B-171578(1), JUL 28, 1971

B-171578(1): Jul 28, 1971

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PROTESTANT WAS PRECLUDED FROM PARTICIPATING IN THE SECOND STEP OF THE PROCUREMENT BECAUSE ITS OFFER FAILED TO MEET THE REQUIRED DELIVERY SCHEDULE. BECAUSE ONLY ONE ACCEPTABLE PROPOSAL WAS RECEIVED. NEGOTIATIONS WERE CONDUCTED WITH THAT PROPOSER AND SUCH WAS PROPER UNDER THE RFP. WHILE PROTESTANT DENIES THE ADMINISTRATIVE STATEMENTS THAT IT WAS INFORMED OF THE NECESSITY FOR MEETING THE DELIVERY SCHEDULE SET OUT IN THE RFP. THE 350 OUT OF 6370 POINTS WHICH WERE ASSIGNED FOR PROOF THAT THE DELIVERY SCHEDULE WOULD BE MET MAY NOT PROPERLY BE CONSTRUED AS A RELAXATION OF THE SPECIFIED DELIVERY REQUIREMENTS. INC.: FURTHER REFERENCE IS MADE TO YOUR TELEFAX DATED DECEMBER 21. DUE TO LACK OF DEFINITIVE SPECIFICATIONS FOR THE CENTERS IT WAS DETERMINED THAT THE PROCUREMENT WOULD BE NEGOTIATED IN TWO STEPS.

B-171578(1), JUL 28, 1971

BID PROTEST - DELIVERY SCHEDULE - BID RESPONSIVENESS - TWO-STEP PROCUREMENT DECISION DENYING PROTEST AGAINST AWARD OF A NEGOTIATED CONTRACT TO PRITCHARD-KING, INC., UNDER AN RFP ISSUED BY HEW FOR THE PROCUREMENT OF THREE MOBILE HEALTH EXAMINATION CENTERS FOR THE NATIONAL CENTER FOR HEALTH STATISTICS. PROTESTANT WAS PRECLUDED FROM PARTICIPATING IN THE SECOND STEP OF THE PROCUREMENT BECAUSE ITS OFFER FAILED TO MEET THE REQUIRED DELIVERY SCHEDULE. BECAUSE ONLY ONE ACCEPTABLE PROPOSAL WAS RECEIVED, NEGOTIATIONS WERE CONDUCTED WITH THAT PROPOSER AND SUCH WAS PROPER UNDER THE RFP. WHILE PROTESTANT DENIES THE ADMINISTRATIVE STATEMENTS THAT IT WAS INFORMED OF THE NECESSITY FOR MEETING THE DELIVERY SCHEDULE SET OUT IN THE RFP, SUCH DENIAL DOES NOT CONSTITUTE SUFFICIENT EVIDENCE TO JUSTIFY A REJECTION BY THE COMP. GEN. OF THE ADMINISTRATIVE VERSION OF THE FACTS. FURTHER, THE 350 OUT OF 6370 POINTS WHICH WERE ASSIGNED FOR PROOF THAT THE DELIVERY SCHEDULE WOULD BE MET MAY NOT PROPERLY BE CONSTRUED AS A RELAXATION OF THE SPECIFIED DELIVERY REQUIREMENTS.

TO MEDICAL COACHES, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEFAX DATED DECEMBER 21, 1970, AND SUPPLEMENTING LETTERS DATED JANUARY 8, MARCH 5, AND APRIL 7, 1971, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER REQUEST FOR PROPOSALS (RFP) HSM-110-NHS-14(1), ISSUED BY THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE (HEW).

THE RFP CONTEMPLATED A FIXED PRICE CONTRACT FOR THE PROCUREMENT OF THREE MOBILE HEALTH EXAMINATION CENTERS FOR THE NATIONAL CENTER FOR HEALTH STATISTICS (NCHS), EACH CENTER CONSISTING OF THREE INTERCONNECTING SEMITRAILER VANS. DUE TO LACK OF DEFINITIVE SPECIFICATIONS FOR THE CENTERS IT WAS DETERMINED THAT THE PROCUREMENT WOULD BE NEGOTIATED IN TWO STEPS. THE FIRST STEP WAS TO CONSIST OF SOLICITATION, SUBMISSION, EVALUATION AND, IF NECESSARY, DISCUSSIONS OF TECHNICAL PROPOSALS TO DETERMINE THE ACCEPTABILITY OF THE CENTERS OFFERED. THE SECOND STEP WAS TO INCLUDE THE SOLICITATION AND SUBMISSION OF PRICE PROPOSALS BY THOSE FIRMS WHICH SUBMITTED ACCEPTABLE PROPOSALS UNDER THE FIRST STEP. IN ORDER TO MEET ESTABLISHED SCHEDULES FOR THE ENTIRE SURVEY TO MEASURE AND MONITOR THE NUTRITIONAL STATUS OF THE AMERICAN PEOPLE, IT WAS DETERMINED THAT TWO OF THE THREE MOBILE EXAMINATION CENTERS SHOULD BE DELIVERED NOT LATER THAN APRIL 1971. BASED ON THE LACK OF DEFINITIVE SPECIFICATIONS AS WELL AS THE URGENCY OF THE PROCUREMENT, THE USE OF FORMAL ADVERTISING WAS NOT CONSIDERED FEASIBLE AND NEGOTIATION PURSUANT TO THE AUTHORITY OF 41 U.S.C. 252(C)(10), AS IMPLEMENTED BY PARAGRAPH 1-3.210(A)(13) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), WAS AUTHORIZED.

