B-158953, JUN. 17, 1968

B-158953, JUN. 17, 1968

TO SILENT HOIST AND CRANE CO., INC.:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 2, 1968, PROTESTING AGAINST ALLEGED SOLE SOURCE PURCHASES BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), DEFENSE SUPPLY AGENCY, RICHMOND, VIRGINIA, FROM HYSTER CO. (HYSTER), OF 15,000-POUND CAPACITY FORKLIFT GAS TRUCKS.

THE PROCUREMENT ITEM WAS THE SUBJECT OF AN EARLIER PROTEST REGISTERED BY YOU AGAINST SEVERAL SIMILAR PURCHASES BY DGSC EARLY IN 1966. IN OUR DECISION B-158953, JUNE 23, 1966, WE INFORMED YOU THAT THE PURCHASES, WHICH HAD BEEN MADE FOR DEPARTMENT OF THE ARMY REQUIREMENTS IN SOUTHEAST ASIA, HAD BEEN AUTHORIZED PURSUANT TO THE NEGOTIATION AUTHORITY CONTAINED IN 10 U.S.C. 2304 (A) (13), RELATING TO STANDARDIZATION OF TECHNICAL EQUIPMENT AND INTERCHANGEABILITY OF PARTS, AND THAT THE DETERMINATIONS TO NEGOTIATE, WHICH WERE ISSUED IN MARCH 1966, WERE FINAL UNDER 10 U.S.C. 2310. WE FURTHER INFORMED YOU THAT COMPETITIVE PROCUREMENT PROCEDURES WOULD BE USED FOR ITEMS WHICH WERE INTENDED FOR USE AT PLACES OTHER THAN VIETNAM. FOR THESE AND FOR THE OTHER REASONS SET FORTH IN OUR DECISION, WE CONCLUDED THAT THE PROCUREMENTS HAD BEEN CONDUCTED IN ACCORDANCE WITH THE LAW AND THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND THAT WE WOULD NOT BE JUSTIFIED IN QUESTIONING EITHER THE STANDARDIZATION ACTION OR NEGOTIATION WITH ONLY ONE SOURCE IN EACH OF THE PROCUREMENTS.

IN YOUR LETTER OF APRIL 2, YOU ALLEGE THAT SUBSEQUENT TO THE ISSUANCE OF OUR DECISION SEVERAL HUNDRED MORE OF THE TRUCKS HAVE BEEN PROCURED BY THE DGSC ON A SOLE SOURCE BASIS FROM HYSTER, EACH TIME "ONLY FOR USE IN SOUTHEAST ASIA.' YOU FURTHER ALLEGE THAT THE DEPARTMENT OF THE ARMY HAS NOT PROCURED ANY OTHER 15,000-POUND FORKLIFT TRUCK FOR USE WITHIN THE CONTINENTAL UNITED STATES OR ANYWHERE ELSE IN THE WORLD. ACCORDINGLY, YOU CONTEND THAT THE DETERMINATION AND FINDINGS ISSUED BY THE ASSISTANT SECRETARY OF THE ARMY IN SUPPORT OF THE PURCHASES FOR SOUTHEAST ASIA WAS FAULTY IN THAT THE TRUCKS PROCURED WERE IN FACT FOR USE NOT ONLY IN SOUTHEAST ASIA BUT WORLDWIDE.

YOU ALSO STATE THAT THE END ITEM IS BASICALLY A COMMERCIAL TRUCK WHICH IS CURRENTLY MANUFACTURED BY YOU AND BY AT LEAST FOUR OTHER UNITED STATES MANUFACTURERS AND THAT THE DEPARTMENT OF DEFENSE HAS STANDARDIZED MANY OF THE COMPONENTS OF THE TRUCK UNDER MILITARY SPECIFICATION MIL-T-21870 OF MAY 24, 1966. ACCORDINGLY, AND ON THE BASIS THAT THE TRUCKS WHICH HAVE BEEN PROCURED FROM HYSTER DO NOT HAVE SUCH STANDARDIZED PARTS AND SINCE THE DETERMINATION AND FINDINGS REGARDING STANDARDIZATION WERE BASED ON AN OBSOLETE UNIT, YOU CLAIM THAT THE ADDITIONAL LOGISTIC SUPPORT HAS CAUSED INCREASED COST TO THE GOVERNMENT.

