B-149344, DEC. 26, 1962

B-149344, DEC. 26, 1962

TO HI-G, INC.:

THIS REFERS TO YOUR PROTEST AGAINST THE AWARDS MADE BY THE DEPARTMENT OF DEFENSE (CIVIL DEFENSE) UNDER DOD RFP NO. 2-189, FOR FURNISHING NATIONAL EMERGENCY ALARM REPEATER (NEAR) RECEIVERS.

THE REQUEST FOR PROPOSALS WAS ISSUED ON JUNE 5, 1962, UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (11), WHICH AUTHORIZES NEGOTIATION FOR FURNISHING PROPERTY FOR EXPERIMENT, TEST, DEVELOPMENT, OR RESEARCH. AS REPORTED, THIS PROCUREMENT IS A PART OF THE DEVELOPMENT OF AN EMERGENCY WARNING SYSTEM FOR THE PUBLIC. IT IS CONTEMPLATED THAT ONCE SPECIFICATIONS ARE DEVELOPED FOR THIS SYSTEM, THE DEPARTMENT WILL LICENSE MANUFACTURERS TO PRODUCE THE EQUIPMENT FOR SALE TO THE UTILITIES AND THE GENERAL PUBLIC.

PRICES WERE REQUESTED FOR THE ITEM ON QUANTITIES OF 5,000, 10,000, 20,000, 30,000, 40,000 AND 50,000 UNITS. THE EVALUATION AND AWARD CRITERIA WERE SPECIFIED AS FOLLOWS:

"1. EVALUATION AND AWARD

A. EVALUATION CRITERIA FOR PROPOSALS:

1. BUSINESS INTEGRITY

2. OFFEROR'S WILLINGNESS TO COMPLY WITH LICENSE AGREEMENT PROVIDING FOR FUTURE SALE OF RECEIVERS.

3. TECHNICAL CAPACITY OF OFFEROR

4. OFFEROR'S AVAILABILITY OF MANUFACTURING FACILITIES, PERSONNEL, ETC.

5. FINANCIAL CAPABILITY (IN ACCORDANCE WITH SECTION 1, PART 9, ARMED SERVICES PROCUREMENT REGULATION).

6. PROPOSED MANUFACTURER'S PRICE FOR FUTURE NATIONAL SALES ESTIMATED AT ONE MILLION UNITS PER MONTH FOR TEN MONTHS--- .

7. OFFEROR'S PLAN FOR MANUFACTURING AND DISTRIBUTING THE ONE MILLION UNITS PER MONTH FOR TEN MONTHS INCLUDING AVAILABILITY OF FACILITIES, PERSONNEL, AND MATERIALS.

8. PROPOSED PRICE FOR THE 5,000 UNITS AS WELL AS PRICES FOR GOVERNMENT OPTION ON INCREASED QUANTITIES.

"B. AWARD

BASED ON THE ABOVE EVALUATION CRITERIA, AWARD WILL BE MADE TO THE FIVE MOST RESPONSIVE OFFERORS. THE OFFEROR CERTIFIES BY THE SUBMISSION OF A PROPOSAL THAT HE IS WILLING TO ACCEPT AND COMPLY WITH A LICENSING AGREEMENT.'

THE POINT VALUE ASSIGNED TO EACH OF THE EIGHT CATEGORIES WAS NOT SPECIFIED IN THE RFP.

IT IS REPORTED THAT 28 PROPOSALS WERE RECEIVED BY JUNE 22, 1962, THE CLOSING DATE SPECIFIED FOR THE RECEIPT OF PROPOSALS; AND THAT EACH OF THESE WAS EVALUATED BY WEIGHING THE EIGHT FACTORS LISTED IN THE RFP AS FOLLOWS: 10 PERCENT FOR FINANCIAL CAPABILITY, 5 PERCENT FOR PROPOSED PRICE FOR FUTURE NATIONAL SALES, 5 PERCENT FOR DISTRIBUTION PLAN FOR FUTURE NATIONAL SALES, 30 PERCENT FOR UNIT COST FOR THE SUBJECT PROCUREMENT AND 20 PERCENT FOR HARDWARE DESIGN.

