B-168215, SEP. 15, 1970

B-168215, SEP. 15, 1970

BID PROTEST - FEDERAL AID GRANTS DENIAL OF PROTEST AGAINST AWARD OF MANAGEMENT CONTRACT TO CRESAP, MCCORMICK & PAGET, INC., BY COMMITTEE FOR ECONOMIC OPPORTUNITY, TUCSON, ARIZONA. DETERMINATION THAT PROTESTANT'S FIRM DID NOT HAVE QUALIFICATIONS TO PERFORM MANAGEMENT CONTRACT FINANCED BY FEDERAL GRANT FUNDS DOES NOT APPEAR FROM THE RECORD TO HAVE BEEN RESULT OF PREJUDICE AND THEREFORE THERE IS NO BASIS FOR QUESTIONING AWARD.

TO ULTRASYSTEMS, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTERS OF OCTOBER 23 AND 28, 1969, AND OTHER CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONCERTED MANAGEMENT IMPROVEMENT PROJECT CONTRACT TO ANOTHER CONCERN, CRESAP, MCCORMICK AND PAGET, INCORPORATED (CRESAP) BY THE COMMITTEE FOR ECONOMIC OPPORTUNITY (CEO), TUCSON, ARIZONA.

CEO IS A PRIVATE NONPROFIT CORPORATION ORGANIZED UNDER THE LAWS OF ARIZONA AND RECOGNIZED BY THE OFFICE OF ECONOMIC OPPORTUNITY (OEO), AS A COMMUNITY ACTION AGENCY (CAA) UNDER SECTION 210 OF THE ECONOMIC OPPORTUNITY ACT OF 1964, AS AMENDED, 42 U.S.C. 2790. OEO HAS MADE A NUMBER OF GRANTS TO CEO UNDER TITLE II OF THE ECONOMIC OPPORTUNITY ACT OF 1964, AS AMENDED, 42 U.S.C. 2781 ET SEQ. ONE OF THESE, GRANT NO. 7201, JUNE 28, 1969, IN THE AMOUNT OF $55,000 WAS MADE UNDER THE CONCERTED MANAGEMENT IMPROVEMENT PROGRAM (CMIP), AND COVERED THE COST OF OBTAINING MANAGEMENT IMPROVEMENT CONSULTANT SERVICES. THE GRANT WAS MADE PURSUANT TO OEO'S AUTHORITY TO PROVIDE SPECIFIED TECHNICAL ASSISTANCE AND TRAINING DIRECTLY OR THROUGH GRANTS OR OTHER ARRANGEMENTS.

SPECIAL CONDITION NO. 8 OF GRANT NO. 7201, PROVIDES THAT WITHIN 75 DAYS OF RECEIPT OF THE GRANT, THE CAA SHOULD SELECT A CONSULTING FIRM; OBTAIN THE WRITTEN CONCURRENCE OF THE OEO REGIONAL OFFICE; AND DECIDE UPON AN OPERATIONAL SCHEDULE OR OBTAIN A TIME EXTENSION FOR MEETING THIS REQUIREMENT FROM THE OEO REGIONAL OFFICE. WITH RESPECT TO THE SELECTION OF THE CMIP CONTRACTOR, OEO'S BOOKLET "HOW TO GET THE BEST RESULTS FROM YOUR CMIP CONSULTANT" WAS AVAILABLE TO CEO. IT IS OEO'S POSITION THAT THERE ARE NO MANDATORY CRITERIA FOR SELECTION OF A CMIP CONTRACTOR.

OEO ADVISES IT HAS BEEN INFORMED THAT CEO ISSUED A REQUEST FOR PROPOSALS TO TEN CONCERNS; THAT BEFORE OCTOBER 9, 1969, SEVEN OF THOSE CONCERNS HAD SUBMITTED PROPOSALS AND BY OCTOBER 9, THREE OF THE SEVEN CONCERNS HAD BEEN ELIMINATED FROM FURTHER CONSIDERATION BY CEO.

