohio, which serves as Whitmore's key subcontractor for machined housings and gimbal assemblies. It will be important to confirm Pinnacle's current production capacity, delivery schedules, workforce availability, and any relevant operational updates that have occurred since the original proposal submission. If Pinnacle has expanded capacity or made capital investments since the original proposal, those developments should be reflected in any updated proposal narrative.

• ITAR Compliance Plan. Whitmore should ensure that its International Traffic in Arms Regulations ("ITAR") compliance plan (CDRL A015) remains current and accurately reflects the Company's compliance infrastructure. Whitmore received an "Outstanding" rating under Factor 3(c) (ITAR/Export Compliance) during the original evaluation, which is a competitive advantage that should be preserved and, if possible, enhanced.

• Prepare for New Discussions. If the Air Force elects to conduct new discussions as part of the corrective action, Whitmore should be prepared to respond promptly and thoroughly to any Evaluation Notices. Response timelines during discussions are typically short, and the Company should have its subject matter experts identified and available on short notice.

We are available to assist with proposal revisions to the extent that doing so falls within the scope of our engagement. Our team has deep familiarity with the evaluation record and the specific concerns raised by the SSEB, and we can provide targeted guidance on how best to address those concerns in any revised submission. We can also coordinate with Ridgeline Consulting Group and Janet Overmeyer as needed to support the proposal preparation effort.

4.4 Potential Follow-On Protest

Finally, we want to make you aware that if the Air Force's corrective action is inadequate — or if the corrective action results in a new award decision that is unfavorable to Whitmore and that reflects continued evaluation deficiencies — the Company would retain the right to file a new protest at GAO challenging any such deficiencies. A follow-on protest would be filed under a new B-number and would be adjudicated on its own merits based on the record developed during the corrective action.

We do not anticipate that a follow-on protest will be necessary, particularly given the Air Force's early and affirmative response to the GAO recommendation. However, we will carefully assess the need for any further protest action as the corrective action unfolds and will promptly advise you if we identify any concerns.

5. Engagement Status and Fee Update

As of January 31, 2024, our total fees incurred on this engagement remain within the $425,000 voluntary fee cap established in the engagement letter dated September 26, 2023. We are mindful of the fee cap and have managed our staffing and workflow throughout this engagement to ensure compliance.

We will provide you with a detailed billing summary under separate cover, including a breakdown of fees by timekeeper, a summary of costs incurred, and a reconciliation against the fee cap. That billing summary will be transmitted directly to Patricia Langford's office in accordance with your standing instructions.

We also note that the protest cost claim, if successful, would result in reimbursement by the Air Force of reasonable attorneys' fees and costs incurred in connection with the protest. To the extent the Air Force reimburses these costs, the reimbursement would offset Whitmore's out-of-pocket expenses for this engagement. We will keep you informed of the status of the cost claim and any discussions with the Contracting Officer regarding the amount of reimbursement.

6. Request for Client Input

As we transition from the protest phase to the corrective action and reevaluation phase, we want to ensure that we are fully aligned with Whitmore's strategic priorities and business objectives.

Please let us know if there are any strategic considerations, internal developments, or changes in the Company's competitive posture that we should be aware of as we move into this next phase. For example, if Whitmore has made any organizational changes, entered into any new teaming arrangements, or experienced any developments related to its manufacturing capabilities or supply chain since the original proposal submission, we should discuss those developments and assess whether and how they should be reflected in any updated proposal materials.

We also recommend scheduling a conference call at your earliest convenience with you, Donald Stokes, and Patricia Langford to discuss the corrective action timeline, reevaluation preparation strategy, and the protest cost claim in greater detail. Our team is available on short notice, and we are happy to accommodate your schedules. Please have your office coordinate with my assistant, Ellen Prescott, to identify a mutually convenient time.

Finally, please confirm the availability of Donald R. Stokes to execute the certification required for the protest cost claim. As noted above, we will provide the claim to your team for review before submission, and we will need Mr. Stokes's signed certification before the claim can be filed with the Contracting Officer.

