B-157014, DEC. 1, 1965

B-157014: Dec 1, 1965

Additional Materials:

Contact:

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

 

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

STOKES AND KHEEL: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 10. IT IS STATED IN YOUR LETTER THAT THE FEDERAL AVIATION AGENCY'S SPECIFICATIONS CLEARLY SET FORTH THE SYSTEM THAT THE AGENCY WANTED DELIVERED. THAT NO RESEARCH AND DEVELOPMENT WAS INVOLVED. THAT YOU ARE RELIABLY INFORMED THAT DECISION SYSTEMS. WAS THE LOWEST BIDDER BY A SUBSTANTIAL MARGIN. YOU INDICATED THAT A DECISION HAD BEEN MADE TO AWARD A CONTRACT TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUGGESTED THAT SUCH DECISION MAY HAVE RESULTED SOLELY FROM A BELIEF ON THE PART OF THE COGNIZANT ADMINISTRATIVE OFFICIALS THAT A LARGE COMPANY COULD PERFORM THE REQUIRED SERVICES BETTER THAN A SMALL COMPANY. WA4R-5-278 WAS ISSUED TO 68 FIRMS ON DECEMBER 31.

B-157014, DEC. 1, 1965

TO BATTLE, FOWLER, STOKES AND KHEEL:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 10, 1965, PROTESTING ON BEHALF OF DECISION SYSTEMS, INCORPORATED, TEANECK, NEW JERSEY, THE REJECTION OF ITS PROPOSAL AND THE AWARD OF A CONTRACT TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION UNDER REQUEST FOR PROPOSAL NO. WA4R-5-278, ISSUED ON DECEMBER 31, 1964, BY THE FEDERAL AVIATION AGENCY FOR THE PROCUREMENT OF COMPUTER PROGRAMMING SERVICES.

IT IS STATED IN YOUR LETTER THAT THE FEDERAL AVIATION AGENCY'S SPECIFICATIONS CLEARLY SET FORTH THE SYSTEM THAT THE AGENCY WANTED DELIVERED; THAT NO RESEARCH AND DEVELOPMENT WAS INVOLVED; AND THAT YOU ARE RELIABLY INFORMED THAT DECISION SYSTEMS, INCORPORATED, WAS THE LOWEST BIDDER BY A SUBSTANTIAL MARGIN. YOU INDICATED THAT A DECISION HAD BEEN MADE TO AWARD A CONTRACT TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUGGESTED THAT SUCH DECISION MAY HAVE RESULTED SOLELY FROM A BELIEF ON THE PART OF THE COGNIZANT ADMINISTRATIVE OFFICIALS THAT A LARGE COMPANY COULD PERFORM THE REQUIRED SERVICES BETTER THAN A SMALL COMPANY.

THE RECORD SUBMITTED BY THE FEDERAL AVIATION AGENCY SHOWS THAT REQUEST FOR PROPOSAL NO. WA4R-5-278 WAS ISSUED TO 68 FIRMS ON DECEMBER 31, 1964, WITH A CLOSING DATE OF FEBRUARY 12, 1965. SOME OF THE AGENCY'S REQUIREMENTS HAD BEEN ANNOUNCED PREVIOUSLY TO INDUSTRY AT A PRE-BID CONFERENCE ON SEPTEMBER 14, 1964, WHEN PRELIMINARY SPECIFICATIONS WERE DISTRIBUTED. THE WORK STATEMENT IN THE SCHEDULE ATTACHED TO THE REQUEST FOR PROPOSAL PROVIDED FOR THE DESIGN, PRODUCTION, DOCUMENTATION, INSTALLATION AND SUPPORT FOR SUBSEQUENT MODIFICATION OF THE NATIONAL AIRSPACE SYSTEM, ENROUTE STAGE A COMPUTER PROGRAM SUBSYSTEM FOR THE IBM COMPUTER IN ACCORDANCE WITH FEDERAL AVIATION AGENCY ENGINEERING REQUIREMENT, FAA-ER-120-001, DATED OCTOBER 9, 1964, ENTITLED "COMPUTER PROGRAM FOR ENROUTE STAGE A MODEL I OF NATIONAL AIRSPACE SYSTEM," AMENDMENT NO. 1 THERETO DATED DECEMBER 23, 1964, AND ANY APPLICABLE SPECIFICATIONS OR DOCUMENTS REFERENCED THEREIN.

PROSPECTIVE OFFERORS WERE ADVISED IN THE REQUEST FOR PROPOSAL THAT THE GOVERNMENT PROPOSED TO ENTER INTO A COST-PLUS-A-FIXED-FEE CONTRACT FOR THE PARTICULAR WORK, AND THAT PROPOSALS WOULD BE CONSIDERED ONLY FROM RESPONSIBLE OFFERORS WITH SUFFICIENT FINANCIAL RESOURCES, PLANT SUPPORT AND ORGANIZATION, AND WITH SUFFICIENT EXPERIENCE IN THE TYPE OF WORK CONTEMPLATED IN THE SCHEDULE OF THE REQUEST FOR PROPOSAL.

