B-171857(1), MAY 24, 1971

B-171857(1): May 24, 1971

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INCORPORATED: REFERENCE IS MADE TO YOUR LETTERS DATED FEBRUARY 3. ONLY THOSE PROPOSALS WHICH SCORED AT LEAST 80 PERCENT OF A POSSIBLE 100 PERCENT IN PHASE ONE WERE MADE ELIGIBLE FOR PHASE TWO EVALUATION AND ONLY THOSE WHOSE PROPOSALS SCORED 80 PERCENT IN PHASE TWO WERE MADE ELIGIBLE FOR NEGOTIATION AND AWARD. THE "NOTICE TO PROSPECTIVE OFFERORS" WHICH WAS INCORPORATED INTO THE SUBJECT RFP PROVIDED THAT "OFFERS WILL NOT BE ACCEPTED FROM FIRMS ENGAGED IN THE MANUFACTURE OF AUTOMATIC DATA PROCESSING EQUIPMENT OR FROM SUBSIDIARIES. PROSPECTIVE OFFERORS WERE ALSO ADVISED THAT A COST -PLUS-FIXED-FEE CONTRACT WAS ANTICIPATED. TWELVE OFFERS WERE RECEIVED AND PHASE ONE EVALUATION COMMENCED IN EARLY NOVEMBER 1970 BY A SELECTION AND EVALUATING BOARD.

B-171857(1), MAY 24, 1971

BID PROTEST - BIDDER RESPONSIBILITY - CONFLICT OF INTEREST DENYING PROTEST OF CAPCOMP, INC., AGAINST THE AWARD OF A CONTRACT TO ITT DATA SERVICES UNDER AN RFP ISSUED BY THE AGRICULTURE STABILIZATION AND CONSERVATION SERVICE FOR CONSULTATION ON UTILIZING TECHNIQUES OF ADVANCED GENERATION DIGITAL COMPUTER TECHNOLOGY. AN RFP PROHIBITING AWARD TO ANY FIRM ENGAGED IN THE MANUFACTURE OF AUTOMATIC DATA PROCESSING EQUIPMENT DOES NOT PREVENT AWARD TO ITT ON THE BASIS OF ITS MANUFACTURE OF DATA COMMUNICATIONS EQUIPMENT, THE AGENCY HAVING CONSIDERED THAT THE MANUFACTURE OF SUCH PERIPHERAL EQUIPMENT CONSTITUTED AN INSUFFICIENT THREAT OF CONFLICT OF INTEREST.

TO CAPCOMP, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTERS DATED FEBRUARY 3, 1971, AND APRIL 1, 1971, WITH ENCLOSURES, PROTESTING THE AWARD OF A CONTRACT TO ITT DATA SERVICES (ITT) UNDER REQUEST FOR PROPOSALS (RFP) NO. ASCS-34-71DC, ISSUED ON OCTOBER 13, 1970, BY THE AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE (ASCS), UNITED STATES DEPARTMENT OF AGRICULTURE.

THE SUBJECT RFP SOLICITED DETAILED PROPOSALS FOR PROVIDING DESIGNATED ASCS OFFICIALS WITH ADVICE AND CONSULTING SERVICES IN COOPERATION WITH THE ACCOUNTING, BUDGET, AND REPORTING TASK FORCE FOR THE DEVELOPMENT OF A CONCEPTUAL PLAN FOR THE FUTURE FINANCIAL OPERATION OF ASCS AND THE COMMODITY CREDIT CORPORATION AS A SEGMENT OF A TOTAL AGENCY OPERATING SYSTEM, UTILIZING TECHNIQUES OF ADVANCED GENERATION DIGITAL COMPUTER TECHNOLOGY. THE RFP LISTED A NUMBER OF SPECIFIC AREAS FOR CONSULTATION DEALING WITH ACCOUNTING, BUDGETING, REPORTING AND TRAINING.

THE SOLICITATION PROVIDED FOR A TWO-PHASE EVALUATION OF PROPOSALS SUBMITTED, WITH SPECIFIED POINT VALUES ASSIGNED TO THE VARIOUS SELECTION CRITERIA. ONLY THOSE PROPOSALS WHICH SCORED AT LEAST 80 PERCENT OF A POSSIBLE 100 PERCENT IN PHASE ONE WERE MADE ELIGIBLE FOR PHASE TWO EVALUATION AND ONLY THOSE WHOSE PROPOSALS SCORED 80 PERCENT IN PHASE TWO WERE MADE ELIGIBLE FOR NEGOTIATION AND AWARD. IN ADDITION, THE "NOTICE TO PROSPECTIVE OFFERORS" WHICH WAS INCORPORATED INTO THE SUBJECT RFP PROVIDED THAT "OFFERS WILL NOT BE ACCEPTED FROM FIRMS ENGAGED IN THE MANUFACTURE OF AUTOMATIC DATA PROCESSING EQUIPMENT OR FROM SUBSIDIARIES, AFFILIATES AND AGENTS OF SUCH FIRMS." PROSPECTIVE OFFERORS WERE ALSO ADVISED THAT A COST -PLUS-FIXED-FEE CONTRACT WAS ANTICIPATED.

