B-161334, NOVEMBER 13, 1967, 47 COMP. GEN. 252

B-161334: Nov 13, 1967

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TECHNICAL CRITERIA ESTABLISHED AFTER THE ISSUANCE OF THE REQUEST FOR PROPOSALS WAS NOT A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION. NEGOTIATION OF THE PROCUREMENT WITH ONLY ONE OF FIVE OFFERORS WAS NOT IN ACCORD WITH PARAGRAPH 3-804 OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIRING CLARIFICATION OF DEFECTIVELY PRICED PROPOSALS. ONE OF THE REJECTED PROPOSALS COMING WITHIN THE "COMPETITIVE RANGE" CONTEMPLATED BY 10 U.S.C. 2304 (G) SHOULD HAVE BEEN CONSIDERED AS IT WAS NOT SO TECHNICALLY INFERIOR AS TO PRECLUDE MEANINGFUL NEGOTIATION. ALTHOUGH THE AWARD MADE WILL NOT BE DISTURBED. 1967: REFERENCE IS MADE TO A REPORT DATED MAY 24. YOU ARE REQUESTED TO RESPOND STRICTLY TO THE REQUIREMENTS OF THE ATTACHED STATEMENT OF WORK.

B-161334, NOVEMBER 13, 1967, 47 COMP. GEN. 252

BIDS - EVALUATION - NEGOTIATION - CRITERIA ESTABLISHMENT THE DETERMINATION TO EVALUATE PROPOSALS FOR FURNISHING TAPE RECORDERS, SPARE PARTS, AND USE DOCUMENTATION ON THE ONLY COMMON BASIS OFFERED, THE PRICE OF THE RECORDER, RATHER THAN ON THE BASIS OF THE POINTS ASSIGNED TO THE COST, MANAGEMENT, AND TECHNICAL CRITERIA ESTABLISHED AFTER THE ISSUANCE OF THE REQUEST FOR PROPOSALS WAS NOT A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION, FOR UNLIKE MANAGEMENT AND TECHNICAL EVALUATIONS, COST EVALUATIONS CAN BE OBJECTIVELY MEASURED ON OVERALL COSTS AND, THEREFORE, NEGOTIATION OF THE PROCUREMENT WITH ONLY ONE OF FIVE OFFERORS WAS NOT IN ACCORD WITH PARAGRAPH 3-804 OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIRING CLARIFICATION OF DEFECTIVELY PRICED PROPOSALS. HOWEVER, EVEN IN APPLYING THE DEFECTIVE COST EVALUATION TECHNIQUE, ONE OF THE REJECTED PROPOSALS COMING WITHIN THE "COMPETITIVE RANGE" CONTEMPLATED BY 10 U.S.C. 2304 (G) SHOULD HAVE BEEN CONSIDERED AS IT WAS NOT SO TECHNICALLY INFERIOR AS TO PRECLUDE MEANINGFUL NEGOTIATION. ALTHOUGH THE AWARD MADE WILL NOT BE DISTURBED, STEPS SHOULD BE TAKEN TO AVOID A RECURRENCE OF SIMILAR NEGOTIATION PROCEDURES.

TO THE SECRETARY OF THE AIR FORCE, NOVEMBER 13, 1967:

REFERENCE IS MADE TO A REPORT DATED MAY 24, 1967, FROM THE DEPUTY CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE OF PROCUREMENT POLICY, DEPARTMENT OF THE AIR FORCE, WASHINGTON, D.C., RELATIVE TO THE PROTEST OF CONSOLIDATED ELECTRODYNAMICS CORPORATION (CEC) AGAINST THE AWARD OF CONTRACT NO. F04695-67-C-0132 TO THE AMPEX CORPORATION UNDER REQUEST FOR PROPOSALS (RFP) F04695-67-R-0064.

BY LETTER DATED NOVEMBER 15, 1966, THE AIR FORCE SATELLITE CONTROL FACILITY, SPACE SYSTEMS DIVISION, AIR FORCE SYSTEMS COMMAND, LOS ANGELES, CALIFORNIA (AFSCF SSD) REQUESTED PRICE AND TECHNICAL PROPOSALS ON A FIXED- PRICE BASIS FOR FABRICATING, TESTING AND DELIVERING 22 MAGNETIC TAPE RECORDERS WITH ASSOCIATED SPARE PARTS AND DOCUMENTATION FOR USE IN THE SPACE GROUND LINK SUBSYSTEM, IN ACCORDANCE WITH AN ATTACHED STATEMENT OF WORK, ENTITLED "MAGNETIC TAPE RECORDERS," AND AEROSPACE CORPORATION REPORT NO. TOR-669/6110-01/-16, REISSUE A (TOR/16), DATED SEPTEMBER 23, 1966, ENTITLED "WIDEBAND MAGNETIC TAPE RECORDERS.' SECTION 3 OF THAT REPORT DEALING WITH THE GENERAL CONCEPT OF TOR/16 STATED THAT: "THE RECORDERS SHALL BE A STANDARD PRODUCT LINE FROM A WELL RECOGNIZED MANUFACTURER OF PROVED REPUTATION.' FURTHER, THE INFORMATION AND INSTRUCTIONS ACCOMPANYING THE SOLICITATION, ADVISED OFFERORS, IN PART, AS FOLLOWS:

******* ******* ******* ******* "4. YOU ARE REQUESTED TO RESPOND STRICTLY TO THE REQUIREMENTS OF THE ATTACHED STATEMENT OF WORK. HOWEVER, ANY ALTERNATIVE SOLUTION OR USE OF OTHER EQUIPMENT SHOULD BE SUBMITTED IN A SEPARATE PROPOSAL.

******* ******* ******* ******* "8. YOUR PROPOSAL SHOULD INCLUDE YOUR DESIGN OR PLAN FOR ACCOMPLISHING THIS PROCUREMENT. IF IN SUBMITTING THIS PLAN, YOU SHOULD INCLUDE INFORMATION WHICH YOU DO NOT WANT DISCLOSED TO THE PUBLIC OR USED BY THE GOVERNMENT FOR ANY PURPOSE OTHER THAN EVALUATION OF THE PROPOSALS, YOU SHOULD MARK EACH SHEET OF DATA WHICH YOU WISH TO RESTRICT WITH THE LEGEND BELOW:

"/A) YOUR PROPOSAL SHOULD INCLUDE A MAINTAINABILITY PROGRAM PLAN CONTAINING FULLY DESCRIPTIVE PLANNING FOR THE ACCOMPLISHMENT OF EACH MAINTAINABILITY PROGRAM TASK SPECIFIED BY THE STATEMENT OF WORK. THIS SHOULD INCLUDE: "/I) THE WORK TO BE ACCOMPLISHED FOR EACH SPECIFIED TASK AS DELINEATED IN MIL-STD-470. "/II) THE TIME PHASING OF EACH TASK. "/III) THE CONTRACTOR ORGANIZATIONAL ELEMENT RESPONSIBLE FOR IMPLEMENTING THE MAINTAINABILITY PROGRAM. "/IV) GENERAL TECHNIQUES FOR ALLOCATING QUANTITIVE REQUIREMENTS TO LOWER LEVEL FUNCTIONAL ELEMENTS OF THE SYSTEM (SUBSYSTEM, ASSEMBLY OR COMPONENTS.)

