B-178164, JUL 5, 1974

B-178164: Jul 5, 1974

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PROCURING ACTIVITY'S CANCELLATION OF PROCUREMENT UPON LEARNING THAT THERE WERE OTHER CENTRAL TIME AND FREQUENCY DISTRIBUTION SYSTEMS SIMILAR TO SYSTEM BEING PROCURED UNDER CANCELED SOLICITATION WHICH MIGHT BETTER MEET GOVERNMENT'S NEEDS WAS REASONABLE. SINCE RECORD DOES NOT INDICATE THAT ACTIVITY COULD HAVE EVALUATED OR REVIEWED ALL SYSTEMS PRIOR TO CANCELLATION. ANY CHANGE IN ACTIVITY'S REQUIREMENTS RESULTING FROM REVIEW OF SYSTEMS COULD NOT HAVE BEEN ACCOMPLISHED BY SPECIFICATION CHANGES UNDER ASPR 3-805.4 SINCE REVIEW OF SYSTEMS MAY HAVE EXTENDED PERIOD OF TIME AND COULD ULTIMATELY RESULT IN PROCUREMENT OF SYSTEM CONSIDERABLY DIFFERENT FROM SYSTEM ORIGINALLY CONTEMPLATED. 2. SINCE RECORD DOES NOT INDICATE THAT ACTIONS OF PROCUREMENT AGENCY WERE ARBITRARY OR CAPRICIOUS. 3.

B-178164, JUL 5, 1974

1. PROCURING ACTIVITY'S CANCELLATION OF PROCUREMENT UPON LEARNING THAT THERE WERE OTHER CENTRAL TIME AND FREQUENCY DISTRIBUTION SYSTEMS SIMILAR TO SYSTEM BEING PROCURED UNDER CANCELED SOLICITATION WHICH MIGHT BETTER MEET GOVERNMENT'S NEEDS WAS REASONABLE, SINCE RECORD DOES NOT INDICATE THAT ACTIVITY COULD HAVE EVALUATED OR REVIEWED ALL SYSTEMS PRIOR TO CANCELLATION. MOREOVER, ANY CHANGE IN ACTIVITY'S REQUIREMENTS RESULTING FROM REVIEW OF SYSTEMS COULD NOT HAVE BEEN ACCOMPLISHED BY SPECIFICATION CHANGES UNDER ASPR 3-805.4 SINCE REVIEW OF SYSTEMS MAY HAVE EXTENDED PERIOD OF TIME AND COULD ULTIMATELY RESULT IN PROCUREMENT OF SYSTEM CONSIDERABLY DIFFERENT FROM SYSTEM ORIGINALLY CONTEMPLATED. 2. OFFEROR NOT ENTITLED TO PROPOSAL PREPARATION COSTS, SINCE RECORD DOES NOT INDICATE THAT ACTIONS OF PROCUREMENT AGENCY WERE ARBITRARY OR CAPRICIOUS. 3. OFFEROR NOT ENTITLED TO ATTORNEY FEES IN PROSECUTING CLAIM FOR COSTS, SINCE FEES ARE NOT RECOVERABLE IN ABSENCE OF STATUTORY AUTHORITY OR COURT- MADE EXCEPTION. 4. WHERE OFFEROR SUBMITTED ALTERNATE PROPOSAL THERE WAS NO REQUIREMENT THAT OFFEROR'S PRIMARY PROPOSAL BE TECHNICALLY ACCEPTABLE OR "RESPONSIVE" TO SPECIFICATION BEFORE ITS ALTERNATE PROPOSAL COULD BE CONSIDERED.

TO FREQUENCY ELECTRONICS, INC.:

ON JULY 24, 1972, REQUEST FOR PROPOSALS (RFP) N00024-73-R-3012(S) (HEREAFTER RFP -3012) WAS ISSUED BY THE NAVAL SHIP SYSTEMS COMMAND (NAVSHIPS) FOR THE PROCUREMENT, ON A COST-PLUS-FIXED-FEE BASIS, OF SEVEN AN/URQ-13(V) TIME AND FREQUENCY STANDARDS, TOGETHER WITH ID 1364A/U REMOTE DIGITAL DISPLAY INDICATOR, REPAIR PARTS, DATA, ENGINEERING SERVICES, AND A TRAINING COURSE.

