B-174492, JUN 1, 1972

B-174492, JUN 1, 1972

BID PROTEST - IMPROPER PROCUREMENT PROCEDURES CONCERNING THE PROTEST OF CROWN CORK AND SEAL COMPANY, INC; AGAINST AWARD OF A CONTRACT TO THE MIEHLE DIVISION, MGD GRAPHIC SYSTEMS, NORTH AMERICAN ROCKWELL (MIEHLE) UNDER A SOLICITATION ISSUED BY THE BUREAU OF ENGRAVING AND PRINTING (BEP) FOR PRINTING PRESSES. BEP'S ACCEPTANCE OF MIEHLE'S PROPOSED AUTOMATIC TRANSFER PRESS AS THE STANDARD AGAINST WHICH OTHER PROPOSALS WOULD BE EVALUATED WAS NEVER CLEARLY COMMUNICATED TO ALL OFFERORS BY WRITTEN AMENDMENT. FURTHER, NO SPECIFIC GUIDANCE WAS PROVIDED WITH RESPECT TO ITEMS ENTITLED "STANDARD RELATED EQUIPMENT" AND "SOLVENT RECOVERY SYSTEM." FINALLY, THE ACCEPTANCE OF MIEHLE'S UNSOLICITED PRICE MODIFICATION AFTER THE FINAL DATE FOR PROPOSAL SUBMISSION WAS CONTRARY TO THE REQUIREMENT FOR A COMMON CUTOFF DATE CONTAINED IN FPR 1-3.805-1(B). THESE DEFICIENCIES PRECLUDED CROWN'S PROPOSAL FROM BEING CONSIDERED IN A FAIR AND IMPARTIAL MANNER AND SHOULD BE PREVENTED FROM RECURRING IN FUTURE PROCUREMENTS. ALSO, IF ADDITIONAL PRESSES ARE REQUIRED, THE GIORI TRANSFER PRESS SHOULD BE ENUMERATED BY NAME OR PROVIDED AS GOVERNMENT- FURNISHED PROPERTY, AS SUGGESTED BY CROWN.

TO MR. SECRETARY:

BY LETTER DATED JANUARY 11, 1972, THE ACTING ASSISTANT SECRETARY FOR ADMINISTRATION FURNISHED OUR OFFICE WITH A REPORT ON THE PROTEST OF CROWN CORK AND SEAL COMPANY, INC; UNDER SOLICITATION NO. 93, ISSUED BY THE BUREAU OF ENGRAVING AND PRINTING (BEP).

THE SUBJECT SOLICITATION CALLED FOR "PRESSES: PRINTING, WEB-FED, POSTAGE STAMP" TO BE CONSTRUCTED IN ACCORDANCE WITH BEP SPECIFICATIONS ATTACHED TO THE SOLICITATION.

THIS PROCUREMENT INITIALLY WAS ADVERTISED UNDER AN INVITATION ISSUED TO 14 FIRMS, BUT ONLY TWO FIRMS, CROWN AND THE MIEHLE DIVISION, MGD GRAPHIC SYSTEMS, NORTH AMERICAN ROCKWELL (MIEHLE), SUBMITTED BIDS. HOWEVER, UPON EVALUATION OF THE CROWN AND MIEHLE BIDS, IT WAS DETERMINED THAT THE MIEHLE BID, IN THE AMOUNT OF $2.98 MILLION, WAS NONRESPONSIVE BECAUSE IT CONTAINED AN OPEN-END ESCALATION PROVISION TO COVER POTENTIAL MATERIAL AND LABOR COST FLUCTUATIONS, CONTRARY TO THE REQUIREMENTS OF SECTION 1-2.407-4 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR). THE CROWN BID, IN THE AMOUNT OF $4.4 MILLION, WAS DETERMINED TO BE TECHNICALLY NONRESPONSIVE BY THE CONTRACTING OFFICER ON JULY 26, 1971. THEREAFTER, ON JULY 27, 1971, A WRITTEN DETERMINATION AND FINDINGS WAS ISSUED BY THE CHIEF, OFFICE OF ADMINISTRATIVE SERVICES, BEP, AUTHORIZING NEGOTIATION OF A CONTRACT FOR THE PRESSES PURSUANT TO 41 U.S.C. 252(C)(14) AND FPR SEC. 1-3.214, WHICH PERMIT NEGOTIATION AFTER ADVERTISING WHEN IT IS DETERMINED THAT ADVERTISED BID PRICES ARE UNREASONABLE. BOTH BIDDERS WERE ADVISED OF THIS DECISION. UNDER 41 U.S.C. 257(A) AND (C), THE "DETERMINATION AND FINDINGS" IS FINAL. SEE WHEELABRATOR CORPORATION V CHAFEE, 455 F.2D 1306 (1971).

