B-179582, B-179328, NOV 14, 1974, 54 COMP GEN 375

B-179328,B-179582: Nov 14, 1974

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WHICH WERE UNEQUALLY APPLIED TO FAVOR INCUMBENT RESULTS IN APPEARANCE OF PARTIALITY WHICH CALLS FOR RECOMMENDATION THAT CONTRACT BE TERMINATED. EVALUATION OF COMPETITIVE PROPOSALS SHOULD NOT HAVE INVOLVED CONSIDERATION OF INCUMBENT'S EAST COAST CAPABILITIES IN SELECTING AWARDEE FOR WEST COAST CONTRACT AND SHOULD HAVE RECOGNIZED HISTORICAL COST IMPORTANCE OF SHIP HUSBANDING IN EVALUATION SCHEME. 1974: PROTESTS HAVE BEEN SUBMITTED BY WILLAMETTE-WESTERN CORPORATION (WILLAMETTE-WESTERN) AND PACIFIC TOWBOAT & SALVAGE CO. THE STATUTORY AUTHORITY FOR THIS TYPE OF CONTRACT IS CODIFIED AT 10 U.S.C. 7361 ET SEQ. THE PROTESTS WERE UNTIMELY FILED UNDER OUR BID PROTEST PROCEDURES. WE HAVE DETERMINED THAT THE PROTESTS SHOULD BE CONSIDERED SINCE THEY INVOLVE ISSUES WHICH GO TO THE HEART OF THE COMPETITIVE PROCUREMENT PROCESS AND THEREFORE COME WITHIN THE EXCEPTIONS UNDER 4 C.F.R. 20.2(B) (1974).

B-179582, B-179328, NOV 14, 1974, 54 COMP GEN 375

CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - ADVANCE RELEASE - PREJUDICIAL RELEASE OF DRAFT REQUEST FOR PROPOSALS (RFP) FOR MARINE SALVAGE AND SHIP HUSBANDING CONTRACT TO INCUMBENT CONTRACTOR APPROXIMATELY 5 MONTHS BEFORE OTHER COMPETITORS RECEIVED OFFICIAL RFP, RESULTING IN INCUMBENT'S SOLE KNOWLEDGE OF APPROXIMATE WEIGHTS OF EVALUATION CRITERIA IN VIOLATION OF ARMED SERVICES PROCUREMENT REGULATION 1 1004(B) AND 3-501(A); AND CONSIDERATION OF CRITERIA NOT STATED IN RFP, WHICH WERE UNEQUALLY APPLIED TO FAVOR INCUMBENT RESULTS IN APPEARANCE OF PARTIALITY WHICH CALLS FOR RECOMMENDATION THAT CONTRACT BE TERMINATED. CONTRACTS - NEGOTIATION - COMPETITION - PROPRIETY - METHOD OF CONDUCTING NEGOTIATIONS CONTRARY TO CONCEPT IMPLICIT IN NEGOTIATED PROCUREMENTS AND STATUTORY REQUIREMENT (10 U.S.C. 7361(C)(2) (1970)) FOR MAXIMUM COMPETITION FOR AWARD OF SHIP SALVAGE CONTRACT, EVALUATION OF COMPETITIVE PROPOSALS SHOULD NOT HAVE INVOLVED CONSIDERATION OF INCUMBENT'S EAST COAST CAPABILITIES IN SELECTING AWARDEE FOR WEST COAST CONTRACT AND SHOULD HAVE RECOGNIZED HISTORICAL COST IMPORTANCE OF SHIP HUSBANDING IN EVALUATION SCHEME. CONTRACTS - PROTESTS - AWARD PREJUDICIAL ALTHOUGH UNTIMELY FILED UNDER ITS INTERIM BID PROTEST PROCEDURES AND STANDARDS, GENERAL ACCOUNTING OFFICE CONSIDERS PROTESTS WHICH RAISE SIGNIFICANT ISSUES CONCERNING PROCUREMENT AGENCY'S PARTIALITY TOWARD INCUMBENT TO PREJUDICE OF OTHER COMPETITORS FOR AWARD OF SHIP SALVAGE CONTRACT.

IN THE MATTER OF WILLAMETTE-WESTERN CORPORATION; PACIFIC TOWBOAT & SALVAGE COMPANY, NOVEMBER 14, 1974:

PROTESTS HAVE BEEN SUBMITTED BY WILLAMETTE-WESTERN CORPORATION (WILLAMETTE-WESTERN) AND PACIFIC TOWBOAT & SALVAGE CO. (PACTOW) CONTESTING THE PROCEDURES USED BY THE SUPERVISOR OF SALVAGE (SUPSAL), NAVAL SEA SYSTEMS COMMAND, IN AWARDING SHIP SALVAGE CONTRACT N00024-73 C-0273 TO THE MURPHY PACIFIC MARINE SALVAGE COMPANY (MURPHY PACIFIC). THE NAVAL SHIP SYSTEMS COMMAND (NAVSHIPS) HAS SINCE MERGED WITH THE NAVAL ORDNANCE SYSTEMS COMMAND TO FORM THE NAVAL SEA SYSTEMS COMMAND. THE STATUTORY AUTHORITY FOR THIS TYPE OF CONTRACT IS CODIFIED AT 10 U.S.C. 7361 ET SEQ., (1970), SALVAGE FACILITIES ACT (ACT).

AS COUNSEL FOR MURPHY PACIFIC CONTENDS, THE PROTESTS WERE UNTIMELY FILED UNDER OUR BID PROTEST PROCEDURES, 4. C.F.R., PART 20 (1974). HOWEVER, WE HAVE DETERMINED THAT THE PROTESTS SHOULD BE CONSIDERED SINCE THEY INVOLVE ISSUES WHICH GO TO THE HEART OF THE COMPETITIVE PROCUREMENT PROCESS AND THEREFORE COME WITHIN THE EXCEPTIONS UNDER 4 C.F.R. 20.2(B) (1974).

SUPSAL AWARDS TWO SHIP SALVAGE CONTRACTS - ONE FOR THE EAST COAST AND THE OTHER FOR THE WEST COAST OF THE UNITED STATES. EACH OF THE CONTRACTS, WHILE DESIGNED PRIMARILY TO AFFORD SHIP SALVAGE COVERAGE FOR EACH COAST BY THE RESPECTIVE CONTRACTOR, IS STRUCTURED TO COVER ANY LOCATION WORLD-WIDE, AS CONSIDERED NECESSARY BY SUPSAL. MURPHY PACIFIC HAS HELD ALL OF THE PREVIOUS CONTRACTS FOR SHIP SALVAGE ACTIVITIES.

REQUEST FOR PROPOSALS (RFP) N00024-73-R-0532(S), OFFICIALLY ISSUED ON OCTOBER 11, 1972, ENVISIONED BASICALLY TWO TYPES OF SERVICES PRIMARILY FOR THE WEST COAST: (1) SHIP SALVAGE (OFF-SHORE), OCEAN ENGINEERING AND MARINE SERVICES; AND (2) HUSBANDING, MANNING AND OPERATION OF A GOVERNMENT- FURNISHED SALVAGE VESSEL AND RELATED CRAFT (BARGE). THE "BASIS FOR AWARD" SECTION "D," PARAGRAPH (N) OF THE RFP STATED:

THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM AWARD SHALL BE MADE IS WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT. TECHNICAL CAPABILITY TO PERFORM THE WORK WILL BE GIVEN THE GREATEST WEIGHT. OFFEROR'S COST PROPOSAL IS NOT CONTROLLING. THE OFFEROR'S COST PROPOSAL IS IMPORTANT TO DETERMINE HIS UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT AND TO DETERMINE THE REASONABLENESS OF THE COST PROPOSAL.

