B-180335, JUN 3, 1974

B-180335: Jun 3, 1974

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NOTWITHSTANDING THAT TOTAL QUANTITY OFFER OF NONMOBILIZATION BASE PRODUCER WAS $256. SINCE AWARD WOULD BE CONTRARY TO SECRETARIAL DETERMINATION DIRECTING AWARD TO MOBILIZATION BASE PRODUCERS AND IF PROCUREMENT WERE RESOLICITED UNDER SOLICITATION PROPERLY ADVISING OFFERORS THAT AWARD WAS RESTRICTED TO MOBILIZATION BASE PRODUCERS. GAO RECOMMENDS THAT SOLICITATIONS AND SYNOPSES FOR MOBILIZATION BASE PROCUREMENTS STATE THAT AWARD IS RESTRICTED TO MOBILIZATION BASE PRODUCERS AND SOLICITATIONS ALSO CONTAIN STATEMENT THAT MULTIPLE AWARDS WILL BE MADE WHEN THAT IS ACTUAL INTENTION. THIS DETERMINATION WAS MADE UNDER AUTHORITY OF 10 U.S.C. 2304(A)(16) WHICH PROVIDES IN PERTINENT PART: "(A) *** THE HEAD OF AN AGENCY MAY NEGOTIATE *** A PURCHASE *** IF - "(16) *** HE DETERMINES THAT *** IT IS IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A *** MANUFACTURER.

B-180335, JUN 3, 1974

1. NOTWITHSTANDING THAT TOTAL QUANTITY OFFER OF NONMOBILIZATION BASE PRODUCER WAS $256,000 LESS THAN COMBINED OFFERS OF MOBILIZATION BASE PRODUCERS ON SEPARATE QUANTITY BASIS, MULTIPLE AWARDS MADE TO MOBILIZATION BASE PRODUCERS PURSUANT TO SECRETARIAL DETERMINATION TO NEGOTIATE UNDER 10 U.S.C. 2304(A)(16), ALTHOUGH NOT IN ACCORDANCE WITH EXPRESS TERMS OF SOLICITATION WHICH DID NOT RESTRICT AWARD TO MOBILIZATION BASE PRODUCERS OR PERMIT MULTIPLE AWARDS AT PRICE EXCEEDING LOWER TOTAL-QUANTITY OFFER, DOES NOT PROVIDE BASIS FOR RECOMMENDING TERMINATION OF AWARDS AND AWARD TO NONMOBILIZATION BASE PRODUCER, SINCE AWARD WOULD BE CONTRARY TO SECRETARIAL DETERMINATION DIRECTING AWARD TO MOBILIZATION BASE PRODUCERS AND IF PROCUREMENT WERE RESOLICITED UNDER SOLICITATION PROPERLY ADVISING OFFERORS THAT AWARD WAS RESTRICTED TO MOBILIZATION BASE PRODUCERS, NONMOBILIZATION BASE PRODUCER WOULD NOT BE ELIGIBLE FOR AWARD BECAUSE NOT ON MOBILIZATION BASE LIST. 2. GAO RECOMMENDS THAT SOLICITATIONS AND SYNOPSES FOR MOBILIZATION BASE PROCUREMENTS STATE THAT AWARD IS RESTRICTED TO MOBILIZATION BASE PRODUCERS AND SOLICITATIONS ALSO CONTAIN STATEMENT THAT MULTIPLE AWARDS WILL BE MADE WHEN THAT IS ACTUAL INTENTION.

TO CEMSCO, INC.:

REQUEST FOR PROPOSALS (RFP) N00104-74R-TA06, ISSUED BY THE NAVY SHIPS PARTS CONTROL CENTER, ON AUGUST 15, 1974, SOLICITED OFFERS FOR FURNISHING MAU 93/B BOMB FIN ASSEMBLIES.

