B-171349, NOV 17, 1971

B-171349: Nov 17, 1971

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TECHNICAL EVALUATIONS WERE MADE AS FOLLOWS: ARMA - 35%. IT IS CLEAR THAT FACTORS OTHER THAN PRICE MAY BE CONSIDERED AND GIVEN APPROPRIATE WEIGHT AND A DETERMINATION OF TECHNICAL ACCEPTABILITY IS PRIMARILY A FUNCTION OF THE PROCURING AGENCY. IT WAS PROPER TO CONSIDER DEVELOPMENTAL RISK AS PART OF THE TECHNICAL EVALUATION WHERE THE PROCUREMENT IS CONSIDERED CRITICAL FOR PRIORITY REQUIREMENTS. THE RECORD DOES NOT ESTABLISH THAT ARMA WAS ADEQUATELY INFORMED OF THE TWO MAJOR TECHNICAL OBJECTIONS TO ITS PROPOSAL. WHILE IT IS NOT LIKELY THAT ARMA WOULD HAVE BEEN ABLE TO CURE THE DEVELOPMENTAL RISK DEFICIENCY. SINCE IT WAS BASED ON FAILURE TO HAVE AN EXISTING SYSTEM. IT IS CLEAR THAT THE SOLICITATION WAS CHANGED AND THAT THE CHANGES HAD THE EFFECT OF REDUCING REQUIREMENTS.

B-171349, NOV 17, 1971

BID PROTEST - NEGOTIATION PROCEDURES - EVALUATION FACTORS - CHANGED REQUIREMENTS CONCERNING PROTESTS BY THE ARMA DIVISION OF AMBAC INDUSTRIES AND LACOSTA AND ROMBERG, INC., FIRST AND THIRD LOW BIDDERS, RESPECTIVELY, AGAINST AWARD OF A CONTRACT TO BELL AEROSYSTEMS COMPANY, SECOND LOW BIDDER, UNDER AN RFP ISSUED BY THE NAVAL OCEANOGRAPHIC OFFICE FOR AN OCEAN GRAVITY MEASURING SYSTEM. AFTER FULL NEGOTIATIONS, TECHNICAL EVALUATIONS WERE MADE AS FOLLOWS: ARMA - 35%, LACOSTA - 53% AND BELL - 58%.WITH RESPECT TO ARMA'S PROTEST, IT IS CLEAR THAT FACTORS OTHER THAN PRICE MAY BE CONSIDERED AND GIVEN APPROPRIATE WEIGHT AND A DETERMINATION OF TECHNICAL ACCEPTABILITY IS PRIMARILY A FUNCTION OF THE PROCURING AGENCY. FURTHER, IT WAS PROPER TO CONSIDER DEVELOPMENTAL RISK AS PART OF THE TECHNICAL EVALUATION WHERE THE PROCUREMENT IS CONSIDERED CRITICAL FOR PRIORITY REQUIREMENTS. HOWEVER, THE RECORD DOES NOT ESTABLISH THAT ARMA WAS ADEQUATELY INFORMED OF THE TWO MAJOR TECHNICAL OBJECTIONS TO ITS PROPOSAL, AND WHILE IT IS NOT LIKELY THAT ARMA WOULD HAVE BEEN ABLE TO CURE THE DEVELOPMENTAL RISK DEFICIENCY, SINCE IT WAS BASED ON FAILURE TO HAVE AN EXISTING SYSTEM, THE PROCEDURES USED VIOLATED ASPR 3-805.1(A). ALSO, THE COMP. GEN. QUESTIONS THE APPROPRIATENESS OF THE INSTANT METHOD OF EVALUATING PRICE PROPOSALS - SINCE A SCORING OR EVALUATION METHOD WHICH REQUIRES OR PERMITS ALL PRICE PROPOSALS TO BE AWARDED THE SAME SCORE, DESPITE SIGNIFICANT DIFFERENCES IN THE PROPOSED PRICES, DOES NOT ALLOW FOR EFFECTIVE PRICE EVALUATION. WITH RESPECT TO LACOSTA'S PROTEST, IT IS CLEAR THAT THE SOLICITATION WAS CHANGED AND THAT THE CHANGES HAD THE EFFECT OF REDUCING REQUIREMENTS. THE CLAIM BY THE PROCURING ACTIVITY THAT THE CHANGES WERE IMMATERIAL BECAUSE THEY WERE NOT EVALUATION FACTORS IS NOT SUPPORTED BY THE RECORD AND IF, AS IT APPEARS, NO NOTICE OF SUCH CHANGE WAS GIVEN LACOSTA, SUCH A FAILURE WAS A SERIOUS DEFICIENCY IN THE NEGOTIATION PROCESS. WHILE IT IS NOW INAPPROPRIATE FOR GAO TO TAKE CORRECTIVE ACTION, ALL OF THE ABOVE DEFICIENCIES SHOULD BE AVOIDED IN FUTURE PROCUREMENTS.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER SUP 0232, OF JUNE 15, 1971, FROM THE ACTING DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, AND PRIOR CORRESPONDENCE, REPORTING ON THE PROTESTS BY ARMA DIVISION OF AMBAC INDUSTRIES AND LACOSTA AND ROMBERG, INC., AGAINST THE AWARD OF CONTRACT N62306-71-C-0073 BY THE NAVAL OCEANOGRAPHIC OFFICE (NAVOCEANO) TO BELL AEROSYSTEMS COMPANY.

THIS PROCUREMENT FOR AN OCEAN GRAVITY MEASURING SYSTEM ORIGINALLY BEGAN ON JANUARY 9, 1969, WITH THE ISSUANCE OF AN IFB IN THE COMMERCE BUSINESS DAILY. THIS IFB WAS CANCELLED FOR TECHNICAL REASONS ON JANUARY 14, 1969, BY ISSUANCE OF SYNOPSIS NO. 51 IN THE COMMERCE BUSINESS DAILY, WHICH INCLUDED THE FOLLOWING LANGUAGE:

" *** THE PROCUREMENT WILL BE EFFECTED BY TWO-STEP FORMAL ADVERTISING WITH THE FIRST STEP TO BE ISSUED UNDER RFP N62306-69-R-0104 *** DEVELOPMENT WILL NOT BE SPONSORED. ONLY ITEMS FULLY OPERATIONAL OR IDEAS THAT HAVE BEEN REDUCED TO PRACTICE WILL BE CONSIDERED."

RFP N62306-69-R-0104 WAS CANCELLED PRIOR TO ISSUANCE, AGAIN FOR TECHNICAL REASONS. RFP N62306-70-R-0120 WAS THEN ISSUED ON AUGUST 19, 1969, AS THE FIRST STEP IN A TWO-STEP COMPETITIVE NEGOTIATION. IT CALLED FOR TECHNICAL PROPOSALS WITHOUT PRICES FOR THE FURNISHING OF TWO SEA GRAVITY MEASURING SYSTEMS, AND STATED THAT:

"THE SECOND STEP WILL BE THE SUBMISSION OF REQUEST FOR QUOTATION ONLY TO THOSE CONCERNS SUBMITTING ACCEPTABLE TECHNICAL PROPOSALS DETERMINED TO BE ACCEPTABLE, EITHER INITIALLY OR AS A RESULT OF DISCUSSIONS *** ."

