B-170398, FEB 17, 1971, 50 COMP GEN 565

B-170398, FEB 17, 1971, 50 COMP GEN 565

CONTRACTS - RESEARCH AND DEVELOPMENT - CONFLICTS OF INTEREST PROHIBITIONS THE FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION, IN AWARDING A COST-PLUS-A-FIXED-FEE CONTRACT FOR AN URBAN TRAFFIC CONTROL SYSTEM (UTCS) TO THE OFFEROR THAT HAD PREPARED THE SPECIFICATIONS FOR THE SYSTEM UNDER A RESEARCH AND DEVELOPMENT STUDY, DID NOT VIOLATE ANY MANDATORY REGULATIONS, SINCE THE FEDERAL PROCUREMENT REGULATIONS DO NOT CONTAIN AN ORGANIZATIONAL CONFLICTS OF INTEREST PROVISION AND THE DEPARTMENT HAS NOT ISSUED SPECIFIC RULES GOVERNING CONFLICTS OF INTERESTS, AND EVEN IF THE ADMINISTRATION WAS SUBJECT TO THE DEPARTMENT OF DEFENSE DIRECTIVES 5500.10, "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST," WHICH IT IS NOT, THE DIRECTIVE IS NOT SELF-EXECUTING AND WOULD NOT APPLY IN THE ABSENCE OF NOTICE TO PROSPECTIVE CONTRACTORS AND INCLUSION OF A RESTRICTIVE CLAUSE IN THE CONTRACT. MOREOVER, WHETHER THE UTCS PROGRAM REPRESENTS A JUDICIOUS, AS DISTINGUISHED FROM LEGAL, EXPENDITURE OF PUBLIC FUNDS WOULD NOT AFFECT THE LEGALITY OF THE CONTRACT. CONTRACTS - NEGOTIATION - COMPETITION - FAILURE TO SOLICIT PROPOSALS FROM ALL SOURCES THE FACT THAT SEVERAL SOURCES EXPERIENCED IN TRAFFIC CONTROL SYSTEMS WERE NOT SOLICITED TO SUBMIT OFFERS BY THE FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION, UNDER A REQUEST FOR PROPOSALS, DOES NOT ESTABLISH THAT ADEQUATE COMPETITION AND A REASONABLE PRICE WERE NOT OBTAINED, SINCE IN RESOLVING QUESTIONS CONCERNING THE ADEQUACY OF THE SOLICITATION OF SUPPLY SOURCES THE PROPRIETY OF A PARTICULAR PROCUREMENT MUST BE DETERMINED FROM THE GOVERNMENT'S POINT OF VIEW UPON THE BASIS OF WHETHER ADEQUATE COMPETITION AND REASONABLE PRICES WERE OBTAINED AND NOT UPON WHETHER EVERY POSSIBLE SUPPLY SOURCE WAS OFFERED AN OPPORTUNITY TO BID OR SUBMIT A PROPOSAL. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - SUBMISSION DATE THE DETERMINATION OF THE DATE TO BE SPECIFIED FOR RECEIPT OF PROPOSALS IS A MATTER OF JUDGMENT PROPERLY VESTED IN THE CONTRACTING AGENCY; AND WHERE THE RECORD EVIDENCES THAT A 40-DAY PERIOD FOR THE SUBMISSION OF PROPOSALS ON AN URBAN TRAFFIC CONTROL SYSTEM TO THE FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION, WAS ADEQUATE FOR ANY OFFEROR WHO HAD AN INTEREST IN THE PROJECT, AS WELL AS EXPERIENCE, KNOWLEDGE, SYSTEMS EXPERTISE, AND CAPABILITY SUFFICIENT TO MEET THE REQUIREMENTS CONTAINED IN THE REQUEST FOR PROPOSALS, IT IS CONCLUDED THE DATE SPECIFIED FOR THE SUBMISSION OF OFFERS WAS NOT ARBITRARILY OR CAPRICIOUSLY SELECTED, NOR WAS THE DATE UNDULY RESTRICTIVE OF COMPETITION FOR THE PROCUREMENT. CONTRACTS - NEGOTIATION - EVALUATION FACTORS - CRITERIA WHERE A SOLICITATION IS DEFICIENT IN NOT PROVIDING REASONABLY DEFINITE INFORMATION AS TO THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA OR FACTORS SET OUT IN THE REQUEST FOR PROPOSALS, AND THE SUFFICIENCY OF THE INFORMATION IS NOT QUESTIONED PRIOR TO THE SUBMISSION OF PROPOSALS, AND THE RECORD DOES NOT ESTABLISH THAT ANY OFFEROR WAS PLACED AT A COMPETITIVE ADVANTAGE OR DISADVANTAGE BY THE INADEQUACY OF THE INFORMATION, THE DEFICIENCY IS NOT SUFFICIENTLY MATERIAL TO DISTURB A CONTRACT AWARD. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - AMBIGUOUS ALTHOUGH IT IS INCUMBENT UPON A GOVERNMENT AGENCY TO STATE THE MATERIAL REQUIREMENTS OF A PROCUREMENT IN A CLEAR AND UNAMBIGUOUS MANNER, SHOULD ANY ASPECT OF A SOLICITATION REQUIRE CLARIFICATION, GOOD FAITH AND AN OBSERVANCE OF THE SPIRIT OF COMPETITIVE SOLICITATION, AS WELL AS SOUND BUSINESS PRACTICE ON THE PART OF COMPETITORS FOR GOVERNMENT CONTRACTS, DICTATE THAT THE APPROPRIATE TIME FOR A DETAILED EXAMINATION OF ANY PROVISION CONSIDERED TO BE AMBIGUOUS OR CONFUSING SHOULD BE PRIOR TO THE TIME SPECIFIED FOR SUBMISSION OF PROPOSALS OR BIDS, AND ANY UNRESOLVED AMBIGUITIES SHOULD BE THE SUBJECT OF A TIMELY PROTEST. CONTRACTS - NEGOTIATION - COMPETITION - DISCUSSION WITH ALL OFFERORS REQUIREMENT - NONRESPONSIVE PROPOSALS WHEN A PROPOSAL IS DETERMINED UPON INITIAL EVALUATION TO BE OUTSIDE THE COMPETITIVE RANGE, THERE IS NO REQUIREMENT IN ACCORDANCE WITH SECTION 1- 3.805-1(A) OF THE FEDERAL PROCUREMENT REGULATIONS TO CONDUCT FURTHER DISCUSSIONS CONCERNING THE DEFICIENCIES OF THE PROPOSAL, THE SECTION REQUIRING THAT AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHOULD BE CONDUCTED ONLY WITH RESPONSIBLE OFFERORS "WHO SUBMITTED PROPOSALS WITHIN A COMPETITIVE RANGE." CONTRACTS - COST PLUS - BASIS FOR AWARD THE COST-PLUS-A-FIXED-FEE CONTRACTS AUTHORIZED BY 41 U.S.C. 254(B) MAY BE USED WHEN THE HEAD OF AN AGENCY DETERMINES THAT SUCH METHOD OF CONTRACTING IS LIKELY TO BE LESS COSTLY THAN OTHER METHODS OR THAT IT IS IMPRACTICAL TO SECURE PROPERTY OR SERVICES OF THE KIND OR QUALITY REQUIRED WITHOUT USE OF A COST OR COST-PLUS-A-FIXED-FEE OR AN INCENTIVE TYPE CONTRACT; AND SINCE THE ADMINISTRATIVE DETERMINATION IS AFFORDED FINALITY BY 41 U.S.C. 257(A), THERE IS NO LEGAL BASIS TO REQUIRE CANCELLATION OF A CONTRACT SIMPLY BECAUSE IT IS A COST REIMBURSEMENT TYPE OF CONTRACT.

TO THE LFE CORPORATION, FEBRUARY 17, 1971:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JULY 15, 1970, AND TO SUBSEQUENT CORRESPONDENCE FROM YOU AND YOUR ATTORNEYS, PROTESTING THE AWARD OF A CONTRACT TO SPERRY RAND CORPORATION UNDER REQUEST FOR PROPOSALS (RFP) NO. 241, ISSUED BY THE FEDERAL HIGHWAY ADMINISTRATION (FHWA), DEPARTMENT OF TRANSPORTATION, WASHINGTON, D.C.

REQUEST FOR PROPOSALS NO. 241 WAS ISSUED ON APRIL 22, 1970, TO 20 FIRMS, INCLUDING LFE. THE STATEMENT OF WORK WAS SET OUT IN THE RFP AS FOLLOWS:

THE CONTRACTOR SHALL FURNISH THE NECESSARY FACILITIES, MATERIALS, PERSONNEL, AND SUCH OTHER SERVICES AS MAY BE REQUIRED, AND IN CONSULTATION WITH THE GOVERNMENT, CONDUCT A RESEARCH AND DEVELOPMENT STUDY ENTITLED, "ADVANCED CONTROL TECHNOLOGY IN URBAN TRAFFIC CONTROL SYSTEMS - INSTALLATION," WITH THE OBJECTIVES TO PROCURE, INSTALL, AND TO RENDER TO OPERATIONAL STATUS (INCLUDING SOFTWARE) THE URBAN TRAFFIC CONTROL SYSTEM AND THE BUS PRIORITY SYSTEM.