A SYNOPSIS OF THE PROPOSED PROCUREMENT WAS PUBLISHED ON SEPTEMBER 22, 1970, IN THE COMMERCE BUSINESS DAILY REQUESTING ORGANIZATIONS HAVING EXPERIENCE AND CAPABILITIES IN CONSTRUCTION OF LARGE SEMITRAILER VANS DESIGNED FOR MOBILE EXAMINATION UNITS, TO SUBMIT WRITTEN REQUESTS FOR COPIES OF THE RFP. EIGHTEEN FIRMS RESPONDED. EIGHT ADDITIONAL FIRMS WERE RECOMMENDED BY THE PROJECT OFFICER, MAKING A TOTAL OF 26 FIRMS WHICH WERE SOLICITED FOR UNPRICED TECHNICAL PROPOSALS ON OCTOBER 7, 1970. TEN FIRMS RESPONDED BUT DECLINED TO SUBMIT PROPOSALS, TEN DID NOT RESPOND, AND TECHNICAL PROPOSALS WERE RECEIVED FROM THE FOLLOWING:

1. ALUMINUM BODY CORPORATION

2. ARO CORPORATION

3. LYNCOACH AND TRUCK COMPANY, INC.

4. MEDICAL COACHES, INC.

5. MET PRO WATER TREATMENT CORPORATION

6. PRITCHARD-KING, INC.

THE PROPOSALS WERE SUBMITTED FOR TECHNICAL EVALUATION ON OCTOBER 29, 1970, AND THE PROPOSALS SUBMITTED BY ALUMINUM BODY CORPORATION AND MET PRO WATER TREATMENT CORPORATION WERE FOUND TO BE NONRESPONSIVE.

DURING THE PERIOD OF NOVEMBER 10-12, 1970, MEETINGS WERE HELD WITH EACH OF THE FOUR REMAINING POTENTIAL CONTRACTORS TO CLARIFY THOSE TECHNICAL AREAS IN THEIR PROPOSALS WHICH WERE UNCLEAR OR INCOMPLETE, TO CONDUCT NEGOTIATIONS, AND TO PERMIT EACH FIRM TO SUBMIT ANY REVISIONS RESULTING FROM THE NEGOTIATIONS. THE RECORD SHOWS THE FOLLOWING SUMMARIES OF THE MEETINGS HELD WITH EACH OF THE FOUR CONTRACTORS:

(A) ARO CORPORATION - IT WAS DETERMINED THAT THIS OFFEROR PROPOSED TO USE AN "OFF-THE-SHELF" COMMERCIAL INSULATED FREIGHT VAN, WHEREAS THE RFP SPECIFICALLY REQUIRED A CUSTOM BUILT TYPE OF BODY, DESIGNED TO MEET FUNCTIONAL REQUIREMENTS OF THE HEALTH EXAMINATION CENTERS. IT WAS POINTED OUT TO ARO THAT THIS WAS AN ESSENTIAL REQUIREMENT IN THE EVALUATION AND ACCEPTANCE OF A PROPOSAL.

(B) LYNCOACH AND TRUCK COMPANY - AFTER CLARIFICATION OF TECHNICAL AREAS, THE REPRESENTATIVE INDICATED THE NEED TO CONFER WITH MANAGEMENT AND TECHNICAL PERSONNEL AT HIS HOME OFFICE IN ORDER TO FULLY ANSWER ALL QUESTIONS AND, ALTHOUGH ADVISED THAT TIME WOULD BE PROVIDED FOR RESUBMISSION OF ADDITIONAL INFORMATION, THE CONTRACTOR'S REPRESENTATIVE INDICATED THAT HIS COMPANY PROBABLY WOULD NOT RESPOND DUE TO A SEASONAL UNAVAILABILITY OF PERSONNEL TO WORK ON PROPOSALS.

