B-182104, NOV 29, 1974

B-182104, NOV 29, 1974

1. IN NEGOTIATED PROCUREMENT FOR HIGH-ALTITUDE SUPERPRESSURED POWERED AEROSTAT (HASPA), CONTRACTING OFFICER'S REFUSAL TO REOPEN NEGOTIATIONS WHEN, SUBSEQUENT TO SUBMISSION OF BEST AND FINAL OFFERS, INTENDED CONSULTANT OF ONE OFFEROR NOTIFIED OFFEROR THAT HIS SERVICES WOULD NOT BE AVAILABLE BECAUSE OF POSSIBLE CONFLICT OF INTEREST WITH HIS POSITION ON PROCURING AGENCY ADVISORY BOARD WAS NOT IMPROPER, SINCE RECORD DOES NOT ESTABLISH THAT AGENCY WAS RESPONSIBLE FOR LOSS OF CONSULTING SERVICES TO OFFEROR, DESPITE OFFEROR'S CONTENTION TO THE CONTRARY. 2. CONTRACTING OFFICER ACTED PROPERLY IN REFUSING TO REOPEN NEGOTIATIONS IN ORDER TO CONSIDER MODIFICATION TO PROPOSAL SUBMITTED ONE WEEK AFTER SUBMISSION OF BEST AND FINAL OFFERS, SINCE ASPR 3-506 PRECLUDES THE OPENING OF LATE PROPOSALS OR MODIFICATIONS EXCEPT FOR IDENTIFICATION PURPOSES, AND SUCH REOPENING WOULD HAVE BEEN CONTRARY TO BELIEF THAT ONCE NEGOTIATIONS HAVE BEEN HELD AND BEST AND FINAL OFFERS RECEIVED, NEGOTIATIONS SHOULD NOT BE REOPENED UNLESS CLEARLY IN GOVERNMENT'S BEST INTERESTS. 3. PROTESTER'S CLAIM THAT TECHNICAL TRANSFUSION OCCURRED DURING NEGOTIATING PROCESS, THEREBY ALLOWING COMPETITOR TO SUBMIT REVISED OFFER USING PROTESTER'S UNIQUE AND INNOVATIVE CONCEPTS, IS NOT SUPPORTED BY THE RECORD, SINCE REVIEW OF COMPETITOR'S REVISED PROPOSAL DOES NOT INDICATE THE ADOPTION OF ANY OF PROTESTER'S INNOVATIONS AS A RESULT OF TECHNICAL TRANSFUSION. 4. ALTHOUGH SOLICITATION FOR RESEARCH AND DEVELOPMENT CONTRACT ON COST- PLUS-FIXED-FEE BASIS FAILED TO INDICATE RELATIVE IMPORTANCE OF COST, CONTRACTING OFFICER PROVIDED THIS INFORMATION PRIOR TO SUBMISSION OF BEST AND FINAL OFFERS SO THAT PROTESTER CANNOT CLAIM THAT IT WAS MISLED. FURTHER, CONTRACT COULD PROPERLY BE AWARDED TO OFFEROR WHOSE PROPOSAL WAS LOWER RATED TECHNICALLY BUT WAS SIGNIFICANTLY LESS COSTLY. 5. ALTHOUGH GAO AGREES WITH THE PROTESTER'S CONTENTION THAT EVALUATED COSTS PROVIDE SOUNDER BASIS THAN PROPOSED COSTS FOR DETERMINING MOST ADVANTAGEOUS PROPOSAL FOR COST REIMBURSEMENT TYPE CONTRACT, IT APPEARS THAT AGENCY DID EVALUATE COSTS PROPOSED BY SUCCESSFUL OFFEROR AND FOUND THEM TO BE REASONABLE. SINCE EVALUATING PROPOSED COSTS IS MATTER FOR ADMINISTRATIVE DISCRETION OF CONTRACTING AGENCIES, AND SINCE PROTESTER'S LATE PROPOSED MODIFICATION INDICATED POSSIBILITY OF SUBSTANTIAL COST REDUCTION OF ITS HIGHER COSTS, COMPTROLLER GENERAL CANNOT SAY THAT LOW OFFER REPRESENTS A BUY-IN. 6. AWARD OF CONTRACT WHILE PROTEST WAS PENDING WAS NOT IMPROPER, SINCE IT WAS DETERMINED AT LEVEL HIGHER THAN CONTRACTING OFFICER THAT FAILURE TO MAKE AWARD PROMPTLY WOULD RESULT IN UNDUE DELAY, AND GAO WAS NOTIFIED BY AGENCY OF INTENT TO MAKE AWARD, IN ACCORDANCE WITH ASPR 2 407.8(B).

