B-164106, NOV. 8, 1968

B-164106, NOV. 8, 1968

TO KIRKLAND, ELLIS, HODSON, CHAFFETZ AND MASTERS:

REFERENCE IS MADE TO A TELEGRAM OF APRIL 22, 1968, AND SUBSEQUENT CORRESPONDENCE PROTESTING ON BEHALF OF DEFENSE ELECTRONICS, INCORPORATED, AGAINST THE AWARD TO MICRODYNE CORPORATION UNDER SOLICITATION NO. F04697- 68-B-0041 ISSUED BY THE HEADQUARTERS, AIR FORCE WESTERN TEST RANGE, VANDENBERG AIR FORCE BASE, CALIFORNIA.

THIS PROCUREMENT WAS FOR SIX TELEMETRY RECEIVERS, PLUS RELATED CRYSTALS AND DATA. TWO-STEP ADVERTISING WAS USED AND UNDER THE FIRST STEP REQUESTS FOR TECHNICAL PROPOSALS WERE SENT TO DEFENSE ELECTRONICS, INCORPORATED (DEI), AND TO MICRODYNE CORPORATION (MICRODYNE). BOTH FIRMS SUBMITTED ACCEPTABLE TECHNICAL PROPOSALS. THE SECOND STEP WAS ISSUED ON APRIL 3, 1968, REQUESTING SEALED BIDS, WHICH WERE OPENED ON APRIL 18, 1968, AND MADE AVAILABLE FOR INSPECTION BY ALL PARTIES PRESENT. MICRODYNE WAS THE APPARENT LOW BIDDER. A DEI REPRESENTATIVE REQUESTED PERMISSION TO REVIEW MICRODYNE'S TECHNICAL PROPOSAL SUBMITTED UNDER THE FIRST STEP AND INCORPORATED IN THE BID UNDER THE SECOND STEP. AIR FORCE PERSONNEL TENTATIVELY DENIED THE REQUEST BECAUSE THE COVER SHEET OF MICRODYNE'S TECHNICAL PROPOSAL WAS MARKED WITH THE FOLLOWING RESTRICTIVE LEGEND:

"THE DATA FURNISHED IN THIS PROPOSAL SHALL NOT BE DISCLOSED OUTSIDE THE GOVERNMENT OR BE DUPLICATED, USED OR DISCLOSED IN WHOLE OR IN PART FOR ANY PURPOSE OTHER THAN TO EVALUATE THE PROPOSAL; PROVIDED, THAT IF A CONTRACT IS AWARDED TO THIS OFFER OR AS A RESULT OF OR IN CONNECTION WITH THE SUBMISSION OF SUCH DATA, THE GOVERNMENT SHALL HAVE THE RIGHT TO DUPLICATE, USE, OR DISCLOSE THIS DATA TO THE EXTENT PROVIDED IN THE CONTRACT. THIS RESTRICTION DOES NOT LIMIT THE GOVERNMENT'S RIGHT TO USE INFORMATION CONTAINED IN SUCH DATA IF IT IS OBTAINED FROM ANOTHER SOURCE.'

ON APRIL 22, 1968, DEI SENT A TELEGRAM TO THE CONTRACTING OFFICER AND THIS OFFICE PROTESTING ANY AWARD TO MICRODYNE ON THE GROUNDS THAT THE RESTRICTIVE LEGEND ON THE COVER SHEET OF THE TECHNICAL PROPOSAL MADE THE BID BY MICRODYNE NONRESPONSIVE WITHIN THE MEANING OF PARAGRAPHS 2-404 AND 1-329.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND PUBLIC LAW 89-487 BY PREVENTING DISCLOSURE TO OTHER BIDDERS OF DATA NECESSARY FOR A COMPLETE AND ACCURATE EVALUATION OF THE BID. DEI ALSO PROTESTED BY THE SAME TELEGRAM THE REFUSAL TO ALLOW INSPECTION OF MICRODYNE'S PROPOSAL AND ANY ACTION THE AIR FORCE MIGHT TAKE TO HAVE MICRODYNE INVALIDATE THE RESTRICTIVE LEGEND SO AS TO QUALIFY FOR AWARD. THE CONTRACTING OFFICER, BY LETTER OF APRIL 23, 1968, SENT DEI COPIES OF PAGES 1 AND 2 OF MICRODYNE'S BID, WHICH WERE EXAMINED BY DEI AT BID OPENING, TOGETHER WITH 10 PAGES OF MICRODYNE STANDARD EQUIPMENT DESCRIPTIONS REPRODUCED FROM A PORTION OF THE TECHNICAL PROPOSAL WHICH WERE AVAILABLE FROM ANOTHER SOURCE AND NOT CONSIDERED SUBJECT TO THE RESTRICTIVE LEGEND. FURTHER, THE CONTRACTING OFFICER ADVISED THAT THE FIRST 2 PAGES WERE CONSIDERED TO GIVE SUFFICIENT INFORMATION AS TO QUANTITY, PRICE AND DELIVERY, AND THE LATTER 10 AS TO THE ESSENTIAL NATURE AND TYPE OF PRODUCT TO PERMIT EVALUATION. ASPR 2-404.4 (A) PROVIDES IN PART:

"/A) WHEN A BID IS ACCOMPANIED BY DESCRIPTIVE LITERATURE (AS DEFINED IN 202.5 (A) (, AND THE BIDDER IMPOSES A RESTRICTION THAT SUCH LITERATURE MAY NOT BE PUBLICLY DISCLOSED, SUCH RESTRICTION RENDERS THE BID NONRESPONSIVE IF IT PROHIBITS THE DISCLOSURE OF SUFFICIENT INFORMATION TO PERMIT COMPETING BIDDERS TO KNOW THE ESSENTIAL NATURE AND TYPE OF THE PRODUCTS OFFERED OR THOSE ELEMENTS OF THE BID WHICH RELATE TO QUANTITY, PRICE AND DELIVERY TERMS.' ASPR 2-503.1 (C) RESPECTING RECEIPT OF TECHNICAL PROPOSALS UNDER TWO-STEP ADVERTISING PROVIDES:

"/C) UPON THE RECEIPT OF TECHNICAL PROPOSALS:

"/I) EVERY PRECAUTION SHALL BE TAKEN TO SAFEGUARD TECHNICAL PROPOSALS AGAINST DISCLOSURE TO UNAUTHORIZED PERSONS;

"/II) TECHNICAL PROPOSALS SUBMITTING DATA MARKED IN ACCORDANCE WITH 3- 507.1 SHALL BE ACCEPTED AND HANDLED IN ACCORDANCE WITH THAT PARAGRAPH; " ASPR 3-507.1 (A) WHICH SETS FORTH IN ESSENCE THE RESTRICTIVE LEGEND USED BY MICRODYNE ALSO STATES: "* * * CONTRACTING OFFICERS AND OTHER GOVERNMENT PERSONNEL SHALL NOT REFUSE TO CONSIDER ANY PROPOSAL MERELY BECAUSE IT OR THE DATA SUBMITTED WITH IT IS SO MARKED. THOSE PORTIONS OF THE PROPOSAL AND DATA WHICH ARE SO MARKED (EXCEPT FOR INFORMATION WHICH IS ALSO OBTAINED FROM ANOTHER SOURCE WITHOUT RESTRICTION SHALL BE USED ONLY TO EVALUATE THE PROPOSAL AND SHALL NOT BE DISCLOSED OUTSIDE THE GOVERNMENT WITHOUT THE WRITTEN PERMISSION OF THE OFFEROR. * * *).' IN RESOLVING THE SEEMING CONFLICT BETWEEN ASPR 2-404.4 AND 3-507.1 (A) WE DO NOT FIND IT NECESSARY TO DECIDE WHETHER OR NOT THE 10 PAGES OF MICRODYNE STANDARD EQUIPMENT DESCRIPTIONS TOGETHER WITH THE 2 PAGES UNDER THE SECOND STEP WERE SUFFICIENT TO MEET THE REQUIREMENTS OF THE FIRST REGULATION. THEREFORE, WE WILL ASSUME FOR THE PURPOSE OF THIS CASE THAT 41 COMP. GEN. 510, B-147875, FEBRUARY 2, 1962, IS, AS CONTENDED, DISTINGUISHED ON THE FACTS. HOWEVER, THE CONCLUSION THAT ASPR 2-404.4 REQUIRES REJECTION OF A BID UNDER TWO-STEP ADVERTISING WHEN THE RESTRICTIVE LEGEND PROVIDED FOR IN ASPR 3-507.1 (A) IS USED WAS REJECTED BY THIS OFFICE IN OUR DECISION 46 COMP. GEN. 34, WHEREIN WE STATED AT PAGE 38:

"* * * WE FEEL IT IS SUFFICIENT TO STATE THAT WE DO NOT AGREE THAT THE RESPONSIVENESS OF FMC'S BID SUBMITTED UNDER THE STEP TWO PROCEDURES IS AFFECTED BY THE CONTINUED EXERCISE THEREIN OF THE CONFIDENTIAL PRIVILEGES REASONABLY AFFORDED THAT COMPANY'S PROPOSAL PACKAGE UNDER STEP ONE. IT IS CLEAR THAT, NOTWITHSTANDING THE PROVISIONS OF ASPR 2 404.4 (A), ANY SUCH MATERIAL WHICH HAD BEEN MARKED IN ACCORDANCE WITH ASPR 3-507.1 WOULD REMAIN CONFIDENTIAL DURING THE STEP TWO PROCESS, AND WE DO NOT PERCEIVE ANY COMPELLING REASON OR REQUIREMENT FOR A DIFFERENT RULE CONCERNING ACCEPTED STEP ONE MATERIAL WHICH THAT OFFEROR HAS RESTRICTED BY OTHER MEANS AGAINST UNAUTHORIZED DISCLOSURE.'

ADDITIONALLY, THE PUBLIC INFORMATION ACT OF 1966, PUBLIC LAW 89-487, WHICH AMENDED THE ADMINISTRATIVE PROCEDURE ACT, 5 U.S.C. 552, SPECIFICALLY EXEMPTED TRADE SECRETS AND COMMERCIAL OR FINANCIAL INFORMATION OBTAINED FROM A PERSON AND PRIVILEGED OR CONFIDENTIAL.

THE SPECIFICATION IN THE REQUEST FOR PROPOSALS STATED THAT PROPOSALS WERE TO BE BASED UPON THE STATEMENT OF WORK FOR TELEMETRY RECEIVERS, MIL-CR-32 A/U CRYSTALS AND THE DEI BRAND "MODEL TR711, SOLID STATE RECEIVERS" . THE STATEMENT OF WORK IN THE REQUEST SPECIFIED THAT THE GOVERNMENT REQUIRED SIX TELEMETRY RECEIVERS FOR PLAYBACK OF MINUTEMAN III PHASE MODULATED, PRE -DETECTION, RECORDED DATA. EACH RECEIVER WAS TO CONSIST OF LISTED DEI COMPONENTS OR EQUAL AND THE RF TUNING UNIT, THE DEMODULATORS, AND IF FILTER ASSEMBLIES WERE TO BE FRONT PANEL PLUG-IN UNITS. ALL CONTROLS AND INDICATOR LIGHTS NECESSARY FOR SET-UP TO OPERATION WERE TO BE AN INTEGRAL PART OF THE RECEIVER AND LOCATED ON THE RECEIVER FRONT PANEL. EACH RECEIVER WAS TO BE MODULAR IN NATURE, ASSEMBLED AS A COMPLETE UNIT, PAINTED GREY ENAMEL AND HAVE A SPECIFIED MEAN TIME BETWEEN FAILURES.

THE LETTER OF JUNE 21, 1968, ON BEHALF OF DEI CONTENDS IN ESSENCE THAT THE PURCHASE DESCRIPTION WHICH INCLUDED A REFERENCE TO THE DEI BRAND OR EQUAL DID NOT SPELL OUT SALIENT CHARACTERISTICS OF THE NAMED MODEL; THEREFORE, ALL CHARACTERISTICS MUST BE DEEMED ESSENTIAL AND, INASMUCH AS MICRODYNE'S PROPOSED MODEL WAS NOT EQUAL, THEN EITHER THE SPECIFICATIONS HAD BEEN RELAXED FOR MICRODYNE AND/OR MICRODYNE HAD NOT OFFERED TO PERFORM IN ACCORDANCE WITH THE REQUIREMENTS AS SET FORTH IN THE REQUEST.

A NUMBER OF OUR DECISIONS WERE CITED IN THE LETTER OF JUNE 21, 1968. WITHOUT DISCUSSING EACH OF THESE DECISIONS IN DETAIL WE THINK IT IS SUFFICIENT TO NOTE THAT THEY ARE DISTINGUISHED FROM THE CASE BEFORE US IN THAT THEY DID NOT INVOLVE TWO-STEP ADVERTISED PROCUREMENTS. TWO STEP FORMAL ADVERTISING IS DESCRIBED AS A FLEXIBLE PROCEDURE, ESPECIALLY USEFUL IN THE PROCUREMENT OF COMPLEX ITEMS REQUIRING TECHNICAL PROPOSALS. ASPR 2 -501 PROVIDES:

"2-501 GENERAL. TWO-STEP FORMAL ADVERTISING IS A METHOD OF PROCUREMENT DESIGNED TO EXPAND THE USE AND OBTAIN THE BENEFITS OF FORMAL ADVERTISING WHERE INADEQUATE SPECIFICATIONS PRECLUDE THE USE OF CONVENTIONAL FORMAL ADVERTISING. IT IS ESPECIALLY USEFUL IN PROCUREMENTS REQUIRING TECHNICAL PROPOSALS, ESPECIALLY THOSE FOR COMPLEX ITEMS. IT IS CONDUCTED IN TWO STEPS:

(I) STEP ONE CONSISTS OF THE REQUEST FOR, AND SUBMISSION, EVALUATION, AND, IF NECESSARY, DISCUSSION OF A TECHNICAL PROPOSAL, WITHOUT PRICING, TO DETERMINE THE ACCEPTABILITY OF THE SUPPLIES OR SERVICES OFFERED. AS USED IN THIS CONTEXT, THE WORD -TECHNICAL- HAS A BROAD CONNOTATION AND INCLUDES ENGINEERING APPROACH, SPECIAL MANUFACTURING PROCESSES, AND SPECIAL TESTING TECHNIQUES. WHEN IT IS NECESSARY IN ORDER TO CLARIFY BASIC TECHNICAL REQUIREMENTS, RELATED REQUIREMENTS SUCH AS MANAGEMENT APPROACH, MANUFACTURING PLAN, OR FACILITIES TO BE UTILIZED MAY BE CLARIFIED IN THIS STEP. CONFORMITY TO THE TECHNICAL REQUIREMENTS IS RESOLVED IN THIS STEP, BUT CAPACITY AND CREDIT, AS DEFINED IN 1-705.4, ARE NOT.

(II) STEP TWO IS A FORMALLY ADVERTISED PROCUREMENT CONFINED TO THOSE WHO SUBMITTED ACCEPTABLE TECHNICAL PROPOSALS IN STEP ONE. BIDS SUBMITTED IN STEP TWO ARE EVALUATED AND THE AWARDS MADE IN ACCORDANCE WITH PARTS 3 AND 4 OF THIS SECTION. TWO-STEP FORMAL ADVERTISING REQUIRES THAT THE CONTRACTING OFFICER WORK CLOSELY WITH TECHNICAL PERSONNEL AND THAT HE UTILIZE THEIR SPECIALIZED KNOWLEDGE IN DETERMINING THE TECHNICAL REQUIREMENTS OF THE PROCUREMENT, IN DETERMINING THE CRITERIA TO BE USED IN EVALUATING TECHNICAL PROPOSALS, AND IN MAKING SUCH EVALUATION. OBJECTIVE OF THIS METHOD IS TO PERMIT THE DEVELOPMENT OF A SUFFICIENTLY DESCRIPTIVE AND NOT UNDULY RESTRICTIVE STATEMENT OF THE GOVERNMENT'S REQUIREMENT, INCLUDING AN ADEQUATE TECHNICAL DATA PACKAGE, SO THE SUBSEQUENT PROCUREMENTS MAY BE MADE BY CONVENTIONAL FORMAL ADVERTISING.'

IN OUR DECISION, B-157827, FEBRUARY 7, 1966, INVOLVING THAT PARAGRAPH WE STATED: "WE ARE OF THE OPINION THAT THE PRIMARY OBJECT OF THE SUBJECT ASPR PROVISION IS TO OBTAIN FOR THE GOVERNMENT A NUMBER OF DIFFERENT PROPOSALS, EMPLOYING VARIED METHODS, WHICH WILL ACCOMPLISH A DESIRED END AS SET FORTH AND LIMITED IN THE SPECIFICATIONS. THE BASIC OBJECT IS TO PROVIDE A BROADER BASE FOR COMPETITION THAN IS PROVIDED IN A -BRAND NAME OR EQUAL- PROCUREMENT. IN THE LATTER CASE THE ITEM SOUGHT IS CIRCUMSCRIBED BY THE - BRAND NAME- ITEM, WHEREAS IN A TWO STEP PROCUREMENT, THE FIRST STEP PROVIDES A BROADER FIELD FOR PROPOSERS TO WORK IN PREPARING THEIR PROPOSALS. IN VIEW OF THIS BROAD SCOPE IN PURPOSE, WE CANNOT SUBSCRIBE TO A VIEW THAT WOULD RESTRICT THE CLARIFICATION OR EVALUATION OF PROPOSALS. WE WOULD DEFEAT THE CONCEPT OF -TWO-STEP- PROCUREMENTS IF WE ATTEMPTED TO PLACE UNDUE RESTRICTIONS ON THE PROCEDURES OR JUDGMENTS INVOLVED IN THE - FIRST-STEP-. * * *"

