B-176066(1), AUG 28, 1972

B-176066(1): Aug 28, 1972

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WHILE RECOGNIZING PROTESTANT'S ALLEGATION THAT THERE WAS NO WAY FOR THEM TO KNOW THAT A SINGLE CENTRAL PROCESSING UNIT WAS SUCCESSFULLY BENCHMARKED FOR THE EXPANDED SYSTEM REQUIREMENTS. BELIEVES DCA WAS ENTITLED TO RELY ON THE PROVISION IN THE RFP FOR SUBMISSION OF ALTERNATE PROPOSALS. TO BURROUGHS CORPORATION: THIS IS IN REPLY TO YOUR TELEGRAM OF MAY 27. THE SYSTEM OFFERED WAS TO BE EXPANDABLE TO MEET THE REQUIREMENTS OF THE "EXPANDED ADP SYSTEM. IT IS REPORTED THAT DCA EXPECTED TO ACQUIRE THE SYSTEM HAVING THE GREATEST VALUE TO THE GOVERNMENT WHICH WOULD NOT EXCEED THE AVAILABLE FUNDING OF $2.2 MILLION. IT WAS ANTICIPATED THAT THE SYSTEM ACQUIRED WOULD FALL BETWEEN THE BASIC AND EXPANDED SYSTEMS.

B-176066(1), AUG 28, 1972

BID PROTEST - EVALUATION OF PROPOSALS - DUTY TO INFORM - ALTERNATE PROPOSALS - DUTY TO NEGOTIATE DENIAL OF PROTEST BY THE BURROUGHS CORPORATION AGAINST THE AWARD OF A CONTRACT UNDER AN RFP ISSUED BY THE DEFENSE COMMUNICATIONS AGENCY (DCA). WHILE RECOGNIZING PROTESTANT'S ALLEGATION THAT THERE WAS NO WAY FOR THEM TO KNOW THAT A SINGLE CENTRAL PROCESSING UNIT WAS SUCCESSFULLY BENCHMARKED FOR THE EXPANDED SYSTEM REQUIREMENTS, THE COMP. GEN. BELIEVES DCA WAS ENTITLED TO RELY ON THE PROVISION IN THE RFP FOR SUBMISSION OF ALTERNATE PROPOSALS. FURTHER, IT CANNOT BE CONCLUDED THAT DCA'S DECISION NOT TO CONDUCT NEGOTIATIONS RENDERS THE CONTRACT ILLEGAL. SEE ASPR 3- 805.1(A)(V).

TO BURROUGHS CORPORATION:

THIS IS IN REPLY TO YOUR TELEGRAM OF MAY 27, 1972, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS DCA100-72-R-0018, ISSUED BY THE DEFENSE COMMUNICATIONS AGENCY (DCA).

THE SOLICITATION CALLED FOR THE FURNISHING, INSTALLATION, CHECK-OUT, PROGRAMMING AND OTHER SERVICES, OF AN AUTOMATIC DATA PROCESSING (ADP) SYSTEM TO BE USED FOR COMMUNICATIONS SIMULATION AT DCA'S SYSTEMS ENGINEERING FACILITY AT RESTON, VIRGINIA. THE PROCUREMENT CONTEMPLATED A PURCHASE AND/OR LEASE OF A "BASIC MINIMUM ADP SYSTEM," AS DEFINED IN THE SOLICITATION, AND THE SYSTEM OFFERED WAS TO BE EXPANDABLE TO MEET THE REQUIREMENTS OF THE "EXPANDED ADP SYSTEM," WITH A PRICED OPTION TO COVER THE ADDITIONAL WORKING STORAGE AND CENTRAL PROCESSING UNIT (CPU) SPEED. IT IS REPORTED THAT DCA EXPECTED TO ACQUIRE THE SYSTEM HAVING THE GREATEST VALUE TO THE GOVERNMENT WHICH WOULD NOT EXCEED THE AVAILABLE FUNDING OF $2.2 MILLION. IT WAS ANTICIPATED THAT THE SYSTEM ACQUIRED WOULD FALL BETWEEN THE BASIC AND EXPANDED SYSTEMS. NOTICE OF THE FUNDING LIMITATION WAS PROVIDED IN THE SOLICITATION AND THE RELATIVE IMPORTANCE OF THE TECHNICAL EVALUATION FACTORS WAS DISCLOSED.

DCA HAS ADVISED THAT NOTICE OF AWARD WAS ISSUED TO IBM ON MAY 22, 1972, AND THAT A DEFINITIVE CONTRACT WAS SIGNED ON JUNE 6. IT IS REPORTED THAT THE AWARD TO IBM RESULTED IN THE ACQUISITION OF A SYSTEM EVALUATED AT THE HIGHEST RATING ACCORDED ANY OFFER, AND AT THE LEAST TOTAL COST TO THE GOVERNMENT OVER THE LIFE OF THE SYSTEM.

