B-162062, NOV. 9, 1967

B-162062: Nov 9, 1967

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OFFEROR WHO WAS NOT APPRISED OF HOW QUOTATIONS WERE EVALUATED AND WHO BELIEVES THAT AWARD WAS BASED ON PRICE ALONE MUST HAVE PROTEST DENIED SINCE RECORD SHOWS COST WAS BUT ONE OF SEVERAL FACTORS CONSIDERED IN AWARD. THE EVALUATION FACTORS AND RELATIVE WEIGHTS ARE MATTERS PRIMARILY FOR CONSIDERATION OF PROCURING AGENCY AND WHERE EVALUATION AND REVIEW COMPORT WITH THE LAW THEY WILL NOT BE QUESTIONED. TO UNITED INDUSTRIAL ENGINEERING CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF JULY 11. IT WAS STATED IN THE PROPOSAL THAT ACCOMPLISHMENT OF THE REQUIRED WORK. CATEGORIES OF LABOR WHICH ATAC CONSIDERED NECESSARY FOR CONTRACT PERFORMANCE WERE SET FORTH WITHOUT REFERENCE TO ANY SPECIFIC NUMBER OF PERSONNEL IN EACH CATEGORY.

B-162062, NOV. 9, 1967

BIDS - NEGOTIATION - COMPETITIVE RANGE DETERMINATION DECISION TO UNITED INDUSTRIAL ENGINEERING CORP. CONCERNING PROTEST TO AWARD TO TROJAN ENGINEERING CO. FOR FURNISHING ENGINEERING SERVICES ON COST-PLUS-FIXED-FEE BASIS FOR PREPARATION OF MILITARY SPECIFICATIONS AND STANDARDS FOR ARMY TANK-AUTOMOTIVE COMMAND. OFFEROR WHO WAS NOT APPRISED OF HOW QUOTATIONS WERE EVALUATED AND WHO BELIEVES THAT AWARD WAS BASED ON PRICE ALONE MUST HAVE PROTEST DENIED SINCE RECORD SHOWS COST WAS BUT ONE OF SEVERAL FACTORS CONSIDERED IN AWARD. THE EVALUATION FACTORS AND RELATIVE WEIGHTS ARE MATTERS PRIMARILY FOR CONSIDERATION OF PROCURING AGENCY AND WHERE EVALUATION AND REVIEW COMPORT WITH THE LAW THEY WILL NOT BE QUESTIONED.

TO UNITED INDUSTRIAL ENGINEERING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JULY 11, 1967, PROTESTING AGAINST THE AWARD OF A CONTRACT TO THE TROJAN ENGINEERING CO. UNDER REQUEST FOR QUOTATIONS NO. DA-AE07-67-Q-0563, ISSUED BY THE UNITED STATES ARMY TANK- AUTOMOTIVE COMMAND (ATAC), PROCUREMENT AND PRODUCTION DIRECTORATE, WARREN, MICHIGAN.

THE PROPOSAL, ISSUED ON MAY 12, 1967, REQUESTED QUOTATIONS ON THE BASIS OF A COST-PLUS-FIXED-FEE CONTRACT FOR FURNISHING ENGINEERING SERVICES FOR THE PREPARATION OF MILITARY SPECIFICATIONS AND STANDARDS. FOR THE INFORMATION OF PROSPECTIVE QUOTERS, IT WAS STATED IN THE PROPOSAL THAT ACCOMPLISHMENT OF THE REQUIRED WORK, BASED ON PAST EXPERIENCE, INDICATED THE EXPENDITURE OF APPROXIMATELY 80,000 MAN HOURS OF WORK ON THE BASIS OF 40 PERSONNEL AT 2,000 HOURS PER EMPLOYEE. ALSO, CATEGORIES OF LABOR WHICH ATAC CONSIDERED NECESSARY FOR CONTRACT PERFORMANCE WERE SET FORTH WITHOUT REFERENCE TO ANY SPECIFIC NUMBER OF PERSONNEL IN EACH CATEGORY. PARAGRAPH 3 OF THE REQUEST FOR QUOTATIONS, ENTITLED "EVALUATION OF QUOTATIONS," PROVIDED:

"QUOTATIONS SUBMITTED PURSUANT TO THIS SOLICITATION WILL BE EVALUATED ON THE BASIS OF (1) TECHNICAL APPROACH AND UNDERSTANDING OF THE REQUIREMENT, (2) EXPERIENCE IN SIMILAR WORK, (3) THE OVERALL REASONABLENESS AND COMPLETENESS OF THE QUOTATION, (4) THE REASONABLENESS OF THE COST ESTIMATE, (5) THE EXPERIENCE OF THE PROPOSED PERSONNEL, (6) THE ABILITY OF THE QUOTER TO OBTAIN AND RETAIN QUALIFIED PERSONNEL AS EVIDENCED BY THE QUOTATION, AND (7) THE PROPOSED ORGANIZATION OF THE WORK FORCE. THE ABOVE ARE LISTED FOR INFORMATION AND ARE NOT INTENDED TO ILLUSTRATE THE RELATIVE WEIGHTS GIVEN TO ANY FACTORS BUT ONLY TO INDICATE SOME OF THE AREAS WHICH WILL BE CONSIDERED DURING EVALUATION.'

YOU PROTESTED AGAINST THE AWARD MADE TO TROJAN ON THE BASIS THAT YOU HAVE NEVER BEEN KNOWLEDGEABLY APPRISED OF HOW QUOTATIONS WERE ACTUALLY EVALUATED AND YOU ALSO BELIEVE THAT THE AWARD WAS BASED ON PRICE SINCE THE AWARD WAS $51,000 LESS THAN YOUR QUOTATION.

THE RECORD SHOWS THAT 23 FIRMS WERE SOLICITED AND 6 QUOTATIONS WERE RECEIVED. TECHNICAL EVALUATION OF THE 6 QUOTATIONS RECEIVED WAS CONDUCTED, CONSIDERING SUITABILITY OF PROPOSED ORGANIZATION AND SUPPORT INFORMATION SUBMITTED WITH EACH QUOTATION. THE TECHNICAL EVALUATION LISTING QUOTERS IN THE ORDER OF TECHNICAL COMPETENCE, TOGETHER WITH ESTIMATED COSTS USING PROVISIONAL OVERHEAD RATES, WAS REPORTED TO US AS FOLLOWS:

(TABLE OMITTED) THE ESTIMATED PRICE DIFFERENTIAL, CONSIDERING THE MAXIMUM OVERHEAD FIGURES OF UNITED, WHICH WAS GIVEN A TECHNICAL RATING OF 1, AND QUOTER NO. 3, TROJAN, WHICH WAS INITIALLY GIVEN A RATING OF 2, AMOUNTED TO $21,256. TECHNICAL PERSONNEL OF THE PROCUREMENT AGENCY REVIEWED THE RATING GIVEN TO TROJAN TO DETERMINE WHETHER THE RATED TECHNICAL COMPETENCE OF UNITED MIGHT OFFSET THE $21,256 SAVINGS AND, AFTER SUCH REVIEW, IT WAS DETERMINED THAT AWARD TO TROJAN WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT, ESTIMATED PRICE AND OTHER FACTORS CONSIDERED. IT IS THE GOVERNMENT'S OBLIGATION TO AFFORD NEGOTIATION OPPORTUNITY TO THE MAXIMUM NUMBER OF QUALIFIED QUOTERS WHO ARE WITHIN A COMPETITIVE RANGE. THE FACT THAT TROJAN WAS SOMEWHAT LESS TECHNICALLY QUALIFIED THAN YOUR FIRM COULD NOT PROPERLY FORM A BASIS FOR EXCLUDING TROJAN FROM NEGOTIATION, ESPECIALLY WHERE, AS HERE, NEGOTIATION HAD A MEANINGFUL AFFECT TO UPGRADE TROJAN'S QUOTATION. IT IS FURTHER REPORTED THAT TROJAN PROPOSED TO FURNISH THE FULL COMPLEMENT OF REQUIRED PERSONNEL WITHIN 48 HOURS AFTER CONTRACT AWARD, WHEREAS, UNITED PROPOSED TO FURNISH ITS FULL PERSONNEL COMPLEMENT WITHIN 30 DAYS. ALL FACTORS CONSIDERED, THE AWARD MADE TO TROJAN WAS THEREFORE DETERMINED TO BE THE MOST ADVANTAGEOUS TO THE GOVERNMENT.