THE PROCUREMENT IN QUESTION INVOLVED A REQUIREMENT FOR 15 MONTHS OF COMPUTER PROGRAMMING EFFORT FOR THE NATIONAL AIRSPACE SYSTEM, ENROUTE STAGE A. THE PROGRAMMING WILL BE FOR SYSTEMS LOCATED AT THE NATIONAL AVIATION FACILITIES EXPERIMENTAL CENTER, ATLANTIC CITY, NEW JERSEY, AND AT THE JACKSONVILLE, FLORIDA, AIR ROUTE TRAFFIC CONTROL CENTER. THE NAFEC SYSTEM IS FOR TEST AND EVALUATION PURPOSES. THE JACKSONVILLE SYSTEM WILL BE THE FIRST OF SUCH SYSTEMS TO BE INSTALLED ON A NATIONWIDE BASIS TO PROVIDE SEMI-AUTOMATIC CONTROL OF AIR TRAFFIC. THE COMPUTER PROGRAMMING NECESSARY FOR OPERATION OF THESE SYSTEMS IS BEING PROCURED CONCURRENTLY WITH THE ACQUISITION OF MUCH OF THE SYSTEM "HARDWARE.'

THE SPECIFICATIONS PROVIDED BY THE GOVERNMENT IN THIS CASE DID NOT PURPORT TO BE FINAL SPECIFICATIONS FOR THE PROGRAMMING WORK. RATHER, IT WAS CONTEMPLATED THAT THE CONTRACT WOULD BE AWARDED PRIMARILY ON THE BASIS OF THAT PROPOSAL WHICH WAS CONSIDERED TO REPRESENT THE BEST TECHNICAL APPROACH TO THE PROGRAMMING OF A COMPUTER SYSTEM WHICH WOULD MEET THE AGENCY'S STANDARDS AND GENERAL REQUIREMENTS. A COST-PLUS-A FIXED-FEE CONTRACT WAS PROPOSED AND IT IS APPARENT THAT PROSPECTIVE OFFERORS WERE ON NOTICE OF THE FACT THAT THE SELECTION OF THE FIRM FOR NEGOTIATION OF THE CONTRACT WOULD NOT BE DEPENDENT ENTIRELY UPON A COMPARISON OF ESTIMATED COSTS AND FEES AS SET FORTH IN THE VARIOUS PROPOSALS.

IT HAS BEEN REPORTED BY THE FEDERAL AVIATION AGENCY THAT A PRECISE SPECIFICATION FOR FIXED-PRICE CONTRACTING COULD NOT HAVE BEEN WRITTEN FOR THE PROGRAMMING OF A NEW SYSTEM OF THE COMPLEXITY OF THAT CONTEMPLATED IN THE REQUEST FOR PROPOSAL AND, THEREFORE, ONLY THE GENERAL REQUIREMENTS OF THE GOVERNMENT WERE FURNISHED TO COMPANIES IN THE PROPOSAL REQUEST. ALTHOUGH THE PROPOSED CONTRACT WAS NOT DESIGNATED AS ONE FOR RESEARCH AND DEVELOPMENT, IT CALLED FOR PROFESSIONAL SERVICES OF A MORE OR LESS INTRICATE AND COMPLEX NATURE, AND THE ENTIRE TENOR OF THE REQUEST FOR PROPOSAL INDICATED THAT A CAREFUL EVALUATION OF EACH OFFEROR'S COMPETENCE WOULD BE MADE.

DECISION SYSTEMS, INCORPORATED, SUBMITTED A PROPOSAL UNDER WHICH IT AGREED TO PERFORM THE REQUIRED DESIGNING AND OTHER WORK ON A COST-PLUS A- FIXED-FEE BASIS AND, ALTERNATIVELY, AT A FIXED PRICE OF $658,175, WHICH WOULD COVER THE COST OF CERTAIN ADDITIONAL NON-OPERATIONAL FUNCTIONS BUT NOT THE COST OF OBTAINING NECESSARY PRIVATELY-OWNED FACILITIES. CONNECTION WITH THE COST-PLUS-A-FIXED-FEE OFFER, THE COMPANY ESTIMATED THAT THE TOTAL COST TO THE GOVERNMENT FOR THE PROJECT WOULD AMOUNT TO THE SUM OF $572,326.09, EXCLUDING THE COST OF OBTAINING PRIVATELY-OWNED FACILITIES BUT INCLUDING $46,415.32 AS THE ESTIMATED COST AND FEE FOR THE SO-CALLED ADDITIONAL NON-OPERATIONAL FUNCTIONS. THE FEDERAL AVIATION AGENCY DEDUCTED THE SUM OF $46,415.32 AND CONSIDERED THE BASIC COST-PLUS-A -FIXED-FEE ESTIMATE TO BE $525,911, REPRESENTING ESTIMATED COSTS OF $491,506, PLUS A FIXED FEE OF 7 PERCENT, OR $34,405. FOUR OTHER PROPOSALS WERE RECEIVED IN REPORTED AMOUNTS WHICH EXCEEDED $1 MILLION IN EACH CASE, AND IN ITS PROPOSAL THE INTERNATIONAL BUSINESS MACHINES CORPORATION ESTIMATED THAT THE COST OF THE PROJECT WOULD AMOUNT TO THE SUM OF $1,854,681.

