B-155771, MAR. 11, 1965

B-155771: Mar 11, 1965

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THIS LRFTP WAS ISSUED BY THE AIR FORCE SYSTEMS COMMAND. AS THE FIRST STEP OF A TWO-STEP ADVERTISED PROCUREMENT WHEREUNDER TECHNICAL PROPOSALS WERE SOLICITED FOR THE FURNISHING OF 72 AUXILIARY POWER UNITS. OFFERORS WERE PERMITTED TO SUBMIT MULTIPLE TECHNICAL PROPOSALS PRESENTING DIFFERENT BASIC APPROACHES FOR MEETING THE NEEDS OF THE AIR FORCE. OFFERORS HAVING UNSUCCESSFUL PROPOSALS WILL BE SO NOTIFIED. EXPENSIVE EXHIBITS ARE NEITHER REQUIRED NOR DESIRED. IT IS REALIZED THAT ALL OF THE TECHNICAL FACTORS CANNOT BE DETAILED IN ADVANCE. THREE TECHNICAL PROPOSALS WERE RECEIVED. THESE PROPOSALS WERE EVALUATED BY TECHNICALLY QUALIFIED AIR FORCE PERSONNEL. YOUR TWO PROPOSALS WERE FOUND TO BE NOT TECHNICALLY ACCEPTABLE IN THAT UNDER YOUR PROPOSALS A MAJOR REDESIGN OF THE POWER UNITS WOULD BE REQUIRED NOTWITHSTANDING THAT EXHIBIT "A" PROVIDED THAT "COMPATIBILITY WITH EXISTING AIRFRAME CONFIGURATION" WOULD BE A MAJOR FACTOR IN THE TECHNICAL EVALUATION.

B-155771, MAR. 11, 1965

TO THE GARRETT CORPORATION:

BY LETTER DATED DECEMBER 10, 1964, WITH ENCLOSURES, YOU PROTESTED AGAINST THE CANCELLATION OF LETTER REQUEST FOR TECHNICAL PROPOSAL (LRFTP) NO. WE-5 -2835-538, AND THE CONTEMPLATED PROCUREMENT OF THE END ITEM ON A NEGOTIATED BASIS.

THIS LRFTP WAS ISSUED BY THE AIR FORCE SYSTEMS COMMAND, AERONAUTICAL SYSTEMS DIVISION, ON AUGUST 28, 1964, AS THE FIRST STEP OF A TWO-STEP ADVERTISED PROCUREMENT WHEREUNDER TECHNICAL PROPOSALS WERE SOLICITED FOR THE FURNISHING OF 72 AUXILIARY POWER UNITS. BY AMENDMENT NO. 1 TO THE LRFTP, OFFERORS WERE PERMITTED TO SUBMIT MULTIPLE TECHNICAL PROPOSALS PRESENTING DIFFERENT BASIC APPROACHES FOR MEETING THE NEEDS OF THE AIR FORCE. AS RELEASED TO OFFERORS, THE LRFTP ADVISED THAT:

1. THE PROCUREMENT WOULD BE ACCOMPLISHED IN TWO STEPS; THE SOLICITATION, SUBMISSION AND EVALUATION OF DETAILED TECHNICAL PROPOSALS WITHOUT PRICING TO DETERMINE THE ACCEPTABILITY OF THE PRODUCTS OFFERED; AND THE ISSUANCE OF A FORMAL INVITATION ONLY TO OFFERORS HAVING ACCEPTABLE TECHNICAL PROPOSALS;

2. REQUIREMENTS FOR THE TECHNICAL PROPOSALS SET FORTH IN EXHIBIT "A" SHOULD BE STRICTLY COMPLIED WITH IN ALL RESPECTS; AND

3. OFFERORS HAVING UNSUCCESSFUL PROPOSALS WILL BE SO NOTIFIED.

SPECIFICALLY, EXHIBIT "A" TO THE LRFTP PROVIDED IN PART:

