B-209279.2, FEB 8, 1983

B-209279.2: Feb 8, 1983

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CONTRACTING OFFICER'S DECISION TO USE EVALUATION OF PROPOSALS SUBMITTED FOR 8(A) AWARD TO MAKE NON-8(A) AWARD WAS REASONABLE UNDER "PUBLIC EXIGENCY" EXCEPTION TO REQUIREMENT FOR FORMAL ADVERTISING. WHERE CONTRACTING AGENCY NEGOTIATED WITH FOUR 8(A) FIRMS BEFORE REQUESTING THE SMALL BUSINESS ADMINISTRATION (SBA) TO NOMINATE THE EVENTUAL AWARDEE AND SBA DECLINED TO NOMINATE THAT PARTICULAR FIRM 1 OR 2 DAYS BEFORE INCUMBENT'S CONTRACT WAS TO EXPIRE AND SERVICES WERE CONSIDERED ESSENTIAL. ACCELERATED NEGOTIATED PROCUREMENT WAS NOT SOLE SOURCE AWARD SINCE ALL FOUR 8(A) FIRMS COMPETED ON EQUAL BASIS AND PROTESTER WAS AWARE THAT AWARD MIGHT BE MADE TO ANOTHER FIRM AND SHOULD HAVE OFFERED ITS BEST PRICE. 2.

B-209279.2, FEB 8, 1983

DIGEST: 1. CONTRACTING OFFICER'S DECISION TO USE EVALUATION OF PROPOSALS SUBMITTED FOR 8(A) AWARD TO MAKE NON-8(A) AWARD WAS REASONABLE UNDER "PUBLIC EXIGENCY" EXCEPTION TO REQUIREMENT FOR FORMAL ADVERTISING, WHERE CONTRACTING AGENCY NEGOTIATED WITH FOUR 8(A) FIRMS BEFORE REQUESTING THE SMALL BUSINESS ADMINISTRATION (SBA) TO NOMINATE THE EVENTUAL AWARDEE AND SBA DECLINED TO NOMINATE THAT PARTICULAR FIRM 1 OR 2 DAYS BEFORE INCUMBENT'S CONTRACT WAS TO EXPIRE AND SERVICES WERE CONSIDERED ESSENTIAL. ACCELERATED NEGOTIATED PROCUREMENT WAS NOT SOLE SOURCE AWARD SINCE ALL FOUR 8(A) FIRMS COMPETED ON EQUAL BASIS AND PROTESTER WAS AWARE THAT AWARD MIGHT BE MADE TO ANOTHER FIRM AND SHOULD HAVE OFFERED ITS BEST PRICE. 2. CONSIDERATION OF CONTINGENT LINE ITEM FOR RELOCATION AND RECRUITING IN EVALUATION OF PROTESTER'S PROPOSAL WAS REASONABLE, EVEN THOUGH PROTESTER CONTENDS IT IS UNLIKELY THAT IT WOULD INCUR MORE THAN A FRACTION OF THESE COSTS. SINCE PROTESTER ITEMIZED THESE EXPENSES IN ITS PROPOSAL, GOVERNMENT IS STILL LIABLE FOR ENTIRE AMOUNT OF LINE ITEM UNDER FIXED-RATE LABOR HOURS CONTRACT IF EXPENSES ARE INCURRED, AND IT IS MERE CONJECTURE THAT PROTESTER WOULD INCUR ONLY A FRACTION OF THESE COSTS. 3. AWARD OF COMPUTER SERVICES CONTRACT ON A NEGOTIATED BASIS UNDER "PUBLIC EXIGENCY" EXCEPTION TO FORMAL ADVERTISING SHOULD NOT HAVE INCLUDED OPTION PROVISIONS. SINCE CONTRACT INCLUDES 1-YEAR BASE PERIOD, THERE APPEARS TO BE NO EMERGENCY SITUATION WHICH WOULD SUPPORT INCLUSION OF OPTIONS. GAO RECOMMENDS THAT CONTRACTING AGENCY NOT EXERCISE OPTIONS, BUT RATHER PROCURE SUCH SERVICES EITHER THROUGH FORMAL ADVERTISING OR SBA'S 8(A) PROGRAM.

