B-175480, AUG 3, 1972

B-175480: Aug 3, 1972

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ALTHOUGH THE AIR FORCE CONCEDES THAT IMPROPER TRANSPORTATION RATES WERE APPLIED IN EVALUATING KILGORE'S BID AS TO TOTAL COST. THAT FACT IS NOT CONTROLLING HEREIN. IT IS CLEAR THAT. TO KILGORE CORPORATION: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO THIOKOL CHEMICAL CORPORATION BY EGLIN AIR FORCE BASE. WAS ISSUED ON OCTOBER 14. SIX PROPOSALS WERE RECEIVED BY THE AMENDED CLOSING DATE. OLIN CORPORATION WERE DETERMINED TO BE WITHIN THE COMPETITIVE RANGE. NEGOTIATIONS WERE CONDUCTED WITH THOSE THREE FIRMS AND. THIOKOL WAS FOUND TO OFFER THE MOST ADVANTAGEOUS PROPOSAL. WAS AWARDED THE CONTRACT ON MARCH 14. YOUR PROTEST WAS INITIALLY BASED UPON THE CONTENTION THAT AN IMPROPER TRANSPORTATION RATE WAS APPLIED TO YOUR PROPOSAL PRICE AND.

B-175480, AUG 3, 1972

BID PROTEST - EVALUATIONS - TRANSPORTATION CHARGES DENIAL OF PROTEST BY KILGORE CORPORATION AGAINST THE AWARD OF A CONTRACT TO THIOKOL CHEMICAL CORPORATION BY EGLIN AFB, FLA., FOR A QUANTITY OF LUU- 2/B FLARES. ALTHOUGH THE AIR FORCE CONCEDES THAT IMPROPER TRANSPORTATION RATES WERE APPLIED IN EVALUATING KILGORE'S BID AS TO TOTAL COST, THAT FACT IS NOT CONTROLLING HEREIN. IT IS CLEAR THAT, IN THIS CASE, THE UNFAVORABLE TECHNICAL EVALUATION REPORT ON THE KILGORE BID PROVIDED THE BASIS FOR THE AWARD TO THIOKOL. SEE 10 U.S.C. 2304(A). FURTHER, THE RECORD DOES NOT PROVIDE THAT EVIDENCE OF ARBITRARINESS REQUIRED FOR GAO TO CHALLENGE THE EXERCISE OF DISCRETION BY THE ADMINISTRATIVE AGENCY. 51 COMP. GEN. , B- 173677, MARCH 31, 1972.

TO KILGORE CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO THIOKOL CHEMICAL CORPORATION BY EGLIN AIR FORCE BASE, FLORIDA, PURSUANT TO SOLICITATION NO. F08635-72-R-0004.

THE SUBJECT SOLICITATION, A NEGOTIATED PROCUREMENT, WAS ISSUED ON OCTOBER 14, 1971, FOR PROPOSALS ON A STATED QUANTITY OF LUU-2/B FLARES TO BE MANUFACTURED IN ACCORDANCE WITH SPECIFICATION NO. 705166A, AUTHENTICATED SEPTEMBER 17, 1971. THE REQUEST FOR PROPOSALS REQUIRED OFFERS ON AN F.O.B. ORIGIN BASIS, WITH NOTICE TO THE EFFECT THAT TRANSPORTATION COSTS TO TOOELE, UTAH, WOULD BE ADDED TO THE PROPOSAL PRICE FOR EVALUATION PURPOSES ONLY TO DETERMINE THE OVERALL COST TO THE GOVERNMENT. SIX PROPOSALS WERE RECEIVED BY THE AMENDED CLOSING DATE, DECEMBER 3, 1971. AFTER TECHNICAL EVALUATION, KILGORE, THIOKOL, AND OLIN CORPORATION WERE DETERMINED TO BE WITHIN THE COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. NEGOTIATIONS WERE CONDUCTED WITH THOSE THREE FIRMS AND, AFTER SUBMISSION OF BEST AND FINAL OFFERS, THIOKOL WAS FOUND TO OFFER THE MOST ADVANTAGEOUS PROPOSAL, PRICE AND OTHER FACTORS CONSIDERED, AND WAS AWARDED THE CONTRACT ON MARCH 14, 1972.