7. Closing

We are very pleased with this outcome, and we appreciate the trust and confidence you have placed in Calderwood & Harkness in connection with this important matter. The GAO sustain is a testament to the strength of Whitmore's competitive position and the quality of the factual record the team assembled over the past several months.

Our full team — including Lt. Col. (Ret.) Nathan Yardley (Of Counsel), Megan Zhao (Senior Associate), Alan Burke (Lead Associate), and Sara Hendricks (Working Associate) — stands ready to continue supporting Whitmore through the corrective action process and reevaluation. Each member of the team is deeply familiar with the procurement record, the evaluation issues, and the competitive landscape, and we are well-positioned to provide seamless support as events unfold.

Please do not hesitate to contact me directly with any questions, concerns, or instructions. I can be reached at the contact information below.

Claudia Merritt, Partner Calderwood & Harkness LLP 1750 K Street NW, Suite 1100 Washington, D.C. 20006 Telephone: (202) 555-0147

Email: cmerritt@calderwoodharkness.com

We look forward to speaking with you soon.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Claudia Merritt Partner

cc:

Donald R. Stokes, Vice President, Government Contracts, Whitmore Aerospace LLC Patricia "Trish" Langford, Chief Financial Officer, Whitmore Aerospace LLC Ian Blackwood, Billing Partner, Calderwood & Harkness LLP Lt. Col. (Ret.) Nathan Yardley, Of Counsel, Calderwood & Harkness LLP

Enclosure:

Copy of GAO Decision, Whitmore Aerospace LLC, B-422187; B-422187.2 (January 29, 2024)

