B-158953, JUN. 23, 1966

B-158953, JUN. 23, 1966

TO SILENT HOIST AND CRANE CO., INC.:

REFERENCE IS MADE TO YOUR LETTERS OF APRIL 13 AND MAY 10, 1966, PROTESTING AGAINST THE AWARD OF NEGOTIATED CONTRACTS, ON A SOLE SOURCE BASIS, FOR THE PURCHASE OF MATERIALS HANDLING EQUIPMENT BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), DEFENSE SUPPLY AGENCY (DSA), RICHMOND, VIRGINIA, UNDER REQUEST FOR PROPOSALS (RFP) NOS. DSA-4-66-4406, 4-66 4407, 4-66-4478, 4-66-4740 AND 4-66-4965. ALL OF THE EQUIPMENT IN QUESTION--- FORKLIFT TRUCKS, VARYING IN CAPACITY FROM 4,000 POUNDS TO 15,000 POUNDS AND WAREHOUSE TRACTORS OF 4,000-POUND CAPACITY--- IS TO BE SHIPPED TO SOUTHEAST ASIA TO SUPPORT COMBAT OPERATIONS IN VIET NAM.

WITH SPECIFIC REFERENCE TO RFP NO. DSA-4-66-4740, WHICH COVERS FORKLIFT TRUCKS WITH A 15,000 POUND CAPACITY, MANUFACTURED BY THE HYSTER CO., YOU STATE THAT SINCE THE ITEM IS IDENTICAL TO EQUIPMENT PROCURED THROUGH COMPETITIVE NEGOTIATIONS IN WHICH YOU PARTICIPATED IN LATE 1963, UNDER RFP NO. DSA-4-64-646, WHICH CITED MILITARY SPECIFICATION MIL-T-15442J, IT IS NOT A PROPRIETARY ITEM; THAT THE 1963 UNIT PRICE WAS APPROXIMATELY $8,000; AND THAT THE PRICE AT WHICH THE CURRENT AWARD WAS MADE IS APPROXIMATELY 18 PERCENT HIGHER. YOU QUESTION WHY SUCH PREVIOUSLY PURCHASED UNITS COULD NOT BE SHIPPED OVERSEAS AND WHY REPLACEMENT UNITS COULD NOT BE PROCURED ON A COMPETITIVE BASIS. YOU STATE THAT THE DEPARTMENT OF THE NAVY, BUREAU OF SUPPLIES AND ACCOUNTS (NOW NAVY SUPPLY SYSTEMS COMMAND), HAS A STANDARDIZATION PROGRAM FOR THE EQUIPMENT AND THAT A NEW SPECIFICATION, MIL-T-21870, INCORPORATING AMENDMENTS AND CHANGES IN MIL-T-15442J, WILL BE ISSUED IN A FEW MONTHS; ACCORDINGLY, YOU QUESTION WHETHER THE DEPARTMENT OF DEFENSE (DOD) IS NOT DEFEATING ITS OWN STANDARDIZATION PROGRAM BY NEGOTIATING FOR UNITS IDENTICAL TO THE PREVIOUSLY PURCHASED UNITS PRIOR TO THE ISSUANCE OF THE NEW STANDARDIZATION REQUIREMENTS. ADDITIONALLY, YOU STATE THAT SINCE CONGRESS HAS NOT DECLARED WAR, WARTIME PROCUREMENT PROCEDURES CANNOT BE EMPLOYED AND THAT IN VIEW OF THE QUANTITY INVOLVED (EQUAL TO A YEAR'S NEEDS), THE SECRETARIAL DETERMINATION TO NEGOTIATE SOLE SOURCE IS NOT IN THE BEST INTERESTS OF THE GOVERNMENT, IS STIFLING TO COMPETITION, AND IS MANIFESTLY UNFAIR TO YOU, A SMALL BUSINESS CONCERN WHICH IS IN A POSITION TO FURNISH THE EQUIPMENT IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS. ACCORDINGLY, YOU REQUEST THAT PENDING OUR DECISION ON YOUR PROTEST, STOP WORK ORDERS BE ISSUED ON ALL OF THE CONTRACTS.

