B-170107, SEP. 16, 1970

B-170107: Sep 16, 1970

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THE USE OF TWO-STEP PROCUREMENT OF A HIGHLY COMPLEX ITEM THAT COULD NOT BE OBTAINED AS AN OFF-SHELF ITEM OR UNDER A MILITARY SPECIFICATION BECAUSE OF THE PARTICULAR NEEDS OF THE USING AGENCY WAS PROPER AND SINCE ITS USE ACTUALLY BROADENED COMPETITION THERE IS NO BASIS FOR CONSIDERING SPECIFICATIONS RESTRICTIVE. TO THE AMERICAN TOOL WORKS COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 17. THE REQUEST FOR PROPOSALS WAS ISSUED DECEMBER 11. THE APPLICABLE SPECIFICATION CITED THEREIN WAS PURCHASE DESCRIPTION WRNE 3416-306. YOU PROTESTED TO THE BUYER THAT THE SPECIFICATION WAS SO RESTRICTIVE THAT ONLY ONE MANUFACTURER COULD COMPLY. THE MANUFACTURER MENTIONED WAS "CINCINNATI LATHE & TOOL COMPANY" (CURRENTLY OPERATING UNDER THE NAME "CINCINNATI MILACRON COMPANY").

B-170107, SEP. 16, 1970

BID PROTEST - TWO-STEP PROCUREMENT PROPRIETY DENIAL OF PROTEST OF AMERICAN TOOL WORKS COMPANY AGAINST USE OF TWO STEP PROCUREMENT FOR ACQUISITION OF COMPLEX LATHES FOR WARNER ROBBINS AIR MATERIAL AREA. THE USE OF TWO-STEP PROCUREMENT OF A HIGHLY COMPLEX ITEM THAT COULD NOT BE OBTAINED AS AN OFF-SHELF ITEM OR UNDER A MILITARY SPECIFICATION BECAUSE OF THE PARTICULAR NEEDS OF THE USING AGENCY WAS PROPER AND SINCE ITS USE ACTUALLY BROADENED COMPETITION THERE IS NO BASIS FOR CONSIDERING SPECIFICATIONS RESTRICTIVE.

TO THE AMERICAN TOOL WORKS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 17, 1970, PROTESTING ANY AWARD UNDER REQUEST FOR TECHNICAL PROPOSALS NO. PR FD2060-70-34415, ISSUED BY WARNER ROBINS AIR MATERIEL AREA (WRAMA), GEORGIA.

THE REQUEST FOR PROPOSALS WAS ISSUED DECEMBER 11, 1969, AS THE FIRST STEP OF A TWO-STEP PROCUREMENT SEEKING THE ACQUISITION OF THREE FSN 3416ND075772L LATHES. THE APPLICABLE SPECIFICATION CITED THEREIN WAS PURCHASE DESCRIPTION WRNE 3416-306, SEPTEMBER 17, 1969.

