B-190105, MAR. 27, 1978, 57 COMP.GEN. 370

B-190105, MAR. 27, 1978, 57 COMP.GEN. 370

CONTRACTS - PROTESTS - TIMELINESS - NEGOTIATED CONTRACTS - DATE BASIS OF PROTEST MADE KNOWN - AWARD ON INITIAL PROPOSAL BASIS PROTEST AFTER SUBMISSION OF INITIAL PROPOSALS OBJECTING TO AWARD ON BASIS OF INITIAL PROPOSALS AND AGENCY'S FAILURE TO AMEND REQUEST FOR PROPOSALS (RFP) IS NOT UNTIMELY, BECAUSE PROTEST IS NOT DIRECTED AT ANY APPARENT IMPROPRIETY IN RFP, BUT AT CONDUCT OF PROCUREMENT AFTER INITIAL PROPOSALS WERE RECEIVED. CONTRACTS - PROTESTS - TIMELINESS - NEGOTIATED CONTRACTS - DATE BASIS OF PROTEST MADE KNOWN - AWARD ON INITIAL PROPOSAL BASIS WHERE OFFEROR RECEIVED INFORMATION ON JULY 25 LEADING IT TO INQUIRE WHETHER AGENCY WOULD AMEND RFP, WAITED FOR PROMISED RESPONSE, AND PROTESTED WITHIN 10 WORKING DAYS AFTER IT WAS TOLD ON AUGUST 25 THAT AWARD WAS BEING MADE ON BASIS OF INITIAL PROPOSALS, PROTEST IS NOT UNTIMELY. BASIS FOR PROTEST WAS NOT KNOWN UNTIL AGENCY RESPONDED TO JULY INQUIRY, AND DELAY IN AGENCY RESPONSE IS NOT SO GREAT THAT AGENCY INACTION CHARGED PROTESTER WITH KNOWLEDGE OF BASIS FOR PROTEST PRIOR TO AUGUST 25. CONTRACTS - NEGOTIATION - AWARDS - INITIAL PROPOSAL BASIS - COMPETITION SUFFICIENCY PROTESTER'S DOUBTS THAT ADEQUATE COMPETITION EXISTED FURNISH NO BASIS FOR OBJECTION TO AWARD ON BASIS OF INITIAL PROPOSALS WERE THERE IS NO SHOWING THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3 807.1(A) (1976 ED.) CRITERIA FOR ADEQUATE PRICE COMPETITION WERE NOT SATISFIED. ALLEGED ADVANTAGE TO GOVERNMENT AS REASON FOR OPENING DISCUSSIONS IS NOT SHOWN. CONTRACTS - NEGOTIATION - CHANGES, ETC. - WRITTEN AMENDMENT REQUIREMENT - EXCEPTIONS - DE MINIMIS RULE APPLICABILITY PROTESTER'S CONTENTION-- THAT AIR FORCE ERRED IN MAKING AWARD ON INITIAL PROPOSAL BASIS BECAUSE ASPR 3-805.4(A) (1976 ED.) REQUIRED AMENDMENT TO RFP DUE TO CHANGE IN REQUIREMENTS-- IS NOT SUSTAINED. SOLE CHANGE (REMOVAL OF 1 OF 617 EQUIPMENT ITEMS TO BE SERVICED) APPEARS TO BE DE MINIMIS WHERE AIR FORCE MAINTAINS THERE WAS NO SIGNIFICANT CHANGE IN SERVICE REQUIREMENTS, SUCCESSFUL OFFEROR HAD PREVIOUSLY ACCEPTED REQUIREMENT TO SERVICE DELETED ITEM AS NO COST MODIFICATION TO PRIOR CONTRACT, AND EVEN PROTESTER ALLEGES ONLY SMALL REDUCTION IN ITS PROPOSED PRICE WAS DUE TO CHANGE. CONTRACTORS - INCUMBENT - COMPETITIVE ADVANTAGE PROTESTER FAILS TO SHOW THAT RFP AS ISSUED CONTAINED INACCURATE INFORMATION GIVING INCUMBENT CONTRACTOR UNFAIR COMPETITIVE ADVANTAGE. THRUST OF PROTEST IS THAT PROTESTER WAS UNFAIRLY DISADVANTAGED BY LACK OF OPPORTUNITY TO REVISE ITS PROPOSAL AFTER INITIAL PROPOSALS WERE SUBMITTED AND IT LEARNED THAT 1 OF 617 EQUIPMENT ITEMS TO BE SERVICED HAD BEEN REMOVED. HOWEVER, DE MINIMIS CHANGE DID NOT REQUIRE AGENCY TO AMEND RFP PURSUANT TO ASPR 3-805.4(A) (1976 ED.), NOR DID AGENCY ERR IN MAKING AWARD ON BASIS OF INITIAL PROPOSALS UNDER ASPR 3-805.1(V) (1976 ED.). CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - PREPARATION - COSTS IN VIEW OF CONCLUSIONS THAT AGENCY DID NOT ERR IN MAKING AWARD ON BASIS OF INITIAL PROPOSALS, THAT THERE WAS NO REQUIREMENT TO AMEND RFP FOR DE MINIMIS CHANGE IN REQUIREMENTS, AND THAT INCUMBENT CONTRACTOR DID NOT HAVE UNFAIR COMPETITIVE ADVANTAGE, THERE IS NO BASIS TO FIND ARBITRARY AND CAPRICIOUS ACTION BY AGENCY NECESSARY TO SUPPORT RECOVERY OF PROPOSAL PREPARATION COSTS. CLAIM IS ACCORDINGLY DENIED.

