B-163024, AUG. 27, 1968

B-163024, AUG. 27, 1968

TO SCANWELL LABORATORIES, INCORPORATED:

FURTHER REFERENCE IS MADE TO THE TELEGRAM OF NOVEMBER 30, 1967, LETTERS DATED DECEMBER 20, 1967, JANUARY 18, 1968, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS NO. WA 5M-8-0012, ISSUED BY THE FEDERAL AVIATION ADMINISTRATION, DEPARTMENT OF TRANSPORTATION. A LETTER OF JULY 16, 1968, ADVISES THAT SCANWELL HAS DECLINED TO COMMENT ON FAA'S REPORT.

OFFERS WERE SOLICITED FOR THE PROCUREMENT OF 14 EACH MARK I FULL INSTRUMENT LANDING SYSTEMS (ILS), IN ACCORDANCE WITH THE SPECIFICATIONS LISTED IN THE SCHEDULE UNDER ITEM NO. 1, AND 11 EACH PARTIAL ILS, IN ACCORDANCE WITH THE SPECIFICATIONS UNDER ITEM NO. 2 OF THE SCHEDULE. ITEM NO. 3 WAS FOR 1 EACH MARK I DUAL LOCALIZER AND DUAL GLIDE SLOPE STATION IN ACCORDANCE WITH THE LISTED SPECIFICATIONS. ITEM NOS. 4 THROUGH 11 WERE FOR VARIOUS SUPPLIES OR SERVICES AS DESCRIBED ON PAGES 3 THROUGH 6 OF THE SCHEDULE. ITEM NOS. 12 AND 13 REQUESTED OFFERS FOR ADDITIONAL OPTIONAL QUANTITIES OF THE UNITS DESCRIBED IN ITEM NO. 1 AND ITEM NO. 2, RESPECTIVELY. ITEM NO. 14 WAS FOR PART TIME CHARTS FOR THE INITIAL SYSTEM UNDER ITEM NO. 1.

EACH OF THE MAJOR PIECES OF EQUIPMENT IN THE PROCUREMENT WAS TO BE IN ACCORDANCE WITH PUBLISHED SPECIFICATIONS AS FOLLOWS:

EQUIPMENT SPECIFICATIONS

--------- -------------- DUAL EQUIPMENT LOCALIZER STATION FAA-E-2247 AND PARAGRAPH 3.5 ANTENNA HEATERS FAA-E-2186 AND PARAGRAPH 3.18 DUAL EQUIPMENT GLIDE SLOPE STATION FAA-E-2242 AND PARAGRAPH 3.5 TYPE V TRANSMITTING ANTENNAS FAA-E-2245 AND PARAGRAPH 3.16 TYPE VI MONITOR ANTENNAS FAA-E-2245 AND PARAGRAPH 3.16 AND 40- TOWER FAA-E 2245 AND PARAGRAPH 3.16 MARKER BEACON STATION FAA-E-2221 EXHAUST FAN AND FAA-E-2185 AND PARAGRAPH 3.9 SPACE HEATER FOR FAA-E-2185 AND PARAGRAPH 3.8 EACH LOCALIZER AND GLIDE SLOPE TRAILER SINGLE EQUIPMENT LOCALIZER STATION FAA-E-2247 AND PARAGRAPH 3.4

