B-164775, AUG. 27, 1968

B-164775: Aug 27, 1968

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INCORPORATED: REFERENCE IS MADE TO YOUR LETTER OF JULY 1. WAS ISSUED ON MAY 2. THE TECHNICAL PROPOSALS IN THE FIRST STEP WERE TO BE SUBMITTED BY JUNE 3. THREE PROPOSALS WERE RECEIVED. THE PLATFORM SUBSYSTEM WAS TENTATIVELY FOUND UNACCEPTABLE IN THAT AS SET FORTH IN THE PROPOSAL IT REQUIRED OUTSIDE INPUTS FOR HEADING. AMBAC WAS REQUESTED TO CLARIFY WHETHER INPUTS WERE TO BE SUPPLIED FROM EXTERNAL SOURCES. THE PROPOSAL WAS DECLARED UNACCEPTABLE BY A LETTER OF JUNE 21. THE POSITION TAKEN BY AMBAC IN THESE CONTACTS WAS THAT THEY SHOULD BE PERMITTED TO BID UNDER THE SECOND STEP OF THE ADVERTISEMENT AS THEIR PRODUCT WOULD SATISFY THE ACCURACY STANDARDS OF THE REQUEST FOR PROPOSALS WITHOUT EXTERNAL INPUTS.

B-164775, AUG. 27, 1968

TO AMBAC INDUSTRIES, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF JULY 1, 1968, SETTING FORTH YOUR PROTEST UNDER REQUEST FOR PROPOSALS NO. N62306-68-R-0144, ISSUED BY THE UNITED STATES NAVAL OCEANOGRAPHIC OFFICE.

THE REQUEST FOR PROPOSALS, UNDER THE TWO-STEP FORMAL ADVERTISING PROCEDURE, WAS ISSUED ON MAY 2, 1968, FOR THE ACQUISITION OF TWO OCEAN GRAVITY METER SYSTEMS WITH AN OPTION FOR ONE ADDITIONAL UNIT, ENGINEERING DRAWINGS, A TRAINING COURSE, AND A SPARE PART PROVISION OPTION. THE TECHNICAL PROPOSALS IN THE FIRST STEP WERE TO BE SUBMITTED BY JUNE 3, 1968. THREE PROPOSALS WERE RECEIVED. AMBAC PROPOSED A SYSTEM CONSISTING OF THREE BASIC SUBSYSTEMS; A GRAVITY SENSOR SUBSYSTEM, A PLATFORM SUBSYSTEM, AND A DATA PROCESSING AND DISPLAY SUBSYSTEM. IN EVALUATING THE AMBAC PROPOSAL THE CONTRACTING OFFICER FOUND THE FIRST AND THIRD SUBSYSTEMS OF THE PROPOSAL SATISFACTORY. HOWEVER, THE PLATFORM SUBSYSTEM WAS TENTATIVELY FOUND UNACCEPTABLE IN THAT AS SET FORTH IN THE PROPOSAL IT REQUIRED OUTSIDE INPUTS FOR HEADING, VELOCITY, AND LATITUDE FROM DEVICES ABOARD VESSELS TO MEET THE REQUIREMENT OF BEING ABLE TO RETURN TO FULL OPERATION CAPABILITY WITHIN ONE MINUTE AFTER COMPLETION OF A CHANGE IN THE SHIP'S COURSE OR SPEED. BY TELEGRAM OF JUNE 12, 1968, AMBAC WAS REQUESTED TO CLARIFY WHETHER INPUTS WERE TO BE SUPPLIED FROM EXTERNAL SOURCES, AND BY A TELEGRAM ON JUNE 14, 1968, THE COMPANY STATED THAT ITS PROPOSAL REQUIRED INPUTS FROM OUTSIDE SOURCES. ACCORDINGLY, THE PROPOSAL WAS DECLARED UNACCEPTABLE BY A LETTER OF JUNE 21, 1968. SUBSEQUENT TO THAT DETERMINATION CORRESPONDENCE AND CONFERENCES TOOK PLACE BETWEEN THE GOVERNMENT AND AMBAC. THE POSITION TAKEN BY AMBAC IN THESE CONTACTS WAS THAT THEY SHOULD BE PERMITTED TO BID UNDER THE SECOND STEP OF THE ADVERTISEMENT AS THEIR PRODUCT WOULD SATISFY THE ACCURACY STANDARDS OF THE REQUEST FOR PROPOSALS WITHOUT EXTERNAL INPUTS, ALTHOUGH SUCH WERE NECESSARY TO MEET THE HIGHER DEGREE OF ACCURACY SET FORTH IN THEIR PROPOSAL, AND THAT IF REQUIRED AMBAC SHOULD BE PERMITTED TO MODIFY THE PLATFORM SUBSYSTEM TO QUALIFY THEIR PROPOSAL. THE GOVERNMENT'S POSITION WAS THAT AS PRESENTED THE TECHNICAL PROPOSAL OF AMBAC WAS UNACCEPTABLE AND WOULD REQUIRE A MAJOR REVISION TO BECOME ACCEPTABLE. THEREFORE, AMBAC WAS DENIED AN OPPORTUNITY TO QUOTE A PRICE UNDER THE SECOND STEP. AMBAC PROTESTED THIS REFUSAL PLUS THE FAILURE OF THE CONTRACTING OFFICER TO FULLY EXPLAIN IN THE TELEGRAM OF JUNE 12, 1968, THE REASON WHY INFORMATION WAS BEING REQUESTED AS TO NEED FOR INPUTS FROM OUTSIDE SOURCES.

