B-174455, JUL 6, 1972

B-174455, JUL 6, 1972

BID PROTEST - PROPOSED RENEGOTIATION DECISION DENYING THE PROTEST OF GARY AIRCRAFT CORPORATION AGAINST AWARD OF A CONTRACT TO SPARTAN AVIATION, INC., UNDER AN RFP ISSUED BY THE AIR FORCE. GARY CONTENDS THAT THE CIRCUMSTANCES OF THIS PROCUREMENT REQUIRE THAT NEGOTIATIONS BE REOPENED. IN VIEW OF THE LARGE PRICE DIFFERENTIAL IN GARY'S PROPOSAL, THE COMP. GEN. MUST AGREE WITH AIR FORCE THAT CHANGES IN THE SUBJECT CONTRACT ARE RELATIVELY INSIGNIFICANT AND THE POSSIBILITY OF AWARD TO THE CHINESE AIR FORCE WOULD NOT AFFECT PROTESTANT'S COMPETITIVE STANDING. FURTHER, SINCE THE PRICES OF BOTH OFFERORS HAVE BEEN MADE PUBLIC, THE PROPOSED RENEGOTIATION WOULD BE TANTAMOUNT TO AN AUCTION TECHNIQUE AND WOULD REQUIRE SPARTAN TO AGAIN COMPETE FOR A CONTRACT TO WHICH IT WAS PREVIOUSLY ENTITLED. FINALLY, THE DISMISSAL OF GARY'S COURT ACTION OPERATES AS AN ADJUDICATION ON THE MERITS AND THE COMP. GEN. IS PRECLUDED FROM ANY FURTHER ACTION IN THIS REGARD.

TO GARY AIRCRAFT CORPORATION:

THIS IS IN REPLY TO YOUR TELEFAX MESSAGES DATED MAY 5 AND 17, 1972, PROTESTING AGAINST THE AWARD OF A CONTRACT TO SPARTAN AVIATION, INC., UNDER REQUEST FOR PROPOSALS F41608-71-R-4929, ISSUED BY THE DEPARTMENT OF THE AIR FORCE.

THE SOLICITATION CONTEMPLATED A THREE-YEAR CONTRACT FOR THE OVERHAUL OF THE R-3350 SERIES AIRCRAFT ENGINES AND COMPONENTS AND PROVIDED FOR TWO ADDITIONAL ONE-YEAR OPTIONS. YOU ARE THE INCUMBENT CONTRACTOR FOR THESE SERVICES, AND THIS PROCUREMENT WAS THE SUBJECT OF A PRIOR PROTEST BY SPARTAN, WHO HAD BEEN DETERMINED NONRESPONSIBLE BY THE CONTRACTING OFFICER. BY A DECISION OF THIS OFFICE DATED MARCH 22, 1972, WE ADVISED THE SECRETARY OF THE AIR FORCE THAT IN THE LIGHT OF CERTAIN INFORMATION WHICH WAS AVAILABLE TO, BUT NOT CONSIDERED BY, THE CONTRACTING OFFICER, A REEVALUATION OF SPARTAN'S RESPONSIBILITY WAS REQUIRED. WHEN THE AIR FORCE PROCEEDED WITH A CURRENT PRE-AWARD SURVEY ON SPARTAN PURSUANT TO OUR DECISION, IT WAS TEMPORARILY RESTRAINED AS A RESULT OF A COURT ACTION INITIATED BY YOUR FIRM. SUBSEQUENTLY, THE COURT DENIED YOUR MOTION FOR A TEMPORARY INJUNCTION AND GRANTED THE GOVERNMENT'S MOTION TO DISMISS. THEREAFTER, THE AIR FORCE COMPLETED ITS SURVEY OF SPARTAN, AND THE CONTRACTING OFFICER FOUND THE FIRM TO BE A RESPONSIBLE CONTRACTOR. NOTWITHSTANDING YOUR PROTEST, A CONTRACT WAS AWARDED TO SPARTAN SUBSEQUENT TO OUR RECEIPT OF ADVICE FROM THE AIR FORCE OF ITS DECISION TO MAKE SUCH AN AWARD.

ESSENTIALLY, IT IS YOUR POSITION THAT NEGOTIATIONS SHOULD BE REOPENED SINCE (1) CHANGES IN THE SERVICES BEING PERFORMED UNDER THE CONTRACT WHICH YOU CURRENTLY HOLD HAVE ARISEN SUBSEQUENT TO SUBMISSION OF YOUR ORIGINAL PROPOSAL ON AUGUST 30, 1971, AND SUCH CHANGES SHOULD ALSO BE REFLECTED IN THE SUBJECT SOLICITATION; (2) CHANGES IN YOUR PRESENT WORKLOAD WOULD PERMIT YOU TO NOW OFFER A LOWER RATE THAN YOU PREVIOUSLY OFFERED; AND (3) THERE IS A STRONG POSSIBILITY THAT CERTAIN ENGINES WILL BE OVERHAULED UNDER SEPARATE CONTRACT WITH A FOREIGN GOVERNMENT, WHICH WOULD ALSO AFFECT THE CONTRACT REQUIREMENTS AND THE EVALUATION OF OFFERS.

