B-176013, FEB 12, 1973

B-176013: Feb 12, 1973

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GAO WILL NOT QUESTION THESE DETERMINATIONS UNLESS THEY ARE SO ARBITRARY OR CAPRICIOUS AS TO BE CLEARLY ERRONEOUS. SINCE THE NATIONAL BUREAU OF STANDARDS HAS VERIFIED THE VALIDITY OF THE DETERMINATION THAT SST'S PROPOSAL WAS TECHNICALLY UNACCEPTABLE. THERE IS NO BASIS FOR CHALLENGING THE REJECTION OF THE PROPOSAL. IT CANNOT BE CONCLUDED THAT THE FAILURE TO NOTIFY SST OF THE EXTENSION OF THE PROPOSAL SUSPENSION DATE WAS PREJUDICAL TO THEM. THE PROCUREMENT WAS TO BE NEGOTIATED UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(11). PROPOSALS WERE TO BE SUBMITTED BY JANUARY 28. THE DATE FOR RECEIPT OF PROPOSALS WAS EXTENDED TO FEBRUARY 14. ALL INTERESTED PARTIES WERE REPORTEDLY NOTIFIED OF THIS CHANGE.

B-176013, FEB 12, 1973

BID PROTEST - TECHNICAL EVALUATION - UNACCEPTABLE BID - EXTENSION OF SUBMISSION DATE DENIAL OF PROTEST BY SCIENTIFIC SYSTEMS TECHNOLOGY, INC. (SST), AGAINST THE AWARD OF A CONTRACT TO THE TRW SYSTEMS GROUP, TRW, INC., UNDER AN RFP ISSUED BY KIRTLAND AFB, N.M. A PURCHASING ACTIVITY HAS THE PRIMARY RESPONSIBILITY FOR DETERMINING ITS MINIMUM NEEDS AND WHETHER A PRODUCT MEETS THESE NEEDS. GAO WILL NOT QUESTION THESE DETERMINATIONS UNLESS THEY ARE SO ARBITRARY OR CAPRICIOUS AS TO BE CLEARLY ERRONEOUS. B-171030, JUNE 22, 1971. SINCE THE NATIONAL BUREAU OF STANDARDS HAS VERIFIED THE VALIDITY OF THE DETERMINATION THAT SST'S PROPOSAL WAS TECHNICALLY UNACCEPTABLE, THERE IS NO BASIS FOR CHALLENGING THE REJECTION OF THE PROPOSAL. ALSO, IT CANNOT BE CONCLUDED THAT THE FAILURE TO NOTIFY SST OF THE EXTENSION OF THE PROPOSAL SUSPENSION DATE WAS PREJUDICAL TO THEM.

TO SCIENTIFIC SYSTEM TECHNOLOGY, INC.:

WE REFER TO YOUR LETTER OF AUGUST 14, 1972, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF CONTRACT NO. F29601-72-C-0091 TO THE TRW SYSTEMS GROUP, TRW, INC., UNDER REQUEST FOR PROPOSALS (RFP) NO. F29601-72- R-0037, ISSUED BY KIRTLAND AIR FORCE BASE, NEW MEXICO.

