B-131715, AUGUST 1, 1957, 37 COMP. GEN. 72

B-131715, AUGUST 1, 1957, 37 COMP. GEN. 72

CONTRACTS - NEGOTIATION - IMPRACTICABLE TO OBTAIN COMPETITION AFTER PROPOSALS FOR THE PREPARATION OF TECHNICAL MANUSCRIPTS WERE RECEIVED FROM 16 RESPONSIBLE FIRMS AND EVALUATED ON THE BASIS OF PRICE, THE PRACTICABILITY OF A COMPETITIVE PROCUREMENT HAS BEEN CONCLUSIVELY DEMONSTRATED AND A NEGOTIATED AWARD UNDER 10 U.S.C. 2304 (A) (10), WHICH AUTHORIZES AN EXCEPTION TO FORMAL ADVERTISING UPON AN ADMINISTRATIVE DETERMINATION THAT IT IS IMPRACTICABLE TO OBTAIN COMPETITION, IS IMPROPER. THE EXAMPLES OF NEGOTIATED PROCUREMENTS IN PARAGRAPH 3-210.2 OF THE ARMED SERVICES PROCUREMENT REGULATIONS FOR USE UNDER 10 U.S.C. 2304 (A) (10), WHEN IT IS IMPRACTICABLE TO OBTAIN COMPETITION MAY ONLY BE USED AFTER THE LACK OF COMPETITION HAS BEEN ESTABLISHED.

TO THE SECRETARY OF THE NAVY, AUGUST 1, 1957:

REFERENCE IS MADE TO A LETTER OF JUNE 20, 1957, SIGNED BY THE ASSISTANT SECRETARY OF THE NAVY ( MATERIAL) IN RESPONSE TO OUR REQUEST OF MAY 7, 1957, FOR A REPORT IN REGARD TO THE PROTEST BY THE DESCRIPTIVE AND GRAPHIC SERVICES AGAINST THE AWARD TO EDWARD T. JOHNSON AND ASSOCIATES OF NEGOTIATED CONTRACT NO. NOM-69774, DATED APRIL 30, 1957, PURSUANT TO REQUEST FOR PROPOSALS NO. 264Q-57, ISSUED MARCH 8, 1957.

THE REQUEST SOLICITED PROPOSALS FOR THE PREPARATION OF 21 MANUSCRIPTS COVERING OPERATION, MAINTENANCE, SHOP-REBUILD, AND TABULATED PARTS LIST FOR VARIOUS ITEMS OF MECHANICAL AND ELECTRICAL EQUIPMENT AND A SET OF SPARE PARTS ITEM DESCRIPTIONS. PROPOSALS WERE TO COVER AN ORIGINAL AND FOUR COPIES OF EACH MANUSCRIPT AND FOUR GLOSSY PRINTS PLUS ONE NEGATIVE OF EACH ITEM OF BOARD ART. THE MANUSCRIPTS WERE TO BE PREPARED IN ACCORDANCE WITH THE CORPS OF ENGINEERS WRITERS STYLE GUIDE, WITH CERTAIN EXCEPTIONS NOT HERE RELEVANT. THE REQUEST CALLED FOR A PRICE FOR THE MANUSCRIPTS AND ART WORK COVERING EACH ITEM OF EQUIPMENT, WITH A STATEMENT OF THE ESTIMATED NUMBER OF PAGES AND THE ESTIMATED PIECES OF ART TO BE INCLUDED IN EACH MANUSCRIPT. A PRICE PER LINE ITEM OF SPARE PARTS ITEM DESCRIPTIONS WAS ALSO CALLED FOR, THE NUMBER OF LINE ITEMS TO BE AT THE OPTION OF THE GOVERNMENT BUT IN NO CASE TO EXCEED 30,000.

SIXTEEN PROPOSALS WERE RECEIVED. THE JOHNSON FIRM PRESENTED THE LOWEST AGGREGATE PROPOSAL FOR THE MANUSCRIPTS AT $114,998.40 LESS 2 PERCENT PROMPT PAYMENT DISCOUNT. THE SECOND LOWEST PROPOSAL FOR THE MANUSCRIPTS AT $149,921.68 WAS RECEIVED FROM DESCRIPTIVE. ON THE SPARE PARTS ITEM DESCRIPTIONS, THE JOHNSON QUOTATION WAS $5.37 PER LINE ITEM, LESS PROMPT PAYMENT DISCOUNT, WHILE THE DESCRIPTIVE QUOTATION WAS $4.25. ASSUMING THAT THE MAXIMUM NUMBER OF LINE ITEMS FOR THE SPARE PARTS ITEM DESCRIPTIONS WOULD BE REQUIRED, THE TOTAL AMOUNTS OF THE BIDS FOR ALL ITEMS WERE $270,576.43 FOR JOHNSON AND $277,421.68 FOR DESCRIPTIVE. THE CONTRACT WAS AWARDED TO JOHNSON ON THE BASIS OF LOWEST COST.