TWELVE OFFERS WERE RECEIVED AND PHASE ONE EVALUATION COMMENCED IN EARLY NOVEMBER 1970 BY A SELECTION AND EVALUATING BOARD, CONSISTING OF FOUR ASCS OFFICIALS REPRESENTING THE AREAS OF INTEREST INVOLVED IN THE SUBJECT RFP, AND A REPRESENTATIVE OF THE OFFICE OF BUDGET AND FINANCE OF THE DEPARTMENT OF AGRICULTURE. FOUR OFFERS INCLUDING YOUR FIRM QUALIFIED FOR PHASE TWO EVALUATION BY RECEIVING SCORES OF 80 OR MORE ON PHASE ONE. OF THESE FOUR, ONLY ITT RECEIVED A QUALIFYING SCORE OF 80 PERCENT IN THE SECOND PHASE, THUS BECOMING THE ONLY OFFEROR ELIGIBLE FOR NEGOTIATION AND AWARD. THE SUBJECT CONTRACT WAS AWARDED ON DECEMBER 7, 1970, TO ITT, WHO THEN COMMENCED PERFORMANCE.

AN ANALYSIS OF THE CORRESPONDENCE INDICATES THAT THE BASES FOR PROTEST ARE ESSENTIALLY THAT: (1) THE CONTRACTOR, ITT DATA SERVICES, A SUBSIDIARY OF INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION (ITT CORP.), IS INELIGIBLE TO RECEIVE AWARD BECAUSE THE PARENT COMPANY IS HEAVILY ENGAGED IN THE MANUFACTURE OF AUTOMATIC DATA PROCESSING EQUIPMENT AND THE RFP PROHIBITS AWARD TO ANY FIRM ENGAGED IN SUCH MANUFACTURE, AND (2) THE POINT EVALUATION OF PROPOSALS WAS ERRONEOUSLY UTILIZED AS AN ABSOLUTE FOR DETERMINING ELIGIBILITY WHEREAS POINT EVALUATION SHOULD HAVE ONLY BEEN UTILIZED AS A BASIS FOR RANKING ELIGIBLE CONTRACTORS.

YOUR FIRM BASES ITS CONTENTION THAT ITT IS INELIGIBLE FOR AWARD UNDER THE PROVISION ON EVIDENCE FROM SEVERAL TRADE PUBLICATION ARTICLES AND FROM PORTIONS OF ITT CORP.'S LATEST ANNUAL REPORT, WHICH INDICATE THAT EITHER ITT OR ITT CORP. IS INVOLVED IN THE MANUFACTURE OF VARIOUS TYPES OF DATA EQUIPMENT. ON THE OTHER HAND, ASCS AND ITT CONTEND THAT THE EQUIPMENT MANUFACTURED BY ITT SHOULD BE CLASSIFIED AS DATA COMMUNICATIONS EQUIPMENT WHICH IS NOT WITHIN THE PROHIBITION AND WOULD RESULT IN NO CONFLICT OF INTEREST, SINCE THE EQUIPMENT IS NOT OF THE TYPE ASCS WOULD ULTIMATELY USE WITH THE PROPOSED ACCOUNTING SYSTEM. YOUR FIRM CONTENDS THAT BOTH DATA PROCESSING AND DATA COMMUNICATIONS EQUIPMENT WOULD BE UTILIZED IN THE PROJECTED SYSTEM THUS CREATING A SITUATION WHEREBY THE MANUFACTURE OF EITHER CLASS OF EQUIPMENT WOULD VIOLATE EITHER THE LANGUAGE OR THE SPIRIT OF THE PROHIBITION.

