B-171382, APR 14, 1971

B-171382: Apr 14, 1971

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ALTHOUGH THE SUBMISSION OF PROPOSALS FOR COMBINATIONS OF SET ASIDE AND NON-SET ASIDE QUANTITIES MAY NOT HAVE BEEN PRECLUDED BY THE RFP. THERE IS NO REQUIREMENT FOR MORE THAN ONE ROUND OF WRITTEN OR ORAL DISCUSSIONS WHERE NO MATERIAL CHANGES ARE MADE IN THE REQUIREMENTS. THE PROTEST IS THEREFORE DENIED. MCILWAIN & FINNEY: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 15. FIFTY PERCENT OF THE TOTAL REQUIRED QUANTITY WAS SET ASIDE FOR QUALIFYING LABOR SURPLUS AREA CONCERNS. THAT FURTHER NEGOTIATIONS SHOULD HAVE BEEN CONDUCTED IN VIEW OF THE NARROW MARGIN OF EVALUATED PRICE DIFFERENCES. THAT IT IS A CERTIFIED FIRST PREFERENCE LABOR SURPLUS AREA CONCERN. THE ADDITIONAL CONTENTIONS WERE MADE THAT THE PROPOSALS ON THE NON-SET ASIDE QUANTITY APPARENTLY WERE NOT EVALUATED PROPERLY.

B-171382, APR 14, 1971

BID PROTEST - SET ASIDE AWARD DECISION DENYING PROTEST AGAINST AWARD OF CONTRACTS TO THE KEYSTONE MANUFACTURING CORPORATION AND TO THE RULON COMPANY UNDER AN RFP ISSUED BY THE AMMUNITION PROCUREMENT AND SUPPLY AGENCY, DEPARTMENT OF THE ARMY FOR THE PROCUREMENT OF DELAY PLUNGERS, 50% OF THE TOTAL BEING SET ASIDE FOR QUALIFYING LABOR SURPLUS AREA CONCERNS. ALTHOUGH THE SUBMISSION OF PROPOSALS FOR COMBINATIONS OF SET ASIDE AND NON-SET ASIDE QUANTITIES MAY NOT HAVE BEEN PRECLUDED BY THE RFP, THE GOVERNMENT DID NOT REQUEST PRICES ON SET ASIDE QUANTITIES AND AN AWARD TO PROTESTANT ON SUCH A BASIS WOULD BE IMPROPER BECAUSE IT COULD NOT BE REACHED ON THE ELIGIBILITY SCALE FOR THE SET ASIDE. FURTHER, NOTWITHSTANDING A NARROW PRICE DIFFERENCE, THERE IS NO REQUIREMENT FOR MORE THAN ONE ROUND OF WRITTEN OR ORAL DISCUSSIONS WHERE NO MATERIAL CHANGES ARE MADE IN THE REQUIREMENTS. THE PROTEST IS THEREFORE DENIED.

TO CLIFFORD, WARNKE, GLASS, MCILWAIN & FINNEY:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 15, 1970, AND TO SUBSEQUENT CORRESPONDENCE IN SUPPORT OF A PROTEST BY THE Z-D PRODUCTS DIVISION OF WELLS MARINE, INCORPORATED, COSTA MESA, CALIFORNIA (Z-D), AGAINST AWARDS OF CONTRACTS TO THE KEYSTONE MANUFACTURING CORPORATION, BOSTON, MASSACHUSETTS (KEYSTONE), AND TO THE RULON COMPANY, CHICAGO, ILLINOIS (RULON), PURSUANT TO REQUEST FOR PROPOSALS NO. DAAA09-71-R 0030, ISSUED BY THE AMMUNITION PROCUREMENT AND SUPPLY AGENCY, DEPARTMENT OF THE ARMY, FOR THE PROCUREMENT OF DELAY PLUNGERS. FIFTY PERCENT OF THE TOTAL REQUIRED QUANTITY WAS SET ASIDE FOR QUALIFYING LABOR SURPLUS AREA CONCERNS.

