B-180468, APR 25, 1974

B-180468: Apr 25, 1974

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WHICH WERE NOT LISTED IN IFB AS EVALUATION FACTOR. SECTION DI) REQUIRES EXACT BASIS UPON WHICH BIDS WILL BE EVALUATED TO BE STATED IN IFB AND SINCE GAO HAS ALSO HELD THAT IF ANY FACTOR OTHER THAN BID PRICE IS TO BE CONSIDERED IN DETERMINING LOW BIDDER. SO THAT ALL BIDDERS ARE ON EQUAL FOOTING. 2. ALTHOUGH SECOND LOW BIDDER APPARENTLY URGES THAT FAILURE TO LIST ADMINISTRATIVE COST OF FIRST ARTICLE APPROVAL AS EVALUATION FACTOR SHOULD NOT PRECLUDE CONSIDERATION OF COST AFTER BID OPENING IN DETERMINING LOWEST BIDDER SINCE COST WAS IMPROPERLY OMITTED AS EVALUATION FACTOR FROM IFB. GAO CONCLUDES THAT COST WAS PROPERLY OMITTED FROM IFB SINCE THERE IS NO MANDATORY ASPR REQUIREMENT THAT COST BE CONSIDERED AS EVALUATION FACTOR AND SINCE GAO VIEWS AGENCY STATEMENT THAT COST WAS INSIGNIFICANT TO INDICATE THAT COST WAS NOT CAPABLE OF REALISTIC ESTIMATION. 3.

B-180468, APR 25, 1974

1. ADMINISTRATIVE COSTS INCIDENT TO APPROVAL OF FIRST ARTICLE, WHICH WERE NOT LISTED IN IFB AS EVALUATION FACTOR, MAY NOT BE CONSIDERED AFTER BID OPENING IN DETERMINING LOW BIDDER SINCE ASPR 2-201(A), SECTION DI) REQUIRES EXACT BASIS UPON WHICH BIDS WILL BE EVALUATED TO BE STATED IN IFB AND SINCE GAO HAS ALSO HELD THAT IF ANY FACTOR OTHER THAN BID PRICE IS TO BE CONSIDERED IN DETERMINING LOW BIDDER, IFB MUST ADVISE BIDDERS OF SUCH FACTOR, SO THAT ALL BIDDERS ARE ON EQUAL FOOTING. 2. ALTHOUGH SECOND LOW BIDDER APPARENTLY URGES THAT FAILURE TO LIST ADMINISTRATIVE COST OF FIRST ARTICLE APPROVAL AS EVALUATION FACTOR SHOULD NOT PRECLUDE CONSIDERATION OF COST AFTER BID OPENING IN DETERMINING LOWEST BIDDER SINCE COST WAS IMPROPERLY OMITTED AS EVALUATION FACTOR FROM IFB, GAO CONCLUDES THAT COST WAS PROPERLY OMITTED FROM IFB SINCE THERE IS NO MANDATORY ASPR REQUIREMENT THAT COST BE CONSIDERED AS EVALUATION FACTOR AND SINCE GAO VIEWS AGENCY STATEMENT THAT COST WAS INSIGNIFICANT TO INDICATE THAT COST WAS NOT CAPABLE OF REALISTIC ESTIMATION. 3. NEITHER COST INCIDENT TO PREAWARD SURVEY NOR COSTS INCIDENT TO LONGER DELIVERY SCHEDULE CONTEMPLATED FOR LOW BIDDER WHO REQUIRED FIRST ARTICLE APPROVAL MAY BE CONSIDERED AS EVALUATION FACTORS IN DETERMINING LOWEST BIDDER SINCE, APART FROM CONSIDERATION THAT COSTS WERE NOT LISTED IN IFB AS EVALUATION FACTORS, ADMINISTRATIVE COST MUST BE INCURRED IN DETERMINING ANY BIDDER'S RESPONSIBILITY WHETHER A PREAWARD SURVEY IS ORDERED FOR A PARTICULAR BIDDER OR NOT, HENCE COST OF DETERMINING BIDDER'S RESPONSIBILITY THROUGH PREAWARD SURVEY, EVEN ASSUMING IT COULD BE REALISTICALLY ESTIMATED, DOES NOT AFFORD RATIONAL BASIS FOR DISCRIMINATION BETWEEN SUBMITTED BIDS; MOREOVER, ASPR 1 1903(A)(I) PRECLUDES USE OF DIFFERENCE IN DELIVERY SCHEDULES RESULTING FROM NEED FOR FIRST ARTICLE APPROVAL AS EVALUATION FACTOR.

