B-171662, JUL 19, 1971, 51 COMP GEN 33

B-171662: Jul 19, 1971

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CONTRACTS - NEGOTIATION - EVALUATION FACTORS - "BEST BUY ANALYSIS" THE FAILURE TO DISCLOSE THE 3 TO 1 RATIO OF TECHNICAL MERIT TO COST EVALUATION FORMULA OF THE "BEST BUY ANALYSIS" INCLUDED IN THE EVALUATION/SELECTION PLAN APPROVED AS THE BASIS FOR THE AWARD OF COST PLUS -FIXED-FEE CONTRACT UNDER A REQUEST FOR QUOTATIONS FOR THE PROCUREMENT OF AUTOMATIC TEST EQUIPMENT FOR INTERNAL COMBUSTION ENGINE POWERED MATERIEL - WHERE NO QUESTIONS AS TO THE BEST BUY ANALYSIS WERE RAISED AT A PREQUOTATION CONFERENCE - WAS NOT PREJUDICIAL IN THE AWARD COMPETITION. WHICH WAS RANKED AS THE LEAST IMPORTANT OF ELEVEN EVALUATION FACTORS. SINCE THE TWO OFFERORS SELECTED FOR NEGOTIATIONS WERE ESSENTIALLY EQUAL AS TO TECHNICAL ABILITY AND.

B-171662, JUL 19, 1971, 51 COMP GEN 33

CONTRACTS - NEGOTIATION - EVALUATION FACTORS - "BEST BUY ANALYSIS" THE FAILURE TO DISCLOSE THE 3 TO 1 RATIO OF TECHNICAL MERIT TO COST EVALUATION FORMULA OF THE "BEST BUY ANALYSIS" INCLUDED IN THE EVALUATION/SELECTION PLAN APPROVED AS THE BASIS FOR THE AWARD OF COST PLUS -FIXED-FEE CONTRACT UNDER A REQUEST FOR QUOTATIONS FOR THE PROCUREMENT OF AUTOMATIC TEST EQUIPMENT FOR INTERNAL COMBUSTION ENGINE POWERED MATERIEL - WHERE NO QUESTIONS AS TO THE BEST BUY ANALYSIS WERE RAISED AT A PREQUOTATION CONFERENCE - WAS NOT PREJUDICIAL IN THE AWARD COMPETITION, EVEN THOUGH THE SOLICITATION DID NOT ACCURATELY REFLECT THE IMPORTANCE TO BE ACCORDED TO COST, WHICH WAS RANKED AS THE LEAST IMPORTANT OF ELEVEN EVALUATION FACTORS, SINCE THE TWO OFFERORS SELECTED FOR NEGOTIATIONS WERE ESSENTIALLY EQUAL AS TO TECHNICAL ABILITY AND, THEREFORE, THE ONLY CONSIDERATION REMAINING FOR EVALUATION WAS PRICE, AN ADVANTAGE NOT TO BE IGNORED PURSUANT TO PARAGRAPH 4-106.4 OF THE ARMED SERVICES PROCUREMENT REGULATION.

TO RCA CORPORATION, JULY 19, 1971:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO DYNASCIENCES CORPORATION, PURSUANT TO REQUEST FOR QUOTATIONS (RFQ) NO. DAAA25-70-Q-0653, ISSUED BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE RFQ WAS ISSUED ON MAY 26, 1970, FOR THE PROCUREMENT OF AUTOMATIC TEST EQUIPMENT FOR INTERNAL COMBUSTION ENGINE POWERED MATERIEL, INCLUDING DEVELOPMENT OF PROGRAMMABLE DIAGNOSTIC UNITS AND TRANSDUCER KITS. NINE QUOTATIONS WERE RECEIVED BY THE CLOSING DATE OF JULY 31, 1970. AFTER EVALUATION OF THE QUOTATIONS IN ACCORDANCE WITH THE EVALUATION/SELECTION PLAN APPROVED MAY 15, 1970, BY THE ASSISTANT SECRETARY OF THE ARMY (R. & D.), AND NEGOTIATIONS WITH YOUR COMPANY AND DYNASCIENCES, AWARD WAS MADE TO THE LATTER ON DECEMBER 30, 1970, ON A COST-PLUS-FIXED-FEE BASIS FOR AN ESTIMATED COST OF $3,594,429, INCLUDING FEE.