IN JULY 1973, PRIOR TO THE ISSUANCE OF THE RFP, THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS) AUTHORIZED THE PROCUREMENT OF THE BOMB FIN ASSEMBLIES BY NEGOTIATION INSTEAD OF FORMAL ADVERTISING. THIS DETERMINATION WAS MADE UNDER AUTHORITY OF 10 U.S.C. 2304(A)(16) WHICH PROVIDES IN PERTINENT PART:

"(A) *** THE HEAD OF AN AGENCY MAY NEGOTIATE *** A PURCHASE *** IF -

"(16) *** HE DETERMINES THAT *** IT IS IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A *** MANUFACTURER, OR OTHER SUPPLIER, AVAILABLE FOR FURNISHING PROPERTY *** IN CASE OF A NATIONAL EMERGENCY ***."

THE SECRETARY FURTHER DETERMINED THAT THE PRODUCTION CAPACITIES OF FOUR FIRMS (STRAIGHTLINE MANUFACTURING COMPANY, METALS ENGINEERING COMPANY, POLORON PRODUCTS, AND DELL INDUSTRIES) WOULD BE REQUIRED IN CASE OF NATIONAL EMERGENCY TO MEET THE PLANNED MOBILIZATION REQUIREMENTS FOR THE ASSEMBLIES. FORMAL ADVERTISING WAS CONSIDERED NOT TO BE FEASIBLE, BECAUSE THAT METHOD OF PROCUREMENT MIGHT REQUIRE AWARD OF A CONTRACT TO A LOW BIDDER WHO WAS NOT ONE OF THE FOUR PLANNED PRODUCERS FOR THE ASSEMBLIES, THEREBY PREVENTING AWARD OF SINGLE OR MULTIPLE CONTRACTS TO PRODUCERS HAVING THE REQUISITE MOBILIZATION BASE CAPACITIES TO THE DETRIMENT OF NATIONAL DEFENSE AND INDUSTRIAL MOBILIZATION.

RFP -TA06 WAS LISTED IN THE COMMERCE BUSINESS DAILY (CBD) OF AUGUST 20, 1973, IN PERTINENT PART AS FOLLOWS:

"*** RFP N00104-74-R-TA06. NOT AVAIL., FOR DISTRIBUTION. *** REQUESTS FOR PROPOSAL HAVE BEEN ISSUED TO (THERE FOLLOWED A LISTING OF THE FOUR FIRMS REFERENCED IN THE ASSISTANT SECRETARY'S DETERMINATION) *** SEE NOTE *** 24. ***"

NOTE 24 PROVIDES THAT A REQUEST FOR A COPY OF THE CITED PROPOSAL SHOULD BE RECEIVED BY THE ISSUING OFFICE NOT LATER THAN 10 DAYS FROM THE DATE OF LISTING OF THE SYNOPSIS IN THE CBD. ON AUGUST 23, 1973, A COPY OF THE RFP WAS FURNISHED TO CEMSCO, INC., BY THE ISSUING OFFICE IN RESPONSE TO A TELEPHONE REQUEST.

CEMSCO AND THE FOUR COMPANIES SOLICITED ORIGINALLY SUBMITTED INITIAL PROPOSALS FOR THE REQUIREMENT ON SEPTEMBER 5, 1973. AFTER THE RECEIPT OF INITIAL PROPOSALS, SEVERAL CHANGES WERE MADE IN THE RFP AND THE FIVE OFFERORS WERE PROVIDED AN OPPORTUNITY TO SUBMIT REVISED PROPOSALS.

DURING THE INTERVAL BETWEEN RECEIPT OF INITIAL PROPOSALS AND FINAL PROPOSALS, THE CONTRACTING OFFICER WAS DIRECTED TO "MAINTAIN TWO SOURCES IN ORDER TO PROTECT THE INDUSTRIAL MOBILIZATION BASE." BECAUSE OF THIS DIRECTIVE, THE CONTRACTING OFFICER DETERMINED WHICH COMBINATION OF AWARDS WOULD RESULT IN AWARD AT THE LOWEST EVALUATED COST WHILE MAINTAINING TWO SOURCES.

