B-186428, SEPTEMBER 29, 1976

B-186428: Sep 29, 1976

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WHERE ONLY ONE ACCEPTABLE INITIAL PROPOSAL IS RECEIVED AND CONTRACTING OFFICER FINDS THAT OTHER FOUR PROPOSALS ARE SUSCEPTIBLE OF BEING MADE ACCEPTABLE AND THEREBY INCREASE COMPETITION. OPENING OF NEGOTIATIONS WITH ALL OFFERORS WAS PROPER ACTION. 2. LOW OFFEROR'S REDUCTION OF ORIGINAL PRICE FOLLOWING NEGOTIATION PROVIDES NO BASIS TO CONCLUDE THAT PRICES WERE LEAKED BY PROCURING AGENCY. AS IT IS NOT UNCOMMON FOR OFFERORS TO REDUCE PRICES DURING FINAL STAGES OF NEGOTIATIONS EVEN WITHOUT CHANGE IN GOVERNMENT'S REQUIREMENTS. 3. WHICH STATES PRICE IS NOT BEST AND FINAL AND PRICE MAY BE REDUCED FURTHER. IS NO BASIS FOR CONTRACTING OFFICER TO REOPEN NEGOTIATIONS. WHICH ARE ONLY TO BE REOPENED WHEN DETERMINED TO BE IN BEST INTEREST OF GOVERNMENT AND HERE REOPENING WOULD BENEFIT ONLY ONE OFFEROR WHO CHOSE NOT TO OFFER BEST PRICE. 4.

B-186428, SEPTEMBER 29, 1976

1. WHERE ONLY ONE ACCEPTABLE INITIAL PROPOSAL IS RECEIVED AND CONTRACTING OFFICER FINDS THAT OTHER FOUR PROPOSALS ARE SUSCEPTIBLE OF BEING MADE ACCEPTABLE AND THEREBY INCREASE COMPETITION, OPENING OF NEGOTIATIONS WITH ALL OFFERORS WAS PROPER ACTION. 2. LOW OFFEROR'S REDUCTION OF ORIGINAL PRICE FOLLOWING NEGOTIATION PROVIDES NO BASIS TO CONCLUDE THAT PRICES WERE LEAKED BY PROCURING AGENCY, AS IT IS NOT UNCOMMON FOR OFFERORS TO REDUCE PRICES DURING FINAL STAGES OF NEGOTIATIONS EVEN WITHOUT CHANGE IN GOVERNMENT'S REQUIREMENTS. 3. BEST AND FINAL OFFER, WHICH STATES PRICE IS NOT BEST AND FINAL AND PRICE MAY BE REDUCED FURTHER, IS NO BASIS FOR CONTRACTING OFFICER TO REOPEN NEGOTIATIONS, WHICH ARE ONLY TO BE REOPENED WHEN DETERMINED TO BE IN BEST INTEREST OF GOVERNMENT AND HERE REOPENING WOULD BENEFIT ONLY ONE OFFEROR WHO CHOSE NOT TO OFFER BEST PRICE. 4. ALLEGED VIOLATION OF ANTITRUST LAWS AND RESTRAINT OF TRADE LEGISLATION IS MATTER FOR DETERMINATION BY DEPARTMENT OF JUSTICE.

SECURITY ASSISTANCE FORCES & EQUIPMENT INTERNATIONAL INC.:

SECURITY ASSISTANCE FORCES & EQUIPMENT INTERNATIONAL INC. (SAFE) HAS PROTESTED THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS (RFP) NO. DAJA37-76-R-0250, ISSUED BY THE UNITED STATES ARMY PROCUREMENT AGENCY, EUROPE, FRANKFURT, GERMANY.

THE RFP WAS FOR THE REPLACEMENT OF TELLER CAGES AND VAULT/SAFE ALARM SYSTEMS AT UNITED STATES ARMY MILITARY BANKING FACILITIES IN GERMANY AND WAS ISSUED ON A BRAND NAME OR EQUAL BASIS. THE VAULT ALARMS WERE TO BE MOSLER MODEL "CENTURIAN 2000" OR EQUAL AND THE SAFE DOOR ALARMS WERE TO BE MOSLER MODEL 400A OR EQUAL.

FIVE PROPOSALS WERE RECEIVED IN RESPONSE TO THE RFP. SAFE'S PROPOSAL WAS LOW AS TO PRICE BUT WAS DETERMINED TO BE TECHNICALLY UNACCEPTABLE BECAUSE OF THE LACK OF SUFFICIENT DATA TO PROVE ITS "OR EQUAL" ALARM SYSTEM ACCEPTABLE. HOWEVER, SAFE HAD ALSO SUBMITTED AN ALTERNATE PROPOSAL BASED ON THE BRAND NAME ITEMS WHICH WAS CONSIDERED TECHNICALLY ACCEPTABLE. TWO WEEKS FOLLOWING THE RECEIPT OF PROPOSALS, THE CONTRACTING OFFICER RECEIVED A LETTER FROM FRANZ GARNY GMBH CO (GARNY), THE GERMAN SUBSIDIARY OF MOSLER, ADVISING THAT MOSLER WAS NOT PROVIDING THE REQUIRED SYSTEMS TO SAFE.

