B-174302, MAY 24, 1972

B-174302, MAY 24, 1972

BID PROTEST - NEGOTIATED PROCUREMENTS - AWARD CRITERIA DENIAL OF PROTEST BY HIGH VOLTAGE ENGINEERING CORPORATION AGAINST THE AWARD OF A COST-PLUS-A-FIXED-FEE CONTRACT TO PHYSICS INTERNATIONAL CORPORATION (PIC), UNDER AN RFQ ISSUED BY THE U.S. ARMY MOBILITY EQUIPMENT RESEARCH AND DEVELOPMENT CENTER, FT. BELVOIR, VA., FOR THE DESIGN, FABRICATION, TESTING AND DELIVERY OF A TRANSPORTABLE ELECTROMAGNETIC PULSE SIMULATOR. IN A NEGOTIATED PROCUREMENT, THE RULES OF FORMALLY ADVERTISED, COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ARE NOT APPLICABLE, AND A CONTRACTING OFFICER MAY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT. THE CONTRACTING AGENCY OF NECESSITY HAS BROAD DISCRETION IN EVALUATING TECHNICAL AND PRICE PROPOSALS, AND IN DETERMINING WHICH PROPOSAL IS MOST ADVANTAGEOUS TO THE GOVERNMENT. SINCE IT APPEARS FROM THIS RECORD THAT THE CONTRACTING OFFICER HAD A REASONABLE BASIS FOR HIS AWARD SELECTION, GAO WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE AWARD AS MADE TO PIC.

TO HIGH VOLTAGE ENGINEERING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 7, 1971, AND SUBSEQUENT CORRESPONDENCE RELATIVE TO YOUR PROTEST AGAINST THE AWARD ON SEPTEMBER 17, 1971, OF A COST-PLUS-A-FIXED-FEE CONTRACT TO THE PHYSICS INTERNATIONAL CORPORATION (PIC), PURSUANT TO REQUEST FOR QUOTATIONS NO. DAAK02-71-Q- 1490, ISSUED APRIL 5, 1971, BY THE UNITED STATES ARMY MOBILITY EQUIPMENT RESEARCH AND DEVELOPMENT CENTER, FORT BELVOIR, VIRGINIA, FOR THE DESIGN, FABRICATION, TESTING AND DELIVERY OF A TRANSPORTABLE ELECTROMAGNETIC PULSE SIMULATOR (TEMPS), CONSISTING OF A PULSER, AN ANTENNA/TERMINATION STRUCTURE AND AN ANTENNA SUPPORT STRUCTURE.

YOU WERE ADVISED BY LETTER DATED SEPTEMBER 17, 1971, FROM THE CONTRACTING OFFICER, THAT, AFTER AN EVALUATION OF ALL OFFERS SUBMITTED, IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO AWARD A CONTRACT TO ANOTHER COMPANY. THE LETTER STATED THAT FIVE QUOTATIONS WERE SUBMITTED, THAT A CONTRACT IN THE TOTAL ESTIMATED AMOUNT OF $1,924,664 WAS AWARDED TO PIC, AND THAT IT HAD BEEN DETERMINED THAT THE TECHNICAL APPROACH CHOSEN BY YOUR COMPANY WAS NOT LIKELY TO PROVIDE THE TRANSPORTABILITY NECESSARY TO THE TEMPS. IT WAS INDICATED THAT DEFICIENCIES HAD BEEN FOUND IN YOUR TECHNICAL PROPOSAL WITH RESPECT TO THE FOLLOWING IMPORTANT AREAS:

1. THE NECESSITY OF DISASSEMBLING THE PULSER PRIOR TO TRANSPORT WHICH WOULD REQUIRE THE VENTING OF 1,700 POUNDS OF INSULATING GAS AT THAT TIME, AS WELL AS PRIOR TO PERFORMING MAINTENANCE;

