B-190433, JUL 7, 1978

B-190433, JUL 7, 1978

DIGEST: 1. TECHNICAL PROPOSALS IN FIRST STEP OF TWO-STEP FORMALLY ADVERTISED PROCUREMENT FOR PARCEL SORTER WERE IMPROPERLY REJECTED BECAUSE THEY FAILED TO MEET REQUIREMENT FOR MINIMUM SORTATION RATE WHERE SPECIFICATION DID NOT CLEARLY SET FORTH SORTATION RATE REQUIREMENT. SINCE SYSTEM HAS BEEN INSTALLED, CANCELLATION IS IMPRACTICABLE. 2. CLAIM FOR BID PREPARATION COSTS IS DENIED SINCE AMBIGUOUS SPECIFICATION REPRESENTS "MERE NEGLIGENCE" RATHER THAN ARBITRARY AND CAPRICIOUS ACTION ON AGENCY'S PART.

NORFOLK CONVEYOR DIVISION OF JERVIS B. WEBB COMPANY; E.C. CAMPBELL, INC.:

NORFOLK CONVEYOR DIVISION OF JERVIS B. WEBB COMPANY (NORFOLK) AND E.C. CAMPBELL, INC. (ECC), HAVE PROTESTED THE STATE DEPARTMENT'S AWARD OF A CONTRACT FOR A PARCEL SORTING SYSTEM TO E-SYSTEMS, GARLAND DIVISION (E- SYSTEMS). THE BASES OF THE PROTESTS ARE THAT EACH PROTESTER WAS IMPROPERLY EXCLUDED FROM THE SECOND STEP OF THE TWO-STEP FORMALLY ADVERTISED SOLICITATION AND THAT THE SECOND STEP WAS CONDUCTED IN A MANNER PREJUDICIAL TO EACH OF THEM. BOTH ARE ALSO CLAIMING BID PREPARATION COSTS. FOR THE REASONS THAT FOLLOW, THE PROTESTS ARE SUSTAINED, BUT THE CLAIMS FOR BID PREPARATION COSTS ARE DENIED.

BACKGROUND

THE REQUEST FOR TECHNICAL PROPOSALS (RFTP NO. ST-77-32-1), THE FIRST STEP OF THE TWO-STEP PROCUREMENT, WAS ISSUED ON APRIL 12, 1977. IT REQUESTED TECHNICAL PROPOSALS FOR SUPPLYING AND INSTALLING AN AUTOMATED PARCEL SYSTEM (APS) FOR MOVING AND SORTING A VARIETY OF ITEMS IN STATE'S RECEIVING STATION AT NEWINGTON, VIRGINIA. THE SOLICITATION STATED THAT THE SYSTEM WAS TO BE SUPPLIED AND INSTALLED IN ACCORDANCE WITH THE ATTACHED PERFORMANCE SPECIFICATIONS WHICH, UNLESS OTHERWISE SPECIFIED, REPRESENTED "A GUIDE TO FACILITATE THE DEVELOPMENT OF TECHNICAL PROPOSALS BY PROSPECTIVE OFFERORS." BIDDERS WERE ADVISED THAT AFTER THE PROPOSALS HAD BEEN EVALUATED AN INVITATION FOR BIDS WOULD BE ISSUED TO THOSE FIRMS WHOSE PROPOSALS WERE DEEMED ACCEPTABLE UNDER STEP ONE. BIDDERS WERE CAUTIONED THAT BIDS ON THE SECOND STEP WERE TO BE BASED ON THE FIRST STEP PROPOSALS.

SIX PROPOSALS WERE RECEIVED BY JUNE 14, 1977. BY THE FIRST WEEK IN AUGUST THE PROPOSALS HAD BEEN EVALUATED AND STATE HAD PREPARED A SET OF QUESTIONS FOR ALL BIDDERS PREMISED ON THE FACT THAT PORTIONS OF THEIR PROPOSALS WERE "LACKING IN CLARIFICATION EITHER BY NOT BEING ADDRESSED OR VAGUE." ALL BIDDERS RESPONDED IN A TIMELY FASHION. UPON REEVALUATION THE EVALUATORS DETERMINED ON SEPTEMBER 9, 1977 THAT ALL PROPOSALS BUT E- SYSTEMS WERE UNACCEPTABLE.

