B-164165, AUG. 13, 1968

B-164165: Aug 13, 1968

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TO AVCO CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 29. THE SUBJECT RFP WAS ISSUED ON AUGUST 9. THE SYSTEMS AND EQUIPMENT WHICH WERE TO BE MAINTAINED AND OPERATED BY THE PROSPECTIVE CONTRACTOR WERE LISTED IN THE 110 PAGE ADDENDUM II OF THE RFP. THE AVERAGE OPERATING SCHEDULE OVER A 12-MONTH PERIOD FOR EACH RADAR WAS GIVEN IN ADDENDUM I AS A GUIDE FOR PLANNING AND ESTIMATION PURPOSES. WAS NOT TO BE CONSIDERED AS FIXED SCHEDULE COMMITMENTS. BIDDER'S SYMPOSIUM AND SITE INVESTIGATION WAS HELD AT WSMR ON AUGUST 22 AND A SITE INVESTIGATION WAS HELD AT GREEN RIVER ON AUGUST 25. A0001 TO THE RFP WAS ISSUED ON SEPTEMBER 14. AN ANALYSIS OF ALL THE CORRESPONDENCE SUBMITTED IN SUPPORT OF YOUR PROTEST INDICATES THAT THE BASES FOR PROTEST ARE ESSENTIALLY THAT: (1) THE RFP DOES NOT REFLECT THE NEEDS AND REQUIREMENTS OF THE ARMY.

B-164165, AUG. 13, 1968

TO AVCO CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 29, 1968, AND TO SUBSEQUENT CORRESPONDENCE FROM YOUR COUNSEL, PROTESTING THE AWARD OF A CONTRACT TO RCA SERVICE COMPANY UNDER REQUEST FOR PROPOSALS (RFP) DAAD07-68-R-0007, BY THE DEPARTMENT OF THE ARMY, WHITE SANDS MISSILE RANGE (WSMR), NEW MEXICO.

THE SUBJECT RFP WAS ISSUED ON AUGUST 9, 1967, AND SOLICITED DETAILED TECHNICAL, MANAGEMENT AND COST APPROACH PROPOSALS FOR PROVIDING WSMR WITH NONPERSONAL TECHNICAL RADAR SERVICES FOR THE OPERATION, DIRECT SUPPORT, INSTALLATION, MAINTENANCE, REPAIR, RELOCATION AND MODIFICATION OF GOVERNMENT-FURNISHED RADAR SYSTEMS, TARGET ACQUISITION SYSTEMS, CHAIN RADAR SYSTEMS AND ASSOCIATED SUBSYSTEMS. PERFORMANCE UNDER THE CONTRACT ALSO INCLUDED DISPLAY, FORMATTING AND CALIBRATION OF ELECTRONIC TRACKING EQUIPMENT, AND COLLECTION, ANALYSIS, DISPLAY AND PROCESSING FOR DATA REDUCTIONS AND COMPUTATIONS. THE RFP CALLED FOR A COST-PLUS-AWARD-FEE CONTRACT OVER A FIVE-YEAR TERM, SUBJECT TO THE AVAILABILITY OF FUNDS FOR EACH YEAR.

THE SYSTEMS AND EQUIPMENT WHICH WERE TO BE MAINTAINED AND OPERATED BY THE PROSPECTIVE CONTRACTOR WERE LISTED IN THE 110 PAGE ADDENDUM II OF THE RFP. ALSO, THE AVERAGE OPERATING SCHEDULE OVER A 12-MONTH PERIOD FOR EACH RADAR WAS GIVEN IN ADDENDUM I AS A GUIDE FOR PLANNING AND ESTIMATION PURPOSES, BUT WAS NOT TO BE CONSIDERED AS FIXED SCHEDULE COMMITMENTS. BIDDER'S SYMPOSIUM AND SITE INVESTIGATION WAS HELD AT WSMR ON AUGUST 22 AND A SITE INVESTIGATION WAS HELD AT GREEN RIVER ON AUGUST 25, 1967. AS A RESULT OF THE SYMPOSIUM, AMENDMENT NO. A0001 TO THE RFP WAS ISSUED ON SEPTEMBER 14, WHICH INCLUDED, AMONG OTHER THINGS, QUESTIONS ASKED AT THE SYMPOSIUM AND ANSWERS THERETO. AMENDMENT NO. 0002 INCORPORATED SYMPOSIUM HANDOUT #3, WHICH LISTS EQUIPMENT AT EACH OPERATING SITE.

