B-153195, FEB. 6, 1964

B-153195, FEB. 6, 1964

TO KAISER JEEP CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 3, 1964, AND SUBSEQUENT CORRESPONDENCE PROTESTING AGAINST CONSIDERATION BY THE DEPARTMENT OF THE ARMY OF A BID SUBMITTED BY FORD MOTOR COMPANY ON THE MULTI-YEAR PROCUREMENT OF M-151 VEHICLES UNDER IFB NO. AMC-20-113-63 1979/T).

UNDER THE PROVISIONS OF THE IFB IN STEP ONE OF THIS TWO-STEP PROCUREMENT THE REQUIREMENTS OF THE GOVERNMENT WERE SET OUT IN ALTERNATE SCHEDULES. ALTERNATE "A" REFLECTED THE GOVERNMENT'S REQUIREMENTS FOR THREE YEARS, WHILE ALTERNATE "B" REFLECTED ONLY THE REQUIREMENTS FOR THE FIRST YEAR OF THE PROCUREMENT PROGRAM. AS ORDINARILY ISSUED, PAGES 3R AND 3S OF THE STEP ONE IFB REQUIRED DELIVERY UNDER ALTERNATE "A" OF 1000 VEHICLES BY THE END OF DECEMBER 1964, AND DELIVERY OF 1000 VEHICLES PER MONTH THEREAFTER THROUGH MAY 1967. ADDITIONALLY, SCHEDULE PAGE 3AA OF THE IFB PROVIDED AS FOLLOWS UNDER THE HEADING "DELIVERY:"

"A. REQUIRED DELIVERY--- UNLESS OTHERWISE PROVIDED IN THIS INVITATION, DELIVERY MUST BE MADE STRICTLY IN ACCORDANCE WITH THE REQUIRED DELIVERY SCHEDULE, AND BIDS PROPOSING TO MAKE DELIVERY NOT IN ACCORDANCE WITH THE REQUIRED DELIVERY SCHEDULE WILL BE REJECTED AS NON RESPONSIVE.'

AS RELEASED TO BIDDERS ON MAY 17, 1963, STEP ONE OF THE IFB WAS ACCOMPANIED BY A COVERING LETTER AND TWO EXHIBITS. THE COVERING LETTER ADVISED BIDDERS, IN PERTINENT PART, AS FOLLOWS:

"TECHNICAL PROPOSALS SUBMITTED UNDER STEP ONE MUST FULLY COMPLY, WITHOUT EXCEPTION, WITH REQUIREMENTS OF EXHIBIT 1, ANNEXED HERETO. THE CRITERIA ESTABLISHED FOR THE GOVERNMENT'S EVALUATION OF THE TECHNICAL PROPOSALS ARE DESCRIBED IN EXHIBIT 2, ANNEXED HERETO.

"IT IS TO BE SPECIFICALLY UNDERSTOOD THAT:

"B. THE GOVERNMENT MAY DISCUSS THE TECHNICAL PROPOSAL WITH THE CONCERN SUBMITTING THE PROPOSAL FOR THE PURPOSE OF OBTAINING ADDITIONAL INFORMATION, CLARIFICATION, OR AMENDMENTS, AS MAY BE REQUIRED.

"C. IN THE SECOND STEP, THE ONLY BIDS WHICH WILL BE CONSIDERED FOR AWARD ARE THOSE WHICH ARE BASED ON TECHNICAL PROPOSALS WHICH HAVE BEEN DETERMINED BY THE GOVERNMENT TO BE ACCEPTABLE.

"D. EACH BID IN THE SECOND STEP MUST BE BASED ON THE BIDDER'S OWN TECHNICAL PROPOSAL, AS MAY HAVE BEEN MODIFIED.

"E. BIDDERS SUBMITTING UNACCEPTABLE TECHNICAL PROPOSALS WILL BE NOTIFIED OF THIS FACT UPON COMPLETION OF THE TECHNICAL EVALUATION.'

EXHIBIT 1 WAS ENTITLED "CONTENT OF TECHNICAL PROPOSAL" AND PROVIDED IN PERTINENT PART THAT TECHNICAL PROPOSALS MUST INCLUDE INFORMATION ON "EXCEPTIONS AND/OR ADDITIONS, IF ANY, TO THE PROPOSED TERMS AND CONDITIONS OF THE INVITATION FOR BIDS.'

EXHIBIT 2 WAS ENTITLED "CRITERIA FOR EVALUATION OF TECHNICAL PROPOSALS" AND PROVIDED THAT A ,BIDDER'S WILLINGNESS TO MEET GOVERNMENT DELIVERY REQUIREMENTS" WOULD BE ONE OF THE CRITERIA USED IN DETERMINING IF TECHNICAL PROPOSALS WERE ACCEPTABLE.

UNDER DATE OF SEPTEMBER 30, 1963, FORD SUBMITTED ITS TECHNICAL PROPOSAL. SUBSECTION 1.4 OF SUCH PROPOSAL WAS ENTITLED "DELIVERY SCHEDULE" AND PROVIDED, IN PERTINENT PART, AS FOLLOWS:

"THE DELIVERY SCHEDULES SET FORTH IN THE IFB, PAGES 3R, 3S, AND 3T ARE ACCEPTABLE TO FORD AND WILL BE COMPLIED WITH AS LONG AS THE GOVERNMENT'S REPRESENTATION REGARDING THE AVAILABILITY OF SPECIAL TOOLING IS MET. * *

ON OCTOBER 3, 1963, THE PROCURING ACTIVITY ISSUED AMENDMENT NO. 3 TO THE IFB. AMONG OTHER CHARGES, THIS AMENDMENT CHANGED THE ALTERNATE "A" DELIVERY REQUIREMENTS SO AS TO "REQUIRE" DELIVERY OF SPECIFIED NUMBERS OF VEHICLES FOR EACH MONTH BEGINNING IN JANUARY 1965 AND ENDING IN JUNE 1967. HOWEVER, SUCH "REQUIREMENT" WAS MODIFIED BY THE FOLLOWING NOTATION:

"NOTE: BIDDER MAY PROPOSE TO START DELIVERY OF ITEMS 1A AND 1B EARLIER THAN JANUARY 1965, PROVIDED THAT THE ALTERNATE DELIVERY SCHEDULE INCLUDES THE FOLLOWING REQUIREMENTS:

(1) SCHEDULE MUST PROVIDE FOR DELIVERIES TO LEVEL OFF AT A REASONABLE MONTHLY RATE.