YOUR PROTEST WAS INITIALLY BASED UPON THE CONTENTION THAT AN IMPROPER TRANSPORTATION RATE WAS APPLIED TO YOUR PROPOSAL PRICE AND, BUT FOR THIS ERROR, YOU SHOULD HAVE RECEIVED THE AWARD AS THE LOW OFFERER. ADDITION, YOU PROTESTED THAT THE DESIGNATION OF TOOELE, UTAH, AS THE DESTINATION FOR EVALUATION OF TRANSPORTATION COSTS DISCRIMINATED AGAINST ALL MAJOR FIRMS EXCEPT THIOKOL. AFTER REVIEW OF THE ADMINISTRATIVE REPORT, WHICH CONCEDED APPLICATION OF ERRONEOUS FREIGHT RATES BUT STATED THAT YOUR PROPOSAL WAS TECHNICALLY UNACCEPTABLE, YOU SUBMITTED A REBUTTAL CONTENDING THAT THE CLAIM CONCERNING TECHNICAL UNACCEPTABILITY IS AN AFTER -THE-FACT ATTEMPT TO JUSTIFY A DECISION BASED UPON THE ERRONEOUS ASSUMPTION THAT THIOKOL SUBMITTED THE LOW OFFER. AS EVIDENCE OF KILGORE'S TECHNICAL CAPABILITY, YOU POINT TO ITS EXPERIENCE IN PYROTECHNICS GENERALLY AND TO ITS SUCCESSFUL DEVELOPMENT AND PRODUCTION OF THE LUU-1/B, 5/B AND 6/B FLARES. YOU ALSO CONTEND THAT KILGORE FOLLOWED THE FORMAT SUGGESTED BY THE RFP IN PREPARING ITS PROPOSAL, WHICH FEATURED A COMPLETE OPERATIONS ANALYSIS WITH MTM LABOR AND A RESTRICTED SECTION DEALING WITH VALVE ENGINEERING IDEAS BASED UPON KILGORE'S LONG EXPERIENCE WITH FLARES. YOU ALSO CONTEND THAT AS A RESULT OF DISCUSSIONS WITH EGLIN PERSONNEL ON TWO OCCASIONS, KILGORE AGREED TO MEET THE TWO AREAS OF MAJOR CONCERN, THAT IS, TAMPING TIME AND APPLICATION OF THE LINER COATING. FINALLY, YOU CONTEND THE PROCUREMENT WAS HANDLED AS AN AUCTION WHICH RESULTED IN THIOKOL REDUCING ITS INITIAL OFFER BELOW KILGORE'S.

THE AIR FORCE CONCEDES THAT IMPROPER TRANSPORTATION RATES WERE INADVERTENTLY APPLIED AND THAT BASED UPON AN EVALUATION UTILIZING THE PROPER TRANSPORTATION RATES KILGORE WOULD HAVE BEEN THE LOW OFFEROR AT A PRICE OF $11,262,438, OR $22,253 BELOW THIOKOL'S OFFER WHEN REDUCED FOR WAIVER OF FIRST ARTICLE TESTING IN ACCORDANCE WITH THE TERMS OF THE RFP. ALTHOUGH NOT PROPERLY FOR CONSIDERATION IN THE EVALUATION, THE AIR FORCE ALSO POINTS OUT THAT THE ACTUAL COST TO THE GOVERNMENT UNDER THE CONTRACT WITH THIOKOL WILL BE FURTHER REDUCED SOME $163,000 BY REASON OF THIOKOL'S AUTHORIZED USE OF CERTAIN GOVERNMENT-OWNED TOOLING AND FACILITIES IN ITS POSSESSION UNDER OTHER GOVERNMENT CONTRACTS. WITH REGARD TO THE DESIGNATION OF TOOELE, UTAH, AS THE DESTINATION POINT FOR TRANSPORTATION COST EVALUATION PURPOSES, THE AIR FORCE CORRECTLY POINTS OUT THAT THIS WAS IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION 19-208.4(A), WHICH PROVIDES THAT WHEN THE EXACT DESTINATION OF THE SUPPLIES IS NOT KNOWN A TENTATIVE DESTINATION POINT IN THE GENERAL LOCATION OF THE EXPECTED USERS SHALL BE DESIGNATED FOR THE PURPOSE OF EVALUATION. SINCE THE ULTIMATE DESTINATION POINTS WERE NOT KNOWN, THE GOVERNMENT'S STORAGE DEPOT AT TOOELE, UTAH, WAS DESIGNATED.

