B-181704, JAN 16, 1975, 54 COMP GEN 586

B-181704, JAN 16, 1975, 54 COMP GEN 586

CONTRACTS - NEGOTIATION - EVALUATION FACTORS - MANNING REQUIREMENTS - GOVERNMENT ESTIMATED BASIS LOW OFFER FOR MESS ATTENDANT SERVICES WHICH PROPOSED USE OF 64.5 PERCENT OF GOVERNMENT'S ESTIMATE WITHOUT PRESENTING DETAILED JUSTIFICATION REQUIRED BY REQUEST FOR PROPOSALS AS TO WHY OFFEROR COULD PERFORM AT THAT LEVEL WAS IMPROPERLY ACCEPTED; FACT THAT INCUMBENT CONTRACTOR SUBMITTED OFFER OF 73.9 PERCENT OF ESTIMATE, THAT SMALL BUSINESS ADMINISTRATION REPRESENTATIVE FELT OFFEROR COULD PERFORM AT THAT LEVEL, AND THAT OFFEROR WAS SUCCESSFUL SUBCONTRACTOR AT ANOTHER BASE DOES NOT CONSTITUTE CONTEMPLATED JUSTIFICATION. CONTRACTS - NEGOTIATION - EVALUATION FACTORS - MANNING REQUIREMENTS - DOLLAR HOUR RATIO WHERE REQUEST FOR PROPOSALS REQUIRES OFFEROR'S DOLLAR/HOUR RATIO TO EXCEED OFFEROR'S BASIC LABOR EXPENSE, OFFER CONTAINING DOLLAR/HOUR OF $3.77 AND BASIC LABOR EXPENSE OF $3.41 IS ACCEPTABLE. CONTRACTS - DISPUTES - CONFLICT BETWEEN ADMINISTRATIVE REPORT AND CONTRACTOR'S ALLEGATIONS IN ABSENCE OF ANY EVIDENCE TO CONTRARY, CONTRACTING OFFICER'S STATEMENT THAT NO TELEGRAM PROHIBITING "OFFSET BID" WAS EVER SENT TO ANY PARTY MUST BE ACCEPTED. CONTRACTS - NEGOTIATION - AWARDS - NOTICE CONTRACTING OFFICER IS NOT REQUIRED TO FOLLOW 5-DAY NOTIFICATION RULE TO ENABLE UNSUCCESSFUL OFFERORS TO FILE PROTEST CONCERNING SMALL BUSINESS SIZE STATUS AS PROVIDED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 703(B)(1) (1973 ED.) IN VIEW OF EXCEPTION IN ASPR 3-508.2(B) (1973 ED.) WHICH PERMITS AWARDS ON BASIS OF URGENCY WITHOUT PRIOR NOTICE. CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - MESS ATTENDANT SERVICES - MAN-HOUR ESTIMATES IN NAVY MESS ATTENDANT SOLICITATION, WHERE SUCCESSFUL OFFEROR PROPOSES TO USE 64.5 PERCENT OF GOVERNMENT ESTIMATE WITH NO JUSTIFICATION AS TO WHY JOB CAN BE PERFORMED AT THAT LEVEL AND CONTRACTING OFFICER ADMITS THAT IF THERE WERE MORE TIME AVAILABLE FOR NEGOTIATIONS GOVERNMENT ESTIMATE MIGHT HAVE BEEN IN NEED OF DOWNWARD REVISION, UNDER ARMED SERVICES PROCUREMENT REGULATION 3-805.4(C) (DPC #110, MAY 30, 1973) FAILURE TO REOPEN NEGOTIATION ON AMENDED ESTIMATE COUPLED WITH AWARD ON BASIS OF UNSUBSTANTIATED LOW OFFER REQUIRES THAT CONTRACT BE TERMINATED FOR CONVENIENCE OF GOVERNMENT.