AN ANALYSIS OF ALL THE CORRESPONDENCE SUBMITTED IN SUPPORT OF YOUR PROTEST INDICATES THAT THE BASES FOR PROTEST ARE ESSENTIALLY THAT: (1) THE RFP DOES NOT REFLECT THE NEEDS AND REQUIREMENTS OF THE ARMY, AND THE AWARD BASED THEREON NECESSITATES AN IMMEDIATE CONTRACT MODIFICATION SUBSTANTIALLY INCREASING CONTRACT REQUIREMENTS AND COSTS TO THE UNITED STATES; (2) GRANTING THE ACCURACY OF THE REQUIREMENTS CITED IN THE RFP, RCA'S TECHNICAL PROPOSAL FOR STAFFING THE GOVERNMENT-FURNISHED EQUIPMENT IS GROSSLY UNDERESTIMATED; (3) THE ARMY SHOULD NOT HAVE UTILIZED A COST TYPE CONTRACT FOR THIS PROCUREMENT; AND (4) THE ARMY IMPROPERLY REFUSED TO EVALUATE SAVINGS TO THE GOVERNMENT (IN PHASE-IN AND PHASE-OUT COSTS) WHICH WOULD HAVE RESULTED FROM THE RETENTION OF THE INCUMBENT CONTRACTOR, AVCO.

YOU OBJECT TO THE ARMY'S STATEMENT OF ITS NEEDS AND REQUIREMENTS IN THE RFP FOR SEVERAL REASONS. FIRST, IT IS ALLEGED THAT AVCO'S ACTUAL CURRENT VERIFIED EQUIPMENT INVENTORY AT WSMR ILLUSTRATES THAT THE ARMY UNDERESTIMATED THE VALUE OF THE GOVERNMENT-FURNISHED EQUIPMENT AT WSMR BY NEARLY $3.2 MILLION. IN ADDITION, YOU STATE THE RFP FAILED TO DISCLOSE THE FACT THAT A TWO-SHIFT OPERATION IS REQUIRED AT TWO OPERATING FACILITIES, WHICH REQUIREMENT HAD BEEN INCLUDED IN AVCO'S PRIOR CONTRACT. YOU THEREFORE CONTEND THAT PROPOSALS WERE SOLICITED ON THE BASIS OF SUBSTANTIALLY ERRONEOUS INFORMATION WHICH RESULTED IN A CONTRACT WHICH DOES NOT REFLECT THE ARMY'S ACTUAL NEEDS.

IN THIS CONNECTION, THE RECORD INDICATES THAT AT THE BIDDER'S SYMPOSIUM THE QUESTION WAS ASKED WHETHER ALL ITEMS OF EQUIPMENT WERE LISTED IN ADDENDUM II. THE ANSWER WAS INCORPORATED INTO THE RFP BY PARAGRAPH 19 ON PAGE 5 OF AMENDMENT NO. A-0001 AS FOLLOWS:

"ANSWER: THE EQUIPMENT LIST FURNISHED IN ADDENDUM II, INCLOSURE 3, ARE THOSE EQUIPMENTS THAT WERE ASSIGNED TO THE CONTRACTOR-OPERATED PORTION OF THE RADAR SYSTEM AT THE TIME THE RFP WAS PREPARED. ADDITIONAL EQUIPMENTS MAY BE ADDED TO OR SUBTRACTED FROM THE LIST AS THE RANGE'S MODERNIZATION PROGRAM MATERIALIZES. ALSO, BY OPERATIONAL NECESSITY, EQUIPMENTS WILL BE DELETED FROM THIS EQUIPMENT LIST AND NEW ONES ADDED TO THE LIST DURING THE REMAINDER OF THE CURRENT CONTRACT PERIOD. HOWEVER, THE RATE OF EFFORT AND THE LEVEL OF EFFORT IS ESTIMATED TO REMAIN CONSTANT. THEREFORE, ALL BIDDERS ARE INSTRUCTED TO BID ON THE EQUIPMENT LIST INCLUDED IN THE RFP ADDENDUM 2 (EXCLUDING THE ADMINISTRATION AND ENGINEERING SECTION) IN ORDER TO NORMALIZE ALL PROPOSALS.'

