B-164688, OCT. 2, 1968

B-164688, OCT. 2, 1968

TO LITCOM DIVISION OF LITTON SYSTEMS, INC.:

WE REFER TO YOUR TELEGRAM OF JUNE 25, 1968, AND SUBSEQUENT COMMUNICATIONS PROTESTING THE AWARD OF A CONTRACT TO RCA SERVICE COMPANY, A DIVISION OF RADIO CORPORATION OF AMERICA, UNDER REQUEST FOR PROPOSALS NO. F41608-68-R- C573 ISSUED FEBRUARY 13, 1968, BY THE DEPARTMENT OF THE AIR FORCE, SAN ANTONIO AIR MATERIEL AREA.

THE FACTS AND CIRCUMSTANCES SURROUNDING THIS PROCUREMENT ARE SET OUT AS FOLLOWS IN A REPORT SUBMITTED BY THE CONTRACTING OFFICER, A COPY OF WHICH WAS FURNISHED YOUR COUNSEL: "1. THE REQUIREMENT IS FOR REPAIR, CALIBRATION AND CERTIFICATION OF PRECISION MEASUREMENT EQUIPMENT (PME) FOR THE USAF IN THE EUROPEAN THEATRE AND THE SAME SERVICES FOR THE FEDERAL REPUBLIC OF GERMANY IN GERMANY. THE GERMAN AIR FORCE (GAF) WORKLOAD MUST BE PERFORMED CONCURRENTLY WITH THE USAF WORKLOAD USING USAF RESOURCES AND EQUIPMENT ON A NON-INTERFERENCE BASIS. "2. SOLICITATION WAS MADE BY COMPETITIVE NEGOTIATIONS WITH 31 SOURCES SOLICITED AND 7 RESPONSIVE PROPOSALS RECEIVED. THIS IS THE FIRST YEAR OF A THREE YEAR POLICY. "3. LITCOM DIVISION OF LITTON SYSTEMS, INC. HAS PROTESTED AWARD ON CONTRACT F41608-68-C-9570 TO RCA SERVICE CO. DIVISION WHICH WAS CONSUMATED ON 21 JUNE 1968 WITH AN EFFECTIVE DATE OF 1 JULY 1968. LITCOM ALLEGES (1) THAT THE AIR FORCE REFUSED TO CONSIDER A MODIFICATION TO THEIR PROPOSAL RECEIVED PRIOR TO AWARD AND; (2) THAT THE AIR FORCE REFUSED TO CONSIDER ADDITIONAL PHASE IN - PHASE OUT COSTS FOR CERTAIN PORTIONS OF THE CONTRACT WORK WHICH WOULD ACCRUE TO ANY OTHER CONTRACTOR THAN LITCOM. IN LETTER DATED 24 JUN 1968 LITCOM ALLEGED NO TRANSITION/PHASE OVER COSTS WERE INCLUDED IN THE RFP TO INCORPORATE THE GAF PORTION OF THE PROGRAM, CONSEQUENTLY, THEIR PROTEST WITH REGARD TO THE SECOND POINT APPEARS TO BE LIMITED TO THE GAF PORTION ONLY. "4. THE MODIFICATION OR REVISION TO LITCOM'S PROPOSAL WAS RECEIVED ON 13 JUNE 1968 WHICH WAS AFTER THE LAST DATE SET FOR ACCEPTANCE OF MODIFICATIONS OR CHANGES 5 JUNE 1968, AS SET FORTH IN SAPIIA MESSAGE 311734Z DATED 31 MAY 1968. LITCOM'S REVISED PROPOSAL WAS CONSIDERED A LATE PROPOSAL AND HANDLED IN ACCORDANCE WITH CLAUSE 8 -LATE OFFERS AND MODIFICATIONS OR WITHDRAWALS , STANDARD FORM 33A OF THE RFP, AND PURSUANT TO ASPR 3-506 AND 3.805.1 PROCEDURES. (SEE CONTRACTING OFFICER'S STATEMENT REGARDING LITCOM MESSAGE DATED 13 JUNE 1968.) SYNOPSIS OF THE TWO OFFERS INVOLVED ARE AS FOLLOWS:

ORIGINAL PROPOSAL EVALUATION FACTOR TOTAL DIFFERENCE

----------------- ----------------- ----------- ------- --- RCA $638,036.00 $52,200.00 $690,236.00 ( LITTON $841,379.00 - $841,379.00 ($151,143.00

