B-170528, MAY 18, 1971

B-170528: May 18, 1971

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

INVOLVING SPECIAL SCIENTIFIC EXPERTISE IS NOT WITHIN THE JURISDICTION OF GAO. WHERE EXTENSIVE NEGOTIATIONS WERE HELD WITH BOTH OFFEROR AND SUCCESSFUL OFFER ACCEPTED THE REQUIREMENT THAT THE SUBJECT COOLERS OPERATE WITH A COEFFICIENT OF PERFORMANCE 0.2 AS A FIRM COMMITTMENT WHILE PROTESTANT DID NOT AGREE THAT SUCH EFFICIENCY WAS PRESENTLY POSSIBLE. TO BORG-WARNER THERMOELECTRICS: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 7. PROVIDES THAT IT IS THE GENERAL PURPOSE OF PEM PROJECTS TO EXPLORE. ANALYZE AND IDENTIFY MAJOR OBSTACLES TO PRODUCTION OF ESSENTIAL ITEMS FOR WHICH MAJOR DIFFICULTIES ARE FORESEEN IN MEETING REQUIRED PRODUCTION. THE EXCEPTION FOR THE PURCHASE OF PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION.

B-170528, MAY 18, 1971

BID PROTEST - UNREALISTIC SPECIFICATION - TECHNICAL CONSIDERATION DECISION DENYING PROTEST AGAINST AWARD OF CONTRACT TO NUCLEAR SYSTEMS, INC., UNDER AN RFP ISSUED BY THE ARMY ELECTRONICS COMMAND TO ESTABLISH PRODUCTION CAPABILITY TECHNIQUES FOR THE FABRICATION OF CERTAIN THERMOELECTRIC COOLERS. A PROTEST BASED NOT ON A MATTER OF LAW, BUT INVOLVING SPECIAL SCIENTIFIC EXPERTISE IS NOT WITHIN THE JURISDICTION OF GAO. WHERE EXTENSIVE NEGOTIATIONS WERE HELD WITH BOTH OFFEROR AND SUCCESSFUL OFFER ACCEPTED THE REQUIREMENT THAT THE SUBJECT COOLERS OPERATE WITH A COEFFICIENT OF PERFORMANCE 0.2 AS A FIRM COMMITTMENT WHILE PROTESTANT DID NOT AGREE THAT SUCH EFFICIENCY WAS PRESENTLY POSSIBLE, IT MUST BE LEFT TO THE CONTRACTOR'S PERFORMANCE TO SETTLE THE DIFFERENCE OF OPINION.

TO BORG-WARNER THERMOELECTRICS:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 7, 1971, AND PRIOR CORRESPONDENCE, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAB05-70-R-0474 ISSUED BY THE UNITED STATES ARMY ELECTRONICS COMMAND (ARMY), PHILADELPHIA, PENNSYLVANIA.

THE RFP, ISSUED APRIL 22, 1970, COVERED A PRODUCTION ENGINEERING MEASURE (PEM) TO ESTABLISH PRODUCTION CAPABILITY TECHNIQUES FOR THE FABRICATION OF 2-WATT, 20-WATT AND 100-WATT THERMOELECTRIC COOLERS. ARMY REGULATION 37- 40, PARAGRAPHS 39 THROUGH 41, PROVIDES THAT IT IS THE GENERAL PURPOSE OF PEM PROJECTS TO EXPLORE, ANALYZE AND IDENTIFY MAJOR OBSTACLES TO PRODUCTION OF ESSENTIAL ITEMS FOR WHICH MAJOR DIFFICULTIES ARE FORESEEN IN MEETING REQUIRED PRODUCTION; TO RECOMMEND SPECIFIC ACTIONS TO REDUCE SUCH OBSTACLES; TO PROVIDE FOR CONSTRUCTION AND TESTS OF PILOT MODELS OF PRODUCTION EQUIPMENT; AND TO PROVIDE PRODUCTION ENGINEERING IN ORDER TO FACILITATE MASS PRODUCTION OF SUCH ITEMS.

THE PROCUREMENT, NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A)(10), THE EXCEPTION FOR THE PURCHASE OF PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION, REQUESTED PROPOSALS TO COVER ALL WORK NECESSARY TO ESTABLISH CAPABILITY TO MANUFACTURE THE ABOVE MENTIONED THERMOELECTRIC COOLERS ON A PILOT LINE BASIS, ENGINEERING AND FIRST ARTICLE SAMPLES, A LIMITED PRODUCTION ITEM, MONTHLY, QUARTERLY AND FINAL REPORTS, AND A BILL OF MATERIALS FOR THE THERMOELECTRIC COOLERS REQUIRED.