FINALLY, YOU CONTEND THAT THE USE OF SOLE SOURCE NEGOTIATED CONTRACTS HAS INCREASED THE COST TO THE GOVERNMENT OF THE PROCUREMENT ITEM BEYOND WHAT THE COST WOULD HAVE BEEN UNDER COMPETITIVE BIDDING AND THAT IN ORDER TO PROCURE THE BEST AND LATEST STANDARDIZED EQUIPMENT THE DEPARTMENT OF THE ARMY MUST BE MADE TO RETURN THE ITEM TO OPEN COMPETITION AMONG THE VARIOUS MANUFACTURERS. THEREFORE, YOU REQUEST THAT OUR OFFICE INSTRUCT THE DEPARTMENTS OF DEFENSE AND ARMY TO CHANGE THE CURRENT PROCUREMENT PROCEDURE, AND USE COMPETITIVE BIDDING TO OBTAIN THE BEST EQUIPMENT AT THE LOWEST COST.

A REPORT DATED MAY 8, 1968, FROM THE DEFENSE GENERAL SUPPLY CENTER CONTRACTING OFFICER READS, IN PERTINENT PART, AS FOLLOWS:

"SILENT HOIST AND CRANE COMPANY, INC., IS QUESTIONING THE DEPARTMENT OF THE ARMY'S STANDARDIZATION DECISION ON THE 15,000 POUND CAPACITY FORKLIFT TRUCK. THIS STANDARDIZATION PROGRAM WAS REVIEWED BY THE COMPTROLLER GENERAL TO THE EXTENT DESIRED AND DISCUSSED IN HIS DECISION OF 23 JUNE 1966 UNDER B-158953. SINCE THE DATE OF THAT DECISION, THIS CENTER HAS ONLY ENTERED INTO ONE ADDITIONAL CONTRACT FOR THE 15,000 POUND CAPACITY, GAS FORK LIFT TRUCKS, CONTRACT NO. DSA 400-67-C-A261, UNDER THE STANDARDIZATION PROGRAM, ALTHOUGH IT DID EXERCISE AN OPTION FOR 150 UNITS UNDER THE CONTRACT THAT WAS IN EXISTENCE AT THE TIME THE DECISION B-158953 WAS ISSUED. THE DEPARTMENT OF THE ARMY HAS VERIFIED THAT THE UNITS PURCHASED UNDER THE PREVIOUS CONTRACT WERE SHIPPED TO SEA, OR IN SUPPORT OF SEA.