REVISED PROPOSALS EVALUATION FACTOR TOTAL DIFFERENCE

----------------- ----------------- ----------- ------- --- RCA $607,002.00 $52,200.00 $659,202.00 ( LITTON$687,473.90 - $687,473.90 ( $28,271.90 "FOR SOME UNKNOWN REASON, LITCOM REDUCED THEIR TOTAL PRICE JUST UNDER RCA'S PREVIOUS PRICE ON EACH OCCASION, IF THEIR LATE REVISED PRICE WERE ALLOWED. "5. PHASE IN COSTS FOR THE GAF PORTION, PARAGRAPH 3 (2) ABOVE, WERE CONSIDERED BUT WERE DISREGARDED AS NOMINAL IN AMOUNT, SINCE THE GAF WORKLOAD REQUIRES THE USE OF THE SAME USAF EQUIPMENT ON A NON- INTERFERENCE BASIS THAT WAS CONSIDERED IN THE ORIGINAL EVALUATION FACTOR. OUR AGREEMENT WITH THE GAF REQUIRES ONLY THE PRODUCTION OF PIECES, NOT TRANSITION OR TRAINING COSTS. THE QUESTION MAY ALSO BE RAISED AS TO THE APPLICABILITY OF ANY EVALUATION FACTOR. IN ADDITION, THE FOLLOWING POINTS WERE ALSO CONSIDERED:

"A. ALL CONTRACTORS WERE ADVISED THAT THE GAF EFFORT WAS ON A NON INTERFERENCE BASIS TO THE USAF EFFORT BY MOD. NO. 0004 TO THE RFP DATED 26 APRIL 1968. THE MOBILE VANS REQUIRED TO PERFORM ON THE GAF PORTION ARE GOVERNMENT FURNISHED EQUIPMENT UNDER THE USAF EFFORT. ALTHOUGH THESE VANS (APPROXIMATELY 4 TO 6 OF A TOTAL 14) ARE PHYSICALLY LOCATED IN GERMANY, THE VANS REMAIN PRIMARILY UNDER THE USAF WORKLOAD.

"B. HISTORICALLY, THE GAF REQUIREMENT HAS BEEN ADDED AFTER AWARD OF THE USAF PORTION AND NO PHASE IN OR TRAINING COSTS HAVE BEEN INVOLVED. QUALIFIED TECHNICIANS ARE REQUIRED BY THE RFP SHOULD BE ABLE TO COMMENCE WORK IMMEDIATELY WITHOUT ADDITIONAL TRAINING.

"C. LITCOM IS PRESENTLY PERFORMING ON 9,000 PIECES OF PME UNDER THE PRIOR CONTRACT F41608-67-C-8713-P015 WITH COMPLETION OF DELIVERY SCHEDULED FOR 21 JULY 1968. LITCOM HAD AGREED AS EARLY AS 28 MAY 1968 TO RETAIN RESPONSIBILITY OF GOVERNMENT FURNISHED EQUIPMENT IN GERMANY UNTIL 31 JULY 1968 OR UNTIL TRANSFERED TO THE USAF OR A NEW CONTRACTOR. THIS AGREEMENT WITH THE PROTESTANT SHOULD PREVENT ANY DEGRADATION OF USAF EQUIPMENT LOCATED IN GERMANY.

"D. OF THE $52,200.00 EVALUATION FACTOR USED IN PART XXI OF RFP F41608-68 -R-C573, $7,200.00 WAS FOR TRANSPORTATION COSTS OF AN ESTIMATED 65 U.S. NATIONALS RETURNING TO THE CONTINENTAL .S.A., PER SANNPA LETTER DATED 30 JAN 1968. THIS EVALUATION FACTOR WAS BASED ON AN ESTIMATED TOTAL OF 8J EMPLOYEES OF WHICH 6 ARE INDIGENOUS (SPANISH) AND SEVERAL OTHERS ARE MARRIED TO EUROPEAN NATIONALS AND ARE NOT EXPECTED TO RETURN TO THE U.S. OUR ESTIMATE OF TRANSPORTATION COSTS COVERED ALL CONTRACTOR EMPLOYEES EXPECTED TO RETURN TO THE U.S. REGARDLESS OF WORK STATION. PRESENT INFORMATION PROVIDED BY AFPO MORON SPAIN SHOWS THAT 61 EMPLOYEES ARE ON HAND OF WHICH 6 ARE EUROPEANS, WHICH MAY INDICATE OUR EVALUATION FACTOR WAS TOO HIGH.

