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B-158042 (2), MAR. 30, 1966

B-158042 (2) Mar 30, 1966
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION: ENCLOSED IS A COPY OF OUR DECISION OF TODAY CONCERNING A PROTEST BY WOLF RESEARCH AND DEVELOPMENT CORPORATION AGAINST THE AWARD OF A CONTRACT TO LOCKHEED ELECTRONICS CORPORATION. THIS MATTER WAS THE SUBJECT OF REPORTS FROM THE DIRECTOR OF PROCUREMENT. WHICH ARE DISCUSSED IN THE SUCCEEDING PARAGRAPHS. THE RECORD INDICATES THAT YOUR DETERMINATION TO NEGOTIATE SOLELY WITH LOCKHEED WAS BASED ON THE SEB'S HIGH RATING OF LOCKHEED BECAUSE OF ITS PROPOSAL. " AND CLEARLY ARE AT VARIANCE WITH PARAGRAPHS 203. WE THINK THAT THE REQUIREMENTS SET FORTH IN THE MANUAL ACCORD WITH GOOD PROCUREMENT PRACTICES AND SHOULD HAVE BEEN FOLLOWED. THE ADMINISTRATIVE RECORD SHOULD HAVE EXPLAINED WHY THE MANUAL WAS NOT FOLLOWED BY THE SEB.

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B-158042 (2), MAR. 30, 1966

TO ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY CONCERNING A PROTEST BY WOLF RESEARCH AND DEVELOPMENT CORPORATION AGAINST THE AWARD OF A CONTRACT TO LOCKHEED ELECTRONICS CORPORATION, PURSUANT TO REQUEST FOR PROPOSALS BG83- 59-5-20P. THIS MATTER WAS THE SUBJECT OF REPORTS FROM THE DIRECTOR OF PROCUREMENT, DATED DECEMBER 17 AND 23, 1965, AND JANUARY 7 AND 28, 1966. THE DECISION ALLUDES TO MINOR ERRORS AND DEVIATIONS FROM ACCEPTED PRACTICE, WHICH ARE DISCUSSED IN THE SUCCEEDING PARAGRAPHS.

THE RECORD INDICATES THAT YOUR DETERMINATION TO NEGOTIATE SOLELY WITH LOCKHEED WAS BASED ON THE SEB'S HIGH RATING OF LOCKHEED BECAUSE OF ITS PROPOSAL,"AND ITS MANAGEMENT TEAM.' SINCE YOUR DETERMINATION SPECIFICALLY REFERS TO THE SEB'S RATING OF LOCKHEED'S MANAGEMENT TEAM AS A FACTOR SEPARATE FROM THE RATING OF THE PROPOSAL, WHICH ALSO INVOLVED AN EVALUATION OF THE MANAGEMENT TEAM, WE ASSUME THAT YOU TOOK INTO CONSIDERATION THE MANAGEMENT FACTORS SEPARATELY SCORED IN THE SEB'S "KEY FACTOR ANALYSIS.' THE "ANALYSIS" INVOLVED ELIMINATING FROM THE ORIGINALLY CONCEIVED EVALUATION SYSTEM THE SCORES OBTAINED IN THE "PERFORMANCE" AREA, AND SUBSTITUTING POINTS SCORED FOR THE PROPOSED MANAGEMENT TEAM. THIS RESULTED IN WOLF'S "TECHNICALLY COMPETENT" PROPOSAL BECOMING "UNACCEPTABLE," ANOTHER BECOMING "UNDESIRABLE," AND TWO OTHERS CHANGING THEIR RELATIVE STANDING. THESE CHANGE APPARENTLY OCCURRED WITHOUT ANY NEW CONSIDERATIONS, SUCH AS ACTUAL ESTIMATED COST, BEING CRANKED INTO THE "ANALYSIS.' WE THINK SUCH CHANGES DID, CONTRARY TO THE SEB'S INTENTIONS,"DISTURB THE INTEGRITY OF PREVIOUS SCORING RESULTS," AND CLEARLY ARE AT VARIANCE WITH PARAGRAPHS 203, 510, AND 515 OF THE NASA SOURCE EVALUATION BOARD MANUAL. WHILE WE RECOGNIZE YOUR AUTHORITY TO WAIVE AND ACCEPT THE SEB'S UNAUTHORIZED ALTERATIONS OF THE GROUND RULES FOR EVALUATION, WE THINK THAT THE REQUIREMENTS SET FORTH IN THE MANUAL ACCORD WITH GOOD PROCUREMENT PRACTICES AND SHOULD HAVE BEEN FOLLOWED. CERTAINLY, THE ADMINISTRATIVE RECORD SHOULD HAVE EXPLAINED WHY THE MANUAL WAS NOT FOLLOWED BY THE SEB, AND WHY YOU DECIDED IN THIS CASE TO WAIVE SUCH UNAUTHORIZED ACTION.