(2) DELIVERIES MUST BE COMPLETED NOT LATER THAN JUNE 1967.'

ON OCTOBER 10, 1963, BY AMENDMENT NO. 4 TO THE IFB, THE FOREGOING NOTE WAS AMENDED TO READ AS FOLLOWS:

"NOTE: BIDDER MAY PROPOSE A DELIVERY SCHEDULE OTHER THAN AS SHOWN ABOVE PROVIDED THAT THE ALTERNATE DELIVERY SCHEDULE INCLUDES THE FOLLOWING REQUIREMENTS:

(1) DELIVERIES START NO EARLIER THAN JULY 1964 OR NOT LATER THAN JANUARY 1965.

(2) DELIVERIES END NO EARLIER THAN JANUARY 1967 OR NOT LATER THAN JUNE 1967.

(3) SCHEDULE PROVIDES FOR DELIVERIES TO LEVEL OFF AT A REASONABLE MONTHLY RATE.

"BIDDERS OFFERING TO MAKE DELIVERIES OTHER THAN AS SET FORTH IN THE SCHEDULE SHOWN ON PAGE 3R MUST INDICATE IN THEIR STEP ONE PROPOSAL THE DEFINITIVE DELIVERY SCHEDULE UPON WHICH THEY ARE BIDDING. THE DELIVERY SCHEDULE SO OFFERED BY THE SUCCESSFUL BIDDER IN ITS STEP ONE PROPOSAL WILL BE THE SCHEDULE ACCEPTED BY THE GOVERNMENT AND CONTRACTED FOR.'

UNDER DATE OF OCTOBER 11, 1963, FORD ACKNOWLEDGED RECEIPT OF AMENDMENTS 1 THROUGH 4, AND ALSO SUBMITTED SEVERAL AMENDMENTS TO ITS TECHNICAL PROPOSAL. AMONG SUCH AMENDMENTS WAS THE FOLLOWING ADVICE RELATIVE TO FORD'S DELIVERY SCHEDULE:

"PARAGRAPH 1.4, PAGE 1-2, DELIVERY SCHEDULE IS HEREBY AMENDED TO DELETE REFERENCE TO THE DELIVERY SCHEDULES SET FORTH IN THE IFB, PAGES 3R, 3S, AND 3T AND THE ATTACHED SCHEDULE IS SUBSTITUTED THEREFOR.'

INSOFAR AS SUCH ATTACHED SCHEDULE RELATED TO ALTERNATE "A," IT PROPOSED THAT FORD WOULD COMMENCE DELIVERIES WITH 500 VEHICLES IN DECEMBER 1964, 750 VEHICLES IN JANUARY 1965, AND 1250 VEHICLES PER MONTH THEREAFTER UNTIL DELIVERIES WERE COMPLETED IN DECEMBER 1966. THE EFFECT OF FORD'S OCTOBER 11 AMENDMENT THEREFORE WAS TO PROPOSE TO START DELIVERIES WITHIN THE PERIOD PERMITTED BY AMENDMENT NO. 4 TO THE IFB, AND ONE MONTH EARLIER THAN THE LATEST DATE FOR INITIAL DELIVERY, BUT TO COMPLETE DELIVERIES ONE MONTH IN ADVANCE OF JANUARY 1967, THE EARLIEST DATE FOR COMPLETING DELIVERIES UNDER PARAGRAPH (2) OF THE NOTE TO THE DELIVERY SCHEDULE SET OUT IN AMENDMENT NO. 4 TO THE IFB. THE CONTRACTING OFFICER HAS ADVISED THAT, THROUGH INADVERTENCE, THE DELIVERY COMPLETION DATE PROPOSED BY FORD'S OCTOBER 11 LETTER WAS OVERLOOKED. BY LETTER DATED OCTOBER 30 THE CONTRACTING OFFICER ADVISED FORD AS FOLLOWS:

"THIS SHALL CONSTITUTE ADVICE THAT YOUR TECHNICAL PROPOSAL SUBMITTED IN RESPONSE TO OUR INVITATION FOR BIDS NO. AMC-20-113-63-1979/T) (STEP ONE) (MYP) IS ACCEPTABLE. YOUR PROPOSAL IS CONSIDERED TO CONSIST OF THE FOLLOWING:

1. BASIC TECHNICAL PROPOSAL DATED 29 JULY 1963.

2. LETTER DATED 12 SEPTEMBER 1963.

3. LETTER DATED 30 SEPTEMBER 1963.

4. LETTER DATED 11 OCTOBER 1963.

5. LETTER DATED 29 OCTOBER 1963.

"THIS QUALIFIES YOUR COMPANY TO SUBMIT A PRICED BID IN STEP TWO OF THIS PROCUREMENT. THE FORMAL IFB WILL BE ISSUED LATER THIS WEEK.'

STEP TWO OF THE IFB WAS ISSUED ON OCTOBER 31, 1963. PAGE 2A OF THE IFB ADVISED, IN PERTINENT PART, AS FOLLOWS:

"2. BIDS WILL BE ACCEPTED ONLY FROM THOSE FIRMS WHO HAVE SUBMITTED ACCEPTABLE TECHNICAL PROPOSALS PURSUANT TO THE FIRST STEP OF SUCH PROCEDURES, AS INITIATED BY IFB NO. AMC-20-113-63-1979/T) (STEP ONE) (MYP). ANY BIDDER WHO HAS SUBMITTED MULTIPLE TECHNICAL PROPOSALS IN THE FIRST STEP OF THIS TWO-STEP PROCUREMENT MAY SUBMIT A SEPARATE BID COVERING EACH TECHNICAL PROPOSAL WHICH HAS BEEN DETERMINED ACCEPTABLE BY THE GOVERNMENT.

