B-166989-/1), AUG. 8, 1969

B-166989-/1): Aug 8, 1969

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BID PROTEST - NEGOTIATED - DELIVERY SCHEDULE DECISION TO ARTISAN ELECTRONICS CORPORATION DENYING PROTEST AGAINST AWARD OF NEGOTIATED CONTRACT FOR TEST PANELS FOR THE NIKE-HERCULES WEAPONS SYSTEM FOR ARMY MISSILE COMMAND ON BASIS THAT ALTERNATE DELIVERY SCHEDULE WAS NOT SO VAGUE OR PREJUDICIAL TO OFFERORS THAT CANCELLATION OF CONTRACT WOULD BE WARRANTED. TO ARTISAN ELECTRONICS CORPORATION: FURTHER REFERENCE IS MADE TO THE LETTER OF MAY 21. THE INITIAL SOLICITATION WAS FOR A QUANTITY OF 22 EACH NIKE HERCULES PANEL. A REQUIREMENT FOR ADDITIONAL PANELS AROSE AND THE QUANTITY WAS INCREASED TO 31 EACH DURING NEGOTIATIONS WITH ALL OFFERORS. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (1) AND WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS CONCERNS.

B-166989-/1), AUG. 8, 1969

BID PROTEST - NEGOTIATED - DELIVERY SCHEDULE DECISION TO ARTISAN ELECTRONICS CORPORATION DENYING PROTEST AGAINST AWARD OF NEGOTIATED CONTRACT FOR TEST PANELS FOR THE NIKE-HERCULES WEAPONS SYSTEM FOR ARMY MISSILE COMMAND ON BASIS THAT ALTERNATE DELIVERY SCHEDULE WAS NOT SO VAGUE OR PREJUDICIAL TO OFFERORS THAT CANCELLATION OF CONTRACT WOULD BE WARRANTED.

TO ARTISAN ELECTRONICS CORPORATION:

FURTHER REFERENCE IS MADE TO THE LETTER OF MAY 21, 1969, PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER A NEGOTIATED SOLICITATION, REQUEST FOR PROPOSALS (RFP) NO. DAAHO1-69-R-0688, ISSUED BY THE UNITED STATES ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA, WITH A CLOSING DATE OF APRIL 4, 1969.

THE INITIAL SOLICITATION WAS FOR A QUANTITY OF 22 EACH NIKE HERCULES PANEL, ELECTRIC TEST. A REQUIREMENT FOR ADDITIONAL PANELS AROSE AND THE QUANTITY WAS INCREASED TO 31 EACH DURING NEGOTIATIONS WITH ALL OFFERORS. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (1) AND WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS CONCERNS. PAGE 5 OF THE RFP PROVIDED AS FOLLOWS: "NOTE: THIS REQUIREMENT HAS BEEN ASSIGNED I.P.D. (ISSUE PRIORITY DESIGNATOR) 02 FOR WHICH AN URGENT NEED HAS BEEN ESTABLISHED. THE PROPOSED DELIVERY WILL BE A PRIME FACTOR IN EVALUATION OF PROPOSALS. (SEE PAGE 6 ARTICLE 1)" THIS ITEM WAS IN A "ZERO BALANCE" STOCK POSITION.

PARAGRAPH I OF THE RFP ON PAGE 6 ENTITLED "DELIVERY" PROVIDES AS FOLLOWS: "1. REQUIRED DELIVERY SCHEDULE: ( ( NO FIRST ARTICLE: 22 EACH ON OR BEFORE 390 CALENDAR DAYS AFTER DATE OF CONTRACT.'2. ALTERNATE DELIVERY SCHEDULE:

"A. IF THE OFFEROR CAN IMPROVE UPON THE REQUIRED DELIVERY SCHEDULE ABOVE, THE BEST DELIVERY SCHEDULE WITHIN THE OFFEROR'S CAPABILITY SHOULD BE SET FORTH BELOW. AFTER RECEIPT OF PROPOSALS, THE GOVERNMENT'S ALTERNATE DELIVERY SCHEDULE WILL BECOME THE ALTERNATE DELIVERY DATE SELECTED BY THE GOVERNMENT FROM THOSE SUBMITTED BY THE PROPOSERS, AND SHALL BECOME A POINT OF NEGOTIATION BETWEEN THE GOVERNMENT AND ALL PROPOSERS WITHIN THE COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. SELECTION WILL THEN BE BASED UPON NEGOTIATION AMONG ALL RESPONSIVE PROPOSERS OR QUOTERS WITHIN THE ZONE OF CONSIDERATION, UPON ONE OR THE OTHER OF THE TWO PRICES AND DELIVERY DATES, I.E., THE REQUIRED DELIVERY DATE AND THE LOWEST PRICE PROPOSED OR THE GOVERNMENT'S ALTERNATE DELIVERY DATE AND THE LOWEST PRICE PROPOSED THEREUPON.'' ( NO FIRST ARTICLE: EACH ON OR BEFORE

CALENDAR DAYS AFTER DATE OF CONTRACT.

