B-170322, DEC. 1, 1970

B-170322: Dec 1, 1970

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THE FACT THAT THE CONTRACT FOR THE SECOND STAGE CONVERSION WAS AWARDED TO INFORMATICS. THE COMPANY WHICH ALREADY HAD BEEN AWARDED AND WAS IN THE PROCESS OF COMPLETING THE FIRST STAGE. DOES NOT ESTABLISH THE CONTENTIONS OF THE PROTESTANT THAT THE AWARD WAS NOT MADE TO THE RESPONSIBLE OFFEROR WHOSE PROPOSAL WAS TO THE BEST ADVANTAGE OF THE GOVERNMENT AND THAT FAIR CONSIDERATION WAS NOT GIVEN OTHER PROPOSALS. ALL PROPOSERS WERE FURNISHED WITH ALL THE INFORMATION THE GOVERNMENT HAD AVAILABLE ON THE FIRST STAGE. CONSIDERATION WAS GIVEN ALL PROPOSALS BY A SIX MEMBER EVALUATION BOARD WITH PROVISIONS FOR REVIEW OF THE HIGHER RANKING PROPOSALS. NO EVIDENCE EXISTS TO SUBSTANTIATE THE CLAIM THAT ANY CONTRACTOR WAS PRE-SELECTED.

B-170322, DEC. 1, 1970

BID PROTEST - EVALUATION - UNFAIR ADVANTAGE DENIAL OF PROTEST OF FEIN-MARQUART ASSOCIATES, INC., AGAINST THE AWARD OF A CONTRACT ISSUED BY THE DEPT. OF HOUSING & URBAN DEVELOPMENT TO INFORMATICS, INC., TO WORK ON THE SECOND STAGE OF THE CONVERSION OF A COMPUTER SYSTEM TO NEW, THIRD GENERATION DATA PROCESSING EQUIPMENT. THE FACT THAT THE CONTRACT FOR THE SECOND STAGE CONVERSION WAS AWARDED TO INFORMATICS, THE COMPANY WHICH ALREADY HAD BEEN AWARDED AND WAS IN THE PROCESS OF COMPLETING THE FIRST STAGE, DOES NOT ESTABLISH THE CONTENTIONS OF THE PROTESTANT THAT THE AWARD WAS NOT MADE TO THE RESPONSIBLE OFFEROR WHOSE PROPOSAL WAS TO THE BEST ADVANTAGE OF THE GOVERNMENT AND THAT FAIR CONSIDERATION WAS NOT GIVEN OTHER PROPOSALS, THE COMPETITION BEING USED SOLELY TO REDUCE THE PRICE OF A PRE-SELECTED (I.E., INFORMATICS) CONTRACTOR. WHILE WORK ON THE FIRST STAGE OF THE CONVERSION GAVE INFORMATICS AN EDGE, IT HAD NO ASSURANCE THAT ITS WORK THERE, WOULD BE DEEMED ACCEPTABLE WHEN COMPLETED; IN ADDITION, ALL PROPOSERS WERE FURNISHED WITH ALL THE INFORMATION THE GOVERNMENT HAD AVAILABLE ON THE FIRST STAGE. CONSIDERATION WAS GIVEN ALL PROPOSALS BY A SIX MEMBER EVALUATION BOARD WITH PROVISIONS FOR REVIEW OF THE HIGHER RANKING PROPOSALS; NO EVIDENCE EXISTS TO SUBSTANTIATE THE CLAIM THAT ANY CONTRACTOR WAS PRE-SELECTED.

TO FEIN-MARQUART ASSOCIATES, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEFAX DATED JULY 14, 1970, AND LETTERS DATED JULY 14, 1970, AND SEPTEMBER 23, 1970, PROTESTING THE AWARD OF A CONTRACT BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD), TO INFORMATICS, INCORPORATED, UNDER REQUEST FOR PROPOSALS NO. H-50-70.

