B-219088, B-219088.2, B-219088.3, OCT 16, 1985, 85-2 CPD 414

B-219088,B-219088.3,B-219088.2: Oct 16, 1985

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GAO WILL NOT CONSIDER UNDER OUR BID PROTEST REGULATIONS. THREE PROTESTS AGAINST THE AWARD OF A CONTRACT TO ARRANGE INTERNATIONAL OCEAN FREIGHT TRANSPORTATION BECAUSE THE SERVICES ARE TO BE PERFORMED AT NO COST TO THE GOVERNMENT AND THE SHIPMENT OF CARGO BY OCEAN CARRIERS IS NOT SUBJECT GENERALLY TO PROCUREMENT PROCEDURES. GAO GENERALLY WILL NOT CONSIDER ALLEGATIONS THAT MORE RESTRICTIVE SPECIFICATIONS SHOULD HAVE BEEN EMPLOYED. SINCE THE USE OF RESTRICTIVE SPECIFICATIONS IS INCONSISTENT WITH THE PRINCIPLE OF FREE AND OPEN COMPETITION IN FEDERAL PROCUREMENTS. WHILE RFP STATED THAT OFFERORS WERE TO BE ASSESSED ON THEIR "DEMONSTRATED ABILITY" TO MEET RFP REQUIREMENTS. IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION.

B-219088, B-219088.2, B-219088.3, OCT 16, 1985, 85-2 CPD 414

TRANSPORTATION SERVICES - PROCUREMENT PROCEDURES DIGEST: 1. GAO WILL NOT CONSIDER UNDER OUR BID PROTEST REGULATIONS, 4 C.F.R. PART 21 (1985), THREE PROTESTS AGAINST THE AWARD OF A CONTRACT TO ARRANGE INTERNATIONAL OCEAN FREIGHT TRANSPORTATION BECAUSE THE SERVICES ARE TO BE PERFORMED AT NO COST TO THE GOVERNMENT AND THE SHIPMENT OF CARGO BY OCEAN CARRIERS IS NOT SUBJECT GENERALLY TO PROCUREMENT PROCEDURES. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - SPECIFICATIONS - RESTRICTIVE - AGENCY DETERMINATION TO USE LESS RESTRICTIVE SPECIFICATIONS 1A. GAO GENERALLY WILL NOT CONSIDER ALLEGATIONS THAT MORE RESTRICTIVE SPECIFICATIONS SHOULD HAVE BEEN EMPLOYED, SINCE THE USE OF RESTRICTIVE SPECIFICATIONS IS INCONSISTENT WITH THE PRINCIPLE OF FREE AND OPEN COMPETITION IN FEDERAL PROCUREMENTS. CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - QUALIFICATIONS OF OFFERORS - ADEQUACY OF FINANCES, PERSONNEL, FACILITIES, ETC. 2. WHILE RFP STATED THAT OFFERORS WERE TO BE ASSESSED ON THEIR "DEMONSTRATED ABILITY" TO MEET RFP REQUIREMENTS, OFFERORS MAY SHOW THIS ABILITY NOT ONLY THROUGH HISTORICAL EXPERIENCE, BUT ALSO BY SUBMISSION OF PLANS IN OFFER DEMONSTRATING ABILITY TO MEET REQUIREMENTS AND ALSO THROUGH PROPOSED USE OF SUBCONTRACTORS. CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - EVALUATION - ADMINISTRATIVE DISCRETION 3. THE DETERMINATION OF THE RELATIVE MERITS OF A PROPOSAL, PARTICULARLY WITH RESPECT TO TECHNICAL CONSIDERATIONS, IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION, AND THE EXERCISE OF THAT DISCRETION WILL NOT BE DISTURBED UNLESS IT IS SHOWN TO BE ARBITRARY OR IN VIOLATION OF THE PROCUREMENT LAWS OR REGULATIONS. CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - EVALUATION - PROPRIETY 4. WHERE AGENCY, WHILE GENERALLY LIMITING EVALUATION OF OFFERORS' PROPOSALS TO TECHNICAL PROPOSALS, CONSIDERS ONE OFFEROR'S BUSINESS PROPOSAL WITHOUT EVALUATING ALL OFFERORS' BUSINESS PROPOSALS AND GIVES IT A HIGHER RATING BASED ON INFORMATION IN THAT PROPOSAL, AGENCY HAS ACTED IMPROPERLY BY NOT TREATING ALL OFFERORS EQUALLY. CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - DISCUSSION WITH ALL OFFERORS REQUIREMENT - "MEANINGFUL" DISCUSSIONS 5. DISCUSSIONS ARE NOT MEANINGFUL WHERE TECHNICAL EVALUATION OF INITIAL OFFERS INDICATES THAT SEVERAL OFFERORS' TECHNICAL PROPOSALS, WHICH WERE FOUND IN THE COMPETITIVE RANGE, DID NOT CONTAIN BUSINESS AFFILIATIONS LIST WORTH 10 PERCENT OF TOTAL EVALUATION POINTS, AND AGENCY FAILS TO ADVISE THESE OFFERORS OF THIS OMISSION DURING DISCUSSIONS.

