B-143234, B-143236, DEC. 7, 1960
Highlights
PELTON DIVISION: FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF JUNE 16. THE SEVERAL GROUNDS UPON WHICH YOU PREDICATE YOUR PROTEST WILL BE CONSIDERED SEPARATELY IN THE ORDER PRESENTED. IT IS CONTENDED BY YOU. TO WHOM AWARDS WERE MADE UNDER THE CITED INVITATIONS. HAVE INDICATED THAT THE TURBINES THEY CONTEMPLATE FURNISHING WILL BE COMPLETELY FABRICATED ABROAD. THEIR PROPOSALS ARE NONRESPONSIVE. YOUR CONTENTION IS BASED UPON THE REQUIREMENTS OF PARAGRAPH E6 (F) OF THE SPECIAL CONDITIONS MADE A PART OF THE INVITATION WHICH PROVIDES THAT "THE A LINING OPERATIONS SHALL BE PERFORMED IN A SHOP LOCATED WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES. THE CORRESPONDING GENERATORS WHICH ARE TO BE SUPPLIED UNDER SEPARATE UNDERTAKINGS.
B-143234, B-143236, DEC. 7, 1960
TO BALDWIN-LIMA-HAMILTON CORPORATION, PELTON DIVISION:
FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF JUNE 16, 1960, AND TO SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF CONTRACTS TO ANY OTHER BIDDER UNDER BUREAU OF RECLAMATION SPECIFICATIONS NOS. DS 5277 AND DS-5278 COVERING HYDRAULIC TURBINES FOR DELIVERY TO THE TRINITY RIVER AND CLEAR CREEK PROJECTS. THE SEVERAL GROUNDS UPON WHICH YOU PREDICATE YOUR PROTEST WILL BE CONSIDERED SEPARATELY IN THE ORDER PRESENTED.
IT IS CONTENDED BY YOU, IN LETTER OF JUNE 22, 1960, THAT SINCE THE RESPECTIVE FOREIGN BIDDERS, HITACHI NEW YORK, LTD., AND ENGLISH ELECTRIC EXPORT AND TRADING COMPANY , LTD., TO WHOM AWARDS WERE MADE UNDER THE CITED INVITATIONS, HAVE INDICATED THAT THE TURBINES THEY CONTEMPLATE FURNISHING WILL BE COMPLETELY FABRICATED ABROAD, THEIR PROPOSALS ARE NONRESPONSIVE. YOUR CONTENTION IS BASED UPON THE REQUIREMENTS OF PARAGRAPH E6 (F) OF THE SPECIAL CONDITIONS MADE A PART OF THE INVITATION WHICH PROVIDES THAT "THE A LINING OPERATIONS SHALL BE PERFORMED IN A SHOP LOCATED WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES," OR AS PERMITTED BY SUPPLEMENTAL NOTICE NO. 2, DATED MAY 5, 1960, THE DOMINION OF CANADA.
THESE CONTRACTS COVER THE PRODUCTION OF HYDRAULIC TURBINES AND RELATED COMPONENTS, TO DRIVE, BY VERTICAL SHAFTS, THE CORRESPONDING GENERATORS WHICH ARE TO BE SUPPLIED UNDER SEPARATE UNDERTAKINGS. THE TURBINE CONTRACTORS ARE CHARGED WITH THE DUTY OF ASSEMBLING AND A LINING THE GENERATOR AND TURBINE SHAFTS BUT OBVIOUSLY SUCH OPERATION CANNOT BE ACCOMPLISHED UNTIL THE GENERATOR SHAFTS HAVE BEEN FABRICATED. WHILE THE DUTY TO PERFORM THAT OPERATION CLEARLY IS IMPOSED UPON THE TURBINE CONTRACTORS, ARRANGEMENTS TO ACCOMPLISH THAT FUNCTION MUST, OF NECESSITY, BE CORRELATED WITH THE GENERATOR MANUFACTURERS AFTER COMPLETE FABRICATION OF THE TURBINES EXCEPT FOR THE BOLT HOLES AND COUPLING FLANGES WHICH JOIN THE SHAFTS. THE BUREAU OF RECLAMATION DOES NOT CONSIDER SUCH REQUIREMENT OF THE SPECIFICATIONS TO BE A PART OF THE MANUFACTURING PROCESS, AND SINCE THE DETAILS TO PERFORM THAT ULTIMATE FUNCTION ARE SUBJECT TO APPROVAL BY THE CONTRACTING OFFICER, THE BUREAU LIKEWISE DOES NOT CONSIDER IT DETERMINATIVE AS TO THE RESPONSIVENESS OF A BID.