YOU CONTEND IT WAS YOUR UNDERSTANDING, BASED ON RFP INSTRUCTIONS AND THE CLARIFICATIONS BY DCA PERSONNEL, THAT THROUGH-PUT PERFORMANCE AND CAPACITY WOULD BE THE PRIME CRITERIA FOR SELECTION, SUBJECT ONLY TO A LIMITATION OF $2.2 MILLION. YOU THEREFORE REQUESTED AND OBTAINED AN AMENDMENT TO THE SOLICITATION TO PERMIT YOUR PROPOSAL TO INCORPORATE TWO CPU'S. YOU ALLEGE THAT IT WAS APPARENT TO DCA, BUT NOT TO YOUR FIRM, AS A RESULT OF THE BENCHMARK TESTS CONDUCTED PURSUANT TO THE PROVISIONS OF THE SOLICITATION, THAT EACH OF THE CPU'S IN YOUR PROPOSAL HAD IN FACT MET BOTH THE BASIC AND EXPANDED REQUIREMENTS. YOU CONTEND THAT YOU LACKED THE NECESSARY INFORMATION TO APPLY VALUES TO BENCHMARK RESULTS TO ALLOW YOU TO DETERMINE WHETHER OR NOT DCA'S EXPANDED SYSTEM PERFORMANCE REQUIREMENTS HAD BEEN MET BY A SINGLE CPU SYSTEM. IT IS YOUR BELIEF THAT IT SHOULD NOT HAVE BEEN NECESSARY FOR YOU TO SUBMIT AN ALTERNATE PROPOSAL INCORPORATING ONLY A SINGLE CPU; RATHER, IT WAS INCUMBENT UPON DCA TO ADVISE YOU THAT THE PERFORMANCE OF EACH CPU MET THE EXPANDED REQUIREMENTS AND TO CONDUCT DISCUSSIONS SO THAT A REDUCED PRICE (BY APPROXIMATELY $400,000) FOR A SINGLE PROCESSOR SYSTEM COULD HAVE BEEN SUBMITTED AND CONSIDERED. YOU STATE THAT THE MANY CONVERSATIONS BETWEEN BURROUGHS AND DCA CONCERNING BOTH EQUIPMENT AND PRICE OFFERINGS WERE HELD ONLY TO PERMIT THE EVALUATION TEAM TO AFFIRM ITS INTERPRETATION OF THE CONFIGURATION AND PRICES OFFERED, AND YOU BELIEVE THAT DCA'S FAILURE TO NEGOTIATE AN ACCEPTABLE CONFIGURATION AT THE LOWEST POSSIBLE PRICE WAS IMPROPER.

ALTERNATIVELY, IT IS ARGUED THAT IT WAS INCUMBENT UPON THE GOVERNMENT TO EVALUATE AN ALTERNATE CONFIGURATION INCORPORATING A SINGLE CPU NOTWITHSTANDING YOUR FAILURE TO SUBMIT ONE OR THE FAILURE OF DCA TO NEGOTIATE, SINCE (1) BOTH DUAL AND SINGLE SYSTEMS WERE SUCCESSFULLY BENCHMARKED, (2) THE METHOD OF SWITCHING THE SECOND PROCESSOR ON OR OFF WAS DEMONSTRATED TO THE GOVERNMENT AND (3) PRICE INFORMATION FOR BOTH SYSTEMS WAS INCLUDED IN BURROUGHS' FEDERAL SUPPLY SCHEDULE (FSS) PRICE LIST. FURTHERMORE, WHILE YOU DO NOT CONTEST THE FAIRNESS OR REASONABLENESS OF THE PRICES OFFERED, YOU CONTEND IT SHOULD HAVE BEEN OBVIOUS TO DCA THAT BURROUGHS STOOD READY TO NEGOTIATE BECAUSE YOUR OFFER WAS SUBMITTED UNDER THE PROVISIONS OF THE RFP WHICH ALLOWED FOR A COMPLETELY SEPARATE CONTRACT FROM THE FSS LISTINGS.

