B-163473, AUG. 9, 1968

B-163473, AUG. 9, 1968

TO SENTINEL ELECTRONICS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 16, 1968, AND SUBSEQUENT CORRESPONDENCE IN WHICH YOU PROTESTED AGAINST AN AWARD TO ANY BIDDER UNDER INVITATION FOR BIDS (IFB) NO. DAAB05-68-B-0201, ISSUED ON AUGUST 10, 19678 BY THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA, TO FULFILL A REQUIREMENT FOR RADIO SET CONTROL GROUP AN/GRA-39 IN A QUANTITY OF 1,230 UNITS PLUS 9,710 MULTIYEAR UNITS. THE THREE LOWEST BIDS AS RECORDED ON THE OPENING DATE, OCTOBER 13, 1967, WERE AS FOLLOWS:

OTIS ELEVATOR COMPANY $2,097,505.00

ELCO CORPORATION 2,229,845.00

SENTINEL ELECTRONICS, INCORPORATED 2,241,266.49 AWARD WAS MADE TO OTIS ELEVATOR COMPANY ON APRIL 26, 1968.

IN A LETTER DATED OCTOBER 26, 1967, TO THE PROCURING ACTIVITY YOU ALLEGED THAT THE IFB SHOULD BE CANCELLED BECAUSE IT CONTAINED SEVERAL TECHNICAL DEFICIENCIES WHICH THE ACTIVITY WAS COGNIZANT OF PRIOR TO BID OPENING AS A RESULT OF EXPERIENCE ON PRIOR CONTRACTS WITH YOUR COMPANY AND OTIS ELEVATOR FOR PROCUREMENTS OF THE SAME ITEM. YOU IDENTIFIED THESE DEFICIENCIES AS THE RFI FILTER AND DISTORTION PROBLEMS. CONCERNING THE FILTER PROBLEM YOU ALLEGED THAT ON YOUR PRIOR CONTRACT THE REQUIRING ACTIVITY SPECIFIED YOUR "FIX" SHOULD BE USED INSTEAD OF THE OTIS FIX, PRESUMABLY BECAUSE IT WAS DEEMED PREFERABLE TO THE OTIS FIX, BUT THAT YOUR FIX WAS NOT SPECIFIED IN THE SUBJECT IFB EVEN THOUGH IT SHOULD HAVE BEEN. CONCERNING THE DISTORTION PROBLEM YOU ALLEGED THAT YOU HAD BROUGHT IT TO THE ATTENTION OF COGNIZANT PERSONNEL BECAUSE OF DIFFICULTIES EXPERIENCED ON YOUR PRIOR CONTRACT AND THAT THE OPENING OF THE IFB SHOULD HAVE BEEN POSTPONED PENDING RESOLUTION OF THE DIFFICULTY. IN A LETTER DATED FEBRUARY 16, 1968, THE CONTRACTING OFFICER ADVISED YOU THAT YOU WERE ALLOWED TO PROCEED WITH YOUR OWN RFI FIX IN YOUR PRIOR CONTRACT ONLY BECAUSE OF THE DELAY WHICH WOULD HAVE BEEN INCURRED HAD THE OTIS FIX BEEN REQUIRED, AND NOT BECAUSE YOUR FIX WAS DEEMED PREFERABLE. CONCERNING DISTORTION THE CONTRACTING OFFICER STATED THAT THE PROBLEM WOULD BE RESOLVED BY ORDERING THE SUCCESSFUL BIDDER TO USE TRANSISTORS WITH A 30-60 BETA RANGE INSTEAD OF THE 20-60 RANGE SPECIFIED IN THE INVITATION, WHICH HE CONCLUDED WOULD NOT INVOLVE ANY SUBSTANTIAL PRICE DIFFERENTIAL OR AFFECT THE RELATIVE STANDING OF THE BIDDERS. HE THEREFORE REJECTED YOUR REQUEST TO CANCEL THE IFB AND READVERTISE THE REQUIREMENT.