IN THE MATTER OF DYNETERIA, INC., JANUARY 16, 1975:

DYNETERIA, INC. (DYNETERIA) PROTESTED THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS (RFP) N00140-74-R-0703, WHICH CALLED FOR THE PERFORMANCE OF MESS ATTENDANT SERVICES AT THE NAVAL SUPPORT ACTIVITY, PHILADELPHIA, PENNSYLVANIA, FOR THE PERIOD OF JULY 1, 1974, TO JUNE 30, 1975. THE RFP, ISSUED ON APRIL 26, 1974, RESULTED IN NINE PROPOSALS BEING RECEIVED BY JUNE 3, 1974, THE AMENDED DATE SPECIFIED FOR RECEIPT OF OFFERS. ALL NINE OFFERS WERE FOUND TO BE WITHIN THE COMPETITIVE RANGE.

ON JUNE 17, 1974, THE CONTRACTING OFFICER REQUESTED THAT BEST AND FINAL OFFERS BE SUBMITTED BY 4 P.M. ON JUNE 20, 1974. FIVE OFFERORS LOWERED THEIR PRICES AFTER RECEIPT OF THIS MESSAGE. DYNETERIA'S OFFER IN THE AMOUNT OF $280,960.16 REMAINED UNCHANGED, WHILE BROKEN LANCE ENTERPRISES, INC. (BROKEN LANCE), ULTIMATELY THE SUCCESSFUL CONTRACTOR, LOWERED ITS PRICE FROM $238,843 TO $196,163.04. AWARD WAS MADE ON JUNE 24, 1974, AND PERFORMANCE COMMENCED AS REQUIRED ON JULY 1, 1974.

DYNETERIA CONTENDS THAT ALL OFFERS WERE NOT EVALUATED ON AN EQUAL BASIS BY THE CONTRACTING OFFICE SINCE THE SOLICITATION REQUIRED THAT IF AN OFFEROR PROPOSED SUBSTANTIALLY FEWER HOURS THAN THE GOVERNMENT'S ESTIMATE THAT IT SPECIFICALLY SUBMIT DOCUMENTATION JUSTIFYING THE USE OF THOSE FEWER HOURS AND BROKEN LANCE FAILED TO DO SO. DYNETERIA ALSO MAINTAINS THAT THE AMOUNT OF MONEY BID BY BROKEN LANCE DOES NOT COVER, AS THE RFP REQUIRES, THE ACTUAL LABOR COSTS INVOLVED. DYNETERIA FURTHER ALLEGES THAT IT RECEIVED A WARNING FROM THE CONTRACTING OFFICER, IN THE FORM OF A TELEGRAM THAT ANY "OFFSET BID" RELATED TO INCREASING OR DECREASING OF MEALS SERVED WOULD BE CONSIDERED AS "NONRESPONSIVE." FINALLY, DYNETERIA OBJECTS TO THE CONTRACT BEING AWARDED WITHOUT 5 DAYS PRIOR NOTICE BEING GIVEN TO THE OTHER BIDDERS TO PROTEST THE SIZE STATUS OF THE SUCCESSFUL OFFEROR AS REQUIRED BY THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

THE RFP AS AMENDED STATED THAT ALL OFFERS WERE TO BE EVALUATED IN ACCORDANCE WITH SECTION D OF THE SOLICITATION. THAT SECTION READ AS FOLLOWS:

