Protest Regarding Award to Higher Bidder

B-176077(2): Jan 26, 1973

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CHANGES IN CORPORATE FORM WILL NOT INVALIDATE A LICENSE ISSUED PURSUANT TO THE CLINICAL LABORATORIES IMPROVEMENT ACT OF 1967 AS LONG AS NO CHANGE WAS MADE IN THE LABORATORY FACILITY THAT WAS LICENSED. COMPLIANCE WITH FEDERAL LICENSING REQUIREMENTS IS A MATTER OF RESPONSIBILITY RATHER THAN RESPONSIVENESS. PRICE IS NOT THE CONTROLLING FACTOR OF AN RFP WHERE A HIGH LEVEL OF TECHNICAL COMPETENCE IS REQUIRED FOR SUCCESSFUL PERFORMANCE OF THE CONTRACT. 50 COMP. GUNDERSON & GARRETT FULLER: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 28. THE SOLICITATION WAS FOR LABORATORY URINALYSIS SCREENING IN CONNECTION WITH THE DEPARTMENT OF DEFENSE DRUG ABUSE PROGRAM. WERE SELECTED FOR LABORATORY TESTING OF SAMPLE SPECIMENS.

B-176077(2), JAN 26, 1973

BID PROTEST - FEDERAL LICENSING - PRICE FACTOR DECISION DENYING THE PROTEST OF UNITED MEDICAL LABORATORIES, INC., AGAINST AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN RFP ISSUED BY THE U.S. ARMY MEDICAL RESEARCH AND DEVELOPMENT COMMAND, WASHINGTON, D.C., FOR LABORATORY URINALYSIS SCREENING. CHANGES IN CORPORATE FORM WILL NOT INVALIDATE A LICENSE ISSUED PURSUANT TO THE CLINICAL LABORATORIES IMPROVEMENT ACT OF 1967 AS LONG AS NO CHANGE WAS MADE IN THE LABORATORY FACILITY THAT WAS LICENSED. MOREOVER, COMPLIANCE WITH FEDERAL LICENSING REQUIREMENTS IS A MATTER OF RESPONSIBILITY RATHER THAN RESPONSIVENESS, SO A SUCCESSFUL OFFEROR NEED ONLY OBTAIN A LICENSE BY THE TIME OF AWARD OR CONTRACT PERFORMANCE. COMP. GEN. 377, 378 (1971). ALSO, PRICE IS NOT THE CONTROLLING FACTOR OF AN RFP WHERE A HIGH LEVEL OF TECHNICAL COMPETENCE IS REQUIRED FOR SUCCESSFUL PERFORMANCE OF THE CONTRACT. 50 COMP. GEN. 110 (1970).

TO HARVEY J. GUNDERSON & GARRETT FULLER:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 28, 1972, AND SUBSEQUENT CORRESPONDENCE, PROTESTING ON BEHALF OF UNITED MEDICAL LABORATORIES, INCORPORATED (UML), THE FAILURE OF THAT FIRM TO RECEIVE THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS (RFP) DADA17-72-R 0602, ISSUED BY THE UNITED STATES ARMY MEDICAL RESEARCH AND DEVELOPMENT COMMAND, WASHINGTON, D.C.

THE SOLICITATION WAS FOR LABORATORY URINALYSIS SCREENING IN CONNECTION WITH THE DEPARTMENT OF DEFENSE DRUG ABUSE PROGRAM. THE RFP PROVIDED THAT WRITTEN PROPOSALS WOULD BE INITIALLY EVALUATED ON THE BASIS OF ANSWERS TO TECHNICAL QUESTIONS, WITH A SUBSEQUENT EVALUATION OF PRICE AND ACTUAL LABORATORY PROCESSING OF TEST SAMPLES. ELEVEN OF THE 27 OFFERORS, INCLUDING YOUR CLIENT, WERE SELECTED FOR LABORATORY TESTING OF SAMPLE SPECIMENS. WASHINGTON REFERENCE LABORATORY, INCORPORATED (WRL), AND BIOCHEMICAL PROCEDURES BOTH SCORED OVER 90 PERCENT, AND AWARDS WERE SUBSEQUENTLY MADE TO THOSE FIRMS. UML AND FIVE OTHER UNSUCCESSFUL OFFERORS THEN PROTESTED THE AWARDS TO THIS OFFICE.

YOU HAVE PROTESTED AGAINST THE AWARD TO WRL, CLAIMING THAT IT DID NOT HAVE THE REQUISITE LICENSE, AND THAT ITS PRICE WAS HIGHER THAN UML'S. YOU ALSO ASSERT THAT UML WAS PREJUDICED BY AN IMPROPER EVALUATION OF ITS LABORATORY TESTING RESULTS.

PARAGRAPH 10 OF SECTION C OF THE RFP STATES THAT:

"IN ORDER TO BE ELIGIBLE FOR AWARD OF THIS CONTRACT, THE OFFEROR MUST CERTIFY THAT THE LICENSING REQUIREMENTS OF THE CLINICAL LABORATORIES IMPROVEMENT ACT OF 1967 - PART 74 OF THE PUBLIC HEALTH SERVICE REGULATION, TITLE 42 U.S.C. ANNOTATED HAVE BEEN MET OR IN LIEU THEREOF, THAT THE OFFEROR HAS OBTAINED A LETTER OF EXEMPTION IN ACCORDANCE WITH SUBPART F OF THAT ACT."