FOLLOWING TECHNICAL NEGOTIATIONS WITH CROWN AND MIEHLE, IT WAS DETERMINED THAT THE CROWN PROPOSAL WAS TECHNICALLY DEFICIENT IN SIX MAJOR AREAS OUTLINED IN A TECHNICAL REPORT DATED SEPTEMBER 24, 1971, AND THAT IT SHOULD BE REJECTED. ALTHOUGH THIS ADVERSE DETERMINATION WAS MADE IN LATE SEPTEMBER, NO AWARD ACTION WAS TAKEN SINCE CONGRESSIONAL INQUIRIES ON CROWN'S BEHALF REPORTEDLY RESULTED IN A REVIEW OF THE MATTER BY YOUR DEPARTMENT. THEREAFTER AWARD WAS MADE TO MIEHLE ON NOVEMBER 2, 1971. CROWN WAS ADVISED OF THE REJECTION OF ITS PROPOSAL BY LETTER OF THE SAME DATE IN ACCORDANCE WITH FPR SEC. 1 3.103, ALTHOUGH THE DETAILED REASONS FOR REJECTION OF ITS PROPOSAL WERE NOT FURNISHED UNTIL BEP WROTE A LETTER TO CROWN ON DECEMBER 22, 1971, IN RESPONSE TO ITS REQUEST FOR DISCUSSION WITH BEP PERSONNEL OF THE BASES OF ITS PROPOSAL REJECTION.

CROWN CONTENDS, IN GENERAL, WITH RESPECT TO THE MAJORITY OF THE AREAS IN WHICH ITS PROPOSAL WAS FOUND TECHNICALLY DEFICIENT, THAT IT COULD HAVE EASILY COMPLIED WITH THE DESIRES OF BEP WITH LITTLE DIFFICULTY HAD THOSE DESIRES BEEN CLEARLY EXPRESSED, EITHER IN THE SOLICITATION DOCUMENT, OR LATER DURING NEGOTIATIONS.

WITH RESPECT TO ONE MAJOR AREA RELIED ON FOR PROPOSAL REJECTION, HOWEVER (THE REQUIREMENT FOR AN "AUTOMATIC TRANSFER PRESS"), CROWN CONTENDS, IN ESSENCE, THAT BEP ENTERTAINED AN UNCOMMUNICATED PREFERENCE FOR A TRANSFER PRESS MANUFACTURED BY A PARTICULAR FOREIGN MANUFACTURER AND THAT THIS PREFERENCE EFFECTIVELY PRECLUDED ANY OFFEROR SAVE MIEHLE FROM COMPETING SUCCESSFULLY FOR AWARD. IN THIS REGARD, CROWN MAINTAINS THAT THE VALUE OF THE TRANSFER PRESS IN QUESTION IS IN THE NEIGHBORHOOD OF $100,000, AS OPPOSED TO THE APPROXIMATELY $3 MILLION VALUE OF THE TOTAL PROCUREMENT, AND CONCLUDES THEREFROM THAT THE GOVERNMENT'S INTERESTS WOULD HAVE BETTER BEEN SERVED EITHER BY ACQUIRING THE TRANSFER PRESS SEPARATELY AND FURNISHING IT AS GOVERNMENT-FURNISHED PROPERTY OR BY SPECIFYING THE DESIRED TRANSFER PRESS BY BRAND NAME IN THE SOLICITATION SO ALL OFFERORS WOULD HAVE EQUAL OPPORTUNITY TO ACQUIRE IT FROM THE MANUFACTURER.

