B-164552, FEB. 24, 1969

B-164552, FEB. 24, 1969

TO PIERSON, BALL AND DOWD:

REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF SERV-AIR, INCORPORATED OF THE AWARD TO PAGE AIRCRAFT MAINTENANCE, INC. (PAGE) BY THE UNITED STATES ARMY OF A CONTRACT FOR FISCAL YEAR 1969 AIRCRAFT MAINTENANCE SERVICES AT FORT RUCKER, ALABAMA, AND FORT STEWART, GEORGIA, UNDER REQUEST FOR PROPOSALS DABC01-68-R-0051.

THE FISCAL YEAR 1968 CONTRACT FOR THE AIRCRAFT MAINTENANCE SERVICES HEREIN INVOLVED WAS THE SUBJECT OF OUR DECISION B-162387, DECEMBER 11, 1967, 47 COMP GEN 336, WHICH HELD THAT A CONTRACTUALLY RESERVED OPTION TO NEGOTIATE FOR THE CONTINUATION OF CONTRACT SERVICES FOR UP TO TWO ADDITIONAL YEARS SHOULD NOT BE EXERCISED ON THE BASIS THAT THE COST PLUS- INCENTIVE-FEE (CPIF) AWARD HAD DEVIATED FROM STATUTORY AND REGULATORY NEGOTIATION REQUIREMENTS.

THE FISCAL YEAR 1969 REQUEST FOR PROPOSALS, LIKE ITS PREDECESSOR, CONTEMPLATED A CPIF CONTRACT AND CONTAINED A SIMILAR OPTION CLAUSE. WITH REGARD TO PROPOSAL EVALUATION, THE RFP SET OUT A DETAILED LIST OF EVALUATION FACTORS AND RELATIVE WEIGHTS TO BE APPLIED TO THOSE FACTORS. ALSO, OFFERORS WERE REQUIRED TO SUBMIT COMPLETE COST ESTIMATES AND FEE SCHEDULES TO BE USED BY THE GOVERNMENT IN PROPOSAL EVALUATION. CONCERNING THE NATURE AND EXTENT OF NEGOTIATIONS TO BE CONDUCTED, THE RFP PROVIDED IN PARAGRAPH 6 OF THE "GENERAL INFORMATION" SECTION THAT:

"PROPOSALS RECEIVED WILL PROVIDE A BASIS FOR SELECTION OF A CONTRACTOR AND NEGOTIATION OF A CONTRACTUAL DOCUMENT IN FINAL FORM. NEGOTIATIONS SHALL BE CONDUCTED AS FOLLOWS: (I) WHERE A RESPONSIBLE PROSPECTIVE CONTRACTOR SUBMITS A RESPONSIVE PROPOSAL WHICH, IN THE CONTRACTING OFFICER'S OPINION IS CLEARLY AND SUBSTANTIALLY MORE ADVANTAGEOUS TO THE GOVERNMENT THAN ANY OTHER PROPOSAL, NEGOTIATIONS MAY BE CONDUCTED WITH THAT PROSPECTIVE CONTRACTOR ONLY; (II) WHERE SEVERAL RESPONSIBLE PROSPECTIVE CONTRACTORS SUBMIT PROPOSALS WHICH ARE GROUPED SO THAT A MODERATE CHANGE IN EITHER THE PRICE OR THE TECHNICAL PROPOSAL OR BOTH WOULD MAKE ANY ONE OF THE GROUP THE MOST ADVANTAGEOUS PROSPECTIVE CONTRACTOR TO THE GOVERNMENT, FURTHER NEGOTIATIONS SHALL BE CONDUCTED WITH ALL PROSPECTIVE CONTRACTORS IN THAT GROUP.'

WITH REGARD TO PROPOSAL EVALUATION, THE RFP PROVIDED AS FOLLOWS:

"ALL PROPOSALS RECEIVED SHALL BE CAREFULLY CONSIDERED AND EVALUATED BY A CONTRACT EVALUATION BOARD AND THE DEFENSE CONTRACT AUDIT AGENCY, UTILIZING CRITERIA ESTABLISHED FOR THE EXPRESS PURPOSE OF SELECTING A CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT. THE COST DATA SET FORTH IN APPENDICES "F" AND "G" WILL BE EVALUATED AND THE FACTORS SET FORTH BELOW WILL BE EVALUATED AND GRADED ACCORDING TO AN ESTABLISHED EVALUATION PROCEDURE.' THE FACTORS SET OUT AS TO BE CONSIDERED INCLUDED: (A) ORGANIZATION FOR PERFORMANCE OF CONTRACT, (B) MANAGEMENT EXPERIENCE AND CAPABILITY, (C) QUALIFICATIONS OF KEY PERSONNEL DIRECTLY RELATED TO PERFORMANCE OF CONTRACT, (D) RECORD OF PRESENT AND PAST PERFORMANCE, (E) ADEQUACY OF ACCOUNTING PROCEDURES, AND (F) REALISM OF COST DATA.