SECTION D - EVALUATION AND AWARD FACTORS

EVALUATION OF OFFEROR'S MANNING AND PRICES

(A) MANNING LEVELS OFFERED MUST BE SUFFICIENT TO PERFORM THE REQUIRED SERVICES. FOR THE PURPOSE OF EVALUATING PROPOSALS THE GOVERNMENT ESTIMATES THAT SATISFACTORY PERFORMANCE DURING THE CONTRACT PERIOD OF 365 DAYS WILL REQUIRE A TOTAL OF 80,676 MANNING HOURS (INCLUDING MANAGEMENT/SUPERVISION). THIS ESTIMATE IS BASED UPON APPROXIMATELY 247.50 HOURS AND A REPRESENTATIVE WEEKDAY MULTIPLIED BY 252 WEEKDAYS, AND 162 HOURS ON A REPRESENTATIVE WEEKEND/HOLIDAY MULTIPLIED BY 113 WEEKEND/HOLIDAYS. SUBMISSION OF MANNING CHARTS WHOSE TOTAL HOURS FALL BELOW THE TOTAL OF 80,732.50 HOURS FOR THE TOTAL OF 365 DAYS DURING THE CONTRACT PERIOD AS STATED ABOVE MAY RESULT IN REJECTION OF THE OFFER UNLESS THE OFFEROR CLEARLY SUBSTANTIATES THE MANNING DIFFERENCE WITH SPECIFIC DOCUMENTATION DEMONSTRATING THAT THE OFFEROR CAN PERFORM THE REQUIRED SERVICES SATISFACTORILY WITH FEWER HOURS. SUCH DOCUMENTATION SHOULD ACCOMPANY THE OFFER.

(B) FURTHER EVALUATION OF THE OFFERORS' PROPOSALS WILL BE BASED ON THE FOLLOWING CRITERIA:

(1) THE MANNING DISTRIBUTION IN SPACE/JOB CATEGORIES PRIOR TO, DURING, AND AFTER MEAL HOURS AND AT PEAK PERIODS MUST REPRESENT AN EFFECTIVE, WELL PLANNED MANAGEMENT APPROACH TO THE EFFICIENT UTILIZATION OF MANPOWER RESOURCES IN PERFORMING THE SERVICES REQUIRED; AND

(2) THE TOTAL MANHOURS OFFERED MUST BE SUPPORTED BY THE PRICE OFFERED WHEN COMPARED AS FOLLOWS. THE TOTAL OF ALL HOURS OFFERED FOR THE TOTAL DAYS DURING THE CONTRACT PERIOD WILL BE DIVIDED INTO THE TOTAL OFFERED PRICE (LESS ANY EVALUATED PROMPT PAYMENT DISCOUNT) TO ASSURE THAT THIS DOLLAR/HOUR RATIO IS AT LEAST SUFFICIENT TO COVER THE FOLLOWING BASIC LABOR EXPENSES:

(I) THE BASIC WAGE RATE;

(II) IF APPLICABLE, FRINGE BENEFITS, (HEALTH AND WELFARE, VACATION, AND HOLIDAYS) (A FACTOR OF 5% OF THE BASIC WAGE RATE WILL BE USED IN THIS EVALUATION TO COVER VACATION AND HOLIDAYS); AND

(III) OTHER EMPLOYEE-RELATED EXPENSES AS FOLLOWS:

(A) FICA (INCLUDING HOSPITAL INSURANCE) AT THE RATE OF 5.85% (THIS PERCENTAGE WILL BE APPLIED TO THE BASIC WAGE RATE PLUS THE HEALTH AND WELFARE BENEFITS, UNLESS THE OFFEROR SUBMITS SATISFACTORY EVIDENCE THAT THESE BENEFITS ARE NOT PAID TO EMPLOYEES IN CASH);

(B) UNEMPLOYMENT INSURANCE (APPLIED TO THE BASIC WAGE RATE) AT THE RATE SET FORTH BY THE OFFEROR IN THE PROVISION IN SECTION B OF THIS SOLICITATION ENTITLED "OFFEROR'S STATEMENT AS TO UNEMPLOYMENT INSURANCE RATE AND WORKMEN'S COMPENSATION INSURANCE RATE APPLICABLE TO HIS COMPANY"; AND

(C) WORKMEN'S COMPENSATION INSURANCE (APPLIED TO THE BASIC WAGE RATE) AT THE RATE SET FORTH BY THE OFFEROR IN THE PROVISION REFERRED TO IN (B) ABOVE.

FAILURE OF THE PRICE OFFERED TO THUS SUPPORT THE OFFEROR'S MANNING CHARTS MAY RESULT IN REJECTION OF THE PROPOSAL.

