B-174208, APR 6, 1972

B-174208: Apr 6, 1972

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THE CONTRACTING OFFICER'S DETERMINATION THAT A FIRM IS WITHIN THE COMPETITIVE RANGE DOES NOT ESTABLISH THE OFFEROR'S ENTITLEMENT TO AWARD SOLELY ON THE BASIS OF ITS LOW FIXED PRICE. ON THE PRESENT RECORD IT APPEARS THAT THE AWARD WAS PROPERLY MADE ON THE BASIS OF PRICE AND TECHNICAL ACCEPTABILITY. FROM OUR REVIEW OF THE ADMINISTRATIVE RECORD OF THE PROCUREMENT (WHICH WAS OBTAINED BY OUR EUROPEAN BRANCH). WE MUST CONCLUDE THAT THERE IS NO BASIS FOR OUR OFFICE TO INTERPOSE A LEGAL OBJECTION TO THE AWARD. THE FOLLOWING PERTINENT FACTS ARE DRAWN FROM THE RECORD BEFORE OUR OFFICE. THE SOLICITATION WAS ISSUED ON JUNE 16. ONE OF THE KEY FACTORS LISTED WAS THE ORGANIZATION AND MANAGEMENT PROPOSED.

B-174208, APR 6, 1972

BID PROTEST - NEGOTIATED PROCUREMENT - EVALUATION FACTOR DECISION DENYING PROTEST OF RAYTHEON SERVICE COMPANY AGAINST AWARD OF A CONTRACT TO ELECTRONICA NAVAL E INDUSTRIAL, S.A., MADRID, SPAIN, UNDER AN RFP ISSUED BY THE AIR FORCE PROCUREMENT CENTER, WIESBADEN, GERMANY, FOR PROVIDING BASE MAINTENANCE SERVICES AT ZARAGOZA AIR BASE, SPAIN. IN VIEW OF THE CLEAR LANGUAGE OF THE SOLICITATION, AS WELL AS THE TEXT OF NEGOTIATION SESSIONS HELD PRIOR TO AWARD, THE COMP. GEN. CANNOT AGREE THAT THE PROCURING ACTIVITY FAILED TO ADEQUATELY INDICATE THE ROLE THAT AN OFFEROR'S MANNING PROPOSALS WOULD PLAY IN BID EVALUATION. FURTHERMORE, THE CONTRACTING OFFICER'S DETERMINATION THAT A FIRM IS WITHIN THE COMPETITIVE RANGE DOES NOT ESTABLISH THE OFFEROR'S ENTITLEMENT TO AWARD SOLELY ON THE BASIS OF ITS LOW FIXED PRICE. ON THE PRESENT RECORD IT APPEARS THAT THE AWARD WAS PROPERLY MADE ON THE BASIS OF PRICE AND TECHNICAL ACCEPTABILITY, AND THE PROTEST MUST BE DENIED.

TO RAYTHEON SERVICE COMPANY:

WE REFER TO YOUR LETTER OF DECEMBER 29, 1971, RECEIVED IN OUR OFFICE ON JANUARY 31, 1972, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ELECTRONICA NAVAL E INDUSTRIAL, S.A., MADRID, SPAIN (ENISA), UNDER UNITED STATES AIR FORCE PROCUREMENT CENTER, WIESBADEN, GERMANY, REQUEST FOR PROPOSALS NO. 61308-71-R-0139.

FROM OUR REVIEW OF THE ADMINISTRATIVE RECORD OF THE PROCUREMENT (WHICH WAS OBTAINED BY OUR EUROPEAN BRANCH), WE MUST CONCLUDE THAT THERE IS NO BASIS FOR OUR OFFICE TO INTERPOSE A LEGAL OBJECTION TO THE AWARD.

