B-164715, OCT. 24, 1968

B-164715, OCT. 24, 1968

TO COVINGTON AND BURLING:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 28 AND AUGUST 19, 1968, PROTESTING ON BEHALF OF MANAGEMENT TECHNOLOGY INC. (MTI) AGAINST THE AWARD OF A CONTRACT INVOLVING THE INTERDEPENDENCE OF COMPUTERS AND COMMUNICATIONS TO THE STANFORD RESEARCH INSTITUTE (SRI) BY THE FEDERAL COMMUNICATIONS COMMISSION (FCC).

YOUR PROTEST AGAINST THE AWARD MADE TO SRI IS BASED ON YOUR CONTENTION THAT MTI'S PROPOSAL WAS RANKED NUMBER ONE; THAT ITS PRICE WAS LOWER THAN THAT OF STANFORD; AND THAT MEMBERS OF THE FCC STAFF WERE ADVERSE TO AWARDING THE CONTRACT TO A PROFIT MAKING CONCERN.

THE INVITATION ISSUED ON APRIL 19, 1968, SOLICITED PROPOSALS FROM EXPANDED INTERSERVICE SHARING OF LAND MOBILE RADIO CHANNELS AND A NUMBER OF POSSIBLE CONTRACTORS FOR STUDIES INVOLVING (1) THE FREQUENCY ASSIGNMENT PRINCIPLES, AND (2) THE REGULATORY AND POLICY PROBLEMS PRESENTED BY THE INTERDEPENDENCE OF COMPUTER AND COMMUNICATIONS SERVICES AND FACILITIES. THE INVITATION EXPRESSED A PREFERENCE FOR A SINGLE PROPOSAL COVERING BOTH STUDIES BUT INDICATED THAT FCC WOULD ENTERTAIN A PROPOSAL WITH RESPECT TO EACH STUDY ON A SEPARATE BASIS.

AS YOU KNOW FROM THE ADMINISTRATIVE REPORT FURNISHED TO YOU BY OUR OFFICE, WHILE MTI HAD SUBMITTED A JOINT PROPOSAL FOR BOTH STUDIES, ITS PROPOSAL FOR THE LAND MOBILE STUDY WAS NOT ACCEPTABLE AND ITS PROPOSAL FOR THE COMPUTER STUDY WAS CONSIDERED SEPARATELY AND RANKED HIGH IN THE EVALUATION PROCESS. THE FCC EVALUATION COMMITTEE, AFTER REVIEW AND TECHNICAL APPRAISAL OF THE DIFFERENT PROPOSALS, AND WITH DUE REGARD TO THE PREVIOUSLY ANNOUNCED PREFERENCE FOR A SINGLE CONTRACTOR, SUBMITTED NAMES OF SRI AND THE RESEARCH ANALYSIS CORPORATION AS THE MOST QUALIFIED OFFERORS TO UNDERTAKE THE SUBJECT CONTRACT IN ITS ENTIRETY. ON JUNE 25, 1968, FCC AWARDED THE CONTRACT TO SRI. WE FIND NO BASIS TO QUESTION THIS AWARD.

THIS AWARD WAS MADE TO SRI AFTER AN UNANIMOUS VOTE OF COMMISSIONERS HYDE, COX, WADSWORTH AND JOHNSON OF FCC, ALL OF WHOM CONCURRED IN THE FOLLOWING ACTION:

"HAVING DETERMINED PURSUANT TO SUBPART 1-3.2 OF THE FEDERAL PROCUREMENT REGULATIONS, THAT FORMAL ADVERTISING PROCEDURES WERE NOT FEASIBLE AND PRACTICABLE TO BE FOLLOWED IN CONNECTION WITH THE PROCUREMENT OF THESE STUDIES, (1) THE EXPANDED INTER-SERVICE SHARING OF LAND MOBILE RADIO CHANNELS AND FREQUENCY ASSIGNMENT PRINCIPLES, AND (2) THE REGULATORY AND POLICY PROPOSALS PRESENTED BY INTERDEPENDENCE OF COMPUTER AND COMMUNICATIONS SERVICES AND FACILITIES, AND THAT THE SELECTION OF A SPECIFIC CONTRACTOR WOULD DEPEND ALMOST ENTIRELY ON THE SCOPE, METHODOLOGY AND EVALUATION OF THE PROPOSED STUDIES AND THE QUALIFICATIONS AND COMPETENCY OF THE RESEARCH ORGANIZATION PROPOSING TO PERFORM THE STUDIES, INVITATIONS TO SUBMIT PROPOSALS WERE SENT TO NUMEROUS COMPANIES AND ORGANIZATIONS AND A SYNOPSIS OF THE STUDY WITH AN INVITATION TO SUBMIT PROPOSALS WAS PUBLISHED IN THE COMMERCE BUSINESS DAILY.

"AFTER A DISCUSSION OF THE COMMITTEE'S RECOMMENDATIONS, THE COMMISSION UNANIMOUSLY FINDS IT TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO AWARD A CONTRACT FOR THE PROCUREMENT OF THE ABOVE DESCRIBED STUDIES TO THE STANFORD RESEARCH INSTITUTE AT A COST OF $499,541 ON THE BASIS THAT THE SCOPE AND METHODOLOGY OF THE STUDIES PROPOSED BY THIS CONTRACT WERE PROPERLY DESIGNED TO ACHIEVE THE DESIRED RESULTS SET FORTH IN THE STUDY OBJECTIVES AND REQUIREMENTS, THAT THIS CONTRACTOR APPEARED TO BE THE MOST QUALIFIED TO PERFORM THE STUDIES, AND THAT IT WOULD BE TO THE DECIDED ADVANTAGE OF THE COMMISSION TO HAVE ONE CONTRACTOR FOR BOTH STUDIES.'

