B-181130, AUG 19, 1974

B-181130: Aug 19, 1974

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WHICH WAS SUBSEQUENTLY APPROVED BY AGENCY. OTHER OFFEROR WAS ENTITLED UNDER ASPR 3-805.4 TO BE ADVISED OF SUCH CHANGE AND ALLOWED TO SUBMIT REVISED PROPOSAL BASED ON ACCEPTABILITY OF NEW TEST METHOD. POSSIBLE PRICE IMPACT ON PROPOSER NOT PERMITTED TO RESPOND TO CHANGE IS SPECULATIVE AND UNWARRANTED IN VIEW OF FACT THAT OFFERORS DID NOT COMPETE ON EQUAL BASIS. 2. BECAUSE OF ADVANCED STAGE OF CONTRACT AND FACT THAT GOVERNMENT WILL OBTAIN ITEMS WITHIN AN ACCEPTABLE TIME FRAME. TERMINATION OF THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT IS NOT RECOMMENDED DESPITE IMPROPER FAILURE OF NAVY PROCURING ACTIVITY TO AMEND RFP TO PERMIT ALTERNATE TEST METHOD. RFP PROVISION STATING THAT PROPOSALS OFFERING DELIVERY BEYOND REQUIRED DELIVERY TIME WILL BE CONSIDERED NONRESPONSIVE TO RFP AND REJECTED IS INAPPROPRIATE IN THE CONTEXT OF A NEGOTIATED PROCUREMENT.

B-181130, AUG 19, 1974

1. WHERE ONE OFFEROR SUBMITTED NEW TEST PROCEDURE OTHER THAN ONE REQUIRED BY RFP, WHICH WAS SUBSEQUENTLY APPROVED BY AGENCY, OTHER OFFEROR WAS ENTITLED UNDER ASPR 3-805.4 TO BE ADVISED OF SUCH CHANGE AND ALLOWED TO SUBMIT REVISED PROPOSAL BASED ON ACCEPTABILITY OF NEW TEST METHOD. RECORD BEFORE GAO, POSSIBLE PRICE IMPACT ON PROPOSER NOT PERMITTED TO RESPOND TO CHANGE IS SPECULATIVE AND UNWARRANTED IN VIEW OF FACT THAT OFFERORS DID NOT COMPETE ON EQUAL BASIS. 2. BECAUSE OF ADVANCED STAGE OF CONTRACT AND FACT THAT GOVERNMENT WILL OBTAIN ITEMS WITHIN AN ACCEPTABLE TIME FRAME, TERMINATION OF THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT IS NOT RECOMMENDED DESPITE IMPROPER FAILURE OF NAVY PROCURING ACTIVITY TO AMEND RFP TO PERMIT ALTERNATE TEST METHOD, AND ACCEPTING FOR AWARD PROPOSAL DEVIATING FROM RFP BY OFFERING AN ALTERNATE TEST METHOD AND A LONGER DELIVERY SCHEDULE THAN REQUIRED. 3. RFP PROVISION STATING THAT PROPOSALS OFFERING DELIVERY BEYOND REQUIRED DELIVERY TIME WILL BE CONSIDERED NONRESPONSIVE TO RFP AND REJECTED IS INAPPROPRIATE IN THE CONTEXT OF A NEGOTIATED PROCUREMENT.

REQUEST FOR PROPOSALS (RFP) N00104-74-R-VA21 WAS ISSUED ON SEPTEMBER 10, 1973, AND SOLICITED OFFERS FOR THREE MODULE ASSEMBLIES BY THE NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA. UNIDYNAMICS/ST. LOUIS, INC. (UNIDYNAMICS), WAS THE ONLY SOURCE SOLICITED; HOWEVER, AN UNSOLICITED PROPOSAL WAS RECEIVED FROM OCEAN TECHNOLOGY, INC. (OTI), PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS OF OCTOBER 10, 1973.

