B-174867, APR 28, 1972, 51 COMP GEN 694

B-174867: Apr 28, 1972

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SPACE RENTAL COSTS FOR IDLE PLANTS OR EQUIPMENT WAS PROPER SINCE THE SCOPE OF THE LAYAWAY AND MAINTENANCE WORKS FOR ALL OFFERORS HAD NOT BEEN ESTABLISHED. THERE IS NO LEGAL BASIS TO DISTURB THE CONTRACTS AWARDED PRIOR TO THE RESOLUTION OF THE PROTEST. SINCE THE OBJECTIONABLE PROVISION FOR EVALUATING ABNORMAL MAINTENANCE COSTS WAS REMOVED FROM THE RFP. THE RECORD EVIDENCES THE NEGOTIATIONS CONDUCTED WERE WITHIN THE AUTHORITY OF 10 U.S.C. 2304(A)(16). THAT THE DELIVERY SCHEDULES WERE DESIGNED TO BE EQUITABLE. 1972: FURTHER REFERENCE IS MADE TO YOUR TELEFAX DATED DECEMBER 30. CONTRACTS WERE AWARDED TO SPERRY RAND CORPORATION AND GOLDEN INDUSTRIES. BEFORE RESOLUTION OF THE PROTEST BY OUR OFFICE AS IS AUTHORIZED UNDER SUCH CIRCUMSTANCES BY PARAGRAPH 2 407.8(B)(3) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

B-174867, APR 28, 1972, 51 COMP GEN 694

BIDS - EVALUATION - GOVERNMENT EQUIPMENT, ETC. - LAYAWAY AND MAINTENANCE COSTS IN THE EVALUATION OF OFFERS TO SUPPLY METAL PARTS FOR PROJECTILES SUBMITTED UNDER A REQUEST FOR PROPOSALS (RFP) ISSUED PURSUANT TO 10 U.S.C. 2304(A)(16), PERMITTING THE NEGOTIATION OF CONTRACTS IN THE INTERESTS OF NATIONAL DEFENSE AND INDUSTRIAL MOBILIZATION, BY PRODUCERS WHO OPERATE GOVERNMENT-OWNED FACILITIES OR PRIVATELY-OWNED PLANTS UTILIZING GOVERNMENT EQUIPMENT, THE EXCLUSION OF LAYAWAY, MAINTENANCE, AND SPACE RENTAL COSTS FOR IDLE PLANTS OR EQUIPMENT WAS PROPER SINCE THE SCOPE OF THE LAYAWAY AND MAINTENANCE WORKS FOR ALL OFFERORS HAD NOT BEEN ESTABLISHED. FURTHERMORE, THERE IS NO LEGAL BASIS TO DISTURB THE CONTRACTS AWARDED PRIOR TO THE RESOLUTION OF THE PROTEST, AS PROVIDED BY PARAGRAPH 2-407.8(B)(3), SINCE THE OBJECTIONABLE PROVISION FOR EVALUATING ABNORMAL MAINTENANCE COSTS WAS REMOVED FROM THE RFP, AND THE RECORD EVIDENCES THE NEGOTIATIONS CONDUCTED WERE WITHIN THE AUTHORITY OF 10 U.S.C. 2304(A)(16), AND THAT THE DELIVERY SCHEDULES WERE DESIGNED TO BE EQUITABLE.

TO THE CHAMBERLAIN MANUFACTURING CORPORATION, APRIL 28, 1972:

FURTHER REFERENCE IS MADE TO YOUR TELEFAX DATED DECEMBER 30, 1971, AND YOUR LETTER OF JANUARY 4, 1972, PROTESTING AGAINST THE TERMS OF REQUEST FOR PROPOSALS DAAA09-72-R-0054 (RFP-0054), ISSUED BY THE ARMY MUNITIONS COMMAND, JOLIET, ILLINOIS. ALTHOUGH YOU PROTESTED BEFORE AWARD, THE CONTRACTING OFFICER DETERMINED THAT DELIVERY WOULD BE DELAYED BY THE FAILURE TO MAKE AWARD PROMPTLY AND THAT A PROMPT AWARD WOULD OTHERWISE BE ADVANTAGEOUS TO THE GOVERNMENT. IN VIEW THEREOF, CONTRACTS WERE AWARDED TO SPERRY RAND CORPORATION AND GOLDEN INDUSTRIES, INC., ON MARCH 31, 1972, BEFORE RESOLUTION OF THE PROTEST BY OUR OFFICE AS IS AUTHORIZED UNDER SUCH CIRCUMSTANCES BY PARAGRAPH 2 407.8(B)(3) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