Z-D CONTENDED THAT THE AWARDS DO NOT PROVIDE THE LOWEST COST OF THE REQUIREMENT TO THE GOVERNMENT; THAT THE CONTRACTING OFFICER ERRONEOUSLY INTERPRETED THE RESPONSE OF Z-D TO HIS TELEGRAM REQUESTING A LAST AND FINAL OFFER; THAT FURTHER NEGOTIATIONS SHOULD HAVE BEEN CONDUCTED IN VIEW OF THE NARROW MARGIN OF EVALUATED PRICE DIFFERENCES; AND THAT IT IS A CERTIFIED FIRST PREFERENCE LABOR SURPLUS AREA CONCERN. THE ADDITIONAL CONTENTIONS WERE MADE THAT THE PROPOSALS ON THE NON-SET ASIDE QUANTITY APPARENTLY WERE NOT EVALUATED PROPERLY; AND THAT THE CONTRACTING OFFICER SHOULD NOT HAVE REJECTED AS NONRESPONSIVE Z-D'S BEST AND FINAL OFFER ON A COMBINATION OF ALTERNATE C NON-SET-ASIDE AND ALTERNATE B SET-ASIDE QUANTITIES OF THE REQUEST FOR PROPOSALS.

THE REQUEST FOR PROPOSALS STATED A TOTAL REQUIREMENT OF 7,715,750 UNITS OF WHICH 50 PERCENT, OR 3,857,875 UNITS, WAS SET ASIDE FOR QUALIFYING SURPLUS LABOR AREA CONCERNS. PROSPECTIVE OFFERORS WERE ADVISED THAT THE SET-ASIDE QUANTITY WOULD BE AWARDED AFTER THE NON-SET ASIDE QUANTITY. VIEW OF THE POSSIBLE NEED TO MAKE MULTIPLE AWARDS, SPACES WERE PROVIDED FOR PRICES ON THREE ALTERNATE QUANTITIES ON THE NON-SET-ASIDE. THE REQUESTED PRICES WERE TO BE F.O.B. ORIGIN, FOR SHIPMENT BY RAIL AND MOTOR CARRIER, ON ALTERNATE A, B AND C QUANTITIES OF 1,525,000 UNITS, 2,525,000 UNITS AND 3,525,000 UNITS, RESPECTIVELY. THE GOVERNMENT RESERVED THE RIGHT TO MAKE AN AWARD OF THE ALTERNATE QUANTITIES, PLUS OR MINUS 5 PERCENT.

KEYSTONE WAS AWARDED A CONTRACT FOR AN ADJUSTED ALTERNATE C QUANTITY OF 3,701,250 UNITS. THAT COMPANY WAS ADVISED THAT IT WAS BEING CONSIDERED FOR AWARD ON PART OR ALL OF THE SIMILAR SET-ASIDE PORTION BUT THE COMPANY INDICATED THAT IT COULD NOT ACCEPT AN AWARD FOR THE FULL SET-ASIDE QUANTITY. EVENTUALLY KEYSTONE WAS AWARDED A CONTRACT FOR 1,800,000 ADDITIONAL UNITS AND A CONTRACT FOR THE BALANCE OF 1,901,250 UNITS INCLUDED IN THE SET-ASIDE QUANTITY WAS AWARDED TO RULON. BOTH COMPANIES REPORTEDLY ARE CERTIFIED-ELIGIBLE LABOR SURPLUS AREA CONCERNS WITH A FIRST PREFERENCE AND SMALL BUSINESSES. AS SUCH, THEY ARE IN THE FIRST GROUP OF A SEVEN-GROUP ORDER OF PRIORITY FOR NEGOTIATIONS ON THE SET-ASIDE PORTION. Z-D IS REPORTED TO BE LARGE BUSINESS AND QUALIFIED FOR SECOND PRIORITY AS A CERTIFIED-ELIGIBLE CONCERN WITH A FIRST PREFERENCE BUT NOT A SMALL BUSINESS.

IT IS REPORTED THAT NEGOTIATIONS WERE CONDUCTED WITH ALL EIGHT COMPANIES SUBMITTING PROPOSALS. SEPTEMBER 28, 1970, WAS SET AS THE CLOSING DATE FOR NEGOTIATION AND RECEIPT OF LAST AND FINAL OFFERS. BY TELEGRAM RECEIVED ON THE CLOSING DATE, Z-D RESTATED ITS PRICES ON ALTERNATE A AND B QUANTITIES; REVISED ITS PRICE F.O.B. ORIGIN, SHIPMENT BY MOTOR CARRIER, ON THE ALTERNATE C QUANTITY OF 3,525,000 UNITS, TO $0.449 PER UNIT; AND SUBMITTED ADDITIONAL PRICES FOR COMBINATIONS OF SET-ASIDE AND NON-SET-ASIDE QUANTITIES. THE BEST OF THOSE WAS A PRICE OF $0.440 PER UNIT, F.O.B. ORIGIN, FOR SHIPMENT BY MOTOR CARRIER, ON A COMBINATION OF AN ALTERNATE B SET-ASIDE QUANTITY AND THE ALTERNATE C NON-SET-ASIDE QUANTITY.

