B-143277, JULY 20, 1960, 40 COMP. GEN. 35

B-143277, JULY 20, 1960, 40 COMP. GEN. 35

CONTRACTS - COMPETITIVE SYSTEM - TWO-STEP - PROCUREMENTS - PROPRIETY A TWO-STEP PROCUREMENT UNDER WHICH BIDDERS, AFTER BEING FURNISHED A PERFORMANCE SPECIFICATION, ARE REQUESTED TO SUBMIT TECHNICAL PROPOSALS, WITHOUT PRICES, THEN, AFTER THE PROPOSALS ARE EVALUATED FOR ACCEPTABILITY, THOSE BIDDERS WHO QUALIFIED ARE INVITED TO BID UNDER NORMAL ADVERTISING PROCEDURES ON AN INVITATION WHICH INCLUDES A REQUIREMENT FOR COMPLIANCE WITH THE TECHNICAL PROPOSAL IS NOT RESTRICTIVE OF COMPETITION, EVEN THOUGH SOME BIDDERS ARE DISQUALIFIED AT THE FIRST STAGE BECAUSE THEIR TECHNICAL PROPOSALS ARE MATERIALLY DEFICIENT, SINCE PROCUREMENT OFFICERS ARE VESTED WITH A REASONABLE DEGREE OF DISCRETION TO DETERMINE THE EXTENT OF COMPETITION AND ARE RESPONSIBLE FOR DETERMINING THE CONFORMANCE OF THE TECHNICAL PROPOSALS TO THE GOVERNMENT'S REQUIREMENTS. UNDER A TWO-STEP PROCUREMENT WHICH REQUIRED BIDDERS TO FURNISH PROPOSALS COMPLYING WITH THE TECHNICAL SPECIFICATIONS AND PROVIDED FURTHER THAT ONLY MARGINAL PROPOSALS WOULD BE PERMITTED TO BE BROUGHT UP TO ACCEPTABLE STANDARDS, A BIDDER WHOSE TECHNICAL PROPOSAL WAS UNACCEPTABLE FOR MATERIAL DEFICIENCIES MAY NOT BE CONSIDERED AS HAVING BEEN IMPROPERLY DENIED AN OPPORTUNITY TO PRESENT ADDITIONAL DATA TO BRING THE MATERIALLY DEFICIENT PROPOSAL UP TO REQUIRED STANDARDS SO AS TO BE FURNISHED AN INVITATION UNDER THE SECOND STEP OF THE PROCUREMENT. THE DISQUALIFICATION OF A BIDDER FROM THE SECOND STEP OF A TWO-STEP PROCUREMENT BECAUSE OF FAILURE TO FURNISH SUFFICIENT DATA TO PERMIT DETERMINATION THAT THE TECHNICAL PROPOSALS MET THE GOVERNMENT'S REQUIREMENTS WOULD NOT BE AFFECTED BY THE FACT THAT A BIDDER COULD HAVE OBTAINED A SMALL BUSINESS CERTIFICATE OF COMPETENCY, THE DETERMINATION OF THE BIDDER'S CAPACITY AND CREDIT BEING A MATTER OF THE RESPONSIBILITY OF THE BIDDER AFTER EVALUATION THAT THE TECHNICAL PROPOSAL SUBMITTED BY THE BIDDER WAS ACCEPTABLE. A STATEMENT BY A BIDDER, IN CONNECTION WITH A TWO-STEP PROCUREMENT, THAT A PATENT INDEMNITY CLAUSE OTHER THAN THE ONE IN THE BID FORM MIGHT BE FOR APPLICATION IS NOT REGARDED AS A CONDITION WHICH WOULD QUALIFY THE PROPOSAL NECESSITATING REJECTION IN VIEW OF THE CLARIFICATION BY THE BIDDER THAT EITHER CLAUSE WOULD BE ACCEPTABLE. A STATEMENT BY A BIDDER THAT HE RESERVES THE RIGHT TO REVISE THE PROPOSED UNIT SELLING PRICE, IN THE EVENT THAT THE SPECIFIED INCREMENTS ARE CHANGED, AMOUNTS TO AN "ALL OR NONE" OFFER, WHICH CONDITION, WHEN SUBMITTED IN RESPONSE TO AN INVITATION WHICH RESERVED TO THE GOVERNMENT THE RIGHT TO ACCEPT ANY ITEM OR GROUP OF ITEMS, DOES NOT MAKE THE BID NONRESPONSIVE TO THE INVITATION.

