B-167578, OCT. 28, 1969

B-167578: Oct 28, 1969

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PROPRIETY WHERE NEGOTIATIONS WERE OPENED AFTER CONTRACTING OFFICER HAD DETERMINED TO AWARD CONTRACT ON BASIS OF INITIAL PROPOSALS. CONTRACTING OFFICER'S ACTION IN OPENING NEGOTIATIONS UPON RECEIVING PROPOSAL MODIFICATION IS NOT SUBJECT TO QUESTION. POSSIBLE INFERENCE FROM PREAWARD SURVEY THAT OFFEROR'S PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR AS SUCH WOULD NOT PER SE CONSTITUTE "AUCTION TECHNIQUE" PROHIBITED BY ASPR 3- 805 (B). ON THE GROUND THAT THE CONDUCT OF NEGOTIATIONS AFTER COMPLETION OF A PREAWARD SURVEY OF YOUR FIRM WAS IMPROPER. THE CLOSING DATE FOR SUBMISSION OF PROPOSALS UNDER THE SUBJECT RFP WAS JUNE 4. BASED ON THE CONTRACTING OFFICER'S DETERMINATION THAT THE AIR MOTIVE PRICES WERE FAIR AND REASONABLE.

B-167578, OCT. 28, 1969

NEGOTIATION--PROPRIETY WHERE NEGOTIATIONS WERE OPENED AFTER CONTRACTING OFFICER HAD DETERMINED TO AWARD CONTRACT ON BASIS OF INITIAL PROPOSALS, AND PREAWARD SURVEY OF APPARENTLY SUCCESSFUL OFFEROR HAD BEEN COMPLETED, CONTRACTING OFFICER'S ACTION IN OPENING NEGOTIATIONS UPON RECEIVING PROPOSAL MODIFICATION IS NOT SUBJECT TO QUESTION, SINCE ASPR 3-506 DOES NOT PRECLUDE OPENING OF NEGOTIATIONS WITH ALL OFFERORS UPON RECEIPT OF MODIFICATION TO OFFER WHICH WOULD PROVE ADVANTAGEOUS TO GOVT.; POSSIBLE INFERENCE FROM PREAWARD SURVEY THAT OFFEROR'S PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR AS SUCH WOULD NOT PER SE CONSTITUTE "AUCTION TECHNIQUE" PROHIBITED BY ASPR 3- 805 (B); AND NO EVIDENCE EXISTED THAT INITIATION OF PREAWARD SURVEY RESULTED IN RELEASE OF PROCUREMENT INFORMATION.

TO AIR MOTIVE ENGINEERING CORPORATION:

YOUR TELEGRAM DATED JULY 28, 1969, PROTESTED AGAINST THE AWARD OF A CONTRACT TO ANY OTHER OFFEROR UNDER REQUEST FOR PROPOSALS (RFP) NO. F41608 -69-R-4804, ISSUED BY THE SAN ANTONIO AIR MATERIEL AREA, ON THE GROUND THAT THE CONDUCT OF NEGOTIATIONS AFTER COMPLETION OF A PREAWARD SURVEY OF YOUR FIRM WAS IMPROPER.

THE CLOSING DATE FOR SUBMISSION OF PROPOSALS UNDER THE SUBJECT RFP WAS JUNE 4, 1969, AND BASED ON THE CONTRACTING OFFICER'S DETERMINATION THAT THE AIR MOTIVE PRICES WERE FAIR AND REASONABLE, INITIAL PROPOSALS WERE EVALUATED ON THE BASIS OF A POSSIBLE AWARD THEREUNDER WITHOUT DISCUSSIONS PURSUANT TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1 (A) (V) AND PARAGRAPH 10 (G) OF STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS. A PREAWARD SURVEY OF AIR MOTIVE WAS THEREFORE REQUESTED OF THE DALLAS DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR) OFFICE ON JUNE 18, 1969, AND ON JULY 2, 1969, AN AFFIRMATIVE PREAWARD SURVEY REPORT ON AIR MOTIVE WAS FURNISHED THE CONTRACTING OFFICER. JULY 8, 1969, HOWEVER, ANOTHER OFFEROR REQUESTED AND WAS GRANTED PERMISSION TO SUBMIT A PROPOSAL MODIFICATION. AFTER RECEIPT OF THE REVISED OFFER, THE CONTRACTING OFFICER RELYING UPON OUR DECISION AT 47 COMP. GEN. 279 (1967), FIXED JULY 30, 1969, AS THE FINAL DATE FOR SUBMISSION OF PROPOSAL MODIFICATIONS AND ALL OFFERORS WERE ADVISED OF THE OPPORTUNITY TO REEVALUATE THEIR PRICES AND DELIVERY TERMS FOR THE PURPOSE OF SUBMITTING THEIR BEST AND FINAL OFFERS TO THE GOVERNMENT BY JULY 30. REVISED OFFERS WERE RECEIVED FROM ALL OFFERORS BY THAT DATE. NO AWARD HAS BEEN MADE AS YET UNDER THE RFP.