THE RFP, ISSUED DECEMBER 30, 1971, REQUESTED PROPOSALS FOR THE DEVELOPMENT OF A COMPUTER CODE WHICH WOULD AUTOMATICALLY PROVIDE LITERAL OR NUMERICAL TRANSFER FUNCTIONS FOR ELECTRICAL CIRCUITS. THE PROCUREMENT WAS TO BE NEGOTIATED UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(11), WHICH PERMITS NEGOTIATION FOR EXPERIMENTAL, DEVELOPMENTAL, OR RESEARCH WORK. PROPOSALS WERE TO BE SUBMITTED BY JANUARY 28, 1972. HOWEVER, ON JANUARY 28, THE DATE FOR RECEIPT OF PROPOSALS WAS EXTENDED TO FEBRUARY 14. ALL INTERESTED PARTIES WERE REPORTEDLY NOTIFIED OF THIS CHANGE. OF THE 10 PROPOSALS SUBMITTED BY FEBRUARY 14, ONLY THOSE OF TRW AND THE NORTH AMERICAN ROCKWELL CORPORATION WERE FOUND TO BE TECHNICALLY ACCEPTABLE. THEREAFTER, THE CONTRACTING OFFICER DETERMINED THAT NO USEFUL PURPOSE WOULD BE SERVED BY CONDUCTING NEGOTIATIONS WITH NORTH AMERICAN ROCKWELL SINCE ITS COST PROPOSAL OF $149,397 WAS CLEARLY NOT IN A COST COMPETITIVE RANGE. AFTER SUBSEQUENT NEGOTIATIONS WITH TRW, THE COST-PLUS-FIXED-FEE CONTRACT IN QUESTION WAS AWARDED TO THAT FIRM AT THE NEGOTIATED PRICE OF $56,153.

THE PRIMARY BASIS OF YOUR PROTEST IS THAT THE SCIENTIFIC SYSTEM TECHNOLOGY, INC., (SST), PROPOSAL WAS TECHNICALLY ACCEPTABLE AS SUBMITTED, AND THAT ANY LACK OF DETAIL COULD HAVE EASILY BEEN CLEARED UP DURING NEGOTIATIONS. IN THIS REGARD, YOU CONTEND THAT, CONTRARY TO THE POSITION TAKEN BY THE AIR FORCE ADMINISTRATIVE REPORT FURNISHED YOU EARLIER FOR COMMENT, THE SST PROPOSED PROGRAM WAS CAPABLE OF HANDLING LARGE-SCALE SYSTEMS ANALYSIS PROGRAMS, AS REQUIRED BY THE STATEMENT OF WORK, BY MAKING MULTIPLE PASS RUNS. YOU FURTHER STATE THAT YOUR PROPOSAL COMMENT THAT "SST WILL DO ALL POSSIBLE TO MAKE THE COMPUTER CODE FOR AUTOMATICALLY GENERATING TRANSFER FUNCTIONS AS COMPUTATIONALLY EFFICIENT AS POSSIBLE," CITED BY THE AIR FORCE ADMINISTRATIVE REPORT AS AN INDICATION THAT THE SST TECHNICAL APPROACH WAS UNACCEPTABLY VAGUE, "WAS MADE ONLY AFTER SPECIFIC MENTION WAS MADE OF THE KEY MATHEMATICAL TECHNIQUES TO BE USED, REFERRED ONLY TO DETAIL WORK, AND SHOULD NOT BE QUOTED OUT OF CONTEXT."

YOU FURTHER PROTEST THAT SST NEVER RECEIVED NOTIFICATION THAT THE DATE FOR SUBMISSION OF PROPOSALS HAD BEEN EXTENDED TO FEBRUARY 14, AND YOU FEEL IT UNUSUAL THAT THE DATE SHOULD HAVE BEEN EXTENDED ON THE VERY DAY THAT PROPOSALS WERE TO BE RECEIVED. IT IS FURTHER YOUR BELIEF THAT ANY FIRM PLANNING TO RESPOND TO THE INITIAL RFP WOULD HAVE ALREADY SUBMITTED ITS PROPOSAL BY THE TIME IT RECEIVED NOTIFICATION OF THE EXTENSION, A FACT WHICH WOULD HAVE PLACED ANY FIRM WITH PRIOR KNOWLEDGE OF THE EXTENSION AT A CONSIDERABLE ADVANTAGE. YOU BELIEVE IT HIGHLY PROBABLE THAT SOME OFFERORS DID HAVE PRIOR KNOWLEDGE.

