B-176407, SEP 27, 1972

B-176407: Sep 27, 1972

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THE CONTRACTING OFFICER IS NOT PRECLUDED FROM OPENING-UP THE NEGOTIATIONS UPON RECEIPT OF THE OFFER. THE ESTABLISHMENT OF A MINIMUM TIME FOR SUBMISSION OF PRICE REVISIONS IS WITHIN THE DISCRETION OF THE CONTRACTING OFFICIALS AS LONG AS THE TIMING IS NOT UNREASONABLE OR PREJUDICIAL TO THE OFFERORS. PREAWARD SURVEYS ARE ADMINISTRATIVE REVIEWS USED TO ESTABLISH THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS. ARE NOT TO BE INTERPRETED AS INDICATING THAT A PARTICULAR CONTRACTOR IS TO RECEIVE THE AWARD. THE RFP WAS ISSUED NOVEMBER 18. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A)(7) COVERING PURCHASES AND CONTRACTS FOR MEDICINE OR MEDICAL SUPPLIES. PROPOSALS WERE RECEIVED ONLY FROM CUTTER LABORATORIES.

B-176407, SEP 27, 1972

BID PROTEST - NEGOTIATED PROCUREMENTS - CONSIDERATION OF LATE PRICE REDUCTIONS - TIME FOR SUBMISSION OF PRICE REVISIONS - PURPOSE OF PREAWARD SURVEYS DECISION DENYING THE PROTEST OF BURRON MEDICAL PRODUCTS, INC., AGAINST THE PROCEDURES EMPLOYED UNDER AN RFP ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PA., FOR INTRAVENOUS INJECTION SETS. WHERE AN OFFEROR UNDER AN RFP MAKES A LATE VOLUNTARY PRICE REDUCTION WHICH INDICATES THE POSSIBILITY OF SUBSTANTIAL SAVINGS TO THE GOVERNMENT, THE CONTRACTING OFFICER IS NOT PRECLUDED FROM OPENING-UP THE NEGOTIATIONS UPON RECEIPT OF THE OFFER. ALSO, THE ESTABLISHMENT OF A MINIMUM TIME FOR SUBMISSION OF PRICE REVISIONS IS WITHIN THE DISCRETION OF THE CONTRACTING OFFICIALS AS LONG AS THE TIMING IS NOT UNREASONABLE OR PREJUDICIAL TO THE OFFERORS. FURTHER, PREAWARD SURVEYS ARE ADMINISTRATIVE REVIEWS USED TO ESTABLISH THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS, AND ARE NOT TO BE INTERPRETED AS INDICATING THAT A PARTICULAR CONTRACTOR IS TO RECEIVE THE AWARD.

TO BURRON MEDICAL PRODUCTS, INC.:

WE REFER TO YOUR LETTER DATED AUGUST 25, 1972, AND PRIOR CORRESPONDENCE, PROTESTING THE PROCEDURES EMPLOYED BY THE CONTRACTING AGENCY, UNDER REQUEST FOR PROPOSALS (RFP) DSA120-72-R-1128, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, (DPSC), PHILADELPHIA, PENNSYLVANIA.

THE RFP WAS ISSUED NOVEMBER 18, 1971, REQUIRING PROPOSALS BY DECEMBER 1, 1971, FOR 64,960 PACKAGES OF FEDERAL STOCK NUMBER 6515-721-9540, "INTRAVENOUS INJECTION SET, 20 GAGE NEEDLE, DISPOSABLE, 48S, TYPE 1". THE RFP ALSO REQUESTED PRICES ON AN OPTION TO PURCHASE AN ADDITIONAL 50 PERCENT OF THE BASIC QUANTITY. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A)(7) COVERING PURCHASES AND CONTRACTS FOR MEDICINE OR MEDICAL SUPPLIES.

PROPOSALS WERE RECEIVED ONLY FROM CUTTER LABORATORIES, INC. (CUTTER), AND BURRON MEDICAL PRODUCTS, INC. (BURRON). BOTH PROPOSERS SUBMITTED OFFERS ON THE BASIC AND OPTION QUANTITIES. THE CUTTER PROPOSAL WAS ON AN FOB DESTINATION BASIS WHEREAS BURRON SUBMITTED ALTERNATE PROPOSALS ON AN FOB ORIGIN AND FOB DESTINATION BASIS. WE NOTE THAT CLAUSE D.11.80 OF THE RFP EXCLUDED CONSIDERATION OF THE OPTION PRICES FOR PURPOSES OF EVALUATION FOR AWARD, UNLESS EXERCISED AT TIME OF AWARD.