2. THE PROPOSED PULSER WEIGHT EXCEEDS THE WEIGHT SPECIFIED IN THE REQUEST FOR QUOTATIONS BY 3,775 POUNDS; AND

3. THE PROPOSED PULSER EXCEEDS BY 18 FEET THE LENGTH SPECIFIED IN THE REQUEST FOR QUOTATIONS.

YOU STATED IN YOUR LETTER OF OCTOBER 7, 1971, THAT THE ESTIMATED AMOUNT OF THE CONTRACT AWARDED TO PIC IS $430,786 HIGHER THAN UNDER YOUR FIRM'S OFFER. YOU SUGGESTED THAT THE FIRST INDICATED AREA OF DEFICIENCY IN YOUR PROPOSAL WAS OF SLIGHT SIGNIFICANCE IN THAT THE COST OF VENTING 1,700 POUNDS OF INSULATING GAS WOULD BE APPROXIMATELY $3,000 AND YOU HAD PROPOSED THAT THE GAS BE SAVED BY USING A GAS HANDLING SYSTEM COSTING LESS THAN $30,000. WITH RESPECT TO THE SECOND AND THIRD INDICATED AREAS OF DEFICIENCY, YOU CONTENDED THAT AT NO TIME DURING THE BRIEFING GIVEN BY THE CONTRACTING OFFICER AND HIS TECHNICAL STAFF TO INTERESTED PARTIES WERE DEMENSIONS AND WEIGHTS GIVEN AS BINDING

THE DEPARTMENT OF THE ARMY FURNISHED A DOCUMENTED REPORT ON THE PROTEST. COPIES OF THE CONTRACTING OFFICER'S SEPARATE ADMINISTRATIVE REPORT AND OF A LETTER DATED DECEMBER 17, 1971, FROM HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, WERE FURNISHED TO YOUR COMPANY FOR COMMENT. YOUR COMMENTS WERE SUBMITTED BY LETTER DATED JANUARY 6, 1972.

IT IS REPORTED BY THE CONTRACTING OFFICER THAT SIX PROPOSALS WERE RECEIVED IN RESPONSE TO THE REQUEST FOR QUOTATIONS, TWO FROM ONE OF THE FIVE COMPANIES WHICH SUBMITTED PROPOSALS. AS THE RESULT OF TECHNICAL EVALUATIONS AND DISCUSSIONS WITH OFFERORS, IT WAS DECIDED TO ELIMINATE FOUR PROPOSALS FROM FURTHER CONSIDERATION. A FINAL TECHNICAL DISCUSSION AND NEGOTIATION CONFERENCE WAS HELD WITH THE REMAINING OFFERORS, YOUR COMPANY AND PIC. FINAL PROPOSALS AND ADDENDUMS WERE RECEIVED FROM THE TWO COMPANIES AND THE TECHNICAL EVALUATION COMMITTEE RECOMMENDED THAT AN AWARD BE MADE TO PIC. THE CONTRACTING OFFICER STATES THAT HE REVIEWED THE TECHNICAL EVALUATIONS AND COST DATA AND AGREED WITH THE RECOMMENDATION OF THE TECHNICAL EVALUATION COMMITTEE.

THE AREAS OF INDICATED DEFICIENCIES REFERRED TO IN THE LETTER OF SEPTEMBER 17, 1971, TO YOUR COMPANY, ARE DISCUSSED IN THE CONTRACTING OFFICER'S REPORT. HE DOES NOT DISPUTE YOUR SUGGESTION THAT THE FIRST INDICATED AREA OF DEFICIENCY IN YOUR PROPOSAL WAS OF MINOR SIGNIFICANCE. IT IS REPORTED WITH RESPECT TO THE SECOND AND THIRD INDICATED AREAS OF DEFICIENCY THAT THE WEIGHT AND DIMENSIONS OF THE PULSER WERE FURNISHED AS GUIDELINES NOT BINDING UPON PROSPECTIVE OFFERORS, BUT THAT YOUR PROPOSAL EXCEEDED THE GUIDELINES TO SUCH AN EXTENT AS NOT TO BE SATISFACTORY. THE CONTRACTING OFFICER ALSO STATES THAT THE THREE SPECIFIED AREAS OF DEFICIENCY WERE EXAMPLES ONLY AND WERE NOT INTENDED TO CONVEY THE COMPLETE RESULTS OF THE TECHNICAL EVALUATION OF YOUR PROPOSAL.

