B-171076, DEC 16, 1970, 50 COMP GEN 390

B-171076, DEC 16, 1970, 50 COMP GEN 390

CONTRACTS - NEGOTIATION - EVALUATION FACTORS - POINT RATING - CRITERIA FACTORS WHERE IN THE EVALUATION OF MANAGEMENT, FINANCIAL, AND TECHNICAL FACTORS OFFERED UNDER A REQUEST FOR QUOTATIONS FOR THE OPERATION OVERSEAS OF A COMMUNICATION SYSTEM, OFFERORS ARE FOUND EQUALLY QUALIFIED TECHNICALLY ON THE BASIS OF NORMALIZING THE RESULTS OF THE NUMERICAL SCORING SYSTEM USED BY A SOURCE SELECTION EVALUATION BOARD AND THE ANALYSIS OF THE BOARD'S EVALUATION BY A SOURCE SELECTION ADVISORY COUNCIL USING ITS INDEPENDENT SCORING AND WEIGHTING - REFERRED TO AS THE "NO GAIN TECHNIQUE" - AND ON THE BASIS OF REEVALUATING MANPOWER PROPOSALS, AN AWARD OF A COST-PLUS- AWARD FEE CONTRACT TO THE LOWEST OFFEROR WAS PROPER, AND THE AWARD IS UNAFFECTED BY THE ADVISORY COUNCIL'S DEVIATION, WITH PERMISSION, FROM THE EVALUATION GUIDELINES IN THE ARMY COMMAND PAMPHLET 715-3, AND BY THE CHANGES IN SCORING MADE BETWEEN EVALUATIONS, SINCE THE RELATIVE WEIGHTS OF THE EVALUATION CRITERIA WERE PRESERVED. CONTRACTS - COST-PLUS - EVALUATION FACTORS - "REALISM" OF COSTS AND TECHNICAL APPROACH IN THE AWARD OF COST-REIMBURSEMENT CONTRACTS, PROCUREMENT PERSONNEL ARE REQUIRED TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING PROPOSED COSTS AND TECHNICAL APPROACH, AND SUCH JUDGMENTS MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCIES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS "REALISM" OF COSTS AND TECHNICAL APPROACHES, AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS. SHOULD THE GOVERNMENT FAIL TO ADEQUATELY MEASURE THE "REALISM" OF LOW QUANTUM OF COSTS, THE DEFINITION OF "REASONABLE" COST TO MEAN LOW COST PER SE ON A COMPARATIVE BASIS WOULD BE IMPROPER FOR AWARD PURPOSES. CONTRACTS - REQUESTS FOR QUOTATIONS - EVALUATION FACTORS - DISCLOSURE ALTHOUGH OFFERORS UNDER A REQUEST FOR QUOTATIONS SHOULD BE INFORMED OF THE RELATIVE WEIGHT OR IMPORTANCE ATTACHED TO EACH EVALUATION FACTOR, THERE IS NO REQUIREMENT TO DISCLOSE THE PRECISE NUMERICAL WEIGHTS TO BE USED IN THE EVALUATION PROCESS. IF AN OFFEROR IS IN DOUBT AS TO THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA TO BE USED, THE TIME FOR RESOLUTION OF THE MATTER IS BEFORE THE CLOSING DATE SET FOR RECEIPT OF QUOTATIONS. CONTRACTS - REQUESTS FOR QUOTATIONS - EVALUATION FACTORS - DISCLOSURE IN A SECOND EVALUATION OF OFFERS TO OPERATE A COMMUNICATION SYSTEM OVERSEAS, THE APPLICATION OF BONUS AND PENALTY POINTS IN THE WEIGHTING SYSTEM, POINTS NOT PROVIDED FOR IN A REQUEST FOR QUOTATIONS, DOES NOT CONSTITUTE A SUBSTANTIVE CHANGE THAT SHOULD HAVE BEEN FURNISHED TO ALL OFFERORS BY MEANS OF AMENDMENT, AS THE PURPOSE OF THE WEIGHTING SYSTEM WAS TO ENABLE THE SOURCE SELECTION ADVISORY COUNCIL TO APPLY ITS INDEPENDENT JUDGMENT TO THE EVALUATION CRITERIA CONSIDERED BY THE SOURCE SELECTION EVALUATION BOARD, AND THE INCLUSION OF THE ADDITIONAL POINTS WAS IN ACCORD WITH PROCEDURES ESTABLISHED PRIOR TO THE RECEIPT OF QUOTATIONS.

TO PAGE COMMUNICATIONS, ENGINEERS, INC., DECEMBER 16, 1970:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 20, 1970, AND SUBSEQUENT CORRESPONDENCE CONCERNING YOUR PROTEST AGAINST THE AWARD OF A COST-PLUS AWARD FEE CONTRACT TO FEDERAL ELECTRIC CORPORATION (FEC), UNDER REQUEST FOR QUOTATION (RFQ) DAEA-18-70-Q-1997.

THE RFQ WAS ISSUED ON MAY 18, 1970, BY THE PROCUREMENT DIVISION, FORT HUACHUCA SUPPORT COMMAND, UNITED STATES ARMY, FORT HUACHUCA, ARIZONA, TO PROCURE THE FOLLOWING REQUIREMENTS IN SOUTHEAST ASIA: (1) FIELD ENGINEERING, OPERATION AND MAINTENANCE SERVICES, AND ON-THE-JOB TRAINING (OJT) FOR THE INTEGRATED COMMUNICATION SYSTEM (ICS), AND THE DIAL TELEPHONE EXCHANGE (DTE); (2) COMMUNICATION ENGINEERING SERVICES AND EMERGENCY ON-CALL TECHNICAL SUPPORT FOR CABLE HEADS AND EIGHT ADDITIONAL SITES; (3) OPERATION AND MAINTENANCE OF TWO AREA MAINTENANCE AND SUPPLY FACILITIES (AMSF). THE RFQ FURTHER PROVIDED THAT ALL WORK REQUIREMENTS WOULD BE PERFORMED IN A PERIOD OF 1 YEAR FROM DATE OF AWARD, WITH AN OPTION BY THE GOVERNMENT FOR RENEWAL FOR FOUR 1-YEAR PERIODS.

SECTION D.3 OF THE RFQ, AS AMENDED, INFORMED PROSPECTIVE OFFERORS OF THE EVALUATION FACTORS FOR AWARD AS FOLLOWS:

D. EVALUATION FACTORS

THE OMISSION OF ANY OF THE REQUIRED RESPONSES CONSTITUTES LACK OF RESPONSE BY THE QUOTER AND SHALL RESULT IN AN EVALUATION OF BEING UNRESPONSIVE TO THE RFQ. FACTORS ARE SET FORTH IN ORDER OF EQUAL OR DECREASING IMPORTANCE.

A. MANAGEMENT FACTORS: THE OFFEROR MUST RESPOND TO EACH OF THE BELOW LISTED FACTORS TO ENABLE THE GOVERNMENT TO EVALUATE THE OFFEROR'S CAPABILITY TO PERFORM THE SERVICES:

1. RECOGNITION AND UNDERSTANDING OF THE SCOPE AND LEVEL OF MANAGEMENT EFFORT REQUIRED, AS EVIDENCED BY A COMPREHENSIVE PLAN FOR THE OVERALL APPROACH TO PROVIDING THE SERVICES REQUIRED. THIS WILL INCLUDE A DESCRIPTION OF THE METHODS AND PROCEDURES PROPOSED TO ACCOMPLISH SPECIFIC CONTRACT OPERATIONS, PERFORMANCE SCHEDULES, RECRUITMENT AND RETENTION OF SPECIALIZED PERSONNEL, SAFETY MANAGEMENT, SECURITY MANAGEMENT (TO INCLUDE CONCEPT FOR ASSURING CONTINUITY OF OPERATION IN PERIODS OF EMERGENCY.)

2. PROVISION OF ORGANIZATION CHART AND SUFFICIENTLY DETAILED SUPPLEMENTARY MATERIAL TO SHOW CLEARLY:

A. ORGANIZATION STRUCTURE PROPOSED FOR PERFORMANCE OF CONTRACT.

B. NUMBER AND DESCRIPTION OF PERSONNEL, MATCHED TO ORGANIZATION STRUCTURE.

C. EDUCATION, EXPERIENCE AND SPECIAL QUALIFICATIONS OF KEY PERSONNEL (TO INCLUDE SECURITY CLEARANCES) AS REQUIRED BY SUCCEEDING SECTIONS OF THIS RFQ.

D. PROJECT MANAGER'S RELATIVE POSITION IN OFFEROR'S ORGANIZATION AND DEGREE OF AUTHORITY OF THE PROJECT MANAGER.

E. RATIO OF HOME OFFICE SUPPORT PERSONNEL TO MANAGEMENT AND TECHNICAL PERSONNEL DIRECTLY ENGAGED IN EXECUTION OF THE CONTRACT.

3. PROVISION OF A DETAILED PHASE-IN PLAN.

4. DESCRIPTION IN DETAIL OF PAST PERFORMANCE AND EXPERIENCE OF OFFEROR IN WORK SIMILAR TO THE REQUIREMENT OF THIS SOLICITATION.

B. FINANCIAL FACTORS: THE OFFEROR MUST RESPOND TO EACH OF THE BELOW LISTED FACTORS TO ENABLE THE GOVERNMENT TO EVALUATE THE OFFEROR'S FINANCIAL SUBMISSION:

1. PROPOSED CONTRACT COST TO INCLUDE BASE AND MAXIMUM FEE. DETAILED ESTIMATES AND SCHEDULES MUST BE SUBMITTED WHICH WILL PERMIT A COMPREHENSIVE EVALUATION OF COSTS FOR THE INDIVIDUAL ITEMS OF WORK DESCRIBED IN THE NINE SECTIONS IDENTIFIED UNDER PAR F.1. CONTRACTOR SERVICES, SECTION F DESCRIPTION OF SUPPLIES/SERVICES TO BE PERFORMED.

2. PROPOSED METHOD FOR IMPLEMENTING AND MAINTAINING A COST ACCOUNTING AND COST REPORTING SYSTEM. AS A MINIMUM, MONTHLY COST AND FINANCIAL REPORTS WILL BE REQUIRED. BUDGET AND COST CONTROLS WILL BE PROVIDED FOR IN ORDER THAT CONTRACTOR COST AND PERFORMANCE MAY BE EVALUATED. AN ACCOUNTING STRUCTURE WILL BE DEVELOPED TO PROVIDE COST DATA FOR THE ITEMS OF WORK IDENTIFIED IN THE NINE SECTIONS LISTED IN SECTION F PREVIOUSLY REFERRED TO. ELEMENTS OF EXPENSE WILL BE COSTED. ALSO, COSTS OF U.S. PERSONNEL AND FOREIGN NATIONALS WILL BE SEGREGATED. COSTS BY SITE ARE DESIRABLE, BUT NOT MANDATORY IF THE MAINTENANCE OF SUCH COSTS IS TOO EXPENSIVE. BIDDERS WILL INCLUDE THIS PROVISION WITH AN ESTIMATE OF COST AND MANNING.

3. PROVIDE A SEPARATE DETAILED COST SCHEDULE FOR THE PHASE-IN PLAN.

4. OFFEROR'S FINANCIAL POSITION AS EVIDENCED BY DOCUMENTARY EVIDENCE, I.E., BALANCE SHEET, PROFIT, AND LOSS STATEMENT.

5. THE QUALIFICATIONS AND ASSIGNMENTS OF PERSONNEL WITH PROPOSED SALARY SCALE.

6. RECORD OF COST PERFORMANCE ON GOVERNMENT CONTRACTS COMPARING FINAL COST TO ESTIMATED COST.

C. TECHNICAL FACTORS: THE OFFEROR MUST RESPOND TO EACH OF THE FACTORS LISTED BELOW TO ENABLE THE GOVERNMENT TO EVALUATE THE OFFEROR'S CAPABILITY TO PERFORM THE TECHNICAL SERVICES:

1. RECOGNITION AND UNDERSTANDING OF THE TECHNICAL SERVICES REQUIRED, EVIDENCED BY A DETAILED PLAN TO SATISFY THE OPERATION AND/OR MAINTENANCE REQUIREMENTS FOR EACH SYSTEM, SUBSYSTEM, AND SUPPORT FACILITY SPECIFIED IN SUCCEEDING SECTIONS OF THIS RFQ.

2. DESCRIPTION OF PLAN TO TRAIN US MILITARY AND RVNAF, TO OPERATE AND MAINTAIN EACH SYSTEM, SUB-SYSTEM AND SUPPORT FACILITY SPECIFIED IN SUCCEEDING SECTIONS OF THIS RFQ.

3. DESCRIPTION OF PLAN TO MEET QUALITY ASSURANCE REQUIREMENTS FOR EACH SYSTEM, SUB-SYSTEM, AND SUPPORT FACILITY SPECIFIED IN SUCCEEDING SECTIONS OF THIS RFQ.

4. DESCRIPTION OF PLAN TO PROVIDE COMMUNICATIONS ENGINEERING SERVICES WHICH WILL BE RESPONSIVE TO THE IMMEDIACY OF GOVERNMENT'S REQUIREMENT TO RE-CONFIGURE SYSTEMS AND SUB-SYSTEMS TO MATCH RE DEPLOYMENT OF FORCES.