DANIEL F. YOUNG, INC.; UNIVERSAL TRANSCONTINENTAL CORPORATION; AMEX INTERNATIONAL, INC.:

DANIEL F. YOUNG, INC., UNIVERSAL TRANSCONTINENTAL CORPORATION AND AMEX INTERNATIONAL, INC., PROTEST THE AWARD OF A CONTRACT BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) TO THE UNIVERSAL SHIPPING COMPANY, INC., FOR INTERNATIONAL OCEAN SHIP CHARTERING AND FREIGHT FORWARDING SERVICES IN CONNECTION WITH AID'S RESPONSIBILITIES FOR THE ADMINISTRATION AND SHIPMENT OF COMMODITIES UNDER CERTAIN FOOD DONATION PROGRAMS. THIS CONTRACT WAS COMPETITIVELY PROCURED UNDER REQUEST FOR PROPOSALS (RFP) AID/OTR-85-004. THE REQUIRED SERVICES ARE TO BE PERFORMED BY THE CONTRACTOR AT NO COST TO THE GOVERNMENT. INSTEAD, THE SOLICITATION PROVIDES THAT THE SELECTED CONTRACTOR WILL RECEIVE COMMISSIONS DIRECTLY FROM THE OCEAN CARRIERS.

WE DISMISS THE PROTESTS.

THE RFP PROVIDES THAT THE SELECTED CONTRACTOR WILL RECEIVE COMMODITY AVAILABILITY NOTICES AND WILL ARRANGE INTERNATIONAL OCEAN TRANSPORTATION SERVICES BY INITIATING PUBLIC FREIGHT TENDERS OR TELEPHONIC BID REQUESTS WITH ALL COMMON CARRIERS SERVING THE DESIRED LOCATIONS. THE CONTRACTOR IS TO SUBMIT ALL BOOKING CONFIRMATIONS AND CHARTER PARTIES TO AID FOR THE AGENCY'S APPROVAL AND SIGNATURE.

WE HAVE RECENTLY HELD THAT THE SELECTION OF A CONTRACTOR TO PROVIDE TRAVEL MANAGEMENT SERVICES TO GOVERNMENT EMPLOYEES AT NO COST TO THE GOVERNMENT IN CONNECTION WITH AIRLINE TRAVEL IS NOT SUBJECT TO OUR BID PROTEST JURISDICTION. THE BASIS FOR OUR HOLDING IS THAT THE PURCHASE OF TRAVEL BY GOVERNMENT EMPLOYEES IS NOT SUBJECT TO PROCUREMENT PROCEDURES AND THE SELECTION OF A CONTRACTOR TO PROVIDE TRAVEL MANAGEMENT SERVICES TO THE GOVERNMENT AT NO COST IS NO MORE THAN A MANAGEMENT VEHICLE TO FACILITATE THE GOVERNMENT'S TRAVEL PURCHASES. T.V. TRAVEL, INC. ET AL., B-218198 ET AL., JUNE 25, 1985, 85-1 CPD PARA. 720. OUR HOLDING IN T.V. TRAVEL GOVERNS THIS CASE SINCE THE FREIGHT FORWARDING AND CHARTER BROKERING SERVICES PROVIDED BY THE CONTRACTOR TO AID ARE TO BE PERFORMED AT NO COST TO THE GOVERNMENT AND THE SHIPMENT OF CARGO BY OCEAN CARRIERS IS NOT SUBJECT GENERALLY TO PROCUREMENT PROCEDURES. THEREFORE, THIS CASE IS SIMILARLY NOT FOR CONSIDERATION UNDER OUR BID PROTEST REGULATIONS, 4 C.F.R. PART 21 (1985). /1/

THE HONORABLE WALTER B. JONES:

CHAIRMAN, COMMITTEE ON MERCHANT MARINE AND FISHERIES

HOUSE OF REPRESENTATIVES

WE REFER TO YOUR LETTER DATED JUNE 19, 1985, REQUESTING OUR REVIEW OF THE AWARD OF A SHIP CHARTERING AND FREIGHT FORWARDING CONTRACT TO UNIVERSAL SHIPPING COMPANY (UNIVERSAL) BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) UNDER REQUEST FOR PROPOSALS (RFP) NO. AID/OTR-85 004.

OUR REVIEW OF THE RECORD SHOWS CERTAIN DEFICIENCIES IN THE PROCEDURES FOLLOWED WHICH MAY HAVE AFFECTED THE AWARD SELECTION. IN VIEW OF THE DEFICIENCIES NOTED, WE ARE RECOMMENDING TO AID BY LETTER OF TODAY (COPY ENCLOSED) THAT THE DISCUSSIONS BE REOPENED AND THAT THE CONTRACT BE TERMINATED IF THE DISCUSSIONS INDICATE THAT ANOTHER FIRM SHOULD HAVE BEEN SELECTED.

