B-176004, DEC 21, 1972

B-176004, DEC 21, 1972

BID PROTEST - AGENCY DISCRETION - DEFICIENCY DISCUSSIONS DURING NEGOTIATIONS - CONGRESSIONAL POLICY DENIAL OF PROTEST ON BEHALF OF INTERNATIONAL ENGINEERING CO. AGAINST THE AWARD OF A CONTRACT TO LITCOM, OF LITTON INDUSTRIES, INC., UNDER AN RFQ ISSUED BY THE U.S. ARMY ELECTRONICS COMMAND, FORT MONMOUTH, N.J. THE RESULTS OF THE TECHNICAL EVALUATION OF ALL SUBMITTED OFFERS WILL NOT BE DISTURBED BY THE COMP. GEN. UNLESS THE ADMINISTRATIVE AGENCY'S EVALUATION WAS ARBITRARY OR CAPRICIOUS. ALSO, 10 U.S.C. 2304(G) PLACES WIDE DISCRETION WITH THE PROCURING AGENCY IN DETERMINING THE EXTENT OF DEFICIENCY DISCUSSION TO BE HELD DURING COMPETITIVE PRE-AWARD NEGOTIATIONS. 51 COMP. GEN. 431. FURTHER, THE SELECTION OF LITCOM'S "PAPER PROMISES" OVER IEC'S WORKING PROTOTYPE DOES NOT VIOLATE CONGRESSIONAL POLICY OF FAVORING PROVEN HARDWARE SINCE THE PROCUREMENT CALLS FOR THE DEVELOPMENT OF RATHER LIMITED NUMBER OF ITEMS.

TO VOM BAUR, COBURN, SIMMONS & TURTLE:

REFERENCE IS MADE TO THE MAY 19, 1972, TELEFAX FROM INTERNATIONAL ENGINEERING COMPANY (IEC) AND TO SUBSEQUENT CORRESPONDENCE FROM YOUR OFFICE, PROTESTING AGAINST AWARD OF A CONTRACT UNDER RFQ DAAB07-72-Q 0081, ISSUED BY THE UNITED STATES ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY.

THE SOLICITATION WAS FOR THE DEVELOPMENT AND FABRICATION OF 23 ENGINEERING DEVELOPMENT MODELS OF AN AN/PSN-6(V) LORAN POSITION FIXING NAVIGATION SET, AND ANCILLARY ITEMS, PLUS CERTAIN OPTIONS. BASIC PROPOSALS WERE SOUGHT FOR A LORAN SYSTEM LIGHT ENOUGH TO BE CARRIED IN A MAN'S BACKPACK (REFERRED TO AS "MANPACK"). ALTERNATE PROPOSALS WERE SOUGHT FOR A MANPACK WITH AN OFFSET TARGET CAPABILITY AND FOR A MANPACK WITH DIFFERENT SIZE AND WEIGHT LIMITATIONS. THE FIVE INITIAL PROPOSALS RECEIVED WERE TECHNICALLY EVALUATED AND ONLY THOSE SUBMITTED BY IEC AND THE LITCOM DIVISION OF LITTON SYSTEMS, INCORPORATED (LITCOM), WERE FOUND TO BE ACCEPTABLE, WITH LITCOM RECEIVING THE HIGHER TECHNICAL RATING. NEGOTIATIONS WERE CONDUCTED WITH IEC AND LITCOM, AFTER WHICH BEST AND FINAL OFFERS FOR A BASIC MANPACK WITH OFFSET TARGET CAPABILITY WERE REQUESTED. AWARD OF A COST-PLUS-INCENTIVE-FEE CONTRACT WAS THEN MADE TO LITCOM ON THE BASIS OF ITS HIGHER TECHNICAL RATING.

YOU ASSERT THAT THE TECHNICAL EVALUATION RESULTING IN A LOWER SCORE FOR IEC THAN FOR LITCOM WAS ARBITRARY AND WITHOUT SUBSTANTIAL FOUNDATION, AND THAT EACH AREA OF IEC'S PROPOSAL THAT THE ARMY CONSIDERED TO BE DEFICIENT OR IN NEED OF CLARIFICATION WAS TRIVIAL. YOU CLAIM THAT IN FACT IEC HAS A WORKING MODEL OF THE LORAN SYSTEM WHILE ALL LITCOM OFFERS ARE "PAPER PROMISES." IN ADDITION, YOU STATE THAT THE ARMY DID NOT INFORM IEC DURING NEGOTIATIONS THAT ELEMENTS OF ITS PROPOSAL WERE CONSIDERED DEFICIENT AND DID NOT GIVE IEC AN OPPORTUNITY TO REVISE ITS PROPOSAL IN ORDER TO MEET THE ARMY'S OBJECTIONS. YOU FURTHER CLAIM THAT THE ARMY INDICATED TO LITCOM A PREFERENCE FOR A PARTICULAR KIND OF COMPUTER BUT GAVE THE OPPOSITE INDICATION TO IEC.

