B-169535, JUL 2, 1970, 50 COMP GEN 1

B-169535, JUL 2, 1970, 50 COMP GEN 1

CONTRACTS - NEGOTIATION - CUTOFF DATE - SAME FOR ALL PROPOSERS THE FAILURE TO ESTABLISH A COMMON CUTOFF DATE FOR THE NEGOTIATION OF A COST-PLUS-AWARD-FEE CONTRACT FOR THE FINAL HARDWARE DESIGN AND DEVELOPMENT OF THE APPLICATIONS TECHNOLOGY SATELLITES (ATS) PROJECT WITH THE TWO OFFERORS WHO HAD BEEN AWARDED PARALLEL CONTRACTS FOR THE PRELIMINARY ANALYSIS AND FEASIBILITY STUDIES OF THE ATS, AND THE PREMATURE DISTRIBUTION FOR EVALUATION OF THE FIRST FINAL PROPOSAL RECEIVED RESULTED IN DEFECTIVE SELECTIVE PROCEDURES PREJUDICIAL TO THE CONTRACTOR DENIED THE OPPORTUNITY TO COMPETE ON AN EQUAL TIME BASIS AND POSSIBLY OVERCOME ITS PRICE DISADVANTAGE, A SITUATION COMPOUNDED BY THE PREMATURE DISTRIBUTION OF THE PROPOSAL FOR COST EVALUATION. THEREFORE, THE PROPOSED AWARD TO THE OFFEROR ADVANTAGED BY THE LONGER NEGOTIATION PERIOD SHOULD BE RECONSIDERED. CONTRACTS - NEGOTIATION - COMPETITION - DISCUSSION WITH ALL OFFERORS REQUIREMENT THE FACT THAT UNDER 10 U.S.C. 2304(G) WRITTEN OR ORAL DISCUSSION SHOULD BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHOSE PROPOSALS ARE WITHIN A COMPETITIVE RANGE THAT ENCOMPASSES BOTH PRICE AND TECHNICAL CONSIDERATIONS DOES NOT PERMIT THE USE OF ANY PROCEDURE THAT WOULD DISCLOSE INFORMATION DURING THE NEGOTIATION PERIOD TO THE UNFAIR COMPETITIVE ADVANTAGE OF ANY PROPOSER.

TO THE ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, JULY 2, 1970:

WE REFER TO YOUR LETTER OF APRIL 9, 1970, REQUESTING THAT WE CONDUCT A REVIEW OF THE EVENTS LEADING TO THE SELECTION OF THE GENERAL ELECTRIC COMPANY (GE) RATHER THAN FAIRCHILD HILLER CORPORATION (FAIRCHILD) TO BUILD TWO (F&G) APPLICATIONS TECHNOLOGY SATELLITES (ATS). YOU ASK US TO "ESTABLISH WHETHER THERE WERE ANY IMPROPRIETIES AND WHETHER OR NOT ESTABLISHED PROCEDURES WERE PROPERLY FOLLOWED IN THIS SELECTION." ADDITION TO YOUR LETTER OF APRIL 9, WE HAVE ALSO RECEIVED A PROTEST FROM FAIRCHILD HILLER AGAINST THE PROPOSED AWARD TO GE.

APPLICATIONS TECHNOLOGY SATELLITES (F&G) IS A NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) PROGRAM FOR DESIGN, DEVELOPMENT, PRODUCTION, LAUNCH AND SUPPORT OF TWO SYNCHRONOUS COMMUNICATIONS SATELLITES NOW SCHEDULED TO BE LAUNCHED IN EARLY 1973 AND 1975, RESPECTIVELY. EACH SATELLITE WILL HAVE A MINIMUM USEFUL LIFE OF 2 YEARS AND WILL ACT AS A PRECISELY ORIENTED TEST BED FOR THE PERFORMANCE OF NUMEROUS COMMUNICATION EXPERIMENTS. A PRINCIPAL FEATURE OF THE SPACECRAFT IS A 30-FOOT DIAMETER PARABOLIC ANTENNA THAT IS DEPLOYED AFTER THE SPACECRAFT IS PLACED IN ORBIT. THE ANTENNA IS TO BE CAPABLE OF PROVIDING A GOOD QUALITY TV SIGNAL TO A SMALL, INEXPENSIVE GROUND RECEIVER. IN ADDITION TO COMMUNICATIONS TESTS, THE SPACECRAFT WILL PERFORM OTHER EXPERIMENTS OF SCIENTIFIC AND TECHNOLOGICAL SIGNIFICANCE.

