B-150246, MAR. 27, 1963

B-150246, MAR. 27, 1963

TO DANIEL J. CANTOR AND COMPANY:

THIS REFERS TO YOUR LETTERS OF MARCH 6, 1963, DECEMBER 28, 1962, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD MADE UNDER REQUEST FOR QUOTATIONS NO. 47-63Q, ISSUED ON AUGUST 13, 1962, BY THE UNITED STATES NAVY PURCHASING OFFICE, WASHINGTON, D.C.

THE SUBJECT RFQ WAS NEGOTIATED UNDER AUTHORITY OF 10 U.S.C. 2304 (A) (10) (IMPRACTICABLE TO SECURE COMPETITION), AS IMPLEMENTED BY ASPR 3 210.2 (VII) FOR TECHNICAL NONPERSONAL SERVICES IN CONNECTION WITH THE ASSEMBLY, INSTALLATION, OR SERVICING (OR THE INSTRUCTION OF PERSONNEL THEREIN) OF EQUIPMENT OF A HIGHLY TECHNICAL OR SPECIALIZED NATURE, AND IT WAS TOTALLY RESTRICTED TO SMALL BUSINESS. THIS PROCUREMENT WAS INITIATED FOR THE PURPOSE OF SELECTING A CONTRACTOR TO CONDUCT A COURSE IN VALUE ENGINEERING IN CONNECTION WITH THE TRAINING OF PERSONNEL ENGAGED IN THE RESEARCH AND DEVELOPMENT OF WEAPONS SYSTEMS.

THE RFQ STATED THAT SUBMITTED QUOTATIONS SHOULD CONSIST OF A PRICE QUOTATION, AND INFORMATION AS TO---

"/A) QUALIFICATIONS AND BACKGROUND OF PERSONNEL ENGAGED IN EACH COURSE.

"/B) A SYLLABUS FOR EACH COURSE.

"/C) SAMPLES OF TRAINING MATERIALS TO BE FURNISHED FOR EACH COURSE.'

QUOTERS WERE INFORMED THAT THEIR QUOTATIONS WOULD BE USED TO DETERMINE---

"/1) THE CONTRACTOR'S UNDERSTANDING OF THE SCOPE OF THE WORK AS SHOWN BY THE SCIENTIFIC OR TECHNICAL APPROACH PROPOSED.

"/2) AVAILABILITY AND COMPETENCE OF EXPERIENCED ENGINEERING, SCIENTIFIC, OR OTHER TECHNICAL PERSONNEL.

"/3) EXPERIENCE OR PERTINENT NOVEL IDEAS IN THE SPECIFIC BRANCH OF SCIENCE OR TECHNOLOGY INVOLVED.

"/4) THE CONTRACTOR'S WILLINGNESS TO DEVOTE HIS RESOURCES TO THE PROPOSED WORK WITH APPROPRIATE DILIGENCE.'

IT WAS TENTATIVELY INDICATED THAT A FIXED-PRICE CONTRACT WOULD BE AWARDED BY SEPTEMBER 30, 1962, AND THAT THE FIRST COURSE WOULD COMMENCE IN OCTOBER 1962.

SEPTEMBER 4, 1962, WAS THE CLOSING DATE FOR RECEIPT OF QUOTATIONS, AND AT THAT DATE THE FOLLOWING QUOTATIONS WERE RECEIVED:

TABLE

PLANT MANAGEMENT AND MAINTENANCE CO. $22,197.00

VALUE TECHNOLOGY CORP. 41,860.00

DANIEL J. CANTOR AND CO. 42,495.00

VALUE ENGINEERING, INC. 47,133.00

GARY LABORATORIES 50,190.00

VALUE PROGRAMS FOR INDUSTRY 54,788.88

THESE SIX PROPOSALS WERE SUBMITTED FOR EVALUATION TO THE BUREAU OF NAVAL WEAPONS. THE BUREAU RECOMMENDED IN A REPORT DATED SEPTEMBER 20, 1962, THAT THE CONTRACT SHOULD BE NEGOTIATED WITH VALUE PROGRAMS FOR INDUSTRY, INCORPORATED, AS THE MOST QUALIFIED SOURCE.

