B-176505, MAR 6, 1973

B-176505: Mar 6, 1973

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IN THE CONTEXT OF NEGOTIATED COST-REIMBURSEMENT CONTRACTS PRICE IS NOT THE CONTROLLING FACTOR IN DETERMINING THE MOST ADVANTAGEOUS PROPOSAL. THE DETERMINATION OF COMPETITIVE RANGE IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION WHICH WILL NOT BE DISTURBED IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION WAS AN ARBITRARY ABUSE OF DISCRETION. 48 COMP. IT CANNOT BE CONCLUDED THAT THE CONTRACTING AGENCY ABUSED ITS DISCRETION IN REJECTING PROTESTANT'S BID OR IN DETERMINING THAT GENERAL ELECTRIC'S PROPOSAL WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. " THE MATTER IS ACADEMIC SINCE EPA REPORTS THAT THERE ARE NO PLANS TO AWARD A CONTRACT UNDER PHASE II OF THE PROCUREMENT. P. SAUNDERS ENTERPRISES: THIS IS IN REFERENCE TO YOUR LETTER OF NOVEMBER 9.

B-176505, MAR 6, 1973

BID PROTEST - NEGOTIATIONS - COMPETITIVE RANGE - COST-PLUS-FIXED-FEE CONTRACT - PRICE NOT A FACTOR - CONFLICT OF INTEREST DENIAL OF PROTEST BY D.P. SAUNDERS ENTERPRISES AGAINST THE AWARD OF A COST-PLUS-FIXED-FEE (CPFF) CONTRACT TO GENERAL ELECTRIC COMPANY UNDER AN RFP ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY (EPA) FOR "REQUIREMENTS ANALYSIS FOR ENVIRONMENTAL POLLUTION MONITORING DATA." IN THE CONTEXT OF NEGOTIATED COST-REIMBURSEMENT CONTRACTS PRICE IS NOT THE CONTROLLING FACTOR IN DETERMINING THE MOST ADVANTAGEOUS PROPOSAL, AND AWARD NEED NOT NECESSARILY BE MADE TO THE OFFEROR PROPOSING THE LOWEST ESTIMATED COSTS. 50 COMP. GEN. 739 (1971). MOREOVER, THE DETERMINATION OF COMPETITIVE RANGE IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION WHICH WILL NOT BE DISTURBED IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION WAS AN ARBITRARY ABUSE OF DISCRETION. 48 COMP. GEN. 314 (1968). BASED ON THIS RECORD, IT CANNOT BE CONCLUDED THAT THE CONTRACTING AGENCY ABUSED ITS DISCRETION IN REJECTING PROTESTANT'S BID OR IN DETERMINING THAT GENERAL ELECTRIC'S PROPOSAL WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. SEE B-171580, JUNE 21, 1971. ALTHOUGH THERE COULD BE A POTENTIAL CONFLICT OF INTEREST UNDER PHASE II OF THE CONTRACT SINCE RECOMMENDATIONS THEREUNDER COULD IN EFFECT BECOME A "SPECIFICATION" OR "STATEMENT OF WORK," THE MATTER IS ACADEMIC SINCE EPA REPORTS THAT THERE ARE NO PLANS TO AWARD A CONTRACT UNDER PHASE II OF THE PROCUREMENT.

TO D. P. SAUNDERS ENTERPRISES:

THIS IS IN REFERENCE TO YOUR LETTER OF NOVEMBER 9, 1972, AND PRIOR CORRESPONDENCE, IN WHICH YOU PROTEST THE AWARD OF A COST-PLUS-FIXED-FEE (CPFF) CONTRACT TO GENERAL ELECTRIC COMPANY UNDER REQUEST FOR PROPOSALS WA 72-S-39 ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY (EPA) FOR "REQUIREMENTS ANALYSIS FOR ENVIRONMENTAL POLLUTION MONITORING DATA."

ELEVEN PROPOSALS WERE RECEIVED AND EVALUATED BY A TECHNICAL EVALUATION BOARD IN CONFORMANCE WITH THE TECHNICAL EVALUATION CRITERIA SET FORTH IN THE SOLICITATION. BASED ON THE INITIAL EVALUATION OF PROPOSALS, THE D. P. SAUNDERS TECHNICAL PROPOSAL WAS DETERMINED TO BE TECHNICALLY UNACCEPTABLE, AND YOUR FIRM WAS ELIMINATED FROM FURTHER CONSIDERATION. SIX OF THE ELEVEN PROPOSALS WERE DETERMINED TO BE WITHIN THE COMPETITIVE RANGE. AFTER WRITTEN AND ORAL DISCUSSIONS WITH THE OFFERORS WITHIN THE COMPETITIVE RANGE, THE CONTRACTING OFFICER DETERMINED THAT AN AWARD TO GENERAL ELECTRIC ON THE BASIS OF ITS CPFF PROPOSAL OF $201,002 WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

