B-176283(1), FEB 5, 1973

B-176283(1): Feb 5, 1973

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GAO MAY NOT PROPERLY OBJECT TO A CONTRACTING OFFICER'S DETERMINATION TO REOPEN NEGOTIATIONS IN THE ABSENCE OF A SHOWING THAT SUCH ACTION CONSTITUTES AN ABUSE OF DISCRETION OR WAS OTHERWISE CONTRARY TO THE BEST INTEREST OF THE GOVERNMENT. POST-AWARD NOTICE TO UNSUCCESSFUL OFFERORS IS A PROCEDURAL REQUIREMENT AND DOES NOT AFFECT THE VALIDITY OF A CONTRACT AWARD. 46 COMP. INCORPORATED: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 15. WAS CLOSED ON FEBRUARY 15. THREE PROPOSALS WERE RECEIVED FOR LOT I AND THREE PROPOSALS WERE RECEIVED FOR LOT II (EACH LOT HAD A DIFFERENT OPTICAL DISTORTION SPECIFICATION). EVALUATION BY THE PROCURING ACTIVITY DETERMINED PROCUREMENT WAS TO BE MADE ON LOT I ONLY.

B-176283(1), FEB 5, 1973

BID PROTEST - REOPENING OF NEGOTIATIONS - POST-AWARD NOTICE TO UNSUCCESSFUL OFFERORS DECISION DENYING THE PROTEST OF BAIRD-ATOMIC, INC., AGAINST AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN RFP ISSUED BY THE NAVAL AMMUNITION DEPOT, CRANE, IND., FOR NIGHT VISION BIOCULAR EYEPIECE LENSES. GAO MAY NOT PROPERLY OBJECT TO A CONTRACTING OFFICER'S DETERMINATION TO REOPEN NEGOTIATIONS IN THE ABSENCE OF A SHOWING THAT SUCH ACTION CONSTITUTES AN ABUSE OF DISCRETION OR WAS OTHERWISE CONTRARY TO THE BEST INTEREST OF THE GOVERNMENT. ALSO, POST-AWARD NOTICE TO UNSUCCESSFUL OFFERORS IS A PROCEDURAL REQUIREMENT AND DOES NOT AFFECT THE VALIDITY OF A CONTRACT AWARD. 46 COMP. GEN. 285, 293 (1966).

TO BAIRD-ATOMIC, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 15, 1972, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER OFFEROR, UNDER REQUEST FOR PROPOSALS (RFP) NO. N00164-72-R-0191, ISSUED BY THE NAVAL AMMUNITION DEPOT, CRANE, INDIANA.

THE RECORD SHOWS THAT THE SUBJECT SOLICITATION ISSUED ON JANUARY 25, 1972, FOR THE PURCHASE OF 1002 EACH, NIGHT VISION SIGHT AN/TVS-4, BIOCULAR EYEPIECE LENS, WAS CLOSED ON FEBRUARY 15, 1972. IN RESPONSE TO THE SOLICITATION, THREE PROPOSALS WERE RECEIVED FOR LOT I AND THREE PROPOSALS WERE RECEIVED FOR LOT II (EACH LOT HAD A DIFFERENT OPTICAL DISTORTION SPECIFICATION). EVALUATION BY THE PROCURING ACTIVITY DETERMINED PROCUREMENT WAS TO BE MADE ON LOT I ONLY. THE THREE PROPOSALS FOR LOT WERE:

SINGER $413,200.00

BAIRD-ATOMIC 494,650.00

OPTO MECHANIK 517,803.54

THE CONTRACTING OFFICER DETERMINED THAT NEGOTIATIONS WOULD NOT BE HELD IN THAT ADEQUATE COMPETITION HAD BEEN RECEIVED TO DETERMINE PRICE REASONABLENESS. A PREAWARD SURVEY WAS REQUESTED ON THE LOW OFFEROR, SINGER. DURING THIS SURVEY IT WAS DETERMINED THAT CERTAIN CHANGES WERE NECESSARY TO CLARIFY THE SPECIFICATIONS, THUS REQUIRING DISCUSSIONS WITH EACH OF THE THREE OFFERORS. ON MARCH 21, 1972, OFFERORS WERE ORALLY REQUESTED TO FURNISH THEIR BEST AND FINAL OFFER IN WRITING NO LATER THAN MARCH 24, 1972. IN RESPONSE TO THIS REQUEST, ONLY BAIRD ATOMIC REDUCED ITS PRICE. THE PRICE STANDINGS ON MARCH 24, 1972, WERE:

BAIRD-ATOMIC $388,750.00

SINGER 413,200.00

OPTO MECHANIK 517,803.54

THUS BAIRD-ATOMIC BECAME LOW OFFEROR AND A PREAWARD SURVEY WAS REQUESTED ON THAT FIRM. THE INITIAL RECOMMENDATION ON APRIL 25, 1972, WAS NEGATIVE. AFTER SUBSEQUENT CORRESPONDENCE FROM BAIRD-ATOMIC, A RE EVALUATION WAS REQUESTED ON MAY 3, 1972. ON MAY 11, 1972, AN AWARD WAS RECOMMENDED.

MEANWHILE, DURING THE COURSE OF THE PREAWARD SURVEY ON BAIRD-ATOMIC, SINGER NOTIFIED THE CONTRACTING OFFICER THAT FINANCIAL BENEFITS COULD BE OBTAINED BY THE GOVERNMENT IN FURTHER NEGOTIATIONS. SINGER ADVISED THE CONTRACTING OFFICER ON MAY 5, 1972, THAT AS A DIRECT RESULT OF DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT NEW APPROVED BIDDING RATES, A REVISED TOTAL PRICE OF $385,000 COULD BE SUBMITTED. AS A RESULT OF THIS NOTIFICATION, THE CONTRACTING OFFICER DETERMINED THAT NEGOTIATIONS WOULD BE REOPENED, AND ON MAY 11, 1972, REQUESTED THE OFFERORS TO SUBMIT THEIR BEST AND FINAL OFFERS IN WRITING NO LATER THAN MAY 17, 1972. THE FOLLOWING BEST AND FINAL OFFERS WERE RECEIVED:

SINGER $377,980.00

BAIRD-ATOMIC 389,990.00

(OPTO MECHANIK DID NOT SUBMIT AN OFFER)

SINGER AS LOW OFFEROR WAS SELECTED FOR THE AWARD ON MAY 25, 1972, AND THE CONTRACT WAS SIGNED ON JUNE 29, 1972. YOU REPORT THAT YOUR FIRM WAS FIRST NOTIFIED OF THIS AWARD ON JULY 3, 1972, ALTHOUGH YOU FILED A PROTEST AGAINST THE AWARD OF THIS PROCUREMENT TO ANY OTHER OFFEROR ON JUNE 16, 1972.

YOU CONTEND THAT SINGER'S OFFER TO REDUCE ITS PRICE SHOULD NOT HAVE BEEN CONSIDERED BECAUSE IT CONSTITUTED A LATE MODIFICATION OF ITS PROPOSAL UNDER ASPR 3-506, AND THAT THE SUBSEQUENT REOPENING OF NEGOTIATIONS CONVERTED THIS PROCUREMENT INTO AN AUCTION, WHICH IS STRICTLY PROHIBITED BY ASPR 3-805.1(B).

