B-178907, FEB 27, 1974, 53 COMP GEN 632

B-178907: Feb 27, 1974

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"COST OF OWNERSHIP" THE DELETION OF A "LIFE CYCLE" COSTING EVALUATION FACTOR AND THE ADDITION OF A "COST OF OWNERSHIP TO THE GOVERNMENT" FACTOR IN A REINSTATED SOLICITATION AFTER THE SUBMISSION OF OSCILLOSCOPES FOR QUALIFICATION UNDER STEP ONE OF A TWO-STEP NEGOTIATED PROCUREMENT WITHOUT GIVING OFFERORS AN OPPORTUNITY TO MODIFY THEIR STEP ONE PROPOSALS IN LIGHT OF THE NEW INTRODUCED FACTORS INTO THE PROCUREMENT IS SUSTAINED SINCE THERE IS NO EVIDENCE OF REAL PREJUDICE TO THE POSITION OF THE PROTESTER. IT WAS NOT IMPROPER TO ADD THE SAME GOVERNMENT COST OF OWNERSHIP RATE TO THE PRICE OFFERED ON EACH MANUFACTURER'S EQUIPMENT. SINCE DATA WAS NOT AVAILABLE FROM WHICH INDIVIDUAL OWNERSHIP RATES COULD BE FIXED AND RATE USED WAS BASED ON THE AVERAGE COST TO THE GOVERNMENT FOR INTRODUCING SIMILAR EQUIPMENT INTO GOVERNMENT INVENTORY.

B-178907, FEB 27, 1974, 53 COMP GEN 632

BIDS - TWO-STEP PROCUREMENT - EVALUATION - COSTS - "LIFE CYCLE" V. "COST OF OWNERSHIP" THE DELETION OF A "LIFE CYCLE" COSTING EVALUATION FACTOR AND THE ADDITION OF A "COST OF OWNERSHIP TO THE GOVERNMENT" FACTOR IN A REINSTATED SOLICITATION AFTER THE SUBMISSION OF OSCILLOSCOPES FOR QUALIFICATION UNDER STEP ONE OF A TWO-STEP NEGOTIATED PROCUREMENT WITHOUT GIVING OFFERORS AN OPPORTUNITY TO MODIFY THEIR STEP ONE PROPOSALS IN LIGHT OF THE NEW INTRODUCED FACTORS INTO THE PROCUREMENT IS SUSTAINED SINCE THERE IS NO EVIDENCE OF REAL PREJUDICE TO THE POSITION OF THE PROTESTER. CONTRACTS - SPECIFICATIONS - EVALUATION FACTORS - "LIFE CYCLE" V. "COST OF OWNERSHIP" IN DECIDING WHETHER OSCILLOSCOPES SHOULD BE PURCHASED UNDER AN OPEN END CONTRACT OR A NEW SOLICITATION, IT WAS NOT IMPROPER TO ADD THE SAME GOVERNMENT COST OF OWNERSHIP RATE TO THE PRICE OFFERED ON EACH MANUFACTURER'S EQUIPMENT, SINCE DATA WAS NOT AVAILABLE FROM WHICH INDIVIDUAL OWNERSHIP RATES COULD BE FIXED AND RATE USED WAS BASED ON THE AVERAGE COST TO THE GOVERNMENT FOR INTRODUCING SIMILAR EQUIPMENT INTO GOVERNMENT INVENTORY. CONTRACTS - SPECIFICATIONS - MINIMUM NEEDS REQUIREMENT - BASIS FOR DETERMINATION THE CONTENTION THAT, IN DECIDING WHETHER TO PURCHASE CLASS III 15 MHZ OSCILLOSCOPES BY SOLICITATION OR UNDER OPEN-END CONTRACT, PROTESTER'S CLASS III 50 MHZ OSCILLOSCOPE UNDER OPEN-END CONTRACT SHOULD HAVE BEEN USED AS THE BASIS OF COST COMPARISON INSTEAD OF COMPETITOR'S OPEN-END CONTRACT CLASS II 15 MHZ EQUIPMENT IS WITHOUT MERIT, SINCE THE DETERMINATION OF THE GOVERNMENT'S NEEDS IS VESTED IN THE PROCURING ACTIVITY WHICH DECIDED ON THE 15 MHZ EQUIPMENT. CONTRACTS - PROTESTS - TIMELINESS - SOLICITATION IMPROPRIETIES THE ALLEGATION AFTER AWARD THAT THE REQUEST FOR PROPOSALS (RFP) ESTABLISHED AN "AUCTION TECHNIQUE" THAT IS PROHIBITED BY PARAGRAPH 3 805.1(B) OF THE ARMED SERVICES PROCUREMENT REGULATION IS DISMISSED AS AN UNTIMELY PROTEST UNDER SECTION 20.2(A) OF THE INTERIM BID PROTEST PROCEDURES AND STANDARDS SINCE IMPROPRIETIES IN AN RFP ARE REQUIRED TO BE FILED PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS. CONTRACTS - PROTESTS - PROCEDURES - INTERIM BID PROTEST PROCEDURES AND STANDARDS COMPLIANCE REQUIREMENT THE FAILURE OF THE PROCURING AGENCY TO COMPLY WITH SECTION 20.4 OF THE INTERIM BID PROTEST PROCEDURES AND STANDARDS DID NOT CONSTITUTE A VIOLATION OF PARAGRAPH 1-403 OF THE ARMED SERVICES PROCUREMENT REGULATION RESPECIFYING FACTORS WHICH WILL NOT PERMIT A DELAY IN MAKING AN AWARD UNTIL THE ISSUANCE OF A COMPTROLLER GENERAL DECISION, AND THE FAILURE IS NOT SIGNIFICANT SINCE 20.4 IS NOT BINDING ON CONTRACTING AGENCIES.

