B-170154(1), APR 8, 1971

B-170154(1), APR 8, 1971

BID PROTEST - NEGOTIATIONS - DEFICIENT COST EVALUATION FACTOR CONCERNING PROTEST BY DECISION SYSTEMS ASSOCIATES, INC., (DSAI), AGAINST AWARD OF A CONTRACT TO ANY OTHER OFFEROR UNDER RFP ISSUED BY AEROSPACE MEDICAL DIVISION, BROOKS AFB, TEXAS, FOR DEVELOPMENT OF COMPUTER-BASED METHODS OF SIMULATING REDISTRIBUTION OF AIR FORCE ENLISTED PERSONNEL WITHIN OCCUPATION AREA. RFP CALLED FOR COST-PLUS-FIXED-FEE TYPE REQUEST; PROTESTANT SUBMITTED FIRM FIXED-PRICE OFFER FOR ALL WORK EXCEPT COMPUTER RENTAL WHICH WAS ON COST REIMBURSEMENT BASIS AS ALLEGED BY PROTESTANT. RFP FAILED TO IDENTIFY COMPUTER HARDWARE DESIRED, STATE NUMBER OF SIMULATED RUNS REQUIRED OR GIVE EXPLICIT CONFIGURATION OF SIMULATED RUNS; THUS, RFP IS DEFICIENT IN SPECIFICITY IN NOT GIVING APPROPRIATE EVALUATION FACTOR FOR COMPUTER COSTS, ALLOWING NO VALID BASIS FOR COMPARING PROPOSALS IN THIS ASPECT. PROTESTANT WAS RATED FIRST TECHNICALLY BY EVALUATION PANEL AND FIXED-PRICE APPEARS LOWEST, AWARD TO PROTESTANT WOULD NOT BE IMPROPER. HOWEVER, IF COMPUTER COSTS ARE CONSIDERED SIGNIFICANT AND IF INFORMATION CAN BE DEVELOPED TO PERMIT OFFERORS TO INTELLIGENTLY PRICE OUT THIS FACTOR, A MODIFICATION OF RFP OR NEW SOLICATION WOULD BE REQUIRED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 28, 1970, WITH ATTACHMENTS, FROM THE CHIEF, CONTRACT PLACEMENT DIVISION, DIR/PROCUREMENT POLICY, DCS/S&L, REFERENCE SPPLA, AND A LETTER DATED JANUARY 5, 1971, WITH ATTACHMENTS, FROM THE CHIEF, CONTRACT MANAGEMENT DIVISION, DIR/PROCUREMENT POLICY, DCS/S&L, REFERENCE SPPMB, REPORTING ON THE PROTEST BEFORE AWARD OF DECISION SYSTEMS ASSOCIATES, INCORPORATED (DSAI), AGAINST AWARD TO ANY OTHER OFFEROR UNDER REQUEST FOR PROPOSALS (RFP) NO. F41609-70-R-0047, ISSUED BY THE AEROSPACE MEDICAL DIVISION (AFSC), BROOKS AIR FORCE BASE, TEXAS.

THE SUBJECT SOLICITATION, ISSUED APRIL 20, 1970, COVERS THE DEVELOPMENT OF COMPUTER-BASED METHODS OF SIMULATING THE REDISTRIBUTION OF AIR FORCE ENLISTED PERSONNEL WITHIN AN OCCUPATIONAL AREA. CLAUSE 27 ON PAGE 8 OF THE RFP PROVIDES AS FOLLOWS:

"A PROPOSAL FOR A COST-PLUS-FIXED-FEE (COMPLETION) TYPE CONTRACT IS REQUESTED. IF YOU PROPOSE A DIFFERENT TYPE CONTRACT, IT MUST BE FULLY JUSTIFIED AND IN THE BEST INTEREST OF THE GOVERNMENT, OTHERWISE IT MAY NOT BE ACCEPTABLE." THE EFFORT CALLED FOR IN THE SOLICITATION WAS SET FORTH IN SECTION D OF THE STATEMENT OF WORK IN FOUR PHASES AS FOLLOWS:

"1. PHASE I, PLANNING VISIT.

"2. PHASE II, DESIGN OF MODEL. THE CONTRACTOR SHALL DESIGN A MODEL OF THE ALLOCATION AND REALLOCATION FLOW OF AIR FORCE ENLISTED PERSONNEL THROUGH THIRTY-TWO ASSIGNMENT CATEGORIES WITHIN A SINGLE JOB SPECIALTY FIELD.

