B-169924, B-170426, NOV. 24, 1970

B-169924, B-170426, NOV. 24, 1970

BID PROTEST - PROPRIETARY RIGHTS - SOLE SOURCE DETERMINATION OF PROTESTS BY STERLING LABORATORIES AND ITT GILFILLAN, INC., (SOLE SOURCE PRODUCER) UNDER TWO REQUESTS FOR PROPOSALS FOR FURNISHING RADAR EQUIPMENT FOR OKLAHOMA TINKER AIR FORCE BASE. RECORD DOES NOT INDICATE THAT PROPRIETY RIGHTS OF PROTESTANT (ITTG) WERE VIOLATED NOR IS THERE ANYTHING TO INDICATE THAT IF STERLING WERE TO FURNISH COMPONENTS THROUGH "REVERSE ENGINEERING" THAT IT GAINED ITS KNOWLEDGE OTHER THAN THROUGH LEGITIMATE PROCESSES. THE QUESTION OF WHETHER STERLING CAN DELIVER IS FACTUAL DETERMINATION FOR CONTRACTING OFFICER AND WILL NOT BE DISTURBED UNLESS IT IS ARBITRARY OR NOT BASED ON SUBSTANTIAL EVIDENCE. UNDER A PROCUREMENT WHERE A MAJOR COMPONENT OF ONE MANUFACTURER WOULD NOT BE AVAILABLE TO COMPETITORS TO PERMIT THEM TO COMPETE, THE PROCURING AGENCY SHOULD REEVALUATE THE PROCUREMENT AND FOR THOSE ITEMS ONLY OBTAINABLE FROM ONE MANUFACTURER A SOLE SOURCE PROPRICUREMENT SHOULD BE MADE. FOR THOSE ITEMS AS TO WHICH TIME PERMITS COMPETITION, EITHER BY BREAKING OUT PROETARY COMPONENTS TO BE FURNISHED BY THE GOVERNMENT OR THROUGH TIMELY AVAILABILITY FROM THE PROPRIETOR, SHOULD BE RECOMPETED.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTERS AND ENCLOSURES DATED JULY 23, AND AUGUST 18, 1970, FROM THE CHIEF, CONTRACT PLACEMENT DIVISION, DIR/PROCUREMENT POLICY, DCS/S&L, AND AUGUST 31, AND OCTOBER 1, 1970, FROM AFSPPLA FURNISHING OUR OFFICE WITH BASIC AND SUPPLEMENTAL REPORTS ON THE PROTESTS, BEFORE AWARD, OF STERLING LABORATORIES (STERLING) AND ITT GILFILLAN, INCORPORATED (ITTG), AGAINST AWARD TO ANY OTHER OFFEROR UNDER REQUEST FOR PROPOSALS NO. F34601-70-R-2269, AS AMENDED, FOR FOUR (4) ITEMS OF MODIFICATION KITS FOR AN/FPN-16 AND AN/MPN-13,-14,-15 AND 16 RADAR EQUIPMENT, AND ELEVEN (11) ITEMS OF SPARE PARTS AND TECHNICAL DATA. ITTG ALSO PROTESTS AGAINST AWARD TO ANY OTHER OFFEROR UNDER REQUEST FOR PROPOSALS NO. F34601-70-R-2286, AS AMENDED, FOR SEVEN (7) ITEMS OF MPN BASELINE SPARE COMPONENTS AND SEVEN (7) ITEMS DATA FOR THE AN/MPN 13A, 15A, 16B, 19, 20, 21, AND 22, RADAR EQUIPMENTS. RFP 2269 WAS ISSUED ON JANUARY 20, 1970, AND ESSENTIALLY FOR SUPPORT THEREOF RFP 2286 WAS ISSUED ON FEBRUARY 3, 1970, BOTH BY THE OKLAHOMA CITY AIR MATERIEL AREA (AFLC), TINKER AIR FORCE BASE, OKLAHOMA.