THE PARAGRAPH IMMEDIATELY PRECEDING THE ABOVE GAVE THE EVALUATION CRITERIA IN DESCENDING ORDER OF IMPORTANCE:

A. CAPABILITY TO CONDUCT MARINE SALVAGE AND OCEAN ENGINEERING OPERATIONS OF THE TYPE DESCRIBED IN SECTION F.

THE FACTORS WHICH WILL BE CONSIDERED IN THE EVALUATION OF THIS CRITERIA ARE (A) THE EXPERTISE, EXPERIENCE, TRAINING AND NUMBERS OF LINE PERSONNEL AVAILABLE FOR PERFORMANCE OF SALVAGE AND OCEAN ENGINEERING OPERATIONS, (B) EQUIPMENT AND FACILITIES AVAILABLE FOR THE PERFORMANCE OF SUCH OPERATIONS, (C) MANAGEMENT, INCLUDING MANAGEMENT PERSONNEL AND BUSINESS ORGANIZATION.

B. CAPABILITY TO CONDUCT SHIP AND HUSBANDING OPERATIONS OF THE TYPE DESCRIBED IN SECTION F.

THE FACTORS WHICH WILL BE CONSIDERED IN THE EVALUATION OF THIS CRITERIA ARE (A) THE EXPERTISE, EXPERIENCE, TRAINING AND NUMBERS OF LINE PERSONNEL AVAILABLE FOR PERFORMANCE OF SHIP AND HUSBANDING OPERATIONS, (B) EQUIPMENT AND FACILITIES AVAILABLE FOR SUCH OPERATIONS AND (C) MANAGEMENT, INCLUDING MANAGEMENT PERSONNEL, AND MANAGEMENT AND BUSINESS ORGANIZATION.

C. ENGINEERING AND DEVELOPMENT CAPABILITIES.

D. LABOR RELATIONS.

E. SUBCONTRACTING PROCEDURES AND CAPABILITIES.

F. PROCEDURES FOR LIAISON AND COORDINATION WITH THE SUPERVISOR OF SALVAGE.

(II) WHILE SOME OF THE ABOVE CRITERIA WILL BE ASSIGNED MUCH LESS VALUE THAN OTHERS, OFFERORS ARE CAUTIONED THAT ALL ELEMENTS OF THE TECHNICAL DISSERTATION ARE CONSIDERED TO BE VITAL. CONSEQUENTLY ALL ELEMENTS OF THE PROPOSED ARE EXPECTED TO BE SUFFICIENTLY COMPREHENSIVE IN ORDER THAT A THOROUGH EVALUATION CAN BE MADE.

THE INFORMATION REQUIRED TO BE FURNISHED BY EACH COMPETITOR IN ITS PROPOSAL WAS LISTED IN SECTION D1, TECHNICAL DISSERTATION, WHICH CLOSELY PARALLELED THE EVALUATION CRITERIA, BUT PROVIDED MORE DETAIL.

THE CLOSING DATE FOR RECEIPT OF PROPOSALS WAS NOVEMBER 13, 1972. PROPOSALS WERE RECEIVED ONLY FROM MURPHY PACIFIC, WILLAMETTE-WESTERN AND PACTOW. A TECHNICAL REVIEW BOARD (BOARD) COMPOSED OF FOUR VOTING MEMBERS AND A CHAIRMAN WAS CONVENED ON NOVEMBER 14. ON NOVEMBER 15 AND 16, TWO OF THE MEMBERS VISITED THE WILLAMETTE-WESTERN AND PACTOW FACILITIES. BECAUSE ALL BOARD MEMBERS WERE THOROUGHLY FAMILIAR WITH MURPHY PACIFIC, THAT FIRM'S FACILITIES WERE NOT VISITED. PRESUMABLY, THIS FAMILIARITY WITH MURPHY PACIFIC'S CAPABILITIES RESULTED FROM CONTACT DURING THE PREVIOUS 5 1/2 YEARS THAT MURPHY PACIFIC PERFORMED THE PREDECESSOR CONTRACT.

ON NOVEMBER 21, THE BOARD MEMBERS RECOMMENDED TO THE BOARD CHAIRMAN THAT AWARD BE MADE TO MURPHY PACIFIC. THE CHAIRMAN PROMPTLY FORWARDED TO SUPSAL THE BOARD'S RECOMMENDATION THAT AWARD TO MURPHY PACIFIC WAS JUSTIFIED ON THE BASIS OF ITS TECHNICAL REVIEW OF THE PROPOSALS. DECEMBER 1, SUPSAL ENDORSED, AND FORWARDED TO THE COMMANDER, NAVSHIPS, THE RECOMMENDATION OF THE BOARD. SUPSAL CONCLUDED THAT, ON THE BASIS OF TECHNICAL COMPETENCE AND OPERATIONAL EXPERIENCE, MURPHY PACIFIC WAS FAR SUPERIOR TO OTHER OFFERORS IN ITS ABILITY TO PROVIDE THE GOVERNMENT, AND SPECIFICALLY SUPSAL, THE SERVICES REQUIRED.

ON JANUARY 19, 1973, THE COMMANDER, NAVSHIPS SUBMITTED TO THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS), VIA THE CHIEF OF NAVAL MATERIAL, A RECOMMENDATION THAT HE SIGN THE PROPOSED DETERMINATION ATTACHED TO THE LETTER. THE DETERMINATION CITED A LACK OF AVAILABLE COMMERCIAL FACILITIES AND AUTHORIZED THE COMMANDER, NAVSHIPS TO ENTER INTO THE PROPOSED CONTRACT WITH MURPHY PACIFIC. AUTHORITY WAS ALSO DELEGATED TO THE COMMANDER, NAVSHIPS, TO MAKE THE NECESSARY DETERMINATIONS AND FINDINGS FOR THE WORK REQUIRED DURING THE TERM OF THE CONTRACT. ASSUMING THAT THE ASSISTANT SECRETARY WOULD APPROVE THE JANUARY 19 RECOMMENDATION, THE COMMANDER, NAVSHIPS, SOLICITED THE COMMENTS AND RECOMMENDATIONS ON THE PROPOSED CONTRACT FROM THE DEPARTMENT OF COMMERCE, MARITIME ADMINISTRATION, AS REQUIRED BY SECTION 7361(B) OF THE ACT. THE DEPARTMENT OF COMMERCE, BY LETTER OF FEBRUARY 1, OFFERED NO OBJECTION TO THE PROPOSED CONTRACT.