THE FOLLOWING PERTINENT FACTS ARE DRAWN FROM THE RECORD BEFORE OUR OFFICE. THE SOLICITATION WAS ISSUED ON JUNE 16, 1971, AND REQUESTED FIXED -PRICE PROPOSALS FOR PROVIDING BASE MAINTENANCE SERVICES AT ZARAGOZA AIR BASE, SPAIN. SECTION "D" OF THE SOLICITATION APPRISED OFFERORS OF THE CRITERIA TO BE USED IN PROPOSAL EVALUATION AND AWARD. ONE OF THE KEY FACTORS LISTED WAS THE ORGANIZATION AND MANAGEMENT PROPOSED. IN THIS REGARD, THE SOLICITATION ALSO ADVISED OFFERORS OF THE GOVERNMENT'S ESTIMATE OF THE MANNING NECESSARY TO SATISFACTORILY ACCOMPLISH THE WORK REQUIRED. PARAGRAPH 6A(6) OF SECTION "D" CAUTIONED OFFERORS THAT:

" *** THE U.S. GOVERNMENT MANNING ESTIMATE (WHICH WAS 550 FOR PERFORMING THE SERVICES ON WHICH THE CONTRACT WAS AWARDED) *** MAY BE USED AS A GUIDE FOR THE NUMBER OF PERSONNEL THAT MAY BE REQUIRED TO PERFORM THE NECESSARY SERVICES *** . THIS ESTIMATE IS PROVIDED TO REFLECT THE GOVERNMENT'S CONCEPT AS TO THE SCOPE OF EFFORT REQUIRED AND AS A TOOL FOR PROPOSAL PREPARATION. THE MANNING ESTIMATES HEREIN SHALL IN NO WAY MINIMIZE, LIMIT OR RELIEVE THE CONTRACTOR'S OBLIGATION TO SATISFY THE REQUIREMENTS OF PERFORMANCE OF THE CONTRACT AND TO PROVIDE AS MANY PERSONS AS ARE NECESSARY TO FULFILL ALL REQUIREMENTS.

"PROPOSALS OFFERING A LESSER MANNING MUST BE FULLY JUSTIFIED. THE BURDEN OF PROOF IN JUSTIFYING A FEWER, AS WELL AS A GREATER, NUMBER OF PEOPLE THAN THE U.S. GOVERNMENT ESTIMATE WILL BE UPON THE PROPOSER. FAILURE TO PROVIDE ADEQUATE JUSTIFICATION CAN SUBJECT A PROPOSER TO A DETERMINATION OF NONRESPONSIVENESS DURING TECHNICAL REVIEW AND EVALUATION OF THE PROPOSAL."

TEN PROPOSALS WERE RECEIVED IN RESPONSE TO THE SOLICITATION BY AUGUST 17, 1971, THE DATE SET FOR RECEIPT OF PROPOSALS. THEREAFTER, TWO OF THE PROPOSALS RECEIVED WERE DETERMINED TO BE UNACCEPTABLE BECAUSE THEY FAILED TO PROVIDE SUFFICIENT INFORMATION TO PERMIT EVALUATION; THE REMAINING PROPOSALS WERE SUBJECTED TO A TECHNICAL EVALUATION. AFTER CONSIDERATION OF THE RESULTS OF THE EVALUATION OF THE MANAGEMENT AND THE COST PROPOSALS OF THE REMAINING OFFERORS, THE CONTRACTING OFFICER DETERMINED THAT A THIRD SOURCE WAS NOT WITHIN A COMPETITIVE RANGE. THE REMAINING OFFERORS, TOGETHER WITH THEIR PROPOSED MANNING (INCLUDING THE MIX OF AMERICAN NATIONALS (A/N) AND SPANISH NATIONALS (S/N) AND PRICES FOR THE MULTIYEAR TERMS) WERE:

"INITIAL PROPOSALS

MANNING

"PROPOSER SCORE A/N S/N TOTAL $ PRICE

TUMPANE 5.83 65 518 583 6,207,081

PA&E 4.76 24 482 508 4,900,759

RAYTHEON 4.37 22 380 402 3,843,576

BURNS & ROE 4.19 21 558 579 5,666,293

SAE 4.04 19 467 486 4,095,784

ENISA 3.87 9 372 381 3,972,072

AVCO 3.82 9 419 428 4,152,881"

