B-136411, JUNE 26, 1958, 37 COMP. GEN. 855

B-136411: Jun 26, 1958

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WHERE NEGOTIATIONS ARE CONDUCTED TO THE BEST ADVANTAGE TO THE GOVERNMENT. AWARD IS MADE TO THE SUPPLIER MAKING THE BEST FINAL PROPOSAL AND THERE IS NO EVIDENCE OF ANY VIOLATION OF THE ARMED SERVICES PROCUREMENT REGULATION. 1958: REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 10. THE FACTS OF THE CASE ARE BRIEFLY SET FORTH IN A REPORT DATED JUNE 20. A REVISED AND LOWER PROPOSAL WAS RECEIVED FROM THE STEWART-WARNER CORPORATION. THE REVISED PROPOSAL OF THE LEWYT MANUFACTURING COMPANY WAS LOW AND THAT COMPANY IS BEING CONSIDERED FOR AWARD UNDER PROPOSED CONTRACT NO. A LOWER REVISED PROPOSAL IS RECEIVED FROM ANOTHER QUALIFIED FIRM. IT IS CONTENDED IN YOUR LETTER OF JUNE 12. THAT THE CONSIDERATION OF A REVISED OR AMENDED PROPOSAL IN THIS INSTANCE REPRESENTS AN ABUSE UNDER PARAGRAPH 3-107.2 OF THE ARMED SERVICES PROCUREMENT REGULATION AND "IS MOST CONDUCIVE OF AUCTION TECHNIQUES AND OTHER UNDESIRABLE PROCUREMENT PRACTICES.'.

B-136411, JUNE 26, 1958, 37 COMP. GEN. 855

CONTRACTS - NEGOTIATION - AWARD ON A REVISED PROPOSAL - LOWEST PROPOSAL ON INITIAL NEGOTIATION THE REJECTION OF THE LOWEST PROPOSAL RECEIVED IN THE INITIAL ROUND OF A NEGOTIATED PROCUREMENT CONDUCTED PURSUANT TO 10 U.S.C. 2304 (A) (16) BECAUSE OF THE RECEIPT OF A LOWER PROPOSAL RECEIVED FROM A LATE OFFEROR AND AN AWARD TO ANOTHER CONCERN ON THE BASIS OF THE LOWEST PROPOSAL RECEIVED ON A RESOLICITATION AFTER RECEIPT OF REVISED PROPOSALS FROM ALL PARTICIPATING SOURCES DO NOT PROVIDE ANY BASIS FOR OBJECTION TO THE PROCUREMENT PROCEDURE, WHERE NEGOTIATIONS ARE CONDUCTED TO THE BEST ADVANTAGE TO THE GOVERNMENT, AWARD IS MADE TO THE SUPPLIER MAKING THE BEST FINAL PROPOSAL AND THERE IS NO EVIDENCE OF ANY VIOLATION OF THE ARMED SERVICES PROCUREMENT REGULATION.

TO HOFFMAN ELECTRONICS CORPORATION, JUNE 26, 1958:

REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 10, 1958, AND LETTER DATED JUNE 12, 1958, PROTESTING ANY AWARD OF A CONTRACT OTHER THAN TO YOUR COMPANY FOR THE MANUFACTURE AND DELIVERY OF RADIO SETS AND RELATED EQUIPMENT DESCRIBED IN ARMY SIGNAL SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, REQUEST FOR PROPOSALS NO. SC-36-039-58-10658-A1, AS AMENDED.

THE FACTS OF THE CASE ARE BRIEFLY SET FORTH IN A REPORT DATED JUNE 20, 1958, FROM THE DEPARTMENT OF THE ARMY, AS FOLLOWS: YOUR COMPANY SUBMITTED THE LOWEST PROPOSAL IN THE INITIAL ROUND OF NEGOTIATIONS BUT, PRIOR TO ANY AWARD TO YOUR FIRM, A REVISED AND LOWER PROPOSAL WAS RECEIVED FROM THE STEWART-WARNER CORPORATION. AS THE RESULT OF AFFORDING ALL OF THE PARTICIPATING SOURCES OF SUPPLY AN EQUAL OPPORTUNITY TO SUBMIT REVISED PROPOSALS, THE REVISED PROPOSAL OF THE LEWYT MANUFACTURING COMPANY WAS LOW AND THAT COMPANY IS BEING CONSIDERED FOR AWARD UNDER PROPOSED CONTRACT NO. DA-36-039-SC-76351, IN THE TOTAL AMOUNT OF $7,514,526.60.

