B-174803, JUL 13, 1972

B-174803, JUL 13, 1972

PROCUREMENT LAW - ALLEGED IMPROPER FAILURE TO MAKE AWARD DECISION DENYING THE PROTEST OF KISCO COMPANY, INC., AGAINST AWARD OF A CONTRACT TO NORRIS INDUSTRIES UNDER AN RFP ISSUED BY THE ARMY MUNITIONS COMMAND. THE COMP. GEN. RECOGNIZES AN ANOMALY IN THAT THE AMENDMENT, WHICH DELETED THE NECESSITY FOR AWARDING CONTRACTS TO AT LEAST TWO SUPPLIERS, WAS ISSUED AS A RESULT OF PROTESTANT'S UNSOLICITED OFFER TO FURNISH THE ENTIRE QUANTITY. IN ANY EVENT, GAO HAS PREVIOUSLY HELD THAT NO IMPROPRIETY EXISTS IN THE ELIMINATION OF A PROVISION FOR A MINIMUM OF TWO AWARDS AND THE SUBSEQUENT AWARD TO ONLY ONE OFFEROR. B-174529, MAY 18, 1972. ACCORDINGLY, THE PROTEST IS DENIED.

TO STOREY, BRYAN & SILVERSTEIN:

REFERENCE IS MADE TO YOUR PROTEST, ON BEHALF OF KISCO COMPANY, INC. (KISCO), AGAINST THE AWARD OF A CONTRACT TO NORRIS INDUSTRIES (NORRIS), UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAA09-71-R-0126, ISSUED BY THE UNITED STATES ARMY MUNITIONS COMMAND (MUCOM), JOLIET, ILLINOIS, FOR 105 MM. CARTRIDGE CASES.

FOR THE REASONS SET FORTH IN DETAIL BELOW, THE PROTEST IS DENIED.

THE RFP, ISSUED ON JULY 14, 1971, SOLICITED, IN PART, OFFERS FOR SEVEN QUANTITY RANGES IN ASCENDING ORDER, COMMENCING WITH A RANGE OF 3,200,000 TO 4,800,000 UNITS AND CONCLUDING WITH A RANGE OF 12,800,016 TO 14,400,000 UNITS. IN ADDITION, THE RFP SPECIFIED A TOTAL QUANTITY FOR PROCUREMENT OF 16,167,690 UNITS AND CONTAINED THE FOLLOWING STATEMENT:

"IT HAS BEEN DETERMINED TO BE IN THE INTEREST OF INDUSTRIAL MOBILIZATION TO HAVE AT LEAST TWO SUPPLIERS AVAILABLE FOR FURNISHING MILITARY SUPPLIES IN THE EVENT OF A NATIONAL EMERGENCY, AND TO AVOID DISCONTINUITY OF SUPPLY WHICH MIGHT BE CREATED BY STRIKES, ACTS OF GOD OR OTHER UNFORESEEABLE CONTINGENCIES."

SUBSEQUENT TO THE RECEIPT OF TIMELY INITIAL PROPOSALS BY, INTER ALIA, KISCO AND NORRIS ON OR BEFORE AUGUST 4, 1971, KISCO SUBMITTED AN UNSOLICITED PROPOSAL TO SUPPLY THE TOTAL QUANTITY FOR PROCUREMENT FOR AN EVALUATED PRICE OF $35,692,903.97 BY TELEGRAM DATED AUGUST 20, 1971. EVALUATION OF THE UNSOLICITED PROPOSAL RESULTED IN AN EXPECTED COST SAVINGS OF $1,132,406.17 OVER THE LOWEST POSSIBLE EVALUATED COST ON THE BASIS OF TWO CONTRACTORS, NORRIS AND KISCO, IN THE AMOUNT OF $36,825,310.14. IN VIEW OF THIS INFORMATION, AND A PREAWARD SURVEY DISCLOSING KISCO'S ABILITY TO SUPPLY THE ENTIRE QUANTITY AT AN ACCEPTABLE DELIVERY RATE, MUCOM REQUESTED AND RECEIVED APPROVAL FROM APPROPRIATE OFFICIALS TO RESOLICIT BOTH OFFERORS FOR THE ENTIRE QUANTITY FOR PROCUREMENT. WHEREUPON, ON OCTOBER 5, 1971, MUCOM ISSUED AMENDMENT 0004 TO THE RFP WHICH INCORPORATED THEREIN AN EIGHTH QUANTITY RANGE OF 14,400,016 TO 16,167,690, TOGETHER WITH AN APPLICABLE MONTHLY DELIVERY RATE OF 900,001 TO 1,010,480, AND DELETED THE ABOVE-QUOTED PARAGRAPH NECESSITATING THE AWARD OF TWO CONTRACTS. A LATER AMENDMENT ANNOUNCED THE SELECTED TOTAL QUANTITY TO BE PROCURED AS 14,654,410 TO BE DELIVERED AT A RATE OF 1,010,480 PER MONTH. SUBSEQUENT TO THE RECEIPT OF TIMELY REVISED PROPOSALS, NEGOTIATIONS WITH BOTH OFFERORS, AND AN EVALUATION DISCLOSING THAT NORRIS SUBMITTED A PRICE EVALUATED AT $2,495,777.91 LOWER THAN KISCO'S, ON NOVEMBER 23, 1971, AWARD WAS MADE TO NORRIS AT A PRICE DEMONSTRATING SUBSTANTIAL COST SAVINGS OVER THE ORIGINAL "ONE AWARD" CONCEPT.

