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B-181782, DEC 26, 1974, 54 COMP GEN 530

B-181782 Dec 26, 1974
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CONTRACTS - NEGOTIATION - EVALUATION FACTORS - ADDITIONAL FACTORS - NOT IN REQUEST FOR PROPOSALS CONSIDERATION OF ADDITIONAL EVALUATION FACTORS NOT CONTAINED IN REQUEST FOR PROPOSALS WAS IMPROPER SINCE PROSPECTIVE OFFERORS ARE ENTITLED TO BE ADVISED OF EVALUATION FACTORS WHICH WILL BE APPLIED TO THEIR PROPOSALS. CERTAIN INFORMATION WHICH DCA HAS ALREADY DISCLOSED TO THE INTERESTED PARTIES WILL BE INCLUDED IN OUR DISCUSSION OF THIS PROTEST. THE RFP STATED THAT THE TOTAL EFFORT AND WORK REQUIREMENTS WERE DEFINITIVELY SET FORTH WITHIN THE ATTACHED DCA STATEMENT OF WORK ENTITLED "DIGITAL TROPO/LOS SIMULATION SYSTEM.". OFFERORS WERE ADVISED THAT THE TYPE OF CONTRACT PROPOSED SHOULD RESULT. THE RFP STATED THAT "SELECTION OF THE CONTRACTOR WILL BE BASED ON THE QUALITY OF THE TECHNICAL PROPOSAL AS EVALUATED IN ACCORDANCE WITH THE CRITERIA SET FORTH IN PARAGRAPH (6) BELOW.

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B-181782, DEC 26, 1974, 54 COMP GEN 530

CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - AMENDMENT - EQUAL COMPETITIVE BASIS FOR ALL OFFERORS WHERE, AFTER RECEIPT OF PROPOSALS, PROCUREMENT AGENCY DECIDES THAT IT HAS A PREFERENCE FOR A PARTICULAR APPROACH TO SATISFY ITS NEEDS, REQUEST FOR PROPOSALS SHOULD BE AMENDED TO AFFORD ALL OFFERORS AN EQUAL OPPORTUNITY TO REVISE THEIR PROPOSALS AND TO PARTICIPATE IN MEANINGFUL NEGOTIATIONS. SEE ARMED SERVICES PROCUREMENT REGULATION 3-805.4 (1974 ED.). CONTRACTS - NEGOTIATION - EVALUATION FACTORS - ADDITIONAL FACTORS - NOT IN REQUEST FOR PROPOSALS CONSIDERATION OF ADDITIONAL EVALUATION FACTORS NOT CONTAINED IN REQUEST FOR PROPOSALS WAS IMPROPER SINCE PROSPECTIVE OFFERORS ARE ENTITLED TO BE ADVISED OF EVALUATION FACTORS WHICH WILL BE APPLIED TO THEIR PROPOSALS. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - OMISSIONS - PREJUDICIAL REQUEST FOR PROPOSALS WHICH FAILED TO LIST RELATIVE IMPORTANCE OF PRICE VIS-A-VIS LISTED EVALUATION FACTORS SHOULD BE AMENDED WHERE RECORD INDICATES SUCH FAILURE RESULTED IN PREJUDICE TO COMPETING OFFERORS. CONTRACTS - NEGOTIATION - COMPETITION - DISCUSSION WITH ALL OFFERORS REQUIREMENT - WRITTEN OR ORAL NEGOTIATIONS FAILURE TO CONDUCT ORAL DISCUSSIONS OR WRITTEN COMMUNICATIONS WITH OFFERORS TO EXTENT NECESSARY TO RESOLVE UNCERTAINTIES RELATING TO WORK REQUIREMENTS OR PRICE TO BE PAID VIOLATES REQUIREMENT FOR MEANINGFUL NEGOTIATIONS. CONTRACTS - NEGOTIATION - EVALUATION FACTORS - PRICE ELEMENTS FOR CONSIDERATION - COST ESTIMATES COST PROPOSALS OFFERED ON COST-REIMBURSEMENT BASIS SHOULD BE SUBJECT TO INDEPENDENT COST PROJECTION TO DETERMINE REALISM AND REASONABLENESS OF PROPOSED COSTS SINCE EVALUATED COSTS PROVIDE SOUNDER BASIS FOR DETERMINING MOST ADVANTAGEOUS PROPOSAL.

