B-177514, MAR 6, 1973

B-177514, MAR 6, 1973

BID PROTEST - NEGOTIATIONS - COMPETITIVE RANGE - CHANGE IN REQUIREMENTS NONDISCLOSURE OF PRICES DENIAL OF PROTEST BY NEW LAO HOSPITAL CONSTRUCTION CORP., AGAINST THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER AN RFP ISSUED BY THE NAVAL FACILITIES ENGINEERING COMMAND FOR A "MATERNITY AND CHILD CARE BUILDING" TO BE LOCATED IN PAKSE, LAOS. SINCE PROTESTANT'S INITIAL PRICE PROPOSAL WAS CONSIDERABLY HIGHER THAN THE TWO LOWEST PRICED PROPOSALS, THE COMP. GEN. BELIEVES THE PROCURING AGENCY ACTED REASONABLY IN EXCLUDING PROTESTANT FROM THE COMPETITIVE RANGE NEGOTIATIONS. 48 COMP. GEN. 314 (1968). ALSO, UNDER ASPR 3-805.1(E) NO REASSESSMENT OF THE COMPETITIVE RANGE IS NECESSARY EXCEPT TO THE EXTENT THAT THE MAGNITUDE OF THE CHANGE IN THE SCOPE OF THE WORK IN RELATION TO THE DIFFERENCE IN THE OFFERED PRICES INDICATES A REASONABLE POSSIBILITY THAT AN OFFER OUTSIDE THE ORIGINAL COMPETITIVE RANGE MAY BECOME THE MOST ACCEPTABLE. IN THIS INSTANCE, IT CANNOT BE SAID THAT THE CONTRACTING OFFICER'S FAILURE TO NOTIFY PROTESTANT OF THE CHANGE AND PERMIT HIM TO SUBMIT A REVISED PROPOSAL WAS UNREASONABLE. B 170216, SEPTEMBER 10, 1970. ALSO, IN NEGOTIATED PROCUREMENTS PRICES ARE TREATED AS CONFIDENTIAL IN ORDER TO AVOID AN "AUCTION" OF THE CONTRACT. ASPR 3-805.1(B).

TO NEW LAO HOSPITAL CONSTRUCTION CORPORATION:

WE REFER TO YOUR LETTERS DATED NOVEMBER 7 AND DECEMBER 4, 1972, PROTESTING AGAINST AWARD OF CONTRACT TO ANOTHER FIRM UNDER REQUEST FOR PROPOSALS NO. 44-72-0028, ISSUED AUGUST 17, 1972, BY THE UNITED STATES NAVAL FACILITIES ENGINEERING COMMAND.

THE SUBJECT PROCUREMENT WAS FOR A "MATERNITY AND CHILD CARE BUILDING" TO BE LOCATED IN PAKSE, LAOS. FIVE PROPOSALS WERE RECEIVED BY THE CLOSING DATE ON SEPTEMBER 18, 1972, INCLUDING YOUR PROPOSAL FOR $282,700. THE PROCURING AGENCY FOUND, HOWEVER, THAT ONLY TWO PROPOSALS WERE WITHIN FIFTEEN PERCENT OF ITS IN-HOUSE ESTIMATE OF $193,238, NAMELY, MEKONG CONSTRUCTION ($219,000) AND CHAROEN PHONG CONSTRUCTION ($224,390), AND THAT THE NEXT LOWEST PRICE SUBMITTED WAS $252,500. THEREUPON, NEGOTIATIONS WERE CONDUCTED ONLY WITH THE TWO LOWEST OFFERORS. INITIAL NEGOTIATIONS RESULTED IN OFFERS OF $218,000 AND $219,390, RESPECTIVELY. THE NAVY REPORTS THAT SINCE THE GOVERNMENT HAD ONLY $207,758 AVAILABLE FOR THE PROCUREMENT, IT WAS NECESSARY TO DELETE FROM THE SPECIFICATIONS THE EMERGENCY GENERATOR SHED, MECHANICAL AND ELECTRICAL ITEMS FROM THE WATER TOWER, AND TO REDUCE THE THICKNESS OF THE TERRAZO FLOOR. THE NAVY ESTIMATED A CORRESPONDING COST REDUCTION OF $12,930.50 FOR THE ABOVE DELETED ITEMS. FINAL NEGOTIATIONS WITH THE TWO LOW OFFERORS RESULTED IN FURTHER PRICE REDUCTIONS, AND A CONTRACT WAS AWARDED FOR $207,000, TO MEKONG CONSTRUCTION, AS THE LOWEST OFFEROR.