"3. PHASE III, DEVELOPMENT OF OPERATING PROGRAMS.

THE CONTRACTOR SHALL DEVELOP AND TEST COMPUTER PROGRAMS TO SIMULATE THE REDEPLOYMENT OF AIR FORCE ENLISTED PERSONNEL AS OUTLINED UNDER PHASE II.

"4. PHASE IV, SIMULATION RUNS. THE CONTRACTOR SHALL INPUT TEST DATA PROVIDED BY THE CONTRACT MONITOR TO OBTAIN THE SPECIFIED PRINTED OUTPUTS FROM THE SIMULATION RUNS." THE RFP ALSO REQUIRED THE CONTRACTOR TO PERFORM FROM 5 TO 10 SIMULATION RUNS (THE NUMBER TO BE DETERMINED BY THE AIR FORCE AFTER AWARD) FOR TEST PURPOSES ON UNDESIGNATED THIRD GENERATION COMPUTER EQUIPMENT TO BE SELECTED AFTER AWARD BY THE AIR FORCE.

DSAI SUBMITTED ITS PROPOSAL PRIOR TO THE MAY 20, 1970, DUE DATE FOR RECEIPT OF PROPOSALS. THE PROPOSAL WAS ON A FIRM FIXED-PRICE BASIS FOR ALL ASPECTS OF THE REQUIRED CONTRACT WORK EXCEPT COMPUTER RENTAL. DSAI SET FORTH IN ITS PROPOSAL ESTIMATED COMPUTER RENTAL COSTS ON A COST REIMBURSEMENT BASIS.

DSAI ALLEGES THAT ITS PROPOSAL WILL RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT AND THAT IT IS ENTITLED TO AWARD. THIS ARGUMENT ESSENTIALLY IS BASED UPON THE ALLEGATION THAT COMPUTER RENTAL COSTS UNDER THE RFP CANNOT RATIONALLY BE ESTIMATED AND HENCE SHOULD NOT BE INCLUDED IN EVALUATION OF THE POTENTIAL COSTS TO THE GOVERNMENT. EXCLUSIVE OF COMPUTER RENTAL COSTS, DSAI STATES THAT NOT ONLY IS ITS ESSENTIALLY FIXED- PRICE PROPOSAL THE MOST PREFERRED TYPE IN ACCORDANCE WITH ASPR 3- 402(B)(1), BUT THAT IT IS ALSO LOWER IN DOLLARS THAN ANY OF THE OTHER LESS PREFERRED COST REIMBURSEMENT TYPE PROPOSALS.

THE SOLICITATION DOES NOT IDENTIFY THE COMPUTER HARDWARE THAT WILL BE USED IN CONTRACT PERFORMANCE, AND ON PAGES 3 AND 4 THE RFP'S STATEMENT OF WORK STATES:

"THE MODEL OF THE ASSIGNMENT ROTATION OF ENLISTED PERSONNEL AND THE SUPPORTING COMPUTER PROGRAMS WILL, AFTER THE COMPLETION OF THIS CONTRACT EFFORT, BE USED BY THE RESEARCH STAFF OF THE PERSONNEL RESEARCH DIVISION ON THE PRD COMPUTER SYSTEM. IT IS ANTICIPATED THAT A 3RD GENERATION COMPUTER SYSTEM WILL BE AVAILABLE AT THE PERSONNEL RESEARCH DIVISION AT A TIME APPROXIMATELY COINCIDENT WITH THE COMPLETION OF THIS CONTRACT. THE PRESENT TIME IT IS IMPOSSIBLE TO IDENTIFY THE SYSTEM WHICH WILL BE SELECTED. THEREFORE, IT WILL BE NECESSARY TO PREPARE PROGRAMS IN ABSENCE OF SPECIFIC INFORMATION REGARDING THE PERSONNEL RESEARCH DIVISION REPLACEMENT COMPUTER SYSTEM. COMPUTER PROGRAMS DEVELOPED UNDER THIS CONTRACT SHOULD BE READILY ADAPTABLE TO A SYSTEM WITH THE FOLLOWING MINIMAL CHARACTERISTICS:

A. 256 K CHARACTERS OF CORE MEMORY.

B. ONE HUNDRED MILLION CHARACTERS OF IMMEDIATE ACCESS STORAGE.

C. TWELVE MAGNETIC TAPE DRIVES.

IF THE SELECTION PROCEDURES FOR THE PERSONNEL RESEARCH DIVISION REPLACEMENT SYSTEM HAS RESULTED IN THE IDENTIFICATION OF THE SPECIFIC REPLACEMENT SYSTEM BEFORE THE INITIATION OF PHASE III, THE CONTRACTOR WILL DEVELOP COMPUTER PROGRAMS FOR THE SELECTED SYSTEM."

