B-168519, MAY 14, 1970, 49 COMP. GEN. 772

B-168519: May 14, 1970

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WHICH QUANTITIES WERE BELOW KNOWN REQUIREMENTS THAT IF DISCLOSED. DISCLOSURE WAS NOT PREVENTED BY THE INTENSIVE COMBAT RATE (PRODUCTION CAPABILITY) ESTABLISHED FOR THE PROCUREMENT. WOULD HAVE OBTAINED LOWER PRICES. WAS A DEFECTIVE RFP. ERRONEOUSLY BASED ON THE BELIEF ALL SUPPLIERS WOULD HAVE TO BE RESOLICITED WHEREAS AN AMENDMENT TO THE RFP WOULD HAVE SUFFICED. THE AWARDS MADE WILL NOT BE DISTURBED. WAS ISSUED PURSUANT TO 10 U.S.C. 2304(A)(16). PERMITTING NEGOTIATION WHERE PURCHASES ARE TO BE MADE IN THE INTEREST OF NATIONAL DEFENSE OR INDUSTRIAL MOBILIZATION. WAS AUTHORIZED BY A PROPERLY EXECUTED CLASS DETERMINATION AND FINDINGS. WERE TO: A. APPARENTLY IS THE MAXIMUM PRODUCTION CAPABILITY OF A GIVEN CONTRACTOR.

B-168519, MAY 14, 1970, 49 COMP. GEN. 772

CONTRACTS -- NEGOTIATION -- PRICES -- BASED ON QUANTITY SOLICITED A REQUEST FOR PROPOSALS (RFP) FOR ROCKET BOOSTERS, ISSUED PURSUANT TO 10 U.S.C. 2304(A)(16) PERMITTING NEGOTIATION IN THE INTEREST OF NATIONAL DEFENSE OR INDUSTRIAL MOBILIZATION, AND APPROVED BY A CLASS DETERMINATION AND FINDINGS, THAT SOLICITED OFFERS ON THREE ALTERNATIVE QUANTITIES FOR SINGLE OR MULTIPLE AWARD, WHICH QUANTITIES WERE BELOW KNOWN REQUIREMENTS THAT IF DISCLOSED, AND DISCLOSURE WAS NOT PREVENTED BY THE INTENSIVE COMBAT RATE (PRODUCTION CAPABILITY) ESTABLISHED FOR THE PROCUREMENT, WOULD HAVE OBTAINED LOWER PRICES, WAS A DEFECTIVE RFP. ALTHOUGH THE DETERMINATION NOT TO CONSIDER AN INVOLUNTARY OFFER OF LARGER QUANTITIES AT LOWER PRICES, ERRONEOUSLY BASED ON THE BELIEF ALL SUPPLIERS WOULD HAVE TO BE RESOLICITED WHEREAS AN AMENDMENT TO THE RFP WOULD HAVE SUFFICED, RESULTED IN HIGHER PRICES, THE AWARDS MADE WILL NOT BE DISTURBED, BUT FUTURE PROCUREMENTS SHOULD PERMIT OFFERS IN THE LARGEST QUANTITIES POSSIBLE WITHIN THE CONSTRAINT IMPOSED BY THE INTENSIVE COMBAT RATE.

TO THE SECRETARY OF THE ARMY, MAY 14, 1970:

BY LETTER DATED JANUARY 27, 1970, THE DEPUTY DIRECTOR FOR PROCUREMENT, DIRECTORATE OF REQUIREMENTS AND PROCUREMENT, HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, FURNISHED OUR OFFICE WITH A REPORT ON THE PROTEST OF BRAD'S MACHINE PRODUCTS, INC. (BMP), UNDER REQUEST FOR PROPOSALS (RFP) DAAA09-70-R-0049.

THE SUBJECT RFP, FOR M125A1 BOOSTERS, WAS ISSUED PURSUANT TO 10 U.S.C. 2304(A)(16), AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-216, PERMITTING NEGOTIATION WHERE PURCHASES ARE TO BE MADE IN THE INTEREST OF NATIONAL DEFENSE OR INDUSTRIAL MOBILIZATION, AND WAS AUTHORIZED BY A PROPERLY EXECUTED CLASS DETERMINATION AND FINDINGS. THE OBJECTIVES OF THE INSTANT PROCUREMENT, AS LISTED IN THE JANUARY 27 REPORT, WERE TO:

A. MEET A MONTHLY PRODUCTION RATE OF 1.3 MILLION

B. SUPPORT AN ICR (INTENSIVE COMBAT RATE) OF 2.4 MILLION

C. MAINTAIN METAL PARTS PRODUCTION CONTINUITY

D. BUY AT THE LOWEST COST CONSISTENT WITH THE OBJECTIVES WHILE NOT SPECIFICALLY DEFINED IN THE ADMINISTRATIVE FILE, "INTENSIVE COMBAT RATE," OR ICR, APPARENTLY IS THE MAXIMUM PRODUCTION CAPABILITY OF A GIVEN CONTRACTOR, OR GROUP OF CONTRACTORS, AS DETERMINED BY THE CONTRACTING OFFICIALS.