ILC DOVER:

THIS CASE INVOLVES A PROTEST AGAINST THE NAVY'S COURSE OF ACTION WHICH CULMINATED IN THE AWARD OF A NEGOTIATED, COST-PLUS-FIXED-FEE CONTRACT FOR A HIGH-ALTITUDE SUPERPRESSURED POWER AEROSTAT (HASPA) TO THE MARTIN MARIETTA CORPORATION.

REQUEST FOR PROPOSALS (RFP) NO. N60921-74-R-0152 WAS ISSUED BY THE NAVAL ORDNANCE LABORATORY (NOW NAVAL SURFACE WEAPONS CENTER), WHITE OAK, MARYLAND, ON JANUARY 23, 1974. PROPOSALS WERE RECEIVED FROM MARTIN MARIETTA, ILC DOVER, AND ONE OTHER FIRM, AND ALL WERE CONSIDERED TO BE IN THE COMPETITIVE RANGE. NEGOTIATIONS WERE CONDUCTED AND REVISED OFFERS WERE SOLICITED, WITH BEST AND FINAL OFFERS BEING SUBMITTED ON JULY 22, 1974. ON AUGUST 22, 1974, ILC DOVER PROTESTED AGAINST ANY AWARD UNDER THE SOLICITATION, CLAIMING THAT THE NAVY HAD IMPROPERLY REJECTED BOTH ITS REQUEST FOR A REOPENING OF NEGOTIATIONS AND ITS PROPOSED MODIFICATION TO ITS BEST AND FINAL OFFER. ILC DOVER FURTHER CLAIMED A POSSIBLE CONFLICT OF INTEREST INVOLVING A NAVY CONSULTANT, AND ALLEGED THE POSSIBILITY OF TECHNICAL TRANSFUSION DURING NEGOTIATIONS AND THE MISAPPLICATION OF THE SOLICITATION'S AWARD CRITERIA. AWARD OF A CONTRACT TO MARTIN MARIETTA WAS MADE WHILE THIS PROTEST WAS PENDING, RESULTING IN ILC DOVER'S PROTEST AGAINST THE "ARBITRARY AND CAPRICIOUS" AWARD ACTION AND ITS CLAIM THAT THE NAVY WAS "PREDISPOSED" TO AWARD THE CONTRACT TO MARTIN MARIETTA.

THE REQUEST FOR REOPENING NEGOTIATIONS AND THE CONFLICT OF INTEREST ALLEGATION ARISE OUT OF ILC DOVER'S PLANNED USE OF DR. DAVID C. HAZEN OF PRINCETON UNIVERSITY AS A CONSULTANT. THE INTRODUCTORY PORTION OF ILC DOVER'S PROPOSAL STATED THAT "THE PRINCETON UNIVERSITY AERONAUTICAL AND MECHANICAL ENGINEERING DEPARTMENT, UNDER THE DIRECTION OF DR. DAVID C. HAZEN, WILL CONSULT IN THE AREAS OF PROPELLER DESIGN, AERODYNAMICS AND STABILITY." SECTION 3.2 OF THE PROPOSAL REFERENCED AN AERODYNAMIC, ANALYSIS OF DR. HAZEN, INCLUDED IN THE PROPOSAL AS APPENDIX D, AND STATED THAT "DR. HAZEN WILL BE RETAINED ON A CONSULTANT BASIS TO PARTICIPATE IN PERIODIC DESIGN REVIEWS AND WHEN SPECIAL PROBLEMS ARISE." SECTION 4.2.3 STATED THAT WIND TUNNEL TESTS WOULD BE PERFORMED AT PRINCETON UNIVERSITY.

ON JULY 31, 1974, MORE THAN A WEEK AFTER THE JULY 22 SUBMISSION OF BEST AND FINAL OFFERS, ILC DOVER NOTIFIED THE CONTRACTING OFFICER THAT ITS CONTINUING STUDIES OF THE HASPA CONCEPT HAS RESULTED IN A DETERMINATION THAT ITS AUTOPILOT IS "OVER-DESIGNED FOR THIS VEHICLE," AND THAT IT "NOW PROPOSES TO PERFORM THE MAJOR PORTION OF THE AUTOPILOT SYSTEM DESIGN OBTAINED FROM DR. W. C. HAZEN OF THE DEPARTMENT OF AERONAUTICS AND PRINCETON UNIVERSITY. ***THE NET EFFECT OF THE ABOVE STUDIES CAN RESULT IN A SIGNIFICANT REDUCTION IN THE PORTION OF OUR PRICE. *** WE ARE PREPARED TO DISCUSS THIS AREA OF POTENTIAL COST REDUCTION WITH YOUR TEAM ON SHORT NOTICE." THE NAVY DID NOT RESPOND TO THIS LETTER. SUBSEQUENTLY, BY LETTER OF AUGUST 14, 1974, DR. HAZEN NOTIFIED ILC DOVER THAT HE WOULD NOT BE ABLE TO SERVE AS A CONSULTANT TO ILC DOVER BECAUSE OF A POSSIBLE CONFLICT OF INTEREST ARISING OUT OF TASKS HE WOULD PERFORM AS VICE CHAIRMAN OF THE NAVAL RESEARCH ADVISORY COMMITTEE. ON AUGUST 22, 1974, ILC DOVER TELEPHONED THE CONTRACTING OFFICER TO REQUEST A REOPENING OF NEGOTIATIONS AND AN OPPORTUNITY TO SUBMIT A REVISED PROPOSAL. THE CONTRACTING OFFICER DENIED THE REQUEST.

