B-170261, SEP 24, 1970, 50 COMP GEN 215

B-170261, SEP 24, 1970, 50 COMP GEN 215

CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - DISTRIBUTION LIMITATION THE FACT THAT THE PROPOSAL TIMELY SUBMITTED BY A FIRM IN RESPONSE TO A NOTICE OF THE PROCUREMENT IN THE COMMERCE BUSINESS DAILY HAD NOT BEEN OBTAINED FROM THE PROCURING AGENCY DOES NOT JUSTIFY THE REFUSAL TO CONSIDER THE OFFER ON THE BASIS OF UNFAIRNESS TO THE FIRMS WHO HAD ACQUIRED A REQUEST FOR PROPOSALS (RFP) FROM THE LIMITED NUMBER MADE AVAILABLE ON A "FIRST RECEIVED, FIRST SERVED" BASIS BUT WERE NOT PERMITTED TO COMPETE BECAUSE OF THE BELIEF SUFFICIENT COMPETITION HAD BEEN SECURED FROM THE FIRMS SELECTED TO RECEIVE AN RFP, AND UNFAIRNESS TO THOSE FIRMS UNABLE TO OBTAIN THE RFP. ALTHOUGH A PURCHASING AGENCY MAY LIMIT THE NUMBER OF PROSPECTIVE CONTRACTORS SOLICITED, THIS AUTHORITY IS NOT JUSTIFICATION FOR NOT CONSIDERING THE UNSOLICITED OFFER AND FOR FAILING TO OBTAIN MAXIMUM COMPETITION. THEREFORE, THE PROPOSAL REFUSED MAY BE RESUBMITTED AND ALL OFFERORS WHO HAD SUBMITTED PROPOSALS AFFORDED AN OPPORTUNITY TO REVISE THEIR PROPOSALS.

TO THE SECRETARY OF THE ARMY, SEPTEMBER 24, 1970:

REFERENCE IS MADE TO A LETTER DATED AUGUST 24, 1970, WITH ENCLOSURES, FROM THE DEPUTY FOR PROCUREMENT, OFFICE OF THE ASSISTANT SECRETARY, REPORTING ON THE PROTEST OF INTERAX, INC., UNDER REQUEST FOR PROPOSALS (RFP) NO. DADA17-70-R-9005, ISSUED BY THE U.S. ARMY MEDICAL RESEARCH AND DEVELOPMENT COMMAND, WASHINGTON, D.C. THE ATTORNEYS FOR THE PROTESTANT CONTEND THAT THE CONTRACTING OFFICER HAS IMPROPERLY REFUSED TO CONSIDER THE PROPOSAL SUBMITTED BY INTERAX UNDER THAT RFP.

THE CONTRACTING OFFICER STATES THAT ON JANUARY 29, 1970, SYSTEMS ANALYSIS PERSONNEL SUBMITTED TO HIM THE NAMES OF SEVEN FIRMS WHICH THEY HAD SELECTED FOR RECEIPT OF THE RFP ON THE BASIS OF THEIR KNOWN TECHNICAL CAPABILITY AND COMPETENCE. AFTER EVALUATING THE NATURE OF THE PROPOSED PROCUREMENT, THE DOLLAR AMOUNT INVOLVED, THE NEED FOR ADEQUATE COMPETITION, AND THE AMOUNT OF TIME REQUIRED OF THE SOURCE SELECTION BOARD TO EVALUATE EACH PROPOSAL RECEIVED, THE CONTRACTING OFFICER STATES THAT HE DECIDED, IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 -1002.1, TO LIMIT THE NUMBER OF SOLICITATIONS TO 50 COPIES. WE ARE ADVISED THAT 53 COPIES WERE ACTUALLY PREPARED.