CROWN ALSO RAISES PERIPHERAL ISSUES, CONCLUSORY IN NATURE, RELATING TO THE INDEPENDENCE OF THE DETERMINATIONS MADE BY THE CONTRACTING OFFICER; THE EVALUATION OF THE APPLICABLE BASIC IMPORT DUTY WITH RESPECT TO FOREIGN ITEMS IN THE MIEHLE OFFER AS REQUIRED BY THE SOLICITATION TERMS AND THE BUY AMERICAN ACT; AND THE REQUIREMENTS OF EXECUTIVE ORDER NO. 11615 CONCERNING ECONOMIC CONTROLS. WITH RESPECT TO THESE PERIPHERAL ISSUES, OUR REVIEW OF THE RECORD REVEALS THAT NO VIOLATIONS OF STATUTE, REGULATION, OR EXECUTIVE ORDER OCCURRED IN THESE AREAS.

WITH RESPECT TO THE VALIDITY OF THE CONTRACT AWARDED TO MIEHLE, THERE IS FOR APPLICATION THE PRINCIPLE THAT THE DRAFTING OF SPECIFICATIONS WHICH REFLECT THE MINIMUM NEEDS OF THE GOVERNMENT AND THE DETERMINATION WHETHER ITEMS OFFERED MEET THE SPECIFICATIONS ARE MATTERS OF JUDGMENT RESERVED TO THE PROCUREMENT ACTIVITY WHICH ORDINARILY ARE NOT SUBJECT TO QUESTION BY OUR OFFICE. SEE 47 COMP. GEN. 701 (1968). FURTHER, WE BELIEVE THAT THE RECORD SUPPORTS THE TECHNICAL DECISION THAT THE MIEHLE APPROACH TO MEET THE NEEDS OF BEP WAS SUPERIOR OVER THE ONE PRESENTED BY THE CROWN PROPOSAL.

HOWEVER, IN OUR OPINION, THE PROCUREMENT PROCEDURES FOLLOWED DEVIATED FROM GOOD PROCUREMENT PRACTICES. SUBPARAGRAPH (C) OF FPR SEC. 1-3.802, "PREPARATION FOR NEGOTIATION," STATES THAT:

"REQUESTS FOR PROPOSALS SHALL CONTAIN THE INFORMATION NECESSARY TO ENABLE A PROSPECTIVE OFFEROR TO PREPARE A QUOTATION PROPERLY. *** "

SIMILARLY, FPR SEC. 1-3.804, "CONDUCT OF NEGOTIATIONS," STATES THAT:

" *** COMPLETE AGREEMENT OF THE PARTIES ON ALL BASIC ISSUES SHALL BE THE OBJECTIVE OF THE CONTRACT NEGOTIATIONS. ORAL DISCUSSIONS OR WRITTEN COMMUNICATIONS SHALL BE CONDUCTED WITH OFFERORS TO THE EXTENT NECESSARY TO RESOLVE UNCERTAINTIES RELATING TO THE PURCHASE OR THE PRICE TO BE PAID.

FURTHER, FPR SEC. 1-3.805-1 STATES, IN PERTINENT PART, THAT:

" *** WHEN THE PROPOSAL MOST ADVANTAGEOUS TO THE GOVERNMENT INVOLVES A MATERIAL DEPARTURE FROM THE STATED REQUIREMENTS, CONSIDERATION SHALL BE GIVEN TO OFFERING THE OTHER FIRMS WHICH SUBMITTED PROPOSALS AN OPPORTUNITY TO SUBMIT NEW PROPOSALS ON A TECHNICAL BASIS WHICH IS COMPARABLE TO THAT OF THE MOST ADVANTAGEOUS PROPOSAL ***

