B-162171, SEP. 26, 1967

B-162171, SEP. 26, 1967

BIDS - NEGOTIATION - COST - REIMBURSEMENT TYPE DECISION TO C-E-I-R INC. RE PROTEST TO AWARD TO WESTAT OF RESEARCH AND DEVELOPMENT TRAFFIC STUDY FOR FEDERAL HIGHWAY ADMINISTRATION. SELECTION OF PROPOSAL OF OFFEROR FOR COST REIMBURSEMENT TYPE RESEARCH CONTRACT WHOSE ESTIMATED PRICE WAS HIGHER THAN SEVERAL OTHER RESPONSIVE OFFERORS WAS NOT IMPROPER UNDER FPR 1 - 3.805.2 WHICH PROVIDES THAT COST FACTOR NEED NOT BE THE CONTROLLING ONE IN EVALUATION OF COST REIMBURSEMENTS TYPE CONTRACTS. THEREFORE, ON BASIS OF EVALUATION TEAM CONCLUSION AWARD IS CONSIDERED PROPER. ALTHOUGH PROTESTING OFFEROR MAY NOT HAVE BEEN SUFFICIENTLY INFORMED OF REASONS FOR REJECTION, SUCH FAILURE DID NOT PREJUDICE COMPETITIVE POSITION AND THEREFORE PROTEST MUST BE DENIED.

TO C-E-I-R INC.:

WE REFER TO YOUR LETTER DATED JULY 27, 1967, PROTESTING THE AWARD MADE UNDER REQUEST FOR PROPOSALS (RFP) NO. 135, ISSUED ON MAY 3, 1967, BY THE FEDERAL HIGHWAY ADMINISTRATION, UNITED STATES DEPARTMENT OF TRANSPORTATION.

THE REFERENCED RFP SOLICITED PROPOSALS FOR A RESEARCH AND DEVELOPMENT STUDY ENTITLED "DATA ANALYSIS OF INTERSTATE GEOMETRICS AND URBAN TRAFFIC CONTROL" AND PROVIDED THAT PROPOSALS SHOULD DETAIL THE ELEMENTS OF WORK INVOLVED, THE LEVEL AND NUMBER OF PERSONNEL TO BE UTILIZED, AND THE PROPOSED COSTS. IT WAS CONTEMPLATED THAT A COST PLUS A FIXED FEE CONTRACT WOULD BE NEGOTIATED. THE RFP FURTHER PROVIDED THAT PROPOSALS WOULD BE EVALUATED AND THE PROSPECTIVE CONTRACTOR SELECTED PRINCIPALLY ON THE FOLLOWING CRITERIA:

"A. GENERAL QUALITY AND RESPONSIVENESS OF PROPOSAL

1. COMPLETENESS AND THOROUGHNESS

2. RECOGNITION OF OVERALL CONCEPT AND OBJECTIVE

3. RESPONSIVENESS TO REQUIREMENTS, TERMS, CONDITIONS AND TIME OF PERFORMANCE

4. CONSIDERATION OF RELATED FACTORS

5. PHYSICAL FACILITIES, IF APPLICABLE

"B. THE QUALIFICATIONS OF STAFF TO BE ASSIGNED TO THE PROJECT" A PREPROPOSAL CONFERENCE WAS HELD ON MAY 10, 1967, TO WHICH ALL PROSPECTIVE OFFERORS WERE INVITED TO DISCUSS THE PROCUREMENT REQUIREMENTS. ON THE CLOSING DATE FOR RECEIPT OF PROPOSALS FIVE OFFERS WERE RECEIVED AND AS A RESULT OF EVALUATION AN AWARD WAS MADE TO WESTAT RESEARCH, INC.

YOUR PROTEST IS MADE ESSENTIALLY ON THE GROUND THAT THE ADMINISTRATION'S ACTION IN REJECTING YOUR OFFER OF $139,503, WHILE ACCEPTING WESTAT'S OFFER OF $215,128, IS NOT IN THE GOVERNMENT'S BEST INTEREST IN VIEW OF THE CONTRACTING ACTIVITY'S DETERMINATION THAT YOUR PROPOSAL WAS TECHNICALLY ACCEPTABLE. YOU FURTHER ALLEGE THAT THE CONTRACTING OFFICER FAILED TO REPLY TO YOUR REQUEST FOR A CLEARLY DEFINED EXPLANATION OF THE AWARD TO WESTAT.

