B-167185, SEPTEMBER 3, 1969, 49 COMP. GEN. 156

B-167185: Sep 3, 1969

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AS THE ITEM WAS IMPRACTICABLE TO OBTAIN BY COMPETITION IS NOT SUBJECT TO LEGAL OBJECTION. ABSENT EVIDENCE THE CONTRACTING AGENCY ACTED ARBITRARILY IN DETERMINING THAT THE LAY-UP OVER FOAM CONCEPT SELECTED WAS FEASIBLE AND PRACTICAL. OFFICIALS WHO HAVE THE RESPONSIBILITY OF DRAFTING SPECIFICATIONS THAT ARE ADEQUATE TO MEET THE MINIMUM NEEDS OF THE GOVERNMENT. IN A DISPUTE CONCERNING THE TECHNICAL ASPECTS OF THE METHOD SELECTED TO PRODUCE WEATHERSHIELD- A METHOD WIDELY USED IN INDUSTRY FOR SEVERAL YEARS- -THE ADMINISTRATIVE POSITION IS UPHELD. THE MANDATE OF 10 U.S.C. 2304(G) FOR DISCUSSIONS WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE WAS MET BY PROVIDING OPPORTUNITY FOR PRICE AND TECHNICAL PROPOSAL CHANGES.

B-167185, SEPTEMBER 3, 1969, 49 COMP. GEN. 156

CONTRACTS -- SPECIFICATIONS -- ADMINISTRATIVE DETERMINATION CONCLUSIVENESS -- GENERAL ACCOUNTING OFFICE FUNCTION THE ADMINISTRATIVE CHOICE OF ONE OR TWO POSSIBLE METHODS OF PRODUCING PLASTIC WEATHERSHIELDS FOR GUN MOUNTS AUTHORIZED TO BE PROCURED BY NEGOTIATION UNDER 10 U.S.C. 2304(A)(10), AS THE ITEM WAS IMPRACTICABLE TO OBTAIN BY COMPETITION IS NOT SUBJECT TO LEGAL OBJECTION, ABSENT EVIDENCE THE CONTRACTING AGENCY ACTED ARBITRARILY IN DETERMINING THAT THE LAY-UP OVER FOAM CONCEPT SELECTED WAS FEASIBLE AND PRACTICAL. ON ISSUES OF A TECHNICAL NATURE, THE UNITED STATES GENERAL ACCOUNTING OFFICE (GAO) MUST RELY ON THE JUDGMENT OF CONTRACTING OFFICIALS POSSESSING THE EXPERTISE GAO LACKS--OFFICIALS WHO HAVE THE RESPONSIBILITY OF DRAFTING SPECIFICATIONS THAT ARE ADEQUATE TO MEET THE MINIMUM NEEDS OF THE GOVERNMENT. THEREFORE, IN A DISPUTE CONCERNING THE TECHNICAL ASPECTS OF THE METHOD SELECTED TO PRODUCE WEATHERSHIELD- A METHOD WIDELY USED IN INDUSTRY FOR SEVERAL YEARS- -THE ADMINISTRATIVE POSITION IS UPHELD. CONTRACTS -- NEGOTIATION -- CHANGES, ETC. -- ORAL V WRITTEN ALTHOUGH IN NEGOTIATING A CONTRACT UNDER 10 U.S.C. 2304(A)(10), THE MANDATE OF 10 U.S.C. 2304(G) FOR DISCUSSIONS WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE WAS MET BY PROVIDING OPPORTUNITY FOR PRICE AND TECHNICAL PROPOSAL CHANGES, THE ORAL NOTICE OF SIGNIFICANT DELIVERY CHANGES DID NOT MEET THE STANDARDS OF PARAGRAPH 3 805.1(E) OF THE ARMED SERVICES PROCUREMENT REGULATION THAT SIGNIFICANT CHANGES IN REQUIREMENTS MUST BE BY WRITTEN AMENDMENT AND THAT AN ORAL NOTICE SHOULD BE USED ONLY IN VERY LIMITED CIRCUMSTANCES. THE FAILURE TO OBSERVE THE REGULATION WAS A SERIOUS DEFICIENCY IN THE NEGOTIATION PROCESS, BUT ALL OFFERORS HAVING BEEN GIVEN AMPLE OPPORTUNITY TO RESPOND TO THE ORAL ADVICE, A LEGAL OBJECTION TO THE VALIDITY OF THE AWARD WOULD NOT BE JUSTIFIED. HOWEVER, CORRECTIVE ACTION SHOULD BE TAKEN TO PREVENT A REPETITION OF THE DEFICIENCY.

