B-169831, JUL. 27, 1970

B-169831: Jul 27, 1970

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ON BASIS THAT PROTESTANT'S COST-PLUS-A-FIXED-FEE PROPOSAL OR ALTERNATE FIXED PRICE PROPOSAL SHOULD HAVE BEEN CONSIDERED. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 18. PRICING AND TECHNICAL PROPOSALS WERE SOLICITED FROM 24 FIRMS WITH THE ADVICE. IT WAS CONTEMPLATED THAT WORK UNDER THE CONTRACT WOULD BE IMPLEMENTED UNDER A COST-REIMBURSEMENT TYPE CONTRACT. A CONTRACT WAS ENTERED INTO WITH THE AVCO CORPORATION ON A COST-PLUS-A FIXED-FEE BASIS. THE ESTIMATED TOTAL AMOUNT OF THE CONTRACT IS $131. THE POST OFFICE DEPARTMENT HAS REPORTED THAT WHEN THE EIGHT PROPOSALS WERE RECEIVED THEY WERE FORWARDED TO APPROPRIATE PERSONNEL FOR TECHNICAL EVALUATIONS AND RECOMMENDATION FOR SELECTION FOR NEGOTIATION.

B-169831, JUL. 27, 1970

BID PROTEST -- TECHNICAL EVALUATION DENIAL OF PROTEST OF HYDROSYSTEMS, INC., AGAINST AWARD TO AVCO CORPORATION FOR MAIL DISTRIBUTION TRAINING SYSTEMS FOR POST OFFICE DEPT. ON BASIS THAT PROTESTANT'S COST-PLUS-A-FIXED-FEE PROPOSAL OR ALTERNATE FIXED PRICE PROPOSAL SHOULD HAVE BEEN CONSIDERED. UNDER SEC. 1-3.805.-2, FED. PROC. REGS. ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED CONTROLLING IN SELECTING A CONTRACTOR FOR COST-REIMBURSEMENT TYPE CONTRACT.

TO HYDROSYSTEMS, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 18, 1970, PROTESTING AN AWARD TO THE AVCO CORPORATION, AVCO SYSTEMS DIVISION, WILMINGTON, MASSACHUSETTS, UNDER REQUEST FOR PROPOSALS NO. 14-70, ISSUED SEPTEMBER 19, 1969, BY THE BUREAU OF RESEARCH AND ENGINEERING, POST OFFICE DEPARTMENT, FOR THE DESIGN, DEVELOPMENT, FABRICATION AND INSTALLATION OF TWO MAIL DISTRIBUTION TRAINING DEVICES.

PRICING AND TECHNICAL PROPOSALS WERE SOLICITED FROM 24 FIRMS WITH THE ADVICE, THAT, CONTRACTUALLY, IT WAS CONTEMPLATED THAT WORK UNDER THE CONTRACT WOULD BE IMPLEMENTED UNDER A COST-REIMBURSEMENT TYPE CONTRACT. AS OF OCTOBER 20, 1969, THE CLOSING DATE FOR RECEIPT OF PROPOSALS, EIGHT PROPOSALS HAD BEEN RECEIVED, INCLUDING PROPOSALS SUBMITTED BY YOUR COMPANY AND THE AVCO CORPORATION. ON MAY 4, 1970, A CONTRACT WAS ENTERED INTO WITH THE AVCO CORPORATION ON A COST-PLUS-A FIXED-FEE BASIS. THE ESTIMATED TOTAL AMOUNT OF THE CONTRACT IS $131,075, INCLUDING A FIXED FEE OF $10,000.

YOU CONTENDED THAT YOUR PROPOSAL PRESENTED A MORE FAVORABLE OFFER TO THE POST OFFICE DEPARTMENT FROM THE STANDPOINT OF PRICE, INASMUCH AS YOU HAD SUBMITTED A COST-PLUS-A-FIXED-FEE PROPOSAL IN THE TOTAL ESTIMATED AMOUNT OF $95,959, AND AN ALTERNATE FIXED-PRICE PROPOSAL IN THE AMOUNT OF $93,650. YOU ALSO CONTENDED THAT, DURING A MEETING AT THE POST OFFICE DEPARTMENT ON APRIL 8, 1970, YOU HAD SUCCESSFULLY ANSWERED ALL QUESTIONS RAISED BY THE ENGINEERING AND CONTRACTING PERSONNEL OF THE DEPARTMENT IN REGARD TO THE TECHNICAL FEATURES OF YOUR PROPOSAL.

THE POST OFFICE DEPARTMENT HAS REPORTED THAT WHEN THE EIGHT PROPOSALS WERE RECEIVED THEY WERE FORWARDED TO APPROPRIATE PERSONNEL FOR TECHNICAL EVALUATIONS AND RECOMMENDATION FOR SELECTION FOR NEGOTIATION. ON FEBRUARY 4, 1970, A CONTRACT AWARD REVIEW BOARD MEETING WAS HELD FOR THE PURPOSE OF REVIEWING THE PROPOSALS AND TECHNICAL EVALUATIONS. INITIAL DISCUSSIONS OF THE REVIEW BOARD RESULTED IN LEAVING ONLY THE PROPOSALS OF THE AVCO CORPORATION AND YOUR COMPANY FOR FURTHER CONSIDERATION.

