B-152508, MAY 1, 1964

B-152508, MAY 1, 1964

TO HUDSON AND CREYKE:

WE REFER TO THE PROTEST OF DEFENSE ELECTRONICS, INC., AGAINST THE AWARD MADE UNDER INVITATION FOR BIDS NO. 08-606-64-9, ISSUED ON AUGUST 9, 1963, BY THE DEPARTMENT OF THE AIR FORCE.

THIS INVITATION WAS ISSUED AS STEP II, UNDER A TWO-STEP FORMAL ADVERTISING PROCEDURE INITIATED BY REQUEST FOR TECHNICAL PROPOSAL NO. 63- 1077 (REV.), FOR ELECTRONIC EQUIPMENT USED FOR TELEMETRY INSTRUMENTATION. THESE SYSTEMS ARE COMPOSED OF RADIO RECEIVERS, MAGNETIC TAPE RECORDS, PEN RECORDERS, TEST EQUIPMENT, DISTRIBUTION SUBSYSTEM AND AUXILIARY ITEMS AND ARE FOR INSTALLATION ON THE ATLANTIC MISSILE RANGE FOR THE PURPOSE OF GATHERING TEST DATA FROM MISSILES AND SPACECRAFT.

A PRIOR INVITATION (IFB NO. 08-606-63-204) HAD BEEN ISSUED AS STEP II ON THIS REQUIREMENT ON APRIL 8, 1963. UNDER STEP I OF THE PROCUREMENT IT HAD BEEN DETERMINED THAT DEFENSE ELECTRONICS, INC. (DEI) AND SPACE-GENERAL CORPORATION (S-GC) HAD BEEN THE ONLY TECHNICALLY QUALIFIED BIDDERS; UNDER STEP II DEI HAD BID A TOTAL PRICE OF $5,915,428.29, WHILE S-GC HAD BID $9,809,853. THE DEI BID HAD INCLUDED A UNIT PRICE OF $219,717.04 ON THE BASIC ITEM (ITEM NO. 1, A RECEIVER) RECORDER GROUP (TRKI-12) ( FOR 19 UNITS. THE INVITATION HAD ALSO REQUESTED OPTION PRICES ON VARIOUS QUANTITIES, SUBJECT TO EXERCISE UNTIL JUNE 30, 1964. FOR THE OPTION QUANTITIES DEI HAD QUOTED UNIT PRICES RANGING FROM $505,978.70 FOR ONE UNIT (ITEM NO. 1) TO $282,319.99 FOR 15 UNITS. ON MAY 28, 1963 DEI HAD RECEIVED THE AWARD ON THE BASIC QUANTITY (19 UNITS PLUS COMPONENTS AND DATA), AT A TOTAL CONTRACT PRICE OF $5,915,428.29.

THE RECORD SHOWS THAT SHORTLY AFTER THE AWARD A NEED AROSE TO PROCURE AN ADDITIONAL 11 COMPLETE UNITS. UNDER THE TERMS OF THE OPTION OFFERED BY DEI THE 11 UNITS WERE AVAILABLE AT A TOTAL PRICE OF $4,052,382.78, WHILE ITS CONTRACT PRICE AT THAT TIME ON THE SAME QUANTITY WAS $2,935,810.19. (DEI'S OPTION PRICE ON ITEM NO. 1 WAS $298,477.31 EACH FOR 11 UNITS.) THE CONTRACTING OFFICER FELT THAT A HIGHER PRICE ON OPTION ITEMS WAS NOT JUSTIFIED. HE STATES THAT HE INFORMALLY ASKED DEI TO REDUCE ITS OPTION PRICES, BUT THAT DEI REFUSED ON THE GROUND THAT ITS PROFIT WAS ONLY INCLUDED IN THE OPTION QUANTITIES. THE CONTRACTING OFFICER REPORTS THAT HE WAS THEREAFTER ADVISED BY THE AIR FORCE MISSILE TEST CENTER PROGRAM DIRECTOR THAT FROM A TECHNICAL POINT OF VIEW THERE WAS NO NEED THAT THE ADDITIONAL UNITS BE IDENTICAL OR EXACT DUPLICATES OF THE DEI UNITS; AND THAT THE S-GC UNIT, WHICH HAD BEEN FOUND TECHNICALLY ACCEPTABLE UNDER STEP I OF THE PROCUREMENT, ALTHOUGH NOT TECHNICALLY IDENTICAL TO THE DEI UNIT, WAS IN ACCORDANCE WITH THE GOVERNMENT SPECIFICATIONS AND WOULD PERFORM THE SAME FUNCTION AS THE DEI UNIT. BUT THE CONTRACTING OFFICER WAS ALSO ADVISED THAT FROM A LOGISTIC POINT OF VIEW ADDITIONAL ITEMS OF TECHNICAL DATA, TRAINING SERVICES AND SOME ADDITIONAL SPARE PARTS WOULD HAVE TO BE PROCURED IF THE ADDITIONAL UNITS WERE OBTAINED FROM A SOURCE OTHER THAN DEI. HE CONCLUDED, HOWEVER, THAT THE ADVANTAGE TO BE DERIVED FROM HAVING MORE THAN ONE SOURCE PRODUCING THIS EQUIPMENT WOULD OFFSET THE DISADVANTAGE OF THE COST DUPLICATION INVOLVED.