******* ******* ************** "31. BLOCKS 23, 24, 25 AND 26 OF THE VARIOUS LINE ITEMS OF THE DD FORM 1423, CONTRACT DATA REQUIREMENTS LIST, WHICH IS ATTACHED TO THE STATEMENT OF WORK, ARE TO BE FILLED IN AND THIS BECOME A PART OF YOUR COST PROPOSAL. CARE SHOULD BE EXERCISED IN THE COMPLETION OF THIS FORM.'

OF THE THIRTEEN SOURCES ORIGINALLY SOLICITED, FIVE FIRMS SUBMITTED TECHNICAL AND PRICE PROPOSALS BY THE CLOSING DATE DECEMBER 9, 1966, AS FOLLOWS:

HEWLETT-PACKARD $ 762,720

CEC $ 803,440

AMPEX CORPORATION $ 917,962

HONEYWELL, INC. $ 985,319

3M COMPANY $1,007,086

BY TWX, DATED DECEMBER 9, 1966, CEC ADVISED THAT AS A RESULT OF AN ERROR IN THE PREPARATION OF ITS PROPOSAL THE UNIT PRICE FOR THE TAPE RECORDERS SHOULD BE CORRECTED TO $33,180 AND THE EXTENDED TOTAL SHOULD BE CORRESPONDINGLY CORRECTED TO $729,960. THE TWX WAS, HOWEVER, TRANSMITTED AFTER THE 12:01 P.M. CLOSING TIME FOR RECEIPT OF PROPOSALS AND WAS THEREFORE DETERMINED TO BE A LATE MODIFICATION AND, IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-506 (G), WAS TREATED AS A LATE PROPOSAL AND NOT FURTHER CONSIDERED. CEC DOES NOT QUESTION THIS DETERMINATION.

ON DECEMBER 22, 1966, A PROPOSAL EVALUATION BOARD (PEB) WAS ESTABLISHED WITH THREE PANELS TO PERFORM A POINT EVALUATION OF THE COST, TECHNICAL AND MANAGEMENT ASPECTS OF THE PROPOSALS. EVALUATION CRITERIA FOR EACH AREA WERE DETERMINED BEFORE THE PROPOSALS WERE OPENED, AND THE DISTRIBUTION OF POINTS AMONG THE RESPECTIVE AREAS WAS AS FOLLOWS: COST-500 POINTS; TECHNICAL-350 POINTS; MANAGEMENT-150 POINTS. HOWEVER, IN THE AREA OF COST EVALUATION IT BECAME NECESSARY TO ADJUST THE EVALUATION CRITERIA TO TAKE INTO ACCOUNT CERTAIN PRICING DISCREPANCIES IN THE PROPOSALS OF HONEYWELL, HEWLETT-PACKARD, AND CEC. IN THIS RESPECT, IT APPEARS THAT THE AMPEX AND 3M PRICE PROPOSALS WERE COMPLETE IN THAT THEY INCLUDED THE COSTS OF THE TAPE RECORDERS, SPARE PARTS AND THE REQUIRED DOCUMENTATION. IT WAS DETERMINED, HOWEVER, THAT THE CEC PROPOSAL DID NOT INCLUDE EITHER SPARE PARTS OR DOCUMENTATION COSTS. FURTHER, THE HONEYWELL PRICE PROPOSAL EXCLUDED THE SPARE PARTS COST AND IT COULD NOT BE DETERMINED FROM THE HEWLETT PACKARD PROPOSAL WHETHER DOCUMENTATION COSTS WERE INCLUDED. PROVIDE A BASIS FOR COMPARISON AND COST WEIGHING, ALL PROPOSALS WERE EVALUATED ON THE BASIS OF THE TAPE RECORDER COSTS ONLY.

UPON EVALUATION, THE PROPOSALS RECEIVED THE FOLLOWING SCORES:

COST TECHNICAL MANAGEMENT TOTAL

AMPEX 451 208 59 718

HEWLETT-PACKARD 500 139 34 673

HONEYWELL 434 82 34 650

CEC 475 72 32 579

3M COMPANY 405 110 53 568

DESPITE THE RELATIVE POSITION OF THE HEWLETT-PACKARD, 3M COMPANY AND HONEYWELL PROPOSALS IN THE TOTAL POINT STANDINGS, THE PROPOSALS OF THESE OFFERERS WERE DETERMINED BY THE TECHNICAL EVALUATION PANEL TO BE UNACCEPTABLE, AND WERE NOT FURTHER CONSIDERED. IN THIS REGARD THE FOLLOWING TECHNICAL EVALUATION CATEGORIES WERE ESTABLISHED IN CONFORMANCE WITH THE RFP: TAPE TRANSPORT (TOR-16); HEADS (TOR-16); DIRECT RECORD/REPRODUCE ELECTRONICS (TOR-16); WIDEBAND FM ELECTRONICS (TOR-16); PRIMARY POWER REQUIREMENTS (TOR-16); ACCEPTANCE TEST (PARA. 2.1.7); QUALITY ASSURANCE (PARA. 2.1.8); RELIABILITY (PARA. 2.1.8); MAINTAINABILITY (PARA. 2.2.2); PERSONNEL SUBSYSTEM (PARA. 2.2.3); CONFIGURATION MANAGEMENT (PARA. 2.4); TRAINING (PARA. 2.5); DELIVERABLE DATA AND DOCUMENTATION; INDEX OF COMPLIANCE SPECIFICATIONS. THE ADMINISTRATIVE REPORT INDICATES THE EMPHASIS PLACED ON THE FOREGOING FACTORS, AND THE BASIS FOR THE DETERMINATION OF TECHNICAL UNACCEPTABILITY, AS FOLLOWS: "5. WITHIN THE TECHNICAL EVALUATION CATEGORY FIVE ITEMS WERE DETERMINED TO BE CRITICAL:THE TAPE TRANSPORT, THE HEADS, THE DIRECT RECORD/REPRODUCE ELECTRONICS, THE WIDEBAND FM ELECTRONICS, AND THE PRIMARY POWER REQUIREMENTS. PRIOR TO BID OPENING THE TECHNICAL PANEL HAD DETERMINED THAT IF ANY PROPOSAL RECEIVED A UNANIMOUS ZERO FROM ALL INDIVIDUAL EVALUATORS (I.E., IF THE PROPOSAL DID NOT -EVIDENCE A MINIMALLY ADEQUATE (OR BETTER) APPROACH TO SATISFACTION OF THE REQUIREMENT-) FOR ANY OF THESE CRITICAL ITEMS, THE PROPOSAL WOULD BE CONSIDERED TOTALLY UNACCEPTABLE. "6. THE PROPOSALS OF HEWLETT-PACKARD, 3M COMPANY AND HONEYWELL, INC., WERE DETERMINED TECHNICALLY UNACCEPTABLE UNDER THE CRITERIA DESCRIBED IN PARAGRAPH 5 ABOVE: * *"