"B. ANY OFFER PROPOSING DELIVERY OF PRODUCTION QUANTITY LATER THAN THE REQUIRED DELIVERY SCHEDULE SET FORTH ABOVE MAY NOT BE CONSIDERED UNLESS ALL OTHERWISE RESPONSIVE OFFERS RECEIVED FROM RESPONSIBLE OFFERORS IN RESPONSE TO THIS RFP PROPOSE DELIVERY LATER THAN THE REQUIRED DELIVERY SCHEDULE, IN WHICH EVENT THE DELIVERY SCHEDULE WILL BECOME THE SUBJECT OF NEGOTIATION. IF THE OFFEROR CANNOT MEET THE REQUIRED DELIVERY SCHEDULE, HE MAY PROPOSE THE BEST SCHEDULE WITHIN HIS CAPABILITY.'' ( NO FIRST ARTICLE: EACH ON OR BEFORE CALENDAR DAYS AFTER DATE OF CONTRACT.

IF THE OFFEROR PROPOSES NO ALTERNATE DELIVERY SCHEDULE, THE REQUIRED DELIVERY SCHEDULE STATED ABOVE SHALL APPLY.

IF THE OFFEROR INTENDS TO PROPOSE ON AN EARLIER ALTERNATE DELIVERY SCHEDULE, HE WILL ALSO PROPOSE ON THE REQUIRED DELIVERY SCHEDULE AND INDICATE A PRICE FOR EACH ON PAGE 5.'NAME OF OFFEROR "3. EVALUATION SHALL BE MADE AS FOLLOWS:

"A. IF NO EARLIER ALTERNATE DELIVERY SCHEDULE IS RECEIVED, AWARD WILL BE MADE TO THE LOWEST RESPONSIVE RESPONSIBLE OFFEROR WITHIN THE REQUIRED DELIVERY SCHEDULE.

"B. IF OFFERS WHICH PROPOSE DELIVERY EARLIER THAN THE REQUIRED DELIVERY SCHEDULE ARE RECEIVED, AWARD MAY BE MADE TO THE LOWEST RESPONSIVE RESPONSIBLE OFFEROR WITH THE BEST DELIVERY SCHEDULE, OR

"C. IF AN OFFER IS RECEIVED WHICH PROPOSES EARLIEST DELIVERY BUT AT A PRICE THAT IS NOT THE LOWEST, THE GOVERNMENT MAY ELECT TO MAKE AWARD BASED ON EARLIEST DELIVERY. * * *

"D. DIFFERENCE OF 30 DAYS OR LESS BETWEEN ALTERNATE DELIVERY SCHEDULES PROPOSED WILL NOT BE CONSIDERED IN EVALUATING FOR EARLY DELIVERY AWARD.

"E. NOTWITHSTANDING ANY OTHER PROVISION OF THE RFP, THE GOVERNMENT RESERVES THE RIGHT TO MAKE AWARD BASED UPON THE DELIVERY SCHEDULE WHICH BEST SERVES ITS INTEREST.' IN ACCORDANCE WITH SUBPARAGRAPH 3 (B) OF THE "DELIVERY" PROVISIONS OF THE RFP THE AWARD WAS MADE TO THE LOWEST RESPONSIVE RESPONSIBLE OFFEROR WITH THE BEST DELIVERY SCHEDULE.

FOURTEEN PROPOSALS WERE RECEIVED PURSUANT TO THIS SOLICITATION ON THE ORIGINAL QUANTITY OF 22 EACH, ALL OF WHICH MET THE GOVERNMENT'S REQUIRED DELIVERY SCHEDULE OF 390 DAYS. THREE OF THE 14 OFFERORS PROPOSED EARLIER ALTERNATE DELIVERY SCHEDULES OF 180 DAYS. A STATEMENT IN THE FILE BY THE NEGOTIATOR FOR THIS PROCUREMENT STATES "BEST DELIVERY WAS STRESSED DURING NEGOTIATIONS.' WHEN NEGOTIATIONS WERE FINALIZED NINE OF THE FOURTEEN OFFERORS HAD OFFERED EARLIER DELIVERIES RANGING FROM 150 DAYS TO 375 DAYS. ARTISAN OFFERED THE LOWEST UNIT PRICE BUT ITS DELIVERY SCHEDULE EVEN AFTER NEGOTIATIONS REMAINED CONSTANT AT 390 DAYS.

