B-150639, APR. 30, 1963

B-150639, APR. 30, 1963

TO GALESKI PHOTO CENTER, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 14, 1963, WITH ENCLOSURES, PROTESTING ON BEHALF OF YOUR SUBSIDIARY--- THE PHOTO INDUSTRIAL CORPORATION--- THE PROCEDURE FOLLOWED BY THE DEFENSE GENERAL SUPPLY AGENCY, RICHMOND 12, VIRGINIA, IN THE PROCUREMENT OF CERTAIN PHOTOGRAPHIC CHEMICALS UNDER INVITATION FOR BIDS NO. DSA-4-63-1431, DATED DECEMBER 11, 1962, AS AMENDED. IN THE ENCLOSURE TO YOUR LETTER YOU SET FORTH AT SOME LENGTH THE BASIS FOR YOUR PROTEST AND YOU EXPRESSED THE VIEW THAT THE DEPARTMENT OF THE NAVY CANNOT JUSTIFY ITS ACTION IN THIS CASE, WHICH, YOU STATED, ADDS MORE THAN TEN PERCENT TO THE COST OF THE ITEMS.

PRIOR TO A DISCUSSION OF THE MATTERS INVOLVED IN YOUR PROTEST WE WISH TO SAY THAT INFORMAL ADVICE HAS BEEN RECEIVED FROM THE DEFENSE SUPPLY AGENCY TO THE EFFECT THAT DELIVERIES UNDER THE CONTRACT DATED JANUARY 16, 1963, WITH THE PHILIP A. HUNT COMPANY, HAVE BEEN COMPLETED. ACCORDINGLY, THERE IS NO ACTION WHICH OUR OFFICE MAY TAKE IN THIS CASE OTHER THAN TO CONSIDER THE BASIS FOR YOUR PROTEST.

ON MARCH 14, 1963, OUR OFFICE RECEIVED A TELEPHONE CALL FROM THE OFFICE OF THE HONORABLE JACOB K. JAVITS, UNITED STATES SENATE, REQUESTING THAT OUR DECISION ON YOUR PROTEST BE POSTPONED UNTIL LAWRENCE BRATSKEIR, ESQUIRE, HAD AN OPPORTUNITY TO SUBMIT A BRIEF IN SUPPORT OF YOUR PROTEST AND THE PROTEST FILED BY L. B. RUSSELL CHEMICALS, INC. UNDER DATE OF MARCH 15, 1963, MR. BRATSKEIR CALLED AT OUR OFFICE AND REQUESTED THAT HE BE ALLOWED TEN DAYS IN WHICH TO SUBMIT A BRIEF. ON MARCH 25, 1963, WE RECEIVED FROM MR. BRATSKEIR A LETTER DATED MARCH 22, 1963, TRANSMITTING THE INDICATED BRIEF.

THE MATTERS SET FORTH IN THE BRIEF ARE LARGELY A REPETITION OF, OR AN ELABORATION ON, THE STATEMENTS CONTAINED IN YOUR LETTER OF JANUARY 14, 1963. AFTER RECITING CERTAIN FACTS, MR. BRATSKEIR TOOK THE POSITION THAT THE CONTRACTING OFFICER'S CONCLUSIONS REPRESENTING THE URGENT NEED FOR THE CHEMICALS WAS UNJUSTIFIED. HE ALSO POINTED OUT THAT IN ADDITION TO THE SAVING WHICH WOULD HAVE RESULTED FROM THE PURCHASE OF ITEM 1 FROM THE NATIONAL RESEARCH AND CHEMICAL COMPANY, A CONSIDERABLE SAVING WOULD HAVE RESULTED FROM THE PURCHASE OF ITEM 2 FROM YOUR CONCERN. HE THEN ALLEGED THAT THE "CONTRACTING AUTHORITIES" EXCEEDED THE RULES AND REGULATIONS IMPLEMENTING PUBLIC CONTRACTS AND, FINALLY, HE TOOK THE POSITION THAT YOUR CONCERN AND L. B. RUSSELL CHEMICALS SHOULD BE COMPENSATED FOR LOSS OF PROFITS AND EXPENSES OF BIDDING.

