B-168603, FEB. 13, 1970

B-168603: Feb 13, 1970

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A DETERMINATION THAT AN OFFEROR'S PROPOSAL WAS NOT WITHIN THE COMPETITIVE RANGE BECAUSE OF EXCEPTIONS TO THE SPECIFICATIONS IS NOT SUBJECT TO OBJECTION. AVIONICS DIVISION: REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 12. THE SUBJECT RFP IS A RESOLICITATION OF THE PROCUREMENT INITIATED UNDER RFP NO. WHICH WAS CANCELLED ON SEPTEMBER 26. A PROTEST BY HOFFMAN ELECTRONICS CORPORATION AGAINST CANCELLATION OF THE PRIOR RFP IS PRESENTLY PENDING BEFORE OUR OFFICE UNDER B-167338. EXCEPT FOR THE FACT THAT THE SAME PROCUREMENT IS INVOLVED. THE PROTESTS ARE NOT RELATED. THE SUBJECT RFP WAS ISSUED ON SEPTEMBER 26. TECHNICAL PROPOSALS WERE NOT REQUIRED BECAUSE THEY HAD BEEN SUBMITTED AND EVALUATED UNDER THE CANCELLED RFP AND ONLY THOSE FIRMS PREVIOUSLY SUBMITTING PROPOSALS WERE ACTIVELY SOLICITED.

B-168603, FEB. 13, 1970

BID PROTEST--NEGOTIATION--COMPETITIVE RANGE DECISION DENYING PROTEST OF ITT, AVIONICS DIVISION AGAINST NEGOTIATED PROCUREMENT OF RETROFIT KITS BY NAVAL AIR SYSTEMS COMMAND. A DETERMINATION THAT AN OFFEROR'S PROPOSAL WAS NOT WITHIN THE COMPETITIVE RANGE BECAUSE OF EXCEPTIONS TO THE SPECIFICATIONS IS NOT SUBJECT TO OBJECTION. DECISIONS ON FAILURE TO COMPLY WITH NEGOTIATION REQUIREMENTS DISCUSSED AND DISTINGUISHED.

TO ITT, AVIONICS DIVISION:

REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 12, 1969, AND LETTERS OF DECEMBER 23, 1969, AND JANUARY 16, 1970, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF ANY CONTRACT BY THE NAVAL AIR SYSTEMS COMMAND (NAVAIR) UNDER REQUEST FOR PROPOSALS NO. N00019-70-R-0044, IN THE ABSENCE OF NEGOTIATIONS REQUIRED BY CITED STATUTE AND REGULATIONS. THE SUBJECT RFP IS A RESOLICITATION OF THE PROCUREMENT INITIATED UNDER RFP NO. N00019- 69-R-0191, WHICH WAS CANCELLED ON SEPTEMBER 26, 1969. A PROTEST BY HOFFMAN ELECTRONICS CORPORATION AGAINST CANCELLATION OF THE PRIOR RFP IS PRESENTLY PENDING BEFORE OUR OFFICE UNDER B-167338. EXCEPT FOR THE FACT THAT THE SAME PROCUREMENT IS INVOLVED, THE PROTESTS ARE NOT RELATED.

THE SUBJECT RFP WAS ISSUED ON SEPTEMBER 26, 1969, WITH AN AMENDED CLOSING DATE OF NOVEMBER 13, 1969, FOR THE PROCUREMENT OF MORE THAN 500 AN/ARN-84 TACAN SYSTEMS, IN ACCORDANCE WITH STATED SPECIFICATIONS, RETROFIT KITS, SPARE AND REPAIR PARTS, AND DATA. IN ADDITION THE RFP PROVIDES FOR FIRST ARTICLE APPROVAL, LIFE AND RELIABILITY TESTS, AND OPTIONS FOR ADDITIONAL QUANTITIES. TECHNICAL PROPOSALS WERE NOT REQUIRED BECAUSE THEY HAD BEEN SUBMITTED AND EVALUATED UNDER THE CANCELLED RFP AND ONLY THOSE FIRMS PREVIOUSLY SUBMITTING PROPOSALS WERE ACTIVELY SOLICITED.

IN ADDITION TO YOUR FIRM, HOFFMAN ELECTRONICS CORPORATION AND GENERAL DYNAMICS AGAIN SUBMITTED OFFERS. YOUR PROPOSAL WAS ACCOMPANIED BY A LETTER DATED NOVEMBER 12, 1969, WHICH PROVIDED, IN PART, AS FOLLOWS:

"CAREFUL REVIEW OF THE SUBJECT SOLICITATION INDICATES SEVERAL REMAINING AREAS OF INCONSISTENCY REQUIRING FURTHER CLARIFICATION. IN THE ABSENCE OF A TECHNICAL PROPOSAL AND EXISTING SCHEDULE ANOMOLIES, IT IS SUGGESTED THAT AFTER REVIEW OF OUR PROPOSAL, DISCUSSIONS TAKE PLACE FOR CLARIFICATION OF THE FOLLOWING AREAS:

