B-180907, APR 22, 1975

B-180907: Apr 22, 1975

Additional Materials:

Contact:

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

 

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

WHILE CONTRACT AWARD BY COST-TYPE PRIME CONTRACTOR OF ATOMIC ENERGY COMMISSION IS CONSIDERED AS AWARD MADE FOR FEDERAL AGENCY. IS UNTIMELY AS NOT MADE WITHIN 5 WORKING DAYS OF KNOWLEDGE OF BASIS OF PROTEST. PROTEST THAT AEC COST-TYPE PRIME CONTRACTOR FAILED TO ENGAGE IN PROPER NEGOTIATION PROCEDURES IS NOT SUSTAINED AS PRIME CONTRACTOR'S COMPETITIVE PROCUREMENT PROCEDURES (APPROVED BY AEC) DID NOT REQUIRE NEGOTIATION PROCEDURE URGED BY PROTESTER. 4. SUBSEQUENT ARGUMENTS OF PROTESTER RESPONDING TO PRIME CONTRACTOR'S STATEMENTS IN ADMINISTRATIVE REPORT REGARDING ADEQUACY OF PROPOSAL DOCUMENTATION AND PROPRIETY OF PRIME CONTRACTOR'S COST EVALUATION WERE TIMELY SINCE THESE ARGUMENTS COULD NOT HAVE BEEN RAISED BY PROTESTER UNTIL IT RECEIVED ADMINISTRATIVE REPORT.

B-180907, APR 22, 1975

1. WHILE CONTRACT AWARD BY COST-TYPE PRIME CONTRACTOR OF ATOMIC ENERGY COMMISSION IS CONSIDERED AS AWARD MADE FOR FEDERAL AGENCY, PROPRIETY OF AWARD MUST BE CONSIDERED IN LIGHT OF RELEVANT PRIME CONTRACT PROVISIONS, NOT STATUTORY AND REGULATORY REQUIREMENTS GOVERNING DIRECT FEDERAL PROCUREMENT. 2. PROTEST BASED UPON CONTENTIONS THAT GOVERNMENT PRIME CONTRACTOR PASSED PROTESTER'S PROPRIETARY DATA TO OTHER BIDDERS AND IMPROPERLY REQUESTED DIRECT PRICE QUOTE FROM PROTESTER'S PROPOSED SUBCONTRACTOR, IS UNTIMELY AS NOT MADE WITHIN 5 WORKING DAYS OF KNOWLEDGE OF BASIS OF PROTEST. FURTHERMORE, THESE CONTENTIONS APPEAR TO BE WITHOUT MERIT SINCE CONTRACTOR DENIES IT RELEASED PROTESTER'S DATA TO ANY OTHER OFFEROR OR THAT IT ACTED UPON THE PRICE QUOTE SUBMITTED BY PROTESTER'S PROPOSED SUBCONTRACTOR. 3. PROTEST THAT AEC COST-TYPE PRIME CONTRACTOR FAILED TO ENGAGE IN PROPER NEGOTIATION PROCEDURES IS NOT SUSTAINED AS PRIME CONTRACTOR'S COMPETITIVE PROCUREMENT PROCEDURES (APPROVED BY AEC) DID NOT REQUIRE NEGOTIATION PROCEDURE URGED BY PROTESTER. 4. WHERE INITIAL PROTEST CONTENDED THAT PROTESTER'S PROPOSED SYSTEM REPRESENTED LOWEST INSTALLED COST, SUBSEQUENT ARGUMENTS OF PROTESTER RESPONDING TO PRIME CONTRACTOR'S STATEMENTS IN ADMINISTRATIVE REPORT REGARDING ADEQUACY OF PROPOSAL DOCUMENTATION AND PROPRIETY OF PRIME CONTRACTOR'S COST EVALUATION WERE TIMELY SINCE THESE ARGUMENTS COULD NOT HAVE BEEN RAISED BY PROTESTER UNTIL IT RECEIVED ADMINISTRATIVE REPORT. HOWEVER, RECORD REVEALS SUBSTANTIAL BASIS FOR CONTRACTOR'S DECISION REGARDING DOCUMENTATION. 5. WHILE PROTESTER ALLEGES THAT ITS OFFER REPRESENTED LOWEST COST INSTALLED SYSTEM AND THAT AGENCY IMPROPERLY DETERMINED OTHER OFFER TO BE LOW, ANALYSIS OF RECORD INDICATES THAT AEC COST-TYPE PRIME CONTRACTOR PROPERLY EVALUATED COST OF PROTESTER'S BASIC SYSTEM OFFER AND HAD REASONABLE BASIS FOR ITS ESTIMATE OF PROGRAMMING, TRAINING AND DOCUMENTATION COSTS ASSOCIATED WITH PROTESTER'S OFFER.

TENNECOMP SYSTEMS, INC.:

TENNECOMP SYSTEMS, INCORPORATED, HAS FILED A PROTEST WITH THIS OFFICE AGAINST AWARD OF A CONTRACT TO ANOTHER FIRM UNDER REQUEST FOR QUOTATIONS (RFQ) NO. RGR 671, ISSUED BY E.I. DU PONT DE NEMOURS & COMPANY (DU PONT) WHILE ACTING UNDER PRIME CONTRACT NO. AT(07-2)-1, WITH THE UNITED STATES ATOMIC ENERGY COMMISSION (AEC). WHILE AEC HAS NOW BEEN SUPERSEDED BY THE ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION, FOR PURPOSES OF CONTINUITY WE WILL REFER TO THAT AGENCY AS AEC.