THE RECORDS SHOWS THAT ON OR ABOUT NOVEMBER 26, 1962, THE DEFENSE GENERAL SUPPLY AGENCY RECEIVED FROM THE U.S. AVIATION SUPPLY OFFICE MILITARY INTERDEPARTMENTAL PURCHASE REQUEST NO. R 63/94/383 NSF, COVERING THE FOLLOWING ITEMS:

ITEM 1, 3,024 EACH, KIT, CHEMICAL, PHOTOGRAPHIC, FIXING AGENT, CONSISTS OF 1-FIVE GALLON CUBITAINER OF LIQUID, FIXER, 2-32 OUNCE POLY BOTTLE OF PART "B" AND 1-32 OUNCE POLY BOTTLE OF PART "C" TO MAKE A TOTAL OF 20 GALLONS OF TYPE IN GRAPH-O-MAT FIXING AGENT FOR USE IN EH 38A PROCESSING MACHINE, PHILIP A. HUNT COMPANY PART NUMBER 45601 OR EQUAL.

ITEM 2, 3,024 EACH, KIT, CHEMICAL, PHOTOGRAPHIC, DEVELOPING AGENT, CONSISTS OF 1-64 OUNCE POLY BOTTLE OF TYPE III GRAPH-O-MAT STARTER AND 1-5 GALLON CUBITAINER OF TYPE III, GRAPH-O-MAT DEVELOPER-REPLENISHER TO MAKE 20 GALLONS OF WORKING SOLUTION, PHILIP A. HUNT COMPANY PART NUMBER 12309 OR EQUAL.

IN ORDER TO PROCURE THE FOREGOING ITEMS, THE INDICATED INVITATION FOR BIDS WAS ISSUED UNDER DATE OF DECEMBER 11, 1962, THE PROCUREMENT BEING RESTRICTED TO SMALL BUSINESS CONCERNS. BIDS WERE RECEIVED FROM THE PHILIP A. HUNT COMPANY, THE NATIONAL RESEARCH AND CHEMICAL COMPANY, AND THE PHOTO INDUSTRIAL CORPORATION. THE HUNT COMPANY PROPOSED TO FURNISH ITS OWN PRODUCTS, THAT IS, THE BRAND NAMES CITED IN THE INVITATION, NATIONAL RESEARCH BID ON ITS NACCO BRAND RAPID FIXER UNIT FOR ITEM 1 BUT DID NOT BID ON ITEM 2, AND PHOTO INDUSTRIAL BID TO SUPPLY L. B. RUSSELL CHEMICALS, INC., RAY-O-MAT FIXER FOR ITEM 1 AND L. B. RUSSELL CHEMICALS, INC., RAY-O- MAT STARTER DEVELOPER/REPLENISHER FOR ITEM 2.

THEREAFTER, THE DEFENSE GENERAL SUPPLY AGENCY RECEIVED A TELEGRAM FROM THE U.S. NAVY AVIATION SUPPLY OFFICE DELETING THE "OR EQUAL" DESIGNATION FROM THE MILITARY INTERDEPARTMENTAL PURCHASE REQUEST AND STATING THAT THE HUNT COMPANY CHEMICALS WERE THE ONLY KNOWN MATERIALS AVAILABLE FOR HIGH QUALITY RESULTS WITH BOTH FILMS AND PAPER. BASED ON THIS INFORMATION IT WAS DETERMINED THAT THE INVITATION SHOULD BE CANCELLED DUE TO INADEQUATE SPECIFICATIONS, AND BIDDERS WERE NOTIFIED ACCORDINGLY. IT WAS FURTHER DETERMINED BY THE DEFENSE SUPPLY AGENCY THAT THE HUNT COMPANY CHEMICAL KITS WERE AVAILABLE ONLY FROM THE MANUFACTURER AND THAT THE KITS WERE ITEMS FOR WHICH IT WAS IMPRACTICABLE TO OBTAIN COMPETITION WITHIN THE MEANING OF 10 U.S.C. 2304 (A) (10) AS CONTEMPLATED BY PARAGRAPH 3-210.2 (I) OF THE ARMED SERVICES PROCUREMENT REGULATION. NEGOTIATIONS WERE THEREAFTER CONDUCTED WITH THE HUNT COMPANY AND ON JANUARY 16, 1963, THE COMPANY WAS TELEPHONICALLY NOTIFIED OF THE ACCEPTANCE OF ITS OFFER AND FURNISHED THE NUMBER OF THE CONTRACT--- DSA-4-1954/OI S-15885-63 P 612). THE DEFENSE SUPPLY AGENCY REPORTED THAT THE AWARD WAS MADE TELEPHONICALLY BECAUSE IT WAS ESSENTIAL THAT THE CONTRACTOR COMMENCE PRODUCTION AT THE EARLIEST POSSIBLE DATE SINCE THE CHEMICALS WERE URGENTLY REQUIRED BY THE DEPARTMENT OF THE NAVY.