IN THE MATTER OF SIGNATRON, INC., DECEMBER 26, 1974:

THIS PROTEST BEFORE AWARD QUESTIONS THE LEGALITY OF THE PROPOSED AWARD OF A CONTRACT TO CNR, INC. (CNR), UNDER REQUEST FOR PROPOSALS (RFP) NO. DCA100-74-R-0052, ISSUED BY THE DEFENSE COMMUNICATIONS AGENCY (DCA). COUNSEL FOR SIGNATRON, INC. (SIGNATRON) CONTENDS THAT THE PROPOSED AWARD TO CNR WOULD BE CONTRARY TO APPLICABLE STATUTES AND REGULATIONS. FOR THE REASONS DISCUSSED BELOW, WE CONCLUDE THAT NEGOTIATIONS, IN ACCORDANCE WITH 10 U.S.C. SEC. 2304(G) (1970), SHOULD BE REOPENED. ALTHOUGH PARAGRAPH 3- 507 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) (1974 ED.) LIMITS DISCLOSURE OF INFORMATION DURING THE PREAWARD OR PREACCEPTANCE PERIOD, CERTAIN INFORMATION WHICH DCA HAS ALREADY DISCLOSED TO THE INTERESTED PARTIES WILL BE INCLUDED IN OUR DISCUSSION OF THIS PROTEST.

ON APRIL 10, 1974, DCA ISSUED THE SUBJECT RFP TO 34 FIRMS FOR TECHNICAL AND COST PROPOSALS FOR THE DELIVERY AND INSTALLATION OF A DIGITAL TROPO/LOS SIMULATION SYSTEM WITH THE CAPABILITY FOR REAL TIME, REPEATABLE SIMULATION OF PRESENT AND FUTURE DIGITAL DCS TROPO AND LOS NETWORK CONFIGURATIONS. THE RFP STATED THAT THE TOTAL EFFORT AND WORK REQUIREMENTS WERE DEFINITIVELY SET FORTH WITHIN THE ATTACHED DCA STATEMENT OF WORK ENTITLED "DIGITAL TROPO/LOS SIMULATION SYSTEM." THE PROPOSED PROCUREMENT HAD PREVIOUSLY BEEN PUBLICIZED IN THE COMMERCE BUSINESS DAILY IN ACCORDANCE WITH ASPR SEC. 1-1003 (1974 ED.). OFFERORS WERE ADVISED THAT THE TYPE OF CONTRACT PROPOSED SHOULD RESULT, IF POSSIBLE, IN ASSUMPTION OF COST RESPONSIBILITY BY THE OFFEROR, SUCH AS A FIRM FIXED PRICE OR INCENTIVE TYPE RELATED TO PERFORMANCE OR COST (OR BOTH) COVERING THE WORK AS OUTLINED IN THE PROPOSAL.

THE RFP STATED THAT "SELECTION OF THE CONTRACTOR WILL BE BASED ON THE QUALITY OF THE TECHNICAL PROPOSAL AS EVALUATED IN ACCORDANCE WITH THE CRITERIA SET FORTH IN PARAGRAPH (6) BELOW, PRICE AND OTHER FACTORS CONSIDERED." PARAGRAPH (6) OF THE RFP STATED:

TECHNICAL PROPOSALS WILL BE EVALUATED USING THE FOLLOWING CRITERIA, WHICH WILL BE THE ONLY CRITERIA USED:

(A) TECHNICAL CONSIDERATIONS - APPROX. 75%

THIS RATING FACTOR INCLUDES:

1. UNDERSTANDING OF THE REQUIREMENT.

2. SOUNDNESS OF TECHNICAL APPROACH.

3. COMPLIANCE WITH REQUIREMENTS.

4. SPECIAL TECHNICAL FACTORS.

(B) MANAGEMENT CAPABILITY - APPROX. 25%

THIS RATING FACTOR INCLUDES:

1. SPECIFIC RELATED EXPERIENCE.

2. TECHNICAL ORGANIZATION.

3. LEVEL OF EFFORT AND SUPPORT PROPOSED.

4. SPECIFIC TECHNICAL EQUIPMENT AND FACILITIES.

THE EVALUATION CRITERIA DID NOT ESTABLISH A WEIGHT FOR "PRICE AND OTHER FACTORS."

