B-152598, DEC. 3, 1963

B-152598, DEC. 3, 1963

TO SULLIVAN, SHEA AND KENNEY:

WE REFER TO CORRESPONDENCE ON BEHALF OF THE TRANSPORT COMPANY OF TEXAS INCLUDING YOUR LETTERS OF OCTOBER 14 AND NOVEMBER 19, 1963, EACH TRANSMITTING A BRIEF IN SUPPORT OF YOUR POSITION AGAINST THE PROPRIETY OF A PROPOSED AWARD OF A CONTRACT BY THE NAVY TO ANOTHER FIRM FOR SUPPORT SERVICES AT THE KWAJALEIN ENIWETOK COMPLEX IN THE MARSHALL ISLANDS.

FOR THE PAST FOUR YEARS ONE FIRM, THE TRANSPORT COMPANY OF TEXAS (TCT), HAS BEEN THE CONTRACTOR AT KWAJALEIN. ANOTHER FIRM, HOLMES AND NARVER, HAS PERFORMED AT ENIWETOK FOR THE PAST THREE YEARS. ON MARCH 16, 1962, THE PURCHASING ACTIVITY, THE U.S. NAVY PURCHASING OFFICE, LOS ANGELES, (NPOLA), ISSUED A REQUEST TO 25 FIRMS SOLICITING PROPOSALS FOR THE SERVICES AT KWAJALEIN AND ENIWETOK EITHER SEPARATELY OR AS A SINGLE UNDERTAKING. THE REQUEST FOR PROPOSALS, SERIAL NO. 185-1-62, SCHEDULE 21894/62, CONTEMPLATED A COST-PLUS-A-FIXED-FEE CONTRACT FOR ONE YEAR WITH TWO ANNUAL RENEWAL OPTIONS. WITH RESPECT TO THE EXPERIENCE OF PROSPECTIVE CONTRACTORS, THE RFP PROVIDED:

"PROPOSALS WILL BE CONSIDERED FROM THOSE CONCERNS WHICH HAVE PERFORMED SIMILAR WORK AT REMOTE LOCATIONS, AND HAVE PERFORMED SUCH WORK FOR APPROXIMATELY THREE YEARS WITHIN THE RECENT PAST AT A MULTI MILLION DOLLAR YEARLY EXPENDITURE AT ANY SINGLE REMOTE JOB SITE. * * *"

THE NATURE AND SCOPE OF THE WORK WERE DESCRIBED IN SPECIFICATION NO. 185- 1-62 DATED MARCH 1, 1962, WHICH STATED IN PART:

"12.5.1.B. AT PMRF KWAJALEIN, THE QUALITY OF PERFORMANCE BY THE CONTRACTOR IN SUPPORT OF AUTHORIZED OPERATIONAL TASKS AND PROGRAMS SUPPORTED BY PMR SHALL BE EQUIVALENT TO BEST PRACTICES AS A TYPICAL MAJOR NAVAL STATION IN THE CONTINENTAL UNITED STATES.

"12.5.2. PMRF ENIWETOK

"12.5.2.A. THE OPERATIONAL POLICY AT PMRF ENIWETOK IS IDENTICAL WITH THAT CITED ABOVE FOR KWAJALEIN.

"12.6. MAINTENANCE POLICY

"12.6.1. PMRF KWAJALEIN

"12.6.1.A. THE QUALITY AND SCOPE OF PERFORMANCE FOR MAINTENANCE OF FACILITIES, UTILITIES, EQUIPMENT AND PHYSICAL PLANT OF ALL KINDS AT KWAJALEIN ATOLL SHALL BE EQUIVALENT TO BEST PRACTICE AT A TYPICAL MAJOR NAVAL STATION IN THE CONTINENTAL UNITED STATES.

"12.6.2. PMRF ENIWETOK

"12.6.2.A. BY DOD DIRECTIVE, THERE HAS BEEN IMPOSED ON PMR AN AUSTERE LEVEL OF SCOPE OF MAINTENANCE AT PMRF ENIWETOK. QUALITY OF PERFORMANCE OF MAINTENANCE TASKS SHALL BE EQUIVALENT TO BEST NAVAL STANDARDS. HOWEVER, SCOPE OF PERFORMANCE OF MAINTENANCE FUNCTIONS SHALL, OF NECESSITY, BE THE MINIMUM AMOUNT PRUDENT TO ASSURE THAT EFFECTIVE SUPPORT IS FURNISHED FOR ASSIGNED PROGRAMS. NO STRUCTURAL MAINTENANCE SHALL BE PERFORMED IN AREAS AND BUILDINGS NOT IN USE NOR PROGRAMMED TO BE IN USE BY FIRM, KNOWN PROGRAMS. MECHANICAL AND ELECTRICAL MAINTENANCE SHALL BE PERFORMED SUFFICIENT FOR NECESSARY SUPPORT OF SUCH PROGRAMS.'

BY APRIL 16, 1962, THE DEADLINE DATE, FOURTEEN FIRMS HAVE SUBMITTED PROPOSALS. THESE WERE EVALUATED BY TECHNICAL PERSONNEL OF THE USING ACTIVITY, PACIFIC MISSILE RANGE (PMR), AND NPOLA. FOLLOWING THAT EVALUATION AND FURTHER CONSIDERATION BY OTHER ACTIVITIES IN THE DEPARTMENT OF THE NAVY THE SIX FIRMS DETERMINED TO HAVE SUBMITTED THE BEST TECHNICALLY ACCEPTABLE PROPOSALS, INCLUDING TCT, HOLMES AND NARVER, AND GLOBAL ASSOCIATES, WERE RESOLICITED UNDER A NEW REQUEST FOR PROPOSALS, SERIAL 6215, SCHEDULE 21894/62, ISSUED MARCH 8, 1963.

THE REVISED SOLICITATION, ISSUED--- AS STATED IN THE COVER LETTER--- IN VIEW OF THE TIME ELAPSING SINCE THE LAST SOLICITATION AND THE INCREASE OF WORK REQUIREMENTS IN CERTAIN AREAS, CALLED FOR PROPOSALS ON A COST-PLUS- INCENTIVE FEE BASIS FOR A ONE YEAR CONTRACT WITH TWO ANNUAL RENEWAL OPTIONS COVERING BOTH KWAJALEIN AND ENIWETOK. EACH PROPOSAL WAS REQUIRED TO INCLUDE A PLAN OF ORGANIZATION AND STAFFING, A TARGET PERSONNEL TURNOVER RATE, THE REQUESTED FEE, OVERHEAD AND GENERAL AND ADMINISTRATIVE EXPENSES, A GUARANTEED MAN-YEAR WAGE RATE FOR EACH CLASSIFICATION OF NONINDIGENOUS EMPLOYEE AND A TARGET STAFFING FIGURE FOR SUCH PERSONNEL. UNDER THE INCENTIVE PROVISION THE FEE COULD BE INCREASED AS MUCH AS TWO- FOLD OR DECREASED TO NOTHING BASED ON THE DIFFERENCE BETWEEN TARGET AND ACTUAL STAFFING (OTHER THAN THAT DUE TO A CHANGE IN THE SCOPE OF PERFORMANCE), PERSONNEL TURNOVER, AND ON THE QUALITY OF PERFORMANCE. ADDITION IT WAS MADE CLEAR THAT ANY INCREASE IN THE GUARANTEED MAXIMUM LABOR RATES FOR EACH INDIVIDUAL CLASSIFICATION WOULD BE BORNE BY THE CONTRACTOR. STATED MAXIMUM OVERHEAD, AND GENERAL AND ADMINISTRATIVE EXPENSE RATES AND DIRECT LABOR COSTS WERE GUARANTEED FOR THE FIRST YEAR. INCLUDED IN THE SPECIFICATION CHANGES WERE THE FOLLOWING:

"SECTION 12.6.1.A. DELETE "BEST PRACTICE AT A TYPICAL MAJOR NAVAL

STATION" AND REPLACE WITH "GOOD INDUSTRIAL

AND COMMERCIAL PRACTICES.'

"SECTION 12.6.2A DELETE "BEST NAVAL STANDARDS.' AND REPLACE WITH

"GOOD INDUSTRIAL AND COMMERCIAL PRACTICES.'"

OF THE SIX FIRMS SOLICITED, FIVE RESPONDED BY THE DEADLINE DATE, APRIL 22, 1963, INCLUDING TCT, GLOBAL, AND HOLMES AND NARVER. A LETTER OF APRIL 22, 1963, ACCOMPANYING THE TCT BID STATED IN PART:

"IN PREPARING THIS REVISION TO OUR PROPOSAL, WE HAVE BEEN GOVERNED BY THE FOLLOWING:

(1)FOR THE PURPOSES OF EVALUATION, THE NEED IS RECOGNIZED FOR UNIFORMITY IN SUBMISSIONS FROM THE SEVERAL BIDDERS. THUS, WE HAVE BID STRICTLY ON THE SPECIFICATIONS, RATHER THAN EVALUATING THEM IN LIGHT OF OUR KNOWLEDGE, AS ONE OF THE INCUMBENT CONTRACTORS, OF THE TASKS AND LEVEL OF EFFORT NOW REQUIRED. SINCE THE ORIGINAL SPECIFICATIONS WERE PREPARED IN EARLY 1962 AND WERE BASED ON CALENDAR YEAR 1961 DATA, IT IS UNDERSTANDABLE THAT THEY WOULD DIFFER SUBSTANTIALLY FROM THE PRESENT SCOPE OF OPERATIONS.

(2) ALSO, WE WERE DIRECTED TO PERFORM CERTAIN FUNCTIONS IN ACCORDANCE WITH NAVY STANDARDS AND PROCEDURES. IN ELIMINATING THESE IN YOUR REQUEST FOR MODIFICATION, YOU HAVE ALLOWED US TO APPLY THE "BEST INDUSTRIAL PRACTICES.'"

THIS LETTER INDICATED THE STRONG POSSIBILITY OF A LACK OF MUTUAL UNDERSTANDING AS TO THE SCOPE AND LEVEL OF PERFORMANCE REQUIRED UNDER THE SPECIFICATIONS. A CONSIDERABLE EXCHANGE OF INFORMATION DESCRIBED IN DETAIL BELOW ENSUED WHICH WAS INTENDED TO ELIMINATE ANY SUCH LACK OF AGREEMENT FOLLOWING WHICH ALL FIRMS WERE OFFERED AN OPPORTUNITY BY TELEGRAM OF MAY 29, 1963, TO REVISE THEIR PROPOSALS. ONLY TCT CHOSE TO REVISE ITS PROPOSAL PURSUANT TO SUCH OPPORTUNITY AND DID SO ON JUNE 7, 1963.

PERTINENT DATA FROM THE PROPOSALS OF THE THREE CONTENDING FIRMS OPENED APRIL 22, 1963, ARE AS FOLLOWS:

TABLE

GLOBAL TCT HOLMES AND NARVER NON INDIGENOUS STAFFING

1015 1120 1292 MAXIMIZED 1ST YEAR AVERAGE $9,464 $8,786

$10,305

MAN-YEAR COST TARGET FEE $251,696 $375,270 $309,192 MONTHLY PERSONNEL TURNOVER 1.5 2.0 2.5

RATE MAXIMIZED TOTAL 1ST YEAR $10,184,868 $10,488,933 $13,835,060

COST

AN EVALUATION TEAM COMPOSED OF PMR PERSONNEL WAS CONVENED ON APRIL 23, 1063, TO CONSIDER THE PROPOSALS. IN A REPORT DATED MAY 8, 1963, IN WHICH ITS CONCLUSIONS WERE PRESENTED, THE TEAM DESCRIBED ITS FUNCTION TO BE THE SELECTION OF THAT PROPOSAL OFFERING THE BEST PERFORMANCE AT THE LEAST COST TO THE GOVERNMENT. IN ORDER TO EVALUATE PROPOSED STAFFING, THE TEAM, UPON AN ANALYSIS OF THE WORK TO BE PERFORMED, ESTABLISHED AN OPTIMUM NONINDIGENOUS STAFFING LEVEL OF 1377. IT WAS NOTED THAT SINCE ALL FIRMS SUBMITTING REVISED PROPOSALS HAD ALREADY BEEN QUALIFIED AS RESPONSIBLE, THE TEAM'S MAIN CONSIDERATION WAS WITH THE PROPOSED STAFFING PLANS AND RELATED COSTS. THE TEAM RECOMMENDED AWARD TO HOLMES AND NARVER ON THE BASIS THAT THE STAFFING PLANS PROPOSED BY GLOBAL AND TCT, WHOSE OFFERS APPEAR TO ENTAIL LOWER COSTS TO THE GOVERNMENT, WERE UNREALISTIC AND THAT THE LOW WAGE RATES PROPOSED BY THE LATTER TWO WOULD ATTRACT PERSONNEL OF RELATIVELY LOW COMPETENCE.