SHORTLY AFTER THE LETTER TO THE DEPARTMENT OF COMMERCE WAS SENT, THE CHIEF OF NAVAL MATERIAL NONCONCURRED IN THE RECOMMENDATION TO AWARD A CONTRACT TO MURPHY PACIFIC WITHOUT CONDUCTING DISCUSSIONS WITH THE OTHER TWO OFFERORS. THIS WAS TANTAMOUNT TO A REDETERMINATION OF COMPETITIVE RANGE WHICH INCLUDED ALL OFFERORS. IN RESPONSE TO A REQUEST BY COUNSEL FOR PACTOW FOR ANY DOCUMENTATION DIRECTING SUCH COURSE OF ACTION, THE DEPUTY COMMANDER FOR CONTRACTS, SUPPLY CORPS, NAVAL SEA SYSTEMS COMMAND, REPRESENTS IN HIS REPORT OF JULY 22, 1974, TO OUR OFFICE, THAT THE NOTIFICATION "*** DOES NOT APPEAR TO HAVE BEEN REDUCED TO WRITING." CONCERNING COUNSEL'S RELATED REQUEST FOR ANY UNDERLYING RECORDS, THE DEPUTY COMMANDER FOR CONTRACTS "*** FOUND NO RECORDS ON THE SUBJECT ***" OTHER THAN A MEMORANDUM DATED MARCH 16, 1973, DISCUSSED BELOW.

IN ACCORDANCE WITH THE DIRECTION OF THE CHIEF OF NAVAL MATERIAL, ALL THREE FIRMS, HAVING BEEN DETERMINED TO BE WITHIN THE COMPETITIVE RANGE, WERE REQUESTED ON JANUARY 31, 1973, TO SUBMIT ADDITIONAL INFORMATION CONCERNING SPECIFIC AREAS OF THE PROPOSALS BY FEBRUARY 5, 1973, THE CLOSING DATE FOR RECEIPT OF BEST AND FINAL OFFERS. THE CONTRACTING OFFICER AFFORDED BOTH WILLAMETTE-WESTERN AND PACTOW THE OPPORTUNITY TO REVISE THEIR PROPOSALS TO DEAL WITH THE SAME SIGNIFICANT WEAKNESSES, I.E., COMPANY POSITION AND EXPERIENCE IN MARINE ENGINEERING, MARINE SALVAGE AND OCEAN ENGINEERING, EXPERIENCE AND EXPERTISE OF LINE AND MANAGEMENT PERSONNEL, AND MARINE AND SUPPORT EQUIPMENT AVAILABLE FOR OFFSHORE SALVAGE OPERATIONS. NO SIGNIFICANT WEAKNESSES WERE NOTED IN MURPHY PACIFIC'S PROPOSAL. ORAL DISCUSSIONS WERE SCHEDULED FOR FEBRUARY 2 THROUGH 4, 1973. AFTER ORAL DISCUSSIONS WERE CONCLUDED ON THOSE DATES, THE CLOSING DATE WAS EXTENDED FROM FEBRUARY 5 TO FEBRUARY 14. REVISIONS WERE TIMELY RECEIVED. DURING THE PERIOD FEBRUARY 20 THROUGH MARCH 2, THE BOARD CONDUCTED ONSITE INSPECTIONS OF THE FACILITIES OF THE THREE COMPETITORS AND INTERVIEWED VARIOUS KEY PERSONNEL.

ON MARCH 14, 1973, THE COORDINATOR OF THE BOARD SUBMITTED TO THE CHAIRMAN A SUMMARY OF THE BOARD'S INSPECTION TOUR. ALSO SUBMITTED WERE THE INDIVIDUAL BOARD MEMBERS' NARRATIVE IMPRESSIONS AND SCORE SHEETS ON EACH OFFEROR. BY MEMORANDUM DATED MARCH 16, 1973, MENTIONED ABOVE, THE COMMANDER, NAVSHIPS, REQUESTED THE CONCURRENCE OF THE DEPUTY CHIEF OF NAVAL MATERIAL (PROCUREMENT AND PRODUCTION) TO IMPLEMENT THE DIRECTIVE OF THE CHIEF OF NAVAL MATERIAL THAT THE BOARD'S MEMBERSHIP BE CHANGED TO PRECLUDE THE PARTICIPATION OF ANY MEMBER WHO ACTED IN A SIMILAR CAPACITY IN SELECTING MURPHY PACIFIC ON THE PREVIOUS CONTRACT. THIS PROPOSED CHANGE MADE THE VICE COMMANDER, NAVSHIPS, THE SOURCE SELECTION AUTHORITY (SSA) INSTEAD OF SUPSAL. THE ASSISTANT FOR MODERNIZATION, AIRCRAFT CARRIER SHIP LOGISTICS DIVISION, NAVSHIPS, BECAME CHAIRMAN OF THE BOARD. IN ADDITION, THE DEPUTY COUNSEL, NAVSHIPS, WAS APPOINTED AS LEGAL ADVISOR TO THE BOARD. THE VOTING MEMBERS OF THE BOARD REMAINED THE SAME. CONCURRENCE WAS RECEIVED ON MARCH 19, 1973.

BY MEMORANDUM DATED MARCH 20, 1973, THE NEW CHAIRMAN OF THE BOARD COMMUNICATED TO THE NEW SSA THE UNANIMOUS RECOMMENDATION THAT AWARD BE MADE TO MURPHY PACIFIC PREDICATED ON THE BOARD'S OPINION THAT MURPHY PACIFIC WAS CLEARLY TECHNICALLY SUPERIOR. THE MAJOR FACTORS FAVORING MURPHY PACIFIC WERE: (1) MARINE SALVAGE EXPERIENCE UNEQUALLED BY THE OTHER TWO COMPETITORS; (2) EXPERTISE OF LINE PERSONNEL IN TERMS OF LARGE-SCALE SALVAGE OPERATIONS AND NUMBER OF OPERATIONS; (3) EXCLUSIVITY IN MARINE SALVAGE AND OCEAN ENGINEERING WITH NO COMPETING DISTRACTIONS TO DILUTE THE ATTENTION AND EFFORTS OF TOP MANAGEMENT; AND (4) AS A SINGLE CORPORATE ENTITY NO QUESTION SHOULD ARISE AS TO COMPETING INTERESTS OR PRIORITIES OF TWO OR MORE ENTITIES IN PERFORMING WIDESPREAD AND OFTEN SIMULTANEOUS TASKS FOR THE NAVY.

