B-149901, JAN. 10, 1963
Highlights
TO SUWANNEE STEAMSHIP COMPANY: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 15. THE DECISION TO AWARD THE SUBCONTRACT TO MTL WAS BASED PRIMARILY UPON THE EXPERIENCE OF ITS KEY EMPLOYEES. THESE FACTORS WERE INCLUDED IN 36 SPECIFIC STANDARDS OF EVALUATION ESTABLISHED BY PAA. EACH OFFEROR'S PROPOSAL WAS COMPARED TO AND RATED AGAINST THE STANDARDS. WE ARE ENCLOSING A COPY OF THAT PORTION OF A SUMMARY OF THE COMPARATIVE EVALUATION OF YOUR PROPOSAL AND THE PROPOSAL SUBMITTED BY MTL ON THE FACTORS DESCRIBED ABOVE. IS ALREADY IN YOUR POSSESSION. ALSO ENCLOSED IS A COPY OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND CIRCUMSTANCES. WHICH OUTLINES THE BASIS UPON WHICH IT WAS ESTIMATED THAT SAVINGS IN THE AMOUNT OF $219.
B-149901, JAN. 10, 1963
TO SUWANNEE STEAMSHIP COMPANY:
REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 15, 1962, AND SUBSEQUENT CORRESPONDENCE TRANSMITTING INFORMATION AND DOCUMENTS PERTINENT TO OUR REVIEW OF A SUBCONTRACT FOR OPERATION OF ATLANTIC MISSILE RANGE VESSELS TO MARINE TRANSPORT LINES (NTL) BY PAN AMERICAN WORLD AIRWAYS (PAA) UNDER ITS PRIME CONTRACT NO. AF08/606/-5300.
AS INDICATED IN A LETTER DATED SEPTEMBER 12, 1962, FROM THE ASSISTANT SECRETARY OF THE AIR FORCE TO YOUR COMPANY, THE DECISION TO AWARD THE SUBCONTRACT TO MTL WAS BASED PRIMARILY UPON THE EXPERIENCE OF ITS KEY EMPLOYEES, ITS EXPERIENCE IN WORLD-WIDE OPERATIONS, THE EXTENT OF ITS SHORESIDE MAINTENANCE RESOURCES, AND ESTIMATED SAVINGS EXPECTED TO RESULT FROM ITS MAINTENANCE POLICY. THESE FACTORS WERE INCLUDED IN 36 SPECIFIC STANDARDS OF EVALUATION ESTABLISHED BY PAA, PRIOR TO ISSUING ITS REQUEST FR PROPOSALS, AS THE DESIRED CRITERIA FOR AN ATLANTIC MISSILE RANGE MARINE SUBCONTRACTOR, AND EACH OFFEROR'S PROPOSAL WAS COMPARED TO AND RATED AGAINST THE STANDARDS. WE ARE ENCLOSING A COPY OF THAT PORTION OF A SUMMARY OF THE COMPARATIVE EVALUATION OF YOUR PROPOSAL AND THE PROPOSAL SUBMITTED BY MTL ON THE FACTORS DESCRIBED ABOVE. WE UNDERSTAND THAT A BREAKDOWN OF THE POINT EVALUATION ON THESE FACTORS, WHICH RESULTED IN YOUR COMPANY'S PROPOSAL BEING EVALUATED AT 57 OF A POSSIBLE 100 POINTS, AND IN MTL'S PROPOSAL BEING EVALUATED AT 83 POINTS, IS ALREADY IN YOUR POSSESSION.
ALSO ENCLOSED IS A COPY OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND CIRCUMSTANCES, WHICH OUTLINES THE BASIS UPON WHICH IT WAS ESTIMATED THAT SAVINGS IN THE AMOUNT OF $219,487.64 COULD BE EXPECTED IN PAA'S OPERATIONS UNDER ITS PRIME CONTRACT IF THE SUBCONTRACT WAS AWARDED TO MTL RATHER THAN TO YOUR COMPANY.
WITH SPECIFIC REFERENCE TO THE ALLEGATIONS IN THE BRIEF FILED BY YOUR ATTORNEYS THAT PAA'S REFUSAL TO AWARD TO YOUR COMPANY WAS BASED UPON LACK OF TECHNICAL AND PERFORMANCE QUALIFICATIONS AND UPON LACK OF FINANCIAL CAPABILITIES, IT SHOULD BE NOTED THAT BOTH YOUR COMPANY AND MTL WERE CONSIDERED FINANCIALLY CAPABLE OF PERFORMING THE SUBCONTRACT, AND THAT PAA'S EVALUATION, AS SUMMARIZED IN THE ENCLOSURES, ONLY INDICATED THAT THE TECHNICAL AND PERSONNEL QUALIFICATION OF MTL WERE CONSIDERED SUPERIOR TO YOUR COMPANY.
