:D.1. 1;E5Tr,. _ ( 862 COMPTROLLER GENERAL OF THE UNITED STATES WiSHINGTON. D.C. ztmau Dm73638 OCT 2 6 1971 AIR MAIL Mr. Eugene A. Wille "fuction (Hwaii)" P. 0. Bcz 3565 nonolulu, Hawaii 968fl Dear Mr. Willes Reference is made to- 3ur letter of Ju17 36, 19713 to the cMADM~ng General, U. S. Arwy Electronics Cand, protesting the ward of a contract to Federal Electric Corpration (Fc) under Request for Quotation M007-n7-Q.0429. Copies of this protest were referred to this Office on July 23.1, a in view of such re- ferral we have been advised that the Army does wt intend to rep3y to YMM protest. Your buss of protest is that MEs quotation is so unrealiti- cally law that it will be inpossible for FC to perfobm at the price quoted, and that acceptance of its quotation violates the Goverment's policy of avoiding quotations which are so low as to indicate the offeror in "btuing" the contract. You also allege that the Govern- men*t'I price analysis may bare been inaq at nd you request re- evalbtion of the pricing aspects of the FEC poosal, together with a copy of the FEC costing pa*Age to enable you to point out areas of unrealistie, eroneous ani/or onitted conts. Finally, ym advise that notice of award vwan not sent to ym on a timely basis. Request for Quotation BLAB7-71nq-0429 solicited 21 fims to qote on services and materiails to operate and maintain a broadcast station in the Republic of V.LetnYn for 2 =nthe (P-72) with an option for 12 additional onths (7Y-73). The two parts of the state- ment of work listed periods of operation, mnimm manning requirements, zintec2we and overmul schduls, conztruction of =me new facili- tiea, acqui3ition of equiplit, reports and data preparation. Three firma suboitted proposals on NV 18, 171. All propoas& were tech. nically acceptable, and the prices proposed before negotiation were: SP A 0p 7 -)'S9S12 ; 8 ; ~~- y;si~:E:- ~,- V'*r .,g?,..._> , ,< -' ;:863 3-173638 * YY~~~~~~~-72 F (Or3 n) -ace CoMimcation's Eng.,Oic. *385,089 $181,390 fction (Haii)" *000,526 $26,456 ECs, IT Serviie. $348,658 $186,590 Negotiations were conducted with you on June 14, FWC on June 15 and with Nge on the 16th. :ach firm was requested to submit its final and best price by June 21., 197l, with these resultss Ff-72 (option) W:_3 - -5T,588 $137,855 sfwction (Bawaii)" 86, 251 2, 97 Page .369,2T3 $180,417 Since PC ofrered the nzst favorsble price for both the initial year and the option year, the record. Insctats that Its labor hours. ekllI classificationsa d la)bor rates were carefully examined and compred with the other offerings. The other proposed costs for conatMCt*ioa, spare parts,'t)o1S, and other rquirYments were also examined and found to be rea3onable and to meet the contract require- =uMt This analysis confirmed that Y' s qwitatiou provided for adeqwte a reasonable coutract performame. Therefore, a8 outract. was awardtd to'= on June 3), 1971. The record Indicates that notice to the. asu1ccessfal otferore was sent out under date of July 1, 1971, amd it would appear that suhl notice meets the aliS n infortion prescribed-by t Armed Services Procurement Regulation, specifically AFA 3y508.3(a)?w ch reads: "Post-Award Notice of ferors. (a) PraqVly after making all awards in any procuremert in excess of $10.,O0, the contrleting oz=$cer shall give written notice to the unsuccessful offerors that th*ir proposeJ.s were not accepted, except that such not ce need not be given where notice has beea provided pursoant to 3-506.2(a). klsUch notice shall incade: -2- . . . 864 B-l73638 (i) the 'ua er of prospective contractors solicitwd; (ij) the nutxer of' proposals received; (lii) the name and address of each offeror receiving an avardj -(iv) the itecas quantitles, and unit prices of each awardj provided that, where the nuaWer of items or other factors -Iakes the 1Listing of unit prices i: practUleable' only the total contract price need be furnished; -and (v) in geueral tezmso the seos vw tbe ofrerorl's prosal was not'accepted, oinfortio in eXCept ihere the price (iv) above readily reveals such reasonj but v n o event vill an offeror s cost breakdoin, profit, overhAd, rates, trade secreta',p r 8cturing processes and teebaiwes, or other confidential business ipoormfrsn ke disclosed to ar' other Addtiow informtion as to wk~ an ofeor's prpoal Vag UWt llCcepted 13bbd.be - rovided to the offeror upon~s requefft -to the contracting officer, sabject to the limitation in (v) abow. With respect to your first poiat of roteat, to the effect that M3:a offer vaB SO uniroIstically low as to be iossibl* of perfon ,nce, the record discloses that a conrehensive cost ansysis was forwarded by the Contract p'rice An3yst. -to the- contracting officer on June 22, 1.9T7. Imclued was a summy of egaotlations frm a cost stndoitt and a mre detailed item by ite an1ysis of the proposed and negotiated figures of the PM proposal, which in total price was the wst favorable of the three, both as Oi p:roposed and as finally negotiated. Also, as neotiated, F=C was the low bidder by a sub3tAUtial mrgin on both the 3- B.173638. basic period (JY .72) and :fox the ot year (? T3)- In adition to total prices, an analysis was mae of the di1ect labor costs by job title, hours to be atilied, and vage rates eqaqyed in the cost package. All were found to be