B-163882, FEBRUARY 13, 1969, 48 COMP. GEN. 536

B-163882: Feb 13, 1969

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CONTRACTS - NEGOTIATION - CUTOFF DATE - NOTICE SUFFICIENCY WHERE THE COMMON CUTOFF DATE FOR NEGOTIATIONS PRESCRIBED BY PARAGRAPH 3- 805.1 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION WAS NOT ESTABLISHED UNDER A REQUEST FOR PROPOSALS UNTIL AFTER THE LOW OFFER HAD BEEN MADE RESPONSIVE AND ACCEPTED DURING THE PENDENCY OF A REQUEST FOR A SMALL BUSINESS CERTIFICATE OF COMPETENCY ON THE OFFEROR OF A RESPONSIVE PROPOSAL WHO VIEWED THE CUTOFF NOTICE AS A REQUEST FOR CONFIRMATION OR EXTENSION OF ITS OFFER AND NOT AS A CONTINUATION OF NEGOTIATIONS. THE CUTOFF NOTICE ALTHOUGH NOT CONSTITUTING AN IMPROPER AUCTION TECHNIQUE WITHIN THE MEANING OF PARAGRAPH 3-805.1 (B) WAS INSUFFICIENT TO INFORM OFFERORS THAT NEGOTIATIONS WERE STILL OPEN AND TO INVITE THEIR "BEST AND FINAL OFFER.'.

B-163882, FEBRUARY 13, 1969, 48 COMP. GEN. 536

CONTRACTS - NEGOTIATION - CUTOFF DATE - NOTICE SUFFICIENCY WHERE THE COMMON CUTOFF DATE FOR NEGOTIATIONS PRESCRIBED BY PARAGRAPH 3- 805.1 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION WAS NOT ESTABLISHED UNDER A REQUEST FOR PROPOSALS UNTIL AFTER THE LOW OFFER HAD BEEN MADE RESPONSIVE AND ACCEPTED DURING THE PENDENCY OF A REQUEST FOR A SMALL BUSINESS CERTIFICATE OF COMPETENCY ON THE OFFEROR OF A RESPONSIVE PROPOSAL WHO VIEWED THE CUTOFF NOTICE AS A REQUEST FOR CONFIRMATION OR EXTENSION OF ITS OFFER AND NOT AS A CONTINUATION OF NEGOTIATIONS, THE CUTOFF NOTICE ALTHOUGH NOT CONSTITUTING AN IMPROPER AUCTION TECHNIQUE WITHIN THE MEANING OF PARAGRAPH 3-805.1 (B) WAS INSUFFICIENT TO INFORM OFFERORS THAT NEGOTIATIONS WERE STILL OPEN AND TO INVITE THEIR "BEST AND FINAL OFFER.' THEREFORE, ALL OFFERORS WITHIN A COMPETITIVE RANGE SHOULD BE AFFORDED FURTHER OPPORTUNITY FOR NEGOTIATIONS.

TO THE SECRETARY OF THE NAVY, FEBRUARY 13, 1969:

REFERENCE IS MADE TO THE REPORTS FURNISHED THIS OFFICE BY THE NAVALSHIP SYSTEMS COMMAND BY LETTERS OF MAY 23, JULY 15, AND NOVEMBER 26, 1968, CONCERNING A PROTEST BY AN OFFEROR AND THE AWARD WHICH SHOULD BE MADE UNDER REQUEST FOR PROPOSALS N-00024-67-R-3457 (S) FOR DIGITAL TO ANALOG CONVERTERS. INASMUCH AS THIS PROCUREMENT IS STILL ACTIVE OUR DECISION, IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION 3-507.2, WILL NOT DISCLOSE THE IDENTITY OR NUMBER OF OFFERORS.

THE REQUEST FOR PROPOSALS (RFP) WAS ISSUED ON MAY 1, 1967, WITH A CLOSING DATE OF MAY 17, 1967, FOR 37 CV-1980 ( ( (USQ-20 (U) DIGITAL TO ANALOG CONVERTERS, TOGETHER WITH ASSOCIATED MAINTENANCE AND REPAIR PARTS, ENGINEERING SERVICES AND TECHNICAL DATA FOR SHIPBOARD USE. THE ORIGINAL RFP WAS ISSUED ON A SOLE-SOURCE BASIS, BUT SUBSEQUENTLY, UPON REQUEST, WAS ISSUED TO OTHER OFFERORS. PROPOSALS RECEIVED OFFERED TWO DIFFERENT TYPES OF EQUIPMENT, ONE APPROACH EMPLOYING SWITCHING INTO TRANSFORMERS AND THE OTHER EMPLOYING RESISTIVE LADDER NETWORKS.