THE TWO PROCUREMENTS PRESENT SIMILAR FACTUAL SITUATIONS. BOTH PROCUREMENTS WERE NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A) (10) AND CONTEMPLATED FIRM FIXED PRICE CONTRACTS. IT IS REPORTED THAT INITIALLY THIS EQUIPMENT WAS CODED SOLE SOURCE TO ITTG, AND THEREFORE RFP 2269 WAS DETERMINED TO COME UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3- 210.2 (I) BECAUSE THE SUPPLIES WERE BELIEVED TO BE OBTAINABLE FROM ONLY ONE FIRM ("SOLE SOURCE OF SUPPLY"). STERLING REQUESTED AND WAS FURNISHED A COPY OF THE PROPOSAL IN ACCORDANCE WITH ASPR 1-1002.1. SUBSEQUENT TO THE SUBMISSION DATE FOR PROPOSALS ON APRIL 22, 1970, THE CONTRACTING OFFICER CHANGED THE EXCEPTION FOR NEGOTIATION TO THAT IN ASPR 3-210.2 (XIII), "WHEN IT IS IMPOSSIBLE TO DRAFT, FOR A SOLICITATION OF BIDS, ADEQUATE SPECIFICATIONS OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED SUPPLIES OR SERVICES". IN A LIKE MANNER, RFP 2286 AS AMENDED, WITH A FINAL CUT OFF DATE OF JUNE 19, 1970, WAS FURNISHED STERLING AND THE EXCEPTION FOR NEGOTIATION WAS DETERMINED TO BE THAT IN ASPR 3-210.2 (XV), "WHEN THE CONTEMPLATED PROCUREMENT IS FOR PARTS OR COMPONENTS BE PROCURED AS REPLACEMENT PARTS IN SUPPORT OF EQUIPMENT SPECIALLY DESIGNED BY THE MANUFACTURER, WHERE DATA AVAILABLE IS NOT ADEQUATE TO ASSURE THAT THE PART OR COMPONENT WILL PERFORM THE SAME FUNCTION IN THE EQUIPMENT AS THE PART OR COMPONENT IT IS TO REPLACE". BOTH PROPOSALS CALL FOR SUPPLIES BY ITTG PART NUMBER, AND INCLUDE AT LEAST ONE COMPONENT WHICH IS CONCEDED TO BE PROPRIETARY WITH ITTG, THAT IS, THE LOG FTC AMPLIFIERS IN ITEMS 1 AND 5 OF RFP 2269 AND, IN ITEM 9 OF RFP 2286. BOTH PROPOSALS INITIALLY CALLED FOR DELIVERY 180 DAYS AFTER RECEIPT OF AWARD.

IT IS ADMINISTRATIVELY REPORTED THAT PROCUREMENTS FOR THIS EQUIPMENT HERETOFORE HAD BEEN NEGOTIATED ON A "SOLE SOURCE" BASIS WITH ITTG AND THAT THE GOVERNMENT DOES NOT HAVE A COMPLETE REPROCUREMENT DATA PACKAGE. PREVIOUS PROCUREMENTS, HOWEVER, THE GOVERNMENT ACQUIRED "LIMITED RIGHTS" TO SEVERAL DRAWINGS PROPRIETARY TO ITTG, AND SEVERAL THOUSAND CATEGORY "H" MAINTENANCE DRAWINGS, MOST OF WHICH WERE PURCHASED WITH "UNLIMITED" RIGHTS BY THE GOVERNMENT AND ARE AVAILABLE FOR SALE AT THE AFLC DATA DEPOSITORY.