YOU ALSO NOTE THAT THE MARCH 3, 1972, LETTER TO SST FROM THE PROCUREMENT ACTIVITY, STATING THAT IN VIEW OF "COST AND TECHNICAL FACTORS" NO REVISION OF THE SST PROPOSAL WOULD BE PERMITTED AND THAT THE PROPOSAL WOULD NOT BE CONSIDERED FOR AWARD, DID NOT INFORM YOU THAT THE SST PROPOSAL HAD BEEN FOUND TECHNICALLY UNACCEPTABLE. YOU BELIEVE THAT THE SST PROPOSAL WAS DETERMINED TO BE TECHNICALLY UNACCEPTABLE ONLY AFTER YOUR PROTEST OF THE AWARD HAD BEEN FILED. IT IS ALSO YOUR BELIEF THAT THE TRW CONTRACT PRICE OF $56,153 REPRESENTS A DOWNWARD ADJUSTMENT OF THE PRICE INITIALLY SUBMITTED WHICH WAS GENERATED BY THE SST PROTEST. IN THIS REGARD, YOU POINT OUT THAT SST WAS ORIGINALLY NOTIFIED BY LETTER OF MAY 10, 1972, FROM THE CONTRACTING OFFICER, THAT AWARD HAD BEEN MADE TO TRW AT THE PRICE OF $86,207 AND THAT WHILE THE CONTRACTING OFFICER INITIALLY DENIED HAVING SENT THIS LETTER, HIS POSITION NOW IS THAT AN INCORRECT PRICE WAS INSERTED IN THE LETTER AS A RESULT OF A TYPOGRAPHICAL ERROR.

FINALLY, YOU REQUEST INFORMATION WITH RESPECT TO THE PERCENTAGE OF RESEARCH AND DEVELOPMENT CONTRACTS AWARDED TO SMALL BUSINESS FIRMS IN RECENT YEARS (APPARENTLY BECAUSE SMALL BUSINESS CONCERNS HAVE BEEN SYSTEMATICALLY EXCLUDED FROM PARTICIPATION IN SUCH PROCUREMENTS).

WITH RESPECT TO THE DETERMINATION OF TECHNICAL COMPETITIVE RANGE, AND THE EXCLUSION OF SST THEREFROM, THE DEPARTMENTAL REPORT POINTS OUT THAT OF THE EIGHT TECHNICALLY UNACCEPTABLE PROPOSALS, THE SST PROPOSAL WAS FIFTH RANKED. FURTHER, THE REPORT STATES:

"LACK OF TECHNICAL DATA OR INFORMATION (WHICH WOULD HAVE BEEN OBTAINED) AND LACK OF CLARITY, WERE NOT THE BASIS FOR DETERMINATION OF UNACCEPTABILITY OF THE TECHNICAL PROPOSALS. CONTRACTORS SUBMITTING UNACCEPTABLE PROPOSALS WERE ELIMINATED FROM CONSIDERATION BECAUSE THEY WERE NOT IN THE TECHNICAL COMPETITIVE RANGE."

WITH RESPECT TO THE REASONS FOR DETERMINING THE SST PROPOSAL TO BE UNACCEPTABLE, THE REPORT SUMMARIZES THE TECHNICAL EVALUATION AS FOLLOWS:

"AS SPECIFICALLY POINTED OUT IN PARAGRAPHS 1 AND 2 OF THE STATEMENT OF WORK, THE CODE TO BE DEVELOPED UNDER THIS CONTRACTUAL EFFORT IS TO BE USED AS ONE PART OF A LARGE-SCALE SYSTEMS ANALYSIS PROGRAM. THE TECHNICAL APPROACH THEN, MUST BE ONE WHICH ALLOWS THE CODE TO HANDLE LARGE CIRCUITS AND/OR LARGE SYSTEMS OF DIFFERENTIAL EQUATIONS. THE METHOD PRESENTED ON THE SCIENTIFIC SYSTEM TECHNOLOGY PROPOSAL IS GREATLY CONSTRAINED TO SMALL SYSTEMS AND NO ATTEMPT HAS BEEN MADE TO SHOW HOW IT COULD BE ADAPTED TO LARGER PROBLEMS. ALTHOUGH THE METHOD WHICH IS PRESENTED IS SIMILAR TO THAT IN THE TRW PROPOSAL, MANY ADVANCED TECHNIQUES, WHICH HAVE BEEN APPLIED BY TRW, ALLOW THE PROBLEM SIZE TO INCREASE AND ONLY BE LIMITED BY MACHINE CORE REQUIREMENTS. THESE TECHNIQUES IN FLOWGRAPH REDUCTION, CODE ELIMINATION AND OPTIMUM TREEING MAKE THE TRW CODE AVAILABLE FOR USE IN A LARGE SCALE SYSTEM ANALYSIS PROGRAM. THIS CANNOT BE SAID FOR THE SCIENTIFIC SYSTEM TECHNOLOGY APPROACH. IN PARAGRAPH 2.7 OF THE SCIENTIFIC SYSTEM TECHNOLOGY PROPOSAL, IT IS STATED THAT THE CODE WILL BE MADE AS COMPUTATIONALLY EFFICIENT AS POSSIBLE BUT THAT THE METHODS OF COATES, LENMER-SCHER AND TELLEGREN ARE ALREADY THE MOST EFFICIENT WAYS TO HANDLE THE TASKS AT HAND. TAKING INTO ACCOUNT THE ADVANCED TECHNIQUES WHICH TRW PROPOSES TO INCREASE THE EFFICIENCY OF COATES' ALGORITHM, THIS IS NOT TRUE. THE ADVANCED WORK, WHICH TRW PROPOSES IN THESE AREAS, WILL INCREASE THE EFFICIENCY OF THE CODE TREMENDOUSLY. THIS IS ALSO POINTED OUT IN THE RFP, UNDER UNDERSTANDING OF THE PROBLEM IN THE RATIONALE FOR ASSIGNED RATING FACTORS. THE FACT THAT NO SYSTEM APPLICATION IS POSSIBLE WITH THE PROPOSED APPROACH MAKES IT UNACCEPTABLE FOR SOLVING THE SYSTEMS ANALYSIS CODE PROBLEM."

IN VIEW OF THE TECHNICALLY COMPLEX NATURE OF THIS PROCUREMENT AND THEREFORE OF THE BASES FOR TECHNICAL EVALUATION, WE REQUESTED ADVICE FROM QUALIFIED PERSONNEL OF THE NATIONAL BUREAU OF STANDARDS IN AN ATTEMPT TO VERIFY THE VALIDITY OF THE REASONS ADVANCED FOR REJECTION OF THE SST PROPOSAL. WE WERE TOLD THAT OF THE TWO PROPOSALS TRW'S IS CLEARLY MORE EXPLICIT, SOPHISTICATED, AND DETAILED IN WHAT IS OFFERED THAN IS THE PROPOSAL OF SST. FURTHER, WE WERE ADVISED THAT THE SST PROPOSAL DOES NOT EXPLICITLY SHOW HOW ITS SYSTEM WILL BE ADAPTED TO LARGER PROBLEMS, ALTHOUGH IT WAS FELT, NONETHELESS, THAT SST COULD PROBABLY DO THE REQUIRED WORK. IT WAS ALSO NOTED THAT ALTHOUGH SST WAS NOT PROPOSING PER SE TO OFFER ITS MAGIC SYSTEM FOR THIS PROCUREMENT, SST MAY HAVE INTRODUCED SOME CONFUSION AS TO WHAT IT WAS OFFERING BY INCLUDING INFORMATION RELATIVE TO MAGIC IN ITS PROPOSAL.

