B-164925, NOV. 8, 1968

B-164925: Nov 8, 1968

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AN OFFEROR'S BRIEFING WAS HELD ON MARCH 25 AT THE SACRAMENTO AIR MATERIEL AREA. OFFERORS WERE REQUESTED TO SUBMIT THEIR TECHNICAL AND PRICE PROPOSALS AT THE SAME TIME BUT IN SEPARATE DOCUMENTS. WERE INFORMED THAT TECHNICAL PROPOSALS WOULD BE EVALUATED SEPARATELY FROM THE PRICE PROPOSALS. A TECHNICAL EVALUATION BOARD WAS CONVENED AND PERFORMED AN EVALUATION OF THE TECHNICAL PROPOSALS WITHOUT ANY KNOWLEDGE OF THE PRICES SUBMITTED. WERE DETERMINED TO BE TECHNICALLY UNACCEPTABLE BY THE BOARD. THE THIRD-LOW PROPOSAL WAS SUBMITTED BY KENTRON-HAWAII IN THE AMOUNT OF $906. 477.20 AND WAS DETERMINED TO BE TECHNICALLY ACCEPTABLE. 341.74 RANKED SEVENTH AND WAS DETERMINED TO BE TECHNICALLY ACCEPTABLE.

B-164925, NOV. 8, 1968

TO HUDSON AND CREYKE:

WE REFER TO YOUR LETTER OF JULY 23, 1968, AND SUBSEQUENT COMMUNICATIONS AS ATTORNEYS FOR AKWA-DOWNEY CONSTRUCTION COMPANY, PROTESTING THE AWARD OF A CONTRACT TO KENTRON-HAWAII, LIMITED, FOR AIR FORCE REQUIREMENTS FOR ENGINEERING AND INSTALLATION SERVICES IN CONNECTION WITH COMMUNICATIONS, ELECTRONICS AND METEOROLOGICAL SYSTEMS AND/OR FACILITIES IN THE STATE OF HAWAII AND OTHER LOCATIONS IN THE PACIFIC AREA DURING THE PERIOD OF ONE YEAR FROM DATE OF CONTRACT, UNDER REQUEST FOR PROPOSAL NO. F04606-68-R- 0543 ISSUED MARCH 13, 1968.

AN OFFEROR'S BRIEFING WAS HELD ON MARCH 25 AT THE SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, CALIFORNIA. OFFERORS WERE REQUESTED TO SUBMIT THEIR TECHNICAL AND PRICE PROPOSALS AT THE SAME TIME BUT IN SEPARATE DOCUMENTS, AND WERE INFORMED THAT TECHNICAL PROPOSALS WOULD BE EVALUATED SEPARATELY FROM THE PRICE PROPOSALS. OF THE 71 SOURCES SOLICITED, 13 OFFERORS SUBMITTED PROPOSALS AT THE CLOSING DATE, APRIL 22, 1968. A TECHNICAL EVALUATION BOARD WAS CONVENED AND PERFORMED AN EVALUATION OF THE TECHNICAL PROPOSALS WITHOUT ANY KNOWLEDGE OF THE PRICES SUBMITTED. EIGHT OF THE PROPOSALS, INCLUDING THOSE OFFERING THE TWO LOWEST PRICES -- REGIONAL COMMUNICATIONS, INC., $701,878, AND AKWA-DOWNEY, $789,930 -- WERE DETERMINED TO BE TECHNICALLY UNACCEPTABLE BY THE BOARD. THE THIRD-LOW PROPOSAL WAS SUBMITTED BY KENTRON-HAWAII IN THE AMOUNT OF $906,477.20 AND WAS DETERMINED TO BE TECHNICALLY ACCEPTABLE. THE PROPOSAL OF THE INCUMBENT CONTRACTOR, BENDIX FIELD ENGINEERING CORPORATION, IN THE AMOUNT OF $1,308,341.74 RANKED SEVENTH AND WAS DETERMINED TO BE TECHNICALLY ACCEPTABLE. PROPOSAL PRICES CONSISTED OF MANDAY RATES FOR SEVEN CLASSIFICATIONS OF WORK, AND A DRAFTING UNIT RATE QUOTED FOR PREPARATION OF AN ESTIMATED 26,600 UNITS OF ENGINEERING DRAWINGS, RECORD DRAWINGS AND REVISIONS THERETO, AND OFFERS WERE EVALUATED ON ESTIMATED QUANTITIES STATED IN THE SOLICITATION FOR THE SEVERAL CLASSIFICATIONS OF WORK AND SERVICES.

