B-174003, FEB 10, 1972

B-174003, FEB 10, 1972

BID PROTEST - DEVIATION FROM REQUIREMENTS OF RFQ DECISION DENYING PROTEST OF LITTON SYSTEMS, INC., AGAINST AWARD OF A CONTRACT TO BRADDOCK, DUNN AND MCDONALD, INC., UNDER AN RFQ ISSUED BY THE ARMY SAN FRANCISCO PROCUREMENT AGENCY FOR SUPPORTING SCIENTIFIC AND TECHNICAL SERVICES. SINCE THE DIFFERENCES BETWEEN THE POINT SCORES OF OTHER OFFERORS AND THE MINIMUM POINT SCORE REQUIRED UNDER THE SOLICITATION WERE SO SLIGHT, AND IN THE INTERESTS OF FURTHERING THE COMPETITIVE NATURE OF THE PROCUREMENT, THE CONTRACTING OFFICER'S DECISION TO AFFORD BRADDOCK AND PHILCO-FORD CORPORATION AN OPPORTUNITY TO SUBMIT CLARIFIED TECHNICAL PROPOSALS WAS NOT ONLY APPROPRIATE, BUT REQUIRED. B-171586(1), APRIL 29, 1971. PROTESTANT'S CONTENTION THAT THE PROCURING ACTIVITY WAS BETTER ABLE TO SHOW OTHER OFFERORS HOW TO CORRECT THEIR PROPOSALS AFTER HAVING SEEN LITTON'S PROPOSAL IS WITHOUT MERIT, SINCE ASPR 3-507.2 FORBIDS DISSEMINATION OF SUCH INFORMATION. ALSO, OBJECTION TO THE ALLEGED VAGUENESS OF THE RFQ CRITERIA FOR DETERMINING REASONABLENESS OF COST IS PRECLUDED BY THE GENERAL RULE THAT DETERMINATIONS OF COST ANALYSIS ARE BEST LEFT TO THE DISCRETION OF THE CONTRACTING AGENCY. 50 COMP. GEN. 390, 410 (1970). FINALLY, THERE IS NO SPECIFIC PROHIBITION AGAINST THE SUBMISSION OF AN UNPROFITABLE PRICE AND, IN THE INSTANT CASE, NO REASON TO BELIEVE THAT THE CONTRACT WILL EXCEED ESTIMATED COSTS RESULTING IN A "BUY- IN," CONTRARY TO THE PROVISIONS OF ASPR 1-311.

TO LITTON SYSTEMS, INC.:

WE REFER TO YOUR LETTER OF NOVEMBER 19, 1971, AND PRIOR CORRESPONDENCE, PROTESTING THE AWARD OF CONTRACT NO. DAAG05-72-C-0074 TO BRADDOCK, DUNN & MCDONALD, INC., UNDER REQUEST FOR QUOTATIONS (RFQ) NO. DAAG05-71-Q-0516, ISSUED BY THE UNITED STATES ARMY SAN FRANCISCO PROCUREMENT AGENCY.

FOR THE REASONS HEREINAFTER STATED, THE PROTEST IS DENIED.

THE RFQ REQUESTED OFFERS ON A COST-PLUS-AWARD-FEE BASIS FOR SCIENTIFIC AND TECHNICAL SERVICES IN SUPPORT OF EXPERIMENTATION CONDUCTED BY THE UNITED STATES ARMY COMBAT DEVELOPMENTS COMMAND EXPERIMENTATION COMMAND. THE RFQ PRESCRIBED SPECIFIC CRITERIA FOR THE EVALUATION OF TECHNICAL AND COST PROPOSALS, ALLOCATING TOTAL POINT VALUES OF 80 AND 20, RESPECTIVELY. PROSPECTIVE OFFERORS WERE APPRISED THAT NO TECHNICAL PROPOSAL SCORED AT LESS THAN A MINIMUM OF 68 POINTS WOULD BE CONSIDERED FOR AWARD. SUBSEQUENT TO THE TECHNICAL EVALUATION, NEGOTIATIONS WERE TO BE CONDUCTED ON A COST BASIS WITH THOSE OFFERORS WHO HAD BEEN RATED TECHNICALLY AT 68 POINTS OR BETTER. AWARD WAS TO BE MADE TO THE OFFEROR WHOSE TOTAL POINT SCORE ON A TECHNICAL AND COST BASIS WAS HIGHEST.