DSAI ARGUES THAT THE FAILURE TO IDENTIFY THE COMPUTER HARDWARE TO BE USED MAKES RATIONAL ESTIMATION OF COMPUTER RENTAL COSTS IMPOSSIBLE AND ALLEGES THAT ANY SUCH ESTIMATE MIGHT WELL BEAR NO RELATIONSHIP WHATSOEVER TO THE COMPUTER RENTAL COSTS THAT WILL ACTUALLY BE INCURRED IN CONTRACT PERFORMANCE. HENCE, DSAI CONTENDS THAT SUCH ESTIMATES SHOULD NOT BE USED IN DETERMINING WHICH PROPOSAL APPEARS TO BE THE MOST COST-ADVANTAGEOUS TO THE GOVERNMENT. IN THIS REGARD, DSAI STATES THAT THE ABSENCE OF HARDWARE SPECIFICITY MAKES IT IMPOSSIBLE FOR ANY OFFEROR OR EVEN THE AIR FORCE TO ESTIMATE REALISTICALLY THE COSTS OF DEBUGGING AND TESTING THE PROGRAMS OR THE COSTS OF CONDUCTING SIMULATION RUNS, AND MAKES ANY SUCH ESTIMATE PURE SPECULATION.

DSAI CONTENDS FURTHER, THAT THE RFP PROVIDES NO BASIS FOR THE OFFEROR TO DETERMINE THE NUMBER OF SIMULATION RUNS THAT THE GOVERNMENT WILL REQUIRE OF THE CONTRACTOR. PAGE 12 OF THE RFP'S STATEMENT OF WORK PROVIDES "THE TEST DATA WILL CONSIST OF NO LESS THAN FIVE AND NO MORE THAN 10 SEPARATE RUNS." WE ARE INFORMED THAT THIS TEST DATA IS TO BE PROVIDED THE CONTRACTOR BY THE GOVERNMENT CONTRACT MONITOR.

DSAI POINTS OUT THAT IT WILL OBVIOUSLY COST MORE IF TEN SIMULATION RUNS ARE REQUIRED BY THE GOVERNMENT THAN IF FIVE ARE REQUIRED. CONSEQUENTLY, AS TO THIS ASPECT OF THE CONTRACT, AN OFFEROR WOULD NOT BE ABLE TO ACCURATELY ESTIMATE A COMPUTER RENTAL FIGURE FOR CONDUCTING THESE SIMULATION RUNS, BUT RATHER COULD ONLY ESTIMATE A RANGE OF COSTS.

FINALLY, WITH REFERENCE TO THE INABILITY OF OFFERORS TO ACCURATELY ESTIMATE COMPUTER COSTS TO BE INCURRED IN PERFORMANCE OF THE CONTRACT, DSAI ALLEGES THAT THE RFP IS NOT EXPLICIT AS TO THE CONFIGURATION OF THE ABOVE-REFERENCED SIMULATION RUNS, ESPECIALLY AS TO THE NUMBER OF TIME INCREMENTS SIMULATED, NUMBER OF PERSONNEL PROJECTED, AND OTHER SOLUTION PARAMETERS.

IT IS APPARENT THAT DSAI IS CORRECT IN ITS ALLEGATION THAT THE RFP IS SIGNIFICANTLY DEFICIENT IN SPECIFICITY TO PERMIT A REASONABLY ACCURATE ESTIMATE OF COMPUTER COSTS. THERE IS NO VALID BASIS FOR COMPARING THE PROPOSALS ON THIS ASPECT, WHICH, THEREFORE, DOES NOT APPEAR TO BE AN APPROPRIATE EVALUATION FACTOR.

THE CONTRACTING OFFICER HAS SIMPLY STATED IN THIS REGARD THAT " *** IT IS OBVIOUS THAT SOME ESTIMATE MUST BE OBTAINED FOR THESE COSTS IN ORDER THAT THE AMOUNT OF CONTRACT FUNDING CAN BE DETERMINED." WHILE THIS STATEMENT IS TRUE, IT PROVIDES NO JUSTIFICATION FOR USING UNREALISTIC AND UNSOUND EVALUATION FACTORS.

