B-169429, AUG 21, 1970, 50 COMP GEN 117

B-169429: Aug 21, 1970

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CONTRACTS - NEGOTIATION - EVALUATION FACTORS - POINT RATING - DISCLOSURE OF EVALUATION BASE IN AWARDING A CONTRACT TO THE HIGHEST OFFEROR UNDER A REQUEST FOR PROPOSALS TO CONDUCT A SURVEY OF MINORITY FIRMS ON THE BASIS OF A POINT RATING THAT WAS NOT STRUCTURED TO INFORM OFFERORS OF THE EVALUATION CRITERIA TO BE USED AND THE RELATIVE IMPORTANCE OF EACH FACTOR. THE PRINCIPLES OF NEGOTIATED COMPETITIVE PROCUREMENT WERE NOT OBSERVED. TO INSURE THAT THE GOVERNMENT WILL OBTAIN THE MOST ADVANTAGEOUS CONTRACT AVAILABLE IN FUTURE PROCUREMENTS. OFFERORS MUST BE ADVISED THAT NEGOTIATIONS ARE BEING CONDUCTED. THE CUTOFF DATE PRESCRIBED BY SECTION 1-3.805-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS IS CONSIDERED AN ESSENTIAL AND NOT A DE MINIMIS REQUIREMENT.

B-169429, AUG 21, 1970, 50 COMP GEN 117

CONTRACTS - NEGOTIATION - EVALUATION FACTORS - POINT RATING - DISCLOSURE OF EVALUATION BASE IN AWARDING A CONTRACT TO THE HIGHEST OFFEROR UNDER A REQUEST FOR PROPOSALS TO CONDUCT A SURVEY OF MINORITY FIRMS ON THE BASIS OF A POINT RATING THAT WAS NOT STRUCTURED TO INFORM OFFERORS OF THE EVALUATION CRITERIA TO BE USED AND THE RELATIVE IMPORTANCE OF EACH FACTOR, AND WITHOUT GIVING OTHER OFFERORS IN A COMPETITIVE RANGE THE OPPORTUNITY TO DISCUSS THE WEAKNESSES, EXCESSES, OR DEFICIENCIES OF THEIR ORIGINAL PROPOSALS AS REQUIRED BY SECTION 1-3.805-1 OF THE FEDERAL PROCUREMENT REGULATIONS, THE PRINCIPLES OF NEGOTIATED COMPETITIVE PROCUREMENT WERE NOT OBSERVED. HOWEVER, THE CONTRACT HAVING BEEN COMPLETED, IT WOULD NOT BE IN THE BEST PUBLIC INTEREST TO TAKE ANY REMEDIAL ACTION; BUT TO INSURE THAT THE GOVERNMENT WILL OBTAIN THE MOST ADVANTAGEOUS CONTRACT AVAILABLE IN FUTURE PROCUREMENTS, SUCH PROCEDURES SHOULD BE CORRECTED. CONTRACTS - NEGOTIATION - CUTOFF DATE - REOPENING OF NEGOTIATIONS SINCE TO PROPERLY TERMINATE THE CLOSE OF NEGOTIATIONS, OFFERORS MUST BE ADVISED THAT NEGOTIATIONS ARE BEING CONDUCTED; ASKED FOR THEIR "BEST AND FINAL" OFFER AND NOT MERELY TO CONFIRM A PRIOR SUBMISSION; AND INFORMED THAT ANY REVISION OF A PROPOSAL MUST BE SUBMITTED BY THE COMMON CUTOFF DATE, THE CUTOFF DATE PRESCRIBED BY SECTION 1-3.805-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS IS CONSIDERED AN ESSENTIAL AND NOT A DE MINIMIS REQUIREMENT, AND THE PURPOSES OF ESTABLISHING A COMMON CUTOFF DATE WOULD BE FRUSTRATED IF A PROPOSAL REVISION WERE PERMITTED AFTER A COMMON CUTOFF DATE WITHOUT OPENING NEW NEGOTIATIONS ON THE BASIS THAT THIS PROCEDURE WOULD BE FAVORABLE TO THE GOVERNMENT.

TO THE DIRECTOR, OFFICE OF ECONOMIC OPPORTUNITY, AUGUST 21, 1970:

FURTHER REFERENCE IS MADE TO THE PROTEST OF URBANETICS, INC., AGAINST THE AWARD BY THE OFFICE OF ECONOMIC OPPORTUNITY OF FIXED PRICE CONTRACT NO. BOO-5099 TO SAM HARRIS ASSOCIATES, LTD. (HARRIS) FOR A SURVEY OF MINORITY MANUFACTURING FIRMS. THIS MATTER WAS THE SUBJECT OF REPORTS DATED MAY 4 AND 21, 1970, WITH SUPPORTING DOCUMENTS FROM THE ASSOCIATE DIRECTOR FOR ADMINISTRATION, AND THE OFFICE OF THE GENERAL COUNSEL.

THE RECORD SHOWS THAT THE SUBJECT CONTRACT WAS AWARDED UNDER REQUEST FOR PROPOSALS (RFP) NO. PD-012, WHICH WAS ISSUED ON JANUARY 20, 1970, PURSUANT TO THE AUTHORITY SET FORTH IN FEDERAL PROCUREMENT REGULATIONS (FPR) 1- 3.210(A)(13). THE CONTRACTING OFFICER HAD DETERMINED THAT ADEQUATE SPECIFICATIONS COULD NOT BE DRAFTED TO OBTAIN THE REQUIREMENT ON A FORMALLY ADVERTISED BASIS.