PROPOSALS WERE RECEIVED FROM PAGE, THE INCUMBENT CONTRACTOR, AND FROM HAWTHORNE, SERV-AIR, INCORPORATED, AND HAYES INTERNATIONAL.

AFTER TWO NEGOTIATION SESSIONS WITH EACH OF THE FOUR OFFERORS, AND TIMELY MODIFICATION OF PROPOSALS ON THE PART OF THREE OF THE FOUR OFFERORS, THE PAGE PROPOSAL WAS DETERMINED TO BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. ACCORDINGLY, AWARD WAS MADE TO PAGE, THE INCUMBENT CONTRACTOR, ON JUNE 3, 1968.

YOU PROTEST THAT "THE EVALUATION TEAM CONSIDERED FACTORS IN AWARDING THIS CONTRACT WHICH WERE NOT IN THE REQUEST FOR PROPOSALS (RFP), THAT THEY FAILED TO NEGOTIATE WITH SERV-AIR AS REQUIRED BY THE ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) AND THAT THEY FAILED TO GIVE WEIGHT TO SERV -AIR'S PRICING PROPOSAL.' YOU POINT TO FACTS REVEALED AT A DEBRIEFING CONFERENCE CONDUCTED BY THE ARMY FOR SERV-AIR'S BENEFIT AFTER AWARD HAD BEEN MADE TO PAGE AS PROVIDING EVIDENCE OF DEPARTURES FROM REQUIRED EVALUATION AND NEGOTIATION PROCEDURES IN THE SPECIFIC AREAS OF AUTOMATION, COST ACCOUNTING AND PRICING.

IN THIS REGARD YOU STATE THAT SERV-AIR WAS "PENALIZED" IN THE TECHNICAL EVALUATION FOR FAILURE TO SUBMIT A SUFFICIENTLY DETAILED BREAK-OUT OF ITS PROPOSED COST ACCOUNTING AND AUTOMATIC DATA PROCESSING (ADP) SYSTEMS NOTWITHSTANDING THE FACT THAT ITS COST ACCOUNTING AND ADP PROCEDURES WERE CURRENTLY IN USE IN TWO SIMILAR AIR FORCE CONTRACTS AND HAD BEEN APPROVED BY THE DEFENSE CONTRACT AUDIT AGENCY (DCAA), THE AGENCY CHARGED WITH THE RESPONSIBILITY OF ESTABLISHING ACCOUNTING PROCEDURES FOR ALL BRANCHES OF THE ARMED SERVICES. YOU CONTEND THAT THIS REQUIREMENT FOR DETAIL, NOT SET OUT IN THE RFP, PROVIDED THE INCUMBENT CONTRACTOR AND OTHER CONTRACTORS WITH PRIOR EXPERIENCE AT FORT RUCKER, WITH AN UNFAIR ADVANTAGE OVER SERV- AIR BECAUSE THE DETAIL APPARENTLY REQUIRED BY THE EVALUATORS WOULD NECESSARILY HAVE TO BE BASED ON KNOWLEDGE GAINED DURING THE PERFORMANCE OF PRIOR FORT RUCKER CONTRACTS. IN SUBSTANTIATION OF THIS POSITION, YOU CITE NUMEROUS EXAMPLES OF STATEMENTS MADE AT THE DEBRIEFING WHICH IN YOUR OPINION CLEARLY SHOW THAT THE RELATIVELY LOWER EVALUATION POINT SCORES ACHIEVED BY SERV-AIR IN THE AREAS OF ACCOUNTING AND AUTOMATION WERE UNFAIRLY DETERMINED ON THE BASIS OF REQUIREMENTS NOT CONTAINED IN THE RFP. YOU MAINTAIN THAT IF DEFICIENCIES EXISTED IN THESE AREAS, THEY SHOULD HAVE BEEN RESOLVED DURING NEGOTIATIONS AND THAT THE FAILURE TO DO SO CONSTITUTED A VIOLATION OF THE PROCUREMENT STATUTES AND REGULATIONS SUFFICIENTLY SERIOUS TO WARRANT CANCELLATION OF THE CONTRACT AS AWARDED.

