B-170751, SEP 23, 1970, 50 COMP GEN 202

B-170751: Sep 23, 1970

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MAY BE ACCEPTED AND THE PROPOSAL CONSIDERED IN VIEW OF THE FACT NEGOTIATION PROCEDURES ARE MORE FLEXIBLE THAN THOSE USED FOR ADVERTISED PROCUREMENTS. 1970: REFERENCE IS MADE TO LETTER FAC 0211E DATED SEPTEMBER 10. THE IFP WAS ISSUED ON AUGUST 24. WHICH AUTHORIZES THE NEGOTIATION OF CONTRACTS WHERE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. THE DATE SET FOR THE RECEIPT OF PROPOSALS WAS AUGUST 28. UPON RECEIPT OF PROPOSALS THE GOVERNMENT WILL REVIEW THEM AND MAY CALL UPON THE PROPOSERS FOR CLARIFICATION OR ADDITIONAL DATA AND MAY CONDUCT ORAL OR WRITTEN NEGOTIATIONS WITH SOME OR ALL OF THOSE SUBMITTING PROPOSALS. ALL PROPOSERS ARE ADVISED THAT AWARD MAY BE MADE WITHOUT DISCUSSION OR FURTHER NEGOTIATION OF PROPOSALS RECEIVED AND.

B-170751, SEP 23, 1970, 50 COMP GEN 202

CONTRACTS - NEGOTIATION - ADDENDA ACKNOWLEDGMENT REQUIREMENT THE ACKNOWLEDGMENT OF A SUBSTANTIVE AMENDMENT RECEIVED AFTER THE CLOSING TIME FOR RECEIPT OF PROPOSALS UNDER A NEGOTIATED INVITATION FOR PROPOSALS ISSUED PURSUANT TO THE PUBLIC EXIGENCY AUTHORITY IN 10 U.S.C. 2304(A) (2), AND WHICH PROVIDES FOR AWARD ON THE BASIS OF INITIAL PROPOSALS, MAY BE ACCEPTED AND THE PROPOSAL CONSIDERED IN VIEW OF THE FACT NEGOTIATION PROCEDURES ARE MORE FLEXIBLE THAN THOSE USED FOR ADVERTISED PROCUREMENTS. HOWEVER, AS THE LATE ACCEPTANCE OF THE ADDENDUM INVOLVES ACTIONS THAT CONSTITUTE DISCUSSION WITHIN THE MEANING OF 10 U.S.C. 2304(G) AND PARAGRAPH 3-805.1(A) OF THE ARMED SERVICES PROCUREMENT REGULATION, NEGOTIATIONS MUST BE CONDUCTED WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE TO OBTAIN "BEST AND FINAL" OFFERS, FOR NOTWITHSTANDING THE URGENCY OF THE PROCUREMENT, AN AWARD MAY NO LONGER BE MADE ON THE BASIS OF THE INITIAL PROPOSALS RECEIVED.

TO THE SECRETARY OF THE NAVY, SEPTEMBER 23, 1970:

REFERENCE IS MADE TO LETTER FAC 0211E DATED SEPTEMBER 10, 1970, WITH ENCLOSURES, FROM THE COMMANDER, NAVAL FACILITIES ENGINEERING COMMAND, AND A SUPPLEMENTAL REPORT, WITH ENCLOSURE, OF SEPTEMBER 11, 1970, FROM THE HEAD, CONTRACT PROCEDURES BRANCH, NAVAL FACILITIES ENGINEERING COMMAND, FURNISHING A REPORT ON THE PROTEST OF SCHIRMER'S LANDSCAPE NURSERY, INC. THE PROTEST CONCERNS THE PROPOSAL OF SMITH GRADING AND PAVING COMPANY, INC. (SMITH), UNDER NEGOTIATED INVITATION FOR PROPOSALS (IFP) NO. N62467- 71-C-0072, ISSUED BY THE COMMANDING OFFICER, SOUTHERN DIVISION, CHARLESTON, SOUTH CAROLINA.