"IN THE AREA OF DELIVERY, IT IS OUR INTENT TO PROVIDE FULL TACAN CAPABILITY INCLUDING THE ELEMENTS OF ITEM 92 WITH THE INITIAL PRODUCTION DELIVERIES, THUS OBVIATING THE NEED FOR RETROFIT KITS. THE NINE MONTH REQUIREMENT SCHEDULE FOR FIRST ARTICLE TEST DATA (AUGUST, 1970), THE REQUIREMENT TO COMMENCE RELIABILITY ASSURANCE TEST IN AUGUST, 1970, AND THE COMMENCEMENT OF PRODUCTION DELIVERIES IN NOVEMBER, 1970, CONTAINS A CONTRADICTION IN THAT NO TIME ALLOWANCE IS PROVIDED FOR, AMONG OTHER THINGS, REQUIRED GOVERNMENT APPROVAL ACTIONS. A THREE MONTH EXTENSION IN THE FIRST ARTICLE TEST DATA SUBMISSION AND INITIAL PRODUCTION DELIVERIES WOULD AMELIORATE THIS SITUATION.

"IN THE AREA OF SPECIFICATION MIL-N-81207(AS) AS AMENDED, TWO MINOR PERFORMANCE PARAMETERS SHOULD BE CLARIFIED:

"A. PARAGRAPH 3.4.1 - LONG PULSE RISE AND FALL TIME - TO BE CONSISTENT WITH MIL-STD-291B, THE SPECIFIED '2.5 0.1 MICROSECONDS' SHOULD READ '2.0 0.25 MICROSECONDS'.

"B. PARAGRAPHS 3.4.31.1.1 AND 3.4.32.3.1 - POWER - IN THE INTEREST OF RELIABILITY, IT IS RECOMMENDED THAT THE 600 WATTS POWER OUTPUT BE REDUCED TO 350 WATTS.

"IN THE AREA OF RELIABILITY, GOVERNMENT AND INDUSTRY-EXPERIENCE INDICATES THAT WITH RESPECT TO A NEW DESIGN BEING SUBJECTED TO FORMAL RELIABILITY TESTING FOR THE FIRST TIME AND PARTICULARLY UNDER PRESSURES OF A SHORT DELIVERY CYCLE, THAT IT IS UNLIKELY THAT TRUE MAXIMUM MTBF WILL BE REALIZED INITIALLY. TRUE MTBF IS PROGRESSIVE AND DEMONSTRATED ON SUBSEQUENT MATURE SYSTEMS. IT IS, THEREFORE, PROPOSED THAT THE MTBF FOR THE INITIAL RELIABILITY ASSURANCE TEST BE 250-300 HOURS."

WITH REGARD TO THE SPECIFICATION CHANGES OR EXCEPTIONS REFERRED TO ABOVE, THE NAVY ADVISED YOU BY LETTER DATED NOVEMBER 28, 1969, IN PERTINENT PART, AS FOLLOWS:

"THE GOVERNMENT'S POSITION IS AS FOLLOWS:

"1. THE GOVERNMENT'S DELIVERY REQUIREMENTS FOR THE SUPPLIES AND SERVICES TO BE PROCURED UNDER THIS SOLICITATION REMAIN AS SPECIFIED IN THE RFP SCHEDULE, AND THE DELIVERY SCHEDULE YOU PROPOSE IN YOUR OFFER IS UNACCEPTABLE.

"2. WHILE THE LONG PULSE RISE AND FALL TIME SPECIFIED IN PARAGRAPH 3.4.1 OF SPECIFICATION MIL-N-81207(AS), AS AMENDED, IS INCONSISTENT WITH SPECIFICATION MIL-STD-291B, IT IS REQUIRED FOR THE AN/ARN-84 AND SHALL REMAIN AS SPECIFIED (I.E. 2.5 0.1 MICROSECONDS).

"3. YOUR RECOMMENDATION THAT THE POWER OUTPUT SPECIFIED BY PARAGRAPHS 3.4.31.1.1 AND 3.4.32.3.1 BE REDUCED FROM 600 WATTS IS UNACCEPTABLE AND THIS REQUIREMENT REMAINS UNCHANGED.

"4. THE GOVERNMENT'S REQUIREMENT THAT AN MTBF OF 500 HOURS BE DEMONSTRATED DURING THE RELIABILITY ASSURANCE TESTS (INCLUDING THE INITIAL RELIABILITY ASSURANCE TEST) REQUIRED BY MIL-N-81207(AS), AS AMENDED, IS FIRM AND REMAINS UNCHANGED.

"5. THIS COMMAND IS INTERESTED IN YOUR PROPOSAL TO UTILIZE FAULT ISOLATION CARDS IN LIEU OF A TACAN BEACON SIMULATOR AND WILL ACCEPT A PROPOSAL AS PART OF YOUR RESPONSE TO THIS LETTER FOR WHAT YOU CONSIDER TO BE AN ADEQUATE NUMBER OF THESE CARDS. ANY SUCH PROPOSAL SUBMITTED SHALL BE SEPARATELY PRICED FROM THE REQUIREMENTS OF THE SUBJECT RFP AND WILL NOT BE CONSIDERED IN ANY WAY AS PART OF YOUR PROPOSAL FOR THE PURPOSE OF PRICE COMPARISON WITH THE PROPOSALS OF OTHERS RESPONDING TO THIS SOLICITATION FOR AWARD EVALUATION. HOWEVER, SHOULD YOU INDICATE THAT THESE FAULT ISOLATION CARDS WILL BE AN INTEGRATED PART OF THE EQUIPMENT REQUIRED UNDER THIS SOLICITATION, THE INCREASED COST ASSOCIATED THEREWITH WOULD BE ADDED TO YOUR EQUIPMENT PRICE UNLESS THESE CARDS WERE OFFERED AT NO COST TO THE GOVERNMENT.

