B-158028, FEB. 14, 1966

B-158028, FEB. 14, 1966

TO GULTON INDUSTRIES, INC.:

BY LETTER DATED NOVEMBER 19, 1965, WITH ENCLOSURES, TO THE UNITED STATES ARMY MOBILITY EQUIPMENT CENTER, AS SUPPLEMENTED BY LETTER TO OUR OFFICE DATED JANUARY 27, 1966, YOU PROTESTED AGAINST THE AWARD OF A CONTRACT TO THE SONOTONE CORPORATION UNDER REQUEST FOR PROPOSALS NO. AMC/T/23-195-37- 66, ISSUED ON OCTOBER 11, 1965, FOR A QUANTITY OF NICKLE CADMIUM BATTERIES.

THE REQUEST PROVIDED THAT PROPOSALS WOULD BE RECEIVED UNTIL 4:30 P.M., OCTOBER 28, 1965, FOR CONTEMPLATED AWARD BY NOVEMBER 10, 1965. PAGE 1 OF THE SCHEDULE PROVIDED WITH REFERENCE TO NEGOTIATIONS AND CONTRACT AWARD AS FOLLOWS:

"OFFERS RECEIVED WILL PROVIDE A BASIS FOR SELECTION OF A PROSPECTIVE CONTRACTOR. AWARD MAY BE MADE WITHOUT A DISCUSSION OF PROPOSALS RECEIVED; HENCE, PROPOSALS SHOULD BE SUBMITTED INITIALLY ON THE MOST FAVORABLE TERMS FROM A PRICE AND, WHEN APPLICABLE, A TECHNICAL STANDPOINT WHICH THE OFFEROR CAN SUBMIT TO THE GOVERNMENT. WHERE A RESPONSIBLE OFFEROR SUBMITS A RESPONSIVE PROPOSAL WHICH, IN THE CONTRACTING OFFICER'S OPINION, IS CLEARLY AND SUBSTANTIALLY MORE ADVANTAGEOUS TO THE GOVERNMENT THAN ANY OTHER PROPOSAL, NEGOTIATIONS MAY BE CONDUCTED WITH THAT OFFEROR ONLY. WHERE SEVERAL RESPONSIBLE OFFERORS SUBMIT OFFERS WHICH ARE GROUPED SO THAT A MODERATE CHANGE IN EITHER THE PRICE OR THE TECHNICAL PROPOSAL WOULD MAKE ANY ONE OF THE GROUP THE MOST ADVANTAGEOUS TO THE GOVERNMENT, FURTHER NEGOTIATIONS MAY BE CONDUCTED WITH ALL OFFERORS IN THE GROUP. * * *"

PROPOSALS WERE RECEIVED FROM SONOTONE AND GULTON AND OPENED ON OCTOBER 28, 1965, AND IT APPEARED THAT GULTON WAS THE INITIAL LOW OFFEROR.

THE PRICES OFFERED BY EACH PROPOSER WERE:

TABLE

ITEM QUANTITY UNIT PRICE

1A 2,415 EACH $66.73 (GULTON)

72.92 (SONOTONE)

1B 1,260 EACH 66.18 (GULTON)

72.53 (SONOTONE)

F.O.B. ORIGIN 3,675 EACH 66.39 (GULTON)

72.24 (SONOTONE)

IT IS REPORTED WITH REFERENCE TO THE GULTON OFFER THAT AN OBVIOUS MISTAKE WAS MADE IN THE EXTENSION OF THE UNIT PRICE OF ITEM 1A (DESTINATION) AND THAT THE QUOTED F.O.B. DESTINATION PRICE FOR ITEM 1B WAS LOWER THAN THE QUOTED F.O.B. ORIGIN PRICE. GULTON WAS ADVISED BY MR. HARRIS E. CLARK, CONTRACT SPECIALIST, AS TO THESE APPARENT ERRORS AND GULTON CORRECTED AND REVISED ITS PRICES FOR ITEM 1A TO $67.18 AND ITEM 1B TO $66.73. NOVEMBER 9, 1965, GULTON WAS REQUESTED BY MR. CLARK TO BRING ITS F.O.B. DESTINATION PRICES (ITEMS 1A AND 1B) MORE IN LINE WITH THE RECOMMENDATIONS OF THE GOVERNMENT TRANSPORTATION SPECIALIST. GULTON THEREUPON REDUCED ITS F.O.B. DESTINATION UNIT PRICES BY 10 CENTS EACH AND ADVISED THAT THIS WAS ITS BEST OFFER AND ADVISED THAT IT WOULD STAND ON ITS F.O.B. ORIGIN PRICE. ALSO, ON NOVEMBER 9, 1965, THE TREASURER OF SONOTONE, MR. FRANK LEVERONE, TELEPHONED MR. CLARK TO INQUIRE WHETHER AN AWARD HAD BEEN MADE AND, IF NOT, WHETHER THERE WAS TIME TO SUBMIT REVISED PRICES. MR. CLARK ADVISED MR. LEVERONE THAT REVISED PRICES WOULD BE CONSIDERED IF THEY WERE RECEIVED DURING THAT DAY SINCE AWARD WAS TO BE MADE IMMEDIATELY. PRIOR TO THE CLOSE OF BUSINESS ON NOVEMBER 9, SONOTONE TELEPHONED AGAIN ADVISING MR. CLARK OF ITS REVISED PRICES. BY CONFIRMING TELEGRAM RECEIVED AT THE PROCUREMENT ACTIVITY AT 1620 HOURS, NOVEMBER 9, SONOTONE SUBMITTED ITS REVISED PRICES AS FOLLOWS:

ITEM 1A $65.68

DO. 1B 64.29

F.O.B. ORIGIN 64.98

AWARD WAS MADE ON NOVEMBER 10, 1965, TO SONOTONE FOR 3,675 BATTERIES ON AN F.O.B. ORIGIN BASIS AT $64.98 EACH, OR FOR A TOTAL CONSIDERATION OF $238,801.50.

YOU PROTESTED AGAINST SUCH AWARD, WHICH WAS ADMINISTRATIVELY REPORTED TO BE FOR A CRITICAL OUT-OF-STOCK ITEM CARRYING AN 02 PRIORITY, ON THE BASIS THAT REPRESENTATIVES OF THE PROCUREMENT ACTIVITY DISCLOSED TO SONOTONE PROPRIETARY PRICING INFORMATION RELATING TO THE GULTON OFFER CONTRARY TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-507.2 (B) AND 3-805.1 (B). YOUR OTHER ALLEGATION THAT A LATE OFFER OF SONOTONE WAS ACCEPTED 12 DAYS AFTER OFFERS WERE OPENED AND THAT AWARD WAS MADE ON THE BASIS OF SUCH "LATE" OFFER IS NOT WELL TAKEN IN VIEW OF THE LANGUAGE OF ASPR 3-506 (C) WHICH CLEARLY CONTEMPLATES THE CONSIDERATION OF NORMAL REVISIONS OF PROPOSALS FROM SELECTED OFFERORS WHICH ARE RECEIVED, AS HERE, DURING THE USUAL COURSE OF NEGOTIATIONS.

TURNING TO YOUR PRINCIPAL POINT OF PROTEST, YOU CONTEND THAT MR. CLARK ADVISED SONOTONE BY TELEPHONE ON NOVEMBER 9 THAT "THEY WERE NOT THE LOW BIDDER ON THIS PARTICULAR RFP.' THIS, IN YOUR OPINION, VIOLATED ASPR 3- 507.2 (B) AND -805.1 (B). THOSE PARAGRAPHS READ IN PERTINENT PART THAT:

"3-507.2 DISCLOSURE OF INFORMATION DURING THE PRE-AWARD OR PRE ACCEPTANCE PERIOD.

"/B)EQUAL CONSIDERATION AND INFORMATION TO ALL PROSPECTIVE CONTRACTORS. DISCUSSIONS WITH PROSPECTIVE CONTRACTORS REGARDING A POTENTIAL PROCUREMENT AND THE TRANSMISSION OF TECHNICAL OR OTHER INFORMATION SHALL BE CONDUCTED ONLY BY THE CONTRACTING OFFICER, HIS SUPERIORS HAVING CONTRACTURAL AUTHORITY OR OTHERS SPECIFICALLY AUTHORIZED. SUCH PERSONNEL SHALL NOT FURNISH ANY INFORMATION TO A POTENTIAL SUPPLIER WHICH ALONE OR TOGETHER WITH OTHER INFORMATION MAY AFFORD HIM AN ADVANTAGE OVER OTHERS. HOWEVER, GENERAL INFORMATION WHICH WOULD NOT BE PREJUDICIAL TO OTHERS MAY BE FURNISHED UPON REQUEST E.G., EXPLANATION OF A PARTICULAR CONTRACT CLAUSE OR A PARTICULAR CONDITION OF THE SCHEDULE. WHEN NECESSARY TO CLARIFY AMBIGUITIES, OR CORRECT MISTAKES OR OMISSIONS, AN APPROPRIATE AMENDMENT TO THE SOLICITATION SHALL BE FURNISHED IN A TIMELY MANNER TO ALL TO WHOM THE SOLICITATION HAS BEEN FURNISHED. SEE 3-505.

"3-805.1GENERAL.

