B-167867, JAN. 20, 1970

B-167867, JAN. 20, 1970

BID PROTEST--NEGOTIATIONS--EVALUATION DECISION TO SONICRAFT, INC; DENYING PROTEST AGAINST NEGOTIATED AWARD BY AERONAUTICAL SYSTEMS DIVISION, WRIGHT-PATTERSON, AIR FORCE BASE WITH ITT RESEARCH INSTITUTE OF A COST-PLUS-FIXED-FEE CONTRACT FOR REPAIR OF JH SYSTEMS. A REVIEW OF THE RECORD OF A TECHNICAL NEGOTIATED PROCUREMENT AND A RESOLICITATION ON THE BASIS OF REVISED REQUIREMENTS DOES NOT INDICATE ANY BASIS FOR OBJECTION. HOWEVER, IN A LETTER TO THE SECRETARY OF THE AIR FORCE, SUGGESTION WAS MADE THAT OFFERORS SHOULD HAVE BEEN INFORMED OF THE VARIOUS EVALUATION CRITERIA AND ALSO THE RELATIVE IMPORTANCE OF THE CRITERIA.

TO SONICRAFT, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF SEPTEMBER 9 AND NOVEMBER 18, 1969, AND YOUR LETTERS OF SEPTEMBER 15, DECEMBER 2 AND 4, 1969, PROTESTING AGAINST AWARD TO ANY OFFEROR OTHER THAN YOURSELF UNDER REQUEST FOR QUOTATIONS (RFQ) NO. F33657-69-Q-0689-P001 AND RFQ NO. F33657-69-Q- 0689-P002, ISSUED BY HEADQUARTERS, AERONAUTICAL SYSTEMS DIVISION, WRIGHT- PATTERSON AIR FORCE BASE, OHIO.

REQUEST FOR QUOTATIONS NO. F33657-69-Q-0689-P001 (HEREAFTER "RFQ P001"), ISSUED ON APRIL 17, 1969, CONTEMPLATED A COST PLUS FIXED-FEE CONTRACT FOR THE MAINTENANCE, REPAIR AND DEPLOYMENT OF CERTAIN EQUIPMENT KNOWN AS THE JH SYSTEMS FOR THE PERIOD JULY 1, 1969 THROUGH JUNE 30, 1970. SUBSEQUENT CHANGE IN REQUIREMENTS, DISCUSSED MORE FULLY BELOW, LED TO THE CANCELLATION OF RFQ P001 AND A RESOLICITATION, RFQ NO. F33657-69-Q-0689- P002 ("RFQ P002"), WAS ISSUED ON NOVEMBER 3, 1969. UNDER THE CIRCUMSTANCES, WE MUST REGARD AS MOOT YOUR PROTEST UNDER RFQ P001 SINCE THAT SOLICITATION, WHICH NO LONGER REFLECTS THE GOVERNMENT'S REQUIREMENTS, HAS BEEN CANCELED AND NO AWARD SHALL BE MADE THEREUNDER. HOWEVER, IN VIEW OF THE REQUEST, MADE IN YOUR LETTERS OF DECEMBER 2 AND 4, 1969, THAT WE RESPOND TO YOUR CONTENTIONS CONCERNING RFQ P001, AND IN ORDER TO FULLY SET FORTH THE DEVELOPMENT OF THIS PROCUREMENT, WE SHALL DISCUSS YOUR ARGUMENTS BELOW.

BOTH YOUR COMPANY AND IIT RESEARCH INSTITUTE (IITRI) SUBMITTED TECHNICAL AND COST PROPOSALS IN RESPONSE TO RFQ P001. THE TECHNICAL PROPOSALS WERE EVALUATED BY THE REQUIRING AGENCY, THE AIR FORCE TECHNICAL APPLICATIONS CENTER (AFTAC), AND BOTH WERE FOUND TO BE TECHNICALLY ACCEPTABLE. HOWEVER, THE PROCURING ACTIVITY DESIRED CERTAIN CORRECTIONS AND CLARIFICATIONS OF YOUR PROPOSAL, WHICH WERE REQUESTED OF YOU BY TELEPHONE ON MAY 29, 1969. YOU RESPONDED BY SUBMITTING AN AMENDED CONTRACT PRICING PROPOSAL DATED JUNE 3, 1969, WHICH WAS RECEIVED BY THE PROCURING ACTIVITY ON JUNE 10, 1969. THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), CHICAGO, ASSISTED BY AFTAC PERSONNEL, THEN CONDUCTED A PRE-AWARD SURVEY OF YOUR FIRM AND IN A SURVEY REPORT DATED JUNE 27, 1969, RECOMMENDED "COMPLETE AWARD" TO YOU. SUBSEQUENTLY, YOU SUBMITTED AN UNSOLICITED AMENDED PRICING PROPOSAL, DATED JULY 31, 1969, TO DCASR, CHICAGO, AND TO THE PROCURING ACTIVITY.