(C) MEDICAL COACHES, INC. - YOUR COMPANY SENT ITS WASHINGTON REPRESENTATIVE TO THE MEETING CONVENED ON NOVEMBER 12, 1970. DUE TO HIS INSUFFICIENT FAMILIARITY WITH THE PROPOSAL TO ANSWER TECHNICAL QUESTIONS AND LACK OF AUTHORITY TO COMMIT YOUR COMPANY WITH RESPECT THERETO, A SECOND MEETING WAS HELD ON NOVEMBER 13, 1970, WITH YOUR PRESIDENT AND THE WASHINGTON REPRESENTATIVE. DISCUSSIONS CENTERED ON THE CRITICAL FACTOR OF DELIVERY WHICH WAS THE MAJOR AREA OF CONCERN TO THE GOVERNMENT WITH RESPECT TO YOUR PROPOSAL, SINCE YOU HAD FAILED TO SUBMIT A PRODUCTION SCHEDULE AS SPECIFIED IN THE RFP AND IT WAS NOT POSSIBLE TO DETERMINE IF THE PROPOSAL WAS RESPONSIVE TO THE DELIVERY REQUIREMENTS. YOUR PRESIDENT DISCLOSED THAT A MINIMUM OF FIVE MONTHS FROM DATE OF AWARD WOULD BE REQUIRED FOR DELIVERY OF THE FIRST TWO CENTERS AND SEVEN MONTHS FOR THE THIRD CENTER. (THE RFP SPECIFIED FOUR MONTHS AND SIX MONTHS, RESPECTIVELY.) HOWEVER, THE GOVERNMENT'S NEGOTIATORS EMPHASIZED THE CRITICAL IMPORTANCE OF MEETING THE SPECIFIED DELIVERY SCHEDULE AND THAT THIS REQUIREMENT COULD NOT BE RELAXED. AS A RESULT, YOUR REPRESENTATIVES AGREED TO CAREFULLY REVIEW THIS FACTOR IN THE SUBMISSION OF PRODUCTION SCHEDULES CONFIRMING THE NEGOTIATIONS.

(D) PRITCHARD-KING, INC. - ON NOVEMBER 10, 1970, A MEETING WAS CONVENED WITH COMPANY REPRESENTATIVES AND A LIST OF TECHNICAL ITEMS WAS REVIEWED IN DETAIL TO THE SATISFACTION OF BOTH PARTIES.

AT THE CONCLUSION OF EACH MEETING, EACH OFFEROR WAS GIVEN AN OPPORTUNITY TO SUBMIT REVISIONS AND/OR CONFIRMATION OF TECHNICAL PROPOSALS RESULTING FROM THE NEGOTIATIONS. EACH WAS ADVISED THAT THE CLOSING TIME AND DATE FOR SUBMISSION OF REVISIONS WAS 4:00 P.M. ON NOVEMBER 18, 1970, AND THAT ALL OTHER TERMS AND CONDITIONS OF THE RFP REMAINED IN EFFECT. THIS INFORMATION WAS CONFIRMED BY TELEGRAM TO EACH ON NOVEMBER 13, 1970.

ON NOVEMBER 18, 1970, REVISIONS AND CONFIRMATION OF NEGOTIATIONS WERE RECEIVED FROM ARO CORPORATION, YOUR COMPANY, AND PRITCHARD-KING, INC. LYNCOACH AND TRUCK COMPANY DID NOT RESPOND UNTIL DECEMBER 2, 1970, WHEN A LETTER WAS RECEIVED ADVISING OF THEIR INTENTION NOT TO PARTICIPATE FURTHER IN THIS PROCUREMENT. ARO CORPORATION DID NOT RESOLVE THE MAJOR OBJECTION TO ITS PROPOSAL WHICH WAS THE USING OF A COMMERCIAL INSULATED FREIGHT VAN AS ITS BASIC UNIT AND THE PROPOSAL WAS NOT ACCEPTABLE. THE PRITCHARD-KING ORGANIZATION PROVIDED FURTHER CLARIFICATION OF ITS PROPOSAL WHICH WAS ACCEPTABLE.

YOUR RESPONSE RESOLVED SOME DETAILS BUT IT DID NOT SHOW COMPLIANCE WITH THE DELIVERY REQUIREMENTS SPECIFIED IN THE RFP. SPECIFICALLY, YOUR LAST OFFER DATED NOVEMBER 16, 1970, PROPOSED THAT IF AN ORDER BY THE GOVERNMENT WAS PLACED BY NOVEMBER 20, 1970, DELIVERY ON THE FIRST CENTER WOULD BE APRIL 15-20, 1971, DELIVERY OF THE SECOND CENTER WOULD BE MADE JUNE 15, 1971, AND DELIVERY OF THE THIRD CENTER WOULD BE MADE AUGUST 15, 1971. YOU STATED FURTHER THAT IF AN ORDER BY THE GOVERNMENT WAS NOT PLACED UNTIL DECEMBER 20, 1970, THE DELIVERY OF THE FIRST CENTER WOULD BE MAY 15-20. THE ABOVE DELIVERY DATES WERE ALSO QUALIFIED BY YOUR STATEMENT THAT THE PRODUCTION SCHEDULE WAS PREDICATED UPON THE DATES WHEN TRAILER PLATFORMS WOULD BE DELIVERED FROM THE TRAILER CHASSIS MANUFACTURER.