THE REFERENCED RFP, ISSUED ON DECEMBER 22, 1971, WAS RESTRICTED TO THE FOLLOWING BASE PRODUCERS OF PROJECTILES, 155MM, HE, M107, MPTS:

LOUISIANA ARMY AMMUNITION PLANT (LAAP, SPERRY RAND CORPORATION)

TWIN CITIES ARMY AMMUNITION PLANT (TCAAP, 155MM LINE OPERATED BY DONOVAN CONSTRUCTION COMPANY)

SCRANTON ARMY AMMUNITION PLANT (SAAP, CHAMBERLAIN MANUFACTURING CORPORATION)

NEW BEDFORD DIVISION, CHAMBERLAIN MANUFACTURING CORPORATION

GOLDEN INDUSTRIES, INC., SYLACAUGA, ALABAMA

LAAP, TCAAP AND SAAP ARE GOVERNMENT-OWNED, CONTRACTOR-OPERATED (GOCO) FACILITIES, WHILE THE NEW BEDFORD AND SYLACAUGA PLANTS ARE PRIVATELY OWNED, PRIVATELY-OPERATED (POPO) PLANTS UTILIZING GOVERNMENT-OWNED PRODUCTION EQUIPMENT.

THE SOLICITATION, FOR THE SUPPLY OF METAL PARTS FOR 1,535,466 PROJECTILES, WAS ISSUED IN TELETYPE FORM AND GENERALLY INCORPORATED BY REFERENCE THE PROVISIONS OF REQUEST FOR PROPOSALS DAAA09-71-R-0143 (RFP 0143). RFP-0143, A PRIOR SOLICITATION FOR IDENTICAL ITEMS, WAS THE SUBJECT OF OUR DECISION 51 COMP. GEN. 344 (1971) TO GOLDEN, AND B 173953(2) AND B-174264, DECEMBER 13, 1971, TO DONOVAN. YOU ASSERT THAT THE INSTANT RFP OMITS AN APPROPRIATE EVALUATION FACTOR, INCLUDES AN IMPROPER EVALUATION FACTOR, IS NOT WITHIN THE NEGOTIATION AUTHORITY CONFERRED BY 10 U.S.C. 2304(A)(16), CONTAINS A DELIVERY SCHEDULE DESIGNED TO ASSURE AWARD TO ONE OF THE OFFERORS, AND CONTAINS AN UNFAIR "DOUBLE STANDARD" OF EVALUATION BETWEEN GOCO AND POPO OFFERORS. WE SHALL DISCUSS YOUR CONTENTIONS IN THE ORDER IN WHICH THEY ARE PRESENTED IN YOUR LETTER OF JANUARY 4, 1972.

YOU OBSERVED THAT THE NATURE OF THESE PLANTS CREATES A MONOPSONY BETWEEN THEM AND THE GOVERNMENT. IF A GOVERNMENT OWNED PLANT IS NOT AWARDED A PRODUCTION CONTRACT, THE GOVERNMENT MUST INCUR LAYAWAY AND MAINTENANCE COSTS OF THE IDLE PLANT. IN THE EVENT THAT NO AWARD IS MADE TO A POPO PLANT, THE GOVERNMENT WOULD INCUR THE COSTS FOR IDLE PLANT SPACE, I.E., SPACE RENTAL. YOU ASSERT THAT THE GOVERNMENT SHOULD HAVE EVALUATED THESE COSTS BY DEDUCTING THEM FROM THE METAL PARTS COSTS PROPOSED UNDER THIS SOLICITATION BY EACH POPO PLANT.