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law 1750 K Street NW, Suite 1100 Washington, D.C. 20006
January 31, 2024
Mr. Marcus J. Whitmore Chief Executive Officer Whitmore Aerospace LLC 2400 Dominion Ridge Parkway, Suite 800 Herndon, Virginia 20171
Re: GAO Decision in Whitmore Aerospace LLC, B-422187; B-422187.2 — Protest Sustained; Recommended Corrective Action and Next Steps
Engagement No.: 1019-00003 Solicitation No.: FA8222-23-R-0087 Contract No.: FA8222-23-D-0193
Dear Marcus:
1. Purpose and Summary of Favorable Outcome
The purpose of this letter is to formally confirm the favorable outcome of the bid protest filed on behalf of Whitmore Aerospace LLC ("Whitmore" or the "Company") before the U.S. Government Accountability Office ("GAO") and to outline in detail the recommended corrective action, the next steps your team should consider, and the action items that will require your attention in the coming weeks.
On January 29, 2024, GAO issued its decision in the matter of Whitmore Aerospace LLC, B-422187; B-422187.2, sustaining Whitmore's protest challenging the U.S. Department of the Air Force's award of an indefinite-delivery/indefinite-quantity ("IDIQ") contract — Contract No. FA8222-23-D-0193, with a ceiling value of $387,500,000 over a five-year ordering period — for advanced infrared countermeasure ("IRCM") pod assemblies to Halcyon Defense Systems Inc. ("Halcyon"). The decision was authored by Kenneth R. Woodley, Managing Associate General Counsel, Procurement Law Division.
This is a significant victory for Whitmore. A GAO sustain remains a relatively infrequent outcome — historically, only a small percentage of protests filed at GAO are sustained on the merits — and it reflects the strength of the legal and factual record we developed over the course of this engagement. More importantly, the decision positions the Company favorably for the anticipated reevaluation and new source selection that the Air Force has been recommended to undertake. We are optimistic about Whitmore's competitive posture going forward and believe the Company's proposal will fare well in a properly conducted evaluation.
The balance of this letter summarizes the GAO decision, describes the recommended corrective action, identifies key next steps and action items for both our firm and Whitmore, and addresses several related matters including the protest cost claim and engagement status.
2. Summary of the GAO Decision
The GAO decision addressed four protest grounds. GAO sustained the protest on two grounds, denied one ground, and did not reach the fourth ground. We summarize each below.
2.1 Ground 1 — Unreasonable Best-Value Tradeoff Analysis (Sustained)
GAO found that the Source Selection Authority ("SSA"), Brigadier General Harlan T. Jeffcoat, failed to provide a substantive rationale in the Source Selection Decision Document ("SSDD") for why Halcyon's "Outstanding" rating under Factor 1(b) (Manufacturing Readiness) justified paying a $17,400,000 price premium — representing approximately 4.82% — over Whitmore's lower-priced, technically acceptable proposal. As the record established, Whitmore's evaluated total price was $343,800,000, while Halcyon's evaluated total price was $361,200,000.
GAO's analysis focused on the content of the SSDD itself. The decision found that the SSDD merely restated the adjectival ratings assigned to each offeror by the Source Selection Evaluation Board ("SSEB") without identifying any specific technical benefits, discriminators, or advantages associated with Halcyon's proposal that would warrant paying the substantial price premium. This approach was inconsistent with the requirements of Federal Acquisition Regulation ("FAR") § 15.308, which requires the SSA to document the rationale for any tradeoff, including the benefits associated with additional costs, and with the solicitation's own stated evaluation methodology.
The solicitation, at Section M, stated that technical and non-price evaluation factors, when combined, were "significantly more important" than price. However, Section M also made clear that price would nonetheless be evaluated and that the SSA was required to document the tradeoff rationale, particularly where a higher-priced proposal was selected over a lower-priced one. GAO emphasized that even under an evaluation scheme that assigns greater weight to technical and non-price factors, the SSA may not simply invoke the relative weighting of factors as a substitute for articulating a reasoned basis for paying a premium. The absence of such a reasoned basis rendered the best-value determination unreasonable.
This finding is consistent with a well-established line of GAO precedent, and the decision cites several foundational cases in this area. The sustain on Ground 1 alone would have been sufficient to warrant corrective action.
2.2 Ground 2 — Materially Unequal Discussions (Sustained)
GAO also sustained Whitmore's protest on the ground that the Air Force conducted materially unequal discussions during the August 14–25, 2023, discussion period.
The record established the following: During discussions, the Air Force issued two Evaluation Notices to Whitmore — EN-WAL-001 and EN-WAL-002 — identifying alleged weaknesses in Whitmore's Manufacturing Readiness subfactor (Factor 1(b)). Whitmore responded to both Evaluation Notices in its Final Proposal Revision ("FPR"), addressing the identified concerns.