PURSUANT TO STEP I OF THE PRIOR PROCUREMENT, ONLY DEI AND S-GC WERE CONSIDERED AS POSSIBLE SOURCES. THE CONTRACTING OFFICER WROTE TO BOTH THESE SOURCES (LETTER TO DEI DATED JUNE 25, 1963), ASKING WHETHER A COMPETITIVE BID WOULD BE SUBMITTED UNDER A NEW INVITATION. (THESE LETTERS SET FORTH THE ITEMS AND QUANTITIES REQUIRED AND PRICES AVAILABLE TO THE GOVERNMENT UNDER THE DEI OPTION.) S-GC ANSWERED IN THE AFFIRMATIVE; DEI OFFERED TO REDUCE ITS OPTION PRICES BY 2 PERCENT. HOWEVER, AIR FORCE WAS NOT SATISFIED WITH ONLY A 2 PERCENT. HOWEVER, AIR FORCE WAS NOT SATISFIED WITH ONLY A 2 PERCENT REDUCTION, AND ON AUGUST 9, 1963, IT ISSUED THE SUBJECT INVITATION.

UNDER THE TERMS OF THIS INVITATION DEI AND S-GC WERE EACH REQUIRED TO SUBMIT BIDS IN ACCORDANCE WITH THEIR PRIOR RESPECTIVE STEP I TECHNICAL PROPOSALS. IN THE CASE OF DEI THE INVITATION SPECIFIED ADDENDUM A, WHICH INCLUDED THE AMPEX MODEL FR-1400 RECORDER COMPONENT. THE ORIGINAL CONTRACT HAD BEEN AWARDED TO DEI WITH THE CEC RECORDER INCLUDED UNDER ADDENDUM C. THE CONTRACTING OFFICER REPORTS, HOWEVER, THAT BEFORE CONTRACT PERFORMANCE HAD STARTED, A "14-TRACK REQUIREMENT" NOT SUITABLE TO THE CEC RECORDER HAD ARISEN; THAT BOTH PARTIES HAD AGREED AT THE TIME THAT THE AMPEX MODEL FR-1400 RECORDER WAS ADAPTABLE TO THE REQUIRED 7-TRACK AND 14- TRACK SYSTEMS; AND THAT FOR THIS REASON THE INVITATION CITED ADDENDUM A OF THE DEI TECHNICAL PROPOSAL. HE STATES, HOWEVER, THAT IT WAS THEREAFTER CONFIRMED THAT THE MODEL FR-1400 OF ADDENDUM A WAS NOT QUITE SUITABLE, AND THAT AN AMPEX SPECIAL WIDE BAND RECORDER PROPOSED UNDER DEI'S ADDENDUM H SHOULD BE UTILIZED BY DEI. UNDER SUPPLEMENTAL AGREEMENT NO. 1 TO THE BASIC CONTRACT DATED AUGUST 28, 1963, ADDENDUM H WAS SUBSTITUTED FOR ADDENDUM C. THIS CHANGE (PARAGRAPH 7 OF THE SUPPLEMENTAL AGREEMENT) WAS ALSO MADE APPLICABLE TO THE OPTION ITEMS. IN ADDITION, PARAGRAPH 11 OF THE AGREEMENT PROVIDED FOR A 2 PERCENT REDUCTION IN DEI'S OPTION PRICES IF EXERCISED NOT LATER THAN SEPTEMBER 16, 1963. ALSO, UNDER DATE OF AUGUST 26, 1963 THE AIR FORCE ISSUED AMENDMENT NO. 1 TO THE INVITATION, STATING AS FOLLOWS:

"THE AMPEX SPECIAL WIDE BAND RECORDER NO. 18002500-1 IS AN ACCEPTABLE SUBSTITUTE FOR RECORDERS INCLUDED IN THE BIDDER'S TECHNICAL PROPOSAL.'

THE CONTRACTING OFFICER STATES THAT MODEL NO. 18002500-1 IS IN FACT THE MODEL TO BE FURNISHED UNDER ADDENDUM H OF THE DEI CONTRACT; AND THAT THE AMENDMENT STILL LEFT THE INTERESTED PARTIES FREE TO BID ON MODEL NO. FR- 1400 OR MODEL NO. 18002500-1.

BID OPENING WAS HELD, AS SCHEDULED, ON SEPTEMBER 3, 1963, AND S-GC SUBMITTED THE ONLY BID. S-GC'S TOTAL BID ON ALL THE ITEMS WAS $3,958,463. DEI'S OPTION PRICES ON THE SAME REQUIREMENT, WITH THE 2 PERCENT DISCOUNT, TOTALED $3,971.335.13. A FACTOR FOR ADDITIONAL TRANSPORTATION COSTS WAS ADDED TO THE S-GC BID, AND AS EVALUATED BY THE CONTRACTING OFFICER, THE S-GC BID WAS $5,646.64 LOWER THAN THE OPTION PRICE. THE S-GC BID INCLUDED PRICES ON DATA ITEMS WHICH WERE NOT IN THE DEI OPTION PRICE, SINCE THEY WERE ALREADY BEING FURNISHED UNDER THE CONTRACT. HOWEVER, IT WAS ADMINISTRATIVELY DETERMINED THAT DATA BEING SUPPLIED UNDER THE DEI CONTRACT COULD BE USED WITH THE S-GC EQUIPMENT IN LIEU OF SOME OF THE DATA ITEMS SPECIFIED IN THE S-GC BID, AND THAT SOME OF THE OTHER DATA ITEMS, WHILE CONVENIENT, WERE NOT ABSOLUTELY NECESSARY. THIS CONNECTION, THE AWARD PROVISION OF THE INVITATION (PART XXIII, PAGE 20) SPECIFIED THAT THE GOVERNMENT RESERVED THE RIGHT TO MAKE AWARD EITHER WITH OR WITHOUT THE DATA REQUIREMENTS. IN TOTAL, IT WAS ESTIMATED THAT $135,402 OF DATA ITEMS BID BY S-GC COULD BE ELIMINATED (ITEMS 8, 9, 12, 13, 15 AND 16). THE EFFECT OF THE DELETIONS ON THE EVALUATION WAS TO REDUCE THE S-GC BID FROM A TOTAL OF $3,958,463 TO $3,823,061, AND TO FURTHER SPREAD THE DIFFERENCE BETWEEN THE S-GC BID AND THE OPTION PRICE TO $141,048.

DURING THE WEEK FOLLOWING THE BID OPENING, IT IS REPORTED THAT DEI MADE SEVERAL OFFERS INTENDED TO EFFECT CERTAIN MINOR REDUCTIONS IN THE COST OF THE OPTION, AND THAT IF OFFERED--- ON SEPTEMBER 12, 1963--- TO CHANGE THE F.O.B. POINT SO AS TO RESULT IN A REDUCTION OF $40,000 IN THE OPTION PRICE. THE CONTRACTING OFFICER CONCLUDED THAT THESE OFFERS STILL DID NOT MAKE THE OPTION MORE ADVANTAGEOUS THAN THE S-GC BID. ON SEPTEMBER 16, 1963, AWARD WAS MADE TO S-GC AT A CONTRACT PRICE OF $3,832,061. (IT IS REPORTED THAT AFTER DEI WAS INFORMED OF THE S-GC AWARD, IT OFFERED TO REDUCE ITS OPTION PRICE BY $250,000.)

