B-178887(2), APR 10, 1974

B-178887(2): Apr 10, 1974

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UNSUCCESSFUL OFFEROR'S PROTEST ON GROUNDS THAT IT WAS NOT NOTIFIED OF ALL SUBCRITERIA USED IN PROPOSAL EVALUATION. THAT USE OF "COMMONALITY" IN EVALUATION WAS IMPROPER. THAT EVALUATION OF BUDGET CRITERION WAS CONDUCTED IRRATIONALLY. THAT ITS PROPOSAL WAS WITHIN COMPETITIVE RANGE. ARE MATTERS COMING WITHIN PRIMARY JURISDICTION OF THE CONTRACTING AGENCY AND DETERMINATION BY CONTRACTING AGENCY WILL NOT BE DISTURBED IN ABSENCE OF CLEAR SHOWING OF ARBITRARY OR UNREASONABLE ACTION. 2. OFFEROR'S CLAIM THAT ITS PROPOSAL WAS EXCLUDED FROM NEGOTIATIONS SOLELY BECAUSE OF LOW PROPOSED COST IS NOT FACTUALLY SUPPORTED BY RECORD WHICH REFLECTS THAT PROPOSAL WAS NOT REJECTED SOLELY FOR THIS REASON. RATHER WAS EXCLUDED ON THE BASIS OF THE COMPARATIVELY LOW TOTAL SCORE ACHIEVED AS A RESULT OF BOTH ITS TECHNICAL AND COST SCORING.

B-178887(2), APR 10, 1974

1. UNSUCCESSFUL OFFEROR'S PROTEST ON GROUNDS THAT IT WAS NOT NOTIFIED OF ALL SUBCRITERIA USED IN PROPOSAL EVALUATION; THAT USE OF "COMMONALITY" IN EVALUATION WAS IMPROPER; THAT EVALUATION OF BUDGET CRITERION WAS CONDUCTED IRRATIONALLY; AND THAT ITS PROPOSAL WAS WITHIN COMPETITIVE RANGE, ARE MATTERS COMING WITHIN PRIMARY JURISDICTION OF THE CONTRACTING AGENCY AND DETERMINATION BY CONTRACTING AGENCY WILL NOT BE DISTURBED IN ABSENCE OF CLEAR SHOWING OF ARBITRARY OR UNREASONABLE ACTION. 2. OFFEROR'S CLAIM THAT ITS PROPOSAL WAS EXCLUDED FROM NEGOTIATIONS SOLELY BECAUSE OF LOW PROPOSED COST IS NOT FACTUALLY SUPPORTED BY RECORD WHICH REFLECTS THAT PROPOSAL WAS NOT REJECTED SOLELY FOR THIS REASON, BUT RATHER WAS EXCLUDED ON THE BASIS OF THE COMPARATIVELY LOW TOTAL SCORE ACHIEVED AS A RESULT OF BOTH ITS TECHNICAL AND COST SCORING.

TO KIRSCHNER ASSOCIATES, INC.:

REQUEST FOR PROPOSALS (RFP) MA/OPER 7304 WAS ISSUED ON APRIL 16, 1973, BY THE MANPOWER ADMINISTRATION, UNITED STATES DEPARTMENT OF LABOR. THE RFP SOLICITED PROPOSALS FOR A THOROUGH EVALUATION OF THE WORK INCENTIVE PROGRAM (WIN) IN ORDER TO MEASURE THE EFFECTIVENESS OF THE WIN LEGISLATION AND THE WIN II PROGRAM, INVOLVING STATISTICAL SAMPLING, RESEARCH DESIGN, FIELD MANAGEMENT, DATA EVALUATION AND ANALYSIS, AND REPORT PREPARATION. PROSPECTIVE OFFERORS WERE ADVISED BY THE RFP THAT A COST REIMBURSEMENT TYPE CONTRACT WAS ANTICIPATED.

PROPOSALS WERE RECEIVED FROM THIRTEEN OFFERORS AND EACH ONE WAS EVALUATED AND RANKED BY THE PROPOSAL EVALUATION PANEL IN ACCORDANCE WITH THE CRITERIA STATED IN THE RFP. EACH OF THE SEVEN PANEL MEMBERS FIRST SCORED EACH OF THE PROPOSALS ON FOUR TECHNICAL CRITERIA, ASSIGNING FOR EACH CRITERION A SCORE OF EITHER 0, 25, 50, 75, OR 100. THE TECHNICAL CRITERIA AND THE WEIGHT ASSIGNED TO EACH WERE DESCRIBED AS FOLLOWS IN THE RFP:

WEIGHT

"A. THE CLARITY AND SPECIFICITY WITH WHICH THE OFFEROR DETAILS THE WORK TO BE PERFORMED AND THE EXTENT TO WHICH THE PROPOSAL DISPLAYS AN UNDERSTANDING OF THE PURPOSE OF THIS EVALUATION

