B-176089, SEP 26, 1972

B-176089: Sep 26, 1972

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THE CONTRACTING OFFICER WAS IN ERROR WHEN HE REJECTED MSD'S BID AS BEING LATE IN THAT HE APPLIED THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATIONS RATHER THAN THE FEDERAL PROCUREMENT REGULATIONS. THAT ERROR IS NOT CONTROLLING SINCE FDA ALSO FOUND THAT MSD'S BID WAS NONRESPONSIVE AND WAS NOT REASONABLY SUBJECT TO BEING MADE ACCEPTABLE THROUGH MEANINGFUL NEGOTIATIONS. GAO WILL NOT QUESTION SUCH ADMINISTRATIVE DETERMINATIONS IN THE ABSENCE OF A CLEAR SHOWING OF ARBITRARY ABUSE OF DISCRETION. TO MSD COMPUTERS: REFERENCE IS MADE TO YOUR LETTERS DATED MAY 31. THE DATE AND TIME ESTABLISHED FOR THE RECEIPT OF PROPOSALS WAS MARCH 20. FORTY PROPOSALS WERE RECEIVED WITHIN THE PERIOD FOR RECEIPT OF PROPOSALS.

B-176089, SEP 26, 1972

BID PROTEST - LATE BIDS - APPLICABLE REGULATIONS - NONRESPONSIVE BID - COMPETITIVE RANGE DECISION DENYING THE PROTEST OF MSD COMPUTERS (MSD) AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN RFP ISSUED BY THE FOOD AND DRUG ADMINISTRATION (FDA), FOR INVESTIGATION OF ELECTRICAL SAFETY IN HOSPITALS. THE CONTRACTING OFFICER WAS IN ERROR WHEN HE REJECTED MSD'S BID AS BEING LATE IN THAT HE APPLIED THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATIONS RATHER THAN THE FEDERAL PROCUREMENT REGULATIONS. HOWEVER, THAT ERROR IS NOT CONTROLLING SINCE FDA ALSO FOUND THAT MSD'S BID WAS NONRESPONSIVE AND WAS NOT REASONABLY SUBJECT TO BEING MADE ACCEPTABLE THROUGH MEANINGFUL NEGOTIATIONS. GAO WILL NOT QUESTION SUCH ADMINISTRATIVE DETERMINATIONS IN THE ABSENCE OF A CLEAR SHOWING OF ARBITRARY ABUSE OF DISCRETION.

TO MSD COMPUTERS:

REFERENCE IS MADE TO YOUR LETTERS DATED MAY 31, JULY 3 AND JULY 21, 1972, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER RFP 641-2-157, ISSUED BY THE FOOD AND DRUG ADMINISTRATION (FDA), DEPARTMENT OF HEALTH, EDUCATION AND WELFARE (HEW).

THE SUBJECT SOLICITATION REQUESTED PROPOSALS FOR THE INVESTIGATION OF ELECTRICAL SAFETY IN HOSPITALS. THE DATE AND TIME ESTABLISHED FOR THE RECEIPT OF PROPOSALS WAS MARCH 20, 1972, AT 4:00 P.M. FORTY PROPOSALS WERE RECEIVED WITHIN THE PERIOD FOR RECEIPT OF PROPOSALS. YOUR FIRM'S HAND DELIVERED OFFER, HOWEVER, WAS RECEIVED AT 4:32 P.M. ON MARCH 21, 1972. THE CONTRACTING OFFICER CONSIDERED YOUR SUBMISSION AS A LATE PROPOSAL, AND ADVISED YOU AS FOLLOWS:

"YOUR LATE PROPOSAL SHALL BE OPENED AND EVALUATED, BUT WILL NOT BE CONSIDERED FOR AWARD UNLESS FOUND TO BE OF EXTREME IMPORTANCE TO THE GOVERNMENT, AS FOR EXAMPLE WHERE IT OFFERS SOME IMPORTANT TECHNICAL OR SCIENTIFIC BREAKTHROUGH."