"E. WE CONSIDERED THAT AN ADDITIONAL MONETARY CONSIDERATION WAS NOT APPROPRIATE FOR THE GERMAN WORKLOAD FOR THESE REASONS, AND SINCE THE GAF REQUIREMENT WAS PUBLICIZED IN APRIL 1968, LITCOM HAD AMPLE OPPORTUNITY TO RAISE THESE QUESTIONS PRIOR TO FINAL NEGOTIATIONS. "6. IT SHOULD BE NOTED THAT LITCOM ORIGINALLY PROPOSED $841,379.00 FOR THE REQUIREMENT AND SUBSEQUENTLY REDUCED THEIR PROPOSAL BY $153,905.10 TO $687,473.90. FEEL IT IS ALMOST LUDICROUS FOR LITCOM TO MAKE SUCH A REDUCTION AND THEN PRODUCE ANOTHER REDUCTION $32,500.00 FOLLOWED BY THE STATEMENT THAT LITCOM BELIEVES ITS PRICE QUOTATION REPRESENTS MINIMAL RESPONSIBLE QUOTATION FOR SATISFACTORY PERFORMANCE OF ALL WORK REQUIREMENTS. IF LITCOM'S REVISION WERE ALLOWED, WE WOULD BE DUTY BOUND TO ALLOW ALL OTHER CONTRACTORS TO REVISE THEIR PROPOSALS. THIS TECHNIQUE IS ALSO PROHIBITED BY ASPR 3- 805.1. ,7. FINALLY, WE NEGOTIATED WITH FOUR (4) CONTRACTORS CONSIDERED TO BE IN THE AREA OF CONSIDERATION. ALL CONTRACTORS WERE AWARE OF THIS COMPETITION AND WERE ALL GIVEN AN OPPORTUNITY TO REVISE THEIR PROPOSALS UNTIL 4:45 P.M. CDT, 5 JUNE 1968. IN ALL FAIRNESS AND PER ASPR WE CANNOT PERMIT CONTRACTORS TO CONTINUE TO MODIFY THEIR PROPOSALS MERELY BECAUSE AN AWARD HAS NOT BEEN MADE OR BECAUSE THEY ARE DISPLEASED WITH THE RESULTS OF AN AWARD; NOR CAN WE ALLOW CONTRACTORS TO DICTATE OUR EVALUATION CRITERIA AS AN AFTERTHOUGHT.'

THE CONTRACTING OFFICER'S STATEMENT REGARDING YOUR MESSAGE OF JUNE 13, 1968 (PARAGRAPH 4 OF HIS REPORT), IS AS FOLLOWS: "RCA - TOTAL PRICE $607,002.00 LITCOM $687,473.90

EVAL. FACTOR 52,200.00

$659,202.00 $687,473.90

ALLEGED MISTAKE -21,500.00

$665,973.90

"EVEN IF THE ALLEGED ARITHMETIC ERROR IN COMPUTATION FOR ITEM 2 IS VALID, LITCOM IS STILL NOT THE LOW OFFEROR. FURTHER, LITCOM'S REEXAMINATION OF DEPLOYMENT OF VANS FOR ITEM 2 WHICH REDUCES THAT ESTIMATE BY $11,000.00 IS A LATE PROPOSAL AND CANNOT BE PERMITTED IN ACCORDANCE WITH OUR SAPIIA MESSAGE 311734Z, MAY 1968 DATED 31 MAY 1968 WHICH STATED -ANY CHANGES IN ITEM PRICES RESULTING FROM NEGOTIATIONS WILL BE ACCEPTED FROM CONTRACTORS IN THE AREA OF CONSIDERATION UNTIL :45 P.M., CDT, 5 JUN 1968. OFFERS MAY BE MODIFIED BY TELEGRAPHIC NOTICE PROVIDED SUCH NOTICE IS RECEIVED PRIOR TO THE HOUR AND DATE SPECIFIED. REQUEST ANY CHANGE BE SUBMITTED BY LINE ITEM AND TOTAL. FOR CHANGES RECEIVED AFTER THE ABOVE DATE AND TIME OR FOR NO CHANGE, THE ORIGINAL PROPOSAL WILL BE USED FOR FINAL EVALUATION.-

"THE ABOVE DETERMINATION IS IN ACCORDANCE WITH ASPR 3-506 AND 3.805.1.'

