B-176504, DEC 21, 1972

B-176504, DEC 21, 1972

BID PROTEST - TECHNICAL DEFICIENCY - COST-REIMBURSEMENT AWARD DECISION DENYING A PROTEST BY ALTEK ENGINEERING LTD., AGAINST THE AWARD OF CONTRACT TO BATTELLE COLUMBUS LABORATORIES UNDER AN RFP ISSUED BY THE MANPOWER ADMINISTRATION, DEPARTMENT OF LABOR. WHERE A PROPOSAL IS UNACCEPTABLE UPON INITIAL EVALUATION AND IS NOT WITHIN A COMPETITIVE RANGE, NEGOTIATIONS OR DISCUSSIONS NEED NOT BE CONDUCTED WITH THE UNACCEPTABLE BIDDER. SEE 50 COMP. GEN. 565, 578 (1971). ALSO, SINCE THE RFP REQUIRED WORK PERFORMANCE TO BE ON A COST REIMBURSEMENT BASIS, CONTRACT EVALUATION IS NOT RESTRICTED SOLELY TO OFFEROR'S ESTIMATED PRICE QUOTATION. THUS ALTEK'S TECHNICAL DEFICIENCIES NOTWITHSTANDING ITS LOW BID PRICE, PRECLUDE ANY QUESTIONING OF THE VALIDITY OF THE AWARD AS MADE.

TO ALTEK ENGINEERING LTD.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 4, 1972, AND PRIOR CORRESPONDENCE, PROTESTING THE AWARD OF A CONTRACT TO THE BATTELLE COLUMBUS LABORATORIES UNDER REQUEST FOR PROPOSALS (RFP) ORD-72 3, ISSUED ON FEBRUARY 28, 1972, BY THE MANPOWER ADMINISTRATION, DEPARTMENT OF LABOR.

THE RFP SOLICITED DETAILED PROPOSALS FOR CONDUCTING A SURVEY OF VOCATIONAL TRAINING IN 300 FEDERAL AND STATE CORRECTIONAL INSTITUTIONS. WE HAVE BEEN INFORMALLY ADVISED THAT PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS, THE MANPOWER ADMINISTRATION ADVISED PROSPECTIVE OFFERORS BY TELEGRAM THAT THE SOLICITATION SHOULD HAVE SHOWN THE NUMBER OF INSTITUTIONS TO BE SURVEYED AS 800 INSTEAD OF 300. THE RFP SET OUT SIX EVALUATION CRITERIA FOR APPLICATION IN DETERMINING THE SUCCESSFUL OFFEROR. PROSPECTIVE OFFERORS WERE ALSO ADVISED THAT A COST-REIMBURSEMENT TYPE CONTRACT WAS ANTICIPATED.

FIFTY-SIX OFFERS WERE RECEIVED AND EACH PROPOSAL WAS EVALUATED AGAINST THE CRITERIA ESTABLISHED IN THE RFP BY A TECHNICAL EVALUATION COMMITTEE OF THE OFFICE OF RESEARCH AND DEVELOPMENT. THE EVALUATION COMMITTEE CONCLUDED THAT THE PROPOSAL SUBMITTED BY YOUR FIRM IN THE ESTIMATED AMOUNT OF $136,826.74 WAS INSUFFICIENT WHEN EVALUATED AGAINST THE CRITERIA IN THE FOLLOWING SIX RESPECTS:

"I. THE TWO-PARAGRAPH 'STATEMENT OF PURPOSE AND SCOPE' INCLUDED IN THE TECHNICAL PROPOSAL DID NOT DEMONSTRATE THE NECESSARY UNDERSTANDING OF THE NEED FOR AND PURPOSE OF THE PROPOSED SURVEY. THE ALTEK PROPOSAL AFFORDED VIRTUALLY NO BASIS FOR JUDGING THE FIRM'S GRASP OF THE KEY ISSUES PERTAINING TO VOCATIONAL TRAINING AND PREPARATION IN CORRECTIONAL INSTITUTIONS WHICH CONSTITUTE THE FOUNDATION FOR THE STUDY.