THE RECORD EVIDENCES THAT THE RESULTS OF THE EVALUATION OF YOUR OFFER WERE SET FORTH IN NARRATIVE FORM IN A MEMORANDUM DATED APRIL 18, 1972, AND SIGNED BY THE ACTING DIRECTOR, DIVISION OF STANDARDS, OFFICE OF MEDICAL DEVICES, CM-2, FDA. THE MEMORANDUM CONTAINED THE CONCLUSION THAT YOUR PROPOSAL WAS LACKING IN MANY AREAS AND, THEREFORE, WAS NONRESPONSIVE. BASED UPON THIS TECHNICAL EVALUATION, THE CONTRACTING OFFICER DETERMINED THAT YOUR FIRM'S PROPOSAL WAS NOT OF EXTREME IMPORTANCE TO FDA AND, THEREFORE, THAT IT DID "NOT WARRANT THE GRANTING OF AN EXEMPTION TO THE LATE PROPOSAL REQUIREMENTS."

IN ITS REPORT TO THIS OFFICE IN RESPONSE TO YOUR PROTEST, THE DIRECTOR OF PROCUREMENT AND MATERIEL MANAGEMENT, OASAM, HEW, RECOGNIZED THAT BOTH THE FEDERAL PROCUREMENT REGULATIONS (FPR) AND THE HEW PROCUREMENT REGULATIONS ARE SILENT WITH REGARD TO THE TREATMENT OF LATE PROPOSALS, AND THAT THE REQUIREMENT FOR A FINDING THAT A LATE PROPOSAL IS OF EXTREME IMPORTANCE TO THE GOVERNMENT AS A PREREQUISITE TO CONSIDERING SUCH PROPOSAL FOR AWARD IS A REQUIREMENT ONLY OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3- 506(C)(II), WHICH IS INAPPLICABLE TO THIS PROCUREMENT.

WITH RESPECT TO THE TIME FOR SUBMISSION OF PROPOSALS, FPR 1-3.802(C) PROVIDES FOR THE FIXING OF A DATE ON WHICH THE GOVERNMENT CAN REASONABLY EXPECT OFFERS TO BE SUBMITTED. UNDER THIS REGULATION, HOWEVER, IF A PROPOSAL IS RECEIVED AFTER THE DATE INDICATED FOR RECEIPT OF PROPOSALS, BUT BEFORE AWARD IS MADE, WE FIND NOTHING TO PRECLUDE THE PROPOSAL FROM BEING CONSIDERED FOR AWARD ALONG WITH THE OTHER PROPOSALS RECEIVED. 151944, MARCH 19, 1969.

IN LIGHT OF THE EXISTING DISTINCTION BETWEEN THE FPR'S AND THE ASPR'S, WE ARE OF THE OPINION THAT THE CONTRACTING OFFICER IN THE INSTANT CASE WAS IN ERROR IN APPLYING AN ASPR REQUIREMENT TO YOUR FIRM'S LATE PROPOSAL, THEREBY RESULTING IN HIS DETERMINATION THAT YOUR LATE PROPOSAL SHOULD NOT BE CONSIDERED FOR AWARD.

WE ARE OF THE VIEW THAT A BASIC PURPOSE OF NEGOTIATED PROCUREMENTS IS TO DETERMINE WHETHER DEFICIENT PROPOSALS ARE REASONABLY SUBJECT TO BEING MADE ACCEPTABLE THROUGH DISCUSSIONS, RATHER THAN TO DISCARD INITIAL PROPOSALS BECAUSE THEY MAY NOT BE FULLY RESPONSIVE TO THE REQUIREMENTS OF AN RFP. TO THIS END, WE HAVE HELD THAT PROPOSALS MUST BE REGARDED AS WITHIN A COMPETITIVE RANGE, AND SUBJECT TO NEGOTIATION, UNLESS THEY ARE SO TECHNICALLY INFERIOR, OR OUT OF LINE FROM A PRICE STANDPOINT, AS TO PRECLUDE THE POSSIBILITY OF MEANINGFUL NEGOTIATIONS. IN THE INSTANT CASE, SINCE THE TECHNICAL EVALUATOR CONCLUDED ONLY THAT MSD'S PROPOSAL WAS NONRESPONSIVE, WE REQUESTED HEW TO REEVALUATE YOUR FIRM'S PROPOSAL TO DETERMINE WHETHER THE PROPOSAL IS REASONABLY SUBJECT TO BEING MADE ACCEPTABLE THROUGH MEANINGFUL NEGOTIATIONS WITH YOUR COMPANY.