"3. THE SUPPLIES OR SERVICES TO BE PROCURED WILL BE IN ACCORDANCE WITH:

A. THE ITEM DESCRIPTIONS AND SPECIFICATIONS SET FORTH IN IFB NO. AMC 20- 113-63-1979/T) (STEP ONE) DATED 17 MAY 1963, AS MODIFIED BY:

(I) AMENDMENT NO. 1 DATED 11 JULY 1963

(II) AMENDMENT NO. 2 DATED 26 SEPTEMBER 1963

(III) AMENDMENT NO. 3 DATED 3 OCTOBER 1963

(IV) AMENDMENT NO. 4 DATED 9 OCTOBER 1963

(V)AMENDMENT NO. 5 DATED 11 OCTOBER 1963

(VI) AMENDMENT NO. 6 DATED 23 OCTOBER 1963

B. THE BIDDER'S TECHNICAL PROPOSAL, AS FINALLY ACCEPTED.

"4. THE BIDDER'S TECHNICAL PROPOSAL IS INCORPORATED HEREIN BY REFERENCE AS THOUGH EACH AND EVERY PART OF SAID PROPOSAL WERE PRINTED IN THIS INSTRUMENT. NOTHING SAID IN THE BIDDER'S TECHNICAL PROPOSAL SHALL CONSTITUTE A WAIVER OF THE TECHNICAL REQUIREMENTS SET FORTH IN IFB NO. AMC -20-113-63-1979/T) (STEP ONE), AS MODIFIED BY AMENDMENTS THERETO.'

PARAGRAPH 5A OF SCHEDULE PAGE 3AA OF THE STEP TWO IFB ADVISED AS FOLLOWS:

"A. REQUIRED DELIVERY--- UNLESS OTHERWISE PROVIDED IN THIS INVITATION, DELIVERY MUST BE MADE STRICTLY IN ACCORDANCE WITH THE REQUIRED DELIVERY SCHEDULE, AND BIDS PROPOSING TO MAKE DELIVERY NOT IN ACCORDANCE WITH THE REQUIRED DELIVERY SCHEDULE WILL BE REJECTED AS NONRESPONSIVE.'

PAGE 3Q OF THE IFB SET FORTH THE SAME DELIVERY SCHEDULE, (SPECIFYING NUMBERS OF VEHICLES FOR EACH MONTH BEGINNING IN JANUARY 1965 AND ENDING IN JUNE 1967), AS HAD BEEN PREVIOUSLY SET OUT IN AMENDMENT NO. 3 TO THE STEP ONE IFB. BIDDERS WERE ALSO ADVISED AS FOLLOWS BY PARAGRAPH A OF THE DELIVERY SCHEDULE PROVISIONS ON PAGE 3Q OF THE STEP TWO IFB:

"A. DELIVERY MUST BE MADE IN ACCORDANCE WITH THE SCHEDULE SET FORTH HEREIN, OR IN ACCORDANCE WITH THE ALTERNATE DELIVERY SCHEDULE SUBMITTED BY THE BIDDER, AND ACCEPTED BY THE GOVERNMENT, IN STEP ONE OF THE INVITATION FOR BIDS. BIDS PREDICATED ON MAKING DELIVERIES OTHER THAN AS HEREIN STATED WILL BE DEEMED NON-RESPONSIVE.'

WITH RESPECT TO THE PURPOSE OF THE ALTERNATE "A" DELIVERY SCHEDULE PARAGRAPH 3B OF THE INFORMATION AND INSTRUCTIONS ADVISED AS FOLLOWS:

"B. THE TOTAL REQUIREMENT IS DIVIDED INTO THREE (3) PROGRAM YEAR INCREMENTS CORRESPONDING TO THE PROCEDURE THE GOVERNMENT WILL FOLLOW IN INCREMENTAL FUNDING FOR PERFORMANCE OF THE CONTRACT IF THE AWARD IS MADE UNDER ALTERNATE "A.' THE DELIVERY SCHEDULE FOR ITEMS UNDER ALTERNATE "A" IS CORRELATED TO THE PROCEDURE FOR OBLIGATING FUNDS, AND AT ANY GIVEN TIME DURING THE PERFORMANCE PERIOD OF THIS CONTRACT, THE GOVERNMENT'S MAXIMUM OBLIGATION TO THE CONTRACTOR IS THAT SET FORTH IN THE CLAUSES OF THE CONTRACT ENTITLED,"LIMITATION OF PRICE AND CONTRACTOR OBLIGATIONS," ,CANCELLATION OF ITEMS," AND "TERMINATION FOR CONVENIENCE OF THE GOVERNMENT.'"

PURSUANT TO THE STEP TWO IFB, FORD SUBMITTED A BID ON ALTERNATE "A" IN AN EVALUATED AMOUNT OF $81,277,650, BASED UPON DELIVERIES BEGINNING IN DECEMBER 1964 AND ENDING IN DECEMBER 1966, WHILE YOUR COMPANY SUBMITTED A BID IN AN EVALUATED AMOUNT OF $84,176,596 BASED UPON DELIVERIES BEGINNING IN SEPTEMBER 1964 AND ENDING IN JANUARY 1967.

