B-171562(1), MAY 17, 1971

B-171562(1): May 17, 1971

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SELECTION OF A CONTRACTOR WHOSE PERFORMANCE WILL MOST LIKELY RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT REQUIRED CONSIDERATION OF SUCH FACTORS AS AVAILABILITY OF SKILLED AND QUALIFIED PERSONNEL AND THE PROPOSED MANAGEMENT PLAN. TO SELECT A CONTRACTOR SOLELY ON THE BASIS OF THE LOWEST LABOR RATE AS PROTESTANT CONTENDS SHOULD HAVE BEEN DONE WOULD PROVIDE NO ASSURANCE THAT THE OVERALL COST WOULD BE LOWEST. LTD.: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO DYNALECTRON CORPORATION BY THE UNITED STATES ARMY MOBILITY EQUIPMENT COMMAND (MECOM) PURSUANT TO REQUEST FOR QUOTATIONS NO. THE RFQ WAS ISSUED TO 41 FIRMS AND 12 TIMELY RESPONSES WERE RECEIVED. AWARD WAS MADE TO DYNALECTRON ON DECEMBER 4.

B-171562(1), MAY 17, 1971

BID PROTEST - LOWEST OVERALL COST - LABOR RATE DENYING PROTEST OF DYNAMIC SYSTEMS INTERNATIONAL AGAINST THE AWARD TO DYNALECTRON CORP., OF A CONTRACT FOR MAINTENANCE AND REPAIR AS REQUIRED ON COMMERCIAL CONSTRUCTION EQUIPMENT LOCATED IN VIETNAM UNDER AN RFP ISSUED BY THE U.S. ARMY MOBILITY EQUIPMENT COMMAND. SELECTION OF A CONTRACTOR WHOSE PERFORMANCE WILL MOST LIKELY RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT REQUIRED CONSIDERATION OF SUCH FACTORS AS AVAILABILITY OF SKILLED AND QUALIFIED PERSONNEL AND THE PROPOSED MANAGEMENT PLAN; TO SELECT A CONTRACTOR SOLELY ON THE BASIS OF THE LOWEST LABOR RATE AS PROTESTANT CONTENDS SHOULD HAVE BEEN DONE WOULD PROVIDE NO ASSURANCE THAT THE OVERALL COST WOULD BE LOWEST.

TO DYNAMIC SYSTEMS INTERNATIONAL, LTD.:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO DYNALECTRON CORPORATION BY THE UNITED STATES ARMY MOBILITY EQUIPMENT COMMAND (MECOM) PURSUANT TO REQUEST FOR QUOTATIONS NO. DAAK01 Q-1191.

THE RFQ, ISSUED ON AUGUST 4, 1970, WITH A CLOSING DATE OF SEPTEMBER 15, 1970, SOLICITED QUOTATIONS FOR FURNISHING THE WORK AND SERVICES NECESSARY TO ACCOMPLISH TEARDOWN, ANALYSIS, ENGINEERING EVALUATIONS, MAINTENANCE, OVERHAUL, REPAIR, REWORK AND MODIFICATION AS REQUIRED ON COMMERCIAL CONSTRUCTION EQUIPMENT LOCATED IN THE REPUBLIC OF VIETNAM. THE RFQ WAS ISSUED TO 41 FIRMS AND 12 TIMELY RESPONSES WERE RECEIVED. AWARD WAS MADE TO DYNALECTRON ON DECEMBER 4, 1970, FOR THE PERIOD THROUGH JUNE 30, 1971, WITH AN OPTION TO EXTEND PERFORMANCE FOR TWO YEARS.

YOU CONTEND THAT THE AWARD TO DYNALECTRON WAS ERRONEOUS FOR THE FOLLOWING REASONS:

"(A) DEVIATION FROM THE PRESCRIBED REGULATION OF ASPR FOR EVALUATING THE TIME AND MATERIAL CONTRACT CALLED FOR IN REFERENCE (A) IN THAT MECOM EVALUATED THE PROPOSAL AS IF A FIXED PRICE CONTRACT WERE CALLED FOR.

"(B) GROSS ERROR IN THE EVALUATION OF COST IN THAT IT IMPROPERLY REQUIRED THE INJECTION OF AN UNCERTAIN ELEMENT (TOTAL LABOR HOURS) PERMITTING THE WINNER TO PREVAIL WITH CONSIDERABLY HIGHER LABOR RATES AND AN UNCERTAIN ESTIMATE OF FEWER TOTAL LABOR HOURS.

