B-154395, SEP. 4, 1964

B-154395, SEP. 4, 1964

TO KALPIN, ZUCHERMAN AND TOBIN:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 27, 1964, WITH ENCLOSURE, ADDRESSED TO THE GENERAL SERVICES ADMINISTRATION PROTESTING THE AWARD OF A CONTRACT TO ESCALANTE GARDENS UNDER REQUEST FOR PROPOSAL (RFP) NO. 02-601- SER-64-934. AS WE ADVISED IN OUR LETTER OF JUNE 16, 1964, THE MATTER WAS TRANSMITTED HERE BY THE GENERAL SERVICES ADMINISTRATION FOR CONSIDERATION AND REPLY.

IT IS REPORTED THAT THE SUBJECT RFP WAS ISSUED BY DAVIS-MONTHAN AIR FORCE BASE, ARIZONA, ON APRIL 14, 1964, WITH A CLOSING DATE OF MAY 5, 1964, AND REQUESTED PROPOSALS FOR PROVIDING BILLETING SERVICES FOR STUDENT OFFICERS OF THE 4453RD COMBAT CREW TRAINING WING, DAVIS MONTHAN AIR FORCE BASE, FOR THE FISCAL YEAR 1965. THE CONTRACTING OFFICER, WITH THE APPROVAL OF THE COMMANDING OFFICER, ISSUED A DETERMINATIONS AND FINDINGS THAT THIS PROCUREMENT WAS FOR SERVICES FOR WHICH IT WAS IMPRACTICAL TO SECURE COMPETITION BY MEANS OF FORMAL ADVERTISING, AND THAT NEGOTIATION OF A CONTRACT FOR THESE SERVICES WAS AUTHORIZED PURSUANT TO 10 U.S.C. 2304 (A) (10) AND ASPR 3-210.2 (XIII).

FOUR PROPOSALS WERE RECEIVED IN RESPONSE TO THE GOVERNMENT SOLICITATION. OF THE FOUR PROPOSALS RECEIVED, TWO WERE DECLARED BEYOND THE ACCEPTABLE RANGE, QUALITATIVE AND PRICE-WISE. YOUR ORGANIZATION OFFERED THE CRAYCROFT GARDENS APARTMENTS FOR THE BILLETING SERVICE AT NO OCCUPIED RATE OF $1.98 PER MAN-DAY AND AN UNOCCUPIED RATE OF $122 PER MAN-DAY. THE OTHER ORGANIZATION, WHOSE PROPOSAL WAS CONSIDERED IN THE ACCEPTABLE RANGE, OFFERED ESCALANTE GARDEN AT AN OCCUPIED RATE OF $2.46 PER MAN-DAY AND AN UNOCCUPIED RATE OF $1.50 PER MAN-DAY. THE REQUEST FOR PROPOSALS ESTIMATED THE GOVERNMENT'S NEEDS AT 66,000 MAN-DAYS OCCUPIED BILLETS AND 1,000 MAN DAYS UNOCCUPIED BILLETS FOR THE FISCAL YEAR 1965.

FOLLOWING THE OPENING OF PROPOSALS ON MAY 5, 1964, AT AN EVALUATION AND NEGOTIATION DISCUSSION WITH CRAYCROFT, IT WAS REVEALED THAT CRAYCROFT'S PROPOSAL CONTAINED A DEFICIENCY IN TELEPHONE SERVICE THAT DID NOT MEET THE REQUEST FOR PROPOSAL REQUIREMENTS. CRAYCROFT WAS REQUESTED TO REVISE ITS PROPOSAL TO INCLUDE TELEPHONE SERVICE TO EACH APARTMENT. THE EVALUATION AND REVIEW OF THE PROPOSAL OF ESCALANTE GARDENS REVEALED THE INCLUSION OF TOO MANY FEATURES OVER AND BEYOND THOSE CALLED FOR IN THE SPECIFICATIONS, SUCH AS TELEVISION FOR EACH APARTMENT, BARBEQUE PITS, PATIO CHAIRS AND A GUARANTEE OF 80,000 MAN DAYS. ESCALANTE WAS REQUESTED TO ELIMINATE THE EXTRAS AND SUBMIT A REVISED PROPOSAL. BOTH CRAYCROFT AND ESCALANTE WERE GIVEN UNTIL MAY 7, 1964, TO SUBMIT REVISED PROPOSALS. BY LETTER DATED MAY 5, 1964, CRAYCROFT REVISED ITS ORIGINAL BID TO INCLUDE TELEPHONE SERVICE TO EACH APARTMENT AT $2.01, $2.02, AND $2.03 FOR A 4-PARTY, 2-PARTY AND PRIVATE LINE, RESPECTIVELY, WITH NO CHANGE IN THE UNOCCUPIED RATE. THE REVISED ESCALANTE PROPOSAL IN ITS LETTER OF MAY 6, 1964, WITH THE "EXTRAS" EXCLUDED WAS $2.02 WITH A PRIVATE TELEPHONE LINE. THE USING AGENCY CONSIDERED IT ADVISABLE TO HAVE PRIVATE TELEPHONE SERVICE. THE PRICES SUBMITTED IN THE REVISED PROPOSALS WERE CONSIDERED REASONABLE AND NO FURTHER NEGOTIATIONS TOWARD OBTAINING FURTHER PRICE REDUCTIONS WERE CONSIDERED ADVISABLE.