THE RFP PROVIDES THAT THE SELECTED CONTRACTOR WILL RECEIVE COMMODITY AVAILABILITY NOTICES AND WILL ARRANGE INTERNATIONAL OCEAN TRANSPORTATION SERVICES BY INITIATING PUBLIC FREIGHT TENDERS OR TELEPHONIC BID REQUESTS TO SOLICIT OFFERS FROM ALL COMMON CARRIERS SERVING THE DESIRED LOCATIONS. THE CONTRACTOR IS TO SUBMIT ALL BOOKING CONFIRMATIONS AND CHARTER PARTIES TO AID FOR THE AGENCY'S APPROVAL AND SIGNATURE. THE SOLICITATION STATES THAT THE SELECTED CONTRACTOR WILL PERFORM THE SERVICES AT NO COST TO THE GOVERNMENT, BUT INSTEAD WILL RECEIVE COMMISSIONS DIRECTLY FROM THE OCEAN CARRIERS.

INITIALLY, WE NOTE THAT DANIEL F. YOUNG, INC. (YOUNG), UNIVERSAL TRANSCONTINENTAL CORPORATION, AND AMEX INTERNATIONAL, INC. PROTESTED TO OUR OFFICE THE AWARD TO UNIVERSAL UNDER OUR BID PROTEST REGULATIONS. RECENTLY HELD THAT THE SELECTION OF A CONTRACTOR TO PERFORM TRAVEL MANAGEMENT SERVICES FOR THE GOVERNMENT AT NO COST WAS NOT SUBJECT TO OUR BID PROTEST JURISDICTION. SEE T.V. TRAVEL, INC., ET AL., B-218198, ET AL., JUNE 25, 1985, 85-1 CPD PARA. 720. WE ARE PRESENTLY RECONSIDERING THAT DECISION. MEANWHILE, SINCE THE SERVICES HERE ARE OF A SIMILAR NATURE TO THOSE INVOLVED IN THE CITED CASE, BY DECISION OF TODAY WE ARE DISMISSING THE PROTESTS. BECAUSE YOU HAVE ASKED US TO INVESTIGATE THE CONTRACTOR SELECTION IN THIS CASE, HOWEVER, WE HAVE REVIEWED THIS CONTRACT AWARD.

OUR REVIEW OF THIS CONTRACT AWARD CONSIDERED THE FOLLOWING CONCERNS EXPRESSED IN YOUR LETTER. FIRST, YOU QUESTION THE PROPRIETY OF THE AMENDMENT WHICH DELETED THE REQUIREMENT THAT OFFERORS BE LICENSED FREIGHT FORWARDERS AND PERMITTED OFFERORS TO SUBCONTRACT WITH LICENSED FREIGHT FORWARDERS. THE SUGGESTION IS MADE THAT THIS AMENDMENT SOLELY BENEFITED UNIVERSAL SINCE, WITHOUT THIS AMENDMENT, UNIVERSAL, WHICH IS NOT A LICENSED FREIGHT FORWARDER BUT HAS A SUBCONTRACT RELATIONSHIP WITH A FREIGHT FORWARDER, COULD NOT HAVE SUBMITTED AN OFFER. ALSO, YOU ASSERT THAT THE RELATIONSHIP BETWEEN UNIVERSAL AND THE FREIGHT FORWARDER MAY VIOLATE THE REVISED RFP'S PROHIBITION AGAINST JOINT VENTURES, AND THAT THIS RELATIONSHIP, TO THE EXTENT IT MAY INVOLVE SHARING THE FREIGHT FORWARDING FEE, MAY VIOLATE THE SHIPPING ACT, 46 U.S.C. SEC. 8416 (1982).

YOU ALSO QUESTION THE PROPRIETY OF THE EVALUATION AND AWARD. SPECIFICALLY, REFERENCE IS MADE TO THE REQUIREMENT THAT AN OFFEROR SHOW ITS "DEMONSTRATED ABILITY" IN PROGRAM MANAGEMENT AND EQUIPMENT CAPABILITY. YOU ALSO POINT OUT THAT UNIVERSAL IS A RELATIVELY NEW COMPANY AND COULD NOT SHOW "DEMONSTRATED ABILITY" AS REQUIRED BY THE RFP. YOU ALSO BELIEVE THAT THE EVALUATION WAS UNFAIR BECAUSE UNIVERSAL WAS GIVEN CREDIT FOR FACTORS WHICH WERE NOT STATED AS EVALUATION FACTORS UNDER THE RFP AND THAT THE EVALUATION WHICH SUPPORTED AN AWARD TO UNIVERSAL LACKED A REASONABLE BASIS.

AS NOTED ABOVE, WE FOUND DEFICIENCIES WITH HOW THE PROPOSALS WERE EVALUATED AND WITH THE DISCUSSIONS CONDUCTED WHICH MAY HAVE AFFECTED THE SELECTION DECISION. WE FOUND NO DEFICIENCIES WITH REGARD TO THE REMAINING ISSUES YOU RAISE.