IN ACCORDANCE WITH THE BUREAU'S RECOMMENDATION, THE CONTRACTING OFFICER REPORTS THAT HE CONDUCTED NEGOTIATIONS WITH VALUE PROGRAMS FOR INDUSTRY AS THE FIRM REPRESENTING THE GREATEST VALUE TO THE GOVERNMENT IN TERMS OF EXPECTED PERFORMANCE AND IN TERMS OF OTHER FACTORS CONSIDERED MORE RELEVANT THAN PRICE, IN ACCORDANCE WITH ASPR 3-805.1 (D). THAT PARAGRAPH STATES AS FOLLOWS:

"/D) THE PROCEDURES SET FORTH IN (A), (B), AND (C) ABOVE MAY NOT BE APPLICABLE IN APPROPRIATE CASES WHEN PROCURING RESEARCH AND DEVELOPMENT, OR SPECIAL SERVICES (SUCH AS ARCHITECT-ENGINEERING SERVICES) OR WHEN COST- REIMBURSEMENT TYPE CONTRACTING IS ANTICIPATED. AWARD OF A CONTRACT MAY BE PROPERLY INFLUENCED BY THE PROPOSAL WHICH PROMISES THE GREATEST VALUE TO THE GOVERNMENT IN TERMS OF POSSIBLE PERFORMANCE, ULTIMATE PRODUCIBILITY, GROWTH POTENTIAL AND OTHER FACTORS RATHER THAN THE PROPOSAL OFFERING THE LOWEST PRICE OR PROBABLE COST AND FIXED FEE.'

AWARD OF A CONTRACT WAS MADE ON OCTOBER 29, 1962, TO VALUE PROGRAMS FOR INDUSTRY, INC., AT AN ESTIMATED CONTRACT PRICE OF $57,308.88, WHICH INCLUDES THE ESTIMATED COST OF TRAINING MATERIALS.

YOU PROTEST THE AWARD OF THIS CONTRACT MADE AT A PRICE HIGHER THAN THE PRICE YOU OFFERED. IN SUPPORT OF YOUR PROTEST YOU CITE ASPR 3-101 (XVIII) WHICH CALLS FOR CONSIDERATION OF BROADENING THE INDUSTRIAL BASE BY THE DEVELOPMENT OF ADDITIONAL SUPPLIERS, AND ASPR 3-801.1 (C) WHICH PROVIDES THAT:

"/C) EXCEPT WHERE COST-REIMBURSEMENT TYPE CONTRACTS ARE TO BE USED (SEE 3 -805.2), A REQUEST FOR PROPOSALS MAY PROVIDE THAT AFTER RECEIPT OF INITIAL TECHNICAL PROPOSALS SUCH PROPOSALS WILL BE EVALUATED TO DETERMINE THOSE WHICH ARE ACCEPTABLE TO THE GOVERNMENT OR WHICH, AFTER DISCUSSION, CAN BE MADE ACCEPTABLE, AND UPON SUBMISSION OF PRICES THEREAFTER, AWARD SHALL BE MADE TO THAT OFFEROR OF AN ACCEPTABLE PROPOSAL WHO IS THE LOW RESPONSIBLE OFFEROR.'

