B-158385, SEP. 14, 1966

B-158385, SEP. 14, 1966

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A REPORT RELATIVE TO THE NEGOTIATED PROCUREMENT OF OCEAN TOWING SERVICES WHICH WAS FURNISHED THIS OFFICE UNDER DATE OF AUGUST 9, 1966, BY THE ASSISTANT SECRETARY (INSTALLATIONS AND LOGISTICS) IN RESPONSE TO OUR LETTER OF APRIL 6, 1966.

IN OUR LETTER WE POINTED OUT THE STATUTORY PREFERENCE FOR FORMAL ADVERTISING AS REFLECTED IN THE LANGUAGE OF 10 U.S.C. 2304 (A), WHICH REQUIRES THAT PURCHASES OF, AND CONTRACTS FOR, PROPERTY OR SERVICES BE MADE BY FORMAL ADVERTISING IN ALL CASES IN WHICH THE USE OF FORMAL ADVERTISING IS FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES. WE ARE IN AGREEMENT WITH, AND GRATIFIED BY, THE ADVICE IN THE ASSISTANT SECRETARY'S REPORT THAT PROPER STATEMENTS OF FACTS AND CIRCUMSTANCES WILL BE REQUIRED IN ALL FUTURE PROCUREMENTS OF OCEAN TOWING SERVICES WHERE USE OF FORMAL ADVERTISING IS DETERMINED TO BE IMPRACTICABLE AND WE DO NOT FEEL THAT WE ARE REQUIRED TO OBJECT TO THE AWARD UNDER RFP NO. 52. HOWEVER, WITH RESPECT TO THE BELIEF EXPRESSED BY THE ASSISTANT SECRETARY THAT THE FACTS MAY SUPPORT A CLASS DETERMINATION, WE QUESTION WHETHER SEVERAL OF THE FACTS AND CIRCUMSTANCES WHICH ARE OUTLINED IN YOUR REPORT OF AUGUST 9 ARE SUCH AS TO AFFORD ANY JUSTIFICATION FOR FAILING TO USE FORMAL ADVERTISING PROCEDURES, AND WHETHER THE PRESENT RECORD ESTABLISHES THAT ANY OR ALL OF THE REMAINING FACTS AND CIRCUMSTANCES WILL NECESSARILY BE PRESENT IN ALL FUTURE PROCUREMENT OF OCEAN TOWING SERVICES, SO AS TO JUSTIFY A CLASS DETERMINATION. IN THIS CONNECTION, WE SUGGEST THAT CONSIDERATION BE GIVEN TO THE FOLLOWING QUESTIONS WHICH WE BELIEVE ARE RAISED BY THE INFORMATION SET OUT IN THE REPORT OF AUGUST 9, 1966:

(1) FACTORS SUCH AS THE TUG'S SEAWORTHINESS, SUITABILITY, CAPABILITY TO PERFORM THE TOW, AND RELATIVE EXPERIENCE OF EACH ELIGIBLE OFFEROR, RELATED TO THE RESPONSIBILITY OF THE BIDDER, AND WE QUESTION WHETHER THESE MATTERS MAY PROPERLY BE CONSIDERED DIFFERENTLY UNDER A NEGOTIATED PROCUREMENT THAN UNDER A FORMALLY ADVERTISED PROCUREMENT.

(2) THE RESUME OF PAST EXPERIENCE ON TIME AVAILABLE FOR SOLICITATION AND AWARD MAY BE A COMPLETELY UNRELIABLE AND TOTALLY UNACCEPTABLE BASIS FOR A CONCLUSION THAT THERE WILL BE INSUFFICIENT LEAD TIME TO PERMIT FORMAL ADVERTISING IN ALL FUTURE PROCUREMENTS. SPECIFICALLY, THE RECORD DOES NOT INDICATE WHETHER THE SHORT LEAD TIMES IN PAST PROCUREMENTS MAY NOT BE ATTRIBUTABLE IN WHOLE OR PART TO KNOWLEDGE THAT NEGOTIATION WOULD BE USED, AND THAT GREATER LEAD TIMES WERE THEREFORE UNNECESSARY, OR WHETHER EXISTING PROCEDURES CAN BE REVAMPED TO PERMIT AND REQUIRE GREATER LEAD TIMES IN SOME OR ALL FUTURE PROCUREMENTS OF OCEAN TOWING SERVICES.