(C) AWARD WILL BE MADE TO THE RESPONSIBLE OFFEROR WHOSE PROPOSAL, MEETING THE CRITERIA SET FORTH IN (A) AND (B) ABOVE, OFFERS THE LOWEST EVALUATED TOTAL PRICE AFTER APPLICATION OF THE EVALUATION FACTORS FOR MONTHLY VOLUME VARIATIONS AS PROVIDED IN SECTION E.

NOTE TO OFFEROR: THE PURPOSE OF THE ABOVE PRICE-TO-HOURS EVALUATION IS TO ASSURE:

(I) THAT MANNING LEVELS OFFERED ARE NOT UNREALISTICALLY INFLATED IN HOPES OF SECURING A MORE FAVORABLE PROPOSAL EVALUATION; AND

(II) THAT AWARD IS NOT MADE AT A PRICE SO LOW IN RELATION TO BASIC PAYROLL AND RELATED EXPENSES ESTABLISHED BY LAW AS TO JEOPARDIZE SATISFACTORY PERFORMANCE.

NOTHING IN THIS SECTION D SHALL BE CONSTRUED AS LIMITING THE CONTRACTOR'S RESPONSIBILITY FOR FULFILLING ALL OF THE REQUIREMENTS SET FORTH IN THIS CONTRACT.

THE RECORD SHOWS THAT THE ORIGINAL OFFER FROM BROKEN LANCE INDICATED THAT 80,676 HOURS (THE GOVERNMENT'S ESTIMATE) WOULD BE PROVIDED AND ACCORDINGLY THE OFFER CONTAINED MANNING CHARTS REFLECTING MANHOURS IDENTICAL TO THE GOVERNMENT ESTIMATES OF 247.5 MANHOURS FOR A REPRESENTATIVE WEEKDAY AND 162 MANHOURS FOR A REPRESENTATIVE WEEKEND/HOLIDAY. HOWEVER, BROKEN LANCE'S BEST AND FINAL OFFER STATED ITS BELIEF THAT SATISFACTORY SERVICE COULD BE ACCOMPLISHED WITH TOTAL MANNING OF ONLY 52,004.5 HOURS (164 MANHOURS PER WEEKDAY AND 94.5 MANHOURS PER DAY ON WEEKENDS). ACCORDINGLY, THE TOTAL MANHOURS PROPOSED BY BROKEN LANCE WAS ONLY 64.15 PERCENT OF THE GOVERNMENT'S ESTIMATE BUT MORE IMPORTANTLY WAS SUBMITTED WITH NO DETAILED DOCUMENTATION TO JUSTIFY THE PROPOSED USE OF LESS THAN THE GOVERNMENT'S ESTIMATE. THE CONTRACTING OFFICER STATES THAT: "NO SUCH DOCUMENTATION WAS FURNISHED BECAUSE THE REVISED OFFER WAS SUBMITTED BY TELEGRAM."

NOTWITHSTANDING THIS FAILURE TO JUSTIFY, THE CONTRACTING OFFICER CONCLUDED, THAT SATISFACTORY PERFORMANCE OF THE CONTRACT WOULD BE POSSIBLE WITH SUBSTANTIALLY FEWER HOURS THAN THOSE CONTAINED IN THE GOVERNMENT ESTIMATE. THIS POSITION WAS BASED PRIMARILY ON THE FACT THAT THE INCUMBENT CONTRACTOR PROPOSED 59,598 HOURS (73.9 PERCENT OF THE GOVERNMENT ESTIMATE) AND HAD INCLUDED IN ITS PROPOSAL A STATEMENT THAT IT WAS CURRENTLY PERFORMING THE CONTRACT WITHIN THOSE MANHOUR LEVELS.

