B-218260.1, MAY 17, 1985

B-218260.1: May 17, 1985

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CONTRACTS - NEGOTIATION - REQUEST FOR PROPOSALS - AMENDMENT - EQUAL COMPETITIVE BASIS FOR ALL OFFERORS DIGEST: PROTEST IS SUSTAINED WHERE THE AGENCY SIGNIFICANTLY RELAXED ITS REQUIREMENTS DURING DISCUSSIONS WITH THE SOLE OFFEROR IN THE COMPETITIVE RANGE AND OTHER OFFERORS WERE NOT GIVEN AN OPPORTUNITY TO COMPETE ON THE ALTERED REQUIREMENT. THE CONTRACT IS FOR A "WEB INTAGLIO" PRINTING PRESS FOR THE PRODUCTION OF UNITED STATES CURRENCY. ALTERNATE PROPOSALS WERE ALSO REQUESTED ON THREE PARTIAL SYSTEMS: THE PRINTING PRESS AND PROCESSING EQUIPMENT. FIVE PROPOSALS WERE RECEIVED IN RESPONSE TO THE RFP. FOUR (INCLUDING HAMILTON'S AND DE LA RUE GIORI'S) WERE FOR THE COMPLETE SYSTEM. ONE WAS FOR A PARTIAL SYSTEM.

B-218260.1, MAY 17, 1985

CONTRACTS - NEGOTIATION - REQUEST FOR PROPOSALS - AMENDMENT - EQUAL COMPETITIVE BASIS FOR ALL OFFERORS DIGEST: PROTEST IS SUSTAINED WHERE THE AGENCY SIGNIFICANTLY RELAXED ITS REQUIREMENTS DURING DISCUSSIONS WITH THE SOLE OFFEROR IN THE COMPETITIVE RANGE AND OTHER OFFERORS WERE NOT GIVEN AN OPPORTUNITY TO COMPETE ON THE ALTERED REQUIREMENT.

THE HAMILTON TOOL COMPANY:

THE HAMILTON TOOL COMPANY PROTESTS THE BUREAU OF ENGRAVING AND PRINTING'S (BEP) CONTRACT AWARD TO DE LA RUE GIORI UNDER REQUEST FOR PROPOSALS (RFP) NO. BEP-83-55(N). THE CONTRACT IS FOR A "WEB INTAGLIO" PRINTING PRESS FOR THE PRODUCTION OF UNITED STATES CURRENCY.

WE SUSTAIN THE PROTEST.

THE SOLICITATION REQUESTED OFFERS FOR A COMPLETE WEB-BASED UNITED STATES CURRENCY PRODUCTION SYSTEM COMPRISED OF THREE MAJOR COMPONENTS: A WEB INTAGLIO PRINTING PRESS, CURRENCY PROCESSING EQUIPMENT, AND AN AUTOMATED CURRENCY INSPECTION SYSTEM. ALTERNATE PROPOSALS WERE ALSO REQUESTED ON THREE PARTIAL SYSTEMS: THE PRINTING PRESS AND PROCESSING EQUIPMENT, THE PRINTING PRESS AND AUTOMATED INSPECTION SYSTEM, AND THE PRINTING PRESS ALONE.

FIVE PROPOSALS WERE RECEIVED IN RESPONSE TO THE RFP; FOUR (INCLUDING HAMILTON'S AND DE LA RUE GIORI'S) WERE FOR THE COMPLETE SYSTEM, AND ONE WAS FOR A PARTIAL SYSTEM. OF THESE PROPOSALS, ONLY THAT OF DE LA RUE GIORI WAS INCLUDED IN THE COMPETITIVE RANGE. THE EVALUATORS FOUND THAT THE OTHER PROPOSALS CONTAINED FUNDAMENTAL DEFICIENCIES AND WEAKNESSES WHICH MADE THEM TECHNICALLY UNACCEPTABLE. IN ADDITION, THE PROPOSED COSTS OF THE OTHER PROPOSALS FOR COMPLETE SYSTEMS EXCEEDED THE COST PROPOSED BY DE LA RUE GIORI. ACCORDINGLY, THE TECHNICAL EVALUATION COMMITTEE RECOMMENDED THAT THE CONTRACTING OFFICER ENTER INTO NEGOTIATIONS WITH DE LA RUE GIORI FOR AWARD.

