B-159796, NOV. 30, 1966

B-159796, NOV. 30, 1966

TO JOHN REINER GENERATORS, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF JULY 29, 1966, PROTESTING THE AWARD ON JUNE 29, 1966, OF A CONTRACT TO HOLT BROTHERS FOR 274 GENERAL PURPOSE ENGINE GENERATOR SETS UNDER REQUEST FOR PROPOSALS NO. AMC (T/ 23-195-353- 66, ISSUED MAY 25, 1966, BY THE UNITED STATES ARMY MOBILITY EQUIPMENT CENTER, DIRECTORATE OF PROCUREMENT AND PRODUCTION, ST. LOUIS, MISSOURI, RATHER THAN TO THE LOW OFFEROR, JOHN REINER GENERATORS, INCORPORATED.

WE ARE INFORMED THAT THE PROCUREMENT WORK DIRECTIVE SUPPORTING THIS ACQUISITION SPECIFIED AN 02 PRIORITY, AS THE GENERATORS WERE NEEDED TO SUPPORT THE MILITARY EFFORT IN SOUTHEAST ASIA, AND THAT IT WAS DETERMINED THAT THE PROCUREMENT SHOULD BE NEGOTIATED IN ACCORDANCE WITH THE PUBLIC EXIGENCY EXCEPTION TO ADVERTISED BIDDING PROCEDURES, SECTION 3-202.2 (VI) OF THE ARMED SERVICES PROCUREMENT REGULATION.

OF THE 26 FIRMS SOLICITED, 13 FIRMS HAD SUBMITTED PROPOSALS BY THE EXTENDED OPENING DATE OF JUNE 16, 1966. ON THE BASIS OF THE INFORMATION CONTAINED IN THESE ORIGINAL PROPOSALS, ONLY TWO, THE PROPOSALS OF HOLT BROTHERS AND ALLIS-CHALMERS WERE FOUND TO BE TECHNICALLY RESPONSIVE. WITHOUT FURTHER DISCUSSION THE CONTRACT WAS AWARDED TO HOLT BROTHERS, THE LOWEST RESPONSIVE, RESPONSIBLE PROPOSER, AND PRODUCTION PURSUANT TO THIS AWARD IS CURRENTLY UNDER WAY.

THE PROPOSAL OF JOHN REINER WAS REJECTED AS TECHNICALLY DEFICIENT BECAUSE IT FAILED TO FURNISH MAKE AND MODEL NUMBER OF THE BATTERY, BATTERY CHARGER, AND INSTRUMENTS; BECAUSE THE TEST DATA AND EXPERIENCE DATA WERE INCOMPLETE; BECAUSE MORE DETAILS WERE REQUIRED TO THOROUGHLY EVALUATE THE GENERATOR; AND BECAUSE THE PROPOSAL FAILED TO SUPPLY A SAMPLE COMMERCIAL WARRANTY, RADIO SUPPRESSION EQUIPMENT INFORMATION, AND GUARANTEED SHIPPING WEIGHT. HOWEVER, SUCH DATA AS WAS SUPPLIED WITH THE JOHN REINER PROPOSAL INDICATED THAT ITS OFFER MIGHT HAVE SATISFIED THE TECHNICAL REQUIREMENTS OF THE REQUEST, BUT THAT CERTAIN ADDED INFORMATION WAS NECESSARY BEFORE A COMPLETE EVALUATION WAS POSSIBLE. THE CONTRACTING OFFICER, DESPITE A POSSIBLE SAVING OF $328,526, DECLINED TO INVESTIGATE OR DISCUSS JOHN REINER'S PROPOSAL, GIVING AS A REASON ON PAGE 2 OF HIS REPORT:

"THE FIRST PAGE OF THE SCHEDULE OF THE REQUEST FOR PROPOSAL STATES IN PART: "OFFERS RECEIVED WILL PROVIDE A BASIS FOR SELECTION OF A PROSPECTIVE CONTRACTOR. AWARD MAY BE MADE WITHOUT A DISCUSSION OF PROPOSALS RECEIVED, HENCE, PROPOSALS SHOULD BE SUBMITTED INITIALLY ON THE MOST FAVORABLE TERMS FROM A PRICE AND, WHEN APPLICABLE, TECHNICAL STANDPOINT WHICH THE OFFEROR CAN SUBMIT TO THE GOVERNMENT.'"

BECAUSE OF THIS TERM OF THE PROPOSAL, THE SAME REPORT, ON PAGES 4 5, CONCLUDED:

"* * * BECAUSE OF THE URGENCY OF THE REQUIREMENT, THE CONTRACTING OFFICER HAD PREPARED THE REQUEST FOR PROPOSAL TO CLEARLY STATE THAT AWARD MIGHT BE MADE WITHOUT DISCUSSION OF PROPOSALS RECEIVED, SO THEY SHOULD BE SUBMITTED ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT * * *. ALL OFFERORS WERE ON NOTICE THAT THEY SHOULD NOT EXPECT A SECOND CHANCE.'

