B-178624, OCT 5, 1973, 53 COMP GEN 209

B-178624, OCT 5, 1973, 53 COMP GEN 209

CONTRACTS - SPECIFICATIONS - QUALIFIED OFFERORS LIST ALTHOUGH THE PROTEST AGAINST THE AWARD OF A CONTRACT UNDER A REQUEST FOR PROPOSALS ISSUED BY THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION WILL NOT BE CONSIDERED AS IT WAS UNTIMELY FILED PURSUANT TO SECTION 20.2 OF THE GAO INTERIM BID PROCEDURES AND STANDARDS, EXCEPTION IS TAKEN TO THE ESTABLISHMENT AND OPERATION OF A QUALIFIED OFFERORS LIST (QOL) BY THE ADMINISTRATION TO CURTAIL THE EXCESSIVE PRODUCTION OF SOLICITATION PACKAGES, BUT WHICH IN FACT IS A PRESOLICITATION PROCEDURE FOR DETERMINING A PROSPECTIVE BIDDER'S OR OFFEROR'S RESPONSIBILITY, AND AS THE PROCEDURE UNDULY RESTRICTS COMPETITION IT SHOULD BE ELIMINATED. FURTHERMORE THE FEDERAL PROCUREMENT REGULATIONS, RELIED UPON AS AUTHORITY TO ESTABLISH THE QOL, MERELY PERMIT THE ESTABLISHMENT OF A MAILING LIST TO ASSURE AN ADEQUATE SOURCE OF SUPPLY AND TO SPELL OUT THE NECESSARY PROCEDURES FOR A REASONABLE RESTRICTION ON THE NUMBER OF SOLICITATIONS AVAILABLE.

TO THE SECRETARY OF TRANSPORTATION, OCTOBER 5, 1973:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO THE COUNSEL FOR AMF, INC., ADVISING THAT THE PROTEST AGAINST THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS NHTSA-3-A862, ISSUED BY THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA), IS UNTIMELY UNDER SECTION 20.2 (4 CFR) OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS AND WILL NOT BE CONSIDERED.

HOWEVER, DURING THE COURSE OF OUR DEVELOPMENT OF INFORMATION ON THE MATTER, IT CAME TO OUR ATTENTION THAT THE SOLICITATION PROCEDURES EMPLOYED BY NHTSA DO NOT COMPORT WITH APPLICABLE STATUTES AND REGULATIONS.

AT OUR REQUEST, BY LETTER DATED AUGUST 2, 1973, NHTSA FORWARDED ALL RELEVANT DOCUMENTS CONCERNING THE ESTABLISHMENT AND OPERATION OF ITS QUALIFIED OFFERORS LIST (QOL). THIS INFORMATION WAS CONTAINED IN POLICY MEMO NO. 20, DATED MARCH 27, 1972, FROM THE DIRECTOR, OFFICE OF CONTRACTS AND PROCUREMENT:

A QUALIFIED OFFERORS LIST, IDENTIFIED WITH THE CONCORD CODING STRUCTURE, HAS BEEN DEVELOPED. IT PRESENTLY CONSISTS OF CONTRACTORS WHICH RECEIVED AWARDS DURING FY '71 AND '72, TOGETHER WITH FY '71 RFP OFFERORS WHOSE PROPOSALS WERE EVALUATED AS BEING TECHNICALLY ACCEPTABLE.

IN ORDER TO PRESERVE THE INTEGRITY OF THE LIST, ALL NEW FIRMS SEEKING INCLUSION MUST BE REVIEWED TO DETERMINE IF QUALIFIED.

ALL SF 129 "BIDDER'S MAILING LIST APPLICATIONS" TOGETHER WITH CAPABILITY DESCRIPTIONS RECEIVED FROM FIRMS INTERESTED IN BEING INCLUDED IN THE NHTSA QUALIFIED BIDDERS LIST WILL BE DIRECTED TO GROUP C FOR APPROPRIATE REVIEW PROGRAM ACTIVITIES. ONLY FIRMS DEEMED QUALIFIED AFTER EVALUATION WILL BE INCLUDED IN THE LIST. SUITABLE RESPONSES WILL BE PREPARED AND FORWARDED TO THESE FIRMS BY GROUP C, AFTER A DETERMINATION OF QUALIFICATION HAS BEEN COMPLETED.

