B-152001, JAN. 10, 1964

B-152001, JAN. 10, 1964

TO RECOGNITION EQUIPMENT, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JULY 2, 1963, PROTESTING AN AWARD TO PHILCO CORPORATION UNDER REQUEST FOR PROPOSALS NO. 166573, ISSUED APRIL 24, 1962, BY THE ROME AIR DEVELOPMENT CENTER, GRIFFISS AIR FORCE BASE, NEW YORK.

PROPOSALS WERE SOLICITED FROM 13 SOURCES FOR THE DESIGN AND FABRICATION OF AN AUTOMATIC PRINT READER FOR THE CONVERSION OF CERTAIN FILES. SIX PROPOSALS WERE SUBMITTED, FOUR OF WHICH, INCLUDING YOUR OWN, WERE DETERMINED BY THE AIR FORCE TO BE TECHNICALLY UNACCEPTABLE. AFTER EXTENSIVE NEGOTIATIONS, FIXED PRICE CONTRACT NO. AF30/602/-2861 WAS AWARDED TO PHILCO CORPORATION ON NOVEMBER 15, 1962, IN THE AMOUNT OF $750,937. YOU PROTEST THIS AWARD ON THE GROUNDS THAT THERE WAS NOT COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) RELATING TO COMPETITION, SELECTION OF OFFERORS FOR NEGOTIATION AND THE INCORPORATION IN THE CONTRACT OF MATERIAL CHANGES IN THE ORIGINAL SPECIFICATIONS.

YOU STATE THAT:

"IT IS FIRST OF ALL FELT THAT INSUFFICIENT REGARD WAS GIVEN TO THE LANGUAGE OF PARAGRAPH 3-102 OF THE ASPR. PARAGRAPH 3-102 (A) REQUIRES, IN ESSENCE, THAT PROCUREMENTS SHALL BE MADE BY FORMAL ADVERTISING WHERE PRACTICABLE EVEN THOUGH AUTHORIZATION FOR NEGOTIATION MAY EXIST. IT IS NOT APPARENT THAT THE SUBJECT PROCUREMENT, WHICH WAS AWARDED THROUGH NEGOTIATION APPARENTLY ONLY WITH THE AWARDEE, WOULD NOT HAVE BEEN FEASIBLE AND PRACTICABLE BY FORMAL ADVERTISING EVEN THOUGH THE FINDINGS REQUIRED FOR PROCUREMENT BY NEGOTIATION MAY HAVE CONCEIVABLY, IF PERHAPS ERRONEOUSLY, BEEN MADE. EVEN IF THE APPLICABILITY OF PARAGRAPH 3-211 WERE CONCEDED, IT IS NOT SEEN THAT THE SUBJECT PROCUREMENT WAS "ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT" AS REQUIRED BY PARAGRAPH 3-102 (C).'

PARAGRAPH 3-102 (A) AND 3-102 (C) (IN PART) OF ASPR PROVIDE AS FOLLOWS:

"/A) PROCUREMENT SHALL BE MADE BY FORMAL ADVERTISING WHENEVER SUCH METHOD IS FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES EVEN THOUGH NEGOTIATION MAY BE AUTHORIZED UNDER PART 2 OF THIS SECTION.

"/C) NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT. WHEN A PROPOSED PROCUREMENT APPEARS TO BE NECESSARILY NONCOMPETITIVE, THE PURCHASING ACTIVITY IS RESPONSIBLE NOT ONLY FOR ASSURING THAT COMPETITIVE PROCUREMENT IS NOT FEASIBLE, BUT ALSO FOR ACTING WHENEVER POSSIBLE TO AVOID THE NEED FOR SUBSEQUENT NONCOMPETITIVE PROCUREMENTS. * * *"

PURSUANT TO 10 U.S.C. 2304 (A) (11), PARAGRAPH 3-211 OF ASPR AUTHORIZES NEGOTIATION OF CONTRACTS FOR PROPERTY OR SERVICES THAT THE SECRETARY OF THE DEPARTMENT DETERMINES TO BE FOR EXPERIMENTAL, DEVELOPMENTAL OR RESEARCH WORK, OR FOR MAKING OR FURNISHING PROPERTY FOR EXPERIMENT, TEST, DEVELOPMENT OR RESEARCH.