IN REPORTING TO THIS OFFICE THE ARMY HAS TAKEN THE POSITION THAT WITH ONE EXCEPTION THE EQUIPMENT LIST IN THE AMENDED RFP, AS IDENTIFIED BY UNIT, SYSTEM AND SUBSYSTEM, IS COMPLETE. WHAT THE RFP FAILED TO INCLUDE IS THE REQUIREMENT FOR OPERATING AND MAINTAINING NAVY MOBILE TRACKING RADARS AND ANCILLARY EQUIPMENT IN SUPPORT OF THE NAVY STANDARD ARM AND AIR FORCE AGM 78A PROGRAMS. THESE RADARS WERE INITIALLY FURNISHED BY THE NAVY TO WSMR ON A LOAN BASIS AND BY MODIFICATION NO. 22 (DATED JUNE 30, 1967) TO YOUR PRIOR CONTRACT YOU WERE REQUIRED TO SUPPORT THESE TWO PROGRAMS THROUGH DECEMBER 31, 1967. WE ARE ADVISED THAT AT THAT TIME THE STANDARD ARM AND AIR FORCE AGM-78A REQUIREMENTS WERE TO BE TERMINATED BY DECEMBER 31, 1967. SUBSEQUENT TO THE MODIFICATION, NAVY AND AIR FORCE EXTENDED THE SUPPORT REQUIREMENT FOR THESE PROGRAMS UNTIL JUNE 30, 1968. THE RECORD INDICATES THAT THE CONTRACTING OFFICER BECAME AWARE OF THE NEED FOR THE EXTENSION TO JUNE 30, 1968, OF THE REQUIREMENT TO SUPPORT THE NAVY TRACKING RADARS ON NOVEMBER 3, 1967, AT WHICH TIME A THREE MONTH EXTENSION OF THE AVCO CONTRACT WAS REQUESTED. THIS WAS WELL AFTER DATE FOR RECEIPT OF PROPOSALS (OCTOBER 13, 1967) AND THE DATE ON WHICH THE SOURCE SELECTION BOARD COMMENCED ITS EVALUATION OF PROPOSALS (OCTOBER 25, 1967).

THE RECORD INDICATES THAT THE CONTRACTING OFFICER CONSIDERED THAT THE REQUIREMENT FOR THE OPERATION AND MAINTENANCE OF THE NAVY TRACKING RADARS AND ACCESSORY EQUIPMENT SHOULD NOT BE ADDED TO THE RFP BY AMENDMENT AT THAT TIME FOR THE FOLLOWING REASONS: 1. TITLE TO THE EQUIPMENT WAS STILL IN THE NAVY AND HE FELT IT UNWISE TO CONSIDER ADDING IT TO THE GOVERNMENT- FURNISHED EQUIPMENT LIST FOR OPERATION AND MAINTENANCE DURING THE PROPOSED FIVE-YEAR CONTRACT. 2. THE AWARD DATE OF THE NEW CONTRACT WAS STILL SPECULATIVE AND THE NAVY AND AIR FORCE REQUIREMENTS PLACED ON WSMR EXTENDED ONLY TO JUNE 30, 1968. 3. ALL PROPOSERS WERE ON NOTICE THAT THEY MIGHT BE REQUIRED TO OPERATE AND MAINTAIN EQUIPMENT NOT LISTED ON THE SCHEDULE IN THE RFP. 4. AN AMENDMENT TO THE RFP ISSUED AFTER THE PROPOSALS WERE ALREADY UNDER EVALUATION WOULD REQUIRE THAT ALL EVALUATION, BOTH TECHNICAL AND COST, BE STOPPED PENDING SUBMISSION OF NEW TECHNICAL AND COST PROPOSALS.

WHILE THE RECORD INDICATES THAT NAVY AND AIR FORCE SUBSEQUENTLY PLACED AN ADDITIONAL REQUIREMENT ON WSMR TO CONTINUE THE SUPPORT OF THE STANDARD ARM AND AGM-78A PROGRAMS THROUGH JUNE 30, 1968, WHICH WILL REQUIRE A MODIFICATION OF THE NEW CONTRACT IN AN ESTIMATED AMOUNT OF $135,762, THE ARMY HAS TAKEN THE POSITION THAT THIS LATEST EXTENSION WAS NOT FORESEEABLE BY WSMR. WE HAVE BEEN INFORMALLY ADVISED BY COUNSEL TO THE STAFF JUDGE ADVOCATE AT WSMR THAT THE CONTRACTING OFFICER WAS NOT AWARE OF THIS ADDITIONAL REQUIREMENT UNTIL ON OR ABOUT MARCH 1, 1968, AT WHICH TIME NEGOTIATIONS WITH OFFERORS HAD BEEN COMPLETED FOR MORE THAN THREE WEEKS.

