B-169438, AUG. 19, 1970

B-169438, AUG. 19, 1970

BID PROTEST -- SPECIFICATION DEVIATIONS DENIAL OF PROTEST AGAINST REJECTION OF LOW QUOTATION FOR ELECTRONIC SYSTEMS FOR WARNER ROBINS AIR FORCE BASE. LOW OFFEROR WHO TOOK EXCEPTION TO THE SPECIFICATIONS BUT WHO WAS ADVISED THAT THE COST OF INVESTIGATING USE OF LOW BACKGROUND MATERIAL WOULD BE MORE THAN TOTAL COST OF SYSTEM AND THEREFORE, DETERMINATION NOT TO RELAX SPECIFICATIONS MUST BE UPHELD. INASMUCH AS THERE WAS ONLY ONE TECHNICALLY ACCEPTABLE PROPOSAL, AIR FORCE WAS NOT REQUIRED TO NEGOTIATE FURTHER.

TO CANBERRA INDUSTRIES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 25, 1970, WITH ENCLOSURES, PROTESTING THE REJECTION OF YOUR QUOTATION UNDER REQUEST FOR QUOTATIONS (RFQ) NO. F09603-70-Q-0579, ISSUED BY WARNER ROBINS AIR FORCE BASE, GEORGIA.

THE RFQ WAS ISSUED ON AUGUST 18, 1969, FOLLOWING THE ISSUANCE OF THE DETERMINATION AND FINDING DATED AUGUST 11, 1969, THAT THE CONTRACT COULD BE NEGOTIATED WITHOUT FORMAL ADVERTISING PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304(A)(2). THE RFQ, BEARING AN URGENT PRIORITY DESIGNATION, WAS AMENDED ON THREE OCCASIONS. THE FIRST EXTENDED THE CLOSING DATE TO SEPTEMBER 29; SECOND AND THIRD AMENDMENTS WERE MADE BY TELEGRAMS ON OCTOBER 6 AND 29 TO ALTER THE SPECIFICATIONS AND ESTABLISH CUTOFF DATES FOR RECEIPT OF RESPONSES. BOTH TELEGRAPH AMENDMENTS RENDERED THE SPECIFICATIONS SLIGHTLY LESS STRINGENT THAN ORIGINALLY.

QUOTATIONS WERE REQUESTED FOR THREE LINE ITEMS IDENTIFIED AS GELI) SYSTEMS, ITEMS 1 AND 2 OF WHICH ARE COMPRISED OF TWO SUBSYSTEMS. THE SPECIFIC ITEM UNDER PROTEST IS ITEM 2AA OF THE RFQ, DETECTOR SHIELDS, ELECTRONIC SUBSYSTEM FOR GAMMA RAY COUNTING FOR THE SYSTEM IN SUPPORT OF THE B/20 PROGRAM. FIRMS WERE REQUIRED TO SUBMIT TECHNICAL EVALUATION DATA IN SUFFICIENT DETAIL TO PERMIT THE AIR FORCE PROJECT ENGINEER TO DETERMINE WHETHER THE SYSTEMS OR SUBSYSTEMS PROPOSED MET THE RFQ SPECIFICATIONS. THE SYSTEM SPECIFICATIONS PROVIDED AT PAGE 11 THEREOF THE FOLLOWING:

"BACKGROUND. THE BACKGROUND OF THE TOTAL SYSTEM IS SPECIFIED. THIS SPECIFICATION MAY BE MET AT ANY GROUND LEVEL LOCATION IN THE UNITED STATES THAT THE CONTRACTOR CHOOSES (I.E., AT THE MANUFACTURER'S LABORATORY, IF DESIRED). THE SPECIFICATIONS ARE FOR THE MAXIMUM ALLOWABLE BACKGROUND CONTINUUM AT 600 KEV AND 200 KEV FOR THE SYSTEM OPERATING IN THE ANTI- COINCIDENCE MODE AND FOR THE SUM OF THE SYSTEM'S ANTI-COINCIDENCE COINCIDENCE MODES (SUM MODE). THE NUMBER OF COUNTS PER MINUTE PER KEV MUST BE LESS THAN:

MODE 600 KEV 200 KEV

ANTICOINCIDENCE 0.0029 0.0165

SUM 0.012 0.088"

THE FOREGOING HAS REFERENCE TO EXTRANEOUS INPUT THAT INTERFERES WITH AND DEGRADES THE OUTPUT. IT IS ANALOGOUS TO BACKGROUND NOISE IN RADIO RECEPTION. THOSE FIRMS SUBMITTING QUOTES ON ITEM 2AA, WITH INITIAL AND REVISED QUOTES AFTER AMENDMENT CHANGES, WERE AS FOLLOWS:

OFFEROR BASIC QUOTE REVISED

CANBERRA INDUSTRIES $27,200 NO CHANGE

ORTEC, INC.10,800 - - -

TENNELEC, INC.*56,600 $37,760

NUCLEAR DIODES, INC. 99,000 81,500**

* WITHDREW QUOTE DECEMBER 10, 1969.

** QUOTER INCREASED PRICE TO $83,000 DURING NEGOTIATION. YOUR PROPOSAL FOR ITEM 2AA INCLUDED THE FOLLOWING RESERVATIONS: "SYSTEM PERFORMANCE SPECIFICATIONS:

"BECAUSE OF THE RISK INVOLVED IN MAKING A GUARANTEE OF PERFORMANCE TO THE LIMITS SPECIFIED WE MUST TAKE EXCEPTIONS. THE SPECIFICATIONS THAT ARE GIVEN ARE REASONABLE PERFORMANCE TARGETS AND WE SHALL USE THE BEST MATERIALS AND DESIGN AT OUR DISPOSAL TO ENSURE THAT THESE SPECIFICATIONS ARE MET. ACCORDING TO THE LITERATURE, HOWEVER, THE BEST THAT HAS BEEN DONE WITH A SYSTEM OF THIS SORT FALL SHORT OF THE REQUIREMENTS IN P/C IMPROVEMENT AND IN BACKGROUND LEVELS.

* * * * * "BACKGROUND-

"THE BACKGROUND LEVELS THAT ARE SPECIFIED ARE A FACTOR OF THREE OR SO BETTER THAN THAT OBTAINED BY COOPER, ET AL. (REPORT BNWL-SA-1522) WITH A DETECTOR ONLY ONE THIRD AS LARGE. AS MENTIONED EARLIER, WE WILL DO EVERYTHING POSSIBLE TO MINIMIZE THE BACKGROUND, BUT WE CANNOT GUARANTEE SUCH LOW LEVELS."

UPON COMPLETION OF THE ENGINEERING EVALUATION OF YOUR PROPOSAL, THE CONTRACTING OFFICER SPECIFICALLY QUERIED THE AIR FORCE ENGINEERS AS TO THE POSSIBILITY OF RELAXING THE SPECIFICATIONS ON "BACKGROUND" AND ALSO "SHIELDING." HE WAS ADVISED THAT THESE TWO AREAS WERE EXTREMELY CRITICAL AND THAT THE SPECIFICATIONS WOULD HAVE TO BE MAINTAINED OTHERWISE THE SYSTEM WOULD NOT FULFILL THE END USE REQUIREMENT. IN VIEW OF THE FOREGOING, YOUR PROPOSAL WAS REJECTED AS UNACCEPTABLE DESPITE ITS MUCH LOWER PRICE. THE ITEM PROPOSED WAS AWARDED TO NUCLEAR DIODES, INC., ON JANUARY 20, 1970. IT IS REPORTED THAT THE CONTRACTOR IS AHEAD OF SCHEDULE AND IS PERFORMING SATISFACTORILY. YOUR PROTEST, IN EFFECT, THAT THE SPECIFICATION FOR BACKGROUND SHIELDING IS UNREALISTIC; THAT THE PURCHASING DEPARTMENT DOES NOT REALLY ANTICIPATE PURCHASE OF A SYSTEM THAT WORKS PERFECTLY; AND THAT YOU KNEW THE SYSTEM YOU PROPOSED WOULD NOT MEET SPECIFICATIONS, BUT THAT YOU FELT YOUR PRICE WOULD EFFECT CONSIDERABLE SAVINGS TO THE GOVERNMENT ALTHOUGH YOU STATE THAT THE PROCUREMENT OFFICIALS DID NOT APPEAR TO BE INTERESTED IN REDUCING COSTS. YOU STATE THAT THERE SHOULD HAVE BEEN A THOROUGH INVESTIGATION BY THE PROCUREMENT ACTIVITY TO DETERMINE THE REASON FOR THE PRICE DIFFERENCES BETWEEN OFFERS. HOWEVER, IT APPEARS FROM THE RECORD THAT THE PRICE DIFFERENCE REFLECTED BY NUCLEAR DIODES REPRESENTS ITS TECHNICAL UNDERSTANDING OF THE SPECIFICATIONS WHICH RESULTED IN ITS HIGHER OFFER THAT MET THE TECHNICAL REQUIREMENTS OF THE GOVERNMENT.