THE AFTAC TECHNICAL EVALUATION HAD CONCLUDED THAT YOU PROPOSED USING AN EXCESSIVE AMOUNT OF ENGINEERING PERSONNEL, WHILE IITRI'S PROPOSED "MANPOWER MIX" WAS REASONABLE. HOWEVER, SONICRAFT'S ESTIMATE OF MAN-YEARS ALLOTTED FOR THE PROJECT WAS REASONABLE WHILE IITRI'S ESTIMATE WAS EXCESSIVE. THEREFORE, A REPRESENTATIVE OF THE PROCURING ACTIVITY, ON AUGUST 27, 1969, REQUESTED BOTH OFFERORS TO SUBMIT THEIR LOWEST ESTIMATED COST AND FIXED FEE BY 5:00 P.M; AUGUST 29, 1969, BASED UPON THE MAN-YEARS OF EFFORT AND MANPOWER MIX SUGGESTED IN THE AFTAC TECHNICAL EVALUATION REPORT. THE FOLLOWING REVISED PROPOSALS WERE RECEIVED ON AUGUST 29, 1969:

SONICRAFT, INC. IITRI ESTIMATED COST $80,064.80 $78,426 FIXED FEE 4,803.89 4,900 TOTAL $84,868.69 $83,326 YOUR LETTER OF AUGUST 28, 1969, TRANSMITTING THE REVISED PROPOSAL CONCLUDED:

"IN CONSIDERATION OF THE TIME RESTRAINTS IMPOSED ON US SONICRAFT, INCORPORATED, CONSIDERS THIS REVISED CONTRACT PRICING PROPOSAL OUR BEST AND FINAL OFFER."

ON SEPTEMBER 9, 1969, YOU TELEPHONED THE PROCURING ACTIVITY TO INQUIRE WHETHER A REVISED PRICING PROPOSAL WOULD BE ACCEPTED. YOU WERE INFORMED THAT NO REVISIONS WOULD BE ACCEPTED SINCE THE NEGOTIATIONS HAD BEEN CLOSED AND YOUR "BEST AND FINAL OFFER" HAD BEEN MADE. YOU PROTESTED TO THIS OFFICE BY TELEGRAM OF SEPTEMBER 9, 1969, AND BY LETTER DATED SEPTEMBER 15, 1969, IN WHICH YOU CONTENDED THAT AWARD SHOULD BE MADE TO YOU.

FIRST, YOU CONTEND THAT AWARD SHOULD BE MADE TO YOU BECAUSE:

"ON THE CLOSING DATE OF THE INITAL REQUEST FOR QUOTATION (RFQ) SONICRAFT, INC. WAS THE LOW BIDDER. PRIOR TO AWARD OF THE CONTRACT, THE CONTRACTING OFFICER REQUESTED FROM SONICRAFT, INC. AN AMENDED BID IN THE INTEREST OF THE GOVERNMENT BUT REFUSED TO ACCEPT A SUBSEQUENT OFFER IN THE INTEREST OF THE GOVERNMENT MADE BY SONICRAFT, INC."

THE REPORT FURNISHED OUR OFFICE IN THIS MATTER SHOWS THAT ON THE ORIGINAL CLOSING DATE FOR RECEIPT OF QUOTATIONS, MAY 12, 1969, YOUR PRICING PROPOSAL WAS LOW. HOWEVER, YOU SUBSEQUENTLY REVISED YOUR PROPOSAL ON JUNE 3 AND JULY 31, 1969, AND SUBMITTED YOUR "BEST AND FINAL OFFER" ON AUGUST 28, 1969. IITRI ALSO SUBMITTED A REVISION OF ITS QUOTATION ON AUGUST 28, 1969. AS A RESULT OF THESE REVISIONS, SONICRAFT'S PRICING PROPOSAL WAS NO LONGER LOW. BOTH FIRMS' REVISIONS OF AUGUST 28, 1969, WERE IN RESPONSE TO TELEPHONE CALLS FROM THE PROCURING ACTIVITY ON AUGUST 27, ASKING FOR A STATEMENT OF LOWEST ESTIMATED COST AND FIXED FEE BY 5:00 P.M; AUGUST 29, 1969. THESE CALLS WERE CONFIRMED BY TELEGRAMS OF THE SAME DATE, SENT TO BOTH OFFERORS, WHICH STATED:

"* * * REQUEST YOUR LOWEST TOTAL COST ESTIMATE AND FIXED FEE FOR SUBJECT RFQ BASED ON FOLLOWING: (1) A TOTAL OF APPROXIMATELY TWO MAN YEARS OF EFFORT; (2) A LABOR MIX OF APPROXIMATELY TWO-THIRDS LOWER LEVEL TECHNICAL AND ENGINEERING EFFORT AND ONE-THIRD SUPERVISORY AND HIGHER LEVEL ENGINEERING EFFORT. REF PARA 'Y' OF SUBJECT RFQ. A REPLY BY TWX IS REQUIRED BY 1700 HOURS 29 AUGUST 69 * * *." PARAGRAPH "Y" OF RFQ P001 WAS ESSENTIALLY THE "LATE PROPOSALS" (JANUARY 1964) CLAUSE WHICH APPEARS AT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3 506 (B).

IT IS OBVIOUS THAT WHEN NEGOTIATIONS ARE CONDUCTED, THEY MUST BE BROUGHT TO A CLOSE AT SOME POINT PRIOR TO AWARD OF A CONTRACT. THE METHOD OF TERMINATING NEGOTIATIONS IS ESTABLISHED BY ASPR 3-805.1 (B) WHICH STATES IN PERTINENT PART:

"* * * ALL SUCH OFFERORS SHALL BE INFORMED OF THE SPECIFIED DATE (AND TIME IF DESIRED) OF THE CLOSING OF NEGOTIATIONS AND THAT ANY REVISIONS TO THEIR PROPOSALS MUST BE SUBMITTED BY THAT DATE. ALL SUCH OFFERORS SHALL BE INFORMED THAT ANY REVISION RECEIVED AFTER SUCH DATE SHALL BE TREATED AS A LATE PROPOSAL IN ACCORDANCE WITH THE 'LATE PROPOSALS' PROVISIONS OF THE REQUEST FOR PROPOSALS. * * *"

IN OUR DECISION B-166019, AUGUST 1, 1969, WE OBSERVED:

"WITH REGARD TO THE NATURE AND EXTENT OF INFORMATION REQUIRED IN A NOTICE TO OFFERORS OF THE FINAL DATE FOR THE SUBMISSION OF PROPOSAL MODIFICATIONS, WE STATED IN B-165988, MARCH 11, 1969, 48 COMP. GEN. , THAT:

'* * * OFFERORS SHOULD BE ADVISED (1) THAT NEGOTIATIONS ARE BEING CONDUCTED; (2) THAT OFFERORS ARE BEING ASKED FOR THEIR "BEST AND FINAL" OFFER, NOT MERELY TO CONFIRM OR RECONFIRM PRIOR OFFERS; AND, FINALLY (3) THAT ANY REVISION MUST BE SUBMITTED BY THE DATE SPECIFIED. SEE B-163882, FEBRUARY 13, 1969, 48 COMP. GEN. ; AND B 164581, DECEMBER 27, 1968, 48 COMP. GEN. .'"

