B-170093(2), SEP. 28, 1970

B-170093(2): Sep 28, 1970

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BID PROTEST - NEGOTIATION DEFICIENCIES WHERE OFFERORS WERE ASKED TO CLARIFY THEIR PROPOSALS AND THE QUESTIONING RESULTED IN CHANGES. THE CONTRACTING OFFICER DID NOT HAVE A RIGHT TO INVOKE THE EXCEPTION TO THE MANDATORY REQUIREMENT FOR DISCUSSION WITH ALL OFFERORS WITHIN THE COMPETITIVE RANGE AND ACCEPT WITHOUT DISCUSSION THE MOST FAVORABLE INITIAL PROPOSAL. THE DETERMINATION AS TO WHICH PROPOSALS ARE WITHIN A COMPETITIVE RANGE AND ENTITLED TO BE DISCUSSED MUST BE MADE AFTER RECEIPT OF INITIAL PROPOSALS AND PRIOR TO ANY DISCUSSIONS AND REVISIONS. SECRETARY: ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO COMPUTER NETWORK CORPORATION CONCERNING ITS PROTEST AGAINST THE AWARD OF CONTRACT NO. THIS MATTER WAS THE SUBJECT OF REPORTS DATED JULY 30 AND SEPTEMBER 2.

B-170093(2), SEP. 28, 1970

BID PROTEST - NEGOTIATION DEFICIENCIES WHERE OFFERORS WERE ASKED TO CLARIFY THEIR PROPOSALS AND THE QUESTIONING RESULTED IN CHANGES, THE CONTRACTING OFFICER DID NOT HAVE A RIGHT TO INVOKE THE EXCEPTION TO THE MANDATORY REQUIREMENT FOR DISCUSSION WITH ALL OFFERORS WITHIN THE COMPETITIVE RANGE AND ACCEPT WITHOUT DISCUSSION THE MOST FAVORABLE INITIAL PROPOSAL. THE DETERMINATION AS TO WHICH PROPOSALS ARE WITHIN A COMPETITIVE RANGE AND ENTITLED TO BE DISCUSSED MUST BE MADE AFTER RECEIPT OF INITIAL PROPOSALS AND PRIOR TO ANY DISCUSSIONS AND REVISIONS. IN VIEW OF DEFICIENCIES, OPTION FOR ADDITIONAL SERVICES SHOULD NOT BE EXERCISED AND ADVICE SHOULD BE FURNISHED OF THE REMEDIAL ACTION TAKEN BY THE DEPARTMENT.

TO MR. SECRETARY:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO COMPUTER NETWORK CORPORATION CONCERNING ITS PROTEST AGAINST THE AWARD OF CONTRACT NO. L 70- 103 TO U. S. TIME-SHARING, INC., (U. S. TIME). THIS MATTER WAS THE SUBJECT OF REPORTS DATED JULY 30 AND SEPTEMBER 2, 1970, FROM THE OFFICE OF THE ASSISTANT SECRETARY FOR ADMINISTRATION. WHILE WE HAVE CONCLUDED THAT UNDER THE CIRCUMSTANCES OF THIS CASE CANCELLATION OF THE CONTRACT AWARDED TO U. S. TIME-SHARING, INC., IS NOT REQUIRED, WE WISH TO BRING TO YOUR ATTENTION SERIOUS DEFICIENCIES NOTED DURING THE COURSE OF OUR REVIEW OF THIS MATTER.

YOUR DEPARTMENT TOOK THE POSITION IN ITS REPORT THAT THERE WAS NO OBLIGATION TO NEGOTIATE WITH COMNET REGARDING ITS OFFER TO REDUCE ITS PRICE SINCE THE GOVERNMENT WAS ENTITLED TO ACCEPT WITHOUT DISCUSSION THE MOST FAVORABLE INITIAL PROPOSAL WHICH WAS CONSIDERED TO BE FAIRLY AND REASONABLY PRICED, CITING FEDERAL PROCUREMENT REGULATIONS (FPR) 1 3.805- 1(A)(5). THE ADMINISTRATIVE REPORT STATES, HOWEVER, THAT DURING EVALUATION OF PROPOSALS, COMNET WAS CALLED IN TO CORRECT DISCREPANCIES IN ITS PRICING ALGORITHM, THAT U. S. TIME WAS ASKED TO CLARIFY CONFLICTING STATEMENTS IN ITS OFFER WITH RESPECT TO ITS PROPOSAL COST FOR LESS THAN SIX HOURS TURNAROUND TIME AND THAT OTHER QUESTIONING RESULTED IN A CHANGE OF U. S. TIME'S PROPOSAL CONCERNING THE LOCATION OF ITS PROPOSED FACILITY.