THE RFP STATED THAT A FIRM FIXED-PRICE AWARD WAS CONTEMPLATED BUT THAT ALTERNATE PROPOSALS WOULD BE CONSIDERED. THE SPECIFIC WORK REQUIREMENTS TO BE ACCOMPLISHED AND THE CRITERIA FOR EVALUATING PROPOSALS WAS SET FORTH IN THE RFP AS FOLLOWS:

SPECIFIC:

THE CONTRACTOR SHALL PROVIDE ALL NECESSARY QUALIFIED PERSONNEL, FACILITIES, MATERIALS, AND SERVICES (INCLUDING TRAVEL AND PER DIEM) REQUIRED TO IDENTIFY AND COLLECT DATA ON MINORITY MANUFACTURING FIRMS THROUGHOUT THE CONTINENTAL UNITED STATES WITH THE CAPACITY TO PRODUCE PRODUCTS AND SERVICES REQUIRED BY COOPERATING GOVERNMENT PROCUREMENT AGENCIES. IDENTIFICATION OF THESE FIRMS SHALL BE LIMITED TO THOSE LOCATED IN URBAN AND RURAL POVERTY AREAS WITH COORDINATION FROM SMALL BUSINESS ADMINISTRATION AND OFFICE OF ECONOMIC OPPORTUNITY. THE CONTRACTOR SHALL DEVELOP AN EQUITABLE DISTRIBUTION OF THE FIRMS BETWEEN URBAN AND RURAL AREAS.

IN PERFORMANCE OF THIS CONTRACT, THE CONTRACTOR SHALL CONDUCT THE FOLLOWING WORK:

1. EVALUATE NOT LESS THAN THREE HUNDRED (300) MINORITY BUSINESS ENTERPRISES UTILIZING EXHIBIT "A" ATTACHED HERETO.

NOTE: THE CONTRACTOR SHALL NOTIFY EACH FIRM BEING EVALUATED THAT UNDER NO CIRCUMSTANCES SHOULD IT BELIEVE THAT THE SUBMISSION OF THIS DATA MAKES IT ELIGIBLE TO RECEIVE A FEDERAL SUBCONTRACT.

2. PREPARE A LISTING OF AS MANY FIRMS AS POSSIBLE INCLUDING NAME, ADDRESS, TELEPHONE, PRODUCT LINE OR MAJOR LINE, AND WHERE POSSIBLE LIST LAST CONTRACT AND THE PRODUCT LINE FURNISHED TO THE FEDERAL GOVERNMENT, LIST EQUIPMENT ON HAND AND THE CAPACITY OF THIS EQUIPMENT. EXHIBIT "A" SHALL BE USED FOR THIS LISTING.

3. COLLABORATE AND COORDINATE CONTRACTOR'S EFFORTS THROUGH CONSULTATIONS WITH OEO PERSONNEL AND SMALL BUSINESS ADMINISTRATION OFFICIALS CHARGED WITH THE ADMINISTRATION OF SECTION 8(A).

4. SUBMIT MATERIALS, REPORTS AND LISTS WEEKLY DURING THE OPERATION OF THE CONTRACT AND AT THE END OF THE CONTRACT PERIOD SUBMIT TO THE CONTRACTING OFFICER, OFFICE OF ECONOMIC OPPORTUNITY AND SMALL BUSINESS ADMINISTRATION TWENTY (20) COPIES OF A FINAL REPORT, WITHIN TEN (10) DAYS AFTER COMPLETION OF THE CONTRACT.

TECHNICAL PROPOSALS WILL BE EVALUATED PURSUANT TO THE FOLLOWING FACTORS:

1. DEMONSTRATION OF AN UNDERSTANDING OF THE OBJECTIVES, GOALS, AND MAJOR CONCEPT OF THE STUDY.

2. PRIOR EXPERIENCE AND CAPABILITY OF THE OFFEROR'S STAFF IN PERFORMING WORK OF THE TYPE REQUIRED BY THIS REQUEST FOR PROPOSALS.

3. TECHNICAL QUALIFICATIONS AND CAPABILITY OF THE STAFF ASSIGNED TO THIS PROJECT.

THE CONTRACTING OFFICER STATES THAT ELEVEN COMPANIES SUBMITTED PROPOSALS BY THE CLOSING DATE OF FEBRUARY 9, 1970, AND THE FOLLOWING SIX WERE DETERMINED TO BE ACCEPTABLE AND WITHIN A COMPETITIVE RANGE:

1. SAM HARRIS ASSOCIATES, LTD.

2. TRANSCENDENTAL CORPORATION

3. URBANETICS, INC.

4. ROY LITTLEJOHN ASSOCIATES, INC.

5. BLX GROUP, INC.

6. KOBA ENTERPRISES, INC.

THE SELECTION PANEL, WHICH CONSISTED OF FOUR OEO EMPLOYEES AND THREE SMALL BUSINESS ADMINISTRATION EMPLOYEES, EVALUATED THE HARRIS PROPOSAL AS FOLLOWS:

SAM HARRIS ASSOCIATES, LTD.