ILC DOVER, WHILE ASSERTING THAT ITS PROPOSAL "EVIDENCES RELIANCE UPON THE SERVICES OF PROFESSOR HAZEN TO A LARGE EXTENT" AND THAT "THE LOSS OF DR. HAZEN HAS A SIGNIFICANT IMPACT ON THE ILC DOVER PROPOSAL," ADMITS THAT ORDINARILY "THE LOSS OF PERSONNEL AFTER PROPOSAL SUBMISSION WOULD BE A CIRCUMSTANCE FALLING WITHIN AN OFFEROR'S RESPONSIBILITY." IT CLAIMS, HOWEVER, THAT "THIS IS NOT THE CASE WHERE THE CHANGE IN CIRCUMSTANCES AND THE LOSS OF KEY PERSONNEL IS DIRECTLY ATTRIBUTABLE TO THE ACTION OF THE AGENCY CONSIDERING THE PROPOSAL." ILC DOVER FURTHER CLAIMS THAT ITS LOSS OF DR. HAZEN'S SERVICES WAS DIRECTLY ATTRIBUTABLE TO IMPROPER ACTIONS BY THE NAVY WHICH IT SAYS WERE CONTRARY TO APPENDIX C OF THE CIVIL SERVICE FEDERAL PERSONNEL MANUAL SYSTEM ON SPECIAL GOVERNMENT EMPLOYEES, ENCLOSURE (7) TO DOD DIRECTIVE 5500.7. IT SAYS THAT AS A RESULT IT IS ENTITLED TO AN OPPORTUNITY TO RESTRUCTURE ITS PROPOSAL TO TAKE INTO ACCOUNT THE LOSS OF DR. HAZEN. IT ALSO STATES THAT IT COULD "OBJECT TO ANY NAVY ASSOCIATION WITH DR. HAZEN ON THIS PROGRAM BECAUSE OF A CONFLICT OF INTEREST."

THE RECORD DOES NOT ESTABLISH THAT THE NAVY UNFAIRLY OR IMPROPERLY CAUSED DR. HAZEN TO WITHDRAW AS AN ILC DOVER CONSULTANT OR THAT THE NAVY'S ACTIONS WERE CONTRARY TO THE FEDERAL PERSONNEL MANUAL APPENDIX CITED. THAT DOCUMENT STATES THAT WHEN AN INDIVIDUAL IS APPOINTED TO A GOVERNMENT ADVISORY POSITION, "PARTICULAR CARE SHOULD BE EXERCISED" TO EXCLUDE CONTRACTS OR OTHER TRANSACTIONS OF THE INDIVIDUAL'S PRIVATE CLIENTS "FROM THE RANGE OF THE CONSULTANT'S OR ADVISER'S DUTIES." THE CONTRACTING OFFICER REPORTS THAT DR. HAZEN HAS SERVED CONTINUOUSLY ON THE NAVAL RESEARCH ADVISORY COMMITTEE SINCE 1971, AND THAT "THERE HAS BEEN NO OCCASION IN THIS PROCUREMENT FOR THE NAVAL ORDNANCE LABORATORY TO CONSULT WITH OR USE THE SERVICES OF PROFESSOR HAZEN." THUS, IT APPEARS THAT DR. HAZEN'S MEMBERSHIP ON THE COMMITTEE PRECEDED HIS ASSOCIATION WITH ILC DOVER, THAT HIS WITHDRAWAL AS A CONSULTANT TO ILC DOVER STEMMED FROM HIS PERSONAL DECISION THAT THERE MIGHT BE A CONFLICT OF INTEREST IN HIS CONTINUED ASSOCIATIONS WITH BOTH ILC DOVER AND THE COMMITTEE, AND THAT THE NAVY WAS NOT DIRECTLY RESPONSIBLE FOR DR. HAZEN'S DECISION TO DISCONTINUE HIS CONSULTING RELATIONSHIP WITH ILC DOVER. UNDER THESE CIRCUMSTANCES, WE CANNOT AGREE THAT THE NAVY TOOK ANY ACTIONS WITH RESPECT TO DR. HAZEN WHICH WERE PREJUDICIAL TO ILC DOVER SO AS TO WARRANT A REOPENING OF NEGOTIATIONS OR THAT DR. HAZEN'S CONTINUING ASSOCIATION WITH THE NAVY REPRESENTS A CONFLICT OF INTEREST WHICH BEARS ON THE LEGALITY, PROPRIETY, OR REASONABLENESS OF THE ACTIONS TAKEN BY THE NAVY IN AWARDING A CONTRACT FOR THE HASPA PROJECT.

