B-142770, JUL. 20, 1960

B-142770: Jul 20, 1960

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TO PACKARD BELL ELECTRONICS CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 2. THE RECORD SHOWS THAT THE REQUEST FOR QUOTATION WAS ISSUED TO THIRTY FIRMS ON MARCH 3. WAS ESTABLISHED FOR RECEIPT OF QUOTATIONS. CONTRACT AWARD WAS CONTEMPLATED. THE 13 PROPOSALS RECEIVED IN RESPONSE TO THE REQUEST FOR QUOTATION WERE TURNED OVER TO THE SOURCE EVALUATION BOARD ON MARCH 25. THE EVALUATION WAS COMPLETED ON APRIL 5. EIGHT FIRMS WERE APPROVED BY THE BOARD AS BEING QUALIFIED. THREE WERE SELECTED FOR FURTHER NEGOTIATIONS. WAS DEVELOPED AND APPROVED BY THE AERONAUTICAL SYSTEMS CENTER STAFF IN FEBRUARY 1960 FOR THIS PROCUREMENT. NORMALLY PRE-PRODUCTION QUALIFICATION TESTS AND PRODUCTION LEAD TIME FOR THIS TYPE OF ELECTRONIC HARDWARE WILL EXCEED 12 MONTHS.

B-142770, JUL. 20, 1960

TO PACKARD BELL ELECTRONICS CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 2, 1960, AND LETTER DATED MAY 11, 1960, PROTESTING THE ACTION OF THE AIR FORCE IN MAKING AN AWARD OF A CONTRACT TO BENDIX CORPORATION UNDER REQUEST FOR QUOTATION NO. 33-600-60- 5070.

THE RECORD SHOWS THAT THE REQUEST FOR QUOTATION WAS ISSUED TO THIRTY FIRMS ON MARCH 3, 1960, AND A CLOSING DATE OF MARCH 24, 1960, WAS ESTABLISHED FOR RECEIPT OF QUOTATIONS. ALSO, THE REQUEST FOR QUOTATION PLACED ALL PROPOSERS ON NOTICE THAT A MAY 1, 1960, CONTRACT AWARD WAS CONTEMPLATED. THE 13 PROPOSALS RECEIVED IN RESPONSE TO THE REQUEST FOR QUOTATION WERE TURNED OVER TO THE SOURCE EVALUATION BOARD ON MARCH 25, 1960, AND THE EVALUATION WAS COMPLETED ON APRIL 5, 1960. EIGHT FIRMS WERE APPROVED BY THE BOARD AS BEING QUALIFIED, AND THREE WERE SELECTED FOR FURTHER NEGOTIATIONS.

A PROCUREMENT PLAN, INCLUDING MILESTONE SCHEDULES, WAS DEVELOPED AND APPROVED BY THE AERONAUTICAL SYSTEMS CENTER STAFF IN FEBRUARY 1960 FOR THIS PROCUREMENT. NORMALLY PRE-PRODUCTION QUALIFICATION TESTS AND PRODUCTION LEAD TIME FOR THIS TYPE OF ELECTRONIC HARDWARE WILL EXCEED 12 MONTHS. AS THE PROJECTED DATE FOR CONTRACT AWARD WAS MAY 1, 1960, THIS WAS NECESSARY TO SUPPORT THE GAM-87 PROGRAM. TIME, THEREFORE, WAS OF THE ESSENCE THROUGHOUT ALL ACTIONS RELATED TO CONSUMMATING THIS PROCUREMENT.

ON APRIL 7, 1960, THE PROCUREMENT OFFICE TELEPHONED THE THREE FIRMS SELECTED AND ARRANGED FOR NEGOTIATION MEETINGS. PACKARD BELL WAS SCHEDULED FOR APRIL 11 AND 12, 1960; ITT APRIL 13 AND 14, 1960; AND BENDIX APRIL 15 AND 16, 1960. NO PARTICULAR REASON EXISTED FOR THE FINAL ORDER OF APPEARANCE OF THE FIRMS FOR THE NEGOTIATION MEETINGS.

