B-170942, SEP 8, 1971

B-170942, SEP 8, 1971

BID PROTEST - NEGOTIATED PROCUREMENT - FACTORS OTHER THAN PRICE DENYING PROTEST OF DIGILAB, INC., LOW BIDDER, AGAINST THE AWARD OF A SUBCONTRACT FOR A HIGH RESOLUTION FOURIER TRANSFORM SPECTROMETER SYSTEM TO IDEALAB, INC. UNDER AN RFQ ISSUED BY GENERAL ELECTRIC COMPANY UNDER A PRIME CONTRACT WITH NASA. THE DETERMINATION BY GE THAT AN AWARD TO IDEALAB WOULD BE PREFERABLE, SINCE IT HAD ALREADY BUILT AN INTERFEROMETER TO THE REQUIRED RESOLUTION (0.1 CM-1), WHILE PROTESTANT HAD NOT, DESPITE THE FACT THAT IDEALAB'S PRICE WAS HIGHER, IS IN THE BEST INTERESTS OF THE GOVERNMENT. IN A NEGOTIATED PROCUREMENT IT IS PROPER TO AWARD A CONTRACT ON THE BASIS OF TECHNICAL SUPERIORITY EVEN AT HIGHER PRICE WHERE TECHNICAL SUPERIORITY IS DETERMINED TO JUSTIFY THE ADDITIONAL COST.

TO DIGILAB, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEGRAM DATED OCTOBER 2, 1970, AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTEST AGAINST THE AWARD OF A SUBCONTRACT FOR A HIGH RESOLUTION FOURIER TRANSFORM SPECTROMETER SYSTEM TO ANOTHER CONCERN BY THE GENERAL ELECTRIC COMPANY (GE) UNDER COST-PLUS-A-FIXED-FEE PRIME CONTRACT NO. NAS1-10139 WITH THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA).

UNDER THIS PRIME CONTRACT, GE IS PERFORMING AN EXPERIMENT CONCERNING THE DEVELOPMENT OF CARBON MONOXIDE POLLUTION IN THE ATMOSPHERE. ON JULY 23, 1970, GE ISSUED REQUEST FOR QUOTATIONS (RFQ) NO. 32-015-70, FOR A HIGH RESOLUTION FOURIER TRANSFORM SPECTROMETER WITH ASSOCIATED DATA HANDLING, CONTROL AND DISPLAY SYSTEMS. THE INSTRUMENT WAS REQUIRED TO HAVE A RESOLUTION OF AT LEAST 0.1 CM -1 AND BE OPTIMIZED FOR USE IN THE 1-3 MICRON SPECTRAL REGION. QUOTATIONS WERE DUE AUGUST 10, 1970.

SIX COMPANIES RESPONDED TO THE RFQ. ONLY THE PROPOSALS FROM IDEALAB, INCORPORATED, AND DIGILAB, INCORPORATED, A SUBSIDIARY OF BLOCK ENGINEERING, INCORPORATED, WERE REGARDED AS TECHNICALLY ACCEPTABLE. UPON EVALUATION OF THE TWO ACCEPTABLE PROPOSALS, GE FOUND THAT IDEALAB'S PRICE WAS $97,427 AND THAT FOR A COMPARABLE SYSTEM DIGILAB'S PRICE WAS $113,350.

A MEMORANDUM DATED SEPTEMBER 14, 1970 (GE'S TECHNICAL EVALUATION OF PROPOSALS), STATES THAT THE CRITICAL ITEM IN THIS PROCUREMENT IS THE INTERFEROMETER. GE DETERMINED THAT AN AWARD TO IDEALAB WOULD BE PREFERABLE SINCE IT HAD ALREADY BUILT AN INTERFEROMETER TO THE REQUIRED RESOLUTION (0.1 CM -1) WHILE DIGILAB HAD NOT PRODUCED AN INTERFEROMETER OF THAT RESOLUTION. IT WAS ALSO FOUND THAT DIGILAB HAD PUT TOGETHER AN ENTIRE SYSTEM USING A LOWER RESOLUTION INTERFEROMETER, AND WHILE IDEALAB HAD PRODUCED A HIGHER RESOLUTION INTERFEROMETER, IT HAD NOT PUT TOGETHER AS AN INTEGRATED UNIT ALL OF THE COMPONENTS WHICH WERE REQUIRED TO MEET THE SPECIFIED SYSTEM. HOWEVER, GE STILL PREFERRED TO AWARD TO IDEALAB AND IN THIS REGARD A NOTE ON GE'S MEMORANDUM OF SEPTEMBER 14, 1970, STATES:

" *** WHILE IT IS NOT DESIRABLE, IT IS NEVERTHELESS PREFERABLE TO HAVE A GOOD INTERFEROMETER AND A FAULTY DDHS (DIGITAL DATA HANDLING SYSTEM) (WHICH CAN BE DEBUGGED), RATHER THAN A FAULTY INTERFEROMETER (WHICH CANNOT BE DEBUGGED) AND A GOOD DDHS."

BASED ON ITS TECHNICAL AND COST REVIEWS, GE DETERMINED THAT AWARD SHOULD BE MADE TO IDEALAB AND ON SEPTEMBER 25, 1970, IN ACCORDANCE WITH "SPACE SYSTEMS INSTRUCTION SECTION 4, PART 12," GE REQUESTED SOURCE APPROVAL FOR THIS ORDER SINCE IT WAS IN EXCESS OF $1,000, FROM THE AIR FORCE PLANT REPRESENTATIVE, NASA'S CONTRACTING AGENT. THE PROPOSED AWARD TO IDEALAB WAS APPROVED BY THE AIR FORCE PLANT REPRESENTATIVE ON SEPTEMBER 30, 1970, AND ON OCTOBER 6, 1970, GE ISSUED A PURCHASE ORDER TO IDEALAB FOR PROCUREMENT OF THE SPECIFIED SYSTEM ON A FIRM-FIXED PRICE BASIS. THE CONTRACT AWARDED TO IDEALAB REQUIRES AN INTERFEROMETER WITH A MAXIMUM RESOLUTION OF 0.1 CM -1.

IN RESPONSE TO YOUR PROTEST TO GE, THE ACO ON OCTOBER 6, 1970, ADVISED LANGLEY RESEARCH CENTER, NASA, THAT DIGILAB HAD PREVIOUSLY SUPPLIED A FOURIER TRANSFORM SYSTEM TO GE; HOWEVER, THAT SYSTEM HAD A RESOLUTION OF 0.5 CM -1 WHICH IS LESS THAN THE 0.1 CM -1 REQUIRED BY THE INSTANT SPECIFICATIONS. THE ACO ALSO ADVISED THAT THE PRICE OF IDEALAB'S SYSTEM WAS $97,427, WHEREAS A COMPARABLE DIGILAB SYSTEM WOULD COST $113,350.

YOU HAVE SUBMITTED A CHRONOLOGY OF EVENTS BEGINNING WITH THE SUBMISSION OF THE ORIGINAL GE PROPOSAL TO NASA DURING 1967-1968, THROUGH YOUR PROTEST TO THIS PROCUREMENT. YOUR FIRST CONTENTION CONCERNS WHETHER GE ACTUALLY NEEDED AN INTERFEROMETER SYSTEM IN ADDITION TO THE ONE PURCHASED FROM YOU IN APRIL 1970. IN THIS REGARD YOU ADVISE THAT YOU HAD OFFERED TO MODIFY THE SYSTEM AS NECESSARY.

YOU ALSO ASSERT THAT THE TECHNICAL AND PRICE INFORMATION FURNISHED BY GE TO THE ACO WAS INSUFFICIENT TO SUBSTANTIATE THE DETERMINATION THAT IDEALAB'S PROPOSAL WAS PREFERABLE TO DIGILAB'S. YOUR LETTER OF APRIL 2, 1971, POINTS OUT THAT ON AUGUST 28, 1970, DIGILAB FURNISHED GE WITH A LIST OF CUSTOMERS FOR A FULL FOURIER TRANSFORM SPECTROMETER SYSTEM AND THAT THIS LETTER AS WELL AS OTHER DOCUMENTATION CLARIFIES ANY RESERVATIONS THERE MAY HAVE BEEN WITH RESPECT TO DIGILAB'S PROPOSAL. YOU URGE THAT GE DID NOT GIVE ADEQUATE CONSIDERATION TO THESE COMMUNICATIONS.