"YOUR TECHNICAL PROPOSAL, SUBMITTED IN RESPONSE TO THIS LETTER REQUEST, SHALL BE PREPARED SIMPLY AND ECONOMICALLY, PROVIDING STRAIGHTFORWARD, CONCISE DELINEATION OF YOUR CAPABILITIES TO SATISFACTORILY PERFORM THE CONTRACT BEING SOUGHT. THE PROPOSAL, THEREFORE, SHALL BE PRACTICAL, LEGIBLE, CLEAR AND COHERENT. THE USE OF ELABORATE FORMATS AND BINDERS, COLOR WHERE BLACK AND WHITE WOULD SUFFICE, AND EXPENSIVE EXHIBITS ARE NEITHER REQUIRED NOR DESIRED. YOUR TECHNICAL PROPOSAL SHOULD BE SPECIFIC AND COMPLETE. IT IS REALIZED THAT ALL OF THE TECHNICAL FACTORS CANNOT BE DETAILED IN ADVANCE, BUT YOUR PROPOSAL SHALL DEMONSTRATE A THOROUGH UNDERSTANDING OF THE REQUIREMENTS AND A LOGICAL PLAN OF SOLVING THE PROBLEMS AND SHALL INCLUDE, WHERE APPLICABLE, SKETCHES, DRAWINGS, NEW TECHNIQUES AND A COMPLETE EXPLANATION OF THE PROCEDURES YOU PROPOSE TO FOLLOW. THE TECHNICAL PROPOSAL SHALL BE SUBMITTED IN TRIPLICATE. SHALL NOT CONTAIN ANY REFERENCE TO PRICES SO THAT IT MAY BE EVALUATED STRICTLY ON THE BASIS OF TECHNICAL MERIT.'

THREE TECHNICAL PROPOSALS WERE RECEIVED, ONE FROM THE SOLAR DIVISION OF THE INTERNATIONAL HARVESTER COMPANY, AND THE OTHER TWO FROM THE AIRESEARCH MANUFACTURING COMPANY OF ARIZONA, A DIVISION OF YOUR CORPORATION. CONTEMPLATED BY PARAGRAPH 2-503.1 (C) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THESE PROPOSALS WERE EVALUATED BY TECHNICALLY QUALIFIED AIR FORCE PERSONNEL. YOUR TWO PROPOSALS WERE FOUND TO BE NOT TECHNICALLY ACCEPTABLE IN THAT UNDER YOUR PROPOSALS A MAJOR REDESIGN OF THE POWER UNITS WOULD BE REQUIRED NOTWITHSTANDING THAT EXHIBIT "A" PROVIDED THAT "COMPATIBILITY WITH EXISTING AIRFRAME CONFIGURATION" WOULD BE A MAJOR FACTOR IN THE TECHNICAL EVALUATION. WITH PARTICULAR REFERENCE TO THE LAST TWO PAGES OF YOUR LETTER OF PROTEST WHICH DEAL WITH THE TECHNICAL ASPECTS INVOLVED IN THE EVALUATION OF YOUR PROPOSALS, THE AIR FORCE HAS ADVISED:

"/3) DURING THE DISCUSSIONS OF THE PROPOSAL 6, 9, 12 AND 13 NOV. 1964 BETWEEN AIRESEARCH AND THE AIR FORCE, 2 POINTS OF THE REJECTION WERE CLARIFIED AND AIRESEARCH EXPRESSED A WILLINGNESS TO MODIFY THEIR EQUIPMENT ON TWELVE POINTS TO MEET THE SPECIFICATION REQUIREMENTS. AIRESEARCH CONCURRED THAT 3 POINTS OF THE REJECTION WOULD REQUIRE AIRCRAFT MODIFICATION. ON THESE THREE POINTS OF REJECTION, AIRESEARCH REMAINED FIRM IN THEIR DESIGN AS PROPOSED. CONFIRMATION OF THESE RESULTS IN WRITING FROM THE CONTRACTOR WERE REQUESTED IN ORDER THAT A POSITIVE DECISION BY THE GOVERNMENT COULD BE MADE. AT THE CONCLUSION OF THESE MEETINGS, THE GOVERNMENT AGREED TO PURSUE THE MATTER FURTHER AND ADVISE AIRESEARCH OF ITS FORMAL POSITION AT AN EARLY DATE. THAT THE GOVERNMENT AGREED TO INVESTIGATE THE MATTER FURTHER MAY HAVE LED TO THE UNWARRANTED OPTIMISTIC OUTLOOK BY AIRESEARCH AS EXPRESSED IN PARAGRAPHS 5 AND 6 OF THE PROTEST LETTER.

"/4) IN THE INTEREST OF MAINTAINING A COMPETITIVE ATMOSPHERE WITH REGARD TO THIS PROCUREMENT, THE GOVERNMENT WAS MOVED TO CONSIDER THE POSSIBILITY OF RESTRICTIVE REQUIREMENTS AND INVESTIGATE WITH THE USING ACTIVITY, THE ARMY MATERIEL COMMAND, THE POSSIBILITY OF DEVIATION FROM THEIR REQUIREMENTS IN THE AREAS OF THE THREE REJECTION POINTS REFERRED TO IN (3) ABOVE. HOWEVER, UPON INQUIRY TO THAT ACTIVITY RELATIVE TO THIS MATTER, THE PROCURING OFFICE WAS ADVISED THAT CHANGES PROPOSED WERE NOT ACCEPTABLE. IN THIS RESPECT, IT WAS NOT THE INTENT OF THE GOVERNMENT TO ACCEPT AIRESEARCH'S TECHNICAL PROPOSAL, HAD THE USING ACTIVITY AGREED TO THE CHANGES. RATHER, EACH SOURCE WOULD HAVE BEEN GRANTED AN OPPORTUNITY TO RESUBMIT PROPOSALS FOR THE REVISED REQUIREMENTS FOR WHICH A NEW OPENING DATE WOULD HAVE BEEN ESTABLISHED.