BASED ON THE REVISED MONETARY PROPOSAL AND OTHER FACTORS IT WAS DECIDED TO ACCEPT THE ESCALANTE PROPOSAL. THE FACTORS CONSIDERED IN ARRIVING AT THE RECOMMENDED AWARD TO ESCALANTE WERE AS FOLLOWS:

(A) THE FACTORS EMPLOYED BY ESCALANTE IN REVISING ITS PRICE WERE ANALYZED AND CONSIDERED PROPER.

(B) BY ACCEPTANCE OF ESCALANTE'S PROPOSAL OF $2.02, THE TOTAL PRICE WOULD BE $133,320, PLUS $1,500 FOR UNOCCUPIED ESTIMATE, TOTALLING $134,820, LESS 1/2 OF 1 PERCENT CASH DISCOUNT, $674.10; WITH A GRAND TOTAL OF $134,145.90. THIS COMPARED TO CRAYCROFT'S REVISED PROPOSAL OF $133,980 FOR COMPARABLE SERVICE, PLUS $1,220 FOR UNOCCUPIED ESTIMATE, WITH NO CASH DISCOUNT AND A GRANT TOTAL OF $134,200.

(C) IN ADDITION TO MONETARY CONSIDERATION, ESCALANTE'S PROPOSAL WAS CONSIDERED MORE DESIRABLE SINCE (1) IT AFFORDED MORE PRIVACY AND ISOLATION FROM TRAFFIC, BUSINESS AND RESIDENTIAL AREAS THAN THE CRAYCROFT PROPOSAL, WHICH IS LOCATED IN A CENTRALIZED BUSINESS DISTRICT AND ADJACENT TO HEAVY TRAFFIC AREA; (2) QUIET SURROUNDINGS ARE MORE CONDUCIVE TO STUDY, REST AND RELAXATION OF STUDENT OFFICERS; (3) SEPARATION OF BACHELOR STUDENTS FROM THOSE APARTMENTS HOUSING FAMILIES WAS CONSIDERED DESIRABLE, SINCE STUDENTS WOULD BE HOUSED IN SEPARATE COURTS APART FROM OTHERS; (4) INCLUSION OF NEW AUTOMATIC WASHERS IN EACH APARTMENT IS CONSIDERED BENEFICIAL. THE CRAYCROFT PROPOSAL PROVIDED FIVE COIN OPERATED WASHERS AND DRYERS TO BE SHARED BY OTHER OCCUPANTS; AND (5) ADDITIONAL OUTSIDE STORAGE FACILITIES AND ENCLOSED PATIO FOR EACH APARTMENT.

UPON BEING ADVISED THAT ITS PROPOSAL WOULD NOT BE ACCEPTED, CRAYCROFT IMMEDIATELY TOOK EXCEPTION, AND REQUESTED THAT ITS PROPOSAL BE REDUCED TO $2.02 INCLUDING TELEPHONE SERVICE. CRAYCROFT WAS THEN INFORMED THAT ANY REVISIONS ALLOWED WOULD HAVE TO CORRESPONDINGLY BE ALLOWED HIS COMPETITOR, RESULTING IN A "PRICE WAR" OR "AUCTIONING" PROCESS. CRAYCROFT SUBSEQUENTLY REQUESTED THAT ITS PROPOSAL BE REVISED TO $1.98 INCLUDING TELEPHONE SERVICE, OR THAT ALL PRICES REVERT TO THE ORIGINAL PROPOSALS ON BID OPENING DATE.

BY LETTER DATED MAY 28, 1964 OF THE CONTRACTING OFFICER, CRAYCROFT WAS ADVISED, IN REPLY TO ITS WRITTEN PROTEST, AS FOLLOWS:

"IT IS APPARENT FROM YOUR PRECONCEIVED NOTIONS REGARDING WRONGDOING ON OUR PART THAT THIS MAY TO A GREAT EXTENT BE DUE TO YOUR UNFAMILIARITY WITH PROCUREMENT REGULATIONS AND PROCEDURE. I SHALL BRIEFLY EXPLAIN THE TWO PRINCIPAL METHODS OF COMPETITIVE PROCUREMENT:

"A. FORMAL ADVERTISING, OR SEALED BID METHOD, SETS AN HOUR AND DATE FOR OPENING OF BIDS AFTER WHICH NO CHANGE TO BID PRICES OR REVISIONS THERETO ARE POSSIBLE, BARRING MINOR DEFICIENCIES OF FORM NOT SUBSTANCE.