THE THREE PROPOSALS SCORED HIGHEST ON THE TECHNICAL EVALUATION WERE AS FOLLOWS:

OFFEROR SCORE

LITTON SYSTEMS, INC. (LITTON) 75.6

BRADDOCK, DUNN & MCDONALD, INC. (BDM) 66.9

PHILCO-FORD CORPORATION (PHILCO-FORD) 66.4

THE EVALUATION BOARD CONCLUDED THAT THE LITTON TECHNICAL PROPOSAL WAS SIGNIFICANTLY SUPERIOR TO ALL OTHERS SUBMITTED. IN ADDITION, THE BOARD CONCLUDED THAT ALTHOUGH THE PROPOSALS OF BDM AND PHILCO-FORD CONTAINED SUBSTANTIVE WEAKNESSES, THE SMALL DIFFERENCES BETWEEN THEIR POINT SCORES AND THE REQUIRED MINIMUM 68 POINTS WERE INCONCLUSIVE. HOWEVER, FURTHER CONSIDERATION OF THESE TWO FIRMS FOR NEGOTIATION, THE BOARD FELT, SHOULD BE MADE ONLY IF SUCH ACTION WAS CONSIDERED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT.

AFTER ANALYZING ALL OFFERS, THE CONTRACTING OFFICER DETERMINED NOT TO NEGOTIATE WITH BDM AND PHILCO-FORD, BUT RATHER TO HOLD PRICE NEGOTIATIONS WITH LITTON ALONE. CONSEQUENTLY, THE UNSUCCESSFUL OFFERORS WERE NOTIFIED THAT THEIR PROPOSALS WERE UNACCEPTABLE. TWO OFFERORS, OTHER THAN BDM AND PHILCO-FORD, PROTESTED THE REJECTION OF THEIR PROPOSALS TO OUR OFFICE. TWO OTHER OFFERORS, ONE BEING BDM, PROTESTED REJECTION OF THEIR PROPOSALS TO THE CONTRACTING OFFICER. THE TWO PROTESTS FILED WITH OUR OFFICE WERE LATER WITHDRAWN. HOWEVER, BECAUSE OF THE PROTESTS, THE CONTRACTING OFFICER DECIDED TO AFFORD EACH OFFEROR AN OPPORTUNITY TO DISCUSS THE REASONS FOR THE UNACCEPTABILITY OF ITS PROPOSAL. DURING THAT PERIOD, THE CONTRACTING OFFICER REEVALUATED THE PROCUREMENT SITUATION IN VIEW OF THE FACT THAT ONLY ONE PROPOSAL HAD BEEN FOUND TECHNICALLY ACCEPTABLE AND ELIGIBLE FOR NEGOTIATION. THIS REEVALUATION WAS MADE IN LIGHT OF THE PROVISIONS OF 10 U.S.C. 2304(G), WHICH REQUIRES DISCUSSIONS WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. AS A RESULT OF THIS REEVALUATION, IT WAS DETERMINED, IN THE INTEREST OF FURTHERING THE COMPETITIVE NATURE OF THE PROCUREMENT, THAT THE BDM AND PHILCO-FORD PROPOSALS SHOULD BE CONSIDERED AS REASONABLY SUSCEPTIBLE OF BEING MADE ACCEPTABLE. ACCORDINGLY, LITTON, BDM, AND PHILCO-FORD WERE AFFORDED THE OPPORTUNITY TO SUBMIT CLARIFIED TECHNICAL PROPOSALS. THESE WERE THEN REEVALUATED BY THE EVALUATION BOARD. THE RESULTING SCORES WERE:

OFFEROR SCORE

LITTON 75.7

BDM 69.8

PHILCO-FORD 68.5

COST NEGOTIATIONS, RESULTING IN FINAL REVISED COST PROPOSALS, WERE THEN UNDERTAKEN WITH THE THREE FIRMS. ALL THREE FINAL REVISED COST PROPOSALS WERE CONSIDERED TO BE REASONABLE AND REALISTIC. FOLLOWING NEGOTIATIONS, THESE COST PROPOSALS WERE EVALUATED AS FOLLOWS. A MEAN ESTIMATED COST WAS DERIVED BY TOTALING THE FINAL ESTIMATED COSTS OF ALL OFFERORS AND DIVIDING THIS TOTAL BY THE NUMBER OF OFFERORS. EACH OFFEROR WAS GIVEN 7.5, AS MATHEMATICALLY DETERMINED, OF THE POSSIBLE 15 POINTS (OUT OF 20 POINTS ALLOCATED TO COST) ALLOTTED FOR COST REASONABLENESS.

THEN, 1.5 POINTS WERE ADDED OR SUBTRACTED FROM THE 7.5 POINTS FOR EACH $50,000 INCREMENT THAT THE OFFEROR'S ESTIMATED COST WAS BELOW OR ABOVE THE MEAN ESTIMATED COST. OF THE REMAINING FIVE POINTS OF THE 20 POINTS ALLOCATED TO COST, ONE POINT WAS ALLOTTED TO THE ADEQUACY OF THE COST SUBMISSION, AND FOUR POINTS WERE ALLOTTED TO THE REASONABLENESS OF FEES. THE FINAL RESULTS OF THE COST EVALUATION AND THE TOTAL SCORING WERE AS FOLLOWS:

REASONABLE- ADEQUACY OF REASONABLE-

OFFEROR NESS OF COST SUBMISSION NESS OF FEES

LITTON 2.4 1 4

BDM 14.2 1 4

PHILCO-FORD 6.0 1 4

TOTAL

COST TECHNICAL TOTAL

SCORE SCORE SCORES

7.475.7 83.1

19.2 69.8 89.0

11.0 68.5 79.5

BECAUSE BDM ACHIEVED THE HIGHEST TOTAL SCORE AND WAS DETERMINED TO BE RESPONSIBLE, AWARD WAS MADE TO THAT FIRM.

LITTON CONTENDS THAT THE CONTRACTING AGENCY'S REQUEST FOR PROPOSAL CLARIFICATIONS FROM BDM AND PHILCO-FORD AFTER LITTON'S PROPOSAL HAD ALONE BEEN FOUND ACCEPTABLE CONSTITUTED AN IMPROPER CHANGE IN THE STATED RFQ EVALUATION CRITERIA, IN VIEW OF THE TECHNICAL CUT-OFF POINT OF 68 POINTS. OUR OFFICE HAS TAKEN THE POSITION THAT A DETERMINATION OF WHAT CONSTITUTES A "COMPETITIVE RANGE," PARTICULARLY WITH RESPECT TO THE EVALUATION OF TECHNICAL PROPOSALS, IS PRIMARILY ONE WITHIN THE DISCRETION OF THE CONTRACTING ACTIVITY. WE DO NOT QUESTION SUCH A DETERMINATION ABSENT A SHOWING THAT SUCH DISCRETION HAS BEEN ABUSED. 48 COMP. GEN. 314, 317-318 (1968); B-169671(1), B-169671(2), AUGUST 31, 1970. HOWEVER, WE DO NOT BELIEVE THAT A CONTRACTING ACTIVITY MAY PROPERLY BASE A DETERMINATION AS TO WHICH PROPOSALS FALL WITHIN A COMPETITIVE RANGE SOLELY UPON A COMPARISON OF THE EVALUATION SCORE OF EACH OFFEROR'S PROPOSAL WITH AN ARBITRARY, INFLEXIBLE, PREDETERMINED SCORE FOR TECHNICAL ACCEPTABILITY. SUCH A METHOD IS NOT CONDUCIVE TO OBTAINING THE MAXIMUM COMPETITION OR FLEXIBILITY CONTEMPLATED BY THE PROCUREMENT STATUTES AND REGULATIONS COVERING NEGOTIATION. BORDERLINE PROPOSALS ORDINARILY SHOULD NOT BE AUTOMATICALLY EXCLUDED FROM CONSIDERATION IF THEY ARE REASONABLY SUSCEPTIBLE TO BEING MADE ACCEPTABLE BY ADDITIONAL OR CLARIFYING INFORMATION. 50 COMP. GEN. 59, 60-61 (1970). CONSEQUENTLY, WE DO NOT BELIEVE THAT IT WAS IMPROPER TO HAVE INCLUDED BDM AND PHILCO-FORD IN THE NEGOTIATION BY REQUESTING PROPOSAL CLARIFICATIONS FROM THE TWO FIRMS CONSIDERING THE INSIGNIFICANT POINT MARGIN SEPARATING THEIR SCORES FROM THE 68-POINT TECHNICAL CUT-OFF. CLEARLY, MEANINGFUL NEGOTIATIONS COULD AND DID BRING THOSE OFFERORS IMPROPERLY EXCLUDED FROM THE COMPETITIVE RANGE INTO THE ZONE OF CONSIDERATION FOR COST NEGOTIATIONS. IN SUCH CIRCUMSTANCES, THE ACTION TAKEN BY THE CONTRACTING AGENCY WAS NOT ONLY APPROPRIATE, BUT, IN OUR OPINION, REQUIRED. SEE B-171586(1), APRIL 29, 1971.