YOU CONTEND THAT MTI'S PRICE FOR THE COMPUTER STUDY WAS LOWER THAN THE ESTIMATE SUBMITTED BY SRI AS PART OF ITS JOINT PROPOSAL. WHILE PRICE IS ALWAYS A FACTOR TO BE CONSIDERED IN THE EVALUATION, PRICE ALONE IS NOT NECESSARILY THE DOMINANT FACTOR FOR CONSIDERATION IN MAKING AN AWARD OF A NEGOTIATED CONTRACT FOR THE TYPE OF SERVICE HERE INVOLVED. IN THIS PROCUREMENT, IT IS REPORTED THAT PRICE WAS NOT THE MAJOR CONSIDERATION IN AWARDING THE CONTRACT AND THAT THE PARAMOUNT CONSIDERATION WAS THE CONCEPTUAL APPROACH OFFERED AND THE DEMONSTRATED ABILITY OF THE RESPONDING OFFEROR TO CARRY IT OUT.

IN NEGOTIATED PROCUREMENTS, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE BIDDER, ARE NOT CONTROLLING AND THE NEGOTIATION AUTHORITY MAY LEGALLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE ACCOMPLISHMENT OF THE PROCUREMENT. 40 COMP. GEN. 508. WITH REGARD TO YOUR CONTENTION THAT THE FCC STAFF CONSIDERED IT INAPPROPRIATE TO AWARD A POLICY STUDY CONTRACT TO A PROFIT MAKING CONCERN, IT IS REPORTED THAT AT LEAST TWO NONPROFIT COMPANIES DECIDED NOT TO COMPETE FOR THE AWARD BECAUSE OF THEIR VIEW THAT THEY WOULD BE DIRECTLY COMPETING WITH PROFIT MAKING FIRMS. MOREOVER, WE CANNOT CONCLUDE FROM THE RECORD BEFORE US THAT THE ULTIMATE AWARD WAS INFLUENCED BY THE NONPROFIT CHARACTER OF THE SUCCESSFUL OFFEROR.

YOU REQUEST, FOR THE GUIDANCE OF PROCUREMENT AGENCIES, A RULING BY OUR OFFICE THAT THE STATUS OF A BIDDER AS A PROFIT SEEKING (AND TAX PAYING) COMPANY RATHER THAN A NONPROFIT CONCERN IS NOT ONE OF THE "OTHER" FACTORS WHICH MAY APPROPRIATELY BE TAKEN INTO ACCOUNT UNDER FPR SECTION 1-3.102 IN NEGOTIATING A CONTRACT. ALTHOUGH WE ARE NOT AUTHORIZED UNDER OUR ORGANIC LEGISLATION TO RENDER A DECISION TO YOU AT YOUR REQUEST, YOUR ATTENTION IS INVITED TO DECISION B-156838, JULY 13, 1965. IN THAT CASE IT WAS POINTED OUT THAT UNIVERSITIES OBTAIN THEIR SUPPORT FROM ENDOWMENTS, GRANTS AND OTHER DIRECT AND INDIRECT SUBSIDIES FROM GOVERNMENTAL BODIES. IT WAS FURTHER ARGUED THAT TO FORCE PRIVATE INDUSTRY TO COMPETE WITH UNIVERSITIES IN AREAS OF OF DEFENSE PROCUREMENT NORMALLY SERVED BY PRIVATE INDUSTRY WOULD MEAN THE EXODUS OF PRIVATE INDUSTRY FROM THESE AREAS AND A CRITICAL NARROWING OF THE DEFENSE PROCUREMENT BASE. SINCE THE PROCUREMENT AGENCY FOUND THAT THE TWO OFFERORS -- THE UNIVERSITY OF DAYTON AND A PROFIT MAKING COMMERCIAL CONCERN -- WERE EQUAL IN TECHNICAL COMPETENCE, THE AWARD WAS MADE TO THE UNIVERSITY OF DAYTON ON THE BASIS OF LOWEST COST TO THE GOVERNMENT. OUR OFFICE UPHELD THE CONTRACT AWARD TO THE UNIVERSITY OF DAYTON AND STATED AS FOLLOWS:

"* * * WHILE YOU PRESENT COGENT ARGUMENTS IN THIS REGARD, AT THE PRESENT TIME THERE IS NO POLICY PRONOUNCEMENT BY THE DEPARTMENT OF DEFENSE, EITHER IN THE ARMED SERVICES PROCUREMENT REGULATION OR IN ANY OTHER DIRECTIVE WHICH PRECLUDES COMPETITION BETWEEN PROFIT AND NONPROFIT ORGANIZATIONS WHEN SEEKING GOVERNMENT CONTRACTS.' THE ABOVE STATEMENT IS EQUALLY APPLICABLE TO THE FPR AND WE FIND NOTHING IN FPR SECTION 1-3.102 WHICH WOULD INDICATE A CONTRARY VIEW.