THE PRIME CONTRACT IN QUESTION, WHICH PROVIDES FOR REIMBURSING DU PONT'S COSTS PLUS A NOMINAL FIXED-FEE OF ONE DOLLAR, AND WHICH IS SIMILAR IN CONCEPT TO OTHER AEC PRIME MANAGEMENT CONTRACTS, STIPULATES THAT DU PONT SHALL MANAGE THE AEC SAVANNAH RIVER PLANT (PLANT), AIKEN, SOUTH CAROLINA. UNDER THIS CONTRACT, EFFECTIVE AUGUST 1, 1950, AND EXTENDED THROUGH SEPTEMBER 30, 1979, DU PONT IS RESPONSIBLE FOR THE DESIGN, CONSTRUCTION, AND OPERATION OF THIS PLANT, WHICH PRODUCES NUCLEAR MATERIALS FOR THE NATION'S DEFENSE PROGRAMS.

PURSUANT TO THIS RESPONSIBILITY, DU PONT ISSUED THE RFQ IN QUESTION ON JUNE 12, 1973, SOLICITING QUOTATIONS FOR A FIXED PRICE CONTRACT TO SUPPLY A CONTROL AND MONITORING COMPUTER SYSTEM CONSISTING OF 14 CENTRAL PROCESSING UNITS AND ASSOCIATED PERIPHERALS FOR THREE OPERATING REACTORS, BROKEN DOWN INTO THREE REACTOR COMPUTER SYSTEMS, A PROGRAM DEVELOPMENT SYSTEM, AND NON-ADP SIGNAL CONDITIONING EQUIPMENT. THE RFQ PROVIDED THAT EVALUATION AND AWARD WOULD BE ON THE BASIS OF THE OPTIMUM INSTALLED COST, INCLUDING BID PRICE OF THE EQUIPMENT, ADEQUACY OF DESIGN AND OPERATING COST, AND REQUESTED THE FURNISHING OF SUFFICIENT MATERIAL TO PROVIDE FOR THE EVALUATION OF THE QUALITY OF PROPOSED EQUIPMENT, SERVICES, AND DOCUMENTATION. WHEN THE QUOTATION PERIOD ENDED ON AUGUST 31, 1973, SIX QUOTATIONS FOR THE REACTOR COMPUTER SYSTEM AND THREE PARTIAL QUOTATIONS FOR THE SIGNAL CONDITIONING EQUIPMENT WERE RECEIVED BY DU PONT. DU PONT REPORTS THAT MEETINGS WERE HELD WITH OFFERORS TO REVIEW TECHNICAL DETAILS OF THEIR QUOTATIONS, EQUIPMENT DEMONSTRATIONS WERE HELD, AND NUMEROUS TRIPS WERE MADE TO EVALUATE THE OFFERORS' EQUIPMENT AND CAPABILITIES. AFTER RECEIVING CLARIFYING DATA ON SEVERAL QUOTATIONS, DU PONT DETERMINED THAT THE PROPOSALS OF INTERDATA, INCORPORATED, AND TENNECOMP COULD MEET THE MINIMUM REQUIREMENTS OF THE ADP EQUIPMENT BUT THAT EACH HAD CERTAIN EQUIPMENT DEFICIENCIES AND THAT THEIR QUOTATIONS NECESSITATED FURTHER COST DEFINITION. DATA WEST WAS THE ONLY ACCEPTABLE FIRM ON THE SIGNAL CONDITIONING EQUIPMENT. ACCORDINGLY, BOTH TENNECOMP AND INTERDATA WERE REQUESTED TO REDEFINE THEIR QUOTES BY LETTERS OF JANUARY 22, 1974. AFTER REVIEWING THE RESPECTIVE RESPONSES, DU PONT, ON MARCH 29, 1974, SELECTED INTERDATA'S PROPOSAL AS HAVING THE LOWEST OPTIMUM INSTALLED COST FOR THE SYSTEM. WE HAVE BEEN ADVISED BY AEC THAT IT AUTHORIZED DU PONT TO AWARD THIS CONTRACT TO INTERDATA AND THAT SUCH AWARD HAS BEEN MADE.

REGARDING PROCUREMENT PROCEDURES USED BY DU PONT IN THIS PROCUREMENT, ARTICLE XXII OF THE PRIME CONTRACT PROVIDES IN PERTINENT PART:

"THE CONTRACTOR SHALL HAVE THE RIGHT TO SUBLET SUCH PORTIONS OF THE WORK UNDER THIS CONTRACT AS MAY BE DESIRABLE OR NECESSARY IN THE JUDGMENT OF THE CONTRACTOR AND SUCH WORK SHALL BE ACCOMPLISHED BY SUBCONTRACTS; PROVIDED (1) THAT SUCH SUBCONTRACT IN EXCESS OF $2,000 SHALL BE IN WRITING, AND (2) THAT EACH SUBCONTRACT IN EXCESS OF $500 ON A COST, COST- PLUS-A-FIXED FEE OR TIME AND MATERIAL BASIS, AND (3) (A) ALL CONSTRUCTION AND ARCHITECT-ENGINEER SUBCONTRACTS OR ANY INDIVIDUAL ALTERATION THERETO IN EXCESS OF $10,000, (B) ALL OFF-SITE RESEARCH AND DEVELOPMENT SUBCONTRACTS OR ANY INDIVIDUAL ALTERATION THERETO IN EXCESS OF $5,000, AND (C) ALL OTHER SUBCONTRACTS OR ANY INDIVIDUAL ALTERATION THERETO IN EXCESS OF $25,000, SHALL BE SUBJECT TO THE WRITTEN APPROVAL OF THE COMMISSION. IN LETTING SUBCONTRACTS AND IN CARRYING OUT PROCUREMENT HEREUNDER, THE CONTRACTOR SHALL FOLLOW PROCEDURES USED BY IT IN ITS COMMERCIAL OPERATIONS; PROVIDED, HOWEVER, THAT SUCH PROCEDURES REDUCED IN WRITING SHALL BE SUBJECT TO THE APPROVAL OF THE COMMISSION AND THAT SUCH PROCEDURES MAY BE MODIFIED OR DEVIATED FROM TO MEET THE PARTICULAR CIRCUMSTANCES OF THE WORK HEREUNDER WITH THE CONCURRENCE OF THE COMMISSION."

