B-180292, SEP 12, 1974

B-180292: Sep 12, 1974

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AWARD UNDER RFP FOR ADPE REQUIREMENT WAS IMPROPER. SINCE OFFERORS WERE NOT COMPETING ON EQUAL BASIS. WHERE RFP WAS SO INHERENTLY DEFECTIVE THAT IDENTITY OF OTHERWISE LOWEST ACCEPTABLE OFFEROR CANNOT BE DETERMINED WITH NECESSARY CERTAINTY. ALTHOUGH ADPE CONTRACT WAS AWARDED IMPROPERLY. PRIOR DECISION RECOMMENDING RESOLICITATION IS MODIFIED IN VIEW OF EVIDENCE PRESENTED BY CONTRACTING AGENCY ESTABLISHING THAT IT WOULD NOT BE IN BEST INTEREST OF GOVERNMENT TO RESOLICIT. DPF FURTHER STATES THAT THE OBVIOUS PURPOSE FOR GSA'S ISSUANCE OF MTC WAS TO ELIMINATE THE NEED FOR NEGOTIATION OF THE CONDITIONS TO BE INCLUDED IN ADPE CONTRACTS FOR THE SUPPLY OF BRAND NAME ITEMS AND TO ALLOW AWARD UNDER SUCH RFP'S TO BE MADE ON THE BASIS OF LOWEST OVERALL COST TO THE GOVERNMENT.

B-180292, SEP 12, 1974

1. AWARD UNDER RFP FOR ADPE REQUIREMENT WAS IMPROPER, SINCE OFFERORS WERE NOT COMPETING ON EQUAL BASIS, INASMUCH AS TELEGRAPHIC RFP MADE NO REFERENCE TO CONTRACT CONDITIONS NOR TO ADPE'S INSTALLATION LIMITATIONS, AND SHORTAGE OF PROCUREMENT TIME DOES NOT EXCUSE AGENCY FROM INFORMING OFFERORS OF CONTRACT REQUIREMENTS. 2. WHERE RFP WAS SO INHERENTLY DEFECTIVE THAT IDENTITY OF OTHERWISE LOWEST ACCEPTABLE OFFEROR CANNOT BE DETERMINED WITH NECESSARY CERTAINTY, AWARD CANNOT BE MADE TO PROTESTER, AND IT WOULD BE VIOLATION OF FEDERAL PROCUREMENT LAW AND PREJUDICIAL TO OTHER OFFERORS TO CONDUCT DISCUSSIONS WITH PROTESTER TO MAKE PROPOSAL ACCEPTABLE. 3. ALTHOUGH ADPE CONTRACT WAS AWARDED IMPROPERLY, PRIOR DECISION RECOMMENDING RESOLICITATION IS MODIFIED IN VIEW OF EVIDENCE PRESENTED BY CONTRACTING AGENCY ESTABLISHING THAT IT WOULD NOT BE IN BEST INTEREST OF GOVERNMENT TO RESOLICIT.

DPF INCORPORATED:

BY DECISION B-180292, JUNE 5, 1974, WE SUSTAINED THE PROTEST OF DPF INCORPORATED (DPF) AGAINST THE AWARD OF CONTRACT NO. 4-35556 TO ITEL CORPORATION (ITEL) UNDER A REQUEST FOR PROPOSALS (RFP) ISSUED BY THE UNITED STATES DEPARTMENT OF COMMERCE (COMMERCE) BECAUSE COMMERCE FAILED TO PROPERLY CONDUCT DISCUSSIONS WITH DPF. THE RFP REQUESTED PROPOSALS FOR THE LEASE AND MAINTENANCE OF AN IBM 360/65 CPU AND THE RENTAL OF AN IBM 3330 DISK UNIT OR EQUIVALENT.