WITH RESPECT TO YOUR FIRST CONTENTION, WE THINK IT HAS BEEN ADEQUATELY SHOWN IN THE ADMINISTRATIVE REPORT, A COPY OF WHICH HAS BEEN FURNISHED TO YOU, THAT AN INTERFEROMETER SYSTEM OF A HIGHER RESOLUTION THAN THE ONE YOU PREVIOUSLY SUPPLIED TO GE, WAS REQUIRED BY GE UNDER ITS PRIME CONTRACT. THE RESEARCH PROJECT ENGINEER, LANGLEY RESEARCH CENTER HAS SUBMITTED THE FOLLOWING MEMORANDUM DATED NOVEMBER 9, 1970, TO EXPLAIN THE NEED FOR THE INSTANT INTERFEROMETER SYSTEM AS A PART OF THE EXPERIMENT UNDER GE'S CONTRACT:

"AS SPECIFIED BY TASK 4.2.3 OF THE STATEMENT OF WORK OF CONTRACT NASI 10139, THIS INSTRUMENTATION IS REQUIRED FOR USE IN A SERIES OF GROUND FACILITY LONG-PATH ABSORPTION EXPERIMENTS WHICH ARE A NECESSARY PART OF THE PROGRAM TO DEVELOP THE CORRELATION INTERFEROMETER MEASUREMENT TECHNIQUE. THE SPECTROMETER INSTRUMENT WILL BE DELIVERED BY THE SUPPLIER TO GENERAL ELECTRIC, ACCEPTED BY GENERAL ELECTRIC, AND USED BY GENERAL ELECTRIC FOR THESE (4.2.3) EXPERIMENTS.

"REGARDING THE NEED FOR THIS INSTRUMENT, THE GENERAL ELECTRIC PROPOSAL DATED APRIL 1970, SUBMITTED IN RESPONSE TO RFP L-17,880, PROPOSED TO ACCOMPLISH THE 4.2.3 EXPERIMENTS USING A GENERAL ELECTRIC OWNED SPECTROMETER. BASED ON TECHNICAL REVIEW, IT WAS DETERMINED THAT THE PROPOSED INSTRUMENT DID NOT HAVE THE REQUIRED CAPABILITY FOR THE LONG-PATH MEASUREMENTS. IT WAS CONCLUDED THAT THE INSTRUMENT DID NOT HAVE SUFFICIENTLY HIGH SPECTRAL RESOLUTION TO DETECT THE 2.3 MICRON ABSORPTION LINES OF CARBON MONOXIDE IN THE PRESENCE OF SUBSTANTIAL INTERFERENCE FROM THE ABSORPTION LINES OF WATER VAPOR AND OTHER MOLECULES. THIS WOULD BE TRUE IN ANY LONG-PATH MEASUREMENT WITH LARGE AMOUNTS OF WATER VAPOR IN THE PATH (E.G., THE EXPERIMENTS OF TASK 4.2.3 OR WHEN MAKING ATMOSPHERIC SOLAR ABSORPTION MEASUREMENTS).

"THE NEED FOR AN IMPROVED INSTRUMENT WAS THEN MADE KNOWN BY THE UNDERSIGNED TO THE LANGLEY CONTRACT NEGOTIATOR IN MAY 1970, FOLLOWING COMPLETION OF THE PROPOSAL EVALUATION. SUBSEQUENTLY, GENERAL ELECTRIC PROPOSED THAT A SPECTROMETER HAVING HIGHER SPECTRAL RESOLUTION BE INCLUDED IN THE CONTRACT.

"THE IDEALAB IF-6 INSTRUMENTATION WHICH GE HAS SELECTED HAS A SPECTRAL RESOLUTION OF AT LEAST 0.1 WAVENUMBER (0.1 CM -1), APPROXIMATELY 5 TO 10 TIMES BETTER THAN THE GE-OWNED INSTRUMENT. THIS RESOLUTION WILL BE ADEQUATE TO PROVIDE THE NECESSARY DISCRIMINATION OF THE CO ABSORPTION FROM THE INTERFERENCES.