THE FOLLOWING FIRMS RESPONDED BY THE MAY 13, 1974, CLOSING DATE: CNR, INC.; SIGNATRON, INC.; AND COMPUTER SCIENCES CORPORATION (CSC). THE THREE PROPOSALS WERE TECHNICALLY EVALUATED BY THE DEFENSE COMMUNICATIONS ENGINEERING CENTER (DCEC) EVALUATION TEAM. ADJECTIVE RATINGS OF "EXCELLENT, GOOD, AVERAGE, POOR, UNSATISFACTORY" WERE USED IN EVALUATING THE TECHNICAL PROPOSALS. COUNSEL FOR DCA REPORTS THAT IN ORDER TO ARRIVE AT THESE ADJECTIVE RATINGS, THE CHAIRMAN OF THE EVALUATION COMMITTEE ESTABLISHED PROCEDURES WHEREBY STATED VALUE (NUMERIC) RANGES WERE ESTABLISHED. UNDER THESE PROCEDURES A RATING OF "EXCELLENT" WOULD BE DERIVED FROM A TECHNICAL CONSIDERATION NUMERIC OF 126-150 AND A MANAGEMENT RATING OF 43-50 FOR A TOTAL OF 169-200. UNDER THIS RATING SYSTEM, CNR AND SIGNATRON WERE RATED "EXCELLENT" AND CSC WAS RATED "GOOD" IN BOTH THE TECHNICAL AND MANAGEMENT CATEGORIES.

THE EVALUATION TEAM'S REPORT LISTED VARIOUS ITEMS WHICH MIGHT BE CONSIDERED FOR NEGOTIATION WITH EACH OF THE OFFERORS, AND THE DETERMINATION WAS MADE THAT THOSE ITEMS, WHEN COMBINED WITH QUESTIONS REGARDING PRICING, WERE SUCH AS TO WARRANT CONDUCTING NEGOTIATIONS.

THE CONTRACTING OFFICER REPORTS THAT THE THREE OFFERORS WERE CONTACTED AND ADVISED THAT NEGOTIATIONS WOULD BE CONDUCTED. SIGNATRON WAS TOLD THAT THE EVALUATION TEAM HAD REPORTED THAT IT HAD UNEARTHED NO DISCREPANCIES OR AMBIGUITIES TO BE RESOLVED, AND CSC WAS TOLD THAT THERE WERE CERTAIN DISCREPANCIES TO BE RESOLVED REGARDING THEIR SIMULATION OF A "TIMING JITTER" PROBLEM. IT IS REPORTED BY DCA THAT NEGOTIATIONS WERE CONDUCTED WITH CNR AND SIGNATRON BY TELEPHONE ON MAY 30 AND 31, 1974. THE CONTRACTING OFFICER STATES THAT SIGNATRON IN ITS NEGOTIATIONS CONDUCTED BY TELEPHONE INTRODUCED NOTHING NEW REGARDING ITS ORIGINAL APPROACH TO AND MANNER OF PERFORMING THE WORK REQUIREMENTS AS PRESENTED. NEGOTIATIONS WERE CONDUCTED WITH CSC ON JUNE 3, 1974, IN THE OFFICE OF THE CONTRACTING OFFICER.

THE THREE FIRMS SUBMITTING PROPOSALS WERE ADVISED BY TELEPHONE ON JUNE 3, 1974, TO SUBMIT ANY DESIRED REVISIONS) TO THEIR ORIGINAL PROPOSALS BY JUNE 12, 1974. CNR SUBMITTED A LETTER DATED JUNE 4, 1974, ADDRESSING THE ITEMS DISCUSSED AND REDUCING THEIR ORIGINAL ESTIMATED CPFF PRICE FROM $278,519 TO $267,404. SIGNATRON SUBMITTED A LETTER DATED JUNE 11, 1974, ADVISING THAT THEIR ORIGINAL ESTIMATED CPIF TARGET PRICE WAS REDUCED FROM $242,795 TO $239,850. BY LETTER DATED JUNE 12, 1974, CSC SUBMITTED REVISIONS TO THEIR PROPOSAL AND REDUCED THEIR ORIGINAL ESTIMATED CPIF TARGET PRICE FROM $379,385 TO $314,334. AFTER REVIEWING THE REVISIONS, THE DCEC EVALUATION TEAM REPORTED THAT THE "EXCELLENT" RATINGS OF CNR AND SIGNATRON WERE UNCHANGED BUT THAT CSC'S RATING HAD BEEN RAISED TO "EXCELLENT." THE CONTRACTING OFFICER INDICATES THAT THE EVALUATION TEAM RECOMMENDED AWARD TO CNR ON THE BASIS OF TECHNICAL EXCELLENCE. WE NOTE, HOWEVER, THAT ITS ESTIMATED COST PLUS A FIXED-FEE-ESTIMATED PRICE WAS APPROXIMATELY $28,000 HIGHER THAN SIGNATRON'S ESTIMATED PRICE.

