B-143259, FEB. 13, 1961

B-143259, FEB. 13, 1961

TO WILMER AND BROUN:

REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 27, 1960, AND PRIOR CORRESPONDENCE FROM KECO INDUSTRIES, INC., PROTESTING AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN NEGOTIATING WITH CARRIER CORPORATION AS A SINGLE SOURCE FOR THE PROCUREMENT OF 60,000 BTU/HR., AIR CONDITIONERS. YOUR PROTEST IN THIS MATTER IS BASED UPON THE CONTENTION THAT VARIOUS MANUFACTURERS OF AIR CONDITIONERS, INCLUDING KECO, ARE CAPABLE OF PRODUCING ACCEPTABLE ITEMS IN AS SHORT A TIME AS CARRIER, AND THAT A DETERMINATION TO NEGOTIATE WITH CARRIER AS A SINGLE SOURCE UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (14) THEREFORE CANNOT BE JUSTIFIED.

OUR INVESTIGATION INTO THIS MATTER INDICATES THAT THE AIR CONDITIONERS HERE INVOLVED ARE OF A TYPE WHICH IS BEING DEVELOPED SPECIFICALLY TO MEET CERTAIN REQUIREMENTS OF THE SIGNAL CORPS. THE ORIGINAL DEVELOPMENT CONTRACT, NO. DA 44-009-ENG-3917, WAS AWARDED TO CARRIER ON MARCH 25, 1959, AND THE TWO TEST UNITS CALLED FOR BY THIS CONTRACT WERE DELIVERED BY CARRIER ON MARCH 24 AND MAY 26, 1960. HOWEVER, TESTS CONDUCTED ON THESE MODELS INDICATED DEFICIENCIES IN SEVERAL RESPECTS. CONTRACT NO. DA 44-009 -ENG-4636, CALLING FOR THE MANUFACTURE OF 14 ADDITIONAL UNITS UNDER SPECIFICATIONS REVISED TO CORRECT SUCH DEFICIENCIES, WAS THEREFORE AWARDED TO CARRIER ON JUNE 29, 1960. 13 OF THESE UNITS WERE DELIVERED TO THE SIGNAL CORPS AND TO ADLER ELECTRONICS CORPORATION FOR TEST AND INSTALLATION IN COMMUNICATIONS EQUIPMENT NOT CONNECTED WITH THE SYSTEM HERE INVOLVED. THE FOURTEENTH UNIT WAS DELIVERED TO THE CORPS OF ENGINEERS ON DECEMBER 22, 1960, AND HAS NOT YET BEEN FULLY TESTED AND FINALLY ACCEPTED BY THE CORPS OF ENGINEERS FOR ITS INTENDED USE.

THE CURRENT REQUIREMENT OF THE SIGNAL CORPS FOR PRODUCTION OF AN ADDITIONAL 46 UNITS APPEARS TO HAVE BEEN ESTABLISHED EARLY IN SEPTEMBER 1960. HOWEVER, SUCH REQUIREMENT WAS SUBJECT TO ADVICE DATED SEPTEMBER 20, 1960, FROM THE SIGNAL AIR DEFENSE ENGINEERING AGENCY THAT RECENT TESTS OF THE UNITS FURNISHED UNDER CONTRACT NO. DA-44-009 ENG-3917 INDICATED A NEED FOR INCORPORATING TWENTY ONE ADDITIONAL MODIFICATIONS INTO THE 46 UNITS REQUIRED. A PURCHASE REQUEST COVERING THE REQUIREMENT FOR 46 UNITS WAS RECEIVED BY THE ENGINEER SUPPLY CONTRACT OFFICE ON SEPTEMBER 23, 1960. AUTHORITY TO NEGOTIATE A CONTRACT WITH CARRIER UNDER 10 U.S.C. 2304 (A) (14) WAS REQUESTED ON SEPTEMBER 30, 1960, AND A DETERMINATION THAT THE ARTICLES TO BE PROCURED WERE OF A TECHNICAL AND SPECIALIZED NATURE, THAT PROCUREMENT BY FORMAL ADVERTISING AND COMPETITIVE BIDDING MIGHT REQUIRE DUPLICATION OF PREPARATION ALREADY MADE AND WOULD UNDULY DELAY THE PROCUREMENT OF SUCH ARTICLES, WAS MADE BY THE ASSISTANT SECRETARY (LOGISTICS) ON OCTOBER 12, 1960. NEGOTIATION OF A CONTRACT WITH CARRIER UNDER 10 U.S.C. 2304 (A) (14) WAS AUTHORIZED THEREIN.

