B-147394, SEP. 4, 1962

B-147394, SEP. 4, 1962

TO THE SECRETARY OF THE AIR FORCE:

THIS REFERS TO THE PROTEST OF THE M AND T COMPANY AGAINST THE AWARD MADE UNDER REQUEST FOR QUOTATION NO. 1 (3900-62-LP68001), ISSUED BY SAN ANTONIO AIR MATERIAL AREA, KELLY AIR FORCE BASE, TEXAS, WHICH MATTER IS THE SUBJECT OF A REPORT FROM YOUR DEPARTMENT, DATED JANUARY 5, 1962, TO THIS OFFICE, AND A SUPPLEMENTAL LETTER, DATED JUNE 6, 1962.

THE FACTS PERTINENT TO THE PROTEST ARE PRESENTED AS FOLLOWS:

THE REQUEST WAS ISSUED ON MAY 12, 1961, SOLICITING PROPOSALS FOR THE MANAGEMENT, SUPERVISION, LABOR SERVICES, TOOLING, PARTS AND MATERIALS NECESSARY FOR THE MAINTENANCE AND REPAIR OF SPECIAL PURPOSE VEHICLES AND ALSO SPACE GROUND EQUIPMENT AT KELLY AIR FORCE BASE AND SAN ANTONIO AIR FORCE STATION, SAN ANTONIO, TEXAS. A DETERMINATION WAS MADE PURSUANT TO 10 U.S.C. 2306 (C) TO USE A COST-PLUS-A-FIXED-FEE TYPE CONTRACT, ON THE BASIS OF A FINDING THAT THE EXACT NATURE AND EXTENT OF THE PROPOSED WORK COULD NOT BE ESTABLISHED IN ADVANCE, AND THAT THE COST OF PERFORMING THE REQUIRED WORK COULD NOT BE ACCURATELY FORECAST. NEGOTIATION FOR THE SERVICES WAS AUTHORIZED PURSUANT TO 10 U.S.C. 2304 (A) (10) AS CONTEMPLATED BY PARAGRAPH 3-210.2 (IX) OF THE ARMED SERVICES PROCUREMENT REGULATION, ON A DETERMINATION THAT IT WAS IMPRACTICAL TO SECURE COMPETITION BY MEANS OF FORMAL ADVERTISING.

ATTACHMENT NO. 1 TO THE REQUEST STATED IN PART AS FOLLOWS:

"SECTION III. EVALUATION:

"A. ALL QUOTATIONS RECEIVED SHALL BE SUBJECTED TO AN EVALUATION BY A DULY SELECTED PANEL OF QUALIFIED AIR FORCE PERSONNEL FOR THE PURPOSE OF SELECTING THE QUOTER/S) WITH WHOM NEGOTIATIONS MAY BE CONDUCTED. * * * THE AREAS OF CONSIDERATION TO BE USED IN MAKING THE EVALUATION ARE THE FOLLOWING:

"1. PRESENT KEY MANAGEMENT PERSONNEL (EXECUTIVE, ADMINISTRATIVE, SUPERINTENDENT AND FOREMEN) TO BE UTILIZED IN THE PROPOSED AWARD. * * *

"2. PRIOR OR COMPARABLE EXPERIENCE IN PERFORMING WORK OF THE TYPES CONTEMPLATED. * * *

"3. QUOTER'S PLAN TO STAFF AND OPERATE THE MAINTENANCE AND REPAIR FACILITY. * * *

"4. FINANCIAL STATUS AND CAPABILITY. * * *

"5. ESTIMATED COST. * * *

"6. FEE. * * *

"B. THE EVALUATION PANEL WILL USE AN ESTABLISHED CRITERIA IN ARRIVING AT THE QUOTER/S) WITH WHOM NEGOTIATION MAY BE CONDUCTED. THIS CRITERIA SHALL PROVIDE A PREDETERMINED MAXIMUM POINT VALUE FOR EACH AREA OF CONSIDERATION. BASED ON THE DATA PRESENTED AND FINDINGS OF THE PANEL AND THE POINT DECIDED UPON WILL BE RECORDED AND THE NET AGGREGATE OF THE AREAS UNDER CONSIDERATION WILL DETERMINE WHICH QUOTER/S) SHALL BE SELECTED WITH WHOM FINAL NEGOTIATIONS WILL BE CONDUCTED.'