TO MEET THE STATED OBJECTIVES, THE RFP SOLICITED OFFERS ON THREE ALTERNATIVE QUANTITIES OF THE SUBJECT BOOSTERS TO BE DELIVERED WITHIN AN 8 -MONTH PERIOD COMMENCING JANUARY 1, 1970, AS FOLLOWS:

TOTAL QUANTITY DELIVERY RATE

ALTERNATE 1A 1,600,000 200,000 PER MONTH

ALTERNATE 1B 2,400,000 300,000 PER MONTH

ALTERNATE 1C 3,200,000 400,000 PER MONTH

THE RFP ALSO CONTAINED AN OPTION PROVISION RESERVING TO THE GOVERNMENT THE RIGHT TO INCREASE THE TOTAL QUANTITY OF ANY ITEM AWARDED BY 50 PERCENT AT ANY TIME FROM THE DATE OF AWARD AT THE LOWER OF THE SCHEDULED PRICES OR THE PRICES QUOTED SEPARATELY BY THE OFFEROR FOR THE OPTION QUANTITIES, AND PROVIDED THAT DELIVERIES OF THE OPTION QUANTITIES WOULD COMMENCE UPON COMPLETION OF DELIVERIES OF THE BASIC QUANTITIES UNLESS OTHERWISE AGREED BY THE PARTIES.

WITH RESPECT TO THE METHOD OF AWARD OF THE THREE ALTERNATES, PAGE 5 OF PART A OF THE RFP, AS AMENDED, STATED AS FOLLOWS:

*** PROPOSALS FOR QUANTITIES OTHER THAN THE TOTAL QUANTITIES LISTED BELOW FOR EACH ALTERNATIVE 1A, 1B, AND 1C WILL NOT BE CONSIDERED FOR AWARD.

NOTICE TO OFFERORS: (POSSIBLE COMBINATIONS OF AWARDS) THIS SOLICITATION AND THE RANGE OF QUANTITIES AND DELIVERY RATES PROPOSED ARE FOR THE PURPOSE OF ALLOWING THE GOVERNMENT TO SELECT A SINGLE AWARD, OR COMBINATION OF MULTIPLE AWARDS WHICH WILL SATISFY THE CURRENT PRODUCTION REQUIREMENTS AND AT THE SAME TIME RETAIN ONE OR MORE SUPPLIERS IN AN ACTIVE STATE WITH CAPABILITY TO ACCELERATE PRODUCTION TO A HIGHER PRODUCTION RATE AT SOME FUTURE DATE, IF REQUIRED. THE GOVERNMENT EXPECTS THAT ONE OR MORE OFFERORS PARTICIPATING IN THIS COMPETITIVE PROCUREMENT ACTION WILL BE UNSUCCESSFUL AND MAY NOT RECEIVE ANY AWARD AS A RESULT OF THIS SOLICITATION. IT IS POSSIBLE THAT NOT MORE THAN THREE AWARDS WILL RESULT FROM THIS SOLICITATION AND THE QUANTITIES AND DELIVERY SCHEDULES AWARDED MAY VARY BETWEEN THOSE OFFERORS WHO ARE SELECTED FOR AWARDS WITH SOME RECEIVING LARGER QUANTITIES THAN OTHERS, BASED ON THE ALTERNATE QUANTITIES, ALTERNATE DELIVERY SCHEDULES, AND PRICES SUBMITTED IN RESPONSE TO THE SOLICITATION. THE GOVERNMENT RESERVES THE RIGHT TO MAKE THAT COMBINATION OF AWARDS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. PRINCIPAL AMONG SUCH OTHER FACTORS WILL BE THE POTENTIAL QUANTITATIVE MOBILIZATION PRODUCTION REQUIREMENT FOR THE SUPPLY ITEM INVOLVED AND THE ABILITY OF FIRMS SELECTED FOR AWARD TO RESPOND TO SUCH POTENTIAL FUTURE DEMANDS BY THE GOVERNMENT FOR INCREASED PRODUCTION BEYOND THE QUANTITIES INITIALLY AWARDED AS A RESULT OF THIS SOLICITATION.

