B-164581, APR. 29, 1969

B-164581, APR. 29, 1969

TO HART, MOSS AND TAVENNER:

WE REFER TO YOUR LETTER OF MARCH 28, 1969, IN WHICH YOU REQUEST RECONSIDERATION OF OUR DECISION OF DECEMBER 27, 1968 (B-164581), CONCERNING A PROTEST AGAINST THE AWARD OF A CONTRACT BY THE NAVAL ELECTRONIC SYSTEMS COMMAND TO ITT AVIONICS UNDER REQUEST FOR PROPOSALS NO. N00039-68-R-2011/S).

YOUR REQUEST FOR RECONSIDERATION IS BASED ON TWO POINTS. THE FIRST OF THESE INVOLVES WHAT YOU CONSIDER TO BE AN ERRONEOUS STATEMENT OF FACT SET FORTH IN THE SECOND FULL PARAGRAPH ON PAGE 11 OF OUR DECISION. YOU SAY:

"* * * THAT PARAGRAPH STATES THAT NATIONAL RADIO COMPANY WAS AWARE THAT ITS ORIGINAL QUOTATION EXCEEDED THE NATO FUNDS THEN AVAILABLE, AND WAS GIVEN AN OPPORTUNITY TO SUBMIT A REVISED PRICE.

"IF THIS STATEMENT IS CONSIDERED OUT OF CONTEXT, IT MIGHT BE EXPLAINABLE. HOWEVER, WHEN CONSIDERED IN CONTEXT, IT IS A MISSTATEMENT OF FACT. IT IS TRUE THAT AFTER NATIONAL'S OFFER HAD BEEN RECEIVED AND EVALUATED, NATIONAL DID OBTAIN INFORMATION FROM WHICH IT MIGHT HAVE BELIEVED THAT ITS ORIGINAL QUOTATION EXCEEDED THE NATO FUNDS THEN AVAILABLE. IT ALSO, HOWEVER, RECEIVED INFORMATION FROM WHICH IT MIGHT HAVE BELIEVED THAT ITS ORIGINAL QUOTATION EXCEEDED THE NATO FUNDS THEN AVAILABLE. IT ALSO, HOWEVER, RECEIVED INFORMATION FROM WHICH IT BELIEVED THAT THE NAVY DEPARTMENT HAD ADVISED NATO THAT, IN ORDER TO MEET THE NATIONAL BID, THE FUNDS AVAILABLE WOULD HAVE TO BE INCREASED. THE INFORMATION SUPPLIED TO YOUR OFFICE INDICATES WITHOUT QUESTION THAT THE NAVY DEPARTMENT SOUGHT THE ADDITIONAL FUNDS FROM NATO AND, IN FACT, OBTAINED THEM IN THE EXACT AMOUNT OF THE NATIONAL BID. THERE WAS, THEREFORE, AT THE TIME, NO NECESSITY FOR NATIONAL TO BE GIVEN AN OPPORTUNITY TO SUBMIT A REVISED PRICE; AND IT WAS NOT, IN FACT, SO GIVEN SUCH AN OPPORTUNITY. IT WAS NOT UNTIL AFTER THE NAVY DEPARTMENT DECIDED TO REOPEN THE ITT AVIONICS OFFER AND PERMIT THE OFFEROR TO MAKE ITS OFFER RESPONSIVE THAT NATIONAL RADIO COMPANY WAS REQUESTED TO -RECONFIRM ITS OFFER.-"

BASED UPON THE INFORMATION IN THE RECORDS BEFORE US, WE BELIEVE THE STATEMENT TO WHICH YOU OBJECT IS ACCURATE BOTH IN AND OUT OF CONTEXT. THE RELEVANT BACKGROUND FACTS WHICH YOU DO NOT CHALLENGE MAY BE SUMMARIZED AS FOLLOWS.

THE ORIGINAL CLOSING DATE FOR RECEIPT OF PROPOSALS SET BY AMENDMENT NO. 2 WAS APRIL 5, 1968. PROPOSALS WERE OPENED ON THAT DATE AND OF THE THREE PROPOSALS RECEIVED ONLY NATIONAL RADIO'S WAS RESPONSIVE. ITT AVIONICS' PROPOSAL WAS THE LOWEST RECEIVED AND, ALTHOUGH NOT RESPONSIVE ON THE BASIS OF AWARD WITHOUT NEGOTIATION, WAS CAPABLE OF BEING MADE RESPONSIVE THROUGH NEGOTIATION. SEE ASPR 3-805.1 (B).

