B-173444, DEC 21, 1971

B-173444, DEC 21, 1971

BID PROTEST - BID EVALUATION DENIAL OF A POST-AWARD PROTEST BY MICROFORM DATA SYSTEMS, INC., AGAINST THE AWARD OF A CONTRACT TO WOLLENSAK, INC., UNDER A LETTER REQUEST FOR PROPOSALS ISSUED BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C., FOR A TWO-STEP PROCUREMENT COVERING A QUANTITY OF MICROFORM READERS AND FILM PRODUCTION IN SUPPORT OF THE NAVY'S CATALOG DATA MINIATURIZATION PROGRAM. QUESTIONS REGARDING THE PROPRIETY OF THE EVALUATION CRITERIA SHOULD HAVE BEEN RAISED PRIOR TO THE OPENING OF STEP 2 OF THE SOLICITATION. FURTHER, THE RECORD CLEARLY INDICATES THAT THE EVALUATION PROCEDURE TO BE USED WAS FULLY EXPLAINED TO ALL BIDDERS AT A PREBID CONFERENCE. ALSO, IF AWARD IS TO BE MADE ON THE BASIS OF FACTORS OTHER THAN PRICE, THESE "OTHER FACTORS" MUST BE SPELLED OUT IN THE INVITATION.

TO MICROFORM DATA SYSTEMS, INC.:

WE REFER TO YOUR LETTER OF AUGUST 3, 1971, RESPONDING TO THE ADMINISTRATIVE REPORT FURNISHED OUR OFFICE BY LETTER, WITH ENCLOSURES, DATED JULY 22, 1971, FROM THE DEPUTY COMMANDER, PROCUREMENT MANAGEMENT, NAVAL SUPPLY SYSTEMS COMMAND, IN CONNECTION WITH YOUR POST-AWARD PROTEST AGAINST THE AWARD OF A CONTRACT ON JUNE 21, 1971, TO WOLLENSAK INC., UNDER NAVY PURCHASING OFFICE, WASHINGTON, D.C., SOLICITATION N00600-71-B-0263, A TWO-STEP FORMALLY ADVERTISED PROCUREMENT COVERING A QUANTITY OF MICROFORM READERS AND FILM PRODUCTION IN SUPPORT OF THE NAVY'S CATALOG DATA MINIATURIZATION PROGRAM.

THE BASIC QUESTION PRESENTED BY THE PROTEST IS THE PROPRIETY OF THE EVALUATION METHOD USED BY THE NAVY. SPECIFICALLY, YOU ASSERT IN YOUR INITIAL PROTEST LETTER OF JUNE 28, 1971, THAT THE NAVY FAILED TO TAKE INTO CONSIDERATION SIGNIFICANT COSTS, WHICH, IF EVALUATED, WOULD HAVE RESULTED IN THE AWARD OF THE CONTRACT TO YOUR FIRM. FROM OUR REVIEW OF THE RECORD BEFORE OUR OFFICE AND FOR THE REASONS SET FORTH BELOW, WE CAN INTERPOSE NO LEGAL OBJECTION TO THE NAVY'S AWARD OF A CONTRACT TO WOLLENSAK.

THIRTEEN QUALIFIED FIRMS SUBMITTED BIDS ON STEP 2 BY THE BID OPENING DATE, JUNE 11, 1971, AND THE THREE LOW EVALUATED BIDS WERE REPORTED AS FOLLOWS: WOLLENSAK INC. - $1,607,043; WESTERN RESERVE ELECTRONICS, INC. - $1,609,866; MICROFORM DATA SYSTEMS, INC. - $1,747,890. WITH RESPECT TO THE METHOD OF EVALUATION, THE CONTRACTING OFFICER'S STATEMENT OF FACTS INDICATES THAT TO ENCOURAGE MAXIMUM COMPETITION FROM THE MICROFILM INDUSTRY, THE LETTER REQUEST FOR TECHNICAL PROPOSALS (LRTP) DATED MARCH 4, 1971, PERMITTED THE OFFER OF MICROFILM SYSTEMS WITH REDUCTION RATIOS OF NOT LESS THAN 42:1 (FORTY-TWO TIMES SMALLER THAN THE ORIGINAL DOCUMENT), NOR MORE THAN 210:1. THE CONTRACTING OFFICER POINTS OUT THAT, GENERALLY SPEAKING, THE COST OF A MICROFILM READER INCREASES AS THE REDUCTION INCREASES, WHILE THE COST OF MICROFICHE PRODUCTION DECREASES AS THE RATIO INCREASES. THEREFORE, TO DETERMINE THE MOST COST EFFECTIVE SYSTEM, READER COST AND FICHE PRODUCTION COST FOR 5 YEARS WERE EVALUATED. THE INVITATION FOR BIDS (STEP 2) REQUESTED PRICES FOR 4,400 MICROFORM READERS AND AN OPTION QUANTITY OF 1,320 UNITS; IN ADDITION, PRICES WERE REQUESTED FOR FILM PRODUCTION OF MICROFICHE FOR 1 YEAR AND OPTIONS FOR 4 SUCCEEDING YEARS OF FILM PRODUCTION. SECTION "D" OF THE INVITATION ADVISED BIDDERS, IN PART, THAT: BIDS AND PROPOSALS WILL BE EVALUATED FOR PURPOSES OF AWARD BY ADDING THE TOTAL PRICE FOR ALL OPTION QUANTITIES TO THE TOTAL PRICE FOR THE BASIC QUANTITY. SEE GENERALLY PARAGRAPHS 1-1503 AND 1-1504 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