IN THE MATTER OF TELOS COMPUTING, INC., MARCH 27, 1978:

TABLE OF CONTENTS

I. INTRODUCTION 371 II. BACKGROUND 372 III. ALLEGED UNTIMELINESS OF PROTEST 373 IV. ALLEGED ADVANTAGE TO GOVERNMENT AS REASON FOR CONDUCTING DISCUSSIONS 375 V. CHANGE IN REQUIREMENTS 376 VI. ALLEGED UNFAIR COMPETITIVE ADVANTAGE 377 VII. CLAIM FOR PROPOSAL PREPARATION COSTS 379 VIII. CONCLUSION 379

I. INTRODUCTION

THIS IS OUR DECISION ON A PROTEST BY TELOS COMPUTING, INC. (TELOS), CONCERNING THE AWARD OF A CONTRACT TO AIL, INC., UNDER REQUEST FOR PROPOSALS (RFP) NO. F09603-77-R-1063, ISSUED BY THE DEPARTMENT OF THE AIR FORCE. THE PROTESTER CONTENDS THAT RATHER THAN MAKING AN AWARD ON THE BASIS OF THE INITIAL PROPOSALS, THE CONTRACTING OFFICER SHOULD HAVE AMENDED THE RFP AND CONDUCTED DISCUSSIONS WITH THE OFFERORS. TELOS SEEKS, ALTERNATIVELY, (1) A RECOMMENDATION THAT NEGOTIATIONS BE REOPENED, OR (2) A RECOMMENDATION THAT THE CONTRACT OPTIONS NOT BE EXERCISED, AS WELL AS A DECISION GRANTING RECOVERY OF ITS PROPOSAL PREPARATION COSTS. THE AIR FORCE AND AIL MAINTAIN THE PROTEST IS UNTIMELY, OR, IF TIMELY, IS IN ANY EVENT WITHOUT MERIT.

II. BACKGROUND

THE RFP CONTEMPLATED THE AWARD OF A CONTRACT FOR SERVICES AND REPAIR WORK IN SUPPORT OF VARIOUS EQUIPMENT PECULIAR TO 11 SITES (6 IN THE CONTINENTAL UNITED STATES, 2 IN HAWAII AND 3 IN GERMANY) WHICH HANDLE INTELLIGENCE DATA. PROPOSALS WERE TO BE SUBMITTED FOR A 1-YEAR CONTRACT PERIOD AND FOR 2 OPTION YEARS, PRICED IN TERMS OF MAN-MONTH RATES AT THE 11 SITES. APPEARS FROM SECTION D OF THE RFP THAT GIVEN ACCEPTABLE TECHNICAL PROPOSALS, THE LOWEST EVALUATED PRICE FOR THE 3 YEARS WOULD BE THE DETERMINATIVE FACTOR FOR AWARD.

ATTACHMENT I TO THE RFP LISTED THE EQUIPMENT, BY TYPE AND QUANTITY OF TYPE AT EACH SITE, FOR WHICH REPAIR AND MAINTENANCE SERVICES WOULD BE REQUIRED. ALTOGETHER, 221 TYPES AND 617 ITEMS OF EQUIPMENT WERE LISTED. FOR ONE OF THE SITES (STUTTGART, GERMANY), 11 DIFFERENT TYPES OF EQUIPMENT (17 TOTAL ITEMS) WERE LISTED. ONE OF THE UNITS AT THIS SITE WAS IDENTIFIED AS AM ARM-2365 MAGNETIC CORE MEMORY SYSTEM.

THE RFP WAS ISSUED ON JUNE 3, 1977. AT A PREPROPOSAL CONFERENCE ON JUNE 21, ONE QUESTION WAS WHETHER THERE WOULD BE ANY FUTURE CHANGES TO THE ATTACHMENT I EQUIPMENT LIST. PROSPECTIVE OFFERORS WERE ADVISED THAT "THE EQUIPMENT LIST IS UP TO DATE AT THIS TIME; HOWEVER, REQUIREMENTS ARE ALWAYS SUBJECT TO CHANGE."

THE AIR FORCE REPORTS THAT ON JULY 15, 1977, THE ARM-2365 WAS "DE INSTALLED." THE RFP WAS NOT AMENDED TO ADVISE PROSPECTIVE OFFERORS OF THIS DEVELOPMENT. (THE AIR FORCE STATES THAT THE CONTRACTING OFFICER WAS UNAWARE OF THE DE-INSTALLATION AT THIS TIME.) ON JULY 18, 1977, INITIAL PROPOSALS WERE SUBMITTED BY AIL, THE INCUMBENT CONTRACTOR, AND TELOS. THE AIR FORCE STATES THAT BOTH PROPOSALS WERE CONSIDERED TO BE "RESPONSIVE" TO THE RFP. THE EVALUATED PRICES FOR THE THREE PRICED YEARS WERE AIL: $1,450,296.95; AND TELOS: $1,457,562.30.