"/B) WHENEVER NEGOTIATIONS ARE CONDUCTED WITH MORE THAN ONE OFFEROR, NO INDICATION SHALL BE MADE TO ANY OFFEROR OF A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION SINCE SUCH PRACTICE CONSTITUTES AN AUCTION TECHNIQUE WHICH MUST BE AVOIDED. AFTER RECEIPT OF PROPOSALS, NO INFORMATION REGARDING THE NUMBER OR IDENTITY OF THE OFFERORS PARTICIPATING IN THE NEGOTIATIONS SHALL BE MADE AVAILABLE TO THE PUBLIC OR TO ANY ONE WHOSE OFFICIAL DUTIES DO NOT REQUIRE SUCH KNOWLEDGE. WHENEVER NEGOTIATIONS ARE CONDUCTED WITH SEVERAL OFFERORS, WHILE SUCH NEGOTIATIONS MAY BE CONDUCTED SUCCESSIVELY, ALL OFFERORS SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS (SEE (A) ABOVE) SHALL BE OFFERED AN EQUITABLE OPPORTUNITY TO SUBMIT SUCH PRICE, TECHNICAL, OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM THE NEGOTIATIONS. ALL SUCH OFFERORS SHALL BE INFORMED OF THE SPECIFIED DATE (AND TIME IF DESIRED) OF THE CLOSING OF NEGOTIATIONS AND THAT ANY REVISIONS TO THEIR PROPOSALS MUST BE SUBMITTED BY THAT DATE. * * *"

THE DOCUMENTS IN THE FILE, WHICH WERE MADE AVAILABLE TO YOU ON JANUARY 17, 1966, FOR REVIEW AND COMMENT, DO NOT CLEARLY ESTABLISH THE EXACT NATURE OF THE ADVICE GIVEN TO SONOTONE BY MR. CLARK. HOWEVER, IT IS SUFFICIENTLY CLEAR FROM THE RECORD THAT GULTON'S "PRICE" AS SUCH WAS NOT REVEALED TO SONOTONE. WHILE WE WOULD AGREE THAT A STATEMENT TO AN OFFEROR THAT IT IS NOT LOW IS CERTAINLY INFORMATION RELATED TO PRICE, SUCH A STATEMENT, STANDING ALONE, WOULD NOT CONSTITUTE AN AUCTION TECHNIQUE OTHERWISE PRECLUDED BY ASPR 3-805.1 (B). WITHOUT KNOWLEDGE AS TO PRICE, PRICE VARIANCES, OR THE LIKE, AN OFFEROR HAVING SUCH INFORMATION WOULD BE HARD PRESSED TO SUBMIT AN INTELLIGENT PRICE REVISION WHICH CONCEIVABLY WOULD BE LOWER THAN ITS COMPETITOR. WE FEEL THAT BOTH PARTICIPANTS TO THIS NEGOTIATION WERE AFFORDED EQUAL OPPORTUNITIES TO SUBMIT REVISIONS TO THEIR PROPOSALS. GULTON WAS AFFORDED TWO OPPORTUNITIES TO SUBMIT PRICE REVISIONS DURING THE NEGOTIATIONS AND, IN FACT, DID TAKE ADVANTAGE OF SUCH OPPORTUNITIES. THE EXTENSION OF THAT SAME OPPORTUNITY TO SONOTONE WAS NOT PREJUDICIAL TO GULTON EVEN THOUGH IT MAY HAVE BEEN ACCOMPANIED WITH THE STATEMENT ATTRIBUTED TO MR. CLARK. MOREOVER, WE NOTE THAT BOTH GULTON AND SONOTONE WERE FULLY AWARE OF THE FACT THAT NEGOTIATIONS HAD TO BE CONCLUDED BY NOVEMBER 9, SINCE AWARD HAD TO BE MADE ON THE NEXT DAY. ANY EVENT, TO HAVE EXTENDED FURTHER OPPORTUNITY TO GULTON UNDER SUCH CIRCUMSTANCES WOULD HAVE BEEN INCONSISTENT WITH THE KNOWN URGENCY OF THE PROCUREMENT AND THE LIMITED TIME FOR NEGOTIATIONS. IT IS DIFFICULT FOR US TO UNDERSTAND HOW THE NEGOTIATION TECHNIQUES OF ASPR, SECTION III, PART 8, COULD BE EFFECTIVELY IMPLEMENTED SO AS TO ASSURE MAXIMUM PRICE COMPETITION WITHOUT AFFORDING EACH RESPONSIBLE, COMPETITIVE OFFEROR AN OPPORTUNITY TO SUBMIT PRICE REVISIONS; AND A REQUEST FOR PRICE REVISIONS IN THAT CONTEXT CERTAINLY COULD IMPLY THAT A PARTICULAR OFFEROR'S PRICE IS EXCESSIVE OR HIGHER THAN SOME OTHER OFFER.

WE, THEREFORE, ARE OF THE OPINION THAT THE CIRCUMSTANCES HERE INVOLVED WAS NOT OF THE CHARACTER WHICH IS PROHIBITED BY THE REGULATIONS QUOTED ABOVE. IN THIS CONNECTION, SEE B-151976 DATED OCTOBER 15, 1963, WHICH WAS QUOTED, IN PART, IN THE ADMINISTRATIVE LEGAL OPINION HERETOFORE FURNISHED TO YOU. IN VIEW OF THE URGENCY OF THIS PROCUREMENT AND THE FACT THAT THERE WAS NO APPARENT LEGAL IMPEDIMENT TO THE AWARD, WE FIND NO BASIS TO DISTURB THE AWARD MADE TO SONOTONE.