B-181736, JAN 16, 1975

B-181736: Jan 16, 1975

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ALLEGATION THAT LOW OFFEROR DID NOT HAVE. WILL NOT BE CONSIDERED SINCE WE HAVE DISCONTINUED PRACTICE OF REVIEWING BID PROTESTS OF CONTRACTING OFFICER'S AFFIRMATIVE RESPONSIBILITY DETERMINATION EXCEPT FOR ACTION BY PROCURING OFFICIALS WHICH ARE TANTAMOUNT TO FRAUD. 2. CONTRACTING OFFICER PROPERLY EXCLUDED PROTESTER FROM FURTHER AWARD CONSIDERATION ON BASIS THAT OFFER WAS NO LONGER WITHIN COMPETITIVE RANGE. PROCURING ACTIVITY WAS NOT REQUIRED TO CONDUCT FURTHER NEGOTIATIONS WITH PROTESTER OR REQUEST "BEST AND FINAL" OFFER. 3. WHERE COST AND PRICE ANALYSIS PERFORMED ON ONLY REMAINING OFFER WITHIN COMPETITIVE RANGE DISCLOSED THAT INCORRECT G & A FACTOR WAS UTILIZED. LOW OFFEROR'S REDUCTION IN QUOTED PRICE TO REFLECT CORRECT G & A FACTOR WAS PROPER AND FURTHER NEGOTIATIONS NOT REQUIRED WITH OTHER OFFERORS NO LONGER WITHIN COMPETITIVE RANGE.

B-181736, JAN 16, 1975

1. ALLEGATION THAT LOW OFFEROR DID NOT HAVE, EITHER UNDER DEVELOPMENT OR AS AN ESTABLISHED PRODUCT, SOFTWARE REQUIRED BY SOLICITATION AND LACKED REQUISITE EXPERIENCE, WILL NOT BE CONSIDERED SINCE WE HAVE DISCONTINUED PRACTICE OF REVIEWING BID PROTESTS OF CONTRACTING OFFICER'S AFFIRMATIVE RESPONSIBILITY DETERMINATION EXCEPT FOR ACTION BY PROCURING OFFICIALS WHICH ARE TANTAMOUNT TO FRAUD. 2. WHERE PROTESTER, FOLLOWING DISCUSSIONS WITH PROCURING ACTIVITY, SUBMITTED REVISED PROPOSAL WHICH CONTINUED TO INCLUDE EXCEPTION TO SOLICITATION'S "RIGHTS IN TECHNICAL DATA" CLAUSE, CONTRACTING OFFICER PROPERLY EXCLUDED PROTESTER FROM FURTHER AWARD CONSIDERATION ON BASIS THAT OFFER WAS NO LONGER WITHIN COMPETITIVE RANGE. ACCORDINGLY, PROCURING ACTIVITY WAS NOT REQUIRED TO CONDUCT FURTHER NEGOTIATIONS WITH PROTESTER OR REQUEST "BEST AND FINAL" OFFER. 3. WHERE COST AND PRICE ANALYSIS PERFORMED ON ONLY REMAINING OFFER WITHIN COMPETITIVE RANGE DISCLOSED THAT INCORRECT G & A FACTOR WAS UTILIZED, LOW OFFEROR'S REDUCTION IN QUOTED PRICE TO REFLECT CORRECT G & A FACTOR WAS PROPER AND FURTHER NEGOTIATIONS NOT REQUIRED WITH OTHER OFFERORS NO LONGER WITHIN COMPETITIVE RANGE. MOREOVER, INCLUSION OF PROGRESS PAYMENTS PROVISION IN CONTRACT THROUGH NEGOTIATION WITH ONLY OFFEROR WITHIN COMPETITIVE RANGE WAS PROPER AND DID NOT PREJUDICE INTERESTS OF PROTESTER WHO WAS EXCLUDED FROM FURTHER CONSIDERATION AS NOT WITHIN COMPETITIVE RANGE.