IN THE INTERESTS OF SUSTAINING THE COMPETITIVE ASPECTS OF THE PROCUREMENT, THE PROGRAM OFFICE WAS REQUESTED TO GIVE CAREFUL CONSIDERATION TO THE POSSIBILITY OF RELAXING THE GOVERNMENT'S REQUIREMENTS IN THE AREAS OF TECHNICAL AND DELIVERY REQUIREMENTS IN ORDER TO PERMIT FURTHER CONSIDERATION OF ARO'S AND YOUR PROPOSALS. DUE TO THE FACT THAT A CUSTOM-BUILT TRAILER WAS CONSIDERED CRITICAL TO THE LIFE AND PERFORMANCE REQUIREMENTS, THE PROGRAM COULD NOT ACCEPT THE DEVIATION PROPOSED BY ARO. SINCE THE SPECIFIED DELIVERY SCHEDULES ON THE FIRST TWO CENTERS WERE CONSIDERED ESSENTIAL IN ORDER TO AVOID SERIOUS DELAY IN THE PROGRAM AND SUBSTANTIAL DAMAGE TO THE GOVERNMENT, NCHS REITERATED THAT DELIVERY AS REQUIRED IN THE RFP MUST REMAIN FIRM.

SINCE ONLY THE PROPOSAL OF PRITCHARD-KING, INC., WAS CONSIDERED TO BE ACCEPTABLE FOR SOLICITATION OF PRICE PROPOSALS UNDER THE SECOND STEP OF THIS PROCUREMENT, IT WAS ADMINISTRATIVELY DETERMINED THAT A FINAL CONFIRMATION OF THE DELIVERY SCHEDULE SHOULD BE OBTAINED FROM THE DIRECTOR, NCHS, AND THAT THE CONTRACTING OFFICER SHOULD PLACE A CALL TO YOUR COMPANY TO RECONFIRM ITS PROPOSED DELIVERY SCHEDULE. THE DIRECTOR DETERMINED THAT THE DELIVERY SCHEDULE COULD NOT BE RELAXED AND A CALL WAS MADE TO YOUR COMPANY ON DECEMBER 1, 1970. IT IS REPORTED THAT YOUR PRESIDENT RECONFIRMED THE COMPANY'S QUOTED DELIVERY SCHEDULE AND STATED THAT THE FIRM WAS NOT IN A POSITION TO MEET THE RFP DELIVERY REQUIREMENTS. FROM THIS IT WAS DETERMINED THAT YOUR PROPOSAL COULD NOT BE GIVEN FURTHER CONSIDERATION FOR THIS PROCUREMENT. ON THE SAME DATE, A REQUEST FOR A FIXED-PRICE PROPOSAL WAS SENT TO PRITCHARD-KING, INC. ON DECEMBER 7, 1970, PRITCHARD-KING, INC., SUBMITTED ITS FIXED-PRICE PROPOSAL. IN ORDER FOR THE CONTRACTOR TO MEET THE DELIVERY SCHEDULES IT WAS FOUND NECESSARY TO PROVIDE IMMEDIATE CONTRACTUAL AUTHORIZATION TO COMMENCE PERFORMANCE OF WORK PENDING COMPLETION OF AN AUDIT REVIEW AS REQUIRED BY FPR 1-3.809(B), AND FINAL NEGOTIATION OF THE CONTRACT. LETTER OF INTENT TO EXECUTE A DEFINITIVE CONTRACT FOR THE ARTICLES AND SERVICES DESCRIBED IN THE RFP WAS NEGOTIATED WITH PRITCHARD-KING, INC., ON DECEMBER 14, 1970, WHICH PROVIDED FOR DEFINITIZATION WITHIN 60 DAYS FROM DATE OF AWARD. WE ARE ADVISED THAT CONTRACT NO. HSM-110-71 48 WAS DEFINITIZED ON JANUARY 22, 1971, WITH PRITCHARD-KING, INC., AT A FIXED PRICE ROUNDED TO $373,500.00. THE CONTRACT WAS DATED FEBRUARY 16, 1971, AND NOTICE OF THE AWARD WAS PUBLISHED IN THE COMMERCE BUSINESS DAILY ON MARCH 1, 1971.

BY LETTER DATED DECEMBER 16, 1970, RECEIVED BY YOU ON DECEMBER 21, 1970, YOU WERE ADVISED THAT YOUR TECHNICAL PROPOSAL DID NOT MEET THE GOVERNMENT'S DELIVERY REQUIREMENTS AS SPECIFIED IN THE RFP, AND YOUR COMPANY WOULD THEREFORE NOT BE SOLICITED FOR PRICES UNDER THE SECOND STEP OF THE PROCUREMENT.

