B-156720, JUL. 27, 1965

B-156720, JUL. 27, 1965

TO N. C. WITBECK ASSOCIATES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 4, 1965, WITH ATTACHMENTS, PROTESTING ANY AWARD OF A CONTRACT UNDER ARMY MATERIAL COMMAND REQUEST FOR PROPOSALS NO. AMXDO-CSA-386. YOU STATE AS A BASIS FOR YOUR PROTEST THAT YOUR COMPANY IS FULLY QUALIFIED TO PERFORM THIS WORK, AND HAS OFFERED TO DO SO AT A FIRM FIXED PRICE OF $23,000 AS COMPARED TO THE HARBRIDGE HOUSE, INC., PROPOSAL OF $48,821.

THE PROCUREMENT WAS SYNOPSIZED ON MARCH 8 AND 10, 1965, FOR PREPARATION OF A MANUAL,"LOGISTICS - MATERIAL DEVELOPMENT MANAGEMENT.' THE CONTRACTING AGENCY IS THE HARRY DIAMOND LABORATORIES. TWELVE RESPONSES WERE RECEIVED WITH TEN OF THE TWELVE COMPANIES RESPONDING BEING EVALUATED AS POTENTIALLY CAPABLE OF PERFORMANCE. THESE TEN COMPANIES PLUS THOSE ON THE BIDDER'S LIST, A TOTAL OF FIFTEEN, WERE INVITED TO SUBMIT PROPOSALS. THE REQUEST FOR PROPOSALS (RFP) CONTAINED AN INVITATION TO ATTEND A PRENEGOTIATION MEETING AT THE U.S. ARMY LOGISTICS MANAGEMENT CENTER. YOUR COMPANY WAS NOT AMONG THE SEVEN WHOSE REPRESENTATIVES ATTENDED THE MEETING. HOWEVER, AS A RESULT OF A REQUEST BY TELEPHONE ON APRIL 1, 1965, MATERIAL DISTRIBUTED AT THE MEETING WAS SUBSEQUENTLY SENT TO YOU.

THE REQUEST CONTEMPLATED AWARD OF A COST-PLUS-A-FIXED-FEE TYPE CONTRACT AFTER NEGOTIATION. THE EVALUATION CRITERIA WERE SET FORTH IN THE REQUEST AS FOLLOWS:

"AWARD WILL BE BASED UPON EVALUATION OF THE FOLLOWING MAJOR FACTORS: ORGANIZATION, PROFESSIONAL QUALIFICATIONS OF PERSONNEL, MATERIAL DEVELOPMENT, MANAGEMENT FIELD EXPERIENCE, RELATED EXPERIENCE, SAMPLES OF PREVIOUS WORK PERFORMED AND PRESENTATION AND DOCUMENTATION OF MATERIAL SUBMITTED.'

THE REQUEST FOR PROPOSALS THUS, IN EFFECT, SETS FORTH THAT THE EVALUATION WOULD BE BASED ON FACTORS OTHER THAN PRICE. EIGHT PROPOSALS WERE RECEIVED AND EVALUATED IN GENERAL ACCORDANCE WITH CRITERIA AND PROCEDURES BY THE ARMY LOGISTICS MANAGEMENT CENTER, FORT LEE, VIRGINIA.

THE EVALUATION, BASED UPON WEIGHTED APPLICATION OF THE FACTORS SET FORTH IN THE REQUEST FOR PROPOSALS, ESTABLISHED THAT HARBRIDGE HOUSE, INC., WAS THE LOWEST QUALIFIED OFFEROR.

IN A NEGOTIATED PROCUREMENT, THE RULES OF FORMALLY ADVERTISED, COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ARE NOT APPLICABLE AND A CONTRACTING OFFICER MAY LEGALLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT. ON THIS SUBJECT, ASPR 3-805.2 PROVIDES AS FOLLOWS:

"3-805.2 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.'

