B-159582, SEP. 7, 1966

B-159582: Sep 7, 1966

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TO THE NUCLEAR RESEARCH CORPORATION: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED JUNE 30. OBJECTION IS RAISED TO SECTION A OF AMENDMENT NO. 1 OF THE IFB. 500 IS THE ESTIMATED COST TO THE GOVERNMENT OF TESTING A PROSPECTIVE CONTRACTOR'S FIRST ARTICLE. IS REPORTED THE ESTIMATED COST OF TESTING IN THIS CASE IS DERIVED FROM THE ACCUMULATED COST EXPERIENCE OF THE NAVAL RADIOLOGICAL DEFENSE LABORATORY. IT IS PROPOSED BY THE CONTRACTING OFFICER TO AWARD THE CONTRACT TO ENI. WHOSE BID LESS DISCOUNT IS $515. IS $522. YOUR PROTEST PROPOSES THAT THE PROCEDURE SET OUT IN REFERENCED AMENDMENT NO. 1 IS CONTRARY TO PRINCIPLES OF FREE AND COMPETITIVE BIDDING. THE ADDITION TO YOUR BID FOR EVALUATION PURPOSES OF AN AMOUNT REPRESENTING COST OF FIRST ARTICLE TESTING IS MANDATORY UNDER THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-1903/A).

B-159582, SEP. 7, 1966

TO THE NUCLEAR RESEARCH CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED JUNE 30, 1966, AND CONFIRMING LETTER OF JULY 1, 1966, PROTESTING THE AWARD OF INVITATION FOR BIDS (IFB) 600-780-66-S, ISSUED BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C., TO ANY BIDDER OTHER THAN NUCLEAR RESEARCH CORPORATION (NRC). OBJECTION IS RAISED TO SECTION A OF AMENDMENT NO. 1 OF THE IFB, WHICH PROVIDES THAT THE ESTIMATED COST TO THE GOVERNMENT OF TESTING THE FIRST ARTICLE DELIVERED BY THE CONTRACTOR SHALL BE ADDED, FOR EVALUATION PURPOSES ONLY, TO ALL BIDS SUBMITTED BY BIDDERS NOT ELIGIBLE FOR WAIVER OF TESTING.

AMENDMENT NO. 1 TO THE IFB STIPULATES THAT $6,500 IS THE ESTIMATED COST TO THE GOVERNMENT OF TESTING A PROSPECTIVE CONTRACTOR'S FIRST ARTICLE. IS REPORTED THE ESTIMATED COST OF TESTING IN THIS CASE IS DERIVED FROM THE ACCUMULATED COST EXPERIENCE OF THE NAVAL RADIOLOGICAL DEFENSE LABORATORY, SAN FRANCISCO, CALIFORNIA, THE INSTALLATION THAT PERFORMS SUCH TESTS FOR THE GOVERNMENT.

THE SUBJECT IFB LISTED ELECTRO-NEUTRONICS INCORPORATED (ENI) AS THE ONLY PROSPECTIVE BIDDER ELIGIBLE FOR SUCH WAIVER, SINCE IT HAD SUBMITTED AND APPROVED FIRST ARTICLE UNDER PREVIOUS CONTRACTS FOR THE SAME OR SIMILAR ITEMS. IT IS PROPOSED BY THE CONTRACTING OFFICER TO AWARD THE CONTRACT TO ENI, WHOSE BID LESS DISCOUNT IS $515,708, WHILE YOUR FIRM'S BID, LESS DISCOUNT AND WITH THE EVALUATION FACTOR OF $6,500ADDED, IS $522,190.51.

YOUR PROTEST PROPOSES THAT THE PROCEDURE SET OUT IN REFERENCED AMENDMENT NO. 1 IS CONTRARY TO PRINCIPLES OF FREE AND COMPETITIVE BIDDING, SINCE ITS RESTRICTIVE NATURE FAILS TO PROVIDE AN EQUAL BIDDING BASIS FOR ALL BIDDERS AND FRUSTRATES THE GOVERNMENT'S OBJECTIVE TO SECURE ADDITIONAL SMALL BUSINESS COMPETITION.

THE ADDITION TO YOUR BID FOR EVALUATION PURPOSES OF AN AMOUNT REPRESENTING COST OF FIRST ARTICLE TESTING IS MANDATORY UNDER THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-1903/A), WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"1-1903 FIXED-PRICE TYPE CONTRACTS.