OFFERORS SUBMITTING PROPOSALS ON ALTERNATIVE IC MUST SUBMIT PROPOSALS ON ALTERNATIVE 1A AND 1B. OFFERS SUBMITTING PROPOSALS ON ALTERNATIVE IB MUST SUBMIT A PROPOSAL ON ALTERNATIVE 1A. OFFERORS SUBMITTING PROPOSALS ON ALTERNATIVE 1A ONLY ARE NOT REQUIRED TO SUBMIT PROPOSALS ON ALTERNATIVE 1B OR 1C. FAILURE TO COMPLY WITH THE ABOVE PROCEDURE WILL BE CAUSE FOR THE REJECTION OF PROPOSAL.

THE AMENDED DATE FOR PROPOSAL SUBMISSION WAS OCTOBER 6, 1969, BY WHICH TIME 16 PROPOSALS HAD BEEN RECEIVED. THE PROPOSAL SUBMITTED BY BMP BY THAT DATE QUOTED PRICES FOR THE THREE LISTED ALTERNATES AND ALSO, ACCORDING TO THE ATTORNEYS FOR BMP, THE COMPANY, BY LETTER DATED SEPTEMBER 24, 1969, SUBMITTED AN ALTERNATE PROPOSAL FOR 8,000,000 UNITS (1,000,000 PER MONTH) AT A PRICE OF $1.579 EACH WITH DUTY FREE CERTIFICATES OR $1.624 WITHOUT DUTY FREE CERTIFICATES. THIS INITIAL ALTERNATE PROPOSAL WAS NOT INCLUDED IN THE ADMINISTRATIVE FILE FURNISHED US AND IT NOW APPEARS THAT THE SEPTEMBER 24 LETTER WAS WITHDRAWN BEFORE THE OCTOBER 6 PROPOSAL SUBMISSION DATE. BY TELETYPE DATED OCTOBER 13, 1969, THE DATE OF OCTOBER 17, 1969, WAS SET AS THE CLOSING DATE FOR PROPOSAL MODIFICATIONS, AND EACH OF THE 16 OFFERORS WAS REQUESTED TO "GIVE YOUR FINAL OFFER ON EACH OF THE ALTERNATIVES ON WHICH YOUR FIRM ORIGINALLY SUBMITTED AN OFFER."

BY LETTER DATED OCTOBER 16, 1969, BMP QUOTED THE FOLLOWING PRICES ON THE THREE RFP ALTERNATES:

ALTERNATE 1A ALTERNATE 1B ALTERNATE 1C

(200,000 PER MONTH) (300,000 PER MONTH) (400,000 PER MONTH)

$1.520 EACH $1.512 EACH $1.493 EACH

IN ADDITION, BMP SUBMITTED AN ALTERNATE PROPOSAL FOR QUANTITIES OF 600,000 PER MONTH, 800,000 PER MONTH, AND 1,000,000 PER MONTH AS FOLLOWS:

600,00 PER MONTH 600,000 PER MONTH 1,000,000 PER MONTH

$1.466 EACH $1.451 EACH $1.433 EACH

A SECOND LETTER DATED OCTOBER 16 ALSO QUOTED A PRICE OF $1.433 EACH FOR MONTHLY QUANTITIES OF 800,000, 1,000,000, AND 1,375,000 PER MONTH AND OFFERED TO "BUILD OUR MACHINE AND TOOLING CAPACITY TO A MAXIMUM OF 2.4 MILLION PER MONTH" IN ORDER TO MEET THE GOVERNMENT'S INTENSIVE COMBAT RATE IN THE EVENT AWARDS IN EXCESS OF 800,000 PER MONTH WERE TO BE MADE TO BMP. THE UNEXPANDED INTENSIVE COMBAT RATE OF BMP IS REPORTEDLY 1.25 MILLION PER MONTH, APPROXIMATELY 52 PERCENT OF THE RATE REQUIRED (2.4 MILLION PER MONTH).

ALSO, BY LETTER DATED NOVEMBER 4, 1969, AFTER THE CLOSING DATE FOR PROPOSAL MODIFICATION, BMP MODIFIED ITS ALTERNATE PROPOSAL BOTH IN TERMS OF PRICE AND QUANTITY, ALLEGEDLY AT THE REQUEST OF THE PROCURING ACTIVITY, AS FOLLOWS:

500,000 PER MONTH 600,000 PER MONTH 700,000 PER MONTH

$1.422 EACH $1.417 EACH $1.408 EACH

800,000 PER MONTH 900,000 PER MONTH 1,000,000 PER MONTH

$1.401 EACH $1.396 EACH $1.388 EACH

IN THE SAME LETTER BMP AGAIN OFFERED TO EXPAND ITS INTENSIVE COMBAT RATE CAPABILITY, THIS TIME TO 2.5 MILLION UNITS PER MONTH.