THIS CONTRACTOR WON OUR NOMINATION TO DO THE SUBJECT SURVEY OF MINORITY BUSINESSES BECAUSE WE FEEL THAT THEY WILL PRODUCE A MORE ACCURATE AND RELIABLE PRODUCT. THE STRENGTH OF THIS PROPOSAL IS IN:

1. THE QUALITY OF THE PERSONNEL

2. THE PROPOSED PROCEDURE

SAM HARRIS, WHO WILL GIVE 30 PERCENT OF HIS TIME TO THIS PROJECT, WALTER COOPER AND TED LEDBETTER ARE THREE OF THE MOST EXPERIENCED AND KNOWLEDGEABLE PEOPLE IN THE AREA OF MINORITY ENTERPRISE. THEY HAVE BEEN INVOLVED WITH THE MAJOR BUSINESS DEVELOPMENT PROGRAMS OF SEA, EDA AND OEO'S TITLE IV PROGRAM. KEN BROWN, PROJECT MANAGER, HAS EXPERIENCE WITH MCKINSEY AND COMPANY AND AS DIRECTOR OF ECONOMIC RESEARCH FOR THE NEW YORK CITY DEPARTMENT OF COMMERCE AND INDUSTRIAL DEVELOPMENT. THE BACKGROUNDS OF THE OTHER PROJECT PARTICIPANTS ADD UP TO THE MOST EXPERIENCED AND KNOWLEDGEABLE STAFF OF ANY OF THE PROPOSED STAFF OF ANY OF THE PROPOSED PROJECTS, BY FAR.

IN ADDITION, THE METHODOLOGY OF THIS PROPOSAL OFFERS A MUCH BETTER CHANCE OF HAVING A RELIABLE QUALITY THAN ANY OTHER OF THE PROPOSALS REVIEWED. THE CONTRACTOR WILL USE TEN (10) IN-HOUSE SURVEYORS WHO WILL BE DEPLOYED THROUGHOUT THE COUNTRY. THEY WILL HOLD INTERVIEWS DIRECTLY AND ON-SITE WITH THE FIRMS. EACH OF THOSE SURVEYORS IS TO CONDUCT THREE TO FIVE BUSINESS SURVEYS PER WEEK. THE SURVEYORS WILL PERSONALLY OBSERVE THE OPERATIONS OF THE FIRMS AND MAKE THEIR PRESENTATION IN PROPOSED SUPPLEMENTAL REPORTS WHICH EACH MEMBER WOULD SUBMIT IN ADDITION TO THE QUESTIONNAIRE. THE REPORTS WOULD INCLUDE INFORMATION ON THE PHYSICAL FACILITIES, THE ESTIMATED CAPACITY AND THE ABILITY OF THE FIRMS TO PRODUCE QUALITY PRODUCTS BASED UPON UNIFORMLY PREPARED CRITERIA FOR EVALUATING SUCH FIRMS.

THE INFORMATION SUBMITTED BY THE TEAM MEMBERS TO THE WASHINGTON HEADQUARTERS WOULD BE REVIEWED BY A PANEL OF THREE PROFESSIONAL PERSONS WITH EXPERTISE IN THIS AREA. THIS PANEL WOULD BE AVAILABLE FOR SOLVING ALL PROBLEM CASES IN-HOUSE WHENEVER THESE OCCUR. THE PROCEDURE ISSUES CONSISTENT INFORMATION AND ELIMINATES THE NECESSITY FOR TRAINING A LARGE NUMBER OF SUBCONTRACTORS STAFFS OVER WHICH THE PRIME CONTRACTOR HAS NO CONTROL.

WE RECOGNIZE THAT HARRIS HAS BID ABOVE THE ALLOCATED PRICE. THERE ARE THREE AREAS OF EFFORT WHICH WE FEEL CAN BE CUT IN THE NEGOTIATION. THEY ARE:

1. THE REQUIREMENT TO IDENTIFY ADDITIONAL PRODUCTS. (LAST ITEM IN TASK #3 PAGE III-7)

2. IDENTIFICATION OF GROUPING OF MANUFACTURING FIRMS FOR INTEGRATIVE PRODUCTION RELATIONSHIPS (TASK #5 FIRST SENTENCE, FIRST PARAGRAPH - PAGE III-9).

3. THE PROPOSAL CALLS FOR WEEKLY TRIPS BACK TO WASHINGTON FOR PROJECT STAFF. WE DO NOT THINK THAT MORE THAN FOUR TRIPS PER STAFF MEMBER ARE NECESSARY. OF COURSE, IT MAY BE THAT GIVEN PER DIEM, ETC., THE COST TO THE GOVERNMENT WILL NOT BE MUCH AFFECTED BY ELIMINATING THIS TRAVEL.

IN ANY EVENT, WE THINK THAT THE HARRIS PROPOSAL IS CONSIDERABLY SUPERIOR TO ITS NEAREST RIVAL AND SOME EXTRA COST TO ASSURE UNIFORMITY OF SURVEY RESULTS IS WARRANTED.

IN SUBSEQUENT NEGOTIATIONS HARRIS DELETED FROM ITS PROPOSAL THE THREE AREAS SHOWN ABOVE. ADDITIONALLY, HARRIS REDUCED THE NUMBER OF RESEARCHERS FROM TEN TO EIGHT AND CHANGED ITS PROPOSAL FROM A COST REIMBURSEMENT TYPE TO A FIXED-PRICE BASIS.

