B-235861, Oct 3, 1989, 89-2 CPD 289

B-235861, Oct 3, 1989, 89-2 CPD 289

PROCUREMENT - Competitive Negotiation - Contract awards - Initial offer awards - Discussion - Propriety PROCUREMENT - Competitive Negotiation - Initial offers - Rejection - Propriety DIGEST: Where protester submitted required descriptive literature indicating that product did not meet requirements of commercial item description, the agency's rejection of that proposal without discussions and its award of a contract, on the basis of initial proposals, to the lowest priced, technically acceptable offeror, is not unreasonable.

Basic Measuring Instruments:

Basic Measuring Instruments (BMI) protests the rejection of its proposals submitted under request for proposals (RFP) No. F41608-88-R 4998, issued by the San Antonio Air Logistics Center, Kelly Air Force Base, Texas. The protester essentially objects to the agency's decision to award a contract on the basis of initial proposals.

On May 5, 1988, the agency issued the solicitation for a 3-year, firm- fixed price requirements contract for a best estimated quantity of 92 power line monitors, in accordance with a commercial item description, for monitoring disturbances associated with power distribution systems, equipment and medical instrumentation. The RFP basically provided for award to the lowest technically acceptable offeror and reserved for the agency the right to make award without discussions.

The RFP required offerors to submit two samples for evaluation, with descriptive information regarding any minor modifications needed for the model offered to meet the item description. The instructions provided further that with their proposals, offerors provide a description of such modifications, appropriately noting such modifications on any descriptive literature submitted and assigning a unique model or part number to apply to the production equipment. The solicitation provided that in the event that both sample items failed during testing, the vendor would have the opportunity to select and repair one of the samples, for the purpose of continued testing, but that in no event, would the offeror be allowed to replace or exchange one sample for another.

The protester submitted two offers, one based on its Model 2400 monitor at $6,550 per unit and one based on its Model 4800 monitor at $8,139 per unit. On February 27, 1989, the agency notified the protester that it intended to make an award to Dranetz Technologies, Inc., at a unit price of $7,200 per unit; the agency specifically advised the protester that the offer of its Model 2400 monitor had been rejected for failure to meet the requirements of paragraph 12a of the item description, requiring that the monitor offered have the ability to measure all three phases and the neutral-to-ground line of a 3-phase system simultaneously. BMI then filed a protest with the agency, pointing out that by use of its A-111 impulse probe, which was described in its proposal, the monitor's capacity could be increased to cover the required additional channels.

In responding to this agency-level protest, the agency discovered that the protester had mistakenly sent its A-112 impulse probe with its sample; agency engineers then reviewed the protester's descriptive literature pertaining to the use of the A-111 probe and concluded that while the probe would allow the monitor to meet the channel capacity requirement, the channels monitored through the probe would not meet other requirements, specifically paragraph 12b, requiring an impulse voltage range of 50-4000 volts peak. Nor did the literature indicate that channels utilizing the probe would have the required ability to measure the duration of the voltage impulse. The agency accordingly denied BMI's protest and this protest to our Office followed.

The protester first argues that the agency improperly and incorrectly processed BMI's proposal for its model 2400 monitor, that the agency should have advised the protester that it had submitted the wrong probe; furthermore, the protester asserts that if it had tested the model 2400 with A-111 impulse probe, the agency would have found that configuration satisfied the solicitation requirements, despite what the descriptive literature said. The protester believes that the solicitation obligated the agency to notify BMI and give it a chance to remedy any perceived problems with its monitors. The protester contends that in any event, the agency should have asked offerors to submit best and final offers because BMI had made the agency aware of its intention to lower its price if given the opportunity to revise its proposal.

The agency explains that the protester's proposal, which offered its A- 111 probe, was not provided to the engineers who tested the sample; as a consequence, no one noted the discrepancy between the sample and the proposal. It is the agency's position that the solicitation precluded it from allowing the protester to substitute equipment once that equipment had been submitted for testing; in any event, the agency believes that since the proposal contained no discussion of an intention to modify the equipment, as required by the solicitation, it properly concluded that the model 2400, with A-111 impulse probe was technically unacceptable, based on the descriptive literature submitted with BMI's proposal.

Our Office has indeed found that an agency may rely on descriptive literature submitted with a proposal to find that proposal unacceptable. Sabre Communications Corp., B-233439, Mar. 2, 1989, 68 Comp.Gen. ***, 89-1 CPD Para. 224. The record shows that had the agency noted the discrepancy between BMI's sample and its proposal, it would still have found the protester's proposal unacceptable based on its descriptive literature for the A-11 impulse probe, and the protester was not therefore materially prejudiced by the agency's failure to notice that discrepancy during testing. See Huff & Huff Service Corp., B-235419, July 17, 1989, 89-2 CPD Para. 55. Specifically, the agency evaluators found, and BMI fails to dispute, that, according to BMI's literature, BMI's product, including the A-111 impulse probe not tested, does not meet the salient characteristic that the channels monitor be capable of measuring an impulse voltage ranger of 50-4000 volts peak. BMI's descriptive literature describes the range capability of its A-111 impulse probe as up to 2400 volts peak, rather than the required 4,000 volts peak. As a result, even though the A -111 probe permits the model 2400 to meet the 4 channel requirement by providing two additional channels, these channels would not meet impulse voltage range requirements. The record also indicates that the A-111 would require major modification to meet the specification.

Accordingly, since BMI's descriptive literature showed that its product did not conform to the RFP specifications in a material way, we find that the Air Force's rejection of BMI's proposal as technically unacceptable was not unreasonable. Further, we have recognized that award may properly be based on initial proposals provided that, as here, notice of that possibility is stated in the RFP, and there is no other lower-priced technically acceptable proposal. AEG Aktiengeselldchaft, 65 Comp.Gen. 419 (1986), 86-1 CPD Para. 267. Thus, award of the contract based on the lowest-priced technically acceptable initial offer was not unreasonable.

The protester asserts that by letter of February 23, 1989, shortly before the agency awarded the contract to Dranetz, it advised the agency that it could reduce its price below that submitted by its known competitor and that with this knowledge the agency should have requested BAFOs to obtain the benefits of its lower price. BMI's specific offer was to reduce its price by the "percentage of any cost reductions on ... the 2400 series which will have been implemented in BMI's manufacturing process between July, 1988 and the date of the Best and Final bid" and to underbid its competitor's published prices. This offer to lower its price, contingent on possible cost reductions in the manufacturing process, is clearly speculative and the Air Force reasonably, in our view, did not consider the letter as justifying discussions in the expectation of obtaining a better price.

The protest is denied.