ON FEBRUARY 19 AND MARCH 5, 1966, THE ARMY MOBILITY EQUIPMENT CENTER, ST. LOUIS, MISSOURI, ISSUED TO THE DGSC FIVE MILITARY INTERDEPARTMENTAL PURCHASE REQUESTS (MIPRS) FOR THE EQUIPMENT IN QUESTION. FOUR OF THE MIPRS COVERED FORKLIFT TRUCKS, TO BE DELIVERED BY AUGUST 21, 1966, AND EACH CITED ONLY ONE MANUFACTURER'S MODEL. THREE OF THE FORKLIFT TRUCK MODELS, ONE EACH MANUFACTURED BY THE BAKER DIVISION, OTIS ELEVATOR COMPANY, BY THE TOW MOTOR CORPORATION, AND BY THE HYSTER COMPANY, WERE TO COMPLY WITH MILITARY SPECIFICATION NO. MIL T-15442J, DATED SEPTEMBER 5, 1962, AS AMENDED, AND THE FOURTH FORKLIFT TRUCK MODEL, MANUFACTURED BY THE BAKER DIVISION, OTIS ELEVATOR COMPANY, WAS TO COMPLY WITH MILITARY SPECIFICATION NO. MIL-T-15636G, DATED JULY 17, 1963. THE REMAINING MIPR COVERED A WAREHOUSE TRACTOR, MANUFACTURED BY UNITED TRACTOR, INC., TO BE DELIVERED BY THE 90TH DAY OF 1967 (I.E., MARCH 31), AND THE APPLICABLE MILITARY SPECIFICATION WAS NO. MIL-T-15830H, DATED APRIL 11, 1963.

AUTHORITY TO NEGOTIATE EACH OF THE CONTRACTS WITH THE PARTICULAR MANUFACTURER WAS INCLUDED IN A DETERMINATION AND FINDINGS (D AND F) SIGNED BY THE ASSISTANT SECRETARY OF THE ARMY ON MARCH 25, 1966, FOR EACH PROCUREMENT, PURSUANT TO 10 U.S.C. 2304 (A) (13) AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-213. IN EACH D AND F, THE ASSISTANT SECRETARY STATED THAT HE HAD DETERMINED THAT THE EQUIPMENT CONSTITUTES TECHNICAL EQUIPMENT; THAT STANDARDIZATION OF THE EQUIPMENT AND INTERCHANGEABILITY OF ITS PARTS ARE NECESSARY IN THE PUBLIC INTEREST; AND THAT PROCUREMENT OF THE EQUIPMENT AND PARTS BY NEGOTIATION IS NECESSARY TO ASSURE SUCH STANDARDIZATION AND INTERCHANGEABILITY. THE DOCUMENTATION ON WHICH THE D AND F'S WERE BASED STATES THAT IMMEDIATE STANDARDIZATION FOR EACH ITEM IS NECESSARY, INTERCHANGEABILITY WITH ITEMS OF EQUIPMENT DAMAGED DURING COMBAT OR OTHER EMERGENCY BEING ESSENTIAL; THAT EXISTING ASSETS IN THE SUPPLY SYSTEM ARE NOT SUFFICIENT TO SATISFY THE VIET NAM REQUIREMENTS, THUS MAKING REDISTRIBUTION OF SUCH ASSETS INFEASIBLE; THAT IT IS UNECONOMICAL TO USE OR DEVELOP MILITARY DESIGN FOR THE ITEMS; THAT THE PROCUREMENT IS EXPECTED TO RESULT IN SUBSTANTIAL SAVINGS BY LIMITING THE NUMBER AND VARIETY OF ITEMS IN VIET NAM, BY REDUCING THE EXPENSE OF PERSONNEL TRAINING AND PUBLISHING OF LITERATURE ON A VARIETY OF MAJOR ITEMS, BY PERMITTING CANNIBALIZATION AND INTERCHANGEABILITY OF PARTS THEREBY REDUCING DOWN TIME AND CRASH REQUISITIONS, AND BY FACILITATING SUPPORT IN COMBAT; THAT THE USE OF FORMAL ADVERTISING WOULD DEFEAT THE OBJECTIVES OF STANDARDIZATION OF THE ITEM BY INTRODUCING DIFFERENT MAKES AND MODELS, COMPONENT PARTS, TECHNICAL LITERATURE, AND MAINTENANCE PROCEDURES INTO THE SUPPLY SYSTEM; AND THAT COMPETITIVE PROCUREMENT WILL BE UTILIZED FOR REQUIREMENTS FOR OTHER THAN VIET NAM.