THE CONTRACT SHALL COVER THE FINAL SYSTEM ANALYSIS, ENGINEERING PROCUREMENT AND INSTALLATION OF THE EQUIPMENT FOR THE FIRST PHASE OF THE URBAN TRAFFIC CONTROL SYSTEM COMPUTER-CONTROLLED SIGNAL SYSTEM, AND THE BUS PRIORITY SYSTEM. A NECESSARY REQUIREMENT IS THE PROGRAMMING OF ALL THE SOFTWARE AND THE DEVELOPMENT OF THE INITIAL COMPLEMENT OF SIGNAL CONTROL TIMING PATTERNS. A MORE DETAILED METHOD OF PROCEDURE WILL BE INSERTED HERE BASED UPON THE SELECTED CONTRACTOR'S METHOD OF APPROACH.

ON JUNE 1, 1970, THE CLOSING DATE FOR RECEIPT OF PROPOSALS, THE FOLLOWING COST-PLUS-A-FIXED-FEE PROPOSALS WERE RECEIVED AND RECORDED:

SPERRY RAND $3,778,581

LFE 4,026,930

TRW, INC. 4,556,549

YOU ALSO STATED IN YOUR TRANSMITTAL LETTER THAT YOU WERE WILLING TO NEGOTIATE A FIRM FIXED-PRICE CONTRACT FOR THE PROJECT. ALTHOUGH THE PROPOSED COST OF YOUR PROPOSAL WAS LESS THAN THE COST SHOWN IN TRW'S PROPOSAL, PRICE WAS NOT OF PRIMARY IMPORTANCE BECAUSE A COST REIMBURSEMENT TYPE OF CONTRACT WAS INVOLVED, AND THE RFP PROVIDED THAT AWARD MIGHT BE MADE TO OTHER THAN THE LOWEST OFFEROR IF ANOTHER PROPOSAL WAS CLEARLY SUPERIOR.

THE THREE PROPOSALS RECEIVED FROM SPERRY RAND, TRW, AND YOUR COMPANY WERE EXAMINED AND ASSIGNED NUMERICAL SCORES OF 83.6, 77.8 AND 61.4, RESPECTIVELY, BY A TECHNICAL EVALUATION TEAM. WITH NO DISSENTING VOTES, THE TECHNICAL EVALUATION TEAM RECOMMENDED THAT YOUR PROPOSAL BE ELIMINATED FROM FURTHER CONSIDERATION. IN THESE CIRCUMSTANCES, THE CONTRACTING OFFICER DETERMINED THAT YOUR PROPOSAL WAS OUTSIDE THE COMPETITIVE RANGE. WRITTEN QUESTIONS CONCERNING THEIR PROPOSALS WERE THEN PROVIDED SPERRY RAND AND TRW, AND ORAL DISCUSSIONS WERE CONDUCTED WITH THOSE FIRMS ON JUNE 15, 1970. FOLLOWING THE DISCUSSIONS, FINAL COST PROPOSALS (INCLUDING REVISIONS AS A RESULT OF THE DISCUSSIONS) WERE SUBMITTED AND THE TECHNICAL AND BUSINESS EVALUATIONS OF THE PROPOSALS WERE COMPLETED. SPERRY RAND'S FINAL COST PROPOSAL TOTALED $3,975,849, AND TRW PROPOSED A FINAL PRICE OF $4,083,650. THE EVALUATION PANEL RECOMMENDED TO THE CONTRACTING OFFICER THAT A CONTRACT BE NEGOTIATED WITH SPERRY RAND. FINAL NEGOTIATIONS WERE UNDERTAKEN WITH SPERRY RAND AND THE CONTRACT WAS AWARDED TO THAT FIRM ON JUNE 30, 1970, IN THE AMOUNT OF $3,775,691. ON THE DAY PRECEDING THE AWARD, YOU WITHDREW YOUR PROPOSAL.

YOU SAY THAT YOU ARE NOT SEEKING THE CONTRACT FOR YOUR COMPANY AND THAT YOUR POSITION IS THAT THE CONTRACT SHOULD NOT HAVE BEEN AWARDED TO SPERRY RAND FOR A NUMBER OF REASONS, INCLUDING YOUR BELIEF THAT THE ENTIRE URBAN TRAFFIC CONTROL SYSTEMS (UTCS) PROGRAM IS OF QUESTIONABLE VALUE AND COULD WELL BE DISCONTINUED, THUS SAVING THE GOVERNMENT A CONSIDERABLE AMOUNT OF MONEY. THE DETAILS OF YOUR PROTEST ARE SUMMARIZED IN YOUR ATTORNEY'S LETTER OF AUGUST 3, 1970, AS FOLLOWS:

LFE CORPORATION IS PROTESTING THE DEPARTMENT OF TRANSPORTATION AWARD TO SPERRY RAND ON THE GROUND THAT THIS NEGOTIATED PROCUREMENT HAS BEEN SO FLAWED BY ACTION CONTRARY TO REGULATIONS AND IN EXCESS OF ADMINISTRATIVE AUTHORITY THAT THE PROCUREMENT ITSELF SHOULD BE CANCELED. FIRST, LFE CONTENDS THAT THIS PROCUREMENT HAS BEEN CONDUCTED IN SUCH A WAY AS TO MINIMIZE COMPETITION, RATHER THAN MAXIMIZE IT. INDEED, THERE HAS BEEN SUCH A COMBINATION OF ANTICOMPETITIVE FACTORS HERE THAT VIRTUALLY NO COMPETITION HAS EXISTED. THAT COMBINATION OF FACTORS INCLUDES THE FOLLOWING:

(1) AN ORGANIZATIONAL CONFLICT OF INTEREST ON THE PART OF SPERRY, WHICH PERFORMED THE PRECEDING, FEDERALLY FUNDED CONTRACT FOR THE PREPARATION OF THE RFP;

(2) AN INADEQUATE SOLICITATION OF POTENTIAL SOURCES;

(3) AN INADEQUATE TIME FOR OFFERORS (OTHER THAN SPERRY) TO PREPARE OFFERS, INCLUDING HIGHLY IMPORTANT TECHNICAL PROPOSALS;

(4) BOTH A FAILURE OF PROCUREMENT OFFICIALS TO COMMUNICATE THE RELATIVE WEIGHTS TO BE GIVEN TO THE VARIOUS EVALUATION FACTORS AND THE INCLUSION OF AN IMPROPER, COMPLETELY SUBJECTIVE EVALUATION FACTOR;

(5) AMBIGUITIES WITHIN THE RFP, WHICH WAS PREPARED BY AND PROBABLY UNDERSTOOD ONLY BY SPERRY;

(6)APPARENT COMMUNICATIONS WITH SPERRY, WHICH ADVISED SPERRY OF THE TECHNICAL APPROACH EMPLOYED BY LFE AND PERMITTED IT TO MAKE A MAJOR CHANGE IN ITS TECHNICAL APPROACH; AND

(7) A FAILURE ON THE PART OF THE AGENCY, DESPITE ITS COMMUNICATIONS WITH SPERRY, TO ENGAGE IN DISCUSSIONS WITH LFE.

IN ADDITION, THE DEPARTMENT OF TRANSPORTATION OFFICIALS HAVE AWARDED A COST REIMBURSEMENT CONTRACT WHERE THERE IS NO NEED FOR SUCH A CONTRACT FORM AND WHERE LFE HAS IN FACT INDICATED ITS WILLINGNESS TO NEGOTIATE A FIXED PRICE CONTRACT; NO DISCUSSIONS WERE HELD WITH LFE WITH RESPECT TO THIS POSSIBILITY. FURTHERMORE, WE BELIEVE THIS COST REIMBURSEMENT CONTRACT IS FOR A TOTAL AMOUNT IN EXCESS OF APPROPRIATED FUNDS; EITHER THE CONTRACT AMOUNT IS IN EXCESS OF APPROPRIATED FUNDS OR THE AGENCY DOES NOT NEED FUNDS IT IS PRESENTLY REQUESTING FROM CONGRESS.

UNDER THESE CIRCUMSTANCES, AND WHERE THE NEED FOR THIS PROGRAM IS QUESTIONABLE TO BEGIN WITH, THE PROCUREMENT ACTION SHOULD BE ABANDONED. LFE CORPORATION REQUESTS THAT THE COMPTROLLER GENERAL INSTRUCT THE AGENCY THAT, IN VIEW OF THE ILLEGALITIES AND INFIRMITIES OF THIS PROCUREMENT, THE CONTRACT BE CANCELED.