IN THE MATTER OF TEKTRONIX, INC., FEBRUARY 27, 1974:

REQUEST FOR PROPOSALS (RFP) NO. F41608-73-B-H602 WAS ISSUED BY THE DEPARTMENT OF THE AIR FORCE, KELLY AIR FORCE BASE, SAN ANTONIO, TEXAS, ON NOVEMBER 24, 1971, AS THE FIRST STEP OF A TWO-STEP NEGOTIATED PROCUREMENT FOR CLASS III 15 MHZ OSCILLOSCOPES. THE FIRST STEP REQUIRED SUBMISSION OF A BID SAMPLE TO BE EVALUATED AND TESTED FOR MINIMUM SPECIFICATION REQUIREMENTS. THE PROVISIONS OF THE RFP INCLUDED A COMBINED MULTI-YEAR 50 -PERCENT LABOR SURPLUS AREA SET-ASIDE AND A LIFE CYCLE COSTING METHOD OF PROCUREMENT.

THE SECOND STEP OF THE SOLICITATION WAS ISSUED ON APRIL 12, 1973, TO BALLANTINE LABORATORIES, INC. (BALLANTINE), HEWLETT-PACKARD COMPANY (HEWLETT-PACKARD) AND TEKTRONIX, INC. (TEKTRONIX), THE THREE FIRMS WHOSE OSCILLOSCOPES WERE QUALIFIED IN THE FIRST STEP. ON MAY 8, 1973, THE CONTRACTING OFFICER CANCELED THE SOLICITATION WITH THE FOLLOWING EXPLANATION: "THERE IS NO LONGER A REQUIREMENT FOR THE SUPPLIES COVERED BY THIS SOLICITATION."