A TOTAL OF 200 POINTS WAS ASSIGNED FOR THE 6 AREAS, WHICH FACT WAS NOT REVEALED TO THE QUOTERS, AS FOLLOWS:

TABLE

MAXIMUM POINTS

"1. PERSONNEL TO BE UTILIZED IN THE 50

PROPOSED AWARD

"2. PRIOR OR COMPARABLE EXPERIENCE IN 50

PERFORMING WORK OF THE TYPES

CONTEMPLATED

"3. CONTRACTOR'S PLAN TO STAFF AND 60

OPERATE THE MAINTENANCE AND REPAIR

FACILITY

"4. FINANCIAL STATUS AND CAPABILITY 10

"5. FEE 20

"6. COST 10"

TWELVE QUOTATIONS WERE RECEIVED BY THE CLOSING DATE ON JUNE 22, 1961, AS PROVIDED BY THE EVALUATION PROCEDURE. THE QUOTATIONS WERE EVALUATED BY EACH MEMBER OF THE EVALUATION COMMITTEE INDEPENDENTLY AND APART FROM THE OTHER MEMBERS OF THE COMMITTEE. THE POINTS ASSIGNED TO EACH QUOTER IN AN AREA WERE ARRIVED AT BY TAKING THE AVERAGE OF THE TOTAL POINTS ASSIGNED BY THE INDIVIDUAL EVALUATORS. THE RESULT OBTAINED FOR "FINANCIAL CAPABILITY" (ITEM 4) WAS THE UNANIMOUS OPINION OF THE COMMITTEE, AND THE POINTS ASSIGNED FOR ESTIMATED COST AND FEE (ITEMS 5 AND 6) WERE COMPUTED BY PREDETERMINED FORMULAS.

AN EVALUATION OF THE 12 CONTRACTORS' QUOTATIONS RECEIVED WAS MADE AND THE EVALUATION COMMITTEE RECOMMENDED IN A REPORT DATED JULY 6, 1961, THAT THE CONTRACTING OFFICER NEGOTIATE WITH THE 4 QUOTERS THAT WERE AWARDED THE HIGHEST NUMBER OF POINTS. THE 4 HIGH CONTRACTORS LISTED WERE, IN THE DESCENDING ORDER OF POINTS RECEIVED, THE TUMPANE COMPANY, INC., BEISER AVIATION CORPORATION, THE M AND T COMPANY, AND THE HAYES CORPORATION. NEGOTIATIONS WERE CONDUCTED WITH THESE 4 FIRMS DURING JULY 1961. AS A RESULT IT WAS DETERMINED THAT FURTHER NEGOTIATIONS WOULD BE CONDUCTED WITH TUMPANE AND BEISER, AS M AND T AND HAYES WERE CONSIDERED TO BE UNSUITABLE FOR PURPOSE OF THIS AWARD.

BASED ON THE NEGOTIATION CONFERENCES, THE CONTRACTING OFFICER, ON JULY 28, 1961, DETERMINED THAT THE CONTRACT SHOULD BE AWARDED TO BEISER AVIATION CORPORATION, DESPITE THE FACT THAT TUMPANE WAS AWARDED AN AVERAGE ADVANTAGE OVER BEISER OF 28.74 POINTS BY THE EVALUATION COMMITTEE. THE CONTRACTING OFFICER'S DETERMINATION THAT THE CONTRACT SHOULD BE AWARDED TO BEISER WAS SENT TO THE PROCUREMENT COMMITTEE (SAPC). IT WAS THERE DETERMINED THAT THE RESULTS OF THE AFOREMENTIONED NEGOTIATION CONFERENCE WERE NOT CONCLUSIVE. IT WAS CONCLUDED THAT THE TUMPANE COMPANY, INC., AND BEISER SHOULD BE RECALLED AND FURTHER DISCUSSIONS HELD. ACCORDINGLY, THE ORIGINAL EVALUATION COMMITTEE WAS RECONVENED AND CONFERENCES HELD WITH BEISER ON AUGUST 14, 1961, AND WITH TUMPANE ON AUGUST 15, 1961. IN THESE NEGOTIATIONS, TUMPANE AGAIN RECEIVED MORE POINTS THAN BEISER, AND THE CONTRACTING OFFICER DETERMINED THAT TUMPANE SHOULD RECEIVE THE AWARD.