DISCUSSIONS WERE CONDUCTED WITH REGIONAL, AKWA-DOWNEY AND KENTRON WHOSE PRICES WERE CONSIDERED TO BE WITHIN A COMPETITIVE RANGE. IT IS REPORTED THAT THE PURPOSE OF THE MEETING WITH REGIONAL AND AKWA-DOWNEY ON JUNE 13 AND 14, 1968, RESPECTIVELY, WAS TO REQUEST CLARIFICATION FROM THE TWO OFFERORS REGARDING THE UNACCEPTABLE ASPECTS OF THEIR TECHNICAL PROPOSALS AS WELL AS TO DISCUSS THE PROPOSED RATES TO DETERMINE THAT THE OFFERORS COMPLETELY UNDERSTOOD THE ELEMENTS ON WHICH THEY WERE PROPOSING. THE NEGOTIATING OFFICER STATES THAT THE RATES, GENERALLY, WERE CONSIDERED MUCH LOWER THAN THE GOVERNMENT'S EXPERIENCE IN THE PACIFIC AREA HAD INDICATED, AND THAT THE INCUMBENT CONTRACTOR HAD BEEN ENCOUNTERING DIFFICULTIES IN OBTAINING QUALIFIED PERSONNEL AT HIS MANDAY RATES. REGIONAL SUBMITTED REVISED PRICE RATES AT THE MEETING ON JUNE 13 WHICH RATES WERE CONFIRMED ON JUNE 21 WHEN AN AMENDMENT TO ITS TECHNICAL PROPOSAL WAS SUBMITTED. AKWA-DOWNEY AMENDED ITS TECHNICAL PROPOSAL AND PRICE RATES ON JUNE 18, 1968. THE AMENDMENTS SUBMITTED BY REGIONAL AND AKWA-DOWNEY TO THEIR TECHNICAL PROPOSALS WERE REVIEWED BY THE TECHNICAL EVALUATION BOARD AND IN NEITHER INSTANCE DID THE AMENDMENTS PROVE SUFFICIENT TO RAISE THE TECHNICAL EVALUATION FROM UNACCEPTABLE TO ACCEPTABLE. HOWEVER, THE REVISED PRICE RATES MADE REGIONAL THIRD-LOW ($1,054,096.60), AND AKWA- DOWNEY FIFTH-LOW ($1,167,447.74). A MEETING HAD BEEN HELD WITH KENTRON ON MAY 6 TO CLARIFY MINOR TECHNICAL POINTS, AND TO DISCUSS ITS PROPOSED PRICE RATES TO INSURE THAT KENTRON HAD INCLUDED ALL APPLICABLE FACTORS IN THE RATES QUOTED WHICH WERE A MATTER OF PRIME CONCERN TO THE PURCHASING ACTIVITY SINCE, AS IN THE CASES OF REGIONAL AND AKWA DOWNEY, THEY WERE LOWER THAN ANTICIPATED AND THERE WAS QUESTION AS TO WHETHER THE RATES WERE ALL-INCLUSIVE IN ACCORDANCE WITH THE RFP. THAT FIRM DID NOT REVISE ITS RATES AND SUBSEQUENTLY CONFIRMED THOSE RATES AS BEING FIRM AND APPLYING FOR THE LIFE OF THE CONTRACT.

AFTER THE ABOVE DISCUSSIONS, THE PURCHASING ACTIVITY PROCEEDED TO PROCESS AN AWARD TO KENTRON. ON JULY 3, 1968, AKWA-DOWNEY SUBMITTED A TELEGRAM REDUCING ITS RATES, AS REVISED ON JUNE 18, BY 20 PERCENT DUE TO A STATED DISCOVERY OF AN ERROR (DUPLICATION OF OVERHEAD FACTOR). THE AMOUNT OF THE REDUCTION WAS INSUFFICIENT TO MAKE AKWA-DOWNEY'S PRICE ($934,042.58) LOWER THAN KENTRON'S ($906,477.20), AND AWARD WAS MADE WITHOUT FURTHER DISCUSSIONS ON JULY 11, 1968, TO KENTRON, THE LOW RESPONSIVE AND RESPONSIBLE OFFEROR AT THAT TIME.