"IT IS ANTICIPATED THAT FURTHER USE OF THE HIGH RESOLUTION SPECTROMETER WILL BE REQUIRED IN DIRECT SUPPORT OF OTHER CONTRACTOR TASKS DURING THE DEVELOPMENT PROGRAM. THIS WILL PROBABLY INCLUDE HIGH RESOLUTION SPECTRAL MEASUREMENTS IN SUPPORT OF LABORATORY AND FIELD TESTS OF THE BREADBOARD AND ENGINEERING MODEL CORRELATION INTERFEROMETER INSTRUMENTS (TASKS 4.2.5, 4.3.2, AND 4.3.4), AS WELL AS ATMOSPHERIC SPECTRAL MEASUREMENTS TO SUPPORT THE FLIGHT DEMONSTRATION OF THE ENGINEERING MODEL CORRELATION INTERFEROMETER INSTRUMENT (TASK 4.4.3). THE GENERAL ELECTRIC-OWNED SPECTROMETER WOULD NOT HAVE SUFFICIENT SPECTRAL RESOLUTION FOR ANY OF THESE MEASUREMENTS."

AS STATED, GE'S EXISTING INTERFEROMETER SYSTEM WHICH YOU SUPPLIED WOULD HAVE REQUIRED MODIFICATIONS TO MEET CURRENT REQUIREMENTS. GE DETERMINED THAT SUCH AN ALTERNATIVE WAS NOT FEASIBLE SINCE REQUIRED MODIFICATIONS TO THE INTERFEROMETER, THE CRITICAL ITEM OF THE SYSTEM, MIGHT HAVE ADVERSELY AFFECTED THE ENTIRE SYSTEM. THE TECHNICAL DETERMINATION OF SUCH REQUIREMENTS LIES OUTSIDE THE PROVINCE OF THIS OFFICE AND WE COULD NOT PROPERLY QUESTION SUCH DETERMINATION AGREED TO IN THIS INSTANCE BY BOTH THE PRIME CONTRACTOR AND THE GOVERNMENT AGENCY CONCERNED IN THE ABSENCE OF A SHOWING OF ARBITRARY ACTION. SEE 49 COMP. GEN. 156, 160 (1969); 17 COMP. GEN. 554 (1938). WE FIND A REASONABLE BASIS FOR THE DETERMINATION IN THIS CASE. THEREFORE, WE CANNOT CONCLUDE THAT THE INSTANT PROCUREMENT BY THE PRIME CONTRACTOR (GE) WAS IMPROPER. WE THINK IT IS APPROPRIATE TO NOTE HERE THAT OUR CONCLUSION WOULD BE THE SAME IF THIS HAD BEEN A PROCUREMENT BY A GOVERNMENT AGENCY RATHER THAN A PRIME CONTRACTOR.

REGARDING THE PRICE, IT IS YOUR CONTENTION THAT YOUR DATA UNIT, ONE OF THE COMPONENTS IN THE SYSTEM, SHOULD HAVE BEEN EVALUATED AT $49,000 NOT AT $71,000, WHICH GE DETERMINED WAS YOUR PRICE FOR A DATA SYSTEM COMPARABLE TO THE SYSTEM OFFERED BY IDEALAB. GE'S LETTER OF AUGUST 18 TO THE AIR FORCE PLANT REPRESENTATIVE STATED THAT YOUR $49,000 DATA UNIT DID NOT HAVE THE SAME CAPABILITY AS IDEALAB'S DATA SYSTEM; THAT ONLY YOUR $71,000 DATA UNIT WAS COMPARABLE AND IN CONFORMITY TO THE REQUIREMENTS. THE LETTER ADVISED THAT THE DATA SYSTEM OFFERED BY DIGILAB FOR $49,000 "PROCESSES ONLY 32K (32,000) INPUT POINTS IN THE DUAL BEAM MODE AND HAS A SPECTRAL PASSBAND OF 2,000 CM -1" AND THAT THE IDEALAB SYSTEM "PROCESSES 64K (64,000) INPUT DATA POINTS IN THE DUAL BEAM MODE AND HAS A SPECTRAL PASSBAND OF 3,200 CM -1." THIS LETTER FURTHER ADVISED THAT THE DIGILAB DATA SYSTEM WHICH PROCESSED 64K INPUT POINTS WAS QUOTED AS AN OPTION AT $71,000 AND THIS WAS THE PRICE THAT GE INCLUDED IN DETERMINING THE OVERALL PRICE OF YOUR PROPOSAL AT $113,350. IF GE HAD INCLUDED $49,000 AS THE PRICE FOR YOUR DATA SYSTEM AS URGED BY YOU, THE PRICE FOR YOUR TOTAL SYSTEM WOULD HAVE BEEN LESS THAN IDEALAB'S TOTAL SYSTEM PRICE OF $97,427.

