B-156304, MAY 20, 1965

B-156304, MAY 20, 1965

TO GORN ELECTRIC COMPANY:

YOUR TELEGRAM OF MARCH 10, 1965, SUPPLEMENTED BY YOUR LETTER OF MARCH 11, PROTESTS ANY AWARD UNDER REQUEST FOR PROPOSALS NO. DSA-9-65 2667, ISSUED FEBRUARY 10, 1965, BY THE DEFENSE ELECTRONICS SUPPLY CENTER (DESC), DEFENSE SUPPLY AGENCY (DSA).

THE RFP SOLICITED PROPOSALS TO FURNISH PRESSURE SWITCHES FOR B-52 AIRCRAFT, FOR DELIVERY IN VARYING QUANTITIES, TO BE MANUFACTURED IN ACCORDANCE WITH BOEING AIRPLANE COMPANY SPECIFICATION 10-1175-6, REVISION Y, DATED AUGUST 14, 1961. PROSPECTIVE OFFERORS WERE ADVISED THAT "ONLY OFFERS FROM SOURCES APPROVED IN ACCORDANCE WITH THE CITED BOEING SPECIFICATIONS WILL BE CONSIDERED FOR AWARD OF CONTRACT HEREUNDER.'

FOUR PROPOSALS WERE RECEIVED BY DESC, TWO FROM FIRMS WHICH ARE APPROVED SOURCES FOR THE SWITCHES AND TWO FROM FIRMS, ONE OF WHICH IS YOUR FIRM, WHICH ARE NOT APPROVED SOURCES. THE LOWEST OFFER WAS SUBMITTED BY YOUR FIRM, AND THE SECOND LOWEST OFFER WAS SUBMITTED BY ONE OF THE APPROVED SOURCES. DESC REPORTS THAT THE CURRENT STOCK POSITION DEMANDS THAT A PROCUREMENT BE MADE FROM A RELIABLE SUPPLIER. HOWEVER, IN VIEW OF YOUR PROTEST, NO AWARD HAS BEEN MADE PENDING OUR DECISION.

BASICALLY, YOU PROTEST THE USE OF NEGOTIATION RATHER THAN ADVERTISING FOR THE PROCUREMENT OF THE SWITCHES. YOU STATE THAT YOUR FIRM HAS SUPPLIED THE SWITCHES UNDER OTHER GOVERNMENT ONTRACTS; THAT RESPONSE TO BOTH ADVERTISED AND NEGOTIATED SOLICITATIONS SHOWS THAT AT LEAST FIVE MANUFACTURERS ARE INTERESTED IN COMPETITIVE BIDDING; THAT ALTHOUGH YOU ARE AN AIR FORCE APPROVED SOURCE FOR THE ITEM, YOUR LOW OFFER WAS REJECTED IN A RECENT NEGOTIATED PROCUREMENT; AND THAT THE TESTING SHOULD BE CONDUCTED BY THE GOVERNMENT RATHER THAN BY BOEING, THE MANUFACTURER OF THE B-52 AIRCRAFT. IN ADDITION, YOU ASK THAT WE CONSIDER SPECIFICALLY THE FOLLOWING POINTS:

"1. COMPLETE SPECIFICATIONS ARE AVAILABLE AND HAVE BEEN DISTRIBUTED FOR THIS PROCUREMENT.

"2. COMPETITIVE SOURCES ARE AVAILABLE FOR BIDDING.

"3. BOEING AIRPLANE CO. WILL NO LONGER COMPLETE TESTS FOR INTERESTED PRESSURE SWITCH MANUFACTURERS WHO DESIRE BOEING APPROVAL. BECAUSE THE B- 52 AIRCRAFT IS NOW FULLY OPERATIONAL, REPLACEMENT PARTS PROCUREMENT AND QUALIFICATION TESTING ARE GOVERNMENTAL RESPONSIBILITIES.

"4. NO GOVERNMENT "QPL" LIST HAS BEEN ESTABLISHED.

"5. UNDER THE "OEM" APPROVAL CONCEPT, MANY "SOLE SOURCE" SITUATIONS HAVE BEEN CREATED AS EVIDENCED BY THE BOEING APPROVALS INDICATED FOR THIS ITEM AND SISTER SWITCHES COVERED BY BOEING SPEC 10 1175-6.'