IT IS FURTHER REPORTED THAT THE EVALUATION PROCESS WAS CONDUCTED, UNDER THE PERSONAL SUPERVISION OF THE DEPUTY ASSISTANT SECRETARY OF DEFENSE (CIVIL DEFENSE), BY TECHNICAL AND CONTRACT SPECIALISTS ASSIGNED TO THE PROJECT, DURING THE PERIOD JUNE 22 THROUGH JUNE 26, 1962. THE TOTAL POINTS RECEIVED BY THE TOP FIVE OFFERORS, AND YOUR CONCERN, WERE AS FOLLOWS:

CHART.

GENERAL TIME CORPORATION 84.045

RBM CONTROLS DIVISION, ESSEX WIRE CORPORATION82.375

AMERICAN STANDARD ELECTRONIC CORPORATION 81.620

EMERSON ELECTRIC MANUFACTURING COMPANY 80.870

GENERAL ELECTRIC COMPANY 78.410

HI-G 75.325

AWARDS WERE MADE ON JUNE 30, 1962, FOR 20,000 UNITS, TO THE FIVE TOP EVALUATED OFFERERS.

YOU STATE THAT IN THE SHORT PERIOD OF TIME THAT ALL THE PROPOSALS WERE EVALUATED (28 PROPOSALS WERE EVALUATED IN THE PERIOD JUNE 22, 1962, WHICH INCLUDED A WEEKEND), THERE WAS, IN FACT, NO SURVEY MADE AS TO TECHNICAL CAPACITY OF THE OFFERORS, AVAILABILITY OF MANUFACTURING FACILITIES, PERSONNEL, BUSINESS INTEGRITY, AND FINANCIAL CAPABILITY, ETC., AS SET FORTH IN THE EVALUATION CRITERIA, BEYOND INFORMATION CONTAINED IN THE PROPOSALS THEMSELVES. YOU CONTEND THAT THE LACK OF SUCH SURVEY AND PLANT INSPECTION MAKES ANY EVALUATION EXTREMELY LIMITED IN VALUE AND NOT THAT CONTEMPLATED IN THE REQUEST. IN LINE WITH THIS CONTENTION, YOU POINT TO AMERICAN STANDARD ELECTRONICS CORPORATION, A NEWLY ESTABLISHED SMALL BUSINESS CONCERN, WHICH DOES NOT HAVE YOUR TECHNICAL CAPABILITIES AND FINANCIAL RESOURCES, BUT NEVERTHELESS, RECEIVED AN AWARD. SUCH AN AWARD, YOU SAY, CASTS SUBSTANTIAL DOUBT ON THE METHOD OF EVALUATION UNDER CRITERIA 1 (BUSINESS INTEGRITY), 3 (TECHNICAL CAPACITY OF OFFEROR), 4 (OFFEROR'S AVAILABILITY OF MANUFACTURING FACILITIES, PERSONNEL, ETC.), AND 5 (FINANCIAL CAPABILITY).

AS PREVIOUSLY INDICATED 30 POINTS OF THE TOTAL HUNDRED WERE ASSIGNED TO UNIT COST ON THIS PROCUREMENT. AMERICAN STANDARD OFFERED A UNIT PRICE OF $5.75 FOR 20,000 UNITS AND YOU OFFERED A UNIT PRICE OF $10.00. THE RESULT WAS THAT AMERICAN STANDARD RECEIVED 29.11 OF THE POSSIBLE 30 POINTS WHILE YOU RECEIVED ONLY 16.74 POINTS. APART FROM THIS SIGNIFICANT 12.37 POINT ADVANTAGE IN AMERICAN STANDARD'S FAVOR, THE RECORD INDICATES THAT YOU RECEIVED 58.585 OF THE REMAINING 70 POINTS, WHILE AMERICAN STANDARD RECEIVED 52.510 POINTS. YOU CAN SEE THAT AMERICAN STANDARD WAS NOT RATED HIGHER THAN YOUR FIRM ON THE OTHER CATEGORIES. IT SCORED HIGHER OVERALL ONLY BECAUSE OF ITS CONSIDERABLY LOWER UNIT PRICE.

THE SELECTION OF THE CONTRACTOR BEST QUALIFIED FOR AWARD IN A NEGOTIATED PROCUREMENT IS TO BE MADE BY THE ADMINISTRATIVE OFFICE CONCERNED IN THE EXERCISE OF ITS SOUND JUDGMENT AS TO THE BEST INTERESTS OF THE GOVERNMENT. 37 COMP. GEN. 855. WE FIND NO BASIS ON THE RECORD TO CONCLUDE THAT THE INSTANT AWARDS REPRESENT ANY ABUSE OF SOUND ADMINISTRATIVE DISCRETION.