ON JANUARY 5, 1967, PEB CONFIRMED THE FINDINGS OF THE COST, MANAGEMENT AND TECHNICAL PANELS, AND, AS EXPRESSED IN THE MINUTES OF THE MEETING, UNANIMOUSLY AGREED THAT:

"A. AMPEX IS RATED HIGHEST

B. CEC IS RATED SECOND HIGHEST.

C. ALL OTHER BIDDERS (3M, HONEYWELL, AND HEWLETT-PACKARD) ARE TECHNICALLY UNACCEPTABLE AND WILL NOT BE CONSIDERED.'

ON THE NEXT DAY, A REPRESENTATIVE OF CEC AND A REPRESENTATIVE OF AMPEX MET INDIVIDUALLY WITH THE CONTRACTING OFFICER TO ANSWER "SOME QUESTIONS CLARIFYING THE * * * PROPOSAL/S) SUBMITTED IN RESPONSE TO THE SUBJECT RFP.' WITH REGARD TO THE MEETING WITH THE CEC REPRESENTATIVE, THE CONTRACTING OFFICER, IN A MEMORANDUM DATED JANUARY 6, 1967, ADVISES THAT THE CEC REPRESENTATIVE CONFIRMED THE CONTRACTING OFFICER'S CONCLUSION THAT THE CEC PRICE PROPOSAL DID NOT INCLUDE SPARE PARTS OR DOCUMENTATION COSTS. SINCE THE CEC REPRESENTATIVE DID NOT HAVE THE COST INFORMATION RELATIVE TO THESE ITEMS IMMEDIATELY AVAILABLE, THE CONTRACTING OFFICER CONTACTED THE CHAIRMAN OF PEB TO DETERMINE WHETHER THE INFORMATION COULD BE SUPPLIED LATER THAT DAY OR ON THE FOLLOWING MONDAY. THE CHAIRMAN ADVISED THAT THE INFORMATION COULD NOT BE ACCEPTED.

HOWEVER, BY TWX, DATED JANUARY 6, 1967, CEC STATED AS FOLLOWS: "RE: YOUR CONVERSATION THIS DATE WITH OUR MR. SCHNIEDER AND REQUEST FOR CLARIFICATION WHETHER REQUIRED SPARES (11 SETS) AND DOCUMENTATION WERE INCLUDED IN OUR REFERENCED PROPOSAL AND TWX AMENDMENT. "PLEASE BE ADVISED THAT THE REFERENCED PROPOSAL FOR 22 MAGNETIC TAPE SYSTEMS AT $36,520.00 EACH INCLUDED BOTH 11 SETS OF SPARES AND MODIFIED AIR FORCE DOCUMENTATION. OUR REFERENCED TWX AMENDMENT SERVED TO REMOVE THE COST OF DOCUMENTATION WHICH WE BELIEVE SHOULD NOT HAVE BEEN INCLUDED IN THE EQUIPMENT PRICE. OUR AMENDED UNIT PRICE OF $33,180.00 FOR 22 UNITS, INCLUDES 11 SETS OF SPARE PARTS. "THE CLERICAL ERROR WHICH INCLUDED DOCUMENTATION AS A PART OF THE EQUIPMENT PRICING IN OUR REFERENCED PROPOSAL WAS CORRECTED BY OUR REFERENCED TWX ON THE SAME DATE OUR PROPOSAL WAS SUBMITTED, AND PRIOR TO CLOSE OF BUSINESS ON THE BID DUE DATE.'

WE ARE ADVISED THAT IN VIEW OF THE CONFLICTING REPRESENTATIONS BY CEC, PEB DECIDED TO CONSIDER THE CEC PROPOSAL AS NOT INCLUDING THE COST OF SPARES AND DOCUMENTATION.

BY MEMORANDUM DATED JANUARY 12, 1967, THE COMMANDER OF THE AIR FORCE SATELLITE CONTROL FACILITY, THE FINAL AUTHORITY WHICH REVIEWED PEB'S FINDINGS AND RECOMMENDATION, AUTHORIZED THE DIRECTOR OF PROCUREMENT AND PRODUCTION (SSCK) TO INITIATE NEGOTIATIONS SOLELY WITH AMPEX. THE COMMANDER'S MEMORANDUM SUPPORTS THIS DETERMINATION AS FOLLOWS: "3. THE TWO REMAINING PROPOSALS WERE SCORED BY THE BOARD: AMPEX, RECEIVING A SCORE OF 718 AND CONSOLIDATED ELECTRODYNAMICS CORPORATION, RECEIVING A SCORE OF 579. THE BOARD RECOMMENDS THAT AMPEX ONLY BE SELECTED FOR NEGOTIATION. IN ANALYZING THE DIFFERENCE, I NOTED PARTICULARLY THAT IN THE TECHNICAL AREA AMPEX RECEIVED A SCORE OF 208 AS COMPARED TO 72 FOR CEC. IN THE AREA OF COST, CEC LED WITH 475 AS COMPARED TO 451 FOR AMPEX. HOWEVER, FROM THE BOARD'S ANALYSIS OF THE COST FACTOR, IT WOULD APPEAR THAT THIS COST VARIATION WAS NOT COMPLETELY REALISTIC BECAUSE AMPEX INCLUDED PERTINENT COSTS WHICH CEC HAD NOT INCLUDED, TO WIT, COSTS OF DOCUMENTATION AND THE COST OF THE REPLACEMENT OF 4 FR-1600 TAPE RECORDERS. FROM MY ANALYSIS OF THIS VERY SUBSTANTIAL VARIANCE IN SCORE, PARTICULARLY THE VERY GREAT DIFFERENCE IN THE TECHNICAL SCORE, I CONCLUDE WITHIN THE MEANING OF 10 U.S.C. 2304G AND ASPR 3-805.1 THAT CEC'S PROPOSAL WAS NOT WITHIN THE COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, AND THAT NEGOTIATIONS NEED BE CONDUCTED ONLY WITH AMPEX CORPORATION.'

