B-179825, MAR 12, 1974

B-179825: Mar 12, 1974

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

AWARD OF A NEGOTIATED CPFF CONTRACT BY ARMY AS A RESULT OF "BEST BUY" ANALYSIS TO AN OFFEROR WHO SUBMITTED HIGHER PRICED BUT TECHNICALLY SUPERIOR PROPOSAL THAN THE PROTESTER WAS REASONABLE EXERCISE OF ADMINISTRATIVE DISCRETION SINCE ARMY DID NOT DEPART FROM EVALUATION AND AWARD CRITERIA STATED IN RFQ. AWARD DECISION WAS SUPPORTED BY RECORD. 2. WHICH REQUIRES THAT PROTESTS AGAINST ALLEGED IMPROPRIETIES IN SOLICITATION WHICH ARE APPARENT PRIOR TO CLOSING DATE FOR RECEIPT OF PROPOSALS BE FILED BEFORE CLOSING DATE. ALLEGATION THAT ARMY DEPARTED FROM CRITERIA IS FOR CONSIDERATION SINCE PROTEST WAS FILED WITHIN 5 WORKING DAYS "AFTER THE BASIS FOR PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN." 4 CFR 20.2(A).

B-179825, MAR 12, 1974

1. AWARD OF A NEGOTIATED CPFF CONTRACT BY ARMY AS A RESULT OF "BEST BUY" ANALYSIS TO AN OFFEROR WHO SUBMITTED HIGHER PRICED BUT TECHNICALLY SUPERIOR PROPOSAL THAN THE PROTESTER WAS REASONABLE EXERCISE OF ADMINISTRATIVE DISCRETION SINCE ARMY DID NOT DEPART FROM EVALUATION AND AWARD CRITERIA STATED IN RFQ, AS ALLEGED, AND AWARD DECISION WAS SUPPORTED BY RECORD. 2. WHILE A PROTEST AGAINST EVALUATION AND AWARD CRITERIA STATED IN RFQ WOULD BE UNTIMELY UNDER PORTION OF SECTION 20.2(A) OF BID PROTEST PROCEDURES AND STANDARDS, WHICH REQUIRES THAT PROTESTS AGAINST ALLEGED IMPROPRIETIES IN SOLICITATION WHICH ARE APPARENT PRIOR TO CLOSING DATE FOR RECEIPT OF PROPOSALS BE FILED BEFORE CLOSING DATE, ALLEGATION THAT ARMY DEPARTED FROM CRITERIA IS FOR CONSIDERATION SINCE PROTEST WAS FILED WITHIN 5 WORKING DAYS "AFTER THE BASIS FOR PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN." 4 CFR 20.2(A).

TO SYSTEMS CONSULTANTS, INC.:

ON JUNE 1, 1973, THE DEPARTMENT OF THE ARMY'S FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA, ISSUED REQUEST FOR QUOTATIONS (RFQ) DAAA25 73- Q-0697. THE RFQ SOLICITED TECHNICAL AND COST-PLUS-FIXED-FEE (CPFF) PROPOSALS FOR CONVERSION OF THE AUTOMATED RANGE MANAGEMENT SYSTEM FROM A SINGLE-RANGE SYSTEM INTO A MULTIRANGE FACILITY. PROPOSALS WERE RECEIVED FROM SYSTEMS CONSULTANTS, INC. (SYSCON), AND PURVIS SYSTEMS, INC. (PURVIS), BY JUNE 18, 1973, THE CLOSING DATE FOR RECEIPT OF INITIAL PROPOSALS. THE PROPOSALS WERE EVALUATED BY A TECHNICAL EVALUATION PANEL AGAINST THE EVALUATION CRITERIA SET FORTH IN THE RFQ. DISCUSSIONS WERE CONDUCTED WITH EACH OFFEROR AND, ULTIMATELY, BOTH OFFERORS WERE ASKED ON SEPTEMBER 10 TO SUBMIT BEST AND FINAL OFFERS BY SEPTEMBER 14. BOTH OFFERORS SUBMITTED TIMELY RESPONSES. THE BEST AND FINAL OFFERS WERE FURTHER ANALYZED BY THE TECHNICAL EVALUATION PANEL. ON THE BASIS OF A REVISED BEST BUY ANALYSIS, THE PANEL RECOMMENDED AWARD TO PURVIS. AWARD WAS MADE TO PURVIS ON SEPTEMBER 21, 1973, AT AN ESTIMATED COST, INCLUDING FEE, OF $176,778. SYSCON, BY WESTERN UNION MAIL GRAM DATED SEPTEMBER 21, 1973, PROTESTED THE AWARD TO ARMY. THE RECORD INDICATES THE MAIL GRAM WAS RECEIVED BY THE ARMY ON SEPTEMBER 25, 1973. SUBSEQUENTLY, SYSCON PROTESTED DIRECTLY TO OUR OFFICE.