IN REPORTING TO OUR OFFICE IN THIS MATTER THE FEDERAL HIGHWAY ADMINISTRATOR STATES THAT FIVE PROPOSALS WERE RECEIVED FOR THIS PROCUREMENT AND A TEN MEMBER TEAM WAS ESTABLISHED FOR EVALUATING THE PROPOSALS. IT IS REPORTED THAT AFTER COMPLETING ITS EVALUATIONS THE TEAM VOTED 9 TO 1 TO ACCEPT THE WESTAT PROPOSAL. THE PERTINENT CONCLUSIONS OF THE EVALUATORS ARE REPORTED AS FOLLOWS: "WESTAT RESEARCH, INC., WAS CHOSEN BECAUSE THIS ORGANIZATION PROVED TO BE THE MOST RESPONSIVE TO THE REQUIREMENTS OF RFP NO. 135. THEIR PROPOSAL WAS COMPLETE AND THOROUGH, SHOWED RECOGNITION OF THE OVERALL CONCEPT AND OBJECTIVE OF PHASE A AND GAVE EVIDENCE OF A COMPREHENSIVE STUDY ANALYSIS IN THE PROPOSAL OF THEIR - DATA ANALYSIS OF INTERSTATE GEOMETRICS AND URBAN TRAFFIC CONTROL.- MORE SPECIFICALLY, THE PROPOSAL INDICATED A METHOD OF APPROACH CONSISTENT WITH THE DATA TO BE ANALYZED AND A RECOGNITION OF THE PROBLEMS ASSOCIATED IN MANIPULATING LARGE DATA FILES. FOR EXAMPLE, THIS FIRM PROPOSED TO ANALYZE THE DATA BY USE OF A MULTIVARIATE REGRESSION ANALYSIS AND INDICATED A DEFINITE WORK PLAN TO TRANSFORM THE RAW DATA INTO A FORM SUITABLE FOR ANALYSIS, ACCOMPLISH THE ANALYSIS BY ELIMINATING UNNECESSARY VARIABLES, AND INTERPRET THE RESULTS. THIS, COUPLED WITH THE ABILITY AND EXPERIENCE OF THE PRINCIPAL INVESTIGATOR, MADE WESTAT RESEARCH, INC., THE OVERWHELMING CHOICE. "THE REMAINING PROPOSALS DID NOT SHOW EVIDENCE OF HAVING GIVEN THE PROBLEM MUCH THOUGHT NOR DID THEY INDICATE SPECIFIC METHODOLOGY TO ACCOMPLISH THE ANALYSIS. IN ADDITION, THE PRINCIPAL INVESTIGATORS DID NOT APPEAR TO POSSESS THE ABILITY AND/OR EXPERIENCE TO ACCOMPLISH THE TASK.' IN ADDITION, THE FEDERAL HIGHWAY ADMINISTRATOR HAS REPORTED THAT: "* * * THE INVESTIGATORS NAMED BY C-E I-R, INC., DID NOT APPEAR TO HAVE AS ADEQUATE A BACKGROUND EXPERIENCE TO ACCOMPLISH THE WORK AS THAT SHOWN BY WESTAT, INC. THERE WAS A WIDE GAP IN THE TECHNICAL FINDINGS OF THE EVALUATION TEAM BETWEEN THE SUCCESSFUL OFFEROR AND THE SECOND CHOICE. THE PROPOSAL OF C-E-I-R, INC., WAS RATED LAST WITHIN THE GROUP OF FOUR PROPOSALS RATED AS ACCEPTABLE.'

THE PROCEDURES GENERALLY APPLICABLE TO COST-REIMBURSEMENT TYPE CONTRACTS WHICH ARE FOR CONSIDERATION HERE ARE STATED IN THE FEDERAL PROCUREMENT REGULATIONS (FPR) AS FOLLOWS:

"SEC. 1-3.805-2 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 OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (A) THE LOWEST PROPOSED COST, (B) THE LOWEST PROPOSED FEE, OR (C) 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 AGENCY PROCEDURES AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE SEC. 1-3.808). 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.'

IN REGARD TO THE AWARD TO WESTAT AT AN ESTIMATED PRICE WHICH IS HIGHER THAN THE ESTIMATED PRICE INCLUDED IN YOUR PROPOSAL, IT WOULD APPEAR TO BE CLEARLY PERMISSIBLE, UNDER THE ABOVE REGULATION, FOR THE ADMINISTRATION TO REJECT A LESS EXPENSIVE PROPOSAL, INCLUDING THE PROPOSALS SUBMITTED BY YOUR FIRM AND BY THE TWO OTHER RESPONSIVE OFFERORS WHOSE PROPOSALS WERE EVEN LESS COSTLY THAN YOURS, SINCE PRICE IS NOT CONTROLLING IN A COST- REIMBURSEMENT TYPE CONTRACT. IN VIEW THEREOF, AND OF THE CONCLUSION OF THE EVALUATION TEAM THAT WESTAT'S PROPOSAL WAS MORE ACCEPTABLE ON THE BASIS OF FACTORS OTHER THAN ESTIMATED COST, WE SEE NO BASIS FOR HOLDING THE AWARD TO WESTAT IMPROPER.

WHILE IT IS REGRETTABLE THAT YOU MAY NOT HAVE BEEN SUFFICIENTLY INFORMED BY THE CONTRACTING OFFICER OF THE REASONS FOR REJECTING YOUR PROPOSAL, AS CONTEMPLATED BY THE NOTICE PROVISIONS OF THE PROCUREMENT REGULATIONS (FPR SEC. 1-3.103 (B) (, WE FIND NOTHING IN YOUR PROTEST TO INDICATE THAT SUCH FAILURE COULD HAVE PREJUDICED YOUR COMPETITIVE POSITION WITH RESPECT TO THE PROCUREMENT IN QUESTION.

BASED UPON THE FOREGOING WE MUST CONCLUDE THAT THE REASONS FOR REJECTING YOUR PROPOSAL ARE LEGALLY SUFFICIENT TO SUPPORT THE ACTION OF THE PROCURING ACTIVITY AND, ACCORDINGLY, YOUR PROTEST MUST BE DENIED.