IT IS THE AIR FORCE'S POSITION THAT EVEN HAD KILGORE'S PRICE PROPOSAL BEEN PROPERLY EVALUATED KILGORE WOULD NOT HAVE RECEIVED THE AWARD BECAUSE OF TECHNICAL UNACCEPTABILITY. TECHNICAL EVALUATION OF THE PROPOSALS WAS CONDUCTED BY A PANEL OF SIX TECHNICAL PERSONNEL FROM THE ARMAMENT DEVELOPMENT AND TEST CENTER, EGLIN AIR FORCE BASE. EACH MEMBER OF THE PANEL WAS SELECTED BECAUSE OF HIS EXPERIENCE RELATIVE TO THE FABRICATION AND PERFORMANCE OF THE LUU-2/B FLARE. THE EVALUATIONS WERE CONDUCTED DURING THE PERIOD DECEMBER 6 TO 22, 1971. PRIOR TO BEGINNING THE EVALUATIONS, THE PANEL MEMBERS AGREED UPON RATING FACTORS AND WEIGHTS FOR THE EVALUATION CRITERIA SPECIFIED IN SECTION D OF THE RFP TO ALLOW EACH PANEL MEMBER TO ASSIGN SCORES TO EACH MAJOR ASSEMBLY OF THE FLARES. EVALUATION GUIDELINES WERE PROVIDED TO ASSIST PANEL MEMBERS. ALL PANEL MEMBERS REVIEWED EACH PROPOSAL IN ITS ENTIRETY; IN ADDITION, AREAS OF SPECIAL INTEREST WERE ASSIGNED TO EACH PANEL MEMBER. AFTER EACH INDIVIDUAL PANEL MEMBER PREPARED AN EVALUATION SCORE SHEET AND COMMENTS ON EACH PROPOSAL, A SUMMARY COMPOSITE EVALUATION SHEET OF THE PANEL'S WEIGHTED SCORES FOR THE SIX PROPOSALS WAS PREPARED AND SUBMITTED TO AN ADVISORY PANEL. KILGORE WAS RATED FOURTH WITH A WEIGHTED AVERAGE OF 55.8 AS COMPARED TO 83 FOR THIOKOL AND 79.5 FOR OLIN OUT OF A POSSIBLE 100.

THE ADVISORY PANEL DETERMINED THAT DISCUSSIONS SHOULD BE CONDUCTED WITH KILGORE, OLIN AND THIOKOL. A LIST OF QUESTIONS WAS PREPARED BY TECHNICAL PERSONNEL FOR USE IN THE DISCUSSIONS. EACH OFFEROR WAS BRIEFED ON THE CONTENTS OF THE QUESTIONS AND REPORTEDLY ADVISED THAT THEIR RESPONSES WOULD BE CRITICAL IN THE TECHNICAL EVALUATION. IT IS REPORTED THAT AS A RESULT OF THE DISCUSSIONS AND OFFERORS' RESPONSES TO THE QUESTIONS, OLIN AND THIOKOL STRENGTHENED THEIR POSITIONS. THE REACTION TO THE DISCUSSIONS WITH KILGORE AND ITS ANSWERS TO THE QUESTIONS IS SUMMARIZED BY THE CONTRACTING OFFICER AS FOLLOWS:

"*** IT WAS DETERMINED BY THE EVALUATION TEAM THAT KILGORE CORPORATION DID NOT UNDERSTAND OR UNDERESTIMATED A MAJOR PORTION OF THE CONTROLLING PROCESSES AND PROCEDURES REQUIRED FOR THE MANUFACTURE OF THE FLARES, I.E., LINER STANDARDIZATION (CONTROL OF PHYSICAL PROPERTIES), APPLICATION OF LINER THROUGH USE OF LINER SPRAY EQUIPMENT, TAMPING VARIABLES (ACHIEVING REQUIRED DENSITY OF ILLUMINANT MATERIALS), ILLUMINANT FORMULATION (ACHIEVING REQUIRED BURN TIME AND LIGHT OUTPUT THROUGH MIXING OF ILLUMINANT MATERIALS IN ACCORDANCE WITH SPECIFICATION ALLOWING TOLERANCES AS TO PROPORTION OF MATERIALS TO BE USED IN THE MIX), LABOR HOURS REQUIRED TO PERFORM THE PROCESSES AND PROCEDURES, ETC. KILGORE DID NOT IMPROVE THEIR STANDING, BUT RATHER WEAKENED IT TO THE POINT OF BEING TECHNICALLY UNACCEPTABLE. IT WAS, THEREFORE, RECOMMENDED BY THE TECHNICAL EVALUATION GROUP THAT KILGORE CORPORATION NOT BE CONSIDERED FOR AWARD OF THIS PROCUREMENT."

NOTWITHSTANDING THE TECHNICAL EVALUATION PANEL'S RECOMMENDATION, THE ADVISORY PANEL DETERMINED THAT FURTHER DISCUSSIONS SHOULD BE CONDUCTED WITH KILGORE BECAUSE OF ITS COMPETITIVE PRICE. THESE DISCUSSIONS WERE CONDUCTED ON FEBRUARY 3, 1972, AND THE CONTRACTING OFFICER FURNISHED OUR OFFICE THE FOLLOWING REPORT RELATIVE THERETO:

"*** DURING THESE DISCUSSIONS KILGORE CORPORATION WAS NOTIFIED OF ALL DISCREPANCIES AND DOUBTS THAT HAD BEEN OBSERVED IN THEIR ORIGINAL TECHNICAL PROPOSAL AND THEIR RESPONSE TO THE QUESTIONS THAT HAD BEEN PROVIDED TO THEM ON 24 JANUARY 1972, I.E., OUT OF SEQUENCE PRODUCTION PROCESSES SUCH AS INSTALLING THE BELLCRANK INTO THE FIRING PIN ASSEMBLY AFTER INSTALLATION INTO THE IGNITER HOUSING IN LIEU OF BEFORE; A SINGLE PASS APPLICATION OF LINER MATERIAL DURING THE SPRAYING PROCESS WITHOUT INVESTIGATING THE PROPERTIES OF THE MATERIAL OR THE CAPABILITIES OF THE REQUIRED EQUIPMENT; AND THE ILLUMINANT FORMULATION AND TAMPER VARIABLES REQUIRED FOR ACHIEVING THE PROPER DENSITY OF THE CANDLE. ALL OF THESE SUBJECTS DIRECTLY AFFECT THE EFFORT REQUIRED PRIOR TO DELIVERY OF FAAT. MISJUDGMENT OF THESE TECHNICAL PROBLEMS CAUSED KILGORE TO DRASTICALLY UNDERESTIMATE THIS PORTION OF THE WORK REQUIREMENT. THE TECHNICAL EVALUATION GROUP WENT OVER THE DEFICIENT AREAS OF KILGORE'S PROPOSAL WITH THEM ALLOWING KILGORE TO ASK QUESTIONS IN REGARD TO THE OVERALL MANUFACTURING PROCESSES AND PROCEDURES. THE GOVERNMENT RESPONDED TO ALL OF KILGORE'S QUESTIONS, PROVIDING INFORMATION THAT HAD BEEN OBTAINED FROM THE PREVIOUS PRODUCTION CONTRACT AND FROM WORK THAT HAD BEEN ACCOMPLISHED BY THE GOVERNMENT ENGINEERS. IT WAS DETERMINED AS A RESULT OF THESE TECHNICAL DISCUSSIONS THAT KILGORE'S TECHNICAL APPROACH IF FOLLOWED WOULD SERIOUSLY JEOPARDIZE THE MANUFACTURE OF THE PRODUCT AND THE SCHEDULED DELIVERY OF THE FLARE. KILGORE'S TECHNICAL GRADING WAS NOT IMPROVED. THEREFORE, THE TECHNICAL EVALUATION GROUP ADVISED THE ADVISORY PANEL THAT THERE WAS STILL AN EXTREMELY HIGH RISK INVOLVED SHOULD KILGORE CORPORATION BE SELECTED FOR AWARD."

IN NEGOTIATED PROCUREMENTS THE GOVERNING STATUTE, 10 U.S.C. 2304(A), REQUIRES AN AWARD TO BE MADE TO THE BEST ADVANTAGE OF THE GOVERNMENT, "PRICE AND OTHER FACTORS CONSIDERED." WHILE PRICE IS ALWAYS A FACTOR TO BE CONSIDERED IN THE EVALUATION, IT IS WITHIN THE DISCRETION OF THE CONTRACTING AGENCY TO DETERMINE ON THE BASIS OF "OTHER FACTORS" THAT IT IS TO THE GOVERNMENT'S ADVANTAGE TO AWARD A CONTRACT TO OTHER THAN THE LOW OFFEROR. SEE 50 COMP. GEN. 110 (1970). IT IS CLEAR THAT THE "OTHER FACTORS" WERE CONTROLLING IN THE SELECTION OF THIOKOL.

WITH REGARD TO THE TECHNICAL EVALUATIONS, IT HAS BEEN THE CONSISTENT POSITION OF OUR OFFICE THAT IN SUCH MATTERS WE MUST DEFER TO THE JUDGMENT OF THE ADMINISTRATIVE AGENCY IN THE ABSENCE OF EVIDENCE THAT THE AGENCY HAS ACTED ARBITRARILY. 51 COMP. GEN. , B-173677, MARCH 31, 1972. IT IS OUR VIEW THAT THE EVALUATION AND SCORING PLAN AND PROCEDURES EMPLOYED IN THIS CASE PROVIDED FOR A COMPREHENSIVE AND OBJECTIVE EVALUATION. FROM OUR REVIEW OF THE RECORD SUPPORTING THE TECHNICAL JUDGMENTS, WE CANNOT CONCLUDE THAT SUCH DETERMINATIONS WERE ARBITRARY.

FINALLY, WE SEE NO EVIDENCE IN THE RECORD TO INDICATE THAT THIOKOL'S REDUCTION IN PRICE IN ITS "BEST AND FINAL" OFFER RESULTED FROM OTHER THAN LEGITIMATE COMPETITIVE NEGOTIATION PROCEDURES. IN THIS CONNECTION, WE NOTE THAT YOUR COMPANY ALSO MADE ADJUSTMENTS IN PRICES IN SUBMISSION OF YOUR "BEST AND FINAL" OFFER.

FOR THE FOREGOING REASONS, YOUR PROTEST IS DENIED.