NPOLA CONCURRED IN THE RECOMMENDATION OF THE PMR EVALUATION TEAM AND ON MAY 10, 1963, REQUESTED AUTHORITY TO AWARD A CONTRACT TO HOLMES AND NARVER. IN SUPPORT OF THE RECOMMENDATION NPOLA CONCLUDED THAT---

"THE STAFFING LEVELS OFFERED BY BOTH THE TRANSPORT COMPANY OF TEXAS AND GLOBAL ASSOCIATES ARE SO INADEQUATE THAT THEIR ACCEPTANCE WOULD PRECLUDE A SUCCESSFUL SUPPORT OPERATION.'

WITH RESPECT TO WAGE RATES PROPOSED BY TCT AND GLOBAL, NPOLA CONCLUDED:

"1. ALL WAGE RATES PROPOSED BY TCT, INCLUDING HOUSING AND SUBSISTENCE ALLOWANCES, AND BY GLOBAL ARE CONSIDERABLY BELOW THE COMPENSATION BEING PAID INCUMBENT EMPLOYEES UNDER THE CURRENT CONTRACT. IT IS INCONCEIVABLE TO THINK THAT SUCH DRASTICALLY REDUCED PAY SCALES WOULD RESULT IN THE RETENTION OF AN APPRECIABLE NUMBER OF INCUMBENT EMPLOYEES OR ATTRACT COMPETENT NEW EMPLOYEES. IN ADDITION, IT IS BELIEVED THAT THE MORALE OF THOSE EMPLOYEES WHO REMAINED WOULD BE SO AFFECTED THAT THE QUALITY AND QUANTITY OF THEIR WORK WOULD SUFFER.'

MEANWHILE, THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS) ON APRIL 25, 1963, APPOINTED A SPECIAL REVIEW BOARD MADE UP OF THREE REAR ADMIRALS, AN ARMY MAJOR GENERAL, TWO NAVY CAPTAINS, AND TWO CIVILIAN REPRESENTATIVES OF THE NAVY TO REVIEW AND EVALUATE THE AWAITED NPOLA RECOMMENDATION AND TO "RECOMMEND TO THE SECRETARY OF THE NAVY AWARD OF A CONTRACT TO THAT COMPANY TO WHICH AN AWARD WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT.' IT WAS THIS BOARD THAT CAUSED TO BE SENT THE TELEGRAM OF MAY 29, REFERRED TO ABOVE IN RESPONSE TO WHICH TCT AMENDED ITS PROPOSAL. ONE ORIGINAL MEMBER OF THE BOARD, REAR ADMIRAL LEWIS C. COPE, WAS REPLACED BY REAR ADMIRAL ALEXANDER C. HUSBAND ON JUNE 14, 1963, AS A PART OF THE GENERAL TAKEOVER BY THE LATTER OF THE FORMER'S DUTIES. THERE WERE NO OTHER CHANGES IN THE MAKE UP OF THE BOARD.

THE SPECIAL BOARD DID NOT LIMIT ITSELF TO THE INFORMATION CONTAINED IN THE PMR AND NPOLA RECOMMENDATIONS. CONSIDERABLE ADDITIONAL WRITTEN INFORMATION AS WELL AS ORAL TESTIMONY WAS CONSIDERED. THE BOARD SPLIT IN ITS CONCLUSIONS TRANSMITTED TO THE ASSISTANT SECRETARY ON JULY 25, 1963; THE MAJORITY (5) RECOMMENDING AWARD TO GLOBAL WHILE A MINORITY (3) RECOMMENDED AWARD TO TCT BASED ON ITS REVISED PROPOSAL OF JUNE 7 WHICH CONTAINED THE FOLLOWING PERTINENT DATA:

TABLE

MONTHLY

PERSONNEL MAXIMIZED TOTAL NON-INDIGENOUS MAXIMIZED 1ST YEAR TARGET TURNOVER 1ST YEAR

STAFFING MAN-YEAR COST FEE RATE COST

1371 $8,967 $470,025 2.0 $12,849,418

THE MAJORITY RECOMMENDATION OF AWARD TO GLOBAL WAS BASED ESSENTIALLY ON FOUR FACTORS:

1. THE FIRMS MAKING UP THE JOINT VENTURE IDENTIFIED AS GLOBAL, INTERNATIONAL AIRCRAFT SERVICES, INC. (IAS) AND THE H. C. SMITH CONSTRUCTION CO., (HCS) HAVE SUCCESSFULLY PERFORMED DEFENSE CONTRACTS IN THE SAME AND RELATED FIELDS; THE KEY PERSONNEL PROPOSED TO BE UTILIZED IN PERFORMING THE CONTRACT REPRESENT EXCELLENT MANAGEMENT; THE JOINT VENTURE HAD MADE SATISFACTORY FINANCIAL ARRANGEMENTS TO PERFORM.

2. THE STAFFING PLAN PROPOSED BY GLOBAL WHILE UNDERESTIMATED IN SOME AREAS WAS REGARDED AS STRONG AND SOUND IN OTHERS. THE STAFFING LEVEL PROPOSED (1015) WAS SO LOW AS COMPARED TO THE OTHERS THAT EVEN IF GLOBAL WERE AUTHORIZED TO EMPLOY AN ADDITIONAL 286 NONINDIGENOUS EMPLOYEES THE COST TO THE GOVERNMENT WOULD STILL BE LOWER THAN UNDER ANY OTHER PROPOSAL. THE BOARD MAJORITY DID NOT BELIEVE THAT GLOBAL WOULD REQUIRE THAT GREAT AN INCREASE TO PERFORM. IN ADDITION, THE PMR STAFFING OPTIMUM WAS CONSIDERED "PROBABLY HIGH" AND THE INCENTIVE FEE ARRANGEMENT WAS CONSIDERED AN INDUCEMENT TO GLOBAL, IF AWARDED THE CONTRACT, TO MAKE THE BEST USE OF MANPOWER IN PERFORMING.

3. THE BOARD MAJORITY CONCLUDED THAT THE WAGE STRUCTURE PROPOSED BY GLOBAL WOULD PERMIT THE HIRING AND RETENTION OF QUALIFIED PERSONNEL.

4. GLOBAL OFFERED TO PERFORM AT THE LOWEST FEE.

THE BOARD MINORITY DISSENTED FROM THE SELECTION OF GLOBAL ON THE GROUNDS THAT THE PROPOSED STAFFING WAS SO INADEQUATE AS TO INDICATE A LACK OF UNDERSTANDING OF THE WORK TO BE PERFORMED. THE MINORITY CONSIDERED THAT TCT'S PAST PERFORMANCE WAS SATISFACTORY, ITS PROPOSED STAFFING WAS ADEQUATE, AND THE WAGE RATES PROPOSED, WHILE LOWER THAN THE MAXIMUM RATES UNDER THE EXISTING CONTRACT AT KWAJALEIN, WERE DEEMED HIGH ENOUGH TO PERMIT THE RECRUITMENT AND RETENTION OF COMPETENT PERSONNEL. HAVING CONCLUDED IN EFFECT THAT GLOBAL'S PROPOSAL WAS NOT ACCEPTABLE AND THAT TCT'S WAS, THE MINORITY RECOMMENDED AWARD TO TCT AS THE FIRM OFFERING THE LOWEST-COST ACCEPTABLE PROPOSAL.

THE ASSISTANT SECRETARY, BY MEMORANDUM OF AUGUST 1, 1963, REFERRED THE MATTER TO THE SECRETARY OF THE NAVY WITH THE RECOMMENDATION THAT THE VIEW OF THE BOARD MAJORITY BE ADOPTED. THIS VIEW WAS SUBSEQUENTLY CONCURRED IN SUCCESSIVELY BY THE DEPARTMENT OF DEFENSE GENERAL COUNSEL, THE DEPUTY SECRETARY OF DEFENSE AND THE SECRETARY OF THE NAVY. IT IS THIS PROPOSED DISPOSITION AGAINST WHICH YOU HAVE PROTESTED ON BEHALF OF TCT. YOU CONTEND FIRST THAT GLOBAL'S PROPOSAL SHOULD NOT BE CONSIDERED FOR AWARD BECAUSE IT DID NOT TAKE INTO CONSIDERATION THE CHANGES IN SPECIFICATIONS EFFECTED BY THE WIRE OF MAY 29, 1963 TO ALL INTERESTED PARTIES. INSTEAD GLOBAL IN REPLY SIMPLY REAFFIRMED ITS PROPOSAL OPENED ON APRIL 22. YOU STATE ON PAGE 10 OF YOUR EARLIER BRIEF:

"THE GLOBAL BID WHICH WAS CONSIDERED FOR THE AWARD WAS ENTERED ON APRIL 22 PURSUANT TO THE SPECIFICATIONS. ON MAY 29, THE SPECIFICATIONS WERE CHANGED BUT GLOBAL DID NOT CHANGE ITS BID. THE JOB SPECIFIED AND ON WHICH THE APRIL 22 PROPOSALS WERE BASED IS VASTLY DIFFERENT FROM THAT REQUESTED ON MAY 29. ACCORDINGLY, GLOBAL'S BID IS WHOLLY UNRESPONSIVE TO THE SPECIFICATIONS, AS AMENDED ON MAY 29TH.'

THE TELEGRAM OF MAY 29, STATED IN PERTINENT PART AS FOLLOWS:

3. QUALITY OF OPERATIONS: NAVY TELETYPE MESSAGE OF 16 MAY 1963, PLACED EACH OFFEROR ON NOTICE THAT THERE WILL BE NO REDUCTION IN THE QUALITY OF PERFORMANCE AND LEVEL OF SERVICES TO BE FURNISHED BELOW THE QUALITY OF PERFORMANCE AND LEVEL OF SERVICES REQUIRED UNDER THE CURRENT CONTRACT. EACH OFFEROR IS HEREBY PLACED ON NOTICE THAT THE RFP AND THE INFORMATION FURNISHED ON SITE INSPECTION AND AT THE VENDORS' BRIEFING CONFERENCE DO NOT PROVIDE FOR OR PERMIT ANY DIMINUTION OR REDUCTION OF THE LEVELS OF SERVICES OR QUALITY OF OPERATIONS CURRENTLY BEING REQUIRED ON THE ISLANDS. ANY EXCEPTION OR RESERVATION TO FULFILLING THE REQUIREMENTS CONTAINED IN THE RFP, OR DISCLOSED BY THE SITE INSPECTION OR VENDORS' BRIEFING CONFERENCES, OR AS FURTHER DEFINED HEREIN WILL RENDER YOUR PROPOSAL UNACCEPTABLE.

4. EACH OFFEROR IS HEREBY AUTHORIZED TO SUBMIT A REVISED PROPOSAL SHOULD HE SO DESIRE. REVISED PROPOSALS SHALL BE SUBMITTED TO NPO LOS ANGELES NOT LATER THAN 7 JUNE 1963.