THE CONTRACTING OFFICER REPORTED THE BUREAU OF NAVAL WEAPONS ADVISED THAT AT THE TIME THE MIPR WAS ISSUED THE EASTMAN KODAK COMPANY AND THE HUNT COMPANY WERE THE ONLY KNOWN MANUFACTURERS OF CHEMICALS DESIGNED SPECIFICALLY FOR USE IN THE EH-38A FILM AND PAPER PROCESSOR MANUFACTURED BY THE EASTMAN KODAK COMPANY; THAT THE EASTMAN KODAK AND THE HUNT COMPANY CHEMICALS HAD BEEN TESTED AND THE HUNT COMPANY CHEMICALS HAD PROVEN SUPERIOR TO THOSE OF EASTMAN KODAK; THAT THE EASTMAN KODAK PRODUCTS CAUSED CORROSIVE ACTION AND DAMAGE TO THE ROLLERS; THAT THE CAPABILITIES OF THE PROCESSOR COULD NOT BE JEOPARDIZED BY THE USE OF UNTESTED PROCESSING SOLUTIONS AND THAT SINCE THE CHEMICALS WERE URGENTLY REQUIRED, TIME DID NOT PERMIT THE TESTING OF UNKNOWN CHEMICALS FOR THIS PROCUREMENT. IT WAS EMPHASIZED THAT CHEMICAL AND MECHANICAL FUNCTIONS IN THE EH-38A SYSTEM ARE, OF NECESSITY, CLOSELY RELATED AND THAT DIFFICULTIES WHICH MIGHT APPEAR TO BE MECHANICAL COULD IN REALITY BE DUE TO FAULTY CHEMICAL SOLUTIONS. THE BUREAU OF NAVAL WEAPONS ALSO ADVISED THAT IT WOULD AT ANY TIME REVIEW THE RESULTS OF TESTS CONDUCTED BY A MANUFACTURER TO ASCERTAIN IF THE CHEMICAL SHOWS PROMISE OF BEING COMPATIBLE WITH THE EH-38A SYSTEM AND IF FEASIBLE THE BUREAU WILL REQUEST SAMPLES FOR OPERATIONAL TESTING. THE CONTRACTING OFFICER ADVISES THAT YOUR CONCERN WAS BEING ADVISED TO CONTACT THE BUREAU OF NAVAL WEAPONS CONCERNING THE TESTING OF YOUR PRODUCT OR THAT OF YOUR SUPPLIER--- L. B. RUSSELL CHEMICALS, INC.

THE FACT THAT THE HUNT COMPANY CHEMICALS MAY HAVE BEEN TESTED AT THE RISK OF DAMAGING THE EH-38A PROCESSOR, IF THIS BE SO, DOES NOT CONSTITUTE A JUSTIFIABLE BASIS FOR EXPOSING THE PROCESSOR TO FURTHER RISK BY USING IT TO TEST CHEMICALS MANUFACTURED BY OTHER COMPANIES WITHOUT PRELIMINARY TEST DATA.