UNITED COMPUTING CORPORATION:

ON MAY 28, 1974, THE U.S. ARMY ARMAMENT COMMAND (ARCOM) ISSUED REQUEST FOR QUOTATIONS (RFQ) NO. DAAA09-74-Q-2056 FOR SOFTWARE NECESSARY TO AUGMENT AN EXISTING INTERACTIVE GRAPHICS REFRESH COMPUTER SYSTEM INTO AN INTERACTIVE COMPUTER AIDED DESIGN AND NUMERICAL CONTROL MACHINE TOOL TAPE PREPARATION AND VERIFICATION SYSTEM. THE RFQ CONTEMPLATED A FIRM-FIXED- PRICE CONTRACT.

OF THE FIFTY-EIGHT PROSPECTIVE CONTRACTORS SOLICITED, THREE SUBMITTED QUOTATIONS BY JUNE 18, 1974, WITH PRICES AS FOLLOWS:

OFFEROR QUOTATION

LUNDY ELECTRONICS & SYSTEMS, INC. (LUNDY) $59,411.00

UNITED COMPUTING CORPORATION (UNITED) $75,000.00

COMPUTER VISION $95,000.00

THE PROCURING ACTIVITY FOUND THAT THE QUOTATIONS RECEIVED FROM LUNDY AND UNITED WERE NOT FULLY RESPONSIVE IN THAT THEY BOTH TOOK EXCEPTION TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) SECTION 7 104.9(A)(1974 ED.) "RIGHTS IN TECHNICAL DATA" CLAUSE, INCORPORATED BY REFERENCE IN THE RFQ. THE OFFER FROM COMPUTER VISION WAS SUBMITTED WITHOUT ANY EXCEPTION. THE CONTRACTING OFFICER DECIDED TO OPEN NEGOTIATIONS WITH ALL THREE PROSPECTIVE CONTRACTORS, NOTWITHSTANDING THE EXCEPTION TAKEN BY TWO OF THE OFFERORS. ON JUNE 19, 1974, TELEGRAPHIC MESSAGES WERE SENT TO THE THREE OFFERORS CONFIRMING TELEPHONE NEGOTIATIONS OF THAT DATE AND ESTABLISHING JUNE 20, 1974 AS THE DEADLINE FOR RECEIPT OF REVISED PROPOSALS.

DURING THE COURSE OF THE TELEPHONIC NEGOTIATIONS, THE CONTRACTING OFFICER INFORMED BOTH LUNDY AND UNITED THAT THE GOVERNMENT COULD NOT ACCEPT THEIR RESPECTIVE PROPOSALS WITH THE EXCEPTIONS TAKEN TO THE "RIGHTS IN TECHNICAL DATA" CLAUSE. AS A RESULT OF THESE NEGOTIATIONS, LUNDY WITHDREW ITS EXCEPTION TO THE CLAUSE WHILE UNITED REMOVED ITS ORIGINAL EXCEPTION BUT SUBSTITUTED YET ANOTHER EXCEPTION. THE RECORD INDICATES THAT UNITED DELIBERATELY TOOK EXCEPTION TO THE SOLICITATION'S "RIGHTS IN TECHNICAL DATA" CLAUSE BECAUSE IT WANTED TO RESTRICT THE USE OF ITS SOFTWARE THAT WOULD BE DELIVERED UNDER THE CONTRACT BECAUSE OF THE BELIEF THAT TO PERMIT THE GOVERNMENT TO DUPLICATE THE SOFTWARE WOULD PUT IT OUT OF BUSINESS. COMPUTER VISION DID NOT REVISE ITS PRICE AND WAS APPARENTLY ELIMINATED FROM FURTHER CONSIDERATION DUE TO ITS PROPOSAL BEING UNREASONABLY HIGH WITH RESPECT TO PRICE.