ON APRIL 30, 1968, THE CONTRACTING OFFICER REQUESTED CLEARANCE FROM HIGHER AUTHORITY TO CONTRACT WITH NATIONAL RADIO ON THE BASIS OF THE INITIAL PROPOSAL AND WITHOUT NEGOTIATIONS. THE CONTRACTING OFFICER RECOGNIZED, AND SO STATED IN HIS REQUEST FOR AUTHORITY TO CONTRACT, THAT IN A NORMAL SITUATION CONSIDERATION MIGHT BE GIVEN TO FURTHER NEGOTIATION WITH ALL OFFERORS TO POSSIBLY CLARIFY DEFICIENT OFFERS BY REQUESTING STRICT CONFORMANCE WITH THE EXPRESSED REQUIREMENTS. HOWEVER, AT THAT POINT IN TIME THIS PROCEDURE WAS NOT FEASIBLE BECAUSE THE PROCUREMENT WAS BEING NEGOTIATED UNDER THE EXIGENCY EXCEPTION OF 10 U.S.C. 2304 (A) (2). HOWEVER, ON MAY 9, 1968, THE CONTRACTING OFFICER WAS ADVISED THROUGH APPROPRIATE AUTHORITY THAT NATIONAL RADIO'S PRICE EXCEEDED AVAILABLE NATO FUNDS, AND THAT THE NAVY DEPARTMENT WOULD NOT ADVANCE THE MONEY FOR THE PROCUREMENT PENDING EFFORTS TO OBTAIN ADDITIONAL SUMS FROM THE NATO COUNTRIES CONCERNED. ACCORDINGLY, THE CONTRACTING OFFICER WITHDREW HIS REQUEST FOR CLEARANCE TO AWARD THE CONTRACT TO NATIONAL RADIO AND ON MAY 22, 1968, NATIONAL RADIO WAS GIVEN AN OPPORTUNITY TO SUBMIT A REVISED PRICE WHEN IT WAS ASKED TO RECONFIRM ITS PROPOSAL PRICE BY MAY 29, 1968.

ON MAY 23, 1968, REPRESENTATIVES OF NATIONAL RADIO MET WITH NAVAL ELECTRONIC SYSTEMS COMMAND NEGOTIATORS. WHILE THERE IS SOME DISPUTE BETWEEN THE PARTIES INVOLVED CONCERNING WHAT TRANSPIRED DURING THIS MEETING, IT SEEMS TO BE AGREED THAT, AT THE VERY LEAST, NATIONAL RADIO WAS ADVISED OF THE DIFFICULTIES CONCERNING THE INSUFFICIENCY OF NATO BUDGETED FUNDS. YOUR LETTER CONCEDES THAT NATIONAL RADIO "DID OBTAIN INFORMATION FROM WHICH IT MIGHT HAVE BELIEVED THAT ITS ORIGINAL QUOTATION EXCEEDED THE NATO FUNDS THEN AVAILABLE.' YOU ALSO STATE, HOWEVER, THAT NATIONAL RADIO HAD RECEIVED INFORMATION FROM WHICH IT BELIEVED THAT THE NAVY DEPARTMENT HAD ADVISED NATO THAT, IN ORDER TO MEET NATIONAL RADIO'S BID, THE FUNDS AVAILABLE WOULD HAVE TO BE INCREASED. MOREOVER, YOU ASSERT THAT SINCE THE NAVY DEPARTMENT SOUGHT THE ADDITIONAL FUNDS FROM NATO AND, IN FACT, OBTAINED THEM IN THE EXACT AMOUNT OF THE NATIONAL RADIO BID,"THERE WAS, THEREFORE, AT THE TIME, NO NECESSITY FOR NATIONAL RADIO TO BE GIVEN AN OPPORTUNITY TO SUBMIT A REVISED PRICE; AND IT WAS NOT, IN FACT, SO GIVEN SUCH AN OPPORTUNITY.'