THE RECORD SHOWS THAT THE SWITCHES IN QUESTION ARE OF ONE OF A SERIES OF SEVEN TYPES MANUFACTURED UNDER BASIC BOEING SPECIFICATION,NO. 10-1175, THE SEVERAL TYPES OF WHICH ARE NUMBERED 10-1175-1 THROUGH 10 1175-7. THE FUNCTION OF THE SWITCHES, WHICH ARE USED IN ELEVEN DIFFERENT POSITIONS IN THE HYDRAULIC SYSTEM OF THE B-52 AIRCRAFT PRODUCED BY BOEING FOR THE GOVERNMENT, IS TO OPERATE A PRESSURE LOSS WARNING SYSTEM WITHIN THE HYDRAULIC SYSTEM. THE BASIC SPECIFICATION LISTS THE APPROVED SOURCES FOR EACH SWITCH. THERE IS ONLY ONE APPROVED SOURCE FOR THE 10-1175-1, -2 AND -5 SWITCHES BUT AT LEAST TWO BOEING APPROVED SOURCES FOR THE REMAINING SWITCHES, INCLUDING THE 10-1175-6 INVOLVED IN THE PRESENT PROCUREMENT. YOUR FIRM IS NOT LISTED AS AN APPROVED SOURCE FOR ANY OF THE SWITCHES.

THE PROCUREMENT HISTORY OF THE SWITCHES DISCLOSES THAT, WHILE THE AIR FORCE AWARDED YOU A NEGOTIATED CONTRACT IN 1960 FOR THE 10-1175-4, 10-1175 -6, AND 10-1175-7 SWITCHES, AND AN ADVERTISED CONTRACT IN 1962 FOR THE 10- 1175-4 SWITCHES, YOU WERE NOT DESIGNATED BY THE AIR FORCE AS AN APPROVED SOURCE FOR THE SWITCHES. RATHER, THE RECORD SHOWS THAT DUE TO UNSATISFACTORY PERFORMANCE, PROCUREMENT OF ADDITIONAL SWITCHES WAS DISCONTINUED BY THE AIR FORCE AND DISPOSAL OF ALL THREE TYPES OF YOUR SWITCHES IN STOCK WAS ORDERED IN NOVEMBER 1964.

IT IS ALSO SHOWN THAT IN 1964 DESC AWARDED YOU TWO ADVERTISED CONTRACTS FOR THE 10-1175-6 SWITCHES; THAT YOU WERE LATE COMPLYING WITH THE FIRST- ARTICLE TESTING REQUIREMENTS OF ONE OF THE CONTRACTS; THAT THE TESTS AND SAMPLES WHICH YOU ULTIMATELY SUBMITTED UNDER BOTH CONTRACTS WERE REJECTED IN NOVEMBER AND DECEMBER 1964; THAT DEFAULT ACTION WAS CONSIDERED, BUT THAT IN LIEU THEREOF YOU WERE PERMITTED TO SUBMIT ON FEBRUARY 3, 1965, SIX ADDITIONAL SWITCHES FOR TESTING. TESTS ON SUCH SWITCHES HAVE BEEN PERFORMED BY THE AIR FORCE LOGISTICS COMMAND (AFLC), WHICH REPORTS THAT THREE OF THE SWITCHES HAVE FAILED TO MEET THE "FUNCTIONAL TESTS, HIGH TEMPERATURE, LOW TEMPERATURE AND PROOF TEST.'

THE RECORD FURTHER SHOWS THAT TWO RECENTLY ADVERTISED PROCUREMENTS OF THE SWITCHES, IFB DSA 9-65-479 FOR THE 10-1175-7 SWITCH AND IFB DSA 9-65-782 FOR THE 10-1175-6 SWITCH, WERE CANCELLED, THE FORMER BECAUSE THE REQUIREMENT WAS CANCELLED AND THE LATTER UPON DETERMINATION BY DESC THAT ONLY BOEING APPROVED SOURCES SHOULD BE CONSIDERED FOR AWARD. IN THIS CONNECTION, THE RECORD SHOWS THAT IT WAS LEARNED AFTER IFB DSA 9-65-782 HAD BEEN ISSUED THAT A SUPERSEDED REVISION OF THE BOEING SPECIFICATION HAD BEEN USED AND THAT THE ITEM WAS IDENTIFIED BY MANUFACTURERS' SOURCE CONTROLLED DRAWING ONLY AND NOT COVERED BY ADEQUATE SPECIFICATIONS. ACCORDINGLY, CANCELLATION OF THE IFB WAS APPROVED AND NEGOTIATION OF THE PROCUREMENT PURSUANT TO 10 U.S.C. 2304 (A) (10) AND ARMED SERVICES PROCUREMENT REGULATION 3-210.2 (XV) WAS AUTHORIZED.