INTERNATIONAL BUSINESS SERVICES, INC.:

INTERNATIONAL BUSINESS SERVICES, INC. (IBS), PROTESTS THE AWARD OF CONTRACT NO. NA-83-SAC-00003, FOR FURNISHING COMPUTER OPERATION AND MAINTENANCE SERVICES, BY THE UNITED STATES DEPARTMENT OF COMMERCE, NATIONAL OCEANOGRAPHIC AND ATMOSPHERIC ADMINISTRATION (NOAA), TO AUTOMATED DATATRON, INC. (ADI). IBS ASSERTS THAT NOAA IMPROPERLY AWARDED THE CONTRACT TO ADI ON A SOLE-SOURCE BASIS, EVEN THOUGH IBS HAD PROVEN ITSELF A RELIABLE, ALTERNATE SOURCE FOR THE REQUIRED SERVICES AS THE INCUMBENT CONTRACTOR.

FOR THE REASONS STATED BELOW, WE DENY IBS'S PROTEST IN PART AND SUSTAIN IT IN PART.

IBS HAD BEEN PERFORMING THESE SERVICES FOR NOAA AS A SUBCONTRACTOR TO THE SMALL BUSINESS ADMINISTRATION (SBA) UNDER THE AUSPICES OF THE 8(A) PROGRAM (UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT, 15 U.S.C. SEC. 637(A) (SUPP. III, (1979)) SINCE OCTOBER 1, 1979. BY LETTER OF MAY 11, 1982, THE DEPARTMENT OF COMMERCE REQUESTED THAT SBA NOMINATE IBS FOR AN 8(A) SUBCONTRACT TO CONTINUE PERFORMING THE SERVICES DURING FISCAL YEAR 1983, WITH OPTIONS FOR FISCAL YEARS 1984 AND 1985. IBS SUBMITTED TECHNICAL AND COST PROPOSALS FOR THE SUBCONTRACT TO COMMERCE ON MAY 21. HOWEVER, ON JUNE 17, WHILE COMMERCE'S REQUEST FOR NOMINATION OF IBS WAS PENDING AT SBA, THE SBA ANNOUNCED THAT NO FURTHER 8(A) CONTRACT AWARDS WOULD BE MADE TO FIRMS FOUND NOT TO BE WITHIN THE SBA'S SIZE STANDARDS UNDER APPLICABLE SBA REGULATIONS SET FORTH IN 13 C.F.R. PART 121 (1982). (THIS ANNOUNCEMENT WAS THE RESULT OF OUR DECISION IN COMPUTER DATA SYSTEMS, INC., B-205521, JUNE 16, 1982, 82-1 CPD 593.) TWENTY-FIVE FIRMS, INCLUDING IBS, WERE AFFECTED. ACCORDING TO COMMERCE, THE PRACTICAL EFFECT OF THE SBA'S ANNOUNCEMENT WAS "TO RENDER IBS AND TWENTY-FOUR OTHER FIRMS INELIGIBLE FOR NEW SUBCONTRACT AWARDS UNDER THE 8(A) PROGRAM," AND, THEREFORE, COMMERCE'S MAY 11 REQUEST FOR NOMINATION OF IBS "THUS BECAME MOOT."