ON JUNE 21, 1974, THE CONTRACTING OFFICER REQUESTED THAT A COST AND PRICE ANALYSIS BE PERFORMED ON THE LOW QUOTATION SUBMITTED BY LUNDY. THE ANALYSIS REVEALED THAT LUNDY HAD UTILIZED AN INCORRECT G & A FACTOR (21% IN LIEU OF 17.3%), AND APPLICATION OF THE CORRECT FACTOR WOULD REDUCE LUNDY'S PRICE TO $57,594.00. IN SUBSEQUENT CORRESPONDENCE, LUNDY ACKNOWLEDGED THAT IT HAD IN FACT UTILIZED AN INCORRECT G & A FACTOR AND ACCORDINGLY REDUCED ITS PRICE TO $57,594.00. IN ORDER TO DETERMINE THE LOW OFFEROR'S ABILITY TO PERFORM (RESPONSIBILITY) THE SUBJECT PROCUREMENT, THE CONTRACTING OFFICER CONTACTED THE ADMINISTRATIVE CONTRACTING OFFICER (ACO) AT DCASD, GARDEN CITY, NEW YORK. THE ACO INFORMED THE CONTRACTING OFFICER THAT LUNDY WAS CAPABLE OF PRODUCING A GOOD PRODUCT BUT WAS HAVING CERTAIN FINANCIAL DIFFICULTIES AND RECOMMENDED THE AWARDING OF PROGRESS PAYMENTS AS PART OF THE CONTRACT TO INSURE THE OFFEROR'S TIMELY PERFORMANCE. ACCORDINGLY, THE CONTRACTING OFFICER CONTACTED LUNDY IN ORDER TO NEGOTIATE INCLUSION OF PROGRESS PAYMENTS IN ANY RESULTING CONTRACT, AND BY MESSAGE DATED JUNE 26, 1974, LUNDY REQUESTED PROGRESS PAYMENTS IN RETURN FOR ITS PREVIOUS REDUCTION IN ITS INITIAL QUOTED PRICE. AFTER RECEIVING A FAVORABLE REPORT ON THE TECHNICAL EVALUATION PERFORMED ON LUNDY'S OFFER, THE CONTRACTING OFFICER, ON JUNE 28, 1974, AWARDED THE INSTANT CONTRACT TO LUNDY AT A TOTAL PRICE OF $57,594.00. THE CONTRACT AS AWARDED INCLUDED THE ASPR SECTION 7-104.35(B) "PROGRESS PAYMENTS" CLAUSE.

SUBSEQUENTLY, BY TELEGRAM DATED JULY 5, 1974, UNITED PROTESTED THE AWARD OF THE CONTRACT TO LUNDY. UNITED CONTENDS: (1) THAT AT THE TIME OF BID OPENING, LUNDY DID NOT IN FACT HAVE, EITHER UNDER DEVELOPMENT OR AS AN ESTABLISHED PRODUCT, THE SOFTWARE SPECIFIED BY THE SOLICITATION AND LACKED PRIOR EXPERIENCE IN THE SPECIFIED TECHNOLOGY; (2) THAT THE LOW OFFEROR, AFTER BEING AUDITED BY DCASD PRIOR TO AWARD, WAS GIVEN THE OPPORTUNITY TO FURTHER REDUCE ITS QUOTED PRICE, AN OPPORTUNITY NOT AFFORDED THE OTHER OFFERORS; AND (3) THAT NO REQUEST FOR A "BEST AND FINAL" WAS ISSUED BY THE PROCURING ACTIVITY.