THE APRIL 9, 1970, ISSUE OF THE COMMERCE BUSINESS DAILY CONTAINED A SYNOPSIS OF THE RFP ENTITLED "A STUDY TO DEVELOP DATA AUTOMATION REQUIREMENTS." THE SYNOPSIS INDICATED THAT THE RFP WAS TO BE ISSUED ON APRIL 15, 1970, AND THAT A PREPROPOSAL CONFERENCE WOULD BE HELD ON MAY 8, 1970, AND THAT OFFERS WERE DUE ON JUNE 8, 1970. THE SYNOPSIS MADE REFERENCE TO NOTE 24 OF THE NUMBERED NOTE SYSTEM, WHICH EXPLAINED THAT THE RFP'S WERE AVAILABLE IN A LIMITED NUMBER AND WOULD BE FURNISHED TO THE REQUESTER ON A "FIRST RECEIVED, FIRST SERVED" BASIS.

A TOTAL OF 198 PROSPECTIVE CONTRACTORS RESPONDED TO THE NOTICE IN THE COMMERCE BUSINESS DAILY. MANY OF THESE FIRMS SUBSEQUENTLY INDICATED THAT THEY WERE NOT INTERESTED IN SUBMITTING A PROPOSAL. WE ARE ADVISED THAT BY APRIL 14, 1970, THE ENTIRE AVAILABLE SUPPLY OF 53 RFP'S HAD BEEN EXHAUSTED. SEVEN OF THESE WERE SENT TO THE FIRMS ORIGINALLY SELECTED BY SYSTEMS ANALYSIS PERSONNEL, AND THE REMAINING 46 WERE DISTRIBUTED ON A "FIRST RECEIVED, FIRST SERVED" BASIS. AFTER THE SUPPLY OF RFP'S HAD BEEN EXHAUSTED, THE CONTRACTING OFFICER ADVISED 45 REQUESTERS OF THIS FACT. ARE ADVISED THAT INTERAX WAS NOT AMONG THE 45 REQUESTERS WHO WERE UNABLE TO OBTAIN A COPY OF THE RFP.

ON MAY 8, 1970, THE PREPROPOSAL CONFERENCE WAS HELD AS SCHEDULED. MR. SMITH OF INTERAX APPEARED AT THIS CONFERENCE. THE CONTRACTING OFFICER STATES THAT THIS WAS THE FIRST INDICATION HE HAD THAT INTERAX WAS INTERESTED IN THE RFP. AFTER CONSULTATION WITH LEGAL COUNSEL, THE CONTRACTING OFFICER ADVISED MR. SMITH THAT INTERAX WAS NOT AMONG THOSE FIRMS SOLICITED, AND THAT ANY PROPOSAL SUBMITTED BY THEM WOULD NOT BE CONSIDERED TO HAVE BEEN IN RESPONSE TO THE RFP.

THEREAFTER, SEVEN PROPOSALS WERE RECEIVED AND ACCEPTED FOR EVALUATION ON JUNE 8, 1970. THE CONTRACTING OFFICER DETERMINED THAT THIS WAS A SUFFICIENT NUMBER OF PROPOSALS TO INSURE THAT THE PROCUREMENT WOULD BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT. HOWEVER, ON THAT SAME DAY, MR. SMITH OF INTERAX TIMELY TENDERED COPIES OF HIS FIRM'S PROPOSAL IN RESPONSE TO THE RFP TO THE CONTRACTING OFFICER. THE CONTRACTING OFFICER STATES THAT HE ADVISED MR. SMITH THAT IT WOULD BE IMPROPER FOR HIM TO ACCEPT INTERAX'S PROPOSAL AND THAT TO DO SO WOULD BE UNFAIR TO THE 45 OTHER PROSPECTIVE CONTRACTORS WHO HAD RELIED IN GOOD FAITH UPON THE CONTRACTING OFFICER'S STATEMENT THAT ADDITIONAL PROPOSALS WOULD NOT BE ACCEPTED. WE UNDERSTAND THAT INTERAX OBTAINED A COPY OF THE RFP FROM THE COMPUTER PLANNING CORPORATION WHICH HAD RECEIVED A COPY OF THE RFP BUT DECLINED TO SUBMIT A PROPOSAL. THE CONTRACTING OFFICER ACCEPTED CUSTODY OF THE INTERAX PROPOSAL SUBJECT TO A DETERMINATION BY LEGAL COUNSEL AS TO WHETHER HE MIGHT BE OBLIGATED TO ACCEPT IT.