AS SET OUT IN THE SEVERAL LETTERS IN SUPPORT OF YOUR PROTEST, IT IS YOUR BELIEF THAT THE STEP ONE IFB, AS AMENDED BY AMENDMENT NO. 4, SET OUT MANDATORY DELIVERY SCHEDULES; THAT ANY FAILURE IN A BID TO OFFER DELIVERY WITHIN THE LIMITATIONS OF SUCH DELIVERY SCHEDULES CONSTITUTED A MATERIAL DEVIATION FROM THE REQUIREMENTS OF THE IFB; AND THAT THE FAILURE OF FORD'S BID TO OFFER DELIVERY IN FULL CONFORMITY WITH THE DELIVERY REQUIREMENTS, AS AMENDED BY AMENDMENT NO. 4, THEREFORE PRECLUDES A VALID AWARD BASED UPON FORD'S OFFERED DELIVERY SCHEDULE UNLESS ALL BIDDERS ARE GIVEN AN EQUAL OPPORTUNITY TO BID UPON THE SAME BASIS. IN SUPPORT OF YOUR POSITION YOU REFER TO VARIOUS DECISIONS OF THIS OFFICE HOLDING THAT WHERE AN INVITATION FOR BIDS STATES A REQUIRED DELIVERY SCHEDULE, TIME IS OF THE ESSENCE OF THE CONTRACT AND FAILURE OF A BID TO CONFORM WITH SUCH DELIVERY SCHEDULE IS A MATERIAL DEVIATION WHICH CANNOT BE WAIVED. ADDITIONALLY, YOU POINT TO THE PROVISIONS OF ASPR 2-404.2 (C) WHICH REQUIRE THE REJECTION OF BIDS OFFERING UNACCEPTABLE DELIVERY SCHEDULES, AND TO ASPR 2- 405, WHICH DESCRIBE A MINOR INFORMALITY AS "SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE INVITATION FOR BIDS, HAVING NO EFFECT * * * ON * * * DELIVERY OF THE SUPPLIES * * * AND THE CORRECTION OR WAIVER OF WHICH WOULD NOT AFFECT THE RELATIVE STANDING OF, OR BE OTHERWISE PREJUDICIAL TO, BIDDERS.' IT IS YOUR POSITION THAT THESE REGULATIONS ARE APPLICABLE TO THE CIRCUMSTANCES IN THE INSTANT TWO-STEP PROCUREMENT, AND THAT YOUR COMPANY WOULD HAVE BEEN ABLE TO BID LESS, BASED UPON SAVINGS RESULTING FROM INCREASED MONTHLY PRODUCTION, IF IT HAD BEEN PERMITTED TO BID UPON A DELIVERY SCHEDULE WHICH PERMITTED COMPLETION OF DELIVERIES PRIOR TO JANUARY 1967.

THE REPORT SUBMITTED TO THIS OFFICE BY THE DEPARTMENT OF THE ARMY UNDER DATE OF DECEMBER 31, 1963, ADVISES THAT, WHILE THE FAILURE OF FORD'S TECHNICAL PROPOSAL TO OFFER COMPLETION OF DELIVERY BETWEEN JANUARY AND JUNE 1967 WAS INADVERTENTLY OVERLOOKED BY THE CONTRACTING OFFICER, THAT OFFICIAL'S LETTER TO FORD DATED OCTOBER 30, 1963, DID ANNOUNCE THE GOVERNMENT'S ACCEPTANCE OF FORD'S TECHNICAL PROPOSAL,INCLUDING, BY SPECIFIC REFERENCE, THE LETTER DATED OCTOBER 11, 1963, BY WHICH FORD SUBMITTED ITS ALTERNATE DELIVERY SCHEDULE. ADDITIONALLY, THE CONTRACTING AGENCY CALLS ATTENTION TO THE ABOVE QUOTED PARAGRAPH HEADED "DELIVERY SCHEDULE" WHICH APPEARS ON PAGE 3 OF THE STEP TWO IFB AND REQUIRES BIDS TO BE SUBMITTED "IN ACCORDANCE WITH THE ALTERNATE DELIVERY SCHEDULE SUBMITTED BY THE BIDDER, AND ACCEPTED BY THE GOVERNMENT IN STEP ONE OF THE INVITATION FOR BIDS.' IT IS THEREFORE THE POSITION OF THE CONTRACTING AGENCY THAT FORD'S TECHNICAL PROPOSAL UNDER THE STEP ONE IFB, INCLUDING THE DELIVERY SCHEDULE SET OUT IN SUCH PROPOSAL, WAS ACCEPTED BY THE CONTRACTING OFFICER'S LETTER OF OCTOBER 30, 1963, AND THAT FORD'S PRICED BID BASED UPON SUCH DELIVERY SCHEDULE THEREFORE WAS COMPLETELY RESPONSIVE TO THE STEP TWO IFB AND SHOULD BE ACCEPTED BY THE GOVERNMENT. IT IS THE FURTHER CONTENTION OF THE CONTRACTING AGENCY THAT THE DEVIATION OF ONE MONTH IN FORD'S DELIVERY SCHEDULE FROM THE DELIVERY COMPLETION DATE SET OUT IN THE STEP ONE IFB IS NOT A MATERIAL DEVIATION AND COULD THEREFORE PROPERLY BE WAIVED BY THE CONTRACTING OFFICER. IN SUPPORT OF HIS CONTENTION THAT FORD'S TECHNICAL PROPOSAL COMPLIED WITH ALL MATERIAL REQUIREMENTS OF THE STEP ONE IFB, THE CONTRACTING OFFICER HAS ADVISED AS FOLLOWS:

"THE INITIATION OF DELIVERIES IS WITHIN THE PARAMETERS ESTABLISHED FOR COMMENCEMENT BY AMENDMENT NO. 4. DELIVERIES ARE CLEARLY SCHEDULED TO LEVEL OFF AT A REASONABLE MONTHLY RATE. THE QUESTION THEN IS WHETHER THE PROPOSAL TO COMPLETE DELIVERIES IN DECEMBER, 1966, IS SUCH A MATERIAL DEVIATION FROM THE EXACT REQUIREMENTS OF STEP ONE AS TO RENDER THE BID NON -RESPONSIVE. THE CONTRACTING OFFICER BELIEVES IT IS NOT.