YOU PROTEST THAT YOU WERE NOT ALLOWED TO PARTICIPATE IN THE SECOND STEP OF THE ABOVE PROCUREMENT, AND THE ENTIRE MANNER IN WHICH THE NEGOTIATIONS WERE HANDLED BY HEW. YOU STATE THAT IT IS TRUE YOU WERE TOLD THE GOVERNMENT DESIRED DELIVERY OF THOSE UNITS ON APRIL 1, 1971, FOR PROJECTS COMMENCING ON THAT DATE, BUT THAT NO EMPHASIS WAS PLACED ON THE DELIVERY DATE, AND YOUR REPRESENTATIVES WERE ADVISED DURING YOUR PROPOSAL DISCUSSION MEETINGS OF NOVEMBER 12 AND 13, 1970, THAT THE PROJECTS SHOULD HAVE BEEN STARTED IN 1970 AND THAT SOME OF THE GOVERNMENT FURNISHED EQUIPMENT HAD BEEN PROCURED IN 1969. YOU CATEGORICALLY DENY THAT IN EITHER MEETING YOUR REPRESENTATIVES WERE TOLD YOUR DELIVERY SCHEDULE WAS UNACCEPTABLE, AND YOU ASK WHY ONLY 350 POINTS, OF THE TOTAL 6370 SCORING POINTS, WERE ALLOTTED TO DELIVERY IN THE TECHNICAL EVALUATION IF THE SPECIFIED DELIVERY DATES WERE OF SUCH IMPORTANCE. YOU SAY YOU SINCERELY FEEL THAT BECAUSE AN EXCEPTION TO YOUR PROPOSED DELIVERY WAS NOT TAKEN BY THE GOVERNMENT AT EITHER MEETING, AND BECAUSE OF THE LOW SCORE ASSIGNED TO DELIVERY, YOU WERE DEFINITELY MISLED BY THE GOVERNMENT.

IN ADDITION, YOU NOTE THE STATEMENT IN THE CONTRACTING OFFICER'S REPORT THAT THE CONTRACT CONTAINS A PROVISION FOR REDUCTION OF PROFIT FOR LATE DELIVERY, AND YOU QUESTION THE PROPRIETY OF A DAMAGE PROVISION WHICH ALLOWS THE CONTRACTOR A PROFIT, IRRESPECTIVE OF THE COST TO THE GOVERNMENT OF A LATE DELIVERY, AND WHICH REQUIRES THE GOVERNMENT TO ESTABLISH THAT THE CONTRACTOR HAS MADE A PROFIT BEFORE THE DAMAGE PROVISION MAY BE INVOKED. YOU REQUEST BEFORE A FINAL DECISION IS RENDERED ON YOUR PROTEST THAT THIS OFFICE DETERMINE WHETHER OR NOT DELIVERY ON ITEMS 1 AND 2 HAVE BEEN MADE IN ACCORDANCE WITH THE CONTRACT, AS YOU FEEL THAT THIS HAS A DIRECT BEARING ON THIS CASE. YOU ALSO ASK WHY HEW IS PERMITTED TO PROCURE THESE CENTERS THROUGH ITS OWN PURCHASING DEPARTMENT, AS YOU BELIEVE PROCUREMENT OF ALL TRAILERS, REGARDLESS OF THE TYPE, SHOULD BE MADE THROUGH THE GENERAL SERVICES ADMINISTRATION. FINALLY, YOU REQUEST THE IMMEDIATE CANCELLATION OF THE CONTRACT BY HEW IF YOUR PROTEST IS RULED UPON FAVORABLY, OR THE REIMBURSEMENT OF YOUR EXPENSES IN THE AMOUNT OF $7,500, FOR PREPARING YOUR TECHNICAL PROPOSAL.

UNDER THE FIRST STEP OF THIS PROCUREMENT OFFERORS WERE AUTHORIZED AND ENCOURAGED TO SUBMIT MULTIPLE TECHNICAL PROPOSALS PRESENTING DIFFERENT BASIC APPROACHES, PROVIDED THAT EACH PROPOSAL SHOULD MEET THE CRITERIA CONTAINED IN THE RFP. THE RFP FURTHER GAVE THE CRITERIA UPON WHICH THE EVALUATION OF THE PROPOSALS WOULD BE BASED. EXHIBIT 1 TO THE RFP INCLUDED THE REQUIREMENT THAT THE TECHNICAL PROPOSAL BE SO SPECIFIC, DETAILED AND COMPLETE AS TO CLEARLY AND FULLY DEMONSTRATE THAT THE OFFEROR HAD A THOROUGH UNDERSTANDING OF THE REQUIREMENTS FOR, AND THE TECHNICAL PROBLEMS INHERENT IN THE DESIGN, MANUFACTURE AND DELIVERY OF THE EQUIPMENT, AND HAD A VALID AND PRACTICAL SOLUTION FOR SUCH PROBLEMS. THE PROPOSAL WAS REQUIRED TO INCLUDE MATERIAL, DEMONSTRATING THE METHOD BY WHICH THE REQUIREMENTS OF THE RFP WOULD BE MET, AND PRODUCTION SCHEDULES FOR VARIOUS COMPONENTS OF THE EQUIPMENT. THE RFP, INCLUDED THE SPECIAL PROVISIONS OF THE PROPOSED CONTRACT, WHICH SET FORTH THE DELIVERY REQUIREMENTS FOR THE CENTERS WITHIN THE TIME PERIODS SHOWN AS FOLLOWS: ITEM DELIVERY QUANTITY DESTINATION DELIVERY TIME

