B-182238, JAN 16, 1975

B-182238, JAN 16, 1975

1. ALLEGATION THAT LOW OFFER TO PERFORM STUDY LEADING TO DEVELOPMENT OF WAREHOUSE MODERNIZATION PLAN REPRESENTS A "BUY-IN" DOES NOT PROVIDE BASIS FOR OBJECTION TO AWARD, SINCE ASPR 1-311 DOES NOT PRECLUDE AWARD IN SUCH CIRCUMSTANCES. 2. CLAIM THAT EVALUATION PROCEDURES AND CRITERIA WERE "SUSPECT" IS NOT SUPPORTED BY RECORD EVEN THOUGH MAXIMUM POSSIBLE EVALUATION SCORES WERE RECEIVED BY TWO OFFERORS AND PRICE DISPARITY EXISTED BETWEEN OFFERORS.

LESTER B. KNIGHT & ASSOCIATES, INC.:

LESTER B. KNIGHT & ASSOCIATES, INC. (KNIGHT), AN UNSUCCESSFUL OFFEROR ON A DEPARTMENT OF THE NAVY SOLICITATION CALLING FOR THE DEVELOPMENT OF A WAREHOUSE MODERNIZATION PLAN, HAS PROTESTED THE AWARD MADE TO ROACH MANUFACTURING CORPORATION ON THE GROUNDS THAT THE ROACH OFFER WAS A "BUY- IN" AND THAT THE PROPOSAL EVALUATION PROCEDURES WERE "SUSPECT." FOR THE REASONS HEREIN, WE HAVE CONCLUDED THAT THE PROTEST IS WITHOUT MERIT.

REQUEST FOR PROPOSALS (RFP) NO. N00600-74-R-5305, ISSUED BY THE NAVAL REGIONAL PROCUREMENT OFFICE, WASHINGTON, D.C., REQUESTED OFFERS TO DEVELOP AND FURNISH A PLAN FOR MODERNIZING NAVAL SUPPLY SYSTEMS COMMAND WAREHOUSE FACILITIES AND OPERATIONS AT FOUR NAVAL SUPPLY CENTERS IN THE UNITED STATES. FIVE OF THE SEVEN OFFERS RECEIVED, INCLUDING THOSE FROM KNIGHT AND ROACH, WERE REGARDED AS WITHIN THE COMPETITIVE RANGE. NEGOTIATIONS WERE CONDUCTED, FOLLOWED BY SUBMISSION OF REVISED PROPOSALS AND SUBSEQUENTLY BY SUBMISSION OF BEST AND FINAL OFFERS. ALL FIVE REVISED OFFERS WERE REGARDED AS TECHNICALLY ACCEPTABLE. THE BEST AND FINAL PRICES RECEIVED WERE AS FOLLOWS:

COMPANY PRICE

ROACH MANUFACTURING CORPORATION $188,999.01

BOOZE ALLEN HAMILTON $231,060.00

A. EPSTEIN COMPANIES, INC. $374,428.05

LESTER B. KNIGHT AND ASSOCIATES $387,735.00

A.T. KEARNEY $813,705.00

SINCE THE RFP PROVIDED THAT AWARD WOULD BE MADE "TO THE LOWEST PRICED OFFEROR AMONG ALL ACCEPTABLE AND RESPONSIBLE OFFERORS," ROACH WAS AWARDED THE CONTRACT.

"BUY-IN" IS DEFINED AS "THE PRACTICE OF ATTEMPTING TO OBTAIN A CONTRACT AWARD BY KNOWINGLY OFFERING A PRICE OR COST ESTIMATE LESS THAN ANTICIPATED COSTS WITH THE EXPECTATION OF EITHER (I) INCREASING THE CONTRACT PRICE *** THROUGH CHANGE ORDERS OR OTHER MEANS, OR (II) RECEIVING FUTURE 'FOLLOW-ON' CONTRACTS AT PRICES HIGH ENOUGH TO RECOVER ANY LOSSES ON THE ORIGINAL 'BUY -IN' CONTRACT." ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-311(A) (1974 ED.). KNIGHT CLAIMS THAT THE SOLICITATION WAS SUFFICIENTLY INDEFINITE TO PERMIT THE ASSUMPTION THAT FOLLOW-ON EFFORT WOULD BE REQUIRED, AND SUGGESTS THAT ROACH WAS INFORMED OF THIS POSSIBILITY DURING NEGOTIATIONS. KNIGHT FURTHER CLAIMS THAT ROACH'S LOW PRICE FAILS TO PROVIDE ADEQUATE SALARIES FOR THE MAN-YEARS INDICATED IN THE ROACH PROPOSAL, AND SUGGESTS THAT THIS COMBINATION OF CIRCUMSTANCES INDICATES A "BUY-IN."

THE NAVY REPORTS THAT DURING NEGOTIATIONS IT QUESTIONED ROACH'S PROPOSED PRICE AND THE QUALIFICATIONS OF ITS PROPOSED PERSONNEL, AND THAT ROACH CONFIRMED BOTH ITS PRICE AND UNDERSTANDING OF THE PROJECT. ACCORDING TO THE NAVY, ROACH STATED THAT IT "WAS PREPARED TO PERFORM SATISFACTORILY AT COST IF NECESSARY OR EVEN TO ABSORB A SUBSTANTIAL LOSS SHOULD THAT SITUATION OCCUR" AND THAT IT "GREATLY DESIRED TO RECEIVE THE CONTRACT FOR ITS OWN GOOD MANAGEMENT REASONS - INCLUDING THE VALUABLE EXPERIENCE SUCH A STUDY WOULD PROVIDE." THE NAVY ALSO DENIES THAT IT INTENDS TO AWARD ANY FOLLOW-ON CONTRACT FOR ADDITIONAL STUDY EFFORTS.