FOLLOWING RECEIPT OF THIS INFORMATION, THE CONTRACTING OFFICER DETERMINED TO OPEN NEGOTIATIONS WITH ALL OFFERORS TO PERMIT THE SUBMISSION OF FURTHER TECHNICAL DATA IN AN ATTEMPT TO MAKE THEIR PROPOSALS TECHNICALLY ACCEPTABLE. THIS ACTION WAS TAKEN TO INCREASE COMPETITION, AS GARNY'S PROPOSAL WAS THE ONLY TECHNICALLY ACCEPTABLE INITIAL PROPOSAL. MARCH 17, 1976, WAS ESTABLISHED AS THE CLOSING DATE FOR THE SUBMISSION OF REVISED PROPOSALS AND BEST AND FINAL OFFERS. ALL OFFERORS REDUCED THEIR PROPOSAL PRICES IN THEIR BEST AND FINAL OFFERS AND GARNY WAS THE LOW OFFEROR. GARNY'S PROPOSAL OFFERED THE BRAND NAME ITEMS AND WAS LOW IN PRICE, AWARD WAS MADE TO IT ON APRIL 7, 1976, WITHOUT FURTHER TECHNICAL EVALUATION OF THE OTHER PROPOSALS.

SAFE HAS PROTESTED THE AWARD TO GARNY ON THE GROUNDS THAT NEGOTIATIONS WERE IMPROPERLY CONDUCTED AND THAT AWARD SHOULD HAVE BEEN MADE TO IT BASED ON THE INITIAL PROPOSALS, THAT SAFE'S PRICE WAS TRANSMITTED IN SOME MANNER TO GARNY PRIOR TO THE SUBMISSION OF BEST AND FINAL OFFERS AND, FINALLY, THAT GARNY EXERTED UNDUE INFLUENCE OVER THE PROCUREMENT BY FAILING TO ALLOW OTHER OFFERORS TO QUOTE ON THE MOSLER PRODUCTS.

REGARDING THE OPENING OF NEGOTIATIONS, SAFE VIEWS SUCH ACTION AS IMPROPER BASED ON ITS BELIEF THAT THERE WERE THREE ACCEPTABLE INITIAL PROPOSALS SUBMITTED. SAFE CONTENDS THAT AS THREE FIRMS OFFERED THE MOSLER ITEMS, SAFE, GARNY AND AMERICAN DISTRICT TELEGRAPH CO. (ADT), AWARD SHOULD HAVE BEEN MADE ON THE BASIS OF THE LOWEST PRICED INITIAL PROPOSAL. HOWEVER, THIS REASONING FAILS TO TAKE INTO ACCOUNT THE LETTER FROM GARNY ADVISING THAT IT WOULD NOT FURNISH THE BRAND NAME ITEMS TO SAFE AND, WE ASSUME, NEITHER TO ADT WHICH OFFERED IT AS AN ALTERNATE PROPOSAL AS WAS DONE BY SAFE. SINCE THE BASIC PROPOSALS OF BOTH SAFE AND ADT WERE VIEWED AS TECHNICALLY UNACCEPTABLE ON AN "OR EQUAL BASIS," ONLY THE INITIAL PROPOSAL OF GARNY WAS ACCEPTABLE AND ELIGIBLE FOR AWARD.

IN REGARD TO THE CONDUCTING OF NEGOTIATIONS WITH OFFERORS, SECTION 3 805.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) (1975 ED.) STATES:

"3-805.1 GENERAL.

"(A) WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, EXCEPT THAT THIS REQUIREMENT NEED NOT BE APPLIED TO PROCUREMENTS:

"(V) IN WHICH IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCF OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT OR SERVICE THAT ACCEPTANCE OF THE MOST FAVORABLE INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN A FAIR AND REASONABLE PRICE, PROVIDED HOWEVER THAT THE SOLICITATION NOTIFIED ALL OFFERORS OF THE POSSIBILITY THAT AWARD MIGHT BE MADE WITHOUT DISCUSSION, AND PROVIDED THAT SUCH AWARD IS IN FACT MADE WITHOUT ANY WRITTEN OR ORAL DISCUSSION WITH ANY OFFEROR."

