B-167003, JUN. 9, 1969

B-167003, JUN. 9, 1969

TO MR. SECRETARY:

WE ARE IN RECEIPT OF A LETTER DATED MAY 16, 1969, FROM THE DIRECTOR, OFFICE OF PLANT AND OPERATIONS, FURNISHING A REPORT ON THE PROTEST OF AVIATION SPECIALTIES, INC., AGAINST THE REJECTION OF ITS "ALL OR NONE" OFFER SUBMITTED IN RESPONSE TO SOLICITATION R3-69-64, ISSUED BY REGION 3 OF THE FOREST SERVICE ON MARCH 6, 1969.

BY LETTERS DATED MARCH 6, 1969, PRICE PROPOSALS WERE REQUESTED FROM VARIOUS QUALIFIED OPERATORS FOR FURNISHING AIR TANKER SERVICES FOR FIRE RETARDANT DROPPING AT FOUR AIR TANKER BASES LOCATED AT ALAMOGORDO/GRANT COUNTY, NEW MEXICO; WINSLOW, ARIZONA; SANTA FE, NEW MEXICO; AND GRAND CANYON, ARIZONA. THE REQUEST FOR PROPOSALS ADVISED AVIATION SPECIALTIES THAT: "AWARD FOR EACH BASE WILL BE MADE TO THE RESPONSIBLE OFFEROR QUOTING THE LOWEST PRICES.' AVIATION SPECIALTIES SUBMITTED AN OFFER OF $348 PER FLIGHT HOUR FOR 4-ENGINE AIRCRAFT IF AWARDED A CONTRACT FOR ALL THREE BASES REQUIRING 4-ENGINE AIRCRAFT. IT OFFERED $265 PER FLIGHT HOUR AT THE BASE REQUIRING 2-ENGINE AIRCRAFT AND ALSO PROVIDED FOR INCREASING THE RATE PER FLIGHT HOUR TO $398 IN THE EVENT IT DID NOT RECEIVE AN AWARD FOR ALL THREE BASES WHERE 4-ENGINE AIRCRAFT ARE REQUIRED.

IT IS STATED IN THE LETTER FROM THE DIRECTOR THAT UNDER ESTABLISHED PROCEDURES PROPOSALS ARE SOLICITED FROM ALL KNOWN PROSPECTIVE CONTRACTORS FOR A DESIGNATED BASE FOR AN AREA. THE REQUESTS FOR PRICE PROPOSALS WERE ISSUED BY THE CONTRACTING OFFICER IN CONFORMANCE WITH THIS POLICY AND SPECIFIED THAT SEPARATE AWARD FOR EACH BASE WOULD BE MADE TO THE RESPONSIBLE OFFEROR QUOTING THE LOWEST PRICES. BASED ON THE INTENT OF THIS STATEMENT, THE CONTRACTING OFFICER CONCLUDED THAT HE COULD NOT CONSIDER THE "ALL OR NONE" OFFER FROM AVIATION SPECIALTIES. CONSEQUENTLY, AERO UNION CORPORATION WAS AWARDED A CONTRACT AT $318 PER FLIGHT HOUR FOR THE SANTA FE BASE; FLIGHT ENTERPRISES, INC., WAS AWARDED A CONTRACT AT $390 PER FLIGHT HOUR FOR THE GRAND CANYON BASE; AND AVIATION SPECIALTIES WAS AWARDED A CONTRACT AT $398 PER FLIGHT HOUR FOR THE WINSLOW BASE AND A CONTRACT AT $270 PER FLIGHT HOUR AT ALAMOGORDO/GRANT COUNTY BASE. IT IS FURTHER STATED BY THE DIRECTOR THAT THE ALL OR NONE BID FOR THE THREE BASES WOULD BE LOW IF IT IS ASSUMED THAT EACH BASE REQUIRED A A RELATIVELY EQUAL NUMBER OF FLIGHT HOURS. HOWEVER, IN THE OPINION OF THE DIRECTOR, AS THE NUMBER OF FLIGHT HOURS FOR EACH BASE VARIES WIDELY, IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE AWARD BASE BY BASE AT THE LOWEST OFFER RECEIVED FOR EACH BASE. IN THAT REGARD, IT IS NOTED THAT THE FLIGHT PER HOUR OF $318 (4-ENGINE) QUOTED BY AERO UNION FOR THE SANTA FE BASE IS THE ONLY RATE WHICH IS LESS THAN THE "ALL OR NONE" RATE OF $348 PER FLIGHT HOUR QUOTED BY AVIATION SPECIALTIES. THUS, IT APPEARS THAT A MONETARY ADVANTAGE WOULD ACCRUE TO THE GOVERNMENT ONLY WHERE A LARGE NUMBER OF FLIGHT HOURS WERE REQUIRED AT THE SANTA FE BASE. AN INCREASE IN THE NUMBER OF FLIGHT HOURS AT THE TWO OTHER BASES WOULD INCREASE THE COST TO THE GOVERNMENT.

