B-157827, FEB. 7, 1966

B-157827: Feb 7, 1966

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TO KOLLSMAN INSTRUMENT CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 11. IT IS REPORTED THAT THE FIRST STEP OF THIS TWO-STEP PROCUREMENT INVOLVED THE ISSUANCE OF LETTER REQUEST FOR TECHNICAL PROPOSALS (LRFTP) NO. IT IS FURTHER REPORTED THAT FIRST-STEP PROPOSALS WERE RECEIVED FROM FOUR FIRMS. THE ENGINEERING EVALUATION GROUP DETERMINED THAT THE KOLLSMAN PROPOSAL AND THE PROPOSALS OF TWO OTHER BIDDERS WERE ACCEPTABLE WHILE THE AEROSONIC PROPOSAL WAS UNACCEPTABLE. THAT THIS DETERMINATION WAS NOT COMMUNICATED TO THE PROCURING AUTHORITY UNTIL APRIL 6. THAT AEROSONIC WAS NOT NOTIFIED THAT ITS PROPOSAL WAS UNACCEPTABLE BECAUSE AT THAT TIME IT HAD BEEN DECIDED BY THE AERONAUTICAL SYSTEMS DIVISION TO ISSUE AMENDMENT NO. 3 TO THE REQUEST FOR PROPOSAL WHICH WOULD RELAX THE FRICTION TOLERANCES THEREBY FACILITATING THE MANUFACTURE AND PRODUCTION OF THE INSTRUMENTS.

B-157827, FEB. 7, 1966

TO KOLLSMAN INSTRUMENT CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 11, 1965, YOUR LETTER DATED OCTOBER 22, 1965, OTHER LETTERS, MEMORANDA, AND PERSONAL REPRESENTATIONS, PROTESTING AN AWARD TO ANY BIDDER OTHER THAN YOURSELF UNDER INVITATION FOR BIDS NO. 33-657-66-80 ISSUED BY HEADQUARTERS, AERONAUTICAL SYSTEMS DIVISION (ASD), WRIGHT-PATTERSON AIR FORCE BASE, OHIO.

IT IS REPORTED THAT THE FIRST STEP OF THIS TWO-STEP PROCUREMENT INVOLVED THE ISSUANCE OF LETTER REQUEST FOR TECHNICAL PROPOSALS (LRFTP) NO. R65- 7094 ON OCTOBER 22, 1964, WITH A CLOSING DATE FOR RECEIPT OF PROPOSALS ON NOVEMBER 24, 1964. THE LRFTP STATED THAT THE AIR FORCE ANTICIPATED A REQUIREMENT FOR 983 ALTIMETERS, SERVOED, COUNTER POINTER, TYPES AAU-19/A AND AAU-11/A.

IT IS FURTHER REPORTED THAT FIRST-STEP PROPOSALS WERE RECEIVED FROM FOUR FIRMS, INCLUDING KOLLSMAN AND AEROSONIC INSTRUMENT CORPORATION; THAT ON MARCH 29, 1965, THE ENGINEERING EVALUATION GROUP DETERMINED THAT THE KOLLSMAN PROPOSAL AND THE PROPOSALS OF TWO OTHER BIDDERS WERE ACCEPTABLE WHILE THE AEROSONIC PROPOSAL WAS UNACCEPTABLE; THAT THIS DETERMINATION WAS NOT COMMUNICATED TO THE PROCURING AUTHORITY UNTIL APRIL 6, 1965; THAT AEROSONIC WAS NOT NOTIFIED THAT ITS PROPOSAL WAS UNACCEPTABLE BECAUSE AT THAT TIME IT HAD BEEN DECIDED BY THE AERONAUTICAL SYSTEMS DIVISION TO ISSUE AMENDMENT NO. 3 TO THE REQUEST FOR PROPOSAL WHICH WOULD RELAX THE FRICTION TOLERANCES THEREBY FACILITATING THE MANUFACTURE AND PRODUCTION OF THE INSTRUMENTS; THAT AEROSONIC'S PROPOSAL WAS DEEMED UNACCEPTABLE BECAUSE OF SEVERAL AREAS INVOLVING FRICTION FACTORS; AND THAT THE CONTRACTING OFFICER CONSIDERED IT APPROPRIATE TO SEND AMENDMENT NO. 3 TO AEROSONIC IN ORDER TO PERMIT IT TO REVIEW ITS PROPOSAL AS IT RELATED TO THE FRICTION TOLERANCES SINCE SUCH REVISIONS MIGHT WELL BRING IT WITHIN THE AREA OF EITHER BEING ACCEPTABLE OR CAPABLE OF BEING MADE ACCEPTABLE.