THE TELEGRAM OF AUGUST 27, 1969, AS YOU POINT OUT, ASKED NOT FOR A "FINAL" OFFER BUT THE "LOWEST" OFFER. HOWEVER, WE DO NOT THINK THIS DIFFERENCE IN LANGUAGE IS DECISIVE IN THIS CASE. ASPR 3-805.1 (B) DOES NOT SPECIFY THE MANNER BY WHICH OFFERORS ARE TO BE NOTIFIED OF THE CLOSING DATE OF NEGOTIATIONS. IT IS CLEAR FROM THE RECORD THAT YOU WERE GIVEN VERBAL NOTICE THAT "BEST AND FINAL" OFFERS WERE BEING SOLICITED. YOUR LETTER OF SEPTEMBER 15, 1969, RECITES:

"ON AUGUST 27, 1969, (THE BUYER) TELEPHONED SONICRAFT, INC. AND INDICATED A NEW CONTRACT PRICING PROPOSAL WOULD BE REQUIRED AT WRIGHT PATTERSON AIR FORCE BASE BY THE CLOSE OF BUSINESS ON AUGUST 29, 1969. (THE BUYER) DIRECTED SONICRAFT, INC. TO REAPPORTION ITS LABOR, TO GIVE A BREAKDOWN OF THE OVERHEAD COSTS, AND TO MAKE THIS OUR LAST AND FINAL OFFER."

UNDER THESE CIRCUMSTANCES, WE CONCLUDE THAT THE PROCURING ACTIVITY ADEQUATELY ADVISED YOU OF THE TIME FOR THE CLOSING OF NEGOTIATIONS AND PROPERLY DECLINED TO CONSIDER ANY FURTHER PRICING REVISIONS.

YOUR SECOND CONTENTION IS THAT:

"THE OTHER BIDDER ON THIS RFQ, IIT RESEARCH INSTITUTE, DOES NOT HAVE SUFFICIENT KNOWLEDGE AND EXPERIENCE REQUIRED TO FULFILL THE OBLIGATION OF THIS CONTRACT."

THIS ASSERTION IS BASED UPON YOUR OFFERING, BY SUBCONTRACT, THE SERVICES OF THREE MEN FORMERLY EMPLOYED BY IITRI WHO HAVE HAD CONSIDERABLE EXPERIENCE IN THE MAINTENANCE AND FIELD OPERATION OF THE JH SYSTEMS. YOU SUGGEST THAT FIELD OPERATIONS WITHOUT THESE PERSONNEL MAY WELL LEAD TO EXTENSIVE DAMAGE TO THE EQUIPMENT, AND YOU DESCRIBE SOME INSTANCES IN WHICH SUCH DAMAGE HAS OCCURRED.

THE AIR FORCE HAS MADE THE FOLLOWING RESPONSE TO YOUR SECOND ARGUMENT:

"THE REQUIRING ACTIVITY WHO PERFORMED THE TECHNICAL EVALUATION (HQ USAF/AFTAC) WAS AWARE THAT IITRI HAD LOST THREE KEY PERSONNEL FROM THEIR MAINTENANCE DEPLOYMENT TEAM, AND THAT AS A RESULT, THE EXPERIENCE LEVEL ON THE IITRI TEAM WAS NOT AS GREAT AS IT HAD BEEN, BUT WAS STILL CONSIDERED ADEQUATE TO PERFORM THE WORK REQUIRED * * *. FURTHER, IN ANSWER TO THE PROTEST ALLEGATIONS, THE REQUIRING AGENCY STATED THAT THE IITRI PERSONNEL HAVE BEEN WORKING WITH THE JH EQUIPMENT TO UPDATE THEIR MAINTENANCE CAPABILITY SINCE THE LAST TIME THE SYSTEM WAS INSTALLED IN THE AIRCRAFT: A PROFICIENCY MAINTAINING CAPABILITY NOT AVAILABLE TO THOSE PERSONNEL LEAVING IITRI AND PRESENTLY EMPLOYED BY SONICRAFT AND ITS SUB-CONTRACTOR *

"THE REQUIRING AGENCY DID RECOGNIZE THE ABILITIES OF THE THREE PEOPLE MENTIONED SPECIFICALLY BY SONICRAFT IN THEIR PROTEST, MESSRS. GROOM, VOIRAL, AND TAYLOR, AND RATED SONICRAFT, INC. HIGH IN THIS AREA. NEVERTHELESS, THE PERSONNEL OF IITRI, THE COMPANY WHICH WAS RESPONSIBLE FOR THE OVERALL DESIGN AND FABRICATION OF THE EQUIPMENT, ARE CONSIDERED CAPABLE OF MAINTAINING THE EQUIPMENT UNDER BOTH ROUTINE AND ALERT CONDITIONS.

