B-174084, JAN 5, 1972

B-174084: Jan 5, 1972

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PROTESTANT'S CLAIM THAT THE SOLICITATION WAS AMBIGUOUS IS WITHOUT MERIT SINCE THE APPROPRIATE TIME TO ALLEGE AMBIGUITY WAS BEFORE SUBMISSION OF THE ORIGINAL OFFER. PROTESTANT'S SECOND CONTENTION THAT ITS INITIAL LOW OFFER WAS DISCLOSED TO RAYTHEON IS CONTRADICTED BY THE FACTS. PROTESTANT FURTHER CONTENDS THAT NEGOTIATIONS WERE CONDUCTED WITH RAYTHEON AFTER THE OSTENSIBLE CLOSING OF NEGOTIATIONS. PROTESTANT'S FINAL CONTENTION IS THAT RAYTHEON WAS ALLOWED TO COMBINE THE REQUIREMENTS OF SEVERAL GOVERNMENT CONTRACTS IN DETERMINING UNIT PRICE AND THEREFORE ENJOYED AN UNFAIR COMPETITIVE ADVANTAGE. THERE IS NO BASIS FOR DISTURBING THE AWARD AND THE PROTEST IS DENIED. INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF SEPTEMBER 10.

B-174084, JAN 5, 1972

BID PROTEST - AMBIGUOUS SOLICITATION - UNFAIR COMPETITIVE ADVANTAGE DECISION DENYING PROTEST OF INFRARED INDUSTRIES, INC., AGAINST AWARD OF A CONTRACT TO RAYTHEON CO., FOR A SUPPLY OF REFRIGERATED DETECTION UNITS (RDUS) UNDER AN RFP ISSUED BY THE NAVY SHIPS PARTS CONTROL CENTER. PROTESTANT'S CLAIM THAT THE SOLICITATION WAS AMBIGUOUS IS WITHOUT MERIT SINCE THE APPROPRIATE TIME TO ALLEGE AMBIGUITY WAS BEFORE SUBMISSION OF THE ORIGINAL OFFER, AND NOT AFTER AWARD. PROTESTANT'S SECOND CONTENTION THAT ITS INITIAL LOW OFFER WAS DISCLOSED TO RAYTHEON IS CONTRADICTED BY THE FACTS. PROTESTANT FURTHER CONTENDS THAT NEGOTIATIONS WERE CONDUCTED WITH RAYTHEON AFTER THE OSTENSIBLE CLOSING OF NEGOTIATIONS. THE RECORD INDICATES THAT RAYTHEON ONLY CONFIRMED ITS BEST AND FINAL OFFER AT THE REQUEST OF THE PROCURING AGENCY. PROTESTANT'S FINAL CONTENTION IS THAT RAYTHEON WAS ALLOWED TO COMBINE THE REQUIREMENTS OF SEVERAL GOVERNMENT CONTRACTS IN DETERMINING UNIT PRICE AND THEREFORE ENJOYED AN UNFAIR COMPETITIVE ADVANTAGE. SINCE PROTESTANT HAS ENJOYED A SIMILAR ADVANTAGE OVER RAYTHEON IN THE PAST, THE COMP. GEN. FEELS THAT A DETERMINATION AS TO THE PROPRIETY OF A PARTIAL "BREAKOUT" OF RDUS SHOULD BE LEFT TO THE JUDGEMENT OF THE CONTRACTING AGENCY. ACCORDINGLY, THERE IS NO BASIS FOR DISTURBING THE AWARD AND THE PROTEST IS DENIED.

TO INFRARED INDUSTRIES, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF SEPTEMBER 10, 1971, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO THE RAYTHEON COMPANY UNDER RFP N00104-71-R-Z411 (RFP-Z411), ISSUED BY THE NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA.

THE ABOVE-REFERENCED SOLICITATION WAS ISSUED ON APRIL 13, 1971, FOR A SUPPLY OF 203 REFRIGERATED DETECTION UNITS (RDUS), OF WHICH YOUR FIRM AND RAYTHEON ARE THE ONLY APPROVED AND QUALIFIED SOURCES. THE RDUS WERE DESCRIBED AS FOLLOWS IN THE SOLICITATION SCHEDULE:

