B-167643, NOV. 14, 1969

B-167643, NOV. 14, 1969

NEGOTIATION--LATE PROPOSALS AND QUOTATIONS--MODIFICATION OF PROPOSAL UNDER REQUEST FOR PROPOSALS (RFP) FOR NITROGEN TETROXIDE, UNSUCCESSFUL BIDDER'S PROTEST TO AWARD IS DENIED FOR UNDER TERMS OF RFP RIGHT TO MODIFY OR WITHDRAW OFFERS AT ANY TIME PRIOR TO AWARD AS CONTAINED IN PARAGRAPH 7 (B) OF STANDARD FORM 33A WAS LIMITED BY PARAGRAPH 8 (A) THAT OFFERS AND MODIFICATIONS ARE FOR CONSIDERATION ONLY IF RECEIVED BY DEADLINE SET FOR RECEIPT OF OFFERS AND LATE ONLY IF RECEIVED BY DEADLINE SET FOR RECEIPT OF OFFERS AND LATE MODIFICATION WAS PROPERLY REJECTED. WHILE SPECIFICATIONS WERE ORALLY AMENDED TO INCLUDE MINIMUM GUARANTEE TO ENCOURAGE GREATER COMPETITION AND CHANGE SHOULD HAVE BEEN MADE IN WRITING AS CONTEMPLATED BY ASPR 3-505 (A) SINCE PARTIES WERE MADE AWARE OF GUARANTEE FAILURE TO COMPLY WITH REGULATION DOES NOT INVALIDATE AWARD. NEGOTIATION-- COMPETITION- DISCUSSION WITH ALL OFFERORS REQUIREMENT UNDER REQUEST FOR PROPOSALS (RFP) FOR NITROGEN TETROXIDE, UNSUCCESSFUL BIDDER'S PROTEST TO AWARD IS DENIED FOR WHILE 10 U.S.C. 2304 PROVIDES THAT ORAL OR WRITTEN DISCUSSIONS ARE REQUIRED TO BE HELD 2304 PROVIDES THAT ORAL OR WRITTEN DISCUSSIONS ARE REQUIRED TO BE HELD BY ALL RESPONSIBLE OFFERS WITHIN COMPETITIVE RANGE UNLESS ACCEPTANCE OF INITIAL PROPOSAL WITHOUT DISCUSSION WILL RESULT IN FAIR AND REASONABLE PRICES, RFP FOREWARNED OFFERORS AWARD MIGHT BE MADE ON BASIS OF INITIAL PROPOSALS WITHOUT DISCUSSION AND, IN LIGHT OF CIRCUMSTANCES AND ADMINISTRATIVE DISCRETION NO BASIS IS FOUND TO QUESTION VALIDITY OF CONTRACTING OFFICER'S DECISION, DISCUSSION OF OFFEROR'S RESPONSIBILITY OR ABILITY TO PERFORM NOT FORECLOSING CONTRACTING OFFICER'S RIGHT TO INVOKE EXCEPTION TO REQUIREMENT FOR CONDUCTING WRITTEN OR ORAL DISCUSSIONS WITH ALL OFFERORS.

TO HERCULES, INCORPORATED:

BY LETTER OF AUGUST 4, 1969, AS SUPPLEMENTED BY LETTERS OF SEPTEMBER 22 AND SEPTEMBER 24, 1969, YOU PROTESTED AGAINST THE AWARD OF CONTRACT NO. F41608-69-D-3834 BY THE DEPARTMENT OF THE AIR FORCE, SAN ANTONIO AIR MATERIEL AREA, TO SOUTHWEST POTASH CORPORATION FOR NITROGEN TETROXIDE TO BE USED IN LIQUID PROPELLED MISSILES.