WHILE PARAGRAPH 3-805.1 (E) OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIRES THE ISSUANCE OF AN AMENDMENT TO REQUESTS FOR PROPOSALS WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS, WE CANNOT CONCLUDE THAT THE CIRCUMSTANCES SET OUT ABOVE WERE SUCH AS TO REQUIRE OR JUSTIFY A CONCLUSION THAT THE NAVY REQUIREMENTS WOULD CONTINUE BEYOND JUNE 30, 1968, OR THAT THE RFP SHOULD THEREFORE HAVE BEEN AMENDED TO REFLECT SUCH ADDITIONAL REQUIREMENTS.

WITH RESPECT TO THAT PORTION OF YOUR PROTEST WHICH LAYS STRESS ON THE FACT THAT THE TOTAL DOLLAR VALUE OF THE EQUIPMENT LISTED IS INCORRECT, IT IS CLEAR FROM THE RECORD THAT NONE OF THE OFFERORS, INCLUDING YOUR FIRM, BASED ITS PROPOSAL UPON THE ESTIMATED DOLLAR VALUE. IT IS THE POSITION OF THE ARMY THAT PROPOSALS WERE CONCERNED ONLY WITH THE OPERATION AND MAINTENANCE OF THE LISTED TYPES OF EQUIPMENT (BY UNITS, SYSTEMS AND SUBSYSTEMS), WHICH WERE ACCURATELY REPRESENTED IN THE RFP, WITH THE EXCEPTION OF THE NAVY MOBILE TRACKING RADARS MENTIONED ABOVE. IN VIEW OF THE FACT THAT VARIANCES IN CONTRACTOR-ASSIGNED EQUIPMENT IS INEVITABLE BY THE VERY NATURE OF THE OPERATIONS AT WSMR AND THE RFP CLEARLY ACKNOWLEDGED THIS FACT, IT APPEARS THAT THE GOVERNMENT'S NEEDS WERE REPRESENTED AS ACCURATELY AND AS FAIRLY AS WAS FEASIBLE UNDER THE CIRCUMSTANCES. IN ANY EVENT, IT WOULD APPEAR THAT THIS MATTER WAS ONE WHICH SHOULD HAVE BEEN RAISED AND DECIDED PRIOR TO SUBMISSION OF PROPOSALS. SEE B-162566, DECEMBER 13, 1967; B-151355, JUNE 25, 1963.

YOU ALSO STATE THAT TWO-SHIFT OPERATIONS WHICH WERE IN EXISTENCE UNDER YOUR CONTRACT AT TWO FACILITIES FOR APPROXIMATELY TWO YEARS, WERE ERRONEOUSLY OMITTED FROM THE RFP. YOU ALLEGE THAT ITS ELIMINATION IS AN AFTERTHOUGHT AND A POOR ATTEMPT TO COVER UP A MISTAKE IN THE RFP, SINCE WSMR HAD THE OPPORTUNITY TO ELIMINATE THE TWO-SHIFT OPERATIONS FROM YOUR CONTRACT BUT DID NOT. WHILE THE RECORD DOES NOT INDICATE WHY TWO-SHIFT OPERATIONS WERE IN EFFECT UNDER YOUR CONTRACT, IT IS APPARENT THAT WSMR AFFIRMATIVELY DETERMINED, PRIOR TO THE LATEST SOLICITATION FOR RADAR SERVICES, THAT UTILIZATION OF THE VARIABLE TOUR WORKING DAY TOGETHER WITH THE JUDICIOUS USE OF OVERTIME WOULD MEET THE GOVERNMENT'S OPERATIONAL REQUIREMENTS AND BE LESS COSTLY THAN THE TWO-SHIFT OPERATION WHICH EXISTED UNDER YOUR CONTRACT. IN ACCORDANCE WITH THIS DETERMINATION, PARAGRAPH 6.4 OF THE PURCHASE DESCRIPTION ADVISED ALL OFFERORS THAT THE "VARIABLE TOUR" WORKING DAY WAS UTILIZED AT WSMR.