"(B) *** WHENEVER NEGOTIATIONS ARE CONDUCTED WITH SEVERAL OFFERORS, WHILE SUCH NEGOTIATIONS MAY BE CONDUCTED SUCCESSIVELY, ALL OFFERORS SELECTED TO PARTICIPATE IN SUCH NEGOTIATIONS *** SHALL BE OFFERED AN EQUITABLE OPPORTUNITY TO SUBMIT SUCH PRICE, TECHNICAL, OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM THE NEGOTIATIONS. ALL SUCH OFFERORS SHALL BE INFORMED OF THE SPECIFIED DATE (AND TIME IF DESIRED) OF THE CLOSING OF NEGOTIATIONS AND THAT ANY REVISIONS TO THEIR PROPOSALS SHOULD BE SUBMITTED BY THAT DATE. ***

"(D) WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE, OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, SUCH CHANGE OR MODIFICATION SHALL BE MADE IN WRITING AS AN AMENDMENT TO THE REQUEST FOR PROPOSALS, AND A COPY SHALL BE FURNISHED TO EACH PROSPECTIVE CONTRACTOR. *** "

WITH RESPECT TO THE AUTOMATIC TRANSFER PRESS REQUIREMENT, THE ORIGINAL SOLICITATION SPECIFICATIONS STATED ONLY THAT "ANY ENGRAVING, TRANSFERRING, OR PLATE MAKING EQUIPMENT REQUIRED FOR PREPARING PLATES OR ENGRAVED CYLINDERS SHALL BE FURNISHED AS A PART OF THE PRESS, IF SUCH EQUIPMENT IS NOT AVAILABLE IN THE BUREAU'S OFFICE OF ENGRAVING ON THE ISSUE DATE OF THE INVITATION TO BID." IN RESPONSE TO THIS REQUIREMENT, CROWN INITIALLY PROPOSED TO FURNISH A HAND-OPERATED TRANSFER PRESS, REPORTEDLY SIMILAR TO THOSE CURRENTLY IN USE IN OTHER APPLICATIONS AT BEP. DURING NEGOTIATIONS, HOWEVER, CROWN WAS INFORMED THAT ITS COMPETITOR, MIEHLE, HAD PROPOSED A FULLY AUTOMATIC TRANSFER PRESS; THAT IT WAS THE DESIRE OF BEP THAT AN AUTOMATIC PRESS BE FURNISHED; AND THAT AUTOMATIC PRESSES OF THE TYPE DESIRED WERE MANUFACTURED BY TWO FOREIGN FIRMS. THE NAME OF ONE OF THE FOREIGN FIRMS WAS MENTIONED BY BEP PERSONNEL DURING NEGOTIATIONS BUT THE NAME OF THE SECOND FIRM, DELARUE GIORI, S.A; WAS WITHHELD ON THE GROUND THAT THE GIORI PRESS WAS THE ONE PROPOSED TO BE FURNISHED BY MIEHLE AND THAT DIVULGENCE OF ITS NAME, THEREFORE, WOULD BE INAPPROPRIATE. FOLLOWING NEGOTIATIONS, BY LETTER DATED AUGUST 24, 1971, CROWN WAS ADVISED AS FOLLOWS:

"THE TRANSFER PRESS TO BE OFFERED IN CONJUNCTION WITH THE SPECIFICATIONS AND OUR AUGUST 17, DISCUSSION SHALL BE A MACHINE WHICH IS COMPLETELY AUTOMATIC ACCORDING TO A PRE-ESTABLISHED PROGRAMMED CYCLE DETERMINED BY THE TYPE OF ENGRAVING TO BE TRANSFERRED."