YOU STATE IN YOUR LETTER OF JANUARY 6, 1972, THAT THE CONTRACTING OFFICER HAS RESTATED HIS EARLIER REASONS FOR REJECTING YOUR OFFER WITHOUT ADDING MATERIALLY TO HIS SUBSTANTIATION FOR THOSE REASONS. YOU STATE THAT YOU DO NOT CONCUR WITH THE CONTRACTING OFFICER'S STATEMENT THAT THE AWARD TO PIC WAS IN THE "BEST INTERESTS OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED." YOU ALSO DISAGREE WITH HIS CONTENTIONS THAT YOUR COMPANY DID NOT SUBMIT A REALISTIC COST ESTIMATE AND DID NOT ADEQUATELY RESPOND TO THE COMPLEX TECHNICAL QUESTIONS RAISED DURING THE TECHNICAL BRIEFING. ALSO, YOU CONTEND THAT THE CONTRACTING OFFICER MAY WELL NOT HAVE CONSIDERED ALL ASPECTS OF HIS OWN TECHNICAL SPECIFICATION WHEN HE STATED THAT YOUR COMPANY WAS IN ERROR IN CITING A POSSIBLE 200-FEET SUPPORT STRUCTURE HEIGHT; AND THAT AT NO TIME DURING THE DEBRIEFING DID THE CONTRACTING OFFICER OR HIS REPRESENTATIVE STATE THAT YOUR TECHNICAL PROPOSAL WAS "TECHNICALLY UNACCEPTABLE," ONLY THAT THE PIC PROPOSAL WAS BETTER.

YOU DISCUSS CERTAIN OF THE TECHNICAL FEATURES OF YOUR PROPOSED SYSTEM AND PIC'S. YOU CONTEND THAT YOUR PROPOSED SYSTEM WOULD HAVE GREATER RELIABILITY, THUS LOWER OPERATING COST, THAN THE PIC SYSTEM AND THAT THE LENGTH OF THE PROPOSED PULSER WHEN ASSEMBLED (40 FEET) CANNOT BE REGARDED AS DETRIMENTAL TO ITS OPERATION. YOU SUGGEST THAT THE "BEST INTERESTS" OF THE GOVERNMENT BE EXAMINED MORE CLOSELY AND YOU AGAIN REFER TO THE FACT THAT THE TOTAL ESTIMATED COST IN YOUR PROPOSAL IS MORE THAN $400,000 LOWER THAN THE ESTIMATED COST OF THE CONTRACT AWARDED TO PIC.

WITH RESPECT TO THE CONTROVERSY, THE "TEMPS PROPOSAL EVALUATION," REFERRED TO IN THE CONTRACTING OFFICER'S ADMINISTRATIVE REPORT ON YOUR PROTEST, SETS FORTH VARIOUS TECHNICAL, MANAGEMENT AND COST FEATURES WHICH WERE CONSIDERED BY THE EVALUATION COMMITTEE IN THE FINAL CONTRACTOR SELECTION PHASE OF THE PROCUREMENT. THE REPORT OF THE EVALUATION COMMITTEE STATES THAT THE FOLLOWING TECHNICAL FEATURES OF THE PIC PROPOSED SYSTEM AND YOUR PROPOSED SYSTEM WERE COMPARED: OUTPUT SWITCH GAP, PRIMARY POWER SUPPLY, PEAKING CAPACITORS, ENERGY STORAGE CAPACITORS, ANTENNA, PHYSICAL PARAMETERS, MAINTENANCE AND RELIABILITY.