1 MOBILE HEALTH EXAMINATION 1 BALTIMORE, FOUR (4)

CENTERS CONSISTING OF MD. MONTHS AFTER

THREE (3) INTERCONNECTING EFFECTIVE

SEMITRAILERS VANS DATE OF

CONTRACT 2 MOBILE HEALTH EXAMINATION 1 LOS ANGELES, FOUR (4)

CENTERS CONSISTING OF CALIF. MONTHS AFTER

THREE (3) INTERCONNECTION EFFECTIVE

SEMI-TRAILERS VANS DATE OF

CONTRACT

3 MOBILE HEALTH EXAMINATION 1 TO BE SIX (6)

CENTERS CONSISTING OF SPECIFIED MONTHS AFTER

INTERCONNECTING EFFECTIVE

SEMI-TRAILERS VANS DATE OF

CONTRACT

THE RFP RESERVED TO THE GOVERNMENT THE RIGHT TO CONDUCT NEGOTIATIONS WITH THE PROPOSER IF ONLY ONE ACCEPTABLE PROPOSAL WAS RECEIVED.

ALTHOUGH THE RFP REQUIRED THAT PROPOSALS DEMONSTRATE AN UNDERSTANDING OF THE DELIVERY REQUIREMENTS AND HOW THE OFFEROR PROPOSED TO MEET THOSE REQUIREMENTS, AS WELL AS THE SUBMISSION OF PRODUCTION SCHEDULES FOR VARIOUS COMPONENTS OF THE EQUIPMENT, YOUR PROPOSAL DID NOT INCLUDE OR ADDRESS SUCH REQUIREMENTS. THE SUMMARY OF NEGOTIATIONS WITH YOUR FIRM, AS SET OUT ABOVE, INDICATES THAT AFTER YOUR REPRESENTATIVES DISCLOSED THAT YOU WOULD NEED A LONGER PERIOD FOR DELIVERY OF THE CENTERS, THEY WERE ADVISED OF THE IMPORTANCE OF MEETING THE SPECIFIED DELIVERY SCHEDULE AND THAT THE DELIVERY REQUIREMENTS COULD NOT BE RELAXED. YOU DENY THAT YOUR REPRESENTATIVES WERE TOLD DURING THE NEGOTIATION MEETINGS THAT YOUR DELIVERY SCHEDULE WAS UNACCEPTABLE, AND YOU SAY THAT SINCE A LOW SCORE WAS ASSIGNED TO DELIVERY YOU WERE MISLED BY THE GOVERNMENT IN THIS RESPECT.

IN ADDITION TO THE SUMMARY OF THE NEGOTIATIONS WITH YOUR FIRM, THE RECORD CONTAINS THE FOLLOWING MEMORANDUM BY THE CONTRACTING OFFICER OF HIS CONVERSATION ON DECEMBER 21, 1970, WITH YOUR WASHINGTON REPRESENTATIVE:

"I RECEIVED A TELEPHONE CALL FROM MR. FREUND OF MEDICAL COACHES, INC., ONEONTA, N. Y. HE WAS UPSET ABOUT THE LETTER WHICH ADVISED THAT HIS COMPANY WAS NOT BEING SOLICITED FOR A COST PROPOSAL UNDER THE SECOND STEP OF THE PROCUREMENT. I ASKED HIM IF HE WAS NOT SATISFIED WITH THE EXPLANATION PROVIDED IN THE LETTER. HE REPLIED THAT IT WAS CORRECT IN THAT HIS COMPANY FAILED TO MEET THE REQUIRED DELIVERY SCHEDULE, BUT THAT HE SHOULD BE GIVEN AN OPPORTUNITY TO NEGOTIATE. I SAID I DIDN'T UNDERSTAND, SINCE HIS COMPANY WAS INVITED TO A MEETING AT HSMHA TO CLARIFY AND NEGOTIATE THE PROPOSAL. HE SAID THIS WAS TRUE AND IN FACT AS A RESULT OF THESE DISCUSSIONS HIS COMPANY ADVISED THAT IT COULD NOT MEET THE GOVERNMENT'S DELIVERY REQUIREMENTS. HOWEVER, HE NOW WANTED AN OPPORTUNITY TO SUBMIT A NEW PROPOSAL. HE SAID THAT DUE TO COLD WEATHER, THE TRAILERS WOULD HAVE BEEN CONSTRUCTED IN A HEATED FACILITY AND SINCE HIS COMPANY WOULD NOT HAVE SUFFICIENT SPACE, THEY COULD NOT HAVE PERFORMED. HOWEVER, IF THE GOVERNMENT WOULD DELAY AWARD OF THE CONTRACT UNTIL LATER IN THE YEAR (AT LEAST 30 DAYS FROM THIS DATE) IT WOULD THEN BE WARM ENOUGH TO CONSTRUCT THE TRAILERS OUTDOORS. I INFORMED MR. FREUND THAT AN AWARD HAD ALREADY BEEN MADE TO ANOTHER FIRM. I OFFERED TO HAVE THE CONTRACT NEGOTIATOR BRIEF HIM CONCERNING THE AWARD INFORMATION. HE SAID HIS COMPANY MIGHT PROTEST THE AWARD, BUT THAT HE WOULD FIRST CALL THE CONTRACT NEGOTIATOR FOR ADDITIONAL INFORMATION."

