B-164648, DEC. 16, 1968

B-164648: Dec 16, 1968

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LOLA DICKERMAN: THIS IS IN REPLY TO YOUR TELEGRAM OF JUNE 21. CERTAIN TECHNICAL DATA WERE ALSO REQUIRED TO BE FURNISHED. THE GOVERNMENT RESERVED THE RIGHT TO CONDUCT FIRST ARTICLE TESTING AND TO AWARD A CONTRACT ON THE BASIS OF THE QUANTITY AND PRICE COMBINATION WHICH WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. THE PROCUREMENT WAS CONDUCTED BY NPO FOR REQUIREMENTS OF THE ARMY MOBILITY EQUIPMENT COMMAND (AMEC). YOUR PROTEST IS MADE ON THE GROUNDS THAT NUMEROUS DEFECTS IN THE INVITATION PRECLUDED BIDDERS FROM COMPETING ON AN EQUAL BASIS. WILL CONSIDER EACH ALLEGED DEFECT IN DETAIL BELOW. YOU TAKE THE POSITION THAT THE ESTIMATE OF SUCH COSTS SHOULD HAVE BEEN A FACTOR IN THE EVALUATION OF BIDS.

B-164648, DEC. 16, 1968

TO LAW OFFICES, LOLA DICKERMAN:

THIS IS IN REPLY TO YOUR TELEGRAM OF JUNE 21, 1968, AND SUBSEQUENT CORRESPONDENCE, WRITTEN ON BEHALF OF MURRAY AND TREGURTHA DIVISION OF MATHEWSON MACHINE WORKS, INC. (M-AND-T), PROTESTING ANY AWARD UNDER INVITATION FOR BIDS (IFB) NO. N00123-68-B-1897, ISSUED BY THE U.S. NAVY PURCHASING OFFICE (NPO), LOS ANGELES, CALIFORNIA.

THE INVITATION REQUESTED BIDS FOR QUANTITIES OF 20, 30, 45, AND 91 OUTBOARD PROPELLING UNITS IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-P- 15916D, AS MODIFIED BY THE INVITATION, WITH INTEGRAL ASSEMBLIES CONSISTING OF A 165 BHP DIESEL ENGINE, TRANSMISSION, OUTBOARD DRIVE, HYDRAULIC SYSTEM, CONTROL STATION, AND OTHER FUNCTIONAL ACCESSORIES AND CHASSIS AS SPECIFIED. CERTAIN TECHNICAL DATA WERE ALSO REQUIRED TO BE FURNISHED. UNDER THE INVITATION, THE GOVERNMENT RESERVED THE RIGHT TO CONDUCT FIRST ARTICLE TESTING AND TO AWARD A CONTRACT ON THE BASIS OF THE QUANTITY AND PRICE COMBINATION WHICH WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. THE PROCUREMENT WAS CONDUCTED BY NPO FOR REQUIREMENTS OF THE ARMY MOBILITY EQUIPMENT COMMAND (AMEC), ST. LOUIS, MISSOURI.

IN GENERAL, YOUR PROTEST IS MADE ON THE GROUNDS THAT NUMEROUS DEFECTS IN THE INVITATION PRECLUDED BIDDERS FROM COMPETING ON AN EQUAL BASIS. WILL CONSIDER EACH ALLEGED DEFECT IN DETAIL BELOW.

FIRST, YOU OBJECT TO THE FACT THAT THE INVITATION DID NOT INCLUDE AN ESTIMATE OF THE COST TO THE GOVERNMENT FOR TESTING THE FIRST ARTICLE PURSUANT TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 1903 (A) (III). YOU TAKE THE POSITION THAT THE ESTIMATE OF SUCH COSTS SHOULD HAVE BEEN A FACTOR IN THE EVALUATION OF BIDS, PARTICULARLY SINCE THE DETAILED TESTING PROCEDURES IN THE SPECIFICATIONS WERE SUFFICIENT TO MAKE A REALISTIC ESTIMATE OF THE COST TO THE GOVERNMENT.