50

"B. EXPERIENCE AND QUALIFICATIONS OF KEY STAFF: EXPERIENCE IN ADMINISTRATION OF COMPLEX PROJECT - QUALIFICATIONS IN SUBJECT AREAS OF ANALYSIS IN TERMS OF THE OBJECTIVES OF THIS STUDY 50

"C. LEVEL OF EFFORT PROPOSED AND SOUNDNESS OF THE PROPOSED METHOD FOR ACCOMPLISHMENT

30

"D. COMPANY'S PREVIOUS RECORD AND CURRENT RESOURCES INDICATING CAPABILITY FOR ORGANIZING STUDIES OF THIS SCOPE AND CONDUCTING THEM EFFECTIVELY AND EFFICIENTLY 20"

IF A PROPOSAL AVERAGED LESS THAN 50 FOR ANY OF THE FOUR CRITERIA IN STEP 1 OF THE EVALUATIVE PROCESS IT WAS DISQUALIFIED FROM CONSIDERATION IN STEP 2 INVOLVING A COST ANALYSIS OF THE PROPOSAL DESCRIBED IN THE RFP IN THE FOLLOWING MANNER:

WEIGHT

"E. ACCEPTABILITY OF PROPOSED BUDGET 40"

IN ITS CONSIDERATION OF THIS FINAL CRITERION, THE EVALUATION PANEL ANALYZED THE OFFERORS COST EMPHASIZING THE COST PER MAN YEAR, THE OVERHEAD RATE, AND THE NUMBER OF PROFESSIONAL MAN YEARS. ACCORDING TO THE ADMINISTRATIVE REPORT IT BECAME NECESSARY FOR THE PANEL TO DEVELOP A "COMMONALITY" AMONG THE PROPOSAL FACTORS FOR COMPARISON PURPOSES BECAUSE VARIOUS PROPOSALS PRESENTED THE COST ITEMS IN A NUMBER OF DIFFERENT WAYS USING A MULTIPLICITY OF DEFINITIONS.

SEVEN PROPOSALS QUALIFIED UNDER THE STEP 1 TECHNICAL SCORING SYSTEM FOR CONSIDERATION IN STEP 2 (THE COST ANALYSIS) OF THE RANKING PROCESS. CONSIDERING THE SCORES ACHIEVED IN BOTH STEPS, AS WELL AS THE ACTUAL PROPOSED COST, THE RANKINGS WERE AS FOLLOWS:

NAME COST STEP I - TECHNICAL STEP II - COST TOTAL

RATING RANK RATING RANK STEP I & II

RATING RANK

PACIFIC

INTER-

T&TA $1,580,860 12290 1 3400 1 15690 1

STUDY 1,890,530 12000 3 2880 2 14880 2

WESTAT 2,247,485 11680 4 2280 3 13960 3

NORTH

STAR 2,343,584 12010 2 1720 4 13730 4

PRC 1,769,510 8870 7 2880 2 11750 5

KIRSCHNER 1,234,527 10290 5 1280 6 11570 6

SDC 1,923,593 9390 6 1560 5 10950 7

THE PANEL THEN DETERMINED THAT THERE WAS A SUFFICIENT DIFFERENCE BETWEEN THOSE PROPOSALS WHICH HAD ACCUMULATED 13,000 OR MORE OVERALL POINTS AND THOSE WHICH HAD NOT AND CALLED FOR ORAL PRESENTATIONS BY THOSE COMPANIES SCORING OVER 13,000 POINTS. KIRSCHNER ASSOCIATES, INC. (KIRSCHNER), HAD A TOTAL SCORE OF ONLY 11,570 PLACING IT OUTSIDE THE COMPETITIVE RANGE AS DETERMINED ABOVE AND CONSEQUENTLY IT WAS NOT REQUESTED TO MAKE AN ORAL PRESENTATION.

BECAUSE KIRSCHNER WAS EXCLUDED FROM THIS STEP OF THE PROCUREMENT PROCESS IT IMMEDIATELY REQUESTED, IN ITS LETTER OF JUNE 15, 1973, AN "OPPORTUNITY TO REVIEW THE DEPARTMENT'S EVALUATION OF (ITS) CAPABILITIES, PROPOSAL AND COST IN RELATION TO THIS ASSIGNMENT PRIOR TO CONTRACT AWARD." THE DEPARTMENT OF LABOR REJECTED THIS REQUEST WHICH APPARENTLY WAS TREATED AS A FORMAL PROTEST AND INFORMED OUR OFFICE BY THEIR LETTER OF JUNE 29, 1973, THAT THEY INTENDED TO MAKE THE AWARD DESPITE THIS PROTEST AND ONE BY BLK GROUP, INC. CONSEQUENTLY, THE CONTRACT WAS AWARDED ON JUNE 29, 1973, TO PACIFIC TRAINING AND TECHNICAL ASSISTANCE CORPORATION (PTTA), THE FIRM THAT HAD ATTAINED THE HIGHEST SCORE ON BOTH THE TECHNICAL AND COST ANALYSIS AND HAD ALSO PROPOSED THE LOWEST CONTRACT PRICE OF ANY OF THE FOUR COMPANIES WITHIN THE COMPETITIVE RANGE.