"SONICRAFT, INC. FURTHER CLAIMS THAT COMPONENT FAILURES WILL RESULT IF PERSONNEL LESS EXPERIENCED THAN THOSE THEY PROPOSED TO USE ON THIS PROJECT ARE WORKING ON THE SYSTEM. HOWEVER, THE REQUIRING AGENCY POINTS OUT THAT THESE COMPONENT FAILURES ALSO OCCURRED DURING THE PERIOD WHEN THE THREE EMPLOYEES NOW WORKING FOR SONICRAFT AND THEIR SUBCONTRACTOR WERE WORKING ON THE SYSTEM, AND THAT THIS SHOULD NOT BE CONSIDERED AN UNFAVORABLE COMMENT ABOUT IITRI OR THE THREE EMPLOYEES, BUT SHOULD BE CONSIDERED A NORMAL OCCURRENCE IN THE LIFE OF A DEVELOPMENT PROGRAM." IN 46 COMP. GEN. 371, 372 (1966), WE STATED:

"(WE HAVE CONSISTENTLY HELD THAT WHETHER A BIDDER IS, OR IS NOT, CAPABLE OF PRODUCING IN ACCORDANCE WITH CONTRACT REQUIREMENTS IS A QUESTION OF FACT AND, IN THE ABSENCE OF EVIDENCE THAT A DETERMINATION OF A BIDDER'S CAPABILITY WAS BASED UPON ERROR, FRAUD OR FAVORITISM, OUR OFFICE WILL ACCEPT THE FINDINGS OF THE CONTRACTING AGENCY." ON THE PRESENT RECORD, WE ARE UNABLE TO CONCLUDE THAT THE DETERMINATION THAT IITRI WAS RESPONSIBLE WAS BASED UPON ERROR, FRAUD OR FAVORITISM.

YOU NEXT CONTEND THAT THE CONTRACTING OFFICER EVALUATED YOUR PROPOSAL "ON THE BASIS OF PRICE CONSIDERATION ALONE" AND FAILED TO EXAMINE YOUR TECHNICAL CAPABILITIES.

IN A NEGOTIATED PROCUREMENT, SUCH AS THE INSTANT ONE, THE RULES OF FORMALLY ADVERTISED BIDDING ARE INAPPLICABLE AND THERE MAY BE CONSIDERED ALL FACTORS DEEMED ESSENTIAL TO THE PROCUREMENT IN MAKING THE AWARD. ASPR 3-805.2 PROVIDES THE FOLLOWING GUIDANCE FOR BALANCING ESTIMATED COSTS AGAINST TECHNICAL COMPETENCE IN THE EVALUATION AND AWARD OF COST- REIMBURSEMENT TYPE CONTRACTS:

"IN SELECTING THE CONTRACTOR FOR A COST-REIMBURSEMENT TYPE CONTRACT, ESTIMATED COSTS OF CONTRACT PERFORMANCE AND PROPOSED FEES SHOULD NOT BE CONSIDERED AS CONTROLLING, SINCE IN THIS TYPE OF CONTRACT ADVANCE ESTIMATES OF COST MAY NOT PROVIDE VALID INDICATORS OF FINAL ACTUAL COSTS. THERE IS NO REQUIREMENT THAT COST-REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST TOTAL ESTIMATED COST PLUS PROPOSED FEE. THE AWARD OF COST-REIMBURSEMENT TYPE CONTRACTS PRIMARILY ON THE BASIS OF ESTIMATED COSTS MAY ENCOURAGE THE SUBMISSION OF UNREALISTICALLY LOW ESTIMATES AND INCREASE THE LIKELIHOOD OF COST OVERRUNS. THE COST ESTIMATE IS IMPORTANT TO DETERMINE THE PROSPECTIVE CONTRACTOR'S UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT. THE AGREED FEE MUST BE WITHIN THE LIMITS PRESCRIBED BY LAW AND APPROPRIATE TO THE WORK TO BE PERFORMED (SEE 3-808). BEYOND THIS, HOWEVER, THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT." UNDER THIS PROVISION, THE RELATIVE TECHNICAL COMPETENCE OF PROSPECTIVE CONTRACTORS IS OF PARAMOUNT IMPORTANCE. IN THAT CONNECTION, IT IS ADMINISTRATIVELY REPORTED THAT BOTH PROPOSALS WERE TECHNICALLY EVALUATED BY THE REQUIRING ACTIVITY. EACH PROPOSAL WAS RATED ON THE FOLLOWING FACTORS: UNDERSTANDING OF THE PROBLEM; SOUNDNESS OF APPROACH; COMPLIANCE WITH DATA REQUIREMENTS; TECHNICAL QUALIFICATIONS; QUALITY OF PRODUCT OR SERVICE; OVERRUN HISTORY; ABILITY TO MEET SCHEDULE; TECHNICAL MANAGEMENT/SUPPORT; OFFEROR'S SPECIFIC EXPERIENCE; TECHNICAL ORGANIZATION; SPECIFIC TECHNICAL EQUIPMENT AND FACILITIES AND ANALYTICAL CAPACITY. WAS EXPRESSLY RECOGNIZED IN THE EVALUATION THAT YOUR TECHNICAL QUALIFICATIONS WERE EXCELLENT, AS THE RESULT OF YOUR OBTAINING THE SERVICES OF FORMER IITRI PERSONNEL. HOWEVER, IN THE JUDGMENT OF THE REQUIRING AGENCY, IITRI'S PERSONNEL EXPERIENCE LEVEL WAS ADEQUATE AND ITS OVERALL EXPERIENCE AND CAPABILITIES EXCEEDED THAT OF YOUR FIRM. THEREFORE, IITRI'S TECHNICAL PROPOSAL WAS RATED HIGHER THAN YOURS. THE PROCURING ACTIVITY'S REQUEST FOR A BEST AND FINAL OFFER, MADE ON AUGUST 27, 1969, SET FORTH CERTAIN REQUIREMENTS AS TO MAN-YEARS OF EFFORT AND MANPOWER MIX. IN YOUR PROPOSAL OF AUGUST 28, 1969, YOU DISAGREED WITH THE MANPOWER MIX REQUIREMENT AND YOU STATED:

"IN RESPONSE TO YOUR REQUEST FOR A REAPPORTIONMENT OF LABOR WE DID FIND A WAY TO REDUCE THE COST OF THE CONTRACT WITHOUT REDUCING THE QUALITY OF PERFORMANCE." YOU THEN LOWERED YOUR COST ESTIMATE BY PROPOSING TO UTILIZE CERTAIN SUBSTITUTE MATERIALS, SALVAGED MATERIALS, AND USED INSTEAD OF NEW TAPES FOR TEST TAPES. YOUR FAILURE TO ALTER YOUR MANPOWER MIX AS REQUESTED BY THE GOVERNMENT WAS ALSO CONSIDERED IN DETERMINING THE DESIRABILITY OF YOUR PROPOSAL.

THE TOTAL COST TO THE GOVERNMENT WAS ALSO CONSIDERED IN THE EVALUATION OF PROPOSALS. OF COURSE, UNDER A NEGOTIATED COST REIMBURSEMENT TYPE CONTRACT THERE IS NO FIRM PRE-ESTABLISHED PRICE. THE COST OF THE CONTRACT TO THE GOVERNMENT IS GENERALLY ESTABLISHED ON THE BASIS OF THE ACTUAL COSTS OF PERFORMANCE PROPERLY INCURRED BY THE CONTRACTOR. THUS, COST PROPOSALS WERE EXAMINED TO DETERMINE THEIR VALIDITY AND WHETHER THEY MIGHT LEAD TO COST OVERRUNS. THE PROCURING ACTIVITY DETERMINED THAT YOUR COST ESTIMATES WERE OF QUESTIONABLE VALIDITY, SINCE G & A AND OVERHEAD PROJECTIONS WERE BASED UPON SALES BY SONICRAFT OF $700,000 TO $800,000 DURING FISCAL YEAR 1970, WHICH APPEARED TO BE "SOMEWHAT OPTIMISTIC." IN CONTRAST, THE COSTS PROPOSED BY IITRI, WHO HAD EXPERIENCED NO OVERRUNS UNDER THE PREVIOUS CONTRACT FOR THE WORK TO BE PERFORMED UNDER RFQ P001, WERE DETERMINED TO BE REASONABLE.

IN VIEW OF THE ABOVE, WE DO NOT FIND SUPPORT IN THE PRESENT RECORD FOR YOUR ASSERTION THAT THE PROCURING ACTIVITY CONTEMPLATED AWARD "ON THE BASIS OF PRICE CONSIDERATION ALONE."

FINALLY, YOU MAINTAIN THAT:

"THE CONTRACTING OFFICER DOES NOT HAVE SUFFICIENT KNOWLEDGE TO BE ABLE TO EVALUATE THE REQUIREMENTS FOR PERFORMANCE UNDER THE CONTRACT." YOU THEN STATE YOUR BELIEF THAT THIS ALLEGED INSUFFICIENT KNOWLEDGE IS THE RESULT OF A LACK OF AWARENESS OF THE PROBLEMS OF FIELD OPERATIONS ON THE PART OF THE AFTAC PROJECT OFFICERS, WHO PROVIDED INFORMATION FOR THE TECHNICAL EVALUATION OF PROPOSALS.

THE DEPARTMENT'S REPORT CONTAINS THE FOLLOWING STATEMENT IN REGARD TO THIS ARGUMENT:

"* * * THE EXPLORATORY RESEARCH AND DEVELOPMENT OF THIS SYSTEM WAS PERFORMED BY IIT RESEARCH INSTITUTE UNDER CONTRACT AF 33(657)-12466, IN ACCORDANCE WITH AFTAC REQUIREMENTS. SINCE THAT TIME, FURTHER DEVELOPMENT AND MAINTENANCE SERVICES HAVE BEEN PERFORMED BY IITRI UNDER CONTRACTS AF 33(657)-16758 AND F33657-68-C-1104. ALL TECHNICAL DATA GENERATED AS A RESULT OF THESE CONTRACTS HAS BEEN MADE AVAILABLE TO AFTAC AND SPECIFICALLY, TO THE PROJECT OFFICERS WHO PARTICIPATED IN THE TECHNICAL EVALUATION. THE REQUIRING AGENCY (AFTAC) HAS BEEN RESPONSIBLE FOR GENERATING THE INITIAL REQUIREMENTS FOR THIS SYTEM, AS WELL AS ALL FOLLOW- ON REQUIREMENTS. THUS, AFTAC WAS THOROUGHLY FAMILIAR WITH THE REQUIREMENTS OF THIS PROJECT, AS WELL AS THE TECHNICAL CAPABILITIES OF THE IITRI PERSONNEL AND THE THREE PERSONNEL WHO WERE FORMERLY EMPLOYED BY IITRI AND ARE NOW WORKING FOR SONICRAFT OR ITS SUBCONTRACTOR. THUS, THE CONTRACTING OFFICER BELIEVES THAT SUFFICIENT INFORMATION WAS AVAILABLE TO THE AFTAC TECHNICAL EVALUATORS TO ENABLE THEM TO PERFORM AN ANALYSIS OF TECHNICAL PROPOSALS RECEIVED UNDER THE SUBJECT RFQ."