TWO PROPOSALS WERE RECEIVED IN RESPONSE TO THE REFERENCED SOLICITATION, ONE FROM FREQUENCY ELECTRONICS, INC. (FEI), AND THE OTHER FROM LITCOM DIVISION OF LITTON SYSTEMS, INC. (LITCOM). ACCORDING TO THE ADMINISTRATIVE REPORT, DURING THE COURSE OF EVALUATING THE PROPOSALS IT WAS LEARNED THAT OTHER SYSTEMS FOR THE SAME PURPOSE WERE BEING PROCURED OR WERE UNDER CONSIDERATION BY THE NAVY. IT WAS POINTED OUT THAT THE NAVAL ELECTRONICS SYSTEMS COMMAND (NAVELEX) WAS CONSIDERING PROCUREMENT OF EQUIPMENT USING A CESIUM BEAM APPROACH AND THAT A THIRD SYSTEM, PROPOSED BY LITCOM AS ALTERNATE EQUIPMENT FOR THE PRESENT PROCUREMENT, WAS BEING PROCURED FOR THE DD 963 CLASS SHIPS. IN VIEW OF THESE FACTS, THE CHIEF OF NAVAL MATERIAL-DESIGNATED PROJECT MANAGER, MAJOR SURFACE COMBATANT SHIPS PROJECT (PM-18), RECOMMENDED THAT THERE BE NO PROCUREMENT OF ANY OF THE COMPETING SYSTEMS UNTIL A REVIEW OF ALL OF THE SYSTEMS WAS COMPLETED AND THE NEEDS OF THE FLEET COULD THEREFORE BE ASCERTAINED. IN THE INTERIM, THE NAVY WAS TO CONTINUE USING THE EXISTING AN/URQ-10A SERVICE-APPROVED SYSTEM. CONSEQUENTLY, ON MARCH 1, 1973, THE RFP WAS CANCELED.

BY LETTER OF MARCH 9, 1973, AND SUBSEQUENT CORRESPONDENCE, FEI PROTESTED THE CANCELLATION OF RFP -3012. FEI POINTS OUT THAT A PRIOR PROCUREMENT, RFP N00024-71-Q-3022(S) (HEREAFTER RFP -3022), ISSUED ON OCTOBER 13, 1970, FOR A SIMILAR SYSTEM WAS CANCELED AFTER FEI HAD GONE TO CONSIDERABLE EXPENSE AND EFFORT TO SUBMIT A PROPOSAL. ACCORDING TO FEI, IT HAD BEEN ADVISED BY LETTER OF APRIL 13, 1971, THAT RFP -3022 WAS BEING CANCELED DUE TO A CHANGE IN REQUIREMENTS, ALTHOUGH FEI HAD BEEN ORALLY ADVISED AT THAT TIME THAT THE CANCELLATION WAS THE RESULT OF INSUFFICIENT FUNDING. FEI STATES THAT SINCE IT HAD EXPENDED A GREAT DEAL OF EFFORT AND MONEY IN ORDER TO PREPARE AND SUBMIT A PROPOSAL UNDER THE PRIOR PROCUREMENT (RFP - 3022), IT INQUIRED OF NAVSHIPS AS TO WHETHER THERE WAS SUFFICIENT FUNDING FOR THE PRESENT PROCUREMENT. NAVSHIPS ASSURED FEI THAT SUFFICIENT FUNDING WAS AVAILABLE AND THAT THE GOVERNMENT INTENDED TO AWARD A CONTRACT UNDER THE PRESENT SOLICITATION. FEI STATED THAT ON THE BASIS OF THIS ASSURANCE THAT AWARD WOULD BE MADE, IT PROCEEDED TO INCUR CONSIDERABLE EXPENSE IN THE PREPARATION OF ITS PROPOSAL WHICH WAS SUBMITTED ON SEPTEMBER 8, 1972. A SUPPLEMENTAL TECHNICAL PROPOSAL WAS SUBMITTED ON NOVEMBER 16, 1972. HOWEVER, AS PREVIOUSLY MENTIONED, RFP -3012 WAS CANCELED ON MARCH 1, 1973.