ILC DOVER ALSO CLAIMS THAT THE CONTRACTING OFFICER SHOULD HAVE REOPENED NEGOTIATIONS TO ALLOW THE NAVY TO ACCEPT THE MODIFICATIONS PROPOSED BY ILC DOVER IN ITS LETTER OF JULY 31, 1974. ILC DOVER ASSERTS THAT THE MODIFICATIONS "WOULD YIELD SIGNIFICANT BENEFIT TO THE GOVERNMENT, BOTH IN TERMS OF THE TECHNICAL ACHIEVEMENTS IT WOULD ACCOMPLISH, AND ALSO IN TERMS OF THE REDUCED COSTS WHICH WOULD ACCRUE," AND THAT THE NAVY ACTED ARBITRARILY IN REFUSING TO REOPEN NEGOTIATIONS.

THE CONTRACTING OFFICER'S REFUSAL TO REOPEN NEGOTIATIONS WAS BASED ON ASPR 3-506 WHICH PROVIDES THAT PROPOSALS OR MODIFICATIONS TO PROPOSALS WHICH ARE RECEIVED AFTER THE EXACT TIME SET FOR RECEIPT ARE TO BE REGARDED AS "LATE" AND NOT CONSIDERED FOR AWARD EXCEPT UNDER CIRCUMSTANCES NOT RELEVANT HERE. THE PROTESTER, HOWEVER, REFERS TO 47 COMP. GEN. 279 (1967), IN WHICH WE HELD THAT THE LATE PROPOSAL PROVISIONS OF ASPR DID NOT "PRECLUDE THE OPENING-UP OF NEGOTIATIONS WITH ALL OFFERORS COMPETITIVELY SITUATED UPON THE RECEIPT OF A LATE MODIFICATION TO A TIMELY OFFER WHICH FAIRLY INDICATES THAT SUCH NEGOTIATIONS WOULD PROVE TO BE HIGHLY ADVANTAGEOUS TO THE GOVERNMENT." 47 COMP. GEN. AT 284. WE THINK THAT CASE IS INAPPOSITE SINCE THERE THE CONTRACTING OFFICER AWARDED A CONTRACT WITHOUT CONDUCTING ANY NEGOTIATIONS AT ALL. HERE, NEGOTIATIONS WERE HELD WHICH CULMINATED IN THE SETTING OF A CUT-OFF DATE FOR RECEIPT OF BEST AND FINAL OFFERS. TO HAVE REOPENED NEGOTIATIONS AFTER THAT DATE WOULD HAVE BEEN CONTRARY TO OUR PREVIOUSLY STATED BELIEF THAT "A REOPENING OF NEGOTIATIONS IN THE ABSENCE OF A VALID REASON TENDS TO UNDERMINE THE INTEGRITY OF THE COMPETITIVE NEGOTIATION PROCESS" AND THAT "ONCE NEGOTIATIONS HAVE BEEN HELD AND BEST AND FINAL OFFERS RECEIVED, NEGOTIATIONS SHOULD NOT BE REOPENED UNLESS IT IS CLEARLY IN THE BEST INTERESTS OF THE GOVERNMENT TO DO SO." B-176283(3), FEBRUARY 5, 1973; SEE ALSO 50 COMP. GEN. 547 (1971).

WITH REGARD TO THE CLAIM OF TECHNICAL TRANSFUSION, THE PROTESTER STATES ITS BELIEF THAT "DURING THE COURSE OF NEGOTIATIONS, OTHER OFFERORS WERE INFORMED OF CERTAIN INNOVATIVE FEATURES OF THE ILC DOVER PROPOSAL AND THAT, AS A RESULT, SOME OF THESE FEATURES MAY HAVE BEEN INCORPORATED INTO THE REVISED PROPOSALS OF ANOTHER OFFEROR." ILC DOVER SPECIFICALLY REFERS TO FOUR OF ITS INNOVATIVE FEATURES AND CLAIMS THAT IF THEY ARE FOUND IN ANOTHER PROPOSAL, THEY CAN BE THERE ONLY BY REASON OF TECHNICAL TRANSFUSION. THE PROTESTER ALSO ASSERTS THAT TECHNICAL TRANSFUSION OF ITS UNIQUE CONCEPTS IS INDICATED BY A PAPER, AUTHORED BY TWO MEMBERS OF THE TECHNICAL EVALUATION TEAM, WHICH WAS PRESENTED AT A NAVAL POST-GRADUATE SCHOOL WORKSHOP ON SEPTEMBER 9, 1974. ILC DOVER STATES THAT THE PAPER DIVULGED THE UNIQUE CONCEPTS THAT WERE CONTAINED IN ITS PROPOSAL AND THAT THIS "ATTESTS TO THE FACT THAT AN ILC DOVER CONCEPT HAS BEEN ADOPTED FOR USE IN HASPA BY ANOTHER CONTRACTOR."

