B-181233, MAR 6, 1975

B-181233: Mar 6, 1975

Additional Materials:

Contact:

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

 

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

PROTESTER'S LOW REVISED PROPOSAL BASED ON FURNISHING MATERIAL UNDER TWO PRIOR DEFAULTED CONTRACTS CONDITIONED ON NAVY CHANGING BASIS OF TERMINATION OF THOSE CONTRACTS FROM DEFAULT TO CONVENIENCE (PROPRIETY OF WHICH IS CURRENTLY BEFORE ASBCA). AMOUNTING TO TRADE-OFF OF CLAIMS AND SUBJECTING GOVERNMENT TO EXCESSIVE COSTS WAS PROPERLY DETERMINED TO BE UNACCEPTABLE AND WRITTEN OR ORAL DISCUSSIONS ON CONDITIONS WERE NOT REQUIRED SINCE ANY POSSIBILITY OF DELETION OF CONDITIONS WOULD BE TANTAMOUNT TO SUBMISSION OF NEW PROPOSAL. 2. TO ISSUE TO UNSUCCESSFUL OFFEROR PREAWARD NOTICE THAT ITS REVISED PROPOSAL WAS UNACCEPTABLE APPEARS TO BE AN INADVERTENT TECHNICAL VIOLATION HAVING NO EFFECT ON AWARD MADE TO ANOTHER OFFEROR SINCE AGENCY PROPERLY REFUSED TO CONSIDER REVISED PROPOSAL OF THAT OFFEROR. 3.

B-181233, MAR 6, 1975

1. PROTESTER'S LOW REVISED PROPOSAL BASED ON FURNISHING MATERIAL UNDER TWO PRIOR DEFAULTED CONTRACTS CONDITIONED ON NAVY CHANGING BASIS OF TERMINATION OF THOSE CONTRACTS FROM DEFAULT TO CONVENIENCE (PROPRIETY OF WHICH IS CURRENTLY BEFORE ASBCA), AMOUNTING TO TRADE-OFF OF CLAIMS AND SUBJECTING GOVERNMENT TO EXCESSIVE COSTS WAS PROPERLY DETERMINED TO BE UNACCEPTABLE AND WRITTEN OR ORAL DISCUSSIONS ON CONDITIONS WERE NOT REQUIRED SINCE ANY POSSIBILITY OF DELETION OF CONDITIONS WOULD BE TANTAMOUNT TO SUBMISSION OF NEW PROPOSAL. 2. FAILURE OF PROCURING AGENCY, IN VIOLATION OF ASPR SEC. 3-508 (1973 ED.), TO ISSUE TO UNSUCCESSFUL OFFEROR PREAWARD NOTICE THAT ITS REVISED PROPOSAL WAS UNACCEPTABLE APPEARS TO BE AN INADVERTENT TECHNICAL VIOLATION HAVING NO EFFECT ON AWARD MADE TO ANOTHER OFFEROR SINCE AGENCY PROPERLY REFUSED TO CONSIDER REVISED PROPOSAL OF THAT OFFEROR. 3. PROTEST THAT PROCURING AGENCY SHOULD HAVE UTILIZED FORMAL ADVERTISING RATHER THAN NEGOTIATION IS ONE AGAINST ALLEGED IMPROPRIETY IN NEGOTIATED SOLICITATION WHICH, SINCE IT WAS NOT ASSERTED UNTIL AFTER CLOSING DATE FOR RECEIPT OF PROPOSALS, IS UNTIMELY AND WILL NOT BE CONSIDERED ON MERITS.

COMPUTER MACHINING TECHNOLOGY:

REQUEST FOR PROPOSALS (RFP) NO. N00104-74-R-B681, A TOTAL SMALL BUSINESS SET-ASIDE, WAS ISSUED BY THE UNITED STATES NAVY SHIPS PARTS CONTROL CENTER (SPCC), MECHANICSBURG, PENNSYLVANIA, ON FEBRUARY 7, 1974, FOR A QUANTITY OF 26 TRASH DISPOSAL BALL VALVES.

FOUR PROPOSALS WERE RECEIVED. IN RESPONSE TO A REQUEST FOR BEST AND FINAL OFFERS ON MARCH 28, 1974, COMPUTER MACHINING TECHNOLOGY (CMT) SUBMITTED THE LOW REVISED PROPOSAL IN THE AMOUNT OF $92,300, BASED UPON THE FURNISHING OF MATERIAL IT HAD PROCURED UNDER TWO PREVIOUS SPCC CONTRACTS NOS. N00104-72-C-3447 AND N00104-72-C-4942, INCLUDING A CREDIT FOR MATERIAL IN EXCESS OF $11,000. BOTH CONTRACTS HAD BEEN TERMINATED FOR DEFAULT AND APPEALS TAKEN BY CMT FROM THE TERMINATIONS ARE PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS. CMT'S REVISED PROPOSAL PRICE WAS SUBJECT TO CERTAIN CONDITIONS RELATING TO THE TWO DEFAULTED CONTRACTS. CMT BASED ITS PROPOSAL ON THE CONVERSION OF THE DEFAULT TERMINATIONS TO TERMINATIONS FOR CONVENIENCE. IN ADDITION, AN OUTSTANDING APPLICATION FOR PROGRESS PAYMENTS UNDER CONTRACT -3447 WAS TO BE APPROVED AND PROCESSED. THE REVISED PROPOSAL WAS MADE WITHOUT PREJUDICE TO ANY RIGHTS OR CLAIMS FOR DAMAGES ON THE TWO DEFAULTED CONTRACTS.