PURSUANT TO THIS PROVISION, DU PONT'S PURCHASING PROCEDURE OPERATIONS HAVE BEEN APPROVED BY THE COMMISSION. SEE AEC PROCUREMENT REGULATIONS (AECPR) SEC. 9-59.002(A)(2) (1969 ED. AECPR CIRC. NO. 1); 41 C.F.R. SEC. 9-59.002(A)(2) (1974).

ALTHOUGH WE HAVE RECOGNIZED THAT THE AWARD OF A CONTRACT BY A COST TYPE PRIME CONTRACTOR IN THESE CIRCUMSTANCES REPRESENTS AN AWARD MADE ON BEHALF OF AN AGENCY OF THE FEDERAL GOVERNMENT, SEE B-179462, NOVEMBER 12, 1973, THE PROPRIETY OF SUCH AN AWARD MUST BE CONSIDERED IN LIGHT OF THE RELEVANT PROVISIONS OF THE PRIME CONTRACT AND NOT BY THE REGULATORY REQUIREMENTS WHICH WOULD GOVERN DIRECT PROCUREMENT BY THE UNITED STATES. B-178231, OCTOBER 3, 1973; 51 COMP. GEN. 329, 334 (1971); B-169942, JULY 27, 1970. ADDITIONALLY, AECPR SECS. 9-95.003 AND 004 (1969 ED. AECPR CIRC. NOS. 1, 49) PROVIDE ADDITIONAL POLICIES AND PROVISIONS PERTAINING TO COST-TYPE CONTRACTOR PROCUREMENT.

AS THE BASES FOR ITS PROTEST, TENNECOMP CONTENDS THAT ITS OFFER REPRESENTED A TECHNICALLY ACCEPTABLE SYSTEM WHICH COULD BE INSTALLED FOR THE LOWEST TOTAL COST, AND THAT ITS OFFER WAS PREJUDICED BY CERTAIN DU PONT ACTIONS IN SOLICITING AND CLARIFYING OFFERS, AND EVALUATING THE PROPOSALS RECEIVED. IN THIS REGARD, TENNECOMP ALLEGES THAT DU PONT IMPROPERLY RELEASED TENNECOMP PROPRIETARY DATA TO OTHER CONTRACTORS; THAT DU PONT FAILED TO ACKNOWLEDGE A TENNECOMP PRICE REDUCTION OFFER PRIOR TO ITS EVALUATION OF OFFERS; THAT DU PONT VIOLATED THE RFQ BY DIRECTLY REQUESTING A QUOTE FROM A SUBCONTRACTOR ORIGINALLY PROPOSED BY TENNECOMP; THAT DU PONT IMPROPERLY ATTEMPTED TO OBTAIN ADDITIONAL INFORMATION FROM OFFERORS IN ORDER TO MAKE THEM "RESPONSIVE"; AND THAT THE RFQ IMPROPERLY FAILED TO SPECIFY THE LEVEL OF DOCUMENTATION AND DEPTH OF DIAGNOSTIC MATERIALS DESIRED BY DU PONT. CONCERNING DU PONT'S EVALUATION AND SELECTION PROCEDURES, THE PROTESTER ARGUES THAT THE REALISTIC TOTAL INSTALLED COST OF ITS SYSTEM SHOULD BE CONSIDERED MOST ADVANTAGEOUS TO BOTH AEC AND DU PONT; THAT THE CONTRACT IN QUESTION SHOULD NOT HAVE BEEN AWARDED WITHOUT DETAILED NEGOTIATIONS TO CLARIFY (A) THE OFFERS RECEIVED AND (B) THE MISCONCEPTIONS REGARDING TEMPERATURE AND FLOW SYSTEMS AND DU PONT'S PROCURING ITS ADDITIONAL SYSTEM EQUIPMENT THROUGH ANOTHER CONTRACTOR; THAT TENNECOMP PERFORMED A SIGNIFICANT AMOUNT OF SYSTEM ENGINEERING IN REPLYING TO DU PONT'S REQUEST FOR DATA WHICH WAS NOT CONSIDERED BY DU PONT; THAT DU PONT IMPROPERLY SELECTED INTERDATA ON THE BASIS OF SYSTEM PREFERENCE BECAUSE THIS CRITERION WAS NOT STATED IN THE RFQ; AND THAT DU PONT ASSIGNED ARBITRARY COST FIGURES TO TENNECOMP FUNCTIONS RATHER THAN CONTACTING TENNECOMP FOR CLARIFICATION.