"/5) AIRESEARCH WAS ADVISED BY WIRE ON 3 DECEMBER 1964 AS A REPLY TO THEIR PROTEST THAT GOVERNMENT TECHNICAL REQUIREMENTS WOULD REMAIN UNCHANGED AND THEIR TECHNICAL PROPOSAL REMAINED UNACCEPTABLE BY REASON OF NOT MEETING SPECIFICATION REQUIREMENTS IN THE THREE AREAS PREVIOUSLY MENTIONED. NO FURTHER DISCUSSION WAS CONSIDERED NOR WARRANTED.

"/6) IT IS CONTENDED THAT AIRESEARCH HAD AMPLE OPPORTUNITY TO COMPLY FULLY WITH THE SPECIFICATION REQUIREMENTS IN ITS RESPONSE TO THE GOVERNMENT'S ORIGINAL REQUEST FOR TECHNICAL PROPOSALS. ACCEPTANCE OF AIRESEARCH'S OFFER TO COMPLY WITH THE SPECIFICATION REQUIREMENTS WOULD CONSTITUTE "LATE MODIFICATION" AND IS, OF COURSE, NOT PERMISSIBLE UNDER THE LATE TECHNICAL PROPOSAL PROVISION AND ASPR 2-503.1 (E) AND ASPR 3- 505. THIS POINT WAS NOT MADE TO AIRESEARCH SINCE AT NO TIME DURING THE REFERENCED DISCUSSION DID AIRESEARCH MAKE SUCH AN OFFER. IN FACT, AIRESEARCH MAINTAINED THAT TO COMPLY WITH THE SPECIFICATION REQUIREMENTS WOULD NECESSITATE A MAJOR REDESIGN OF THEIR PRESENT UNITS RESULTING IN A HIGHER PRICE TO THE GOVERNMENT AND A LESS FAVORABLE COMPETITIVE POSITION FOR THEMSELVES.

"C. WITH RESPECT TO PARAGRAPH 9 OF THE PROTEST LETTER, IT WOULD BE ARGUMENTATIVE TO STATE OTHER THAN THE DESIGN AS PROPOSED BY AIRESEARCH WAS FOUND BY THE EVALUATORS TO BE SUCH THAT IF ACCEPTED WOULD REQUIRE AIRFRAME MODIFICATIONS, THEREBY DENOTING INCOMPATIBILITY WITH THE EXISTING AIRFRAME CONFIGURATION.

"D. PARAGRAPHS 10, 11, 12 AND 13 OF THE PROTEST LETTER DEAL WITH THE ASPR REGULATIONS GOVERNING THE TWO-STEP FORMAL ADVERTISING PROCEDURES AND AIRESEARCH'S INTERPRETATION OF SAME. WE DO NOT PRESUME TO INTERPRET HERE THE ASPR REGULATIONS. IT IS OUR BELIEF THAT IN KEEPING WITH THE SPIRIT OF THE PROCEDURE, IT IS THE DUTY OF ALL CONCERNED TO ATTEMPT, CONSISTENT WITH THE REGULATIONS AND FAIRNESS TO ALL BIDDERS, TO SECURE MAXIMUM COMPETITION BY BRINGING TO AN ACCEPTABLE STATUS ALL MARGINAL PROPOSALS. THE PROPOSAL AS SUBMITTED BY AIRESEARCH WAS DETERMINED TO BE UNACCEPTABLE (AS OPPOSED TO MARGINAL) BASED ON THEIR DESIGN BEING CLEARLY IN CONFLICT WITH THE SPECIFICATION REQUIREMENTS AND UPON REEXAMINATION OF SUCH PROPOSAL WAS AGAIN DETERMINED TO BE UNACCEPTABLE. AS PROVIDED BY THE AFPI, FURTHER NEGOTIATIONS ARE REQUIRED OF ANY PROPOSAL IF ADDITIONAL INFORMATION OR CLARIFICATION IS REQUIRED AND THE PROPOSAL IS OTHERWISE TECHNICALLY SATISFACTORY. THE LATTER WAS NOT THE CASE HERE, BUT AIRESEARCH WAS NONETHELESS GIVEN ANOTHER OPPORTUNITY TO BE HEARD DURING THE SEVERAL DISCUSSIONS FOLLOWING ITS PROTEST TO THE CONTRACTING OFFICER. IT WAS THE INTENT OF THE PROCUREMENT ACTIVITY THAT SUCH DISCUSSIONS WOULD BE LIMITED TO A REVIEW OF THE UNACCEPTABLE PROPOSAL TO EXPLAIN WHY IT WAS UNACCEPTABLE. HOWEVER, SUCH DISCUSSIONS DEVELOPED INTO SOMETHING BEYOND THIS ORIGINAL INTENT. DURING THIS TIME AIRESEARCH WAS PERMITTED TO CLARIFY AND SUBMIT CHANGES TO ITS TECHNICAL PROPOSAL. THERE WAS, IN EFFECT, A COMPLETE RE-EVALUATION OF THE PROPOSAL. WHEN IT BECAME APPARENT TO THE PROCUREMENT ACTIVITY THAT THE PROPOSALS AS CHANGED DURING THE REFERENCE DISCUSSIONS WOULD STILL FALL SHORT OF THE TECHNICAL REQUIREMENTS AS OUTLINED IN THE REQUEST FOR TECHNICAL PROPOSALS, THE USING ACTIVITY WAS REQUESTED TO CONSIDER CHANGES IN ITS TECHNICAL REQUIREMENTS SO THAT AIRESEARCH COULD REMAIN IN COMPETITION FOR THIS PROCUREMENT. IT IS SUBMITTED, THEREFORE, THAT CONTRARY TO ITS CLAIM, AIRESEARCH WAS ACCORDED FULL OPPORTUNITY, AS PROVIDED IN THE APPLICABLE PROCUREMENT REGULATIONS, TO DISCUSS, CLARIFY AND FURTHER DOCUMENT ITS PROPOSAL. IN FACT, IT IS BELIEVED THAT THE RECORD JUSTIFIES THE CONCLUSION THAT THE PROCUREMENT ACTIVITY WAS EXTRAORDINARILY LIBERAL IN ITS CONSIDERATION OF THIS PROPOSAL.'

