B-173302, FEB 1, 1972, 51 COMP GEN 457

B-173302, FEB 1, 1972, 51 COMP GEN 457

EQUIPMENT - AUTOMATIC DATA PROCESSING SYSTEM - SELECTION AND PURCHASE - BY OTHER THAN GENERAL SERVICES ADMINISTRATION - APPLICABILITY OF GENERAL SERVICES ADMINISTRATION REGULATIONS FEDERAL AGENCIES DELEGATED AUTHORITY BY THE GENERAL SERVICES ADMINISTRATION (GSA), PURSUANT TO 40 U.S.C. 759(B)(2), TO PURCHASE AUTOMATIC DATA PROCESSING EQUIPMENT (ADPE) ARE REQUIRED TO CONFORM TO THE FEDERAL PROPERTY MANAGEMENT REGULATION (FPMR) PROMULGATED BY GSA TO COORDINATE AND PROVIDE FOR THE ECONOMIC AND EFFICIENT PURCHASE OF ADPE SYSTEMS OR UNITS AND, THEREFORE, THE PROCUREMENT OF ADP EQUIPMENT BY THE ARMY CORPS OF ENGINEERS DELEGATED AUTHORITY SUBJECT TO THE PROVISIONS OF THE FPMR, PARTICULARLY THE LATE PROPOSALS AND MODIFICATIONS PROVISION - AUTHORITY REDELEGATED TO THE DISTRICT ENGINEER - IS NOT GOVERNED BY THE ARMED SERVICES PROCUREMENT REGULATION, AND THE DISTRICT ENGINEER VESTED WITH ALL THE AUTHORITY AND RESPONSIBILITY USUAL TO THE POSITION OF CONTRACTING OFFICER, WITH THE EXCEPTION OF CHOOSING THE SUCCESSFUL OFFEROR, HAVING ISSUED A REQUEST FOR PROPOSALS THAT FAILED TO INCORPORATE THE LATE PROPOSAL AND MODIFICATION REQUIREMENT OF THE FPMR, PROPERLY CANCELLED THE REQUEST.

TO MORGAN, LEWIS & BOCKIUS, FEBRUARY 1, 1972:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 4, 1971, AND PRIOR CORRESPONDENCE, ON BEHALF OF THE UNIVAC FEDERAL SYSTEMS DIVISION OF THE SPERRY RAND CORPORATION, PROTESTING AGAINST THE REJECTION OF ALL PROPOSALS AND CANCELLATION OF REQUEST FOR PROPOSALS (RFP) DACW31-71-R 0001, ISSUED BY THE UNITED STATES ARMY CORPS OF ENGINEERS. ALTHOUGH RESOLICITATION OF THIS NEGOTIATED PROCUREMENT IS BEING HELD IN ABEYANCE PENDING OUR DECISION, NO ATTEMPT WILL BE MADE TO AVOID IDENTIFICATION OF THE OFFERORS SINCE SUCH IDENTIFICATION IS ALREADY KNOWN TO ALL PARTIES.

ON NOVEMBER 21, 1969, SEVERAL FIRMS WERE SENT COPIES OF THE SPECIFICATIONS FOR A COMPUTER SYSTEM AND REQUESTED TO SUBMIT PROPOSALS. FOUR FIRMS REPLIED WITH THE SUBMISSION OF PROPOSALS WHICH INCLUDED BOTH TECHNICAL AND INITIAL PRICING DATA. AFTER BENCHMARK TESTS HAD BEEN COMPLETED, ONLY UNIVAC AND THE GENERAL ELECTRIC COMPANY (GE) WERE FOUND TO BE TECHNICALLY ACCEPTABLE.

THEREAFTER, THE DIRECTOR, MANAGEMENT INFORMATION SYSTEMS (MIS), DEPARTMENT OF THE ARMY, REQUESTED THE GENERAL SERVICES ADMINISTRATION (GSA) TO DELEGATE TO MIS THE AUTHORITY TO PROCURE THE PROPOSED COMPUTER SYSTEM PURSUANT TO 40 U.S.C. 759(B)(2). IN DUE COURSE, THE REQUESTED DELEGATION WAS ACCOMPLISHED SUBJECT, HOWEVER, TO CERTAIN LIMITATIONS WHICH, IN PERTINENT PART, STATE:

2. ALL PROVISIONS OF THE FEDERAL PROPERTY MANAGEMENT REGULATIONS SHALL BE FOLLOWED. IN PARTICULAR:

A. THE SPECIFIC REQUIREMENTS OF FPMR 101-32.4 PERTAINING TO PROCURING AND CONTRACTING FOR ADPE SHALL BE ADHERED TO,

3. THE POLICIES CONTAINED IN BUREAU OF THE BUDGET BULLETIN 60-6 AND BUREAU OF THE BUDGET CIRCULAR A-54, AS REVISED, SHALL BE COMPLIED WITH.

4. PROPOSALS, OR MODIFICATIONS THEREOF, WHICH ARE RECEIVED IN THE OFFICE DESIGNATED IN THE REQUEST FOR PROPOSALS AFTER THE TIME SPECIFIED FOR THEIR SUBMISSION ARE LATE PROPOSALS. LATE PROPOSALS SHALL NOT BE CONSIDERED UNLESS THE CONTRACTING OFFICER DETERMINES THAT SUCH ACTION WOULD NOT UNDULY DELAY THE PROCUREMENT AND WOULD BE IN THE INTEREST OF THE GOVERNMENT. NORMALLY, ONLY LATER OFFERS LOWER IN PRICE, OR OFFERING MORE FAVORABLE FACTORS WHICH DO NOT REQUIRE A TECHNICAL REEVALUATION WILL BE CONSIDERED. THE CONTRACTING OFFICER'S DECISION IS FINAL AND CONCLUSIVE. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THE MODIFICATION, A LATE MODIFICATION, IF REJECTED, SHALL NOT BE DEEMED A WITHDRAWAL OF THE OFFEROR'S TIMELY PROPOSAL.