STERLING BY LETTER DATED DECEMBER 2, 1969, FORMALLY REQUESTED A COPY OF THE SOLICITATION WHICH WAS LATER FORMALIZED IN RFP 2269. WHILE THE RECORD COVERING RFP 2269 CONTAINS MATTERS CONCERNING THE ACQUISITION OF CERTAIN DATA BY STERLING FROM THE GOVERNMENT PRIOR TO THE ISSUANCE DATE OF JANUARY 20, 1970, WE THINK IT PERTINENT HERE TO NOTE THAT BOTH ITTG AND STERLING SUBMITTED TIMELY OFFERS ON FEBRUARY 4, 1970, THE INITIAL CUT-OFF DATE. WHILE THE RECORD DOES NOT CONTAIN COPIES OF THE INITIAL PROPOSALS IT IS APPARENT THAT STERLING OFFERED ITS OWN LOG FTC AMPLIFIERS WITH TECHNICAL DESCRIPTION, WHICH IT ALLEGED WOULD PROVIDE THE GOVERNMENT WITH THE FOLLOWING:

1. IMPROVED OPERATING PARAMETERS AND SPECIFICATIONS.

2. KITS EASILY INTERCHANGEABLE WITH UNITS IN THE FIELD, AND UTILIZING FSN COMPONENTS.

3. "UNLIMITED RIGHTS" IN DATA FOR THIS IMPROVED UNIT, WHEREAS EXISTING DATA FROM ITTG IS SUBJECT TO "LIMITED RIGHTS".

4. CONFIGURATION CONTROL BY GOVERNMENT ON ASSEMBLY.

5. SUBSTANTIAL PRICE REDUCTIONS FROM PUBLISHED ITTG CATALOG PRICING SHEET.

IN ADDITION, STERLING STATED: "SHOULD IT BE DECIDED THAT THIS IMPROVED VERSION CANNOT BE ACCEPTED UNDER THIS CONTRACT, THEN TWO ALTERNATIVES SHOULD BE CONSIDERED. FIRST, THE LOG FTC AMPLIFIER CAN BE SUPPLIED TO STERLING LABORATORIES AS GOVERNMENT FURNISHED PROPERTY. UNDER SUCH CASE, OUR FIRM FIXED PRICE PROPOSAL CAN BE REDUCED BY THE AMOUNTS SPECIFIED IN LINE ITEMS 1 AND 2 OF THE SOLICITATION. THE SECOND ALTERNATIVE WOULD BE FOR THE GOVERNMENT TO DIRECT STERLING LABORATORIES TO PURCHASE THESE ITEMS FROM THE INCUMBENT SUPPLIER. SINCE THE PRICE OF THIS ITEM IS ESTABLISHED WITH THE GOVERNMENT AS A WORLDWIDE CATALOGUE PRICE, THIS ACTION WOULD BE CONSISTENT WITH ASPR PROVISIONS." ITTG OFFERED ITS OWN LOG FTC ASSEMBLY P/N 600161.

AFTER EVALUATION, BOTH OFFERORS WERE ADVISED TO SUBMIT THEIR BEST AND FINAL OFFERS BY MARCH 11, 1970, AS THE FINAL CUT-OFF DATE. BOTH STERLING AND ITTG SUBMITTED PROPOSALS OFFERING THE ITTG LOG FTC AMPLIFIER. DURING THE SUBSEQUENT EVALUATION OF THE PROPOSALS, STERLING PROTESTED TO THIS OFFICE ON MAY 27, 1970, THAT NEGOTIATION WITH ALL OFFERORS WAS NOT ON THE SAME BASIS AND THAT THERE WAS A FAILURE TO ACCOMPLISH A PHYSICAL SURVEY OF STERLING TO DETERMINE ITS CAPABILITY TO PERFORM. THESE ALLEGATIONS WERE SUBSEQUENTLY EXPANDED BY LETTER DATED JUNE 17, 1970, TO INCLUDE ALLEGATIONS AS TO, THE WITHHOLDING OF AVAILABLE DATA; THE ESTABLISHMENT OF SPECIAL PROCEDURES FOR QUALIFICATION OF STERLING IN LIEU OF USING STANDARD METHODS; THE FAILURE TO CONSIDER ALL FACTS IN PREPARING THE SOLE SOURCE DETERMINATION AND FINDINGS; INCONSISTENT INFORMATION CONTAINED IN OCAMA CORRESPONDENCE; FAILURE TO PROVIDE EQUAL INFORMATION; FAILURE TO NEGOTIATE IN GOOD FAITH; AND UTILIZING COMPETITOR'S EMPLOYEES FOR EVALUATION ASSISTANCE DURING THE PROCUREMENT PROCESS. IT SHOULD BE NOTED HERE THAT STERLING'S PROTEST PRECEDED AMENDMENT 002, DATED JUNE 24, 1970, WHICH ESTABLISHED A FINAL CUT-OFF DATE OF JULY 6, 1970; PROVIDED THAT PROGRESS PAYMENTS WERE NOT AUTHORIZED; AND SET OUT A REVISED FIXED DELIVERY SCHEDULE RUNNING FROM AUGUST 1970 THROUGH JANUARY 1971. AMENDMENT 003 WHICH ISSUED JULY 2, 1970, EXTENDED THE FINAL CUT-OFF DATE TO JULY 15, 1970, RESTORED THE AUTHORIZATION FOR PROGRESS PAYMENTS AND REVISED THE DELIVERY SCHEDULE TO COMMENCE IN OCTOBER 1970 AND RUN THROUGH JANUARY 1971.