THE RECORD INDICATES THAT REPRESENTATIVES OF THE OTHER FIVE CONCERNS IN THE COMPETITIVE RANGE WERE ALSO CONTACTED CONCERNING THEIR OFFERS AND GIVEN 24 HOURS TO SUBMIT REVISIONS TO THEIR PROPOSALS. THE NEGOTIATOR STATES THAT THE NEGOTIATIONS WITH THESE CONCERNS WERE "PRELIMINARY" AND DID NOT INVOLVE ANY PRICE DISCUSSIONS. ALTHOUGH IT APPEARS THAT THE PROPOSALS OF URBANETICS AND THE OTHER FOUR CONCERNS WERE CONSIDERED WEAK IN THE AREA OF OBTAINING UNIFORM SURVEY RESULTS, IN THAT THEY PROPOSED TO RELY EXCESSIVELY ON THIRD PARTIES FOR THE RESEARCH DUTIES OR DID NOT PROPOSE TO USE SUFFICIENT RESEARCHERS IN THE FIELD FOR COLLECTING THE DATA, THE RECORD INDICATES THAT THOSE OFFERORS WERE NOT INFORMED OF SUCH WEAKNESS. URBANETICS WAS THE ONLY OFFEROR WHICH FAILED TO SUBMIT A PROPOSAL REVISION, HOWEVER, ONLY HARRIS AND TRANSCENDENTAL WERE REGARDED AS HAVING MADE SUBSTANTIAL CHANGES IN THEIR PROPOSALS.

IN REGARD TO THE NEGOTIATIONS WHICH TOOK PLACE WITH URBANETICS, THE CONTRACT NEGOTIATOR STATES THAT HE ASKED A REPRESENTATIVE OF THE CONCERN IF HE CARED TO MAKE ANY CHANGE IN HIS PROPOSAL. THE REPRESENTATIVE STATED THAT HE DID NOT KNOW WHERE ANY CHANGES COULD BE MADE, AND THAT URBANETICS WOULD NOT REVISE ITS PROPOSAL.

A POINT SYSTEM WAS USED TO RATE THE PROPOSALS WHICH WAS BASED ON POINTS ASSIGNED TO EACH EVALUATOR'S CHOICE FOR FIRST (20), SECOND (15), THIRD (10), AND FOURTH (5). THIS RESULTED IN RANKINGS AS FOLLOWS:

CONTRACTOR 1ST 2ND 3RD 4TH TOTAL

SAM HARRIS 4045 10 0 95

TRANSCENDENTAL 40 30 0 0 70

LITTLEJOHN 0 15 40 0 55

B L K 0 30 0 15 45

URBANETICS 40 0 0 0 40

KOBA 20 15 0 0 35

THE PRICES AFTER NEGOTIATIONS WERE:

1. URBANETICS $38,042.62

2. ROY LITTLEJOHN, 40,734.00; ALTERNATE 40,224.00

3. BIX GROUP 50,036.00

4. TRANSCENDENTAL 53,161.00

5. KOBA ENTERPRISES 56,411.00

6. SAM HARRIS 75,000.00

IT IS REPORTED THAT FURTHER PRICE NEGOTIATIONS WERE CONDUCTED WITH HARRIS ON THE BASIS OF TOTAL DOLLARS, AND ITS PRICE WAS REDUCED TO $72,000. IS ALSO REPORTED THAT NEGOTIATION OF PRICE DID NOT TAKE PLACE WITH OTHER FIRMS BECAUSE NO OTHER TECHNICAL PROPOSAL, AS ORIGINALLY SUBMITTED OR AS MODIFIED, WAS DETERMINED TO BE TECHNICALLY EQUIVALENT TO THE HARRIS PROPOSAL.

PURSUANT TO THE DETERMINATION THAT HARRIS HAD SUBMITTED THE BEST PROPOSAL, AN AWARD WAS CONCLUDED WITH THAT CONCERN FOR A FIRM FIXED PRICE CONTRACT OF $72,000 ON MARCH 23, 1970, WHICH WAS IN EXCESS OF THE $60,000 ORIGINALLY ALLOCATED FOR THE PROCUREMENT. WE HAVE BEEN INFORMALLY ADVISED THAT PERFORMANCE OF THE CONTRACT WAS COMPLETED IN LATE JUNE IN ACCORDANCE WITH THE 90-DAY PERIOD OF PERFORMANCE STIPULATED IN THE RFP.

URBANETICS PROTESTED THE AWARD TO THIS OFFICE CLAIMING THAT THE AREAS IN WHICH ITS PROPOSAL WAS CONSIDERED TECHNICALLY DEFICIENT WERE NOT FULLY SET FORTH IN THE RFP AS REQUIREMENTS OR AS EVALUATION FACTORS. IN ADDITION, THE COMPANY MAINTAINS THAT NO MEANINGFUL NEGOTIATIONS EVER TOOK PLACE BETWEEN IT AND OEO, AND THAT IT SHOULD HAVE BEEN ADVISED OF THE ALLEGED DEFICIENT AREAS OF ITS PROPOSAL.