listic and adequate for the work described in the RN. In a similar mnner overhead rates, mterial costs subcontracting' travel and suabsistewi and other Costi were found valid. In view of the foroing It would appear that the M quote Wa sutfficient3y vmlidatedi and we are unable to aree with your alleption that the offer was unrealistically low. Concerning your allegation that F:Might be %uying".the contract a loss or no profit basis, we believe the cost Analysis discussed -n above tends to minimize this possibility. Additionealy while the O4vermt does not favr the practice of "buyjug inj" it is not illegal, and the option for fiscal year 1973, vbich ray be exercised solely at the Governint' discretion, establishes a ftute fixed price for services whtch further reduces th.e contractor's opportunity to make up 833 deficit through subsequemt over pricing. &Suh an poln is one of the precaiutionary tedmqae -suggested in AM 1-31.1fto protect the GwsO nt a4pv~inst tx "tactica. Mat regulato deines and discusses "Wring in as rol s: "(a). ISVng in'. refrs to the practice of attezting to ob4ain a contract Bwird by bxowingly offering a price or cost esiate Less than anticipated costs vith the expectation of eithir (i) increasing the contract price or estivated cost during the period of perfornmee through change orders ozr other means, or (ii) receiVing future follovwon comatetas at prices hih enough to recover ay losses. on the original' c ct. Such a practice is not 2?avored by the Departnt of Defame since its long-term effeets my diminish compe- tition and it my result in poor contract performnce. Where there is- reason to believe that buing int' has occurred, contracting oi!ficers shall assure that amts tbareby ezclu~ded in the development of the original contract price are not recovered in the pricing of change orders or follov on procureienta subject to cost aalysis. -- - 4- 866 B-173638 *"(b) To aVoid or uiniiaize.the opportunaity for 'bzying in' on a procarezeut:v hch is 1'iely to be swceeded by one. or wore 'foow on-' p-ocuraments, the Govermunt should obtain from the cOntrantor a bindlng price comitzont covering as much of the entire program concerned as i6 practicable. 8uch a coditment say be *aecured through emploent .of oe -of te fllowing pcrrewaent techniques: (i) ~iti-year procuront, with a prowvion in the solicitat'ion that a price nay be submitted only. for the total ulti-year quantity (see 1-322.2); or (2) priced options fbr ad4itiowl quantities wich, together witl tLe qeuantities being firmy contracte for, equal the antieiated totAl prop xequ s (see L-1504). "(e) in additiom to thi use of the techniques noted in (b) abe, it. is Imortant that other safeguards be provided against the contractor'ls recovering, through subaequent over- pricing, from azy nitial lois s1.tuati3 Aaie to 'buying in." PcFr oi1e, see 3-813 vth respect to the amrtization of Uon-recuwing coCsts, aid 3-81.2(c) concrning price tuotatiou which the cttactIng officer considers unrasonable. With regard to the aplication of this regulation, we have coaistntly held that it does -not afobrd a basis for retectioU of a bid, since there is n specific provision therefor in the re&latiu' aad there are spcEcifc presutionary actions set forth to guide the contractingS £oiceryen ' buyig in' is suspected, or la a Possibility. See B1l3.609jrmay 12, 1971; 50 CcW. Gen. 5QOAo UM)7} aid cases cited therein. Your cncern abotrt the adequacy of the Government' s. price anaisis was discused above, -WhilA your recollection of .a telephone conversation with the Government price aralyst is to the effect that procurement parsonnel vere surprised at FM's low price, but had no basis to challenge or verify J:'s eosting paage, vwe can only conclude that yoa misunder- stood the meaning of his cczments, since the record Indicates that a thorough and complete price aalysis was mude before the contract w awarded. -. - 5- . .~;7**- *.r. .*.. -. ); ri .. .f v. ...... .. .-- .;;.:., ;- :: - 867 B-1T3638 R~egarding the tine1±neia Of the notice to you of the award to flC. the above suwr7r of fe.ots indicAtes the action. taken was timely and net the requlremet of AMP 3-508.3(a)f azd the 14 daW period before your' receipt-'would appear to, be attribtable to the distance invoved'It does seen that some more rapid means of cczmimcatioas could have. been employed sw~ alao that mome complete Information about the &ward and the position of the other competitors ~Ko1ld have alayed your cowcrn is owve r, is not ~rta ol affect the .egalitq of award* 48 Co... .en. 35 198). . Concerning your reqqest for a copy of 7E's. costing package, it is the Departmnt .position that thia is confidential a proprietary Informtion which my not be disclosed without the consent of MlC In view of the proviaiona of ASPR 3-50a.3(a)(1r) q,2teA- above, -ve see -,no~bas s: f or disagreemut with the ,Departamet on this polnt.' Accodimg~yyour protest must ~A denied. Very truly yours, . .. .. .~. <. . ... RYXEUER, . ~ ~ ~C ~tolr ~ ~~De)ut-y ~ ~ Geoneral ~ ~ ~. ~ . .. .. of the United States 2T11Ak TOA00 al glixudV o .* .- . .
Protest of Army Contract Award for Broadcast Station
Published by the Government Accountability Office on 1971-10-26.
Below is a raw (and likely hideous) rendition of the original report. (PDF)