B-164596, SEPT. 20, 1968

B-164596, SEPT. 20, 1968

TO SULLIVAN, GUTERSON, LAROSE AND RINDAL:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 18, 1968, ON BEHALF OF PACIFIC COASTAL TRANSPORT, INCORPORATED, TRANSMITTED TO THIS OFFICE BY SENATOR WARREN G. MAGNUSON. THAT LETTER PROTESTED AGAINST THE AWARD OF A NEGOTIATED CONTRACT TO RAYMARK CARGO, INCORPORATED,PURSUANT TO REQUEST FOR PROPOSAL DAHC23-68-R-0018 ISSUED BY THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE, OAKLAND ARMY BASE, CALIFORNIA.

SOLICITATION DAHC23-68-R-0018 WAS ISSUED ON MAY 7, 1968, CALLING FOR PROPOSALS FOR STUFFING CONTAINER SERVICES AT OAKLAND ARMY BASE FOR THE PERIOD OF JUNE 1, 1968, THROUGH MAY 31, 1969. PROPOSALS WERE ORIGINALLY TO BE SUBMITTED BY MAY 22, 1968. BY AMENDMENT THE PERFORMANCE PERIOD WAS CHANGED TO JULY 1, 1968, THROUGH JUNE 30, 1969, AND THE CLOSING DATE FOR PROPOSALS WAS EXTENDED TO MAY 24, 1968. SEVEN RESPONSIVE PROPOSALS WERE RECEIVED BY THE CLOSING DATE AND THOSE WITHIN THE ZONE OF CONSIDERATION WERE AS FOLLOWS: (A) PACIFIC COASTAL TRANSPORT, INCORPORATED (PACIFIC), $2,426,280.31; (B) ALAMEDA DIVERSIFIED INDUSTRIES (ALAMEDA), $2,367,632.62; (C) RAYMARK CARGO, INCORPORATED (RAYMARK), $2,558,897.04; (D) CONTAINER EQUIPMENT CORPORATION $2,622,096. NEGOTIATIONS WERE CONDUCTED ON JUNE 4, 1968, WITH THE FOUR OFFERORS AND THE FINAL CLOSING DATE FOR REVISED PROPOSALS WAS ESTABLISHED AT 12:00 A.M., JUNE 5, 1968. THE LOWEST PROPOSAL RECEIVED WAS $1,822,791.60 FROM RAYMARK. AWARD OF CONTRACT WAS MADE TO RAYMARK ON JUNE 10, 1968.

THE PROTEST AGAINST THIS AWARD IS PREMISED UPON FOUR INTERRELATED BASES. FIRST, THAT THE PROCUREMENT SHOULD HAVE BEEN ADVERTISED RATHER THAN NEGOTIATED. SECOND, THE PROPOSALS SUBMITTED IN RESPONSE TO THE REQUEST SHOULD HAVE BEEN OPENED PUBLICLY. THIRD, THAT THE TIME PERIODS ALLOTTED BETWEEN ISSUANCE OF THE REQUEST, SUBMISSION OF PROPOSALS, OPENING OF PROPOSALS AND AWARD, AND TIME FOR PERFORMANCE FAVORED THE INCUMBENT CONTRACTOR AND DISCOURAGED OTHER POSSIBLE BIDDERS ON THIS COMPLEX PROCUREMENT. FOURTH, THAT THE TIME SEQUENCE AND UNUSUAL PROCEDURES FOLLOWED IN THIS PROCUREMENT INEVITABLY LEAD TO THE CONCLUSION THAT THERE MAY HAVE BEEN IRREGULARITIES AMOUNTING TO COLLUSION BETWEEN THE CONTRACT PERSONNEL AND THE SUCCESSFUL BIDDER.

