B-169725, OCT. 5, 1970

B-169725: Oct 5, 1970

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REVIEW OF PROTEST INDICATED THAT ADMINISTRATIVE RECORD FAILED TO SHOW BASIS UPON WHICH THE SUCCESSFUL OFFEROR'S EQUIPMENT WAS "EQUAL IN ALL MATERIAL RESPECTS' TO BRAND NAME SPECIFIED. ALTHOUGH URGENCY DETERMINATION WAS MADE. THAT WAS TIME FOR NEGOTIATIONS WITH OFFERORS WHO WERE WITHIN A COMPETITIVE RANGE. SECRETARY: REFERENCE IS MADE TO LETTER OF AUGUST 11. THE RFP WAS ISSUED ON FEBRUARY 20. THE RFP CONTAINED A "BRAND NAME OR EQUAL" CLAUSE WHICH PROVIDED IN PERTINENT PART AS FOLLOWS: "(A) IF ITEMS CALLED FOR BY THIS SOLICITATION HAVE BEEN IDENTIFIED IN THE SCHEDULE BY A 'BRAND NAME OR EQUAL' DESCRIPTION. SUCH IDENTIFICATION IS INTENDED TO BE DESCRIPTIVE. IS TO INDICATE THE QUALITY AND CHARACTERISTICS OF PRODUCTS THAT WILL BE SATISFACTORY.

B-169725, OCT. 5, 1970

BID PROTEST - NEGOTIATION - BRAND NAME OR EQUAL DENIAL OF PROTEST ON BEHALF OF LEVELATOR CORPORATION AGAINST AWARD OF A CONTRACT TO A HIGHER OFFEROR--SHELLEY MANUFACTURING CO.--UNDER NEGOTIATED PROCUREMENT FOR THREE ITEMS OF MESS GEAR DISPENSING EQUIPMENT ON A BRAND NAME OR EQUAL BASIS BY SAN FRANCISCO BAY NAVAL SHIPYARD BUT SUGGESTING TO NAVY THAT CORRECTIVE ACTION BE TAKEN TO PREVENT FUTURE IMPROPER NEGOTIATION PROCEDURES. REVIEW OF PROTEST INDICATED THAT ADMINISTRATIVE RECORD FAILED TO SHOW BASIS UPON WHICH THE SUCCESSFUL OFFEROR'S EQUIPMENT WAS "EQUAL IN ALL MATERIAL RESPECTS' TO BRAND NAME SPECIFIED. ALTHOUGH URGENCY DETERMINATION WAS MADE, THAT WAS TIME FOR NEGOTIATIONS WITH OFFERORS WHO WERE WITHIN A COMPETITIVE RANGE.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER OF AUGUST 11, 1970, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, IN RESPONSE TO OUR LETTER OF MAY 12, 1970, FURNISHING A REPORT ON THE PROTEST OF THE LEVELATOR CORPORATION OF AMERICA AGAINST THE AWARD OF A CONTRACT TO A HIGHER OFFEROR UNDER REQUEST FOR PROPOSALS (RFP) NO. N00221-70-R-0699, ISSUED BY THE SAN FRANCISCO BAY NAVAL SHIPYARD, VALLEJO, CALIFORNIA.

THE RFP WAS ISSUED ON FEBRUARY 20, 1970, PURSUANT TO THE "PUBLIC EXIGENCY" NEGOTIATING AUTHORITY SET FORTH IN 10 U.S.C. 2304(A)(2) AND IN PARAGRAPH 3-202 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), FOR THE PROCUREMENT OF THREE ITEMS OF MESS GEAR DISPENSING EQUIPMENT ON A BRAND NAME OR EQUAL BASIS. SPECIFICALLY, THE RFP REFERENCED THE MODELS OF THE AMERICAN MACHINE AND FOUNDRY COMPANY OR EQUAL.

THE RFP CONTAINED A "BRAND NAME OR EQUAL" CLAUSE WHICH PROVIDED IN PERTINENT PART AS FOLLOWS:

"(A) IF ITEMS CALLED FOR BY THIS SOLICITATION HAVE BEEN IDENTIFIED IN THE SCHEDULE BY A 'BRAND NAME OR EQUAL' DESCRIPTION, SUCH IDENTIFICATION IS INTENDED TO BE DESCRIPTIVE, BUT NOT RESTRICTIVE, AND IS TO INDICATE THE QUALITY AND CHARACTERISTICS OF PRODUCTS THAT WILL BE SATISFACTORY. PROPOSALS OFFERING 'EQUAL' PRODUCTS WILL BE CONSIDERED IF THEY ARE DETERMINED BY THE GOVERNMENT TO BE EQUAL IN ALL MATERIAL RESPECTS, INCLUDING SERVICE AND PERFORMANCE, TO THE BRAND NAME PRODUCTS REFERENCED IN THE SOLICITATION.