SYSCON MAINTAINS THAT THE DECISION TO AWARD THE CONTRACT TO PURVIS WAS ARBITRARY AND CAPRICIOUS. SYSCON'S POSITION IS GROUNDED ON THE ALLEGATION THAT THE CONTRACTING AGENCY EVALUATION OF PROPOSALS WAS INCONSISTENT WITH THE EVALUATION CRITERIA SET FORTH IN THE RFQ.

INITIALLY, WE DO NOT UNDERSTAND SYSCON TO CONTEND THAT THE SPECIFIED EVALUATION CRITERIA WERE IMPROPER. IN ITS LETTER OF JANUARY 4, 1974, SYSCON ACKNOWLEDGES THAT WHILE THE EVALUATION PROCEDURES "MAY HAVE APPEARED REASONABLE IN THE ABSTRACT, THE (EVALUATION AND AWARD) PROCEDURES WHICH WERE ACTUALLY APPLIED TO THE EVALUATION OF THE PROPOSALS CLEARLY DEMONSTRATE THAT THE ARMY'S AWARD DETERMINATION WAS ARBITRARY AND CAPRICIOUS." QUESTIONS CONCERNING THE ADEQUACY OF THE EVALUATION PROCEDURES WOULD, AS THE ARMY OBSERVES, BE UNTIMELY UNDER SECTION 20.2(A) OF OUR BID PROTEST PROCEDURES AND STANDARDS, WHICH REQUIRES THAT ALLEGED IMPROPRIETIES IN A SOLICITATION WHICH ARE APPARENT PRIOR TO THE CLOSING DATE FOR RECEIPT OF INITIAL PROPOSALS SHALL BE FILED PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS. HOWEVER, THE ISSUE OF WHETHER THE ARMY DEPARTED FROM THE EVALUATION CRITERIA IS TIMELY SINCE SYSCON'S PROTEST WAS RECEIVED BY THE ARMY ON SEPTEMBER 25 OR WITHIN 5 WORKING DAYS "AFTER THE BASIS FOR PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN." 4 CFR 20.2(A).

SPECIFICALLY, SYSCON MAINTAINS THAT ARMY'S AWARD DECISION WAS BASED SOLELY ON THE "DISPORTIONATELY HEAVY WEIGHT GIVEN BY THE ARMY TO A NON BELIEF IN THE VALIDITY OF SYSCON'S LOWER (ESTIMATED) PRICE." SYSCON URGES THAT THIS "NON-BELIEF" IS INCONSISTENT WITH THE EXPRESS FINDINGS OF THE EVALUATORS. NOTING THAT ITS PROPOSAL WAS DETERMINED TO BE ACCEPTABLE, IT IS SYSCON'S VIEW THAT A CORRECT ASSESSMENT OF ITS FINAL CPFF PROPOSAL OF $118,306 WOULD REQUIRE A CONCLUSION THAT ITS PROPOSAL WAS THE "BEST BUY."