PARAGRAPH 3-805.1(A) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), ISSUED IN IMPLEMENTATION OF 10 U.S.C. 2304(G), REQUIRES THAT "AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS (INCLUDING TECHNICAL QUALITY WHERE TECHNICAL PROPOSALS ARE REQUESTED) CONSIDERED." "OTHER FACTORS" HAS BEEN HELD TO INCLUDE THE TECHNICAL ACCEPTABILITY OF PROPOSALS. 46 COMP. GEN. 606 (1967). IN OUR OPINION, A PROPOSAL MUST BE REGARDED AS BEING WITHIN A COMPETITIVE RANGE UNLESS IT IS SO TECHNICALLY DEFICIENT OR OUT OF LINE IN PRICE AS TO PRECLUDE FURTHER MEANINGFUL NEGOTIATIONS. 45 COMP. GEN. 417 (1966); 47 ID. 252 (1967). PARTICULARLY WITH RESPECT TO TECHNICAL CONSIDERATIONS, HOWEVER, WE RECOGNIZE A REASONABLE DEGREE OF ADMINISTRATIVE DISCRETION IS PERMISSIBLE IN DETERMINING WHETHER A PROPOSAL IS WITHIN THE COMPETITIVE RANGE. B-163024, AUGUST 27, 1968. HERE, THE ITEM PROPOSED BY YOU WAS REJECTED BECAUSE YOU TOOK DELIBERATE EXCEPTION TO THE SPECIFICATIONS. IT IS CONCEDED THAT THE SYSTEM IS COMPRISED OF STANDARD COMMERCIAL, OFF THE-SHELF TYPE ITEMS; HOWEVER, THE PROJECT ENGINEER ADVISED THAT THE COST ASSOCIATED WITH INVESTIGATION AND USAGE OF LOW BACKGROUND MATERIALS IN THE CRYOSTAT AND SHIELD ASSEMBLIES WOULD COST MORE THAN THE TOTAL COST OF THE SYSTEM COMPONENTS. BACKGROUND SPECIFICATIONS WERE CONSIDERED BY THE PROJECT ENGINEER TO BE LOWER THAN THE STATE OF THE ART.

