B-171696, JUL 20, 1971

B-171696: Jul 20, 1971

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WERE INCONSISTENT WITH THE CONCEPT OF COMPETITIVE NEGOTIATION. CONCLUDES THAT ADEQUATE CONSIDERATION WAS NOT GIVEN TO COST IN DETERMINING WHICH OFFER WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. NOTWITHSTANDING THAT THE SUCCESSFUL OFFEROR'S PROPOSAL WAS TECHNICALLY SUPERIOR TO THAT OFFERED BY PROTESTANT. WE CONCLUDE THAT THE NEGOTIATION TECHNIQUES EMPLOYED IN THIS PROCUREMENT WERE INCONSISTENT WITH THE CONCEPT OF "COMPETITIVE NEGOTIATION. THE BASIC CIRCUMSTANCES IMPELLING THIS CONCLUSION ARE NOT IN DISPUTE. IT WAS DETERMINED ON OCTOBER 8. WERE ACCEPTABLE FOR NEGOTIATIONS. TECHNICAL DISCUSSIONS WERE HELD WITH EACH OFFEROR. IT ALSO CONCLUDED THAT LEC'S PROPOSAL WAS NOT TECHNICALLY SUPERIOR TO SPERRY'S PROPOSAL BUT RECOMMENDED FURTHER DISCUSSIONS WITH THESE FIRMS ONLY IN THE EVENT THAT A CONTRACT COULD NOT BE PLACED WITH CIC.

B-171696, JUL 20, 1971

BID PROTEST - NEGOTIATED PROCUREMENT TECHNIQUE - COMPETITION DECISION THAT THE NEGOTIATION TECHNIQUES EMPLOYED IN A PROCUREMENT FOR DESIGN, DEVELOPMENT, INSTALLATION, TEST, AND EVALUATION OF A PROTOTYPE REAL-TIME COMPUTERIZED POSTAL VEHICLE TRAFFIC CONTROL STATION FROM COMPUTER IDENTICS CORPORATION UNDER AN RFP ISSUED BY THE BUREAU OF RESEARCH AND ENGINEERING, WERE INCONSISTENT WITH THE CONCEPT OF COMPETITIVE NEGOTIATION. AFTER REVIEWING THE ADMINISTRATIVE REPORT ON THE PROTEST OF SYSTEMS CONSULTANTS, INC., THE COMP. GEN. CONCLUDES THAT ADEQUATE CONSIDERATION WAS NOT GIVEN TO COST IN DETERMINING WHICH OFFER WAS MOST ADVANTAGEOUS TO THE GOVERNMENT, NOTWITHSTANDING THAT THE SUCCESSFUL OFFEROR'S PROPOSAL WAS TECHNICALLY SUPERIOR TO THAT OFFERED BY PROTESTANT.

TO MR. POSTMASTER GENERAL:

BY LETTER DATED MARCH 10, 1971, WITH ENCLOSURES, THE DIRECTOR, OFFICE OF CONTRACT PROGRAMS, RESEARCH & ENGINEERING DEPARTMENT, FURNISHED OUR OFFICE AN ADMINISTRATIVE REPORT ON THE PROTEST OF SYSTEMS CONSULTANTS, INC. (SYSCON), AGAINST THE AWARD OF A CONTRACT ON JANUARY 8, 1971, TO COMPUTER IDENTICS CORPORATION (CIC) UNDER REQUEST FOR PROPOSALS 198-70 ISSUED BY THE BUREAU OF RESEARCH AND ENGINEERING.

FROM OUR REVIEW OF THE RECORD, WE CONCLUDE THAT THE NEGOTIATION TECHNIQUES EMPLOYED IN THIS PROCUREMENT WERE INCONSISTENT WITH THE CONCEPT OF "COMPETITIVE NEGOTIATION," AS REFLECTED IN SECTION 1-3.8042 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR).

THE BASIC CIRCUMSTANCES IMPELLING THIS CONCLUSION ARE NOT IN DISPUTE. THE 13 PROPOSALS RECEIVED IN RESPONSE TO THE SOLICITATION'S REQUEST FOR COST-PLUS-FIXED-FEE PROPOSALS FOR THE DESIGN, DEVELOPMENT, INSTALLATION, TEST, AND EVALUATION OF A PROTOTYPE REAL-TIME COMPUTERIZED POSTAL VEHICLE TRAFFIC CONTROL STATION, IT WAS DETERMINED ON OCTOBER 8, 1970, BY THE CONTRACT AWARD REVIEW BOARD THAT THE PROPOSALS OF THE FOLLOWING FOUR FIRMS LISTED IN ORDER OF MERIT, WERE ACCEPTABLE FOR NEGOTIATIONS.

