B-174756, JUN 30, 1972

B-174756, JUN 30, 1972

BID PROTEST - COST-PLUS-FIXED-FEE - AMBIGUOUS EVALUATION CRITERIA - ALLEGED COST-SHARING DECISION DENYING THE PROTEST OF SOLAR, DIVISION OF INTERNATIONAL HARVESTER CO; AGAINST THE AWARDING OF SEVERAL COST-PLUS-FIXED-FEE CONTRACTS TO ANY OTHER FIRMS UNDER AN RFQ ISSUED BY THE ARMY AIR MOBILITY RESEARCH AND DEVELOPMENT LABORATORY, FT. EUSTIS, VA. THE AGENCY'S FAILURE TO SPECIFY THE RELATIVE IMPORTANCE OF THREE TECHNICAL SUBAREAS MAY BE CONTRARY TO SOUND PROCUREMENT POLICY BUT IS NOT SUFFICIENT TO RENDER THE AWARDS IMPROPER. SOLAR'S PROPOSAL WAS REJECTED BECAUSE ITS OFFER TO TEST THE COMPRESSOR SUBSEQUENT TO ITS INCORPORATION IN THE GENERATOR WAS CONTRARY TO THE REQUIREMENT OF THE RFP AND IT ADMITTEDLY REFUSED TO CONDUCT HEAT TRANSFER TESTS. SINCE THE TEST CEILING FIGURE DOES NOT APPEAR TO HAVE BEEN THE DETERMINING FACTOR IN REJECTING THE PROPOSAL, THE COMP GEN CANNOT CONCLUDE THAT THE CAVEAT CONTAINED IN ASPR 4-110(B) AGAINST COST-SHARING WAS VIOLATED. FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.

TO SOLAR, DIVISION OF INTERNATIONAL HARVESTER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 25, 1972, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARDING OF CONTRACTS TO FIRMS OTHER THAN SOLAR UNDER REQUEST FOR QUOTATIONS (RFQ) NO. DAAJ02-71-Q 0075, ISSUED BY THE UNITED STATES ARMY AIR MOBILITY RESEARCH & DEVELOPMENT LABORATORY, EUSTIS DIRECTORATE, FT. EUSTIS, VIRGINIA.

THE RFQ WAS ISSUED IN FURTHERANCE OF THE ARMY SMALL TURBINE ADVANCED GAS GENERATOR (STAGG) PROGRAM, A RESEARCH AND DEVELOPMENT EFFORT TO DEVELOP A CORE GAS GENERATOR TECHNOLOGY FOR FUTURE PROGRAMS. OFFERORS WERE ADVISED THAT THE COMPONENT DESIGNS TO BE UTILIZED IN THE PERFORMANCE OF THE PROGRAM WERE TO BE DERIVED FROM CONTRIBUTIVE ENGINEERING (CE), INDEPENDENT RESEARCH & DEVELOPMENT (IR&D), AND OTHER GOVERNMENT OR INDUSTRY-SPONSORED RESEARCH WORK. THEY WERE FURTHER ADVISED THAT COMPONENT TESTING, AS DISTINGUISHED FROM TESTING OF THE GAS GENERATOR ITSELF, WOULD NOT BE PART OF THE WORK COVERED BY THE CONTRACT ALTHOUGH THE RESULTS OF THE TESTS WERE TO BE PROVIDED TO THE GOVERNMENT.

WILLIAMS RESEARCH CORPORATION, AIRESEARCH MANUFACTURING COMPANY OF ARIZONA, AND SOLAR SUBMITTED PROPOSALS ON A GAS GENERATOR IN THE 1-2 PPS AIR FLOW RANGE. DISCUSSIONS WERE HELD WITH ALL THREE OFFERORS AND EVENTUALLY AWARDS WERE MADE TO WILLIAMS AND AIRESEARCH NOTWITHSTANDING THAT SOLAR'S PROPOSAL WAS SOME $635,000 LESS THAN THE HIGHEST OFFER. REJECTION OF SOLAR'S PROPOSAL IS JUSTIFIED ON THE BASIS THAT THE "TECHNICAL SOUNDNESS AND APPROACH OF THOSE PROPOSALS SUBMITTED BY THE TWO AWARDEES, AS WELL AS THE WEAKNESSES CONTAINED IN THE PROTESTOR'S TECHNICAL APPROACH, CLEARLY OUTWEIGHED THE DIFFERENCES IN COST." IN THIS CONNECTION, THE PROCUREMENT ACTIVITY CONTENDS THAT SOLAR WOULD NOT AGREE TO PERFORM AND PAY FOR CERTAIN HEAT TRANSFER TESTS AND AGREED ONLY RELUCTANTLY TO PERFORM TESTS ON THE COMBUSTER COMPONENT OF THE GENERATOR UP TO A FINANCIAL LIMIT OF $160,000.