AS TO YOUR CONTENTION THAT THE CONTRACTING ACTIVITY WAS IN THE POSITION OF BEING BETTER ABLE TO ADVISE BDM AND PHILCO-FORD AS TO HOW TO ACCEPTABLY CLARIFY THEIR PROPOSALS BECAUSE THE ACTIVITY HAD SCRUTINIZED YOUR PROPOSAL, WE SIMPLY NOTE THAT PARAGRAPH 3-507.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) FORBIDS THE DISSEMINATION BY CONTRACTING PERSONNEL OF ANY INFORMATION CONTAINED IN ANY PROPOSAL OR QUOTATIONS TO THE PUBLIC OR TO ANY ONE WITHIN THE GOVERNMENT NOT HAVING A LEGITIMATE INTEREST THEREIN.

IT IS CONTENDED THAT THE RFQ CRITERIA CONCERNING THE EVALUATION OF COST PROPOSALS AS TO REASONABLENESS OF COST ARE VAGUE, ESPECIALLY SO CONSIDERING THE MANNER IN WHICH THE GOVERNMENT CONDUCTED THE EVALUATION. IN THIS REGARD, YOU ASSERT THAT THIS PORTION OF THE COST EVALUATION WAS USED TO MANIPULATE SCORES BY PLACING A GROSSLY UNDUE EMPHASIS ON LOW ESTIMATED COST, WITHOUT CONSIDERATION OF THE REASONABLENESS OF THE ESTIMATED COSTS (15 POINTS OUT OF 20 FOR COST) RELATIVE TO AN ADEQUATE PERFORMANCE OF THE WORK, AND WAS AS SUCH CONTRARY TO ASPR 3-805.2. RATHER THAN BEARING A 20-PERCENT WEIGHT AS ENVISIONED BY THE RFQ, IT IS CONTENDED THAT ESTIMATED COSTS BECAME A CONTROLLING 55-PERCENT FACTOR IN THE EVALUATION. EXPANDING ON THIS, YOU STATE THAT, BECAUSE OF THE 68-POINT CUT-OFF, ACCEPTABLE OFFERORS HAD ONLY A 13-POINT RANGE IN WHICH TO COMPETE ON THE TECHNICAL PORTION OF THE EVALUATION WHILE THE 15 POINTS ALLOTTED TO COST REASONABLENESS GAVE THE ESTIMATED COST PORTION OF THE EVALUATION THE DECISIVE ROLE. SCORING ALL PROPOSERS THE FOUR POINTS MAXIMUM FOR REASONABLENESS OF FEES, WHEN ONLY LITTON ALLOTTED NO FEE TO ITS ESTIMATED COST, IS ALSO QUESTIONED.