IN THIS REGARD, WE HAVE BEEN ADVISED THAT THE ONLY AREA UNDER AVCO'S PRIOR CONTRACT WHERE A TWO-SHIFT OPERATION HAD BEEN REQUIRED WAS IN THE OPERATION OF THE SURVEILLANCE RADARS AT ELEPHANT MOUNTAIN AND ROGER 109. IT IS REPORTED THAT RCA TOOK OVER THE OPERATION AND MAINTENANCE OF THESE TWO SITES ON OR ABOUT JULY 8, 1968, AND THEY BOTH ARE CURRENTLY BEING OPERATED ON A ONE-SHIFT VARIABLE TOUR BASIS. THROUGH JULY 17, 1968, RCA HAS BEEN AUTHORIZED TO USE TWO HOURS OF OVERTIME AT THE ELEPHANT MOUNTAIN SITE. IT IS REPORTED THAT NO AREA OF THE PRESENT CONTRACT REQUIRES OR IS UTILIZING A TWO-SHIFT OPERATION. IN VIEW OF THE FOREGOING, WE SEE NO VALID BASIS FOR OBJECTION TO THE FAILURE OF THE RFP TO PROVIDE FOR TWO SHIFT OPERATIONS.

YOU ALSO CONTEND THAT RCA'S PROPOSAL TO STAFF THE EQUIPMENT LISTED IN THE RFP ON THE BASIS OF 199 MAN YEARS IS SO GROSSLY UNDERESTIMATED AS TO ADVERSELY AFFECT THE CONTRACTOR'S RESPONSIBILITY BY INDICATING ITS UNAWARENESS OF THE COMPLEXITY OF THE WORK. IN SUPPORT OF YOUR POSITION YOU STATE THAT IN YOUR OPINION THE ABSOLUTE MINIMUM WORK FORCE NECESSARY TO OPERATE AND MAINTAIN THE EQUIPMENT LISTED IS 229 MEN; THAT THE REFERENCED RFP DIRECTS THAT PROPOSERS SUBMIT THEIR PROPOSALS BASED ON AN ANTICIPATED NECESSARY WORK FORCE OF 300 MAN YEARS; AND THAT THE ARMY ESTIMATED A REQUIREMENT FOR 259 MAN YEARS IN ITS PREVIOUS PROCUREMENT DURING 1964 WHICH WAS BASED UPON A NEARLY IDENTICAL EQUIPMENT LIST.

IN THIS CONNECTION, THE GENERAL INSTRUCTIONS IN THE SUBJECT RFP STATE, IN PERTINENT PART, AS FOLLOWS:

"GENERAL INSTRUCTIONS

"1. LEVEL OF EFFORT - AS AN INDICATION OF THE SCOPE AND COMPLEXITY OF THIS PROCUREMENT ACTION, THE GOVERNMENT ESTIMATES THAT 300 MAN YEARS (PER YEAR) WILL BE EXPENDED IN CONTRACT PERFORMANCE WITH THE FOLLOWING DELINEATION:

A. GENERAL ELECTRONIC ENGINEERS

B. RADAR FIELD ENGINEERS

C. ANALOG COMPUTER TECHNICIANS

D. DIGITAL COMPUTER TECHNICIANS

E. RADAR TECHNICIANS

F. ENGINEERING AIDES

G. MOBILE POWER MAINTENANCE MEN

H. MANAGEMENT, ADMINISTRATIVE, CLERICAL AND SUPPORT PERSONNEL

"THE ABOVE MATERIAL IS PRESENTED FOR INFORMATION ONLY. THE PERSONNEL MIX - CONTAINED IN DETAILED MANNING SCHEDULES OF YOUR PROPOSAL WILL BE A PRIME INDICATOR OF YOUR UNDERSTANDING OF THE SCOPE OF WORK TO BE PERFORMED.'