ON JANUARY 6, 1970, YOU PROTESTED TO THE BUYER THAT THE SPECIFICATION WAS SO RESTRICTIVE THAT ONLY ONE MANUFACTURER COULD COMPLY. THE MANUFACTURER MENTIONED WAS "CINCINNATI LATHE & TOOL COMPANY" (CURRENTLY OPERATING UNDER THE NAME "CINCINNATI MILACRON COMPANY"). AS A RESULT OF A MEETING BETWEEN YOUR MR. DEETZ AND PROCUREMENT OFFICIALS ON JANUARY 7, 1970, THE DATE FOR RECEIPT OF TECHNICAL (FIRST-STEP) PROPOSALS WAS EXTENDED TO JANUARY 22, 1970. THE PURCHASE DESCRIPTION WAS REVISED ON JANUARY 29, 1970, PRIMARILY FOR THE PURPOSE OF ENCOMPASSING FEATURES PROPOSED BY VARIOUS OFFERORS WHICH, WHILE NOT IN ACCORDANCE WITH THE PURCHASE DESCRIPTION AS PREVIOUSLY WRITTEN, WERE THOUGHT TO BE ACCEPTABLE FOR THE PURPOSES OF THE USING ACTIVITY. ALL OFFERORS WERE APPROPRIATELY ADVISED BY LETTER OF FEBRUARY 6, 1970, OF THE AMENDMENT AND THAT REVISED OFFERS SHOULD BE SUBMITTED BY FEBRUARY 16, 1970. THE DATE FOR RECEIPT OF OFFERS WAS EXTENDED TO MARCH 19, 1970, AND BY THAT DATE SEVEN TECHNICAL PROPOSALS, INCLUDING YOURS, WERE RECEIVED AND TENTATIVELY RATED AS "ACCEPTABLE." HOWEVER, SHORTLY THEREAFTER, THE USING ACTIVITY NOTIFIED WRAMA THAT THE REVISED PURCHASE DESCRIPTION PROVIDED FOR FEATURES THAT MAY BE INCOMPATIBLE WITH MISSION REQUIREMENTS WHICH NOW CALLED FOR "TURNING CENTERS." REPRESENTATIVES FROM THE USING ACTIVITY AND WRAMA THEN REVIEWED THE REVISED PURCHASE DESCRIPTION WHICH ULTIMATELY RESULTED IN THE PREPARATION OF A NEW PURCHASE DESCRIPTION FOR NUMERICALLY CONTROLLED TURNING CENTERS WHICH WAS DISTRIBUTED TO ALL OFFERORS ON MAY 7, 1970 (WRNE 3416-341, APRIL 10, 1970). OFFERORS WERE REQUESTED TO SUBMIT REVISED PROPOSALS IN COMPLIANCE WITH THE NEW PURCHASE DESCRIPTION BY JUNE 1, 1970.

IN RESPONSE TO THE MAY 7, 1970, REVISED PURCHASE DESCRIPTION, THREE OF THE SEVEN SOURCES, INCLUDING YOUR FIRM, WHICH HAD PREVIOUSLY SUBMITTED TECHNICAL PROPOSALS DECLINED TO FURTHER PARTICIPATE IN THE PROCUREMENT. THE REMAINING FOUR SOURCES AND ONE ADDITIONAL SOURCE THAT HAD NOT PREVIOUSLY PARTICIPATED SUBMITTED TECHNICAL PROPOSALS. WE HAVE BEEN INFORMALLY ADVISED THAT AS OF AUGUST 21, 1970, PROPOSALS OF FIVE DIFFERENT FIRMS HAVE BEEN DETERMINED TO BE TECHNICALLY ACCEPTABLE FOR PURPOSES OF THE SECOND STEP.

YOU PROTEST FURTHER THAT "THIS PROCUREMENT IS BIASED AND DELIBERATELY SLANTED TO ELIMINATE COMPETITION THEREBY CIRCUMVENTING THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR)." YOU STATE THAT:

" *** THE USE OF 2-STEP FORMAL ADVERTISING IN THIS CASE WAS NOT CONSISTENT WITH THE PROVISIONS OF ASPR 2-501 AND 2-502 IN THAT (A) AN ADEQUATE SPECIFICATION DOES EXIST FOR NUMERICALLY CONTROLLED LATHES; (B) THE REQUIREMENTS DETAIL DESIGN FEATURES, RATHER THAN PERFORMANCE OR RESULTS.