IT SEEMS CLEAR THAT THE EXTREMELY COMPLICATED AND TECHNICAL NATURE OF THIS PROCUREMENT WAS SUCH THAT FORMAL ADVERTISING WAS NOT FEASIBLE OR PRACTICABLE. SINCE "DEVELOPMENT" WAS INVOLVED, THE EXACT NATURE AND EXTENT OF THE PROPOSED WORK AND THE PRECISE METHOD OF ACCOMPLISHING SAME COULD NOT BE ESTABLISHED IN ADVANCE AND WERE SUBJECT TO IMPROVISATION AND CHANGE BASED ON THE BIDDER'S APPROACH PRIOR TO THE ESTABLISHMENT OF FIRM CONTRACTUAL REQUIREMENTS. THIS PROCUREMENT WAS, HOWEVER, ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT. AS INDICATED ABOVE, PROPOSALS WERE REQUESTED FROM 13 SOURCES AND SECURED FROM 6 AND CONSIDERATION WAS GIVEN TO ALL BIDS WHICH WERE TECHNICALLY ACCEPTABLE AND THEREFORE RESPONSIVE. ASIDE FROM THIS, THE DETERMINATION TO NEGOTIATE THIS CONTRACT UNDER SECTION 2304 (A) (11) OF TITLE 10, U.S.C. IS FINAL AS A MATTER OF LAW. SEE 10 U.S.C. 2310.

YOU CONTEND THAT NEGOTIATIONS SHOULD HAVE BEEN CONDUCTED WITH YOUR FIRM IN ACCORDANCE WITH PARAGRAPH 3-805.1 (A) OF ASPR WHICH PROVIDES, WITH CERTAIN STATED EXCEPTIONS, THAT AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE. THE DIFFERENCE BETWEEN YOUR INITIAL COST-PLUS BID OF $1,353,838 AND THAT OF PHILCO IN THE AMOUNT OF $484,990 WAS SUCH THAT THEY WOULD NOT APPEAR TO BE WITHIN A COMPETITIVE RANGE. HOWEVER, THE PRINCIPAL REASON FOR FAILURE TO FURTHER CONSIDER YOUR PROPOSAL WAS THAT IT WAS FOUND TO BE TECHNICALLY UNACCEPTABLE.

THE REQUEST FOR PROPOSALS STATES THAT AWARD MAY BE MADE WITHOUT DISCUSSION OF PROPOSALS RECEIVED, THAT THE AWARD, IF ANY, RESULTING FROM THE SOLICITATION WILL BE MADE TO THE OFFEROR WHO CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND ALL OTHER FACTORS CONSIDERED, AND THAT AWARD MAY BE PROPERLY INFLUENCED BY THE PROPOSAL WHICH PROMISES THE GREATEST VALUE TO THE GOVERNMENT IN TERMS OF POSSIBLE PERFORMANCE, TECHNICAL COMPETENCE, GROWTH POTENTIAL AND OTHER FACTORS ASIDE FROM PRICE. PROSPECTIVE OFFERORS WERE ALSO ADVISED THAT THE TECHNICAL PROPOSAL WOULD BE THE MOST IMPORTANT CONSIDERATION IN THE AWARD OF A CONTRACT.

IN EVALUATING YOUR PROPOSAL, AIR FORCE PERSONNEL CONCLUDED THAT YOUR OVER -ALL APPROACH WAS NOT TECHNICALLY SUITABLE. SPECIFICALLY, YOUR PROPOSAL WAS DETERMINED TO BE TECHNICALLY INSUFFICIENT IN THAT IT DID NOT INDICATE A METHOD OF HANDLING TOUCHING CHARACTERS, SIZE NORMALIZATION, OR VERTICAL POSITION ERRORS, AND SINCE NEARLY ALL OF THE DOCUMENTS TO BE READ HAVE TOUCHING CHARACTERS OR UNDERLINED MATERIAL WHERE THE UNDERLINE TOUCHES THE BOLD PART OF THE CHARACTERS, THESE DEFICIENCIES WERE CONSIDERED TO BE FATAL. ALSO IT IS REPORTED TO BE ESSENTIAL THAT THE ERROR RATES BE KEPT BELOW CERTAIN SPECIFIED MINIMUMS, WHEREAS YOUR PROPOSAL DOES NOT QUOTE ERROR OR REJECT RATES, NOR DOES IT MEET THE REQUIREMENT FOR EFFICIENT AND ECONOMICAL MEANS TO MONITOR AND VALIDATE CONVERTED MATERIAL.