WE HAVE HELD THAT WHILE 10 U.S.C. 2304(G) REQUIRES THAT MEANINGFUL DISCUSSIONS BE HELD WITH ALL OFFERORS IN A COMPETITIVE RANGE, SUCH DISCUSSIONS SHOULD NOT INVOLVE THE DISCLOSURE TO OTHER PROPOSERS OF ONE PROPOSER'S INNOVATIVE IDEAS OR SOLUTIONS. 51 COMP. GEN. 631 (1972); 52 ID. 870 (1973). OUR REVIEW OF THE RECORD IN THIS CASE, HOWEVER, DOES NOT ESTABLISH THAT SUCH TECHNICAL TRANSFUSION TOOK PLACE. WE HAVE EXAMINED THE REVISED PROPOSAL OF THE SUCCESSFUL OFFEROR, AND WE SEE NOTHING IN IT WHICH SUGGESTS THE ADOPTION OF ILC DOVER'S SPECIFIC INNOVATIVE FEATURES AS A RESULT OF ANY TECHNICAL TRANSFUSION. THE NAVY ALSO DENIES THAT THE TECHNICAL PAPER PRESENTED IN SEPTEMBER REVEALS ANY UNIQUE OR INNOVATIVE CONCEPT OF ILC DOVER. IN ANY EVENT, WE FAIL TO SEE HOW THIS PAPER, PRESENTED WELL AFTER THE CLOSE OF NEGOTIATIONS AND SUBMISSION OF BEST AND FINAL OFFERORS, COULD BE INDICATIVE OF WHETHER TECHNICAL TRANSFUSION OF ILC DOVER'S CONCEPTS TOOK PLACE DURING THOSE NEGOTIATIONS.

SECTION D OF THE SOLICITATION, CAPTIONED "EVALUATION AND AWARD FACTORS", IDENTIFIED VARIOUS FACTORS FOR THE TECHNICAL EVALUATION OF PROPOSALS, BUT NOWHERE INDICATED WHAT WEIGHT, IF ANY, PROPOSED COST WOULD BE GIVEN IN THE EVALUATION. THE RECORD SHOWS THAT THE TECHNICAL SCORING OF MARTIN MARIETTA'S BEST AND FINAL PROPOSAL WAS 2.75 POINTS (ON A 100 POINT SCALE) LOWER THAN ILC DOVER'S SCORING, BUT THAT MARTIN MARIETTA'S PROPOSED PRICE (TOTAL ESTIMATED COST PLUS FIXED FEE) WAS MORE THAN $670,000 BELOW ILC DOVER'S EVALUATED PRICE. IN REPORTING THE CONTRACT AWARD TO MARTIN MARIETTA, THE NAVY STATES THAT THE AWARD WAS BASED ON BOTH "TECHNICAL AND COST FACTORS." ILC DOVER ARGUES THAT THE AWARD WAS THUS CONTRARY TO THE TERMS OF THE RFP, WHICH ILC DOVER BELIEVES INDICATE THAT TECHNICAL SUPERIORITY WAS TO BE PARAMOUNT SO THAT "A COST DIFFERENCE CANNOT POSSIBLY MAKE UP FOR A LOWER TECHNICAL EVALUATION SCORE." THE NAVY ARGUES THAT THE EVALUATION AND AWARD CRITERIA MUST BE READ IN CONJUNCTION WITH ASPR 4- 106.5, WHICH STATES THAT "WHILE COST OR PRICE SHOULD NOT BE THE CONTROLLING FACTOR IN SELECTING A CONTRACTOR FOR A RESEARCH OR DEVELOPMENT CONTRACT, COST OR PRICE SHOULD NOT BE DISREGARDED IN THE CHOICE OF THE CONTRACTOR." THE NAVY FURTHER ARGUES IN EFFECT THAT ANY POSSIBLE PREJUDICE TO ILC DOVER IN THIS REGARD WAS ELIMINATED BY A JUNE 13, 1974 LETTER TO ILC DOVER FROM THE CONTRACTING OFFICER, SETTING FORTH A DATE SET FOR NEGOTIATIONS AND STATING THE FOLLOWING:

"IN ADDITION TO TECHNICAL EXCELLENCE, COST WILL BE A SIGNIFICANT FACTOR UPON WHICH AWARD WILL BE MADE. THE DEGREE OF ITS IMPORTANCE WILL INCREASE WITH THE DEGREE OF EQUALITY OF PROPOSALS IN RELATION TO OTHER FACTORS ON WHICH SELECTION IS TO BE BASED. COST WILL BE EVALUATED ON THE BASIS OF REASONABLENESS, VALIDITY, AND RELIABILITY."