IN YOUR LETTER TO OUR OFFICE DATED APRIL 4, 1968, YOU CONTEND THE IFB SHOULD BE CANCELLED, MAKING ADDITIONAL CONTENTIONS CONCERNING THE ABOVE- RELATED DEFICIENCIES AND REFERRING TO TWO ADDITIONAL DEFECTS WHICH YOU DESCRIBED AS THE WEATHER PROOFING AND SPACE PROBLEMS. YOU ALLEGED THAT THE GOVERNMENT'S PROPOSED SOLUTION OF THE DISTORTION PROBLEM FAILED TO CONSIDER THAT THE TRANSISTORS WOULD HAVE TO BE MATCHED AS WELL AS SELECTED WITHIN A BETA RANGE OF 30-60, AT A SUBSTANTIAL ADDITIONAL COST; ADDITIONALLY, YOU MAINTAIN THAT IF SUCH A DEVIATION WERE PERMITTED THE TRANSISTORS COULD NOT BE MARKED WITH THE "JAN" PREFIX AS REQUIRED BY MILITARY SPECIFICATION MIL-S-19500. REGARDING THE RFI FIX YOU ALLEGED THAT THE INFORMATION PROVIDED IN THE INVITATION WAS INCOMPLETE AND THAT THE PROCURING ACTIVITY FAILED TO DISCLOSE COPIES OF OTIS' PRELIMINARY DRAWINGS TO ALL BIDDERS EVEN THOUGH THE DRAWINGS WERE AVAILABLE.

REGARDING THE WEATHER-PROOFING PROBLEMYUOU ALLEGED THAT ON YOUR PRIOR CONTRACT YOU EXPERIENCED DIFFICULTIES IN MEETING A REQUIREMENT THAT NO MORE THAN 1 PERCENT OF THE RADIO SETS FAIL TO PASS AN AIR-SEAL TEST, WHICH WAS DESIGNED TO ENSURE THAT THE SETS COULD WITHSTAND TEMPERATURE EXTREMES. YOU CLAIMED THAT THE DIFFICULTIES YOU ENCOUNTERED WERE CAUSED BY FAULTY SPECIFICATIONS WHICH WERE INCORPORATED IN THE SUBJECT IFB AND THAT THIS ALLEGATION IS CONFIRMED BY THE EXISTENCE OF A REPORT FILED BY GOVERNMENT PERSONNEL ON THIS PROBLEM. WITH REGARD TO THESE DEFICIENCIES YOU CONTEND THAT YOUR COMPANY AND THE SUCCESSFUL BIDDER HAD SUPERIOR KNOWLEDGE OF THESE PROBLEMS, BUT THAT THE OTHER BIDDERS DID NOT HAVE SUCH DATA. YOU THEREFORE CONTEND THAT ALL BIDDERS DID NOT COMPETE ON AN EQUAL BASIS AS REQUIRED BY LAW.

WITH REGARD TO THE SPACE PROBLEM YOU ALLEGED THAT THE GOVERNMENT FAILED TO PROVIDE A METHOD FOR EQUAL EVALUATION OF RENT-FREE, GOVERNMENT-OWNED SPACE WHICH BIDDERS INTENDED TO USE IN PRODUCTION OF THE REQUIRED ITEMS; MOREOVER, YOU ALLEGED THAT THE PHRASING OF THE PERTINENT PROVISIONS OF THE IFB PERMITTED BIDDERS TO INDICATE USE OF SUCH SPACE FOR MANUFACTURING PURPOSES ONLY, BUT THAT THE 1,134 SQUARE FEET INDICATED BY OTIS WOULD BE INSUFFICIENT FOR THE COMPLETE ASSEMBLING, TESTING AND PACKAGING OF THE UNITS, ALLOWING THE POSSIBILITY THAT OTIS WOULD USE ADDITIONAL RENT-FREE GOVERNMENT-OWNED SPACE WHICH WOULD NOT HAVE BEEN EVALUATED FOR PRICING PURPOSES.