YOUR PROTEST INDICATES THAT YOUR NORMAL PROCEDURE FOR QUOTING ON THIS TYPE OF EQUIPMENT IS TO TAKE EXCEPTION TO THE SPECIFICATIONS AND, IN THIS INSTANCE, YOU KNOWINGLY QUOTED A PRICE WITH A LOSS RISK OF APPROXIMATELY 25 PERCENT OF THE QUOTED PRICE. WHILE YOU IMPLY THAT THE PROCUREMENT ACTIVITY DOES NOT ANTICIPATE PURCHASE OF A SYSTEM THAT WORKS PROPERLY, WE ARE ADVISED THAT AN AWARD WAS MADE WITH THE ASSURANCE THAT SUCH A SYSTEM WOULD "WORK PROPERLY." YOU INDICATE FURTHER THAT HAD YOU NOT TAKEN EXCEPTION TO THE SPECIFICATIONS, YOU WOULD HAVE RISKED HAVING TO REPLACE ONE OR BOTH OF THE SHIELDS IF AT FIRST THE SYSTEM DID NOT MEET SPECIFICATIONS. SINCE BY YOUR OWN ADMISSION YOU KNEW THE SYSTEM YOU PROPOSED WOULD NOT MEET THE SPECIFICATIONS, IT IS REPORTED TO BE INCONCEIVABLE FROM A TECHNICAL STANDPOINT THAT REPLACING SHIELDS WOULD HAVE CORRECTED THE SPECIFICATION DEFICIENCY, UNLESS YOU INTENDED TO ADVANCE THE STATE OF THE ART WITH EACH SHIELD REPLACED UNTIL A SATISFACTORY SHIELD WAS DEVELOPED. IN THIS EVENT, YOU WOULD HAVE BEEN RISKING MONETARY LOSS TO MEET THE SPECIFICATION, OR, IN THE EVENT OF POSSIBLE DEFAULT FOR NONDELIVERY OF A SATISFACTORY SYSTEM, YOU WOULD HAVE BEEN LIABLE FOR ADDITIONAL REPROCUREMENT COSTS.

CONCERNING THE NATURE AND EXTENT OF NEGOTIATIONS TO BE CONDUCTED WITH PROSPECTIVE CONTRACTORS AND THE DETERMINATION AS TO WHETHER INDIVIDUAL PROPOSALS ARE OR ARE NOT WITHIN A COMPETITIVE RANGE AND THEREFORE ENTITLED TO NEGOTIATION OPPORTUNITY, THE FOLLOWING PERTINENT STATEMENT IS MADE IN 48 COMP. GEN. 314 (1968):

"WITH REGARD TO THE NATURE AND EXTENT OF NEGOTIATIONS TO BE CONDUCTED WITH OFFERORS, ASPR 3-805.1, IN IMPLEMENTATION OF 10 U.S.C. 2304(G) REQUIRES THAT 'WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED.' ALSO, ASPR 3-805.1(A)(V), REQUIRES THAT 'IN ANY CASE WHERE THERE IS UNCERTAINTY AS TO THE PRICING OR TECHNICAL ASPECTS OF ANY PROPOSAL, THE CONTRACTING OFFICER SHALL NOT MAKE AWARD WITHOUT FURTHER EXPLORATION AND DISCUSSION PRIOR TO AWARD.' WHILE OUR OFFICE HAS HELD THAT A PROPOSAL MUST BE CONSIDERED TO BE WITHIN A COMPETITIVE RANGE SO AS TO REQUIRE NEGOTIATIONS UNLESS IT IS SO TECHNICALLY INFERIOR OR OUT OF LINE WITH REGARD TO PRICE THAT MEANINGFUL NEGOTIATIONS ARE PRECLUDED, WE HAVE ALSO RECOGNIZED THAT THE DETERMINATION OF COMPETITIVE RANGE, PARTICULARLY AS REGARDS TECHNICAL CONSIDERATIONS, IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION WHICH WILL NOT BE DISTURBED IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION WAS AN ARBITRARY ABUSE OF DISCRETION. SEE B-164313 DATED JUNLY 5, 1968.

"THERE IS VEHEMENT DISAGREEMENT ON THE PART OF THE PROTESTANTS WITH REGARD TO THE TECHNICAL CONCLUSIONS REACHED BY THE EVALUATION TEAM. HOWEVER, IN VIEW OF THE TECHNICAL NATURE OF THE DETERMINATIONS, OUR LACK OF EXPERTISE IN THIS AREA AND THE WIDE RANGE OF DISCRETION VESTED IN THE CONTRACTING OFFICIALS, WE CANNOT CONCLUDE THAT THE DETERMINATION THAT ONLY ONE PROPOSAL WAS ACCEPTABLE CONSTITUTED A CLEAR ABUSE OF DISCRETION."