HOWEVER, PRIOR TO THE MAKING OF AN AWARD, THE DEPARTMENT REVISED ITS PREVIOUSLY ESTIMATED DIRECT LABOR MAN-HOURS, ITS ESTIMATED TOTAL COST OF GOVERNMENT FURNISHED PARTS, AND ITS TOTAL COST OF CONTRACTOR FURNISHED PARTS. IN VIEW OF THE REVISED ESTIMATES, AMENDED ESTIMATED COST AND FIXED FEE QUOTATIONS WERE REQUESTED FROM THE INTERESTED QUOTERS. THE AMENDED PROPOSALS WERE EVALUATED AGAIN UNDER THE POINT SYSTEM AND TUMPANE, BEISER AND THE M AND T COMPANY SCORED HIGHEST IN THE ORDER NAMED. FROM AMONG THESE, TUMPANE WAS SELECTED FOR FINAL NEGOTIATION OF THE COST AND FEE. OCTOBER 1, 1961, AWARD WAS ISSUED TO TUMPANE AT AN ESTIMATED COST OF $969,265, AND A FIXED FEE OF $27,500. THE M AND T COMPANY HAD SUBMITTED THE LOWEST ESTIMATED COST AND FIXED FEE, AT $742,320 PLUS A $1 FEE.

THE M AND T COMPANY PROTESTED THE AWARD TO TUMPANE, AND IN CONNECTION WITH THIS PROTEST, THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION SUBMITTED A LETTER OF MARCH 12, 1962. HE QUESTIONED BOTH THE FAILURE TO ADVERTISE THE PROCUREMENT AND WHETHER THE METHOD OF SELECTING THE SUCCESSFUL CONTRACTOR TO BE AWARDED A NEGOTIATED PROCUREMENT IS AUTHORIZED UNDER THE PERTINENT PROVISIONS OF LAW AND REGULATION. SPECIFICALLY, THE CONTRACT UNDER PROTEST IS A REPETITIVE PROCUREMENT FOR SERVICE PREVIOUSLY NEGOTIATED ON A COST-PLUS-A-FIXED FEE BASIS. (IN THIS CONNECTION, SEE OUR DECISION PUBLISHED AT 40 COMP. GEN. 508, WHEREIN THE PREVIOUS CONTRACT AWARDED TO THE TUMPANE COMPANY, INC., WAS THE SUBJECT OF A PROTEST.) ALTHOUGH A COST-PLUS FIXED-FEE CONTRACT MAY HAVE BEEN JUSTIFIED IN THE ORIGINAL PROCUREMENT WHERE THE EXACT NATURE OR AMOUNT OF THE WORK MAY NOT HAVE BEEN KNOWN, QUESTION IS RAISED BY THE ADMINISTRATOR AS TO WHY THIS PRIOR EXPERIENCE DID NOT GENERATE SUFFICIENT KNOWLEDGE TO ENABLE SUBSEQUENT PROCUREMENTS FOR THE SAME SERVICE TO BE MADE BY ADVERTISING. (ASPR, SECTION 3-102 STATES THAT PROCUREMENTS SHALL BE MADE BY FORMAL ADVERTISING WHENEVER SUCH METHOD IS FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES EVEN THOUGH NEGOTIATION MAY BE AUTHORIZED.)

ON THE POINTS ASSIGNED EACH AREA OF CONSIDERATION FOR EVALUATION PURPOSES, THE ADMINISTRATOR STATES THAT THE FIRST THREE CATEGORIES (PERSONNEL TO BE UTILIZED IN THE PROPOSED AWARD, PRIOR OR COMPARABLE EXPERIENCE IN PERFORMING WORK OF THE TYPES CONTEMPLATED, AND, CONTRACTOR'S PLAN TO STAFF AND OPERATE THE MAINTENANCE AND REPAIR FACILITY), TOTALLING 160 POINTS OUT OF A MAXIMUM OF 200, ARE PREDICATED ON ESSENTIALLY THE SAME CONSIDERATIONS. HE STATES THAT THERE IS LITTLE DOUBT THIS DISTRIBUTION WOULD GREATLY FAVOR A CONTRACTOR HAVING PERFORMED A PRIOR CONTRACT FOR THE SAME SERVICE PARTICULARLY IF THE PRIOR CONTRACTOR IS A LARGE CONCERN AND THE OTHER BIDDERS ARE SMALL, AND THE RESULT IS THUS A SYSTEM WEIGHTED IN FAVOR OF CERTAIN PROSPECTIVE OFFERORS--- A CONDITION WHICH PERMITS THE PROCURING AGENCY TO EFFECT A SOLE SOURCE PROCUREMENT.