THE RECORD INDICATES THAT ON JUNE 18, 1970, LEGAL COUNSEL CONCLUDED THAT "THE POLICY CONSIDERATIONS STRONGLY FAVOR NOT EVALUATING THE PROPOSAL FROM INTERAX, AND UNLESS YOU INDEPENDENTLY DETERMINE THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO EVALUATE IT, I RECOMMEND THAT IT NOT BE EVALUATED." BASED ON THIS ADVICE, THE CONTRACTING OFFICER BY LETTER OF JUNE 22, 1970, RETURNED INTERAX'S PROPOSAL WITH THE ADVICE THAT IT COULD NOT BE "ACCEPTED FOR EVALUATION." THIS LETTER STATED IN PERTINENT PART AS FOLLOWS:

THE ESSENCE OF YOUR POSITION IS THAT OUR ACCEPTANCE OF YOUR PROPOSAL (IT BEING IN RESPONSE TO ONE OF THE FIFTY REQUESTS FOR PROPOSALS) WILL NOT BE A VIOLATION OF THE DISTRIBUTION LIMIT ESTABLISHED BY THIS OFFICE.

FEDERAL STATUTES ALLOW FOR THE LIMITED DISTRIBUTION OF RFP'S. THE PURPOSE IS, OF COURSE, TO LIMIT THE NUMBER OF FIRMS APPROACHED. THE INTENT IS NOT THAT THE FIFTY COPIES (AS IN THIS CASE) BE PASSED FROM HAND TO HAND UNTIL FIFTY INTERESTED FIRMS ARE FOUND. THE NUMBER OF RFP'S DETERMINED PROPER AND SUFFICIENT FOR A PARTICULAR COMPETITIVE PROCUREMENT ASSUMES THAT SOME FIRMS WILL RESPOND AND SOME WILL NOT. MAINTAINING THE LIMITED NUMBER OF RFP'S IS NOT A GOAL IN ITSELF BUT SERVES AS A MEANS OF LIMITING THE NUMBER OF FIRMS SOLICITED, AT THE SAME TIME ALLOWING AMPLE COMPETITION. ACCEPT YOUR PROPOSAL MERELY BECAUSE YOU HAVE OBTAINED ONE OF THE RFP'S WOULD BE TO LOSE SIGHT OF THE INTENDED EFFECT OF THE STATUTES. ALSO, IT WOULD NOT BE FAIR TO OTHER INTERESTED PROSPECTIVE CONTRACTORS WHO COULD NOT RECEIVE COPIES OF THE RFP DUE TO LIMITED DISTRIBUTION.

I HAVE ENCLOSED ALL THE COPIES OF YOUR FIRM'S PROPOSAL WHICH MR. SMITH DELIVERED TO US.

BY LETTER DATED JULY 8, 1970, THE ATTORNEYS FOR INTERAX PROTESTED THE REFUSAL OF THE CONTRACTING OFFICER TO CONSIDER ITS PROPOSAL. THIS LETTER STATES IN PART AS FOLLOWS:

RFP DADA17-R-9005 WAS SENT TO A LIMITED NUMBER OF POTENTIAL CONTRACTORS. INTERAX, INC. DID NOT RECEIVE A COPY OF THE RFP. INTERAX, INC. NOTED THE SOLICITATION IN THE "COMMERCE BUSINESS DAILY" AND REQUESTED A COPY OF THE RFP. THIS REQUEST WAS DENIED ALLEGEDLY BECAUSE NO COPIES WERE AVAILABLE AT THE TIME THE PURCHASING AND CONTRACT OFFICE RECEIVED THE REQUEST BY INTERAX, INC. INTERAX, INC., HOWEVER, OBTAINED A COPY OF THE RFP FROM COMPUTER PLANNING CORPORATION WHICH RECEIVED A COPY DIRECTLY FROM THE ARMY BUT DID NOT INTEND TO BID. INTERAX, INC. RESPONDED TO THE RFP AND SUBMITTED ITS PROPOSAL TO THE PROPER OFFICE BEFORE THE CLOSE OF BUSINESS ON THE DATE SET IN THE RFP FOR RECEIPT OF PROPOSALS. ***