" *** WE CANNOT, HOWEVER, CHANGE OUR DESIGN AND BID COMPETITIVELY TO PURCHASE DESCRIPTIONS WHICH INCORPORATE NON-ESSENTIAL DESIGN CHARACTERISTICS FEATURED BY EACH OF OUR COMPETITORS. PROCUREMENT PACKAGES SUCH AS THE ONE IN QUESTION CONTAIN FEATURES WHICH ARE PURPORTED TO BE ESSENTIAL REQUISITES OF THE GOVERNMENT, WHEN IN REALITY THESE REQUIREMENTS ARE INSERTED BY INDIVIDUALS IN THE EMPLOY OF THE GOVERNMENT WHO ENDEAVOR TO INFLUENCE BIDS. *** "

WHILE YOU HAVE NOT SO STATED IN YOUR PROTEST, THE CONTRACTING OFFICER INDICATES THAT THE TWO DESIGN FEATURES OF WHICH YOU COMPLAIN ARE PROBABLY "VARIABLE LEAD THREAD CUTTING CAPABILITY" AND "FIXED TURRETS." AS TO THIS, BOTH THE USING ACTIVITY AND WRAMA HAVE ADVISED THAT THESE FEATURES ARE CRITICALLY ESSENTIAL TO THE GOVERNMENT'S NEEDS. REGARDING YOUR ALLEGATION RELATIVE TO INTENT TO ELIMINATE COMPETITION, IT IS TO BE NOTED THAT AT LEAST FIVE MANUFACTURERS WILL BE ELIGIBLE TO SUBMIT PRICED OFFERS UNDER THE SECOND STEP OF THE PROCUREMENT.

WHILE YOUR FIRM DID SUBMIT A TECHNICAL PROPOSAL ON FEBRUARY 10, 1970, WHICH COMPLIED WITH WRNE 3416-306, AS AMENDED, THE AMENDMENT FAILED TO SET FORTH THE GOVERNMENT'S EXACT REQUIREMENTS FOR THE DESIRED MACHINES. THE RECORD ESTABLISHES THAT THE TURNING CENTERS BEING PROCURED ARE NOT OFF-THE -SHELF ITEMS BUT ARE EXTREMELY COMPLEX, NUMERICALLY CONTROLLED "TURNING CENTERS" WHICH ARE ESTIMATED TO COST IN THE NEIGHBORHOOD OF $150,000 EACH. IT HAS BEEN FURTHER STATED BY THE AIR FORCE THAT THE EQUIPMENT DESCRIBED BY MIL-L-80053A, CITED BY YOU, WILL NOT MEET THE GOVERNMENT'S NEEDS IN THIS INSTANCE.

TWO-STEP FORMAL ADVERTISING AS PRESCRIBED BY ASPR 2-501 IS A FLEXIBLE PROCEDURE WHICH IS ESPECIALLY APPROPRIATE IN THE PROCUREMENT OF COMPLEX ITEMS, AS HERE, REQUIRING TECHNICAL PROPOSALS AND EVALUATION IN THE LIGHT OF THE GOVERNMENT'S NEEDS. ASPR 2-501 PROVIDES:

"2-501 GENERAL. TWO-STEP FORMAL ADVERTISING IS A METHOD OF PROCUREMENT DESIGNED TO EXPAND THE USE AND OBTAIN THE BENEFITS OF FORMAL ADVERTISING WHERE INADEQUATE SPECIFICATIONS PRECLUDE THE USE OF CONVENTIONAL FORMAL ADVERTISING. IT IS ESPECIALLY USEFUL IN PROCUREMENTS REQUIRING TECHNICAL PROPOSALS, ESPECIALLY THOSE FOR COMPLEX ITEMS. IT IS CONDUCTED IN TWO STEPS:

"(I) STEP ONE CONSISTS OF THE REQUEST FOR, AND SUBMISSION, EVALUATION, AND, IF NECESSARY, DISCUSSION OF A TECHNICAL PROPOSAL, WITHOUT PRICING, TO DETERMINE THE ACCEPTABILITY OF THE SUPPLIES OR SERVICES OFFERED. AS USED IN THIS CONTEXT, THE WORD 'TECHNICAL' HAS A BROAD CONNOTATION AND INCLUDES ENGINEERING APPROACH, SPECIAL MANUFACTURING PROCESSES, AND SPECIAL TESTING TECHNIQUES. WHEN IT IS NECESSARY IN ORDER TO CLARIFY BASIC TECHNICAL REQUIREMENTS, RELATED REQUIREMENTS SUCH AS MANAGEMENT APPROACH, MANUFACTURING PLAN, OR FACILITIES TO BE UTILIZED MAY BE CLARIFIED IN THIS STEP. CONFORMITY TO THE TECHNICAL REQUIREMENTS IS RESOLVED IN THIS STEP, BUT CAPACITY AND CREDIT, AS DEFINED IN 1-705.4, ARE NOT.

