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A firm protested a Department of the Army contract award for computer training and associated supplies, contending that the Army unreasonably evaluated the awardee's technical capability and past performance, and improperly evaluated price. GAO held that the evaluation was reasonable and consistent with the solicitation's stated evaluation criteria. Accordingly, the protest was denied.

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B-151646, JUL. 16, 1963

TO BROWN, GOOD PASTURE AND BLOCK:

BY LETTER DATED MAY 27, 1963, YOU PROTESTED, ON BEHALF OF THE FRONTIER MANUFACTURING COMPANY, AGAINST THE AWARD OF A CONTRACT TO THE FRICK- GALLAGHER MANUFACTURING COMPANY UNDER INVITATION FOR BIDS NO. 9825, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), FEDERAL SUPPLY SERVICE, DENVER, COLORADO, ON APRIL 8, 1963.

THE INVITATION REQUESTED BIDS FOR FURNISHING AN INDEFINITE QUANTITY OF ROTARY BINS AND STORAGE EQUIPMENT FOR ONE YEAR FROM DATE OF AWARD OR THROUGH JUNE 30, 1964, WHICHEVER IS LATER. THE INVITATION ADVISED BIDDERS THAT THE ANNUAL POTENTIAL VOLUME UNDER SCHEDULE NO. 1--- ITEMS 1 THROUGH 30--- WAS ESTIMATED TO BE $360,000 AND UNDER SCHEDULE NO. 2- - ITEMS 31 THROUGH 46--- TO BE $240,000. THE INVITATION PROVIDED THAT THE DEMAND FACTORS FOR EACH ITEM REPRESENT THE ESTIMATED REQUIREMENTS FOR EACH ITEM DURING THE CONTRACT TERM, AND THAT THE ESTIMATED VOLUME AND DEMAND FACTORS SHALL NOT BE CONSTRUED TO REPRESENT ANY AMOUNT WHICH THE GOVERNMENT SHALL BE OBLIGATED TO ORDER.

SEVENTY-SIX FIRMS WERE INVITED TO BID BUT ONLY TWO BIDS WERE RECEIVED AND OPENED ON MAY 9, 1963. BASED ON THE EVALUATION FORMULA IN PARAGRAPH 9 OF THE INVITATION THAT BIDS WOULD BE EVALUATED FOR AWARD ON NET WEIGHTED DEMAND FACTORS AS SPECIFIED THEREIN, FRICK GALLAGHER WAS DETERMINED TO BE APPRECIABLY LOWER THAN FRONTIER. IN FACT, ON THE BASIS OF PRICE ALONE, FRICK-GALLAGHER'S DELIVERED UNIT PRICES TO ANY POINT IN THE UNITED STATES ON ITEMS 17, 30, 38, 40 AND 41--- WHICH REPRESENT ABOUT 82 PERCENT OF THE TOTAL VOLUME--- WERE GENERALLY LOWER THAN FRONTIER'S ORIGIN PRICES. ALSO, FRICK GALLAGHER'S PRICES, AS EVALUATED, ON ELEVEN OF THE HIGHER WEIGHTED ITEMS AVERAGED ABOUT 3 PERCENT LOWER THAN THOSE UNDER FRONTIER'S PRIOR CONTRACT FOR THE SAME OR SIMILAR ITEMS. DUE TO THE URGENCY OF THE NEED FOR THE END ITEMS, AND IN THE ABSENCE OF A CONTRACT FOR SUCH PRODUCTS, AWARD WAS MADE TO FRICK-GALLAGHER AS THE LOWEST RESPONSIVE BIDDER. ON THE RECORD, WE ARE NOT DISPOSED TO QUESTION THE AWARD.

YOUR PROTEST RAISES SEVERAL POINTS IN SUPPORT OF YOUR CONTENTION THAT AWARD TO FRICK-GALLAGHER WAS IMPROPER UNDER THE CIRCUMSTANCES.

1. METHOD OF BID EVALUATION

YOU ALLEGE THAT AN IMPROPER METHOD OF EVALUATING BIDS WAS PRESCRIBED AND APPLIED. IN YOUR OPINION, THE DEMAND FACTORS ASSIGNED TO GSA REGION 5, WHERE FRICK-GALLAGHER IS LOCATED, ARE EXTRAVAGANTLY WEIGHED IN FAVOR OF THAT COMPANY, WHEREAS THE DEMAND FACTORS ASSIGNED TO GSA REGION 7, WHERE FRONTIER IS LOCATED, ARE ONLY A SMALL FRACTION OF THE DEMAND ACTUALLY EXPERIENCED BY FRONTIER IN ITS PERFORMANCE ON THE PRIOR-YEAR CONTRACT. THE BASIS OF THE FACTS BEFORE US, WE FIND NO BASIS TO QUESTION THIS METHOD OF BID EVALUATION. PARAGRAPH 9 OF THE INVITATION PRESCRIBED SEVEN STEPS TO BE FOLLOWED IN DETERMINING THE NET WEIGHTED DEMAND FACTORS AS FOLLOWS:

"STEP 1: MULTIPLY THE PRICE BID FOR EACH ITEM BY ITS DEMAND FACTOR SHOWN IMMEDIATELY BELOW THE BID PRICE SPACE IN THE SCHEDULES.