WHILE THE PROCEDURES TO BE FOLLOWED UNDER A NEGOTIATED PROCUREMENT ARE LESS RIGID THAN THOSE APPLICABLE TO FORMAL ADVERTISING, THERE IS STILL A REQUIREMENT FOR COMPETITION. SEE 10 U.S.C. 2304(G) AND ASPR 3 102(C) WHICH PROVIDE THAT NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT.

COMPETITION IN NEGOTIATION MAY BE CONSIDERED WITH RESPECT TO OTHER FACTORS AS WELL AS PRICE. WHEN, HOWEVER, THE RFP PURPORTS TO SOLICIT INFORMATION FOR USE IN EVALUATING PRICE, IT OBVIOUSLY MUST BE ON SOME MEANINGFUL BASIS. IF OFFERORS ARE CALLED UPON TO PROPOSE PRICES ON SIGNIFICANT ELEMENTS WITHOUT GIVING THEM SUFFICIENT INFORMATION TO INTELLIGENTLY ARRIVE AT A PRICE, WHETHER FIRM OR OTHERWISE, THE RESULT, FAR FROM PROVIDING A VALID BASIS FOR COMPARISON, IMPRESSES US AS AN EFFORT IN FUTILITY. IT MAY ALSO, WHETHER JUSTIFIABLY OR NOT, WELL LEAVE THE CONTRACTING ACTIVITY OPEN TO CHARGES OF FAVORITISM OR FRAUD.

WITHOUT CONSIDERING COMPUTER COSTS, DSAI'S PREFERRED FIXED-PRICE CONTRACT APPEARS TO OFFER THE LOWEST PRICE TO THE GOVERNMENT. ADDITIONALLY, ITS PROPOSAL WAS RATED FIRST TECHNICALLY. THE RECORD INDICATES IN THIS REGARD THAT MANY OFFERS WERE EVALUATED BY THE TECHNICAL EVALUATION PANEL AND A NUMBER OF OFFERORS WERE CONSIDERED CAPABLE OF PERFORMING THE CONTRACT. HOWEVER, THE PANEL RATED DSAI'S OFFER AS THE BEST PROPOSAL RECEIVED CONSIDERING UNDERSTANDING OF THE PROBLEM, SOUNDNESS OF APPROACH, TECHNICAL ORGANIZATION, AND SPECIFIC EXPERIENCE. ASPR 4-106.4 PROVIDES, IN PART, THAT "RESEARCH AND DEVELOPMENT CONTRACTS SHOULD BE AWARDED TO THOSE ORGANIZATIONS *** WHICH HAVE THE HIGHEST COMPETENCE IN THE SPECIFIC FIELD OF SCIENCE OR TECHNOLOGY INVOLVED *** ." IN VIEW OF THE FACT THAT DSAI APPARENTLY SUBMITTED THE BEST TECHNICAL PROPOSAL, AND ITS FIXED-PRICE PROPOSAL IS LOWER THAN ANY OF THE OTHER COST ESTIMATES (DISREGARDING AN UNRELIABLE COMPUTER COST ESTIMATE), AWARD TO DSAI WOULD NOT APPEAR IMPROPER. HOWEVER, WE DO NOT BELIEVE THAT COMPUTER COST NECESSARILY SHOULD BE DISREGARDED. IF IT IS CONSIDERED SIGNIFICANT, AND IF SUFFICIENT DEFINITE INFORMATION CAN BE DEVELOPED TO PERMIT THE OFFERORS TO INTELLIGENTLY PRICE OUT THIS FACTOR, IT MAY PROPERLY PROVIDE A BASIS FOR EVALUATION. IN SUCH A CASE, OF COURSE, A MODIFICATION TO THE RFP OR A NEW SOLICITATION WOULD BE REQUIRED.

WE RECOGNIZE THAT THE AWARD HAS BEEN LONG DELAYED. IF AN IMMEDIATE AWARD MUST BE MADE, WITHOUT REFERENCE TO COMPUTER COSTS, WE BELIEVE THAT A VALID COST COMPARISON CAN BE MADE BETWEEN THE DSAI FIXED-PRICE PROPOSAL AND THE OTHER COST REIMBURSEMENT TYPE PROPOSALS, PARTICULARLY SINCE THE DSAI PRICE, UNLIKE THE COST REIMBURSABLE PRICES, WOULD BE BINDING ON THE CONTRACTOR.