WE DO NOT AGREE. ON THE RECORD BEFORE US AND FOR THE REASONS SET FORTH BELOW, WE FIND NO BASIS TO INTERPOSE A LEGAL OBJECTION TO THE AWARD.

THE RFQ IDENTIFIED THE EVALUATION AND AWARD FACTORS, IN PERTINENT PART, AS FOLLOWS:

"EVALUATION AND AWARD FACTORS

"THE FOLLOWING FACTORS ARE ARRANGED IN DECREASING ORDER OF IMPORTANCE:

"A. QUALIFICATION OF PERSONNEL

B. UNDERSTANDING OF AND METHOD OF ACCOMPLISHING OBJECTIVES

C. VALIDITY OF COST ESTIMATE

D. DEFINITION OF ANTICIPATED PROBLEM AREAS

E. COMPLETENESS AND THOROUGHNESS OF PROPOSAL

F. REALISM OF TIME PHASING

G. SAFETY

H. PROXIMITY TO FRANKFORD ARSENAL

"ITEM A IS PRIMARILY INTENDED TO SCREEN OUT THOSE FIRMS WHOSE EMPLOYEES DO NOT POSSESS THE MINIMUM EXPERIENCE QUALIFICATIONS (SUCH AS DISC EXPERIENCE WITH 2100 SERIES MACHINES; KNOWLEDGE OF BALLISTIC'S TESTING, ITS INSTRUMENTATION; SYSTEM'S INTEGRATION). THIS ITEM IS VERY HEAVILY WEIGHTED.

"ITEM B IS INTENDED TO INSURE THE GOVERNMENT THAT THE BIDDERS FULLY UNDERSTAND THE OBJECTIVES.

"ITEM C IS SELF EXPLANATORY. IT IS WEIGHTED THE SAME AS ITEM B - HEAVY.

"ITEM D, E, AND F ARE SELF EXPLANATORY.

"ITEM G IS INCLUDED BECAUSE THE GOVERNMENT MUST BE ASSURED THAT SAFETY OF ALL RANGE PERSONNEL FROM WEAPONS BEING DISCHARGED OR AMMUNITION BEING FIRED OR SHOCK CANNOT OCCUR FROM FAULTY DESIGN OF THE RANGE UNITS.

"ITEM H, WEIGHTED LIGHTLY, IS PRESENTED TO MINIMIZE TRAVEL EXPENDITURES FOR REPAIR OF SYSTEM ONCE WARRANTIES HAVE EXPIRED.

"EVALUATION PROCEDURE:

"IN CONDUCTING THE EVALUATION OF PROPOSALS, A 'BEST BUY' ANALYSIS WILL BE USED IN SELECTING THE SUCCESSFUL BIDDER. THIS ANALYSIS IS A MATHEMATICAL RELATIONSHIP BETWEEN TECHNICAL MERIT RATING AND COST, AND A 'COST TO MERIT' RATIO. IN THIS PROCUREMENT, A COST TO MERIT RATIO OF 3 TO 1 WILL BE USED. THE COST ASPECT IN THE BEST BUY ANALYSIS IS A RELATIVE COMPARISON (OF WORK PROPOSED TO COST) OF ALL PROPOSALS ONCE THE VALIDITY OF COST TO PROPOSED WORK HAS BEEN ESTABLISHED FOR EACH INDIVIDUAL PROPOSAL IN THE TECHNICAL MERIT RATING EVALUATION. THE BEST BUY, THEREFORE, IS THE HIGHEST TECHNICALLY RATED PROPOSAL WHICH IS OFFERED AT THE MOST REASONABLE PROBABLE COST. ***"

BASED ON AN EVALUATION OF THE PROPOSALS AGAINST FACTORS "A" THROUGH "F" AND SUBSEQUENT BEST BUY ANALYSIS, THE EVALUATION TEAM'S INITIAL REPORT OF JUNE 26, 1973, INDICATED THE FOLLOWING RESULTS:

TECHNICAL MERIT BEST BUY INDEX

PURVIS 86.59 1.296

SYSCON 71.97 1.000

WITH RESPECT TO TECHNICAL MERIT, PURVIS OBTAINED AN EVALUATION ADVANTAGE FOR ALL FACTORS EXCEPT FACTOR "F," WHERE PURVIS AND SYSCON RECEIVED THE SAME SCORE. WHILE, OVERALL, PURVIS WAS JUDGED AS HAVING SUBMITTED THE SUPERIOR PROPOSAL, THE DECISIVE EVALUATIVE DIFFERENCE BETWEEN THE PROPOSALS WAS IN THE SCORES RECEIVED FOR FACTOR "C," "VALIDITY OF COST ESTIMATE." INITIALLY, SYSCON RECEIVED A MEAN SCORE OF 4.8 OUT OF 10 FOR THIS FACTOR WHILE PURVIS RECEIVED A MEAN SCORE OF 8.9 OUT OF 10.

AS A RESULT OF THE DISCUSSIONS AND A CONSIDERATION OF THE BEST AND FINAL OFFERS, PURVIS' TECHNICAL MERIT RATING REMAINED UNCHANGED. IN ITS BEST AND FINAL OFFER SYSCON REDUCED ITS CPFF PROPOSAL FROM $140,188 TO $118,306. ANALYSIS OF THIS OFFER RESULTED IN A REVISION OF SYSCON'S SCORE FOR FACTOR "C" TO A MEAN SCORE OF 3 OUT OF 10 AND A REVISED TECHNICAL MERIT RATING OF 68.37. THE RESULTANT BEST BUY ANALYSIS YIELDED THE FOLLOWING INDEXES: PURVIS 1.203; SYSCON 1.00. THE SEPTEMBER 17, 1973, FINAL REPORT OF THE TECHNICAL EVALUATION PANEL GIVES THE FOLLOWING REASONS FOR SYSCON'S REVISED SCORE:

"1. REFERENCE TECHNICAL EVALUATION REPORT DATED 25 JUN 73. IN THIS REPORT, THE CONCLUSION OF THE PANEL WITH RESPECT TO SCI'S VALIDITY OF COST ESTIMATE (FACTOR C) WAS THAT THEY WERE, AT BEST, JUST ACCEPTABLE. THE CHIEF AREAS IN QUESTION WERE THE COSTS OF WIRING AND ASSEMBLING. HENCE, SYSCON EARNED AN AVERAGE MARKED OF 4.8 OUT OF 10 FOR FACTOR C.

"2. REFERENCE SCI'S LETTER OF 14 SEPTEMBER 73. IN THIS LETTER SCI NOT ONLY RETAINED WHAT THE PANEL CONSIDERS AS LOW ASSEMBLY TIMES, BUT ALSO DECREASED THEIR ENGINEERING TIME ESTIMATES TO A LEVEL CONSIDERED AS BORDERING ON UNREALISTIC. THE PANEL, THEREFORE, ELECTED TO RE EVALUATE SCI'S PROPOSAL. *** NOTE THAT FACTOR C HAS BEEN REDUCED TO AN AVERAGE OF 3.0 OUT OF 10.0."

SYSCON FOCUSES ON THE PANEL'S INITIAL CONCLUSION THAT ITS COST ESTIMATES WERE "ACCEPTABLE." SYSCON CONSIDERS THIS CONCLUSION TO BE AN EXPRESS FINDING OF COST VALIDITY WHICH IS INCONSISTENT WITH THE SCORE SYSCON RECEIVED FOR FACTOR "C." WE SEE NO INCONSISTENCY. IN OUR VIEW, THE SCORE INITIALLY RECEIVED BY SYSCON WAS A QUANTIFICATION OF THE PANEL'S SUBJECTIVE JUDGMENT THAT SYSCON'S ESTIMATE WAS "AT BEST, JUST ACCEPTABLE."