BY MESSAGE OF JULY 26 AND LETTER OF JULY 27, 1977, TELOS ADVISED THE AIR FORCE THAT IT HAD BEEN INFORMED BY A THIRD PARTY ON JULY 25, 1977, THAT THE ARM-2365 HAD BEEN DE-INSTALLED. TELOS REQUESTED CLARIFICATION OF THE STATUS OF THE ARM-2365 AND SEVERAL OTHER ITEMS IN THE SOLICITATION AS WELL AS "NECESSARY AMENDMENT" TO THE RFP, ON THE BASIS THAT CHANGES IN THE VARIOUS ITEMS COULD HAVE A SIGNIFICANT COST IMPACT ON THE TELOS PROPOSAL. BY LETTER DATED AUGUST 25, 1977, TO THE AIR FORCE, TELOS COMPLAINED THAT IT HAD RECEIVED NEITHER WRITTEN NOR ORAL RESPONSE TO ITS INQUIRY.

IN THE MEANTIME, THE CONTRACTING OFFICER BY LETTER OF AUGUST 23, 1977, CONFIRMED THAT THE ARM-2365 HAD BEEN DE-INSTALLED, FURNISHED INFORMATION AS TO THE OTHER ASPECTS OF TELOS' INQUIRY, AND ADVISED TELOS THAT NEGOTIATIONS WOULD NOT BE CONDUCTED AND THAT AN AWARD WAS BEING MADE ON THE BASIS OF THE INITIAL PROPOSALS. TELOS PROTESTED TO THE AIR FORCE BY MESSAGE AND LETTER DATED AUGUST 26, 1977, AND FILED ITS PROTEST WITH OUR OFFICE ON SEPTEMBER 9, 1977.

III. ALLEGED UNTIMELINESS OF PROTEST

AIL AND THE AIR FORCE ARGUE THAT THE PROTEST IS UNTIMELY BECAUSE IT IS DIRECTED AGAINST ALLEGED DEFICIENCIES IN THE RFP AND WAS NOT FILED PRIOR TO THE CLOSING DATE FOR RECEIPT OF INITIAL PROPOSALS (JULY 18, 1977). THIS CONTENTION IS APPARENTLY BASED ON THE FACTS THAT THE RFP ADVISED OFFERORS THAT AWARD MIGHT BE MADE ON THE BASIS OF THE INITIAL PROPOSALS WITHOUT DISCUSSIONS, AND THAT OFFERORS WERE INFORMED THAT WHILE THE EQUIPMENT LIST IN THE RFP WAS UP TO DATE THE REQUIREMENTS WERE ALWAYS SUBJECT TO CHANGE.

PROTESTS ALLEGING IMPROPRIETIES WHICH ARE APPARENT IN AN RFP AS ORIGINALLY ISSUED MUST BE FILED PRIOR TO THE CLOSING DATE FOR RECEIPT OF INITIAL PROPOSALS. SEE SECTION 20.2(B)(1) OF OUR BID PROTEST PROCEDURES, 4 C.F.R.PART 20 (1977). THE PROTESTER'S POSITION, BASED UPON INFORMATION IT RECEIVED AFTER SUBMITTING ITS INITIAL PROPOSAL, IS THAT THE AIR FORCE WAS REQUIRED TO AMEND THE RFP AND INITIATE DISCUSSIONS. THE ABOVE-NOTED RFP STATEMENTS DO NOT CONCLUSIVELY ESTABLISH THAT AN AWARD WOULD BE MADE ON THE BASIS OF THE INITIAL PROPOSALS, NOR DO THEY EXCLUDE THE POSSIBILITY THAT THE RFP MIGHT BE AMENDED DUE TO CHANGED REQUIREMENTS, DISCUSSIONS CONDUCTED, AND BEST AND FINAL OFFERS REQUESTED. ACCORDINGLY, WE DO NOT BELIEVE IT IS ACCURATE TO CHARACTERIZE THE PROTEST AS OBJECTING TO THESE RFP STATEMENTS, NOR CAN WE CONCLUDE THAT THE BASIS FOR PROTEST WAS APPARENT FROM THE TERMS OF THE RFP.

THE DECISIONS OF OUR OFFICE CITED BY AIL AND THE AIR FORCE IN THIS CONNECTION INVOLVE THE KIND OF SITUATION WHERE THE PROTESTER OBJECTS TO TERMS AND CONDITIONS APPARENT IN THE RFP-- SUCH AS THE TYPE OF CONTRACT CONTEMPLATED (KAPPA SYSTEMS, INC., 56 COMP.GEN. 675 (1977), 77-1 CPD 412), A REQUIREMENT THAT A SAMPLE BE SUBMITTED WITHIN 2 DAYS SHOULD THE AGENCY REQUEST ONE (COMSPACE CORPORATION, B-186342, JANUARY 24, 1977, 77-1 CPD 46), OR THE LISTING OF A PARTICULAR MANUFACTURER'S PART AS EQUAL TO ANOTHER MANUFACTURER'S PART (MILTOPE CORPORATION, B-188342, APRIL 18, 1977, 77-1 CPD 270). THE PRESENT PROTEST, IN CONTRAST, IS THE TYPE OF CASE WHERE, GIVEN THE RFP TERMS AND CONDITIONS, THE PROTEST IS ESSENTIALLY DIRECTED AT THE WAY THE PROCUREMENT WAS CONDUCTED AFTER INITIAL PROPOSALS WERE RECEIVED. SEE, IN THIS REGARD, AMRAM NOWAK ASSOCIATES, INC., B-187253, NOVEMBER 29, 1976, 76-2 CPD 454; U.S. NUCLEAR, INC., 57 COMP.GEN. 185 (1977), 77-2 CPD 511.