IT IS FEI'S POSITION THAT ON BOTH PROCUREMENTS IT SUBMITTED ACCEPTABLE PROPOSALS AND ON THE PRESENT PROCUREMENT IT WOULD HAVE BEEN ENTITLED TO THE AWARD BUT FOR THE CANCELLATION, SINCE LITCOM DID NOT SUBMIT A TECHNICALLY ACCEPTABLE PROPOSAL. FEI FURTHER ALLEGES THAT THE SECOND SOLICITATION SHOULD NOT HAVE BEEN CANCELED SINCE THE CHANGES IN NAVSHIPS' REQUIREMENTS SHOULD HAVE BEEN ACCOMPLISHED BY SPECIFICATION CHANGES UNDER THE AUTHORITY OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1(E) THEN IN EFFECT, WHICH PROVIDED IN PART:

"WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE REQUEST FOR PROPOSALS OR REQUEST FOR QUOTATIONS, AND A COPY SHALL BE FURNISHED TO EACH PROSPECTIVE CONTRACTOR. ***"

IN ITS LETTER OF JULY 9, 1973, FEI QUESTIONS THE BASIS GIVEN BY NAVSHIPS FOR CANCELING RFP -3012, I.E., THE NECESSITY TO REVIEW OTHER SHIPBOARD CENTRAL TIME AND FREQUENCY SYSTEMS WHICH MIGHT BETTER MEET THE NAVY'S NEEDS. FEI STATES THAT THE LITCOM DD 963 SYSTEM USES A FREQUENCY STANDARD ALMOST IDENTICAL TO THE AN/URQ-10A WHICH IS SUPPLIED BY FEI AND THAT THE CESIUM BEAM STANDARD SYSTEM PROPOSED TO BE ASSEMBLED BY NAVELEX WOULD BE ANOTHER GENERIC SYSTEM UTILIZING A CESIUM BEAM STANDARD IN PLACE OF THE AN/URQ-10A STANDARD. FEI CONTENDS THAT THESE STANDARDS COULD BE USED INTERCHANGEABLY WITH MINIMAL SYSTEM CHANGES. THIS BEING THE CASE, FEI ARGUES THAT ITS SYSTEM WOULD REQUIRE MINIMAL REVISION TO ACCEPT THE CESIUM BEAM STANDARD AS A PRIMARY SOURCE IN PLACE OF THE AN/URQ-10A. FEI CONCLUDES THAT EITHER THE CESIUM STANDARD OR THE AN/URQ-10A COULD HAVE EASILY BEEN IMPLEMENTED DURING THE INITIAL DESIGN OF THE TIMING SYSTEM OR AS A RETROFIT. IN OTHER WORDS, THE POSSIBILITY OF UTILIZING THE CESIUM BEAM STANDARD OR ANY OTHER PRIMARY STANDARD WOULD HAVE LITTLE IMPACT ON THE SYSTEMS UNDER CONSIDERATION FOR THIS PROCUREMENT.

FEI ALSO CONTENDS THAT THE SYSTEM PROPOSED BY LITCOM IN ITS ALTERNATE PROPOSAL WAS CONCEIVED AS EARLY AS JANUARY 1972 FOR REQUIREMENTS DATING BACK TO 1970. REGARDING THE CESIUM BEAM SYSTEM, FEI ASSERTS THAT THIS SYSTEM HAS BEEN UNDER CONSIDERATION BY THE NAVY FOR MORE THAN 3 YEARS. FEI STATES THAT IN VIEW OF THESE FACTS, ANY ADDITIONAL EVALUATION DESIRED BY NAVSHIPS SHOULD HAVE BEEN ACCOMPLISHED PRIOR TO THE CANCELLATION OF THE SECOND SOLICITATION AND UNDER THESE CIRCUMSTANCES CANCELLATION OF RFP - 3012 WAS ARBITRARY AND UNREASONABLE.