SOLAR CONTENDS THAT THE CONTRACTS AWARDED TO WILLIAMS AND AIRESEARCH ARE IMPROPER BECAUSE (1) THEY WILL RESULT IN SUBSTANTIALLY HIGHER COSTS TO THE GOVERNMENT; (2) THEY ARE CONTRARY TO PARAGRAPHS 3-403.(A)(6) AND 4-110 OF ARMED SERVICES PROCUREMENT REGULATION (ASPR); AND (3) THE CONTRACTS' OBJECTIVES ARE BASED ON WORK EXTRANEOUS TO THE AWARDED CONTRACTS WHICH IS NOT CONTROLLABLE OR ENFORCEABLE BY THE GOVERNMENT.

THE SOLICITATION ANTICIPATED THE AWARDING OF SEVERAL COST-PLUS-FIXED FEE CONTRACTS. AS SOLAR RECOGNIZES, PROPOSED COSTS ARE NOT THE CONTROLLING FACTOR IN THE AWARD OF SUCH CONTRACTS FOR ASPR 3-805.2, IN PERTINENT PART, STATES:

" *** THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. *** THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT."

CONSEQUENTLY, WE CANNOT CONCLUDE THAT AWARD OF CONTRACTS AT HIGHER COSTS THAN THOSE PROPOSED BY SOLAR RENDERS THE AWARD OF THE CONTRACTS SUBJECT TO LEGAL OBJECTION OR QUESTION BY OUR OFFICE. IN CONNECTION WITH THIS CONTENTION, SOLAR ALSO ARGUES THAT THE GOVERNMENT ARBITRARILY ADDED AN AMOUNT TO ITS OFFER TO ARRIVE AT THE "REAL" COST OF SOLAR'S PROPOSAL; THAT SOLAR WAS NOT ADVISED OF SIGNIFICANT EVALUATION CRITERIA AND THEIR RELATIVE WEIGHTS; AND THAT SOLAR DID IN FACT AGREE TO DO COMPRESSOR TESTING.

WITH REGARD TO THE EVALUATION FACTORS, THE RFQ ADVISED OFFERORS THAT THE EVALUATION OF PROPOSALS WAS DIVIDED INTO TWO AREAS: TECHNICAL, WHICH WAS GIVEN A WEIGHT OF 65 PERCENT OF THE TOTAL WEIGHT IN THE EVALUATION AND FINANCIAL AND MANAGEMENT, WHICH WAS GIVEN A WEIGHT OF 35 PERCENT. THESE MAJOR AREAS WERE FURTHER DIVIDED INTO SUBAREAS, EACH OF WHICH CONTAINED A NARRATIVE EXPLANATION OF THE FACTORS UPON WHICH EVALUATION OF THE SUBAREA WOULD BE BASED. REPORTEDLY, THE THREE TECHNICAL SUBAREAS WERE NOT WEIGHTED EQUALLY, BUT THERE IS NO INDICATION IN THE RFQ OF THE RELATIVE IMPORTANCE OF THESE SUBAREAS VIS A-VIS ONE ANOTHER. WHILE WE BELIEVE THAT OFFERORS SHOULD HAVE BEEN ADVISED OF THE RELATIVE IMPORTANCE OF THE SUBAREAS, THE FAILURE TO DO SO, ALTHOUGH CONTRARY TO WHAT WE CONSIDER TO BE SOUND PROCUREMENT POLICY, DOES NOT RENDER THE AWARDS IMPROPER. SEE 51 COMP. GEN. (B 172261, SEPTEMBER 13, 1971). MOREOVER, ON THE BASIS OF THE RECORD BEFORE US, IT DOES NOT APPEAR THAT FACTORS OTHER THAN THOSE STATED IN THE RFQ WERE USED IN THE EVALUATION OF PROPOSALS. THIS, IN OUR VIEW, CONSTITUTES AN ADEQUATE REPLY TO SOLAR'S GENERAL CLAIM THAT IT WAS NOT APPRISED OF SIGNIFICANT EVALUATION CRITERIA AND TO ITS CONTENTION THAT THE AMOUNT OF CONTRACTOR COMPONENT TESTING WAS AN EVALUATION FACTOR.