AUTHORITY TO NEGOTIATE THE PROCUREMENT, SUBJECT TO THE FOREGOING LIMITATIONS, WAS REDELEGATED THROUGH THE CHIEF OF ENGINEERS TO THE BALTIMORE DISTRICT ENGINEER. BOTH THESE INDIVIDUALS WERE ADVISED THAT THE UNITED STATES ARMY COMPUTER SYSTEMS SUPPORT EVALUATION COMMAND (CSSEC) WOULD EVALUATE THE PROPOSALS RECEIVED. BOTH WERE FURTHER ADVISED THAT FINAL OFFERS WOULD BE FORWARDED TO MIS WHICH WOULD, AFTER A FINAL REVIEW OF THE PROPOSALS, RECOMMEND A SOURCE TO THE SOURCE SELECTION AUTHORITY (SSA), IN THIS CASE THE ASSISTANT SECRETARY OF THE ARMY (FM). THE BALTIMORE DISTRICT ENGINEER WAS THEN TO BE ADVISED OF THE SELECTION SO THAT A CONTRACT WITH THE SELECTED FIRM COULD BE EXECUTED.

ON OCTOBER 27, 1970, THE RFP WAS ISSUED TO UNIVAC AND HONEYWELL INFORMATION SYSTEMS, INC. (HIS), GE'S SUCCESSOR IN INTEREST WITH RESPECT TO THIS PROCUREMENT. BOTH FIRMS RESPONDED WITH PROPOSALS WHICH UNDERWENT PRELIMINARY REVIEW BY CSSEC. AS A CONSEQUENCE OF THAT REVIEW, DISCUSSIONS WERE HELD WITH EACH OFFEROR. ON FEBRUARY 1, 1971, LETTERS SUMMARIZING THE UNDERSTANDINGS REACHED DURING THE RESPECTIVE DISCUSSIONS WERE SENT TO EACH COMPANY. THESE LETTERS ALSO ADVISED THAT ANY CHANGES, RECOMMENDATIONS AND DISCOUNTS TO BE OFFERED HAD TO BE SUBMITTED NO LATER THAN FEBRUARY 5. EACH OFFEROR MADE TIMELY REVISIONS TO ITS OFFER.

THE REVISED PROPOSALS WERE SENT TO CSSEC FOR EVALUATION IN ACCORDANCE WITH A PREDETERMINED EVALUATION FORMULA. HIS MADE A FURTHER PRICE REVISION OF ITS PROPOSAL ON MARCH 9 AND IT TOO WAS FORWARDED TO CSSEC FOR CONSIDERATION. SUBSEQUENTLY, THE SSA APPROVED THE SELECTION OF UNIVAC FOR AWARD AND ON MAY 21 NOTIFICATION TO THAT EFFECT WAS GIVEN TO THE BALTIMORE DISTRICT ENGINEER. WITH RESPECT TO THAT NOTIFICATION, THE ADMINISTRATIVE REPORT STATES:

*** CSSEC SENT AN UNCLASSIFIED TELEGRAM, ADDRESSED TO BALTIMORE DISTRICT, VIA FORT HOLABIRD, MARYLAND. THE TELEGRAM WAS RECEIVED AT FORT HOLABIRD AND PLACED IN AN ENVELOPE ADDRESSED TO THIS OFFICE, WHICH WAS PLACED IN THE MAILS ON SATURDAY, 22 MAY 1971. THE ENVELOPE WAS DULY DELIVERED TO THE BALTIMORE DISTRICT MAIL ROOM ON MONDAY, 24 MAY 1971 AND OPENED BY MAIL HANDLING PERSONNEL. THE INCLOSED MESSAGE WAS EXAMINED AND ROUTED BY A MAIL CLERK AND DISPATCHED BY ORDINARY MESSENGER WITH A QUANTITY OF OTHER ORDINARY MAIL, TO THE CHIEF, SUPPLY DIVISION. ONLY AFTER IT HAD PASSED THROUGH A NUMBER OF HANDS, WITH NO PARTICULAR SECURITY PRECAUTIONS, WAS THE MESSAGE DELIVERED TO THE CHIEF, SUPPLY DIVISION.

THE ADMINISTRATIVE REPORT STATES FURTHER THAT ON MAY 25, BEFORE THE BALTIMORE DISTRICT ENGINEER HAD BECOME AWARE OF THE CSSEC TELEGRAM, HIS SUBMITTED A MODIFICATION TO ITS PROPOSAL WHICH FURTHER REDUCED ITS PRICE. FACED WITH THIS TURN OF EVENTS, PERSONNEL FROM THE BALTIMORE DISTRICT ENGINEER OFFICE AND CSSEC MET TO DISCUSS THE HIS MODIFICATION AND ITS LATER CLARIFICATIONS THERETO. ALTHOUGH IT WAS FELT THAT SOME TIME WOULD BE CONSUMED IN REEVALUATING THE HIS PROPOSAL, THE REPORT STATES THAT ALL CSSEC PERSONNEL PRESENT FELT THAT CONSIDERATION OF THE HIS MODIFICATION WOULD BE IN THE GOVERNMENT'S BEST INTERESTS AND THAT REEVALUATION WOULD NOT UNDULY DELAY THE PROCUREMENT OR REQUIRE ANOTHER TECHNICAL REVIEW OF EITHER OFFER.

