B-171586(1), APR 29, 1971

B-171586(1): Apr 29, 1971

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THE REQUIREMENT THAT A CONTRACTOR BE LOCATED IN A GIVEN AREA IS MATTER OF RESPONSIBILITY AND WHERE BIDDERS LOCATED OUTSIDE THE PRESCRIBED GEOGRAPHICAL AREA PROPOSE EITHER TO SET UP FACILITIES IN OR TO UTILIZE THE PLANT OF ANOTHER COMPANY LOCATED WITHIN THE PRESCRIBED AREA. REOPENING OF NEGOTIATIONS WITHOUT ANY STATED REASON IS NOT AN AUCTION TECHNIQUE BUT IS REQUIRED UNDER APPROPRIATE CIRCUMSTANCES BY ASPR 3 805.1(A). THE PROTEST IS DENIED FOR REASONS HEREINAFTER STATED. THE PROPOSALS RECEIVED UNDER THE RFP WERE SUBMITTED FOR TECHNICAL EVALUATION TO THE NAVAL SHIP RESEARCH AND DEVELOPMENT CENTER (NSRDC) ON APRIL 13. NSRDC DETERMINED THAT THE PROPOSALS OF CERTAIN FIRMS WERE NOT WITHIN THE COMPETITIVE RANGE ON A TECHNICAL BASIS.

B-171586(1), APR 29, 1971

BID PROTEST - RESPONSIBILITY - GEOGRAPHIC AREA - REOPENING OF NEGOTIATIONS DENYING PROTEST OF RSC INDUSTRIES, INC., AGAINST THE PROPOSED AWARD OF A CONTRACT TO JAKUS ASSOCIATES UNDER AN RFP ISSUED BY THE NAVY SUPPLY SYSTEMS COMMAND, WASHINGTON NAVY YARD FOR AN INDEFINITE NUMBER OF MAN- HOURS FOR TECHNICAL SERVICES IN SUPPORT OF PROJECT SURPASS. THE REQUIREMENT THAT A CONTRACTOR BE LOCATED IN A GIVEN AREA IS MATTER OF RESPONSIBILITY AND WHERE BIDDERS LOCATED OUTSIDE THE PRESCRIBED GEOGRAPHICAL AREA PROPOSE EITHER TO SET UP FACILITIES IN OR TO UTILIZE THE PLANT OF ANOTHER COMPANY LOCATED WITHIN THE PRESCRIBED AREA, BIDS SHOULD NOT BE REJECTED IF OTHERWISE ACCEPTABLE. REOPENING OF NEGOTIATIONS WITHOUT ANY STATED REASON IS NOT AN AUCTION TECHNIQUE BUT IS REQUIRED UNDER APPROPRIATE CIRCUMSTANCES BY ASPR 3 805.1(A).

TO RSC INDUSTRIES, INC.:

WE REFER TO YOUR LETTER DATED FEBRUARY 22, 1971, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE PROPOSED AWARD OF A CONTRACT TO JAKUS ASSOCIATES, SAN DIEGO, CALIFORNIA, UNDER REQUEST FOR PROPOSALS (RFP) NO. N00600-70-R-5344, ISSUED BY THE NAVAL SUPPLY SYSTEMS COMMAND, U.S. NAVY PURCHASING OFFICE (NPO), WASHINGTON NAVY YARD, FOR AN INDEFINITE NUMBER OF MAN-HOURS FOR TECHNICAL SERVICES IN SUPPORT OF PROJECT SURPASS.

THE PROTEST IS DENIED FOR REASONS HEREINAFTER STATED.

SINCE NO AWARD HAS BEEN MADE OF THIS NEGOTIATED PROCUREMENT, WE MUST RESTRICT OUR RECITATION OF THE FACTS. PARAGRAPH 3-507.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR); B-169633, AUGUST 20, 1970, 50 COMP. GEN. .

THE PROPOSALS RECEIVED UNDER THE RFP WERE SUBMITTED FOR TECHNICAL EVALUATION TO THE NAVAL SHIP RESEARCH AND DEVELOPMENT CENTER (NSRDC) ON APRIL 13, 1970. NSRDC DETERMINED THAT THE PROPOSALS OF CERTAIN FIRMS WERE NOT WITHIN THE COMPETITIVE RANGE ON A TECHNICAL BASIS. ON JUNE 2, 1970, THOSE FIRMS WERE NOTIFIED THEIR PROPOSALS WERE UNACCEPTABLE. FROM JULY 16 THROUGH JULY 24, 1970, NEGOTIATIONS WERE CONDUCTED WITH THE FIRMS WITHIN THE COMPETITIVE RANGE RESULTING IN THE SUBMISSION OF REVISED PROPOSALS ON JULY 24, 1970.