"CONTRACT DSA 400-67-C-A261, DATED 30 JUNE 1967, COVERED 189 TRUCKS PARTLY IDENTIFIED AS HYSTER MODEL H150C (EX. 1). THE CONTRACT WAS NEGOTIATED TO FILL THE REQUIREMENTS OF MIPR A1-7-TT807-01-EG-Z3 (EX. 2). THE AUTHORITY TO NEGOTIATE THE INDIVIDUAL CONTRACT FOR THE HYSTER COMPANY MODEL H150C IS SHOWN IN A DETERMINATION AND FINDINGS DATED 19 MAY 1967, SIGNED BY ROBERT A. BROOKS, ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS). AS IN THE DETERMINATION AND FINDINGS PREVIOUSLY REVIEWED IN COMPTROLLER GENERAL'S DECISION NO. 158953, THIS DETERMINATION AND FINDINGS STATES THAT THE ASSISTANT SECRETARY HAD DETERMINED THAT THE EQUIPMENT CONSTITUTES TECHNICAL EQUIPMENT, THAT STANDARDIZATION OF SUCH EQUIPMENT AND INTERCHANGEABILITY OF ITS PARTS ARE NECESSARY IN THE PUBLIC INTEREST AND THAT THE PROCUREMENT OF SUCH EQUIPMENT AND OF ITS PARTS BY NEGOTIATION IS NECESSARY TO ASSURE THAT STANDARDIZATION AND INTERCHANGEABILITY. THE DETERMINATION AND FINDINGS EXTENDS FOR A PERIOD OF 12 MONTHS FROM ITS DATE. A COPY OF THE DETERMINATION AND FINDINGS, TOGETHER WITH SUPPORTING DATA, IS ATTACHED (EX. 3). THE SUPPORTING DATA MAKES IT CLEAR THAT THE ITEMS ARE TO BE USED FOR SUPPORT OF UNITED STATES ARMY OPERATIONS IN VIETNAM. THE CONTRACT PRICE OF $9,928.00 F.O.B. ORIGIN, PER TRUCK WAS ANALYZED PRIOR TO AWARD AND IT WAS FOUND THAT SUCH PRICE WAS REASONABLE BASED ON A COMPARISON OF SIMILAR COMMERCIAL ITEMS SOLD IN SUBSTANTIAL QUANTITIES TO THE GENERAL PUBLIC (EX. 4). THE DELIVERY DATE FOR THE FINAL INCREMENT OF 38 TRUCKS IS ON OR BEFORE 31 MAY 1968. HOWEVER, THE RECORDS OF THIS CENTER SHOW THAT 179 OF THE 189 TRUCKS HAVE ALREADY BEEN SHIPPED. THE RECORDS OF THIS CENTER ALSO SHOW THAT ALL ITEMS WERE SHIPPED TO -TRANSPORTATION OFFICER, SHARPE ARMY DEPOT, LATHROP, CALIFORNIA- MARKED FOR -A58202 7031 6015-. THE DEPARTMENT OF THE ARMY HAS VERIFIED THAT 154 TRUCKS HAVE BEEN POSTED ON SHARPE ARMY DEPOT'S REPORT; THAT 27 OF THE TRUCKS HAVE BEEN TRANSHIPPED TO VIETNAM; 6 TRUCKS HAVE BEEN SHIPPED TO OKINAWA, 4 TRUCKS HAVE BEEN SHIPPED TO THAILAND AND THE BALANCE OF THE TRUCKS WILL BE SHIPPED TO SEA IN ACCORDANCE WITH THE ARMY'S -CLOSED LOOP SUPPORT PROGRAM.- (EX. 5).

"SINCE 23 JUNE 1966, THIS CENTER HAS MADE TWO OTHER CONTRACTS THAT INCLUDE 15,000 POUND CAPACITY TRUCKS, BEING PURCHASED TO FILL MIPR'S ISSUED BY THE DEPARTMENT OF THE ARMY. ONE OF THESE CONTRACTS COVERED TWO TRUCKS FOR USE IN KOREA. THE PROCUREMENT WAS MADE THROUGH FORMAL ADVERTISING PROCEDURES WITH HYSTER COMPANY AND SILENT HOIST AND CRANE COMPANY BEING THE BIDDERS. HYSTER COMPANY RECEIVED THE AWARD, DATED 1 DECEMBER 1967, UNDER CONTRACT NO. DSA 400-68-C-2917 AS THE LOW BIDDER. THE CONTRACT CONTAINED OPTION PROVISIONS AND ONE FURTHER TRUCK WAS PURCHASED THROUGH EXERCISE OF THE OPTION, TO BE DELIVERED TO VALPARAISO, CHILE, TO FILL A MAP PROCUREMENT REQUESTED UNDER AN ARMY MIPR. THE OTHER CONTRACT NO. DSA 400-68-C-3880, IS DATED 19 JANUARY 1968 AND COVERS 116 TRUCKS FOR USE BY THE ARMY, NAVY, MARINES AND AIR FORCE (EX. 6). THIS CONTRACT WAS ALSO EFFECTED THROUGH USE OF FORMAL ADVERTISING PROCEDURES. SILENT HOIST AND CRANE COMPANY, INC., WAS ONE OF THE SIX BIDDERS. AWARD WAS MADE TO BAKER-YORK, INC., SUBSIDIARY OF OTIS ELEVATOR, WEST MEMPHIS, ARKANSAS AS THE LOW BIDDER. UNIT PRICES RANGED FROM $9,625.00 TO $10,585.00, DEPENDING PRIMARILY UPON THE AMOUNT OF FREIGHT INCLUDED IN THE UNIT PRICE. THE ORIGINAL ARMY REQUIREMENT INCLUDED IN THIS CONTRACT WAS ONE TRUCK FOR USE IN FT. BRAGG, NORTH CAROLINA. HOWEVER, THE CONTRACT CONTAINED OPTION PROVISIONS AND THREE ADDITIONAL TRUCKS FOR DELIVERY TO QUITO, ECUADOR WERE PURCHASED AS MAP PROCUREMENTS ON MIPR'S ISSUED BY THE DEPARTMENT OF THE ARMY.