BEFORE RECEIPT OF THE NOVEMBER 4 BMP LATE PROPOSAL MODIFICATION, THE CONTRACTING OFFICER, BY LETTER DATED NOVEMBER 6, 1969, ADVISED BMP THAT ITS UNSOLICITED ALTERNATE PROPOSALS HAD "BEEN REVIEWED AND FOUND NOT TO BE IN THE BEST INTEREST OF THE GOVERNMENT, WITH ALL FACTORS CONSIDERED."

ALTHOUGH THE PROTEST OF BMP WAS MADE BEFORE AWARDS WERE ACCOMPLISHED, AWARDS WERE NEVERTHELESS MADE, ON THE BASIS OF URGENCY, ON DECEMBER 4, 1969. AWARDS WERE NOT MADE, HOWEVER, UNTIL THE PROPOSED ACTIONS WERE APPROVED BY THE DIRECTOR, MATERIEL ACQUISITION, OFFICE OF THE ASSISTANT SECRETARY, AND UNTIL OUR OFFICE WAS NOTIFIED PURSUANT TO ASPR 2-407.9. AWARDEES, THE QUANTITIES AWARDED, AND THE RESPECTIVE PRICES ARE SET OUT BELOW:

CONTRACTOR QUANTITY

BMP 1,600,000 (2000,000 PER MO.)

I.D. PRECISION COMPONENTS 2,400,000 (300,000 PER MO.)

ETOWAH MFG. CO. 3,200,000 (400,000 PER MO.)

D.V.A. CORPORATION 3,200,000 (400,000 PER MO.)

PRICE TOTAL PRICE

$1.52 EACH $2,432,000

$1.46 EACH $3,504,000

$1.452 EACH $4,662,400

$1.435 EACH $4,592,000

$15,190,400

WE HAVE BEEN INFORMALLY ADVISED BY THE DEPARTMENT OF THE ARMY THAT THE INTENSIVE COMBAT RATES FOR THE SUCCESSFUL OFFERORS ARE AS FOLLOWS:

CONTRACTOR ICR

BMP 1,250,000 PER MONTH

I.D. PRECISION COMPONENTS 300,000 PER MONTH

ETOWAH MFG. CO. 500,000 PER MONTH

DVA CORPORATION 750,000 PER MONTH

THE PROTEST OF BMP INITIALLY REQUESTED THAT THE CONTRACTS AWARDED BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT ON THE GROUND THAT THE RFP TERMS AS AMENDED ENCOURAGED THE SUBMISSION OF OFFERS FOR QUANTITIES IN EXCESS OF THOSE CONTAINED IN THE THREE LISTED ALTERNATES AND THAT SINCE SUCH OFFERS WERE PERMITTED BY THE RFP TERMS, THERE WAS NO REQUIREMENT THAT THE RFP BE AMENDED OR THAT RESOLICITATION BE ACCOMPLISHED IN ORDER THAT THE SAME OPPORTUNITY BE EXTENDED TO THE OTHER OFFERORS AFTER RECEIPT OF THE BMP ALTERNATIVE PROPOSAL FOR LARGER QUANTITIES. ALTERNATIVELY, BMP ARGUES THAT IF OFFERS IN LARGER QUANTITIES WERE NOT IN STRICT ACCORD WITH THE RFP TERMS, GOOD PROCUREMENT PRACTICE REQUIRED FURTHER NEGOTIATION WHERE SUCH OFFERS WERE IN THE GOVERNMENT'S INTEREST BECAUSE OF THEIR SIGNIFICANTLY LOWER COST.