THE GENERAL RULE TO BE FOLLOWED BY GOVERNMENT PROCUREMENT OFFICIALS IS THAT TO THE EXTENT FEASIBLE AND PRACTICABLE CONTRACTS SHALL BE ADVERTISED. HOWEVER, 10 U.S.C. (U.S.C.) 2304 (A) (10) SETS FORTH THE AUTHORITY FOR NEGOTIATION OF CONTRACTS WHEN IT IS IMPRACTICABLE TO OBTAIN COMPETITION. ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3 200 WHICH IMPLEMENTS THE NEGOTIATION AUTHORITY UNDER 10 U.S.C. 2304 (A) REQUIRES THAT THE NEGOTIATED CONTRACT SHALL CONTAIN A REFERENCE TO THE AUTHORITY UNDER WHICH IT WAS NEGOTIATED. CONTRACT DAHC23-69-D 0002, WHICH WAS AWARDED RAYMARK PURSUANT TO REQUEST DAHC-23-68-R-0018, STATED ON ITS FACE THAT IT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (10). ASPR 3-210.2 SETS FORTH EXAMPLES OF CIRCUMSTANCES WHERE COMPETITION IS IMPRACTICABLE TO OBTAIN AND WHEN NEGOTIATION SHOULD BE USED. ASPR 3-210.2 (X) PROVIDES: "/X) WHEN THE CONTEMPLATED PROCUREMENT IS FOR STEVEDORING, TERMINAL, WAREHOUSING, OR SWITCHING SERVICES, AND WHEN EITHER THE RATES ARE ESTABLISHED BY LAW OR REGULATION, OR THE RATES ARE SO NUMEROUS OR COMPLEX THAT IT IS IMPRACTICABLE TO SET THEM FORTH IN THE SPECIFICATIONS OF FORMAL SOLICITATION OF BIDS.'

ASPR 3-210.3 REQUIRES THAT WHEN NEGOTIATION IS AUTHORIZED UNDER THE ABOVE AUTHORITY INVOLVING MORE THAN $10,000 IT SHALL BE APPROVED IN ADVANCE BY A LEVEL HIGHER THAN CONTRACTING OFFICER AND THAT THE CONTRACT SHALL BE ACCOMPANIED BY THE DETERMINATION AND FINDINGS JUSTIFYING ITS USE. THE CONTRACT FILE BEFORE THIS OFFICE CONTAINED THE FOLLOWING DOCUMENT.

"DETERMINATION AND FINDINGS

"AUTHORITY TO NEGOTIATE AN INDIVIDUAL CONTRACT

"1. I HEREBY FIND THAT:

"A. THE WESTERN AREA, MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE PROPOSES TO PROCURE STUFFING CONTAINER SERVICES AND RELATED WAREHOUSING, RECEIVING/CLERKING AND DOCUMENTATION BY NEGOTIATION. SERVICES ARE TO BE PERFORMED AT MOTBA FACILITIES IN THE INTRANSIT WAREHOUSE AREAS INVOLVING WAREHOUSES 803 THROUGH 808 (EXCLUDING 805).

"B. THE ESTIMATED COST OF THE PROPOSED PROCUREMENT IS $2,396,304.00.

"C. PROCUREMENT BY NEGOTIATION OF THE ABOVE DESCRIBED SERVICES IS JUSTIFIED FOR THE FOLLOWING REASONS:

"/1) RATES FOR THE SERVICES INVOLVED ARE COMPLEX AND IS IMPRACTICABLE TO SET THEM FORTH IN THE SPECIFICATIONS OF FORMAL SOLICITATION OF BIDS TO EMBRACE MULTI-SHIFT OPERATIONS, TO PROVIDE FOR RVN OPTIMUM OPERATIONS.

"/2) MINIMUM PROSPECTIVE COMPETITION IN THE AREA PRECLUDES OBTAINING THE MOST ADVANTAGEOUS PRICES FOR THIS SERVICE THROUGH FORMAL ADVERTISING.

"2. UPON THE BASIS OF THE FINDINGS SET FORTH ABOVE, I HEREBY DETERMINE THAT THE NEGOTIATION OF THE PROPOSED PROCUREMENT IS IN THE BEST INTEREST OF THE GOVERNMENT.

"3. SUBJECT TO THE AVAILABILITY OF FUNDS AND ON THE PROVISO THAT THE ABOVE SERVICES HAVE BEEN AUTHORIZED FOR PROCUREMENT, IT MAY, THEREFORE, BE PROCURED BY NEGOTIATION FOR THE PERIOD 1 JUNE 1968 THROUGH 31 MAY 1969 PURSUANT TO 10 U.S.C. 2304 (A) (10), AND PARAGRAPH 3-210.2 (X) OF THE ARMED SERVICES PROCUREMENT REGULATION.