CONCERNING THE PROPRIETY OF AN AWARD TO MTL PRIOR TO THE DATE ON WHICH A FACILITY SECURITY CLEARANCE WAS GRANTED TO THAT COMPANY, THE SECURITY REGULATIONS TO WHICH YOUR LETTERS REFER DEAL WITH THE RIGHT OF ACCESS TO SECURITY INFORMATION. WHILE THE REFUSAL OF A CONTRACTING AGENCY TO GRANT A SUBCONTRACTOR SECURITY CLEARANCE NECESSARY TO PERFORMANCE OF ITS SUBCONTRACT WOULD CONSTITUTE A VALID BASIS FOR CANCELLING THE SUBCONTRACT, WE ARE NOT AWARE OF ANY REQUIREMENT THAT SUCH CLEARANCE BE GRANTED TO A BIDDER BEFORE A VALID SUBCONTRACT AWARD CAN BE MADE. IN ANY EVENT YOUR LETTER INDICATES THAT MTL WAS GRANTED A FACILITY SECURITY CLEARANCE ON OR BEFORE OCTOBER 15, 1962, AND ITS FAILURE TO OBTAIN SUCH CLEARANCE AT SOME EARLIER DATE THEREFORE CAN HAVE NO BEARING ON THE PRESENT VALIDITY OF ITS SUBCONTRACT.
WITH RESPECT TO THE FAILURE OF PAA TO SPECIFICALLY ADVISE PROSPECTIVE OFFERORS OF THE EVALUATION FACTORS AND ITS FAILURE TO ELICIT FULL INFORMATION FROM ALL OFFERORS ON ALL MATTERS SUBJECT TO EVALUATION UNDER THE EVALUATION STANDARDS USED IN THIS PROCUREMENT, THERE IS NO PRESENT REQUIREMENT THAT SUCH PROCEDURES BE FOLLOWED. IT IS OUR OPINION, HOWEVER, THAT THIS SHOULD BE DONE AS A MATTER OF SOUND PROCUREMENT PRACTICE AND ADEQUATE PROTECTION OF THE GOVERNMENT'S INTEREST. WE HAVE THEREFORE RECOMMENDED TO THE SECRETARY OF THE AIR FORCE THAT PROCEDURES IN THIS AREA BE REVIEWED WITH A VIEW TO THE ISSUANCE OF APPROPRIATE REGULATIONS ON THE SUBJECT.
THERE IS, OF COURSE, NO REQUIREMENT OF LAW OR REGULATION THAT A COST-TYPE CONTRACT OR SUBCONTRACT AWARD BE BASED UPON THE OFFER PROPOSING THE LOWEST ESTIMATED COSTS AND FIXED FEE. CONVERSELY, PARAGRAPH 3-805.2 PROVIDES AS FOLLOWS:
"COST-REIMBURSEMENT TYPE CONTRACTS. IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COST OF CONTRACT PERFORMANCE AND PROPOSED FEE SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST- REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND REGULATION AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE 3 808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT.'
FROM OUR REVIEW OF THIS PROCUREMENT WE MUST CONCLUDE THAT THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT DETERMINATIONS THAT MTL COULD PERFORM THE SUBCONTRACT IN A MANNER MORE ADVANTAGEOUS TO THE GOVERNMENT THAN SUWANNEE, AND THAT AN AWARD TO MTL WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. IT WOULD APPEAR THAT THE AWARD ACTION REPRESENTS A VALID AND BINDING CONTRACTUAL COMMITMENT BY PAA. CANCELLATION OF THE SUBCONTRACT WOULD THEREFORE RENDER PAA LIABLE FOR PAYMENT OF ADDITIONAL COSTS IN THE FORM OF TERMINATION CLAIMS WHICH WOULD BE REIMBURSABLE TO PAA BY THE GOVERNMENT UNDER THE TERMS OF PRIME CONTRACT NO. DA08/606/-5300. UNDER SUCH CIRCUMSTANCES THIS OFFICE WOULD NOT BE JUSTIFIED IN DIRECTING CANCELLATION OF THE SUBCONTRACT. YOUR PROTEST AGAINST THE AWARD TO MTL MUST THEREFORE BE DENIED.
AS YOU ARE AWARE, OUR REVIEW OF THIS PROCUREMENT WAS INSTITUTED AT THE REQUEST OF THE CHAIRMAN OF THE SUBCOMMITTEE ON SMALL BUSINESS AND GOVERNMENT PROCUREMENT, SELECT COMMITTEE ON SMALL BUSINESS, HOUSE OF REPRESENTATIVES. WE HAVE THEREFORE FORWARDED A REPORT, TOGETHER WITH PERTINENT RECORDS OF THIS PROCUREMENT, TO THE SUBCOMMITTEE. PENDING RECEIPT OF ADVICE THAT THE SUBCOMMITTEE REQUIRES ADDITIONAL INFORMATION, NO FURTHER ACTION IS CONTEMPLATED BY THIS OFFICE.