5. WHETHER OR NOT YOU SUBMIT A REVISED PROPOSAL YOU MUST, IN ORDER TO BE RESPONSIVE, ACCEPT WITHOUT QUALIFICATION THE ABOVE REQUIREMENTS CONCERNING STAFFING AND QUALITY OF OPERATIONS. SUCH ACCEPTANCE SHALL BE SUBMITTED IN WRITING TO NPO LOS ANGELES NO LATER THAN 7 JUNE 1963. ANY REVISION TO YOUR PROPOSAL SUBMITTED AFTER 7 JUNE 1963 WILL BE CONSIDERED A LATE PROPOSAL IN ACCORDANCE WITH THE PROVISIONS OF ASPR 3 804.2 US NAVY PURCHASING OFFICE CODE OZ, LOS ANGELES, CALIFORNIA.'

IT SHOULD BE NOTED THAT THE TELEGRAM QUOTED DOES NOT PURPORT TO EFFECT ANY CHANGE IN SPECIFICATIONS. IT SIMPLY REITERATES THE POSITION ALREADY TAKEN IN THE CITED MESSAGE OF MAY 16, 1963, THAT THE SPECIFICATIONS ARE NOT TO BE INTERPRETED TO EFFECT ANY DIMINUTION IN THE QUALITY OR LEVEL OF SERVICES REQUIRED UNDER THE EXISTING CONTRACTS. THE MESSAGE OF MAY 16 WAS IN TURN PART OF THE CORRESPONDENCE ARISING OUT OF THE TCT LETTER OF APRIL 22 QUOTED ABOVE INDICATING AN UNDERSTANDING ON THE PART OF TCT THAT THE SPECIFICATIONS AS AMENDED UNDER THE RESOLICITATION FOR PROPOSALS ISSUED MARCH 8, 1963, CALLED FOR SOMETHING LESS THAN THE PERFORMANCE REQUIRED UNDER THE EXISTING CONTRACTS, AND THAT THE CHANGE IN TERMINOLOGY IN THE SPECIFICATIONS FROM NAVY STANDARDS AND PROCEDURES TO BEST INDUSTRIAL PRACTICES IMPORTED A CHANGE IN THE SERVICES TO BE FURNISHED BY THE CONTRACTOR.

TO CLARIFY THE MATTER NPOLA SENT THE FOLLOWING DISPATCH TO TCT ON APRIL 29, 1963:

"/REF) A. YOUR LETTER TRANSMITTAL, SUBJ: PROPOSAL DATED 22 APR 63

1. REF (A) STATES YOUR BID SUBMITTAL STRICTLY ON SPECIFICATIONS RATHER THAN KNOWLEDGE OF CURRENT LEVEL OF OPERATIONS. REFERENCE (A) FURTHER IMPLIES THAT RFP REVISION OF "GOOD PRACTICE OF A TYPICAL MAJOR NAVAL STATION" RELATIVE TO MAINTENANCE STANDARDS WOULD ALLOW CHANGE IN STAFFING LEVEL. SINCE THESE CONSIDERATIONS APPARENTLY REFLECT SUBSTANTIAL STAFFING IMPACT ON YOUR REVISED PROPOSAL, REQUEST ADDRESSEE PROVIDE NPOLA AT KWAJALEIN STAFFING BREAKDOWN IN FUNCTIONAL AREA FORMAT OF ENCLOSURE (4) TO REVISED RFP DATED 8 MARCH 63 IN THREE (3) COLUMNS AS FOLLOWS:

A. CURRENT STAFFING LEVEL

B. STAFFING PROVIDED BY ORIGINAL PROPOSAL

C. STAFFING PROVIDED BY REVISED PROPOSAL

2. FOR EACH FUNCTIONAL AREA IN WHICH STAFFING DIFFERENCE BETWEEN COLUMNS A AND C ABOVE IS GREATER THAN 5 PERCENT, PROVIDE RATIONALE AND SPECIFIC INFORMATION INCLUDING MAN YEARS OF EFFORT DIFFERENTIAL AS TO FUNCTIONS NOW PERFORMED WHICH ARE NOT COVERED BY TOTAL RFP. ALSO FOR EACH FUNCTIONAL AREA IN WHICH STAFFING DIFFERENCE IS RESULTANT TO "GOOD INDUSTRIAL PRACTICES" VICE ,NAVY STANDARD," EXPRESS THIS STAFFING VARIANCE IN MAN YEARS OF EFFORT.

3. REQUEST REPLY BY CLOSE OF BUSINESS 1 MAY 63.'

THE REPLY FROM TCT STATED IN PERTINENT PART AS FOLLOWS:

"2. WE STATED THAT WE HAD BEEN DIRECTED TO PERFORM CERTAIN FUNCTIONS IN ACCORDANCE WITH "NAVY STANDARDS AND PROCEDURES" AS AN EXAMPLE WE HAD BEEN DIRECTED TO HAVE MESSMEN SERVE THE CAFETERIA LINES IN THE GENERAL MESS BY ELIMINATION OF THIS PROCEDURE AND OPERATING THESE LINES ON A SELF SERVICE BASIS SOME REDUCTION IN STAFFING WOULD BE IN ORDER ANOTHER EXAMPLE BY ELIMINATING (SIC) OF A REQUIREMENT TO ADHERE TO STANDARD NAVAL PROCEDURES THERE COULD RESULT SOME REDUCTION IN STAFFING IN THE CURRENTLY IMPOSED REQUIREMENT TO FOLLOW STANDARD NAVY PROCEDURES OF ACCOUNTING AND REPORTING ON ALL GOVERNMENT FURNISHED TRANSPORTATION EQUIPMENT.

"3. THE INTENT OF THIS SUBPARAGRAPH WAS RELATED IN NO WAY TO MAINTENANCE STANDARDS OR STAFFING LEVEL FOR MAINTENANCE WORK PLEASE BE ASSURED THAT IT WAS NOT INTENT TO MAKE AN IMPLICATION OF ,GOOD INDUSTRIAL AND COMMERCIAL PRACTICES" VIS-A-VIZ "BEST NAVAL STANDARDS" OR "BEST PRACTICE OF A TYPICAL MAJOR NAVAL STATION" COULD RESULT IN MAINTENANCE STANDARDS WHICH WOULD ALLOW A CHANGE IN STAFFING LEVEL.'

TO ELIMINATE ANY POSSIBLE MISUNDERSTANDING NPOLA SENT AN ADDITIONAL MESSAGE TO TCT ON MAY 16 STATING IN PART:

"1. REFERENCE IS MADE TO YOUR TELEGRAM OF 2 MAY 1962 CONCERNING A MISINTERPRETATION WITH RESPECT TO SUBPARAGRAPH 2 OF YOUR PROPOSAL LETTER OF 22 APRIL 1963.

2. IN ORDER THAT THERE SHALL BE NO MISUNDERSTANDING AS TO LEVELS OF SERVICES TO BE PERFORMED AND QUALITY OF PERFORMANCE OF THESE SERVICES, YOU ARE HEREBY INFORMED THAT THE SAME QUALITY OF PERFORMANCE AND THE SAME LEVEL OF SERVICES AND OPERATIONS IS TO BE FURNISHED AS IS REQUIRED BY PMR UNDER THE CURRENT CONTRACT PERFORMANCE.

3. IF THIS UNDERSTANDING IS CAUSE FOR ANY CHANGE IN YOUR PROPOSAL FROM THAT SUBMITTED, ADVISE BY TELEGRAM TO CDR. E. C. CHAPMAN, NPOLA . . .'

THE REPLY FROM TCT STATED:

"PAR. 1 WITHOUT ANY CHANGE TO OUR PROPOSAL DATED 22 APRIL 1963 WE CAN AND WILL PERFORM IN ACCORDANCE WITH THE SPECIFICATIONS WITHOUT ANY SACRIFICE TO THE PRESENT QUALITY OF OUR OPERATION.

PAR. 2 WE CAN CONTINUE TO OPERATE UNDER THE GUIDE LINES AND STANDARDS THAT HAS BEEN GIVEN TO US BY PMR EXCEPT WHERE THEY MIGHT BE IN DIRECT CONFLICT WITH SOMETHING STATED IN THE SPECIFICATIONS.'

ALL OTHER INTERESTED FIRMS WERE ADVISED BY MESSAGE OF MAY 16 IN PERTINENT PART AS FOLLOWS:

"2. A QUESTION HAS BEEN RAISED REGARDING THE QUALITY OF MAINTENANCE, LEVEL OF SERVICES AND OPERATIONS, AND RECORD KEEPING WHICH WILL BE REQUIRED OF THE SUCCESSFUL OFFEROR.

"3. IT IS NOT INTENDED THAT THERE SHALL BE ANY DIMINISHMENT OF THE QUALITY OR LEVELS OF PERFORMANCE AS REQUIRED BY PMR UNDER CURRENT CONTRACT PERFORMANCE, AND AS SET FORTH IN THE RFP.'

AS REQUESTED IN YOUR SECOND BRIEF, THE RELEVANT PORTIONS OF THE REPLIES FROM THE OTHER OFFERORS ARE AS FOLLOWS:

A. HOLMES AND NARVER, INC.

"IN REFERENCE TO YOUR QUESTION AS SET FORTH IN PARAGRAPH 4, WHICH REFERS TO PARAGRAPH "DIMINISHMENT OF THE QUALITY OR LEVELS OF PERFORMANCE AS REQUIRED BY PMR UNDER CURRENT CONTRACT PERFORMANCE AND AS SET FORTH IN THE RFP.' THE ANSWER IS THAT THERE WILL BE NO DIMINISHMENT IN THE QUALITY OF HOLMES AND NARVER'S SERVICE IF HOLMES AND NARVER IS FAVORED WITH THE CONTRACT"

B. GLOBAL ASSOCIATES

"GLOBAL ASSOCIATES WISHES TO AFFIRM THAT ITS REVISED PROPOSAL ANTICIPATES NO DIMINISHMENT OF THE QUALITY OR LEVELS OF PERFORMANCE UNDERSTOOD TO BE REQUIRED BY PMR UNDER CURRENT CONTRACT PERFORMANCE AND AS SET FORTH IN THE RFP.'

C. POMEROY-HAWAIIAN DREDGING CO.

"IN REGARD TO YOUR PAR FOUR PLEASE BE ADVISED THAT OUR REVISED PROPOSAL DOES NOT REPEAT DOES NOT INTEND THAT THERE SHALL BE ANY DIMINISHMENT OF QUALITY OR LEVELS OF PERFORMANCE AS REQUIRED BY PMR UNDER CURRENT CONTRACT PERFORMANCE AND AS SET FORTH IN THE RFP.'

D. PAN AMERICAN WORLD AIRWAYS, INC.

"PARAGRAPH 3 OF YOUR TELEGRAM DATED MAY 16 2131Z DOES NOT--- REPEAT NOT-- - CHANGE PAN AMERICANS REVISED PROPOSAL IN RESPONSE TO NPOLA RFP 21894/62 OF 8 MARCH 1963 FOR THE LOGISTIC/BASE SUPPORT OF KWAJALEIN AND ENIWETOK.'

IN A FINAL EFFORT TO INSURE THERE WAS NO MISUNDERSTANDING THE TELEGRAM OF MAY 29 WAS SENT. ONLY TCT TOOK ADVANTAGE OF THE OPPORTUNITY OFFERED IN THAT MESSAGE TO ALTER ITS PROPOSAL.

WE THINK THAT THE FOREGOING EXCHANGE OF CORRESPONDENCE INDICATES THAT PRIOR TO THE ISSUANCE OF THE MESSAGE OF MAY 29 ALL INTERESTED PARTIES HAD BEEN CLEARLY INFORMED THAT THE SPECIFICATIONS UPON WHICH PROPOSALS HAD ALREADY BEEN SUBMITTED DID NOT CONTEMPLATE ANY CHANGE IN THE LEVEL OR QUALITY OF PERFORMANCE CURRENTLY REQUIRED AND ALL PARTIES HAD UNEQUIVOCALLY INDICATED AN INTENTION TO PERFORM ON THAT BASIS WITHIN THE STAFFING LEVELS CONTAINED IN THE PROPOSALS. IN VIEW OF THE CLEAR AND UNEQUIVOCAL STATEMENT AS TO THE LEVEL OF PERFORMANCE REQUIRED IN THE MESSAGES OF MAY 16 AND 29 FROM THE NAVY, WE CANNOT AGREE THAT THE USE OF THE TERM "UNDERSTOOD" IN THE GLOBAL REPLY TO THE EARLIER MESSAGE CAN REASONABLY BE CONSTRUED AS AN ENFORCEABLE QUALIFICATION OF ITS OFFER TO PERFORM. IN THIS CONNECTION IT SHOULD BE NOTED THE RESPONSES CLEARLY INDICATE THAT IN VIEW OF THE OFFERORS OTHER THAN TCT CURRENT REQUIREMENTS WERE NOT SUBSTANTIALLY DIFFERENT FROM "GOOD INDUSTRIAL AND COMMERCIAL PRACTICES" PRESCRIBED IN THE SPECIFICATIONS AS AMENDED UNDER THE SOLICITATION ISSUED MARCH 8, 1963.

