B-153884, AUG. 3, 1964

B-153884: Aug 3, 1964

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

PFAELZER AND ROBERTSON: REFERENCE IS MADE TO YOUR LETTER OF JULY 2. CONTRACT AF 04/694/-450 IS A LETTER CONTRACT EVENTUALLY TO BE SUPERSEDED BY A DEFINITIVE FIXED-PRICE-TYPE CONTRACT. SEVEN COMPANIES SUBMITTED PROPOSALS WHICH WERE EVALUATED BY A NINE-MAN SYLVANIA TEAM DIVIDED INTO THREE GROUPS OF THREE MEN TO A GROUP. EACH GROUP OF WHICH WAS RESPONSIBLE FOR EVALUATING ONE OF THE THREE TYPES OF PROPOSALS. WHICH WAS TO ACCOMPANY EACH BID. THE PROCEDURE WHICH WAS EMPLOYED WAS THAT WITHIN EACH GROUP EACH TEAM MEMBER MADE AN INDEPENDENT EVALUATION OF THE PROPOSAL ASSIGNED TO THE GROUP FOR EVALUATION AND GRADED THE PROPOSAL BASED UPON FACTORS AND POINTS THAT HAD BEEN ESTABLISHED BY SYLVANIA AND APPROVED FOR USE BY THE AIR FORCE BEFORE THE REQUEST FOR PROPOSALS WAS ISSUED.

B-153884, AUG. 3, 1964

TO GRAY, PFAELZER AND ROBERTSON:

REFERENCE IS MADE TO YOUR LETTER OF JULY 2, 1964, AND PREVIOUS CORRESPONDENCE, PROTESTING FOR THE HOOD CORPORATION AGAINST A SUB CONTRACT AWARD MADE TO AMF/THOMAS BY SYLVANIA ELECTRIC PRODUCTS INC., PERFORMING FOR THE DEPARTMENT OF THE AIR FORCE UNDER CONTRACT AF 04/694/-450.

CONTRACT AF 04/694/-450 IS A LETTER CONTRACT EVENTUALLY TO BE SUPERSEDED BY A DEFINITIVE FIXED-PRICE-TYPE CONTRACT. UNDER THE LETTER CONTRACT, SYLVANIA SENT TO TWENTY-ONE COMPANIES A REQUEST FOR FIRM FIXED-PRICE BIDS, INCLUDING A MANAGEMENT PROPOSAL, A TECHNICAL PROPOSAL AND A COST PROPOSAL, FOR THE INSTALLATION OF APPROXIMATELY 1,050 MILES OF CABLE IN CONNECTION WITH MINUTEMAN WING VI. IN ANSWER TO THE REQUEST, SEVEN COMPANIES SUBMITTED PROPOSALS WHICH WERE EVALUATED BY A NINE-MAN SYLVANIA TEAM DIVIDED INTO THREE GROUPS OF THREE MEN TO A GROUP, EACH GROUP OF WHICH WAS RESPONSIBLE FOR EVALUATING ONE OF THE THREE TYPES OF PROPOSALS, I. E., MANAGEMENT, TECHNICAL, AND COST, WHICH WAS TO ACCOMPANY EACH BID. THE PROCEDURE WHICH WAS EMPLOYED WAS THAT WITHIN EACH GROUP EACH TEAM MEMBER MADE AN INDEPENDENT EVALUATION OF THE PROPOSAL ASSIGNED TO THE GROUP FOR EVALUATION AND GRADED THE PROPOSAL BASED UPON FACTORS AND POINTS THAT HAD BEEN ESTABLISHED BY SYLVANIA AND APPROVED FOR USE BY THE AIR FORCE BEFORE THE REQUEST FOR PROPOSALS WAS ISSUED. THE INDEPENDENT SCORES WERE SUBMITTED TO AND COMPILED BY A TENTH SYLVANIA EMPLOYEE WHO TOTALED THEM AND AVERAGED THEM OUT FOR EACH TYPE OF PROPOSAL SUBMITTED BY EACH PROPONENT. THE SEPARATE AVERAGE SCORES WERE TOTALED TO ARRIVE AT A COMPOSITE SCORE FOR EACH PROPONENT.