OUR REVIEW OF THE PRESENT RECORD REVEALS NO INDICATION THAT THE EVALUATION OF PROPOSALS WAS PREJUDICED BY A LACK OF KNOWLEDGE ON THE PART OF THE AIR FORCE OF THE REQUIREMENTS OF THE CONTRACT. IN THE ABSENCE OF CLEAR PROOF TO THE CONTRARY, WE MUST ASSUME THAT THE INDIVIDUALS IN WHOM THE ADMINISTRATIVE DEPARTMENTS OF THE GOVERNMENT HAVE VESTED THE AUTHORITY TO MAKE SUCH JUDGMENTS ARE COMPETENT, AND OUR OFFICE DOES NOT HAVE THE TECHNICAL EXPERTISE IN SUCH FIELDS WHICH WOULD ENABLE US TO QUESTION THEIR TECHNICAL DETERMINATIONS ON THEIR MERITS. FURTHER, WE REGARD THE DETERMINATION OF THE ABILITIES OF AIR FORCE EMPLOYEES AND THEIR POSITION ASSIGNMENTS IS A MATTER FOR CONSIDERATION BY THE HEAD OF THAT DEPARTMENT.

IN VIEW OF THE ABOVE, YOUR PROTEST UNDER RFQ NO. F33657-69-Q-0689 P001 IS DENIED.

REQUEST FOR QUOTATIONS P001 REQUIRED SERVICES THEREUNDER TO BE PERFORMED FROM JULY 1, 1969 TO JUNE 30, 1970. DELAY IN THE RECEIPT OF INFORMATION ON THE ANALYSIS OF ESTIMATED COSTS OF YOUR PROPOSAL PREVENTED A CONTRACT FROM BEING AWARDED AS SCHEDULED. THE THEN EXISTING CONTRACT WITH IITRI FOR THESE SERVICES WAS EXTENDED TO DECEMBER 1, 1969. THE SERVICES WERE NOT PROVIDED DURING DECEMBER 1969. HOWEVER, THE REQUIRING ACTIVITY EMPHASIZED ITS NEED FOR THESE SERVICES NO LATER THAN JANUARY 1, 1970. THESE CHANGED REQUIREMENTS LED TO THE CANCELLATION OF RFQ P001 AND THE ISSUANCE OF RFQ P002 ON NOVEMBER 3, 1969, WHICH REQUIRED SERVICES FOR THE PERIOD JANUARY 1 THROUGH JUNE 30, 1970.

YOU HAVE PROTESTED AGAINST THE TERMS OF THE RESOLICITATION, BY LETTER OF DECEMBER 4, 1969, UPON TWO GROUNDS. FIRST, YOU REFER TO PARAGRAPH (C) OF RFQ P002, WHICH PROVIDES:

"TO ASSIST THE GOVERNMENT IN EVALUATING THE REASONABLENESS OF THE COST OF YOUR LABOR AND ENGINEERING EFFORT, THE FOLLOWING LABOR MIX IS SUGGESTED:

"(1) SENIOR SCIENTIST OR SENIOR ENGINEER .25 MAN-MONTH LEVEL

WORK EFFORT QUALIFIED OR EXPERIENCED IN FIELD OPERATION AND MAINTENANCE OF EXOTIC ELECTRONIC SYSTEMS, CHECK OUT, EXTENDED OPERATION, PREVENTIVE MAINTENANCE, CORRECT CAUSES OF MALFUNCTION.

"(2) RESEARCH SCIENTIST OR RESEARCH 1.50 MAN-MONTH ENGINEER LEVEL

WORK EFFORT QUALIFIED OR EXPERIENCED IN FIELD OPERATION AND MAINTENANCE OF EXOTIC ELECTRONIC SYSTEMS, CHECK OUT, EXTENDED OPERATION, PREVENTIVE MAINTENANCE, CORRECT CAUSES OF MALFUNCTION.

"(3) ASSOCIATE SCIENTIST OR ASSOCIATE .50 MAN-MONTH ENGINEER LEVEL

WORK EFFORT QUALIFIED OR EXPERIENCED IN FIELD OPERATION AND MAINTENANCE OF EXOTIC ELECTRONIC SYSTEMS, CHECK OUT, EXTENDED OPERATION, PREVENTIVE MAINTENANCE, CORRECT CAUSES OF MALFUNCTION.

"(4) TECHNICIANS (ASSEMBLY - TEST AND 9.75 MAN-MONTH CHECK OUT)

WORK EFFORT "THE PROPOSER MAY OFFER AN ALTERNATE LABOR MIX/TOTAL MAN- MONTH EFFORT IF IT BELIEVES AND DEMONSTRATES THAT SUCH AN ALTERNATE MIX/EFFORT WILL PERMIT PERFORMANCE OF THE SERVICES REQUIRED BY THIS PROCUREMENT IN A MORE EFFICIENT AND ECONOMICAL MANNER. "NOTE: 173.3 MAN- HOURS CONSTITUTES 1 MAN-MONTH." YOU INTERPRET THE PROVISION'S REFERENCE TO PERSONNEL "QUALIFIED OR EXPERIENCED IN FIELD OPERATION AND MAINTENANCE OF EXOTIC ELECTRONIC SYSTEMS" TO EXCLUDE FROM THE EVALUATION OF PROPOSALS EXPERIENCE WITH THE JH SYSTEMS. IF EXPERIENCE WITH THE JH SYSTEMS IS NOT RELEVANT TO PERFORMANCE OF RFQ P002, YOU SUGGEST THAT THE RFQ SHOULD HAVE BEEN DISTRIBUTED "TO SOME OF THE MANY FIRMS WHICH HAVE PERSONNEL THAT ARE QUALIFIED AND EXPERIENCED 'IN FIELD OPERATION AND MAINTENANCE OF EXOTIC ELECTRONIC SYSTEMS.'"