ITTG PROTESTED BY TELEGRAMS DATED JULY 22, 1970, AGAINST AWARDS TO ANY OTHER FIRM UNDER BOTH RFP 2269 AND RFP 2286, ON THE BASIS THAT THE SUPPLIES DESCRIBED IN AND REQUIRED BY THE SUBJECT SOLICITATIONS WERE IDENTIFIED BY REFERENCE TO ITTG PART NUMBER, AND THAT DRAWINGS FOR ITEMS NUMBER 1, 5, 11 AND 14 UNDER RFP 2269 WERE DELIVERED TO THE GOVERNMENT UNDER PRIOR CONTRACTS FOR LOGISTIC PURPOSES ONLY AND NOT FOR REPROCUREMENT PURPOSES. ITTG ALSO ALLEGES THAT CERTAIN COMPONENTS (COVERS AND PLATES, PART NUMBERS GS132-001, GS132-002, GS132-003 AND GS132-004) SUBASSEMBLIES OF ITEM 7; AND THE LOG FTC AMPLIFIER, PART NUMBER 172030-1, AND ITS SUBASSEMBLIES, A SUBASSEMBLY OF ITEM 9, ALL UNDER RFP 2286 ARE PROPRIETARY ITEMS TO ITTG. FURTHERMORE ITTG CONTENDS THAT IT IS TOTALLY INCONCEIVABLE HOW THE AIR FORCE COULD CONTEMPLATE AN AWARD TO THE OTHER OFFEROR UPON PROPER EVALUATION OF ITS ABILITY TO MEET THE DELIVERY REQUIREMENTS AND THAT AUCTION TECHNIQUES WERE USED IN ORDER TO LOWER ITTG'S PRICES.

IT SHOULD BE NOTED HERE THAT THE ADMINISTRATIVE REPORTS DATED JULY 23 AND AUGUST 18, 1970, WERE PREPARED PRIOR TO THE PREAWARD SURVEY OF STERLING WHICH WAS FURNISHED TO OUR OFFICE ALONG WITH THE SUPPLEMENTARY REPORT DATED OCTOBER 1, 1970.

THE CONTRACTING OFFICER'S FACTS AND FINDINGS DATED JULY 30, 1970, ON ITTG'S PROTEST TO RFP 2269, MAKE THE FOLLOWING COMMENTS:

"THE PROTESTANT ALLEGES THAT THE PROCUREMENT WAS INITIATED ON A SOLE SOURCE BASIS BECAUSE ONLY ITT GILFILLAN POSSESSED THE CAPABILITY AND RESPONSIBILITY TO SATISFY THE REQUIREMENT.

