B-169148, OCT 6, 1970, 50 COMP GEN 246

B-169148: Oct 6, 1970

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AN AWARD ON THE BASIS OF PRICE ALONE WAS JUSTIFIED WHERE BOTH OFFERS RECEIVED WERE TECHNICALLY ACCEPTABLE. AS THE CONCEPTS IN PARAGRAPHS 3-805.2 AND 4 106.5(A) OF THE ARMED SERVICES PROCUREMENT REGULATION THAT PRICE ALONE IS NOT THE CONTROLLING FACTOR RELATE TO SITUATIONS WHERE THE FAVORED OFFEROR IS SIGNIFICANTLY SUPERIOR IN TECHNICAL ABILITY AND RESOURCES. ALTHOUGH THE AWARD WAS NOT ILLEGAL BECAUSE OF FAILURE TO CONTINUE DISCUSSIONS WITH ALL OFFERORS IN A COMPETITIVE RANGE WHEN AN AMENDMENT CHANGED THE "INITIAL PROPOSAL" REQUIREMENTS OF THE SOLICITATION AND TO REQUEST "BEST AND FINAL" OFFERS. 1970: REFERENCE IS MADE TO A LETTER DATED APRIL 9. THE MAJORITY OF RESEARCH AND DEVELOPMENT PROCUREMENTS FROM THIS DIRECTORATE WILL NOT BE FORMALLY ADVERTISED BUT WILL BE NEGOTIATED.

B-169148, OCT 6, 1970, 50 COMP GEN 246

CONTRACTS - RESEARCH AND DEVELOPMENT - PRICE FACTOR UNDER A SOLICITATION ISSUED PURSUANT TO 10 U.S.C. 2304(A)(11), INVITING PROPOSALS ON A COST-PLUS-A-FIXED-FEE BASIS FOR RESEARCH AND DEVELOPMENT SERVICES TO MAINTAIN A WIND TUNNEL, AN AWARD ON THE BASIS OF PRICE ALONE WAS JUSTIFIED WHERE BOTH OFFERS RECEIVED WERE TECHNICALLY ACCEPTABLE, AS THE CONCEPTS IN PARAGRAPHS 3-805.2 AND 4 106.5(A) OF THE ARMED SERVICES PROCUREMENT REGULATION THAT PRICE ALONE IS NOT THE CONTROLLING FACTOR RELATE TO SITUATIONS WHERE THE FAVORED OFFEROR IS SIGNIFICANTLY SUPERIOR IN TECHNICAL ABILITY AND RESOURCES. ALTHOUGH THE AWARD WAS NOT ILLEGAL BECAUSE OF FAILURE TO CONTINUE DISCUSSIONS WITH ALL OFFERORS IN A COMPETITIVE RANGE WHEN AN AMENDMENT CHANGED THE "INITIAL PROPOSAL" REQUIREMENTS OF THE SOLICITATION AND TO REQUEST "BEST AND FINAL" OFFERS, AND FAILURE TO SPECIFY ALL EVALUATION FACTORS, SUCH DEFICIENCIES SHOULD BE AVOIDED IN FUTURE NEGOTIATED PROCUREMENTS.

TO THE SECRETARY OF THE AIR FORCE, OCTOBER 6, 1970:

REFERENCE IS MADE TO A LETTER DATED APRIL 9, 1970, WITH ENCLOSURES, FROM THE CHIEF, CONTRACT PLACEMENT DIVISION, DIRECTOR OF PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF, SYSTEMS AND LOGISTICS, AND A LETTER OF JUNE 1, 1970, RECEIVED HERE ON JUNE 24, 1970, WITH ENCLOSURES, FROM THE DEPUTY DIRECTOR OF PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF, PROCUREMENT AND PRODUCTION, TO HEADQUARTERS, USAF (AFSPPLA), ALL FURNISHING REPORTS ON THE PROTESTS OF SYSTEMS RESEARCH LABORATORIES, INC. (SRL), AGAINST THE AWARD OF A CONTRACT TO TECHNOLOGY INCORPORATED (TI), UNDER REQUEST FOR PROPOSALS (RFP) NO. F33615-70-R-1588, ISSUED BY THE AERONAUTICAL SYSTEMS DIVISION, WRIGHT-PATTERSON AIR FORCE BASE, OHIO.

