B-148807, AUG. 30, 1962

B-148807: Aug 30, 1962

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THE REQUEST WHICH WAS ADDRESSED TO YOUR COMPANY AND SOUTHWESTERN BELL ADVISED THAT CONSIDERATION WOULD BE GIVEN TO THE FOLLOWING FACTORS. IT WAS STATED THAT NO REQUIREMENT FOR LOCAL AREA EXCHANGE WAS IMPLIED BUT THAT THE EXISTENCE THEREOF WOULD HAVE A DECIDED EFFECT UPON COSTS.) 2. THE FOLLOWING SERVICES WERE LISTED "IF THEY CAN BE MADE AVAILABLE: "/E) 150 DIRECT INWARD DIALING (DID) TRUNKS. PROPOSALS WERE RECEIVED FROM YOUR COMPANY AND SOUTHWESTERN BELL ON MARCH 19. BOTH PROPOSALS WERE EVALUATED BY AN ADVISORY COMMITTEE AND ON APRIL 5. THE COMMITTEE CONCLUDED THAT BOTH COMPANIES WERE ESSENTIALLY EQUAL IN "ABILITY TO SERVE" BUT THAT IN PRICE AND RESPONSIVENESS TO THE REQUEST FOR PRICING INFORMATION YOUR COMPANY'S PROPOSAL WAS AT LEAST MORE FAVORABLE TO THE GOVERNMENT.

B-148807, AUG. 30, 1962

TO GENERAL TELEPHONE COMPANY OF THE SOUTHWEST:

BY TELEGRAM DATED MAY 2, 1962, AND SUBSEQUENT CORRESPONDENCE, YOU PROTESTED AGAINST THE AWARD OF A COMMUNICATIONS SERVICES CONTRACT FOR THE MANNED SPACECRAFT CENTER, CLEAR LAKE (HARRIS COUNTY), TEXAS, TO THE SOUTHWESTERN BELL TELEPHONE COMPANY UNDER A REQUEST FOR PROPOSALS ISSUED BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ON MARCH 5, 1962.

THE REQUEST WHICH WAS ADDRESSED TO YOUR COMPANY AND SOUTHWESTERN BELL ADVISED THAT CONSIDERATION WOULD BE GIVEN TO THE FOLLOWING FACTORS, ASIDE FROM PRICE FACTORS:

1. EXISTENCE OF A CENTRAL OFFICE OF ADEQUATE CAPACITY TO SERVE THE CENTER. (HOWEVER, IT WAS STATED THAT NO REQUIREMENT FOR LOCAL AREA EXCHANGE WAS IMPLIED BUT THAT THE EXISTENCE THEREOF WOULD HAVE A DECIDED EFFECT UPON COSTS.)

2. ACTUAL CONSTRUCTION DATES AND AMOUNT OF CENTRAL OFFICE AND OUTSIDE PLANT WHICH WOULD BE INSTALLED AT ABOUT AUGUST 1, 1963.

3. A FIRM REQUIREMENT FOR AN ALTERNATE ROUTING PLAN OF THE REQUESTED CIRCUITS.

4. AVAILABILITY DATE OF IN-OUT DIALING.

5. EARLIEST DATE WHEN SERVICE WOULD BE AVAILABLE AT THE SITE. (CIRCUITS) IMMEDIATELY AVAILABLE QUOTATION OF PRICES FOR THE VARIOUS SERVICES DESIRED BY ITEM DESCRIPTION. THE REQUEST FURTHER SET OUT THE SERVICE REQUIREMENTS OF THE CENTER AS OF DECEMBER 1, 1963:

CHART

"/A) 3,000 STATION LINE TERMINALS.

(B) 100 INCOMING TRUNKS.

(C) 60 OUTGOING "DIAL" TRUNKS.

(D) 12 SWITCHBOARD POSITIONS.'

ALSO, THE FOLLOWING SERVICES WERE LISTED "IF THEY CAN BE MADE AVAILABLE:

"/E) 150 DIRECT INWARD DIALING (DID) TRUNKS.

(F) 40 DIRECT DISTANCE DIALING (DDD) TRUNKS.'

