B-130412, OCT. 22, 1957

B-130412, OCT. 22, 1957

TO CARL L. SHIPLEY, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 7, 1957, SUBMITTED ON BEHALF OF HEYER PRODUCTS COMPANY, WITH REGARD TO OUR DECISION OF JUNE 13, 1957 (36 COMP. GEN. 809), AFFIRMED BY OUR DECISION OF OCTOBER 2, 1957, HOLDING THAT THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE AIR FORCE PURSUANT TO INVITATION FOR BIDS NO. 33-600-57-96, ISSUED NOVEMBER 27, 1956, WAS NOT LEGALLY INVALID.

YOU POINT OUT THAT IN YOUR LETTER OF AUGUST 30, 1957, REQUESTING RECONSIDERATION OF OUR DECISION OF JUNE 13, 1957, YOU STATED:

"I FURTHER CALL TO YOUR ATTENTION THAT THE HEYER PROTEST OF JANUARY 18, 1957, RESTATED IN THE 5TH PARAGRAPH THEREOF THAT THE SPECIFICATIONS WERE INCONSISTENT AND INADEQUATE. SENATE REPORT NO. 1111, REFERRED TO ABOVE CONCLUDES ON PAGE 19, IN PARAGRAPH 3, THAT THE SPECIFICATIONS WERE CHANGED ON THE 39TH DAY OF THE 30-DAY RESPONSE PERIOD. SECTION 3 (C) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, AS AMENDED, (41 U.S.C.A. 152 C. 69 STAT. 551) PROVIDES THAT ANY AWARD OF A CONTRACT UNDER SPECIFICATIONS WHICH ARE INADEQUATE OR WHICH DO NOT PERMIT FULL AND FREE COMPETITION SHALL BE INVALIDATED AND REJECTED. IT SEEMS CLEAR THAT UNDER THE FACTS DEVELOPED AT THE SENATE HEARING AND THROUGH STATEMENTS OF AIR FORCE OFFICIALS THE AWARD OF THE G-1 POWER SUPPLY CONTRACT TO FEDERAL TELEPHONE IS INVALID.'

THE CITED PARAGRAPH OF YOUR LETTER OF JANUARY 18, 1957, STATED:

"HEYER FURTHER PROTESTS THE AWARD OF THE ABOVE CONTRACT ON THE GROUNDS THAT THE SPECIFICATIONS INCLUDED INCONSISTENT REQUIREMENTS WHICH WERE IMPOSSIBLE OF MEETING UNLESS IT WERE KNOWN THAT A WAIVER OR DEVIATION COULD BE OBTAINED. THE SPECIFICATIONS IN ONE PLACE CALLED FOR SELENIUM RECTIFIERS, WHILE IN ANOTHER PLACE THE SPECIFICATIONS REQUIRED RECTIFIERS OF A TYPE WHICH WOULD NOT GENERATE TOXIC OR ACRID SMOKE. WHEN HEYER WENT TO WESTINGHOUSE AND INTERNATIONAL RECTIFIER, TWO OF THE LARGEST IN THE BUSINESS, TO INQUIRE ABOUT PURCHASE OF THIS COMPONENT, HE WAS ADVISED THAT IT WAS IMPOSSIBLE TO SUPPLY A SELENIUM RECTIFIER WHICH WOULD NOT GENERATE TOXIC OR ACRID SMOKE IN THE EVENT OF AN OVERLOAD OR BLOW-OUT. (SEE ATTACHED LETTER). UPON FURTHER INQUIRY FROM THE UNITED STATES HEALTH SERVICE HEYER LEARNED THAT SELENIUM IS EXTREMELY TOXIC UNDER CERTAIN CONDITIONS AND THAT THE SELENIUM OXIDES PRODUCED AS A RESULT OF A SHORT CIRCUIT IN AIR BORNE EQUIPMENT MIGHT WELL OVERCOME MILITARY PERSONNEL, RESULTING IN A MAJOR DISASTER. HOWEVER, HEYER KNEW FROM EXPERIENCE THAT IT WOULD BE POSSIBLE TO USE SILICON RECTIFIERS WHICH WERE PERFECTLY SAFE, BUT WHICH WERE FAR MORE EXPENSIVE. IN VIEW OF THIS INFORMATION, HEYER FOUND IT UTTERLY IMPOSSIBLE TO MAKE A SENSIBLE BID.'

