B-143702, SEP. 27, 1960

B-143702: Sep 27, 1960

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TO INTERSTATE ELECTRONICS CORPORATION: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 5. TWO BIDS WERE RECEIVED. THE BID OF DIXIE MANUFACTURING COMPANY WAS IN THE AMOUNT OF $246. YOUR BID WAS IN THE AMOUNT OF $201. NEGOTIATIONS WERE ENTERED INTO WITH DIXIE AND YOUR FIRM. YOUR FINAL OFFER WAS IN THE AMOUNT OF $206. THE FINAL OFFER OF DIXIE WAS IN THE AMOUNT OF $240. YOU PROTEST THE AWARD TO DIXIE BECAUSE YOU FEEL THAT YOU WERE QUALIFIED TO PERFORM THE WORK AND SINCE YOUR BID WAS LOWER THAN THE BID OF DIXIE. THE PROPOSED INSTALLATION IS REGARDED BY THE AGENCY AS PURELY EXPERIMENTAL AND DEVELOPMENTAL IN THE SENSE THAT ITS EXACT PERFORMANCE CANNOT BE SPECIFIED IN ADVANCE AND IT IS TO BE USED PRIMARILY FOR INVESTIGATIVE PURPOSES IN CONNECTION WITH BASIC RESEARCH OBJECTIVES.

B-143702, SEP. 27, 1960

TO INTERSTATE ELECTRONICS CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 5, 1960, PROTESTING THE REJECTION OF YOUR BID ON REQUEST FOR PROPOSAL NO. 246-6 15-60 FOR FURNISHING ALL LABOR, EQUIPMENT, AND MATERIALS AND PERFORM ALL WORK FOR THE CONSTRUCTION OF A LOW LEVEL RADIATION COUNTING FACILITY IN ROOM B3B- 25, BUILDING 10, NATIONAL INSTITUTES OF HEALTH, BETHESDA, MARYLAND.

THE SUBJECT REQUEST FOR PROPOSAL SOLICITED PRICES FOR A NEGOTIATED FIXED- PRICE CONTRACT FOR CONSTRUCTION OF A LOW LEVEL RADIATION COUNTING FACILITY. TWO BIDS WERE RECEIVED. THE BID OF DIXIE MANUFACTURING COMPANY WAS IN THE AMOUNT OF $246,341. YOUR BID WAS IN THE AMOUNT OF $201,225. SUBSEQUENT TO BID OPENING ON JUNE 15, 1960, NEGOTIATIONS WERE ENTERED INTO WITH DIXIE AND YOUR FIRM, WITH CERTAIN ADDITIONS AND REDUCTIONS IN THE AMOUNTS OF THE BIDS. YOUR FINAL OFFER WAS IN THE AMOUNT OF $206,300.97. THE FINAL OFFER OF DIXIE WAS IN THE AMOUNT OF $240,991.45. YOU PROTEST THE AWARD TO DIXIE BECAUSE YOU FEEL THAT YOU WERE QUALIFIED TO PERFORM THE WORK AND SINCE YOUR BID WAS LOWER THAN THE BID OF DIXIE. ALSO, YOU STRESSED THE FACT THAT YOUR FIRM RECEIVED A SIMILAR AWARD BY THE DEPARTMENT OF THE NAVY FOR INSTRUMENTATION DESIGN AND INSTALLATION AT THE NAVAL HOSPITAL, BETHESDA, MARYLAND.

THE PROPOSED INSTALLATION IS REGARDED BY THE AGENCY AS PURELY EXPERIMENTAL AND DEVELOPMENTAL IN THE SENSE THAT ITS EXACT PERFORMANCE CANNOT BE SPECIFIED IN ADVANCE AND IT IS TO BE USED PRIMARILY FOR INVESTIGATIVE PURPOSES IN CONNECTION WITH BASIC RESEARCH OBJECTIVES. WAS CONSIDERED OF THE UTMOST IMPORTANCE TO CHOOSE A CONTRACTOR WHO WAS FULLY AWARE OF THE METICULOUS ATTENTION REQUIRED AT EVERY STAGE OF DESIGN AND CONSTRUCTION OF THE INVOLVED ROOM AND OF THE INSTALLATION OF THE DETECTION AND RECORDING EQUIPMENT, SO AS TO ACHIEVE THE ULTIMATE PERFORMANCE POSSIBLE IN THE NIH ENVIRONMENTAL BACKGROUND.