AEROSONIC'S REVISED PROPOSAL, DATED APRIL 23, 1965, RESPONDING TO AMENDMENT NO. 3, WAS DETERMINED TO BE WITHIN THE AREA OF BEING MADE ACCEPTABLE WITH THE EXPENDITURE OF REASONABLE EFFORT ON THE PART OF THE GOVERNMENT. IN SEVERAL SUBSEQUENT LETTERS AERSONIC FURNISHED SUFFICIENT CLARIFICATION OF ITS REVISED PROPOSAL TO HAVE IT DETERMINED ACCEPTABLE BY AERONAUTICAL SYSTEMS DIVISION.

THE RECORD SHOWS THAT AS OF JULY 12, 1965, SIX ENGINEERS HAD PARTICIPATED IN THE JOINT SERVICES TECHNICAL EVALUATION OF PROPOSALS SUBMITTED FOR THE DESIGN AND PRODUCTION OF AAU-11/A AND AAU-19/A ALTIMETERS. ALTHOUGH THE DETERMINATION WAS NOT UNANIMOUS, THE REVISED AEROSONIC PROPOSAL WAS CONSIDERED ACCEPTABLE. ON JULY 12, 1965, THE DIRECTORATE OF SYSTEMS ENGINEERING STATED THAT ALL FOUR SUBMITTED PROPOSALS WERE ACCEPTABLE, AND THE PROPOSALS WERE ACCEPTED BY THE AERONAUTICAL SYSTEMS DIVISION.

THEREAFTER THE SECOND STEP OF THE PROCUREMENT, IFB NO. 33-657-66-80 WAS ISSUED ON AUGUST 9, 1965, TO THE FOUR COMPANIES CONCERNED. THE IFB REQUESTED BIDS ON INCREMENTAL QUANTITIES OF THE AAU-11/A UNDER PART I FOR FY 65, PART II,"A" FOR INCREMENTAL QUANTITIES OF THE AAU 19/A FOR FY'S 65 AND 66, AND PART II,"B" FOR INCREMENTAL QUANTITIES OF THE AAU-19/A FOR FY'S 65, 66, 67, 68 AND 69. IT IS CONTEMPLATED THAT AN AWARD WILL BE MADE FOR 495 UNITS UNDER PART I AND 10,501 UNITS UNDER PART II. ONE COMPANY DECLINED TO BID, AEROSONIC WAS LOW BIDDER AND KOLLSMAN WAS SECOND LOW BIDDER.

YOU PROTEST THE AWARD OF A CONTRACT TO THE AEROSONIC CORPORATION STATING THAT "ANY SUCH AWARD IS CONTRARY TO THE ARMED SERVICES PROCUREMENT REGULATIONS AND THE INTENT OF CONGRESS AND IS NOT IN THE BEST INTEREST OF THE GOVERNMENT.' IN YOUR LETTER OF OCTOBER 22, 1965, IT IS SPECIFICALLY CONTENDED THAT: (1) A MULTI-YEAR AWARD IS INCONSISTENT WITH REGULATIONS; (2) AN IMPROPER REVISION OF TECHNICAL PROPOSAL WAS PERMITTED; (3) PROPRIETARY DATA MAY HAVE BEEN MADE AVAILABLE TO KOLLSMAN COMPETITORS; (4) THE PATENT INDEMNITY CLAUSE OF THE CONTEMPLATED CONTRACT HAS BEEN WAIVED WITH RESPECT TO AEROSONIC, TO THE PREJUDICE OF ALL OTHER BIDDERS; (5) AEROSONIC'S QUALIFICATIONS ARE DOUBTFUL. THE ADDITIONAL LETTERS, MEMORANDA, COPIES OF DOCUMENTS, AND ARGUMENTS PRESENTED HERE, SUPPLEMENTED THE FIVE BASIC CONTENTIONS MENTIONED ABOVE, AND ALLEGED SPECIFICALLY THAT PERTINENT PROCUREMENT REGULATIONS HAVE BEEN MISINTERPRETED OR DISREGARDED. THE PARTICULAR ARMED SERVICES PROCUREMENT REGULATION PROVISIONS CITED IN THE SEVERAL LETTERS AND MEMORANDA WILL BE MENTIONED IN CONNECTION WITH THE DISCUSSION OF EACH OF THE FIVE POINTS OF PROTEST.