TWO PROPOSALS, YOURS AND THAT OF NUCLEAR SYSTEMS, INC. (NSI), WERE RECEIVED AND OPENED ON MAY 22. ACCOMPANYING YOUR PROPOSAL WAS A LETTER WHICH, IN PERTINENT PART, STATED:

"IT IS RESPECTFULLY SUGGESTED THAT THE SUBJECT PEM CONTRACT BE MODIFIED TO INCLUDE FUNDING FOR DEVELOPING PRODUCTION TECHNIQUES AND EQUIPMENT FOR ADVANCED NEW THERMOELECTRIC MATERIALS. AS OUR PROPOSAL SHOWS, IT IS IMPOSSIBLE TO MEET THE PROPOSED SPECIFICATIONS USING READILY AVAILABLE THERMOELECTRIC MATERIAL, HOWEVER, THESE SPECIFICATIONS CAN BE MORE NEARLY SATISFIED USING ADVANCED NEW MATERIALS AVAILABLE NOW ONLY IN LABORATORY QUANTITIES. *** " THE SPECIFICATION YOU STATED YOU COULD NOT MEET WAS THE REQUIREMENT THAT THE COOLERS OPERATE WITH A COEFFICIENT OF PERFORMANCE (C.O.P.) .2, OR HIGHER. YOU STATE THAT THE C.O.P. IS LIMITED BY THE QUALITY OF THE THERMOELECTRIC MATERIAL THAT IS USED IN THE COOLING MODULES AND YOU CONTEND THAT NO MATERIAL IS AVAILABLE ON THE MARKET WHICH WOULD PERMIT THE COOLERS TO OPERATE WITH A C.O.P. OF .2 OR HIGHER.

THE PROPOSAL SUBMITTED BY NSI WAS THE LOWEST RECEIVED. WITH ITS PROPOSAL IT SUBMITTED A LETTER WHICH, IN PERTINENT PART, STATED:

"TO BE A TRULY OBJECTIVE AND RESPONSIVE BIDDER, NUCLEAR SYSTEMS FEELS IT NECESSARY TO POINT OUT THAT THE ATTAINMENT OF A THERMOELECTRIC COOLING SYSTEM HAVING A COEFFICIENT OF PERFORMANCE OF 0.20 AND OTHERWISE MEETING THE PFP REQUIREMENTS IS PUSHING THE STATE-OF-THE ART."

ON MAY 25, 1970, THE CONTRACTING OFFICER REQUESTED THE PRODUCTION ENGINEERING BRANCH TO CONDUCT A TECHNICAL EVALUATION OF THE TWO PROPOSALS RECEIVED. AN EVALUATION OF THE TWO PROPOSALS WAS ISSUED JUNE 2, 1970, WHICH STATED:

"2. NUCLEAR SYSTEMS, INC. PROPOSAL WAS REVIEWED AND EVALUATED AS ACCEPTABLE *** . THIS COMPANY PROPOSED AS A DESIGN GOAL, A C.O.P. OF .2. THEIR PROPOSAL CITES A C.O.P. OF .16 AND SUGGESTS WITH BETTER PRODUCTION TECHNIQUES AND METHODS THEY COULD OBTAIN A C.O.P. OF .2. NUCLEAR WAS CONTACTED BY TELEPHONE TO CLARIFY THEIR PROPOSAL. THEY THEN STATED THAT WITH THESE NEW TECHNIQUES THEY COULD ATTAIN A C.O.P. OF .2 AND WOULD REMOVE THEIR OBJECTION DURING NEGOTIATIONS. THIS WAS ACCEPTABLE TO NIGHT VISION LAB PERSONNEL AND COULD BE CLARIFIED BY NEGOTIATION.

"3. BORG-WARNER TOOK EXCEPTION TO THE C.O.P. OF .2, THE SIZE AND WEIGHT. SINCE THESE EXCEPTIONS ARE NOT CONSIDERED TO BE EITHER VALID OR ACCEPTABLE BY NIGHT VISION LAB, BORG-WARNER'S TECHNICAL PROPOSAL WAS EVALUATED AS NON -ACCEPTABLE. *** "

FURTHER NEGOTIATIONS WERE CONDUCTED JUNE 26, 1970, WITH YOUR FIRM BY THE PROJECT ENGINEER AND THE CONTRACT SPECIALIST. DURING THE COURSE OF THESE DISCUSSIONS, YOU FURNISHED A TECHNICAL CLARIFICATION CONCERNING THE C.O.P. OF .2 WHICH APPEARED TO REMOVE THOSE QUALIFICATIONS CONTAINED IN YOUR ORIGINAL PROPOSAL. SIMILAR DISCUSSIONS WERE HELD WITH NSI IN WHICH IT INDICATED THAT IT HAD NO QUESTIONS RELATING TO THE RFP. DURING THESE DISCUSSIONS, BOTH YOUR FIRM AND NSI WERE REQUESTED TO SUBMIT IN WRITING CONFIRMATION OF THESE NEGOTIATIONS AND BEST AND FINAL OFFERS WHICH BOTH OFFERORS DID JUNE 29, 1970.