PARAGRAPH 1.8(E) OF THE RFP ESTABLISHED THE FOLLOWING EVALUATION CRITERIA:

"(E) PROPOSAL EVALUATION CRITERIA

"EACH PROPOSAL WILL BE SUBJECTED TO AN ANALYSIS OF THE FOLLOWING CRITICAL AREAS:

A. SUITABILITY OF THE GRAVITY SENSOR FOR THE INTENDED USE.

B. SUITABILITY OF THE STABILIZED PLATFORM WITHOUT THE NECESSITY FOR GFE INPUTS FOR SPEED, VELOCITY AND HEADING.

C. PROPOSED METHOD OF DATA FILTERING.

D. DATA READOUT AND RECORDING SCHEME.

E. RELIABILITY AND MAINTENANCE AND EASE OF OPERATION.

F. NECESSITY FOR ADDITIONAL DATA REDUCTION, WHEN IN THE INDEPENDENT MODE, REQUIRED TO REDUCE THE OUTPUT TO FILTERED DATA REQUIRING NO ADDITIONAL CORRECTIONS, EXCEPT EOTVOS AND DRIFT.

G. SUITABILITY OF THE INTERFACE TO THE PDR-9.

PROPOSALS WERE RECEIVED FROM ARMA, BELL AEROSYSTEMS, AND LACOSTA AND ROMBERG. THE LACOSTA AND ROMBERG PROPOSAL WAS THE ONLY TECHNICALLY ACCEPTABLE PROPOSAL. AFTER ATTEMPTS WERE MADE TO MAKE PROPOSALS ACCEPTABLE, NAVOCEANO ISSUED RFQ N62306-70-Q-0459 ON MAY 21, 1970. IT IS REPORTED THE RFQ WAS ISSUED SO AS TO OBTAIN "COMPLETELY ACCEPTABLE PROPOSALS THAT COULD BE EVALUATED WITH COST AS A CONSIDERATION, BUT NOT A PARAMOUNT ONE."

SECTION 1.8 OF THE RFQ PROVIDED AS FOLLOWS:

"1.8 - QUOTATION EVALUATION

(1) PROPOSALS SUBMITTED UNDER RFP N62306-70-R-0120 HAVE BEEN EVALUATED TECHNICALLY, EXCEPT IN THE AREA OF:

ALL PROPOSALS WERE SATISFACTORY; BUT A FINAL EVALUATION CAN NOT BE MADE UNTIL PRICES ARE RECEIVED AND THE REMAINING TECHNICAL PROBLEMS SOLVED AND RATED. IT IS THE PURPOSE OF THIS RFQ TO SOLICIT PRICES, TO INFORM QUOTERS OF THE FINAL EVALUATION CRITERIA, AND TO SOLICIT ANY ADDITIONAL INFORMATION IN THE ABOVE CITED TECHNICAL AREA THAT QUOTERS DESIRE TO SUBMIT TO FACILITATE THE FINAL EVALUATION.

(2) THE TOTAL PROPOSAL WILL BE EVALUATED ON THE BASIS OF 100% WITH AN ALLOCATION OF 60% TO TECHNICAL PERFORMANCE AND 40% TO LIFE CYCLE COST/PRICE.

(3) THE INDIVIDUAL ELEMENTS OF THE EVALUATION ARE:

A. TECHNICAL PERFORMANCE - 60%

(I) TECHNICAL AREAS WHICH REQUIRE SUBJECTIVE EVALUATION ARE THE ACCURACY, STABILITY AND RELIABILITY OF SENSOR CALIBRATION AND THE SYSTEM DRIFT. ANY ADDITIONAL INFORMATION IN THESE AREAS SUBMITTED BY THE CONTRACTORS IN STEP TWO WILL BE EVALUATED.

(II) THE INDIVIDUAL RATINGS WILL BE AS FOLLOWS:

(A) DRIFT: MAXIMUM WEIGHT WILL BE GIVEN TO SUBSTANTIVE EVIDENCE ESTABLISHING ABSOLUTELY PREDICTABLE SYSTEM DRIFT WITHIN THE ACCURACY SPECIFIED IN THE PURCHASE DESCRIPTION. PERCENTAGE POINTS ASSIGNED WILL BE PROPORTIONAL TO THE EVALUATOR'S ASSESSMENT OF THE RELIABILITY OF THE DATA SUBMITTED IN THE PROPOSALS WITH AMENDMENTS AND ANY OTHER DATA THAT MAY BE SUBMITTED IN STEP TWO.

(B) SENSOR CALIBRATION/(SCALE FACTOR) ACCURACY STABILITY AND RELIABILITY: MAXIMUM WEIGHT WILL BE GIVEN TO EVIDENCE ESTABLISHING SENSOR CALIBRATION (SCALE FACTOR) STABILITY AND RELIABILITY ABSOLUTELY WITHIN THE ACCURACY SPECIFIED IN THE PURCHASE DESCRIPTION. PERCENTAGE POINTS ASSIGNED WILL BE PROPORTIONAL TO THE EVALUATOR'S ASSESSMENT OF THE RELIABILITY OF THE DATA SUBMITTED IN THE PROPOSALS WITH AMENDMENTS AND ANY OTHER DATA THAT MAY BE SUBMITTED IN STEP TWO.

(C) THE FINAL PERCENTAGE VALUE FOR TECHNICAL EVALUATION WILL BE THE ARITHMETIC MEAN OF THE PERCENTAGE POINTS ASSIGNED TO THE TWO AREAS NOTED ABOVE. THE MEAN VALUE WILL NOT EXCEED 60%.

B. COST - 40%

EVALUATED PRICE FOR A SERVICE LIFE OF THREE YEARS.

EVALUATION CRITERIA WILL BE PLUS 1% FOR EACH $1,000.00 LESS THAN THE GOVERNMENT ESTIMATE OF THREE (3) YEAR LIFE CYCLE COST; THE ELEMENTS OF WHICH ARE SET FORTH IN SECTION 1.1 HEREIN."

THE FOLLOWING QUOTATIONS WERE RECEIVED:

ARMA BELL LACOSTA

$312,015 $401,700 $398,500

BELL AND LACOSTA REDUCED THEIR PRICES RESULTING IN THE FOLLOWING FINAL COST EVALUATION:

ARMA BELL LACOSTA

$312,015 $321,500 $326,000

AFTER FURTHER NEGOTIATIONS, THE FOLLOWING TECHNICAL EVALUATION WAS MADE:

MAXIMUM

CATEGORY WEIGHT OFFEROR

BELL LACOSTA ARMA

BASIC CONFORMANCE TO PURCHASE

DESCRIPTION REQUIREMENTS 30% 30% 30% 30%

NON-DEVELOPMENTAL CHARACTERISTICS

(RISK) 15% 14% 8% 0%

ACCEPTABILITY OF TECHNIQUES EMPLOYED 15% 14% 15% 5%

60% 58% 53% 35%

THEREAFTER, THE AWARD WAS MADE TO BELL ON NOVEMBER 19, 1970.

THE TWO UNSUCCESSFUL PROPOSERS FILED PROTESTS AGAINST THE AWARD. ARMA, FILING ITS PROTEST ON NOVEMBER 20, 1970, CLAIMED THAT NAVOCEANO ERRED IN CONCLUDING THAT AN AWARD TO ARMA WOULD HAVE INVOLVED A HIGH TECHNICAL RISK. THAT CONCLUSION WAS CHALLENGED BOTH ON FACTUAL GROUNDS AND BECAUSE TECHNICAL RISK, STEMMING FROM FAILURE TO HAVE PREVIOUSLY BUILT THE REQUESTED GRAVIMETER SYSTEM, WAS NOT ESTABLISHED AS AN EVALUATION FACTOR IN THE RFQ. THE PROTEST ALSO RAISED SEVERAL OTHER POINTS WHICH ARE DISCUSSED HEREIN. LACOSTA AND ROMBERG FILED A PROTEST ON MAY 3, 1971, CLAIMING ESSENTIALLY THAT IT WAS IMPROPERLY AND UNFAIRLY TREATED BECAUSE THE SPECIFICATIONS OF THE CONTRACT ENTERED INTO WITH BELL DIFFERED FROM THE SPECIFICATIONS OF THE SOLICITATION. WE WILL DISCUSS THE GROUNDS OF EACH PROTEST IN TURN.