IT IS YOUR PRIMARY CONTENTION THAT THE "BEST BUY ANALYSIS," APPLIED TO THE QUOTATIONS IN THE EVALUATION PROCESS, PLACED A MUCH GREATER EMPHASIS ON COST IN RELATION TO TECHNICAL MERIT THAN WAS INDICATED BY SECTION H, EVALUATION AND AWARD FACTORS, OF THE RFQ. IN THIS CONNECTION, YOU POINT OUT THAT THE BEST BUY ANALYSIS EMPLOYED A 3 TO 1 RATIO OF TECHNICAL MERIT TO COST, WHEREAS IN SECTION H COST WAS RANKED LAST AMONG 11 EVALUATION FACTORS "LISTED IN THE ORDER OF THEIR RELATIVE IMPORTANCE." YOU ASSERT THAT IN RELIANCE ON THIS PROVISION OF THE RFQ, RCA TOOK A TECHNICAL AND MANAGEMENT APPROACH IN PREPARING ITS QUOTATION BASED ON A HIGH-QUALITY SYSTEM NOT GREATLY CONSTRAINED BY CONSIDERATIONS OF COST. IT IS YOUR POSITION THAT HAD YOU KNOWN A 3 TO 1 RATIO WOULD APPLY, YOU "WOULD HAVE TAKEN SOME OTHER APPROACH CALCULATED TO ATTAIN A SIMILARLY HIGH RATING BUT WITH MUCH GREATER RECOGNITION OF COST AS A VERY IMPORTANT FACTOR." YOU ALSO ARGUE THAT IN VIEW OF THE RFQ LANGUAGE, APPLICATION OF THE 3 TO 1 RATIO WAS CONTRARY TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3- 805.2, WHICH PROVIDES THAT IN SELECTING A CONTRACTOR FOR A COST- REIMBURSEMENT TYPE CONTRACT ESTIMATED COSTS AND PROPOSED FEES SHOULD NOT BE CONSIDERED CONTROLLING. YOU ALSO TAKE ISSUE WITH THE TECHNICAL MERIT RATING ASSIGNED TO YOUR QUOTATION.

AS A FINAL MATTER, YOU ASSERT THAT CONTRARY TO 10 U.S.C. 2304(G) AND ASPR 3-805.1, NO WRITTEN OR ORAL DISCUSSIONS OF RCA'S COST AND FEE QUOTATIONS WERE CONDUCTED AFTER THE ACCEPTABILITY OF ITS TECHNICAL QUOTATION WAS RESOLVED. IN ADDITION, YOU CONTEND THAT THERE WAS A FAILURE TO CONDUCT DISCUSSIONS CONCERNING YOUR OFFER OF A CONTRACT WITH COST INCENTIVES COUPLED WITH AN AWARD FEE BASED UPON TECHNICAL PERFORMANCE AS PROVIDED FOR BY ASPR 3-405.5(H). YOU ALSO STATE THAT IN ADDITION TO FAILING TO CONDUCT THE REQUIRED DISCUSSIONS WITH RCA, YOU BELIEVE COST DISCUSSIONS WERE CONDUCTED WITH DYNASCIENCES, RESULTING IN AN INCREASE OF ABOUT ONE MILLION DOLLARS IN ITS UNREASONABLY LOW QUOTATION PRICE. ON THE BASIS OF THE FOREGOING, YOU ASK OUR OFFICE TO DECLARE THE CONTRACT VOID AB INITIO AND REQUIRE RESOLICITATION.