"STEP 2: ADD THE PRODUCTS OF THE MULTIPLIED FACTORS OBTAINED UNDER STEP 1 FOR ALL OF THE ITEMS UNDER EACH SCHEDULE FOR EACH ZONE. THESE SUMS WILL BE THE WEIGHTED DEMAND FACTORS FOR THE RESPECTIVE ZONES UNDER GROUP NO. 1.

"STEP 3: ADD THE WEIGHTED DEMAND FACTORS OBTAINED FOR EACH SCHEDULE UNDER STEP 2. THESE SUMS WILL BE THE WEIGHTED DEMAND FACTORS FOR GROUP NO. 2.

"STEP 4: DETERMINE VALUE OF QUANTITY DISCOUNTS BY FOLLOWING COMPUTATIONS: (THERE FOLLOWS FORMULAS TO BE APPLIED TO EACH GROUP OF ITEMS WITHIN SCHEDULES NOS. 1 AND 2 WHEREIN FIXED PERCENTAGES ARE MULTIPLIED BY THE PARTICULAR WEIGHTED DEMAND FACTOR TIMES THE QUANTITY DISCOUNT OFFERED ON PAGE 32 OF THE INVITATION.)

"STEP 5: SUBTRACT QUANTITY DISCOUNT FACTORS FOR GROUPS NOS. 1 AND 2 UNDER EACH SCHEDULE FROM THEIR RESPECTIVE WEIGHTED DEMAND FACTORS OBTAINED UNDER STEPS 2 AND 3. THESE AMOUNTS MULTIPLIED BY THE TIME PAYMENT DISCOUNT RATE WILL BE THE TIME PAYMENT DISCOUNT FACTORS.

"STEP 6: ADD THE RESPECTIVE QUANTITY DISCOUNT FACTORS (STEP 4) AND TIME PAYMENT DISCOUNT FACTORS (STEP 5). THESE SUMS WILL BE THE TOTAL WEIGHTED DISCOUNT FACTORS, FOR EACH GROUP UNDER EACH SCHEDULE.

"STEP 7: SUBTRACT THE RESPECTIVE TOTAL WEIGHTED DISCOUNT FACTORS (STEP 6) FROM THE TOTAL WEIGHTED DEMAND FACTORS (STEPS 2 AND 3). THE AMOUNTS OBTAINED UNDER STEP 7 WILL BE THE DISCOUNTED WEIGHTED DEMAND FACTORS TO BE USED IN EVALUATING BIDS UNDER GROUPS NOS. 1 AND 2 OF SCHEDULE NOS. 1 AND 2 AS TO PRICE.'

WE NOTE THAT PARAGRAPH 9 ABOVE CONTAINS LANGUAGE SIMILAR TO THAT USED IN AN INVITATION WHICH RESULTED IN AN AWARD ON DECEMBER 21, 1961, TO FRONTIER AND WHICH WAS THE SUBJECT OF OUR DECISIONS REPORTED AT 41 COMP. GEN. 366 AND B-147370 DATED MARCH 28, 1962, INVOLVING DIFFERENT ASPECTS OF THE PROCUREMENT. NO OBJECTION WAS RAISED AT THAT TIME TO THE USE OF SUCH BID EVALUATION FORMULA. SINCE THE DEMAND FACTORS ARE BASED ON PREVIOUS EXPERIENCE AND ANTICIPATED REQUIREMENTS PROJECTED FOR THE ENSUING CONTRACT PERIOD, IT WAS INAPPROPRIATE TO USE INFORMATION AS TO PURCHASES FROM FRONTIER DURING THE PERIOD IT HELD THE PRIOR CONTRACT BECAUSE SUCH INFORMATION WAS NOT REPRESENTATIVE OF FUTURE DEMANDS. WE UNDERSTAND THAT THIS WAS LARGELY ATTRIBUTABLE TO THE FACT THAT--- FOR INEXPLICABLE REASONS --- MORE THAN 50 PERCENT OF THE PURCHASES REPORTED BY USING AGENCIES WAS FOR STORAGE EQUIPMENT ACCESSORIES WHICH NORMALLY ARE NOT PURCHASED IN SUCH MAGNITUDE. HENCE, A DEMAND FACTOR BASED STRICTLY ON PURCHASES EXPERIENCED DURING THE PERIOD OF FRONTIER'S CONTRACT WOULD NOT BE WARRANTED. IN THAT CONNECTION, PARAGRAPH 1 OF THE INVITATION, ENTITLED "SCOPE OF CONTRACT," ADVISED BIDDERS THAT "THE ESTIMATED VOLUME AND THE DEMAND FACTORS SHALL NOT BE CONSTRUED TO REPRESENT ANY AMOUNT WHICH THE GOVERNMENT SHALL BE OBLIGATED TO ORDER UNDER THE CONTRACT," AND THAT "THE ESTIMATED POTENTIAL VOLUME AND DEMAND FACTORS SHOWN ARE FOR INFORMATION OF BIDDERS AND FOR USE IN EVALUATING BIDS ONLY.'