IN VIEW OF THE TWO APPROACHES, THE NAVAL SHIP SYSTEMS COMMAND (COMMAND) DETERMINED THAT, TO FULFILL ITS REQUIREMENTS, THE SPECIFICATIONS FOR THE CONVERTERS SHOULD BE REVISED TO SPECIFY THE SALIENT CHARACTERISTICS OF THE RESISTIVE LADDER DESIGN, ELIMINATING SWITCHING INTO TRANSFORMERS. IN THE ENGINEERING JUDGMENT OF THE COMMAND, THIS CHANGE WOULD OVERCOME THE DIFFICULTIES EXPERIENCED WITH THE PREVIOUS VERSIONS OF THE EQUIPMENT.

ON FEBRUARY 23, 1968, OFFERORS WERE REQUESTED TO REVISE THEIR PROPOSALS IN ACCORDANCE WITH THE REVISED SPECIFICATIONS. ADDITIONALLY, REQUIREMENTS WERE INCLUDED FOR THE SUBMISSION OF A PREPRODUCTION MODEL AND FOR THE FINAL ACCEPTANCE TEST ON EQUIPMENT TO BE PERFORMED USING A CP-642B/USQ-20 OR CP-642A COMPUTER, THE OUTPUT OF WHICH THE EQUIPMENT UNDER PROCUREMENT MUST CONVERT. A CLOSING DATE FOR PROPOSALS WAS SET FOR FEBRUARY 29, 1968, AND LATER EXTENDED TO MARCH 29, 1968.

ONE PROTEST WAS FILED WITH THIS OFFICE BY A COPY OF A LETTER OF MARCH 18, 1968, TO THE CONTRACTING OFFICER. IN ESSENCE IT WAS CONTENDED THAT THE ORIGINAL RFP WAS AMENDED TO FAVOR THE ORIGINALLY INTENDED SOLE SOURCE. THE FOLLOWING PARAGRAPHS OF THE SPECIFICATIONS WERE ALLEGED TO BE RESTRICTIVE, REFLECTING FAVORITISM AND MORE THAN THE GOVERNMENT'S MINIMUM NEEDS:

A) PARAGRAPH 3.4.1.1--- SIZE OF PRINTED CIRCUIT CARD SHALL BE AS SHOWN IN FIGURE 1 OF THE SPECIFICATION.

B) PARAGRAPH 3.4.1.2--- CONNECTORS SHALL BE AS USED IN THE CP642B/USQ-20 (V) COMPUTER AND CV2036/USQ-20 (V) KEYSET CENTRAL MULTIPLEXER AS DESIGNED AND BUILT BY A COMPETITOR.

C) PARAGRAPH 3.1.4.3--- LIGITAL CARDS SHALL BE AS USED IN THE CP642B COMPUTER AND CV2036 KCMX AND AS TABULATED IN ENCLOSURE 1 TO SPECIFICATION ES-17-6178D01.

D) PARAGRAPH 3.6.1.1--- ALL SWITCHES MUST OPERATE INTO RESISTIVE LOADS.

E) PARAGRAPH 3.6.1.2--- SWITCHING NETWORKS SHALL BE ISOLATED FROM INDUCTIVE LOADS.

F) PARAGRAPH 3.6.1.3--- MAXIMUM CURRENT SWITCHED BY ANY SWITCH SHALL NOT EXCEED 1 MILLIAMPERE.

G) PARAGRAPH 3.6.1.4--- MAXIMUM VOLTAGE ACROSS ANY SWITCH SHALL NOT EXCEED 10 VOLTS.

H) PARAGRAPH 3.6.1.6--- SWITCHING SHALL BE DONE BY SEMICONDUCTORS SELECTED FROM MIL-STD-701 THOUGH MIL-E-16400 IS QUITE SPECIFIC IN THIS INSTANCE.