IN EACH CASE, PRIOR TO AWARD, THE CONTRACTING OFFICER MADE A COMPLETE PRICE ANALYSIS, AS REQUIRED BY ASPR 3-811. IN EACH ANALYSIS, PRIOR PROCUREMENTS OF THE ITEMS WERE CITED; COMPARISON OF PREVIOUS PRICES WAS MADE; FACTORS ACCOUNTING FOR PRICE INCREASES WERE DISCUSSED; AND IT WAS DETERMINED THAT ALL OF THE PRICES QUOTED BY THE FIRMS SOLICITED, WHICH WERE BELOW THE ESTIMATED PRICES REFLECTED ON THE MIPRS, WERE FAIRAND REASONABLE. FURTHER, IT WAS DISCLOSED THAT THE TOWMOTOR 4,000- POUND CAPACITY FORKLIFT TRUCK, THE BAKER DIVISION 6,000-POUND CAPACITY FORKLIFT TRUCK, THE HYSTER CO. 15,000-POUND CAPACITY FORKLIFT TRUCK, AND THE UNITED TRACTOR WAREHOUSE TRACTOR HAD PREVIOUSLY BEEN APPROVED OR SELECTED FOR STANDARDIZATION.

WITH REGARD TO RFP NO. DSA-4-66-4740, WHICH INVOLVES PROCUREMENT OF 200 HYSTER CO. FORKLIFT TRUCKS AND A ONE-YEAR SUPPLY OF SUPPORT PARTS, THE PRICE ANALYSIS SHOWS THAT THE AWARD PRICE OF $9,460 PER UNIT IS 14.5 PERCENT HIGHER THAN THE PREVIOUS CONTRACT PRICE OF $8,259 PER UNIT; THAT THE OTHER PRICES QUOTED IN CONNECTION WITH THE JANUARY 1964 PROCUREMENT OF THE ITEM RANGED FROM $8,796 TO $11,550 PER UNIT; AND THAT THE CURRENT AWARD PRICE IS 32.6 PERCENT LOWER THAN HYSTER'S CONSUMER PRICE FOR SIMILAR EQUIPMENT WITH THE OPERATIONAL EQUIPMENT REQUIRED BY THE RFP. THE RECORD FURTHER SHOWS THAT, AS WITH THE OTHER EQUIPMENT INVOLVED, SUBSTANTIAL QUANTITIES OF THE HYSTER EQUIPMENT HAD PREVIOUSLY BEEN DELIVERED TO VIET NAM, A FACTOR WHICH INFLUENCED THE SELECTION OF THE ITEM FOR STANDARDIZATION.