A LETTER DATED APRIL 7, 1967, TRANSMITTING THE RFP ADVISED PROSPECTIVE OFFERORS CONCERNING ALTERNATE PROPOSALS AS FOLLOWS: "THE GOVERNMENT WILL CONSIDER ALTERNATE TECHNICAL PROPOSALS ONLY IF A PROPOSAL CONFORMING TO SPECIFICATIONS IS FURNISHED TOGETHER WITH NECESSARY SPARES (INCLUDING PRICE DIFFERENTIALS) WHICH INCORPORATE AN ALTERNATE LOCALIZE ANTENNA DESIGN (PARAGRAPH 3.1.3 OF SPECIFICATION FAA E-2247) AND/OR AN ALTERNATE GLIDE SLOPE ANTENNA AND TRANSMITTER DESIGN (PARAGRAPH 3.1.1 OF SPECIFICATION FAA-E-2242). IN ADDITION TO THESE SPECIFIC VARIATIONS, THE GOVERNMENT WILL ALSO CONSIDER PROPOSALS WHICH OFFER OTHER VARIATIONS IN SPECIFICATION DETAIL IN REGARD TO CIRCUITS, COMPONENT PARTS, MATERIALS, CONSTRUCTION, FABRICATION, FINISHES AND MECHANICAL LAYOUTS. SUCH A DESIGN MUST HOWEVER PROVIDE THE REQUIRED OVERALL ELECTRICAL PERFORMANCE CHARACTERISTICS OVER THE PRESCRIBED SERVICE CONDITIONS AND THE SPECIFIED CAPABILITIES FOR CONTROL, ADJUSTMENT, MONITORING TEST, MAINTENANCE TROUBLE -SHOOTING AND PERSONNEL PROTECTION AND SHALL REFLECT A LEVEL OF QUALITY AND WORKMANSHIP CONSISTENT WITH THE INTENT OF APPLICABLE DETAILED SPECIFICATIONS IN THAT THE RESULTING EQUIPMENT PRODUCTS CAN BE EXPECTED TO PROVIDE MANY YEARS OF USEFUL OPERATION WITH A MINIMUM OF ROUTINE MAINTENANCE. OFFERORS ARE NOT REQUIRED TO SUBMIT ALTERNATE PROPOSALS.'

SCANWELL LABORATORIES, INCORPORATED, WHICH SUBMITTED A PROPOSAL TO THE ABOVE RFP, WAS ADVISED ON NOVEMBER 29, 1967, THAT ITS PROPOSAL WAS DETERMINED TO BE UNACCEPTABLE FOR REASONS OF PRICE AND THAT NEGOTIATIONS WOULD NOT BE CONDUCTED WITH IT.

SCANWELL'S PROTEST WILL BE CONSIDERED FROM THE TWO ASPECTS RAISED IN THE TELEGRAM AND LETTERS TO OUR OFFICE: FIRST, DETAILED SPECIFICATIONS FOR THE ILS COULD HAVE BEEN FURNISHED BY FAA AND A FORMALLY ADVERTISED PROCUREMENT WOULD HAVE BEEN APPROPRIATE; SECOND, THE GROUND RULES FOR THIS PROCUREMENT AND THE MANNER OF SELECTING THE SUCCESSFUL OFFEROR ARE QUESTIONED. CONCERNING THE FIRST POINT, THE SPECIFICATIONS ARE CHARACTERIZED IN THE LETTER OF DECEMBER 20, 1967, AS "THE USUAL TYPE INSTRUMENT LANDING SYSTEM SPEC REQUIREMENTS" AND "BASICALLY PERFORMANCE SPECS WITH SOME ENVELOPE LIMITATIONS". THE COMPLAINT IS MADE, HOWEVER, THAT THE SOLICITATION DOES NOT INDICATE WHETHER "HIGH OR LOW QUALITY SYSTEMS" ARE CALLED FOR. SPECIFICALLY IT IS STATED FURTHER:

"* * * IT IS NOT ENOUGH TO SAY THAT ILS SYSTEMS MUST MEET GENERAL SPECIFICATIONS. POOR QUALITY ILS SYSTEMS CAN BE INSTALLED AND BE MADE TO WORK. BUT IF THE REQUIREMENT IS THAT THEY MUST WORK ALL THE TIME, IN ALL POSSIBLE WEATHER CONDITIONS, AND MEET PARTICULAR TECHNICAL REQUIREMENTS, SUCH AS LOCALIZER COURSE QUALITY; COURSE STABILITY AND RANGE; GLIDE PATH QUALITY STABILITY AND RANGE; STABILITY OF LOCALIZER AND GLIDE SLOPE TRANSMITTING AND MONITORING SYSTEMS OVER EXTREME ENVIRONMENTAL CONDITIONS; AND THAT THERE BE STABILITY OF THE LOCALIZER AND GLIDE SLOPE AND MONITORING ANTENNA SYSTEMS OVER A WIDE RANGE OF TEMPERATURE, HUMIDITY AND SITING CONDITIONS, THEN CERTAIN COSTS ARE INEVITABLE. THE IMPORTANCE OF PRICE IN SUCH COMPETITIONS MUST BE CLEAR. IF IT IS NOT, AND THE REQUIREMENT IS INUNDATED WITH SPECIFICATIONS OF A GENERAL SORT, AND ALTERNATE TECHNICAL PROPOSALS ARE INVITED, AND THE SPARE PARTS AND OTHER PERIPHERAL REQUIREMENTS ARE VAGUE, THE FAA EVALUATION PROCESS AFFORDS THE CONTRACTING OFFICER SUCH WIDE LATITUDE THAT HE NO LONGER MUST BE OBJECTIVE. HE CAN-T HELP BUT BE INTUITIVE IN HIS CHOICE. THIS INVITATION PRACTICALLY PRECLUDES OBJECTIVITY.'