YOU FIRST PROTESTED THE AWARD ON THE BASIS THAT ALTHOUGH AKWA-DOWNEY HAD BEEN INFORMED THAT IT WAS TECHNICALLY QUALIFIED TO PERFORM THE CONTRACT, IT WAS URGED, ENCOURAGED AND INDUCED TO INCREASE ITS VARIOUS PRICE RATES, AND IN PARTICULAR THE UNIT RATE FOR DRAFTING SERVICES, WHICH WAS MORE THAN SUFFICIENT TO ACCOUNT FOR THE PRICE DIFFERENTIAL BETWEEN AKWA-DOWNEY'S AND KENTRON'S LAST OFFERS. IN THAT CONNECTION YOU CONTEND THAT THE GOVERNMENT NEGOTIATORS STATED IN THE MEETING WITH AKWA-DOWNEY ON JUNE 14 THAT ITS DRAFTING UNIT RATE OF $8 WAS FAR BELOW THE RATE EXPECTED AND THAT SUCH STATEMENT WAS MADE AT A TIME WHEN THE GOVERNMENT HAD ON HAND AN OFFER FROM REGIONAL AT $1.75 (ACTUALLY $2.55, AS REVISED FROM $1.25), AN OFFER FROM KENTRON AT $4.90, AND HAD BEEN PAYING BENDIX, THE PREVIOUS CONTRACTOR, A PRICE OF $7.50 FOR THE SAME WORK (THE ORIGINAL PRICES QUOTED RANGED FROM $1.25 TO $23). YOU SAY THAT THE AWARD WAS NOT BASED ON OPEN COMPETITION FAIRLY UNDERSTOOD BY ALL PARTIES AS THE GOVERNMENT MISLED SOME PARTIES AS TO THE PRICING, COST AND COMPETITIVE SITUATION, WHICH AMOUNTED TO A "REVERSE" AUCTION TECHNIQUE, AND THAT NEGOTIATIONS WERE NOT CONDUCTED ON A FAIR AND EQUAL BASIS WITH ALL SELECTED OFFERORS WHO HAD BEEN DETERMINED TO BE QUALIFIED.

AS INDICATED ABOVE, THE ADMINISTRATIVE REPORT SUBMITTED TO THIS OFFICE (A COPY OF WHICH WAS FURNISHED YOU) SETS OUT THAT AKWA-DOWNEY'S PROPOSAL WAS NOT TECHNICALLY ACCEPTABLE. IN COMMENTING ON THAT REPORT YOU STATE THAT AT NO TIME WAS AKWA-DOWNEY INFORMED THAT ITS PROPOSAL WAS NOT ACCEPTABLE, EITHER INITIALLY OR AFTER IT WAS AMENDED, BUT WAS GIVEN A VERY DEFINITE CONTRARY IMPRESSION BY THE NEGOTIATING TEAM.

WITH RESPECT TO YOUR STATEMENT THAT AKWA-DOWNEY HAD BEEN INFORMED THAT IT WAS TECHNICALLY QUALIFIED, THE CONTRACTING OFFICER HAS REPORTED:

"NEGOTIATIONS WERE HELD ON 14 JUNE 1968 WITH AKWA-DOWNEY CONSTRUCTION COMPANY. SEE TAB K FOR MINUTES OF MEETING AND SUBSEQUENT CORRESPONDENCE. THE CIRCUMSTANCES WERE ESSENTIALLY THE SAME AS THOSE ENCOUNTERED WITH REGIONAL COMMUNICATIONS, EXCEPT AT THIS POINT AKWA DOWNEY WAS SECOND AS TO PRICE COMPETITION. AFTER THE AREAS OF CONCERN WERE DISCUSSED, THEY WERE REQUESTED TO SUBMIT AN AMENDMENT TO THEIR PROPOSAL CLARIFYING AREAS THAT WERE CONSIDERED UNACCEPTABLE BY THE EVALUATION BOARD. AT NO TIME WAS AKWA -DOWNEY TOLD THEY WERE TECHNICALLY QUALIFIED TO PERFORM THE PROPOSED CONTRACT AS THEY ALLEGE. IN FACT, THE PRIMARY PURPOSE OF THE MEETING WAS TO REQUEST CLARIFICATION FROM THE CONTRACTOR IN ORDER TO SATISFY THE AIR FORCE TEAM THAT THE CONTRACTOR UNDERSTOOD THE REQUIREMENT AND WAS QUALIFIED TO PERFORM. HOWEVER, IN THE DISCUSSIONS REGARDING THE TECHNICAL ASPECTS OF THE CONTRACTOR'S PROPOSAL, THE NEGOTIATOR AND AIR FORCE TEAM FELT IT WAS ONLY APPROPRIATE TO DISCUSS THE PROPOSED RATES AS FROM PAST EXPERIENCE THEY APPEARED TO BE UNREALISTICALLY LOW. DURING GENERAL DISCUSSION IT WAS EVIDENT THAT SEVERAL ELEMENTS OF COST WERE NOT INCLUDED IN THE INITIAL PROPOSED RATES. THE AIR FORCE TEAM POINTED OUT SEVERAL AREAS TO INSURE THAT THE CONTRACTOR UNDERSTOOD THE NECESSARY ELEMENTS TO FORMULATE A RATE. UPON CONCLUSION OF THE NEGOTIATION, AKWA-DOWNEY STATED THEY WOULD SUBMIT AN AMENDMENT TO THEIR PROPOSAL ON 18 JUNE 1968 COVERING THE POINTS DISCUSSED, AND INDICATED THEY WOULD ALSO REVIEW THEIR PROPOSED RATES.

"A. THE AMENDMENT TO THE TECHNICAL PROPOSAL WAS SUBMITTED BY THE OFFEROR AND REVIEWED BY THE TECHNICAL EVALUATION BOARD. IT WAS DETERMINED THAT THE ADDITIONAL INFORMATION WAS NOT ADEQUATE TO CHANGE THE BOARD'S RATING OF THE TECHNICAL PROPOSAL AND IT REMAINED UNACCEPTABLE.

"B. THE OFFEROR ALSO SUBMITTED REVISED RATES AS PART OF HIS AMENDMENT. (SEE TAB K). THESE RATES WERE EVALUATED IN ACCORDANCE WITH THE TERMS OF THE RFP WHICH PLACED AKWA-DOWNEY FIFTH, INSTEAD OF SECOND, AS TO PRICE.'

IN CONNECTION WITH THE ABOVE DETERMINATIONS OF TECHNICAL UNACCEPTABILITY BY THE EVALUATION BOARD, IT IS NOTED THAT OF THE 13 TECHNICAL PROPOSALS SUBMITTED REGIONAL'S PROPOSAL AS ORIGINALLY SUBMITTED RANKED SEVENTH WITH A SCORE OF 576.1 OUT OF A POSSIBLE MAXIMUM SCORE OF 1,000, AND AKWA- DOWNEY'S PROPOSAL RANKED NINTH WITH A SCORE OF 431.2. KENTRON'S SCORE WAS 892.5, AND FOUR OTHER OFFERORS SCORED IN EXCESS OF 800. AS STATED PREVIOUSLY, THE EVALUATION OF PROPOSALS WAS CONDUCTED BY THE BOARD WITHOUT KNOWLEDGE OF THE PRICES OFFERED, AND NO EVIDENCE HAS BEEN PRESENTED WHICH PURPORTS TO SHOW THAT THE BOARD'S EVALUATION WAS UNREASONABLE OR INFLUENCED BY PREJUDICE OR BIAS TOWARDS REGIONAL OR AKWA-DOWNEY.