THE MINUTES OF THE CMIP STEERING COMMITTEE DATED OCTOBER 9, 1969, INDICATE THAT FOUR FIRMS INCLUDING ULTRASYSTEMS AND CRESAP WERE INTERVIEWED WITH EACH FIRM BEING GIVEN APPROXIMATELY 45 MINUTES TO ONE HOUR. THE CMIP STEERING COMMITTEE VOTED TO SELECT ULTRASYSTEMS AS THE FIRM TO BE RECOMMENDED TO THE CEO BOARD OF DIRECTORS FOR APPROVAL AS THE CMIP CONSULTANT.

BY LETTER DATED OCTOBER 10, 1969, THE ASSISTANT REGIONAL ADMINISTRATOR FOR PROGRAM MANAGEMENT AND REVIEW OF OEO ADVISED THE CHAIRMAN OF CEO THAT ULTRASYSTEMS WAS NOT A MANAGEMENT CONSULTING FIRM AND THAT WHILE YOUR CONCERN HAD DONE WORK IN THE PROGRAM AREA, THERE WAS NO EVIDENCE FOUND IN THE PROPOSAL OR ELICITED DURING THE INTERVIEW THAT THE FIRM HAD PERFORMED ANY GENERAL MANAGEMENT CONSULTING PROJECTS. THE DECISION OF THE BOARD OF DIRECTORS OF CEO TO AWARD THE CMIP CONTRACT TO CRESAP WAS MADE ON OCTOBER 15, 1969, AND CONCURRED IN BY THE OEO REGIONAL OFFICE ON OCTOBER 16.

WE ARE ADVISED THAT A STUDY OF ULTRASYSTEMS PROPOSAL ENTITLED "ANALYSIS OF THE CMIP PROPOSAL PRESENTED TO THE TUCSON, ARIZONA, CAA BY ULTRASYSTEMS, INCORPORATED.", DATED SEPTEMBER 15, 1969, WAS PREPARED BY THE SAME CONSULTANTS WHICH PREPARED THE ANALYSES OF THE OTHER PROPOSALS SUBMITTED FOR THE CMIP CONTRACT. IT IS STATED IN THE ANALYSIS THAT A THOROUGH REVIEW OF ULTRASYSTEMS' PROPOSAL INDICATED THAT THERE WERE THREE BASIC SHORTCOMINGS WHICH CAST SERIOUS DOUBTS ON THE VALUE OF YOUR SERVICES TO THE TUCSON CAA IF A CONTRACT WERE AWARDED TO YOUR CONCERN. THE ANALYSIS FIRST SUMMARIZES THE AREAS OF WEAKNESS CONNECTED WITH YOUR PROPOSAL AND THEN ELABORATES ON THE DETAILS OF EACH OF THE WEAKNESSES.

IT IS URGED IN YOUR PROTEST THAT OEO'S ASSISTANT REGIONAL ADMINISTRATOR COERCED THE CMIP'S STEERING COMMITTEE AND CEO INTO REJECTING THE ULTRASYSTEMS PROPOSAL AND THAT THIS ASSISTANT MANAGER ACTED WITH UNDUE BIAS AND PREJUDICE AGAINST ULTRASYSTEMS. OEO'S REPORT STATES AS FOLLOWS WITH REGARD TO THESE CONTENTIONS:

"THE ALLEGED COERCION BY MR. EHRLICH (ASSISTANT REGIONAL MANAGER FOR PROGRAM MANAGEMENT AND REVIEW OF OEO) IS STATED TO HAVE CONSISTED OF HIS STATING TO CEO THAT HIS OFFICE WOULD NOT PERMIT AWARD OF THE CONTRACT TO ULTRASYSTEMS, INC. THE FACT IS, AS WE ARE INFORMED BY MR. EHRLICH, THAT HE WAS OF THE OPINION THAT AWARD OF THE CONTRACT TO ULTRASYSTEMS, INC. WOULD NOT BE CONSISTENT WITH THE TERMS OF THE GRANT WITH RESPECT TO THE REQUIRED QUALIFICATION OF THE CMIP CONTRACTOR, AND HE SO INFORMED THE CEO BOARD OF DIRECTORS BY LETTER TO ITS CHAIRMAN, PAUL LAOS, JR., DATED OCTOBER 10, 1969, A COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT 5. WE BELIEVE THAT MR. EHRLICH'S OPINION WAS AMPLY SUPPORTED BY THE FACTS. HIS EXPRESSION OF THAT OPINION AND HIS SUGGESTION THAT ULTRASYSTEMS, INC. BE ELIMINATED FROM CONSIDERATION FOR THAT REASON, EVEN IF CONSTRUED AS A STATEMENT THAT HIS OFFICE WOULD NOT PERMIT AWARD OF THE CONTRACT TO ULTRASYSTEMS, INC., DID NOT CONSTITUTE COERCION. SINCE THE GRANT TERMS REQUIRED OEO REGIONAL OFFICE CONCURRENCE IN A CONTRACT AWARD, THEY PLAINLY CONTEMPLATED THAT THE REGIONAL OFFICE MIGHT REFUSE TO PERMIT THE AWARD TO A CONCERN DEEMED NOT TO MEET THE INTENT OF THE GRANT. IF SUCH A REFUSAL WERE HELD TO BE COERCION IN ANY WRONGFUL SENSE, THE PURPOSE OF THE CONCURRENCE REQUIREMENT WOULD BE COMPLETELY DEFEATED. THIS WOULD BE SO NOT ONLY AS TO THE GRANT IN QUESTION BUT ALSO AS TO MANY OTHER OEO GRANTS EMPLOYING CONCURRENCE REQUIREMENTS TO ENSURE THE ECONOMICAL AND EFFECTIVE USE OF GRANT FUNDS AND THE PROPER FUNCTIONING OF GRANT ASSISTED PROJECTS. MOREOVER, EVEN ASSUMING THAT THE OPINION EXPRESSED BY MR. EHRLICH COULD HAVE HAD A COERCIVE EFFECT ON A BOARD OF DIRECTORS THAT WISHED TO CONTRACT WITH ULTRASYSTEMS, INC., IT SEEMS TO US THAT IF THAT HAD BEEN THE BOARD'S WISH IT LAY WITH THE BOARD TO REFER THE MATTER TO A HIGHER LEVEL OF AUTHORITY IN OEO THAN THAT OF MR. EHRLICH. SINCE THE BOARD DID NOT AVAIL ITSELF OF SUCH A REFERRAL, IT SEEMS CLEAR THAT ITS DECISION TO AWARD THE CONTRACT TO CRESAP WAS NOT COERCED."

THE REPORT FROM OEO GIVES THE FOLLOWING CHRONOLOGY OF EVENTS THAT LED UP TO THE AWARD TO CRESAP:

"FOLLOWING THE STEERING COMMITTEE MEETING, MR. EHRLICH SENT A LETTER TO ULTRASYSTEMS, INC. REQUESTING FURTHER INFORMATION RELEVANT TO THE SHORTCOMINGS NOTED IN EXHIBIT 7. (THE CONSULTANT'S ANALYSIS). COPIES OF MR. EHRLICH'S LETTER DATED OCTOBER 10, 1969 AND THE RESPONSE FROM ULTRASYSTEMS, INC. DATED OCTOBER 14, 1969 ARE ATTACHED HERETO AS EXHIBITS 8 AND 9. COPIES OF BOTH MR. EHRLICH'S LETTER AND THE RESPONSE WENT TO HECTOR MORALES, THE DEPUTY DIRECTOR AND CMIP COORDINATOR OF CEO.