AS TO THE SECOND ITEM, WE ARE REFERRED TO THE PROVISION INCLUDED ON PAGE 2 OF THE TRANSMITTAL LETTER OF APRIL 7, 1967: "AN AWARD WILL BE MADE TO THE FIRM WHOSE PROPOSAL IS DETERMINED TO BE MOST ADVANTAGEOUS TO THE GOVERNMENT AFTER CONSIDERING TECHNICAL ABILITY, THE MOST FAVORABLE PRICING ARRANGEMENT AND OTHER FACTORS. * * *" BY SUPPLEMENT NO. 1, DATED APRIL 20, 1967, THE ABOVE-QUOTED PROVISION WAS REPLACED BY THE FOLLOWING: "AN AWARD WILL BE MADE TO THE FIRM WHOSE PROPOSAL IS DETERMINED TO BE ADVANTAGEOUS TO THE GOVERNMENT TECHNICALLY, PRICING AND OTHER FACTORS CONSIDERED.' IT IS YOUR POSITION THAT THESE PROVISIONS ARE NOT SUFFICIENTLY CLEAR AS TO THE EFFECT THAT PRICE WILL HAVE ON THE EVALUATION OF PROPOSALS AND THAT CONSEQUENTLY, YOU FEEL IT WAS IMPROPER FOR THE PROCURING ACTIVITY TO REJECT YOUR PROPOSAL ON THE BASIS OF PRICE. QUESTION HAS BEEN RAISED WHETHER THE ALTERNATE PROPOSALS SOLICITED BY THE INVITATION COULD BE EVALUATED ON A COMMON BASIS WITH CONFORMING PROPOSALS. THE FOLLOWING PROVISION IN PARAGRAPH (D) OF PART I, TECHNICAL DISSERTATION, IN THE TRANSMITTAL LETTER, HAS BEEN BROUGHT TO OUR ATTENTION:

"/D) ALTERNATE PROPOSAL SHALL CITE ALL PROPOSED DEVIATIONS FROM APPLICABLE SPECIFICATION REQUIREMENTS BY SPECIFIC REFERENCE TO PARAGRAPH NUMBER AND OFFER COMPARABLY DEFINITIVE SPECIFICATION LANGUAGE IN LIEU THEREOF. THE RESULTING CONTRACT, IF ANY, WILL PROVIDE THAT ALL SPECIFICATION REQUIREMENTS MUST BE COMPLIED WITH UNLESS SPECIFICALLY PROVIDED OTHERWISE IN THE CONTRACT.' THE UNDERSCORED PORTION OF THE ABOVE -QUOTED PROVISION WAS INSERTED BY SUPPLEMENT NO. 1, DATED APRIL 20, 1967. SCANWELL QUESTIONS THE PROPRIETY OF THE ABOVE PROVISION FROM THE POINT OF VIEW THAT IT PERMITS THE PROCURING ACTIVITY TO WAIVE SPECIFICATION REQUIREMENTS IN FAVOR OF A PARTICULAR OFFEROR.