THE DECISIONS OF THIS OFFICE HAVE CONSISTENTLY HELD THAT AN RFP MUST ADVISE OFFERORS OF ALL EVALUATION FACTORS AND OF THE RELATIVE IMPORTANCE OF EACH FACTOR. 49 COMP. GEN. 229 (1969); B-169645, JULY 24, 1970; B- 167054, JANUARY 14, 1970. IN THE INSTANT CASE IT IS THE APPARENT POSITION OF YOUR AGENCY THAT ALL WORK REQUIREMENTS AND EVALUATION FACTORS WERE STATED AS FULLY AS POSSIBLE AT THE TIME THE SOLICITATION WAS ISSUED, AND THAT YOUR AGENCY DID NOT DESIRE TO RESTRICT THE APPROACHES AN OFFEROR COULD CONSIDER IN ACCOMPLISHING THE WORK BY LISTING DETAILED SPECIFICATIONS IN THE RFP. HOWEVER, WE NOTE THAT THE HARRIS PROPOSAL WAS CONSIDERED SUPERIOR PARTLY BECAUSE THE COMPANY PROPOSED TO HOLD ON-SITE INTERVIEWS WITH THE FIRMS, OBSERVE THEIR FACILITIES AND OPERATIONS, AND SUBMIT SUPPLEMENTAL REPORTS CONTAINING INFORMATION IN ADDITION TO THE INFORMATION CALLED FOR BY EXHIBIT A OF THE RFP.

IN SUCH CONNECTION THE HARRIS PROPOSAL STATES:

SINCE AS WE HAVE NOTED THE APPROACH WHICH WE WOULD PROPOSE TO UTILIZE IS DIAGNOSTIC AND ANALYTICAL IN NATURE, WE DEEM IT NECESSARY TO OBTAIN MORE INFORMATION THAN REFLECTED IN THE QUESTIONS ITEMIZED IN EXHIBIT A TO THE RFP FOR THIS PROPOSAL. ALTHOUGH WE WOULD NOT ALTER THE BASIC FORMAT OF THE QUESTIONNAIRE, IT SEEMS THAT THE INSTRUMENT SHOULD BE MODIFIED AND/OR AN APPROACH ADOPTED WHICH WOULD PERMIT MUCH MORE INFORMATION TO BE OBTAINED DURING AN INTERVIEW AND PERMIT SUPPLEMENTATION BY OBSERVATIONAL ANALYSES. THE REFINEMENT OF THE SUGGESTED SURVEY INSTRUMENT AND THE DEVELOPMENT OF OBSERVATIONAL METHODS REQUIRED TO MAKE THE SURVEY SUFFICIENTLY ANALYTICAL TO OBTAIN THE OBJECTIVES STATED EARLIER WOULD BE ACCOMPLISHED DURING THE FIRST THREE WEEKS OF THE PROJECT.

WE DEEM IT NECESSARY TO NOT ONLY SEEK ADDITIONAL INFORMATION FROM THE INTERVIEWEES BUT TO ALSO OBSERVE THE PRODUCTION, AND ASSESS THE ADEQUACY OF MANAGEMENT, THE PRODUCTIVE FACILITIES AND OTHER FACTORS WHICH WOULD INFLUENCE THE POTENTIAL FOR EXPANDED PRODUCTION. AN EXAMPLE OF THE ADDITIONAL INFORMATION WHICH WE CONSIDER NECESSARY TO OBTAIN DURING THE INTERVIEW INCLUDES BUT IS NOT LIMITED TO: AGE AND HEALTH CONDITIONS OF MANAGEMENT PERSONNEL AS WELL AS THEIR RELATED PRIOR BUSINESS, EMPLOYMENT AND TRAINING EXPERIENCE.

THE AGE OF THE FIRM; ITS ANNUAL GROWTH (BOTH IN DOLLAR VOLUME AND EMPLOYMENT) SINCE ITS INCEPTION AND THE MAJOR FACTORS WHICH HAVE CONTRIBUTED TO ITS GROWTH, AS WELL AS AN IDENTIFICATION OF WHAT ARE CONSIDERED TO BE IMPEDIMENTS TO FURTHER GROWTH.

THE AVERAGE VOLUME OF INVENTORY, THE PEAKS AND TROUGHS IN THE PRODUCTION CYCLE; THE METHODS USED TO FINANCE INVENTORY; THE QUALITY OF THE WORK FORCE; THE TYPE OF TRAINING PROVIDED AS WELL AS AN INDICATION WHETHER THE EMPLOYEES ARE UNIONIZED. A LISTING OF EQUIPMENT BY TYPE, AGE, AND FAIR MARKET VALUE FOR EXISTING FIRMS AS WELL AS NEW BUSINESSES.

THE NATURE OF QUALITY CONTROL METHODS AND THE ADEQUACY OF SUPERVISION, PHYSICAL FACILITIES, AND PLANT LAYOUT AS WELL AS THE ACCESSIBILITY OF THE PLANT'S LOCATION TO MAJOR RAIL AND TRUCK ROUTES.

AN IDENTIFICATION OF THE FIRM'S INDEBTEDNESS, I.E., LONG-TERM AND SHORT- TERM; ITS ACCESS TO LONG- AND SHORT-TERM CREDIT; ITS RELATIONSHIP TO ITS CREDITORS, I.E., CREDIT RATING; AND THE MAXIMUM SIZE OF THE LINE OF CREDIT WHICH IT HAS BEEN ABLE TO OBTAIN.

AN ASSESSMENT OF THE FIRM'S EXCESS PRODUCTIVE CAPACITY AND MANAGEMENT'S OPINION ABOUT THE MAXIMUM EXTENT TO WHICH IT COULD EXPAND PRODUCTION WITHIN A SIX MONTHS' PERIOD OF TIME GIVEN ITS EXISTING PHYSICAL FACILITIES, THE AVAILABILITY OF LAND AND A MAXIMUM OF A 20 PERCENT INCREASE IN CAPITAL FOR EQUIPMENT, MODIFICATION OF ITS PRODUCTIVE FACILITIES AND THE FINANCING OF INVENTORY.