THE REPORT OF MAY 23, 1968, FROM THE COMMAND RESPONDED TO SPECIFIC POINTS CONTESTED AS FOLLOWS (NAMES OF OFFERORS HAVE BEEN OMITTED):

A. SPECIFICATION, PARAGRAPH 3.4.1.1. THE REQUIREMENT THAT THE SIZE OF THE PRINTED CIRCUIT CARDS SHALL BE AS SHOWN IN FIGURE 1 OF THE SPECIFICATION SERVES THE REQUIREMENTS OF COMMONALITY AND MAINTAINABILITY. THE SAME SIZE CARD IS USED IN THE CV-642B COMPUTER, THE CV-2036 KEY SET CENTRAL MULTIPLEXER AND THROUGHOUT THE NAVY TACTICAL DATA SYSTEM. THE CIRCUIT CARD IS A REPLACEABLE ITEM COSTING APPROXIMATELY $20.

B. SPECIFICATION, PARAGRAPH 3.4.1.2. THE CONNECTOR SPECIFIED, USED IN THE CV-642B/USQ-20 (V) COMPUTER AND THE CV-2036/USQ-20 (V) KEY SET CENTRAL MULTIPLEXER, WAS DESIGNED BY THE NAVY. * * * THERE ARE AT LEAST TWO SOURCES FOR THIS COMPONENT. THIS CONNECTOR, NECESSARY FOR MATING WITH THE STANDARD SIZE CARDS, IS OF PROVEN RELIABILITY.

C. SPECIFICATION, PARAGRAPH 3.1.4.3. HERE THE REQUIREMENT THAT THE DIGITAL CARDS USED SHALL BE THOSE USED IN THE CV-642B COMPUTER AND THEN CV -2036 KEY SET CENTRAL MULTIPLEXER AS TABULATED IN ENCLOSURE (1) TO THE SPECIFICATION, IS SPECIFIED FOR THE SAME REASON OUTLINED IN A ABOVE. THESE CARDS CAN BE MADE FROM THE DRAWINGS THEREOF AS SYLVANIA HAS DONE IN ANOTHER PROCUREMENT. AT THE PRE-AWARD SURVEY (THE PROTESTANT) INDICATED IT INTENDED TO BUY THESE DIGITAL CARDS FROM SYLVANIA.

D. SPECIFICATION, PARAGRAPH 3.6.1.1. HERE THE REQUIREMENT IS THAT ALL SWITCHES MUST OPERATE INTO RESISTIVE LOADS. THIS DESIGN REQUIREMENT SPECIFIES A MUCH BETTER TECHNICAL APPROACH PROVIDING GREATER ACCURACY AND INCREASED RELIABILITY. IT ELIMINATES SATURATION IN THE TRANSFORMER. THE USE OF RESISTIVE CIRCUITS IS NOT NEW AND IS NOT UNIQUE TO (THE SOLE SOURCE). THIS DESIGN APPROACH IS FREQUENTLY USED BY MANUFACTURERS OF SIMILAR TYPES OF EQUIPMENT.

E. SPECIFICATION, PARAGRAPH 3.6.1.2. THE REQUIREMENT THAT SWITCHING NETWORKS BE ISOLATED FROM INDUCTIVE LOADS IS NECESSARY TO ELIMINATE TRANSFORMER SATURATION.

F-G. SPECIFICATION, PARAGRAPHS 3.7.1.3 AND .4. THE REQUIREMENTS THAT MAXIMUM CURRENT SWITCHES BY ANY SWITCH SHALL NOT EXCEED 1 MILLIAMPERE AND THAT THE MAXIMUM VOLTAGE ACROSS ANY SWITCH SHALL NOT EXCEED 10 VOLTS ARE NECESSARY TO INSURE RELIABILITY AND LONG EQUIPMENT LIFE.