BY LETTER OF NOVEMBER 6, 1973, COUNSEL FOR KIRSCHNER PROTESTED THE CONTRACT AWARD TO PTTA. COUNSEL REQUESTED OUR OFFICE TO "INSTRUCT THE DEPARTMENT OF LABOR TO TERMINATE THE CONTRACT AWARDED UNDER THE RFP AND THEREAFTER TO RECOMPETE ITS REMAINING NEEDS IN ACCORDANCE WITH LAW AND SOUND PROCUREMENT POLICY." THIS REQUEST WAS BASED ON SEVERAL ALLEGATIONS. FIRST COUNSEL CLAIMED THAT THE GOVERNMENT FAILED TO APPRISE OFFERORS OF THE SUBCRITERIA TO BE USED IN EVALUATING CRITERION "E" AND THEN COMPOUNDED THIS ERROR BY RESTRUCTURING THE PROPOSALS AS SUBMITTED IN ORDER TO CONFORM THEM TO THOSE SUBCRITERIA. IT IS THEREFORE ASSERTED THAT THIS VIOLATED THE PRINCIPLE THAT ALL OFFERORS MUST BE TREATED FAIRLY AND EQUALLY. COUNSEL ALSO STATED THAT BASED ON THE ADMINISTRATIVE REPORT KIRSCHNER WAS APPARENTLY EXCLUDED FROM NEGOTIATION "SOLELY BECAUSE THE EVALUATORS FELT THAT KIRSCHNER'S PROPOSED COSTS WERE TOO LOW" AND THAT SUCH TREATMENT VIOLATED THE RULE ENUNCIATED BY OUR OFFICE IN 50 COMP. GEN. 16 (1970). FURTHERMORE, IT IS ALLEGED THAT IN LIGHT OF THE VERY LOW SCORE KIRSCHNER RECEIVED FROM THE EVALUATION PANEL ON ITS PROPOSED BUDGET WHICH WAS SIGNIFICANTLY LOWER THAN THE COST PROPOSAL SUBMITTED BY THE EVENTUAL CONTRACT RECIPIENT, THE GOVERNMENT'S ACTUAL EVALUATIVE PROCESS AS APPLIED TO THIS CRITERION "APPEARS TO DEFY RATIONAL EXPLANATION" AND INDICATES THAT THE "ENTIRE EVALUATION PROCESS WAS CONDUCTED IN AN ARBITRARY AND IRRATIONAL MANNER." FINALLY COUNSEL CONTENDED THAT "SINCE KIRSCHNER'S TECHNICAL PROPOSAL WAS 'ACCEPTABLE' *** THERE IS 'NOTHING IN THE RECORD WHICH WOULD INDICATE THAT (KIRSCHNER'S) PROPOSAL IS SO TECHNICALLY INFERIOR AS TO PRECLUDE ANY POSSIBILITY OF MEANINGFUL NEGOTIATION WITH SUCH OFFER'" AND THAT CONSEQUENTLY THERE WAS NO JUSTIFICATION FOR THE DEPARTMENT OF LABOR'S DETERMINATION THAT THE PROPOSAL FELL OUTSIDE THE COMPETITIVE RANGE.