THE TWO PROPOSALS QUOTED THE FOLLOWING PRICES:

UNIT PRICE TOTAL

UNIDYNAMICS $5,599.65 $16,798.95

OTI 4,250.00 12,740.00

THE RFP CONTAINED THE FOLLOWING NOTATION CONCERNING TESTING OF THE ASSEMBLIES:

"NOTE: MANUFACTURER WILL BENCH TEST 100% IN ACCORDANCE WITH DRAWING 1478921 AS REQUIRED BY NOTE 11 OF DRAWING NR. 1478840. BENCH TESTS TO BE WITNESSED AND VERIFIED BY DCAS PERSONNEL."

WITH RESPECT TO THE TESTING OF THE ASSEMBLIES, THE PROPOSAL PRICE OF UNIDYNAMICS WAS BASED ON THE "RENT-FREE USE OF A GOVERNMENT MK3 MOD 8 DUMMY DIRECTOR, WHICH IS CURRENTLY IN OUR POSSESSION HELD UNDER CONTRACT N600 (19) 64978 AND FOR WHICH AUTHORIZATION IS REQUIRED." OTI TOOK NO EXCEPTION IN ITS PROPOSAL TO THE TEST REQUIREMENTS IMPOSED BY THE RFP. OCTOBER 19, 1973, THE CONTRACTING OFFICER TELEPHONED OTI TO INQUIRE HOW IT INTENDED TO COMPLY WITH THE TEST REQUIREMENTS. OTI REPLIED THAT IT WOULD BUILD ITS OWN TEST EQUIPMENT AND ON NOVEMBER 28, 1973, OTI WAS REQUESTED TO SUBMIT ITS PROPOSED TEST PROCEDURE TO THE NAVY FOR TECHNICAL EVALUATION. THE OTI TEST PROCEDURE, WHEREIN A SERVO MECHANISM IS SUBSTITUTED FOR THE DUMMY DIRECTOR, WAS APPROVED FORMALLY BY THE TECHNICAL EVALUATORS ON MARCH 29, 1974, BECAUSE THE SERVO MECHANISM COULD PROVIDE CERTAIN SIGNALS REQUIRED BY PERFORMANCE TEST AND ADJUSTMENT REQUIREMENTS OF DRAWING 1478921. ON APRIL 2, 1974, AWARD WAS MADE TO OTI.

UNIDYNAMICS WAS ADVISED OF THE AWARD ON APRIL 22, 1974, AND ON APRIL 24, 1974, PROTESTED THE AWARD TO OUR OFFICE. FOLLOWING OUR RECEIPT OF THE NAVY REPORT ON THE PROTEST ON JUNE 10, 1974, UNIDYNAMICS FILED COMMENTS WITH OUR OFFICE ON JUNE 28, 1974. OTI DECLINED TO OFFER COMMENTS.

UNIDYNAMICS CONTENDS THAT THE TESTING METHOD TO BE UTILIZED BY OTI WHICH THE NAVY EVENTUALLY ACCEPTED AMOUNTED TO A SUBSTANTIAL CHANGE IN THE TESTING REQUIREMENTS. THE FIRM STRESSES ITS POSITION THAT THE RFP REQUIRED COMPLETE COMPLIANCE WITH THE APPLICABLE DRAWING WHICH CALLED FOR TESTING TO BE ACCOMPLISHED ONLY WITH A DUMMY DIRECTOR. THE CHANGE, IT IS ALLEGED, SHOULD HAVE BEEN COMMUNICATED TO IT BY AMENDMENT TO AFFORD AN OPPORTUNITY TO REVISE ITS OFFER. ACCORDING TO UNIDYNAMICS, ITS PROPOSAL PRICES WOULD HAVE BEEN REDUCED SUBSTANTIALLY HAD IT KNOWN THAT THE TEST REQUIREMENT FOR USE OF A DUMMY DIRECTOR HAD BEEN WAIVED.