THE IFP WAS ISSUED ON AUGUST 24, 1970, UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(2), WHICH AUTHORIZES THE NEGOTIATION OF CONTRACTS WHERE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. THE DATE SET FOR THE RECEIPT OF PROPOSALS WAS AUGUST 28, 1970. THE IFP SOLICITED PROPOSALS FOR A CONSTRUCTION CONTRACT TO REPAIR DAMAGED REENTRY BODY MAGAZINES AT THE POLARIS MISSILE FACILITY ATLANTIC, CHARLESTON, SOUTH CAROLINA. PARAGRAPH 8 OF THE INSTRUCTIONS TO PROPOSERS READS AS FOLLOWS:

AWARD OF CONTRACT. UPON RECEIPT OF PROPOSALS THE GOVERNMENT WILL REVIEW THEM AND MAY CALL UPON THE PROPOSERS FOR CLARIFICATION OR ADDITIONAL DATA AND MAY CONDUCT ORAL OR WRITTEN NEGOTIATIONS WITH SOME OR ALL OF THOSE SUBMITTING PROPOSALS. ALL PROPOSERS ARE ADVISED THAT AWARD MAY BE MADE WITHOUT DISCUSSION OR FURTHER NEGOTIATION OF PROPOSALS RECEIVED AND, HENCE, PROPOSALS SHOULD BE SUBMITTED INITIALLY ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT. THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL PROPOSALS OR WAIVE ANY INFORMALITY IN PROPOSALS RECEIVED.

WE ASSUME THAT THE LANGUAGE THAT "THE GOVERNMENT *** MAY CONDUCT ORAL OR WRITTEN NEGOTIATION WITH SOME OR ALL" HAS REFERENCE TO OFFERORS WITHIN A COMPETITIVE RANGE. IN ADDITION, PARAGRAPH 1 ON THE REVERSE SIDE OF STANDARD FORM 20, A PART OF THE IFP, CAUTIONED PROSPECTIVE OFFERORS AS FOLLOWS:

*** BIDS THAT DO NOT REFERENCE ALL ADDENDA *** MAY BE CONSIDERED INFORMAL. ***

ON AUGUST 26, 1970, THE SOLICITED OFFERORS WERE TELEPHONICALLY ADVISED BY THE PROCUREMENT ACTIVITY THAT ADDENDUM NO. 1 TO THE IFP HAD BEEN ISSUED. THAT ADDENDUM CONTAINED THE FOLLOWING STATEMENT:

EACH BIDDER SHALL REFER IN HIS BID TO ALL ADDENDA; FAILURE TO DO SO MAY CONSTITUTE AN INFORMALITY IN THE BID.

A MEMORANDUM FOR THE FILE DATED SEPTEMBER 4, 1970, SETS OUT THE SUBSTANCE OF THE TELEPHONE CONVERSATIONS WITH THE PROSPECTIVE OFFERORS AS FOLLOWS:

1. ON THE AFTERNOON OF 26 AUGUST 1970 THE UNDERSIGNED CALLED EACH OF THE PROPOSERS FOR THE SUBJECT CONTRACT TO ADVISE THEM THAT ADDENDUM NO. 1 HAD BEEN MAILED AND THE ADDENDUM CHANGED THE BASE COURSE THICKNESS FROM 3" TO 4-1/2" COMPACTED AND THAT THIS WAS THE ONLY CHANGE. EACH PROPOSER WAS ADVISED THAT THE ADDENDUM SHOULD BE ACKNOWLEDGED IN THE PROPOSAL. FOR SMITH GRADING AND PAVING COMPANY, INC. THE ADDENDUM WAS DISCUSSED WITH MR. C. D. SMITH, JR. (PRESIDENT OF SMITH).