MOREOVER, THE CONTRACTING OFFICER PRIOR TO AWARD (1) RECEIVED INFORMATION FROM REPRESENTATIVES OF THE SMALL BUSINESS ADMINISTRATION WHICH "ASSURED HER THAT BROKEN LANCE'S REVISED OFFER WAS ENTIRELY VALID AND BASED ON A THOROUGH AND KNOWLEDGEABLE REVIEW OF PERFORMANCE REQUIREMENTS;" AND (2) KNEW THAT BROKEN LANCE WAS CURRENTLY A SATISFACTORY SUBCONTRACTOR TO SBA FOR MESS ATTENDANT SERVICES. ON THE ABOVE NOTED BASES, THE CONTRACTING OFFICER MADE AWARD TO BROKEN LANCE. THE CONTRACTING OFFICER'S REPORT DOES NOTE, HOWEVER, THAT "IF MORE TIME HAD BEEN AVAILABLE FOR THE CONDUCT OF NEGOTIATIONS IT MIGHT HAVE BEEN DESIRABLE TO CONSIDER WHETHER THE GOVERNMENT ESTIMATE OF NECESSARY MANHOURS SHOULD HAVE BEEN REVISED IN LIGHT OF THE RESPONSES RECEIVED."

AS NOTED ABOVE, THE RFP STATES THAT DOCUMENTATION INDICATING THE JUSTIFICATION FOR PROPOSING LESS THAN THE GOVERNMENT'S ESTIMATE SHOULD ACCOMPANY THE OFFER, (SECTION D, SUPRA). THE RFP STATES THAT A FAILURE TO FURNISH SAID MATERIAL MAY RESULT IN THE REJECTION OF AN OFFER PROPOSING LESS THAN THE GOVERNMENT'S ESTIMATE, OUR OFFICE HAS, HOWEVER, FOUND THAT THE SUBMISSION OF AN OFFER OF LESS THAN WHAT THE GOVERNMENT HAS STATED IS ITS INITIAL CUTOFF POINT WITHOUT SUCH SUBSTANTIATION IS IMPROPER (HERE THE CUTOFF POINT WAS 100 PERCENT OF THE GOVERNMENT ESTIMATE WHILE IN PREVIOUS CASES, SEE INFRA, 95 PERCENT OF THE TOTAL GOVERNMENT ESTIMATE WAS VIEWED AS THE CUTOFF). MATTER OF ABC MANAGEMENT SERVICES, INC., 53 COMP. GEN. 710 (1974) AT 715-716. IN MATTER OF ABC MANAGEMENT SERVICES, INC., SUPRA, THE RFP PROVIDED THAT IF PROPOSAL EXHIBITING LESS THAN 95 PERCENT OF THE GOVERNMENT'S ESTIMATE "MAY RESULT IN THE REJECTION OF THE OFFER WITHOUT FURTHER NEGOTIATIONS UNLESS THE OFFEROR CLEARLY SUBSTANTIATES THE MANNING DIFFERENCE WITH SPECIFIC DOCUMENTATION DEMONSTRATING THAT THE OFFEROR CAN PERFORM THE REQUIRED SERVICE WITH SUCH FEWER HOURS." THERE WE HELD THAT THE SUBMISSION OF AN OFFER OF 94.94 PERCENT OF THE GOVERNMENT'S ESTIMATE WITHOUT ANY SUBSTANTIATION WAS IMPROPER. ACCORDINGLY, IF THE FACT THAT AN OFFEROR FAILED TO JUSTIFY A .06 PERCENT DEVIATION MANDATED REJECTION IN MATTER OF ABC MANAGEMENT SERVICES, INC., SUPRA, WE FEEL EVEN STRONGER THAT THE FAILURE TO JUSTIFY A 35.5 PERCENT DEVIATION IN THE CASE AT HAND MUST RENDER THE AWARD IMPROPER.