TO TELEDYNE MCCORMICK-SELPH:

IFB F42600-74-B-6233 WAS ISSUED BY THE DEPARTMENT OF AIR FORCE ON OCTOBER 30, 1973, FOR FZU-1/B BOOSTER FUZES.

SECTION C-33, "FIRST ARTICLE APPLICABILITY," OF THE IFB DESCRIBED TWO CLASSES OF BIDDERS. THOSE BIDDERS WHO HAD NOT SUPPLIED THE ITEMS IN THE PRECEDING 12-MONTH PERIOD WERE TO SUBMIT BIDS UNDER BID "A" (FIRST ARTICLE APPROVAL REQUIRED) AND THOSE BIDDERS WHO HAD SUPPLIED THE FUZES WITHIN THE PAST 12 MONTHS WERE TO SUBMIT BIDS UNDER BID "B" (FIRST ARTICLE APPROVAL NOT REQUIRED). ADDITIONALLY, THE IFB, AS AMENDED, REQUIRED BID "A" BIDDERS WHO HAD NEVER FURNISHED FUZES TO THE GOVERNMENT TO CONDUCT A FORMAL QUALIFICATION TEST OF THE ITEMS.

RECOGNIZING THE TIME REQUIRED FOR APPROVAL OF FIRST ARTICLE, THE IFB PROVIDED THAT BID "A" BIDDERS WERE REQUIRED TO COMPLETE DELIVERY OF THE ITEMS WITHIN 330 DAYS FROM THE DATE OF RECEIPT OF FIRST ARTICLE APPROVAL WHICH WAS TO BE COMPLETED WITHIN 105 DAYS FROM DATE OF AWARD. CONTRAST, BID "B" BIDDERS WERE REQUIRED TO COMPLETE DELIVERY WITHIN 360 DAYS AFTER THE CONTRACTOR RECEIVED WRITTEN NOTICE OF AWARD. THE IFB FURTHER ADVISED BIDDERS THAT EITHER BID "A" OR BID "B" OFFERS WERE EQUALLY ACCEPTABLE AND THAT AWARD WAS TO BE MADE CONSISTENT WITH THE BEST INTEREST OF THE GOVERNMENT.

IN ADDITION, PARAGRAPH 10(A) OF STANDARD FORM 33A OF IFB PROVIDED:

"THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE OFFER CONFORMING TO THE SOLICITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED."

SECTION J-4 OF THE IFB SET FORTH SPECIAL PROVISIONS ON FIRST ARTICLE APPROVAL FOR BID "A" BIDDERS. IT PROVIDED THAT THE FIRST ARTICLE WAS 50 UNITS OF THE FUZES AND THAT THE CONTRACTOR WAS TO REPORT ON THE RESULT OF THE TESTING. THE SCHEDULE OF THE IFB FURTHER PROVIDED THAT 50 FIRST ARTICLE TEST REPORTS (PRESUMABLY ONE FOR EACH OF THE UNITS TESTED) WERE TO BE PROVIDED TO THE GOVERNMENT.

BIDS WERE OPENED ON DECEMBER 7, 1973, AND HOLEX INCORPORATED, A BID "A" BIDDER, SUBMITTED THE APPARENT LOW BID OF $248,499; TELEDYNE MCCORMICK- SELPH (TELEDYNE), A BID "B" BIDDER, SUBMITTED THE APPARENT SECOND LOW BID OF $248,532.40.

BECAUSE OF THE URGENT NEED FOR THE FUZES, THE AIR FORCE NOTIFIED GAO ON MARCH 14, 1973, THAT IT WAS MAKING AWARD TO HOLEX NOTWITHSTANDING THE PENDENCY OF THE PROTEST.

