BNUMBER: B-275439.3
DATE: March 31, 1997
TITLE: ACS Systems & Engineering, Inc.
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Matter of:ACS Systems & Engineering, Inc.
File: B-275439.3
Date:March 31, 1997
L. Allan Parrott, Jr., Esq., Patrick H. O'Donnell, Esq., and Terence
Murphy, Esq., Kaufman & Canoles, for the protester.
John W. Fowler, Jr., Esq., Blank, Rome, Comisky & McCauley, for
Peirce-Phelps, Inc., an intervenor.
Kathryn E. Simmons, Department of Defense, for the agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Where contracting agency evaluated best and final offers (BAFO) based
upon changed requirements which were not communicated to offerors
until after award, contracting agency properly proposed to correct
this error by issuing an amendment to clarify its revised
requirements; allowing the submission of revised BAFOs based upon
those requirements; and evaluating the revised BAFOs for purposes of
award.
DECISION
ACS Systems & Engineering, Inc. protests the corrective action
proposed by the Department of Defense's Television-Audio Support
Activity (T-ASA) in connection with the firm's prior protest of the
award of a contract to Peirce-Phelps, Inc. under request for proposals
(RFP) No. TASA12-95-R-0025, issued to obtain shipboard audio
entertainment systems (SAES) on behalf of the Naval Media Center
(NMC). ACS contends that the proposed corrective action is
unreasonable and unlawful.
We deny the protest.
The solicitation, issued July 20, 1995, anticipated the award of a
fixed-price requirements contract for SAES units consisting of
state-of-the-art, commercial-off-the-shelf components. Each SAES unit
will broadcast through a ship's intercom system from such sources as
compact discs, audio cassettes, commercial FM signals, and the Armed
Forces Satellite Transmitted Radio Service audio signal. The contract
will run for 1 base year, with up to 4 option years.
To satisfy the base year requirements, offerors were to supply up to
13 SAES units under the third line item. This line item also included
two sub-line items, one for a 1-year SAES warranty and the other for a
2-year SAES warranty. In this regard, section C.3.10 of the RFP
required that a manufacturer's standard warranty cover the equipment
and services to be provided. If this warranty did not extend for a
total of 1 year, offerors were to provide the price of doing so;
offerors were also to provide the price associated with extending this
warranty for a total of 2 years. In addition, the solicitation
contained two separate line items for SAES spare parts kits--one for
onboard use and one for depot-level use. Offerors were advised that
these line items were to be priced as options. The remaining line
items concerned such things as data, engineering services and support,
technical manuals, and training.[1]
Award would be made to the offeror submitting the "best overall
proposal," considering merit and price. The solicitation included the
standard clause, "Evaluation of Options," set forth at Federal
Acquisition Regulation (FAR) sec. 52.217-5, which informed offerors that
offers would be evaluated by adding the total price for all options to
the total price for the basic requirement unless, in accordance with
FAR sec. 17.206(b), it was determined not to be in the government's best
interests to do so.[2]
T-ASA's technical evaluation team (TET) evaluated the eight proposals
it received and conducted discussions with all offerors. The
evaluation of discussion responses resulted in a competitive range of
three: ACS's proposal; Peirce-Phelps's proposal for a basic system;
and Peirce-Phelps's proposal for an enhanced system. Best and final
offers (BAFO) were requested and submitted by March 11, 1996.
However, on March 21, a firm whose proposal was excluded from the
competitive range filed a protest in this Office, and the final
evaluation of BAFOs was suspended until after our July decision
denying the protest was issued. Techniarts Eng'g, B-271509,
July 1, 1996, 96-2 CPD para. 1.
Given the passage of time since the solicitation's issuance, the TET
postponed its final evaluation until after the NMC had reviewed each
line item in light of the agency's current situation and requirements.
NMC listed the line items in terms of their priority, placing primary
emphasis on the production units and associated nonrecurring items.
The three items lowest on the priority list were the 2-year warranty
and the two types of spare parts kits.
In view of the NMC's priorities, the TET's final evaluation did not
consider the proposed prices of the 2-year warranty or spare parts
kits. The TET concluded that Peirce-Phelps's proposal for an enhanced
system represented the best value to the government and the
contracting officer, acting as the source selection official, agreed.
After its September 27 briefing, T-ASA's Board of Awards discussed the
fact that the prices of the 2-year warranty and spare parts kits were
not evaluated and concluded that such action was proper in view of the
language in FAR sec. 17.206(b). Award was made to Peirce-Phelps on
September 30.
After its debriefing, ACS filed a protest in this Office challenging
T-ASA's conduct of the evaluation. The agency subsequently conceded
that it had improperly failed to evaluate all line item prices. The
agency proposed to take corrective action by amending the solicitation
to delete the unevaluated line items and allowing the submission of
second BAFOs from the offerors in the competitive range. We dismissed
the protest as academic on December 23, and the present protest
followed.
Contracting officials in negotiated procurements have broad discretion
to take corrective action where the agency determines that such action
is necessary to ensure fair and impartial competition. Computing
Devices Int'l, B-258554.3, Oct. 25, 1994, 94-2 CPD para. 162. It is
fundamental that offerors must be advised of a procuring agency's
actual minimum requirements and the basis upon which their proposals
will be evaluated. Unisys Corp., 67 Comp. Gen. 512 (1988), 88-2 CPD para.