FOLLOWING SUCH DETERMINATION AND APPARENTLY AS A RESULT OF THE REQUIREMENT FOR 21 MODIFICATIONS, AS SET OUT ABOVE, THE TIME REQUIRED TO INCORPORATE SUCH CHANGES INTO THE APPLICABLE SPECIFICATIONS, AND THE RESULTING NECESSITY FOR THE MANUFACTURER TO REDESIGN AND RETEST CERTAIN FEATURES OF THE 46 UNITS, DELIVERY DATES WERE EXTENDED TO BEGIN MARCH 1961. A REQUEST FOR A PROPOSAL, BASED UPON DELIVERY BEGINNING IN MARCH 1961 WAS THEREFORE ISSUED TO CARRIER ON NOVEMBER 30, 1960, WITH A CLOSING DATE OF DECEMBER 12, 1960. SUBSEQUENT REVISION OF THE DELIVERY SCHEDULE IN JANUARY 1961 INDICATES INITIAL DELIVERIES BEGINNING IN APRIL 1961 WILL BE ACCEPTABLE.

THE NECESSITY FOR DELIVERY SUBSTANTIALLY IN ACCORDANCE WITH THE JANUARY 1961 REVISION OF THE DELIVERY SCHEDULE DOES NOT APPEAR TO BE CONTESTED BY KECO, AND THE PRIMARY QUESTION TO BE DECIDED THEREFORE IS WHETHER THE ARMY WAS JUSTIFIED IN DETERMINING EITHER THAT CARRIER WAS THE ONLY MANUFACTURER CAPABLE OF MEETING SUCH SCHEDULE OR, IN THE EVENT THERE WAS SUBSTANTIAL EVIDENCE THAT NO MANUFACTURER COULD BE EXPECTED TO MEET SUCH SCHEDULE, WHETHER CARRIER COULD REASONABLY BE EXPECTED TO DELIVER ACCEPTABLE ARTICLES IN A LESSER TIME THAN ANY OTHER MANUFACTURER. AS INDICATED IN KECO'S LETTER DATED DECEMBER 21, 1960, A COPY OF WHICH WAS ENCLOSED WITH YOUR LETTER DATED DECEMBER 27, 1960, THE ABILITY OF MANUFACTURERS OTHER THAN CARRIER TO PRODUCE ACCEPTABLE ITEMS IN THE SAME TIME AS CARRIER IS DEPENDENT IN LARGE PART UPON THE NUMBER AND QUALITY OF THE DRAWINGS DELIVERED TO THE GOVERNMENT BY CARRIER UNDER THE PRIOR DEVELOPMENT CONTRACTS. IN THIS CONNECTION WE HAVE BEEN ADVISED BY THE DEPARTMENT OF THE ARMY UNDER DATE OF FEBRUARY 9, 1961, THAT CARRIER WAS REQUIRED TO DELIVER ENGINEERING DRAWINGS UNDER BOTH CONTRACTS 3917 AND 4636 WITHIN FOUR WEEKS AFTER DATE OF AWARD, AND THAT SUCH DRAWINGS WERE DELIVERED APPROXIMATELY ON SCHEDULE. HOWEVER, WE ARE ADVISED THAT THESE DRAWINGS ARE NOT ADEQUATE IN EITHER FORM OR CONTENT FOR USE IN COMPETITIVE BIDDING.

