B-164253, JUL. 24, 1968

B-164253, JUL. 24, 1968

TO THE ASTRO FIREWORKS AND MFG. CO., INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 7, 1968, PROTESTING THE ACTION OF THE UNITED STATES ARMY CINCINNATI PROCUREMENT AGENCY, CINCINNATI, OHIO, IN AWARDING A CONTRACT TO SECURITY SIGNALS, INC., UNDER REQUEST FOR PROPOSALS NO. DAAG31-68-R-0455.

THE REQUEST, ISSUED ON MARCH 19, 1968, COVERED A REQUIREMENT FOR 2,382,200 IGNITERS, TIME BLASTING FUZE, WEATHER PROOF, M60, FSN: 1375 691- 1671-M766, ITEMS 0001 AND 0002. THE PROCUREMENT CARRIED AN URGENT DELIVERY REQUIREMENT DESIGNATED BY AN 02 PRIORITY. THE ORIGINAL CLOSING DATE FOR RECEIPT OF OFFERS WAS APRIL 2, 1968, AND IN VIEW OF THE DOLLAR VOLUME AND COMPLEXITY OF THE ITEM, A PRESOLICITATION CONFERENCE WAS HELD ON MARCH 19, 1968. THE CONFERENCE WAS ATTENDED BY REPRESENTATIVES OF 14 FIRMS, INCLUDING ONE FROM YOUR FIRM. ON MARCH 20, 1968, AMENDMENT NO. 1 WAS ISSUED TO INCORPORATE CERTAIN CLAUSE AND TECHNICAL CHANGES.

TEN PROPOSALS WERE RECEIVED. YOUR FIRM SUBMITTED A PROPOSAL FOR ITEM 0002 ONLY AT A UNIT PRICE OF $0.73614. SECURITY SIGNALS, INC., SUBMITTED A PROPOSAL FOR THE TOTAL QUANTITY REQUIRED BY ITEMS 0001 AND 0002 AT A UNIT PRICE OF $0.6125. ON APRIL 12, 1968, AMENDMENT NO. 2 WAS ISSUED TO REVISE CERTAIN ENGINEERING REQUIREMENTS ORIGINALLY SET FORTH IN THE SOLICITATION, AND RESPONDING OFFERORS WERE ADVISED TO SUBMIT REVISED PRICES ON OR BEFORE 4:00 P.M., E.S.T., APRIL 23, 1968.

THE RECORD INDICATES THAT SECURITY SIGNALS ACKNOWLEDGED RECEIPT OF AMENDMENT NO. 2 AND REVISED ITS UNIT PRICES FOR ITEMS 0001 AND 0002 TO $0.6549 AND $0.6462, RESPECTIVELY. SECURITY SIGNALS ALSO SUBMITTED AN ALTERNATE OFFER BASED ON THE TOTAL QUANTITY COVERED BY ITEMS 0001 AND 0002 IN THE AMOUNT OF $0.5999 PER UNIT. YOUR FIRM ACKNOWLEDGED AMENDMENT NO. 2 AND IN A COVERING LETTER DATED APRIL 15, 1968, YOU SUBMITTED AN ALTERNATE PROPOSAL TO FURNISH THE ENTIRE QUANTITY OF 2,382,200 UNITS COVERED BY ITEMS 0001 AND 0002 AT A UNIT PRICE OF $0.74. IN YOUR LETTER, YOU LISTED A DELIVERY SCHEDULE FOR THE TOTAL QUANTITY OF UNITS REQUIRED UNDER ITEMS 0001 AND 0002.