UNDER THE PROCEDURES ESTABLISHED, IT WAS POSSIBLE FOR A PROPONENT TO ACCUMULATE 1,000 POINTS, 200 HAVING BEEN ESTABLISHED FOR THE MANAGEMENT PROPOSAL, 300 FOR THE TECHNICAL PROPOSAL AND 500 FOR THE COST PROPOSAL. AS A RESULT OF THE EVALUATION, AMF/THOMAS RANKED FIRST WITH A COMPOSITE SCORE OF 637.5 AND HOOD RANKED SECOND WITH 602.9. BASED UPON THIS EVALUATION, SYLVANIA PROPOSED TO CONTRACT WITH AMF/THOMAS. THE LETTER CONTRACT PROVIDES THAT SYLVANIA SHALL GIVE ADVANCE NOTICE TO AND RECEIVE WRITTEN CONSENT FROM THE AIR FORCE CONTRACTING OFFICER PRIOR TO ENTERING INTO ANY SUBCONTRACT IN EXCESS OF $25,000. ACCORDINGLY, SYLVANIA SUBMITTED ITS SOURCE SELECTION TO THE CONTRACTING OFFICER WHO AFTER A REVIEW OF THE EVALUATION AND DISCUSSIONS WITH SYLVANIA AUTHORIZED IT TO COMPLETE NEGOTIATIONS WITH AMF/THOMAS. FORMAL APPROVAL OF THE SUBCONTRACT ITSELF IS UNDERSTOOD TO HAVE BEEN WITHHELD PENDING DISPOSITION OF THE HOOD PROTEST.

YOU HAVE PROTESTED THE FACT THAT THE AWARD WAS NOT MADE TO HOOD. IT IS TRUE, AS YOU HAVE INDICATED, THAT HOOD'S COST PROPOSAL OF $2,572,457 WAS THE LOWEST RECEIVED AND WAS LOWER THAN AMF/THOMAS BY SOME $95,838 AND THAT HOOD HAS HAD PRIOR EXPERIENCE IN THE KIND OF WORK REQUIRED BY THE CONTRACT AND THAT IT INDICATED IN ITS BID, AS IT WAS INVITED TO DO IN THE REQUEST FOR PROPOSALS, THAT THE CABLE SYSTEM TO BE LAID DOWN WOULD REQUIRE AN ESTIMATED 905 SPLICE CASES INSTEAD OF THE 1,700 SPLICE CASES WHICH THE STATEMENT OF WORK IN THE REQUEST FOR PROPOSALS ESTIMATED MIGHT BE NEEDED. HOWEVER, THE SUBJECT PROCUREMENT IS A NEGOTIATED PROCUREMENT AND WHETHER SUCH A PROCUREMENT IS CONDUCTED DIRECTLY BY THE GOVERNMENT OR BY A PRIME CONTRACTOR OF THE GOVERNMENT, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING WHICH REQUIRE AWARD TO BE MADE TO THE LOWEST RESPONSIBLE AND RESPONSIVE BIDDER ARE NOT FOR APPLICATION. THAT SUCH RULES WERE NOT INTENDED TO APPLY TO THE IMMEDIATE PROCUREMENT WAS MADE MANIFEST BY THE SECTION IN THE REQUEST FOR PROPOSALS, HEADED "AWARD," WHICH INDICATES THAT PRICE, RESPONSIBILITY AND RESPONSIVENESS ARE NOT THE ONLY FACTORS WHICH WOULD BE CONSIDERED. IN THE LANGUAGE OF THE REQUEST FOR PROPOSALS,"ANY AWARD MADE UNDER THIS RFP SHALL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THIS RFP WILL BE MOST ADVANTAGEOUS TO SYLVANIA AND/OR THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' TO PROVIDE FOR EVALUATION OF ALL FACTORS WHICH WERE DEEMED IMPORTANT, SYLVANIA, AS PROCUREMENT AGENCIES OF THE GOVERNMENT HAVE DONE, DEVISED A POINT EVALUATION SYSTEM WHICH WAS SUBMITTED TO AND APPROVED BY THE AIR FORCE. WHILE IT MIGHT HAVE BEEN PREFERABLE TO INCLUDE IN THE REQUEST FOR PROPOSALS, A STATEMENT OF THE WEIGHT TO BE ASSIGNED EACH AREA OF THE PROPOSALS, SO THAT THE PROPONENT WOULD HAVE BEEN IN A BETTER POSITION TO MAKE INFORMED AND REALISTIC PROPOSALS IN THE LIGHT OF THE RELATIVE IMPORTANCE ATTACHED TO EACH FACTOR, THE FAILURE TO HAVE DONE SO IS NOT SO IMPROPER AS TO VITIATE THE POINT SYSTEM WHICH WAS UTILIZED. B-147394, SEPTEMBER 4, 1962; B 149330, OCTOBER 10, 1962; B-149901, JANUARY 10, 1963; AND B-150001, MAY 15, 1963. IN THAT CONNECTION, IN B-149344, DECEMBER 26, 1962, IT WAS STATED:

"IT IS OBVIOUS THAT THE OFFEROR'S PRICE IS MORE SIGNIFICANT TO THE GOVERNMENT IN THE CASE OF A NEGOTIATED FIXED-PRICE CONTRACT THAN IN THE CASE OF A CPFF TYPE CONTRACT. BUT IN ANY NEGOTIATED PROCUREMENT PRICE IS ONLY ONE FACTOR WHICH ENTERS INTO THE AWARD DETERMINATION. WE DO NOT FIND THAT IT WAS IMPROPER TO UTILIZE A POINT EVALUATION SYSTEM FOR THE PURPOSE OF AWARD SELECTIONS IN THIS CASE. AND, WHILE WE FEEL THAT ADVANCE DISCLOSURE TO OFFERORS OF THE RELATIVE IMPORTANCE OF THE EVALUATION FACTORS IS DESIRABLE WE DO NOT FIND THAT THE AWARD PROCEDURE WAS CONDUCTED CONTRARY TO STATUTE OR REGULATION.'

THE STATEMENT BY HOOD IN ITS PROPOSAL THAT 905 SPLICE CASES WOULD BE REQUIRED HAD AN ADVERSE EFFECT IN THE EVALUATION OF THE TECHNICAL AND COST PROPOSALS SUBMITTED BY THE COMPANY. YOUR POSITION IS THAT THE STATEMENT OF REDUCED QUANTITIES SHOULD HAVE HAD A POSITIVE INSTEAD OF A NEGATIVE EFFECT. HOWEVER, SYLVANIA ESTIMATED THAT THERE WOULD BE ABOUT 1,700 SPLICE CASES NEEDED AND THE AIR FORCE APPARENTLY DOES NOT DISAGREE WITH THAT ESTIMATE. IN THE CIRCUMSTANCES, IT APPEARS THAT SYLVANIA'S ESTIMATE MAY HAVE BEEN REASONABLE AND IT DOES NOT APPEAR UNREASONABLE FOR THE EVALUATORS TO HAVE TREATED HOOD'S STATEMENT OF A REDUCED QUANTITY OF SPLICE CASES AS SHOWING SOME LACK OF APPRECIATION FOR THE WORK TO BE REQUIRED UNDER THE IMMEDIATE REQUEST FOR PROPOSALS.

YOU HAVE SUGGESTED THAT SYLVANIA MAY HAVE HAD AN ULTERIOR MOTIVE IN RATING THE HOOD PROPOSAL AS IT DID. YOU INDICATE THAT ON OTHER MISSILE WINGS HOOD HAS WORKED WITH ANOTHER COMPANY WHICH IS CURRENTLY IN LITIGATION WITH SYLVANIA AND YOU FEEL THAT HOOD WAS NOT SELECTED TO ASSURE THAT THE COMPANY IN LITIGATION WOULD HAVE NO PART OF THE WORK. HOWEVER, THERE IS NOTHING IN THE INFORMATION WHICH HAS BEEN PRESENTED TO US WHICH POSITIVELY ESTABLISHES THAT SYLVANIA HAD THE MOTIVE ATTRIBUTED TO IT. MOREOVER, IT IS NOT THE FUNCTION OF OUR OFFICE TO TECHNICALLY EVALUATE BIDS AND PROPOSALS OR TO MAKE AN INDEPENDENT DETERMINATION WHETHER HOOD SHOULD HAVE RATED FIRST IN THE POINT EVALUATION. B-150507, MARCH 29, 1963.