"II. THE ALTEK PROPOSAL FELL FAR SHORT OF PROVIDING SUFFICIENT INFORMATION TO ASSESS THE ORGANIZATION'S INTENDED METHODOLOGY. MATTERS OF SAMPLING, QUESTIONNAIRE CONSTRUCTION, ANALYTIC METHODS AND THE LIKE WERE SUPERFICIALLY DEALT WITH IN LESS THAN A FULL PAGE OF THE TECHNICAL PROPOSAL, AGAIN PRECLUDING A JUDGMENT OF RESEARCH CAPABILITY. SITE VISITATIONS, A CRITICAL ELEMENT OF THE STUDY SPECIFICATIONS, WERE COMPLETELY OMITTED FROM THE TREATMENT OF RESEARCH METHODOLOGY.

"III. ALTEK FAILED TO PRESENT EVIDENCE OF ORGANIZATIONAL CAPABILITY TO IMPLEMENT THE TYPES OF METHODOLOGY REQUIRED BY THE SURVEY. NOTABLY LACKING IN THE PROPOSAL WAS ANY INDICATION OF EXPERIENCE IN DESIGNING AND ADMINISTERING SURVEY-TYPE PROJECTS (SEE ATTACHMENT B).

"IV. CONTRARY TO THE TECHNICAL PROPOSAL'S ASSERTION (P. 2) THAT ALTEK'S PERSONNEL ARE 'KNOWLEDGEABLE IN VOCATIONAL TRAINING PROGRAMS,' THE SUBMISSION FAILS TO DOCUMENT THE REQUISITE KNOWLEDGE AND EXPERIENCE IN THE PROBLEM AREA ON THE PART OF THE KEY STAFF (SEE ATTACHMENT C). THE SOLE REFERENCE TO PERTINENT STAFF EXPERIENCE IS TO BE FOUND IN THE BRIEF RESUME OF A CONSULTANT WHO WOULD HAVE BEEN EMPLOYED BUT 10 DAYS DURING THE 18- MONTH TERM OF THE PROJECT, A LEVEL OF EXPERIENCE AND A TIME COMMITMENT FAR LESS THAN THOSE REQUIRED TO CONDUCT THE TYPE OF STUDY PRESCRIBED BY THE RFP.

"V. ALTEK'S STATEMENT OF FINANCIAL CAPABILITY PORTRAYS THE FIRM'S FINANCIAL RESOURCES TO BE LESS THAN THOSE REQUIRED TO UNDERTAKE AND SUSTAIN A PROJECT OF THIS MAGNITUDE.

"VI. THE COST ESTIMATE OF $136,826.74 CANNOT BE CORRELATED WITH THE LEVEL OF EFFORT PROPOSED BY ALTEK IN VIEW OF THE LIMITED DETAIL PRESENTED IN THE TECHNICAL PROPOSAL."

SINCE THE PROPOSAL OF THE BATTELLE COLUMBUS LABORATORIES IN THE ESTIMATED AMOUNT OF $253,960 RECEIVED THE HIGHEST SCORE UNDER THE EVALUATION CRITERIA SUBMITTED, THE CONTRACT WAS AWARDED TO THAT FIRM.

YOUR PROTEST RELATES TO THE MANNER IN WHICH THE SUCCESSFUL OFFEROR WAS SELECTED. YOU QUESTION THE FAILURE OF THE ADMINISTRATION TO NEGOTIATE WITH YOUR FIRM, AND AN AWARD TO BATTELLE AT A PRICE APPROXIMATELY $100,000 HIGHER THAN THE PRICE OFFERED BY YOUR FIRM. YOU FURTHER COMPLAIN THAT NO DIRECT NOTIFICATION OF CONTRACT AWARD WAS PROVIDED ALTEK BY THE DEPARTMENT OF LABOR.