AT THE OUTSET, IT SHOULD BE UNDERSTOOD THAT THE ACTION WHICH YOU REQUEST OF THIS OFFICE - TO REQUIRE THE CANCELLATION OF SPERRY RAND'S CONTRACT - MAY BE TAKEN ONLY UPON THE CONCLUSION THAT THE ACTIONS OF THE AGENCY IN AWARDING THE CONTRACT WERE SO INCOMPATIBLE WITH THE REQUIREMENTS OF THE PERTINENT LAWS, AND REGULATIONS ISSUED PURSUANT THERETO, AS TO RENDER THE CONTRACT CLEARLY ILLEGAL. WHETHER THE UTCS PROGRAM, OR THE SYSTEM INVOLVED IN THE SUBJECT CONTRACT, REPRESENTS A JUDICIOUS (AS DISTINGUISHED FROM LEGAL) EXPENDITURE OF PUBLIC FUNDS WOULD NOT AFFECT THE LEGALITY OF THE CONTRACT.

YOUR CONTENTIONS, AS SUMMARIZED ABOVE, WILL BE CONSIDERED IN THE ORDER PRESENTED.

IN SUPPORT OF YOUR FIRST CONTENTION, YOU POINT OUT THAT SECTION 1 3.101(D) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) REQUIRES THAT NEGOTIATED PROCUREMENTS BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT. YOU SAY THAT THE REQUIREMENT FOR MAXIMIZATION OF COMPETITION CONTAINS AN IMPLICIT BAN ON PROCUREMENTS WHICH UNNECESSARILY FAVOR ONE CONTRACTOR OVER OTHERS, AND THAT SPERRY RAND WAS IN A FAVORED POSITION BY REASON OF ITS HAVING PREPARED THE SPECIFICATIONS FOR THE PROCUREMENT UNDER A STUDY CONTRACT WITH THE FEDERAL HIGHWAY ADMINISTRATION. YOU MAINTAIN THAT SPERRY RAND EXPERIENCED AN ORGANIZATIONAL CONFLICT OF INTEREST IN THE PERFORMANCE OF THE STUDY CONTRACT THAT LED IT TO DRAFT SPECIFICATIONS FAVORING THE USE OF UNIVAC COMPUTERS, WHICH ARE MANUFACTURED BY SPERRY RAND.

IT IS YOUR FURTHER POSITION THAT ALTHOUGH THE SPECIFICATIONS ACCOMPANYING RFP NO. 241 OSTENSIBLY PERMITTED A CHOICE AMONG SEVERAL MANUFACTURERS' COMPUTERS, ALL BUT THE UNIVAC GROUP WERE UNCOMPETITIVE FROM A PRICE OR PERFORMANCE POINT OF VIEW. YOU NOTE THAT THE FPR DOES NOT CONTAIN REGULATIONS ON ORGANIZATIONAL CONFLICTS OF INTEREST AND THAT THE DEPARTMENT OF TRANSPORTATION (DOT) HAS NOT ISSUED SPECIFIC RULES GOVERNING SUCH CONFLICTS OF INTEREST. YOU SAY, HOWEVER, THAT CONFLICTS OF INTEREST IMPEDE COMPETITION IN CONTRAVENTION OF THE PROVISIONS OF THE FPR, AND THAT THE DEPARTMENT OF DEFENSE RULES ON ORGANIZATIONAL CONFLICTS OF INTEREST MAY BE USED TO MEASURE THE ANTICOMPETITIVE EFFECT AND IMPROPRIETY OF THE CONFLICTS OF INTEREST WHICH, YOU CONTEND, WERE INVOLVED IN THIS PROCUREMENT.

RULES 2 AND 3 OF DEPARTMENT OF DEFENSE DIRECTIVE 5500.10, JUNE 1, 1963 (ARMED SERVICES PROCUREMENT REGULATION APPENDIX G), "RULES FOR THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST," PERTAIN TO THE IMPOSITION OF RESTRICTIONS, IN THE PROCUREMENT OF NONDEVELOPMENTAL ITEMS OR SYSTEMS, ON CONTRACTORS WHO WERE INVOLVED IN THE PREPARATION OF SPECIFICATIONS, ETC., FOR THOSE ITEMS OR SYSTEMS. WHILE WE AGREE THAT IN THE ABSENCE OF DOT AND FPR INSTRUCTIONS ON ORGANIZATIONAL CONFLICTS OF INTEREST IT WOULD NOT HAVE BEEN OBJECTIONABLE FOR THE FHWA TO HAVE CONSULTED DIRECTIVE 5500.10 AS A GUIDE IN DRAFTING THE SOLICITATION FOR PROPOSALS ON PREPARATION OF THE SYSTEM'S SPECIFICATIONS AND FOR THE SUBSEQUENT PROCUREMENT OF THE SYSTEM, IT IS EVIDENT THAT THE FHWA IS NOT SUBJECT TO THE DEPARTMENT OF DEFENSE DIRECTIVE AND THAT IT DID NOT VIOLATE ANY MANDATORY REGULATIONS BY FAILING TO INCLUDE AN ORGANIZATIONAL CONFLICT OF INTEREST PROVISION IN THE CONTRACT. IN THIS CONNECTION, FHWA REPORTS THAT AS INDIVIDUAL CONTRACTS ARE WRITTEN, AN INFORMAL DETERMINATION IS MADE AS TO WHETHER SUCH EXCLUSION CLAUSES ARE RELEVANT AND APPLICABLE TO A GIVEN PROCUREMENT.

ADDITIONALLY, SINCE SPERRY RAND'S CONTRACT FOR THE PREPARATION OF THE SPECIFICATIONS DID NOT CONTAIN A CLAUSE RESTRICTING THE COMPANY IN A FOLLOW-ON PROCUREMENT, WE DO NOT BELIEVE UNDER SUCH CIRCUMSTANCES THAT THE DIRECTIVE SUPPORTS YOUR POSITION THAT A COMPETITIVE ADVANTAGE WAS AFFORDED SPERRY RAND AS THE DRAFTER OF THE SPECIFICATIONS, WHICH SHOULD HAVE MADE THAT FIRM INELIGIBLE TO COMPETE FOR THE SYSTEM. IN UPHOLDING THE AWARD IN 49 COMP. GEN. 463 (1970) WE STATED:

AN EXAMINATION OF DOD DIRECTIVE 5500.10 INDICATES THAT IT IS NOT SELF EXECUTING, BUT SPECIFICALLY PROVIDES THAT PROSPECTIVE CONTRACTORS WILL BE ADVISED OF THE APPLICABILITY OF THE ORGANIZATIONAL CONFLICT OF INTEREST RULES BY A NOTICE IN THE SOLICITATION AND BY A CLAUSE IN THE RESULTING CONTRACT. SEE B-165794, APRIL 25, 1969, 48 COMP. GEN. . ASPR 1-113.2(A), DEALING WITH ORGANIZATIONAL CONFLICTS OF INTEREST, PROVIDES THAT "THE DIRECTIVE CANNOT OF ITSELF IMPOSE ANY OBLIGATIONS ON THE CONTRACTOR; SUCH OBLIGATIONS MUST BE IMPOSED BY A CONTRACT CLAUSE DESIGNED TO CARRY OUT THE INTENT OF THE DIRECTIVE." IT IS FURTHER PROVIDED THAT PROSPECTIVE CONTRACTORS MUST BE ADVISED OF THE APPLICABILITY OF SUCH RULES AND BE GIVEN AN OPPORTUNITY TO NEGOTIATE THE TERMS OF THE CLAUSE AND ITS APPLICATION. THE CONTRACT AWARDED TO A.V.L. IN 1965 CONTAINED NO CLAUSE RESTRICTING A.V.L.'S ACTIVITIES ON LATER PROCUREMENTS OR THE DEVELOPMENT OF THE SMALL, LIGHTWEIGHT COMPRESSION ENGINE IN QUESTION. *** HERCULES, LIKEWISE, IS UNDER NO "HARDWARE EXCLUSION" CLAUSE OR ANY OTHER RESTRICTION ON FOLLOW-ON PROCUREMENTS WHICH MAY HAVE PREVENTED IT FROM ACCEPTING THE AWARD OF THE INSTANT CONTRACT.

ASPR 1-113.2(C) PROVIDES THAT:

"THE CONTRACTING OFFICER SHALL NOT IMPOSE RESTRICTIONS UNDER THE DIRECTIVE IN FOLLOW-ON PROCUREMENTS ON ANY PROSPECTIVE CONTRACTOR IN THE ABSENCE OF A SPECIFIC CONTRACTUAL AGREEMENT WITH THE CONTRACTOR."