THE RFQ ENVISIONED THAT COMPONENTS OF THE GAS GENERATOR WOULD BE THOROUGHLY TESTED PRIOR TO THEIR INCORPORATION INTO THE GENERATOR AND THE TESTING OF THE GENERATOR ITSELF. FURTHER, COMPONENT TESTING WAS TO BE THE SOLE RESPONSIBILITY OF THE CONTRACTOR. SOLAR CONTENDS THAT IT DID, IN FACT, AGREE TO CONDUCT COMPRESSOR COMPONENT TESTING, ALBEIT ONLY UP TO A CEILING OF $160,000, AND THAT NO BASIS EXISTED FOR REFUSING IT AN AWARD. IT IS TRUE THAT SOLAR AGREED TO SUCH TESTING. WE NOTE, HOWEVER, THAT TESTING OF THE COMPRESSOR WAS TO TAKE PLACE SUBSEQUENT, NOT PRIOR, TO ITS INCORPORATION IN THE GENERATOR, A PROCEDURE CONTRARY TO THE REQUIREMENTS OF THE RFQ. MOREOVER, SOLAR DOES NOT DISPUTE THE CONTRACTING OFFICER'S STATEMENT THAT SOLAR REFUSED TO CONDUCT HEAT TRANSFER TESTS WHICH THE GOVERNMENT CONSIDERED TO BE A HIGH RISK ELEMENT OF WORK. SINCE SOLAR'S PROPOSAL WAS ULTIMATELY REJECTED FOR THE TECHNICAL DEFICIENCIES STATED ABOVE, WE FIND NO BASIS TO QUESTION THE CONTRACTOR SELECTIONS MADE BY THE PROCUREMENT ACTIVITY. IN THIS CONTEXT, CONSIDERATION OF SOLAR'S CONTENTION THAT CERTAIN MONETARY AMOUNTS WERE ARBITRARILY ADDED TO ITS COST ESTIMATE IS UNNECESSARY SINCE TECHNICAL DEFICIENCIES RENDERED SOLAR'S PROPOSAL INELIGIBLE FOR AWARD.

AS A SECOND MAJOR CONTENTION, SOLAR MAINTAINS THAT THE CONTRACTS WERE AWARDED ON THE BASIS OF COST SHARING WHICH IS CONTRARY TO GOOD PROCUREMENT POLICY. THE SPECIFIC BASIS FOR THIS POSITION IS SOLAR'S SUSPICION THAT ITS FAILURE TO RECEIVE AN AWARD WAS BECAUSE IT REFUSED TO CONDUCT TESTS IN EXCESS OF $160,000, I.E; THAT THIS AMOUNT WAS AN INSUFFICIENT SHARING OF COSTS. THERE IS, HOWEVER, NOTHING IN THE RECORD BEFORE US TO INDICATE THAT THIS TEST-CEILING FIGURE WAS THE DETERMINING FACTOR IN REJECTING SOLAR'S PROPOSAL. CONSEQUENTLY, THERE WOULD APPEAR TO BE NO VIOLATION OF THE CAVEAT CONTAINED IN ASPR 4 110(B) THAT: "WILLINGNESS TO SHARE COSTS SHOULD NOT BE A FACTOR IN COMPETITIVE SOURCE SELECTION." MOREOVER, THE USE OF COST-SHARING CONTRACTS IS SPECIFICALLY PROVIDED FOR IN ASPR 4-110 SUBJECT TO THE GUIDELINES AND POLICY STATEMENTS SET FORTH THEREIN.