WE HAVE LONG HELD THAT SOLICITATIONS SHOULD INFORM OFFERORS OF THE FACTORS THAT WILL BE USED IN THE EVALUATION OF PROPOSALS AND OF THE RELATIVE IMPORTANCE OF THOSE FACTORS, 49 COMP. GEN. 229 (1969); 50 ID. 246 (1970); 52 ID. 161 (1972), A REQUIREMENT NOW INCORPORATED IN ASPR 3 501(B) SEC. DI). IN DISCUSSING THE FAILURE OF AN RFP TO SHOW THE RELATIVE IMPORTANCE OF PRICE, WE HAVE STATED:

"*** THAT INTELLIGENT COMPETITION REQUIRES, AS A MATTER OF SOUND PROCUREMENT POLICY, THAT OFFERORS BE ADVISED OF THE EVALUATION FACTORS TO BE USED AND THE RELATIVE IMPORTANCE OF THOSE FACTORS. *** WE BELIEVE THAT EACH OFFEROR HAS A RIGHT TO KNOW WHETHER THE PROCUREMENT IS INTENDED TO ACHIEVE A MINIMUM STANDARD AT THE LOWEST COST OR WHETHER COST IS SECONDARY TO QUALITY. COMPETITION IS HARDLY SERVED IF OFFERORS ARE NOT GIVEN ANY IDEA OF THE RELATIVE VALUES OF TECHNICAL EXCELLENCE AND PRICE. WE BELIEVE A COMPLAINT IS JUSTIFIED IF IN SUCH CIRCUMSTANCES A MATERIALLY SUPERIOR OFFER IS REJECTED IN FAVOR OF ONE OFFERING A LOWER PRICE." 52 COMP. GEN. 161 AT 164.

HERE IT CANNOT BE SAID THAT ILC DOVER WAS UNAWARE OF THE ROLE PRICE WOULD PLAY IN THE EVALUATION FOR AWARD. IN ADDITION TO ASPR 4-106.5, WHICH STATES THAT COST OR PRICE SHOULD BE AN IMPORTANT CONSIDERATION IN THE SELECTION OF A RESEARCH AND DEVELOPMENT CONTRACTOR, THE PROTESTER HAD BEFORE IT, WELL BEFORE THE SUBMISSION OF ITS BEST AND FINAL OFFER, THE CONTRACTING OFFICER'S LETTER OF JUNE 13, 1974, WHICH CLEARLY DELINEATED THE RELATIVE IMPORTANCE OF COST. ALTHOUGH THE CONTRACTING OFFICER SHOULD HAVE INCLUDED THAT INFORMATION IN THE SOLICITATION, EITHER INITIALLY OR BY MEANS OF AN AMENDMENT TO THE RFP, IT DOES NOT APPEAR THAT ILC DOVER WAS IN ANY WAY MISLED BY THE INCLUSION OF THIS INFORMATION IN THE LETTER RATHER THAN IN THE RFP, NOR DOES IT APPEAR ILC DOVER QUESTIONED OR OBJECTED TO THE CONTRACTING OFFICER'S INTENDED CONSIDERATION OF COST AFTER IT RECEIVED THAT LETTER. INSTEAD, ILC DOVER, APPARENTLY ACQUIESCING IN THE NAVY'S INTENDED CONSIDERATION OF COST, ENTERED INTO NEGOTIATIONS AND SUBSEQUENTLY SUBMITTED A BEST AND FINAL OFFER. UNDER THESE CIRCUMSTANCES, THE ABSENCE FROM THE SOLICITATION OF A SPECIFIC INDICATION OF THE RELATIVE IMPORTANCE OF COST DOES NOT PROVIDE ANY BASIS FOR OUR OBJECTING TO THE EVALUATION AND AWARD ACTIONS TAKEN BY THE NAVY. SEE 50 COMP. GEN. 565, 575 (1971).