NEGOTIATIONS WERE COMPLETED WITH AMPEX ON FEBRUARY 15, 1967, AND THE CONTRACT IN THE AMOUNT OF $917,962 WAS AWARDED ON MARCH 10, 1967, WITH THE MODIFICATIONS AS PROPOSED BY THE CONTRACTING OFFICER ON FEBRUARY 15, 1967, AS FOLLOWS:

"A. PARAGRAPH 2.5 TRAINING WAS DELETED AS NO REQUIREMENT EXISTS FOR TRAINING OF AFSCF PERSONNEL. THIS WAS VERIFIED BY MAJOR HEGLAND, SSOFT. THE PROPOSED PRICE SUBMITTED BY AMPEX CORPORATION WAS NOT AFFECTED BY THE DELETION OF PARA. 2.5 AS THE REQUIREMENT PERTAINING TO THE NUMBER OF PERSONNEL TO BE TRAINED WAS NOT STIPULATED IN THE RFP AND THEREFORE, IT WAS QUOTED ON A PER PERSON BASIS AND NOT INCLUDED IN THE TOTAL PRICE PROPOSED.

"B. AMPEX CORPORATION ORIGINALLY PROPOSED TO REPLACE FOUR (4) EACH MODEL FR1600 NOW INSTALLED AT VTS, AND OL-5 WITH THE CURRENT CONFIGURATION MODELS AT NO COST TO THE GOVERNMENT, HOWEVER, THE PROPOSAL DID NOT INCLUDE THE SPARES. THEIR CURRENT OFFER INCLUDES THE PROVISION OF THIRTEEN (13) SETS OF SPARE PARTS RATHER THAN ELEVEN (11) SETS AS ORIGINALLY PROPOSED. THE TWO (2) ADDITIONAL SETS OF SPARES ARE FOR THE FOUR (4) MODELS TO BE EXCHANGED.' WE HAVE BEEN INFORMALLY ADVISED THAT THE AMPEX OFFER TO REPLACE FOUR PREVIOUSLY INSTALLED TAPE RECORDERS WAS NOT CONSIDERED IN THE EVALUATION OF THE AMPEX PROPOSAL.

BY TWX DATED MARCH 30, 1967, CEC FILED A PROTEST AGAINST THE AWARD WITH THE CONTRACTING OFFICER, AND BY LETTER DATED APRIL 28, 1967, CEC BROUGHT THE MATTER TO THE ATTENTION OF OUR OFFICE. THE ADMINISTRATIVE REPORT ADVISED THAT AS OF MAY 14, 1967, AMPEX HAD INCURRED $125,000 IN COSTS, AND THAT "ANY DELAY IN THE PERFORMANCE OF THE CONTRACT WOULD JEOPARDIZE PROGRAMS OF THE UTMOST NATIONAL IMPORTANCE.' IN ITS LETTERS OF APRIL 28, JUNE 21 AND AUGUST 29, 1967, CEC MAINTAINS THAT THE PROCURING ACTIVITY IN NEGOTIATING SOLELY WITH AMPEX VIOLATED THE "COMPETITIVE NEGOTIATION" REQUIREMENTS OF SECTION 2304 (G) OF TITLE 10, UNITED STATES CODE. THAT SECTION PROVIDES AS FOLLOWS: "/G) IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH RATES OR PRICES ARE NOT FIXED BY LAW OR REGULATION AND IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, AND WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED: PROVIDED, HOWEVER, THAT THE REQUIREMENTS OF THIS SUBSECTION WITH RESPECT TO WRITTEN OR ORAL DISCUSSIONS NEED NOT BE APPLIED TO PROCUREMENTS IN IMPLEMENTATION OF AUTHORIZED SET-ASIDE PROGRAMS OR TO PROCUREMENTS WHERE IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT, THAT ACCEPTANCE OF AN INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN FAIR AND REASONABLE PRICES AND WHERE THE REQUEST FOR PROPOSALS NOTIFIES ALL OFFERORS OF THE POSSIBILITY THAT AWARD MAY BE MADE WITHOUT DISCUSSION.'

IN SUPPORT OF THIS CONTENTION, CEC ALLEGES THAT ITS TECHNICAL PROPOSAL WAS WHOLLY RESPONSIVE TO THE SPECIFICATION, AND THAT ITS COST PROPOSAL WAS SIGNIFICENTLY LOWER THAN THE AMPEX PROPOSAL. IT IS FURTHER SUGGESTED THAT THE POINT EVALUATION WAS INFLUENCED PRIMARILY BY PERSONNEL PREFERENCES. THE PROCUREMENT AGENCY'S REPORT, ON THE OTHER HAND, ADVISES THAT THE DECISION NOT TO NEGOTIATE WITH CEC WAS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION IN DETERMINING THE EXISTENCE OF THE ,COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED.' FURTHER, ATTENTION IS AGAIN FOCUSED ON THE WIDE POINT DIFFERENTIAL (APPROXIMATELY 20 PERCENT OVERALL AND 60 PERCENT IN THE TECHNICAL AREA) BETWEEN CEC AND AMPEX AS INDICATIVE OF THE CORRECTNESS OF THE DECISION. WITH PARTICULAR REGARD TO THE CEC PROPOSAL EVALUATION, AFSCF SSD ADVISED HEADQUARTERS, AIR FORCE SYSTEMS COMMAND, ON MAY 30, 1967, AS FOLLOWS: "* * * THE CEC PROPOSAL HAD NO OUTSTANDING STRONG POINTS EVIDENCED RESULTING FROM THE EVALUATION. THEIR PROPOSAL WAS CONSIDERED WEAK IN THE FOLLOWING AREAS:

A. ACCEPTANCE TEST - NO INFORMATION WAS INCLUDED ON ACCEPTANCE TESTING.

B. QUALITY ASSURANCE - NO INFORMATION WAS INCLUDED ON A QUALITY ASSURANCE PROGRAM.

C. RELIABILITY - NO INFORMATION WAS INCLUDED ON A RELIABILITY PROGRAM.

D. MAINTAINABILITY PROGRAM.

E. PERSONNEL SUBSYSTEM - NO DISCUSSION RELATIVE TO PERSONNEL SUBSYSTEM OR HUMAN ENGINEERING ACTIVITY WAS INCLUDED.

F. CONFIGURATION MANAGEMENT - INADEQUATE INFORMATION IN PROPOSAL TO PERMIT EVALUATION.

G. TRAINING - NO MENTION OF A TRAINING PROGRAM WAS INCLUDED.

H. DOCUMENTATION - THE PROPOSAL INDICATES ONLY THAT DOCUMENTATION WOULD BE NEGOTIATED WITH THE AIR FORCE AT A LATER DATE, AND THAT THEY WOULD PROVIDE A QUOTATION FOR THE REQUIRED INFORMATION UPON REQUEST.