ON SEPTEMBER 8, 1970, IN ACCORDANCE WITH ASPR 1-703(B)(1), NOTICE WAS SENT TO ALL OFFERORS ADVISING THEM OF THE THEN CONTEMPLATED AWARD TO RSC. HOWEVER, THE CONTRACTING OFFICER REPORTS:

"AS THE RESULT, HOWEVER, OF A FINAL REVIEW IN THIS OFFICE OF THE RECOMMENDED AWARD TO RSC, IT WAS DETERMINED THAT THE ACTION REJECTING THE OFFERS OF (NAMES OF FIRMS OMITTED) WITHOUT ANY DISCUSSIONS WAS NOT CONSISTENT WITH THE INTENT OF ASPR 3-805. A DECISION WAS THEREFORE MADE TO OPEN NEGOTIATIONS WITH ALL FIRMS THAT HAD SUBMITTED PROPOSALS SO THAT ALL FIRMS MIGHT HAVE AN OPPORTUNITY TO REVISE THEIR PROPOSALS."

NEGOTIATIONS WERE REOPENED BY LETTER DATED SEPTEMBER 24, 1970. NEGOTIATIONS WERE REOPENED AGAIN ON NOVEMBER 24 AND 30, 1970, IN ORDER TO CLARIFY SOME PROPOSALS. BY LETTER DATED DECEMBER 17, 1970, ALL OFFERORS WERE NOTIFIED THAT JAKUS WAS THE SUCCESSFUL OFFEROR.

THE FIRST BASIS OF THE PROTEST IS THAT "IN THE EVENT THAT JAKUS ASSOCIATES HAS PROPOSED TO OPEN A FACILITY, OR TO USE AN EXISTING AFFILIATE OR SUBSIDIARY FACILITY IN WASHINGTON, D.C., RSC SUBMITS THAT CRITERIA A(3) AND B (OF THE RFP) WOULD *** BE VIOLATED." THE CITED CRITERIA, INSOFAR AS PERTINENT, WERE:

"A. EVALUATION WILL BE BASED ON THE FOLLOWING CRITERIA:

"(3) LOCATION WITHIN 50 MILES OF WASHINGTON, D.C.

"B. *** OFFERS THAT DO NOT SHOW AN OPERATING FACILITY WITHIN 50 MILES OF WASHINGTON, D.C. WILL NOT BE CONSIDERED."

FURTHER, THE RFP CONTAINED A CAVEAT AS FOLLOWS:

"WARNING - LIMITATION OF GEOGRAPHICAL AREA

"ANY CONTRACT AWARDED AS A RESULT OF THIS SOLICITATION SHALL BE WITH A FIRM THAT HAS OPERATING FACILITIES LOCATED WITHIN A FIFTY (50) MILE RADIUS OF WASHINGTON, D.C."

OUR OFFICE HAS HELD, WITH REFERENCE TO FORMALLY ADVERTISED PROCUREMENTS, THAT THE REQUIREMENT THAT A CONTRACTOR BE LOCATED IN A GIVEN AREA IS A MATTER OF RESPONSIBILITY AND THAT WHERE BIDDERS LOCATED OUTSIDE THE PRESCRIBED GEOGRAPHICAL AREA PROPOSE EITHER TO SET UP FACILITIES IN OR TO UTILIZE THE PLANT OF ANOTHER COMPANY LOCATED WITHIN THE PRESCRIBED AREA, THE BIDS SHOULD NOT BE REJECTED IF THE BIDDERS ARE OTHERWISE ACCEPTABLE. B-163039, JANUARY 25, 1968, AND CASES CITED THEREIN. THERE IS NO REASON WHY SUCH HOLDING SHOULD NOT APPLY TO NEGOTIATED PROCUREMENTS AS WELL. THAT CONNECTION, ASPR 1-903.2 REQUIRES THAT A PROSPECTIVE CONTRACTOR:

"(I) HAVE THE NECESSARY ORGANIZATION, EXPERIENCE, OPERATIONAL CONTROLS AND TECHNICAL SKILLS, OR THE ABILITY TO OBTAIN THEM (INCLUDING WHERE APPROPRIATE, SUCH ELEMENTS AS PRODUCTION CONTROL PROCEDURES, PROPERTY CONTROL SYSTEM AND QUALITY ASSURANCE MEASURES APPLICABLE TO MATERIALS PRODUCED OR SERVICES PERFORMED BY THE PROSPECTIVE CONTRACTOR AND SUBCONTRACTORS (SEE 1-903.4)); AND

"(II) HAVE THE NECESSARY PRODUCTION, CONSTRUCTION, AND TECHNICAL EQUIPMENT AND FACILITIES, OR THE ABILITY TO OBTAIN THEM. WHERE A PROSPECTIVE CONTRACTOR PROPOSES TO USE THE FACILITIES OR EQUIPMENT OF ANOTHER CONCERN, NOT A SUBCONTRACTOR, OR OF HIS AFFILIATE (SEE 2 201(ABII) AND (B)(XVII)), ALL EXISTING BUSINESS ARRANGEMENTS, FIRM OR CONTINGENT, FOR THE USE OF SUCH FACILITIES OR EQUIPMENT SHALL BE CONSIDERED IN DETERMINING THE ABILITY OF THE PROSPECTIVE CONTRACTOR TO PERFORM THE CONTRACT; SEE ALSO 1-904.2."