THE RFP, AS AMENDED, REQUESTED OFFERS ON VARIOUS QUANTITIES OF THE ASSEMBLIES AS FOLLOWS:

ITEM QUANTITY

0001AA 384,800

0001AB 253,968

0001AC192,400

0001AD 130,882

CEMSCO'S PRICES UNDER ITEMS 0001AB AND 0001AD WERE HIGHER THAN THOSE OF STRAIGHTLINE AND DELL. CEMSCO'S PRICE FOR ITEM 0001AA (COMPRISING 50 FEWER ASSEMBLIES THAN THE COMBINED NUMBERED ASSEMBLIES LISTED UNDER ITEMS 0001AB AND 0001AD) WAS SUBSTANTIALLY LESS THAN THAT SUBMITTED BY ALL OTHERS. MOST ADVANTAGEOUS AWARDS, GIVEN THE DIRECTIVE TO MAINTAIN TWO PRODUCERS, WERE 253,968 EACH UNDER ITEM 0001AB TO STRAIGHTLINE AND 130,882 EACH TO DELL UNDER ITEM 0001AD.

THE CONTRACTING OFFICER RECOGNIZES THAT THE SPLIT AWARDS, COMPARED TO A SIMPLE AWARD TO CEMSCO, REQUIRES PAYMENT OF A NET PREMIUM OF $256,000. ALSO STATES HE WAS AT FAULT FOR NOT INFORMING CEMSCO THAT THE RFP WAS RESTRICTED TO INDUSTRIAL MOBILIZATION BASE COMPANIES AND THAT CEMSCO'S OFFER COULD NOT BE CONSIDERED FOR AWARD OF A CONTRACT. IN THAT REGARD, THE CONTRACTING OFFICER POINTS OUT THAT THE AWARDS WERE IN ACCORDANCE WITH THE SECRETARIAL DETERMINATION SETTING ASIDE THE CONTRACTS FOR INDUSTRIAL MOBILIZATION BASE COMPANIES.

CEMSCO TAKES ISSUE WITH THE VIEW THAT THE AWARDS WERE PROPER. IT URGES THAT THE TERMS OF THE RFP DID NOT PERMIT THE MULTIPLE AWARDS IN QUESTION. IT DOES NOT QUESTION THE VALIDITY OF THE SECRETARY'S JULY 1973 DETERMINATION. NEITHER DOES IT ASSERT THAT THE AWARDS WOULD HAVE BEEN PROPER HAD THE RFP ADVISED OFFERORS THAT AWARD WOULD BE RESTRICTED TO MOBILIZATION BASE PRODUCERS.

THE RFP, AS AMENDED, DOES NOT CONTAIN ANY INDICATION THAT THIS PROCUREMENT WAS AN "EXCEPTION 16" PROCUREMENT. MOREOVER, SECTION D-4, "EVALUATION OF OFFERS," AT PAGE 12 OF THE RFP PROVIDED FOR A COST OF $90 PER CONTRACT FOR CONTRACT ADMINISTRATION BEING CONSIDERED IN DETERMINING THE LOWEST AGGREGATE COST TO THE GOVERNMENT AND WHETHER TO MAKE MULTIPLE AWARDS. THE IMPORT OF THIS PROVISION IS THAT MULTIPLE AWARDS WOULD NOT BE MADE UNLESS THE AWARD OF MORE THAN ONE CONTRACT AND THE CONSIDERATION OF THE COST OF ADMINISTERING THE MULTIPLE CONTRACTS ESTIMATED TO BE $90 A CONTRACT WOULD RESULT IN THE LOWEST AGGREGATE COST TO THE GOVERNMENT.

THE RFP, AS AMENDED, WAS FUNDAMENTALLY DEFECTIVE IN NOT INFORMING OFFERORS THAT ONLY INDUSTRIAL MOBILIZATION BASE COMPANIES WERE ELIGIBLE FOR AWARD AND THAT A DETERMINATION HAD BEEN MADE TO MAKE MULTIPLE AWARDS. SEE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-501(B)(3), SECTION DI), EVALUATION FACTORS FOR AWARD, WHICH PROVIDES AS PERTINENT:

"*** THE SOLICITATION SHALL CLEARLY INFORM OFFERORS OF (I) THE SIGNIFICANT EVALUATION FACTORS ***."