IN ADDITION TO YOUR CONTENTIONS MENTIONED IN PARAGRAPH 3 OF THE REPORT, YOU HAVE TAKEN ISSUE WITH THE STATEMENT THAT NEGOTIATIONS WERE CONDUCTED WITH THE FOUR CONTRACTORS IN THE AREA OF CONSIDERATION (PARAGRAPH 7). YOU STATE THAT WHILE REPRESENTATIVES OF YOUR COMPANY VISITED THE CONTRACTING OFFICER ON MAY 31, 1968, THE PURPOSE OF THAT MEETING WAS TO DISCUSS MATTERS CONCERNING YOUR THEN CURRENT CONTRACT, AND THAT ALTHOUGH THE SUBJECT PROCUREMENT WAS MENTIONED NO NEGOTIATION OR SUBSTANTIVE DISCUSSIONS OF YOUR PROPOSAL TOOK PLACE AT THAT TIME. YOU HAVE FURNISHED AFFIDAVITS FROM YOUR REPRESENTATIVES TO THAT EFFECT.

IN PRESENTING YOUR CONTENTION THAT THE CONTRACTING OFFICER SHOULD HAVE EVALUATED THE UNSOLICITED PRICE REDUCTION OF $11,000 WHICH WAS SUBMITTED BY YOUR MESSAGE OF JUNE 13, YOU STATE SUCH MODIFICATION WAS RECEIVED PRIOR TO AWARD AND THAT THE ADDITIONAL CRITERIA CONCERNING DELAYS IN THE MAILS AND TELEGRAPH OFFICES, OR IN GOVERNMENT INSTALLATIONS, AS SET OUT IN PROVISIONS (2) AND (3) OF PARAGRAPH 8 (A), STANDARD FORM 33A, JULY 1966, DO NOT RELATE TO MODIFICATIONS OF EXISTING OFFERS UNLESS THE GOVERNMENT ACTUALLY TREATS SUCH A MODIFICATION AS A LATE OFFER WITH PROMPT NOTIFICATION TO THE OFFEROR. YOU SAY THAT YOU WERE NOT NOTIFIED THAT YOUR PRICE REDUCTION WAS TO BE TREATED AS A LATE OFFER, BUT WERE INFORMED INSTEAD THAT IT WOULD BE CONSIDERED IN THE EVALUATION OF ALL PROPOSALS. YOU CITE ASPR 2-303.6 AS THE GOVERNING PROVISION OF THAT REGULATION.

ASPR 2-303.6 PERTAINS TO PROCUREMENT BY FORMAL ADVERTISING RATHER THAN BY NEGOTIATION WHICH IS THE METHOD OF PROCUREMENT HERE INVOLVED. PERTINENT REGULATIONS CONCERNING LATE MODIFICATIONS OF OFFERS OR PROPOSALS ARE CONTAINED IN ASPR 3-506 AND 3-805.1, AS CITED IN THE CONTRACTING OFFICER'S STATEMENT, AND DO NOT PROVIDE FOR EVALUATION OF LATE MODIFICATIONS OR REVISIONS OF PROPOSALS EXCEPT UNDER CIRCUMSTANCES WHICH ARE NOT INVOLVED IN YOUR SITUATION.