TELEDYNE ARGUES THAT AWARD ON THE BASIS OF ITS BID SHOULD HAVE BEEN FOUND IN THE GOVERNMENT'S BEST INTEREST NOTWITHSTANDING THE SLIGHTLY HIGHER AMOUNT OF ITS TOTAL BID WHEN "OTHER FACTORS" RELATED TO THE GOVERNMENT'S ADMINISTRATIVE COSTS OF FIRST ARTICLE APPROVAL FOR HOLEX ARE CONSIDERED. THUS, IT SAYS THE GOVERNMENT WOULD NECESSARILY INCUR: INSPECTION AND SUPERVISION COSTS INCIDENT TO THE QUALIFICATION AND FIRST ARTICLE TESTS HOLEX WOULD BE REQUIRED TO PERFORM; ADDITIONAL ADMINISTRATIVE COSTS INCIDENT TO THE LONGER DELIVERY SCHEDULE REQUIRED FOR BID "A" BIDDERS; AND ADMINISTRATIVE COSTS INCIDENT TO A PREAWARD SURVEY ON HOLEX.

THESE COSTS, TELEDYNE SAYS, CLEARLY OFFSET THE PRICING ADVANTAGE OF HOLEX'S BID AND SHOULD HAVE BEEN EVALUATED IN DETERMINING THE MOST ADVANTAGEOUS AWARD PURSUANT TO ASPR 2-407.5 WHICH PROVIDES:

"*** OTHER FACTORS TO BE CONSIDERED. THE FACTORS SET FORTH IN (I) THROUGH (VI) BELOW, AMONG OTHERS, MAY BE CONSIDERED IN EVALUATING BIDS.

"(I)FORESEEABLE COSTS OR DELAYS TO THE GOVERNMENT RESULTING FROM DIFFERENCES IN INSPECTION, LOCATION OF SUPPLIES, TRANSPORTATION, ETC. ***"

THE AIR FORCE DISAGREES. IT POINTS OUT THAT ASPR 1-1903(A)(III) REQUIRES COSTS ASSOCIATED WITH FIRST ARTICLE TESTING TO BE AN EVALUATION FACTOR ONLY WHERE, UNLIKE THE CASE HERE, THE GOVERNMENT IS TO BE RESPONSIBLE FOR FIRST ARTICLE TESTING, AND THAT A SEPARATE EVALUATION FACTOR COVERING THE COST OF REVIEW AND APPROVAL OF THE FIRST ARTICLE WAS CONSIDERED INAPPROPRIATE BECAUSE THE AIR FORCE WILL MERELY APPROVE A TEST REPORT PREPARED AND SUBMITTED BY THE CONTRACTOR. THE AGENCY REFERS TO ASPR 1- 1903(A)(I)(B) WITH RESPECT TO THE ALLEGATION THAT ADDITIONAL ADMINISTRATIVE COSTS WOULD BE INVOLVED IN HOLEX'S LONGER DELIVERY SCHEDULE. THAT PROVISION PRECLUDES MAKING THE DIFFERENCE IN DELIVERY SCHEDULES RESULTING FROM WAIVER OF FIRST ARTICLE APPROVAL A FACTOR IN EVALUATION FOR AWARD. LASTLY, THE AGENCY OBSERVES THAT THE COST OF PREAWARD SURVEYS WAS NOT AN EVALUATION FACTOR SINCE THE COST OF DETERMINING A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY, WHETHER BY SURVEY OR OTHER MEANS, IS INCURRED TO SOME DEGREE ON EVERY CONTEMPLATED AWARD TO AN ELIGIBLE BIDDER, AND THAT THE IFB DOES NOT AUTHORIZE AWARD TO OTHER THAN THE LOW BIDDER. UPON REVIEW, WE FIND NO BASES TO DISAGREE WITH THE AGENCY'S ADMINISTRATION OF THIS AWARD.

ASPR 2-201(A), SECTION DI), REQUIRES THAT THE EXACT BASIS UPON WHICH BIDS WILL BE EVALUATED AND AWARD MADE BE STATED IN THE IFB, INCLUDING ANY GOVERNMENT COSTS TO BE ADDED OR DEDUCTED. WE HAVE HELD THAT IF ANY FACTOR OTHER THAN BID PRICE IS TO BE CONSIDERED IN DETERMINING THE LOW BIDDER, THE IFB MUST ADVISE THE BIDDERS OF SUCH FACTOR SO THAT ALL BIDDERS ARE ON EQUAL FOOTING IN SUBMITTING BIDS. B-179914, MARCH 26, 1974, AND CASES CITED THEREIN. SINCE THE ADMINISTRATIVE COSTS IN QUESTION WERE NOT LISTED AS EVALUATION FACTORS IN THE IFB, CONSIDERATION OF THESE COSTS AFTER BID OPENING WOULD NOT BE PROPER.