However, the Air Force failed to issue any Evaluation Notices to Halcyon regarding its Supply Chain Risk Management subfactor (Factor 3(b)), despite the fact that Halcyon received only an "Acceptable" rating under that subfactor — the lowest passing rating — and despite the fact that internal SSEB evaluation notes, authored under the supervision of SSEB Chair Dr. Yolanda R. Fenn, identified a "significant concern" about Halcyon's heavy reliance on a sole-source foreign subcontractor, Meridian Semiconductor GmbH, located in Dresden, Germany, for critical gallium arsenide (GaAs) sensor wafers essential to the IRCM pod's targeting and tracking subsystem.
This finding was materially supported by documentary evidence that our team obtained through the protest process. Specifically, the unredacted Agency Report Tabs 22 and 28 — which Calderwood & Harkness successfully obtained through our November 6, 2023, document production request to agency counsel — were instrumental in establishing this ground. Those documents revealed that the SSEB's internal evaluation narrative characterized Halcyon's sole-source reliance on Meridian Semiconductor as a "significant concern" and noted the risk of supply chain disruption in the event of export restrictions, geopolitical events, or capacity constraints affecting the foreign subcontractor. Despite these documented concerns, the Air Force did not raise the issue with Halcyon during discussions or provide Halcyon with an opportunity to address it.
GAO applied the well-settled standard that agencies are not required to conduct all-encompassing discussions, but when they do engage in discussions, they must do so meaningfully and not in a manner that is materially unequal. The failure to raise a documented "significant concern" with Halcyon while simultaneously issuing Evaluation Notices to Whitmore on a different subfactor constituted materially unequal treatment that prejudiced Whitmore's competitive position.
The sustain on Ground 2, in combination with Ground 1, provides a robust basis for the corrective action that GAO has recommended.
2.3 Ground 3 — Organizational Conflict of Interest (Denied)
GAO denied Whitmore's allegation that Halcyon had an impaired objectivity or unequal access to information organizational conflict of interest ("OCI") arising from a prior Analysis of Alternatives ("AoA") study. That AoA study had been performed by Halcyon Analytical Services LLC, a wholly owned subsidiary of Halcyon, under Contract No. FA8222-21-C-0018, valued at approximately $2,300,000, and addressed various alternative approaches to the Air Force's next-generation IRCM capability, including the very requirement that was subsequently the subject of Solicitation No. FA8222-23-R-0087.
Whitmore argued that the AoA study provided Halcyon with competitively useful, non-public information — including insight into the Air Force's prioritization of manufacturing readiness and supply chain resilience — that gave Halcyon an unfair competitive advantage during the proposal process. We developed this ground through witness testimony at the January 4, 2024, telephonic hearing, during which GAO heard testimony from Donald R. Stokes (Whitmore's Vice President for Government Contracts), Greta M. Holloway (Halcyon's Senior Vice President for Strategic Programs), and Contracting Officer Colonel Diane W. Prescott.
Despite the factual record we assembled, GAO found insufficient evidence that the AoA study provided Halcyon with competitively useful non-public information that was not otherwise available to all offerors through the solicitation and its amendments. GAO also credited the Air Force's OCI mitigation plan, which included an information firewall between Halcyon Analytical Services LLC and Halcyon's proposal team, a certification by Halcyon's corporate ethics officer, and the Contracting Officer's independent review.
While this outcome is disappointing, and we continue to believe the facts supported a closer call than the decision reflects, it does not diminish the force or practical significance of the sustain on Grounds 1 and 2. The corrective action recommended by GAO fully addresses the evaluation deficiencies that most directly affected the award outcome.
2.4 Ground 4 — Labor Rate Realism (Not Reached)
GAO declined to reach Whitmore's fourth protest ground — that the Air Force failed to conduct an adequate evaluation of the realism of Halcyon's proposed labor rates under CLIN 0002 (Engineering Support Services) — because the sustain on Grounds 1 and 2 already required corrective action encompassing a full reevaluation of proposals. GAO noted that the recommended corrective action would provide the agency an opportunity to address any deficiencies in its price or cost realism analysis as part of the reevaluation.
This is a common outcome in cases where GAO sustains on substantive evaluation grounds. The practical effect is that the Air Force will be expected to conduct a thorough and properly documented evaluation in all respects during the corrective action, which may encompass renewed scrutiny of labor rate realism.
3. GAO's Recommended Corrective Action