AT A CONFERENCE HELD AT OUR OFFICE ON AUGUST 1, 1973, REPRESENTATIVES OF NHTSA STATED THAT THE QOL HAD BEEN ESTABLISHED AS A MEANS TO CURTAIL EXCESSIVE PRODUCTION OF SOLICITATION PACKAGES. SUPPORT FOR THIS POSITION IS FOUND, IN NHTSA'S OPINION, IN FEDERAL PROCUREMENT REGULATIONS (FPR) 1- 1.302-(B), 1-1.1002, 1-2.203-1, 1-2.205-1 AND 1 2.205.4. FRP 1-1.302-1(B) IMPOSES THE RESPONSIBILITY ON THE CONTRACTING OFFICER TO SOLICIT COMPETITIVE PROPOSALS OR BIDS FROM "*** ALL SUCH QUALIFIED SOURCES AS ARE DEEMED NECESSARY *** TO ASSURE SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF SUPPLIES AND SERVICES NECESSARY TO MEET THE REQUIREMENTS OF THE AGENCY CONCERNED." FPR 1-1.1002 PROVIDES THAT ONLY A "REASONABLE NUMBER OF COPIES" OF EACH INVITATION FOR BIDS AND REQUEST FOR PROPOSALS NEED BE MAINTAINED. TO THE EXTENT OF AVAILABILITY, THE SOLICITATIONS SHOULD BE DISSEMINATED TO INTERESTED PARTIES, EXCEPT THAT THE SOLICITATIONS MAY OTHERWISE BE RESTRICTED TO PERUSAL AT THE ISSUING OFFICE. FPR 1-2.203-1 REQUIRES THAT A SUFFICIENT NUMBER OF INVITATIONS FOR BIDS BE DISTRIBUTED SO AS TO ELICIT ADEQUATE COMPETITION. FPR 1 2.205-1 PROVIDES FOR THE ESTABLISHMENT OF MAILING LISTS TO ASSURE ACCESS TO ADEQUATE SOURCES OF SUPPLY AND SERVICES. PROCEDURES ARE ALSO ESTABLISHED FOR ADDITION TO THE MAILING LIST. FINALLY, FPR 1-2.205 4(A) PROVIDES THAT:

TO PREVENT EXCESSIVE ADMINISTRATIVE COSTS OF A PROCUREMENT, MAILING LISTS SHOULD BE USED IN A WAY WHICH WILL PROMOTE COMPETITION COMMENSURATE WITH THE DOLLAR VALUE OF THE PURCHASE TO BE MADE. AS MUCH OF THE MAILING LIST WILL BE USED AS IS COMPATIBLE WITH EFFICIENCY AND ECONOMY IN SECURING ADEQUATE COMPETITION AS REQUIRED BY LAW. *** THE FACT THAT LESS THAN AN ENTIRE MAILING LIST IS USED SHALL NOT IN ITSELF PRECLUDE FURNISHING OF BIDDING SETS TO OTHERS UPON REQUEST THEREFOR, OR CONSIDERATION OF BIDS RECEIVED FROM BIDDERS WHO WERE NOT INVITED TO BID.

WE DO NOT AGREE THAT THE FOREGOING REGULATIONS PROVIDE NHTSA THE AUTHORITY TO ESTABLISH THE QOL. IN OUR OPINION, THE FOREGOING MERELY PERMITS THE ESTABLISHMENT OF A MAILING LIST TO ASSURE AN ADEQUATE SOURCE OF SUPPLY AND TO SPELL OUT THE NECESSARY PROCEDURES FOR A REASONABLE RESTRICTION ON THE NUMBER OF SOLICITATIONS AVAILABLE. HOWEVER, THE QOL GOES FURTHER. AS WE UNDERSTAND THE PROCEDURE, INTERESTED PARTIES SUBMIT STANDARD FORM 129, BIDDER'S MAILING LIST APPLICATIONS, PLUS "CAPABILITY DESCRIPTIONS" WHICH ARE THEN EVALUATED IN ADVANCE OF ANY PROCUREMENT TO ESTABLISH THE BIDDER'S RESPONSIBILITY.

IT IS THE CORNERSTONE OF THE COMPETITIVE SYSTEM THAT BIDS AND/OR PROPOSALS BE SOLICITED IN SUCH A MANNER AS TO PERMIT THE MAXIMUM AMOUNT OF COMPETITION CONSISTENT WITH THE NATURE AND EXTENT OF THE SERVICES OR ITEMS BEING PROCURED. ANY ESTABLISHMENT OF PRESOLICITATION PROCEDURES FOR DETERMINING A PROSPECTIVE BIDDER'S/OFFEROR'S RESPONSIBILITY, WHETHER RELATING TO THE MANNER OF MANUFACTURE OR CAPABILITY TO MANUFACTURE, IS A RESTRICTION OF FULL AND FREE COMPETITION. THE QUESTION TO BE ANSWERED CONCERNING THE VALIDITY OF THE PROCEDURES IS NOT WHETHER IT RESTRICTS COMPETITION PER SE, BUT WHETHER IT UNDULY RESTRICTS COMPETITION.