ACCORDING TO THE CONTRACTING OFFICER, A DECISION TO MAKE AN AWARD TO CNR, WHICH RECEIVED THE HIGHEST TECHNICALLY RATED PROPOSAL, WAS MADE AFTER CONSIDERING THE DECLARATION BY DCEC THAT ADAPTING THE SYSTEM PROPOSED BY SIGNATRON WOULD RESULT IN THE FOLLOWING ADDITIONAL EXPENSE TO DCEC:

A. THE ESTIMATED COST TO ADD THE DUPLEX CAPABILITY TO SIGNATRON'S SYSTEM (ALREADY PROVIDED BY CNR AS PART OF THEIR OFFER) WAS APPROXIMATELY $25,000 AND COULD BE CONSIDERABLY MORE.

B. THE ADDITIONAL HARDWARE MODEMS REQUIRED FOR THE SIGNATRON SYSTEM IN THE FUTURE, IN ADDITION TO THE NEED TO TRAIN OPERATOR PERSONNEL AND PURCHASE SPECIAL TEST EQUIPMENT, WOULD PROVE VERY COSTLY. ESTIMATES OF COSTS OF LOS AND TROPO MODEMS MADE BY DCEC, ECOM, RADC AND OTHERS, RAN FROM $10K TO $60K EACH, AFTER INITIAL ENGINEERING COSTS.

C. COSTLY OVERHEAD ASSOCIATED WITH OPERATION OF THE SIGNATRON SYSTEM.

D. COSTS ASSOCIATED WITH INVESTIGATING THE EFFECTS OF OTHER MODEMS.

TAKING INTO CONSIDERATION TECHNICAL EXCELLENCE AND THE FACTORS LISTED ABOVE PERTAINING TO THE OVERALL EXPENSES OF ADAPTING THE SIGNATRON SYSTEM, WE DETERMINED THAT AWARD TO CNR WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT, NOTWITHSTANDING THE FACT THAT ANOTHER FIRM HAD OFFERED A LOWER (ESTIMATED) PRICE.

SIGNATRON FILED A PROTEST WITH THIS OFFICE BY TELEGRAM DATED JULY 10, 1974, PROTESTING ANY AWARD OF A CONTRACT TO CNR. THIS TELEGRAM WAS SUPPLEMENTED BY ADDITIONAL MATERIAL FROM BOTH SIGNATRON AND ITS COUNSEL. SIGNATRON CONTENDS THAT AN AWARD TO CNR WOULD BE ILLEGAL SINCE IT WOULD (1) BE CONTRARY TO THE TERMS OF THE ADVERTISED NOTICE AND RFP; (2) WOULD BE BASED ON CONSIDERATIONS AND EVALUATION FACTORS NOT DELINEATED IN THE RFP, AND (3) FAILS TO COMPLY WITH ALL APPLICABLE PROCUREMENT REGULATIONS, INCLUDING THE NECESSITY FOR "MEANINGFUL DISCUSSIONS" AND "NEGOTIATIONS." IN ACCORDANCE WITH SECTION 20.9 OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS, SIGNATRON EXERCISED ITS RIGHT TO OFFER ORAL ARGUMENT IN SUPPORT OF ITS POSITION. OUR OFFICE EXTENDED THE OPPORTUNITY TO ALL PARTIES EXPRESSING AN INTEREST IN THIS MATTER TO ATTEND AN INFORMAL CONFERENCE ON SEPTEMBER 30, 1974.