WITH RESPECT TO THE DETAILED ORIGINAL REPRODUCIBLE DRAWINGS (PRODUCTION TYPE DRAWINGS) NECESSARY TO COMPETITIVE BIDDING, WHICH CARRIER WAS ALSO OBLIGATED TO SUBMIT UNDER BOTH CONTRACTS, THE ARMY ADVISES THAT SUCH DRAWINGS HAVE NEVER BEEN DELIVERED UNDER CONTRACT 3917 SINCE DEFICIENCIES REVEALED BY TESTING THE TWO UNITS DELIVERED UNDER THAT CONTRACT WERE TO BE CORRECTED AND PRODUCTION TYPE DRAWINGS INCORPORATING SUCH CORRECTIONS WERE TO BE FURNISHED UNDER CONTRACT 4636. FURTHER, WE ARE ADVISED THAT, WHILE CONTRACT 4636 REQUIRED DELIVERY OF DETAILED ORIGINAL REPRODUCIBLE DRAWINGS BY DECEMBER 7, 1960, SUCH DRAWINGS WERE NOT DELIVERED UNTIL JANUARY 13, 1961.

WHILE THE FAILURE OF THE DEPARTMENT OF THE ARMY TO OBTAIN DRAWINGS IN STRICT ACCORDANCE WITH THE PROVISIONS OF CARRIER'S CONTRACTS MAY BE A PROPER SUBJECT FOR SEPARATE INVESTIGATION, THERE WOULD APPEAR TO BE LITTLE, IF ANY, DOUBT THAT THE DRAWINGS WHICH WERE IN THE POSSESSION OF THE DEPARTMENT ON OCTOBER 12, 1960, THE DATE SINGLE SOURCE NEGOTIATION WITH CARRIER WAS AUTHORIZED, WERE INADEQUATE AS TO BOTH QUANTITY AND QUALITY FOR USE IN A COMPETITIVE PROCUREMENT. IN VIEW THEREOF,AND WITHOUT ATTEMPTING TO PASS UPON WHETHER CHOICE OF A DIFFERENT NEGOTIATION AUTHORITY MAY HAVE BEEN MORE APPROPRIATE, IT WOULD APPEAR THAT THERE WAS ADEQUATE JUSTIFICATION ON OCTOBER 12, 1960, TO SUPPORT THE BASIC CONCLUSION THAT NEGOTIATION WITH CARRIER ON A SINGLE SOURCE BASIS WAS NECESSARY.

THE REMAINING QUESTION APPEARS TO BE WHETHER AN AWARD TO CARRIER AT THE PRESENT TIME, BASED UPON THE OCTOBER 12, 1960, DETERMINATION AND THE RESULTING SINGLE SOURCE NEGOTIATIONS, WOULD BE JUSTIFIED. IN THIS CONNECTION, THE DEPARTMENT'S ADVICE OF FEBRUARY 9, 1961, STATES THAT REVIEW AND REVISION OF THE DRAWINGS DELIVERED BY CARRIER ON JANUARY 13 WILL BE NECESSARY BEFORE SUCH DRAWINGS MAY BE CLASSIFIED AS PRODUCTION DRAWINGS SUITABLE FOR USE IN A COMPETITIVE PROCUREMENT. IN VIEW OF THE FACT THAT VARIOUS MODIFICATIONS REQUESTED BY THE SIGNAL CORPS AND REFERRED TO ABOVE ARE TO BE INCLUDED IN THE ITEMS CURRENTLY REQUIRED, THE REVIEW AND REVISION OF CARRIER'S DRAWINGS, TOGETHER WITH OTHER PROCEDURES INCIDENT TO OBTAINING COMPETITIVE BIDS OR PROPOSALS, WOULD NECESSARILY RESULT IN SUBSTANTIAL ADDITIONAL DELAY IF THE PROCUREMENT IS NOW TO BE ACCOMPLISHED ON A COMPETITIVE BASIS. SINCE IT APPEARS THAT SUCH FURTHER DELAY WOULD ADVERSELY AFFECT THE EFFICIENT AND ORDERLY COMPLETION OF OTHER ITEMS NECESSARY TO EARLY OPERATION OF THE SYSTEM HERE INVOLVED, WE ARE AWARE OF NO SOUND BASIS UPON WHICH THE AWARD OF A CONTRACT TO CARRIER AS A SINGLE SOURCE FOR THE CURRENT REQUIREMENT OF THESE ITEMS COULD NOW BE QUESTIONED.