YOU CONTEND THAT MUCOM IMPROPERLY FAILED TO MAKE AWARD BASED UPON THE INITIAL PRPOSALS RECEIVED BY AUGUST 9, 1971. IN YOUR VIEW, AMENDMENT 0004 WAS, IN EFFECT, A NEW PROCUREMENT AND IMPLIEDLY REJECTED ALL PROPOSALS UNDER THE RFP, PRIOR TO THE ISSUANCE OF THE AMENDMENT. THEREFORE, YOU URGE, WHERE, AS HERE, THERE ARE ABSENT COMPELLING REASONS FOR THE REJECTION OF ALL OFFERS, ANY SUBSEQUENT AWARD SHOULD BE CONSIDERED INVALID.

INITIALLY, WE OBSERVE THAT THE ISSUANCE OF AMENDMENT 0004, AS SET FORTH ABOVE, STEMMED FROM THE SUBMISSION BY KISCO OF AN UNSOLICITED PROPOSAL AFTER THE CLOSING DATE FOR RECEIPT OF INITIAL PROPOSALS. THAT UNSOLICITED PROPOSAL OFFERED A PRICE TO SUPPLY THE ENTIRE QUANTITY TO BE PROCURED, A PROPOSAL WHICH, ACCORDING TO THE "TWO AWARD" REQUIREMENTS OF THE RFP COULD NOT BE ACCEPTED WITHOUT THE ISSUANCE OF AN AMENDMENT. HAVING SUBMITTED THE UNSOLICITED PROPOSAL GIVING RISE TO THE AMENDMENT, KISCO THEN KNOWINGLY CONTINUED TO PARTICIPATE WITHOUT OBJECTION IN THE PROCUREMENT, AS ALTERED BY AMENDMENT 0004. NOT UNTIL AFTER THE AWARD OF THE CONTRACT TO NORRIS DID KISCO PROTEST. THEREFORE, IN OUR VIEW, AN ANOMALY IS EVIDENT IN THAT THE MATTER COMPLAINED OF BY KISCO WAS INITIATED BY THE ACTION OF THE COMPLAINANT ITSELF.

IN ANY EVENT, THE CONTRACTING OFFICER REPORTS THAT, PRIOR TO THE ISSUANCE OF THE RFP, THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS) APPROVED A PROCUREMENT PLAN TO MAKE TWO AWARDS FOR THE PROCUREMENT DUE TO THE CONSIDERED INABILITY OF ANY ONE CONTRACTOR TO PRODUCE THE TOTAL PLANNED MONTHLY QUANTITY. SIMULTANEOUSLY WITH THE EVALUATION OF KISCO'S UNSOLICITED PROPOSAL EXHIBITING SUBSTANTIAL COST SAVINGS TO BE DERIVED FROM AN AWARD TO ONE RATHER THAN TWO OFFERORS, MUCOM RECEIVED INFORMATION REDUCING THE REQUIRED MONTHLY QUANTITY RATE TO 975,000. CONSIDERING THIS INFORMATION AND THE FAVORABLE PREAWARD SURVEY ON KISCO, A REVISED PROCUREMENT PLAN WAS APPROVED TO RESOLICIT NORRIS AND KISCO FOR THE ENTIRE QUANTITY. THAT APPROVAL REFLECTED AN EVALUATION OF EXISTING INVENTORY STOCK LEVELS, PROJECTED CONSUMPTION RATES, ANTICIPATED PRODUCTION RATES, AND THE REDUCED REQUIRED MONTHLY QUANTITY RATE. IT WAS DETERMINED THAT A REQUIREMENT THAT TWO SOURCES BE IN CURRENT PRODUCTION TO AVOID DISCONTINUITY OF PRODUCTION COULD NO LONGER BE JUSTIFIED.

IN OUR DECISION 51 COMP. GEN. (B-174529, MAY 18, 1972), WE FOUND NO IMPROPRIETY IN THE ELIMINATION OF A PROVISION FOR A MINIMUM OF TWO AWARDS VERY SIMILAR TO THE ABOVE-QUOTED RFP STATEMENT AND THE SUBSEQUENT AWARD TO ONE OFFEROR BY THE SAME CONTRACTING ACTIVITY, MUCOM. THERE, AS HERE, AN OFFEROR SUBMITTED AN UNSOLICITED PROPOSAL FOR THE TOTAL QUANTITY, WHICH REFLECTED A SUBSTANTIAL COST SAVINGS, NOTWITHSTANDING AN RFP REQUIREMENT FOR TWO AWARDS. SIMILARLY, THE BASIS FOR THE "TWO AWARD" REQUIREMENT IN THAT DECISION RESULTED FROM A NECESSITY TO GUARD AGAINST DISCONTINUITY OF SUPPLY AND THE CONSIDERED INABILITY OF ONLY ONE CONTRACTOR BEING ABLE TO FULFILL FUTURE REQUIREMENTS. FURTHERMORE, IN VIEW OF POTENTIAL COST SAVINGS AND A REVIEW OF FUTURE REQUIREMENTS, THE RFP UNDER CONSIDERATION IN THAT DECISION, AS HERE, WAS AMENDED TO REQUIRE ONLY ONE AWARD FOR THE TOTAL QUANTITY TO BE PROCURED. WHEREUPON, AS IS THE CASE HERE, A SINGLE AWARD WAS MADE IN THAT CASE TO A FIRM CAPABLE OF MANUFACTURING THE NECESSARY MONTHLY QUANTITIES AT A SAVINGS OVER A "TWO AWARD" PROCUREMENT.

WE BELIEVE THE HOLDING IN THE ABOVE-CITED DECISION TO BE DISPOSITIVE OF THE ISSUES RAISED BY THIS PROTEST. THEREFORE, WE FIND NO LEGAL BASIS UPON WHICH TO OBJECT TO THE ACTIONS OF MUCOM WITH REGARD TO THE INSTANT PROCUREMENT. SEE, ALSO, 49 COMP. GEN. 772, 778 (1970).