B-170527, JUN 29, 1971

B-170527, JUN 29, 1971

BID PROTEST - CANCELLATION AND RESOLICITATION DENYING PROTEST OF THOMPSON MANUFACTURING COMPANY AGAINST THE CANCELLATION OF A REQUEST FOR PROPOSALS AND THE ISSUANCE OF A SUPERSEDING RFP BY THE ARMAMENT DEVELOPMENT AND TEST CENTER, PROCUREMENT AND PRODUCTION, EGLIN AIR FORCE BASE FLORIDA. WHERE THERE HAS BEEN A SUBSTANTIAL REVISION OF THE SPECIFICATIONS BASED ON A REEVALUATION OF THE GOVERNMENT'S NEEDS, CANCELLATION OF THE ORIGINAL RFP AND ISSUANCE OF A SUPERSEDING ONE IS A PROPER METHOD FOR THE CONTRACTING OFFICER TO EMPLOY, ALTHOUGH IT MAY NOT HAVE BEEN THE PREFERRED METHOD IN THIS CASE. COPY OF DECISION SENT TO SECRETARY OF THE AIR FORCE NOTING THAT THE PREFERRED METHOD OF PROCEDING WOULD HAVE BEEN TO MODIFY THE ORIGINAL RFP.

TO THE THOMPSON MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 12, 1971, IN SUPPORT OF THE PROTEST FILED BY THOMPSON MANUFACTURING COMPANY (THOMPSON) DATED DECEMBER 15, 1970, AND SUPPLEMENTAL LETTERS AGAINST THE CANCELLATION OF REQUEST FOR PROPOSALS (RFP) NO. F08635-70-R-0213, AND THE ISSUANCE OF A SUPERSEDING RFP NO. F08635-71-R-0075, DATED DECEMBER 31, 1970, BOTH ISSUED BY THE ARMAMENT DEVELOPMENT AND TEST CENTER, PROCUREMENT AND PRODUCTION, EGLIN AIR FORCE BASE, FLORIDA.

YOUR PROTEST IS PREDICATED, FIRST, ON THE FAILURE OF THE AIR FORCE TO FOLLOW OUR DECISION B-170527, NOVEMBER 13, 1970, WHEREIN WE STATED, REGARDING THE RESPONSIBILITY OF THOMPSON UNDER THE ORIGINAL SOLICITATION:

" *** WE BELIEVE A NEW EVALUATION SHOULD BE MADE AS TO THE RESPONSIBILITY OF THE THOMPSON MANUFACTURING COMPANY UNDER SECTION 1 903.1(III) OF ASPR. IF THE NEW EVALUATION IS ADVERSE, WE BELIEVE IT SHOULD AGAIN BE REFERRED TO THE SBA FOR POSSIBLE APPEAL UNDER THE REGULATION."

SECONDLY, YOU CONTEND THAT THERE WAS NO JUSTIFICATION FOR THE CANCELLATION AND THE SUBSEQUENT NEW SOLICITATION.

A BRIEF REVIEW OF THE CONTRACTING OFFICER'S ACTIONS TAKEN SUBSEQUENT TO OUR DECISION OF NOVEMBER 13, 1970, SHOWS THAT ON DECEMBER 11, 1970, THOMPSON WAS ADVISED THAT THE RFP FOR 3128 BRU-3A/A BOMB RELEASE UNITS WAS CANCELLED BECAUSE OF A SIGNIFICANT CHANGE IN THE GOVERNMENT'S REQUIREMENTS AND THAT THE PROCUREMENT WOULD BE RESOLICITED IN THE NEAR FUTURE AS RFP NO. F08635-71-R-0075 WITH A REQUIREMENT FOR 4128 BRU-3A/A BOMB RELEASE UNITS. THEREAFTER, FOLLOWING THE PROTEST BY THOMPSON, THE CONTRACTING OFFICER, ON DECEMBER 23, 1970, OUTLINED THE FOLLOWING REASONS IN SUPPORT OF THE POSITION TAKEN TO RESOLICIT THE BRU-3A/A PROCUREMENT AND TO SUPPORT THE NECESSITY FOR OBTAINING THE AUGMENTED QUANTITY UNDER A SINGLE CONTRACT:

"A. THE MANUFACTURER OF THE BRU-3A/A REQUIRES A SUBSTANTIAL CAPITAL INVESTMENT IN TOOLING, JIGS, FIXTURES, AND TEST EQUIPMENT. THE GOVERNMENT ACQUIRED A CONSIDERABLE AMOUNT OF SUCH EQUIPMENT ON A PREVIOUS SOLE-SOURCE CONTRACT WHICH WILL BE MADE AVAILABLE TO THE SELECTED CONTRACTOR. ORDER TO AVOID THE EXPENSIVE DUPLICATION OF SUCH EQUIPMENT AND INCREASED RACK UNIT PRICE, IT IS MANDATORY THAT ONLY ONE MANUFACTURER PRODUCE BRU- 3A/A RACKS. IF THE CONTRACT HAD BEEN AWARDED FOR THE 3,128 RACKS AND AN RFP ISSUED FOR THE ADDITIONAL 1,000 RACKS, THE CONTRACTOR WHO WON THE FIRST CONTRACT WOULD HAVE A DEFINITE COMPETITIVE ADVANTAGE OVER THE OTHER BIDDERS BECAUSE OF THE TOOLING IN HIS POSSESSION. SUCH A SITUATION WOULD BE PREJUDICIAL TO OTHER BIDDERS AND IN CONFLICT WITH COMPETITIVE PROCUREMENT POLICIES, IE., ASPR 3 805.1(E) AND 3-507.2(B).

"B. ANOTHER RELEVANT FACTOR SUPPORTING OUR DETERMINATION IS THE NEED FOR CORRECTIONS TO BE MADE TO THE AF DRAWING SUPPLIED WITH THE RFP. THE AF RECOGNIZES THE EXISTENCE OF ERRORS WHICH MAY PRECLUDE PRACTICAL MANUFACTURE, ASSEMBLY, OR INTERCHANGEABILITY WITH RACKS PREVIOUSLY MANUFACTURED AND IS TASKING THE CONTRACTOR WITH FINDING AND CORRECTING THESE ERRORS. A TOLERANCE STUDY OF RACK COMPONENTS WILL BE PERFORMED BY THE CONTRACTOR AS AN AID TO IDENTIFY SUCH ERRORS. SPLITTING THE PROCUREMENT WOULD OBVIOUSLY CREATE COMPLEXITIES AND JEOPARDIZE THE DELIVERY SCHEDULE. IT IS PATENTLY APPARENT THAT THE RESOLICITATION FOR THE TOTAL QUANTITY IS IN THE BEST INTERESTS OF THE AIR FORCE FROM BOTH A TECHNICAL AND A COST BASIS."

IN KEEPING WITH THE ABOVE THE CONTRACTING OFFICER NOTIFIED ALL PROSPECTIVE PROPOSERS BY LETTER DATED DECEMBER 31, 1970, OF THE GOVERNMENT'S INTENTION TO MAKE AVAILABLE CERTAIN ITEMS OF SPECIAL TOOLING FOR USE IN CONNECTION WITH ANY CONTRACT AWARDED AS A RESULT OF RFP F08635- 71-R-0075. THE DESCRIPTION OF THE TOOLING AND RELATED TERMS AND CONDITIONS WERE TO BE FURNISHED BY AN AMENDMENT TO THE RFP ON OR ABOUT JANUARY 8, 1971.

AMENDMENT NO. 1, ISSUED JANUARY 21, 1971, EXTENDED THE SUBMISSION DEADLINE TO FEBRUARY 17, 1971, CHANGED THE DELIVERY DATE FOR ITEM NO. 2 FROM DECEMBER 1971, TO NOVEMBER 1971, AND SET FORTH THE AVAILABLE GOVERNMENT-OWNED SPECIAL TOOLING AND SPECIAL TEST EQUIPMENT OFFERED ON AN "AS IS" BASIS.