H. SPECIFICATION, PARAGRAPH 3.6.1.6. THE REQUIREMENT THAT SWITCHING SHALL BE DONE BY SEMICONDUCTORS SELECTED FROM MIL STD-701 IS NECESSARY TO PROVIDE THE RELIABILITY AND LONG LIFE THAT IS NECESSARY TO MEET THE NAVY'S NEEDS. (THE PROTESTANT) HAS USED REED RELAYS IN SOME OF THE EQUIPMENTS PRODUCED BY IT UNDER EARLIER CONTRACTS AND ASSERTS THAT IT SHOULD BE FREE TO USE THEM AGAIN. THESE REED RELAYS HAVE BEEN DIFFICULT TO FABRICATE, OPERATE AT HIGH TEMPERATURES, AND HAVE NOT PROVEN RELIABLE IN OPERATION.

RESPECTING THE MATTER OF RESTRICTIVE SPECIFICATIONS, THIS OFFICE HAS RECOGNIZED THE PRIMARY RESPONSIBILITY OF THE PROCURING ACTIVITY TO DRAFT SPECIFICATIONS REFLECTING THE ACTUAL NEEDS OF THE GOVERNMENT CONSISTENT WITH THE OVERALL GOAL OF COMPETITIVE PROCUREMENT. 44 COMP. GEN. 302. ESSENTIALLY, WE ARE CONFRONTED HERE WITH A DIFFERENCE OF TECHNICAL OPINION AS TO THE ACTUAL NEEDS OF THE GOVERNMENT AND WE WILL NOT DISAGREE WITH THE JUDGMENT OF THE CONTRACTING OFFICER UNLESS IT IS CLEARLY AND CONVINCINGLY IN ERROR. 40 COMP. GEN. 294. THE COMMAND IN THIS INSTANCE HAS SET FORTH IN DETAIL THE NEED FOR THE AMENDMENTS TO THE RFP AND ON THAT BASIS THE PROTEST ON THIS POINT IS DENIED.

ANOTHER PROTEST, SUBMITTED TO THIS OFFICE BY LETTER OF MAY 10, 1968, INVOLVES THE ADDED REQUIREMENT TO THE AMENDED RFP FOR THE SUBMISSION OF A PREPRODUCTION MODEL AND FOR THE FINAL ACCEPTANCE TEST ON EQUIPMENT TO BE PERFORMED USING A CP-642B/USQ-20 OR CP-642A COMPUTER. THE CRUX OF THE PROTEST IS WHETHER SOLICITATION CALLS FOR THE COMPUTER FOR TESTING THE EQUIPMENT TO BE FURNISHED BY THE OFFEROR OR SUPPLIED AS GOVERNMENT- FURNISHED EQUIPMENT UNDER THE CONTRACT. THIS PROCUREMENT IS NEGOTIATED, NOT ADVERTISED, AND EVEN ASSUMING ARGUENDO THAT THE PROTESTANT'S POSITION IS CORRECT THE GOVERNMENT CANNOT BE FORCED TO ENTER INTO A CONTRACT WHICH DOES NOT MEET ITS NEEDS. THE COMMAND ADVISED THE PROTESTANT THAT THE GOVERNMENT COULD NOT FURNISH THE REQUIRED COMPUTER AND THAT THE OFFER TO BE CONSIDERED SHOULD BE REVISED. INASMUCH AS ANY RESULTING CONTRACT WILL PROVIDE THAT THE CONTRACTOR FURNISH THE TEST COMPUTER, WE DO NOT CONSIDER IT FRUITFUL TO DISCUSS WHAT MIGHT HAVE BEEN THE RESULT IF A CONTRACT HAD BEEN AWARDED BEFORE CLARIFICATION OF THE REQUIREMENT. WE THEREFORE CONSIDER THIS QUESTION RESOLVED.

THE FINAL MATTER BEFORE THIS OFFICE INVOLVES THE MANNER IN WHICH THE NEGOTIATIONS HAVE BEEN CONDUCTED. AS SET OUT ABOVE, THE CLOSING DATE FOR PROPOSALS, AFTER EXTENSIONS, WAS SET FOR MARCH 29, 1968. TWO OF THE PROPOSALS RECEIVED UNDER THE AMENDED RFP WERE INITIALLY UNACCEPTABLE. ONE OFFER WAS TECHNICALLY UNACCEPTABLE BECAUSE THE SWITCHING INTO TRANSFORMERS APPROACH WAS PROPOSED. THE OTHER UNACCEPTABLE OFFER REQUIRED THE CP- 642B/USQ-20 OR CP-642A COMPUTER FOR THE FINAL ACCEPTANCE TESTING TO BE FURNISHED AS GOVERNMENT EQUIPMENT. HOWEVER, THESE TWO OFFERORS WERE CONSIDERED WITHIN A COMPETITIVE RANGE AND NEGOTIATIONS WERE CONDUCTED WITH ALL OFFERORS.