"4. THE ABOVE DETERMINATION APPLIES TO AN APPROVED PROGRAM FOR FISCAL YEARS 1968 AND 1969. APPROVED: (S) J. O. KANG (S) P. R. KELLEY

J. O. KANG P. R. KELLEY

DIR PROCUREMENT CONTRACTING

OFFICER

24 APRIL 1968"

ADDITIONALLY, THIS OFFICE HAS BEEN ADVISED THAT THIS WAS THE THIRD SOLICITATION ON THE WEST COAST FOR "STUFFING" SERVICES. IN THE PREVIOUS PROCUREMENTS IT WAS NECESSARY TO EXPLAIN SPECIFICATIONS TO THE OFFERORS, WHICH RESULTED IN PRICE REDUCTIONS, AND IN THE PRESENT PROCUREMENT THE TWO LOW OFFERORS, AFTER NEGOTIATIONS, REDUCED THEIR OFFERS IN EXCESS OF $500,000. IN VIEW OF THIS PAST EXPERIENCE AND INASMUCH AS THE REGULATIONS WERE STRICTLY FOLLOWED, WE MUST CONCLUDE THE DETERMINATION TO NEGOTIATE RATHER THAN ADVERTISE THIS PROCUREMENT WAS PROPER AND REASONABLE. FURTHERMORE, IN THAT THE DETERMINATION AND FINDINGS MEET THE REQUIREMENT OF 10 U.S.C. 2304 (A) (10), AS IMPLEMENTED BY ASPR 2-310 ET SEQ., SUCH FINDINGS AND DETERMINATION ARE FINAL UNDER 10 U.S.C. 2310.

IN THIS CONNECTION, IT IS POINTED OUT THAT IN NEGOTIATED PROCUREMENTS THERE IS NO REQUIREMENT OF PUBLIC OPENING OF PROPOSALS. AS WE STATED IN B -147264, NOVEMBER 3, 1961:

"WHILE THE REQUIREMENT FOR OPENING OF BIDS AT A TIME AND PLACE STATED IN THE INVITATION FOR BIDS UNDER A FORMALLY ADVERTISED PROCUREMENT IS CLEARLY SET OUT IN BOTH LAW AND REGULATION (SEE 10 U.S.C. 2305 (C) AND ASPR 2- 402.1 (A) (, WE ARE NOT AWARE OF ANY SIMILAR REQUIREMENT APPLICABLE TO PROPOSALS SOLICITED AND RECEIVED UNDER A NEGOTIATED PROCUREMENT. CONVERSELY, THE APPLICABLE REGULATIONS DO REQUIRE THAT INFORMATION CONTAINED IN PROPOSALS SHALL NOT BE DISCLOSED AFTER OPENING AND DURING THE CONDUCT OF NEGOTIATIONS WITH OTHER OFFERORS. SEE ASPR 3-109, 3-804 AND 3- 805.1 (B).' THE CONCERN EXPRESSED OVER THE LACK OF PUBLIC OPENING OF PROPOSALS SEEMS TO BE DIRECTED AT THE POSSIBILITY THAT RAYMARK THEREBY GAINED AN UNFAIR ADVANTAGE THROUGH EXPOSURE OF THE PRICES SUBMITTED AND/OR THAT RAYMARK AFTER NEGOTIATIONS REDUCED ITS PROPOSAL BY APPROXIMATELY 25 PERCENT OR $500,000 DUE TO INSIDE KNOWLEDGE. FIRST, AS NOTED ABOVE, THE REVELATION OF SUCH INFORMATION BY PROCUREMENT PERSONNEL IS FORBIDDEN. THIS INSTANCE, WE CAN FIND NO EVIDENCE NOR HAS ANY BEEN PRESENTED THAT SUCH COLLUSION TOOK PLACE. RAYMARK SUBMITTED ITS FINAL ADJUSTED PROPOSAL PRIOR TO THE SUBMISSION OF PROPOSALS BY THE TWO NEXT LOW OFFERORS. NOR IN THIS CONTEXT CAN WE PERCEIVE THE SIGNIFICANCE OF THE FACT THAT THE LOW OFFEROR REDUCED HIS PROPOSAL BY A LARGE SUM. RATHER, IT WOULD SEEM TO REFLECT FAVORABLY UPON THE PROPRIETY OF INITIALLY DETERMINING TO NEGOTIATE, NOT ADVERTISE, AND UPON THE SUBSEQUENT DECISION TO CONDUCT FURTHER NEGOTIATIONS AFTER RECEIPT OF THE INITIAL PROPOSALS. THIS CONCLUSION IS BOLSTERED BY THE FACT THAT THE SECOND LOW OFFEROR ALSO REDUCED ITS PROPOSAL BY A SUM GREATER THAN $500,000.