IN RESPONSE TO THESE ALLEGATIONS, AEC AND DU PONT CONTEND THAT DU PONT ACTED PROPERLY IN SELECTING INTERDATA FOR AWARD AND IN SOLICITING AND CLARIFYING OFFERS, AND THAT DU PONT'S SELECTION OF INTERDATA REPRESENTS THE LOWEST INSTALLED COST SYSTEM AVAILABLE. DU PONT ALSO CONTENDS THAT TENNECOMP'S PROTEST, BASED ON ACTIVITIES WHICH OCCURRED IN JANUARY AND FEBRUARY 1974, IS UNTIMELY AS IT WAS NOT FILED UNTIL MARCH 22, 1974. FINALLY, INTERDATA ARGUES THAT INSOFAR AS TENNECOMP'S PROTEST RELATES TO DU PONT'S COST ANALYSIS OF THE INTERDATA AND TENNECOMP PROPOSALS, IT IS UNTIMELY AS IT WAS NOT RAISED UNTIL PRESENTED IN THE TENNECOMP COMMENTS TO THE INITIAL ADMINISTRATIVE REPORT.

STANDARDS APPLICABLE TO THE TIMELINESS OF PROTESTS ARE STATED IN SECTION 20.2(A) OF THIS OFFICE'S INTERIM BID PROTEST PROCEDURES AND STANDARDS (4 C.F.R. SEC. 20.2(A) (1974)) IN PERTINENT PART AS FOLLOWS:

"*** PROTESTS BASED UPON ALLEGED IMPROPRIETIES IN ANY TYPE OF SOLICITATION WHICH ARE APPARENT PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS SHALL BE FILED PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS. IN OTHER CASES, BID PROTESTS SHALL BE FILED NOT LATER THAN 5 DAYS AFTER THE BASIS FOR PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN, WHICHEVER IS EARLIER. ***"

INITIALLY, TENNECOMP CONTENDS THAT ITS PROPRIETARY DATA, SUBMITTED IN ITS AUGUST 29, 1973, QUOTATION, WAS IMPROPERLY DISCLOSED BY DU PONT. TENNECOMP RELIES ON THE FACT THAT DU PONT'S JANUARY 22, 1974, LETTER TO IT REFERRED TO THIS DATA. HOWEVER, SINCE THE BASIS OF THE PROTEST IS DIVULGENCE OF THE DATA IN THE JANUARY 22, 1974 LETTER, IT IS OUR OPINION THAT THE BASIS OF THE PROTEST SHOULD HAVE BEEN APPARENT AT THAT TIME, AND IT IS UNTIMELY AS IT WAS NOT MADE WITHIN FIVE WORKING DAYS FROM RECEIPT OF THAT LETTER. MATTER OF CITY MOVING & STORAGE CO., INC., B-181167, AUGUST 16, 1974. AT ANY RATE, SINCE DU PONT'S DENIAL OF DIVULGENCE TO ANYONE ELSE IS UNCONTROVERTED, THE PROTEST IN THIS REGARD APPEARS UNMERITORIOUS.

TENNECOMP ALSO PROTESTS THAT DU PONT IMPROPERLY REQUESTED A QUOTE FROM A SUBCONTRACTOR, DIGITAL EQUIPMENT CORPORATION (DEC), ORIGINALLY PROPOSED BY TENNECOMP. WHILE DU PONT STATES THAT ITS ACTIONS REGARDING DEC WERE NOT IMPROPER AS DU PONT HAS AN EXISTING PURCHASE AGREEMENT WITH DEC (WHICH AEC RECOMMENDS BE UTILIZED IN APPROPRIATE CIRCUMSTANCES), IT POINTS OUT THAT IT ADVISED TENNECOMP IN ITS JANUARY 22, 1974, LETTER THAT IT MIGHT REQUEST SUCH A DIRECT QUOTE, AND THAT TENNECOMP'S FEBRUARY 15, 1974, LETTER TO DU PONT INDICATED TENNECOMP'S CONCURRENCE IN THIS ACTION. WE NOTE, HOWEVER, THAT DU PONT DID NOT ACT UPON DEC'S QUOTE AS IT WAS DETERMINED SUCH ACTION WOULD NOT BE ADVANTAGEOUS TO DU PONT. AFTER AN ANALYSIS OF TENNECOMP'S FEBRUARY 15 LETTER TO DU PONT, IN WHICH TENNECOMP RECOGNIZES THAT "SRP WILL PURCHASE ALL DEC EQUIPMENT, SERVICES, AND SOFTWARE; AND WILL DROP- SHIP THE EQUIPMENT TO" TENNECOMP, WE BELIEVE IT WAS APPARENT TO TENNECOMP BY THAT DATE THAT DU PONT WAS CONSIDERING A DIRECT PURCHASE OF DEC EQUIPMENT. ACCORDINGLY, THE PROTEST IN THIS REGARD, FIRST MADE ON MARCH 22, 1974, IS UNTIMELY. MOREOVER, IT APPEARS THAT THIS ASPECT OF THE PROTEST IS WITHOUT SUBSTANCE.

TENNECOMP RAISES SEVERAL POINTS CONCERNING "NEGOTIATIONS" IN THIS PROCUREMENT. TENNECOMP STATES THAT DU PONT MAINTAINED A CONTINUING DIALOGUE WITH IT AND INTERDATA UNTIL THE LETTERS OF JANUARY 22, 1974, REQUESTING REDEFINITION OF PRICES. IN THIS REGARD, WE NOTE THAT ON SEVERAL OCCASIONS DU PONT ATTEMPTED TO SECURE FROM THE OFFERORS CLARIFICATION OF THEIR RESPECTIVE TECHNICAL PROPOSALS. IT IS ARGUED THAT EVEN THOUGH DU PONT HAD NOT FORMALLY INDICATED A CLOSING DATE FOR FURTHER CLARIFICATION OR REDEFINITION, DU PONT FAILED TO RESPOND TO TENNECOMP'S LAST PRICE REDUCTION. TENNECOMP ARGUES THAT SINCE WHAT IT CONSIDERED TO BE NEGOTIATIONS HAD NOT BEEN CLOSED, IT WAS WILLING TO NEGOTIATE A LOWER PRICE WITH DU PONT. FURTHERMORE, IT IS TENNECOMP'S POSITION THAT A CONTRACT SHOULD NOT HAVE BEEN AWARDED WITHOUT NEGOTIATIONS REGARDING (A) OVERALL PRICE AND (B) ENGINEERING AND COST IMPACT RELATING TO SYSTEM DESIGN AND SUBCONTRACTOR UTILIZATION.

