B-161405, OCT. 2, 1967

B-161405: Oct 2, 1967

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WAS NOT PROPER. PERMITTING OPTIONAL METHODS OF INPUT DID NOT AFFECT THE MAJOR PORTION OF THE WORK TO BE PERFORMED IS MERELY INDICATIVE OF THE SCOPE OF THE CHANGES AND NOT NECESSARILY DETERMINATIVE OF THE CHARACTER OF THE CHARGES FOR CONSIDERATION AS TO WHETHER THEY ARE "SUBSTANTIAL" AS THAT TERM IS USED IN 1-3.805-1 (D). AS WELL AS THE METHOD AND LEVEL OF PERFORMANCE THEY SHOULD HAVE BEEN COMMUNICATED TO BOTH OFFERORS. ALTHOUGH THE FAILURE WILL NOT MAKE THE AWARD ILLEGAL. CORRECTIVE ACTION IS URGED. THE LONG STANDING RULE OF THE COMPTROLLER GENERAL TO ACCEPT THE ADMINISTRATIVE REPORT IN RESOLVING DISPUTED QUESTIONS OF FACT WILL NOT BE ADHERED TO IN SUCH CASE. IS URGED TO PREVENT A RECURRENCE OF THE IRREGULARITY.

B-161405, OCT. 2, 1967

BIDS - AMENDMENT, ETC. DECISION TO SECY. OF AGRICULTURE CONCERNING THE PROTEST BY DOCUMENTATION INC. THAT NEGOTIATED AWARD FOR IMPLEMENTATION OF CURRENT RESEARCH INFORMATION SYSTEM (CRIS) TO AUTOMATION TECHNOLOGY, INC. WAS NOT PROPER. THE FACT THAT MODIFICATIONS TO SPECIFICATIONS FOR AN AUTOMATED INFORMATION SYSTEM EXTENDING THE DELIVERY DATE, REDUCING LIQUIDATED DAMAGES, AND PERMITTING OPTIONAL METHODS OF INPUT DID NOT AFFECT THE MAJOR PORTION OF THE WORK TO BE PERFORMED IS MERELY INDICATIVE OF THE SCOPE OF THE CHANGES AND NOT NECESSARILY DETERMINATIVE OF THE CHARACTER OF THE CHARGES FOR CONSIDERATION AS TO WHETHER THEY ARE "SUBSTANTIAL" AS THAT TERM IS USED IN 1-3.805-1 (D), FPR, WHICH REQUIRES THAT ALL OFFERORS BE NOTIFIED OF CHANGES OCCURRING DURING NEGOTIATIONS AND THAT ORAL ADVICE BE FOLLOWED BY WRITTEN AMENDMENT. SINCE THE CHANGES HAD AN IMPACT ON THE COST, AS WELL AS THE METHOD AND LEVEL OF PERFORMANCE THEY SHOULD HAVE BEEN COMMUNICATED TO BOTH OFFERORS. ALTHOUGH THE FAILURE WILL NOT MAKE THE AWARD ILLEGAL, CORRECTIVE ACTION IS URGED. WHEN A PROCURING ACTIVITY FAILS TO COMPLY WITH A REQUIREMENT FOR REDUCING ORAL ADVICE TO A WRITTEN MEMORANDUM, THE LONG STANDING RULE OF THE COMPTROLLER GENERAL TO ACCEPT THE ADMINISTRATIVE REPORT IN RESOLVING DISPUTED QUESTIONS OF FACT WILL NOT BE ADHERED TO IN SUCH CASE. THE DEPT. IS URGED TO PREVENT A RECURRENCE OF THE IRREGULARITY.

TO MR. SECRETARY:

REFERENCE IS MADE TO A REPORT DATED JUNE 15, 1967, FROM THE ASSISTANT SECRETARY FOR ADMINISTRATION, CONCERNING THE PROTEST OF DOCUMENTATION INCORPORATED (DOCINC.) AGAINST THE AWARD OF CONTRACT NO. 12-01-06-5-125 TO AUTOMATION TECHNOLOGY, INC. (AUTOTECH) UNDER REQUEST FOR PROPOSALS (RFP) NO. OMI-5-B-67.

THE RECORD INDICATES THAT THE SUBJECT RFP WAS ISSUED ON JANUARY 20, 1967, BY THE PROCUREMENT AND PROPERTY BRANCH, DIVISION OF ADMINISTRATIVE SERVICES, OFFICE OF MANAGEMENT SERVICES, TO 172 POTENTIAL SOURCES. PRICED PROPOSALS WERE REQUESTED ON A FIXED-PRICE BASIS FOR THE DETAILED-SYSTEM DESIGN, PROGRAMMING AND DOCUMENTATION NECESSARY FOR THE FULL IMPLEMENTATION OF THE DEPARTMENT OF AGRICULTURE'S CURRENT RESEARCH INFORMATION SYSTEM (CRIS).