THE ISSUE FOR OUR DETERMINATION IS WHETHER THE PROPOSAL TIMELY SUBMITTED BY INTERAX IN RESPONSE TO THE RFP MUST BE ACCEPTED AND EVALUATED. THE JUDGE ADVOCATE, U.S. ARMY MEDICAL RESEARCH AND DEVELOPMENT COMMAND, IN A MEMORANDUM DATED AUGUST 17, 1970, STATES THAT THE CONTRACTING OFFICER IS NOT REQUIRED TO ACCOUNT AND EVALUATE THE PROPOSAL OF INTERAX. THE POSITION OF THE JUDGE ADVOCATE AS SUMMARIZED IN THE ABOVE-CITED MEMORANDUM IS AS FOLLOWS:

9. IN SUMMARY THEN, IT IS MY OPINION THAT:

"A) NEITHER THE STATUTES, REGULATIONS, OR ANY OTHER AUTHORITIES SPECIFICALLY REQUIRE THE CONTRACTING OFFICER TO ACCEPT AND EVALUATE ALL PROPOSALS, WHERE, AS HERE, THE ADMINISTRATIVE COSTS OF SOURCE SELECTION BOARD EVALUATION COULD EXCEED THE TOTAL ESTIMATED AMOUNT OF THE PROCUREMENT.

"B) SINCE THE CONTRACTING OFFICER DID NOT 'SOLICIT' A PROPOSAL FROM INTERAX BUT, ON THE CONTRARY, CLEARLY TOLD THEM, WELL IN ADVANCE, THAT THEIR PROPOSAL WOULD NOT BE ACCEPTED, THERE WAS NEITHER EXPRESS NOR IMPLIED PROMISE TO ACCEPT AND EVALUATE UNDER THE RULE OF HEYER PRODUCTS, SUPRA (177 F. SUPP. 25D (1959)).

"C) SINCE THERE WAS NO REGULATORY REQUIREMENT TO EVALUATE AND SINCE NO SUCH REQUIREMENTS AROSE DUE TO SOLICITATION, THE DECISION WAS ONE WHICH WAS PROPERLY WITHIN THE DISCRETION OF THE CONTRACTING OFFICER.

"D) UNDER THE FACTS OF THE INSTANT CASE WHEREIN 1) INTERAX HAD BEEN TOLD, AS HAD ALL OTHER INTERESTED FIRMS, THAT PROPOSALS WOULD BE ACCEPTED ONLY FROM THOSE FIRST 53 FIRMS SOLICITED; 2) INTERAX WAS TOLD THAT THEY COULD SUBMIT A PROPOSAL THROUGH, OR IN AFFILIATION WITH, COMPUTER PLANNING CORPORATION, AND THAT IN SUCH CASE THEIR PROPOSAL WOULD BE ACCEPTED AND EVALUATED; 3) THE CONTRACTING OFFICER DETERMINED THAT THE SEVEN PROPOSALS RECEIVED AND EVALUATED WERE SUFFICIENT, CONSIDERING THE NATURE AND DOLLAR VALUE OF THIS PROCUREMENT, TO INSURE ADEQUATE COMPETITION AS REQUIRED BY LAW; THAT THE CONTRACTING OFFICER DID NOT ABUSE HIS DISCRETION BY REFUSING TO ACCEPT AND EVALUATE THE PROPOSAL SUBMITTED BY INTERAX."

THE JUDGE ADVOCATE CONTENDS THAT IT WOULD NOT BE VIOLATIVE OF THE SPIRIT OF FULL COMPETITION TO REFUSE TO CONSIDER INTERAX'S PROPOSAL AND THAT THE TEST SHOULD BE WHETHER, AS IN OUR DECISION B-152001, JANUARY 10, 1964, THERE HAS BEEN SUFFICIENT COMPETITION TO SHOW THAT THE PROCUREMENT WAS REASONABLE AND NONDISCRIMINATORY. IN THE CITED DECISION, WE HELD THAT THE SOLICITATION OF 13 SOURCES WAS SUFFICIENT TO HAVE MET THE REQUIREMENTS OF ASPR 3-102(C) EVEN THOUGH THERE WERE OTHER QUALIFIED SOURCES AVAILABLE. HOWEVER, THAT DECISION DID NOT DEAL WITH THE REFUSAL OF A CONTRACTING AGENCY TO CONSIDER A PROPOSAL WHICH WAS TIMELY SUBMITTED BY A FIRM WHICH WAS NOT SOLICITED. THE QUESTION INVOLVED HERE IS NOT WHETHER A PROCURING AGENCY MAY LIMIT DISTRIBUTION OF RFP'S BUT WHETHER A PROCURING AGENCY CAN REFUSE TO CONSIDER A PROPOSAL WHICH WAS TIMELY SUBMITTED ON THE BASIS THAT IT WOULD BE UNFAIR TO OTHER INTERESTED FIRMS WHO WERE DENIED COPIES OF THE RFP AND HENCE AN OPPORTUNITY TO COMPETE.