IN EARLY MAY 1968, NEGOTIATIONS WERE HELD WITH THE TECHNICALLY UNACCEPTABLE OFFEROR. THE COMMAND ADVISED THAT OFFEROR THAT ITS EXCEPTIONS TO THE REVISED SPECIFICATIONS MADE ITS PROPOSAL UNACCEPTABLE AND ASKED IT TO WITHDRAW THOSE EXCEPTIONS AND UNDERTAKE TO CONFORM TO THE RESISTIVE LADDER NETWORK DESIGN IN LIEU OF SWITCHING INTO TRANSFORMERS. BY LETTER OF MAY 17, 1968, THAT OFFEROR ADVISED THAT IN ITS VIEW THE BEST INTERESTS OF THE GOVERNMENT WOULD BE SERVED BY ACCEPTING ITS PROPOSAL WITH THE MINOR MODIFICATIONS. THE COMMAND AGAIN ADVISED THE OFFEROR THAT ITS PROPOSAL WAS UNACCEPTABLE UNLESS THE EXCEPTIONS TO THE REVISED SPECIFICATIONS WERE WITHDRAWN AND REQUESTED THE OFFEROR TO WITHDRAW THE PROPOSAL UNLESS IT WAS WILLING TO CONFORM. AT THAT TIME THE OFFEROR DID NEITHER.

AS NOTED, ANOTHER OFFEROR'S PROPOSAL WAS UNACCEPTABLE WITH RESPECT TO THE COMPUTER TO BE USED IN TESTING. FOLLOWING DISCUSSIONS WITH THE COMMAND REGARDING THE AVAILABILITY OF THE REQUIRED COMPUTER, THE OFFEROR, ON AUGUST 12, 1968, WITHDREW ITS EXCEPTION. THAT PROPOSAL THEN WAS RESPONSIVE. HOWEVER, THE COMMAND FOUND THE OFFEROR NONRESPONSIBLE FOR THE PURPOSE OF PERFORMING UNDER THIS PROCUREMENT AND REFERRED THE CASE BY LETTER OF OCTOBER 14, 1968, TO THE NEW YORK AREA OFFICE OF THE SMALL BUSINESS ADMINISTRATION (SBA) FOR A CERTIFICATE OF COMPETENCY (COC). OCTOBER 31, 1968, THE MATTER WAS FORWARDED TO THE SBA HEADQUARTERS IN WASHINGTON WITH AN AFFIRMATIVE RECOMMENDATION.

WHILE THE QUESTION OF RESPONSIBILITY OF ONE OFFEROR WAS PENDING AT SBA, WASHINGTON, THE OFFEROR WHO PREVIOUSLY HAD REFUSED TO WITHDRAW ITS EXCEPTIONS TO THE RESISTIVE LADDER NETWORKS REQUIREMENT ADVISED THE COMMAND BY A TELEGRAM OF NOVEMBER 12, 1968, THAT IT WAS WITHDRAWING THE EXCEPTIONS AND CONFIRMING ITS PRICE. INASMUCH AS THERE HAD BEEN NO FORMAL CLOSING OF NEGOTIATIONS UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1 (B), THE COMMAND CONCLUDED IT MUST CONSIDER THIS OFFEROR'S NOW CONFORMING PROPOSAL. BY TELEGRAM OF NOVEMBER 15, 1968, ALL OFFERORS WERE REQUESTED TO CONFIRM THEIR PROPOSALS BY NOVEMBER 20, 1968, AND WERE ADVISED THAT ANY PROPOSAL REVISIONS AFTER THAT DATE WOULD BE LATE. ALL OFFERORS CONFIRMED THEIR PROPOSALS. ON NOVEMBER 21, 1968, THE COMMAND WITHDREW THE REQUEST TO SBA FOR A COC, SINCE THAT OFFEROR'S PROPOSAL WAS NO LONGER THE MOST FAVORABLE.