ADDITIONALLY, SECTION D.1 OF THE RFQ INFORMED OFFERORS AS FOLLOWS:

D.1. NOTICE TO QUOTERS

THE GOVERNMENT INTENDS TO EVALUATE RESPONSES TO THIS SOLICITATION AND TO AWARD A CONTRACT BASED ON FACTORS OTHER THAN THE LOWEST PROBABLE COST. SHALL BE THE RESPONSIBILITY OF THE QUOTER TO GIVE SUFFICIENT EVIDENCE TO ENABLE THE GOVERNMENT TO EVALUATE THE PROPOSAL APPLYING THE TECHNICAL MANAGERIAL AND FINANCIAL FACTORS OUTLINED BELOW. EACH FACTOR WILL BE WEIGHTED WITH RESPECT TO ITS RELATIVE IMPORTANCE.

FOR EVALUATION PURPOSES, THE ARMY HAD PREPARED AN ESTIMATE THAT 2,012 PERSONNEL WOULD BE NECESSARY TO PERFORM THE CONTRACT OF WHICH NUMBER 1,103 WOULD BE UNITED STATES CITIZENS AND 909 WOULD BE VIETNAMESE. IN THIS CONNECTION, THE RFQ SET FORTH THE GOVERNMENT'S ESTIMATE OF THE NUMBER OF TECHNICALLY SKILLED PERSONNEL NEEDED TO PROVIDE THE SERVICES AT THE INSTALLATIONS. AN INDEPENDENT GOVERNMENT COST ESTIMATE WAS ALSO DEVELOPED TO PROVIDE THE DEPARTMENT WITH A BASIS FOR A COMPARATIVE EVALUATION OF THE QUOTATIONS.

THE RFQ WAS ISSUED TO 34 PROSPECTIVE CONTRACTORS. ON MAY 28, 1970, A PREPROPOSAL CONFERENCE WAS HELD FOR THE PURPOSE OF EXPLAINING THE TECHNICAL AND ADMINISTRATION REQUIREMENTS AND TO AFFORD AN OPPORTUNITY TO ANSWER QUESTIONS ABOUT THE PROCUREMENT. AT THAT CONFERENCE, THE FOLLOWING QUESTION AND ANSWER WAS SUPPLIED CONCERNING THE EVALUATION OF PHASE-IN- COSTS FOR THE CONTRACT:

Q - REFERENCE PART 1, GENERAL INSTRUCTION, SECTION D.3C(3). HOW WILL "PHASE-IN" COSTS BE EVALUATED?

A - THE PHASE-IN COST WILL BE SUBMITTED AS A SEPARATE PART OF THE PROPOSAL AND WILL BE EVALUATED AND NEGOTIATED SEPARATELY. SHOULD THE SUCCESSFUL CONTRACTOR HAVE A PHASE-IN COST, HIS FINAL NEGOTIATED PHASE IN COST WILL BECOME A CEILING FOR PHASE-IN COST ON THAT CONTRACTOR'S PROPOSAL. HOWEVER, EACH CONTRACTOR'S PROPOSAL LESS THE PHASE-IN COST WILL BE EVALUATED SEPARATELY FOR CONSIDERATION FOR AWARD. THE FINAL CONTRACT AWARD PRICE WILL INCLUDE ALL COSTS.

FOUR QUOTATIONS WERE RECEIVED BY THE PROCURING ACTIVITY ON JULY 3, 1970, INCLUDING SUBMISSIONS FROM YOUR CONCERN AND FEC.

THE RECORD INDICATES THAT THESE QUOTATIONS WERE SUBSEQUENTLY ANALYZED IN ACCORDANCE WITH AN EVALUATION PLAN ESTABLISHED PRIOR TO THE ISSUANCE OF THE RFQ. THAT PLAN ESTABLISHED PROCEDURES FOR A DETAILED EVALUATION OF QUOTATIONS BY A SOURCE SELECTION EVALUATION BOARD (SSEB) AND AN ANALYSIS OF THE BOARD'S EVALUATION BY A SOURCE SELECTION ADVISORY COUNCIL (SSAC).

THE PLAN ESTABLISHED THREE MAJOR AREAS (MANAGEMENT, FINANCIAL AND TECHNICAL) TO BE EVALUATED. IT ALSO ESTABLISHED FACTORS, SUBFACTORS AND ELEMENTS FOR NUMERICAL SCORING PURPOSES WITHIN EACH OF THE AREAS. WITHIN THE FINANCIAL AREA THE FOLLOWING PERTINENT FACTORS, SUBFACTORS AND ELEMENTS, AMONG OTHERS, WERE ESTABLISHED FOR EVALUATION:

2.1 REASONABLENESS AND REALISM OF PROPOSED COST AND FEE.

2.1.A REIMBURSABLE COSTS FN1) ICS.

2.1.A.8 GENERAL AND ADMINISTRATIVE COST FN1).

FN1 (THESE COSTS WERE ALSO SET FORTH AS EVALUATION SUBFACTORS WITH RESPECT TO ALL THE OTHER REQUIRED OPERATIONS).

2.1.J PROPOSED FEE CRITERIA.

2.1.J.1 PROPOSED BASIC FEE.

2.1.J.2 PROPOSED AWARD FEE.

2.3 PHASE-IN COST.

2.3.A DIRECT COST SALARY AND BENEFITS.

2.3.H GENERAL AND ADMINISTRATIVE COSTS.

WITHIN THE TECHNICAL AREA THE FOLLOWING PERTINENT FACTORS, SUBFACTORS AND ELEMENTS, AMONG OTHERS, WERE ESTABLISHED FOR EVALUATION:

3.1 UNDERSTANDING OF THE O&M SERVICES REQUIRED.

A. ICS.

(1) QUALIFICATIONS OF PERSONNEL.

(2) ADEQUACY OF MANNING LEVEL.

B. DTE.

(1) QUALIFICATIONS OF PERSONNEL.

(2) ADEQUACY OF MANNING LEVEL.

C. AMSF.

(1) QUALIFICATIONS OF PERSONNEL.

(2) ADEQUACY OF MANNING LEVEL.

D. ASC.

(1) QUALIFICATIONS OF COMPUTER PERSONNEL.

(3) ADEQUACY OF MANNING LEVEL.

(4) QUALIFICATIONS OF OTHER PERSONNEL.

E. AUTOSEVCOM.

(1) QUALIFICATIONS OF PERSONNEL.

WITHIN THE MANAGEMENT AREA THE FOLLOWING PERTINENT FACTORS, SUBFACTORS AND ELEMENTS WERE ESTABLISHED FOR EVALUATION:

1.1 MANAGEMENT (GENERAL)

C. ADEQUACY OF OVERALL PLAN.

1.2 MANAGEMENT STRUCTURE

(A) STRUCTURE PROPOSED FOR PERFORMANCE.

(4) QUALIFICATIONS OF KEY MANAGEMENT PERSONNEL.

THE SSEB WAS DIRECTED TO UTILIZE A SCORING SYSTEM PROVIDING FOR A MAXIMUM OF 10 POINTS FOR AN OUTSTANDING RATING IN EACH OF THE SPECIFIED ELEMENTS WHICH WERE TO BE ADDED AND AVERAGED THROUGH THE FACTOR LEVEL TO PROVIDE A COMBINED SCORE FOR EACH OF THE THREE AREAS. IT WAS FURTHER PROVIDED THAT THE SSEB WOULD NOT RANK THE QUOTATIONS, BUT FURNISH THE RAW AREA SCORES TO THE SSAC. THE SSAC WAS DIRECTED TO APPLY ITS OWN JUDGMENT TO THE ANALYSIS AND TO "WEIGHT" THE SSEB RAW AREA SCORES BY MULTIPLYING THE SCORES BY PREDESIGNATED VALUES WHICH WERE: MANAGEMENT-10; FINANCIAL-8; TECHNICAL-8. UPON COMPLETION OF THE EVALUATION PROCESS, THE SSAC WAS TO PRESENT FINDINGS TO THE COMMANDING GENERAL, UNITED STATES ARMY STRATEGIC COMMUNICATIONS COMMAND (USASTRATCOM), UPON WHICH HE COULD BASE RECOMMENDATIONS FOR FUTURE ACTIONS.

THE RECORD SHOWS THAT THE SSEB REPORTED THE RESULTS OF ITS EVALUATION OF THE QUOTATIONS ON JULY 20, 1970. THE SSEB AREA SCORES FOR PAGE AND FEC WERE:

MANAGEMENT FINANCIAL TECHNICAL

FEC 7.55 6.88 5.38

PAGE 9.31 6.86 6.59

THE SCORES WERE ACCOMPANIED BY LENGTHY NARRATIVE STATEMENTS SETTING FORTH THE STRENGTHS AND WEAKNESSES OF THE TWO QUOTATIONS, UPON WHICH BASIS THE SCORES WERE APPARENTLY ASSIGNED.

WITH RESPECT TO THE FINANCIAL AREA OF THE FEC QUOTATION, THE SSEB NOTED THAT THE TOTAL COST QUOTED THEREIN FOR SUPPLYING 1,590 PERSONNEL SPACES DISTRIBUTED TO 628 U.S. CITIZENS, 877 LOCAL NATIONALS (LN), AND 85 THIRD- COUNTRY NATIONALS (TCN) WAS FAVORABLE; THAT THE BASE FEE WAS ONLY 1 PERCENT; AND THAT THE AWARD FEE RANGED FROM MINUS 2 PERCENT TO PLUS 6 PERCENT, WHICH WAS STATED TO SHOW THE CONTRACTOR'S CONFIDENCE IN HIS PERFORMANCE. WEAK POINTS IN FEC'S FINANCIAL QUOTATION WERE NOTED IN PERTINENT PART AS FOLLOWS:

THE REASONABLENESS AND REALISM OF THE BASE SALARY RATE IS SUSPECT. ALTHOUGH THE MINIMUM, MEDIUM, AND MAXIMUM SCALES FOR US AND TCN EMPLOYEES ARE SHOWN, THE APPLICATION OF THE RATES WAS GENERALLY ON THE MINIMUM SCALE. ALSO, THE LN COSTS WERE AT THE LOWEST STEP OF THE PAY SCHEDULE. THIS WOULD TEND TO INDICATE, FOR EXAMPLE, THAT THE TECHNICIANS TO BE EMPLOYED WOULD BE AT THE LOWEST LEVEL OF TECHNICAL EXPERIENCE.

THE LOW BASE SALARY RANGE IS ALSO SUSPECT SINCE THE BIDDER PLANS TO HIRE AND UTILIZE ENCUMBENT PERSONNEL PRESENTLY IN COUNTRY. IT IS DOUBTFUL IF THE BIDDER CAN RECRUIT AT THE SALARY RANGE QUOTED. IN ADDITION, IT WOULD APPEAR THAT THE NUMBER AND ASSOCIATED COSTS OF PERSONNEL DO NOT PROVIDE THE RESOURCES NEEDED TO MEET GOVERNMENT STANDARDS FOR SYSTEMS SECURITY, SAFETY, PROFICIENCY, AND BACK-UP CAPABILITY. WITH RESPECT TO THE FINANCIAL QUOTATION SUBMITTED BY PAGE, THE SSEB NOTED THAT THE COMPANY SPECIFIED 1,697 PERSONNEL SPACES DISTRIBUTED TO 413 U.S. CITIZENS, 892 LOCAL NATIONALS AND 392 THIRD COUNTRY NATIONALS. THE BOARD DETERMINED THAT PAGE'S COST ESTIMATE AND PROPOSED FIXED FEE WERE FAVORABLE TO THE GOVERNMENT; THAT THE PROPOSED SALARY RATES WERE ADEQUATE INDUCEMENT FOR PROCUREMENT OF QUALIFIED PERSONNEL AND THAT DIRECT LABOR CHARGES FOR ALL CLASSIFICATIONS OF PERSONNEL APPEARED REASONABLE. HOWEVER, THE SSEB NOTED THAT THE COMPANY'S PROPOSED AWARD FEE OF 8.2 PERCENT AND THE SUBSISTENCE RATES FOR PERSONNEL OUTSIDE THE SAIGON AREA WERE EXCESSIVE; THAT THE BURDEN RATE AND THE GENERAL AND ADMINISTRATIVE (G&A) EXPENSES WERE UNFAVORABLE TO THE GOVERNMENT; AND THAT A SALARY RAISE FACTOR OF 1.5 PERCENT WAS CONSIDERED EXCESSIVE.

THE RECORD SHOWS THAT THE SSAC WAS BRIEFED CONCERNING THE RESULTS OF THE SSEB EVALUATION ON JULY 21, 1970. THE CHAIRMAN OF THE SSEB ADVISED THE SSAC THAT THREE OF THE FOUR EVALUATED QUOTATIONS REFLECTED A THOROUGH UNDERSTANDING OF THE WORK REQUIREMENTS; THAT THE FOURTH OFFEROR HAD SUBMITTED AN INFERIOR QUOTATION, BUT ITS MANNING ESTIMATE MOST NEARLY MATCHED THE GOVERNMENT ESTIMATE; AND THAT IN VIEW THEREOF, DISCUSSIONS SHOULD BE HELD WITH ALL OF THE OFFERORS.

IN ACCORDANCE WITH THE EVALUATION PLAN, THE SSAC PREPARED AN ANALYSIS OF THE SSEB FINDINGS AND THE QUOTATIONS. WITH RESPECT TO FEC, THE COUNCIL OBSERVED THAT THE COMPANY'S COST ESTIMATE WAS EXTREMELY OPTIMISTIC AND HAD A HIGH COST GROWTH POTENTIAL. FURTHERMORE, THE SSAC STATED THAT SOME REDIRECTION WOULD BE REQUIRED TO ATTAIN A MANNING LEVEL THAT COULD REASONABLY BE EXPECTED TO ASSURE THAT THE GOVERNMENT WOULD RECEIVE ADEQUATE OPERATIONS AND MAINTENANCE SERVICE.