YOU CONTEND THAT YOUR TELEGRAM OF AUGUST 31, 1970, MADE IT CLEAR THAT YOUR PRICE FOR THE DATA SYSTEM FOR EITHER 32K OR 64K INPUT POINTS WAS $49,000. YOU POINT OUT THAT THIS TELEGRAM OFFERED TWO ALTERNATIVES FOR THE MEMORY DISK OF 256K, EITHER 32K DOUBLE PRECISION INPUT POINTS OR 64K SINGLE PRECISION INPUT POINTS, FOR $49,000. YOU HAVE ADVISED THAT THE 256K SIZE MEMORY DISK IS THE SAME SIZE AS THE DISK INCLUDED IN THE IDEALAB PROPOSAL WHICH WAS ACCEPTED BY GE.

IT REMAINS THE NASA/GE VIEW THAT YOUR $49,000 DATA UNIT WOULD NOT MEET THE STATED REQUIREMENTS. IT MAY WELL BE THAT GE SHOULD HAVE ENGAGED IN ADDITIONAL DISCUSSIONS WITH YOUR FIRM TO CLARIFY THE MATTER BEFORE MAKING AN AWARD. IN ANY CASE, IT APPEARS THAT GE HAD MORE CONFIDENCE IN THE IDEALAB SYSTEM BECAUSE THAT FIRM HAD PRODUCED AN INTERFEROMETER WITH THE REQUIRED RESOLUTION OF 0.1 CM -1 WHEREAS YOUR CONCERN HAD NOT PRODUCED SUCH AN INTERFEROMETER. WHILE YOU FURNISHED A LIST OF CUSTOMERS TO GE ON AUGUST 28, 1970, IT HAS NOT BEEN SHOWN THAT AN INTERFEROMETER WITH A RESOLUTION OF 0.1 CM -1 WAS PRODUCED FOR ANY OF THE CUSTOMERS ON THAT LIST. BASED ON THE INTERFEROMETER FACTOR, IT APPEARS THAT GE'S SELECTION OF IDEALAB WAS REASONABLE AND NOT CONTRARY TO THE BEST INTERESTS OF THE GOVERNMENT, EVEN IF YOUR TOTAL SYSTEM SHOULD HAVE BEEN EVALUATED AT THE LOWER PRICE AS YOU CONTEND. IN A NEGOTIATED PROCUREMENT BY A GOVERNMENT AGENCY IT IS NOT IMPROPER TO AWARD A CONTRACT ON THE BASIS OF A PROPOSAL REGARDED AS TECHNICALLY SUPERIOR EVEN AT A HIGHER PRICE WHERE THE TECHNICAL SUPERIORITY IS DETERMINED TO JUSTIFY THE ADDITIONAL COST. 170633, MAY 3, 1971. WE FIND NO BASIS TO APPLY A MORE RESTRICTIVE STANDARD TO A PROCUREMENT BY A COST-PLUS-A-FIXED-FEE PRIME CONTRACTOR.

FINALLY, YOUR LETTER OF JULY 9, 1971, STATES THAT IDEALAB IS OVER THREE MONTHS DELINQUENT IN THE DELIVERY OF THE DATA SYSTEM. NASA ADVISES THAT IDEALAB WAS DELINQUENT IN DELIVERY BUT THE WHOLE SYSTEM INCLUDING THE DATA UNIT MEETING THE REQUIREMENTS OF THE SPECIFICATIONS HAS NOW BEEN DELIVERED TO GE. WE ARE ADVISED THAT THE REASONS FOR THE DELAY IN DELIVERY WERE THAT IDEALAB CHANGED ITS SUBCONTRACTOR FOR THE DATA UNIT AND THAT SOME OF THE DELAY WAS ALSO ATTRIBUTABLE TO CERTAIN CHANGE ORDERS WHICH HAVE BEEN ISSUED. IN THIS REGARD NASA HAS ADVISED THAT THERE WAS NO RELAXATION OF THE RESOLUTION REQUIREMENT ORIGINALLY SPECIFIED.

UNDER THE CIRCUMSTANCES YOUR PROTEST IS DENIED.