AS AN INDICATION OF THE POTENTIAL LOWER COSTS THAT WOULD BE REALIZED BY AWARD TO BMP IN HIGHER QUANTITY RANGES, THE BRIEFING PREPARED BY THE ARMY MATERIEL COMMAND FOR PRESENTATION TO MEMBERS OF THE STAFF OF THE OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY, (INSTALLATIONS AND LOGISTICS), DIRECTORATE OF MATERIEL ACQUISITION, INDICATED THAT AN AWARD OF A MONTHLY PRODUCTION QUANTITY OF 1,000,000 PER MONTH TO BMP AT ITS QUOTED PRICE FOR THAT QUANTITY AND AN AWARD OF A QUANTITY OF 300,000 PER MONTH TO DVA CORPORATION AT ITS QUOTED PRICE FOR THAT QUANTITY WOULD HAVE RESULTED IN A SAVINGS OF SOME $606,983 OVER THE ACTUALLY AWARDED PRICES. THE RECOMMENDATION OF THE BRIEFING, SUBSEQUENTLY APPROVED BY THE DIRECTOR, MATERIEL ACQUISITION, HOWEVER, WAS THAT AWARD ON THE HIGHER QUANTITY RANGES WAS NOT FEASIBLE. THE REASONS FOR THIS RECOMMENDATION ARE DISCUSSED BELOW.

BY LETTER DATED FEBRUARY 26, 1970, SUBMITTED BY BMP'S ATTORNEYS IN REBUTTAL OF THE JANUARY 27, 1970, ADMINISTRATIVE REPORT, THE TERMINATION REQUEST WAS WITHDRAWN IN VIEW OF THE TIME ELAPSED SINCE AWARDS WERE MADE AND IN ITS PLACE IT WAS REQUESTED "THAT THE ARMY BE INSTRUCTED IN FUTURE NEGOTIATED PROCUREMENTS TO SOLICIT AND CONSIDER PROPOSALS ON LARGER MONTHLY QUANTITIES, AS THE BEST INTERESTS OF THE GOVERNMENT DICTATE THAT THE TOTAL PRICE PAID ON THIS TYPE OF PROCUREMENT BE THE LOWEST PRICES SUBMITTED BY RESPONSIBLE OFFERORS."

THE POSITION TAKEN IN THE ADMINISTRATIVE REPORT IS THAT WHILE THE BMP OFFERS IN THE UPPER QUANTITY RANGES WOULD HAVE PROVIDED THE GOVERNMENT WITH LOWER PRICES, SUCH OFFERS COULD NOT HAVE BEEN CONSIDERED UNDER THE RFP TERMS WITHOUT A RESOLICITATION OF ALL 41 SUPPLIERS ORIGINALLY SOLICITED. IT WAS ESTIMATED THAT SUCH RESOLICITATION WOULD TAKE 5 WEEKS, BUT IT WAS CONCLUDED THAT SUCH PERIOD WOULD BE UNACCEPTABLE BECAUSE OF URGENCY. THE REPORT ALSO POSTULATES ADDITIONAL COST FIGURES WHICH WOULD THEORETICALLY BE INCURRED IF THE CURRENT CONTRACT WERE EXTENDED TO ALLOW RESOLICITATION, WHICH THEORETICAL COSTS ARE SAID TO BE IN EXCESS OF ANY COST SAVINGS TO BE GAINED BY ACCEPTANCE OF BMP'S LOWER OFFERS IN THE HIGHER RANGES. FINALLY, THE REPORT MAINTAINS THAT THE AWARDS AS MADE WERE NECESSARY TO MAINTAIN THE ICR RATE OF 2.4 MILLION PER MONTH, AND THAT RESOLICITATION FOR OFFERS ON HIGHER PRODUCTION QUANTITIES WOULD PROBABLY VIOLATE THE ADEQUATE PRICE COMPETITION PROVISIONS OF ASPR 3- 807.1(B)(1)(B)(I).