INITIALLY, WE NOTE THAT THE AWARDEE'S PROPOSAL WAS MARKED "CONFIDENTIAL," AND THAT ONLY GAO HAS BEEN PROVIDED WITH A COPY OF THE PROPOSAL BY AID. WE ALSO POINT OUT THAT THERE IS APPARENTLY NO WRITTEN RECORD OF THE DISCUSSIONS CONDUCTED WITH OFFERORS AND THAT, WHILE AID HAS PROVIDED US WITH THE EVALUATORS' RAW SCORE SHEETS, THEY DO NOT INDICATE, OTHER THAN IN GENERAL TERMS, THE RATIONALE FOR A GIVEN EVALUATOR'S SCORE FOR A PARTICULAR FACTOR. IN ADDITION, IT APPEARS THAT EACH EVALUATOR MAY HAVE USED DIFFERENT SUBCRITERIA WITH VARYING WEIGHTED VALUES IN SCORING THE PROPOSALS. HOWEVER, THE RECORD CONTAINS THE AID TECHNICAL EVALUATION COMMITTEE'S (TEC) REASONS FOR RECOMMENDING AWARD TO UNIVERSAL.

THE RECORD INDICATES THAT THE RFP WAS ISSUED ON MARCH 12, 1985. AMENDMENT TO THE RFP WAS ISSUED ON APRIL 2, 1985, DELETING A PROVISION WHICH RESTRICTED OFFERS TO THOSE FROM LICENSED FREIGHT FORWARDERS. AS A RESULT OF THE AMENDMENT, OFFERORS THAT COULD SUBCONTRACT WITH LICENSED FREIGHT FORWARDERS WERE PERMITTED TO SUBMIT OFFERS. THE AMENDMENT, HOWEVER, PROHIBITED OFFERS FROM JOINT VENTURES BECAUSE AID CONCLUDED THAT A JOINT VENTURE WAS NOT PERMITTED TO OFFER FREIGHT FORWARDING SERVICES UNDER THE APPLICABLE SHIPPING LAW AND REGULATION.

THE RFP REQUIRED THAT THE TECHNICAL PROPOSALS BE DIVIDED INTO SECTIONS CORRESPONDING TO THE PRIMARY EVALUATION FACTORS. EVALUATION FACTORS WERE ASSIGNED RELATIVE WEIGHTS. UNDER THE TECHNICAL SECTION, THE FACTORS WERE (1) PROGRAM MANAGEMENT, ASSIGNED 25 POINTS, AND DEFINED AS THE OFFEROR'S DEMONSTRATED ABILITY TO MANAGE THE DELIVERY OF THE REQUIRED COMMODITY THROUGH BOOKING, CHARTERING AND FORWARDING SERVICES; (2) EQUIPMENT CAPABILITY, ASSIGNED 15 POINTS, AND STATED AS THE OFFEROR'S DEMONSTRATED ABILITY TO PROVIDE THE REQUIRED STATISTICAL DATA, WORD PROCESSING AND TELEX COMMUNICATION EQUIPMENT, AND (3) PERSONNEL QUALIFICATIONS, ASSIGNED 25 POINTS, AND DEFINED AS THE NUMBER AND QUALIFICATIONS OF THE OFFEROR'S PERSONNEL COMMITTED TO THE PROGRAM. OFFERORS WERE ALSO REQUIRED TO SUBMIT A BUSINESS MANAGEMENT SECTION. THIS SECTION REQUIRED A STATEMENT OF OFFEROR'S QUALIFICATIONS, THAT IS, THE OFFEROR'S DEMONSTRATION OF ITS BACKGROUND IN OCEAN TRANSPORTATION BOOKING/CHARTERING/FREIGHT FORWARDING SERVICES, WHICH WAS WORTH 25 POINTS, AND A LIST OF BUSINESS AFFILIATIONS VALUED AT 10 POINTS AND WHICH REQUIRED DOCUMENTATION OF MEMBERSHIP IN PROFESSIONAL INDUSTRY ORGANIZATIONS. THE POINTS ASSIGNED THE FIVE EVALUATION FACTORS TOTALLED 100 POINTS. THE RFP STATED THAT AWARD WAS TO BE MADE TO THE FIRM OFFERING THE MOST ADVANTAGEOUS PROPOSAL TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. HOWEVER, PRICE WAS NOT A FACTOR FOR AWARD, SINCE THE SERVICES ARE TO BE PERFORMED AT NO DIRECT COST TO THE GOVERNMENT. THUS, AWARD WAS TO BE MADE TO THE FIRM DETERMINED BY AID TO OFFER THE MOST ADVANTAGEOUS PROPOSAL.