COMMERCE SOUGHT PROPOSALS FROM OTHER FIRMS WHICH WERE STILL ELIGIBLE TO PARTICIPATE IN THE 8(A) SUBCONTRACTING PROGRAM. THREE OTHER 8(A) FIRMS SUBMITTED PROPOSALS: DYNAMIC DATA PROCESSING, INC.; IMR SYSTEMS CORPORATION; AND ADI. DISCUSSIONS WERE HELD WITH ALL THREE FIRMS BETWEEN JULY 29 AND AUGUST 2. ONLY ADI'S PROPOSAL WAS DETERMINED TO BE FULLY TECHNICALLY ACCEPTABLE AND, THEREFORE, COMMERCE COMMENCED PRICE/COST NEGOTIATIONS WITH ADI. THESE NEGOTIATIONS WERE NEAR COMPLETION WHEN, ON AUGUST 17, THE SBA PROMULGATED AN "INTERIM EMERGENCY RULE" WHICH REINSTATED IBS AND THE 24 OTHER AFFECTED FIRMS AS ELIGIBLE TO RECEIVE 8(A) SUBCONTRACTS FOR AN ADDITIONAL 6-MONTH PERIOD. ACCORDINGLY, IBS WAS ALLOWED TO SUBMIT A REVISED PROPOSAL ON AUGUST 30. BY LETTER DATED SEPTEMBER 2, 1982, AN SBA BUSINESS DEVELOPMENT SPECIALIST CONTACTED THE CONTRACTING OFFICER, CERTIFIED THAT THE SBA WAS COMPETENT TO PERFORM THIS CONTRACT, AND STATED THAT THE SBA WAS SUPPORTING IBS'S BUSINESS PLAN FOR PERFORMING THE REQUIRED WORK AS AN 8(A) SUBCONTRACTOR.

DURING THIS PERIOD, COMMERCE EVALUATED IBS'S REVISED PROPOSAL AND DETERMINED THAT, EVEN THOUGH THE PROPOSALS OF IBS AND ADI WERE BOTH TECHNICALLY ACCEPTABLE, AWARD TO ADI WOULD BE MORE ADVANTAGEOUS TO THE GOVERNMENT. THE PRIMARY REASON FOR THIS DETERMINATION WAS THAT THE PROPOSED COST OF SUBCONTRACTING WITH IBS WAS $13,452 MORE THAN THE PROPOSED COST OF CONTRACTING WITH ADI FOR FISCAL YEAR 1983. BY LETTER OF SEPTEMBER 14, THE CONTRACTING OFFICER REQUESTED THAT THE SBA NOMINATE ADI INSTEAD OF IBS. HOWEVER, THE SBA NOTIFIED THE CONTRACTING OFFICER BY LETTER OF SEPTEMBER 29 THAT, IN LIGHT OF THE FACT THAT COMMERCE ORIGINALLY OFFERED THIS PROCUREMENT TO IBS UNDER THE 8(A) PROGRAM, IT STILL REQUESTED THAT THE SUBCONTRACT BE AWARDED TO IBS. FINALLY, ON SEPTEMBER 30, THE CONTRACTING OFFICER DETERMINED THAT AWARD WOULD BE MADE TO ADI WITHOUT FORMAL ADVERTISING UNDER THE AUTHORITY OF 41 U.S.C. SEC. 252(C)(2) (1976) BECAUSE THE PUBLIC EXIGENCY WOULD NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. IN HIS DETERMINATION AND FINDINGS IN SUPPORT OF THE NEGOTIATED AWARD TO ADI, THE CONTRACTING OFFICER STATED, AMONG OTHER THINGS, THAT AWARD COULD NOT BE MADE TO SBA WITH A SUBCONTRACT TO ADI UNDER THE 8(A) PROGRAM BECAUSE THE SBA HAD INDICATED THAT IT WOULD NOT PROCESS THE PROPOSED ADI CONTRACT FURTHER. ON OCTOBER 15, IBS FILED THIS PROTEST WITH OUR OFFICE.

ESSENTIALLY, IBS CONTENDS THAT COMMERCE'S AWARD TO ADI WAS AN IMPROPER SOLE-SOURCE AWARD WHICH WAS NOT JUSTIFIED UNDER THE PUBLIC EXIGENCY EXCEPTION TO THE STATUTORY REQUIREMENT FOR FORMAL ADVERTISING IN VIEW OF THE FACT THAT IBS WAS READY, WILLING, AND CAPABLE OF PERFORMING THE REQUIRED SERVICES. IBS ALSO CONTENDS THAT THE CONTRACTING OFFICER WAS FULLY AWARE AS EARLY AS SEPTEMBER 2 THAT THE SBA WAS SUPPORTING IBS'S NOMINATION FOR THE 8(A) SUBCONTRACT AND, THEREFORE, HAD ALMOST 1 MONTH BEFORE IBS'S CONTRACT WOULD EXPIRE. THUS, IBS CONCLUDES THAT THERE WAS ADEQUATE TIME FOR PROCUREMENT BY FORMAL ADVERTISING, NEGATING THE CLAIM OF "PUBLIC EXIGENCY." IBS ARGUES THAT, AFTER THE CONTRACTING OFFICER RECEIVED SBA'S NOMINATION OF IBS, HE HAD ONLY TWO CHOICES: (1) AWARD THE CONTRACT TO SBA AND THE SUBCONTRACT TO IBS UNDER THE 8(A) PROGRAM; OR (2) EXTEND IBS'S EXISTING CONTRACT SO AS TO ALLOW SUFFICIENT TIME FOR PROCUREMENT OF THE FOLLOW ON CONTRACT BY FORMAL ADVERTISING.

