B-162398, NOVEMBER 15, 1967, 47 COMP. GEN. 272

B-162398: Nov 15, 1967

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1967: REFERENCE IS MADE TO LETTER OF SEPTEMBER 28. PARAGRAPH "L" THEREOF PROVIDED THAT TO DETERMINE WHICH BID IS MOST ADVANTAGEOUS TO THE GOVERNMENT. THREE BIDS WERE RECEIVED AS FOLLOWS: RATES PER HOUR PRIME TIME OTHER THAN PRIME TIME DATACOMP DATA SERVICE IBM 360/30 $50 $30 IBM 360/40 60 40 COMPUTER USAGE DEVELOPMENT CORP. THE CHARACTERISTICS OF THE EQUIPMENT WERE DETERMINED TO BE AS FOLLOWS: 360 MODEL CORE SIZE TAPE DATACOMP DATA SERVICE 30 64K 30KB 40 64K 30KB COMPUTER USAGE DEVELOPMENT CORP. 30 64K 60KB APPLIED DATA RESEARCH 40 128K 120KB THE ABSTRACT OF BIDS STATES THAT THE MODEL 40 IS 5 PERCENT MORE EFFICIENT THAN THE MODEL 30. THAT THE 128K CORE SIZE IS 20 PERCENT MORE EFFICIENT THAN THE 64K CORE SIZE.

B-162398, NOVEMBER 15, 1967, 47 COMP. GEN. 272

BIDS - EVALUATION - ESTIMATES - SUFFICIENCY OF EVALUATION BASE THE AWARD OF A CONTRACT TO FURNISH COMPUTER TIME FOR AN ESTIMATED NUMBER OF HOURS TO THE BIDDER WHOSE EQUIPMENT PERFORMED MORE EFFICIENTLY ON THE BASIS THAT NONWITHSTANDING HIGHER HOURLY CHARGES, THE ULTIMATE COST TO THE GOVERNMENT WOULD BE SIGNIFICANTLY LESS THAN IF THE WORK WOULD BE PERFORMED AT THE LOWER HOURLY CHARGES OFFERED BY OTHER BIDDERS SHOULD BE CANCELED, THE INVITATION ALTHOUGH PROVIDING FOR THE EVALUATION OF BIDS ON THE BASIS OF THE DIFFERENCE IN EQUIPMENT SPEEDS IN FAILING TO RELATE THE SPEEDS TO ESTIMATED JOB MIXES OR APPLICATIONS DID NOT PROVIDE THE FULL AND FREE COMPETITION CONTEMPLATED BY 41 U.S.C. 253, FOR BIDDERS UNINFORMED OF THE "PERFORMANCE FACTORS" TO BE USED IN THE EVALUATION OF BIDS COULD NOT INTELLIGENTLY PREPARE THEIR BIDS.

TO THE SECRETARY OF STATE, NOVEMBER 15, 1967:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 28, 1967, FROM THE DEPUTY UNDER SECRETARY FOR ADMINISTRATION, REPORTING ON THE PROTEST OF DATACOMP DATA SERVICE AGAINST THE AWARD MADE UNDER INVITATION FOR BIDS ST-67-50.

THE INVITATION SOLICITED HOURLY RATES FOR FURNISHING THE DEPARTMENT COMPUTER TIME AS NEEDED DURING THE PERIOD OF AUGUST 12, 1967, THROUGH JUNE 30, 1968. THE INVITATION SPECIFIED THE MINIMUM COMPUTER CONFIGURATION WHICH WOULD MEET THE GOVERNMENT'S NEEDS (IBM SYSTEM 360, MODEL 30 OR 40). THE PRICE SCHEDULE IN THE INVITATION SOLICITED OFFERS ON A PRIME TIME, AND OTHER THAN PRIME TIME, BASIS, AND INFORMATION AS TO THE PERFORMANCE CHARACTERISTICS OF THE EQUIPMENT OFFERED FOR USE. PARAGRAPH "K" OF THE SPECIAL PROVISIONS ESTIMATED THE TOTAL NUMBER OF HOURS OF COMPUTER USE THAT WOULD BE NEEDED DURING THE PRIME SHIFT AND DURING OTHER THAN THE PRIME SHIFT BASED UPON THE SPEED OF AN IBM SYSTEM 360, MODEL 30. PARAGRAPH "L" THEREOF PROVIDED THAT TO DETERMINE WHICH BID IS MOST ADVANTAGEOUS TO THE GOVERNMENT, BIDS WOULD BE EVALUATED ON THE BASIS OF THE SPEEDS OF THE EQUIPMENT OFFERED IN RELATION TO THE PRICES QUOTED BASED ON THE ESTIMATED HOURS OF USAGE SPECIFIED IN PARAGRAPH "K.' THREE BIDS WERE RECEIVED AS FOLLOWS:

RATES PER HOUR

PRIME TIME OTHER THAN PRIME TIME DATACOMP DATA SERVICE

IBM 360/30 $50 $30

IBM 360/40 60 40 COMPUTER USAGE DEVELOPMENT CORP.

IBM 360/30 75 50 APPLIED DATA RESEARCH

IBM 360/40 80 60 FROM THE INFORMATION FURNISHED BY EACH BIDDER, THE CHARACTERISTICS OF THE EQUIPMENT WERE DETERMINED TO BE AS FOLLOWS:

360 MODEL CORE SIZE TAPE DATACOMP DATA SERVICE

30 64K 30KB

40 64K 30KB COMPUTER USAGE DEVELOPMENT

CORP.

30 64K 60KB APPLIED DATA RESEARCH

40 128K 120KB

THE ABSTRACT OF BIDS STATES THAT THE MODEL 40 IS 5 PERCENT MORE EFFICIENT THAN THE MODEL 30; THAT THE 128K CORE SIZE IS 20 PERCENT MORE EFFICIENT THAN THE 64K CORE SIZE; THAT 60KB TAPES ARE 175 PERCENT MORE EFFICIENT THAN 30KB TAPES; AND 120KB TAPES ARE 250 PERCENT MORE EFFICIENT THAN 30KB TAPES. APPLYING THESE "PERFORMANCE FACTORS" TO THE EQUIPMENT OFFERED BY THE BIDDERS, IT WAS DETERMINED THAT THE EQUIPMENT OF APPLIED DATA RESEARCH WAS CAPABLE OF PERFORMING SO MUCH FASTER THAN THE EQUIPMENT OF THE OTHER BIDDERS THAT, NOTWITHSTANDING ITS HIGHER HOURLY CHARGES, THE ULTIMATE COST TO THE GOVERNMENT FOR PERFORMANCE WOULD BE SIGNIFICANTLY LESS THAN IF THE WORK WERE PERFORMED BY EITHER OF THE OTHER BIDDERS. ACCORDINGLY, THE CONTRACT WAS AWARDED TO APPLIED DATA RESEARCH ON AUGUST 10, 1967.

SECTION 1-3.409 OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES THAT IN A REQUIREMENTS CONTRACT---

"* * * AN ESTIMATED TOTAL QUANTITY IS STATED FOR THE INFORMATION OF PROSPECTIVE CONTRACTORS, WHICH ESTIMATE SHOULD BE AS REALISTIC AS POSSIBLE. THE ESTIMATE MAY BE OBTAINED FROM THE RECORDS OF PREVIOUS REQUIREMENTS AND CONSUMPTION, OR BY OTHER MEANS. * * *"

THE INFORMATION AS TO ESTIMATED TOTAL QUANTITIES OF WORK IS ALSO IMPORTANT FOR A PROPER EVALUATION OF BIDS. BY USING ESTIMATED QUANTITIES FOR BID EVALUATION DIFFERENT FROM ACTUAL ANTICIPATED NEEDS, THE POSSIBILITY ARISES THAT A BIDDER MAY BE FOUND LOW ON EVALUATION WHO IS NOT THE LOWEST BIDDER ON THE REAL REQUIREMENTS, OR THE BEST ESTIMATE THEREOF. 42 COMP. GEN. 257, 260.