WE RECOMMENDED THAT THIS REQUIREMENT BE RESOLICITED IMMEDIATELY AND AWARD MADE THEREON AT WHICH TIME THE PRESENT CONTRACT MAY BE CANCELED. WE WENT ON TO STATE:

"WE DO NOT BELIEVE IT APPORPRIATE IN THE PRESENT CASE TO CANCEL THE CONTRACT AND AWARD IT TO DPF, RATHER THAN RESOLICITING THE REQUIREMENT, BECAUSE THE CONTRACT AS WRITTEN INCLUDES PROVISIONS, SUCH AS THE LIQUIDATED THESE PROVISIONS." WELL MATERIALLY AFFECTED THE OFFERORS' PRICES HAD THEY BEEN ON NOTICE DAMAGES CLAUSE, TO WHICH THE RFP IDD NOT MAKE REFERENCE BUT WHICH COULD

BY LETTERS DATED JUNE 25 AND JULY 2, 1974, COUNSEL FOR DPF REQUESTED THAT WE RECONSIDER OUR DECISION INSOFAR AS WE RECOMMEND RESOLICITING THE REQUIREMENT INSTEAD OF AWARDING THE CONTRACT TO DPF AS THE LOW OFFEROR UNDER THE RFP. IN THIS REGARD, DPF CONTENDS THAT CONTRACT NO. 4-35556, EXCEPT FOR INCONSEQUENTIAL VARIATIONS, ADOPTED THE LANGUAGE OF THE STANDARDIZED "MASTER TERMS AND CONDITIONS" (MTC) FOR THIRD PARTY SUPPLIERS OF AUTOMATIC DATA PROCESSING EQUIPMENT (ADPE), ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA) UNDER ITS COMPREHENSIVE AUTHORITY TO CONTROL THE GOVERNMENT'S PROCUREMENT OF ADPE. DPF NOTES THAT IT AND ALL OTHER ACTIVE THIRD PARTY ADPE SUPPLIERS (INCLUDING ITEL) FORMALLY SUBSCRIBE TO MTC. DPF FURTHER STATES THAT THE OBVIOUS PURPOSE FOR GSA'S ISSUANCE OF MTC WAS TO ELIMINATE THE NEED FOR NEGOTIATION OF THE CONDITIONS TO BE INCLUDED IN ADPE CONTRACTS FOR THE SUPPLY OF BRAND NAME ITEMS AND TO ALLOW AWARD UNDER SUCH RFP'S TO BE MADE ON THE BASIS OF LOWEST OVERALL COST TO THE GOVERNMENT. DPF CONCLUDES THAT THE OFFERORS WERE THEREFORE ON NOTICE OF THE PROVISIONS IN THIS CONTRACT AND AWARD UNDER THIS BRAND-NAME ADPE PROCUREMENT, FOR WHICH PRICE WAS THE DETERMINATIVE FACTOR, SHOULD HAVE BEEN MADE TO DPF AS THE LOWEST OTHERWISE ACCEPTABLE OFFEROR.

DPF FURTHER NOTES THAT COMMERCE HAD DETERMINED PURSUANT TO 41 U.S.C. 252(C) (2) THAT "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING" FOR THIS ADPE PROCUREMENT. DPF CONTENDS THAT THE PRESS OF TIME NECESSARILY INVOLVED IN THIS PROCUREMENT SHOULD EXCUSE THE TELEGRAPHIC FRP FROM STATING ALL OF THE PROVISIONS TO BE INCLUDED IN THE CONTRACT.

DPF ALSO CONTENDS THAT THE RESOLICITATION CANNOT REMEDY THE UNFAIRNESS OF THE PROCUREMENT PROCEDURE INVOLVED HERE, IN VIEW OF THE INHERENT COMPETITIVE ADVANTAGE THAT HAS ACCRUED TO ITEL BY VIRTUE OF ITS HAVING BEEN IMPROPERLY AWARDED THE CONTRACT AND ITS RECEIPT OF THE RENTS THEREON ALLOWING IT TO AMORTIZE ITS INVESTMENT IN THE EQUIPMENT ALREADY INSTALLED.

BY LETTER DATED JULY 12, 1974, COMMERCE ALSO REQUESTED THAT WE RECONSIDER OUR DECISION. COMMERCE STATES THAT IT HAS MADE A RETROSPECTIVE TECHNICAL EVALUATION OF DPF'S PROPOSAL UNDER THE RFP, WHICH HAS REVEALED THAT DPF'S PROPOSAL WAS UNACCEPTABLE IN ANY CASE, SO THAT COMMERCE'S FAILURE TO HOLD DISCUSSIONS WITH DPF DID NOT MAKE THE AWARD TO ITEL FATALLY DEFICIENT SO AS TO REQUIRE RESOLICITATION OF THE REQUIREMENT. COMMERCE FIRST CONTENDS THAT DPF'S OFFERED 360/65 IH CPU IS NOT ACCEPTABLE BECAUSE DPF'S PROPOSAL OFFERED A CORE MEMORY MANUFACTURED BY STANDARD MEMORIES INCORPORATED (SMI) BUT COMMERCE'S RESEARCH HAS REVEALED THAT SMI DOES NOT OFFER SUCH STORAGE UNITS FOR THE IBM 360/65 CPU.