IT MAY BE THAT BROKEN LANCE AS AN EXPERIENCED CONTRACTOR DID UNDERSTAND THE REQUIREMENTS OF THE TASK. HOWEVER, UNLESS UNDER THE TERMS OF THE SOLICITATION IT DOCUMENTED THE SPECIFIC REASONS WHY IT FELT IT COULD PERFORM AT LESS THAN THE GOVERNMENT ESTIMATE, IRRESPECTIVE OF ANY VIEWS OF ANY SBA OFFICIALS, THAT OFFER COULD NOT PROPERLY BE ACCEPTED.

AS TO DYNETERIA'S ASSERTION THAT BROKEN LANCE'S OFFERED HOURS ARE NOT SUPPORTED BY THE PROPOSED PRICE IN ACCORDANCE WITH SECTION DB)(2) OF THE RFP, WE CALCULATE BROKEN LANCE'S BASIC LABOR COSTS AS FOLLOWS:

PER HOUR

MINIMUM HOURLY WAGE $2.91

HEALTH AND WELFARE 0.12

VACATION AND HOLIDAY (5 PERCENT OF MINIMUM WAGE) 0.145

FICA (5.85 PERCENT OF MINIMUM WAGE AND HEALTH AND

WELFARE) 0.177

UNEMPLOYMENT INSURANCE (1 PERCENT) 0.029

WORKMAN'S COMPENSATION (1 PERCENT) 0.029

TOTAL (3.41) (FN1) 3.41

SECONDLY WE COMPUTE BROKEN LANCE'S DOLLAR/HOUR RATIO TO BE:

$196,163.04 (PRICE LESS ANY EVALUATED DISCOUNT)/52,004.5 (HOURS OFFERED) $3.772

SINCE BROKEN LANCE'S DOLLAR/HOUR RATIO $3.77) EXCEEDS ITS BASIC LABOR COST ($3.41), WE SEE NO BASIS TO SUSTAIN DYNETERIA'S PROTEST IN THIS REGARD.

DYNETERIA FURTHER ASSERTS THAT IT RECEIVED A TELEGRAM FROM THE CONTRACTING OFFICER PROHIBITING AN "OFFSET BID" RELATED TO THE INCREASE OR DECREASE OF MEALS SERVED. HOWEVER, IN ABSENCE OF ANY EVIDENCE TO THE CONTRARY, WE MUST ACCEPT THE CONTRACTING OFFICER'S STATEMENT THAT HE NEVER COMMUNICATED WITH DYNETERIA OR ANY OTHER OFFEROR IN ANY SUCH MANNER.

FINALLY, DYNETERIA'S OBJECTION THAT IT DID NOT HAVE THE OPPORTUNITY TO PROTEST THE SMALL BUSINESS STATUS OF BROKEN LANCE IS APPARENTLY BASED ON ASPR SEC. 1-703(B)(1) (1973 ED.), WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

*** IN PROCUREMENTS REQUIRING THE SUBMISSION OF PROPOSALS, THE CONTRACTING OFFICER SHALL, EXCEPT UNDER THE CIRCUMSTANCES SPECIFIED IN 3- 508.2(B), NOTIFY THE APPARENTLY UNSUCCESSFUL OFFERORS IN WRITING OF THE NAME AND LOCATION OF THE APPARENTLY SUCCESSFUL OFFERORS) AND ESTABLISH A DEADLINE DATE (AT LEAST FIVE WORKING DAYS PLUS A REASONABLE TIME FOR THE NOTICE TO REACH THE UNSUCCESSFUL OFFERORS) BY WHICH ANY SIZE PROTEST ON THE INSTANT PROCUREMENT MUST BE RECEIVED.

HOWEVER, ASPR SEC. 3-508.2(B) (1973 ED.) PROVIDES THAT THE NOTIFICATION PROCEDURE SHALL NOT APPLY TO ANY URGENT PROCUREMENT ACTION.