WE DO NOT AGREE WITH SIGNATRON'S FIRST CONTENTION THAT THE RFP RESTRICTED PROPOSALS TO HARDWARE APPROACHES. WE BELIEVE ANY FORM OF SIMULATION APPROACH COULD BE SUBMITTED, I.E., ALL HARDWARE OR A COMBINATION OF SOFTWARE HARDWARE SIMULATION APPROACH. HOWEVER, OUR REVIEW OF THIS PROCUREMENT LEADS US TO THE CONCLUSION THAT NEGOTIATIONS SHOULD BE REOPENED TO CORRECT CERTAIN DEFICIENCIES DISCUSSED BELOW. IN SEEKING TO RESOLVE SOME OF THE ISSUES RAISED IN THIS PROTEST, WE MADE A TECHNICAL REVIEW OF THE RFP STATEMENT OF WORK. IT WAS CONCLUDED THAT THE STATEMENT OF WORK DID NOT REQUIRE OFFERORS TO FURNISH BOTH A SIMPLEX AND A DUPLEX OPERATION SYSTEM.

PARAGRAPH 2.2.1 OF THE STATEMENT OF WORK PROVIDES THAT "THE SIMULATION SYSTEM IS CONSIDERED TO OPERATE SIMPLEX, BUT SHALL BE DESIGNED TO PROVIDE FOR DUPLEX OPERATION WHERE THE TWO DIRECTIONS OF TRANSMISSION HAVE INDEPENDENT STATISTICS, OR THE MEDIA PARAMETERS MAY BE DIFFERENT FOR EACH DIRECTION OF TRANSMISSION." IN RESPONSE TO THIS REQUIREMENT, SIGNATRON PROPOSED TO FURNISH A "SIMPLEX" OPERATION SYSTEM WHICH WAS DESIGNED TO PROVIDE FOR THE POTENTIAL FOR ADDING A DUPLEX OPERATION. SIGNATRON'S TECHNICAL PROPOSAL RECEIVED A RATING OF EXCELLENT.

CNR PROPOSED A SYSTEM WHICH PROVIDED A SIMPLEX AS WELL AS AN ACTUAL DUPLEX OPERATION SYSTEM WHICH WAS ALSO RATED EXCELLENT.

IN EVALUATING SIGNATRON'S PROPOSAL, DCEC STATED THAT THE ESTIMATED COST TO ADD THE DUPLEX "CAPABILITY" TO SIGNATRON'S SYSTEM WAS APPROXIMATELY $25,000 AND COULD BE CONSIDERABLY MORE. WHILE DCEC THROUGHOUT ITS EVALUATION PROCESS, AS WELL AS IN ITS REPORT ON THE PROTEST, MAKES REFERENCE TO DUPLEX CAPABILITY, IT IS APPARENT THAT DCEC IS EQUATING THE WORD "CAPABILITY" WITH "ACTUAL" DUPLEX OPERATION AND THUS CONSIDERED THE ESTIMATED COST FOR AN ACTUAL DUPLEX OPERATION AS A SIGNIFICANT CRITERIA FOR AWARD ALTHOUGH IT WAS NOT STATED AS AN EVALUATION FACTOR. AS AN EXAMPLE, THE RECORD CONTAINS A MEMORANDUM DATED JUNE 28, 1974, FROM DCEC WHICH STATES IN PERTINENT PART: "DCEC MUST IMMEDIATELY UPGRADE THE SYSTEM FOR THE DUPLEX CAPABILITY." IN OUR OPINION, THIS MEMORANDUM INDICATES THAT DCEC HAD COME TO THE CONCLUSION AT THAT TIME THAT IT REQUIRED AN ACTUAL DUPLEX OPERATION SYSTEM ALTHOUGH THIS REQUIREMENT WAS NOT COMMUNICATED TO THE OFFERORS IN THE RFP OR DURING THE COURSE OF NEGOTIATIONS. THEREFORE, DCEC'S CONSIDERATION OF AN EVALUATION FACTOR NOT STATED IN THE RFP OR IN AN AMENDMENT HAD A PREJUDICIAL EFFECT ON COMPETING OFFERORS.