ON THIS RECORD, WE CANNOT CONCLUDE THAT ROACH'S PRICE REPRESENTS A "BUY- IN." EVEN IF ROACH DID INTEND A "BUY-IN," HOWEVER, WE WOULD NOT BE ABLE TO OBJECT TO THE LEGALITY OF THE CONTRACT AWARD TO ROACH. ASPR 1-311(A) PROVIDES ONLY THAT WHEN THERE IS REASON TO BELIEVE THAT BUYING IN HAS OCCURRED, "CONTRACTING OFFICERS SHALL ASSURE THAT AMOUNTS THEREBY EXCLUDED IN THE DEVELOPMENT OF THE ORIGINAL CONTRACT PRICE ARE NOT RECOVERED IN THE PRICING OF CHANGE ORDERS OR OF FOLLOW-ON PROCUREMENTS SUBJECT TO COST ANALYSIS." WE HAVE RECOGNIZED IN MANY DECISIONS THAT SINCE THE REGULATION DOES NOT PROVIDE FOR REJECTION OF A BID OR OFFER WHERE "BUYING IN" IS THOUGHT TO HAVE OCCURRED, THERE IS NO LEGAL BASIS UPON WHICH AN AWARD MAY BE PRECLUDED OR DISTURBED MERELY BECAUSE THE LOW BIDDER SUBMITTED AN UNPROFITABLE PRICE. SEE, E.G., 50 COMP. GEN. 50 (1970); B-173523, DECEMBER 28, 1971; B-175974, DECEMBER 19, 1972.

WITH REGARD TO THE EVALUATION PROCEDURES, KNIGHT CLAIMS THAT THE "RANGE IN PRICE FOR ACCEPTABLE PROPOSALS IS SO BROAD AS TO INDICATE CLEAR CONCISE EVALUATION CRITERIA WERE NOT ESTABLISHED OR UNDERSTOOD." KNIGHT FURTHER CLAIMS THAT ITS 100 PERCENT EVALUATION SCORE INDICATES THAT "THE EVALUATORS THEMSELVES HAD A POOR GRASP OF PROJECT REQUIREMENTS," AND THAT THE WINNING OFFEROR'S RESUMES INDICATED A LACK OF DEPTH WHICH MAKES THE SELECTION OF THAT OFFEROR SUSPECT.

WE DO NOT AGREE WITH THESE ASSERTIONS. IT IS NOT UNCOMMON FOR OFFERORS TO PROPOSE A WIDE RANGE OF PRICES IN RESPONSE TO A SOLICITATION. THIS DISPARITY IN PRICES MAY BE DUE TO ANY OF SEVERAL REASONS, SUCH AS THE EFFICIENCY, OVERHEAD, OR DESIRED PROFIT OF THE VARIOUS OFFERORS, OR THE EXTENT TO WHICH A PROPOSED LEVEL OF PERFORMANCE EXCEEDS OR DOES NOT MEET THE GOVERNMENT'S MINIMUM REQUIREMENTS. THUS, PRICE DISPARITY BY ITSELF DOES NOT ESTABLISH THE ABSENCE OF CLEAR EVALUATION CRITERIA. FURTHERMORE, THE FACT THAT TWO OFFERORS RECEIVED THE MAXIMUM POSSIBLE EVALUATION SCORES PROVIDES NO REASON, IN OUR OPINION, FOR CONCLUDING THAT THE EVALUATORS DID NOT UNDERSTAND THE REQUIREMENTS OF THE PROJECT. SUCH SCORES MAY MEAN ONLY THAT THE PROPOSALS WERE REGARDED AS COMPLETELY SATISFYING THE GOVERNMENT REQUIREMENTS IN ALL MATERIAL RESPECTS.

WITH REGARD TO THE RESUMES SUBMITTED BY ROACH, THE NAVY BELIEVES THAT THEY "MAY NOT FULLY DETAIL EXPERIENCE OF ALL PERSONNEL INVOLVED," BUT THAT THE FULL AND PART-TIME STAFF OF ROACH REPRESENTED TO THE EVALUATORS "AN AGGREGATE OF EXPERTISE SUFFICIENT TO ACCOMPLISH THE PROJECT." IN THIS CONNECTION, THE RFP LISTED ONE OF THE EVALUATION FACTORS AS "THE RELATIVE QUALIFICATIONS OF THE OFFEROR AND HIS ASSOCIATES IN THE TECHNICAL FIELDS OF COMPETENCE INVOLVED IN THE WORK CALLED FOR." SINCE OUR REVIEW OF THE RECORD INDICATES THAT THE NAVY CONDUCTED A MEANINGFUL ANALYSIS OF PROPOSALS PURSUANT TO THE CRITERIA FOR EVALUATION LISTED IN THE SOLICITATION AND SINCE THE EXTENT TO WHICH AN OFFEROR'S PERSONNEL MAY BE VIEWED AS COMPETENT TO PERFORM A REQUIRED TASK IS A MATTER PRIMARILY FOR THE JUDGMENT OF THE PROCURING ACTIVITY, WE CANNOT REGARD THE AGENCY'S EVALUATION AS ARBITRARY OR AS AN ABUSE OF THE BROAD DISCRETION POSSESSED BY THE EVALUATORS IN SUCH MATTERS.

FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.