ARMED SERVICES PROCUREMENT REGULATION 2-503.1 (A) (VIII) DOES PROVIDE AUTHORITY FOR THE CONTRACTING OFFICER TO REQUEST ADDITIONAL INFORMATION FROM OFFERORS TO CLARIFY OR SUPPLEMENT OFFERS WHEN NECESSARY TO OBTAIN ADEQUATE PRICE COMPETITION OR OTHERWISE IN THE GOVERNMENT'S BEST INTEREST. HOWEVER, THAT REGULATION ALSO PROVIDES IN PART: "* * * THE GOVERNMENT MAY, IN ITS SOLE DISCRETION, REQUEST ADDITIONAL INFORMATION FROM OFFERORS OF PROPOSALS WHICH THE GOVERNMENT CONSIDERS REASONABLY SUSCEPTIBLE OF BEING MADE ACCEPTABLE BY ADDITIONAL INFORMATION CLARIFYING OR SUPPLEMENTING BUT NOT BASICALLY CHANGING ANY PROPOSAL SUBMITTED * * *.' THE REGULATION DOES NOT GIVE THE OFFEROR THE RIGHT TO MODIFY HIS OFFER AT WILL AND TO ANY DEGREE. RATHER THE USE OF TWO-STEP FORMAL ADVERTISING AS A PROCUREMENT METHOD WAS DESIGNED TO OBTAIN THE BENEFITS OF FORMAL ADVERTISING. SEE ASPR 2 501. INHERENT TO THE CONCEPT OF FORMAL ADVERTISING IS THE FUNDAMENTAL REQUIREMENT THAT ALL OFFERORS BE TREATED EQUALLY ON AN ESTABLISHED AND KNOWN BASIS. IN THE PRESENT INSTANCE, THE CONTRACTING OFFICER AND HIS TECHNICAL PERSONNEL DETERMINED THAT THE PROPOSAL BY AMBAC WAS UNACCEPTABLE AND COULD NOT BE CLARIFIED OR SUPPLEMENTED BY ADDITIONAL INFORMATION TO BECOME ACCEPTABLE UNLESS THE PROPOSAL WAS BASICALLY CHANGED. THIS DETERMINATION IS BY THE EXPRESS TERMS OF THE REGULATION IN THE SOLE DISCRETION OF THE GOVERNMENT. AS WE STATED IN 40 COMP. GEN. 35, AT PAGE 38:

"UNDER THESE REGULATIONS, THE DETERMINATION OF THE ACCEPTABILITY OF TECHNICAL PROPOSALS IS VESTED IN THE PROCUREMENT OFFICIALS WHO ARE BEST QUALIFIED TO EVALUATE THEM.' THIS OFFICE WILL NOT OBJECT TO THE DETERMINATION BY THE TECHNICAL PERSONNEL THAT A PROPOSAL IS UNACCEPTABLE AND NOT SUSCEPTIBLE OF BEING MADE ACCEPTABLE, UNLESS IT IS CLEARLY SHOWN THAT THE DETERMINATION WAS ARBITRARY OR CAPRICIOUS OR MADE IN BAD FAITH. SEE B-161613, AUGUST 28, 1967, AND B-160006, DECEMBER 22, 1966. IN THIS CASE, WE HAVE BEEN UNABLE TO FIND ANY SUCH EVIDENCE.

FURTHER, THIS OFFICE CANNOT CONCLUDE THAT THE TELEGRAM OF JUNE 12, 1968, WHILE LACKING TO SOME DEGREE IN CLARITY AS TO ITS PURPOSE, AFFORDS ANY BASIS FOR OBJECTING TO THE PROCUREMENT ACTIONS OF THE CONTRACTING OFFICER. THAT TELEGRAM NEED NOT HAVE BEEN SENT AND, REGARDLESS OF CLARITY OF PURPOSE, THE RESPONSE THERETO WAS NOT CONSIDERED DETERMINATIVE AS TO THE ACCEPTABILITY OF AMBAC'S PROPOSAL.

ACCORDINGLY, THE PROTEST AGAINST THE REJECTION OF YOUR TECHNICAL PROPOSAL BY THE NAVAL OCEANOGRAPHIC OFFICE MUST BE DENIED.