THE ARMY, IN ITS ADMINISTRATIVE REPORT, DESCRIBES IEC'S PROPOSAL AS "GOOD," BUT INDICATES THAT IT CONTAINED CERTAIN WEAKNESSES. AS EXAMPLES OF THESE WEAKNESSES, THE REPORT CITES IEC'S ANTENNA INPUT DESIGN, THE USE OF 6 KHZ BANDWIDTH NOTCH FILTERS ON THE LORAN SIGNAL, AND THE ABSENCE OF AN ERROR ANALYSIS FROM THE SECTION OF THE PROPOSAL DEALING WITH THE METHOD OF CONVERSION OF TIME DIFFERENCE NUMBERS TO UTM COORDINATES. THE REPORT STATES THAT ALL SUCH AREAS WERE BROUGHT UP IN NEGOTIATION SESSIONS AS AREAS REQUIRING CLARIFICATION, BUT THAT THE "TECHNICAL DISCUSSIONS WITH IEC WERE NOT SATISFACTORY, LEAVING THE TECHNICAL NEGOTIATORS WITH THE IMPRESSION THAT A NUMBER OF MARGINAL OR INCOMPLETE DESIGN AREAS REMAINED AND THAT IEC EITHER DID NOT OR WOULD NOT RECOGNIZE THESE WEAK AREAS." THE REPORT FURTHER STATES THAT IEC WAS INFORMED THAT ITS RESPONSES WERE NOT SATISFACTORY, BUT THAT IEC MERELY SUBMITTED WRITTEN CONFIRMATION OF THE SAME UNSATISFACTORY ANSWERS. ON THE OTHER HAND, YOU CLAIM THAT THESE ALLEGED TECHNICAL DEFICIENCIES EITHER DO NOT EXIST OR ARE "SO MINOR THAT ANY RELIANCE ON THEM BY THE ARMY IS ARBITRARY ***" AND THAT IN ANY EVENT THE ARMY WAS LEGALLY REQUIRED TO POINT OUT THESE AREAS DURING NEGOTIATION AS DEFICIENCIES AND NOT MERELY AS AREAS REQUIRING CLARIFICATION.

IN SUPPORT OF YOUR CONTENTION THAT THE ARMY'S TECHNICAL EVALUATION WAS ARBITRARY, YOU HAVE SUBMITTED A DETAILED DISCUSSION OF EACH AREA OF THE IEC PROPOSAL THAT THE ARMY REGARDED AS WEAK. WHERE THE ARMY STATES THAT IEC'S "ANTENNA INPUT DESIGN DID NOT RECOGNIZE THE DROP IN INPUT SIGNAL LEVEL" AND "WOULD HAVE LACKED THE REQUIRED SENSITIVITY," YOU CLAIM THAT THE DESIGN "DID IN FACT RECOGNIZE THE DROP IN INPUT SIGNAL LEVEL" AND THAT IT "HAD THE REQUIRED SENSITIVITY." IN REBUTTING THE ARMY'S STATEMENT THAT IEC FAILED TO SATISFACTORILY SHOW THE EFFECTS OF USING THE 6 KHZ BANDWIDTH, YOU STATE THAT IEC DID JUST THAT BY SUBMITTING A SET OF PHOTOGRAPHS OF "UNQUESTIONABLE CLARITY" THAT THE ARMY HAS NOT EVEN ACKNOWLEDGED. YOU AGREE WITH THE ARMY THAT IEC DID NOT PROVIDE AN ERROR ANALYSIS WITH ITS DESCRIPTION OF THE CONVERSION METHOD TO UTM COORDINATES, BUT CLAIM THAT THE ERROR ANALYSIS WOULD NOT HAVE ASSISTED THE ARMY IN EVALUATING IEC'S PROPOSAL AND THAT IEC DID SUBMIT ALL THE NECESSARY DATA TO ENABLE THE ARMY TO EVALUATE THE ACCURACY OF IEC'S EQUIPMENT. THE CONTRACTING OFFICER, RESPONDING TO YOUR CLAIMS, REITERATES THE ARMY'S POSITION WITH RESPECT TO THE IEC ANTENNA INPUT DESIGN AND THE 6 KHZ BANDWIDTH, AND STATES THAT THE ERROR ANALYSIS WAS REQUIRED "TO SUBSTANTIATE THE PROPOSED DESIGN OFFERED BY IEC."

