B-157161, APR. 19, 1966

B-157161, APR. 19, 1966

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED NOVEMBER 4, 1965, TRANSMITTING AN ADMINISTRATIVE REPORT AND ENCLOSURES, FROM THE DIRECTOR OF PROCUREMENT AND PRODUCTION, HEADQUARTERS UNITED STATES ARMY MATERIEL COMMAND, RELATIVE TO THE MATTER OF THE PROTEST OF HAYES INTERNATIONAL CORPORATION AGAINST THE AWARD MADE BY THE UNITED STATES ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA, TO THE LOCKHEED AIRCRAFT CORPORATION, LOCKHEED MISSILES AND SPACE COMPANY, HUNTSVILLE, ALABAMA, UNDER REQUEST FOR QUOTATIONS AMSMI-IXDA-58- 65.

IT IS REPORTED THAT THE UNITED STATES ARMY MISSILE COMMAND SOLICITED QUOTATIONS FOR THE FURNISHING OF SUPPORT SERVICES IN THE DEVELOPMENT OF AN ANALOG COMPUTER MATHEMATICAL MODEL. THE TECHNICAL PERFORMANCE REQUIRED UNDER THIS SOLICITATION WAS DEFINED IN TECHNICAL REQUIREMENT NO. 766 ENTITLED FY-65 ROCKETS AND LAUNCHERS INVESTIGATION PROGRAM ANALOG COMPUTER MATHEMATICAL MODEL. QUOTATIONS WERE SOLICITED FROM 105 FIRMS AND WERE TO BE SUBMITTED ON OR BEFORE 4:30 P.M., CENTRAL STANDARD TIME, MAY 12, 1965. QUOTATIONS WERE RECEIVED FROM 15 FIRMS.

IT IS FURTHER REPORTED THAT IN THE EVALUATION OF THE QUOTATIONS RECEIVED IN RESPONSE TO THE SOLICITATION, IT APPEARED THAT THE QUOTATION SUBMITTED BY HAYES INTERNATIONAL DID NOT INCLUDE ANY PROVISION FOR DIGITAL AND ANALOG COMPUTER EFFORT IN SUPPORT OF THE DEVELOPMENT OF AN ANALOG COMPUTER MATHEMATICAL MODEL. IN THE OPINION OF THE CONTRACTING OFFICER THIS EFFORT IS INHERENT IN AND ESSENTIAL TO THE SUCCESSFUL PERFORMANCE OF ANY CONTRACT RESULTING FROM THIS SOLICITATION. IN THIS CONNECTION HOWEVER, IT MAY BE STATED THAT THE HAYES INTERNATIONAL QUOTATION CONTAINS THE FOLLOWING STATEMENTS ON PAGES 3-5 AND 3-7:

"REQUIREMENTS FOR DIGITAL COMPUTATION WHICH MAY ARISE WILL BE SUPPLIED THROUGH BIRMINGHAM TECHNICAL GROUP ATTACHED TO THE PROGRAM MANAGER'S OFFICE.

"THE NEED FOR ANALOG COMPUTATION WILL BE PROVIDED THROUGH THE FACILITIES OF THE UNIVERSITY OF ALABAMA AEROSPACE ENGINEERING DEPARTMENT.'

IT ALSO IS REPORTED THAT HAYES INTERNATIONAL WAS REQUESTED TO PROVIDE INFORMATION TO CLARIFY THE APPARENT DEFICIENCY OF COMPUTER COST INFORMATION, AND IN A LETTER DATED JUNE 7, 1965, TO THE SPECIAL CONTRACTS DIVISION, DIRECTORATE OF PROCUREMENT AND PRODUCTION, REDSTONE ARSENAL, HAYES INTERNATIONAL STATED THAT THE USE OF ANALOG COMPUTERS WAS NOT ANTICIPATED, BUT THAT IT DID ANTICIPATE THE USE OF A DIGITAL COMPUTER FOR 330 HOURS AT A TOTAL ESTIMATED COST OF $9,561. FURTHER, INFORMATION WAS FURNISHED BY HAYES INTERNATIONAL FOR CLARIFICATION OF ITS QUOTATION IN SUBSEQUENTLY DATED LETTERS, AND IT WAS DEVELOPED THAT THE HAYES INTERNATIONAL ORIGINAL QUOTATION DID NOT INCLUDE COMPUTER COSTS.