AIL, HOWEVER, MAINTAINS THAT EVEN IF THE PROTEST IS NOT DIRECTED AGAINST THE RFP, IT IS STILL UNTIMELY BECAUSE IT WAS NOT FILED WITHIN 10 WORKING DAYS AFTER THE BASIS FOR PROTEST WAS KNOWN OR SHOULD HAVE BEEN KNOWN (4 C.F.R. 20.2(B)(2)). AIL POINTS OUT THAT WHILE TELOS LEARNED OF THE REMOVAL OF THE ARM-2365 ON JULY 25, 1977, IT DID NOT PROTEST TO THE AIR FORCE UNTIL AUGUST 26, 1977, AND TO OUR OFFICE UNTIL SEPTEMBER 9, 1977.

THE BASIS FOR PROTEST IS THAT THE AGENCY PROCEEDED WITH AN AWARD ON THE BASIS OF THE INITIAL PROPOSALS RATHER THAN AMENDING THE RFP AND CONDUCTING DISCUSSIONS. WE BELIEVE THIS BASIS WAS NOT KNOWN UNTIL THE AIR FORCE RESPONDED TO TELOS' JULY 26 INQUIRY. FURTHER, WE CANNOT SAY THAT THE AMOUNT OF TIME WHICH ELAPSED BETWEEN TELOS' JULY 26 INQUIRY AND THE AGENCY'S RESPONSE IN LATE AUGUST WAS SO GREAT THAT THE AIR FORCE'S INACTION CHARGED TELOS WITH KNOWLEDGE OF THE BASIS FOR PROTEST. IN THIS REGARD, TELOS HAS STATED THAT IN SEVERAL TELEPHONE CONVERSATIONS WITH AIR FORCE PERSONNEL SUBSEQUENT TO JULY 26, 1977, IT WAS TOLD THAT ITS INQUIRY WAS UNDER CONSIDERATION AND WOULD BE RESOLVED WHEN KEY AIR FORCE PROCUREMENT PERSONNEL RETURNED FROM VACATION.

WE BELIEVE TELOS FIRST HAD KNOWLEDGE OF THE BASIS FOR PROTEST ON AUGUST 25, 1977, WHEN IT TELEPHONED THE AIR FORCE AND WAS TOLD AN AWARD HAD BEEN MADE. TELOS IMMEDIATELY PROTESTED TO THE AIR FORCE. WITHOUT WAITING FOR A DECISION BY THE AIR FORCE ON ITS PROTEST, TELOS FILED ITS PROTEST WITH OUR OFFICE ON SEPTEMBER 9, 1977 (THE TENTH WORKING DAY AFTER AUGUST 25, 1977).

ACCORDINGLY, THE PROTEST TO OUR OFFICE WAS TIMELY FILED WITHIN 10 WORKING DAYS AFTER THE BASIS FOR PROTEST WAS KNOWN OR SHOULD HAVE BEEN KNOWN. THE DECISIONS CITED BY AIL IN THIS REGARD ARE INAPPOSITE. JERRY M. LEWIS TRUCK PARTS & EQUIPMENT, INC., B-188960, JUNE 27, 1977, 77-1 CPD 458, INVOLVED A SITUATION WHERE THE PROTESTER RECEIVED NOTICE THAT AN AWARD HAD BEEN MADE TO ANOTHER OFFEROR. IN MICROSURANCE, INC. REQUEST FOR RECONSIDERATION, B-188830, JUNE 3, 1977, 77-1 CPD 393, THE UNTIMELY PROTEST, ALLEGEDLY PROMPTED BY THE CONTENDS OF THE BIDS AS REVEALED AT BID OPENING, WAS FILED SEVERAL MONTHS AFTER BID OPENING.

FINALLY, ONE PERIPHERAL OBJECTION RAISED BY THE PROTESTER IS UNTIMELY. TELOS HAS CONTENDED THAT INCORPORATING BY REFERENCE IN THE RFP A PROVISION ADVISING OFFERORS THAT AWARD MIGHT BE MADE ON THE BASIS OF THE INITIAL PROPOSALS (PARAGRAPH 10 OF STANDARD FORM 33A (MARCH 1969), INCORPORATED AT PAGE 6 OF THE RFP), IS NOT A SUFFICIENT NOTICE TO OFFERORS. IN THIS REGARD, WE HAVE NOTED THAT THE OBLIGATION RESTS ON OFFERORS TO CAREFULLY SCRUTINIZE THE RFP AND THAT AN APPARENT SOLICITATION IMPROPRIETY CAN CONSIST OF AN OMITTED PROVISION WHICH ALLEGEDLY SHOULD HAVE BEEN INCLUDED. HONEYWELL INC., B-184245, NOVEMBER 24, 1975, 75-2 CPD 346. ANY UNCERTAINTY ON TELOS' PART CONCERNING THIS MATTER SHOULD HAVE BEEN TIMELY RAISED PRIOR TO THE CLOSING DATE FOR RECEIPT OF INITIAL PROPOSALS.