IN THE COST AREA, YOU COMPLAIN THAT NO INDICATION WAS GIVEN AT THE DEBRIEFING CONFERENCE AS TO WHAT WEIGHT, IF ANY, WAS GIVEN TO COST DATA IN PROPOSAL EVALUATION IN SPITE OF SPECIFIC REQUESTS FOR SUCH INFORMATION, AND YOU CONCLUDE THAT THE FACT THAT SERV-AIR PROPOSED COSTS SOME $646,000 LOWER THAN THOSE PROPOSED BY PAGE WAS NOT GIVEN DUE CONSIDERATION BY THE EVALUATORS.

AT THE OUTSET, IT SHOULD BE MADE CLEAR THAT IT IS NOT THE FUNCTION OF OUR OFFICE TO EVALUATE PROPOSALS OR TO SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICIALS BY MAKING AN INDEPENDENT DETERMINATION AS TO WHICH OFFEROR SHOULD BE RATED FIRST AND THEREBY RECEIVE AN AWARD. SUCH DETERMINATIONS WILL BE QUESTIONED BY OUR OFFICE ONLY UPON A CLEAR SHOWING OF UNREASONABLENESS OR FAVORITISM, OR UPON A CLEAR SHOWING OF A VIOLATION OF THE PROCUREMENT STATUTES AND REGULATIONS. B-158686, SEPTEMBER 2, 1966; B-150507, MARCH 29, 1963.

TO DECIDE THAT MORE OR LESS POINTS SHOULD HAVE BEEN AWARDED IN VARIOUS AREAS OF PROPOSAL EVALUATION WOULD REQUIRE A COMPLETE RE EVALUATION OF ALL PROPOSALS SUBMITTED -- A TASK WHICH OUR OFFICE NOT ONLY IS NOT EQUIPPED TO PERFORM, BUT WHICH, AS INDICATED ABOVE, IS NOT WITHIN OUR JURISDICTION. IN THIS REGARD, OUR PRIOR DECISION AT 47 COMP. GEN. 336 HELD: "IT IS AXIOMATIC THAT THE CONTRACTING OFFICER ENJOYS THE WIDEST POSSIBLE RANGE OF DISCRETION IN THE EVALUATION OF NEGOTIATED PROPOSALS AND IN DETERMINING WHICH OFFER OR PROPOSAL IS ENTITLED TO BE ACCEPTED AS IN THE GOVERNMENT'S BEST INTEREST.' FOR REASONS SET OUT BELOW, WE CANNOT CONCLUDE THAT A SHOWING OF UNREASONABLENESS OR FAVORITISM SUFFICIENT TO WARRANT ADVERSE ACTION BY OUR OFFICE HAS BEEN ESTABLISHED. NOR CAN WE CONCLUDE THAT INFORMATION NOT CONTAINED IN THE RFP OR REQUESTED DURING NEGOTIATIONS WAS USED DURING PROPOSAL EVALUATION.

IN THE INSTANT CASE, NEGOTIATIONS WERE CONDUCTED ON TWO OCCASIONS WITH EACH OF THE OFFERORS AND PROPOSALS WERE EVALUATED ON A TECHNICAL BASIS BY A SPECIALLY CONSTITUTED CONTRACT EVALUATION BOARD AND ON A COST BASIS BY THE DEFENSE CONTRACT AUDIT AGENCY. POINTS WERE ASSIGNED ON THE BASIS OF THE FACTORS AND WEIGHTS SET OUT IN THE RFP, AND THE HIGHEST POINT SCORE WAS ACHIEVED BY PAGE, IN BOTH THE TECHNICAL AND COST AREAS.

THE REPORT SUBMITTED TO OUR OFFICE BY THE DEPARTMENT OF THE ARMY MAKES IT CLEAR THAT SERV-AIR WAS NOT "PENALIZED" , AS SUCH, DURING PROPOSAL EVALUATION, BUT RATHER THAT WHILE THE SERV-AIR PROPOSAL WAS ACCEPTABLE IN ALL AREAS, THE PROPOSAL SUBMITTED BY PAGE WAS SO SUPERIOR AS TO WARRANT AWARD TO PAGE. THUS, THE SERV-AIR APPROACH IN THE AREAS OF AUTOMATION AND ACCOUNTING WAS ACCEPTABLE AND WERE IT NOT FOR THE FACT THAT THE ADDITIONAL DETAIL PROVIDED BY PAGE SIGNIFICANTLY BETTERED ITS PROPOSAL, SERV-AIR POSSIBLY WOULD HAVE BEEN IN LINE FOR AWARD. AS EVIDENCE OF THE OVERALL ACCEPTABILITY OF THE SERV-AIR PROPOSAL, THE CONTRACT EVALUATION BOARD RECOMMENDED AWARD TO SERV-AIR IF AWARD COULD NOT BE MADE TO PAGE.