IN OUR VIEW, THE PROCUREMENT PROCEDURES FOLLOWED DEVIATED FROM APPLICABLE PROCUREMENT REGULATIONS. SUBPARAGRAPH (A) OF ASPR SEC. 3 501 (1974 ED.) "PREPARATION OF REQUEST FOR PROPOSALS OR REQUEST FOR QUOTATIONS" STATES IN PART:

*** SOLICITATIONS SHALL CONTAIN THE INFORMATION NECESSARY TO ENABLE A PROSPECTIVE OFFEROR OR QUOTER TO PREPARE A PROPOSAL OR QUOTATION PROPERLY. ***

FURTHER, ASPR SEC 3-805.4 (1974 ED.) "CHANGES IN GOVERNMENT REQUIREMENTS" PROVIDES:

(A) WHEN, EITHER BEFORE OR AFTER RECEIPT OF PROPOSALS, CHANGES OCCUR IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS MADE 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 SOLICITATION.

SIGNATRON HAS ADVISED THAT IT INTERPRETED PARAGRAPH 2.2.1 OF THE STATEMENT OF WORK AS REQUIRING THAT PROPOSALS CONTAIN ONLY THE "POTENTIAL" FOR ADDING A DUPLEX OPERATION SYSTEM RATHER THAN AS IMPOSING A REQUIREMENT FOR AN "ACTUAL" DUPLEX OPERATION SYSTEM. WE HAVE BEEN INFORMALLY ADVISED THAT DCEC MADE THE SAME INTERPRETATION. OUR OFFICE AGREES WITH THIS INTERPRETATION. DCEC'S LATER PREFERENCE FOR A SYSTEM WHICH INCLUDED AN "ACTUAL" DUPLEX OPERATION AS INDICATED IN ITS JUNE 28 MEMORANDUM, SHOULD HAVE BEEN CLEARLY COMMUNICATED TO ALL OFFERORS BY WRITTEN AMENDMENT TO THE RFP AND BY LATER APPROPRIATE DISCUSSIONS WITH ALL OFFERORS SUBMITTING PROPOSALS. COUNSEL FOR SIGNATRON STATES THAT AT NO TIME WAS SIGNATRON REQUESTED TO QUOTE A PRICE FOR FURNISHING AN ACTUAL DUPLEX OPERATION SYSTEM WHICH IT CONTENDS WOULD HAVE BEEN SIGNIFICANTLY LESS THAN THE $25,000 CONSIDERED. IN OUR OPINION, THE FAILURE ON THE PART OF DCA TO CONVEY THIS IMPORTANT TECHNICAL PREFERENCE TO SIGNATRON BEFORE SUBMISSION OF ITS FINAL PROPOSAL VIOLATED THE FUNDAMENTAL CONCEPT THAT OFFERORS FOR GOVERNMENT CONTRACTS SHOULD BE TREATED IN A FAIR AND IMPARTIAL MANNER. SEE B-174492, JUNE 1, 1972.

THE RECORD ALSO INDICATES THAT IN CONSIDERING THE COST INVOLVED IN SIGNATRON'S APPROACH, DCEC STATED "THE ADDITIONAL HARDWARE MODEMS REQUIRED FOR THE SIGNATRON SYSTEM IN THE FUTURE, WOULD PROVE VERY COSTLY." WE FIND NOTHING IN THE STATED EVALUATION CRITERIA WHICH WOULD PERMIT EVALUATION OF THE COST OF ADDITIONAL HARDWARE MODEMS WHICH MIGHT BE REQUIRED IN THE FUTURE.

IT IS OUR VIEW THAT THE STATEMENT OF WORK WAS WRITTEN IN GENERAL TERMS AND DID NOT EXPLAIN PROPERLY THE OPERATION REQUIREMENTS FOR A SIMULATION SYSTEM. WE BELIEVE THAT THE RFP WAS DEFICIENT IN FAILING TO INDICATE THE RELATIVE WEIGHT TO BE GIVEN TO PRICE. SEE ASPR SEC. 3-501 (1974 ED.), SECTION D "EVALUATION FACTORS FOR AWARD." OFFERORS WERE ON NOTICE THAT PRICE WOULD BE AN EVALUATION FACTOR AS THE RFP CONTAINED THE FOLLOWING: (3) SELECTION OF THE CONTRACTOR WILL BE BASED ON THE QUALITY OF THE TECHNICAL PROPOSAL AS EVALUATED IN ACCORDANCE WITH THE CRITERIA SET FORTH IN PARAGRAPH (6) BELOW, PRICE AND OTHER FACTORS CONSIDERED.