"(C) IF THE OFFEROR PROPOSES TO FURNISH AN 'EQUAL' PRODUCT, THE BRAND NAME, IF ANY, OF THE PRODUCT TO BE FURNISHED SHALL BE INSERTED IN THE SPACE PROVIDED IN THE SOLICITATION, OR SUCH PRODUCT SHALL BE OTHERWISE CLEARLY IDENTIFIED IN THE PROPOSAL. THE EVALUATION OF PROPOSALS AND THE DETERMINATION AS TO EQUALITY OF THE PRODUCT OFFERED SHALL BE THE RESPONSIBILITY OF THE GOVERNMENT AND WILL BE BASED ON INFORMATION FURNISHED BY THE OFFEROR OR IDENTIFIED IN HIS PROPOSAL, AS WELL AS OTHER INFORMATION REASONABLY AVAILABLE TO THE PURCHASING ACTIVITY. THE INFORMATION FURNISHED MAY INCLUDE SPECIFIC REFERENCES TO INFORMATION PREVIOUSLY FURNISHED OR TO INFORMATION OTHERWISE AVAILABLE TO THE PURCHASING ACTIVITY."

SECTION 4.1 OF THE RFP, SET FORTH THE DELIVERY SCHEDULE AS FOLLOWS:

"4.1 TIME OF DELIVERY

"A. DELIVERY IS REQUIRED TO BE MADE IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:

TIME

(WITHIN THE NUMBER OF DAYS STATED BELOW AFTER DATE OF CONTRACT)

20 DAYS

PROPOSALS OFFERING DELIVERY WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED ABOVE WILL BE EVALUATED EQUALLY AS REGARDS TIME OF DELIVERY. PROPOSALS OFFERING DELIVERY UNDER SUCH TERMS OR CONDITIONS THAT DELIVERY WILL NOT CLEARLY FALL WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED MAY BE REJECTED. WHERE AN OFFEROR PROPOSES AN EARLIER DELIVERY THAN THAT CALLED FOR ABOVE, THE GOVERNMENT RESERVES THE RIGHT TO AWARD EITHER IN ACCORDANCE WITH THE REQUIRED SCHEDULE OR IN ACCORDANCE WITH THE SCHEDULE PROPOSED BY THE OFFEROR. IF THE OFFEROR PROPOSES NO OTHER DELIVERY SCHEDULE, THE REQUIRED SCHEDULE STATED ABOVE SHALL APPLY.

"B. ALTERNATE DELIVERY TIME: THE GOVERNMENT FURTHER RESERVES THE RIGHT TO ACCEPT A LATER DELIVERY PERIOD THAN THAT SET FORTH ABOVE AS THE REQUIRED DELIVERY SCHEDULE ON THE BASIS OF PRICE. THE OFFEROR MAY INSERT ANY ALTERNATE DELIVERY SCHEDULE AND PRICE IN THE SPACE PROVIDED BELOW.

"C. OFFEROR'S PROPOSED DELIVERY SCHEDULE (TO BE COMPLETED BY THE OFFEROR)

TIME

(WITHIN THE NUMBER OF DAYS STATED BELOW AFTER DATE OF CONTRACT)"

WHEN PROPOSALS WERE OPENED, IT WAS NOTED THAT THE PRICES OFFERED BY LEVELATOR ON ITEMS 1, 2, AND 3 WERE THE LOWEST RECEIVED; HOWEVER, THE CONTRACTING OFFICER DETERMINED THAT THE PROPOSAL OF LEVELATOR WAS UNACCEPTABLE BECAUSE OF THE 75-DAY DELIVERY OFFERED BY THAT FIRM FOR ITEMS 1 AND 2 AND, ALSO, BECAUSE ITS PROPOSAL DID NOT CONTAIN SUFFICIENT INFORMATION TO PERMIT EVALUATION OF THE "OR EQUAL" PRODUCT IT OFFERED IN LIEU OF THE AMERICAN MACHINE AND FOUNDRY COMPANY MODEL REFERENCED IN THE RFP. THE ADVERSE DETERMINATION OF THE CONTRACTING OFFICER WAS CONSIDERED BY A REVIEW BOARD WHICH AGREED THAT THE PROPOSAL OF LEVELATOR WAS UNACCEPTABLE BECAUSE OF THE 75-DAY DELIVERY PERIOD OFFERED AND BECAUSE OF THE TIME THAT WOULD BE REQUIRED IN ANY EVENT TO OBTAIN FURTHER INFORMATION FROM LEVELATOR FOR EVALUATION OF THE OFFER. THEREFORE, THE BOARD RECOMMENDED THAT AN AWARD BE MADE TO THE SHELLEY MANUFACTURING COMPANY WHICH OFFERED A 40-DAY DELIVERY AND WHOSE PROPOSAL WAS CAPABLE OF IMMEDIATE EVALUATION. ON MARCH 25, 1970, CONTRACT NO. N00221-70-C-0138 WAS AWARDED TO THE SHELLEY MANUFACTURING COMPANY. THE RECORD INDICATES THAT THE CONTRACTOR DELIVERED THE EQUIPMENT WITHIN 40 DAYS AFTER THE DATE OF THE CONTRACT.