ON SEPTEMBER 22, 1977, STATE ISSUED THE IFB TO E-SYSTEMS WITH A CLOSING DATE OF SEPTEMBER 28, 1977. E-SYSTEMS' BID WAS ACCEPTED BY STATE ON SEPTEMBER 29, 1977. THE FOLLOWING DAY, STATE MAILED NOTICE OF UNACCEPTABILITY TO THE FIVE BIDDERS ELIMINATED AFTER STEP ONE. THREE OF THE BIDDERS FILED TIMELY PROTESTS. THE LOGAN COMPANY CHOSE NOT TO FILE THE REQUISITE DETAILS AND ADVISED THIS OFFICE THAT IT WOULD NOT BE PURSUING THE MATTER.

GROUNDS OF PROTEST

ECC AND NORFOLK RESPECTIVELY CONTEND THAT THE CONTRACTING OFFICER ERRED IN FINDING THEIR PROPOSALS UNACCEPTABLE. IN ADDITION, IT IS CONTENDED THAT THE AGENCY ERRED IN CONDUCTING THE SECOND STEP OF A TWO STEP PROCUREMENT BY FORMAL ADVERTISING METHODS. SINCE NO COMPETITION EXISTED, THEY CONTEND THAT THE PROCUREMENT SHOULD HAVE BEEN NEGOTIATED, THEREBY ALLOWING THE CONTRACTING OFFICER TO CONSIDER COST AND PRICING DATA UNDER FPR SEC. 1-1.202-1 (1976).

STATE'S RATIONALE FOR FINDING ECC'S AND NORFOLK'S PROPOSALS UNACCEPTABLE

THE WRITTEN EVALUATIONS OF ECC'S AND NORFOLK'S PROPOSAL, WHICH WERE COMPLETED ON AUGUST 30, 1977, CONTAINED NUMEROUS FINDINGS OF "UNACCEPTABILITY" FOR BOTH PROPOSALS. STATE CONSIDERED ECC'S PROPOSAL SO DEFICIENT IN TWO AREAS AS TO BE UNSUSCEPTIBLE OF BEING MADE ACCEPTABLE WITHOUT A BASIC CHANGE. THE FIRST AREA CONCERNS ECC'S ABILITY TO MEET MANDATORY MINIMUM STANDARDS AS TO THE DIMENSIONS OF PARCELS THAT CAN BE CONVEYED DIRECTLY ON THE CONVEYOR SYSTEMS. THE SECOND AREA CONCERNS ECC'S SYSTEM'S ABILITY TO HANDLE A SPECIFIC MINIMUM VOLUME OR "THROUGHPUT" OF PARCELS ONCE THE SYSTEM IS EXPANDED. NORFOLK'S PROPOSAL WAS ALSO DEEMED UNABLE TO MEET THE EXPANDED SYSTEM'S THROUGHPUT REQUIREMENTS. MOREOVER, NORFOLK'S PROPOSAL WAS FOUND UNACCEPTABLE BECAUSE OF THE SYSTEM'S "ACCESSIBILITY" PROBLEMS. WE WILL FIRST CONSIDER WHETHER STATE'S DECISION THAT NORFOLK'S AND ECC'S PROPOSALS WERE UNACCEPTABLE BECAUSE EACH FAILED TO MEET THE EXPANDED SYSTEMS "THROUGHPUT RATE" WAS RATIONALLY FOUNDED.