UNDER SCOPE OF WORK, PARAGRAPH I, GENERAL DESCRIPTION, OF THE RFP, ALL PROPOSALS WERE REQUIRED TO MEET AS A MINIMUM THE "BROAD SYSTEM SPECIFICATIONS * * * CONTAINED IN -CURRENT RESEARCH INFORMATION SYSTEM OF THE DEPARTMENT OF AGRICULTURE-SYSTEMS DESIGN STUDY- PREPARED BY DOCUMENTATION, INC. * * *" THIS STUDY WAS MADE BY DOCINC. UNDER A PREVIOUS CONTRACT TO DESIGN THE CRIS SYSTEM FOR THE DEPARTMENT. PARTICULAR RELEVANCE TO OUR CONSIDERATION HERE, PARAGRAPH IX, DETAILED DESCRIPTION OF WORK, PROVIDED, AS FOLLOWS:

"A. SYSTEMS INPUT - ALL INPUT TO THE CRIS SYSTEM WILL BE OPTICALLY SCANNED. KEYPUNCHING WILL BE USED ONLY FOR PROGRAM DECKS. THE CONTRACTOR WILL PROVIDE THE SCANNING CAPABILITY NECESSARY TO CONVERT PREPARED INPUT DOCUMENTS INTO MACHINE READABLE FORM. THE TYPE OF SCANNING EQUIPMENT TO BE USED IS TO BE RECOMMENDED BY THE CONTRACTOR. SUCH SCANNING EQUIPMENT MUST HAVE UPPER AND LOWER CASE READING AND TRANSLATING CAPABILITY. THE CONTRACTOR MUST SHOW IN HIS PROPOSAL THE MAKE AND MODEL OF THE SCANNING EQUIPMENT HE PROPOSES TO USE. THIS EQUIPMENT MUST HAVE PRIOR APPROVAL OF THE GOVERNMENT BEFORE IT IS USED. THIS RECOMMENDATION SHOULD TAKE INTO CONSIDERATION PURCHASE LEAD TIME NECESSARY FOR THE GOVERNMENT TO ACQUIRE INPUT TYPING EQUIPMENT WITHIN THE SIX WEEK'S DEADLINES STIPULATED IN PARAGRAPH 2 - INPUT TRAINING.'

IT WAS FURTHER REQUIRED THAT THE SYSTEM BE OPERATIONAL AND TURNED OVER TO THE GOVERNMENT WITH COMPLETE DOCUMENTATION ON OR BEFORE 242 CALENDAR DAYS FROM DATE OF CONTRACT AWARD. FAILURE TO MAKE TIMELY DELIVERY, WOULD RESULT IN THE ASSESSMENT OF LIQUIDATED DAMAGES, IN ACCORDANCE WITH PARAGRAPH IV OF THE SPECIAL PROVISIONS OF THE RFP, IN THE AMOUNT OF $500 FOR EACH CALENDAR DAY OF DELAY UNTIL DELIVERY IS EFFECTED, SUBJECT TO THE RIGHT OF THE GOVERNMENT TO TERMINATE THE CONTRACT FOR DEFAULT.

BY FEBRUARY 13, 1967, THE CLOSING DATE FOR RECEIPT OF PROPOSALS, TWO SOURCES RESPONDED WITH PRICED PROPOSALS AS FOLLOWS:

DOCUMENTATION INCORPORATED $325,000

AUTOMATION TECHNOLOGY, INC. $317,000

UPON EVALUATION, BOTH PROPOSALS WERE DEEMED TO BE TECHNICALLY ACCEPTABLE BY COGNIZANT PERSONNEL OF THE PROCURING ACTIVITY. IN THIS REGARD, DOCINC. HAS CONTENDED THAT THE DEPARTMENT ERRED IN ITS DETERMINATION THAT THE AUTOTECH PROPOSAL WAS RESPONSIVE TO THE TERMS OF THE RFP. SPECIFICALLY, IT IS ALLEGED, IN RELIANCE ON PARAGRAPH II, A., SYSTEMS INPUT, OF THE SCOPE OF WORK PROVISIONS, THAT:

"THE DEPARTMENT OF AGRICULTURE INFORMED DOC INC THAT AUTO TECH INITIALLY PROPOSED TO PERFORM THE SPECIFIED OPTICAL SCANNING FUNCTIONS USING A CONTROL DATA CORPORATION MODEL 915 OPTICAL SCANNER. ACCORDING TO THE MANUFACTURER, THE CURRENTLY AVAILABLE 915 DOES NOT -HAVE UPPER AND LOWER CASE READING AND TRANSLATING CAPABILITY- (PAGE 7, ENCLOSURE (1) ). SINCE THIS SCANNER DOES NOT HAVE THESE CAPABILITIES AS REQUIRED BY THE SCOPE OF WORK, PAGE 7, PARAGRAPH II, DETAILED DESCRIPTION OF WORK OF THE SUBJECT, RFP, DOC INC TAKES THE POSITION THAT AUTO TECH WAS NOT RESPONSIVE TO THE SUBJECT RFP IN ITS INITIAL PROPOSAL. THEREFORE, DOC INC WOULD BE THE ONLY COMPANY TECHNICALLY RESPONSIVE TO THE SUBJECT RFP.'

