B-170598, NOV. 10, 1970

B-170598: Nov 10, 1970

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LOW OFFEROR WHO HAD PROPOSAL RANKED LOW FOR TWO COST-REIMBURSEMENT TYPE CONTRACTS AND WAS ONLY ONE-THIRD OF GOVERNMENT'S ESTIMATE UNDER ANOTHER REQUEST WAS PROPERLY DETERMINED TO HAVE SUBMITTED TECHNICALLY DEFECTIVE OFFER. A COPY OF WHICH WAS FORWARDED TO THIS OFFICE. WERE ISSUED BY THE CONSUMER PROTECTION AND ENVIRONMENTAL HEALTH SERVICE. THE THIRD REQUEST FOR PROPOSALS J-003 LEAA-0 WAS ISSUED BY THE LAW ENFORCEMENT ASSISTANCE ADMINISTRATION. THESE THREE CONTRACTS WERE NEGOTIATED PURSUANT TO 41 U.S.C. 252 (C)(10) SINCE THE NATURE OF THE WORK MADE IT IMPOSSIBLE FOR THE GOVERNMENT TO DRAFT DETAILED SPECIFICATIONS SETTING FORTH THE EXACT MANNER IN WHICH THE STUDIES SHOULD BE PERFORMED. THE REQUESTS FOR PROPOSALS ALSO SET FORTH THE CRITERIA FOR EVALUATING THE TECHNICAL PROPOSALS AND ADVISED OFFERORS THAT EACH CONTRACT WOULD BE NEGOTIATED WITH THE OFFEROR WHOSE PROPOSAL WAS MOST ADVANTAGEOUS TO THE GOVERNMENT.

B-170598, NOV. 10, 1970

BID PROTEST DENIAL OF PROTEST AGAINST REJECTION OF LOW PROPOSALS FOR STUDIES FOR DEPT. OF HEALTH, EDUCATION, AND WELFARE, AND DEPT. OF JUSTICE, UNDER NEGOTIATED PROCEDURES FOR AWARD OF COST REIMBURSEMENT TYPE CONTRACT. LOW OFFEROR WHO HAD PROPOSAL RANKED LOW FOR TWO COST-REIMBURSEMENT TYPE CONTRACTS AND WAS ONLY ONE-THIRD OF GOVERNMENT'S ESTIMATE UNDER ANOTHER REQUEST WAS PROPERLY DETERMINED TO HAVE SUBMITTED TECHNICALLY DEFECTIVE OFFER.

TO RESEARCH CENTRAL, INCORPORATED:

THIS CONCERNS YOUR LETTER OF JULY 14, 1970, TO MR. WILLIAM SHADY, SMALL BUSINESS ADMINISTRATION, A COPY OF WHICH WAS FORWARDED TO THIS OFFICE, PROTESTING THE CONTRACT AWARDS BY THE DEPARTMENTS OF JUSTICE AND HEALTH, EDUCATION, AND WELFARE FOR WHICH YOUR AFFILIATE, SOCIAL DYNAMICS, INCORPORATED, SUBMITTED OFFERS LOWER THAN THE ANNOUNCED CONTRACT PRICES.

THE LETTER OF JULY 14, 1970, IDENTIFIED THREE REQUESTS FOR PROPOSALS UNDER WHICH YOUR AFFILIATE HAD SUBMITTED OFFERS LOWER THAN THE ANNOUNCED CONTRACT PRICES. TWO OF THOSE REQUESTS FOR PROPOSALS, CPE NEG-122 AND 123 INVOLVING SOLID WASTE MANAGEMENT, WERE ISSUED BY THE CONSUMER PROTECTION AND ENVIRONMENTAL HEALTH SERVICE, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE. THE THIRD REQUEST FOR PROPOSALS J-003 LEAA-0 WAS ISSUED BY THE LAW ENFORCEMENT ASSISTANCE ADMINISTRATION, DEPARTMENT OF JUSTICE, FOR A STUDY OF LAW ENFORCEMENT COMMAND AND CONTROL PROBLEMS RELATED TO CROWDS AND DEMONSTRATIONS. THESE THREE CONTRACTS WERE NEGOTIATED PURSUANT TO 41 U.S.C. 252 (C)(10) SINCE THE NATURE OF THE WORK MADE IT IMPOSSIBLE FOR THE GOVERNMENT TO DRAFT DETAILED SPECIFICATIONS SETTING FORTH THE EXACT MANNER IN WHICH THE STUDIES SHOULD BE PERFORMED. THE REQUESTS FOR PROPOSALS REQUIRED OFFERORS TO SUBMIT BOTH TECHNICAL AND PRICE PROPOSALS FOR PERFORMING THESE CONTRACTS. THE REQUESTS FOR PROPOSALS ALSO SET FORTH THE CRITERIA FOR EVALUATING THE TECHNICAL PROPOSALS AND ADVISED OFFERORS THAT EACH CONTRACT WOULD BE NEGOTIATED WITH THE OFFEROR WHOSE PROPOSAL WAS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. ADDITIONALLY, THE REQUESTS FOR PROPOSALS STATED THAT IF DISCUSSIONS WERE NECESSARY THEY WOULD BE CONDUCTED WITH ALL OFFERORS WITHIN THE COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED.