IN THE RECENT NEGOTIATED PROCUREMENT UNDER RFP NO. DSA 9-65-1970, ISSUED OCTOBER 20, 1964, IN WHICH YOU STATE YOUR LOW OFFER WAS REJECTED, THE RFP PROVIDED THAT ONLY OFFERS FROM APPROVED SOURCES WOULD BE CONSIDERED FOR AWARD. YOUR PROTEST AGAINST THE USE OF NEGOTIATION AND RESTRICTION OF AWARD TO AN APPROVED SOURCE FOR THE 10 1175-4 SWITCH INVOLVED WAS DENIED BY DESC IN A LETTER DATED JANUARY 12, 1965, READING AS FOLLOWS:

"THIS IS TO ACKNOWLEDGE RECEIPT OF YOUR LETTER, DATED 4 JAN 1965, PROTESTING THE AWARD OF RFP DSA 9-65-1970 TO FREBANK, INC.

"YOUR ATTENTION IS INVITED TO THE NOTE SET FORTH ON THE SCHEDULE PAGE OF THE ABOVE CITED RFP WHICH STATES IN PART,"ONLY OFFERS FROM SOURCES APPROVED IN ACCORDANCE WITH CITED BOEING SPECIFICATION WILL BE CONSIDERED FOR AWARD OF CONTRACT HEREUNDER.' YOUR COMPANY WAS NOT LISTED AS ONE OF THE APPROVED SOURCES.

"YOUR LETTER STATES THAT YOU HAVE SUCCESSFULLY FURNISHED THIS ITEM TO THE AIR FORCE AND TO DESC. AFIC HAS ADVISED THIS CENTER THAT CONSIDERABLE DIFFICULTY HAS BEEN ENCOUNTERED WITH YOUR SWITCH P/N GPP 13000-2. ENTENSIVE RESEARCH HAS DISCLOSED THAT THIS SWITCH IS UNRELIABLE AND UNSATISFACTORY FOR AF EQUIPMENT. AT THE PRESENT TIME YOUR P/N GPP-13000-2 IS NOT CONSIDERED INTERCHANGEABLE WITH BOEING P/N 10-1175-4. ACCORDINGLY, YOUR PROPOSAL WAS NOT CONSIDERED FOR AWARD ON AFOREMENTIONED RFP.

"IN VIEW OF THE ABOVE CIRCUMSTANCES, PLEASE BE ADVISED THAT YOUR PROTEST IS HEREBY DISALLOWED.'

REGARDING THE CURRENT USE OF NEGOTIATION INSTEAD OF ADVERTISING FOR THE PROCUREMENT OF THE SWITCHES, THE RECORD SHOWS THAT PRIOR TO THE ISSUANCE OF RFP NO. DSA 9-65-2667, THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATIONS AND FINDINGS THAT IT WAS IMPRACTICABLE TO OBTAIN ADEQUATE COMPETITION THROUGH ADVERTISING DUE TO THE INADEQUACY OF THE SPECIFICATIONS, AMONG OTHER REASONS; NEGOTIATION WAS THEREFORE AUTHORIZED PURSUANT TO 10 U.S.C. 2304 (A) (10) AND ASPR 3-210 (XV). UNDER PUBLIC LAW 87-653, APPROVED SEPTEMBER 10, 1962, 10 U.S.C. 2310 (B), SUCH ADMINISTRATIVE ACTION IS FINAL AND IS NOT SUBJECT TO REVIEW BY OUR OFFICE. IN THIS CONNECTION, IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THE EXISTING LOW STOCK OF THE SWITCHES CAN BE DIRECTLY ATTRIBUTED TO YOUR FAILURE TO MEET YOUR CONTRACTUAL OBLIGATIONS; ALSO, THAT THE FAILURE OF YOUR SWITCHES UNDER OPERATIONAL CONDITIONS AND YOUR SUBSEQUENT DELINQUENCY AND FAILURE TO DELIVER ACCEPTABLE FIRST ARTICLES UNDER THE TWO ADVERTISED CONTRACTS DISCUSSED ABOVE HAVE PRECIPITATED THE NEGOTIATED SOLICITATIONS WHICH EXCLUDED YOU. THEREFORE, IN VIEW OF THE LOW STOCK POSITION, THE DISPOSAL ACTION TAKEN ON THE SWITCHES YOU HAD FURNISHED TO THE AIR FORCE, AND THE ABSENCE OF ANY BENEFIT TO THE GOVERNMENT FROM YOUR TWO CURRENT CONTRACTS, IT WAS CONSIDERED THAT ANOTHER AWARD TO YOU AT THIS TIME WOULD NOT BE WITHIN THE BEST INTERESTS OF THE GOVERNMENT.