ALSO, COMMERCE STATES THAT THE IBM 360/65 IH CPU OFFERED BY DPF CANNOT FIT IN THE AREA AVAILABLE FOR INSTALLATION.

COMMERCE FURTHER STATES THAT THE ADPE REQUIREMENT, WHICH WAS THE SUBJECT OF THE RFP, WILL BE REPROCURED IN 1975. THIS REPROCUREMENT IS IN ACCORDANCE WITH GSA'S DELEGATION OF PROCUREMENT AUTHORITY, WHICH WAS ONLY FOR AN INTERIM PERIOD NOT TO EXCEED TWO YEARS AND WHICH REQUIRES COMMERCE TO DESIGN SYSTEMS SPECIFICATIONS DURING THE INTERIM PERIOD IN ORDER TO ISSUE A SOLICITATION TO REPLACE THE BRAND-NAME ADPE ON A FULLY COMPETITIVE BASIS. COMMERCE CONTENDS THAT THE COST AND EFFORT IN COMPLYING WITH OUR RECOMMENDATION THAT THIS REQUIREMENT BE RESOLICITED IMMEDIATELY WOULD BE OPERATIONALLY PROHIBITIVE IN VIEW OF THE FACT THAT ANY AWARD UNDER THE RESOLICITATION WOULD BE FOR A PERIOD OF LESS THAN 12 MONTHS. IN THIS REGARD, COMMERCE ALLEGES THAT INSTALLATION OF NEW EQUIPMENT WOULD TAKE APPROXIMATELY 11 DAYS AND WOULD COST COMMERCE AT LEAST $67,000 REPRESENTING INCOME LOST FOR ADPE SERVICES TO THE VARIOUS DIVISIONS IN COMMERCE. THIS ALSO WOULD CAUSE A BACKLOG OF WORK FOR THE COMPUTER AFTER THE INSTALLATION PERIOD AND MAY CAUSE SOME DIVISIONS TO INCUR THE FURTHER EXPENSE OF OBTAINING COMPUTER SERVICES FROM OTHER SOURCES.

FURTHERMORE, ALTHOUGH COMMERCE HAS INDICATED THAT IT BELIEVES IT MAY BE FEASIBLE TO RESOLICIT, IT HAS SUGGESTED THAT IT MAY NOT BE ABLE TO DO SO ON THE SAME BASIS AS THE ORIGINAL RFP, BECAUSE THE IBM 3330 EQUIVALENT DISK UNIT AND THE CORE MEMORY FOR THE CPU MAY HAVE TO BE DELETED AND OBTAINED UNDER GSA REQUIREMENTS CONTRACTS FOR THOSE ITEMS, SINCE THE PREVIOUS WAIVER OF THESE MANDATORY SOURCES OF SUPPLY MAY NO LONGER APPLY IF THERE ARE IMPROVED DELIVERY SCHEDULES.

COMMERCE CONCLUDES THAT IN VIEW OF THE TECHNICAL UNACCEPTABILITY OF DPF'S PROPOSAL AND THE HIGH COST OF INTERRUPTED ADPE SERVICES TO COMMERCE, IT WOULD NOT BE IN THE GOVERNMENT'S BEST INTERESTS TO RECOMPETE THIS REQUIREMENT.

DPF HAS DISPUTED COMMERCE'S CONTENTION THAT ITS PROPOSAL WOULD HAVE BEEN TECHNICALLY UNACCEPTABLE IN ANY CASE. IN THIS REGARD, DPF STATES THAT SMI DOES MANUFACTURE A CORE MEMORY WHICH IS PART OF THE INTERMEM CORPORATION'S (INTERMEM) 7065 SYSTEM FOR THE IBM 360/65 CPU, WHICH WAS BEING OFFERED BY DPF IN THIS CASE. THE INTERMEM 7065 COMBINES SMI'S STORAGE MODULES WITH INTERMEM'S INTERFACE FOR THE IBM 360/65. ALSO, DPF NOTES THAT NO SPACE LIMITATIONS WERE STATED IN THE RFP, AND THAT BY SIMPLY ROTATING ONE PIECE OF EQUIPMENT IN THE COMPUTER ROOM, DPF'S IBM 360/65 I CPU WOULD FIT IN THE AREA AVAILABLE FOR INSTALLATION.