IT IS REPORTED THAT ON APRIL 22, 1968, ALL OFFERORS WERE NOTIFIED BY TELEGRAM THAT NEGOTIATIONS WOULD OPEN ON APRIL 24, 1968, AND CLOSE AT 4:00 P.M., ON APRIL 26, 1968, AND THAT NO PROPOSED CHANGES WOULD BE CONSIDERED THEREAFTER. THE RECORD INDICATES THAT THE GOVERNMENT CONTRACT SPECIALIST CONDUCTED NEGOTIATIONS WITH ALL OFFERORS COMMENCING ON APRIL 24, 1968. REVISED DELIVERY SCHEDULE STARTING 130 DAYS AFTER AWARD AT THE SAME RATE STATED IN THE SCHEDULE AND TO BE COMPLETED 370 DAYS AFTER DATE OF AWARD DOCUMENT WAS OFFERED TO ALL PROPOSERS IF THIS DELIVERY FACTOR AFFECTED THEIR PRICES. AFTER COMPLETION OF NEGOTIATIONS WITH ALL OFFERORS BY NOON ON APRIL 26, 1968, THE CONTRACT SPECIALIST RECOMMENDED THAT AN AWARD BE MADE TO SECURITY SIGNALS FOR ITEMS 0001 AND 0002 AT ITS NEGOTIATED REVISED UNIT PRICE OF $0.5889. ON APRIL 26, 1968, THE BOARD OF AWARDS APPROVED THE RECOMMENDATION OF THE CONTRACT SPECIALIST AND ON APRIL 30, 1968, A CONTRACT FOR FURNISHING THE IGNITERS REQUIRED UNDER ITEMS 0001 AND 0002 WAS AWARDED TO SECURITY SIGNALS.

YOU CONTEND THAT THE CONTRACTING AGENCY NEGLECTED TO NOTIFY YOUR FIRM OF THE DELIVERY SCHEDULE CHANGE IN THE REQUEST FOR PROPOSALS. IT IS REPORTED THAT FORMAL NEGOTIATIONS WERE OPENED WITH ALL OFFERORS BY TELEPHONE ON APRIL 24, 1968; THAT ALL OFFERORS INCLUDING YOUR FIRM WERE TOLD THAT THE GOVERNMENT WAS ALLOWING A REVISED DELIVERY SCHEDULE STARTING 130 DAYS AFTER AWARD AT THE SAME RATE OF DELIVERY AS STATED ON PAGE 8 OF THE SCHEDULE WITH COMPLETION 370 DAYS AFTER AWARD; AND THAT OFFERORS WERE ADVISED THAT THE PROCUREMENT WAS BEING COMPETITIVELY NEGOTIATED AND THAT THEY SHOULD THEREFORE SUBMIT THEIR BEST REVISED PRICES. IT ALSO IS REPORTED THAT AT THE TIME YOU WERE ADVISED OF THE CHANGE IN THE DELIVERY SCHEDULE, THE REVISED DELIVERY SCHEDULE CONTAINED IN YOUR LETTER OF APRIL 15, 1968, FOR THE ENTIRE QUANTITY WAS DISCUSSED WITH A REPRESENTATIVE OF YOUR FIRM. THE RECORD INDICATES THAT YOUR REPRESENTATIVE WAS TOLD THAT SINCE IT APPEARED THAT WAIVER OF THE FIRST ARTICLE TESTING COULD BE ACCOMPLISHED IN YOUR CASE AND BECAUSE OF THE 30-DAY EXTENSION IN THE DELIVERY SCHEDULE OFFERED BY THE GOVERNMENT, THE SCHEDULE OF DELIVERIES OF THE ENTIRE QUANTITY SET FORTH IN YOUR LETTER OF APRIL 15, 1968, WAS CONSIDERED ACCEPTABLE BY THE GOVERNMENT. IT APPEARS THAT YOUR REVISED OFFER OF APRIL 15, 1968, COVERING BOTH ITEMS IN LIEU OF ITEM 0002 ORIGINALLY PROPOSED, WAS BASED ON A REVISED DELIVERY SCHEDULE FALLING WITHIN ONE WEEK OF THE REVISED DELIVERY SCHEDULE WHICH THE GOVERNMENT CONTRACT SPECIALIST DISCUSSED WITH THE PRESIDENT OF YOUR FIRM ON APRIL 15, 1968. SINCE IT APPEARS THAT YOUR REVISED OFFER OF APRIL 15, 1968, WAS LARGELY BASED ON THE EXTENDED DELIVERY DATE OFFERED BY THE GOVERNMENT, IT MAY BE CONCLUDED THAT YOUR FIRM WAS NOT PREJUDICED IN THE NEGOTIATION OF THIS PROCUREMENT.