THE MEMORANDUM THEN FURNISHES AN ACCOUNT OF THE EVENTS SUBSEQUENT TO THE TIME ESTABLISHED FOR SUBMISSION OF PROPOSALS.

2. APPROXIMATELY ONE HOUR AFTER THE CLOSING TIME FOR RECEIPT OF PROPOSALS, MR. EDWARD GROVER, SUPERINTENDENT FOR SMITH GRADING AND PAVING CO., INC. CALLED THE UNDERSIGNED AND ADVISED THAT HE HAD FORGOTTEN TO ACKNOWLEDGE THE ADDENDUM IN HIS PROPOSAL, BUT THAT HE HAD CONSIDERED IT IN MAKING THE PROPOSAL AND THAT HE HAD CALLED THIS OFFICE ON THE MORNING PRIOR TO THE CLOSING TIME FOR PROPOSALS AND HAD THE ADDENDUM READ TO HIM SINCE HE HAD NOT, AT THAT TIME, SEEN THE MAILED COPY. THIS PHONE CALL CAN BE NEITHER CONFIRMED OR DENIED.

3. MR. GROVER WAS ADVISED TO CONFIRM HIS ACKNOWLEDGMENT OF THE ADDENDUM AND THAT A RULING AS TO ITS ACCEPTABILITY WOULD BE MADE. HE WAS ALSO ADVISED THAT THERE WAS SOME VARIANCE BETWEEN HIS PROPOSAL PRICE AND THE GOVERNMENT ESTIMATE AND HE SHOULD REVIEW AND CONFIRM HIS PROPOSAL.

IT SHOULD BE POINTED OUT AT THIS JUNCTURE THAT THE OFFER SUBMITTED BY SMITH CONTAINED THE NOTATION "ADD" IN THE APPROPRIATE SPACE IN IFP PROVIDED FOR ACKNOWLEDGMENT OF RECEIPT OF ADDENDA. IN RESPONSE TO A REQUEST FOR CONFIRMATION OF MR. GROVER'S ACKNOWLEDGMENT OF THE ADDENDUM ON BEHALF OF SMITH, THAT OFFEROR BY LETTER DATED AUGUST 31, 1970, TO THE PROCUREMENT ACTIVITY, ADVISED AS FOLLOWS:

THIS WILL CONFIRM OUR VERBAL CONVERSATION WITH YOU AUGUST 28, 1970, THAT WE WERE AWARE OF ADDENDUM NO. 1 THAT READ, "CHANGE BASE COURSE THICKNESS FROM 3 INCHES TO 4-1/2 INCHES COMPACTED." THIS WAS OMITTED FROM OUR PROPOSAL BY MISTAKE, BUT OUR PRICE WAS BASED ON THE SPECIFICATIONS AS AMENDED BY ADDENDUM NO. 1.

WE HAVE THOROUGHLY VIEWED OUR PROPOSAL AND WE FEEL THAT IT IS CORRECT TO THE BEST OF OUR KNOWLEDGE.

IF WE ARE AWARDED THIS WORK, WE WILL STRIVE TO COMPLETE IT IN STRICT ACCORDANCE WITH THE PLANS AND SPECIFICATIONS.

WE ARE ADVISED BY THE PROCUREMENT ACTIVITY THAT THE IMPLEMENTATION OF THE DRAWING CHANGE REQUIRED BY THE ADDENDUM WOULD "ADD APPROXIMATELY $3,000 TO THE VALUE OF THE CONTRACT." HENCE, THE ADDENDUM EFFECTS A MATERIAL AND SIGNIFICANT CHANGE IN THE CONTRACT REQUIREMENTS.