ASPR 1-903.4 CONSIDERS THAT ACCEPTABLE EVIDENCE OF A PROSPECTIVE CONTRACTOR'S "ABILITY TO OBTAIN" THE NECESSARY FACILITIES AND PERSONNEL REQUIRED BY ASPR 1-903.2 "SHALL NORMALLY BE A COMMITMENT OR EXPLICIT ARRANGEMENT, WHICH WILL BE IN EXISTENCE AT THE TIME THE CONTRACT IS TO BE AWARDED, FOR THE RENTAL, PURCHASE OR OTHER ACQUISITION OF SUCH RESOURCES, EQUIPMENT, FACILITIES, OR PERSONNEL."

MOREOVER, THE MATTER OF RESPONSIBILITY IS RESOLVED AS OF THE TIME THAT PERFORMANCE IS SCHEDULED TO BEGIN, NOT THE DATE SET FOR THE RECEIPT OF PROPOSALS. SEE 47 COMP. GEN. 373, 376 (1968) AND B-162888, JANUARY 4, 1968.

FURTHER, THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT HAS CONDUCTED A PREAWARD SURVEY ON JAKUS AND IS SATISFIED THAT THE COMPANY'S PLANS FOR COMMENCING WORK UPON RECEIPT OF AWARD ARE SATISFACTORY.

THE SECOND BASIS OF THE PROTEST IS THAT THE REOPENING OF NEGOTIATIONS ON TWO OCCASIONS WITHOUT ANY STATED REASON OR JUSTIFICATION CONSTITUTED AN AUCTION TECHNIQUE AND WAS THEREFORE IMPROPER. WE DO NOT AGREE. THE REOPENING OF NEGOTIATIONS WAS REQUIRED BY THE COMPETITIVE NEGOTIATION PROVISIONS OF 10 U.S.C. 2304(G) AS IMPLEMENTED BY ASPR 3-805.1(A). FURTHER, UNLESS A PROPOSAL IS DETERMINED TO BE SO TECHNICALLY INFERIOR AS TO PRECLUDE ANY POSSIBILITY OF MEANINGFUL NEGOTIATION, THERE IS AN OBLIGATION TO CONDUCT DISCUSSIONS WITH THE OFFEROR. SEE 45 COMP. GEN. 417, 427 (1966); AND 47 ID. 29, 53 (1967). ALSO, WE HAVE RECOGNIZED THAT THE DETERMINATION OF COMPETITIVE RANGE WITH REGARD TO TECHNICAL CONSIDERATIONS IS ONE WHICH INITIALLY IS FOR THE CONTRACTING OFFICER TO EXERCISE IN HIS DISCRETION. SEE 48 COMP. GEN. 314, 317 (1968).

ALTHOUGH, INITIALLY, SEVERAL OFFERORS WERE DETERMINED TO BE OUTSIDE THE COMPETITIVE RANGE ON A TECHNICAL BASIS, FURTHER REVIEW BY NPO DISCLOSED THAT THESE OFFERORS WERE WITHIN THE COMPETITIVE RANGE SINCE THEIR PROPOSALS COULD BE MADE ACCEPTABLE, IF EFFECTIVELY REVISED THROUGH MEANINGFUL NEGOTIATIONS. UNDER THESE CIRCUMSTANCES, THE REOPENING OF DISCUSSIONS FOR THE PURPOSE OF CORRECTING NEGOTIABLE DEFICIENCIES WAS APPROPRIATE. SEE B-169633, SUPRA.