THE "EVALUATION OF QUOTATIONS" CLAUSE, ABOVE, CONTAINED SEVEN EVALUATION FACTORS. PARAGRAPH 4 THEREOF, EXPANDING ON THE COST FACTOR IN PARAGRAPH 3, PROVIDED THAT ESTIMATED COSTS OF PERFORMANCE AND/OR PROPOSED FEES WOULD BE EVALUATED IN THE LIGHT OF REASONABLENESS AND PRACTICALITY AND THAT SUCH ESTIMATED COSTS WOULD BE USED AS A GUIDE FOR DETERMINING THE QUOTER'S UNDERSTANDING OF THE REQUIREMENTS, THE CALIBER OF PERSONNEL TO BE FURNISHED, AS WELL AS THE ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL. PARAGRAPH 4 FURTHER PROVIDED THAT THE PRIMARY CONSIDERATION IN MAKING ANY AWARD WOULD BE TO DETERMINE WHICH QUOTER COULD PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. WHILE YOU BELIEVE THAT COST WAS THE ONLY FACTOR UPON WHICH THE AWARD TO TROJAN WAS BASED, PARAGRAPHS 3 AND 4, WHEN READ TOGETHER, SHOW THAT COST WAS BUT ONE OF SEVERAL FACTORS CONSIDERED IN MAKING AWARD TO TROJAN, AND THE RECORD SUBMITTED HERE DOES NOT INDICATE OTHERWISE.

IT WAS THE DUTY OF THE CONTRACTING OFFICER TO NEGOTIATE WITH ALL THOSE QUOTERS WHOSE PROPOSALS WERE WITHIN THE RANGE OF TECHNICAL ACCEPTABILITY. ASPR 3-805.1 WHICH PRESCRIBES THE NEGOTIATION PROCEDURES IN THE SELECTION OF OFFERORS FOR NEGOTIATION AND AWARD IS AN IMPLEMENTATION OF 10 U.S.C. 2304 (G). THAT PROVISION OF LAW READS 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: * * *"

THE LEGISLATIVE HISTORY OF SECTION 2304 (G) DEMONSTRATES THAT DECISIONS AS TO WHETHER FIRMS ARE WITHIN A COMPETITIVE RANGE ARE MATTERS OF ADMINISTRATIVE DISCRETION WHICH THIS OFFICE SHOULD CONSIDER REVISING ONLY UPON A CLEAR SHOWING THAT SUCH DETERMINATION WAS MADE IN ARBITRARY ABUSE OF THAT DISCRETION. THAT PRICE ALONE WAS NOT THE SOLE DETERMINATIVE FACTOR IS NOT ONLY SUPPORTED BY THE RECORD BEFORE US, BUT BY THE FOLLOWING PROVISIONS OF ASPR 3-805.2:

"COST-REIMBURSEMENT TYPE CONTRACTS. IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST- REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE 3-808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT.'

ALL PERTINENT FACTORS OF EVALUATION WERE CONSIDERED BY THE PROCURING AGENCY, AND A REVIEW OF THE NEGOTIATION PROCEDURES AND PRACTICES FOLLOWED ESTABLISHES THAT THE AWARD WAS PRIMARILY BASED UPON TECHNICAL ADVANTAGE TO THE GOVERNMENT. WHILE PRICE IS ALWAYS A FACTOR IN GOVERNMENT PROCUREMENT, FACTORS OTHER THAN PRICE WERE OVERRIDING CONSIDERATIONS IN THIS PROCUREMENT. SEE 40 COMP. GEN. 508; CF. 46 ID. 191. THE VARIOUS FACTORS WHICH ARE PROPERLY FOR CONSIDERATION IN PROCUREMENTS SUCH AS HERE INVOLVED AND THE RELATIVE WEIGHTS WHICH ARE TO BE ASSIGNED TO EACH FACTOR ARE MATTERS PRIMARILY FOR CONSIDERATION BY THE PROCUREMENT AGENCY, AND OUR OFFICE ORDINARILY WILL NOT QUESTION THE NEGOTIATION PROCEDURES EMPLOYED IN SITUATIONS, AS HERE, WHERE THE EVALUATION REVIEW AND NEGOTIATIONS COMPORTED WITH LAW AND REGULATION. SEE PART 8, SECTION III, ASPR.