THE RECORD INDICATES THAT ITT'S ELIGIBILITY UNDER THE SUBJECT RFP WAS EXTENSIVELY REVIEWED AND DISCUSSED BY THE SELECTION AND EVALUATING BOARD WHICH CONCLUDED THAT THE INFORMATION FURNISHED BY ITT PROVIDED AN ADEQUATE BASIS FOR DETERMINING THAT THE FIRM WAS ELIGIBLE UNDER THE QUALIFICATION LANGUAGE. WHETHER ITT HAS DEMONSTRATED COMPLIANCE WITH THE QUALIFICATION LANGUAGE OR WHETHER THEY HAVE THE POTENTIAL TO PERFORM THE CONSULTING SERVICES IN AN OBJECTIVE MANNER DEPENDS ON THE DEFINITIONS OF THE TERMS "DATA PROCESSING EQUIPMENT" AND "DATA COMMUNICATIONS EQUIPMENT" AND THE INTER-RELATIONSHIP BETWEEN THE USES OF THESE TWO TYPES OF EQUIPMENT.

YOUR FIRM FURTHER ALLEGES THAT EVEN THOUGH ITT MAY NOT MANUFACTURE DATA PROCESSING EQUIPMENT PER SE THE STATED PURPOSE OF THE PROJECT CONTEMPLATED BY THE SUBJECT RFP MUST ENCOMPASS THE USE OF DATA COMMUNICATIONS EQUIPMENT, WHICH ITT CORP. ADMITTEDLY DOES MANUFACTURE. HOWEVER, WE FEEL THAT IF THE AGENCY DETERMINED THAT THE MANUFACTURE OF SUCH PERIPHERAL EQUIPMENT CONSTITUTED A SUFFICIENT THREAT OF A CONFLICT OF INTEREST ON THE PART OF THE PROSPECTIVE CONTRACTOR, THE PROHIBITION IN THE RFP WOULD HAVE SPECIFICALLY MENTIONED DATA COMMUNICATIONS EQUIPMENT.

IN VIEW OF THE FACT THAT THE RECORD INDICATES THAT ITT'S PERFORMANCE OF THE SUBJECT CONTRACT WILL NOT DIRECTLY INVOLVE IT IN DRAWING OF SPECIFICATIONS FOR EQUIPMENT WHICH THE GOVERNMENT MAY EVENTUALLY PROCURE, WE MUST CONCLUDE THAT THE QUESTION OF ITT'S ELIGIBILITY UNDER THE SUBJECT RFP IS A MATTER OF JUDGMENT WITHIN THE COGNIZANCE OF THE PROCUREMENT AGENCY. CF. 48 COMP. GEN. 702, 706 (1969). WE WILL NOT SUBSTITUTE OUR JUDGMENT ON SUCH A MATTER IN THE ABSENCE OF CONVINCING EVIDENCE OF UNREASONABLENESS OR FAVORITISM IN THE AGENCY DETERMINATION.

YOU ALSO CONTEND THAT THE USE OF A PREDETERMINED MINIMUM ACCEPTABLE EVALUATION SCORE IN DECIDING ELIGIBILITY FOR THE CONDUCT OF NEGOTIATIONS WAS ERRONEOUS. YOUR FIRM IN EFFECT ALLEGES HERE THAT DISCUSSIONS WERE NOT CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMITTED PROPOSALS WITHIN A COMPETITIVE RANGE. ONLY ITT ACHIEVED A SCORE OF 80 PERCENT, OR MORE, ON PHASE TWO, RESULTING IN THE CONDUCT OF NEGOTIATIONS EXCLUSIVELY WITH ITT. SINCE YOUR PROPOSAL DID NOT ACHIEVE THE PREDETERMINED MINIMUM ACCEPTABLE SCORE, IT WAS CONSIDERED OUTSIDE THE "COMPETITIVE RANGE." FOR THAT REASON YOU WERE NOT GIVEN AN OPPORTUNITY TO NEGOTIATE. WE HAVE HELD THAT THE COMPETITIVE RANGE SHOULD BE DECIDED ON THE BASIS OF THE ARRAY OF SCORES ACTUALLY OBTAINED BY THE OFFERS, NOT ON A PREDETERMINED ABSOLUTE SCORE. SEE OUR LETTER OF TODAY TO THE SECRETARY OF AGRICULTURE, COPY ENCLOSED. HOWEVER, IN VIEW OF THE SCORES ACTUALLY ACHIEVED, 85 FOR ITT AND 70 FOR CAPCOMP, AND HAVING REGARD FOR THE DISCRETION AFFORDED THE CONTRACTING ACTIVITY IN SUCH MATTERS, WE CANNOT CONCLUDE THAT THE DECISION LIMITING FIRMS ELIGIBLE FOR NEGOTIATION AFTER PHASE TWO TO ITT WAS SO DEFICIENT AS TO JUSTIFY CANCELLATION OF THE CONTRACT AWARDED UNDER THE SUBJECT RFP.

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.