IN MATTERS OF THIS NATURE INVOLVING DISPUTED QUESTIONS OF FACT BETWEEN THE ADMINISTATIVE OFFICERS OF THE GOVERNMENT AND CLAIMANTS OR OTHER PERSONS DEALING WITH THE GOVERNMENT, IT IS THE LONG-ESTABLISHED RULE OF THIS OFFICE TO ACCEPT THE FACTS AS SHOWN BY THE ADMINISTRATIVE RECORDS, IN THE ABSENCE OF EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THEIR CORRECTNESS. 3 COMP. GEN. 51 (1923); 16 ID. 325 (1936). WHILE YOU DENY THE ADMINISTRATIVE STATEMENTS THAT YOU WERE INFORMED OF THE NECESSITY FOR MEETING THE DELIVERY SCHEDULE SET OUT IN THE RFP, SUCH DENIAL DOES NOT CONSTITUTE SUFFICIENT EVIDENCE TO JUSTIFY A REJECTION BY THIS OFFICE OF THE ADMINISTRATIVE VERSION OF THE FACTS.

CONCERNING YOUR CONTENTION THAT THE 350 SCORING POINTS (OUT OF A TOTAL OF 6370 POINTS) ASSIGNED TO DELIVERY IN THE EVALUATION OF PROPOSALS INDICATE THAT THE SPECIFIED DELIVERY DATES WERE NOT IMPORTANT, IT SHOULD BE NOTED THAT THE 350 POINTS WERE NOT ASSIGNED ON THE BASIS OF MEETING DELIVERY REQUIREMENTS, AS YOU IMPLY, BUT WERE ASSIGNED FOR "PROOF" OF DELIVERY. IS REPORTED THAT THESE POINTS WERE ALLOCATED TO THE MATERIAL SUBMITTED BY AN OFFEROR TO SUPPORT THE DELIVERY SCHEDULE, SUCH AS SUBCONTRACTOR CONTROLS, PRODUCTION CAPABILITY, ETC. WE AGREE WITH THE POSITION OF THE AGENCY THAT THE RELATIVELY LOW NUMBER OF POINTS WHICH WERE ASSIGNED FOR PROOF THAT THE DELIVERY SCHEDULE WOULD BE MET MAY NOT PROPERLY BE CONSTRUED AS A RELAXATION OF THE SPECIFIED DELIVERY REQUIREMENTS.