CONCERNING THE DOD STANDARDIZATION PROGRAM FOR SUCH EQUIPMENT UNDER THE DIRECTION OF THE NAVY SUPPLY SYSTEM COMMAND, THE CONTRACTING OFFICER MAKES THE FOLLOWING COMMENTS:

"* * * THIS PROGRAM IS CONCERNED WITH THE DEVELOPMENT OF A SPECIFICATION FOR FORKLIFT TRUCKS TO MEET THE NEEDS OF ALL THE MILITARY SERVICES AND IS NOT PERTINENT TO STANDARDIZATION OF PARTICULAR MAKES AND MODELS OF EQUIPMENT FOR THE PURPOSE OF ACHIEVING INTERCHANGEABILITY OF PARTS AND REDUCTION OF STOCKS OF PARTS TO SUPPORT AN OVERSEAS THEATER OF OPERATIONS. IT SHOULD BE NOTED THAT THIS EQUIPMENT IS BASICALLY COMMERCIAL MODIFIED TO MEET THE REQUIREMENTS OF MILITARY SPECIFICATIONS AND THAT PARAGRAPH 10/A) (4) OF THE REQUESTS FOR APPROVAL OF THE DETERMINATIONS AND FINDINGS STATES DEVELOPMENT OF MILITARY DESIGN IS UNECONOMICAL.'

THE STATUTORY AUTHORITY PURSUANT TO WHICH THE CONTRACTS IN QUESTION WERE NEGOTIATED, 10 U.S.C. 2304/A) (13), PROVIDES THAT THE HEAD OF A DEFENSE AGENCY MAY NEGOTIATE A CONTRACT IF THE PURCHASE OR CONTRACT IS FOR EQUIPMENT THAT HE DETERMINES TO BE TECHNICAL EQUIPMENT WHOSE STANDARDIZATION AND THE INTERCHANGEABILITY OF WHOSE PARTS ARE NECESSARY IN THE PUBLIC INTEREST AND WHOSE PROCUREMENT BY NEGOTIATION IS NECESSARY TO ASSURE THAT STANDARDIZATION AND INTERCHANGEABILITY. THERE IS NO PROVISION IN THE STATUTE RESTRICTING THE EXERCISE OF SUCH AUTHORITY TO WARTIME, AND UNDER 10 U.S.C. 2310, THE DETERMINATION TO NEGOTIATE IS FINAL.

ASPR 3-213.2, WHICH SETS FORTH THE POLICIES AND PROCEDURES TO BE EMPLOYED IN PROCUREMENTS NEGOTIATED UNDER 10 U.S.C. 2304/A) (13), READS, IN PART, AS FOLLOWS:

"3-213.2 APPLICATION

"/A) THE AUTHORITY OF THIS PARAGRAPH 3-213 MAY BE USED FOR PROCURING ADDITIONAL UNITS AND REPLACEMENT ITEMS OF SPECIFIED MAKES AND MODELS OF TECHNICAL EQUIPMENT AND PARTS, WHICH ARE ITHER: (I) FOR TACTICAL USE, OR (II) AN INTEGRAL PART OF OR USED IN DIRECT SUPPORT OF A WEAPONS SYSTEM, OR (III) FOR USE IN ALASKA, HAWAII OR OUTSIDE THE REMAINDER OF THE UNITED STATES, IN THEATERS OF OPERATIONS, ON BOARD NAVAL VESSELS, OR AT ADVANCED OR DETACHED BASES; AND WHICH HAVE BEEN ADOPTED AS STANDARD ITEMS OF SUPPLY IN ACCORDANCE WITH PROCEDURES PRESCRIBED BY EACH RESPECTIVE DEPARTMENT. CURRENT OR RECURRING PROCUREMENT REQUIREMENT FOR THE ITEM SHALL BE PRESENT.

"/B) THIS AUTHORITY WOULD APPLY, FOR EXAMPLE, WHENEVER IT IS NECESSARY:

(I) TO LIMIT THE VARIETY AND QUANTITY OF PARTS THAT MUST BE CARRIED IN STOCK;

(II) TO MAKE POSSIBLE, BY STANDARDIZATION, THE AVAILABILITY OF PARTS THAT MAY BE INTERCHANGED AMONG ITEMS OF DAMAGED EQUIPMENT DURING COMBAT OR OTHER EMERGENCY;

(III) TO PROCURE FROM SELECTED SUPPLIERS TECHNICAL EQUIPMENT WHICH IS AVAILABLE FROM A NUMBER OF SUPPLIERS BUT WHICH WOULD HAVE SUCH VARYING PERFORMANCE OR DESIGN CHARACTERISTICS (NOTWITHSTANDING DETAILED SPECIFICATIONS AND RIGID INSPECTION) AS WOULD PREVENT STANDARDIZATION AND INTERCHANGEABILITY OF PARTS; OR

(IV) TO PROVIDE A UNIFORM CONFIGURATION OF EQUIPMENT FOR MATERIEL PROGRAMMED FOR A MILITARY ASSISTANCE PROGRAM (MAP) COUNTRY OR COUNTRIES.'

