B-140361, FEB. 3, 1960

B-140361, FEB. 3, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED JANUARY 15, 1960, FROM THE CHIEF, CONTRACTS BRANCH, PROCUREMENT DIVISION, FURNISHING A REPORT RELATIVE TO THE REQUEST OF GAYSTON CORPORATION FOR RECONSIDERATION OF OUR DECISION TO YOU OF NOVEMBER 10, 1959, CONCERNING THE BID OF CENTURY TOOL COMPANY SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. ORD-33-079-59 199 ISSUED BY ROSSFORD ORDNANCE DEPOT, TOLEDO, OHIO.

THE INVITATION REQUESTED BIDS ON A QUANTITY OF CYLINDER COMPRESSION TESTERS, IN ACCORDANCE WITH MILITARY SPECIFICATION T-13011B, DATED DECEMBER 11, 1958, WITH CERTAIN EXCEPTIONS. THE INVITATION PROVIDES FOR PREPRODUCTION TESTS IN ACCORDANCE WITH NOTE 8, PAGE 9, AS FOLLOWS:

"8. CONTRACTOR CONDUCTED TEST: A. THE CONTRACTOR WILL MANUFACTURE AN ACCEPTABLE PREPRODUCTION SAMPLE, TEST, AND SUBMIT A TEST REPORT TO THE GOVERNMENT IN ACCORDANCE WITH PERTINENT SPECIFICATIONS IN THE CONTRACT, WITHIN NINETY (90) DAYS AFTER AWARD. UTILIZING THE INFORMATION IN THE PREPRODUCTION SAMPLE. GOVERNMENT REVIEW TIME IS NOT CHARGEABLE TO THE CONTRACTOR'S TIME FOR SUBMISSION OF THE TEST REPORT. ANY CORRECTIONS OR ADJUSTMENTS REQUIRED DUE TO DISCREPANCIES FROM SPECIFICATION REQUIREMENTS SHALL BE ACCOMPLISHED AT NO COST TO THE GOVERNMENT WITHIN THE ABOVE TIME LIMITATIONS. THE ACCEPTED PREPRODUCTION SAMPLE WILL BE ACCEPTED AS A DELIVERABLE ITEM OF THE CONTRACT AFTER MODIFICATION AND REPAIRS, IF NECESSARY, HAVE BEEN COMPLETED.

"B. PREPRODUCTION INSPECTION AND TEST REPORT: PREPRODUCTION INSPECTIONS ARE THOSE TESTS PERFORMED ON A SAMPLE MODEL AFTER AWARD OF CONTRACT AND BEFORE PROCEEDING WITH QUANTITY MANUFACTURE, TO DETERMINE CONFORMANCE WITH THE SPECIFICATIONS. THE SAMPLE SHALL BE TESTED BY THE CONTRACTOR OR TESTING AGENCY APPROVED BY THE CONTRACTING OFFICER ADMINISTERING THE CONTRACT. PROVISIONS SHALL BE MADE FOR THE GOVERNMENT, IF IT ELECTS, TO WITNESS THE PREPRODUCTION TESTS. THE CONTRACTING OFFICER SHALL BE NOTIFIED TEN (10) DAYS PRIOR TO THE PREPRODUCTION TESTS.'

THE PURPOSE OF THE ABOVE PREPRODUCTION TEST REQUIREMENT IS TO MAKE SURE THAT THE CONTRACTOR CAN AND WILL PRODUCE AN ARTICLE MEETING THE SPECIFICATION REQUIREMENTS. OBVIOUSLY, THE TEST REQUIREMENTS ARE A BENEFIT TO THE GOVERNMENT. HOWEVER, THEY ARE ALSO OF GREAT BENEFIT TO THE CONTRACTOR IN THAT IT IS DETERMINED BEFORE HE COMMENCES FULL PRODUCTION WHETHER THE ARTICLE HE PROPOSES TO FURNISH MEETS THE REQUIREMENTS OF THE SPECIFICATION.

IT WAS HELD IN THE DECISION OF NOVEMBER 10, 1959, THAT THE BID OF CENTURY TOOL COMPANY SHOULD BE EVALUATED ON THE BASIS OF THE NET PRICE INCLUDING A $500 DEDUCTION WHICH WAS OFFERED IF THE TEST DATA PREVIOUSLY FURNISHED UNDER ANOTHER CONTRACT FOR THE IDENTICAL ITEM WOULD BE ACCEPTABLE.

GAYSTON CORPORATION REQUESTS RECONSIDERATION OF THE DECISION ON THE BASIS THAT:

1. THE REDUCTION OFFERED BY CENTURY MUST BE CONSIDERED AS NONRESPONSIVE SINCE WAIVER OF THE PREPRODUCTION REQUIREMENT WAS NOT OFFERED TO ALL BIDDERS.

2. ANY BIDDER CAN REDUCE HIS PRICE IF PERMITTED TO ELIMINATE PREPRODUCTION INSPECTION AND TEST REPORTS SINCE THE PROCEDURE IS EXPENSIVE AND TIME CONSUMING.