WITH RESPECT TO THE QUOTATION SUBMITTED BY PAGE THE SSAC REITERATED THE DATA SET FORTH BY THE SSEB CONCERNING THE EXCESSIVE COSTS AND FEES CONTAINED IN THE CONCERN'S PROPOSAL AND STATED THAT THE LEVEL OF MANNING PROPOSED BY THE CONCERN SHOULD BE INCREASED IN THE MAINTENANCE AND QUALITY ASSURANCE AREAS.

BASED ON THE WEAKNESSES OF EACH QUOTATION, THE PROCURING CONTRACTING OFFICER DEVELOPED A LIST OF ITEMS FOR NEGOTIATION WITH EACH COMPANY. DISCUSSIONS WITH THE SUBJECT CONCERNS WERE THEREAFTER CONDUCTED PRIOR TO THE SSAC'S FINAL EVALUATION. THE RECORD INDICATES THAT DISCUSSIONS IN DEPTH WERE HELD WITH FEC AND PAGE DURING LATE JULY AND THE FIRST WEEK OF AUGUST CONCERNING THE WEAKNESSES DISCUSSED IN THE SSEB REPORT.

THE RESULTS OF THE DISCUSSIONS WITH FEC CONCERNING THE VARIOUS ITEMS OF COST IN ITS QUOTATION WERE SET FORTH IN A MEMORANDUM DATED AUGUST 5, 1970, WHICH WAS SIGNED BY THE CONTRACTING OFFICER AND THE COST ANALYST FOR THE PROCUREMENT. PURSUANT TO THESE DISCUSSIONS, FEC GRANTED THE CONTRACTING OFFICER THE RIGHT TO ADJUST ITS QUOTATION FOR WHAT THE GOVERNMENT CONSIDERED TO BE DEFICIENCIES IN COSTS FEC PROPOSED FOR DEMOBILIZATION, MINIMUM SALARY RANGE, FOREIGN SERVICE ALLOWANCE, WAR RISK INSURANCE, AND COMPETITION BONUS. PURSUANT TO THIS AGREEMENT, THE GOVERNMENT INCLUDED FOREIGN SERVICE AND WAR HAZARD BONUSES OF 25 PERCENT EACH IN FEC'S QUOTATION. THIS ADDITION WAS SUBSEQUENTLY DELETED WHEN FEC AGREED THAT THESE BONUSES WOULD NOT BE AN ALLOWABLE COST FOR THE FIRST-YEAR CONTRACT. FURTHERMORE, FEC AGREED TO CEILINGS ON G&A AND PHASE-IN COSTS. ACCORDINGLY, THE GOVERNMENT CONCLUDED THAT FEC'S QUOTATION WAS "FAIR AND REASONABLE" AND THAT ALL AREAS OF UNDERESTIMATED COSTS HAD BEEN CLARIFIED TO THE SATISFACTION OF THE CONTRACTING OFFICER.

DISCUSSIONS CONCERNING THE COST OF PAGE'S QUOTATION WERE CONDUCTED ON AUGUST 1, 1970. THE EVALUATION RECORD INDICATES THAT THE COMPANY PROPOSED A G&A RATE OF 9 PERCENT, BUT THAT IT ACCEPTED A RATE OF 8.4 PERCENT RECOMMENDED BY THE GOVERNMENT "AUDITOR." IN THIS CONNECTION, THERE IS NOTHING IN THE RECORD TO INDICATE THAT PAGE OFFERED, OR WAS ASKED IF IT WOULD AGREE TO, A CEILING ON THESE COSTS. PAGE WAS ALSO QUESTIONED ABOUT ITS PROPOSED COSTS FOR TRAVEL AND PER DIEM, GENERAL OFFICE SUPPORT IN MANILA AND BANGKOK, AND RAISES. IN SUMMARY, THE GOVERNMENT ANALYSTS CONCLUDED THAT THE PAGE QUOTATION WAS ALSO FAIR AND REASONABLE.

TECHNICAL DISCUSSIONS WITH EACH CONCERN WERE ALSO HELD DURING THIS PERIOD. THE RECORD SHOWS THAT BOTH FEC AND PAGE WERE INFORMED THAT THEIR PROPOSED MANNING LEVELS WERE AUSTERE IN CERTAIN AREAS, AND THAT PURSUANT TO SUCH ADVICE, THE CONCERNS SUBSEQUENTLY MADE ADJUSTMENTS TO THEIR MANNING ESTIMATES. GOVERNMENT REPRESENTATIVES CONCLUDED THAT AS A RESULT OF SUCH MODIFICATIONS, THE MANNING LEVELS PROPOSED BY EACH OFFEROR WERE REALISTIC AND PROVIDED ASSURANCE THAT THE WORK REQUIREMENTS OF THE CONTRACT COULD BE ADEQUATELY PERFORMED.

PURSUANT TO THE TECHNICAL AND COST DISCUSSIONS, EACH OFFEROR SUBMITTED REVISIONS TO ITS QUOTATIONS, TOGETHER WITH EXECUTED COPIES OF A "MODEL" PROPOSED CONTRACT, TO THE PROCURING ACTIVITY PRIOR TO THE CUTOFF DATE SET FOR RECEIPT OF REVISED QUOTATIONS ON AUGUST 6, 1970. THE "MODEL" CONTRACTS INCLUDED THE SALIENT FEATURES OF THE RFQ AS AMENDED, AND THE PHASE-IN PLAN OF EACH OFFEROR, BUT DID NOT CONTAIN ANY OF THE OTHER INDIVIDUAL DATA SET FORTH IN EACH OFFEROR'S QUOTATION.

UPON CONCLUSION OF THE NEGOTIATIONS, THE RESULTS WERE ORALLY PRESENTED TO THE SSAC. SINCE THE SSEB HAD COMPLETED ITS EVALUATION PRIOR TO THE NEGOTIATIONS, THE SSAC DEVELOPED A SCORING METHOD FOR USE IN APPLYING ITS OWN JUDGMENT TO THE RESULTS OF THE NEGOTIATIONS. UTILIZING THIS METHOD, THE SSAC ASSIGNED ITS OWN SCORE TO EACH OF THE FACTORS SCORED BY THE SSEB, WITH THE PROVISION THAT THE SSAC SCORES COULD EQUAL BUT NOT EXCEED THE SSEB SCORES. THIS PROVISION IS REFERRED TO AS THE "NO GAIN TECHNIQUE." THE TWO SCORES ON EACH FACTOR WERE THEN ADDED AND AVERAGED TO PROVIDE A "NORMALIZED" VALUE FOR EACH OF THE THREE AREAS (TECHNICAL, FINANCIAL, MANAGEMENT) SET FORTH IN THE RFQ. THE AREA SCORES WERE THEN MULTIPLIED BY THE AREA WEIGHTS, NOTED ABOVE, TO DETERMINE LUMP SUM SCORES.

THE RESULTS OF THE "NORMALIZED" SCORING PROCESS WERE AS FOLLOWS:

(CHART OMITTED)

THE FINAL LUMP SUMS OF THE AREA SCORES, AFTER APPLYING THE AREA WEIGHT MULTIPLIERS TO THE "NORMALIZED" AREA SCORES OF THE CONCERNS, WERE:

FEC - 172.70 PAGE - 185.18

THE SSAC FINAL ANALYSIS NOTED THAT PAGE AND FEC WERE BOTH FULLY QUALIFIED IN ALL AREAS OF THE RFQ, AND THEREFORE CONCLUDED THAT THE AWARD SHOULD BE MADE ON THE BASIS OF THE OFFER THAT REPRESENTED THE LOWEST REALISTIC COST TO THE GOVERNMENT; THAT ESTIMATED COSTS WAS NOT A VALID BASIS FOR REALISTIC COST COMPARISON, BUT THAT A COMPARISON OF CERTAIN COST AND FEE CEILINGS (PHASE-IN AND BASE FEE) PROPOSED BY THE OFFERORS WAS VALID IN DETERMINING AN AWARD, SINCE THE BASE FEE WAS FIXED AND THE PHASE-IN COST CONTAINED A CEILING; AND THAT, OF THE TWO CONCERNS, FEC HAD SUBMITTED THE LOWEST BASE FEE, PHASE-IN COST, AND THE LOWEST PROPOSED AWARD FEE. VIEW OF THIS COMPARISON, THE FACT THAT FEC HAD ALSO AGREED TO A LOW CEILING ON G&A COSTS AND HAVE WAIVED THE OVERSEAS AND HAZARDOUS DUTY BONUSES, AND SINCE FEC'S MANNING OFFER CONTAINED A HIGHER PERCENTAGE OF U.S. PERSONNEL THAN EITHER OF THE TWO OTHER COMPANIES AND THEREFORE SUGGESTED A MORE QUALIFIED WORK FORCE, THE SSAC RECOMMENDED THAT THE AWARD SHOULD BE MADE TO FEC.

ALTHOUGH THE SSAC HAD STATED THAT ESTIMATED COST WAS NOT A REALISTIC BASE FOR COST COMPARISON, IT ALSO NOTED THAT FEC'S MANAGEMENT COST OFFER WAS A MILLION DOLLARS LESS THAN THE COST OF THE MANAGEMENT STRUCTURE PROPOSED BY THE OTHER OFFERORS. THE RECORD INDICATES THAT THIS CONSIDERATION WAS CITED AS AN ADDITIONAL REASON FOR DIRECTING AN AWARD TO FEC RATHER THAN PAGE.

IN CONCLUDING ITS RECOMMENDATION THAT AN AWARD BE MADE TO FEC, THE COUNCIL OBSERVED THAT THE SUCCESSFUL CONTRACTOR WOULD BE ASSURED OF THE POST-AWARD OPPORTUNITY TO ADD PERSONNEL BASED ON OPERATIONAL NECESSITY, WHICH WOULD RESULT IN COST GROWTH EVEN THOUGH THE CONTRACTOR COULD NOT INCREASE HIS FEES. NEVERTHELESS, THE SSAC CONCLUDED THAT FEC'S FEE STRUCTURE APPEARED TO PROVIDE SUFFICIENT MOTIVATION FOR THE CONTRACTOR TO PERFORM ON THE CONTRACT.

THE ABOVE EVALUATION AND RECOMMENDATION WAS APPARENTLY COMPLETED PRIOR TO THE RECEIPT OF FINAL OFFERS FROM THE OFFERORS, BUT AFTER THE MEMORANDA OF THE NEGOTIATIONS HAD BEEN FURNISHED TO THE COUNCIL. THE RELATIVE DIFFERENCE IN THE FEES AND CEILINGS WAS NOT CHANGED BY THE SUBMISSION OF THE FINAL OFFER, ALTHOUGH THERE WAS A REDUCTION IN THESE ITEMS FOR THE COMPANIES. IN THIS CONNECTION, FEC PROPOSED A "ZERO" BASE FEE. THE COMPANY ALSO AGREED THAT FOREIGN SERVICE AND HAZARDOUS DUTY PAY BONUSES WOULD NOT BE REIMBURSABLE COSTS FOR THE LIFE OF THE CONTRACT, INCLUDING ANY ADDITIONAL PERIOD OF TIME REQUIRED BY EXERCISE OF THE OPTIONS IN THE CONTRACT.

SUBSEQUENTLY, THE FINDINGS AND RECOMMENDATIONS OF THE SSAC WERE TRANSMITTED TO THE OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS). THAT OFFICE DID NOT ACCEPT THE COUNCIL'S RECOMMENDATION FOR AWARD TO FEC. INSTEAD, IT DIRECTED THAT ALL OFFERS BE REEVALUATED. THIS DIRECTIVE WAS SET FORTH IN A MEMORANDUM DATED AUGUST 20, 1970, SIGNED BY BRIGADIER GENERAL VINCENT H. ELLIS, USA, AS DEPUTY FOR PROCUREMENT AS FOLLOWS:

IT HAS BEEN BROUGHT TO MY ATTENTION THAT THE EVALUATION OF THE SOURCE SELECTION EVALUATION BOARD AND THE SOURCE SELECTION ADVISORY COUNCIL WERE BASED UPON THE ORIGINAL GOVERNMENT MANNING ESTIMATE.

IT APPARENTLY HAS BEEN DETERMINED BY THE U.S. ARMY STRATEGIC COMMUNICATIONS COMMAND THAT FEWER PEOPLE COULD PERFORM THE REQUIRED SERVICES. THIS OFFICE SHOULD BE PROVIDED WITH THE DETAILS AND JUSTIFICATION OF THIS REVISED GOVERNMENT MANNING ESTIMATE INCLUDING OVERTIME AND MIX OF EMPLOYEES SINCE IT IS A CRITICAL PART OF THE SELECTION FOR AWARD.

IT IS REQUESTED THAT THE SOURCE SELECTION ADVISORY COUNCIL BE RECONVENED TO: (1) REEVALUATE ALL OFFERS INCLUDING RESULTS OF NEGOTIATIONS IN ACCORDANCE WITH THE CRITERIA SET FORTH IN THE SOLICITATION BASED UPON THE REVISED GOVERNMENT MANNING ESTIMATE; (2) REEVALUATE ALL OFFERS WITHOUT USING THE NO GAIN TECHNIQUE PREVIOUSLY EMPLOYED BY SSAC; (3) PRESENT A REVISED SSAC REPORT TO THE HPA.