TO THE SECRETARY OF THE NAVY, SEPTEMBER 3, 1969:

REFERENCE IS MADE TO A LETTER DATED JULY 18, 1969, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, FORWARDING A REPORT ON THE PROTESTS BY EFMC CORPORATION AND PRIVITT PLASTICS, INC., AGAINST THE AWARD OF A CONTRACT TO SWEDLOW, INC., UNDER REQUEST FOR PROPOSALS NO. N00197-69-R-0021, ISSUED BY THE NAVAL ORDNANCE STATION, LOUISVILLE, KENTUCKY. WE ALSO MAKE REFERENCE TO LETTERS DATED AUGUST 6 AND 19, 1969, FROM THE ACTING DEPUTY COMMANDER AND THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, FURNISHING RELEVANT DOCUMENTS WHICH HAD NOT BEEN INCLUDED AS PART OF THE ORIGINAL REPORT.

THE REQUEST FOR PROPOSALS (RFP) WAS ISSUED ON MARCH 7, 1969, COVERING 12 PLASTIC WEATHERSHIELDS FOR GUN MOUNTS. NEGOTIATION WAS AUTHORIZED UNDER 10 U.S.C. 2304(A)(10) WHICH PERMITS NEGOTIATION OF A CONTRACT WHEN IT IS IMPRACTICABLE TO OBTAIN COMPETITION. PROPOSALS WERE REQUIRED TO BE SUBMITTED IN TWO SEPARATE SECTIONS, THE FIRST RELATING TO ALL THE TECHNICAL ASPECTS OF THE PROCUREMENT, THE SECOND COVERNING ALL THE COST ASPECTS THEREOF. PAGE 11 OF THE RFP ADMONISHED PROSPECTIVE OFFERORS THAT THE GOVERNMENT REQUIRED DELIVERY OF THE FIRST WEATHERSHIELD 270 DAYS AFTER THE DATE OF THE CONTRACT AND ONE EVERY 30 DAYS THEREAFTER UNTIL THE ENTIRE QUANTITY HAD BEEN DELIVERED. OFFERORS WERE AUTHORIZED TO SUBMIT ACCELERATED DELIVERY SCHEDULES. THE METHOD OF EVALUATING OFFERS IN TERMS OF DELIVERY SCHEDULES WAS STATED AS FOLLOWS:

OFFERORS OFFERING DELIVERY OF EACH QUANTITY WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED ABOVE WILL BE EVALUATED EQUALLY AS REGARDS TIME OF DELIVERY. OFFERORS OFFERING DELIVERY OF A QUANTITY UNDER SUCH TERMS OR CONDITIONS THAT DELIVERY WILL NOT CLEARLY FALL WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED ABOVE WILL BE CONSIDERED NONRESPONSIVE AND WILL BE REJECTED. WHERE AN OFFEROR OFFERS AN EARLIER DELIVERY SCHEDULE THAN THAT CALLED FOR ABOVE, THE GOVERNMENT RESERVES THE RIGHT TO AWARD EITHER IN ACCORDANCE WITH THE REQUIRED SCHEDULE OR IN ACCORDANCE WITH THE SCHEDULE OFFERED BY THE OFFEROR. IF THE OFFEROR OFFERS NO OTHER DELIVERY SCHEDULE, THE DELIVERY SCHEDULE STATED ABOVE SHALL APPLY.

ON PAGE 17 OF THE RFP APPEARED PROVISIONS CONCERNING FIRST ARTICLE APPROVAL. IT WAS THEREIN SPECIFIED THAT ONE WEATHERSHIELD WAS TO BE DELIVERED TO THE NAVAL ORDNANCE STATION AT LOUISVILLE WITHIN 210 CALENDAR DAYS FROM THE DATE OF THE CONTRACT.