IN LIGHT OF 10 U.S.C. 2304 (G) WHICH PROVIDES IN PART THAT WHEN PROCUREMENTS ARE NEGOTIATED ,WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED," WE FEEL THAT DISCUSSION WOULD HAVE BEEN APPROPRIATE UNDER THE CIRCUMSTANCES HERE. SEE B-158686 OF SEPTEMBER 2, 1966, WHERE WE DISCUSSED AT LENGTH THE IMPLICATIONS OF 10 U.S.C. 2304 (G).

WE RECOGNIZE THAT 10 U.S.C. 2304 (G) PERMITS AN EXCEPTION TO THE DUTY TO NEGOTIATE WHERE ,ACCEPTANCE OF AN INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN FAIR AND REASONABLE PRICES," BUT SINCE JOHN REINER OFFERED TO BUILD THE GENERATORS FOR $1,199 LESS PER UNIT, OR $328,566 LESS OVERALL, AND THREE OTHER PROPOSALS OFFERED PRICES LESS THAN THE SUCCESSFUL PROPOSER, HOLT BROTHERS, WE BELIEVE THE CONTRACTING OFFICER SHOULD HAVE EXERCISED HIS AUTHORITY TO INITIATE NEGOTIATIONS IN AN ATTEMPT TO SECURE THE BEST CONTRACT POSSIBLE, PRICE AND OTHER FACTORS CONSIDERED.

MANY OF THE ITEMS LISTED AS TECHNICAL DEFICIENCIES IN THE ARMY'S EVALUATION OF YOUR PROPOSAL SEEM TO HAVE BEEN OF SUCH A NATURE THAT DISCUSSION WOULD HAVE RESULTED IN CLARIFICATION. HAD THE ARMY MADE ANY ATTEMPT TO DISCUSS YOUR PROPOSAL, MANY OF THE DIFFICULTIES PROBABLY COULD HAVE BEEN ANSWERED. IN VIEW OF THE FACT YOUR OFFER WAS SUBSTANTIALLY LOWER AND THAT IT MIGHT WELL HAVE SATISFIED THE GOVERNMENT'S NEEDS, WE FEEL THAT UNDER THE NEGOTIATED BID PROCEDURE, THE ARMY HAD SOME DUTY TO ATTEMPT TO ASCERTAIN SUCH READILY AVAILABLE ITEMS AS YOUR STANDARD COMMERCIAL WARRANTY, GUARANTEED SHIPPING WEIGHT, AND ADDITIONAL INFORMATION ABOUT YOUR EXPERIENCE BUILDING GENERATOR SETS. TREATING ITEMS SUCH AS THESE, WHICH COULD HAVE BEEN CURED BY ONE TELEPHONE CALL, AS A BASIS FOR REJECTING YOUR OFFER AS NONRESPONSIVE APPEARS TO US TO HAVE BEEN UNDULY TECHNICAL.

IT FURTHERS APPEARS THAT THE LACK OF MAKE AND MODEL NUMBERS FOR THE INSTRUMENTS, BATTERY, AND BATTERY CHARGER WERE MATTERS WHICH COULD HAVE BEEN EASILY ASCERTAINED WITH MINIMAL DELAY BUT FOR THE CONTRACTING OFFICER'S NARROW CONSTRUCTION OF HIS DUTY TO NEGOTIATE. THIS WOULD ALSO APPLY TO THE DISCUSSION NECESSARY TO CLEAR UP THE OTHER TECHNICAL DEFICIENCIES, FOR THEY INVOLVED INADEQUATE DATA OR INCOMPLETE DESCRIPTION OF THE COMPONENTS IN QUESTION, RATHER THAN ITEMS THAT WERE PRIMA FACIE BELOW THE TECHNICAL STANDARDS OF THE REQUEST. DESPITE THE HIGH PRIORITY ACCORDED THIS PROCUREMENT, THE STATUTORY MANDATE TO WIDEN COMPETITION IN NEGOTIATED PROCUREMENTS COULD HAVE BEEN OBEYED WITHOUT UNDUE DELAY, FOR THE SHORTCOMINGS OF THE JOHN REINER PROPOSAL WERE ESSENTIALLY A MATTER OF ESTABLISHING THE IDENTITY OF CERTAIN COMPONENTS. WHEN IT IS REMEMBERED THAT, ACCORDING TO THE PROJECTED DELIVERY SCHEDULE, IT TOOK FROM MAY 13, 1966, THE DATE THE PROCUREMENT WORK DIRECTIVE WAS RECEIVED BY THE PROCURING ACTIVITY, UNTIL OCTOBER 7, 1966, FOR THE DELIVERY OF THE FIRST GENERATOR, IT APPEARS THAT THE SHORT TIME REQUIRED TO CLARIFY SUCH MATTERS AS THE MAKE AND MODEL OF THE BATTERY SHOULD NOT HAVE BEEN A MATERIAL CONSIDERATION WHEN COMPARED TO THE OVERALL TIME NECESSARY TO EFFECT THE PROCUREMENT.