WHILE IBS HAS STYLED ITS PROTEST AS ONE AGAINST THE AWARD OF A SOLE SOURCE CONTRACT, WE DO NOT FIND THE INSTANT SITUATION TO BE ONE INVOLVING A NONCOMPETITIVE, SOLE-SOURCE AWARD. COMMERCE'S DECISION TO NEGOTIATE PURSUANT TO 41 U.S.C. SEC. 252(C)(2) WAS MADE BECAUSE OF THE SHORT PERIOD OF TIME REMAINING BEFORE IBS'S CONTRACT EXPIRED. WHEN COMMERCE DECIDED NOT TO PURSUE AN AWARD UNDER THE 8(A) PROGRAM, ANOTHER EXCEPTION TO THE REQUIREMENT FOR FORMAL ADVERTISING HAD TO BE INVOKED FOR AN AWARD TO BE VALID.

WE DO NOT AGREE WITH IBS'S ARGUMENT THAT THERE WAS NO URGENCY JUSTIFYING NEGOTIATION.

WHILE THE SBA DID NOTIFY COMMERCE BY LETTER OF SEPTEMBER 2 THAT IT WAS NOMINATING IBS, THE FACT IS THAT COMMERCE HAD ONLY RECEIVED IBS'S REVISED PROPOSAL ON AUGUST 30 AND WAS IN THE PROCESS OF EVALUATING IT. AFTER EVALUATING IBS'S REVISED PROPOSAL, COMMERCE DECIDED THAT IT WAS MORE ADVANTAGEOUS TO HAVE ADI PERFORM THE WORK. COMMERCE ASKED SBA TO NOMINATE ADI ON SEPTEMBER 14 AND WAS NOT INFORMED UNTIL SEPTEMBER 29 THAT SBA INTENDED TO CONTINUE TO NOMINATE IBS. THE PROTESTER CONTENDS SUCH NOTIFICATION WAS MADE ON SEPTEMBER 28. SINCE ONLY 1 OR 2 DAYS WERE LEFT BEFORE IBS'S CONTRACT WOULD EXPIRE AND THE COMPUTER OPERATION AND MAINTENANCE SERVICES WERE ESSENTIAL TO COMMERCE'S ABILITY TO PERFORM ITS MISSION PROGRAMS, WE WILL NOT DISPUTE THE CONTRACTING OFFICER'S DETERMINATION THAT A PUBLIC EXIGENCY SITUATION EXISTED. FURTHERMORE, WE HAVE HELD THAT THE EXIGENCY EXCEPTION IS AVAILABLE WHENEVER URGENCY REQUIRES AN IMMEDIATE PURCHASE REGARDLESS OF WHETHER THE EMERGENCY COULD HAVE OR SHOULD HAVE BEEN FORESEEN. ALTON IRON WORKS, INC., B-179212, MARCH 6, 1974, 74-1 CPD 121.