PROPOSALS WERE RECEIVED FROM YOUR COMPANY AND SOUTHWESTERN BELL ON MARCH 19, 1962. BOTH PROPOSALS WERE EVALUATED BY AN ADVISORY COMMITTEE AND ON APRIL 5, 1962, THE COMMITTEE RECOMMENDED TO THE CONTRACTING OFFICER THAT YOUR COMPANY BE SELECTED TO PROVIDE SERVICE TO THE CENTER. THE COMMITTEE CONCLUDED THAT BOTH COMPANIES WERE ESSENTIALLY EQUAL IN "ABILITY TO SERVE" BUT THAT IN PRICE AND RESPONSIVENESS TO THE REQUEST FOR PRICING INFORMATION YOUR COMPANY'S PROPOSAL WAS AT LEAST MORE FAVORABLE TO THE GOVERNMENT.

PURSUANT TO SECTION 3.856-1 (A) OF CHAPTER 18 OF THE NASA MANAGEMENT MANUAL, THE CONTRACTING OFFICER MADE HIS OWN EVALUATION AND PRICE ANALYSIS OF THE TWO PROPOSALS. THAT SECTION PROVIDES:

"RESPONSIBILITY OF CONTRACTING OFFICER. THE CONTRACTING OFFICER IS RESPONSIBLE FOR PERFORMING OR HAVING PERFORMED ALL ADMINISTRATIVE ACTIONS NECESSARY FOR EFFECTIVE CONTRACTING. HE SHALL EXERCISE REASONABLE CARE, SKILL, AND JUDGMENT AND SHALL AVAIL HIMSELF OF THE SERVICES OF NASA SPECIALISTS IN THE FIELDS OF CONTRACTING, FINANCE, LAW, COST ANALYSIS, ENGINEERING, SYSTEM RELIABILITY, AND CONTRACT AUDIT TO THE EXTENT CONSIDERED NECESSARY IN THE PARTICULAR PROCUREMENT. HOWEVER, HE SHALL NOT TRANSFER HIS OWN RESPONSIBILITIES TO THEM. THUS, THE FINAL NEGOTIATION OF PRICE, INCLUDING EVALUATION OF COST ESTIMATES, AND THE SELECTION OF THE APPROPRIATE TYPE OF CONTRACT REMAIN THE RESPONSIBILITY OF THE CONTRACTING OFFICER.'

ON APRIL 10, 1962, THE CONTRACTING OFFICER RECOMMENDED THAT A CONTRACT BE ENTERED INTO WITH SOUTHWESTERN BELL BASED UPON THE FOLLOWING CONSIDERATIONS:

"/1) ABILITY TO SERVE--- THESE FACTORS BEAR UPON THE ABILITY OF THE FIRM TO SERVE THE MANNED SPACECRAFT CENTER'S GROUND COMMUNICATION REQUIREMENT: MAINTENANCE, MANUFACTURING, ADEQUACY OF EXISTING AND PROPOSED FACILITIES, UNDERSTANDING OF THE SCOPE OF WORK, AVAILABILITY AND COMPETENCE OF TECHNICAL PERSONNEL, AVAILABILITY OF RESEARCH AND TEST FACILITIES, RESOURCES COMMITMENT AND RELIABILITY OF ALTERNATE ROUTING.

"THE CHIEF, COMMERCIAL COMMUNICATION SERVICES DIVISION, A.F.C.S., SCOTT FIELD, ILLINOIS WAS CONSULTED. IN HIS EXPERIENCE WITH BOTH COMPANIES, INVOLVING COMMUNICATIONS THROUGHOUT THE UNITED STATES, HE COULD NOT FIND ANY POINT OF SUPERIORITY OF ONE OVER THE OTHER. IT MUST BE CONCLUDED THEN THAT IN THE FIELD OF ABILITY TO SERVE THE COMPANIES ARE ESSENTIALLY EQUAL.

"THE ALTERNATE ROUTING PLANS OFFERED BY THE TWO COMPANIES ARE DIFFERENT, SOUTHWESTERN BELL'S OFFERING BEING BURIED CABLE AND CONDUIT ON BOTH LEGS OF THE ALTERNATE ROUTING, WHILE GENERAL TELEPHONE'S ALTERNATE ROUTING INVOLVED BURIED CABLE ON ONE ROUTING AND MICROWAVE ON THE OTHER. TECHNICAL ADVISORS STATED THAT THERE IS NO DIFFERENCE IN RELIABILITY BETWEEN THE TWO TYPES OF COMMUNICATIONS.