BY LETTER OF JANUARY 8, 1970, NAVOCEANO INFORMED ARMA THAT THE INITIAL TECHNICAL EVALUATION OF ITS PROPOSAL INCLUDED THE FOLLOWING COMMENTS:

A. "THE LACK OF TECHNICAL INFORMATION ON DRIFT AND TARE OF SENSOR TO ASSURE THE PROBLEM IS UNDER CONTROL.

B. "REQUIRE CLARIFICATION OF FILTERING TECHNIQUE.

C. "REQUIRE CLARIFICATION ON LOSS OF HEAT ON SCALE FACTOR."

AFTER TECHNICAL DISCUSSIONS BETWEEN ARMA AND NAVOCEANO WERE HELD ON JANUARY 22, 1970, ARMA SUBMITTED REVISED INFORMATION ON MARCH 10, 1970. AN EVALUATION MEMORANDUM DATED APRIL 29, 1970, RATED THE LACOSTA AND ROMBERG PROPOSAL AS FIRST CHOICE, WITH BELL'S PROPOSAL AS SECOND CHOICE AND THE ARMA PROPOSAL AS THIRD CHOICE. THE FOLLOWING COMMENTS WERE MADE REGARDING THE ARMA PROPOSAL:

"THIRD CHOICE IS THE ARMA PROPOSAL. THE TECHNICAL PROPOSAL LOOKS VERY PROMISING, HOWEVER, I DON'T BELIEVE WE SHOULD TAKE ON ANOTHER OR THIRD PROTOTYPE SYSTEM. THE METER SYSTEM IS NEW, AND AS DESCRIBED IN THE PROPOSAL, HASN'T BEEN TESTED. THE SENSOR AND DATA SYSTEM HAVE BEEN USED FOR SHORT PERIODS BY OTHER AGENCIES. FROM EXPERIENCE WITH OTHER GRAVITY METERS, WE WILL HAVE AN ADJUSTMENT PERIOD IN WORKING OUT THE SYSTEM PROBLEMS WHEN EMPLOYING IT ON OUR EXTENDED SURVEY PERIODS. *** THIS EQUIPMENT HAS THE LARGEST DRIFT RATE OF THE THREE METER SYSTEMS, WHICH COULD BE A PROBLEM OVER A LONG SURVEY CRUISE."

AN INDORSEMENT TO THAT MEMORANDUM STATED THAT "ALL THREE INSTRUMENTS SHOULD YIELD EQUIVALENT PRECISION AND ACCURACY" AND SHOULD BE "ABOUT EQUIVALENT IN EASE OF OPERATION AND MAINTAINABILITY." HOWEVER, AS TO THE ARMA PROPOSAL IT WAS STATED THAT:

" *** IS TECHNICALLY INFERIOR IN TERMS OF DRIFT AND TARES WITH UNKNOWN ECONOMY AND ALTHOUGH ARMA INDICATES A HIGH DEGREE OF CONFIDENCE WITH A ONE YEAR GUARANTEE, THERE IS STILL A MEASURE OF TECHNICAL RISK IN OUR PROCUREMENT OF THIS METER AT THIS TIME."

PROPOSALS WERE NEXT EVALUATED AFTER RECEIPT OF RESPONSES TO RFQ N62306-70 -Q-0459. A MEMORANDUM DATED JULY 15, 1970, NOTING THAT THE ADDITIONAL TECHNICAL INFORMATION "WEAKENS THE ARMA CASE" ITEMIZED FIVE SPECIFIC COMMENTS ON ITS PROPOSAL. FOUR OF THESE COMMENTS WERE CONCERNED WITH WARRANTY, CORRECTION OF DEFECTS AND QUALIFICATIONS OF OFFEROR. THE ONE COMMENT SPECIFICALLY CONCERNING TECHNICAL MATTER STATED:

"THE SUPPLEMENTARY TECHNICAL INFORMATION DOES NOT MATERIALLY CHANGE OUR EVALUATION OF THE ARMA PROPOSAL, EXCEPT IN A NEGATIVE SENSE. THE BASIC QUESTION OF SCALE FACTOR ACCURACY OVER A WIDE RANGE OF GRAVITY CHANGE IS STILL DOUBTFUL. THIS IS NOT NECESSARILY LIMITED TO THE OUTPUT OF THE SENSORY ELEMENT, BUT IS CONCERNED WITH THE PRACTICAL OPERATION OF THE FIRST FREQUENCY MULTIPLIER AND THE FILTERING TECHNIQUE."

ON AUGUST 11, 1970, REPRESENTATIVES OF ARMA AND NAVOCEANO MET AGAIN TO FURTHER DISCUSS PROVISIONS OF THE ARMA PROPOSAL. ARMA AND NAVOCEANO DISAGREE ON EXACTLY WHAT TRANSPIRED AT THAT MEETING. ARMA STATES THAT THE DISCUSSION RELATED PRIMARILY TO CONTRACTUAL TERMS AND CONDITIONS, THAT ONLY A FEW TECHNICAL QUESTIONS WERE ASKED, AND THAT AS A RESULT OF THE ARMA ANSWERS TO THOSE QUESTIONS, IT WAS SPECIFICALLY TOLD THAT THE FUNCTIONING OF ITS MULTIPLIER FILTER READOUT (MFR) SATISFIED REQUIREMENTS. ARMA ALSO STATES THAT IT AGREED TO FURNISH A MANUAL ON FILTERING AND THAT IT WAS FURNISHED, ALONG WITH ALL OTHER INFORMATION IT UNDERSTOOD TO BE REQUIRED. NAVOCEANO MAINTAINS THAT MANY QUESTIONS REGARDING FILTERING/DATA LOGGING TECHNIQUE WERE ASKED AND THAT ARMA WAS TO FURNISH A MANUAL WHICH WOULD MORE CLEARLY DEFINE ITS FILTER TECHNIQUE, BUT THAT SUCH A MANUAL WAS NOT SUPPLIED. THE ONLY DOCUMENTATION PERTAINING TO THIS MEETING IS A "MEMO TO FILE" LISTING THE SUBJECTS DISCUSSED AND NOTING THE AGREEMENT TO FURNISH A MANUAL DESCRIBING THE ARMA PROPOSED FILTERING TECHNIQUE. IT DOES NOT PROVIDE ANY DETAILED INFORMATION ON WHAT AGREEMENTS OR UNDERSTANDINGS REGARDING TECHNICAL MATTERS, IF ANY, WERE MADE. SUBSEQUENT TO THE MEETING, ARMA FURNISHED ADDITIONAL INFORMATION BY TELEGRAM DATED AUGUST 25, 1970, REGARDING CORRECTION OF DEFECTS AND INSPECTION AND TESTING.

ON SEPTEMBER 30, 1970, THE PROPOSALS WERE AGAIN EVALUATED, AND THE FOLLOWING COMMENTS REGARDING THE ARMA PROPOSAL WERE MADE:

"ALTHOUGH THE MATERIAL SUBMITTED BY AMBAC INDICATED THAT THE PROPOSED METER WILL PROBABLY MEET THE PURCHASE DESCRIPTION REQUIREMENTS, THIS HAS NOT BEEN CONCLUSIVELY AND FACTUALLY ESTABLISHED SINCE NO SYSTEM SO CONFIGURED HAS BEEN CONSTRUCTED. ADDITIONALLY, DETAILED DOCUMENTARY INFORMATION REQUESTED DURING THE 8/11/70 NEGOTIATING SESSION WAS NOT PROVIDED. THE LACK OF THE DETAILED INFORMATION AND/OR CONCLUSIVE EVIDENCE OF PERFORMANCE CAPABILITY RENDERS THIS QUOTATION AS UNACCEPTABLE IN TERMS OF HIGH RISK AND THIS PROCUREMENT IS CRITICAL TO FULFILLING PRIORITY ONE REQUIREMENTS. I RECOMMEND THAT AMBAC NOT BE CONSIDERED FOR ANY FURTHER NEGOTIATIONS."