THE CONTRACTING OFFICER IS IN GENERAL AGREEMENT WITH YOUR CONCEPT THAT SPACE RENTAL AND OTHER MAINTENANCE COSTS INCURRED AFTER LAYAWAY SHOULD BE EVALUATED, PROVIDED SUCH COSTS ARE MEANINGFUL AND MEASURABLE. ASPR 13- 505. HOWEVER, WE ARE ADVISED THAT AT THE TIME OF THE INSTANT SOLICITATION, THE SCOPE OF LAYAWAY AND MAINTENANCE WORK FOR ALL OFFERORS WAS NOT ESTABLISHED, THEREBY PRECLUDING EVALUATION OF THESE COSTS. IT IS STATED IN THE ADMINISTRATIVE REPORT:

IT IS NOTED THAT THE ENTIRE THRUST OF THE FIRST ALLEGED ERROR IN THE RFP IS FOUNDED ON PROTESTANT'S ASSUMPTION THAT THE GOVERNMENT WOULD CONTINUE TO CONSIDER ITS NEW BEDFORD PLANT AS A MOBILIZATION BASE, IN THE EVENT PROTESTANT DID NOT RECEIVE AN AWARD FOR PRODUCTION AT THE FACILITY. THIS ASSUMPTION INFERS A CLEAR AND CONCISE DEFINITION OF THE NEED FOR THE NEW BEDFORD PLANT IN THE ARMY'S PLANS FOR THE FUTURE, AS THEY RELATE TO MOBILIZATION REQUIREMENTS. BECAUSE THE CONTRACTING OFFICER, AT THE TIME OF RFP PREPARATION, COULD NOT, WITH ANY DEGREE OF CERTAINTY, ANTICIPATE THE FUTURE NEEDS OF MILITARY FOR THE END ITEM INVOLVED, HE COULD NOT MAKE A DETERMINATION AS TO THE SCOPE OF THE MAINTENANCE PROGRAM THAT WOULD BE REQUIRED I.E. WILL THE PLANT BE HELD IN A HIGH OR LOW STATE OF READINESS. THUS IT WAS IMPOSSIBLE FOR HIM TO ASSIGN A MEANINGFUL EVALUATION FACTOR TO POTENTIAL SPACE RENTAL, PLUS OTHER MAINTENANCE COSTS TO BE INCURRED AFTER LAYAWAY.

UNDER THE FACILITY CONTRACT FOR YOUR NEW BEDFORD DIVISION, WE ARE ADVISED THAT THE GOVERNMENT HAS THE OPTION TO PLACE IN LAYAWAY ALL OR A PORTION OF ITS EQUIPMENT IN YOUR PLANT. RENTAL, IN AMOUNT TO BE NEGOTIATED WOULD THEN BE PAID BY THE GOVERNMENT FOR THE SPACE OCCUPIED BY THAT EQUIPMENT. AS INDICATED IN THE ABOVE-QUOTED PORTION OF THE ADMINISTRATIVE REPORT, AT THE TIME OF THE ISSUANCE OF THE RFP THE PROCURING ACTIVITY COULD NOT DETERMINE IN WHAT STATE OF READINESS YOUR PLANT WOULD BE HELD IN THE EVENT IT DID NOT RECEIVE AN AWARD. THUS, THE QUANTITY OF EQUIPMENT THAT MIGHT BE PLACED IN LAYAWAY, AND CONSEQUENTLY THE SPACE RENTAL FOR THAT EQUIPMENT, WAS NOT KNOWN. THE POSSIBILITY ALSO EXISTED THAT THE SPACE RENTAL ACTUALLY NEGOTIATED UNDER THE FACILITY CONTRACT MIGHT VARY SUBSTANTIALLY FROM THE EVALUATION FACTOR USED IN THE SOLICITATION. IN THE OPINION OF THE PROCURING ACTIVITY, THE COSTS OF LAYAWAY, MAINTENANCE AND SPACE RENTAL WERE SO UNCERTAIN AND SPECULATIVE THAT AN EVALUATION FACTOR THEREFOR WAS INAPPROPRIATE. UNDER THESE CIRCUMSTANCES, WE BELIEVE THAT THE EXCLUSION OF SUCH AN EVALUATION FACTOR WAS PROPER.