FOR THE NON-SET-ASIDE ALTERNATE C QUANTITY, KEYSTONE AND RULON QUOTED F.O.B. ORIGIN, MOTOR SHIPMENT, UNIT PRICES OF $0.4445 AND $0.4498. WITH THE CONSIDERATION OF FACTORS OTHER THAN PRICE, SUCH AS TRANSPORTATION COSTS, DISCOUNTS OFFERED FOR PROMPT PAYMENT AND WHETHER THE OFFERORS PROPOSED TO USE GOVERNMENT FURNISHED EQUIPMENT OR FACILITIES, THE THREE PROPOSALS SUBMITTED BY KEYSTONE, RULON AND Z-D ON THE NON-SET-ASIDE ALTERNATE C QUANTITY WERE EVALUATED AT $0.451725, $0.455105 AND $0.458926 PER UNIT, RESPECTIVELY.

THE CONTRACTING OFFICER REJECTED Z-D'S COMBINATION PRICING PROPOSALS ON THE GROUNDS THAT A PROPOSAL BASED ON COMBINATIONS OF SET-ASIDE AND NON-SET -ASIDE FROM AN OFFEROR WHO COULD NOT BE REACHED ON THE ELIGIBILITY SCALE FOR THE SET-ASIDE IS INCONSISTENT WITH THE PURPOSES OF LABOR SURPLUS PROGRAMS.

BY LETTER DATED JANUARY 22, 1971, YOU WERE FURNISHED COPIES OF CERTAIN OF THE MATERIAL WHICH WE RECEIVED FROM THE DEPARTMENT OF THE ARMY IN REGARD TO Z-D'S PROTEST. IN A LETTER DATED FEBRUARY 4, 1971, YOU STATED THAT THE NET FIGURES FOR Z-D AND KEYSTONE WERE NOT PREVIOUSLY AVAILABLE TO YOU. THE REFERRED-TO FIGURES WERE BASED UPON ADJUSTMENTS IN YOUR OWN CALCULATIONS OF THE ELEMENTS CONSIDERED IN EVALUATING PROPOSALS. THE BASIS FOR THE ABOVE-LISTED UNIT PRICE EVALUATIONS OF $0.451725, $0.455105 AND $0.458926, FOR F.O.B. ORIGIN DELIVERY, SHIPMENT BY MOTOR CARRIER, IS AS FOLLOWS:

KEYSTONE RULON Z-D PRODUCTS

QUOTED UNIT PRICES$0.444500 $0.449800 $0.449000

LESS: DISCOUNTS 0.001111 0.001125 0.001123

NET UNIT PRICES $0.443389 $0.448675 $0.447877

MILAN 0.002502 0.001552 0.007270

LONE STAR 0.001524 0.000998 0.001775

GOVERNMENT EQUIPMENT

OR FACILITIES USE 0.004310 0.003880 0.002004

EVALUATED OFFERS PER UNIT $0.451725 $0.455105 $0.458926

YOU CONTEND THAT, IN VIEW OF THE NARROW PRICE DIFFERENCES, THE GOVERNMENT NEGOTIATOR SHOULD HAVE CONTINUED NEGOTIATIONS WITH RESPECT TO THE NON-SET- ASIDE PORTION AFTER RECEIPT OF Z-D'S FINAL OFFER ON THE NON-SET-ASIDE ALTERNATE C QUANTITY.

THE APPLICABLE STATUTE AND IMPLEMENTING REGULATION DO NOT IMPOSE ANY REQUIREMENT FOR MORE THAN ONE ROUND OF WRITTEN OR ORAL DISCUSSIONS WHERE NO MATERIAL CHANGES ARE MADE IN THE REQUIREMENTS. ALL OFFERORS WERE ADVISED OF THE CLOSING DATE FOR THE SUBMISSION OF REVISED PROPOSALS AND THE CONTRACTING OFFICER WAS NOT OBLIGED TO NEGOTIATE WITH ANY OF THE OFFERORS AFTER THE SPECIFIED CLOSING DATE. TO TAKE A CONTRARY VIEW WOULD PERMIT THE NEGOTIATION PROCESS TO BE UNDULY PROTRACTED AND TO INTERFERE WITH THE EFFICIENT DISCHARGE OF THE ADMINISTRATIVE ACTIVITY'S FUNCTIONS.

