B-161975, AUG. 25, 1967

B-161975, AUG. 25, 1967

BIDS - NEGOTIATION - REJECTION JUSTIFICATION DECISION TO AUDIO PRODUCTION, INC. PROTESTING NEGOTIATED AWARD TO DIRECTORS GROUP, INC. FOR PRODUCTION OF CANCER FILM FOR PHS. DETERMINATION IN A NEGOTIATED PROCUREMENT BY A CONTRACTING OFFICER THAT PROPOSAL OF ONE COMPANY WAS BETTER THAN PROTESTANT'S WHICH DETERMINATION WAS BASED ON REVIEW OF FINDINGS OF COMMITTEE THAT MADE AN INDEPENDENT STUDY OF ALL PROPOSALS IS A DETERMINATION THAT WILL NOT BE DISTURBED. IS NOT FUNCTION OF GAO TO TECHNICALLY EVALUATE PROPOSALS OR TO MAKE AN INDEPENDENT EVALUATION. ALSO UNDER NEGOTIATED PROCEDURES PROCUREMENT PERSONNEL HAVE A CONSIDERABLY BROADER RANGE OF DISCRETION.

TO MR. HARRY A. CARRAGHER, MANAGER:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 30, 1967, PROTESTING THE AWARD OF A CONTRACT BY THE PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, TO DIRECTORS GROUP, INC., UNDER REQUEST FOR PROPOSALS PH 86-67-NEG. 56.

THE REQUEST FOR PROPOSALS SOLICITED COST-PLUS-FIXED-FEE OFFERS TO PRODUCE SIX MOTION PICTURE FILMS ON THE SUBJECT OF CANCER FOR TELEVISION SHOWING. PROPOSALS WERE RECEIVED FROM FIVE COMPANIES AND WERE EVALUATED NUMERICALLY BY A REVIEW COMMITTEE ON FIVE FACTORS: (1) PAST ACHIEVEMENT, (2) PRESENT TALENT CAPABILITY, (3) CONCEPT OF PROJECT AS EXPRESSED IN BID, (4) COST RELATIONSHIP TO CONCEPTS OF PROJECT, AND (5) ABILITY TO CARRY OUT PROJECT. ALTHOUGH THE COST PROPOSAL OF AUDIO PRODUCTIONS WAS THE LOWEST RECEIVED, THE DIRECTORS GROUP PROPOSAL RECEIVED THE HIGHEST RATING: 24 OUT OF A POSSIBLE 25 POINTS. AUDIO PRODUCTIONS RECEIVED A RATING OF 21. AUDIO PRODUCTIONS SCORED LOWER IN THE EVALUATION BECAUSE IT WAS CONSIDERED TO HAVE PRESENTED A PROPOSAL IN WHICH SHOOTING AND EDITORIAL TIME WERE PARED TO A MINIMUM AND IN WHICH PRODUCTION SEEMED TO BE CONCEIVED IN AN OVER SIMPLIFIED MANNER AND IT WAS CONSIDERED THAT THE PROPOSAL CONTAINED A STEREOTYPED FORMAT AND AN ASSEMBLY LINE APPROACH. DISCUSSIONS WERE HELD WITH AUDIO PRODUCTIONS' PERSONNEL CONCERNING THE ELEMENTS AND INFORMATION TO BE USED FOR SELECTION PURPOSES AND THE COMPANY SUPPLEMENTED THE PROPOSAL BY LETTER. HOWEVER, IT WAS DETERMINED BY TECHNICAL PERSONNEL THAT THE LETTER DID NOT UPGRADE THE PROPOSAL OR CAUSE A CHANGE TO BE MADE IN THE EVALUATION RATING. THE EVALUATION WAS PRESENTED TO THE CONTRACTING OFFICER FOR CONSIDERATION. THE CONTRACTING OFFICER REQUESTED A FURTHER JUSTIFICATION FROM THE REVIEW COMMITTEE OF THE SELECTION OF THE DIRECTORS GROUP. THE COMMITTEE FURNISHED THE CONTRACTING OFFICER WITH A MEMORANDUM STATING THAT IT HAD EXAMINED THE FIVE PROPOSALS, HAD FURTHER DISCUSSIONS WITH THE EXECUTIVES OF THE FIVE COMPANIES THAT SUBMITTED PROPOSALS, AND HAD MADE INFORMAL INQUIRIES OF DISINTERESTED PARTIES WHO HAD KNOWLEDGE OF THE WORK OF THE COMPANIES. THE COMMITTEE MEMORANDUM STATED FURTHER THAT AUDIO PRODUCTIONS INDICATED THAT THEY PREFERRED A STEREOTYPE FORMAT WHICH THE COMMITTEE FOUND UNACCEPTABLE. ON THE OTHER HAND, THE COMMITTEE SAID IT RECOMMENDED DIRECTORS GROUP BECAUSE IT OFFERED THE MOST PROMISING CREATIVE TEAM APPROACH; POSSESSED THE WIDEST RANGE OF AVAILABLE WRITING, DIRECTORIAL AND PRODUCTION TALENT, AND THAT IT HAD A BACKGROUND OF EXECUTIVE EXPERIENCE IN ADVERTISING AND TELEVISION PROMOTION AS WELL AS EXTENSIVE FILM-MAKING EXPERIENCE IN BOTH COMMERCIAL AND PUBLIC SERVICE ACTIVITIES. THE COMMITTEE FURTHER ADVISED THAT DIRECTORS GROUP HAD A REALISTIC APPRECIATION OF THE GROUND-BREAKING NATURE OF THE PROJECT AND AN ANTICIPATION OF THE NEED FOR EXPERIMENTATION AS THE PROJECT PROGRESSES, AND THAT IT WAS PREPARED TO HANDLE THE ASSIGNMENT ON A SINGLE LEADERSHIP TEAM BASIS. ALSO, THE COMMITTEE SAID IT FOUND THAT THE FILMS OFFERED BY DIRECTORS GROUP FOR VIEWING TO BE SUPERIOR TO THOSE OFFERED BY THE OTHER COMPANIES. THE CONTRACTING OFFICER REVIEWED THE FINDINGS OF THE COMMITTEE AND MADE AN INDEPENDENT STUDY OF THE FIVE PROPOSALS. HE CONCURRED IN THE SELECTION OF THE DIRECTORS GROUP, INC., AND AWARD WAS MADE TO THAT COMPANY.