IT IS OUR OPINION THAT THE WORD "CONTROLLING" AS USED IN ASPR 3-805.2 MUST BE CONSTRUED AS MEANING THAT ESTIMATED COSTS AND PROPOSED FEES WILL NOT OVERRIDE ALL OTHER FACTORS WHICH ARE TO BE CONSIDERED IN SELECTING A CONTRACTOR. WHERE, AS HERE, ESTIMATED COSTS AND PROPOSED FEES ARE ALLOTTED ONLY A 20-PERCENT WEIGHT, WE DOUBT WHETHER THEY CONSTITUTED THE CONTROLLING FACTOR. CONSIDERATION SHOULD BE GIVEN ESTIMATED COSTS AND PROPOSED FEES REGARDLESS OF HOW SMALL. THEY MAY AND SHOULD BECOME CONTROLLING IF ALL OTHER FACTORS ARE SUBSTANTIALLY EQUAL AND, WHERE, AS HERE, THE CONTRACTING AGENCY DOES NOT DEEM IT NECESSARY TO PAY A COST PREMIUM FOR TECHNICALLY SUPERIOR EFFORT. 50 COMP. GEN. 390, 407 (1970), B -171076; AND 50 COMP. GEN. 246, 249 (1970).

WE DO AGREE THAT THE RFQ DID NOT PROVIDE THAT LOWNESS PER SE OF THE COST ESTIMATES WOULD BE A FACTOR IN THE AWARD. AND WE ALSO AGREE THAT A DEFINITION OF "REASONABLE" COST TO MEAN "LOW" COST PER SE ON A COMPARATIVE BASIS WOULD HAVE BEEN IMPROPER FOR AWARD PURPOSES. HOWEVER, WE BELIEVE THAT ANY SUCH DEFINING IN THIS RESPECT WAS AVOIDED BY THE PROCURING ACTIVITY AS A RESULT OF ITS CONSIDERATION OF THE ACTUAL ACCOUNTING SYSTEMS OF EACH OFFEROR, THE REALISM THEREUNDER OF THE OFFEROR'S COSTS, AND THE REALISM OF THE OFFEROR'S ESTIMATED COSTS TO THE PROCUREMENT AS A WHOLE. FURTHER, OUR OFFICE RECOGNIZES THAT THE AWARD OF COST REIMBURSEMENT CONTRACTS REQUIRES PROCUREMENT PERSONNEL TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING THE PROPOSED COSTS AND TECHNICAL APPROACH INVOLVED. WE BELIEVE THAT SUCH JUDGMENT MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE PROCURING ACTIVITY INVOLVED, SINCE IT IS IN THE BEST POSITION TO ASSESS "REALISM" OF COSTS AND OF TECHNICAL APPROACHES AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS. 50 COMP. GEN. 390, 410, SUPRA.

NOR, IN THIS CONTEXT, DO WE FIND THE FORMULA ADOPTED FOR SCORING REASONABLENESS OF THE PROPOSED COSTS TO HAVE BEEN UNREASONABLE IN VIEW OF THE THOROUGH CONSIDERATION OF ALL APPROPRIATE FORMULAS BY COMPETENT TECHNICAL PERSONNEL BEFORE THE ADOPTION OF THE ONE USED, AND IN VIEW OF THE EQUAL AND UNBIASED APPLICATION OF THIS FORMULA TO ALL OFFERORS. AS TO YOUR CONTENTION THAT THIS FORMULA WAS NOT DISCUSSED IN THE RFQ, OUR OFFICE HAS HELD THAT OFFERORS SHOULD BE INFORMED AS TO THE RELATIVE WEIGHT OR IMPORTANCE ATTACHED TO EACH FACTOR, OR, AT THE VERY LEAST, THE BROAD SCHEME OF SCORING. 49 COMP. GEN. 229, 230 (1969); B 166052(2), MAY 20, 1969. WE DO NOT BELIEVE THAT THE PRECISE FORMULA TO BE USED IN DISTRIBUTING THESE POINTS NEED BE INDICATED IN A SOLICITATION. MOREOVER, HAD YOU HAD ANY DOUBT OR CONCERN AS TO THE POINT DISTRIBUTION, THE TIME FOR RESOLUTION OF THE MATTER WAS BEFORE THE CLOSING DATE SET FOR RECEIPT OF QUOTATIONS. 50 COMP. GEN. 390, 412, SUPRA. FURTHER, FROM THE RECORD, WE MUST CONCLUDE THAT SCORING FOR REASONABLENESS OF FEES WAS DONE FAIRLY AND WITHOUT PREJUDICE TO ANY OFFEROR.