"(II) STEP TWO IS A FORMALLY ADVERTISED PROCUREMENT CONFINED TO THOSE WHO SUBMITTED ACCEPTABLE TECHNICAL PROPOSALS IN STEP ONE. BIDS SUBMITTED IN STEP TWO ARE EVALUATED AND THE AWARDS MADE IN ACCORDANCE WITH PARTS 3 AND 4 OF THIS SECTION. "TWO-STEP FORMAL ADVERTISING REQUIRES THAT THE CONTRACTING OFFICER WORK CLOSELY WITH TECHNICAL PERSONNEL AND THAT HE UTILIZE THEIR SPECIALIZED KNOWLEDGE IN DETERMINING THE TECHNICAL REQUIREMENTS OF THE PROCUREMENT, IN DETERMINING THE CRITERIA TO BE USED IN EVALUATING TECHNICAL PROPOSALS, AND IN MAKING SUCH EVALUATION. OBJECTIVE OF THIS METHOD IS TO PERMIT THE DEVELOPMENT OF A SUFFICIENTLY DESCRIPTIVE AND NOT UNDULY RESTRICTIVE STATEMENT OF THE GOVERNMENT'S REQUIREMENT, INCLUDING AN ADEQUATE TECHNICAL DATA PACKAGE, SO THE SUBSEQUENT PROCUREMENTS MAY BE MADE BY CONVENTIONAL FORMAL ADVERTISING."

REGARDING THAT ASPR PROVISION, WE SAID IN B-157827, FEBRUARY 7, 1966, THAT:

" *** WE ARE OF THE OPINION THAT THE PRIMARY OBJECT OF THE SUBJECT ASPR PROVISION IS TO OBTAIN FOR THE GOVERNMENT A NUMBER OF DIFFERENT PROPOSALS, EMPLOYING VARIED METHODS, WHICH WILL ACCOMPLISH A DESIRED END AS SET FORTH AND LIMITED IN THE SPECIFICATIONS. THE BASIC OBJECT IS TO PROVIDE A BROADER BASE FOR COMPETITION THAN IS PROVIDED IN A 'BRAND NAME OR EQUAL' PROCUREMENT. IN THE LATTER CASE THE ITEM SOUGHT IS CIRCUMSCRIBED BY THE 'BRAND NAME' ITEM, WHEREAS IN A TWO-STEP PROCUREMENT, THE FIRST STEP PROVIDES A BROADER FIELD FOR PROPOSERS TO WORK IN PREPARING THEIR PROPOSALS. IN VIEW OF THIS BROAD SCOPE IN PURPOSE, WE CANNOT SUBSCRIBE TO A VIEW THAT WOULD RESTRICT THE CLARIFICATION OR EVALUATION OF PROPOSALS. WE WOULD DEFEAT THE CONCEPT OF 'TWO-STEP' PROCUREMENTS IF WE ATTEMPTED TO PLACE UNDUE RESTRICTIONS ON THE PROCEDURES OR JUDGMENTS INVOLVED IN THE 'FIRST-STEP.' *** ' ALSO, IN 48 COMP. GEN. 4., 58-59 (1968), WE HELD:

"WHILE YOUR COUNSEL HAS CITED SEVERAL DECISIONS OF OUR OFFICE STRESSING THE NECESSITY FOR BIDS TO RESPOND FULLY TO THE REQUIREMENTS OF THE INVITATION, SO THAT THE CONTRACT AWARDED WILL BE THE SAME CONTRACT OFFERED TO ALL BIDDERS, WE HAVE NOT APPLIED THOSE STRICT RULES TO THE EVALUATION OF PROPOSALS SUBMITTED IN THE FIRST STEP OF THE TWO STEP PROCUREMENT PROCEDURE. ACCOMPLISHMENT OF THE STATED OBJECTIVES OF THIS METHOD REQUIRES A CONSIDERABLE ELEMENT OF FLEXIBILITY AND TO THIS END THE REGULATIONS SPECIFICALLY PROVIDE FOR DISCUSSIONS WITH ANY OFFEROR OF HIS PROPOSAL, MAKING THE FIRST-STEP EVALUATION PROCEDURE MORE IN THE NATURE OF NEGOTIATED PROCUREMENT THAN OF STRICT FORMAL ADVERTISING."

IN TWO-STEP FORMAL ADVERTISING, THE FIRST STEP NEED ONLY SET FORTH THE GOVERNMENT'S NEEDS SUFFICIENTLY SO AS TO PROVIDE AN EQUAL BASIS FOR SUBMITTING TECHNICAL PROPOSALS. THE TWO-STEP PROCEDURE CONTEMPLATES THE POSSIBILITY THAT THESE NEEDS MAY BE MET BY VARYING PROPOSALS. WE THINK THAT THE USE OF THE TWO-STEP PROCUREMENT PROCEDURE IN THIS INSTANCE BROADENED COMPETITION.

WITH REGARD TO YOUR ALLEGATION THAT WRNE 3416-341 "CONTAINED TWO DESIGN FEATURES FOUND ON THE CINCINNATI LATHE & TOOL MACHINE BUT NOT ON THE MACHINE WE PROPOSED," WE ARE ADVISED THAT THESE TWO FEATURES WERE INCLUDED ONLY AFTER A HIGH LEVEL REVIEW OF THE ESSENTIALITY TO THE PROCUREMENT. ASPR 1-1206.1(A) AUTHORIZES SUCH INCLUSION UNDER THE CIRCUMSTANCES REVEALED BY THIS RECORD. SINCE FIVE BIDDERS HAVE CONFORMED TO THE REQUIREMENTS WITHOUT OBJECTION, WE CANNOT SAY THAT THE SPECIFICATIONS ARE RESTRICTIVE OF COMPETITION.

WE MUST CONCLUDE, ON THE RECORD BEFORE US, THAT THE ADMINISTRATIVE ACTIONS TAKEN TO BROADEN COMPETITION BY USE OF THE TWO-STEP PROCUREMENT PROCEDURES WERE PROPER IN THE CIRCUMSTANCES. WHERE, AS HERE, THERE IS DISAGREEMENT BETWEEN PROCUREMENT OFFICIALS AND AN INTERESTED OFFEROR AS TO HOW BEST THE GOVERNMENT'S NEEDS MAY BE SATISFIED, WE HAVE CONSISTENTLY HELD THAT DETERMINATIONS AS TO THE ACTUAL NEEDS OF THE GOVERNMENT AND THE DRAFTING OF SPECIFICATIONS TO SATISFY THOSE NEEDS ARE THE RESPONSIBILITY OF THE PROCURING AGENCY INVOLVED AND SUCH SPECIFICATIONS MAY NOT BE DICTATED BY PROSPECTIVE CONTRACTORS. FURTHER, WHERE THE DETERMINATION OF THE GOVERNMENT'S NEEDS REQUIRES THE EXPERT JUDGMENT OF TECHNICAL PERSONNEL, WE WILL NOT QUESTION THE TECHNICAL CONCLUSIONS OF THE CONTRACTING AGENCY UNLESS THERE IS A CLEAR SHOWING OF FRAUD OR ABUSE OF AUTHORITY OR ARBITRARY ACTION, NONE OF WHICH IS EVIDENCED HERE.

ACCORDINGLY, YOUR PROTEST IS DENIED.