ESSENTIALLY, THE ISSUE FOR CONSIDERATION IS WHETHER THE REVISION OF NOVEMBER 12, 1968, MAKING THE PROPOSAL CONFORMING SHOULD BE CONSIDERED. WE THINK, UNDER THE CIRCUMSTANCES OF THIS CASE, THAT IT SHOULD.

ASPR 3-805.1 (A) REQUIRES THAT, AFTER RECEIPT OF INITIAL PROPOSALS, DISCUSSIONS BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE WITH CERTAIN EXCEPTIONS NOT HERE PERTINENT. THAT REGULATION IMPOSES AN AFFIRMATIVE DUTY TO NEGOTIATE AND IN THIS CASE THE COMMAND DID IN FACT ENGAGE IN SUCH DISCUSSION WITH ALL OFFERORS. HOWEVER, ASPR 3-805.1 (B) IN ADDITION TO PROHIBITING AUCTION TECHNIQUES, PROVIDES IN PART: WHILE SUCH NEGOTIATIONS MAY BE CONDUCTED SUCCESSIVELY, ALL OFFERORS

* * * WHENEVER NEGOTIATIONS ARE CONDUCTED WITH SEVERAL OFFERORS, SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS (SEE (A) ABOVE) SHALL BE OFFERED AN EQUITABLE OPPORTUNITY TO SUBMIT SUCH PRICE, TECHNICAL, OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM THE NEGOTIATIONS. ALL SUCH OFFERORS SHALL BE INFORMED OF THE SPECIFIED DATE (AND TIME IF DESIRED) OF THE CLOSING OF NEGOTIATIONS AND THAT ANY REVISIONS TO THEIR PROPOSALS MUST BE SUBMITTED BY THAT DATE. ALL SUCH OFFERORS SHALL BE INFORMED THAT ANY REVISION RECEIVED AFTER SUCH DATE SHALL BE TREATED AS A LATE PROPOSAL IN ACCORDANCE WITH THE "LATE PROPOSALS" PROVISIONS OF THE REQUEST FOR PROPOSALS. (IN THE EXCEPTIONAL CIRCUMSTANCES WHERE THE SECRETARY CONCERNED AUTHORIZES CONSIDERATION OF SUCH A LATE PROPOSAL RESOLICITATION SHALL BE LIMITED TO THE SELECTED OFFERORS WITH WHOM NEGOTIATIONS HAVE BEEN CONDUCTED.) IN ADDITION, ALL SUCH OFFERORS SHALL ALSO BE INFORMED THAT AFTER THE SPECIFIED DATE FOR THE CLOSING OF NEGOTIATION NO INFORMATION OTHER THAN NOTICE OF UNACCEPTABILITY OF PROPOSAL, IF APPLICABLE (SEE 3- 508), WILL BE FURNISHED TO ANY OFFEROR UNTIL AWARD HAS BEEN MADE. ASPR 3- 506 (H) STATES: (B) THE NORMAL REVISIONS OF PROPOSALS BY SELECTED OFFERORS OCCURRING DURING THE USUAL CONDUCT OF NEGOTIATIONS WITH SUCH OFFERORS ARE NOT TO BE CONSIDERED AS LATE PROPOSALS OR LATE MODIFICATIONS, BUT SHALL BE HANDLED IN ACCORDANCE WITH 3-805.1 (B). THE REGULATIONS READ TOGETHER PROVIDE THAT, WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE, NEGOTIATIONS MUST BE CONDUCTED WITH ALL OFFERORS IN A COMPETITIVE RANGE WHO SHALL BE OFFERED AN EQUITABLE OPPORTUNITY, PRIOR TO A DATE ESTABLISHED FOR THE CLOSE OF DISCUSSIONS, TO SUBMIT NORMAL REVISIONS TO THEIR PROPOSALS RESULTING FROM NEGOTIATIONS. THE PRESENT PROTEST, BY OFFEROR A, WHOSE RESPONSIBILITY WAS REFERRED TO SBA, IS SIMPLY THAT ANOTHER PROSPECTIVE CONTRACTOR WAS PERMITTED TO MODIFY ITS PROPOSAL AFTER EVENTS HAD HAPPENED WHICH LED OFFEROR A TO BELIEVE THAT IT WOULD RECEIVE THE AWARD. THE OTHER OFFEROR, WHO MODIFIED ITS PROPOSAL IN NOVEMBER, MAY OR MAY NOT HAVE KNOWN THIS; IT HAD KNOWN FOR SOME TIME THAT ITS OWN PROPOSAL WAS NOT ACCEPTABLE UNLESS MODIFIED, BUT IT HAD NOT BEEN TOLD THAT ITS PROPOSAL HAD BEEN REJECTED AND COULD NO LONGER BE MODIFIED.