WE ALSO BELIEVE THAT THE FOREGOING REASONING APPLIES WITH EQUAL VALIDITY TO THE CONTENTION THAT AWARD TO BDM IS NOT IN THE BEST INTERESTS OF THE GOVERNMENT BECAUSE AFTER CONSIDERING START-UP AND PHASE-IN COSTS, WHICH, OF PARTICULAR SIGNIFICANCE, WERE NOT PART OF THE EVALUATION FACTORS SET FORTH IN THE RFQ, THE TOTAL CONTRACT COST TO THE GOVERNMENT WILL ALLEGEDLY EXCEED THE LITTON PROPOSED COST BY $200,000. THE CONTRACTING OFFICER, AFTER AN ANALYSIS AND COMPARISON OF ALL PERTINENT COSTS, REACHED A REASONABLE JUDGMENT THAT EVEN CONSIDERING SUCH COSTS THE BDM PROPOSAL STILL OFFERED A SAVINGS TO THE GOVERNMENT AND THAT CONSEQUENTLY AWARD TO BDM WAS IN THE BEST INTERESTS OF THE GOVERNMENT.

AS REGARDS YOUR ALLEGATION THAT THIS PROCUREMENT RESULTED IN A "BUY IN", AND, THEREFORE WAS CONTRARY TO ASPR 1-311, WE ARE AWARE OF NO LEGAL PRINCIPLE ON WHICH AN AWARD MIGHT BE PRECLUDED OR DISTURBED MERELY BECAUSE THE LOW BIDDER SUBMITTED AN UNPROFITABLE PRICE IF SUCH BE THE CASE. 173102, JUNE 29, 1971. NOR DO WE BELIEVE THAT THE CONTRACTING OFFICER WAS REMISS IN PERFORMING HIS DUTY UNDER ASPR 1-311 TO ASSURE THAT THE UNDERSTATED COSTS ARE NOT RECOUPED BY THE CONTRACTOR BY MEANS OF CONTRACT CHANGES OR FOLLOW-ON CONTRACTS. THE CONTRACTING OFFICER CONCLUDED THAT THERE WAS NO REASON TO BELIEVE THAT THE CONTRACT AWARDED WILL EXCEED THE ESTIMATED COSTS. WHERE NO "BUYING-IN" HAS OCCURRED, OF COURSE, THERE WOULD BE NO NEED TO TAKE PROTECTIVE MEASURES. IN ANY CASE, WE FEEL THE GOVERNMENT IS AMPLY PROTECTED BY THE CEILING PLACED UPON DIRECT LABOR AND BY THE FACT THAT SHOULD IT BE DISCOVERED THAT ACTUAL COSTS ARE EXCEEDING THOSE ORIGINALLY ESTIMATED THE 1-YEAR OPTIONS NEED NOT BE EXERCISED. TO YOUR CONTENTION THAT YOU WERE NOT GIVEN THE OPPORTUNITY TO SUBMIT VIEWS TO THE CONTRACTING OFFICER ON THE ISSUES PRESENTED IN THE PROTESTS SUBMITTED TO OUR OFFICE, AS STATED ABOVE, BOTH PROTESTS WERE WITHDRAWN WITHOUT ANY ACTION THEREON BY OUR OFFICE. WE DO NOT SEE, THEREFORE, THE NECESSITY FOR THE LITERAL APPLICATION OF THE CITED ASPR.