B-177956, MAY 30, 1973

B-177956: May 30, 1973

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INCORPORATED: REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 16. THE PROCUREMENT WAS NEGOTIATED UNDER 10 U.S.C. 2304(A)(7). A REQUIRED DELIVERY SCHEDULE WAS NOT EXPRESSED AND OFFERORS WERE AFFORDED THE OPPORTUNITY OF PROPOSING A DELIVERY SCHEDULE OTHER THAN THE GOVERNMENT'S DESIRED SCHEDULE. TWO PROPOSALS WERE RECEIVED. NEGOTIATIONS WERE OPENED TELEPHONICALLY WITH REPRESENTATIVES OF BOTH LILY WHITE AND FRAASS. LILY WHITE WAS INFORMED THAT THE GOVERNMENT WAS NOW CALLING FOR A REQUIRED DELIVERY SCHEDULE (THAT INITIALLY PROPOSED BY FRAASS). FRAASS WAS REQUESTED TO CONFIRM ITS PROPOSED DELIVERY SCHEDULE. BOTH FIRMS WERE INFORMED THAT BEST AND FINAL OFFERS MUST BE SUBMITTED ORALLY BY THE CLOSE OF BUSINESS ON DECEMBER 13.

B-177956, MAY 30, 1973

DENIAL OF PROTEST AGAINST THE FAILURE OF THE CONTRACTING OFFICER TO ACCEPT COMPANY'S OFFERED REDUCTION IN PRICE UNDER RFP NO. DSA120-73-R 0911 ISSUED BY DEFENSE PERSONNEL SUPPORT CENTER, PHILA., PA., AS A NEGOTIATED PROCUREMENT FOR MEDICAL SUPPLIES.

TO LILY WHITE SALES COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 16, 1973, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE FAILURE OF THE CONTRACTING OFFICER TO ACCEPT YOUR COMPANY'S OFFERED REDUCTION IN PRICE UNDER REQUEST FOR PROPOSALS (RFP) NO. DSA120-73-R-0911, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), PHILADELPHIA, PENNSYLVANIA. THE PROCUREMENT WAS NEGOTIATED UNDER 10 U.S.C. 2304(A)(7), AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-207, WHICH AUTHORIZES THE NEGOTIATION OF PROCUREMENTS FOR MEDICAL SUPPLIES.

THE REQUEST FOR PROPOSALS (RFP), ISSUED ON OCTOBER 24, 1972, SOLICITED OFFERS FOR THE DELIVERY OF A LARGE QUANTITY OF CAMOUFLAGED FIRST AID FIELD DRESSING ON AN F.O.B. ORIGIN AND/OR DESTINATION BASIS TO FOUR DESTINATIONS. THE RFP REFLECTED THE GOVERNMENT'S DESIRED DELIVERY SCHEDULE. HOWEVER, A REQUIRED DELIVERY SCHEDULE WAS NOT EXPRESSED AND OFFERORS WERE AFFORDED THE OPPORTUNITY OF PROPOSING A DELIVERY SCHEDULE OTHER THAN THE GOVERNMENT'S DESIRED SCHEDULE. THE RFP ESTABLISHED NOVEMBER 14, 1972, AS THE CLOSING DATE FOR RECEIPT OF PROPOSALS. TWO PROPOSALS WERE RECEIVED, ONE FROM FRAASS SURGICAL MANUFACTURING COMPANY, INCORPORATED, IN THE AMOUNT OF $1,028,538.75, AND THE OTHER FROM LILY WHITE, IN THE NET AMOUNT OF $1,306,305.79. ON DECEMBER 7, 1972, NEGOTIATIONS WERE OPENED TELEPHONICALLY WITH REPRESENTATIVES OF BOTH LILY WHITE AND FRAASS. LILY WHITE WAS INFORMED THAT THE GOVERNMENT WAS NOW CALLING FOR A REQUIRED DELIVERY SCHEDULE (THAT INITIALLY PROPOSED BY FRAASS). FRAASS WAS REQUESTED TO CONFIRM ITS PROPOSED DELIVERY SCHEDULE. BOTH FIRMS WERE INFORMED THAT BEST AND FINAL OFFERS MUST BE SUBMITTED ORALLY BY THE CLOSE OF BUSINESS ON DECEMBER 13, 1972, AND CONFIRMED IN WRITING BY THE CLOSE OF BUSINESS ON DECEMBER 15, 1972, AND THAT ANY OFFER SUBMITTED THEREAFTER WOULD BE TREATED AS A LATE PROPOSAL. BY LETTERS DATED DECEMBER 8, 1972, TO BOTH FIRMS, THE CONTRACTING OFFICER CONFIRMED THE ABOVE TELEPHONE CONVERSATIONS.

BY LETTER DATED DECEMBER 8, 1972, FRAASS RESPONDED TO THE GOVERNMENT'S REQUEST FOR BEST AND FINAL OFFERS, REVISING ITS PRICE TO $1,008,885.14.