ALSO, THE SBA ADMINISTRATOR STATES THAT THE POINT EVALUATION SYSTEM AS EMPLOYED HERE GAVE INSUFFICIENT WEIGHT TO THE LOW QUOTER (THE M AND T COMPANY). ASPR, SECTION 3-805.2 PROVIDES AS FOLLOWS:

"3.805.2 COST-REIMBURSEMENT TYPE CONTRACTS. IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT, ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS IF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST -REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND REGULATION AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE 3 808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT.'

THE ADMINISTRATOR STATES WHILE IT IS TRUE THAT IN COST-REIMBURSEMENT TYPE CONTRACTS ESTIMATED COST OF PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, THIS SHOULD NOT PERMIT A DISREGARD OF THE BASIC POLICY OF THE DEPARTMENT OF DEFENSE TO PROCURE SERVICES FROM RESPONSIBLE SOURCES AT FAIR AND REASONABLE PRICES CALCULATED TO RESULT IN THE LOWEST ULTIMATE OVER-ALL COST TO THE GOVERNMENT, EVEN IN NEGOTIATED PROCUREMENT; AND THAT ACCOMPLISHMENT OF THIS POLICY WOULD DICTATE THE ESTABLISHMENT OF DEFINITIVE STANDARDS DEFINING THE MINIMUM REQUIREMENTS OF THE GOVERNMENT SO THAT AN AWARD WOULD BE MADE TO THE LOWEST OFFEROR MEETING THOSE REQUIREMENTS, SINCE NO PROVISION EXISTS FOR THE PAYMENT OF ADDITIONAL SUMS FOR SERVICES WHICH EXCEED THE NEEDS OF THE GOVERNMENT.

THE SBA ADMINISTRATOR CONCLUDES AS FOLLOWS:

"ASPR 3-805.1 PROVIDES THAT NEGOTIATIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE "PRICE AND OTHER FACTORS CONSIDERED.' THE TERM "OTHER FACTORS" HAS BEEN HELD TO REFER TO THE ABILITY OF THE BIDDER TO PERFORM AND ANY COST FACTORS WHICH WILL AFFECT THE OVERALL COST TO THE GOVERNMENT. 37 COMP. GEN. 550. IN THE SUBJECT CASE, HOWEVER, NEGOTIATIONS WERE CONDUCTED WITH THE FOUR OFFERORS WHO RECEIVED THE HIGHEST NUMBER OF POINTS, AS RECOMMENDED BY THE EVALUATION COMMITTEE. FOLLOWING NEGOTIATION, THE CONTRACTING OFFICER DETERMINED THAT THE CONTRACT SHOULD BE AWARDED TO BEISER. AS INDICATED IN HIS DETERMINATION, HIS DECISION WAS SENT BACK BY HIGHER AUTHORITY, THE EVALUATION COMMITTEE WAS RECONVENED, AND FURTHER NEGOTIATIONS WERE CONDUCTED WITH BEISER AND TUMPANE. THE EVALUATION COMMITTEE AGAIN GAVE TUMPANE A HIGHER SCORE THAN BEISER AND THE CONTRACTING OFFICER THEN DETERMINED TO AWARD THE CONTRACT TO TUMPANE BASED UPON THE POINT SCORE DETERMINED BY THE EVALUATION COMMITTEE.

"THUS, THE CONTRACTING OFFICER'S FINAL ACTION WAS MERELY PRO FORMA. THE REAL SELECTION OF FIRMS FOR NEGOTIATION AND DETERMINATION OF AWARD WERE MADE NOT BY THE CONTRACTING OFFICER, AS REQUIRED BY LAW, BUT ON THE BASIS OF POINTS DETERMINED BY THE EVALUATION COMMITTEE.