WHILE THE PROVISIONS OF ASPR 3-506 PRECLUDE ACCEPTANCE OF A LATE OFFER OR MODIFICATION AS SUCH, THESE PROVISIONS MAY NOT REASONABLY BE CONSTRUED AS PRECLUDING EITHER THE OPENING OR THE REOPENING OF NEGOTIATIONS WITH ALL OFFERORS UPON THE RECEIPT OF A LATE MODIFICATION TO A TIMELY OFFER WHICH INDICATES TO THE CONTRACTING OFFICER THAT NEGOTIATIONS OR FURTHER NEGOTIATIONS, AS THE CASE MAY BE, WOULD BE ADVANTAGEOUS TO THE GOVERNMENT. NEITHER THE STATUTES GOVERNING THE CONDUCT OF NEGOTIATED PROCUREMENTS NOR THE IMPLEMENTING REGULATIONS CONTAIN ANY PROVISION LIMITING THE EXTENT OF NEGOTIATIONS WHICH MAY BE CONDUCTED PRIOR TO THE AWARD OF A NEGOTIATED CONTRACT. NEGOTIATING PROCEDURES, UNLIKE THOSE REQUIRED FOR FORMAL ADVERTISING ARE DESIGNED TO BE FLEXIBLE AND INFORMAL. THEREFORE, WE FEEL THAT OUR OFFICE MAY NOT PROPERLY OBJECT TO A CONTRACTING OFFICER'S DETERMINATION TO REOPEN NEGOTIATIONS IN THE ABSENCE OF A SHOWING THAT SUCH ACTION CONSTITUTES AN ABUSE OF DISCRETION OR WAS OTHERWISE CONTRARY TO THE BEST INTERESTS OF THE GOVERNMENT.

WE RECOGNIZE, OF COURSE, THAT IT IS NOT IN THE GOVERNMENT'S BEST INTEREST TO HOLD ENDLESS ROUNDS OF NEGOTIATIONS TO THE POINT WHERE A TIMELY AWARD IS NO LONGER POSSIBLE. SEE 50 COMP. GEN. 547, 552 (1971). IN ORDER TO AVOID UNDUE DELAY IN THE AWARDS OF NEGOTIATED CONTRACTS AND AT THE SAME TIME TO PRESERVE THE INTEGRITY OF THE COMPETITIVE NEGOTIATING PROCESS, WE BELIEVE THAT ONCE NEGOTIATIONS HAVE BEEN HELD AND BEST AND FINAL OFFERS RECEIVED, NEGOTIATIONS SHOULD NOT BE REOPENED UNLESS IT IS CLEARLY IN THE BEST INTERESTS OF THE GOVERNMENT TO DO SO.

THE RECORD INDICATES THAT THE CONTRACTING OFFICER REOPENED THE NEGOTIATIONS PRIMARILY BECAUSE OF THE POSSIBILITY OF OBTAINING A PRICE REDUCTION FROM SINGER. AS PREVIOUSLY INDICATED, SINGER ADVISED THE CONTRACTING OFFICER THAT DCASD HAD APPROVED NEW G&A AND OVERHEAD RATES FOR USE BY SINGER UNDER COST TYPE CONTRACTS AND THAT AS A RESULT SINGER WAS IN A POSITION TO REDUCE ITS PRICE FOR THE SUBJECT (NON-COST TYPE) CONTRACT FROM $413,000 TO $385,000. IN VIEW OF THIS, AND SINCE THE PRIOR NEGOTIATIONS HAD BEEN ORAL, THE CONTRACTING OFFICER STATES HE DETERMINED THAT THE NEGOTIATIONS SHOULD BE REOPENED.

WE DO NOT REGARD SINGER'S INDICATED PRICE OF $385,000 AS REPRESENTING A SIGNIFICANT COST SAVINGS TO THE GOVERNMENT COMPARED TO YOUR MARCH 24 PRICE OF $388,750 (ALTHOUGH SINGER IN FACT QUOTED A FINAL REDUCED PRICE OF $377,980 ON MAY 17). ALSO, WE DO NOT UNDERSTAND WHY THE CONTRACTING OFFICER FELT THAT THE CONDUCTING OF ORAL DISCUSSIONS DURING THE INITIAL ROUND OF NEGOTIATIONS REQUIRED AN ADDITIONAL ROUND OF NEGOTIATIONS, SINCE IT IS NOT REPORTED THAT ANY OF THE COMPETITORS MISUNDERSTOOD THE REQUIREMENTS OF THE SPECIFICATIONS. THEREFORE, WE QUESTION WHETHER IT WAS IN THE BEST INTERESTS OF THE GOVERNMENT TO REOPEN THE NEGOTIATIONS. HOWEVER, AS PREVIOUSLY STATED, WE DO NOT FIND THAT THE CONTRACTING OFFICER'S ACTION IN REOPENING THE NEGOTIATIONS WAS CONTRARY TO LAW OR REGULATION, AND THE RECORD FAILS TO SHOW THAT THE ACTION WAS TAKEN IN BAD FAITH.