WE NOTE THAT THE CONTRACTING OFFICER'S OBSERVATIONS CONCERNING THE COST IMPACT OF VARYING REDUCTION RATIOS ARE CONFIRMED BY CONTRASTING YOUR FIRM'S BID PRICES WITH WOLLENSAK'S BID PRICES. AN EXAMINATION OF THE BID ABSTRACT REVEALS THAT ALTHOUGH THE COST OF YOUR MICROFORM READER WITH A 210:1 REDUCTION WAS APPROXIMATELY $1,082,000 GREATER THAN THE COST OF WOLLENSAK'S MICROFORM READER WITH A 48:1 REDUCTION, YOUR BID WAS NEVERTHELESS WITHIN $141,000 OF WOLLENSAK'S BID WHEN MICROFICHE PRODUCTION COSTS WERE CONSIDERED.

AT THE OUTSET, WE MUST NOTE THAT ANY QUESTIONS YOU HAD CONCERNING THE PROPRIETY OF THE EVALUATION CRITERIA SHOULD HAVE BEEN RAISED PRIOR TO THE OPENING OF STEP 2. CF. 48 COMP. GEN. 757, 760 (1969). CONTRARY TO YOUR ASSERTION, WE BELIEVE THAT SECTION "D" OF THE INVITATION, QUOTED ABOVE, CLEARLY INDICATED THE METHOD OF EVALUATION. THIS METHOD OF EVALUATION WAS DISCUSSED AT A PREBID CONFERENCE ON APRIL 2, 1971. THE RESULTS OF THIS CONFERENCE WERE PUBLISHED ON APRIL 9, 1971, AS AMENDMENT 0002 TO THE LRTP AND EXHIBIT "C" THEREOF, ENTITLED TENTATIVE EVALUATION METHOD, SPECIFICALLY ADDRESSED THE PROPOSED METHOD OF EVALUATION. ALTHOUGH YOU HAVE FOCUSED ON THE TITLE OF EXHIBIT "C", WE BELIEVE IT IS EVIDENT FROM AN EXAMINATION OF THE EXHIBIT IN CONJUNCTION WITH THE PREBID CONFERENCE QUESTIONS AND ANSWERS THAT THE EVALUATION FORMAT WAS TENTATIVE ONLY IN THE SENSE THAT AT THE TIME OF THE PREBID CONFERENCE THE EXACT QUANTITIES THAT WOULD BE SPECIFIED IN STEP 2 WERE NOT KNOWN. FURTHER, THIS UNCERTAINTY IS REMOVED BY AN EXAMINATION OF SECTION "E" OF THE SCHEDULE WHICH IDENTIFIES THE QUANTITIES FOR WHICH BIDS WERE TO BE SUBMITTED.

IN ANY EVENT, WE CANNOT AGREE WITH YOUR SUGGESTION THAT THE LANGUAGE OF PARAGRAPH 10(A) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS (STANDARD FORM 33A, MARCH 1969) THAT AWARD WILL BE MADE TO THE OFFEROR WHOSE OFFER WILL BE "MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED," INDICATES THAT "OTHER FACTORS" OF COST WOULD BE CONSIDERED IN THE AWARD OF THE INSTANT CONTRACT. TO SUSTAIN YOUR CONCLUSION WE WOULD HAVE TO IGNORE THE LANGUAGE OF SECTION "D." FURTHERMORE, IT IS OUR POSITION THAT IF THE AWARD IS TO BE MADE ON THE BASIS OF "OTHER FACTORS," THESE FACTORS MUST BE SPELLED OUT IN THE INVITATION. SEE 50 COMP. GEN. 447, 454 (1970); B-164694, OCTOBER 31, 1968.

WITH RESPECT TO THESE "OTHER FACTORS," YOU CONTEND THAT A MINIMUM OF $500,000 IN TOTAL SYSTEMS COSTS COULD HAVE BEEN SAVED IF AN AWARD HAD BEEN MADE TO YOUR FIRM. WE NOTE AT THIS POINT THAT ASPR 1-1503(C) PROVIDES THAT WHEN OPTIONS ARE EVALUATED, THE TOTAL OF THE BASIC AND OPTION QUANTITIES MAY NOT EXCEED 5 YEARS. FIRST, YOU URGE THAT BECAUSE LESS FICHE WILL BE SHIPPED THE 5-YEAR COST OF SHIPPING YOUR MICROFICHE WITH A 210:1 REDUCTION WILL BE APPROXIMATELY $150,000 LESS THAN THE COSTS OF MAILING FICHE WITH A 48:1 REDUCTION. SECOND, YOU MAINTAIN THAT OVER A 5- YEAR PERIOD SAVINGS OF AT LEAST $350,000 IN LABOR COSTS WILL RESULT FROM YOUR SYSTEM'S SHORTER ACCESS TIME (DEFINED AS THE TIME NECESSARY TO LOCATE A DESIRED FICHE AND PLACE IT IN THE READER PLUS THE LENGTH OF TIME NECESSARY TO REPLACE THE FICHE).