SHORTLY THEREAFTER, ON JUNE 14, UNIVAC ADVISED THE PROCUREMENT ACTIVITY BY LETTER THAT IT BELIEVED THAT UNIVAC HAD BEEN SELECTED FOR AWARD AND THAT THIS INFORMATION HAD BEEN IMPROPERLY DISCLOSED TO HIS. ON A PREVIOUS OCCASION, UNIVAC'S REPRESENTATIVES HAD ALSO CONTENDED THAT THE SPECIFIC LANGUAGE OF THE RFP PRECLUDED CONSIDERATION OF THE HIS MODIFICATION SINCE IT WAS A LATE MODIFICATION AND IF, IN FACT, IT WAS CONSIDERED, SUCH ACTION CONSTITUTED AN AUCTION.

THE PROCUREMENT ACTIVITY TOOK THE UNIVAC POSITION UNDER ADVISEMENT. AFTER REVIEWING THE RFP, HOWEVER, IT WAS DECIDED THAT THE SOLICITATION WAS MATERIALLY DEFECTIVE FOR FAILING TO INCORPORATE THE REQUIRED FEDERAL PROPERTY MANAGEMENT REGULATION (FPMR) CLAUSE CONCERNING LATE PROPOSALS AND MODIFICATIONS. CONSEQUENTLY, BOTH FIRMS WERE NOTIFIED OF THE REJECTION OF THEIR PROPOSALS AND THE CANCELLATION OF THE RFP. THIS ACTION TOOK PLACE ON JUNE 11 AND PRIOR TO THE JUNE 14 SUBMISSION BY UNIVAC WHICH APPARENTLY HAD NOT AS OF THAT TIME RECEIVED THE CANCELLATION NOTICE. ON JUNE 15, UNIVAC PROTESTED THE CANCELLATION BY TELEGRAM TO THE PROCUREMENT ACTIVITY AND OUR OFFICE. ON JUNE 23, 1971, A NEW RFP WAS ISSUED BUT NO DATE HAS BEEN ESTABLISHED FOR RECEIPT OF PROPOSALS IN VIEW OF THE PROTEST.

AFTER SIFTING THROUGH THE EXTENSIVE CORRESPONDENCE FROM UNIVAC'S COUNSEL, WE CONCLUDE THAT THE ISSUES DISCUSSED BELOW ARE DISPOSITIVE OF THE PROTEST.

DOES GSA HAVE THE AUTHORITY TO PROMULGATE REGULATIONS CONTROLLING THE PURCHASE OF COMPUTER SYSTEMS?

WHILE RECOGNIZING PUBLIC LAW 89-306, 79 STAT. 1127, OCTOBER 30, 1965 (40 U.S.C. 759, ET SEQ.), UNIVAC CONTENDS THAT GSA IS WITHOUT AUTHORITY TO PROMULGATE REGULATIONS BEARING ON THE PURCHASE OF COMPUTERS OR TO INSIST ON THEIR USE WHEN INCONSISTENT WITH THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). IN THIS CONNECTION, UNIVAC NOTES THAT 40 U.S.C. 759(G) PROVIDES THAT THE AUTHORITY VESTED IN THE ADMINISTRATOR, GSA, IS TO BE EXERCISED SUBJECT TO THE FISCAL AND POLICY CONTROL EXERCISED BY THE OFFICE OF MANAGEMENT AND BUDGET PREVIOUSLY THE BUREAU OF THE BUDGET (BOB). REFERENCE IS THEN MADE TO PARAGRAPH 5 OF BOB CIRCULAR NO. A-54, OCTOBER 14, 1961, WHICH STATES:

*** ALL ADP EQUIPMENT ACQUISITION TRANSACTIONS ARE SUBJECT TO PREVAILING POLICIES, LAWS AND REGULATIONS GOVERNING PROCUREMENT BY FEDERAL GOVERNMENT AGENCIES. ***

FROM THIS STATEMENT, UNIVAC EXTRAPOLATES THE ABOVE CONTENTION AND BOLSTERS IT WITH A CITATION TO OUR DECISION 47 (COMP. GEN. 29, 51-52 (1967), WHEREIN WE STATE:

*** HOWEVER, PARAGRAPH 5 OF THE BOB CIRCULAR (A-54) PROVIDES THAT ALL EDPE ACQUISITION TRANSACTIONS ARE SUBJECT TO PREVAILING POLICIES, LAWS AND REGULATIONS GOVERNING PROCUREMENT BY AGENCIES.

*** WHILE GSA WILL EXECUTE THE CONTRACT BASED ON THE AIR FORCE SOURCE SELECTION, SELECTION OF THE SOURCE, UNDER CIRCUMSTANCES SUCH AS HERE INVOLVED, IS IN OUR OPINION A PART OF THE PROCUREMENT PROCESS AND SUBJECT TO THE REQUIREMENTS OF 10 U.S.C. 2304(G) AND THE APPLICABLE PROVISIONS OF ASPR. ***