DCA HAS TAKEN THE POSITION THAT IF BURROUGHS HAD DESIRED ITS ONE PROCESSOR SYSTEM TO BE CONSIDERED AND FULLY EVALUATED, IT WAS INCUMBENT UPON BURROUGHS TO PRESENT A PROPOSAL ON THAT CONFIGURATION FOR CONSIDERATION PURSUANT TO PARAGRAPH 14 OF THE RFP ENTITLED "ALTERNATIVE PROPOSALS," WHICH PROVIDES, AS FOLLOWS:

"A VENDOR MAY SUBMIT MORE THAN ONE (1) PROPOSAL, BUT EACH MUST INDIVIDUALLY SATISFY THE MANDATORY REQUIREMENTS OF THIS RFP. EACH PROPOSAL WILL INDICATE THE COMPLETE RANGE OF PRICING AS SPECIFIED IN THE COST TABLES ATTACHED HERETO. IN THE CASE OF PRICE/COST OPTIONS FOR A GIVEN CONFIGURATION, AN ALTERNATIVE PROPOSAL WILL NOT BE REQUIRED. ALTERNATIVE PROPOSALS ARE SUBMITTED, SUCH ALTERNATIVE WILL BE CLEARLY LABELED AND IDENTIFIED ON THE COVER PAGE OF EACH SEPARATE DOCUMENT. THE REASONS FOR THE ALTERNATIVES) AND ITS COMPARATIVE BENEFITS SHALL BE EXPLAINED. EACH PROPOSAL SUBMITTED WILL BE EVALUATED ON ITS OWN MERITS."

MOREOVER, DCA IS OF THE VIEW THAT INFORMATION REGARDING THE PERFORMANCE OF THE SINGLE CPU CONFIGURATION WAS KNOWN TO BURROUGHS DURING THE COURSE OF THE LIVE TEST DEMONSTRATIONS (BENCHMARK TESTS) AND THAT EVEN THEN IT WAS NOT TOO LATE FOR BURROUGHS TO SUBMIT A PROPOSAL BASED ON SUCH A CONFIGURATION.

SINCE YOU DID NOT SUBMIT AN ALTERNATE PROPOSAL, THE AGENCY ADVISES IT DID NOT PERFORM A FULL EVALUATION OF YOUR SINGLE CPU SYSTEM. SUCH AN EVALUATION WOULD HAVE ENCOMPASSED SOME 25 FACTORS RELATING TO CAPABILITY, RELIABILITY, EXPANDABILITY, FLEXIBILITY, AND GENERAL USEFULNESS OF THE HARDWARE AND SOFTWARE PROPOSED. NONE OF THESE ASPECTS OF A SINGLE CPU SYSTEM WAS EVALUATED; ONLY THE THROUGH-PUT WAS MEASURED BY THE CONDUCT OF THE LIVE DEMONSTRATION TEST. ALSO THE AGENCY NOTES THAT THE FSS LISTING FOR YOUR B6700 SYSTEM CONTAINS FIVE DIFFERENT SYSTEMS, EACH AT CONSIDERABLY DIFFERENT PRICES AND WITH SIGNIFICANTLY DIFFERENT CAPACITIES. IT IS ALSO NOTED THAT BURROUGHS' PROPOSAL OFFERED CERTAIN BENEFITS AT NO COST TO THE GOVERNMENT. ACCORDINGLY, THE AGENCY DENIES THAT IT HAD SUFFICIENT INFORMATION AND ANALYSIS TO CONSTRUCT A PROPOSAL FOR AND CONSIDER A BURROUGHS SINGLE CPU SYSTEM.

WHILE DCA APPEARS TO CONCEDE THAT PRICE NEGOTIATIONS WERE NOT CONDUCTED, THE AGENCY HAS TAKEN THE POSITION THAT ADEQUATE COMPETITION WAS PRESENT SINCE FOUR ACCEPTABLE OFFERS, EACH CONSIDERED TO BE WITHIN A COMPETITIVE RANGE, WERE RECEIVED AND ALL PRICES OFFERED "WERE EQUAL TO THEIR FSS PRICES ON HARDWARE OR AT VERY LOW OR NO PRICE ON NON-FSS ITEMS." DCA REPORTS THAT IT WAS NOT CONSIDERED REASONABLE TO EXPECT THAT VENDORS WOULD REDUCE THE FSS PRICE OF THEIR MAJOR HARDWARE ITEMS, PARTICULARLY IN VIEW OF THE "MOST FAVORED CUSTOMER" TYPE PROVISIONS APPLICABLE TO FSS VENDORS. ACCORDINGLY, IT IS DCA'S VIEW THAT THIS PROCUREMENT WAS AWARDED AT A PRICE WHICH WAS CONSIDERED "FAIR AND REASONABLE," AND WHICH WAS CONSIDERED TO BE THE LOWEST PRICE WHICH COULD REALISTICALLY BE EXPECTED UNDER THE CIRCUMSTANCES.

