B-168599, FEB. 12, 1970

B-168599: Feb 12, 1970

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FOR FURNISHING NAVY DEPARTMENT OPTICAL COMPUTER SYSTEM ON BASIS THAT AWARD WAS NOT MADE ON LOWEST OVERALL COST. A REVIEW OF EVALUATION FACTORS SUBSTANTIATES THAT AWARD FOR COMPUTER EQUIPMENT WAS MADE ON THE BASIS OF THE LOWEST TOTAL SYSTEM LIFE COST AND. THERE IS NO BASIS FOR OBJECTION TO THE AWARD. TO SCAN-DATA CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM DATED DECEMBER 11. THE BASIS FOR YOUR PROTEST WAS THAT AWARD WAS NOT MADE ON THE BASIS OF OVERALL LOWEST COST TO THE GOVERNMENT FOR THE LIFE OF THE COMPUTER SYSTEM. THIS CONCLUSION WAS PREMISED UPON THE ANNOUNCED AWARD PRICE TO FARRINGTON ELECTRONICS OF AN AVERAGE OF $5. 453 PER MONTH FOR THE SYSTEM LIFE WHILE SCAN-DATA'S PROPOSED LEASE PRICE FOR AN EXTENDED FOUR-YEAR TERM WAS $4.

B-168599, FEB. 12, 1970

BID PROTEST--EVALUATION DECISION DENYING PROTEST OF SCAN-DATA CORPORATION AGAINST AWARD TO FARRINGTON ELECTRONICS, INC. FOR FURNISHING NAVY DEPARTMENT OPTICAL COMPUTER SYSTEM ON BASIS THAT AWARD WAS NOT MADE ON LOWEST OVERALL COST. A REVIEW OF EVALUATION FACTORS SUBSTANTIATES THAT AWARD FOR COMPUTER EQUIPMENT WAS MADE ON THE BASIS OF THE LOWEST TOTAL SYSTEM LIFE COST AND, THEREFORE, THERE IS NO BASIS FOR OBJECTION TO THE AWARD.

TO SCAN-DATA CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM DATED DECEMBER 11, 1969, PROTESTING THE AWARD MADE TO FARRINGTON ELECTRONICS, INCORPORATED, UNDER ADPESO PROJECT NO. 005-69. THE BASIS FOR YOUR PROTEST WAS THAT AWARD WAS NOT MADE ON THE BASIS OF OVERALL LOWEST COST TO THE GOVERNMENT FOR THE LIFE OF THE COMPUTER SYSTEM. THIS CONCLUSION WAS PREMISED UPON THE ANNOUNCED AWARD PRICE TO FARRINGTON ELECTRONICS OF AN AVERAGE OF $5,453 PER MONTH FOR THE SYSTEM LIFE WHILE SCAN-DATA'S PROPOSED LEASE PRICE FOR AN EXTENDED FOUR-YEAR TERM WAS $4,995 PER MONTH SYSTEM LIFE. THE EXTENSION OF THESE LEASE PRICES OVER A FORTY EIGHT MONTH SYSTEM LIFE, YOU REPORT, WOULD SAVE THE GOVERNMENT $21,984 IF AWARD WERE MADE TO SCAN-DATA.

THE NAVY'S AUTOMATIC DATA PROCESSING EQUIPMENT SELECTION OFFICE BY PROJECT SOLICITATION NO. 005-69, DATED JULY 10, 1969, REQUESTED OFFERORS TO SUBMIT PROPOSALS FOR AN OPTICAL CHARACTER RECOGNITION (OCR) COMPUTER SYSTEM BY SEPTEMBER 9, 1969. OFFERS WERE RECEIVED FROM FARRINGTON ELECTRONICS, SCAN-DATA, AND CONTROL DATA CORPORATION. NEGOTIATIONS WERE CONDUCTED WITH ALL OFFERORS AND OFFERORS WERE INFORMED THEIR FINAL OFFERS MUST BE SUBMITTED BY NOVEMBER 4, 1969.