IN CONTRAST, DOCINC. PROPOSED TO COMPLY WITH THE INPUT REQUIREMENTS BY FURNISHING THE RECOGNITION EQUIPMENT INCORPORATED ELECTRONIC RETINA READ. AS STATED IN ITS LETTER DATED JUNE 20, 1967, THIS EQUIPMENT "RECOGNIZES, READS, AND TRANSLATES UPPER AND LOWER CASE CHARACTERS DIRECTLY" FROM THE INPUT FORMS. IT IS FURTHER POINTED OUT THAT USE OF THE OPTICAL SCANNING HARDWARE PROPOSED BY AUTOTECH WOULD REQUIRE UPSHIFT AND DOWNSHIFT PRECEDENCE CODES TO BE TYPED ON THE INPUT FORMS.

THE INITIAL ADMINISTRATIVE REPORT DATED JUNE 15, 1967, ADVISED US THAT OPTICAL SCANNER HARDWARE REQUIRES A COMPUTER PROGRAM TO MAKE IT WORK; THAT BOTH DOCINC. AND AUTOTECH PROPOSED TO UTILIZE AN IBM 360/40 COMPUTER TO PROCESS THE DATA COMING OUT OF THE SCANNER SYSTEM EACH PROPOSED; AND THAT BOTH PROPOSED THE USE OF UPSHIFT AND DOWNSHIFT PROCEDURE CODES TO REPRESENT TRANSLATED UPPER AND LOWER CASE DATA IN THE OUTPUT. ON THIS BASIS, WE WERE FURTHER ADVISED IN THE JUNE 15 REPORT THAT FOR THE PURPOSES OF EVALUATING THE PROPOSALS UNDER THE TERMS OF THE RFP "THE DIVISION OF THE READING AND TRANSLATING ABILITY BETWEEN THE SCANNING HARDWARE AND THE SOFTWARE NECESSARY, IN EITHER CASE, FOR ITS OPERATION WAS IMMATERIAL, AND BOTH WERE EVALUATED AS ONE UNIT.' WITH PARTICULAR REGARD TO THE INTENDED PURPOSE OF THE RFP TERMS REQUIRING "UPPER AND LOWER CASE READING AND TRANSLATING CAPABILITY," A SUPPLEMENTAL ADMINISTRATIVE REPORT FURNISHED OUR OFFICE ON JULY 11, 1967, SPECIFICALLY ADVISED, AS FOLLOWS: "* * * IN THE REQUEST FOR PROPOSALS WE ASK THAT THE SCANNING SYSTEM PROPOSED BE ACCEPTABLE TO THE GOVERNMENT AND CAPABLE OF READING AND TRANSLATING UPPER AND LOWER CASE CHARACTERS. DOCUMENTATION INCORPORATED AGREES THAT -THE OUTPUT OF BOTH SCANNING SYSTEMS IS THE SAME.- BOTH SYSTEMS PROPOSED START WITH THE SAME SOURCE DOCUMENTS, BOTH ACHIEVE THE SAME OUTPUT. THEREFORE, BOTH MUST READ AND TRANSLATE UPPER AND LOWER CASE IN THE INPUT INTO UPPER AND LOWER CASE IN THE OUTPUT. AS THE ONLY INPUT TO A SCANNING DEVICE IS WHAT IT SCANS BOTH OF THESE SYSTEMS MUST -READ- UPPER AND LOWER CASE. WE AGREE WITH WEBSTER THAT TO READ MEANS -TO GET THE SENSE OF,- -TO UNDERSTAND- THEN IT IS OBVIOUS THAT BOTH SYSTEMS READ UPPER AND LOWER CASE. PLACING AS MUCH EMPHASIS AS DOCUMENTATION INCORPORATED DOES ON THE METHOD OF REPRESENTING UPPER AND LOWER CASE ON THE INPUT FORM, IS EQUIVALENT TO CLAIMING THAT ROMAN NUMERALS AREN-T NUMBERS AND CANNOT BE READ AS SUCH. * * * THE TECHNICAL EVALUATION TEAM FELT THAT THE USE OF THE UPSHIFT AND DOWNSHIFT CHARACTER, A LONG ESTABLISHED METHOD IN OPTICAL SCANNING, WAS AN ACCEPTABLE AND PROPER WAY TO PROVIDE FOR THE READING AND TRANSLATING OF THE UPPER AND LOWER CASE CHARACTERS AS REQUIRED IN THE REQUEST FOR PROPOSALS.'