IT IS REPORTED THAT THE AIR FORCE INTENDED TO FULFILL ITS OPERATIONAL NEEDS BY PLACING ORDERS UNDER AN EXISTING OPEN-END CONTRACT WITH HEWLETT- PACKARD FOR CLASS II 15 MHZ OSCILLOSCOPES. AT THAT TIME, THE AIR FORCE BELIEVED THAT THE PURCHASE OF CLASS II 15 MHZ OSCILLOSCOPES WOULD BE LESS COSTLY FOR THE GOVERNMENT, SINCE THE BASIC ITEM PROCURED WOULD BE STANDARDIZED AND MAINTENANCE COSTS WOULD BE LESSENED THEREBY. UPON FURTHER REFLECTION, THE AIR FORCE RECOGNIZED THAT IT DID NOT HAVE RECENT AND RELIABLE DATA CONCERNING THE PRICE OF CLASS III OSCILLOSCOPES.

ACCORDINGLY, ON JUNE 6, 1973, THE AIR FORCE REINSTATED THE SUBJECT SOLICITATION IN ORDER TO OBTAIN A BASIC PRICE UPON WHICH AN EVALUATION COULD BE PERFORMED. WHEN THE SOLICITATION WAS REINSTATED, TWO BASIC CHANGES WERE MADE IN THE SECOND STEP.

THE PROVISIONS OF THE ORIGINAL SOLICITATION, AS AMENDED, PERTAINING TO "EVALUATION FOR AWARD ON ONE-YEAR OR MULTI-YEAR BASIS" AND "FIFTY PERCENT (50%) LABOR SURPLUS/TOTAL LIFE CYCLE TARGET COST" WERE DELETED AND A NEW CLAUSE "EVALUATION OF OFFERS/COST OF OWNERSHIP TO THE GOVERNMENT" WAS ADDED. THIS ADDED PROVISION WAS SUBSEQUENTLY AMENDED ON JUNE 13, 1973, TO PROVIDE AS FOLLOWS:

THE GOVERNMENT RESERVES THE RIGHT TO EITHER AWARD UNDER THIS REQUEST FOR PROPOSAL OR ABANDON THE RFP AND PURCHASE THEIR REQUIREMENTS FOR OSCILLOSCOPES, 15 MHZ, UNDER CONTRACT F41608-71-D-7322. THIS DETERMINATION WILL BE MADE BASED ON THE COST OF OWNERSHIP TO THE GOVERNMENT. THE COST OF OWNERSHIP OF THE CLASS 3 OSCILLOSCOPES BEING SOLICITED UNDER THIS REQUEST FOR PROPOSAL WILL BE DETERMINED BY TAKING THE TOTAL PRICE OFFERED FOR ITEM 0001 LESS ANY PROMPT PAYMENT DISCOUNT APPLICABLE (SEE PARAGRAPH C-9) AND ADDING TO THAT PRICE THE FOLLOWING:

(1) $128,186.00 (599X$214.00) WHICH REPRESENTS THE ADDITIONAL COSTS ASSOCIATED WITH THE COST OF INTRODUCING NEW ITEMS INTO GOVERNMENT INVENTORIES INCLUDING TEN-YEAR MANAGEMENT COSTS;

(2) COST OF ITEM 0002 SPARE PARTS;

(3) COST OF DATA UNDER ITEM 0003, LESS ANY PROMPT PAYMENT DISCOUNT APPLICABLE (SEE PARAGRAPH C-9);

(4) TRANSPORTATION COSTS.

THE TOTAL EVALUATED COST OF OWNERSHIP OF THE CLASS 3 OSCILLOSCOPES WILL BE COMPARED WITH THE TOTAL COST OF CLASS 2 OSCILLOSCOPES PURCHASED UNDER CONTRACT F41608-71-D-7322. THIS TOTAL COST OF OWNERSHIP OF THE CLASS 2 OSCILLOSCOPE IS $741,484.13, INCLUDING TRANSPORTATION ($1,237.87X599 EA).

IF THE COST OF CLASS 3 OSCILLOSCOPES AS PROVIDED HEREIN EXCEEDS THE TOTAL COST FOR CLASS 2 OSCILLOSCOPES, AS SHOWN ABOVE, NO AWARD WILL BE MADE UNDER THIS RFP ***.