THE DEPARTMENT ADMITS THAT THE TECHNICAL RESOLUTION OF THE DISTORTION PROBLEM WAS PARTIALLY ACCOMPLISHED PRIOR TO BID OPENING, BUT ADVISES THAT IT WAS NOT INCORPORATED INTO THE IFB BY WAY OF AMENDMENT BECAUSE THE ESTIMATED COST IMPACT OF UTILIZING TRANSISTORS WITH A 30-60 BETA RANGE INSTEAD OF THOSE SPECIFIED IN THE IFB WAS CONSIDERED NEGLIGIBLE, AND THEREFORE NOT ENOUGH TO DISTURB THE RELATIVE STANDING OF THE BIDDERS. WAS NOT UNTIL JANUARY 1968, THREE MONTHS AFTER BID OPENING, THAT THE DISTORTION PROBLEM WAS FINALLY RESOLVED BY FURTHER REQUIRING TRANSISTORS WITHIN THE 30-60 BETA RANGE TO BE MATCHED TO A BETA RATIO OF 1.5:1. THE DEPARTMENT ADVISES THAT THE SOLE TRANSISTOR VENDOR HAS OFFERED TO FURNISH TRANSISTORS CLASSIFIED AND MARKED IN FIVE NARROWER RANGES BETWEEN 30 AND 60 BETA, SO THAT ANY TWO TRANSISTORS WITHIN ANY OF THE FIVE SUB-RANGES WILL BE WITHIN THE 1.5 TO 1 RATIO, AND HAS QUOTED A PRICE OF $1.75 EACH FOR SUCH TRANSISTORS AS AGAINST $1.60 EACH FOR THE UNGRADED TRANSISTORS ORIGINALLY SPECIFIED. THE DIFFERENCE OF $0.30 PER EQUIPMENT IS REGARDED AS INCONSEQUENTIAL AND NOT ENOUGH TO DISTURB THE RELATIVE RANKING OF THE BIDDERS. THE DEPARTMENT HAS ADVISED US THAT IT WILL ISSUE A FORMAL CHANGE ORDER TO THE SUCCESSFUL CONTRACTOR REQUIRING USE OF 30-60 BETA RANGE TRANSISTORS, MATCHED IN THE MANNER RELATED ABOVE, INSTEAD OF THE 20-60 BETA RANGE TRANSISTORS PRESENTLY SPECIFIED, AND THAT SINCE SUCH CHANGES WILL AFFECT THE INTERCHANGEABILITY OF THE DEVICES, THE CONDITIONS PRESCRIBED FOR DEVIATION FROM THE REQUIREMENT OF MARKING THE SEMI- CONDUCTORS WITH THE "JAN" PREFIX WILL BE FULFILLED IN ACCORDANCE WITH PARAGRAPH 3.7.5 OF MIL-S-19500D QUOTED BELOW: "MIL S-19500D

"3.7.5 -JAN- PREFIX. - THE DESIGNATION OF ALL SEMICONDUCTOR DEVICES PROCURED TO AND MEETING THE REQUIREMENTS OF THIS SPECIFICATION AND THE APPLICABLE DETAIL SPECIFICATIONS SHALL BEAR THE PREFIX -JAN-; EXCEPT THAT IN THE CASE OF SMALL SEMICONDUCTOR DEVICES THE PREFIX -J- SHALL BE USED. THE -JAN- BRAND OR THE ABBREVIATION -J- SHALL NOT BE USED ON ANY SEMICONDUCTOR DEVICE PROCURED UNDER CONTRACTS OR ORDERS WHICH PERMIT OR REQUIRE CHANGES TO PARAMETER LIMITS OR PHYSICAL OUTLINE AS SPECIFIED HEREIN OR IN THE APPLICABLE DETAIL SPECIFICATION, IF SUCH CHANGES AFFECT THE INTERCHANGEABILITY OF THE SEMICONDUCTOR DEVICE. * * *"