ALTHOUGH COUNSEL'S LETTER OF NOVEMBER 6, 1973, DID NOT QUESTION THE PROCEDURE EMPLOYED BY THE DEPARTMENT OF LABOR IN AWARDING THE CONTRACT TO PTTA BEFORE OUR OFFICE ACTED ON THE INITIAL PROTEST, THAT MATTER REQUIRES SOME ATTENTION. AS STATED IN THE ADMINISTRATIVE REPORT THE DEPARTMENT OF LABOR REJECTED KIRSCHNER'S REQUEST FOR A PREAWARD CONFERENCE BECAUSE 41 CFR 1-3.103 ONLY REQUIRES THAT POST AWARD DEBRIEFING CONFERENCES BE HELD WITH UNSUCCESSFUL OFFERORS. THEN IN ACCORDANCE WITH THE GENERAL ACCOUNTING OFFICE INTERIM BID PROTEST PROCEDURES PUBLISHED IN 4 CFR 20.4 PROVIDING THAT AFTER A PROTEST IS MADE AN AWARD SHALL BE DELAYED PENDING A RULING BY THE COMPTROLLER GENERAL "*** UNLESS THERE HAS FIRST BEEN FURNISHED TO THE GENERAL ACCOUNTING OFFICE A WRITTEN FINDING BY THE HEAD OF THE AGENCY, HIS DEPUTY, OR AN ASSISTANT SECRETARY (OR EQUIVALENT), SPECIFYING THE FACTORS WHICH WILL NOT PERMIT DELAY OF THE AWARD ***" SUCH A FINDING WAS MADE AND THE DISPUTED CONTRACT WAS AWARDED. IN SO DOING THE DEPARTMENT OF LABOR ALSO FULLY COMPLIED WITH THE PROVISIONS OF FPR 1 2.407 -8(B)(4) WHICH STATES THAT A CONTRACT MAY BE AWARDED PRIOR TO RESOLUTION OF A PROTEST IF THE CONTRACTING OFFICER DETERMINES THAT THE ITEMS TO BE PROCURED ARE URGENTLY REQUIRED OR THAT PERFORMANCE WILL BE UNDULY DELAYED IF THE AWARD IS NOT MADE PROMPTLY OR THAT A PROMPT AWARD WILL OTHERWISE BE ADVANTAGEOUS TO THE GOVERNMENT. FURTHERMORE, NOTICE OF INTENT TO MAKE AWARD WAS FURNISHED OUR OFFICE PURSUANT TO THE REQUIREMENT OF FPR 1-2.407- 8(B)(3). CONSEQUENTLY, OUR OFFICE CANNOT OBJECT TO AN AWARD UNDER THESE CIRCUMSTANCES.

THE CONTENTIONS OF THE LETTER OF NOVEMBER 6, AS SUMMARIZED ABOVE, WILL BE CONSIDERED IN THE ORDER PRESENTED. IN SUPPORT OF COUNSEL'S INITIAL ALLEGATION THAT OFFERORS WERE NOT ADEQUATELY APPRISED OF THE SUBCRITERIA TO BE USED IN EVALUATING THE BUDGET PROPOSAL AND THAT THE GOVERNMENT ERRED IN ATTEMPTING TO RESTRICT THE PROPOSALS, COUNSEL CITED THE PROVISIONS OF FPR 1-3.802(C) AND OUR DECISIONS IN 52 COMP. GEN. 466 (1973) AND 49 COMP. GEN. 229 (1969).

CONCERNING COUNSEL'S MENTION OF FPR 1-3.802(C) IT WAS APPARENTLY REFERRING TO THE FIRST SENTENCE OF THAT PROVISION WHICH STATES THAT "REQUESTS FOR PROPOSALS SHALL CONTAIN THE INFORMATION TO ENABLE PROSPECTIVE OFFEROR TO PREPARE A QUOTATION PROPERLY." WHILE THIS REGULATION THEN CONTINUES TO LIST THE TYPE OF INFORMATION WHICH SHOULD BE INCLUDED IN A RFP IT HAS NO LANGUAGE TO INDICATE THAT THE PLANNED PROPOSAL EVALUATION SCHEME MUST BE FULLY DESCRIBED IN THE RFP. RATHER, THE INTERPRETATION OF THE MEANING OR APPLICATION OF THE ABOVE-QUOTED SENTENCE HAS DEPENDED ON THE RELEVANT DECISIONS OF OUR OFFICE.

AS REGARDS OUR DECISION IN 52 COMP. GEN. 466 (1973), WHICH COUNSEL CITED, THE FACTS ARE EASILY DISTINGUISHABLE FROM THOSE IN THE PRESENT INSTANCE. IN THAT CASE THE PROTESTING FIRM WAS WITHIN THE COMPETITIVE RANGE AND WAS INVITED TO PARTICIPATE IN NEGOTIATION BUT APPARENTLY IT WAS NEVER ADVISED OF THE SPECIFIC DEFICIENCIES OF ITS PROPOSAL. ALTHOUGH THE PROTEST WAS EVENTUALLY DENIED WE STATED THAT "WE BELIEVE IT IS INCUMBENT UPON GOVERNMENT NEGOTIATORS TO BE AS SPECIFIC AS PRACTICAL CONSIDERATION WILL PERMIT IN ADVISING OFFERORS OF THE CORRECTIONS REQUIRED IN THEIR PROPOSALS." HOWEVER, IN THE PRESENT SITUATION THE DEPARTMENT OF LABOR DETERMINED THAT KIRSCHNER'S PROPOSAL WAS NOT WITHIN THE COMPETITIVE RANGE AND CONSEQUENTLY THERE COULD BE NO REQUIREMENT THAT KIRSCHNER BE INFORMED OF ANY SPECIFIC CORRECTIONS REQUIRED IN ITS PROPOSAL DURING NEGOTIATIONS THAT KIRSCHNER WAS NOT ENTITLED TO PARTICIPATE IN.