YOU SUGGEST THE POSSIBILITY THAT RULON WAS GIVEN AN OPPORTUNITY TO MEET KEYSTONE'S PRICE DURING THE PERIOD OF NEGOTIATIONS. THIS WOULD NOT HAVE BEEN IMPROPER IN CARRYING ON NEGOTIATIONS FOR THE SET-ASIDE QUANTITY AFTER AWARD OF THE NON-SET-ASIDE QUANTITY. WE HAVE NO INFORMATION TO INDICATE THAT THE KEYSTONE PRICES WERE DISCLOSED TO ANY OF THE OTHER OFFERORS DURING THE PERIOD OF NEGOTIATIONS ON THE NON-SET ASIDE QUANTITY.

IT IS ARGUED THAT Z-D'S COMBINATION PRICING PROPOSALS SHOULD HAVE BEEN CONSIDERED BECAUSE THE GOVERNMENT RESERVED THE RIGHT TO MAKE THAT COMBINATION OF AWARDS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THE RESERVATION OF RIGHT WAS BASED UPON THE STATED NECESSITY FOR MAKING A SINGLE AWARD OR A COMBINATION OF AWARDS WHICH WOULD SATISFY CURRENT PRODUCTION REQUIREMENTS AND OTHER CONDITIONS. IN OUR OPINION, IT WAS NOT INTENDED AS A BASIS FOR DISREGARDING THE 50 PERCENT SET-ASIDE FOR QUALIFYING LABOR SURPLUS AREA CONCERNS, OR THE STATED ORDER OF PRIORITY AS DEFINED IN SEVEN LISTED GROUPS OF SUCH CONCERNS. INDEED, AS ALREADY INDICATED, SUCH AN INTERPRETATION WOULD BE INCONSISTENT WITH THE PROVISIONS DEALING WITH THE SET-ASIDE AS WELL AS WITH THE ENTIRE CONCEPT UNDERLYING THE LABOR SURPLUS PROGRAM.

Z-D, A DIVISION OF A LARGE BUSINESS CONCERN, QUALIFIED FOR INCLUSION IN THE SECOND PRIORITY CATEGORY FOR THE SET-ASIDE PORTION. IT WAS NOT ENTITLED, BY REASON OF HAVING SUBMITTED A LOW PROPOSAL ON A COMBINATION OF NON-SET-ASIDE AND SET-ASIDE QUANTITIES, TO BE CONSIDERED FOR AWARD ON THE SET-ASIDE QUANTITY AHEAD OF FIRMS IN THE HIGHEST PRIORITY GROUP.

THERE DOES NOT APPEAR TO BE ANY BASIS FOR CONCLUDING THAT THE CONTRACTING OFFICER ERRONEOUSLY INTERPRETED Z-D'S RESPONSE TO HIS TELEGRAM REQUESTING A LAST AND FINAL OFFER, OR THAT THE PROPOSALS ON THE ADJUSTED NON-SET- ASIDE QUANTITY OF 3,701,250 UNITS WERE NOT EVALUATED PROPERLY. THE SUBMISSION OF PROPOSALS FOR COMBINATIONS OF SET-ASIDE AND NON-SET-ASIDE QUANTITIES MAY NOT HAVE BEEN PRECLUDED BY THE TERMS AND CONDITIONS OF THE REQUEST FOR PROPOSALS, AS YOU SUGGEST. HOWEVER, THE GOVERNMENT DID NOT SPECIFICALLY REQUEST PRICES ON SET ASIDE QUANTITIES AND IT WAS CONTEMPLATED THAT AWARDS ON THE SET-ASIDE PORTION OF THE REQUEST FOR PROPOSALS WOULD BE MADE AT PRICES EQUAL TO THE HIGHEST PRICE AWARDED ON THE NON-SET-ASIDE PORTION, ADJUSTED TO REFLECT TRANSPORTATION AND OTHER COST FACTORS WHICH WERE CONSIDERED IN EVALUATING OFFERS ON THE NON-SET- ASIDE PORTION. IT WAS DETERMINED THAT THE PRICE WHICH RULON WOULD NEED TO COMPETE FOR THE SET-ASIDE PORTION WAS $0.446411 PER UNIT, AND THAT IS THE REPORTED PRICE PER UNIT IN THE CONTRACT AWARDED TO RULON.

IN THE CIRCUMSTANCES, WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE CONTRACTS AWARDED TO KEYSTONE AND RULON. YOUR PROTEST IS THEREFORE DENIED.