THE SSA ADVISED THE DEPUTY CHIEF OF NAVAL MATERIAL (PROCUREMENT AND PRODUCTION) ON APRIL 13, 1973, OF HIS DECISION TO AWARD TO MURPHY PACIFIC AFTER HAVING CONSIDERED THE RECOMMENDATIONS OF THE BOARD, CONTRACTING OFFICER AND LEGAL COUNSEL. FIVE MAJOR FACTORS WERE LISTED AS FAVORING MURPHY PACIFIC. THE FIRST FOUR WERE THE SAME AS DISCUSSED IMMEDIATELY ABOVE IN THE MARCH 20 MEMORANDUM FROM THE BOARD CHAIRMAN TO THE SSA. ADDITIONALLY, THE SSA DISCUSSED THE PRICE ASPECT. IN THIS REGARD, HE STATED THAT:

*** EXPERIENCE HAS SHOWN THAT 90% OF THE EFFORT CONTEMPLATED UNDER THE CONTRACT WILL BE REIMBURSED ON A COST-PLUS-FIXED FEE BASIS. THE REMAINING EFFORT IS ANTICIPATED TO BE ON A PER DIEM BASIS. ALTHOUGH MURPHY- PACIFIC'S PROPOSED PER DIEM RATES ARE APPROXIMATELY TWELVE (12) AND EIGHT (8) PERCENT HIGHER FOR AN ASSUMED TYPICAL SALVAGE OPERATION THAN THOSE OFFERED BY THE REMAINING TWO COMPETITORS, THE SIGNIFICANCE OF THIS DIFFERENCE DISAPPEARS WHEN IT IS RECOGNIZED THAT THE GREATER TECHNICAL EXPERTISE AND CAPABILITY OF MURPHY PACIFIC WILL ENABLE THEM TO ACCOMPLISH A GIVEN TASK WITHIN A SIGNIFICANTLY SHORTER TIME FRAME, THEREBY OFFSETTING THE DIFFERENCE IN RATES.

AWARD WAS MADE TO MURPHY PACIFIC ON MAY 3, 1973.

PURSUANT TO OUR BID PROTEST PROCEDURES (4 CFR 20.9 (1974)), A CONFERENCE OF ALL INTERESTED PARTIES WAS HELD AT GAO. AT THAT TIME, ORAL ARGUMENTS WERE PRESENTED BY EACH COMPETITOR. INASMUCH AS BOTH PROTESTERS SEEK THE SAME REMEDY AND BOTH PROTESTS ARE BASED UPON THE SAME FACTS, WE WILL NOT SEPARATELY LIST THE CONTENTIONS. THE MAIN CONTENTION CONCERNS ALLEGED PREJUDICIAL TREATMENT FAVORING MURPHY PACIFIC. THIS CONTENTION IS BASED ON INFERENCES STEMMING FROM THE PREMATURE RELEASE OF A DRAFT RFP TO MURPHY PACIFIC. THE DRAFT WAS RECEIVED BY MURPHY PACIFIC ON MAY 19, 1972, OR APPROXIMATELY 5 MONTHS BEFORE THE OFFICIAL RFP WAS RELEASED TO ITS COMPETITORS. THIS PREMATURE RELEASE OF THE DRAFT RFP WAS THE SUBJECT OF A REPORT DATED APRIL 22, 1974, FROM THE DEPUTY COMMANDER FOR CONTRACTS, SUPPLY CORPS, NAVSHIPS, TO GAO, WHICH SUMMARIZED AND INTERPRETED THE RAW DATA PERTAINING TO THE INVESTIGATION OF THE MATTER CONDUCTED BY THE OFFICE OF NAVAL INTELLIGENCE (ONI). COUNSEL FOR PACTOW HAS UNSUCCESSFULLY SOUGHT FROM THE NAVY ACCESS TO THE UNDERLYING DOCUMENTS UPON WHICH THE SUMMARY REPORT WAS MADE. WHILE RELEASE OF THE BACKGROUND MATERIAL HAS NOT BEEN DISCLOSED OUTSIDE OF THE GOVERNMENT, OUR OFFICE HAS INSPECTED THAT MATERIAL. ALSO, PROTESTERS ALLEGE THAT THE DRAFT RFP EVALUATION CRITERIA AND THEIR RELATIVE WEIGHTS WERE CHANGED IN THE OFFICIAL RFP TO FAVOR MURPHY PACIFIC.

PROTESTERS HAVE ALSO QUESTIONED THE REASONABLENESS OF THE NAVY'S EVALUATION BASED UPON FACTORS NOT LISTED IN THE RFP. SPECIFICALLY, IT IS NOTED THAT EXCLUSIVITY OF ENDEAVOR IS RELIED UPON IN THE DECISION PROCESS, EVEN THOUGH IT WAS NOT LISTED AS AN EVALUATION CRITERION IN THE RFP. MURPHY PACIFIC'S ACTUAL CAPABILITY TO PERFORM ON THE WEST COAST IS ALSO QUESTIONED. THE AWARD IS PROTESTED FURTHER ON THE BASIS THAT IT IS CONTRARY TO THE INTENT OF THE ACT TO DEVELOP COMMERCIAL SALVAGE CAPABILITY. LASTLY, THE CIRCUMSTANCES SURROUNDING THE TRANSMISSION OF THE LETTER OF JANUARY 27, 1973, TO THE DEPARTMENT OF COMMERCE WHICH SOLICITED VIEWS ON THE AWARD, WAS ORIGINALLY THOUGHT BY PROTESTERS TO EVIDENCE THE FACT THAT THE NEGOTIATION PROCESS WAS MERELY PERFUNCTORY SINCE A CHOICE HAD ALREADY BEEN MADE. AT THE CONFERENCE PROTESTERS CLAIMED THE LETTER WAS EVIDENCE THAT THE OFFICIALS RESPONSIBLE FOR MAKING THE AWARD DECISION WERE PREPARED TO REACH THAT DECISION WITHOUT ENOUGH INFORMATION TO ACT REASONABLY. THIS CONDUCT IS INTERPRETED TO BUTTRESS PROTESTERS' ALLEGATION THAT THE AWARD SELECTION WAS NOT IMPARTIALLY REACHED.

AS STATED ABOVE, MURPHY PACIFIC'S WEST COAST CAPABILITY TO PERFORM IN TERMS OF EQUIPMENT, AS WELL AS PERSONNEL HAS BEEN QUESTIONED. IN RESPONSE TO A CONGRESSIONAL REQUEST, OUR OFFICE UNDERTOOK AN INVESTIGATION INTO CERTAIN ASPECTS OF THIS AWARD - ONE BEING A FACTUAL RECITATION OF THE ACTUAL AMOUNT OF EQUIPMENT POSSESSED BY MURPHY PACIFIC ON THE WEST COAST IN COMPARISON TO THE AMOUNT CLAIMED IN ITS PROPOSAL. THE RESULTS OF OUR INVESTIGATION ARE BEING RELEASED SIMULTANEOUSLY WITH THIS DECISION TO THE REQUESTING CONGRESSIONAL SOURCES, AND WE UNDERSTAND THAT ALL OF THE INTERESTED PARTIES WILL RECEIVE A COPY. IT SHOULD BE RECOGNIZED THAT OUR OFFICE WAS NOT REQUESTED TO CONDUCT THE INVESTIGATION UNTIL AFTER MURPHY PACIFIC HAD COMMENCED PERFORMANCE OF THE CONTRACT.