ON DECEMBER 13, 1972, REPRESENTATIVES OF LILY WHITE TELEPHONED THE CONTRACTING OFFICER AND INQUIRED AS TO WHETHER THERE WOULD BE ANY FURTHER NEGOTIATIONS. THEY WERE ADVISED THAT, ALTHOUGH FURTHER NEGOTIATIONS WERE NOT ABSOLUTELY RULED OUT, THE COMPANY SHOULD OFFER ITS BEST PRICE AT THIS TIME SINCE AWARD WOULD LIKELY BE MADE WITHOUT FURTHER NEGOTIATIONS. THE LILY WHITE REPRESENTATIVES THEN INDICATED THAT ON THIS BASIS THEY WERE REDUCING THEIR PRICE TO $1,071,800.29. THIS PRICE WAS CONFIRMED BY LETTER DATED DECEMBER 13, 1972.

ON DECEMBER 19, 1972, A REPRESENTATIVE OF LILY WHITE TELEPHONED THE CONTRACTING OFFICER AND ASKED IF HE COULD FURTHER REDUCE LILY WHITE'S PRICE. THE CONTRACTING OFFICER ADVISED THAT ANY MODIFICATION RECEIVED WOULD BE TREATED AS A LATE PROPOSAL. BY TELEGRAM DATED DECEMBER 20, 1972, AND RECEIVED BY THE CONTRACTING OFFICER ON DECEMBER 22, 1972, LILY WHITE SUBMITTED A FURTHER PRICE REDUCTION, QUOTING A TOTAL PRICE OF $939,071.23.

IN VIEW OF ITS LOW PRICE OFFERED AS OF THE FINAL CLOSING DATE, AND IN VIEW OF THE FACT THAT ITS PRICE WAS 6.1 PERCENT LOWER THAN THE MOST RECENT AWARD TO YOUR FIRM, ACCEPTANCE OF THE FRAASS PROPOSAL WAS CONSIDERED BY THE CONTRACTING OFFICER TO BE IN THE BEST INTEREST OF THE GOVERNMENT. ACCORDINGLY, ON FEBRUARY 2, 1973, AN AWARD WAS MADE TO FRAASS, AND YOU WERE SO NOTIFIED BY LETTER DATED FEBRUARY 5, 1973.

THE RFP IN SECTION "M" STATED THAT STANDARD FORM (SF) 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS, WAS INCORPORATED IN THE SOLICITATION BY REFERENCE. PARAGRAPH 8 OF SF 33A PROVIDES THAT THE RULES FOR CONSIDERATION OF LATE BIDS IN ADVERTISED PROCUREMENTS (SEE ASPR 2-303) WOULD ALSO APPLY TO LATE OFFERS AND MODIFICATIONS IN THE SUBJECT NEGOTIATED PROCUREMENT.

THE CONTRACTING OFFICER STATES THAT HE CONSIDERED YOUR OFFERED PRICE REDUCTION OF DECEMBER 20, 1972, TO BE A LATE MODIFICATION AND NOT ELIGIBLE FOR CONSIDERATION FOR AWARD UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-506(C), QUOTED IN PERTINENT PART AS FOLLOWS:

LATE PROPOSALS SHALL NOT BE CONSIDERED FOR AWARD, EXCEPT UNDER THE FOLLOWING CIRCUMSTANCES:

(I) WHERE ONLY ONE PROPOSAL IS RECEIVED;

(II) WHERE THE SECRETARY CONCERNED DETERMINES THAT CONSIDERATION OF A LATE PROPOSAL IS OF EXTREME IMPORTANCE TO THE GOVERNMENT, AS FOR EXAMPLE WHERE IT OFFERS SOME IMPORTANT TECHNICAL OR SCIENTIFIC BREAKTHROUGH; OR

(III) UNDER THE CIRCUMSTANCES SET FORTH IN 2-303 PERMITTING CONSIDERATION OF LATE BIDS.

IN THIS REGARD, THE CONTRACTING OFFICER STATES THAT NONE OF THE ABOVE EXCEPTIONS ALLOWING FOR CONSIDERATION OF LATE PROPOSALS WAS PRESENT IN THIS CASE AND, THEREFORE, THE LATE RECEIPT OF YOUR DECEMBER 20, 1972, TELEGRAM COULD NOT BE CONSIDERED EXCUSABLE UNDER THE RULES FOR LATE PROPOSALS.

YOU MAINTAIN THAT THE PERIOD OF DECEMBER 7 - DECEMBER 13 SET FOR SUBMISSION OF BEST AND FINAL OFFERS WAS OF SUCH A SHORT DURATION AS TO BE PREJUDICIAL TO YOUR COMPANY AND THAT, IN ANY EVENT, YOUR DECEMBER 20 PRICE REDUCTION SHOULD HAVE BEEN GIVEN CONSIDERATION IN ACCORDANCE WITH THE REGULATION RELATING TO LATE PROPOSALS WHICH ARE OF EXTREME IMPORTANCE TO THE GOVERNMENT.