WITH RESPECT TO THE FIRST ASPECT OF SCANWELL'S PROTEST, FAA HAS ADVISED THAT A COMPLETE ILS IN SOLID STATE FORM HAD NOT BEEN PREVIOUSLY PROCURED FROM A SINGLE SOURCE. FAA HAS ALSO DENIED SCANWELL'S CONTENTION THAT ALL COMPONENTS OF THE ILS HAD BEEN PREVIOUSLY PROCURED THROUGH THE MEDIUM OF FORMAL ADVERTISING SINCE SIGNIFICANT COMPONENTS OF THE SYSTEM SUCH AS THE LOCALIZER AND GLIDE SLOPE STATIONS HAVE BEEN ACQUIRED ONLY BY NEGOTIATION USING PERFORMANCE SPECIFICATIONS. FAA CONTENDS THAT IT WAS IMPOSSIBLE TO PREPARE ADEQUATE SPECIFICATIONS FOR A FORMALLY ADVERTISED PROCUREMENT.

IT IS AGREED BY BOTH SCANWELL AND FAA THAT THE SPECIFICATIONS ARE LARGELY OF THE PERFORMANCE TYPE. THIS, HOWEVER, DOES NOT MEAN SUCH SPECIFICATIONS ARE NOT ADEQUATE FOR PROCUREMENT BY FORMAL ADVERTISING. WHILE SOME OF THE COMPONENTS HAVE NOT PREVIOUSLY BEEN PROCURED BY COMPETITIVE BID, OTHERS HAVE BEEN SO PROCURED USING PERFORMANCE TYPE SPECIFICATIONS AND WE HAVE NOT BEEN APPRISED OF ANY GOOD REASON FOR THE DISTINCTION. ON THE OTHER HAND, SECTION 302 (C) (10) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 252 (C) (10), PROVIDES THAT CONTRACTS MAY BE NEGOTIATED WITHOUT ADVERTISING IF FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO SECURE COMPETITION. IN A PRIOR REVIEW THE LEGISLATIVE HISTORY OF THE ABOVE SECTION WAS FOUND TO INDICATE THAT THE AGENCY CONCERNED HAS THE MAXIMUM RESPONSIBILITY FOR DECISIONS AS TO WHERE IT IS IMPRACTICABLE TO OBTAIN COMPETITION. SEE B-157954, DECEMBER 15, 1965. UNDER FEDERAL PROCUREMENT REGULATIONS 1-3.210 (A) (13) IMPOSSIBILITY OF DRAFTING ADEQUATE SPECIFICATIONS IS LISTED AS ONE OF THE INSTANCES WHERE THE AUTHORITY OF 41 U.S.C. 252 (C) (10) MAY BE USED. VIEW OF THE FOREGOING WE CANNOT SAY THAT THE PROCURING ACTIVITY'S DETERMINATION THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION FOR THE INSTANT PROCUREMENT WAS SO ERRONEOUS AS TO REQUIRE CANCELLATION OF A CONTRACT. WE ARE, HOWEVER, RECOMMENDING THAT THE MATTER BE CAREFULLY CONSIDERED IN FUTURE PROCUREMENTS. AT THE SAME TIME WE CANNOT AGREE THAT THE SOLICITATION DOES NOT INDICATE THE LEVEL OF QUALITY REQUIRED. THE SECOND PARAGRAPH OF THE TRANSMITTAL LETTER DATED APRIL 7, 1967, INDICATES THAT THE LEVEL CALLED FOR IS THAT WHICH WILL PROVIDE "MANY YEARS OF USEFUL OPERATION WITH A MINIMUM OF ROUTINE MAINTENANCE". WE BELIEVE THIS CAN REASONABLY BE CONSTRUED TO CALL FOR THE SAME HIGH QUALITY WHICH, IT IS NOTED IN THE LETTER OF DECEMBER 20, 1967, FAA HAS HAD THE REPUTATION OF REQUIRING IN THE PAST.