THE REQUEST FOR PROPOSALS WAS ISSUED ON APRIL 16, 1970 AND WAS FURNISHED TO APPROXIMATELY 175 FIRMS. THIRTEEN FIRMS SUBMITTED PROPOSALS BY THE CLOSING DATE OF MAY 18, 1970. AS BACKGROUND INFORMATION, THE REQUEST FOR PROPOSALS RECITED THAT HUD WAS ACQUIRING A NEW COMPUTER SYSTEM SCHEDULED FOR DELIVERY IN JUNE 1970. IN JUNE 1969, HUD HAD AWARDED A CONTRACT TO INFORMATICS, INCORPORATED, FOR THE DESIGN OF A SYSTEM TO CONVERT THE FHA INSURANCE IN FORCE SYSTEM (IIF), FROM OPERATION ON THE IBM 7074/1401 EAM CONFIGURATION TO NEW THIRD GENERATION ELECTRONIC DATA PROCESSING EQUIPMENT. THE REQUEST CONTINUED THAT THE CONTRACTOR HAD PRODUCED AN INSURANCE IN FORCE GENERAL SYSTEMS DESIGN AND WAS CURRENTLY IN THE PROCESS OF PRODUCING THE DETAIL SYSTEM DESIGN, WHICH WAS TO INCLUDE THE DETAILED COMPUTER SPECIFICATIONS FOR EACH UNIQUE MODULE. THE SCOPE OF THE SYSTEMS EFFORT WAS CONSIDERED A CONVERSION DESIGN RATHER THAN A SYSTEM REDESIGN. THE CONVERSION DESIGN WAS ACCOMPLISHED SO AS TO HAVE A MINIMUM IMPACT ON THE USER, YET TAKE MAXIMUM ADVANTAGE OF THE NEW COMPUTER CAPABILITY. THE STATEMENT OF WORK SECTION OF THE REQUEST THE INSURANCE IN FORCE SYSTEM WAS DESCRIBED AS BEING DIVIDED INTO SEVEN STATED SUBSYSTEMS WHICH WERE BRIEFLY DISCUSSED. IN THE SCOPE OF WORK SECTION OF THE ATTACHMENT, THE FOUR "TASKS" TO BE PERFORMED BY THE CONTRACTOR WERE DESCRIBED, WHICH WERE FOLLOWED BY THE STATEMENTS THAT:

"ALL WORK IN THE FOREGOING TASKS SHALL BE PERFORMED IN A MANNER CONSISTENT WITH THE GENERAL SYSTEM DESIGN AND THE MODULE SPECIFICATIONS FURNISHED BY THE GOVERNMENT."

AND

"A COPY OF THE GENERAL SYSTEM DESIGN AND MODULE SPECIFICATIONS MAY BE PICKED UP BY PROSPECTIVE OFFERORS AT THE FOLLOWING LOCATION: *** "

EXHIBIT I, ACCOMPANYING THE REQUEST, CONSISTED OF A BREAKDOWN OF THE IIF SUBSYSTEM AND MODULE AND WAS FOLLOWED BY 16 FLOW CHARTS SHOWING THE EXTENT OF THE PROJECT.

IN YOUR LETTER OF JULY 14, 1970, YOU STATE THAT THE SPECIFICATIONS FOR THE TECHNICAL PORTION OF THE PROPOSAL WERE TO BE THE OUTPUT OF AN EARLIER HUD CONTRACT WITH INFORMATICS AND THAT "AT THE TIME THE REQUEST FOR PROPOSAL WAS ISSUED, ONLY ABOUT 15-20 PERCENT OF THE SPECIFICATIONS WERE AVAILABLE TO THE BIDDERS BECAUSE THESE SPECIFICATIONS HAD NOT BEEN COMPLETED ON SCHEDULE." YOU FURTHER STATE THAT YOU SPECIFICALLY INQUIRED OF BOTH TECHNICAL AND CONTRACTING PERSONNEL AT HUD WHETHER THE FACT THAT ONLY INFORMATICS KNEW THE DETAILS OF THE PROPOSED PROGRAM WOULD BE GIVING THEM A GREAT ADVANTAGE OVER THEIR COMPETITORS, AND YOU WERE ASSURED THAT KNOWLEDGE OF THE DETAILS OF THE PRIOR EFFORT WAS NOT AN EVALUATION FACTOR. IN THE LETTER OF SEPTEMBER 23, 1970, FROM YOUR ATTORNEY, PREDICATED ON THE ADMINISTRATIVE REPORT AND EXAMINATION OF THE FILE IN OUR OFFICE, THREE POINTS ARE MADE:

1. HUD VIOLATED THE TERMS OF ITS OWN REQUEST BY (A) REQUIRING BIDDERS TO PROCEED ON THE BASIS OF AN INCOMPLETE DETAIL SYSTEM DESIGN, AND (B) IGNORING THE REQUIREMENT OF THE REQUEST THAT THE CONTRACT BE AWARDED TO THE RESPONSIBLE OFFEROR WHOSE PROPOSAL IS TO THE BEST ADVANTAGE OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. YOU STATE, ON THIS LATTER POINT, THAT PRICE APPEARS TO HAVE BEEN DISREGARDED TO A SIGNIFICANT EXTENT SINCE THE CONTRACT IS IN AN AMOUNT CONSIDERABLY IN EXCESS OF YOUR PROPOSED PRICE AND ALSO THAT OF ANOTHER TECHNICALLY HIGH RANKED PROPOSER.

2. THE HUD DOCUMENTATION ITSELF ESTABLISHES THAT THE PROPOSALS SUBMITTED DID NOT RECEIVE HONEST AND FAIR CONSIDERATION, AND THAT COMPETITION, AT SUBSTANTIAL EXPENSE TO THE OTHER PROPOSERS, WAS USED SOLELY TO REDUCE THE PRICE OF A PRE-SELECTED CONTRACTOR. IN SUPPORT OF THIS ALLEGATION, REFERENCE IS MADE TO COMMENTS OF SEVERAL EVALUATORS ON THEIR EVALUATION SHEETS AND TO STATEMENTS THAT INFORMATICS OBTAINED "SPECIAL EXPERTISE ACQUIRED ON THE FIRST CONTRACT."

3. CONTRARY TO THE HUD ADMINISTRATIVE REPORT, THERE IS NO EVIDENCE THAT DELAY IN CONTRACT PERFORMANCE PENDING REVIEW BY OUR OFFICE WOULD HAVE BEEN PREJUDICIAL TO THE GOVERNMENT'S INTEREST.

THE ADMINISTRATIVE REPORT STATES THAT IN ACCORDANCE WITH REGULAR DEPARTMENTAL PROCEDURES, A 6 MEMBER PROPOSAL EVALUATION BOARD, ASSISTED BY A 10 MEMBER TECHNICAL EVALUATION WORKGROUP EVALUATED THE 13 TECHNICAL AND MANAGEMENT PROPOSALS RECEIVED. THE RECORD SHOWS THAT THE THIRTEEN PROPOSALS WERE DIVIDED AMONG THREE WORKGROUPS, FOUR PROPOSALS TO EACH OF TWO WORKGROUPS AND FIVE PROPOSALS TO THE THIRD WORKGROUP, FOR INITIAL EVALUATION ON A PREDETERMINED POINT RATING SYSTEM ENCOMPASSING FOUR CATEGORIES TO BE EVALUATED. EACH FORM USED FOR RATING PURPOSES ALSO PROVIDED SPACE FOR COMMENTARY AS TO SIGNIFICANT STRENGTHS AND FAVORABLE POINTS AS WELL AS SIGNIFICANT WEAKNESSES AND UNFAVORABLE POINTS OF THE PROPOSAL BEING EVALUATED. THE THREE PROPOSALS WITH THE HIGHEST POINT SCORE, WERE POINT SCORED BY ALL THE WORKGROUP EVALUATORS. A REPORT WAS PREPARED ON THE EVALUATION OF THE THREE FINALIST PROPOSERS, SIGNED BY THE EVALUATORS AND SUBMITTED TO THE PROPOSAL EVALUATION BOARD. THE FEIN- MARQUART PROPOSAL WAS NOT SELECTED AS A FINALIST. EACH OF THE THREE FINALIST PROPOSALS WAS EVALUATED BY EACH OF THE MEMBERS OF THE PROPOSAL EVALUATION BOARD. EACH BOARD MEMBER HAD THE OPTION, IF HE SO DESIRED, TO REVIEW AND RANK ANY OR ALL OF THE NON-FINALIST PROPOSALS. THE BOARD REPORT INDICATES THAT TWO MEMBERS CHOSE TO REVIEW AND RANK THE FEIN- MARQUART PROPOSAL BUT THAT BECAUSE "THE BOARD WAS NOT SUFFICIENTLY STIMULATED BY THE RANKING OF FEIN-MARQUART ASSOCIATES, INC., *** IT WAS DECIDED NOT TO GIVE FURTHER CONSIDERATION TO *** THE PROPOSAL AS FINALISTS."