OBJECTION IS MADE TO THE MAKING OF THE PROCUREMENT ON A MULTI-YEAR BASIS. IT IS CONTENDED THAT SUCH AN AWARD IS INCONSISTENT WITH THE PERTINENT PROCUREMENT REGULATIONS, SINCE A NEGOTIATED CONTRACT WAS MORE APPROPRIATE THAN MULTI-YEAR ADVERTISED PROCUREMENT; THAT EFFECTIVE COMPETITION WAS NOT OBTAINED SINCE ONLY ONE BIDDER BID RESPONSIVELY TO THE MULTI-YEAR PORTION OF THE INVITATION; AND THAT THE ALTIMETERS BEING PROCURED WOULD BECOME OBSOLESCENT AND SUPERSEDED WITHIN THE MULTI-YEAR PERIOD BECAUSE OF ADVANCES BEING MADE IN THE DESIGN AND SPECIFICATION AS A RESULT OF RESEARCH AND DEVELOPMENT IN THE INDUSTRY.

THE CONTRACTING OFFICER HAS STATED, CONCERNING YOUR OBJECTION TO A MULTI- YEAR AWARD, THAT:

"RELATIVE TO USE OF MULTI-YEAR METHOD, ASPR 1-322.1 (A) DIRECTS ITS USE UNLESS OVERRIDING DISADVANTAGES ARE EVIDENT. SUCH IS NOT THE CASE HERE. AS A MATTER OF FACT, QUITE THE CONTRARY. ONE OF THE DOD AIMS SPO'S RESPONSIBILITIES IN THE PROCUREMENT OF SPECIFIC AIMS EQUIPMENTS FOR ALL SERVICES WITH SPECIFIC DIRECTION TO ENHANCE STANDARDIZATION TO THE MAXIMUM EXTENT. FURTHER, THE KNOWN QUANTITIES INVOLVED IN THIS AND OTHER AIMS PROCUREMENTS ARE LARGE AND PRODUCTION SPANS TWO (2), THREE (3), AND FOUR (4) YEARS. IN THIS CONTEXT, DOD AIMS PROCUREMENTS, AND MORE SPECIFICALLY THIS PROCUREMENT, MEETS ALL OF THE CRITERIA FOR USE OF THE MULTI-YEAR METHOD * * *.'

WE AGREE WITH THE CONCLUSION OF THE CONTRACTING OFFICER THAT THIS MULTI- YEAR PROCUREMENT WAS JUSTIFIED UNDER THE PROCEDURES OF ASPR 1 322. ALSO DO NOT QUESTION THE DETERMINATION OF THE CONTRACTING OFFICER THAT THIS PROCUREMENT IS A PROPER ONE FOR THE USE OF TWO-STEP ADVERTISING PROCEDURES. SEE SECTION 2, PART 5 OF ASPR. AS TO THE CONTENTION THAT COMPETITION WAS NOT OBTAINED ON THE MULTI-YEAR PORTION OF THE SECOND STEP SINCE ONLY ONE BIDDER WAS RESPONSIVE, WE CAN ONLY COMMENT THAT THIS RESULT COULD NOT BE ANTICIPATED BY THE CONTRACTING OFFICER IN VIEW OF THE FACT THAT FOUR FIRMS HAD SUBMITTED ACCEPTABLE PROPOSALS UNDER STEP ONE.

YOUR SECOND CONTENTION IS THAT AEROSONIC WAS IMPROPERLY PERMITTED TO REVISE ITS ORIGINAL TECHNICAL PROPOSAL IN CONTRAVENTION OF SECTION 2-503.1 OF ASPR. SPECIFICALLY, IT IS CHARGED THAT AEROSONIC WAS PERMITTED TO COMPLETELY CHANGE ITS ORIGINAL PROPOSAL FOLLOWING THE ISSUANCE OF AMENDMENT NO. 3 AND SPECIFICATION CHANGE NO. 4,APRIL 15, 1965, TO A PROPOSAL CLOSELY RESEMBLING THE KOLLSMANPROPOSAL. ALSO, IN THIS CONTENTION, YOU CALL ATTENTION TO THE PARTICULAR LANGUAGE OF AMENDMENT 3, WHICH STATES "IT IS ANTICIPATED THAT THESE CHANGES WILL NOT AFFECT YOUR PROPOSAL AS SUBMITTED * * *.' THIS LANGUAGE IS CONTRASTED WITH THE LANGUAGE OF EARLIER AMENDMENTS WHICH STATED "YOU ARE REQUESTED TO REVIEW SAID SPECIFICATION CHANGES AND AMEND OR RE AFFIRM YOUR PROPOSAL SUBMITTED IN RESPONSE TO SUBJECT LETTER REQUEST.'