THE RECORD INDICATES THAT A COMPREHENSIVE TECHNICAL EVALUATION OF THE BASIC PROPOSALS WAS MADE IN ACCORDANCE WITH THE CRITERIA SET FORTH IN SECTION D OF THE RFQ. EACH MEMBER OF THE TECHNICAL EVALUATION TEAM NUMERICALLY RATED EACH PROPOSAL ON MORE THAN 40 ELEMENTS MAKING UP THE FACTORS AND SUB-FACTORS LISTED IN THE RFQ. WHEN THESE RATINGS WERE AVERAGED, IEC SCORED HIGHER THAN LITCOM IN SEVERAL AREAS WHILE LITCOM RECEIVED THE HIGHER SCORE IN OTHER AREAS. IN SOME INSTANCES, THE TWO OFFERORS RECEIVED IDENTICAL SCORES. THE NARRATIVE REPORT OF THE EVALUATION TEAM POINTED OUT STRENGTHS AND WEAKNESSES OF EACH PROPOSAL AND SUGGESTED CERTAIN AREAS FOR DISCUSSION DURING NEGOTIATION. IN THE CASE OF IEC, NOTE WAS TAKEN OF ITS "SOLID BACKGROUND" AND "EXTENSIVE EXPERIENCE IN THE LORAN FIELD," ALONG WITH SOME SPECIFIC "SHORTCOMINGS" THAT WERE RECOMMENDED FOR DISCUSSION. AS FINALLY COMPUTED, BOTH THE LITCOM AND THE IEC PROPOSALS WERE RATED TECHNICALLY ACCEPTABLE, ALTHOUGH LITCOM'S PROPOSAL WAS SCORED SEVERAL POINTS HIGHER THAN IEC'S. WE DO NOT FIND ANYTHING IN THE RECORD WHICH SUGGESTS THAT THIS EVALUATION WAS IMPROPER, UNFAIR, OR CONDUCTED IN BAD FAITH. ALTHOUGH YOU TAKE EXCEPTION TO THE ALLEGED WEAKNESSES IN THE IEC PROPOSAL REFERRED TO IN THE ARMY REPORT, WE CANNOT SAY THAT THE OVERALL EVALUATION, WHICH INCLUDED MANY ITEMS, WAS ARBITRARY OR CAPRICIOUS. ON THE CONTRARY, THE SCORING OF EACH PROPOSAL APPEARS TO HAVE BEEN OBJECTIVE AND IS WELL SUPPORTED BY THE NARRATIVE PORTION OF THE TECHNICAL REPORT.

WHILE IT IS CLEAR THAT THERE IS STRONG DISAGREEMENT BETWEEN IEC AND THE ARMY AS TO THE VALIDITY OF THE TECHNICAL WEAKNESSES RAISED BY THE ARMY DURING NEGOTIATION WITH IEC, IT IS GENERALLY NOT THE FUNCTION OF OUR OFFICE TO RESOLVE DISPUTES OF THIS NATURE. B-167508, DECEMBER 8, 1969. THE RESOLUTION OF SUCH TECHNICAL DISPUTES PROPERLY FALLS WITHIN THE WIDE RANGE OF DISCRETION RESERVED TO ADMINISTRATIVE AGENCIES. 48 COMP. GEN. 314 (1968). THE OVERALL DETERMINATION OF THE RELATIVE DESIRABILITY AND TECHNICAL ADEQUACY OF THE IEC AND LITCOM PROPOSALS IS PROPERLY A FUNCTION OF THE ARMY, AND WE HAVE NOT ATTEMPTED TO MAKE AN INDEPENDENT EXAMINATION IN THIS RESPECT. SEE B-164552(1), FEBRUARY 24, 1969 AND B-173677, MARCH 31, 1972 (51 COMP. GEN. ).