"B. NEGOTIATION PROCEDURES WHICH WERE UTILIZED IN THIS INSTANCE CONTEMPLATE FURTHER NEGOTIATION, EXPLORATION AFTER OPENING IF REQUIRED. (SEE NOTES TO BIDDERS, CLAUSE 6, CONDITIONS OF PROPOSAL ON PAGE 6 OF REQUEST FOR PROPOSAL). THIS REFERENCE IS QUOTED IN PART: "AWARD. AWARD WILL NOT BE MADE WITHOUT FURTHER EXPLORATION AND DISCUSSION PRIOR TO AWARD.' THUS IN DIRECT OPPOSITION TO PRINCIPLES OF ADVERTISING, NEGOTIATION CONTEMPLATES FURTHER DISCUSSION, EXPLORATION, NEGOTIATION OR REVISION AS WAS DONE IN THIS INSTANCE.

"FURTHERMORE IN APPRAISING YOU OF YOUR STATUS AFTER SUCCESSFUL PROPOSER WAS DETERMINED, YOU WERE INFORMED OF YOUR COMPETITOR'S ORIGINAL PROPOSAL AND REVISED PROPOSAL, WHICH DID NOT HAVE TO BE DISCLOSED. ONLY THE ACCEPTED PROPOSAL NEED BE DIVULGED, AND ONLY AFTER AWARD. THE FACT THAT YOU WERE INFORMED OF ALL THIS WOULD TEND TO CONFIRM THE OPENHANDED METHOD EMPLOYED. HAD WE BEEN DISPOSED TO CONCEAL, HIDE OR WITHHOLD ANY INFORMATION, THIS COURTESY WOULD HAVE NOT BEEN EXTENDED.

"AS TO YOUR FACILITIES, THESE WERE INSPECTED ON 7 APRIL 64 AND FOUND SUITABLE. THIS HAS NEVER BEEN AN ISSUE, AND YOUR SWIMMING POOL WAS A DESIRABLE FEATURE BUT WAS NOT CALLED FOR IN SPECIFICATIONS NOR COULD SUCH BE A DECIDING FACTOR.'

IT APPEARS TO BE YOUR CONTENTION THAT YOUR ORIGINAL PROPOSAL, AS THE LOWEST ONE OFFERED, SHOULD BE ACCEPTED, AND THE CONTRACT AWARDED FOR YOUR CRAYCROFT GARDENS.

PARAGRAPHS 3-805 (A) AND (B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) CONCERNING NEGOTIATED CONTRACTS, PROVIDE IN PART AS FOLLOWS:

"/A) AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, * * *

"/B) WHENEVER NEGOTIATIONS ARE CONDUCTED WITH MORE THAN ONE OFFEROR, NO INDICATION SHALL BE MADE TO ANY OFFEROR OF A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION SINCE SUCH PRACTICE CONSTITUTES AN AUCTION TECHNIQUE WHICH MUST BE AVOIDED. AFTER RECEIPT OF PROPOSALS NO INFORMATION REGARDING THE NUMBER OF IDENTITY OF THE OF OFFERORS PARTICIPATING IN THE NEGOTIATIONS SHALL BE MADE AVAILABLE TO THE PUBLIC OR TO ANYONE WHOSE OFFICIAL DUTIES DO NOT REQUIRE SUCH KNOWLEDGE. WHENEVER NEGOTIATIONS ARE CONDUCTED WITH SEVERAL OFFERORS, WHILE SUCH NEGOTIATIONS MAY BE CONDUCTED SUCCESSIVELY, ALL OFFERORS SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS * * * SHALL BE OFFERED AN EQUITABLE OPPORTUNITY TO SUBMIT SUCH PRICE, TECHNICAL, OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM THE NEGOTIATIONS. ALL SUCH OFFERORS SHALL BE INFORMED OF THE SPECIFIED DATE (AND TIME IF DESIRED) OF THE CLOSING OF NEGOTIATIONS AND THAT ANY REVISIONS TO THEIR PROPOSALS MUST BE SUBMITTED BY THAT DATE * *

WE HAVE CAREFULLY REVIEWED THE MINUTES OF CONFERENCES, CORRESPONDENCE, AND REPORTS IN THIS MATTER AND FIND NO ERROR IN THE PROCUREMENT PROCEDURES. THE PROCUREMENT WAS IN ACCORD WITH THE REGULATIONS CONCERNED IN NEGOTIATED CONTRACT MATTERS.

ACCORDINGLY, IN VIEW OF THE FOREGOING WE PERCEIVE NO OBJECTION TO THE ADMINISTRATIVE ACTION TAKEN IN THE MATTER.