THE PURPOSE OF PUBLIC LAW 89-306, SUPRA, WAS TO AMEND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 378, JUNE 30, 1949, SO AS TO ESTABLISH THE AUTHORITY AND PROVIDE THE OPERATIONAL MACHINERY NEEDED FOR THE EFFECTIVE AND EFFICIENT MANAGEMENT OF AUTOMATIC DATA PROCESSING EQUIPMENT (ADPE). SEE U.S.C. CONG. & AD. NEWS (1965), PAGE 3859; 48 COMP. GEN. 462 (1969). IN ACCORDANCE WITH THIS PURPOSE, GSA WAS AUTHORIZED, INTER ALIA, TO COORDINATE AND PROVIDE FOR THE ECONOMIC AND EFFICIENT PURCHASE OF SUCH EQUIPMENT BY FEDERAL AGENCIES. 40 U.S.C. 759(A). IT WAS FURTHER EMPOWERED TO DELEGATE TO FEDERAL AGENCIES THE AUTHORITY TO PURCHASE ADPE SYSTEMS OR SPECIFIC UNITS OF SUCH EQUIPMENT. 40 U.S.C. 759(B)(2). ANY CONTENTION THAT GSA CANNOT DELEGATE ITS PURCHASE AUTHORITY IS, THEREFORE, PLAINLY REFUTED BY THE CLEAR LANGUAGE OF THE STATUTE.

THE ADMINISTRATOR, GSA, IS AUTHORIZED BY 40 U.S.C. 481(A)(1) TO PRESCRIBE POLICIES AND METHODS REGARDING THE PROCUREMENT OF PERSONAL PROPERTY BY EXECUTIVE AGENCIES. THE DEPARTMENT OF DEFENSE, HOWEVER, IS EXEMPTED FROM SUCH POLICIES BY VIRTUE OF A PROVISO IN THE SECTION. IN ADDITION, 40 U.S.C. 474(3) STATES THAT NOTHING IN THE FEDERAL PROPERTY ACT SHALL IMPAIR OR AFFECT ANY AUTHORITY OF ANY AGENCY NAMED IN THE ARMED FORCES PROCUREMENT ACT OF 1947 (PUBLIC LAW 80-413, 62 STAT. 21, FEBRUARY 19, 1948, 41 U.S.C. 151) AND THE HEAD OF SUCH AN AGENCY WITH RESPECT TO THE ADMINISTRATION OF THE 1947 ACT. THE DEPARTMENT OF THE ARMY IS ONE OF THE AGENCIES SO NAMED.

THE RELEVANCE AND IMPORTANCE OF THIS DISCUSSION COMES CLEARLY INTO FOCUS WHEN CONSIDERED IN CONNECTION WITH 40 U.S.C. 759(E) WHICH STATES:

(E) INAPPLICABILITY OF OTHER INCONSISTENT PROVISIONS OF LAW.

THE PROVISO FOLLOWING PARAGRAPH (4) IN SECTION 481(A) OF THIS TITLE AND THE PROVISIONS OF SECTION 474 OF THIS TITLE SHALL HAVE NO APPLICATION IN THE ADMINISTRATION OF THIS SECTION. NO OTHER PROVISIONS OF THIS ACT OR ANY OTHER ACT WHICH IS INCONSISTENT WITH THE PROVISIONS OF THIS SECTION SHALL BE APPLICABLE IN THE ADMINISTRATION OF THIS SECTION.

THIS PROVISION WAS OBVIOUSLY INTENDED TO GIVE PUBLIC LAW 89-306 AN EFFECT PARAMOUNT TO ANY OTHER STATUTORY PROVISION INCONSISTENT WITH IT AND TO SPECIFICALLY REMOVE FROM THE MILITARY DEPARTMENTS OF THE GOVERNMENT THE ABILITY TO EXEMPT THEIR PURCHASE OF GENERAL PURPOSE, COMMERCIALLY AVAILABLE ADPE FROM THE CONTROL AND POLICIES OF GSA. SEE 48 COMP. GEN., SUPRA.

WE NEED NOT CONSIDER AT LENGTH THE IMPACT OF THE SENTENCE PREVIOUSLY QUOTED FROM BOB CIRCULAR A-54. WHATEVER THAT IMPACT WAS, IT IS NO LONGER RELEVANT TO THIS PROCUREMENT SINCE THE QUOTED STATEMENT WAS DELETED WHEN PARAGRAPH 5 WAS EXTENSIVELY REVISED BY BOB TRANSMITTAL MEMORANDUM NO. 1, OF JUNE 27, 1967, SOME 3 YEARS BEFORE THE SOLICITATION HERE IN QUESTION WAS ISSUED.

THE QUOTED LANGUAGE FROM OUR DECISION 47 COMP. GEN., SUPRA, WHICH INVOLVED A CONSIDERATION OF BOB CIRCULAR A-54, AROSE IN THE CONTEXT OF WHETHER THE PROVISIONS OF 10 U.S.C. 2304(G) WERE APPLICABLE TO THE SOURCE SELECTION THERE INVOLVED. THE QUESTION, STATED MORE NARROWLY, WAS WHETHER DISCUSSIONS HAD TO BE HELD WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE. WHILE CONCLUDING THAT 10 U.S.C 2304(G) AND ITS IMPLEMENTING REGULATIONS WERE APPLICABLE TO THE CONDUCT OF NEGOTIATIONS UNDER THE CIRCUMSTANCES OF THE CASE, IT IS QUITE EVIDENT FROM THE CASE LANGUAGE IMMEDIATELY FOLLOWING THAT QUOTED ABOVE THAT OUR CONCLUSION REGARDING THIS ASPECT OF THE DECISION WAS PRIMARILY CONCERNED WITH PROVIDING AN ANSWER TO THE NARROWER QUESTION PRESENTED, FOR WE SAID:

*** IN ANY EVENT, WHETHER THE PROCUREMENT BE CONSIDERED AS BEING NEGOTIATED BY THE AIR FORCE OR GSA, THE FPR (FEDERAL PROCUREMENT REGULATIONS) AND ASPR, AS ALREADY POINTED OUT, CONTAIN IDENTICAL PROVISIONS REQUIRING DISCUSSIONS WITH OFFERORS WITHIN A COMPETITIVE RANGE.