IT IS REPORTED THAT THE LIFE CYCLE COST PROVISIONS WERE DELETED BECAUSE TIME DID NOT PERMIT THE ACCUMULATION OF THE DATA NECESSARY FOR A MEANINGFUL COMPUTATION, SINCE A LIFE CYCLE COST EVALUATION WOULD TAKE MONTHS, AND THE FUNDS FOR THE OSCILLOSCOPES WERE DUE TO EXPIRE AT THE END OF JUNE 1973. THE COST OF OWNERSHIP FACTOR WAS APPLIED SOLELY TO AID THE AIR FORCE IN DETERMINING WHETHER IT WAS COST EFFECTIVE TO PURCHASE CLASS III, RATHER THAN CLASS II OSCILLOSCOPES.

OFFERS WERE RECEIVED FROM THE THREE SOURCES BY THE CLOSING DATE OF JUNE 18, 1973, WITH FINAL AND BEST PRICES FURNISHED BY JUNE 21, 1973. THE FINAL AND BEST OFFERS WERE EVALUATED AS FOLLOWS FOR THE PROCUREMENT:

BALLANTINE LABORATORIES, INC $578,588.15

TEKTRONIX, INC 606,348.60

HEWLETT-PACKARD CO 749,926.69

AFTER APPLYING THE COST FACTORS IN THE "EVALUATION OF OFFERS/COST OF OWNERSHIP TO THE GOVERNMENT" CLAUSE TO ASCERTAIN WHETHER THE COST OF THE CLASS III OSCILLOSCOPES WOULD BE LESS THAN THE $741,484.13 TOTAL COST OF OWNERSHIP ESTIMATED FOR CLASS II, THE EVALUATED OFFERS WERE AS FOLLOWS:

BALLANTINE LAB. INC $706,774.15

TEKTRONIX, INC 734,534.60

HEWLETT-PACKARD CO 878,112.69

PRIOR TO THE CLOSING DATE OF THE SUBJECT SOLICITATION, BY LETTER DATED JUNE 15, 1973, COUNSEL ENTERED A PROTEST AGAINST THE PROCUREMENT ON BEHALF OF TEKTRONIX. BY MEMORANDUM DATED JUNE 23, 1973, THE CONTRACTING OFFICER RECOMMENDED THAT AWARD BE MADE NOTWITHSTANDING THE PROTEST. THE RECOMMENDATION WAS APPROVED BY HIGHER AUTHORITY AND AWARD WAS MADE TO BALLANTINE, THE LOW OFFEROR ON JUNE 27, 1973.

BY LETTER DATED JULY 20, 1973, AND PRIOR CORRESPONDENCE, COUNSEL FOR TEKTRONIX PROTESTED THE AWARD OF A CONTRACT TO BALLANTINE TO THIS OFFICE. FOR THE REASONS SET FORTH BELOW, THE TEKTRONIX PROTEST IS DENIED. THE PROTEST IS BASED ON THE FOLLOWING CONTENTIONS: (1) THE AGENCY HAS IMPROPERLY CHANGED THE BASIS FOR EVALUATION FROM LIFE CYCLE COSTING TO COST OF OWNERSHIP TO THE GOVERNMENT; (2) THE USE OF AN AIR FORCE DETERMINED FLAT RATE SUM DOES NOT REFLECT THE VARIANCE OF THE ACTUAL OWNERSHIP COSTS; (3) THE PROCUREMENT RESTRICTS COMPETITION; (4) THE SOLICITATION, AS REINSTATED, IS CONTRARY TO THE REGULATIONS PROHIBITING THE USE OF "AUCTION TECHNIQUE" AND; (5) THE AGENCY FAILED TO COMPLY WITH SECTION 20.4 OF THE INTERIM BID PROTEST PROCEDURES AND STANDARDS.