OUR DECISION IN 49 COMP. GEN. 229 (1969), CAN ALSO BE DISTINGUISHED FROM THE SITUATION AT HAND. IN THAT CASE THE AMENDED RFP MERELY STATED THAT "GREATEST EMPHASIS SHALL BE PLACED ON THE FOLLOWING CRITERIA IN THE ORDER LISTED." WHAT FOLLOWED CONSISTED OF A GENERAL STATEMENT OF THE MINIMUM REQUIREMENTS FOR AN ACCEPTABLE PROPOSAL WITHOUT ANY SUGGESTION OF THE RELATIVE WEIGHT OR IMPORTANCE TO BE ATTACHED TO EACH FACTOR. HOWEVER, THE FULL RECORD REVEALED THAT THE EVALUATION TEAM MADE USE OF A VERY DETAILED AND RIGID SYSTEM INCLUDING WEIGHTED SCORING DURING PROPOSAL EVALUATION. WE STATED IN THAT DECISION:

"*** WE BELIEVE THAT WHEN IT IS INTENDED THAT NUMERICAL RATINGS WILL BE EMPHASIZED OFFERORS SHOULD BE INFORMED OF AT LEAST THE MAJOR FACTORS TO BE CONSIDERED AND THE BROAD SCHEME OF SCORING TO BE EMPLOYED. WHETHER OR NOT NUMERICAL RATINGS ARE TO BE USED WE BELIEVE THAT NOTICE SHOULD BE GIVEN AS TO ANY MINIMUM STANDARDS WHICH WILL BE REQUIRED AS TO ANY PARTICULAR ELEMENT OF EVALUATION AS WELL AS REASONABLY DEFINITE INFORMATION AS TO THE DEGREE OF IMPORTANCE TO BE ACCORDED TO PARTICULAR FACTORS IN RELATION TO EACH OTHER."

IN THE CASE AT HAND IT IS CLEAR THAT THE RFP SPECIFICALLY STATED THE MAJOR FACTORS TO BE CONSIDERED DURING EVALUATION AS WELL AS THE ACTUAL WEIGHT ASSIGNED TO EACH FACTOR. ALTHOUGH IT APPEARS THAT DURING EVALUATION OF CRITERION "E" THE EVALUATION PANEL CONSIDERED CERTAIN COST ITEMS THAT WERE NOT SPECIFICALLY INDICATED IN THE RFP IT HAS NOT GENERALLY BEEN REQUIRED THAT SUCH DETAILED EVALUATIVE INFORMATION BE INCLUDED IN AN RFP. IN 50 COMP. GEN. 565 (1971), ONE OF THE BASES OF THE PROTEST CONCERNED THE PROCEDURE EMPLOYED BY THE EVALUATION PANEL WHICH HAD USED A PREPARED FORM WITH A DETAILED LISTING OF 32 EVALUATION FACTORS AND THE WEIGHTS ASSIGNED TO EACH, WHEREAS THE RFP ONLY LISTED GENERAL CRITERIA. OUR DECISION THERE SAID THAT:

"ALTHOUGH IT IS EVIDENT THAT THE CRITERIA LISTED IN THE RFP ARE NOT BROKEN DOWN TO SPECIFY EACH FACTOR USED IN THE EVALUATION PROCESS, WE BELIEVE THERE IS SUFFICIENT CORRELATION BETWEEN THE DETAILED EVALUATION FACTORS ACTUALLY USED AND THE GENERALIZED CRITERION SHOWN IN THE RFP TO SATISFY THE REQUIREMENT THAT PROSPECTIVE OFFERORS BE ADVISED OF THE EVALUATION CRITERIA WHICH WILL BE APPLIED TO THEIR PROPOSALS."