HOWEVER, COMMERCE NOTES THAT DPF DOES NOT MAKE ANY REFERENCE TO INTERMEM IN ITS PROPOSAL. COMMERCE FURTHER CONTENDS THAT DPF'S PROPOSAL CANNOT REASONABLY BE CONSTRUED TO MEAN THAT DPF WAS ACTUALLY OFFERING THE INTERMEM 7065. COMMERCE ALSO ALLEGES THAT DPF'S SMALLER IBM 360/65 I CPU WOULD NOT SATIFSY COMMERCE'S SPACE REQUIREMENTS. THE TELEGRAPHIC RFP STATED:

"THE DEPARTMENT OF COMMERCE IS REQUESTING A PROPOSAL TO A REQUIREMENT FOR AN IBM 360/65. THE CONFIGURATION IS TO CONTAIN 1.5 MILLION CHARACTERS OF MAIN-STORAGE, 3 SELECTOR CHANNELS, 1 MULTIPLEX CHANNEL, 1 1052 ADAPTER AND 2 DISC STORAGE UNITS IMB 3330 EQUIVALENT AND CONTROLLER. THE PROPOSAL WILL BE INCLUSIVE OF MAINTENANCE OF THE ABOVE. DELIVERY IS REQUESTED FOR DECEMBER 21, 1973 ***"

NO REFERENCE WAS MADE IN THE RFP CONCERNING THE CONDITIONS TO BE CONTAINED IN THE CONTRACT AWARDED PURSUANT TO THE RFP.

HOWEVER, FEDERAL PROCUREMENT REGULATION (FPR) 1-3.802(C) PROVIDES:

"REQUESTS FOR PROPOSALS SHALL CONTAIN THE INFORMATION NECESSARY TO ENABLE A PROSPECTIVE OFFEROR TO PROPERLY PREPARE A QUOTATION OR PROPOSAL. THE REQUEST FOR PROPOSALS SHALL BE AS COMPLETE AS POSSIBLE WITH RESPECT TO:

*** SPECIFICATIONS; *** SPECIAL PROVISIONS; *** AND CONTRACT CLAUSES.

FURTHER, IT IS A FUNDAMENTAL PRINCIPLE OF FEDERAL PROCUREMENT LAW THAT SOLICITATIONS BE DRAFTED IN SUCH A MANNER TO INFORM THE OFFERORS IN CLEAR AND UNAMBIGUOUS TERMS OF WHAT WILL BE REQUIRED OF THEM UNDER THE CONTRACT TO BE AWARDED SO THAT THE OFFERORS CAN COMPETE ON AN EQUAL BASIS. SEE 36 COMP. GEN. 380 (1956); 48 COMP. GEN. 326 (1968); 49 COMP. GEN. 713 (1970); B-178857, OCTOBER 5, 1973; 53 COMP. GEN.---(B 179836, FEBRUARY 25, 1974); 54 COMP. GEN. (B-167015, JULY 2, 1974). NO PROSPECTIVE CONTRACTOR CAN INTELLIGENTLY COMPUTE HIS OFFER WITHOUT BEING FULLY INFORMED BEFOREHAND OF WHAT WILL BE REQUIRED OF HIM AND OF ALL FACTORS WHICH WILL MATERIALLY AFFECT THE COST OF HIS WORK OR HIS ABILITY TO PERFORM.

IN THE PRESENT CASE, ALTHOUGH COMMERCE MAY HAVE INCLUDED MANY CONDITIONS, WHICH ARE THE SAME AS THOSE IN MTC , IN THE CONTRACT AWARDED TO ITEL, IT NEVER INFORMED THE OFFERORS BEFOREHAND WHAT PROVISIONS WOULD BE IN THE CONTRACT. MOREOVER, ALTHOUGH IT IS NOW CLEAR THAT COMMERCE REGARDS SPACE LIMITATIONS FOR THE INSTALLATION OF THE PROCURED ADPE AS AN ESSENTIAL REQUIREMENT, NO REFERENCE WAS MADE TO THIS REQUIREMENT IN THE RFP.