THIS WAS THE FIRST PROCUREMENT OF THIS ITEM ON A COMPETITIVE BASIS. PRIOR PROCUREMENTS HAD ALL BEEN NEGOTIATED WITH A SOLE-SOURCE PRIME CONTRACTOR. THE EXPERIENCED PRODUCTION LEAD TIME WHICH WAS USED IN CALCULATING THE REQUIRED DELIVERY SCHEDULE FOR THIS PROCUREMENT WAS BASED ON A RECORD OF PAST DELIVERY SCHEDULES WHICH HAD NOT BEEN SUBJECTED TO THE TEST OF COMPETITION. WE HAVE NOT FOUND ANY EVIDENCE THAT THE PROCURING ACTIVITY ACTED IN OTHER THAN GOOD FAITH IN CALCULATING THE REQUIRED DELIVERY SCHEDULE OF 390 DAYS FOR THIS PROCUREMENT.

BASICALLY, THE FIRST ASSERTION OF YOUR PROTEST IS THAT THIS SOLICITATION DOES NOT GIVE ADEQUATE CRITERIA REGARDING THE BASIS FOR SELECTING THE SUCCESSFUL OFFEROR. IT IS ALSO URGED THAT THE TERMS OF THE SOLICITATION REQUIRE THAT ALL OFFERORS BE ADVISED OF THE SPECIFIC DELIVERY SCHEDULE SELECTED BY THE PROCURING ACTIVITY. IN THIS CASE IT WOULD HAVE MEANT THAT ALL OFFERORS SHOULD HAVE BEEN ADVISED OF THE 150 DAY DELIVERY SCHEDULE OF A PARTICULAR OFFEROR SINCE THIS WAS THE SCHEDULE SELECTED BY THE PROCURING ACTIVITY AS THE ACTUAL DELIVERY SCHEDULE FOR THIS ITEM. YOUR LETTER ASKS "SHOULD THE BIDDER BE EXPECTED TO SELECT HIS BID FROM AN INFINITE SCALE OF RATIOS OF PRICE TO DELIVERY IN THE HOPE THAT HE MAY HIT THE LUCKY COMBINATION?

WE HAVE RECENTLY CONSIDERED A NEGOTIATED SOLICITATION WHICH ALSO INVITED OFFERS ON ALTERNATE DELIVERY SCHEDULES. SEE 47 COMP. GEN. 448. IN THE SITUATION WHERE THERE IS A BETTER DELIVERY SCHEDULE OFFERED BUT AT A PRICE HIGHER THAN THE PRICE QUOTED ON THE REQUIRED DELIVERY SCHEDULE, SUBPARAGRAPHS 3 (A), (B) AND (C) OF THE "DELIVERY" PROVISIONS IN THE CITED CASE, WHICH ARE SUBSTANTIALLY THE SAME AS SUBPARAGRAPHS 3 (A), (B) AND (C) OF THE "DELIVERY" PROVISIONS IN THIS CASE, LEAVE IT UP TO THE PROCURING ACTIVITY TO COMPARE THE PRICES FOR THE ITEMS UNDER THE REQUIRED AND ALTERNATE DELIVERY SCHEDULES AND TO MAKE THE AWARD ON THE BASIS WHICH BEST SERVES THE GOVERNMENT'S INTERESTS. THE FACTS IN 47 COMP. GEN. 448, INDICATE THAT IN THAT CASE THE PROCURING ACTIVITY MERELY INFORMED OFFERORS THAT AWARD MIGHT BE MADE ON THE BASIS OF THE EARLIEST PROPOSED DELIVERY AND THE SUCCESSFUL OFFEROR WAS SELECTED WITHOUT NEGOTIATION WITH THE OTHER OFFERORS ON THE ALTERNATE DELIVERY SCHEDULE PROPOSED BY THE SUCCESSFUL OFFEROR. WE INTERPOSED NO OBJECTION TO THAT PROCEDURE.