"AN EXAMINATION OF THE EVALUATION OF BIDS, EXHIBIT D, REVEALS THAT THE DELIVERY SCHEDULE OFFERED BY FORD DURING STEP ONE WHICH WAS ACCEPTED BY THE GOVERNMENT HAD NO EFFECT, OR AT WORST, A NEGLIGIBLE EFFECT ON PRICE. AN ANALYSIS OF THE DELIVERY REQUIREMENTS EXPRESSED IN AMENDMENT NO. 4 TO STEP ONE OF THE INVITATION INDICATES THAT FORD'S OFFERED DELIVERY WOULD HAVE BEEN IN COMPLETE COMPLIANCE THEREWITH IF MERELY ONE VEHICLE HAD BEEN SCHEDULED FOR DELIVERY IN JANUARY 1967. CERTAINLY, THE ACCELERATION OF DELIVERY OF A SINGLE VEHICLE OF A TOTAL QUANTITY OF 30,000 UNITS CANNOT BE SAID TO PRODUCE A RESULT PREJUDICIAL TO OTHER BIDDERS, OR TO HAVE A MATERIAL AND SUBSTANTIAL EFFECT ON PRICE. MORE IMPORTANT, THE LANGUAGE OF AMENDMENT NO. 4 RELATES ONLY TO DELIVERIES. NOTHING CONTAINED IN THE INVITATION OR AMENDMENTS THERETO PROHIBITED ANY OF THE BIDDERS FROM SCHEDULING COMPLETION OF PRODUCTION IN ADVANCE OF JANUARY, 1967. THE ONLY ERROR WAS IN FAILING TO NOTIFY KAISER-JEEP DURING STEP ONE THAT THE GOVERNMENT WOULD ACCEPT A DELIVERY SCHEDULE WHICH CONTEMPLATES COMPLETION IN DECEMBER, 1966.

"THE CONTRACTING OFFICER DOES NOT BELIEVE THAT FORD'S BID PRICES WOULD HAVE BEEN ANY DIFFERENT HAD THEY SCHEDULED COMPLETION OF DELIVERIES FOR JANUARY, 1967, BECAUSE THE PRODUCTION SCHEDULE OF THAT FIRM AND THE PROTESTING COMPANY COULD WELL BE IN DECEMBER, 1966, NOTWITHSTANDING THE REQUIRED COMPLETION DATE OR LACK OF NOTICE REGARDING RELAXATION OF THAT DATE.'

THE PRINCIPLES AND PROCEDURES APPLICABLE TO TWO-STEP ADVERTISED PROCUREMENTS ARE SET OUT IN SECTION II, PART 5, OF THE ARMED SERVICES PROCUREMENT REGULATION. TO THE EXTENT THAT PROCEDURES ARE PRESCRIBED OR PROHIBITED THEREIN, SUCH REGULATIONS MUST BE CONSIDERED AS CONTROLLING IN DETERMINING THE AUTHORITY OF CONTRACTING AGENCIES AND OFFICERS, OR THE VALIDITY OF PROVISIONS OF INVITATIONS FOR BIDS WHICH ESTABLISH CRITERIA OR PROCEDURES TO BE FOLLOWED IN CONDUCTING A TWO STEP ADVERTISED PROCUREMENT. IN CONSIDERING THE MERITS OF YOUR PROTEST, IT IS THEREFORE BOTH NECESSARY AND PROPER TO FIRST EXAMINE THOSE PROVISIONS OF THE REGULATIONS WHICH ARE DIRECTLY PERTINENT TO THE PROCEDURES APPLICABLE TO THE INSTANT PROCUREMENT.

WITH RESPECT TO THE CONSIDERATION AND EVALUATION OF TECHNICAL PROPOSALS UNDER A STEP ONE IFB, ASPR 2-503.1 (B) (V) AND (VI) PROVIDE AS FOLLOWS:

"/V) TECHNICAL PROPOSALS WILL BE CATEGORIZED AS ACCEPTABLE OR UNACCEPTABLE. PROPOSALS SHOULD NOT BE CATEGORIZED AS UNACCEPTABLE WHEN A REASONABLE EFFORT ON THE PART OF THE GOVERNMENT COULD BRING THE PROPOSALS TO AN ACCEPTABLE STATUS AND INCREASE COMPETITION. THE CONTRACTING OFFICER SHALL ARRANGE FOR ANY NECESSARY DISCUSSIONS WITH SOURCES SUBMITTING TECHNICAL PROPOSALS FOR THE PURPOSE OF OBTAINING ADDITIONAL INFORMATION OR CLARIFICATION WHICH MAY BE REQUIRED. WHEN, AFTER DISCUSSION AND SUBMISSION OF NECESSARY INFORMATION AND CLARIFICATION, TECHNICAL PROPOSALS ARE DETERMINED TO BE ACCEPTABLE, THEY WILL BE SO CATEGORIZED. IF, HOWEVER, IT IS DETERMINED AT ANY TIME THAT A TECHNICAL PROPOSAL IS NOT REASONABLY SUSCEPTIBLE TO BEING MADE ACCEPTABLE, IT SHOULD BE CLASSIFIED AS UNACCEPTABLE AND NO DISCUSSIONS OF IT NEED THEREAFTER BE INITIATED.

"/VI) UPON FINAL DETERMINATION THAT A TECHNICAL PROPOSAL IS UNACCEPTABLE, THE CONTRACTING OFFICER SHALL PROMPTLY NOTIFY THE SOURCE SUBMITTING THE PROPOSAL OF THAT FACT. THE NOTICE SHALL INDICATE, IN GENERAL TERMS, THE BASIS FOR SUCH DETERMINATION INCLUDING A STATEMENT OF WHETHER REJECTION WAS BASED ON FAILURE TO FURNISH SUFFICIENT INFORMATION OR ON AN UNACCEPTABLE ENGINEERING APPROACH.'

FROM THE FOREGOING IT IS APPARENT THAT THE SOLICITATION OF TECHNICAL PROPOSALS UNDER STEP ONE CONTEMPLATES THE RECEIPT AND CONSIDERATION OF PROPOSALS WHICH MAY NOT BE IN FULL COMPLIANCE WITH THE REQUIREMENTS SET OUT IN THE IFB. IT IS EQUALLY APPARENT THAT THE REGULATIONS DO NOT CONTEMPLATE OR AUTHORIZE THE REJECTION OF PROPOSALS WHICH ARE NOT FULLY RESPONSIVE TO THE REQUIREMENTS SET OUT IN THE IFB UNLESS AND UNTIL SUCH PROPOSALS ARE EVALUATED, DETERMINATIONS ARE MADE THAT SUCH PROPOSALS ARE UNACCEPTABLE, AND FURTHER DETERMINATIONS ARE MADE THAT SUCH PROPOSALS CANNOT READILY BE MADE ACCEPTABLE. FURTHER, IN THE ABSENCE OF A DETERMINATION THAT AN UNACCEPTABLE PROPOSAL CANNOT READILY BE MADE ACCEPTABLE, IT IS OUR OPINION THAT THE REGULATION OBLIGATES THE CONTRACTING OFFICER TO CONTRACT THE OFFEROR AND ATTEMPT TO OBTAIN AN ACCEPTABLE PROPOSAL. IN VIEW THEREOF, IT IS OBVIOUS THAT THE RULES APPLICABLE TO FORMAL ADVERTISING HAVE LITTLE, IF ANY, APPLICATION TO THE SOLICITATION AND EVALUATION OF TECHNICAL PROPOSALS SUBMITTED UNDER A STEP ONE IFB.