IN THE PRESENT CASE IT IS OBVIOUS THAT IN ADDITION TO A GENERAL CORRELATION BETWEEN CRITERION "E" AS STATED IN THE RFP AND CRITERION "E" AS EVALUATED BY THE PANEL, THE ACTUAL WEIGHT ASSIGNED THAT ITEM WAS SPECIFICALLY STATED IN THE RFP. FURTHERMORE, A CAREFUL EXAMINATION OF EXHIBIT B - THE COST AND PRICE ANALYSIS FORM - THAT WAS INCLUDED IN EACH RFP INDICATES THAT AN OFFEROR WHO PROPERLY COMPLETED THE ENTIRE FORM WOULD ACTUALLY HAVE SUPPLIED ALL OF THE COST INFORMATION THAT THE EVALUATING PANEL CONSIDERED ESSENTIAL. THE IMPORTANCE OF THE INFORMATION REQUIRED BY EXHIBIT B WAS CLEARLY INDICATED IN THE RFP INSTRUCTION WHICH STATED THAT: "OFFERORS ARE CAUTIONED THAT PROPOSALS CONTAINING INSUFFICIENT COST INFORMATION, AS REQUIRED BY EXHIBITS B AND C, WILL BE CONSIDERED NONRESPONSIVE." COUNSEL'S CLAIM THAT THE LABOR DEPARTMENT'S USE OF A "COMMONALITY" FOR PURPOSES OF COMPARING THE VARIOUS COST PROPOSALS VIOLATED THE PRINCIPLE THAT ALL OFFERORS MUST BE TREATED FAIRLY AND EQUALLY IS BASELESS. TO THE CONTRARY IT IS EVIDENT THAT THE LABOR DEPARTMENT'S DEVELOPMENT OF A "COMMONALITY" OR UNIFORM MODE OF EXPRESSION WAS INTENDED TO INSURE THAT ALL OF THE PROPOSALS WERE EVALUATED "FAIRLY AND EQUALLY" AND IN A UNIFORM MANNER. WE FIND NOTHING IN THE RECORD TO INDICATE THAT THE PANEL MEMBERS APPLIED THEIR COMMON FORMULA IN AN UNFAIR OR BIASED MANNER. CONSEQUENTLY, COUNSEL'S CLAIMS THAT THE RFP DID NOT ADEQUATELY APPRISE OFFERORS OF THE BASES TO BE USED IN EVALUATING CRITERION "E" AND THAT THE USE OF A COMMON FACTOR IN THAT PROCESS WAS IMPROPER MUST BE REJECTED.

AS REGARDS THE CONTENTION THAT KIRSCHNER WAS EXCLUDED FROM NEGOTIATION "SOLELY" BECAUSE THE PANEL FELT KIRSCHNER'S PROPOSED COSTS WERE TOO LOW, THEREBY VIOLATING A PRINCIPLE ENUNCIATED IN 50 COMP. GEN. 16 (1970), WE BELIEVE COUNSEL IS MISTAKEN. KIRSCHNER WAS NOT REJECTED SOLELY BECAUSE ITS PROPOSED COSTS WERE TOO LOW, BUT WAS EXCLUDED ON THE BASIS OF THE COMPARATIVELY LOW TOTAL SCORE ACHIEVED AS A RESULT OF BOTH THE TECHNICAL AND COST SCORING. COUNSEL CONTENDS THAT THE ADMINISTRATIVE REPORT'S STATEMENT THAT "PANEL MEMBERS OBVIOUSLY FELT THAT THERE WERE SERIOUS DOUBTS AS TO THE FEASIBILITY OF THE COMPANY'S COST PROPOSAL" INDICATES THAT KIRSCHNER'S TECHNICAL PROPOSAL WAS ACCEPTABLE. THE ABOVE-QUOTED STATEMENT HAS NO REFERENCE TO THE ACCEPTABILITY OF KIRSCHNER'S TECHNICAL PROPOSAL BUT RELATES TO THE LOW SCORE KIRSCHNER'S PROPOSAL ATTAINED FOR CRITERION "E".

THE DECISION OF OUR OFFICE IN 50 COMP. GEN. 16 (1970) IS DISTINGUISHABLE FROM THE PRESENT SITUATION AND THEREFORE IS NOT APPLICABLE. IN THAT PROCUREMENT THE CRITERION FOR EVALUATION IN THE RFQ STATED THAT 25 POINTS WERE ASSIGNED TO REASONABLENESS OF COST, BUT DURING THE PROPOSAL EVALUATION THE NAVY DECIDED THAT THE PRICE FACTOR SHOULD NOT BE CONSIDERED FOR ALL OFFERS DIFFERING BY MORE THAN 10 PERCENT FROM THE GOVERNMENT ESTIMATE. IN OUR DECISION WE STATED THAT "NAVY'S REASONING RESULTED IN EFFECT IN DELETION OF THE PRICE EVALUATION FACTOR STATED IN THE SOLICITATION." ALTHOUGH THE OFFEROR IN THAT CASE WAS IMPROPERLY EXCLUDED FROM NEGOTIATION DUE TO THE TOTAL LACK OF CONSIDERATION GIVEN ITS COST PROPOSAL, COUNSEL SUGGESTS THAT HOLDING SHOULD BE APPLIED TO THE PRESENT SITUATION IN WHICH, ACCORDING TO COUNSEL'S OWN CLAIM, KIRSCHNER WAS EXCLUDED FROM NEGOTIATION BECAUSE ITS COST PROPOSAL WAS CONSIDERED BY THE EVALUATING PANEL AND RECEIVED A VERY LOW SCORE. FURTHERMORE, THERE IS NO REQUIREMENT IN A COST REIMBURSEMENT TYPE NEGOTIATED PROCUREMENT THAT A PROPOSAL BE EVALUATED ON A STRICT PRICE BASIS. THE CONTRACTOR IN SUCH A METHOD OF CONTRACTING IS REIMBURSED NOT ON THE BASIS OF HIS COST ESTIMATE, BUT FOR THE ACTUAL COST INCURRED IN PERFORMING THE WORK. THEREFORE, A CONTRACTING OFFICER MAY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT. SEE B-174302, MAY 24, 1972, AND B 176504, DECEMBER 21, 1972.