AT THIS POINT, HOWEVER, AGENCY OFFICIALS BECAME CONCERNED ABOUT THE PROPOSED COST FOR THE SYSTEM, WHICH WAS CONSIDERABLY GREATER THAN ANTICIPATED. AFTER ATTEMPTS TO NEGOTIATE AN ACCEPTABLE PRICE REDUCTION WITH DE LA RUE GIORI FAILED, THE AGENCY CONCLUDED THAT PURCHASE OF THE TOTAL SYSTEM WAS TOO EXPENSIVE. IT DECIDED INSTEAD TO PURCHASE THE PRINTING PRESS ALONE, IF A REASONABLE PRICE COULD BE NEGOTIATED.

UPON REVIEW OF THE NATURE AND EXTENT OF THE TECHNICAL DEFICIENCIES ASSOCIATED WITH THE PRINTING PRESS PORTION OF THE SYSTEMS PROPOSED BY ALL OFFERORS, EXCEPT DE LA RUE GIORI, THE CONTRACTING OFFICER DETERMINED THAT ONLY DE LA RUE GIORI WAS IN THE COMPETITIVE RANGE FOR THE PRINTING PRESS. AFTER FURTHER DISCUSSIONS, DE LA RUE GIORI SUBMITTED A SEPARATE "BEST AND FINAL OFFER" FOR A "SIMPLIFIED" WEB INTAGLIO PRINTING PRESS, AND THE AGENCY ACCEPTED THIS OFFER.

HAMILTON ASSERTS THAT BEP'S DECISION TO PURCHASE THE PRINTING PRESS ALONE REPRESENTED A REDEFINITION OF THE AGENCY'S NEEDS AND RESULTED IN THE PURCHASE OF SOMETHING QUALITATIVELY DIFFERENT FROM WHAT HAD BEEN SOLICITED. THE PROTESTER CONTENDS THAT THE AGENCY INVITED OFFERS FOR A SOPHISTICATED, STATE-OF-THE-ART, FULLY INTEGRATED SYSTEM, BUT INSTEAD PURCHASED NOTHING BUT A SIMPLIFIED, OUTDATED PRINTING PRESS WHICH COULD EASILY HAVE BEEN PROVIDED BY HAMILTON OR ANY OF THE OTHER OFFERORS. HAMILTON ARGUES THAT BEP SHOULD HAVE AMENDED THE SOLICITATION TO REFLECT ITS RELAXED REQUIREMENTS AND GIVEN ALL OF THE ORIGINAL COMPETITORS AN OPPORTUNITY TO OFFER THE PRINTING PRESS.

BEP ASSERTS THAT THE PRINTING PRESS PURCHASED FROM DE LA RUE GIORI FULLY COMPLIES WITH THE SPECIFICATIONS IN THE RFP AND, THEREFORE, IS NOT QUALITATIVELY DIFFERENT FROM THE PRINTING PRESS ACTUALLY SOLICITED. BEP ALSO DISPUTES HAMILTON'S CONTENTIONS THAT THE PRINTING PRESS IT ACQUIRED IS SIMPLIFIED OR OUTDATED.

IN ADDITION, THE AGENCY STATES THAT ITS INTENT ALWAYS HAS BEEN TO ACQUIRE A COMPLETE CURRENCY PRODUCTION SYSTEM, EITHER ALL AT ONE TIME OR IN INCREMENTAL COMPETITIVE PROCUREMENTS FOR THE VARIOUS SYSTEM COMPONENTS. BEP SAYS THAT THIS INTENT WAS REFLECTED IN THE SOLICITATION WHICH, AS NOTED ABOVE, PROVIDED FOR THE SUBMISSION OF ALTERNATE PROPOSALS ON VARIOUS COMPONENTS OF THE COMPLETE SYSTEM.

THE AGENCY ASSERTS THAT THE DESIGN OF THE PRINTING PRESS PURCHASED FROM DE LA RUE GIORI WILL ENABLE THE SYSTEM TO BE COMPLETED LATER, THROUGH A COMPETITIVE PROCUREMENT, BY DE LA RUE GIORI OR SOME OTHER FIRM.

HAMILTON NOTES, HOWEVER, THAT DURING THE PREPROPOSAL CONFERENCE BEP EXPRESSED A CLEAR PREFERENCE FOR PURCHASING A COMPLETE SYSTEM UNDER THE RFP. /1/ FOR EXAMPLE, HAMILTON CITES AGENCY STATEMENTS THAT A PROPOSAL FOR ONLY ONE OR TWO PARTS OF THE SYSTEM WOULD NOT HAVE THE SAME EVALUATION WEIGHT AS ONE FOR A COMPLETE SYSTEM AND THAT A PROPOSAL FOR LESS THAN A COMPLETE SYSTEM MIGHT RECEIVE A LOWER SCORE.