NEGOTIATIONS WERE CONDUCTED AS SCHEDULED ON APRIL 11 AND 12, 1960, WITH YOUR MR. H. L. VICK AS THE PRINCIPAL NEGOTIATOR FOR YOUR COMPANY. PRIOR TO COMMENCEMENT OF NEGOTIATIONS, MR. VICK WAS INFORMED THAT (1) THE QUANTITY OF ITEM 2 OF THE REQUEST FOR QUOTATION TO BE PLACED ON CONTRACT WOULD BE 14 EACH; (2) REALIZING THREE WEEKS TO BE A RELATIVELY SHORT TIME FOR PREPARING A PROPOSAL, PACKARD BELL WOULD, DURING THE NEGOTIATION, BE GIVEN THE OPPORTUNITY OF RAISING ANY QUESTIONS ON ANY TERMS OF THE REQUEST FOR QUOTATION WHICH MIGHT NOT BE UNDERSTOOD; AND (3) THE CLOSE OF THE SECOND DAY OF NEGOTIATIONS, APRIL 12, 1960, WOULD BE THE FINAL CUT-OFF FOR SUBMISSION OF A REVISED QUOTATION. MR. VICK QUESTIONED THE CUT-OFF DATE AND HE WAS AGAIN INFORMED THAT THE FINAL CUT-OFF DATE FOR REVISIONS TO THE QUOTATION WAS ON APRIL 12, 1960. EACH OF THE OTHER FIRMS NEGOTIATED WITH WAS ALSO ADVISED THAT TIME FOR SUBMISSION OF REVISED PROPOSALS WOULD BE THE CLOSE OF BUSINESS ON THE SECOND DAY OF THE RESPECTIVE NEGOTIATION PERIODS.

CHRONOLOGICALLY, THE FOLLOWING SEQUENCE OF EVENTS TRANSPIRED AFTER APRIL 11, 1960:

APRIL 12--- PACKARD BELL, PURSUANT TO THE NEGOTIATION AGREEMENT, SUBMITTED A REVISION TO THEIR ORIGINAL PROPOSAL, REDUCING THE QUOTED PRICE FROM $1,881,638 TO $1,809,433.

APRIL 13-14--- NEGOTIATIONS WERE CONDUCTED WITH ITT. ORIGINAL PROPOSAL REDUCED BY LETTER OF APRIL 14 FROM $2,364,914 TO $1,906,162.

APRIL 15-16--- NEGOTIATIONS CONDUCTED WITH BENDIX. ORIGINAL PROPOSAL REDUCED BY LETTER DATED APRIL 15 FROM $1,490,155 TO $1,299,603, THUS MAKING THAT BID THE LOWEST RECEIVED AT THE TIME OF THE CUT-OFF DATE.

APRIL 21--- TWO UNSOLICITED REVISED PROPOSALS WERE RECEIVED FROM PACKARD BELL BY LETTER DATED APRIL 19. IN ACCORDANCE WITH THE PROVISIONS OF ASPR 3-804.2 (B), THE CONTRACTING OFFICER DETERMINED THAT IT WAS NOT IN THE BEST INTEREST OF THE GOVERNMENT TO ACCEPT THIS LATE PROPOSAL BECAUSE (1) IT WOULD REQUIRE RESOLICITATIONS; (2) IT WOULD PRECLUDE THE AWARD OF A CONTRACT BY MAY 1, 1960, WHICH IN TURN WOULD HAVE AN ADVERSE EFFECT ON THE GAM-77 AND GAM-87 MISSILE PROGRAM; AND THAT IT WAS EVIDENT FROM THE ACTIONS TAKEN BY PACKARD BELL SINCE THE CLOSE OF NEGOTIATIONS THAT ANY RESOLICITATION WOULD RESULT IN AN AUCTION, WHICH IS TO BE AVOIDED PURSUANT TO ASPR 3-805.1 (A). THE CONTRACTING OFFICER FOLLOWED THE REQUIRED PROCEDURE IN HAVING THIS DETERMINATION APPROVED BY HIGHER AUTHORITY. THE REVISED PRICES CONTAINED IN THE LATE PROPOSAL FROM PACKARD BELL ($1,578,257) WERE HIGHER THAN THE PRICE OF BENDIX ($1,299,603). THE ALTERNATE PROPOSAL SUBMITTED BY PACKARD BELL, AT THIS TIME, WHICH OFFERED TO UNDERBID ANY ACCEPTABLE CONTRACTOR'S QUOTE BY $25,000 FOR TWO TEST UNITS AND $2,000 PER UNIT FOR PRODUCTION ITEMS, WAS CONSIDERED TO BE NONRESPONSIVE AS PRICES WERE NOT INDEPENDENTLY ARRIVED AT IN COMPETITIVE NEGOTIATIONS.