THE CONTRACTING OFFICER'S ADMINISTRATIVE REPORT STATES THAT:

"5. THE GOVERNMENT DID NOT ENTER INTO NEGOTIATIONS WITH HAYES AT ANY TIME. HAYES WAS FULLY AWARE THAT IT WAS NOT IN NEGOTIATIONS WHEN IT SUBMITTED THE ABOVE NOTED LETTERS IN CLARIFICATION OF ITS QUOTATION. PARAGRAPH 6. OF HAYES' ABOVE NOTED LETTER, DATED 14 JUNE 1965, * * * SUPPORTS THE GOVERNMENT POSITION ON THIS POINT.

"6. THE FAILURE OF HAYES TO INCLUDE ESTIMATED COMPUTER COSTS IN ITS QUOTATION DISPLAYED HAYES' INADEQUATE GRASP OF THE PROBLEM INVOLVED IN THE DESIGN OF AN ANALOG COMPUTER MATHEMATICAL MODEL. THE VERY NATURE OF AN ANALOG COMPUTER MATHEMATICAL MODEL REQUIRES THE UTILIZATION OF COMPUTERS FOR ITS DESIGN AND VERIFICATION. FOR THIS REASON, THE HAYES QUOTATION WAS DETERMINED TO BE TECHNICALLY UNACCEPTABLE. THE COMPUTER COST INFORMATION SUBMITTED BY HAYES IN ITS 7 JUNE 1965 LETTER OF CLARIFICATION WAS DETERMINED TO BE A LATE MODIFICATION TO THE ORIGINAL HAYES QUOTATION PURSUANT TO PARAGRAPH 3 506/G) OF THE ARMED SERVICES PROCUREMENT REGULATION. * * *

"9. THE CONTRACTING OFFICER, AFTER REVIEWING THE RECOMMENDATION OF THE CONTRACTOR SELECTION BOARD, ACCEPTED THE RECOMMENDATION AND AWARDED CONTRACT NUMBER DA-01-021-AMC-12819/Z) TO LOCKHEED AIRCRAFT CORPORATION (LOCKHEED MISSILES AND SPACE COMPANY) ON 29 JUNE 1965.

"10. ON 7 JULY 1965, HAYES INTERNATIONAL CORPORATION WAS NOTIFIED, BY CONTRACTING OFFICER'S LETTER, OF AWARD OF THE ABOVE NOTED CONTRACT TO LOCKHEED AIRCRAFT CORPORATION (LOCKHEED MISSILES AND SPACE COMPANY). * * * HAYES WAS ALSO INFORMED THAT ITS QUOTATION WAS EVALUATED TECHNICALLY UNACCEPTABLE DUE TO THE FACT THAT $9,561.00 OF ESTIMATED COMPUTER COST, INCLUDING FIXED FEE, WAS NOT INCLUDED IN HAYES' ORIGINAL QUOTATION, BUT WAS IN FACT A LATE MODIFICATION UNDER ASPR 3-506.'

ASPR 3-805.1 WHICH PRESCRIBES THE NEGOTIATION PROCEDURES TO BE APPLIED IN THE SELECTION OF OFFERORS FOR NEGOTIATION AND AWARD IS AN IMPLEMENTATION OF 10 U.S.C. 2304/G). THAT PROVISION OF LAW READS AS FOLLOWS:

"/G) IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH RATES OR PRICES ARE NOT FIXED BY LAW OR REGULATION AND IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, AND WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED: PROVIDED, HOWEVER, THAT THE REQUIREMENTS OF THIS SUBSECTION WITH RESPECT TO WRITTEN OR ORAL DISCUSSIONS NEED NOT BE APPLIED TO PROCUREMENTS IN IMPLEMENTATION OF AUTHORIZED SET-ASIDE PROGRAMS OR TO PROCUREMENTS WHERE IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OR ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT, THAT ACCEPTANCE OF AN INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN FAIR AND REASONABLE PRICES AND WHERE THE REQUEST FOR PROPOSALS NOTIFIES ALL OFFERORS OF THE POSSIBILITY THAT AWARD MAY BE MADE WITHOUT DISCUSSION.'