THE ATS (F&G) PROGRAM HAS BEEN CONDUCTED BY NASA UNDER THE MANAGEMENT PROCEDURES NOW OUTLINED IN NHB 7121.2 DATED AUGUST 1968 ENTITLED "PHASED PROJECT PLANNING GUIDELINES" WHICH ARE USED FOR THE PROCUREMENT OF MAJOR RESEARCH AND DEVELOPMENT PROJECTS.

THE PROGRAM STARTED WITH A PHASE A COMPETITION WHICH IN MAY 1966 RESULTED IN THE AWARD OF THREE PARALLEL CONTRACTS FOR PRELIMINARY ANALYSIS AND FEASIBILITY STUDIES FOR ATS (F&G). THE THREE CONTRACTORS SELECTED WERE FAIRCHILD, GE, AND LOCKHEED. DURING PHASE A THE THREE CONTRACTORS DEVELOPED DESIGN PARAMETERS AND OTHER INFORMATION. NASA ALSO CONDUCTED AN IN-HOUSE STUDY (BY A GODDARD SPACE FLIGHT CENTER TEAM) ON ALL THE PROBLEM AREAS RELATED TO THE ATS (F&G) PROGRAM. AT THE CONCLUSION OF PHASE A THE GODDARD TEAM ASSESSED THE VARIOUS STUDIES AND ARRIVED AT A "PREFERRED APPROACH FOR ATS F&G" DATED NOVEMBER 20, 1967, WHICH WAS DISTRIBUTED TO THE PHASE A CONTRACTORS.

PHASE B/C SOLICITATION DATED FEBRUARY 8, 1968, WAS DISTRIBUTED TO THE THREE CONTRACTORS WITH COPIES OF THE FINAL REPORTS ISSUED BY EACH OF THE THREE CONTRACTORS ON PHASE A. BIDDERS WERE INSTRUCTED THAT COMBINED PHASE B AND C WOULD INCLUDE SYSTEM DESIGN AND WOULD BE ACCOMPLISHED UNDER TWO CONTRACTS, AND THAT PHASE D INVOLVING FINAL HARDWARE DESIGN AND DEVELOPMENT WOULD BE PERFORMED BY A SINGLE CONTRACTOR, "ANTICIPATED TO BE ONE OF THE CONTRACTORS SELECTED FOR THIS PROCUREMENT (PHASE B/C); HOWEVER, NASA RESERVES THE RIGHT TO BRING NEW CONTRACTORS INTO THE PROJECT AT ANY TIME IT IS CONSIDERED TO BE IN THE GOVERNMENT'S BEST INTEREST." THE SOLICITATION FURTHER STATED THAT THE PHASE D WORK STATEMENT WOULD BE "DEVELOPED LARGELY UPON THIS PHASE B AND C EFFORT, THEREFORE, PERTINENT TECHNICAL DATA DEVELOPED IN PHASE B AND C WILL BE MADE AVAILABLE TO THE PHASE B AND C INCUMBENT CONTRACTORS FOR CONSIDERATION IN PREPARATION OF THEIR FINAL PHASE D PROPOSALS." FINALLY THE SOLICITATION STATED AS FOLLOWS:

THE DATA DEVELOPED UNDER THE PROPOSED CONTRACTS WILL BE THE PROPERTY OF THE GOVERNMENT, EXCEPT WHERE PROPRIETARY RIGHTS ARE AGREED TO IN ADVANCE, AND MAY BE RELEASED TO OTHER CONTRACTORS FOR FOLLOW-ON EFFORT, AND MAY ALSO BE PUBLISHED FOR GENERAL DISTRIBUTION.

IN SEPTEMBER 1968, PHASE B/C CONTRACTS WERE AWARDED TO BOTH GE AND FAIRCHILD (LOCKHEED DID NOT RECEIVE A PHASE B/C CONTRACT). PHASE B/C CALLED FOR, AMONG OTHER ITEMS, THE DELIVERY OF PHASE D PROPOSALS. EACH PHASE B/C CONTRACT CONSISTED OF TWO PARTS. PART I WAS A FIRM-FIXED PRICE CONTRACT CONSISTING OF THE STUDY EFFORT, WHILE PART II WAS ON A COST-PLUS- FIXED-FEE BASIS AND WAS TO COVER THE HOLDING PERIOD BETWEEN PHASES B/C AND D.