"/2) THE FOLLOWING BASIC REQUIRED SERVICES WERE CONSIDERED IN ESTABLISHING THE PROBABLE COST TO THE GOVERNMENT FOR REQUIRED TELEPHONE SERVICE:

CHART

"A. ADMINISTRATIVE TELEPHONE SERVICE REQUIRED BY 1 DEC. 1963:

1. 3000 STATION LINE TERMINALS

2. 100 INCOMING TRUNKS

3. 60 OUTGOING "DIAL" TRUNKS

4. 12 SWITCHBOARD POSITIONS

"B. DESIRED, IF CAN BE MADE AVAILABLE:

5. 150 DIRECT INWARD DIALING (DID) TRUNKS

6. 40 DIRECT DISTANCE DIALING (DDD) TRUNKS

"C. PRIVATE LONG LINE FACILITIES:

1. 106 FULL PERIOD VOICE 4-WIRE FULL DUPLEX

2. 22 DTAT (3KC FULL DUPLEX)

3. 18 DATA (3KC SIMPLEX (ONE WAY NON-SIM) (

4. 18 TELETYPE, 60 AND/OR 100 WORD PER MINUTE FULL DUPLEX

5. 2 TV WIDE BAND SIMPLEX (528 DEF. MAX.)

"D. ALTERNATE ROUTING:

50 PERCENT VOICE, DATA AND TELETYPE

100 PERCENT TV

"THESE SERVICES TRANSLATE INTO DOLLARS AS FOLLOWS:

CHART CONTRACTOR EQP-T COST PER MO. COST PER MO. BY ITEM

SW BELL GEN TEL ---------------- ----------- ------------ 12 ATTENDANT POSITIONS SW - $155 EA. GEN - 50 EA.

$ 1860 $ 600 NO.GEN.OFF. TRUNKS SW

- $24.75 GEN - 18.75 3960

3000 160 MILEAGE CHARGES SW - 10/14 AT ?50 PER

1/4 800 3000 MAIN STA. AND LINE EQP-T

EXTENSIONS - BOTH - $1.75 EA. 7500 7500 990 SWITCHES (CEN. OFF)

AT $4.00 3690 3690 1 POWER PLANT

70 70

TOTAL $ 18,150 $ 15,130

DIFFERENCE $ 3,020

"IT IS APPARENT FROM THE ABOVE THAT IF THERE WERE NO REQUIREMENT FOR TOLL SERVICE INTO THE LEAGUE CITY OR HOUSTON EXCHANGES THAT A SUBSTANTIAL SAVING WOULD BE REALIZED BY GOING TO GENERAL TELEPHONE COMPANY. WITH HOUSTON AS OUR PRIMARY COMMUNITY OF INTEREST FROM A COMMERCIAL, INDUSTRIAL, EDUCATIONAL AND RESIDENTIAL STANDPOINT, IT BECOMES IMMEDIATELY APPARENT THERE WILL BE A SUBSTANTIAL TOLL COST INVOLVED IN THE CENTER OPERATION IN CALLS TO THE HOUSTON AREA. ALTERNATE MEANS OF OBTAINING THESE SERVICES ARE AS FOLLOWS:

"/A) INDIVIDUALLY PLACED AND BILLED LONG DISTANCE CALLS.

"/B) "TELPAK" FOREIGN EXCHANGE SERVICE.

"THE TELPAK SERVICES PROVIDES 24-HOUR PER DAY LEASING OF A PACKAGE OF VOICE CIRCUITS. THE FOREIGN EXCHANGE CIRCUITS THAT WOULD BE AVAILABLE FOR USE UNDER A SOUTHWESTERN BELL CONTRACT THAT WOULD PROVIDE TOLL-FREE DIRECT DIALING FROM THE HOUSTON EXCHANGE TO LEAGUE CITY AND THE SAME TYPE SERVICE UNDER A GENERAL TELEPHONE CONTRACT TO PROVIDE CONNECTION FROM LEAGUE CITY TO HOUSTON ARE AS FOLLOWS:

CHART

SW BELL GEN TEL

------- ------- "TELPEK "A" (12 VOICE CIRCUITS) $ 1,212 $ 1,140 TELPAK "B" (24 VOICE CIRCUITS)

2,100 1,956 TELPAK "C" (60 VOICE CIRCUITS)

N/A 3,910 2 INDIVIDUAL FOREIGN EXCHANGE CIRCUITS 240

"AN ESTIMATE OF THE TOLL LOAD BETWEEN THE CENTER AND HOUSTON INDICATES THAT IT WOULD BE ECONOMICALLY DESIRABLE IF WE CONTRACTED WITH GENERAL TELEPHONE TO HAVE THE TELPAK "C" WHICH WOULD COST $3910 PER MONTH. IF THE CONTRACT IS AWARDED TO SOUTHWESTERN BELL THERE WOULD BE NO REQUIREMENT FOR SPECIAL SERVICE INTO HOUSTON AND DIRECT ACCESS INTO LEAGUE CITY EXCHANGE COULD BE PROVIDED AT A COST OF $240.00 FOR TWO INDIVIDUAL FOREIGN EXCHANGE CIRCUITS. IT IS THE OPINION OF THE CONTRACTING OFFICER'S ADVISOR ON COMMUNICATIONS THAT TWO SUCH CIRCUITS WILL BE ADEQUATE TO CARRY OFFICIAL BUSINESS TRAFFIC INTO THE GENERAL TELEPHONE COMPANY NETWORK OF LEAGUE CITY, DICKINSON, KEMAH AND BACLIFF.

"IN MY ESTIMATION THE BASIC EXCHANGE COSTS, TO SHOW THE COMPARISON OF COSTS BETWEEN THE TWO COMPANIES, WOULD APPEAR AS FOLLOWS:

CHART

SW BELL GEN TEL

------- ------- "TOTAL COST OF EXCHANGE

EQUIPMENT $18,150 $15,130 2 INDIVIDUAL FOREIGN

EXCHANGE CIRCUITS 240 TELPAK "C"

3,190

TOTALS $18,390 $19,040

"THE DIFFERENCE IS NOT GREAT BUT SHOULD BE GIVEN WEIGHT IN MAKING THIS EVALUATION SINCE OTHER FACTORS ARE SO NEARLY THE SAME. THE SAVING INDICATED IS ABOUT $7,800 PER YEAR.

"OTHER FACTORS CONSIDERED CAN BE STATED AS FOLLOWS:

"1. OUT ABILITY TO NEGOTIATE COSTS FOR SPECIAL ASSEMBLY EQUIPMENT FAVORS GENERAL TELEPHONE.

"2. OUR COMMUNITY OF INTEREST FAVORS SOUTHWESTERN BELL TELEPHONE.

"3. ABILITY TO SERVE IN THE LOCAL AREA FROM AVAILABLE RESOURCES FAVORS SOUTHWESTERN BELL TELEPHONE.'

ON APRIL 17, 1962, THE PROCUREMENT OFFICER APPROVED THE RECOMMENDATION OF THE CONTRACTING OFFICER STATING THAT THE "COMMUNITY OF INTEREST" FAVORS SOUTHWESTERN BELL; THAT THE ULTIMATE COST TO THE GOVERNMENT FAVORS SOUTHWESTERN BELL SINCE, WHILE YOUR COMPANY'S BASIC RATES ARE LOWER FOR SOME AREAS OF SERVICE, THE COST OF LONG DISTANCE TOLLS OR FOREIGN EXCHANGE SERVICE THROUGH SOUTHWESTERN BELL OFFSETS THIS ADVANTAGE; AND THAT SOUTHWESTERN BELL OFFERED A LARGER SCOPE OF CAPABILITY IN THE CLEAR LAKE AREA (575,000 STATIONS V. 4,000 STATIONS), INCLUDING THE SCOPE AND READY AVAILABILITY OF MAINTENANCE SERVICE, SPARE PARTS AND ENGINEERING CAPABILITY. ACCORDINGLY, THE CONTRACT WAS AWARDED TO SOUTHWESTERN BELL ON MAY 1, 1962, PURSUANT TO THE PROVISIONS OF 10 U.S.C. 2304 (A) (10).