FEI REQUESTS THAT OUR OFFICE DIRECT NAVSHIPS TO INVALIDATE THE CANCELLATION OF THE PRESENT SOLICITATION AND REFLECT ANY CHANGE IN THE REQUIREMENTS FOR EQUIPMENT AS AN AMENDMENT TO THE RFP AND NEGOTIATE A CONTRACT IN GOOD FAITH WITH FEI, THE ONLY QUALIFIED OFFEROR. IN THE ALTERNATIVE, FEI REQUESTS THAT OUR OFFICE CONSIDER THIS PROTEST AS A CLAIM FOR EXPENSES INCURRED IN THE PREPARATION OF ITS PROPOSAL PLUS LEGAL FEES INCURRED IN THE MATTER.

THE NAVY DISAGREES WITH FEI'S CONCLUSION THAT THE SUBSTITUTION OF A CESIUM BEAM STANDARD FOR THE AN/URQ-10A FREQUENCY STANDARD WOULD HAVE LITTLE IMPACT ON THE SYSTEM PROPOSED FOR PROCUREMENT UNDER RFP -3012. NAVSHIPS STATES THAT WHILE AT ONE TIME THE NAVY HAD THOUGHT THERE WAS A DEGREE OF INTERCHANGEABILITY BETWEEN THE CESIUM STANDARD AND THE AN/URQ 10A, SUBSEQUENT TECHNICAL DEVELOPMENTS IN THE AREA OF CESIUM BEAM STANDARDS HAVE CHANGED ITS OPINION AS REGARDS INTERCHANGEABILITY. IN THIS REGARD, NAVSHIPS POINTS OUT THAT RFP -3012 DID NOT CONTAIN THE STATEMENT, CONTAINED IN RFP -3022, WHICH RESERVED THE RIGHT TO SUBSTITUTE AS GOVERNMENT-FURNISHED EQUIPMENT ONE CESIUM STANDARD FOR ONE OF THE THREE AN/URQ-10'S. NAVELEX, IN ITS TECHNICAL DISCUSSION OF THE IMPACT OF THE CESIUM BEAM STANDARD ON THE REQUIREMENTS CONTAINED IN THE RFP, STATES THAT THERE WOULD BE A SUBSTANTIAL IMPACT ON THE ITEMS COVERED BY THE RFP. NAVELEX POINTS OUT THAT THE EXPENSIVE COMBINER COMPARATOR AND THE R-1407 VLF RECEIVER REQUIRED TO BE BUILT UNDER THE RFP WOULD NO LONGER BE REQUIRED IF THE CESIUM BEAM STANDARD IS ADOPTED. NAVELEX FURTHER STATES THAT A SYSTEM BASED ON THE USE OF A MILITARIZED CESIUM BEAM STANDARD AND A PAIR OF DISCIPLINED TIME/FREQUENCY STANDARDS WOULD BE MORE COST EFFECTIVE, MORE RELIABLE AND WOULD BE AVAILABLE TO MEET SCHEDULED REQUIREMENTS. THEREFORE, NAVELEX IS OF THE VIEW THAT THIS WOULD NOT BE A MINIMAL REVISION SINCE, EXCEPT FOR A CABINET AND THE AM-2123 DISTRIBUTION AMPLIFIER, THE COMPLEMENT OF EQUIPMENT WOULD BE DIFFERENT.