VIEWED FROM THIS PERSPECTIVE, OUR COMMENTS RESPECTING THE EFFECT OF BOB CIRCULAR A-54 MUST BE CONSIDERED DICTA SINCE NEGOTIATIONS WERE REQUIRED WITH ALL OFFERORS IN ANY CASE. MOREOVER, SINCE THE REFERENCE TO BOB CIRCULAR A-54 FOUND IN 47 COMP. GEN., SUPRA, WAS MADE IN A CONTEXT NOT APPLICABLE TO THE INSTANT SITUATION, WE DO NOT BELIEVE THAT IT IS DECISIVE HERE.

IT SEEMS CLEAR FROM THE FOREGOING DISCUSSION THAT GSA IS VESTED WITH EXCLUSIVE AUTHORITY TO PURCHASE GENERAL PURPOSE ADPE (SEE 47 COMP. GEN. 275 (1967)) AND CAN PROMULGATE REGULATIONS IN FURTHERANCE OF THAT ACOUTRITY AS WELL AS DELEGATE ITS PURCHASE AUTHORITY TO OTHER AGENCIES. WHEN THAT AUTHORITY IS DELEGATED, WE PERCEIVE NO LEGAL RESTRICTION ON GSA'S ABILITY TO REQUIRE CONFORMANCE WITH ITS REGULATIONS RESPECTING THE PROCUREMENT OF ADPE SUCH AS FPMR SUBPART 101 32.4. VIRTUE OF 40 U.S.C. 759(E) AND THE DELEGATION TO THE ARMY, THAT FPMR SUBPART IN GENERAL AND FPMR 101-32.408-4 CONCERNING LATE PROPOSALS AND MODIFICATIONS, IN PARTICULAR, ARE APPLICABLE TO AND CONTROL THE PURCHASE OF ADPE BY THE ARMY IN THIS INSTANCE. FPMR 101 32.408-4 WAS SET OUT IN ITS ENTIRETY AS PARAGRAPH 4 OF THE LIMITATIONS ON THE AUTHORITY DELEGATED TO THE ARMY AND HAS PREVIOUSLY BEEN QUOTED HEREIN. ITS USE WAS MANDATORY AND THIS FACT CANNOT BE OBSCURED BY AN ASSERTION THAT IT PRODUCES A RESULT DIFFERENT FROM THAT WHICH ORDINARILY RESULTS WHEN ASPR 3-506, THE COMPARABLE ASPR PROVISION, IS USED. THE RESULT OF ITS USE, EVEN IF UNUSUAL, HAS NO BEARING ON WHETHER IT MUST BE USED IN THE FIRST PLACE.

WE FIND NO BASIS TO SUSTAIN UNIVAC'S CONTENTIONS AND THE QUESTION PRESENTED MUST THUS BE ANSWERED IN THE AFFIRMATIVE.

DOES USE OF FPMR 101-32.408-4 PLACE UNIVAC AT A COMPETITIVE DISADVANTAGE OR VIOLATE GOOD PROCUREMENT POLICY?

UNIVAC CONTENDS THAT THE USE OF THE FPMR LATE PROPOSAL AND MODIFICATION CLAUSE DOES NOT MAXIMIZE COMPETITION AS REQUIRED BY ASPR 1 300.1 SINCE PROPOSALS MAY BE SUBMITTED AND CONSIDERED AFTER THE TIME SET FOR THE SUBMISSION OF INITIAL OFFERS. IT IS CLAIMED THAT OFFERORS ARE, THUS, NOT COMPETING ON A COMMON BASIS REQUIRED FOR COMPETITION. AFTER CONCLUDING THAT A LATE OFFER UNDER THE FPMR CLAUSE WILL NOT ORDINARILY BE ACCEPTED UNLESS IT OFFERS A LOWER PRICE OR MORE FAVORABLE TERMS, UNIVAC NEXT CONTENDS THAT THE CLAUSE NECESSARILY INVOLVES AN AUCTION TECHNIQUE SINCE ACCEPTANCE OF A LATE OFFER INDICATES TO OTHER PROPOSERS THAT THEIR OFFERS ARE NOT LOW IN RELATION TO THE LATE OFFER, ASSUMING OF COURSE THAT THEY KNOW OF THE LATE OFFER.

UNIVAC CONCLUDES FURTHER THAT UNDER THE FPMR PROVISION A LATE OFFER CAN BE CONSIDERED AND AWARD MADE WITHOUT GIVING ANY OTHER OFFEROR THE OPPORTUNITY TO PARTICIPATE IN ANOTHER ROUND OF NEGOTIATIONS. IT ALSO NOTES THAT THE CLAUSE CONFLICTS WITH THE ASPR 3-805.1(B) REQUIREMENT THAT OFFERORS ARE TO BE NOTIFIED OF THE SPECIFIC DATE FOR THE CLOSING OF NEGOTIATIONS; THAT A REJECTION OF A PROPERLY WORDED LATE OFFER MAY OPERATE TO WITHDRAW AN OTHERWISE TIMELY SUBMITTED PROPOSAL; AND THAT THE CLAUSE'S EQUATION OF "THE BEST INTEREST OF THE GOVERNMENT" WITH A PECUNIARY SAVINGS NOT ONLY GIVES THE LATE OFFEROR A DISTINCT COMPETITIVE ADVANTAGE BUT IS CONTRARY TO HOLDINGS OF OUR OFFICE.