WE ALSO NOTE THAT SOME OF THESE TECHNICAL DEFICIENCIES WERE PARTLY THE FAULT OF AMBIGUOUS TERMS IN THE REQUEST FOR PROPOSALS, FOR IT DID NOT INDICATE WITH ANY SPECIFICITY JUST HOW DETAILED A DESCRIPTION WAS REQUIRED. IN PARTICULAR, EVEN THOUGH THE REQUEST STATED THAT CERTAIN ITEMS WERE TO BE IDENTIFIED BY MAKE AND MODEL, THEREBY LEAVING OPEN THE INFERENCE THAT A DESCRIPTIVE PROPOSAL WOULD BE ADEQUATE FOR THE REMAINING COMPONENTS, THE ARMY DETERMINED THAT YOUR FAILURE TO SUPPLY MAKE AND MODEL FOR SOME OF THESE OTHER COMPONENTS WAS A TECHNICAL DEFICIENCY.

BECAUSE THE LOW EVALUATION OF YOUR PROPOSAL WAS BASED, IN PART, ON OBJECTIONS OF THIS TYPE, WE FEEL THAT THE REJECTION OF YOUR PROPOSAL WITHOUT NEGOTIATION WAS NOT PROPER.

UNLIKE THE CASE OF A REQUEST FOR PROPOSALS FOR A RESEARCH AND DEVELOPMENT CONTRACT WHEN PRECISE ENGINEERING AND SCIENTIFIC DATA WOULD BE THE HEART OF THE PROPOSAL, A FEW INSTANCES OF INSUFFICIENT DATA OR DETAIL ARE NOT ORDINARILY AN ADEQUATE REASON FOR REJECTING WITHOUT DISCUSSION A LOW BID ON A COMMON ARTICLE OF INDUSTRIAL EQUIPMENT. THIS IS ESPECIALLY TRUE UNDER THE FACTS HERE, WHERE THE CONTRACTOR OFFERED TO ASSEMBLE GENERATOR SETS FROM SUCH ORDINARY COMMERCIAL PARTS AS DIESEL ENGINES, INSTRUMENTS, GENERATORS, AND STORAGE BATTERIES. FOR THIS REASON, 39 COMP. GEN. 490 IS NOT APPLICABLE.

THEREFORE, WE CONCLUDE THAT JOHN REINER'S PROPOSAL SHOULD NOT HAVE BEEN EXCLUDED FROM FURTHER NEGOTIATIONS TO ASCERTAIN IF ITS PROPOSAL WAS TECHNICALLY SUFFICIENT.

WHILE WE USE THE TERM NEGOTIATIONS HERE, WE REALIZE THAT FOR A MAJORITY OF THE DEFICIENCIES THE DISCUSSION WOULD BE MORE IN THE NATURE OF A CLARIFICATION THAN A GIVE-AND-TAKE NEGOTIATION PROCESS, AND THAT THE DISCUSSION WOULD NOT NECESSARILY INVOLVE THE GRANTING OF MORE FAVORABLE TERMS THAN THOSE ORIGINALLY CONTEMPLATED IN THE JOHN REINER PROPOSAL.

WE FURTHER NOTE THAT THE ARMY RAISED A QUESTION REGARDING THE PRODUCTION CAPABILITY AND QUALITY ASSURANCE PROCEDURES OF YOUR FIRM. BECAUSE THE ARMY DETERMINED THAT YOUR PROPOSAL WAS TECHNICALLY NONRESPONSIVE, IT DID NOT PASS ON THE QUESTION OF YOUR FIRM'S RESPONSIBILITY, SO THAT IT IS NOT NECESSARY TO CONSIDER THE ISSUE HERE.

ALTHOUGH THE CONTRACTING OFFICER ACTED IMPRUDENTLY IN DENYING YOUR FIRM AN OPPORTUNITY TO DISCUSS YOUR PROPOSAL, THE PRESENT AWARD TO HOLT BROTHERS CANNOT BE DISTURBED BECAUSE SUCH ACTION WOULD CAUSE THE LOSS OF TWO MONTHS ON THE DELIVERY SCHEDULE OF A CRITICALLY NEEDED ITEM. ACCORDINGLY, THIS OFFICE WILL TAKE NO FURTHER ACTION IN THE MATTER.