AS A RESULT OF THE ABOVE-DESCRIBED SEQUENCE OF EVENTS, CROWN STATES THAT IT ELECTED TO SUBCONTRACT FOR THE AUTOMATIC TRANSFER PRESS WITH THE GENERAL ELECTRIC COMPANY, IF AWARDED A CONTRACT. IT IS FURTHER ALLEGED THAT THIS INFORMATION WAS CONVEYED TO APPROPRIATE BEP PERSONNEL BEFORE THE FINAL DATE FOR PROPOSAL SUBMISSION OF SEPTEMBER 7, 1971, ALTHOUGH THE FINAL PROPOSAL SUBMITTED BY CROWN ON THAT DATE CONTAINS ONLY A GENERAL DESCRIPTION OF THE TRANSFER PRESS WHICH IT PROPOSED TO PROVIDE AND MAKES NO MENTION OF ANY SUBCONTRACTING ARRANGEMENTS WITH GENERAL ELECTRIC. ANY EVENT, THE RECORD BEFORE US, INCLUDING A MEMORANDUM SUMMARIZING THE POINTS DISCUSSED WITH CROWN DURING NEGOTIATIONS, DOES NOT INDICATE THAT ONLY THE GIORI TRANSFER PRESS WAS ACCEPTABLE OR THAT THE PROPOSAL OF A TRANSFER PRESS OTHER THAN THE TWO MENTIONED DURING THE NEGOTIATION SESSION WITH CROWN WOULD NECESSARILY RENDER A PROPOSAL TECHNICALLY UNACCEPTABLE. HOWEVER, BY LETTER TO CROWN DATED DECEMBER 22, 1971, FOLLOWING CROWN'S PROTEST TO OUR OFFICE, THE BEP DIRECTOR STATED THAT:

"ON THE BASIS OF OUR UPDATED INFORMATION ON THE AVAILABILITY INTERNATIONALLY OF SUCH (AUTOMATIC TRANSFER) EQUIPMENT IT IS NOT OUR JUDGMENT THAT YOUR ORGANIZATION CAN OBTAIN EQUIPMENT BY PURCHASE FROM ABROAD WHICH WILL ADEQUATELY COMPETE WITH THE EQUIPMENT OFFERED IN THE NEGOTIATIONS BY THE MIEHLE COMPANY. *** "

IT APPEARS TO US THAT WHAT ACTUALLY HAPPENED WAS THAT, AT LEAST WITH RESPECT TO THE AUTOMATIC TRANSFER PRESS, BEP ACCEPTED THE MIEHLE APPROACH AS THE STANDARD AGAINST WHICH THE CROWN PROPOSAL WAS TO BE EVALUATED WITHOUT SO INFORMING CROWN. WHILE WE DO NOT CHALLENGE THE BEP'S TECHNICAL JUDGMENT AS TO THE STANDARD OF EVALUATION EMPLOYED, THAT STANDARD SHOULD HAVE BEEN CLEARLY COMMUNICATED TO ALL OFFERORS BY WRITTEN AMENDMENT TO THE SOLICITATION AND BY LATER APPROPRIATE DISCUSSIONS. IN OUR OPINION, THE FAILURE ON THE PART OF BEP TO CONVEY THIS IMPORTANT TECHNICAL RESERVATION TO CROWN BEFORE SUBMISSION OF ITS FINAL PROPOSAL VIOLATED THE FUNDAMENTAL CONCEPT THAT RESPONSIBLE AND QUALIFIED OFFERORS FOR GOVERNMENT CONTRACTS SHOULD BE TREATED IN A FAIR AND IMPARTIAL MANNER AS CONTEMPLATED BY THE FPR PARAGRAPHS QUOTED ABOVE. SEE 50 COMP. GEN. 670, 672-673 (1971).

ADDITIONALLY, THIS APPARENT UNCOMMUNICATED PREFERENCE FOR THE MIEHLE TECHNICAL APPROACH IS EVIDENT IN TWO OTHER AREAS MENTIONED IN THE DECEMBER 22, 1971, BEP LETTER JUSTIFYING REJECTION OF THE CROWN PROPOSAL. THUS, WHILE THE ORIGINAL SOLICITATION AND SUMMARY OF NEGOTIATION DISCUSSIONS PROVIDE NO SPECIFIC GUIDANCE WITH RESPECT TO ITEMS ENTITLED "STANDARD RELATED EQUIPMENT" AND "SOLVENT RECOVERY SYSTEM," THE DECEMBER 22 LETTER UNFAVORABLY COMPARES THE APPROACH CHOSEN BY CROWN WITH THAT OFFERED BY MIEHLE, REFERRING TO SPECIFIC ASPECTS OF THE MIEHLE PROPOSAL NOT STATED AS REQUIREMENTS IN THE SOLICITATION, AS AMENDED, AND APPARENTLY NOT DISCUSSED DURING NEGOTIATIONS.