"/A) THE SOLICITATION FOR A FIXED-PRICE TYPE CONTRACT WHICH IS TO CONTAIN A REQUIREMENT FOR FIRST ARTICLE APPROVAL SHALL INFORM BIDDERS OR OFFERORS THAT WHERE SUPPLIES IDENTICAL OR SIMILAR TO THOSE CALLED FOR HAVE BEEN PREVIOUSLY FURNISHED BY THE BIDDER OR OFFEROR AND HAVE BEEN ACCEPTED BY THE GOVERNMENT, THE REQUIREMENT FOR FIRST ARTICLE APPROVAL MAY BE WAIVED BY THE GOVERNMENT. TO PERMIT PROPER EVALUATION OF BIDS OR OFFERS WHERE ONE OR MORE BIDDERS OR OFFERORS MAY BE ELIGIBLE TO HAVE FIRST ARTICLE APPROVAL TESTS WAIVED, THE SOLICITATION SHALL PERMIT THE SUBMISSION OF ALTERNATIVE BIDS OR OFFERS--- ONE INCLUDING FIRST ARTICLE APPROVAL TESTS AND THE OTHER EXCLUDING SUCH TESTS; SHALL STATE CLEARLY THE RELATIONSHIP OF THE FIRST ARTICLE TO THE CONTRACT QUANTITY (SEE PARAGRAPH (E) OF THE CONTRACT CLAUSES IN 1 1906), AND SHALL PROVIDE FOR:

"/III)IF THE GOVERNMENT IS TO BE RESPONSIBLE FOR FIRST ARTICLE TESTING, THE COST TO THE GOVERNMENT OF SUCH TESTING SHALL BE A FACTOR IN THE EVALUATION OF THE BIDS AND PROPOSALS TO THE EXTENT THAT SUCH COST CAN BE REALISTICALLY ESTIMATED. THIS ESTIMATE SHALL BE DOCUMENTED IN THE CONTRACT FILE AND CLEARLY SET FORTH IN THE SOLICITATION AS A FACTOR WHICH WILL BE CONSIDERED IN EVALUATING THE BIDS OR PROPOSALS.'

SUBSECTION (III) QUOTED ABOVE WAS ADDED IN A RECENT REVISION TO THE ASPR IN ORDER TO REFLECT OUR DECISION WITH RESPECT TO WHETHER THE COST OF TESTING PREPRODUCTION SAMPLES SHOULD BE CONSIDERED IN THE EVALUATION OF BIDS WHERE SUCH TESTS ARE PERFORMED AT GOVERNMENT EXPENSE. SEE ASPR REVISION 15, FEBRUARY 1, 1966, NOTES REGARDING SUBSTANTIVE CHANGES.

THE DECISION OF OUR OFFICE TO WHICH THE REVISION REFERS APPEARS TO BE B- 156582, JULY 16, 1965, WHICH STATES IN PERTINENT PART:

"SECONDLY, AND OF PERHAPS MORE IMPORTANCE, IS THE FACT THAT IF SUCH GOVERNMENT TESTING COSTS ARE PROPER FOR CONSIDERATION IN DETERMINING THE MOST ADVANTAGEOUS BID IN THE PRESENT CASE, THEY NOT ONLY MAY BUT MUST BE CONSIDERED IN THIS AND ALL OTHER CASES OF GOVERNMENT PROCUREMENT. WE DO NOT KNOW WHETHER IT IS POSSIBLE OR ADMINISTRATIVELY FEASIBLE TO DETERMINE SUCH COSTS IN ALL CASES. CONCEIVABLY SUCH COSTS MAY VARY EVEN IN TESTING THE SAME ITEM. THERE MIGHT BE DIFFERENCES OF OPINION AS TO WHAT SPECIFIC CATEGORIES OF COSTS, SUCH AS SALARIES AND OVERHEAD, SHOULD BE INCLUDED. WE BELIEVE THAT IF SUCH COSTS ARE TO BE A FACTOR IN BID EVALUATION, THIS SHOULD BE DONE ONLY AFTER THOROUGH STUDY AND CONSIDERATION OF THE PROS AND CONS BY ALL INTERESTED GOVERNMENT AGENCIES, ESTABLISHMENT OF PROPER CRITERIA FOR THE USE OF THIS FACTOR, AND SPECIFIC NOTICE TO BIDDERS IN INVITATIONS TO BID THAT IT WILL BE A BID EVALUATION FACTOR.' IN OUR OPINION, ASPR 1-1903/A) (III) SUFFICIENTLY OVERCOMES THE OBJECTIONS RAISED IN THE ABOVE QUOTED PASSAGE, AND THE EVALUATION PROCEDURE FOLLOWED IN THE INSTANT CASE WAS THEREFORE IN ACCORD WITH BOTH THE REGULATION AND THE JULY 16, 1965, DECISION OF THIS OFFICE. FURTHER, WE BELIEVE THAT THE PROCEDURE, EVEN THOUGH RESTRICTIVE, IS NECESSARY AND PROPER IN DETERMINING THE BID MOST ADVANTAGEOUS TO THE GOVERNMENT.

FOR THE FOREGOING REASONS WE SEE NO LEGAL BASIS FOR OBJECTING TO THE REJECTION OF YOUR BID, AND YOUR PROTEST IS THEREFORE DENIED.