IN ADDITION TO SEEKING THE ABOVE INFORMATION THROUGH INTERVIEWS, THE PERSONNEL CONDUCTING THE SURVEY WOULD, ON THE BASIS OF PREDETERMINED CRITERIA, MAKE JUDGMENTS ABOUT THE FIRM'S MANAGEMENT, THE EFFICIENCY OF OPERATIONS, PLANT LAYOUT, QUALITY OF WORK FORCE AND FINANCIAL CAPACITY TO SUPPORT AN EXPANDED LEVEL OF PRODUCTION. ADDITIONALLY, THE SURVEY PERSONNEL WOULD IDENTIFY OPERATIONAL DEFICIENCIES, MANAGEMENT WEAKNESSES, DEFICIENCIES IN THE FIRM'S CAPITAL STRUCTURE AND OTHER OBSTACLES WHICH WOULD HAVE TO BE OVERCOME BEFORE THE FIRMS COULD MEET PERFORMANCE STANDARDS REQUIRED BY GOVERNMENT CONTRACTS. ***

THE SPECIFIC WORK REQUIREMENTS OF THE RFP CLEARLY SHOWED THAT THE INFORMATION SPECIFIED IN EXHIBIT A SHOULD BE OBTAINED AND USED AS THE BASIS FOR EVALUATING AND LISTING THE MINORITY FIRMS. PARAGRAPH 11 OF EXHIBIT A REQUIRED IDENTIFICATION OF THE PERSON FROM WHOM THE INFORMATION WAS OBTAINED. THE RFP DID NOT INDICATE THAT ON-SITE OBSERVATIONS WERE EITHER EXPECTED OR DESIRED OR THAT SUCH A PROCEDURE WOULD BE A FACTOR FOR CONSIDERATION IN THE EVALUATION. IT FURTHER APPEARS THAT YOUR AGENCY WAS IN AGREEMENT WITH HARRIS THAT ON-SITE SURVEYS, AND INFORMATION IN ADDITION TO THAT SPECIFIED IN EXHIBIT A, WOULD BE BENEFICIAL IN ACCOMPLISHING THE AGENCY'S NEEDS AND THAT YOUR AGENCY WAS WILLING TO MAKE ADDITIONAL PAYMENT FOR THE EXTRA EFFORTS INVOLVED. WE BELIEVE THEREFORE THAT THE RFP SHOULD HAVE BEEN AMENDED SO THAT ALL PROCEDURES AND INFORMATION DEEMED ESSENTIAL TO PROPER PERFORMANCE OF THE CONTRACT WOULD HAVE BEEN SHOWN, IN ORDER THAT THE PROPOSALS AND THEIR EVALUATION COULD HAVE BEEN BASED ON UNIFORM REQUIREMENTS AND CRITERIA.

SINCE IT APPEARS THAT ON-SITE SURVEYS BY CONTRACTOR PERSONNEL WERE ACTUALLY CONSIDERED NECESSARY BY YOUR AGENCY FOR OBTAINING THE UNIFORMITY AND RELIABILITY NEEDED IN THE REPORTS, AND SUCH A PROCEDURE WARRANTED THE PAYMENT OF A HIGHER CONTRACT PRICE, WE ARE NOT PERSUADED BY THE STATEMENTS IN THE REPORT OF MAY 21 INDICATING THAT ALL OF THE SIX PROPOSALS WERE ACCEPTABLE; THAT THE EVALUATION CRITERIA WERE NOT CHANGED; AND THAT ON- SITE SURVEYS WERE NOT SET OUT IN THE SPECIFICATIONS BECAUSE THE OFFERORS WERE EXPECTED TO SPECIFY THE MANNER IN WHICH THE WORK WOULD BE ACCOMPLISHED. LIKEWISE, WE REJECT THE ARGUMENT ADVANCED IN THE REPORT THAT NEGOTIATIONS WITH THE OFFERORS FOR ON-SITE SURVEYS WOULD HAVE BEEN PREJUDICIAL TO HARRIS, AND WOULD IN EFFECT BE TAKING THE BENEFIT OF ITS THINKING, EXPERIENCE AND EXPERTISE, AND GIVING IT TO OTHERS. THE PROPOSITION OF ON-SITE INTERVIEWS AND OBSERVATIONS OF MANUFACTURING PLANTS AND THEIR OPERATIONS DOES NOT PRESENT A NEW METHOD OF ACQUIRING DATA OR OF MAKING EVALUATIONS. THE HARRIS PROPOSAL IN OFFERING SUCH AN APPROACH, INTRODUCES NEITHER A TECHNICAL BREAK-THROUGH NOR A NOVEL CONCEPT FOR OBTAINING THE REQUIREMENTS SPECIFIED IN THE RFP. ALSO, IT APPEARS FROM THE HARRIS PROPOSAL THAT THE ACTUAL BASIS FOR CONDUCTING ON-SITE INTERVIEWS AND SURVEYS WAS FOR THE PRIMARY PURPOSES OF OBTAINING DATA OTHER THAN THAT REQUIRED BY EXHIBIT A.