AFTER THE SEB'S PRESENTATION OF ITS EVALUATION OF OFFERS, AND AFTER YOUR DECISION TO NEGOTIATE WITH LOCKHEED ON A SOLE-SOURCE BASIS, THE MANNED SPACECRAFT CENTER INCREASED ITS ESTIMATE OF THE MAN-HOURS WHICH WOULD BE REQUIRED TO PERFORM THE CONTRACT, AND DECIDED TO WITHDRAW THE AVAILABILITY OF GOVERNMENT-FURNISHED FACILITIES AND MATERIALS. THESE CHANGES RESULTED IN APPROXIMATELY A 22 PERCENT COST INCREASE OVER THE FIGURES PREVIOUSLY GIVEN TO YOU BY THE SEB WITH RESPECT TO ITS RECONSTRUCTED ESTIMATE OF LOCKHEED'S COSTS. THIS SUBSTANTIAL INCREASE, AND THE FACT THAT THUS FAR NEITHER LOCKHEED NOR ANY ONE OF ITS COMPETITORS HAD BEEN ASKED TO FURNISH PRICES FOR THE MATERIALS THEY WOULD NOW HAVE TO FURNISH, OR TO REDUCE THEIR LABOR, GANDA, OVERHEAD OR PROFIT RATES, LEADS US TO BELIEVE THAT IT WOULD HAVE BEEN HIGHLY DESIRABLE HAD THE SUBJECT CHANGES IN THE SCOPE OF THE WORK BEEN BROUGHT TO YOUR ATTENTION FOR REVIEW PRIOR TO THE COMMENCEMENT OF NEGOTIATIONS. IN VIEW OF THE HIGHLY COMPETITIVE STANDING OF THE OTHER FOUR OFFERORS, WE THINK THAT CHANGES OF THIS MAGNITUDE IN THE SCOPE OF THE WORK SHOULD HAVE GIVEN RISE TO REFLECTIONS UPON THE JUSTIFICATION FOR NEGOTIATING SOLELY WITH LOCKHEED.