THE EXPRESSION OF THE GOVERNMENT'S REQUIREMENTS AND THE CONSEQUENT DETERMINATION OF A PARTICULAR OFFEROR'S CONFORMANCE TO THE STATED REQUIREMENTS ARE PRIMARILY THE RESPONSIBILITY OF THE CONTRACTING AGENCY. IN THIS LATTER RESPECT, IT IS WELL ESTABLISHED THAT THE FACTUAL DETERMINATION OF RESPONSIVENESS WILL NOT BE QUESTIONED BY OUR OFFICE IN THE ABSENCE OF A SHOWING OF BAD FAITH OR LACK OF A REASONABLE FACTUAL BASIS. 17 COMP. GEN. 554; 19 ID. 587. HERE, WE NOTE THAT THE REQUIREMENT IN PARAGRAPH II, A, OF THE SCOPE OF WORK PROVISION MAY BE READ AS A LIMITATION ON THE "BROAD SYSTEMS SPECIFICATIONS" CONTAINED IN THE STUDY PREVIOUSLY PREPARED BY DOCINC. UNDER CONTRACT, SINCE THE DESIGNATION OF OPTICAL SCANNING AS THE INPUT MODE WOULD EXCLUDE THE USE OF PUNCHED CARD INPUT WHICH WAS LISTED AS AN ACCEPTABLE ALTERNATE INPUT METHOD, ALTHOUGH NOT RECOMMENDED BY DOCINC. FURTHER, THE LANGUAGE OF PARAGRAPH II, A, CITED BY THE PROTESTANT, IS APPARENTLY SUSCEPTIBLE OF THE LITERAL INTERPRETATION URGED AND THIS WAS APPARENTLY RECOGNIZED BY AUTOTECH WHEN IT STATED, WITH RESPECT TO THE CONTROL DATA CORPORATION MODEL 915 OFFERED IN ITS PROPOSAL, THAT: "WHILE THIS EQUIPMENT RECOGNIZES ONLY UPPER-CASE ASA FONT, A SPECIAL LOWER CASE SHIFT CHARACTER WILL BE UTILIZED. * * *.' HOWEVER, WE CANNOT ON THE RECORD PROPERLY SUBSTITUTE OUR JUDGMENT FOR THAT OF THE PROCURING ACTIVITY, OR CONCLUDE THAT THE INTERPRETATION OF THE INPUT REQUIREMENT DEFINED IN TERMS OF THE DEPARTMENT'S OVERALL PROGRAM OBJECTIVES IS UNREASONABLE. MOREOVER, IT IS OUR VIEW THAT SPECIFICATIONS CONTAINED IN REQUESTS FOR PROPOSALS SHOULD BE ACCORDED AS BROAD AN INTERPRETATION AS POSSIBLE CONSISTENT WITH THE GOVERNMENT'S EXPRESSED NEEDS. IN ANY EVENT, THE QUESTION OF THE INITIAL RESPONSIVENESS OF THE AUTOTECH PROPOSAL IS ACADEMIC IN VIEW OF THE SUBSEQUENT CHANGES IN THE GOVERNMENT'S REQUIREMENTS.

BOTH PRICE PROPOSALS SUBSTANTIALLY EXCEEDED THE GOVERNMENT'S COST ESTIMATE OF $250,000, AND IT THEREFORE BECAME NECESSARY TO NEGOTIATE FOR THE IMPLEMENTATION OF CRIS WITHIN THE LIMITATIONS OF AVAILABLE FUNDS. LETTERS DATED MARCH 6, 1967, AND MARCH 9, 1967, RESPECTIVELY, TO DOCINC. AND AUTOTECH, THE PROCURING ACTIVITY RAISED CERTAIN QUESTIONS RELATIVE TO THE TECHNICAL ASPECTS OF THE TWO PROPOSALS, AND REQUESTED THE OFFERORS TO RESTRUCTURE THEIR PROPOSAL PRICES ON AN ATTACHED FORMAT. THESE LETTERS WERE SUPPLEMENTED BY SEPARATE MEETINGS WITH DOCINC. AND AUTOTECH ON MARCH 7 AND MARCH 13, 1967, RESPECTIVELY. IN THIS REGARD, THE INITIAL ADMINISTRATIVE REPORT AND THE SUPPLEMENTAL REPORT ADVISE THAT AT THESE CONFERENCES BOTH OFFERORS WERE ORALLY INFORMED OF MODIFICATIONS TO THE TERMS OF THE RFP DIRECTED TO ACHIEVING A REDUCTION IN THE COST OF CRIS IMPLEMENTATION. THE INITIAL REPORT FURTHER STATES THAT: "OTHER PROSPECTIVE OFFERORS (SYLVANIA ELECTRONICS SYSTEMS, ARIES CORPORATION, BOOZ-ALLEN APPLIED RESEARCH, VITRO LABORATORIES, AND GENERAL ELECTRIC CO.) WERE NOTIFIED OF THE MODIFIED SPECIFICATIONS AND INVITED TO SUBMIT POSALS.' HOWEVER, NONE OF THESE FIRMS RESPONDED TO THE REQUEST.