WHEN THE FOREGOING HAS BEEN ACCOMPLISHED, THE MATTER SHOULD AGAIN BE SUBMITTED FOR SECRETARIAL PRE-AWARD REVIEW AND NOTATION ALONG WITH THE RECORDS OF NEGOTIATIONS.

BY DIRECTION OF THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS):

BY MEMORANDUM OF AUGUST 28, 1970, THE CHAIRMAN OF THE SSAC INSTRUCTED THE CHAIRMAN OF THE SSEB TO REEVALUATE ALL OFFERS, INCLUDING RESULTS OF THE NEGOTIATIONS, IN ACCORDANCE WITH THE CRITERIA SET FORTH IN THE RFQ AS FOLLOWS:

UTILIZE THE COMVETS SOURCE SELECTION EVALUATION PLAN, SUPPLEMENTED BY AMCP 715-3, IN THE REVISION OF THE ORIGINAL SSEB REPORT DATED 20 JULY 1970.

REEVALUATE AND RESCORE, USING ALL AVAILABLE INFORMATION, INCLUDING ORIGINAL WORK PAPERS, PROPOSALS, AND SUBSEQUENT CLARIFICATION BY OFFERORS.

DEVELOP AND USE A WEIGHTING PLAN TO BE USED AT THE SUB-FACTOR AND ELEMENT LEVEL, WITH RATIONALE THEREFOR. IT IS SUGGESTED THAT YOU CONSIDER USING THE "CHECK LIST" TYPE OF APPROACH FOR APPROPRIATE SUBFACTORS AND ELEMENTS TO ELIMINATE THE NEED FOR WEIGHTING EACH ITEM AND TO PLACE EMPHASIS ON THE MORE SIGNIFICANT ITEMS. WEIGHTS WOULD BE APPLIED ONLY BY THE SSEB CHAIRMAN/EXECUTIVE COMMITTEE AND WOULD NOT BE DIVULGED TO SSEB EVALUATORS. SUCH SUB-FACTOR AND ELEMENT WEIGHTS WILL BE COMPLETED, MARKED WITH TIME AND DATE, SEALED AND FILED WITH THE STAFF JUDGE ADVOCATE. THIS ACTION WILL BE ACCOMPLISHED ON OR AFTER 28 AUG. 70 WITHOUT FURTHER REFERENCE TO THE SSAC, EXCEPT FOR REPORTING TIME OF ACCOMPLISHMENT. THE ON OR AFTER DATE IS SPECIFIED SO THAT SSAC AREA AND FACTOR WEIGHTS MAY BE SIMILARLY SIGNED AND SEALED BEFORE SSEB WEIGHTING IS FROZEN.

RESOLVE AND ELIMINATE ANY INCONSISTENCIES WITHIN AND BETWEEN AREA NARRATIVE SUMMARIES, AND PROVIDE RATIONALE EXPLAINING APPARENT INCONSISTENCIES THAT ARE RETAINED.

PROVIDE SPECIFIC EXAMPLES OF STRENGTHS AND WEAKNESSES REPORTED IN NARRATIVE SUMMARIES.

IN ADDITION TO THE ABOVE, AND AS A SEPARATE ACTION, THE SSEB WILL PROVIDE THE SSAC WITH DETAILED INPUT FOR A SENSITIVITY ANALYSIS DESIGNED TO DETERMINE CONFIDENCE LIMITS FOR THE DIFFERENCES IN TOTAL WEIGHTED SCORES BETWEEN CONTRACTORS.

BY MEMORANDUM OF AUGUST 31, 1970, THE COMMANDING GENERAL (USASTRATCOM) ADVISED THE CHAIRMAN OF THE SSAC THAT THE GOVERNMENT MANNING ESTIMATE WOULD NOT BE AN "INCONTROVERTIBLE" STANDARD TO EVALUATE OFFEROR'S MANPOWER PROPOSALS, AND THAT COGNIZANCE SHOULD BE TAKEN THAT THE CONTRACTING OFFICER AND HIS NEGOTIATING TEAM HAD CONCLUDED AS A MATTER OF JUDGMENT, THAT THE FINAL MANPOWER PROPOSAL MADE BY EACH OFFEROR WAS ADEQUATE TO REALISTICALLY PROVIDE THE SERVICES SPECIFIED IN THE RFQ.

IN ACCORDANCE WITH THESE DIRECTIVES, THE SSEB DEVELOPED A SCORING AND WEIGHTING PLAN AT THE SUBFACTOR AND ELEMENT LEVEL WHICH ALLOTTED A MAXIMUM OF 400 POINTS FOR EACH AREA. WITHIN THE FINANCIAL AREA, 100 POINTS WERE ALLOTTED TO THE SUBFACTORS COMPRISING EACH OF THE FACTORS SET FORTH THEREIN, IN PERTINENT PART AS FOLLOWS:

2.1 REASONABLENESS AND REALISM OF PROPOSED COST AND FEE.

A. REIMBURSABLE COSTS - ICS - 32

B. REIMBURSABLE COSTS - D.T.E. - 12

C. REIMBURSABLE COSTS - AMSF - 9

D. REIMBURSABLE COSTS - SPECIAL REQUIREMENTS - 4

J. PROPOSED FEE CRITERIA - 13

FOR SCORING PURPOSES THE SSEB DEFINED "REASONABLENESS" AND "REALISM" OF PROPOSED COSTS AS FOLLOWS: (A) "REASONABLENESS OF PROPOSED COSTS" IS DEFINED AS THE LOWEST PROPOSED TOTAL DOLLAR COST TO THE GOVERNMENT FOR THE ITEM BEING EVALUATED. THIS IS A COMPARATIVE EVALUATION. AS AN EXAMPLE, THE LOWEST TOTAL DOLLAR PROPOSAL FOR AN ICS ITEM MAY BE CONSIDERED MOST REASONABLE, AND GIVEN A SCORE OF 10, (SSEP SCORING TABLE). THE HIGHEST DOLLAR ESTIMATE MAY BE GIVEN A SCORE OF 5, BASED UPON THE RATIONALE THAT COSTS ASSOCIATED WITH MANPOWER, AS SUBMITTED BY OFFERORS, ARE GENERALLY ACCEPTABLE TO THE GOVERNMENT AS A RESULT OF NEGOTIATIONS. INTERMEDIATE TOTAL COST ESTIMATES FOR THE ITEM SHOULD THEN BE SCORED PRO RATA IN RELATIONSHIP TO THE ESTIMATED COSTS OF THE LOWEST AND HIGHEST ESTIMATE. (B) "REALISM OF PROPOSED COSTS" IS DEFINED AS THE MOST VALID ESTIMATED COST THAT THE GOVERNMENT CAN EXPECT TO PAY FOR THE PROPOSED SERVICES. THE INITIAL CRITERIA FOR EVALUATION OF THE "REALISM OF PROPOSED COSTS" WILL BE THE RATES IN THE INDEPENDENT GOVERNMENT COST ESTIMATE (IGCE). FOR EXAMPLE, IN THE ELEMENT "DIRECT COST, SALARY," THE INITIAL EVALUATION OF THE "REALISM OF PROPOSED COSTS" WILL BE BASED ON A SAMPLE OF THE HOURLY SALARY RATES OF THE PREDOMINANT NUMBER OF PERSONNEL IN THE GOVERNMENT ESTIMATE COMPARED WITH THE COUNTERPART RATES CONTAINED IN THE PROPOSALS. FROM THE COMPARISON, THE OFFEROR FALLING CLOSEST TO THE IGCE MAY BE SCORED A 10; THE OFFEROR WITH THE GREATEST DEVIATION ABOVE OR BELOW MAY BE SCORED A 5. INTERMEDIATE OFFERORS SHOULD BE SCORED IN PRO RATA RELATION TO DEVIATIONS FROM THE GOVERNMENT ESTIMATE.

ADDITIONAL CONSIDERATIONS INCLUDE SUCH MATTERS AS ERRONEOUS COMPUTATIONS, OMISSIONS OF MAJOR COST ITEMS, AND MAJOR UNALLOWABLE COST ITEMS, ETC. IF THESE MATTERS WARRANT A SCORE OR LESS THAN 5, COMPLETE JUSTIFICATION WILL BE NOTED ON THE COMVETS FORM 1.

THE SSEB FURTHER PROVIDED THAT PHASE-IN COSTS WOULD BE SCORED ON A COMPARATIVE BASIS IN ACCORDANCE WITH THE NUMERICAL SCALE SET FORTH IN THE DEFINITION OF "REASONABLENESS." THE SSEB ALSO NOTED THAT CERTAIN SUBFACTORS IN THE TECHNICAL AREA, FOR EXAMPLE, QUALIFICATIONS OF PERSONNEL, SHOULD BE SCORED EQUALLY, SINCE ALL OFFERORS HAD SIGNED IDENTICAL "MODEL" CONTRACTS WHICH DESCRIBED IDENTICAL PREREQUISITES FOR PERSONNEL TO BE FURNISHED IN CONNECTION WITH PERFORMANCE OF THE CONTRACT.

TO EVALUATE THE TOTAL MANPOWER AND MULTI-SKILL SCORES OF THE OFFERORS' MANNING ESTIMATES, THE SSEB DETERMINED THAT A COMPARATIVE NUMERICAL EVALUATION SHOULD BE DESIGNED WITH A MAXIMUM SCORE OF TEN. THE BOARD PROPOSED TO EVALUATE THE QUALITY OF THE "MIX" OF THE OFFERORS' MANNING ESTIMATES BY USING A PREDETERMINED RATIO OF THE PERSONNEL OF THE THREE NATIONALITY GROUPS INVOLVED.

THE RECORD SHOWS THAT "RAW" NUMERICAL SCORES WERE ASSIGNED TO THE PROPOSALS BASED ON THE ABOVE CRITERIA, WHICH WERE THEN WEIGHTED BY THE SSEB CHAIRMAN, DEPUTY CHAIRMAN, AND MEMBERS OF THE EXECUTIVE COMMITTEE, AND THE FOLLOWING SCORES WERE ASSIGNED:

(CHART OMITTED)

THE STRENGTHS OF FEC'S FINANCIAL QUOTATION CITED IN THE SSEB REPORT WERE THE SAME FACTORS CITED BY THE SSAC IN ITS INITIAL RECOMMENDATION THAT FEC SHOULD RECEIVE THIS AWARD, AS LISTED ABOVE. ADDITIONALLY, THE SSEB NOTED THAT FEC'S QUOTATION WAS MOST "FAVORABLE" TO THE GOVERNMENT ON THE BASIS OF COMPARATIVE EVALUATION OF PROPOSED COSTS, EVEN AFTER AN ADJUSTMENT WAS MADE IN FEC'S COSTS TO INCLUDE A 1 YEAR'S COMPLETION BONUS AND DEMOBILIZATION COSTS. AS A WEAKNESS IN THE PROPOSAL, THE SSEB FOUND THAT FEC'S PROPOSED SALARY RATES MIGHT HAMPER RECRUITING.

IN THE FINANCIAL AREA, THE SSEB NARRATIVE DISCLOSES THAT PAGE'S QUOTATION WAS CONSIDERED WEAK BECAUSE ITS G&A COST AND RATE APPEARED TO BE HIGH, AND ITS BILLETING AND MESS RATES FOR U.S. CITIZENS WERE CONSIDERED EXCESSIVE. HOWEVER, OVERALL, PAGE'S COST PROPOSAL WAS CONSIDERED BOTH REASONABLE AND REALISTIC.

THE RECORD INDICATES THAT THE SSEB EVALUATION WAS FORWARDED TO THE SSAC ON SEPTEMBER 30, 1970.

IN ACCORDANCE WITH THE DIRECTIVE OF THE COMMANDING GENERAL, USASTRATCOM, THE SSAC HAD DEVELOPED A SCORING AND WEIGHTING SYSTEM IN ACCORDANCE WITH THE GUIDELINES IN ARMY MATERIEL COMMAND PAMPHLET (AMCP) 715-3, CHAPTER 3, PARAGRAPH 3-3D(6) (B) AND (C) (INCLUDING THE USE OF BONUS AND PENALTY POINTS), WHICH ARE SET FORTH AS FOLLOWS IN THAT PAMPHLET:

(B) ANOTHER SYSTEM OF WEIGHTING OFTEN USED ESTABLISHES A BASE, SAY 1000 POINTS AS A POSSIBLE TOTAL SCORE, AND DISTRIBUTES THE AVAILABLE POINTS TO ELEMENTS, FACTORS, AND SUBFACTORS IN ACCORDANCE WITH THEIR IMPORTANCE (FIG G-12, APP G).

(C) ANOTHER FREQUENTLY USED METHOD OF WEIGHTING CONSISTS OF THE APPLICATION OF BONUS AND PENALTY POINTS BY THE SSAC. IT IS AN ARRANGEMENT WHEREIN THE SSAC RESERVES POINTS FOR ITS OWN USE, E.G., A MAXIMUM OF 100 OUT OF A TOTAL POSSIBLE SCORE OF 1,000 POINTS OR 10 PERCENT OF THE MAXIMUM SCORE. WITH THE POINTS THUS RETAINED, THE SSAC ADDS OR SUBTRACTS AMOUNTS FROM THE SCORES AWARDED BY THE SSEB PRIOR TO THE APPLICATION OF THE WEIGHTS ESTABLISHED BEFORE THE ISSUANCE OF THE RFP. IN THIS WAY, THE SSAC IS ABLE TO REWARD AND PENALIZE SUCH PREVIOUSLY UNFORESEEABLE FEATURES AS THE OVERALL QUALITY OF THE TOTAL PROPOSAL AS WELL AS SIGNIFICANT STRENGTHS (E.G., A TECHNICAL BREAKTHROUGH OR A NEW APPROACH) AND WEAKNESS INADEQUATELY RECOGNIZED IN THE WEIGHTS PREVIOUSLY ESTABLISHED. THE ORIGINAL SSEB SCORES MODIFIED BY THE PRE-ESTABLISHED WEIGHTS, BOTH WITH AND WITHOUT ADJUSTMENT BY BONUS AND PENALTY POINTS, ARE THEREAFTER PRESENTED TO THE SSA FOR HIS GUIDANCE (FIG G-13, APP G).