A DOCUMENT ENTITLED "TABULATED RESULTS OF TECHNICAL EVALUATION," FURTHER EXPLAINED THE TECHNICAL EVALUATION:

"1. BASED ON THE TOTAL INFORMATION PROVIDED DURING THE ENTIRE EPOCH OF NEGOTIATION, THE QUOTATIONS SUBMITTED WERE EVALUATED TO ESTABLISH THE RELATIVE TECHNICAL QUALITY. THE FACTORS CONSIDERED IN EVALUATION WERE:

A. OVERALL CONFORMANCE WITH REQUIREMENTS OF NAVOCEANO PURCHASE DESCRIPTION.

B. DEVELOPMENTAL NATURE OF TECHNIQUES PROPOSED FOR CONFORMANCE TO PURCHASE DESCRIPTION REQUIREMENTS.

C. APPLICABILITY OF TECHNIQUES PROPOSED FOR MEETING ACCURACY, DRIFT AND TARE REQUIREMENTS, INCLUDING STATIC ACCURACY, DRIFT PREDICTABILITY AND FILTERING.

"2. A QUOTATION PROPOSING A PERFECT METER WOULD HAVE RECEIVED A TECHNICAL WEIGHT OF 60%. THE QUOTATIONS AND SUPPLEMENTARY DOCUMENTATION SUBMITTED WERE WEIGHTED AS FOLLOWS:

(A) THE PROPOSAL SUBMITTED BY BELL AEROSYSTEMS CONFORMS TO EVALUATION ON CRITERIA (A). THE FINAL ALTERNATIVE PROPOSAL SUBMITTED BY BELL IMPROVES THE TECHNICAL ACCEPTABILITY OF THE SYSTEM AND DIMINISHES THE RISK INVOLVED IN ESTABLISHING DRIFT PREDICTABILITY AND STATIC ACCURACY. IN ADDITION THE ALTERNATIVE PROPOSAL IMPROVES DATA REDUCTION CAPABILITY, TARE IDENTIFICATION AND ON-LINE EVALUATION OF DATA. THE ONLY DEVELOPMENTAL EFFORT WILL BE TO CHANGE FROM A VARIAN 620 TO A PDP8L WHICH IS MAXIMAL IN TERMS OF RISK. A TOTAL TECHNICAL WEIGHT OF 58% IS ASSIGNED TO THIS QUOTATION. (B) THE PROPOSAL SUBMITTED BY LACOSTA AND ROMBERG CONFORMS TO EVALUATION CRITERIA (A), HOWEVER, THE CHANGE OF TECHNIQUE INVOLVED IN OBTAINING THE REQUIRED METER OUTPUT MUST BE CONSIDERED DEVELOPMENTAL IN NATURE. ALTHOUGH WE HAVE CONFIDENCE IN THE TECHNIQUES PROPOSED, EXPERIENCE HAS SHOWN THAT THERE ARE RISKS INVOLVED. ALTHOUGH IT IS OUR JUDGEMENT THAT THIS RISK IS MINIMAL, IT MUST BE CONSIDERED. THE LACOSTA AND ROMBERG PROPOSAL IS THEREFORE ASSIGNED A TECHNICAL WEIGHT 53%.

(C) THE INFORMATION SUBMITTED BY AMBAC INDICATES THAT PROPOSED METER WILL PROBABLY MEET PURCHASE DESCRIPTION REQUIREMENTS. ALTHOUGH THIS IS NOT CONCLUSIVELY AND FACTUALLY ESTABLISHED, IT IS OUR OPINION THAT THE PRODUCTION OF A FULLY CONFIGURED METER SYSTEM WOULD INVOLVE CONSIDERABLE DEVELOPMENTAL EFFORT, AND AS SUCH, MUST GO INTO A HIGH RISK CATEGORY. DESCRIPTIVE AND TECHNICAL INFORMATION PROVIDED FOR EVALUATION DID NOT FULLY ESTABLISH CONFORMANCE TO DRIFT, TARE AND STATIC ACCURACY REQUIREMENTS. THE AMBAC PROPOSAL IS THEREFORE ASSIGNED A TOTAL TECHNICAL WEIGHT OF 35%."

AS A RESULT OF THIS FINAL EVALUATION, NO FURTHER NEGOTIATIONS WERE CONDUCTED WITH ARMA.

IN A NEGOTIATED PROCUREMENT, A CONTRACT NEED NOT BE AWARDED TO THE LOWEST RESPONSIBLE OFFEROR. B-167374, OCTOBER 6, 1969. FACTORS OTHER THAN PRICE MAY BE CONSIDERED AND GIVEN APPROPRIATE WEIGHT WHEN PROPOSALS ARE EVALUATED AND THE RESULTS OF A TECHNICAL EVALUATION MAY BE CONSIDERED. COMP. GEN. 508 (1961); B-161990, AUGUST 29, 1967. WE HAVE CONSISTENTLY HELD THAT WHETHER A PROPOSAL IS TECHNICALLY ACCEPTABLE AND SATISFIES THE NEEDS OF THE GOVERNMENT IS PRIMARILY FOR THE DETERMINATION OF THE PROCURING AGENCY, AND SUCH A DETERMINATION WILL NOT BE QUESTIONED BY OUR OFFICE UNLESS IT IS CLEARLY SHOWN TO HAVE BEEN ARBITRARY, CAPRICIOUS, OR MADE IN BAD FAITH. B-172100, JUNE 28, 1971.

WE HAVE REVIEWED THE RECORD AND ARE UNABLE TO CONCLUDE THAT THE FACTUAL DETERMINATION REGARDING THE ARMA TECHNICAL PROPOSAL IS ARBITRARY. WHILE ARMA CLAIMED TO HAVE MANUFACTURED SIMILAR GRAVIMETERS AND HAVE HAD "EXTENSIVE EXPERIENCE IN THE GRAVIMETRY FIELD," THE NAVOCEANO TECHNICAL EVALUATORS BELIEVED THERE WAS A HIGH DEGREE OF RISK INVOLVED IN ARMA BUILDING AND FURNISHING THE GRAVIMETER SYSTEM. THIS WAS BASED UPON THE FACT THAT ARMA HAD NOT BUILT A FUNCTIONING GRAVIMETER SYSTEM THAT WAS IN ACCORDANCE WITH THE PURCHASE DESCRIPTION, ALTHOUGH IT HAD DEVELOPED THE BASIC COMPONENTS FOR THE SYSTEM. THEREFORE, THE EVALUATORS DID NOT ASSIGN TO THE PROPOSAL ANY OF THE 15 POINTS AVAILABLE FOR THAT ELEMENT OF THE EVALUATION. THE EVALUATORS WERE FURTHER CONCERNED ABOUT THE PROPOSED FILTERING TECHNIQUE, AND ASSIGNED THE PROPOSAL ONLY 5 OF A POSSIBLE 15 POINTS IN THE ACCEPTABILITY OF TECHNIQUES EMPLOYED CATEGORY.

IT IS NOT IMPROPER TO CONSIDER DEVELOPMENTAL RISK AS PART OF A TECHNICAL EVALUATION, PARTICULARLY WHERE THE PROCUREMENT IS CONSIDERED CRITICAL FOR PRIORITY REQUIREMENTS. SEE DECISION B-171663, MAY 20, 1971, AND B-165457, MARCH 18, 1969. FURTHER, WE PERCEIVE NOTHING UNREASONABLE OR ARBITRARY IN THE FINDING THAT THE ARMA PRODUCTION OF THE REQUIRED SYSTEM WOULD INVOLVE "CONSIDERABLE DEVELOPMENTAL EFFORT" AND MUST THEREFORE BE CONSIDERED A HIGH RISK.