DU PONT REPORTS THAT ALTHOUGH THIS PROCUREMENT WAS A COMPETITIVE PROCUREMENT, UNDER ITS PROCEDURES IT WAS NOT A "NEGOTIATED" PROCUREMENT PURSUANT TO THE FEDERAL PROCUREMENT REGULATIONS, GENERALLY CONTEMPLATING THE DETAILED NEGOTIATION OF PRICES. DU PONT POINTS OUT THAT ONCE IT HAD DETERMINED WHICH PROPOSED SYSTEMS WERE TECHNICALLY ACCEPTABLE, ITS PROCEDURES CONTEMPLATED EVALUATION OF COST FIGURES AND SELECTION OF THE CONTRACTOR ON THE BASIS OF LOWEST INSTALLED COST. ACCORDINGLY, NO COST OR PRICE NEGOTIATIONS WERE CONDUCTED. WE NOTE THAT THIS IS CONSISTENT WITH AECPR SEC. 9-59.003(B)(1)(I-IV) (1969 ED. AECPR CIRC. NO. 1). THEREFORE, WE FIND NO LEGAL BASIS TO OBJECT TO THE PROCEDURES USED OR TO FIND THAT DETAILED NEGOTIATIONS WERE REQUIRED.

IN REGARD TO DU PONT'S SELECTION OF INTERDATA, TENNECOMP RAISES SEVERAL ISSUES REGARDING THE DU PONT METHOD USED TO DEVELOP THE ESTIMATES RELIED UPON IN THE COST EVALUATION PROCESS, THE PROPRIETY OF THE DU PONT COST ESTIMATES THEMSELVES, AND THE DU PONT CONCLUSION THAT TENNECOMP'S SYSTEM COST (INSTALLED) WAS NOT LOW.

IN DETERMINING THE BASES ON WHICH TO MEASURE AND DETERMINE EACH PROPOSAL'S COST, DU PONT RELIED ON WHAT IT CONSIDERED TO BE THE FINAL PRICE OFFERED BY EACH OFFEROR AND THE REASONABLE PROGRAMMING, TRAINING AND DOCUMENTATION COSTS (PTD COSTS) TO BE BORNE BY DU PONT TO INSTALL AND MAKE OPERATIONAL EACH PROPOSED SYSTEM. ADDITIONALLY, DU PONT INCLUDED IN EACH EVALUATION A CONSTANT FIGURE REPRESENTING THE COST TO DU PONT OF THE DATA WEST EQUIPMENT. DURING THIS PROCEDURE, DU PONT ESTIMATED THAT CERTAIN OF ITS COSTS RELATING TO INSTALLATION OF THE PROPOSED TENNECOMP SYSTEM WOULD BE HIGHER THAN THE COMPARABLE INTERDATA SYSTEM COSTS BECAUSE OF, INTER ALIA, THE ALLEGED INADEQUACY OF CERTAIN TENNECOMP DOCUMENTATION. AFTER CONDUCTING ITS ANALYSIS, DU PONT DETERMINED THE TOTAL INSTALLED COST OF THE INTERDATA SYSTEM TO BE LOWER THAN THAT OF THE TENNECOMP SYSTEM, THE ONLY OTHER ACCEPTABLE PROPOSAL. WITH RESPECT TO THE REPORTED INADEQUACY OF THE TENNECOMP DOCUMENTATION, TENNECOMP CONTENDS THAT IT FURNISHED ADEQUATE DOCUMENTATION AND LITERATURE TO DU PONT TO EXPLAIN ITS SYSTEM AND PERMIT A REASONABLE ESTIMATE OF ANY RELATED INSTALLATION COSTS; THAT THE LEVEL OF DOCUMENTATION ULTIMATELY SOUGHT BY DU PONT WAS OVER AND ABOVE THAT SPECIFIED IN THE RFQ; AND, NOTWITHSTANDING THE ALLEGED DOCUMENTATION DEFICIENCY, THAT TENNECOMP SHOULD HAVE HAD SOME INPUT REGARDING THE NECESSARY COSTS TO INSTALL ITS PROPOSED SYSTEM. IN THIS CONNECTION, TENNECOMP CONSIDERS AS ARBITRARY DU PONT'S ESTIMATE OF THE COSTS DU PONT WOULD INCUR IN INSTALLING THE TENNECOMP SYSTEM. TENNECOMP SUGGESTS THAT DU PONT PROVIDED AN "ARBITRARY" COST ESTIMATE BECAUSE IT CONSIDERED THE INTERDATA SYSTEM TO BE MORE ACCEPTABLE, AND IT FURTHER ALLEGES THAT DU PONT WILL EXPAND THIS PROCUREMENT WITH INTERDATA AFTER PERFORMANCE OF THE CONTRACT HAS BEGUN.