WE BELIEVE THAT THE ABOVE REASONING APPLIES EQUALLY HERE. WHILE YOU CONTEND THAT THE PRICE RANGE OF THE PROPOSALS SHOULD HAVE REQUIRED FURTHER AIR FORCE INVESTIGATION AS TO WHAT WAS INVOLVED, YOU DID TAKE OUTRIGHT EXCEPTION TO THE SPECIFICATIONS GIVING RISE TO THE REASONABLE IMPRESSION THAT YOU WOULD NOT TRY TO MEET THE SPECIFICATIONS BUT WOULD EXPECT THE GOVERNMENT TO NEGOTIATE FURTHER, IF AT ALL, ON YOUR TERMS. HAVING ONLY ONE TECHNICALLY ACCEPTABLE PROPOSAL AND FACED WITH AN URGENT NEED FOR THE ITEM, THE AIR FORCE WAS NOT REQUIRED TO NEGOTIATE FURTHER WITH UNACCEPTABLE OFFERORS.

THE CONDUCT OF NEGOTIATIONS IS SET FORTH IN ASPR 3-804 WHICH PROVIDES THAT:

"EVALUATION OF OFFERORS' OR CONTRACTORS' PROPOSALS INCLUDING PRICE REVISION PROPOSALS, BY ALL PERSONNEL CONCERNED, WITH THE PROCUREMENT, AS WELL AS SUBSEQUENT NEGOTIATIONS WITH THE OFFEROR OR CONTRACTOR, SHALL BE COMPLETED EXPEDITIOUSLY. COMPLETE AGREEMENT OF THE PARTIES ON ALL BASIC ISSUES SHALL BE THE OBJECTIVE OF THE CONTRACT NEGOTIATIONS. ORAL DISCUSSIONS OR WRITTEN COMMUNICATIONS SHALL BE CONDUCTED WITH OFFERORS TO THE EXTENT NECESSARY TO RESOLVE UNCERTAINTIES RELATING TO THE PURCHASE OR THE PRICE TO BE PAID. BASIC QUESTIONS SHOULD NOT BE LEFT FOR LATER AGREEMENT DURING PRICE REVISIONS OR OTHER SUPPLEMENTAL PROCEEDINGS. COST AND PROFIT FIGURES OF ONE OFFEROR OR CONTRACTOR SHALL NOT BE REVEALED TO OTHER OFFERORS OR CONTRACTORS."

WHILE YOU MAY HAVE BEEN ENTITLED TO SOME OPPORTUNITY TO DISCUSS THE TECHNICAL ASPECTS OF THE RFQ PRIOR TO SUBMISSION OF YOUR PROPOSAL, IT WAS NOT INCUMBENT UPON THE CONTRACTING AGENCY TO INITIATE SUCH A DISCUSSION EXCEPT AT THE REQUEST OF THE PROSPECTIVE OFFEROR. THE ADMINISTRATIVE REPORT DENIES THAT YOU REQUESTED SUCH A DISCUSSION. IN VIEW OF THE DETERMINATION THAT YOUR PROPOSAL WAS SO TECHNICALLY INFERIOR AS TO PRECLUDE ANY POSSIBILITY OF MEANINGFUL NEGOTIATION, AND SINCE WE ARE NOT IN A POSITION TO QUESTION THE TECHNICAL ASPECTS OF THIS DETERMINATION, WE CANNOT CONCLUDE THAT THE DETERMINATION CONSTITUTED AN ABUSE OF DISCRETION, ESPECIALLY SINCE ALL PROPOSALS APPEAR TO HAVE BEEN EVALUATED ON THE SAME CRITERIA. SEE B-166052, MAY 20, 1969.

YOUR PROTEST IS THEREFORE DENIED.