IN THE CONTRACTING OFFICER'S LETTER OF MAY 20, 1960, TO ALL PROSPECTIVE BIDDERS IT WAS STATED THAT "AFTER ALL QUOTATIONS ARE RECEIVED IT IS ANTICIPATED THAT A CONTRACT WILL BE NEGOTIATED WITH THE CONTRACTOR WHO POSSESSES THE NECESSARY BUSINESS AND TECHNICAL QUALIFICATIONS, WHOSE TECHNICAL APPROACH AND PLAN OF OPERATIONS MOST NEARLY (IN THE OPINION OF THE GOVERNMENT) MEETS THE REQUIREMENTS OF NIH AND WHOSE PRICE AND OTHER TERMS ARE CONSIDERED REASONABLE.' THE SUBSEQUENT EVENTS AND FACTS ARE REPORTED IN A LETTER OF SEPTEMBER 16, 1960, FROM THE SECRETARY OF HEALTH, EDUCATION AND WELFARE AND ARE SUBSTANTIALLY AS FOLLOWS:

IN ORDER THAT THERE MIGHT BE NO MISUNDERSTANDING OF THE NIH REQUEST FOR A PROPOSAL, REPRESENTATIVES OF A NUMBER OF COMPANIES, INCLUDING YOUR FIRM, ATTENDED A PRE-BIDDING MEETING ON MAY 27, 1960. AT THIS MEETING IT WAS POINTED OUT THAT, SINCE SPECIFIC STANDARDS OF RADIATION MINIMIZATION COULD NOT BE GIVEN BY NIH BEYOND THE CURRENT "STATE OF THE ART," THE TECHNICAL APPROACHES BY ANY PROSPECTIVE CONTRACTOR WOULD WEIGH MOST HEAVILY IN THE ULTIMATE SELECTION OF THE SUCCESSFUL CONTRACTOR. AFTER THE BID OPENING, OR ON JUNE 20, 1960, REPRESENTATIVES OF YOUR FIRM MET WITH THE CONTRACTING OFFICER, REPRESENTATIVES OF THE PLANT ENGINEERING BRANCH (NIH), AND DR. HOWARD ANDREWS, RADIATION SAFETY OFFICER, FOR A DISCUSSION OF YOUR PROPOSAL. UNRESOLVED QUESTIONS AND DOUBTS INDICATED THAT NO AWARD COULD BE MADE AND SHOULD BE HELD PENDING A SCHEDULED MEETING WITH DIXIE, WHICH WAS HELD ON JUNE 21, 1960. SUBSEQUENT TO THIS LATTER MEETING IT WAS CONCLUDED TO NEGOTIATE A CONTRACT WITH DIXIE. THIS CONCLUSION WAS REACHED BY THE CONTRACTING OFFICIALS WHO RELIED ON THE JUDGMENT OF DR. ANDREWS. IT WAS THE OPINION OF DR. ANDREWS THAT YOUR FIRM DID NOT DEMONSTRATE THE TECHNICAL KNOWLEDGE IN CERTAIN RESPECTS REQUIRED TO ADEQUATELY PERFORM THE INTENDED CONTRACT. HIS OPINION IS REPORTED TO HAVE BEEN BASED IN PART ON THE FOLLOWING MATTERS:

"1. THE ORIGINAL PROPOSAL FROM INTERSTATE ELECTRONICS INDICATED A VERY INCONCLUSIVE APPROACH TO AN EXTREMELY COMPLEX PROBLEM. ELECTRONIC COMPONENTS WERE SPECIFIED WITH NO EVIDENCE THAT CALCULATIONS HAD BEEN MADE TO INSURE THE ADEQUACY OF THESE COMPONENTS. SUBSEQUENT DISCUSSIONS BROUGHT OUT THAT THESE CALCULATIONS ALMOST CERTAINLY ARE IN ERROR BY LARGE FACTORS. THIS IN PART, WAS CONVINCING EVIDENCE THAT INTERSTATE LACKS THE COMPETENCE IN THIS SPECIALIZED FIELD TO DO THE DESIGN AND CONSTRUCTION REQUIRED BY OUR BID INVITATION.

"2. INTERSTATE SHOWED A COMPLETE LACK OF AWARENESS OF THE EXTREME DEGREE OF CLEANLINESS REQUIRED TO INSURE THAT THE FINISHED INSTALLATION WOULD MEET NIH REQUIREMENTS. ALTHOUGH INTERSTATE IS NOW AWARE OF THE GENERAL PROBLEM, THERE IS NO EVIDENCE THAT THEY HAVE AN APPRECIATION OF THE NEED TO CONTROL COUNTLESS MINUTIAE, OR THAT A SINGLE CONTROL FAILURE COULD RESULT IN AN INSTALLATION THAT WOULD BE USELESS FOR ITS INTENDED PURPOSE.

"THE PROPOSAL SUBMITTED BY INTERSTATE COVERING THE NIH REQUIREMENT CONTAINED THE FOLLOWING STATEMENT: ". . . INTERSTATE ELECTRONICS CORPORATION IS AT PRESENT CONSTRUCTING A LOW LEVEL RADIATION COUNTING FACILITY FOR THE U.S. NAVAL HOSPITAL AT BETHESDA AND CAN BRING EXPERIENCE GAINED FROM THIS PROJECT FOR THE SPEEDY SOLUTION OF DESIGN AND ENGINEERING PROBLEMS . . .' IN CONTRADICTION TO THIS STATEMENT INTERSTATE IN ANOTHER INSTANCE STATED THAT IT WOULD BE RESPONSIBLE ONLY FOR THE INSTRUMENTATION AT THE NAVY INSTALLATION WHICH HAS NOT AS YET BEEN INSTALLED AND TESTED.