IN A SOMEWHAT SIMILAR CASE INVOLVING THE AWARD TO YOUR CORPORATION OF A CONTRACT TO FURNISH THE HYDRAULIC TURBINES FOR INSTALLATION IN THE POWERPLANT AT GLEN CANYON DAM, ENGLISH ELECTRIC COMPANY QUESTIONED YOUR ABILITY TO COMPLY WITH THE SPECIFICATIONS RELATING TO ASSEMBLY AND ALINEMENT REQUIREMENTS. THE BUREAU OF RECLAMATION CONCLUDED THAT DESPITE THE FACT THAT BOTH FOREIGN AND DOMESTIC COMPONENTS WERE INVOLVED, SUCH REQUIREMENTS WOULD BE ACCOMPLISHED TO THE SATISFACTION OF THE CONTRACTING OFFICER THROUGH SUBSEQUENT ARRANGEMENTS WITH THE GENERATOR MANUFACTURER, AND THAT SUCH REQUIREMENTS WERE NOT MATERIAL IN EVALUATION OF THE BIDS. IN DECISION OF APRIL 7, 1960, B-141623, WE HELD THAT THE TECHNICAL JUDGMENT EXERCISED BY THE BUREAU IN ITS DETERMINATION IN THAT MATTER WAS NOT SUBJECT TO QUESTION BY THIS OFFICE. WE THINK THAT SUCH CONCLUSION IS FOR APPLICATION IN THIS CASE.
A SECOND CONTENTION SET FORTH IN YOUR LETTER OF JUNE 22, 1960, IS THAT AWARD OF THE TWO CONTRACTS TO FOREIGN CONCERNS IS IN VIOLATION OF THE PROVISIONS OF THE BUY AMERICAN ACT OF 1933, 41 U.S.C. 10A, ET SEQ. YOU REQUEST THAT WE RECONSIDER OUR DECISION OF OCTOBER 26, 1959, 39 COMP. GEN. 309; IN THE LIGHT OF THE INCREASE IN FOREIGN COMPETITION ARISING SINCE THAT DATE, WHICH THREATENS TO DESTROY THE DOMESTIC HYDRAULIC TURBINE INDUSTRY.
PURSUANT TO THE TERMS OF THE SAID ACT AND EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, THE FOREIGN BIDS WERE EVALUATED BY ADDING THE 6 PERCENT DIFFERENTIAL STIPULATED IN THE EXECUTIVE ORDER, AND BY COMPARISON YOUR PROPOSALS EXCEEDED THE FOREIGN BIDS BY APPROXIMATELY $183,000 ON THE TRINITY RIVER PROJECT, AND $253,000 ON THE CLEAR CREEK PROJECT. EXCEPT FOR REASONS NEXT DISCUSSED, THERE IS NO AUTHORITY UNDER EXISTING LAW TO DISREGARD THE FOREIGN PROPOSALS IN FAVOR OF YOUR OFFERS WHERE YOU WERE OTHER THAN LOW BIDDER. ACCORDINGLY, OUR DECISION OF OCTOBER 26, 1959, SUPRA, WHICH INVOLVED THE PROCUREMENT OF HYDRAULIC TURBINES FOR THE BIG BEND PROJECT IN SOUTH DAKOTA, CLEARLY IS FOR APPLICATION IN THIS CASE, AND WILL NOT BE DISTURBED.