CIC $983,366

SPERRY SYSTEMS MANAGEMENT DIVISION $863,183

LABORATORY FOR ELECTRONICS CORPORATION (LEC) $816,730

SYSCON $783,398

THEREAFTER, FROM OCTOBER 13 THROUGH OCTOBER 20, 1970, TECHNICAL DISCUSSIONS WERE HELD WITH EACH OFFEROR. ON OCTOBER 27, THE BOARD RECONVENED AND CONSIDERED THE RESULTS OF THE TECHNICAL DISCUSSIONS. THE BOARD RECOMMENDED THAT SYSCON NOT BE CONSIDERED FURTHER AND THAT A CONTRACT BE AWARDED TO CIC AS SOON AS POSSIBLE. IT ALSO CONCLUDED THAT LEC'S PROPOSAL WAS NOT TECHNICALLY SUPERIOR TO SPERRY'S PROPOSAL BUT RECOMMENDED FURTHER DISCUSSIONS WITH THESE FIRMS ONLY IN THE EVENT THAT A CONTRACT COULD NOT BE PLACED WITH CIC.

ON NOVEMBER 4, 5 AND 6, 1970, THE CONTRACT NEGOTIATOR VISITED THE OFFICES OF EACH OFFEROR FOR THE PURPOSE OF REVIEWING THEIR FACILITIES. ADDITION, DURING THE MONTH OF DECEMBER, THE CONTRACT NEGOTIATOR RECEIVED PREVIOUSLY REQUESTED DEFENSE CONTRACT AUDIT AGENCY (DCAA) REPORTS ON THE COST PROPOSALS OF EACH FIRM. AFTER STUDYING THE DCAA REPORTS, THE CONTRACT NEGOTIATOR CONDUCTED PRICE NEGOTIATIONS SOLELY WITH CIC, WHICH RESULTED IN A REDUCTION OF THE CIC TOTAL ESTIMATED COST AND FIXED FEE TO $899,674. AWARD WAS MADE TO CIC ON JANUARY 8, 1971.

IN A LETTER OF JANUARY 26, 1971, THE ATTORNEY FOR SYSCON, IN SUPPORT OF THE PROTEST TELEGRAM OF JANUARY 15, 1971, CONTENDED THAT THE AWARD SHOULD HAVE BEEN MADE TO SYSCON SINCE ITS PROPOSAL WAS TECHNICALLY ACCEPTABLE AND IT OFFERED THE LOWEST ESTIMATED COST.

WE HAVE RECOGNIZED THAT, IN THE CONTEXT OF COST-TYPE CONTRACTS OF A RESEARCH AND DEVELOPMENT NATURE, COST NEED NOT BE CONTROLLING AND THAT, IN DETERMINING WHICH OFFEROR CAN PERFORM IN A MANNER MOST ADVANTAGEOUS TO GOVERNMENT, TECHNICAL AND OTHER FACTORS MAY BE CONSIDERED AND GIVEN PREDOMINANCE. FROM OUR REVIEW OF THE RECORD, WE FIND NO BASIS TO QUESTION THE DETERMINATION THAT THE CIC PROPOSAL WAS TECHNICALLY SUPERIOR TO THE OTHERS RECEIVED, PARTICULARLY THE SYSCON PROPOSAL. HOWEVER, IT IS ALSO CLEAR TO US THAT ADEQUATE CONSIDERATION WAS NOT GIVEN TO COST IN DETERMINING WHICH OFFER WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. THE IMPORTANCE OF COST AND THE APPROACH THAT WE BELIEVE SHOULD BE FOLLOWED WITH RESPECT TO COST IS INDICATED IN THE FOLLOWING DECISIONS: 50 COMP. GEN. --- (B-171663, APRIL 19, 1971); 50 COMP. GEN. (B-169148, OCTOBER 6, 1970); B-170633(1) AND (2), MAY 3, 1971; B 171857, MAY 24, 1971; 50 COMP. GEN. (B-167259, B-167003, B-167846, AUGUST 19, 1970).

WHILE FURTHER ACTION BY OUR OFFICE AT THIS TIME WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT, WE DO BELIEVE THAT THE SITUATION IS OF SUFFICIENT IMPORTANCE TO BRING IT TO YOUR ATTENTION.