IT WAS CONSIDERED THAT THE OUTPUT SWITCH GAP PROPOSED BY PIC, A SINGLE CHANNEL HEMISPHERICAL SWITCH GAP, PRESENTED A SUPERIOR APPROACH TO YOUR MULTICHANNEL POINT-PLANE OUTPUT SWITCH GAP, IN TERMS OF SIMPLICITY, RELIABILITY AND MAINTAINABILITY. ALSO, THE COMMITTEE FOUND THAT PIC HAD PROPOSED A RATHER SIMPLE AND WELL PROVEN APPROACH OF USING BATTERIES FOR THE PRIMARY POWER SUPPLY, WHEREAS, YOUR COMPANY PROPOSED THE USE OF AN INDUSTRIAL MOTOR-DRIVEN AIR COMPRESSOR UNIT AND FURNISHED VERY FEW DETAILS AND SPECIFICATIONS FOR INTERFACING THE COMPONENTS OF THE SYSTEM. THE PROPOSED POWER SUPPLY WAS FURTHER QUESTIONED ON THE BASIS THAT THE TEMPS MUST BE COMPLETELY TRANSPORTABLE AND THE USER OF YOUR PROPOSED EQUIPMENT WOULD BE COMPELLED TO ESTABLISH AT EACH SITE PRIMARY AC POWER SUPPLY, WITH ADDITIONAL COSTS REQUIRED.

THE COMMITTEE DETERMINED IN REGARD TO PEAKING CAPACITORS THAT THE PIC AND YOUR PROPOSAL APPROACHES WOULD REQUIRE FURTHER DEVELOPMENT. THE DESIGN PROPOSED BY PIC WAS BACKED UP BY TWO ALTERNATE APPROACHES, WHILE YOUR COMPANY REPORTEDLY RELIED ENTIRELY UPON THE SUCCESS OF THE GAS DIELECTRIC PEAKING CAPACITOR. IT WAS FOUND IMPERATIVE TO PERFORM A TECHNICAL RISK ANALYSIS BUT YOUR COMPANY REPORTEDLY CHOSE NOT TO PURSUE THIS ROUTE EVEN AFTER TECHNICAL DISCUSSION WITH GOVERNMENT PERSONNEL. THE COMMITTEE FOUND WITH REFERENCE TO ENERGY STORAGE CAPACITORS THAT BOTH PIC AND YOUR COMPANY WERE EXCESSIVELY WEAK IN THAT AREA OF THE DEVELOPMENT PROGRAM. HOWEVER, WHILE PIC REPORTEDLY CHOSE TO EVALUATE VARIOUS TYPES OF ENERGY STORAGE CAPACITORS, YOUR COMPANY REPORTEDLY RELIED SOLELY ON ONE COMPANY FOR ITS DESIGN. WITH REGARD TO THE ANTENNAS, IT WAS FOUND THAT WHILE BOTH FIRMS PROPOSED THE SAME BASIC CONCEPT, YOUR FIRM FAILED TO GIVE SUFFICIENT DETAIL IN THE AREAS OF ANTENNA TERMINATION OR ANTENNA POLARIZATION.

CONCERNING THE MATTER OF PHYSICAL PARAMETERS, THE COMMITTEE REPORTED THAT PIC ACHIEVED A HIGHER SCORING ON THE BASIS OF TRANSPORTABILITY AND MAINTAINABILITY. THE TWO SYSTEMS WERE REPORTED AS DIFFERING SIGNIFICANTLY IN WEIGHT AND LENGTH AND, WHILE PIC ADHERED CLOSELY TO THE GUIDELINES OF THE REQUEST FOR QUOTATIONS, YOUR PROPOSAL EXCEEDED THOSE GUIDELINES CONSIDERABLY. YOUR PROPOSED 40-FEET LENGTH FOR THE PULSER WAS NOT CONSIDERED DETRIMENTAL TO SYSTEM TRANSPORTABILITY BECAUSE THE PULSER COULD BE DISASSEMBLED PRIOR TO TRANSPORTING. HOWEVER, DISASSEMBLY WAS BELIEVED TO BE UNDESIRABLE FROM A RELIABILITY AND MAINTENANCE STANDPOINT, PARTICULARLY IN VIEW OF THE NECESSITY TO KEEP PULSER FREE OF ANY CONTAMINANTS TO ASSURE RELIABLE OPERATION. IT WAS CONSIDERED THAT THIS MIGHT BE DIFFICULT BECAUSE THE DISASSEMBLY AND SUBSEQUENT ASSEMBLY MIGHT TAKE PLACE UNDER EXTREME ENVIORONMENTAL CONDITIONS.