IN REGARD TO LUNDY'S POSSESSING THE NECESSARY SOFTWARE SPECIFIED BY THE SOLICITATION'S SPECIFICATIONS AND AS TO ITS PRIOR EXPERIENCE, THE PROTESTER IS IN ESSENCE QUESTIONING THE RESPONSIBILITY OF THE LOW OFFEROR AND ITS ELIGIBILITY FOR CONTRACT AWARD. THIS OFFICE HAS DISCONTINUED ITS PRIOR PRACTICE OF REVIEWING BID PROTESTS INVOLVING A CONTRACTING OFFICER'S AFFIRMATIVE DETERMINATION OF RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR SINCE ANY SUCH DETERMINATION IS LARGELY A MATTER OF BUSINESS JUDGMENT PROPERLY WITHIN THE DISCRETION OF THE PROCURING OFFICIALS. MATTER OF UNITED HATTERS, CAP AND MILLINERY WORKERS INTERNATIONAL UNION, 53 COMP. GEN. , B-177512, JUNE 7, 1974. IF PURSUANT TO THE APPLICABLE REGULATIONS THE CONTRACTING OFFICER FINDS THE PROSPECTIVE CONTRACTOR RESPONSIBLE, WE DO NOT BELIEVE THE FINDING SHOULD BE DISTURBED EXCEPT FOR ACTIONS BY PROCURING OFFICIALS WHICH ARE TANTAMOUNT TO FRAUD. MATTER OF CENTRAL METAL PRODUCTS, INC., 54 COMP. GEN. , B-181724, JULY 26, 1974. SINCE NO FRAUD HAS BEEN ALLEGED OR DEMONSTRATED, WE MUST DECLINE TO FURTHER CONSIDER THE MATTER.

IN REGARD TO THE TWO OTHER ALLEGATIONS WHICH CONSTITUTE THE REMAINDER OF UNITED'S PROTEST, THE RECORD INDICATES THAT ON THE BASIS OF THE PROCURING ACTIVITY'S INITIAL EVALUATION, UNITED WAS DETERMINED WITHIN THE COMPETITIVE RANGE AND ELIGIBLE FOR NEGOTIATIONS, NOTWITHSTANDING THE FACT THAT ITS INITIAL PROPOSAL TOOK EXCEPTION TO THE SOLICITATION'S "RIGHTS IN TECHNICAL DATA" CLAUSE. NEGOTIATIONS WERE UNDERTAKEN WITH UNITED IN ACCORDANCE WITH ASPR 3-805.3(A)(1974 ED.), BY ADVISING THE OFFEROR OF THE DEFICIENCY IN ITS PROPOSAL AND AFFORDING IT AN OPPORTUNITY TO REVISE THE PROPOSAL IN ORDER TO MAKE IT CONFORM TO THE TERMS AND CONDITIONS OF THE SOLICITATION. HOWEVER, UNITED'S REVISED PROPOSAL CONTINUED TO INCLUDE AN EXCEPTION TO ASPR 7-109.4(A)(1974 ED.). ALTHOUGH THE ADMINISTRATIVE RECORD DOES NOT STATE THAT UNITED WAS NO LONGER CONSIDERED TO BE WITHIN THE COMPETITIVE RANGE, THIS CONCLUSION CAN REASONABLY BE DRAWN FROM THE FACT THAT THE PROCURING ACTIVITY'S INITIAL EVALUATION AND DISCUSSIONS FOLLOWING THE RECEIPT OF PROPOSALS INDICATED THAT THE GOVERNMENT COULD NOT ACCEPT ANY EXCEPTION TO THE AFOREMENTIONED CLAUSE.