ALTHOUGH THE URGENCY OF THE PROCUREMENT IS EVIDENT FROM THE RECORD, WE BELIEVE THAT THE ABOVE-QUOTED DELIVERY PROVISIONS DID NOT REFLECT THAT URGENCY. RATHER, THE DELIVERY PROVISIONS INTRODUCED INCONSISTENCIES AND AMBIGUITIES INTO THE PROCUREMENT. SUBPARAGRAPH "A" BY THE USE OF THE WORD "REQUIRED" STRESSES TIME OF "DELIVERY," WHEREAS SUBPARAGRAPH "B" STRESSES "PRICE." ALSO, SUBPARAGRAPHS "A" AND "B" RESERVE OPTIONS TO THE GOVERNMENT WHICH ARE INCONSISTENT WITH THE ADVICES TO OFFERORS AS TO DELIVERY REQUIREMENTS. WHILE THE RECORD INDICATES THAT THE REQUIRED DELIVERY TIME OF 20 DAYS AFTER DATE OF CONTRACT WAS FIXED BECAUSE OF THE URGENT NEED OF THE EQUIPMENT, THE RECORD ALSO INDICATES THAT SUCH DELIVERY TIME WAS UNREALISTIC BECAUSE THE EQUIPMENT HAD TO BE MANUFACTURED. SEE ASPR 1-305.2(A) PRESCRIBING THE POLICIES AND PROCEDURES REGARDING DELIVERY REQUIREMENTS.

ASPR 1-305.2(C) DIRECTS THAT ALL INVITATIONS FOR BIDS AND REQUESTS FOR PROPOSALS "SHALL, EXCEPT WHERE CLEARLY UNNECESSARY, INFORM BIDDERS OR OFFERORS OF THE BASIS ON WHICH THEIR BIDS OR PROPOSALS WILL BE EVALUATED WITH RESPECT TO TIME OF DELIVERY OR PERFORMANCE." THE DELIVERY PROVISIONS OF THE RFP DID NOT ADEQUATELY INFORM PROSPECTIVE OFFERORS OF THE DELIVERY STANDARDS THEIR PROPOSALS WERE EXPECTED TO MEET. SPECIFICALLY, IT IS NOT CLEAR WHETHER THE RFP ESTABLISHES EARLIEST DELIVERY DATE IN TERMS OF TIME OR PRICE AS THE BASIS FOR MAKING AN AWARD. FOR EXAMPLE, PROSPECTIVE OFFERORS WERE ADVISED THAT DELIVERY IS REQUIRED TO BE MADE BY THE CONTRACTOR 20 DAYS AFTER DATE OF THE CONTRACT AND THAT A TENDERED DELIVERY DATE NOT WITHIN THE APPLICABLE DELIVERY PERIOD WILL CAUSE REJECTION OF THE PROPOSAL. HOWEVER, PROSPECTIVE OFFERORS WERE ADVISED THAT "THE GOVERNMENT FURTHER RESERVES THE RIGHT TO ACCEPT A LATER DELIVERY PERIOD THAN THAT SET FORTH ABOVE AS THE REQUIRED DELIVERY SCHEDULE ON THE BASIS OF PRICE," AND THAT "THE OFFEROR MAY INSERT ANY ALTERNATE DELIVERY SCHEDULE AND PRICE IN THE SPACE PROVIDED BELOW." WE BELIEVE THEREFORE THAT THE RFP WAS IMPROPERLY DRAFTED TO THE PREJUDICE OF COMPETING OFFERORS WHO HAD NO COMMON UNDERSTANDING OF THE GOVERNMENT'S DELIVERY REQUIREMENTS.