PARAGRAPH 3-107 OF THE ARMED SERVICES PROCUREMENT REGULATION AUTHORIZES RESOLICITATION OF PROPOSALS WHERE, PRIOR TO AWARD TO A PROPOSED CONTRACTOR, A LOWER REVISED PROPOSAL IS RECEIVED FROM ANOTHER QUALIFIED FIRM.

IT IS CONTENDED IN YOUR LETTER OF JUNE 12, 1958, THAT THE CONSIDERATION OF A REVISED OR AMENDED PROPOSAL IN THIS INSTANCE REPRESENTS AN ABUSE UNDER PARAGRAPH 3-107.2 OF THE ARMED SERVICES PROCUREMENT REGULATION AND "IS MOST CONDUCIVE OF AUCTION TECHNIQUES AND OTHER UNDESIRABLE PROCUREMENT PRACTICES.' HOWEVER, SUBPARAGRAPH (A) OF SECTION 3-107.2 STATES THAT " IT IS IMPORTANT AND DESIRABLE THAT THE GOVERNMENT NOT BE PRECLUDED IN SPECIFIC SITUATIONS FROM GAINING THE BENEFIT OF ADVANTAGEOUS LATE PROPOSALS," AND ESTABLISHES A PROCEDURE TO BE FOLLOWED WITH A VIEW TOWARD THE PREVENTION OF ANY ABUSES WHEN SUCH LATE PROPOSALS HAVE BEEN SUBMITTED.

THE CONTRACTING OFFICER FOLLOWED THE ESTABLISHED PROCEDURE IN OBTAINING ADVICE FROM HIGHER AUTHORITY AS TO WHETHER IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT TO CONSIDER THE LATE PROPOSAL OF THE STEWART- WARNER COMPANY, AND THEN RESOLICITING PROPOSALS FROM ALL FIRMS DETERMINED TO BE CAPABLE OF MEETING THE PARTICULAR REQUIREMENTS OF THE GOVERNMENT. THERE IS NO EVIDENCE OF ANY VIOLATION OF THE PROVISIONS OF SECTION 3-805 OF THE ARMED SERVICES PROCUREMENT REGULATION TO THE EFFECT THAT AUCTION TECHNIQUES SHOULD BE AVOIDED AND THAT, IN ORDER TO PREVENT ANY SUCH ABUSES OF THE NEGOTIATION PROCESSES," NO INDICATION SHALL BE MADE TO ANY OFFEROR OF A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION.'

AN ADMINISTRATIVE DECISION HAD BEEN MADE TO CONDUCT THE PROCUREMENT AS A NEGOTIATION UNDER AUTHORITY OF SECTION 2304 (A) (16), TITLE 10, U.S.C. AND SECTION 2302, TITLE 10, U.S.C. DEFINES THE TERM "NEGOTIATION" AS MEANING TO "MAKE WITHOUT FORMAL ADVERTISING.' IN SUCH PROCUREMENT THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING ARE NOT FOR APPLICATION AND IT IS OUR VIEW THAT IT IS THE DUTY OF CONTRACTING OFFICIALS TO CONDUCT THE NEGOTIATION TO THE BEST ADVANTAGE OF THE GOVERNMENT AND TO PLACE THE CONTRACT WITH THE SUPPLIER MAKING THE BEST FINAL PROPOSAL. THUS, THE FACT THAT YOUR COMPANY MAY HAVE SUBMITTED THE LOWEST RESPONSIVE BID UNDER THE ORIGINAL REQUEST FOR PROPOSALS IS NOT DETERMINATIVE ON THE QUESTION AS TO THE LEGALITY OF ANY CONTRACT AWARDED TO ANOTHER CONCERN ON THE BASIS OF NEGOTIATIONS CONDUCTED AFTER RECEIPT OF THE REVISED PROPOSALS FROM THE VARIOUS CONCERNS INTERESTED IN OBTAINING THE AWARD.

ACCORDINGLY, WE WOULD NOT BE JUSTIFIED IN TAKING ANY EXCEPTION TO THE PROCEDURE FOLLOWED IN THIS CASE OR TO THE PROPOSED AWARD OF THE CONTRACT TO THE LEWYT MANUFACTURING COMPANY.