FPR 1-3.805-1 REQUIRES THAT DISCUSSIONS BE CONDUCTED WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. IT IS A WELL-ESTABLISHED PRINCIPLE IN FEDERAL PROCUREMENTS THAT SUCH DISCUSSIONS MUST BE MEANINGFUL AND FURNISH INFORMATION TO ALL OFFERORS WITHIN THE COMPETITIVE RANGE AS TO THE AREAS IN WHICH THEIR PROPOSALS ARE BELIEVED TO BE DEFICIENT SO THAT COMPETITIVE OFFERORS ARE GIVEN AN OPPORTUNITY TO FULLY SATISFY THE GOVERNMENT'S REQUIREMENTS. 47 COMP. GEN. 336 (1967). WHEN NEGOTIATIONS ARE CONDUCTED THE FACT THAT INITIAL PROPOSALS MAY BE RATED AS ACCEPTABLE DOES NOT INVALIDATE THE NECESSITY FOR DISCUSSIONS OF THEIR WEAKNESSES, EXCESSES OR DEFICIENCIES IN ORDER THAT THE CONTRACTING OFFICER MAY OBTAIN THAT CONTRACT WHICH IS MOST ADVANTAGEOUS TO THE GOVERNMENT. WE HAVE STATED THAT DISCUSSIONS OF THIS NATURE SHOULD BE CONDUCTED WHENEVER IT IS ESSENTIAL TO OBTAIN INFORMATION NECESSARY TO EVALUATE A PROPOSAL OR TO ENABLE THE OFFEROR TO UPGRADE THE PROPOSAL. THUS, WHERE AN OFFEROR FAILED TO PASS A BENCHMARK TEST, THAT FACTOR ALONE SHOULD NOT HAVE PRECLUDED DISCUSSIONS TO DETERMINE WHETHER THE PROPOSAL COULD BE IMPROVED. 47 COMP. GEN. 29 (1967). MOREOVER, WE HAVE HELD THAT MEANINGFUL DISCUSSIONS MUST BE CONDUCTED WITH CONCERNS IN A COMPETITIVE RANGE EVEN IN THE NEGOTIATION OF RESEARCH AND DEVELOPMENT CONTRACTS WHERE THE OFFEROR'S TECHNICAL APPROACH AND EXPERIENCE ARE OF CRITICAL IMPORTANCE, AND CONFORMITY WITH DETAILED SPECIFICATIONS IS NOT THE STANDARD FOR AWARD. B-168485, MARCH 30, 1970.

ADDITIONALLY, WE NOTE THAT THE RFP DID NOT INFORM THE OFFERORS OF THE RELATIVE IMPORTANCE OF THE EVALUATION FACTORS. THE DECISIONS OF THIS OFFICE HAVE CONSISTENTLY HELD THAT SUCH OMISSION IS CONTRARY TO THE DICTATES OF SOUND PROCUREMENT POLICY. SEE 50 COMP. GEN. 59 (1970), AND OTHER DECISIONS TO THE SAME EFFECT CITED THEREIN.

REGARDING THE STATEMENTS IN THE REPORT OF MAY 21 DEFENDING THE AWARD TO THE HIGHEST OFFEROR, AND THE LACK OF PRICE NEGOTIATIONS WITH THE COMPETITIVE OFFERORS, ON THE BASIS THAT ALTHOUGH THE COMPETITIVE PROPOSALS WERE ACCEPTABLE THEY WERE NOT TECHNICALLY EQUIVALENT TO THE HARRIS PROPOSAL AND PRICE NEGOTIATIONS WITH THE OTHER OFFERORS WOULD HAVE SERVED NO USEFUL PURPOSE SINCE NO OTHER PROPOSAL WAS BEING CONSIDERED FOR AWARD, YOUR ATTENTION IS DIRECTED TO 43 COMP. GEN. 353 (1963). AFTER REFERRING TO THE LEGISLATIVE HISTORIES OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 40 U.S.C. 471 NOTE, AND THE ARMED SERVICES PROCUREMENT ACT OF 1947, 41 U.S.C. 151 NOTE (1952 ED.) IT IS STATED AT PAGES 370 AND 371 OF THE DECISION:

NOTWITHSTANDING THE ABOVE, THE SENATE ARMED SERVICES COMMITTEE DELETED THIS PROVISION FROM THE BILL AND EXPLAINED ITS ACTION AT PAGE 3, S. REPT. NO. 571, 80TH CONGRESS, AS FOLLOWS:

THE BILL WAS AMENDED BY DELETING THE AUTHORITY TO NEGOTIATE CONTRACTS FOR THE PURPOSE OF SECURING A PARTICULAR QUALITY OF MATERIALS. YOUR COMMITTEE IS OF THE OPINION THAT THIS SECTION IS OPEN TO CONSIDERABLE ADMINISTRATIVE ABUSE AND WOULD BE EXTREMELY DIFFICULT TO CONTROL. FOR THIS REASON IT HAS BEEN ELIMINATED.

AS INDICATED BY THE LEGISLATIVE HISTORY OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 40 U.S.C. 471 NOTE, THAT ACT WAS INTENDED TO EXTEND THE SAME PROCUREMENT PRINCIPLES TO CIVILIAN AGENCIES OF THE GOVERNMENT AS HAD PREVIOUSLY BEEN CONFERRED UPON THE MILITARY DEPARTMENTS BY THE ARMED SERVICES PROCUREMENT ACT OF 1947. SEE PAGE 6, H. REPT. NO. 670, AND PAGE 5 S. REPT. NO. 475, 81ST CONGRESS.