THE REPORT FURNISHED THIS OFFICE BY THE DEPARTMENT OF THE NAVY SET FORTH THE FOLLOWING FACTORS WHICH WERE CONSIDERED IN THIS PROCUREMENT:

"A MANDATORY REQUIREMENT OF THE RFP WAS THE SUCCESSFUL COMPLETION OF A BENCHMARK DEMONSTRATION THAT INCLUDED THE SCANNING OF 40 NAVAL AUTOMATED RESEARCH AND DEVELOPMENT INFORMATION SYSTEM (NARDIS) FORMS. THESE FORMS WITH DATA TYPED ON THEM WERE PROVIDED BY THE NAVY AND WERE DISTRIBUTED THREE WEEKS AFTER THE ISSUANCE OF THE RFP TO THOSE VENDORS INDICATING AN INTENTION TO BENCHMARK. THE DEMONSTRATION CONSISTED OF SCANNING DATA ON THE 40 DOCUMENTS, PLACING THE DATA ON MAGNETIC TAPE AND THEN PRINTING, OFF -LINE, THE DATA RECORDED ON TAPE. THE TIME TO SCAN AND WRITE THE DATA ON TAPE HAD TO BE 10 MINUTES OR LESS.

"ALL THREE VENDORS PASSED THE BENCHMARK DEMONSTRATION WITH THE BENCHMARK DEMONSTRATION WITH THE TIMES NOTED BELOW:

CDC - 7 MINUTES

FARRINGTON - 5 MINUTES, 1 SECOND

SCAN-DATA - 7 MINUTES, 59 SECONDS AFTER THE DEMONSTRATIONS, ALL THREE VENDORS WERE FORMALLY DECLARED RESPONSIVE TO THE RFP BY ADPESO LETTER.

"THE RFP PROVIDED IN ATTACHMENT 2, CHAPTER 2, THE NECESSARY INFORMATION FOR EACH VENDOR TO COMPUTE OPERATIONAL USE TIME PER MONTH FOR THE FOUR YEAR SYSTEM LIFE. FARRINGTON'S BENCHMARK TIME WAS NOTED TO BE APPROXIMATELY 11% FASTER THAN THE TIME STATED IN THEIR PROPOSAL, WHILE SCAN-DATA'S BENCHMARK TIME TURNED OUT TO BE APPROXIMATELY 14% SLOWER THAN THEIR QUOTED TIME. BOTH COMPANIES WERE ASKED TO EXPLAIN THE DIFFERENCE. FARRINGTON STATED THAT THEIR PROPOSAL TIME WAS ESTIMATED BASED ON SCANNING ONLY A FEW NARDIS DOCUMENTS AND PROJECTING THAT TIME TO ENCOMPASS ALL 40 DOCUMENTS. SCAN-DATA STATED THEIR SLOWER TIME DURING THE BENCHMARK DEMONSTRATION WAS DUE TO THE FACT THAT THE SYSTEM BENCHMARKED DID NOT INCLUDE THEIR EXTENDED ARITHMETIC ELEMENT (EAE) FEATURE WHICH GIVES THE COMPUTER MULTIPLY AND DIVIDE CAPABILITY. WITH THIS FEATURE SCAN-DATA INDICATED THAT APPROXIMATELY A 15.5% IMPROVEMENT IN PROCESSING TIME COULD BE EXPECTED. THE EAE WAS A PART OF SCAN-DATA'S PROPOSAL AND THE MULTIPLY AND DIVIDE CAPABILITY WAS A SYSTEM REQUIREMENT OF THE RFP. THE SOURCE SELECTION EVALUATION BOARD SHOULD HAVE BEEN INFORMED AT THE TIME OF THE DEMONSTRATION OF ANY DIFFERENCES BETWEEN EQUIPMENT PROPOSED AND EQUIPMENT BENCHMARKED. SUCH WAS NOT THE CASE; IN FACT, SCAN-DATA SIGNED A FORM PERTINENT TO EQUIPMENT BENCHMARKED BUT FAILED TO NOTE THE LACK OF THE EAE.

