B-181806, DEC 5, 1974

B-181806: Dec 5, 1974

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WAS IMPROPER AND TENDS TO DESTROY CONFIDENCE IN COMPETITIVE PROCUREMENT SYSTEM. CORRECTIVE ACTION IN THIS PROCUREMENT IS NOT POSSIBLE. THE DETERMINATION TO NEGOTIATE THIS PROCUREMENT WAS MADE AS A RESULT OF THE UNIFORM MATERIAL AND ISSUE PRIORITY SYSTEM (UMMIPS) DESIGNATOR 01 BEING ASSIGNED TO IT. NEGOTIATION WAS AUTHORIZED UNDER ASPR SEC. 3-202.2(VI) (1974 ED.). FOUR LOCAL FIRMS WERE ORALLY CONTACTED AND SUBSEQUENTLY PROVIDED COPIES OF THE RFQ. ALL OFFERORS WERE INFORMED THAT THEIR QUOTATIONS WERE DUE BY THE CLOSE OF BUSINESS ON JUNE 27. THE TWO PROPOSALS RECEIVED WERE FURNISHED TO THE BASE CIVIL ENGINEERS ON JUNE 28 FOR TECHNICAL EVALUATION. THEIR RESPONSE WAS AS FOLLOWS: "THE PROPOSALS FROM THE QUALITY ELECTRONICS COMPANY AND THE ANNANDALE SERVICE COMPANY FOR A BURGLAR ALARM RECEIVING STATION HAVE BEEN EVALUATED.

B-181806, DEC 5, 1974

PURSUANT TO ASPR SEC. 3-805.4 (1974 ED.), DECISION TO RELAX AND/OR MODIFY REQUIREMENTS OF RFQ MUST BE MADE IN WRITING THROUGH FORM OF AMENDMENT TO RFQ AND DISSEMINATED TO ALL PROSPECTIVE CONTRACTORS, AND FAILURE TO DO SO, WITH RESULTANT AWARD TO OFFEROR WHO BEST APPROACHED ALTERED REQUIREMENTS OF RFQ, WAS IMPROPER AND TENDS TO DESTROY CONFIDENCE IN COMPETITIVE PROCUREMENT SYSTEM. HOWEVER, AS CONTRACT HAS BEEN FULLY PERFORMED, CORRECTIVE ACTION IN THIS PROCUREMENT IS NOT POSSIBLE.

ANNANDALE SERVICE COMPANY; AUSTIN CARBONIC CO., INC.:

ON JUNE 26, 1974, THE PROCUREMENT DIVISION, BERGSTROM AIR FORCE BASE, RECEIVED PURCHASE REQUEST NO. FB 4857 4163 9500 FOR THE PURCHASE AND INSTALLATION OF A SECURITY ALARM AND DURESS INTRUSION CABINET. THIS PURCHASE REQUEST RESULTED FIRST IN AN ORAL REQUEST FOR PROPOSALS, AUTHORIZED IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 3-501(D)(II) (1974 ED.), AND THEN SHORTLY THEREAFTER IN A WRITTEN REQUEST FOR QUOTATIONS (RFQ) NO. F41687-74-00147. THE DETERMINATION TO NEGOTIATE THIS PROCUREMENT WAS MADE AS A RESULT OF THE UNIFORM MATERIAL AND ISSUE PRIORITY SYSTEM (UMMIPS) DESIGNATOR 01 BEING ASSIGNED TO IT. THEREFORE, NEGOTIATION WAS AUTHORIZED UNDER ASPR SEC. 3-202.2(VI) (1974 ED.), "PUBLIC EXIGENCY."