WE BELIEVE THAT THE AWARD TO DE LA RUE GIORI WAS IMPROPER. DE LA RUE GIORI DID NOT IN FACT SUBMIT AN ALTERNATE PROPOSAL FOR THE PRINTING PRESS ALONE IN RESPONSE TO THE RFP. RATHER, THE AGENCY SOLICITED SUCH AN OFFER FROM DE LA RUE GIORI ONLY AFTER NEGOTIATIONS WITH THE FIRM FAILED TO PRODUCE AN ACCEPTABLE PRICE FOR THE COMPLETE SYSTEM. AT THAT POINT, FURTHER DISCUSSIONS WERE HELD WITH DE LA RUE GIORI AND THE PROPOSAL FOR THE PRINTING PRESS ALONE WAS SUBMITTED. SIGNIFICANTLY, THE PRINTING PRESS OFFERED IN THIS PROPOSAL DIFFERED IN KEY RESPECTS FROM THE PRINTING PRESS OFFERED BY THE FIRM FOR THE COMPLETE SYSTEM.

DE LA RUE GIORI'S PROPOSAL FOR JUST THE PRINTING PRESS STATES THAT THE OFFERED PRESS IS OF THE SAME BASIC CONSTRUCTION AS THE ONE ORIGINALLY PROPOSED EXCEPT FOR PROCESS CONTROL AND QUALITY CONTROL. THE PROPOSAL ALSO STATES THAT:

"THESE MACHINES CANNOT BE RETROFITTED TO A MACHINE LIKE THE ONE ORIGINALLY OFFERED, WITHOUT A GREAT AMOUNT OF WORK, BUT THEY REPRESENT THE BASIC UNITS FOR FURTHER DEVELOPMENT OF OTHER UNITS LIKE THE ONES ORIGINALLY OFFERED" AND THAT:

"ALL THE CONSTRUCTION DESIGN WILL BE SUCH TO ALLOW AT THE LATER STAGE THE REDESIGNING OF THE UNITS ... TO OBTAIN A MACHINE LIKE THE ONE ORIGINALLY OFFERED OR THE COMPLETE CURRENCY PRODUCTION SYSTEM"

THE FEDERAL ACQUISITION REGULATION (FAR), 48 C.F.R. SEC. 15.606(A) (1984), PROVIDES THAT WHEN EITHER BEFORE OR AFTER RECEIPT OF PROPOSALS AN AGENCY CHANGES, RELAXES OR OTHERWISE MODIFIES ITS REQUIREMENTS, THE SOLICITATION MUST BE AMENDED TO REFLECT THE MODIFICATION. ABSENT A COMPELLING REASON, THIS PROVISION APPLIES TO A SIGNIFICANT OR SUBSTANTIAL CHANGE EVEN WHERE THE COMPETITIVE RANGE HAS BEEN REDUCED TO ONLY ONE OFFEROR. SEE COMPUTEK INC., ONTEL CORP., 54 COMP.GEN. 1080 (1975), 75-1 CPD PARA. 384; JOINT ACTION IN COMMUNITY SERVICE, INC., B-214564, AUG. 27, 1984, 84-2 CPD PARA. 228. THUS, IF DURING FINAL DISCUSSIONS IT BECOMES OBVIOUS THAT THE CONTRACT REQUIREMENTS BEING NEGOTIATED WITH THE SOLE REMAINING OFFEROR DIFFER SIGNIFICANTLY FROM THE REQUIREMENTS STATED IN THE RFP, THE CONTRACTING OFFICER MUST AMEND THE RFP AND SEEK NEW OFFERS. COMPUTEK INC., ONTEL CORP., 54 COMP.GEN. AT 1085.

HERE, WHILE THE AGENCY AND PROTESTER DISAGREE ABOUT THE ADEQUACY OF THE NOTICE TO OFFERORS THAT THE AGENCY MIGHT NOT PURCHASE A COMPLETE SYSTEM AS A RESULT OF THIS PROCUREMENT, IT IS CLEAR THAT THE AGENCY EXPRESSED A DEFINITE PREFERENCE FOR PURCHASING A COMPLETE SYSTEM. MOREOVER, THE AGENCY ITSELF STATES THAT ITS INTENT WAS EVENTUALLY TO ACQUIRE A COMPLETE SYSTEM, EITHER THROUGH THE INSTANT PROCUREMENT OR A SERIES OF PROCUREMENTS FOR THE VARIOUS SYSTEM COMPONENTS. IT IS EVIDENT THAT THE PRINTING PRESS ACQUIRED FROM DE LA RUE GIORI IS NOT CONSISTENT WITH THIS INTENT.