IN THIS CONNECTION PARAGRAPH 1-3.805 OF THE FEDERAL PROCUREMENT REGULATIONS STATES AS FOLLOWS:

"IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (A) THE LOWEST PROPOSED COST, (B) THE LOWEST PROPOSED FEE, OR (C) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND AGENCY PROCEDURES AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE SEC 1-3.808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT."

IN VIEW OF THE FOREGOING, COUNSEL'S CONTENTION THAT KIRSCHNER WAS IMPROPERLY EXCLUDED FROM NEGOTIATION BECAUSE THE EVALUATORS FELT ITS PROPOSED COSTS WERE TOO LOW IS REJECTED AS BEING BOTH FACTUALLY AND LEGALLY UNSUPPORTABLE.

COUNSEL'S NEXT ALLEGATION, WHICH IS SOMEWHAT RELATED TO THE ONE DISCUSSED ABOVE, IS THAT THE GOVERNMENT'S ACTUAL EVALUATION PROCESS AS APPLIED TO THE "PROPOSED BUDGET" WAS IRRATIONAL. THE BASIS FOR THIS CLAIM STEMS FROM THE COMPARATIVE SCORING OF KIRSCHNER'S COST PROPOSAL AND THOSE OF THE OTHER OFFERORS, INCLUDING THE CONTRACT RECIPIENT, ALL OF WHICH HAD HIGHER COST ESTIMATES THAN DID KIRSCHNER. TO FURTHER SUPPORT THIS VIEW COUNSEL CLAIMED THAT SINCE KIRSCHNER'S OVERHEAD WAS ONLY 50 PERCENT WHILE THE CONTRACT RECIPIENT'S WAS 80 PERCENT, "IT IS APPARENT THAT KIRSCHNER'S AND THE CONTRACT RECIPIENT'S PROPOSED DIRECT COSTS WERE COMPARABLE." CLOSE EXAMINATION OF THE COST AND PRICE ANALYSIS FORMS SUBMITTED BY KIRSCHNER AND PTTA DEMONSTRATES THAT COUNSEL'S CONCLUSION TO THIS EFFECT IS CLEARLY INACCURATE. PTTA ACTUALLY ESTIMATED ITS OVERHEAD AT 81.7 PERCENT OF $279,903 OR A TOTAL OVERHEAD AMOUNT OF $228,681, WHEREAS KIRSCHNER'S ESTIMATE WAS 50.6 PERCENT OF $442,690 WHICH TOTALS $224,001. THE ACTUAL DIRECT COST ESTIMATES FOR KIRSCHNER AND PTTA WERE $919,080 AND $1,283,482 RESPECTIVELY - A VERY SUBSTANTIAL DIFFERENCE ACCOUNTING FOR VIRTUALLY THE ENTIRE VARIANCE BETWEEN THE TWO COST PROPOSALS.

OUR OFFICE HAS STATED THAT "*** THE AWARD OF COST-REIMBURSEMENT CONTRACTS REQUIRES PROCUREMENT PERSONNEL TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING THE PROSPECTIVE COSTS AND TECHNICAL APPROACH INVOLVED. B-152039, JANUARY 20, 1964." 50 COMP. GEN. 390, 410 (1970). OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT "*** SUCH JUDGMENT MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCIES INVOLVED SINCE THEY ARE IN THE BEST POSITION TO ASSESS 'REALISM' OF COSTS AND TECHNICAL APPROACHES AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS." 50 COMP. GEN. SUPRA. ALSO SEE B-174302, MAY 24, 1972.

FPR 1-3.805-2, AS QUOTED ABOVE, CLEARLY STATES THAT TOO MUCH EMPHASIS ON ESTIMATED COSTS IN SUCH PROCUREMENTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES. IT CONTINUES TO POINT OUT THAT A COST ESTIMATE IS AN IMPORTANT FACTOR TO BE USED IN DETERMINING THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF AND ABILITY TO PERFORM THE CONTRACT. THEREFORE, THERE IS ABSOLUTELY NO BASIS UPON WHICH WE COULD DETERMINE THAT MERELY BECAUSE KIRSCHNER'S COST PROPOSAL RECEIVED A VERY LOW RATING, THE ENTIRE EVALUATION PROCESS OR ANY ASPECT OF IT WAS CONDUCTED, AS COUNSEL MAINTAINS, IN AN ARBITRARY AND IRRATIONAL MANNER.