QUOTING FROM THE EVALUATION REPORT OF JUNE 26, SYSCON ALSO NOTES THE EVALUATORS FOUND THAT CERTAIN TECHNIQUES USED BY IT "REFLECT IN LOWER WIRING COSTS." IT IS MAINTAINED THAT THE EVALUATORS IGNORED THIS FINDING WHEN THEY STATED THAT: "THE CHIEF AREAS IN QUESTION WERE THE COSTS OF WIRING AND ASSEMBLING." IN OUR VIEW, THE STATEMENTS QUOTED HAVE BEEN REMOVED FROM THEIR PROPER CONTEXT. THE FIRST STATEMENT WAS MADE IN CONNECTION WITH THE EVALUATORS' ASSESSMENT OF SYSCON'S UNDERSTANDING OF AND METHOD OF ACCOMPLISHING THE PROGRAM OBJECTIVES. THE TECHNICAL EVALUATION REPORT OF JUNE 26 CONTAINS THE FOLLOWING COMMENTS:

"A. PARAGRAPH 1.02 OF THE SCOPE OF WORK CITES THAT ALL MAJOR ITEMS SHALL BE MODULAR ON PLUG-IN CARDS AND SHALL BE DESIGNED SO AS TO EFFICIENTLY TROUBLESHOOT. THEIR PROPOSED MULTIPLE FUNCTION PER CARD (COUNTERS AND A/D RATE CONTROLLERS) WERE DEEMED BY THE PANEL AS A SIGNIFICANT MAINTENANCE/LOGISTICS HEADACHE - IN THE CASE OF COUNTERS, GANGING THREE TOGETHER RESULTS IN ONE DEFECTIVE COUNTER DISABLING TWO GOOD ONES.

"B. TO SUPPLEMENT THE ABOVE, SYSCON SUGGESTED USING MUXED DATA WITHIN A BOARD; THEY ALSO TRANSMIT THEIR DATA SERIALLY FROM THE A/D CONVERTERS AND COUNTERS AT HIGH RATES (2 MHZ). BOTH OF THESE TECHNIQUES ARE UNNECESSARY AS WELL AS MAKING TROUBLESHOOTING MUCH MORE DIFFICULT. BOTH IDEAS, HOWEVER, REFLECT IN LOWER WIRING COSTS."

MOREOVER, THE SECOND STATEMENT IS THE FINAL REPORT'S RECAPITULATION OF THE RESULTS OF THE INITIAL TECHNICAL EVALUATION IN THE AREA OF COST VALIDITY. THE ACTUAL FINDINGS WERE STATED IN THE JUNE 26 REPORT, IN PERTINENT PART, AS FOLLOWS:

"VALIDITY OF COST ESTIMATE: THE PANEL CHOSE TO REVIEW THIS AREA IN DETAIL. IT HAS BEEN FA'S (FRANKFORD ARSENAL'S) EXPERIENCE THAT SUBSTANTIAL COST OVERRUNS HAVE OCCURRED WITH SYSCON. HENCE, WE ANALYZED BOTH COST ESTIMATES IN GREAT DETAIL. BOTH FIRMS' HARDWARE ESTIMATES ARE PROBABLY CLOSE TO THE ACTUAL EXPENSES THAT SHALL OCCUR. HOWEVER, CONSIDERABLE DIFFERENCE IN TEST TIME AND ASSEMBLY TIME WERE NOTED BETWEEN SYSCON'S PROPOSAL AND THE INDEPENDENT GOVERNMENT COST ESTIMATE. HENCE, WITH MS. HELBIG'S (CONTRACTING NEGOTIATOR) APPROVAL, A PANEL MEMBER CONTACTED SYSCON FOR FURTHER INFORMATION ON THE COST SCHEDULE. SOME CHANGES OF TIME ESTIMATES DID OCCUR. HOWEVER, THE PANEL TAKES EXCEPTION TO THE FINAL ESTIMATES OF TASKS 4-5, 6-16, 15-27, 22-23, 24-25, AND FINALLY, TASK 38-39. FROM THE PANEL'S UNDERSTANDING OF THE AMOUNT OF LABOR INVOLVED IN THESE TASKS, IT IS JUST NOT POSSIBLE THAT SYSCON COULD ACCOMPLISH THEM WITHIN THE MANHOURS ALLOCATED GIVEN CURRENT PERFORMANCE STANDARDS AND HOURLY RATES FOR WIREMEN. IT WAS CONFIRMED IN ONE OF THE DISCUSSIONS WITH SYSCON THAT BOTH SYSCON AND FA WERE USING THE SAME STANDARDS AND RATES. THIS LAST TASK, THE FINAL SYSTEM TEST, HAS AN ALLOTTED TIME OF 120 HOURS; BASED UPON DEMONSTRATED PAST EXPERIENCES WITH BTSM AND ARMS, SYSCON'S TIME COULD BE OFF BY AS MUCH AS 500%. THE PANEL, THEREFORE, CONSIDERED SYSCON'S ESTIMATE, AT BEST, JUST ACCEPTABLE.