WHEN IT WAS ISSUED, THE INSTANT SOLICITATION THROUGH THE INCORPORATION BY REFERENCE OF PROVISIONS OF RFP-0143, ESTABLISHED AN ABNORMAL MAINTENANCE COST BASED ON HISTORICAL EXPENDITURES FOR THE GOCO PLANTS THAT WOULD BE USED AS AN EVALUATION FACTOR, BUT NOT AS A CEILING, SHOULD THE OFFEROR BE AWARDED A CONTRACT. IN CONTRAST, POPO PLANTS WERE REQUIRED TO SUBMIT AN ABNORMAL MAINTENANCE EVALUATION FACTOR WHICH, IF THEY WERE AWARDED THE CONTRACT, WOULD BECOME A CEILING COST. YOU PROTESTED AGAINST THE INCLUSION OF THIS EVALUATION FACTOR ON THE BASIS THAT IT WAS UNREAL, CONJECTURAL, AND DID NOT CONSIDER THE REASONABLE ASSUMPTION THAT THE GREATER THE ABNORMAL MAINTENANCE ACTIVITY IN A PRIOR CONTRACT PERIOD, THE LESS LIKELY SUCH MAINTENANCE WOULD BE REQUIRED IN A SUBSEQUENT PERIOD. YOU ALSO CONTENDED THAT THE PROVISION CREATES A "DOUBLE STANDARD" BETWEEN GOCO AND POPO PLANTS, IN THAT THE GOCO CONTRACTOR IS NOT BURDENED WITH A COST CEILING FOR ABNORMAL MAINTENANCE AND REPAIR COSTS, AS IS THE POPO CONTRACTOR.

THE FOLLOWING RESPONSE TO THESE CONTENTIONS WERE MADE IN THE ADMINISTRATIVE REPORT:

EACH CONTRACTOR, UNDER HIS FACILITY CONTRACT HAS ESTABLISHED A MAINTENANCE PLAN FOR GOVERNMENT EQUIPMENT. FOR ANY MAINTENANCE REQUIRED, WHICH IS NOT CONSIDERED NORMAL, THE CONTRACTOR WILL BEAR AN AMOUNT OF COSTS AS ESTABLISHED AND ALL COSTS OVER THIS AMOUNT WILL BE BORNE JOINTLY BY THE CONTRACTOR AND THE GOVERNMENT.

THE SOLICITATION WILL BE AMENDED TO REQUIRE THAT ALL OFFERORS BOTH GOCO AS WELL AS POPO OFFERORS SHALL SUBMIT AN EVALUATION FACTOR WHICH IS BASED ON THOSE ESTIMATES WHICH THE CONTRACTOR PROJECTS WILL BE EXPERIENCED ABOVE THOSE NORMAL COSTS WHICH THEY MUST PERFORM IN ACCORDANCE WITH THEIR ESTABLISHED MAINTENANCE PLAN. THE EVALUATION FACTOR REFLECTS THE "OUT OF POCKET" COSTS WHICH THE GOVERNMENT WILL BEAR UNDER THE FACILITIES CONTRACT DURING THE PERIOD OF PERFORMANCE OF THE SUPPLY CONTRACT. THIS FACTOR WILL BE REVEALED TO ALL OFFERORS.

THE CONTRACTOR'S PROPOSED UNIT PRICE FOR THE SUPPLY CONTRACT WILL CONTAIN AN AMOUNT WHICH HE ANTICIPATES HE WILL EXPERIENCE FOR MAINTENANCE UNDER HIS MAINTENANCE PLAN PLUS AN AMOUNT TO COVER HIS AGREED UPON SHARE OF ABNORMAL MAINTENANCE.

THE EVALUATION FACTOR, AS SUBMITTED BY THE OFFEROR WILL BE USED FOR EVALUATION PURPOSES AND WILL ALSO BE USED AS A CEILING COST FOR THE GOVERNMENT'S SHARE IN ANY RESULTANT CONTRACT.