NEITHER CAN WE QUESTION THE VALIDITY OF THE RATING GIVEN THE ARMA PROPOSED TECHNIQUE. PARAGRAPH 3.2.3 OF THE PURCHASE DESCRIPTION PORTION OF THE SOLICITATION STATED THAT A "DIGITAL FILTER IS REQUIRED." THE ARMA LETTER OF DECEMBER 8, 1970, STATES THAT THE ARMA SYSTEM IS "IN DIGITAL FORM" AND THAT IT FILTERS "DIGITALLY," AND FOR THAT REASON IT BELIEVES THE SYSTEM CONFORMS TO THE SPECIFICATION REQUIREMENTS. AGAIN, IN LETTER OF JANUARY 25, 1971, ARMA STATES THAT THE FILTER IS "ENTIRELY DIGITAL IN FUNCTION." NAVOCEANO, HOWEVER, STATES IN THE ADMINISTRATIVE REPORT THAT THIS "IS NOT THE SAME AS COMPLYING WITH THE REQUIREMENTS FOR A DIGITAL FILTER."

SUCH A FACTUAL DISPUTE ON TECHNICAL MATTERS CANNOT BE RESOLVED BY OUR OFFICE AND, IN THE ABSENCE OF A CLEAR SHOWING THAT THE PROCURING AGENCY IS IN ERROR, WE WILL ACCEPT THE AGENCY'S DETERMINATION. B-169754, DECEMBER 23, 1970. THERE IS NOTHING IN THE RECORD TO ENABLE US TO CONCLUDE THAT THE NAVOCEANO TECHNICAL DETERMINATION WAS ERRONEOUS.

WHILE THE RECORD PROVIDES NO LEGAL BASIS FOR CHALLENGING, ON THE FACTS, THE TECHNICAL EVALUATION MADE IN THIS CASE, WE DO HAVE SERIOUS RESERVATIONS CONCERNING THE ACTIONS OF NAVOCEANO IN DEALING WITH ARMA. THE DOCUMENTATION PROVIDED WITH THE ADMINISTRATIVE REPORT DOES NOT EFFECTIVELY ESTABLISH THAT ARMA WAS ADEQUATELY INFORMED OF THE TWO MAJOR TECHNICAL OBJECTIONS TO ITS PROPOSAL. THE LETTER OF JANUARY 8, 1970, SENT BY NAVOCEANO TO ARMA REFERRED TO A FEW TECHNICAL MATTERS, TO THE LACK OF INFORMATION ON DRIFT AND TARE, AND TO A REQUIREMENT TO CLARIFY FILTERING TECHNIQUE. ON JANUARY 27, 1970, ARMA AND NAVOCEANO MET TO DISCUSS THE MATTERS REFERRED TO IN THAT LETTER, FOLLOWING WHICH NAVOCEANO, BY LETTER DATED FEBRUARY 20, 1970, REQUESTED ARMA TO MODIFY ITS PROPOSAL IN ACCORDANCE WITH THE QUESTIONS RAISED AT THE MEETING. THE LETTER ALSO REQUIRED ADDITIONAL INFORMATION REGARDING SELECTION OF PROPOSED OPERATING TEMPERATURE. ARMA FURNISHED ADDITIONAL INFORMATION ON MARCH 10, 1970, WHICH WAS EVALUATED BY MEMORANDUM DATED APRIL 29, 1970. THERE IS NOTHING IN THE RECORD TO SHOW THAT ARMA WAS EVER NOTIFIED OF THE OBJECTIONS RAISED IN THAT MEMO. INSTEAD, ARMA RECEIVED RFQ N62306-70-Q-0459 IN MAY WHICH STATED THAT ALL "PROPOSALS WERE SATISFACTORY" BUT THAT SOME "REMAINING TECHNICAL PROBLEMS" HAD TO BE SOLVED AND RATED. ARMA SUBMITTED ITS OFFER UNDER THIS SECOND STEP OF THE SOLICITATION, AND ITS PROPOSAL WAS AGAIN EVALUATED ON JULY 15, 1970. THIS EVALUATION NOTED THAT THE ARMA CASE WAS WEAKENED, EXPRESSED CONCERN OVER FILTERING TECHNIQUE, AND NOTED UNDESIRABLE CONTRACTUAL TERMS. ARMA AND NAVOCEANO THEN CONDUCTED DISCUSSIONS ON AUGUST 11, 1970. THE RECORD BEFORE US DOES NOT INDICATE HOW ARMA WAS NOTIFIED OF THIS MEETING OR WHETHER SUCH NOTICE INCLUDED INFORMATION ON TECHNICAL OBJECTIONS TO ITS PROPOSAL. A DISCUSSION OF FILTERING TECHNIQUE WAS INCLUDED IN THIS MEETING, BUT AS NOTED ABOVE, THERE IS DISAGREEMENT ON EXACTLY WHAT WAS STATED ABOUT THE ACCEPTABILITY OF THE ARMA PROPOSED TECHNIQUE. THE MEMO TO FILE LISTS SPECIFIC TECHNICAL MATTERS DISCUSSED, BUT THIS LIST DOES NOT INCLUDE ANY MENTION OF TECHNICAL RISK. ARMA SUBMITTED ADDITIONAL INFORMATION ON AUGUST 25, 1970. A FINAL TECHNICAL EVALUATION WAS PERFORMED ON SEPTEMBER 30, 1970, WHICH NOTED QUESTIONABLE TECHNIQUE AND DEVELOPMENTAL RISK. ARMA WAS NOT NOTIFIED OF THIS EVALUATION, AND APPARENTLY WAS GIVEN NO FURTHER INFORMATION UNTIL AFTER THE CONTRACT WAS AWARDED TO BELL. THUS, FROM THE RECORD IT APPEARS THAT ARMA WAS NEVER INFORMED OF THE DEVELOPMENTAL RISK FACTOR THAT WAS A CONTRIBUTING CAUSE OF ITS FAILURE TO RECEIVE THE AWARD, AND IT IS LESS THAN CLEAR THAT ARMA WAS ADEQUATELY PUT ON NOTICE THAT ITS PROPOSED FILTERING TECHNIQUE WAS NOT ACCEPTABLE.

ASPR 3-805.1(A) REQUIRES THAT DISCUSSIONS BE CONDUCTED WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE. WE STATED IN 50 COMP. GEN. 117, 123 (1970):

" *** IT IS A WELL-ESTABLISHED PRINCIPLE IN FEDERAL PROCUREMENTS THAT SUCH DISCUSSIONS MUST BE MEANINGFUL AND FURNISH INFORMATION TO ALL OFFERORS WITHIN THE COMPETITIVE RANGE AS TO THE AREAS IN WHICH THEIR PROPOSALS ARE BELIEVED TO BE DEFICIENT SO THAT COMPETITIVE OFFERORS ARE GIVEN AN OPPORTUNITY TO FULLY SATISFY THE GOVERNMENT'S REQUIREMENTS. *** WHEN NEGOTIATIONS ARE CONDUCTED THE FACT THAT INITIAL PROPOSALS MAY BE RATED AS ACCEPTABLE DOES NOT INVALIDATE THE NECESSITY FOR DISCUSSIONS OF THEIR WEAKNESSES, EXCESSES OR DEFICIENCIES IN ORDER THAT THE CONTRACTING OFFICER MAY OBTAIN THAT CONTRACT WHICH IN MOST ADVANTAGEOUS TO THE GOVERNMENT. *** "