THE REPORT FURNISHED OUR OFFICE BY THE AIR FORCE SHOWS THAT THE REASONABLENESS OF THE LABOR MIX OF ENGINEER AND TECHNICAL LEVEL PERSONNEL AND THE MAN-YEARS OF EFFORT REQUIRED WERE A SOURCE OF CONTINUING CONCERN TO THE PROCURING ACTIVITY. THESE PROBLEMS WERE DISCUSSED IN THE AFTAC EVALUATION OF PROPOSALS UNDER RFQ P001, WHICH EVALUATION ALSO MADE CERTAIN RECOMMENDATIONS AS TO THE LABOR MIX AND MAN-YEARS OF EFFORT REQUIRED FOR CONTRACT PERFORMANCE. THESE RECOMMENDATIONS WERE INCORPORATED INTO THE PROCURING ACTIVITY'S TELEGRAM OF AUGUST 27, 1969, REQUESTING "LOWEST" OFFERS UNDER RFQ P001. UPON THE CANCELLATION OF RFQ P001 AND THE RESOLICITATION UNDER RFQ P002, THIS ASPECT OF PERFORMANCE WAS FURTHER CONSIDERED. THE LABOR MIX AND TOTAL MAN-HOURS WERE DISCUSSED BY MEMBERS OF THE PROCURING ACTIVITY AND WERE PRESENTED FOR COMMENT TO AFTAC, THE REQUIRING ACTIVITY. THE RESULT OF THESE DISCUSSIONS WAS PARAGRAPH C. OF RFQ P002, QUOTED ABOVE.

WE BELIEVE IT IS CLEAR FROM THE DEVELOPMENT OF THIS PROCUREMENT THAT THE PURPOSE OF PARAGRAPH C. WAS TO SET FORTH THE MANPOWER MIX AND MAN-YEARS OF EFFORT SUGGESTED BY THE AIR FORCE TO BE APPROPRIATE. THE PROVISION WAS NOT DRAWN TO REMOVE FROM CONSIDERATION IN THE EVALUATION OF PROPOSALS ANY EXPERIENCE OF AN OFFEROR WITH THE JH SYSTEMS. THEREFORE, WE FIND NO MERIT IN YOUR FIRST CONTENTION.

YOU HAVE ALSO OBJECTED TO THE RELATIVELY BRIEF PERIOD OF PERFORMANCE UNDER RFQ P002, WHICH IS FROM JANUARY 1 THROUGH JUNE 30, 1970, ON THE BASIS THAT IT CREATES AN UNFAIR COMPETITIVE ADVANTAGE FOR IITRI, THE INCUMBENT CONTRACTOR.

IN THIS REGARD, AFTAC HAS INFORMED THE PROCURING ACTIVITY THAT: "OUR FY 70-73 RDT&E PLANNING AND FUNDING REQUIREMENTS REFLECT THE CHANGE OF OPERATION FROM CONTRACTOR SERVICES TO BLUE-SUIT (IN-HOUSE) OPERATION IN FY 71 AND PRECLUDES OUR EXTENSION OF THIS EFFORT PAST 30 JUN 1970." YOUR OBJECTION TO THE CONTRACT TERM THUS CONCERNS THE DETERMINATION BY THE AIR FORCE TO OBTAIN THESE SERVICES THROUGH THE USE OF ITS OWN RESOURCES RATHER THAN CONTRACTING THEREFOR WITH PRIVATE ENTERPRISE. OUR OFFICE HAS TAKEN THE POSITION THAT THE PROPRIETY OF SUCH A DETERMINATION IS NOT A MATTER PERMITTING OF A RULING IN TERMS OF LEGAL RIGHTS AND RESPONSIBILITIES. 167239, SEPTEMBER 3, 1969. THEREFORE, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE DECISION NOT TO CONTRACT FOR THESE SERVICES BEYOND JUNE 30, 1970.

UNDER THESE CIRCUMSTANCES, YOUR PROTEST UNDER RFQ NO. F33657-69-Q 0689- P002 MUST BE DENIED.

ALTHOUGH WE HAVE FOUND NO BASIS FOR INTERFERING WITH THIS PROCUREMENT, WE THINK IT WOULD HAVE BEEN DESIRABLE TO HAVE MORE CLEARLY EXPRESSED THE STANDARDS FOR EVALUATION OF OFFERS AND THEIR RELATIVE WEIGHTS IN THE SUBJECTS REQUESTS FOR QUOTATIONS. WE ARE BY LETTER OF TODAY, COPY ENCLOSED, SUGGESTING TO THE SECRETARY OF THE AIR FORCE THAT IN FUTURE PROCUREMENTS OFFERORS SHOULD BE INFORMED OF THE RELATIVE WEIGHTS ASSIGNED TO EACH EVALUATION FACTOR.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 18, 1969, FROM THE DEPUTY CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE, PROCUREMENT POLICY, DCS/S&L, FURNISHING A REPORT IN CONNECTION WITH A PROTEST BY SONICRAFT, INCORPORATED, AGAINST AWARD TO ANY OTHER OFFEROR UNDER REQUEST FOR QUOTATION (RFQ) NO. F33657-69-Q-0689-P001 AND RFQ NO. F33657-69-Q-0689- P002, ISSUED BY HEADQUARTERS, AERONAUTICAL SYSTEMS DIVISION, WRIGHT- PATTERSON AIR FORCE BASE, OHIO.

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO SONICRAFT. ALTHOUGH WE DENIED SONICRAFT'S PROTEST, WE BELIEVE THAT THE METHODOF INFORMING OFFERORS OF THE EVALUATION STANDARDS APPLICABLE TO THEIR PROPOSALS WAS DEFICIENT.