WITH REGARD TO TENNECOMP'S PROTEST CONCERNING THE PROPRIETY OF DU PONT'S EVALUATION PROCESS, IT IS ALLEGED THAT THIS PART OF THE PROTEST IS UNTIMELY SINCE IT WAS NOT RAISED BY TENNECOMP IN ITS ORIGINAL PROTEST TO THIS OFFICE BUT FIRST RAISED AFTER RECEIPT OF THE ADMINISTRATIVE REPORT. TENNECOMP'S PROTEST DID INITIALLY CONTEND THAT THE TOTAL INSTALLED COST OF ITS SYSTEM WOULD REPRESENT A SIGNIFICANT COST SAVINGS TO THE AEC. DU PONT RESPONDED TO TENNECOMP'S INITIAL PROTEST BY STATING THAT INTERDATA'S SYSTEM REPRESENTED THE LOWEST INSTALLED COST AND THAT TENNECOMP'S PROPOSAL DID NOT CONTAIN SUFFICIENT DOCUMENTATION IN TERMS OF COST DATA AND TECHNICAL INFORMATION TO SUPPORT TENNECOMP'S ALLEGATION THAT ITS SYSTEM WAS THE LOWEST IN COST. TENNECOMP'S SUBSEQUENT RESPONSE THERETO COULD NOT HAVE BEEN MADE UNTIL IT RECEIVED THE DU PONT REPORT. THEREFORE, WE DO NOT BELIEVE THESE ARGUMENTS ARE UNTIMELY.

WITH RESPECT TO DU PONT'S DOCUMENTATION REQUIREMENTS AND TENNECOMP'S COMPLIANCE THEREWITH, PARAGRAPH 4.0 OF THE RFQ INSTRUCTED BIDDERS TO SUBMIT A CONCISE, COMPLETE DELINEATION OF PRICES AND OTHER NECESSARY FACTORS WITH THE PROPOSAL. PARAGRAPH 7.0, ENTITLED "PROPOSAL DOCUMENTATION", PROVIDED THAT PROPOSALS SHOULD CONTAIN SUFFICIENT MATERIAL TO EVALUATE THE QUALITY OF ALL PROPOSED EQUIPMENT, SERVICES, AND DOCUMENTATION AND ALSO LISTED, AS A MINIMUM, NINE DIFFERENT TYPES OF ITEMS TO BE SUBMITTED. DU PONT HAS SPECIFICALLY INDICATED WHAT TENNECOMP DOCUMENTATION IT CONSIDERED INADEQUATE AND THE REASONS THEREFOR. WE FIND NO BASIS TO CONCLUDE THAT THE DU PONT ANALYSIS WAS UNREASONABLE. ALSO, WE DO NOT AGREE WITH TENNECOMP'S ALLEGATION THAT DU PONT BASED ITS ANALYSIS ON A HIGHER LEVEL OF DOCUMENTATION THAN STATED IN THE RFQ, AS THE RFQ STATED THAT DU PONT REQUIRED COMPLETE DOCUMENTATION AND THE MATERIALS REFERENCED THEREIN WERE LISTED ONLY AS A MINIMUM.

FINALLY, WITH RESPECT TO TENNECOMP'S CONTENTION THAT IT SHOULD HAVE HAD SOME INPUT INTO DU PONT'S COST ESTIMATES, IT SHOULD BE NOTED THAT THESE ESTIMATES WERE DU PONT'S OWN CALCULATIONS OF THE COSTS IT WILL INCUR FOR PROGRAMMING, TRAINING, AND DOCUMENTATION (PTD) IN RELATION TO SYSTEM INSTALLATION. IN FACT, OUR ANALYSIS OF THE RECORD INDICATES THAT TENNECOMP DID HAVE INPUT IN DU PONT'S ESTIMATES, AS A PART OF THE DU PONT ESTIMATES WAS BASED ON TENNECOMP'S DOCUMENTATION AND DU PONT'S DISCUSSIONS WITH TENNECOMP AND ITS SUPPLIERS. OF COURSE, DU PONT ALSO RELIED ON ITS OWN KNOWLEDGE OF WHAT WAS TO BE DONE, THE DEPTH OF DETAIL AND QUALITY REQUIRED, THE NUMBER, EXPERIENCE, SKILL AND ABILITIES OF DU PONT PERSONNEL INVOLVED, AND DU PONT SALARIES, FRINGE BENEFITS, TAXES AND OVERHEAD. FIND NO BASIS ON WHICH TO DISAGREE WITH DU PONT'S PROCEDURE FOR ESTIMATING PTD COSTS.

WE NEXT CONSIDER TENNECOMP'S CONTENTION THAT THE TOTAL OVERALL INSTALLED COST OF ITS SYSTEM WAS LOWER THAN THAT OF THE INTERDATA SYSTEM AND THAT DU PONT'S ANALYSIS OF THE TENNECOMP SYSTEM WAS ARBITRARY. TENNECOMP'S ALLEGATIONS RELATE TO DU PONT'S ESTIMATE OF TENNECOMP'S BASIC SYSTEM COST AND THE DU PONT PTD COSTS UNDER THE TENNECOMP SYSTEM. BOTH DU PONT AND TENNECOMP HAVE PRESENTED THIS OFFICE WITH THEIR ESTIMATES OF THE TENNECOMP BASIC SYSTEM AND PTD COSTS ALONG WITH DU PONT'S ESTIMATE OF BOTH THE INTERDATA BASIC SYSTEM AND PTD COSTS (WHICH ARE NOT IN DISPUTE). INDICATED, THE COST OF THE INSTALLED SYSTEM IS MADE UP OF THE BASIC SYSTEM COST, THE PTD COSTS AND THE DATA WEST EQUIPMENT COST (WHICH IS A CONSTANT). THE RESPECTIVE ESTIMATES ARE REFLECTED IN THE FOLLOWING COMPOSITE TABLE:

DU PONT ESTIMATES TENNECOMP ESTIMATE

INTERDATA TENNECOMP TENNECOMP

SYSTEM SYSTEM SYSTEM

(INSTALLED

SYSTEM COST)

1. BASIC SYSTEM 2,074,767 1,933,834 1,850,434

2. DATA WEST 526,702 526,702 526,702

EQUIP.