ILC DOVER NEXT CONTENDS THAT EVEN IF COST WAS A PROPER CONSIDERATION, COST REALISM RATHER THAN COST QUANTUM SHOULD HAVE BEEN THE STANDARD APPLIED. IT FURTHER STATES THAT ANY EVALUATION BASED ON COST REALISM WOULD REVEAL THAT MARTIN MARIETTA'S PROPOSED COSTS WERE UNREASONABLY LOW AND REPRESENT A BUY-IN. IN THIS CONNECTION, THE PROTESTER HAS FURNISHED US WITH ITS ANALYSIS OF MARTIN MARIETTA'S ESTIMATED COSTS, ALONG WITH ITS CONCLUSION THAT MARTIN MARIETTA'S COST PROPOSAL WOULD PROVIDE FOR ONLY 24 MAN-MONTHS OF ENGINEERING EFFORT FOR THE REQUIRED 32 MONTH PROGRAM.

WE AGREE THAT WHEN A CONTRACT IS TO BE PERFORMED ON A COST-PLUS-FIXED FEE BASIS, "EVALUATED COSTS RATHER THAN PROPOSED COSTS WOULD PROVIDE A SOUNDER BASIS FOR DETERMINING THE MOST ADVANTAGEOUS PROPOSAL." 52 COMP. GEN. 870, 874 (1973); SEE ALSO B-180414, SEPTEMBER 3, 1974, 54 COMP. GEN. --- (1974). HOWEVER, THE RECORD DOES NOT ESTABLISH THAT THE NAVY RELIED ON THE PROPOSAL COSTS ALONE. THE CONTRACTING OFFICER'S JUNE 13, 1974, LETTER SPECIFIED THAT COST WOULD BE EVALUATED FOR "REASONABLENESS, VALIDITY, AND RELIABILITY." ALTHOUGH IT APPEARS THAT THE PROPOSAL COSTS AND THE NAVY'S EVALUATED COSTS WERE THE SAME IN THIS INSTANCE, THE NAVY ADVISES THAT THE COST OF THE SUCCESSFUL PROPOSAL "WAS CAREFULLY EVALUATED," THAT "DCAS AND DCAA FIELD PRICING SUPPORT WAS PROVIDED," AND THAT THE CONTRACTING OFFICER DETERMINED THAT THE COST WAS "FAIR AND REASONABLE FOR THE EFFORT PROPOSED." ADDITIONALLY, MARTIN MARIETTA HAS REITERATED THE VALIDITY OF ITS COST PROPOSAL AND ASSERTS THAT THE PROTESTER'S ANALYSIS IS INCORRECT. ALTHOUGH WE HAVE NOT PERFORMED A DETAILED AUDIT OF MARTIN MARIETTA'S COST PROPOSAL, WE HAVE COMPARED THAT PROPOSAL WITH THE PROTESTER'S AND HAVE NOTED SIGNIFICANT DIFFERENCES IN ESTIMATES OF RAW MATERIAL AND DIRECT LABOR. HOWEVER, WE ALSO NOTE THAT ILC DOVER, IN ITS JULY 31, 1974 LETTER, STATED THAT ITS AUTOPILOT WAS "OVER-DESIGNED" AND THAT A "SIGNIFICANT REDUCTION" IN PRICE WAS POSSIBLE. THUS, WE CANNOT SAY THAT THESE DIFFERENCES INDICATE THAT THE PROPOSED COSTS OF EITHER OFFEROR ARE UNREASONABLE OR THAT ONE PROPOSAL REPRESENTS A BUY-IN. FURTHERMORE, THE "AWARD OF COST-REIMBURSEMENT CONTRACTS REQUIRES PROCUREMENT PERSONNEL TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING THE PROPOSED COSTS ***. WE BELIEVE THAT SUCH JUDGMENT MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCIES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS 'REALISM' OF COSTS *** AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS." 50 COMP. GEN. 390, 410 (1970).