THE FINAL CONTENTION IS THAT KIRSCHNER'S PROPOSAL WAS NOT SO TECHNICALLY INFERIOR AS TO PRECLUDE ANY POSSIBILITY OF MEANINGFUL NEGOTIATIONS AND, THEREFORE, THE DEPARTMENT OF LABOR HAD NO JUSTIFICATION FOR EXCLUDING KIRSCHNER FROM THE COMPETITIVE RANGE. WE ARE COMPELLED TO DISAGREE WITH THIS CONTENTION. IN 47 COMP. GEN. 252 (1967), WE RECOGNIZED THAT THE USE OF A POINT RATING SYSTEM IN EVALUATING PERTINENT FACTORS IS AN APPROPRIATE METHOD FOR DETERMINING WHICH PROPOSALS ARE WITHIN A COMPETITIVE RANGE. SEE ALSO B-174589, MARCH 28, 1972, AND B-176077(1), JANUARY 26, 1973. ALTHOUGH WE HAVE OBJECTED TO THE USE OF A PREDETERMINED SCORE FOR SELECTING OFFERS WITHIN A COMPETITIVE RANGE AS BEING CONTRARY TO THE FLEXIBILITY INHERENT IN NEGOTIATED PROCUREMENTS, 50 COMP. GEN. 59 (1970), WE HAVE STATED ON NUMEROUS OCCASIONS THAT THE COMPETITIVE RANGE MUST BE DETERMINED ON THE BASIS OF THE ACTUAL RANGE OF SCORES ACHIEVED. SEE B 171857(2), MAY 24, 1971, AND B-170890, OCTOBER 5, 1971.

IN THE PRESENT INSTANCE THE DEPARTMENT OF LABOR DID NOT ESTABLISH A PREDETERMINED MINIMUM SCORE FOR ACCEPTABILITY, BUT FOLLOWED THE PROCEDURE REQUIRED BY OUR OFFICE IN THE ABOVE-MENTIONED DECISIONS. THE LABOR DEPARTMENT REPORT STATES THAT "THE PANEL DETERMINED THAT THERE WAS A REAL DIFFERENCE BETWEEN THOSE PROPOSALS WHICH HAD ACCUMULATED 13,000 OR MORE OVERALL POINTS AND THOSE WHICH HAD NOT AND CALLED FOR ORAL PRESENTATIONS BY THOSE WHICH HAD SCORED OVER 13,000 POINTS."

THE THREE DECISIONS OF OUR OFFICE COUNSEL CITED IN THIS REGARD - 47 COMP. GEN. 252 (1967), 45 COMP. GEN. 417, 427 (1966), AND 46 COMP. GEN. 191 (1966) - ARE ALL DISTINGUISHABLE FROM THE SITUATION SURROUNDING THE PRESENT PROCUREMENT. IN EACH OF THOSE INSTANCES NEGOTIATIONS WERE ONLY CONDUCTED WITH A SINGLE OFFEROR AND THIS FACT WAS THE PRIMARY BASIS FOR OUR CRITICISM OF THE PROCEDURE FOLLOWED IN THOSE PROCUREMENTS. WHEN THERE IS ADEQUATE COMPETITION WITH RESPECT TO BOTH PRICE AND TECHNICAL CONSIDERATION, AS WAS THE CASE HERE, IT IS NOT NECESSARY TO REQUIRE THAT THE COMPETITIVE RANGE BE ENLARGED TO INCLUDE THOSE PROPOSALS DEEMED UNACCEPTABLE IN COMPARISON WITH THE OTHER SUPERIOR PROPOSALS. SEE 49 COMP. GEN. 309 (1969). WE HAVE CONSISTENTLY RECOGNIZED THAT A REASONABLE DEGREE OF ADMINISTRATIVE DISCRETION IS PERMISSIBLE DURING DETERMINATION OF THE RELATIVE DESIRABILITY AND TECHNICAL ADEQUACY OF THE PROPOSALS RECEIVED AND SUCH DETERMINATION WILL NOT BE DISTURBED IN THE ABSENCE OF A CLEAR SHOWING THAT THERE HAS BEEN AN ARBITRARY ABUSE OF DISCRETION. SEE 48 COMP. GEN. 314, 317-318 (1968) AND 52 COMP. GEN. 718, 724 (1973). ON THE BASIS OF THE RECORD BEFORE US WE CANNOT CONCLUDE THAT THERE HAS BEEN AN ABUSE OF SUCH DISCRETION.

FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.