SHORTAGE OF PROCUREMENT TIME DOES NOT EXCUSE A PROCURING AGENCY FROM INFORMING THE OFFERORS OF THE CONDITIONS INCLUDED IN THE CONTRACT TO BE AWARDED UNDER THE RFP. EVEN A TELEGRAPHIC RFP SHOULD INCORPORATE BY REFERENCE THOSE PROVISIONS TO BE INCLUDED IN THE CONTRACT.

SINCE IT IS OUR VIEW THAT THE RFP WAS SO INHERENTLY DEFECTIVE THAT THE IDENTITY OF THE OTHERWISE LOWEST ACCEPTABLE OFFEROR CANNOT BE DETERMINED WITH THE NECESSARY CERTAINTY, WE CANNOT RECOMMEND A DIRECT AWARD TO DPF. IN ANY CASE, WE BELIEVE IT WOULD BE IN VIOLATION OF FEDERAL PROCUREMENT LAW AND PREJUDICIAL TO THE OTHER OFFERORS TO CONDUCT THE DISCUSSIONS WHICH WOULD BE NEEDED TO MAKE DPF'S ORIGINAL PROPOSAL ACCEPTABLE FOR COMMERCE'S REQUIREMENTS.

ORDINARILY, WE WOULD REITERATE OUR RECOMMENDATION THAT THIS REQUIREMENT BE RESOLICITED. HOWEVER, WHERE WE HAVE CONCLUDED THAT A CONTRACT HAS BEEN IMPROPERLY AWARDED, WE HAVE TAKEN INTO CONSIDERATION CERTAIN FACTORS, SUCH AS GOOD FAITH OF THE PARTIES, URGENCY OF THE PROCUREMENT, EXTENT OF PERFORMANCE AND COST TO THE GOVERNMENT, IN DECIDING WHETHER THE AWARD SHOULD BE DISTURBED. SEE 51 COMP. GEN. 423 (1972); B-177285, APRIL 6, 1973; B-178857, SUPRA; 53 COMP. GEN. (B 178625, NOVEMBER 8, 1973); B- 178701, FEBRUARY 22, 1974. IN VIEW OF THE PRESENT EVIDENCE SUBMITTED BY COMMERCE REGARDING THE COST AND OTHER PROBLEMS INVOLVED IN RESOLICITING THIS REQUIREMENT AND SINCE THE RECORD SHOWS NO INDICATION OF BAD FAITH ON THE PART OF ITEL OR COMMERCE, WE NO LONGER BELIEVE IT IS IN THE GOVERNMENT'S BEST INTEREST TO RESOLICIT.

COMMERCE ALSO HAS INDICATED THAT THE DESIGN OF THE SYSTEMS SPECIFICATION, WHICH WAS REQUIRED BY GSA IN ITS DELEGATION OF PROCUREMENT AUTHORITY, WILL BE COMPLETED IN JANUARY 1975. THE ADPE TO BE PROCURED IN ACCORDANCE WITH THE REVISED SPECIFICATION WILL REPLACE THE PRESENT "BRAND-NAME" ADPE ON A FULLY COMPETITIVE BASIS. THIS RESOLICITATION IS EXPECTED TO BE ISSUED BY APRIL 1, 1975, TO ALLOW FOR THE NECESSARY COORDINATION WITH GSA. NEGOTIATIONS AND AWARD ARE EXPECTED TO BE COMPLETED BY JULY 1, 1975. CONSEQUENTLY, THE PERIOD WHICH WOULD BE COVERED BY THE IMMEDIATE RESOLICITATION RECOMMENDED IN OUR PREVIOUS DECISION WOULD BE FOR NO MORE THAN ABOUT 9 MONTHS. MOREOVER, IF COMMERCE IS UNABLE TO SECURE AN EXCEPTION TO ITS OBLIGATION TO PURCHASE THE IBM 3330 AND CORE MEMORY UNDER GSA REQUIREMENTS CONTRACTS, THE RESOLICITATION OF THIS ADPE REQUIREMENT WOULD BE ON A DIFFERENT BASIS THAN THE DEFECTIVE RFP.

ACCORDINGLY, DECISION B-180292, JUNE 5, 1974, IS MODIFIED INSOFAR AS RECOMMENDING RESOLICITATION OF THIS REQUIREMENT. HOWEVER, BY LETTER OF TODAY, WE ARE REQUESTING THE SECRETARY OF COMMERCE TO TAKE THE NECESSARY STEPS TO INSURE THAT THE PROCUREMENT DEFICIENCIES NOTED ABOVE DO NOT RECUR IN FUTURE PROCUREMENTS.