INSOFAR AS YOU CONTEND THAT DCA SHOULD HAVE EVALUATED AND CONSIDERED FOR AWARD A SINGLE CPU SYSTEM ON THE BASIS OF THE BENCHMARK RESULTS AND PRICING INFORMATION AVAILABLE FROM THE FSS PRICE LISTS, WE FIND NO SUFFICIENT BASIS FOR IMPOSING SUCH A DUTY UPON THE GOVERNMENT. REACHING THIS CONCLUSION WE RECOGNIZE YOUR ALLEGATION THAT THERE WAS NO WAY FOR YOU TO KNOW THAT A SINGLE CPU CONFIGURATION WAS SUCCESSFULLY BENCHMARKED FOR THE EXPANDED SYSTEM REQUIREMENTS; NEVERTHELESS WE BELIEVE DCA WAS ENTITLED TO RELY UPON THE PROVISION IN THE SOLICITATION FOR SUBMISSION OF ALTERNATE PROPOSALS. MOREOVER, WITH RESPECT TO THOSE ITEMS FOR WHICH YOU OFFERED EITHER NO CHARGE OR A LOWER PRICE THAN WAS LISTED ON THE FSS, YOUR OFFER SPECIFICALLY STATED THAT SUCH PRICES WOULD BE APPLICABLE "PROVIDED THAT AT NO TIME WILL THE CONFIGURATION OF THE SYSTEM BE LESS THAN THAT SHOWN IN THE APPENDIX I PRICE LIST." WE MUST CONCLUDE, THEREFORE, THAT SUCH PRICES WERE NOT INTENDED BY YOU TO BE VALID FOR ANY OTHER CONFIGURATION WHICH MIGHT BE CONSIDERED.

ON THE OTHER HAND, IT IS OUR VIEW THAT IT WOULD HAVE BEEN IN THE GOVERNMENT'S BEST INTEREST HAD DCA CONDUCTED NEGOTIATIONS AND INFORMED BURROUGHS THAT ITS PROPOSAL INCLUDED EQUIPMENT WHICH DID NOT APPEAR ESSENTIAL FOR MEETING THE BASIC AND EXPANDED REQUIREMENTS. OBVIOUSLY, DCA SHOULD HAVE BEEN INTERESTED IN BURROUGHS' REASONS FOR PROPOSING A DUAL CPU SYSTEM SINCE A SINGLE CPU HAD BEEN SUCCESSFULLY BENCHMARKED. HOWEVER, WE ARE UNABLE TO CONCLUDE THAT IN THE CIRCUMSTANCES THE DECISION OF DCA NOT TO CONDUCT NEGOTIATIONS RENDERS THE CONTRACT ILLEGAL. IN THIS CONNECTION, THE RECORD SHOWS THAT SIX OFFERS WERE RECEIVED FROM FOUR MAJOR HARDWARE VENDORS AND THAT FOUR OF THE OFFERS WERE ACCEPTABLE AND CONSIDERED TO BE WITHIN A COMPETITIVE RANGE. WE BELIEVE, THEREFORE, THAT COMPETITION HAS BEEN ADEQUATELY DEMONSTRATED SO AS TO PRECLUDE ANY SERIOUS QUESTION REGARDING THE FAIRNESS OR REASONABLENESS OF THE PRICES OFFERED AND WE NOTE THAT YOU CONCEDE THAT THE PRICES ARE FAIR AND REASONABLE ALTHOUGH NOT NECESSARILY THE LOWEST. SEE ARMED SERVICES PROCUREMENT REGULATION 3- 805.1(A)(V) WHICH PERMITS CONTRACT AWARD WITHOUT NEGOTIATIONS IN SUCH CIRCUMSTANCES.

WHILE IN SUPPORT OF YOUR POSITION YOU HAVE CITED OUR DECISION IN 47 COMP. GEN. 29 (1967) FOR THE PROPOSITION THAT DISCUSSIONS ARE REQUIRED TO BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, THAT DECISION INVOLVED A SITUATION, UNLIKE THE PRESENT CASE, IN WHICH THE AGENCY DESIRED TO NEGOTIATE AND IT PROPOSED TO DO SO WITH ONLY ONE FIRM. IN THAT CASE, WE HELD THAT THE AGENCY COULD NOT EXCLUDE THE PROTESTOR FROM NEGOTIATIONS SINCE IT COULD NOT PROPERLY CONCLUDE THAT THE COMPANY'S PROPOSAL WAS NOT WITHIN A COMPETITIVE RANGE. HERE, WE UNDERSTAND THAT DCA ENTERED INTO A CONTRACT WITHOUT ATTEMPTING TO OBTAIN BETTER PRICES THROUGH NEGOTIATIONS.

ACCORDINGLY, YOUR PROTEST IS DENIED.

A COPY OF OUR LETTER OF TODAY TO THE DIRECTOR, DCA, IS ENCLOSED FOR YOUR &NFORMATION.