YOU HAVE NOT IDENTIFIED THE SOURCE OF THE INFORMATION THAT THE NAVY DEPARTMENT HAD ADVISED NATO ABOUT INCREASING AVAILABLE FUNDS IF NATIONAL RADIO'S BID WAS TO BE MET OR THE POINT IN TIME WHEN NATIONAL RADIO RECEIVED SUCH INFORMATION. HOWEVER, IT SHOULD BE NOTED THAT SUCH INFORMATION IS OF AN INTERNAL CONFIDENTIAL TYPE WHICH ORDINARILY WOULD NOT, AND SHOULD NOT, BE AVAILABLE TO OFFERORS AT A TIME WHEN PROPOSALS ARE UNDER CONSIDERATION SINCE ITS DISCLOSURE WOULD BE INIMICAL TO THE GOVERNMENT'S INTEREST. THE REASON FOR THIS IS OBVIOUS SINCE AN OFFEROR WHO KNOWS THAT AVAILABLE FUNDS ARE INSUFFICIENT TO MEET HIS PROPOSAL, BUT IS ALSO AWARE THAT THE GOVERNMENT MAY BE SEEKING ADDITIONAL FUNDS, MAY WELL CONCLUDE THAT PRICE CONCESSIONS DURING NEGOTIATIONS ARE UNNECESSARY TO GAIN THE AWARD.

IN ANY EVENT, YOUR ASSERTION THAT, AT THE TIME, THERE WAS NO NECESSITY FOR NATIONAL TO BE GIVEN AN OPPORTUNITY TO SUBMIT A REVISED PRICE BECAUSE THE NAVY HAD OBTAINED THE NEEDED FUNDS IN THE EXACT AMOUNT OF THE NATIONAL RADIO BID, IS WIDE OF THE MARK. THE CLOSING DATE FOR THE RECEIPT OF REVISED PROPOSALS OR RECONFIRMATION OF PRIOR PROPOSALS WAS MAY 29, 1968, BUT THE NAVAL ELECTRONIC SYSTEMS COMMAND DID NOT RECEIVE ADVICE THAT THE NATO COUNTRIES INVOLVED HAD AGREED TO MAKE THE ADDITIONAL FUNDS AVAILABLE UNTIL TWO DAYS LATER, THAT IS, MAY 31, 1968. ACCORDINGLY, AT THE TIME WHEN NEGOTIATIONS WERE BEING CONDUCTED THE CONTRACTING OFFICER WAS NOT AWARE OF THE FACT, SUBSEQUENTLY ESTABLISHED, THAT ADDITIONAL FUNDS WERE AVAILABLE AND THERE WAS EVERY REASON, CONTRARY TO YOUR ASSERTION, TO GIVE NATIONAL RADIO AN OPPORTUNITY TO SUBMIT A REVISED PRICE.

WHILE THE NAVY NEGOTIATION TEAM, APPARENTLY RELYING ON THE ANTI AUCTION PROVISIONS OF ASPR 3-805.1 (B), DID NOT SPECIFICALLY ADVISE NATIONAL RADIO THAT THE COMPETITION FOR THE PROCUREMENT HAD NOT ENDED AND WOULD NOT END UNTIL MAY 29, 1968, WE DO NOT BELIEVE THAT SUCH OMISSION AMOUNTED TO A FAILURE TO CONDUCT NEGOTIATIONS AS REQUIRED BY THE LAW AND REGULATIONS ESPECIALLY IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THIS CASE. NATIONAL RADIO WAS GIVEN AN OPPORTUNITY TO REVISE ITS PRICE BY MAY 29, 1968, AT A TIME WHEN IT KNEW THAT THE AVAILABLE NATO FUNDS WERE INSUFFICIENT BUT IT CHOSE NOT TO DO SO.

THE SECOND POINT IN YOUR REQUEST FOR RECONSIDERATION INVOLVES, YOU SAY, OUR INTERPRETATION OF 10 U.S.C. 2304 (G). YOU CONTEND THAT THE EFFECT OF OUR DECISION IS TO PERMIT AN OFFEROR WHO IS LEFT OUT OF THE "INITIAL NEGOTIATIONS, PURSUANT TO ASPR 3-805.1," TO SUBMIT A "LATE" PROPOSAL IN LIEU OF HIS INITIAL NON-RESPONSIVE PROPOSAL AND TO OBTAIN AN AWARD THEREON. WE MADE THIS DECISION, YOU SAY, IN THE FACE OF THE CONTRARY PROVISIONS OF SECTION 3-506 OF ASPR,WHICH PROHIBITS THE CONSIDERATION OF LATE PROPOSALS OR MODIFICATIONS TO PROPOSALS (OTHER THAN THOSE THAT RESULT FROM THE FORMAL REVISIONS OF OFFERS DURING THE USUAL CONDUCT OF NEGOTIATIONS WITH OFFERORS WHO HAVE BEEN SELECTED FOR NEGOTIATIONS UNDER ASPR 3-805.1) UNLESS THE SECRETARY DETERMINES THAT THE LATE PROPOSAL IS OF EXTREME IMPORTANCE TO THE GOVERNMENT.