BASED ON THE FACTS REPORTED AS THE BASIS FOR THE D ANF F-S, WE MUST CONCLUDE THAT THE PROCUREMENTS IN QUESTION HAVE BEEN CONDUCTED IN ACCORDANCE WITH THE LAW AND THE REGULATIONS AND WE WOULD NOT BE JUSTIFIED IN QUESTIONING EITHER THE STANDARDIZATION ACTION OR THE NEGOTIATION WITH ONLY ONE SOURCE IN EACH INSTANCE. FURTHER, THE PROCUREMENTS NOT BEING COMPETITIVE, THERE IS NO REQUIREMENT THAT THE SMALL BUSINESS STATUS OF OTHER PRODUCERS BE CONSIDERED IN MAKING AWARD. IN VIEW OF THE LIMITATION OF THE STANDARDIZATION PROCEDURE IN CONNECTION WITH THESE PROCUREMENTS TO THE NEEDS FOR VIET NAM, THERE IS NO STIFLING OF COMPETITION INSOFAR AS THE NEEDS OF OTHER AREAS ARE CONCERNED.

CONCERNING THE MATTER OF ISSUANCE OF STOP ORDERS UNDER THE CONTRACTS PENDING OUR DECISION ON YOUR PROTEST, YOU ARE ADVISED THAT OUR OFFICE, HAS CONSISTENTLY TAKEN THE POSITION THAT WE CANNOT REQUIRE THE CONTRACTING AGENCY TO CAUSE WORK TO BE STOPPED UNTIL WE HAVE DECIDED THE PROPRIETY OF THE AWARD, ALTHOUGH WE BELIEVE THAT SUCH ACTION SHOULD BE TAKEN WHERE THE GOVERNMENT'S INTERESTS WOULD NOT THEREBY BE PREJUDICED. WE MUST, HOWEVER, RECOGNIZE THAT THE PROCURING AGENCY, HAVING THE RESPONSIBILITY FOR SEEING THAT OPERATIONAL PROGRAMS OF THE GOVERNMENT ARE NOT UNREASONABLY DELAYED BY LACK OF NECESSARY SUPPLIES, IS IN A BETTER POSITION TO DETERMINE THE EXTENT TO WHICH THE INTERESTS OF THE GOVERNMENT WOULD BE PREJUDICED. WHEN A PROTEST IS RECEIVED AFTER AWARD, AND IT REASONABLY APPEARS THAT THE AWARD MAY BE HELD TO BE INVALID AND A DELAY IN RECEIVING THE SUPPLIES OR SERVICES IS NOT PREJUDICIAL TO THE GOVERNMENT'S INTEREST, THE CONTRACTING OFFICER WILL FREQUENTLY SEEK A MUTUAL AGREEMENT WITH THE SUCCESSFUL BIDDER TO STOP WORK ON A NO COST BASIS, OR SERVE NOTICE THAT NO COST SHOULD BE INCURRED PENDING RESOLUTION OF THE PROTEST. IN THIS CASE, THE URGENCY OF THE PROCUREMENTS APPEARS TO INDICATE THAT ISSUANCE OF STOP WORK ORDERS MAY WELL HAVE BEEN CONTRARY TO THE GOVERNMENT'S INTERESTS, AND WE THEREFORE SEE NO BASIS TO QUESTION AN ADMINISTRATIVE DECISION NOT TO ISSUE SUCH ORDERS.