ON BEHALF OF DESCRIPTIVE AND GRAPHIC SERVICES IT IS CONTENDED, IN SUBSTANCE, THAT THE QUANTITY AND QUALITY OF COVERAGE OFFERED BY THE SUCCESSFUL BIDDER WERE BELIEVED TO BE SUBSTANTIALLY LESS THAN WERE CONTEMPLATED BY ITS PROPOSAL; THAT THE REQUEST FOR PROPOSALS WAS SO VAGUE AND INDEFINITE IN SETTING FORTH THE GOVERNMENT'S DESIRES THAT EVALUATION ON THE BASIS OF PRICE ALONE WAS NOT PROPER; AND THAT READVERTISEMENT OF THE PROCUREMENT WITH ADEQUATE SPECIFICATIONS WOULD PROBABLY RESULT IN A SAVING IN THE VICINITY OF $50,000.

THE PROTESTANT WAS HANDICAPPED IN ITS PRESENTATION BY ITS INABILITY TO OBTAIN FROM THE PROCURING OFFICE ANY INFORMATION AS TO THE COVERAGE OFFERED BY OTHER BIDDERS. HOWEVER, THE INFORMATION OBTAINED BY US FROM YOUR DEPARTMENT INDICATES THAT THERE IS A SUBSTANTIAL BASIS FOR QUESTION AS TO THE PROPRIETY OF THE PROCUREMENT.

WE ARE ADVISED THAT THE BIDS SUBMITTED SHOWED A RANGE OF MORE THAN FIVE TO ONE IN THE ESTIMATED NUMBER OF PAGES OF MANUSCRIPT AND IN THE NUMBER OF PIECES OF MANUSCRIPT. IN THIS REGARD, THE LETTER OF JUNE 20, 1957, STATES:

PROPOSALS WERE EVALUATED ON THE BASIS OF OVERALL COSTS TO THE MARINE CORPS. IT WAS NOT THE INTENTION OF THE MARINE CORPS TO FURNISH ANY OFFEROR TECHNICAL DATA OR INSTRUCTIONS OTHER THAN THOSE CONTAINED IN THE CORPS OF ENGINEERS WRITERS STYLE GUIDE. IT WAS INTENDED THAT OFFERORS WOULD EXERCISE THEIR TECHNICAL ABILITIES AND INGENUITY IN DETERMINING THE BEST METHOD OF MEETING THE REQUIREMENTS OUTLINED IN THE GUIDE. IN THIS CONNECTION, THE ONLY INFORMATION REQUESTED BY THE MARINE CORPS FROM THE OFFERORS WAS AN ESTIMATE AS TO THE NUMBER OF PAGES AND PIECES OF ART INVOLVED. THIS INFORMATION WAS NOT FOR EVALUATION AS TO PRICE FOR EACH ITEM, BUT MERELY FOR THE PURPOSE OF DETERMINING THE COMPREHENSION OF THE OFFEROR AS TO THE SCOPE OF THE WORK TO BE PERFORMED. PRICES PER PAGE OR PIECES OF ART DID NOT ENTER INTO PRICE EVALUATIONS, AS IN ALL MATERIAL OF THIS NATURE MUCH DEPENDS UPON THE TECHNICAL ABILITY AND THE INGENUITY OF THE INDIVIDUAL CONTRACTOR IN DESCRIBING AND ILLUSTRATING THE EQUIPMENT.

IT THUS APPEARS THAT THE ONLY PURPOSE OF THE REQUEST FOR PROPOSALS, SO FAR AS EVALUATION WAS CONCERNED, WAS TO SOLICIT PRICE QUOTATIONS, AND THAT THE ESTIMATES OF QUANTITY OF PAGES AND ART WORK WERE CONSIDERED ONLY TO INSURE THAT THE OFFERORS UNDERSTOOD THE SCOPE OF THE WORK TO BE PERFORMED. FROM THIS WE MUST INFER THAT THE QUANTITIES INDICATED PROVIDED SUFFICIENT INFORMATION TO DETERMINE THE OFFERORS' COMPREHENSION, AND THAT THE CONTRACTING OFFICER MUST HAVE HAD IN MIND AS THE BASIS FOR SUCH DETERMINATION AT LEAST AN APPROXIMATE MINIMUM QUANTITY FOR PAGES AND ART WORK. IF THIS MINIMUM WAS POSSIBLE TO BE ESTIMATED IN ADVANCE, IT SHOULD HAVE BEEN INDICATED IN THE REQUEST FOR PROPOSALS; IF IT WAS BASED IN PART UPON THE ESTIMATES FURNISHED BY BIDDERS WE BELIEVE IT WOULD HAVE BEEN DECIDEDLY IN THE INTEREST OF THE GOVERNMENT TO USE IT AS THE BASIS FOR FURTHER NEGOTIATION WITH BIDDERS WHOSE PRICES HAD BEEN BASED UPON FURNISHING A SUBSTANTIALLY GREATER VOLUME OF MATERIAL.

IN SUMMARY, THE PROPOSALS SUPPLY NOTHING MORE THAN PRICE QUOTATION EXCEPT FOR AN INDICATION OF THE OFFERORS' UNDERSTANDING OF THE SCOPE OF THE WORK WHICH WE THINK MIGHT WELL HAVE BEEN IMPROVED BY BETTER EXPLANATION IN THE REQUEST ITSELF.