YOU QUESTION THE USE OF NEGOTIATION IN CONNECTION WITH THIS PROCUREMENT ON THE BASIS THAT THE DRAWINGS AND SPECIFICATIONS WERE SUFFICIENTLY DETAILED TO HAVE PERMITTED THE USE OF FORMAL ADVERTISING, AS REQUIRED BY ASPR 3-102 (A).

THE PURPOSE OF THIS PROCUREMENT IS TO DEVELOP SPECIFICATIONS FOR AN EMERGENCY WARNING SYSTEM WHICH EVENTUALLY WILL BE SOLD BY MANUFACTURERS TO THE GENERAL PUBLIC. MORE IMMEDIATELY, THESE RECEIVERS ARE TO BE USED IN CONNECTION WITH TESTS OF NEAR SYSTEM SIGNAL GENERATORS AND RECEIVERS ON POWER LINES AT VARIOUS LOCATIONS THROUGHOUT THE UNITED STATES. IN ORDER BEST TO ACHIEVE THESE RESULTS IT WAS DETERMINED TO NEGOTIATE CONTRACTS PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (11). UNDER APPLICABLE LAW THIS DETERMINATION MUST BE ACCEPTED AS FINAL. 10 U.S.C. 2310.

YOU STATE THAT WHILE THE RFP LISTED THE EIGHT EVALUATION FACTORS WHICH WERE TO BE WEIGHTED NO INDICATION WAS GIVEN TO OFFERORS PRIOR TO AWARD AS TO THE WEIGHTED POINTS ASSIGNED. YOU CITE OUR DECISION B 147394, SEPTEMBER 4, 1962, FOR THE PROPOSITION THAT THE WEIGHT TO BE ASSIGNED TO EACH EVALUATION FACTOR SHOULD BE STATED IN THE REQUEST FOR PROPOSALS. OUR DECISION OF SEPTEMBER 4, 1962, WE STATED AS FOLLOWS:

"WE DO NOT FIND THAT THE USE OF A POINT EVALUATION SYSTEM BY THE ADMINISTRATIVE AUTHORITY FOR THE PURPOSE OF SELECTING THE SOURCES FOR NEGOTIATION OF A CPFF TYPE CONTRACT IS CONTRARY TO STATUTE OR REGULATION. WE DO FEEL, HOWEVER, THAT QUOTERS ARE PLACED IN A BETTER POSITION TO MAKE MORE ACCURATE AND REALISTIC PROPOSALS WHEN THEY ARE INFORMED IN ADVANCE OF THE RELATIVE IMPORTANCE TO BE ATTACHED TO EACH EVALUATION FACTOR.'

IT IS OBVIOUS THAT THE OFFEROR'S PRICE IS MORE SIGNIFICANT TO THE GOVERNMENT IN THE CASE OF A NEGOTIATED FIXED-PRICE CONTRACT THAN IN THE CASE OF A CPFF TYPE CONTRACT. BUT IN ANY NEGOTIATED PROCUREMENT PRICE IS ONLY ONE FACTOR WHICH ENTERS INTO THE AWARD DETERMINATION. WE DO NOT FIND THAT IT WAS IMPROPER TO UTILIZE A POINT EVALUATION SYSTEM FOR THE PURPOSE OF AWARD SELECTIONS IN THIS CASE. AND, WHILE WE FEEL THAT ADVANCE DISCLOSURE TO OFFERORS OF THE RELATIVE IMPORTANCE OF THE EVALUATION FACTORS IS DESIRABLE, WE DO NOT FIND THAT THE AWARD PROCEDURE WAS CONDUCTED CONTRARY TO STATUTE OR REGULATION.

ACCORDINGLY, YOUR PROTEST AGAINST THE AWARDS MADE UNDER THIS PROCUREMENT IS DENIED. HOWEVER, A COPY OF THIS DECISION IS BEING PROVIDED TO THE SECRETARY OF DEFENSE, AND WE ARE EXPRESSING OUR VIEW TO THE SECRETARY THAT APPROPRIATE GUIDELINES MIGHT USEFULLY BE SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION GOVERNING THE UTILIZATION OF POINT EVALUATION.