THE TEKTRONIX PRIMARY CONTENTION IS THAT THE SOLICITATION, AS REINSTATED, IS PREJUDICIAL TO IT. TEKTRONIX CONTENDS THAT ITS BID SAMPLE, WHICH WAS SUBMITTED UNDER STEP 1, HAD BEEN SPECIALLY MODIFIED FOR EVALUATION ON A LIFE CYCLE COSTING BASIS. SINCE THE SECOND STEP PERMITS OFFERS ONLY ON OSCILLOSCOPES QUALIFIED UNDER STEP 1, TEKTRONIX HAD TO PROPOSE ON A SAMPLE APPROVED UNDER DIFFERENT EVALUATION CRITERIA. IT CONTENDS THAT RATHER THAN PROPOSING A HIGH ACQUISITION, LOW OPERATION COST ITEM, IT WOULD HAVE PROPOSED A LOW ACQUISITION, HIGH OPERATION COST OSCILLOSCOPE HAD IT KNOWN THAT THE EVALUATION FACTOR OF COST OF OWNERSHIP TO THE GOVERNMENT WOULD BE UTILIZED RATHER THAN LIFE CYCLE COSTING.

IN NEGOTIATION AS IN FORMAL ADVERTISING, EFFECTIVE COMPETITION PROMOTING BOTH THE RIGHT OF OFFERORS TO AN EQUAL OPPORTUNITY TO COMPETE AND THE GOVERNMENT'S INTEREST IN OBTAINING SUPPLIES AND SERVICES AT FAIR PRICES, REQUIRES THAT ALL PROSPECTIVE CONTRACTORS HAVE THE OPPORTUNITY TO PREPARE THEIR OFFERS ON THE BASIS OF THE EVALUATION FACTORS TO BE USED IN MAKING THE AWARD. WE THINK THERE IS MERIT, AT LEAST THEORETICALLY, IN THE POSITION PUT FORTH ON BEHALF OF TEKTRONIX THAT, BASED ON THE INITIAL GROUND RULES, ITS TECHNICAL PROPOSAL WAS AIMED AT ACHIEVING A LOW LIFE CYCLE COST AT POSSIBLE EXPENSE TO THE INITIAL PURCHASE PRICE AND, THEREFORE, THAT IT WAS PREJUDICED BY THE ELIMINATION OF THE LIFE CYCLE EVALUATION FACTOR WITHOUT THE OPPORTUNITY TO MODIFY ITS TECHNICAL PROPOSAL. FURTHER, WE DO NOT BELIEVE THAT THE DEFICIENCY IN THE PROCESS MAY BE EXCUSED SIMPLY ON THE BASIS THAT ALL OFFERORS STOOD ON THE SAME FOOTING. FOLLOWING THAT KIND OF LOGIC COULD RESULT IN FAVORING THE OFFER SUBMITTED CASUALLY TO THE DETRIMENT OF THE OFFER CAREFULLY PREPARED IN RESPONSE TO THE ANNOUNCED EVALUATION FACTORS. HOWEVER, AN AWARD SHOULD NOT BE PUT ASIDE BECAUSE OF A THEORETICAL ADVERSE IMPACT ON COMPETITION. THE AIR FORCE CONCLUDES THAT NONE OF THE TECHNICAL PROPOSALS WOULD HAVE BEEN MATERIALLY DIFFERENT EVEN IF OFFERORS COULD HAVE MADE CHANGES IN THEIR TECHNICAL PROPOSALS FOLLOWING ELIMINATION OF THE LIFE CYCLE COST EVALUATION PROVISION AND NOTES IN THIS CONNECTION THAT TEKTRONIX HAS OFFERED NO TANGIBLE PROOF OF ANY MATERIAL CHANGE IT WOULD HAVE PROPOSED HAD THE OPPORTUNITY BEEN MADE AVAILABLE. IN RESPONSE TO THE AIR FORCE POSITION, IT IS ASSERTED THAT TEKTRONIX "MIGHT WELL HAVE GIVEN VERY CAREFUL CONSIDERATION" TO THE SUBMISSION FOR QUALIFICATION OF ONE OF ITS LOWER PRICED MODELS. THERE IS NO INDICATION, HOWEVER, THAT THE LOWER PRICED MODEL COULD HAVE MET THE TECHNICAL SOLICITATION REQUIREMENTS.