THIRTY-FIVE FIRMS SUBMITTED INITIAL OFFERS. AN AID TEC EVALUATED THESE OFFERS AND ESTABLISHED A COMPETITIVE RANGE OF SIX FIRMS, THAT IS, THE TEC DETERMINED THAT SIX FIRMS HAD A REASONABLE CHANCE FOR AWARD. BASED ON INITIAL PROPOSALS, YOUNG HAD THE HIGHEST SCORED PROPOSAL AND UNIVERSAL, THE EVENTUAL AWARDEE, WAS RANKED SECOND. THE CONTRACTING OFFICER DIRECTED THE TEC TO CONDUCT SITE VISITS AND HOLD DISCUSSIONS WITH THESE SIX OFFERORS. AFTER SITE VISITS AND DISCUSSIONS WERE HELD, THE SIX OFFERORS WERE REEVALUATED, AND UNIVERSAL RECEIVED THE HIGHEST SCORE OF 79 POINTS AND YOUNG WAS RANKED SECOND WITH 75 POINTS. THE TEC RECOGNIZED THE RELATIVE CLOSENESS OF THE SCORES, BUT CONCLUDED THAT UNIVERSAL WAS THE BEST QUALIFIED TO PERFORM THE WORK. IN THIS CONNECTION, THE TEC SUBMITTED TO THE CONTRACTING OFFICER A NARRATIVE STATEMENT OF THE STRENGTHS AND DEFICIENCIES OF THE PROPOSALS. THE TEC FOUND THAT UNIVERSAL HAD A WELL- BALANCED, COMPACT ORGANIZATION WITH AN EXTREMELY STRONG PROJECT MANAGER AND EXCEPTIONAL AUTOMATIC DATA PROCESSING CAPABILITY. THE TEC ALSO FOUND THAT, UNDER UNIVERSAL'S PROPOSAL, THE BASIC FUNCTIONS TO BE PERFORMED WERE "WELL THOUGHT OUT AND ASSIGNED TO CAPABLE PERSONNEL," THAT UNIVERSAL'S ORGANIZATION OFFERED GREAT POTENTIAL FOR INNOVATIVE APPROACHES TO THE PROGRAM AND THAT UNIVERSAL HAD A VALUABLE "OVERSEAS INTELLIGENCE NETWORK." ON THE OTHER HAND, THE TEC STATED THAT, WHILE YOUNG HAD A STRONG ORGANIZATION WITH A PROVEN TRACK RECORD, YOUNG'S CHARTERING SUBCONTRACTOR OFFERED LIMITED RESOURCES AND, THUS, IN THE TEC'S VIEW, YOUNG GENERALLY HAD QUESTIONABLE CAPABILITY TO DEVOTE SUFFICIENT RESOURCES TO PERFORM THE HIGH VOLUME LEVEL OF CHARTERING ACTIVITY REQUIRED UNDER THE PROGRAM. ALSO, THE TEC REFERRED TO THE SPLIT RESPONSIBILITY BETWEEN YOUNG'S NEW YORK LOCATION AND PROGRAM OPERATIONS IN WASHINGTON AND NOTED THAT COORDINATION AND RESPONSIVENESS COULD PRESENT A PROBLEM. BASED ON THE TEC'S FINDINGS, THE CONTRACTING OFFICER CONCLUDED THAT AWARD TO UNIVERSAL WAS MOST ADVANTAGEOUS TO THE GOVERNMENT.

WITH REGARD TO THE AMENDMENT OF THE RFP, WHICH PERMITTED OFFERS FROM EITHER LICENSED FREIGHT FORWARDERS OR THOSE OFFERORS ASSOCIATED WITH A LICENSED FREIGHT FORWARDER THROUGH A SUBCONTRACT RELATIONSHIP, THE RECORD BEFORE US DOES NOT INDICATE WHAT FACTORS LED TO THE ISSUANCE OF THIS AMENDMENT. WE NOTE, HOWEVER, THAT AN AMENDMENT SUCH AS THIS, WHICH TENDS TO BROADEN COMPETITION, WOULD RARELY BE QUESTIONED BY OUR OFFICE SINCE THE USE OF RESTRICTIVE SPECIFICATIONS IS INCONSISTENT WITH THE PRINCIPLE OF FREE AND OPEN COMPETITION IN FEDERAL PROCUREMENTS. JOSEPH POLLACK CORPORATION, B-209899, DEC. 23, 1982, 82-2 CPD PARA. 573.

YOU ALSO EXPRESS CONCERN THAT UNIVERSAL AND WALFORD TRANSWORLD (WALFORD), UNIVERSAL'S DESIGNATED FREIGHT FORWARDER, MAY NOT HAVE FORMED A SUBCONTRACT RELATIONSHIP BUT, INSTEAD, FORMED A JOINT VENTURE, WHICH IS EXPRESSLY PROHIBITED BY THE RFP. IT IS ARGUED THAT SINCE UNDER THE SHIPPING ACT AND ITS IMPLEMENTING REGULATIONS, NO LICENSED OCEAN FREIGHT FORWARDER MAY ENTER INTO AN AGREEMENT WITH AN UNLICENSED PARTY, WHEREBY ANY RESULTING FEE, COMPENSATION OR BENEFIT INURES TO THE BENEFIT OF THE UNLICENSED PARTY (SEE 46 C.F.R. SEC. 510.31(E) (1984)), WALFORD IS PRECLUDED FROM SHARING ITS FREIGHT FORWARDING FEES WITH UNIVERSAL. THUS, IT IS ARGUED, WITHOUT EXPLANATION, THAT THE ARRANGEMENT BETWEEN UNIVERSAL AND WALFORD MUST BE A JOINT VENTURE AGREEMENT IN WHICH BOTH PARTIES ENGAGE IN AND CARRY OUT A BUSINESS FOR JOINT PROFIT, WHICH IS PROHIBITED BY THE RFP.