ACCORDINGLY, IT IS OUR VIEW THAT THE CONTRACTING OFFICER, HAVING DETERMINED THE REASONABLENESS OF MARTIN MARIETTA'S PROPOSED COSTS, COULD PROPERLY FURTHER DETERMINE THAT THE COST SAVINGS REPRESENTED BY THAT PROPOSAL OFFSET THE ADVANTAGES OBTAINABLE BY ACCEPTANCE OF ILC DOVER'S HIGHER RATED TECHNICAL PROPOSAL. ALTHOUGH ASPR 3-803(C) PROVIDES THAT ESTIMATED COSTS SHOULD NOT BE CONSIDERED AS CONTROLLING IN SELECTING A CONTRACTOR FOR A COST-TYPE CONTRACT, ASPR 4-106.5, AS NOTED ABOVE, REQUIRES CONSIDERATION OF COST IN DETERMINING WHICH OF SEVERAL OFFERS IS MOST ADVANTAGEOUS TO THE GOVERNMENT. FURTHERMORE, WHILE ILC DOVER MAINTAINS THAT ITS PROPOSAL WAS SO SIGNIFICANTLY SUPERIOR TO MARTIN MARIETTA'S THAT ONLY AN EVALUATION IMPROPERLY BASED ON COST ALONE COULD HAVE RESULTED IN AWARD TO ANOTHER OFFEROR, THE RECORD APPEARS TO SUPPORT THE CONTRACTING OFFICER'S STATEMENT THAT AWARD WAS BASED ON BOTH COST AND TECHNICAL CONSIDERATIONS. IN THIS CONNECTION, WE POINT OUT THAT THE EXTENT TO WHICH A HIGHER NUMERICALLY RATED PROPOSAL IS TO BE REGARDED AS SUPERIOR TO A LOWER RATED PROPOSAL "DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH PROCUREMENT AND IS PRIMARILY A MATTER WITHIN THE DISCRETION OF THE PROCURING AGENCY." 52 COMP. GEN. 686, 690 (1973). THE CONTRACTING OFFICER HERE DETERMINED THAT THE POINT SPREAD BETWEEN THE MARTIN MARIETTA AND ILC DOVER PROPOSALS WAS "INSUFFICIENT IN THE LIGHT OF THE SUBSTANTIALLY HIGHER COST" ASSOCIATED WITH THE PROTESTER'S PROPOSAL. THE RECORD DOES NOT ESTABLISH THAT THIS DETERMINATION WAS UNREASONABLE.

FINALLY, ILC DOVER OBJECTS TO THE AWARD OF THE CONTRACT TO MARTIN MARIETTA WHILE THE PROTEST WAS PENDING. ASPR 2-407.8(B) (3) PROVIDES THAT WHEN A PREAWARD PROTEST HAS BEEN RECEIVED, AWARD SHALL NOT BE MADE UNTIL THE MATTER IS RESOLVED UNLESS THE CONTRACTING OFFICER DETERMINES THAT THE ITEMS NEEDED ARE URGENTLY REQUIRED, OR THAT DELIVERY OR PERFORMANCE WILL BE UNDULY DELAYED BY FAILURE TO MAKE AWARD PROMPTLY, OR THAT A PROMPT AWARD WILL OTHERWISE BE ADVANTAGEOUS TO THE GOVERNMENT. ON SEPTEMBER 30, 1974, THE CONTRACTING OFFICER DETERMINED THAT THE HASPA PROGRAM WOULD BE UNDULY DELAYED BY FAILURE TO MAKE AWARD PROMPTLY BECAUSE OF SEASONAL WIND CONDITIONS AND BECAUSE OF IMPUT NEEDED FROM THE HASPA CONTRACTOR TO THE CONTRACTOR FOR THE ONGOING FUEL CELL POWER SYSTEM CONTRACT. THIS DETERMINATION WAS APPROVED AT A LEVEL HIGHER THAN THE CONTRACTING OFFICER, AND, IN ACCORDANCE WITH ASPR 2 407.8(B)(2), THE NAVY NOTIFIED THIS OFFICE ON THE FOLLOWING DAY OF ITS INTENTION TO MAKE AWARD. ALTHOUGH ILC DOVER ASSERTS THAT THE AWARD WAS IMPROPER BECAUSE THE NAVY'S RELIANCE ON WIND CONDITIONS IS "UNJUSTIFIED" AND BECAUSE THE NOTIFICATION TO OUR OFFICE WAS MADE TO SOMEONE NOT DIRECTLY CONNECTED WITH THE CASE, IT APPEARS THAT THE NAVY COMPLIED WITH THE APPLICABLE REGULATIONS IN MAKING THE AWARD AND WE THEREFORE HAVE NO BASIS FOR OBJECTING TO THE AWARD ACTION.

IN LIGHT OF THE ABOVE, AND BASED ON OUR CAREFUL REVIEW OF THE RECORD, WE FIND NO BASIS FOR A FINDING THAT THE NAVY WAS PREDISPOSED TO AWARD THE CONTRACT TO MARTIN MARIETTA. IN REACHING THIS CONCLUSION, WE HAVE CONSIDERED ILC DOVER'S CLAIM THAT A CLASSIFIED PAPER PRESENTED ON OCTOBER 2, 1974 (THE DATE OF AWARD), BUT PREPARED EARLIER INDICATED THIS PREDISPOSITION BECAUSE IT STATED THAT MARTIN MARIETTA WAS THE HASPA CONTRACTOR. HOWEVER, WE UNDERSTAND FROM THE NAVY THAT THE PAPER WAS DELIVERED AFTER THE AWARD WAS MADE AND THE NAME OF THE CONTRACTOR WAS REVEALED ONLY AFTER PROPER CLEARANCE TO DO SO HAD BEEN OBTAINED.

FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.