THE NEXT CONTENTION IS THAT THE GLOBAL NONINDIGENOUS STAFFING LEVEL IS SO INADEQUATE IN RELATION TO THE JOB TO BE DONE AS TO WARRANT REJECTING THE PROPOSAL AS NONRESPONSIVE. AS INDICATED EARLIER PMR, NPOLA AND THE BOARD MINORITY ARRIVED AT THE SAME CONCLUSION. HOWEVER, IN THE VIEW OF THE BOARD MAJORITY, CONCURRED IN BY THE SECRETARY AND ASSISTANT SECRETARY OF THE NAVY AND THE GENERAL COUNSEL AND DEPUTY SECRETARY OF DEFENSE, EVEN THOUGH THE STAFFING CONTEMPLATED WAS PROBABLY LOW, THE ACCEPTANCE OF THE GLOBAL PROPOSAL WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT.

THE PROCUREMENT IS BEING NEGOTIATED UNDER 10 U.S.C. 2304 (A) (6) WHICH AUTHORIZES AN EXCEPTION FROM THE NORMAL FORMAL ADVERTISING REQUIREMENT WHEN THE CONTRACT IS FOR SERVICES TO BE PROCURED AND USED OUTSIDE THE UNITED STATES AND THE TERRITORIES, COMMONWEALTHS, AND POSSESSIONS. IT IS PROVIDED IN ASPR, WHICH HAS THE FORCE AND EFFECT OF LAW (SEE PAUL V. UNITED STATES, 371 U.S. 245, 255), AT SECTION 3-101 THAT WHEN PROCUREMENTS ARE UNDERTAKEN PURSUANT TO NEGOTIATION MAXIMUM COMPETITION SHOULD BE OBTAINED TO THE END THAT THE PROCUREMENT WILL BE MADE TO "THE BEST ADVANTAGE OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' IT IS FURTHER PROVIDED THAT IN THE CONDUCT OF NEGOTIATIONS THE FOLLOWING FACTORS SHOULD BE AMONG THOSE GIVEN DUE ATTENTION:

"/I) COMPARISON OF PRICES QUOTED, AND CONSIDERATION OF OTHER PRICES FOR THE SAME OR SIMILAR SUPPLIES OR SERVICES, WITH DUE REGARD TO PRODUCTION COSTS, INCLUDING EXTRA-PAY SHIFT, MULTI-SHIFT AND OVERTIME COSTS, AND ANY OTHER FACTOR RELATING TO PRICE, SUCH AS PROFITS, COST OF TRANSPORTATION, AND CASH DISCOUNTS;

(II) COMPARISON OF THE BUSINESS REPUTATIONS, CAPABILITIES, RESPONSIBILITIES OF THE RESPECTIVE PERSONS OR FIRMS WHO SUBMIT QUOTATIONS (SEE 1-903);

(III) CONSIDERATION OF THE QUALITY OF THE SUPPLIES OR SERVICES OFFERED, OR OF THE SAME OR SIMILAR SUPPLIES OR SERVICES PREVIOUSLY FURNISHED, WITH DUE REGARD TO THE SATISFACTION OF TECHNICAL REQUIREMENTS; "

"/XV) CONSIDERATION OF THE SOUNDNESS OF PROSPECTIVE CONTRACTORS" MANAGEMENT OF LABOR RESOURCES, INCLUDING WAGE RATES, NUMBER OF WORKERS AND TOTAL ESTIMATED LABOR HOURS, WITH PARTICULAR ATTENTION TO POSSIBLE UNECONOMICAL PRACTICES FOUND IN LABOR-MANAGEMENT AGREEMENTS OR IN COMPANY POLICY, ESPECIALLY IN THE SELECTION OF CONTRACTORS FOR DEVELOPMENT AND PRODUCTION OF MAJOR WEAPON SYSTEMS AND SUBSYSTEMS; * * *"

IN ADDITION, ASPR 3-805.1 (D) PROVIDES IN PART:

"* * * 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.'

HISTORICALLY THE REGULAR MEANS OF OBTAINING SUPPLIES OR SERVICES BY CONTRACT CONTEMPLATES THE USE OF COMPETITIVE BIDDING. IN THAT KIND OF PROCUREMENT A SITUATION IS ESTABLISHED, AT LEAST IN THE IDEAL, WHERE THE CONTRACT IS AWARDED UPON A SIMPLE MATHEMATICAL CALCULATION TO DECIDE WHICH BID IS LOW. UNDER NEGOTIATION ON THE OTHER HAND, AND PARTICULARLY WHERE, AS HERE, A CONTRACT OF OTHER THAN THE FIXED-PRICE TYPE IS TO BE AWARDED, A NUMBER OF FACTORS MAY BE CONSIDERED AND THE PROPOSALS ARE PROPERLY FOR EVALUATION ON EACH INDIVIDUAL FACTOR AND ON THE SUM OF SUCH FACTORS. SEE B-150524, MARCH 11, 1963; B-148365, JUNE 8, 1962. WHILE, IN OUR VIEW, IT IS THE DUTY OF THE CONTRACTING AGENCY TO CONDUCT NEGOTIATIONS TO THE BEST ADVANTAGE OF THE GOVERNMENT, IT IS RECOGNIZED THAT THE PROCESS INVOLVES THE EXERCISE OF JUDGMENT AND WE CANNOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING AGENCY, NOR MAY THE ADMINISTRATIVE JUDGMENT BE QUESTIONED IN THE ABSENCE OF A SHOWING OF UNDUE FAVORITISM OR LACK OF GOOD FAITH. 148807, AUGUST 30, 1962; B-146688, OCTOBER 9, 1961; B-137093, MAY 8, 1959. IN THE PRESENT SITUATION, THE MAJORITY OF THE SPECIAL REVIEW BOARD FOUND AFTER EXTENSIVE CONSIDERATION OF THE MATTER THAT THE BEST INTERESTS OF THE GOVERNMENT WOULD BE SERVED BY AWARD TO GLOBAL. THIS JUDGMENT WAS AFFIRMED BY THE SECRETARY OF THE NAVY, WITH WHOM THE DEPARTMENT'S CONTRACTING AUTHORITY ULTIMATELY RESTS, AND BY OTHER HIGH-LEVEL OFFICERS OF THE DEPARTMENT OF DEFENSE AND OF THE NAVY. WE FIND NO GROUNDS FOR QUESTIONING ITS REASONABLE BASIS OR GOOD FAITH.

ADMITTEDLY, ALL OF THE REVIEWING AUTHORITIES, INCLUDING THE BOARD MAJORITY, CONSIDERED THAT THE STAFFING PLAN PROPOSED BY GLOBAL WAS PROBABLY LOW. THIS FACT IN ITSELF IS INSUFFICIENT TO REQUIRE REJECTION OF THE GLOBAL PROPOSAL OUT OF HAND. THE POINT IS THAT THE BOARD MAJORITY CONCLUDED, AFTER CAREFULLY CONSIDERING THE MATTER, THAT EVEN WITH THE PROBABLE INCREASE IN STAFFING ABOVE THE LEVEL STATED IN THE PROPOSAL, AWARD TO GLOBAL WOULD STILL RESULT IN A CONTRACT MORE FAVORABLE TO THE GOVERNMENT THAN AWARD UNDER ANY OF THE OTHER PROPOSALS. THIS, IN OUR OPINION, IS THE SIGNIFICANT CONSIDERATION.

A FURTHER CONTENTION YOU PRESENT AGAINST AWARD TO GLOBAL IS THAT THE JOINT VENTURE LACKS RESPONSIBILITY. YOU POINT OUT THAT THE JOINT VENTURE IS NEW AND IS ITSELF WITHOUT EXPERIENCE. YOU FURTHER STATE THAT ONE OF THE MEMBER FIRMS, IAS HAS OPERATED AT A LOSS FOR SEVERAL YEARS AND THAT THE OTHER MEMBER FIRM MAY HAVE HAD SOME DIFFICULTY IN OBTAINING FINANCING. YOU IMPLY THAT BURTCO, PROPOSED AS A SUBCONTRACTOR BY GLOBAL FOR CERTAIN FOOD SERVICE OPERATIONS, IS SMALL AND INEXPERIENCED. YOU QUESTION ALSO WHETHER GLOBAL MEETS THE SPECIALIZED EXPERIENCE REQUIREMENT INCLUDED IN THE RFP AND WHETHER THE ABSORPTION OF IAS INTO ITS PARENT FIRM, THE ATLAS CORPORATION, AS OF NOVEMBER 1, 1963, AFFECTS THE DETERMINATION OFGLOBAL'S RESPONSIBILITY AND QUALIFICATIONS.

THE JOINT VENTURE APPEARS TO HAVE BEEN ORGANIZED IN CONTEMPLATION OF THE PROCUREMENT UNDER CONSIDERATION. IT IS NOT UNUSUAL FOR JOINT VENTURES TO BE ORGANIZED FOR A SPECIFIC GOVERNMENT CONTRACT. WE DO NOT THINK IT CAN BE SERIOUSLY ARGUED THAT THE EXPERIENCE OF THE JOINT VENTURE AS DISTINCT FROM ITS MEMBER FIRMS SHOULD BE THE BASIS FOR DETERMINING THE RESPONSIBILITY OF THE PROSPECTIVE CONTRACTOR. SEE 36 COMP. GEN. 673.

THE RESPONSIBILITY OF THE FIRMS MAKING UP GLOBAL AND OF BURTCO WERE INVESTIGATED BY THE INSPECTOR, NAVAL MATERIAL, SAN FRANCISCO. IN A NAVAL SPEED LETTER OF JULY 12, 1963, HE REPORTED THAT IAS IN THE PERFORMANCE OF A SUPPORT SERVICES CONTRACT ON WAKE ISLAND WAS CHARACTERIZED BY THE CONTRACTING AGENCY AS EXTREMELY COOPERATIVE AND THE RESULTS AS COMPLETELY SATISFACTORY. IN ADDITION, IAS HAD TWO AIRCRAFT MAINTENANCE AND REPAIR CONTRACTS ON WHICH SCHEDULES WERE SAID TO HAVE BEEN REMARKABLY WELL MET. IT WAS ALSO REPORTED THAT THE OTHER MEMBER OF THE JOINT VENTURE, H. C. SMITH CONSTRUCTION COMPANY, HAD SUCCESSFULLY PERFORMED AS A SUBCONTRACTOR ON TWO FACILITY MAINTENANCE AND ENGINEERING CONTRACTS AT VANDENBURG AIR FORCE BASE AND IS CURRENTLY PERFORMING SATISFACTORILY ON A TIME AND SERVICE CONTRACT. IT WAS FURTHER NOTED THAT BURTCO, A PROPOSED SUBCONTRACTOR, HAD PERFORMED SATISFACTORILY ON ALASKA AIR COMMAND CONTRACTS SINCE 1957. THE INSPECTOR ALSO LOOKED INTO THE FINANCIAL ARRANGEMENTS PROPOSED BY THE JOINT VENTURE AND FOUND THEM ACCEPTABLE. THE BACKGROUNDS OF KEY PERSONNEL ASSIGNED TO THE PROPOSED CONTRACT WERE EXAMINED AND FOUND TO BE EXCELLENT. IN SUM, ALL OF THE INFORMATION DEVELOPED TENDED TO SUPPORT A DETERMINATION OF RESPONSIBILITY.

