B-164594, NOVEMBER 14, 1968, 48 COMP. GEN. 323

B-164594: Nov 14, 1968

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WHERE NEITHER THE PRICE NOR THE COMPETITIVE POSITION OF THE LOW OFFEROR WERE EXPOSED. PRECAUTION WAS TAKEN IN THE PREAWARD SURVEY REQUEST. THE DETERMINATION TO CONTINUE PRICE NEGOTIATIONS WAS MADE IN GOOD FAITH. WHETHER OR NOT AN UNSOLICITED PRICE REDUCTION SHOULD BE CONSIDERED IS A PROBLEM FOR INCLUSION IN A STUDY OF PROCEDURES FOR HANDLING LATE PROPOSALS AND LATE MODIFICATIONS TO PROPOSALS. 1968: THIS IS IN REPLY TO YOUR TELEGRAM OF JUNE 17. ESSENTIALLY YOUR PROTEST IS MADE ON THE GROUNDS THAT THE CONTRACTING OFFICER IMPROPERLY ENTERTAINED PRICE REVISIONS FROM OFFERORS AFTER A PREAWARD SURVEY ON YOUR COMPANY HAD COMMENCED. THAT YOUR ORIGINAL PRICE WAS REVEALED TO CURTIS. THAT CURTIS WAS DELINQUENT UNDER TWO CONTRACTS FOR THE SAME ITEM AT THE TIME OF AWARD.

B-164594, NOVEMBER 14, 1968, 48 COMP. GEN. 323

CONTRACTS - NEGOTIATIONS - PROPRIETY - PREAWARD PLANT SURVEY EFFECT NEGOTIATIONS FOR LOWER PRICES UNDER A REQUEST FOR PROPOSALS PROMPTED BY AN UNSOLICITED PRICE REVISION RECEIVED SUBSEQUENT TO THE INITIATION OF A PREAWARD SURVEY OF THE LOW OFFEROR DO NOT CONSTITUTE THE AUCTION TECHNIQUE PROHIBITED BY PARAGRAPH 3-805.1 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHERE NEITHER THE PRICE NOR THE COMPETITIVE POSITION OF THE LOW OFFEROR WERE EXPOSED, PRECAUTION WAS TAKEN IN THE PREAWARD SURVEY REQUEST--- WHICH PER SE DOES NOT CONSTITUTE AN AUCTION TECHNIQUE--- TO PROTECT INFORMATION, AND THE DETERMINATION TO CONTINUE PRICE NEGOTIATIONS WAS MADE IN GOOD FAITH. HOWEVER, WHETHER OR NOT AN UNSOLICITED PRICE REDUCTION SHOULD BE CONSIDERED IS A PROBLEM FOR INCLUSION IN A STUDY OF PROCEDURES FOR HANDLING LATE PROPOSALS AND LATE MODIFICATIONS TO PROPOSALS.

TO THE PROSPECT MANUFACTURING AND ENGINEERING COMPANY, NOVEMBER 14, 1968:

THIS IS IN REPLY TO YOUR TELEGRAM OF JUNE 17, 1968, AND SUBSEQUENT CORRESPONDENCE IN WHICH YOU PROTEST AND REQUEST CANCELLATION OF THE AWARD OF A CONTRACT TO CURTIS INDUSTRIES UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAF01-68-R-0624, ISSUED BY THE ROCK ISLAND ARSENAL, ROCK ISLAND, ILLINOIS.

ESSENTIALLY YOUR PROTEST IS MADE ON THE GROUNDS THAT THE CONTRACTING OFFICER IMPROPERLY ENTERTAINED PRICE REVISIONS FROM OFFERORS AFTER A PREAWARD SURVEY ON YOUR COMPANY HAD COMMENCED; THAT YOUR ORIGINAL PRICE WAS REVEALED TO CURTIS; THAT CURTIS WAS DELINQUENT UNDER TWO CONTRACTS FOR THE SAME ITEM AT THE TIME OF AWARD; AND THAT THE HISTORY OF NUMEROUS PROCUREMENT PRACTICES INDICATES A PATTERN OF DISCRIMINATION PRACTICED AGAINST YOUR COMPANY.