"7.THE GOVERNMENT'S POSITION ON THOSE MATTERS AND/OR ITEMS RELATIVE TO THE SUBJECT RFP TO WHICH YOU TOOK EXCEPTION BY YOUR TRANSMITTAL LETTER ARE NOT NEGOTIABLE. ACCORDINGLY, YOU WILL NOT BE CONSIDERED FOR AN AWARD UNDER THIS SOLICITATION UNLESS YOUR BEST AND FINAL OFFER IS IN STRICT ACCORDANCE WITH THE SOLICITATION AS AMENDED AND WITH SUCH FURTHER MODIFICATIONS AS MAY BE PERMITTED BY THE TERMS OF THIS LETTER. THE GOVERNMENT DOES NOT INTEND TO ENGAGE IN FURTHER DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS REGARDING THE FINAL CONTENTS OF THIS SOLICITATION." THE LETTER ALSO STATED THAT YOUR BEST AND FINAL OFFER MUST BE SUBMITTED NO LATER THAN DECEMBER 8, 1969. SIMILAR LETTERS WERE SENT TO HOFFMAN AND GENERAL DYNAMICS.

YOU REPLIED TO THE FOREGOING LETTER UNDER DATE OF DECEMBER 5, 1969, AGREEING TO COMPLY WITH THE DELIVERY REQUIREMENTS AS SPECIFIED IN THE RFP. HOWEVER, YOU REITERATED YOUR EXCEPTIONS TO THE SPECIFICATION REQUIREMENTS CONCERNING LONG PULSE RISE AND FALL TIME, AND POWER, AND AGAIN PROPOSED CERTAIN CHANGES TO THE MTBF REQUIREMENT. YOU ALSO REQUESTED ORAL DISCUSSIONS CONCERNING THE PROPOSED CHANGES AND STATED YOUR POSITION THAT THE NAVY'S FAILURE TO CONDUCT DISCUSSIONS WOULD BE CONTRARY TO THE STATUTORY AND REGULATORY REQUIREMENTS CONCERNING NEGOTIATION.

THE NAVY HAS REFUSED TO ENGAGE IN THE DISCUSSIONS YOU REQUEST. THEREFORE, YOU HAVE PROTESTED TO OUR OFFICE CONTENDING THAT THE RULES OF NEGOTIATED PROCUREMENT REQUIRE THE NAVY TO DISCUSS YOUR POSITION THAT THE CHANGES YOU HAVE PROPOSED ARE MINOR AND REPRESENT AN ACCEPTABLE TECHNICAL APPROACH, PARTICULARLY SINCE YOU BELIEVE ITT'S PRICE IS LOW BY A SUBSTANTIAL AMOUNT. IN SUPPORT OF THIS CONTENTION YOU CITE 10 U.S.C. 2304 (G), ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-101, 3-804, AND 3- 805.1, AND SEVERAL COMPTROLLER GENERAL DECISIONS. YOU ARGUE THAT THE STATUTE AND REGULATIONS REQUIRE THAT WRITTEN OR ORAL DISCUSSIONS BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED; THAT THE RESPONSIVENESS OF A PROPOSAL IS NOT A FACTOR; AND, THEREFORE, THE NAVY MUST DISCUSS ITT'S TECHNICAL APPROACH EVEN THOUGH ITS PROPOSAL IS NONRESPONSIVE. FURTHERMORE, YOU CONTEND THAT THE NAVY'S LETTER OF NOVEMBER 28, 1969, NOT ONLY FAILS TO SATISFY THE REQUIREMENT FOR "WRITTEN" DISCUSSIONS BUT SPECIFICALLY PRECLUDES THE REQUIRED DISCUSSIONS. IN THIS CONNECTION YOU CITE PARAGRAPH 7 OF THE LETTER, WHICH WAS QUOTED ABOVE. YOU POINT OUT THAT ALTHOUGH HOFFMAN APPARENTLY MADE ITS OFFER CONTINGENT ON THE USE OF GOVERNMENT FURNISHED EQUIPMENT, NAVY'S LETTER OF NOVEMBER 28, 1969, TO HOFFMAN INDICATES THAT THE NAVY DID NOT CONSIDER THAT HOFFMAN HAD TAKEN ANY "NON-NEGOTIABLE EXCEPTIONS" AS IT DID IN ITT'S CASE.