IT IS WELL ESTABLISHED THAT THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED AND IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS WE WILL NOT OBJECT THERETO. 37 COMP. GEN. 430, 435. THE RECORD PREPARED BY THE INSPECTOR OF NAVAL MATERIAL APPEARS IN OUR VIEW TO AMPLY SUPPORT THE AFFIRMATIVE DETERMINATION AS TO GLOBAL'S RESPONSIBILITY.

WE THINK IT APPROPRIATE IN THIS CONNECTION TO POINT OUT THAT CONTRARY TO YOUR APPARENT IMPRESSION, BURTCO PARTICIPATION UNDER THE GLOBAL PROPOSAL WOULD BE LIMITED TO FURNISHING EIGHT SUPERVISORY EMPLOYEES PLUS CERTAIN MANAGEMENT CONSULTANT SERVICES AT A TOTAL COST OF $178,612.08.

THE NAVY HAS EXAMINED CAREFULLY INTO THE BACKGROUND AND EXPERIENCE OF THE JOINT VENTURES COMPRISING GLOBAL AND CONCLUDES THAT THEY MEET THE SPECIALIZED EXPERIENCE REQUIREMENTS OF THE RFP WHICH HAVE ALREADY BEEN QUOTED. A BROCHURE SETTING OUT THE EXPERIENCE OF THE JOINT VENTURERS REASONABLY SUPPORTS THE DETERMINATION OF THE NAVY THAT SUCH FIRMS HAVE PERFORMED SIMILAR WORK OF THE KIND, QUANTITY AND WITHIN THE TIME REQUIRED. WE DO NOT THINK THE TERM "SIMILAR" CAN BE CONSTRUED TO MEAN IDENTICAL IN ALL RESPECTS. IN ADDITION, THE DEPARTMENT HAS BEEN MADE AWARE OF THE ABSORPTION OF IAS INTO ATLAS AND CONSIDERS THE ONLY SIGNIFICANT EFFECT TO BE THE STRENGTHENING OF THE FINANCIAL RESPONSIBILITY OF GLOBAL.

IT SHOULD BE NOTED THAT THE GLOBAL PROPOSAL UNDER CONSIDERATION MAKES CLEAR THAT ONLY TWO FIRMS, IAS AND HCS, MAKE UP THE JOINT VENTURE. NEITHER OF THE TWO PROPOSALS WAS IT INDICATED THAT THE JOINT VENTURE WOULD INCLUDE ANY OTHER FIRMS IN LIEU OF OR IN ADDITION TO THOSE NAMED ABOVE. WE DO NOT KNOW THE ULTIMATE SOURCE OF THE INFORMATION PRESENTED AT PAGE 8 OF YOUR SECOND BRIEF AS TO OTHER POSSIBLE MEMBERS. WE DO NOT BELIEVE THAT IN THIS MATTER SUCH SOURCES SHOULD BE CONSIDERED AS AUTHORITATIVE AS EITHER THE PROCURING AGENCY OR THE PROPOSALS.

IT IS NEXT CONTENDED THAT THE SPECIFICATIONS ARE TOO VAGUE, INDEFINITE AND INCOMPLETE TO PERMIT A COMPETITIVE EVALUATION OF PROPOSALS. ADDITION A NUMBER OF OMISSIONS AND ERRORS IN THE SPECIFICATIONS ARE NOTED. SPECIFICALLY YOU STATE THAT THE SPECIFICATIONS CONTEMPLATE $400,000 WORTH OF CONSTRUCTION AND MODIFICATION, WHILE THE CURRENT REQUIREMENTS CALL FOR $1,600,000 WORTH. THE RFP REQUIRES A CAPABILITY FOR ACCOMPLISHING REPAIR AND IMPROVEMENT PROJECTS UP TO A VALUE OF $100,000 PER PROJECT, AND PROVIDES THAT FOR PROPOSAL PURPOSES FUNDING FOR THIS CATEGORY WILL AVERAGE $400,000 PER YEAR. THE NAVY CONTENDS THAT THE ESTIMATE IN THE RFP REMAINS VALID, AND FURTHER ADVISES:

"THE $1,600,000 ANNUAL FIGURE CITED BY TRANSPORT COMPANY OF TEXAS INCLUDES CERTAIN ONE-TIME PROJECTS OF AN ORDER-OF-MAGNITUDE OF OVER $100,000 WHICH WERE GIVEN TO TCT TO BE PERFORMED, BUT WHICH ARE EXPECTED TO BE COMPLETED--- OR SUBSTANTIALLY SO--- BY THE TIME THE NEW CONTRACTOR TAKES OVER. * * *

"THUS, THE BASIS ON WHICH THE QUOTATIONS WERE REQUESTED REMAINS VALID.'

IN ANY CASE, ASPR PROVIDES AT SECTION 3-402 (B) (1) THAT THE FIRM FIXED- PRICE TYPE OF CONTRACT IS PREFERRED. IT ALSO PROVIDES AT SECTION 3-405.1 (B) THAT THE COST-REIMBURSEMENT TYPE CONTRACT (A GENERAL CATEGORY INCLUDING THE COST-PLUS-INCENTIVE-FEE TYPE PROPOSED FOR USE ON THE INSTANT PROCUREMENT) IS SUITABLE FOR USE "ONLY WHEN THE UNCERTAINTIES INVOLVED IN CONTRACT PERFORMANCE ARE OF SUCH MAGNITUDE THAT COST OF PERFORMANCE CANNOT BE ESTIMATED WITH SUFFICIENT REASONABLENESS TO PERMIT USE OF ANY TYPE OF FIXED-PRICE CONTRACT.'

WE THINK GENERALLY THAT COST-REIMBURSEMENT TYPE CONTRACTS ARE APPROPRIATE FOR USE UNDER THE CITED ASPR PROVISIONS WHEN THE NATURE OF THE SITUATION IS SUCH AS TO PRECLUDE THE STATEMENT OF SPECIFICATIONS WITH THE DEGREE OF DETAIL, CERTAINTY, CORRECTNESS AND COMPLETENESS TO PERMIT THE STANDARD OF COMPETITION YOU URGE. THUS, IF YOUR STANDARD IS TO PREVAIL, A COST- REIMBURSEMENT TYPE CONTRACT WOULD NEVER BE PROPER FOR USE.

SPECIFICATION NO. 185-1-62 OF MARCH 1, 1962, ISSUED WITH THE FIRST REQUEST FOR PROPOSALS SETS OUT IN SOME DETAIL THE SCOPE OF THE WORK TO BE PERFORMED. THIS WAS SUPPLEMENTED TO SOME EXTENT IN THE SECOND SOLICITATION. IN ADDITION ALL PROSPECTIVE CONTRACTORS WERE INVITED TO ATTEND A ,BIDDER'S CONFERENCE" PRIOR TO THE DEADLINE FOR SUBMISSION OF PROPOSALS IN EACH CASE AT WHICH THEY WERE GIVEN THE OPPORTUNITY TO ASK QUESTIONS CONCERNING THE PROCUREMENT. THE QUESTIONS AND ANSWERS WERE WRITTEN OUT AND DISTRIBUTED TO ALL INTERESTED PARTIES. ALSO, INTERESTED PARTIES WERE REQUIRED TO PARTICIPATE IN AN INSPECTION TOUR OF THE SITES AS A PREREQUISITE TO QUALIFYING FOR PARTICIPATION IN THE COMPETITION. THE TOUR TOOK PLACE IN MARCH 1962. CONSIDERING THE LIMITATIONS INHERENT IN THE KIND OF SITUATION IN WHICH COST REIMBURSEMENT TYPE CONTRACTS ARE APPROPRIATE UNDER THE ASPR PROVISIONS CITED ABOVE, WE CANNOT FIND ANY INADEQUACY IN THE SPECIFICATION WHICH WOULD BE SUFFICIENT TO INVALIDATE THE PROPOSED AWARD. IN THIS CONNECTION IT SHOULD BE NOTED THAT UNDER ASPR 3-210.2 (XIII) IT IS PROPER TO NEGOTIATE A CONTRACT IN CIRCUMSTANCES WHERE IT IS IMPOSSIBLE TO DRAFT ADEQUATE SPECIFICATIONS. WE THINK IT SHOULD BE NOTED ALSO THAT NONE OF THE OTHER FIRMS SUBMITTING PROPOSALS CONSIDERED THE SPECIFICATIONS SO INADEQUATE AS TO PERMIT THE PREPARATION OF AN OFFER WHICH UPON ACCEPTANCE, AND WITHOUT ADDITIONAL NEGOTIATION, COULD COMMIT THE FIRM TO PERFORMANCE IN ACCORDANCE THEREWITH. IN FACT, IN A LETTER OF JUNE 6, 1963, IN REPLY TO THE MESSAGE OF MAY 29, 1963, HOLMES AND NARVER, INC., ADVISED NPOLA, IN PART, AS FOLLOWS:

"THE HOLMES AND NARVER, INC. PROPOSED STAFFING AND LABOR RATES ARE REALISTICALLY RESPONSIVE TO EFFECTIVE PROSECUTION OF THE WORK OUTLINED IN THE NAVY'S REQUEST FOR PROPOSAL; AND, IN FACT, WE HAVE FOUND NOTHING IN THE NAVY'S REQUEST FOR PROPOSAL WHICH, BY INCLUSION OR OMISSION, WOULD NOT PERMIT A CONTRACTOR, THOROUGHLY QUALIFIED BY EXPERIENCE IN SUPPORTING REMOTE SITES, TO SUBMIT A COMPLETE AND REALISTIC PROPOSAL.'

THIS APPEARS TO BE POSITIVE EVIDENCE THAT THE SPECIFICATIONS WERE REGARDED BY AN ADMITTEDLY QUALIFIED OFFEROR AS ADEQUATE FOR THE PREPARATION OF A PROPOSAL.

YOU NEXT CONTEND THAT THE TCT PROPOSAL SHOULD PROPERLY BE REGARDED AS LOW SINCE IT OFFERS THE LOWEST MAN-YEAR COST WHICH IS A GUARANTEED FIGURE WHILE EXCEPT FOR A REDUCTION IN THE TARGET FEE, THE CONTRACTOR IS NOT PENALIZED IF HE IS UNABLE TO PERFORM SATISFACTORILY WITH THE STAFFING INDICATED IN HIS PROPOSAL.

WE THINK THAT THE ULTIMATE LOW COST TO THE GOVERNMENT DEPENDS UPON A NUMBER OF SIGNIFICANT FACTORS INCLUDING NOT ONLY MAN-YEAR COST BUT ALSO FIXED FEE AND EFFICIENCY OF MANAGEMENT AND MANPOWER UTILIZATION. THE LAST, OF COURSE, IS NOT SUSCEPTIBLE OF MATHEMATICAL COMPARISON BUT MUST BE BASED ON A MORE OR LESS SUBJECTIVE JUDGMENT. HOWEVER, EVEN IF IT WERE TO BE CONCEDED THAT ACCEPTANCE OF TCT'S PROPOSAL WOULD RESULT IN THE LOWEST COST TO THE GOVERNMENT, SUCH CONCLUSION DOES NOT NECESSARILY REQUIRE AWARD TO YOUR FIRM. SEE IN THIS CONNECTION ASPR 3 805.2 WHICH STATES AS FOLLOWS:

"COST-REIMBURSEMENT TYPE CONTRACTS. IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES 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 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.'

IN VIEW OF THE QUOTED PROVISION OF ASPR AND THE EARLIER DISCUSSION CONCERNING THE AREA OF DISCRETION AFFORDED THE CONTRACTING AGENCY IN THE AWARD OF NEGOTIATED CONTRACTS, WE CANNOT AGREE THAT AWARD IS REQUIRED TO TCT ON THE BASIS THAT THE FIRM'S PROPOSAL OFFERS THE LOWEST MAN-YEAR COST. IN ANY CASE, AFTER CAREFUL CONSIDERATION OF THE COMPREHENSIVE EXPLANATIONS PRESENTED IN YOUR BRIEFS, WE BELIEVE, FOR THE REASONS SET OUT BELOW, THAT THE AVERAGE MAN-YEAR COST SHOWN IN THE TCT PROPOSAL AS MODIFIED MAY NOT, UPON A CAREFUL READING OF THE SPECIFICATIONS, BE AS LOW AS THE GLOBAL FIGURE.