THE ADMINISTRATIVE COMMENT ON THIS POINT IS AS FOLLOWS:

"4. THE PROTESTOR'S SECOND ASSERTION IS THAT THE AEROSONIC CORPORATION WAS ALLOWED TO REVISE ITS TECHNICAL PROPOSAL IN CONTRAVENTION OF ASPR 2- 503.1. THE WORDING OF ASPR 2-503.1 (C) IS SUCH THAT IT MAKES IT INCUMBENT UPON THE CONTRACTING OFFICER TO PUT FORTH EVERY REASONABLE EFFORT TO OBTAIN ADDITIONAL INFORMATION AND CLARIFICATION WHICH WILL BRING PROPOSALS UP TO ACCEPTABLE STANDARDS, THEREBY IMPROVING COMPETITION. THE ASPR ALLOWS THE CONTRACTING OFFICER CONSIDERABLE LATITUDE IN THE INTERPRETATION OF WHAT CONSTITUTES A "REASONABLE EFFORT.' IN RECONSTRUCTING THE SEQUENCE OF EVENTS, BASED UPON THE PROTEST LETTER AND THE CONTRACTING OFFICER'S STATEMENT, IT APPEARS THAT AEROSONIC'S PROPOSAL WAS, AT ONE POINT IN TIME, SIGNIFICANTLY CHANGED. THIS WAS IN RESPONSE TO AMENDMENT NUMBER 3 TO THE LRFTP. AMENDMENT NUMBER 3 WAS A MATERIAL CHANGE IN THE REQUIREMENTS. MENTIONED IN ITEM 20 ON PAGE 8 OF THE LETTER OF PROTEST, KOLLSMAN INSTRUMENT CORPORATION RECOMMENDED THIS CHANGE IN A LETTER, DATED 17 MARCH 1965. THE AIR FORCE TECHNICAL EVALUATION PERSONNEL REVIEWED THE RECOMMENDATION MADE BY KOLLSMAN THAT FRICTION TOLERANCES BE REDUCED AND DECIDED THAT THE TOLERANCES COULD BE REDUCED WITHOUT SACRIFICING THE INTEGRITY OF THE EQUIPMENT. AMENDMENT NUMBER 3 INCORPORATED THIS RECOMMENDATION, AND WAS SENT TO ALL PROSPECTIVE BIDDERS ON 15 APRIL 1965. THE PROTESTOR FURTHER EXPRESSES THE BELIEF THAT AEROSONIC WAS ADVISED ON ABOUT THE FIRST OF APRIL THAT ITS PROPOSAL WAS NOT TECHNICALLY ACCEPTABLE. EVEN IF THIS HAD BEEN TRUE, THE IMPENDING CHANGE IN FRICTION TOLERANCE REQUIREMENTS WOULD HAVE AGAIN "OPENED THE DOOR" EQUALLY TO ALL PROSPECTIVE BIDDERS. A LETTER, DATED 29 MARCH 1965, STATING THAT THE AEROSONIC PROPOSAL WAS NOT CONSIDERED ADEQUATE FROM A TECHNICAL STANDPOINT WAS SENT FROM THE TECHNICAL EVALUATION GROUP TO THE CONTRACTING OFFICER. HOWEVER, THIS INFORMATION WAS NOT OFFICIALLY TRANSMITTED TO AEROSONIC AND SHOULD NOT HAVE BEEN MADE KNOWN TO ANY OF THE OTHER PROSPECTIVE BIDDERS. IT IS PERTINENT TO NOTE THE PROVISIONS OF AFPI 2-503.1 (B) WHICH STATE THAT TECHNICAL EVALUATIONS "ARE RECOMMENDATIONS ONLY AND MUST BE APPROVED BY THE CONTRACTING OFFICER.' ON THE 15TH OF APRIL AMENDMENT NUMBER 3, MENTIONED ABOVE, WAS SENT TO ALL PROSPECTIVE BIDDERS IN ACCORDANCE WITH AFPI 2-503.1 AND IN KEEPING WITH COMPTROLLER GENERAL LETTER B 156522 WHICH ATES,"IT IS A LONGSTANDING RULE OF COMPETITIVE BIDDING THAT, WHERE THERE IS A MATERIAL CHANGE IN REQUIREMENTS BEFORE AN AWARD IS MADE, ALL BIDDERS SHOULD BE GIVEN AN OPPORTUNITY TO BID TO THE NEW REQUIREMENT.'"