AS A RESULT OF THESE DISCUSSIONS, THE PRODUCTION ENGINEERING BRANCH DETERMINED THAT THE PROPOSALS OF BOTH COMPANIES WERE ACCEPTABLE BUT DETERMINED THAT FURTHER NEGOTIATIONS SHOULD BE CONDUCTED WITH THE OFFERORS IN AN ATTEMPT TO FURTHER CLARIFY THE PROPOSALS. THEREAFTER, ON JULY 9, 1970, TELEPHONIC NEGOTIATIONS WERE CONDUCTED WITH BOTH OFFERORS. DURING THE COURSE OF DISCUSSIONS WITH YOUR FIRM, YOU ADVISED THE CONTRACTING OFFICER THAT YOUR WRITTEN CONFIRMATION DID NOT ACCEPT THE C.O.P. OF .2 AS A FIRM COMMITMENT; THAT IT WAS MERELY AN OFFER OF BEST EFFORT; AND THAT YOU WERE OF THE OPINION THAT THE C.O.P. COULD NOT BE MET.

THE CONTRACTING OFFICER ALSO CONDUCTED TELEPHONIC NEGOTIATIONS WITH NSI THE SAME DAY. DURING THIS CONVERSATION THE CONTRACTING OFFICER ADVISED NSI THAT ITS PRESENT PROPOSAL DID NOT ACCEPT A C.O.P. OF .2 AS A FIRM COMMITMENT AND THAT ITS PROPOSED PERFORMANCE APPEARED TO ONLY OFFER BEST EFFORTS. NSI ADVISED THE CONTRACTING OFFICER THAT IT UNDERSTOOD THAT A C.O.P. OF .2 WAS A FIRM COMMITMENT AND NOT AN OBJECTIVE AND THAT NSI WOULD MEET THE C.O.P. REQUIREMENT. BY LETTER AND TELEGRAM OF THE SAME DAY TO THE PROCURING ACTIVITY, NSI CONFIRMED IN WRITING THE STATEMENTS MADE DURING THE TELEPHONE CONVERSATION. ON JULY 24, 1970, CONTRACT DAAB05-71-C -2601 WAS AWARDED TO NSI.

IN THIS CASE, BOTH YOU AND THE CONTRACTING AGENCY HAVE BEEN PROVIDED WITH AN OPPORTUNITY TO COMMENT ON THE OTHER PARTY'S POSITION. IN SUMMARY, YOU, ON THE ONE HAND, HAVE CONTENDED THAT THE STATE OF THE ART HAS NOT ADVANCED TO THE POINT WHERE A C.O.P. OF .2 IS POSSIBLE WITH MATERIAL PRESENTLY AVAILABLE, WHILE THE CONTRACTOR, ON THE OTHER HAND, BELIEVES THAT IT IS POSSIBLE AND IS PREPARED TO PRESS THE STATE OF THE ART TO THE POINT WHERE IT WILL BE ABLE TO MEET THE REQUIREMENT. AS EVIDENCED BY THE AWARD OF THE CONTRACT, THE ARMY IS PREPARED TO PROVIDE THE CONTRACTOR WITH AN OPPORTUNITY TO ACHIEVE THE RESULT. WHETHER THE CONTRACTOR WILL SUCCEED AND WHETHER THE ARMY WAS CORRECT IN PLACING ITS CONFIDENCE IN THE CONTRACTOR REMAIN TO BE DEMONSTRATED BY THE PERFORMANCE ACHIEVED UNDER THE CONTRACT. IN ANY EVENT, THE FOREGOING INVOLVES NOT A MATTER OF LAW, BUT SPECIAL SCIENTIFIC EXPERTISE WHICH OUR OFFICE DOES NOT POSSESS. CERTAINLY ARE NOT PREPARED TO SAY ON THE BASIS OF THE RECORD BEFORE US THAT NSI CANNOT PERFORM AS IT HAS PROMISED.

IN THE CIRCUMSTANCES, WE HAVE NO CHOICE BUT TO DENY THE PROTEST AND TO LEAVE THE CONTRACTOR'S PERFORMANCE TO SETTLE THE DIFFERENCE OF OPINION.