I. INDEX OF COMPLIANCE SPECIFICATIONS - NONE WAS INCLUDED IN THEIR PROPOSAL.

"* * * IT IS IMPORTANT TO NOTE HERE THAT IF A PROPOSAL MERELY INDICATES THAT ALL REQUIREMENTS CAN BE FULFILLED WITHOUT EVIDENCE AS TO HOW THEY CAN BE FULFILLED, THERE IS NO BASIS FOR THE EVALUATORS TO DETERMINE THEY ARE ACCEPTABLE FOR NEGOTIATIONS. THE PROPOSAL WAS THE MECHANISM USED IN THE INSTANT CASE * * *.'

IN RESPONSE, CEC MAINTAINS THAT WITH THE EXCEPTION OF "D," ABOVE, "MAINTAINABILITY PROGRAM," INFORMATION IN THE OTHER AREAS WAS "NOT REQUESTED FOR THE PROPOSAL PHASE BY THE RFP, AND THAT THE LACK OF THIS UNREQUESTED DATA MAY HAVE BEEN USED AS A REASON TO DOWN-RATE BOTH THE TECHNICAL AND MANAGEMENT SECTIONS OF CEC'S PROPOSAL.'

UPON THE RECORD PRESENTED, IT IS OUR OPINION THAT THE NEGOTIATION PROCEDURES EMPLOYED IN THIS PROCUREMENT DID NOT CONFORM TO THE PROCUREMENT STATUTES OR THE IMPLEMENTING REGULATIONS.

CONSIDERING FIRST THE SELECTION OF EVALUATION CRITERIA AND THE DETERMINATION OF THE RELATIVE IMPORTANCE ATTACHED TO EACH FACTOR, WE MUST ACKNOWLEDGE THAT THESE MATTERS ARE PRIMARILY THE RESPONSIBILITY OF THE PROCURING ACTIVITY. CEC HAS NOT QUESTIONED EITHER THE USE OF THE POINT EVALUATION SYSTEM, OR THE RELATIVE POINT DISTRIBUTION AMONG THE AREAS OF COST, TECHNICAL, OR MANAGEMENT ASPECTS OF THE TECHNICAL EVALUATION, AND WE FIND NO BASIS FOR RAISING AN OBJECTION IN THIS RESPECT. HOWEVER, IT IS NECESSARY TO DRAW ATTENTION TO THE IMPROPER ADJUSTMENT OF THE COST EVALUATION CRITERIA AFTER IT WAS DISCOVERED THAT THREE OF THE PROPOSALS CONTAINED PRICING DISCREPANCIES. IN OUR OPINION, THE PROCURING ACTIVITY'S DECISION TO EVALUATE AND ASSIGN POINTS IN THE COST CATEGORY SOLELY ON THE BASIS OF A SEGMENT, ALBEIT THE MAJOR PORTION, OF THE PROCUREMENT WAS INCONSISTENT WITH THE CONCEPT OF FAIR AND EQUAL EVALUATION. UNLIKE TECHNICAL EVALUATIONS, WHICH NECESSARILY INVOLVE THE EXERCISE OF DISCRETION, COST EVALUATION IS SUSCEPTIBLE OF OBJECTIVE MEASUREMENT ON THE BASIS OF THE OVERALL COST TO THE GOVERNMENT OF THE PROCUREMENT. FAIRNESS TO ALL OFFERORS REQUIRES NO LESS. WHILE IT CAN BE SAID THAT THE TAPE RECORDER COSTS WERE THE ONLY COMMON DENOMINATOR PRESENT IN ALL PROPOSALS, THIS FACT OBVIOUSLY DOES NOT INSURE THAT PROPOSALS WOULD BE CAPABLE OF EVALUATION ON A COMMON BASIS. AN EXAMINATION OF THE HEWLETT-PACKARD AND AMPEX PROPOSALS DEMONSTRATES THE SPECULATIVE CHARACTER OF THE ADJUSTED CRITERIA AS AN EVALUATION BASIS. SINCE WE ARE ADVISED THAT IT WAS IMPOSSIBLE TO ELIMINATE THE COST OF SPARE PARTS FROM THE HEWLETT PACKARD PROPOSAL, IT CANNOT BE SAID THAT THE ASSIGNMENT OF THE MAXIMUM NUMBER OF POINTS TO THAT PROPOSAL REMEDIES THE INHERENT UNDERRATING OF THE HEWLETT- PACKARD PROPOSAL IN THE ABSENCE OF AN ADJUSTMENT OF THE POINTS ASSIGNED TO THE OTHER PROPOSALS. FURTHER, WHILE THE AMPEX PROPOSAL LISTS THE REQUIRED DOCUMENTATION AS A NO-COST ITEM, WE MAY AGREE, AS IS POINTED OUT IN THE EXHIBITS TO THE REPORT, THAT THE COST OF THIS ITEM WOULD BE CARRIED AS A PART OF THE PRICE OF THE TAPE RECORDERS. TO THIS EXTENT, THE AMPEX PROPOSAL WAS SIMILARLY UNDERRATED.

WITH RESPECT TO THE EVALUATION OF THE CEC PROPOSAL IN THIS AREA, WE NOTE CEC'S CONTENTION THAT THE PROCESS USED TO CONVERT POINTS IN THE COST CATEGORY HAS "OBVIOUSLY BEEN CHOSEN TO PRODUCE VERY LITTLE POINT SPREAD FOR VERY SIGNIFICANT PRICE DIFFERENCES" IS BASED UPON THE ASSERTION THAT ITS PROPOSAL PRICE OF $803,440 INCLUDED THE PRICE OF DOCUMENTATION AND SPARES. IN EXAMINING THE CEC PROPOSAL, THE CONTRACTING AGENCY CONCLUDED THAT THE COST OF SPARES AND DOCUMENTATION WAS NOT INCLUDED. THIS CONCLUSION IS NOT UNREASONABLE ON THE FACE OF THE CEC PROPOSAL. IN THE COVER LETTER TO THE CEC PROPOSAL, IT WAS STATED THAT: "IT WAS OUR INTERPRETATION OF THE * * * RFP THAT SPARE PARTS AND DOCUMENTATION WOULD BE NEGOTIATED WITH SSD BY THE SUCCESSFUL CONTRACTOR. IF THIS INTERPRETATION IS IN ERROR, WE WILL PROVIDE ANY NECESSARY QUOTATION WITHIN SEVEN (7) DAYS UPON YOUR REQUEST.' THIS UNDERSTANDING OF THE RFP WAS REFLECTED IN THE CEC PRICE PROPOSAL WHEN, IN LIEU OF A PRICE OF ITEM 2, SPARE PARTS PACKAGE, THE PROPOSAL STATED "TO BE NEGOTIATED.' FURTHER, NO REFERENCE IN THE PROPOSAL ITSELF IS MADE TO THE DOCUMENTATION COST, AND THE CEC PROPOSAL DID NOT INCLUDE DD FORM 1423, CONTRACTS DATA REQUIREMENTS LIST, AS REQUIRED BY THE TERMS OF THE RFP.