PHASE D PROPOSALS WERE SUBMITTED BY FAIRCHILD AND GE IN SEPTEMBER 1969, AS SCHEDULED. PRICE PROPOSALS WERE BASED ON ESTIMATED COSTS SINCE A COST- PLUS-AWARD-FEE CONTRACT WAS ANTICIPATED. OCTOBER THROUGH DECEMBER OF 1969 WAS TAKEN UP WITH PROPOSAL DISCUSSIONS, FACT FINDINGS AND SO ON. BY THE END OF DECEMBER 1969 BOTH COMPETITORS SUBMITTED REVISED PROPOSALS BASED ON THE PRIOR DISCUSSIONS WITH GODDARD.

DURING THIS PERIOD THE NASA SOURCE EVALUATION BOARD, CONSISTING OF GODDARD AND OTHER NASA PERSONNEL SPECIFICALLY CONSTITUTED FOR EVALUATING THE PROPOSALS, HAD ALREADY MADE PRELIMINARY TECHNICAL RATINGS OF THE PROPOSALS. ON THE INITIAL SCORING, FAIRCHILD WAS RATED AT 699 AND GE AT 664. AFTER PRELIMINARY ORALS WERE CONDUCTED, THE COMPETITORS WERE THEN RATED AS FOLLOWS: FAIRCHILD AT 683 AND GE AT 670. FINAL RATINGS WERE GIVEN AFTER GODDARD CONDUCTED FACT FINDING FOR ABOUT 10 DAYS WITH EACH COMPANY. THESE FINAL SCORES WERE 687 FOR GE, AND 686 FOR FAIRCHILD.

ON FEBRUARY 4, 1970, A SOURCE EVALUATION BOARD REPORT WAS SUBMITTED TO YOU AS THE SOURCE SELECTION OFFICIAL FOR THIS PROCUREMENT. THIS DETAILED REPORT STATED IN SUMMARY THAT:

IT IS THE OPINION OF THE SOURCE EVALUATION BOARD THAT FAIRCHILD HILLER AND GENERAL ELECTRIC PROPOSALS ARE TECHNICALLY EQUAL. BASED ON THE GSFC (GODDARD) TECHNICAL EVALUATION OF MANHOURS AND MATERIALS, THE COST DIFFERENCE IS MINOR. BOTH PROPOSERS CAN EXECUTE PHASE D IN AN ACCEPTABLE MANNER.

IN THE MEANTIME, A FUNDING PROBLEM AROSE WITHIN NASA NECESSITATING A DELAY OF ABOUT 1 YEAR IN THE LAUNCH SCHEDULE OF THE SATELLITES. IN A MEMORANDUM DATED FEBRUARY 5, 1970, YOUR EXECUTIVE OFFICER REQUESTED THAT THE TWO COMPETITORS BE ADVISED OF THE FUNDING PROBLEM AND THE NEED FOR REVISED PROPOSALS TO "MAXIMIZE ANY TECHNICAL, QUALITY, INTERFACE, OR DELIVERY SCHEDULE ADVANTAGES, AS WELL AS ECONOMIES THAT CAN BE EFFECTED AS A RESULT OF THE CHANGES IN FUNDING AND LAUNCH SCHEDULE. ORAL AND WRITTEN DISCUSSIONS WILL BE CONDUCTED SO THAT ALL ESSENTIAL TERMS AND CONDITIONS *** HAVE BEEN AGREED TO." THIS MEMORANDUM WAS NOT RECEIVED BY GODDARD UNTIL AFTER THE FEBRUARY 12, 1970, LETTER MENTIONED BELOW HAD BEEN SENT TO BOTH CONTRACTORS, ALTHOUGH GODDARD WAS IMMEDIATELY ADVISED OF THE CHANGED SITUATION.

A JOINT MEETING BETWEEN REPRESENTATIVES OF GODDARD, GE, AND FAIRCHILD WAS HELD ON FEBRUARY 6, 1970, AT WHICH TIME THE TWO COMPETITORS WERE GIVEN INSTRUCTIONS FOR SUBMITTING THEIR REVISED PROPOSALS. THIS MEETING WAS CONFIRMED BY A LETTER DATED FEBRUARY 12, 1970, FROM GODDARD TO BOTH CONTRACTORS WHICH, ACCORDING TO GODDARD OFFICIALS, CONTAINED THE INFORMATION GIVEN OUT AT THE FEBRUARY 6 MEETING.

THE FEBRUARY 12TH LETTER REQUESTED A REVISED PROPOSAL BASED ON CERTAIN FUNDING LIMITATIONS AND ON CERTAIN LAUNCH READINESS DATES FOR THE F&G SATELLITES. BIDDERS WERE ALSO INVITED TO SUBMIT AN ALTERNATE PROPOSAL BASED ON THE SAME FUNDING LIMITATIONS BUT ALTERNATE LAUNCH DATES. THE LETTER STATED THAT "IT IS ANTICIPATED THAT THE TECHNICAL ASPECTS OF THE PRESENT PROPOSAL WILL NOT BE ALTERED EXCEPT AS APPROPRIATE TO REFLECT SCHEDULE REVISIONS." THE LETTER CONCLUDED AS FOLLOWS:

IT IS ANTICIPATED THAT THE TIME FROM SINGLE CONTRACTOR SELECTION TO CONTRACT DEFINITIZATION WILL BE APPROXIMATELY FOUR MONTHS.