WE TURN THEN TO CONSIDERATION OF THE EFFECT OF INCLUDING DELIVERY SCHEDULES IN THE STEP ONE IFB, AND THE EFFECT OF FORD'S FAILURE TO OFFER FULL COMPLIANCE WITH SUCH SCHEDULES. THE RECORD INDICATES THAT, INSOFAR AS THE GOVERNMENT WAS CONCERNED, THE PRIMARY MATTER TO BE ACCOMMODATED BY ESTABLISHING BEGINNING AND ENDING DATES FOR DELIVERIES ON THE ALTERNATE "A" REQUIREMENTS WAS TO ASSURE THAT DELIVERIES FOR EACH OF THE THREE YEARS INVOLVED WOULD BE SCHEDULED SO AS TO PERMIT FUNDING 120 DAYS IN ADVANCE OF COMPLETION OF DELIVERIES ON THE PRECEDING YEAR'S REQUIREMENT. THIS APPEARS TO HAVE BEEN RECOGNIZED BY BOTH YOUR COMPANY AND BY FORD, AS EVIDENCED BY THE REQUESTS FOR REVISION OF THE DELIVERY SCHEDULE SET OUT IN AMENDMENT NO. 2, AND THE SUBSEQUENT ISSUANCE OF AMENDMENTS 3 AND 4. ARE THEREFORE OF THE OPINION THAT, NOTWITHSTANDING THE ADVICE ON PAGE 3AA OF THE IFB THAT "BIDS PROPOSING TO MAKE DELIVERIES NOT IN ACCORDANCE WITH THE REQUIRED DELIVERY SCHEDULE WILL BE REJECTED AS NON-RESPONSIVE," THE SUBMISSION OF TECHNICAL PROPOSALS OFFERING DELIVERY SCHEDULES WHICH DID NOT CONFORM TO THE COMPLETION DATES SPECIFIED IN AMENDMENT NO. 4 WAS PERMISSIBLE, AND THAT A PROPOSAL OF THIS TYPE WAS REQUIRED TO BE EVALUATED AND PROCESSED UNDER THE PROCEDURES PRESCRIBED IN ASPR 2 503.1 (B) FOR THE PROCESSING OF UNACCEPTABLE PROPOSALS BEFORE IT COULD BE ELIMINATED FROM PRICE COMPETITION UNDER THE STEP TWO IFB. SINCE FORD WAS NOT NOTIFIED THAT ITS PROPOSAL WAS UNACCEPTABLE FOLLOWING SUCH PROCESSING, FORD WAS JUSTIFIED IN BELIEVING IT WAS ENTITLED TO SUBMIT A BID UNDER THE STEP TWO IFB ON THE BASIS OF THE DELIVERY SCHEDULE IT HAD PROPOSED IN ITS STEP ONE TECHNICAL PROPOSAL.

THERE REMAINS THE QUESTION WHETHER YOUR COMPANY SHOULD ALSO HAVE BEEN GIVEN THE OPPORTUNITY TO SUBMIT A PRICED BID UNDER THE STEP TWO IFB BASED UPON THE SAME DELIVERY SCHEDULE OFFERED BY FORD AND, IF SO, WHETHER THE FAILURE TO AFFORD YOUR COMPANY AN OPPORTUNITY TO SUBMIT A BID ON THAT BASIS PRECLUDES A VALID AWARD BASED UPON FORD'S BID.

THE ANSWER TO THE FIRST QUESTION MUST NECESSARILY BE IN THE AFFIRMATIVE. CLEARLY, THE ALTERNATE DELIVERY SCHEDULE PROPOSED BY FORD, ALTHOUGH DEVIATING SLIGHTLY FROM THE SCHEDULE SPECIFIED IN THE IFB, WAS ACCEPTABLE TO THE GOVERNMENT, AND EITHER THE STEP ONE OR THE STEP TWO IFB THEREFORE SHOULD HAVE SO ADVISED ALL BIDDERS. HOWEVER, THE DEVIATION IN THE DELIVERY SCHEDULE OFFERED BY FORD WAS INADVERTENTLY OVERLOOKED BY THE CONTRACTING OFFICER AND THIS WAS NOT DONE. THERE IS NO EVIDENCE BEFORE THIS OFFICE THAT FORD WAS AWARE OF THE DELIVERY SCHEDULE OFFERED BY YOUR COMPANY, OR THAT IT OTHERWISE KNEW YOUR COMPANY WAS NOT BEING GIVEN THE OPPORTUNITY TO ADOPT THE SAME DELIVERY SCHEDULE SET OUT IN FORD'S TECHNICAL PROPOSAL. CONVERSELY, THERE IS NO EVIDENCE THAT YOUR COMPANY WAS AWARE, PRIOR TO OPENING OF THE PRICED BIDS, THAT FORD'S TECHNICAL PROPOSAL, AS ACCEPTED BY THE GOVERNMENT AND INCORPORATED BY REFERENCE INTO THE STEP TWO IFB, PROPOSED A DELIVERY SCHEDULE WHICH DID NOT COMPLY WITH THE SCHEDULES SET OUT IN THE STEP ONE IFB. OF COURSE, IF YOUR COMPANY DID POSSESS SUCH KNOWLEDGE, IT SHOULD HAVE PROTESTED PRIOR TO THE TIME BIDS WERE OPENED. UNDER THE CIRCUMSTANCES, IT IS APPARENT THAT BOTH YOUR COMPANY AND FORD HAVE BEEN MISLED BY FAILURE OF THE STEP TWO IFB TO INVITE PRICED BIDS ON THE BASIS OF THE DELIVERY SCHEDULE INCLUDED IN FORD'S TECHNICAL PROPOSAL, YOUR COMPANY BY THE FAILURE TO KNOW THAT FORD HAD SUBMITTED AN ALTERNATE DELIVERY SCHEDULE WHICH HAD BEEN ACCEPTED BY THE CONTRACTING OFFICER, AND FORD BY ITS FAILURE TO KNOW THAT OTHER BIDDERS HAD NOT BEEN GIVEN AN OPPORTUNITY TO BID ON THE SAME DELIVERY SCHEDULE OFFERED BY FORD. IT IS EQUALLY APPARENT THAT BOTH YOUR COMPANY AND FORD HAVE RIGHTS WHICH MUST PROPERLY BE CONSIDERED IN DETERMINING THE MERITS OF YOUR PROTEST. YOUR COMPANY HAS NOT BEEN GIVEN THE OPPORTUNITY TO COMPETE ON THE SAME DELIVERY BASIS AS FORD. ON THE OTHER HAND FORD, SINCE ITS ALTERNATE DELIVERY SCHEDULE HAD BEEN ACCEPTED BY THE CONTRACTING OFFICER, HAD REASON TO BELIEVE IT WAS COMPETING ON AN ACCEPTABLE BASIS WITH YOUR COMPANY, HAS HAD ITS LOW BID PRICE REVEALED AT BID OPENING.