IN ADDITION, TEKTRONIX MAINTAINS THAT THE USE OF THE AIR FORCE DETERMINED FLAT RATE SUM APPLIED IN THE COST OF OWNERSHIP TO THE GOVERNMENT TO ALL PROPOSALS DOES NOT REFLECT THE FACT THAT OWNERSHIP COSTS TO THE AIR FORCE WILL VARY SUBSTANTIALLY AMONG THE STEP 1 QUALIFIED INSTRUMENTS. SECTION D -5, WHICH WAS ADDED TO THE SOLICITATION ON JUNE 6, AND SUBSEQUENTLY AMENDED ON JUNE 13, PROVIDED THE CRITERIA THAT THE AIR FORCE WOULD USE IN DETERMINING COST OF OWNERSHIP OF CLASS III OSCILLOSCOPES AS FOLLOWS:

*** FIGURES REPRESENTING THE COST OF OWNERSHIP OF THESE CLASS 3 OSCILLOSCOPES AND COMPARATIVE ACQUISITION COST OF CLASS 2 OSCILLOSCOPES ARE BEING DEVELOPED BY THE GOVERNMENT AND WILL BE PROVIDED TO THE OFFERORS ON OR BEFORE 73 JUNE 13. THE AFORESAID, WILL INCLUDE, (1) THE COSTS ASSOCIATED WITH THE INTRODUCTION OF NEW ITEMS INTO GOVERNMENT INVENTORIES, (2) TEN YEAR MANAGEMENT COSTS***

THE JUNE 13 AMENDMENT OF THIS SECTION STATED THAT $214 PER OSCILLOSCOPE "*** REPRESENTS THE ADDITIONAL COSTS ASSOCIATED WITH THE COST OF INTRODUCING NEW ITEMS INTO GOVERNMENT INVENTORIES INCLUDING TEN YEAR MANAGEMENT COSTS." THE AIR FORCE HAS INDICATED THAT DATA WAS NOT AVAILABLE FROM WHICH IT COULD FIX AN OWNERSHIP COST FOR EACH OF THE OSCILLOSCOPES QUALIFIED IN THE FIRST STEP. THE $214 IS THE AVERAGE COST TO THE GOVERNMENT BASED ON A LIFE CYCLE METHOD OF EVALUATION OF THREE CLASS III 15 MHZ OSCILLOSCOPES PRESENTLY IN THE AIR FORCE INVENTORY: MONSANTO (STANDARD) 6270A, TEKTRONIX 422 AND HEWLETT PACKARD 1700A. THE AIR FORCE BELIEVES THAT THE $214 IS A REASONABLE ESTIMATE OF THE COST TO THE GOVERNMENT OF INTRODUCING ANY ONE OF THE OSCILLOSCOPES QUALIFIED IN THE FIRST STEP INTO GOVERNMENT INVENTORY, AND WE FIND NO LEGAL BASIS TO OBJECT IN THE CIRCUMSTANCES.