THE GENERAL PURPOSE OF AND THE BASIC REASON FOR TWO-STEP PROCUREMENT IS STATED IN ASPR 2-501, AS FOLLOWS:

"2-501 GENERAL. TWO-STEP FORMAL ADVERTISING IS A METHOD OF PROCUREMENT DESIGNED TO EXPAND THE USE AND OBTAIN THE BENEFITS OF FORMAL ADVERTISING WHERE INADEQUATE SPECIFICATIONS PRECLUDE THE USE OF CONVENTIONAL FORMAL ADVERTISING. IT IS ESPECIALLY USEFUL IN PROCUREMENTS REQUIRING TECHNICAL PROPOSALS, ESPECIALLY THOSE FOR COMPLEX ITEMS. IT IS CONDUCTED IN TWO STEPS:

(I) STEP ONE CONSISTS OF THE REQUEST FOR, AND SUBMISSION, EVALUATION, AND, IF NECESSARY, DISCUSSION OF A TECHNICAL PROPOSAL, WITHOUT PRICING, TO DETERMINE THE ACCEPTABILITY OF THE SUPPLIES OR SERVICES OFFERED. AS USED IN THIS CONTEXT, THE WORD "TECHNICAL" HAS A BROAD CONNOTATION AND INCLUDES ENGINEERING APPROACH, SPECIAL M&NUFACTURING PROCESSES, AND SPECIAL TESTING TECHNIQUES. WHEN IT IS NECESSARY IN ORDER TO CLARIFY BASIC TECHNICAL REQUIREMENTS, RELATED REQUIREMENTS SUCH AS MANAGEMENT APPROACH, MANUFACTURING PLAN, OR FACILITIES TO BE UTILIZED MAY BE CLARIFIED IN THIS STEP. CONFORMITY TO THE TECHNICAL REQUIREMENTS IS RESOLVED IN THIS STEP, BUT CAPACITY AND CREDIT, AS DEFINED IN 1-705.4, ARE NOT.

(II) STEP TWO IS A FORMALLY ADVERTISED PROCUREMENT CONFINED TO THOSE WHO SUBMITTED ACCEPTABLE TECHNICAL PROPOSALS IN STEP ONE. BIDS SUBMITTED IN STEP TWO ARE EVALUATED AND THE AWARDS MADE IN ACCORDANCE WITH PARTS 3 AND 4 OF THIS SECTION.

TWO-STEP FORMAL ADVERTISING REQUIRES THAT THE CONTRACTING OFFICER WORK CLOSELY WITH TECHNICAL PERSONNEL AND THAT HE UTILIZE THEIR SPECIALIZED KNOWLEDGE IN DETERMINING THE TECHNICAL REQUIREMENTS OF THE PROCUREMENT, IN DETERMINING THE CRITERIA TO BE USED IN EVALUATING TECHNICAL PROPOSALS, AND IN MAKING SUCH EVALUATION. AN OBJECTIVE OF THIS METHOD IS TO PERMIT THE DEVELOPMENT OF A SUFFICIENTLY DESCRIPTIVE AND NOT UNDULY RESTRICTIVE STATEMENT OF THE GOVERNMENT'S REQUIREMENT, INCLUDING AN ADEQUATE TECHNICAL DATA PACKAGE, SO THE SUBSEQUENT PROCUREMENTS MAY BE MADE BY CONVENTIONAL FORMAL ADVERTISING.'