(3) WE QUESTION WHETHER FACTORS SUCH AS THE INCREASED HAZARDS OF TOWING OVER CARGO CARRIAGE, THE EXISTENCE OF ONLY LIMITED COMPETITION, THE READINESS DATE OF THE TUG, AND THE FACT THAT OPERATORS WILL NOT HOLD TUGS AVAILABLE FOR LONG PERIODS OF TIME, WOULD OPERATE TO MAKE FORMAL ADVERTISING IMPRACTICABLE IN ALL PROCUREMENTS.

(4) WITH RESPECT TO THE ADVICE THAT THE FLEXIBILITY OF NEGOTIATION PROCEDURE IS NECESSARY TO ACCOMMODATE MATTERS SUCH AS (A) CHANGING CIRCUMSTANCES OCCURRING DURING THE PROCUREMENT, (B) THE CORRECTION OF CERTAIN DEFICIENCIES IN OFFERS, (C) THE CONSIDERATION OF OFFERS WHICH DO NOT ASSUME ALL INCIDENTAL CHARGES APPLICABLE TO THE PARTICULAR ROUTE INVOLVED, AND (D) THE REJECTION OF THE LOW PROPOSAL BECAUSE OF SAFETY FACTORS, WE SUGGEST THAT THESE SAME CONSIDERATIONS ARE NOT UNIQUE TO OCEAN TOWING SERVICES BUT ARE ALSO PRESENT IN THE PROCUREMENT OF VARIOUS OTHER SERVICES WHICH ARE ACCOMPLISHED BY FORMAL ADVERTISING. WHILE THE ADDITIONAL FLEXIBILITY OF NEGOTIATIONS MIGHT BE CONSIDERED DESIRABLE IN THE PROCUREMENT OF OCEAN TOWING SERVICES IT WOULD NOT FOLLOW THAT SUCH ADDITIONAL FLEXIBILITY IS NECESSARY, SINCE SIMILAR PROBLEMS ARE DEALT WITH UNDER FORMAL ADVERTISING PROCEDURES BY AMENDMENTS TO IFB-S, BY CORRECTION OR WAIVER OF MINOR INFORMALITIES OR IRREGULARITIES IN BIDS, BY THE DRAFTING OF IFB'S WHICH PROVIDE FOR EVALUATION OF BIDS BASED ON THE ASSUMPTION OF INCIDENTAL COSTS EITHER BY THE GOVERNMENT OR BY THE BIDDER, BY AWARDS TO OTHER THAN THE LOW BIDDER WHEN CONSIDERATION OF OTHER FACTORS IN ADDITION TO PRICE JUSTIFIES SUCH ACTION, AND BY THE REJECTION OF BIDS AND THE USE OF NEGOTIATION PROCEDURES WHERE THE BID PRICES ARE UNREASONABLE.

IN VIEW OF THE FOREGOING WE QUESTION WHETHER THE PRESENT RECORD WOULD SUPPORT A CLASS ACTION BY CLEARLY AND CONVINCINGLY ESTABLISHING THAT THE USE OF FORMAL ADVERTISING WOULD NOT BE FEASIBLE AND PRACTICABLE IN ALL FUTURE OCEAN TOWING PROCUREMENTS. IT IS THEREFORE SUGGESTED THAT THE ABOVE COMMENTS BE CONSIDERED IN ANY FURTHER DELIBERATIONS ATTENDANT TO THE ISSUANCE OF A CLASS DETERMINATION FOR THE NEGOTIATION OF ALL FUTURE OCEAN TOWING SERVICES.

A COPY OF THE ADMINISTRATIVE REPORT OF AUGUST 9 AND A COPY OF THIS LETTER ARE BEING FURNISHED THE CONGRESSIONAL SOURCE OF INTEREST IN THE MATTER.