THE RECORD BEFORE US DOES INDICATE THAT THE CESIUM BEAM STANDARD WAS UNDER CONSIDERATION BY THE NAVY AS EARLY AS 1971. HOWEVER, WE DO NOT KNOW WHETHER THE NAVY HAD SUFFICIENT KNOWLEDGE OF THE CESIUM BEAM STANDARD TO HAVE ACCOMPLISHED A MEANINGFUL EVALUATION PRIOR TO THE SECOND SOLICITATION, OR, FOR THAT MATTER, WHETHER THE NAVY EVEN HAD A CESIUM BEAM STANDARD SYSTEM ON WHICH TO EVALUATE. WHILE FEI, IN ITS LETTER OF OCTOBER 15, 1973, CONTENDED THAT IT HAD BEEN ADVISED BY OFFICIALS OF THE SPERRY SYSTEMS MANAGEMENT GROUP THAT SEVERAL CESIUM BEAM ATOMIC STANDARDS HAVE BEEN PROCURED BY THE BUREAU OF SHIPS FOR SHIPBOARD APPLICATION, WE HAVE BEEN ADVISED THAT SPERRY HAS, UNDER A CONTRACT WITH THE NAVY, PROCURED FROM HEWLETT PACKARD A CESIUM BEAM ATOMIC STANDARD, WHICH STANDARD IS A COMMERCIAL ITEM SLIGHTLY MODIFIED FOR NAVY USE. IT IS OUR UNDERSTANDING THAT THE LATTER STANDARD IS A COMPONENT OF A NAVIGATIONAL SYSTEM RATHER THAN A COMPLETE CENTRAL TIME AND FREQUENCY DISTRIBUTION SYSTEM, AS IS THE AN/URQ-13(V) CENTRAL TIME AND FREQUENCY STANDARD (FOR SHIPBOARD USE) BEING PROCURED UNDER THE CANCELED SOLICITATION. THE LATTER STANDARD IS A SMALLER, MORE RUGGED STANDARD DESIGNED TO MILITARY SPECIFICATIONS TO MEET FULL GENERAL PURPOSE SHIPBOARD REQUIREMENTS AND HAS A DIFFERENT PHYSICAL AND ELECTRICAL CONFIGURATION FROM THE COMMERCIAL STANDARD OBTAINED BY SPERRY.

SECTION 10(B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS RESERVES TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL OFFERS. ALSO, OUR OFFICE HAS LONG RECOGNIZED THAT CONTRACTING OFFICERS ARE CLOTHED WITH BROAD POWERS OF DISCRETION IN DECIDING WHETHER AN INVITATION FOR BIDS OR A NEGOTIATED PROCUREMENT SHOULD OR SHOULD NOT BE CANCELED AND OUR OFFICE WILL NOT INTERFERE WITH SUCH DETERMINATION UNLESS IT IS UNREASONABLE. 169492, JULY 17, 1970, AND CASES CITED THEREIN.

WHILE FEI CONTENDS THAT THE USE OF A CESIUM BEAM FREQUENCY STANDARD WOULD HAVE LITTLE IMPACT UPON THE EQUIPMENT BEING PROCURED UNDER THE CANCELED SOLICITATION, FEI HAS NOT SUBMITTED SUFFICIENT EVIDENCE TO REBUT THE VALIDITY OF NAVSHIPS' DETERMINATION THAT THE USE OF SUCH A SYSTEM WOULD HAVE A SIGNIFICANT IMPACT, ESPECIALLY WHEN VIEWED IN THE LIGHT OF THE ESTABLISHED PRINCIPLE THAT THE DETERMINATION OF THE NEEDS OF THE GOVERNMENT RESTS PRIMARILY WITH THE PROCURING AGENCY.