THE CONTRACTING OFFICER MADE A WRITTEN DETERMINATION ON JUNE 24, 1974, THAT PREAWARD NOTICE TO UNSUCCESSFUL OFFERORS AS REQUIRED BY ASPR WOULD NOT BE ISSUED SINCE PROMPT AWARD OF THE CONTRACT WITHOUT DELAY WAS NECESSARY IN ORDER FOR THE PROGRAM TO BE CONTINUED ON JULY 1, 1974, WITHOUT INTERRUPTION. HE NOTED THAT BEST AND FINAL OFFERS WERE DUE NO LATER THAN 4 P.M., JUNE 20, 1974, AND THAT THE EVALUATION OF THESE RESPONSES WAS NOT COMPLETED UNTIL JUNE 24, 1974. AWARD WAS MADE BECAUSE THE SUCCESSFUL OFFEROR NEEDED IMMEDIATE NOTICE TO PROCEED IN ORDER THAT SUFFICIENT PERSONNEL COULD BE HIRED AND AVAILABLE FOR SERVICE WHEN THE OLD CONTRACT EXPIRED. SINCE BROKEN LANCE HAD BEEN PREVIOUSLY IDENTIFIED AS A MINORITY OWNED SMALL BUSINESS FIRM BY THE SBA AND WAS CURRENTLY PERFORMING A MESS ATTENDANT CONTRACT AS A SMALL BUSINESS SUBCONTRACTOR, THE CONTRACTING OFFICER CONCLUDED THAT AN AFFIRMATIVE DETERMINATION OF BROKEN LANCE'S SMALL BUSINESS STATUS HAD BEEN MADE BY SBA. UNDER THE CIRCUMSTANCES, THIS PROCUREMENT WOULD, IN OUR OPINION, COME WITHIN THE EXCEPTION TO PRIOR NOTICE PROVIDED IN ASPR SEC. 3-508.2(B) (1973 ED.). NOTED ABOVE, WE FEEL THAT THE AWARD TO BROKEN LANCE WAS IMPROPER. THE SUCCESSFUL OFFEROR PROPOSED ONLY 64.5 PERCENT OF THE GOVERNMENT'S ESTIMATE WHICH WAS ACCEPTED IN THE ABSENCE OF THE JUSTIFICATION REQUIRED BY THE RFP AND EVEN THOUGH THE CONTRACTING OFFICER ADMITS THAT THE GOVERNMENT'S ESTIMATE MIGHT HAVE BEEN IN NEED OF DOWNWARD REVISION. THE CASE AT HAND IS DISTINGUISHABLE FOR OTHER SITUATIONS WHERE OFFERS SUBSTANTIALLY LESS THAN THE GOVERNMENT ESTIMATE HAVE BEEN ACCEPTED - MATTER OF ABC MANAGEMENT SERVICES, INC., TIDEWATER MANAGEMENT SERVICES, INC., CHEMICAL TECHNOLOGY, INC., 53 COMP. GEN. 656 (1974); 53 ID. 198 (1973); B 179041, OCTOBER 26, 1973 - FOR IN EACH OF THOSE CASES THE SUCCESSFUL OFFEROR SUBMITTED THE REQUIRED JUSTIFICATION. THERE, WE FELT THAT IN EACH SITUATION THE GOVERNMENT BELIEVED THROUGHOUT THAT ITS GOOD-FAITH ESTIMATE WAS A REASONABLY ACCURATE MEASURE OF REQUIRED PERFORMANCE BUT THAT THE AWARDEE HAD BEEN ABLE TO DEMONSTRATE, AS PROVIDED FOR IN THE RFP, THAT ANOTHER REASONABLE MEASURE OF REQUIRED PERFORMANCE EXISTED.

THE ACCEPTANCE IN THIS CASE OF BROKEN LANCE'S OFFER WITHOUT JUSTIFICATION WHILE A VIOLATION OF THE RFP ALSO INDICATES TO US THE CONTRACTING OFFICER'S BELIEF, WHICH WAS SUBSEQUENTLY STATED, THAT THE GOVERNMENT ESTIMATE WAS OVERSTATED.