IT IS CLEAR THAT IN THE ABSENCE OF AN ACCURATE UNDERSTANDING AND EXPRESSION OF ALL COST ELEMENTS (TAPE RECORDERS, SPARE PARTS, DOCUMENTATION), THE PRICE PROPOSALS DID NOT REFLECT THE COST TO THE GOVERNMENT OF THE REQUESTED SERVICES. GIVEN THE FACT THAT THE 3M AND AMPEX PROPOSALS WERE COMPLETE FROM THE STANDPOINT OF PRICE, WE ARE UNABLE TO UNDERSTAND WHY SOUND PROCUREMENT POLICY DICTATES THAT THESE OTHERWISE COMPLETE PRICE PROPOSALS BE OBSCURED IN AN ATTEMPT TO PROVIDE A BASIS FOR COMPARISON WITH THREE OTHER PROPOSALS EVIDENCING VARIOUS DEGREES OF PRICE UNCERTAINTY OR INCOMPLETENESS. CERTAINLY, THE POLICY OF ASPR 3-804 WOULD HAVE DICTATED A CLARIFICATION OF THE DEFECTIVE PRICING PROPOSALS AS THE ONLY ACCEPTABLE ALTERNATIVE. THAT SECTION PROVIDES AS FOLLOWS:

"CONDUCT OF NEGOTIATIONS. EVALUATION OF OFFERORS' OR CONTRACTORS' PROPOSALS, INCLUDING PRICE REVISION PROPOSALS, BY ALL PERSONNEL CONCERNED, WITH THE PROCUREMENT, AS WELL AS SUBSEQUENT NEGOTIATIONS WITH THE OFFEROR OR CONTRACTOR, SHALL BE COMPLETED EXPEDITIOUSLY. COMPLETE AGREEMENT OF THE PARTIES ON ALL BASIC ISSUES SHALL BE THE OBJECTIVE OF THE CONTRACT NEGOTIATIONS. ORAL DISCUSSIONS OR WRITTEN COMMUNICATIONS SHALL BE CONDUCTED WITH OFFERORS TO THE EXTENT NECESSARY TO RESOLVE UNCERTAINTIES RELATING TO THE PURCHASE OR THE PRICE TO BE PAID. BASIC QUESTIONS SHOULD NOT BE LEFT FOR LATER AGREEMENT DURING PRICE REVISIONS OR OTHER SUPPLEMENTAL PROCEEDINGS. COST AND PROFIT FIGURES OF ONE OFFEROR OR CONTRACTOR SHALL NOT BE REVEALED TO OTHER OFFERORS OR CONTRACTORS.'

MOREOVER, WE CANNOT CONSIDER THAT THE CONTRACTING OFFICER'S MEETING ON JANUARY 6, 1966, WITH CEC, REMEDIED THE INITIAL FAILURE TO SEEK THE PRICE CLARIFICATION REQUIRED BY ASPR 3-804. THIS MEETING SERVED NO PURPOSE, BUT MERELY CONFIRMED PRIOR ASSUMPTIONS AND PERPETUATED A FAULTY COST CRITERIA. WITH RESPECT TO THE SUBSEQUENT INCONSISTENT CEC COST REPRESENTATION EXPRESSED IN THE CEC TWX OF JANUARY 7, 1967, IT WAS CERTAINLY NOT IN THE GOVERNMENT'S BEST INTEREST FOR THE COST EVALUATION PANEL TO DISREGARD THIS LATER WRITTEN COMMITMENT AND CONSIDER THE CEC PROPOSAL TO BE $803,440, AS ORIGINALLY SUBMITTED, WITHOUT SPARES OR DOCUMENTATION. THERE IS, HOWEVER, NO QUESTION THAT CEC WAS IN A "COMPETITIVE RANGE" FROM THE STANDPOINT OF PRICE EVEN IF WE APPLY THE DEFECTIVE CRITERIA.

TURNING NEXT TO THE MANAGEMENT EVALUATION, WE CANNOT AGREE WITH CEC'S SUGGESTION THAT THE INCLUSION OF THIS CATEGORY IN THE EVALUATION MAY BE QUESTIONED BECAUSE THE PROCUREMENT IS FOR STANDARD OFF-THE-SHELF EQUIPMENT AND THAT THE USE OF BROAD DESIGN ORIENTED CRITERIA WAS IMPROPER SINCE: "FOR STANDARD EQUIPMENT PROCUREMENTS THE MANAGEMENT EVALUATION IS NORMALLY INFLUENCED BY THE PAST PERFORMANCE RECORD OF THE BIDDER, CAPABILITIES AND FACILITIES SURVEY-S, ETC.' AS WE HAVE INDICATED, THE SELECTION OF EVALUATION FACTORS IS PROPERLY WITHIN THE SOUND DISCRETION OF THE PROCURING ACTIVITY. SEE ASPR 1-903.2, AND SUB PART (A) (II) THEREOF, WHICH AUTHORIZE THE IMPOSITION OF ADDITIONAL STANDARDS FOR EVALUATION PURPOSES. WE DO, HOWEVER, BELIEVE THAT THE ADVICE IN THE RFP WITH RESPECT TO A PREAWARD SURVEY MAY HAVE LED OFFERORS TO DEEMPHASIZE THE NEED FOR MANAGEMENT INFORMATION. IN THIS REGARD, THE SOLICITATION ADVISED AS FOLLOWS: "14. IT IS EXPECTED THAT THE OFFEROR OR OFFERORS WITH WHOM THE GOVERNMENT INTENDS TO NEGOTIATE AND AWARD A CONTRACT WILL BE REQUIRED TO UNDERGO A PRE-AWARD SURVEY AND RECEIVE A SATISFACTORY DETERMINATION THEREFROM PRIOR TO COMMENCEMENT OF NEGOTIATIONS AND AWARD.'

CEC FURTHER ALLEGES, IN QUESTIONING THE DIFFERENCE IN THE POINTS ASSIGNED TO ITS PROPOSAL IN THIS AREA AS COMPARED TO AMPEX, THAT:

"* * * WHEREAS, C.E.C. READILY CONCEDES THAT THE OVERALL CAPABILITIES AND FACILITIES OF BOTH AMPEX AND C.E.C., AS TWO OF THE NATION'S OLDEST AND LARGEST INSTRUMENTATION MANUFACTURERS ARE COMPLETELY ADEQUATE TO PERFORM THIS CONTRACT, C.E.C. BELIEVES THAT AMPEX HAS PERFORMED POORLY ON AN IMPORTANT RECENT CONTRACT WITH AFSCF SSD, AND THAT THIS POOR PERFORMANCE WAS NOT REFLECTED IN THE HEAVY POINT ADVANTAGE ASSIGNED TO AMPEX IN -THE MANAGEMENT- CATEGORY. SPECIFICALLY, C.E.C. BELIEVES THAT THE FOUR (4) GOVERNMENT-OWNED AMPEX FR 1600S LISTED IN THE PRESENT CONTRACT AS ITEM 3 WERE PREVIOUSLY PURCHASED BY AFSCF SSD FROM AMPEX AND THAT THESE EQUIPMENTS WERE (1) NOT DELIVERED ON SCHEDULE BY SEVERAL MONTHS, AND (2) COULD NOT BE INITIALLY ACCEPTED FOR TECHNICAL NON-PERFORMANCE REASONS WHEN RECEIVED.'