WITH RESPECT TO THE CONDUCT OF NEGOTIATIONS, YOU ASSERT THAT THE ARMY, IN MERELY REQUESTING CLARIFICATIONS FROM IEC, DID NOT PROPERLY NEGOTIATE WITH IEC BECAUSE NO INDICATION WAS GIVEN THAT THE ARMY BELIEVED THERE WERE DEFICIENCIES IN ITS PROPOSAL AND THEREFORE IT HAD NO OPPORTUNITY TO UPGRADE THE PROPOSAL. YOU ALSO STATE THAT WHEN SOME OF THE AREAS FOR WHICH CLARIFICATION IS REQUESTED "ARE IN FACT PATENTLY TRIVIAL, ANY REASONABLE OFFEROR MAY JUSTIFIABLY CONCLUDE THAT ALL THE AREAS RAISED ARE TRIVIAL" AND ARE NOT IN NEED OF UPGRADING.

10 U.S.C. 2304(G) REQUIRES THAT NEGOTIATIONS BE HELD WITH OFFERORS IN A COMPETITIVE RANGE. SUCH NEGOTIATIONS MUST BE "MEANINGFUL" AND MUST INFORM OFFERORS "AS TO THE AREAS IN WHICH THEIR PROPOSALS ARE DEFICIENT SO THAT COMPETITIVE OFFERORS ARE GIVEN A BASIC OPPORTUNITY TO FULLY SATISFY THE GOVERNMENT'S REQUIREMENTS." 51 COMP. GEN. 431, 433 (1972). HOWEVER, WE HAVE RECOGNIZED THAT IT IS NOT NECESSARY IN EVERY INSTANCE TO POINT OUT DEFICIENCIES IN ORDER TO HAVE MEANINGFUL DISCUSSION. B-173677, SUPRA. IN THAT CASE WE STATED THE FOLLOWING:

"*** WHETHER THE STATUTORY REQUIREMENT FOR DISCUSSIONS MUST INCLUDE THE POINTING OUT OF DEFICIENCIES, AND THE EXTENT THEREOF, IS A MATTER OF JUDGMENT PRIMARILY FOR DETERMINATION BY THE PROCURING AGENCY IN LIGHT OF ALL THE CIRCUMSTANCES OF THE PARTICULAR PROCUREMENT AND THE REQUIREMENT FOR COMPETITIVE NEGOTIATIONS, AND *** SUCH DETERMINATION IS NOT SUBJECT TO QUESTION BY OUR OFFICE UNLESS CLEARLY ARBITRARY OR WITHOUT A REASONABLE BASIS."

THE ARMY, OF COURSE, WAS PRECLUDED FROM POINTING OUT TO IEC EVERY AREA IN WHICH LITCOM ACHIEVED A HIGHER SCORE OR PROVIDED MORE DETAIL. 164552(2), FEBRUARY 24, 1969. HOWEVER, ALTHOUGH NOT PHRASED IN TERMS OF "DEFICIENCIES," THE ARMY DID CALL TO IEC'S ATTENTION CERTAIN AREAS OF ITS PROPOSAL THAT WERE CONSIDERED WEAK. THE CONTRACTING OFFICER REPORTS THAT "IEC WAS ASKED A NUMBER OF QUESTIONS TO CLARIFY THEIR PROPOSAL" AND THAT THEY "WERE DISCUSSED IN NEGOTIATIONS." WHILE IEC MAY HAVE REGARDED THE AREAS AS TRIVIAL, THE CONTRACTING OFFICER DENIES THAT THEY WERE MINOR OR TRIVIAL. UNDER THESE CIRCUMSTANCES, WE SEE NO BASIS FOR CONCLUDING THAT MEANINGFUL NEGOTIATIONS WERE NOT HELD WITH IEC.