THE ABOVE REFERENCED PROVISION IN THE REGULATION PROVIDES AS FOLLOWS:

"/III) IF THE GOVERNMENT IS TO BE RESPONSIBLE FOR FIRST ARTICLE TESTING, THE COST TO THE GOVERNMENT OF SUCH TESTING SHALL BE A FACTOR IN THE EVALUATION OF THE BIDS AND PROPOSALS TO THE EXTENT THAT SUCH COST CAN BE REALISTICALLY ESTIMATED. THIS ESTIMATE SHALL BE DOCUMENTED IN THE CONTRACT FILE AND CLEARLY SET FORTH IN THE SOLICITATION AS A FACTOR WHICH WILL BE CONSIDERED IN EVALUATING THE BIDS OR PROPOSALS.'

IN A SUPPLEMENTAL REPORT TO THIS OFFICE DATED OCTOBER 30, 1968, THE CONTRACTING OFFICER STATES THAT NPO WAS UNABLE TO OBTAIN TIMELY AND PRECISE INFORMATION FROM THE APPROPRIATE ARMY OFFICE CONCERNING THE COST OF SUCH TESTING. FURTHER, THE DIFFICULTY ENCOUNTERED BY NPO IS EVIDENCED BY THE FACT THAT AS OF OCTOBER 30 THE PROCURING ACTIVITY STILL HAD NOT RECEIVED DEFINITE CONFIRMATION OS SUCH COSTS. THE CONTRACTING OFFICER STATES THAT ALTHOUGH HE WAS VERBALLY ADVISED AT ONE TIME BY AMEC THAT THE COST WOULD TENTATIVELY EXCEED $68,000, HE WAS SUBSEQUENTLY INFORMED THAT THE COST WOULD APPROXIMATE $13,000. IN THE LIGHT OF SUCH DIVERSE ESTIMATES AND UNCERTAINTY, AND THE UNSUCCESSFUL EFFORTS OF THE CONTRACTING OFFICER TO OBTAIN A CONFIRMED REALISTIC ESTIMATE OF SUCH COST, WE ARE NOT DISPOSED TO OBJECT TO THE AWARD OF A CONTRACT WITHOUT CONSIDERATION OF TESTING COSTS IN THIS INSTANCE. IT APPEARS THAT EVEN IF EITHER OF THE ABOVE ESTIMATES HAD BEEN SUFFICIENTLY DOCUMENTED TO JUSTIFY ITS INCORPORATION INTO THE INVITATION AS AN EVALUATION FACTOR, NONE OF THE BIDS SUBMITTED BY M AND-T ON THE BASIS OF FIRST ARTICLE WAIVER WOULD HAVE DISPLACED ANY OF THE SUCCESSFUL BIDDER'S BIDS. IN VIEW OF THIS, THE FAILURE TO STATE ESTIMATED TESTING COSTS MAY NOT BE CONSIDERED TO HAVE BEEN PREJUDICIAL TO M-AND-T.

YOU ALSO QUESTION THE ACCURACY OF THE INVITATION'S TIME LIMIT FOR COMPLETION OF FIRST ARTICLE TESTING. YOU CONTEND THAT THE ACCURACY OF THE TESTING TIME IS IMPORTANT SINCE IT INFLUENCES THE COST OF ON-SITE TECHNICAL ASSISTANCE AND THE TOTAL PERIOD OF CONTRACT PERFORMANCE, BOTH OF WHICH ARE FACTORS TO BE CONSIDERED IN DETERMINING THE BID PRICE. ADDITION, YOU CONTEND THAT IF THE GOVERNMENT REQUIRED AN EXTENSION OF THE TIME FOR TESTING DURING THE CONDUCT OF SUCH TESTS, AN EQUITABLE ADJUSTMENT WOULD NOT BE PERMITTED SINCE THE INVITATION MAKES NO PROVISION THEREFOR.