THE RFP, ISSUED ON NOVEMBER 26, 1969, PURSUANT TO 10 U.S.C. 2304(A)(11) INVITED PROPOSALS ON A COST-PLUS-A-FIXED-FEE BASIS FOR RESEARCH AND DEVELOPMENT SERVICES COMMENCING ON FEBRUARY 17, 1970, FOR A 3-YEAR PERIOD IN CONNECTION WITH THE MAINTENANCE OF THE AEROSPACE RESEARCH LABORATORIES' (ARL) HYPERSONIC WIND TUNNEL FACILITY. PARAGRAPH 14 OF THE GENERAL INSTRUCTIONS FOR PREPARING PROPOSALS PROVIDED IN PERTINENT PART:

A. BECAUSE OF THE NATURE OF THE WORK, THE MAJORITY OF RESEARCH AND DEVELOPMENT PROCUREMENTS FROM THIS DIRECTORATE WILL NOT BE FORMALLY ADVERTISED BUT WILL BE NEGOTIATED. THE CONTRACTING OFFICER WILL SELECT THE BEST OVERALL PROPOSAL, BASED ON THE TECHNICAL MERIT, COST, AND OTHER FACTORS. IN MOST INSTANCES TECHNICAL FACTORS ARE OF PRIMARY IMPORTANCE. THE GOVERNMENT RESERVES THE RIGHT TO NEGOTIATE WITH ANY CONTRACTOR AND TO REJECT, AS THE GOVERNMENT'S INTEREST MAY APPEAR, ANY AND ALL QUOTATIONS AND PROPOSALS RECEIVED, OR TO WAIVE ANY MINOR INFORMALITY IN CONNECTION THEREWITH.

B. THE TERM "NEGOTIATION" AS USED HEREIN SHALL NOT BE INTERPRETED AS MEANING THAT OFFERORS WILL BE GIVEN THE OPPORTUNITY TO REVISE OR LOWER THEIR ORIGINAL QUOTATION OR OTHERWISE MODIFY THEIR ORIGINAL PROPOSAL. OFFERORS ARE CAUTIONED TO REVIEW CAREFULLY ALL TERMS AND CONDITIONS AND SPECIFICATIONS OF THIS REQUEST FOR PROPOSAL PRIOR TO SUBMISSION OF BIDS. THIS PROCUREMENT MAY BE AWARDED WITHOUT DISCUSSION OF PROPOSALS RECEIVED; THEREFORE, PROPOSALS SHOULD BE SUBMITTED ON THE MOST FAVORABLE TERMS, FROM A PRICE AND TECHNICAL STANDPOINT, WHICH THE OFFEROR CAN SUBMIT TO THE GOVERNMENT. THE CONTRACTING OFFICER MAY CONSIDER OFFEROR'S ORIGINAL PROPOSAL AS FINAL WITHOUT EXTENDING THE PRIVILEGE TO MODIFY OR REVISE QUOTATION OR CONDUCT FURTHER NEGOTIATIONS.

PROPOSALS WERE RECEIVED FROM TWO OF THE EIGHT SOURCES SOLICITED BY THE DECEMBER 29, 1969, CLOSING DATE. CONTEMPORANEOUS WITH THE RECEIPT OF PROPOSALS, THE USING ACTIVITY PRESCRIBED WEIGHTED VALUES APPLICABLE TO EACH FACTOR TO BE USED IN THE TECHNICAL EVALUATION OF PROPOSALS. DECEMBER 30, 1969, THE CONTRACTING OFFICER REQUESTED A TECHNICAL EVALUATION OF THE PROPOSALS OF SRL AND TI FROM THE FLUID DYNAMICS FACILITIES RESEARCH LABORATORY, ARL. THE TECHNICAL EVALUATION TEAM REPORTED ON JANUARY 12, 1970, THAT BOTH PROPOSALS WERE CONSIDERED TO BE TECHNICALLY ACCEPTABLE. THE TEAM ASSIGNED THE FOLLOWING POINT SCORES, ON A 100-POINT SCALE:

SYSTEMS RESEARCH LABORATORIES 84 POINTS

TECHNOLOGY INCORPORATED 78 POINTS

DUE TO FUNDING CUTS, THE STATED PERFORMANCE TIME WAS REDUCED FROM 3 YEARS TO 2 YEARS. IT IS REPORTED THAT ON JANUARY 22, 1970, THE TWO TECHNICALLY ACCEPTABLE PROPOSERS WERE REQUESTED BY AMENDMENT 2 TO REVISE THEIR COST PROPOSALS TO CONFORM TO THE 1-YEAR REDUCTION IN PERFORMANCE TIME BY FEBRUARY 5, 1970. REVISED PROPOSALS WERE SUBMITTED TIMELY BY SRL AND TI. TI REVISED ITS PRICE DOWNWARD TO REFLECT A REDUCED LEVEL OF EFFORT BASED ON A 2-YEAR PROGRAM. THE REVISED PROPOSAL OF SRL CONTAINED THE FOLLOWING STATEMENT:

AS YOU ARE AWARE SRL HAS PROPOSED TO PROVIDE PERSONNEL WHO HAVE HAD A NUMBER OF YEARS OF DIRECT EXPERIENCE WITH THE FACILITIES AND REQUIREMENTS OF THE FLUID DYNAMICS FACILITIES RESEARCH LABORATORY AND HAVE THEREFORE BEEN SPECIFICALLY TRAINED TO OPERATE THIS COMPLEX EQUIPMENT. CONSIDERABLE TRAINING IS REQUIRED BEFORE OPERATING PERSONNEL BECOME PROFICIENT WITH THIS COMPLEX AND HAZARDOUS FACILITY. WE HAVE, CONSEQUENTLY, BASED OUR LABOR COSTS UPON THESE INDIVIDUALS. IN THE EVENT THAT THE GOVERNMENT DOES NOT CHOOSE TO UTILIZE THESE FULLY TRAINED PERSONNEL, SRL CAN OFFER PERSONNEL WHO MEET THE REQUIREMENTS AS STATED IN THE RFP BUT WHO DO NOT HAVE THE DIRECT EXPERIENCE "ON THE JOB." THIS WOULD RESULT IN A REDUCTION OF COSTS. ANOTHER APPROACH COULD BE TO REALIGN STAFF ASSIGNMENT, ACCELERATE REASSIGNMENT, ETC. THE ABOVE OPTIONS ARE AVAILABLE FOR DISCUSSION. ***

THE ESTIMATED COSTS TO THE GOVERNMENT, INCLUDING FEES, OF THE REVISED PROPOSALS WERE AS FOLLOWS:

SYSTEMS RESEARCH LABORATORIES $742,486

TECHNOLOGY INCORPORATED 719,800

WITHOUT NEGOTIATIONS WITH EITHER SRL OR TI, CONTRACT NO. F33615-70-C 1447 WAS AWARDED TO TI ON FEBRUARY 16, 1970.

ONE OF THE PRINCIPAL BASES OF THE PROTEST CONCERNS THE SRL ALLEGATION THAT THE CONTRACTING OFFICER PLACED A "HIGHER EMPHASIS ON COST THAN IS PERMITTED BY THE REGULATIONS," REFERRING SPECIFICALLY TO THE PROVISIONS OF PARAGRAPH 3-805.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). THAT SECTION DISCUSSES THE SELECTION OF A CONTRACTOR FOR A COST- REIMBURSEMENT TYPE CONTRACT AND REQUIRES THAT "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." THE SECTION CONTINUES AS FOLLOWS:

*** 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 OVER RUNS. 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 (SEE 3 803). 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.

SINCE THE SUBJECT CONTRACT IS ONE FOR THE PROCUREMENT OF RESEARCH AND DEVELOPMENT SERVICES, THERE IS FOR CONSIDERATION ALSO ASPR 4-106.5(A) WHICH DEALS WITH THE EVALUATION OF PRICE AND COSTS IN THE SELECTION OF A RESEARCH AND DEVELOPMENT CONTRACTOR. THAT PROVISION READS IN PART:

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. ***

IN RESPONSE TO SRL'S ALLEGATION THAT THE LOWER COST ESTIMATE SUBMITTED IN THE TECHNICALLY INFERIOR TI PROPOSAL WAS CONSIDERED AS CONTROLLING, WE ARE ADVISED THAT THE TECHNICAL DIFFERENCES IN THE TWO PROPOSALS DID NOT WARRANT THE INCURRENCE OF ADDITIONAL COSTS THAT WOULD HAVE BEEN OCCASIONED BY ACCEPTING SRL'S PROPOSAL. IN FACT, THE TECHNICAL EVALUATION TEAM CONSIDERED THE DIFFERENCE IN POINT SCORES TO BE INSIGNIFICANT. ALTHOUGH SRL HAD BEEN THE ONLY CONTRACTOR AT THE FACILITY SINCE THE COMMENCEMENT OF OPERATIONS IN 1959, A HIGHLY ADVANTAGEOUS FACTOR IN THE OPINION OF THE EVALUATORS, THE TECHNICAL EVALUATION TEAM DETERMINED THAT TI WAS CAPABLE OF PERFORMING IN ACCORDANCE WITH THE REQUIREMENTS OF THE CONTRACT. THIS REGARD, WE ARE ADVISED THAT:

*** BOTH BIDDERS WERE RATED RELATIVELY HIGH WHICH INDICATED A HIGH TECHNICAL CAPABILITY TO PERFORM THE REQUIREMENTS OF THE CONTEMPLATED CONTRACT AND THE ADDITIONAL 6 POINT RATING ASSIGNED TO THE SYSTEMS RESEARCH LABORATORIES' PROPOSAL DID NOT JUSTIFY THE EXPENDITURE OF ADDITIONAL MONEY. THE 78 POINT RATING ASSIGNED TO THE TECHNOLOGY INCORPORATED PROPOSAL ESTABLISHED THAT THEY WERE QUITE CAPABLE OF PERFORMING THE REQUIRED WORK, AND TO PLACE UNDUE EMPHASIS ON THE 84 POINT RATING OF SYSTEMS RESEARCH LABORATORIES WOULD HAVE BEEN SUPERFLUOUS TO THE REQUIREMENTS OF THE AEROSPACE RESEARCH LABORATORIES AND DID NOT WARRANT THE EXPENDITURE OF ADDITIONAL FUNDS.

WHERE, AS HERE, TWO OFFERORS ARE ESSENTIALLY EQUAL AS TO TECHNICAL ABILITY AND RESOURCES TO SUCCESSFULLY PERFORM A RESEARCH AND DEVELOPMENT EFFORT, THE ONLY CONSIDERATION REMAINING FOR EVALUATION IS PRICE. IN SUCH A SITUATION, WE BELIEVE THAT THE LOWER PRICED OFFER REPRESENTS AN ADVANTAGE TO THE GOVERNMENT WHICH SHOULD NOT BE IGNORED. INDEED, ASPR 4- 106.4 MAKES IT CLEAR THAT AWARDS SHOULD NOT BE FOR CAPABILITIES THAT EXCEED THOSE DETERMINED TO BE NECESSARY FOR SUCCESSFUL PERFORMANCE OF THE WORK. WE VIEW THE AWARD TO TI AS EVIDENCING A DETERMINATION THAT THE COST PREMIUM INVOLVED IN MAKING AN AWARD TO SRL, BASED ON ITS SLIGHT TECHNICAL SUPERIORITY OVER TI, WOULD NOT BE JUSTIFIED IN LIGHT OF THE ACCEPTABLE LEVEL OF EFFORT AND ACCOMPLISHMENT EXPECTED OF TI AT A LOWER COST. THE CONCEPTS EXPRESSED IN ASPR 3-805.2 AND 4-106.5(A) THAT PRICE IS NOT THE CONTROLLING FACTOR IN THE AWARD OF COST-REIMBURSEMENT AND RESEARCH AND DEVELOPMENT CONTRACTS RELATE, IN OUR VIEW, TO SITUATIONS WHEREIN THE FAVORED OFFEROR IS SIGNIFICANTLY SUPERIOR IN TECHNICAL ABILITY AND RESOURCES OVER LOWER PRICED, LESS QUALIFIED OFFERORS. ALTHOUGH WE FIND THAT THIS ASPECT OF THE SRL PROTEST IS WITHOUT MERIT, OUR REVIEW HAS DISCLOSED DEFICIENCIES IN THE RFP AND THE NEGOTIATION PROCESS THEREUNDER.

SRL CONTENDS THAT THE AWARD OF THIS CONTRACT WITHOUT NEGOTIATIONS OR DISCUSSIONS WITH EITHER OF THE TWO OFFERORS VIOLATED THE PROVISIONS OF ASPR 3-805.1.