IT IS NOT DISPUTED THAT MURPHY PACIFIC RECEIVED A COPY OF THE DRAFT OF THE RFP APPROXIMATELY 5 MONTHS BEFORE WILLAMETTE-WESTERN OR PACTOW. THIS FACT WAS ACKNOWLEDGED IN THE SUMMARY OF THE ONI REPORT DATED APRIL 22, 1974. AS STATED THEREIN, ONI WAS UNABLE TO ESTABLISH DEFINITIVELY WHO TRANSMITTED THE RFP TO MURPHY PACIFIC OR BY WHAT MEANS IT WAS TRANSMITTED. IT IS STATED THAT THE PHYSICAL LOCATION OF THE WEST COAST REPRESENTATIVE, SUPSAL, IN MURPHY PACIFIC'S OFFICES WAS "INFERENTIALLY" A CONTRIBUTING FACTOR. BASED ON OUR INSPECTION OF THE ONI FILE, THE SUMMARY IS ACCURATE IN STATING THAT THE ONI REPORT, WHICH CONSISTED OF SUMMARIES OF INTERVIEWS WITH KEY INDIVIDUALS, DID NOT DEFINITIVELY ESTABLISH THE INDIVIDUAL RESPONSIBLE FOR THE PREMATURE RELEASE.

THE ONI REPORT ALSO ESTABLISHES THAT MURPHY PACIFIC MADE CERTAIN HANDWRITTEN CHANGES ON THE DRAFT RFP WHICH WERE INCORPORATED VERBATIM INTO THE OFFICIAL RFP. THESE HANDWRITTEN CHANGES DID NOT AFFECT THE EVALUATION CRITERIA, BUT INCLUDED, INTER ALIA, SUCH DETAILS AS NUMBERING, CAPITALIZATION, TITLING, GRAMMAR AND DATES. THE NAVY CONCEDES THAT THE PREMATURE RELEASE OF THE DRAFT RFP TO MURPHY PACIFIC ALONE CONSTITUTED A SERIOUS ADMINISTRATIVE LAXITY. THE NAVY HAS ACKNOWLEDGED THAT THE PHYSICAL LOCATION OF ITS WEST COAST REPRESENTATIVE, SUPSAL, WITHIN MURPHY PACIFIC'S CORPORATE HEADQUARTERS WAS A CONTRIBUTORY FACTOR TO THE PREMATURE ACQUISITION OF INFORMATION. THE NAVY HAS ADVISED THAT THIS SITUATION HAS BEEN CORRECTED BY THE PHYSICAL REMOVAL OF THE OFFICES OF THE SUPSAL REPRESENTATIVE FROM MURPHY PACIFIC'S CORPORATE HEADQUARTERS.

THE CRITERIA CONTAINED IN THE DRAFT RFP, WITH WEIGHTED PERCENTAGE FIGURES, WERE:

PERCENT

MARINE SALVAGE CAPABILITIES (INCLUDING POSITION IN U.S. MARITIME

INDUSTRY) 25

SHIP OPERATIONS AND HUSBANDING CAPABILITIES 25

EXPERTISE OF LINE PERSONNEL (INCLUDING TRAINING PROGRAM) 20

ENGINEERING AND DEVELOPMENTAL CAPABILITIES 10

BASE SUPPORT AND OTHER RELATED FACILITIES AND SERVICES 5

FINANCIAL AND CORPORATE STATUS 5

LABOR AGREEMENTS AND PRACTICE 5

SUB-CONTRACTING 3

LIAISON/COORDINATION WITH THE SUPERVISOR OF SALVAGE 2

TOTAL (FN1) 100

FN1 THE EVALUATION PROCESS CONVERTED WEIGHTED FIGURES TO A CORRESPONDING 1,000-POINT SCALE.

THE OFFICIAL RFP DID NOT CONTAIN ANY CRITERIA WEIGHTS, BUT RATHER LISTED IN DESCENDING ORDER OF IMPORTANCE SIX MAJOR CRITERIA WITH SUBCRITERIA FOR MARINE SALVAGE AND SHIP HUSBANDING (THE TWO MAIN CRITERIA). IN COMPARING THE WEIGHTED EVALUATION CRITERIA WITH THE OFFICIAL RFP SCORE SHEET, WE NOTE THE FOLLOWING CHANGES IN EMPHASIS. WHILE EXPERTISE OF LINE PERSONNEL WAS A SEPARATE CRITERION WORTH 200 POINTS IN THE DRAFT RFP (PRESUMABLY 100 POINTS EACH FOR MARINE SALVAGE AND SHIP HUSBANDING CAPABILITIES), THE OFFICIAL VERSION CREATED SEPARATE SUBCRITERIA WORTH 150 POINTS FOR MARINE SALVAGE CAPABILITY AND 100 POINTS FOR SHIP HUSBANDING. IN ADDITION, THE OFFICIAL RFP MADE MARINE SALVAGE WORTH 350 POINTS AND SHIP HUSBANDING ONLY 200 POINTS ALTHOUGH EACH WAS WORTH 250 POINTS IN THE DRAFT RFP.

THE NAVY'S POSITION ON THE MATTER IS THAT THE "*** PROCUREMENT WAS NOT SUBSTANTIALLY PREJUDICED ***" BY THE PREMATURE RELEASE OF THE DRAFT RFP. THE NAVY MAINTAINS THAT ANY ATTEMPT BY MURPHY PACIFIC TO STRUCTURE ITS PROPOSAL ALONG THE LINES OF THE DRAFT RFP WOULD HAVE RESULTED IN A COMPETITIVE DETRIMENT, NOT ADVANTAGE. IN NOTING THE SHIFT IN RELATIVE WEIGHTS OF THE SALVAGE AND HUSBANDING CRITERIA, THE NAVY REPRESENTS THAT A MURPHY PACIFIC PROPOSAL STRUCTURED TO COMPORT WITH THE DRAFT RFP WOULD HAVE PLACED TOO MUCH EMPHASIS ON HUSBANDING.

THE PREMATURE RELEASE CONSTITUED A VIOLATION OF THE PROCUREMENT REGULATIONS IN EFFECT AT THE TIME. ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-1004(B) (1969 ED. REVISION 8) PROVIDED:

(B) MAXIMUM INFORMATION MAY BE MADE AVAILABLE TO THE PUBLIC EXCEPT (I) ADVANCE INFORMATION ON PROPOSED PLANS REGARDING PROCUREMENTS, WHICH INFORMATION WOULD PROVIDE UNDUE OR DISCRIMINATORY ADVANTAGE TO PRIVATE OR PERSONAL INTERESTS *** THIS POLICY APPLIES TO ALL GOVERNMENT PERSONNEL WHO PARTICIPATE DIRECTLY OR INDIRECTLY IN ANY STAGE OF THE PROCUREMENT CYCLE.

MOREOVER, WHILE THE EVALUATION CRITERIA WERE CHANGED FROM DRAFT TO OFFICIAL RFP TO INCREASE THE EMPHASIS ON SALVAGE CAPABILITY, MURPHY PACIFIC, BY VIRTUE OF THE PREMATURE RELEASE, WAS THE ONLY COMPETITOR FOR THIS AWARD THAT SUBMITTED ITS PROPOSAL WITH KNOWLEDGE OF THE APPROXIMATE WEIGHTS ASSIGNED TO THE EVALUATION CRITERIA. THIS IS ESPECIALLY SIGNIFICANT SINCE THE RFP CONVEYED ONLY MINIMAL INFORMATION TO MURPHY PACIFIC'S COMPETITORS AS TO THE RELATIVE IMPORTANCE TO BE ATTACHED TO THE STATED EVALUATION CRITERIA. AS QUOTED ABOVE, THE RFP SIMPLY LISTED THE CRITERIA IN DESCENDING ORDER OF IMPORTANCE EVEN THOUGH OFFERORS WERE APPRISED THAT SOME OF THE CRITERIA WOULD BE ASSIGNED MUCH LESS VALUE THAN OTHERS. WE HAVE HELD THAT SIMILAR ADVICE TO OFFERORS IN NEGOTIATED PROCUREMENTS FAILED TO ADEQUATELY INFORM OFFERORS OF THE RELATIVE WEIGHTS OF EVALUATION FACTORS. MATTER OF AEL CORPORATION, ET AL., 53 COMP. GEN. 800 (1974).