* * * * * AS A RESULT OF NEGOTIATIONS, THE FINAL REVISED RENTAL CHARGES PROPOSED BY THE THREE COMPETING OFFERS WERE:

VENDORS YEARLY EQUIPMENT RENTALS

ONE YR. TERM FOUR YR. TERM

CDC $66,360 $265,440

FARRINGTON 65,436 261,744

SCAN-DATA 85,340 239,760

"THE TERMS OF THE SOLICITATION, HOWEVER, CLEARLY NOTIFIED OFFERORS THAT CERTAIN OTHER COSTS TO THE GOVERNMENT WOULD BE CONSIDERED IN EVALUATING THE PROPOSALS TO DETERMINE THE LOWEST OVERALL SYSTEM LIFE COST TO THE GOVERNMENT. INCLUDED IN SUCH ADDITIONAL COSTS WERE: TRANSPORTATION, INSTALLATION, VENDOR SUPPORT AND EARLY DELIVERY (DESIRABLE FEATURE OF THE RFP) AS VENDOR-PROPOSED CHARGES, AND ELECTRICAL POWER AND OPERATING PERSONNEL, AS GOVERNMENT-COMPUTED CHARGES. THE 14 AUGUST 1969 SUPPLEMENT 1 TO THE SOLICITATION INFORMED OFFERORS THAT PERSONNEL COSTS WOULD BE EVALUATED AT $10 PER HOUR AND ELECTRICAL POWER AT 1.2[ PER KILOWATT HOUR. BOTH THE POWER AND PERSONNEL COSTS WERE DERIVED BY APPLYING THE OFFEROR'S BENCHMARK TIME TO THE TOTAL WORKLOAD OF EACH YEAR AS STATED IN THE RFP TO GIVE ANNUAL OPERATING HOURS. THESE HOURS WERE MULTIPLIED BY THE DOLLAR RATES MENTIONED IN THE SUPPLEMENT 1.

"THE DESIRABLE FEATURE WOULD MAKE IT POSSIBLE TO ELIMINATE AN EXISTING KEY-PUNCH CONTRACT COSTING APPROXIMATELY $10,000 PER MONTH TWO MONTHS EARLY. THEREFORE, THE DESIRABLE VALUE CREDIT WAS ASSIGNED A MAXIMUM OF $20,000 LESS THE COST FOR OBTAINING THE DESIRABLE. AS SHOWN BELOW, THE MAXIMUM VALUE ($20,000) OF THE DESIRABLE ITEM EARLY DELIVERY) WAS ADDED TO CDC'S AND SCAN-DATA'S COST TOTAL AS THESE TWO VENDORS DID NOT PROPOSE TO PROVIDE EARLY DELIVERY. PRIOR TO EXECUTION OF ITS CONTRACT, FARRINGTON INFORMED THE NAVY THAT IT WOULD BE ABLE TO DELIVER THE EQUIPMENT ONLY TWO MONTHS AFTER CONTRACT AWARD, NOT ONE MONTH. THUS, $10,000 WAS ADDED TO FARRINGTON'S BASIC COST REPRESENTING ONE MONTH'S KEY-PUNCH CONTRACT CHARGE, AND $5,453 WAS ADDED FOR ONE MONTH'S EARLIER OCR SYSTEM RENTAL.