SPECIFICALLY, WE ARE ADVISED THAT THREE CHANGES TO THE SOLICITATION REQUIREMENTS WERE COMMUNICATED TO THE OFFERORS: FIRST, DOCINC. AND AUTOTECH WERE ADVISED THAT THE DELIVERY DATE OF THE OPERATIONAL CRIS SYSTEM WOULD BE EXTENDED; SECOND, IT WAS STATED THAT THE LIQUIDATED DAMAGES WOULD BE REDUCED; AND THIRD, OFFERORS WERE ADVISED THAT, IN LIEU OF THE MANDATORY REQUIREMENT FOR OPTICAL SCANNING CONTAINED IN PARAGRAPH II, A., OPTIONAL METHODS OF INPUT INTO THE SYSTEM WOULD BE CONSIDERED. THIS REGARD, WE ARE ADVISED THAT INPUT BY PUNCHED CARD AND BY MAGNETIC TAPE SELECTRIC TYPEWRITER (MT/ST) WERE EXPRESSLY MENTIONED. THE SUPPLEMENTAL REPORT ADVISES THAT THIS LATTER METHOD DIFFERS FROM INPUT BY OPTICAL SCANNING, AS FOLLOWS: "* * * THE ONLY DIFFERENCE BETWEEN THE MAGNETIC TAPE SELECTRIC SYSTEM AND THE OPTICAL SCANNING SYSTEM IS IN THE REPLACEMENT OF THE USE OF AN EXPENSIVE OPTICAL SCANNING DEVICE TO PRODUCE A COMPUTER READABLE MAGNETIC TAPE FROM A TYPEWRITER DOCUMENT BY THE INEXPENSIVE DIGI-DATA CONVERTER WHICH TAKES MAGNETIC TAPE PRODUCED IN THE KEYBOARDING OPERATION AT THE SAME TIME AS THE TYPEWRITTEN DOCUMENT AND CONVERTS IT INTO A COMPUTER READABLE MAGNETIC TAPE. ONCE THIS COMPUTER COMPATIBLE MAGNETIC TAPE HAS BEEN OBTAINED IT IS PROCESSED THROUGH THE SAME PROGRAMS AND SYSTEM FEATURES THROUGH WHICH A TAPE OBTAINED FROM AN OPTICAL SCANNING SYSTEM WOULD HAVE BEEN PROCESSED. THE REAL DIFFERENCE BETWEEN THE TWO SYSTEMS IS IN THE REPLACEMENT OF THE OPTICAL SCANNING EQUIPMENT WITH THE DIGI-DATA CONVERTER EQUIPMENT. ALL DATA PREPARATION PRIOR TO THIS EQUIPMENT LINK IS SUBSTANTIALLY THE SAME AND ALL THE DATA MANIPULATION, FILE BUILDING, AND REPORT PRODUCING THAT FOLLOW ARE SUBSTANTIALLY THE SAME AS THEY WOULD HAVE BEEN IF THE OPTICAL SCANNING EQUIPMENT HAD BEEN USED. * * *"

BY LETTER DATED MARCH 15, 1967, DOCINC. RESPONDED TO THE LETTER OF MARCH 6 IN LIGHT OF THE MARCH 7, 1967, MEETING. THE REVISED PRICE PROPOSAL INCLUDED IN THE LETTER WAS SUBSTANTIALLY SIMILAR TO DOCINC'S ORIGINAL PRICE RESPONSE ($325,000). AUTOTECH BY LETTER DATED MARCH 20, 1967, SUBMITTED A REVISED PRICE PROPOSAL WHICH PROVIDED SEPARATE PRICING FOR INPUT BY OPTICAL SCANNING AND BY PUNCHED CARD INPUT. HOWEVER, IT WAS STATED THAT INPUT BY MT/ST WOULD BE PREFERABLE TO EITHER METHOD. ON MARCH 29, 1967, THE PROPOSAL WAS SUPPLEMENTED TO INCLUDE MT/ST, AND A REVISED PRICE OF $250,000 FOR CRIS IMPLEMENTATION WAS SUBMITTED.