THE REQUEST FOR PROPOSALS CLEARLY INDICATED THAT THE MAJOR FACTORS UPON WHICH AWARD WOULD BE BASED WERE OTHER THAN PRICE. THE TECHNICAL EVALUATION ELIMINATED THREE OFFERS, INCLUDING YOUR COMPANY, FROM FURTHER CONSIDERATION FOR AWARD. AWARD WAS MADE ON APRIL 28, 1965, TO HARBRIDGE HOUSE, INC. WE BELIEVE THAT IN A NEGOTIATED PROCUREMENT THE CONTRACTING OFFICER IS UNDER A DUTY TO CONDUCT THE NEGOTIATION TO THE BEST ADVANTAGE OF THE GOVERNMENT AND TO PLACE THE CONTRACT WITH THE OFFEROR MAKING THE BEST FINAL PROPOSAL. 38 COMP. GEN. 861; 40 ID. 508. UNDER A COST- REIMBURSEMENT TYPE CONTRACT, THERE IS NO FIRM PRE ESTABLISHED PRICE. THE COST OF THE CONTRACT TO THE GOVERNMENT IS GENERALLY ESTABLISHED ON THE BASIS OF THE ACTUAL COSTS OF PERFORMANCE PROPERLY INCURRED BY THE CONTRACTOR. FOR THIS REASON ASPR 3-805.2 PROVIDES THAT THE CONTRACTOR'S COST OF CONTRACT PERFORMANCE AND PROPOSED FEE ARE NOT TO BE CONSIDERED AS CONTROLLING IN THE AWARD SELECTION.

THE REVISED GOVERNMENT COST ESTIMATE FOR THE PROCUREMENT WAS $68,555.92. EIGHT PROPOSALS WERE RECEIVED CONTAINING ESTIMATED COSTS FROM $23,000 TO $61,130. THE EIGHT COMPANIES SUBMITTING PROPOSALS WERE GIVEN A TECHNICAL EVALUATION. THE TECHNICAL RATING OF YOUR COMPANY ON ALL FACTORS WAS THE SECOND LOWEST RECEIVED AND THE HIGHEST TECHNICAL RATING WAS THAT OF HARBRIDGE HOUSE, INC.

IN VIEW OF THE COST-REIMBURSEMENT TYPE OF CONTRACT CONTEMPLATED, YOUR PROPOSAL IN THE NEGOTIATED PROCUREMENT CANNOT BE REGARDED IN THE SAME LIGHT AS A BID ON A FIXED-PRICE CONTRACT UNDER ADVERTISED PROCUREMENT. YOUR PROPOSAL OF $23,000, THE LOWEST OF THE EIGHT PROPOSALS, IS NOT IN ANY SENSE A LOWER BID THAN THE PROPOSAL OF $48,821 FROM THE SUCCESSFUL OFFEROR FOR THE REASON THAT NEITHER OF YOU WOULD BE BOUND BY THE COST ESTIMATES IN YOUR PROPOSALS. REGARDLESS OF THE ESTIMATE YOU SUBMIT, THE GOVERNMENT IS BOUND TO PAY ACTUAL COSTS IN THE EVENT OF AN AWARD UNDER THE COST- REIMBURSEMENT TYPE OF CONTRACT USED HERE.

FROM OUR REVIEW OF THIS PROCUREMENT, WE MUST CONCLUDE THAT THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT THE ADMINISTRATIVE DETERMINATION THAT HARBRIDGE HOUSE, INC., WOULD PERFORM THE CONTRACT IN A MANNER MORE ADVANTAGEOUS TO THE GOVERNMENT THAN ANY OTHER OFFEROR. SINCE THE AWARD AS MADE WAS IN COMPLIANCE WITH THE APPLICABLE STATUTORY PROVISION AND IMPLEMENTING REGULATIONS, WE MUST CONCLUDE THAT THE AWARD IS NOT SUBJECT TO QUESTION BY OUR OFFICE AND YOUR PROTEST IS DENIED.