ADMITTEDLY, THE MAXIMIZATION OF COMPETITION IN BOTH FORMALLY ADVERTISED AND NEGOTIATED PROCUREMENTS IS A GOAL WHICH OUR OFFICE CAN READILY ACCEPT. HOWEVER, WE PERCEIVE NOTHING IN THE FPMR CLAUSE UNDER DISCUSSION WHICH COMPELS THE CONCLUSION THAT IT PREVENTS THE MAXIMIZATION OF COMPETITION. CERTAINLY, IT CANNOT BE SAID THAT OFFERORS ARE NOT COMPETING ON AN EQUAL BASIS REGARDING THE SUBMISSION OF LATE OFFERS SINCE ALL OFFERORS MAY SUBMIT LATE OFFERS THAT MAY, OR MAY NOT, BE CONSIDERED.

WITH RESPECT TO AUCTIONS, OUR OFFICE HAS STATED THAT THERE IS NOTHING INHERENTLY ILLEGAL ABOUT AN AUCTION IN THE CONTEXT OF A COMPETITIVELY NEGOTIATED PROCUREMENT. SEE 48 COMP. GEN. 536, 541 (1969). AS A POLICY MATTER, HOWEVER, USE OF AN AUCTION TECHNIQUE IS PROSCRIBED BY BOTH SECTION 1-3.805-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) AND ASPR 3- 805.1(B). UNDER EITHER OF THESE PROVISIONS, AN AUCTION TECHNIQUE IS DISCLOSURE BY THE GOVERNMENT TO AN OFFEROR OF THE PRICE TO BE MET IN ORDER TO OBTAIN FURTHER CONSIDERATION OR THE FACT THAT HIS PRICE IS NOT LOW VIS- A-VIS ANOTHER OFFEROR. IN THIS CASE, WE ARE NOT PREPARED TO CONCLUDE, FOR REASONS MORE FULLY EXPLAINED BELOW, THAT THE REQUISITE PREJUDICIAL DISCLOSURE WAS IN FACT MADE.

ABSENT A DISCLOSURE OF PRICE OR RELATIVE STANDING, WE HAVE HELD THAT CONDUCTING A PREAWARD SURVEY PRIOR TO THE CLOSE OF NEGOTIATIONS DOES NOT CONSTITUTE AN AUCTION PER SE, NOTWITHSTANDING THAT OFFERORS NOT BEING SURVEYED COULD INFER THAT THEIR OFFERS WERE NOT LOW. B-171260, APRIL 8, 1971; B-173536, OCTOBER 22, 1971. SINCE WE DO NOT FIND FROM THE RECORD THAT THE GOVERNMENT MADE A DISCLOSURE TO HIS WHICH WAS PREJUDICIAL TO UNIVAC'S INTERESTS, NO PROHIBITED AUCTION TECHNIQUE INITIATED THE SUBMISSION OF THE LATE HIS MODIFICATION. SIMILARLY, NO AUCTION TECHNIQUES ARE INVOLVED WHEN AN OFFEROR BELIEVES IT NECESSARY TO OFFER A LOWER REVISED PRICE BECAUSE ANOTHER OFFEROR HAS SUBMITTED A LATE MODIFICATION.

IN THE ABSTRACT, THERE IS MERIT TO UNIVAC'S OBSERVATION THAT THE FPMR CLAUSE ALLOWS FOR THE CONSIDERATION OF A LATE OFFER WITHOUT THE NECESSITY OF ANOTHER ROUND OF NEGOTIATIONS. CERTAINLY, THE LANGUAGE OF THIS FPMR CLAUSE SEEMS TO LEND ITSELF TO THIS RESULT. WHETHER AN AWARD CAN BE MADE ON A LATE PROPOSAL WITHOUT OFFERING ALL OFFERORS AN OPPORTUNITY TO ENTER INTO DISCUSSION IS ANOTHER MATTER AND ONE WHICH IS NOT DECISIVE HERE SINCE THE PROCUREMENT NEVER REACHED THE "DISCUSSION" STAGE BY VIRTUE OF THE CANCELLATION OF THE SOLICITATION INVOLVED. IT HAS BEEN OUR LONG-HELD POSITION, HOWEVER, THAT DISCUSSIONS WITH ONE OFFEROR NECESSITATE DISCUSSIONS WITH ALL OFFERORS WITHIN THE COMPETITIVE RANGE.

TO THE EXTENT THAT ASPR 3-805.1(B) REQUIRES THAT OFFERORS BE NOTIFIED OF A SPECIFIC DATE ON WHICH NEGOTIATIONS ARE TO CLOSE, IT IS IN CONFLICT WITH THE FPMR CLAUSE, THE EFFECT OF WHICH IS TO LEAVE DISCUSSIONS OPEN UP TO THE TIME OF CONTEMPLATED AWARD. THIS CONFLICT, THOUGH, IS MORE APPARENT THAN REAL SINCE THE FPMR CLAUSE, BY VIRTUE OF THE EFFECT OF 40 U.S.C. 759(E), PREVIOUSLY DISCUSSED, TAKES PRECEDENCE OVER THE CONFLICTING ASPR PROVISION. ACCORDINGLY, UNIVAC'S CONTENTION IS NOT WELL TAKEN ALTHOUGH, AS A MATTER OF SOUND PROCUREMENT POLICY, WE BELIEVE THAT A CUTOFF DATE FOR DISCUSSION IS A NECESSARY RESTRICTION WHICH CARRIES WITH IT AN OVERRIDING IMPLICATION OF FAIR DEALING.