THE RECORD FURTHER SHOWS THAT ALL PROSPECTIVE OFFERORS WERE ADVISED THAT THEY WOULD BE ALLOWED TO USE ONLY ALREADY EXISTING, OR CURRENTLY BEING DEVELOPED, DATA CONVERSION TECHNIQUES WHICH HAD BEEN AT LEAST LABORATORY TESTED AND VERIFIED TO THE SATISFACTION OF GOVERNMENT ENGINEERS AND THAT THE CONTRACTING OFFICER WOULD BE THE JUDGE OF COMPLIANCE WITH THIS REQUIREMENT. IN THIS CONNECTION, IT IS REPORTED THAT AT THE TIME OF SUBMISSION OF BIDS YOU DID NOT HAVE LABORATORY SUBSTANTIATION OF YOUR TECHNIQUES.

FINALLY, YOU STATE THAT YOU HAVE BEEN GIVEN TO UNDERSTAND THAT SIGNIFICANT MODIFICATIONS TO THE SPECIFICATIONS AS ORIGINALLY PROPOUNDED WERE MADE PRIOR TO THE ACTUAL AWARD OF A CONTRACT, AND THAT YOU SHOULD HAVE BEEN AFFORDED AN OPPORTUNITY TO SUBMIT A REVISED PROPOSAL UNDER THE MODIFIED SPECIFICATIONS, IN ACCORDANCE WITH PARAGRAPH 3-805.1 (E) OF ASPR, WHICH PROVIDES AS FOLLOWS:

"/E) WHENEVER IN THE COURSE OF NEGOTIATION A SUBSTANTIAL CHANGE IS MADE IN THE GOVERNMENT'S REQUIREMENTS (FOR EXAMPLE, INCREASES OR DECREASES IN QUALITIES OR MATERIAL CHANGES IN THE DELIVERY SCHEDULES), ALL OFFERORS SHALL BE GIVEN AN EQUITABLE OPPORTUNITY TO SUBMIT REVISED PROPOSALS UNDER THE CHANGED REQUIREMENTS.'

THE CONTRACTING OFFICER CONCLUDED THAT RESOLICITATION WAS NOT WARRANTED BECAUSE THE ORIGINAL INTENT OF THE INITIAL SOLICITATION WAS NOT CHANGED, AND THAT THE CHANGES REFLECTED IN THE REVISED WORK STATEMENT WERE THE RESULT OF NEGOTIATIONS WITH PHILCO TO OBTAIN WHAT IT INITIALLY PROPOSED IN TERMS SUITABLE FOR A FIXED PRICE CONTRACT. THE CONTRACT SETS FORTH FULLY AND EXPLICITLY THE WORK TO BE PERFORMED AND THE METHOD OF ACCOMPLISHING SAME, BUT NO SUBSTANTIAL CHANGE WAS MADE IN THE GOVERNMENT'S REQUIREMENTS.

THE DETERMINATION OF THE NEEDS OF THE GOVERNMENT AND THE METHOD OF ACCOMPLISHING SAME IS PRIMARILY THE RESPONSIBILITY OF THE PROCURING AGENCY, AS IS THE EVALUATION OF PROPOSALS RECEIVED, AND IN THE ABSENCE OF EVIDENCE OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE ACTION TAKEN WE ARE NOT REQUIRED TO OBJECT TO SAME. THIS IS PARTICULARLY TRUE WHERE, AS IN THIS CASE, THE PROCUREMENT IS FOR EQUIPMENT OF A HIGHLY SPECIALIZED SCIENTIFIC NATURE AND THE DETERMINATIONS MUST BE BASED ON EXPERT TECHNICAL OPINION. SINCE THE REPORTED FACTS INDICATE THAT THERE WAS A REASONABLE BASIS FOR THE AIR FORCE ACTION AND THAT THERE WAS COMPLIANCE WITH APPLICABLE PROVISIONS OF STATUTE AND REGULATIONS, WE FIND NO BASIS FOR DISTURBING THE AWARD AS MADE AND YOUR PROTEST MUST BE DENIED.