INSOFAR AS THE MERITS OF THE MANAGEMENT PROPOSALS WERE CONCERNED, ONLY TUMPANE, THE INCUMBENT CONTRACTOR, WAS JUDGED FULLY ACCEPTABLE. THE REMAINING PROPOSALS WERE JUDGED BELOW STANDARD EVIDENCING DEFICIENCIES WHICH MIGHT BE CORRECTABLE THROUGH NEGOTIATIONS. AS BETWEEN RAYTHEON AND ENISA, RAYTHEON WAS RANKED HIGHER; BOTH, HOWEVER, WERE CONSIDERED TO HAVE SIGNIFICANT MANNING DEFICIENCIES IN MOST AREAS. NEGOTIATIONS WERE CONDUCTED WITH EACH OF THE FIRMS AND EACH SUBMITTED A TIMELY RESPONSE BY THE SEPTEMBER 15, 1971, CLOSING DATE. THE REVISED MANNING AND PRICE PROPOSALS ARE AS FOLLOWS:

"FINAL PROPOSALS

MANNING

"PROPOSER SCORE A/N S/N TOTAL $ PRICE

TUMPANE 6.13 65 518 583 6,257,900

PA&E 4.61 23 448471 4,383,269

RAYTHEON 4.50 22 392 414 3,950,828

BURNS & ROE 4.99 31551 582 6,005,149

SAE 4.64 19 468 487 4,416,324

ENISA 5.3513 499 511 4,164,000

AVCO 4.69 19 478 497 5,341,357"

AS A RESULT OF A REEVALUATION OF THE MANAGEMENT PROPOSALS, TUMPANE REMAINED FIRST. ENISA'S FINAL PROPOSAL WAS RANKED SECOND AND RAYTHEON'S, ALTHOUGH SLIGHTLY IMPROVED, RANKED LAST. THE EXPLANATION FOR THE SUBSTANTIAL IMPROVEMENT IN ENISA'S FINAL PROPOSAL CAN BE FOUND IN ITS REVISED MANNING. THE SAME BASIS EXPLAINS THE DECLINE IN RAYTHEON'S STANDING VIS-A-VIS THE OTHER OFFERORS.

DESPITE THE TECHNICAL SUPERIORITY OF TUMPANE'S TECHNICAL PROPOSAL, THE CONTRACTING OFFICER, AFTER COMPARING TUMPANE'S COST PROPOSAL WITH ENISA'S COST PROPOSAL, DETERMINED THAT AWARD TO ENISA WOULD BE MOST ADVANTAGEOUS, PRICE AND OTHER FACTORS CONSIDERED.

IT IS YOUR BASIC CONTENTION THAT THE AIR FORCE FAILED TO ADEQUATELY DISCLOSE ITS ESTIMATE OF THE MANNING NECESSARY TO ACCOMPLISH THE SPECIFIED TASKS, AND THAT IT RELIED ON AN UNDISCLOSED MINIMUM MANNING LEVEL IN AWARDING THE CONTRACT, CITING 50 COMP. GEN. 670 (1971). IN THE CITED CASE, WE EXPRESSED THE VIEW THAT IT WAS THE GOVERNMENT'S OBLIGATION TO APPRISE OFFERORS OF ITS JUDGMENT AS TO THE RESOURCES NECESSARY TO PERFORM THE WORK IN ORDER TO ASSIST OFFERORS IN PROPOSAL PREPARATION. WE ALSO STATED THAT:

" *** THIS DISCLOSURE MAY PROPERLY TAKE THE FORM OF REALISTIC ESTIMATES, WHICH MAY INCLUDE AN INDICATION OF MAXIMUM AND MINIMUM LEVELS. HOWEVER, WHERE *** THE CONTRACTING AGENCY TREATS THE FAILURE OF AN OFFEROR TO MEET PREDETERMINED LEVELS AS A MATTER OF 'RESPONSIVENESS,' IT IS INCUMBENT ON THE CONTRACTING AGENCY TO CLEARLY DISCLOSE IN THE SOLICITATION ITS DETERMINATION OF WHAT IS REQUIRED. IN THIS CONTEXT, SUCH DISCLOSURE IS, IN OUR VIEW, AN INTEGRAL PART OF THE GOVERNMENT'S OBLIGATION TO STATE ITS MINIMUM NEEDS."