IN ADDITION, IT MUST BE NOTED THAT THE USE OF THE $214 EVALUATION FACTOR WAS SOLELY FOR THE PURPOSE OF DETERMINING WHETHER THE CLASS III OSCILLOSCOPES WOULD BE PURCHASED UNDER THE PRESENT SOLICITATION. SINCE THE COST OF EACH OF THE THREE CLASS III OSCILLOSCOPES OFFERED, WHICH INCLUDED THE $214 FIGURE AND OTHER EVALUATION FACTORS, DID NOT EXCEED THE COST OF THE CLASS II OSCILLOSCOPE, A DETERMINATION WAS MADE TO MAKE AN AWARD UNDER THE PRESENT SOLICITATION. THIS AWARD WAS MADE ON THE BASIS OF THE OFFERED PRICES. THE FLAT RATE EVALUATION FACTOR DID NOT ENTER INTO DETERMINING THE SUCCESSFUL OFFEROR UNDER THE SOLICITATION. BALLANTINE RECEIVED THE AWARD BECAUSE IT WAS THE LOW OFFEROR.

TEKTRONIX CONTENDS THAT THE FAILURE OF THE AIR FORCE TO CONSIDER THE TEKTRONIX CLASS III 50 MHZ OSCILLOSCOPE AVAILABLE TO THE AIR FORCE UNDER AN EXISTING OPEN-END CONTRACT WITH A COST OF OWNERSHIP OF $1,087, IN LIEU OF THE CLASS II 15 MHZ HEWLETT-PACKARD OSCILLOSCOPE WITH A COST OF OWNERSHIP OF $1,239, AS THE OSCILLOSCOPE WITH WHICH THE ITEMS OFFERED UNDER THE PRESENT SOLICITATION SHOULD BE COMPARED IS AN UNDUE RESTRICTION ON COMPETITION.

ON MAY 18, 1973, TEKTRONIX FORMALLY REQUESTED THE SAN ANTONIO AIR MATERIAL AREA (SAAMA) TO CONSIDER THE TEKTRONIX INSTRUMENT AS COMPARABLE TO THE HEWLETT-PACKARD INSTRUMENT WHICH AT THAT TIME WAS APPARENTLY BEING CONSIDERED BY SAAMA IN PLACE OF THE REQUIREMENT DESCRIBED IN SOLICITATION F41608-73-R-H602. SUBSEQUENT TO REINSTATEMENT OF THE SUBJECT SOLICITATION, THE DEPUTY CHIEF, COMMODITIES PROCUREMENT DIVISION, DIRECTORATE, PROCUREMENT AND PRODUCTION, BY LETTER DATED JUNE 11, 1973, ADDRESSED TO THE AIR FORCE ACCOUNT MANAGER, TEKTRONIX, ADVISED THAT THE EVALUATION CONTEMPLATED BY THE RFP WAS LIMITED TO A COMPARISON OF COST BETWEEN CLASS II AND CLASS III 15 MHZ OSCILLOSCOPES, NOT A COMPARISON OF CLASS II 15 MHZ WITH CLASS III 50 MHZ. THE DEPUTY CHIEF STATED THAT THE AIR FORCE NEED IS FOR CLASS III 15 MHZ, NOT CLASS III 50 MHZ OSCILLOSCOPES AND, FURTHER, THAT THE AIR FORCE WAS REVIEWING THEIR REQUIREMENTS TO DETERMINE WHETHER OR NOT IT WOULD BE IN THE GOVERNMENT'S INTEREST TO STANDARDIZE ON ONE OSCILLOSCOPE TO COVER THE ENTIRE RANGE FROM 0 TO 50. THIS REVIEW WILL INCLUDE AN ANALYSIS OF NOT ONLY THE MHZ RANGE BUT ALSO THE USE OF CLASS II IN COMPARISON WITH CLASS III. THE DEPUTY CHIEF CONCLUDED BY EXPLAINING THAT ALTHOUGH THE REVIEW WAS IN PROCESS, A FINAL DETERMINATION WITH ANY CHANGE IN INVENTORY PROCEDURE WOULD NOT BE FORTHCOMING UNTIL THE NEXT BUY/BUDGET COMPUTATION. THE DETERMINATION OF THE GOVERNMENT'S NEEDS AND THE DRAFTING OF SPECIFICATIONS TO MEET THOSE NEEDS ARE RESPONSIBILITIES VESTED IN THE PROCUREMENT ACTIVITY AND NOT OUR OFFICE. CONSEQUENTLY, WE WILL NOT QUESTION THE ACTIONS OF THE PROCUREMENT ACTIVITY IN THESE AREAS UNLESS IT IS CLEARLY SHOWN THAT THE ADMINISTRATIVE DISCRETION WAS ABUSED. SEE B-175153, APRIL 20, 1972. NO SUCH SHOWING HAS BEEN PRESENTED HERE AND, THUS, WE CANNOT CONCLUDE THAT THE SPECIFICATIONS COMPLAINED OF DO NOT REPRESENT THE LEGITIMATE NEEDS OF THE GOVERNMENT.