PRIOR TO BID OPENING, YOU DIRECTED THE CONTRACTING OFFICER'S ATTENTION TO THE QUESTION OF THE SUFFICIENCY OF THE TIME FRAME FOR TESTING AND YOU SUGGESTED AN INCREASE FROM THE 120 DAYS PROVIDED IN THE INVITATION TO 28 WEEKS, BASED ON AN AVERAGE OF 8 HOURS OF TESTING PER DAY, 5 DAYS PER WEEK. YOUR SUGGESTION WAS FORWARDED TO THE ARMY FOR CONSIDERATION AND IT WAS REPORTED THAT THE ESTIMATE OF 28 WEEKS APPEARED TO BE MORE REALISTIC THAN THE 120 DAYS STATED IN THE INVITATION. THE CONTRACTING OFFICER, HOWEVER, DID NOT AMEND THE SPECIFICATION, APPARENTLY BECAUSE HE DID NOT CONSIDER THE EXISTING SPECIFICATION ERRONEOUS. THE CONTRACTING OFFICER HAS ADVISED US THAT THE ARMY ALSO CONSIDERS THAT THE TESTS CAN BE, AND SOMETIMES ARE, COMPLETED IN 84 TO 125 DAYS. IN VIEW OF THIS ADVICE, WE DO NOT CONSIDER THE 120 DAY SPECIFICATION SO ERRONEOUS OR INADEQUATE AS TO RESULT IN UNREALISTICALLY LOW BIDS.

IT IS ALSO YOUR POSITION THAT M-AND-T WAS PREJUDICED BY THE DEFICIENT IFB, SINCE IT WAS ADVISED BY THE CONTRACTING OFFICER THAT THE TEST WOULD TAKE LONGER THAN SHOWN ON THE IFB, AND HAD TO BID ITS COST ACCORDINGLY. WE NOTE, HOWEVER, THAT M-AND-T SUBMITTED ITS BID PRIOR TO THE CONVEYANCE OF ANY ADVICE TO IT BY THE CONTRACTING OFFICER. FURTHER, IN THE ABSENCE OF AN AMENDMENT TO THE INVITATION, WE DO NOT FEEL THAT M-AND-T WAS JUSTIFIED IN COMPUTING ITS BID ON THE BASIS OF THE 28 WEEKS TESTING SCHEDULE. IN THIS REGARD, PARAGRAPH 3 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS PROVIDES THAT ORAL EXPLANATIONS OR INSTRUCTIONS GIVEN BEFORE THE AWARD OF THE CONTRACT ARE NOT BINDING. MOREOVER, IT IS APPARENT THAT M-AND-T WAS NOT, IN FACT, PREJUDICED BY TAKING INTO ACCOUNT THE MORE REALISTIC TESTING SCHEDULE, EVEN THOUGH IT MAY HAVE DONE SO, SINCE THE PRICE REDUCTION OFFERED IN ITS BID FOR THE WAIVER OF FIRST ARTICLE TESTING STILL WOULD HAVE LEFT ITS PRICE SUBSTANTIALLY HIGHER THAN THAT OF THE LOW BIDDER, EVEN WITHOUT CONSIDERATION OF THE PRICES BID FOR TECHNICAL DATA. THE INCREASE IN M-AND-T'S BID PRICE WHICH MAY HAVE RESULTED FROM THE EXTENDED TIME FOR CONDUCTING FIRST ARTICLE TESTS IS, OF COURSE, ELIMINATED IF SUCH TESTS ARE WAIVED.

AS TO YOUR OBJECTION THAT THE INVITATION PROVISION FOR EXERCISING THE ADDITIONAL QUANTITY OPTION IS AMBIGUOUSLY WORDED, WE ARE OF THE OPINION THAT THE APPROPRIATE TIME FOR A DETAILED EXAMINATION OF THE SOLICITATION AND CLARIFICATION OF ANY PROVISION THEREOF CONSIDERED TO BE AMBIGUOUS OR CONFUSING IS PRIOR TO THE TIME SPECIFIED FOR SUBMISSION OF BIDS. SEE B- 151355, JUNE 25, 1963. SINCE YOU COULD REASONABLY HAVE BEEN EXPECTED TO HAVE HAD THIS QUESTION CLARIFIED WHILE YOU WERE PREPARING YOUR BID AND SINCE, IN ANY EVENT, THE OPTION PRICE WAS NOT FOR CONSIDERATION IN EVALUATION OF BIDS, FURTHER CONSIDERATION OF THIS POINT AT THIS TIME WOULD SERVE NO USEFUL PURPOSE.