"(C) BAD FAITH ON MECOM'S PART IS NECESSARILY IMPLIED IN THAT IT SET EVALUATION GUIDELINES UNFAIRLY FAVORING THE WINNER AND COMMITTED THE GROSSLY ERRONEOUS COST EVALUATION OF (B)." IT IS YOUR CONTENTION THAT THE AWARD TO DYNALECTRON AT ITS HIGHER LABOR RATES WILL RESULT IN THE GOVERNMENT PAYING AN ADDITIONAL $337,700 FOR PERFORMANCE THROUGH JUNE 30, 1971, AND AN ADDITIONAL $675,400 PER YEAR IF THE OPTION IS EXERCISED.

IT IS REPORTED THAT THE SUBJECT CONTRACT IS A CONTINUATION OF THE SAME SERVICES PROVIDED UNDER A PREVIOUS CONTRACT WITH DYNALECTRON. SINCE THERE WAS NO WAY TO PROJECT THE EXTENT OF THE WORK THAT WOULD BE INVOLVED, IT WAS DETERMINED THAT A TIME AND MATERIALS CONTRACT WOULD BE THE MOST APPROPRIATE TYPE TO USE. FURTHER, IT WAS DECIDED THAT IN VIEW OF THE USE OF A TIME AND MATERIALS CONTRACT AND THE HIGHLY SENSITIVE WORK INVOLVED, GREATER EMPHASIS SHOULD BE PLACED ON THE CAPABILITY OF THE PROSPECTIVE CONTRACTOR TO PERFORM THAN ON THE LABOR RATES, PER DIEM RATES, AND ESTIMATED TRANSPORTATION COSTS QUOTED. THEREFORE, THE RFQ PROVIDED THAT IN THE EVALUATION, "PRIME CONSIDERATION WILL BE GIVEN TO THE FOLLOWING FACTORS IN DESCENDING ORDER OF IMPORTANCE:"

"D 2.

"A. AVAILABILITY OF SKILLED AND QUALIFIED PERSONNEL (QUANTITY AND CATEGORY ON HAND AND THOSE TO BE EMPLOYED).

"B. CONTRACTOR'S PROPOSED MANAGEMENT PLAN FOR THE CONTRACT TO INCLUDE:

(1) MAN-LOADING, INCLUDING SUPERVISORY, MANAGEMENT AND OPERATIONAL PERSONNEL.

(2) REPAIR PARTS SUPPLY SYSTEM.

(3) SYSTEM FOR CONTROL OF GOVERNMENT-FURNISHED PARTS, PROPERTY, EQUIPMENT, ETC.

(4) CONTRACTOR'S RECOGNITION OF THE PROBLEMS INHERENT IN THE NATURE AND LOCATION OF THE PROPOSED WORK AND SERVICES, TO INCLUDE IDENTIFICATION OF CRITICAL PROBLEM AREAS AND PROPOSED SOLUTIONS.

"C. CONTRACTOR'S PAST EXPERIENCE ON MAINTENANCE AND REPAIR OF SIMILAR CONSTRUCTION EQUIPMENT.

"D. OFFEROR'S LABOR RATES, PER DIEM RATES AND ESTIMATED TRANSPORTATION COSTS.

"D 4. THE GOVERNMENT, AFTER EVALUATION OF ALL FACTORS OUTLINED ABOVE, INTENDS TO AWARD A CONTRACT TO THE CONTRACTOR WHOSE OFFER IS THE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED."

IN ADDITION, SECTION D REQUIRED SUBMISSION OF, AMONG OTHER THINGS, A PRICING PROPOSAL IN TWO PARTS SHOWING (1) STRAIGHT TIME AND OVERTIME HOURLY RATES FOR EACH LABOR CLASSIFICATION SPECIFIED AND (2) A BREAKDOWN OF THE TOTAL ESTIMATED COST FOR THE ENTIRE PROJECT, TO INCLUDE LABOR, TRAVEL, PER DIEM AND OTHER DIRECT AND INDIRECT COSTS; A PROGRAM MANAGEMENT PLAN SHOWING THE APPROACH OR METHOD OF ACCOMPLISHING THE WORK; PROPOSED MAN-LOADING BY NUMBER AND LABOR CLASSIFICATION FOR EACH SERVICE LOCATION SPECIFIED BASED ON THE LIST OF EQUIPMENT AT EACH SITE; AND PROPOSED TOTAL MAN-LOADING BY NUMBER AND CLASSIFICATION FOR THE ENTIRE PROJECT; AND PERSONNEL RESUMES FOR EMPLOYEES IN EIGHT CLASSIFICATIONS. THE RFQ SPECIFIED 26 SITES WHERE PERFORMANCE WOULD BE REQUIRED, AND CONTAINED A LIST OF THE NUMBER, TYPE AND LOCATION OF THE EQUIPMENT. AMENDMENT 1 TO THE RFQ INCLUDED THE FOLLOWING PROVISION CONCERNING EVALUATION OF COST:

"THE COST CRITERIA TO BE USED IN EVALUATION WILL BE THE TOTAL ESTIMATED COST TO THE GOVERNMENT, WHICH WILL BE COMPUTED BY APPLYING THE CONTRACTOR'S PROPOSED PER DIEM RATES AND LABOR BILLING RATES TO CONTRACTOR'S PROPOSED STAFFING. CONTRACTOR'S PROPOSED OTHER FORESEEABLE COST WILL ALSO BE A CRITERIA WHICH WILL BE USED TO ARRIVE AT A TOTAL ESTIMATED COST FOR THE SERVICES."

AFTER RECEIPT OF THE QUOTATIONS, A CONTRACTING OFFICER'S TEAM PERFORMED A TECHNICAL EVALUATION DURING THE PERIOD SEPTEMBER 21 THROUGH OCTOBER 8, 1970, IN ACCORDANCE WITH THE EVALUATION PLAN DEVELOPED PRIOR THERETO. THE TECHNICAL EVALUATION WAS BASED ON THE FACTORS LISTED IN SECTION D 2 A, B AND C, AND APPLICATION THERETO OF WEIGHTS OF 40, 30 AND 20 PERCENT, RESPECTIVELY, AS ESTABLISHED IN THE EVALUATION PLAN. THE FOLLOWING RANKING RESULTED FROM THE INITIAL EVALUATION:

RANKING FIRM POINTS

1 DYNALECTRON 368.96

2 6 360.96

3 7 340.52

4 3 333.60

5 2 287.44

6 9 225.68

7 1 204.68

8 8 191.58

9 4 168.30

10 11 160.92

11 DYNAMIC 137.18

12 10 92.68

THE EVALUATION TEAM CONCLUDED THAT THE FIRST FOUR FIRMS WERE IN THE ZONE OF CONSIDERATION. HOWEVER, AS REQUIRED BY THE EVALUATION PLAN, THE REPORT INCLUDED INFORMATION AS TO THE WEAKNESSES IN EACH QUOTATION. DURING THE PERIOD OCTOBER 19 THROUGH NOVEMBER 9, 1970, THE CONTRACTING OFFICER CONDUCTED NEGOTIATIONS WITH ALL 12 FIRMS AND THEY WERE ADVISED OF THEIR RESPECTIVE AREAS OF WEAKNESS AND AFFORDED AN OPPORTUNITY TO MAKE REVISIONS. AFTER REVISIONS WERE MADE, THE QUOTATIONS WERE REEVALUATED. THE RANKING REMAINED THE SAME THROUGH FIRM NUMBER NINE. YOUR POINT TOTAL INCREASED TO 146.48 AND DYNALECTRON'S POINT TOTAL INCREASED TO 375.46. THE EVALUATED ESTIMATED COST OF YOUR QUOTATION WAS $2,172,453.20 AND DYNALECTRON'S WAS $1,531,703.20. DYNALECTRON'S ESTIMATED COST WAS THE LOWEST OF THE SIX HIGHEST TECHNICALLY RANKED QUOTATIONS. SUBSEQUENT TO THE FINAL TECHNICAL EVALUATION, A 10 PERCENT WEIGHT FACTOR WAS APPLIED TO COST. THE LOW QUOTATION WAS ASSIGNED THE MAXIMUM OF 10 PERCENT AND A PERCENTAGE RATIO BETWEEN THAT QUOTATION AND THE OTHERS WAS ESTABLISHED. THE RESPECTIVE SCORES FOR COST WERE ADDED TO THE TECHNICAL POINT SCORES WITH NO RESULTING CHANGE IN THE RANKINGS.