THOMPSON, THROUGH ITS ATTORNEYS, VIGOROUSLY PROTESTS THE REJECTION OF ALL OFFERS UNDER THE INITIAL RFP ON THE GROUNDS THAT THE CONTRACTING OFFICER'S DETERMINATIONS WERE SO GROSSLY ERRONEOUS AS TO CONSTITUTE AN ARBITRARY REJECTION CONTRARY AND DETRIMENTAL TO THE GOVERNMENT'S INTEREST IN MAINTAINING THE INTEGRITY OF THE COMPETITIVE BID SYSTEM. IN SUPPORT THEREOF IT IS CONTENDED THAT THOMPSON'S LOW OFFER HAD BEEN EXPOSED AT THE TIME OF THE CANCELLATION AND THE EFFECT OF THE RESOLICITATION IS AN AUCTION AGAINST THOMPSON'S EARLIER LOW OFFER CONTRARY TO THE PROVISIONS OF ASPR 3-805.1(B) WHICH EXPRESSLY PROHIBITS THE USE OF AUCTION TECHNIQUES, INCLUDING SPECIFICALLY ANY INDICATION TO AN OFFEROR OF A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION, OR INFORMING AN OFFEROR THAT HIS PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR. IN ADDITION, IT IS CONTENDED THAT THE LEGALITY AND PROPRIETY OF THE CANCELLATION TURN ON WHETHER IT WAS NECESSITATED BY A SIGNIFICANT AND MODIFIED CHANGE IN THE AIR FORCE REQUIREMENTS. IT IS STATED THAT THE JUSTIFICATIONS CITED IN THE AIR FORCE REPORT ARE PLAINLY INADEQUATE AND THE CANCELLATION THEREFORE MUST BE CONSIDERED AN ABUSE OF DISCRETION. YOU ASSERT THAT THERE SHOULD BE APPLIED TO COMPETITIVE NEGOTIATIONS SUCH AS HERE, THE POLICY GOVERNING FORMALLY ADVERTISED PROCUREMENT SET FORTH AT ASPR 2-404.1(A) AS FOLLOWS:

" *** AS A GENERAL RULE, AFTER OPENING, AN INVITATION FOR BIDS SHOULD NOT BE CANCELLED AND READVERTISED DUE SOLELY TO INCREASED REQUIREMENTS FOR THE ITEMS BEING PROCURED; AWARD SHOULD BE MADE ON THE INITIAL INVITATION FOR BIDS AND THE ADDITIONAL QUANTITY REQUIRED SHOULD BE TREATED AS A NEW PROCUREMENT."

THE CONTRACTING OFFICER IN A SUPPLEMENTAL REPORT DATED APRIL 22, 1971, DENIES THAT THE PRICE OFFERED BY THOMPSON OR ANY OTHER OFFEROR WAS DISCLOSED TO THE OTHER OFFERORS OR ANY PERSON OR FIRM OUTSIDE THE GOVERNMENT SERVICE EITHER AT THE TIME OF OPENING OF OFFERS OR AT ANY TIME SUBSEQUENT TO THE OPENING OF OFFERS. IT SHOULD BE NOTED HOWEVER, THAT OUR DECISION DATED NOVEMBER 13, 1970, DOES INDICATE THE COMPETITIVE POSITION OF THOMPSON.

WE HAVE HELD THAT THERE IS NOTHING INHERENTLY ILLEGAL FROM A PROCUREMENT STANDPOINT IN AN AUCTION. 48 COMP. GEN. 536, 541 (1969). NEVERTHELESS, WE DO NOT APPROVE ANY PROCEDURE WHEREBY INFORMATION WHICH WOULD GIVE AN UNFAIR COMPETITIVE ADVANTAGE TO ANY PROPOSER WOULD BE DISCLOSED DURING THE NEGOTIATION PROCESS. B-171384, MARCH 12, 1971 (50 COMP. GEN. ). MORE SPECIFICALLY, WE HAVE HELD THAT THE REFERRAL OF AN OFFEROR'S RESPONSIBILITY TO THE SMALL BUSINESS ADMINISTRATION FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY (48 COMP. GEN. 536, SUPRA), WHICH WOULD GIVE AN INDICATION THAT THE OFFEROR, SUBJECT TO THE PROCEDURE, IS UNDER POSSIBLE CONSIDERATION FOR AWARD, WOULD NOT PRECLUDE FURTHER NEGOTIATIONS. WE FIND NOTHING HERE THAT WOULD PROVIDE AN ADVANTAGE IN EXCESS OF THAT CONDONED IN OUR PREVIOUS DECISIONS.

THE REPORT FURTHER RELIES ON ASPR 3-805.1(E) WHICH READS IN PERTINENT PART AS FOLLOWS:

"WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE REQUEST FOR PROPOSAL OR REQUEST FOR QUOTATIONS, AND A COPY SHALL BE FURNISHED TO EACH PROSPECTIVE CONTRACTOR. *** " THE CONTRACTING OFFICER STATES THAT UNDER THAT POLICY, HE HAS NO ALTERNATIVE BUT TO APPRISE ALL OF THE PROSPECTIVE CONTRACTORS OF THE ADDITIONAL BOMB RELEASE UNITS TO BE PRODUCED.