TO VIEWLEX, INC., JULY 20, 1960:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 22 AND JULY 15, 1960, PROTESTING THE REJECTION OF YOUR TECHNICAL PROPOSAL AND SUBSEQUENT BID SUBMITTED IN RESPONSE TO REQUEST FOR TECHNICAL PROPOSAL R60-2033-107 NOAS AND INVITATION 33-600-60-245, UNDER THE TWO-STEP PROCUREMENT PROCEDURE, FOR 70MM. HAND-HELD CAMERAS.

ON APRIL 7, 1960, AMC AERONAUTICAL SYSTEMS CENTER, DEPARTMENT OF THE AIR FORCE, ISSUED REQUEST FOR TECHNICAL PROPOSAL R-60-2033-107-NOAS ADVISING BIDDERS THAT THE PROCUREMENT FOR THE 70MM. CAMERAS WOULD BE ACCOMPLISHED IN TWO PHASES: "/1) SOLICITATION, SUBMISSION AND EVALUATION OF DETAILED TECHNICAL PROPOSALS WITHOUT PRICING TO DETERMINE ACCEPTABILITY OF THE PRODUCTS OFFERED, AND (2) ISSUANCE OF A FORMAL INVITATION FOR BID ONLY TO THOSE FIRMS HAVING ACCEPTABLE TECHNICAL PROPOSALS.' THE REQUEST FOR PROPOSALS FURTHER CAUTIONED THAT THE TECHNICAL PROPOSALS HAD TO BE RECEIVED NOT LATER THAN MAY 16, 1960; THAT THE INVITATION FOR BIDS WOULD BE ISSUED ON OR ABOUT MAY 24, 1960," ONLY TO THOSE BIDDERS HAVING ACCEPTABLE TECHNICAL PROPOSALS ON THAT DATE; " AND THAT AWARD WOULD BE MADE TO THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH THE APPLICABLE PERFORMANCE SPECIFICATION AND " BIDDER'S TECHNICAL PROPOSAL AS FINALLY ACCEPTED BY THE GOVERNMENT.'

SUBSEQUENTLY, ON APRIL 22, 1960, GOVERNMENT ENGINEERING PERSONNEL MET WITH A GROUP OF PROSPECTIVE BIDDERS. AT THAT MEETING, EACH PARAGRAPH OF THE SPECIFICATION WAS READ AND EXPLAINED AND BIDDERS' QUESTIONS ABOUT THE TECHNICAL REQUIREMENTS WERE ANSWERED AND DISCUSSED. ALSO, AT THAT TIME, BECAUSE TIME WAS OF THE ESSENCE, THE BIDDERS WERE ADVISED OF THE URGENCY OF THE PROCUREMENT AND THE NECESSITY FOR FURNISHING COMPLETE INFORMATION AND DATA IN THEIR TECHNICAL PROPOSALS.

SIXTY-FOUR FIRMS WERE SOLICITED. ELEVEN RESPONDED WITH TECHNICAL PROPOSALS. EACH OF THESE PROPOSALS WAS SUBMITTED TO FIVE GOVERNMENT ENGINEERING EXPERTS FOR THEIR INDEPENDENT EVALUATION AND ANALYSIS. THESE ENGINEERS DETERMINED AFTER THOROUGH INDEPENDENT EXAMINATION THAT ONLY FOUR PROPOSALS WERE COMPLETE AND ACCEPTABLE IN THE TREATMENT OF ALL THE MECHANICAL ASPECTS OF THE CAMERA. OF THE OTHER SEVEN, SIX WERE SO MATERIALLY INCOMPLETE THAT THEY WERE CONSIDERED UNACCEPTABLE, AND ONE WAS COMPLETE, BUT THE EQUIPMENT OFFERED WAS NOT RESPONSIVE TO THE GOVERNMENT'S REQUIREMENTS EXPRESSED IN THE REQUEST FOR PROPOSALS.

YOUR PROPOSAL WAS TERMED UNACCEPTABLE BECAUSE YOU HAD NOT FURNISHED SUFFICIENT INFORMATION TO PERMIT COMPLETE EVALUATION OF THE CAMERA YOU PROPOSED TO SUPPLY. FOR EXAMPLE, AMONG OTHER ITEMS, YOU DID NOT SHOW HOW YOU WOULD ACCOMPLISH THE FOCAL PLANE SHUTTER OR THE SYNCHRONIZATION OF THE FLASH NOR DID YOU FURNISH SCHEMATIC DRAWINGS SHOWING THE INTERIOR DETAILS AND MECHANISMS OF CERTAIN INNER WORKING PARTS. SINCE YOUR PROPOSAL WAS UNACCEPTABLE, YOU WERE NOT FURNISHED AN INVITATION TO BID IN THE SECOND PHASE OF THE PROCUREMENT. HOWEVER, BY LETTER DATED JUNE 20, 1960, YOU SUBMITTED A BID WHICH INCLUDED A SPECIFIC PRICE PLUS AN UNSTATED COST FOR SPARE PARTS TO BE DETERMINED SUBSEQUENTLY.