THE REVISED PROPOSALS ARE REQUIRED TO BE DELIVERED TO THE GSFC BY FEBRUARY 27, 1970, IN ORDER TO MAINTAIN THE PLANNED SCHEDULE FOR AWARD OF A CONTRACT. THE CONTRACTOR SHOULD ADVISE THE CONTRACTING OFFICER BY FEBRUARY 16, 1970, OF HIS ABILITY TO SUBMIT THE REVISED COST PROPOSAL AS STATED ABOVE.

ON FEBRUARY 16, 1970, FAIRCHILD ADVISED GODDARD, "THAT EVERY EFFORT WILL BE EXTENDED TO EFFECT SUBMITTAL OF SUBJECT REVISED COST PROPOSALS BY 27 FEBRUARY 1970." GE REPLIED BY TELEGRAM ON FEBRUARY 16 THAT "THE EARLIEST DATE THAT WE CAN GUARANTEE SUBMITTAL OF RESPONSIVE PROPOSALS IS MARCH 6, 1970. HOWEVER, WE WILL STRIVE TO BETTER THIS DATE."

ON FEBRUARY 18, THE GE GENERAL MANAGER WAS AT GODDARD, AND HE STATED THAT THE ADDITIONAL TIME (BEYOND FEBRUARY 27) WAS REQUIRED "DUE TO TIME REQUIRED BY SUBCONTRACTORS AND THE FACT THAT GE WAS ALSO SUBMITTING A PROPOSAL FOR (ANOTHER PROCUREMENT) WHICH WAS BEING PREPARED AT THE SAME TIME." HE INDICATED THAT NONETHELESS EVERY EFFORT WOULD BE MADE TO HAVE THE PROPOSAL IN BY MARCH 4, 1970.

THEN, ON FEBRUARY 25, 1970, A FAIRCHILD REPRESENTATIVE CALLED THE GODDARD CONTRACTING OFFICER (MR. KRENNING) TO ADVISE HIM OF FAIRCHILD'S INTENTION TO SUBMIT A TELEGRAPHIC REQUEST FOR AN EXTENSION FROM FRIDAY, FEBRUARY 27, 1970, TO MONDAY, MARCH 2, 1970, FOR THE SUBMISSION OF FAIRCHILD'S PROPOSAL. THE FAIRCHILD REPRESENTATIVE REPORTS HE WAS TOLD THAT SUCH A REQUEST WOULD NOT BE APPROVED BECAUSE A SIMILAR REQUEST FROM GE HAD ALREADY BEEN REJECTED. AS A RESULT OF THIS CONVERSATION, THE TELEGRAM WAS NOT SENT.

MR. KRENNING CONFIRMS THAT FACT THAT MR. FLYNN OF FAIRCHILD ORALLY REQUESTED AN EXTENSION OF TIME BUT HE DENIES HAVING SAID THAT GE HAD BEEN REFUSED A SIMILAR REQUEST. MR. KRENNING REPORTS HE STATED TO MR. FLYNN THAT ANY WRITTEN REQUEST FOR AN EXTENSION WOULD BE REFERRED PROMPTLY TO HIS SUPERIOR. HE FURTHER REPORTS STATING TO THE FAIRCHILD REPRESENTATIVE THAT "IF IT WAS NECESSARY THAT THEY BE LATE, THEY WERE GOING TO BE WHETHER OR NOT NASA CONCURRED AND IF IT WERE NOT NECESSARY, WHY SHOULD WE GRANT AN UNNECESSARY DELAY." FINALLY, MR. KRENNING STATES THAT AT THE END OF THIS CONVERSATION HE WAS CONVINCED THAT FAIRCHILD WOULD BE LATE.

THE RECORD SHOWS THAT FAIRCHILD'S BASIC AND ALTERNATE PROPOSALS WERE SUBMITTED AT 4:00 P.M., ON FEBRUARY 27, 1970. FAIRCHILD ALSO SUBMITTED A THIRD, OPTIONAL, PROPOSAL ON MARCH 4. (THIS PROPOSAL WOULD HAVE REQUIRED FAIRCHILD TO EXCEED THE FUNDING LIMITATION BY SOME $300,000 FOR FISCAL YEAR 1971, BUT FAIRCHILD STIPULATED THAT SUCH EXCESS COSTS BE ALLOWED AS DEFERRED CHARGES TO LATER YEAR APPROPRIATION.) THIS PROPOSAL WAS ULTIMATELY REJECTED BY YOUR AGENCY.