UPON REVIEW, WE FIND NO BASIS TO DISAGREE WITH THIS ADMINISTRATIVE STATEMENT.

IT IS TO BE NOTED THAT THE GOVERNMENT RESERVED THE RIGHT IN THE LRFTP TO NEGOTIATE WITH OFFERORS HAVING "MARGINAL" TECHNICAL PROPOSALS THAT MAY BECOME ACCEPTABLE TO MEET AIR FORCE REQUIREMENTS. HOWEVER, YOUR PROPOSALS WERE TECHNICALLY UNACCEPTABLE SINCE THEY DEVIATED MATERIALLY FROM THE REQUIREMENTS OF EXHIBIT "A.' IT IS WITH REFERENCE TO "MARGINAL" PROPOSALS THAT ASPR 2-503.1 (C) AUTHORIZES FURTHER ADMINISTRATIVE EFFORTS TO OBTAIN AN ACCEPTABLE PROPOSAL, BUT THAT REGULATION DOES NOT CONTEMPLATE CONTINUING EFFORTS BY AN OFFEROR OR ACTIONS BY THE GOVERNMENT CONTRACTING OFFICER TO CHANGE A PATENTLY NONRESPONSIVE PROPOSAL INTO ONE WHICH MIGHT EVENTUALLY BE REGARDED AS "MARGINAL.' SEE 40 COMP. GEN. 35; ID. 40; B- 153195, FEBRUARY 6, 1964. WE HAVE HELD THAT THE DETERMINATION OF THE ACCEPTABILITY OF TECHNICAL PROPOSALS IS VESTED IN THE PROCUREMENT AGENCY WHICH IS BEST QUALIFIED TO EVALUATE THEM AND, IN ACCORDANCE WITH WELL- ESTABLISHED PRECEDENT, WE WILL NOT QUESTION ITS DETERMINATION. 40 COMP. GEN. 40, 42. WE, THEREFORE, CONCLUDE THAT THE PROCUREMENT AGENCY PROPERLY REJECTED YOUR PROPOSALS.

SINCE THE FIRST STEP OF THIS PROCUREMENT RESULTED IN ONLY ONE ACCEPTABLE TECHNICAL PROPOSAL, THE PROCUREMENT AGENCY WAS AUTHORIZED UNDER ASPR 2- 503.1 (F) TO CANCEL THE LRFTP AND TO CONTINUE THE PROCUREMENT BY NEGOTIATION PROCEDURES PURSUANT TO 10 U.S.C. 2304 (A) (10), AS IMPLEMENTED BY ASPR 3-210.2 (III). IN VIEW OF THE REGULATORY AUTHORITY GRANTED TO THE PROCUREMENT AGENCY UNDER THESE CIRCUMSTANCES, WE PERCEIVE OF NO LEGAL BASIS UPON WHICH WE COULD QUESTION THE NEGOTIATION ..END :

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