FURTHER, WE DO NOT AGREE WITH YOUR CONTENTION THAT THE CRITERIA SET OUT IN PROVISIONS (2) AND (3) OF PARAGRAPH 8 (A), STANDARD FORM 33A, ARE NOT FULLY APPLICABLE TO MODIFICATIONS OF OFFERS. PARAGRAPH (A) SPECIFICALLY REFERS TO "OFFERS AND MODIFICATIONS OF OFFERS" AND WE FIND NOTHING IN THAT PARAGRAPH WHICH DISTINGUISHES BETWEEN THOSE FACTORS IN THE APPLICATION OF THE SUBSEQUENT CRITERIA SHOWN THEREIN. THE CONTRACTING OFFICER'S MESSAGE OF MAY 31, 1968, TO THE FOUR PROSPECTIVE CONTRACTORS SET A SPECIFIC CLOSING TIME ON JUNE 5, 1968, PRIOR TO WHICH OFFERS COULD BE MODIFIED. YOUR OFFER OF A PRICE REDUCTION WAS SUBSEQUENTLY MADE BY TELEGRAM DATED JUNE 13, 1968, AND THEREFORE THE UNTIMELY RECEIPT OF YOUR PROPOSED MODIFICATION WAS DUE SOLELY TO THE TIME OF SENDING RATHER THAN TO ANY OF THE DELAY CRITERIA SET FORTH IN PARAGRAPH 8 (A) WHICH WOULD PERMIT ITS CONSIDERATION. ACCORDINGLY, WE PERCEIVE NO BASIS EITHER UNDER THE SOLICITATION OR PERTINENT REGULATIONS ON WHICH THAT LATE MODIFICATION MAY BE CONSIDERED IN THE EVALUATION OF THE OFFERS RECEIVED, IRRESPECTIVE OF WHETHER YOU WERE PROMPTLY NOTIFIED THAT THE OFFERED REDUCTION WOULD BE TREATED AS A LATE PROPOSAL, OR WHETHER YOU WERE IMPROPERLY INFORMED THAT IT WOULD BE CONSIDERED IN THE EVALUATION OF ALL PROPOSALS.

THE $52,200 EVALUATION FACTOR ADDED TO ALL PROPOSALS EXCEPT THAT OF YOUR FIRM (THE INCUMBENT CONTRACTOR) WAS ESTABLISHED IN PART ON THE BASIS THAT ONE MONTH'S ADDITIONAL SERVICES BY THE INCUMBENT WOULD BE REQUIRED TO MAINTAIN CONTINUITY OF PRODUCTION DURING THE CHANGEOVER PERIOD, AND FOR THE INCUMBENT TO FINALIZE REPORTS, TURN OVER PRODUCTION SCHEDULES, INVENTORY OF EQUIPMENT, ETC., TO THE NEW CONTRACTOR. SUCH FACTOR WAS COMPUTED ON THE BASIS OF AN ESTIMATED $45,000 FOR THE MONTH'S SERVICES, AND, AS STATED IN THE ABOVE REPORT, $7,200 FOR TRANSPORTATION COSTS IN RETURNING AN ESTIMATED 65 UNITED STATES NATIONALS TO THE CONTINENTAL UNITED STATES OF AMERICA. IN SUPPORT OF YOUR CONTENTION THAT AN ADDITIONAL AMOUNT FOR EVALUATION SHOULD HAVE BEEN PRESCRIBED FOR THE GERMAN AIR FORCE (GAF) PORTION OF THE PROCUREMENT WHICH WAS ADDED BY AMENDMENT 0004, YOU HAVE SUBMITTED AN AFFIDAVIT DATED JULY 16, 1968, STATING THAT YOU WOULD INCUR COSTS TOTALING $24,344.17 IN PHASING-OUT YOUR OPERATION ON THE GAF PORTION OF YOUR CONTRACT WHICH EXPIRED ON JUNE 30, 1968. YOU STATE THAT YOU BELIEVE THE PHASE-IN COSTS OF RCA WILL BE SIMILAR IN NATURE, AND THAT RCA WILL ULTIMATELY BILL THOSE COSTS TO THE GOVERNMENT.