"6E 14209311139

RDU

2439861 OR 2580744."

IT IS ADMINISTRATIVELY REPORTED THAT 2439861 AND 2580744 REFER TO NAVORD CONFIDENTIAL DRAWINGS OF THE RDUS WHICH IN TURN INVOKE THE REQUIREMENTS OF CONFIDENTIAL WEAPONS SPECIFICATION 1592A (WS 1592A). BY LETTER OF APRIL 22, 1971, YOU ADVISED THE PROCURING ACTIVITY THAT YOU WERE QUOTING ON YOUR DRAWING 2581319 REV. 1, INSTEAD OF DRAWING 2439861 SPECIFIED IN THE SOLICITATION. ACCORDINGLY, YOU CHANGED THE SCHEDULE ITEM DESCRIPTION IN YOUR PROPOSAL TO READ:

"6E 14209311139

RDU

OR 2580744

2581319 REV. 1."

WEAPONS SPECIFICATION 1592A SETS FORTH THE PROCEDURE FOR SELECTING CERTAIN UNITS FOR TESTING, KNOWN AS PRODUCT SURVEILLANCE (PS) AND PRODUCT SURVEILLANCE AND LIFE (PS&L) UNITS. THE TESTS PERFORMED UPON THESE UNITS ARE NOT DESTRUCTIVE AND THE UNITS MAY BECOME PART OF THE PRODUCTION QUANTITY. ON MAY 10, 1971, THE CLOSING DATE FOR RECEIPT OF PROPOSALS, THE FOLLOWING PROPOSALS WERE RECEIVED FOR 203 UNITS, INCLUDING PRESERVATION AND PACKAGING (P&P):

UNIT PRICE TOTAL PRICE

RAYTHEON $623.00 $126,469.00

INFRARED 657.43

P&P .57 658.00 133,573.95

RAYTHEON CHOSE TO INCLUDE PRESERVATION AND PACKAGING WITHIN THE UNIT PRICE OF THE RDUS, WHICH WAS IN ACCORDANCE WITH INSTRUCTIONS GIVEN ON PAGE 2 OF THE "ADDITIONAL GENERAL PROVISIONS" OF THE RFP, WHILE YOUR FIRM STATED ITS P&P CHARGE SEPARATELY. ADDITIONALLY, WITH REFERENCE TO PRODUCT SURVEILLANCE UNITS, AND PRODUCT SURVEILLANCE AND LIFE UNITS, YOU STATED IN YOUR INITIAL OFFER:

"IF P&S AND PS&L UNITS ARE REQUIRED IN ACCORDANCE WITH WS-1592A, THE PRICE FOR EACH P&S UNIT WILL BE $903.00 AND THE PRICE FOR EACH PS&L UNIT WILL BE $1319.00."

BY TELEGRAM OF JUNE 10, 1971, THE PROCURING ACTIVITY INCREASED THE QUANTITY OF RDUS TO 704, AMENDED THE DELIVERY SCHEDULE, AND INFORMED BOTH OFFERORS:

"3. CONTRACTORS MUST QUALIFY TO WEAPONS SPECIFICATION WS 1592A AMEND NO. 1. ADVISE IF YOU CAN COMPLY."

THE FOLLOWING AMENDED OFFERS WERE RECEIVED BY JUNE 15, 1971, THE CLOSING DATE ESTABLISHED BY THE TELEGRAMS:

UNIT PRICE TOTAL PRICE

RAYTHEON $596.00 $419,584.00

INFRARED 624.43 P&P .57 625.00 440,000.00

INFRARED REITERATED THAT PS UNITS WOULD BE AN ADDITIONAL $903.00 EACH AND PS&L UNITS WOULD BE AN ADDITIONAL $1319.00 EACH. IN TELEPHONE CALLS TO RAYTHEON AND YOUR FIRM ON JUNE 24 AND 25, RESPECTIVELY, BOTH OFFERORS WERE REQUESTED TO REVIEW THEIR OFFERS AND SUBMIT ANY REVISIONS THERETO BY JUNE 28, 1971. IN A TELEGRAM OF JUNE 24, RAYTHEON RESPONDED:

"CONFIRMING OUR TELEVON 6-24-71 RAYTHEON RECONFIRMS PRICE OF $596. OUR BEST AND FINAL OFFER FOR THE RDU UNITS DEFINED BY SPEC WS-1592A AMENDMENT ONE."

INFRARED SUBMITTED THE FOLLOWING "BEST PRICES AND DELIVERY" BY LETTER OF JUNE 28:

ITEM UNIT PRICE TOTAL

RDUS $595.43 $419,182.72

P&P .57 401.28

$419,584.00

INFRARED'S PRICES FOR PS AND PS&L UNITS REMAINED UNCHANGED.