THE SUBJECT NEGOTIATED PROCUREMENT WAS INITIATED BY REQUEST FOR PROPOSALS NO. F41608-69-R-7381 ISSUED MARCH 21, 1969. TWO PROPOSALS WERE RECEIVED BY THE DEADLINE, APRIL 11, 1969, AFTER THE SOLICITATION HAD BEEN MODIFIED ORALLY ON APRIL 7 TO GUARANTEE A MINIMUM PURCHASE OF 6,000,000 POUNDS OF NITROGEN TETROXIDE. HERCULES' PROPOSAL AT $945,265 AND SOUTHWEST'S AT $683,652 WERE SUBMITTED ON AN F.O.B. ORIGIN BASIS AS REQUESTED BY THE SOLICITATION. ON JULY 17, 1969, HERCULES REDUCED ITS PRICES TO $881,389. THIS WAS CONSIDERED A LATE MODIFICATION BY THE CONTRACTING OFFICER AND WAS DISREGARDED. ON JULY 29, 1969, HERCULES WAS ADVISED BY THE CONTRACTING OFFICER THAT AWARD HAD BEEN MADE TO SOUTHWEST POTASH ON JULY 24, 1969. THE COURSE OF A PRE-AWARD SURVEY, SOME DISCUSSIONS ON RESPONSIBILITY WERE HELD WITH SOUTHWEST POTASH.

YOU CONTEND THAT THE PROPOSAL MODIFICATION OF JULY 17, 1969, SHOULD HAVE BEEN CONSIDERED, AND THAT THE PROCUREMENT WAS "CONTRIVED" IN THAT THE CIRCUMSTANCES INDICATE A PRECONCEIVED DECISION TO MAKE AWARD TO SOUTHWEST POTASH. YOU ALSO ASSERT THAT WRITTEN OR ORAL DISCUSSIONS, AS REQUIRED BY SUBSECTION (G) OF 10 U.S.C. 2304 (A) (10) SHOULD HAVE BEEN HELD WITH HERCULES INASMUCH AS DISCUSSIONS RESPECTING RESPONSIBILITY WERE IN FACT HELD PRIOR TO AWARD WITH SOUTHWEST POTASH.

PUBLIC LAW 87-653, SEPTEMBER 10, 1962, ADDED SUBSECTION (G) TO 10 U.S.C. 2304 REQUIRING THAT ORAL OR WRITTEN DISCUSSIONS BE HELD WITH ALL RESPONSIBLE OFFERORS WITHIN THE COMPETITIVE RANGE UNLESS IT CLEARLY CAN BE DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE THAT ACCEPTANCE OF AN INITIAL PROPOSAL WITHOUT DISCUSSION WILL RESULT IN FAIR AND REASONABLE PRICES AND THE REQUEST FOR PROPOSALS FOREWARNED OFFERORS THAT AWARD MIGHT BE MADE ON THE BASIS OF INITIAL PROPOSALS WITHOUT DISCUSSIONS. IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THIS PROCUREMENT COMES WITHIN THE EXCEPTION. WE RECOGNIZE THAT THE CONTRACTING OFFICER'S DETERMINATION WITH RESPECT TO THE APPLICATION OF THE EXCEPTION TO A PARTICULAR PROCUREMENT MUST INVOLVE THE REASONABLE EXERCISE OF DISCRETION. IN THIS CASE THE CONTRACTING OFFICER CONSIDERED ALL THE AVAILABLE INFORMATION, INCLUDING HERCULES' MODIFICATION OF JULY 17, 1969, IN DETERMINING NOT TO CONDUCT DISCUSSIONS. IN LIGHT OF THE CIRCUMSTANCES AND THE ADMINISTRATIVE DISCRETION WE FIND NO BASIS TO QUESTION THE VALIDITY OF THE CONTRACTING OFFICER'S DECISION.