AS WE READ THE SOLICITATION PROVISIONS CONCERNING THE GOVERNMENT'S MANNING ESTIMATES, IT IS CLEAR FROM THE LANGUAGE USED THAT THE ESTIMATE IS TO BE TAKEN SERIOUSLY. THIS IS EVIDENT FROM THE CAVEAT THAT AN OFFEROR PROPOSING LESSOR OR GREATER MANNING MUST FULLY JUSTIFY ITS POSITION OR ELSE RISK A "DETERMINATION OF NONRESPONSIVENESS DURING TECHNICAL REVIEW AND EVALUATION OF THE PROPOSAL." MOREOVER, IN VIEW OF THE CAVEAT, WE CANNOT AGREE THAT THE SOLICITATION FAILS TO ADEQUATELY INDICATE THE ROLE THAT AN OFFEROR'S MANNING CHARTS ARE TO PLAY IN THE EVALUATION. ADDITION, A READING OF PARAGRAPH 6 OF SECTION "D," ENTITLED "THE MANAGEMENT PROPOSAL," EMPHASIZES THE FACT THAT PROPOSED MANNING IS CRITICAL TO AN ASSESSMENT OF AN OFFEROR'S MANAGEMENT PROPOSAL. INDEED, THE INTRODUCTORY SENTENCE OF THE PARAGRAPH, WITHOUT MORE, CONFIRMS OUR OBSERVATION:

"THE ESSENCE OF THE MANAGEMENT PROPOSAL IS A DEMONSTRATION OF THE UNDERSTANDING OF THE REQUIREMENT *** TOGETHER WITH A CLEAR DEMONSTRATION OF AN ABILITY TO SATISFY THOSE REQUIREMENTS. *** "

MORE IMPORTANTLY, WE MUST NOTE THAT BASED ON A REVIEW OF THE MINUTES OF THE NEGOTIATIONS, THERE IS NO INDICATION THAT THE AIR FORCE DEPARTED FROM ITS MANNING CONCEPTS. RATHER, THE MINUTES OF EACH NEGOTIATION SESSION INDICATE THAT THE AIR FORCE DISCUSSED MANNING IN LIGHT OF ITS ESTIMATE. MOREOVER, WE CAN ATTRIBUTE NO SIGNIFICANCE TO THE FACT THAT ENISA'S FINAL MANNING PROPOSAL WAS 7 PERCENT BELOW THE GOVERNMENT'S ESTIMATE TO SUPPORT THE SUGGESTION THAT THE AIR FORCE HAD IN FACT LOWER UNSTATED REQUIREMENTS. IN OUR VIEW, SUCH CONCLUSION WOULD IGNORE THE FACT THAT THE TYPE AND CALIBER OF THE PERSONNEL PROPOSED BY ENISA COULD FULLY JUSTIFY A LESSER MANNING.

THE CIRCUMSTANCES OF THIS PROCUREMENT SHARPLY CONTRAST WITH THOSE INVOLVED IN THE CITED CASE. THERE, OF THE FIVE OFFERORS RESPONDING TO THE SOLICITATION, ALL BUT THE INCUMBENT CONTRACTOR, WHO SUBMITTED THE HIGHEST PRICED OFFER, WERE DENIED A NEGOTIATION OPPORTUNITY ON THE GROUNDS OF "TECHNICAL UNACCEPTABILITY." THE ONLY SUBSTANTIAL REASON ADVANCED IN SUPPORT OF REJECTION WAS THE FAILURE TO MEET PREDETERMINED RESOURCE LEVELS WHICH WERE NOT ADEQUATELY DISCLOSED IN THE SOLICITATION. IT WAS IN THIS CONTEXT THAT THE REMARKS, QUOTED ABOVE, WERE MADE. THE THRUST OF OUR COMMENTS WAS SIMPLY THAT WHERE THE GOVERNMENT KNOWS EXACTLY WHAT IT WANTS IN TERMS OF RESOURCES AND PRECLUDES THE POSSIBILITY OF VARIATIONS IN RESOURCES BASED ON AN OFFEROR'S ASSESSMENT OF AND APPROACH TO WHAT IS REQUIRED, THE RESOURCE LEVELS MUST BE DISCLOSED.