ON MARCH 13, 1969, AMENDMENT NO. 1 WAS ISSUED, ADDING TO THE RFP A LIST OF GOVERNMENT-FURNISHED PROPERTY, OFFERED ON AN "AS IS" BASIS, AND PROVIDING THAT SUCH PROPERTY WAS BEING MADE AVAILABLE SUBJECT TO APPLICABLE CLAUSES OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

ON MARCH 20, 1969, A BRIEFING CONFERENCE FOR THE BENEFIT OF INTERESTED COMPANIES WAS CONDUCTED AT THE NAVAL ORDNANCE STATION IN LOUISVILLE. REPRESENTATIVES FROM ALL THREE OF THE INVOLVED COMPANIES WERE PRESENT. MINUTES OF THE MEETING INDICATE THAT NAVY PERSONNEL REVEALED THE FOLLOWING INFORMATION:

*** ON PAGE 10, ITEM M, WHERE WE GIVE A CHOICE OF TWO MEANS OF ATTACHING REINFORCING BEAMS INSIDE THE SHIELD STRUCTURE, YOU CAN EITHER MOLD THEM SEPARATELY AND BOND THEM IN AS IN METHOD TWO OR LAY THEM UP IN PLACE OVER FOAM. WE ARE GOING TO DELETE METHOD TWO. YOU MUST LAY UP OVER FOAM. ARE NOT GOING TO ALLOW SECONDARY BONDING. WE HAVE HAD A LOT OF TROUBLE WITH BOD HAD A LOT OF TROUBLE WITH BOND LINES BETWEEN THE SHIELD AND BEAM. THERE IS BEAM TOOLING AVAILABLE WHICH PROBABLY WOULD BE AVAILABLE FOR YOU TO USE TO MAKE FOAM MOLDS.

THE REFERENCED PORTION OF THE ORIGINAL RFP PROVIDED AS FOLLOWS:

(M) NOTE 7 OF DRAWING CALLS FOR THE BEAMS TO BE BONDED TO THE SHELL WITH ADHESIVE PER MMM-A-132, IN ACCORDANCE WITH MIL-A-9067. THIS DOCUMENTATION IS BEING REVISED TO SPECIFY THAT ASSEMBLY OF THE BEAMS TO THE SHELL IS TO BE ACCOMPLISHED BY EITHER OF THE METHODS LISTED BELOW. VENDOR WILL BE REQUIRED TO NOTIFY THE PROCUREMENT AGENCY WHICH METHOD HAS BEEN SELECTED. THIS METHOD SHALL THEN BECOME MANDATORY AND WILL BE A PART OF THE CONTRACT WHEN IT BECOMES FINAL. METHOD 1

FABRICATION OF THE BEAMS OVER PRE-FORMS OF FOAM (MIL-C-8087, TYPE II, CLASS 2) DIRECTLY IN THE SHELL. THIS WILL ELIMINATE ALL SECONDARY BONDS. METHOD 2

SEPARATE FABRICATION OF THE BEAMS AND THE SHELL WITH SECONDARY BONDING OF THE BEAMS TO THE SHELL WITH ADHESIVE (FILM TYPE) PER MMM-A 132, TYPE I, CLASS 3.

ON APRIL 4, 1969, AMENDMENT NO. 2 WAS ISSUED. IT EXTENDED THE DATE SET FOR RECEIPT OF PROPOSALS TO APRIL 14 (CONFIRMING A TELEGRAM DATED MARCH 27, 1969), AND ALSO MADE CERTAIN CHANGES IN THE TECHNICAL ASPECTS OF THE PROCUREMENT. INCLUDED IN THESE CHANGES WAS THIS: DURING THE VENDOR BRIEFINGS OF 20 MARCH 69 "METHOD 2" OF NOTE (M) WAS DELETED. "METHOD 2" IS HEREBY REINSTATED AS FOLLOWS:

SEPARATELY MOLDED REINFORCING BEAMS MAY BE ASSEMBLED TO THE SHELL UTILIZING SECONDARY BONDING METHODS WITH ADHESIVE PER MMM-A-132, TYPE I, CLASS 3, IN ACCORDANCE WITH MIL-A-9067. ALL SUCH JOINTS SHALL HAVE THE MINIMUM MECHANICAL PROPERTIES LISTED IN TABLE 1 OF MM-A-132 UNDER TYPE I, CLASS 3.