THERE IS NO SHOWING HERE THAT UNIVERSAL AND WALFORD FORMED A PROHIBITED JOINT VENTURE. FIRST, UNIVERSAL'S PROPOSAL STATES THAT WALFORD IS UNIVERSAL'S SUBCONTRACTOR. SECOND, THERE IS NO LAW OR REGULATION THAT WE ARE AWARE OF WHICH WOULD PRECLUDE UNIVERSAL FROM SHARING PART OF ITS CHARTER BROKERING FEES WITH WALFORD UNDER A SUBCONTRACT ARRANGEMENT. THE REGULATION ONLY PREVENTS THE SHARING OF THE FREIGHT FORWARDING FEES, NOT THE CHARTER BROKERING FEES. FINALLY, AND POSSIBLY MOST SIGNIFICANTLY, IS THE FACT THAT NOTHING IN THE RECORD PROVIDES A BASIS TO CONCLUDE THAT WALFORD CONTRACTED TO ACCEPT THE POTENTIAL LIABILITIES AND RESPONSIBILITIES UNDER UNIVERSAL'S CONTRACT WITH THE GOVERNMENT, WHICH WOULD NORMALLY BE AN INDICATION OF A JOINT VENTURE. SEE BLACK'S LAW DICTIONARY (4TH ED. 1968). CONCERN WAS EXPRESSED THAT UNIVERSAL AND ITS FREIGHT FORWARDER SUBCONTRACTOR, WALFORD, WERE FOREIGN OWNED CORPORATIONS. UNIVERSAL'S PROPOSAL, HOWEVER, STATES THAT UNIVERSAL IS A CLOSELY HELD SMALL BUSINESS WHICH IS WHOLLY OWNED, CONTROLLED, AND OPERATED BY UNITED STATES CITIZENS. UNIVERSAL STATES THAT WALFORD IS A DELAWARE CORPORATION, THE MAJORITY OF WHOSE STOCK IS AMERICAN OWNED. THUS, ON THIS RECORD, THERE IS NO BASIS TO QUESTION AID'S FINDING THAT UNIVERSAL AND WALFORD ARE AMERICAN COMPANIES.

WITH REGARD TO THE ALLEGATIONS THAT AID'S TECHNICAL EVALUATION WAS UNREASONABLE, WE INITIALLY NOTE THAT IT IS NOT THE FUNCTION OF OUR OFFICE TO EVALUATE TECHNICAL PROPOSALS OR RESOLVE DISPUTES OVER THE SCORING OF TECHNICAL PROPOSALS. GENERAL MANAGEMENT SYSTEMS, INC., B-214246, SEPT. 25, 1984, 84-2 CPD PARA. 351. CONSEQUENTLY, THE DETERMINATION OF THE RELATIVE MERITS OF A PROPOSAL, PARTICULARLY WITH RESPECT TO TECHNICAL CONSIDERATIONS, IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION, AND THE EXERCISE OF THAT DISCRETION WILL NOT BE DISTURBED UNLESS IT IS SHOWN TO BE ARBITRARY OR IN VIOLATION OF THE PROCUREMENT LAWS OR REGULATIONS. ALTURDYNE, B-214103.2, OCT. 2, 1984, 84-2 CPD PARA. 379.

YOU POINT OUT THAT ACCORDING TO THE RFP, UNDER THE EVALUATION FACTORS OF "PROGRAM MANAGEMENT" AND "EQUIPMENT CAPABILITY," FOR EXAMPLE, THE OFFERORS ARE TO BE ASSESSED ON THEIR "DEMONSTRATED ABILITY" TO MANAGE DELIVERY OF THE REQUIRED COMMODITIES THROUGH BOOKING/CHARTERING AND FORWARDING SERVICES AND TO PROVIDE REQUIRED STATISTICAL DATA AND WORD PROCESSING. YOU POINT OUT THAT THE AWARDEE, UNIVERSAL, IS A RELATIVELY NEW FIRM AND HAS NO PRIOR EXPERIENCE WITH FREIGHT FORWARDING AND DATA ANALYSIS. HOWEVER, WE DO NOT BELIEVE THAT THE RFP REQUIRES THE OFFEROR ITSELF TO HAVE SUCH HISTORICAL EXPERIENCE. THUS, UNDER "PROGRAM MANAGEMENT," THE RFP STATES THAT POINTS WILL BE AWARDED BY ASSESSING THE ELEMENTS CONTAINED IN THE OFFEROR'S PROGRAM MANAGEMENT PLAN. THREE OF THE FOUR LISTED SUBCRITERIA UNDER PROGRAM MANAGEMENT STATE THAT THE OFFEROR'S STAFFING PLAN, CARGO CONTROL PLAN AND IMPLEMENTATION PLAN WILL BE EVALUATED AND ASSESSED. THE SOLICITATION IS QUITE CLEAR THAT "DEMONSTRATED ABILITY" HERE REFERS NOT TO HISTORICAL EXPERIENCE, BUT INSTEAD TO THE PLANS PROPOSED FOR MANAGING THE CONTRACT. UNDER THESE CIRCUMSTANCES, AID REASONABLY COULD DETERMINE THAT UNIVERSAL'S PROPOSED PLANS SHOWED THAT UNIVERSAL COULD BEST PERFORM THE WORK.