THE CONTRACT CLAUSE IS THE CONTROLLING FACTOR. THIS CONCLUSION IS SUPPORTED BY THE HOUSE REPORT CONCERNING, "AVOIDING CONFLICTS OF INTERESTS IN DEFENSE CONTRACTING AND EMPLOYMENT" (HOUSE COMMITTEE ON GOVERNMENT OPERATIONS, H.R. REP. 917, 88TH CONG., 1ST SESS. (1963)), AT PAGE 72:

IT WOULD SEEM TO FOLLOW *** THAT THE CONTRACT CLAUSE IS THE CONTROLLING FACTOR. IF THE PROHIBITIONS CITED AND ILLUSTRATED IN THE DIRECTIVE DO NOT APPLY IN ANY GIVEN CASE, THEY WILL NOT BE EMBODIED IN THE TERMS OF THE CONTRACT. IN SUCH CASES, THE CONTRACTOR NEED NOT BE CONCERNED ABOUT THE PRESENT OR FUTURE RESTRICTIONS OR PROHIBITIONS. THUS, AS EACH INDIVIDUAL CONTRACT IS WRITTEN, A DETERMINATION IS MADE WHETHER EXCLUSION CLAUSES ARE RELEVANT AND HENCE APPLICABLE.

IT IS THEREFORE CLEAR THAT THE DIRECTIVE CANNOT BE APPLIED IN THE ABSENCE OF AN APPROPRIATE CONTRACT CLAUSE AND NEITHER A.V.L. NOR HERCULES WAS SUBJECT TO A CONTRACTUAL RESTRICTION ON FUTURE PROCUREMENTS. UNDER THESE CIRCUMSTANCES, THE AWARD TO HERCULES DID NOT VIOLATE THE PROVISIONS OF DOD DIRECTIVE 5500.10.

REGARDING YOUR STATEMENT THAT SPERRY RAND DRAFTED SPECIFICATIONS UNDER ITS STUDY CONTRACT FAVORING THE USE OF UNIVAC COMPUTERS, WE NOTE THAT THE SPECIFICATIONS LISTED OTHER ACCEPTABLE COMPUTER SYSTEMS, AND THEIR TYPICAL CONFIGURATION PRICES, WHICH ARE COMPETITIVE WITH THE UNIVAC EQUIPMENT. ALSO, THE SPECIFICATIONS DID NOT INDICATE THAT THE LIST WAS ALL-INCLUSIVE OR THAT OTHER COMPUTERS WERE NOT AVAILABLE AND ACCEPTABLE. ACCORDINGLY, WE ARE UNABLE TO ACCEPT YOUR VIEW THAT THE SPECIFICATIONS WERE RESTRICTIVE OF COMPETITION IN THIS AREA EVEN THOUGH THE XEROX DATA SYSTEMS SIGMA 3 WHICH YOU PROPOSED TO USE IN COMBINATION WITH THE SIGMA 5, WAS NOT LISTED. IN YOUR SECOND CONTENTION YOU COMPLAIN THAT MAXIMUM COMPETITION WAS NOT SECURED BECAUSE SEVERAL COMPANIES EXPERIENCED IN TRAFFIC CONTROL SYSTEMS WERE NOT SOLICITED; THE RFP PROVIDED THAT OFFERORS BE ABLE TO SHOW THAT THEY HAD SUCCESSFULLY PERFORMED GOVERNMENT DEVELOPMENT CONTRACTS OF $3,000,000 WITHIN THE LAST 5 YEARS; THE PUBLISHED NOTICE OF THE PROCUREMENT STATED THAT THE NOTICE WAS FOR INFORMATION ONLY AND THAT THE RFP WAS NOT AVAILABLE; AND LFE, A MOST EXPERIENCED FIRM IN TRAFFIC CONTROL SYSTEMS, WAS NOT FURNISHED A COPY OF THE RFP UNTIL IT MADE A REQUEST FOR A COPY. IN RESPONSE TO THESE ASSERTIONS THE AGENCY REPORTED:

ON APRIL 9, 1970, A REPRESENTATIVE OF LFE VISITED WITH THE UTCS PROJECT STAFF WHERE FOR THE FIRST TIME LFE DISPLAYED A REAL CORPORATE INTEREST IN THE UTCS PROJECT. THIS OFFICIAL WAS GIVEN ALL AVAILABLE INFORMATION IN ADDITION TO BEING DIRECTED TO THE CLEARINGHOUSE FOR FEDERAL SCIENTIFIC AND TECHNICAL INFORMATION WHERE INFORMATION REGARDING SYSTEM SPECIFICATIONS HAD BEEN AVAILABLE SINCE FEBRUARY 1970. IT IS APPARENT TO US THAT LFE HAD KNOWLEDGE OF, BUT DISPLAYED NO TANGIBLE INTEREST IN, THE DEVELOPMENT OF THE UTCS PROJECT SINCE THE INCEPTION OF THE PROJECT PLANNING PHASE, IN JUNE 1968, AND THEIR DECISION TO BECOME AN ACTIVE OFFEROR WAS MADE AT A RATHER LATE DATE.

IT IS TRUE THAT LFE WAS NOT ON A PRELIMINARY LIST PREPARED IN DECEMBER 1969, BY THE TECHNICAL OFFICE. THIS LIST NAMING 15 POTENTIAL CONTRACTORS WAS COMPILED FROM AVAILABLE INFORMATION AS TO COMPETENCE, CAPABILITY, SYSTEMS EXPERTISE, INTEREST AND GENERAL ABILITY TO PERFORM A MAJOR SYSTEM DEVELOPMENT. HOWEVER, BETWEEN JANUARY AND THE OFFICIAL MAILING ON APRIL 22, FIVE ORGANIZATIONS WERE ADDED, INCLUDING LFE. THE REASON WHY CONVENTIONAL SUPPLIERS OF TRAFFIC CONTROL EQUIPMENT WERE NOT ON THE SOLICITATION LIST LIES IN THE FACT THAT THE PROJECT IS PRIMARILY DEVELOPMENTAL RESEARCH AND INVOLVES MANY OTHER ASPECTS BESIDES CONVENTIONAL TRAFFIC CONTROL EQUIPMENT. AS A POINT OF FACT, SEVERAL TRAFFIC CONTROL EQUIPMENT MANUFACTURERS VISITED THE PROJECT STAFF OF THE TRAFFIC SYSTEMS DIVISION AND UPON LEARNING OF THE SCOPE OF RFP-241 INDICATED THEY WOULD NOT BE INTERESTED OFFERORS. WHEN LFE INDICATED THEIR INTEREST BEFORE THE RFP WAS RELEASED, THEY WERE ADDED TO THE SOLICITATION LIST (TAB 4).

IN RESOLVING QUESTIONS CONCERNING THE ADEQUACY OF THE SOLICITATION OF SUPPLY SOURCES, WE HAVE HELD THAT THE PROPRIETY OF A PARTICULAR PROCUREMENT MUST BE DETERMINED FROM THE GOVERNMENT'S POINT OF VIEW UPON THE BASIS OF WHETHER ADEQUATE COMPETITION AND REASONABLE PRICES WERE OBTAINED, NOT UPON WHETHER EVERY POSSIBLE BIDDER WAS AFFORDED AN OPPORTUNITY TO BID. B-167379, AUGUST 15, 1969; B-164047, JUNE 10, 1968. FURTHER, IT IS CLEAR THAT YOUR FIRM WAS NOT DENIED AN OPPORTUNITY TO COMPETE FOR THE CONTRACT, INASMUCH AS YOU WERE FURNISHED A COPY OF THE RFP AND DID, IN FACT, SUBMIT A TECHNICAL PROPOSAL IN RESPONSE THERETO. IN ANY EVENT, SINCE THE RECORD DOES NOT ESTABLISH THAT ADEQUATE COMPETITION AND A REASONABLE PRICE WERE NOT OBTAINED, NO BASIS IS PROVIDED FOR CANCELING THE CONTRACT ON THOSE GROUNDS.

YOU ALSO CONTEND, HOWEVER, THAT THE 40-DAY PERIOD ALLOWED OFFERORS TO SUBMIT PROPOSALS WAS INADEQUATE (EXCEPT FOR SPERRY RAND) IN VIEW OF THE CONSIDERABLE TECHNICAL EFFORT, STUDY, AND JUDGMENT REQUIRED. YOU CITE, AS SUPPORT, THE REQUIREMENT IN THE DEPARTMENT OF TRANSPORTATION PROCUREMENT REGULATIONS (12-2.202-1) THAT THE TIME PERMITTED SHOULD REFLECT THE CONSIDERED JUDGMENT OF THE CONTRACTING OFFICER TAKING INTO ACCOUNT ALL OF THE FACTS SURROUNDING THE PROCUREMENT WHICH, YOU CONTEND, IS NOT THE SITUATION HERE. AS INDICATED IN THE CITED REGULATION, THE AMOUNT OF TIME ALLOWED FOR RESPONDING TO A SOLICITATION IS A MATTER COMMITTED TO THE BEST JUDGMENT OF THE CONTRACTING OFFICER. IN THIS CONNECTION, THE RECORD SHOWS THAT THE RECOMMENDED 6-WEEK PERIOD (AFTER MAILING OF THE RFP'S) FOR SUBMISSION OF PROPOSALS WAS REVIEWED AND APPROVED BY THE APPROPRIATE OFFICIALS CONCERNED. IT IS ALSO REPORTED THAT IT WAS THE CONSIDERED OPINION OF THE RESPONSIBLE TECHNICAL OFFICE THAT THE PERIOD AUTHORIZED FOR THE PREPARATION OF THE PROPOSAL WAS ADEQUATE FOR ANY BIDDER WHO HAD AN INTEREST IN THE PROJECT AS WELL AS EXPERIENCE, KNOWLEDGE, SYSTEMS EXPERTISE, AND CAPABILITY SUFFICIENT TO MEET THE REQUIREMENTS CONTAINED IN THE RFP. IN ADDITION, IT IS NOTED THAT ALTHOUGH PROSPECTIVE OFFERORS WERE ADVISED AT THE PREPROPOSAL CONFERENCE ON MAY 1, 1970, THAT THE AGENCY DID NOT ANTICIPATE EXTENDING THE PROPOSAL OPENING DATE OF JUNE 1, 1970, NO OBJECTION WAS RAISED TO THE TIME ALLOWED FOR SUBMISSION OF PROPOSALS, NOR DID YOU OR ANY OF THE OTHER PROSPECTIVE OFFERORS PROTEST THAT SUCH TIME WAS INSUFFICIENT FOR THE PREPARATION OF ADEQUATE PROPOSALS.