YOU ALSO CLAIM THAT DURING NEGOTIATION THE ARMY INFORMED LITCOM THAT IT WOULD FAVOR THE USE OF A GENERAL PURPOSE COMPUTER, SUCH AS THE CONTROL DATA MODEL 469, BUT THAT IEC WAS TOLD JUST THE OPPOSITE. YOU FURTHER INDICATE THAT THE ARMY WAS INTERESTED IN THE CONTROL DATA MODEL 469 COMPUTER FOR ANOTHER PROGRAM AND THAT THE USE OF THIS COMPUTER FOR BOTH PROGRAMS "WOULD HAVE LED TO A SIGNIFICANT COST 'BREAK' FOR LITCOM ON THIS PROGRAM." THE CONTRACTING OFFICER, HOWEVER, STATES THAT HE WAS UNFAMILIAR WITH THE OTHER PROGRAM AND THAT IT WAS NOT CONSIDERED IN THIS PROCUREMENT. HE ALSO DENIES THAT LITCOM WAS TOLD THAT THE ARMY FAVORED USE OF THE MODEL 469 COMPUTER IN THE LORAN MANPACK. THE RECORD ESTABLISHES THAT LITCOM'S ORIGINAL PROPOSAL WAS BASED ON UTILIZING THE MODEL 469 COMPUTER, BUT IT DOES NOT INDICATE WHAT, IF ANYTHING, BOTH LITCOM AND IEC WERE TOLD REGARDING THE USE OF THAT TYPE OF COMPUTER. ANY EVENT, THE RECORD APPEARS TO SUPPORT THE CONTRACTING OFFICER'S STATEMENT THAT THE AWARD TO LITCOM WAS BASED ON THE OVERALL SUPERIORITY OF THAT COMPANY'S PROPOSAL AND NOT ON ANY ONE FACTOR.

FINALLY, YOU ASSERT THAT IEC IS THE ONLY FIRM TO HAVE BUILT A WORKING PROTOTYPE OF A MANPACK LORAN UNIT, WHILE LITCOM HAS PROVIDED NOTHING BUT PAPER PROMISES. YOU STATE THAT THERE IS AN "ENORMOUS GAP" BETWEEN WHAT LITCOM HAS PREVIOUSLY PRODUCED AND WHAT IS REQUIRED FOR THE MANPACK IN TERMS OF WEIGHT LIMITATIONS AND ALLOWABLE POWER SOURCE. YOU CLAIM THAT AN AWARD TO LITCOM UNDER SUCH CIRCUMSTANCES VIOLATES CONGRESSIONAL POLICY AGAINST RELIANCE ON PAPER PROMISES OVER PROVEN HARDWARE, ESPECIALLY IN VIEW OF THE COST-REIMBURSABLE TYPE CONTRACT INVOLVED, AND THAT "BY ACCEPTING LITCOM'S PAPER PROMISES, THE GOVERNMENT FACES THE PROSPECT OF PAYING, UNDER A COST CONTRACT FOR AN EXTENSIVE RESEARCH AND DEVELOPMENT EFFORT WITH NO CERTAINTY OF SUCCESS" WHICH YOU SAY CANNOT BE JUSTIFIED WHEN "DEMONSTRATED HARDWARE IS IN EXISTENCE."

IN SUPPORT OF YOUR POSITION, YOU CITE OUR REPORT TO THE CONGRESS, B 163058, NOVEMBER 19, 1970, ENTITLED "ADVERSE EFFECTS OF LARGE-SCALE PRODUCTION OF MAJOR WEAPONS BEFORE COMPLETION OF DEVELOPMENT AND TESTING," IN WHICH WE CRITICIZED DECISIONS TO GO INTO PRODUCTION PRIOR TO COMPLETION OF FULL SCALE TESTING. AS THE TITLE INDICATES, OUR REPORT CRITICIZED THE PRACTICE OF AUTHORIZING LARGE-SCALE PRODUCTION OF MAJOR WEAPON SYSTEMS BEFORE THE SYSTEMS WERE PROVEN. IN THE INSTANT CASE WE ARE CONCERNED WITH THE RELATIVE MERITS OF PROPOSALS TO DEVELOP A RATHER LIMITED NUMBER OF LORAN MANPACK MODELS. WE FAIL TO SEE THE RELEVANCE OF OUR PRIOR REPORT TO THE INSTANT SITUATION.

THE RECORD SHOWS THAT THE TECHNICAL EVALUATION OF THE PROPOSALS INCLUDED THOROUGH CONSIDERATION OF EACH OFFEROR'S KNOWLEDGE OF STATE-OF THE-ART IN THE LORAN FIELD, THE PROPOSED USE OF PROVEN COMPONENTS, AND THE LIKELIHOOD OF THE PROPOSED DESIGN'S MEETING SIZE, WEIGHT AND POWER LIMITATIONS. THE AWARD TO LITCOM WAS BASED ON ITS HIGHER TECHNICAL SCORE.

ACCORDINGLY, WE ARE UNABLE TO CONCLUDE THAT THE AWARD TO LITCOM WAS IMPROPER, AND YOUR PROTEST MUST THEREFORE BE DENIED.