THE RESULT OF THE REEVALUATION WAS AS FOLLOWS:

"BASED UPON THE TECHNICAL EVALUATION CONDUCTED ON APRIL 18, 1972 *** THE PROPOSAL SUBMITTED BY MEDICAL SYSTEMS DEVELOPMENT, INC., IS UNACCEPTABLE AS WRITTEN AND IS NOT CONSIDERED SUSCEPTIBLE OF BEING CLARIFIED SO AS TO WARRANT FURTHER TECHNICAL CONSIDERATION."

IT IS A WELL ESTABLISHED PRINCIPLE OF OUR OFFICE THAT, WITH RESPECT TO TECHNICAL CONSIDERATIONS, WE WILL NOT QUESTION SUCH ADMINISTRATIVE DETERMINATIONS IN THE ABSENCE OF A CLEAR SHOWING OF ARBITRARY ABUSE OF DISCRETION. SEE B-171905, JULY 20, 1971, AND B-171030, JUNE 22, 1971. YOUR LETTER TO THIS OFFICE DATED JULY 21, 1972, YOU HAVE RESPONDED TO THE MATTERS RAISED IN THE TECHNICAL EVALUATION DATED APRIL 18, 1972, WITH THE INTENT OF DEMONSTRATING THAT THE EVALUATION IS TOTALLY UNTRUE, WITHOUT FOUNDATION AND MERELY THE CONSEQUENCE OF FDA'S PREDETERMINED POSITION TO AVOID ANY FURTHER CONSIDERATION OF YOUR PROPOSAL. IN THIS CONNECTION, WITH THE AID OF YOUR RESPONSE TO THE EVALUATION IN THIS CASE, WE WERE ABLE TO MAKE SOME COMPARISONS BETWEEN THE SUFFICIENCY OF YOUR PROPOSAL AND THE PROPOSAL OF A FIRM DETERMINED TO BE WITHIN THE COMPETITIVE RANGE. THESE COMPARISONS DID NOT INDICATE THAT THE STATEMENTS CONTAINED IN THE EVALUATION NARRATIVE WERE THE PRODUCT OF AN ARBITRARY OR CAPRICIOUS EXERCISE OF ADMINISTRATIVE JUDGMENT.

FOR EXAMPLE, YOU CHALLENGE THE FOLLOWING STATEMENT CONTAINED IN THE TECHNICAL EVALUATION OF YOUR PROPOSAL:

"THERE WAS NO INDICATION OF THE SAMPLE SIZE WHICH WOULD BE UNDERTAKEN DURING THE STUDY."

YOUR RESPONSE CITED SECTION II.2.1 OF YOUR PROPOSAL, WHERE IT WAS EXPRESSED THAT "THE BASIC SAMPLE WILL INCLUDE THE FOLLOWING TYPES OF HOSPITALS" FOLLOWED BY A LIST INCLUDING SUCH TYPES AS CITY HOSPITALS, MEDICAL CENTERS AND UNIVERSITY HOSPITALS. FURTHER, YOU INDICATED THAT SINCE SECTION II.2.1 ALSO STATED THAT "MSD HAS BEEN ASSOCIATED WITH HUNDREDS OF HOSPITALS AND THEIR ADVANCED ELECTRICAL SAFETY PROGRAMS," THAT A MINIMUM SAMPLE OF ONE HUNDRED HOSPITALS IS INFERRED AND IS A CLEAR INDICATION OF THE SAMPLE SIZE WHICH WOULD BE UNDERTAKEN DURING THIS STUDY. HOWEVER, IT IS OUR VIEW THAT YOUR PROPOSAL MERELY INDICATED THE SUBJECTS OF YOUR SAMPLE AND FAILED TO CLEARLY ADVISE THE GOVERNMENT OF THE SIZE OF YOUR INTENDED SURVEY OF HOSPITALS.

IN THIS REGARD A PROPOSAL WHICH WAS SUBJECT TO FURTHER NEGOTIATIONS WAS MORE SPECIFIC AS TO THE SIZE OF ITS SAMPLES. IT STATED "EXTENSIVE DATA FROM 35 HOSPITALS RANGING FROM 48 TO 800 BEDS" WOULD BE THE BASIS OF ITS SAMPLE FOR THE PURPOSE OF OBTAINING BASIC DATA ON THE INCIDENCE AND CHARACTERISTICS OF DEFICIENCIES IN ELECTRICAL DISTRIBUTION SYSTEMS IN HEALTH CARE FACILITIES.