UNDER THE RULES APPLICABLE TO FORMAL ADVERTISED BIDDING IT IS CLEAR THAT BOTH PROPOSALS WOULD HAVE HAD TO BE REJECTED AS NONRESPONSIVE. BUT IT IS A NEGOTIATED PROCUREMENT, AND BOTH OFFERORS WERE GIVEN THE OPPORTUNITY TO MODIFY THEIR NONCONFORMING OFFERS. OFFEROR A DID SO IN AUGUST, OFFEROR B IN NOVEMBER. UNDER THE RULES APPLICABLE TO NEGOTIATED PROCUREMENT, NEGOTIATIONS MAY BE CONDUCTED AT DIFFERENT TIMES WITH DIFFERENT OFFERORS. WHEN THIS IS DONE, THE RULES ALSO REQUIRE, IN FAIRNESS TO ALL, THAT A COMMON CUTOFF DATE BE SET FOR ALL. THIS HAD NOT BEEN DONE AT THE TIME THE NOVEMBER MODIFICATION WAS RECEIVED, AND, AS NOTED, THAT OFFEROR HAD NOT BEEN TOLD IT COULD NO LONGER MODIFY ITS PROPOSAL.

THERE WAS NO REQUIREMENT THAT NAVY REJECT OFFEROR B'S NONCONFORMING PROPOSAL, DESPITE ITS FAILURE TO ANSWER NAVY'S SECOND REQUEST IN MAY FOR CONFORMANCE. IN VIEW OF THE FACT THAT OFFEROR A WAS GIVEN AN OPPORTUNITY THEREAFTER TO MODIFY ITS PROPOSAL, OFFEROR B WAS ENTITLED TO AS MUCH TIME AS OFFEROR A. NEGOTIATIONS HAD BEEN UNDERTAKEN WITH OFFEROR B AND NEVER HAD BEEN DECLARED AT AN END. NO COMMON CUTOFF DATE FOR ALL OFFERORS HAD BEEN FIXED AT THE TIME THE NOVEMBER MODIFICATION WAS RECEIVED, AND FURTHER NEGOTIATIONS WITH OFFEROR B WELL MIGHT HAVE BEEN INITIATED BY NAVY IF OFFEROR A'S PROPOSAL HAD FINALLY TURNED OUT TO BE UNACCEPTABLE.

FACED WITH THE FACT THAT OFFERORS HAD NOT BEEN GIVEN A COMMON CUTOFF DATE, NAVY DECIDED THIS WAS NECESSARY AND DID SO ON NOVEMBER 15, 1968. THE CIRCUMSTANCES, WE CANNOT SAY SUCH ACTION WAS WRONG OR EVEN AVOIDABLE. WE DO NOT AGREE THAT THIS CONSTITUTES AN AUCTION TECHNIQUE. IN A SENSE, THE VERY CONDUCT OF NEGOTIATIONS AFTER RECEIPT OF INITIAL PROPOSALS MAY BE ARGUED TO RESEMBLE AN AUCTION TECHNIQUE, BUT THIS IS WHAT THE LAW CALLS FOR. THERE IS NOTHING INHERENTLY ILLEGAL FROM A PROCUREMENT STANDPOINT IN AN AUCTION, AND IT IS USED SUCCESSFULLY IN PROPERTY DISPOSAL PROCEDURES. WE BELIEVE THAT UNTIL A COMMON CUTOFF DATE FOR FURTHER MODIFICATION OF PROPOSALS IS ESTABLISHED FOR ALL OFFERORS IT CANNOT BE SAID THAT NEGOTIATIONS HAVE CLOSED OR THAT MODIFICATIONS MADE EITHER VOLUNTARILY OR AS A RESULT OF GOVERNMENT REQUEST SHOULD NOT BE CONSIDERED. IF IT IS DECIDED THAT PROPOSAL MODIFICATIONS SHOULD NOT BE PERMITTED AFTER ACTION IS INITIATED, SUCH AS A PREAWARD SURVEY OR REFERENCE TO SBA, WHICH MAY INDICATE THAT A PARTICULAR OFFEROR IS FAVORED TO WIN THE AWARD, THE SOLUTION, IN OUR OPINION, IS TO FIX A CUTOFF DATE WHICH PRECEDES THE REVELATORY ACTION. WE SEE NO REASON WHY A CUTOFF DATE COULD NOT BE ESTABLISHED, CONDITIONALLY IF NEED BE, WITH THE RESERVATION OF A RIGHT ON THE PART OF THE GOVERNMENT TO REOPEN NEGOTIATIONS IN THE EVENT ONE OR MORE OFFERORS ARE SUBSEQUENTLY FOUND NONRESPONSIBLE OR THEIR OFFERS FOUND UNACCEPTABLE FOR TECHNICAL OR OTHER REASONS.