WE HAVE CAREFULLY REVIEWED THE VOLUMINOUS RECORD IN THIS PROCUREMENT IN THE LIGHT OF THE SUPPLEMENTAL INFORMATION AND DATA FURNISHED BY YOUR COMPANY, SOUTHWESTERN BELL AND NASA, AND WE MUST CONCLUDE THAT NO LEGAL BASIS EXISTS FOR QUESTIONING THE AWARD MADE. WE RECOGNIZE THAT THE EVALUATION WHICH EVENTUALLY RESULTED IN THE AWARD WAS BASED ON ELEMENTS WHICH WERE NOT INCLUDED IN THE REQUEST FOR PROPOSALS, BUT SUCH CIRCUMSTANCE DID NOT AFFECT THE LEGALITY OF THE AWARD. AN ADMINISTRATIVE DECISION HAD BEEN MADE TO CONDUCT THE PROCUREMENT AS A NEGOTIATION UNDER 10 U.S.C. 2304 (A) (10). "NEGOTIATION" IS DEFINED IN 10 U.S.C. 2302 AS MEANING TO "MAKE WITHOUT FORMAL ADVERTISING," THAT IS, WITHOUT REGARD TO THE PROCEDURES PRESCRIBED IN 10 U.S.C. 2305 AND IN THE IMPLEMENTING REGULATIONS APPEARING IN PART 2 OF THE NASA PROCUREMENT REGULATIONS. SUCH PROCUREMENTS, THE RULES, PROCEDURES AND REGULATORY CRITERIA OF FORMALLY ADVERTISED COMPETITIVE BIDDING ARE NOT FOR APPLICATION. IN OUR OPINION, IT IS THE DUTY OF THE CONTRACTING OFFICER TO CONDUCT NEGOTIATIONS TO THE BEST ADVANTAGE OF THE GOVERNMENT AND TO PLACE THE CONTRACT WITH THE PROPOSER MAKING THE BEST FINAL PROPOSAL. THUS, WHILE YOUR COMPANY'S PROPOSAL MAY HAVE BEEN THE LOWEST IN COST WITH RESPECT TO THE SERVICES DESCRIBED IN SCHEDULE "A" TO THE REQUEST FOR PROPOSALS, SUCH FACT ALONE IS NOT DETERMINATIVE OF THE LEGALITY OF THE AWARD WHICH WAS MADE ON THE BASIS OF FACTORS NOT EXPRESSLY SET OUT IN THE REQUEST FOR PROPOSALS BUT WHICH WERE CONSIDERED ESSENTIAL BY THE CONTRACTING OFFICER IN DETERMINING WHICH COMPANY'S OFFER BEST MET THE REQUIREMENTS OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

AS A CONSEQUENCE OF YOUR PROTEST, AN AD HOC COMMITTEE ESTABLISHED BY NASA TO REVIEW THIS PROCUREMENT. IN ITS REPORT, THE COMMITTEE SUMMARIZED THE COST COMPARISON IT HAD MADE TO CORRECT ,ERRORS" FOUND IN THE SEVERAL PRICE ANALYSES MADE IN CONNECTION WITH THE EVALUATION OF PROPOSALS. HOWEVER, THE COMMITTEE CONCLUDED:

"* * * THAT WHILE WEAKNESSES EXIST IN THE PROCUREMENT PROCESS, THE FACTORS CONSIDERED WERE PROPER FACTORS, INFORMATION ON THE FACTORS EVALUATED WAS AVAILABLE THOUGH NOT EXHAUSTIVE, A SMALL PRICE ADVANTAGE FOR SOUTHWESTERN BELL UNDER EXISTING TARIFFS DOES APPARENTLY EXIST, NO EVIDENCE EXISTS OF MORE FAVORABLE TREATMENT OF ONE COMPETITOR THAN THE OTHER.

"IT IS OUR RECOMMENDATION THAT THE AWARD TO SOUTHWESTERN BELL NOT BE REOPENED * * *.'