HOWEVER, THIS DOES NOT DISPOSE OF THE QUESTION WHETHER NAVSHIPS' CANCELLATION OF THE PROCUREMENT WAS REASONABLE IN LIGHT OF THE EVENTS SURROUNDING THIS PROCUREMENT. IT IS FEI'S CONTENTION THAT THE NAVY HAD KNOWLEDGE OF ALL THREE SYSTEMS, INCLUDING THE CESIUM BEAM SHIPBOARD SYSTEM, FOR AT LEAST 3 YEARS. HOWEVER, THERE IS NO EVIDENCE TO INDICATE THAT THE NAVY HAD A SYSTEM USING A CESIUM BEAM STANDARD AT THE TIME RFP - 3012 WAS CANCELED OR AT ANY TIME PRIOR TO THE CANCELLATION. FOR THAT MATTER, WE HAVE BEEN ADVISED BY NAVY THAT NO SYSTEM USING A CESIUM BEAM STANDARD WAS IN EXISTENCE ANYWHERE AT THE TIME RFP -3012 WAS CANCELED AND SUBSEQUENT TO THE CANCELLATION THE NAVY BEGAN DEVELOPING A SYSTEM USING THE CESIUM BEAM STANDARD WHICH IS STILL IN DEVELOPMENT. THUS, IT WOULD APPEAR REASONABLE THAT THE NAVY WAS NOT IN A POSITION TO EVALUATE A SYSTEM USING THE CESIUM BEAM STANDARD PRIOR TO THE TIME RFP -3012 WAS CANCELED. IN THIS REGARD, FEI POINTS OUT THAT RFP -3022, WHICH WAS A PRIOR PROCUREMENT FOR A SIMILAR ITEM, WAS ALSO CANCELED BECAUSE OF A CHANGE IN REQUIREMENTS. APPARENTLY FEI IS OF THE VIEW THAT THIS SUPPORTS ITS CONTENTION THAT THE EVALUATION OF THE THREE SYSTEMS COULD HAVE BEEN ACCOMPLISHED PRIOR TO CANCELLATION. THE RECORD INDICATES THAT THE CANCELLATION OF RFP -3022 RESULTED FROM THE RECEIPT OF PRICES FROM THE OFFERORS SUBSTANTIALLY IN EXCESS OF THE GOVERNMENT ESTIMATE AND THAT THE AN/URQ-10A FREQUENCY STANDARD WAS SUBSTITUTED FOR THE AN/URQ-13(V) AND THE AN/URQ-13(V)1. WE FAIL TO UNDERSTAND WHY A CHANGE IN NAVY'S REQUIREMENTS IN 1971 UNDER RFP -3022 NECESSARILY PRECLUDES THE NECESSITY FOR A REVIEW OF ITS REQUIREMENTS IN 1973.

REGARDING FEI'S CONTENTION THAT THE CHANGES IN NAVSHIPS' REQUIREMENTS COULD HAVE BEEN ACCOMPLISHED BY AN AMENDMENT PURSUANT TO ASPR 3 805.1(E), QUOTED ABOVE, WE HAVE NO REASON TO DISAGREE WITH NAVSHIPS' POSITION THAT THE REVIEW OF REQUIREMENTS RECOMMENDED BY THE CHIEF OF NAVAL MATERIAL MAY TAKE CONSIDERABLE TIME AND THE ULTIMATE RECOMMENDATION MAY BE TO PROCURE SOMETHING ENTIRELY DIFFERENT FROM THE AN/URQ-13(V). WE BELIEVE THE SITUATION IN THE PRESENT CASE IS SOMEWHAT DIFFERENT FROM THE SITUATION IN 49 COMP. GEN. 846 (1970), CITED BY FEI IN SUPPORT OF ITS POSITION. THAT CASE THE REQUIRED CHANGES IN THE SPECIFICATIONS WERE NOT SUCH THAT IT WOULD HAVE TO TAKE A GREAT DEAL OF TIME, NOR WAS THERE A POSSIBILITY OF THE PROCURING ACTIVITY EVENTUALLY PROCURING ITEMS NOT CONTEMPLATED WHEN THE RFP WAS ORIGINALLY ISSUED.

ON THE BASIS OF THE RECORD, WE ARE UNABLE TO CONCLUDE THAT NAVSHIPS' CANCELLATION OF RFP -3012 WAS UNREASONABLE.