WE ARE STILL OF THE VIEW THAT IT IS SUFFICIENT IN A NEGOTIATED PROCUREMENT WHERE ALTERNATE DELIVERY SCHEDULES ARE REQUESTED, TO MERELY ADVISE OFFERORS THAT AWARD MAY BE MADE ON THE BASIS OF THE BEST DELIVERY SCHEDULE WITHOUT SPECIFICALLY NEGOTIATING WITH OFFERORS ON THE ALTERNATE DELIVERY SCHEDULE SELECTED BY THE PROCURING ACTIVITY. IN THIS REGARD WE DO NOT AGREE THAT OFFERORS ARE ASKED TO MERELY GUESS AT A COMBINATION OF RATIOS TO ARRIVE AT THE "LUCKY" COMBINATION. IT WOULD SEEM THAT AN OFFEROR SHOULD BE ABLE TO TAKE THE BEST DELIVERY HE CAN OFFER AND BE ABLE TO COMPUTE WHAT THE ITEM WILL COST BASED ON SUCH DELIVERY. THIS IS WHAT THE PROCURING ACTIVITY ASKED YOU TO DO DURING NEGOTIATIONS WHEN YOU WERE ASKED TO QUOTE A PRICE BASED ON BEST DELIVERY. YOU COULD HAVE GIVEN THE GOVERNMENT THREE ALTERNATIVE QUOTATIONS. FIRST, YOU COULD HAVE OFFERED A PACKAGE WHICH PLACED PRIMARY EMPHASIS ON THE DELIVERY FACTOR GIVING THE GOVERNMENT THE ABSOLUTE SHORTEST DELIVERY WITHOUT CONSIDERATION OF THE PRICE FACTOR. PRESUMABLY YOUR PRICE ON SUCH A SCHEDULE MIGHT BE VERY HIGH. AS AN ALTERNATIVE, YOU COULD HAVE PROPOSED A PACKAGE WHICH OFFERED A SHORTER DELIVERY SCHEDULE THAN THE ONE REQUIRED BUT WHERE WEIGHT WAS GIVEN TO PRICE AND DELIVERY. THIS MIGHT NOT OFFER THE GOVERNMENT YOUR SHORTEST DELIVERY BUT PRESUMABLY THE PRICE WOULD BE MORE REASONABLE. THE OTHER PACKAGE WOULD HAVE BEEN YOUR PRICE BASED ON THE REQUIRED SCHEDULE. THIS IS NOT GUESSING AT ,LUCKY" COMBINATIONS BUT IS UTILIZING SOUND BUSINESS JUDGMENT TO ARRIVE AT ALTERNATE OFFERS WHICH CAN THEN BE COMPARED TO THE OTHER OFFERS BY THE PROCURING ACTIVITY FOR THE PURPOSE OF CHOSING THE ONE THAT BEST SUITS THE GOVERNMENT'S INTEREST. THE "NOTE" ON PAGE 5 OF THE RFP SPECIFICALLY ADVISED OFFERORS THAT THE PROPOSED DELIVERY WILL BE A PRIME FACTOR IN EVALUATION OF PROPOSALS. IN THE CIRCUMSTANCES WE DO NOT THINK THAT THE CRITERIA FOR SELECTION WERE SO VAGUE THAT IT CAN BE CONCLUDED THAT OFFERORS WERE NOT SUFFICIENTLY ADVISED OF ALL OF THE EVALUATION FACTORS AND OF THE RELATIVE WEIGHTS TO BE ATTACHED TO SUCH FACTORS.

WE AGREE THAT SUBPARAGRAPH 2 (A) OF THE INSTANT "DELIVERY" PROVISIONS WHICH IS AN EXPANDED VERSION OF SUBPARAGRAPH 2 (A) OF THE "DELIVERY" PROVISIONS QUOTED IN 47 COMP. GEN. 448, SEEMS TO INDICATE THAT OFFERORS WITHIN A COMPETITIVE RANGE WILL BE PERMITTED TO NEGOTIATE ON THE ALTERNATE DELIVERY SCHEDULE WHICH IS SELECTED BY THE PROCURING ACTIVITY. THIS WAS NOT DONE IN THIS CASE. NEGOTIATIONS, HOWEVER, WERE CONDUCTED WITH OFFERORS INCLUDING YOUR CONCERN ON THE BASIS OF THE BEST DELIVERY WHICH OFFERORS MIGHT WANT TO PROPOSE. YOU CHOSE NOT TO REVISE YOUR PROPOSAL AS FAR AS THE DELIVERY SCHEDULE WAS CONCERNED. WE HAVE NO WAY OF KNOWING WHETHER YOU WOULD HAVE BEEN ABLE TO QUOTE ON A DELIVERY SCHEDULE WHICH WAS LESS THAN 390 DAYS. THERE IS ALSO A QUESTION IF YOU WOULD HAVE BEEN ABLE TO QUOTE ON A 150-DAY SCHEDULE. ON THE BASIS OF THE RECORD PRESENTED WE DO NOT FIND THAT YOU WERE PREJUDICED TO THE DEGREE THAT THIS AWARD SHOULD BE CANCELLED.

OTHER REASONS MITIGATING AGAINST CANCELLATION ARE THE SUBSTANTIAL TERMINATION COSTS THAT WOULD BE INCURRED AND THE LEAD TIME THAT MIGHT BE LOST. THEREFORE, IN ANY EVENT, CANCELLATION WOULD NOT BE IN THE BEST INTERESTS OF THE UNITED STATES.