WHILE THERE IS LITTLE QUESTION THAT PAGE'S PRIOR EXPERIENCE AT FORT RUCKER GAVE IT A DEFINITE COMPETITIVE ADVANTAGE OVER FIRMS SUCH AS SERV- AIR WHICH HAD NEVER PERFORMED A CONTRACT AT THAT BASE, WE ARE NOT INFORMED HOW SUCH AN ADVANTAGE MAY BE EQUALIZED BETWEEN OFFERORS NOR DO WE PERCEIVE HOW EQUALIZATION, IF POSSIBLE, OF SUCH AN ADVANTAGE WOULD BE TO THE GOVERNMENT'S BENEFIT. ALSO, SINCE SERV-AIR ACHIEVED A POINT SCORE HIGHER THAN THAT ACHIEVED BY TWO OTHER PRIOR FORT RUCKER CONTRACTORS, WE DO NOT THINK IT CAN BE SAID THAT THE ADVANTAGE GAINED BY PRIOR CONTRACTORS WAS INSURMOUNTABLE.

SINCE THE DRAFTERS OF THE RFP HAD NO WAY OF DETERMINING BEFOREHAND THE AMOUNT OF DETAIL WHICH WOULD BE PROPOSED BY THE VARIOUS OFFERORS IN THE AUTOMATION AND ACCOUNTING AREAS, A STATEMENT IN THE RFP OF THE EXACT AMOUNT OF DETAIL DESIRED WAS NOT FEASIBLE. SIMILARLY, WE CANNOT AGREE THAT THERE WAS VIOLATION OF STATUTE OR REGULATION IN THE ALLEGED FAILURE OF THE CONTRACTING OFFICIALS TO REQUEST ADDITIONAL DETAIL DURING NEGOTIATIONS. THE REPORT REVEALS THAT WRITTEN REQUESTS WERE MADE TO SERV- AIR DURING NEGOTIATIONS FOR ADDITIONAL INFORMATION IN THE AREAS OF ARMAMENT, MAINTENANCE, SUPPLY, OPERATION OF ACCOUNTING AND ADP SUPPORT, PRODUCTION CONTROL AND QUALITY CONTROL. IN OUR OPINION, THE NEGOTIATORS WERE REASONABLY EXPLICIT IN THEIR REQUESTS FOR ADDITIONAL INFORMATION, AND THEY DISCHARGED THEIR RESPONSIBILITY WITHOUT DIVULGING BY DIRECT STATEMENT OR BY IMPLICATION THE FACT THAT THE PROPOSALS OF OTHER OFFERORS WERE CONSIDERED TO BE BETTER OR MORE COMPLETE IN THOSE AREAS FOR WHICH ADDITIONAL INFORMATION WAS REQUESTED. TO POINT OUT DURING NEGOTIATIONS EVERY AREA IN WHICH ANOTHER OFFEROR HAS ACHIEVED A HIGHER POINT SCORE OR PROVIDED MORE DETAIL IS NOT ONLY NOT REQUIRED BY STATUTE OR REGULATION, BUT IN FACT IS SPECIFICALLY PRECLUDED BY ASPR 3-805.1 (B) WHICH PROHIBITS THE USE OF "AUCTION TECHNIQUES.'

CONCERNING THE SPECIFIC STATEMENTS MADE AT THE DEBRIEFING CONFERENCE, WE THINK IT IMPORTANT TO NOTE THAT THE PURPOSE OF A DEBRIEFING CONFERENCE -- WHICH IS CONDUCTED ON AN INFORMAL BASIS -- IS TO AID UNSUCCESSFUL OFFERORS IN GAINING AN UNDERSTANDING OF THE AREAS IN WHICH THEIR PROPOSALS COULD HAVE BEEN STRENGTHENED TOWARD THE END THAT FUTURE PROPOSALS WILL HAVE A GREATER CHANCE OF SUCCESS. FURTHER, THE TENOR OF THE STATEMENTS MADE BY THE CONTRACTING OFFICIALS AT THE DEBRIEFING, AS SUMMARIZED BY YOU AND AS CONTAINED IN A PARTIAL VERBATIM TRANSCRIPT, WAS THAT THE SERV-AIR PROPOSAL WAS AN ACCEPTABLE PROPOSAL, BUT THAT ON AN OVERALL BASIS THE PAGE PROPOSAL WAS DETERMINED TO BE BETTER. WHILE EXPLANATIONS OF WHY A PROPOSAL WAS DETERMINED TO BE SECOND BEST PROVIDE LITTLE SOLACE TO A CONSCIENTIOUS OFFEROR WHO HAS JUSTIFIABLE FAITH IN HIS ABILITY TO PERFORM, SUCH EXPLANATIONS ARE NOT DESIGNED OR INTENDED AS A JUSTIFICATION OF THE EVALUATION STANDARDS EMPLOYED. ALSO, SINCE THE INFORMATION CONSIDERED DURING THE EVALUATION OF NEGOTIATED PROPOSALS IS TO A LARGE DEGREE CONFIDENTIAL, A COMPLETE EVALUATION REVIEW IS NEITHER CONTEMPLATED NOR PERMITTED IN A POST-AWARD DEBRIEFING. ACCORDINGLY, WE CANNOT CONCLUDE THAT STATEMENTS MADE AT A DEBRIEFING CONFERENCE, UNSUBSTANTIATED BY OTHER EVIDENCE, PROVIDE SUFFICIENT BASIS FOR A CLEAR FINDING OF BIAS TO WARRANT ADVERSE ACTION BY OUR OFFICE.