ALSO, WITH RESPECT TO THE DETERMINATION TO MAKE MULTIPLE AWARDS CONTRARY TO THE PROVISIONS OF SECTION D-4 OF THE RFP, ASPR 3-505 STATES:

"(A) IF AFTER ISSUANCE OF A REQUEST FOR PROPOSALS OR QUOTATIONS, BUT BEFORE THE CLOSING DATE OF THEIR RECEIPT, IT BECOMES NECESSARY *** TO CORRECT A DEFECT ***, SUCH CHANGE SHALL BE ACCOMPLISHED BY ISSUANCE OF AN AMENDMENT TO THE REQUEST ***."

CEMSCO, THEN, MUST BE VIEWED AS THE SUCCESSFUL OFFEROR UNDER THE TERMS OF THE DEFECTIVE RFP. HOWEVER, WE AGREE WITH THE CONTRACTING OFFICER THAT HE HAD AUTHORITY UNDER THE SECRETARIAL DETERMINATION AND THE DIRECTIVE TO MAKE THE SPLIT AWARDS TO THE MOBILIZATION BASE PRODUCERS.

THE SECRETARIAL DETERMINATION WAS MADE BEFORE THE RFP WAS ISSUED. EXPRESSLY LISTED THE ASSEMBLIES AS MOBILIZATION BASE ITEMS FOR WHICH REQUIREMENTS COULD BE PROCURED BY NEGOTIATION DURING FISCAL YEAR 1974. NAMED THE SOLICITED MOBILIZATION BASE PRODUCERS AS SOURCES WHOSE CURRENT PRODUCTION CAPACITIES MUST BE MAINTAINED IN ORDER TO MEET PLANNED MOBILIZATION REQUIREMENTS. WE CANNOT, THEREFORE, QUESTION THE APPLICABILITY OF THE SECRETARIAL DETERMINATION TO THIS PROCUREMENT. SINCE THE DETERMINATION REQUIRED AWARD TO MOBILIZATION BASE PRODUCERS ONLY AND BECAUSE CEMSCO WAS NOT A LISTED MOBILIZATION BASE PRODUCER AT THE TIME OF AWARD, WE CONCLUDE THAT IT WAS PROPER TO PRECLUDE AN AWARD TO CEMSCO.

BECAUSE OF THIS CONCLUSION, WE SEE NO BASIS FOR RECOMMENDING TERMINATION OF THE AWARDED CONTRACTS AND AWARD TO CEMSCO, AS THE COMPANY URGES. THAT WOULD NOT CURE THE DEFECTIVE RFP AND, MOREOVER, WOULD BE CONTRARY TO THE AUTHORITY DIRECTING AWARD TO MOBILIZATION BASE PRODUCERS ONLY. IF NAVY RESOLICITED THE REQUIREMENT UNDER RFP PROPERLY ADVISING OFFERORS OF THE RESTRICTION, CEMSCO WOULD NOT BE ELIGIBLE FOR AWARD SINCE IT IS NOT ON THE LIST OF MOBILIZATION PRODUCERS.

IN VIEW OF THE FOREGOING, THE CEMSCO PROTEST IS DENIED.

WE ARE, HOWEVER, BY LETTER OF TODAY TO THE SECRETARY OF THE NAVY RECOMMENDING THAT FUTURE SOLICITATIONS FOR "MOBILIZATION BASE" REQUIREMENTS STATE THAT ONLY MOBILIZATION BASE PRODUCERS WILL BE ELIGIBLE FOR AWARD AND ALSO CONTAIN AN ACCURATE STATEMENT THAT MULTIPLE AWARDS WILL BE MADE WHEN THAT IS THE ACTUAL INTENTION. ADDITIONALLY, WE ARE RECOMMENDING TO THE SECRETARY THAT THE SYNOPSES OF SUCH FUTURE PROCUREMENTS ALSO CONTAIN A STATEMENT THAT AWARD WILL BE RESTRICTED TO MOBILIZATION BASE PRODUCERS ONLY.