AS TO THE PROPRIETY OF THE PROCURING ACTIVITY'S EVALUATION IN SELECTING THE SUCCESSFUL OFFEROR, FPR 1-3.805-1 (A), WHICH IS COMPARABLE TO ASPR 3- 805.1 (A), PROVIDES THAT:

"/A) AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMITTED PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, * * *" APPARENT FROM THE ABOVE EXCERPT FROM FPR AND THE PREVIOUSLY QUOTED PROVISION RELATING TO "AWARD" WHICH WAS INSERTED INTO THE RFP BY SUPPLEMENT NO. 1, IS THAT PRICE IS ALWAYS A FACTOR IN GOVERNMENT PROCUREMENTS. WHETHER IT WILL ULTIMATELY EMERGE AS THE DOMINANT FACTOR IS RARELY KNOWN IN ADVANCE. "COMPETITIVE RANGE" ENCOMPASSES BOTH PRICE AND TECHNICAL CAPABILITY. SEE 47 COMP. GEN. 29, 53 AND CASES CITED THEREIN. A FAA MEMORANDUM DATED JULY 3, 1967, PREPARED BY THE CHIEF, NAVIGATION DEVELOPMENT DIVISION, STATED THAT IN VIEW OF THE QUOTED PROVISION RELATING TO "AWARD" IT WAS NOT POSSIBLE TO RECOMMEND AWARD SOLELY ON THE BASIS OF NUMERICAL SCORES WITHOUT CONSIDERATION OF PRICE. THE CONFORMING AND ALTERNATE OFFERS WERE TECHNICALLY EVALUATED AND POINT SCORES WERE ALLOTTED PURSUANT TO THE PRESCRIBED FORMULA AS INDICATED IN THE SCORE SHEETS. COPIES OF THESE SCORE SHEETS HAVE BEEN MADE AVAILABLE TO YOU.

THE POINT SCORES ALLOTTED TO PROPOSALS IN THE TECHNICAL EVALUATION AND THE PRICES IN THE CONFORMING OFFERS AND ALTERNATE PROPOSALS ARE CONSIDERED AS COMPETITIVE INFORMATION; CONSEQUENTLY, SPECIFIC INFORMATION IN THIS REGARD CANNOT BE MADE AVAILABLE TO YOU. OUR REVIEW INDICATES THAT FOUR CONFORMING OFFERS WERE RECEIVED PURSUANT TO THE SOLICITATION AND THAT TWO CONFORMING OFFERORS ALSO SUBMITTED ALTERNATE PROPOSALS. SCANWELL CHOSE NOT TO SUBMIT AN ALTERNATE PROPOSAL. IN THE TECHNICAL EVALUATION SCANWELL RECEIVED THE LOWEST POINT SCORE RATING AND THE LEAST FAVORABLE TECHNICAL RANKING OF THE FOUR CONFORMING PROPOSALS RECEIVED. NEGOTIATIONS WERE CONDUCTED ON THE BASIS OF AN ALTERNATE PROPOSAL FROM A COMPANY WHICH HAD ALSO SUBMITTED A CONFORMING OFFER. THE ALTERNATE PROPOSAL OF THIS COMPANY WAS FOUND TO BE TECHNICALLY ACCEPTABLE AT A PRICE SUBSTANTIALLY LOWER THAN THE PRICE OF SCANWELL'S PROPOSAL. NEGOTIATIONS WERE ALSO CONDUCTED WITH ANOTHER COMPANY ON THE BASIS OF A CONFORMING OFFER. THIS COMPANY'S OFFER HAD RECEIVED A HIGHER POINT SCORE IN THE TECHNICAL EVALUATION AND WAS SUBSTANTIALLY LOWER IN PRICE THAN SCANWELL'S PROPOSAL. SCANWELL'S PROPOSAL WAS ALSO SUBSTANTIALLY HIGHER THAN THE GOVERNMENT'S ESTIMATE FOR THE PROCUREMENT. THE PRICES IN THE OFFERS CHOSEN BY THE PROCURING ACTIVITY AS BEING WITHIN A COMPETITIVE RANGE WERE IN THE AREA OF THE GOVERNMENT'S ESTIMATE. IN THE CIRCUMSTANCES IT WAS ADMINISTRATIVELY DETERMINED, HAVING IN MIND THE AMOUNT BY WHICH SCANWELL'S PROPOSAL WAS HIGH IN RELATION TO THE SUBCONTRACTING COST CONTEMPLATED BY SCANWELL, THAT ITS PROPOSAL WAS NOT IN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED; CONSEQUENTLY, NEGOTIATIONS WERE NOT CONDUCTED WITH SCANWELL. IT IS OUR VIEW THAT ANY FIRM'S PROPOSAL MUST BE REGARDED AS WITHIN A COMPETITIVE RANGE UNLESS IT IS SO TECHNICALLY INFERIOR OR OUT OF LINE FROM A PRICE STANDPOINT AS TO PRECLUDE THE POSSIBILITY OF MEANINGFUL NEGOTIATIONS. SEE 47 COMP. GEN. 252, 262; 45 COMP. GEN. 417, 427. SUCH DETERMINATION BEING SUBJECTIVE WE RECOGNIZE A REASONABLE DEGREE OF ADMINISTRATIVE DISCRETION IN ITS FORMULATION. B-158042, MARCH 30, 1966. PURSUANT TO OUR REVIEW WE FIND NO BASIS TO QUESTION THE VALIDITY OF THE ADMINISTRATIVE DETERMINATION THAT SCANWELL'S PROPOSAL WAS NOT WITHIN A COMPETITIVE RANGE. THE GROUND RULES FOR THE PROCUREMENT AS SET FORTH IN THE TRANSMITTAL LETTER OF APRIL 7, 1967, AS REVISED, CLEARLY INDICATED THAT OFFERORS HAD A CHOICE OF SUBMITTING ALTERNATE PROPOSALS, WHICH, HOWEVER, STILL HAD TO MEET REQUIRED PERFORMANCE CHARACTERISTICS. WITH RESPECT TO PARAGRAPH (D) OF PART I OF THE TRANSMITTAL LETTER OF APRIL 7, 1967, FAA HAS ADVISED THAT CERTAIN PARAMETERS WITH REGARD TO WHAT CONSTITUTED AN ACCEPTABLE PROPOSAL WITHIN THE CONFINES OF THE SPECIFICATIONS WERE ESTABLISHED PRIOR TO NEGOTIATIONS AND THAT NO DEVIATIONS WERE PERMITTED FROM THESE PARAMETERS. THE PURPOSE OF PARAGRAPH (D) OF PART I WAS TO COVER THOSE SITUATIONS WHERE IT WAS FOUND PURSUANT TO NEGOTIATIONS THAT AN AREA OF A PROPOSAL NEEDED CLARIFICATION AND POSSIBLY SOME REVISION.