IN OUR DECISION OF JUNE 13, 1957, WE NOTED THAT THE REPORT RECEIVED FROM THE DEPARTMENT OF THE AIR FORCE ON THE MATTER STATED THAT TESTS CONDUCTED BY THE WRIGHT AIR DEVELOPMENT CENTER INDICATED THAT THE USE OF SELENIUM RECTIFIERS IS COMPATIBLE WITH THE REQUIREMENT FOR NON TOXICITY CONTAINED IN THE APPLICABLE SPECIFICATION. WE FURTHER STATED:

"WHETHER SELENIUM RECTIFIERS CAN BE USED WITHOUT THE POSSIBILITY OF EMITTING ACRID SMOKE THAT WOULD ADVERSELY AFFECT PERSONNEL IS A QUESTION OF FACT AND IN SUCH MATTERS WE HAVE NO ALTERNATIVE BUT TO ACCEPT THE ADMINISTRATIVE FINDINGS OF FACT, IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY. 3 COMP. GEN. 51; B-128917, OCTOBER 2, 1956.'

IN OUR LETTER OF OCTOBER 2, 1957, WE HELD THAT THE MODIFICATIONS TO THE SPECIFICATIONS MADE THE DAY PRIOR TO SCHEDULED BID OPENING WERE OF A CLARIFYING NATURE AND DID NOT EFFECT ANY SUBSTANTIVE CHANGE IN THE CONTRACT REQUIREMENTS. WE CONCLUDED:

"WHILE WE WOULD BE INCLINED TO REGARD A LAST-MINUTE CHANGE IN SPECIFICATIONS WITH DISFAVOR IF SUCH CHANGE COULD REASONABLY BE REGARDED AS TENDING IN FAVOR A PARTICULAR BIDDER OR CLASS OF BIDDERS, OR AS MAKING ANY SIGNIFICANT CHANGE IN THE SPECIFICATIONS WHICH COULD REASONABLY BE EXPECTED TO AFFECT THE RESPONSIVENESS OR THE PRICE OF ANY OF THE BIDS, IT DOES NOT APPEAR THAT THE CHANGE IN THIS CASE COULD HAVE ANY SIGNIFICANT EFFECT--- AT ANY RATE NONE IS IN FACT ALLEGED--- AND, THEREFORE, WE PERCEIVE NO LEGAL OBJECTION THERETO.'

IN VIEW OF THE FOREGOING, WE CANNOT AGREE THAT THE AWARD IN QUESTION VIOLATED THAT PORTION OF 10 U.S.C. 2305 (A) WHICH PROVIDES THAT "THE SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY AND SERVICES NEEDED BY THE AGENCY CONCERNED.'

IN YOUR LETTER YOU ALSO STATE:

"* * * WE HAVE LEARNED THAT THE ACTUAL PRODUCTION UNDER THIS CONTRACT, WHICH WAS ALLEGED BY THE AIR FORCE TO BE OF SUCH PRESSING URGENCY THAT IT COULD NOT BE READVERTISED, IS FAR BEHIND AND THAT THE FEDERAL TELEPHONE AND RADIO COMPANY, WHICH RECEIVED THE CONTRACT, IS NOT MEETING ITS SCHEDULE. TO DATE ONLY 87 UNITS HAVE BEEN DELIVERED TO THE AIR FORCE, AGAINST A CONTRACT FOR SEVERAL THOUSAND. UNDER THESE CIRCUMSTANCES, IT SEEMS IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO REQUIRE THE AIR FORCE TO COMPLY WITH THE SECTION OF THE ARMED SERVICES PROCUREMENT ACT REFERRED TO ABOVE AND TERMINATE THIS CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT OR FOR DEFAULT AND READVERTISE IT SO THAT THE GOVERNMENT CAN GAIN THE BENEFIT OF FULL AND FREE COMPETITION. * * *"

WE HAVE BEEN ADVISED INFORMALLY THAT THE CONTRACTOR IS NOT MEETING THE DELIVERY SCHEDULE BECAUSE OF, AMONG OTHER REASONS, A STRIKE AT ONE OF ITS PLANTS. WHETHER A CONTRACT SHOULD BE TERMINATED, EITHER FOR CONVENIENCE OR FOR DEFAULT, IS A MATTER FOR ADMINISTRATIVE DETERMINATION; THE DECISION DOES NOT REST WITH OUR OFFICE. 34 COMP. GEN. 74, 76; 20 COMP. GEN. 358, 360; 18 COMP. GEN. 826, 828, THEREFORE, SINCE WE HAVE CONCLUDED THAT THE AWARD WAS NOT LEGALLY INVALID, ANY DECISION TO TERMINATE THE CONTRACT MUST BE MADE BY THE DEPARTMENT OF THE AIR FORCE.