ECC'S AND NORFOLK'S PROPOSALS REGARDING "SYSTEM THROUGHPUT"

THE PRIMARY REASON WHY STATE FOUND FIVE OUT OF THE SIX PROPOSALS UNACCEPTABLE, INCLUDING, OF COURSE, ECC'S AND NORFOLK'S, RELATES TO WHAT STATE CHARACTERIZES AS THE "MANDATORY REQUIREMENTS FOR THROUGHPUT INCLUDING THROUGHPUT FOR THE TOTAL PLANNED EXPANSION."

TO BETTER UNDERSTAND THIS ISSUE, A BRIEF REVIEW OF THE PARCEL SORTING SYSTEM REQUIRED BY STATE IS NECESSARY. THE BASIC PURPOSE OF THE SYSTEM IS TO FACILITATE THE LOADING OF STATE'S DIPLOMATIC POUCHES. THE PARCELS, RANGING IN SIZE UP TO 24" X 19" X 19", ARE TO BE MOVED FROM THE WAREHOUSES RECEIVING AREA, SORTED, AND DEPOSITED IN THE DISPATCH AREA FOR LOADING INTO THE DIPLOMATIC POUCHES. THE SYSTEM HAS THREE IDENTIFIABLE COMPONENTS: (1) THE INPUT CONVEYORS; (2) THE SORTER; AND (3) THE OUTPUT ACCUMULATING CONVEYORS. INITIALLY, THE PARCELS ARE LOADED ONTO THE INPUT CONVEYERS WHICH MOVE THEM TO THE SORTER. THE SORTER'S AUTOMATIC INDUCTION EQUIPMENT PRESENTS THE PACKAGES TO AN OPERATOR AT THE SORTER INPUT FOR ELECTRONIC ENCODING. AFTER ENCODING, THE PARCELS ARE LOADED BY THE INDUCTION CONVEYOR ONTO THE TRANSPORTING CONVEYOR WHICH CARRIES THE PARCELS TO ONE OF 12 OUTPUTS (22 IN THE "EXPANDED" SYSTEM). WHEN THE PARCEL REACHES THE OUTPUT DESIGNATED BY THE CODE, A DIVERTING MECHANISM PUSHES THE PARCEL ONTO AN OUTPUT ACCUMULATING CONVEYOR WHICH TRANSPORTS AND ACCUMULATES THE PARCELS IN THE DISPATCH AREA OF THE WAREHOUSE.

THE DESCRIPTION ABOVE RELATES TO THE SYSTEM AS INITIALLY PURCHASED BY STATE. THAT SYSTEM IS CAPABLE OF SERVING 280 WORLD-WIDE DESTINATIONS. THE SYSTEM AS NOW CONFIGURED CANNOT, HOWEVER, SORT THE PARCELS INTO 280 SEPARATE CATEGORIES SO THAT ALL PARCELS IN ONE CATEGORY ARE DEPOSITED AND ACCUMULATED TOGETHER ON THE SAME OUTPUT ACCUMULATING CONVEYOR IN THE DISPATCH AREA. HOW EACH OF THE OFFERORS PROPOSED TO MEET THAT FUTURE REQUIREMENT IS THE HEART OF THE CONTROVERSY.

STATE'S POSITION IS THAT SECTION 4.5.4 OF THE SPECIFICATIONS SET A MINIMUM "SYSTEM THROUGHPUT RATE" FOR AN EIGHT-HOUR WORK DAY ONCE THE SYSTEM WAS EXPANDED TO SORT THE PARCELS INTO 280 CATEGORIES. SPECIFICALLY, STATE ARGUES THAT THE SPECIFICATIONS REQUIRE A SUSTAINED "THROUGHPUT RATE" FOR THE ENTIRE SYSTEM OF 30 ITEMS PER MINUTE WHICH IS 14,400 ITEMS PER EIGHT-HOUR DAY. STATE EXPLAINS ITS POSITION AS FOLLOWS:

"PARAGRAPH 4.2.6 OF THE DEPARTMENT'S TECHNICAL SPECIFICATIONS STATES: 'THE SORTER AND THE TRANSPORTING CONVEYORS SHALL OPERATE AT SUFFICIENT SPEED TO PROVIDE A MINIMUM MACHINE SORTATION RATE OF 30 ITEMS PER MINUTE *** (THE OPERATOR WORK STATION SHALL BE CONFIGURED IN SUCH A MANNER AS) TO ALLOW THE OPERATOR TO ALSO MEET THIS THROUGHPUT RATE.' THIS EQUATES TO A THROUGHPUT OF 14,400 ITEMS PER 8 HOUR DAY. PARAGRAPH 4.5.4 GOES ON TO SAY THAT THE SYSTEM MUST BE CAPABLE OF BEING EXPANDED INTO ONE WHICH CAN MACHINE SORT PARCELS AND BUNDLES INTO 280 CATEGORIES, AT THE DESCRIBED RATE (30 ITEMS PER MINUTE). YOUR PROPOSAL DOES NOT MEET THE MANDATORY REQUIREMENT IN PARAGRAPH 4.5.4 FOR THE THROUGHPUT RATE FOR THE FULL 280 CATEGORIES BECAUSE YOU RECYCLE THE ACCUMULATION THROUGH THE ORIGINAL SORTER, THUS RESTRICTING THE 30 ITEMS PR MINUTE INPUT. APPARENTLY YOU FAILED TO UNDERSTAND PARAGRAPH 4.5.4 WHICH SAYS 'UNLESS SUCH SORTATION IS PROVIDED FOR IN THE ORIGINAL SYSTEM *** THE PROPOSAL SHALL DESCRIBE *** HOW THIS WOULD BE ACCOMPLISHED IN THE FUTURE BY UTILIZING THE SYSTEM EQUIPMENT *** BY ADDING EQUIPMENT TO IT AS REQUIRED TO MEET THE EXPANDED SORTATION REQUIREMENTS ***.' ALSO IN OUR LETTER REQUESTING CLARIFICATION DATED AUGUST 4, 1977 YOU WERE ASKED TO: 'EXPLAIN IN DETAIL HOW THE THROUGHPUT REQUIREMENTS ARE TO BE MET AS PROPOSED FOR PHASE III. HOW IS INSTALLATION OF PHASE III EXPANSION TO BE ACCOMPLISHED INCLUDING ACCESSIBILITY? EXPLAIN HOW THE 280 SORT CATEGORIES ARE TO BE MET IN CONJUNCTION WITH THE SYSTEM THROUGHPUT REQUIREMENTS FOR PHASE III AND MEET ALL OTHER MANDATORY REQUIREMENTS.' YOUR RESPONSE OF AUGUST 25, 1977 STILL DOES NOT FULFILL THIS REQUIREMENT WHICH ALSO MAKES YOUR PROPOSAL UNACCEPTABLE."

ECC AND NORFOLK DISAGREE THAT THE SPECIFICATION CONTAINED ANY "SYSTEM THROUGHPUT" REQUIREMENT. ECC STATES THAT:

"THERE IS NO DISPUTE THAT ECC SUBMITTED A TECHNICAL PROPOSAL THAT INCLUDED A SORTING MACHINE CAPABLE OF THIRTY SORTS PER MINUTE. ARITHMETIC EXTRAPOLATION OF THE REQUIRED MECHANICAL SORTATION RATE DOES NOT DEFINE THE DAILY SYSTEM-WIDE WORKLOAD (30 SORTS PER MINUTE X 60 MINUTES X 8 HOURS 14,400 SORTS PER EIGHT-HOUR DAY). THE MECHANICAL SORTATION RATE DEFINES THE PERFORMANCE REQUIREMENT FOR 'THROUGHPUT' AT THE SORTING MACHINE ONLY. HOWEVER, STATE SEIZES UPON THE WORD 'THROUGHPUT' TO IMPLY A MANDATORY SYSTEM-WIDE MATERIAL HANDLING RATE OF 30 ITEMS PER MINUTE. THE MECHANICAL SORTATION RATE PER DAY AT A SINGLE LOCATION WITHIN THE SYSTEM CANNOT BE USED TO DEFINE THE OUTPUT OF THE ENTIRE SYSTEM. YET, THE CONTRACTING OFFICER ADMITTED THAT HE REJECTED ECC'S PROPOSAL ON THE BASIS OF HIS INTERPRETATION THAT THE MECHANICAL SORTATION RATE CREATED A SYSTEM-WIDE 'THROUGHPUT' REQUIREMENT. ALTHOUGH THE SORTING MACHINE IS A CRITICAL ELEMENT OF THE CONVEYOR SYSTEM, IT CANNOT BE USED TO MEASURE THE WORKLOAD OF THE ENTIRE SYSTEM."