IN YOUR LETTER OF JUNE 28, 1968, YOU STATE THAT AN INCONSISTENCY EXISTS IN THE INVITATION BETWEEN SECTION 7.11 (E), UNDER WHICH THE CONTRACTOR IS REQUIRED TO REFURBISH AT ITS OWN EXPENSE ANY FIRST ARTICLE TEST UNIT WHICH IT MAY DESIRE TO RESUBMIT AS A CONTRACT PRODUCTION ITEM, AND SECTION 7.13 (C), UNDER WHICH THE REFURBISHING OF PRODUCTION RUN ITEMS TESTED AFTER DELIVERY WOULD BE DONE AT GOVERNMENT EXPENSE. IN THIS REGARD, WE FIND NO INCONSISTENCY, AND BELIEVE THE LIABILITY FOR REFURBISHING ARTICLES IN THESE TWO DISTINCT SITUATIONS IS CLEAR.

YOU ALSO STATE IN YOUR PROTEST THAT THE WIDE RANGE BETWEEN THE LOW BID AND THE OTHER BIDS FOR THE TECHNICAL DATA REQUIRED BY THE INVITATION INDICATES (1) A LACK OF APPRECIATION FOR THE SCOPE OF WORK REQUIRED, (2) A BID MISTAKE, OR (3) AN ATTEMPT TO "BUY-IN.' IN THIS REGARD, THE RECORD INDICATES THAT VERIFICATION OF THE LOW BID WAS OBTAINED PRIOR TO AWARD. FURTHER, WE HAVE CONSISTENTLY STATED THAT THE DETERMINATION OF A BIDDER'S QUALIFICATION TO PERFORM IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, AND IN THE ABSENCE OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE DETERMINATION, THERE IS NO BASIS FOR LEGAL OBJECTION. SEE 37 COMP. GEN. 430; B-158143, MARCH 4, 1966, AND CASES CITED THEREIN. NO SUCH EVIDENCE HAS BEEN PRESENTED IN THIS CASE.

YOU ARE ALSO ADVISED THAT WE HAVE HELD IN THE PAST THAT AN ATTEMPT TO "BUY-IN" DOES NOT AFFORD A BASIS FOR REJECTION OF A BID. SEE B 158326, MAY 5, 1966, AND ASPR 1-311.

YOU ALSO CONTEND THAT M-AND-T IS THE ONLY MANUFACTURER WHICH MEETS THE SPECIFICATION REQUIREMENT THAT THE PROPELLING UNIT AND ITS COMPONENTS BE A REGULAR COMMERCIAL PRODUCT OF THE MANUFACTURER OR ITS SUPPLIER. IN THIS REGARD, THE CONTRACTING OFFICER STATES THAT THE LOW SUCCESSFUL BIDDER, WESTERN GEAR CORPORATION, IN FACT PRODUCES AND HAS SOLD ON THE OPEN MARKET AS A STANDARD COMMERCIAL PRODUCT A PROPELLING UNIT SIMILAR TO THAT CALLED OUT IN THE INVITATION. AS STATED ABOVE, DETERMINATIONS BY THE ADMINISTRATIVE OFFICERS CONCERNED REGARDING THE QUALIFICATION OF OFFERORS WILL NOT BE QUESTIONED BY THIS OFFICE IN THE ABSENCE OF A CLEAR AND CONVINCING SHOWING TO THE CONTRARY.

WHILE IN YOUR LETTER OF SEPTEMBER 5, 1968, YOU OBJECT TO THE FAILURE OF THE PROCURING ACTIVITY TO GIVE THE PROMPT NOTIFICATION OF AWARD AS REQUIRED BY ASPR, THE CONTRACTING OFFICER'S REPORT OF OCTOBER 30 STATES THAT ALL UNSUCCESSFUL BIDDERS, INCLUDING M-AND-T, WERE ADVISED BY MAIL ON JUNE 25, 1968, OF THE AWARD OF THE CONTRACT ON THAT DATE TO A BIDDER OTHER THAN THEMSELVES. IT SHOULD ALSO BE NOTED THAT THE ADMINISTRATIVE FAILURE TO GIVE WRITTEN NOTICE REQUIRED UNDER ASPR IS NOT CAUSE TO UPSET AN OTHERWISE VALID AWARD. B-150014, NOVEMBER 20, 1962.

FOR ALL OF THE ABOVE REASONS WE MUST CONCLUDE THAT NO LEGAL BASIS EXISTS FOR OBJECTING TO THE AWARD OF THIS CONTRACT AND YOUR PROTEST IS THEREFORE DENIED.