WE BELIEVE THE ARMA LETTER OF MARCH 10, 1970, AND TELEGRAM OF AUGUST 25, 1970, REFLECT AN ATTEMPT TO SATISFY OBJECTIONS WHICH AROSE FROM THE DISCUSSION SESSIONS OF JANUARY 22 AND AUGUST 11, 1970. HOWEVER, WE CANNOT CONCLUDE FROM THE RECORD THAT THE ARMA UNDERSTANDING OF THE STATUS OF ITS TECHNICAL PROPOSAL WAS DUE TO THE FAILURE OF NAVOCEANO PERSONNEL TO FURNISH INFORMATION REGARDING DEFICIENCIES IN THE PROPOSED TECHNIQUE. IS CLEAR, THOUGH, THAT ARMA WAS NOT NOTIFIED OF THE RISK FACTOR THAT WAS BEING APPLIED AGAINST THE PROPOSAL. HOWEVER, IT IS NOT LIKELY THAT ARMA, HAD IT KNOWN ABOUT THE CONCERN OVER DEVELOPMENTAL RISK, WOULD HAVE BEEN ABLE TO CURE THAT DEFICIENCY SINCE IT WAS BASED ON ITS FAILURE TO HAVE AN EXISTING SYSTEM. EVEN IF WE ASSUME THAT ARMA COULD HAVE ELIMINATED THE DEFICIENCY TO THE COMPLETE SATISFACTION OF NAVOCEANO, THEREBY INCREASING ITS RATING BY 15 POINTS, ARMA WOULD NOT HAVE BEEN ENTITLED TO THE AWARD AS IT STILL WOULD HAVE REMAINED 8 RATING POINTS BEHIND LACOSTA.

THE SECOND BASIS FOR THE ARMA PROTEST IS THAT DEVELOPMENTAL RISK, I.E., NECESSITY FOR HAVING PREVIOUSLY CONSTRUCTED THE REQUESTED GRAVIMETER SYSTEM, WAS NOT IDENTIFIED AS AN EVALUATION FACTOR IN THE RFP. N62306-70- R-0120 AND RFQ N62306-70-Q-0459 WITH THE CRITERIA THAT WAS ACTUALLY USED CLEARLY REVEALS THAT THE PROPOSALS WERE NOT EVALUATED STRICTLY IN ACCORDANCE WITH THE CRITERIA LISTED IN THE SOLICITATIONS. THE RFQ ESTABLISHED TWO INDIVIDUAL RATING AREAS FOR THE FINAL TECHNICAL EVALUATION, DRIFT, AND SENSOR CALIBRATION/(SCALE FACTOR) ACCURACY STABILITY AND RELIABILITY. THE FINAL PERCENTAGE VALUE FOR TECHNICAL EVALUATION WAS TO BE THE ARITHMETIC MEAN OF THE POINTS ASSIGNED TO THE TWO AREAS. THE EVALUATION ACTUALLY MADE CONSIDERED CONFORMITY TO THE PURCHASE DESCRIPTION, DEVELOPMENTAL RISK, AND ACCEPTABILITY OF TECHNIQUES EMPLOYED, WITH PURCHASE DESCRIPTION CONFORMITY GIVEN A WEIGHT TWICE THAT GIVEN TO EACH OF THE OTHER TWO CATEGORIES.

NAVOCEANO STATED IN THE INITIAL ADMINISTRATIVE REPORT THAT THE EVALUATION "METHOD USED WAS TO EQUATE THE DEVELOPMENTAL CHARACTERISTICS RISK AND ACCEPTABILITY OF TECHNIQUES TO THE PROBABILITY OF THE PROPOSED CONFIGURATION 'ESTABLISHING ABSOLUTELY' THE TECHNICAL PARAMETER OF THE EVALUATION CRITERIA." IN A SUPPLEMENTAL REPORT, IT IS STATED THAT "THE EVALUATION PROCEDURE MERELY EQUATED THE CONFIDENCE LEVEL TO BE ASSIGNED TO THE EVALUATION FACTORS, WHICH RESULTED IN THE FINAL NUMERICAL RATING ASSIGNED."

ASSUMING THAT THIS MEANS THAT THE EVALUATION FACTORS DRIFT AND SCALE FACTOR WERE RATED IN TERMS OF PURCHASE DESCRIPTION CONFORMITY, RISK, AND TECHNIQUE, SUCH A METHOD CLEARLY IS CONTRARY TO SOUND PROCUREMENT POLICY. WE HAVE HELD THAT OFFERORS MUST BE ADVISED OF ALL EVALUATION FACTORS AND THE RELATIVE IMPORTANCE OF EACH FACTOR. 50 COMP. GEN. 117 (1970); 50 COMP. GEN. 60 (1970), AND CASES CITED THEREIN. IN THIS CASE, THE OFFERORS OBVIOUSLY WERE NOT INFORMED THAT THE EVALUATION FACTORS WOULD BE APPLIED IN TERMS OF CERTAIN OTHER CRITERIA, AND THAT RELATIVE WEIGHTS WERE ASSIGNED TO THESE OTHER CRITERIA.

FURTHER, THE ADMINISTRATIVE CONTENTION THAT SYNOPSIS NO. 51 MADE DEVELOPMENTAL RISK A PROPER EVALUATION FACTOR BECAUSE IT "INFORMED ALL PROSPECTIVE OFFERORS THAT DEVELOPMENT WOULD NOT BE SPONSORED" IS WITHOUT MERIT. THE SYNOPSIS WAS SUBMITTED ON JANUARY 14, 1969, TO CANCEL THE IFB ORIGINALLY ISSUED FOR THE PROCUREMENT. IT ALSO INFORMED PROSPECTIVE OFFERORS THAT THE PROCUREMENT WOULD "BE EFFECTED BY TWO STEP FORMAL ADVERTISING" UNDER RFP N62306-69-R-0104 AND THAT "DEVELOPMENT WOULD NOT BE SPONSORED." THAT RFP WAS LATER CANCELLED ALSO. IT IS DIFFICULT TO SEE HOW A STATEMENT PUBLISHED IN JANUARY 1969 IN CONNECTION WITH AN IFB CANCELLATION AND NOTIFICATION OF INTENDED ISSUANCE OF A SUBSEQUENTLY CANCELLED RFP CAN PROVIDE NOTICE TO PROPOSERS WHO RESPONDED TO ANOTHER RFP DATED AUGUST 19, 1969. ANY EVALUATION FACTORS INTENDED TO BE APPLICABLE IN A PARTICULAR PROCUREMENT SHOULD BE IDENTIFIED IN THE SOLICITATION UNDER WHICH PROPOSALS WOULD BE EVALUATED. THIS IS THE ONLY WAY TO FAIRLY INSURE THAT OFFERORS OR PROPOSERS ARE ADVISED OF ALL EVALUATION CRITERIA AS REQUIRED BY OUR DECISIONS.

WHILE ALL THREE PROPOSERS WERE NOT INFORMED OF THE EVALUATION CRITERIA THAT WERE ULTIMATELY USED, IT WAS ARMA THAT WAS ADVERSELY AFFECTED, AS IT RECEIVED A LOW RATING IN THE DEVELOPMENTAL RISK CATEGORY. ALTHOUGH THE NAVOCEANO ACTIONS WERE IMPROPER AND AGAINST THE DICTATES OF SOUND PROCUREMENT POLICY, THEY CANNOT BE DISPOSITIVE OF THE PROTEST, SINCE, AS NOTED ABOVE, THE RELATIVE COMPETITIVE POSITION OF ARMA WITH RESPECT TO THE OTHER PROPOSERS WOULD NOT HAVE CHANGED EVEN IF IT RECEIVED THE TOTAL POSSIBLE POINTS IN THE RISK CATEGORY. CF. 50 COMP. GEN. (B-170682, MARCH 19, 1971). HOWEVER, SINCE IT IS IMPROPER TO USE EVALUATION CRITERIA WHICH ARE DIFFERENT FROM THE CRITERIA IDENTIFIED IN THE SOLICITATION, IT IS RECOMMENDED THAT STEPS BE TAKEN TO PREVENT A RECURRENCE OF THE SITUATION IN THE FUTURE.