AS INDICATED ABOVE, THE DETERMINATION OF THE DATE TO BE SPECIFIED FOR RECEIPT OF PROPOSALS IS A MATTER OF JUDGMENT PROPERLY VESTED IN THE CONTRACTING AGENCY, AND WE CANNOT CONCLUDE FROM THE RECORD THAT THE DATE SPECIFIED WAS ARBITRARILY OR CAPRICIOUSLY SELECTED, OR THAT SUCH DATE UNDULY RESTRICTED COMPETITION FOR THE PROCUREMENT.

YOU NEXT CONTEND THAT THE COMPLETE LIST OF EVALUATION FACTORS, AND THE WEIGHTS ASSIGNED TO THOSE FACTORS, WERE NOT COMMUNICATED IN THE RFP. YOU FURTHER ALLEGE THAT THE EVALUATION POINTS GIVEN TO CERTAIN CRITERIA WERE UNREALISTIC AND THAT THE AGENCY DID NOT USE THOSE EVALUATION FACTORS WHICH WERE IDENTIFIED IN THE RFP BUT INSTEAD USED A RATING FORM HAVING NO APPARENT CORRESPONDENCE TO THE CRITERIA SPECIFIED IN THE RFP. YOU ALSO SAY THAT THE SECOND CRITERION LISTED IN THE RFP, WHICH SHOWED AS AN EVALUATION FACTOR "THE SUBJECTIVE JUDGMENT OF AN EVALUATION PANEL AS TO THE ABILITY OF THE OFFEROR TO BRING ADEQUATE STAFF AND FACILITIES TO BEAR UPON THE PROBLEMS *** ," REDUCED COMPETITION BY PROMOTING AMBIGUITY AS TO THE BASIS FOR COMPETITION.

THE RFP PROVIDED THAT THE PROPOSALS WOULD BE EVALUATED AND THE PROSPECTIVE CONTRACTOR SELECTED PRINCIPALLY ON THE FOLLOWING CRITERIA:

1. GENERAL QUALITY AND RESPONSIVENESS OF PROPOSAL

A. RECOGNITION OF OVERALL OBJECTIVES.

B. COMPREHENSIVENESS, OBJECTIVITY AND COMPLIANCE WITH CRITERIA OF THE REQUIREMENTS AS SET FORTH IN THE PROSPECTUS.

C. THE OFFEROR'S EXERCISE OF JUDGMENT, THOROUGH KNOWLEDGE, AND COMPETENCE IN RELATED FIELDS.

D. RESPONSIVENESS TO REQUIREMENTS, TERMS, CONDITIONS.

E. FACILITIES AVAILABLE.

2. THE SUBJECTIVE JUDGMENT OF AN EVALUATION PANEL AS TO THE ABILITY OF THE OFFEROR TO BRING ADEQUATE STAFF AND FACILITIES TO BEAR UPON THE PROBLEMS TO INSURE A HIGH PROBABILITY OF SUCCESSFUL ACCOMPLISHMENT OF THE OBJECTIVES. AN EVALUATION WILL BE MADE OF PAST PERFORMANCE DATA ON SIMILAR GOVERNMENT DEVELOPMENT CONTRACTS OVER 3 MILLION DOLLARS WHICH WERE COMPLETED OR IN PROCESS WITHIN THE LAST FIVE YEARS. DATA ON AT LEAST THE FOLLOWING ITEMS SHOULD BE INCLUDED IN THE PROPOSAL.

A. NAME OF CONTRACT, CONTRACT NUMBER, CONTRACT OBJECTIVES.

B. NAME OF SPONSORING AGENCY, GOVERNMENT CONTRACTING OFFICER AND TECHNICAL MANAGER.

C. ORIGINAL CONTRACT PRICE AND FINAL CONTRACT PRICE WITH REASONS FOR OVERRUNS, IF ANY.

D. ORIGINAL COMPLETION DATE AND FINAL COMPLETION DATE WITH REASONS FOR TIME EXTENSIONS, IF ANY.

E. DOLLAR AMOUNT OF MAJOR SUBCONTRACTS AND NAME OF SUBCONTRACTOR.

3. THE QUALIFICATIONS OF STAFF TO BE ASSIGNED TO THE PROJECT.

4. COSTS: COSTS WILL BE A FACTOR, HOWEVER AWARD MAY BE MADE TO OTHER THAN THE LOWEST OFFEROR IN AN INSTANCE WHEREBY A PROPOSAL IS CLEARLY SUPERIOR IN THE CATEGORIES REFLECTED ABOVE.

AS YOU ALLEGE, THE EVALUATION PANEL DID NOT ACTUALLY EVALUATE THE PROPOSALS IN THE MANNER AS THE CRITERIA WERE SET OUT IN THE RFP, BUT USED A PREPARED FORM ENTITLED "CRITERIA FOR INDIVIDUAL EVALUATION OF PROPOSALS." THE FORM LISTED 32 EVALUATION FACTORS AND THE WEIGHT APPLICABLE TO EACH FACTOR. THE BASIS FOR USING THE FORM, WHICH WAS DESIGNED FOR THIS PROCUREMENT, AND ITS CORRELATION TO THE CRITERIA SHOWN IN THE RFP, ARE EXPLAINED BY THE AGENCY AS FOLLOWS:

THE "CRITERIA FOR INDIVIDUAL EVALUATION" REFLECTS ALL THE BASIC ELEMENTS OUTLINED IN RFP NO. 241. THE DIFFERENCE IS IN THE DETAILED BREAKDOWN OF THE MAJOR SUBGROUPS WHICH WAS CONSIDERED NECESSARY FOR THE PROPER EVALUATION OF THE INDIVIDUAL PROPOSALS AND THE ASSIGNMENT OF WEIGHTS TO INDIVIDUAL CRITERION IN ACCORDANCE WITH ESTABLISHED PRACTICES FOR A LARGE SYSTEM DEVELOPMENT-TYPE CONTRACT. THE OTHER DIFFERENCE IS THAT A PAST PERFORMANCE CRITERION WAS NOT DIRECTLY STATED IN THE INDIVIDUAL EVALUATION SHEET. IT WAS FELT THAT THIS ASPECT WAS ADEQUATELY COVERED IN THE SUMMARY OF INDIVIDUAL EVALUATIONS OF PROPOSALS (TAB 6) UNDER THE FOLLOWING CRITERIA:

A. GENERAL - ADEQUACY OF THE OFFEROR'S FACILITIES, RESOURCES AND MANAGEMENT SUPPORT FOR THIS PROJECT.

B. PROJECT MANAGEMENT - ALL CRITERIA STATED THEREIN.

FOR FURTHER CORRELATION THE FOLLOWING BREAKDOWN IS OFFERED:

(CHART OMITTED)