UNDER THE TERMS OF THE REFERENCED RFP THE DATE ESTABLISHED FOR SUBMISSION OF OFFERS WAS APRIL 29, 1968. UPON OPENING OF THE OFFERS PROSPECT WAS DETERMINED TO BE THE APPARENT LOW OFFEROR, HAVING PROPOSED TO SUPPLY THE ITEM AT $1.188 EACH WITH FIRST ARTICLE APPROVAL, OR AT $1.186 EACH WITHOUT SUCH APPROVAL. THE RECORD INDICATES THAT ON MAY 9, 1968, THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), DETROIT, MICHIGAN, TO CONDUCT A PREAWARD SURVEY OF PROSPECT IN ORDER TO OBTAIN INFORMATION WHICH WOULD ENABLE HIM TO DECIDE WHETHER YOUR FIRM WAS A RESPONSIBLE OFFEROR. THE REPORT BY DCASR WAS SUBSEQUENTLY RETURNED ON JUNE 3 WITH A FAVORABLE RECOMMENDATION.

IN THE INTERIM, BY TELETYPE DATED MAY 20, 1968, CURTIS INDUSTRIES, THE FOURTH LOW OFFEROR, SUBMITTED A REVISION OF ITS OFFER REQUESTING THAT ITS UNIT PRICE BE REDUCED FROM $1.34 EACH TO $1.16 EACH. IT IS THE POSITION OF THE CONTRACTING OFFICER THAT, UPON RECEIPT OF THIS REVISION, HE CONSIDERED THE BEST INTERESTS OF THE GOVERNMENT WOULD BE SERVED BY NEGOTIATING WITH ALL OFFERORS IN EXPECTATION OF RECEIVING LOWER PRICES FOR THE ITEM. HE THEN RESORTED TO THE DECISIONS OF THE COMPTROLLER GENERAL TO ASCERTAIN THE PROPRIETY AND LEGALITY OF A SECOND ROUND OF NEGOTIATIONS. FOLLOWING A REVIEW OF OUR DECISION PUBLISHED AT 47 COMP. GEN. 279, NOVEMBER 21, 1967, THE CONTRACTING OFFICER CONCLUDED FURTHER NEGOTIATIONS WOULD BE PROPER.

ACCORDINGLY, ON MAY 20 OFFERORS WERE REQUESTED TO REVIEW THE REQUIREMENTS CONTAINED IN THE RFP AND RESUBMIT THEIR BEST UNIT PRICES BY 4:30 P.M. C.D.S.T., MAY 27, 1968. OUR INVESTIGATION ESTABLISHES THAT CURTIS' REVISED OFFER WAS SUBMITTED BY TELETYPE AND WAS TIME STAMPED AT ROCK ISLAND ARSENAL ON MAY 27, 1968, 11:43 A.M. WE ALSO FOUND THAT YOUR REVISED OFFER BY LETTER DATED MAY 24, 1968, WAS RECEIVED BY THE ROCK ISLAND CITY POST OFFICE ON SATURDAY, MAY 25, 1968, AND BY THE ARSENAL'S MAIL AND RECORDS BRANCH ON MONDAY, MAY 27. WE WERE UNABLE TO DETERMINE THE EXACT TIME YOUR OFFER WAS RECEIVED AT THAT ARSENAL SINCE THE ENVELOPE WAS DISCARDED AFTER OPENING.

AFTER REVIEWING THE REVISED OFFERS, A CONTRACT WAS AWARDED TO CURTIS AT ITS PROPOSED UNIT PRICE OF $1.075 EACH, WHICH WAS THE LOWEST RECEIVED.