"THIS CENTER HAS ALSO ENTERED INTO FIVE ADDITIONAL CONTRACTS FOR A BASIC QUANTITY OF 165, 15,000 POUND CAPACITY, FORK LIFT TRUCKS TO FILL REQUIREMENTS OF THE NAVY, MARINES AND AIR FORCE, NUMBERED DSA 400-66-C 0620, DSA 400-67-C-0572, DSA 400-67-C-0660, DSA 400-67-C-5171 AND DSA 400- 68-C-0367. THE RECORDS OF THIS CENTER SHOW THAT THESE CONTRACTS WERE NEGOTIATED UNDER 10 U.S.C. 2304 (A) (2) BASED ON PRIORITY NUMBERS CITED IN THE REQUISITIONS AND THAT COMPETITION WAS SOUGHT IN EACH INSTANCE AND RECEIVED FOR FOUR OF THE CONTRACTS. SILENT HOIST AND CRANE COMPANY, INC., SUBMITTED NO OFFER IN TWO INSTANCES, EXPLAINING IN ONE INSTANCE THAT THE ITEM WAS SUITABLE BUT IT WAS ENGAGED IN OTHER WORK, AND IN ONE INSTANCE THAT IT DID NOT DESIRE TO SPEND TIME ON FRINGE- ITEMS-MANUALS AND PREPRODUCTION MODEL TESTING-AT THAT TIME. IN THE OTHER TWO INSTANCES, SILENT HOIST AND CRANE COMPANY, INC., SUBMITTED AN OFFER BUT WAS NOT LOW. THE CONTRACTS WERE MADE WITH HYSTER COMPANY AS THE ONLY OFFEROR IN ONE INSTANCE AND THE LOW OFFEROR IN THE OTHER INSTANCES.

"IN SUMMARY, THIS CENTER HAS ENTERED INTO ONLY ONE ADDITIONAL CONTRACT ON A SOLE SOURCE BASIS TO FULFILL THE REQUIREMENTS OF THE DEPARTMENT OF THE ARMY'S STANDARDIZATION PROGRAM. NEGOTIATION OF THE CONTRACT WAS AUTHORIZED BY AN APPROPRIATE DETERMINATION AND FINDINGS AND THE PRICE WAS FOUND TO BE REASONABLE BASED ON COMPARISON WITH PRICES OF SIMILAR COMMERCIAL ITEMS SOLD IN SUBSTANTIAL QUANTITIES TO THE GENERAL PUBLIC. THE EXTENT THAT THE ITEMS HAVE BEEN PLACED IN USE THEY ARE IN FACT BEING USED IN THE SEA AREA. IN ALL OTHER PROCUREMENTS OF THE 15,000 POUND CAPACITY TRUCK, THIS CENTER SOUGHT COMPETITION AND RECEIVED IT IN ALL INSTANCES BUT ONE. * * *"