HOWEVER, THE FAILURE TO SHOW THE RELATIVE IMPORTANCE OF PRICE VIS-A VIS THE EVALUATION FACTORS WHICH WERE LISTED IS CONTRARY TO THE VIEW OF OUR OFFICE THAT INTELLIGENT COMPETITION REQUIRES, AS A MATTER OF SOUND PROCUREMENT POLICY, THAT OFFERORS BE ADVISED OF THE EVALUATION FACTORS TO BE USED AND THE RELATIVE IMPORTANCE OF THOSE FACTORS. WE BELIEVE THAT EACH OFFEROR HAS A RIGHT TO KNOW WHETHER THE PROCUREMENT IS INTENDED TO ACHIEVE A MINIMUM STANDARD AT THE LOWEST COST OR WHETHER COST IS SECONDARY TO QUALITY. COMPETITION IS NOT SERVED IF OFFERORS ARE NOT GIVEN ANY IDEA OF THE RELATIVE VALUES OF TECHNICAL EXCELLENCE AND PRICE. SEE MATTER OF AEL SERVICE CORPORATION ET AL., 53 COMP. GEN. 800 (1974); 52 ID. 161 (1972).

IN OUR VIEW, DEFICIENCIES NOTED ABOVE ARE MATERIAL DEVIATIONS FROM THE STATUTORY AND REGULATORY NEGOTIATION REQUIREMENTS AS TO REQUIRE THAT NEGOTIATIONS SHOULD BE REOPENED. SEE 52 COMP. GEN. 409, 412 (1973). THE AMENDED RFP SHOULD CLEARLY INDICATE THE WORK REQUIREMENTS, THE EVALUATION CRITERIA AND THE WEIGHT TO BE GIVEN TO PRICE.

THERE IS NO INDICATION THAT THE GOVERNMENT PERFORMED AN INDEPENDENT COST PROJECTION OF THE OFFERORS' PROPOSED COSTS. WE BELIEVE SUCH AN EXAMINATION OF OFFERORS' PROPOSED COSTS SHOULD BE MADE PRIOR TO DETERMINING THE MOST ADVANTAGEOUS PROPOSAL. IN 50 COMP. GEN. 390, 410 (1970), WE STATED:

OUR OFFICE HAS NOTED THAT THE AWARD OF COST-REIMBURSEMENT CONTRACTS REQUIRES PROCUREMENT PERSONNEL TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING THE PROPOSED COSTS AND TECHNICAL APPROACH INVOLVED. B-152039, JANUARY 20, 1964. WE BELIEVE THAT SUCH JUDGMENT MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCIES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS "REALISM" OF COSTS AND TECHNICAL APPROACHES, AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS.

SINCE THE RFP CONTEMPLATED A COST-TYPE REIMBURSEMENT CONTRACT, EVALUATED COSTS RATHER THAN PROPOSED COSTS PROVIDE A SOUNDER BASIS FOR DETERMINING THE MOST ADVANTAGEOUS PROPOSAL, ESPECIALLY WHEN CONTENDING OFFERORS ARE ESSENTIALLY EQUAL AS TO TECHNICAL ABILITIES. THUS, WE BELIEVE THAT THE AMENDED RFP SHOULD INDICATE THAT THE PROCUREMENT AGENCY WILL EVALUATE COST FACTORS TO DETERMINE THAT REASONABLENESS AND REALISM OF COST UNDER THE TECHNICAL APPROACHES PROPOSED. SEE MATTER OF RAYTHEON COMPANY, 54 COMP. GEN. 169 (1974). AS THIS DECISION CONTAINS A RECOMMENDATION FOR CORRECTIVE ACTION TO BE TAKEN, IT IS BEING TRANSMITTED BY LETTERS OF TODAY TO THE CONGRESSIONAL COMMITTEES NAMED IN SECTION 232 OF THE LEGISLATIVE REORGANIZATION ACT OF 1970, PUBLIC LAW 91-510, 31 U.S.C. 1172.

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