YOU HAVE REFERRED TO STATEMENTS OF THIS OFFICE IN 36 COMP. GEN. 311 AND 41 COMP. GEN. 424 THAT THE CONTRACTING OFFICER SHOULD NOT APPROVE SUBCONTRACTS ENTERED INTO BY A PRIME CONTRACTOR IF THE SUBCONTRACTS WOULD BE PREJUDICIAL TO THE INTERESTS OF THE GOVERNMENT, AND YOU HAVE INDICATED THAT IN VIEW OF THE PRICE DIFFERENCE BETWEEN THE HOOD PROPOSAL AND THE AMF/THOMAS PROPOSAL, IT WOULD NOT BE IN THE GOVERNMENT'S INTEREST TO APPROVE THE SUBCONTRACT AWARDED THE LATTER FIRM. HOWEVER, THE ORIGINAL AMF/THOMAS PROPOSAL WHICH YOU USE AS A COMPARISON WAS NEGOTIATED DOWNWARD TO $2,565,000 WHICH IS $7,457 LOWER THAN THE PRICE WHICH HAS BEEN PROPOSED BY HOOD. IN THAT RESPECT, THE HOOD PRICE APPEARS TO BE LESS FAVORABLE THAN THE AMF/THOMAS PRICE. WHILE IT IS TRUE THAT THE LATTER PRICE WAS NEGOTIATED UP TO $2,795,463 BY REASON OF CHANGES PRICED AT $230,463 TO COVER A CHANGE IN TERMINATION OF THE CABLE AND REQUIREMENT FOR LARGER SPLICE PITS, AND IT MIGHT HAVE BEEN MORE DESIRABLE TO RECEIVE COMPETITIVE PRICES AND INCLUDE SUCH INFORMATION IN AN EVALUATION OF ALL PROPONENTS ACROSS THE BOARD, PRICE WEIGHING HEAVILY IN THE UTILIZED POINT EVALUATION SYSTEM, THE FACT REMAINS THAT THAT WAS NOT DONE SO THAT THERE IS NO WAY OF KNOWING NOW THAT HOOD WOULD HAVE BEEN EVALUATED AS THE BEST SOURCE TO CONTRACT WITH HAD SUCH INFORMATION BEEN INCLUDED IN THE EVALUATION.

YOU HAVE INDICATED THAT YOU HAVE A SERIOUS QUESTION WHETHER THE UPWARD ADJUSTMENT SHOULD HAVE BEEN ANY MORE THAN $34,000. FIRST, YOU STATE THAT WHILE THE CHANGE AUTHORIZED TEMPORARY INSTALLATION OF THE CABLE 800 FEET FROM THE POINT OF CONNECTION RATHER THAN 300 FEET AS ORIGINALLY PROVIDED, THE CABLE WOULD ULTIMATELY HAVE TO BE INSTALLED TO THE CONNECTION POINT SO THAT THERE WOULD NOT BE ANY INCREASED COST TO THE CONTRACTOR. SECOND, YOU STATE THAT ASSUMING THERE ARE TO BE 1,700 SPLICE CASE PITS WHICH ARE TO BE ENLARGED YOU DO NOT UNDERSTAND HOW IT COULD POSSIBLY ADD TO THE COST MORE THAN $20 A SPLICE PIT OR MORE THAN A TOTAL OF $34,000. BY COPY OF THIS LETTER TO THE SECRETARY OF THE AIR FORCE, WE ARE BRINGING THIS MATTER TO THE ATTENTION OF THE AIR FORCE FOR ITS CONSIDERATION IN THE NEGOTIATION OF PRICE FOR THE DEFINITIVE CONTRACT EVENTUALLY TO BE AWARDED TO SYLVANIA. IN THAT CONNECTION, IT SHOULD BE NOTED THAT THE CLAUSE IN THE LETTER CONTRACT, PRESCRIBED BY ASPR 3-903.1 AND PROVIDING FOR THE APPROVAL BY THE CONTRACTING OFFICER OF A SUBCONTRACT, STIPULATES THAT NO CONSENT BY THE ACCEPTABILITY OF ANY SUBCONTRACT PRICE OR OF ANY AMOUNT PAID THEREUNDER, UNLESS SPECIFICALLY STATED.

ACCORDINGLY, IN VIEW OF THE FOREGOING, THE PROTEST OF THE HOOD CORPORATION IS DENIED.

PURSUANT TO YOUR REQUEST, EXHIBITS "A" AND "B" WHICH ACCOMPANIED YOUR LETTER OF MAY 7, 1964, ARE RETURNED.