IT IS REPORTED THAT A TECHNICAL EVALUATION TEAM INITIALLY REVIEWED ALL OF THE FIVE PROPOSALS FROM THE STANDPOINT ONLY OF DETERMINING WHETHER THE PROPOSALS MET THE AGENCY'S STANDARDS AND REQUIREMENTS AND OTHERWISE INDICATED THAT THE OFFERORS WERE FULLY CAPABLE OF PERFORMING THE PROPOSED COMPUTER PROGRAMMING WORK. AS THE RESULT OF THE INITIAL REVIEW, THE PROPOSALS OF DECISION SYSTEMS, INCORPORATED, AND ANOTHER CONCERN WERE ELIMINATED FROM FURTHER CONSIDERATION. A MORE DETAILED ASSESSMENT WAS THEN MADE OF THE REMAINING THREE PROPOSALS, WITH PROPOSED PRICES OR ESTIMATES OF COST ALSO BEING CONSIDERED. ON THE BASIS OF THIS FURTHER REVIEW, THE EVALUATION TEAM CONCLUDED THAT THE INTERNATIONAL BUSINESS MACHINES CORPORATION HAD SUBMITTED THE MOST FAVORABLE PROPOSAL FROM BOTH TECHNICAL AND COST STANDPOINTS. A CONTRACT IN AN ESTIMATED AMOUNT OF $1,761,470 WAS SUBSEQUENTLY NEGOTIATED WITH AND AWARDED TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION.

IN THE CASE OF THE PROPOSAL SUBMITTED BY DECISION SYSTEMS, INCORPORATED, IT WAS ADMINISTRATIVELY DETERMINED ON THE BASIS OF THE PROPOSAL ITSELF AND OTHER KNOWN BACKGROUND INFORMATION THAT THE COMPANY FAILED TO SHOW FULL CAPABILITY TO PERFORM THE REQUIRED COMPUTER PROGRAMMING WORK. IT WAS ALSO DETERMINED THAT THE PROPOSAL WAS TECHNICALLY NONRESPONSIVE IN SEVERAL AREAS. THE TECHNICAL EVALUATION TEAM REPORTED VARIOUS MAJOR DEFICIENCIES IN THE PROPOSAL, SOME OF WHICH ARE OUTLINED IN THE REPORT OF THE FEDERAL AVIATION AGENCY TO OUR OFFICE.

THE REPORT OF THE FEDERAL AVIATION AGENCY SETS FORTH, AS AN EXAMPLE OF THE OFFEROR'S APPARENT FAILURE TO SHOW FULL CAPABILITY AND UNDERSTANDING OF THE COMPLEXITY OF THE PROPOSED WORK, THE FACT THAT THE PROPOSAL GREATLY UNDERESTIMATED THE MANPOWER REQUIREMENTS FOR THE PROCUREMENT. THE AGENCY'S ESTIMATE FOR SUCH REQUIREMENTS WAS 845 MAN MONTHS AS COMPARED WITH THE OFFEROR'S ESTIMATE OF 250 MAN-MONTHS OF PROGRAMMING EFFORT. THE LATTER FIGURE IS REPORTED TO BE 437 MAN MONTHS LOWER THAN THE ESTIMATE OF ANY OTHER OFFEROR AND THE FEDERAL AVIATION AGENCY CONSIDERED THE ESTIMATE OF 250 MAN-MONTHS TO BE UNREALISTIC. IN ADDITION, IT IS REPORTED THAT THE OFFEROR PROPOSED THAT A MAXIMUM OF 25 PERSONNEL WOULD BE ASSIGNED TO THE CONTRACT, WHEREAS THE GOVERNMENT'S ESTIMATE WAS FROM 50 TO 60 PERSONS.

IT IS STATED IN THE AGENCY'S REPORT THAT THE OFFEROR ATTEMPTED TO JUSTIFY SUCH EXTREMELY LOW ESTIMATES OF MANPOWER REQUIREMENTS AS SET FORTH IN ITS PROPOSAL BY PROPOSING A LEVEL OF PRODUCTIVITY WHICH WAS UNREALISTICALLY HIGH AS COMPARED WITH BOTH THE INDUSTRY AS A WHOLE AND PRIOR EXPERIENCE OF DECISION SYSTEMS, INCORPORATED, ON FEDERAL AVIATION AGENCY CONTRACTS.