ON APRIL 3, 1967, A REPRESENTATIVE OF DOCINC. CONTACTED THE PROCURING ACTIVITY AND WAS INFORMED THAT THE DEPARTMENT PROPOSED TO AWARD THE CONTRACT TO AUTOTECH. LATER THAT DAY, DOCINC. SUBMITTED AN UNSOLICITED PRICE PROPOSAL IN THE AMOUNT OF $248,000. HOWEVER, BASED ON THE OVERALL SYSTEMS COST, THE AUTOTECH PROPOSAL WAS STILL CONSIDERED THE LOWER OF THE TWO. THEREAFTER, ON APRIL 17, 1967, CONTRACT NO. 12-01-06-5-125 FOR CRIS IMPLEMENTATION WAS AWARDED TO AUTOTECH ON THE BASIS OF INPUT BY MT/ST, WITH DELIVERY OF THE OPERATIONAL SYSTEM WITHIN 365 CALENDAR DAYS, RATHER THAN THE 242 DAYS ORIGINALLY SPECIFIED. FAILURE TO MAKE TIMELY DELIVERY WILL RESULT IN THE ASSESSMENT OF LIQUIDATED DAMAGES OF $100 PER DAY AS OPPOSED TO THE $500 PER DAY ORIGINALLY SPECIFIED IN THE RFP. DOCINC. CONTENDS THAT THE PROCEDURE EMPLOYED FOR EFFECTING THE MODIFICATIONS MADE TO THE RFP CONTRAVENES THE FEDERAL PROCUREMENT REGULATIONS (FPR) 1-3.805-1 (D), WHICH PROVIDE AS FOLLOWS:

"/D) WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE, OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE REQUEST FOR PROPOSALS, AND A COPY SHALL BE FURNISHED TO EACH PROSPECTIVE CONTRACTOR. ORAL ADVICE OF CHANGE OR MODIFICATION MAY BE GIVEN, IF (1) THE CHANGES INVOLVED ARE NOT COMPLEX IN NATURE, (2) ALL PROSPECTIVE CONTRACTORS ARE NOTIFIED SIMULTANEOUSLY (PREFERABLY BY A MEETING WITH THE CONTRACTING OFFICER), AND (3) A RECORD IS MADE OF THE ORAL ADVICE GIVEN. IN SUCH INSTANCES, HOWEVER, THE ORAL ADVICE SHOULD BE PROMPTLY FOLLOWED BY A WRITTEN AMENDMENT VERIFYING SUCH ORAL ADVICE PREVIOUSLY GIVEN. THE DISSEMINATION OF ORAL ADVICE OF CHANGES OR MODIFICATIONS SEPARATELY TO EACH PROSPECTIVE CONTRACTOR DURING INDIVIDUAL NEGOTIATION SESSIONS SHOULD BE AVOIDED UNLESS PRECEDED, ACCOMPANIED, OR IMMEDIATELY FOLLOWED BY A WRITTEN AMENDMENT TO THE REQUEST FOR PROPOSALS EMBODYING SUCH CHANGES OR MODIFICATIONS.'

WITH PARTICULAR REGARD TO THE MODIFICATION PERMITTING OPTIONAL METHODS OF INPUT, DOCINC. ADVISES THAT AT THE MARCH 7, 1967, MEETING, THEY WERE MERELY ASKED IF THEY WERE AWARE OF MT/ST, TO WHICH QUERY THEY RESPONDED AFFIRMATIVELY. IN THIS RESPECT, DOCINC. ALLEGES IN ITS LETTER OF JUNE 20, 1967, THAT THEY WERE NEVER INFORMED EITHER VERBALLY OR IN WRITING THAT A METHOD OTHER THAN OPTICAL SCANNING WAS BEING SOLICITED BY THE DEPARTMENT UNDER THE RFP.

INITIALLY, THE PROCURING ACTIVITY MAINTAINS THAT SINCE "THE SPECIFICATION MODIFICATIONS * * * WERE MINOR WHEN CONSIDERED IN THE TOTAL SERVICES REQUIRED," THE NOTICE REQUIREMENTS OF FPR 1-3.805-1 (D) WHICH RELATE TO "SUBSTANTIAL" CHANGES WERE NOT FOR APPLICATION. IN THIS RESPECT, WE MAY ACKNOWLEDGE THAT THE GREATEST PORTION OF THE WORK TO BE DONE IN CRIS IMPLEMENTATION "DESIGNING, DEVELOPING, PROGRAMMING, AND COMPLETE TESTING AND DEBUGGING OF SEVERAL VERY SOPHISTICATED, HIGHLY INTERRELATED COMPUTER PROGRAMS") WOULD NOT BE SERIOUSLY AFFECTED BY THE SPECIFICATION MODIFICATIONS. HOWEVER, THE FACT THAT THIS MAJOR PORTION OF THE WORK WOULD NOT BE AFFECTED IS MERELY INDICATIVE OF THE SCOPE OF THE CHANGES, AND IS NOT NECESSARILY DETERMINATIVE OF THE CHARACTER OF THE CHANGES. CONSISTENT WITH THE GOAL OF MAXIMIZING COMPETITION IN THE PROCUREMENT OF SUPPLIES AND SERVICES BY NEGOTIATION, FPR 1-3.805-1 (D) IS INTENDED TO INSURE THAT QUALIFIED OFFERORS ARE EXTENDED FULL OPPORTUNITY TO PARTICIPATE IN THE NEGOTIATION OF GOVERNMENT CONTRACTS ON AN EQUAL BASIS, WITHIN REASONABLE TIME LIMITATIONS. IN THIS REGARD, IT IS OUR OPINION THAT CHANGES IN THE GOVERNMENT'S REQUIREMENTS DURING THE COURSE OF NEGOTIATIONS MUST BE VIEWED AS SUBJECT TO THE REQUIREMENTS OF FPR 1 3.805- 1 (D) WHENEVER SUCH CHANGE WOULD BE DETERMINATIVE OF THE ULTIMATE AWARD OF A CONTRACT. CLEARLY, THE FAILURE TO COMMUNICATE A CHANGE WHICH ULTIMATELY BECOMES THE BASIS OF A SUBSEQUENT AWARD IS PREJUDICIAL TO THE UNINFORMED OFFEROR. HERE, WE NOTE THAT THERE IS NO SUGGESTION THAT, WITH RESPECT TO THE MAJOR AND UNCHANGED PORTION OF THE WORK, THE PROPOSALS OF EITHER DOCINC. OR AUTOTECHWERE OTHER THAN SATISFACTORY, OR THAT THE DETERMINATION TO PERMIT OPTIONAL SYSTEMS INPUT WAS BASED ON A TECHNICAL DISSATISFACTION WITH INPUT BY OPTICAL SCANNING. RATHER, THIS DECISION WAS BASED ON THE ADMITTEDLY LOWER COST OF THE OPTIONAL INPUT METHODS.