PURSUANT TO THE PROVISION IN SECTION E, PAGE 25 OF THE RFP, ON DECEMBER 22, 1971, DPSC REQUESTED BURRON AND CUTTER TO SUBMIT TWO SAMPLE UNITS FOR TESTING TO DETERMINE COMPLETE COMPLIANCE WITH THE SPECIFICATIONS, INCLUDING A PROFESSIONAL EXAMINATION BY THE MILITARY MEDICAL SERVICES. WHILE THE RFP ESTIMATED 60 DAYS WOULD BE REQUIRED FOR EVALUATION, APPROVALS OF BOTH UNITS WERE NOT RECEIVED UNTIL MAY 23, 1972. IN THE INTERIM, A PRE-AWARD SURVEY AND EQUAL OPPORTUNITY COMPLIANCE REVIEW RESULTED IN A RECOMMENDATION OF AN AWARD TO BURRON. ALSO, ON MAY 10, 1972, THE CONTRACTING OFFICER WAS NOTIFIED THAT THE SPECIFICATION DEVIATION REQUESTED BY CUTTER CONCERNING THE USE OF WATER IN LIEU OF 50- PERCENT ALCOHOL AND WATER MIXTURE FOR A LEAKAGE TEST WAS APPROVED FOR INCORPORATION INTO THE RFP.

DURING THE LONG PERIOD OF EVALUATION, PERIODIC EXTENSIONS OF THE TIME FOR ACCEPTANCE OF PROPOSALS WERE OBTAINED FROM BOTH BURRON AND CUTTER. HOWEVER, CUTTER'S MARCH 31, 1972, LETTER EXTENDING ITS PROPOSAL ALSO INCLUDED A VOLUNTARY PRICE REDUCTION. IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-506(G), THE PRICE REDUCTION WAS TREATED AS AN UNACCEPTABLE LATE MODIFICATION. IT IS REPORTED THAT IN VIEW OF THE CUTTER PRICE REDUCTION, CONSIDERATION WAS GIVEN TO REOPENING NEGOTIATIONS BUT WAS DEFERRED BECAUSE IT WAS FELT THAT NEGOTIATION WOULD BE IN ORDER LATER BECAUSE OF A NEED TO REVISE SPECIFICATIONS, AS PER THE AFOREMENTIONED DEVIATION, AND TO REVISE THE DELIVERY SCHEDULE.

ON JUNE 2, 1972, NEGOTIATIONS WERE TELEPHONICALLY CONDUCTED WITH BOTH BURRON AND CUTTER. IT IS REPORTED THAT FIVE AREAS WERE NEGOTIATED: (1) THE SPECIFICATION DEVIATION; (2) CORRECTION OF DEFICIENCIES NOTED IN THE PREAWARD SAMPLES; (3) REVISED DELIVERY SCHEDULE; (4) OPTION PRICES; AND (5) BASIC QUANTITY PRICES, PARTICULARLY IN VIEW OF CUTTER'S LATE MODIFICATION. BOTH OFFERORS SUBMITTED PRICE REVISIONS ON THE BASIC AND OPTION QUANTITIES BY THE JUNE 6 CUTOFF DATE.

IT IS BURRON'S POSITION THAT IN VIEW OF THE INORDINATE AMOUNT OF TIME NECESSARY TO EVALUATE THE PRE-AWARD SAMPLES, THE FACT THAT NO NEGOTIATIONS WERE CONDUCTED AFTER SUBMISSION OF INITIAL PROPOSALS, THE POSITIVE PRE- AWARD SURVEYS, AND THE FACT THAT THE REASONS CITED FOR REOPENING NEGOTIATION DID NOT JUSTIFY THAT ACTION, AWARD SHOULD BE MADE TO BURRON UNDER THE INITIAL PROPOSALS.

WE BELIEVE THE PROTRACTED PERIOD FOR PRE-AWARD TESTING IS SUFFICIENTLY EXPLAINED IN THE ADMINISTRATIVE REPORT AS FOLLOWS:

"THE OVER-ALL TIME FOR EVALUATION OF SAMPLES IS DEPENDENT ON A NUMBER OF FACTORS. A TIME FACTOR IS INVOLVED IN RECEIPT OF THE SAMPLES FROM PROSPECTIVE CONTRACTORS; FURTHER TIME IS INVOLVED IN DPSC LABORATORY TESTING (WHICH IS AFFECTED BY CURRENT WORKLOADS, ALTHOUGH IT MUST BE STRESSED THAT TESTING OF IV SETS IS ASSIGNED A HIGH PRIORITY); ADDITIONAL TIME IS TAKEN IN TRANSMITTAL OF SAMPLES TO THE DMMB AND IN THE PROFESSIONAL EVALUATION OF THE SAMPLES. WHILE DPSC TESTING IS BEING PERFORMED, SAMPLES ARE FORWARDED TO AN OUTSIDE LABORATORY FOR TESTING TO DETERMINE WHETHER THE SETS ARE PYROGEN-FREE AND NON-TOXIC. IT IS NOT AT ALL UNUSUAL OR UNREASONABLE, THEREFORE, FOR THE ENTIRE SAMPLE EVALUATION PROCESS (THE DURATION OF WHICH CAN NEVER BE FINITELY ESTABLISHED) TO CONSUME A FEW MONTHS TIME. FROM PREVIOUS EXPERIENCE, REGULAR SUPPLIERS OF ITEMS SUBJECTED TO SUCH EVALUATION, INCLUDING BURRON, WERE AWARE OF THIS FACT. IN THE PROTESTED PROCUREMENT, AS PREVIOUSLY MENTIONED, SAMPLES WERE REQUESTED BY LETTER DATED 22 DECEMBER 1971. BURRON'S SAMPLES WERE RECEIVED AT THE DPSC LABORATORY ON 18 JANUARY 1972 AND CUTTER'S SAMPLES WERE RECEIVED THERE ON 31 JANUARY 1972. DPSC LABORATORY AND OUTSIDE LABORATORY TESTING WERE COMPLETED DURING THE FIRST WEEK OF MARCH 1972. 13 MARCH 1972 THE BURRON SAMPLES, AND ON 23 MARCH 1972 THE CUTTER SAMPLES, WERE FORWARDED TO DMMB. BY DMMB LETTERS DATED 15 MAY 1972, DPSC WAS ADVISED OF PROFESSIONAL ACCEPTANCE OF BOTH FIRMS' SAMPLES. ON 23 MAY 1972, THE PURCHASING OFFICE WAS ADVISED OF THE DPSC AND DMMB EVALUATION."

IT SEEMS APPARENT THAT DPSC INITIALLY INTENDED TO AWARD A CONTRACT ON THE BASIS OF INITIAL PROPOSALS, NOTWITHSTANDING ITS AUTHORITY TO CONDUCT FURTHER NEGOTIATIONS. HOWEVER, THE MARCH 31 PRICE REDUCTION BY CUTTER INDICATED THE POSSIBILITY OF A SUBSTANTIAL SAVINGS TO THE GOVERNMENT. OUR OFFICE CONSIDERED A SIMILAR SITUATION IN 47 COMP. GEN. 279 (1967). THAT CASE, AWARD WAS MADE TO AN OFFEROR ON THE BASIS OF INITIAL PROPOSALS, NOTWITHSTANDING A LATE VOLUNTARY PRICE REDUCTION WHICH INDICATED A POSSIBLE SAVINGS TO THE GOVERNMENT OF APPROXIMATELY $100,000. COMMENTING UPON THE CONTRACTING OFFICER'S REFUSAL TO CONSIDER THE LATE MODIFICATION WE STATED:

"*** WHILE THE PROVISIONS OF ASPR 3-506 OPERATE TO PRECLUDE, IN THE SPECIFIED CIRCUMSTANCES, ACCEPTANCE OF A LATE OFFER OR MODIFICATION AS SUCH, THEY DO NOT, AND WERE NEVER INTENDED TO PRECLUDE THE OPENING-UP OF NEGOTIATIONS WITH ALL OFFERORS COMPETITIVELY SITUATED UPON THE RECEIPT OF A LATE MODIFICATION TO A TIMELY OFFER WHICH FAIRLY INDICATES THAT SUCH NEGOTIATIONS WOULD PROVE TO BE HIGHLY ADVANTAGEOUS TO THE GOVERNMENT.

WE CONSIDER THE FOREGOING AS CONTROLLING THE PRESENT SITUATION. WE NOTE THAT AT THE TIME NEGOTIATIONS WERE REOPENED, BOTH BURRON AND CUTTER HAD BEEN OFFERED EQUAL OPPORTUNITIES TO COMPETE AND BOTH WERE TREATED EQUALLY IN THE REOPENED NEGOTIATIONS.