YOU MAINTAIN THAT THE INITIATION OF A PREAWARD SURVEY OF YOUR FIRM NOT ONLY PUT OTHER OFFERORS ON NOTICE THAT YOUR FIRM WAS IN LINE FOR AWARD, BUT THAT ONCE YOUR PROPOSAL PRICE WAS DIVULGED OUTSIDE OF THE PROCURING ACTIVITY, I.E., TO THE DALLAS DCASR OFFICE, THERE WAS NO GUARANTEE THAT IT DID NOT FIND ITS WAY INTO THE HANDS OF YOUR COMPETITORS PROMPTING A PROPOSAL MODIFICATION DESIGNED TO BETTER THE PRICES SET OUT IN YOUR PROPOSAL. YOU THEREFORE CONTEND THAT THE OPENING OF NEGOTIATIONS AFTER A DETERMINATION TO AWARD ON THE BASIS OF INITIAL PROPOSALS AND THE COMPLETION OF A PREAWARD SURVEY ON THE APPARENTLY SUCCESSFUL OFFEROR "IS NOT IN LINE WITH THE INTENT OF THE LAW OR ITS IMPLEMENTING REGULATIONS.'

47 COMP. GEN. 279 (1967), RELIED ON BY THE CONTRACTING OFFICER IN MAKING HIS DETERMINATION THAT PROPOSAL MODIFICATIONS WERE IN ORDER NOTWITHSTANDING THE FACT THAT A PREAWARD SURVEY REPORT ON AIR MOTIVE HAD BEEN COMPLETED, HELD THAT THE REJECTION OF A PROPOSAL MODIFICATION OFFERING A SIGNIFICANT PRICE REDUCTION AS LATE WHERE A PRIOR DETERMINATION HAD BEEN MADE TO AWARD WITHOUT NEGOTIATION ON THE BASIS THAT ADEQUATE COMPETITION EXISTED, BUT WHERE NO AWARD HAD IN FACT BEEN MADE, WAS AN "UNSOUND EXERCISE OF DISCRETION.' THE DECISION STATED THAT:

"* * * WHILE THE PROVISIONS OF ASPR 3-506 OPERATE TO PRECLUDE, IN THE SPECIFIED CIRCUMSTANCES, ACCEPTANCE OF A LATE OFFER OR MODIFICATION AS SUCH, THEY DO NOT, AND WERE NEVER INTENDED TO, PRECLUDE THE OPENING UP OF NEGOTIATIONS WITH ALL OFFERORS COMPETITIVELY SITUATED UPON THE RECEIPT OF A LATER MODIFICATION TO A TIMELY OFFER WHICH FAIRLY INDICATES THAT SUCH NEGOTIATIONS WOULD PROVE TO BE HIGHLY ADVANTAGEOUS TO THE GOVERNMENT. * *

SIMILARLY, A MORE RECENT CASE, 48 COMP. GEN. 323 (1968), INVOLVED A SITUATION, SEEMINGLY IDENTICAL TO THE ONE GIVING RISE TO YOUR PROTEST, IN WHICH NEGOTIATIONS WERE OPENED AFTER A DETERMINATION TO AWARD WITHOUT NEGOTIATION AND THE INSTITUTION OF A PREAWARD SURVEY OF THE LOW OFFEROR. THAT DECISION SUSTAINED THE CONDUCT OF NEGOTIATIONS NOTWITHSTANDING THE POSSIBILITY THAT THE INITIATION OF A PREAWARD SURVEY "CAN IN A PARTICULAR CASE GIVE RISE TO THE INFERENCE THAT AN OFFEROR'S PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR" ON THE BASES THAT THE ABOVE-MENTIONED "INFERENCE" WOULD NOT PER SE CONSTITUTE AN "AUCTION TECHNIQUE," PROHIBITED BY ASPR 3-805.1 (B), AND THAT NO EVIDENCE EXISTED THAT THE INITIATION OF A PREAWARD SURVEY RESULTED IN THE RELEASE OF PROCUREMENT INFORMATION.

HOWEVER, BECAUSE BOTH OF THE ABOVE-CITED CASES POINTED UP AN UNCERTAINTY IN THE EXISTING REGULATIONS WITH REGARD TO LATE PROPOSAL MODIFICATIONS IN THAT THE REGULATIONS REQUIRE REJECTION OF LATE PROPOSAL MODIFICATIONS WHILE REQUIRING AT THE SAME TIME THAT NEGOTIATIONS BE CONDUCTED, THE MATTER WAS BROUGHT TO THE ATTENTION OF THE SECRETARY OF DEFENSE FOR POSSIBLE CONSIDERATION BY THE ASPR COMMITTEE.

IN THE INSTANT CASE, THERE IS NO INDICATION THAT THE REQUEST FOR A PREAWARD SURVEY OF AIR MOTIVE RESULTED IN THE DISCLOSURE OF THE AIR MOTIVE PROPOSAL PRICES OUTSIDE OF THE GOVERNMENT. IN VIEW OF THE FACT THAT ASPR 3-507.2 PRECLUDES THE RELEASE OF SUCH INFORMATION BEFORE THE AWARD OF A NEGOTIATED CONTRACT, WE WOULD NOT BE JUSTIFIED IN CONCLUDING, WITHOUT CONVINCING EVIDENCE, THAT THE REFERRAL TO DCASR FOR A PREAWARD SURVEY RESULTED IN SUCH A DISCLOSURE. FURTHER, THE REPORT SUBMITTED TO OUR OFFICE BY THE DEPARTMENT OF THE AIR FORCE STATES THAT THE NATURE OF THE MODIFICATION WHICH LED TO THE OPENING OF NEGOTIATIONS WAS SUCH THAT NO INDICATION OF "INSIDE KNOWLEDGE" EXISTED.

IN ACCORDANCE WITH THE ABOVE CONSIDERATIONS, WE MUST CONCLUDE THAT THE ACTION OF THE CONTRACTING OFFICER IN OPENING NEGOTIATIONS UPON RECEIPT OF A PROPOSAL MODIFICATION IS NOT SUBJECT TO QUESTION AND THAT YOUR PROTEST MUST THEREFORE BE DENIED.