B-178001, FEB 14, 1974, 53 COMP GEN 593

B-178001, FEB 14, 1974, 53 COMP GEN 593

CONTRACTS - NEGOTIATION - COMPETITION - DISCUSSION WITH ALL OFFERORS REQUIREMENT - PROPOSAL REVISIONS THE REJECTION OF A PROPOSAL INITIALLY DETERMINED TO BE WITHIN A COMPETITIVE RANGE ON THE BASIS OF ORAL STATEMENTS MADE BY THE OFFEROR DURING THE COURSE OF DISCUSSION WAS IMPROPER SINCE THE OFFEROR WAS NOT AFFORDED AN OPPORTUNITY TO SUBMIT A REVISED PROPOSAL. WHILE THE DURATION OF A NEGOTIATION SESSION WITH AN OFFEROR IS NOT DETERMINATIVE OF WHETHER MEANINGFUL DISCUSSIONS WERE CONDUCTED, AFFORDING THE OFFEROR THE OPPORTUNITY TO SUBMIT A REVISED PROPOSAL IS AN ESSENTIAL ELEMENT OF THE NEGOTIATING PROCESS REQUIRED BY 10 U.S.C. 2304(G). HOWEVER, THE PROCUREMENT SHOULD NOT BE DISTURBED SINCE THE RECORD SHOWS THE AWARD WAS MADE TO THE OFFEROR SUBMITTING A SUPERIOR PROPOSAL AND THE AGENCY HAD SERIOUS DOUBTS AS TO PROTESTER'S ABILITY TO PERFORM CONTRACT. MODIFIED BY 53 COMP. GEN. - (B-178001, MAY 14, 1974). CONTRACTS - NEGOTIATION - NOTICE TO OFFEROR OF DISQUALIFICATION WHERE AN AWARD WAS NOT MADE UNDER THE REQUEST FOR PROPOSALS UNTIL 20 DAYS AFTER THE PROTESTER'S PROPOSAL WAS DETERMINED TO BE UNACCEPTABLE, PARAGRAPH 3-508.2 OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIRED THE AGENCY TO NOTIFY THE PROTESTER THAT ITS PROPOSAL WAS REJECTED. HOWEVER, ANY VIOLATION OF THE REGULATION IS PROCEDURAL AND DOES NOT AFFECT THE AWARD.

IN THE MATTER OF OPERATIONS RESEARCH, INCORPORATED, FEBRUARY 14, 1974:

CONTRACT NO. N61339-73-C-0097 WAS AWARDED TO THE IBM CORPORATION (IBM) UNDER REQUEST FOR PROPOSALS (RFP) NO. N61339-73-R-0041, ISSUED ON OCTOBER 17, 1972, BY THE NAVAL TRAINING EQUIPMENT CENTER (NTEC) ORLANDO, FLORIDA. THE SOLICITATION INVITED PROPOSALS ON A COST-PLUS-A FIXED-FEE BASIS FOR RESEARCH AND DEVELOPMENT SERVICES IN CONNECTION WITH THE "DETERMINATION OF THE TECHNOLOGIES POTENTIALLY SUPPORTIVE OF THE DESIGN, OPERATIONS, EVALUATIONS, AND REDESIGN OF THE NAVY TRAINING SYSTEM." THIS OBJECTIVE IS TO BE ACCOMPLISHED IN THREE PHASES, WITH PHASE I-ANALYSIS OF THE NAVY'S EDUCATION AND TRAINING SYSTEMS BEING THE SUBJECT OF THE PROCUREMENT.

ON THE NOVEMBER 20, 1972, CLOSING DATE, FOUR PROPOSALS WERE RECEIVED. DECEMBER 1, 1972, THE NAVY PREPARED A LIST OF "TECHNICAL CLARIFICATION" QUESTIONS FOR EACH OF THE FOUR OFFERORS. ALL THE OFFERORS' RESPONSES TO THESE QUESTIONS WERE EVALUATED BY COGNIZANT TECHNICAL PERSONNEL AND IT WAS DETERMINED THAT ONLY THE PROPOSALS SUBMITTED BY OPERATIONS RESEARCH, INCORPORATED (ORI) AND IBM WERE ACCEPTABLE "BUT REQUIRE FURTHER DISCUSSION." ACCORDINGLY, ONLY THOSE TWO FIRMS WERE INVITED TO ATTEND "TECHNICAL CLARIFICATION" CONFERENCES, HELD SEPARATELY FOR ORI ON JANUARY 8, 1973, AND FOR IBM ON JANUARY 9, 1973, AND THE OTHER TWO OFFERORS WERE ADVISED THAT THEIR PROPOSALS WERE UNACCEPTABLE. THE RESPONSES OF THE OFFERORS TO QUESTIONS POSED AT THESE CONFERENCES WERE EVALUATED, RESULTING IN THE AWARD OF A CONTRACT ON FEBRUARY 1, 1973, TO IBM AT AN ESTIMATED COST OF $309,828, INCLUDING FEE.