IN ACCORDANCE WITH THE METHOD STIPULATED IN SECTION (B), AND IN ORDER TO PROVIDE A WAY OF WEIGHTING THE SSEB SCORES AT THE FACTOR LEVEL, THE SSAC ASSIGNED ONE THOUSAND POINTS TO EACH OF THE THREE EVALUATION AREAS WHICH WERE BROKEN DOWN AS FOLLOWS:

(1) MANAGEMENT AREA (1000 POINTS)

(A) 1.1 MANAGEMENT GENERAL 400 PTS)

(B) 1.2 MANAGEMENT STRUCTURE (250 PTS)

(C) 1.3 PHASE-IN PLAN (250 PTS)

(D) 1.4 PAST EXPERIENCE AND PERFORMANCE (100 PTS)

(2) FINANCIAL AREA (1000 POINTS)

(A) 2.1 PROPOSED COST AND FEE (550 PTS)*

(B) 2.2 COST ACCOUNTING AND REPORTING SYSTEM (200 PTS)

(C) 2.3 PHASE-IN COST (200 PTS)

(D) 2.4 PREVIOUS COST PERFORMANCE (50 PTS)

(E) 2.5 QUALIFICATIONS AND ASSIGNMENT OF PERSONNEL (0 PTS)*

(F) 2.6 FINANCIAL POSITION (0 PTS)

(3) TECHNICAL AREA (1000 POINTS)

(A) 3.1 O&M SERVICES (550 PTS)

(B) 3.2 TRAINING REQUIREMENTS (300 PTS)

(C) 3.3 QUALITY ASSURANCE PROGRAM (75 PTS)

(D) 3.4 ENGINEERING SERVICES (75 PTS)

THE RECORD SHOWS THAT THE SSAC REVIEWED ALL FACTORS IN ALL AREAS TO ENSURE THE RETENTION OF A REASONABLE BALANCE AMONG ALL FACTORS, IN ORDER TO PRECLUDE A SINGLE FACTOR IN A GIVEN AREA FROM HAVING UNDUE WEIGHT IN THE OVERALL SCORE.

THE SYSTEM PROVIDED THAT THE FACTOR SCORES ESTABLISHED BY THE SSEB EVALUATION WERE TO BE MULTIPLIED BY THE RELATIVE WEIGHT EACH SSAC FACTOR WEIGHT BORE TO THE 1000-POINT TOTAL FOR EACH AREA AS FOLLOWS:

(CHART OMITTED)

*THE SSEB DID NOT SCORE FACTOR 2.5 BECAUSE THE CRITERIA FOR THAT FACTOR ALREADY HAD BEEN CONSIDERED IN FACTOR 2.1. THE SSAC HAD ALLOWED 50 POINTS IN ITS WEIGHTING SCHEME FOR FACTOR 2.5. SINCE THE CRITERIA FOR FACTOR 2.5 WAS APPLIED TO FACTOR 2.1 BY THE SSEB THE SSAC TRANSFERRED THE 50 POINTS ALLOWED FOR 2.5 TO 2.1. THIS INCREASES THE FACTOR 2.1 WEIGHT TO 550 AND ELIMINATES ANY SCORE FOR FACTOR 2.5.

THE SCORE FOR EACH AREA WAS THEN TO BE DETERMINED BY ADDING THE SSAC WEIGHTED FACTOR SCORES.

IN ACCORDANCE WITH THE CITED AMCP GUIDELINE, THE SSAC ALSO RESERVED FOR ITSELF A MAXIMUM ASSESSMENT OF 100 POINTS IN EACH AREA OF EVALUATION TO BE ADDED TO OR SUBTRACTED FROM EACH OFFEROR'S MERIT RATING PRIOR TO APPLICATION OF THE SAME SSAC AREA WEIGHTING MULTIPLIERS WHICH HAD PREVIOUSLY BEEN APPLIED IN THE FIRST EVALUATION, AS NOTED ABOVE. THE ALLOCATION OF THESE POINTS WAS TO BE BASED ON THE OVERALL QUALITY OF EACH OFFER, SIGNIFICANT STRENGTHS AND WEAKNESSES INADEQUATELY RECOGNIZED IN THE WEIGHTED SCORES, HIGHLY ATTRACTIVE FEATURES WORTHY OF SPECIAL ATTENTION IN THE SELECTION PROCESS, AND RISKS WHICH COULD HAVE AN IMPACT OF THE SUCCESS OF THE PROJECT.

THE APPLICATION OF THE SSAC FACTOR-WEIGHT FORMULA TO THE SCORES FURNISHED BY THE SSEB FURNISHED THE FOLLOWING RESULTS BY AREA:

MANAGEMENT FINANCIAL TECHNICAL TOTAL

PAGE 977 778 747 2502

FEC 843 934 626 2403

THE SSAC ANALYSIS OF FEC'S MANAGEMENT QUOTATION REVEALS THAT THE COUNCIL APPARENTLY DISAGREED WITH THE SSEB'S EVALUATION OF THE FEASIBILITY OF THE COMPANY'S PLAN FOR THE PHASE-IN OPERATION. ALTHOUGH THE SSEB BELIEVED THE FEASIBILITY OF THE PLAN WAS QUESTIONABLE, THE SSAC CONSIDERED THIS PLAN OUTSTANDING. ADDITIONALLY, THE SSAC CONSIDERED THE COMPANY'S QUOTATION RELATING TO METHODS AND PROCEDURES TO BE EXCELLENT, WHICH VIEW WAS NOT FULLY SHARED BY THE SSEB.

IN VIEW OF THE SSAC'S DETERMINATION THAT FEC'S PROPOSAL IN THE MANAGEMENT AREA WAS FULLY RESPONSIVE AND INDICATED A COMPREHENSIVE UNDERSTANDING OF THE RFQ REQUIREMENTS, AND INSOFAR AS THE SSEB WEIGHTED SCORE APPARENTLY DID NOT FULLY REFLECT SUCH ASSESSMENT, THE SSAC DETERMINED THAT 50 BONUS POINTS SHOULD BE ASSIGNED TO FEC'S PROPOSAL IN THIS AREA.

IN THE FINANCIAL AREA, THE SSAC CONCLUDED THAT FEC'S QUOTATION MERITED 100 BONUS POINTS FOR THE FOLLOWING REASONS:

FINANCIAL. COMPANY A (FEC) SCORED SUBSTANTIALLY HIGHER THAN ANY OTHER OFFEROR IN THIS AREA, HAVING SUBMITTED THE OFFER THAT REPRESENTS THE LOWEST OVERALL COST TO THE GOVERNMENT. THE REASONABLENESS OF COMPANY A'S OFFER IS UNCHALLENGED. WITH REGARD TO REALISM, COMPANY A HAS SHOWN A WILLINGNESS UNIQUE AMONG THE CONTENDING OFFERORS TO ACCEPT SUBSTANTIAL FINANCIAL RISK. THIS IS CHARACTERIZED BY THE VOLUNTARY ESTABLISHMENT OF CEILINGS, AND AGREEMENT TO A ZERO BASE FEE AND AN AWARD FEE THAT WILL RESULT IN FINANCIAL LOSS IF MINIMUM ACCEPTABLE PERFORMANCE STANDARDS ARE NOT MET (SEE PG II-A-8 FOR A LISTING OF COMMITMENTS). THE NET IMPRESSION GAINED IS THAT THE OFFEROR HAS HIGH CONFIDENCE IN HIS ABILITY TO PERFORM THE CONTRACT WITHIN THE COSTS QUOTED. THE SSAC HAS NO INFORMATION TO THE CONTRARY AND CONCLUDES THAT THE RANKING OF COMPANY A FAR AHEAD OF THE OTHER OFFERORS BASED ON OVERALL ECONOMIC CONSIDERATIONS IS FULLY JUSTIFIED (PG III-2, PAR 1C(3)).

THE PRECEDING SUBPARAGRAPH IS THE BASIS FOR THE SSAC'S AWARDING THE MAXIMUM OF 100 BONUS POINTS IN THE FINANCIAL AREA AS A MEANS TO EMPHASIZE AND ADEQUATELY ASSESS "HIGHLY ATTRACTIVE FEATURES WORTHY OF SPECIAL ATTENTION IN THE SELECTION PROCESS." THE SCORING AND WEIGHTING SYSTEM USED BY THE SSEB AT THE ELEMENT AND SUB-FACTOR LEVEL DOES NOT PROVIDE A MEANS FOR SUCH EMPHASIS AND RECOGNITION. IN ADDITION, THIS ACTION BY THE SSAC HIGHLIGHTS THAT SPECIFIC PROPOSAL WHICH WILL OBTAIN THE LEVELS OF PERFORMANCE PRESCRIBED IN THE RFQ AT THE MOST REALISTIC AND REASONABLE COSTS TO THE GOVERNMENT. NOT ONLY DOES COMPANY A MAKE MORE BINDING COMMITMENTS TO THE GOVERNMENT BUT THE ESTIMATED COST DIFFERENCES ARE SUBSTANTIAL: $4.5 MILLION ON A PROPOSED BASIS AND $3.6 MILLION ON A COMPARABLE BASIS.

IN THE TECHNICAL AREA, FEC WAS ASSESSED 10 PENALTY POINTS.

TURNING TO THE EVALUATION OF PAGE'S PROPOSAL, THE RECORD INDICATES THAT THE COMPANY WAS ASSESSED 50 PENALTY POINTS IN THE MANAGEMENT AREA BECAUSE OF THE FOLLOWING:

COMPANY B (PAGE) HAS HAD EXTENSIVE EXPERIENCE IN SOUTHEAST ASIA SINCE 1956 AND HAS HAD COMPARABLE C-E CONTRACTUAL EXPERIENCE IN VIET NAM SINCE 1962. THE PROPOSAL CLEARLY DEVELOPS COMPANY B'S EXTENSIVE KNOWLEDGE IN C- E O&M OPERATIONS. THE SSAC AGREES THAT THE COMPANY'S PAST PERFORMANCE IS IMPRESSIVE, BUT NOT TO THE DEGREE IMPLIED BY THE SSAC SCORE. ACCORDINGLY, THIS PROVIDES A BASIS FOR ASSESSING PENALTY POINTS.

COMPANY B'S PROPOSAL REFLECTS A HIGH MANNING LEVEL WHEN COMPARED TO ANOTHER OFFEROR AND IS LARGELY DUE TO THE PROPOSED USE OF EXCESSIVE NUMBERS OF OVERHEAD PERSONNEL. THE QUANTITY OF SUPPORT PERSONNEL (ADMINISTRATIVE AND DRIVERS) APPEARS TO BE HIGH. FURTHER, THE PROPOSED USE OF SUPPORT TO COMVETS FROM OUT OF COUNTRY FIELD OFFICES IS UNIQUE TO COMPANY B'S OFFER. THE VALIDITY OF A REQUIREMENT FOR THIS SUPPORT AS A RESOURCE CHARGEABLE TO COMVETS IS QUESTIONED, ESPECIALLY SINCE IT FURTHER INCREASES THE ALREADY EXCESSIVE OVERHEAD MANNING. THIS PROVIDES THE BASIS FOR THE LEVY OF PENALTY POINTS BY THE SSAC.

COMPANY B'S PROPOSED USE OF SENIOR SITE SUPERVISORS IN A DUAL ROLE OF SUBSECTOR SUPERVISORS STRAINS THE SPAN OF CONTROL TO THE POINT THAT THE IMPORTANT SUPERVISION OF ICS AND DTE SITES MAY BE DILUTED. THE PROPOSAL DOES NOT SPECIFY THE LOCATION OF THE ICS SECTOR SUPERVISORS, WHICH FURTHER INCREASES THE CONCERN FOR ADEQUATE SECTOR SUPERVISION. THIS PROVIDES THE BASIS FOR THE LEVY OF PENALTY POINTS BY THE SSAC.

THE COMPANY WAS NOT PENALIZED, OR GIVEN BONUS POINTS, IN THE FINANCIAL AREA. HOWEVER, IT WAS ASSESSED A NET PENALTY OF 10 POINTS IN THE TECHNICAL AREA.

THE FINAL SCORES FOR THE COMPANIES AS ADJUSTED BY THE BONUS AND PENALTY POINTS WERE:

MANAGEMENT FINANCIAL TECHNICAL TOTAL

FEC 893 827 493 2213

PAGE 927 622 589 2138

BASED UPON THIS EVALUATION, THE SSAC RECOMMENDED THAT AN AWARD BE MADE TO FEC.

IN VIEW OF THIS ANALYSIS AND RECOMMENDATION, AN AWARD WAS MADE TO FEC ON OCTOBER 20, 1970. IN THIS CONNECTION, WE HAVE BEEN ADVISED THAT PRIOR TO AWARD A REPRESENTATIVE OF THE ASSISTANT SECRETARY OF THE ARMY "NOTED" THE INTENTION OF THE PROCURING ACTIVITY TO MAKE AN AWARD TO FEC.