IN A NEGOTIATED PROCUREMENT, SUCH AS THE IMMEDIATE ONE, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING ARE NOT APPLICABLE AND THERE MAY BE CONSIDERED ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT IN MAKING AN AWARD. NEGOTIATION PROCEDURES, UNLIKE THOSE REQUIRED FOR FORMAL ADVERTISING, ARE DESIGNED TO BE FLEXIBLE AND INFORMAL. THESE PROCEDURES PROPERLY PERMIT THE CONTRACTING OFFICER TO DO THINGS IN THE AWARDING OF A NEGOTIATED CONTRACT THAT WOULD BE A RADICAL VIOLATION OF THE LAW IF THE PROCUREMENT WERE BEING ACCOMPLISHED BY FORMAL ADVERTISING. THIS IS RECOGNIZED BY THE PROVISION IN ASPR 3-805.1(V) WHICH PERMITS RESOLICITATION OF OFFERORS UPON THE RECEIPT OF A NONRESPONSIVE OFFER. SEE, GENERALLY, 47 COMP. GEN. 279, 284 (1967).

ONE OF THE BASES FOR REJECTING THE PROPOSAL OF LEVELATOR WAS THAT THE FIRM DID NOT SUBMIT SUFFICIENT INFORMATION WITH ITS PROPOSAL TO ENABLE THE PROCURING ACTIVITY TO DETERMINE WHETHER ITS MODELS WERE EQUAL TO THE BRAND NAME MODELS SPECIFIED IN THE RFP. IN THIS CONNECTION, IT IS NOTED THAT THE RECORD FURNISHED OUR OFFICE IS SILENT AS TO THE BASIS UPON WHICH IT WAS DETERMINED THAT THE EQUIPMENT OFFERED BY THE SHELLEY MANUFACTURING COMPANY, THE SUCCESSFUL OFFEROR, WAS "EQUAL IN ALL MATERIAL RESPECTS" TO THE BRAND NAMES SPECIFIED IN THE RFP.

ADDITIONALLY, WE FEEL THAT SOME OPPORTUNITY FOR NEGOTIATIONS WITH OFFERORS WAS POSSIBLE DESPITE THE URGENCY OF THE PROCUREMENT. THE RECORD INDICATES THAT THE CLOSING DATE FOR RECEIPT OF PROPOSALS WAS MARCH 6, 1970; THAT PROPOSALS WERE EVALUATED ON MARCH 16, 1970; AND THAT THE CONTRACT WAS AWARDED TO SHELLEY ON MARCH 25, 1970, PRESUMABLY ON AN INITIAL PROPOSAL BASIS. WITHIN THAT TIME FRAME, IT WAS DISCOVERED THAT THE PROPOSAL OF LEVELATOR AND OTHERS DID NOT CONTAIN SUFFICIENT "OR EQUAL" INFORMATION FOR EVALUATION PURPOSES. IN VIEW THEREOF, OFFERORS WHO WERE IN A COMPETITIVE RANGE SHOULD HAVE BEEN CONTACTED AND AFFORDED AN OPPORTUNITY TO CLARIFY THEIR PROPOSALS BY AN EARLY DATE. ALSO, IN VIEW OF THE MANNER IN WHICH THE DELIVERY SCHEDULE WAS DRAWN, LEVELATOR AND OTHER OFFERORS SIMILARLY SITUATED SHOULD HAVE REQUESTED AT THE SAME TIME WHEN "BEST AND FINAL" OFFERS WERE INVITED TO ADVISE THE PROCURING ACTIVITY OF THEIR BEST DELIVERY DATE. WE BELIEVE THAT IS WHAT THE LAW AND REGULATIONS REQUIRE UNDER THESE CIRCUMSTANCES. 10 U.S.C. 2304(G) AND ASPR 3-805.1. SEE 48 COMP. GEN. 583 (592-593) (1969).

ALTHOUGH OUR OFFICE IS PRECLUDED FROM TAKING EFFECTIVE ACTION IN THIS MATTER, WE BELIEVE THAT THE ABOVE-DISCUSSED ASPECTS OF THE PROTEST WARRANT A THOROUGH REVIEW OF THE NEGOTIATION PROCESSES UTILIZED BY THE SAN FRANCISCO BAY NAVAL SHIPYARD IN ORDER TO AVOID FUTURE IMPROPER NEGOTIATION PROCEDURES. FINALLY, WE NOTE WITH CONCERN THAT THREE MONTHS ELAPSED BEFORE OUR OFFICE WAS FURNISHED WITH A REPORT ON THE PROTEST. CONSIDERING THE CONTENT OF THE REPORT, WHICH FAILED TO MEET THE ESSENTIAL REQUIREMENTS OF ASPR 2-407.8, WE ARE UNABLE TO UNDERSTAND THE REASONS FOR THE DELAY IN REPORTING. WE TRUST THAT APPROPRIATE MEASURES WILL BE UNDERTAKEN TO ASSURE TIMELY COMPLIANCE WITH ASPR 2 407.8.