DUE TO THE EXTREMELY SHORT PERIOD OF TIME LEFT BEFORE PERFORMANCE WAS NECESSARY, WE FIND THAT A NEGOTIATED PROCUREMENT ON AN ACCELERATED BASIS WAS APPROPRIATE. SEE LAS VEGAS COMMUNICATIONS, INC. - RECONSIDERATION, B-195966.2, OCTOBER 28, 1980, 80-2 CPD 323. IN EFFECT, THAT IS WHAT OCCURRED HERE. THE CONTRACTING OFFICER RELIED UPON THE NEGOTIATIONS AND PROPOSAL EVALUATIONS WHICH HAD BEEN CONDUCTED UNDER THE 8(A) PROCUREMENT AND DETERMINED THAT ADI WAS A BETTER BUY. WE FAIL TO SEE HOW IBS WAS PREJUDICED IN THIS REGARD SINCE IT HAD BEEN ALLOWED TO COMPETE ON AN EQUAL BASIS WITH THE OTHER THREE 8(A) FIRMS. FURTHERMORE, IBS HAD BEEN TOLD THAT (1) NEGOTIATIONS WERE SUBSTANTIALLY COMPLETED WITH ONE OF THE FIRMS WHEN IBS AGAIN BECAME ELIGIBLE FOR AN 8(A) AWARD, (2) THE OTHER FIRM OFFERED A PRICE WHICH WAS SUBSTANTIALLY LOWER THAN IBS'S INITIAL PRICE, AND (3) THERE WERE INADEQUACIES IN IBS'S INITIAL PROPOSAL. IBS THEN WAS ALLOWED TO REVISE ITS PROPOSAL. COMPARE NATIONAL DATA CORPORATION, B-202953, APRIL 6, 1982, 82-1 CPD 313, WHERE WE HELD THAT IT WAS IMPROPER TO THRUST A FIRM INTO COMPETITION WITH ANOTHER FIRM WITHOUT INFORMING THE COMPETITORS THAT A COMPETITION WAS BEING HELD. HERE, IBS KNEW IT WAS IN COMPETITION, WAS AFFORDED AN OPPORTUNITY TO REVISE ITS PROPOSALS, AND WAS TREATED FAIRLY. EVEN THOUGH THE COMPETITION WAS CONDUCTED AS AN 8(A) PROCUREMENT AND THE AWARD WAS NOT MADE ON AN 8(A) BASIS, IBS WAS ON NOTICE THAT AWARD TO ANOTHER FIRM WAS BEING CONSIDERED AND, THEREFORE, SHOULD HAVE OFFERED ITS BEST PRICE. ACCORDINGLY, WE SEE NO REASON TO OBJECT TO THE AWARD MERELY BECAUSE IBS THOUGHT THAT BOTH THE COMPETITION AND THE AWARD WOULD RESULT IN AN 8(A) SUBCONTRACT RATHER THAN A DIRECT PRIME CONTRACT TO AN 8(A) FIRM. SEE NAVAJO FOOD PRODUCTS, INC., B-202433, SEPTEMBER 9, 1981, 81-2 CPD 206.

COUNSEL FOR IBS ARGUES THAT A PROPER COURSE OF CONDUCT WOULD HAVE BEEN TO HAVE MADE A SOLE-SOURCE AWARD FOR A LIMITED PERIOD OF TIME TO IBS IN ORDER TO PERMIT NOAA TO CONDUCT FORMAL ADVERTISING FOR THE REMAINING PORTION OF THE CONTRACT PERIOD. WE NEED NOT ADDRESS THIS SUGGESTION, SINCE THE AGENCY DID NOT IN FACT CHOOSE TO DO SO. WHAT IS BEFORE US IS NOT A QUESTION OF WHAT THE AGENCY COULD HAVE DONE, BUT INSTEAD WHETHER WE MUST OBJECT TO THE ACTIONS WHICH THE AGENCY DID IN FACT TAKE. AS INDICATED ABOVE, WE BELIEVE THAT THOSE ACTIONS WERE LEGALLY SUPPORTABLE.