IN YOUR LETTER OF PROTEST YOU STATE AS FOLLOWS:

"OUR COMPANY HAS INDICATED THAT IT WOULD MAKE AVAILABLE TO THE NAVY DEPARTMENT ONE OF THE RECOGNIZED CAREER MEN IN THE FIELD OF VALUE ENGINEERING, IVAN M. MARTY, JR. MR. MARTY WAS THE CO-CHAIRMAN OF THE AMERICAN MANAGEMENT ASSOCIATION SEMINAR ON VALUE ENGINEERING. IT IS GENERALLY RECOGNIZED THAT THE AMERICAN MANAGEMENT ASSOCIATION IS THE LEADING SOCIETY OF ITS TYPE IN THE COUNTRY. MR. MARTY IS BOTH AN ECONOMIST AND AN ENGINEER. IF THE NAVY DEPARTMENT FEELS THAT SUCH AN INDIVIDUAL LACKS "ADEQUATE COMPREHENSION," THEN I WOULD QUESTION THEIR MEANS OF EVALUATING SUCH A RESOURCE.

"WE ARE AN EXPERIENCED EDUCATIONAL FACILITY. YET NO ONE, AFTER WE OFFERED A LOWER BID, SOUGHT TO INTERVIEW MR. MARTY OR VISIT OUR OFFICES TO MEET OTHERS OF OUR STAFF, SUCH AS DR. ECKERMAN WHO HAS WORKED WITH SCIENTIFIC AND TECHNICAL PERSONNEL FOR OVER TWENTY-FIVE YEARS. FOR MY OWN PART, I HAVE MANAGED AN EDUCATIONAL SYSTEM FOR A WORLD-WIDE WHICH WAS MUCH LARGER IN SCOPE THAN THE PROPOSED VALUE ENGINEERING PROGRAM, AND HAVE TAUGHT MANAGEMENT AND INDUSTRIAL ENGINEERING WHILE VALUE ENGINEERING WAS BECOMING A "FULL-TIME" CONCEPT.

"FURTHER, THE NAVY STATES THAT FOUR WEEKS IS CONSIDERED FAR TOO LITTLE TIME IN WHICH TO STUDY THE FIELD OF VALUE ENGINEERING TRAINING AND DEVELOP A PROGRAM. THE FIELD OF VALUE ENGINEERING TRAINING IS WELL-KNOWN TO US. I HAVE WATCHED THIS FIELD GROW, AND MR. MARTY HAS BEEN PART OF THIS GROWTH AND WE HAVE BOTH CONTRIBUTED TO IT.

"WE NOTED THAT FOUR WEEKS WOULD REQUIRE A "CRASH PROGRAM" ON OUR PART, AND WE MET AMONG OURSELVES AND DECIDED TO LEND TO IT THE NECESSARY CONCENTRATION AT THAT TIME. TO US, WE FELT THAT ANY CONTRACTOR TO BE "RESPONSIVE" TO A PROPOSAL WHICH STATES ON PAGE 4 THAT THE AWARD WILL BE MADE ON SEPTEMBER 30, 1962 AND THAT THE TENTATIVE SCHEDULE STARTS IN WAY BY THE END OF OCTOBER.

"YET WE COULD HAVE BEEN READY AND PROVIDED AN EXCELLENT PROGRAM. IF THE NAVY DEPARTMENT OFFERED THIS FOR NEGOTIATION AND KNEW THAT ALL CONTRACTORS BUT ONE MIGHT WELL REQUIRE MORE THAN FOUR WEEKS TO PREPARE, THEN ALL WOULD BE NON-RESPONSIVE BUT THIS PRESELECTED ONE CONTRACTOR. IN SUCH A CASE, A DISCRIMINATORY SITUATION EXISTED AT THE VERY START AND MAKES OUR PROTEST VALID.