REGARDING THE WEATHER-PROOFING PROBLEM THE DEPARTMENT HAD ADVISED IT WAS UNAWARE THAT THIS DIFFICULTY WAS CAUSED BY GOVERNMENT-FURNISHED DATA UNTIL AFTER BIDS WERE OPENED, AND THAT IT WAS NOT RESOLVED UNTIL TWO MONTHS THEREAFTER. IT IS FURTHER REPORTED THAT THE DEFICIENCY WILL BE REMEDIED BY INSIGNIFICANT DIMENSIONAL CHANGES IN VARIOUS GASKETS, WHICH WILL HAVE ONLY A NEGLIGIBLE COST IMPACT, IF ANY. ADDITIONALLY, THE DEPARTMENT SPECIFICALLY DENIES THE EXISTENCE OF ANY GOVERNMENT REPORT CONCERNING THE WEATHER-PROOFING PROBLEM.

THE DEPARTMENT MAINTAINS THAT IT WOULD HAVE BEEN IMPROPER TO CANCEL THE IFB AND READVERTISE THE REQUIREMENT AFTER BIDS WERE OPENED BECAUSE THE NEGLIGIBLE PRICE CONSIDERATIONS INVOLVED IN REMEDYING THESE DEFECTS WOULD NOT HAVE CONSTITUTED A COMPELLING REASON TO AVOID THE IFB AS IS REQUIRED PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 404.1 (A) QUOTED BELOW:

"2-404 REJECTION OF BIDS

"2-404.1 CANCELLATION OF INVITATION AFTER OPENING.

"/A) THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION. EVERY EFFORT SHALL BE MADE TO ANTICIPATE CHANGES IN A REQUIREMENT PRIOR TO THE DATE OF OPENING AND TO NOTIFY ALL PROSPECTIVE BIDDERS OF ANY RESULTING MODIFICATION OR CANCELLATION, THEREBY PERMITTING BIDDERS TO CHANGE THEIR BIDS AND PREVENTING THE UNNECESSARY EXPOSURE OF BID PRICES. AS A GENERAL RULE, AFTER OPENING, AN INVITATION FOR BIDS SHOULD NOT BE CANCELED AND READVERTISED DUE SOLELY TO INCREASED REQUIREMENTS FOR THE ITEMS BEING PROCURED; AWARD SHOULD BE MADE ON THE INITIAL INVITATION FOR BIDS AND THE ADDITIONAL QUANTITY REQUIRED SHOULD BE TREATED AS A NEW PROCUREMENT.'

WHILE WE ARE INCLINED TO THE VIEW THAT THE ACTION OF THE PROCURING ACTIVITY IN PROCEEDING WITH THE BID OPENING IN THE FACE OF THE QUESTIONS THAT HAD ARISEN, RATHER THAN POSTPONING THE OPENING UNTIL THESE MATTERS HAD BEEN RESOLVED, WAS OF QUESTIONABLE PROPRIETY, WE CANNOT SAY THAT THE APPARENTLY NEGLIGIBLE COST IMPACT OF THE MODIFICATIONS SUBSEQUENTLY DETERMINED UPON WAS SUFFICIENT TO JUSTIFY READVERTISING OF THE PROCUREMENT AFTER THE BIDS HAD BEEN OPENED AND PRICES DISCLOSED. IN THE CASES CITED TO US IN YOUR LETTER OF APRIL 4, 1968, OUR OFFICE UPHELD THE CANCELLATION OF DEFECTIVE INVITATIONS BECAUSE THE SPECIFICATION DEFICIENCIES WERE SUBSTANTIAL AND WOULD HAVE SIGNIFICANTLY AFFECTED BID PRICES. B-155276, MARCH 18, 1965; B 140009, AUGUST 17, 1959; B-155560, NOVEMBER 30, 1964; 39 COMP. GEN. 571. BECAUSE OF THE INSIGNIFICANT DEFECTS INVOLVED HERE WE ARE UNABLE TO CONCLUDE THAT FREE AND FULL COMPETITION, REQUIRED OF ADVERTISED PROCUREMENTS PURSUANT TO 10 U.S.C. 2305 (A), WAS DENIED. IF SUCH DEFECTS WERE CONSIDERED AS SIGNIFICANT AS YOU NOW MAINTAIN THEY ARE, THE QUESTION NATURALLY ARISES AS TO WHY YOU DID NOT INSIST THAT THEY BE CLARIFIED PRIOR TO SUBMITTING YOUR BID. B-162566, DECEMBER 13, 1967; B-151355, JUNE 25, 1963. THE MAIN THRUST OF YOUR ARGUMENT, THAT BECAUSE OF THE KNOWLEDGE POSSESSED BY YOU AND OTIS OF THE DIFFICULTIES TO BE OVERCOME (WHICH WAS NOT AVAILABLE TO OTHER BIDDERS) YOU WERE AT A COMPETITIVE DISADVANTAGE, IS NOT SUPPORTED BY THE RESULTS OF THE BIDDING, SINCE OTIS' BID WAS THE LOWEST OF THE 19 RECEIVED, AND YOUR'S WAS LOWER THAN ALL BUT ONE OF THE BIDS SUBMITTED BY THE 17 BIDDERS WITHOUT PRIOR EXPERIENCE.