IN THIS REGARD, WE HAVE BEEN INFORMALLY ADVISED THAT THERE WAS A PRIOR DEFICIENCY ON THE PART OF AMPEX, BUT THAT SUCH DEFICIENCY WAS CORRECTED, AND THAT THERE WAS NO CONTRACT DEFAULT. HOWEVER, IN OUR OPINION, THE DIFFERENCE IN MANAGEMENT SCORES MAY BE TRACED TO THE DETERMINATION THAT THE CEC PROPOSAL WAS INFORMATIONALLY DEFICIENT. THIS IS CONFIRMED BY THE REPORT OF THE MANAGEMENT PANEL WHICH STATES, IN RELEVANT PART, AS FOLLOWS:

"6. WEAK POINTS OF THE VARIOUS PROPOSALS WHICH THE PANEL DESIRES TO BRING TO THE ATTENTION OF THE BOARD ARE AS FOLLOWS:

******* ******* ******* ******* "CEC - THE PROPOSAL DOES NOT CONTAIN INFORMATION ON HOW THE PROPOSER INTENDS TO MEET THE TOR/WORK STATEMENT REQUIREMENTS. THE PROPOSAL MERELY STATES CEC WILL COMPLY.

******* ************** ******* "7. IT IS AGAIN EMPHASIZED THAT PROPOSALS WERE EVALUATED AGAINST RFP REQUIREMENTS AS AMPLIFIED BY TOR-16 AND THE WORK STATEMENT AND AGAINST PREDETERMINED CRITERIA IN THE ORGANIZATION AND FACILITIES SUB-AREAS. PROPOSALS WERE NOT EVALUATED AGAINST ONE ANOTHER IN THE MANAGEMENT AREA.'

TURNING TO THE TECHNICAL EVALUATION, THE REPORT ADVISES THAT THE DETERMINATION NOT TO NEGOTIATE WITH CEC WAS BASED PRIMARILY ON THE TECHNICAL EVALUATION OF THE PROPOSALS. IN THIS RESPECT, AFSCF SSD ADVISED HEADQUARTERS, AIR FORCE SYSTEMS COMMAND, THAT THE AMPEX PROPOSAL WAS "FAR SUPERIOR," AS EVIDENCED BY THE FOLLOWING FACTORS:

"A. TAPE TRANSPORT - THE PRE-AMPLIFIERS HAVE A 4 MIZ BANDWIDTH FOR FUTURE EXPANSION. VACUMM DRIVE IS USED, WHICH ELIMINATES PINCH ROLLERS. END-OF- TAPE SENSING IS PROVIDED. MECHANICAL PARKING BRAKES ARE PROVIDED, WHICH ALSO FUNCTION AS EMERGENCY BRAKES TO PREVENT TAPE SPILLAGE IN THE EVENT OF POWER FAILURE. MASS IS ADDED TO THE CAPSTAN TO REDUCE HIGH-FREQUENCY FLUTTER, YET THE REQUIRED TIME DISPLACEMENT ERROR CAN BE MAINTAINED. AS A SPECIAL OPTION, AN AUTOMATIC PROGRAMMING SYSTEM, EITHER BY COMPUTER OR CARD PROGRAMMER CONTROL, COULD BE PROVIDED. B. WIDEBAND FM ELECTRONICS - TESTS HAVE BEEN RUN WITH TYPICAL PCM FORMATS AND PHOTOGRAPHS OF THE REPRODUCED SIGNALS APPEAR TO BE SATISFACTORY. ADDED FEATURES, NOT SPECIFICALLY REQUESTED IN THE TOR ARE:

(1) SQUELCH (ZERO OUTPUT WITH NO INPUT).

(2) OUTPUT LIMITING WHICH PREVENTS OVERDRIVING OF EQUIPMENT FOLLOWING THE RECORDER.

(3) LOSS-OF-SIGNAL-INDICATOR. (4) FILTER SWITCH WHICH ALLOWS THE NOISE BANDWIDTH TO BE OPTIMIZED FOR EACH PARTICULAR SIGNAL.

(5) DC CALIBRATION METER FOR QUICK SET-UP FOR OPERATION. THE OPTIONAL AUTOMATIC PROGRAMMING SYSTEM CAN BE USED TO CHANGE THE CHANNEL CONFIGURATION UNDER COMPUTER CONTROL. C. C. ACCEPTANCE TEST - A VERY COMPLETE ACCEPTANCE TEST PROCEDURE WAS INCLUDED.'

IN COMMENTING ON THESE "STRONG POINTS," CEC HAS MAINTAINED THAT ALL OF THE FEATURES TO THE EXTENT REQUESTED ARE INCLUDED FEATURES OF THE CEC EQUIPMENT, AND THAT, IF REQUESTED, CEC COULD HAVE PROVIDED THE OPTIONAL ITEMS. BY LETTER DATED AUGUST 9, 1967, THE DIRECTORATE OF PROCUREMENT POLICY RESPONDED, IN PART, AS FOLLOWS:

"5. CEC CONTENDS THAT THE RECORDERS IT PROPOSED TO FURNISH CONTAINED SOME OF THE FEATURES OF THE AMPEX RECORDERS WHICH THE AIR FORCE TECHNICAL PERSONNEL CONSIDERED STRONG POINTS. THE CEC PROPOSAL, HOWEVER, FAILED TO MENTION ANY SUCH FEATURES AND COULD NOT THEREFORE BE EVALUATED AS OFFERING ANY OF THOSE FEATURES.'