ALTHOUGH IT IS EVIDENT THAT THE CRITERIA LISTED IN THE RFP ARE NOT BROKEN DOWN TO SPECIFY EACH FACTOR USED IN THE EVALUATION PROCESS, WE BELIEVE THERE IS SUFFICIENT CORRELATION BETWEEN THE DETAILED EVALUATION FACTORS ACTUALLY USED AND THE GENERALIZED CRITERIA SHOWN IN THE RFP TO SATISFY THE REQUIREMENT THAT PROSPECTIVE OFFERORS BE ADVISED OF THE EVALUATION CRITERIA WHICH WILL BE APPLIED TO THEIR PROPOSALS. REGARDING THE WEIGHTS ASSIGNED TO THE EVALUATION FACTORS, SUCH MATTERS REQUIRE THE EXERCISE OF INFORMED JUDGMENT BY THE TECHNICAL EXPERTS OF THE AGENCY. UNLESS IT IS CLEARLY AND CONVINCINGLY ESTABLISHED THAT THE ADMINISTRATIVE DETERMINATIONS ARE ARBITRARY, CAPRICIOUS, OR NOT REASONABLY SUPPORTABLE BY THE FACTS, WE WILL NOT ATTEMPT TO SUBSTITUTE OUR JUDGMENT IN SUCH MATTERS FOR THAT OF THE TECHNICAL PERSONNEL OF THE AGENCY. ON THESE STANDARDS, WE CANNOT CONCLUDE THAT THE EVALUATION FACTORS AND THEIR RELATIVE WEIGHTS, AS USED IN THE EVALUATION OF THE PROPOSALS, WERE UNREALISTIC IN RELATIONSHIP TO THE OBJECTIVES OF THE SOLICITATION. IN ADDITION, WE NOTE THAT ALL OFFERORS RECEIVED THE SAME EVALUATION INFORMATION, AND THAT THE SAME PRESELECTED FACTORS AND WEIGHTS WERE USED IN EVALUATING EACH OF THE THREE PROPOSALS RECEIVED. SINCE THESE FACTORS AND WEIGHTS WERE ESTABLISHED BY AGENCY PERSONNEL WITHOUT ADVICE OR PARTICIPATION BY SPERRY RAND, WE CANNOT ACCEPT YOUR VIEW THAT SPERRY RAND RECEIVED AN UNFAIR COMPETITIVE ADVANTAGE THROUGH THEIR USE.

WE ALSO REJECT YOUR POSITION THAT THE USE OF "SUBJECTIVE JUDGMENT" IN THE SECOND CRITERION SHOWN IN THE RFP CREATED SUCH AN AMBIGUITY AS TO REDUCE COMPETITION FOR THE PROCUREMENT. THE LOGICAL IMPORT OF THAT PROVISION IS THAT AN EVALUATION WOULD BE MADE OF EACH OFFEROR'S STAFF, FACILITIES, AND PAST PERFORMANCE, AND THAT THE SUBJECTIVE JUDGMENT OF THE EVALUATION PANEL WOULD BE EXERCISED IN DETERMINING THE ABILITY OF THE OFFEROR TO ACCOMPLISH THE PROCUREMENT'S OBJECTIVES. WHILE THE CRITERION COULD HAVE BEEN STATED IN A CLEARER MANNER, THE EVALUATION IN SUCH AREAS OBVIOUSLY REQUIRES A BROAD EXERCISE OF JUDGMENT; AND WE DO NOT BELIEVE THAT THE REFERENCE TO THE SUBJECTIVE JUDGMENT OF THE EVALUATION PANEL CREATED AN AMBIGUITY AS TO THE FACTORS WHICH WERE TO BE EVALUATED. IN SUCH CONNECTION, WE NOTE THAT AN EXPLANATION OF THE STATEMENT WAS NOT REQUESTED BY ANY OF THE PROSPECTIVE OFFERORS, AND IT IS ELEMENTARY THAT IF AN OFFEROR HAD ANY SERIOUS QUESTION AS TO THE MEANING OF THE PROVISION HE SHOULD HAVE PRESENTED IT PRIOR TO THE SUBMISSION OF HIS PROPOSAL.

REGARDING YOUR CONTENTION THAT THE WEIGHTS ASSIGNED TO THE EVALUATION CRITERIA OR FACTORS WERE NOT COMMUNICATED IN THE RFP, NEITHER OUR OFFICE NOR THE APPLICABLE PROCUREMENT REGULATIONS REQUIRE DISCLOSURE OF THE PRECISE NUMERICAL WEIGHTS TO BE USED IN THE EVALUATION PROCESS. ALSO, SEE THE RULING OF THE COURT DATED DECEMBER 23, 1970, IN THE CASE OF PAGE COMMUNICATIONS ENGINEERS, INC. V STANLEY R. RESOR, ET AL., CIVIL ACTION NO. 3173-70, UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, IN WHICH IT IS STATED "FURTHERMORE, NEITHER BIDDER WAS ENTITLED TO BE ADVISED OF THE PRECISE NUMERICAL WEIGHTS TO BE USED."

IN DETERMINING WHETHER THE EVALUATION WEIGHTS SHOULD HAVE BEEN DISCLOSED TO PROSPECTIVE OFFERORS, WE STATED IN B-170449(1), NOVEMBER 17, 1970:

WHILE THIS IS AN ACCEPTABLE METHOD OF CONVEYING TO OFFERORS THE RELATIVE IMPORTANCE OF EVALUATION CRITERIA (SEE B-170142, OCTOBER 22, 1970), IT IS NOT A REQUIRED METHOD. RATHER, IT HAS BEEN OUR POSITION THAT OFFERORS SHOULD BE INFORMED OF "THE BROAD SCHEME OF SCORING TO BE EMPLOYED" AND "REASONABLY DEFINITE INFORMATION AS TO THE DEGREE OF IMPORTANCE TO BE ACCORDED TO PARTICULAR FACTORS IN RELATION TO EACH OTHER." 49 COMP. GEN. 229, 230-231 (1969).

IT IS OUR VIEW THAT THE SOLICITATION WAS DEFICIENT IN NOT PROVIDING REASONABLY DEFINITE INFORMATION AS TO THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA OR FACTORS SET OUT IN THE RFP. HOWEVER, OUR POSITION IN SUCH SITUATIONS IS THAT WHERE THE SUFFICIENCY OF THE INFORMATION CONCERNING THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA IS NOT QUESTIONED PRIOR TO THE SUBMISSION OF PROPOSALS, AND THE RECORD DOES NOT ESTABLISH THAT ANY OFFEROR WAS PLACED AT A COMPETITIVE ADVANTAGE OR DISADVANTAGE BY THE INADEQUACY OF SUCH INFORMATION, WE DO NOT CONSIDER THE DEFICIENCY AS SUFFICIENTLY MATERIAL TO DISTURB AN AWARD. SEE B-169754, DECEMBER 23, 1970, AND 50 COMP. GEN. 59 (1970), CITED THEREIN. SINCE THE CONTRACTING OFFICER WAS NOT ASKED PRIOR TO THE SUBMISSION OF PROPOSALS FOR A MORE DEFINITE STATEMENT OF THE RELATIVE IMPORTANCE OF THE EVALUATION FACTORS, AND SINCE WE DO NOT FIND THAT THE OFFERORS' COMPETITIVE POSITIONS WERE AFFECTED BY THE DEFICIENCY, WE WILL NOT INTERFERE WITH THE AWARD ON SUCH BASIS. IN CONTENDING THAT THE EQUIPMENT AND PERFORMANCE SPECIFICATIONS CONTAIN AMBIGUITIES, YOU POINT OUT SEVERAL SEEMING INCONSISTENCIES IN THE SPECIFICATIONS WHICH YOU SAY HINDERED YOUR PROPOSAL EFFORTS AND CAUSED YOUR RATING TO BE REDUCED. YOU ASSERT THAT SINCE SPERRY RAND PREPARED THE SPECIFICATIONS, IT WAS IN A FAVORED POSITION TO RESOLVE THE AMBIGUITIES. YOU ALSO STATE THAT WHEN YOUR REPRESENTATIVE MADE SPECIFIC INQUIRY OF THE AGENCY AS TO BUS DETECTORS, HE WAS ADVISED TO CHECK OTHER SOURCES, WHEREAS TRW RECEIVED HELPFUL INTERPRETATIONS CONCERNING BUS TRANSMITTERS FROM THE AGENCY DURING ITS PROPOSAL PREPARATION EFFORT. IT SHOULD BE NOTED THAT THE COMMUNICATIONS BETWEEN THE AGENCY AND TRW, WHICH YOU CITE IN SUPPORT OF YOUR LAST STATEMENT, WERE MADE AFTER THE SUBMISSION AND EVALUATION OF TRW'S PROPOSAL, DURING THE SUBSEQUENT DISCUSSIONS OR NEGOTIATIONS CONDUCTED WITH THAT FIRM, AND NOT IN CONNECTION WITH THE PREPARATION OF ITS INITIAL PROPOSAL AS YOU INDICATE. WE THEREFORE REJECT YOUR SUGGESTION THAT FAVORITISM WAS SHOWN TRW IN SUCH RESPECT.