BASED ON THE CONTRACTING OFFICER'S STATEMENTS, WHICH WE MUST ACCEPT AS CORRECT IN THE ABSENCE OF EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THEIR CORRECTNESS, WE MUST CONCLUDE THAT THE DGSC HAS NOT DISREGARDED THE COMPETITIVE BIDDING REQUIREMENTS OF 10 U.S.C. 2304 (A) AND ASPR 2- 102.1 (A), AND THAT THERE HAS BEEN NO ABUSE OF THE NEGOTIATION AUTHORITY CONTAINED IN 10 U.S.C. 2304 (A) (13). FURTHER, IN VIEW OF THE PROXIMITY OF THE PRICE OF $9,928 PER UNIT WHICH WAS OBTAINED ON THE ONE NONCOMPETITIVE NEGOTIATED PROCUREMENT FROM HYSTER FOR SOUTHEAST ASIA TO THE UNIT PRICES RANGING FROM $9,625 TO $10,585 QUOTED FOR THE ADVERTISED PROCUREMENT OF SIMILAR EQUIPMENT WHICH WAS AWARDED TO ANOTHER MANUFACTURER IN JANUARY 1968, WE ARE UNABLE TO CONCUR WITH YOUR CONTENTION THAT THE PURCHASE FROM HYSTER HAS RESULTED IN GREATER COST TO THE GOVERNMENT THAN A COMPETITIVE PURCHASE.

AS TO THE FACT THAT A NEW STANDARDIZATION PROGRAM WAS PUT INTO EFFECT IN MAY 1966, IT APPEARS THAT SUCH ACTION WAS TAKEN AFTER THE HYSTER TRUCK HAD ALREADY BEEN PROCURED IN QUANTITY FOR SHIPMENT TO SOUTHEAST ASIA. ACCORDINGLY, TO INSIST NOW THAT THE DGSC COMMENCE TO PROCURE DIFFERENT MAKES OR MODELS OF TRUCKS AND PARTS FOR USE IN SUCH AREA WOULD BE TO DEFEAT THE PURPOSE FOR WHICH STANDARDIZATION UNDER 10 U.S.C. 2304 (A) (13) WAS AUTHORIZED IN THE FIRST INSTANCE; I.E., TO INSURE THAT THE VEHICLES WOULD ALL BE OF THE SAME TYPE AND MANUFACTURE AND THAT THE PARTS WOULD BE INTERCHANGEABLE. FURTHER, AS THE USING AGENCY THE DEPARTMENT OF THE ARMY HAS THE PRIMARY RESPONSIBILITY FOR DETERMINING THE MINIMUM NEEDS OF THE GOVERNMENT AND WHETHER ITEMS OFFERED WILL MEET THOSE NEEDS. WE SEE NOTHING OF RECORD WHICH WOULD WARRANT QUESTIONING THE DEPARTMENT'S DETERMINATION IN THIS CASE THAT IT REQUIRES FOR USE IN VIETNAM A TRUCK OF THE TYPE BEING PROCURED FROM HYSTER AND THAT SUCH TRUCK, THOUGH IT MAY NOT BE AS UPDATED AS THE COMMERCIAL TRUCKS TO WHICH YOU REFER, WILL MEET SUCH NEEDS.

IN ADDITION, THE RECORD DOES NOT SUPPORT YOUR CHARGE THAT THE TRUCKS WHICH HAVE BEEN PROCURED PURSUANT TO 10 U.S.C. 2304 (A) (13) FOR USE IN SOUTHEAST ASIA ARE INTENDED FOR USE WORLDWIDE, ALSO. RATHER, THE RECORD SHOWS THAT OF THE 189 UNITS COVERED BY THE 1967 HYSTER CONTRACT, 37 UNITS HAVE BEEN TRANSSHIPPED FROM SHARPE ARMY DEPOT, LATHROP, CALIFORNIA, TO VARIOUS POINTS IN SOUTHEAST ASIA, AND THE REMAINING UNITS WILL BE SHIPPED ULTIMATELY TO SOUTHEAST ASIA FROM THE SAME DEPOT IN ACCORDANCE WITH THE ARMY'S "CLOSED LOOP SUPPORT PROGRAM" FOR VIETNAM.

FOR THE REASONS STATED, WE SEE NO LEGAL BASIS FOR OBJECTION TO THE PROCEDURES WHICH HAVE BEEN EMPLOYED BY THE DGSC IN PROCURING THE TRUCKS AND PARTS, AND, WE THEREFORE MUST DENY BOTH YOUR PROTEST AND YOUR REQUEST THAT WE INSTRUCT THE DEPARTMENTS OF DEFENSE AND ARMY TO CHANGE PROCEDURES IN PROCURING SIMILAR ITEMS FOR SIMILAR USE IN THE FUTURE.