SINCE THE EVALUATION OF THE PROPOSALS IN THIS AREA REQUIRES THE EXERCISE OF A TECHNICAL JUDGMENT, WE MAY NOT, AS CEC SUGGESTS, REEVALUATE OR COMPARE THE RELATIVE MERITS OF ITS PROPOSAL VIS-A-VIS THAT OF AMPEX. HOWEVER, IT IS SIGNIFICANT TO NOTE THAT IT HAS NOT BEEN SUGGESTED THAT THE "FAR SUPERIOR" CHARACTER OF THE AMPEX PROPOSAL IS ATTRIBUTABLE TO A TECHNOLOGICAL BREAKTHROUGH, OR ADVANCEMENT IN THE STATE OF THE ART. SEE, IN CONTRAST, B-158489, JUNE 6, 1966, WHEREIN THE PROTESTANT MAINTAINED THAT IT WAS IMPROPERLY EXCLUDED BY THE ADMINISTRATIVE AGENCY FROM PARTICIPATION IN NEGOTIATIONS SINCE ITS PROPOSAL HAD SATISFIED THE GOVERNMENT'S MINIMUM TECHNICAL REQUIREMENTS, AND THEREFORE WAS WITHIN A "COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED.' IN DENYING THE CONTENTION, WE OBSERVED AS FOLLOWS:

"THE ADMINISTRATIVE REPORT INTRODUCED THE DISTINGUISHING FACT THAT LINK'S PROPOSAL WAS CONSIDERED FAR SUPERIOR BECAUSE IT INCORPORATED A SURPRISINGLY NOVEL AND ALLEGEDLY PROPRIETARY APPROACH TO THE RFP REQUIREMENTS, AND WAS CONSIDERED TO BE SUCH A SUBSTANTIAL ADVANCEMENT IN THE STATE OF THE ART IN THE FIELD OF GRAPHIC RECORDING THAT IT RENDERED MEANINGLESS ANY NEGOTIATIONS ON THE MORE ORTHODOX APPROACH PROPOSED BY MAURER.'

HERE, THE PROCURING ACTIVITY ACKNOWLEDGES THAT CEC HAS IN ITS TECHNICAL PROPOSAL OFFERED COMPLETE COMPLIANCE WITH THE WORK REQUIREMENTS AND TOR 16. THE OBJECTION IS THAT INSUFFICIENT INFORMATION WAS SUPPLIED TO PERMIT A TECHNICAL EVALUATION. THERE WAS, HOWEVER, NO REQUEST IN THE RFP THAT OFFERORS PROVIDE A TECHNICAL DISSERTATION VERIFYING RESPONSES TO THE TAPE RECORDER REQUIREMENT.

CONSIDERING THE OVERALL IMPACT OF THE INFORMATIONAL DEFECTS IN CEC'S PROPOSAL PREPARATION, ESPECIALLY WITH RESPECT TO THE TECHNICAL ASPECTS OF ITS PROPOSAL, WE MAY GIVE SIGNIFICANT EFFECT TO THE FACT THAT DESPITE THESE DEFECTS CEC'S PROPOSAL WAS TECHNICALLY ACCEPTABLE TO PEB. THIS DETERMINATION IS, WE BELIEVE, EVEN MORE SIGNIFICANT IN LIGHT OF THE REJECTION OF THREE OTHER PROPOSALS FOR FAILING TO MEET ALL FIVE OF THE "CRITICAL" TECHNICAL EVALUATION FACTORS. WE, THEREFORE, DRAW YOUR ATTENTION TO A PORTION OF OUR DECISION AT 45 COMP. GEN. 417, 427, WHICH WE BELIEVE IS PERTINENT HERE:

"THE TERM -NEGOTIATION- GENERALLY IMPLIES A SERIES OF OFFERS AND COUNTEROFFERS UNTIL A MUTUALLY SATISFACTORY AGREEMENT IS CONCLUDED BY THE PARTIES. 10 U.S.C. 2304 (G) IMPLEMENTS AND CLARIFIES THE DEFINITION OF - NEGOTIATE- IN 10 U.S.C. 2302 (2) AND IT IS OUR VIEW THAT THE TERM - NEGOTIATE- MUST BE READ IN CONJUNCTION WITH 10 U.S.C. 2304 (G) TO INCLUDE THE SOLICITATION OF PROPOSALS AND THE CONDUCT OF WRITTEN OR ORAL DISCUSSIONS, WHEN REQUIRED, AS WELL AS THE MAKING AND ENTERING INTO A CONTRACT. SEE PAGE 5 OF HOUSE REPORT NO. 1638, ON H.R. 5532, 87TH CONGRESS, WHICH WAS ENACTED AS PUB. L. 87-653, ADDING THE NEW SUBSECTION (G) TO 10 U.S.C. 2304.

"IN THIS CONTEXT, WE BELIEVE THAT AN OBLIGATION TO NEGOTIATE WITH AAI EXISTED NOTWITHSTANDING THAT ITTFL'S PROPOSAL WAS DETERMINED TO BE TECHNICALLY SUPERIOR TO AAI-S. WE FIND NOTHING IN THE RECORD WHICH WOULD INDICATE THAT AAI'S PROPOSAL WAS SO TECHNICALLY INFERIOR AS TO PRECLUDE ANY POSSIBILITY OF MEANINGFUL NEGOTIATION WITH SUCH OFFEROR. THIS IS WHAT BOTH THE LAW AND THE ASPR REQUIRE IN ORDER TO ASSURE THE COMPETITION CONTEMPLATED.' SEE, ALSO, 46 COMP. GEN. 191.

FINALLY, IT MUST BE NOTED THAT THE RFP DID NOT STATE THE EVALUATION CRITERIA OR THE RELATIVE WEIGHT ASSIGNED TO EACH FACTOR. THIS' FAILURE IS, IN OUR OPINION, INCONSISTENT WITH A STATED REQUEST FOR STRICT CONFORMANCE WITH THE TERMS OF THE RFP, AND THE ADVICE THAT THE PROPOSAL WAS THE "MECHANISM" FOR DETERMINING A COMPETITIVE RANGE. FROM THE STANDPOINT OF AVOIDING THE INFORMATIONAL AND PRICING DEFECTS IN PROPOSAL PREPARATION EVIDENT ON THE FACE OF THE RECORD, CLEAR INSTRUCTION AS TO THOSE AREAS OF PARTICULAR SIGNIFICANCE TO THE CONTRACTING AGENCY WILL RESULT IN MORE ACCURATE AND REALISTIC PROPOSAL PREPARATION. SEE B-149344, DECEMBER 26, 1962; B-147394, SEPTEMBER 4, 1962. SEE ESPECIALLY OUR DECISION TO YOU AT 44 COMP. GEN. 439, 442, WHEREIN WE STATED THAT:

"WITH RESPECT TO THE FAILURE OF THE AIR FORCE TO SPECIFICALLY ADVISE PROSPECTIVE OFFERORS OF ALL EVALUATION FACTORS AND TO INDICATE THE RELATIVE IMPORTANCE ATTACHED TO EACH, IT IS OUR OPINION THAT SOUND PROCUREMENT POLICY DICTATES THIS SHOULD BE DONE * * *.'

WHILE PRACTICAL CONSIDERATIONS PRECLUDE FURTHER ACTION ON OUR PART IN THIS MATTER, WE STRONGLY SUGGEST THAT APPROPRIATE STEPS BE TAKEN TO AVOID A RECURRENCE OF SIMILAR NEGOTIATION PROCEDURES.

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