YOU POINT OUT THAT AFTER YOU SUBMITTED YOUR TECHNICAL PROPOSAL YOU MADE REPEATED ATTEMPTS TO MEET WITH ENGINEERING OFFICIALS IN ORDER TO TRY TO BRING YOUR PROPOSAL UP TO STANDARDS, BUT THAT YOU WERE NEVER OFFERED AN OPPORTUNITY TO DO SO. IN THIS CONNECTION, HOWEVER, PROSPECTIVE BIDDERS WERE ADMONISHED IN THE REQUEST FOR TECHNICAL PROPOSALS AND AT THE BRIEFING CONFERENCE, AT WHICH A VIEWLEX REPRESENTATIVE WAS IN ATTENDANCE, THAT TIME WAS LIMITED AND THAT BIDDERS WOULD HAVE TO COMPLY BY THE CUTOFF DATE FOR FURNISHING THEIR PROPOSALS. THE REQUEST FOR TECHNICAL PROPOSALS STATES IN NO UNCERTAIN TERMS: "IT IS STRONGLY URGED THAT THE REQUIREMENTS FOR THE TECHNICAL PROPOSALS * * * BE STRICTLY COMPLIED WITH AND COMPLETE IN ALL RESPECTS.' FURTHER IT INDICATES THAT ONLY MARGINAL PROPOSALS WOULD BE PERMITTED TO BE BROUGHT UP TO ACCEPTABLE STANDARDS. SINCE YOUR PROPOSAL WAS CONSIDERED MATERIALLY DEFICIENT YOU WERE NOT REQUESTED TO SUPPLY ADDITIONAL DATA.

THE TWO-STEP PROCUREMENT FOLLOWED IN THIS CASE WAS IN ACCORDANCE WITH AIR FORCE PROCUREMENT INSTRUCTIONS 2-2100 ET SEQ. THESE REGULATIONS AND THEIR IMPLEMENTATION WERE PROMULGATED AT THE SUGGESTION AND RECOMMENDATION OF THE SUBCOMMITTEE FOR SPECIAL INVESTIGATIONS OF THE HOUSE ARMED SERVICES COMMITTEE. SEE REPORT ON STUDY OF ARMED SERVICES PROCUREMENT ACT, JUNE 15, 1957, P. 652 ET SEQ.UNDER THESE REGULATIONS, THE DETERMINATION OF THE ACCEPTABILITY OF TECHNICAL PROPOSALS IS VESTED IN THE PROCUREMENT OFFICIALS WHO ARE BEST QUALIFIED TO EVALUATE THEM. FURTHER, IT IS WELL SETTLED THAT THE RESPONSIBILITY FOR DETERMINING THE NEEDS OF THE GOVERNMENT AND WHETHER TECHNICAL PROPOSALS MEET THE GOVERNMENT'S REQUIREMENTS IS VESTED IN THE PROCURING AGENCIES ALONE. IN THIS CONNECTION, APPROPRIATE GOVERNMENT OFFICIALS HAVE DETERMINED THAT YOUR PROPOSAL WAS UNACCEPTABLE BECAUSE IT WAS MATERIALLY DEFICIENT IN RESPECTS REFERRED TO ABOVE, AND IN OTHERS THAT WERE REPORTED TO YOU BY AN ADMINISTRATIVE LETTER OF JUNE 14, 1960. IN ACCORDANCE WITH LONG- ESTABLISHED PRECEDENT, WE WILL NOT QUESTION THEIR DETERMINATION.