WHEN THE FAIRCHILD REPRESENTATIVE DELIVERED THIS MARCH 4 OPTIONAL PROPOSAL TO GODDARD HE LEARNED THAT GE'S PROPOSALS HAD NOT YET BEEN DELIVERED. THE VICE PRESIDENT OF FAIRCHILD THEN TELEPHONED THE GODDARD DIRECTOR OF ADMINISTRATION AND MANAGEMENT AND ASKED THAT FAIRCHILD'S PROPOSAL NOT BE DISTRIBUTED TO PERSONNEL FOR EVALUATION BECAUSE OF THE FACT THAT GE'S PROPOSAL HAD NOT YET BEEN RECEIVED. THE NASA DIRECTOR ADVISES US, HOWEVER, THAT THE FAIRCHILD PROPOSAL HAD ALREADY BEEN DISTRIBUTED.

THE GE PROPOSALS WERE RECEIVED AND DISTRIBUTED FOR EVALUATION THE EARLY MORNING OF MARCH 6, 1970.

THEREAFTER, FACTFINDING SESSIONS WERE CONDUCTED AT GODDARD WITH FAIRCHILD ON MARCH 10 AND WITH GE ON MARCH 11 AND 12, WHICH RESULTED IN CERTAIN REFINEMENTS TO THE PROPOSALS. AS A RESULT OF THE FACTFINDING WITH FAIRCHILD, IT WAS REQUIRED TO PROPOSE AN UPWARD ADJUSTMENT IN COST OF $85,722, IN ITS FEBRUARY 27, 1970, PROPOSAL.

THE SOURCE EVALUATION BOARD THEN EVALUATED THE REVISED PROPOSALS BUT MADE NO CHANGE IN THE TECHNICAL SCORING. HOWEVER, BOTH GE AND FAIRCHILD HAD REVISED THEIR PROPOSAL COSTS AND THE BOARD REEVALUATED EACH OF THE COMPETITOR'S COST REVISIONS. THE BOARD'S REPORT DATED APRIL 3, 1970, CONCLUDED THAT THE TWO FIRMS WERE TECHNICALLY EQUAL, BUT ON AN EVALUATION OF CONTRACTOR-PROPOSED COST IT WAS DETERMINED THAT GE WAS APPROXIMATELY 2 PERCENT LOWER THAN FAIRCHILD.

THIS BOARD REPORT WAS PRESENTED ORALLY TO YOU ON APRIL 7, 1970. ON APRIL 8, 1970, THE SELECTION OF GE AS PHASE D CONTRACTOR WAS ANNOUNCED.

AFTER THE ANNOUNCEMENT OF THE SELECTION OF GE, NASA TERMINATED FAIRCHILD'S CONTRACT FOR DEVELOPMENT OF PROPOSALS AND HOLDING AND DISCONTINUED FUNDING OF FAIRCHILD EFFECTIVE APRIL 16, 1970. THE HOLDING PERIOD UNDER GE'S CONTRACT HAS BEEN EXTENDED THROUGH JULY 1970.

WE MUST REPORT THAT IN OUR REVIEW OF THE AWARD SELECTION PROCESS WE FOUND THAT CERTAIN IRREGULARITIES DID OCCUR. WE HAVE IN MIND CERTAIN EVENTS ASSOCIATED WITH THE SUBMISSIONS OF REVISED PROPOSALS AFTER FEBRUARY 4, 1970.