FOR THE FOLLOWING REASONS WE FIND ECC'S AND NORFOLK'S INTERPRETATION OF THE SPECIFICATION'S "THROUGHPUT" PERFORMANCE REQUIREMENTS TO BE REASONABLE. EVERY SUBSECTION OF SECTION 4.0 SYSTEM REQUIREMENTS, WHEN REFERRING TO "INPUT" AND "OUTPUT", DID SO IN THE CONTEXT OF SORTER INPUT AND OUTPUT. THE FOLLOWING SUBSECTIONS OF SECTION 4.0 ENTITLED SYSTEM REQUIREMENTS ARE EXAMPLES:

4.1 MATERIAL FLOW

"4.1.2 AT THE SORTER INPUT THE ITEMS SHALL BE PRESENTED TO AN OPERATOR IN SUCH A WAY THAT NO MANUAL INTERVENTION, EITHER LIFTING, PUSHING OR FACING, IS REQUIRED BY THE OPERATOR FOR LOADING INTO THE SORTER.

"4.1.3 THE ITEMS SHALL FLOW THROUGH THE SORTER AND BE AUTOMATICALLY DEPOSITED AT THE CORRECT ELECTRONICALLY DESIGNATED SORTER OUTPUT. THESE OUTPUTS SHALL BE PROVIDED WITH CONVEYORS FOR RECEIVING, TRANSPORTING, AND ACCUMULATING THE ITEMS AS THEY LEAVE THE SORTER OUTPUT AND SHALL TERMINATE NEAR THE DISPATCH AREA." (EMPHASIS SUPPLIED.)

THE TERM "THROUGHOUT" WAS USED IN SUBSECTION 4.2.6 QUOTED ABOVE FROM STATE'S REPORT IN CONJUNCTION WITH THE "SORTER AND TRANSPORTING CONVEYORS." THE "TRANSPORT MECHANISM" (SUBSECTION 5.2.2.4) IS THAT MECHANISM; CONSISTING OF CONVEYORS, WHICH;

"*** SHALL RECEIVE ITEMS FROM THE INDUCTION EQUIPMENT AND TRANSPORT THEM TO THE PROPER SORTER OUTPUTS ***," AND IS PART OF THE SORTER (SUBSECTION 5.2.2).

IN VIEW OF THE FACTS THAT THE TERMS "INPUT" AND "OUTPUT" ARE USED IN THE SYSTEMS REQUIREMENTS SECTION ONLY IN CONJUNCTION WITH THE SORTER; AND THAT THE TERM "THROUGHPUT" WAS USED IN CONJUNCTION WITH REQUIREMENTS OF THE SORTER, WE CONCLUDE THAT "THROUGHPUT" REFERS TO "SORTER THROUGHPUT" NOT "SYSTEM THROUGHPUT."

STATE HAS ARGUED, IN EFFECT, THAT "THROUGHPUT" REFERRED TO, AND IS SYNONYMOUS WITH, "MACHINE SORTATION" AND THAT "MACHINE SORTATION" IS EQUIVALENT TO "SYSTEM THROUGHPUT." THUS, WHEN REFERRING TO SYSTEM CAPABILITIES IN THE THIRD STATE OF EXPANSION, STATE ARGUES THAT WHERE SUBSECTION 4.5.4 SAID THE EXPANDED SYSTEM MUST:

"'*** MACHINE SORT PARCELS AND BUNDLES INTO 280 CATEGORIES AT THE RATES DESCRIBED HEREIN (SUBSECTION 4.2.6) ***,'IT CLEARLY INDICATED A 'SYSTEM THROUGHPUT RATE' OF 30 ITEMS PER MINUTE OR 14,400 ITEMS PER 8 HOUR DAY."