THE PROTESTANT SUMMARIZES THE BASES FOR ITS PROTEST AS FOLLOWS:

WE ARE ADVISED THAT THE APPARENT LOW BIDDER, SMITH GRADING & PAVING COMPANY, EITHER (1) DID NOT EFFECTIVELY ACKNOWLEDGE ADDENDUM NO. 1 TO SPECIFICATION NO. 06-71-0072 OR (2) THAT THEY COMPLETELY FAILED TO ACKNOWLEDGE RECEIPT OF SAID SPECIFICATION. IN EITHER EVENT WE FEEL THAT OUR CLIENT HAS BEEN SUBSTANTIALLY AND MATERIALLY PREJUDICED BY THE BIDDING PROCEDURE INVOLVED IN THIS PROCUREMENT.

SINCE WE BELIEVE THAT THE NOTATION "ADD" IN SMITH'S PROPOSAL MAY NOT BE CONSIDERED AS AN ACKNOWLEDGMENT OF THE ADDENDUM, THERE IS FOR RESOLUTION THE QUESTION WHETHER THE FAILURE OF THE OFFEROR TO ACKNOWLEDGE RECEIPT OF THE ADDENDUM IN A NEGOTIATED PROCUREMENT PRECLUDES CONSIDERATION OF ITS PROPOSAL.

IT IS A WELL-ESTABLISHED RULE THAT THE FAILURE OF A BIDDER UNDER A FORMALLY ADVERTISED PROCUREMENT TO ACKNOWLEDGE, PRIOR TO BID OPENING, RECEIPT OF AN ADDENDUM WHICH EFFECTS A MATERIAL CHANGE RENDERS THE BID NONRESPONSIVE. 42 COMP. GEN. 490 (1963), AND THE CASES CITED THEREIN. HOWEVER, IN 47 COMP. GEN. 459 (1968), INVOLVING A SOMEWHAT SIMILAR CASE, WE HELD THAT, IN VIEW OF THE FLEXIBILITY ATTENDANT TO NEGOTIATION PROCEDURES, THE FAILURE OF AN OFFEROR TO ACKNOWLEDGE RECEIPT OF AN ADDENDUM WOULD NOT NECESSARILY PRECLUDE CONSIDERATION OF THE AFFECTED PROPOSAL. WE OBSERVED THAT IN THE NORMAL NEGOTIATED PROCUREMENT, THE ACKNOWLEDGMENT OF THE RECEIPT OF AN ADDENDUM AS WELL AS ANY CHANGES IN THE PROPOSAL PRICE OF A GIVEN OFFEROR BROUGHT ABOUT BY THE ADDENDUM PROPERLY MIGHT BE THE SUBJECT OF NEGOTIATIONS PROVIDED OTHER OFFERORS OR THE GOVERNMENT WERE NOT PREJUDICED. IN CONCLUSION, WE STATED THAT:

*** STRICT APPLICATION OF THE LATE ADDENDUM RULE IS NOT APPROPRIATE IN EVERY CASE INVOLVING A NEGOTIATED PROCUREMENT, DEPENDENT, OF COURSE, UPON THE PARTICULAR AND UNIQUE CIRCUMSTANCES INVOLVED.

SEE, ALSO, B-165608, FEBRUARY 12, 1969.

THE REQUESTS FOR PROPOSALS IN THE ABOVE-CITED CASES, AS DOES THE IFP IN THIS CASE, PROVIDED THAT THE GOVERNMENT MAY MAKE AWARD ON AN INITIAL PROPOSAL BASIS WITHOUT DISCUSSION OR NEGOTIATION WITH OFFERORS AND, ALSO, THAT FAILURE TO ACKNOWLEDGE RECEIPT OF ADDENDA MIGHT RESULT IN REJECTION OF THE PROPOSAL. IN THESE CITED DECISIONS, WE HELD THAT THE REJECTION OF OFFERS, WHEREIN THERE WERE FAILURES TO TIMELY ACKNOWLEDGE ADDENDA, WAS PROPER IN VIEW OF THE NECESSITY FOR MAKING PROMPT AWARDS AND THE FACT THAT AWARDS WERE MADE ON AN INITIAL PROPOSAL BASIS.