IBS CONTENDS THAT THE AWARD TO ADI WAS ALSO IMPROPER BECAUSE IT WAS BASED UPON THE CONTRACTING OFFICER'S MISTAKEN PERCEPTION OF ADI'S COST PROPOSAL BEING $13,452 LESS THAN IBS'S COST PROPOSAL. FIRST, IBS POINTS OUT THAT THE ACTUAL CONTRACT AWARDED TO ADI WAS $291,147, OR $7,339 MORE THAN THE COST PROPOSAL (FOR THE FIRST YEAR). THUS, IBS ARGUES THAT THE ACTUAL DIFFERENCE BETWEEN THE CONTRACT AWARDED TO ADI AND THE PROPOSAL OF IBS WAS ONLY $6,113. IBS NEXT STATES THAT IT HAD INCLUDED A CONTINGENT LINE ITEM IN ITS PROPOSAL IN THE AMOUNT OF $6,396 FOR RECRUITING AND RELOCATION. IBS ARGUES THAT IT PROBABLY WOULD NOT HAVE INCURRED MORE THAN A FRACTION OF THESE EXPENSES AND, THEREFORE, THERE IS VIRTUALLY NO COST DIFFERENTIAL BETWEEN THE PROPOSED IBS COSTS AND THE ACTUAL ADI CONTRACT COSTS. WE DO NOT AGREE.

EVEN THOUGH IBS NOW CONTENDS THAT THE AMOUNT IT INCLUDED IN ITS PROPOSAL FOR RECRUITING AND RELOCATION ($6,396) SHOULD NOT HAVE BEEN CONSIDERED BY COMMERCE BECAUSE IBS WAS UNLIKELY TO SPEND THAT MONEY IN PERFORMING THE CONTRACT, THE GOVERNMENT WOULD CLEARLY BE LIABLE TO REIMBURSE IBS FOR THESE COSTS, IF SPENT, SINCE THEY WERE ITEMIZED IN THE COST PROPOSAL. MOREOVER, IT IS MERE CONJECTURE BY IBS TO SAY THAT ONLY A FRACTION OF THESE COSTS WOULD BE INCURRED. IN THESE CIRCUMSTANCES, WE THINK IT WAS REASONABLE AND PRUDENT OF THE CONTRACTING OFFICER TO HAVE CONSIDERED THIS LINE ITEM IN COMPARING THE OFFERS. ACCORDINGLY, ADI'S CONTRACT WAS STILL $6,113 LESS THAN IBS'S COST PROPOSAL, AND WE CANNOT FIND UNREASONABLE THE CONTRACTING OFFICER'S DETERMINATION THAT IT WOULD BE TO THE GOVERNMENT'S ADVANTAGE TO CONTRACT WITH ADI RATHER THAN IBS.

THE LAST ARGUMENT MADE BY IBS CONCERNS THE FACT THAT THE CONTRACT AWARDED TO ADI UNDER THE PUBLIC EXIGENCY EXCEPTION CONTAINED TWO 1-YEAR OPTIONS. IBS ARGUES THAT IT IS INCONGRUOUS FOR A CONTRACT RESULTING FROM NEGOTIATIONS BASED UPON THE PUBLIC EXIGENCY TO CONTAIN OPTION PROVISIONS. WE AGREE WITH IBS UNDER THESE CIRCUMSTANCES. THIS PROCUREMENT WAS CONDUCTED WITHOUT FORMAL ADVERTISING BECAUSE THE URGENT NEED OF NOAA TO HAVE A CONTRACTOR PERFORM THESE COMPUTER-RELATED SERVICES PREVENTED FORMAL ADVERTISING. HOWEVER, SINCE THE CONTRACT HAS A 1-YEAR BASE PERIOD, THERE APPEARS TO BE NO EMERGENCY SITUATION UPON WHICH INCLUSION OF THE OPTIONS COULD HAVE BEEN BASED, AND COMMERCE HAS OFFERED NO JUSTIFICATION FOR NOT USING FORMAL ADVERTISING TO PROCURE THE SECOND AND THIRD YEARS OF COMPUTER SERVICES. SEE ALTON IRON WORKS, INC., SUPRA. WE RECOMMEND BY LETTER OF TODAY THAT COMMERCE NOT EXERCISE THESE OPTIONS, BUT RATHER PROCURE THE SERVICES EITHER BY FORMAL ADVERTISING OR UNDER THE SBA'S 8(A) PROGRAM.

IBS'S PROTEST IS DENIED IN PART AND SUSTAINED IN PART.