THE FACTS STATED, PARTICULARLY THE FACT THAT AFTER FIVE YEARS FROM THE TIME OF THE FIRST AWARD TO YOU OF A CONTRACT BY THE AIR FORCE FOR THE SAME ITEM, YOU HAVE NOT YET PRODUCED A SWITCH WHICH IS SATISFACTORY, APPEAR TO JUSTIFY THE CONCLUSION OF DESC THAT THE SPECIFICATIONS ARE INADEQUATE FOR ADVERTISING--- OR A CONCLUSION THAT YOU ARE NOT CAPABLE OF PRODUCING ITEMS IN CONFORMITY WITH THE SPECIFICATIONS.

REGARDING THE CONDUCT OF THE TESTS BY BOEING RATHER THAN BY THE GOVERNMENT, THE RECORD SHOWS THAT THE TESTS IN THE TWO ADVERTISED PROCUREMENTS IN WHICH AWARD WAS MADE TO YOU WERE PERFORMED BY WRIGHT PATTERSON AIR FORCE BASE UNDER THE CONTRACT TESTING REQUIREMENTS. FURTHERMORE, SINCE ALL TESTS OF THE SWITCHES, WHETHER PERFORMED BY BOEING FOR THE GOVERNMENT OR DIRECTLY BY THE GOVERNMENT, MUST BE CONDUCTED IN COMPLIANCE WITH THE PROVISIONS OF THE BASIC BOEING SPECIFICATION, THE DEGREE OF RESPONSIBILITY FOR PROPER PERFORMANCE OF THE TESTS REMAINS THE SAME AND IS NOT LESSENED WHEN THEY ARE CONDUCTED BY BOEING.

REGARDING THE NONESTABLISHMENT OF A QUALIFIED PRODUCTS LISTING FOR THE ITEM, UNDER ASPR 1-1101 THE USE OF THE QUALIFIED PRODUCTS PROCEDURE IS WITHIN THE DISCRETION OF THE PROCURING AGENCY. IN THIS CASE, THE FACT THAT ONLY ONE FIRM HAS BEEN APPROVED AS A SOURCE FOR THREE OF THE SWITCHES INDICATES THAT ESTABLISHMENT OF A QUALIFIED PRODUCTS LISTING FOR THE SWITCHES MIGHT NOT BE PRACTICABLE AT THIS TIME. ACCORDINGLY, WE FIND NO BASIS TO CRITICIZE THE FAILURE OF THE PROCURING AGENCY TO EMPLOY THE QUALIFIED PRODUCTS PROCEDURE FOR THE PROCUREMENT OF THE SWITCHES.

CONCERNING THE ALLEGED CREATION OF "SOLE SOURCE" SITUATIONS UNDER THE "DEM" APPROVAL CONCEPT, A PROCEDURE WHEREBY THE ORIGINAL EQUIPMENT MANUFACTURER (OEM) RETAINS ENGINEERING RESPONSIBILITY FOR SPECIFIED ITEMS UNTIL SUCH TIME AS THE AGENCY PROCURING THE END ITEM CONSIDERS IT POSSIBLE AND PRACTICABLE TO ASSUME SUCH RESPONSIBILITY, THE FACT THAT SWITCHES PROCURED FROM A SOURCE OTHER THAN A BOEING APPROVED SOURCE HAVE FAILED, SUPPORTS THE ADMINISTRATIVE VIEW THAT THE SPECIFICATIONS ARE INADEQUATE FOR ADVERTISING AND THAT THE SWITCHES MAY REQUIRE MORE THAN THE PRESENTLY AVAILABLE SPECIFICATION TO ASSURE PERFORMANCE OR INTERCHANGEABILITY. THE CIRCUMSTANCES, THE APPLICATION OF THE OEM CONCEPT IS NOT IMPROPER. IS TO BE NOTED, HOWEVER, THAT EXCEPT FOR THE THREE SWITCHES, NONE OF WHICH IS INVOLVED IN YOUR PROTEST, WHICH HAVE BUT ONE APPROVED SOURCE, THERE IS MORE THAN ONE SUCH SOURCE FOR THE SWITCHES.

IN THE CIRCUMSTANCES, AND SINCE THE FINDINGS IN SUPPORT OF THE ADMINISTRATIVE DETERMINATION UNDER 10 U.S.C. 2304 (A) (10) THAT IT IS IMPRACTICABLE TO OBTAIN COMPETITION FOR THE ITEM IN QUESTION ARE FINAL, WE FIND NO LEGAL BASIS TO QUESTION THE USE OF NEGOTIATION IN THE INSTANT PROCUREMENT.

AS TO THE LIMITATION OF THE PROCUREMENT TO BOEING APPROVED SOURCES, THE RECORD CONTAINS SUBSTANTIAL SUPPORT THEREFOR, AND WE SEE NO PROPER BASIS FOR QUESTIONING THE PROPRIETY OF AN AWARD OF A CONTRACT UNDER THE RFP IN QUESTION. YOUR PROTEST IS THEREFORE DENIED.