OUR OFFICE HAS RECOGNIZED THAT THE PURCHASING ACTIVITY HAS THE PRIMARY RESPONSIBILITY FOR DETERMINING ITS MINIMUM NEEDS AND WHETHER A PRODUCT MEETS THESE NEEDS. WE WILL NOT OBJECT TO THE DETERMINATION BY AN ACTIVITY AS TO WHETHER AN ITEM MEETS ITS MINIMUM NEEDS UNLESS THAT DETERMINATION IS SO CAPRICIOUS AND ARBITRARY AS TO BE CLEARLY ERRONEOUS. B-171030, JUNE 22, 1971. WITH RESPECT TO TECHNICAL EVALUATIONS, OUR OFFICE OF NECESSITY RECOGNIZES A REASONABLE DEGREE OF ADMINISTRATIVE DISCRETION IN DETERMINING WHETHER A PROPOSAL IS WITHIN THE COMPETITIVE RANGE AND THEREFORE ELIGIBLE FOR FURTHER CONSIDERATION. B-168092, MAY 5, 1970. THUS, WHERE, AS HERE, IT IS POSSIBLE TO ARGUE THAT WITH ADDITIONAL CLARIFYING MATERIALS AND INFORMATION THE SST PROPOSAL COULD HAVE BEEN MADE ACCEPTABLE, IT CAN ALSO BE ARGUED THAT THE SST PROPOSAL DID NOT EXPLICITLY OFFER A PROGRAM ADAPTED TO A LARGE SCALE SYSTEMS ANALYSIS PROGRAM AS REQUESTED BY THE SOLICITATION THIS, WE ARE UNABLE TO CONCLUDE THAT THE ADMINISTRATIVE DISCRETION PERMITTED IN TECHNICAL EVALUATIONS HAS BEEN ABUSED TO SUCH A DEGREE AS TO BE LEGALLY OBJECTIONABLE.

AS REGARDS THE EXTENSION OF THE DATE FOR SUBMISSION OF PROPOSALS, WE ARE ADVISED THAT THIS ACTION WAS FELT TO BE NECESSARY FOR COMPLIANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 4-106.2(A) AFTER ADDITIONAL SOURCES WERE ADDED TO THE SOURCE LIST SEVERAL DAYS PRIOR TO JANUARY 28. ASPR 4-106.2(A) READS IN PART AS FOLLOWS:

"*** SOURCES WHICH BECOME KNOWN AS A RESULT OF SYNOPSES OR OTHER MEANS OF PUBLICIZING REQUIREMENTS SHALL BE SENT REQUESTS FOR PROPOSALS IF SUCH SOURCES HAVE BEEN TECHNICALLY EVALUATED AND DETERMINED REASONABLY QUALIFIED TO PERFORM ***"

WE ARE ADVISED THAT OF THE 10 PROPOSALS RECEIVED IN RESPONSE TO THE RFP, FIVE WERE RECEIVED FROM FIRMS WHO TOOK THE OPPORTUNITY TO SUBMIT THEIR PROPOSALS DURING THE EXTENDED TIME PERIOD. WE ARE ALSO ADVISED THAT NONE OF THE OFFERORS RECEIVED PRIOR INFORMATION AS TO THE EXTENSION OF THE PROPOSAL SUBMISSION DATE. WE ARE UNABLE TO SAY WHY SST DID NOT RECEIVE NOTIFICATION OF THE EXTENSION SINCE WE ARE ADVISED THAT SST WAS ON THE LIST OF FIRMS TO WHICH NOTICE OF THE EXTENSION WAS TO BE TRANSMITTED. HOWEVER, INASMUCH AS THE TWO FIRMS WHOSE PROPOSALS WERE FOUND TO BE TECHNICALLY ACCEPTABLE WERE ABLE TO SUBMIT THESE OFFERS WITHIN THE ORIGINAL 29-DAY PERIOD ALLOTTED FOR FORMULATION OF PROPOSALS AND INASMUCH AS THOSE OFFERORS ALLOWED THE 2-WEEK SUBMISSION EXTENSION WERE IN ANY EVENT UNABLE TO SUBMIT TECHNICALLY ACCEPTABLE PROPOSALS, WE CANNOT CONCLUDE THAT ALLEGED FAILURE TO NOTIFY SST OF THE TIME EXTENSION WAS PREJUDICIAL TO THAT FIRM. WE FURTHER NOTE THAT AT NO TIME DID SST REQUEST ADDITIONAL TIME IN WHICH TO PREPARE ITS PROPOSAL MORE THOROUGHLY.