ALTHOUGH WRL'S PROPOSAL CONTAINED THE REQUIRED CERTIFICATION, YOU STATE THAT WRL DID NOT HAVE SUCH A LICENSE WHEN ITS PROPOSAL WAS SUBMITTED. YOU POINT OUT THAT WASHINGTON REFERENCE LABORATORY, A DISTRICT OF COLUMBIA CORPORATION, OBTAINED A LICENSE IN 1969 WHICH WAS RENEWED IN 1970 AND 1971, BUT THAT NO LICENSE HAD BEEN ISSUED TO WASHINGTON REFERENCE LABORATORY, INCORPORATED, A DELAWARE CORPORATION ORGANIZED IN 1972 AND AUTHORIZED TO DO BUSINESS IN THE DISTRICT OF COLUMBIA. IT WAS THE LATTER CORPORATION THAT SUBMITTED THE PROPOSAL AND WAS AWARDED A CONTRACT.

THE CONTRACTING OFFICER HAS REPORTED THAT ALL LICENSING CERTIFICATIONS WERE CHECKED WITH THE CHIEF COMPLIANCE OFFICER OF THE CENTER FOR DISEASE CONTROL (CDC), THE LICENSING AGENCY. IT IS REPORTED THAT THE CDC OFFICIAL WAS ADVISED THAT WASHINGTON REFERENCE LABORATORY, THE DISTRICT OF COLUMBIA NON-PROFIT CORPORATION, WAS REORGANIZED TO CHANGE ITS NAME TO W.R. LABORATORY, AND TO FORM A NEW CORPORATION INCORPORATED IN DELAWARE, WASHINGTON REFERENCE LABORATORY, INC., BUT THAT THE FACILITY LOCATION FOR BOTH CORPORATIONS WOULD BE THE SAME AS WHEN WASHINGTON REFERENCE LABORATORY WAS LICENSED. REPORTEDLY, THE CDC OFFICIAL STATED THAT CHANGES IN CORPORATE FORM OR IDENTITY OR IN DIRECTORS WOULD NOT INVALIDATE AN EXISTING LICENSE SO LONG AS NO CHANGE WAS MADE IN THE LABORATORY FACILITY THAT WAS LICENSED. THE CDC OFFICIAL FURTHER STATED THAT SINCE NO CHANGE WAS TO BE MADE IN THE LABORATORY FACILITY INVOLVED, THE EXISTING LICENSE WOULD COVER BOTH CORPORATE ENTITIES UNTIL ITS EXPIRATION DATE OF JUNE 30, 1972. IT IS ALSO REPORTED THAT A RENEWAL APPLICATION WAS FILED BY THE NEW CORPORATION, WASHINGTON REFERENCE LABORATORY, INC. (THE SUCCESSFUL BIDDER), AND THAT A LICENSE WAS ISSUED IN THE NAME OF THE NEW ORGANIZATION EFFECTIVE JULY 1, 1972.

IN VIEW OF THIS EXPLANATION, IT DOES NOT APPEAR THAT WRL IMPROPERLY REPRESENTED THAT IT COMPLIED WITH THE LICENSING REQUIREMENTS. IN ANY EVENT, IT IS WELL ESTABLISHED THAT COMPLIANCE WITH FEDERAL LICENSING REQUIREMENTS IS A MATTER OF RESPONSIBILITY RATHER THAN RESPONSIVENESS, AND THEREFORE A SUCCESSFUL OFFEROR NEED ONLY OBTAIN THE LICENSE "BY THE TIME OF AWARD OR AT THE VERY LATEST BY THE TIME OF CONTRACT PERFORMANCE ***." 51 COMP. GEN. 377, 378 (1971); B-175991(2), AUGUST 15, 1972. THE RECORD CLEARLY ESTABLISHES THAT WRL POSSESSED THE REQUIRED LICENSE ON THE DATE CONTRACT PERFORMANCE WAS TO BEGIN.

THE ARMY ADMITS THAT AN ERROR WAS MADE IN THE EVALUATION OF UML'S PERFORMANCE IN LABORATORY TESTING SPECIMEN SAMPLES, BUT POINTS OUT THAT THE CORRECT EVALUATION OF UML'S PERFORMANCE RESULTED IN A REVISION OF UML'S SCORE FROM 72.3 TO 83.2 PERCENT, WHICH STILL LEAVES UML IN THIRD PLACE POSITION BEHIND THE TWO SUCCESSFUL OFFERORS. THEREFORE, WE CANNOT CONCLUDE THAT UML WOULD HAVE RECEIVED AN AWARD BUT FOR THE ERROR IN TEST RESULTS.

FINALLY, YOU STATE THAT UML'S PRICE OF $2.12 PER PROCESSED SPECIMEN WAS LOWER THAN THE AWARD PRICES OF $2.19 AND $2.31 AND THAT AN AWARD TO UML WOULD HAVE SAVED THE GOVERNMENT AT LEAST $37,402. HOWEVER, HERE IT IS CLEAR THAT WHILE PRICE WAS CONSIDERED, IT WAS NOT THE CONTROLLING FACTOR IN VIEW OF THE HIGH LEVEL OF TECHNICAL COMPETENCE REQUIRED FOR SUCCESSFUL PERFORMANCE OF THE CONTRACT. ASPR 3-101; 50 COMP. GEN. 110 (1970). ACCORDINGLY, AFTER IT WAS DETERMINED WHICH OFFERORS WERE WITHIN A COMPETITIVE RANGE, BOTH TECHNICALLY AND WITH REGARD TO PRICE, AWARD WAS MADE TO THOSE FIRMS WHICH ACHIEVED THE HIGHEST SCORES FOR ACCURATELY IDENTIFYING LABORATORY QUALITY CONTROL SAMPLES.

WE HAVE CAREFULLY REVIEWED THIS PROCUREMENT AND THE SPECIFIC CONTENTIONS YOU MAKE, AND FIND NO BASIS FOR CONCLUDING THAT THE CONTRACTS WERE IMPROPERLY AWARDED. SEE 50 COMP. GEN. 679 (1971). THEREFORE, THE PROTEST IS DENIED.

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