IN THE FIRST PLACE WE BELIEVE THE INSTRUCTIONS SENT OUT TO THE BIDDERS ON FEBRUARY 12 WERE AMBIGUOUS. THE FEBRUARY 12 LETTER STATED THAT "IT IS ANTICIPATED THAT THE TECHNICAL ASPECTS OF THE PRESENT PROPOSALS WILL NOT BE ALTERED EXCEPT AS APPROPRIATE TO REFLECT SCHEDULE REVISIONS." APPEARS THAT THIS LANGUAGE WAS USED IN AN ATTEMPT TO DISCOURAGE TECHNICAL CHANGES IN THE FINAL STAGES OF THE NEGOTIATIONS. IN SO DOING, WE BELIEVE AMBIGUOUS INSTRUCTIONS WERE ISSUED WHICH WERE SUBJECT TO A VARIETY OF INTERPRETATIONS. FURTHERMORE, WE FIND THESE INSTRUCTIONS WERE AT VARIANCE WITH THE INSTRUCTIONS ISSUED ON FEBRUARY 5 BY NASA HEADQUARTERS TO "MAXIMIZE ANY TECHNICAL, QUALITY, INTERFACE, OR DELIVERY SCHEDULE ADVANTAGES, AS WELL AS ECONOMIES THAT CAN BE EFFECTED AS A RESULT OF THE CHANGES IN FUNDING AND LAUNCH SCHEDULE. ORAL AND WRITTEN DISCUSSIONS WILL BE CONDUCTED SO THAT ALL ESSENTIAL TERMS AND CONDITIONS *** HAVE BEEN AGREED TO." HOWEVER, WE ARE MORE CONCERNED WITH ANOTHER ASPECT OF THE FINAL SUBMISSION OF PROPOSALS. YOUR REGULATION, NASA PR 3.805-1(C), STATES THAT A SPECIFIED DATE FOR THE CLOSE OF NEGOTIATIONS SHOULD BE ESTABLISHED AND THAT THEREAFTER PROPOSAL REVISIONS GENERALLY SHOULD NOT BE ACCEPTED. WE DO NOT FIND THAT GODDARD COMPLIED WITH THIS REGULATION.

AS THE RECORD SHOWS, FAIRCHILD SUBMITTED ITS REVISED PROPOSALS ON FEBRUARY 27, 1970, WHILE GE SUBMITTED ITS PROPOSALS ON MARCH 6, 1970. BELIEVE THAT FAIRCHILD HAD EVERY REASON TO REGARD FEBRUARY 27 AS A CUTOFF DATE FOR SUBMISSION OF REVISED PROPOSALS. THE CLEAR IMPORT OF THE FEBRUARY 12 LETTER AND THE CONTRACTING OFFICER'S REMARKS TO THE FAIRCHILD REPRESENTATIVE ON FEBRUARY 25 WAS THAT THE FEBRUARY 27 SUBMISSION DATE COULD BE IGNORED ONLY AT THE BIDDER'S PERIL. THE FACT THAT FAIRCHILD SUBMITTED AN UNSOLICITED, AND ULTIMATELY UNACCEPTABLE, PROPOSAL ON MARCH 4 DOES NOT IN OUR OPINION TAKE AWAY FROM THE FACTUAL SITUATION SET OUT ABOVE WHICH, ACCORDING TO FAIRCHILD, LED IT TO BELIEVE THAT THE PRINCIPAL PROPOSALS SHOULD BE SUBMITTED BY FEBRUARY 27. IT IS REASONABLE TO CONCLUDE THAT FAIRCHILD SUBMITTED ITS MARCH 4 PROPOSAL WITH THE HOPE THAT IT MIGHT BE CONSIDERED TIMELY BUT WITH NO ASSURANCE THAT IT WOULD BE.

GE, ON THE OTHER HAND, STATES IT HAD REASON TO BELIEVE THAT A PROPOSAL SUBMITTED BY MARCH 6, 1970, WOULD BE ACCEPTABLE TO GODDARD. GE OFFICIALS HAVE STATED TO US THAT, WHILE GODDARD PERSONNEL HAD URGED GE TO MEET THE SPECIFIED FEBRUARY 27 DATE, THEY GAVE NO INDICATION THAT A PROPOSAL SUBMITTED AFTER THAT DATE WOULD BE UNACCEPTABLE OR OTHERWISE SUBJECT TO PENALTY.

A SITUATION PREJUDICIAL TO FAIRCHILD WAS THUS CREATED. FAIRCHILD CONTENDS THAT IF IT HAD HAD AN EXTRA WEEK, AS DID GE, TO NEGOTIATE WITH ITS SUBCONTRACTORS OR TO DEVELOP COST SAVING METHODS, IT MIGHT HAVE REDUCED ITS COST PROPOSAL IN MUCH THE SAME MANNER AS GE DID. FOR EXAMPLE, FAIRCHILD HAS SUGGESTED THE USE OF ONE OF ITS OFFSITE FACILITIES IF IT HAD THE EXTRA TIME TO CONSIDER THE MATTER. WE ARE NOT IN A POSITION TO DISAGREE WITH FAIRCHILD, SINCE IT IS A FACT THAT FAIRCHILD PREPARED ITS REVISED PROPOSALS WITHIN 3 WEEKS WHILE GE SUBMITTED ITS PROPOSALS A WEEK LATER.