A QUESTION CONCERNING THE LEVEL OF EFFORT REQUIRED AND THE GOVERNMENT'S ANSWER ARE INCORPORATED INTO THE RFP AS NUMBER 21 ON PAGE 6 OF AMENDMENT A0001, AS FOLLOWS:

"21. QUESTION: THE LEVEL OF EFFORT, INCLOSURE 6, PARAGRAPH 1, STATES THAT THE GOVERNMENT HAS ESTIMATED 300 MAN-YEARS. BASED UPON THE SKILL BREAKDOWN BY CATEGORIES UPON WHICH 300 PERSONNEL WERE ESTIMATED, WHAT IS THE ESTIMATE OF MAN-YEARS BY SCALE CATEGORY?

"ANSWER: THIS QUESTION SHALL NOT BE ANSWERED. THE RFP GIVES THE NUMBER OF HOURS WORKED PER WEEK, THE PERCENTAGE OF OVERTIME, THE PERCENTAGE OF VARIABLE TOUR WORKED, THE PERFORMANCE REQUIREMENTS AND THE EVALUATION CRITERIA FOR SYSTEM PERFORMANCE. FURTHER, THE RATIO OF THE PROPOSED PERSONNEL CATEGORIES WILL BE A MAJOR ELEMENT IN EVALUATING THE TECHNICAL COMPETENCE AND MANAGEMENT ABILITY OF EACH BIDDER. IT IS THE BIDDER'S RESPONSIBILITY TO PREPARE A PROPOSAL BASED UPON FAMILIARITY WITH THE SYSTEMS PRESENTED AND ADDENDUMS SUCH AS THE EQUIPMENT LIST TO INCLUDE MAN- YEARS BY -SCALE- CATEGORIES. THEREFORE, IT IS REPEATED, FOR CLARITY, THE LEVEL OF EFFORT REQUIRED BY THE CONTRACTOR SHALL BE A BIDDER DETERMINATION, AND CAN BE DERIVED FROM: (1) THE NORMAL 40 HOUR WORK WEEK WHICH HAS BEEN ESTABLISHED IN THE RFP;

(2) THE OVERTIME HISTORY GIVEN IN THE RFP;

(3) THE VARIABLE TOUR STATISTICS HISTORY WHICH IS PROVIDED IN THE RFP;

(4) THE OPERATIONAL EXPERIENCE OF THE RADAR COMPLEXES, BY MISSION, WHICH IS PROVIDED IN THE RFP;

(5) THE REQUIRED STANDARDS OF PERFORMANCE AND THE PERFORMANCE REQUIREMENTS ARE GIVEN IN THE RFP; AND

(6) THE STANDARDS OF QUALITY OF THE DEFINED PRODUCT PROVIDED. "THEREFORE, FROM THE GIVEN FACTORS, YOUR CORPORATE MANAGEMENT'S ANALYSIS OF THE OPERATION AND MAINTENANCE OF THE NATIONAL RANGE'S RADAR SYSTEM WILL BE EVIDENCE OF YOUR TECHNICAL COMPETENCE AND INTEREST AS THE PERSPECTIVE (SIC) RADAR SERVICES CONTRACT ON THE NATIONAL RANGE. IN REALITY, THE RANGE IS BUYING TECHNICAL MANAGEMENT FOR O-AND M OF THE CONTRACTOR'S PORTION OF THE DATA COLLECTION DIRECTORATE'S RADAR SYSTEM. THUS, EACH PERSPECTIVE (SIC) BIDDERS' ANALYSIS OF THE RFP IS THE KEY FACTOR IN DETERMINING THE BIDDER'S TECHNICAL AND MANAGEMENT UNDERSTANDING OF THE REQUIREMENTS OF THE PROCUREMENT FOR RADAR TECHNICAL SERVICES.'