COUNSEL FOR ORI CONTENDS THAT THE AWARD TO IBM WAS UNLAWFUL BECAUSE THE NAVY DID NOT CONDUCT FULL AND MEANINGFUL NEGOTIATIONS WITH ORI AS REQUIRED BY STATUTE (10 U.S.C. 2304(G)) AND APPLICABLE REGULATIONS. COUNSEL ARGUES THAT SINCE THE RECORD INDICATES THAT THE ORI PROPOSAL WAS NOT CONSIDERED TECHNICALLY UNACCEPTABLE AFTER THE "TECHNICAL CLARIFICATION" CONFERENCE OF JANUARY 8, 1973, ORI WAS STILL WITHIN THE COMPETITIVE RANGE. IN THIS REGARD, COUNSEL POINTS OUT THAT ALTHOUGH THE MEMORANDUM OF THE FINAL EVALUATION DATED JANUARY 9, 1973, SHOWS THAT IBM'S TECHNICAL SCORE ROSE TO 95.7 AND ORI'S TECHNICAL SCORE FELL TO 77.7 AS A RESULT OF THE "TECHNICAL CLARIFICATIONS" CONFERENCES IN JANUARY, THE MEMORANDUM DOES NOT STATE THAT ORI'S PROPOSAL WAS UNACCEPTABLE AND INCLUDES THE FOLLOWING STATEMENT:

ALL PROPOSALS RECEIVING AN OVERALL RATING OF 75%, OR LESS, *** ARE CONSIDERED TO BE UNACCEPTABLE FROM A TECHNICAL STANDPOINT.

THEREFORE, COUNSEL CONCLUDES THAT ORI'S PROPOSAL MUST HAVE BEEN CONSIDERED ACCEPTABLE. ACCORDINGLY, HE CONTENDS THAT 10 U.S.C. 2304(G) OBLIGED THE AGENCY TO CONDUCT FURTHER NEGOTIATIONS WITH ORI, AND THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1(B) REQUIRED THE AGENCY TO ESTABLISH A COMMON CUT-OFF FOR NEGOTIATIONS WITH BOTH OFFERORS AND TO REQUEST THEM TO SUBMIT BEST AND FINAL OFFERS. COUNSEL POINTS OUT THAT AFTER JANUARY 8, 1973, AGENCY PERSONNEL HELD NO DISCUSSIONS WITH ORI, DID NOT ADVISE IT THAT NEGOTIATIONS WERE TERMINATED, DID NOT ASK ORI'S LOWER COST ESTIMATE. IN SUPPORT OF HIS POSITION THAT SUCH FAILURES WERE VIOLATIVE OF THE APPLICABLE STATUTE, COUNSEL CITES 50 COMP. GEN. 117 (1970), WHERE WE HELD THAT THE AGENCY FAILED TO OBSERVE THE ESTABLISHED PRINCIPLES OF NEGOTIATED PROCUREMENT WHEN IT AWARDED A CONTRACT TO A "SUPERIOR" OFFEROR WITHOUT HOLDING COST OR FULL TECHNICAL DISCUSSIONS WITH OTHER "WEAK" THOUGH ACCEPTABLE OFFERORS, AND FAILED TO ESTABLISH A COMMON CUT-OFF FOR NEGOTIATIONS AND SOLICIT BEST AND FINAL OFFERS FROM ALL ACCEPTABLE OFFERORS.

THE NAVY CONCEDES THAT ORI WAS CONSIDERED TO BE WITHIN THE COMPETITIVE RANGE AFTER THE DECEMBER CLARIFICATION BUT ARGUES, CITING 52 COMP. GEN. 198 (1972), THAT IT WAS NOT REQUIRED TO HOLD FURTHER NEGOTIATIONS WITH ORI AFTER THE JANUARY 8, 1973 CONFERENCE BECAUSE, AS A RESULT OF ORI'S RESPONSES DURING THE CONFERENCE, ITS PROPOSAL WAS NO LONGER CONSIDERED WITHIN THE COMPETITIVE RANGE. THE NAVY STATES THAT IT WAS CONCLUDED THAT MEANINGFUL DISCUSSIONS COULD NOT BE CONDUCTED WITH ORI "ONCE IT WAS DETERMINED THAT THE TECHNICAL PROPOSAL WAS MATERIALLY DEFICIENT."