YOU ALSO REQUEST RECONSIDERATION OF OUR PREVIOUS DECISION, WHICH REQUIRED THE AIR FORCE TO REEVALUATE SPARTAN'S RESPONSIBILITY.

IN CONNECTION WITH YOUR REQUEST THAT THE NEGOTIATIONS BE REOPENED, THE AIR FORCE HAS CONFIRMED THAT THERE HAVE BEEN A NUMBER OF REVISIONS TO THE WORK SPECIFICATIONS IN YOUR CONTRACT SINCE THE RELEASE OF THE SUBJECT SOLICITATION. HOWEVER, IT IS BELIEVED THAT THE PRESENT REQUIREMENTS INVOLVE ONLY RELATIVELY INSIGNIFICANT CHANGES. IT IS REPORTED THAT THE CONTRACTING OFFICER'S ESTIMATE OF THE CHANGES WHICH WILL BE REQUIRED AMOUNTS TO $44 FOR EACH ENGINE. THE AIR FORCE DOES NOT CONSIDER THIS TO BE A SUBSTANTIAL CHANGE, SINCE THE CONTRACT PRICE FOR EACH ENGINE OVERHAUL IS $4,352.40. FURTHERMORE, THE RELATIVE IMPORTANCE OF THE ESTIMATED AMOUNT IS CONSIDERED TO BE GREATLY DIMINISHED BY THE SUBSTANTIAL PRICE DIFFERENTIAL IN YOUR HIGHER PRICED PROPOSAL. THIS DIFFERENCE WAS EVALUATED TO BE IN EXCESS OF $750,000 FOR THE FIRST YEAR OF THE CONTRACT, EVEN AFTER THE ADDITION OF A $140,161 PENALTY TO THE SPARTAN PRICE TO COVER THE COST OF MOVING RESIDUAL GOVERNMENT PROPERTY FROM YOUR PLANT TO SPARTAN'S PLANT.

IN RESPONSE TO YOUR CONTENTION THAT THE STRONG POSSIBILITY OF CONTRACTING WITH A FOREIGN GOVERNMENT ON THE OVERHAUL OF CERTAIN ENGINES SHOULD EFFECT A CHANGE IN THE CONTRACT REQUIREMENTS AND THE CRITERIA USED IN THE EVALUATION OF PRICES, THE AIR FORCE HAS REPORTED AS FOLLOWS:

"*** WE HAVE RECEIVED A PROPOSAL FROM THE CHINESE AIR FORCE FOR OVERHAUL OF R3350-26WD ENGINE FOR VNAF. NEGOTIATIONS ARE SCHEDULED TO COMMENCE 22 MAY 72 ON THAT PROGRAM. GAC IS CORRECT IN ASSUMING THAT THERE IS A POSSIBILITY THAT THESE ENGINES WILL BE OVERHAULED BY A FOREIGN GOVERNMENT. HOWEVER, WE DO NOT FEEL THAT THIS WOULD NECESSITATE CANCELLATION OF THE COMPETITIVE RFP AND RESOLICITATION. THE RFP CONTEMPLATED A REQUIREMENT TYPE CONTRACT. HOWEVER, THE REQUIREMENTS PROVISIONS WERE SPECIFICALLY LIMITED TO ONLY THOSE ENGINES OVERHAULED WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES (CONUS). THE RFP FURTHER STIPULATED THAT THE CANCELLATION CEILING UNDER THE MULTI-YEAR PROVISIONS WOULD BE AMORTIZED AGAINST USAF ENGINES ONLY. BOTH GAC AND SAI RECOGNIZE THAT MAP ENGINES ARE ON AN AS GENERATED BASIS. THERE IS NEVER ANY FIRM ASSURANCE THAT THESE ENGINES WILL GENERATE. EVEN THOUGH WE ARE IN PROCESS OF NEGOTIATING A CONTRACT WITH THE CAF FOR THE R3350-26WD, WE PROPOSE TO LEAVE THE ENGINE IN THE PROPOSED CONTRACT RESULTING FROM THE COMPETITIVE PROGRAM. WE FEEL THAT THIS WILL BE VALUABLE INSURANCE SHOULD UNFORESEEN DEVELOPMENTS DICTATE OVERHAUL OF THIS ENGINE IN CONUS RATHER THAN IN TAIWAN. WE WOULD, OF COURSE, ADVISE THE SUCCESSFUL OFFEROR PRIOR TO AWARD THAT THE PROCUREMENT TO A FOREIGN SOURCE IS IN PROCESS."