WE HAVE BEEN ADVISED BY THE DEPARTMENT OF THE ARMY THAT THE SOLICITATION WAS AMENDED AND THE PROPOSALS WERE EVALUATED AS INDICATED ABOVE. THEREFORE CONSIDER YOUR OBJECTIONS TO HAVE BEEN MET AND THIS ASPECT OF YOUR PROTEST TO BE MOOT.

YOU NEXT ASSERT THAT THE INSTANT PROCUREMENT WAS IMPROPERLY NEGOTIATED UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(16), WHICH PERMITS THE NEGOTIATION OF CONTRACTS IN THE INTERESTS OF NATIONAL DEFENSE OR INDUSTRIAL MOBILIZATION. YOU OBSERVE THAT, OF THE FIVE BASE PRODUCERS, TWO (LAAP AND SAAP) WERE IN PRODUCTION AT THE TIME THE SOLICITATION WAS ISSUED. YOU SUGGEST THAT IF THE INDUSTRIAL MOBILIZATION PLANS PURSUANT TO THE DETERMINATION AND FINDINGS (D&F) AUTHORIZING NEGOTIATION OF THIS PROCUREMENT DISCLOSE THE INTENT TO ADD TWO ADDITIONAL PLANTS TO THOSE ALREADY IN OPERATION, THEN LAAP AND SAAP SHOULD NOT HAVE BEEN SOLICITED. ON THE OTHER HAND, YOU STATE, IF THERE IS NO REQUIREMENT TO RETAIN ANY PLANTS OTHER THAN LAAP AND SAAP, THEN NEGOTIATION UNDER 10 U.S.C. 2304(A)(16) WAS IMPROPER.

THE RECORD SHOWS THAT THE PROCUREMENT PLAN FOR RFP-0054 WAS TO SET FORTH DELIVERY SCHEDULES WHICH WOULD PERMIT THE GREATEST NUMBER OF RESPONSES FROM ALL FIVE BASE PRODUCERS. THE SOLICITATIONS SPECIFICALLY PROVIDED THAT TWO AWARDS WOULD BE MADE. ALTHOUGH SAAP WAS SOLICITED FOR THIS PROCUREMENT, AS A PRACTICAL MATTER IT WAS NOT EXPECTED TO (AND DID NOT) SUBMIT AN OFFER SINCE IT WAS OPERATING AT CAPACITY AT THE TIME RFP-0054 WAS ISSUED. THEREFORE, THE TWO AWARDS WOULD BE PLACED AMONG ONE ACTIVE PRODUCER (LAAP) AND THREE IDLE PRODUCERS (TCAAP, NEW BEDFORD AND GOLDEN). AS WE HAVE STATED ABOVE, AWARDS WERE MADE TO ONE ACTIVE PRODUCER (LAAP) AND ONE OF THE IDLE PLANTS (GOLDEN).

THE PROCUREMENT PLAN AND THE AWARDS MADE UNDER RFP-0054 APPEARS ENTIRELY CONSISTENT WITH THE D&F SUPPORTING THE USE OF NEGOTIATION IN THIS PROCUREMENT. RFP-0054, AS WELL AS ITS PREDECESSOR RFP-0143, WERE NEGOTIATED PURSUANT TO A CLASS D&F EXECUTED ON APRIL 13, 1971, BY THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS). AMONG THE FINDINGS MADE THEREIN ARE THE FOLLOWING:

PROCUREMENT BY NEGOTIATION OF THE ABOVE DESCRIBED PROPERTY AND SERVICES FROM QUALIFIED SELECTED SUPPLIERS IS JUSTIFIED, IN ORDER TO MAKE VITAL SUPPLIERS AVAILABLE IN CASE OF A NATIONAL EMERGENCY, AT WHICH TIME THE INTEREST OF INDUSTRIAL MOBILIZATION WOULD BE SUBSERVED. NEGOTIATION OF THESE CONTRACTS WILL INSURE CONTINUOUS, ACCELERATED PRODUCTION OF THE SPECIFIC AMMUNITION, AND WILL ALSO SUSTAIN THE MOBILIZATION BASE FOR THESE ITEMS.