IT SHOULD BE NOTED FURTHER THAT THE VERY SITUATION INVOLVED HERE WAS BROUGHT TO THE ATTENTION OF THE SUBMITTEE FOR SPECIAL INVESTIGATIONS OF THE HOUSE ARMED SERVICES COMMITTEE BEFORE THE AFPI REGULATIONS AND IMPLEMENTATION WERE ISSUED. SEE PROBLEM 1, REPORT OF JUNE 15, 1957, SUPRA, P. 660. IT THUS APPEARS THAT THE BENEFITS FLOWING FROM THIS PROCEDURE WERE CONSIDERED BY THE SUBCOMMITTEE TO OUTWEIGH ANY SHORTCOMINGS. WE CANNOT DISAGREE WITH THIS VIEW. WE RECOGNIZE THAT A PROCEDURE THAT PERMITS PROCUREMENT OFFICIALS TO REASONABLY CIRCUMSCRIBE THE AREA OF CONSIDERATION OF PROPOSALS CAN BE NECESSARY IN CERTAIN CASES IF THEY ARE TO ACHIEVE THEIR EVALUATION AND CONSUMMATE THEIR COMMITMENTS WITHIN THEIR TIME LIMITATIONS. OBVIOUSLY, PROCUREMENTS CANNOT BE LEFT OPEN INDEFINITELY NOR BIDDERS PERMITTED TO ENGAGE IN ACTIVITY WHICH WOULD BRING ABOUT THAT RESULT.

IN 36 COMP. GEN. 809, WE CONSIDERED THE PROPRIETY OF A PROCUREMENT RESTRICTING ACCEPTABLE BIDS TO MANUFACTURERS WHO HAD PREVIOUSLY QUALIFIED THEIR PRODUCTS. IN THAT DECISION WE HELD THAT AN AWARD WAS NOT RENDERED ILLEGAL BECAUSE SOME OF THE BIDDERS WERE NOT ABLE TO QUALIFY THEIR PRODUCTS IN TIME FOR THE AWARD. AT PAGE 812, WE STATED:

* * * IT IS RECOGNIZED THAT THE DESIRABILITY OF FULL PUBLICITY MUST BE QUALIFIED BY THE CIRCUMSTANCES SURROUNDING THE INDIVIDUAL CASE, AND THAT EFFECT MUST BE GIVEN TO BONA FIDE ADMINISTRATIVE DETERMINATIONS THAT THE EXIGENCIES OF A PARTICULAR PROCUREMENT PROGRAM ARE SUCH THAT THE DELAY INVOLVED IN OBTAINING MAXIMUM COMPETITION WOULD ADVERSELY AFFECT THE GOVERNMENT'S INTERESTS.

THEREFORE, WE HAVE HELD THAT AN AWARD IS VALID EVEN THOUGH THE INVITATION PURSUANT TO WHICH IT WAS MADE PERMITTED SO SHORT A PERIOD BETWEEN ISSUANCE AND BID OPENING THAT SOME BIDDERS WERE UNABLE TO SUBMIT BIDS WITHIN THE TIME ALLOWED. * * * IT IS APPARENT FROM THE FOREGOING, THAT NEITHER THE LANGUAGE OF THE ARMED SERVICES PROCUREMENT REGULATION QUOTED ABOVE NOR THE PROCUREMENT STATUTES APPLICABLE IN THIS INSTANCE CAN BE INTERPRETED TO REQUIRE, AS YOU CONTEND, THAT ALL MANUFACTURERS OF A GIVEN PRODUCT MUST BE GIVEN THE OPPORTUNITY TO QUALIFY THEIR PRODUCTS PRIOR TO THE TIME AN AWARD IS MADE PURSUANT TO AN INVITATION RESTRICTING ACCEPTABLE BIDS TO QUALIFIED PRODUCTS. * * * (ITALICS SUPPLIED.)

AN ANALOGY CAN BE DRAWN BETWEEN THAT CASE AND THE IMMEDIATE PROCUREMENT. IN THAT CASE BIDDERS WERE REQUIRED TO HAVE THEIR PRODUCTS TESTED AND QUALIFIED BEFORE THEY COULD SUBMIT A BID. SIMILARLY, IN THE PRESENT MATTER, BIDDERS WERE REQUIRED TO HAVE THEIR TECHNICAL PROPOSALS APPROVED BEFORE THEY WOULD BE INVITED TO SUBMIT BIDS. IN VIEW OF THE SIMILARITY OF THE SITUATIONS, THE PRINCIPLES ENUNCIATED IN THE ABOVE CASE ARE APPLICABLE TO THIS PROCUREMENT.

ACCORDINGLY, INASMUCH AS UNDER THE PERTINENT REGULATIONS, THE PROCUREMENT OFFICIALS CHARGED WITH THE RESPONSIBILITY OF DETERMINING THE RESPONSIVENESS OF TECHNICAL REQUIREMENTS HAVE FOUND YOUR TECHNICAL PROPOSAL UNACCEPTABLE, YOUR SUBSEQUENT BID COULD NOT BE CONSIDERED RESPONSIVE, AND WAS THEREFORE PROPERLY DISREGARDED.