ASPR 2-503.1 (C) PROVIDES, WITH REGARD TO THE EVALUATION OF TECHNICAL PROPOSALS SUBMITTED UNDER STEP ONE OF A TWO-STEP PROCUREMENT, AS FOLLOWS:

"/C) UPON THE RECEIPT OF TECHNICAL PROPOSALS:

"/I) EVERY PRECAUTION SHALL BE TAKEN TO SAFEGUARD TECHNICAL PROPOSALS AGAINST DISCLOSURE TO UNAUTHORIZED PERSONS;

"/II) TECHNICAL PROPOSAL SUBMITTING DATA MARKED IN ACCORDANCE WITH 3- 507.1 SHALL BE ACCEPTED AND HANDLED IN ACCORDANCE WITH THAT PARAGRAPH; AND

"/III) ANY REFERENCE TO PRICE OR COST SHALL BE REMOVED.'

WE VIEW THE ABOVE-QUOTED PROVISIONS AS INVESTING IN THE TECHNICAL AND PROCUREMENT PERSONNEL CHARGED WITH THIS PROCUREMENT CONSIDERABLE LATITUDE IN THE EVALUATION OF PROPOSALS. 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 PRECEDENTS, WE WILL NOT QUESTION ITS DETERMINATION. 40 COMP. GEN. 35. WHETHER A PROPOSAL NEEDS CLARIFICATION TO BE DEEMED ACCEPTABLE, WHETHER A PROPOSAL CAN BE MADE ACCEPTABLE BY CLARIFICATION AND REASONABLE EFFORT BY THE GOVERNMENT, HOW MANY OR HOW FEW LETTERS OF CLARIFICATION MAY BE ADDRESSED TO A PROPOSER, ARE ALL MATTERS OF JUDGMENT ON THE PART OF THE PROCUREMENT AGENCY. WE WILL NOT QUESTION SUCH JUDGMENT UNLESS THERE IS EVIDENCE OF FRAUD, PREJUDICE, ABUSE OF AUTHORITY, ARBITRARINESS OR CAPRICIOUS ACTION. NO SUCH EVIDENCE APPEARS IN THIS MATTER, NOR IS THERE ANY ALLEGATION TO THAT EFFECT. WE ARE OF THE OPINION THAT THE PRIMARY OBJECT OF THE SUBJECT ASPR PROVISION IS TO OBTAIN FOR THE GOVERNMENT A NUMBER OF DIFFERENT PROPOSALS, EMPLOYING VARIED METHODS, WHICH WILL ACCOMPLISH A DESIRED END AS SET FORTH AND LIMITED IN THE SPECIFICATIONS. THE BASIC OBJECT IS TO PROVIDE A BROADER BASE FOR COMPETITION THAN IS PROVIDED IN A "BRAND NAME OR EQUAL" PROCUREMENT. IN THE LATTER CASE THE ITEM SOUGHT IS CIRCUMSCRIBED BY THE "BRAND NAME" ITEM, WHEREAS IN A TWO- STEP PROCUREMENT, THE FIRST STEP PROVIDES A BROADER FIELD FOR PURPOSES TO WORK IN PREPARING THEIR PROPOSALS. IN VIEW OF THIS BROAD SCOPE IN PURPOSE, WE CANNOT SUBSCRIBE TO A VIEW THAT WOULD RESTRICT THE CLARIFICATION OR EVALUATION OF PROPOSALS. WE WOULD DEFEAT THE CONCEPT OF "TWO-STEP" PROCUREMENTS IF WE ATTEMPTED TO PLACE UNDUE RESTRICTIONS ON THE PROCEDURES OR JUDGMENTS INVOLVED IN THE "FIRST-STEP.' EXCEPT AS INDICATED ABOVE, WE ARE NOT DISPOSED TO LIMIT THE JUDGMENT OF THE PROCURING AGENCY IN ATTEMPTING TO CLARIFY A PROPOSAL IN ORDER TO ACCOMPLISH ITS ACCEPTABILITY, WHERE THE PROPOSAL HAS NOT BEEN FINALLY REJECTED AS NONACCEPTABLE.

AS TO YOUR CONTENTION THAT AEROSONIC WAS PERMITTED TO SUBMIT AN ENTIRELY NEW PROPOSAL AFTER THE ISSUANCE OF AMENDMENT NO. 3 TO THE REQUEST FOR PROPOSALS, AND WAS THUS PERMITTED TO HAVE SUBMITTED "LATE PROPOSAL" TO THE REQUEST, OR IN THE ALTERNATIVE, ALLOWED TWO PROPOSALS, IN DISREGARD OF THE REGULATIONS, THE ADMINISTRATIVE OFFICE REPORTS AS FOLLOWS:

"4. SINCE AEROSONIC'S PROPOSAL WAS DEEMED UNACCEPTABLE BECAUSE OF SEVERAL AREAS INVOLVING FRICTION FACTORS, THE CONTRACTING OFFICER DEEMED IT APPROPRIATE TO SEND AMENDMENT NO. 3 TO AEROSONIC IN ORDER TO PERMIT IT TO REVISE ITS PROPOSAL AS IT RELATED TO THE FRICTION TOLERANCES SINCE SUCH REVISIONS MIGHT WELL BRING IT WITHIN THE AREA OF EITHER BEING ACCEPTABLE OR CAPABLE OF BEING MADE ACCEPTABLE.