THE CONTRACTING OFFICER DOES NOT DENY THAT SAVINGS IN SHIPPING COSTS ARE INHERENT IN THE USE OF A 210:1 SYSTEM AS OPPOSED TO A 48:1 SYSTEM. HIS POSITION IS THAT THERE IS NO ABSOLUTE WAY TO DEFINE THE EXTENT OF THE SAVINGS. IN THIS REGARD, WHILE YOUR ESTIMATE WAS BASED ON THE COST OF MAILING THE FICHE AT FIRST-CLASS POSTAGE RATES, THE CONTRACTING OFFICER POINTS OUT THAT FICHE WILL BE SHIPPED IN WHATEVER MANNER IS DEEMED APPROPRIATE AT THE TIME OF SHIPMENT. HE TAKES ESSENTIALLY THE SAME POSITION WITH RESPECT TO YOUR PROJECTIONS OF REDUCED LABOR COSTS ASSOCIATED WITH INFORMATION RETRIEVAL:

INFORMATION RETRIEVAL TIME. MICROFORM DATA SYSTEMS 'ASSUMES' THAT IT TAKES 6 SECONDS TO LOCATE AND 3 SECONDS TO REFILE IN A 210X SYSTEM AND FURTHER 'ASSUMES' THAT IT TAKES 12 SECONDS TO LOCATE AND 6 SECONDS TO FILE A FICHE IN A 42X SYSTEM. IT GOES ON TO 'ASSUME' 10 ACCESSES PER DAY, TO 'ASSUME' 200 WORKING DAYS PER YEAR, TO 'ASSUME' 5 YEARS AND TO 'ASSUME' 5720 READERS FOR AN 'ASSUMED' TIME OF 57,200,000 SECONDS. IT TAKES THE 'ASSUMED' SAVINGS OF 9 SECONDS PER ACCESS AND 'ASSUMED' LABOR COST OF $2.50 PER HOUR AND COMPUTES AN 'ASSUMED' SAVINGS OF $357,500. IT IS INTERESTING TO NOTE THAT MICROFORM DATA SYSTEMS DOES NOT SHOW THE LOSS OF TIME INHERENT IN LOCATING DATA ON A 210X MICROFICHE. A 4 X 6 MICROFICHE PROVIDED BY MICROFORM DATA SYSTEMS WOULD CONTAIN APPROXIMATELY 4300 FULL SIZED (HARDCOPY) PAGES OF DATA AS COMPARED TO APPROXIMATELY 220 PAGES FOR WOLLENSAK. OBVIOUSLY, IT TAKES LONGER TO FIND AN ITEM OF DATA SOMEWHERE IN 4300 PAGES THAN IT WOULD IN 220 PAGES. IN ANY EVENT, A SERIES OF ASSUMPTIONS THAT DO NOT REFLECT THE REALITIES OF ACTUAL OPERATING CONDITIONS HAVE NO PLACE IN THE EVALUATION OF BIDS AND AS SUCH, WERE NOT INCLUDED.

WHILE OUR OFFICE BELIEVES THAT IT IS IN THE BEST INTERESTS OF THE GOVERNMENT TO CONSIDER TOTAL SYSTEMS COSTS, IT HAS BEEN OUR CONSISTENT POSITION THAT FACTORS, SUCH AS THOSE ADVANCED HERE, MUST BE QUANTIFIED WITH REASONABLE CERTAINTY BEFORE THEY MAY BE USED IN THE EVALUATION OF BIDS. SEE B-171127, MARCH 10, 1971, CITING, INTER ALIA, 47 COMP. GEN. 233 (1967); 45 ID. 59 (1965); 36 ID. 380 (1956); AND 35 ID. 282 (1955). US, THE ASSUMPTIONS UPON WHICH YOUR COMPUTATIONS ARE BASED HIGHLIGHT THE CONJECTURAL NATURE OF THE COST SAVINGS FLOWING FROM THESE FACTORS. THOUGH WE DO NOT SAY THAT USE OF THESE FACTORS IN THE EVALUATION OF BIDS WOULD BE INAPPROPRIATE, THEY SHOULD BE USED ONLY AFTER THOROUGH STUDY AND CONSIDERATION, ESTABLISHMENT OF PROPER CRITERIA FOR THE USE OF THE FACTORS, AND SPECIFIC NOTICE IN THE INVITATION. 45 COMP. GEN. 433, 435 (1966). WE THEREFORE CONCUR IN THE CONTRACTING OFFICER'S POSITION.