ALTHOUGH TELEDYNE APPARENTLY FEELS THAT THESE PRINCIPLES SHOULD NOT GOVERN WHERE THE AGENCY NEGLECTED TO LIST PROPER EVALUATION FACTORS AND THAT CANCELLATION OF A SOLICITATION WOULD BE PERMISSIBLE IN CASE OF SUCH NEGLECT UNDER ASPR 2-404.1(B)(IV), IT IS OUR VIEW THAT THE COSTS IN QUESTION WERE PROPERLY OMITTED FROM THE IFB.

IN THE FIRST PLACE, THERE IS NO MANDATORY REQUIREMENT IN ASPR THAT GOVERNMENT COSTS INCIDENT TO APPROVAL OF FIRST ARTICLE TESTING BE AN EVALUATION FACTOR WHERE, AS HERE, THE CONTRACTOR OTHERWISE BEARS THE COST OF FIRST ARTICLE TESTING. SIMILARLY, THERE IS NO REQUIREMENT THAT THE COST OF PREAWARD SURVEYS BE MADE AN EVALUATION FACTOR IN DETERMINING THE MOST ADVANTAGEOUS AWARD TO THE GOVERNMENT.

WE AGREE, HOWEVER, THAT COSTS TO THE GOVERNMENT INVOLVED IN THE SELECTION OF THE CONTRACTOR AND INCURRED BECAUSE OF AN AWARD TO IT DURING CONTRACT PERFORMANCE ORDINARILY SHOULD BE EVALUATION FACTORS TO THE EXTENT THEY CAN BE REALISTICALLY ESTIMATED. THE AIR FORCE STATEMENT THAT THE COST OF ITS REVIEW OF FIRST ARTICLE TESTING WAS NOT AN EVALUATION FACTOR BECAUSE IT WILL MERELY APPROVE A TEST REPORT INDICATES, HOWEVER, THAT THE REVIEW COST IS RELATIVELY INSIGNIFICANT AND NOT CAPABLE OF REALISTIC ESTIMATION. CANNOT DISAGREE WITH THIS POSITION.

SIMILARLY, WE CANNOT QUESTION THE AIR FORCE VIEW THAT THE COSTS OF A PREAWARD SURVEY, EVEN ASSUMING THEY COULD BE REALISTICALLY ESTIMATED, DO NOT AFFORD A RATIONAL BASIS FOR DISCRIMINATING BETWEEN SUBMITTED BIDS SINCE ADMINISTRATIVE EFFORT MUST BE EXPENDED IN ANY EVENT IN DETERMINING A BIDDER'S RESPONSIBILITY WHETHER A PREAWARD SURVEY IS ORDERED FOR A PARTICULAR BIDDER OR NOT. FURTHER, WE AGREE WITH THE AIR FORCE VIEW THAT ASPR 1-1903(A)(I)(B) PRECLUDES USE OF THE DIFFERENCE IN DELIVERY SCHEDULES RESULTING FROM THE NEED FOR FIRST ARTICLE APPROVAL AS AN EVALUATION FACTOR.

THE FACTS OF THE INSTANT CASE ARE DISTINGUISHABLE FROM THOSE IN B 160514, MARCH 30, 1967, AND B-156582, JULY 16, 1965, CITED BY TELEDYNE AS AUTHORITY FOR CONSIDERING ITS BID MOST ADVANTAGEOUS TO THE GOVERNMENT. OUR 1967 DECISION, AWARD WAS MADE TO A FIRM WHOSE "B" BID (FIRST ARTICLE APPROVAL NOT REQUIRED) WAS LOWER THAN THE PROTESTING FIRM'S "A" BID (FIRST ARTICLE APPROVAL REQUIRED); IN OUR 1965 DECISION, THE IFB IN QUESTION MADE IT CLEAR THAT THE PROCURING AGENCY WOULD CONDUCT, AND BEAR THE COST OF, FIRST ARTICLE TESTING.

FOR THESE REASONS, THE PROTEST IS DENIED.