IT IS YOUR POSITION, HOWEVER THAT DISCUSSIONS WITHIN THE CONTEMPLATION OF THE STATUTE WERE IN FACT HELD WITH SOUTHWEST POTASH AND, THEREFORE, SHOULD ALSO HAVE BEEN CONDUCTED WITH HERCULES. WE MUST REJECT THIS PROPOSITION AS INCONSISTENT WITH THE INTENT OF BOTH 10 U.S.C. 2304 (G) AND ASPR 3- 805.1 (A) WHICH PROVIDE THAT WRITTEN OR ORAL DISCUSSIONS WILL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS SUBMITTING PROPOSALS WITHIN THE COMPETITIVE RANGE. CLEARLY, THIS ENVISIONS THAT A PARTICULAR OFFEROR'S RESPONSIBILITY MAY BE DETERMINED BEFORE CONDUCTING DISCUSSIONS OR AT LEAST BEFORE DETERMINING THAT THE PROCUREMENT FALLS WITHIN ONE OF THE EXCEPTIONS WARRANTING AWARD WITHOUT DISCUSSION. IN ANY CASE, THE DISCUSSIONS CONTEMPLATED BY THE STATUTE RELATE TO PROPOSALS WITHIN THE COMPETITIVE RANGE AS OPPOSED TO MATTERS OF RESPONSIBILITY. ASPR 3-805.1 (B) MAKES IT CLEAR THAT DISCUSSION OF PROPOSALS IS CONTEMPLATED, STATING IN PART: "X X X ALL OFFERORS SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS (SEE (A) ABOVE) ( SHALL BE OFFERED AN EQUITABLE OPPORTUNITY TO SUBMIT SUCH PRICE, TECHNICAL, OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM THE NEGOTIATIONS.' THEREFORE, WE CONCLUDE THAT AN OFFEROR'S RESPONSIBILITY OR ABILITY TO PERFORM MAY BE DISCUSSED WITHOUT FORECLOSING THE RIGHT OF THE CONTRACTING OFFICER TO INVOKE THE EXCEPTION TO THE REQUIREMENT FOR CONDUCTING WRITTEN OR ORAL DISCUSSIONS. ANY OTHER CONCLUSION WOULD EITHER DEPRIVE THE GOVERNMENT OF THE RIGHT TO MAKE AWARD ON THE BASIS OF INITIAL PROPOSALS OR ALLOW SUCH AN AWARD ONLY AT THE PERIL OF DEALING WITH NONRESPONSIBLE CONTRACTORS.

YOU ALSO CONTEND THAT THE MODIFICATION OF YOUR PROPOSAL SUBMITTED ON JULY 17, 1969, SHOULD NOT HAVE BEEN REJECTED AS LATE. THIS OBJECTION IS PARTIALLY BASED UPON THE POSITION THAT WRITTEN OR ORAL DISCUSSIONS WERE REQUIRED TO BE HELD PURSUANT TO 10 U.S.C. 2304 (G). WE HAVE ALREADY REJECTED THIS POSITION. ADDITIONALLY, YOU CONTEND THAT THE LANGUAGE OF THE REQUEST FOR PROPOSALS PERMITTED MODIFICATION OF AN OFFER AT ANY TIME PRIOR TO AWARD.

PARAGRAPH 7 (B) OF STANDARD FORM (SF) 33A PROVIDES:

"IF THIS SOLICITATION IS NEGOTIATED, OFFERS MAY BE MODIFIED (SUBJECT TO PAR. 8, WHEN APPLICABLE) OR WITHDRAWN BY WRITTEN OR TELEGRAPHIC NOTICE RECEIVED AT ANY TIME PRIOR TO AWARD. OFFERS MAY BE WITHDRAWN IN PERSON BY AN OFFEROR OR HIS AUTHORIZED REPRESENTATIVE, PROVIDED HIS IDENTITY IS MADE KNOWN AND HE SIGNS A RECEIPT FOR THE OFFER PRIOR TO AWARD.'

BY THE TERMS OF THE RFP THE FOLLOWING WAS SUBSTITUTED FOR THE EQUIVALENT PORTION OF PARAGRAPH 8 IN SF 33A:

"8. LATE OFFERS AND MODIFICATIONS OR WITHDRAWALS (1968 DEC.)