A SECOND EXAMPLE OF THE STATEMENTS CONTAINED IN THE EVALUATION NARRATIVE IS AS FOLLOWS:

"IN THE AREA OF FACILITIES AND EQUIPMENT, MR. SAMUELS DID NOT INDICATE ANY FACILITIES OR ANY EQUIPMENT WHICH WOULD BE UTILIZED DURING THE STUDY."

YOUR RESPONSE NOTES THAT IN NUMEROUS PLACES THROUGHOUT YOUR PROPOSAL YOU IDENTIFIED THE FACILITIES IN CLOSE PROXIMITY TO YOUR HEADQUARTERS AT 5480 WISCONSIN AVENUE, N. W., WASHINGTON, D. C., SUCH AS GEORGE WASHINGTON UNIVERSITY MEDICAL CENTER AND THE NATIONAL INSTITUTES OF HEALTH, WHICH WOULD BE UTILIZED TO COMPLETE THE REQUIREMENTS OF THE SUBJECT INVESTIGATION. FURTHER, YOU CONTEND THAT YOUR PROPOSAL INDICATED THE EQUIPMENT YOU WERE GOING TO UTILIZE IN THE STUDY, SINCE IT EXPRESSLY STATED THAT "MSD ALREADY HAS THE ESSENTIAL TEST EQUIPMENT REQUIRED ***," AND SINCE YOUR PROPOSAL ADVISED THAT YOUR FIRM WAS GOING TO PERFORM TESTS AND MEASUREMENTS WHICH NECESSARILY REQUIRED CERTAIN EQUIPMENT.

OUR REVIEW OF ANOTHER PROPOSAL EVIDENCES THAT IT DESCRIBED THE DETAILS OF ITS LABORATORY FACILITIES AS WELL AS ITS VAN, WHICH IS EQUIPPED WITH SPECIALIZED EQUIPMENT TO BE USED AS A MOBILE LABORATORY. FURTHER, THIS PROPOSAL DESCRIBED THE CAPABILITIES OF MANY OF THE DEVICES TO BE USED BY THE FIRM FOR FIELD AND LABORATORY STUDIES.

IN LIGHT OF THE FOREGOING, WE DO NOT CONSIDER THAT YOU HAVE PRESENTED A CLEAR SHOWING THAT THE AGENCY'S ULTIMATE ACTION IN REJECTING YOUR PROPOSAL WAS WITHOUT FOUNDATION, AND SINCE WE ARE UNABLE TO CATEGORICALLY STATE THAT YOUR PROPOSAL WAS WITHIN A COMPETITIVE RANGE OF THE OTHER PROPOSALS, OR THAT THE DEFICIENCIES IN YOUR PROPOSAL WERE MERELY MINOR MATTERS WHICH SHOULD HAVE BEEN RESOLVED IN NEGOTIATIONS, WE WILL NOT OBJECT TO THE AGENCY'S FAILURE TO CONDUCT NEGOTIATIONS WITH YOUR FIRM. B-171905, JULY 20, 1971.

WITH REGARD TO YOUR ALLEGATION THAT YOUR PROPOSAL NEVER RECEIVED TREATMENT EQUAL TO THAT GIVEN ALL OTHER OFFERORS, THE RECORD BEFORE THIS OFFICE EVIDENCES THAT THE EXTENT OF ANY INEQUALITY IN THE TREATMENT OF YOUR PROPOSAL WAS CONFINED TO THE CONTRACTING OFFICER'S IMPROPER APPROACH TO YOUR LATE SUBMISSION. HOWEVER, NOTWITHSTANDING THIS IMPROPRIETY, IN VIEW OF OUR DETERMINATION THAT THE AGENCY'S ULTIMATE REJECTION OF YOUR PROPOSAL FROM FURTHER CONSIDERATION WAS IN ACCORDANCE WITH APPLICABLE PROCUREMENT PROCEDURES TO REJECT PROPOSALS FOUND NOT TO BE WITHIN THE COMPETITIVE RANGE, WE MUST DENY YOUR PROTEST.