IT IS THE NAVY'S POSITION THAT THE TESTING REQUIREMENTS WERE NOT MODIFIED. THE NAVY BELIEVES THAT THE TESTING REQUIRED BY THE APPLICABLE DRAWING CAN BE ACCOMPLISHED BY USE OF THE SERVO-MECHANISM AS APPROVED BY ITS TECHNICAL EVALUATORS. THE NAVY ARGUES THAT, SINCE THE PROPOSAL OF UNIDYNAMICS WAS BASED ON THE RENT-FREE USE OF A GOVERNMENT FURNISHED DUMMY DIRECTOR, THE USE OF DIFFERENT EQUIPMENT TO PERFORM THE SAME TESTS WOULD HAVE NO PRICE IMPACT ON UNIDYNAMICS' OFFER.

BASED UPON THE GAO REVIEW, WE CONCLUDE THAT, CONTRARY TO THE NAVY'S POSITION, THE ACCEPTANCE OF THE SERVO-MECHANISM REPRESENTED A CHANGE IN THE RFP'S TESTING REQUIREMENTS.

AS SUCH, THE RFP SHOULD HAVE BEEN AMENDED IN ORDER TO GIVE UNIDYNAMICS AN OPPORTUNITY TO SUBMIT A REVISED PROPOSAL AS REQUIRED BY SECTIONS 3- 805.4(A) AND (C) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), WHICH READ AS FOLLOWS:

"(A)WHEN, EITHER BEFORE OR AFTER RECEIPT OF PROPOSALS, CHANGES OCCUR IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS MADE TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE SOLICITATION. WHEN TIME IS OF THE ESSENCE, ORAL ADVICE OF CHANGES MAY BE GIVEN IF (I) THE CHANGES INVOLVED ARE NOT COMPLEX IN NATURE, (II) A RECORD IS MADE OF THE ORAL ADVICE GIVEN, (III) ALL FIRMS TO BE NOTIFIED (SEE (B) BELOW) ARE NOTIFIED AS NEAR TO THE SAME TIME AS FEASIBLE, PREFERABLY THE SAME DAY, AND (IV) THE ORAL ADVICE IS PROMPTLY CONFIRMED BY THE WRITTEN AMENDMENT.

"(C) WHEN A PROPOSAL CONSIDERED TO BE MOST ADVANTAGEOUS TO THE GOVERNMENT INVOLVES A DEPARTURE FROM THE STATED REQUIREMENTS, ALL OFFERORS SHALL BE GIVEN AN OPPORTUNITY TO SUBMIT NEW OR AMENDED PROPOSALS UNDER (A) OR (B) ABOVE ON THE BASIS OF THE REVISED REQUIREMENTS, PROVIDED THIS CAN BE DONE WITHOUT REVEALING TO THE OTHER OFFERORS THE SOLUTION PROPOSED IN THE ORIGINAL DEPARTURE OR ANY INFORMATION WHICH IS ENTITLED TO PROTECTION UNDER 3-507.1."

IN SUPPORT OF THIS CONCLUSION, THE SOLICITATION STATED THAT TESTING WAS TO BE "100% IN ACCORDANCE WITH DRAWING 1478921." WHILE THE SUBSTANCE OF TESTING RESULTS ACHIEVED WITH THE SERVO-MECHANISM MAY SATISFY THE NAVY'S MINIMUM NEEDS, THE DRAWING CLEARLY CALLS FOR TESTING TO BE PERFORMED WITH A DUMMY DIRECTOR. NO LANGUAGE PERMITTING THE USE OF ALTERNATE EQUIPMENT IS ON THE DRAWING. WE BELIEVE THAT THE SUBSTITUTION OF A DIFFERENT TYPE OF TEST EQUIPMENT CONSTITUTES A SUFFICIENT DEVIATION FROM THE ORIGINAL RFP TO REQUIRE COMPLIANCE WITH THE ABOVE-CITED ASPR SECTIONS.