WE AGREE THAT THE EXTENT TO WHICH DEVIATIONS FROM THE STATED SPECIFICATIONS ARE PERMISSIBLE IN THE ALTERNATE PROPOSALS SHOULD BE STATED WITH A REASONABLE DEGREE OF CLARITY AND PRECISION. OTHERWISE FIRMS INTERESTED IN SUBMITTING ALTERNATE PROPOSALS ARE LEFT TO DIVINE THE UNEXPRESSED INTENT OF THE CONTRACTING AGENCY. THIS IS SURELY NOT THE WAY TO INSURE AWARD OF A CONTRACT IN THE BEST INTERESTS OF THE GOVERNMENT. HOWEVER, WE BELIEVE THAT THE PERMISSIBLE DEGREE OF DEVIATION WAS SET OUT WITH SUFFICIENT CLARITY IN THE SECOND PARAGRAPH OF THE TRANSMITTAL LETTER OF APRIL 7, 1967, QUOTED ABOVE, TO SATISFY THE FOREGOING STANDARD. AGREE THAT FAA COULD HAVE EXPRESSED ITSELF MORE CLEARLY IN PARAGRAPH (D) OF PART I OF THE TRANSMITTAL LETTER, AS REVISED; HOWEVER, IN THE ABSENCE OF EVIDENCE THAT MATERIAL SPECIFICATION REQUIREMENTS WERE WAIVED IN FAVOR OF A PARTICULAR OFFEROR, WE CANNOT CONCLUDE THAT THE ENTIRE NEGOTIATION PROCEDURE WAS IMPROPER. IN THE CIRCUMSTANCES WE WILL NOT QUESTION THE AWARD MADE.