IT IS YOUR PRINCIPAL CONTENTION THAT YOUR PROPOSAL WAS IMPROPERLY REJECTED AND THAT YOUR FIRM SHOULD HAVE RECEIVED THE AWARD IN VIEW OF THE FACT THAT YOUR CPFF PROPOSAL WAS OVER 60 PERCENT LOWER THAN THE GENERAL ELECTRIC PROPOSAL. OUR OFFICE HAS RECOGNIZED THAT IN THE CONTEXT OF NEGOTIATED COST-REIMBURSEMENT CONTRACTS, PRICE IS NOT THE CONTROLLING FACTOR IN DETERMINING WHICH PROPOSAL IS MOST ADVANTAGEOUS TO THE GOVERNMENT AND, THEREFORE, AWARD NEED NOT NECESSARILY BE MADE TO THE OFFEROR PROPOSING THE LOWEST ESTIMATED COSTS. 50 COMP. GEN. 739 (1971); B -170374, MARCH 2, 1971. MOREOVER, WE HAVE RECOGNIZED THAT THE DETERMINATION OF COMPETITIVE RANGE IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION WHICH WILL NOT BE DISTURBED IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION WAS AN ARBITRARY ABUSE OF DISCRETION. 48 COMP. GEN. 314, 318 (1968).

WITH RESPECT TO THE TECHNICAL EVALUATION OF YOUR PROPOSAL, WE NOTE THAT OUT OF A POSSIBLE 80 TECHNICAL EVALUATION POINTS, YOUR FIRM RECEIVED A SCORE OF 19.1. IN CONTRAST, GENERAL ELECTRIC RECEIVED A SCORE OF 58.7 AND SCORES RANGING FROM 52.5 TO 48.4 WERE RECEIVED BY THE FIVE OTHER OFFERORS WITHIN THE COMPETITIVE RANGE. ALTHOUGH YOU DISAGREE WITH THE CONCLUSION REACHED BY THE EVALUATION TEAM, WE CANNOT CONCLUDE FROM OUR REVIEW OF THE NARRATIVE STATEMENTS ACCOMPANYING THE TECHNICAL EVALUATION OF YOUR PROPOSAL (COPIES OF WHICH WERE FURNISHED TO YOU) THAT THE CONTRACTING AGENCY ABUSED ITS DISCRETION IN REJECTING YOUR FIRM'S PROPOSAL. FURTHER, IN VIEW OF THE IMPORTANCE ATTACHED TO FACTORS OTHER THAN PRICE IN CONTRACTS OF THIS NATURE AND THE WIDE RANGE OF DISCRETION VESTED IN THE CONTRACTING OFFICIALS, WE ARE UNABLE TO CONCLUDE FROM OUR REVIEW OF THE RECORD THAT THE CONTRACTING AGENCY ABUSED ITS DISCRETION IN DETERMINING THAT THE ACCEPTANCE OF GENERAL ELECTRIC'S PROPOSAL WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. SEE B 171580, JUNE 21, 1971; B-172395, JULY 7, 1971; B -173407, DECEMBER 28, 1971.

YOU HAVE ALSO ALLEGED THAT GENERAL ELECTRIC'S PERFORMANCE OF THE CONTRACT INVOLVES A POTENTIAL CONFLICT OF INTEREST. YOU IMPLY THAT TO THE DEGREE THAT GENERAL ELECTRIC SHARES IN DETERMINING THE MONITORING NEEDS OF EPA, THERE IS A CONFLICT OF INTEREST WHICH MAY INFLUENCE GENERAL ELECTRIC TO OMIT OR DIMINISH ATTENTION TO POLLUTION SOURCES RELATED TO ITS PRODUCED EQUIPMENT, OR MAY SUGGEST AND HIGHLIGHT MONITORING NEEDS WHICH WILL CREATE A DEMAND FOR ITS POLLUTION MONITORING EQUIPMENT.

THE PROCUREMENT REQUEST DIVIDED THE PROCUREMENT INTO TWO PHASES. PHASE I CALLED FOR A "REQUIREMENTS ANALYSIS AND USER SURVEY FOR ENVIRONMENTAL POLLUTION MONITORING DATA." IF THAT PHASE ESTABLISHED THE NEED FOR ADDITIONAL WORK, PHASE II, INVOLVING THE OVERALL DESIGN OF THE SYSTEM'S SOFTWARE AND POSSIBLE HARDWARE THAT WOULD BE NEEDED TO SUPPLY THE REQUIRED DATA, WAS TO FOLLOW. IT WAS CONTEMPLATED THAT IF PHASE I ESTABLISHED THE NEED FOR ADDITIONAL WORK, THE SELECTED PHASE I CONTRACTOR WOULD BE REQUESTED TO CONTINUE WITH PHASE II.