APRIL 26--- PACKARD BELL SUBMITTED ITS FOURTH PROPOSAL, WHICH WAS LOWER IN PRICE THAN THAT OF BENDIX BY THE AMOUNT OF $96,126. AGAIN THE CONTRACTING OFFICER DETERMINED THAT THIS LATE PROPOSAL SHOULD NOT BE FAVORABLY CONSIDERED FOR THE REASONS STATED ABOVE.

APRIL 28--- PACKARD BELL SUBMITTED BY LETTER DATED APRIL 28, 1960, THE FIFTH REVISION TO ITS PROPOSAL, WHICH WAS $362,985 LOWER THAN THAT OF BENDIX. AGAIN THE CONTRACTING OFFICER DETERMINED THAT THIS LATE PROPOSAL SHOULD NOT BE FAVORABLY CONSIDERED FOR THE REASONS ENUMERATED ABOVE.

APRIL 28--- NOTICE OF CONTRACT AWARD WAS SENT TO BENDIX.

YOU STATE THAT IT NEVER HAS BEEN SATISFACTORILY EXPLAINED TO YOU WHY YOUR ALTERNATE BID, DY-1001, SUBMITTED BY YOUR LETTER OF APRIL 19, 1960, WAS NOT ACCEPTABLE. THE SIMPLE ANSWER IS THAT A VALID AND RESPONSIVE BID SHOULD BE ONE WHICH UPON ACCEPTANCE WOULD EFFECT A COMPLETE AND BINDING CONTRACT WITHOUT REFERENCE TO COLLATERAL SOURCES. IN ADDITION, IT IS OBVIOUS THAT IF MORE THAN ONE SUCH BID WERE RECEIVED EVALUATION WOULD BE IMPOSSIBLE.

ALSO, YOU CONTEND THAT ALL BIDDERS SHOULD HAVE BEEN GIVEN THE SAME CUT- OFF DATE. SINCE IT WAS NOT POSSIBLE TO CONDUCT EXTENSIVE NEGOTIATIONS WITH THE VARIOUS PROPOSERS SIMULTANEOUSLY, IT IS THE VIEW OF THE DEPARTMENT OF THE AIR FORCE THAT IT WAS BOTH FAIR AND REASONABLE THAT EACH PARTICIPANT WAS ALLOWED THE SAME TIME FOR NEGOTIATIONS, WITH THE OPPORTUNITY TO SUBMIT ANY PRICE REVISIONS DESIRED NOT LATER THAN THE CLOSE OF BUSINESS ON THE LAST DAY OF NEGOTIATIONS ESTABLISHED FOR EACH PARTICIPANT. WHILE WE FEEL THAT A SINGLE CUT-OFF DATE FOR ALL PARTICIPANTS WOULD HAVE BEEN PREFERABLE, IT DOES NOT APPEAR ON THE FACTS HERE OF RECORD THAT YOU WERE MATERIALLY PREJUDICED BY THE ESTABLISHMENT OF THE CUT-OFF DATES COMPLAINED OF. THE LATEST DATE GIVEN TO ANY OF THE THREE PROSPECTIVE CONTRACTORS WAS APRIL 16, AND AS OF THAT DATE YOU HAD NOT SUBMITTED ANY MODIFICATION OF YOUR PROPOSAL OF APRIL 12. YOUR PROPOSAL OF APRIL 19--- ASIDE FROM THE IMPROPER ALTERNATE REFERRED TO ABOVE--- WAS HIGHER THAN THE BEST RESPONSIVE PROPOSAL THEN IN HAND AND WAS NOT, THEREFORE, IN ANY EVENT ACCEPTABLE ON A PRICE BASIS.

AS TO YOUR PROPOSALS OF APRIL 26 AND 28, THE SUBSTANTIAL REASON FOR THEIR REJECTION WAS THAT, UNDER THE DEFINITE REQUIREMENTS OF THE PERTINENT PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION, CONSIDERATION OF EITHER OF SUCH PROPOSALS WOULD HAVE REQUIRED RESOLICITATION OF PROPOSALS FROM THE OTHER PROPOSERS. SINCE MAY 1 HAD BEEN SCHEDULED AS THE LATEST DATE ON WHICH FINAL AWARD OF A CONTRACT COULD BE MADE WITHOUT ADVERSE EFFECT ON THE GAM-77 AND GAM-87 MISSILE PROGRAMS, IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT IT WAS NOT IN THE BEST INTEREST OF THE GOVERNMENT TO CONSIDER YOUR REVISED PROPOSALS OF APRIL 26 OR 28.