WE NOTE THAT THE CONTRACTING OFFICER'S MARCH 3 LETTER ADVISING THAT SST WAS NO LONGER UNDER CONSIDERATION FOR AWARD WAS THE PROCUREMENT ACTIVITY'S STANDARD NOTIFICATION ISSUED PURSUANT TO ASPR 3-508.2. THIS READS, IN PERTINENT PART, AS FOLLOWS:

"*** IN ADDITION TO STATING THAT THE PROPOSAL HAS BEEN DETERMINED UNACCEPTABLE, NOTICE TO THE OFFEROR SHALL INDICATE, IN GENERAL TERMS, THE BASIS FOR SUCH DETERMINATION AND SHALL ADVISE THAT, SINCE FURTHER NEGOTIATION WITH HIM CONCERNING THE PROCUREMENT IS NOT CONTEMPLATED, A REVISION OF HIS PROPOSAL WILL NOT BE CONSIDERED."

WE BELIEVE THE MARCH 3 LETTER TO BE IN CONFORMANCE WITH THIS REGULATION. FURTHER, WE NOTE THAT YOUR ORIGINAL PROTEST LETTER DATED MAY 12, 1972, INTERPRETS THE CONTRACTING OFFICER'S LETTER AS A REJECTION OF THE SST PROPOSAL FOR TECHNICAL REASONS.

REGARDING THE POSSIBILITY THAT TRW MAY HAVE BENEFITED FROM THE EXTENSION OF THE PERIOD FOR RECEIPT OF PROPOSALS AND THAT THE TRW PRICE WAS ADJUSTED APPROPRIATELY IN VIEW OF THE SST PROTEST, THE COPY OF THE TRW PROPOSAL PROVIDED OUR OFFICE SHOWS THAT SUCH WAS SIGNED BY TRW ON JANUARY 21, APPROXIMATELY ONE WEEK BEFORE THE ORIGINAL PROPOSAL SUBMISSION DATE, AND THAT THE PRICE PROPOSED THEREIN WAS $57,808 AS OPPOSED TO THE $86,207 FIGURE MENTIONED IN THE CONTRACTING OFFICER'S MAY 10, 1972, LETTER. THE DIFFERENCE BETWEEN THE ORIGINALLY PROPOSED PRICE AND THE AWARD PRICE OF $56,153 WOULD APPEAR TO BE A LEGITIMATE RESULT OF THE NEGOTIATIONS HELD PRIOR TO AWARD AND NOT THE SST PROTEST.

FINALLY, ON THE QUESTION OF SMALL BUSINESS PARTICIPATION, THE ADMINISTRATIVE REPORT POINTS OUT THAT ALTHOUGH THIS PROCUREMENT WAS NOT SET-ASIDE FOR SMALL BUSINESS PARTICIPATION 10 OF THE 20 FIRMS SOLICITED (EXCLUDING ONE NON-PROFIT ORGANIZATION) WERE SMALL BUSINESSES. ALTHOUGH THE PERCENTAGE OF RESEARCH AND DEVELOPMENT AWARDS TO SMALL BUSINESSES IS NOT BROKEN OUT OF THE GENERAL SMALL BUSINESS AWARD PERCENTAGES SET OUT IN THE ADMINISTRATIVE REPORT PREVIOUSLY FURNISHED YOU, WE THINK THAT THE SOLICITATION OF A SUBSTANTIAL NUMBER OF SMALL BUSINESS FIRMS IN THIS PROCUREMENT INDICATES THAT THE PROCURING ACTIVITY HAS NOT DELIBERATELY EXCLUDED QUALIFIED SMALL BUSINESS FROM PARTICIPATING IN RESEARCH AND DEVELOPMENT CONTRACTING.

ACCORDINGLY, THE PROTEST MUST BE DENIED.