WITH REGARD TO THE EVALUATION, THE RECORD SHOWS THAT THE "BEST BUY ANALYSIS" WAS INCLUDED IN THE EVALUATION/SELECTION PLAN (E/SP) APPROVED FOR THE PROCUREMENT PRIOR TO ISSUANCE OF THE RFQ IN ACCORDANCE WITH FRANKFORD ARSENAL REGULATION (FAR) 715-35, TECHNICAL EVALUATION OF RESEARCH, DEVELOPMENT, AND ENGINEERING PROPOSALS. THE E/SP, WHICH WAS NOT MADE PART OF THE RFQ, ESTABLISHED VARIOUS LEVELS OF EVALUATION RESPONSIBILITY WITH THE COMMANDING GENERAL, UNITED STATES ARMY TANK AUTOMOTIVE COMMAND, BEING THE SOURCE SELECTION AUTHORITY. THE E/SP ALSO INCLUDED A DESCRIPTION OF THE 10 TECHNICAL AND MANAGERIAL EVALUATION FACTORS, SUB-FACTORS, AND WEIGHTS TO BE APPLIED. IT ALSO PROVIDED FOR APPLICATION OF THE "BEST BUY ANALYSIS" UPON COMPLETION OF THE TECHNICAL EVALUATION AND ESTABLISHMENT OF THE FINAL MERIT RATING.

IN ACCORDANCE WITH PARAGRAPH 7(4) OF FAR 715-35, A 3 TO 1 RATIO OF TECHNICAL MERIT TO COST WAS DETERMINED JUSTIFIABLE FOR THIS PROCUREMENT. BRIEFLY, THE BEST BUY ANALYSIS PROVIDES FOR NORMALIZING THE TECHNICAL MERIT RATINGS AND COSTS OF ALL ACCEPTABLE QUOTATIONS. THIS IS ACCOMPLISHED BY TAKING THE LOWEST TECHNICALLY ACCEPTABLE QUOTATION AS A BASE AND COMPARING ALL OTHERS TO IT ON A NUMERICAL BASIS. THE COSTS OF THE ACCEPTABLE QUOTATIONS ARE SIMILARLY NORMALIZED. THE 3 TO 1 RATIO IS THEN APPLIED TO THE NORMALIZED RATINGS TO DETERMINE THE BEST BUY.

IT IS REPORTED THAT ON JUNE 16, 1970, A PREQUOTATION CONFERENCE WAS HELD AT ABERDEEN, MARYLAND, TO FAMILIARIZE POTENTIAL SOURCES WITH THE TECHNICAL ASPECTS AND THE SOURCE SELECTION PROCEDURE TO BE EMPLOYED. ALL ATTENDEES WERE AFFORDED AN OPPORTUNITY TO ASK QUESTIONS AND THE EVALUATION PROCEDURE, INCLUDING THE BEST BUY ANALYSIS, WAS DEMONSTRATED THROUGH THE USE OF VIEW GRAPH PROJECTIONS. HOWEVER, THE TECHNICAL MERIT TO COST RATIO WAS NOT DISCLOSED. IT IS REPORTED THAT NEITHER RCA NOR ANY OF THE OTHER ATTENDEES RAISED ANY QUESTIONS AS TO THE BEST BUY ANALYSIS.

THE COMPREHENSIVE FILE FURNISHED OUR OFFICE INDICATES THAT THE TECHNICAL EVALUATION PROCEDURE PRESCRIBED BY THE E/SP WAS APPLIED TO EACH QUOTATION. ALL SECTIONS OF EACH QUOTATION WERE EVALUATED BY SEVERAL EVALUATORS. EACH EVALUATOR WAS PROVIDED EVALUATION SHEETS FOR EACH FACTOR AND SUBFACTOR OR ELEMENT TO BE RATED. IN ADDITION TO THE NUMERICAL RATING, EACH EVALUATOR WAS REQUIRED TO SUPPORT HIS RATING WITH A NARRATIVE EXPLANATION. THE EVALUATION SHEETS WERE REVIEWED BY THE CHAIRMAN OF THE TECHNICAL EVALUATION PANEL. THE NUMERICAL SCORES FOR THE TECHNICAL PORTION OF THE PROPOSALS WERE TABULATED, AVERAGED AND COMBINED IN ACCORDANCE WITH THE PREESTABLISHED WEIGHTS. THE BEST BUY ANALYSIS WAS THEN PERFORMED USING THE TECHNICAL MERIT RATINGS AND THE PROPOSED COST ESTIMATES. THE EVALUATION PANEL'S SUMMARY OF THE BEST BUY WITH RESPECT TO RSA AND DYNASCIENCES WAS:

TECHNICAL MERIT BEST BUY INDEX

DYNASCIENCES 62 2.73

RCA 64 1.69

THE EVALUATION REPORT WAS SUBMITTED TO THE SSA WHO ON OCTOBER 9, 1970, APPROVED NEGOTIATIONS WITH RCA AND DYNASCIENCES.