IN ADDITION TO THE TECHNICAL AREA, THE EVALUATORS CONSIDERED BOTH FIRMS FROM THE MANAGEMENT AND COST STANDPOINT. OVERALL, BOTH FIRMS WERE JUDGED TO HAVE SUBMITTED ADEQUATE ADMINISTRATIVE PLANS, BUT THAT OF PIC "WAS JUDGED, ON A COMPETITIVE BASIS, TO HAVE BEEN SUPERIOR." AS TO COST, THE COMMITTEE INDICATED THAT YOUR ESTIMATE OF REQUIRED MAN HOURS WAS CONSIDERABLY LOWER THAN THE GOVERNMENT'S ESTIMATE AND THAT THE PIC ESTIMATE WAS SLIGHTLY HIGHER THAN THE GOVERNMENT'S ESTIMATE. OTHERWISE, THE COMMITTEE FOUND THAT PIC'S COST PROPOSAL WAS EXCELLENT, IN THAT PIC "COSTED EVERYTHING DOWN FROM NUTS AND BOLTS AND SUBMITTED AN EXTENSIVE BILL OF MATERIAL." THE COMMITTEE CONSIDERED THAT YOUR COMPANY HAD SUBMITTED "A VERY LIMITED COST BREAKDOWN" AND THAT IT DID NOT PRICE ALL OF THE ITEMS REQUIRED. IT WAS REPORTED BY THE COMMITTEE THAT YOUR PROPOSAL CONTAINED NO PROVISIONS FOR SUCH ESSENTIAL THINGS AS PACKAGING AND SHIPPING, TEST SITE PREPARATION AND MISCELLANEOUS EQUIPMENT SUCH AS FILM, CABLE, TEST EQUIPMENT, TOOLS, ETC. PIC REPORTEDLY HAD THESE ITEMS COSTED FOR A TOTAL OF APPROXIMATELY $114,000. IN SUMMARY, THE COMMITTEE REPORTED THAT PIC'S COST PROPOSAL SEEMED TO BE REALISTIC, WHEREAS THE CREDITABILITY OF YOUR COST PROPOSAL COULD BE QUESTIONED.

IN A NEGOTIATED PROCUREMENT THE RULES OF FORMALLY ADVERTISED, COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ARE NOT APPLICABLE, AND A CONTRACTING OFFICER MAY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT. THE CONTRACTING AGENCY OF NECESSITY HAS BROAD DISCRETION IN EVALUATING TECHNICAL AND PRICE PROPOSALS AND IN DETERMINING WHICH PROPOSAL IS MOST ADVANTAGEOUS TO THE GOVERNMENT. 47 COMP. GEN. 336, 341 (1967). THIS IS PARTICULARLY TRUE WHERE, AS HERE, THE CONTRACT IS TO BE AWARDED ON A COST- REIMBURSEMENT BASIS. AS WE HAVE STATED:

" *** THE AWARD OF COST-REIMBURSEMENT CONTRACTS REQUIRES PROCUREMENT PERSONNEL TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING THE PROPOSED COSTS AND TECHNICAL APPROACH INVOLVED. B-152039, JANUARY 20, 1964. WE BELIEVE THAT SUCH JUDGMENT MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCIES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS 'REALISM' OF COSTS AND TECHNICAL APPROACHES, AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS." 50 COMP. GEN. 390, 410 (1970).

SINCE IT APPEARS FROM THE RECORD BEFORE US THAT THE CONTRACTING OFFICER HAD A REASONABLE BASIS ..END :