THE RECORD ESTABLISHES THAT ALL PROPOSALS RECEIVED WERE REVIEWED BY A WSMR SOURCE SELECTION BOARD WHICH RECOMMENDED THAT NEGOTIATIONS BE HELD WITH FOUR OF THE SEVEN PROPOSERS. THE TECHNICAL EVALUATION AND THE FINAL COST PROPOSALS NEGOTIATED WITH EACH OF THE FOUR OFFERORS SHOW THAT RCA HAD THE HIGHEST COMPOSITE EVALUATION SCORE AND HAD SUBMITTED THE LOWEST FINAL COST PROPOSAL. AVCO RECEIVED THE THIRD HIGHEST COMPOSITE EVALUATION SCORE AND SUBMITTED THE SECOND LOWEST FINAL COST PROPOSAL. A SOURCE SELECTION ADVISORY COUNCIL APPOINTED BY THE COMMANDING GENERAL, WSMR, REVIEWED THE FINDINGS OF THE BOARD, INCLUDING THE EVALUATION PLAN USED, THE CRITERIA, WEIGHTS AND FACTORS APPLIED, THE VALIDITY OF THE SCORING METHODOLOGY, AND THE RATIONALE FOR ASSIGNMENT OF SCORES. BASED UPON ITS REVIEW, THE COUNCIL RECOMMENDED AWARD TO RCA. THE ENTIRE RECORD WAS THEN SUBMITTED TO THE WSMR BOARD OF AWARDS WHICH REVIEWED ALL PHASES OF THE PROCUREMENT AND THEN RECOMMENDED AWARD TO RCA.

THE DETERMINATION OF WHETHER AN OFFEROR'S TECHNICAL PROPOSAL IS ACCEPTABLE, AND WHETHER THE PROPOSAL INDICATES THAT THE OFFEROR UNDERSTANDS THE NEEDS OF THE AGENCY AND IS QUALIFIED TO SUPPLY SUCH NEEDS, IS A MATTER WHICH THIS OFFICE HAS CONSISTENTLY HELD MUST BE LEFT TO THE SOUND JUDGMENT AND DISCRETION OF THE CONTRACTING AGENCY. WHERE SUCH DETERMINATIONS WERE BASED UPON A POINT SYSTEM OF EVALUATING THE PROPOSALS, AND WERE ALSO SUBJECT TO REVIEW BY SOURCE SELECTION BOARDS, IT HAS BEEN OUR POSITION THAT AWARDS BASED UPON SUCH EVALUATION WILL NOT BE QUESTIONED IN THE ABSENCE OF A CLEAR SHOWING OF UNREASONABLENESS OR FAVORITISM ON THE PART OF THE PROCURING ACTIVITY. SEE 46 COMP. GEN. 191; B-152342, DECEMBER 11, 1963; B-149330, OCTOBER 10, 1962. IN THIS CONNECTION, IT IS OUR UNDERSTANDING THAT RCA'S STAFFING PROPOSAL WAS PREDICATED UPON AN INCREASE IN MULTI-SKILLED EMPLOYEES, WHICH PERMITTED A REDUCTION IN THE NUMBER OF EMPLOYEES. ADDITIONALLY, WE ARE ADVISED THAT RCA AGREED TO A CEILING ON DIRECT LABOR COSTS NEGOTIATED IN ITS CONTRACT. IN VIEW OF THE FOREGOING, AND SINCE WE FIND NO INDICATION OF BAD FAITH IN THE RECORD, WE ARE UNABLE TO DISAGREE WITH THE ACCEPTANCE OF RCA'S TECHNICAL PROPOSAL OR WITH ITS SELECTION FOR CONTRACT AWARD.

IT IS ALSO YOUR POSITION THAT THE NEEDS OF THE ARMY, BOTH FOR THE FULFILLMENT OF ITS OPERATIONAL AND MAINTENANCE REQUIREMENTS, AND FOR THE REALIZATION OF MAXIMUM ECONOMIES IN DEFENSE PROCUREMENT, WOULD BEST BE SECURED BY THE USE OF A FIRM, FIXED-PRICE, COMPETITIVELY BID CONTRACT. MOREOVER, YOU CONTEND THAT THE USE OF A COST-TYPE CONTRACT IS IMPROPER SINCE THE EXPERIENCE GAINED BY THE ARMY IN PAST PROCUREMENTS DATING BACK TO 1958 IN WHICH BOTH FIXED-PRICE AND COST TYPE CONTRACTS WERE USED, DEMONSTRATES THAT THE FORMER TYPE CONTRACT REDUCED THE COST OF OPERATION AND MAINTENANCE TO THE GOVERNMENT, NOTWITHSTANDING SIGNIFICANT INCREASES IN OPERATIONS AT THE RANGE. YOU ALSO OBJECT ON THE BASIS THAT A COST TYPE CONTRACT IMPOSES SUBJECTIVE AND IMMATERIAL CONTRACTOR SELECTION CRITERIA.