IN OUR VIEW THERE IS NO POTENTIAL CONFLICT OF INTEREST INVOLVED IN THE PHASE I PORTION OF THE CONTRACT. IN THIS REGARD, WE BELIEVE THE CONTRACTING OFFICER'S EXPLANATION AS TO THE ABSENCE OF CONFLICT UNDER PHASE I OF THE CONTRACT IS CORRECT. HE STATED:

THERE IS NO REAL CONFLICT OF INTEREST IN DETERMINING WHO THE USERS ARE BECAUSE MANY OF THEM ARE SPECIFIED IN THE CONTRACT. THE DETERMINATION OF USER NEEDS FOR MONITORING DATA AND SENSORS REQUIRED TO ACQUIRE THE DATA IS THE AREA IN QUESTION. HOW IS G. E. GOING TO DETERMINE USER NEEDS AND SENSORS REQUIRED? THE APPROACH IS TWOFOLD. FIRST, G. E. WILL ASK USERS TO DESCRIBE AND IDENTIFY THEIR NEEDS FOR MONITORING DATA AND SENSORS. THE USER WILL PROVIDE THIS INFORMATION WHICH WILL SERVE AS PART OF THE BASIS FOR THE REPORT TO BE DELIVERED TO EPA. THE ORIGINAL DOCUMENTS FROM USERS WHICH DESCRIBE NEEDS WILL BE DELIVERED TO EPA BY G. E. THESE DOCUMENTS WILL BE AVAILABLE TO THE EPA PROJECT OFFICER AS A MEANS OF SUPPORTING AND AUDITING THE G. E. REPORT ON USERS AND NEEDS.

SECOND, G. E. WILL ANALYZE AND IDENTIFY SPECIFIC MONITORING NEEDS THROUGH ANALYSIS OF POLLUTION STANDARDS AND GUIDELINES WHICH ARE TRACEABLE TO THE LEGISLATION WHICH ESTABLISHED A RESPONSIBILITY WITHIN EPA. THIS ANALYSIS IS INTENDED TO BE A CROSS CHECK TO NEEDS USERS IDENTIFY. IT WILL NOT BE USED AS A METHOD OF DISTORTING USER NEEDS BECAUSE THE CROSS CHECK WILL BE SUBJECT TO VERIFICATION BY THE PROJECT OFFICER.

G. E. WILL NOT DECIDE OR DETERMINE MONITORING NEEDS FOR EPA. G. E.'S ROLE UNDER THE CONTRACT IS TO INVENTORY THE DATA NEEDS WHICH VARIOUS USERS HAVE DECIDED FOR THEMSELVES THAT THEY NEED. PRUDENT MEASURES HAVE BEEN ESTABLISHED TO SCREEN ANY POSSIBLE BIAS. THE ORIGINAL DOCUMENTS FROM USERS WILL BE DELIVERED AND WILL BE AVAILABLE FOR AUDIT. THE EPA PROJECT OFFICER HAS A STAFF WITH THE EXPERTISE TO CAREFULLY REVIEW THE G. E. REPORTS TO DETECT ANY IMPARTIALITY. FURTHER, BEFORE THE RESULTS OF THIS CONTRACT WOULD BE USED, THEY WOULD BE SUBJECT TO AN IN-HOUSE EPA REVIEW. BECAUSE G. E.'S ROLE HAS BEEN CAREFULLY DEFINED UNDER THE CONTRACT AND PRUDENT PRECAUTIONS AGAINST IMPARTIALITY HAVE BEEN ESTABLISHED, THERE IS LITTLE IF ANY BASIS TO CONCLUDE THAT THERE IS A MEANINGFUL CONFLICT OF INTEREST IN THIS CONTRACT.

IT SEEMS THAT THE ONLY POTENTIAL CONFLICT OF INTEREST WOULD ARISE UNDER PHASE II OF THE CONTRACT SINCE RECOMMENDATIONS THEREUNDER COULD IN EFFECT BECOME A "SPECIFICATION" OF A "STATEMENT OF WORK," AND CONTRACTORS MIGHT DESIGN SUCH SPECIFICATIONS OR STATEMENTS OF WORK SO AS TO CONFORM TO THEIR OWN SOFTWARE OR HARDWARE CONFIGURATIONS. EPA WAS COGNIZANT OF THIS PROBLEM AND INCLUDED A CLAUSE IN GENERAL ELECTRIC'S CONTRACT WHICH WOULD LIMIT FUTURE CONTRACTING IN THE EVENT OF PHASE II PERFORMANCE. HOWEVER, SINCE WE HAVE BEEN INFORMALLY ADVISED BY EPA THAT THERE ARE NO PLANS TO AWARD A CONTRACT UNDER PHASE II OF THE PROCUREMENT, THE MATTER IS ACADEMIC.

ACCORDINGLY, YOUR PROTEST IS DENIED.