WE ARE IN ACCORD WITH THE ACTIONS OF THE CONTRACTING OFFICER IN THIS INSTANCE. AS WE STATED IN 47 ID. 279, 284:

"*** NEGOTIATION PROCEDURES, UNLIKE THOSE REQUIRED FOR FORMAL ADVERTISING, ARE DESIGNED TO BE FLEXIBLE AND INFORMAL. THESE PROCEDURES PROPERLY PERMIT THE CONTRACTING OFFICER TO DO THINGS IN THE AWARDING OF A NEGOTIATED CONTRACT THAT WOULD BE A RADICAL VIOLATION OF THE LAW IF THE PROCUREMENT WERE BEING ACCOMPLISHED BY FORMAL ADVERTISING. THIS IS RECOGNIZED BY A PROVISION IN ASPR 3-805.1(V) WHICH PERMITS RESOLICITATION OF OFFERORS UPON THE RECEIPT OF A NONRESPONSIVE OFFER. THE PROVISION STATES:

'*** WHEN THE PROPOSAL MOST ADVANTAGEOUS TO THE GOVERNMENT INVOLVES A MATERIAL DEPARTURE FROM THE STATED REQUIREMENTS, CONSIDERATION SHALL BE GIVEN TO OFFERING THE OTHER FIRMS WHICH SUBMITTED PROPOSALS AN OPPORTUNITY TO SUBMIT NEW PROPOSALS ON A TECHNICAL BASIS WHICH IS COMPARABLE TO THAT OF THE MOST ADVANTAGEOUS PROPOSAL, PROVIDED THAT THIS CAN BE DONE WITHOUT REVEALING TO OTHER FIRMS ANY INFORMATION WHICH IS ENTITLED TO PROTECTION UNDER 3-507.1.'

THE EMPHASIS HERE IS ON PERMITTING THE CONTRACTING OFFICER TO TAKE A COURSE OF ACTION WHICH WOULD BE A GREAT BENEFIT TO THE GOVERNMENT. CERTAINLY, IF ASPR AUTHORIZES THE CONSIDERATION OF AN INITIALLY NONRESPONSIVE OFFER IT OUGHT NOT, A FORTIORI, TO PRECLUDE THE OPENING UP OF NEGOTIATIONS UPON THE RECEIPT OF A LATE PRICE MODIFICATION TO A RESPONSIVE TIMELY PROPOSAL. ASPR 3-506 DOES NOT, IN OUR OPINION, REQUIRE THAT ANOMALOUS RESULT."

CONCERNING YOUR ALLEGATION THAT YOU WERE NOT AFFORDED SUFFICIENT TIME TO REEVALUATE YOUR PROPOSAL, IT IS THE POSITION OF OUR OFFICE THAT IT IS CLEARLY PREFERABLE TO LEAVE THE ESTABLISHMENT OF A MINIMUM TIME FOR SUBMISSION OF PRICE REVISION TO PROCUREMENT OFFICIALS AS MAY BE REQUIRED BY THE FACTS AND CIRCUMSTANCES OF THE INDIVIDUAL CASE. B 168671; MARCH 2, 1970, AND CASES CITED THEREIN. IN THIS VEIN, WE NOTE THAT BOTH BURRON AND CUTTER WERE SUPPLIED THE SAME INFORMATION AND ALLOTED EQUAL AMOUNTS OF TIME TO REEVALUATE THEIR PROPOSALS. WHILE YOU STATE THAT YOU DID NOT REQUEST ADDITIONAL TIME TO REEXAMINE YOUR PROPOSAL BECAUSE YOU WERE UNDER THE MISAPPREHENSION THAT SUCH ACTION WAS NOT PERMISSIBLE, BURRON DID IN FACT SUBMIT A REVISED PROPOSAL BY THE JUNE 6 DEADLINE. UNDER THE CIRCUMSTANCES WE CANNOT SAY THAT THE PERIOD OF TIME HERE WAS UNREASONABLE OR PREJUDICIAL.

FINALLY, IT IS UNFORTUNATE THAT BURRON EXPENDED MONEY AND REFUSED OTHER BUSINESS BECAUSE IT INTERPRETED THE VARIOUS PRE-AWARD SURVEYS AS AN INDICATION THAT IT WOULD RECEIVE THE AWARD. HOWEVER, THE PURPOSE OF THESE ADMINISTRATIVE REVIEWS IS TO ESTABLISH THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, AS REQUIRED BY ASPR 3-102(B)(4), AND THE ACCEPTABILITY OF ITS PROPOSED ITEM, IN THE EVENT THAT ITS PROPOSAL IS OTHERWISE MOST ADVANTAGEOUS TO THE GOVERNMENT.

ACCORDINGLY, THE PROTEST IS DENIED.