HOWEVER, SUBSECTION 4.5.4 STATES THAT THE EXPANDED SYSTEM MUST "MACHINE SORT" THE PARCELS AT "THE RATE DESCRIBED HEREIN." SUBSECTION 4.2.6 STATES THAT THE "SORTER AND TRANSPORTING CONVEYOR", DEFINED PREVIOUSLY AS THE "SORTER", SHALL OPERATE AT SUFFICIENT SPEED TO PROVIDE A "MINIMUM MACHINE SORTATION RATE" OF 30 ITEMS PER MINUTE. THUS, THE SPECIFICATION REQUIRED ONLY THAT THE EXPANDED SYSTEM NOT DEGRADE THE CAPABILITIES OF THE SORTER. IT DID NOT SET A RATE AT WHICH THE ENTIRE SYSTEM MUST PROCESS PARCELS.

IT IS A FUNDAMENTAL PRINCIPLE OF FEDERAL PROCUREMENT LAW THAT SOLICITATIONS BE DRAFTED IN SUCH A MANNER AS TO INFORM THE OFFERORS IN CLEAR AND UNAMBIGUOUS TERMS OF WHAT WILL BE REQUIRED OF THEM UNDER THE CONTRACT TO BE AWARDED SO THAT OFFERORS CAN COMPETE ON AN EQUAL BASIS. DPF INCORPORATED, B-180292, SEPTEMBER 12, 1974, 74-2 CPD 159, AND CASES CITED THEREIN. CONSEQUENTLY, WE MUST CONCLUDE THAT THIS STANDARD WAS NOT MET AND THAT STATE IMPROPERLY REJECTED ECC'S AND NORFOLK'S PROPOSALS ON THE BASIS OF THEIR FAILURE TO MEET A SPECIFIED "SYSTEM THROUGHPUT" RATE, BECAUSE THERE WAS NO SUCH SOLICITATION REQUIREMENT.

MOREOVER, IN VIEW OF THE CONTRACTING OFFICER REPRESENTATION THAT ECC'S AND NORFOLK'S INABILITY TO MEET THE "SYSTEM THROUGHPUT" RATE REQUIREMENTS WAS DISPOSITIVE ON THE QUESTION OF HIS DUTY TO QUALIFY AS MANY PROPOSALS AS POSSIBLE FOR THE SECOND STEP OF THE COMPETITION, WE NEED NOT CONSIDER WHETHER OTHER BASES OF UNACCEPTABILITY WOULD HAVE BEEN RATIONALLY FOUNDED AND WOULD HAVE JUSTIFIED ECC'S AND NORFOLK'S EXCLUSION FROM THE SECOND STEP. FOR THE SAME REASON, WE NEED NOT CONSIDER WHETHER THE EVALUATING STAFF HAD SUFFICIENT EXPERTISE, IRRESPECTIVE OF THE ERRONEOUS INTERPRETATION OF THE SPECIFICATION, TO EVALUATE THE PROPOSALS PROPERLY. AVAILABLE RELIEF