ASPR 3-805.1(A), IN PERTINENT PART, READS AS FOLLOWS:

(A) AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS (INCLUDING TECHNICAL QUALITY WHERE TECHNICAL PROPOSALS ARE REQUESTED) CONSIDERED, ***

THE CONTRACTING OFFICER DENIES THE NECESSITY FOR DISCUSSIONS WITH THE OFFERORS IN THE CIRCUMSTANCES OF THIS CASE, RELYING ON ASPR 3 805.1(A)(V), WHICH PERMITS AN AWARD ON AN INITIAL PROPOSAL BASIS WITHOUT DISCUSSIONS IN THE CASE OF:

PROCUREMENTS IN WHICH IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT OR SERVICE THAT ACCEPTANCE OF THE MOST FAVORABLE INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN A FAIR AND REASONABLE PRICE. (PROVIDED, HOWEVER, THAT IN SUCH PROCUREMENTS, THE REQUEST FOR PROPOSALS SHALL NOTIFY ALL OFFERORS OF THE POSSIBILITY THAT AWARD MAY BE MADE WITHOUT DISCUSSION OF PROPOSALS RECEIVED AND HENCE, THAT PROPOSALS SHOULD BE SUBMITTED INITIALLY ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT WHICH THE OFFEROR CAN SUBMIT TO THE GOVERNMENT. ***

ALSO, THE CONTRACTING OFFICER STATES THAT HE HAD MORE THAN 10 YEARS OF COST EXPERIENCE AVAILABLE FOR USE TO ASSURE REASONABLE PRICES AND THAT COMPETITION EXISTED BETWEEN THE TWO OFFERORS. SPECIFICALLY, THE CONTRACTING OFFICER POINTS TO PARAGRAPH 14B OF THE GENERAL INSTRUCTIONS AS AUTHORIZING AN AWARD WITHOUT NEGOTIATIONS. HOWEVER, SRL BELIEVES THAT THE CONTRACTING OFFICER WAS REQUIRED TO CONDUCT DISCUSSIONS WITH SRL UPON RECEIPT OF ITS FEBRUARY 5, 1970, REVISED PROPOSAL WHEREIN "DISCUSSION" WAS SPECIFICALLY REQUESTED. THE CONTRACTING OFFICER STATES THAT HE FELT IT UNNECESSARY TO PURSUE THIS REVISED OFFER AS A POSSIBLE ALTERNATE PROPOSAL BECAUSE IT WOULD NOT HAVE BEEN IN THE BEST INTERESTS OF THE GOVERNMENT TO CONSIDER A REDUCTION OF THE TECHNICAL EXCELLENCE OF A PROPOSAL. ALSO, IT WAS FELT THAT IT WOULD HAVE BEEN UNFAIR FOR A PROSPECTIVE CONTRACTOR TO REDUCE ITS FEE IN ORDER TO OBTAIN A GOVERNMENT CONTRACT.

IT SHOULD BE NOTED AT THIS POINT THAT THE STAFF JUDGE ADVOCATE CITES OUR DECISION, B-165337, MARCH 28, 1969, WHEREIN WE HELD THAT THE SUBMISSION OF REVISED PROPOSALS AT THE BEHEST OF A PROCURING AGENCY CONSTITUTED "DISCUSSIONS" WITHIN THE MEANING AND INTENT OF 10 U.S.C. 2304(G) AS IMPLEMENTED BY ASPR 3-805.1. HE THEREFORE CONCLUDES THAT DISCUSSIONS WERE, IN FACT, HELD WITH BOTH PROPOSERS. WE FURTHER HELD IN THAT CASE THAT WHERE "DISCUSSIONS" HAVE TAKEN PLACE WITH PROPOSERS WHO HAVE MADE REVISIONS IN PRICE, AWARD MAY NO LONGER BE MADE ON THE BASIS OF AN INITIAL PROPOSAL. THERE, AS HERE, AWARD WAS MADE ON THE BASIS OF A "REVISED PROPOSAL" RATHER THAN ON AN "INITIAL PROPOSAL" BASIS.