"PURVIS' COST ESTIMATE WAS ALSO VERY CAREFULLY REVIEWED. THEIR THOROUGH TIME ESTIMATES OCCURRING BETWEEN PAGES 4 AND 5 OF VOLUME II STRENGTHENED THEIR POSITION SIGNIFICANTLY; THE PANEL FELT THAT THE SPECIFIC HOURS, TYPES OF HOURS PROPOSED, AND MATERIALS WERE REASONABLE. HENCE, PURVIS EARNED A FAVORABLE SCORE."

THUS, PLACED IN PROPER PERSPECTIVE, WE FIND NO CONFLICT IN THE PANEL'S EVALUATION FINDINGS. SIMILARLY, SYSCON HAS MISINTERPRETED THE THRUST OF THE PANEL'S FINAL EVALUATION OF THE VALIDITY OF ITS COST ESTIMATE. SAY, AS THE PANEL DID, SYSCON'S REDUCED ENGINEERING ESTIMATES WERE "BORDERING ON (THE) UNREALISTIC" IS NOT A FINDING THAT SYSCON'S COST ESTIMATES WERE REALISTIC.

FINALLY, SYSCON ALLEGES THAT THE COST OVERRUNS ENCOUNTERED BY IT ON OTHER CONTRACTS WERE THE RESPONSIBILITY OF PURVIS PERSONNEL THEN IN THE EMPLOY OF SYSCON. AND, THEREFORE, ARMY SHOULD HAVE QUESTIONED THE REALISM OF PURVIS' COST ESTIMATE. PURVIS, OF COURSE, DISPUTES THE ALLEGATION THAT ITS PERSONNEL WERE RESPONSIBLE FOR THE OVERRUNS. WE NEED ONLY NOTE THAT THE EVALUATORS WERE AWARE OF THE SITUATION AND ANALYZED BOTH PROPOSALS IN DETAIL AND IN LIGHT OF THE GOVERNMENT'S INDEPENDENT COST ESTIMATE.

FOR THE FOREGOING REASONS, WE CANNOT CONCLUDE THAT THE ARMY DEPARTED FROM THE ESTABLISHED EVALUATION AND AWARD CRITERIA. MOREOVER, WE HAVE RECOGNIZED THAT IN THE AWARD OF COST REIMBURSEMENT CONTRACTS, THE CONTRACTING AGENCY HAS AN OBLIGATION AND THE BROAD DISCRETION TO DETERMINE THE REALISM OF THE COST AND TECHNICAL ASPECTS OF PROPOSALS. 50 COMP. GEN. 390, 418 (1970). ON THE RECORD BEFORE US, THE ARMY'S SELECTION AND AWARD OF A CONTRACT TO PURVIS CONSTITUTED A REASONABLE EXERCISE OF DISCRETION.

ACCORDINGLY, THE PROTEST IS DENIED.