WE RECOGNIZE THAT THE ASPR IN EFFECT AT THE TIME THE OFFICIAL RFP WAS ISSUED (ASPR 3-501(B) SEC. DI) (1969 ED. REVISION 11)) REQUIRED ONLY THAT THE RFP STATE THE FACTORS OTHER THAN PRICE WHICH WOULD BE GIVEN PARAMOUNT CONSIDERATION IN AWARDING THE CONTRACT. NOTWITHSTANDING, OUR OFFICE CONSISTENTLY STATED ITS VIEW THAT SOUND PROCUREMENT PRACTICE DICTATED THAT OFFERORS BE INFORMED OF ALL OF THE EVALUATION FACTORS AND THE RELATIVE WEIGHT ASSIGNED EACH. 47 COMP. GEN. 336 (1967); 51 ID. 153 (1972).

WE DO NOT AGREE THAT MURPHY PACIFIC WOULD HAVE PLACED TOO MUCH EMPHASIS ON SHIP HUSBANDING AND TOO LITTLE ON SALVAGE IF IT HAD STRUCTURED ITS PROPOSAL ALONG THE LINES OF THE DRAFT RFP. CONSIDERING THE NAVY'S EVALUATION OF MURPHY PACIFIC'S SALVAGE CAPABILITIES AS CLEARLY SUPERIOR, ANY EMPHASIS MURPHY PACIFIC WOULD HAVE PLACED ON HUSBANDING COULD HAVE RESULTED IN IMPROVING ITS RELATIVELY WEAK POSITION IN THAT AREA WITHOUT SACRIFICING ITS SUPERIOR POSITION IN SALVAGE. SINCE ONLY MURPHY PACIFIC HAD ANY KNOWLEDGE OF THE APPROXIMATE RELATIVE WEIGHTS AS A RESULT OF ITS RECEIPT OF THE DRAFT RFP, ITS COMPETITIVE POSITION WAS GREATLY ENHANCED VIS-A-VIS THE PROTESTERS.

FURTHER, THE NAVY, IN RECOMMENDING MURPHY PACIFIC FOR AWARD, EMPLOYED EVALUATION CRITERIA NOT SPECIFICALLY STATED IN THE RFP - I.E. EXCLUSIVITY OF ENDEAVOR, AND SINGLE CORPORATE ENTITY. ASPR 3-501(A) (1969 ED. REVISION 11) REQUIRED THAT SOLICITATIONS CONTAIN THE INFORMATION NECESSARY TO ENABLE A PROSPECTIVE OFFEROR TO PREPARE A PROPOSAL PROPERLY. WHILE THESE CRITERIA WERE NOT CONSIDERED IN THE POINT RATINGS OF EACH OFFEROR BY THE BOARD, ITS NARRATIVE STATEMENTS INDICATE THAT THEY WERE CRUCIAL IN RECOMMENDING THE SELECTION OF MURPHY PACIFIC.

IN THE CHAIRMAN OF THE BOARD'S RECOMMENDATION OF AWARD TO THE SSA, THESE CRITERIA AMOUNTED TO 50 PERCENT OF THE MAJOR SELECTION FACTORS FAVORING MURPHY PACIFIC. SEE OUR DISCUSSION ABOVE ON THE MARCH 20 MEMORANDUM. THE UTILIZATION OF THESE CRITERIA VIOLATED THE CITED REGULATION AND WAS PREJUDICIAL TO THE COMPETITORS OTHER THAN MURPHY PACIFIC. THE NET EFFECT, WE BELIEVE, IS TO STIFLE COMPETITION.

IN ADDITION, THE EVALUATION CRITERIA USED BUT NOT STATED IN THE RFP WERE NOT APPLIED EQUALLY TO ALL COMPETITORS. IN THEIR NARRATIVE STATEMENTS, THE EVALUATORS DOWNGRADED WILLAMETTE-WESTERN AND PACTOW FOR THEIR DIVERSITY OF ENDEAVOR. IN THE CASE OF PACTOW, ALL OF THE BOARD MEMBERS KNEW THAT PACTOW WAS A SUBSIDIARY OF THE DILLINGHAM MARINE GROUP WITH VARIED MARINE INTERESTS IN TOWING AND TUGBOAT OPERATION. THE BOARD MEMBERS STATED THAT SALVAGE WAS NOT PACTOW'S (DILLINGHAM'S) SPECIALTY AND PROBABLY NEVER WOULD BE. THEY ALSO DOWNGRADED PACTOW BECAUSE OF POSSIBLE COMPETITION OF INTEREST SHOULD ANY CONFLICT ARISE AS TO PRIORITY OF WORK. THE BOARD MEMBERS NOTED FROM WILLAMETTE WESTERN'S ANNUAL REPORT ITS DISTRACTING INTEREST IN CONSTRUCTION. AGAIN, THIS NEGATIVE ASSESSMENT WAS COMPOUNDED IN THE AREA OF CONFLICT OF INTEREST IN THE MANAGEMENT PERSONNEL. AS NOTED, MURPHY PACIFIC WAS SAID TO BE THE ONLY FIRM EXCLUSIVELY ENGAGED IN MARINE SALVAGE WITH NO COMPETING INTERESTS TO DISTRACT ITS MANAGEMENT PERSONNEL.

WHILE NOTING THE FOREGOING DEFICIENCIES IN PACTOW'S AND WILLAMETTE WESTERN'S CORPORATE STRUCTURE AND INTEREST, THE BOARD APPARENTLY DID NOT CHECK THE MURPHY PACIFIC ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDING MARCH 31, 1972, WHICH CLEARLY STATED MURPHY PACIFIC'S INVOLVEMENT IN JOINT VENTURE CONSTRUCTION PROJECTS WITH ITS PARENT, THE MURPHY PACIFIC CORP. (THE REPORT DID INDICATE AN INTENT OF MURPHY PACIFIC TO EXTRICATE ITSELF FROM THE JOINT VENTURE DUE TO FINANCIAL LOSSES.) THE MATTER SHOULD, AT LEAST, HAVE BEEN CONSIDERED. FURTHER, A CHECK OF MOODY'S INDUSTRIAL MANUAL FOR 1972 WOULD HAVE SHOWN THAT MURPHY PACIFIC WAS A SUBSIDIARY OF THE MURPHY PACIFIC CORPORATION. THE MURPHY PACIFIC CORPORATION LISTING WOULD HAVE REFERRED THE INVESTIGATOR TO THE ETS-HOKIN CORPORATION, WHICH OWNED 53 PERCENT OF THE MURPHY PACIFIC CORPORATION. EXAMPLES OF THE ETS- HOKIN CORPORATION'S PRIMARY BUSINESS INTERESTS WERE LISTED AS: MARINE, COMMERCIAL, INDUSTRIAL ENGINEERING, CONSTRUCTION, MISSILE PRODUCTION SYSTEMS, TRACKING SYSTEMS FOR MISSILES, COMPUTERS, MANUFACTURER OF SPECIALIZED ELECTRICAL PRODUCTS. IN FACT, THE BUSINESS LISTING FOR MURPHY PACIFIC EVEN INCLUDED MURPHY PACIFIC'S PARTICIPATION IN CONSTRUCTION OF BRIDGE SUPER STRUCTURES. ALSO, A COMPARISON OF THE OFFICERS AND BOARDS OF DIRECTORS OF MURPHY PACIFIC AND ETS-HOKIN EVIDENCES A SUBSTANTIAL COMMONALITY. IN LIGHT OF THE FOREGOING, WE DO NOT UNDERSTAND THE BASIS FOR FAVORING MURPHY PACIFIC UNDER THE EXCLUSIVITY FACTORS.