RESEARCH CENTRAL'S AFFILIATE, SOCIAL DYNAMICS, SUBMITTED THE LOWEST PRICE PROPOSAL UNDER ALL THREE REQUESTS FOR PROPOSALS. HOWEVER SOCIAL DYNAMICS' TECHNICAL PROPOSAL UNDER REQUEST J-003-LEAA-0 WAS RANKED THE LOWEST OF 26 PROPOSALS RECEIVED AND CONSIDERED UNACCEPTABLE. THE TECHNICAL PROPOSAL SUBMITTED UNDER REQUEST CPE 70-NEG-122 WAS RANKED 6TH OUT OF THE 7 PROPOSALS RECEIVED AND WAS ALSO UNACCEPTABLE. SOCIAL DYNAMICS' TECHNICAL PROPOSAL UNDER REQUEST CPE 70-NEG-123 WAS RANKED THE LOWEST OF THE 11 PROPOSALS RECEIVED AND WAS CONSIDERED UNACCEPTABLE BY HEW.

IN THESE NEGOTIATED PROCUREMENTS AWARD TO OTHER THAN THE LOWEST OFFEROR IS PERMISSIBLE WHERE EVALUATION IS NOT MADE ON PRICE ALONE. SEE 40 COMP. GEN. 508 (1961). FURTHER WE BELIEVE THE FACTS INVOLVED SUPPORT THE CONTRACTING OFFICERS' DETERMINATIONS THAT THE PROPOSALS BY SOCIAL DYNAMICS WERE TECHNICALLY UNACCEPTABLE AND NOT WITHIN THE COMPETITIVE RANGE. THEREFORE DISCUSSIONS WERE NOT REQUIRED WITH THAT FIRM. UNDER BOTH HEW PROCUREMENTS SOCIAL DYNAMICS OFFERED TO DO THE WORK ON A COST-PLUS-A-FIXED FEE BASIS. WHERE A COST REIMBURSEMENT TYPE CONTRACT IS PROPOSED THE COSTS STATED BY THE OFFEROR ARE ONLY ESTIMATES OF THE COST, NOT THE ACTUAL COSTS TO THE GOVERNMENT. FOR THAT VERY REASON THE REGULATIONS REQUIRE THAT SUCH PROPOSALS SHOULD NOT BE EVALUATED STRICTLY ON A PRICE BASIS BUT THAT THE PRICE SHOULD BE CONSIDERED TO DETERMINE IF THE PROPOSED CONTRACTOR UNDERSTANDS THE NATURE OF THE WORK. SEE FEDERAL PROCUREMENT REGULATION 1- 3.805-2, AND B-170534, OCTOBER 6, 1970.

THE FACT THAT SOCIAL DYNAMICS' PRICES WERE CONSIDERABLY LOWER THAN THE CONTRACT AWARDS IS CONSISTENT WITH THE DETERMINATIONS BY HEW THAT THEIR TECHNICAL PROPOSALS WERE UNSATISFACTORY. SIMILARLY, UNDER REQUEST FOR PROPOSALS J-003-LEAA-0 SOCIAL DYNAMICS SUBMITTED A PRICE PROPOSAL WHICH WAS APPROXIMATELY ONE-THIRD OF THE GOVERNMENT'S ESTIMATE OF $90,000 FOR DOING THE WORK REQUIRED. THIS ALSO SHOWS A LACK OF UNDERSTANDING BY SOCIAL DYNAMICS OF THE WORK REQUIRED.

ACCORDINGLY, WE MUST CONCLUDE THAT IN THEIR RESPECTIVE PROCUREMENTS HEW AND JUSTICE DID NOT ACT IMPROPERLY IN REJECTING THE OFFERS BY SOCIAL DYNAMICS AS TECHNICALLY UNACCEPTABLE AND YOUR PROTEST ON THAT BASIS MUST BE DENIED.