THREE PROPOSALS WERE RECEIVED ON APRIL 14, 1969, FROM THE FOLLOWING COMPANIES IN THE STATED AMOUNTS:

COMPANY UNIT PRICE

PRIVITT PLASTICS, INC. (PRIVITT) $18,876,30, LESS 1/2%, 10 DAYS

SWEDLOW, INC. (SWEDLOW) 20,542.50, NET

EFMC CORPORATION (EFMC) 26,598.24, LESS 1/4%, 10 DAYS

THE TECHNICAL SECTION OF EACH OFFEROR'S PROPOSAL WAS SUBMITTED TO TECHNICAL PERSONNEL FOR EVALUATION. IT IS REPORTED THAT IN CONNECTION WITH SUCH EVALUATION, NAVY PERSONNEL VISITED EACH OF THE OFFERORS. THE MEMORANDUM OF THE VISITS STATES: BACKGROUND--DUE TO THE NEED TO RESOLVE TECHNICAL PROPOSAL PROBLEMS AND THE NEED TO ESTABLISH POSITIVE DELIVERY SCHEDULE DATES. MR. HOMER SPARKS AND MR. JOHN DOERING VISITED THE THREE SUBJECT COMPANIES. THE NAVY OFFICILS CONDUCTED THE VISITS OF THE THREE COMPANIES BETWEEN MAY 12 AND 15, 1969. THE CONCLUSIONS REACHED WERE AS FOLLOWS:

5. SUMMARY -- NO POSITIVE DECISION AS TO AWARD OF CONTRACT CAN BE MADE AT THIS TIME UNTIL WE RECEIVE CONFIRMATION OF THE INFORMATION REQUESTED AS A RESULT OF THESE VISITS. KEEPING THIS FACT IN MIND, THE WRITERS HAVE COME TO THE FOLLOWING CONCLUSIONS:

A. A GREAT DEAL MORE CONFIDENCE IN THE BEAM LAYUP ON FOAM CONCEPT HAS BEEN GENERATED. BOTH SWEDLOW AND PRIVITT STATED THAT THIS CONCEPT IS NOT PUSHING THE STATE OF THE ART AND THAT THIS WAS NOT CONSIDERED AN R&D EFFORT ON THEIR PART REGARDLESS OF THE FACT THAT THIS HAS NOT BEEN DONE ON WEATHERSHIELDS IN THE PAST.

B. ALL THREE COMPANIES ARE CAPABLE OF PRODUCING THE REQUIREMENTS OF THIS PROCUREMENT. IT IS POINTED OUT THAT SWEDLOW, INC., HAS ADEQUATE FACILITIES AND A MORE THAN ADEQUATE AMOUNT OF ENGINEERING TALENT, PRODUCTION TALENT AND EXPERIENCE IN THE FIELD OF GRP STRUCTURES.

C. ALTHOUGH SOMEWHAT SMALLER IN ALL RESPECTS THAN SWEDLOW, EFMC HAS PRODUCED THIS REQUIREMENT IN THE PAST; THEREFORE, HAS THE BEGINNING EXPERIENCE NECESSARY AND KNOWLEDGE OF THE TOOLING WHICH WILL GREATLY ASSIST THEM IF THEY SHOULD BE AWARDED A CONTRACT FOR THIS REQUIREMENT.

D. PRIVITT PLASTICS IS A SMALL, NEW, BUT VERY AGGRESSIVE COMPANY. THEY DEMONSTRATED THAT THEY HAVE SOME KNOWLEDGE OF THE COMPLEXITY OF THIS REQUIREMENT BUT THEIR TALENT IN THE MANUFACTURING OF COMPONENTS OF THIS SIZE IS VERY LIMITED. IT IS OUR OPINION THAT, GIVEN A SUFFICIENT AMOUNT OF TIME (MORE THAN AVAILABLE FOR THIS CONTRACT), PRIVITT WOULD BE ABLE TO PRODUCE THIS REQUIREMENT.

6. THE NAVY'S REQUIREMENT FOR THESE SHILDES WILL BE THE KEY TO THE PLACING OF THE CONTRACT. BASED ON A CONTRACT AWARD BY 1 JUNE AND DELIVERY OF 30 DECEMBER, IT IS THE OPINION OF THE WRITERS AT THIS POINT IN TIME THAT EFMC IS IN THE MOST FAVORABLE POSITION TO MEET DELIVERY REQUIREMENTS. HOWEVER, IT IS ALSO BELIEVED THAT IF SWEDLOW DESIRES TO PUT FORTH THE EFFORT REQUIRED AND EXPERIENCES NO MAJOR PROBLEMS, THEY COULD ALSO MAKE TIMELY DELIVERIES. IT IS MOST IMPORTANT THAT COGNIZANT PERSONNEL GIVE FULL CONSIDERATION TO OUR REQUIREMENTS AND ALL POSSIBLE TIME AVAILABLE BE ALLOWED FOR THE DELIVERY OF THIS REQUIREMENT.