DE LA RUE GIORI'S PROPOSAL FOR THE PRINTING PRESS ALONE CLEARLY INDICATES THAT BEFORE THE PRINTING PRESS COULD BE MADE PART OF A COMPLETE CURRENCY PRODUCTION SYSTEM, IT WOULD HAVE TO BE REDESIGNED, AND THAT DOING SO WOULD REQUIRE A GREAT DEAL OF WORK. IT APPEARS THAT THIS IS AT LEAST IN PART DUE TO THE DELETION OF THE PROCESS AND QUALITY CONTROL FEATURES ORIGINALLY PROPOSED AS PART OF THE PRINTING PRESS FOR THE COMPLETE SYSTEM. THESE FEATURES ALLOW FOR THE IDENTIFICATION AND REMOVAL OF DEFECTIVE CURRENCY NOTES FROM THE SYSTEM. THE AGENCY SUGGESTS THAT THEIR DELETION IS INCONSEQUENTIAL BECAUSE THEY RELATE TO THE CURRENCY PROCESSING EQUIPMENT AND AUTOMATED CURRENCY INSPECTION SYSTEM NOT BEING PURCHASED UNDER THIS CONTRACT. WE NOTE, HOWEVER, THAT IN THE COMPLETE SYSTEM PROPOSED BY DE LA RUE GIORI, SIGNIFICANT ASPECTS OF THE PROCESS AND QUALITY CONTROL FUNCTION WERE PERFORMED BY THE PRINTING PRESS ITSELF. THUS, THE FUNCTION CLEARLY RELATES TO THE ABILITY OF THE PRESS TO OPERATE AS PART OF A COMPLETE CURRENCY PRODUCTION SYSTEM.

ACCORDINGLY, WE CONCLUDE THAT THE AGENCY IN FACT RELAXED ITS REQUIREMENTS AFTER ENTERING INTO DISCUSSIONS WITH DE LA RUE GIORI FOR THE PRINTING PRESS ALONE. RATHER THAN FULFILLING ITS STATED INTENT TO ACQUIRE A PRESS THAT COULD BE INTEGRATED INTO A COMPLETE SYSTEM AT SOME LATER DATE, THE AGENCY PURCHASED A SIMPLIFIED PRINTING PRESS THAT WOULD REQUIRE MAJOR REDESIGN IN ORDER TO FUNCTION AS A PART OF A SYSTEM. MOREOVER, WE FIND THAT HAMILTON, AS WELL AS OTHER OFFERORS, MAY HAVE BEEN PREJUDICED BY THE AGENCY'S ACTION. HAD THESE OFFERORS KNOWN OF THE CHANGE IN THE AGENCY'S REQUIREMENTS, THEIR PROPOSED APPROACHES TO MEETING THE AGENCY'S ACTUAL NEEDS MIGHT VERY WELL HAVE BEEN DIFFERENT FROM THE APPROACHES THEY TOOK TO SUPPLYING A COMPLETE, FULLY INTEGRATED SYSTEM. /2/

WE THEREFORE SUSTAIN THE PROTEST. WE RECOMMEND THAT THE CONTRACT AWARD TO DE LA RUE GIORI BE TERMINATED AND THAT OFFERS BE RESOLICITED UNDER AN RFP REVISED TO REFLECT THE AGENCY'S ACTUAL REQUIREMENTS.

/1/ THE MINUTES OF THE PREPROPOSAL CONFERENCE WERE PROVIDED TO ALL OFFERORS BY AMENDMENT NO. 4 TO THE RFP.

/2/ WE NOTE THAT OUR CONCERN HERE IS BASED NOT ON THE AGENCY'S DECISION TO PURCHASE LESS THAN A COMPLETE SYSTEM, BUT INSTEAD ON ITS DECISION TO PURCHASE A PRINTING PRESS THAT DIFFERS IN KEY RESPECTS FROM THE ONE OFFERED BY THE AWARDEE AS PART OF ITS COMPLETE SYSTEM AND WHICH CANNOT OPERATE AS PART OF A COMPLETE SYSTEM WITHOUT MAJOR REDESIGN. THUS, THE FACT THAT THE PRINTING PRESS THAT HAMILTON OFFERED AS PART OF ITS COMPLETE SYSTEM WAS UNACCEPTABLE TO THE AGENCY DOES NOT NECESSARILY INDICATE THAT HAMILTON COULD NOT OFFER A PRESS THAT WOULD MEET THE AGENCY'S CHANGED REQUIREMENTS.