SIMILARLY, UNDER THE CRITERION OF "EQUIPMENT CAPABILITY," THE RFP STATES THAT POINTS WILL BE AWARDED ON THE BASIS OF THE OFFEROR'S "DEMONSTRATED ABILITY" TO PROVIDE THE REQUIRED STATISTICAL DATA, WORD PROCESSING, DOMESTIC AND INTERNATIONAL TELEX COMMUNICATION EQUIPMENT AND OTHER RELATED SERVICES AND EQUIPMENT. CONCERN WAS RAISED OVER THE FACT THAT UNIVERSAL PROPOSED TO SUBCONTRACT MUCH OF ITS DATA AND WORD PROCESSING REQUIREMENTS TO CACI, INC., AND THAT WHILE CACI MAY HAVE THE REQUISITE ABILITY, UNIVERSAL ITSELF MAY NOT. WHERE, AS HERE, HOWEVER, AN OFFEROR PROPOSES TO USE A SUBCONTRACTOR TO PERFORM SPECIFIED WORK, USE OF A SUBCONTRACTOR IS NOT SPECIFICALLY PROSCRIBED BY THE SOLICITATION, AND EVALUATORS HAVE NO REASON TO DOUBT THE SUBCONTRACTOR'S AVAILABILITY, THE ONLY APPROPRIATE CONCERN IS THE MANNER IN WHICH THE SUBCONTRACTOR WILL PERFORM UNDER THE PROPOSED ARRANGEMENT. NATIONAL BIOMEDICAL RESEARCH FOUNDATION, B-208214, SEPT. 23, 1983, 83-2 CPD PARA. 363. AID FOUND THAT UNIVERSAL'S PROPOSAL TO USE CACI REFLECTED STRONG EQUIPMENT CAPABILITY AND, THEREFORE, UNIVERSAL RECEIVED A HIGH SCORE UNDER THIS EVALUATION CRITERION. AGAIN, AS STATED ABOVE, UNDER THE CLAUSE IN THIS EVALUATION CRITERION, IN OUR VIEW, "DEMONSTRATED ABILITY" REFERS TO POTENTIAL ABILITY DEMONSTRATED IN THE PROPOSAL, NOT TO HISTORICAL EXPERIENCE, AND WE FIND NO IMPROPRIETY IN AID'S ACCEPTANCE OF UNIVERSAL'S REPRESENTATIONS AS TO EQUIPMENT CAPABILITY.

HOWEVER, IN REVIEWING THE EVALUATION DOCUMENTS SUBMITTED TO US BY AID, WE FIND PROBLEMS WITH HOW THE PROPOSALS WERE EVALUATED AND WITH THE DISCUSSIONS CONDUCTED, WHICH MAY HAVE AFFECTED THE SELECTION DECISION. NEGOTIATION MEMORANDUM TO AID'S CONTRACT FILE, DATED JUNE 4, 1985, INDICATES THAT ONLY THE TECHNICAL PROPOSALS (NOT THE BUSINESS MANAGEMENT PROPOSALS) WERE PROVIDED TO THE TEC FOR SCORING. ALTHOUGH AID MAY HAVE INTENDED THAT ALL THE INFORMATION TO BE SCORED WAS TO BE PRESENTED IN THE TECHNICAL PROPOSALS, THE RFP WAS NOT CLEAR REGARDING THE SUBMISSION OF THE BUSINESS AFFILIATIONS INFORMATION. YOUNG, UNIVERSAL, AND OTHERS PLACED THEIR BUSINESS AFFILIATIONS LIST (AND OTHER BUSINESS MANAGEMENT INFORMATION FOR EVALUATION) IN A SEPARATE BUSINESS MANAGEMENT PROPOSAL.