IT IS CLEAR THAT THE REQUIREMENT OF THE ABOVE-CITED REGULATION FOR THE CONDUCT OF DISCUSSIONS IS RELAXED ONLY IN THOSE SITUATIONS WHEREIN IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE COST EXPERIENCE THAT ACCEPTANCE OF AN INITIAL OFFER WITHOUT NEGOTIATION WOULD RESULT IN FAIR AND REASONABLE PRICES. BASED ON THE FACTS OF THE INSTANT PROCUREMENT, THE NOTED EXCEPTIONS WERE NOT APPLICABLE. ONLY ONE ACCEPTABLE INITIAL PROPOSAL WAS RECETVED WHICH WAS NOT LOW AS TO PRICE AND THE CONTRACTING OFFICER FELT THAT AT LEAST SOME OF THE OTHER FOUR PROPOSALS COULD BE RAISED TO AN ACCEPTABLE LEVEL THROUGH NEGOTIATIONS. INDEED, IN THIS SITUATION, IF THE CONTRACTING OFFICER HAD AWARDED THE CONTRACT BASED ON INITIAL PROPOSALS WITHOUT CONDUCTING NEGOTIATIONS, WE BELIEVE SUCH ACTION WOULD HAVE BEEN IMPROPER UNDER THE REGULATIONS.

SAFE CONTENDS ALSO THAT ITS INITIAL PROPOSAL PRICE WAS SOMEHOW TRANSMITTED OR "LEAKED" TO GARNY TO ALLOW GARNY TO UNDERBID SAFE ON THE BEST AND FINAL OFFER. OUR OFFICE HAS NOTED THAT IT IS NOT UNCOMMON FOR OFFERORS TO OFFER SUBSTANTIAL PRICE REDUCTIONS IN THE FINAL STAGES OF NEGOTIATIONS, EVEN WITHOUT CHANGES IN THE GOVERNMENT'S REQUIREMENTS. B-174141, JANUARY 20, 1972. SAFE HAS NOT PRESENTED ANY EVIDENCE TO SUPPORT ITS CONTENTION OF A PRICE LEAK AND WE DO NOT THINK THAT SUCH A CONCLUSION MAY REASONABLY BE DRAWN IN THE CIRCUMSTANCES. BRUNO-NEW YORK INDUSTRIES CORPORATION, B-184679, JANUARY 22, 1976, 76-1 CPD 36.

IN CONNECTION WITH THE BEST AND FINAL OFFERS, SAFE ALSO ARGUES THAT SINCE NEGOTIATIONS WERE OPENED, THE CONTRACTING OFFICER SHOULD HAVE CONTINUED NEGOTIATIONS WITH IT, IN VIEW OF THE FACT THAT ITS BEST AND FINAL OFFER WAS ONLY 1.2 PERCENT HIGHER THAN GARNY'S AND THAT IT ADVISED THE CONTRACTING OFFICER THAT THE OFFER DID NOT NECESSARILY CONSTITUTE ITS BEST AND FINAL OFFER BECAUSE OF OTHER CONSIDERATIONS THAT MAY REDUCE THE PRICE FURTHER. THESE CONSIDERATIONS CONSISTED OF LOGISTICS SUPPORT, LIGHTING CONFIGURATION, AND OTHER VALVE ENGINEERING CONCEPTS.

WE DO NOT FIND THAT THE CONTRACTING OFFICER HAD A DUTY TO REOPEN NEGOTIATIONS BASED ON THE STATEMENT CONTAINED IN SAFE'S OFFER. ALL OFFERORS WERE ADVISED OF A COMMON CUT-OFF DATE AND REQUESTED TO SUBMIT THEIR BEST POSSIBLE PRICES. ONCE NEGOTIATIONS HAVE BEEN HELD AND BEST AND FINAL OFFERS RECEIVED, NEGOTIATIONS SHOULD NOT BE REOPENED UNLESS IT IS CLEARLY IN THE BEST INTEREST OF THE GOVERNMENT. ILC DOVER, B-182104, NOVEMBER 29, 1974, 74-2 CPD 301. HERE, A REOPENING OF NEGOTIATIONS WOULD HAVE BENEFITED ONLY SAFE AND SAFE HAD PREVIOUSLY BEEN ADVISED TO SUBMIT ITS BEST PRICE AND IF IT CHOSE TO HOLD BACK ITS TRUE BEST AND FINAL OFFER IN THE EXPECTATION OF FURTHER NEGOTIATIONS AND ANOTHER ROUND OF BEST AND FINAL OFFERS, IT DID SO AT ITS OWN PERIL.

FINALLY, SAFE ALLEGES THAT GARNY AND MOSLER EXERTED INFLUENCE OVER THE PROCUREMENT BY REFUSING TO SELL THE BRAND NAME ITEMS TO SAFE SO THAT SAFE COULD PROPOSE TO FURNISH THE BRAND NAME ITEM RATHER THAN AN "EQUAL." SAFE ARGUES THAT THIS ACTION CONSTITUTED A RESTRAINT OF TRADE AND WAS A NONCOMPETITIVE PRACTICE. AS TO POSSIBLE VIOLATIONS OF THE ANTITRUST LAWS RELATING TO RESTRAINT OF TRADE, SUCH MATTERS ARE PROPERLY FOR CONSIDERATION BY THE DEPARTMENT OF JUSTICE AND NOT OUR OFFICE. MARTIN & TURNER SUPPLY COMPANY, 54 COMP.GEN. 395 (1974), 74-2 CPD 267.

ACCORDINGLY, THE PROTEST IS DENIED.