WITH RESPECT TO THE DETERMINATION THAT THE PROPOSAL OF DECISION SYSTEMS, INCORPORATED, WAS NONRESPONSIVE IN SEVERAL AREAS, THE AGENCY'S REPORT STATES:

"* * * FIRST, ITS PROPOSED OPERATIONAL PROGRAM FOR PROCESSING RADAR DATA RECEIVED AT THE INPUT BUFFER AREAS WAS TOTALLY INADEQUATE. IF DSI HAD ATTEMPTED TO PROCESS RADAR DATA AS PROPOSED, THE RESULT WOULD HAVE BEEN SEVERE LOSS AND DISTORTION OF DATA, WITH A CONSEQUENT ADVERSE EFFECT ON THE AIR TRAFFIC CONTROL SYSTEM. SECOND, DSI'S PROPOSAL FAILED TO INDICATE ADEQUATE COMPREHENSION OF THE SYSTEM MONITORING AND CONTROL PROGRAM, WHICH IS THE MASTER CONTROL PROGRAM FOR THE SYSTEM. THE PURPOSE OF THIS PROGRAM IS TO SCHEDULE THE USE OF OTHER OPERATIONAL PROGRAMS AND MAKE ERROR CORRECTIONS ON A CONSTANT BASIS. THIRD, DSI PROPOSED TO FURNISH SEVERAL UTILITY PROGRAM COMPONENTS AS PORTIONS OF A COMPILER PROGRAM, WHICH PROGRAM IS NOT YET COMPLETE AND IS PROGRAMMED FOR THE IBM 7090 COMPUTER SYSTEM. CERTAIN OF THESE UTILITY PROGRAM COMPONENTS ARE REQUIRED BY PARAGRAPH 3.3.2 OF FAA-ER 120-001 OF OCTOBER 9, 1964, WHICH WAS A PART OF THE RFP, TO INTERFACE AND BE INTEGRATED WITH OTHER UTILITY AND SUPPORT SOFTWARE ITEMS WHICH ARE PROGRAMMED FOR THE IBM 9020 COMPUTER BEING PROVIDED BY THE HARDWARE CONTRACTOR. OFFERING A COMPILER PROGRAM FOR A 7090 COMPUTER, AND NOT SEPARATE UTILITY PROGRAMS COMPATIBLE WITH THE 9020 COMPUTER SYSTEM, IS BASICALLY NON-RESPONSIVE TO THE REQUEST FOR PROPOSALS.'

IT HAS BEEN CONSISTENTLY OUR POSITION THAT THE RESPONSIBILITY FOR TECHNICAL EVALUATIONS OF BIDS AND PROPOSALS, AND FOR DETERMINATIONS AS TO WHETHER BIDDERS OR OFFERORS ARE RESPONSIVE AND FULLY CAPABLE OF PERFORMING PROPOSED GOVERNMENT CONTRACTS, RESTS WITH THE CONTRACTING AGENCIES OF THE GOVERNMENT, AND THAT THEIR DECISIONS IN SUCH MATTERS MUST GOVERN IN THE ABSENCE OF A CLEAR SHOWING OF IMPROPRIETY OR ERROR. THE COURTS HAVE ADOPTED A SIMILAR VIEW. O-BRIEN V. CARNEY, 6 F.SUPP. 761; FRIEND V. LEE, 221 F.2D 96.

IT APPEARS THAT THE FEDERAL AVIATION AGENCY HAS FURNISHED A SUFFICIENT JUSTIFICATION FOR HAVING CONSIDERED THAT THE PROPOSAL SUBMITTED BY DECISION SYSTEMS, INCORPORATED, WAS NOT ENTITLED TO FURTHER CONSIDERATION AFTER COMPLETION OF THE INITIAL TECHNICAL REVIEW OF FIVE PROPOSALS RECEIVED IN RESPONSE TO REQUEST FOR PROPOSAL NO. WA4R-5-278. WE FIND NO BASIS FOR A CONCLUSION THAT THE FEDERAL AVIATION AGENCY DECIDED TO NEGOTIATE THE CONTRACT WITH THE INTERNATIONAL BUSINESS MACHINES CORPORATION BECAUSE OF A BELIEF THAT A LARGE COMPANY COULD PERFORM THE PROPOSED COMPUTER PROGRAMMING WORK BETTER THAN A SMALL COMPANY.

ACCORDINGLY, THE PROTEST MADE TO OUR OFFICE IN THE MATTER MUST BE, AND IS, HEREBY DENIED.