IN ADDITION, IN ITS LETTER OF JULY 20, TEKTRONIX CONTENDS THAT THE IDENTIFICATION AND USE OF THE FLAT RATE COST OF OWNERSHIP FACTOR IN THE REINSTATED SOLICITATION SOLEY FOR DETERMINING WHETHER IT WAS COST EFFECTIVE TO PURCHASE ANY CLASS III RATHER THAN CLASS II OSCILLOSCOPES CONSTITUTED AN "AUCTION TECHNIQUE" PROHIBITED BY PARAGRAPH 3-805.1 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) (AMENDED AND RENUMBERED 3 -805.3(C) BY DEFENSE PROCUREMENT CIRCULAR #110, MAY 30, 1973), BECAUSE ITS USE CLEARLY DIRECTS THE OFFERORS TO BEAT THE CLASS II PRICE OF $1,239 IF THEY WISHED TO BE CONSIDERED.

OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS REQUIRE PROTESTS ALLEGING IMPROPRIETIES IN SOLICITATIONS WHICH ARE APPARENT PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS TO BE FILED PRIOR TO THE CLOSING DATE. 4 CFR 20.2(A). ALTHOUGH TEKTRONIX INITIALLY PROTESTED ON JUNE 15, WHICH WAS PRIOR TO THE CLOSING DATE, THIS CONTENTION WAS NOT RAISED UNTIL JULY 20, WHICH WAS MORE THAN A MONTH AFTER THE CLOSING DATE. ACCORDINGLY, WE REGARD THIS ISSUE AS UNTIMELY RAISED.

LASTLY, TEKTRONIX MAINTAINS THAT THE AIR FORCE FAILED TO COMPLY WITH SECTION 20.4 OF THE INTERIM BID PROTEST PROCEDURES AND STANDARDS AND THAT SUCH FAILURE TO COMPLY CONSTITUTES A PATENT VIOLATION OF PARAGRAPH 1-403 OF ASPR. SINCE GAO HAS NO AUTHORITY TO REGULATE THE WITHHOLDING OF AWARD, THE PROVISIONS OF 20.4 ARE NOT BINDING ON THE CONTRACTING AGENCY. HOWEVER, ASPR 2-407.8(B)(2) DOES REQUIRE THAT NOTICE BE GIVEN TO THE COMPTROLLER GENERAL OF INTENT TO MAKE AN AWARD PRIOR TO THE FINAL DISPOSITION OF A PROTEST BY THIS OFFICE. IN THAT REGARD, ON JUNE 27, 1973, THE PROCUREMENT AGENCY ADVISED OUR OFFICE ORALLY THAT AWARD WOULD BE MADE BY JUNE 29, 1973. CONSEQUENTLY, THE AIR FORCE COMPLIED WITH THE PROVISIONS OF THE ABOVE-CITED REGULATION. WHEN COUNSEL SUBSEQUENTLY INQUIRED AS TO THE DATE ON WHICH THE AWARD WAS MADE, WE WERE UNABLE TO INFORM HIM. AN INQUIRY WAS MADE CONCERNING THE MATTER AND COUNSEL WAS FURNISHED THE INFORMATION THAT WAS RECEIVED ON JULY 2, 1973.