AS ORI'S COUNSEL POINTS OUT, SECTION 2304(G) OF TITLE 10 OF THE U.S.C. REQUIRES THAT WRITTEN OR ORAL DISCUSSIONS BE HELD WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE. WE HAVE HELD THAT IN ORDER TO HAVE MEANINGFUL DISCUSSIONS WITHIN THE INTENT OF 2304(G), OFFERORS SHOULD BE ADVISED OF THE AREAS IN WHICH THEIR PROPOSALS HAVE BEEN JUDGED DEFICIENT SO THAT THEY MAY HAVE THE OPPORTUNITY TO SATISFY THE GOVERNMENT'S REQUIREMENTS, AND THEREBY THE GOVERNMENT MAY OBTAIN THE FULL BENEFITS OF COMPETITION. COMP. GEN. 29 (1967); ID. 336 (1967); 51 ID. 431 (1972); 52 ID. 466 (1973).

AT THE SAME TIME WE HAVE RECOGNIZED THAT THE POINTING OUT OF DEFICIENCIES DURING THE COURSE OF NEGOTIATIONS COULD LEAD TO TECHNICAL TRANSFUSION AND TECHNICAL LEVELING, AND THAT THESE PRACTICES ARE DETRIMENTAL TO THE COMPETITIVE PROCESS. THEREFORE, WE HAVE HELD THAT NO FIXED, INFLEXIBLE RULE CAN BE USED TO CONSTRUE THE REQUIREMENT IN 2304(G) FOR WRITTEN OR ORAL DISCUSSIONS; RATHER THE CONTENT AND EXTENT OF DISCUSSIONS NEEDED TO MEET THE REQUIREMENT IS A MATTER OF JUDGMENT PRIMARILY FOR DETERMINATION BY THE PROCURING AGENCY. 51 COMP. GEN. 621 (1972); SEE ASPR 3-805.3.

OUR DECISION OF 52 COMP. GEN. 198, SUPRA, WAS CONSISTENT WITH THESE PRINCIPLES. IN THAT CASE THE PROTESTER WAS INITIALLY DETERMINED TO BE WITHIN THE COMPETITIVE RANGE. EXAMINATION OF THE PROTESTER'S REVISED PROPOSAL, HOWEVER, REVEALED SERIOUS SHORTCOMINGS IN THE PROTESTER'S APPROACH TO THE CONTRACT WORK. THE REVISED PROPOSAL WAS FOUND BY THE AGENCY EVALUATORS TO BE DEFICIENT IN MANY AREAS, AND IT WAS EVIDENT THAT THE PROTESTER COULD HAVE SATISFIED THE AGENCY'S MISGIVINGS AT THAT POINT "ONLY THROUGH COMPLETELY REVISING ITS COST AND TECHNICAL PROPOSALS." (IBID, AT P. 208.) THEREFORE, WE HELD THAT THE AGENCY WAS NOT REQUIRED TO HOLD FURTHER DISCUSSIONS WITH THE PROTESTER MERELY BECAUSE ITS PROPOSAL INITIALLY HAD BEEN DETERMINED TO BE WITHIN THE COMPETITIVE RANGE. THUS WE STATED (AT P. 208) THAT, "WHETHER THE PROPOSAL IS INITIALLY DETERMINED TO BE WITHIN THE COMPETITIVE RANGE OR WHETHER THE PROPOSAL IS INITIALLY REJECTED, THE CONTRACTING AGENCY SHOULD NOT BE REQUIRED TO HOLD DISCUSSIONS WITH AN OFFEROR ONCE IT IS DETERMINED THAT HIS PROPOSAL IS OUTSIDE THE ACCEPTABLE RANGE."