WE HAVE CONSIDERED THE VARIOUS CASES AND DECISIONS WHICH YOUR PROTEST CITES AS PRECEDENT FOR REFUSING TO CONSIDER FORD'S BID, TOGETHER WITH THOSE PROVISIONS OF THE STEP ONE IFB AND OF ASPR WHICH ARE QUOTED ABOVE AND WHICH DEAL WITH BIDS OFFERING UNACCEPTABLE DELIVERY SCHEDULES. IT IS OUR OPINION THAT SUCH CASES AND DECISIONS ARE NOT SUFFICIENTLY IN POINT TO BE DETERMINATIVE OF THE ISSUES PRESENTED IN THE INSTANT CASE. WITH RESPECT TO THOSE PROVISIONS OF THE STEP ONE IFB AND OF ASPR WHICH DEAL WITH BIDS OFFERING UNACCEPTABLE DELIVERY SCHEDULES, WE MUST CONCLUDE THAT THE PROVISIONS OF ASPR DEALING SPECIFICALLY WITH THE PROCEDURES TO BE FOLLOWED IN TWO-STEP PROCUREMENTS ARE TO BE CONSIDERED CONTROLLING. IT IS OUR FURTHER VIEW THAT FORD WAS ENTITLED TO ASSUME THAT SUCH REGULATIONS HAD BEEN FOLLOWED BY THE CONTRACTING OFFICER, AND TO ASSUME THAT THE CONTRACTING OFFICER'S ACCEPTANCE OF FORD'S TECHNICAL PROPOSAL HAD BEEN PRECEDED BY CONSIDERATION AND ACCEPTANCE OF FORD'S PROPOSED DELIVERY SCHEDULE. THE POSITION IN WHICH FORD NOW FINDS ITSELF MUST THEREFORE BE ATTRIBUTED TO THE CONTRACTING OFFICER'S FAILURE TO FOLLOW THE APPLICABLE REGULATIONS. UNDER SUCH CIRCUMSTANCES, AND IN THE ABSENCE OF A DETERMINATION THAT FORD'S OFFERED DELIVERY SCHEDULE IS, IN FACT, UNACCEPTABLE, IT IS OUR OPINION THAT FORD'S PROPOSAL MUST NOW BE CONSIDERED FOR AWARD UNLESS IT CAN BE SHOWN THAT THE DEVIATION IN FORD'S DELIVERY SCHEDULE RESULTED IN A SUBSTANTIAL COMPETITIVE ADVANTAGE TO FORD, OR THAT YOUR COMPANY WOULD HAVE BEEN IN A SUBSTANTIALLY BETTER COMPETITIVE POSITION IF IT HAD BEEN SPECIFICALLY ADVISED IT COULD BID UPON THE SAME DELIVERY SCHEDULE ON WHICH FORD'S BID WAS BASED. IN THIS CONNECTION, IT MUST BE NOTED THAT THE CONTRACTING AGENCY CONTENDS FORD COULD HAVE COMPLIED WITH THE DELIVERY SCHEDULE SPECIFIED IN THE IFB BY OFFERING TO DELIVERY THE FINAL VEHICLE IN JANUARY 1967, NOTWITHSTANDING THE FACT THAT AMENDMENT NO. 4 TO THE STEP ONE IFB REQUIRED DELIVERIES UNDER THE ALTERNATE SCHEDULES TO "LEVEL OFF AT A REASONABLE MONTHLY RATE.' WHILE WE COULD NOT AGREE THAT THIS PROVISION OF THE IFB PROPERLY COULD BE SO INTERPRETED NEITHER COULD WE AGREE THAT THE PROVISION SHOULD BE INTERPRETED AS REQUIRING DELIVERIES DURING THE FINAL MONTH TO BE EQUAL TO THOSE IN THE PRECEDING MONTH. ALSO IT DOES NOT APPEAR THAT THIS WAS THE UNDERSTANDING OF YOUR COMPANY, SINCE YOUR DELIVERY SCHEDULE PROVIDED FOR DELIVERY OF ONLY 875 VEHICLES IN JANUARY 1967, AS COMPARED TO 1075 IN THE PRECEDING MONTHS. WE THEREFORE SEE NO SOUND BASIS FOR YOUR CONTENTION THAT A SCHEDULE PROPOSING DELIVERIES OF AS MANY AS 500 OR 600 VEHICLES IN THE FINAL MONTH, AS COMPARED TO 1000 OR 1200 IN PRECEDING MONTHS, WOULD HAVE BEEN RESPONSIVE TO AMENDMENT NO. 4, WHEREAS A SCHEDULE PROPOSING DELIVERY OF A SMALLER NUMBER OF THE FINAL MONTH WOULD NOT HAVE BEEN RESPONSIVE. IT IS OUR OPINION THAT FORD, OR YOUR COMPANY, COULD HAVE COMPLIED FULLY WITH THE DELIVERY REQUIREMENTS BY OFFERING DELIVERIES THROUGH DECEMBER 1966 AT ANY REASONABLE LEVEL RATE, AND BY OFFERING TO DELIVER ANY NUMBER OF VEHICLES DURING JANUARY 1967 WHICH MIGHT REMAIN UNDELIVERED AT THE END OF DECEMBER 1966 UNDER SUCH A DELIVERY SCHEDULE. CONSEQUENTLY, WE FAIL TO SEE HOW IT MAY REASONABLY BE CONTENDED THAT FORD WAS ABLE TO BID APPRECIABLY LOWER BECAUSE IT WAS PERMITTED TO COMPLETE DELIVERIES IN DECEMBER 1966 RATHER THAN IN JANUARY 1967. THERE REMAINS FOR CONSIDERATION WHETHER, IF YOUR COMPANY HAD BEEN GIVEN THE OPPORTUNITY TO BID UPON THE SAME SCHEDULE AS FORD, THERE IS ANY VALID BASIS UPON WHICH IT MAY BE CONTENDED THAT YOUR BID PRICE WOULD HAVE BEEN SUBSTANTIALLY LOWER.