THE THIRD OBJECTION RAISED TO THE AWARD MADE TO RAYMARK WAS THAT THE PERIODS OF TIME BETWEEN ISSUANCE OF THE REQUEST, MAY 7, 1968, AND SUBMISSION OF PROPOSALS, MAY 24, 1968, AS WELL AS BETWEEN THE OPENING DATE AND DATE TO BEGIN PERFORMANCE WERE TOO SHORT AND FAVORED THE INCUMBENT CONTRACTOR. ONCE AGAIN, IT MUST BE POINTED OUT THAT THIS IS A NEGOTIATED PROCUREMENT NOT SUBJECT TO RULES OF FORMAL ADVERTISING. ASPR 2-202.1, WHICH RELATES ONLY TO ADVERTISED PROCUREMENT, SETS FORTH AS A GENERAL RULE THAT THE PERIOD BETWEEN ISSUANCE OF THE INVITATION AND SUBMISSION OF BIDS BE 15 DAYS RESPECTING STANDARD COMMERCIAL SERVICES AND 30 DAYS FOR OTHER THAN STANDARD. HOWEVER, THAT GENERAL RULE NEED NOT BE FOLLOWED IN SPECIAL CIRCUMSTANCES AND THE SUBSTANTIVE REQUIREMENT IS THAT AN ADEQUATE OPPORTUNITY BE AFFORDED BIDDERS. IN THIS CASE, AFTER AMENDMENT, 18 DAYS WERE PROVIDED. WHILE THE SERVICES TO BE FURNISHED FOR THIS PROCUREMENT MAY HAVE BEEN STANDARD, IT IS CLEAR THAT THE RATES AND COSTS OF THOSE SERVICES WERE INDEED COMPLEX. HOWEVER, INASMUCH AS THIS WAS A NEGOTIATED PROCUREMENT AND THERE IS NO EVIDENCE THAT ANY OFFEROR WAS PREJUDICED OR PRECLUDED FROM SUBMITTING A PROPOSAL, WE CANNOT CONCLUDE THAT THE PERIOD FOR SUBMITTING PROPOSALS WAS UNREASONABLE. IN THE FUTURE WE HAVE BEEN ADVISED, 30 DAYS WILL BE PROVIDED EXCEPT FOR EMERGENCY PROCUREMENTS.

THE DATE TO BEGIN PERFORMANCE UNDER THIS CONTRACT WAS ORIGINALLY JUNE 1, 1968, ONLY 8 DAYS SUBSEQUENT TO THE DATE FOR SUBMISSION OF PROPOSALS. THE PERFORMANCE PERIOD WAS CHANGED BY AMENDMENT ON MAY 20, 1968, TO BEGIN JULY 1, 1968. THIS CHANGE COUPLED WITH THE FACT THAT ALMOST ALL MATERIAL AND EQUIPMENT WERE TO BE FURNISHED BY THE GOVERNMENT NEGATES ANY PRESUMPTION THAT ONLY THE INCUMBENT CONTRACTOR COULD PERFORM WITHIN THE REQUIRED PERIOD. ALSO, THE SUCCESSFUL OFFEROR WAS NOT THE INCUMBENT CONTRACTOR. MTMTS DOES NOT, NOR DOES THIS OFFICE, DISAGREE WITH YOUR CONCLUSION THAT THE CIRCUMSTANCES FAVORED THE INCUMBENT CONTRACTOR. WHILE SUCH FAVORITISM SHOULD BE AVOIDED TO THE EXTENT PRACTICABLE, IT IS AXIOMATIC THAT IN REPROCUREMENT OF SUPPLIES OR SERVICES, THE INCUMBENT CONTRACTOR HAS AN INHERENT ADVANTAGE DUE TO PAST KNOWLEDGE AND EXPERIENCE.

FINALLY, CONCERN WAS EXPRESSED THAT THERE MAY WELL HAVE BEEN IRREGULARITIES AMOUNTING TO COLLUSION BETWEEN CONTRACT PERSONNEL AND THE SUCCESSFUL OFFEROR. INASMUCH AS THIS GENERAL ASSERTION WAS BASED UPON INDIVIDUAL POINTS WHICH WE HAVE SPECIFICALLY REJECTED, IT ALSO MUST BE REJECTED.

ACCORDINGLY, FOR THE ABOVE REASONS THE PROTEST AGAINST THE CONTRACT AWARDED PURSUANT TO REQUEST FOR PROPOSALS DAHC23-68-R-0018 MUST BE DENIED.