COMPLAINTS CONCERNING AMBIGUITIES IN SPECIFICATIONS HAVE BEEN MADE TO THIS OFFICE ON MANY OCCASIONS. HERE, IN OBSERVANCE OF ITS RESPONSIBILITY TO SEE THAT THE REQUIREMENTS WERE CLEARLY STATED, THE AGENCY CONDUCTED MULTIPLE REVIEWS OF THE SPECIFICATIONS TO REDUCE THE OCCURRENCE OF ERRORS OR AMBIGUITIES IN THE MATERIAL RELEASED WITH THE RFP. WHILE IT APPEARS THAT ALL OF THE AMBIGUITIES MAY NOT HAVE BEEN DISCOVERED, THE VIEWS OF THIS OFFICE REGARDING ERRORS IN SPECIFICATIONS WERE STATED IN B-156025, MAY 4, 1965, AS FOLLOWS:

WHILE IT IS INCUMBENT UPON A GOVERNMENT AGENCY TO STATE THE MATERIAL REQUIREMENTS OF A PROCUREMENT IN A CLEAR AND UNAMBIGUOUS MANNER, WE RECOGNIZE THAT 100 PERCENT CLARITY AS TO ALL ASPECTS OF EVERY SOLICITATION IS UNLIKELY. IT IS NOT UNREASONABLE TO EXPECT THAT IN ANY EXTENSIVE RETROSPECTIVE EXAMINATION BY AN UNSUCCESSFUL COMPETITOR OF A VOLUMINOUS SOLICITATION SUCH AS THE RFP HERE CONCERNED, WHICH IN TURN INCORPORATES ADDITIONAL LENGTHY DOCUMENTS AND MATERIAL, MINOR INCONSISTENCIES CAN BE FOUND ON WHICH TO SUBMIT A PROTEST. WE FEEL THAT GOOD FAITH AND OBSERVANCE OF THE SPIRIT OF COMPETITIVE SOLICITATION, AS WELL AS SOUND BUSINESS PRACTICE ON THE PART OF COMPETITORS FOR GOVERNMENT CONTRACTS, DICTATE THAT THE APPROPRIATE TIME FOR A DETAILED EXAMINATION OF THE SOLICITATION AND CLARIFICATION OF ANY PROVISION THEREOF CONSIDERED TO BE AMBIGUOUS OR CONFUSING IS PRIOR TO THE TIME SPECIFIED FOR SUBMISSION OF PROPOSALS OR BIDS. *** THE SUBMISSION OF A PROTEST AFTER SUCH TIME, ON MATTERS WHICH THE COMPETITOR CONSIDERED MATERIAL TO HIS QUOTATION OR BID AND ON WHICH HE COULD REASONABLY BE EXPECTED TO HAVE HAD CLARIFIED DURING THE PERIOD IN WHICH HE WAS COMPUTING HIS PRICE, NECESSARILY RAISES A QUESTION AS TO THE SINCERITY OF THE PROTEST, FREQUENTLY OPERATES AS A HINDERANCE TO THE PROCURING ACTIVITY IN OBTAINING URGENTLY NEEDED ITEMS IN A TIMELY MANNER, INCREASES THE ADMINISTRATIVE COSTS OF THE PROCUREMENT, AND SERIOUSLY DETRACTS FROM THE BENEFITS DERIVED BY THE GOVERNMENT FROM THE COMPETITION.

IN ADDITION TO HAVING FAILED TO MAKE A TIMELY PROTEST TO THIS OFFICE CONCERNING ANY UNRESOLVED AMBIGUITIES, YOU HAVE NOT DEMONSTRATED THAT AMBIGUITIES WORKED TO THE PARTICULAR DISADVANTAGE OF YOUR FIRM, OR THAT THEY RESULTED IN THE ASSIGNMENT OF A LOWER RATING IN ANY SPECIFIC AREA, ALTHOUGH YOU WERE FURNISHED A COPY OF THE RATING SHEET ON YOUR PROPOSAL SHOWING THE POINTS ASSIGNED TO EACH OF THE FACTORS EVALUATED. FURTHER, SINCE THE RFP SPECIFICALLY PROVIDED THAT THE AGENCY SHOULD BE CONTACTED FOR TECHNICAL INFORMATION, AND ANY DECISIONS CONCERNING CONFLICTING SPECIFICATIONS WOULD NECESSARILY BE MADE BY THE AGENCY, WE DO NOT FIND THAT SPERRY RAND WAS IN A BETTER POSITION, AS YOU CONTEND, THAN YOUR FIRM IN OBTAINING A RESOLUTION OF ANY INCONSISTENCIES IN THE SPECIFICATIONS.

CONCERNING YOUR CONTENTIONS THAT SPERRY RAND WAS ADVISED BY AGENCY PERSONNEL OF THE TECHNICAL APPROACH EMPLOYED BY YOUR FIRM AND AFFORDED AN IMPROPER OPPORTUNITY TO AMEND ITS PROPOSAL TO OFFER XEROX DATA SYSTEMS COMPUTERS INSTEAD OF THE UNIVAC COMPUTER ORIGINALLY OFFERED, THE AGENCY SUBMITTED THE FOLLOWING REPORT IN RESPONSE TO OUR QUESTIONS ON THESE CONTENTIONS:

3. DISCLOSURE OF ANOTHER OFFEROR'S COMPUTER CONFIGURATION:

NO EMPLOYEE OF THE DEPARTMENT OF TRANSPORTATION DISCLOSED TO ANY OFFEROR THE COMPUTER CONFIGURATION PROPOSED BY ANY OTHER OFFEROR FOLLOWING SUBMISSION OF PROPOSALS UNDER RFP NO. 241. IN ARRIVING AT THIS CONCLUSION, WE CONTACTED ALL TECHNICAL EVALUATORS WHO WERE DIRECTLY INVOLVED IN THE EVALUATION OF PROPOSALS ON RFP NO. 241. IN ADDITION, THIS QUESTION WAS DISCUSSED WITH EVERY TECHNICAL DIVISION STAFF MEMBER INVOLVED IN THIS PROCUREMENT AND IN EACH INSTANCE THEIR RESPONSE WAS NEGATIVE.

SPECIFICALLY, QUESTION NO. 3 WAS DISCUSSED WITH PERSONNEL IN THE FOLLOWING OFFICES WITHIN THE DEPARTMENT OF TRANSPORTATION:

URBAN MASS TRANSPORTATION ADMINISTRATION

OFFICE OF PROGRAM DEMONSTRATIONS

FEDERAL HIGHWAY ADMINISTRATION

OFFICE OF TRAFFIC OPERATIONS, TRAFFIC CONTROL DIVISION

OFFICE OF ADMINISTRATION, COMPUTER SERVICES DIVISION

OFFICE OF ADMINISTRATION, CONTRACTS AND PROCUREMENT DIVISION

OFFICE OF RESEARCH AND DEVELOPMENT, SCIENCE ADVISOR

OFFICE OF THE CHIEF COUNSEL, GENERAL LAW DIVISION

ALTHOUGH YOUR QUESTION DID NOT SPECIFICALLY REQUEST COMMENT OUTSIDE THE DEPARTMENT OF TRANSPORTATION, WE ALSO CHECKED WITH THE D.C. DEPARTMENT OF HIGHWAYS AND TRAFFIC (WHO PARTICIPATED ON THE EVALUATION TEAM) AND THEIR RESPONSE WAS NEGATIVE.

YOU WILL NOTE THAT AS REGARDS THE BENCHMARK TESTS HELD IN EARLY JUNE, OFFERORS WITH SIMILAR COMPUTER CONFIGURATIONS WERE PRESENT SINCE ONLY ONE TEST FOR IDENTICAL CONFIGURATIONS WAS REQUIRED.

4. REQUEST FOR ALTERNATE COMPUTER FROM SPERRY RAND:

NO EMPLOYEE OF THE DEPARTMENT OF TRANSPORTATION, FOLLOWING THE SUBMISSION OF PROPOSALS UNDER RFP NO. 241, MADE ANY SUGGESTION TO SPERRY RAND THAT IT SHOULD ALTERNATIVELY PURPOSE THE USE OF XEROX DATA SYSTEMS COMPUTERS. THE SAME PERSONNEL IN THE RESPECTIVE OFFICES MENTIONED IN THE RESPONSES TO QUESTION 3 WERE CONTACTED AND IN EACH INSTANCE THEIR REPLY TO QUESTION 4 WAS NEGATIVE. AS REGARDS SPERRY'S OFFER OF AN ALTERNATE XEROX DATA SYSTEMS COMPUTER, THE ADMINISTRATIVE RECORD REFLECTS THE FOLLOWING EVENTS:

SPERRY RAND HAD INITIALLY OFFERED A SINGLE UNIVAC 418 III PROCESSOR WHICH WAS FOUND TO MEET THE SPECIFICATIONS. HOWEVER, CERTAIN DOUBTS WERE EXPRESSED BY COMPUTER EXPERTS ON THE EVALUATION TEAM IN REGARD TO THE AVAILABILITY OF UNIVAC 418 III USER EXPERIENCE AND EXPANSION CAPABILITY. SUBSEQUENTLY, SPERRY WHOSE OFFER WAS CONSIDERED TO BE WITHIN A COMPETITIVE RANGE, WAS ASKED TO PREPARE WRITTEN ANSWERS AND ENGAGE IN ORAL DISCUSSION ON A NUMBER OF QUESTIONS WHICH PRIMARILY DEALT WITH THE COMPUTER. SPERRY'S REPLY, DURING THE COURSE OF TECHNICAL DISCUSSION, WAS TO THE EFFECT THAT THEY HAD STUDIED A NUMBER OF POSSIBLE CANDIDATE SYSTEMS INCLUDING THE XDS SYSTEM, AND THEY HAD FOUND THE XDS SIGMA 5 COMBINATION TO BE THE MOST DESIRABLE BUT DID NOT OFFER IT INITIALLY SINCE THE 418 III MET THE SPECIFICATIONS AT THE LOWEST COST TO THE GOVERNMENT. AT THE CLOSE OF THE TECHNICAL DISCUSSION WITH SPERRY, THEY WERE ASKED IF THERE WAS ANY ADDITIONAL INFORMATION THEY WISHED TO SUBMIT TO CLARIFY THEIR PROPOSAL BASED ON THE QUESTIONS ASKED DURING THE TECHNICAL DISCUSSION. SPERRY REPLIED BY PROPOSING TWO ADDITIONAL ALTERNATE COMPUTER CONFIGURATIONS FOR THE GOVERNMENT'S EVALUATION:

A. A COMBINATION UNIVAC 418 III AND 418 II, AND

B. A DUAL XDS SIGMA 5 SYSTEM.

SINCE YOU WERE FURNISHED A COPY OF THE ABOVE REPORT AND HAVE NOT SUBMITTED ANY EVIDENCE TO REFUTE THE AGENCY'S STATEMENTS, THE RECORD DOES NOT SUPPORT A CONCLUSION THAT THE COMPUTER CONFIGURATION PROPOSED BY YOU WAS REVEALED TO SPERRY RAND, OR THAT IMPROPER ACTIONS BY AGENCY OFFICIALS WERE INVOLVED IN THE SUBSEQUENT OPPORTUNITY AFFORDED SPERRY RAND TO OFFER ALTERNATE COMPUTERS. WHILE SPERRY RAND ORIGINALLY PROPOSED THE USE OF UNIVAC COMPUTER, THAT COMPUTER WAS DETERMINED TO BE ACCEPTABLE AND THE POINTS ASSIGNED TO SPERRY RAND'S PROPOSAL IN THE INITIAL EVALUATION WERE ON THE BASIS OF THE UNIVAC COMPUTER PROPOSED THEREIN. IT WAS IN THE INITIAL EVALUATION THAT YOUR PROPOSAL WAS DETERMINED TO BE OUTSIDE THE COMPETITIVE RANGE; THEREFORE, THE OFFERING OF ALTERNATE COMPUTERS BY SPERRY RAND IN THE SUBSEQUENT DISCUSSIONS OR NEGOTIATIONS WITH THAT FIRM COULD NOT HAVE OPERATED TO YOUR COMPETITIVE DISADVANTAGE INASMUCH AS YOU HAD BEEN ELIMINATED FROM THE COMPETITION IN THE INITIAL EVALUATION.

WITH REFERENCE TO YOUR COMPLAINT THAT THE AGENCY ENGAGED IN DISCUSSIONS WITH SPERRY RAND CONCERNING ITS PROPOSAL BUT DID NOT DO SO WITH YOUR FIRM, FPR 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 DETERMINED UPON INITIAL EVALUATION TO BE OUTSIDE THE COMPETITIVE RANGE, THERE WAS NO REQUIREMENT THAT FURTHER DISCUSSIONS BE HAD WITH YOUR FIRM CONCERNING YOUR PROPOSAL'S DEFICIENCIES.

YOU ALSO QUESTION THE ACTION OF THE AGENCY IN USING A COST REIMBURSEMENT TYPE CONTRACT FOR THE PROCUREMENT, ON THE BASIS THAT YOU HAD INDICATED TO THE AGENCY A WILLINGNESS TO NEGOTIATE A FIXED-PRICE CONTRACT. COST-PLUS-A -FIXED-FEE CONTRACTS ARE AUTHORIZED BY 41 U.S.C. 254(B) WHEN THE HEAD OF AN AGENCY DETERMINES THAT SUCH METHOD OF CONTRACTING IS LIKELY TO BE LESS COSTLY THAN OTHER METHODS OR THAT IT IS IMPRACTICAL TO SECURE PROPERTY OR SERVICE OF THE KIND OR QUALITY REQUIRED WITHOUT THE USE OF A COST OR COST- PLUS-A-FIXED-FEE OR AN INCENTIVE TYPE CONTRACT. A DETERMINATION IN ACCORD WITH THIS AUTHORITY WAS MADE IN THE CASE AT HAND. INASMUCH AS SUCH DETERMINATIONS ARE AFFORDED FINALITY BY 41 U.S.C. 257(A), WE PERCEIVE NO LEGAL BASIS ON WHICH THIS OFFICE CAN REQUIRE THE CANCELLATION OF THE CONTRACT SIMPLY BECAUSE IT IS A COST REIMBURSEMENT TYPE OF CONTRACT. CF. B-164165, AUGUST 13, 1968.

FINALLY, YOU EXPRESS THE BELIEF THAT THE CONTRACT AMOUNT IS EITHER IN EXCESS OF APPROPRIATED FUNDS OR THE AGENCY DID NOT NEED CERTAIN FUNDS WHICH IT REQUESTED FROM THE CONGRESS. THE AGENCY'S REPLY TO THIS CONTENTION IS AS FOLLOWS:

THE FHWA HAS CONTINUED TO PROVIDE CONGRESSIONAL APPROPRIATIONS COMMITTEES WITH DETAILED BUDGET STATEMENTS AND PROGRAM OBJECTIVES OF ALL ACTIVE RESEARCH AND DEVELOPMENT PROJECTS. WITHIN THE TESTIMONY BEFORE THE SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, ON THE FHWA FISCAL YEAR 1970 BUDGET, THE ESTIMATED COST THROUGH FISCAL YEAR 1969 IS GIVEN AT $1,400,000 WITH REMAINING COSTS ESTIMATED AT $4,900,000. THE REQUESTED APPROPRIATION FOR FISCAL YEAR 1970 IS SHOWN AS $1,100,000. THE TESTIMONY ON THE FHWA FISCAL YEAR 1971 BUDGET BEFORE THE SAME SUBCOMMITTEE ALSO REQUESTS APPROPRIATION OF $1,100,000 FOR CONTINUATION OF THIS PROJECT. THE CONTRACT AWARDED TO SPERRY RAND AS A RESULT OF RFP-241 WAS FUNDED IN ACCORDANCE WITH THE STANDARD POLICIES OF THE FHWA. RESEARCH AND DEVELOPMENT FUNDS IN THE AMOUNT OF $1,276,804, TRAFFIC OPERATIONS DEMONSTRATION FUNDS AMOUNT TO $600,000 AND URBAN MASS TRANSPORTATION ADMINISTRATION FUNDS TOTALING $1,470,887, WERE ALSO APPLIED. A BALANCE OF $428,000 OF THE TOTAL CONTRACT PRICE OF $3,775,691 IS SUBJECT TO AVAILABILITY SUBSEQUENT TO JULY 1, 1970 (TAB 16).

IN VIEW OF THE AGENCY'S EXPLANATION OF THE CONTRACT'S FUNDING, THERE APPEARS TO BE NO BASIS FOR FURTHER QUESTIONING THE AVAILABILITY OF FUNDS TO SATISFY THE GOVERNMENT'S OBLIGATIONS INCURRED BY THE CONTRACT.

IN YOUR VARIOUS COMMUNICATIONS TO THIS OFFICE, YOU HAVE CONTESTED AT CONSIDERABLE LENGTH THE AGENCY'S POSITION THAT THE CONTRACT REQUIRES MAJOR RESEARCH AND DEVELOPMENT EFFORT. YOU SAY SUCH ISSUE IS IMPORTANT IN DETERMINING WHETHER THERE WAS AN ORGANIZATIONAL CONFLICT OF INTEREST AND WHETHER THE USE OF A COST REIMBURSEMENT CONTRACT WAS CONTRARY TO MANDATORY REGULATIONS. SINCE WE HAVE DETERMINED ABOVE, ON OTHER GROUNDS, THAT WE MAY NOT CANCEL THE CONTRACT ON THE BASIS OF AN ORGANIZATIONAL CONFLICT OF INTEREST OR BECAUSE OF THE TYPE OF CONTRACT SELECTED, THE ISSUE AS TO THE AMOUNT OF RESEARCH AND DEVELOPMENT WORK INVOLVED IN THE FULFILLMENT OF THE CONTRACT'S OBJECTIVES IS NOW CONSIDERED TO BE ACADEMIC INSOFAR AS IT MAY BE RELEVANT TO THESE POINTS OF YOUR PROTEST.

IN VIEW OF THE FOREGOING, WE FIND NO BASIS IN YOUR PROTEST ON WHICH THIS OFFICE MAY LEGALLY REQUIRE THE CANCELLATION OF SPERRY RAND'S CONTRACT, AND YOUR REQUEST FOR SUCH ACTION IS THEREFORE DENIED.