IT IS YOUR CONTENTION THAT THE PERIOD OF TIME ALLOWED BY THE CONTRACTING OFFICER FOR NEGOTIATIONS WAS INADEQUATE FOR LILY WHITE CONSIDERING THAT IT HAD TO DEVELOP A REVISED PRICE RESPONSIVE TO THE DELIVERY SCHEDULE PROPOSED BY YOUR COMPETITOR. WE FIND NO INDICATION FROM THE RECORD, HOWEVER, THAT YOU NOTIFIED THE CONTRACTING OFFICER DURING THE PERIOD OF NEGOTIATIONS THAT YOUR FIRM WOULD NEED ADDITIONAL TIME TO RESPOND. THE RECORD SHOWS THAT ON DECEMBER 13, YOU ONLY ASKED THE CONTRACTING OFFICER WHETHER THERE WOULD BE ANY FURTHER NEGOTIATIONS AND YOU WERE INFORMED THAT THE AWARD WOULD LIKELY BE MADE WITHOUT FURTHER NEGOTIATIONS. THEREFORE, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER HAD ANY REASON TO BELIEVE THAT THE TIME ALLOTTED FOR NEGOTIATIONS WAS UNFAIR TO LILY WHITE. UNDER THE CIRCUMSTANCES, WE FIND THAT THE NEGOTIATIONS WERE PROPERLY CLOSED ON DECEMBER 13, AND THAT YOUR PRICE REDUCTION OFFERED ON DECEMBER 20, 1972, CONSTITUTED A LATE MODIFICATION.

CONTRARY TO YOUR ASSERTION, THE CONTRACTING OFFICER REPORTS THAT NONE OF THE CIRCUMSTANCES OF "EXTREME IMPORTANCE" TO THE GOVERNMENT CONTEMPLATED BY ASPR 3-506(C)(II) WAS FOUND IN THE PRESENT CASE. WE CAN FIND NO BASIS TO CHALLENGE THIS JUDGMENTAL DETERMINATION SINCE WE DO NOT BELIEVE THAT EITHER YOUR "REVISED MANUFACTURING PROCESS" OR THE LATE OFFERED PRICE REDUCTION IS NECESSARILY WITHIN CONTEMPLATION OF THE REGULATION. ACCORDINGLY, WE DO NOT BELIEVE THAT THE CITED PROVISIONS OF SF 33A AND THE APPLICABLE REGULATIONS REQUIRED CONSIDERATION OF THE DECEMBER 20, 1972, MODIFICATION SUBMITTED BY YOUR COMPANY OR THAT THE CONTRACTING OFFICER'S REFUSAL TO CONSIDER YOUR LATE MODIFICATION WAS AN ABUSE OF DISCRETION. SEE B-175280, OCTOBER 5, 1972.

FINALLY, YOU ARGUE THAT NEGOTIATIONS CONTINUED WITH FRAASS BEYOND THE CLOSING DATE FOR NEGOTIATIONS AND THAT THIS CONSTITUTED UNFAIR AND ARBITRARY ACTION ON THE PART OF THE CONTRACTING OFFICER. THE CONTRACTING OFFICER REPORTS THAT FOLLOWING THE CLOSING DATE FOR BEST AND FINAL OFFERS CERTAIN PROPOSAL CLARIFICATIONS AND EXTENSIONS TO ACCEPTANCE TIMES WERE REQUESTED. SPECIFICALLY, THE CLARIFICATIONS PERTAINED TO CORRECTION OF THE APPLICABLE MINORITY BUSINESS SUBCONTRACTING PROGRAM PROVISION REFERENCED IN THE RFP, THE IMPOSITION OF AN ADDITIONAL REQUIREMENT FOR THE SUBMISSION OF RANDOM SAMPLES FROM THE FIRST PRODUCTION LOT FOR QUALITY ASSURANCE PURPOSES, CORRECTION OF CERTAIN GEOGRAPHICAL LOCATIONS OF SUPPLIERS, AND CORRECTION OF THE APPLICABLE STABILIZATION OF PRICES, RENTS, WAGES, AND SALARIES CLAUSE OF THE SOLICITATION. WE NOTE THAT AT NO TIME SUBSEQUENT TO DECEMBER 13, 1972, WAS FRAASS PERMITTED TO REVISE ITS PROPOSAL IN TERMS OF PRICE, QUALITY, DELIVERY OR SPECIFICATION COMPLIANCE. WE THEREFORE CONCLUDE THAT THE AWARD TO FRAASS DID NOT INVOLVE OR RESULT FROM A COMPETITIVE ADVANTAGE ENJOYED SOLELY BY THAT COMPANY. SEE B-165837, MARCH 28, 1969.

IN THE PRESENT PROCUREMENT NEGOTIATIONS WERE CONDUCTED WITH YOUR CONCERN AND FRAASS PURSUANT TO ASPR 3-805.1(A), AND THERE IS NO EVIDENCE THAT YOUR FIRM WAS ARBITRARILY DENIED THE OPPORTUNITY TO SUBMIT YOUR BEST PRICE BY THE FINAL CLOSING DATE FOR NEGOTIATIONS. WE ARE THEREFORE UNABLE TO CONCLUDE THAT THE REFUSAL OF THE CONTRACTING OFFICER TO CONSIDER YOUR LATE MODIFICATION CONSTITUTED AN ABUSE OF DISCRETION.

IN VIEW OF THE FOREGOING, YOUR PROTEST IS DENIED.