FEI, IN PART, BASES ITS REQUEST FOR RELIEF ON THE ALLEGATION THAT IT WAS THE ONLY OFFEROR WHO SUBMITTED A TECHNICALLY ACCEPTABLE PROPOSAL AND HAD IT NOT BEEN FOR THE CANCELLATION IT WOULD HAVE BEEN ENTITLED TO THE AWARD. ALSO, IN THIS CONNECTION FEI CONTENDS THAT NAVSHIPS' CONSIDERATION OF LITCOM'S ALTERNATE PROPOSAL WAS A VIOLATION OF THE TERMS OF THE SOLICITATION SINCE LITCOM DID NOT SUBMIT A "RESPONSIVE" PRIMARY PROPOSAL. LITCOM DISAGREES WITH FEI'S STATEMENT THAT ITS (LITCOM'S) PROPOSAL WAS NOT TECHNICALLY ACCEPTABLE. NAVSHIPS STATES THAT LITCOM'S PRIMARY PROPOSAL WAS CONSIDERED "RESPONSIVE" ALTHOUGH IT (NAVSHIPS) QUESTIONED THE USE OF THIS TERM IN A NEGOTIATED PROCUREMENT. IN THE TYPE OF NEGOTIATED PROCUREMENT UNDER DISCUSSION THE TECHNICAL PROPOSAL NEED ONLY "CONTAIN SUFFICIENT DETAIL TO ENABLE ENGINEERING PERSONNEL TO MAKE A THOROUGH EVALUATION AND DETERMINATION AS TO WHETHER OR NOT THE PROPOSED PRODUCT MEETS GOVERNMENT REQUIREMENTS" AND DOES NOT HAVE TO, AS IN ADVERTISED PROCUREMENTS, CONFORM TO A RIGID SET OF SPECIFICATION REQUIREMENTS. ONE OF THE PURPOSES OF A NEGOTIATED PROCUREMENT IS TO DISCUSS DEFICIENCIES IN A PROPOSAL TO DETERMINE IF SUCH DEFICIENCIES CAN BE CORRECTED. THE TERM "NEGOTIATION" GENERALLY IMPLIES A SERIES OF OFFERS AND COUNTEROFFERS UNTIL A MUTUALLY SATISFACTORY AGREEMENT IS CONCLUDED BY THE PARTIES. 45 COMP. GEN. 417, 427 (1966). THUS, IT IS CONCEIVABLE, AND FOR THAT MATTER VERY LIKELY, THAT A PROPOSAL MIGHT NOT BE TECHNICALLY ACCEPTABLE WHEN FIRST SUBMITTED OR MIGHT BE CONSIDERED INFERIOR TO OTHER PROPOSALS, BUT SUSCEPTIBLE OF BEING MADE TECHNICALLY ACCEPTABLE. SINCE THE PROPOSALS ARE EVALUATED TO DETERMINE WHETHER THEY ARE OR CAN BE MADE TECHNICALLY ACCEPTABLE, IT STANDS TO REASON THAT EACH PROPOSAL IS DIFFERENT AND WOULD NOT NECESSARILY BE "RESPONSIVE" IN THE SENSE THAT THERE MIGHT BE CERTAIN DEFICIENCIES TO BE CORRECTED. NAVSHIPS STATES THAT IN THE PRESENT CASE SINCE THE SOLICITATION WAS CANCELED BEFORE EVALUATION OF THE PROPOSALS HAD BEEN COMPLETED, IT WAS NOT DETERMINED WHETHER EITHER FEI'S OR LITCOM'S PROPOSAL WAS TECHNICALLY ACCEPTABLE. THUS, WHETHER OR NOT FEI WOULD HAVE RECEIVED THE AWARD HAD THE SOLICITATION NOT BEEN CANCELED IS CONJECTURAL AT BEST.

REGARDING FEI'S CONTENTION THAT NAVSHIPS' CONSIDERATION OF LITCOM'S ALTERNATE PROPOSAL WAS A VIOLATION OF THE TERMS OF THE SOLICITATION SINCE IT DID NOT SUBMIT A "RESPONSIVE" PRIMARY SOLICITATION, PARAGRAPH 27 ON PAGE 11 OF THE SOLICITATION ALLOWS SUBMISSION OF ALTERNATE PROPOSALS. HOWEVER, NO MENTION IS MADE OF A REQUIREMENT THAT THE PRIMARY PROPOSAL MUST BE TECHNICALLY ACCEPTABLE AND WE KNOW OF NO LAW OR REGULATION THAT REQUIRES SUCH FEI STATES THAT THE LANGUAGE IN SECTION 2(B) OF STANDARD FORM 33A TO THE EFFECT THAT "EACH OFFEROR SHALL FURNISH INFORMATION REQUIRED BY THE SOLICITATION" MEANS THAT THE SUBMISSION OF A PRIMARY PROPOSAL "RESPONSIVE" TO THE TERMS OF THE SOLICITATION IS A CONDITION PRECEDENT TO THE CONSIDERATION BY THE GOVERNMENT OF AN ALTERNATIVE PROPOSAL. HOWEVER, WE INTERPRET THE LANGUAGE OF 2(B) TO MEAN THAT THE OFFEROR SHALL FURNISH THE INFORMATION REQUIRED BY THE SOLICITATION IN CONNECTION WITH WHICHEVER PROPOSAL IS CONSIDERED, WHETHER IT BE THE PRIMARY OR ALTERNATIVE PROPOSAL. WE DO NOT BELIEVE THAT THERE IS A REQUIREMENT THAT THE PRIMARY PROPOSAL BE TECHNICALLY ACCEPTABLE OR "RESPONSIVE" IN ORDER FOR THE GOVERNMENT TO CONSIDER AN ALTERNATIVE PROPOSAL.