ARMA ALSO CLAIMS THAT IT WAS NOT AWARDED ONE PERCENTAGE POINT FOR EACH $1,000 LESS THAN THE GOVERNMENT ESTIMATE AS REQUIRED BY THE EVALUATION CRITERIA SPECIFIED IN THE RFQ. HOWEVER, IT IS ADMINISTRATIVELY REPORTED THAT ALL PROPOSERS WERE GIVEN THE MAXIMUM ALLOWABLE 40 PERCENT FOR COST SINCE EACH PROPOSED PRICE WAS MORE THAN $40,000 LESS THAN THE GOVERNMENT ESTIMATE. THEREFORE, THAT CLAIM IS WITHOUT FOUNDATION. HOWEVER, WE DO QUESTION THE APPROPRIATENESS OF THIS METHOD OF EVALUATING PRICE PROPOSALS, SINCE A SCORING OR EVALUATION METHOD WHICH REQUIRES OR PERMITS ALL PRICE PROPOSALS TO BE AWARDED THE SAME SCORE, DESPITE SIGNIFICANT DIFFERENCES IN THE PROPOSED PRICES, DOES NOT ALLOW FOR EFFECTIVE PRICE EVALUATION. THUS, UNDER THE SYSTEM USED IN THIS CASE, PROPOSED PRICES WHICH MIGHT DIFFER BY $100,000 OR MORE WOULD ALL BE GIVEN THE SAME MAXIMUM POINT SCORE, SO LONG AS THEY ALL WERE MORE THAN $40,000 BELOW THE GOVERNMENT COST ESTIMATE. IS DIFFICULT TO SEE HOW THIS SYSTEM COULD BE ADVANTAGEOUS TO THE GOVERNMENT. ALTHOUGH AWARD IS NOT ALWAYS REQUIRED TO BE MADE TO THE LOWEST PROPOSER, AS WE HAVE NOTED IN A PRIOR DECISION, WHERE TECHNICAL PROPOSALS ARE REGARDED AS ESSENTIALLY EQUAL, THEN PRICE OUGHT TO BE CONSIDERED BECAUSE "THE LOWER PRICED OFFER REPRESENTS AN ADVANTAGE TO THE GOVERNMENT WHICH SHOULD NOT BE IGNORED." 50 COMP. GEN. 246. APPARENTLY, THIS PRINCIPLE WAS ADHERED TO IN THIS CASE DESPITE THE EVALUATION SCORING SYSTEM SET OUT, SINCE A NAVOCEANO LETTER TO LACOSTA AND ROMBERG, DATED MARCH 25, 1971, SPECIFICALLY STATES THAT AS BETWEEN LACOSTA AND BELL, "THE TECHNICAL EVALUATION SCORES WERE SO CLOSE THAT THE DECISION TO AWARD WAS MADE PRIMARILY ON THE BASIS OF COST."

ALTHOUGH, AS BETWEEN LACOSTA AND BELL, COST WAS A CONSIDERATION IN SELECTING THE SUCCESSFUL OFFEROR, IT DOES NOT APPEAR THAT ARMA, WHOSE SCORE WAS LOW ON THE TECHNICAL PROPOSAL, WOULD HAVE BEEN ENTITLED TO THE AWARD EVEN THOUGH IT DID SUBMIT THE LOWEST PRICE. SEE B-170633(1), MAY 3, 1971. THE CLAIM BY ARMA THAT THE PROPOSALS OF THE OTHER OFFERORS WERE EVALUATED AS LOW AS THEY WERE BY IMPROPERLY ELIMINATING THE COST OF TRAINING AND MAINTENANCE FROM THOSE PROPOSALS WHILE LEAVING THE COST OF THOSE ITEMS IN ITS PROPOSAL IS WITHOUT MERIT SINCE THERE IS NOTHING IMPROPER IN ELIMINATING FROM A PROPOSAL THE COST OF UNNECESSARY ITEMS.

THE MAJOR BASIS FOR THE LACOSTA AND ROMBERG PROTEST IS THAT CERTAIN SPECIFICATIONS OF THE CONTRACT ENTERED INTO WITH BELL DIFFER FROM THE SPECIFICATIONS OF THE SOLICITATION. THE PROTESTANT CLAIMS THAT ITS PRICE WOULD HAVE BEEN LOWER THAN THE BELL PROPOSAL HAD IT KNOWN THAT A PROPOSAL CONFORMING TO THE SPECIFICATIONS ULTIMATELY ADOPTED IN THE CONTRACT WOULD HAVE BEEN PERMISSIBLE. THE SPECIFICATIONS IN QUESTION DEAL WITH INTERFACING TO A PDP-9 COMPUTER AND WITH WEIGHT LIMITATIONS.

SECTION 2.0 OF RFP N62306-70-R-0120 REQUIRED THE SEA GRAVITY MEASURING SYSTEM TO MEET THE REQUIREMENTS OF NAVOCEANO PURCHASE DESCRIPTION N00-PD- 05740 DATED JUNE 25, 1969, A COPY OF WHICH WAS ATTACHED TO THE RFP. PARAGRAPH 3.2.3.3 OF THE PURCHASE DESCRIPTION STATED THAT "THE DIGI-DATA OR EQUIVALENT RECORDING SYSTEM SHALL BE INTERFACED TO A PDP-9 COMPUTER (GOVERNMENT OWNED)," AND THEN PROVIDED HOW THE INTERFACE WAS TO WORK. ALSO PROVIDED THAT THE "OUTPUTS OF THE SENSORS SHALL BE INTERFACED TO THE PDP-9 PRIOR TO ANY DIGITAL FILTERING." PARAGRAPH 3.2.6 STATED:

"WEIGHT - NO INDIVIDUAL SYSTEMS COMPONENT SHALL WEIGH OVER 50 POUNDS."

PARAGRAPH 1.0 OF SECTION F OF THE CONTRACT AWARDED TO BELL PROVIDES:

"THE SUPPLIES TO BE DELIVERED HEREUNDER SHALL BE FURNISHED IN ACCORDANCE WITH THE REQUIREMENTS OF PURCHASE DESCRIPTION N00-PD-0574D DATED 25 JUNE 1969, ATTACHED HERETO AND MADE A PART HEREOF AS ATTACHMENT I."

HOWEVER, ATTACHMENT I TO THE CONTRACT, DESIGNATED AS "N00-PD-0574D," DIFFERS IN SEVERAL RESPECTS FROM THE PURCHASE DESCRIPTION ATTACHED TO THE SOLICITATION. OF SIGNIFICANCE HERE, PARAGRAPH 3.2.3.3 IS NOT IN ATTACHMENT I, AND PARAGRAPH 3.2.6 PROVIDES:

"WEIGHT - THE TOTAL SYSTEM WEIGHT INCLUDING RACKS AND VIBRATION ISOLATION HARDWARE SHALL NOT EXCEED 1000 LBS. COMPONENTS SHALL BE REMOVABLE FROM THE RACK."

IN A NAVOCEANO LETTER OF APRIL 9, 1971, TO THE PROTESTOR, IT IS STATED THAT THE FINAL CONTRACT "REFLECTS CHANGED VERBAGE RESULTING FROM NEGOTIATION AND DISCUSSION" AND THAT "THE CHANGES REFLECT ONLY CONTRACTUAL TERMINOLOGY." IT IS FURTHER STATED IN AN ADMINISTRATIVE REPORT THAT THESE CHANGES ARE IMMATERIAL AS THEY WERE NOT EVALUATION FACTORS. FINALLY, IT IS STATED IN THE REPORT THAT "THE CHANGE IN WEIGHT WAS MADE AFTER SELECTION TO DEFINITIZE THE AWARDED CONTRACT TO EQUAL THE PROPOSAL ACCEPTED. NO PROVISIONS OF THE SOLICITATION WERE CHANGED *** ."