WE HAVE CONSIDERED YOUR MEMORANDUM IN SUPPORT OF THE PROTEST WHICH WAS SUBMITTED BY LETTER DATED JULY 16, 1962, WHEREIN ISSUE WAS TAKEN WITH THE AD HOC COMMITTEE'S PRICE ANALYSIS, THE ,COMMUNITY OF INTEREST," AND THE "ABILITY TO SERVE" FACTORS, ALL OF WHICH WERE IN FAVOR OF SOUTHWESTERN BELL. WE BELIEVE THAT THE SUPPLEMENTAL REPORT OF THE AD HOC COMMITTEE DATED JULY 20, 1962, WHICH HAD BEEN MADE AVAILABLE TO YOUR COMPANY FOR COMMENT, SATISFACTORILY PLACED THE PRICE ANALYSIS IN ITS PROPER PERSPECTIVE. THE SUPPLEMENTAL REPORT CORRECTLY STATED, IN OUR OPINION, THAT THE QUESTION OF WHICH COMPANY SUBMITTED THE LOWER PRICES HAS RECEIVED ENTIRELY TOO MUCH EMPHASIS. WHILE, AS WE AGREE, THAT COSTS ARE IMPORTANT IN AWARDING ANY CONTRACT, THEY CERTAINLY CANNOT BE THE ONLY CONTROLLING FACTOR WHEN, AS IN THIS CASE, THEY ARE NOT FIRM AND WHEN SUBSEQUENT CHANGES CANNOT BE CONTROLLED BY THE AGENCY AWARDING THE CONTRACT. THE OVERRIDING CONSIDERATION IN THIS CASE, IN OUR OPINION, WAS AS STATED IN THE SUPPLEMENTAL REPORT OF THE AD HOC COMMITTEE:

"* * * WHEN THE MAJOR FACTORS UPON WHICH THE TWO COMPANIES WERE EVALUATED TURNED OUT TO BE ESSENTIALLY EQUAL, IT BECAME NECESSARY TO CHOOSE UPON SECONDARY CONSIDERATIONS, SUCH AS PRICING INDICATIONS, FUTURE GROWTH OF BUSINESS CONTRACTS (COMMUNITY OF INTEREST), AND IN BEING LOCAL SERVICE CAPABILITY. THE COMMITTEE BELIEVES THAT THE EVALUATION OF THESE FACTORS REQUIRED THE APPLICATION OF ADMINISTRATIVE JUDGMENT, AND THAT THIS JUDGMENT WAS EXERCISED IN A REASONABLE MANNER.'

SEE, IN THIS CONNECTION, 40 COMP. GEN. 508.

WE CANNOT, IN RETROSPECT, SUBSTITUTE OUR JUDGMENT FOR THAT OF NASA WHICH IS CHARGED BY STATUTE WITH THE ADMINISTRATION OF THE MANNED SPACECRAFT PROGRAM. WHILE WE BELIEVE THAT IT WOULD HAVE BEEN DESIRABLE HAD ALL THE FACTORS TO BE USED IN THE EVALUATION BEEN INCLUDED IN THE REQUEST FOR PROPOSALS, ON THE BASIS OF THE RECORD BEFORE US WE CANNOT FIND ANY EVIDENCE OF MORE FAVORABLE TREATMENT OF ONE COMPETITOR THAN THE OTHER. SINCE NO STATE-FRANCHISED AREAS OF SERVICE WERE INVOLVED HERE, IT BECAME NECESSARY FOR NASA TO SEEK COMMUNICATIONS SERVICES FROM TWO COMPANIES WHICH WERE IN A POSITION TO MEET THE CENTER'S REQUIREMENTS. THE DECISION TO AWARD A CONTRACT TO ONE OR THE OTHER WAS ADMITTEDLY DIFFICULT AND REQUIRED THE EXERCISE OF ADMINISTRATIVE JUDGMENT. OTHER CONSIDERATIONS OR FACTORS BEING ALMOST EQUAL, THE CHOICE OF A COMPANY WHICH IS ALREADY SERVING THE METROPOLITAN AREA OF THE CITY OF HOUSTON WHEREIN THE CENTER IS LOCATED AND WHICH IS FRANCHISED BY THE CITY OF HOUSTON TO PROVIDE COMMON CARRIER TELEPHONE SERVICE CANNOT BE LEGALLY QUESTIONED BY OUR OFFICE. YOUR PROTEST, THEREFORE, IS DENIED.