SINCE, IN EFFECT, WRITTEN DISCUSSIONS WERE INITIATED WITH THE TWO OFFERORS THROUGH THE SUBMISSION OF REVISED PROPOSALS, THEREBY PRECLUDING "INITIAL PROPOSAL" AWARD BASIS, THERE IS FOR CONSIDERATION WHETHER NEGOTIATIONS WERE EFFECTIVELY CLOSED ON FEBRUARY 5, NOTWITHSTANDING SRL'S REQUEST FOR DISCUSSION OF THE OPTIONS OUTLINED IN ITS LETTER OF THAT DATE. ASPR 3-805.1(A) REQUIRES THAT, AFTER RECEIPT OF INITIAL PROPOSALS, DISCUSSIONS BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE. THAT REGULATION IMPOSES AN AFFIRMATIVE DUTY TO NEGOTIATE UNLESS THE AWARD IS MADE ON THE BASIS OF INITIAL PROPOSALS AND, IN THIS CASE, THAT WAS NOT DONE. RATHER, DISCUSSIONS THROUGH THE MEDIUM OF AMENDMENT 2 WERE HELD WITH BOTH OFFERORS. ASPR 3-805.1(B), IN ADDITION TO PROHIBITING AUCTION TECHNIQUES, PROVIDES IN PART:

*** WHENEVER NEGOTIATIONS ARE CONDUCTED WITH SEVERAL OFFERORS, WHILE SUCH NEGOTIATIONS MAY BE CONDUCTED SUCCESSIVELY, ALL OFFERORS SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS (SEE (A) ABOVE) SHALL BE OFFERED AN EQUITABLE OPPORTUNITY TO SUBMIT SUCH PRICE, TECHNICAL, OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM THE NEGOTIATIONS. ALL SUCH OFFERORS SHALL BE INFORMED OF THE SPECIFIED DATE (AND TIME IF DESIRED) OF THE CLOSING OF NEGOTIATIONS AND THAT ANY REVISIONS TO THEIR PROPOSALS MUST BE SUBMITTED BY THAT DATE. ALL SUCH OFFERORS SHALL BE INFORMED THAT ANY REVISION RECEIVED AFTER SUCH DATE SHALL BE TREATED AS A LATE PROPOSAL IN ACCORDANCE WITH THE "LATE PROPOSALS" PROVISIONS OF THE REQUEST FOR PROPOSALS. (IN THE EXCEPTIONAL CIRCUMSTANCES WHERE THE SECRETARY CONCERNED AUTHORIZES CONSIDERATION OF SUCH A LATE PROPOSAL RESOLICITATION SHALL BE LIMITED TO THE SELECTED OFFERORS WITH WHOM NEGOTIATIONS HAVE BEEN CONDUCTED.) IN ADDITION, ALL SUCH OFFERORS SHALL ALSO BE INFORMED THAT AFTER THE SPECIFIED DATE FOR THE CLOSING OF NEGOTIATION NO INFORMATION OTHER THAN NOTICE OF UNACCEPTABILITY OF PROPOSAL, IF APPLICABLE (SEE 3- 508), WILL BE FURNISHED TO ANY OFFEROR UNTIL AWARD HAS BEEN MADE.

ASPR 3-506(H) STATES:

(H) THE NORMAL REVISIONS OF PROPOSALS BY SELECTED OFFERORS OCCURRING DURING THE USUAL CONDUCT OF NEGOTIATIONS WITH SUCH OFFERORS ARE NOT TO BE CONSIDERED AS LATE PROPOSALS OR LATE MODIFICATIONS, BUT SHALL BE HANDLED IN ACCORDANCE WITH 3-805.1(B).

THE REGULATIONS READ TOGETHER PROVIDE THAT, WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE, NEGOTIATIONS MUST BE CONDUCTED WITH ALL OFFERORS IN A COMPETITIVE RANGE WHO SHALL BE OFFERED AN EQUITABLE OPPORTUNITY, PRIOR TO THE DATE ESTABLISHED FOR THE CLOSE OF DISCUSSIONS, TO SUBMIT NORMAL REVISIONS TO THEIR PROPOSALS RESULTING FROM NEGOTIATIONS. HERE, "DISCUSSIONS" WERE HELD WITH BOTH OFFERORS THROUGH THE SUBMISSION OF REVISED PROPOSALS AND BOTH OFFERORS HAD AN EQUAL OPPORTUNITY TO SUBMIT REVISIONS TO THEIR RESPECTIVE PROPOSALS BY FEBRUARY 5, 1970. BUT THE AMENDMENT DID NOT SPECIFICALLY REQUEST OFFERORS TO SUBMIT THEIR "BEST AND FINAL" OFFERS REFLECTING THE CHANGE IN PERFORMANCE TIME. NEITHER DID IT STATE AFFIRMATIVELY THAT FEBRUARY 5, 1970, WOULD BE THE CLOSING DATE FOR NEGOTIATIONS; AND LASTLY, IT DID NOT ADVISE THAT NEGOTIATIONS WERE BEING CONDUCTED UNDER REVISED REQUIREMENTS.