THIS CASE CLOSELY PARALLELS A SITUATION CONSIDERED IN 50 COMP. GEN. 637 (1971). THERE, THE CONTRACTING AGENCY, AFTER THE CLOSE OF NEGOTIATIONS, INTRODUCED A SUBSTANTIAL COST FACTOR INTO THE EVALUATION PROCESS WHICH DISPLACED THE TECHNICALLY ACCEPTABLE LOW OFFEROR FOR AWARD PURPOSES. HELD THAT ALL OFFERORS SHOULD HAVE BEEN ADVISED OF THE INTRODUCTION OF THE FACTOR IN EVALUATION AND GIVEN AN OPPORTUNITY FOR DISCUSSIONS THEREON. THOSE CIRCUMSTANCES, WE CONCLUDED THAT THE AWARD WAS ERRONEOUS.

IN SO CONCLUDING, GAO RELIED ON A PRIOR DECISION, 49 COMP. GEN. 98 (1969), WHEREIN AN OFFEROR WAS DENIED THE OPPORTUNITY TO DISCUSS AN EVALUATION FACTOR DURING NEGOTIATIONS WHICH WAS DIRECTLY PREJUDICIAL TO ITS COMPETITIVE POSITION. WE CONCLUDED THAT NEGOTIATIONS SHOULD BE REOPENED TO TAKE THE EVALUATION FACTOR INTO ACCOUNT. OUR COMMENTS THERE ARE PARTICULARLY PERTINENT TO THIS PROTEST:

*** THE PRESENCE OR ABSENCE OF AN EVALUATION FACTOR AND THE AMOUNT THEREOF CAN HAVE AN IMPACT UPON THE PRICES OFFERED AND IN THAT SENSE CAN AFFECT ONE OF THE ESSENTIAL TERMS (PRICE) OF THE CONTRACT ***

*** WE RECOGNIZE THAT OPPORTUNITY FOR SUCH DISCUSSION MIGHT NOT HAVE RESULTED IN ANY CHANGE IN THE AMOUNT OF THE EVALUATION FACTOR, BUT THE OFFEROR, AT LEAST, MIGHT HAVE SATISFIED ITSELF, BEFORE SUBMITTING A REVISED OFFER, OF THE CORRECTNESS OF THE ADMINISTRATIVE POSITION OR, IN THE ABSENCE THEREOF, WOULD HAVE HAD AN OPPORTUNITY TO SHOW THE PROCUREMENT ACTIVITY WHEREIN IT MAY HAVE ERRED. ***

AS IN THOSE CASES, WE BELIEVE THAT THE NAVY'S CONSIDERATION OF THE NEW EVALUATION CRITERIA WITHOUT NOTICE TO THE COMPETITORS AND AN OPPORTUNITY TO HOLD DISCUSSIONS WAS IMPROPER.

PROTESTERS ALSO CONTEND THAT THE INTENT OF THE SALVAGE FACILITIES ACT IS TO DEVELOP A COMMERCIAL MARINE SALVAGE CAPABILITY THAT CAN BE DRAWN UPON AND EXPANDED IN THE EVENT OF WAR. THIS NEED WAS UNDERSCORED BY OUR INVOLVEMENT IN WORLD WAR II. WE AGREE THAT THE INTENT OF THE ACT, AS A WHOLE, WAS TO FOSTER MORE COMMERCIAL SALVAGE OPERATIONS. THE ACT PROVIDES: (C) TERM CONTRACTS FOR SALVAGE FACILITIES MAY BE MADE UNDER THIS SECTION ONLY IF -

(1) THE SECRETARY OF THE NAVY DETERMINES THAT AVAILABLE COMMERCIAL SALVAGE FACILITIES ARE INADEQUATE TO MEET THE REQUIREMENTS OF NATIONAL DEFENSE; AND

(2) PUBLIC NOTICE OF THE INTENTION TO ENTER INTO THE CONTRACTS HAS BEEN GIVEN IN A MANNER AND FOR A PERIOD THAT WILL, IN THE SECRETARY'S JUDGMENT, PROVIDE THE MAXIMUM COMPETITION FOR SUCH CONTRACTS AMONG COMMERCIAL SALVAGE ORGANIZATIONS.

THE LEGISLATIVE HISTORY OF THE ACT INDICATES THAT THE AWARD OF A SALVAGE CONTRACT WAS TO BE "*** ON A COMPETITIVE BASIS, AFTER CAREFUL INVESTIGATION OF EXISTING FACILITIES, TO THE COMPANY BEST QUALIFIED TO DO THE JOB, TAKING INTO CONSIDERATION HIS EQUIPMENT, THE EXPERIENCE OF HIS PERSONNEL, AND HIS WILLINGNESS TO MEET THE MINIMUM STANDARDS PRESCRIBED BY THE NAVY. ALL COMPANIES WILL HAVE EQUAL OPPORTUNITY TO COMPETE FOR THESE CONTRACTS." SEE H. REPORT NO. 1605, 80TH CONG., 2D SESS. 2 (1948). FURTHER, "*** THE NAVY MAY MAKE AVAILABLE TO PRIVATE COMPANIES SUCH VESSELS AND EQUIPMENT AS MAY BE NECESSARY TO BRING THEIR FACILITIES UP TO MINIMUM STANDARDS. THE NAVY MAY ALSO ADVANCE FUNDS TO PRIVATE COMPANIES TO FINANCE SALVAGE OPERATIONS." H. REPORT NO. 1605, ID. AT P. 3. ADDITION, ASPR 1-300.1 (JANUARY 1969) STATES THAT "ALL PROCUREMENTS, WHETHER BY FORMAL ADVERTISING OR BY NEGOTIATION, SHALL BE MADE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICABLE EXTENT." WE DO NOT BELIEVE THAT THE AWARD COMPORTS WITH THE MAXIMUM COMPETITION INTENDED BY THE ACT AND ASPR PROVISIONS CITED ABOVE.