THIS PROCEDURE IS AKIN, WITH SOME NOTABLE EXCEPTIONS, TO THAT EMPLOYED IN CONJUNCTION WITH THE QUALIFIED MANUFACTURIER'S LIST (QML). THE QML WAS ESTABLISHED BY THE DEPARTMENT OF THE ARMY TO DETERMINE THE RESPONSIBILITY OF FIRMS IN THE CUT-MAKE-AND-TRIM INDUSTRY IN ADVANCE OF PROCUREMENT AS CONDITION PRECEDENT TO COMPETITION. THE PROCEDURES WERE DEEMED NECESSARY IN VIEW OF THE INDUSTRY'S HISTORY OF PERSISTENT UNSATISFACTORY PERFORMANCE BY MARGINAL PRODUCERS. THE USUAL PREAWARD METHODS OF DETERMINING RESPONSIBILITY WERE FOUND INADEQUATE BECAUSE THE URGENCY OF SUPPLY REQUIREMENTS FOR MILITARY CLOTHING OFTEN RESTRICTED THE EXTENT OF INVESTIGATION. FURTHER, WHEN TIME PERMITTED A COMPLETE INVESTIGATION, INORDINATE AMOUNTS OF TIME WERE REQUIRED BECAUSE OF THE PHYSICAL CASE WITH WHICH FACILITY LOCATIONS COULD BE TRANSFERRED AND THE COMPLEX CORPORATE STRUCTURES ESTABLISHED BY THE FIRMS. THE FOREGOING DISSUADED MOST REPUTABLE FIRMS FROM COMPETING. THEREFORE, WHILE NOTING THAT THE PROCEDURES RESTRICTED COMPETITION, OUR OFFICE SANCTIONED THE PROCEDURES AS NOT UNDULY RESTRICTIVE AND WITHIN THE AGENCY'S DISCRETION TO DETERMINE ITS NEEDS AND PLACE LEGITIMATE RESTRICTIONS ON COMPETITION WHEN REQUIRED BY THE NATURE OF THE ITEMS OR SERVICES BEING PROCURED. B-135504, MAY 2, 1958. SEE DEFENSE PERSONNEL SUPPORT CENTER MANUAL 5105.3 (1973) FOR PROCEDURAL SAFEGUARDS.

NHTSA ADVANCES NO FURTHER REASON TO JUSTIFY THE NEED FOR PREDETERMINATION OF BIDDER/OFFEROR RESPONSIBILITY BEYOND THE NEED TO RESTRICT THE AVAILABLE NUMBER OF SOLICITATIONS. HOWEVER, MEANS OF PROMOTING ADMINISTRATIVE ECONOMIES AND EFFICIENCIES IN THIS REGARD ARE COVERED IN THE AFOREMENTIONED FPRS. AS WE STATED IN 50 COMP. GEN. 542, 544 (1971) CONCERNING OUR APPROVAL OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION'S MICROELECTRONICS RELIABILITY PROGRAM TO ASSURE A CONTINUOUS SUPPLY OF MICROCIRCUITS MEETING ITS STRINGENT REQUIREMENTS:

WHILE DETERMINATIONS CONCERNING A CONTRACTOR'S RESPONSIBILITY MUST BE MADE BEFORE CONTRACT AWARD, WE HAVE NOT ORDINARILY SANCTIONED SUCH DETERMINATIONS PRIOR TO BID OPENING SINCE TO DO SO MIGHT FORECLOSE THE RECEIPT OF PROPOSALS FROM RESPONSIBLE CONTRACTORS OF WHOM THE PROCUREMENT AGENCY IS NOT AWARE. THUS, IN THE USUAL CASE, SUCH PREBID OPENING DETERMINATIONS HAVE BEEN CONSIDERED AS UNDULY RESTRICTING COMPETITION WITHIN THE MEANING OF THE STATUTES GOVERNING COMPETITION. ***

THEREFORE, IT IS OUR OPINION THAT THE QOL CONSTITUTES AN UNDUE RESTRICTION ON COMPETITION AND SHOULD BE ELIMINATED. FURTHER, EVEN IF THERE WERE VALID REASONS FOR THE USE OF THE QOL, THE ALMOST TOTAL LACK OF REGULATION AND PROCEDURES FOR ITS USE WOULD RENDER IT INVALID IN ITS PRESENT FORM.

WE WOULD APPRECIATE ADVICE ON WHAT ACTION IS TAKEN ON OUR RECOMMENDATION.