ASSUMING, ARGUENDO, THAT A LATE MODIFICATION IS SO WORDED THAT ITS REJECTION EFFECTS A WITHDRAWAL OF AN OTHERWISE TIMELY SUBMITTED PROPOSAL AS UNIVAC CONTENDS, WE DO NOT SEE HOW UNIVAC, OR ANY OTHER OFFEROR, IS PREJUDICED BY SUCH LIKELIHOOD. IN THE FIRST PLACE, ANY OFFEROR COULD OFFER SUCH A MODIFICATION, SO NONE IS FAVORED OVER ANOTHER. SECONDLY, IT IS IN THE GOVERNMENT'S INTEREST TO REQUIRE OFFERORS TO SUBMIT OFFERS WHICH CANNOT BE WITHDRAWN FOR A STATED TIME. SHOULD THE GOVERNMENT DECIDE NOT TO INSIST ON SUCH A FIRM OFFER REQUIREMENT, WE KNOW OF NO IMPEDIMENT THAT WOULD PREVENT IT FROM DOING SO.

ALTHOUGH THE FPMR CLAUSE CAN ARGUABLY BE SAID TO ENCOURAGE LATE PROPOSALS OR MODIFICATIONS OFFERING REDUCTIONS IN PRICE AND, THUS, TO EQUATE THE BEST INTERESTS OF THE GOVERNMENT WITH OBTAINING A PECUNIARY SAVINGS, WE CANNOT AGREE WITH UNIVAC THAT THE LATE OFFEROR OBTAINS ANY LASTING COMPETITIVE ADVANTAGE UNDER THE CLAUSE SINCE ALL OFFERORS ARE FREE TO SUBMIT PRICE REDUCTIONS AT ANY TIME PRIOR TO AWARD. WE ARE, OF COURSE, COGNIZANT OF OUR PRIOR POSITION THAT AN ACCEPTANCE OF A LATE MODIFICATION IS NOT JUSTIFIED ON THE BASIS OF MERE PECUNIARY ADVANTAGE OBTAINED FROM A PRICE REDUCTION. SEE B-167478, OCTOBER 28, 1969. IT IS TO BE NOTED, HOWEVER, THAT THIS STATEMENT AND OTHERS OF SIMILAR IMPORT HAVE BEEN MADE IN A CONTEXT REQUIRING THE CONSIDERATION OF CERTAIN ASPR PROVISIONS INVOLVING CUTOFF DATES WHICH ARE NOT APPLICABLE TO THE PRESENT PROCUREMENT.

IN THIS CONNECTION, WE BELIEVE THAT CUTOFF DATES ARE CORRECTLY VIEWED AS A DEVICE FOR ORDERLY MANAGEMENT OF THE COMPETITIVE PROCUREMENT PROCESS. TO THE EXTENT THAT A VOLUNTARY LATE MODIFICATION TO A PROPOSAL SUBMITTED SUBSEQUENT TO THE CONCLUSION OF DISCUSSIONS DISRUPTS THE ORDERLY PROGRESS OF THE PROCUREMENT, WE DO NOT BELIEVE IT SHOULD BE CONSIDERED EVEN THOUGH ITS ACCEPTANCE MIGHT RESULT IN A MONETARY SAVINGS TO THE GOVERNMENT. AN ABSTRACT PROPOSITION, HOWEVER, WE HAVE NO DIFFICULTY IN EQUATING A SUBSTANTIAL PECUNIARY SAVING WITH THE GOVERNMENT'S BEST INTERESTS. THEREFORE, WHERE, AS HERE, THE FPMR REFLECTS A POLICY DETERMINATION RECOGNIZING THE FOREGOING EQUATION, WE DO NOT FEEL THAT AN OBJECTION ON OUR PART IS REQUIRED.

IT IS OUR CONCLUSION ON THIS POINT THAT WHILE THE FAILURE OF THE FPMR CLAUSE TO ESTABLISH A CLOSING DATE FOR DISCUSSIONS DOES NOT COMPORT WITH OUR VIEW OF GOOD PROCUREMENT POLICY, WE CANNOT SAY THAT SUCH OMISSION IS PATENTLY ILLEGAL.

WAS THE CONTRACTING OFFICER AUTHORIZED TO REJECT ALL BIDS AND CANCEL THE RFP?

UNIVAC CONTENDS THAT AS A RESULT OF THE VARIOUS DELEGATIONS OF AUTHORITY THE DISTRICT ENGINEER COULD ONLY CONDUCT NEGOTIATIONS WITH OFFERORS BUT COULD NOT MAKE A FINAL SELECTION AS TO WHICH FIRM WOULD RECEIVE THE AWARD SINCE FINAL SELECTION AUTHORITY WAS RETAINED BY THE ASSISTANT SECRETARY OF THE ARMY (FM). FROM THIS IT ARGUES THAT ONCE THE FINAL SELECTION WAS MADE, THE DISTRICT ENGINEER HAD NO AUTHORITY WHATEVER TO REJECT ALL OFFERS AND CANCEL THE RFP SINCE TO DO SO WOULD BE TANTAMOUNT TO REEVALUATING AND SETTING ASIDE THE FINAL SELECTION OF UNIVAC MADE BY A HIGHER AUTHORITY. THIS, IT IS MAINTAINED, WOULD GIVE THE DISTRICT ENGINEER A SELECTION CAPABILITY NOT DELEGATED TO HIM. FINALLY, THE CONTENTION IS MADE THAT BY CANCELING THE PROCUREMENT THE DISTRICT ENGINEER "USURPED" THE AUTHORITY RETAINED BY GSA TO DECLARE THE "PROCUREMENT" VOIDABLE.

