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B-152946, MAY 14, 1964

B-152946 May 14, 1964
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UNITED STATES ATOMIC ENERGY COMMISSION: ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO SELLERS. THIS MATTER WAS THE SUBJECT OF REPORTS FROM THE DEPUTY GENERAL MANAGER. YOUR ATTENTION IS PARTICULARLY DIRECTED TO THOSE PORTIONS OF THE DECISION WHICH NOTE THAT THE FORM USED BY H AND N TO SOLICIT BIDS WAS INCORRECTLY CALLED A REQUEST FOR QUOTATION. WE NOTE THAT WHILE THE SUBJECT RFQ TOLD BIDDERS THEY WOULD HAVE TO FURNISH SERVICES OF A FIELD ENGINEER/S). THIS OMISSION CREATED A SITUATION IN WHICH THEIR RELATIVE STANDING COULD HAVE BEEN WHOLLY DEPENDENT UPON THE METHOD USED TO EVALUATE THE ENGINEERING SERVICES. THAT PARAGRAPH ALSO PROVIDES BY INFERENCES THAT HOLMES AND HARVER'S NORMAL BUSINESS PRACTICES ARE NOT THE STANDARD TO BE EMPLOYED IN DETERMINING WHETHER THAT FIRM'S PROCUREMENT PROCEDURES SHOULD BE APPROVED.

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B-152946, MAY 14, 1964

TO CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO SELLERS, CONNER, AND CUNEO, CONCERNING THE PROTEST OF NORDBERG MANUFACTURING COMPANY, AGAINST THE FAILURE OF HOMES AND NARVER, INC. (H AND N), PROCUREMENT AGENTS FOR THE ATOMIC ENERGY COMMISSION UNDER CONTRACT NO. AT/29-2/ 20, AND THE ATOMIC ENERGY COMMISSION CONTRACTING OFFICER AT NEVADA OPERATIONS OFFICE, LAS VEGAS, NEVADA, TO AWARD A CONTRACT FOR THE INSTALLATION OF 6 GENERATOR UNITS AT JOHNSTON ISLAND TO THE ABOVE NAMED COMPANY, IN CONFORMANCE WITH ITS OFFER SUBMITTED IN RESPONSE TO H AND N'S REQUEST FOR QUOTATION (RFQ) NO. JHG-894. THIS MATTER WAS THE SUBJECT OF REPORTS FROM THE DEPUTY GENERAL MANAGER, DATED JANUARY 20, 1964, AND FROM THE GENERAL MANAGER, DATED MARCH 10, 1964.

YOUR ATTENTION IS PARTICULARLY DIRECTED TO THOSE PORTIONS OF THE DECISION WHICH NOTE THAT THE FORM USED BY H AND N TO SOLICIT BIDS WAS INCORRECTLY CALLED A REQUEST FOR QUOTATION, AND THAT H AND N DID NOT HOLD A PUBLIC OPENING OF BIDS OR RECOMMEND REJECTION OF H AND N'S NONRESPONSIVE BID.

FURTHERMORE, WE NOTE THAT WHILE THE SUBJECT RFQ TOLD BIDDERS THEY WOULD HAVE TO FURNISH SERVICES OF A FIELD ENGINEER/S), AND THAT A SEPARATE BID ON THE DAILY RATE FOR AN ENGINEER SHOULD BE SUBMITTED, IT DID NOT INFORM BIDDERS OF THE BASIS FOR EVALUATING THIS PORTION OF THE TOTAL BID. VIEW OF THE VERY SMALL DIFFERENCE BETWEEN THE BIDS OF THE TWO LOWEST RESPONSIVE BIDDERS, THIS OMISSION CREATED A SITUATION IN WHICH THEIR RELATIVE STANDING COULD HAVE BEEN WHOLLY DEPENDENT UPON THE METHOD USED TO EVALUATE THE ENGINEERING SERVICES.

WE NOTE ALSO THAT PARAGRAPH 9-2.102 (B) OF TITLE 41 OF THE CODE OF FEDERAL REGULATIONS (CFR), CITED IN OUR ENCLOSED DECISION, ALSO PROVIDES THAT "AEC CONTRACTING OFFICERS SHALL USE THE SUBSTANTIVE PROVISIONS OF THIS PART AND FPR 1-2 AS A GUIDE OR STANDARD IN REVIEWING PROCUREMENT PRACTICES AND PROCEDURES OF COST-TYPE CONTRACTORS.' SEE ALSO 10 CFR5.501 AND 5.503. PARAGRAPH 9-1.353 (H) PROVIDES THAT "WRITTEN STATEMENTS OF THE DETAILED PROCUREMENT PRACTICES AND PROCEDURES USED OR PROPOSED TO BE USED BY COST-TYPE CONTRACTORS SHALL BE SUBMITTED AT THE EARLIEST PRACTICABLE DATE TO CONTRACTING OFFICERS FOR REVIEW AND WRITTEN DETERMINATION AS TO THE ACCEPTABILITY OF SUCH PRACTICES AND PROCEDURES.' THAT PARAGRAPH ALSO PROVIDES BY INFERENCES THAT HOLMES AND HARVER'S NORMAL BUSINESS PRACTICES ARE NOT THE STANDARD TO BE EMPLOYED IN DETERMINING WHETHER THAT FIRM'S PROCUREMENT PROCEDURES SHOULD BE APPROVED. CF. SUB PARAGRAPHS (1) AND (2) OF 9-1.353/H). SEE ALSO 10 CFR 5.601.

WE SUGGEST THAT IF THE PROCUREMENT PROCEDURES USED BY HOLMES AND NARVER HAVE BEEN PROPERLY APPROVED, SUCH APPROVAL SHOULD BE RECONSIDERED AND APPROPRIATE STEPS SHOULD BE TAKEN TO INSURE THAT FUTURE PROCUREMENTS BY COST-TYPE CONTRACTORS SUCH AS HOLMES AND NARVER WILL BE CONDUCTED UNDER PROCEDURES WHICH CONFORM TO THE GOVERNMENT'S COMPETITIVE BIDDING STANDARDS TO THE GREATEST EXTENT PRACTICABLE.

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