THE RECORD SHOWS THAT SUBSEQUENT TO APPROVAL BY THE SSA ON OCTOBER 9, 1970, NEGOTIATIONS WERE CONDUCTED WITH YOU AND DYNASCIENCES. ALTHOUGH IT APPEARS THAT THE DISCUSSIONS WITH BOTH FIRMS RELATED PRIMARILY TO TECHNICAL MATTERS, THE NEGOTIATIONS RESULTED IN SEVERAL PRICE REVISIONS. SUBSEQUENT TO ONE DISCUSSION YOU REDUCED YOUR COST ESTIMATE BY APPROXIMATELY $1,300,000 AS A RESULT OF CERTAIN TECHNICAL CHANGES. FOLLOWING FURTHER DISCUSSIONS YOU MADE CERTAIN TECHNICAL CHANGES AND INCREASED YOUR ESTIMATED COSTS BY $310,000. SIMILAR DISCUSSIONS WERE CONDUCTED WITH DYNASCIENCES, AS A RESULT OF WHICH IT UPGRADED ITS TECHNICAL APPROACH AND MADE A COMMENSURATE COST ESTIMATE INCREASE OF ABOUT $400,000. FINALLY, BOTH FIRMS WERE ADVISED THAT THE CLOSING DATE FOR NEGOTIATIONS WAS DECEMBER 10, 1970. ON THAT DATE YOU SUBMITTED A LETTER REDUCING BOTH YOUR ESTIMATED COSTS AND FEE TO A TOTAL OF $4,146,214. DYNASCIENCES' FINAL QUOTATION RESULTED IN ITS TOTAL QUOTATION BEING ABOUT $500,000 BELOW YOURS AND A REVISED BEST BUY INDEX OF 2.10 AS COMPARED TO RCA'S 1.95.

WE AGREE WITH YOUR PRIMARY CONTENTION. IN OUR OPINION, THE LISTING OF THE 11 EVALUATION FACTORS IN THE REQUEST FOR QUOTATIONS WITH THE STATEMENT THAT THEY ARE IN THE ORDER OF THEIR "RELATIVE IMPORTANCE" DID INDICATE AN INTENT ON THE PART OF THE GOVERNMENT TO GIVE CONSIDERABLY GREATER WEIGHT TO TECHNICAL ACHIEVEMENT THAN TO COST. SINCE THE TECHNICAL FACTORS WERE EVALUATED ON A COMBINED BASIS OF 3 TO 1 IN RELATION TO COST WHILE COST WAS RANKED AS LEAST IMPORTANT OF 11 EVALUATION FACTORS, WE BELIEVE THAT THE SOLICITATION DID NOT ACCURATELY REFLECT THE IMPORTANCE TO BE ACCORDED TO COST. HOWEVER, WE ARE NOT PERSUADED THAT YOUR FIRM WAS PREJUDICED IN THE AWARD COMPETITION AS A RESULT OF THIS "MISINFORMATION." IN THIS CONNECTION, THE ARMY HAS FURNISHED OUR OFFICE COMPUTATIONS, OF WHICH YOU WERE FURNISHED A COPY, SHOWING THAT EVEN IF RATIOS OF 11 TO 1 AND 20 TO 1 WERE APPLIED, DYNASCIENCES WOULD HAVE BEEN THE "BEST BUY."

