B-173487(1), DEC 10, 1971

B-173487(1): Dec 10, 1971

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WHERE OFFERORS WERE REQUIRED TO MULTIPLY THE ESTIMATED MAN-HOURS BY THE MAN-HOUR RATES OFFERED. NOTHING IN THE RFP ADVISED EACH OFFEROR THAT ITS FINAL PROPOSAL MUST QUOTE A MINIMUM PRICE PER HOUR FOR EACH LABOR CATEGORY AND THE REJECTION OF RAYCOMM'S BID FOR FAILURE TO DO SO WOULD HAVE BEEN VIOLATIVE OF SOUND PROCUREMENT POLICY WHICH REQUIRES THAT OFFERORS BE INFORMED OF ALL EVALUATION FACTORS AND OF THE RELATIVE IMPORTANCE OF EACH FACTOR. THE RATES OFFERED THE GOVERNMENT DO NOT ESTABLISH THE RATES WHICH THE CONTRACTOR WILL. THE PROTEST IS DENIED. INC.: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARDING OF A CONTRACT TO RAYCOMM INDUSTRIES. HAVE ALSO FILED PROTESTS AGAINST THE SUBJECT AWARD.

B-173487(1), DEC 10, 1971

BID PROTEST - BID RESPONSIVENESS - WAGE RATES - UNPROFITABLE BID DECISION DENYING PROTEST BY TEK-MAR, INC., AGAINST AWARD OF A CONTRACT TO RAYCOMM INDUSTRIES, INC., UNDER AN RFP ISSUED BY THE FORT MONMOUTH PROCUREMENT DIVISION, ARMY ELECTRONICS COMMAND, FOR A TIME AND MATERIALS TYPE CONTRACT FOR MAINTENANCE SUPPORT DOCUMENTATION FOR COMMUNICATIONS, ADP, RADAR, NIGHT VISION AND COMBAT SURVEILLANCE AND AVIONICS EQUIPMENT AND SYSTEMS. WHERE OFFERORS WERE REQUIRED TO MULTIPLY THE ESTIMATED MAN-HOURS BY THE MAN-HOUR RATES OFFERED, AND SUCCESSFUL LOW OFFEROR QUOTED A REGULAR HOURLY LABOR RATE BELOW THE MINIMUM $1.60 PER HOUR REQUIRED TO BE PAID UNDER THE WALSH-HEALEY ACT, SUCH DOES NOT RENDER THE BID NONRESPONSIVE. NOTHING IN THE RFP ADVISED EACH OFFEROR THAT ITS FINAL PROPOSAL MUST QUOTE A MINIMUM PRICE PER HOUR FOR EACH LABOR CATEGORY AND THE REJECTION OF RAYCOMM'S BID FOR FAILURE TO DO SO WOULD HAVE BEEN VIOLATIVE OF SOUND PROCUREMENT POLICY WHICH REQUIRES THAT OFFERORS BE INFORMED OF ALL EVALUATION FACTORS AND OF THE RELATIVE IMPORTANCE OF EACH FACTOR. FURTHER, THE RATES OFFERED THE GOVERNMENT DO NOT ESTABLISH THE RATES WHICH THE CONTRACTOR WILL, IN FACT, PAY ITS EMPLOYEES. RAYCOMM MAY NOT BE DENIED THE AWARD MERELY BECAUSE IT SUBMITTED AN UNPROFITABLE PRICE. ACCORDINGLY, THE PROTEST IS DENIED.

TO TEK-MAR, INC.:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARDING OF A CONTRACT TO RAYCOMM INDUSTRIES, INC. (RAYCOMM), UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAB07-71-R-0405 ISSUED BY THE FORT MONMOUTH PROCUREMENT DIVISION, U.S. ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY, ON APRIL 26, 1971. THREE OTHER FIRMS, COMPUTER IMPACT INFORMATION SYSTEMS, INC. (COMPUTER), THE STANWICK CORPORATION (STANWICK) AND HAYES INTERNATIONAL CORPORATION (HAYES), HAVE ALSO FILED PROTESTS AGAINST THE SUBJECT AWARD.

THE RFP REQUESTED OFFERS FOR A TIME AND MATERIALS (REQUIREMENTS) TYPE CONTRACT FOR A 12-MONTH PERIOD, COMMENCING ON DATE OF CONTRACT AWARD, FOR MAINTENANCE SUPPORT DOCUMENTATION FOR COMMUNICATIONS, ADP, RADAR, NIGHT VISION AND COMBAT SURVEILLANCE AND AVIONICS EQUIPMENT AND SYSTEMS. UNDER SECTION D-12 OF THE RFP AWARD WAS TO BE MADE TO THAT RESPONSIBLE, RESPONSIVE OFFEROR OFFERING THE LOWEST TOTAL PRICE FOR ALL CATEGORIES OF DIRECT LABOR SET FORTH IN THE SOLICITATION. IN COMPUTING THE TOTAL PRICE, 18 CATEGORIES OF LABOR WERE LISTED IN SECTION D-13(E) AND OFFERORS WERE REQUIRED TO MULTIPLY THE ESTIMATED MAN-HOURS, SHOWN AFTER EACH LABOR CATEGORY, BY THE MAN-HOUR RATES OFFERED THEREFOR.