ASPR SEC. 3-805.4(C) (DPC #110, MAY 30, 1973) STATES THAT:

(C) WHEN A PROPOSAL CONSIDERED TO BE MOST ADVANTAGEOUS TO THE GOVERNMENT INVOLVES A DEPARTURE FROM THE STATED REQUIREMENTS, ALL OFFERORS SHALL BE GIVEN AN OPPORTUNITY TO SUBMIT NEW OR AMENDED PROPOSALS ***ON THE BASIS OF THE REVISED REQUIREMENTS, PROVIDED THIS CAN BE DONE WITHOUT REVEALING TO THE OTHER OFFERORS THE SOLUTION PROPOSED IN THE ORIGINAL DEPARTURE OR ANY INFORMATION WHICH IS ENTITLED TO PROTECTION UNDER 3-507.1.

ACCORDINGLY, SUBSEQUENT TO RECEIPT OF BEST AND FINAL OFFERS THE CONTRACTING OFFICER SHOULD HAVE AMENDED THE RFP TO DOWNWARDLY ADJUST THE GOVERNMENT ESTIMATE AND REOPEN NEGOTIATIONS. THE CONTRACTING OFFICER'S BELIEF THAT THERE WAS NO TIME TO ACCOMPLISH THIS AMENDMENT AND REOPENING SINCE BEST AND FINALS WERE RECEIVED ON JUNE 20 AND PERFORMANCE WAS NECESSARY AS OF JULY 1, NEGLECTS THE FACT THAT AS IN MANY OTHER SUCH SITUATIONS, E.G., MATTER OF ABC FOOD SERVICE, INC., B 181978, DECEMBER 17, 1974, THE NAVY CAN AND WILL HOLD OVER AN INCUMBENT CONTRACTOR FOR A SHORT PERIOD SO AS TO PERMIT FURTHER NECESSARY NEGOTIATIONS. IT SHOULD BE NOTED THAT THE INCUMBENT CONTRACTOR DID NOT APPEAR UNWILLING TO CONTINUE PERFORMING AS IT WAS ALSO A PARTICIPANT IN THE INSTANT SOLICITATION.

WE BELIEVE THAT THE FAILURE TO REOPEN NEGOTIATIONS ON AN AMENDED GOVERNMENT ESTIMATE COUPLED WITH THE FACT THAT THE AWARD WAS MADE ON THE BASIS OF AN UNSUBSTANTIATED LOW MANHOUR OFFER, REQUIRES US TO RECOMMEND THAT THE INSTANT CONTRACT BE IMMEDIATELY TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT SINCE ALL OFFERORS DID NOT COMPETE ON AN EQUAL BASIS. WOULD FURTHER RECOMMEND THAT THE NAVY RECOMPETE THE REMAINING PORTION OF THE CONTRACT REQUIREMENT.

SINCE THIS DECISION CONTAINS A RECOMMENDATION FOR CORRECTIVE RELIEF A COPY IS BEING FORWARDED TO EACH OF THE COMMITTEES REFERENCED IN SEC. 236 OF THE LEGISLATIVE REORGANIZATION ACT OF 1970, 31 U.S. CODE 1176.

FN1 THE AGENCY CALCULATED BROKEN LANCE'S BASIC LABOR COST AS $3.44, HAVING ADDED $0.03 TO THE PROPOSERS' COSTS DUE TO THE WAGE DETERMINATION REQUIREMENT TO PAY $0.03 PER HOUR TO EMPLOYEES FOR UNIFORM MAINTENANCE. WHILE THERE APPEARS TO BE NO PREJUDICE ATTACHED TO INCLUDING THIS UNIFORM MAINTENANCE FACTOR IN THE EVALUATION, THIS FACTOR WAS NOT STATED IN SECTION D OF THE RFP. IF THE NAVY DESIRED TO INCLUDE THE UNIFORM MAINTENANCE FACTOR IN ITS SECTION D FORMULA, IT WOULD HAVE BEEN PREFERABLE TO HAVE AMENDED SECTION D TO SO STATE.