IT IS CLEAR THAT SMITH'S TELEPHONIC ADDENDUM ACKNOWLEDGMENT, THE SUBSEQUENT REQUEST BY THE PROCUREMENT ACTIVITY THAT SMITH CONFIRM BOTH HIS ACKNOWLEDGMENT OF THE ADDENDUM AND HIS PROPOSAL PRICE, AND SMITH'S LATER CONFIRMING LETTER CONSTITUTED NEGOTIATIONS OR "DISCUSSIONS" WITHIN THE MEANING OF 10 U.S.C. 2304(G) AND ARMED SERVICES PROCUREMENT REGULATION 3- 805.1(A). UNDER THE CITED STATUTE AND REGULATION, WRITTEN OR ORAL DISCUSSIONS ARE REQUIRED TO BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, UNLESS AWARD IS CONTEMPLATED ON AN INITIAL PROPOSAL BASIS. ALTHOUGH THE IFP SPECIFICALLY PROVIDES THAT AN AWARD MAY BE MADE ON AN INITIAL PROPOSAL BASIS, ONCE DISCUSSIONS HAVE BEEN INITIATED WITH ONE OFFEROR SUBSEQUENT TO THE RECEIPT OF INITIAL PROPOSALS, AWARD NO LONGER MAY BE MADE ON THE BASIS OF INITIAL PROPOSALS. SEE B-165837, MARCH 28, 1969.

WE BELIEVE THAT THE CONCEPT OF AWARDING OF CONTRACTS BY THE NEGOTIATION PROCESS DICTATED THE VERY ACTIONS TAKEN BY THE PROCUREMENT ACTIVITY IN THIS CASE. IN THIS REGARD, IN 47 COMP. GEN., SUPRA, AT PAGE 461, WE RECOGNIZED THAT THE NEGOTIATION PROCESS SHOULD BE UTILIZED TO CURE A FAILURE TO ACKNOWLEDGE AN ADDENDUM "PROVIDED OTHER OFFERORS OR THE GOVERNMENT ARE NOT PREJUDICED THEREBY."

SINCE WE CONCLUDED THAT SMITH'S PROPOSAL MAY BE CONSIDERED FOR AWARD ON THE BASIS THAT SMITH'S OBLIGATION UNDER THE ADDENDUM HAS BEEN NEGOTIATED, THERE IS IMPOSED A CONCOMITANT OBLIGATION ON THE GOVERNMENT TO CONDUCT NEGOTIATIONS WITH THE OTHER OFFERORS. IN B-166052(1), MAY 20, 1969, WE CONSTRUED THE ABOVE-CITED STATUTORY AND REGULATORY PROVISIONS AS REQUIRING THAT, IF DISCUSSIONS HAVE BEEN CONDUCTED WITH ONE OFFEROR, THEN DISCUSSIONS SHALL ALSO BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHOSE PROPOSALS ARE WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. SEE, ALSO, 46 COMP. GEN. 191 (1966); B-158528, APRIL 26, 1967. IN VIEW OF THE REPORTED URGENCY OF THIS PROCUREMENT, WE INVITE YOUR ATTENTION TO 49 COMP. GEN. 156 (1969) AND B-168671, MARCH 2, 1970, WHEREIN WE DID NOT QUESTION A PROCUREMENT ACTIVITY'S ACTIONS IN REQUESTING THE SUBMISSION OF "BEST AND FINAL" OFFERS WITHIN 3 HOURS AND 1 DAY, RESPECTIVELY.

ACCORDINGLY, SMITH'S OFFER MAY BE CONSIDERED FOR AWARD PROVIDED OTHER OFFERORS IN A COMPETITIVE RANGE ARE GIVEN AN OPPORTUNITY TO SUBMIT THEIR "BEST AND FINAL" OFFERS. SEE IN THIS REGARD 48 COMP. GEN. 663, 667-668 (1969).