WHILE YOU MAY HAVE ACTUALLY INCURRED THE GAF ASSOCIATED COSTS SET OUT IN THE AFFIDAVIT, THE RECORD DOES NOT SHOW THAT THE GOVERNMENT'S TOTAL ADDITIONAL COSTS INCURRED BY AWARD TO A NEW CONTRACTOR MATERIALLY EXCEEDED THE $52,200 SPECIFIED IN THE SOLICITATION AS THE EVALUATION FACTOR. THE ADMINISTRATIVE OFFICE HAS REPORTED THAT IT EXERCISED AN OPTION UNDER YOUR FORMER CONTRACT FOR ONE MONTH'S ADDITIONAL SERVICES BY YOUR COMPANY DURING THE CHANGEOVER PERIOD AT A COST OF $45,000, AND IT IS INDICATED IN THE ABOVE REPORT THAT THE RETURN TRANSPORTATION COSTS OF ALL UNITED STATES NATIONALS EMPLOYED BY YOU ON BOTH THE USAF AND GAF PORTIONS OF YOUR CONTRACT MAY BE LESS THAN THE ESTIMATED $7,200. REGARDING YOUR BELIEF THAT RCA WILL INCUR SUBSTANTIAL PHASE IN COSTS FOR THE GAF WORKLOAD, AND THAT THE GOVERNMENT WILL SOMEHOW PAY SUCH COSTS, WE FIND NO BASIS FOR REJECTING THE CONTRACTING OFFICER'S CONCLUSION THAT THOSE COSTS WOULD BE NOMINAL IN AMOUNT, AND YOUR OPINION THAT THE GOVERNMENT WILL SOMEHOW PAY THOSE COSTS IS CONSIDERED TO BE MERE SPECULATION WHICH COULD NOT SERVE AS A BASIS FOR ESTABLISHING SUCH COSTS AS AN EVALUATION FACTOR. IN ANY EVENT, SINCE $52,200 WAS SPECIFIED AS THE AMOUNT TO BE USED IN EVALUATING THE PROPOSALS OF NEW CONTRACTORS, ADDITIONAL AMOUNTS MAY NOT NOW BE ADDED TO SUCH EVALUATION FIGURE AS IT IS WELL SETTLED THAT OFFERS MUST BE EVALUATED ON THE BASIS STATED IN THE SOLICITATION.

INASMUCH AS WE DO NOT CONCUR IN EITHER YOUR CONTENTION THAT THE NEW CONTRACTOR EVALUATION FACTOR SHOULD BE INCREASED BECAUSE OF THE GAF WORKLOAD, OR THAT THE LATE MODIFICATION OF YOUR PRICE SHOULD HAVE BEEN CONSIDERED IN EVALUATING YOUR OFFER, THE QUESTION OF WHETHER YOU SHOULD BE PERMITTED TO REDUCE YOUR OFFER $21,500 FOR AN ALLEGED ERROR IN THE COMPUTATION OF YOUR PRICE IS REGARDED AS ACADEMIC, SINCE SUCH A REDUCTION, IF ALLOWED, WOULD NOT CHANGE THE RELATIVE STANDING OF YOUR OFFER.

CONCERNING YOUR STATEMENT THAT NO NEGOTIATION OR SUBSTANTIVE DISCUSSIONS OF YOUR PROPOSAL TOOK PLACE AT YOUR CONFERENCE WITH THE CONTRACTING OFFICER ON MAY 31, THE TERM "NEGOTIATE" IS DEFINED IN 10 U.S.C. 2302 AS MEANING "MAKE WITHOUT FORMAL ADVERTISING," AND 10 U.S.C. 2304 (G) PROVIDES THAT IN CERTAIN NEGOTIATED PROCUREMENTS WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE. WHILE "NEGOTIATION" GENERALLY IMPLIES A SERIES OF OFFERS AND COUNTEROFFERS UNTIL A MUTUALLY SATISFACTORY AGREEMENT IS CONCLUDED BY THE PARTIES (45 COMP. GEN. 417, 427), SUCH A MEANING IS NOT DENOTED IN THE ABOVE STATUTORY PROVISIONS, AND IT DOES NOT APPEAR THAT A SERIES OF OFFERS AND COUNTEROFFERS IS ESSENTIAL TO COMPLIANCE WITH THE REQUIREMENTS OF THOSE PROVISIONS. IN THE IMPLEMENTING REGULATIONS (ASPR 3 -804) THE OBJECTIVE OF THE CONTRACT NEGOTIATIONS IS STATED TO BE THE COMPLETE AGREEMENT OF THE PARTIES ON ALL BASIC ISSUES, AND THAT ORAL DISCUSSIONS OR WRITTEN COMMUNICATIONS SHALL BE CONDUCTED WITH OFFERORS TO THE EXTENT NECESSARY TO RESOLVE UNCERTAINTIES RELATING TO THE PURCHASE OR THE PRICE TO BE PAID. IN THE CONTRACTING OFFICER'S NEGOTIATION MEMORANDUM IT IS STATED THAT NEGOTIATION CONFERENCES WERE HELD WITH FEDERAL ELECTRIC CORPORATION, BENDIX, RCA AND LITTON ON MAY 27, 28, 29 AND 31, 1968, RESPECTIVELY, AND THAT THE FOLLOWING POINTS WERE DISCUSSED WITH ALL PROSPECTIVE CONTRACTORS:

"1. FY69 FUNDS WILL NOT BE AVAILABLE UNTIL THE MIDDLE OF JUL 1968.