Pursuant to its sustain on Grounds 1 and 2, GAO recommended the following corrective action, to be completed within sixty (60) days of the date of the decision — that is, by approximately March 29, 2024:
1. Reevaluation of Proposals. The Air Force shall reevaluate proposals under Factor 1 (Technical Approach) and Factor 3 (Management Approach), including all subfactors, consistent with the findings and analysis set forth in the GAO decision.
2. New Best-Value Tradeoff Analysis. The Air Force shall conduct a new best-value tradeoff analysis with a documented rationale that identifies specific technical discriminators justifying any price premium paid for a higher-rated but higher-priced proposal. The new tradeoff analysis must comply with FAR § 15.308 and the evaluation methodology stated in Section M of the solicitation.
3. Potential Termination of Halcyon's Contract. If Whitmore is selected for award following the reevaluation, the Air Force shall terminate Halcyon's existing contract (Contract No. FA8222-23-D-0193) for the convenience of the Government and make award to Whitmore.
4. Reimbursement of Protest Costs. The Air Force shall reimburse Whitmore's reasonable protest costs, including attorneys' fees, in accordance with 31 U.S.C. § 3554(c)(1) and 4 C.F.R. § 21.8(d).
We are pleased to report that the February 5, 2024, notification from the Contracting Officer, Colonel Diane W. Prescott, to GAO indicates that the Air Force intends to implement the recommended corrective action in full. Under GAO's rules, the agency was required to notify GAO within sixty days of whether it intends to implement the recommendation, and the Air Force has responded well ahead of that deadline, signaling its acceptance. This is a very positive development and suggests that the corrective action will proceed without the need for further litigation at this stage.
4. Next Steps and Action Items
With the GAO decision now in hand and the Air Force's stated intent to implement corrective action, there are several important next steps and action items that require attention from both our team and the Company.
4.1 Monitoring the Air Force's Corrective Action
Calderwood & Harkness will actively monitor the Air Force's implementation of the recommended corrective action within the sixty-day timeline. Prompt and faithful implementation is critical to protecting Whitmore's interests, and we will be vigilant in tracking the agency's progress.
To that end, we will maintain regular contact with agency counsel — Captain Lucas M. Hargrove, USAF, JAG, and Senior Attorney Miriam T. Castellano, SAF/GCQ — to obtain updates on the corrective action schedule, the composition of any reconstituted evaluation panel, and the scope of the reevaluation the Air Force intends to conduct. While the Air Force is not required to provide Whitmore with advance notice of every step, agency counsel has historically been responsive to reasonable inquiries during the corrective action process, and we expect to receive periodic updates.
There are several key risks and issues that we will monitor closely during this period:
(a) Scope of the Reevaluation. We will monitor whether the reevaluation truly encompasses both Factor 1 (Technical Approach) and Factor 3 (Management Approach) and all subfactors within each, as GAO recommended. A narrowly scoped reevaluation that does not address the full breadth of the identified deficiencies could itself be subject to challenge.
(b) Whether Discussions Are Reopened. A critical question is whether the Air Force will open new discussions with all offerors or will limit the corrective action to a reevaluation of existing Final Proposal Revisions. If the Air Force reopens discussions, Whitmore will have an opportunity to strengthen its proposal, particularly in the areas identified in EN-WAL-001 and EN-WAL-002. If the Air Force does not reopen discussions, the reevaluation will be based on the existing record, and the outcome will depend on the quality of the new tradeoff analysis. We will advocate for the reopening of discussions if we believe it is in Whitmore's interest.
(c) Potential Challenge by Halcyon. We will also monitor whether Halcyon Defense Systems Inc. or its counsel, Theodore J. Dunaway at Kessler, Pratt & Dunaway LLP, seeks to challenge the GAO decision by filing a post-award protest at the U.S. Court of Federal Claims ("COFC") under 28 U.S.C. § 1491(b). While such challenges are infrequent and face a high standard of review — a protester at COFC must demonstrate that the GAO decision was arbitrary, capricious, or otherwise not in accordance with law — the possibility cannot be ruled out given the size and strategic significance of this procurement. If Halcyon files at COFC, we will promptly advise you and discuss our response options, which could include intervention in the COFC action.
We will prepare a separate, detailed corrective action monitoring memorandum for internal use, and we will keep you and Donald Stokes apprised of all material developments on a real-time basis.
4.2 Protest Cost Claim Preparation
GAO's recommendation includes the reimbursement of Whitmore's reasonable protest costs, including attorneys' fees, pursuant to 31 U.S.C. § 3554(c)(1) and the implementing regulation at 4 C.F.R. § 21.8(d). This is a meaningful benefit of a sustained protest.