3. SUBTOTAL 2,601,469 2,460,536 2,377,136

4. DU PONT PTD 438,300 662,800 458,800*

EXPENSES

5. TOTAL 3,039,769 3,123,336 2,835,936

*TENNECOMP'S FIGURE 1 REPRESENTATION INCORRECTLY DETERMINED ITEM 4 TO BE $458,300; THE CORRECT FIGURE IS $458,800.

CONCERNING DU PONT'S EVALUATION OF TENNECOMP'S BASIC SYSTEM PRICE, THE DU PONT AND TENNECOMP CALCULATIONS AGREE EXCEPT TO THE EXTENT THAT DU PONT ADDED AN ADDITIONAL $83,400 AS A PRICE ESCALATION ALLOWANCE. DU PONT STATES THAT TENNECOMP AGREED TO THIS COST IN ITS MARCH 8, 1974 LETTER TO DU PONT. AN EXAMINATION OF THE LETTER INDICATES THAT WHILE TENNECOMP DID AGREE TO A PRICE LIMIT OF $83,400 ON ESCALATION CHARGES, TENNECOMP INFORMED DU PONT THAT IT EXPECTED THE ACTUAL ESCALATION INCREASE TO BE NO MORE THAN APPROXIMATELY $10,000. NEVERTHELESS, THE RFQ DID PROVIDE THAT ALL POTENTIAL PRICE INCREASES WOULD BE CONSIDERED WHEN COMPARING QUOTATIONS. THUS, DU PONT DID NOT ACT CONTRARY TO THE RFQ BY CONSIDERING THE POTENTIAL ESCALATION COST WHEN DETERMINING TENNECOMP'S BASIC SYSTEM PRICE. MOREOVER, WE NOTE THAT INTERDATA'S CORRESPONDING ESCALATION COST WAS $117,133.

TENNECOMP ALSO QUESTIONS SEVERAL OF DU PONT'S PTD COST ESTIMATES. PONT ACKNOWLEDGES THE GENERALLY HIGHER PROGRAMMING COSTS OF THE TENNECOMP SYSTEM OVER THE INTERDATA SYSTEM, BUT SUBMITS THAT THESE HIGHER COST ESTIMATES ARE JUSTIFIED. IT POINTS OUT THAT IT EVALUATED EACH PROPOSED SYSTEM, A DU PONT BENCHMARK PROGRAM ON EACH SYSTEM, THE VENDORS' PROGRAMMING MANUALS, AND A SURVEY OF USERS OF THE SOFTWARE SYSTEMS. BASED ON THIS DATA DU PONT REPORTS THAT TENNECOMP'S OPERATING SYSTEM IS APPROXIMATELY TWICE THE SIZE OF THE INTERDATA SYSTEM AND THUS MORE DIFFICULT TO LEARN IN DETAIL AND MODIFY; THAT TENNECOMP'S REAL TIME SYSTEM IS STILL UNDER DEVELOPMENT AND SUBJECT TO LATER CHANGES WHILE INTERDATA'S SYSTEM HAS BEEN IN FINAL FORM FOR APPROXIMATELY A YEAR; AND THAT DOCUMENTATION NECESSARY FOR MODIFICATION IN THE TENNECOMP DEC SOFTWARE PROPOSAL IS DEFICIENT IN QUALITY AND STILL BEING RELEASED. FINALLY, MANY OF THE BASICS OF THE TENNECOMP PROPOSED DEC COMPUTERS ARE VERY DIFFERENT FROM DU PONT'S PRESENT COMPUTERS, WHEREAS ITS PRESENT COMPUTERS ARE VERY SIMILAR TO THOSE OF THE INTERDATA EQUIPMENT.

IN RELATION TO SPECIFIC ITEMS, WHILE DU PONT CONSIDERS A COST OF $75,000 TO BE REASONABLE FOR MODIFICATION OF TENNECOMP'S SYSTEM, TENNECOMP ARGUES THAT THE COST SHOULD BE ZERO AS TENNECOMP PROPOSED TO SUPPLY FOR SIX MONTHS A DEC TRAINED SOFTWARE SPECIALIST WHO WOULD HAVE BEEN EXTREMELY VALUABLE IN MAKING ANY SYSTEM MODIFICATIONS. ACCORDINGLY, IT ARGUES THAT THE $75,000 COST IS WELL IN EXCESS OF ANY REQUIREMENT FOR MODIFICATIONS NOT MADE BY ITS SOFTWARE SPECIALIST. THE RECORD INDICATES, HOWEVER, THAT DU PONT CONSIDERED SUCH TENNECOMP ASSISTANCE INADEQUATE IN TERMS OF THE WORK REQUIRED BECAUSE OF THE EXTENT OF THE MODIFICATION NECESSARY. MOREOVER, WHILE THE TENNECOMP SPECIALIST MAY AID DU PONT IN THE CONCEPTUAL MODIFICATIONS TO BE MADE, THE ACTUAL MODIFICATION WORK MUST BE EFFECTED BY DU PONT PERSONNEL SO THAT THEY MAY BECOME KNOWLEDGEABLE REGARDING FUTURE SYSTEM MODIFICATIONS AND PROBLEMS. BASED ON THE RECORD, WE CANNOT SAY DU PONT'S ESTIMATE OF THIS COST IS WITHOUT A RATIONAL BASIS. B-167782, JANUARY 21, 1970; 42 COMP. GEN. 124, 134 (1962).

