B-167190(2), NOV. 14, 1969

B-167190(2): Nov 14, 1969

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TECHNICAL DEFICIENCIES OF PROPOSAL ALLEGATIONS OF UNSUCCESSFUL OFFER OR THAT PREFERRED APPROACH SHOULD HAVE BEEN INCLUDED IN REQUEST FOR PROPOSALS BY NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA). IN VIEW OF FACT THAT PROPOSED TECHNIQUE WAS NOT CONSIDERED ADEQUATE FOR INTENDED RESEARCH AND DEVELOPMENT EFFORT. SINCE NO DETERMINATION WAS MADE PRIOR TO SUBMISSION OF PROPOSALS THAT ONE PARTICULAR APPROACH WOULD BE PREFERABLE AND ADMINISTRATIVE STATEMENT WAS COMPATIBLE WITH NASA PR 3.805-2 WHICH IS SIMILAR TO ASPR 4-106.5 (A) WHICH INITIALLY PROVIDES THAT FOR A RESEARCH AND DEVELOPMENT CONTRACT. WYATT: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 22. THE CLASSIFICATION OF YOUR COMPANY'S TECHNICAL PROPOSAL AS "MARGINALLY ACCEPTABLE" WAS A MISNOMER SINCE IT WAS REJECTED BECAUSE THE TECHNIQUE PROPOSED WAS NOT CONSIDERED ADEQUATE FOR THE INTENDED RESEARCH AND DEVELOPMENT EFFORT.

B-167190(2), NOV. 14, 1969

RESEARCH AND DEVELOPMENT--TECHNICAL DEFICIENCIES OF PROPOSAL ALLEGATIONS OF UNSUCCESSFUL OFFER OR THAT PREFERRED APPROACH SHOULD HAVE BEEN INCLUDED IN REQUEST FOR PROPOSALS BY NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), IN VIEW OF FACT THAT PROPOSED TECHNIQUE WAS NOT CONSIDERED ADEQUATE FOR INTENDED RESEARCH AND DEVELOPMENT EFFORT, AND THAT ADMINISTRATIVE REPORT WHICH STATED THAT PRICE WOULD NOT BE DETERMINATIVE IN MAKING FINAL AWARD VIOLATED ARMED SERVICES PROCUREMENT REGULATION 4- 106.5 (A), DOES NOT JUSTIFY CANCELLATION OF AWARD, SINCE NO DETERMINATION WAS MADE PRIOR TO SUBMISSION OF PROPOSALS THAT ONE PARTICULAR APPROACH WOULD BE PREFERABLE AND ADMINISTRATIVE STATEMENT WAS COMPATIBLE WITH NASA PR 3.805-2 WHICH IS SIMILAR TO ASPR 4-106.5 (A) WHICH INITIALLY PROVIDES THAT FOR A RESEARCH AND DEVELOPMENT CONTRACT, COST OR PRICE SHOULD NOT BE CONTROLLING.

TO MR. PHILIP J. WYATT:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 22, 1969, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO GENERAL ELECTRIC COMPANY (GE) UNDER REQUEST FOR PROPOSALS (RFP) NO. ERC/R&D KII 8- 00114, ISSUED BY THE ELECTRONICS RESEARCH CENTER (ERC).

THE ENCLOSED COPY OF OUR DECISION OF TODAY TO THE ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), SETS FORTH THE FACTS OF THE MATTER SO THAT THEY NEED NOT BE REPEATED HERE.

AS THE ENCLOSED DECISION INDICATES, THE CLASSIFICATION OF YOUR COMPANY'S TECHNICAL PROPOSAL AS "MARGINALLY ACCEPTABLE" WAS A MISNOMER SINCE IT WAS REJECTED BECAUSE THE TECHNIQUE PROPOSED WAS NOT CONSIDERED ADEQUATE FOR THE INTENDED RESEARCH AND DEVELOPMENT EFFORT. YOU CONTEND THAT IF A PARTICULAR APPROACH OTHER THAN THE ONE OFFERED BY YOUR COMPANY HAD BEEN DETERMINED TO BE PREFERABLE, THE RFP SHOULD HAVE ADVISED THE PROSPECTIVE OFFERORS. HOWEVER, IT IS NOT APPARENT THAT ANY DETERMINATION WAS MADE PRIOR TO THE SUBMISSION OF PROPOSALS THAT ONE PARTICULAR APPROACH WOULD BE PREFERABLE TO ANY OTHER.