WITH RESPECT TO THE SUGGESTION IN YOUR LETTER OF JULY 15, 1960, THAT YOUR FIRM CAN OBTAIN A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION AND THAT SUCH A CERTIFICATE MUST BE ACCEPTED BY THE PROCURING AGENCY AS CONCLUSIVE EVIDENCE OF YOUR TECHNICAL ABILITY TO PERFORM, IT SHOULD BE NOTED THAT WHILE THE CERTIFICATE IS BINDING AS TO A FIRM'S CAPACITY AND CREDIT, NO QUESTION WAS RAISED IN EVALUATING YOUR TECHNICAL PROPOSAL AS TO YOUR CAPACITY OR CREDIT. RATHER THE PROPOSAL WAS TURNED DOWN BECAUSE YOU DID NOT SUPPLY SUFFICIENT INFORMATION AND DATA TO PERMIT THE AGENCY TO DETERMINE WHETHER THE CAMERA YOU PROPOSED TO SUPPLY MET THE GOVERNMENT'S REQUIREMENTS. CAPACITY AND CREDIT ARE MATTERS OF RESPONSIBILITY WHICH IS FOR CONSIDERATION ONLY AFTER THE BIDDER HAS SUBMITTED A PROPOSAL MEETING THE GOVERNMENT'S TECHNICAL NEEDS. THEREFORE, A CERTIFICATE OF COMPETENCY, BEING LIMITED IN ITS APPLICATION, WOULD NOT BE DETERMINATIVE OF THE MATTER INVOLVED HERE.

YOU HAVE PROTESTED ALSO AGAINST THE AWARD TO CHICAGO AERIAL INDUSTRIES ON THE BASIS THAT IT QUALIFIED ITS BID BECAUSE OF THE FOLLOWING STATEMENTS IN THE LETTER ACCOMPANYING THE BID:

4. MCP FORM 71-597A, PARA. FORM NO. 9-11 A.2 (1PATENT INDEMNIFICATION (1NOT PREDETERMINED) ( IS APPLICABLE, SINCE THIS ITEM HAS NOT BEEN SOLD AND WILL NOT BE OFFERED FOR SALE ON THE OPEN COMMERCIAL MARKET.

6. CHICAGO AERIAL INDUSTRIES RESERVES THE RIGHT TO REVISE THE PROPOSED UNIT SELLING PRICE OF ITEM 1 IN THE EVENT THAT THE SPECIFIED INCREMENTS ARE CHANGED.

THE STATEMENT THAT A PATENT INDEMNIFICATION CLAUSE OTHER THAN THE ONE IN THE BID FORM IS APPLICABLE DOES NOT APPEAR TO HAVE BEEN STATED AS A CONDITION. IT MERELY CALLS ATTENTION TO THE POSSIBLE APPLICABILITY OF ANOTHER STANDARD CLAUSE. AT THE MOST, THE STATEMENT IS AN EXPRESSION OF OPINION. THIS VIEW IS SUPPORTED BY TWX, DATED JUNE 27, 1960, CLARIFYING THIS POINT BY INDICATING ITS INTENTION TO ACCEPT EITHER CLAUSE.

YOU ALLEGE THAT THE BIDDER'S RESERVATION OF THE RIGHT TO REVISE THE UNIT SELLING PRICE IN THE EVENT INCREMENTS ARE CHANGED IS NONRESPONSIVE TO THE INVITATION PROVISION STATING:

BIDS SHALL BE SUBMITTED FOR THE INCREMENT QUANTITIES INDICATED BELOW. THE GOVERNMENT RESERVES THE RIGHT TO MAKE AWARD ON ANY QUANTITY WITHIN THE INCREMENT LIMITATION.

THE BIDDER'S RESERVATION AMOUNTS TO AN "ALL OR NONE" OFFER. WE HAVE CONSISTENTLY HELD THAT AN ,ALL OR NONE" OFFER IN A BID SUBMITTED IN RESPONSE TO AN INVITATION WHICH RESERVED TO THE GOVERNMENT THE RIGHT TO ACCEPT ANY ITEM OR GROUPS OF ITEMS DOES NOT RENDER THE BID UNRESPONSIVE TO THE INVITATION NOR PREVENT SUCH BID FROM BEING ACCEPTED. 35 COMP. GEN. 383.

IN THE CIRCUMSTANCES, WE WILL NOT TAKE ANY FURTHER ACTION IN THIS MATTER.

IN ACCORDANCE WITH YOUR REQUEST, THE TECHNICAL PROPOSAL THAT ACCOMPANIED YOUR LETTER OF JUNE 22, 1960, IS RETURNED HEREWITH.