B-170731, JUL 21, 1971

BID PROTEST - NEGOTIATED CONTRACT - REVISING PROPOSAL DECISION DISALLOWING PROTEST OF DCI-DESIGN CONSULTANTS AGAINST THE NAVAL FACILITIES ENGINEERING COMMAND AWARD OF A NEGOTIATED FIXED-PRICE CONTRACT TO LEADERSHIP HOUSING SYSTEMS, INC. FOR THE DESIGN AND CONSTRUCTION OF 102 MILITARY HOUSING UNITS. ALTHOUGH IT IS AGREED THAT THE RFP SHOULD HAVE INDICATED THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA AND THAT THE CONTRACTING OFFICER SHOULD HAVE ALLOWED PROTESTANT AN OPPORTUNITY TO REVISE THEIR PROPOSAL, IT CANNOT BE CONCLUDED THAT CANCELLATION OF THE CONTRACT WOULD BE LEGALLY JUSTIFIED.

TO FLEETWOOD AND JOHNSON:

WE REFER TO YOUR LETTERS OF DECEMBER 9, 1970, JANUARY 7, AND MAY 18, 1971, PROTESTING ON BEHALF OF DCI-DESIGN CONSULTANTS AGAINST THE NAVAL FACILITIES ENGINEERING COMMAND (NAVFAC), WASHINGTON, D.C., AWARD OF A NEGOTIATED FIXED-PRICE CONTRACT ON JULY 24, 1970, TO LEADERSHIP HOUSING SYSTEMS, INC., FOR THE DESIGN AND CONSTRUCTION OF 102 MILITARY FAMILY HOUSING UNITS FOR THE MARINE CORPS BASE, CAMP PENDLETON, CALIFORNIA. NOTE THAT YOUR SUBMISSIONS SUPPLEMENT THE PROTEST OF PRODEVCO, INC., DCI'S CO-VENTURER IN RESPONDING TO REQUEST FOR PROPOSALS N62473-70-C 0029, FILED WITH OUR OFFICE BY LETTERS DATED AUGUST 31 AND OCTOBER 26, 1970.

IN RESPONSE TO THE ADMINISTRATIVE REPORT FURNISHED OUR OFFICE BY THE DEPUTY COMMANDER FOR FACILITIES ACQUISITION, NAVFAC, YOUR LETTER OF JANUARY 7, 1971, RAISES A NUMBER OF CONTENTIONS IN SUPPORT OF THE PROPOSITION THAT THE CONTRACT SHOULD BE CANCELED, OR, ALTERNATIVELY, THAT DCI AND PRODEVCO SHOULD BE AWARDED BID PREPARATION COSTS.

AT THE OUTSET, WE AGREE WITH YOUR CONTENTION THAT THE REQUEST FOR PROPOSALS SHOULD HAVE INDICATED THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA. SEE 50 COMP. GEN. 59 (1970) AND CASES CITED THEREIN. WE ARE DRAWING THIS MATTER TO THE ATTENTION OF THE SECRETARY OF THE NAVY FOR FUTURE CORRECTIVE ACTION.

WITH RESPECT TO THE ACTUAL EVALUATION OF PROPOSALS SUBMITTED IN RESPONSE TO THE REQUEST FOR PROPOSALS, THERE IS A FACTUAL DISPUTE AS TO WHAT EVALUATION FORMULA WAS USED. YOU STATE IN YOUR LETTER OF JANUARY 7, 1971, THAT A REPRESENTATIVE OF THE SAN DIEGO OFFICE OF NAVFAC INDICATED THAT A 60 PERCENT WEIGHT WAS ACCORDED DESIGN QUALITY AND PRICE WAS ASSIGNED A WEIGHT OF 40 PERCENT. WE HAVE INFORMALLY CONFIRMED WITH NAVFAC, WASHINGTON, WHICH APPROVED THE AWARD OF THE CONTRACT, THAT EVALUATION WAS CONDUCTED IN ACCORDANCE WITH THE GUIDANCE CONTAINED IN A MEMORANDUM DATED FEBRUARY 24, 1970, FROM THE DEPUTY ASSISTANT SECRETARY OF DEFENSE (INSTALLATIONS AND HOUSING), ENTITLED "ONE-STEP TURNKEY PROCEDURES FOR MILITARY FAMILY HOUSING PROJECTS." WITH RESPECT TO THE RELATIONSHIP BETWEEN DESIGN QUALITY AND PRICE, THE GUIDANCE PROVIDES AS FOLLOWS:

"COST - TECHNICAL EVALUATION TEAMS SHALL NOT CONSIDER COST. COST WILL BE EVALUATED AFTER INITIAL TECHNICAL EVALUATIONS HAVE BEEN COMPLETED. RANKING OF PROPOSALS WILL BE BASED ON QUALITY/COST RATIO THAT REFLECTS THE RESULTS OF THE TECHNICAL EVALUATION AND COST. THIS RATIO IS THE RESULTANT OF DIVIDING THE PROPOSER'S COST BY THE TOTAL TECHNICAL EVALUATION POINTS RECEIVED BY THE PROPOSER (I.E., BID $ AMOUNT OVER TECH. EVAL. PTS $/POINT). THIS RELATIONSHIP SHOULD BE ESTABLISHED PRIOR TO ENTERING INTO NEGOTIATIONS. RECOGNIZING THAT NEGOTIATIONS WILL IN MOST INSTANCES RESULT IN A CHANGE IN PROPOSER'S TECHNICAL EVALUATION SCORE AND HIS BID PRICE, IT IS ESSENTIAL THAT INITIAL RANKINGS BE ADJUSTED BY RECOMPUTING THE RATIOS PRIOR TO ESTABLISHING A FINAL RANKING OF PROPOSALS. THIS FINAL RANKING SHOULD BE CONSIDERED ONLY AS A STATISTICAL INDICATOR. SOUND JUDGMENT MUST BE APPLIED TO INSURE THAT COST AND ALL OTHER FACTORS ARE PROPERLY CONSIDERED IN MAKING AN AWARD IN THE GOVERNMENT'S BEST INTERESTS. IT IS ESSENTIAL THAT THIS DECISION BE PROPERLY DOCUMENTED."

UNDER THE CIRCUMSTANCES, WE MUST DEFER TO THE REPRESENTATIONS IN THE DEPUTY COMMANDER'S LETTER OF OCTOBER 5, 1970, THAT IN CONSONANCE WITH THE DEPARTMENT OF DEFENSE GUIDANCE, THE EVALUATION OF PROPOSALS YIELDED THE FOLLOWING RESULTS:

DOLLAR PER POINT POINTS PRICE

"1. LEADERSHIP HOUSING SYSTEMS $315.9 7,053 $2,228,000

2. VIKING COMPANY $335.7 6,308 $2,117,058

3. PRODEVCO - PROPOSAL #4 $375.6 5,919 $2,222,937

4. PRODEVCO - PROPOSAL #1 $397.9 5,510 $2,187,980

5. C. E. WYLIE - P. H. LUSARDI $477.9 3,648 $1,743,256"

THE LETTER FURTHER STATES THAT OF THE 14 PROPOSALS RECEIVED IN RESPONSE TO THE SOLICITATION, THE PROPOSALS LISTED ABOVE WERE "TECHNICALLY SUPERIOR," AND THAT OF THE LISTED PROPOSALS, THE PROPOSAL OF C. E. WYLIE - P. H. LUSARDI WAS "DISTINCTLY INFERIOR" IN THE AREAS OF DESIGN AND ENGINEERING. IN LIGHT OF THESE STATEMENTS, THERE APPEARS TO BE A BASIS FOR CONCLUDING THAT PRODEVCO-DCI WAS WITHIN A COMPETITIVE RANGE. ACCORDINGLY, WE BELIEVE THE CONTRACTING OFFICER SHOULD HAVE AFFORDED YOUR FIRM AN OPPORTUNITY TO REVISE ITS PROPOSAL, PARTICULARLY SINCE THE SOLICITATION FAILED TO IDENTIFY THE METHOD OF EVALUATION WITH SPECIFICITY OR INDICATE THE RELATIVE IMPORTANCE OF THE VARIOUS FACTORS USED IN THE EVALUATION.

WHILE THE DEPUTY COMMANDER'S LETTER SUGGESTS THAT ADEQUATE FUNDS EXISTED FOR AN AWARD ON AN INITIAL PROPOSAL BASIS TO LEADERSHIP, THE FACT REMAINS THAT "DISCUSSIONS" WITHIN THE MEANING OF 10 U.S.C. 2304(G) WERE UNDERTAKEN WITH BOTH LEADERSHIP AND VIKING. WITH RESPECT TO THE "DISCUSSIONS," IT IS NOT NECESSARY TO RESOLVE THE QUESTION YOU RAISE OF WHETHER THE CEDAR SHINGLE ROOF ORIGINALLY OFFERED BY LEADERSHIP WAS "RESPONSIVE" TO THE REQUEST FOR PROPOSALS, FOR AS YOU RECOGNIZE, NEGOTIATION, UNLIKE FORMAL ADVERTISING, PERMITS THE CORRECTION OF DEFICIENCIES IN PROPOSALS. 171482, MARCH 17, 1971. LEADERSHIP WAS REQUESTED TO INDICATE WHAT EFFECT A SUBSTITUTION OF ASPHALT SHINGLES FOR THE CEDAR SHINGLES INITIALLY OFFERED WOULD HAVE ON ITS PRICE; IT RESPONDED WITH A PRICE REDUCTION IN AN AMOUNT OF $69,568. IN ADDITION, CERTAIN OTHER REPORTEDLY "MINOR" ITEMS, NOT IN DISPUTE HERE, UNIQUE TO THE VIKING AND LEADERSHIP PROPOSALS WERE DISCUSSED. THESE DISCUSSIONS RESULTED IN LEADERSHIP FURTHER REDUCING ITS PRICE BY $16,670.