TERMINATION FOR CONVENIENCE

WHERE A PROTESTER HAS BEEN IMPROPERLY EXCLUDED FROM COMPETITION IN THE CIRCUMSTANCES OF THIS CASE, TWO BASIC AVENUES OF RELIEF ARE POTENTIALLY AVAILABLE; A NEW OPPORTUNITY TO COMPETE AND BID PREPARATION COSTS. GIVE EITHER PROTESTER THE OPPORTUNITY TO COMPETE WOULD REQUIRE TERMINATION OF E-SYSTEMS' EXISTING CONTRACT. IN DETERMINING WHETHER IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO UNDERTAKE ACTION TO TERMINATE AN IMPROPERLY AWARDED CONTRACT, CERTAIN FACTORS MUST BE CONSIDERED, SUCH AS, THE SERIOUSNESS OF THE PROCUREMENT DEFICIENCY; THE DEGREE OF PREJUDICE TO OTHER OFFERORS OR THE INTEGRITY OF THE COMPETITIVE PROCUREMENT SYSTEM; THE GOOD FAITH OF THE PARTIES; THE EXTENT OF PERFORMANCE; THE COST TO THE GOVERNMENT; THE URGENCY OF THE PROCUREMENT; AND THE IMPACT ON THE USER AGENCY'S MISSION. HONEYWELL INFORMATION SYSTEM, 56 COMP.GEN. 505, 77-1 CPD 256. IT HAS BEEN REPORTED THAT AS OF MARCH 1, 1978, 98 PERCENT OF THE COVEYOR SUBSYSTEM HAD BEEN INSTALLED ALONG WITH 30 PERCENT OF THE ELECTRICAL AND PNEUMATIC SYSTEMS. THIS REPRESENTED ABOUT 70 PERCENT OF THE SYSTEM'S TOTAL COST.

IN ADDITION, THE AGENCY REPORTS THAT THE SYSTEM AS PURCHASED FROM E SYSTEMS WILL MEET ITS NEEDS. MOREOVER THE RECORD SHOWS THAT NOTWITHSTANDING THE "SYSTEM THROUGHPUT" ISSUE THERE IS SOME DOUBT WHETHER THE SYSTEM PROPOSED BY THE PROTESTERS WOULD HAVE BEEN ACCEPTABLE BECAUSE OF PROBLEMS RELATING TO "ACCESSIBILITY OF ONE SYSTEM" AND THE DIMENSIONS OF PARCELS THAT THE OTHER SYSTEM IS ABLE TO HANDLE. IN THIS CASE, WE DO NOT BELIEVE THAT TERMINATION OF THE CONTRACT WOULD BE IN THE GOVERNMENT'S BEST INTEREST.

BID PREPARATION COSTS

ESSENTIALLY, BID PREPARATION COSTS CAN BE RECOVERED WHERE THE GOVERNMENT ACTED ARBITRARILY OR CAPRICIOUSLY WITH RESPECT TO A CLAIMANT'S BID OR PROPOSAL. HEYER PRODUCTS CO. V. UNITED STATES, 135 CT.CL. 63 (1956); SEE ALSO, KECO INDUSTRIES, INC. V. UNITED STATES, 192 CT.CL. 773 (1970); AND KECO INDUSTRIES V. UNITED STATES, 203 CT.CL. 566 (1974). ALTHOUGH THE RECORD INDICATES THAT THERE MAY HAVE BEEN NEGLIGENCE IN THE PREPARATION OF THE SPECIFICATION, WE HAVE CONSISTENTLY HELD THAT "MERE NEGLIGENCE" DOES NOT MEET THE STANDARD NECESSARY FOR THE RECOVERY OF BID PREPARATION COSTS SET FORTH IN KECO AND HEYER PRODUCTS COMPANY, SUPRA. SEE WILLIAM D. FREEMAN, M.D., B-191050, FEBRUARY 10, 1978, 78-1 CPD 120; PACIFIC WEST CONSTRUCTORS, B-190387, JANUARY 24, 1978, 78-1 CPD 63. NOR DOES THE FACT THAT IT IS NOT POSSIBLE TO TERMINATE THE EXISTING CONTRACT ENTITLE A CLAIMANT TO BID PREPARATION COSTS WHERE THE AGENCY'S ERROR WAS NOT THE RESULT OF AN ARBITRARY OR CAPRICIOUS ACT.

ACCORDINGLY, REIMBURSEMENT OF PROPOSAL PREPARATION EXPENSES SHOULD NOT BE ALLOWED.