IN PAST DECISIONS TO YOUR DEPARTMENT, WE HAVE STATED THAT SOUND PROCUREMENT POLICY REQUIRES THAT OFFERORS BE INFORMED OF ALL EVALUATION FACTORS AND OF THE RELATIVE WEIGHTS TO BE ATTACHED TO EACH FACTOR. 167508, DECEMBER 8, 1969; 48 COMP. GEN. 314, 318 (1968); 47 COMP. GEN. 252, 262 (1967); 44 COMP. GEN. 439, 442 (1965). FURTHER, IN OUR DECISION B-167175, OCTOBER 13, 1969, 49 COMP. GEN. , WE STATED:

"* * * WHILE WE HAVE NEVER HELD, AND DO NOT NOW INTEND TO DO SO, THAT ANY MATHEMATICAL FORMULA IS REQUIRED TO BE USED IN THE EVALUATION PROCESS, WE BELIEVE THAT WHEN IT IS INTENDED THAT NUMERICAL RATINGS WILL BE EMPLOYED OFFERORS SHOULD BE INFORMED OF AT LEAST THE MAJOR FACTORS TO BE CONSIDERED AND THE BROAD SCHEME OF SCORING TO BE EMPLOYED. * * *"

REQUEST FOR QUOTATION F33657-69-Q-0689-P001, INFORMED PROSPECTIVE CONTRACTORS IN PARAGRAPH 14:

"THIS PROCUREMENT IS FOR RESEARCH AND/OR DEVELOPMENT. FOR THIS TYPE OF PROCUREMENT, THE AIR FORCE IS SEEKING COMPETITION, NOT ONLY IN PRICE BUT FOR ENGINEERING TALENT AND CREATIVENESS. BECAUSE OF THIS, THE EVALUATION OF RESEARCH AND/OR DEVELOPMENT PROPOSALS INVOLVES MANY THINGS: APPROACH TO THE PROBLEM, NEW OR UNUSUAL ARTICLES TO ACCOMPLISH THE DESIRED OBJECTIVE, TYPE AND EXPERIENCE OF PERSONNEL TO BE UTILIZED ON THE PROJECT ALTERNATE APPROACHES TO THE PROBLEM, ETC. IN ADDITION TO THESE TECHNICAL CONSIDERATIONS, THERE ARE ALSO TERMS AND TYPE OF THE PROPOSED CONTRACT TO BE CONSIDERED AS WELL AS PRICE. WHEN ALL FACTORS ARE WEIGHED AND EQUATED AGAINST A PRICE, THE APPARENT LOW PRICE IS NOT NECESSARILY THE ACTUAL LOW PRICE." PAGES 17 AND 18 OF THE RFQ, UNDER THE TITLE "TECHNICAL PROPOSAL," CONTAIN FURTHER INSTRUCTIONS FOR THE PREPARATION OF PROPOSALS. HOWEVER, THESE INSTRUCTIONS ARE GENERAL IN NATURE AND DO NOT APPEAR TO HAVE BEEN DRAFTED SPECIFICALLY FOR THIS PROCUREMENT.

ALTHOUGH THE GOVERNMENT'S REQUIREMENTS WERE EXPRESSED IN GENERAL TERMS, THE RECORD FURNISHED OUR OFFICE IN THIS MATTER SHOWS THAT PROPOSALS WERE EVALUATED UPON TWELVE SPECIFIC CRITERIA. WE HAVE FOUND NO INDICATION THAT THE EVALUATION WAS BIASED. HOWEVER, WE BELIEVE OFFERORS SHOULD HAVE BEEN INFORMED OF THE TWELVE EVALUATION CRITERIA AND THEIR RELATIVE IMPORTANCE.

A CHANGE IN REQUIREMENTS LED TO THE CANCELLATION OF RFQ NO. F33657 69-Q- 0689-P001 AND A RESOLICITATION, RFQ NO. F33657-69-Q-0689-P002, WAS ISSUED ON NOVEMBER 3, 1969. PARAGRAPH 2 OF THE RESOLICITATION STATED: "THE TECHNICAL PROPOSAL SHALL BE EVALUATED PURSUANT TO THE PROCEDURES SET FORTH IN AFSCM/0ARM 80-10 ENTITLED, R & D TECHNICAL PROPOSAL EVALUATION PROCEDURE, DATED 3 NOV 1969. THE SPECIFIC STANDARDS FOR CONSIDERATION BY THE GOVERNMENT SHALL BE, UNDERSTANDING OF THE PROBLEM-SOUNDNESS OF APPROACH COMPLIANCE WITH REQUIREMENTS TECHNICAL QUALIFICATIONS-QUALITY OF PRODUCT OR SERVICE-OVERRUN HISTORY ABILITY TO MEET SCHEDULES-SPECIFIC EXPERIENCE-TECHNICAL ORGANIZATION SPECIAL TECHNICAL EQUIPMENT AND FACILITIES-ANALYTICAL CAPACITY TECHNICAL MANAGEMENT/SUPPORT."

WE NOTE THAT THIS CLAUSE DOES LIST THE CRITERIA FOR PROPOSAL EVALUATION. HOWEVER, IT DOES NOT INDICATE, EITHER SPECIFICALLY OR BY REFERENCE, THE RELATIVE IMPORTANCE OF THESE CRITERIA.

WE THEREFORE SUGGEST THAT APPROPRIATE ACTION BE TAKEN TO ASSURE THAT OFFERORS IN FUTURE PROCUREMENTS ARE ADVISED OF BOTH THE EVALUATION CRITERIA AND THEIR RELATIVE IMPORTANCE.