FINALLY, THE ADMINISTRATIVE REPORT INDICATES THAT MIEHLE SUBMITTED AN UNSOLICITED PRICE MODIFICATION ON SEPTEMBER 22, 1971, REDUCING ITS $3.129 MILLION PRICE TO $2.9 MILLION. THIS REDUCTION RESULTED IN THE MIEHLE PRICE AS EVALUATED BECOMING LOWER THAN THE CROWN EVALUATED PRICE OF $3.257 MILLION. AS INDICATED ABOVE, THE FINAL DATE FOR PROPOSAL SUBMISSION WAS SEPTEMBER 7, 1971. THE BEP TECHNICAL REPORT ON THE CROWN AND MIEHLE PROPOSALS IS DATED SEPTEMBER 24, 1971, INDICATING THAT AT THE TIME THE MIEHLE PRICE REVISION WAS SUBMITTED, THE CROWN OFFER WAS STILL UNDER CONSIDERATION.

FPR SEC. 1-3.805-1(B), QUOTED ABOVE, REQUIRES THE ESTABLISHMENT OF A COMMON CUTOFF DATE FOR THE CLOSE OF NEGOTIATIONS. WHILE OUR OFFICE HAS SANCTIONED THE REOPENING OF NEGOTIATIONS WHEN A FAVORABLE PRICE REVISION IS RECEIVED AFTER THE ESTABLISHED CUTOFF DATE, IT HAS CLEARLY STATED THAT EQUAL OPPORTUNITY FOR ADDITIONAL PROPOSAL REVISION MUST BE EXTENDED TO ALL SIMILARLY SITUATED OFFERORS, AND THAT A NEW CLOSING DATE MUST BE ESTABLISHED. SEE B-173597(1), DECEMBER 1, 1971. SINCE THE CROWN PROPOSAL WAS STILL UNDER CONSIDERATION WHEN THE LATE MIEHLE PRICE REVISION WAS RECEIVED, THAT REVISION SHOULD NOT HAVE BEEN ACCEPTED WITHOUT THE REOPENING OF NEGOTIATIONS TO EXTEND THE SAME PRICE REVISION OPPORTUNITY TO CROWN.

THESE DEFICIENCIES ARE BROUGHT TO YOUR ATTENTION WITH THE RECOMMENDATION THAT THE CIRCUMSTANCES OF THIS PROCUREMENT BE REVIEWED IN THE LIGHT OF OUR COMMENTS AS A MEANS TO IMPROVE FUTURE NEGOTIATION PROCEDURES. PARTICULAR, PAGE I-2 OF THE SOLICITATION STATES THAT THE POSSIBILITY EXISTS THAT AS MANY AS THREE ADDITIONAL PRESSES SIMILAR OR IDENTICAL TO THE TWO COVERED BY THE INSTANT SOLICITATION WILL BE PROCURED LATER. ALTERNATE SUGGESTIONS ADVANCED BY CROWN THAT THE GIORI TRANSFER PRESS BE ENUMERATED BY NAME IN THE SOLICITATION OR THAT IT BE PROCURED SEPARATELY BY BEP AND PROVIDED AS GOVERNMENT-FURNISHED PROPERTY WOULD APPEAR TO BE PREFERABLE TO THE PROCEDURES FOLLOWED HERE, THE EFFECT OF WHICH WAS TO EXCLUDE ANY OFFEROR WHO WAS NOT IN A POSITION TO KNOW OF BEP'S PREFERENCE FOR THE GIORI TRANSFER PRESS. WE THEREFORE SUGGEST THAT, IN ADDITION TO OUR RECOMMENDATION FOR REVIEW OF THE CIRCUMSTANCES OF THIS PROCUREMENT, CONSIDERATION BE GIVEN TO IMPLEMENTING ONE OR THE OTHER OF THE CROWN SUGGESTIONS SHOULD ADDITIONAL PRESSES BE PROCURED IN THE ..END :