REGARDING YOUR ALLEGATION THAT THE INVITATION DID NOT CONTAIN SUFFICIENT INFORMATION TO PROVIDE KNOWLEDGEABLE COMPETITIVE BIDDING ON THE OTIS FIX SPECIFIED IN THE IFB, THE PROCURING ACTIVITY IS OF THE OPINION THAT THE INFORMATION PROVIDED BIDDERS WAS SUFFICIENT TO ENABLE INFORMED BIDDING; HOWEVER, THE DEPARTMENT ADVISES US THAT THE SKETCHES OF THE OTIS FIX WERE NOT MADE AVAILABLE TO BIDDERS BECAUSE THEY WERE NOT SUFFICIENTLY CLEAR TO PERMIT REPORDUCTION. IN CASES WHERE A DIFFERENCE OF OPINION EXISTS AS TO THE ADEQUACY OF SPECIFICATIONS, THIS OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF CONTRACTING OFFICIALS IN THE ABSENCE OF CLEAR EVIDENCE THAT THE CONTRACTING OFFICIALS ARE IN ERROR. 40 COMP. GEN. 294; B-155710, APRIL 15, 1965. WE SEE NO SUCH EVIDENCE IN THE PRESENT RECORD.

IN REFERENCE TO YOUR ALLEGATIONS CONCERNING THE EVALUATION OF RENT FREE, GOVERNMENT-OWNED SPACE THE CONTRACTING OFFICER HAS FURNISHED THE FOLLOWING INFORMATION:

"D. THE SPACE PROBLEM

"THE GOVERNMENT DID PROVIDE A BASIS UPON WHICH ALL BIDS COULD BE PREPARED AND EVALUATED EQUALLY IN PARAGRAPHS 7 AND 8 OF SECTION H, PROPOSED USE OF PRODUCTION AND RESEARCH PROPERTY: (ASPR SECTION XIII, PART 5/- ON PAGES 106 THROUGH 111 OF THE IFB.

"OTIS IN ITS BID INDICATES USE OF 1134 SQUARE FEET OF GOVERNMENT OWNED PROPERTY UNDER AN AIR FORCE FACILITIES CONTRACT WHICH WOULD BE SUBJECT TO EVALUATION IN ACCORDANCE WITH THE TERMS OF THE CLAUSE. THIS INDICATION BY OTIS WAS NOT A RESTRICTION OF ITS OPERATION TO THIS SQUARE FOOTAGE, BUT MERELY ADVICE IN ACCORDANCE WITH THE CLAUSE IDENTIFYING THAT PORTION OF THE SPACE AVAILABLE FOR PERFORMANCE ON WHICH THE COMPANY DESIRED -RENT- FREE- USAGE.