THE REJECTION BY THE CONGRESS OF THIS REQUEST FOR NEGOTIATION AUTHORITY MUST THEREFORE BE CONSTRUED AS A PROHIBITION AGAINST THE NEGOTIATION OF CONTRACTS WITHOUT PRICE COMPETITION, WHERE THE FAILURE TO OBTAIN PRICE COMPETITION IS BASED SOLELY UPON A DETERMINATION BY THE CONTRACTING AGENCY THAT A PARTICULAR PROSPECTIVE CONTRACTOR WILL DELIVER SUPPLIES AND/OR SERVICES OF A HIGHER QUALITY THAN ANY OTHER CONTRACTOR. 41 COMP. GEN. 484.

ACCORDINGLY, WE MUST CONCLUDE THAT THE SUBJECT CONTRACT WAS AWARDED UNDER PROCEDURES WHICH FAILED TO OBSERVE ESTABLISHED PRINCIPLES OF NEGOTIATED COMPETITIVE PROCUREMENT. SINCE THE CONTRACT WAS COMPLETED IN JUNE WE DO NOT BELIEVE IT WOULD BE IN THE PUBLIC INTEREST FOR THIS OFFICE TO UNDERTAKE REMEDIAL ACTION IN THE MATTER. HOWEVER, WE ARE CALLING THIS PROCUREMENT TO YOUR PARTICULAR ATTENTION SO THAT APPROPRIATE ACTION WILL BE TAKEN TO INSURE THAT IN FUTURE PROCUREMENTS THE RFP'S ARE PREPARED, NEGOTIATIONS ARE CONDUCTED, AND EVALUATIONS ARE MADE IN ACCORDANCE WITH SUCH ESTABLISHED PRINCIPLES. FURTHERMORE, ANY NUMERICAL RATING SYSTEM ESTABLISHED OR USED BY YOUR AGENCY SHOULD BE STRUCTURED TO ENSURE THAT THE EVALUATION CRITERIA AND THEIR RELATIVE IMPORTANCE ARE SET OUT IN RFP, AND THAT PROPOSALS ARE IN FACT EVALUATED IN ACCORDANCE WITH SUCH CRITERIA.

IN FURTHERANCE OF OUR MUTUAL INTEREST IN THE FULL OBSERVANCE OF SOUND PROCUREMENT POLICIES, THE FOLLOWING MATTER IS ALSO BROUGHT TO YOUR ATTENTION.

THE REPORT OF MAY 21 STATES THAT ALL OFFERORS WERE GIVEN AN EQUAL TIME TO REVISE THEIR PROPOSALS BUT THAT A COMMON CUTOFF DATE FOR NEGOTIATIONS WAS NOT PRESCRIBED SINCE THE PROMULGATION OF SUCH A DATE WOULD HAVE ALLOWED SOME CONCERNS MORE TIME TO PREPARE REVISIONS THAN OTHER OFFERORS. IT ALSO EXPRESSES THE VIEW THAT "IN ANY EVENT, THE REQUIREMENT FOR A COMMON CUTOFF DATE SHOULD BE CONSIDERED DE MINIMIS." IN THIS CONNECTION FPR 1-3.805- 1(B) PROVIDES, IN PERTINENT PART:

WHENEVER NEGOTIATIONS ARE CONDUCTED WITH SEVERAL OFFERORS, WHILE SUCH NEGOTIATIONS MAY BE CONDUCTED SUCCESSIVELY, ALL OFFERORS SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS (SEE SEC 1-3.805-1(A)) 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 SHOULD BE SUBMITTED BY THAT DATE.

WE HAVE HELD THAT A SIMILAR PROVISION IN ASPR 3-805.1(B) REQUIRES THE ESTABLISHMENT OF A COMMON CUTOFF DATE TO PROPERLY CLOSE NEGOTIATIONS. COMP. GEN. 536. ANY SUGGESTION THAT A COMMON CUTOFF DATE FOR ALL OFFERORS CONCERNS A TRIVIAL MATTER SHOULD BE DISPELLED BY THE HOLDING IN OUR RECENT DECISION OF JULY 2, 1970. 50 COMP. GEN. 1.

THE REPORT OF MAY 21 ALSO INDICATES THAT A PROPOSAL REVISION FAVORABLE TO THE GOVERNMENT SHOULD BE CONSIDERED EVEN IF SUBMITTED AFTER THE COMMON CUTOFF DATE. IF SUCH ACTION WERE PERMITTED, WITHOUT OPENING UP NEW NEGOTIATIONS FOR ALL OFFERORS IN THE COMPETITIVE RANGE, IT IS APPARENT THAT THE PURPOSES FOR ESTABLISHING A COMMON CUTOFF DATE FOR THE CLOSE OF NEGOTIATIONS WOULD BE FRUSTRATED. IN THIS CONNECTION OUR OFFICE HAS HELD THAT TO PROPERLY TERMINATE THE CLOSE OF NEGOTIATIONS ALL OFFERORS MUST BE ADVISED THAT NEGOTIATIONS ARE BEING CONDUCTED; THAT OFFERORS ARE BEING ASKED FOR THEIR "BEST AND FINAL" OFFER, AND NOT MERELY TO CONFIRM THEIR PRIOR SUBMISSION; AND THAT ANY REVISION TO THEIR PROPOSAL MUST BE SUBMITTED BY THE COMMON CUTOFF DATE. B-167417, SEPTEMBER 12, 1969.

THE MATERIAL FORWARDED WITH THE REPORTS OF MAY 4 AND 21, 1970, IS ENCLOSED TOGETHER WITH A COPY OF OUR LETTER OF TODAY TO URBANETICS.