IN YOUR FIRST BRIEF YOU STATE AT PAGES 30 AND 31, CONTRARY TO THE POSITION TAKEN BY THE SPECIAL BOARD MAJORITY (TO THE EFFECT THAT UNDER THE TCT PROPOSAL THE AVERAGE ANNUAL PAY PER NONINDIGENOUS EMPLOYEE WOULD BE REDUCED ABOUT $1,200 BELOW THAT CURRENTLY BEING PAID BY TCT ON KWAJALEIN) THAT THE MAXIMUM PAY RATES UNDER TCT'S PROPOSAL AS AMENDED ARE EXACTLY THE SAME AS THOSE APPLICABLE TO THE CURRENT CONTRACT EXCEPT FOR (1) ROUNDING OFF, (2) ELIMINATION OF BONUS WHICH WOULD BE REPLACED BY A PROFIT-SHARING PLAN, AND (3) ELIMINATION OF PREMIUM PAY FOR THAT PORTION OF THE BASIC WORK WEEK OF 48 HOURS IN EXCESS OF 40 HOURS. WITH RESPECT TO SUCH PREMIUM PAY IT IS STATED:

"PREMIUM PAY. PURSUANT TO ADVICE TO OFFERORS AT THE LOGISTICS/BASE SUPPORT BIDDERS CONFERENCE HELD IN WASHINGTON ON MARCH 20, 1963, ALL PREMIUM PAY FOR OVERTIME WAS ELIMINATED FROM THE PROPOSAL. UNDER THE PRESENT CONTRACT, PREMIUM PAY OF TIME AND ONE HALF IS REQUIRED FOR ALL HOURS WORKED IN EXCESS OF 40 IN ANY WEEK OR 8 IN ONE DAY. SINCE THE BASIC WORK WEEK IS 48 HOURS, THE ELIMINATION OF PREMIUM PAY CAUSES AN AVERAGE OVERALL REDUCTION OF ABOUT $600 PER MAN-YEAR. TCT CANNOT BE HELD ACCOUNTABLE FOR THIS REDUCTION SINCE THE OFFERORS WERE DIRECTED TO BID ACCORDINGLY. (SEE TRANSCRIPT OF BIDDERS CONFERENCE, P. 16 ET SEQ.). CONSEQUENTLY, IT MUST BE ASSUMED THAT GLOBAL'S PROPOSAL AND THE PROPOSALS OF ALL OTHER OFFERORS ALSO ELIMINATED PREMIUM PAY FOR OVERTIME. "INCIDENTALLY, THE OFFICIALS OF TCT ARE CONVINCED THAT PREMIUM PAY WILL BE REQUIRED UNDER A RULING OF THE HIGH COMMISSIONER, TRUST TERRITORIES, AND THAT ELIMINATION OF SAME UNDER THEIR PROPOSAL WAS DONE ONLY TO BE COMPETITIVE AND TO CONFORM TO THE BIDDING INSTRUCTIONS.'

PARAGRAPH 1, APPEARING AT PAGE 8A OF THE ORIGINAL REQUEST FOR PROPOSALS, STATES IN PART:

"A. FOR ESTIMATING PURPOSES ALL VENDORS SHOULD CONSIDER THAT THE STANDARD 48-HOUR WORK-WEEK COSTS ARE TO BE CONSIDERED AS STRAIGHT TIME ONLY, AND THE QUOTED PAY RATES SHOULD INCLUDE ANY PREMIUM PAID ON TIME IN EXCESS OF 40 HOURS PER WEEK.

"B. REIMBURSEMENT FOR TIME IN EXCESS OF 48 HOURS SHALL BE CONSIDERED AS OVERTIME AND THE PREMIUM PORTION ON THAT TIME IN EXCESS OF 48 HOURS WILL BE INCLUDED IN OVERHEAD.'

(NOTE: THE PROVISIONS OF PARAGRAPH B WERE CHARGED BY LANGUAGE AT PAGE 2 OF THE LETTER TRANSMITTING THE REVISED RFP TO MAKE ALL LABOR COSTS A DIRECT CHARGE.)

YOU STATE IN THE SECOND BRIEF AT PAGE 45 THAT THE FOREGOING WAS "AS A MATTER OF LAW, PROBABLY SUPERSEDED BY ANY INCONSISTENT STATEMENT IN THE BRIEFING CONFERENCE * * * WHICH CAME LATER.' THE STATEMENT REFERRED TO WAS MADE BY COUNSEL TO NPOLA AT THE SECOND BRIEFING CONFERENCE HELD ON MARCH 20, 1963, IN RESPONSE TO A QUESTION RAISED BY THE REPRESENTATIVE OF PAN AMERICAN, ONE OF THE OFFERORS, AS TO THE APPLICABILITY OF PUBLIC LAW 87-581, THE WORK HOURS ACT OF 1962, TO THE PROCUREMENT. COUNSEL ANALYZED THE SITUATION AND CONCLUDED:

"THEREFORE, TO ALL INTENTS AND PURPOSES, I BELIEVE THE PROPOSAL SHOULD BE SUBMITTED ON THE BASIS THAT THE ACT DOES NOT APPLY.'

YOU STATE ON THE BASIS OF THE FOREGOING THAT TCT WAS NOT REQUIRED "TO CONTEMPLATE THE PAYMENT OF PREMIUM PAY AS A MATTER OF STATUTORY OBLIGATION.' IN ADDITION IT IS STATED:

"/7) THE TRANSPORT COMPANY OF TEXAS, PRUDENT IN ITS ANALYSIS OF THE SITUATION, THEN HELD INFORMAL DISCUSSIONS WITH REPRESENTATIVES OF THE TRUST TERRITORY WHO STATED THAT IN THEIR OPINION THE WORK HOURS ACT OF 1962 WOULD BE APPLIED TO THE PROPOSED CONTRACT.

"/8) THE NET EFFECT OF MR. MARKER'S INTERPRETATION, PLUS THE INFORMAL INTERPRETATIONS OF REPRESENTATIVES OF THE TRUST TERRITORY, WAS THAT THE TRANSPORT COMPANY OF TEXAS COULD UNDER THE REQUEST FOR PROPOSALS EXCLUDE, WHICH IT DID, ANY PAYMENT OF PREMIUM PAY FOR WORK OF MORE THAN 40 HOURS A WEEK, CONSIDER THAT THE WORK HOURS ACT WOULD LATER BE APPLIED AND CONSIDER ITSELF ENTITLED TO A CHANGE ORDER ON THE BASIS OF MR. MARKER'S ASSURANCES AT THE VENDORS' BRIEFING CONFERENCE. FOR THIS REASON, THE TRANSPORT COMPANY OF TEXAS ELIMINATED THE AVERAGE $600 A YEAR ATTRIBUTABLE TO PREMIUM PAY IN ITS QUOTATION WITH THE CONVICTION THAT THIS $600 DEDUCTION WOULD BE ELIMINATED BY LATER ACTION OF THE TRUST TERRITORY AND A CHANGE ORDER ISSUED.

"/9) THE TRANSPORT COMPANY OF TEXAS BELIEVES THAT ALL THE OTHER OFFERORS TOOK THE SAME POSITION AND BELIEVES THAT "GLOBAL ASSOCIATES" IN PARTICULAR TOOK THE SAME POSITION BECAUSE OF THE ADMISSION IN THE NAVY REPORT ON PAGE 9, QUOTING THE GENERAL COUNSEL OF DEFENSE, THAT "GLOBAL PROPOSES A REDUCTION OF $600 PER YEAR PER PERSON," WHICH IS PRECISELY THE AVERAGE AMOUNT FOR PREMIUM PAY ELIMINATED BY THE TRANSPORT COMPANY OF TEXAS. THE MAJORITY REPORT OF THE SPECIAL NAVY REVIEW BOARD, PAGE 8, ALSO STATES,"THE PROPOSAL OF GLOBAL WILL CAUSE A REDUCTION OF $600 PER YEAR PER PERSON," AND THERE CAN BE NO EXPLANATION OF THIS EXCEPT THE ELIMINATION OF PREMIUM PAY FROM THE QUOTATION.'

TAKING THE PROVISION OF THE REQUEST FOR PROPOSALS CONCERNING THE INCLUSION OF PREMIUM PAY FOR WORK HOURS BETWEEN 40 AND 48 AND THE EXPLANATION BY NPOLA COUNSEL OF THE APPLICATION OF THE WAGES AND HOURS ACT OF 1962 TOGETHER, WE BELIEVE IT IS CORRECT TO CONCLUDE THAT THERE IS PRESENTLY NO STATUTORY REQUIREMENT APPLICABLE TO THE PROPOSED CONTRACT REQUIRING THE PAYMENT OF ANY PREMIUM FOR HOURS OF THE BASIC 48-HOUR WORK WEEK IN EXCESS OF 40 BUT THAT SUCH PREMIUM MAY CERTAINLY BE PAID AS A MATTER OF COMPANY POLICY AND, IN THAT CASE, INCLUDED IN THE GUARANTEED AVERAGE MAN-YEAR COST. CONTRARY TO YOUR CONCLUSION, HOWEVER, IT WAS NOT THE INTENTION OF THE PROCURING AGENCY THAT PREMIUM PAY FOR THE HOURS BETWEEN 40 AND 48 WHICH WOULD BE PAID AS A MATTER OF COMPANY POLICY SHOULD HAVE BEEN EXCLUDED FROM THE AVERAGE MAN-YEAR COST ON THE BASIS THAT IT WOULD BE REQUIRED BY THE APPLICATION OF THE WAGES AND HOURS ACT TO THE CONTRACT WORK AREA AND THAT SUCH APPLICATION WOULD BE ATTENDED BY A CONTRACT PRICE ADJUSTMENT. IN THIS CONNECTION, GLOBAL, HOLMES AND NARVER AND POMEROY-HAWAIIAN SPECIFICALLY STATED THAT THEY USED TIME-AND-A-HALF FOR 8 HOURS OF THE BASIC 48-HOUR WORK WEEK IN THEIR COMPUTATION OF LABOR RATES.

WE DO NOT KNOW WHETHER OR NOT THE WAGES AND HOURS ACT WILL BE INTERPRETED TO APPLY TO THE CONTRACT; IF IT IS ASSUMED THAT THE ACT WILL BE APPLIED, THEN IT WOULD BE PROPER IN EVALUATING YOUR PROPOSAL TO ADD INTO YOUR AVERAGE MAN-YEAR COST THE ADJUSTMENT IN THE CONTRACT PRICE (ABOUT $600 BASED ON THE FIGURES USED IN YOUR BRIEFS) WHILE NO SUCH ADJUSTMENT WOULD BE REQUIRED IN THE GLOBAL MAN-YEAR COST SINCE THAT FIRM HAS ALREADY INCORPORATED A FACTOR IN ITS MAN-YEAR COST TO PROVIDE FOR TIME-AND-A-HALF FOR THE HOURS OF THE BASIC WORK WEEK IN EXCESS OF 40. IN THAT CASE, GLOBAL'S FIGURE, WHICH WOULD REMAIN AT $9,464, WOULD BECOME LOWER THAN YOUR ADJUSTED COST (USING YOUR OWN FIGURE) OF $9,567. YOUR ARGUMENT AS TO THE SIGNIFICANCE OF THE GUARANTEED MAN-YEAR COST FIGURE WOULD SUPPORT AWARD TO GLOBAL. IF, HOWEVER, THE ACT IS NOT INTERPRETED TO APPLY, TCT, IF AWARDED THE CONTRACT, WOULD BE IN THE POSITION OF HAVING TO PAY WAGES WHICH WOULD BE LESS BY AN AVERAGE FIGURE OF $600 PER MAN-YEAR THAN WHAT TCT HAS DETERMINED TO BE APPROPRIATE WAGE RATES, OR, IN THE ALTERNATIVE, OF MAKING UP THIS DEFICIT (1371 TIMES $600 EQUALS $822,600 PER YEAR) BY SOME OTHER MEANS.