HOWEVER, AFTER A COMPLETE REVIEW OF THE FILE FORWARDED TO THIS OFFICE, WE MUST ALSO CONCLUDE THAT NEGOTIATIONS HAVE NOT BEEN PROPERLY CLOSED. THE TELEGRAM OF NOVEMBER 15, 1968, SENT BY THE COMMAND TO ALL OFFERORS ADVISED THAT THE CLOSING DATE FOR MODIFICATIONS OF PROPOSALS WAS NOVEMBER 20, 1968, AND THAT MODIFICATIONS TO EXISTING OFFERS WOULD NOT BE CONSIDERED AFTER THAT DATE. THAT TELEGRAM ALSO REQUESTED CONFIRMATION OF OFFERS IN WRITING TO BE VALID FOR 60 DAYS. WHILE IN SOME CASES THE LANGUAGE OF THAT TELEGRAM MIGHT SUFFICE TO CLOSE NEGOTIATIONS, IN THIS INSTANCE WE THINK NOT. HERE ONE OFFEROR THOUGH NEGOTIATIONS WERE ALREADY CLOSED AND THAT THE TELEGRAM WAS REQUESTING MERELY A CONFIRMATION OR EXTENSION OF ITS OFFER (WHICH APPARENTLY HAD EXPIRED) FOR A PERIOD OF 60 DAYS UNTIL AWARD COULD BE MADE, NOT A POSSIBLE MODIFICATION OF ITS PROPOSAL. IN THIS REGARD WE HAVE PREVIOUSLY STATED OUR OPINION THAT OFFERORS SHOULD BE ADVISED: (1) THAT NEGOTIATIONS ARE BEING CONDUCTED; (2) THAT OFFERORS ARE BEING ASKED FOR THEIR "BEST AND FINAL" OFFER, NOT MERELY TO CONFIRM OR RECONFIRM PRIOR OFFERS, AND FINALLY (3) THAT ANY REVISION MUST BE SUBMITTED BY THE DATE SPECIFIED. SEE OUR LETTER TO YOU, B-164581, DECEMBER 27, 1968. IN THIS SITUATION, OFFERORS WERE ADVISED ONLY OF A CUTOFF DATE FOR MODIFICATIONS, NOT THAT NEGOTIATIONS WERE BEING CONDUCTED AND THAT THE OFFERORS SHOULD SUBMIT THEIR "BEST AND FINAL" OFFERS. COUPLED WITH THE FACTUAL BACKGROUND OF THIS PROCUREMENT WHICH EVEN FURTHER LULLED SOME OFFERORS INTO INACTIVITY, WE FEEL THE TELEGRAM WAS INSUFFICIENT TO GIVE OFFERORS A VIABLE NOTICE THAT COMPETITIVE NEGOTIATIONS WERE STILL OPEN AND WERE BEING CLOSED AS OF NOVEMBER 20, 1968.

ACCORDINGLY, WE BELIEVE ANY AWARD ON THE PRESENT BASIS WOULD BE OPEN TO SERIOUS QUESTION AND THAT FURTHER OPPORTUNITY FOR NEGOTIATIONS SHOULD BE AFFORDED ALL OFFERORS WITHIN A COMPETITIVE RANGE.