IT APPEARS THAT THE EVALUATORS AND CONTRACTING OFFICER DECIDED THAT THE PROPOSAL OF THE DIRECTORS GROUP WAS BETTER THAN THE PROPOSAL SUBMITTED BY YOUR COMPANY. IN THAT CONNECTION, IT IS NOT THE FUNCTION OF OUR OFFICE TO TECHNICALLY EVALUATE PROPOSALS OR TO MAKE AN INDEPENDENT DETERMINATION WHETHER ANY OTHER COMPETING COMPANY SHOULD HAVE BEEN RATED HIGHER IN A TECHNICAL EVALUATION OF PROPOSALS. B 156435, JUNE 1, 1965; AND B-153884, AUGUST 3, 1964.

IN A NEGOTIATED PROCUREMENT, SUCH AS THE IMMEDIATE ONE, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIBLE BIDDER, ARE NOT APPLICABLE AND THERE MAY BE CONSIDERED ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT IN MAKING AN AWARD. IN THIS REGARD, SECTION 1-3.805-2 OF THE FEDERAL PROCUREMENT REGULATIONS STATES:

"IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (A) THE LOWEST PROPOSED COST, (B) THE LOWEST PROPOSED FEE, OR (C) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND AGENCY PROCEDURES AND APPROPRIATE TO THE WORK TO BE PERFORMED. (SEE SEC. 1-3.808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT.'

AS INDICATED ABOVE, THE PROCUREMENT IN THIS CASE WAS NOT MADE UNDER FORMAL ADVERTISING PROCEDURES, BUT UNDER NEGOTIATED PROCEDURES PERMITTING PROCUREMENT PERSONNEL A CONSIDERABLY BROADER RANGE OF DISCRETION. WE, THEREFORE, DO NOT FIND ANY LEGAL BASIS TO QUESTION THE AWARD OF THE CONTRACT TO DIRECTORS GROUP, INC. ..END :