THE RECORD SHOWS THAT YOUR FIRM AND DYNASCIENCES WERE SELECTED FOR NEGOTIATIONS BASED ON THE INITIAL PROPOSALS. ALL THE OTHER OFFERORS WERE CONSIDERED TO BE OUTSIDE THE ZONE OF CONSIDERATION, ALTHOUGH THEY ALSO WERE PERMITTED THE OPPORTUNITY TO REVISE THEIR PROPOSALS. AS A RESULT OF TECHNICAL REVISIONS MADE DURING THE COURSE OF NEGOTIATIONS, YOUR PROPOSAL WAS REDUCED IN COST BY APPROXIMATELY $1 MILLION, WHILE THE DYNASCIENCES PROPOSAL WAS INCREASED BY APPROXIMATELY $400,000 IN AMOUNT. IT APPEARS THAT YOUR FINAL PROPOSAL WAS REVISED TO GIVE GREATER IMPORTANCE TO COST. ALTHOUGH YOUR FINAL OFFER PROPOSED A CPAF TYPE CONTRACT, IT WAS DECIDED THAT THE CPFF CONTRACT WAS MORE APPROPRIATE FOR THIS PARTICULAR PROCUREMENT AND AWARD WAS MADE ON THAT BASIS. BASED ON THE RECORD, WE CANNOT CONCLUDE THAT ANY FIRM WAS GIVEN A COMPETITIVE ADVANTAGE OR THAT YOUR FIRM SUFFERED A DISADVANTAGE BY REASON OF THE INFORMATION PROVIDED IN THE SOLICITATION. B-169754, DECEMBER 23, 1970. FURTHER, WE ARE UNABLE TO AGREE WITH YOUR CONTENTIONS CONCERNING IMPROPRIETIES WITH RESPECT TO THE EVALUATION PROCEDURE, THE CONDUCT OF NEGOTIATIONS, OR FAILURE TO ACCEPT YOUR OFFER OF A CPAF TYPE CONTRACT. WITH REGARD TO YOUR CONTENTION THAT GREATER EMPHASIS WAS PLACED ON COST THAN PERMITTED BY ASPR 3-805.2, WE BELIEVE THE FOLLOWING EXCERPT FROM 50 COMP. GEN. 246, OCTOBER 6, 1970, IS DISPOSITIVE OF THAT CONTENTION.

WHERE, AS HERE, TWO OFFERORS ARE ESSENTIALLY EQUAL AS TO TECHNICAL ABILITY AND RESOURCES TO SUCCESSFULLY PERFORM A RESEARCH AND DEVELOPMENT EFFORT, THE ONLY CONSIDERATION REMAINING FOR EVALUATION IS PRICE. IN SUCH A SITUATION, WE BELIEVE THAT THE LOWER PRICED OFFER REPRESENTS AN ADVANTAGE TO THE GOVERNMENT WHICH SHOULD NOT BE IGNORED. INDEED. ASPR 4- 106.4 MAKES IT CLEAR THAT AWARDS SHOULD NOT BE FOR CAPABILITIES THAT EXCEED THOSE DETERMINED TO BE NECESSARY FOR SUCCESSFUL PERFORMANCE OF THE WORK. WE VIEW THE AWARD TO TI AS EVIDENCING A DETERMINATION THAT THE COST PREMIUM INVOLVED IN MAKING AN AWARD TO SRL, BASED ON ITS SLIGHT TECHNICAL SUPERIORITY OVER TI, WOULD NOT BE JUSTIFIED IN LIGHT OF THE ACCEPTABLE LEVEL OF EFFORT AND ACCOMPLISHMENT EXPECTED OF TI AT A LOWER COST. THE CONCEPTS EXPRESSED IN ASPR 3-805.2 AND 4-106.5(A) THAT PRICE IS NOT THE CONTROLLING FACTOR IN THE AWARD OF COST-REIMBURSEMENT AND RESEARCH AND DEVELOPMENT CONTRACTS RELATE, IN OUR VIEW, TO SITUATIONS WHEREIN THE FAVORED OFFEROR IS SIGNIFICANTLY SUPERIOR IN TECHNICAL ABILITY AND RESOURCES OVER LOWER PRICED, LESS QUALIFIED OFFERORS.

ACCORDINGLY, WE FIND NO BASIS UPON WHICH WE MAY PROPERLY DISTURB THE AWARD MADE TO DYNASCIENCES.