TO COMPOUND THE SITUATION, THE FAIRCHILD PROPOSALS WERE DISTRIBUTED FOR COST EVALUATION ON MARCH 3 AND TECHNICAL EVALUATION ON MARCH 4, OR 2 AND 3 DAYS BEFORE THE GE PROPOSALS WERE RECEIVED. AS A RESULT, FAIRCHILD CONTENDS THAT CERTAIN COST INFORMATION IN ITS PROPOSALS COULD HAVE BEEN LEAKED TO GE BEFORE THE GE PROPOSALS WERE SUBMITTED. IT IS ARGUED BY YOUR AGENCY THAT IF A LEAK DID OCCUR DURING THIS 2- OR 3-DAY PERIOD, AND THERE IS NO EVIDENCE OF A LEAK, IT COULD NOT HAVE DONE GE MUCH GOOD ANYWAY BY THAT TIME. WE AGREE THAT THERE IS NO EVIDENCE OF A LEAK. ON THE OTHER HAND IT CANNOT BE CONCLUSIVELY STATED THAT THERE WAS NO LEAK. A SITUATION WAS CREATED WHERE A LEAK WHICH MIGHT HAVE AFFECTED THE RESULTS OF THE COMPETITION WAS POSSIBLE. AND THE DANGER OF SUCH A LEAK EXISTED NOT ONLY DURING THE 2- OR 3-DAY PERIOD REFERRED TO, BUT DURING THE ENTIRE WEEK THAT INTERVENED BETWEEN SUBMISSION OF THE TWO PROPOSALS.

THE SITUATION WAS FURTHER COMPOUNDED BY THE APPARENT FACT THAT THE OFFICIALS MAKING THE AWARD SELECTION APPARENTLY WERE NOT AWARE OF THE FACT THAT FAIRCHILD'S PROPOSALS WERE SUBMITTED AND DISTRIBUTED FOR EVALUATION BEFORE GE'S PROPOSALS WERE RECEIVED. IN THIS REGARD WE NOTE THE FOLLOWING STATEMENT CONTAINED IN YOUR ADMINISTRATIVE REPORT TO OUR OFFICE:

THE BOARD'S SECOND REPORT, DATED APRIL 3, 1970 (TAB M), WAS PRESENTED ORALLY TO THE ADMINISTRATOR ON APRIL 7, 1970. IT CONTAINS A MINOR INCONSISTENCY. ON PAGE 2 OF THE SUMMARY, IT STATES INCORRECTLY THAT BOTH PROPOSALS WERE RECEIVED ON MARCH 6, 1970. THIS OVERSIGHT IS CLARIFIED BY THE MORE DETAILED ACCOUNT OF THE MARCH PROPOSALS IN THE "REPORT TO CHAIRMAN BUSINESS MANAGEMENT COMMITTEE," MARCH 31, 1970, WHICH IS ATTACHED AS A PART OF THE BOARD REPORT.

THE WHOLE PROBLEM COULD HAVE BEEN AVOIDED IF GODDARD HAD EXTENDED THE BID SUBMISSION DATE AS ORIGINALLY REQUESTED BY GE IN ITS TELEGRAM OF FEBRUARY 16, 1970. AT THE VERY LEAST THE FAIRCHILD PROPOSALS SHOULD NOT HAVE BEEN DISTRIBUTED FOR EVALUATION UNTIL AFTER GE PROPOSALS WERE RECEIVED. GODDARD OFFICIALS HAVE EXPLAINED THEIR REFUSAL TO GRANT ADDITIONAL TIME ON THE BASIS OF URGENCY. THEY ALSO EXPLAIN THAT, SINCE THEY COULD EVALUATE ONLY ONE PROPOSAL AT A TIME, THEY STARTED TO EVALUATE THE FAIRCHILD PROPOSALS WHILE AWAITING RECEIPT OF THE GE PROPOSALS IN ORDER TO SAVE TIME. WE ARE NOT IMPRESSED BY THIS EXPLANATION. AN AWARD WAS NOT CONTEMPLATED FOR ANOTHER 4 MONTHS AND WE THINK THAT A 1- OR 2-WEEK TIME EXTENSION COULD HAVE BEEN TOLERATED IN THE CIRCUMSTANCES.

