B-171659, NOV 15, 1971

B-171659, NOV 15, 1971

BID PROTEST - REPURCHASE PROCUREMENT - BID BY DEFAULT CONTRACTOR CONCERNING PROTEST BY SECOND LOW BIDDER, HENRY PRODUCTS COMPANY, INC., AGAINST AWARD OF A CONTRACT TO THIRD LOW BIDDER, TELEDYNE-INET, UNDER AN IFB ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHIL., PA., FOR PURCHASE OF MOBILE ELECTRIC POWER PLANTS, A REPURCHASE AGAINST THE ACCOUNT OF PROTESTANT. IN ORDER TO DETERMINE WHETHER PROTESTANT'S BID WAS PROPERLY REJECTED PURSUANT TO 27 COMP. GEN. 343 (1927) AND B-165884, MAY 28, 1969, IT MUST BE FOUND TO HAVE BEEN A REPURCHASE OF HENRY'S DEFAULTED CONTRACT. WHETHER THE ITEMS CALLED FOR UNDER THE INSTANT CONTRACT ARE THE "SAME AS OR SIMILAR" TO THOSE CALLED FOR UNDER THE DEFAULTED CONTRACT IS THE DETERMINATIVE ISSUE AND IS PRESENTLY BEFORE THE ARMED SERVICE BOARD OF CONTRACT APPEALS, WHOSE DECISION IS FINAL ON ISSUES OF FACT. THEREFORE, A DECISION BY GAO AT THIS TIME WOULD BE PREMATURE AND INAPPROPRIATE.

TO ISRAEL & MANESS:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF HENRY PRODUCTS COMPANY, INCORPORATED, AGAINST AWARD OF A CONTRACT TO TELEDYNE-INET PURSUANT TO INVITATION FOR BIDS NO. N00156-71-B-0185, ISSUED BY THE NAVAL AIR ENGINEERING CENTER (NAEC), PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT INVITATION WAS ISSUED ON DECEMBER 1, 1970, WITH A BID OPENING DATE OF JANUARY 7, 1971, FOR THE PROCUREMENT OF 107 TYPE MMG-1 MOBILE ELECTRIC POWER PLANTS, IN ACCORDANCE WITH NAEC SPECIFICATION NO. AS-1921, REV. A, DATED SEPTEMBER 14, 1970. IT IS REPORTED THAT THE PROCUREMENT IS A REPURCHASE AGAINST THE ACCOUNT OF HENRY, WHOSE CONTRACT (NO. N00156-69-C -1116) FOR IDENTICAL ITEMS WAS TERMINATED FOR DEFAULT ON JULY 7, 1970. THREE BIDS WERE RECEIVED AND OPENED ON JANUARY 7, 1971. IRVIN INDUSTRIES, INCORPORATED, WAS THE LOW BIDDER, WITH HENRY AND TELEDYNE SECOND AND THIRD LOW, RESPECTIVELY.

BY TELEGRAM DATED JANUARY 11, 1971, TO OUR OFFICE, TELEDYNE PROTESTED AWARD TO IRVIN. PRIOR TO RESOLUTION OF THE PROTEST, IRVIN'S BID ACCEPTANCE PERIOD EXPIRED ON APRIL 26, 1971, AFTER IT REFUSED THE NAVY'S REQUEST FOR AN EXTENSION. BY LETTER DATED MAY 18, 1971, WE ADVISED THE SECRETARY OF THE NAVY AND TELEDYNE THAT IN VIEW THEREOF, WE WERE CLOSING OUR FILE ON THE LATTER'S PROTEST. SUBSEQUENT THERETO, IRVIN PROTESTED ANY AWARD AND REQUESTED CANCELLATION OF THE SUBJECT INVITATION. WE DENIED IRVIN'S PROTEST ON JUNE 21, 1971.