THE CONTRACTING OFFICER IS OF THE OPINION THAT HE MAY LIMIT THE NUMBER OF PROPOSALS TO BE EVALUATED, PROVIDED THAT SUCH LIMITATION IS IN GOOD FAITH, WITHOUT ABUSE OF DISCRETION, AND TO THE END THAT THE PROCUREMENT WILL BE MADE TO THE BEST ADVANTAGE OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. HOWEVER, THE CONTRACTING OFFICER ALSO STATES THAT THIS APPEARS TO BE A QUESTION OF FIRST IMPRESSION AND THAT NO AUTHORITY CAN BE FOUND WHICH EITHER REQUIRES OR FORBIDS THE CONTRACTING OFFICER FROM ACCEPTING FOR EVALUATION A PROPOSAL RECEIVED FROM A FIRM OTHER THAN ONE TO WHOM AN RFP WAS FURNISHED.

INTERAX URGES THAT THERE IS AN OBLIGATION ON THE PART OF THE CONTRACTING OFFICER TO ACCEPT AND EVALUATE EACH AND EVERY PROPOSAL RECEIVED, WHETHER OR NOT IT HAD BEEN SOLICITED BY THE CONTRACTING OFFICER FOR PROPOSAL PURPOSES. INTERAX CONTENDS THAT THE CONTRACTING OFFICER HAS NO AUTHORITY TO REFUSE TO CONSIDER PROPOSALS SUBMITTED BY FIRMS OTHER THAN THOSE RECEIVING A COPY OF THE RFP DIRECTLY FROM THE ARMY. FURTHER, INTERAX STATES THAT THERE IS NO STATUTORY OR ASPR BAR TO USING AN RFP SENT INITIALLY TO ANOTHER SOURCE OR TO USING ONE OBTAINED PURSUANT TO THE FREEDOM OF INFORMATION ACT, 5 U.S.C. 552.

UPON REVIEW OF THE ENTIRE RECORD BEFORE US, IT IS OUR OPINION THAT THE PROPOSAL SUBMITTED BY INTERAX SHOULD HAVE BEEN ACCEPTED AND CONSIDERED FOR EVALUATION. THE FACT THAT ADEQUATE COMPETITION WOULD EXIST WITHOUT CONSIDERING INTERAX'S PROPOSAL WOULD NOT JUSTIFY THE PROCURING ACTIVITY'S REFUSAL TO ACCEPT THE TIMELY PROPOSAL SUBMITTED BY INTERAX. THE SPIRIT AND INTENT OF THE LAW REQUIRING MAXIMUM COMPETITION WOULD NOT BE SERVED UNLESS INTERAX'S PROPOSAL IS ACCEPTED AND CONSIDERED. SEE 10 U.S.C. SEC 2304(G); ASPR 1-300.1; 3-101; 3 102(C).