WHILE WE AGREE WITH BMP'S ATTORNEYS THAT THE AWARDS AS MADE SHOULD NOT BE QUESTIONED AT THIS DATE, IT IS OUR OPINION, FOR REASONS SET OUT BELOW, THAT THE RFP WAS DEFICIENT IN THAT IT FAILED TO ADVISE OFFERORS OF THE QUANTITIES NEEDED TO SATISFY THE GOVERNMENT'S KNOWN REQUIREMENTS (I.E., A MONTHLY PRODUCTION RATE OF 1.3 MILLION) AND ALSO FAILED TO SOLICIT OFFERS ON THOSE QUANTITIES. IN THIS REGARD, THE STATUTE AND REGULATIONS GOVERNING NEGOTIATED PROCUREMENT CLEARLY CONTEMPLATE AWARDS AT THE LOWEST POSSIBLE PRICES, ALL OTHER RELEVANT FACTORS CONSIDERED. SEE 10 U.S.C. 2304(G) AND ASPR 3-804. SINCE LOWER PRICES GENERALLY RESULT WHEN LARGER QUANTITIES OF A PRODUCTION ITEM ARE PURCHASED, A REQUEST FOR PROPOSALS, AS HERE, LIMITING OFFERS TO QUANTITY RANGES SIGNIFICANTLY LOWER THAN THE GOVERNMENT'S KNOWN REQUIREMENTS CAN BE EXPECTED TO RESULT IN HIGHER PRICES, ESPECIALLY WHEN MULTIPLE AWARDS ARE MADE FOR LESS THAN THE KNOWN REQUIREMENTS, CONTRARY TO THE EXPRESSED INTENT OF THE GOVERNING REGULATIONS. IN THE INSTANT CASE, MOBILIZATION REQUIREMENTS DICTATE THAT A PRODUCTION CAPACITY FOR QUANTITIES IN EXCESS OF PRESENT NEEDS BE MAINTAINED AND IT WAS NECESSARY THAT THIS REQUIREMENT BE MET EVEN IF IT RESULTED IN HIGHER PRICES. HOWEVER, NEITHER THE CLASS D&F JUSTIFYING NEGOTIATION UNDER THE INDUSTRIAL MOBILIZATION EXCEPTION TO THE FORMAL ADVERTISING RULES NOR THE RFP ITSELF STATES THAT THE MAINTENANCE OF THE NEEDED PRODUCTION CAPACITY NECESSARILY REQUIRES CURRENT PRODUCTION BY MORE THAN ONE CONTRACTOR. IN FACT, THE RFP SPECIFICALLY RESERVES TO THE GOVERNMENT THE RIGHT TO MAKE EITHER A SINGLE AWARD OR VARIOUS COMBINATIONS OF MULTIPLE AWARDS. ADDITIONALLY, WHILE THE ADMINISTRATIVE REPORT MAINTAINS THAT THE AWARDS AS MADE WERE NECESSARY TO SUPPORT THE REQUIRED ICR, THERE IS NO INDICATION IN THE RFP OR IN THE ADMINISTRATIVE FILE THAT INDIVIDUAL AWARDS IN EXCESS OF 400,000 UNITS A MONTH WOULD DEFEAT THE REQUIREMENT FOR AN INTENSIVE COMBAT RATE OF 2.4 MILLION UNITS PER MONTH OR THAT THERE WAS ANY CORRELATION BETWEEN THE PRODUCTION QUANTITIES AWARDED AND THE INTENSIVE COMBAT RATE CAPACITY. WITH REGARD TO THE LATTER POINT, THE FACT THAT THE SPECIFIC INTENSIVE COMBAT RATE CAPACITIES ASSIGNED TO THE SUCCESSFUL OFFERORS DID NOT BEAR ANY RELATION TO THE QUANTITIES AWARDED (I.E., BMP WAS AWARDED THE SMALLEST PRODUCTION QUANTITY WHILE BEING POSSESSED OF AN ICR SIGNIFICANTLY LARGER THAN ITS COMPETITORS) WOULD SEEM TO SUPPORT THE PROPOSITION THAT NO SUCH CORRELATION IN FACT EXISTED. THEREFORE, SO LONG AS THE GOVERNMENT WAS ASSURED THAT AWARDS MADE TO ONE OR MORE OFFERORS WOULD SUPPORT THE ICR CAPACITY OF 2.4 MILLION UNITS PER MONTH, WE ARE AWARE OF NO JUSTIFIABLE BASIS FOR FAILING TO ADVISE OFFERORS IN THE RFP OF THE 1.3 MILLION MONTHLY PRODUCTION RATE WHICH WAS STATED TO BE AN OBJECTIVE OF THIS PROCUREMENT, AND FOR SOLICITING OFFERS ON THE BASIS OF THAT MONTHLY PRODUCTION RATE.