THE WORKGROUP REPORT TO THE BOARD RATED THE INFORMATICS PROPOSAL 3RD. THE FEIN-MARQUART ASSOCIATES' PROPOSAL, ON POINT SCORE OF ALL PROPOSERS, WAS RATED 7TH. OF THE THREE PROPOSALS WHICH THE BOARD CONSIDERED TO BE WITHIN A COMPETITIVE RANGE TECHNICALLY (HIGHEST RATED), THE TECHNICAL PROPOSAL OF INFORMATICS WAS INITIIALLY RATED FIRST BY FOUR OF THE SIX BOARD MEMBERS, AND IN ITS FINAL ACTION THE BOARD UNANIMOUSLY RECOMMENDED THE INFORMATICS' PROPOSAL AS NUMBER ONE, AS TECHNICALLY SUPERIOR. CONTRACT NEGOTIATIONS WERE CONDUCTED WITH INFORMATICS AND A CONTRACT ENTERED INTO ON JUNE 30, 1970.

CONCERNING YOUR CONTENTION THAT YOU WERE REQUIRED TO UTILIZE AN INCOMPLETE DETAIL SYSTEM DESIGN, YOU ARE ADVISED THAT YOU AND OTHER PROSPECTIVE PROPOSERS WERE FURNISHED ALL THAT THE GOVERNMENT HAD AVAILABLE. YOU WERE FURNISHED A COPY OF THE GENERAL SYSTEM DESIGN AND MODULE SPECIFICATIONS. NEITHER YOU NOR ANY OTHER PROPOSER WAS FURNISHED A COPY OF THE DETAIL SYSTEM DESIGN BECAUSE THAT DOCUMENT HAD NOT BEEN COMPLETED BY THE CONTRACTOR. AS A MATTER OF FACT WE ARE INFORMALLY ADVISED THAT AT THIS DATE NO PART OF THE DETAIL SYSTEM DESIGN, WHICH INCLUDES THE DETAIL COMPUTER SPECIFICATIONS FOR EACH UNIQUE MODULE, HAS BEEN ACCEPTED BY THE GOVERNMENT. HENCE, ALTHOUGH INFORMATICS MAY HAVE HAD AN EDGE OVER OTHER PROPOSERS SINCE IT IS THE CONTRACTOR REQUIRED TO PRODUCE THE DOCUMENT, INFORMATICS HAD NO ASSURANCE THAT THE COMPLETED PARTS WOULD IN FACT BE DEEMED ACCEPTABLE WHEN THE WORK IS COMPLETED. THIS CIRCUMSTANCE WE ARE OF THE OPINION THAT ALL THIRTEEN PROPOSERS WERE ON AN EVEN BASIC FOOTING. INSOFAR AS PRICE IS CONCERNED WE HAVE OFTEN SAID THAT UNDER NEGOTIATION PROCEDURES, THE CONTRACTING AGENCY MAY RELY UPON FACTORS OTHER THAN PRICE. HERE THE TECHNICAL ASPECT WAS OF PRIME IMPORTANCE WITH PRICE CONSIDERATIONS SECONDARY. WE MAY POINT OUT, HOWEVER, THAT ONE OF THE THREE FINALIST PROPOSERS SUBMITTED A PRICE PROPOSAL SUBSTANTIALLY LESS THAN YOUR PRICE PROPOSAL.

CONCERNING THE SECOND CONTENTION WE FIND NO BASIS FOR A CONCLUSION THAT THE SUBMITTED PROPOSALS DID NOT RECEIVE HONEST AND FAIR CONSIDERATION. STRENGTHS AND WEAKNESSES OF ALL PROPOSALS WERE NOTED BY THE EVALUATORS. IT MAY BE NOTED THAT THE PROPOSAL WITH THE LOWEST PRICE PROPOSAL RECEIVED THE SECOND HIGHEST POINT RATING SCORE ON THE INITIAL EVALUATION, AND AS INDICATED ABOVE WAS ONE OF THE THREE PROPOSALS SELECTED FOR FINAL EVALUATION.

WE FIND NO EVIDENCE THAT INFORMATICS WAS PRE-SELECTED AS THE CONTRACTOR OR THAT THE REQUEST FOR PROPOSALS WAS ISSUED SOLELY TO OBTAIN A PRICE REDUCTION FROM INFORMATICS.