"THUS ADEESO COMPUTED THE FOUR YEAR COMPUTER SYSTEM COST TO THE GOVERNMENT, AS FOLLOWS: COST ELEMENT AND SOLICITATION SOURCE CDC FARRINGTON SCAN-DATA 1. 4 YR. COMPUTER RENTAL

(SOURCE: COST TABLES

1-3; COST QUESTIONNAIRE

QQ 1 AND 2) $252,840 $261,744 $239,760 2. TRANSPORTATION (SOURCE:

QUESTION 4) 175 218 600 3. INSTALLATION (SOURCE:

QUESTION 5) 0 0 0 4. ELECTRICAL POWER (SOURCE:

QUESTION 6 AND SUPPLEMENT

1, PARAGRAPH 7) 1,652 696 1,101 5. OPERATING PERSONNEL

(SOURCE: QUESTION 8 AND

SUPPLEMENT 1, PARAGRAPH 7) 114,720 82,320 131,040 6. VENDOR SUPPORT (SOURCE:

QUESTION 9) 0** 0 0 7. EARLY DELIVERY (SOURCE:

ATTACHMENT 1, PARAGRAPH

2-2; SUPPLEMENT 1,

PARAGRAPH 6)20,000 15,453 20,000

$389,387 $360,431 $392,501 ** INCLUDED IN BASIC EQUIPMENT RENTAL, ELEMENT 1.

"AS PREVIOUSLY DISCUSSED, SCAN-DATA INFORMED THE SSEB THAT A 15.5% PROCESSING IMPROVEMENT COULD BE REALIZED WITH THE USE OF THEIR EXTENDED ARITHMETIC ELEMENT. SINCE THE BENCHMARK TIMINGS ARE OF SUCH SIGNIFICANCE, THE 15.5% IMPROVEMENT WAS INFORMALLY CONSIDERED IN THE COST ANALYSIS. THE RESULT OF SUCH A CONSIDERATION STILL SHOWED FARRINGTON TO HAVE THE LOWEST COST. IF THE RESULT OF SUCH CONSIDERATION HAD BEEN TO SHOW SCAN-DATA AS THE LOWEST OVERALL COST, THE EVALUATION BOARD WOULD HAVE HAD SCAN-DATA RE- BENCHMARK TO VALIDATE THEIR PURPORTED IMPROVEMENT IN BENCHMARK TIMINGS. THUS RECOMPUTATION OF SCAN-DATA'S ELECTRICAL POWER AND OPERATING PERSONNEL COSTS ON THE BASIS OF THE 15.5% REDUCTION YIELDS: ELECTRICAL POWER $ 1,101 X 84.5% $ 930 OP. PERSONNEL 131,040 X 84.5% 110,729

TOTALS $132,141 $111,659

-111,659 TOTAL REDUCTION $ 20,482 EVALUATED COST

$392,501 LESS REDUCTION

-20,482

$372,019

"SINCE THE AFORESAID PROPOSAL EVALUATION FACTORS WERE SET FORTH IN THE SOLICITATION, AS AMENDED AND SUPPLEMENTED, AND SINCE EACH OFFEROR WAS NOTIFIED OF ITS INDIVIDUAL BENCHMARK TIME, THE NAVY DETERMINED THAT THE LOWEST TOTAL SYSTEM LIFE COST WAS PROPOSED BY FARRINGTON ELECTRONICS, AND AWARD WAS MADE TO THAT FIRM. ACCORDINGLY, RATHER THAN OBTAINING A $21,984 COST SAVINGS BY AWARD TO THE PROTESTANT, AS IT CLAIMS, THE GOVERNMENT WOULD BE REQUIRED TO PAY A COST PREMIUM OF $32,070 ($11,588 IF THE 15.5% PROCESSING IMPROVEMENT FACTOR IS VALID) OVER THE TOTAL SYSTEM LIFE - CONSISTING PRINCIPALLY OF OPERATING PERSONNEL COSTS."

SINCE AFTER EVALUATING ALL THE FACTORS SET OUT IN THE SOLICITATION TO BE CONSIDERED IN DETERMINING THE LOW OFFER, FARRINGTON ELECTRONICS WAS THE LOW OFFEROR, WE FIND NO BASIS TO OBJECT TO THE AWARD TO THAT COMPANY AND YOUR PROTEST MUST BE DENIED.