HOWEVER, WE DO NOT BELIEVE THAT OUR HOLDING IN 52 COMP. GEN. 198, SUPRA, IS APPLICABLE WHERE, AS HERE, A REVISED PROPOSAL HAS NOT BEEN SUBMITTED AND EVALUATED. WE HAVE NEVER HELD THAT A PROPOSAL INITIALLY DETERMINED TO BE WITHIN THE COMPETITIVE RANGE MAY BE DETERMINED TO BE NO LONGER WITHIN THAT RANGE ON THE BASIS OF ORAL DISCUSSIONS WITH THE OFFEROR WITHOUT THE RECEIPT AND EVALUATION OF A REVISED PROPOSAL FROM THE OFFEROR. IN FACT, IT IS OUR VIEW THAT WHILE THE DURATION OF A NEGOTIATING SESSION IS BY NO MEANS DETERMINATIVE OF WHETHER MEANINGFUL DISCUSSIONS HAVE BEEN HELD WITH AN OFFEROR, 52 COMP. GEN. 161, 163 (1972), AFFORDING THE OFFEROR THE OPPORTUNITY TO SUBMIT A REVISED PROPOSAL IS AN ESSENTIAL ELEMENT OF THE NEGOTIATING PROCESS REQUIRED BY 10 U.S.C. 2304(G). THEREFORE, ONCE ORI'S PROPOSAL WAS DETERMINED TO BE WITHIN THE COMPETITIVE RANGE THE NAVY SHOULD HAVE GIVEN ORI THE OPPORTUNITY TO SUBMIT A REVISED PROPOSAL BEFORE MAKING ANY FURTHER DETERMINATION WITH REGARD TO THE ACCEPTABILITY OF ORI'S PROPOSAL. THE STATUTORY GOAL OF MAXIMUM COMPETITION IN THE AREA OF NEGOTIATED PROCUREMENTS MAY BE ACHIEVED ONLY IF ALL OFFERORS WITHIN THE COMPETITIVE RANGE ARE AFFORDED AN EQUAL OPPORTUNITY TO REVISE THEIR PROPOSALS. SEE ASPR 3-805.1(B). ORI WAS DENIED THIS OPPORTUNITY.

ALTHOUGH WE FIND THAT THE NAVY'S FAILURE TO REQUEST A BEST AND FINAL PROPOSAL BY ORI WAS IMPROPER, WE DO NOT BELIEVE AWARD TO IBM SHOULD BE DISTURBED. IT IS EVIDENT FROM STATEMENTS IN THE JANUARY 9, 1973 MEMORANDUM CONCERNING THE ORI PROPOSAL SUCH AS "THE BIDDER'S PROPOSAL DOES NOT PRESENT THE VISION NECESSARY TO ANALYZE THE NAVY TRAINING SYSTEM -" AND "THE OFFEROR WAS UNABLE TO EXPLAIN SATISFACTORILY THE TRANSLATION OF THE LATTICE NETWORK TO BE MATHEMATICAL MODELS. THIS IS SIGNIFICANT ***," THAT THE NAVY EVALUATORS HAD SERIOUS DOUBTS AS TO ORI'S ABILITY TO PERFORM THE CONTRACT. FURTHERMORE, IT IS CLEAR THAT IBM WAS CONSIDERED TO HAVE SUBMITTED THE SUPERIOR PROPOSAL. UNDER THE CIRCUMSTANCES, WE DO NOT FEEL ANY USEFUL PURPOSE WOULD BE SERVED BY DISTURBING THE AWARD TO IBM AND REOPENING THE PROCUREMENT AT THIS POINT. HOWEVER, WE RECOMMEND THAT THE SECRETARY OF THE NAVY SHOULD INSURE THAT A REOCCURRENCE OF THE INSTANT SITUATION BE AVOIDED IN THE FUTURE.

FINALLY, COUNSEL CONTENDS THAT THE NAVY FAILED TO NOTIFY ORI THAT ITS PROPOSAL WAS DETERMINED UNACCEPTABLE AS REQUIRED BY ASPR 3-508.2. IN OUR OPINION, THE REGULATION DOES CONTEMPLATE THAT NOTICE OF UNACCEPTABILITY WILL BE GIVEN PROMPTLY WHERE AWARD IS NOT ANTICIPATED WITHIN A "FEW" DAYS. SINCE THE AWARD TO IBM WAS NOT MADE UNTIL SOME 20 DAYS AFTER ORI'S PROPOSAL WAS DETERMINED UNACCEPTABLE, WE BELIEVE THAT SUCH NOTICE SHOULD HAVE BEEN PROVIDED. HOWEVER, ANY VIOLATION OF THE REGULATION WAS PROCEDURAL AND DID NOT AFFECT THE VALIDITY OF THE AWARD.