WE BELIEVE THAT THIS STATUTORY AND REGULATORY REQUIREMENT FOR MAXIMUM COMPETITION WOULD BE COMPROMISED IF INTERAX - THE EIGHTH OFFEROR - WOULD BE EXCLUDED FROM PARTICIPATING IN THE PROCUREMENT BECAUSE IT WAS EITHER NOT DIRECTLY SOLICITED OR NOT THE INITIAL RECIEPIENT OF A RFP. OF COURSE, THE REQUIREMENT FOR MAXIMUM COMPETITION CONSISTENT WITH THE NATURE OF THE PROCUREMENT DOES NOT REQUIRE THE PURCHASING ACTIVITY TO SOLICIT AN EXCESSIVE NUMBER OF PROSPECTIVE CONTRACTORS. SUCH A REQUIREMENT WOULD BE COSTLY AND BURDENSOME TO THE GOVERNMENT IN THE PREPARATION, DISTRIBUTION, AND EVALUATION OF THE PROPOSALS. WHERE THE NUMBER OF PROSPECTIVE CONTRACTORS IS EXCESSIVE, THE PURCHASING AGENCY MAY LIMIT THE NUMBER OF PROSPECTIVE CONTRACTORS SOLICITED PURSUANT TO ASPR 2-205; 3-503. HOWEVER, THE AUTHORITY TO LIMIT THE NUMBER OF PROSPECTIVE CONTRACTORS SOLICITED MAY NOT BE RELIED UPON TO DENY COMPETITIVE OPPORTUNITY TO AN UNSOLICITED OFFEROR. ALTHOUGH THE PURCHASING AGENCY IS PERMITTED TO LIMIT THE NUMBER OF PROSPECTIVE CONTRACTORS SOLICITED, THE PURPOSE OF SUCH LIMITATION IS TO RESTRICT THE GOVERNMENT'S ADMINISTRATIVE BURDEN AND TO MAKE IT UNNECESSARY TO SOLICIT ALL POTENTIAL SOURCES WHERE THE RESULTING COSTS WOULD BE INCONSISTENT WITH THE VALUE OF THE PROCUREMENT.

CONSIDERING THAT 53 COPIES OF THE RFP WERE DISTRIBUTED, IT WOULD SEEM TO FOLLOW THAT THE ACCEPTANCE AND CONSIDERATION OF 53 PROPOSALS SUBMITTED IN RESPONSE TO THE RFP WOULD HAVE BEEN REQUIRED EVEN UNDER THE ARGUMENTS ADVANCED BY THE JUDGE ADVOCATE. WE CANNOT SUBSCRIBE TO THE PROPOSITION ADVANCED THAT AN INVITATION TO COMPETE IS A PREREQUISITE TO THE GOVERNMENT'S OBLIGATION TO FAIRLY CONSIDER A PROPOSAL. RATHER, WE FEEL THAT THE LAW AND REGULATIONS, PROPERLY CONSTRUED, REQUIRE THAT ANY OFFER TIMELY AND PROPERLY SUBMITTED IN RESPONSE TO A NOTICE IN THE COMMERCE BUSINESS DAILY BE FAIRLY AND OBJECTIVELY CONSIDERED IN COMPETITION WITH OTHERS RECEIVED IN RESPONSE TO DIRECT SOLICITATIONS BY THE PROCURING AGENCY. NEITHER DO WE SEE THAT ANY "UNFAIRNESS" WOULD RESULT IN THE CASE OF THOSE FIRMS WHICH WERE UNABLE TO OBTAIN FOR THEIR OWN USE COPIES OF THE RFP IF INTERAX'S PROPOSAL IS ACCEPTED AND CONSIDERED. WE ATTRIBUTE THIS "UNFAIRNESS" TO THE 53-COPY LIMITATION IMPOSED BY THE PROCURING AGENCY AND NOT TO THE FACT THAT INTERAX OBTAINED A COPY OF THE RFP FROM A SOLICITED SOURCE. WE HAVE BEEN ADVISED THAT NO AWARD HAS BEEN MADE UNDER THE RFP. IN VIEW OF OUR CONCLUSION THAT INTERAX'S PROPOSAL SHOULD HAVE BEEN ACCEPTED AND CONSIDERED FOR EVALUATION, WE CONCUR IN THE DEPARTMENT'S RECOMMENDATION TO AUTHORIZE THE CONTRACTING OFFICER TO PERMIT INTERAX TO RESUBMIT ITS PROPOSAL FOR EVALUATION AND CONSIDERATION FOR AWARD. HOWEVER, IT WILL BE NECESSARY TO AFFORD ALL OFFERORS WHO SUBMITTED PROPOSALS AN OPPORTUNITY TO REVISE THEIR PROPOSALS. SEE 10 U.S.C. 2304(G) AND ASPR 3-805.