WE DISAGREE WITH THE POSITION TAKEN ON THIS POINT. IT IS CLEAR FROM THE RECORD THAT THE SOLICITATION WAS CHANGED. IT IS ALSO CLEAR THAT THE CHANGES HAD THE EFFECT OF REDUCING REQUIREMENTS BY ELIMINATING THE NECESSITY FOR INTERFACING WITH A PDP-9 AND BY ELIMINATING THE WEIGHT RESTRICTION FOR SYSTEM COMPONENTS.

THE CLAIM THAT SUCH CHANGES WERE IMMATERIAL BECAUSE THEY WERE NOT EVALUATION FACTORS IS NOT SUPPORTED BY THE RECORD. THE ADMINISTRATIVE REPORT STATES THAT THE AWARD TO BELL RATHER THAN THE PROTESTOR WAS BASED ON PRICE BECAUSE OF THE NEARLY EQUAL TECHNICAL EVALUATIONS. SINCE THERE WAS NO GREAT DISPARITY BETWEEN THE TWO PRICE PROPOSALS, THE PROTESTOR'S CLAIM THAT HIS PRICE COULD HAVE BEEN LOWER IF THE CHANGES IN ACCEPTABLE SPECIFICATIONS WERE KNOWN TO HIM MAKES IT APPEAR THAT SUCH CHANGES WERE GERMANE TO THE PRICE EVALUATION THAT WAS ACTUALLY MADE.

ASPR 3-805.1(E) PROVIDES:

"(E) WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE REQUEST FOR PROPOSAL OR REQUEST FOR QUOTATIONS, AND A COPY SHALL BE FURNISHED TO EACH PROSPECTIVE CONTRACTOR. SEE 3-505 AND 3-507. ORAL ADVICE OF CHANGE OR MODIFICATION MAY BE GIVEN IF (I) THE CHANGES INVOLVED ARE NOT COMPLEX IN NATURE, (II) ALL PROSPECTIVE CONTRACTORS ARE NOTIFIED SIMULTANEOUSLY (PREFERABLY BY A MEETING WITH THE CONTRACTING OFFICER), AND (III) A RECORD IS MADE OF THE ORAL ADVICE GIVEN. IN SUCH INSTANCES, HOWEVER, THE ORAL ADVICE SHOULD BE PROMPTLY FOLLOWED BY A WRITTEN AMENDMENT VERIFYING SUCH ORAL ADVICE PREVIOUSLY GIVEN. THE DISSEMINATION OF ORAL ADVICE OF CHANGES OR MODIFICATIONS SEPARATELY TO EACH PROSPECTIVE BIDDER DURING INDIVIDUAL NEGOTIATION SESSIONS SHOULD BE AVOIDED UNLESS PRECEDED, ACCOMPANIED, OR IMMEDIATELY FOLLOWED BY A WRITTEN AMENDMENT TO THE REQUEST FOR PROPOSAL OR REQUEST FOR QUOTATIONS EMBODYING SUCH CHANGES OR MODIFICATIONS."

ONCE NAVOCEANO DETERMINED THAT BELL'S TECHNICAL PROPOSAL WAS DESIRABLE AND WAS ACCEPTABLE WITHOUT INTERFACING WITH THE PDP-9 AND WITHOUT THE 50 POUND WEIGHT LIMITATION, IT WAS INCUMBENT UPON NAVOCEANO TO ISSUE AN AMENDMENT TO THE RFP REFLECTING THOSE CHANGES. NO SUCH AMENDMENT WAS EVER ISSUED. ALTHOUGH NAVOCEANO STATED THAT THE PROTESTANT WAS INFORMED ORALLY OF THE DELETION OF THE INTERFACING REQUIREMENT AT A MEETING ON JANUARY 14, 1970 (WHICH IS DENIED BY THE PROTESTANT), NO WRITTEN NOTICE AS PROVIDED IN ASPR WAS GIVEN. IN 49 COMP. GEN. 156 (1969), IT WAS HELD THAT SUCH A FAILURE WAS A "SERIOUS DEFICIENCY IN THE NEGOTIATION PROCESS." IT WAS STATED AT PAGE 162 THAT:

" *** THE BENEFITS TO BE DERIVED FROM ISSUANCE OF A WRITTEN AMENDMENT ARE EVIDENT. THE PROCUREMENT OFFICIALS OF THE AGENCY ARE ASSURED THAT NOTICE OF THE COMPLETE CHANGE IS IN FACT COMMUNICATED TO THE PROPER OFFICIALS OF ALL COMPETITIVE OFFERORS AND THAT ALL ASPECTS OF THE CHANGE REFERENCES TO THE APPLICABLE RFP PROVISIONS ARE INCLUDED IN THE NOTICE. THE POSSIBILITY OF CHARGES OF FRAUD OR FAVORITISM IS THEREBY ELIMINATED OR REDUCED. *** "

ALTHOUGH LACOSTA AND ROMBERG DENIES THAT IT WAS INFORMED ORALLY OF THE DELETION, WE CANNOT CONCLUDE BECAUSE OF THE DENIAL THAT SUCH INFORMATION WAS NOT PROVIDED. HOWEVER, IN VIEW OF THE IMPORTANCE OF SUCH INFORMATION AND TO PRECLUDE SIMILAR DENIALS IN OTHER PROCUREMENTS, IN THE FUTURE INFORMATION OF THIS NATURE SHOULD BE FURNISHED AS PROVIDED IN ASPR 3- 805.1(E).

LACOSTA AND ROMBERG ALSO CLAIM THAT THE GRAVITY METER SYSTEM TO BE FURNISHED BY BELL UNDER THE CONTRACT INFRINGES THEIR PATENT NO. 3,474,672, AND THAT THEY NOTIFIED BOTH NAVOCEANO AND BELL OF THE ALLEGED INFRINGEMENT. EVEN IF THE CLAIM IS VALID, THE LEGALITY OF THE CONTRACT WOULD NOT BE AFFECTED. 38 COMP. GEN. 276 (1958); B-167046, SEPTEMBER 29, 1969. THE PROTESTANT'S REMEDY FOR PATENT INFRINGEMENT IS LIMITED TO A SUIT AGAINST THE UNITED STATES IN THE COURT OF CLAIMS UNDER 28 U.S.C. 1498 OR TO THE FILING OF AN ADMINISTRATIVE CLAIM UNDER ASPR 9-404.

WE ARE CONCERNED, HOWEVER, OVER THE ABSENCE OF A PATENT INDEMNITY CLAUSE IN THE BELL CONTRACT. WE NOTE THAT BOTH RFP N62306-70-R-0120 AND RFQ N62306-70-Q-0459 INCORPORATED ASPR 7-104.5, WHICH REFERENCES ASPR 9-103, PROVIDING FOR CONTRACTOR INDEMNIFICATION OF THE GOVERNMENT FOR PATENT INFRINGEMENT ARISING OUT OF CONTRACT PERFORMANCE. THE RECORD BEFORE US INDICATED THAT THIS PROVISION WAS NOT INCLUDED IN THE CONTRACT ULTIMATELY AWARDED TO BELL. WHILE THIS CLAUSE IS NOT REQUIRED FOR ALL CONTRACTS, IT SEEMS INAPPROPRIATE TO INCLUDE IT IN THE SOLICITATION BUT TO ELIMINATE IT FROM THE CONTRACT RESULTING FROM THE SOLICITATION.

WHILE WE FIND IT INAPPROPRIATE TO TAKE CORRECTIVE ACTION, THE DEFICIENCIES AND PROBLEMS NOTED ARE OF SERIOUS CONCERN TO OUR OFFICE. THEREFORE, WE STRONGLY URGE THAT EFFECTIVE ACTION BE TAKEN TO PREVENT A RECURRENCE OF THE DEFICIENCIES NOTED ABOVE IN FUTURE PROCUREMENTS.