WE HAVE REPEATEDLY RECOGNIZED IN A LONG LINE OF DECISIONS THAT THE EVALUATION OF TECHNICAL PROPOSALS AND THE DETERMINATION OF THEIR ACCEPTABILITY OR UNACCEPTABILITY, INVOLVING THE EXPERT JUDGMENT OF TECHNICAL PERSONNEL, ARE PRIMARILY THE RESPONSIBILITY OF THE PROCURING AGENCY. ALSO, IT IS EQUALLY WELL ESTABLISHED THAT WE WILL NOT QUESTION THE TECHNICAL CONCLUSIONS OF THE ADMINISTRATIVE EXPERTS UNLESS THERE IS CLEAR EVIDENCE OF FRAUD OR ABUSE OF AUTHORITY OR ARBITRARY ACTION, NONE OF WHICH ARE EVIDENCED HERE. WHILE IT APPEARS, AS YOU CONTEND, THAT AKWA- DOWNEY WAS NOT SPECIFICALLY NOTIFIED PRIOR TO AWARD THAT ITS PROPOSAL HAD BEEN DETERMINED TO BE UNACCEPTABLE, EITHER INITIALLY OR AFTER IT WAS AMENDED, PARAGRAPH 3-508.2 OF THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES THAT SUCH NOTICE NEED NOT BE GIVEN WHERE THE PROPOSED CONTRACT IS TO BE AWARDED WITHIN A FEW DAYS AND THE POST-AWARD NOTICE TO OFFERORS THAT THEIR PROPOSALS WERE NOT ACCEPTED WILL SUFFICE. SUCH PARAGRAPH ALSO PROVIDES THAT WHEN PRE AWARD NOTICE IS GIVEN AN OFFEROR THAT ITS PROPOSAL IS UNACCEPTABLE, THE OFFEROR SHALL BE ADVISED THAT SINCE FURTHER NEGOTIATION WITH HIM CONCERNING THE PROCUREMENT IS NOT CONTEMPLATED A REVISION OF HIS PROPOSAL WILL NOT BE CONSIDERED.

ACCORDINGLY, INASMUCH AS AKWA-DOWNEY'S OFFER, AS AMENDED AFTER DISCUSSION, WAS EVALUATED AS STILL BEING TECHNICALLY UNACCEPTABLE, AWARD COULD NOT HAVE BEEN MADE TO IT, IRRESPECTIVE OF ITS PRICE, AND YOUR PROTEST MUST BE DENIED.

WITH RESPECT TO YOUR CONTENTIONS OF UNFAIRNESS AND PREFERENTIAL TREATMENT, WE NOTE THAT THE FOLLOWING EXPLANATION WAS GIVEN BY AKWA DOWNEY FOR INCREASING ITS EVALUATED PRICE FROM $789,930 TO $1,167,447.74 UNDER ITS AMENDMENT OF JUNE 18: "THESE PRICES ARE ALL INCLUSIVE WITH THE EXCEPTION OF TRANSPORTATION WHICH SHALL BE FURNISHED BY THE GOVERNMENT. "THE CHANGES IN RATES WERE REQUIRED BY THE ADDITIVE KNOWLEDGE AS TO THE EXTENT OF TRAVEL REQUIRED AND THE DESIRE OF THE GOVERNMENT TO REQUIRE THE USE OF INK AND LINEN FOR DRAFTING.'

WHILE THERE IS NO DOUBT THAT AKWA-DOWNEY INCREASED ITS PRICE AS A RESULT OF THE MEETING OF JUNE 14, THE STATEMENT QUOTED ABOVE DOES NOT SUPPORT YOUR CHARGES, OR CREATE ANY PRESUMPTION, OF UNFAIRNESS OR UNWARRANTED ACTIONS BY THE GOVERNMENT NEGOTIATORS. ON THE CONTRARY, IT WOULD APPEAR TO INDICATE THAT THE PRICE INCREASES WERE MADE AS THE RESULT OF A FULLER UNDERSTANDING OF THE REQUIREMENTS AND UNIQUE CONDITIONS AND CIRCUMSTANCES INVOLVED IN PERFORMING THE CONTRACT WORK, AND WE DO NOT UNDERSTAND THAT YOU CHALLENGE THE ACCURACY OF THE INFORMATION UPON WHICH THE MODIFICATIONS WERE BASED, EXCEPT POSSIBLY AS TO THE EXPERIENCED AND ESTIMATED COSTS OF THE DRAFTING ITEM.

ON THE RECORD, WE PERCEIVE NO ADEQUATE BASIS TO FIND THAT THE AWARD TO KENTRON WAS THE RESULT OF THAT FIRM BEING "A PERSONALLY PREFERRED CONTRACTOR" AS YOU CONTEND, NOR HAVE YOU FURNISHED ANY EVIDENCE TO THAT EFFECT.