IN CONSIDERING THIS POINT, IT MUST BE NOTED THAT YOUR PROTEST DOES NOT ALLEGE THAT YOUR BID PRICE WOULD HAVE BEEN COMPETITIVE WITH FORD'S IF IT HAD BEEN COMPUTED ON THE BASIS OF COMPLETING DELIVERIES ONE MONTH EARLIER, AND, CONSIDERING THE DIFFERENCE OF ALMOST $3,000,000 BETWEEN FORD'S BID AND YOUR BID, SUCH CONCLUSION WOULD APPEAR TO BE SO UNLIKELY AS TO REQUIRE ITS REJECTION IN THE ABSENCE OF CONVINCING EVIDENCE TO SUPPORT IT.

CONVERSELY, TO THE EXTENT THAT YOUR PROTEST DOES CONSIDER THE POSSIBILITY OF A REDUCTION IN YOUR BID PRICE, IT WOULD APPEAR TO BE LIMITED TO A CONTENTION THAT A REDUCTION SUFFICIENT TO MAKE YOUR BID PRICE COMPETITIVE MIGHT HAVE RESULTED IF YOU HAD BEEN GIVEN THE OPPORTUNITY TO BID ON A DELIVERY SCHEDULE WHICH WOULD HAVE PERMITTED YOUR COMPANY TO CONTINUE PRODUCTION AT YOUR PRESENT MONTHLY RATE OF 1500, RATHER THAN THE MONTHLY RATE OF 1075 SPECIFIED IN YOUR BID. THIS CONTENTION IS BASED UPON YOUR BELIEF THAT THE DELIVERY SCHEDULE PROPOSED BY FORD IS BASED UPON FORD'S OPTIMUM RATE OF PRODUCTION, AND THAT YOUR COMPANY THEREFORE SHOULD ALSO BE GIVEN THE OPPORTUNITY TO BID UPON A DELIVERY SCHEDULE BASED UPON YOUR OPTIMUM RATE OF PRODUCTION. WE ARE UNABLE TO CONCUR IN YOUR POSITION, AS SET OUT ABOVE, FOR TWO PRIMARY REASONS. THE AVAILABLE EVIDENCE INDICATES THAT FORD'S DELIVERY SCHEDULE IS BASED UPON A PRODUCTION SCHEDULE CONTROLLED BY VARIOUS EXTRANEOUS CONSIDERATIONS, INCLUDING THE ESTIMATED DATE ON WHICH GOVERNMENT-OWNED EQUIPMENT IN POSSESSION OF YOUR COMPANY MIGHT BE MADE AVAILABLE TO FORD. SECOND, DELIVERY SCHEDULES SHOULD BE BASED UPON THE NEEDS OF THE CONTRACTING AGENCY, NOT UPON THE CONVENIENCE OF BIDDERS AND, WE UNDERSTAND THAT FUNDING REQUIREMENTS OF THE CONTRACTING AGENCY WOULD NOT PERMIT YOUR COMPANY TO CONTINUE DELIVERIES AT THE RATE OF 1500 VEHICLES PER MONTH.

IN VIEW OF THE FOREGOING, WE DO NOT USE A SUFFICIENT BASIS UPON WHICH IT MAY BE CONTENDED THAT YOUR COMPANY WAS MATERIALLY PREJUDICED BY THE INADVERTENT ACCEPTANCE OF THE DELIVERY SCHEDULE INCLUDED IN FORD'S TECHNICAL PROPOSAL, OR BY THE FAILURE OF THE STEP TWO IFB TO ADVISE YOU THAT DELIVERIES COULD BE COMPLETED IN DECEMBER 1966. CONVERSELY, IT IS APPARENT THAT FORD, HAVING ONCE SUBMITTED A BID WHICH IS LOW BY $2.89 MILLION, WOULD BE MATERIALLY PREJUDICED, AND YOUR COMPANY WOULD RECEIVE A SUBSTANTIAL COMPETITIVE ADVANTAGE, IF BOTH BIDS WERE NOW REJECTED AND PRICED BIDS WERE AGAIN REQUESTED UNDER A STEP TWO IFB WHICH SPECIFIED THAT DELIVERIES COULD BE COMPLETED IN DECEMBER 1966. UNDER THE CIRCUMSTANCES SURROUNDING THIS PROCUREMENT WE MUST THEREFORE CONCLUDE THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD BE BEST SERVED BY CONSIDERING FORD'S BID FOR AWARD, AND YOUR PROTEST MUST THEREFORE BE REJECTED.