AS A RESULT OF THE ELIMINATION OF IRVIN FROM THE COMPETITION (SEE B 171659, JUNE 21, 1971), HENRY BECAME THE LOW BIDDER. ALTHOUGH A PRE AWARD SURVEY OF HENRY WAS BEGUN, NONE WAS COMPLETED BECAUSE THE CONTRACTING OFFICER BELIEVED HENRY INELIGIBLE FOR AWARD ON THE BASIS THAT THE PROCUREMENT WAS A REPURCHASE AGAINST THE ACCOUNT OF HENRY AND ITS BID PRICE WAS HIGHER THAN THE DEFAULTED CONTRACT PRICE CITING IN SUPPORT THEREOF OUR DECISIONS 27 COMP. GEN. 343 (1927), AND B-165884, MAY 28, 1969.

ALTHOUGH A PROTEST ON BEHALF OF HENRY WAS FILED WITH OUR OFFICE ON MAY 24, 1971, TELEDYNE WAS AWARDED A CONTRACT ON JUNE 17, 1971, UPON THE BASIS OF A DETERMINATION AND FINDINGS PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 2-407.8(B)(3)(I) THAT THE ITEMS TO BE PROCURED WERE URGENTLY NEEDED AND AFTER NOTICE THEREOF TO OUR OFFICE.

IT IS HENRY'S PRIMARY CONTENTION THAT THE SO-CALLED REPURCHASE IS ACTUALLY A NEW PROCUREMENT SINCE THERE WERE SIGNIFICANT AND SUBSTANTIAL DIFFERENCES IN THE SPECIFICATIONS UNDER THE TWO CONTRACTS AND THERE WAS AN INORDINATE DELAY BETWEEN TERMINATION OF HENRY'S CONTRACT AND READVERTISEMENT. IN SUPPORT OF THIS POSITION, YOU HAVE CITED AND COMPARED 20 SPECIFICATIONS ALLEGED TO BE SUBSTANTIALLY AND SIGNIFICANTLY DIFFERENT. THEREFORE, IT IS CONTENDED THAT UNDER APPLICABLE LAW AND REGULATIONS THE CONTRACTING OFFICER WAS REQUIRED TO MAKE A DETERMINATION OF HENRY'S RESPONSIBILITY AND, IF NEGATIVE, REFER THE MATTER TO THE SMALL BUSINESS ADMINISTRATION FOR CERTIFICATE OF COMPETENCY CONSIDERATION. WITH REGARD TO THE DIFFERENCE IN THE DEFAULTED CONTRACT PRICE AND HENRY'S BID UNDER THE SUBJECT INVITATION, IT IS ASSERTED THAT THE INCREASE OF ALMOST $1,100 PER UNIT WAS JUSTIFIED BY THE SIGNIFICANT AND SUBSTANTIAL CHANGES IN THE SPECIFICATIONS.

THE NAVY CONTENDS THAT THE ITEMS CALLED FOR UNDER THE TWO CONTRACTS ARE THE SAME OR SIMILAR AND THE CHANGES CITED BY YOU ARE EITHER NONEXISTENT OR INCONSEQUENTIAL. IN THIS CONNECTION, THE CONTRACTING OFFICER HAS SUBMITTED A REBUTTAL FOR EACH OF THE SPECIFICATION CHANGES YOU ALLEGE ARE SIGNIFICANT OR SUBSTANTIAL. WITH REGARD TO THE APPROXIMATE FIVE-MONTH DELAY FROM TERMINATION OF HENRY'S CONTRACT UNTIL ISSUANCE OF THE SUBJECT INVITATION, THE NAVY REPORTS THAT THIS RESULTED FROM REVIEW, UPDATING, AND VERIFICATION OF THE SPECIFICATIONS, AND FROM EFFORTS BY YOU ON BEHALF OF HENRY TO RESOLVE PERFORMANCE DEFICIENCIES AND TO HAVE THE DEFAULT TERMINATION WITHDRAWN AND THE CONTRACT REINSTATED. WITH REGARD TO THE INCREASE IN HENRY'S BID OVER THE CONTRACT PRICE, IT IS NOTED THAT THERE WAS A TWO-YEAR PERIOD OF INFLATION BETWEEN AWARD OF THE CONTRACT AND BIDS UNDER THE SUBJECT INVITATION.