THE CONTRACT WAS NEGOTIATED UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (10), AUTHORIZING NEGOTIATION WHEN "IT IS IMPRACTICABLE TO OBTAIN COMPETITION.'

IT IS NOTED THAT REQUESTS FOR PROPOSALS WERE ORIGINALLY SENT TO EIGHTEEN FIRMS, AND THEREAFTER TO TWENTY-NINE MORE, PRESUMABLY AT THEIR OWN REQUEST, AND THAT SIXTEEN PROPOSALS WERE SUBMITTED IN RESPONSE TO THE REQUEST. "COMPETITION" IN THE USUAL SENSE THEREFORE CANNOT BE SAID TO HAVE BEEN LACKING. IT IS SOUGHT, HOWEVER, TO JUSTIFY USE OF THIS EXCEPTION UNDER PARAGRAPH 3-210.2 OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH GIVES A NUMBER OF ILLUSTRATIONS OF TYPES OF SITUATIONS IN WHICH THE AUTHORITY IN SECTION 2304 (A) (10) MAY BE USED. AMONG THESE ARE:

(F) WHEN THE CONTEMPLATED PROCUREMENT IS FOR TRAINING FILM, MOTION PICTURE PRODUCTIONS, OR MANUSCRIPTS;

(M) WHEN IT IS IMPOSSIBLE TO DRAFT, FOR A SOLICITATION OF BIDS, ADEQUATE SPECIFICATIONS OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED SUPPLIES OR SERVICES.

THE SITUATIONS LISTED IN PARAGRAPH 3-210.2 OF ASPR ARE APPARENTLY INTENDED TO BE MERELY ILLUSTRATIVE, AND WE DO NOT INTERPRET THE PARAGRAPH AS REQUIRING INVOCATION OF NEGOTIATING AUTHORITY IN ALL SIMILAR SITUATIONS, BUT ONLY THOSE WHERE THE UNDERLYING REASON FOR THE EXCEPTION EXISTS.

SECTION 2304 (A) OF TITLE 10 PROVIDES EXCEPTIONS TO THE GENERAL REQUIREMENT THAT GOVERNMENT PROCUREMENT BE EFFECTED THROUGH FORMAL ADVERTISING PROCEDURES, AND IT IS CLEAR FROM THE LEGISLATIVE HISTORY OF THE PROVISION THAT IT WAS REPRESENTED BY THE MILITARY DEPARTMENTS AND INTENDED BY THE CONGRESS THAT PROCUREMENT BY FORMAL ADVERTISING WOULD CONTINUE TO BE THE RULE RATHER THAN THE EXCEPTION. THE EXCEPTIONS NUMBERED (1) AND (11) THROUGH (16) INVOLVE THE MAKING OF CERTAIN ADMINISTRATIVE DETERMINATIONS, WHICH ARE BY STATUTE DECLARED TO BE FINAL (10 U.S.C. 2310.) MOST OF THE REMAINING EXCEPTIONS, HOWEVER, INCLUDING NO. (10), ARE DEPENDENT UPON THE EXISTENCE OF SPECIFIED FACTUAL SITUATIONS, AND WHILE WE HAVE ALWAYS RECOGNIZED THE PRIMARY RIGHT OF THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO DETERMINE THE EXISTENCE OF FACTS AS THE BASIS OF ADMINISTRATIVE ACTION, WE CANNOT ACCEPT SUCH A DETERMINATION WHERE THE ACTUAL FACTS ARE OBVIOUSLY NOT IN ACCORD WITH IT. WHEN SIXTEEN RESPONSIBLE FIRMS OFFER A SERVICE TO THE GOVERNMENT UNDER SUCH TERMS THAT AN AWARD CAN BE MADE SOLELY ON THE BASIS OF PRICE (SUBJECT TO DETERMINATION OF THE GENERAL CAPABILITY AND RESPONSIBILITY OF BIDDERS) WE FEEL THAT THE PRACTICABILITY OF OBTAINING COMPETITION HAS BEEN CONCLUSIVELY DEMONSTRATED.

HOWEVER, SINCE THE SUBJECT CONTRACT WAS ENTERED INTO ON APRIL 30, 1957, AND IT IS REPORTED THAT THE CONTRACTOR HAS ACCOMPLISHED A SUBSTANTIAL AMOUNT OF WORK THEREUNDER, IT DOES NOT APPEAR TO BE PRACTICABLE TO TAKE ANY ACTION TO TERMINATE IT, AND NO FURTHER OBJECTION WILL BE RAISED. FUTURE PROCUREMENTS OF THIS KIND THE NEGOTIATING AUTHORITY SHOULD BE USED ONLY WHEN AUTHORIZED AND WHEN IT CAN BE, AND IS, UTILIZED TO OBTAIN SOME BENEFIT FOR THE UNITED STATES NOT OBTAINABLE UNDER THE COMPETITIVE BIDDING PROCEDURES.