"THE SMALL BUSINESS ADMINISTRATION IS GREATLY CONCERNED WITH THE PRESERVATION OF THE COMPETITIVE SYSTEM OF GOVERNMENT PROCUREMENT. THE DESIRE THAT THERE BE TRUE COMPETITION HAS ON MANY OCCASIONS BEEN EXPRESSED BY THE CONGRESS. IT IS THEREFORE REQUISITE THAT PROCURING AGENCIES BE RESTRAINED FROM TAKING ANY ACTION WHICH INFRINGES UPON OR WEAKENS COMPETITION IN GOVERNMENT CONTRACTING. THE USE OF VALID PROCEDURES SHOULD NOT BE COUNTENANCED WHERE THEIR APPLICATION IS SUCH AS TO RESULT IN PREFERENTIAL TREATMENT OR FAVORITISM FOR A BIDDER.'

YOUR DEPARTMENT WAS REQUESTED TO COMMENT ON THE LETTER OF MARCH 12 FROM THE SBA ADMINISTRATOR. A REPLY WAS RECEIVED DATED JUNE 6, 1962, FROM THE DEPUTY FOR PROCUREMENT MANAGEMENT, OFFICE OF THE SECRETARY OF THE AIR FORCE. THE DEPUTY STATES THAT THE PAST EXPERIENCE OF THE AIR FORCE WITH THE PRIOR CONTRACT FOR THIS WORK DID NOT REVEAL SUFFICIENT INFORMATION TO PERMIT PRICING ON A FIXED PRICE BASIS. THE WORK REQUIREMENTS COULD NOT BE ANTICIPATED IN ADVANCE TO A DEGREE WHICH WOULD HAVE ENABLED A PROSPECTIVE CONTRACTOR TO PREPARE VALID ESTIMATES OF COST THAT WOULD HAVE RESULTED IN BIDDING A REASONABLE FIXED PRICE, FAIR BOTH TO THE OFFEROR AND THE GOVERNMENT. UNDER THESE CIRCUMSTANCES IT WAS DECIDED THAT A COST-PLUS-A- FIXED-FEE TYPE CONTRACT WAS PROPER. RECOGNIZING THAT OFFERORS' CPFF COST ESTIMATES DO NOT DETERMINE THE ACTUAL COST TO THE GOVERNMENT IN THE WAY FIXED PRICE PROPOSALS DO, AN EVALUATION WAS MADE TO DETERMINE THE RELATIVE ABILITIES OF THE OFFERORS TO PROVIDE ACCEPTABLE TIMELY SERVICE AT THE LOWEST ACTUAL ULTIMATE COST TO THE GOVERNMENT. HENCE, COST WAS NOT A NEGLIGIBLE FACTOR IN THE SELECTION OF THE CONTRACTOR. THE PROBABLE ULTIMATE COST WAS THE PREDOMINANT FACTOR.

THE DEPUTY STATES THAT THE POINT VALUES ASSIGNED TO THE VARIOUS FACTORS WERE A MATTER OF JUDGMENT AND WERE NOT DESIGNED TO FAVOR OR PENALIZE ANY COMPANY WHETHER LARGE OR SMALL BUSINESS. HE CONCLUDES AS FOLLOWS:

"THE AIR FORCE IS EQUALLY CONCERNED WITH THE PRESERVATION OF THE COMPETITIVE SYSTEM IN GOVERNMENT PROCUREMENT. IT IS EVIDENT FROM THE FACTS IN THIS CASE THAT INTENSE COMPETITION WAS REALIZED. WE BELIEVE THAT THIS PROCUREMENT ACTION WAS FULLY IN ACCORD WITH THE REQUIREMENTS OF THE ARMED SERVICES PROCUREMENT REGULATION. HOWEVER, THE AIR FORCE DOES NOT MAINTAIN THAT THE POINT EVALUATION SYSTEM SO FAR DEVELOPED IS EITHER PERFECT OR FINAL. WE SHALL CONTINUE TO IMPROVE IT AS EXPERIENCE DICTATES.'