"3. THE NIH INVITATION FOR PROPOSALS CALLED FOR DETAILED DESIGN AND CONSTRUCTION AFTER THE INITIAL DESIGN HAS BEEN APPROVED. IN A HIGHLY SPECIALIZED AND UNIQUE DESIGN SUCH AS THIS, IT IS EXPECTED THAT ANY FIRM WOULD USE THE SERVICES OF EXPERT CONSULTANTS THROUGHOUT ALL PHASES OF THE PROJECT. DIXIE MANUFACTURING COMPANY PROPOSED TO USE CONSULTANTS RECOGNIZED AS THE BEST INFORMED IN THE WORLD IN THIS AREA THROUGHOUT THE DESIGN, CONSTRUCTION, AND TESTING OF THE NIH UNIT.'

THE CONCLUSION TO NEGOTIATE A CONTRACT WITH DIXIE WAS BASED ON THE BELIEF THAT IT CLEARLY DEMONSTRATED SUPERIOR INSIGHT INTO THE GENERAL PROBLEM AND A MORE MATURE APPROACH TO THE SOLUTION. SOME SPECIFIC EXAMPLES OF IMPORTANCE IN THIS REGARD ARE REPORTED AS FOLLOWS:

"1. DIXIE AND ITS SUBCONTRACTOR, RADIATION COUNTER LABORATORIES OF CHICAGO, ILLINOIS HAVE HAD PREVIOUS EXPERIENCE WITH THIS TYPE OF INSTALLATION AND HAVE DEMONSTRATED THEIR ABILITY TO PRODUCE A SATISFACTORY UNIT.

"2. THE DIXIE PROPOSAL SHOWED A SOUND QUANTITATIVE ENGINEERING APPRAISAL OF THE GENERAL PROBLEMS AND EQUALLY SOUND SOLUTIONS WERE PROPOSED. DIXIE PROPOSED TO MAINTAIN THE NECESSARY CONSTRUCTION STANDARDS BY ASSIGNING A FULL-TIME RESIDENT PROFESSIONAL ENGINEER TO THE NIH JOB. THIS IS IN CONTRAST TO INTERSTATES PROPOSED BI-WEEKLY VISIT TO THE JOB SITE.

"3. THE ELECTRONIC INSTALLATION PROPOSED BY DIXIE WILL PERMIT SIMULTANEOUS RECORDING FROM THREE CRYSTAL UNITS. THIS MOST DESIRABLE FEATURE WAS STATED BY INTERSTATE TO BE IMPOSSIBLE TO ACHIEVE.'

WHILE, AS STATED HEREINABOVE, YOUR FINAL BID IS CONSIDERED TO HAVE BEEN $206,300.97, COST COMPARISON OF THE TWO BIDS BY ITEM IS REGARDED BY THE AGENCY AS VIRTUALLY IMPOSSIBLE BECAUSE OF THE DIFFERENT APPROACH TO THE RESOLUTION OF THE REQUIREMENT AND COSTING BASES USED BY YOUR FIRM AND DIXIE. YOUR BID PRICE, ACCORDING TO AN ESTIMATE BY DR. ANDREWS, SHOULD HAVE BEEN INCREASED BY APPROXIMATELY $14,000 TO COVER PHOTOMULTIPLIER TUBE REJECTS.

IN THE CASE OF NEGOTIATED PROCUREMENTS, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING DO NOT APPLY, AND THE TERMS AND CONDITIONS UPON WHICH PROPOSALS ARE REQUESTED AND THE SELECTION OF CONTRACTORS ARE DETERMINED ARE MATTERS FOR THE ADMINISTRATIVE OFFICE CONCERNED IN THE EXERCISE OF ITS BEST JUDGMENT AS TO THE INTERESTS OF THE GOVERNMENT. IN SUCH NEGOTIATED PROCUREMENTS, IT IS THE DUTY OF THE CONTRACTING OFFICER TO NEGOTIATE THE CONTRACT WITH THE PARTY MOST RESPONSIVE TO THE STATED NEEDS OF THE GOVERNMENT. IN THIS CASE THE REQUEST FOR PROPOSALS STRESSED THAT THE NECESSARY BUSINESS AND TECHNICAL QUALIFICATIONS OF THE CONTRACTOR WERE OF PRIME IMPORTANCE. INSOFAR AS IT APPEARS FROM THE REPORTED FACTS, THE CONTRACTING OFFICIALS HAVE GIVEN THE MATTER OF SELECTING THE BETTER QUALIFIED BIDDER MATURE CONSIDERATION AND HAVE DETERMINED THAT THE AWARD TO DIXIE IS IN THE BEST INTERESTS OF THE GOVERNMENT.

IN VIEW OF THE WIDE DISCRETION VESTED IN ADMINISTRATIVE OFFICIALS IN NEGOTIATED PROCUREMENTS AND SINCE THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE CONTRACTING OFFICIALS FAILED TO EXERCISE THEIR BEST JUDGMENT IN MAKING THE AWARD, WE DO NOT FEEL THAT THE FAILURE TO AWARD THE CONTRACT TO YOUR FIRM WAS IMPROPER.