UNDER 10 U.S.C. 2306 (C) NO COST CONTRACT, COST-PLUS-A-FIXED-FEE CONTRACT, OR INCENTIVE CONTRACT MAY BE NEGOTIATED UNLESS THE HEAD OF THE AGENCY DETERMINES THAT SUCH A CONTRACT IS LIKELY TO BE LESS COSTLY TO THE UNITED STATES THAN ANY OTHER KIND OF CONTRACT, OR THAT IT IS IMPRACTICABLE TO OBTAIN PROPERTY OR SERVICES OF THE KIND OR QUALITY REQUIRED EXCEPT UNDER SUCH A CONTRACT. A DETERMINATION IN ACCORD WITH THE FOREGOING WAS MADE IN THIS INSTANCE. IN VIEW OF THE BROAD AUTHORITY VESTED BY LAW IN THE HEAD OF THE AGENCY TO DETERMINE THE TYPE OF CONTRACT TO BE UTILIZED, AND SINCE SUCH DETERMINATIONS ARE AFFORDED FINALITY UNDER THE PROVISIONS OF 10 U.S.C. 2310 (A), ANY QUESTIONS TO THIS OFFICE REGARDING THE PROPRIETY OF SUCH A DETERMINATION SHOULD BE RAISED PRIOR TO THE SUBMISSION OF PROPOSALS. IN ANY EVENT, SINCE A FORMAL DETERMINATION WAS MADE IN COMPLIANCE WITH THE STATUTE WE SEE NO VALID BASIS ON WHICH THE VALIDITY OF THE CONTRACT AWARDED MAY BE QUESTIONED SIMPLY BECAUSE IT IS A COST TYPE CONTRACT. B-147394, SEPTEMBER 4, 1962.

FINALLY, YOU CONTEND THAT PHASE-IN AND PHASE-OUT COSTS CONSTITUTE A READILY MEASURABLE AND SIGNIFICANT PORTION OF THE COSTS TO BE INCURRED UNDER ANY CONTRACT, AND YOU CONTEND THAT THE CLEAR REFUSAL OF THE ARMY TO CONSIDER THESE COSTS IN EVALUATING PROPOSALS IS NOT IN THE GOVERNMENT'S BEST INTERESTS. IN THIS CONNECTION THE ARMY'S REPORT STATES AS FOLLOWS: "PHASE-OUT COSTS BEAR A DIRECT RELATION TO THE PHASE-IN COSTS SINCE AS THE NEW CONTRACTOR INCREASES ITS EFFORT THE INCUMBENT DECREASES THE EFFORT IT IS REQUIRED TO UTILIZE SO THAT AT ALL TIMES DURING THE PHASE-IN PERIOD THE CONTRACT WILL BE SUFFICIENTLY MANNED TO INSURE A SMOOTH TRANSITION AND CONTINUITY OF OPERATION. THE PROSPECTIVE PHASE-IN SCHEDULES VARIED WIDELY AND THE COSTS PROPOSED WERE HIGHLY SPECULATIVE AND VARIED SUBSTANTIALLY AMONG THE PROPOSERS. IN ADDITION, AFTER AWARD, ACCELERATION OF THE PHASE- IN WAS ENCOURAGED AND FULL MANNING MIGHT TAKE SUBSTANTIALLY LESS TIME THAT THE ALLOTTED 30 DAY PERIOD. AS THE PHASE-IN VARIES SO TOO WILL THE PHASE- OUT COSTS. THESE WILL BE NEGOTIATED WITH THE INCUMBENT.'

IT IS APPARENT THAT SUCH COSTS WERE HIGHLY SPECULATIVE BECAUSE OF THE POSSIBILITY OF ACCELERATING THE PHASE-IN PROCESS, AND WE THEREFORE CANNOT CONCLUDE THAT SUCH COSTS WERE REQUIRED TO BE CONSIDERED IN EVALUATING THE PROPOSALS RECEIVED. SEE 45 COMP. GEN. 433, 435.

FOR ALL OF THE ABOVE REASONS, AND IN VIEW OF THE LATITUDE CONFERRED UPON AGENCIES IN NEGOTIATING UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (11), WE MUST CONCLUDE THAT NO LEGAL BASIS EXISTS FOR OBJECTING TO THE PROCUREMENT ACTION TAKEN BY THE ARMY IN THIS CASE AND YOUR PROTEST MUST THEREFORE BE DENIED.