"MR. EHRLICH, WE ARE INFORMED, RECEIVED A COPY OF THE OCTOBER 14 ULTRASYSTEMS, INC. RESPONSE (EXHIBIT 9) ON OCTOBER 15, THROUGHLY REVIEWED IT PRIOR TO THE BEGINNING OF THE CEO BOARD OF DIRECTORS MEETING ON THAT DAY AND FOUND THAT IT DID NOT PROVIDE ANY INFORMATION THAT HAD NOT BEEN PROVIDED IN THE PROPOSAL OR BY ULTRASYSTEMS, INC.'S PROPOSED PRINCIPAL CMIP CONSULTANT, FERNANDO OAXACA, AT THE OCTOBER 9 MEETING OF THE STEERING COMMITTEE. MR. EHRLICH HAS INFORMED US AS FOLLOWS:

'ALTHOUGH MR. STEVENS'S LETTER DATED OCTOBER 14, 1969, DID NOT REACH ME BEFORE I LEFT FOR TUCSON ON OCTOBER 15, 1969, I DID OBTAIN A COPY OF THE LETTER FROM MR. MORALES UPON MY ARRIVAL IN TUCSON, AND THOROUGHLY REVIEWED IT PRIOR TO THE BEGINNING OF THE BOARD MEETING. THE LETTER DID NOT PROVIDE ANY ADDITIONAL OR NEW INFORMATION THAT HAD NOT ALREADY BEEN PROVIDED IN THE PROPOSAL AND IN THE INTERVIEW WITH MR. FERNANDO OAXACA, AND DID NOT IN ANY WAY CHANGE MY JUDGEMENT AS TO THE LACK OF COMPETENCE OF THE FIRM, AS WELL AS THE PROPOSED ON-SITE CONSULTANT, TO PERFORM THE WORK. WHILE IT IS TRUE THAT I DISCUSSED WITH MR. WILLIAMS THE ACTION THAT I PROPOSED TO TAKE IN TUCSON PRIOR TO MY DEPARTURE, SUCH ACTION WAS TO BE TAKEN ONLY IF NO FURTHER INFORMATION WAS RECEIVED THAT WOULD CHANGE THE EVALUATION THAT BOTH I AND FRY CONSULTANTS HAD MADE RELATIVE TO COMPETENCE. SINCE MR. STEVENS' LETTER DID NOT PROVIDE ANY NEW RELEVANT INFORMATION, I ADVISED THE BOARD THAT NEITHER THE COMPANY NOR THE ON-SITE CONSULTANT WERE QUALIFIED TO PERFORM THE WORK UNDER THE CRITERIA SUGGESTED IN THE MANUAL "HOW TO GET THE BEST RESULTS FROM YOUR CMIP CONSULTANT.'"

THE RATHER RIGID PROCEDURES APPLICABLE TO THE FEDERAL GOVERNMENT'S FORMALLY ADVERTISED PROCUREMENTS DO NOT APPLY TO PROCUREMENTS IN WHICH THE FEDERAL GOVERNMENT PARTICIPATES MERELY AS GRANTOR OF FUNDS TO SUPPORT PROCUREMENTS EFFECTED BY LOCAL AGENCIES OR INSTITUTIONS. SEE B 168434, APRIL 1, 1970.

WHETHER YOUR CONCERN WAS QUALIFIED TO PERFORM THE CMIP CONTRACT IS PRIMARILY FOR THE DETERMINATION OF THE CONTRACTING OFFICIALS. THE MOST THAT CAN BE SAID IN THIS CASE IS THAT THERE WAS A DIFFERENCE OF OPINION REGARDING YOUR QUALIFICATIONS FOR A CMIP CONTRACT. PURSUANT TO OUR REVIEW OF THE RECORD, WE CANNOT FIND THAT THE DECISION TO AWARD A CONTRACT TO ANOTHER FIRM WAS THE RESULT OF BIAS OR PREJUDICE AGAINST YOUR CONCERN. THE CIRCUMSTANCES WE FIND NO BASIS FOR QUESTIONING THE AWARD MADE.

FOR THESE REASONS YOUR PROTEST IS DENIED.