THE NAVY, IN ASSESSING PERSONNEL AND EQUIPMENT CAPABILITY, HAS INDICATED ITS WILLINGNESS TO CONSIDER MURPHY PACIFIC'S ASSETS WHEREVER THEY MAY BE - EAST, WEST OR GULF COASTS - BECAUSE OF RAPID MOBILITY BY AIR OF MURPHY PACIFIC'S PERSONNEL AND EQUIPMENT. MURPHY PACIFIC STATED IN ITS PROPOSAL THAT, WHILE ITS EAST AND WEST COAST OPERATIONS ARE DISTINCT OPERATING AND COST CENTERS (THE EAST AND WEST COAST CONTRACTS ARE AWARDED TO SEPARATE ENTITIES), IT HAS A COMMON DIRECTORATE AND SHOULD BE VIEWED AS A SINGLE ENTITY FOR EVALUATION PURPOSES. THUS, IN ASSESSING THE CRITICAL FACTOR OF PERSONNEL, MURPHY PACIFIC'S PERSONNEL STATIONED PRIMARILY IN EITHER ITS EAST COAST OR CARRIBBEAN STATIONS, OR BOTH, WERE ALL CONSIDERED AS AVAILABLE FOR PERFORMANCE OF THE WEST COAST CONTRACT. THE NAVY ALSO NOTES THAT THE CONTRACT, WHILE PREDOMINANTLY FOR THE WEST COAST, NOMINALLY COVERS THE ENTIRE WORLD.

HOWEVER, THERE ARE TWO SEPARATE CONTRACTS, ONE FOR EACH COAST, WHICH MIGHT WELL REQUIRE SIMULTANEOUS PERFORMANCE. EACH CLEARLY CONTEMPLATED OPERATIONS PREDOMINANTLY ALONG ONE COAST. TO EVALUATE MURPHY PACIFIC'S CAPABILITY TO PERFORM ON ONE COAST BY ASSESSING ITS CAPABILITY TO PERFORM ON ANOTHER COAST RESULTED IN AN UNWARRANTED DOUBLE CREDIT. MOREOVER, SINCE SALVAGE OPERATIONS OFTEN REQUIRE IMMEDIATE RESPONSE BY THE CONTRACTOR, THE TIME TO TRANSFER RESOURCES FROM ONE COAST TO ANOTHER COULD ADVERSELY AFFECT CONTRACT PERFORMANCE. FURTHER, THE OVERWHELMING MAJORITY OF EXPENSES HISTORICALLY HAVE BEEN INCURRED FOR HUSBANDING THE GOVERNMENT- FURNISHED VESSEL AND PERFORMING OTHER THAN SALVAGE TASK ASSIGNMENTS. MENTIONED ABOVE, THE RFP DID NOT RECOGNIZE THIS HISTORICAL FACT AND WEIGHTED THE EVALUATION CRITERIA FOR SALVAGE ASSIGNMENTS MORE HEAVILY THAN HUSBANDING ACTIVITIES. THE AIM OF THE COMPETITIVE NEGOTIATION PROCESS IS TO PROCURE GOODS AND SERVICES FOR THE BEST ADVANTAGE OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. SEE ASPR 3-101 (1969 ED. REVISION 10). WE DO NOT THINK THAT AN AWARD BASED UPON CONSIDERATIONS THAT DO NOT REFLECT THE ACTUAL CIRCUMSTANCES OF THE PROCUREMENT WILL RESULT IN THE BEST ADVANTAGE TO THE GOVERNMENT. NOR DO WE THINK THAT CONDUCTING A PROCUREMENT UNDER SUCH AN IMPEDIMENT FOSTERS MEANINGFUL COMPETITION.

FOR THESE REASONS, WE CONCLUDE THAT AWARD TO MURPHY PACIFIC WAS IMPROPER.

IT IS CLEAR THAT A DRAFT OF THE RFP WAS PREMATURELY RELEASED TO MURPHY PACIFIC AND THAT REPRESENTATIVES OF THE FIRM MADE HANDWRITTEN NOTATIONS ON THE DRAFT. ALMOST EVERY HANDWRITTEN CHANGE ON THE DRAFT WAS INCORPORATED VERBATIM INTO THE OFFICIAL RFP. THIS INCLUDED, INTER ALIA, SUCH DETAILS AS NUMBERING, CAPITALIZATION, TITLING, GRAMMAR, AND DATES. THE PREMATURE RELEASE AND EVENTUAL INCORPORATION OF THESE DETAILS INTO THE OFFICIAL RFP COMPELS THE CONCLUSION THAT MURPHY PACIFIC POSSESSED DIRECT ACCESS TO NAVY PERSONNEL INVOLVED IN THE FORMULATION OF THE OFFICIAL RFP. THIS MAY ALSO BE A FACTOR IN THE CHANGE IN EMPHASIS IN EVALUATION CRITERIA FROM AN AREA WHERE THE OTHER COMPETITORS SCORED HIGHER TO THE AREA WHICH THE NAVY VIEWED AS MURPHY PACIFIC'S STRONG POINT, SALVAGE CAPABILITIES. THIS IS TRUE EVEN THOUGH THE NAVY STATED THAT SALVAGE CAPABILITY IS THE HEART OF THE CONTRACT, AND IT IS MERELY COINCIDENCE THAT THIS WAS MURPHY PACIFIC'S STRONGEST QUALIFICATION. FURTHERMORE, ONLY MURPHY PACIFIC SUBMITTED ITS PROPOSAL WITH KNOWLEDGE OF THE APPROXIMATE WEIGHTS ASSIGNED TO THE EVALUATION CRITERIA SET FORTH IN THE DRAFT RFP. THIS FACT BECOMES MORE SIGNIFICANT IN LIGHT OF THE DEFICIENT MANNER IN WHICH THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA WAS STATED IN THE OFFICIAL RFP.

IN ADDITION, THE NAVY EMPLOYED EVALUATION CRITERIA NOT SPECIFICALLY STATED IN THE RFP, WHICH OPERATED TO MURPHY PACIFIC'S ADVANTAGE.

AS INDICATED, THE ACT AND REGULATIONS CONTEMPLATE OBTAINING MAXIMUM COMPETITION. IT IS OBVIOUSLY IMPORTANT IN ACHIEVING SUCH COMPETITION NOT ONLY TO MAINTAIN OBJECTIVITY AND IMPARTIALITY IN THE PROCESS BUT TO AVOID APPEARANCES THAT TEND TO COMPROMISE THE OBJECTIVITY AND IMPARTIALITY OF THE PROCESS. WE DO NOT FEEL THE STANDARD HAS BEEN MET IN THIS INSTANCE. IN VIEW THEREOF, WE RECOMMEND THAT THE NAVY TERMINATE THE MURPHY PACIFIC CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT AND CONDUCT NEW NEGOTIATIONS WITHOUT THE DEFICIENCIES DISCUSSED.

AS THIS DECISION CONTANS A RECOMMENDATION FOR CORRECTIVE ACTION TO BE TAKEN, IT IS BEING TRANSMITTED BY LETTERS OF TODAY TO THE CONGRESSIONAL COMMITTEES NAMED IN SECTION 232 OF THE LEGISLATIVE REORGANIZATION ACT OF 1970, PUBLIC LAW 91-510, 31 U.S.C. 1172.

PLEASE ADVICE US OF WHATEVER ACTIONS ARE TAKEN ON OUR RECOMMENDATION.