WITH REGARD TO THE ACCEPTABILITY OF ITT'S TECHNICAL APPROACH, YOU POINT OUT THAT THE PROPOSED CHANGES IN PULSE RISE AND FALL TIME AND POWER WERE ACCEPTED BY NAVY IN ITT'S PROPOSAL UNDER THE CANCELLED RFP AND, THEREFORE, THEY SHOULD BE ACCEPTABLE UNDER THE SUBJECT RFP. FURTHERMORE, YOU STATE THAT THE EARLIER ACCEPTANCE OF THESE MODIFICATIONS HAS RESULTED IN ITT PURSUING A COURSE OF DEVELOPMENT IT IS COMMITTED TO IF IT IS TO MEET THE DATE FOR FIRST ARTICLE TESTING. AS TO THE MATERIALITY OF THE PROPOSED CHANGES OR EXCEPTIONS TO THE SPECIFICATIONS YOU STATE THE FOLLOWING:

"* * * THE ITTAV SUGGESTED CHANGE AFFECTING PULSE RISE AND FALL TIME IS IN ACCORDANCE WITH MIL-STD-291B (STANDARD TACTICAL NAVIGATION (TACAN) SIGNAL) THEREBY PERMITTING THE EQUIPMENT TO BE COMPLETELY COMPATIBLE WITH ALL EXISTING GROUND EQUIPMENT AND PROVIDING FOR GREATER SYSTEM ACCURACY THAN WOULD BE ACHIEVED WITH THE PULSE RISE AND FALL TIME SPECIFIED BY NAVAIR.

"THE PROPOSED REDUCTION IN POWER WILL REDUCE THE RANGE SLIGHTLY ONLY IN THE AIR-TO-AIR BEARING MODE (WITH NO REDUCTION IN RANGE IN THE AIR-TO- GROUND MODES OR THE AIR-TO-AIR DISTANCE MODE). HOWEVER, THIS REDUCTION WILL NOT HAVE ANY PRACTICAL EFFECT SINCE THE EQUIPMENT WILL STILL MEET THE NAVY'S OPERATIONAL REQUIREMENTS. MOREOVER, THE REDUCTION IN POWER ALLOWS THE UNIT TO DISSIPATE LESS HEAT WITH A CORRESPONDING INCREASE IN RELIABILITY."

IT IS THE NAVY'S POSITION THAT ITS LETTER OF NOVEMBER 28, 1969, CONSTITUTES COMPLIANCE WITH THE STATUTORY AND REGULATORY REQUIREMENTS FOR NEGOTIATION. THE NAVY POINTS OUT THAT THE REQUIREMENT IS FOR WRITTEN OR ORAL DISCUSSIONS, AND CONTENDS THAT ITS LETTER CONSTITUTED "WRITTEN DISCUSSIONS", CLEARLY STATING THAT, EXCEPT FOR YOUR PROPOSAL TO UTILIZE FAULT ISOLATION CARDS IN LIEU OF A TACAN BEACON SIMULATOR, YOUR PROPOSED CHANGES WERE UNACCEPTABLE AND NOT NEGOTIABLE. SINCE YOUR REPLY THERETO CLEARLY INDICATED YOUR UNWILLINGNESS TO COMPLY WITH WHAT IT CONSIDERED MINIMUM ESSENTIAL REQUIREMENTS, THE NAVY TAKES THE POSITION THAT FURTHER DISCUSSIONS WOULD NOT BE MEANINGFUL AND ARE NOT REQUIRED. THEREFORE, YOU WERE ADVISED BY LETTER DATED JANUARY 8, 1970, THAT YOUR PROPOSAL WAS NOT CONSIDERED TO BE WITHIN A COMPETITIVE RANGE AND THAT NO FURTHER NEGOTIATIONS WOULD BE CONDUCTED WITH YOU. A LETTER TO THE SAME EFFECT WAS SENT TO GENERAL DYNAMICS.

WITH REGARD TO ACCEPTANCE OF YOUR TECHNICAL PROPOSAL SUBMITTED UNDER THE CANCELLED RFP, THE NAVY STATES THAT IT WAS ACCEPTED BECAUSE YOUR TECHNICAL "APPROACH" INDICATED ABILITY TO DESIGN A SOPHISTICATED MICRO-MINIATURE TACAN SET, BUT NOT BECAUSE IT WAS SATISFACTORY IN EVERY RESPECT. HOWEVER, IT IS THE NAVY'S POSITION THAT THE SUBJECT RFP CLEARLY STATED THAT THE EQUIPMENT OFFERED MUST MEET MILITARY SPECIFICATION MIL-N-81207(AS), AS AMENDED, AND THAT ITS LETTER CLEARLY REAFFIRMED THIS REQUIREMENT.