WITH REFERENCE TO YOUR COMPLAINT THAT NO NEGOTIATIONS OR DISCUSSIONS WERE CONDUCTED WITH YOUR FIRM, FEDERAL PROCUREMENT REGULATIONS 1 3.805.1(A) REQUIRES THAT, AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS "WHO SUBMITTED PROPOSALS WITHIN A COMPETITIVE RANGE." SINCE, AS STATED ABOVE, YOUR PROPOSAL WAS UNACCEPTABLE UPON INITIAL EVALUATION AND, FOR THE REASONS QUOTED ABOVE, NOT WITHIN A COMPETITIVE RANGE, THERE WAS NO REQUIREMENT THAT DISCUSSIONS BE HAD WITH YOUR FIRM CONCERNING PROPOSAL DEFICIENCIES. 50 COMP. GEN. 565, 578 (1971). ALTHOUGH A MARCH 17, 1972, RFP AMENDMENT CHANGING THE NUMBER OF FEDERAL AND STATE CORRECTIONAL INSTITUTIONS TO BE SURVEYED FROM 300 TO 800 WAS REPORTEDLY SENT BY TELEGRAM TO ALTEK'S KENSINGTON, MARYLAND, ADDRESS (THE ADDRESS TO WHICH THE ORIGINAL RFP WAS SENT), ALTEK'S PROPOSAL DOES NOT REFLECT THIS IMPORTANT CHANGE.

WHILE YOUR FIRM DID SUBMIT THE LOWEST PROPOSAL AS TO PRICE, THE CONTRACT WHICH WAS SUBSEQUENTLY AWARDED IS A COST-REIMBURSEMENT TYPE CONTRACT. UNDER SUCH METHOD OF CONTRACTING, THE PRICES SUBMITTED BY OFFERORS FOR THE COST OF PERFORMING THE REQUIRED SURVEY ARE ONLY ESTIMATES OF WHAT THE SURVEY MAY ACTUALLY COST. THE CONTRACTOR IN SUCH SITUATIONS IS REIMBURSED NOT ON THE BASIS OF HIS COST ESTIMATE BUT FOR THE ACTUAL COSTS INCURRED IN PERFORMING THE WORK. SINCE THE ESTIMATED PRICE QUOTED BY THE OFFEROR DOES NOT CONTROL THE AMOUNT OF ACTUAL REIMBURSEMENT, OFFERS TO PERFORM WORK ON A COST-REIMBURSEMENT BASIS ARE NOT EVALUATED ON A STRICT PRICE BASIS. THIS CONNECTION, FEDERAL PROCUREMENT REGULATIONS 1-3.805-2 STATES:

"IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (A) THE LOWEST PROPOSED COST, (B) THE LOWEST PROPOSED FEE, OR (C) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND AGENCY PROCEDURES AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE SEC 1-3.808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT."

SEE, ALSO, B-174096, NOVEMBER 4, 1971. FURTHERMORE, IN VIEW OF THE TECHNICAL UNACCEPTABILITY OF THE ALTEK PROPOSAL, SUMMARIZED ABOVE, THE LOW ALTEK ESTIMATED PRICE WAS NOT FOR CONSIDERATION.

IN REGARD TO YOUR ALLEGATION THAT THE MANPOWER ADMINISTRATION DID NOT DIRECTLY NOTIFY YOUR FIRM OF THE CONTRACT AWARD TO THE BATTELLE COLUMBUS LABORATORIES, IT IS REPORTED THAT ON JULY 17, 1972, EACH OFFEROR WAS SENT A NOTICE OF CONTRACT AWARD. IN ANY EVENT, AN INADVERTENT FAILURE TO NOTIFY AN UNSUCCESSFUL OFFEROR WOULD NOT PROVIDE ANY BASIS FOR QUESTIONING THE VALIDITY OF AN AWARD AS MADE.

ACCORDINGLY, THE PROTEST IS DENIED.