ON OCTOBER 21, 1970, PAGE FILED A PROTEST WITH THIS OFFICE ON THE BASIS THAT THE AWARD TO FEC WAS INCONSISTENT WITH SECTION D.1 OF THE RFQ, WHICH IS QUOTED ABOVE. THEREAFTER, ON OCTOBER 26, 1970, PAGE FILED SUIT IN THE U.S. DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, SEEKING, INTER ALIA, A . PRELIMINARY INJUNCTION ENJOINING THE ARMY FROM ACCEPTING OR AIDING PERFORMANCE UNDER THE CONTRACT UNTIL THIS OFFICE REVIEWED THE MERITS OF THE PROTEST. ON NOVEMBER 3, 1970, THAT COURT ENTERED A PRELIMINARY INJUNCTION ENJOINING THE ARMY FROM ACCEPTING OR AIDING ANY PERFORMANCE UNDER THE SUBJECT AWARD FOR A PERIOD OF 45 DAYS, OR UNTIL THIS OFFICE RENDERED A DECISION ON THE MERITS. THE FOLLOWING PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) HAVE BEEN CITED IN YOUR CORRESPONDENCE AS BEING RELEVANT TO THE MATTERS IN ISSUE:

3-805.2 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 THE LOWEST PROPOSED COST, (2) THE LOWEST PROPOSED FEE, OR (3) THE LOWEST COST- REIMBURSEMENT TYPE CONTRACTS BE AWARDED ON THE BASIS OF EITHER (1) 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.

15-201.3 DEFINITION OF REASONABLENESS.

(A) GENERAL. A COST IS REASONABLE IF, IN ITS NATURE OR AMOUNT, IT DOES NOT EXCEED THAT WHICH WOULD BE INCURRED BY AN ORDINARILY PRUDENT PERSON IN THE CONDUCT OF COMPETITIVE BUSINESS. THE QUESTION OF THE REASONABLENESS OF SPECIFIC COSTS MUST BE SCRUTINIZED WITH PARTICULAR CARE IN CONNECTION WITH FIRMS OR SEPARATE DIVISIONS THEREOF WHICH MAY NOT BE SUBJECT TO EFFECTIVE COMPETITIVE RESTRAINTS. WHAT IS REASONABLE DEPENDS UPON A VARIETY OF CONSIDERATIONS AND CIRCUMSTANCES INVOLVING BOTH THE NATURE AND AMOUNT OF THE COST IN QUESTION. IN DETERMINING THE REASONABLENESS OF A GIVEN COST, CONSIDERATION SHALL BE GIVEN TO -

(I) WHETHER THE COST IS OF A TYPE GENERALLY RECOGNIZED AS ORDINARY AND NECESSARY FOR THE CONDUCT OF THE CONTRACTOR'S BUSINESS OR THE PERFORMANCE OF THE CONTRACT;

(II) THE RESTRAINTS OR REQUIREMENTS IMPOSED BY SUCH FACTORS AS GENERALLY ACCEPTED SOUND BUSINESS PRACTICES, ARM'S LENGTH BARGAINING. FEDERAL AND STATE LAW AND REGULATIONS, AND CONTRACT TERMS AND SPECIFICATIONS;

(III) THE ACTION THAT A PRUDENT BUSINESS MAN WOULD TAKE IN THE CIRCUMSTANCES, CONSIDERING HIS RESPONSIBILITIES TO THE OWNERS OF THE BUSINESS, HIS EMPLOYEES, HIS CUSTOMERS, THE GOVERNMENT AND THE PUBLIC AT LARGE; AND

(IV) SIGNIFICANT DEVIATIONS FROM THE ESTABLISHED PRACTICES OF THE CONTRACTOR WHICH MAY UNJUSTIFIABLY INCREASE THE CONTRACT COSTS.

YOU CONTEND THAT THE ARMY GAVE CONTROLLING WEIGHT TO THE LOWNESS OF THE ESTIMATED COSTS AND FEES SUBMITTED BY FEC IN VIOLATION OF SECTION D.1, "NOTICE TO QUOTERS," OF THE RFP, AND OF THE PROVISIONS OF ASPR 3 805.2; THAT BY DEFINING "REASONABLE COSTS" AS THE LOWEST ESTIMATED COST SUBMITTED, THE ARMY VIOLATED ASPR 15-201.3; THAT BY CHANGING THE EVALUATIONS FACTORS, WEIGHTINGS, AND PROCEDURES AFTER QUOTATIONS HAD BEEN REVIEWED AND GIVEN A RAW SCORE EVALUATION THE ARMY VIOLATED ASPR AND AMCP 715-3, PARAGRAPH 3-3D(5), WHICH PROVIDES THAT WEIGHTS MUST NOT BE ALTERED ONCE THE PROPOSALS HAVE BEEN RECEIVED; THAT BY GIVING GREAT WEIGHT TO PHASE-IN COSTS, THE ARMY VIOLATED AND ABANDONED THE INSTRUCTIONS GIVEN IN THE QUESTIONS AND ANSWERS FOR BIDDERS; THAT THE DEPARTMENT'S EVALUATION RECORDS SHOW THAT PAGE SHOULD HAVE WON THE AWARD; AND THAT THE AWARD TO FEC SHOULD BE CANCELLED.

BEFORE ADDRESSING YOUR ARGUMENT THAT, FOR THE PURPOSE OF AWARD, THE ARMY GAVE CONTROLLING WEIGHT TO THE LOW QUANTUM OF ESTIMATED COSTS AND FEES SUBMITTED BY FEC, WE NOTE THAT YOU APPARENTLY CONCEDE AT PAGE 4 OF YOUR NOVEMBER 20 BRIEF THAT SOME WEIGHT SHOULD BE GIVEN TO ESTIMATED COSTS AND PROPOSED FEES, AT LEAST IN DETERMINING AN OFFEROR'S "UNDERSTANDING OF THE PROJECT AND ABILITY TO ORGANIZE AND PERFORM THE CONTRACT," IN ACCORDANCE WITH THAT PART OF ASPR 3-805.2 WHICH IS UNDERLINED ABOVE. OBVIOUSLY, IT WAS INTENDED THAT SUCH DETERMINATION WOULD BE A FACTOR IN DETERMINING THE MOST ADVANTAGEOUS QUOTATION FOR AWARD. WE AGREE THAT THE RFQ DID NOT PROVIDE THAT LOWNESS PER SE OF THE COST ESTIMATES WOULD BE A FACTOR IN THE AWARD. HOWEVER, WE CANNOT AGREE WITH THE POSITION IMPLICIT IN YOUR ARGUMENT THAT THE RFQ FURTHER PERMITTED AN OFFEROR TO GIVE LESS THAN SIGNIFICANT CONSIDERATION TO THE QUANTUM OF PROPOSED COSTS AND FEES, IN THE INTEREST OF SUBMITTING AN EXCEPTIONAL PROPOSAL IN THE TECHNICAL AND MANAGERIAL AREAS. WE DO NOT BELIEVE THAT ANY REASONABLE OFFEROR COULD HAVE CONCLUDED THAT THE QUANTUM OF ESTIMATED COSTS FOR THE VARIOUS WORK ITEMS WOULD NOT ENTER INTO THE DETERMINATION OF THE CONTRACTOR'S ABILITY TO PERFORM THE CONTRACT AT HIS ESTIMATED COST, AND, HENCE, HIS ELIGIBILITY FOR THE AWARD. CERTAINLY, ANY REASONABLE OFFEROR SHOULD HAVE KNOWN THAT THE QUANTUM OF THE COSTS HE PROPOSED MIGHT BE CONSIDERED EXCESSIVE OR DEFICIENT BY THE PROCURING ACTIVITY, WHEN MEASURED AGAINST THE WORK REQUIREMENTS OF THE RFQ, AND MERIT AN ADVERSE RATING ON HIS ABILITY TO ORGANIZE AND PERFORM THE CONTRACT, EVEN IF HIS PROPOSAL HAD SUPERIOR MERIT IN THE TECHNICAL AND MANAGERIAL AREAS.

IN THIS CONNECTION, IT IS OUR OPINION THAT THE FIRST SENTENCE OF SECTION D.1 OF THE RFQ, AS WELL AS THE WORD "CONTROLLING" IN ASPR 3 805.2 QUOTED ABOVE, MUST BE CONSTRUED AS MEANING THAT ESTIMATED COSTS AND PROPOSED FEES WILL NOT OVERRIDE ALL OTHER FACTORS WHICH ARE TO BE CONSIDERED IN SELECTING A CONTRACTOR. CLEARLY, IF ANY CONSIDERATION AT ALL IS TO BE GIVEN TO ESTIMATED COSTS AND PROPOSED FEES, SUCH CONSIDERATION, REGARDLESS OF HOW SMALL, MAY BECOME CONTROLLING IF ALL OTHER FACTORS ARE SUBSTANTIALLY EQUAL.

ACCORDINGLY, FOR THE PURPOSES OF DISCUSSION, WE MUST CONCLUDE THAT THE RFQ SPECIFICALLY ADVISED ALL OFFERORS THAT THE QUANTUM OF COSTS AND FEES PROPOSED TO ACCOMPLISH THE WORK OBJECTIVES OF THE CONTRACT WOULD BE A CONSIDERED FACTOR IN THE EVALUATION OF PROPOSALS. IN THIS PERSPECTIVE, WE BELIEVE IT IS UNNECESSARY TO CONSIDER THE AUTHORITIES AND LENGTHY ARGUMENT SET FORTH IN YOUR LETTER OF NOVEMBER 20, 1970, TO THE EFFECT THAT THE QUANTUM OF COST ESTIMATES NEED NOT BE A MANDATORY EVALUATION FACTOR IN ALL COST REIMBURSEMENT PROCUREMENTS, SINCE IN THE SUBJECT PROCUREMENT THE PROCURING ACTIVITY WAS UNDER AN OBLIGATION TO EVALUATE THE QUANTUM OF COST ESTIMATES AND FEES IN ACCORDANCE WITH THE STATED EVALUATION CRITERIA SET OUT IN THE RFQ, AND WE CANNOT CONCLUDE THAT SUCH CRITERIA WERE IN CONFLICT WITH ASPR 3-805.2 OR THE DECISIONS OF THIS OFFICE.

THE ARGUMENT YOU HAVE ADVANCED TO DEMONSTRATE THAT THE ARMY GAVE "CONTROLLING" WEIGHT TO THE LOW QUANTUM OF COSTS, FEES, AND CEILINGS PROPOSED BY FEC INVOLVES SEVERAL ALLEGATIONS; FIRST, THAT THE ARMY DID NOT CONDUCT A THOROUGH AND IMPARTIAL ANALYSIS OF FEC'S COSTS TO DETERMINE WHETHER THE COSTS AND FEES WERE "REALISTIC," WHICH YOU ALLEGE IS DEMONSTRATED BY THE ALMOST "PERFECT" SCORE OF 94.38 FOR "REASONABLENESS AND REALISM" OF COSTS AND FEES GIVEN TO FEC BY THE SECOND SSEB, NOTWITHSTANDING SEVERAL WEAKNESSES NOTED IN FEC'S QUOTATION WHICH LESSENED THE SSEB'S CONFIDENCE IN THE REALISM OF FEC'S PROPOSED COST; SECOND, THAT THE ARMY DEFINED "REASONABLENESS" OF COST TO MEAN LOW COST ON A COMPARATIVE BASIS IN CONTRAVENTION OF ASPR 15 201.3, AND WITH FULL KNOWLEDGE THAT SUCH ACTION WOULD GIVE GREAT EMPHASIS TO FEC'S LOW ESTIMATED COSTS; THIRD, THAT THE ARMY GAVE GREAT WEIGHT TO PHASE-IN COSTS IN CONTRAVENTION OF THE INSTRUCTIONS GIVEN TO OFFERORS PRIOR TO THE CLOSING DATE SET FOR RECEIPT OF PROPOSALS; AND FOURTH, THAT THE ARMY DID NOT FULLY AND FAIRLY EVALUATE EACH QUOTATION IN THE MANAGEMENT AND TECHNICAL AREA.

WITH RESPECT TO THE FIRST ALLEGATION, THE RECORD INDICATES THAT THE BOARD AND THE COUNCIL RECEIVED REPORTS FROM THE DEFENSE CONTRACT AUDIT AGENCY (DCAA) WHICH INDICATED THAT BOTH PAGE AND FEC POSSESSED SATISFACTORY ACCOUNTING SYSTEMS, AND THAT CONFIDENCE THEREFORE COULD BE PLACED IN THE SYSTEMS AS A BASIS FOR COST ESTIMATING AND AS REFLECTING ACTUAL COSTS. FURTHERMORE, THE ARMY EVALUATORS NOTED THAT BOTH YOUR CONCERN AND FEC HAD AN EXCELLENT PAST COST PERFORMANCE ON OTHER SIGNIFICANT CONTRACTS INVOLVING OPERATION OF SOPHISTICATED COMMUNICATIONS SYSTEMS, WITH NO SIGNIFICANT CONTRACTOR-CAUSED COST GROWTH. SINCE YOU HAVE NOT DEMONSTRATED THAT THESE STATEMENTS ARE ERRONEOUS, THE DETERMINATION OF WHETHER THE ARMY SUFFICIENTLY EVALUATED THE "REALISM" OF FEC'S PROPOSED COSTS AND FEES MUST BE MADE WITHIN THE PERSPECTIVE OF SUCH STATEMENTS.