ON THE QUESTION OF THE EVALUATION OF COST DATA, THE ADMINISTRATIVE REPORT SETS OUT THE FOLLOWING AREAS IN WHICH POINTS WERE AWARDED BY THE DCAA. WHILE THE NUMBER OF POINTS AWARDED OTHER OFFERORS IS CONSIDERED TO BE CONFIDENTIAL INFORMATION, THE NUMBER OF POINTS AWARDED SERV-AIR IN EACH AREA AND THE MAXIMUM ALLOWABLE NUMBER OF POINTS ARE SET OUT BELOW:

SERV-AIR MAXIMUM

-------- ------- REALISM OF THE NO. OF

DIRECT EMPLOYEES 40 100 REALISM OF RATIO OF

INDIRECT TO DIRECT

EMPLOYEES 100 100 REALISM OF PLANT RATES

100 100 REALISM OF G-AND-A EXPENSE 60 100 REALISM OF FRINGE BENEFITS 50 50 REASONABLENESS OF FEE

STRUCTURE 65 100 REALISM OF PHASE-IN

COSTS 20 50 COST CONTROLS PREPAIRED 50 50

TOTALS 485 650

THE COST EVALUATION POINT SCORES WERE ADDED TO THE TECHNICAL EVALUATION POINT SCORES IN ORDER TO DETERMINE THE BEST OVERALL OFFEROR. SERV-AIR DID NOT RECEIVE THE HIGHEST TOTAL NUMBER OF POINTS IN THE COST EVALUATION. NOR, AS POINTED OUT AT THE DEBRIEFING, WAS THE SERV-AIR COST PROPOSAL THE LOWEST RECEIVED. ALSO, SINCE THE CONTRACT CONTEMPLATED WAS TO BE ON A COST-REIMBURSEMENT BASIS WITH PROPOSED COSTS STATED AS ESTIMATED ONLY AND THEREFORE NOT BINDING ON EITHER PARTY, THE PRIMARY EMPHASIS IN EVALUATION PROPERLY WAS IN THE TECHNICAL AREA. THIS WAS IN ACCORDANCE WITH ASPR 3- 805.2, WHICH REQUIRES THAT COST DATA IN COST-REIMBURSEMENT CONTRACTS BE CONSIDERED IN DETERMINING "THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT" BUT THAT IT NOT BE CONSIDERED AS CONTROLLING. WORDS TO THIS EFFECT WERE ALSO CONTAINED IN THE RFP. WE CANNOT CONCLUDE THAT ANY MORE DEFINITIVE STATEMENT OF THE EVALUATION WEIGHT TO BE PLACED ON ESTIMATED COSTS WAS REQUIRED. THE NECESSITY FOR REFRAINING FROM PLACING UNDUE EMPHASIS ON ESTIMATED COSTS IN COST REIMBURSEMENT CONTRACTS IS NOWHERE MORE EVIDENT THAN IN A CONTRACT SUCH AS IS INVOLVED HERE BECAUSE THE ESTIMATED COSTS ARE TIED DIRECTLY TO THE NUMBER OF PERSONNEL PROPOSED FOR THE VARIOUS TASKS COVERED BY THE RFP. ACCORDINGLY, IN VIEW OF THE FACT THAT THE SERV- AIR PROPOSAL WAS DETERMINED TO BE NOT AS TECHNICALLY DESIRABLE AS THAT SUBMITTED BY PAGE, ITS LOWER ESTIMATED COSTS DID NOT PROVIDE SUFFICIENT BASIS TO OVERRIDE THE MORE ACCEPTABLE PAGE OFFER.