IN THIS CONNECTION, WE NOTE THAT BACK IN DECEMBER 1969, THE FIRST REVISED PROPOSALS WERE ALSO SUBMITTED AT DIFFERENT TIMES. AT THAT TIME THE GE PROPOSAL WAS SUBMITTED BEFORE THE FAIRCHILD PROPOSAL. WE UNDERSTAND THAT NO COMMON CUTOFF DATE WAS ESTABLISHED AT THAT TIME; APPARENTLY THE COMPETITORS SIMPLY WERE TOLD TO SUBMIT THEIR PROPOSALS UPON COMPLETION OF THEIR RESPECTIVE FACT FINDING SESSIONS WITH GODDARD. BE THAT AS IT MAY, WE DO NOT THINK THE EVENTS OF THE PRIOR SUBMISSION CAN JUSTIFY WHAT OCCURRED WITH RESPECT TO THE FINAL SUBMISSION OF PROPOSALS.

YOUR AGENCY TAKES THE POSITION THAT FEBRUARY 27 CANNOT BE REGARDED AS A CUTOFF DATE FOR NEGOTIATIONS IN THE CASE OF FAIRCHILD BECAUSE OF THE FACT THAT DISCUSSIONS, BOTH WRITTEN AND ORAL, WERE HELD WITH FAIRCHILD AS LATE AS MARCH 13, 1970. FAIRCHILD CONTENDS THAT THESE MARCH DISCUSSIONS WERE LIMITED IN SCOPE AND FAIRCHILD DID NOT FEEL FREE TO CHANGE ITS PROPOSAL EXCEPT TO THE EXTENT REQUIRED BY GODDARD. THE RECORD SUPPORTS FAIRCHILD'S POSITION. THE MARCH NEGOTIATIONS WERE CONFINED TO SEVERAL RATHER LIMITED MATTERS RESULTING IN AN UPWARD ADJUSTMENT IN PROPOSAL COST OF ONLY ABOUT $86,000. WE DO NOT REGARD THESE NEGOTIATIONS AS CONSTITUTING A FULL REOPENING OF NEGOTIATIONS WITH FAIRCHILD.

ON THE FACTS OF RECORD IT IS OUR OPINION THAT THE ESTABLISHED AWARD SELECTION PROCEDURES WERE NOT FOLLOWED AND THAT THE PROCEDURES WHICH WERE FOLLOWED WERE DEFECTIVE. UNDER THE CIRCUMSTANCES, WE THINK THAT THE PROPOSED AWARD TO GE SHOULD BE RECONSIDERED. WE RECOGNIZE THAT THE PRESENT POSTURE OF THE PROCUREMENT IS SUCH THAT ARGUMENTS CAN BE MADE AS TO THE FORM SUCH RECONSIDERATION SHOULD TAKE. AT THIS POINT IN TIME WE BELIEVE THIS DECISION SHOULD BE MADE BY YOUR AGENCY, TAKING INTO CONSIDERATION THE DEFECTS IN THE PRIOR NEGOTIATIONS AS SET FORTH IN THIS LETTER. WE WOULD, OF COURSE, BE PLEASED TO DISCUSS WITH YOU SUCH FUTURE ACTION AS YOU MAY THINK PROPER, IF YOU WISH.

AN ADDITIONAL POINT HAS BEEN MADE WHICH WE THINK MERITS COMMENT. FAIRCHILD HAS ALLEGED THAT NASA USED THE DEFICIENCY CORRECTION ROUTE SUPPOSEDLY REQUIRED BY GAO RULINGS TO COACH GE INTO THE ADOPTION OF CERTAIN ELEMENTS OF FAIRCHILD'S DESIGN. WE HAVE HELD, IN ACCORDANCE WITH THE PROVISIONS OF 10 U.S.C. 2304(G), THAT WRITTEN OR ORAL DISCUSSIONS SHOULD BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHOSE PROPOSALS ARE WITHIN A COMPETITIVE RANGE AND THAT COMPETITIVE RANGE ENCOMPASSES BOTH PRICE AND TECHNICAL CONSIDERATIONS. 47 COMP. GEN. 29, 53 (1967). HOWEVER, OUR OFFICE HAS NEVER APPROVED ANY PROCEDURE WHEREBY INFORMATION WHICH WOULD GIVE AN UNFAIR COMPETITIVE ADVANTAGE TO ANY PROPOSER WOULD BE DISCLOSED DURING THE NEGOTIATION PROCESS. WE, AS YOU KNOW, INFORMALLY APPROVED NASA PROCUREMENT REGULATION DIRECTIVE NO. 69-5, DATED MARCH 10, 1969. HOWEVER, WE DO NOT READ THIS REGULATION AS AUTHORIZING SUCH A PROCEDURE.

WE ARE RETURNING THE SOURCE EVALUATION BOARD REPORT AS WELL AS THE CORRESPONDENCE AND MINUTES OF THE ORAL DISCUSSIONS DEALING WITH THE VARIOUS PROPOSALS UNDER SEPARATE COVER.