THE ATTORNEYS FOR AVIATION SPECIALTIES IN LETTER DATED MAY 19, 1969, STATE THAT THE SOLICITATION DID NOT PROHIBIT "ALL OR NONE" OFFERS; THAT THE AGGREGATE OF THE THREE CONTRACTS AWARDED EXCEEDED THE "ALL OR NONE" PRICE OFFERED BY AVIATION SPECIALTIES; AND THAT, THEREFORE, THE CONTRACTS AWARDED FOR THE SANTA FE AND GRAND CANYON BASES SHOULD BE CANCELED AND AWARDED TO AVIATION SPECIALTIES.

UNDER THE ESTABLISHED PROCEDURE, PRICE PROPOSALS ARE REQUESTED ONLY FROM INDIVIDUALS OR FIRMS THAT HAVE BEEN DETERMINED TO BE QUALIFIED TO PERFORM THE SERVICES REQUIRED. WE APPROVED THIS PROCEDURE IN B-157954, DECEMBER 15, 1965. IN DOING SO, IT WAS THE UNDERSTANDING OF OUR OFFICE THAT WHERE TWO OR MORE PROSPECTIVE CONTRACTORS HAVE BEEN DETERMINED TO BE EQUALLY QUALIFIED WITH RESPECT TO ANY ONE AIR TANKER BASE, PRICE QUOTATIONS MUST BE SECURED FROM EACH OFFEROR AND AWARD MADE TO THE LOW RESPONSIBLE OFFEROR. WE OBSERVED THAT THESE SERVICES WOULD BE PROCURED PURSUANT TO THE NEGOTIATION AUTHORITY IN 41 U.S.C. 252 (C) (10) ON THE BASIS THAT IT WOULD BE IMPRACTICABLE TO SECURE COMPETITION BECAUSE OF THE INABILITY TO DRAFT DEFINITIVE SPECIFICATIONS. IN THIS CONNECTION, WE WERE ADVISED THAT THE NEGOTIATION PROCEDURES WOULD COMPLY WITH PART 1-3 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), AND THAT SOME AWARDS WOULD BE NEGOTIATED ON A SOLE-SOURCE BASIS WITH THE ONLY QUALIFIED RESIDENT OPERATOR.

IN OUR REVIEW OF THE INSTANT PROCUREMENT, WE NOTED THAT DIFFERENT LETTER REQUESTS FOR PRICE PROPOSALS WERE SENT TO PRESELECTED QUALIFIED OPERATORS. SOME OF THESE LETTERS COVERED A SINGLE BASE WHILE OTHERS COVERED AS MANY AS FOUR BASES. WITH THE EXCEPTION OF THE LETTER SENT TO AVIATION SPECIALTIES, THESE LETTER REQUESTS MADE IT REASONABLY CLEAR THAT SEPARATE AWARDS FOR EACH BASE WERE INTENDED AND THAT "ALL OR NONE" OFFERS WERE NOT CONTEMPLATED. PARAGRAPH 4G-3.7111 OF THE FOREST SERVICE PROCUREMENT REGULATIONS, ENTITLED "NEGOTIATION OF CONTRACT," FOR AIR TANKER SERVICES, PROVIDES: "NEGOTIATION OF THE FINAL CONTRACT AND ARRANGEMENTS FOR ADMINISTRATION WILL BE THE RESPONSIBILITY OF THE CONTRACTING OFFICER. THE CONTRACT FILE SHALL BE DOCUMENTED WITH A WRITTEN REPORT OF THE NEGOTIATION PROCEEDINGS. FOR MAJOR BASES WHERE A RESIDENT OPERATOR IS REQUIRED AND THERE IS ONLY ONE QUALIFIED RESIDENT OPERATOR AVAILABLE, THE CONTRACT WILL BE NEGOTIATED ON A SOLE-SOURCE BASIS. WHERE TWO OR MORE RESIDENT OPERATORS QUALIFY UNDER THE BOARD'S EVALUATION, UNIT PRICES SHALL BE SECURED FROM EACH QUALIFIED OFFEROR AND AWARD MADE TO THE RESPONSIBLE OFFEROR QUOTING THE LOWEST PRICES. FOR BASES DESIGNATED AS NOT HAVING OR REQUIRING A RESIDENT OPERATOR/S), THE BOARD WILL SELECT THE OPERATOR BEST QUALIFIED UNDER THE FACTORS USED FOR EVALUATION. WHERE TWO OR MORE QUALIFY UNDER THE BOARD'S EVALUATION, UNIT PRICES SHALL BE SECURED FROM EACH QUALIFIED OFFEROR AND AWARD MADE TO THE RESPONSIBLE OFFEROR QUOTING THE LOWEST PRICES. UPON ACCEPTANCE OF THE UNIT PRICES OFFERED, THE FINAL CONTRACT CAN BE PREPARED AND TRANSMITTED TO THE PROSPECTIVE CONTRACTOR FOR SIGNATURE. AFTER THE CONTRACT IS SIGNED BY THE CONTRACTING OFFICER, COPIES OF THE EXECUTED CONTRACT, DESIGNATION OF THE CONTRACTING OFFICER'S REPRESENTATIVE, AND OTHER PERTINENT INFORMATION SHALL BE FURNISHED TO THE CONTRACTOR.'