AFTER CONSULTATION WITH COUNSEL, THE CONTRACTING OFFICER, CONSTRUING THE REVISED PROPOSAL AS AN ALTERNATE PROPOSAL, REFUSED TO CONSIDER THIS APPROACH SINCE CMT HAD NOT SUBMITTED A REPAYMENT PLAN FOR $119,000 IN UNLIQUIDATED PROGRESS PAYMENTS REMAINING UNDER THE TERMINATED CONTRACTS, AND SINCE THERE WAS A SOUND LEGAL BASIS FOR THE DEFAULTS. FURTHERMORE, COUNSEL ADVISED THE CONTRACTING OFFICER THAT, IF THE BASIS FOR THE TERMINATION OF THE CONTRACTS WAS CHANGED FROM DEFAULT TO CONVENIENCE IT WOULD COST THE GOVERNMENT IN EXCESS OF $200,000, I.E., $92,300 UNDER THE SUBJECT SOLICITATION, AND TERMINATION FOR CONVENIENCE COSTS UNDER THE OTHER TWO CONTRACTS, INCLUDING $119,482.50 IN UNLIQUIDATED PROGRESS PAYMENTS. IN VIEW OF THESE CIRCUMSTANCES, THE CONTRACTING OFFICER DETERMINED THAT CMT'S REVISED PROPOSAL WAS UNACCEPTABLE AND SO INFORMED CMT BY LETTER OF MAY 6, 1974. AWARD WAS MADE TO PORTLAND VALVE, INC., IN THE AMOUNT OF $118,092, ON MAY 3, 1974.

CMT PROTESTS THE CONTRACTING OFFICER'S DETERMINATION THAT ITS REVISED PROPOSAL WAS UNACCEPTABLE ON THE GROUND THAT IT WAS NOT AN ALTERNATE PROPOSAL BASED UPON A CONDITION AS CONSTRUED BY THE NAVY, BUT WAS A PROPOSAL WHICH OFFERED TO SUPPLY ALL ITEMS STRICTLY IN ACCORDANCE WITH THE TERMS OF THE RFP AT SUBSTANTIAL COST SAVINGS TO THE GOVERNMENT. IT IS CONTENDED THAT THE GOVERNMENT DID NOT GIVE SERIOUS CONSIDERATION TO ITS OFFER TO MITIGATE DAMAGES IN CONNECTION WITH THE TWO DEFAULTED CONTRACTS BY CREDITING TO THE GOVERNMENT THE AMOUNT OF $12,130 FOR MATERIALS ALREADY PROCURED. CMT ASSERTS THAT THE NAVY SHOULD HAVE COMMUNICATED ITS RESERVATIONS TO CMT, WHICH THE FIRM WOULD HAVE DISPELLED. ALSO, CMT QUESTIONS THE NAVY'S NOT INFORMING IT OF ITS UNACCEPTABILITY UNTIL AFTER THE AWARD WAS MADE. CMT QUESTIONS THE PROPRIETY OF THE NAVY'S CONDUCTING THE PROCUREMENT UNDER NEGOTIATED PROCEDURES RATHER THAN UNDER FORMALLY ADVERTISED PROCEDURES. CMT ASSERTS THAT NONE OF THE PROVISIONS OF SECTIONS 3-200 THROUGH 3-217 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) (1973 ED.), JUSTIFYING PROCUREMENT BY NEGOTIATION, ARE APPLICABLE TO THIS PROCUREMENT.

WE HAVE NO BASIS TO DISAGREE WITH THE NAVY DETERMINATION THAT THE CMT REVISED PROPOSAL WAS UNACCEPTABLE SINCE IT WAS HEAVILY CONDITIONED AND AMOUNTED TO A TRADE-OFF OF RESPECTIVE CLAIMS, SUBJECTED THE GOVERNMENT TO EXCESSIVE COSTS, AND CALLED FOR A CONVERSION OF DEFAULT TO CONVENIENCE TERMINATIONS WITH NO APPARENT LEGAL BASIS.