IT IS CONTENDED THAT TCT WAS INDUCED TO SUBMIT ITS REVISED PROPOSAL OF JUNE 7, 1963, BY STATEMENTS OF HIGH LEVEL NAVY DEPARTMENT OFFICIALS TO THE EFFECT THAT THE SPECIFICATIONS WERE BROAD ENOUGH TO COVER THE NUMBER OF NONINDIGENOUS PERSONNEL DETERMINED BY PMR TO REPRESENT THE OPTIMUM. YOUR FIRST BRIEF IT IS STATED IN THIS CONNECTION:

"KNOWING FULL WELL THE EFFECT THAT THEIR SECOND REVISED PROPOSAL MIGHT HAVE ON THEIR COMPARATIVE STANDING IN LOW-DOLLAR COST, TCT PRESUMED THAT THE MEN WITH PROCUREMENT AUTHORITY ON WHOM THEY RELIED HAD ALSO DETERMINED THAT IT WAS MORE IMPORTANT TO HAVE A REALISTIC PROPOSAL ENVISIONING THE JOB WHICH THE NAVY WANTED DONE THAN ONE BASED ON AN ARBITRARY SET OF SPECIFICATIONS. IT NEVER OCCURRED TO THEM THAT THE REVIEWING AUTHORITIES WOULD USE A COMPLETELY DIFFERENT CRITERION FOR EVALUATION PURPOSES AND THAT THEY WOULD BE DISQUALIFIED FOR THE AWARD BECAUSE THEY DID WHAT THEY WERE TOLD THEY SHOULD DO. FOR THE FINAL REVIEWING AUTHORITY TO DETERMINE THAT THE OPTIMUM STAFFING LEVEL ADOPTED BY PMR IS NOT SACROSANCT AND NOT BINDING ON THE NAVY IS TO DISQUALIFY TCT FOR FOLLOWING THE BIDDING INSTRUCTIONS OF THE ASSISTANT SECRETARY OF THE NAVY, THE GENERAL COUNSEL, AND THE CHIEF OF THE OFFICE OF NAVAL MATERIAL.'

IN REPLY TO THIS STATEMENT THE NAVY HAS ADVISED US:

"NO ONE IN THE NAVY AT ANY TIME ADVISED OR INSTRUCTED TCT OR ANY OTHER OFFEROR THAT BIDS EITHER SHOULD OR HAD TO BE SUBMITTED ON THE BASIS OF ANY SPECIFIC NUMBER OF NONINDIGENOUS PERSONNEL.'

IN YOUR LATER BRIEF YOU REPORT NOTES OF A CONVERSATION BETWEEN SECRETARY BELIEU AND OTHERS WHICH TOOK PLACE ON JUNE 5, 1963, AS FOLLOWS:

"* * * WE THEN ASKED BELIEU WHAT WE WERE SUPPOSED TO DO NEXT AND HE REPORTED THAT WE MUST EITHER REFIGURE OUR BID ON THE BASIS OF THE 1,370 OR SO PEOPLE WITHIN THE TIME SET * * * OR * * * TRY TO GET AN EXTENSION * *

WE ARE ADVISED BY THE NAVY THAT MR. BELIEU DENIES STATING IN SUCH CONVERSATION THAT THE PROPOSAL MUST BE REFIGURED ON THE BASIS OF ANY STATED NUMBER OF PEOPLE. ON THE CONTRARY, MR. BELIEU IS SAID TO HAVE STATED IN SUBSTANCE THAT EACH OFFEROR WAS REQUIRED TO FURNISH ITS OWN DATA ON PERSONNEL STAFFING.

WITHOUT HAVING BEFORE US A TRANSCRIPT OF THE CONVERSATION TO PERMIT STUDY OF THE EXACT LANGUAGE AND THE CONTEXT WITHIN WHICH CERTAIN WORDS WERE USED, IT IS DIFFICULT TO DETERMINE THE MEANING INTENDED BY THE SPEAKER OR REASONABLY INFERRED BY THE LISTENER. HOWEVER, FROM THE INFORMATION THAT IS AVAILABLE WE THINK THE INFORMATION ELICITED IN THE CONVERSATIONS REFERRED TO SHOULD MOST REASONABLY HAVE BEEN INTERPRETED TO MEAN ONLY THAT PMR CONSIDERED OPTIMUM NONINDIGENOUS STAFFING TO BE APPROXIMATELY 1400 PEOPLE. WE DO NOT THINK IT WAS PROPER TO INFER THAT ANY SUBSTANTIAL DEVIATION FROM THAT FIGURE WOULD RENDER A PROPOSAL UNRESPONSIVE. NOTHING IN THE SOLICITATIONS OF MARCH 16, 1962, OR MARCH 8, 1963, OR IN THE CORRESPONDENCE FOLLOWING THE OPENING OF PROPOSALS ON APRIL 22, 1963, WOULD SUPPORT A CONCLUSION THAT THE STAFFING FIGURE HAD TO FALL WITHIN A GIVEN RANGE TO QUALIFY THE PROPOSAL FOR AWARD. IN FACT IN RESPONSE TO ONE OF THE QUESTIONS RAISED AT THE FIRST "BIDDER'S CONFERENCE" HELD ON APRIL 16, 1962, IT WAS STATED IN PART (QUESTION 39, PAGE 38):

"* * * THE PROPOSED MANNING AND COSTS ARE CONSIDERED AN IMPORTANT CONTRIBUTION OF PROSPECTIVE BIDDERS. WE EXPECT ORIGINALITY. THE CURRENT MANNING AND LABOR COSTS OF INCUMBENT CONTRACTORS ARE NOT NECESSARILY A GUAGE TO OPTIMUM OPERATIONS.'

THIS ANSWER WAS INCLUDED IN THE TRANSCRIPT FURNISHED TO ALL PROSPECTIVE CONTRACTORS UNDER TRANSMITTAL LETTER OF APRIL 20, 1962, WITH A REQUEST FOR ACKNOWLEDGMENT OF RECEIPT.

TO ACCEPT THE VIEW THAT A PROPOSAL TO BE RESPONSIVE HAD TO OFFER A NONINDIGENOUS STAFFING LEVEL OF ABOUT 1400 WOULD REPRESENT SUCH A CHANGE IN THE SPECIFICATIONS AS TO REQUIRE FORMAL NOTIFICATION OF ALL INTERESTED PARTIES WITH A FURTHER OPPORTUNITY TO REVISE PROPOSALS. SEE B-131707, MAY 15, 1957. SINCE NO SUCH NOTIFICATION OR OPPORTUNITY WAS GIVEN WE THINK IT WAS NOT REASONABLE TO REGARD THE INFORMATION ELICITED IN CONVERSATION CONCERNING OPTIMUM STAFFING AS ,BIDDING INSTRUCTIONS.' OTHERWISE THE ADVANTAGE WHICH WOULD THEREBY HAVE BEEN AFFORDED TCT COULD WITH PROPRIETY HAVE BEEN REGARDED BY THE OTHER VENDORSAS A SUBSTANTIAL BASIS FOR PROTESTING.

A CONSIDERABLE PORTION OF YOUR EARLIER BRIEF WAS GIVEN OVER TO DATA SUPPORTING THE RESPONSIBILITY OF TCT. THAT FACTOR WAS NOT AN ISSUE IN THE SELECTION OF GLOBAL WHICH RESULTED ESSENTIALLY FROM POSITIVE DETERMINATIONS AS TO THAT FIRM'S PROPOSAL AND CAPACITY RATHER THAN ANY NEGATIVE DETERMINATION WITH RESPECT TO TCT. IN SUBSTANTIATION OF THAT POSITION WE HAVE RECEIVED A LETTER OF NOVEMBER 1963, FROM THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS) AS FOLLOWS:

"THIS LETTER SUPPLEMENTS MY LETTER TO YOU OF 24 OCTOBER 1963 RELATING TO THE PROCUREMENT BY THE NAVY PURCHASING OFFICE, LOS ANGELES, FOR THE OPERATION AND MAINTENANCE OF LOGISTICS BASE SUPPORT FACILITIES AT THE PACIFIC MISSILE RANGE FACILITY, KWAJALEIN, AND AT THE PACIFIC MISSILE RANGE FACILITY, ENIWETOK.

"I WISH TO ADVISE YOU THAT ALL OF THE FIVE FIRMS WHICH SUBMITTED PROPOSALS ON THE LAST REQUEST FOR PROPOSALS WERE CONSIDERED QUALIFIED TO PERFORM THE PROPOSED CONTRACT. THE DECISION TO MAKE AN AWARD OF THIS CONTRACT TO GLOBAL ASSOCIATES IS ON THE BASIS THAT IT IS CONSIDERED THAT GLOBAL IS THE LOW RESPONSIBLE AND RESPONSIVE OFFEROR. NO PROPOSAL WAS REJECTED BECAUSE OF LACK OF QUALIFICATIONS OR RESPONSIBILITY OF AN OFFEROR.'

IN SUPPORT OF YOUR POSITION THAT THE LEGALITY OF THE PROPOSED AWARD SHOULD NOT BE SUSTAINED, YOU CITE OUR RECENT DECISION B-150978, OCTOBER 10, 1963. IN THAT DECISION WE CONCLUDED THAT THE AWARD BY THE SECRETARY OF THE INTERIOR OF A NEGOTIATED CONTRACT FOR THE PROCESSING AND SALE OF ALASKA SEALSKINS WAS INVALID BECAUSE, CONTRARY TO APPLICABLE REGULATIONS (SIMILAR TO THOSE APPLICABLE HERE), THE AWARD HAD BEEN MADE WITHOUT THE SOLICITATION OF FIRM PROPOSALS INCLUDING PRICE FROM INTERESTED AND RESPONSIBLE SOURCES AND THE CONSIDERATION OF SUCH FIRM PROPOSALS IN THE SELECTION OF A CONTRACTOR. INSTEAD, SELECTION WAS MADE ON THE BASIS AUTHORIZED FOR AWARD OF CONTRACTS FOR PROFESSIONAL ARCHITECTURAL OR ENGINEERING SERVICES WHERE PRICE COMPETITION IS BARRED BY ESTABLISHED PROFESSIONAL ETHICAL STANDARDS. THAT HOLDING IS, OF COURSE, NOT GERMANE TO THE PROCUREMENT HERE UNDER CONSIDERATION WHERE FIRM PROPOSALS WERE SOLICITED FROM ALL SOURCES AND WHERE ALL FACTORS INCLUDING PRICE WERE EVALUATED IN STRICT ACCORDANCE WITH APPLICABLE LAWS AND REGULATIONS.