THE PROVISIONS OF ASPR 3-507.2 AND 3-805.1(B) PROHIBIT THE DISCLOSURE TO OFFERORS, AFTER THE RECEIPT OF PROPOSALS PRIOR TO AWARD, OF ANY INFORMATION CONTAINED IN ANY OTHER PROPOSAL OR INFORMATION REGARDING THE NUMBER OR IDENTITIES OF OFFERORS. KEEPING THIS IN MIND, WHERE, AS HERE, NEGOTIATIONS ARE REOPENED FOR THE PURPOSE OF CONDUCTING DISCUSSIONS WITH OFFERORS IMPROPERLY EXCLUDED FROM THE COMPETITIVE RANGE, NPO COULD NOT HAVE ADVISED RSC OF THE PARTICULAR BASES FOR REOPENING NEGOTIATIONS WITH AN INDIVIDUAL OFFEROR. IN ADDITION, NO PROHIBITED AUCTION TECHNIQUES RESULTED FROM THE REOPENING OF NEGOTIATIONS, SINCE THE BASIS THEREFOR WAS IN COMPLIANCE WITH THE ABOVE CITED LAW AND REGULATIONS. YOUR STATEMENT THAT RSC WAS ADVISED BY THE NPO CONTRACT NEGOTIATOR THAT "RSC WAS NO LONGER LOW BIDDER," IS DENIED BY THE NEGOTIATOR, AND THERE IS AN ABSENCE OF EVIDENCE OF RECORD TO OVERCOME THE CORRECTNESS OF THE NEGOTIATOR'S DENIAL.

YOUR FINAL BASIS FOR PROTEST IS THAT NPO FAILED TO COMPLY WITH PARAGRAPH "C" OF THE EVALUATION CRITERIA BY CONTEMPLATING AN AWARD TO A TECHNICALLY INFERIOR LOW-PRICED OFFEROR. PARAGRAPH "C" STATED:

"AWARD OF THE CONTRACT RESULTING FROM THIS SOLICITATION WILL BE INFLUENCED BY THE PROPOSAL WHICH PROMISES THE GREATEST VALUE TO THE GOVERNMENT IN TERMS OF PERFORMANCE RATHER THAN BY THE PROPOSAL OFFERING THE LOWEST PRICE. THE GOVERNMENT RESERVES THE RIGHT TO JUDGE WHICH PROPOSALS SHOW THE REQUIRED COMPETENCE IN THE FUNCTIONAL AREAS LISTED AND WHICH PROPOSAL OFFERS THE GREATEST VALUE TO THE GOVERNMENT." WE INTERPRET THIS PROVISION AS ALLOWING FOR THE CONSIDERATION OF BOTH PRICE AND TECHNICAL ASPECTS OF THE PROPOSALS.

SUBSEQUENT TO THE CLOSE OF NEGOTIATIONS, ALL PROPOSALS WERE EVALUATED ON THE BASIS OF THEIR TECHNICAL ACCEPTABILITY. IN THAT CONNECTION, WE HAVE BEEN ADVISED:

"THE ESSENTIAL INGREDIENTS FOR PERFORMANCE ARE QUALIFICATIONS OF PERSONNEL TO PERFORM THE WORK AND THE CONTRACTOR'S EXPERIENCE.

AN ANALYSIS OF REVISED PROPOSALS INDICATED THAT THE OFFERORS WERE COMPETENT TO PROVIDE THE SERVICES REQUIRED. THE ANALYSIS DID NOT DISCLOSE ANY INFORMATION WHICH WOULD INDICATE INCREASED PERFORMANCE OR GREATER VALUE TO THE GOVERNMENT SHOULD AN AWARD BE MADE TO ANY OTHER OFFEROR *** THAN JAKUS ASSOCIATES." IN CIRCUMSTANCES SUCH AS THESE, IF A TECHNICALLY ACCEPTABLE OFFEROR, SUCH AS JAKUS, HAS SUBMITTED A LOWER PRICE (THIS CANNOT BE DISCLOSED BECAUSE OF THE PREAWARD POSTURE OF THE PROCUREMENT), IT IS OUR VIEW THAT A CONTEMPLATED AWARD TO THAT OFFEROR WOULD NOT BE OBJECTIONABLE. SEE B-169148, OCTOBER 6, 1970, 50 COMP. GEN. AND B-170038, MARCH 29, 1971, 50 COMP. GEN. .

WITH REGARD TO YOUR ALTERNATIVE CONTENTION THAT YOU SHOULD HAVE BEEN ADVISED THAT YOUR PRICE WAS DEFICIENT AND PROVIDED AN OPPORTUNITY TO REVISE IT, ASPR 3-805.1(B) PROVIDES:

"WHENEVER NEGOTIATIONS ARE CONDUCTED WITH MORE THAN ONE OFFEROR, AUCTION TECHNIQUES ARE STRICTLY PROHIBITED; AN EXAMPLE WOULD BE INDICATING TO AN OFFEROR A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION, OR INFORMING HIM THAT HIS PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR. ON THE OTHER HAND, IT IS PERMISSIBLE TO INFORM AN OFFEROR THAT HIS PRICE IS CONSIDERED BY THE GOVERNMENT TO BE TOO HIGH. *** "

IN VIEW OF THE FOREGOING, AN AWARD TO JAKUS APPEARS TO BE JUSTIFIED.