CONSIDERING THE IMPACT OF THE COST SAVINGS ALONE ATTRIBUTABLE TO THE USE OF MT/ST, THE EXTENSION OF THE DELIVERY DATES AND THE REDUCTION IN THE RATE OF LIQUIDATED DAMAGES, AUTOTECH WAS ABLE TO EFFECT A PRICE REDUCTION OF $67,000, OR APPROXIMATELY 20 PERCENT OF ITS ORIGINAL PROPOSAL PRICE. THERE IS NO QUESTION THAT THESE CHANGES IN THE METHOD AND LEVEL OF PERFORMANCE WOULD, IF UNCOMMUNICATED, EFFECTIVELY PRECLUDE ANY FURTHER CONSIDERATION OF THE PROPOSAL SUBMITTED BY DOCINC. WE, THEREFORE, VIEW THE SUGGESTION THAT THE REQUIREMENTS OF FPR 1-3.805-1 (D) WERE NOT FOR APPLICATION AS WITHOUT MERIT.

WE TURN NEXT TO THE ADVICE THAT THE ESSENTIAL REQUIREMENTS OF FPR 1 3.805 -1 (D) WERE COMPLIED WITH WHEN THE TWO PROSPECTIVE CONTRACTORS WERE APPRISED OF THE CHANGES AND WERE AFFORDED AN OPPORTUNITY TO RESPOND, AND THAT SINCE "BOTH INTERESTED BIDDERS WERE FULLY AWARE OF MODIFICATIONS, THERE SEEMED NO PURPOSE SERVED BY WRITTEN STATEMENTS OF THE MODIFICATIONS.' IN 46 COMP. GEN. 285, 292, WE CONSIDERED, FIRST, THE ANALOGOUS SITUATION INVOLVING ORAL NOTIFICATION OF CHANGES IN THE TERMS OF THE RFP COMMUNICATED AT A PREPROPOSAL CONFERENCE, AND STATED THAT: ,ALTHOUGH IT IS OUR VIEW THAT THE REGULATIONS REQUIRE THE ISSUANCE OF AN APPROPRIATE AMENDMENT TO THE RFP IN SUCH CIRCUMSTANCES, IT WOULD APPEAR THAT THE VERBAL INSTRUCTIONS GIVEN AT THE PREPROPOSAL CONFERENCE SERVED SUBSTANTIALLY THE SAME PURPOSE AS A WRITTEN AMENDMENT, IN THAT ALL PROSPECTIVE OFFERORS WERE PLACED ON NOTICE OF THE CHANGE IN THE RFP TERMS.'