CONTRARY TO YOUR ASSERTION, THERE IS SOME MERIT IN THE DEPUTY COMMANDER'S POSITION THAT THE RELATIVE STANDING OF THE OFFERS WOULD NOT HAVE BEEN AFFECTED IF OTHER OFFERORS HAD BEEN PERMITTED TO MAKE COMPARABLE ROOFING CHANGES. YOU SUGGEST THAT PRODEVCO-DCI SUFFERED SUBSTANTIAL PREJUDICE BECAUSE THE AESTHETIC QUALITIES OF THE CEDAR SHINGLES VIS-A-VIS THE TILE SHINGLES OFFERED BY PRODEVCO MADE A SIGNIFICANT EVALUATIVE DIFFERENCE. DO NOT, HOWEVER, APPROACH THE DEPUTY COMMANDER'S REPLY THAT SUCH SUBSTITUTION DID NOT RESULT IN A REDUCTION OF THE QUALITY POINTS ASSIGNED THE LEADERSHIP PROPOSAL WITH THE "INCREDULITY" THAT YOU DO. WE DO NOT FIND NAVFAC'S POSITION THAT THE LONGER LIFE AND LOWER MAINTENANCE COSTS OF ASPHALT SHINGLES OFFSET ANY AESTHETIC QUALITIES OF THE CEDAR SHINGLES ORIGINALLY OFFERED TO BE UNREASONABLE.

NEVERTHELESS, WE BELIEVE THAT THE QUESTION OF THE IMPACT OF PROPOSAL REVISIONS ON THE RELATIVE STANDING OF OFFERORS SHOULD NOT BE LEFT TO SPECULATION. IN OUR VIEW, 10 U.S.C. 2304(G) REQUIRES THAT SUCH IMPACT BE TESTED BY AFFORDING ALL OFFERORS WITHIN A COMPETITIVE RANGE AN OPPORTUNITY TO SUBMIT REVISED PROPOSALS. 48 COMP. GEN. 663 (1969); 47 ID. 336 (1967); 50 ID. (B-169148, OCTOBER 6, 1970); B-170181, FEBRUARY 22, 1971.

WE HAVE CONSIDERED YOUR CONTENTIONS WITH RESPECT TO THE UTILITIES DISTRIBUTION, GRADING, AND SIDEWALK REQUIREMENTS OF THE REQUEST FOR PROPOSALS AND, IN OUR VIEW, THE DEPUTY COMMANDER'S DISPOSITION OF THESE ISSUES IS CORRECT. MOREOVER, ON THE RECORD BEFORE US, THERE IS NO CLEAR AND CONVINCING EVIDENCE THAT THE CONTRACTING OFFICER'S DETERMINATION THAT LEADERSHIP WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR IS SUBJECT TO LEGAL QUESTION, 50 COMP. GEN. (B-170388, OCTOBER 15, 1970), NOR CAN WE QUESTION THE ADEQUACY OF THE PERFORMANCE BOND FURNISHED BY LEADERSHIP ON THE GROUND THAT IT AUGMENTED ITS CORPORATE SURETY BOND WITH AN ADDITIONAL BOND IN THE FORM OF A CERTIFIED CHECK.

WHILE WE ARE DRAWING THE DEFECTS NOTED ABOVE TO THE ATTENTION OF THE SECRETARY OF THE NAVY TO INSURE THAT CORRECTIVE ACTION IS TAKEN TO AVOID THEIR RECURRENCE, WE CANNOT CONCLUDE THAT CANCELLATION OF THE CONTRACT WOULD BE LEGALLY JUSTIFIED, OR THAT THE CONTRACTING AGENCY'S CONDUCT OF NEGOTIATIONS WAS SUCH THAT DCI-PRODEVCO WOULD BE ENTITLED TO RECOVER BID PREPARATION COSTS. KECO INDUSTRIES, INC. V UNITED STATES, 428 F. 2D 1233 (CT. CL. 1970) AND CASES CITED THEREIN.