THE RECORD INDICATES THAT THE EVALUATORS INITIALLY QUESTIONED THE REALISM OF SEVERAL ASPECTS OF FEC'S COST STRUCTURE, AS NOTED ABOVE, FOR DEFICIENCIES IN ESTIMATED COSTS FOR DEMOBILIZATION, MINIMUM SALARY RANGE, FOREIGN SERVICE ALLOWANCE, WAR RISK INSURANCE, AND COMPLETION BONUS. FEC AGREED TO LET THE GOVERNMENT ADJUST ITS QUOTATION TO COMPENSATE FOR THESE DEFICIENCIES. PURSUANT TO THE AGREEMENT, THE GOVERNMENT INCLUDED FOREIGN SERVICE AND WAR HAZARD BONUSES OF 25 PERCENT EACH, WHICH WERE SUBSEQUENTLY DELETED WHEN FEC AGREED TO WAIVE REIMBURSEMENT FOR THESE BONUSES FOR THE FIRST YEAR OF PERFORMANCE. THEREAFTER, AS NOTED ABOVE, FEC WAIVED REIMBURSEMENT FOR THE BONUSES FOR THE LIFE OF THE CONTRACT. BECAUSE OF THESE CONSIDERATIONS, AND SINCE THE ARMY HAD CONCLUDED THAT THE MANAGERIAL AND TECHNICAL APPROACHES PROPOSED BY FEC WERE ADEQUATE TO ACCOMPLISH THE WORK REIMBURSEMENT FOR THESE BONUSES FOR THE FIRST YEAR OF PERFORMANCE, THAT FEC DESERVED A HIGH RATING FOR REALISM OF COSTS PROPOSED, I.E., ABILITY TO PERFORM THE CONTRACT AT ITS ESTIMATED COST.

IN VIEW OF THE FOREGOING, WE DO NOT BELIEVE THAT SUCH HIGH SCORE MAY BE CONSIDERED TO HAVE BEEN ARBITRARILY ASSIGNED, OR BASED UPON LESS THAN A FULL AND FAIR ANALYSIS OF FEC'S COSTS, NOTWITHSTANDING THE FACT THAT THE SECOND SSEB EVALUATION INDICATED RESERVATIONS CONCERNING THE ADEQUACY OF FEC'S PROPOSED SALARY RATES. IN THIS REGARD, WE CANNOT CONCLUDE THAT FEC WAS INSUFFICIENTLY PENALIZED FOR SUCH RESERVATIONS, SINCE THE SSEB DID IN FACT GIVE FEC LESS THAN A PERFECT SCORE, PRESUMABLY BECAUSE OF THE DEFECTS ENUMERATED ABOVE.

CONCERNING YOUR COLLATERAL OBSERVATION THAT THE ARMY ANTICIPATED A SUBSTANTIAL COST OVERRUN WITH AN AWARD TO FEC, THE RECORD INDICATES THAT THE ARMY RECOGNIZED THE POSSIBILITY OF COST GROWTH IN THE EVENT OF AN AWARD TO ANY OF THE POTENTIAL CONTRACTORS, SINCE ANY CONTRACTOR WOULD HAVE THE OPPORTUNITY TO ADD PERSONNEL BASED ON OPERATIONAL NECESSITY. IN THIS REGARD, THE ARMY HAD AN ANALYSIS MADE OF THE POTENTIAL COST GROWTH, AND, CONSEQUENTLY, OF THE RELIABILITY OF THE COST ESTIMATES, WHICH WAS INTENDED TO PRESENT A "WORST CASE" ESTIMATE FOR FEC COSTS COMPARED TO REASONABLY PREDICTABLE ESTIMATES FOR PAGE. IN THIS ANALYSIS, FEC'S COSTS WERE AUGMENTED BY FACTORS FOR SALARY INCREASES, WAR HAZARD AND OVERSEAS BONUSES, AND A FACTOR FOR POTENTIAL MANNING ESTIMATES WHERE THE GOVERNMENT CONSIDERED THE CONTRACTOR'S MANNING WEAKEST, ALTHOUGH APPARENTLY ADEQUATE. PAGE'S ESTIMATE WAS AUGMENTED BY A FACTOR FOR POTENTIAL MANNING REQUIREMENTS IN THOSE AREAS WHERE THE GOVERNMENT CONSIDERED PAGE'S MANNING WEAKEST ALTHOUGH APPARENTLY ADEQUATE. THE ARMY STATES THAT THIS WAS NOT DONE ON AN ASSUMPTION THAT THESE COSTS WOULD BE INCURRED OR REIMBURSED, BUT AS PART OF AN ANALYSIS TO DETERMINE THE "SENSITIVITY" OF THE DECISION TO POSSIBLE WEAKNESSES IN THE COST ESTIMATES.

THE DEPARTMENT CONCLUDED THAT EVEN ON THE BASIS OF ITS "WORST CASE" ANALYSIS, FEC'S PROBABLE COSTS WERE APPROXIMATELY $2 MILLION LESS THAN PAGE'S. A SIMILAR ANALYSIS ON A 5-YEAR BASIS REVEALED A COST ADVANTAGE OF SOME $17.5 MILLION IN FAVOR OF FEC.

OUR OFFICE HAS NOTED THAT THE AWARD OF COST-REIMBURSEMENT CONTRACTS REQUIRES PROCUREMENT PERSONNEL TO EXERCISE INFORMED JUDGMENTS AS TO WHETHER SUBMITTED PROPOSALS ARE REALISTIC CONCERNING THE PROPOSED COSTS AND TECHNICAL APPROACH INVOLVED. B-152039, JANUARY 20, 1964. WE BELIEVE THAT SUCH JUDGMENT MUST PROPERLY BE LEFT TO THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCIES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS "REALISM" OF COSTS AND TECHNICAL APPROACHES, AND MUST BEAR THE MAJOR CRITICISM FOR ANY DIFFICULTIES OR EXPENSES EXPERIENCED BY REASON OF A DEFECTIVE COST ANALYSIS.

IN VIEW OF THE FOREGOING, WE CANNOT AGREE THAT FEC'S LOW QUANTUM OF ESTIMATED COSTS AND FEES MAY BE CONSIDERED UNREALISTIC, OR THAT THE ARMY WAS PRECLUDED FROM CONSIDERING THE REALISM OF SUCH FACTORS FOR AWARD PURPOSES OR THAT THE ACTION OF THE DEPARTMENT IN GIVING SUCH CONSIDERATION IN CONTEMPLATION OF AN AWARD TO FEC RESULTED IN GIVING CONTROLLING WEIGHT TO THE LOWNESS PER SE OF FEC'S COSTS AND FEES.

CONCERNING YOUR ALLEGATION THAT THE ARMY IMPROPERLY DEFINED REASONABLENESS OF COST IN THE SECOND EVALUATION, WE NOTE THAT ASPR 15 201.3, THE REGULATION YOU CITE AS AUTHORITY FOR THAT PROPOSITION, IS FOR APPLICATION IN DETERMINING THE ALLOWABILITY OF COSTS DURING CONTRACT PERFORMANCE, AND NOT FOR DETERMINING THE MOST ADVANTAGEOUS OFFEROR FOR AWARD OF A COST-REIMBURSABLE CONTRACT. WE AGREE THAT A DEFINITION OF "REASONABLE" COST TO MEAN LOW COST PER SE ON A COMPARATIVE BASIS WOULD BE IMPROPER FOR AWARD PURPOSES IF THE GOVERNMENT HAD FAILED TO ADEQUATELY MEASURE THE "REALISM" OF SUCH LOW QUANTUM OF COSTS. HOWEVER, IN THE INSTANT CASE, THE GOVERNMENT ADOPTED A SYSTEM OF ASSESSING THE REALISM OF ALL COSTS PROPOSED BY ALL OFFERORS, WHICH APPEARS TO HAVE ADEQUATELY COMPENSATED FOR ANY DEFICIENCIES IN THE APPROACH OF DEFINING "REASONABLE" COST AS "LOW" COST. YOUR THIRD ALLEGATION IS THAT THE ARMY GAVE SIGNIFICANT WEIGHT TO PHASE-IN COSTS IN CONTRAVENTION OF THE INFORMATION FURNISHED ALL OFFERORS PRIOR TO THE SUBMISSION OF QUOTATIONS THAT SUCH COSTS WOULD BE SEPARATELY EVALUATED. IN THIS CONNECTION, YOU ALSO POINT OUT THAT THE DEPARTMENT'S NEGOTIATOR ADVISED YOUR CONCERN THAT YOU NEEDED A GREATER MANNING EFFORT IN THIS AREA.

WE AGREE THAT THE ANSWER PROVIDED BY THE GOVERNMENT TO ALL OFFERORS AT THE PREPROPOSAL CONFERENCE ON MAY 28 MAY REASONABLY BE INTERPRETED IN THE MANNER YOU ALLEGE. HOWEVER, SUCH INTERPRETATION WOULD APPEAR TO BE IN CONFLICT WITH THE ADVICE SET FORTH IN SECTION D.3.B.3 OF THE RFQ THAT PHASE-IN COSTS WOULD BE AN EVALUATION FACTOR. CERTAINLY, IT IS DIFFICULT TO PERCEIVE WHY SUCH COSTS WOULD BE LISTED AS AN EVALUATION FACTOR WITHOUT INTENDING THAT RESPONSES TO THAT FACTOR WOULD BE EVALUATED FOR AWARD PURPOSES. IN ANY EVENT, IT IS OUR OPINION THAT ALL OFFERORS WERE PLACED AT THE SAME BIDDING DISADVANTAGE FROM SUCH ERRONEOUS ADVICE. ACCORDINGLY, WE CANNOT MAINTAIN THAT THE ERROR CONSTITUTES SUFFICIENT GROUNDS FOR CANCELING THE CONTRACT.

IN THIS CONNECTION, THE DEPARTMENT CONCURS IN YOUR ALLEGATION THAT THE GOVERNMENT SUGGESTED THAT YOU INCREASE THE REQUIREMENTS OF YOUR PHASE-IN PLAN, ALTHOUGH ACCEPTING AN INFERIOR APPROACH BY FEC IN THIS MATTER. HOWEVER, THE DEPARTMENT MAINTAINS THAT THE SUPERIORITY OF YOUR PHASE-IN PLAN WAS FAIRLY AND FULLY REFLECTED IN THE SCORES YOU RECEIVED IN THE TECHNICAL AND MANAGEMENT AREAS, WHICH WERE SUBSTANTIALLY GREATER THAN THE SCORES ASSIGNED TO FEC IN THESE AREAS. ACCORDINGLY, THE DEPARTMENT MAINTAINS THAT YOU WERE NOT PREJUDICED BY SUCH NEGOTIATION APPROACH. FROM OUR EXAMINATION OF THE EVALUATION REPORTS, WE FIND NO BASIS FOR DISAGREEMENT WITH THE DEPARTMENT'S ADVICE.

CONCERNING YOUR FOURTH ALLEGATION, THAT THE ARMY DID NOT FULLY AND FAIRLY EVALUATE THE TECHNICAL AND MANAGEMENT ASPECTS OF YOUR QUOTATION, WE NOTE THAT YOUR CONCERN WAS CONSISTENTLY GIVEN SUPERIOR RATINGS IN THESE AREAS, WHICH SUPERIORITY WAS PRESERVED EVEN AFTER THE SECOND SSAC APPLIED ITS INDEPENDENT JUDGMENT TO THE EVALUATION PROCESS BY MEANS OF THE BONUS AND PENALTY PROCEDURE. IN VIEW THEREOF, AND IN CONSIDERATION OF THE EXTENSIVE ANALYSIS OF ALL PROPOSALS IN THESE AREAS, AS SUMMARIZED ABOVE, WE ARE UNABLE TO AGREE THAT THE ARMY GAVE LESS THAN A FULL EVALUATION TO THESE AREAS.

THE ARGUMENT YOU HAVE ADVANCED TO SHOW THAT THE DEPARTMENT'S CHANGE OF EVALUATION FACTORS, WEIGHTINGS, AND PROCEDURES FOR USE ON THE SECOND ROUND OF EVALUATIONS WAS UNFAIR AND FATALLY DEFECTIVE INVOLVES THE FOLLOWING CONTENTIONS; FIRST, THAT THE ARMY FAILED TO DISCLOSE THE WEIGHTS OF THE EVALUATION CRITERIA; SECOND, THAT THE DEPARTMENT RADICALLY CHANGED ITS NUMERICAL WEIGHTING SYSTEM FOR THE SECOND ROUND OF EVALUATIONS, WHICH YOU ALLEGE SHOULD HAVE BEEN THE SUBJECT OF AN AMENDMENT TO THE RFQ; THIRD, THAT AMCP 715-3 CONTAINS SEVERAL REFERENCES TO THE EFFECT THAT WEIGHTS ARE TO BE ESTABLISHED IN ADVANCE OF THE ISSUANCE OF THE RFQ AND NOT CHANGED THEREAFTER; FOURTH, THAT THE USE OF BONUS AND PENALTY POINTS WAS NOT PERMITTED IN THE EXISTING CIRCUMSTANCES; AND FIFTH, THAT DISREGARD OF THE MANNING SCHEDULE IN THE SECOND ROUND OF NEGOTIATIONS PREJUDICED THE CONSIDERATION OF YOUR OFFER.