REGARDING FEI'S ALTERNATE REQUEST FOR RELIEF, I.E., THAT OUR OFFICE CONSIDER THIS PROTEST AS A CLAIM FOR EXPENSES INCURRED IN THE PREPARATION OF ITS PROPOSAL PLUS LEGAL FEES INCURRED IN THE MATTER, IT HAS BEEN HELD THAT BID OR PROPOSAL PREPARATION COSTS ARE NOT RECOVERABLE UNLESS IT CAN BE DEMONSTRATED THAT THE ACTIONS OF THE PROCUREMENT AGENCY TOWARD THE BIDDER-CLAIMANT WERE IN BAD FAITH, ARBITRARY OR CAPRICIOUS. SEE HEYER PRODUCTS CO. V. UNITED STATES, 140 F. SUPP. 409 (1956); KECO INDUSTRIES INC. V. UNITED STATES, 428 F.2D 1233 (1970), FURTHER CONSIDERED IN U.S. CT. C. NO. 173-69, DATED FEBRUARY 20, 1974; B-173099, MAY 25, 1972. SUCH HAS NOT BEEN DEMONSTRATED TO BE THE CASE IN THE PRESENT INSTANCE. REGARD TO THE CLAIM FOR LEGAL FEES, IT HAS BEEN HELD THAT EXPENSES INCURRED IN OBTAINING LEGAL ASSISTANCE TO PREPARE, PROSECUTE, AND LITIGATE A CLAIM ARE NOT REIMBURSABLE EXPENSES OR AN ELEMENT OF RECOVERABLE DAMAGES. SEE DALE CONSTRUCTION CO. V. UNITED STATES, SEABOARD SURETY COMPANY, INTERVENOR, 168 CT. CL. 692 (1964); DALE CONSTRUCTION CO. V. UNITED STATES, 161 CT. CL. 825 (1963). FEI CONTENDS THAT THESE CASES ARE CLEARLY DISTINGUISHABLE FROM THE PRESENT SITUATION IN THAT THEY DEAL WITH DAMAGES RELATED TO THE PERFORMANCE OF A CONTRACT WHICH ARE RECOVERABLE IN AN ACTION FOR BREACH OF CONTRACT, WHEREAS, IN THE PRESENT CASE, FEI IS SEEKING TO RECOVER EXPENSES INCURRED IN PREPARING ITS PROPOSAL PURSUANT TO A SOLICITATION WHICH WAS ARBITRARILY CANCELED AND ATTORNEY FEES ARE PROPERLY AN ELEMENT OF RECOVERABLE EXPENSES IN SUCH CIRCUMSTANCES. HOWEVER, IN DESCOMP INC. V. ARTHUR SAMPSON, ADMINISTRATOR OF THE GENERAL SERVICES ADMINISTRATION, CIVIL ACTION NO. 4773, USDC, DISTRICT OF DELAWARE (JUNE 3, 1974), IT WAS HELD THAT ATTORNEY FEES IN LITIGATING A CLAIM FOR THE COSTS OF PREPARING AN OFFER WERE NOT RECOVERABLE IN THE ABSENCE OF AN EXPRESS STATUTORY AUTHORITY OR COURT-MADE EXCEPTION.

FOR THE ABOVE REASONS, FEI'S PROTEST IS DENIED.