IN OUR OPINION, AMENDMENT 2 ONLY EXTENDED THE DATE SET FOR RECEIPT OF PROPOSALS AND INFERENTIALLY APPRISED OFFERORS THAT COST AND MANNING ESTIMATES IN THEIR INITIAL PROPOSALS MAY NOT BE RESPONSIVE TO REVISED REQUIREMENTS. ALTHOUGH AMENDMENT 2 WAS DEFICIENT IN THE ABOVE RESPECTS, WE BELIEVE THAT THE RECORD DEMONSTRATES THAT BOTH SRL AND TI VIEWED THE AMENDMENT AS FIXING FEBRUARY 5 AS THE CUTOFF DATE FOR NEGOTIATIONS.

FURTHER, WE BELIEVE THAT THE REVISED PROPOSAL OF SRL - THE CONTRACTOR WHO HAS SATISFACTORILY PERFORMED ON THE PROJECT FOR 11 YEARS - MAY HAVE BEEN WORTHY OF CONSIDERATION AS TO WHETHER NEGOTIATIONS SHOULD HAVE BEEN REOPENED WITH BOTH OFFERORS ON THE REDUCED REQUIREMENTS. SINCE THE AMENDMENT CHANGED THE "INITIAL PROPOSAL" REQUIREMENTS, WE BELIEVE THAT SUCH CIRCUMSTANCE SHOULD HAVE GENERATED AN INQUIRY INTO THE FEASIBILITY AND NECESSITY FOR FURTHER NEGOTIATIONS. WE FIND IT DIFFICULT TO UNDERSTAND HOW A PROPOSAL REVISION OF A CURRENT CONTRACTOR WHEREIN A SPECIFIC INVITATION FOR DISCUSSION IS MADE MAY BE DISREGARDED ESPECIALLY WHEN THE OFFEROR'S REVISION POINTS TO POSSIBLE COST SAVINGS BASED ON SUGGESTED STAFF LEVEL CHANGES. HOWEVER, IN VIEW OF THE WIDE DISCRETION VESTED IN THE CONTRACTING OFFICER IN DETERMINING THE NATURE AND SCOPE OF NEGOTIATIONS, WE CANNOT SAY, AS A MATTER OF LAW, THAT HIS FAILURE TO REOPEN NEGOTIATIONS CONSTITUTED A CLEAR ABUSE OF DISCRETION.

THE RFP CONTAINED A STATEMENT OF WORK AND INCORPORATED A "RFP BOOKLET NO. 2" ENTITLED, "INSTRUCTIONS FOR THE PREPARATION OF PROPOSALS FOR THE DIRECTORATE OF R&D PROCUREMENT." THE FRONT PAGE OF THIS BOOKLET CONTAINS THE FOLLOWING:

THE PURPOSE OF THIS BOOKLET IS TO STANDARDIZE AND SIMPLIFY THE PREPARATION OF PROPOSALS FOR RESEARCH AND DEVELOPMENT PROCUREMENT. IT HAS BEEN PREPARED IN ACCORDANCE WITH CURRENT AIR FORCE PROCUREMENT POLICIES AND PRACTICES. THIS BOOKLET IS INTENDED TO INDICATE THE MINIMUM REQUIREMENTS, FOR THE PREPARATION AND SUBMISSION OF YOUR PROPOSAL. ELABORATION FOR THE PURPOSES OF CLARITY AND EMPHASIS IS NOT OBJECTIONABLE. THIS BOOKLET IS INTENDED TO BE GENERAL IN NATURE WITH APPLICATION TO MANY PROGRAMS. ALTHOUGH IT IS INTENDED AS A GUIDE, SUBJECT TO MODIFICATION AS REQUIRED FOR EACH INDIVIDUAL PROGRAM, ITS CONTENT AND ITS INTENT SHALL BE ADHERED TO WHENEVER POSSIBLE.