REGARDING YOUR CONCERN THAT THE LIQUIDATED DAMAGES PROVISION IS IMPROPER AND THAT SUCH DAMAGES WOULD NOT BE ASSESSED IN CASE OF LATE DELIVERY OF ANY OF THE ITEMS BY THE CONTRACTOR, THE CONTRACT'S INCENTIVE AND DAMAGE CLAUSE PROVIDES INCENTIVE PAYMENT ON THE FIRST TWO CENTERS OF $100 A DAY FOR THE FIRST SEVEN DAYS, AND $200 A DAY THEREAFTER UP TO AND INCLUDING THE 14TH DAY, FOR DELIVERY PRIOR TO THE CONTRACT SCHEDULE. DAMAGES FOR DELIVERY OF THOSE TWO CENTERS AFTER THE CONTRACT SCHEDULE ARE ASSESSED AT THE RATE OF $300 A DAY FOR THE FIRST SEVEN DAYS AND AT THE RATE OF $600 A DAY THEREAFTER, BUT NOT TO THE EXTENT OF REDUCING THE CONTRACT PRICE BY AN AMOUNT GREATER THAN $19,011.55. IT IS REPORTED THAT THE CONTRACTOR WAS FIVE DAYS EARLY IN DELIVERING THE FIRST CENTER, FOR WHICH IT IS ENTITLED TO $500 INCENTIVE PAYMENT, AND THAT THE CONTRACTOR WAS 22 DAYS LATE IN DELIVERING THE SECOND CENTER, FOR WHICH IT WILL BE ASSESSED $11,000 AS DAMAGES. WHILE THE MAXIMUM AMOUNT OF $19,011.55 ASSESSABLE AS LIQUIDATED DAMAGES WAS BASED ON A PERCENTAGE OF THE CONTRACTOR'S NEGOTIATED PROFIT FIGURE, THE ASSESSMENT OF DAMAGES IS NOT DEPENDENT UPON THE CONTRACTOR MAKING AN ACTUAL PROFIT ON THE CONTRACT, AS YOU HAVE INDICATED THE CONTRACTING OFFICER'S STATEMENT SEEMS TO IMPLY. WE AGREE, HOWEVER, WITH YOUR CONTENTION THAT THE FEDERAL PROCUREMENT REGULATIONS (SECTION 1-1.315) PROVIDE FOR ASSESSMENT OF DAMAGES UNTIL DELIVERY IS MADE, AND DO NOT SEEM TO CONTEMPLATE THAT THE AMOUNT OF LIQUIDATED DAMAGES ASSESSABLE FOR A LATE DELIVERY BE LIMITED TO A PERCENTAGE OF THE CONTRACTOR'S ANTICIPATED PROFIT, PARTICULARLY WHERE, AS HERE, THE DAMAGES TO THE GOVERNMENT CONTINUE TO ACCRUE UNTIL DELIVERY IS MADE. WE ARE SO ADVISING THE SECRETARY OF HEW.

IN ANSWER TO YOUR CONTENTION THAT THE PROCUREMENT SHOULD HAVE BEEN HANDLED BY GSA, RATHER THAN HEW, IN THE ABSENCE OF A CITATION TO THE STATUTE OR REGULATION WHICH YOU BELIEVE REQUIRES THAT PROCEDURE, WE ARE UNABLE TO COMMENT AS TO ITS APPLICATION TO THE SUBJECT CASE. HOWEVER, ANY OBJECTIONS OF THIS NATURE SHOULD HAVE BEEN PRESENTED PRIOR TO YOUR PARTICIPATION IN THE PROCUREMENT.

CONCERNING YOUR REQUEST THAT YOU BE REIMBURSED FOR EXPENSES INCURRED IN PREPARING YOUR TECHNICAL PROPOSAL FOR THE FIRST STEP, IN HEYER PRODUCTS COMPANY, INC. V UNITED STATES, 135 CT. CL. 71 (1956), IT WAS STATED:

" *** RECOVERY CAN BE HAD ONLY IN THOSE CASES WHERE IT CAN BE SHOWN BY CLEAR AND CONVINCING PROOF THAT THERE HAS BEEN A FRAUDULENT INDUCEMENT FOR BIDS, WITH THE INTENTION, BEFORE THE BIDS WERE INVITED OR LATER CONCEIVED, TO DISREGARD THEM ALL EXCEPT THE ONES FROM BIDDERS TO ONE OF WHOM IT WAS INTENDED TO LET THE CONTRACT, WHETHER HE WAS THE LOWEST RESPONSIBLE BIDDER OR NOT. IN OTHER WORDS, IT MUST BE SHOWN THAT BIDS WERE NOT INVITED IN GOOD FAITH, BUT AS A PRETENSE TO CONCEAL THE PURPOSE TO LET THE CONTRACT TO SOME FAVORED BIDDER, OR TO ONE OF A GROUP OF PREFERRED BIDDERS, AND WITH THE INTENT TO WILFULLY, CAPRICIOUSLY, AND ARBITRARILY DISREGARD THE OBLIGATION TO LET THE CONTRACT TO HIM WHOSE BID WAS MOST ADVANTAGEOUS TO THE GOVERNMENT."

WE HELD IN B-150159, DECEMBER 6, 1963, IN THIS REGARD, AS FOLLOWS:

"FURTHER, WE FEEL THAT THE HEYER PRODUCTS PRINCIPLE IS FOR APPLICATION ONLY WHERE A CONTRACT IS AWARDED UNDER FALSE PRETENSES TO OTHER THAN THE LEGALLY ENTITLED BIDDER. *** "

SINCE THE FACTS OF THE PRESENT CASE, AS SET OUT ABOVE, DO NOT COMPARE WITH THOSE ENTITLING BIDDERS TO BID PREPARATION EXPENSES UNDER THE RATIONALE OF THE HEYER PRODUCTS CASE, YOUR CLAIM FOR REIMBURSEMENT OF YOUR PROPOSAL PREPARATION EXPENSES MUST BE DISALLOWED.

ACCORDINGLY, BOTH YOUR CLAIM AND YOUR PROTEST MUST BE DENIED.