"IF A SOLE SOURCE PROCUREMENT WAS INTENDED, THEN THIS IS IN DIRECT VIOLATION OF THE DESIRES OF THE ASPR COMMITTEE. * * *"

THE BUREAU OF NAVAL WEAPONS REPORTS, WITH REGARD TO YOUR PROPOSAL AS FOLLOWS:

"4. DANIEL J. CANTOR AND COMPANY SUBMITTED PROPOSAL IN RESPONSE TO THE RFQ. THIS PROPOSAL WAS EVALUATED FAIRLY BY THE BUREAU AND WAS CONSIDERED NOT RESPONSIVE TO THE REQUIREMENTS SET FORTH IN THE RFQ FOR THE FOLLOWING REASONS:

A. IT PROPOSED THAT A PERIOD OF FOUR WEEKS OF STUDY, RESEARCH AND PREPARATION BE ESTABLISHED. THE PROPOSAL STATED THAT THE MISSION OF THIS RESEARCH TEAM WOULD BE TO STUDY THE PROBLEMS THAT ARE PECULIAR TO THE GROUP THAT WOULD BE UNDER INSTRUCTION, TO DEVELOP CASE STUDY MATERIALS ALL APPROPRIATE PUBLICATIONS TO DETERMINE WHICH WOULD BE USED IN THE INSTRUCTION. THIS INDICATED A TOTAL LACK OF UNDERSTANDING OF THE VALUE ENGINEERING CONCEPTS. THE BUREAU IS NOT NAIVE ENOUGH TO BELIEVE THAT A COMPANY CAN SPEND FOUR WEEKS READING BOOKS ON A SUBJECT AND IMMEDIATELY THEREAFTER TEACH THE SUBJECT MATTER FOR THREE WEEKS (TWO WEEKS PLUS ONE WEEK ADVANCED). IF THIS WERE FEASIBLE, THE BUREAU COULD SIMPLY SUPPLY THE BOOKS TO THE STUDENTS AND NOT BOTHER WITH A TRAINING PROGRAM.

B. THE PROPOSAL GAVE NO SPECIFIC COURSE OUTLINE BUT SIMPLY GAVE THE GENERAL NATURE OF THE MATERIALS WHICH WOULD BE COVERED. THIS GENERAL OUTLINE INDICATED ALMOST A TOTAL LACK OF VALUE ENGINEERING TRAINING. FOR EXAMPLE:

(1) THIRTY MINUTES WAS PROPOSED TO COVER THE BACKGROUND OF VALUE ENGINEERING THEORY. THIS IS JUST ENOUGH TO SCRATCH THE SURFACE. THERE IS NO OTHER MENTION IN THE PROPOSAL OF CONTINUING INTO VALUE ENGINEERING THEORY AFTER THE BACKGROUND HAD BEEN SO LIGHTLY TOUCHED UPON.

(2) VARIOUS SUBJECTS, SUCH AS DESIGN COORDINATION AND HUMAN ENGINEERING FACTORS, WERE PROPOSED FOR COVERAGE. THESE TOPICS, INTERESTING AS THEY MAY BE, ARE WELL COVERED IN VARIOUS EMPLOYEE DEVELOPMENT PROGRAMS AT MOST BUREAU FIELD ACTIVITIES.

C. THE PROPOSAL DID NOT INDICATE ANY CAPABILITY IN THE COMPANY IN THE FOLLOWING IMPORTANT AND VITAL AREAS WHICH WERE CONTAINED IN THE SPECIFICATIONS OF THE RFQ:

(1) VALUE MEASUREMENTS IN RESEARCH AND DEVELOPMENT.

(2) SCIENTIFIC EVALUATION OF FUNCTION.

(3)ACHIEVING MAXIMUM VALUE IN ORIGINAL DESIGN.

(4) DEVELOPMENT AND USE OF VALUE AND COST CURVES IN RESEARCH AND DEVELOPMENT.

(5) COST ANALYSIS TECHNIQUES INCLUDING COST PER DIMENSION AND COST PER PROPERTY.

THESE SUBJECTS ARE LEARNED THROUGH YEARS OF EXPERIENCE AND NOT THROUGH FOUR WEEKS STUDY OF AVAILABLE PRINTED MATERIAL.