THE SUBJECT PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A)(10), AS IMPLEMENTED BY PARAGRAPH 3-210.2(VIII) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). SECTION 2302, TITLE 10 U.S.C., DEFINES THE TERM "NEGOTIATE" AS MEANING TO "MAKE WITHOUT FORMAL ADVERTISING." IN A NEGOTIATED PROCUREMENT, THE RULES OF FORMALLY ADVERTISED, COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER, ARE NOT CONTROLLING AND A CONTRACTING OFFICER MAY PROPERLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT GOAL. THE GOAL OF THIS PROCUREMENT WAS TO PROCURE AN INDEFINITE AND INDETERMINABLE AMOUNT OF SPECIFIED SERVICES FROM A RESPONSIBLE SOURCE AT FAIR AND REASONABLE PRICES CALCULATED TO RESULT IN THE LOWEST ULTIMATE OVERALL COST TO THE GOVERNMENT. SEE ASPR 3-801.1. THIS CONNECTION, ASPR 3-806(A) STATES THAT "THE OBJECTIVE OF THE CONTRACTING OFFICER SHALL BE TO NEGOTIATE FAIR AND REASONABLE PRICES IN WHICH DUE WEIGHT IS GIVEN TO ALL RELEVANT FACTORS, INCLUDING THOSE IN 3- 101." ASPR 3-101 STATES THAT WHEN NEGOTIATIONS ARE ENTERED INTO, DUE ATTENTION SHALL BE GIVEN TO A NUMBER OF FACTORS, INCLUDING "CONSIDERATION OF THE SOUNDNESS OF PROSPECTIVE CONTRACTORS' MANAGEMENT OF LABOR RESOURCES, INCLUDING WAGE RATES, NUMBER OF WORKERS AND TOTAL ESTIMATED LABOR HOURS."

IT IS OUR OPINION THAT UNDER THE FOREGOING PRINCIPLES, AND IN VIEW OF THE NATURE OF THE SERVICES BEING PROCURED, AND THE TYPE OF CONTRACT INVOLVED, SELECTION OF A CONTRACTOR WHOSE PERFORMANCE WOULD LIKELY RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT REQUIRED CONSIDERATION OF AND EVALUATION IN ACCORDANCE WITH SUCH FACTORS AS WERE INCLUDED IN SECTION D 2 OF THE RFQ. TO SELECT THE CONTRACTOR SOLELY ON THE BASIS OF THE LOWEST LABOR RATE, AS YOU CONTEND SHOULD HAVE BEEN DONE, WOULD PROVIDE NO ASSURANCE THAT THE OVERALL COST WOULD BE THE LOWEST. IN THIS CONNECTION, THE CONTRACTING OFFICER REPORTS THAT YOU PROPOSED USING ALMOST TWICE THE NUMBER OF PERSONNEL TO PERFORM THE SAME PROJECT AS DYNALECTRON. THE NUMBER OF PERSONNEL PROPOSED BY DYNALECTRON WAS IN LINE WITH BOTH THE GOVERNMENT'S ESTIMATE AND THE NUMBER OF PERSONNEL ACTUALLY REQUIRED IN PERFORMANCE OF THE PREVIOUS CONTRACT. THIS OVERLOADING OF PROPOSED MANPOWER NOT ONLY ACCOUNTS FOR THE CONSIDERABLY HIGHER ESTIMATED COST OF YOUR QUOTATION PREVIOUSLY NOTED, BUT ALSO INDICATES A LACK OF UNDERSTANDING OF THE PROJECT AND WORK REQUIREMENTS. SEE B-170027, OCTOBER 20, 1970.

CONCERNING YOUR CONTENTION THAT THE WEIGHTS OF VARIOUS FACTORS WERE NOT DISCLOSED, WE HAVE HELD THAT OFFERORS SHOULD BE INFORMED OF THE RELATIVE WEIGHT OR IMPORTANCE ATTACHED TO EACH FACTOR. 49 COMP. GEN. 229 (1969). THE RFQ WAS DEFICIENT IN THIS RESPECT. HOWEVER, IN VIEW OF THE RELATIVELY LOW TECHNICAL SCORE RECEIVED BY YOUR FIRM AND THE CONSIDERABLY GREATER ESTIMATED COST OF YOUR QUOTATION, WE DO NOT BELIEVE YOU WERE PREJUDICED BY THIS DEFICIENCY. SEE B-169764, DECEMBER 23, 1970; B-170449, NOVEMBER 17, 1970. FURTHERMORE, WE SEE NO BASIS FOR CONCLUDING THAT THE EVALUATION FACTORS WERE DESIGNED TO FAVOR DYNALECTRON.

ACCORDINGLY, THERE IS NO BASIS FOR OUR OFFICE TO DISTURB THE AWARD AS MADE.