WEAPONS SPECIFICATION 1592A, AMENDMENT NO. 1, PROVIDES FOR THE SELECTION OF PS AND PS&L UNITS ACCORDING TO PRODUCTION LOT SIZES DURING A SPECIFIC DELIVERY TIME FRAME. ONE PS&L UNIT IS REQUIRED WITH EACH PRODUCTION LOT EXCEPT THE FIRST LOT. FIVE PS UNITS ARE REQUIRED WITH THE FIRST PRODUCTION LOT AND SUBSEQUENT PS UNITS VARY WITH THE LOT SIZE AS FOLLOWS:

LOT SIZE PS UNITS REQUIRED

25 - 100 2

101 - 200 3

201 - 300 4

300 AND OVER 4 PLUS 1 PERCENT

OF ALL OVER 300.

YOUR OFFER WAS EVALUATED AS FOLLOWS:

QUANTITY DAYS A.R.O. PS UNITS PS&L UNITS

25 120 5 0

50 120 1 1

75 150 2 1

150 180 3 1

150 210 3 1

150 240 3 1

104 270 3 1

704 20 6

SINCE THE PS AND PS&L UNITS MAY BECOME PART OF THE PRODUCTION QUANTITY UPON COMPLETION OF THE TESTS, YOUR TOTAL PRICE WAS:

678 PRODUCTION UNITS $596

(INCLUDING P&P) $404,088

20 PS UNITS $903 18,060

6 PS&L UNITS $1319 7,914

$430,062

RAYTHEON'S UNIT PRICE OF $596 INCLUDED THE PS AND PS&L TESTING REQUIRED BY WS 1592A, AMENDMENT 1; THEREFORE, ITS TOTAL PRICE WAS $419,584. AWARD TO RAYTHEON IN THIS AMOUNT WAS MADE ON AUGUST 10, 1971.

YOUR FIRST CONTENTION IS THAT THE SOLICITATION WAS AMBIGUOUS AS TO WHETHER THE PS AND PS&L UNITS WERE TO BE FURNISHED. IN THIS REGARD, AS WE HAVE INDICATED ABOVE, THE REQUIREMENTS OF WS 1592A WERE IMPOSED BY THE NAVORD DRAWINGS CITED IN THE INVITATION SCHEDULE. YOU DID NOT QUOTE TO THOSE DRAWINGS, BUT TO YOUR DRAWING 2581319, NOTE 1 OF WHICH STATES: "THIS ASSEMBLY SHALL BE IN ACCORDANCE WITH 10001-WS-1592." YOU ASSERT THAT "THIS IS AN AMBIGUOUS NOTE AS FAR AS P.S. AND P.S.&L. UNITS BEING REQUIRED." IF, IN YOUR OPINION, THE DRAWING UPON WHICH YOUR OFFER WAS BASED WAS AMBIGUOUS AS TO THIS REQUIREMENT, THE APPROPRIATE TIME TO HAVE CONTENDED BEFORE OUR OFFICE THAT SUCH AMBIGUITY WOULD RESULT IN AN IMPROPER EVALUATION OF YOUR OFFER WAS BEFORE SUBMISSION THEREOF, NOT AFTER AWARD TO RAYTHEON. FURTHERMORE, THE JUNE 10 TELEGRAPHIC MODIFICATION OF THE SOLICITATION SPECIFICALLY ADVISED OFFERORS THAT THEY "MUST QUALIFY TO WEAPONS SPECIFICATION WS 1592A, AMEND NO. 1." IN VIEW THEREOF, WE REGARD THE SOLICITATION AS REQUIRING PS AND PS&L UNITS TO BE FURNISHED, AND YOUR OFFER TO HAVE BEEN PROPERLY EVALUATED UNDER THAT REQUIREMENT.

YOU NEXT CONTEND THAT YOUR INITIAL LOW OFFER WAS DISCLOSED TO RAYTHEON, WHO WAS ALLOWED TO MEET IT DURING NEGOTIATIONS. AS SHOWN ABOVE, YOUR PRICE WAS CONSISTENTLY HIGHER THAN RAYTHEON'S, WHO FIRST SUBMITTED A UNIT PRICE OF $596 ON JUNE 15 AND CONFIRMED THAT PRICE AS ITS BEST AND FINAL OFFER BY TELEGRAM OF JUNE 24. YOUR FIRM FIRST OFFERED A UNIT PRICE OF $596 ON JUNE 28, 1971. THEREFORE, WE FIND NO MERIT IN THIS CONTENTION.