THE SBA ADMINISTRATOR REQUESTED THE OPPORTUNITY TO COMMENT FURTHER ON THE PROTEST AFTER HE HAD GIVEN CONSIDERATION TO THE JUNE 6 REPLY FROM YOUR DEPUTY FOR PROCUREMENT AND PRODUCTION. THESE COMMENTS WERE RECEIVED HERE BY LETTER OF JULY 9, 1962. THE ADMINISTRATOR AGAIN TAKES ISSUE WITH YOUR DEPARTMENT REGARDING THE USE OF A COST REIMBURSEMENT TYPE CONTRACT FOR THIS REPETITIVE PROCUREMENT, AND THE DISTRIBUTION OF THE POINT VALUES. CONCLUDES THAT:

"STRIPPED OF ITS GENERALITIES, THE AIR FORCE POSITION AMOUNTS SIMPLY TO THIS--- AN UNQUESTIONABLY COMPETENT AND QUALIFIED SMALL BUSINESS FIRM, WHICH IS THE LOW BIDDER ON BOTH ESTIMATED COST AND FIXED FEE, THROUGH THE OPERATION OF THE POINT EVALUATION SYSTEM, HAS LOST A CONTRACT TO A LARGE FIRM FOR NO OTHER REASON THAT THAT THE LARGE FIRM, BY VIRTUE OF BEING THE CONTRACTOR ON THE PREVIOUS PROCUREMENT, WAS ASSIGNED SUFFICIENT POINTS FOR PAST EXPERIENCE TO PERPETUATE IT AS SUCCESSFUL BIDDER AND THUS EFFECT WHAT AMOUNTS TO A SOLE SOURCE PROCUREMENT. THIS, IN MY OPINION, IS THE VICE OF THE POINT EVALUATION SYSTEM AND I REPEAT MY STRONG OBJECTIONS TO IT.'

THE SMALL BUSINESS ADMINISTRATION BELIEVES THAT THE POINT SYSTEM UTILIZED BY YOUR DEPARTMENT ON THIS PROCUREMENT WORKS TO THE ADVANTAGE OF THE PRIOR CONTRACTOR AND THE LARGE ORGANIZATION, AND RESULTS IN SOLE SOURCE PROCUREMENT AND DISCRIMINATION AGAINST SMALL BUSINESS. HE SUGGESTS THAT IN THE FURTHERANCE OF SOUND PROCUREMENT, STANDARDS SHOULD BE ESTABLISHED DEFINING THE MINIMUM REQUIREMENTS OF THE GOVERNMENT, SO THAT AWARD WOULD BE MADE TO THE LOWEST OFFEROR MEETING THESE REQUIREMENTS.

THIS PROCUREMENT WAS CONDUCTED PURSUANT TO NEGOTIATION. WE BELIEVE THAT IN A NEGOTIATED PROCUREMENT THE CONTRACTING OFFICER IS UNDER A DUTY TO CONDUCT THE NEGOTIATION TO THE BEST ADVANTAGE OF THE GOVERNMENT AND TO PLACE THE CONTRACT WITH THE OFFEROR MAKING THE BEST FINAL PROPOSAL. COMP. GEN. 861. UNDER THE COST-REIMBURSEMENT TYPE CONTRACT THERE IS NO FIRM PRE-ESTABLISHED PRICE. THE COST OF THE CONTRACT TO THE GOVERNMENT IS GENERALLY ESTABLISHED ON THE BASIS OF THE ACTUAL COSTS OF PERFORMANCE PROPERLY INCURRED BY THE CONTRACTOR. FOR THIS REASON THE ASPR PROVIDES THAT THE CONTRACTOR'S ESTIMATED COST OF CONTRACT PERFORMANCE AND PROPOSED FEE ARE NOT TO BE CONSIDERED AS CONTROLLING IN THE AWARD SELECTION. THE PRIMARY CONSIDERATION IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT CONTRACT IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IS A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT. ASPR 3.805.2 UNDER THIS CRITERION THE RELATIVE TECHNICAL COMPETENCE OF PROSPECTIVE CONTRACTORS IS OF PARAMOUNT IMPORTANCE. IN OUR VIEW IT IS NOT SUFFICIENT IN THE CPFF SITUATION IF THE AWARD PROCEDURE ONLY ATTEMPTS TO CHOOSE CONTRACTORS ON A MINIMUM NEEDS BASIS. WE DO NOT FIND THAT THE USE OF A POINT EVALUATION SYSTEM BY THE ADMINISTRATIVE AUTHORITY FOR THE PURPOSE OF SELECTING THE SOURCES FOR NEGOTIATION OF A CPFF TYPE CONTRACT IS CONTRARY TO STATUTE OR REGULATION. WE DO FEEL, HOWEVER, THAT QUOTERS ARE PLACED IN A BETTER POSITION TO MAKE MORE ACCURATE AND REALISTIC PROPOSALS WHEN THEY ARE INFORMED IN ADVANCE OF THE RELATIVE IMPORTANCE TO BE ATTACHED TO EACH EVALUATION FACTOR.