WHEN WE EMPHASIZED IN 50 COMP. GEN., SUPRA, THAT THE CONTRACTING AGENCY TREATED COMPLIANCE WITH THE UNDISCLOSED RESOURCE LEVELS AS A MATTER OF "NONRESPONSIVENESS," WE WERE HIGHLIGHTING THE INFLEXIBILITY OF ITS APPROACH - AN APPROACH WHICH WE CONSIDERED INCONSISTENT WITH THE CONCEPT OF COMPETITIVE NEGOTIATION. RESPONSIVENESS IS A TERM OF ART USED IN FEDERAL PROCUREMENT TO DENOTE COMPLIANCE WITH ALL MATERIAL PROVISIONS OF SOLICITATIONS ISSUED PURSUANT TO THE FORMAL ADVERTISING STATUTES AND IMPLEMENTING REGULATIONS. SO DEFINED, ITS USE IN THE CONTEXT OF NEGOTIATED PROCUREMENTS IS INAPPOSITE, FOR THE LATITUDE INHERENT IN NEGOTIATION PROCEDURES PERMITS AN OFFEROR TO REMEDY DEFECTS IN ITS PROPOSAL WHICH IF PRESENT IN A BID SUBMITTED UNDER FORMAL ADVERTISING PROCEDURES WOULD REQUIRE REJECTION OF THE BID. AS WE STATED IN THE CITED CASE -

"ASPR 3-805.1, IMPLEMENTING 10 U.S.C. 2304(G), REQUIRES THAT WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. NUMEROUS DECISIONS OF OUR OFFICE RECOGNIZE THAT THE CONTRACTING OFFICER HAS BROAD DISCRETION IN DETERMINING WHICH OFFERORS ARE IN A COMPETITIVE RANGE. THIS DISCRETION IS NOT, HOWEVER, WITHOUT LIMITS. A PROPOSAL IS TO BE CONSIDERED WITHIN A COMPETITIVE RANGE UNLESS IT IS SO HIGH IN COST OR SO INFERIOR TECHNICALLY THAT THE POSSIBILITY OF MEANINGFUL NEGOTIATIONS IS PRECLUDED. *** "

THUS, NONRESPONSIVENESS, WHEN APPLIED TO NEGOTIATED PROCUREMENTS, CONNOTES A PROPOSAL WHICH IS SO HIGH IN COST OR SO INFERIOR TECHNICALLY THAT NO POSSIBILITY OF MEANINGFUL NEGOTIATIONS EXISTS. THE RECORD DEMONSTRATES THAT THE CONTRACTING OFFICER APPLIED THIS STANDARD IN EXTENDING NEGOTIATIONS OPPORTUNITY. IN THIS LIGHT, HIS ADVICE TO A REPRESENTATIVE OF RAYTHEON THAT IT WAS IN THE "ZONE OF CONSIDERATION" OR COMPETITIVE RANGE IS NOT INCONSISTENT WITH A DETERMINATION THAT ITS INITIAL PROPOSAL WAS UNACCEPTABLE OR, FOR THAT MATTER, THAT THE FINAL PROPOSAL WAS STILL TECHNICALLY UNACCEPTABLE. WE MUST, THEREFORE, REJECT YOUR CONTENTION THAT BECAUSE NEGOTIATIONS WERE CONDUCTED WITH YOUR FIRM, YOUR PROPOSAL WAS NECESSARILY "RESPONSIVE" AND YOU WERE THEREFORE ENTITLED TO AWARD ON THE BASIS OF YOUR LOW FIXED PRICE. IN REACHING OUR CONCLUSION, WE ALSO CONSIDERED OTHER DECISIONS CITED BY YOU.

MOREOVER, ON THE BASIS OF THE PRESENT RECORD WE SEE NO REASON FOR REVIEWING ENISA'S PERFORMANCE OF THE CONTRACT TO DETERMINE WHETHER THE RESULTS ARE IN THE BEST INTERESTS OF THE UNITED STATES.

THE COPY OF RAYTHEON'S PROPOSAL FURNISHED OUR OFFICE IS RETURNED HEREWITH.