IT IS AXIOMATIC THAT PROCURING AGENCIES MUST OBTAIN COMPETITION TO THE MAXIMUM POSSIBLE EXTENT CONSISTENT WITH THE GOVERNMENT'S NEEDS. "SOLE SOURCE" PROCUREMENTS ARE FROWNED UPON AND MUST BE THOROUGHLY JUSTIFIED, IN PROPER CASES, UNDER ONE OF THE STATUTORY PROVISIONS OF 10 U.S.C. 2304(A). 44 COMP. GEN. 590 (1965). OUR OFFICE WILL NOT COUNTENANCE A USE OF WIDE DISCRETION TO NEGOTIATE ON A SOLE SOURCE BASIS WHICH WOULD DISCRIMINATE AGAINST OTHER QUALIFIED COMPETITORS. HERE THE FACT THAT 13 PROPOSALS WERE RECEIVED INDICATES THAT A SOLE SOURCE PROCUREMENT, IN THIS MATTER, WAS NOT WARRANTED. IN THIS CONNECTION, SEE ALSO PARAGRAPH 1.3.101, FEDERAL PROCUREMENT REGULATIONS.

THE FACT THAT INFORMATICS HAD AN ADVANTAGE OVER ITS COMPETITION BY REASON OF ITS EARLIER CONTRACT CANNOT BE DENIED. THAT ADVANTAGE IS UNAVOIDABLE. YET IT WAS KNOWLEDGE GAINED AT GOVERNMENT EXPENSE. UNDER THIS CONDITION, IT WOULD HAVE BEEN IMPROPER FOR THE GOVERNMENT TO HAVE IGNORED THAT KNOWLEDGE FOR THE PURPOSE OF TREATING ALL PROPOSERS AS HAVING EQUAL TECHNICAL CAPABILITY REGARDLESS OF THE ACTUAL FACTS.

AS TO YOUR CONTENTION THAT PERFORMANCE UNDER THE CONTRACT AWARDED TO INFORMATICS SHOULD HAVE BEEN DELAYED PENDING RESOLUTION OF YOUR PROTEST BY OUR OFFICE, THE ADMINISTRATIVE OFFICE STATES:

" *** BECAUSE WE ARE UNABLE TO DETERMINE THAT IT APPEARS LIKELY THAT THE AWARD TO INFORMATICS MAY BE INVALIDATED AND BECAUSE DELAY IN CONTRACT PERFORMANCE WOULD BE PREJUDICIAL TO THE GOVERNMENT'S INTEREST, WE HAVE NOT REQUESTED INFORMATICS TO AGREE TO SUSPEND PERFORMANCE OF THE WORK ON A NO- COST BASIS."

WITH RESPECT TO THE MATTER OF SUSPENSION OF PERFORMANCE OF THE CONTRACT PENDING DECISION BY OUR OFFICE ON YOUR PROTEST, YOU ARE ADVISED THAT OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT WE CANNOT REQUIRE A CONTRACTING AGENCY TO CAUSE WORK TO BE STOPPED UNTIL WE HAVE DECIDED THE PROPRIETY OF THE AWARD, ALTHOUGH WE HAVE ON OCCASION SUGGESTED THAT SUCH ACTION SHOULD BE TAKEN WHERE THE GOVERNMENT'S INTERESTS WOULD NOT THEREBY BE PREJUDICED. HOWEVER, WE RECOGNIZE THAT THE PROCUREMENT AGENCY, WHICH BEARS THE RESPONSIBILITY FOR SEEING THAT OPERATIONAL PROGRAMS OF THE GOVERNMENT ARE NOT UNREASONABLY DELAYED IS IN A BETTER POSITION TO DETERMINE THE EXTENT TO WHICH THE INTERESTS OF THE GOVERNMENT WOULD BE PREJUDICED. 46 COMP. GEN. 53, 56 (1966).

HERE, HAD WORK BEEN SUSPENDED THE GOVERNMENT MAY WELL HAVE BEEN OBLIGATED TO PAY ANY EXPENSE OF THE CONTRACTOR OCCASIONED BY THE SUSPENSION, THEREBY INCREASING THE COST OF THE PROCUREMENT.

IN VIEW OF THE ABOVE, AND AFTER VERY CAREFUL CONSIDERATION OF THE ENTIRE FILE, WE MUST DENY YOUR PROTEST.