"THE CONTENTION THAT THE 1134 SQUARE FEET OF SPACE USEABLE FOR A PERIOD OF FOUR MONTHS BY OTIS COULD NOT BE EVALUATED EQUALLY IS NOT CORRECT SINCE THE GOVERNMENT PREPARED NOTE AND TIME PERIOD ON PAGE 110OF THE IFB IMPOSED IDENTICAL CONDITIONS ON ALL BIDDERS AND PROVIDED FOR EQUAL EVALUATION. THE NOTE IS QUOTED BELOW:

"NOTE: DATA FOR COMPUTING EVALUATION FACTOR. BIDDERS/OFFERORS ARE FURNISHED THE FOLLOWING DATA TO BE USED, IN ACCORDANCE WITH PARAGRAPH 6, NOTES 1 AND 5 OF THE CONTRACT PROVISION -PROPOSED USE OF PRODUCTION AND RESEARCH PROPERTY-, IN PREPARING THEIR -PROPERTY IDENTIFICATION- AND THEIR -EVALUATION FACTOR-: ITEM NUMBER/S) PRODUCTION PERIOD/S)

0001 OR 0005 4 MONTHS

"INSOFAR AS SENTINEL'S QUESTIONING THE ADEQUACY OF THE RENT-FREE AREA FOR PERFORMANCE IS CONCERNED, IT IS POINTED OUT THAT THIS IS ONLY A SMALL PORTION OF THE SPACE AVAILABLE TO OTIS WHICH THE BIDDER HAS EXPRESSED AN INTENTION TO UTILIZE. THE ADDITIONAL SPACE, THOUGH COVERED BY A GSA LEASING AGREEMENT, IS PAID FOR SEPARATELY, AND AS INDICATED IN THE PREVIOUS PARAGRAPH, DOES NOT GIVE OTIS A COMPETITIVE ADVANTAGE OVER SENTINEL OR ANY OTHER BIDDER. IT IS FOR THIS REASON THAT THE CLAUSE ITSELF, PARAGRAPH 4 (A), PAGE 107 OF THE IFB, SPECIFICALLY STATES -SUCH AGREEMENTS REQUIRE PAYMENT OF A RENTAL OR A USE CHARGE OR OTHER ADEQUATE CONSIDERATION WHEN USE OF THE PROPERTY IS MADE BUT, REGARDLESS OF THE CONSIDERATION, THE AUTHORIZATION FOR USE PURSUANT TO SUCH AGREEMENTS OBVIATES THE NECESSITY FOR EVALUATION .... . THE BIDDER DOES NOT INTEND NOR HAS HE REQUESTED RENT-FREE USAGE OF THIS PARTICULAR PART OF THE GOVERNMENT BUILDING.

"THE PRE-AWARD SURVEY ACTUALLY CONFIRMED THE FOREGOING FACTS INASMUCH AS THE BIDDER INDICATED TO THE MEMBERS OF THE SURVEY TEAM THAT THERE WAS AVAILABLE TO IT FOR PERFORMANCE PURPOSES SOME 5900 SQUARE FEET OF SPACE IN THE GOVERNMENT BUILDING INVOLVED, ONLY 1134 SQUARE FEET OF WHICH WOULD BE USED ON A RENT-FREE BASIS AND THEREFORE, SUBJECT TO EVALUATION UNDER THE CLAUSE.

"REFERENCE THE MATTER OF RECOUPMENT, AND SENTINEL'S CHARGE THAT THE GOVERNMENT IS NOT PROTECTED, THE QUESTION IS ACADEMIC SINCE ADEQUATE COMPENSATION FOR CONTRACTOR USE OF GOVERNMENT SPACE UNDER THE GSA RENTAL AGREEMENT IS ALREADY PROVIDED FOR ($1.10 PER SQUARE FEET).' BASED UPON THE DATA RELATED ABOVE WE ARE UNABLE TO CONCLUDE THAT THE RENT FREE GOVERNMENT-OWNED SPACE SPECIFIED IN THE SUCCESSFUL CONTRACTOR'S BID WAS IMPROPERLY EVALUATED.