IV. ALLEGED ADVANTAGE TO GOVERNMENT AS REASON FOR CONDUCTING DISCUSSIONS

TELOS CONTENDS THAT WHERE, AFTER THE RECEIPT OF INITIAL PROPOSALS, A CONTRACTING OFFICER IS PRESENTED WITH A SITUATION WHERE THE GOVERNMENT STANDS TO BENEFIT GREATLY FROM NEGOTIATIONS, HE SHOULD CONDUCT NEGOTIATIONS, CITING 47 COMP.GEN. 279 (1967), 49 ID. 156 (1969) AND DEVELOPMENT ASSOCIATES, INC., 56 ID. 580 (1977), 77-1 CPD 310 (CITED BY THE PROTESTER AS B-187756, MAY 5, 1977). TELOS ALSO ALLEGES THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 3-805.1(V) (1976 ED.) WAS CONTRAVENED BECAUSE IT WAS NOT CLEARLY DEMONSTRATED THAT ADEQUATE COMPETITION SUFFICIENT TO SUPPORT AN AWARD ON THE BASIS OF THE INITIAL PROPOSALS EXISTED.

ASPR SEC. 3-805.1(V) ALLOWS AWARD TO BE MADE IN A NEGOTIATED PROCUREMENT WITHOUT DISCUSSIONS WHERE IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION THAT ACCEPTANCE OF THE MOST FAVORABLE INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN A FAIR AND REASONABLE PRICE, PROVIDED THAT THE SOLICITATION ADVISED OFFERORS OF THE POSSIBILITY THAT AWARD MIGHT BE MADE WITHOUT DISCUSSIONS, AND PROVIDED THAT AWARD IS IN FACT MADE WITHOUT DISCUSSIONS. ASPR SEC. 3 807.1(A) (1976 ED.) PROVIDES THAT ADEQUATE PRICE COMPETITION EXISTS IF AT LEAST TWO RESPONSIBLE OFFERORS WHICH CAN SATISFY THE GOVERNMENT'S REQUIREMENTS INDEPENDENTLY CONTEND FOR A CONTRACT TO BE AWARDED TO THE "RESPONSIVE" AND RESPONSIBLE OFFEROR SUBMITTING THE LOWEST EVALUATED PRICE BY SUBMITTING PRICED OFFERS "RESPONSIVE" TO THE EXPRESSED REQUIREMENTS OF THE SOLICITATION. IF THESE CRITERIA ARE SATISFIED, ASPR SEC. 3-807.1(B) PROVIDES THAT PRICE COMPETITION MAY BE PRESUMED TO BE ADEQUATE UNLESS THE CONTRACTING OFFICER SPECIFICALLY DETERMINES OTHERWISE.

ASIDE FROM A GENERAL EXPRESSION OF DOUBT THAT ADEQUATE PRICE COMPETITION EXISTED, TELOS HAS FURNISHED NOTHING TO DEMONSTRATE WHY THE CRITERIA OF ADEQUATE PRICE COMPETITION WERE NOT SATISFIED IN THIS PROCUREMENT. MOREOVER, THE DECISIONS OF OUR OFFICE RELIED ON BY THE PROTESTER ARE NOT IN POINT. IN 47 COMP.GEN. 279, AN OFFEROR ATTEMPTED TO REDUCE ITS INITIAL PROPOSAL PRICE FROM $795,397 TO $636,317. WHILE THIS WAS A LATE MODIFICATION TO THE PROPOSAL AND COULD NOT BE ACCEPTED, WE HELD THAT THE CONTRACTING OFFICER, CONFRONTED WITH THIS INFORMATION, SHOULD HAVE CONDUCTED DISCUSSIONS RATHER THAN MAKING AN AWARD ON THE BASIS OF THE INITIAL PROPOSALS, BECAUSE THE LATE PRICE REDUCTION INDICATED THAT THE GOVERNMENT STOOD TO "BENEFIT GREATLY" FROM NEGOTIATIONS. IN THE PRESENT CASE, HOWEVER, AS FAR AS THE RECORD SHOWS TELOS DID NOT AT ANY TIME AFTER SUBMITTING ITS INITIAL PROPOSAL EITHER SUBMIT A PRICE REDUCTION OR ADVISE THE CONTRACTING OFFICER OF THE AMOUNT BY WHICH ITS PRICE MIGHT BE REDUCED IF DISCUSSIONS WERE CONDUCTED. IN THIS REGARD, THE PROTESTER'S INFORMATION SUBMITTED TO OUR OFFICE SHOWING A POSSIBLE PRICE REDUCTION HAS BEEN CLAIMED TO BE PROPRIETARY BY TELOS, AND HAS NOT BEEN RELEASED TO EITHER THE AIR FORCE OR AIL.