We are currently preparing a certified protest cost claim for submission to the Contracting Officer. We anticipate finalizing the claim within the coming days and submitting it promptly thereafter, as the regulations require the claim to be filed within sixty days of GAO's recommendation.
The claim will include the following categories of costs:
• Attorneys' Fees. Fees incurred by Calderwood & Harkness LLP during the course of this engagement for legal services directly related to the prosecution of the protest. These fees will be submitted in a manner consistent with the voluntary fee cap of $425,000 established in our engagement letter dated September 26, 2023, and will be supported by contemporaneous time records, billing rates, and narrative descriptions of services performed.
• Consultant Fees. Fees charged by Ridgeline Consulting Group LLC, our proposal evaluation and technical consulting firm, for the services of its principal, Janet K. Overmeyer, in connection with her review of the evaluation record, analysis of the SSEB evaluation narratives, and preparation of expert declarations filed in support of the protest.
• Hearing Transcript Costs. Costs associated with the preparation and delivery of the transcript of the January 4, 2024, telephonic hearing before GAO.
• Travel Expenses. Travel expenses incurred by Calderwood & Harkness attorneys for document inspection at the Air Force Materiel Command's offices in Dayton, Ohio, including airfare, hotel accommodations, ground transportation, and per diem costs.
• Electronic Filing and Reproduction Costs. Costs associated with the electronic filing of protest submissions, reproduction of hearing exhibits, and related document production expenses.
• Courier and Delivery Charges. Costs for overnight courier delivery and other expedited delivery charges incurred in connection with the protest.
We will provide you with a complete copy of the claim for your review and approval prior to submission. Please note that the claim will require certification by Donald R. Stokes in his capacity as Vice President, Government Contracts, attesting to the accuracy and completeness of the cost data submitted. We will coordinate with Mr. Stokes directly on the certification process.
4.3 Preparation for Proposal Reevaluation
We strongly recommend that Whitmore begin preparing now for the possibility — indeed, the likelihood — that the Air Force may request updated or revised proposal submissions as part of the corrective action. Even if the Air Force limits the corrective action to a reevaluation of existing FPRs, the Company should be prepared to respond promptly if discussions are reopened or if the Air Force requests updated information.
Specifically, we recommend the following preparatory steps:
• Review and Update Proposal Volumes. Whitmore's technical and management proposal volumes should be reviewed and updated, with particular attention to the Manufacturing Readiness subfactor (Factor 1(b)) and the Supply Chain Risk Management subfactor (Factor 3(b)). These are the two subfactors most directly implicated by the GAO decision. With respect to Factor 1(b), Whitmore should be prepared to address the evaluation weaknesses identified in EN-WAL-001 and EN-WAL-002 during the original discussion period. We recommend developing strengthened narrative addressing production line maturity, manufacturing process controls, and transition planning. With respect to Factor 3(b), Whitmore should consider proactively reinforcing its supply chain risk mitigation strategy, given that GAO's decision highlighted supply chain risk management as a significant evaluation issue.
• Coordinate with Key Subcontractors. Whitmore should coordinate promptly with Pinnacle Precision Manufacturing Inc. ("Pinnacle"), located in Beavercreek, Ohio, which serves as Whitmore's key subcontractor for machined housings and gimbal assemblies. It will be important to confirm Pinnacle's current production capacity, delivery schedules, workforce availability, and any relevant operational updates that have occurred since the original proposal submission. If Pinnacle has expanded capacity or made capital investments since the original proposal, those developments should be reflected in any updated proposal narrative.
• ITAR Compliance Plan. Whitmore should ensure that its International Traffic in Arms Regulations ("ITAR") compliance plan (CDRL A015) remains current and accurately reflects the Company's compliance infrastructure. Whitmore received an "Outstanding" rating under Factor 3(c) (ITAR/Export Compliance) during the original evaluation, which is a competitive advantage that should be preserved and, if possible, enhanced.
• Prepare for New Discussions. If the Air Force elects to conduct new discussions as part of the corrective action, Whitmore should be prepared to respond promptly and thoroughly to any Evaluation Notices. Response timelines during discussions are typically short, and the Company should have its subject matter experts identified and available on short notice.
We are available to assist with proposal revisions to the extent that doing so falls within the scope of our engagement. Our team has deep familiarity with the evaluation record and the specific concerns raised by the SSEB, and we can provide targeted guidance on how best to address those concerns in any revised submission. We can also coordinate with Ridgeline Consulting Group and Janet Overmeyer as needed to support the proposal preparation effort.