IN RELATION TO THE FACTOR OF FAMILIARIZATION, IT APPEARS THAT THE SAME ISSUE OF DU PONT SYSTEM KNOWLEDGE CONTROLS. DU PONT INFORMS THIS OFFICE THAT IT WILL COST DU PONT $33,300 TO INTIMATELY FAMILIARIZE ALL ITS PROGRAMMING AND MAINTENANCE STAFF MEMBERS WITH THE TENNECOMP SYSTEM. THIS FAMILIARIZATION IS NECESSARY DUE TO THE COMPLEXITY OF THE SYSTEM AND THE LARGE NUMBER OF STAFF MEMBERS WHO ARE REQUIRED TO MONITOR THESE REACTORS, DIAGNOSE PROBLEMS AND EFFECT PROMPT CORRECTIVE ACTION. WHILE TENNECOMP CONTENDS THAT ITS FAMILIARIZATION COST SHOULD BE NO MORE THAN THE INTERDATA COST, ESPECIALLY IN VIEW OF ITS OFFER OF A SOFTWARE SPECIALIST, CONSIDERING THE LARGE SIZE OF THE TENNECOMP SYSTEM AS COMPARED TO THE SMALLER SIZE OF THE INTERDATA COMPUTERS AND THEIR SIMILARITY TO THE PRESENT DU PONT COMPUTERS, WE CANNOT SAY THAT DU PONT'S ESTIMATES FOR SYSTEM FAMILIARIZATION SHOULD BE THE SAME FOR BOTH TENNECOMP AND INTERDATA, AS ALLEGED.

THE FINAL PROGRAMMING ITEM WITH WHICH TENNECOMP IS CONCERNED IS ASSEMBLY LANGUAGE TRAINING, WHICH DU PONT ESTIMATED WOULD COST $50,000, WITH THE TENNECOMP SYSTEM. WHILE TENNECOMP ORIGINALLY ALSO TOOK ISSUE WITH DU PONT'S ESTIMATE OF $125,000 FOR ASSEMBLY LANGUAGE PROGRAMMING, IN ITS COMMENTS TO THE DU PONT SUPPLEMENTAL REPORT TENNECOMP "CONCEDED" THE DU PONT ESTIMATE SINCE THE ESTIMATE WAS OUT OF TENNECOMP'S DIRECT CONTROL. AS THE BASIS FOR ITS CONTENTION THAT DU PONT'S ESTIMATE OF $50,000 FOR ASSEMBLY LANGUAGE TRAINING SHOULD MORE PROPERLY BE $12,000, TENNECOMP ARGUES THAT ITS PROPOSED ONE WEEK TRAINING COURSE OF ASSEMBLY LANGUAGE PROGRAMMING, SUCCESSFULLY GIVEN TO THOUSANDS OF TRAINEES, WAS ADEQUATE AND WOULD REPRESENT A COST OF ONLY $12,000. DU PONT CONTENDS THAT THE PROGRAMS TO BE WRITTEN IN ASSEMBLY LANGUAGE ARE EXTENSIVE, ALL PROGRAMMERS AND MAINTENANCE PERSONNEL WILL HAVE TO BE ABLE TO SO PROGRAM, AND THE MATERIAL TO BE LEARNED FOR THE TENNECOMP SYSTEM IS COMPLEX. IN ADDITION WE NOTE THAT DU PONT ESTIMATED ITS TRAINING COST FOR THE INTERDATA SYSTEM AS $25,000, OR WELL IN EXCESS OF TENNECOMP'S OWN ESTIMATED COST OF $12,000. THEREFORE, BASED ON THE ABOVE, WE WILL NOT QUESTION DU PONT'S ESTIMATE FOR THIS COST.

PURSUANT TO OUR ANALYSIS OF THE COST ESTIMATES OF BOTH DU PONT AND TENNECOMP, IT APPEARS DU PONT CALCULATED INTERDATA'S TOTAL INSTALLED SYSTEM TO BE $3,039,769, AND TENNECOMP'S SYSTEM TO BE $3,123,336, A DIFFERENCE OF $83,567. TENNECOMP, ON THE OTHER HAND, CALCULATED THE INSTALLED COST OF ITS SYSTEM TO BE $2,835,936, OR $203,833 BELOW THE INTERDATA SYSTEM COST. SINCE WE FIND NO REASON TO OBJECT TO THE DU PONT COST ANALYSIS REPRESENTED BY THE ABOVE-CITED INSTANCES, WE MUST CONCLUDE THAT DU PONT CORRECTLY DETERMINED THE INTERDATA SYSTEM TO BE THE LOWER- COST INSTALLED SYSTEM. AS INTERDATA'S SYSTEM WAS CHOSEN BECAUSE OF ITS LOWER COST, WE FIND NO MERIT TO TENNECOMP'S ALLEGATION THAT INTERDATA WAS SELECTED BECAUSE DU PONT IMPROPERLY PREFERRED THAT SYSTEM'S TECHNICAL APPROACH OVER THE TENNECOMP SYSTEM.

IN VIEW OF THE ABOVE, THE PROTEST IS DENIED.