FURTHER, 49 COMP.GEN. 156 IS NOT IN POINT AS IT INVOLVED A CASE WHERE DISCUSSIONS WERE IN FACT CONDUCTED AND THE ISSUE RELATED TO THE FAILURE TO ISSUE A WRITTEN AMENDMENT TO THE RFP REFLECTING CHANGED DELIVERY REQUIREMENTS. IN DEVELOPMENT ASSOCIATES, SUPRA, WE FOUND NO OBJECTION TO AN AWARD ON THE BASIS OF THE INITIAL PROPOSALS NOTWITHSTANDING THE PROTESTER'S CONTENTION THAT THE AGENCY SHOULD HAVE CONDUCTED DISCUSSIONS WITH IT.

IN VIEW OF THE FOREGOING, WE SEE NO MERIT IN THE PROTESTER'S CONTENTION THAT THE ADVANTAGES TO THE GOVERNMENT CALLED FOR THE OPENING OF DISCUSSIONS.

V. CHANGE IN REQUIREMENTS

TELOS NEXT CONTENDS THAT THE DE-INSTALLATION OF THE ARM-2365 WAS A CHANGE IN THE GOVERNMENT'S REQUIREMENTS REQUIRING AMENDMENT OF THE RFP AS PROVIDED IN ASPR SEC. 3-805.4(A) (1976 ED.):

WHEN, EITHER BEFORE OR AFTER RECEIPT OF PROPOSALS, CHANGES OCCUR IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS MADE TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE SOLICITATION. * * *

THE CHANGE WHICH OCCURRED IN THE PRESENT PROCUREMENT INVOLVED THE DELETION OF ONLY ONE OF THE 617 ITEMS TO BE SERVICED. THE RECORD CLEARLY INDICATES THE DE MINIMIS CHARACTER OF THE CHANGE. IN THIS REGARD, AIL POINTS OUT THAT WHEN THE ARM-2365 WAS ADDED SEVERAL YEARS AGO TO THE EQUIPMENT TO BE SERVICED, IT WAS ACCEPTED AT THAT TIME AS A NO-COST MODIFICATION TO AIL'S CONTRACT. AS DISCUSSED INFRA, TELOS CONTENDS THE DELETION OF THE ARM-2365 HAS A SIGNIFICANT IMPACT ON THE PRICE OF ITS PROPOSAL. HOWEVER, THE INFORMATION FURNISHED BY TELOS CONCERNING THE ALLEGED PRICE IMPACT, EVEN IF ACCEPTED AT FACE VALUE, WOULD INVOLVE ONLY A SMALL REDUCTION IN ITS PROPOSED PRICE. FURTHER, THE AIR FORCE CALLS ATTENTION TO ASPR SEC. 3-505(A) (1976 ED.) WHICH PROVIDES IN PERTINENT PART THAT IF, AFTER ISSUANCE OF AN RFP BUT BEFORE RECEIPT OF PROPOSALS, IT BECOMES NECESSARY TO MAKE SIGNIFICANT CHANGES IN QUANTITY OR SPECIFICATIONS, SUCH CHANGES SHALL BE ACCOMPLISHED BY AN AMENDMENT TO THE RFP. THE AIR FORCE STATES THAT PRIOR TO AWARD ASPR SEC. 3-505(A) WAS CONSIDERED AND A DETERMINATION MADE THAT DE INSTALLATION OF THE ARM-2365 DID NOT CONSTITUTE A SIGNIFICANT CHANGE IN THE REQUIREMENTS BECAUSE A COMPARABLE LEVEL OF SERVICES FOR THE OTHER EQUIPMENT AT THE STUTTGART SITE WAS STILL REQUIRED.

UNDER THESE CIRCUMSTANCES WE DO NOT BELIEVE THAT ASPR SEC. 3 805.4(A), CONSIDERED IN AND OF ITSELF, REQUIRED THE AIR FORCE TO AMEND THE RFP. FURTHER, THE DECISIONS OF OUR OFFICE RELIED ON BY TELOS DO NOT SUPPORT ITS ARGUMENT. SIGNATRON, INC., 54 COMP.GEN. 530 (1974), 74-2 CPD 386 (CITED BY THE PROTESTER AS B-181782, DECEMBER 26, 1974), AND B-174492, JUNE 1, 1972, INVOLVED PROCUREMENTS OF EQUIPMENT (A DIGITAL SIMULATION SYSTEM AND PRINTING PRESSES, RESPECTIVELY). BOTH DECISIONS ESSENTIALLY DEALT WITH THE QUESTION WHETHER AN AGENCY'S ACCEPTANCE OF ONE OFFEROR'S TECHNICAL APPROACH AS THE ANSWER TO ITS NEEDS, WITHOUT AMENDING THE RFP TO REFLECT THIS, DEPRIVED OTHER OFFERORS OF AN EQUAL OPPORTUNITY TO COMPETE. THE PRESENT CASE DOES NOT INVOLVE THE AIR FORCE'S ADOPTION OF ONE OFFEROR'S INDIVIDUAL TECHNICAL APPROACH TO FURNISHING AN EQUIPMENT END ITEM.