THE USE OF THE "BRAND NAME OR EQUAL" DESCRIPTION IN A PROCUREMENT OF THIS KIND SHOULD BE UNDERSTOOD TO SET FORTH A TYPE OF UNIT ILLUSTRATIVE OF THE PROCURING ACTIVITIES' NEEDS AND THE PERFORMANCE CRITERIA TO BE MET. THIS IS CONSISTENT WITH ASPR 2-502 (A) WHICH PROVIDES THAT TWO-STEP ADVERTISING SHALL BE USED WHEN SPECIFICATIONS ARE NOT SUFFICIENTLY DEFINITE AND THE LISTING OF SALIENT CHARACTERISTICS ON A BRAND NAME DESCRIPTION WOULD BE TOO RESTRICTIVE. WE HAVE NOT IN THE PAST REQUIRED THE FIRST STEP, THE REQUEST FOR TECHNICAL PROPOSALS, TO BE SO NARROW AND DEFINITE IN STATING THE GOVERNMENT'S NEEDS. IN OUR DECISION, B-163767, AUGUST 5, 1968, 48 COMP. GEN. ---, WE STATED:

"WHILE YOUR COUNSEL HAS CITED SEVERAL DECISIONS OF OUR OFFICE STRESSING THE NECESSITY FOR BIDS TO RESPOND FULLY TO THE REQUIREMENTS OF THE INVITATION, SO THAT THE CONTRACT AWARDED WILL BE THE SAME CONTRACT OFFERED TO ALL BIDDERS, WE HAVE NOT APPLIED THESE STRICT RULES TO THE EVALUATION OF PROPOSALS SUBMITTED IN THE FIRST STEP OF THE TWO STEP PROCUREMENT PROCEDURE. ACCOMPLISHMENT OF THE STATED OBJECTIVES OF THIS METHOD REQUIRES A CONSIDERABLE ELEMENT OF FLEXIBILITY, AND TO THIS END THE REGULATIONS SPECIFICALLY PROVIDE FOR DISCUSSIONS WITH ANY OFFEROR OF HIS PROPOSAL, MAKING THE FIRST-STEP EVALUATION PROCEDURE MORE IN THE NATURE OF NEGOTIATED PROCUREMENT THAN OF STRICT FORMAL ADVERTISING.'

IN CONCLUSION, WE THINK THE REQUEST FOR PROPOSALS, THE FIRST STEP, IN TWO -STEP FORMAL ADVERTISING NEED ONLY SET FORTH THE GOVERNMENT'S NEEDS SUFFICIENTLY SO AS TO PROVIDE AN EQUAL BASIS FOR SUBMITTING TECHNICAL PROPOSALS. THE TWO-STEP PROCEDURE CONTEMPLATES THE POSSIBILITY THAT THESE NEEDS MAY BE MET BY VARYING PROPOSALS. ACCORDINGLY, WE MUST REJECT THE CONTENTION THAT MICRODYNE WAS PERMITTED TO BID ON RELAXED SPECIFICATIONS.

IT HAS BEEN CONTENDED ALSO THAT MICRODYNE'S BID DID NOT AND WILL NOT MEET THE REQUIREMENTS OF THE GOVERNMENT. IN SUPPORT OF THIS CONTENTION, THE LETTER OF JUNE 28, 1968, FORWARDED A COMPARATIVE ANALYSIS OF DEI MODEL TR- 711 AND MICRODYNE'S 1100-R, AS SHOWN ON THE STANDARD DATA SHEETS WHICH WERE MADE AVAILABLE, NOTING SEVERAL VARIATIONS IN THE TWO RECEIVERS. THE AIR FORCE HAS ADVISED THAT THE TECHNICAL PROPOSAL OF MICRODYNE WHEN REVIEWED AS A WHOLE, INCLUDING THAT PORTION RESTRICTED FROM DISCLOSURE, CLEARLY MEETS THE SPECIFICATIONS. THIS OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION OF THE ACCEPTABILITY OF TECHNICAL PROPOSALS IS OF NECESSITY VESTED IN THE PROCUREMENT AGENCY. 40 COMP. GEN. 35, 38.