YOUR DEPUTY FOR PROCUREMENT MANAGEMENT RECOGNIZES, IN HIS LETTER OF JUNE 6, 1962, QUOTED ABOVE, THAT THE POINT EVALUATION SYSTEM SO FAR DEVELOPED IS NEITHER PERFECT NOR FINAL. IMPROVEMENTS ARE TO BE UNDERTAKEN AS EXPERIENCE DICTATES. HOWEVER, WE DO NOT CONCLUDE THAT THE POINT EVALUATION APPLIED BY YOUR DEPARTMENT HERE HAD THE EFFECT OF PRECLUDING A QUALIFIED SMALL BUSINESS FIRM FROM OBTAINING THE AWARD, OR THAT IT LIMITED THE PROCUREMENT TO A SOLE SOURCE. TWO OF THE FOUR FIRMS SELECTED FOR NEGOTIATION BY THE POINT EVALUATION WERE SMALL BUSINESS CONCERNS. (THE M AND T COMPANY AND BEISER AVIATION CORPORATION.) YOUR DEPARTMENT SOLICITED MANY FIRMS FOR PROPOSALS AND THE PROPOSALS RECEIVED APPEAR TO HAVE BEEN THOROUGHLY CONSIDERED. WHILE THE PRIOR CONTRACTOR ON THE RECURRENT PROCUREMENT RECEIVED THE AWARD (TUMPANE), IT MIGHT ALSO HAVE BEEN DENIED THE AWARD BECAUSE OF ITS PRIOR SERVICE. THE RECORD INDICATES ALSO THAT THE CONTRACTING OFFICER REACHED THE DETERMINATION THAT THE TUMPANE COMPANY SHOULD RECEIVE THE AWARD.

THE SMALL BUSINESS ADMINISTRATION CONTENDS THAT YOUR DEPARTMENT HAD SUFFICIENT EXPERIENCE AVAILABLE TO AVOID USE OF A CPFF TYPE CONTRACT. HOWEVER, PROPER AUTHORITY HERE DETERMINED THAT A CPFF TYPE CONTRACT WAS LIKELY TO BE LESS COSTLY THAN OTHER METHODS, AND THAT IT WAS IMPRACTICABLE TO SECURE THE REQUIRED SERVICES WITHOUT THE USE OF THIS TYPE OF CONTRACT. UNDER APPLICABLE LAW SUCH DETERMINATION MUST BE ACCEPTED AS FINAL. U.S.C. 2310; SEE 37 COMP. GEN. 430, 433.

IT IS OUR CONCLUSION THAT NO BASIS HAS BEEN STATED BY EITHER THE PROTESTING BIDDER OR THE SMALL BUSINESS ADMINISTRATOR WHICH WOULD PROPERLY JUSTIFY OUR OFFICE IN QUESTIONING THE ACTIONS OF YOUR DEPARTMENT WITH REGARD TO THE AWARD MADE TO THE TUMPANE COMPANY UNDER REQUEST FOR QUOTATION NO. 1 (3900-62-L68001).

BY LETTER OF TODAY TO THE M AND TO COMPANY, WE HAVE DENIED ITS PROTEST UNDER THE SUBJECT PROCUREMENT. A COPY OF THAT LETTER IS ENCLOSED. THE SMALL BUSINESS ADMINISTRATOR'S COMMENTS TO OUR OFFICE REGARDING THIS PROCUREMENT HAVE BEEN PRESENTED HEREIN FOR YOUR CONSIDERATION. YOUR ORIGINAL ENCLOSURES ARE RETURNED HEREWITH.