VI. ALLEGED UNFAIR COMPETITIVE ADVANTAGE

TELOS FURTHER ALLEGES THAT AIL, THE INCUMBENT CONTRACTOR, ENJOYED AN UNFAIR COMPETITIVE ADVANTAGE BECAUSE IT KNEW PRIOR TO SUBMITTING ITS PROPOSAL THAT THE ARM-2365 HAD BEEN DE-INSTALLED. IN THIS REGARD, THE AIR FORCE CITES BOSTON PNEUMATICS, INC., 56 COMP.GEN. 689 (1977), 77-1 CPD 416, WHERE WE QUOTED AT PAGE 691 THE FOLLOWING STATEMENT FROM ENSEC SERVICE CORP., 56 COMP.GEN. 656 (1976), 76-1 CPD 34:

* * * CERTAIN FIRMS MAY ENJOY A COMPETITIVE ADVANTAGE BY VIRTUE OF THEIR INCUMBENCY OR THEIR OWN PARTICULAR CIRCUMSTANCES. * * * WE KNOW OF NO REQUIREMENT FOR EQUALIZING COMPETITION BY TAKING INTO CONSIDERATION THESE TYPES OF ADVANTAGES, NOR DO WE KNOW OF ANY POSSIBLE WAY IN WHICH SUCH EQUALIZATION COULD BE EFFECTED. RATHER, THE TEST TO BE APPLIED IS WHETHER THE COMPETITIVE ADVANTAGE ENJOYED BY A PARTICULAR FIRM WOULD BE THE RESULT OF A PREFERENCE OR UNFAIR ACTION BY THE GOVERNMENT.

IN BOSTON PNEUMATICS, IT WAS ALLEGED THAT THE PREVIOUS CONTRACTOR HAD AN UNFAIR ADVANTAGE BECAUSE ONLY IT COULD QUALIFY FOR WAIVER OF INITIAL PRODUCTION TESTING, AND BECAUSE THE SOLICITATION DID NOT PROVIDE FOR FURNISHING A SAMPLE TO BIDDERS. HOWEVER, WE FOUND NO PREFERENCE OR UNFAIR ACTION BY THE GOVERNMENT IN THE CIRCUMSTANCES. IN ENSEC, LIKEWISE, NO UNFAIR ADVANTAGE WAS FOUND IN RESPECT TO OFFERORS' POSSIBLE PARTICIPATION IN A FEDERAL PROGRAM AFFORDING TAX BENEFITS AND OTHER ADVANTAGES.

THERE ARE MANY SIMILAR DECISIONS. UNFAIR COMPETITIVE ADVANTAGES HAVE BEEN ALLEGED, BUT NOT SHOWN, IN CASES WHERE THE PRIOR CONTRACTOR HAS DONE A DESIGN STUDY (TELEDYNE RYAN AERONAUTICAL, 56 COMP.GEN/ 635 (1977), 77-1 CPD 3521 OR HAS DRAFTED PLANS OR PRELIMINARY STUDIES RELEVANT TO THE CURRENT WORK (H. J. HANSEN COMPANY, B-181543, MARCH 28, 1975, 75-1 CPD 187). OTHER CASES WHERE UNFAIR COMPETITIVE ADVANTAGES HAVE NOT BEEN FOUND HAVE INVOLVED ALLEGATIONS THAT THE PRIOR CONTRACTOR HAD ALREADY DEVELOPED CERTAIN NECESSARY OPERATING PROCEDURES (FIELD MAINTENANCE SERVICES CORPORATION, 56 COMP.GEN. 1008 (1977), 77-2 CPD 235), WAS BETTER ABLE TO PROPOSE THE DIRECT LABOR FORCE (FIELD MAINTENANCE SERVICES CORPORATION, B-185339, MAY 28, 1976, 76-1 CPD 350), WAS IN A POSITION TO OFFER MORE SUBSTANTIAL BACKUP FACILITIES (HOUSTON FILMS, INC., B-184402, DECEMBER 22, 1975, 75-2 CPD 404), HAD ALREADY DEVELOPED A LARGE DATA BASE (AEROSPACE ENGINEERING SERVICES CORPORATION, B-184850, MARCH 9, 1976, 76-1 CPD 164), OR WAS IN A POSITION TO RESPOND TO AN ALLEGEDLY UNREASONABLE PROPOSAL RESPONSE PERIOD OF ONLY 5 DAYS) PRICE WATERHOUSE & CO., B-186779, NOVEMBER 15, 1976, 76-2 CPD 412).

SUCH DECISIONS, HOWEVER, ARE NOT FULLY DISPOSITIVE OF THE PRESENT PROTEST. THEY ESSENTIALLY STAND FOR THE PROPOSITION THAT THERE IS NO REQUIREMENT TO ATTEMPT TO EQUALIZE THE COMPETITION TO COMPENSATE FOR THE EXPERIENCE, RESOURCES OR SKILLS ONE OFFEROR HAS OBTAINED IN THE COURSE OF PERFORMING A PRIOR CONTRACT. A DIFFERENT QUESTION IS PRESENTED WHERE INFORMATION CONCERNING THE GOVERNMENT'S REQUIREMENTS IN THE RFP, KNOWN BY THE GOVERNMENT AND THE INCUMBENT CONTRACTOR TO BE INACCURATE, GIVES THE INCUMBENT AN UNFAIR COMPETITIVE ADVANTAGE AGAINST ANY COMPETITOR. SEE, FOR EXAMPLE, INFORMATICS, INC., 56 COMP.GEN. 402 (1977), 77-1 CPD 190, MODIFIED IN PART, 56 ID. 663 (1977), 77-1 CPD 383, WHERE WE STATED THAT THE RFP AS ISSUED SHOULD HAVE CONTAINED A GREATLY REDUCED ESTIMATE OF THE NUMBER OF FILES IN A SUSPENSE FILE SYSTEM, IN ORDER TO ELIMINATE THE UNFAIR COMPETITIVE ADVANTAGE ARISING FROM THE INCUMBENT'S KNOWLEDGE THAT THE ACTUAL NUMBER OF FILES IN EXISTENCE WAS CONSIDERABLY LESS THAN THE NUMBER INDICATED IN THE RFP. WE NOTED THAT THE ABSENCE OF AN ACCURATE ESTIMATE WOULD OPERATE TO THE COMPETITIVE DISADVANTAGE OF ANY OFFEROR COMPETING AGAINST THE INCUMBENT.