D. THE RFQ STATED THAT THE TECHNICAL QUOTATION SHOULD CONTAIN SAMPLES OF TRAINING MATERIALS TO BE FURNISHED FOR EACH COURSE. FOR THIS PURPOSE THE DANIEL J. CANTOR AND COMPANY PROPOSAL CONTAINED ONE DOUBLE SPACED PAGE OF A SPEECH (LESS THAN TWO MINUTES DURATION), A ONE PAGE PORTION OF A COURSE OUTLINE IN EXECUTIVE DEVELOPMENT, AND A ONE PAGE CHART SHOWING A BREAKDOWN OF AVERAGE ANNUAL WORKING HOURS OF NEW YORK STATE LAWYERS. IT IS TOTALLY INCONCEIVABLE HOW THIS TYPE TRAINING MATERIAL IS APPROPRIATE TO A VALUE ENGINEERING COURSE DESIGNED FOR ENGINEERS, SCIENTISTS AND OTHER R AND D SPECIALISTS.'

THE BUREAU ALSO REPORTS THAT IT HAS NO FIRM INDICATION THAT YOUR MR. MARTY OR ANY OTHER MEMBER OF YOUR FIRM HAS EVER DONE ANY TRAINING IN VALUE ENGINEERING DESPITE YOUR CONTENTION THAT YOU COULD HAVE BEEN READY. THE BUREAU CONCLUDES THAT THE PURPOSE OF THIS RFQ WAS TO REQUEST QUOTATIONS FROM FIRMS THAT COULD FURNISH THE NECESSARY SUPPLIES AND SERVICES TO FILL A REQUIREMENT AND NOT PROMISES OF WHAT THEY COULD DO AFTER READING AVAILABLE PRINTED MATERIAL FOR FOUR WEEKS.

THE RECORD INDICATES THAT YOU PROPOSED TO PERFORM A FOUR-WEEK PERIOD OF STUDY, RESEARCH AND PREPARATION FOR DEVELOPING AND OFFERING THE PRESCRIBED COURSE. SINCE IT APPEARED THAT YOU HAD NOT CONDUCTED ANY PREVIOUS VALUE ENGINEERING COURSES IN THE PAST, THE NAVY EVALUATORS RECOMMENDED THAT YOUR PROPOSAL NOT BE ACCEPTED FOR AWARD. WE FIND NO BASIS TO CONCLUDE THAT YOUR BID WAS IMPROPERLY REJECTED.

YOU QUESTION WHETHER THE NAVY INTENDED TO MAKE THE AWARD AVAILABLE TO OTHER THAN JUST ONE PRESELECTED FIRM.

THE CONTRACTING OFFICE REPORTS THAT THREE POSSIBLE SOURCES RECOMMENDED BY THE BUREAU OF NAVAL WEAPONS WERE SOLICITED. THE PROCUREMENT WAS SYNOPSIZED AND TWO OF THE THREE RECOMMENDED SOURCES (VALUE PROGRAMS AND VALUE ENGINEERING), AS WELL AS FOUR OTHERS, SUBMITTED QUOTATIONS. ONE OF THESE (VALUE PROGRAMS) WAS SELECTED FOR FINAL NEGOTIATION AND AWARD. WHILE IT MAY BE THAT A MORE ADEQUATE EVALUATION OF THE SEVERAL PROPOSALS MIGHT HAVE BEEN MADE BY CONDUCTING PERSONAL INTERVIEWS WITH OFFERORS OF THE SERVICES, THE RFQ APPEARS TO HAVE BEEN ADEQUATE TO ADVISE PROSPECTIVE OFFERORS THAT THEIR PROPOSALS SHOULD FURNISH SUFFICIENT INFORMATION TO ESTABLISH THEIR QUALIFICATIONS. ON THE RECORD, WE DO NOT FIND THAT THE NAVY ACTED IMPROPERLY IN SELECTING THE CONTRACTORS ON THIS PROCUREMENT, CONSIDERING THE BROAD ADMINISTRATIVE DISCRETION INVOLVED IN THE NEGOTIATION PROCESS.