USE OF FORMAL ADVERTISING FOR PROCUREMENT OF THE ABOVE DESCRIBED PROPERTY AND SERVICES IS IMPRACTIABLE, BECAUSE SUCH METHOD WOULD NOT ASSURE THE PLACEMENT OF CONTRACTS WITH EXISTING OR SELECTED MOBILIZATION BASE PRODUCERS TO INSURE THEIR CONTINUED AVAILABILITY TO FURNISH ESSENTIAL SUPPLIES, OR TO EXPAND THEIR CAPACITY TO MEET CURRENT AND MOBILIZATION REQUIREMENTS, AS WELL AS TO ASSURE THE RELIABILITY OF THE PRODUCT AND PRODUCTION WITHIN REQUIRED DELIVERY DATES. ADDITIONALLY, IT WOULD NOT BE PRACTICAL UNDER SUCH PROCEDURES TO EXCLUDE EXISTING PRODUCERS IN WHOLE OR IN PART FROM CURRENT PROCUREMENTS, FOR THE PURPOSE OF ESTABLISHING CAPACITY IN THE PLANTS OF NEW PRODUCERS IN ORDER TO MEET CURRENT AND PLANNED MOBILIZATION REQUIREMENTS.

IT APPEARS THAT THE D&F CONTEMPLATED PROCUREMENTS LIMITED TO EXISTING MOBILIZATION BASE PRODUCERS, TO EXISTING AND NEW PRODUCERS, OR TO NEW PRODUCERS ONLY. IN THE INSTANT CASE, BOTH EXISTING AND IDLE PRODUCERS WERE SOLICITED. THE RESULT OF THIS SOLICITATION AND ITS PREDECESSOR, RFP- 0143, HAS BEEN TO PLACE THREE OF THE FIVE PRODUCERS COMPRISING THE MOBILIZATION BASE INTO PRODUCTION OF THESE PROJECTILES. IN OUR OPINION, THE D&F COMPLIES WITH THE PROCUREMENT STATUTE 10 U.S.C. 2304(A)(16), AND WE SEE NO LEGAL BASIS TO QUESTION THE D&F, TO WHICH FINALITY IS ACCORDED BY 10 U.S.C. 2310.

RFP-0054 CONTEMPLATED A TOTAL MONTHLY RATE OF 140,000 UNITS, TO BE ACCOMPLISHED THROUGH TWO AWARDS, AND SET FORTH ALTERNATE MONTHLY DELIVERY SCHEDULES OF 90,000 UNITS (ALTERNATE 1), 70,000 UNITS (ALTERNATE 2), AND 50,000 UNITS (ALTERNATE 3). THE SOLICITATION ADVISED OFFERORS:

OFFERORS MAY QUOTE ON ALTERNATE 3 ONLY. HOWEVER, IF A QUOTE IS GIVEN ON ALTERNATE 2, ONE MUST BE GIVEN ON ALTERNATE 3. LIKEWISE, IF A QUOTE IS GIVEN ON ALTERNATE 1, ONE MUST ALSO BE GIVEN ON ALTERNATES 2 AND 3. FAILURE TO COMPLY WITH THESE PROVISIONS MAY BE CAUSE FOR REJECTION OF THE PROPOSAL.

YOU ASSERT THAT THE OPEN CAPACITY OF LAAP PRIOR TO RFP-0054 WAS 50,000 UNITS PER MONTH, AND THAT THE DELIVERY SCHEDULES WERE "GERRYMANDERED" TO CREATE ALTERNATE 3, WHICH COINCIDES WITH THIS OPEN CAPACITY. YOU MAINTAIN THAT THE STRUCTURE OF THE DELIVERY SCHEDULES VIRTUALLY ASSURED AWARD OF ALTERNATE 3 TO LAAP AND WOULD PLACE IT IN FULL CAPACITY PRODUCTION IN CONTRAVENTION OF 10 U.S.C. 2304(A)(16).