AS WE NOTED IN OUR DECISION OF DECEMBER 27, 1968, THE CONTRACTING OFFICER ON APRIL 30, 1968, REQUESTED CLEARANCE FROM HIGHER AUTHORITY TO CONTRACT WITH NATIONAL RADIO ON THE BASIS OF ITS INITIAL PROPOSAL AND WITHOUT NEGOTIATIONS. THERE WERE NO OFFERORS SELECTED FOR "INITIAL NEGOTIATIONS" PURSUANT TO ASPR 3-805.1 IN THIS CASE AND TO SAY THAT ITT AVIONICS WAS "LEFT OUT" OF THESE "INITIAL NEGOTIATIONS" IS A NON SEQUITUR. BECAUSE OF THE URGENCY OF THE PROCUREMENT, NATIONAL RADIO WAS SELECTED BY THE CONTRACTING OFFICER FOR AWARD, NOT FOR NEGOTIATIONS. HOWEVER, AWARD WAS NOT ACCOMPLISHED BECAUSE NATIONAL RADIO'S PRICE WAS SUBSEQUENTLY FOUND TO EXCEED AVAILABLE FUNDS. IT WAS AT THIS POINT, WITH THE LESSENED URGENCY CREATED BY THE NEED TO AWAIT NATO'S DECISION ON FURNISHING ADDITIONAL FUNDS, THAT THE CONTRACTING OFFICER DECIDED TO CONDUCT NEGOTIATIONS PURSUANT TO 10 U.S.C. 2304 (G). AN AWARD WITHOUT CONDUCTING NEGOTIATIONS WITH ALL OFFERORS IN A COMPETITIVE RANGE AS REQUIRED BY 10 U.S.C. 2304 (G) IS JUSTIFIED ONLY IF IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE COST EXPERIENCE THAT ACCEPTANCE OF AN INITIAL OFFER WITHOUT NEGOTIATIONS WOULD RESULT IN FAIR AND REASONABLE PRICES. SEE ASPR 3-805.1 (A) (V). WE NOTED IN OUR DECISION THAT THIS EXCEPTION TO THE NEGOTIATION REQUIREMENTS OF 10 U.S.C. 2304 (G) WAS NOT, IN OUR OPINION, APPLICABLE TO THE SITUATION INVOLVED IN THIS PROCUREMENT.

SECTION 3-506 OF ASPR DEALS WITH LATE PROPOSALS AND LATE MODIFICATIONS TO PROPOSALS AND IS NOT APPLICABLE TO NORMAL REVISIONS OF PROPOSALS BY SELECTED OFFERORS OCCURRING DURING THE USUAL CONDUCT OF NEGOTIATIONS. SEE ASPR 3-506 (H). ITT AVIONICS WAS SELECTED FOR NEGOTIATIONS AND ITS PROPOSAL OF MAY 29 WAS A NORMAL REVISION OF ITS EARLIER PROPOSAL SUBMITTED PURSUANT TO A REQUEST BY THE CONTRACTING OFFICER. THE FACT THAT THIS SELECTION WAS MADE IN THE LIGHT OF CHANGED CIRCUMSTANCES MORE THAN A MONTH AFTER THE ORIGINAL CLOSING DATE OF APRIL 5, 1968, DOES NOT, IN OUR OPINION, CONVERT ITT'S MAY 29 PROPOSAL INTO A "LATE" MODIFICATION. THE DECISIONS WHICH YOU CITE (B-161782, NOVEMBER 21, 1967; B-163882, FEBRUARY 13, 1969; B-164594, NOVEMBER 14, 1968; AND B-164784, OCTOBER 18, 1968), ALL DEAL WITH PROBLEMS INCIDENT TO THE RECEIPT OF LATE UNSOLICITED MODIFICATIONS TO PROPOSALS. WHILE YOU MAY NOT AGREE WITH THE CONCLUSIONS REACHED IN THOSE CASES THEY HAVE NO RELEVANCY TO THE INSTANT CASE AND WE SEE NO BENEFIT TO BE DERIVED FROM THEIR EXAMINATION IN THE CONTEXT OF THE FACTS OF THIS CASE.

WE ARE OF THE OPINION THAT OUR DECISION OF DECEMBER 27, 1968, IS LEGALLY AND FACTUALLY CORRECT AND IT IS AFFIRMED.