FOUR LOCAL FIRMS WERE ORALLY CONTACTED AND SUBSEQUENTLY PROVIDED COPIES OF THE RFQ. ALL OFFERORS WERE INFORMED THAT THEIR QUOTATIONS WERE DUE BY THE CLOSE OF BUSINESS ON JUNE 27. AT THE TIME SPECIFIED FOR RECEIPT OF PROPOSALS, QUALITY ELECTRONICS ALARM SERVICE CO. (QUALITY) AND ANNANDALE SERVICE COMPANY (ANNANDALE) SUBMITTED PROPOSALS FOR EVALUATION. AUSTIN CARBONIC CO., INC. (AUSTIN), RESPONDED BY DECLINING TO SUBMIT A PROPOSAL STATING THAT IT INTENDED TO ASSIST ANNANDALE DURING INSTALLATION OF THE EQUIPMENT, SHOULD ANNANDALE'S PROPOSAL PROVE SUCCESSFUL.

THE TWO PROPOSALS RECEIVED WERE FURNISHED TO THE BASE CIVIL ENGINEERS ON JUNE 28 FOR TECHNICAL EVALUATION. THEIR RESPONSE WAS AS FOLLOWS:

"THE PROPOSALS FROM THE QUALITY ELECTRONICS COMPANY AND THE ANNANDALE SERVICE COMPANY FOR A BURGLAR ALARM RECEIVING STATION HAVE BEEN EVALUATED. ALTHOUGH NEITHER OF THESE PROPOSALS FULLY MEET THE SPECIFICATIONS FURNISHED YOUR OFFICE, IT IS RECOMMENDED THE PROPOSAL FROM QUALITY ELECTRONICS UTILIZING THE POTTER EQUIPMENT BE SELECTED. THE POTTER EQUIPMENT IS UNDERWRITERS LABORATORY APPROVED AND WILL PROVIDE ALL ESSENTIAL FEATURES REQUIRED BY THE SECURITY POLICE TO ACCOMPLISH THE DESIRED RESULTS; ALSO, THE DELIVERY AND INSTALLATION TIME FOR THIS EQUIPMENT IS OF PARAMOUNT IMPORTANCE AND THE POTTER EQUIPMENT IS AVAILABLE WITH A MUCH SHORTER DELIVERY TIME THAN THE ANNANDALE EQUIPMENT. ***"

BASED UPON THIS EVALUATION, AND THE STATED URGENT NEED FOR THE INSTALLATION OF A RELIABLE ALARM SYSTEM, AWARD OF THE PROCUREMENT WAS MADE TO QUALITY.

UPON NOTIFICATION OF THE ACTION TAKEN BY THE AIR FORCE, BOTH ANNANDALE AND AUSTIN PROTESTED TO OUR OFFICE. WHILE SEVERAL ISSUES OF PROTEST HAVE BEEN RAISED, WE NEED ONLY DISCUSS THE ALLEGATION THAT QUALITY'S PROPOSAL TOOK EXCEPTION TO THE STATED SPECIFICATIONS, AND THAT THE SPECIFICATIONS WERE WAIVED IN PART, WITHOUT NOTICE TO THE OFFERORS, ALLOWING QUALITY TO OBTAIN THE AWARD.

THE STATEMENT OF THE CONTRACTING OFFICER DOES NOT RESPOND TO THE ABOVE ALLEGATION. HOWEVER, THE JUNE 28 STATEMENT OF THE DEPUTY CHIEF, CIVIL ENGINEERING, ITSELF IS SUFFICIENT TO ESTABLISH THAT THERE WERE SERIOUS DEFICIENCIES IN THE PROCUREMENT PROCESS IN THIS INSTANCE.