IT IS REPORTED THAT AS A RESULT OF THESE VISITS, SWEDLOW AND PRIVITT REVISED THEIR TECHNICAL PROPOSALS, WHICH MADE THEM TECHNICALLY QUALIFIED. THE ADMINISTRATIVE REPORT FURTHER STATES:

*** THEY ALSO INDICATED THAT THEY COULD MEET THE NEW DELIVERY SCHEDULE, AND REVISED THEIR PRICE PROPOSALS AS FOLLOWS:

PRIVITT PLASTICS $22,875.00

SWEDLOW, INC. 22,989.00 THE CONTRACTING OFFICER'S STATEMENT OF FACTS RELATES, IN ADDITION:

*** ALL THREE OFFERORS WERE APPRISED DURING THE VISITS THAT THE DELIVERY SCHEDULE HAD BEEN CHANGED TO DELIVERY OF THE PROTOTYPE IN OCTOBER 1969 AND DELIVERY OF PRODUCTION UNITS TO START IN DECEMBER 1969.

IN A LETTER DATED MAY 20, 1969, PRIVITT SUBMITTED A REVISED COST BREAKDOWN INDICATING, AMONG OTHER THINGS, A RATHER SUBSTANTIAL INCREASE IN MANUFACTURING MAN-HOURS REQUIRED.

A TELEGRAM DATED MAY 29, 1969, FROM SWEDLOW WAS RECEIVED AT THE CONTRACTING OFFICE ON JUNE 2, 1969, AND READ, IN PART:

CONFIRMING THE VERBAL ADVICE OF MESSRS GREGG AND SULLIVAN ON 5/29/69;

IF AWARDED A CONTRACT UNDER REP N00197-69-R-0021, SWEDLOW CAN NOW

ASSURE DELIVERY OF TWO WEATHERSHIELDS BY 12/3/69 BASED ON AWARD BY

6/2/69.

ON JUNE 2, 1969, TELEPHONE CALLS WERE MADE FROM THE CONTRACTING OFFICE TO ALL THREE OFFERORS. THE CALLS WERE FOLLOWED ON JUNE 3, 1969, BY NEARLY IDENTICAL TELEGRAMS TO THE OFFERORS, STATING AS FOLLOWS:

CONFIRMING TELECON OF 2 JUNE 1969 BETWEEN *** AND MR. SPARKE

CLOSING OF NEGOTIATIONS ON REP N00197-69-R-0021 IS CLOSE OF BUSINESS

ON 3 JUNE 1969. ALL OFFERORS ARE HEREBY GIVEN THE OPPORTUNITY TO

SUBMIT A BEST AND FINAL OFFER BY THAT DATE. THE GOVERNMENT, HOWEVER,

RESERVES THE RIGHT TO REOPEN NEGOTIATIONS IF ONE OR MORE OFFERORS ARE

SUBSEQUENTLY FOUND NON-RESPONSIBLE OR IF THEIR OFFERS ARE FOUND TO BE

UNACCEPTABLE.

IN RESPONSE THERETO, EFMC LOWERED ITS UNIT PRICE TO $23,964, WHILE NEITHER PRIVITT NOR SWEDLOW ALTERED ITS OFFER. THE RELATIVE STANDING OF THE OFFERS BECAME:

PRIVITT $22,875

SWEDLOW 22,989

EFMC 23,964

ON JUNE 4, 1969, AWARD WAS MADE TO SWEDLOW. PRIVITT WAS NOT AWARDED THE CONTRACT FOR THE FOLLOWING REASON:

PRIVITT PLASTICS, INC. NOTWITHSTANDING THEIR OFFER TO MEET THE NEW DELIVERY SCHEDULE, WAS UNANIMOUSLY DETERMINED BY TECHNICAL PERSONNEL AND THE CONTRACTING OFFICER AS BEING UNABLE TO MEET THE OCTOBER 1969 PROTOTYPE DELIVERY. *** THE ADMINISTRATIVE REPORT ELABORATES:

2. THE MASTER PROGRAM SCHEDULE SUBMITTED BY PRIVITT PLASTICS IN THEIR ORIGINAL OFFER SHOWS THAT PROTOTYPE FABRICATION (FIRST ARTICLE) WOULD REQUIRE TWENTY-FOUR (24) WEEKS PLUS SHIPPING TIME. AS A RESULT OF THE VISIT MADE TO PRIVITT PLASTICS, PRIVITT REDUCED PROTOTYPE FABRICATION TIME BY TWO WEEKS, TO TWENTY-TWO (22) WEEKS PLUS SHIPPING TIME. THEIR NEW DELIVERY SCHEDULE IS SHORT BY TWO WEEKS OF MEETING THE OCTOBER 1969 DELIVERY OF THE PROTOTYPE.