35; Occu-Health, Inc., B-270228.3, Apr. 3, 1996, 96-1 CPD para. 196; Lobar
Inc.,
B-247843.3, Aug. 31, 1992, 92-2 CPD para. 139. When an agency changes its
requirements, either before or after receipt of proposals, it must
issue a written amendment to notify all offerors of the changed
requirements and allow competing firms an opportunity to respond to
them. FAR sec. 15.606(a) (FAC 90-31); Ogden Gov't Servs.--Protest and
Request for Modification of Remedy; Tate Facilities Servs.,
Inc.--Protest, B-253350.3 et al., Apr. 4, 1994, 94-1 CPD para. 226; Budney
Indus.,
B-252361, June 10, 1993, 93-1 CPD para. 450; Universal Technologies, Inc.,
B-241157, Jan. 18, 1991, 91-1 CPD para. 63.
ACS contends that the Navy does require the items proposed for
deletion and should simply reevaluate the BAFOs which have already
been submitted in accordance with the evaluation scheme. Our review
of the record affords us no basis to find the agency's proposed
corrective action unreasonable.
NMC states that the spare parts kits were included in the solicitation
to provide a potentially more convenient method of procuring items
since, at the time the acquisition was planned, the agency was faced
with drastically diminishing manning levels and increased workloads,
but steady funding levels. Thus, for example, if the agency's
storekeepers were swamped with ordering parts for other systems, the
inclusion of these line items would allow them to buy kits of spare
parts instead of many parts individually. However, NMC reports that
the drastic manning reductions have not continued, the workload has
eased, and funding has been reduced.[3] As a result, NMC no longer
needs the convenient option of these line items--the agency employs a
staff of 10 at its supply depot and one of their primary functions is
to procure parts for shipboard broadcasting systems. Similarly, while
the 2-year extended warranty was a potential convenience for Navy
repair personnel given the once-current manning, workload, and funding
considerations, these considerations no longer exist. NMC has six
fleet maintenance facilities located around the world staffed with
technicians qualified to work on all NMC shipboard systems, as well as
repair personnel at its supply depot, and these repair personnel
successfully maintain numerous pieces of equipment without any
warranty protection.
ACS asserts that the NMC must still buy spare parts and has no other
contract vehicle for purchasing them. However, NMC states that it has
no intention of fielding units without having spare parts available,
but prefers the flexibility of purchasing the components for these
commercial-off-the-shelf items individually, rather than in kits,
through its supply depot. As for ACS's assertion that the 2-year
warranty is in the Navy's best interest, the question here is not
whether the solicitation reflects the Navy's ultimate "wish list," but
whether it reflects the Navy's minimum needs. Finally, ACS's point
that the Navy has not "ruled out" the need for these items overlooks
the NMC's statements that these items are "clearly not required" and
"will not be procured." Under the circumstances, we have no basis to
question NMC's determination that its requirements no longer include
the items at issue here. As a result, the agency properly determined
to amend the RFP to reflect its actual requirements and to allow the
submission of second BAFOs based upon those requirements. Lobar Inc.,
supra.
ACS also complains that the proposed corrective action amounts to an
improper auction because Peirce-Phelps's prices have been exposed, or
"technical leveling and/or technical transfusion."[4] Where the
reopening of negotiations is properly required, as here, the prior
disclosure of an offeror's pricing does not preclude reopening
negotiations because the possibility that a contract may not be
awarded based on true competition on an equal basis has a more harmful
effect on the integrity of the competitive system than the otherwise
improper disclosure of proprietary information. The Faxon Co., 67
Comp. Gen. 39 (1987), 87-2 CPD para. 425; Lobar Inc., supra. Accordingly,
the agency's proposed corrective action here is entirely proper.
ACS finally asserts that the proposed corrective action is designed to
"steer" the award to Peirce-Phelps. When a protester contends that
contracting officials are motivated by bias or bad faith, it must
provide convincing proof, since contracting officials are presumed to
act in good faith. Protective Group, Inc./Protective Materials Co.
Div., B-236975, Jan. 11, 1990, 90-1 CPD para. 45. ACS merely notes the
error that led to this proposed corrective action, reiterates its
complaint concerning improper technical transfusion or an auction, and
concludes, with no further proof, that the agency's proposed
corrective action is an attempt to "steer" the award to Peirce-Phelps.
In light of the rationale for the agency's actions, which we have
found reasonable, we find that ACS's unsupported allegations do not
constitute the proof required. Id.
The protest is denied.
Comptroller General
of the United States
1. The contents of the option year requirements were essentially
identical to those of the base year requirements.
2. FAR sec. 17.206(b) states, in part, that:
"The contracting officer need not evaluate offers for any
option quantities when it is determined that evaluation
would not be in the best interests of the [g]overnment and
this determination is approved at a level above the
contracting officer. . . . "
3. ACS's argument that manning reductions will continue are not
particularized to the personnel functions at issue here and provide us
no basis to discount NMC's statements in this regard.
4. The basis for this position is the protester's apparent contention
that reopening negotiations will give Peirce-Phelps an opportunity to
correct what ACS calls its "flawed technical approach," i.e.,
allotting a major portion of its proposed price to the warranty and
spare parts kits. Although ACS supports its argument by citing to the
regulation relating to technical transfusion (FAR sec. 15.610(e)(1)),
that provision clearly has no application to ACS's contention; at
best, ACS's argument can be interpreted as an allegation of technical
leveling, a charge unsupported by the record.