IN THE PRESENT CASE, THE INVITATION ESTIMATED THE NUMBER OF HOURS OF WORK WHICH WOULD BE REQUIRED. IN MAKING SUCH AN ESTIMATE, IT WOULD APPEAR TO BE NECESSARY TO CONSIDER THE DIFFERENT FUNCTIONS TO BE PERFORMED BY THE EQUIPMENT AND THE DEGREE OF PERFORMANCE OF EACH FUNCTION SINCE THE EQUIPMENT DOES NOT OPERATE AT THE SAME SPEED FOR ALL FUNCTIONS. HOWEVER, THE DATA ON WORKLOADS INVOLVED IN DIFFERENT APPLICATIONS WERE NOT INCLUDED IN THE INVITATION AND, FOR THAT MATTER, NEITHER WERE THE "PERFORMANCE FACTORS" WHICH WERE USED TO EVALUATE THE BIDS. THE INFORMATION AS TO THE WORKLOADS INVOLVED IN DIFFERENT APPLICATIONS WAS NECESSARY FOR A PROPER EVALUATION OF BIDS SINCE THE COST TO THE GOVERNMENT DEPENDS UPON THE HOURS OF USE OF THE EQUIPMENT WHICH, IN TURN, ARE DEPENDENT UPON THE TYPE OF PROCESSING THE EQUIPMENT IS REQUIRED TO PERFORM. IN THIS CASE, THE INVITATION PROVIDED FOR THE EVALUATION OF BIDS ON THE BASIS OF THE DIFFERENCE IN THE SPEEDS OF THE EQUIPMENT BUT THOSE SPEEDS WERE NOT RELATED TO ESTIMATED JOB MIXES OR APPLICATIONS WHICH WERE NOT SET OUT IN THE INVITATION. IF SUCH INFORMATION HAD BEEN INCLUDED IN THE INVITATION AND IF THE INVITATION HAD PROVIDED THAT SUCH INFORMATION WOULD BE CONSIDERED IN THE EVALUATION OF BIDS, BIDDERS WOULD HAVE BEEN IN A POSITION TO INTELLIGENTLY PREPARE THEIR BIDS IN THE LIGHT OF KNOWN EVALUATION FACTORS WHEREUNDER EQUIPMENT SPEEDS WOULD BE RELATED TO ESTIMATED JOB APPLICATIONS OR MIXES. IN THAT CONNECTION, IT WAS STATED IN 36 COMP. GEN. 380, 385:

"THE -BASIS' OF EVALUATION WHICH MUST BE MADE KNOWN IN ADVANCE TO THE BIDDERS SHOULD BE AS CLEAR, PRECISE AND EXACT AS POSSIBLE. IDEALLY, IT SHOULD BE CAPABLE OF BEING STATED AS A MATHEMATICAL EQUATION. IN MANY CASES, HOWEVER, THAT IS NOT POSSIBLE. AT THE MINIMUM, THE -BASIS' MUST BE STATED WITH SUFFICIENT CLARITY AND EXACTNESS TO INFORM EACH BIDDER PRIOR TO BID OPENING, NO MATTER HOW VARIED THE ACCEPTABLE RESPONSES, OF OBJECTIVELY DETERMINABLE FACTORS FROM WHICH THE BIDDER MAY ESTIMATE WITHIN REASONABLE LIMITS THE EFFECT OF THE APPLICATION OF SUCH EVALUATION FACTOR ON HIS BID IN RELATION TO OTHER POSSIBLE BIDS. BY THE TERM -OBJECTIVELY DETERMINABLE FACTORS' WE MEAN FACTORS WHICH ARE MADE KNOWN TO OR WHICH CAN BE ASCERTAINED BY THE BIDDER AT THE TIME HIS BID IS BEING PREPARED. FACTORS WHICH ARE BASED ENTIRELY OR LARGELY ON A SUBJECTIVE DETERMINATION TO BE ANNOUNCED BY REPRESENTATIVES OF THE CONTRACTING AGENCY AT THE TIME OF OR SUBSEQUENT TO THE OPENING OF BIDS VIOLATE THE PRINCIPLE FOR THE REASON THAT THEY ARE NOT DETERMINABLE BY THE BIDDER AT THE TIME HIS BID IS BEING PREPARED.'

MOREOVER, THE COMPETITIVE BIDDING STATUTE, 41 U.S.C. 253, REQUIRES THAT SPECIFICATIONS AND INVITATIONS FOR BIDS BE DRAWN SO AS TO PERMIT FULL AND FREE COMPETITION. HOWEVER, THE INVITATION HERE DID NOT PROVIDE FOR FULL AND FREE COMPETITION BECAUSE OF THE DEFICIENCIES DISCUSSED ABOVE. THEREFORE, THE CONTRACT AWARDED THEREUNDER SHOULD BE CANCELED.