THE THIRD ARGUMENT MADE IN YOUR PROTEST IS THAT AFTER THE OSTENSIBLE CLOSING OF NEGOTIATIONS ON JUNE 28, FURTHER NEGOTIATIONS WERE CONDUCTED WITH RAYTHEON ALONE AS TO WHETHER PS AND PS&L UNITS WERE TO BE FURNISHED. THE RECORD SHOWS THAT BY TELEGRAM OF JULY 16, 1971, UPON INQUIRY BY THE PROCURING ACTIVITY, RAYTHEON CONFIRMED THE CONTENTS OF ITS BEST AND FINAL OFFER OF JUNE 24. IT DOES NOT APPEAR THAT RAYTHEON WAS BEING GIVEN AN OPPORTUNITY TO CHANGE ITS PROPOSAL, OR THAT THE GOVERNMENT WAS EFFECTING A CHANGE IN THE SOLICITATION PROVISIONS. THEREFORE, WE DO NOT BELIEVE THAT THE TELEGRAM OF JULY 16 CONSTITUTES A BASIS FOR INVALIDATING THE AWARD.

YOUR FINAL CONTENTION IS THAT RAYTHEON, A LARGE BUSINESS CONCERN, ENJOYED THE UNFAIR COMPETITIVE ADVANTAGE OF COMBINING THE REQUIREMENTS UNDER RFP- Z411 WITH THOSE OF OTHER PROCUREMENTS. YOU STATE THAT DURING THE NEGOTIATIONS UNDER THE INSTANT PROCUREMENT RAYTHEON, AS A SOLE SOURCE, HAD RECEIVED A CONTRACT, AND WAS NEGOTIATING ADDITIONAL CONTRACTS, FOR CERTAIN MISSILES OF WHICH THE RDU IS A COMPONENT. THE EFFECT OF THESE ADDITIONAL CONTRACTS, YOU ASSERT, WAS TO PROVIDE RAYTHEON WITH A MORE ECONOMICAL MAXIMUM PRODUCTION RUN OF 4200 RDUS, IN CONTRAST TO THE 704 UNITS BEING PROCURED UNDER RFP-Z411. IN THIS CONNECTION, IT APPEARS FROM YOUR LETTER OF OCTOBER 13, 1971, THAT IN THE PAST YOU HAVE OBTAINED A SIMILAR ADVANTAGE OVER RAYTHEON. YOU OBSERVE THEREIN THAT THE LOW UNIT PRICE AT WHICH YOU WERE AWARDED CONTRACT N00104-69-C-5442 WAS THE RESULT OF COMBINING SEVERAL GOVERNMENT CONTRACTS TOTALING 685 UNITS WITH A CONTRACT FROM A GOVERNMENT PRIME CONTRACTOR FOR 3000 UNITS. YOU STATE THAT THIS ENABLED YOU TO OFFER A UNIT PRICE APPROXIMATELY $200 BELOW THAT OF RAYTHEON, WHO WAS QUOTING ON ONLY 500 UNITS. YOU NOW MAINTAIN, HOWEVER, THAT THIS SITUATION DOES NOT ENCOURAGE, AND PRACTICALLY PRECLUDES, PARTICIPATION BY YOUR FIRM IN PROCUREMENTS FOR THIS ITEM, IN CONTRAVENTION OF THE NATIONAL POLICY FAVORING SMALL BUSINESS CONCERNS. YOU THEREFORE SUGGEST THAT A PARTIAL "BREAKOUT" OF THE RDUS TO BE USED BY RAYTHEON SHOULD BE MADE TO YOUR FIRM.

SINCE YOUR FIRM AND RAYTHEON ARE THE ONLY APPROVED AND QUALIFIED SOURCES OF SUPPLY FOR THE RDUS, IT WOULD APPEAR IMPROPER TO TOTALLY OR PARTIALLY SET ASIDE FOR SMALL BUSINESS CONCERNS PROCUREMENTS OF THIS ITEM. SEE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.5(A)(I) AND 1- 706.6(A)(III). WITH RESPECT TO A POSSIBLE "BREAKOUT" OF THIS COMPONENT, ASPR 1-326 CONTAINS DETAILED GUIDELINES FOR DETERMINING WHETHER COMPONENTS SHOULD BE PURCHASED BY THE GOVERNMENT DIRECTLY AND FURNISHED TO AN END ITEM CONTRACTOR AS GOVERNMENT-FURNISHED EQUIPMENT FOR INCORPORATION IN THE END ITEM. WE REGARD THIS DETERMINATION AS A MATTER OF JUDGMENT VESTED IN THE CONTRACTING AGENCY, AND WE ARE THEREFORE UNABLE TO CONCLUDE THAT THE NONSELECTION OF THE RDU AS A BREAKOUT COMPONENT AFFORDS A BASIS FOR DISTURBING RAYTHEON'S CONTRACT.

IN VIEW OF THE ABOVE, YOUR PROTEST IS DENIED.