FINALLY, WE SUGGEST THAT THE ADMINISTRATIVE RECORD, THOUGH VOLUMINOUS, WAS NOT WELL DOCUMENTED WITH RESPECT TO YOUR DETERMINATION THAT ONLY LOCKHEED WAS IN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, OR WITH RESPECT TO THE SPECIFIC BASES FOR SUCH DETERMINATION. WHILE IT IS INDISPUTABLE THAT THE SELECTION OF THAT CONTRACTOR WHO HAS OFFERED THE BEST PROPOSAL IS MORE LIKELY TO SERVE THE GOVERNMENT'S INTEREST THAN THE SELECTION OF A CONTRACTOR WHO HAS NOT OFFERED THE BEST PROPOSAL, ITIS NOT APPARENT HOW THIS FACT CONTRIBUTES TO AN UNDERSTANDING OF WHY THE BEST PROPOSAL, AT ANY GIVEN POINT IN TIME, IS THE ONLY ONE WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. WHILE YOU CONCLUDED THAT LOCKHEED HAD SECURED THE HIGHEST RATING FROM THE SEB BECAUSE OF THE SUPERIORITY OF ITS PROPOSAL AND ITS MANAGEMENT TEAM OVER THAT OF ANY COMPETING FIRM, AND ACCORDINGLY, ELECTED THAT FIRM FOR CONTRACT NEGOTIATIONS, THE RECORD RAISES SOME DOUBT AS TO WHETHER YOU WERE RELYING SOLELY ON THE SEB EVALUATION PRIOR TO ITS "KEY FACTOR ANALYSIS," WHICH EVALUATION HAD ALREADY CONSIDERED THE RELATIVE MERITS OF THE MANAGEMENT TEAMS, OR WERE INCLUDING THAT "ANALYSIS" AS A FACTOR IN YOUR SELECTION OF LOCKHEED FOR SOLE-SOURCE NEGOTIATIONS. IF THE FIRST HYPOTHESIS IS CORRECT, WE THINK SOME COMMENT WOULD HAVE BEEN APPROPRIATE AS TO WHY THE OTHER FOUR FIRMS, WHOSE SCORES WERE 97, 95, 93, AND 90 PERCENT OF LOCKHEED'S SCORE, RESPECTIVELY, WERE NOT CONSIDERED TO BE WITHIN A COMPETITIVE RANGE WITH LOCKHEED. IF THE LATTER IS CORRECT, WE THINK THAT SIMILAR COMMENT WOULD HAVE BEEN APPROPRIATE CONCERNING THE TWO FIRMS WHICH WERE WITHIN 90 PERCENT OF LOCKHEED'S SCORE, AND THAT YOUR REASONS FOR ADOPTING THE RESULTS OF THE SEB'S UNAUTHORIZED DEPARTURE FROM THE NASA SOURCE EVALUATION BOARD MANUAL SHOULD HAVE BEEN SET FORTH.

AS EVIDENCED BY TODAY'S DENIAL OF THE SUBJECT PROTEST, WE ARE FULLY AWARE OF AND SYMPATHETIC TO THE VERY DIFFICULT PROBLEM A CONTRACTING OFFICIAL MAY FACE IN DETERMINING WHICH FIRMS ARE IN A COMPETITIVE RANGE WHERE, AS HERE, THERE ARE ONLY SMALL NUMERICAL DIFFERENCES BETWEEN COMPETITORS. ARE ALSO COGNIZANT OF THE FACT THAT, WHILE EVALUATIONS ON THE BASIS OF NARRATIVE JUDGMENTS ARE LESS SUBJECT TO CRITICAL REVIEW THAN EVALUATIONS ON THE BASIS OF NUMERICAL SCORES, THEY ARE ALSO MORE SUBJECT TO ABUSE, AND WE THEREFORE COMMEND YOUR CHOICE OF THE LATTER METHOD. HOWEVER, WE THINK THAT CONTRACTING AGENCIES SHOULD EXERCISE THEIR DISCRETION IN THIS AREA IN SUCH A MANNER SO AS TO EXCLUDE FROM NEGOTIATIONS ONLY THOSE FIRMS WITH WHICH NEGOTIATION WOULD BE MEANINGLESS. IN THIS RESPECT, WE SUGGEST, AS WE DID IN THE HEARINGS BEFORE THE COMMITTEE ON ARMED SERVICES, UNITED STATES SENATE, 87TH CONG. 2D SESS., ON THE BILL WHICH ADDED SECTION (G) TO 10 U.S.C 2304, THAT THE MOST ACCEPTABLE AND OBJECTIVE WAY OF HANDLING THIS DIFFICULT PROBLEM WOULD BE TO PROVIDE IN EACH RFP A FORMULA FOR DETERMINING WHICH FIRMS WILL BE CONSIDERED TO BE WITHIN A COMPETITIVE RANGE.

WE RETURN HEREWITH FILES I AND II, BOOK II, OF THE SEB REPORT, AND THE COPY OF THE SUBJECT CONTRACT, WHICH WERE SUBMITTED WITH THE ADMINISTRATIVE REPORTS.

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