EFMC HAS RAISED A SERIES OF QUESTIONS CONCERNING THE TOTAL CONTRACT COST, NONE OF WHICH APPEARS TO POSE LEGAL PROBLEMS. THE FACTUAL ANSWERS THAT HAVE BEEN INCLUDED AS PART OF THE ADMINISTRATIVE REPORT ARE BEING FORWARDED SEPARATELY TO EFMC BY LETTER OF THIS DATE. THESE RESPONSES ADEQUATELY DISPOSE OF THIS PORTION OF THE PROTEST.

A SECOND MATTER COVERED IN EFMC'S LETTER OF JUNE 9, 1969, TO THE CONTRACTING OFFICER, IS ENTITLED "AMBIGUOUS REQUIREMENTS AND SPECIFICATIONS IN RFP." HOWEVER, THAT COMPANY'S COMPLAINT SEEMS NOT TO BE THAT THE RFP WAS AMBIGUOUS, BUT RATHER THAT AWARD ON THE BASIS OF THE "UNDESIGNED, UNTESTED" LAYUP-OVER-FOAM METHOD OF PRODUCTION PERMITTED BY THE RFP WILL EXPOSE THE GOVERNMENT TO CERTAIN "PITFALLS." THESE ARE ALLEGED TO BE: NO ACCEPTABLE PRODUCTION METHOD; NO ACCEPTABLE QUALITY ASSURANCE METHOD NOT INVOLVING EXTENDED AND COSTLY IN PROCESS INSPECTION; AND NO APPROVED DESIGN.

IN RESPONSE, THE CONTRACTING OFFICER HAS STATED:

*** IT WAS THE OPINION OF TECHNICAL PERSONNEL THAT THE LAYUP OVER FOAM METHOD OF FABRICATION IS BOTH FEASIBLE AND PRACTICAL. INDUSTRY HAS WIDELY USED THIS METHOD OF FABRICATION FOR SEVERAL YEARS, NOT ON THE PARTICULAR ITEM INVOLVED BUT ON OTHER ITEMS AS LARGE AND COMPLEX. IT WILL BE NOTED IN ENCLOSURE (3) THAT BOTH SWEDLOW AND PRIVITT STATED THAT THE LAYUP OVER FOAM CONCEPT IS NOT PUSHING THE STATE OF THE ART AND THAT THE LAYUP OVER FOAM WAS NOT CONSIDERED AN R&D EFFORT ON THEIR PART REGARDLESS OF THE FACT THAT THIS HAD NOT BEEN DONE ON WEATHERSHIELDS IN THE PAST.

THE ISSUE PRESENTED IS OF A TECHNICAL NATURE. THE RESPONSIBLE GOVERNMENT OFFICIALS, POSSESSING IN THIS REGARD THE EXPERTISE THAT WE LACK, HAVE DETERMINED THE LAYUP-OVER-FOAM METHOD OF PRODUCTION TO BE A SATISFACTORY WAY OF MANUFACTURING AN ACCEPTABLE PRODUCT. IT HAS BEEN THE CONSISTENT POSITION OF OUR OFFICE THAT IN SUCH MATTERS WE MUST DEFER TO THE JUDGMENT OF THE ADMINISTRATIVE AGENCY IN THE ABSENCE OF EVIDENCE THAT THE AGENCY HAS ACTED ARBITARILY. B-164615, AUGUST 26, 1968, AND CASES CITED THEREIN. WE FIND NO SUCH EVIDENCE HERE. MOREOVER, IT IS WELL ESTABLISHED THAT THE DRAFTING OF SPECIFICATIONS ADEQUATE TO MEET THE MINIMUM NEEDS OF THE GOVERNMENT IS THE PROPER FUNCTION OF THE PROCURING AGENCY WHICH IS NOT SUBJECT TO LEGAL OBJECTION BY THIS OFFICE. 17 COMP. GEN. 554 (1938). THIRD QUESTION, RAISED BOTH BY EFMC AND PRIVITT, CONCERNS THE CONDUCT OF NEGOTIATIONS. EFMC CONTENDED IN ITS JUNE 9, 1969, LETTER TO THE CONTRACTING OFFICER: NEGOTIATION OR DISCUSSIONS WERE NOT CONDUCTED WITH EFMC, ALTHOUGH EFMC HAS FURTHER STATED: EFMC WAS WITHIN A "COMPETITIVE RANGE"--REFERENCE U.S.C. 2304(G). EFMC HAS FURTHER STATED:

TOTAL COMMUNICATION WITH EFMC WAS ONE TELEGRAM ASKING FOR BEST AND FINAL OFFER (WHICH HAD TO BE ANSWERED WITHIN 3 HOURS BY EFMC), ON 3 JUNE 1969. *** PRIVITT STATED IN ITS LETTER OF JUNE 10, 1969, TO THIS OFFICE:

PRIVITT PLASTICS, INCORPORATED QUOTED A 150 DAY DELIVERY SCHEDULE BUT SHOULD HAVE BEEN EVALUATED ON 270 DAY DELIVERY SCHEDULE WHICH WAS SET FORTH ON PAGE 11, PARAGRAPH 11 OF THE RFP. THIS REQUESTED DELIVERY REQUIREMENT WAS NEVER AMENDED, SO FAR AS WE ARE AWARE, OTHER THAN IN INFORMAL CONVERSATIONS.

PRIVITT WOULD CALL TO THE ATTENTION OF THE GENERAL ACCOUNTING OFFICE THE COMPLETE LACK OF "NEGOTIATIONS" ON THE PART OF THE NAVY. IF THERE WERE QUESTIONS CONCERNING OUR ABILITY TO MEET DELIVERY SCHEDULES WE STRONGLY FEEL THAT WE SHOULD HAVE BEEN OFFERED THE OPPORTUNITY TO DISCUSS THESE QUESTIONS AND PRESENT ADDITIONAL INFORMATION ON OUR BEHALF.

IN OUR OPINION, THE ADMINISTRATIVE RECORD AS SUMMARIZED ABOVE AMPLY DEMONSTRATES THAT ALL OFFERORS WERE GIVEN OPPORTUNITIES TO ALTER THEIR PRICE PROPOSALS AND THAT BOTH PRIVITT AND SWEDLOW WERE ASKED TO (AND DID) AMEND THEIR ORIGINAL TECHNICAL PROPOSALS. INASMUCH AS THERE WERE DISCUSSIONS WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE PURSUANT TO THE MANDATE OF 10 U.S.C. 2304(G), THE PROTESTS DO NOT STATE A LEGAL BASIS FOR OBJECTION IN THIS REGARD. MOREOVER, EFMC'S COMPLAINT CONCERNING THE TIME ALLOWED FOR SUBMISSION OF A BEST AND FINAL OFFER DOES NOT APPEAR TO PRESENT GROUNDS FOR US TO QUESTION THE ACTIONS OF THE GOVERNMENT OFFICERS. EFMC WAS GIVEN TELEPHONE NOTICE THE PREVIOUS DAY OF THE IMMINENT CLOSING OF NEGOTIATIONS AND WAS IN FACT ABLE TO RESPOND WITH A TIMELY PRICE REDUCTION OF ALMOST $32,000. FURTHER, IT IS REPORTED THAT DURING THE VISIT TO EFMC IN MAY 1969 CERTAIN QUESTIONS RELATING TO ITS COST PROPOSAL WERE RAISED. HOWEVER, EFMC DID NOT AT THAT TIME CHOOSE TO CHANGE ITS INITIAL PRICE OFFER.

HOWEVER, A SERIOUS DEFICIENCY IN THE NEGOTIATION PROCESS WAS THE FAILURE OF THE PROCUREMENT OFFICIALS TO OBSERVE THE REQUIREMENTS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1(E) WHICH PROVIDES AS FOLLOWS:

(E) WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENT, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE REQUEST FOR PROPOSAL OR REQUEST FOR QUOTATIONS, AND A COPY SHALL BE FURNISHED TO EACH PROSPECTIVE CONTRACTOR. SEE 3-505 AND 3-507. ORAL ADVICE OF CHANGE OR MODIFICATION MAY BE GIVEN IF (I) THE CHANGES INVOLVED ARE NOT COMPLEX IN NATURE, (II) ALL PROSPECTIVE CONTRACTORS ARE NOTIFIED SIMULTANEOUSLY (PREFERABLY BY MEETING WITH THE CONTRACTING OFFICER), AND (III) A RECORD IS MADE OF THE ORAL ADVICE GIVEN. IN SUCH INSTANCES, HOWEVER, THE ORAL ADVICE SHOULD BE PROMPTLY FOLLOWED BY A WRITTEN AMENDMENT VERIFYING SUCH ORAL ADVICE PREVIOUSLY GIVEN. THE DISSEMINATION OF ORAL ADVICE OF CHANGES OR MODIFICATIONS SEPARATELY TO EACH PROSPECTIVE BIDDER DURING INDIVIDUAL NEGOTIATION SESSIONS SHOULD BE AVOIDED UNLESS PRECEDED, ACCOMPANIED, OR IMMEDIATELY FOLLOWED BY A WRITTEN AMENDMENT TO THE REQUEST FOR PROPOSAL OR REQUEST FOR QUOTATIONS EMBODYING SUCH CHANGES OR MODIFICATIONS.

NO WRITTEN AMENDMENT TO THE RFP RELATIVE TO THE MORE URGENT DELIVERY REQUIREMENTS WAS EVER ISSUED, AND NO EXPLANATION OR JUSTIFICATION HAS BEEN PRESENTED TO OUR OFFICE WITH REFERENCE TO THIS DEFICIENCY.

THE RECORD DOES INDICATE, HOWEVER, THAT ALL OFFERORS WERE GIVEN ORAL ADVICE OF THE SIGNIFICANT CHANGE IN THE GOVERNMENT'S DELIVERY REQUIREMENTS IS PERMITTED UNDER ASPR 3-805.1(E) ONLY IN VERY LIMITED CIRCUMSTANCES, AND EVEN THEN THE ORAL NOTICE IS REQUIRED TO BE "PROMPTLY FOLLOWED BY A WRITTEN AMENDMENT VERIFYING SUCH ORAL ADVICE PREVIOUSLY GIVEN." ADDITIONALLY, WHEN UNDER THE CIRCUMSTANCES ORAL ADVICE IS JUSTIFIED BY THE REGULATION, SUCH ADVICE IS REQUIRED TO BE GIVEN TO ALL OFFERORS "SIMULTANEOUSLY." THE BENEFITS TO BE DERIVED FROM ISSUANCE OF A WRITTEN AMENDMENT ARE EVIDENT. THE PROCUREMENT OFFICIALS OF THE AGENCY ARE ASSURED THAT NOTICE OF THE COMPLETE CHANGE IS IN FACT COMMUNICATED TO THE PROPER OFFICIALS OF ALL COMPETITIVE OFFERORS AND THAT ALL THE ASPECTS OF THE CHANGE REFERENCED TO THE APPLICABLE RFP PROVISIONS ARE INCLUDED IN THE NOTICE. THE POSSIBILITY OF CHARGES OF FRAUD OR FAVORITISM IS THEREBY ELIMINATED OR REDUCED. ALSO, THE WRITTEN AMENDMENT AND ACKNOWLEDGMENT OF ITS RECEIPT PROVIDE A FIRM BASIS FOR REVIEWING AND JUSTIFYING A CHALLENGED PROCUREMENT ACTION. MOREOVER, THE GOVERNMENT IS ASSURED THAT THE RESULTING CONTRACT, AS A LEGAL DOCUMENT, WILL EMBODY THE NEW CHANGED TERMS RATHER THAN THE OLD TERMS.

BECAUSE EFMC AND PRIVITT WERE GIVEN ORAL NOTICE OF THE CHANGE IN DELIVERY REQUIREMENTS AND AMPLE OPPORTUNITY TO RESPOND TO THIS CHANGE, WE DO NOT THINK WE WOULD BE JUSTIFIED IN INTERPOSING A LEGAL OBJECTION TO THE VALIDITY OF THE AWARD MADE TO SWEDLOW. ACCORDINGLY, THE PROTESTS OF EFMC AND PRIVITT ARE DENIED.

HOWEVER, WE THINK THE ABOVE-NOTED DEFICIENCY IN THE NEGOTIATION PROCESS IS A SERIOUS ONE, AND WE STRONGLY RECOMMEND THAT CORRECTIVE ACTION BE TAKEN TO PREVENT REPETITIONS.