IF, AS YOU CONTEND, THE FOREIGN PROCUREMENTS FOR THE TRINITY RIVER AND CLEAR CREEK PROJECTS ARE INCONSISTENT WITH THE PUBLIC INTEREST ON GROUNDS WHICH MIGHT TAKE PRECEDENCE OVER THE HIGHER PRICES QUOTED IN YOUR BIDS, THE DUTY AND AUTHORITY PROVIDED FOR IN THE ACT TO MAKE SUCH FINDING IS VESTED IN THE HEAD OF THE DEPARTMENT OR AGENCY CONCERNED, OR IN THE PRESIDENT OF THE UNITED STATES WHERE NATIONAL SECURITY INTERESTS MAY BE INVOLVED. YOUR FURTHER CONTENTION THAT THE AWARDS WILL HAVE AN ADVERSE EFFECT UPON THE INDUSTRY IN GENERAL, AND THEREBY WEAKEN OUR NATIONAL SECURITY, IS AN ARGUMENT OF A POLITICAL OR ECONOMIC NATURE WHICH CANNOT BE CONSIDERED BY US EXCEPT AS IT MAY BE EMBODIED IN PERTINENT STATUTORY ENACTMENTS OR REGULATIONS. IN THAT CONNECTION THERE IS NOTHING IN THE RECORD TO SHOW THAT THE OFFICE OF CIVIL AND DEFENSE MOBILIZATION HAS MODIFIED ITS FINDING OF JUNE 12, 1959, TO THE EFFECT THAT IMPORTS OF HYDRAULIC TURBINES ARE NOT THREATENING TO IMPAIR THE NATIONAL SECURITY. ACCORDINGLY, THERE IS NO LEGAL JUSTIFICATION FOR US TO QUESTION THE AWARDS TO THE TWO LOW BIDDERS IN THAT REGARD ON THE BASIS OF YOUR PROTEST.
IN YOUR LETTER OF SEPTEMBER 2, 1960, TO THE BUREAU OF RECLAMATION, YOU POINT OUT THAT IF AWARDS HAD BEEN MADE TO HITACHI FOR THE SPRING CREEK TURBINES, AND TO YOUR FIRM FOR THE CLEAR CREEK UNITS, THE COST TO THE GOVERNMENT WOULD HAVE REDUCED BY $92,410. A FURTHER COMPARATIVE CALCULATION BY YOU WHICH INCLUDES TRANSPORTATION AND ERECTION COSTS, BASED ON THE CONTRACT WITH HITACHI FOR THE CLEAR CREEK TURBINES, AND THE CONTRACT WITH NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY FOR THE SPRING CREEK TURBINES, INDICATES A TOTAL EXCESS COST OF $139,114. WHILE NO ISSUE IS TAKEN WITH RESPECT TO THOSE STATEMENTS, SUCH CONTENTIONS FAIL TO TAKE INTO CONSIDERATION MATERIAL ASPECTS RELATIVE TO FOUR PROCUREMENTS, INCLUDING TURBINES FOR THE FLAMING GORGE POWERPLANT, WHICH CONFRONTED THE BUREAU OF RECLAMATION AT THE TIME THE AWARDS IN QUESTION WERE MADE.
THE FOUR LOW BIDS ON ALL OF THESE PROJECTS WERE SUBMITTED BY HITACHI AND ENGLISH ELECTRIC COMPANY. HOWEVER, BECAUSE NEITHER FIRM HAD PREVIOUSLY FURNISHED HYDRAULIC TURBINES TO THE BUREAU OF RECLAMATION IT WAS FELT THAT NO BASIS EXISTED TO EVALUATE THE CAPABILITIES OF THESE BIDDERS TO FULFILL THE EXACTING REQUIREMENTS OF THE SPECIFICATIONS GOVERNING THE MANUFACTURE OF SUCH HIGHLY TECHNICAL EQUIPMENT. FOR THAT REASON THE BUREAU CONCLUDED THAT THE BEST INTEREST OF THE GOVERNMENT WOULD BE SERVED BY LIMITING EACH CONCERN TO ONE CONTRACT. THE DEPARTMENT OF THE INTERIOR CONCURRED WITH THE BUREAU'S DETERMINATION. FOLLOWING THAT CONCLUSION, AWARDS WERE MADE TO HITACHI AND ENGLISH ELECTRIC COMPANY, THE LOW BIDDERS RESPECTIVELY ON THE CLEAR CREEK AND TRINITY RIVER PROJECTS. THE LOW BID OF HITACHI ON THE FLAMING GORGE PROJECT WAS DISREGARDED, AND AWARD MADE TO THE SECOND LOW BIDDER, THE JAMES LEFFEL AND COMPANY. ON THE REMAINING INVITATION FOR THE TURBINES TO BE INSTALLED IN THE SPRING CREEK POWERPLANT, THE TWO LOWER BIDS OF HITACHI AND ENGLISH ELECTRIC COMPANY WERE DISREGARDED IN FAVOR OF THE THIRD LOW BIDDER, NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY.