3. THE PREPRODUCTION TESTS WERE INCLUDED IN THE INVITATION TO ASSURE THE GOVERNMENT OF RECEIVING A QUALITY PRODUCT WHICH MEETS THE APPLICABLE SPECIFICATION AND TO WAIVE THIS REQUIREMENT DEFEATS THE VERY PURPOSE OF THE INCLUSION OF THE REQUIREMENT.

THE CHIEF OF ORDNANCE STATES THAT TO COMPLY WITH THE DECISION OF NOVEMBER 10, 1959, AND THE DIRECTIVE FROM THE ADJUTANT GENERAL, AGAMP (M) 400.12 (23 SEP 59) DCSLOG DATED 24 SEPTEMBER 1959, SUBJECT: USE OF BID EVALUATION FACTORS IN ARMY PROCUREMENT, IT WOULD BE NECESSARY TO ADVISE ALL BIDDERS THAT OFFERS FOR WAIVER OF THE TEST DATA REPORT WOULD BE CONSIDERED FROM THOSE BIDDERS WHO HAD PREVIOUSLY SUPPLIED THE TEST DATA REPORTS ON OTHER GOVERNMENT CONTRACTS, AND THAT ANY SUCH PROVISION APPEARS TO RECOGNIZE THAT SOME BIDDERS ENJOY A PREFERENTIAL POSITION TO THE DETRIMENT OF THE VAST MAJORITY OF BIDDERS, TENDS TO RESTRICT COMPETITION, AND TENDS TO DESTROY THE INTEGRITY OF THE BID SYSTEM.

WE AGREE THAT INVITATIONS FOR BIDS SHOULD ADVISE BIDDERS THAT, UNDER CERTAIN CIRCUMSTANCES, PREPRODUCTION TESTS OR OTHER QUALIFICATION PROCEDURES MAY BE WAIVED. WE BELIEVE THAT THIS IS PARTICULARLY NECESSARY AS BEING IN THE INTEREST OF THE GOVERNMENT WHERE THE DATA WOULD SERVE NO USEFUL PURPOSE. AS AN EXAMPLE, WE NOTE THAT SECTION 2 403.51 OF THE AIR FORCE PROCUREMENT INSTRUCTIONS SPECIFICALLY REQUIRES THAT,"WHEN SAMPLES ARE REQUIRED, THE IFB WILL ALSO PROVIDE THAT, IF A BIDDER HAS PREVIOUSLY OFFERED A PRODUCT WHICH HAS BEEN PREVIOUSLY PROCURED OR PREVIOUSLY TESTED SO THAT FURTHER TESTING OF A SAMPLE WOULD NOT ADD TO THE GOVERNMENT'S KNOWLEDGE OF THE ACCEPTABILITY OF THE PRODUCT, THE REQUIREMENT FOR FURNISHING SAMPLES MAY BE WAIVED FOR THAT BIDDER.' WE HAVE RECEIVED NO PROTESTS AGAINST THE APPLICATION OF THAT PROVISION, NOR ARE WE ADVISED THAT THE AIR FORCE HAS FOUND ANY SERIOUS DIMINUTION OF COMPETITION AS A RESULT THEREOF.

THE PRINCIPLE OF COMPETITIVE BIDDING WHICH REQUIRES THAT ALL BIDDERS HAVE AN EQUAL OPPORTUNITY TO COMPETE ON A COMMON BASIS DOES NOT REQUIRE THAT THE GOVERNMENT MUST SET UP A SYSTEM OF HANDICAPS OR ALLOWANCES TO EQUALIZE ALL DIFFERENCES BETWEEN BIDDERS RESULTING FROM SUCH EXTRANEOUS FACTORS AS LOCATION, FINANCIAL OR PHYSICAL RESOURCES, AND ACQUIRED SKILL, EXPERIENCE, AND KNOW-HOW.

AS INDICATED IN OUR PRIOR DECISION, WE DO NOT FEEL THAT ACCEPTANCE OF THE REDUCTION OFFERED BY THE CENTURY TOOL COMPANY INVOLVED A WAIVER OF A MATERIAL REQUIREMENT OF THE INVITATION; THE PROPOSAL WAS NOT STATED AS A REQUEST FOR A WAIVER, BUT RATHER AS A TENDER OF PREVIOUSLY PERFORMED TESTS ON THE IDENTICAL ARTICLE TO MEET THE TESTING REQUIREMENTS OF THE INVITATION. IN THE CIRCUMSTANCES, SINCE IT WAS OBVIOUS THAT LITERAL COMPLIANCE WITH THE INVITATION REQUIREMENT FOR TESTING "AFTER AWARD" WOULD SERVE NO USEFUL PURPOSE, IT IS OUR VIEW THAT THE WORDS "AFTER AWARD" DID NOT CONSTITUTE A MATERIAL PART OF THE TESTING REQUIREMENTS.

WE HAVE GIVEN CAREFUL CONSIDERATION TO THE ARGUMENTS ADVANCED BUT FIND NO LEGAL BASIS TO CHANGE THE CONCLUSION REACHED IN THE DECISION OF NOVEMBER 10, 1959.