"/THIS PARAGRAPH APPLIES TO ALL ADVERTISED SOLICITATIONS. IN THE CASE OF DEPARTMENT OF DEFENSE NEGOTIATED SOLICITATIONS, IT SHALL ALSO APPLY TO LATE OFFERS AND MODIFICATIONS (OTHER THAN THE NORMAL REVISIONS OF OFFERS BY SELECTED OFFERORS DURING THE USUAL CONDUCT OF NEGOTIATIONS WITH SUCH OFFERORS) BUT NOT TO WITHDRAWAL OF OFFERS. UNLESS OTHERWISE PROVIDED, THIS PARAGRAPH DOES NOT APPLY TO NEGOTIATED SOLICITATIONS ISSUED BY CIVILIAN AGENCIES.)

"/A) OFFERS AND MODIFICATIONS OF OFFERS (OR WITHDRAWALS THEREOF, IF THIS SOLICITATION IS ADVERTISED) RECEIVED AT THE OFFICE DESIGNATED IN THE SOLICITATION AFTER THE EXACT HOUR AND DATE SPECIFIED FOR RECEIPT WILL NOT BE CONSIDERED UNLESS: (1) THEY ARE RECEIVED BEFORE AWARD IS MADE; AND EITHER (2) THEY ARE SENT BY REGISTERED MAIL, OR BY CERTIFIED MAIL FOR WHICH AN OFFICIAL DATED POST OFFICE STAMP (POSTMARK) ON THE ORIGINAL RECEIPT FOR CERTIFIED MAIL HAS BEEN OBTAINED AND IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO DELAY IN THE MAILS, FOR WHICH THE OFFEROR WAS NOT RESPONSIBLE; OR (3) IF SUBMITTED BY MAIL (OR BY TELEGRAM IF AUTHORIZED) IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO MISHANDLING BY THE GOVERNMENT AFTER RECEIPT AT THE GOVERNMENT INSTALLATION; PROVIDED, THAT TIMELY RECEIPT AT SUCH INSTALLATION IS ESTABLISHED UPON EXAMINATION OF AN APPROPRIATE DATE OR TIME STAMP (IF ANY) OF SUCH INSTALLATION, OR OF OTHER DOCUMENTARY EVIDENCE OF RECEIPT (IF READILY AVAILABLE) WITHIN THE CONTROL OF SUCH INSTALLATION OR OF THE POST OFFICE SERVING IT. HOWEVER, A MODIFICATION OF AN OFFER WHICH MAKES THE TERMS OF AN OTHERWISE SUCCESSFUL OFFER MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED AND MAY THEREAFTER BE ACCEPTED.'

WE READ THE FOREGOING PROVISIONS TO MEAN THAT OPPORTUNITY TO MODIFY A NEGOTIATED PROPOSAL AT ANY TIME PRIOR TO AWARD PURSUANT TO PARAGRAPH 7 (B) IS LIMITED BY PARAGRAPH 8 (A) IN CONNECTION WITH NEGOTIATED PROCUREMENTS UNDERTAKEN BY ANY ELEMENT OF THE DEPARTMENT OF DEFENSE. WITH RESPECT TO DEPARTMENT OF DEFENSE NEGOTIATED PROCUREMENTS, OFFERS AND MODIFICATIONS OF OFFERS ARE FOR CONSIDERATION ONLY IF RECEIVED NOT LATER THAN THE DEADLINE SET FOR THE RECEIPT OF OFFERS UNLESS DELAY IN RECEIPT WAS DUE TO UNTIMELY DELIVERY OR MISHANDLING BY THE RECEIVING GOVERNMENT INSTALLATION. THE EXPRESSION IN PARAGRAPH 7 (B) "SUBJECT TO PAR. 8 WHEN APPLICABLE" IS INSERTED BECAUSE UNDER THE ASPR PARAGRAPH 8 IS APPLICABLE TO NEGOTIATED PROCUREMENTS; THERE IS NO EQUIVALENT PROVISION IN THE FPR. THIS IS CONSISTENT WITH THE LANGUAGE OF ASPR 3 506 WHICH STATES: "/G) MODIFICATIONS OF PROPOSALS WHICH ARE RECEIVED IN THE OFFICE DESIGNATED IN THE REQUEST FOR PROPOSALS AFTER THE TIME SPECIFIED FOR SUBMISSION OF PROPOSALS ARE -LATE MODIFICATIONS.- LATE MODIFICATIONS SHALL BE SUBJECT TO THE RULES APPLICABLE TO LATE PROPOSALS SET FORTH IN THIS PARAGRAPH.' SUBPARAGRAPH (D) OF THE SAME REGULATION PROVIDES ESSENTIALLY, WITH CERTAIN EXCEPTIONS NOT RELEVANT, THAT THE PROPOSALS WILL BE EVALUATED BUT NOT CONSIDERED. THIS IS PRECISELY THE ACTION TAKEN BY THE CONTRACTING OFFICER AND ON THIS BASIS THE PROTEST MUST BE REJECTED. IT SHOULD BE NOTED THAT YOUR PRICES WOULD NOT HAVE BEEN LOW EVEN IF THE LATE MODIFICATION HAD BEEN CONSIDERED.