WE ARE ADVISED BY THE DEPARTMENT OF THE ARMY THAT THE "Y-LINE" PRODUCTION AREA AT LAAP CONSISTS OF TWO LINES:ONE FOR THE PRODUCTION OF 155MM HE PROJECTILE METAL PARTS AND ONE FOR 155MM ILLUMINATING METAL PARTS. THE CAPACITY OF THE FORMER LINE IS, AS YOU HAVE STATED, 50,000 UNITS PER MONTH. HOWEVER, AS THE RESULT OF NOT OBTAINING A CONTRACT WHICH WOULD HAVE UTILIZED THE LINE FOR ILLUMINATING PROJECTILES, THAT LINE, WITH A MONTHLY CAPACITY OF 40,000 UNITS, WAS IDLE. LAAP THEREFORE HAD AN OPEN CAPACITY OF 90,000 UNITS A MONTH, AND THE INSTANT AWARD AT THE MONTHLY RATE OF 70,000 UNITS STILL LEAVES OPEN CAPACITY AT LAAP. FURTHERMORE, THE RECORD BEFORE US INDICATES THAT THE DELIVERY SCHEDULES SET FORTH IN THE RFP WERE DESIGNED TO BE EQUITABLE TO ALL MEMBERS OF THE PRODUCTION BASE. LAAP RECEIVED UNDER THE INSTANT RFP BECAUSE ITS OFFER WAS PART OF A COMBINATION OF AWARDS, TOTALING 140,000 UNITS PER MONTH, WHICH ASSURED THE LOWEST COST TO THE GOVERNMENT. THE FOLLOWING WERE THE EVALUATED UNIT PRICES FOR THE PRESENT PROCUREMENT:

TABLE OMITTED

THE MOST ADVANTAGEOUS COMBINATION WAS THE AWARD OF ALTERNATE 1 TO GOLDEN AND ALTERNATE 3 TO LAAP. HOWEVER, IT WAS DETERMINED THAT GOLDEN COULD NOT RESPONSIBLY UNDERTAKE PRODUCTION OF 90,000 UNITS PER MONTH. A COMPARISON OF THE EVALUATED PRICES OF THE COMBINATION OF ALTERNATE 1 TO NEW BEDFORD AND ALTERNATE 3 TO LAAP WITH THE COMBINATION OF ALTERNATE 2 TO BOTH LAAP AND GOLDEN SHOWED THAT THE LATTER COMBINATION RESULTED IN THE LOWEST EVALUATED PRICE. THEREFORE, AWARDS WERE MADE TO LAAP AND GOLDEN, WITH EACH PLANT TO SUPPLY 767,733 UNITS AT THE RATE OF 70,000 PER MONTH. WHILE LAAP OFFERED THE LOWEST PRICE UNDER ALTERNATE 3 (50,000 UNITS PER MONTH), WE DO NOT BELIEVE THE RECORD SUPPORTS THE CONCLUSION THAT THIS ALTERNATE WAS THE RESULT OF "GERRYMANDERING" TO FAVOR LAAP, AND WE NOTE THAT IT IN FACT RECEIVED AN AWARD UNDER ALTERNATE 2 (70,000 UNITS PER MONTH). THEREFORE, WE FIND NO MERIT IN THIS CONTENTION.

THE THRUST OF YOUR FINAL CONTENTION, ENTITLED "PROCUREMENT PRACTICE, GENERALLY," IS THAT THE POTENTIAL FOR ABUSE EXISTS IN PERMITTING SPERRY RAND TO PERFORM BOTH LOAD-ASSEMBLE-PACK OPERATIONS AND METAL PARTS PRODUCTION AT THE SAME PLANT. YOU EXPRESS PARTICULAR CONCERN WHETHER SPERRY RAND MAY BE IMPROPERLY ALLOCATING COSTS UNDER ITS FIXED-PRICE CONTRACTS TO ITS COST-REIMBURSABLE CONTRACTS AT THE FACILITY. WHILE OUR OFFICE HAS EXAMINED THE PROPRIETY OF THE COST ALLOCATIONS AT LAAP, WE ARE NOT IN A POSITION TO RELEASE OUR CONCLUSIONS TO YOU AT THE PRESENT TIME.

IN VIEW OF THE FOREGOING, WE ARE AWARE OF NO LEGAL BASIS UPON WHICH THE AWARDS TO SPERRY RAND AND GOLDEN INDUSTRIES MAY BE DISTURBED. YOUR PROTEST IS, THEREFORE, DENIED.