IN ADDITION, AT OUR REQUEST THE AIR FORCE HAS EVALUATED THE PRICES OFFERED DELETING THE ENGINES IN QUESTION AND RELATED ITEMS AND IT APPEARS THAT THE RELATIVE STANDING OF OFFERORS REMAINS UNCHANGED.

AS TO THE EFFECT OF YOUR PRESENT WORKLOAD UPON THE RATE OFFERED IN YOUR PROPOSAL, WE ARE OF THE VIEW THAT ONCE NEGOTIATIONS ARE CONDUCTED AND FORMALLY CLOSED, MATTERS WHICH MAY AFFECT A PARTICULAR OFFEROR'S COMPETITIVE POSITION AND ARE WHOLLY SUBJECT TO ITS INTERNAL CONTROL (AS OPPOSED TO SIGNIFICANT CHANGES IN THE PROCUREMENT GENERATED BY THE GOVERNMENT), DO NOT NECESSARILY REQUIRE THE REOPENING OF NEGOTIATIONS TO ACCOMMODATE THE INDIVIDUAL OFFEROR.

UNDER THE CIRCUMSTANCES OF THIS CASE IT IS OUR OPINION THAT THE AIR FORCE WAS JUSTIFIED IN PROCEEDING WITH THE AWARD WITHOUT REOPENING NEGOTIATIONS. A COMBINATION OF SEVERAL FACTORS LEADS US TO THIS CONCLUSION. FIRST, NEGOTIATIONS WERE CONDUCTED IN THIS CASE AND THE AIR FORCE REQUESTED AND RECEIVED THE BEST AND FINAL OFFERS. MOREOVER, THE TRANSCRIPT OF THE COURT PROCEEDINGS CONTAINS THE PRICES OFFERED BY BOTH COMPETITORS, AND TO REOPEN NEGOTIATIONS AT THIS TIME WOULD BE TANTAMOUNT TO AN AUCTION TECHNIQUE. IN ADDITION, IT IS NOW APPARENT THAT IF THE CONTRACTING OFFICER HAD NOT FAILED TO CONSIDER CERTAIN MATERIAL INFORMATION AVAILABLE AT THE TIME HE HAD DETERMINED SPARTAN TO BE NONRESPONSIBLE (NOVEMBER 15, 1971), SPARTAN WOULD HAVE BEEN FOUND RESPONSIBLE AND ENTITLED TO THE AWARD. ABSENT ANY SUBSTANTIAL CHANGES IN THE GOVERNMENT'S REQUIREMENTS, REOPENING NEGOTIATIONS AT THE PRESENT TIME WOULD REQUIRE SPARTAN TO AGAIN COMPETE FOR A CONTRACT TO WHICH IT WAS PREVIOUSLY ENTITLED, WHILE A CONTRACT AWARD TO SPARTAN WITHOUT REOPENING NEGOTIATIONS PLACES THE GOVERNMENT IN NO WORSE POSITION AT THE PRESENT TIME THAN IF THE GOVERNMENT HAD ACTED CORRECTLY LAST NOVEMBER. WE FEEL THE CHANGES THAT WERE MADE IN YOUR CURRENT CONTRACT INVOLVE A RELATIVELY SMALL DOLLAR AMOUNT WHEN COMPARED WITH THE ESTIMATED TOTAL CONTRACT PRICE AND, IN VIEW OF THE LARGE DIFFERENCE IN THE PRICES OFFERED WE CANNOT CONCLUDE THAT YOU HAVE BEEN PREJUDICED BECAUSE YOUR OFFER MAY HAVE BEEN LOW IF PRICES HAD ORIGINALLY BEEN SOLICITED ON THE BASIS FOR WHICH YOU NOW CONTEND.

WITH RESPECT TO THE POSSIBLE CONTRACT AWARD TO THE CHINESE AIR FORCE FOR THE OVERHAUL OF CERTAIN ENGINES, IT IS APPARENT FROM THE ABOVE QUOTED PORTION OF THE ADMINISTRATIVE REPORT THAT THE GOVERNMENT'S REQUIREMENTS WOULD BE MET BY AN AWARD WITHOUT CHANGING THE SOLICITATION AND IT IS CLEAR THAT THE RELATIVE STANDING OF OFFERORS WOULD NOT BE CHANGED, EVEN IF THESE ENGINES WERE REMOVED FROM THE SOLICITATION AND NOT CONSIDERED IN THE EVALUATION PROCESS.

WITH REGARD TO YOUR DISAGREEMENT WITH THE MERITS OF OUR DECISION, WE NOTE THAT THIS WAS THE SUBJECT OF THE COURT ACTION INSTITUTED ON YOUR BEHALF WHICH WAS DISMISSED WITH PREJUDICE. SUCH A DISMISSAL OPERATES AS AN ADJUDICATION ON THE MERITS, AND WE ARE, THEREFORE, PRECLUDED FROM ANY FURTHER ACTION IN THIS REGARD.

FOR THE REASONS STATED ABOVE, YOUR PROTEST IS DENIED.