4.4 Potential Follow-On Protest
Finally, we want to make you aware that if the Air Force's corrective action is inadequate — or if the corrective action results in a new award decision that is unfavorable to Whitmore and that reflects continued evaluation deficiencies — the Company would retain the right to file a new protest at GAO challenging any such deficiencies. A follow-on protest would be filed under a new B-number and would be adjudicated on its own merits based on the record developed during the corrective action.
We do not anticipate that a follow-on protest will be necessary, particularly given the Air Force's early and affirmative response to the GAO recommendation. However, we will carefully assess the need for any further protest action as the corrective action unfolds and will promptly advise you if we identify any concerns.
5. Engagement Status and Fee Update
As of January 31, 2024, our total fees incurred on this engagement remain within the $425,000 voluntary fee cap established in the engagement letter dated September 26, 2023. We are mindful of the fee cap and have managed our staffing and workflow throughout this engagement to ensure compliance.
We will provide you with a detailed billing summary under separate cover, including a breakdown of fees by timekeeper, a summary of costs incurred, and a reconciliation against the fee cap. That billing summary will be transmitted directly to Patricia Langford's office in accordance with your standing instructions.
We also note that the protest cost claim, if successful, would result in reimbursement by the Air Force of reasonable attorneys' fees and costs incurred in connection with the protest. To the extent the Air Force reimburses these costs, the reimbursement would offset Whitmore's out-of-pocket expenses for this engagement. We will keep you informed of the status of the cost claim and any discussions with the Contracting Officer regarding the amount of reimbursement.
6. Request for Client Input
As we transition from the protest phase to the corrective action and reevaluation phase, we want to ensure that we are fully aligned with Whitmore's strategic priorities and business objectives.
Please let us know if there are any strategic considerations, internal developments, or changes in the Company's competitive posture that we should be aware of as we move into this next phase. For example, if Whitmore has made any organizational changes, entered into any new teaming arrangements, or experienced any developments related to its manufacturing capabilities or supply chain since the original proposal submission, we should discuss those developments and assess whether and how they should be reflected in any updated proposal materials.
We also recommend scheduling a conference call at your earliest convenience with you, Donald Stokes, and Patricia Langford to discuss the corrective action timeline, reevaluation preparation strategy, and the protest cost claim in greater detail. Our team is available on short notice, and we are happy to accommodate your schedules. Please have your office coordinate with my assistant, Ellen Prescott, to identify a mutually convenient time.
Finally, please confirm the availability of Donald R. Stokes to execute the certification required for the protest cost claim. As noted above, we will provide the claim to your team for review before submission, and we will need Mr. Stokes's signed certification before the claim can be filed with the Contracting Officer.
7. Closing
We are very pleased with this outcome, and we appreciate the trust and confidence you have placed in Calderwood & Harkness in connection with this important matter. The GAO sustain is a testament to the strength of Whitmore's competitive position and the quality of the factual record the team assembled over the past several months.
Our full team — including Lt. Col. (Ret.) Nathan Yardley (Of Counsel), Megan Zhao (Senior Associate), Alan Burke (Lead Associate), and Sara Hendricks (Working Associate) — stands ready to continue supporting Whitmore through the corrective action process and reevaluation. Each member of the team is deeply familiar with the procurement record, the evaluation issues, and the competitive landscape, and we are well-positioned to provide seamless support as events unfold.
Please do not hesitate to contact me directly with any questions, concerns, or instructions. I can be reached at the contact information below.
Claudia Merritt, Partner Calderwood & Harkness LLP 1750 K Street NW, Suite 1100 Washington, D.C. 20006 Telephone: (202) 555-0147
Email: cmerritt@calderwoodharkness.com
We look forward to speaking with you soon.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Claudia Merritt Partner
cc:
Donald R. Stokes, Vice President, Government Contracts, Whitmore Aerospace LLC Patricia "Trish" Langford, Chief Financial Officer, Whitmore Aerospace LLC Ian Blackwood, Billing Partner, Calderwood & Harkness LLP Lt. Col. (Ret.) Nathan Yardley, Of Counsel, Calderwood & Harkness LLP
Enclosure:
Copy of GAO Decision, Whitmore Aerospace LLC, B-422187; B-422187.2 (January 29, 2024)

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