REGARDING THE NAVY'S ARGUMENT THAT THERE WOULD BE NO PRICE IMPACT, UNIDYNAMICS DISAGREES. UNIDYNAMICS STATES THAT NUMEROUS COSTLY CALIBRATIONS ARE NECESSARY IN ORDER TO EMPLOY THE DUMMY DIRECTOR WHICH ARE NOT NECESSARY WITH THE SERVO-MECHANISM. OUR OFFICE IS NOT EQUIPPED TO RESOLVE THE DISAGREEMENT IN THIS TECHNICAL AREA. HOWEVER, ON THE RECORD BEFORE US, A CONSIDERATION OF WHAT UNIDYNAMICS MAY OR MAY NOT HAVE DONE IN REVISING ITS PROPOSAL TO THE CHANGED REQUIREMENTS IS A MATTER OF SPECULATION UNWARRANTED IN VIEW OF THE FACT THAT THE TWO OFFERORS DID NOT COMPETE ON AN EQUAL BASIS. SEE 48 COMP. GEN. 663 (1969); AND B-175968, OCTOBER 17, 1972.

NOT ONLY DID THE PROCURING ACTIVITY IMPROPERLY FAIL TO AMEND THE RFP, BUT THE ACCEPTANCE OF THE OTI PROPOSAL FOR AWARD CONTAINING THE USE OF THE SERVO-MECHANISM FOR TESTING DEVIATED FROM THE ESTABLISHED RFP REQUIREMENTS. IN ADDITION, IN OUR REVIEW OF THE SOLICITATION, OUR OFFICE NOTED THAT THE RFP REQUIRES DELIVERY WITHIN 120 DAYS AFTER THE DATE OF CONTRACT. OTI OFFERED A 180-DAY DELIVERY SCHEDULE AND UNIDYNAMICS OFFERED DELIVERY WITHIN 182 DAYS. AWARD WAS MADE TO OTI BASED ON THE 180-DAY DELIVERY SCHEDULE OFFERED. SUCH BEING THE CASE, THE AWARD WAS BASED ON AN OFFER THAT DID NOT CONFORM TO THE TERMS OF THE RFP IN ANOTHER REGARD.

DESPITE THE ABOVE, WE HAVE BEEN ADVISED BY THE NAVY THAT THE CONTRACT WITH OTI IS NEAR COMPLETION. MOREOVER, THE GOVERNMENT WILL BE OBTAINING THE ASSEMBLIES WITHIN AN ACCEPTABLE TIME-FRAME, AND IT WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT TO TAKE REMEDIAL ACTION IN THE FORM OF RECOMMENDING TERMINATION OF THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT AT THIS LATE DATE. SEE 52 COMP. GEN. 215, 218 (1972); AND B- 175798, OCTOBER 6, 1972. HOWEVER, WE ARE ADVISING THE SECRETARY OF THE NAVY BY LETTER OF TODAY THAT STEPS SHOULD BE TAKEN TO PRECLUDE A RECURRENCE OF THESE SHORTCOMINGS IN PROCUREMENT PROCEDURES IN THE FUTURE.

IN CONCLUSION, ONE FURTHER PROCEDURAL SHORTCOMING, WHICH WE ARE ALSO BRINGING TO THE ATTENTION OF THE SECRETARY OF THE NAVY, DESERVES COMMENT. WE NOTE THAT THE DELIVERY PROVISIONS OF THE RFP CONTAINED THE FOLLOWING LANGUAGE:

"OFFERS OFFERING DELIVERY BEYOND THE NUMBER OF DAYS STATED IN THE COLUMN ENTITLED 'REQUIRED DELIVERY' WILL BE CONSIDERED NON-RESPONSIVE TO THE SOLICITATION AND WILL BE REJECTED." (EMPHASIS ADDED.)

OUR OFFICE HAS STATED IN THE PAST THAT THE TERM NONRESPONSIVE IS INAPPROPRIATE WHEN USED IN THE CONTEXT OF A NEGOTIATED PROCUREMENT DUE TO THE INHERENT FLEXIBILITY OF NEGOTIATION WHICH REQUIRES DISCUSSIONS WITH ALL OFFERORS WITHIN THE COMPETITIVE RANGE. SEE 51 COMP. GEN. 565, 570 (1972).