IN YOUR LEGAL MEMORANDUM OF MARCH 14, 1963 (APPENDIX C TO THE PROTEST), YOU ACKNOWLEDGE THAT ASPR 1-1505, WITH RESPECT TO THE EXERCISE OF CONTRACT OPTIONS, PROVIDES FOR TESTING OF THE MARKET UNDER VARIOUS PRESCRIBED CONDITIONS. BUT YOU CONTEND THAT THE MARKET TESTING PROCEDURE USED HERE OF INVITING A BIDDER TO BID AGAINST REVEALED OPTION PRICES IS IMPROPER AND CONTRARY TO ESTABLISHED BIDDING PRINCIPLES.

ASPR 0-1505 (C) PROVIDES THAT AN OPTION SHOULD BE EXERCISED, ASSUMING THAT THE ITEMS ARE NEEDED AND FUNDS ARE AVAILABLE, ONLY IF ITS EXERCISES IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. IN DETERMINING WHETHER THE OPTION PRICE IS "MOST ADVANTAGEOUS," ASPR 1-1505 (D) PROVIDES THAT THE GOVERNMENT MAY INVESTIGATE OF EXAMINE THE MARKET PRIOR TO UNDERTAKING A NEW SOLICITATION. WE SEE NOTHING WRONG WITH ASKING POTENTIAL SOURCES IF THEY WILL COMPETE AGAINST A REVEALED OPTION PRICE WHICH MAY BE CONSIDERED TO HIGH. OPTION PRICES OFFERED UNDER ADVERTISED BIDDING ARE DISCLOSED AT THE PUBLIC BID OPENING. WE NOTE, FOR EXAMPLE, THAT ON PAGE 5 OF YOUR MEMORANDUM OF LAW YOU QUOTE S-GC'S OPTION BID PRICE AS HAVING BEEN IN THE APPROXIMATE AMOUNT OF $4,799,000. ALSO, THE CONTRACTOR UNDER THE OPTION MAY COMPETE AGAINST HIS OWN OPTION PRICE.

DEI NEXT CONTENDS THAT IT WAS EFFECTIVELY PRECLUDED FROM SUBMITTING A RESPONSIVE BID UNDER INVITATION FOR BIDS NO. 08-606-64-9. SPECIFICALLY, DEI STATES THAT THE RECORDER SPECIFICATIONS CONTAINED IN ITS ADDENDUM A WERE NOT IDENTICAL WITH THE RECORDERS BEING SUPPLIED BY DEI UNDER THE BASIC CONTRACT; YET, UNDER THE INVITATION AS ISSUED, AND IN ACCORDANCE WITH A LETTER FROM THE CONTRACTING OFFICER DATED AUGUST 15, 1963 (EXHIBIT 7 OF YOUR PROTEST FILE), DEI WAS REQUIRED TO BID IN ACCORDANCE WITH ADDENDUM A. WHILE THE RECORDER REQUIREMENT WAS CHANGED BY AMENDMENT NO. 1 TO THE INVITATION, DEI CONTENDS THAT THE CHANGE ISSUED UNDER DATE OF AUGUST 26, 1963, AND RECEIVED BY DEI ON AUGUST 29, 1963, WAS ISSUED TOO LATE TO BE INTELLIGENTLY CONSIDERED FOR PURPOSES OF THE SEPTEMBER 3, 1963 BID OPENING; AND THAT, IN ANY EVENT, DEI HAD NOT UNDERSTOOD THE SIGNIFICANCE OF THIS AMENDMENT, BECAUSE THE AMENDMENT AMBIGUOUSLY CITED A NEW, UNKNOWN MODEL NUMBER (NO. 18002500 1) WITHOUT MAKING ANY REFERENCE TO THE FAMILIAR ADDENDUM H. IN THESE CIRCUMSTANCES, YOU CONTEND THAT THE INVITATION WAS CONFUSING, AND THAT THE FAILURE TO EXTEND THE BID OPENING BEYOND SEPTEMBER 3, 1963 VIOLATED THE POLICY OF ASPR 2-207 FOR EXTENSIONS OF BIDDING TIME WHEN NECESSARY TO CONSIDER INVITATION AMENDMENTS.