"2. THE 5 MONTH CYCLE FOR CALIBRATION HAS BEEN IMPLEMENTED; THEREFORE, WE ARE NOW INTERESTED IN THE LARGER QUANTITIES OF ITEMS 1 THROUGH 4. EVALUATION WILL BE MADE ON A LARGER QUANTITY ONLY.

"3. WE ARE INTERESTED IN DATA ITEMS A001 AND A002 ONLY. DATA ITEM A003 (UL-22) WILL BE DELETED.

"4. IS THE CALIBRATION ENGINEER INCLUDED IN THE TOTAL CITED IN ITEM 14AA?

"5. ITEM 7 - MAN DAY RATE FOR COURIER SERVICES WILL NOT BE FUNDED AND, THEREFORE, WAS NOT USED IN EVALUATION.

"6. COMMERCIAL TRANSPORTATION CITED UNDER ITEM 13 WILL BE FURTHER LIMITED TO COMMERCIAL AIR FORCE - TOURIST CLASS IF AVAILABLE.

"7. ANY REFERENCE TO MATS SHOULD READ MAC SPECIFICALLY IN PART III OF SECTION I.

"8. IN OUR OPINION, ITEM 1 WAS MOST LIKE ITEM 3; AND ITEM 2 WAS MOST LIKE ITEM 14AA FOR WORK REQUIREMENTS AND STAFFING PURPOSES. OVERALL STAFFING OF USAF AND GAF REQUIREMENTS WERE ALSO DISCUSSED.

"9. ITEM 14AA - PME SERVICES FOR THE GERMAN AIR FORCE IS FUNDED SEPARATELY AND ANY ADMINISTRATIVE COSTS IN ITEMS 1 THROUGH 8 (USAF) MUST BE TRANSFERRED TO ITEM 14AA. ITEM 14AA MUST BE PRICED INDEPENDENTLY OF ALL OTHER ITEMS USING CONTRACTOR'S BEST ESTIMATE, ALTHOUGH IT IS RECOGNIZED THAT SOME TASKS WILL BE OVERLAPPING.

"10. TAXES - CONTINGENCIES FOR FOREIGN TAXES WERE DISCUSSED WITH ALL CONTRACTORS EXCEPT LITTON, WHO DID NOT TAKE EXCEPTION TO ASPR 11 403.2.

"11. WE ADVISED THAT ANY REVISION TO PROPOSALS WOULD BE ACCEPTED BY TELEGRAPHIC MESSAGE UNTIL 4:45 P.M. 5 JUN 1968. OUR TWX NO. IS 910 871- 1193. "IN ADDITION TO THE ABOVE, THE FOLLOWING POINTS RECEIVED SPECIAL EMPHASIS:

* * * * * * * "LITTON - IT WAS NOTED THAT LITTON QUOTED SAME PRICE FOR DATA ITEMS A001 AND A002 AS FOR A001 AND A003, ALTHOUGH A003 IS CONSIDERED TO BE MORE COMPREHENSIVE THAN A002. ALTHOUGH LITTON HAD TAKEN NO EXCEPTION TO ASPR TAX CLAUSE 11-403.2, IT WAS ESTABLISHED THAT NO FOREIGN TAXES WERE INCLUDED IN THEIR PROPOSAL. AS THE INCUMBENT WITH SATISFACTORY PRODUCTION AND QUALITY, EXPLANATION OF WORK REQUIREMENTS AND STAFFING WERE NOT CONSIDERED NECESSARY.'

SINCE SUCH DISCUSSIONS APPEAR TO HAVE BEEN CONDUCTED UNIFORMLY WITH ALL OFFERORS WHO SUBMITTED PROPOSALS WITHIN A COMPETITIVE RANGE, AND WERE ADEQUATE TO COMPLY WITH THE PERTINENT STATUTORY AND REGULATORY REQUIREMENTS, WE ARE UNABLE TO CONCLUDE THAT THE NEGOTIATION PROCEDURES FOLLOWED PRESENT ANY BASIS ON WHICH TO QUESTION THE VALIDITY OF THE CONTRACT AWARDED.