"5. AEROSONIC'S REVISED PROPOSAL, DATED 23 APRIL 1965, RESPONDING TO AMENDMENT NO. 3, WAS DETERMINED TO BE WITHIN THE AREA OF BEING MADE ACCEPTABLE WITH THE EXPENDITURE OF REASONABLE EFFORTS ON THE PART OF THE GOVERNMENT. BY LETTERS DATED 19 AND 21 MAY 1965 AND 25 JUNE 1965, AEROSONIC FURNISHED SUFFICIENT CLARIFICATION OF ITS 23 APRIL PROPOSAL SO AS TO HAVE IT DETERMINED ACCEPTABLE BY ASD.'

WE HAVE FREQUENTLY STATED THAT IT IS NOT THE FUNCTION OF OUR OFFICE TO TECHNICALLY EVALUATE PROPOSALS OR TO MAKE AN INDEPENDENT DETERMINATION AS TO WHETHER A PROPOSAL WAS SUSCEPTIBLE OF BEING MADE ACCEPTABLE WITH A REASONABLE EFFORT ON THE PART OF THE GOVERNMENT AND THEREFORE CLASSIFIABLE AS MARGINAL. SEE, GENERALLY, 17 COMP. GEN. 554; 19 ID. 587; 40 ID. 35.

YOUR CONTENTION THAT THE LANGUAGE OF AMENDMENT NO. 3, AS CONTRASTED TO THE LANGUAGE OF AMENDMENT NOS. 1 AND 2, REJECTED THE RIGHT OF PROPOSERS TO REVISE OR CHANGE THEIR PROPOSALS CANNOT BE AGREED TO. THIS AMENDMENT IS CONSIDERED TO HAVE MADE A MAJOR CHANGE IN THE SPECIFICATIONS BY THE REDUCTION OF FRICTION TOLERANCES. WE CONSIDER A MAJOR CHANGE IN SPECIFICATIONS AS SUFFICIENT BASIS FOR A CHANGE IN PROPOSAL NOTWITHSTANDING THE BELIEF OF THE CONTRACTING OFFICER THAT A CHANGE MAY NOT NECESSARILY BE REQUIRED. PROPOSALS ALREADY ACCEPTED MAY NOT REQUIRE A CHANGE, AND IN THIS CIRCUMSTANCE THE CHANGE WOULD BE A "MINOR" ONE, BUT MARGINAL PROPOSALS NOT ACCEPTED OR REJECTED MIGHT, BY REVISIONS PERMITTED BY THIS CHANGE, BE MADE ACCEPTABLE, WHICH IS THE SITUATION HERE. IN THIS SITUATION THE CHANGE IS A "MAJOR" CHANGE. IN PASSING IT MAY BE NOTED THAT THIS CHANGE WAS INITIATED BY THE KOLLSMAN COMPANY.

OUR ATTENTION HAS BEEN CALLED TO THE CIRCUMSTANCE THAT AEROSONIC'S ORIGINAL PROPOSAL WAS RETURNED TO IT IN CONTRAVENTION OF ASPR SEC. 1 308 (B) (III). IT APPEARS THAT AEROSONIC TIMELY SUBMITTED A PROPOSAL, THAT FOLLOWING EACH AMENDMENT TO THE REQUEST FOR PROPOSALS IT SUBMITTED REVISED PROPOSALS, AND THAT THE ORIGINAL PROPOSAL WAS IN FACT RETURNED TO AEROSONIC. THE RETURN OF THE PROPOSAL, WHILE NOT AUTHORIZED, CANNOT BE VIEWED AS AFFECTING THE PROCUREMENT TO THE DETRIMENT OF OTHER PROPOSERS, BUT CAN BE THE CAUSE OF CENSURE OF THE PERSON OR PERSONS WHO RETURNED THE PROPOSAL TO AEROSONIC.