UNLIKE INFORMATICS, WE DO NOT BELIEVE THERE HAS BEEN A SUFFICIENT SHOWING IN THE PRESENT CASE THAT THE RFP AS ISSUED CONTAINED INACCURATE INFORMATION RESULTING IN AIL, THE INCUMBENT CONTRACTOR, HAVING AN UNFAIR COMPETITIVE ADVANTAGE OVER ANY COMPETITOR. IN THIS REGARD, AIL HAD ACCEPTED THE REQUIREMENT TO SERVICE THE ARM-2365 AS A NO-COST MODIFICATION TO ITS PRIOR CONTRACT, THE CONTRACTOR MAINTAINS ITS PROPOSAL OFFERED WITHOUT EXCEPTION TO SERVICE ALL EQUIPMENT, INCLUDING THE ARM-2365, AND THE CONTRACTING OFFICER HAS CONTENDED THAT THE PRICING STRUCTURE OF THE AIL PROPOSAL SHOWS THAT THE INCUMBENT DID NOT REDUCE ITS PRICE DUE TO PRIOR KNOWLEDGE OF THE ARM-2365 REMOVAL.

MOREOVER, IT IS OUR VIEW, AS PREVIOUSLY NOTED, THAT THE PROTEST IS ESSENTIALLY DIRECTED AT THE WAY THE PROCUREMENT WAS CONDUCTED AFTER INITIAL PROPOSALS WERE RECEIVED. RATHER THAN AN UNFAIR COMPETITIVE ADVANTAGE ON THE PART OF AIL, WE BELIEVE THAT THE THRUST OF THE PROTEST IS THAT TELOS WAS OPERATING AT AN UNFAIR COMPETITIVE DISADVANTAGE BECAUSE REMOVAL OF THE ARM-2365 ALLEGEDLY HAD A FAVORABLE IMPACT ON ITS STAFFING PLANS BUT THE AIR FORCE DID NOT GIVE IT THE OPPORTUNITY TO REDUCE ITS PRICE ACCORDINGLY.

HOWEVER, WE HAVE FOUND NO BASIS FOR OBJECTION TO THE AIR FORCE'S ACTIONS WHICH PRECLUDED THE PROTESTER FROM SUCH AN OPPORTUNITY-- THAT IS, WE HAVE FOUND NO VIOLATION OF ASPR SEC. 3-805.1(V) IN REGARD TO MAKING AN AWARD ON THE BASIS OF THE INITIAL PROPOSALS, AND IN OUR VIEW ASPR SEC. 3-805.4(A) DID NOT REQUIRE THE AIR FORCE TO AMEND THE RFP AFTER RECEIPT OF THE INITIAL PROPOSALS DUE TO A CHANGE IN REQUIREMENTS WITHIN THE MEANING OF THE REGULATION. IN THESE CIRCUMSTANCES, WE ARE NOT PERSUADED THAT AN UNFAIR COMPETITIVE ADVANTAGE ON THE PART OF THE INCUMBENT CONTRACTOR HAS BEEN ESTABLISHED.

VII. CLAIM FOR PROPOSAL PREPARATION COSTS

TELOS ALSO SUGGESTS THAT IT SHOULD BE GRANTED RECOVERY OF ITS PROPOSAL PREPARATION COSTS.

BID OR PROPOSAL PREPARATION COSTS MAY BE RECOVERABLE WHERE IT IS SHOWN THAT THE GOVERNMENT'S ARBITRARY AND CAPRICIOUS ACTION TOWARDS A CLAIMANT HAS DENIED THE CLAIMANT FAIR AND HONEST CONSIDERATION OF ITS BID OR PROPOSAL. SEE, GENERALLY, T&H COMPANY, 54 COMP.GEN. 1021 (1975), 75-1 CPD 345. IN THE PRESENT CASE, FOR THE REASONS PREVIOUSLY INDICATED WE HAVE FOUND NO BASIS FOR OBJECTION TO THE AWARD, AND ACCORDINGLY SEE NO GROUNDS TO FIND THE EXISTENCE OF ARBITRARY AND CAPRICIOUS ACTION NECESSARY TO SATISFY THE STANDARD FOR RECOVERY OF PROPOSAL PREPARATION COSTS. ACCORDINGLY, THE CLAIM IS DENIED.

VIII. CONCLUSION

THE PROTEST IS DENIED.