PROTEST IS ALSO MADE BECAUSE YOUR FIRM WAS NOT GIVEN AN OPPORTUNITY TO NEGOTIATE THE PRICE OF THE REQUIRED ITEMS WITH THE GOVERNMENT CONTRACT SPECIALIST (NEGOTIATOR). IN THIS CONNECTION, IT IS REPORTED THAT ON APRIL 15, 1968, THE PRESIDENT OF YOUR FIRM TELEPHONED THE CONTRACT SPECIALIST AND ASKED IF THE GOVERNMENT WAS CONTEMPLATING MAKING A SPLIT AWARD OF ITEMS 0001 AND 0002. YOUR REPRESENTATIVE WAS ADVISED THAT AN AWARD PROBABLY WOULD BE MADE FOR THE ENTIRE QUANTITY TO ONE OFFEROR. THE PRESIDENT OF YOUR FIRM WAS ALSO TOLD THAT THE GOVERNMENT WAS CONSIDERING A 30-DAY EXTENSION IN THE REQUIRED DELIVERY SCHEDULE, AND THAT IT APPEARED THAT YOUR FIRM COULD OBTAIN A WAIVER OF FIRST ARTICLE TESTING WHICH WOULD SAVE ADDITIONAL TIME IN THE DELIVERY OF THE REQUIRED ITEMS. YOUR REPRESENTATIVE WAS REQUESTED BY THE CONTRACT SPECIALIST TO REVIEW YOUR ORIGINAL DELIVERY SCHEDULE ON THE BASIS OF AN ADDITIONAL 30 DAYS PLUS THE WAIVER OF FIRST ARTICLE TESTING FOR THE PURPOSE OF TENDERING AN OFFER FOR BOTH ITEMS 0001 AND 0002. BY LETTER DATED APRIL 15, 1968, YOUR FIRM SUBMITTED A REVISED OFFER FOR THE ENTIRE QUANTITY OF 2,382,200 UNITS WITH A NEW UNIT PRICE OF $0.74, F.O.B. GRANVILLE, OHIO. IT APPEARS THAT THIS OFFER COVERING BOTH ITEMS WAS BASED ON A REVISED DELIVERY SCHEDULE FALLING WITHIN ONE WEEK OF THE GOVERNMENT'S REVISED DELIVERY SCHEDULE.

BY TELEGRAM DATED APRIL 25, 1968, YOU FURTHER REVISED YOUR OFFER FOR THE ENTIRE QUANTITY OF IGNITERS FROM $0.74 EACH TO $0.73614 EACH, THE AMOUNT ORIGINALLY PROPOSED FOR ITEM 0002 ONLY. AS A RESULT OF PRICE NEGOTIATIONS WITH ALL OFFERORS, YOUR FIRM'S RELATIVE STANDING AMONG THE 10 COMPETING OFFERORS DROPPED FROM THIRD TO FIFTH LOWEST OFFEROR. THE RECORD SHOWS THAT THERE WAS A UNIT PRICE SPREAD OF $0.14724 BETWEEN THE FINAL NEGOTIATED UNIT PRICE OF YOUR FIRM AND THAT OF THE SUCCESSFUL OFFEROR, SECURITY SIGNALS. IT IS REPORTED THAT BOTH THE FINAL NEGOTIATED SPREAD IN UNIT PRICE AND YOUR FIRM'S RELATIVE STANDING AMONG ALL OFFERORS WOULD PRECLUDE EITHER A COMPLETE AWARD OR SPLIT AWARD TO YOUR FIRM. IT ALSO IS REPORTED THAT THERE WAS NO REASON TO BELIEVE THAT FURTHER NEGOTIATIONS, IF PERMISSIBLE FROM A TIME STANDPOINT, WOULD HAVE ENABLED YOUR FIRM TO OVERCOME ITS COMPETITIVE STANDING AMONG ALL OFFERORS.

IT IS CLEAR FROM THE RECORD THAT EQUAL OPPORTUNITY TO COMPETE FOR THE PROCUREMENT WAS EXTENDED TO YOU AND THAT YOU WERE GIVEN AT LEAST TWO OPPORTUNITIES TO RECOMPUTE YOUR OFFERED PRICES. AT THE CONCLUSION OF THE NEGOTIATIONS, YOU WERE NOT THE LOWEST OFFEROR AS TO PRICE. MOREOVER, HAD THE CONTRACT SPECIALIST AGAIN REQUESTED YOUR FIRM TO SUBMIT A LOWER PRICE, SUCH ACTION MIGHT HAVE BEEN IN THE NATURE OF AN "AUCTION TECHNIQUE" WHICH IS PROHIBITED BY THE PROVISIONS OF PARAGRAPH 3-805.1 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