TWENTY-TWO FIRMS SUBMITTED OFFERS SETTING OUT THE VARIOUS RATES WHICH WOULD FORM THE BASIS FOR PAYING THE CONTRACTOR FOR THE DIRECT LABOR PERFORMED TO COMPLY WITH DELIVERY ORDERS. IN ACCORDANCE WITH THE MANDATE OF SECTION 3-406.1(A) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), SECTION J.20(B) OF THE RFP REQUIRED THAT THE OFFERED RATES INCLUDE ALL SALARIES, OVERHEAD AND PROFIT, AND PROVIDED THAT PAYMENT BASED ON SUCH RATES WOULD CONSTITUTE THE CONTRACTOR'S ONLY REMUNERATION FOR DIRECT LABOR. MATERIALS, TRAVEL, PER DIEM AND OTHER DIRECT COSTS WERE TO BE REIMBURSED AT ACQUISITION COST PLUS GENERAL AND ADMINISTRATIVE EXPENSES. AS A PART OF THEIR INITIAL PROPOSALS, ALL OFFERORS WERE REQUIRED TO FURNISH A COST BREAKDOWN ON DEPARTMENT OF DEFENSE FORM DD-633-1, CONTRACT PRICING PROPOSAL. ALL OFFERORS, INCLUDING RAYCOMM, SUBMITTED A COMPLETED FORM DD 633-1 SHOWING A BREAKDOWN OF THEIR COSTS. NEGOTIATIONS WERE CONDUCTED AND, ON JUNE 10, 1971, ALL OFFERORS WERE INVITED TO SUBMIT PRICE REVISIONS. NEITHER A BREAKDOWN OF COSTS INVOLVED IN THE BEST AND FINAL OFFERS, OR REVISION OF THE INFORMATION SUPPLIED ON FORM DD 633-1, OR A CERTIFICATE OF CURRENT COST OR PRICING DATA WAS REQUESTED BY THE DEPARTMENT OF THE ARMY SINCE IT HAD BEEN DETERMINED THAT THE RESPONSES TO THE RFP PROVIDED ADEQUATE COMPETITION TO BASE THE AWARD ON PRICE ANALYSIS, RATHER THAN COST ANALYSIS. SUCH ACTION DOES NOT APPEAR TO BE INCONSISTENT WITH THE PROVISIONS OF ASPR 3-807.3(D) WHICH PROVIDE, IN PERTINENT PART, THAT WHEN THERE IS ADEQUATE PRICE COMPETITION, COST OR PRICING DATA SHALL NOT BE REQUESTED.

WHILE RAYCOMM'S FORM DD 633-1 DISCLOSED NO HOURLY WAGE COSTS BELOW THE $1.60 MINIMUM WAGE, AMONG THE FINAL RATES SUBMITTED BY RAYCOMM, WHOSE TOTAL PRICE WAS LOW, THERE WERE 13 LABOR CATEGORIES FOR WHICH RAYCOMM OFFERED TO CHARGE THE GOVERNMENT LESS THAN THE $1.60 PER HOUR MINIMUM WAGE REQUIRED TO BE PAID BY THE FAIR LABOR STANDARDS ACT OF 1938, AS AMENDED, 29 U.S.C. 206. ON JUNE 29, 1971, FOLLOWING A TELEPHONE CONVERSATION OF THE SAME DATE, RAYCOMM SENT A LETTER TO THE CONTRACTING OFFICER ADVISING HIM THAT IT COMPLIED WITH THE REQUIREMENTS FOR PAYMENT OF MINIMUM WAGES, ETC., AND OFFERED ITS RECORDS FOR REVIEW AND EXAMINATION. AFTER THE COMPLETION OF A PREAWARD SURVEY OF RAYCOMM, WHICH RESULTED IN A RECOMMENDATION OF "COMPLETE AWARD," RAYCOMM WAS AWARDED THE CONTRACT ON JUNE 30, 1971.

THE PRINCIPAL BASIS OF YOUR PROTEST IS SIMILAR TO THE ONE YOU FILED WITH THE CONTRACTING OFFICER BY LETTER OF JUNE 26, 1971, AND WHICH WAS DENIED ON JUNE 30, 1971, BY THAT OFFICIAL. YOUR POSITION CONTINUES TO BE THAT ANY REGULAR HOURLY LABOR RATE OFFERED TO THE GOVERNMENT BELOW THE MINIMUM $1.60 PER HOUR REQUIRED TO BE PAID PURSUANT TO THE "WALSH HEALEY ACT" (APPARENTLY INADVERTENTLY CITED INSTEAD OF THE FAIR LABOR STANDARDS ACT, SUPRA) FOR EACH OF THE 18 LABOR CATEGORIES MUST HAVE AN ILLEGAL WAGE AS ONE OF ITS ELEMENTS. YOU THEREFORE CONTEND THAT SUCH OFFER INVALIDATES THE CERTIFIED COSTS ON FORM DD 633-1, AND RENDERS THE OFFER NONRESPONSIVE. YOU ALSO DISAGREE WITH THE CONTRACTING OFFICER'S POSITION THAT THE HOURLY RATES WHICH THE CONTRACTOR CHARGES THE GOVERNMENT HAVE NO BEARING UPON THE WAGES THE CONTRACTOR PAYS. THE PROTESTS OF THE OTHER THREE REFERENCED COMPANIES STATE ESSENTIALLY THE SAME REASONS FOR CONTESTING THE VALIDITY OF THE INSTANT AWARD.