YOUR OBJECTION THAT THE CONTRACTING OFFICER ACTED IMPROPERLY IN REQUESTING PRICE REVISIONS FROM OFFERORS SUBSEQUENT TO INITIATION OF A PREAWARD SURVEY OF YOUR FIRM, IS BASED UPON A PROVISION IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1 (B) WHICH EXPRESSLY PROHIBITS THE USE OF AUCTION TECHNIQUES, SUCH AS INDICATING TO AN OFFEROR A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION OR INFORMING HIM THAT HIS PRICE IS NOT LOW.

OUR INVESTIGATION OF THIS MATTER HAS REVEALED NO EVIDENCE THAT GOVERNMENT PERSONNEL PURPOSELY EXPOSED EITHER YOUR PRICE OR COMPETITIVE POSITION. ALTHOUGH IT IS POSSIBLE THAT THE MERE INSTITUTION OF A PREAWARD SURVEY CAN IN A PARTICULAR CASE GIVE RISE TO THE INFERENCE THAT AN OFFEROR'S PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR, WE DO NOT BELIEVE THAT SUCH NECESSARY ACTION ON THE PART OF THE GOVERNMENT CONSTITUTES AN AUCTION TECHNIQUE PER SE. THE ARMY IN INSTITUTING THE PREAWARD SURVEY IN THIS CASE FOLLOWED EXISTING REQUIRED PRECAUTIONS RELATIVE TO THE RELEASE OF INFORMATION IN NEGOTIATED PROCUREMENTS BY ATTACHING THE LEGEND "FOR OFFICIAL USE ONLY" ON ITS REQUEST FOR A SURVEY AND ON THE SURVEY ITSELF. THE ATTACHMENT OF THIS PHYSICAL MARKING, REQUIRED BY ARMY PROCUREMENT PROCEDURE 1-1004, DESIGNATES A DOCUMENT AS REQUIRING PROTECTION AGAINST UNAUTHORIZED RELEASE IN THE PUBLIC INTEREST.

IN 47 COMP. GEN. 279 THIS OFFICE CRITICIZED A CONTRACTING OFFICER FOR NOT CONDUCTING NEGOTIATIONS AFTER RECEIPT OF THE PROTESTOR'S UNSOLICITED PRICE REDUCTION, ALTHOUGH IN THAT CASE THERE WAS NO DISCLOSURE OF THE GOVERNMENT'S INTENT TO AWARD A CONTRACT TO THE PROTESTOR'S COMPETITOR, WHETHER BY THE INITIATION OF A PREAWARD SURVEY OR OTHERWISE.

IN ANY EVENT WE ARE ADVISED THAT THE ACTIONS TAKEN BY THE CONTRACTING OFFICER IN THE INSTANT CASE WERE THE RESULT OF HIS INTERPRETATION OF OUR DECISION 47 COMP. GEN. 279, AND HE APPARENTLY ACTED IN GOOD FAITH. THEREFORE WE DO NOT QUESTION THE LEGALITY OF THE CONTRACT AS AWARDED.

HOWEVER, OUR OFFICE HAS FOR SOMETIME BEEN CONCERNED WITH THE PRESENT PROCEDURES FOR HANDLING LATE PROPOSALS AND LATE MODIFICATIONS TO PROPOSALS. IN A LETTER OF MARCH 25, 1968, B-161782, TO THE SECRETARY OF THE NAVY WE POINTED OUT OUR DIFFICULTY WITH THE CURRENT REGULATION, WHICH CALLS FOR THE REJECTION OF LATE PROPOSALS AND LATE MODIFICATIONS TO PROPOSALS AND, AT THE SAME TIME, CALLS FOR THE CONDUCT OF NEGOTIATIONS, WITH CERTAIN PERMISSIVE EXCEPTIONS. BY LETTER OF THE SAME DATE WE SENT A COPY OF THAT LETTER TO THE SECRETARY OF DEFENSE SUGGESTING THAT THE ASPR COMMITTEE MAY WISH TO GIVE CONSIDERATION TO THE MATTER. IT IS OUR OPINION THERE IS AN UNCERTAINTY IN THE PRESENT REGULATIONS WHICH GIVES RISE TO THE SITUATION ENCOUNTERED IN YOUR CASE. OFFERORS CANNOT BE SURE WHETHER AN UNSOLICITED PRICE REDUCTION WILL BE IGNORED ON THE BASIS OF "LATENESS" OR CONSIDERED UNDER THE PROVISION PERMITTING NEGOTIATIONS. IT IS NATURAL UNDER THESE CIRCUMSTANCES TO EXPECT SOME OFFERORS TO SUBMIT LATE MODIFICATIONS, AND EVEN CONTRACTING OFFICERS MAY NOT ALWAYS BE CERTAIN AS TO WHEN NEGOTIATIONS SHOULD OR MAY BE CONDUCTED.