FURTHERMORE, THE NAVY CONSIDERS YOUR FAILURE TO MEET THE SPECIFICATIONS IN QUESTION SUBSTANTIAL BECAUSE COMPLIANCE THEREWITH IS ESSENTIAL TO ENSURE COMPATIBILITY WITH CERTAIN NATO REQUIREMENTS, TO PROVIDE OPTIMUM RANGE FOR USE IN IN-FLIGHT REFUELING, AND TO REDUCE EQUIPMENT FAILURE RATES AND CORRESPONDING LIFE CYCLE COSTS. IN SUPPORT OF ITS POSITION IN THIS RESPECT, THE NAVY HAS FURNISHED OUR OFFICE A COPY OF A MEMORANDUM REAFFIRMING THE NECESSITY FOR THE DISPUTED REQUIREMENTS, FROM WHICH WE QUOTE THE FOLLOWING:

"2. THE 500 HR MTBF REQUIREMENT IS NOT ONLY A CNO REQUIREMENT FOR THE AN/ARN-84, BUT IT CAN ALSO BE SHOWN THAT A SIGNIFICANT INCREASE IN LIFE CYCLE COSTS WILL RESULT IF THIS REQUIREMENT IS REDUCED. THE TOTAL COST OF OWNERSHIP OF AVIONICS EQUIPMENT IS MADE UP OF THE INITIAL ACQUISITION COST PLUS THE LOGISTICS SUPPORT COST THROUGHOUT THE LIFE OF THE EQUIPMENT. THE LOGISTICS SUPPORT COSTS INCLUDE COSTS FOR SPARE EQUIPMENTS, SPARE PARTS, TEST EQUIPMENT, MAINTENANCE PERSONNEL AND THEIR TRAINING, REPAIR FACILITIES, AND OVERHAUL COSTS. THE TOTAL OF THESE COSTS IS DIRECTLY RELATED TO THE TOTAL NUMBER OF REPAIRS MADE AND HENCE TO THE MEAN TIME BETWEEN FAILURE. IT CAN BE SHOWN THAT FOR AVIONICS EQUIPMENT, THESE COSTS WILL RUN FROM 5 TO 290 TIMES THE INITIAL ACQUISITION COST OF THE EQUIPMENT (SEE ENCL (1), PAGES 4 AND 12). USING THE LOWER FIGURE AND ASSUMING THAT FOR SMALL CHANGES IN MTBF ABOUT A TARGET VALUE OF 500 HRS, THE LOGISTIC SUPPORT COSTS VARY IN A STRAIGHT LINE RELATIONSHIP, THEN IT FOLLOWS THAT A 20% REDUCTION IN MTBF WILL CAUSE A 20% INCREASE IN LOGISTIC SUPPORT COSTS. SINCE THE LOGISTICS SUPPORT COSTS ARE 5 TIMES THE INITIAL ACQUISITION COST, THE INCREASE IN LIFE CYCLE COSTS IS 5 TIMES 20%, OR 100% OF THE INITIAL ACQUISITION COST. IN OTHER WORDS A REDUCTION IN MTBF OF 100 HOURS, OR 20%, INCREASES THE LIFE CYCLE COSTS BY AN AMOUNT EQUAL TO THE INITIAL PURCHASE PRICE. THE BENEFITS OF LONG TERM REDUCED COSTS ARE IN ADDITION TO THE IMPROVED FLIGHT SAFETY DERIVED FROM A MORE RELIABLE TACAN SET. "3. THE LONG PULSE RISE TIME (PARA 3.4.4.1 OF AMEND 1 TO MIL-N -81207(AS) ) DEVIATES FROM THE REQUIREMENTS OF MIL-STD-291, STANDARD TACTICAL NAVIGATION (TACAN) SIGNAL IN ORDER TO CONFORM TO THE REQUIREMENTS OF DRAFT STANAG 5034, THE STANDARD TACAN SIGNAL. THE DRAFT STANAG IS A NATO DOCUMENT WHOSE PURPOSE IS TO 'INSURE COMPATIBILITY OF ALL AIRBORNE AND GROUND TACAN EQUIPMENT' AND IT APPLIES 'TO NATO ARMY, NAVY, AND AIR FORCES USING OR INTENDING TO USE TACAN EQUIPMENT.' WHEN RATIFIED BY THE UNITED STATES, CONFORMANCE TO THE REQUIREMENTS OF THIS STANAG WILL BE MANDATORY. "4. THE OPERATIONAL RANGE OF THE AN/ARN-84 TACAN SET AS SPECIFIED IN PARAGRAPH 3.4.15 OF MIL-N-81207(AS) IS 300 3 NAUTICAL MILES FOR ALL MODES OF OPERATION. 300 MILES RANGE IS ESPECIALLY IMPORTANT IN THE AIR-TO-AIR BEARING MODE OF OPERATION WHEN IT IS USED FOR IN FLIGHT REFUELING. TO INSURE THAT 300 MILES RANGE IS AVAILABLE IN THIS MODE, 600 WATTS OF PEAK TRANSMITTED POWER IS REQUIRED. A LESSER AMOUNT OF TRANSMITTED POWER, SUCH AS 350 WATTS, WILL NOT PROVIDE THIS ASSURANCE (SEE ENCL. 2). 350 WATTS OF TRANSMITTED POWER IN THIS MODE ONLY PROVIDES 241 MILES RANGE. IF THE EXTRA 74 MILES PROVIDED BY USING 600 WATTS TRANSMITTED POWER SAVED ONE AIRCRAFT PER YEAR BY ENABLING IT TO FIND A TANKER AIRCRAFT PRIOR TO RUNNING OUT OF FUEL, THE COSTS SAVED WOULD MORE THAN COMPENSATE ANY EXTRA COSTS, IF ANY, FOR THE TACAN SET."