CLEARLY, THE CONTRACTING OFFICER'S RIGHT TO INVOKE THE CITED EXCEPTION TO THE MANDATORY REQUIREMENT FOR CONDUCTING ORAL OR WRITTEN DISCUSSION WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE IS FORECLOSED IN SUCH CIRCUMSTANCES. SEE 48 COMP. GEN. 663 (1969). FURTHER, THE CITED PROVISION SPECIFICALLY STATES THAT IN ANY CASE WHERE THERE IS UNCERTAINTY AS TO THE PRICING OR TECHNICAL ASPECTS OF ANY PROPOSALS, THE CONTRACTING OFFICER SHALL NOT MAKE AWARD WITHOUT FURTHER EXPLORATION AND DISCUSSION PRIOR TO AWARD. SINCE DISCUSSIONS HAD IN FACT BEEN INITIATED, THE CONTRACTING OFFICER SHOULD HAVE ESTABLISHED A COMMON CUTOFF DATE FOR NEGOTIATION AND SUBMISSION OF PROPOSAL REVISIONS, AND REFRAINED FROM REVEALING IMPROPER INFORMATION PRIOR TO AWARD AS REQUIRED BY FPR 1-3.805- 1(B). IN THIS REGARD ALSO SEE OUR LETTER TO YOUR PREDECESSOR, B-167417, SEPTEMBER 12, 1969, COPY ENCLOSED.

IT IS ALSO YOUR DEPARTMENT'S POSITION THAT PURSUANT TO FPR 1-3.805 1(A), FURTHER NEGOTIATIONS WITH COMNET WERE NOT REQUIRED SINCE COMNET WAS NOT WITHIN A COMPETITIVE RANGE ONCE U.S. TIME WAS PERMITTED TO CLARIFY AND RESOLVE THE CONFLICT IN ITS PROPOSAL BY ORAL DISCUSSION WITH THE CONTRACTING OFFICER. THIS INTERPRETATION OF THE ABOVE CITED REGULATION APPEARS ERRONEOUS IN THAT THE DECISION AS TO WHICH PROPOSALS ARE WITHIN A COMPETITIVE RANGE AND ENTITLED TO BE DISCUSSED WITH THE OFFERORS MUST BE MADE AFTER RECEIPT OF INITIAL PROPOSALS, AND PRIOR TO ANY DISCUSSIONS AND REVISIONS OF THE PROPOSALS PURSUANT THERETO.

WE BRING THESE MATTERS TO YOUR ATTENTION TO ASSURE THAT APPROPRIATE STEPS WILL BE TAKEN TO PRECLUDE A RECURRENCE OF THE IMPROPER PROCEDURES WHICH GAVE RISE TO THE SUBJECT PROTEST.

FURTHERMORE, IN VIEW OF THE FOREGOING DEFICIENCIES, IT IS OUR OPINION THAT IT WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT, FROM EITHER THE VIEWPOINT OF PRICE OR THE MAINTENANCE OF CONFIDENCE IN THE FEDERAL PROCUREMENT SYSTEM, TO EXERCISE THE OPTION FOR ADDITIONAL SERVICES UNDER THE CONTRACT AWARDED UNLESS YOUR DEPARTMENT SHOULD FIRST DETERMINE THAT THE COMPETITIVE ADVANTAGE OBTAINED BY COMNET THROUGH ITS DISCUSSIONS WITH PERSONNEL OF YOUR DEPARTMENT PRIOR TO CONTRACT AWARD STILL EXISTS, AND THAT THERE IS NO PRACTICAL WAY IN WHICH SUCH ADVANTAGE MAY BE EQUALIZED. YOUR FURTHER ADVICE AS TO THE ACTION TAKEN WITH RESPECT TO THE OPTION SERVICES, AND THE BASIS FOR SUCH ACTION, WILL BE APPRECIATED.

THE FILE FORWARDED WITH THE REPORT OF JULY 30 IS RETURNED.