THE ADMINISTRATIVE REPORT STATED THAT SINCE THIS WAS A TECHNICAL COMPETITION FOR A COST-TYPE STUDY CONTRACT, THE PRICES PROPOSED WERE NOT DETERMINATIVE OF THE FINAL AWARD. YOU CONTEND THAT THE FOREGOING CONTRADICTS PARAGRAPH 4-106.5 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES:

"WHILE COST OR PRICE SHOULD NOT BE THE CONTROLLING FACTOR IN SELECTING A CONTRACTOR FOR A RESEARCH OR DEVELOPMENT CONTRACT, COST OR PRICE SHOULD NOT BE DISREGARDED IN THE CHOICE OF THE CONTRACTOR. IT IS IMPORTANT TO EVALUATE A PROPOSED CONTRACTOR'S COST OR PRICE ESTIMATE, NOT ONLY TO DETERMINE WHETHER THE ESTIMATE IS REASONABLE BUT ALSO TO DETERMINE HIS UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. * * *"

NASA IS GUIDED BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION PROCUREMENT REGULATION (NASA PR), NOT THE ASPR. HOWEVER, WE NOTE THAT THE QUOTED SECTION INITIALLY PROVIDES THAT COST OR PRICE SHOULD NOT BE THE CONTROLLING FACTOR IN SELECTING A CONTRACTOR FOR A RESEARCH AND DEVELOPMENT CONTRACT. WE UNDERSTAND THE ADMINISTRATIVE STATEMENT TO COMPORT WITH THAT REQUIREMENT WHICH IS SIMILAR TO NASA PR 3.805-2 PROVIDING AS FOLLOWS:

"COST-REIMBURSEMENT TYPE CONTRACTS. IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST- REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND APPROPRIATE TO THE WORK TO BE PERFORMED. BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT."

YOU POINT OUT THAT THE RFP PROVIDED THAT PROPOSALS SHOULD CONTAIN A STATEMENT TO THE EFFECT THAT THE PROPOSALS ARE FIRM FOR 90 DAYS AND YOU STATE THAT SINCE ALMOST A YEAR ELAPSED BEFORE THE AWARD WAS MADE ALL PROPOSALS LOST THEIR EFFECTIVENESS. ALTHOUGH IT MAY BE THAT ANY OFFEROR COULD HAVE REFUSED TO ACCEPT AN AWARD IN THOSE CIRCUMSTANCES, THE FACT REMAINS THAT THE SUCCESSFUL OFFEROR DID NOT, BUT INSTEAD ENTERED INTO A CONTRACT UNDER THE RFP.

YOU INDICATE THAT SINCE THE ORIGINAL GE PROPOSAL WAS $59,000 AND WAS CLOSE TO THE $60,000 ALLOCATED FOR THE CONTRACT, THIS INDICATES THE POSSIBILITY THAT IT WAS PROVIDED WITH SPECIAL KNOWLEDGE THAT WAS NOT PROVIDED TO OTHERS. WE DO NOT ATTACH TO THE ORIGINAL PROPOSAL THE SIGNIFICANCE YOU IMPLY.

YOU STATE FURTHER THAT ALTHOUGH THE CONTRACT WAS AWARDED ON THE BASIS OF A PROCUREMENT BY NEGOTIATION, NONE OF THE CIRCUMSTANCES PERMITTING SUCH AN APPROACH TO THE PROCUREMENT WAS PRESENT. HOWEVER, SINCE THE CONTRACT IS FOR A STUDY OF SUBMICRON PARTICLE MEASURING TECHNIQUES LEADING TO THE DEVELOPMENT OF A FIRE DETECTION SYSTEM FOR MANNED SPACECRAFT, IT COMES WITHIN 10 U.S.C. 2304 (A) (11) PROVIDING FOR NEGOTIATION IF THE PURCHASE IS FOR EXPERIMENTAL, DEVELOPMENTAL OR RESEARCH WORK.

YOU CONTEND FURTHER THAT THE AWARD IS OF QUESTIONABLE LEGAL VALIDITY SINCE THE ADMINISTRATIVE REPORT RECOGNIZES THAT THERE MAY HAVE BEEN A VIOLATION OF 10 U.S.C. 2304 (G) REGARDING THE CONDUCT OF WRITTEN OR ORAL DISCUSSIONS WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE IN THAT A REVISED WORK STATEMENT WAS RESTRICTED TO GE RATHER THAN BY INCLUDING THE REVISION IN AN AMENDMENT THAT WOULD BE GIVEN BROADER CIRCULATION. IN THIS REGARD, THE AGENCY HAS RECOGNIZED THE POSSIBLE INSUFFICIENCY AND HAS INDICATED THAT IT WILL TAKE CORRECTIVE ACTION TO APPRISE ERC OF THE PROCUREMENT DEFICIENCIES. CONSIDERING THE PRESENT POSTURE OF THE CASE, THE FACT THAT THE AWARD WAS MADE APRIL 30, 1969, AND THAT THE CONTRACT CALLS FOR RESEARCH WORK BEING COMPLETED IN 8 MONTHS AND THAT 6 MONTHS HAVE NOW ELAPSED FROM THE CONTRACT COMMENCEMENT DATE, OUR OFFICE DOES NOT CONTEMPLATE ANY REMEDIAL ACTION AT THIS TIME.