ALTHOUGH OFFERORS WITHIN THE COMPETITIVE RANGE MUST GENERALLY BE ADVISED OF THE AREAS IN WHICH IT IS BELIEVED THEIR PROPOSALS ARE DEFICIENT OR WEAK AND AFFORDED THE OPPORTUNITY TO SUBMIT A REVISED PROPOSAL, IT IS NOT REQUIRED THAT AN OFFEROR BE HELPED THROUGH SUCCESSIVE ROUNDS OF DISCUSSIONS TO BRING ITS ORIGINAL UNACCEPTABLE PROPOSAL UP TO AN ACCEPTABLE LEVEL WHERE THE OFFEROR REFUSES TO CONFORM TO A STATED REQUIREMENT OF THE SOLICITATION. 51 COMP. GEN. 621 (1972). IN THIS CONNECTION, WE HAVE HELD THAT THE MERE FACT THAT AN OFFEROR IS INITIALLY DETERMINED TO BE WITHIN THE COMPETITIVE RANGE FOR THE PURPOSE OF NEGOTIATIONS DOES NOT PREVENT THE CONTRACTING OFFICER FROM SUBSEQUENTLY EXCLUDING THAT OFFEROR FROM FURTHER AWARD CONSIDERATION WHERE ITS REVISED PROPOSAL IS DETERMINED TO BE OUTSIDE THE COMPETITIVE RANGE. 52 COMP. GEN. 198, 208 (1972). SINCE UNITED'S PROPOSAL REVISIONS SUBMITTED AS A RESULT OF NEGOTIATIONS FAILED TO RESOLVE THE PROCURING ACTIVITY'S INITIAL OBJECTION, IT IS OUR VIEW THAT UNITED'S REVISED PROPOSAL WAS REASONABLY DETERMINED TO BE NO LONGER WITHIN THE COMPETITIVE RANGE AND, THEREFORE, FURTHER NEGOTIATIONS OR A REQUEST FOR A "BEST AND FINAL" OFFER WERE NOT REQUIRED.

AS TO UNITED'S CONTENTION THAT LUNDY WAS GIVEN AN ADDITIONAL OPPORTUNITY TO REDUCE ITS QUOTED PRICE, THE RECORD REVEALS THAT DURING THE COURSE OF AN AUDIT PERFORMED BY DCASD, GARDEN CITY, LUNDY WAS INFORMED THAT IT UTILIZED AN IMPROPER G & A FACTOR. ACCORDINGLY, LUNDY REDUCED ITS QUOTED PRICE TO REFLECT THE PROPER G & A FACTOR. AS STATED PREVIOUSLY, SINCE ARCOM EXCLUDED BOTH UNITED AND COMPUTER VISION FROM FURTHER CONSIDERATION ON THE BASIS OF THEIR REVISED PROPOSALS BEING DETERMINED OUTSIDE THE COMPETITIVE RANGE, FURTHER NEGOTIATIONS WITH THOSE FIRMS WERE NOT REQUIRED. SINCE LUNDY WAS THE ONLY REMAINING OFFEROR WITHIN THE COMPETITIVE RANGE, IT WAS INCUMBENT ON THE CONTRACTING ACTIVITY TO FURTHER NEGOTIATE WITH THAT FIRM IN ORDER TO OBTAIN THE CONTRACT MOST ADVANTAGEOUS TO THE GOVERNMENT. ACCORDINGLY, LUNDY'S REDUCTION IN PRICE FOLLOWING DISCUSSIONS WITH THE DSASD AUDITORS AND THE CONTRACTING OFFICER WAS THE RESULT OF PROPER NEGOTIATIONS.

FINALLY, UNITED CONTENDS THAT THE PROCURING ACTIVITY'S ACTION IN AWARDING PROGRESS PAYMENTS TO LUNDY WITHOUT MAKING SUCH PAYMENTS AVAILABLE TO THE OTHER OFFERORS, AFFORDED LUNDY A DISTINCT ADVANTAGE IN THE PROCUREMENT. THE RECORD INDICATES THAT THE PROGRESS PAYMENTS PROVISION WAS AN ITEM NEGOTIATED BY THE CONTRACTING OFFICER AFTER LUNDY HAD BEEN DETERMINED THE ONLY OFFEROR WITHIN THE COMPETITIVE RANGE. SINCE THE CONTRACTING OFFICER'S OBLIGATION TO FURTHER NEGOTIATE WITH THE OTHER OFFERORS WAS DISCHARGED WHEN THEIR REVISED PROPOSALS WERE DETERMINED OUTSIDE THE COMPETITIVE RANGE, THE CONTRACTING OFFICER WAS NOT REQUIRED TO NEGOTIATE PROGRESS PAYMENTS WITH UNITED.

FOR THE FOREGOING REASONS, UNITED'S PROTEST IS DENIED.