IT IS YOUR PRIMARY CONTENTION THAT AWARD SHOULD BE MADE UNDER THE INITIAL REQUEST FOR PROPOSALS TO THE LOW RESPONSIBLE OFFEROR IN CONFORMANCE WITH THE GOVERNMENT'S REQUIREMENTS.

THOMPSON SUBMITTED THE LOWEST OFFER UNDER THE INITIAL RFP. A PRE AWARD SURVEY WAS CONDUCTED ON THOMPSON RESULTING IN A NEGATIVE RECOMMENDATION AND A DETERMINATION TO REJECT THOMPSON AS NOT RESPONSIBLE. THAT DETERMINATION LED TO YOUR INITIAL PROTEST AND OUR DECISION OF NOVEMBER 13, 1970. AN INVESTIGATION BY OUR OFFICE REVEALS THAT THE WARNER ROBINS AIR MATERIEL AREA (WRAMA) NOTIFIED EGLIN BY TELEPHONE OF THE REQUIREMENT OF 1,000 ADDITIONAL BOMB RACKS ON OCTOBER 22, 1970, AND CONFIRMED THE INITIATION OF THE PURCHASE REQUEST BY MESSAGE DATED NOVEMBER 20, 1970. THUS, IT IS APPARENT THAT THE SPECIFICATIONS WERE IN PROCESS OF REVISION BASED ON THE REEVALUATION OF THE GOVERNMENT'S NEEDS PRIOR TO OUR EARLIER DECISION. IN THESE CIRCUMSTANCES, WE BELIEVE THERE WAS AMPLE JUSTIFICATION FOR THE CONTRACTING OFFICER'S DETERMINATION NOT TO PROCEED WITH AN AWARD FOR THE ORIGINAL QUANTITY.

IN VIEW OF THE SUBSTANTIAL INCREASE IN QUANTITY OF BOMB RACKS NEEDED, THE CONTRACTING OFFICER WOULD HAVE BEEN JUSTIFIED IN MODIFYING THE SOLICITATION PURSUANT TO ASPR 3-805.1(E) AND OBTAINING REVISED PROPOSALS. SEE, IN COMPARISON, B-167386, DECEMBER 22, 1969, IN WHICH WE CONCLUDED THAT THE CONVERSION FROM A FIRM PROCUREMENT OF A QUANTITY OF 99 TO A MULTI -YEAR PROCUREMENT OF 53 IN THE FIRST YEAR AND 46 IN THE SUBSEQUENT YEAR, REQUIRED THE SOLICITATION OF ANOTHER ROUND OF PROPOSALS. WE HAVE HELD THAT THE ISSUANCE OF A NEW SOLICITATION IS A PROPER MEDIUM FOR ACCOMPLISHING THE SAME RESULT. SEE B-165012, OCTOBER 11, 1968; B-165933, AUGUST 26, 1969.

IN LIGHT OF THE FOREGOING, WE NEED NOT CONSIDER WHETHER TOOLING WOULD HAVE JUSTIFIED A RESOLICITATION. CF. 39 COMP. GEN. 396, 399 (1959). HOWEVER, IN THE CIRCUMSTANCES, WE FIND NO REASON FOR NOT INCLUDING IT IN THE RESOLICITATION.

THE WRITTEN FINDINGS SUPPORTING THE DETERMINATION TO NEGOTIATE UNDER 10 U.S.C. 2304(A)(10) ARE GIVEN FINALITY UNDER 10 U.S.C. 2310(B) AND CANNOT BE LEGALLY QUESTIONED BY OUR OFFICE.

WHILE, FOR THE FOREGOING REASONS, WE CONCLUDE THAT AN AWARD MAY PROPERLY BE MADE UNDER THE LATER REQUEST FOR PROPOSALS, WE NOTE THAT THE CIRCUMSTANCES PERMITTED A MODIFICATION OF THE EARLIER REQUEST FOR PROPOSALS ON A TIMELY BASIS. WE BELIEVE THIS WOULD HAVE BEEN PREFERABLE AND IN ACCORDANCE WITH THE LITERAL LANGUAGE OF ASPR 3 805.1(E) AND WE ARE CALLING THIS MATTER TO THE ATTENTION OF THE SECRETARY OF THE AIR FORCE.

NOTWITHSTANDING THE FORCEFUL AND COHERENT PRESENTATION BY COUNSEL IN THIS MATTER, WE MUST, FOR THE REASONS STATED, DENY YOUR PROTEST.