WE ALSO RESPONDED TO THE FURTHER QUESTION OF THE EFFECT OF THE FAILURE OF THE CONTRACTING OFFICER TO ADVISE THE PROTESTANT OF AN INCREASE IN THE PROCUREMENT NEEDS AFTER THE PROPOSALS HAD BEEN OPENED. WHILE WE NOTED IN THAT DECISION THAT CHANGES IN THE GOVERNMENT'S REQUIREMENTS NORMALLY REQUIRE COMMUNICATION TO ALL OFFERORS REGARDLESS OF THEIR INITIAL POSITION AS TO PRICE, WE DID NOT OBJECT TO THE CONTRACTING OFFICER'S ACTION SINCE THE CIRCUMSTANCES INDICATED THAT THE OFFEROR WOULD NOT HAVE BEEN WILLING TO CHANGE HIS POSITION WITH RESPECT TO THE REVISED PROPOSAL. ALTHOUGH WE MAY NOT CONCLUDE THAT SUCH CIRCUMSTANCE IS PRESENT HERE, WE MAY AGREE THAT FROM THE STANDPOINT OF INSURING THAT ALL OFFERORS ARE AFFORDED AN EQUAL OPPORTUNITY TO RESPOND ON A COMMON BASIS, THE FAILURE TO COMPLY WITH THE PROCEDURAL REQUIREMENTS FOR NOTICE DOES NOT NECESSARILY RENDER THE PROCUREMENT ACTION LEGALLY DEFECTIVE. HOWEVER, WE TAKE EXCEPTION TO THE SUGGESTION THAT WRITTEN NOTIFICATION OF CHANGES IN SPECIFICATION REQUIRED BY FPR SERVES NO PURPOSE.

TURNING TO THE QUESTION OF WHETHER DOCINC. WAS, IN FACT, INFORMED OF THE CHANGES, WE NOTE THAT DOCINC. ACKNOWLEDGED THAT MT/ST WAS MENTIONED AND HAS NOT CONTENDED THAT IT WAS UNAWARE OF THE CHANGE IN THE DELIVERY REQUIREMENTS OR THE REDUCTION IN THE RATE OF LIQUIDATED DAMAGES. IN FACT, IN ITS LETTER OF MARCH 15, 1967, TO THE DIRECTOR OF CRIS, IT SPECIFICALLY ADVISED THAT:

"AFTER CAREFUL REVIEW, WE CONCLUDE THAT AN EXTENSION OF DELIVERY FOR PHASE II BEYOND 242 DAYS WOULD NOT RESULT IN A DECREASE IN PRICE. ON THE CONTRARY, IT MIGHT WELL INCREASE IT. THE $500 DAY LIQUIDATED DAMAGES CLAUSE WAS NOT A FACTOR REQUIRING AN INCREASE IN THE BID PRICE.'

IN CONTRAST, AUTOTECH, IN ITS REVISED PRICE PROPOSAL ADVISED THAT AN EXTENSION OF CRIS IMPLEMENTATION TO 1 YEAR "WOULD IMPROVE THE QUALITY OF THE SYSTEM AND SIGNIFICANTLY REDUCE THE COST.' SEE FPR 1 1.315-2, AND FPR 1-1.316-2, DEALING WITH LIQUIDATED DAMAGES PROVISIONS AND THE POLICIES RESPECTING TIME OF PERFORMANCE, RESPECTIVELY. THE IMPORT OF THESE REGULATIONS WOULD SEEM TO LEND MORE SIGNIFICANCE TO DOCINC-S. RESPONSES QUOTED ABOVE.

WHILE WE MAY AGREE, AS THE SUPPLEMENTAL REPORT SUGGESTS, THAT ON THE BASIS OF THESE LATTER TWO MODIFICATIONS, DOCINC. WOULD NOT IN ANY EVENT HAVE RECEIVED AN AWARD, THE ALLEGATIONS OF FAVORITISM AND THE DISPUTED QUESTION OF FACT WITH RESPECT TO THE MODIFICATION PERMITTING OPTIONAL METHODS OF INPUT HIGHLIGHT, IN OUR OPINION, THE IMPORTANCE OF FULL COMPLIANCE WITH THE REGULATORY REQUIREMENTS OF WRITTEN NOTIFICATION OF SPECIFICATION CHANGES. AS YOU KNOW; IT IS THE LONG STANDING POLICY OF OUR OFFICE TO ACCEPT THE ADMINISTRATIVE REPORT IN RESOLVING DISPUTED QUESTIONS OF FACT. IN THIS RESPECT, WE DRAW SPECIFIC ATTENTION TO THE FAILURE OF THE PROCURING ACTIVITY TO COMPLY WITH WHAT WE BELIEVE ARE THE MINIMAL REQUIREMENTS OF FPR 1-3.805-1 (D), QUOTED ABOVE; NAMELY, THE FAILURE TO INSURE THAT "/3) A RECORD IS MADE OF THE ORAL ADVICE GIVEN.' IN SUCH CIRCUMSTANCE, THE PROPRIETY OF OUR CONTINUED ADHERENCE TO SUCH LONG- STANDING POLICY IS QUESTIONABLE, WHEN DISPUTED QUESTIONS OF FACT MAY BE RESOLVED IN FAVOR OF THE GOVERNMENT BY REFERENCE TO WRITTEN MEMORANDA WHICH ARE SPECIFICALLY REQUIRED BY THE PROCUREMENT REGULATIONS. THEREFORE SUGGEST THAT APPROPRIATE ACTION BE TAKEN TO PREVENT A RECURRENCE OF THE FOREGOING SITUATION.