AFTER A CONFERENCE WITH YOUR REPRESENTATIVES, WE REQUESTED CLARIFICATION FROM THE NAVY ON SOME OF THE QUESTIONS RAISED. QUOTED BELOW IS A PART OF THE MEMORANDUM RECEIVED IN RESPONSE TO OUR REQUEST:

"2. ITT'S RESPONSE TO THE SUBJECT RFP PROPOSED TO DEMONSTRATE LESS THAN 500 HOURS MTBF ON THE RELIABILITY QUALIFICATION PHASE TESTS AND TO DEMONSTRATE 500 HOURS MTBF IN THE PRODUCTION ACCEPTANCE PHASE OF THE RELIABILITY DEMONSTRATION TESTS. THE NAVAIR REQUIREMENT IS TO DEMONSTRATE 500 HOURS MTBF ON BOTH PHASES. THE RELIABILITY QUALIFICATION PHASE TESTS ARE CONDUCTED ON A SAMPLE QUANTITY OF EQUIPMENT PRIOR TO ACCEPTANCE OF THE PRODUCTION EQUIPMENT UNDER THE CONTRACT. THE TESTS AMASS A LARGE AMOUNT OF TEST DATA AND THEIR PURPOSE IS TO DEMONSTRATE THAT THE CONTRACTOR HAS BUILT EQUIPMENT THAT MEETS OUR RELIABILITY REQUIREMENTS. THE PRODUCTION ACCEPTANCE PHASE RELIABILITY TESTS ARE CONDUCTED DURING THE DURATION OF THE DELIVERIES ON EACH MONTH'S LOT AND CONSIST OF 50 HOURS TEST TIME ON EACH EQUIPMENT DELIVERED. THE PRIMARY PURPOSE OF THIS PHASE OF THE RELIABILITY TESTS IS TO INSURE THAT THE MANUFACTURING QUALITY CONTROL IS BEING MAINTAINED AT A LEVEL SUFFICIENT TO INSURE THAT THE INHERENT RELIABILITY DESIGNED INTO THE EQUIPMENT WILL NOT BE DEGRADED BY THE MANUFACTURING PROCESS. FAILURES THAT OCCUR DURING TESTING MUST BE ANALYSED FOR CAUSE, AND CORRECTIVE ACTION TAKEN TO PREVENT A RECURRENCE. IT IS UNSATISFACTORY TO DEMONSTRATE LESS THAN 500 HOURS MTBF ON THE QUALIFICATION PHASE RELIABILITY TESTS BECAUSE WE WILL NOT KNOW IF THE MANUFACTURER HAS DESIGNED AND BUILT EQUIPMENT MEETING OUR REQUIREMENTS IF LESS THAN 500 HOURS IS DEMONSTRATED IN THIS PHASE OF TESTING. DUE TO THE SLOW BUILD-UP IN DELIVERY RATES AND THE LIMITED AMOUNT OF TEST TIME IN THE ACCEPTANCE PHASE RELIABILITY TESTS, IT WILL TAKE FOUR TO SIX MONTHS OF TESTING BEFORE A LARGE ENOUGH QUANTITY OF TEST DATA WILL BE AVAILABLE TO PROVIDE A STATISTICALLY HIGH DEGREE OF CONFIDENCE THAT THE RELIABILITY REQUIREMENTS HAVE BEEN MET. THIS IS TECHNICALLY UNSATISFACTORY. THAT IS WHY WE HAVE THE QUALIFICATION PHASE RELIABILITY TESTS AND WHY THE FULL EQUIPMENT MTBF MUST BE DEMONSTRATED IN THE TEST. ADDITIONALLY, IF WE PERMITTED A LOWER MTBF DEMONSTRATION IN THE QUALIFICATION PHASE TESTS AND A GRADUAL BUILD-UP IN RELIABILITY, WE WOULD BE PERMITTING DELIVERY OF LESS RELIABLE EQUIPMENT TO THE FLEET AT A TIME WHEN TEST EQUIPMENT AND SPARE PARTS ARE IN SHORT SUPPLY, THUS COMPOUNDING THE PROBLEMS OF INTRODUCTION OF NEW EQUIPMENT TO THE FLEET. THIS TOO IS UNSATISFACTORY.

"4. THE REQUIREMENT FOR LONG PULSE RISE TIME IS 2.5 0.1 MICROSECONDS AND IS IN CONFORMANCE WITH A PENDING NATO STANDARD. ITT HAS OFFERED 2.0 0.25 MICROSECONDS WHICH IS IN CONFORMANCE WITH U.S. STANDARD, MIL-STD-291B. THE U.S. STANDARD WILL BE CHANGED TO 2.5 0.1 MICROSECOND WHEN THE NATO STANDARD IS RATIFIED. ITT'S OFFER IS ALSO UNSATISFACTORY BECAUSE IT DOES NOT MEET OUR MORE STRINGENT REQUIREMENT FOR 0.1 MICROSECOND TOLERANCE AND THE FASTER RISE TIME THEY PROPOSE REQUIRES MORE BANDWIDTH. GREATER BANDWIDTH WOULD MAKE THE SET MORE SUSCEPTIBLE TO ADJACENT CHANNEL INTERFERENCE."