YOUR THIRD CONTENTION IS THAT CONFIDENTIAL INFORMATION AND PROPRIETARY DATA CONCERNING THE KOLLSMAN PROPOSAL MAY HAVE BEEN DIVULGED TO AEROSONIC. THIS CONTENTION IS DENIED BY THE CONTRACTING OFFICER AND OTHER PERSONNEL CONCERNED. WHERE THERE IS A CONFLICT OR DISPUTE OF FACT BETWEEN A PROTESTANT AND A GOVERNMENT AGENCY, WE USUALLY ARE REQUIRED TO ACCEPT THE ADMINISTRATIVE REPORT AS CORRECT. B 139830, DATED AUGUST 19, 1959. THE FILE CONTAINS NO EVIDENCE TO SUPPORT YOUR BELIEF.

THE FOURTH CONTENTION ADVANCED IN YOUR PROTEST IS THAT "THE GOVERNMENT HAS, BY ITS ACTIONS, COMPLETELY NULLIFIED, WITH RESPECT TO AEROSONIC, THE PATENT INDEMNITY CLAUSE OF THE CONTEMPLATED CONTRACT TO THE PREJUDICE OF ALL OTHER BIDDERS.' THIS CONTENTION IS FOUNDED ON A BELIEF THAT THE GOVERNMENT HAS DIRECTED AEROSONIC TO DESIGN ITS PROPOSED INSTRUMENT IN A PARTICULAR MANNER WHICH INFRINGES ON KOLLSMAN'S PATENTS. THE ADMINISTRATIVE OFFICE, AS STATED IN OUR DISCUSSION OF YOUR THIRD CONTENTION ABOVE, HAS CATEGORICALLY DENIED THE DISCLOSURE OF ANY INFORMATION TO AEROSONIC, AND HAS STATED THAT ANY CONTRACT CONCLUDED IN THIS MATTER WILL CONTAIN THE STANDARD PATENT INDEMNITY CLAUSE AS REQUIRED BY REGULATION. WE FIND NO BASIS FOR CONCURRING WITH YOUR CONTENTION THAT A WAIVER HAS BEEN GRANTED.

THE FIFTH AND FINAL CONTENTION IS THAT AEROSONIC IS TECHNICALLY UNQUALIFIED TO MANUFACTURE THE HIGHLY SOPHISTICATED INSTRUMENT BEING PROCURED HERE.

THE RECORD SHOWS THAT AN AFFIRMATIVE FINDING WAS MADE IN A PRE AWARD SURVEY AND FACILITY CAPABILITY REPORT ON AEROSONIC'S CAPABILITY TO PERFORM THE PROPOSED CONTRACT. WE FIND NO BASIS FOR DISPUTING THIS FINDING. YOU CALL ATTENTION TO THE FACT THAT A CURRENT AEROSONIC CONTRACT HAS BEEN TERMINATED FOR DEFAULT AND THAT ANOTHER CURRENT CONTRACT IS BEING PROCESSED FOR TERMINATION FOR THE SAME REASON. INFORMAL INQUIRY MADE OF THE ADMINISTRATIVE OFFICE REVEALS THAT THE SURVEY TEAM AND THE CONTRACTING OFFICER WERE AWARE OF THIS INFORMATION AT THE TIME OF THEIR FINDINGS. ADDITION, WE ARE INFORMALLY ADVISED THAT A RECENT REAPPRAISAL OF THE AEROSONIC CORPORATION REAFFIRMED THE EARLIER FINDINGS.

WE HAVE FULLY AND CAREFULLY CONSIDERED YOUR SEVERAL CONTENTIONS AS INCORPORATED IN YOUR LETTERS, MEMORANDA AND PERSONAL CONTACTS, BUT WE CANNOT CONCLUDE THAT THERE WAS ANY VIOLATION OF REGULATIONS OR PROCEDURES IN THE PRESENT MATTER. MANY MATTERS DISCUSSED IN YOUR LETTERS AND MEMORANDA PERTAIN TO ADMINISTRATIVE AND POLICY MATTERS OF THE DEPARTMENT OF THE AIR FORCE AND DEPARTMENT OF DEFENSE. SUCH MATTERS DO NOT AFFECT THE VALIDITY OF A PROPOSED AWARD UNLESS THEY ARE IN DEROGATION OF A STATUTE OR EXISTING REGULATIONS.