THE RECORD SHOWS THAT ON AUGUST 26, 1963, THE CONTRACTING OFFICER (MR. H. A. BROWN) TELEPHONED MR. RAYMOND S. ROSENBERG, PRESIDENT OF DEI, TO ADVISE HIM THAT AN INVITATION AMENDMENT WAS TO BE ISSUED WHICH WOULD ALLOW DEI TO BID ON THE AMPEX RECORDER BEING FURNISHED BY DEI UNDER THE CONTRACT. (SEE ADDENDUM TO LETTER FROM MR. ROSENBERG) OF DEI (TO MR. CREYKE, JR., DATED OCTOBER 20, 1963); THAT UNDER DATE OF AUGUST 28, 1963, DEI AGREED TO SUPPLEMENTAL AGREEMENT NO. 1 TO THE CONTRACT, WHEREBY ADDENDUM H WAS SUBSTITUTED IN LIEU OF ADDENDUM C AND PRICE REDUCTIONS WERE OFFERED ON THE OPTION QUANTITIES; AND THAT THE INVITATION AMENDMENT ITSELF REFERRED TO AN AMPEX SPECIAL WIDE BAND RECORDER SUBSTITUTE. UNDER THE CIRCUMSTANCES, WE THINK THAT THE INVITATION AMENDMENT WAS SUFFICIENTLY EXPLICIT. ALTHOUGH THE AMENDMENT WAS ISSUED CLOSE IN TIME TO THE BID OPENING, WE THINK THE CONTRACTING OFFICER WAS JUSTIFIED IN ASSUMING THAT DEI HAD ENOUGH TIME TO PREPARE A BID FOR SUBMISSION. AFTER ALL, THE PURPOSE OF THE AMENDMENT WAS TO ALLOW DEI TO OFFER THE SAME RECORDER WHICH IT WAS FURNISHING UNDER ITS CONTRACT, AND WHICH IT WAS OFFERING TO THE AIR FORCE, UNDER SUPPLEMENTAL AGREEMENT NO. 1, ON THE CONTRACT OPTION QUANTITIES.

THE REDUCTIONS OFFERED BY DEI AFTER THE SEPTEMBER 3 BID OPENING, BUT BEFORE THE SEPTEMBER 16, AWARD, WERE NOT SIGNIFICANT ENOUGH TO OVERCOME THE REDUCTION OFFERED UNDER THE S-GC BID. OF COURSE ANY REDUCTIONS OFFERED BY DEI AFTER THE AWARD COULD NOT PROPERLY BE CONSIDERED ON THE AWARD. IN THIS CONNECTION, WE FEEL THAT SUCH OFFERS AS WERE MADE BY DEI AFTER THE BID OPENING WERE TANTAMOUNT TO LATE BIDS.

NEXT YOU CONTEND THAT THE EVALUATION, I.E., THE DETERMINATION THAT THE S- GC BID WAS MORE ADVANTAGEOUS THAN THE DEI OPTION, PRICE AND OTHER FACTORS CONSIDERED, WAS UNREASONABLE, UNFAIR AND DISCRIMINATORY. YOU SAY THAT THE EVALUATION WITH RESPECT TO TRANSPORTATION WAS UNFAIR; THAT THE MATTER OF ESTABLISHING A SECOND SOURCE SHOULD NOT HAVE BEEN CONSIDERED; AND THAT THE DELETION IN EVALUATION OF ITEMS AMOUNTING TO $135,402 WAS NOT JUSTIFIED. WITH REGARD TO THE DELETION, DEI STATES, IN DETAIL, THAT DEI DATA AND "FOLLOW-ON HARDWARE" CANNOT BE USED FOR THE S-GC EQUIPMENT. THE GIST OF AIR FORCE'S COMMENTS ON THE DELETIONS, WHICH DEI HAS REVIEWED, ARE PRESENTED AS FOLLOWS:

"1. COMPATIBILITY BETWEEN SIMILAR TYPE SYSTEMS AND COMPATIBILITY INTERFACE BETWEEN OTHER SYSTEMS HAS ALWAYS BEEN THE RESPONSIBILITY OF AFMTC. SIMILAR EQUIPMENT FROM SEVERAL SOURCES IS A COMMON OCCURRENCE BECAUSE OF AIR FORCE PROCUREMENT'S DESIRE TO MAINTAIN COMPETITION WHERE POSSIBLE, AND THE FURNISHING OF RANGE USER EQUIPMENTS TO THE RANGE. THE USE OF A MIXTURE OF ANTENNAS, RECEIVERS, RECORDERS, DISCRIMINATORS, PCM GROUND STATIONS, ETC., HAS NEVER CAUSED INTOLERABLE OPERATIONAL INCOMPATIBILITY AT AMR AND IT IS NOT ANTICIPATED WITH TRKI-12 PREDETECTION GROUPS BEING PRODUCED BY TWO SOURCES. "2. EXTENSIVE ENGINEERING CHANGES TO ACHIEVE COMPATIBILITY WILL NOT BE REQUIRED, AND MINOR IMPROVEMENTS IN SYSTEM CAPABILITY WILL BE OBTAINED BY NO-COST TRADE-OFFS, E.G., SUPPLEMENTAL AGREEMENT NR. 4 TO DEI'S CONTRACT.

"E. NO FUTURE COSTS ARE ANTICIPATED IN THE PERFORMANCE OF FIELD MODIFICATIONS TO ACHIEVE COMPATIBILITY. NO UNDEFINED COST WILL BE REQUIRED TO MODIFY DEI DOCUMENTATION ITEMS, BECAUSE ALL REQUIRED DOCUMENTATION IS BEING PROVIDED FROM SPACE GENERAL CORPORATION WITH THE POSSIBLE EXCEPTION OF ADDITIONAL DRAWINGS ESTIMATED TO COST $15,000.00 PREVIOUSLY DISCUSSED IN AMR LETTER DATED 10 OCT. 63,SUBJECT: PROTEST OF AWARD IFB 08-606-64-9 CONTRACT AF 08/606/-6169. THE PURPOSE OF PAR XXIII, IFB 98-606-64-9 WAS TO ENABLE THE AIR FORCE TO REVIEW THE COST BID ON ALL LINE ITEMS AND DELETE COSTLY "CONVENIENCE" ITEMS. ITEMS 8 THROUGH 17 ARE ALL ITEMS NORMALLY INCLUDED IN THE INSTRUCTION BOOK, ITEM 11. THEY ARE LISTED SEPARATELY TO PROVIDE EARLIER DELIVERY DATES AND IN A SEPARATE PACKAGE, WHICH IS MORE CONVENIENT TO REVIEW AND APPROVE. IN MANY INSTANCES THESE ITEMS ARE BID AT NO COST. HOWEVER, IT IS EMPHASIZED THAT NO NECESSARY DOCUMENTATION HAS BEEN DELETED, WHICH WILL NOT BE RECEIVED AT A LATER DATE IN ANOTHER FORM.'

WE ARE NOT IN A POSITION TO OVERRULE THE AIR FORCE'S ENGINEERING DETERMINATIONS IN THE MATTER. IT IS A WELL ESTABLISHED RULE OF OUR OFFICE THAT FACTUAL DETERMINATIONS REGARDING THE NEEDS OF THE PROCURING ACTIVITY ARE MATTERS PRIMARILY WITHIN THE PROVINCE OF THE ADMINISTRATIVE OFFICERS INVOLVED. SEE 17 COMP. GEN. 554. WE ARE SATISFIED HERE THAT THESE DETERMINATIONS WERE MADE BY THE AIR FORCE IN GOOD FAITH UPON AN ADEQUATE CONSIDERATION OF THE EVIDENCE AVAILABLE.