THE CITED STATUTORY PROVISION, 10 U.S.C. 2304 (G), AS IMPLEMENTED BY ASPR 3-805.1 (A), REQUIRES THAT THE SELECTION OF A CONTRACTOR IN A NEGOTIATED PROCUREMENT BE MADE, WITH CERTAIN EXCEPTIONS NOT HERE APPLICABLE, (1) AFTER OBTAINING MAXIMUM COMPETITION CONSISTENT WITH THE NEEDS OF THE PROCUREMENT, AND (2) AFTER WRITTEN OR ORAL DISCUSSIONS ARE CONDUCTED WITH ALL RESPONSIBLE OFFERORS SUBMITTING PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. WE HAVE HELD THAT "COMPETITIVE RANGE" ENCOMPASSES BOTH PRICE AND TECHNICAL FACTORS. 45 COMP. GEN. 417 (1966).

AS STATED ABOVE THE NAVY ADVISED YOU BY LETTER DATED JANUARY 8, 1970, THAT IT DOES NOT CONSIDER YOUR OFFER WITHIN A COMPETITIVE RANGE IN VIEW OF THE CHANGES OR EXCEPTIONS TO CERTAIN SPECIFICATIONS STATED IN YOUR PROPOSAL, AS AMENDED BY YOUR LETTER OF DECEMBER 5, 1969. IF THE NAVY'S DETERMINATION CONCERNING "COMPETITIVE RANGE" IS VALID, THEN WHETHER ITS LETTER OF NOVEMBER 28, 1969, CONSTITUTES "WRITTEN DISCUSSIONS" IS IMMATERIAL.

ALTHOUGH DISCUSSIONS WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE AND NOT THE RESPONSIVENESS OF PROPOSALS IS THE PRIMARY CONSIDERATION IN NEGOTIATED PROCUREMENTS, IN APPLYING THE ABOVE STATUTORY AND REGULATORY PROVISIONS WE HAVE RECOGNIZED THAT THE DETERMINATION OF COMPETITIVE RANGE, PARTICULARLY WITH RESPECT TO TECHNICAL CONSIDERATIONS, IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION WHICH WILL NOT BE DISTURBED IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION WAS AN ARBITRARY ABUSE OF DISCRETION. SEE B-166213, JULY 18, 1969, AND CASES CITED.

THE NAVY'S LETTER OF NOVEMBER 28, 1969, WAS A CLEAR STATEMENT OF ITS POSITION THAT ITS REQUIREMENTS CONCERNING MTBF ON RELIABILITY ASSURANCE TESTS, LONG PULSE RISE AND FALL TIME, AND POWER, AS SPECIFIED IN THE RFP, COULD NOT BE COMPROMISED. IN OUR OPINION, THE RECORD BEFORE THIS OFFICE, INCLUDING THE TECHNICAL EVALUATIONS QUOTED FROM ABOVE, REASONABLY SUPPORTS THE NAVY'S POSITION AS TO THE NECESSITY FOR THESE REQUIREMENTS. ADDITION, THE RECORD INDICATES THAT THE NAVY'S DECISION IN THIS RESPECT INCLUDED CONSIDERATION OF THE SUBSTANTIALLY LOWER PRICE YOU OFFERED, WHICH WAS DETERMINED LESS SIGNIFICANT IN LIGHT OF LIFE CYCLE COSTS AND GREATER FLIGHT SAFETY DERIVED FROM A MORE RELIABLE TACAN SET.

YOUR REPLY TO THE NAVY IS EQUALLY CLEAR IN RESTATING YOUR EXCEPTIONS TO THE SPECIFICATIONS IN QUESTION AND IN INDICATING THAT THE BASIS FOR YOUR POSITION IS THE OPINION THAT THE COST TO OBTAIN THESE REQUIREMENTS "MAY BE DISPROPORTIONATE TO THEIR OPERATIONAL VALUE AND NEED." THUS, IT APPEARS THAT YOUR BASIC DISAGREEMENT WITH THE NAVY IS A DIFFERENCE OF TECHNICAL OPINION AS TO THE ACTUAL NEEDS OF THE GOVERNMENT. WE HAVE CONSISTENTLY HELD THAT THE DETERMINATION OF THE GOVERNMENT'S NEEDS AND THE DRAFTING OF SPECIFICATIONS TO MEET THOSE NEEDS ARE PRIMARILY FUNCTIONS OF THE CONTRACTING AGENCY, WHICH SHOULD NOT BE DISTURBED BY OUR OFFICE IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE OF ERROR. SEE 48 COMP. GEN. , B- 163882, FEBRUARY 13, 1969; B-167477, OCTOBER 28, 1969. WE FIND NO SUCH ERROR ON THE PRESENT RECORD.

IN THESE CIRCUMSTANCES, WE FIND NO BASIS FOR DISAGREEING WITH THE NAVY'S DETERMINATION THAT YOUR PROPOSAL IS NOT WITHIN A COMPETITIVE RANGE BY REASON OF ITS FAILURE TO BE RESPONSIVE TO THE STATED NEEDS OF THE GOVERNMENT.