AS YOU ARE AWARE, THIS PROCUREMENT WAS NOT BY FORMALLY ADVERTISED COMPETITIVE BIDDING, BUT WAS NEGOTIATED UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (10) AS A CONTRACT FOR "PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION.' IN ENACTING THE ARMED SERVICES PROCUREMENT ACT OF 1947, WHICH CREATED THIS AUTHORITY, THE CONGRESS MADE IT CLEAR THAT IT INTENDED THIS EXCEPTION TO BE CONSTRUED LIBERALLY AND THAT REVIEW OF CONTRACTS MADE THEREUNDER "SHOULD NOT EXTEND TO REVERSAL OF BONA FIDE DETERMINATIONS OF IMPRACTICABILITY WHERE ANY REASONABLE GROUND FOR SUCH DETERMINATION EXISTS.' (SENATE REPORT NO. 571, 80TH CONGRESS, 1ST SESSION, P. 8.)

THE AUTHORITY TO NEGOTIATE NECESSARILY VESTS IN THE OFFICIALS TO WHOM SUCH AUTHORITY IS GRANTED A BROAD DISCRETION TO DETERMINE WHAT IS IN THE BEST INTEREST OF THE GOVERNMENT. THE TECHNICAL LEGAL VALIDITY AND EFFECTIVENESS OF A CONTRACT ENTERED INTO UNDER SUCH AUTHORITY IS VIRTUALLY BEYOND QUESTION EXCEPT FOR ACTUAL FRAUD OR OTHER CIRCUMSTANCES WHOLLY INCONSISTENT WITH GOOD FAITH. WE HAVE ON SEVERAL OCCASIONS EXPRESSED THE VIEW THAT IN THE COURSE OF NEGOTIATIONS ANY VALID OFFER RECEIVED BEFORE ACTUAL AWARD OF A CONTRACT SHOULD BE CONSIDERED. ALTHOUGH WE HAVE RECOGNIZED THAT IN PRACTICE THERE MUST BE A TIME BEYOND WHICH FURTHER NEGOTIATION CANNOT REASONABLY BE REQUIRED TO BE CONDUCTED, WE BELIEVE THAT SUCH TIME SHOULD BE REALISTICALLY FIXED WITH REFERENCE TO THE TIME NECESSARY FOR EVALUATION UNDER THE PARTICULAR CIRCUMSTANCES OF EACH CASE AND THE DATE BY WHICH THE NEEDS OF THE GOVERNMENT REQUIRE A CONTRACT TO BE AWARDED.

THE FORM OF REQUEST FOR PROPOSALS USED TO INITIATE THE NEGOTIATING PROCESS EXPRESSLY RESERVES TO THE GOVERNMENT THE RIGHT TO CONSIDER QUOTATIONS OR MODIFICATIONS THEREOF RECEIVED AFTER THE DATE SET FOR SUBMISSION OF PROPOSALS BUT BEFORE A CONTRACT IS CONSUMMATED, SHOULD SUCH ACTION BE IN THE INTEREST OF THE GOVERNMENT. IN THE LIGHT OF THIS PROVISION WE SEE NO SUBSTANTIAL REASON WHY THE RECEIPT OF SUCH A LATE PROPOSAL SHOULD AUTOMATICALLY REQUIRE A RESOLICITATION OF ALL OTHER OFFERORS, WHO HAVE EQUAL RIGHTS TO SUBMIT SUCH LATE QUOTATIONS OR MODIFICATIONS WITHOUT FURTHER REQUEST. WE CANNOT, HOWEVER, DENY THE AUTHORITY OF THE SECRETARY OF DEFENSE TO MAKE SUCH A REGULATION.

IN THE FACE OF THIS REGULATION, THE PROCURING AUTHORITIES IN THIS CASE HAD NECESSARILY TO WEIGH THE SAVING OFFERED BY YOUR LAST PROPOSALS AGAINST THE EFFECT ON THE GOVERNMENT'S TIME SCHEDULE OF THE POSSIBLE DELAY INVOLVED IN RESOLICITATION. WE ARE NOT IN A POSITION TO SAY THAT THEIR CONCLUSION WAS NOT SUPPORTED BY REASONABLE GROUNDS.

YOU ARE THEREFORE ADVISED THAT WE SEE NO GROUND TO TAKE ANY ACTION WITH RESPECT TO THE CONTRACT AWARDED IN THIS INSTANCE.