YOU CONTEND THAT THE DELETIONS FROM THE S-GC BID VIOLATED THE RULE THAT BIDDERS UNDER AN INVITATION MUST BE EVALUATED ON THE SAME BASIS AND IN ACCORDANCE WITH THE TERMS OF THE INVITATION. THE AWARD PROVISION OF THE INVITATION PERMITTED THE GOVERNMENT TO MAKE AWARD WITHOUT ITEMS 5 AND 8 THROUGH 17. ACTUALLY 6 OF THESE ITEMS (ITEMS 8, 9, 12, 13, 15 AND 16) WERE DELETED FROM THE AWARD. IT IS NOTED THAT DEI WAS EVALUATED ONLY ON ITEMS 1 THROUGH 7 (AS IT WAS ALREADY SUPPLYING THE OTHER ITEMS UNDER ITS BASIC CONTRACT), WHILE S-GC WAS EVALUATED ON ITEMS 1 THROUGH 7, PLUS ITEMS 10, 11, 14 AND 17. THEREFORE, WE CANNOT AGREE WITH YOUR STATEMENT.

NEITHER CAN WE AGREE WITH YOUR CONTENTION THAT THE ESTABLISHMENT OF A SECOND SOURCE WAS AN EXTRANEOUS CONSIDERATION IN THIS PROCUREMENT. THE S- GC BID WAS BEING COMPARED TO A CONTRACT OPTION. SUCH COMPARISON IS NOT THE EQUIVALENT OF EVALUATING TWO BIDS UNDER THE SAME INVITATION. ASPR 1- 1505 (C) PROVIDES, AS NOTED, THAT AN OPTION SHOULD BE EXERCISED ONLY IF IT IS DETERMINED THAT SUCH ACTION IS "* * * MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS SIDERED.' ASPR 1-1505 (E) EXPLAINS THAT "OTHER FACTORS" INCLUDE THE GOVERNMENT'S NEED FOR CONTINUITY OF OPERATIONS AND POTENTIAL COSTS TO THE GOVERNMENT OF DISRUPTING OPERATIONS, INCLUDING THE COST OF RELOCATING NECESSARY GOVERNMENT-FURNISHED EQUIPMENT. WHILE THE AFOREMENTIONED FACTORS WEIGH IN FAVOR OF EXERCISING THE CONTRACT OPTION, FACTORS WHICH FAVOR THE ACCEPTANCE OF A COMPETING OFFER, I.E., THE ESTABLISHMENT OF A SECOND SOURCE, BY IMPLICATION SHOULD ALSO BE CONSIDERED.

YOUR OBJECTION TO THE TRANSPORTATION EVALUATION MADE ON THE S-GC BID IS THAT THE TRANSPORTATION WAS EVALUATED BY THE USE OF MOTOR TRUCKS RATHER THAN PADDED VANS. THE AIR FORCE REPORTS THAT DUE TO THE EXPECTED SIZE OF THE SHIPMENTS, THE GOVERNMENT SHOULD HAVE EXCLUSIVE USE OF THE MOTOR TRUCKS. IT IS REPORTED, HOWEVER, THAT EVEN IF PADDED VANS ARE USED THE ADDITIONAL COST TO THE GOVERNMENT WILL BE $2,844.76. AS YOU RECOGNIZE, THIS AMOUNT IS NOT SIGNIFICANT IN THE OVERALL EVALUATION.

IT IS CONTENDED VIGOROUSLY IN YOUR MEMORANDUM AND IN THE DEI LETTERS THAT IF CONSIDERATION BE GIVEN TO ALL THE FACTORS: PRICE, COMPATIBILITY OF EQUIPMENT, CONTINUITY OF OPERATION, EASE OF ADMINISTRATION, ETC., IT IS EVIDENT THAT AN AWARD TO DEI ON THE OPTION REQUIREMENT WOULD HAVE BEEN MORE ADVANTAGEOUS TO THE GOVERNMENT THAN THE S-GC AWARD. HOWEVER, FROM THE OBSERVABLE CRITERIA IT APPEARS TO US THAT THE AWARD TO S-GC WAS JUSTIFIED. FURTHER, WE FIND THAT THE AWARD WAS MADE IN ACCORDANCE WITH APPLICABLE PROVISIONS OF LAW AND REGULATION. ACCORDINGLY, DEI'S PROTEST IS DENIED.