WITH RESPECT TO THE CONTENTION THAT THIS PROCUREMENT WAS CONTRIVED TO MAKE AWARD TO SOUTHWEST POTASH, THE CONTRACTING OFFICER CONCEDES THAT THE PROCUREMENT WAS CONTRIVED TO STIMULATE COMPETITION, BUT NOT TO PREDETERMINE THE SUCCESSFUL CONTRACTOR. THE INCLUSION OF THE 6,000,000 POUNDS MINIMUM GUARANTEE WAS ALSO DESIGNED TO ENCOURAGE GREATER COMPETITION. WE CONSIDER SUCH ENCOURAGEMENT TO BE ENTIRELY CONSISTENT WITH THE PURPOSES OF THE STATUTES GOVERNING PROCUREMENTS BY AGENCIES OF THE FEDERAL GOVERNMENT. HOWEVER, THE CHANGE IN SPECIFICATIONS TO INCLUDE THE MINIMUM GUARANTEE SHOULD HAVE BEEN MADE IN WRITING AS CLEARLY CONTEMPLATED BY ASPR 3-505 (A). CF. B-167185, SEPTEMBER 3, 1969. NEVERTHELESS, SINCE THE PARTIES WERE IN FACT MADE AWARE OF THE GUARANTEE AND IT WAS NEVER INCLUDED IN THE CONTRACT AWARDED TO SOUTHWEST POTASH, WE DO NOT FIND THAT THE FAILURE TO COMPLY WITH THE REGULATION IN THIS REGARD INVALIDATES THE AWARD.

AS TO THE RESPONSIBILITY OF SOUTHWEST POTASH AND THE FAILURE OF THE CONTRACTING OFFICER TO AWARD THE IMMEDIATE PAST CONTRACT FOR A PERIOD OF A FULL YEAR, WE DO NOT HAVE JURISDICTION TO DIRECT AWARD OF CONTRACTS OR TO REQUIRE A LONGER PERIOD FOR CONTRACT PERFORMANCE. OUR AUTHORITY IS LIMITED TO SEEING THAT APPROPRIATIONS ARE EXPENDED IN THE MANNER AND FOR THE PURPOSES PRESCRIBED BY LAW. ALSO, THE QUESTION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS FOR DETERMINATION BY THE PROCURING AGENCY AND WILL BE QUESTIONED IN THIS OFFICE ONLY UPON A SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS. SEE 43 COMP. GEN. 228 (1963).

WE ALSO HAVE CONSIDERED THE FACT THAT AFTER FREIGHT EVALUATION FACTORS WERE ADDED TO THE F.O.B. ORIGIN OFFERS, THE PRICE DIFFERENCE BETWEEN THE OFFERS WAS NOT SO GREAT. THIS EVALUATION WAS MADE BY THE CONTRACTING OFFICER. THE DIFFICULTY IN SECURING FREIGHT RATES FROM VICKSBURG, MISSISSIPPI, THE LOCATION OF THE SOUTHWEST POTASH PLANT, CONTRIBUTED TO THE DELAY IN AWARDING THE CONTRACT. HOWEVER, THE SOUTHWEST POTASH PROPOSAL IS LOW EVEN WHEN FREIGHT EVALUATION FACTORS AND LATE MODIFICATIONS ARE CONSIDERED.