HOWEVER, NO SPECIFIC EVALUATION FACTORS DIRECTLY PERTINENT TO THE PARTICULAR RESEARCH AND DEVELOPMENT EFFORT WERE SET OUT IN THIS RFP. RATHER, THE GENERAL GUIDELINES STATED IN PART II OF THE BOOKLET WERE TO BE FOLLOWED IN PREPARING A PROPOSAL IN RESPONSE TO THE STATEMENT OF WORK IN THE RFP. IMPLICIT IN THE PROCUREMENT OF GOODS AND SERVICES IS THE NECESSITY FOR FURNISHING ADEQUATE INFORMATION TO PROSPECTIVE OFFERORS OF THE GOVERNMENT'S NEEDS AND REQUIREMENTS AND HOW OFFERORS ARE TO RESPOND TO THOSE NEEDS AND REQUIREMENTS. SEE ASPR 3-501(A). ALSO, WE HAVE HELD THAT BOTH EVALUATION CRITERIA AND THE RELATIVE IMPORTANCE ASSIGNED TO EACH FACTOR OF EVALUATION SHOULD BE STATED IN THE RFP. ESPECIALLY PERTINENT IS OUR DECISION OF OCTOBER 13, 1969, 49 COMP. GEN. 229, TO YOU. THERE WE STATED THAT IF A POINT EVALUATION FORMULA IS TO BE USED, OFFERORS SHOULD BE INFORMED AS TO THE EVALUATION FACTORS AND THE RELATIVE IMPORTANCE TO BE ATTACHED TO EACH FACTOR. WE WENT ON TO STATE:

THE RECORD OF THE SUBJECT PROCUREMENT INDICATES THAT, WHILE THE AMENDED RFP IN PARAGRAPH 33 STATED THE GOVERNMENT'S REQUIREMENTS IN BROAD, GENERAL TERMS, THE TECHNICAL REASONS ADVANCED FOR REJECTION OF BERKELEY SCIENTIFIC LABORATORIES, INC. PROPOSAL APPEAR TO INDICATE THE APPLICATION OF RATHER DETAILED AND RIGID REQUIREMENTS. IT IS OUR VIEW THAT THE MERE STATEMENT IN PARAGRAPH 33 THAT "GREATEST EMPHASIS SHALL BE PLACED ON THE FOLLOWING CRITERIA IN THE ORDER LISTED," DOES NOT SUFFICE TO SUFFICIENTLY INFORM OFFERORS OF THE ACTUAL EVALUATION FACTORS USED, OR OF THE RELATIVE WEIGHTS ATTACHED TO EACH FACTOR. WHILE WE HAVE NEVER HELD, AND DO NOT NOW INTEND TO DO SO, THAT ANY MATHEMATICAL FORMULA IS REQUIRED TO BE USED IN THE EVALUATION PROCESS, WE BELIEVE THAT WHEN IT IS INTENDED THAT NUMERICAL RATINGS WILL BE EMPLOYED OFFERORS SHOULD BE INFORMED OF AT LEAST THE MAJOR FACTORS TO BE CONSIDERED AND THE BROAD SCHEME OF SCORING TO BE EMPLOYED. WHETHER OR NOT NUMERICAL RATINGS ARE TO BE USED, WE BELIEVE THAT NOTICE SHOULD BE GIVEN AS TO ANY MINIMUM STANDARDS WHICH WILL BE REQUIRED AS TO ANY PARTICULAR ELEMENT OF EVALUATION, AS WELL AS REASONABLY DEFINITE INFORMATION AS TO THE DEGREE OF IMPORTANCE TO BE ACCORDED TO PARTICULAR FACTORS IN RELATION TO EACH OTHER. ***

THE DEFICIENCIES IN THE RFP AND NEGOTIATION PROCEDURES DO NOT, IN OUR OPINION, JUSTIFY THE CONCLUSION THAT THE AWARD WAS PATENTLY ILLEGAL. HOWEVER, WE STRONGLY RECOMMEND THAT CORRECTIVE MEASURES BE TAKEN TO ASSURE THAT THE ABOVE-DISCUSSED DEFICIENCIES WILL NOT OCCUR IN THE FUTURE.