OUR OFFICE HAS HELD THAT WHERE A DEFAULTED CONTRACTOR SUBMITS A BID FOR A REPURCHASE CONTRACT AT A PRICE HIGHER THAN THE PRICE FOR WHICH HE WAS BOUND UNDER THE DEFAULTED CONTRACT, HIS BID SHOULD NOT BE ACCEPTED. ACCEPTANCE OF SUCH A BID WOULD BE TANTAMOUNT TO A MODIFICATION OF THE DEFAULTED CONTRACT TO PROVIDE FOR AN INCREASE IN THE CONTRACT PRICE WITHOUT ANY CONSIDERATION THEREFOR TO THE GOVERNMENT. 27 COMP. GEN. 343 (1927); B-165884, MAY 28, 1969. FURTHER, BOTH THE COURTS AND THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA) RECOGNIZE THAT WHERE A PROCUREMENT IS FOR THE ACCOUNT OF A DEFAULTED CONTRACTOR THE STATUTES GOVERNING PROCUREMENTS BY THE GOVERNMENT ARE NOT APPLICABLE. SEE B- 165884, SUPRA, AND CASES CITED. THUS, IF THE INVITATION UNDER WHICH THE CONTRACT WAS AWARDED TO TELEDYNE WAS A REPURCHASE OF HENRY'S DEFAULTED CONTRACT, HENRY'S BID THEREUNDER WAS PROPERLY NOT CONSIDERED. THEREFORE, WHETHER THE ITEMS CALLED FOR UNDER TELEDYNE'S CONTRACT ARE THE "SAME AS OR SIMILAR" TO THOSE CALLED FOR UNDER THE DEFAULTED CONTRACT IS THE DETERMINATIVE ISSUE.

WE UNDERSTAND THAT HENRY HAS APPEALED THE DEFAULT TERMINATION OF CONTRACT NO. N00156-69-C-1116, AND THAT SUCH APPEAL IS PRESENTLY PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS. IN ADDITION, THE CONTRACTING OFFICER'S ASSESSMENT OF EXCESS REPROCUREMENT COSTS IS A MATTER PRESENTLY BEFORE THE BOARD UNDER THE APPEAL. THE DEFAULT CLAUSE OF THE HENRY CONTRACT PROVIDES THAT IN THE EVENT OF A TERMINATION FOR DEFAULT THE GOVERNMENT MAY PROCURE SUPPLIES "SIMILAR" TO THOSE SO TERMINATED AND THE CONTRACTOR SHALL BE LIABLE FOR ANY EXCESS COSTS FOR SUCH "SIMILAR" SUPPLIES. THEREFORE, ON THE QUESTION OF HENRY'S LIABILITY FOR EXCESS COSTS, IT WILL BE NECESSARY FOR THE BOARD TO DETERMINE WHETHER THE SUPPLIES CALLED FOR UNDER TELEDYNE'S CONTRACT ARE "SIMILAR" TO THOSE CALLED FOR UNDER HENRY'S DEFAULTED CONTRACT. THE DETERMINATION OF SIMILARITY BY THE BOARD INVOLVES FINDING OF FACT WHICH IS FINAL AND CONCLUSIVE IF IT MEETS THE STANDARDS OF REVIEW OF THE WUNDERLICH ACT, 41 U.S.C. 321-322.

SINCE THE DETERMINATIVE ISSUE IN BOTH THE APPEAL BEFORE THE BOARD AND THE PROTEST BEFORE OUR OFFICE IS THE QUESTION OF SIMILARITY, AND IN VIEW OF THE FINALITY WHICH ATTACHES TO BOARD DETERMINATIONS OF FACTUAL ISSUES, WE BELIEVE THAT ANY DECISION BY OUR OFFICE AT THIS TIME WOULD BE PREMATURE AND UNWARRANTED. IN THE CIRCUMSTANCES, WE CANNOT OBJECT TO THE CONTRACTING OFFICER'S ..END :