AS STATED ABOVE, SINCE THERE WAS ADEQUATE COMPETITION THE AWARD WAS BASED ON AN ANALYSIS OF THE PRICES SHOWN IN THE FINAL OFFERS. THE OFFERORS WERE NOT REQUIRED TO FURNISH A BREAKDOWN OF COSTS IF THERE WAS A CHANGE IN THEIR PRICES FOR THE FINAL OFFERS, AND THE DATA FURNISHED INITIALLY ON THE FORMS DD 633-1 THEREFORE SERVED NO PRACTICAL PURPOSE IN THE AWARDING OF THE CONTRACT. WHILE THE RFP INDICATED THAT A COST ANALYSIS OF THE OFFERS WOULD BE MADE, WE DO NOT FIND ON THE BASIS OF THE PRESENT RECORD THAT ANY OFFEROR WAS PREJUDICED BY THE ABANDONMENT OF THE COST ANALYSIS TECHNIQUE AFTER ADEQUATE PRICE COMPETITION BECAME EVIDENT.

WE ALSO AGREE WITH THE POSITION TAKEN BY THE DEPARTMENT OF THE ARMY THAT THE CONTRACT HOURLY RATES BELOW $1.60 PER SE DO NOT VIOLATE THE STATUTORY MINIMUM WAGE PROVISIONS. THE PERTINENT PROVISION, 29 U.S.C. 206, SUPRA, RELATES TO WAGES PAID, NOT CHARGED, AND THE RATES OFFERED THE GOVERNMENT BY RAYCOMM DO NOT ESTABLISH THE RATES WHICH THE CONTRACTOR WILL, IN FACT, PAY ITS EMPLOYEES. WHILE RAYCOMM HAS AGREED TO CHARGE THE GOVERNMENT AT THE LABOR RATES STATED IN ITS FINAL PRICE, ANY LOSS OCCASIONED BY PAYING WAGES IN EXCESS OF THOSE LOW RATES, WHICH IS NOT OFFSET BY SAVINGS ON RATES CHARGED FOR OTHER LABOR CATEGORIES, WILL BE BORNE BY THE CONTRACTOR, NOT THE GOVERNMENT. OUR DECISIONS HAVE HELD THAT A CONTRACTOR MAY NOT BE DENIED THE AWARD MERELY BECAUSE HE HAS SUBMITTED AN UNPROFITABLE PRICE. -170228, SEPTEMBER 22, 1970; B-169465, JUNE 19, 1970.

WE HAVE CAREFULLY EXAMINED THE ARGUMENTS PRESENTED WHICH CONTEST THE VALIDITY OF THE PROCEDURES HERE EMPLOYED, AND WE FAIL TO FIND ANY LEGAL BASIS ON WHICH RAYCOMM'S PROPOSAL COULD HAVE BEEN REJECTED FOR BEING NONRESPONSIVE TO THE TERMS OF THE RFP. ALTHOUGH THE RFP REQUIRED THAT THE SUCCESSFUL OFFEROR MUST MEET THE MINIMUM WAGE REQUIREMENTS, THERE WAS NOTHING IN THE RFP WHICH SPECIFICALLY ADVISED EACH OFFEROR THAT ITS FINAL PROPOSAL MUST QUOTE A CERTAIN MINIMUM PRICE PER HOUR FOR EACH LABOR CATEGORY. TO HAVE REJECTED RAYCOMM'S PROPOSAL ON THE GROUND THAT SOME OF THE PRICES OFFERED WERE BELOW THE MINIMUM WAGE REQUIREMENTS WOULD HAVE BEEN VIOLATIVE OF SOUND PROCUREMENT POLICY WHICH REQUIRES THAT OFFERORS BE INFORMED OF ALL EVALUATION FACTORS AND OF THE RELATIVE IMPORTANCE OF EACH FACTOR. B-167983, MARCH 11, 1970.

UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE AWARD TO RAYCOMM WAS CLEARLY ILLEGAL SO AS TO JUSTIFY THE CANCELLATION OF THAT FIRM'S CONTRACT. ACCORDINGLY, YOUR PROTEST IS DENIED.

WE ARE BY SEPARATE LETTERS OF TODAY FURNISHING THE OTHER THREE OFFERORS A COPY OF THIS LETTER, SINCE WE CONSIDER IT TO ALSO BE DISPOSITIVE OF THE QUESTIONS PRESENTED IN THEIR PROTESTS.