ALTHOUGH THE CONTRACT AWARD REVIEW BOARD FOUND YOUR PROPOSAL TO HAVE CONSIDERABLE MERIT, IT WAS DETERMINED BY THE BOARD TO CONTAIN THE FOLLOWING NONACCEPTABLE FEATURES: (1) HIGH POTENTIAL SAFETY HAZARD IN THE CUBICLE CARD EJECTION DEVICE; (2) POTENTIALLY UNREASONABLE (EXCESSIVE) NOISE PRODUCING MECHANICAL FEATURES; (3) EXCESSIVE MECHANIZATION WHICH WILL LEAD TO GREATER POTENTIAL MALFUNCTION, DOWN TIME AND MAINTENANCE; AND (4) DEVIATION FROM MILITARY SPECIFICATION COMPONENT REQUIREMENTS. REGARD TO THE AVCO PROPOSAL, THE FOLLOWING FEATURES WERE CONSIDERED BY THE BOARD TO ESTABLISH THE PROPOSAL AS SUPERIOR TO ALL OTHERS: (1) MAXIMUM SORTING FREEDOM; (2) SIMPLICITY OF DESIGN INCLUDING FEWER COMPONENTS RESULTING IN HIGH RELIABILITY AND LOW MAINTENANCE; (3) RELATIVELY LOW COST QUANTITY FOLLOW ON PROCUREMENT COSTS; AND (4) FORWARD CARD EJECTION SYSTEM MORE CLOSELY SIMULATING ACTUAL SORTING METHODS, RHYTHM AND MOVEMENTS. THE BOARD CONCLUDED THAT THE AVCO PROPOSAL OFFERED THE GREATEST POTENTIAL BENEFITS OVER ALL OTHER PROPOSALS RECEIVED AND IT WAS RECOMMENDED THAT NEGOTIATIONS OF A CONTRACT WITH THAT FIRM BE ENTERED INTO IN THE BEST INTERESTS OF THE GOVERNMENT.

THE POST OFFICE DEPARTMENT STATES THAT THE APRIL 1970 CONFERENCE WITH YOUR PERSONNEL IN NO WAY SATISFIED DEPARTMENT TECHNICAL PERSONNEL AS TO THE DESIRABILITY OF THE HYDROSYSTEMS PROPOSED TRAINING DEVICE. IT IS ALSO THE POSITION OF THE POST OFFICE DEPARTMENT THAT THE DEPARTMENT DEALT FAIRLY WITH ALL OFFERORS AND THAT THE CONTRACT WAS AWARDED TO THE AVCO CORPORATION ONLY AFTER A METICULOUS EVALUATION OF ALL PROPOSALS WAS PERFORMED WHICH FINALLY RESULTED IN THE DESIGNATION OF THE AVCO PROPOSAL AS THE ONLY ENTIRELY ACCEPTABLE PROPOSAL.

IN REGARD TO THE MATTER OF COMPARING PROPOSAL PRICES, THERE APPEARS TO BE NO VALID BASIS FOR COMPARISON OF YOUR FIXED-PRICE PROPOSAL WITH THE COST- PLUS-A-FIXED-FEE PROPOSAL OF THE AVCO CORPORATION, OR FOR CONSIDERING THAT YOUR COST-PLUS-A-FIXED-FEE PROPOSAL WAS MORE FAVORABLE TO THE GOVERNMENT BECAUSE IT WAS LOWER THAN THAT OF THE AVCO CORPORATION. AS PROVIDED IN SECTION 1-3.805-2 OF THE FEDERAL PROCUREMENT REGULATIONS, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING IN SELECTING A CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT SINCE IN THAT TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS; AND THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (A) THE LOWEST PROPOSED COST, (B) THE LOWEST PROPOSED FEE, OR (C) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE.

THE RESPONSIBILITY FOR TECHNICAL EVALUATIONS OF BIDS OR PROPOSALS RESTS PRIMARILY WITH THE CONTRACTING AGENCIES OF THE GOVERNMENT AND IT HAS CONSISTENTLY BEEN THE POSITION OF OUR OFFICE THAT AN ADMINISTRATIVE DETERMINATION IN SUCH MATTERS SHOULD GOVERN IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION CONSTITUTED AN ABUSE OF DISCRETION. THE RECORD OF THIS CASE CONTAINS NOTHING TO INDICATE THAT THE CONTRACT AWARD REVIEW BOARD DID NOT EXERCISE REASONABLE JUDGMENT WHEN IT DETERMINED THAT THE PROPOSAL OF THE AVCO CORPORATION WAS SUPERIOR TO ALL OTHERS RECEIVED, OR THAT THE POST OFFICE DEPARTMENT WAS NOT JUSTIFIED IN NEGOTIATING THE CONTRACT WITH THE AVCO CORPORATION ON THE BASIS OF THE BOARD'S RECOMMENDATION.

ACCORDINGLY, YOUR PROTEST TO OUR OFFICE IN THE MATTER IS HEREBY DENIED.