CONCERNING YOUR CONTENTION THAT NEGOTIATIONS SHOULD HAVE CONTINUED WITH YOUR FIRM, THE RECORD SHOWS THAT A CUTOFF DATE FOR NEGOTIATIONS WAS FIXED AT 4:00 P.M., E.S.T., ON APRIL 26, 1968. ASPR 3-805.1 (B) CLEARLY RECOGNIZES THAT IN NEGOTIATED PROCUREMENTS THERE HAS TO BE SOME EVENTUAL CUTOFF DATE AS TO THE CONTINUING OF NEGOTIATIONS. THE PRESCRIBING OF A 3- DAY PERIOD FOR NEGOTIATIONS WAS PROPER IN VIEW OF THE URGENCY OF THE PROCUREMENT AND THE FACT THAT SOME DELAY ALREADY HAD BEEN EXPERIENCED BY THE DRAWING CHANGE. 41 COMP. GEN. 351.

ALTHOUGH AN AWARD MAY BE MADE AS A RESULT OF COMPETITIVE NEGOTIATION WITHOUT BARGAINING BY INITIALLY ACCEPTING THE MOST FAVORABLE OFFER RECEIVED IF THE CONTRACTING OFFICER REGARDS IT TO BE FAIRLY AND REASONABLY PRICED, THE CONTRACTING OFFICER MAY ALSO NEGOTIATE A CONTRACT WITH THAT OFFEROR WHOSE OFFER IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. IT IS FOR THIS REASON THAT OFFERORS MAY BE ALLOWED TO MAKE REVISIONS TO THEIR PROPOSALS UP TO THE TIME THE NEGOTIATIONS ARE OFFICIALLY CLOSED. IN THESE RESPECTS, ASPR 3-805.1 (B), REFERRED-TO ABOVE, PROVIDES AS FOLLOWS:

"WHENEVER NEGOTIATIONS ARE CONDUCTED WITH MORE THAN ONE OFFEROR,AUCTION TECHNIQUES ARE STRICTLY PROHIBITED; AN EXAMPLE WOULD BE INDICATING TO AN OFFEROR A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION, OR INFORMING HIM THAT HIS PRICE IS NOT LOW IN RELATION TO THAT OF ANOTHER OFFEROR. ON THE OTHER HAND, IT IS PERMISSIBLE TO INFORM AN OFFEROR THAT HIS PRICE IS CONSIDERED BY THE GOVERNMENT TO BE TOO HIGH. 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. ALL SUCH OFFERORS SHALL BE INFORMED THAT ANY REVISION RECEIVED AFTER SUCH DATE SHALL BE TREATED AS A LATE PROPOSAL IN ACCORDANCE WITH THE -LATE PROPOSALS' PROVISIONS OF THE REQUEST FOR PROPOSALS (IN THE EXCEPTIONAL CIRCUMSTANCES WHERE THE SECRETARY CONCERNED AUTHORIZES CONSIDERATION OF SUCH A LATE PROPOSAL, RESOLICITATION SHALL BE LIMITED TO THE SELECTED OFFERORS WITH WHOM NEGOTIATIONS HAVE BEEN CONDUCTED.) IN ADDITION, ALL SUCH OFFERORS SHALL ALSO BE INFORMED THAT AFTER THE SPECIFIED DATE FOR THE CLOSING OF NEGOTIATION NO INFORMATION OTHER THAN NOTICE OF UNACCEPTABILITY OF PROPOSAL, IF APPLICABLE (SEE 3- 508), WILL BE FURNISHED TO ANY OFFEROR UNTIL AWARD HAS BEEN MADE.'

SINCE THE RECORD ESTABLISHES THAT SECURITY SIGNALS HAD SUBMITTED THE LOWEST FINAL OFFER AS A RESULT OF THE NEGOTIATIONS, AWARD WAS PROPERLY MADE TO THAT OFFEROR. UPON REVIEW, WE FIND NO BASIS TO QUESTION THAT AWARD WHICH WAS ACCOMPLISHED IN ACCORDANCE WITH THE REGULATORY PROCEDURES GOVERNING NEGOTIATED PROCUREMENTS.