HOWEVER, THE PURPOSE OF NEGOTIATION UNDER THE PARTICULAR CIRCUMSTANCES INVOLVED IN PROCURING AIR TANKER SERVICES WAS TO PROVIDE THE FLEXIBILITY THAT FORMAL ADVERTISING DOES NOT PERMIT. FOLLOWING THIS RATIONALE, IT IS OUR OPINION THAT THE "ALL OR NONE" OFFER OF AVIATION SPECIALTIES SHOULD HAVE BEEN CONSIDERED BY THE CONTRACTING OFFICER AND OTHER EQUALLY QUALIFIED OFFERORS SHOULD HAVE BEEN GIVEN AN OPPORTUNITY TO SUBMIT REVISED PROPOSALS COVERING SERVICES AT MORE THAN ONE BASE. IN OTHER WORDS, IT IS OUR VIEW THAT THE "ALL OR NONE" OFFER OF AVIATION SPECIALTIES WAS WORTHY OF FURTHER CONSIDERATION AND THAT NEGOTIATION PROCEDURES SHOULD HAVE BEEN CONDUCTED IN ACCORDANCE WITH THE REQUIREMENTS PRESCRIBED BY FPR SEC. 1- 3.805-1.

INASMUCH AS AIR TANKER SERVICES ARE BEING PROCURED UNDER NEGOTIATION PROCEDURES AND SINCE THE PROCEDURES EMPLOYED IN THE PRESENT PROCUREMENTS WERE NOT IN COMPLIANCE WITH THE NEGOTIATION POLICIES AND PROCEDURES PRESCRIBED BY SUBPARTS 1-3.1, 1-3.3 AND 1-3.8 OF THE FPR, WE BELIEVE THAT THE ABOVE-QUOTED FOREST SERVICE PROCUREMENT REGULATIONS SHOULD BE REDRAFTED TO IMPLEMENT THE REGULATIONS PRESCRIBED BY THE FPR. PARTICULAR, CONSIDERATION SHOULD BE GIVEN TO THE USE OF THE STANDARD PROCUREMENT FORMS, WITH APPROPRIATE NECESSARY REVISIONS, PRESCRIBED BY PART 1-16 OF THE FPR.

WHILE WE CONCLUDE THAT THE AWARDS MADE DID NOT EVIDENCE COMPLIANCE WITH THE PRESCRIBED NEGOTIATION PROCEDURES, SUCH AWARDS NEED NOT BE DISTURBED IN VIEW OF THE ADVICE THAT THE FIRE SUPPRESSION SERVICES WHICH ARE UNDER CONTRACT TO JULY 15 AND 20, 1969, WOULD BE IMPERILED AND HAMPERED IF ADVERSE ACTION IS DIRECTED.

WE WOULD APPRECIATE BEING ADVISED OF THE ACTIONS TAKEN PURSUANT TO OUR RECOMMENDATIONS STATED ABOVE.