IN A LETTER DATED JANUARY 16, 1970, YOU ARGUE THAT NAVY'S DETERMINATION OF JANUARY 8, 1970, THAT YOU ARE "NO LONGER IN A COMPETITIVE RANGE" IS INCONSISTENT WITH THE FACTS SINCE NAVY'S ARGUMENT THAT ITS NOVEMBER 28TH LETTER CONSTITUTED "WRITTEN DISCUSSIONS" ASSUMES THAT ITT WAS CONSIDERED TO BE WITHIN A COMPETITIVE RANGE. THE NAVY'S LETTER OF THE 28TH MADE NO DEFINITIVE STATEMENT AS TO COMPETITIVE RANGE. WHETHER ANY DETERMINATION CONCERNING COMPETITIVE RANGE HAD BEEN MADE IS SPECULATIVE. HOWEVER, THE LETTER IS UNEQUIVOCABLE IN STATING NAVY'S POSITION AS TO THE UNACCEPTABILITY OF YOUR EXCEPTIONS AND IN ADVISING THAT "YOU WILL NOT BE CONSIDERED FOR AN AWARD UNDER THIS SOLICITATION UNLESS YOUR BEST AND FINAL OFFER IS IN STRICT ACCORDANCE WITH THE SOLICITATION * * *." IT WAS NOT UNTIL AFTER YOU REITERATED YOUR EXCEPTIONS THAT THE DETERMINATION CONCERNING COMPETITIVE RANGE WAS MADE AND, AS STATED ABOVE, WE FIND NO BASIS FOR QUESTIONING THAT DETERMINATION.

WE HAVE REVIEWED THE DECISIONS OF OUR OFFICE CITED BY YOU AND BELIEVE THEY ARE DISTINGUISHABLE ON THE FACTS, ALTHOUGH WE DID FIND IN EACH CASE A FAILURE TO COMPLY WITH THE REQUIREMENT FOR NEGOTIATIONS. IN 45 COMP. GEN. 417 (1966) (B-157150), WE FOUND THAT THE "FAILURE TO NEGOTIATE WITH AAI WAS NOT ON THE BASIS THAT ITS TECHNICAL PROPOSAL WAS UNACCEPTABLE BUT BECAUSE IT WAS DEFICIENT IN TECHNICAL DETAIL." IN B-159796, NOVEMBER 30, 1966, IN OUR LETTER TO THE SECRETARY OF THE ARMY WE CONCLUDED THE "FACTS HERE INDICATE THE DISTINCT POSSIBILITY THAT THE PROTESTANT'S GENERATOR SETS MIGHT HAVE SATISFIED THE REQUIREMENTS OF THE REQUEST FOR PROPOSALS, BUT BECAUSE CERTAIN DETAILED INFORMATION WAS NOT FURNISHED, THE CONTRACTING OFFICER COULD NOT COMPLETELY EVALUATE THE TECHNICAL ASPECTS OF THE PROPOSAL." IN ANOTHER CASE YOU CITE, 47 COMP. GEN. 29 (1967) (B- 161483), WE RULED THAT THE FAILURE TO PASS A BENCHMARK TEST SHOULD NOT AUTOMATICALLY PRECLUDE DISCUSSIONS TO DETERMINE WHETHER THE PROPOSAL COULD BE UPGRADED TO MEET THE BENCHMARK REQUIREMENT, AS CLAIMED BY THE OFFEROR. FINALLY, IN B-167291, DECEMBER 1, 1969, WE CONCLUDED THAT THE LOW OFFER SHOULD NOT HAVE BEEN REJECTED IN THE ABSENCE OF AN "AFFIRMATIVE EFFORT TO ASCERTAIN, AND OBTAIN, THE PRECISE INFORMATION NEEDED TO ESTABLISH THE ACCEPTABILITY OR UNACCEPTABILITY" OF THE PROPOSAL. IN ALL THESE CASES THERE WAS AN INDICATION THAT DISCUSSIONS WITH THE OFFEROR WOULD HAVE BEEN MEANINGFUL EITHER IN OBTAINING INFORMATION NECESSARY TO A PROPER DETERMINATION OF ACCEPTABILITY OR IN POSSIBLY UPGRADING THE PROPOSAL TO MAKE IT ACCEPTABLE. THE INSTANT CASE IS NOT ANALOGOUS BECAUSE THE UNACCEPTABILITY OF YOUR PROPOSAL IS BASED UPON YOUR UNWILLINGNESS OR INABILITY TO MEET IN CERTAIN RESPECTS WHAT THE NAVY HAS ADAMANTLY INSISTED ARE ITS MINIMUM REQUIREMENTS. SINCE THE ESTABLISHMENT OF THESE REQUIREMENTS APPEARS TO HAVE A SOUND BASIS,WE CANNOT CONCLUDE THAT THEIR FURTHER DISCUSSION WOULD BE MEANINGFUL.

ACCORDINGLY, WE FIND NO BASIS FOR SUSTAINING YOUR PROTEST AND IT IS, THEREFORE, DENIED.