THE INVITATION DEMAND FACTORS WERE BASED ON THE BEST INFORMATION AVAILABLE TO THE PROCUREMENT AGENCY, AND BIDDERS WERE AFFORDED ONE MONTH BETWEEN THE DATE THE INVITATION WAS ISSUED AND THE DATE OF BID OPENING TO REVIEW SUCH FACTORS AND TO PREPARE THEIR BIDS ACCORDINGLY. THE RECORD INDICATES THAT NO OBJECTIONS THERETO WERE RECEIVED DURING THIS PERIOD. ONLY AFTER BIDS WERE OPENED AND AFTER IT BECAME KNOWN THAT FRONTIER WAS HIGH BIDDER, WAS OBJECTION RAISED TO THE USE OF THESE FACTORS. YOUR FIRST POINT IN ANSWERED ACCORDINGLY.

2. SOLE SOURCE OF SUPPLY

THE PROCUREMENT AGENCY ADVISED THAT THE REGIONAL OFFICE AT DENVER MADE REPEATED ATTEMPTS IN PAST YEARS TO INTEREST POTENTIAL SUPPLIERS IN COMPETING FOR ROTARY BID AND STORAGE RACK REQUIREMENTS. THIS IS AMPLY ILLUSTRATED BY THE FACT THAT 76 FIRMS WERE SOLICITED HERE BUT ONLY TWO RESPONDED TO THE INVITATION. ACTUALLY, TWO OTHER FIRMS HAVE COMPETED WITH FRONTIER AND FRICK-GALLAGHER IN THE PAST FOR THIS TYPE OF EQUIPMENT. THE COMPETITIVE CHARACTER OF THIS TYPE OF PROCUREMENT IS ALSO EVIDENCE BY OUR DECISION AT 41 COMP. GEN. 366 WHICH CONSIDERED THE RESPONSIVENESS OF FRONTIER'S BID UNDER THE PRIOR INVITATION.

3. UNFAIR COMPETITION

THE ALLEGATIONS RESPECTING THIS POINT ARE NOT FOR CONSIDERATION BY OUR OFFICE IN DETERMINING THE PROPRIETY OF THE AWARD. RATHER, THIS APPEARS TO BE A MATTER OF CONTROVERSY INDEPENDENT OF YOUR PROTEST. CF. 39 COMP. GEN. 254.

4. ESTIMATED VOLUME OF CONTRACT

IT IS STATED THAT THE POTENTIAL VALUE OF THE PROPOSED CONTRACT WAS ESTIMATED IN PARAGRAPH 1 OF THE INVITATION TO BE $600,000. THIS ESTIMATE WAS BASED ON VALUES SHOWN IN PURCHASE ORDERS PLACED BY GSA REGIONAL OFFICES UNDER THE PRIOR CONTRACT WITH FRONTIER. SINCE THIS WAS DETERMINED ADMINISTRATIVELY TO BE THE BEST ESTIMATE OF FUTURE REQUIREMENTS, IT IS NOT OPEN TO QUESTION BY OUR OFFICE.

5. FAILURE TO INVITE FRONTIER TO BID ON OTHER PROCUREMENTS

IT IS ALLEGED THAT AFTER EXPIRATION OF FRONTIER'S CONTRACT ON DECEMBER 21, 1962, INVITATIONS FOR ROTARY BINS AND STORAGE EQUIPMENT WERE NOT MAILED TO FRONTIER. THIS IS NOT THE CASE. THE FILE BEFORE US SHOWS THAT FRONTIER IS AT THE PRESENT TIME, AND HAS BEEN IN THE PAST, ON THE DENVER REGIONAL OFFICE BIDDERS' MAILING LIST AND INVITATIONS WERE MAILED TO FRONTIER IN EVERY INSTANCE. AS A MATTER OF RECORD, FRONTIER RESPONDED TO REQUEST FOR QUOTATIONS NO. 30050 DATED APRIL 29, 1963, AND TO A TELEPHONIC REQUEST FOR QUOTATIONS NO. 30939 ON ABOUT APRIL 17, 1963, FOR STORAGE-TYPE EQUIPMENT. FRONTIER DID RECEIVE AN AWARD UNDER THE FIRST-MENTIONED REQUEST FOR PROPOSALS.

IT IS SUGGESTED THAT THE DENVER REGIONAL OFFICE DID NOT MAIL FRONTIER INVITATIONS BECAUSE THEY WERE LATE IN DELIVERY ON SOME OF THE ITEMS UNDER ITS PRIOR CONTRACT. HOWEVER, REGARDLESS OF ANY DELINQUENCY ON THE PART OF FRONTIER, GSA CONTINUES TO CARRY THE FIRM ON ITS MAILING LIST SINCE MATTERS OF DELINQUENCY ARE FOR CONSIDERATION ONLY WITH RESPECT TO AN EVALUATION OF A BIDDER'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR.

ACCORDINGLY, ON REVIEW OF THE ENTIRE PROCUREMENT TRANSACTION WE HAVE NO ALTERNATIVE BUT TO DENY THE PROTEST.