IN VIEW OF THE FACT THAT THIS PROCUREMENT WAS NEGOTIATED, THE ISSUE THEN BECOMES WHETHER THE NAVY SHOULD HAVE CONDUCTED WRITTEN OR ORAL DISCUSSIONS ON THE REVISED PROPOSAL WITH CMT, AS INFERRED FROM CMT'S PROTEST. SECTION 2304(G) OF TITLE 10 OF THE U.S.C. (1970), AND ITS IMPLEMENTING REGULATIONS IN ASPR SEC. 3-805.1 (1973 ED.) PROVIDE THAT, WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE, WRITTEN OR ORAL DISCUSSIONS MUST BE CONDUCTED WITH ALL OFFERORS IN THE COMPETITIVE RANGE. HERE, THE NAVY GENERALLY SATISFIED THE REQUIREMENT OF HOLDING DISCUSSIONS WITH ALL OFFERORS REQUESTING BEST AND FINAL OFFERS. SEE B 172946, DECEMBER 23, 1971.

IN THE INSTANT CASE, THE EVALUATION WAS CONFINED SOLELY TO THE CONSIDERATION OF PRICE. CMT WAS NOT THE LOW PROPOSER BASED ON INITIAL PROPOSALS SUBMITTED, AND ITS REVISED PROPOSAL WAS CLEARLY UNACCEPTABLE TO THE NAVY. SINCE THE CONDITIONS CONTAINED IN THE REVISED PROPOSAL WERE SO INTERTWINED WITH CMT'S LOW PRICE, ANY FURTHER DISCUSSIONS WITH CMT TO POSSIBLY REMOVE THE CONDITIONS WOULD HAVE BEEN TANTAMOUNT TO THE SUBMISSION BY CMT OF A NEW PROPOSAL. MOREOVER, CMT'S PROTEST ASSERTS THAT DISCUSSIONS WOULD HAVE DISPELLED RESERVATIONS ABOUT THE CONDITIONS AND NOT BROUGHT ABOUT THEIR DELETION FROM ITS REVISED PROPOSAL. IN THESE CIRCUMSTANCES, THE FAILURE OF THE NAVY TO CONDUCT DISCUSSIONS WITH CMT WAS JUSTIFIED. SEE 52 COMP. GEN. 865, 868 (1973), AND 51 ID. 198, 208 (1972).

WITH RESPECT TO THE QUESTION OF THE NAVY'S LATE NOTIFICATION TO CMT THAT ITS REVISED PROPOSAL WAS UNACCEPTABLE, THE FACTS OF RECORD MAKE IT CLEAR THAT, UNDER ASPR SEC. 3-508.2 (1973 ED.), THE NAVY WAS REQUIRED TO GIVE PREAWARD NOTICE TO CMT THAT ITS REVISED PROPOSAL WAS UNACCEPTABLE. THAT REGULATION PROVIDES FOR SUCH PREAWARD NOTICE IN TWO CIRCUMSTANCES, BOTH OF WHICH WERE EXTANT HERE I.E., WHERE THE PERIOD OF EVALUATION IS LIKELY TO EXCEED 30 DAYS AND WHERE THE PROCUREMENT IS A SMALL BUSINESS SET-ASIDE TO BE PLACED THROUGH CONVENTIONAL NEGOTIATIONS. HOWEVER, EVEN THOUGH CMT WAS ENTITLED TO PREAWARD NOTICE OF THE UNACCEPTABILITY OF ITS REVISED PROPOSAL, THE FAILURE TO DO SO WAS A TECHNICAL VIOLATION WHICH APPEARED TO HAVE BEEN INADVERTENT RATHER THAN DELIBERATE. IN ANY EVENT, THIS FAILURE HAD NO EFFECT ON THE AWARD MADE BECAUSE WE HAVE CONCLUDED THE NAVY PROPERLY REFUSED TO CONSIDER THE CMT REVISED PROPOSAL.

FINALLY, IN REGARD TO THE QUESTION OF THE PROPRIETY OF THE NAVY'S CONDUCTING THE PROCUREMENT BY NEGOTIATION RATHER THAN FORMAL ADVERTISING, OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS, 4 C.F.R. SEC. 20.2(A) (1974), PROVIDE THAT PROTESTS BASED ON ALLEGED IMPROPRIETIES IN A NEGOTIATED SOLICITATION WHICH ARE APPARENT PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS SHALL BE FILED PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS. CMT SUBMITTED ITS BEST AND FINAL OFFER ON APRIL 10, 1974, BUT DID NOT RAISE THE QUESTION OF THE ALLEGED IMPROPRIETY UNTIL MAY 21, 1974, IN ITS PROTEST LETTER TO OUR OFFICE. THEREFORE, THIS ASPECT OF CMT'S PROTEST IS UNTIMELY AND WILL NOT BE CONSIDERED ON THE MERITS.

ACCORDINGLY, THE PROTEST IS DENIED.