ASPR SEC. 1-1201(A) (1974 ED.) REQUIRES THAT ONLY THE MINIMUM NEEDS OF THE GOVERNMENT BE SET FORTH IN THE SPECIFICATIONS. IT APPEARS THAT THE PROCURING ACTIVITY RECOGNIZED BY ITS ACTIONS THAT THE SPECIFICATIONS DISTRIBUTED CONTAINED REQUIREMENTS GREATER THAN NECESSARY, SINCE THE SYSTEM OFFERED BY QUALITY PROVIDED ALL OF THE ESSENTIAL FEATURES DESIRED WHILE TAKING EXCEPTION TO THE FOLLOWING STATED REQUIREMENTS: SECTION II - PARAGRAPH 2(B)(1), COLORED SIGNAL LIGHTS TYPE; SECTION II - PARAGRAPH 2(B)(2), INDICATION OF LINE FAULT; AND SECTION II - PARAGRAPH 3(B) CONCERNING CERTAIN PERFORMANCE SPECIFICATIONS. THEREFORE, THE INCLUSION OF THE UNESSENTIAL REQUIREMENTS WAS DIRECTLY CONTRARY TO THE ABOVE- MENTIONED REGULATION. ADDITIONALLY, NOWHERE IN THE RFQ IS UNDERWRITERS LABORATORY APPROVAL OR RAPIDITY OF DELIVERY STATED TO BE OVERRIDING EVALUATION FACTORS WARRANTING AWARD AT OTHER THAN THE LOWEST PRICE.

ALTHOUGH WE RECOGNIZE THAT A CONTRACTING OFFICER HAS THE AUTHORITY TO CURE DEFICIENCIES OF THIS NATURE DURING NEGOTIATIONS PURSUANT TO ASPR SEC. 3-805.4 (1974 ED.), THIS SECTION ALSO REQUIRES THAT A DECISION TO RELAX OR MODIFY A STATEMENT OF REQUIREMENTS IS REQUIRED TO BE MADE IN WRITING IN THE FORM OF AN AMENDMENT TO THE RFQ, AND A COPY FURNISHED TO EACH PROSPECTIVE CONTRACTOR. IT IS MANDATORY THAT EACH PROSPECTIVE CONTRACTOR BE NOTIFIED IN WRITING OF A REDUCTION IN THE REQUIREMENTS. IN THIS CASE, THE CONTRACTING OFFICER'S STATEMENT IS DEVOID OF ANY INDICATION THAT HE FOLLOWED THIS REGULATION INDICATING THAT HE FAILED TO GIVE NOTICE OF ANY KIND TO ANNANDALE THAT THE REQUIREMENTS IN THE SOLICITATION HAD BEEN REDUCED.

THE NECESSITY FOR ISSUING A WRITTEN AMENDMENT FOR MODIFICATION OF REQUIREMENTS IS ALSO CONTAINED IN ASPR SEC. 3-505 (1974 ED.), AND IN SUBSECTION (C) IT IS PROVIDED THAT:

"*** NO AWARD SHALL BE MADE ON A REQUEST FOR PROPOSALS UNLESS SUCH AMENDMENT THERETO HAS BEEN ISSUED IN SUFFICIENT TIME TO PERMIT PROSPECTIVE OFFERORS TO CONSIDER SUCH INFORMATION IN SUBMITTING OR MODIFYING THEIR PROPOSALS."

WE READ THIS PROVISION TO MEAN THAT NO AWARD SHOULD HAVE BEEN MADE IN THIS INSTANCE SINCE NO AMENDMENT WAS ISSUED, AND ANNANDALE THEREFORE HAD NO CHANCE TO CONSIDER THE CHANGE IN ORDER TO MODIFY ITS PROPOSAL.

IN 48 COMP. GEN. 583 (1969) WE HAD OCCASION TO RECOGNIZE SERIOUS DEFICIENCIES IN A PROCUREMENT SIMILAR TO THE PRESENT INSTANCE. WE STATED THAT WE WOULD SCRUTINIZE FUTURE PROCUREMENTS TO DETERMINE WHETHER SUBSTANTIAL CHANGES OCCURRING DURING NEGOTIATIONS ARE TREATED IN ACCORDANCE WITH ASPR SEC. 3-805.4 (1974 ED.).

IN THE PRESENT CASE, WE ARE NOT PERSUADED THAT THE REDUCTION IN THE SPECIFICATIONS WAS MINOR. THE ADMINISTRATION POSITION APPEARS TO REST PRINCIPALLY ON THE ARGUMENT THAT THE CHANGES GAVE NO ADVANTAGE TO QUALITY, THAT QUALITY OFFERED EQUIPMENT THAT WAS UNDERWRITERS LABORATORY APPROVED, AVAILABLE WITH A MUCH SHORTER DELIVERY TIME, AND THAT ANNANDALE HAS NOT SHOWN THAT IT HAS BEEN PREJUDICED SINCE IT HAS NOT SHOWN THAT IT WOULD HAVE BEEN THE LOW OFFEROR HAD IT BEEN PERMITTED TO OFFER ON THE LESSER REQUIREMENTS.