IT APPEARS TO US THAT THE STATUTE AND ASPR 3-805.1/A) (V) MAKE MANDATORY THE REQUIREMENT THAT NEGOTIATION BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT COMPETITIVE OFFERS, AND THAT THIS REQUIREMENT IS RELAXED ONLY IN THOSE SITUATIONS WHEREIN IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE COST EXPERIENCE THAT ACCEPTANCE OF AN INITIAL OFFER WITHOUT NEGOTIATION WOULD RESULT IN FAIR AND REASONABLE PRICES.

IN ITS PROPOSAL HAYES INTERNATIONAL STATED THAT WHERE REQUIRED DIGITAL AND ANALOG COMPUTERS WOULD BE USED. NOWHERE IS IT STATED IN THE RECORD TRANSMITTED HERE THAT HAYES INTERNATIONAL IS NOT A RESPONSIBLE OFFEROR, AND ITS PROPOSAL, BEING THE LOWEST RECEIVED, OBVIOUSLY WAS WITHIN A COMPETITIVE RANGE. HENCE IT APPEARS THAT THE ONLY APPARENT DEFECT IN THE BASIC PROPOSAL WAS THE FAILURE TO FURNISH ESTIMATED PRICE OR COSTING FOR THE DIGITAL AND ANALOG COMPUTER TIME MENTIONED IN THE PROPOSAL AS OBTAINABLE FROM THE SOURCES NAMED. IN SUCH A SITUATION IT IS OUR OPINION THAT FURTHER NEGOTIATION WAS REQUIRED TO BE CONDUCTED WITH HAYES INTERNATIONAL BOTH AS TO PRICE AND ANY UNCERTAIN TECHNICAL ASPECTS, UNLESS ITS ORIGINAL PROPOSAL COULD BE SAID NOT TO BE WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED OR HAYES INTERNATIONAL WAS NOT CONSIDERED RESPONSIBLE.

WE CONCLUDE THAT THE HAYES INTERNATIONAL LETTER OF JUNE 7, 1965, WAS NOT A LATE MODIFICATION OF ITS ORIGINAL PROPOSAL, BUT A NORMAL REVISION OR CLARIFICATION OF ITS PROPOSAL, PARTICULARLY IN VIEW OF THE ABSENCE OF A PRE-AWARD NOTICE OF UNACCEPTABILITY. SEE ASPR 3-508/A), FORMERLY ASPR 3- 507/A).

HOWEVER, BELIEVING AS WE DO THAT THE LETTER OF JUNE 7, 1965, DID NOT CONSTITUTE A LATE MODIFICATION OF THE ORIGINAL PROPOSAL AND SHOULD HAVE BEEN RECEIVED AND CONSIDERED IN DUE COURSE, THE LETTER IN ITS ENTIRETY MUST BE CONSIDERED. IT IS IN THIS LETTER THAT HAYES INTERNATIONAL STATED THAT IT DID NOT INTEND TO USE AN ANALOG COMPUTER. IN THIS RESPECT WE ARE PERSUADED THAT THE CONTRACTING OFFICER AND OTHER PROCUREMENT OFFICIALS WERE NOT WRONG IN THEIR OPINION THAT THE USE OF AN ANALOG COMPUTER WOULD BE NECESSARY IN THE EXECUTION OF ANY RESULTING CONTRACT UNDER THIS PROCUREMENT, AND THAT THE STATEMENT THAT SUCH COMPUTER WOULD NOT BE USED CONSTITUTED A LACK OF UNDERSTANDING OF THE PROBLEM INVOLVED AND THE PRODUCT DESIRED ON THE PART OF HAYES INTERNATIONAL.