CONCERNING YOUR CONTENTION THAT THE DEPARTMENT FAILED TO DISCLOSE THE WEIGHTS OF THE VARIOUS EVALUATION CRITERIA, THE DECISIONS OF OUR OFFICE HAVE HELD THAT OFFERORS SHOULD BE INFORMED OF THE RELATIVE WEIGHT OR IMPORTANCE ATTACHED TO EACH FACTOR. B-167175(1), OCTOBER 13, 1969; B 166052(2), MAY 20, 1969. BUT OUR OFFICE DOES NOT REQUIRE THE DISCLOSURE OF THE PRECISE NUMERICAL WEIGHTS TO BE USED IN THE EVALUATION PROCESS. THIS CONNECTION, IF YOU HAD ANY DOUBT AS TO THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA IN THE SUBJECT RFQ, WE BELIEVE THE TIME FOR RESOLUTION OF THE MATTER WAS BEFORE THE CLOSING DATE SET FOR RECEIPT OF QUOTATIONS.

IN RESPONSE TO YOUR CONTENTION THAT THE ARMY'S EVALUATION PROCEDURES CONSTITUTED A "RADICAL" DEPARTURE FROM THOSE ESTABLISHED FOR THE INITIAL EVALUATION, THE DEPARTMENT MAINTAINS THAT THE WEIGHTING AND SCORING SYSTEM USED BY THE SSEB AT THE SUBFACTOR AND ELEMENT LEVEL, AND THE WEIGHTING SYSTEM USED BY THE SSAC AT THE FACTOR AND AREA LEVEL, PRESERVED THE RELATIVE IMPORTANCE OF THE EVALUATION CRITERIA INITIALLY SET OUT IN THE RFQ. AS NOTED ABOVE, THE AREA MULTIPLIERS WERE THE SAME IN BOTH EVALUATIONS, AND THE AREA WEIGHTS ESTABLISHED IN THE SECOND EVALUATION PRESERVED THE RELATIVE EQUALITY OF THE IMPORTANCE OF THE AREA CRITERIA, SINCE A TOTAL OF ONE THOUSAND POINTS WERE RESERVED FOR EACH OF THE THREE AREAS. ALTHOUGH THE FACTOR WEIGHTS UTILIZED BY THE SECOND SSAC GAVE GREATER EMPHASIS TO THE FIRST-LISTED FACTOR WITHIN EACH AREA THAN WAS GIVEN BY THE EVALUATION SYSTEM UTILIZED ON THE FIRST EVALUATION, THE DEPARTMENT MAINTAINS THAT SUCH CHANGE CANNOT BE CONSIDERED RADICAL, SINCE THE RELATIVE WEIGHTS WERE STILL WITHIN THE FRAMEWORK OF THE ADVICE IN THE RFQ THAT "FACTORS ARE SET FORTH IN EQUAL OR DECREASING ORDER OF IMPORTANCE." WE AGREE WITH THESE CONCLUSIONS, AND SINCE OFFERORS WERE NOT ENTITLED TO BE ADVISED OF THE EXACT EVALUATION PROCEDURES WHICH WERE TO BE USED BY THE BOARD OR THE COUNCIL, WE ARE UNABLE TO AGREE WITH YOUR CONTENTION THAT THE FOREGOING CHANGES ADOPTED IN THE WEIGHTING PROCEDURES SHOULD HAVE BEEN THE SUBJECT OF AN AMENDMENT TO THE RFQ.

THE OTHER "CHANGE" IN THE WEIGHTING SYSTEM ON THE SECOND EVALUATION INVOLVED THE APPLICATION OF BONUS AND PENALTY POINTS. THE DEPARTMENT MAINTAINS THAT THE USE OF THIS SYSTEM ENABLED THE COUNCIL TO APPLY ITS INDEPENDENT JUDGMENT TO THE EVALUATION CRITERIA, JUST AS IT DID IN THE FIRST EVALUATION BY AVERAGING ITS OWN FACTOR WEIGHT SCORES TO EACH OF THE SCORES FURNISHED BY THE SSEB. ALTHOUGH YOU MAINTAIN THAT THE ESTABLISHED PROCEDURES DID NOT PROVIDE FOR THE SSAC TO EXERCISE ITS INDEPENDENT JUDGMENT IN THE SCORING PROCESS, AS NOTED ABOVE THE RECORD INDICATES THAT ONE OF THE PROCEDURES ESTABLISHED PRIOR TO THE RECEIPT OF PROPOSALS WAS A DIRECTIVE TO THE SSAC TO APPLY ITS OWN JUDGMENT TO THE SSEB SCORES. CERTAINLY, IN VIEW OF SUCH MANDATE, THERE WOULD NOT APPEAR TO BE ANY SUBSTANTIAL BASIS FOR QUESTIONING THE SSAC'S RIGHT TO QUANTIFY ITS JUDGMENT IN THE NUMERICAL SCORING ANALYSIS. WE BELIEVE SUCH CONCLUSION IS NECESSITATED WHETHER THE METHOD FOR THE NUMERICAL WEIGHTING OF ITS JUDGMENT WAS ON A FACTOR-BY-FACTOR BASIS, AS IN THE FIRST EVALUATION, OR WAS ON A SELECTED-FACTOR APPROACH AS IN THE SECOND EVALUATION. IN VIEW THEREOF, WE CANNOT AGREE THAT USE OF THE BONUS AND PENALTY POINT SYSTEM CONSTITUTED A RADICAL DEPARTURE FROM THE EVALUATION PROCEDURE UTILIZED IN THE INITIAL ROUND OF EVALUATION. ACCORDINGLY, WE CANNOT ACCEPT YOUR STATEMENT THAT THE EVALUATION SYSTEM UTILIZED ON THE SECOND EVALUATION CONSTITUTED A SUBSTANTIVE CHANGE IN THE REQUIREMENTS OF THE RFQ WHICH SHOULD HAVE BEEN FURNISHED TO ALL OFFERORS BY MEANS OF AN AMENDMENT.

TURNING TO YOUR CONTENTIONS THAT AMCP 715-3 SPECIFICALLY PROHIBITS THE CHANGING OF THE EVALUATION WEIGHTS AFTER PROPOSALS HAVE BEEN RECEIVED, AND THAT USE OF THE BONUS AND PENALTY SCHEME IS NOT PROPERLY FOR APPLICATION IN AN EVALUATION PROCESS WHEN A DIFFERENT SET OF WEIGHTS HAVE BEEN FORMULATED AFTER RECEIPT OF PROPOSALS, THE ARMY POINTS OUT THAT AMCP 715-3 WAS NOT MANDATORY FOR THIS PROCUREMENT AND THAT THE PROCUREMENT PRINCIPLES SET FORTH THEREIN COULD BE ADOPTED ON A CASE-BY-CASE BASIS. ACCORDINGLY, IT MAINTAINS THAT THE CHANGES MADE IN THE EVALUATION WEIGHTING SYSTEM CANNOT BE CONSIDERED LEGALLY DEFECTIVE FOR FAILING TO STRICTLY COMPLY WITH ALL THE PROVISIONS OF AMCP 715-3.

ALTHOUGH THE PROVISION REGARDING THE APPLICATION OF BONUS AND PENALTY POINTS WOULD APPEAR TO BE MORE PROPERLY APPLICABLE TO THE SITUATION WHERE THE WEIGHTS ESTABLISHED PRIOR TO THE RECEIPT OF PROPOSALS INADEQUATELY REFLECT THE STRENGTHS AND WEAKNESSES OF THE PROPOSALS, WE SEE NO LEGAL BASIS FOR QUESTIONING THE VALIDITY OF THE DEPARTMENT'S POSITION THAT THE BONUS AND PENALTY SCHEME WAS ONLY A MEANS OF INTRODUCING THE COUNCIL'S INDEPENDENT JUDGMENT INTO THE EVALUATION PROCESS. OBVIOUSLY, OTHER MEANS COULD HAVE BEEN CHOSEN TO "WEIGHT" THIS JUDGMENT, AND WE MUST AGREE THAT THE PROVISIONS OF AMCP 715-3 ARE NOT MANDATORY FOR PROCUREMENTS OF THE TYPE HERE INVOLVED. SEE THE PREFACE, PAGE V, OF AMCP 715-3.

WITH RESPECT TO WHETHER THE ADDITION OF BONUS AND PENALTY POINTS TO THE SSAC WEIGHTED FACTOR SCORES MAY HAVE RESULTED IN DUAL APPLICATION OF THE COUNCIL'S JUDGMENT TO THE REASONABLENESS AND REALISM OF PROPOSED COST FACTOR, WE NOTE THAT APPLICATION OF PROPORTIONATE BONUS AND PENALTY POINTS TO THE BOARD'S WEIGHTED FACTOR SCORES, WITHOUT APPLICATION OF THE SSAC FACTOR WEIGHTS, WOULD ALSO HAVE RESULTED IN A HIGHER TOTAL POINT SCORE FOR FEC THAN FOR PAGE.

IN VIEW THEREOF, AND SINCE THE RELATIVE WEIGHTS OF THE EVALUATION CRITERIA WERE PRESERVED IN THE SECOND EVALUATION, EVEN CONSIDERING THE APPLICATION OF THESE SPECIAL POINTS, WE CANNOT CONCLUDE THAT ADOPTION OF THE POINTS AND PENALTIES SYSTEM WAS ILLEGAL.

YOU ALSO ALLEGE THAT THE DEPARTMENT DISREGARDED ITS MANNING SCHEDULE IN THE SECOND ROUND OF NEGOTIATIONS TO THE PREJUDICE OF YOUR CONCERN. THIS REGARD, THE DEPARTMENT STATES THAT THE GOVERNMENT MANNING ESTIMATE WAS FOUND TO BE CONSIDERABLY IN EXCESS OF THE ESTIMATE PROVIDED BY ANY OF THE OFFERORS, AND THAT THE OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS) FELT THAT SOME EXPLANATION OF THIS DISPARITY WAS ESSENTIAL. ACCORDINGLY, THE OFFICE DIRECTED THAT PROPOSALS BE REEVALUATED WITH RESPECT TO THE REALISM OF THE MANNING ESTIMATE AND THAT A REVISED GOVERNMENT MANNING ESTIMATE BE FURNISHED TO THAT OFFICE.

THE RECORD INDICATES THAT THE COMMANDING GENERAL, USASTRATCOM, CHOSE NOT TO PREPARE A REVISED ESTIMATE. INSTEAD, HE DETERMINED THAT THE EXTENSIVE ANALYSIS OF OFFERS CONDUCTED ON THE FIRST EVALUATION HAD REVEALED THAT THE MANNING ESTIMATES OF YOUR CONCERN AND FEC WERE CLEARLY ADEQUATE FOR PERFORMANCE. ACCORDINGLY, THE PROPOSALS WERE EVALUATED WITH THIS DIRECTIVE IMPOSED ON THE ENTIRE EVALUATION PROCESS.

WE BELIEVE THAT IT WOULD HAVE BEEN THE BETTER COURSE FOR THE DEPARTMENT TO HAVE PREPARED A REVISED ESTIMATE FOR EVALUATION PURPOSES IN THE SECOND EVALUATION. CERTAINLY, SUCH ESTIMATE WOULD HAVE PROVIDED A MORE UNIFORM BASIS FOR EVALUATING THE ADEQUACY OF EACH QUOTATION, RATHER THAN RELYING ON EACH OFFEROR'S ESTIMATE, PLUS THE SUBJECTIVE JUDGMENT OF EACH EVALUATOR. HOWEVER, WE CAN FIND NO BASIS FOR MAINTAINING THAT YOUR CONCERN WAS UNIQUELY PREJUDICED BY SUCH ACTION.

ALL OFFERORS HAD PREPARED THEIR QUOTATIONS USING THE GOVERNMENT MANNING ESTIMATE, AND IT WOULD THEREFORE APPEAR THAT ALL OFFERORS COULD CLAIM THEY WERE EQUALLY DISADVANTAGED BY THE ARMY'S DECISION TO DISREGARD THE ESTIMATE FOR EVALUATION PURPOSES. IN THIS CONNECTION, FEC POINTS OUT THAT THE "MIX" IN ITS MANNING SCHEDULE MORE NEARLY COMPLIED WITH THE "MIX" CONTEMPLATED BY THE GOVERNMENT ESTIMATE, AND FEC THEREFORE CLAIMS TO HAVE BEEN PREJUDICED BY THE FAILURE TO FULLY APPLY THE GOVERNMENT MANNING ESTIMATE IN THE SECOND EVALUATION. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT PAGE WAS PREJUDICED BY THE CHANGE IN THE EVALUATION OF MANNING SCHEDULES SO AS TO REQUIRE OR JUSTIFY CANCELLATION OF THE CONTRACT AWARDED TO FEC.

IN THIS CONNECTION, THE COURT OF CLAIMS HAS HELD THAT A CONTRACT SHOULD BE CANCELED ONLY IF ITS ILLEGALITY IS CLEAR. SEE JOHN REINER AND COMPANY V UNITED STATES, 163 CT. CL. 381, 325 F. 2D 438 (1963), CERT. DENIED, 377 U.S. 931 (1964); BROWN AND SON ELECTRIC COMPANY V UNITED STATES, 163 CT. CL. 465, 325 F. 2D 446 (1963).

BASED UPON OUR REVIEW OF THE ENTIRE RECORD IN THE INSTANT CASE, WE ARE UNABLE TO FIND SUCH CLEAR ILLEGALITY, AND YOUR PROTEST MUST THERFORE BE DENIED.