IN THIS REGARD, YOU HAVE CONTENDED THAT THE REOPENING OF NEGOTIATIONS CONVERTED THIS PROCUREMENT INTO A PROHIBITED AUCTION. YOU HAVE OUTLINED CIRCUMSTANCES WHICH INDICATE THE POSSIBILITY THAT YOUR PRICE BECAME KNOWN THROUGH THE INDUSTRY, ALTHOUGH YOU HAVE NOT CONTENDED THAT YOUR PRICE WAS IMPROPERLY DISCLOSED BY NAVY OFFICIALS. IN FACT, YOU STATE THAT "OUR PRICE WAS MADE KNOWN BY US TO OTHER GOVERNMENT AGENCIES" IN RESPONSE TO THEIR QUERIES "IN THE BELIEF THIS MARCH 24 PRICE WAS FINAL WITH REGARD TO THE INSTANT PROCUREMENT", AND THAT THE PRICE APPARENTLY THEN BECAME KNOWN BY OTHER FIRMS IN THE INDUSTRY. IN THE CIRCUMSTANCES, WE DO NOT BELIEVE THAT ANY EXPOSURE OF YOUR PRICE TO YOUR COMPETITORS COULD BE CONSIDERED AS AN AUCTION TECHNIQUE BY THE AGENCY. ACCORDINGLY, WE HAVE NO BASIS TO CONCLUDE THAT THE CONTRACT WAS ILLEGALLY AWARDED TO SINGER. SEE 47 COMP. GEN. 279, 286 (1967).

FINALLY, YOU POINT OUT THAT YOU DID NOT RECEIVE PROMPT NOTICE OF THE AWARD AS REQUIRED BY ASPR 3-508.3. YOU STATE THAT YOU WERE NOT NOTIFIED BY THE PROCURING ACTIVITY OF THE CONTRACT AWARD TO SINGER UNTIL JULY 3, 1972, MORE THAN FIVE WEEKS AFTER THE AWARD WAS MADE AND THAT AS A RESULT OF THIS LATE NOTICE YOUR FIRM WAS UNCERTAIN AS TO ITS FUTURE COMMITMENTS. THE ADMINISTRATIVE REPORT STATES THAT NOTIFICATION WAS NOT GIVEN PREVIOUSLY BECAUSE OF THE PROCURING ACTIVITY'S POLICY TO NOTIFY UNSUCCESSFUL OFFERORS ONLY AFTER EXECUTION OF THE CONTRACT BY BOTH PARTIES. THE CONTRACT WAS NOT SIGNED UNTIL JUNE 29, 1972. THE FIVE-WEEK DELAY WAS THEREFORE OCCASIONED BY THE ABOVE POLICY. WE ARE RECOMMENDING TO THE SECRETARY OF THE NAVY BY LETTER OF TODAY, COPY ENCLOSED, THAT THE DEPARTMENT'S NOTICE OF AWARD POLICY SHOULD BE REVIEWED TO ASSURE THAT UNSUCCESSFUL OFFERORS ARE GIVEN PROMPT NOTICE OF AWARD TO THE SUCCESSFUL OFFEROR. HOWEVER, WE HAVE HELD THAT POST AWARD NOTICE TO UNSUCCESSFUL OFFERORS IS A PROCEDURAL REQUIREMENT AND DOES NOT AFFECT THE VALIDITY OF A CONTRACT AWARD. 46 COMP. GEN. 285, 293 (1966). THEREFORE, YOUR PROTEST IS DENIED.