YOU CONTEND THAT YOUR FIRM SHOULD HAVE BEEN NOTIFIED OF THE ABOVE CHANGES IN THE SPECIFICATIONS AND REQUESTED TO SUBMIT A REVISED PRICE PROPOSAL. ALSO, YOU BELIEVE THAT THE SUBJECT PROCUREMENT PROCEDURE WAS CONDUCTED IN AN ARBITRARY MANNER SINCE THE SOLICITATION ONLY ASKED FOR PRICE PROPOSALS, WHICH WERE NOT OPENED IN PUBLIC, AND THE PRICE WAS NEGOTIATED DOWNWARD AFTER THE CONTRACTOR WAS SELECTED. FURTHERMORE, YOU STATE THAT THE SPECIFICATIONS WERE RELAXED AFTER THE AWARD AND THAT SUCH CHANGES REDUCED THE CONTRACTOR'S COSTS BY $50,000.

THE SUBJECT CONTRACT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304(C)(1)(B), WHICH PERMITS NEGOTIATION IN LIEU OF ADVERTISED BIDDING WHERE THE CONSTRUCTION IS TO BE PERFORMED OUTSIDE THE UNITED STATES. UNLIKE THE FORMAL PROCEDURES REQUIRED IN ADVERTISED PROCUREMENT, NEGOTIATION IS A FLEXIBLE METHOD OF PROCUREMENT WHICH USUALLY INVOLVES, AFTER RECEIPT OF PROPOSALS, DISCUSSIONS BY THE CONTRACTING OFFICER WITH THOSE OFFERORS DETERMINED TO BE WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. ASPR 3-805.1. AS NOTED ABOVE, THE PROCURING AGENCY DETERMINED THAT ONLY TWO OFFERORS SUBMITTED PROPOSALS THAT WERE CONSIDERED TO BE IN A PRICE RANGE WHICH WOULD PRODUCE MEANINGFUL NEGOTIATIONS. YOUR INITIAL PRICE PROPOSAL OF $282,700 WAS CONSIDERABLY HIGHER THAN THE TWO LOWEST PRICED PROPOSALS. BASED ON THESE FACTS, WE BELIEVE THE PROCURING AGENCY ACTED REASONABLY IN EXCLUDING YOUR FIRM FROM THE COMPETITIVE RANGE NEGOTIATIONS. 48 COMP. GEN. 314 (1968).

ASPR 3-805.1(E) REQUIRES, AFTER NEGOTIATIONS HAVE BEGUN, THAT EACH "PROSPECTIVE CONTRACTOR" BE NOTIFIED OF ANY SUBSTANTIAL CHANGE WHICH OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR IF THERE HAS BEEN A DECISION TO RELAX THE SCOPE OF WORK. BECAUSE OF LIMITED FUNDS IT WAS NECESSARY TO CHANGE THE REQUIREMENTS AS NOTED ABOVE. SINCE YOUR OFFER WAS CONSIDERABLY HIGHER ($63,310) THAN THE SECOND LOWEST OFFER, AND THE CHANGES IN REQUIREMENTS WERE ESTIMATED AT ONLY $12,930.50, YOU WERE NOT NOTIFIED OF THE SUBJECT CHANGES. IT IS OUR VIEW THAT UNDER THE CITED PROVISION NO REASSESSMENT OF THE COMPETITIVE RANGE IS NECESSARY EXCEPT TO THE EXTENT THAT THE MAGNITUDE OF THE CHANGE IN RELATION TO THE DIFFERENCE IN THE OFFERED PRICES INDICATES A REASONABLE POSSIBILITY THAT AN OFFER OUTSIDE THE ORIGINAL COMPETITIVE RANGE MAY BECOME THE MOST ACCEPTABLE. IN THE PRESENT CIRCUMSTANCES, WE CANNOT SAY THAT THE CONTRACTING OFFICER'S FAILURE TO NOTIFY YOU OF THE CHANGE AND PERMIT YOU TO SUBMIT A REVISED PROPOSAL WAS UNREASONABLE. B-170216, SEPTEMBER 10, 1970; B-171305, SEPTEMBER 2, 1971.

FURTHERMORE, IT IS ADMINISTRATIVELY REPORTED THAT THERE WAS NO CHANGE IN THE SPECIFICATIONS AFTER AWARD OF THE CONTRACT. HOWEVER, THE ORIGINAL SPECIFICATIONS WERE INADVERTENTLY INCLUDED IN THE CONTRACT AND THEY WERE SUBSEQUENTLY DELETED. IN THIS CONNECTION, THE RECORD SHOWS THAT THE PRICE REDUCTION OFFERED BY THE SUCCESSFUL PROPOSER WAS OFFERED DURING THE COURSE OF NEGOTIATIONS AND BEFORE THE AWARD SELECTION WAS MADE.

FINALLY, IT SHOULD BE NOTED THAT PROPOSALS ARE NOT OPENED IN PUBLIC DURING THE COURSE OF NEGOTIATIONS. PRICES SUBMITTED IN PROPOSALS ARE TREATED IN A CONFIDENTIAL MANNER IN ORDER TO AVOID AN "AUCTION" OF THE SUBJECT CONTRACT. ASPR 3.805.1(B).

BASED ON THE ABOVE, WE MUST CONCLUDE THAT THE SUBJECT PROCUREMENT WAS PROPERLY AWARDED AND THAT YOUR PROTEST MUST BE DENIED.