INASMUCH AS THE QUESTION RAISED BY YOUR PROTEST APPEARS TO PRESENT ANOTHER ASPECT OF THE PROBLEM DISCUSSED IN OUR LETTER OF MARCH 25, WE ARE RECOMMENDING TO THE SECRETARY OF DEFENSE THAT IT BE INCLUDED IN THE ASPR COMMITTEE'S STUDY OF THE OVERALL PROBLEM.

WITH REGARD TO YOUR CONTENTION THAT THE SUCCESSFUL OFFEROR WAS DELINQUENT IN ITS DELIVERIES UNDER TWO CONTRACTS FOR THE IDENTICAL ITEM AT THE TIME OF AWARD, THE REPORT OF THE PROCURING AGENCY ESTABLISHES THAT THE CONTRACTOR IS A PREVIOUS AND CURRENT SUPPLIER OF THE IDENTICAL ITEM UNDER CONTRACTS WHICH WERE AND ARE BEING DELIVERED WELL AHEAD OF SCHEDULE. THE AGENCY HAS THEREFORE ADVISED THAT YOUR STATEMENT HAS NO BASIS IN FACT.

IN SUPPORT OF YOUR POSITION THAT THE HISTORY OF PROCUREMENT PRACTICES INDICATES A PATTERN OF DISCRIMINATION PRACTICED AGAINST YOUR COMPANY ON THE PART OF A SINGLE CONTRACTING OFFICER, YOU PLACE PARTICULAR EMPHASIS ON THREE 1966 PROCUREMENTS IN WHICH YOUR LOW BIDS WERE REJECTED BECAUSE OF DETERMINATIONS THAT YOUR FIRM LACKED SUFFICIENT TENACITY AND PERSEVERANCE TO PERFORM THE WORK. YOUR RESERVATIONS AS TO THE PROPRIETY OF ACTIONS WHICH OCCURRED IN A NUMBER OF OTHER PAST PROCUREMENTS APPARENTLY ALSO CONTRIBUTED TO THE BELIEF THAT YOU WERE DISCRIMINATED AGAINST IN THE PRESENT CASE.

IT IS THE POSITION OF THIS OFFICE THAT THE MERIT OF A PROTEST MUST BE JUDGED SOLELY ON THE BASIS OF THE FACTS AND CIRCUMSTANCES SURROUNDING THE PROTESTED PROCUREMENT, AND WE THEREFORE DO NOT CONSIDER AS DETERMINATIVE, OR INSTITUTE INVESTIGATIONS OF, THE FACTS AND CIRCUMSTANCES INVOLVED IN SUCH PAST CASES. SEE 46 COMP. GEN. 606, 611. SINCE YOUR OBJECTIONS TO PAST PROCUREMENTS WERE NOT FILED HERE IN A TIMELY MANNER, AND SINCE WE ARE UNABLE TO CONCLUDE THAT THE CONTRACT AS AWARDED IN THE PRESENT CASE IS ILLEGAL, WE OFFER NO COMMENT REGARDING THE PROPRIETY OF ACTIONS TAKEN IN 1966 AND OTHER PAST PROCUREMENTS.

FOR THE REASONS STATED WE FIND NO LEGAL OBJECTION TO THE AWARD OF THE CONTRACT TO CURTIS IN THIS CASE AND YOUR PROTEST MUST BE DENIED.