ADDITIONALLY, THERE APPEARS TO BE NO BASIS FOR THE INCLUSION IN THE RFP OF THE PROVISION LIMITING OFFERS TO THE TOTAL QUANTITIES LISTED FOR EACH OF THE ALTERNATES IN VIEW OF THE RESERVATION OF THE RIGHT TO THE GOVERNMENT TO MAKE A SINGLE AWARD OR MULTIPLE AWARDS AND IN VIEW OF THE RFP REQUIREMENT THAT OFFERORS QUOTE INDIVIDUAL PRICES ON VARIOUS COMBINATIONS OF ALTERNATES (E.G., AN OFFER FOR ALTERNATE 1C REQUIRED OFFERS ALSO ON ALTERNATES 1A AND 1B). THIS PROVISION, IF READ LITERALLY, WOULD PRECLUDE OFFERS OF LOWER PRICES FOR THE AWARD OF MORE THAN ONE ALTERNATE, OR OF ALL ALTERNATES, EVEN THOUGH THE RIGHT WAS EXPRESSLY RESERVED TO MAKE AWARD ON SUCH COMBINATION BASIS IF DETERMINED TO BE IN THE GOVERNMENT'S INTEREST. SEE 47 COMP. GEN. 658 (1968). THE OBJECTIVE OF THE GOVERNMENT, THOUGH UNEXPRESSED IN THE RFP, WAS TO AWARD MONTHLY PRODUCTION QUANTITIES IN EXCESS OF THE TOTAL MONTHLY PRODUCTION QUANTITIES SET OUT IN THE RFP. WITH THIS OBJECTIVE IN MIND A PROVISION LIMITING OFFERS TO LESSER QUANTITIES COUPLED WITH THE FAILURE TO ADVISE OFFERORS OF TOTAL MONTHLY PRODUCTION QUANTITIES DESIRED WOULD SEEM TO ASSURE HIGHER RATHER THAN LOWER PRICES.

APART FROM THE FACT THAT THE RFP WAS DEFICIENT, THERE WAS NO JUSTIFICATION, IN OUR OPINION, FOR FAILING TO CONDUCT NEGOTIATIONS WITH ALL COMPETITIVELY SITUATED OFFERORS FOR QUANTITIES IN EXCESS OF THOSE LISTED IN THE RFP ONCE AN ALTERNATIVE OFFER FOR LARGER QUANTITIES WAS RECEIVED FROM BMP. WHILE ADMITTING THAT AWARDS IN HIGHER PRODUCTION RANGES, AS PROPOSED BY BMP, WOULD HAVE RESULTED IN LOWER COSTS THAN THE AWARDS AS MADE, THE ADMINISTRATIVE REPORT TAKES THE POSITION THAT TIME DID NOT PERMIT SOLICITATION OF ALTERNATIVE PROPOSALS FROM OFFERORS OTHER THAN BMP BECAUSE TO HAVE DONE SO WOULD HAVE REQUIRED RESOLICITATION OF ALL 41 SUPPLIERS ORIGINALLY SOLICITED. IT IS MAINTAINED THAT SUCH SOLICITATION WOULD HAVE CONSUMED 5 WEEKS THEREBY REQUIRING EXTENSION OF CURRENT CONTRACTS WITH ATTENDANT ADDITIONAL COST. THIS POSITION APPEARS TO BE BOTTOMED ON THE ASSUMPTION THAT THE GOVERNMENT'S FIRST INDICATION THAT OFFERS OF HIGHER PRODUCTION QUANTITIES WERE FEASIBLE WAS THE RECEIPT OF THE OCTOBER 16, 1969, LETTERS OF BMP CONTAINING ALTERNATIVE PROPOSALS IN HIGHER QUANTITY RANGES WHICH WERE SUBMITTED IN RESPONSE TO THE GOVERNMENT'S REQUEST FOR FINAL PROPOSAL MODIFICATIONS BY OCTOBER 17.

WHILE THE ADMINISTRATIVE REPORT STATES THAT A 5-WEEK PERIOD WOULD BE REQUIRED FOR THE RESOLICITATION OF EVEN THOSE SUPPLIERS WHO DID NOT RESPOND TO THE RFP, NO REASONS ARE ADVANCED IN SUBSTANTIATION OF THIS POSITION. INASMUCH AS ASPER 3-805.1(E) REQUIRES ONLY AN RFP AMENDMENT WHERE AN INCREASE IN THE STATEMENT OF REQUIREMENTS IS DESIRED, WE CAN PERCEIVE OF NO REASON WHY A SIMPLE RFP AMENDMENT ISSUED TO THE 6 OFFERORS WHO RESPONDED TO THE RFP REQUESTING PRICES ON QUANTITIES UP TO THE DESIRED MONTHLY PRODUCTION RATE WOULD NOT HAVE SUFFICED. THIS PROCEDURE, IN ALL PROBABILITY, COULD HAVE BEEN ACCOMPLISHED WITHIN A RELATIVELY SHORT TIME AFTER RECEIPT OF THE OCTOBER 16 MODIFICATIONS. IN THIS REGARD, THE ATTORNEYS FOR BMP POINT OUT THAT THE TIME ALLOWED FOR INITIAL PROPOSAL PREPARATION WAS ONLY 4 WEEKS AND CONTEND THAT THE SOLICITATION FOR AMENDED PROPOSALS SHOULD NOT LOGICALLY HAVE TAKEN MORE THAN 2 WEEKS. THE ATTORNEYS ALSO STATE THAT:

WITH REGARD TO THE TIME NECESSARY TO RESOLICIT OFFERORS ON A CHANGE IN QUANTITY, THE SAME PROCUREMENT AGENCY (APSA) RECENTLY MODIFIED FRP NO. DAAA09-70-R-0123 TO GIVE OFFERORS EIGHT DAYS IN WHICH TO RESPOND WITH REVISED PRICES ON A CHANGE IN QUANTITY. IT IS DIFFICULT TO UNDERSTAND HOW APSA TELLS YOUR OFFICE THAT FIVE WEEKS IS NEEDED TO RESOLICIT OFFERORS ON CHANGED QUANTITIES WHEN IT RECENTLY RESOLICITED AND EVALUATED OFFERS ON CHANGED QUANTITIES IN LESS THAN TWO WEEKS ON A COMPARABLE PROCUREMENT PROPOSAL.

ASPR 3-807.1(B)(1)(B)(I), CITED IN JUSTIFICATION FOR THE REFUSAL TO EXTEND THE OPPORTUNITY TO SUBMIT REVISED OFFERS ON LARGER PRODUCTION QUANTITIES THAN CALLED FOR BY THE RFP, PROVIDES THAT ADEQUATE PRICE COMPETITION WILL BE HELD NOT TO EXIST WHERE "THE SOLICITATION WAS MADE UNDER CONDITIONS THAT UNREASONABLY DENY TO ONE OR MORE KNOWN AND QUALIFIED OFFERORS AN OPPORTUNITY TO COMPETE." THE POSITION OF THE ADMINISTRATIVE REPORT IS THAT "RESOLICITATION AT HIGHER RANGES COULD HAVE ELIMINATED SOME OF THE PRESENT SUPPLIERS FROM COMPETING IN THE HIGHER RATE BECAUSE OF LIMITED CAPACITY," AND THAT THIS CIRCUMSTANCE APPARENTLY WOULD BE A VIOLATION OF THE ABOVE-QUOTED ASPR PROVISION.

WE FIND THIS POSITION UNTENABLE. IN THE FIRST PLACE, AMENDMENT OF THE RFP WOULD HAVE MERELY PROVIDED THE OPPORTUNITY FOR THE SUBMISSION AND EVALUATION OF HIGHER PRODUCTION QUANTITY OFFERS AND WOULD NOT HAVE AFFECTED OFFERS RELATING TO THE ALTERNATES AS SET OUT IN THE RFP. SECONDLY, THE PURPOSE OF THE QUOTED ASPR SECTION CLEARLY IS TO ASSURE THE LOWEST PRACTICABLE PRICES THROUGH COMPETITION, A PURPOSE WHICH AN AMENDMENT TO THE RFP WOULD, IN OUR OPINION, HAVE ACCOMPLISHED.

WHILE WE RECOGNIZE THAT THE AVAILABILITY OF FUNDS FOR THIS PROCUREMENT WAS UNCERTAIN AT THE TIME OF RFP ISSUANCE AND THAT, THEREFORE, IT WAS NECESSARY TO RETAIN AS MUCH FLEXIBILITY AS POSSIBLE WITH REGARD TO PRODUCTION QUANTITIES IN THE DRAFTING OF THE RFP PROVISIONS, WE DOUBT THE PROPRIETY OF THE JUDGMENT EXERCISED IN DRAFTING AND INTERPRETING THE RFP IN SUCH A WAY THAT LESS RATHER THAN MORE FLEXIBILITY WAS ATTAINED, AND IN THE REFUSAL TO GIVE ALL OFFERORS A CHANCE BY RFP AMENDMENT TO QUOTE ON HIGHER MONTHLY QUANTITIES ALONG THE LINES PROPOSED BY BMP.

ACCORDINGLY, WE SUGGEST THAT FUTURE SIMILAR PROCUREMENT ACTIONS SHOULD BE UNDERTAKEN IN A MANNER WHICH WILL PERMIT OFFERS IN THE LARGEST QUANTITIES POSSIBLE WITHIN THE CONSTRAINT IMPOSED BY THE INTENSIVE COMBAT RATES AND CARE SHOULD BE TAKEN TO ASSURE THAT ADEQUATE TIMELY RESPONSE BY MEANS OF APPROPRIATE RFP AMENDMENTS IS MADE TO ALTERNATE PROPOSALS WHICH PROVIDE DIFFERENT BUT MORE FAVORABLE TERMS THAN THOSE CONTAINED IN THE UNAMENDED RFP.