THE HOLDING IN B-150978 IS SET OUT ABOVE; ANY OTHER CONCLUSIONS ARE DICTA ONLY. IN ANY CASE, WE DO NOT AGREE THAT THE DICTA SUPPORT THE CONCLUSIONS AT PAGES 16 THROUGH 19 OF YOUR SECOND BRIEF. YOU FIND AN ANALOGY IN THE FACT THAT THE INVALID AWARD WAS CRITICIZED BECAUSE IN MAKING A COMPARATIVE EVALUATION OF RESPONSIBILITY, THE CONTRACTING AGENCY CONSIDERED ONLY NEGATIVE FACTORS OF PAST PERFORMANCE. SINCE THE FIRM TO WHOM THE INVALID AWARD WAS MADE WAS NEW AND HAD NO PRIOR RECORD OF PERFORMANCE WHILE ANOTHER FIRM HAD PERFORMED THE WORK UNDER GOVERNMENT CONTRACT FOR SOME CONSIDERABLE PERIOD OF TIME, IT WAS OBVIOUS THAT THE NEW FIRM WOULD HAVE NO NEGATIVE FACTORS AGAINST IT WHILE THE OLD CONTRACTOR WOULD HAVE ACCUMULATED SUCH FACTORS TO THE EXTENT THAT ITS PAST PERFORMANCE HAD BEEN LESS THAN PERFECT, OR NEARLY SO. IN THE MATTER AT ISSUE, AS NOTED IN THE ASSISTANT SECRETARY'S LETTER, ALL FIVE FIRMS WHO SUBMITTED PROPOSALS IN RESPONSE TO THE LAST RFP, WERE CONSIDERED QUALIFIED. THE RECOMMENDATION FOR AWARD WAS ADEQUATELY SUPPORTED BY A COMPARISON OF DATA CONTAINED IN THE PROPOFALS. EVEN IF IT IS ASSUMED THAT A FACTOR IN SELECTING TCT FOR AWARD WAS AN IMPROPER OR INADEQUATE COMPARISON OF RESPONSIBILITY, THERE REMAINS IN THE ANALYSIS OF THE PROPOSALS A SUFFICIENT BASIS TO SUPPORT THE VALIDITY OF THE PROPOSED AWARD. FURTHER, WHILE THE JOINT VENTURE IS NEW AND WITHOUT PAST EXPERIENCE, GLOBAL RESPONSIBILITY WAS EVALUATED IN TERMS OF THE RECORD OF THE MEMBER FIRMS, WHO HAD A CONSIDERABLE RECORD OF PERFORMANCE ON GOVERNMENT CONTRACTS.

IN SUMMARY, WE FIND THAT THE SELECTION OF GLOBAL FOR THE PROPOSED AWARD REPRESENTED A REASONABLE EXERCISE OF THE DISCRETION AFFORDED CONTRACTING AGENCIES IN THE NEGOTIATION OF CONTRACTS. WE FIND, FURTHER, THAT THE ACTIONS OF THE CONTRACTING AGENCY WITH RESPECT TO THE MATTER ARE NOT INCONSISTENT WITH APPLICABLE STATUTES AND REGULATIONS. WE CONCLUDE, THEREFORE, THAT NO BASIS HAS BEEN PRESENTED TO WARRANT A CONCLUSION THAT AWARD TO GLOBAL WOULD BE INVALID.

CERTAIN OTHER QUESTIONS ARE RAISED IN YOUR SECOND BRIEF WHICH WE BELIEVE SHOULD BE ANSWERED. YOU SUGGEST THAT GLOBAL MAY NOT HAVE QUALIFIED FOR AWARD BECAUSE THE MANDATORY SITE-INSPECTION WHICH TOOK PLACE IN MARCH OF 1962 WAS MADE BY A TEAM REPRESENTING NOT GLOBAL ASSOCIATES BUT AN UNNAMED JOINT VENTURE "CONSISTING OF RCA, INTERNATIONAL AIRCRAFT SERVICES, INC. AND H. C. SMITH CONSTRUCTION CO.' WE ARE ADVISED BY THE NAVY THAT THE TEAM IN QUESTION WAS MADE UP OF 4 MEMBERS; 2 REPRESENTING IAS, 1 REPRESENTING HCS, AND THE LAST FROM THE RCA SERVICE CO. THUS, 3 OF THE TEAM MEMBERS REPRESENTED THE JOINT VENTURERS MAKING UP GLOBAL, WHILE THE FOURTH WAS AN EMPLOYEE OF A FIRM PROPOSED FOR USE BY GLOBAL AS A TECHNICAL CONSULTANT. THE FACT THAT THE JOINT VENTURE HAD NOT BEEN GIVEN A NAME AT THE TIME OF THE SITE-INSPECTION WOULD HAVE NO EFFECT EITHER ON THE PURPOSE OF THE TOUR OR ON THE INFORMATION DERIVED THEREFROM BY THE TEAM REPRESENTING WHAT BECAME GLOBAL. THE ABSENCE OF A NAME AT THAT TIME COULD CERTAINLY NOT, UNDER ANY REASONABLE VIEW, BE REGARDED AS A BASIS FOR QUESTIONING GLOBAL'S ELIGIBILITY FOR AWARD.

YOU ALSO CONTEND THAT GLOBAL WAS CONSIDERED BY PMR AND NPOLA NOT TO BE TECHNICALLY QUALIFIED. THE NAVY ADVISES US THAT GLOBAL WAS NOT, PRIOR TO THE SECOND ROUND SOLICITATION OR AT ANY OTHER TIME, CONSIDERED TO BE TECHNICALLY UNQUALIFIED. YOUR CONCLUSION APPEARS TO HAVE BEEN DERIVED FROM THE FACT THAT NPOLA SENT A DISPATCH OF OCTOBER 26, 1962,TO TCT AND OTHER FIRMS LATER CONSIDERED TECHNICALLY QUALIFIED BUT NOT TO GLOBAL. HOWEVER, THE DISPATCH WAS SENT ONLY TO CLARIFY POINTS IN PROPOSALS PREVIOUSLY SUBMITTED. THE DISPATCH WAS NOT SENT TO GLOBAL ONLY BECAUSE SUCH CLARIFICATION WAS NOT NEEDED.

YOU ALLEGE ALSO THAT THE MAJORITY OF THE SPECIAL REVIEW BOARD RECOMMENDED THAT BOTH GLOBAL AND TCT SHOULD BE DISQUALIFIED FOR INSUFFICIENT STAFFING LEVELS. THE NAVY CATEGORICALLY DENIES THAT A MAJORITY OF THE BOARD EVER MADE SUCH A RECOMMENDATION. IN FACT, IT STATES UNEQUIVOCALLY THAT THE ONLY REPORT MADE BY THE SPECIAL REVIEW BOARD TO MR. BELIEU WAS THAT TRANSMITTED ON JULY 25, 1963, WHICH HAS ALREADY BEEN DISCUSSED AT LENGTH.

YOU ALSO QUESTION THE REGULARITY OF ATTENDANCE AT BOARD HEARINGS, IMPLYING, WE ASSUME, THAT THE MEMBERS WERE NOT AS WELL INFORMED ON THE MATTER AS THEY SHOULD HAVE BEEN. THE NAVY STATES THAT WHILE NO ATTENDANCE RECORDS WERE KEPT, THE CHAIRMAN HAS STATED THAT WITH FEW EXCEPTIONS ALL MEMBERS WERE PRESENT AT BOARD MEETINGS, AND THAT WHEN A MEMBER WAS UNABLE TO BE PRESENT HE WAS BRIEFED BY OTHER BOARD MEMBERS ON WHAT HAD TRANSPIRED IN HIS ABSENCE AND WAS GIVEN AN OPPORTUNITY TO REVIEW ANY WRITTEN MATERIAL CONSIDERED. AS NOTED EARLIER, THE ONLY CHANGE IN THE MAKE-UP OF THE BOARD OCCURRED WHEN REAR ADMIRAL HUSBAND REPLACED REAR ADMIRAL COXE ON JUNE 14, 1963. ADMIRAL HUSBAND HAD ACCESS TO ALL DOCUMENTS IN THE POSSESSION OF THE BOARD, AND WAS INFORMED AS TO PREVIOUS DELIBERATIONS OF, AND TESTIMONY BEFORE, THE BOARD BY HIS COLLEAGUES.

YOU STATE AT PAGE 20 OF YOUR SECOND BRIEF THAT ON FEBRUARY 25, 1963, REAR ADMIRAL BOTTOMS WAS WILLING TO STIPULATE THAT TCT'S PERFORMANCE HAD BEEN "EXEMPLARY" AND SHOULD BE CONTINUED ON THE JOB UNLESS IT COULD BE SHOWN THAT SUBSTANTIAL SAVINGS WOULD RESULT FROM THE SELECTION OF ANOTHER CONTRACTOR. ADMIRAL BOTTOMS STATES THAT HE NEVER CHARACTERIZED TCT'S PERFORMANCE AS EXEMPLARY BUT DID SAY THAT THE WRITTEN RECORD OF THE BUREAU OF WEAPONS WOULD NOT SUPPORT A FINDING THAT TCT'S PERFORMANCE HAD BEEN UNSATISFACTORY.

YOU CONTEND THAT THE CHANGE IN TERMINOLOGY FROM "BEST PRACTICE AT A TYPICAL MAJOR NAVAL TATION" TO "GOOD INDUSTRIAL AND COMMERCIAL PRACTICES" MUST HAVE BEEN MADE WITH A PURPOSE AND SIGNIFICANCE. THE PURPOSE OF THE CHANGE IS DESCRIBED BY THE NAVY AS FOLLOWS:

"THIS CHANGE IN TERMINOLOGY WAS MADE IN ORDER TO DESCRIBE, IN LANGUAGE THAT MIGHT BE MORE MEANINGFUL TO ALL OFFERORS, THE REQUIRED STANDARDS TO BE APPLIED IN THE MAINTENANCE OF PHYSICAL PLANT, EQUIPMENT AND UTILITIES. IT IS CLEAR FROM THE REQUEST FOR PROPOSALS THAT THE LANGUAGE IN QUESTION RELATES SOLELY TO THIS LIMITED SUBJECT. IT WAS THOUGHT BY NAVY PROCUREMENT PERSONNEL CONCERNED WITH DRAFTING THE REVISED REQUEST FOR PROPOSALS ON A COST PLUS INCENTIVE FEE BASIS THAT, SINCE THERE ARE NO "MAJOR NAVAL INSTALLATIONS" IN THE AREAS INVOLVED-- WHICH HAVE A HIGHLY CORROSIVE ATMOSPHERE--- DEFINITION OF MAINTENANCE STANDARDS IN TERMS OF "COMMERCIAL PRACTICE" WOULD BE BETTER UNDERSTOOD BY OFFERORS FAMILIAR WITH OPERATIONS IN THOSE GEOGRAPHIC AREAS. THE EXCHANGE OF CORRESPONDENCE BETWEEN TCT AND NPOLA SET FORTH ON PAGES 14 16 OF THE NAVY REPORT OF 24 OCTOBER 1963 CONCERNS THIS POINT.'

FOR THE REASONS INDICATED EARLIER WE DO NOT BELIEVE THAT THE ANY OFFEROR SHOULD HAVE BEEN MISLED BY THE CHANGE IN TERMINOLOGY.

FINALLY, YOU STATE THAT TCT PROPOSED TO PAY ITS HOME OFFICE EXPENSES OUT OF ITS FEE "UNLIKE GLOBAL ASSOCIATES.' IN POINT OF FACT NEITHER THE GLOBAL NOR THE TCT PROPOSAL INCLUDES ANY "HOME OFFICE EXPENSES.' GLOBAL HAS EXPRESSLY ELIMINATED ALL GENERAL AND ADMINISTRATIVE EXPENSES FROM ITS PROPOSAL AND, THEREFORE, WOULD NOT BE ALLOWED HOME OFFICE EXPENSES AS EITHER A DIRECT OR INDIRECT COST.

IT SHOULD BE REEMPHASIZED THAT OUR JURISDICTION IN THIS MATTER IS TO DECIDE NOT WHETHER THE PROPOSED AWARD REPRESENTS WHAT WE MIGHT CONSIDER THE WISEST CHOICE, BUT WHETHER THE PROPOSED AWARD MAY BE REGARDED UNDER APPLICABLE LAWS AND REGULATIONS AS LEGALLY VALID. WE HAVE FOUND, FOR THE REASONS STATED, THAT NO BASIS HAS BEEN PRESENTED TO WARRANT A DETERMINATION OF INVALIDITY BY US. THIS IS NOT TO SAY THAT YOUR CRITICISMS OF THE NAVY BRIEF OR OF NAVY ACTIONS ON THE MATTER HAVE BEEN TOTALLY WITHOUT FOUNDATION. HOWEVER, WE DO NOT CONSIDER IT NECESSARY OR APPROPRIATE TO RESPOND TO ALL SUCH CRITICISMS EXCEPT TO THE EXTENT THAT THE ACTION OR CONCLUSION IN QUESTION MAY BEAR ON THE VALIDITY OF THE PROPOSED AWARD.