THE RECORD INDICATES THAT THE BASIC REASON FOR THE NEGOTIATION OF THIS PROCUREMENT WAS THE POSITION TAKEN BY THE DEPARTMENT OF THE NAVY THAT THE OPERATIONAL CAPABILITIES OF THE EH-38A PROCESSOR COULD NOT BE JEOPARDIZED BY THE USE OF UNTESTED PROCESSING SOLUTIONS; THAT THE HUNT COMPANY MANUFACTURED THE ONLY KNOWN TESTED AND ACCEPTABLE KIT AND THAT THE URGENT NEED FOR THE SUPPLIES PRECLUDED THE TESTING OF UNKNOWN CHEMICALS. FINDING WAS THEREFORE MADE THAT IT WAS IMPRACTICABLE TO SECURE COMPETITION SINCE THE SUPPLIES NEEDED WERE AVAILABLE ONLY FROM THE HUNT COMPANY. SUCH FINDING IS BY LAW MADE FINAL. SEE SECTION 2310 (B), TITLE 10, U.S. CODE, AS AMENDED BY P.L. 87-653, APPROVED SEPTEMBER 10, 1962.

WE ARE OF THE OPINION THAT IN SUCH CIRCUMSTANCES THE NEGOTIATION OF A CONTRACT WITH THE HUNT COMPANY CANNOT BE CONSIDERED IMPROPER, AND YOUR PROTEST MUST THEREFORE BE DENIED. HOWEVER, IN VIEW OF THE NATURE OF THE SUPPLIES INVOLVED WE BELIEVE IT IS VERY UNLIKELY THAT ONLY ONE SUPPLIER'S PRODUCTS WILL IN FACT MEET THE NEEDS OF THE GOVERNMENT, AND WE BELIEVE IT IS INCUMBENT UPON THE USING AGENCY TO CONDUCT SUCH TESTS AS MAY BE NECESSARY TO DETERMINE THE ACCEPTABILITY OF OTHER PRODUCTS FOR FUTURE NEEDS.

RESPECTING THE CLAIM FOR LOSS OF PROFITS AND EXPENSES OF BIDDING, IT NEED ONLY BE POINTED OUT THAT UNSUCCESSFUL BIDDERS ON FEDERAL CONTRACTS ARE WITHOUT STANDING IN THE COURTS SINCE THEY HAVE NO LITIGABLE RIGHTS. SEE FRIEND V. LEE, 95 APP.D.C. 224, 221, F.2D 96; PERKINS V. LUKENS STEEL CO., 310 U.S. 113, 126. SEE, ALSO, THE CASE OF COLORADO PAVING COMPANY V. MURPHY, 78 F. 28, CITED IN O-BRIEN V. CARNEY, 6 F.SUPP. 761, IN WHICH THE COURT HAD UNDER CONSIDERATION A BILL OF COMPLAINT SEEKING AN INJUNCTION TO PREVENT CERTAIN PAVING WORK FROM BEING PERFORMED BY OTHERS THAN THE COMPLAINANT, THE ACTION BEING BASED UPON THE ALLEGATION THAT THE COMPLAINANT WAS THE LOWEST RELIABLE BIDDER FOR THE PAVING AND, THEREFORE, WAS ENTITLED TO THE CONTRACT. IN ALLOWING A MOTION FOR DISMISSAL OF THE BILL OF COMPLAINT, THE COURT STATED THAT---

"IT IS NOW SETTLED BY THE GREAT WEIGHT OF AUTHORITY THAT THE LOWEST BIDDER CANNOT COMPEL THE ISSUE OF A WRIT OF MANDAMUS TO FORCE THE OFFICERS OF A MUNICIPALITY TO ENTER INTO A CONTRACT WITH HIM * * * AND THE COURTS HOLD THAT HE CANNOT MAINTAIN AN ACTION AT LAW FOR DAMAGES FOR THEIR REFUSAL TO ENTER INTO THE CONTRACT.'