A FAIR READING OF THE DELEGATION OF AUTHORITY MADE TO THE DISTRICT ENGINEER FULLY SUPPORTS UNIVAC'S VIEW THAT FINAL SELECTION AUTHORITY RESIDED WITH THE ASSISTANT SECRETARY. WE DO NOT AGREE, HOWEVER, THAT THE LACK OF FINAL SELECTION AUTHORITY DEPRIVED THE CONTRACTING OFFICER OF THE AUTHORITY TO CANCEL THE PROCUREMENT.

BY VIRTUE OF THE AUTHORITY DELEGATED TO HIM, THE DISTRICT ENGINEER COULD CONDUCT NEGOTIATIONS AND, SUBSEQUENT TO A FINAL SELECTION BY THE ASSISTANT SECRETARY, ENTER INTO A CONTRACT BINDING UPON THE GOVERNMENT. WITH THE SINGLE EXCEPTION OF NOT BEING ABLE TO CHOOSE THE SUCCESSFUL OFFEROR, THE DISTRICT ENGINEER WAS, IN OUR OPINION, OTHERWISE VESTED WITH ALL THE AUTHORITY AND RESPONSIBILITIES USUAL TO THE POSITION OF CONTRACTING OFFICER. CONSEQUENTLY UPON CONCLUDING THAT A MANDATORY FPMR CLAUSE WAS NOT REFLECTED IN THE RFP AND THAT THE PROCUREMENT WAS NOT IN CONFORMANCE WITH THE PURCHASE AUTHORITY DELEGATED BY GSA, THE CONTRACTING OFFICER HAD THE REQUISITE AUTHORITY TO CANCEL THE RFP. SINCE THE CONTRACTING OFFICER ACTED WITHIN THE SCOPE OF HIS DELEGATED AUTHORITY, IT FOLLOWS THAT THERE WAS NO USURPATION OF ANY RIGHT RESERVED TO GSA.

WAS THERE A LEAK OF INFORMATION TO HIS?

UNIVAC CONTENDS THAT THE METHOD BY WHICH THE CONTRACTING OFFICER WAS ADVISED OF THE OFFEROR SELECTED FOR AWARD PERMITTED THE UNAUTHORIZED DISCLOSURE OF THAT INFORMATION. TO SUBSTANTIATE THAT THE SELECTION CHOICE WAS IN FACT "LEAKED" TO HIS, UNIVAC NOTES THAT THE HIS MODIFICATION WAS HAND-DELIVERED TO THE PROCUREMENT ACTIVITY ON MAY 25, SHORTLY AFTER THE PROCURING ACTIVITY BECAME AWARE OF THE SELECTION OF UNIVAC.

ALTHOUGH BOTH OFFERORS DENY ANY IMPROPRIETY, THE CONTRACTING OFFICER CONTENDS THAT BOTH FIRMS APPARENTLY WERE IN POSSESSION OF INFORMATION WHICH ORDINARILY WOULD NOT BE AVAILABLE TO THEM BECAUSE OF THE NEGOTIATED NATURE OF THE PROCUREMENT. HE ALSO STATES THAT BOTH OFFERORS ATTEMPTED TO SECURE INFORMATION FROM HIS STAFF CONCERNING THE PROCUREMENT. WITH RESPECT TO THE SPECIFIC ALLEGATION THAT THE UNIVAC SELECTION WAS "LEAKED" TO HIS, WE UNDERSTAND THAT THE CONTRACTING OFFICER HAS DENIED THIS ASSERTION.

UNIVAC HAS PRESENTED NO DIRECT EVIDENCE OF A LEAK BUT ASKS US INSTEAD TO CONCLUDE ITS EXISTENCE FROM CIRCUMSTANTIAL EVIDENCE. WHILE SUCH EVIDENCE MAY BE SUFFICIENT IN SOME INSTANCES TO PROVE THE MATTER ALLEGED, WE DO NOT FEEL THAT THE INSTANT CASE IS SUCH A SITUATION. IN THE FIRST PLACE, WHILE THE METHOD OF TRANSMITTING THE ADVICE CONCERNING THE SOURCE SELECTION COULD HAVE BEEN MORE DIRECT, THE WORST THAT CAN BE SAID OF IT IS THAT IT PROVIDED AN OPPORTUNITY FOR MORE THAN THE USUAL NUMBER OF GOVERNMENT PERSONNEL TO BECOME AWARE OF THE ACTUAL SOURCE SELECTED. THAT ALONE DOES NOT, OF COURSE, PROVE AN IMPROPER DISCLOSURE.

SECONDLY, THE CONTRACTING OFFICER ADVISES THAT THE STATED REASON FOR THE HIS MODIFICATION WAS AN "INCREASE IN CORPS BUSINESS" AND NOTES THAT ON MAY 6 HIS RECEIVED AUTHORIZATION FOR A SUBSTANTIAL FOLLOW-ON ORDER TO A PREVIOUSLY AWARDED CONTRACT. UNIVAC DOES NOT DISPUTE THIS ASSERTION. THUS, THE HIS MODIFICATION COULD WELL HAVE RESULTED FROM AN INCREASE IN BUSINESS AND NOT A LEAK OF INFORMATION AS ALLEGED BY UNIVAC. IN THESE CIRCUMSTANCES, AND GIVEN THE GRAVITY OF THE ALLEGATION, WE DO NOT BELIEVE THAT ACCEPTANCE OF THE UNIVAC POSITION IS WARRANTED.

ACCORDINGLY, YOUR PROTEST IS DENIED.