THE RECORD INDICATES THAT IN MOST CASES OFFERORS ONLY RECEIVED POINTS FOR INFORMATION PROVIDED IN THEIR TECHNICAL PROPOSALS. FOR EXAMPLE, ALTHOUGH AN EXTENSIVE BUSINESS AFFILIATIONS LIST WAS CONTAINED IN YOUNG'S BUSINESS MANAGEMENT PROPOSAL, YOUNG, THE SECOND HIGHEST SCORED OFFEROR RECEIVED 0 OUT OF 10 POSSIBLE POINTS FOR THIS EVALUATION FACTOR. HOWEVER, THE AWARDEE, WHICH PROVIDED ONLY IN ITS BUSINESS MANAGEMENT PROPOSAL INFORMATION WHICH GENERALLY WAS SUBMITTED BY OFFERORS IN THEIR TECHNICAL PROPOSALS, SPECIFICALLY ITS "QUALIFICATIONS" AND ANSWERS TO QUESTIONS REQUIRED BY AID IN THE RFP, APPEARS TO HAVE RECEIVED POINTS FOR THESE ITEMS. THUS, APPARENTLY YOUNG'S BUSINESS MANAGEMENT PROPOSAL WAS NOT CONSIDERED BY THE TEC, BUT TO SOME EXTENT, UNIVERSAL'S MANAGEMENT PROPOSAL WAS EVALUATED BY THE TEC. TO THE EXTENT UNIVERSAL'S BUSINESS MANAGEMENT PROPOSAL WAS EVALUATED, BUT OTHER OFFERORS' MANAGEMENT PROPOSALS WERE NOT, THE RECORD REFLECTS UNEQUAL TREATMENT OF OFFERORS' PROPOSALS. SEE NATIONAL CAPITAL MEDICAL FOUNDATION, INC., B-215303.5, JUNE 4, 1985, 85-1 CPD PARA. 637.

MOREOVER, SINCE BUSINESS AFFILIATIONS WAS A MAJOR EVALUATION CRITERION WORTH UP TO 10 POINTS, AID, AFTER DETERMINING THE COMPETITIVE RANGE, SHOULD HAVE DISCUSSED THE FAILURE TO PROVIDE THE AFFILIATIONS LIST WITH THOSE OFFERORS WHICH APPEARED TO HAVE NO BUSINESS AFFILIATIONS. HAD AID DONE SO, IT WOULD HAVE BEEN MADE AWARE OF THE FACT THAT MANY OFFERORS INCLUDED THEIR BUSINESS AFFILIATIONS LIST WITH THEIR BUSINESS MANAGEMENT PROPOSALS WHICH WERE IN AID'S POSSESSION. THIS INDICATES TO US AN INCOMPLETE EVALUATION OF THE OFFERS.

FINALLY, IT IS ALLEGED THAT UNIVERSAL IMPROPERLY RECEIVED POINTS FOR FACTORS NOT STATED AS RFP REQUIREMENTS, SPECIFICALLY, UNIVERSAL'S ABILITY BECAUSE OF ITS RELATIONSHIP WITH WALFORD TO PROVIDE WORLDWIDE BRANCH OFFICE COVERAGE AND "A VALUABLE OVERSEAS INTELLIGENCE NETWORK," AND THAT OTHER OFFERORS MAY HAVE LOST POINTS FOR THEIR FAILURE TO DEMONSTRATE A COMPARABLE "OVERSEAS INTELLIGENCE NETWORK." THE TEC NARRATIVE SUPPORTS THIS ALLEGATION. HOWEVER, THE SOLICITATION DID NOT STATE THESE CRITERIA AS FACTORS FOR EVALUATION, AND AID HAS NOT SHOWN HOW THESE CONSIDERATIONS ARE RELATED TO STATED EVALUATION CRITERIA. GIVEN THAT THESE TWO FACTORS APPEAR FROM AID'S VIEW TO HAVE BEEN IMPORTANT IN AWARDING TO UNIVERSAL, ALL OFFERORS SHOULD HAVE BEEN PROVIDED AN OPPORTUNITY TO ADDRESS THESE FACTORS.

AS NOTED PREVIOUSLY, AWARD HAS BEEN MADE TO UNIVERSAL AND THAT FIRM CURRENTLY IS PERFORMING THE CONTRACT. HOWEVER, IN OUR VIEW, IT WOULD BE APPROPRIATE FOR AID TO REEVALUATE OFFERS AFTER REOPENING DISCUSSIONS WITH OFFERORS IN THE COMPETITIVE RANGE TO PROVIDE THEM AN OPPORTUNITY TO HAVE THEIR BUSINESS AFFILIATIONS LISTS CONSIDERED AND TO ADDRESS THE OVERSEAS INTELLIGENCE NETWORK FACTOR AND WORLDWIDE BRANCH OFFICE COVERAGE FACTOR. IF AN OFFER OTHER THAN UNIVERSAL'S IS DETERMINED TO BE MOST ADVANTAGEOUS TO THE GOVERNMENT, WE RECOMMEND THAT AID TERMINATE THE EXISTING CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT AND AWARD TO THE OTHER FIRM.

AS AGREED TO BY YOUR OFFICE, WE ARE FURNISHING A COPY OF THIS LETTER TO AID AND ALL INTERESTED PARTIES.

/1/ A REQUEST FOR RECONSIDERATION OF T.V. TRAVEL, INC. ET AL., B-218198 ET AL., JUNE 25, 1985, 85-1 CPD PARA. 720, IS CURRENTLY PENDING WITH OUR OFFICE.