WE PREVIOUSLY REJECTED THIS ARGUMENT IN 48 COMP. GEN. 663 (1969). PAGE 668 OF THAT DECISION WE SAID:

"*** WE DO NOT BELIEVE IT WAS PROPER TO MAKE AWARD TO LINK ON THE BASIS OF THIS MODIFICATION WITHOUT NOTICE TO YOU THAT LINK WAS BEING OFFERED AN OPPORTUNITY TO BID ON THE BASIS OF SUCH MODIFICATION, AND WITHOUT GIVING YOU AN OPPORTUNITY TO MODIFY YOUR BID PRICE IN THE LIGHT OF SUCH KNOWLEDGE, NOTWITHSTANDING THAT YOU MAY NOT HAVE BEEN ELIGIBLE TO SUBMIT A NEW PRICE BASED UPON WAIVER OF FIRST ARTICLE TESTING OR MAINTAINABILITY AND RELIABILITY TESTING. ***"

IN 48 COMP. GEN. 583, SUPRA, WE STATED:

"GOVERNMENT PROCUREMENT BY NEGOTIATION, LIKE PROCUREMENT BY FORMAL ADVERTISING, REQUIRES THAT CONTRACTING OFFICERS OBSERVE ELEMENTAL IMPARTIALITY TOWARD OFFERORS. WHILE NEGOTIATION PROCEDURES ARE MORE FLEXIBLE THAN ADVERTISED PROCEDURES, SUCH FLEXIBILITY DEMANDS A GREATER DEGREE OF CARE ON THE PART OF THE CONTRACTING OFFICER TO INSURE THAT ALL COMPETITIVE OFFERORS ARE TREATED EQUALLY. ***"

IN THE CIRCUMSTANCES OF THE ABOVE-CITED CASE WE FOUND THAT THE PROTESTER WAS NOT GIVEN AN EQUAL OPPORTUNITY TO COMPETE AND ITS POSITION WAS THEREBY PREJUDICED. THIS IS THE CASE HERE.

THE CONTRACT OFFERED TO QUALITY WAS NOT THE SAME ONE OFFERED TO ANNANDALE. THE CLEAR PRESUMPTION IS THAT THE DEVIATION ALLOWED HERE AFFECTED THE PRICE AT WHICH THE SYSTEM WAS OFFERED TO THE GOVERNMENT. CF. B-160602, MARCH 7, 1967. ALTHOUGH THE CONTRACTING OFFICER APPEARED TO BELIEVE THAT HE WAS FOSTERING COMPETITION BY THE COURSE OF ACTION HE USED, WE THINK SUCH ACTIONS, IF ALLOWED TO CONTINUE, ARE MORE LIKELY TO DESTROY CONFIDENCE IN THE COMPETITIVE PROCUREMENT SYSTEM AND LEAD TO RESTRICTION OF FUTURE COMPETITION IN SIMILAR PROCUREMENTS. B-175968, OCTOBER 17, 1972.

NOTWITHSTANDING THE ABOVE-NOTED DEFICIENCIES, NO CORRECTIVE ACTION IS POSSIBLE SINCE QUALITY HAS COMPLETED PERFORMANCE UNDER THE CONTRACT AND FINAL PAYMENT WAS MADE ON SEPTEMBER 16. WE ARE, HOWEVER, BRINGING OUR VIEWS ON THIS PROCUREMENT TO THE ATTENTION OF THE SECRETARY OF THE AIR FORCE AND REQUESTING THAT CORRECTIVE MEASURES BE TAKEN TO PREVENT A RECURRENCE OF THIS TYPE OF SITUATION IN FUTURE PROCUREMENTS OF THIS NATURE.