A SOMEWHAT SIMILAR SITUATION EXISTED WITH RESPECT TO THE PROPOSAL SUBMITTED BY YOUR CORPORATION, SINCE YOU CONTEMPLATED OBTAINING A SUBSTANTIAL PERCENTAGE OF THE COMPONENT PARTS FROM A FOREIGN SUBCONTRACTOR, EITHER IN BELGIUM OR AUSTRIA. SINCE YOUR FIRM PRESENTLY IS IN PRODUCTION ON A CONTRACT AWARDED ON APRIL 12, 1960, FOR EIGHT HYDRAULIC TURBINES FOR INSTALLATION IN THE GLEN CANYON POWERPLANT, AND SINCE, FOR THE FIRST TIME, CERTAIN RELATED PARTS OF THE END PRODUCT ARE TO BE FURNISHED BY A FOREIGN COMPANY, INEXPERIENCED IN BUREAU SPECIFICATIONS, THE ADMINISTRATIVE OFFICE WAS RELUCTANT TO AWARD A SECOND CONTRACT TO YOUR FIRM UNTIL IT HAS BEEN DEMONSTRATED THAT TURBINES CAN BE PRODUCED IN FULL COMPLIANCE WITH THE SPECIFICATIONS UNDER SUCH ARRANGEMENTS.
YOUR LETTER OF OCTOBER 18, 1960, CONTENDS, IN SUBSTANCE, THAT THE BUREAU'S ACTION ON YOUR PROPOSALS WAS DISCRIMINATORY; THAT THERE IS NO FACTUAL BASIS FOR VIEWING YOUR BIDS, WHICH CONTEMPLATE USING, IN PART, COMPONENTS OF FOREIGN MANUFACTURE, IN THE SAME LIGHT AS FIRMS INEXPERIENCED WITH BUREAU SPECIFICATIONS; AND, THAT TECHNICALLY, YOU COULD COMPLY WITH THE ANNOUNCED POLICY OF THE ADMINISTRATIVE OFFICE OF LIMITING ONE AWARD EACH TO NEW SOURCES, BY PRODUCING THE TURBINES HERE INVOLVED IN A DIFFERENT DIVISION OF YOUR CORPORATION, WITH DIFFERENT SUBCONTRACTORS FROM THOSE FABRICATING THE GLEN CANYON TURBINES.
WE HAVE GIVEN CAREFUL STUDY TO THE REASONS GIVEN BY THE DEPARTMENT OF THE INTERIOR FOR THE AWARDS MADE, AND WE HAVE TODAY ADVISED THE SECRETARY OF THE INTERIOR THAT THE CONSIDERATIONS WHICH WERE USED AS A BASIS FOR MAKING THE AWARDS ARE NOT COMPATIBLE WITH THE REQUIREMENTS FOR FEDERAL ADVERTISED PROCUREMENT. WHILE THE AWARDS ON THE FLAMING GORGE AND SPRING CREEK PROJECTS WERE NOT MADE TO THE LOWEST BIDDER, WE DO NOT FEEL THAT IT WOULD NOW BE IN THE BEST INTEREST OF THE UNITED STATES TO QUESTION THE VALIDITY OF THOSE CONTRACTS. SINCE THE TWO PROJECTS ON WHICH YOU BID WERE AWARDED TO THE LOWEST BIDDER, WE CANNOT QUESTION THE VALIDITY OF THOSE AWARDS. ACCORDINGLY, YOUR PROTEST MUST BE REJECTED.