"COMMENT: UPON RECEIPT OF THE REQUIREMENT, A SINGLE SOURCE JUSTIFICATION FOR PROCUREMENT FROM ITT GILFILLAN WAS PREPARED BASED UPON THE GOVERNMENT'S INABILITY TO DEVELOP A COMPLETE REPROCUREMENT DATA PACKAGE SUFFICIENT TO INSURE COMPETITIVE PROCUREMENT. THE AIR FORCE DID NOT POSSESS A COMPLETE REPROCUREMENT DATA PACKAGE FOR THIS EQUIPMENT ON 20 JANUARY 1970, AT THE TIME OF ISSUANCE OF THE REQUEST FOR PROPOSAL (RFP), NOR DOES IT NOW POSSESS A COMPLETE REPROCUREMENT DATA PACKAGE.

"THE PROTESTANT ALLEGES THAT THE PROCUREMENT WAS THEN PLACED IN A COMPETITIVE CATEGORY UPON RECEIPT BY THE AIR FORCE OF AN UNSOLICITED PROPOSAL.

"COMMENT: STERLING LABORATORIES REQUESTED, BY ITS LETTER OF 2 DECEMBER 1969, THAT IT BE PERMITTED TO QUOTE ON THE RFP. BASED UPON STERLING'S LETTER REQUEST AND ASPR 1-1002.1, STERLING WAS GIVEN COPIES OF THE REQUEST FOR PROPOSAL, TOGETHER WITH A LETTER STATING THAT BECAUSE OF THE LACK OF REPROCUREMENT DATA IT WAS UNLIKELY THAT ANY OTHER COMPANY COULD QUOTE. STERLING LABORATORIES, HOWEVER, DID QUOTE AND SUBMIT FIRM PRICES FOR THE REQUIREMENTS OF THE RFP. THE GOVERNMENT, BASED UPON THE ABOVE-QUOTED STATEMENTS (IN INITIAL PROPOSAL) OF STERLING LABORATORIES AS TO THEIR CAPABILITY AND THE PREMISE THAT THE SAID CAPABILITY OF STERLING LABORATORIES COULD AND WOULD BE VERIFIED BY A PRE-AWARD SURVEY, DETERMINED THAT PRICE COMPETITION DID EXIST INASMUCH AS BOTH ITT GILFILLAN AND STERLING HAD QUOTED FIRM PRICES FOR THE REQUIREMENT WITHIN A COMPETITIVE PRICE RANGE. FURTHER, THE GOVERNMENT IS NOT REQUIRED TO AWARD A CONTRACT ON A SOLE SOURCE BASIS MERELY BECAUSE THE ORIGINAL AUTHORITY TO NEGOTIATE WAS ESTABLISHED ON THAT BASIS, AND FURTHER DEVELOPMENTS INDICATE THAT THE SOLE SOURCE NATURE OF THE PROCUREMENT CAN BE QUESTIONED.

"THE PROTESTANT ALLEGES THAT THE SUPPLIES DESCRIBED IN AND REQUIRED BY THE SOLICITATION ARE IDENTIFIED BY REFERENCE TO THE CONTRACTOR'S PART NUMBER FOR RFP ITEMS 1, 5, 11, AND 14.

"COMMENT: THIS IS TRUE, HOWEVER, IT HAS BEEN THE STANDARD PROCEDURE AND IT IS NOT CONSIDERED TO BE AGAINST REGULATIONS TO IDENTIFY REQUIREMENTS BY A CONTRACTOR'S PART NUMBER WHEN SUFFICIENT DATA IS NOT AVAILABLE TO ADEQUATELY DESCRIBE THE ITEMS.

"THE PROTESTANT ALLEGES THAT THE DRAWINGS FOR ITEMS 1, 5, 11 AND 14 WERE DELIVERED TO THE GOVERNMENT UNDER PRIOR CONTRACTS FOR LOGISTIC PURPOSES ONLY AND NOT FOR REPROCUREMENT PURPOSES.

"COMMENT: THIS IS TRUE. THE DATA FOR ITEMS 1, 11 AND 14 WAS PROCURED AGAINST ITT GILFILLAN CONTRACTS F04606-67-A-0587, ORDER SD41, AND F34601- 69-C-0331. REPROCUREMENT DATA WAS REQUESTED ON ORDER SD41, HOWEVER, ITT GILFILLAN WOULD NOT QUOTE AND IT WAS AGREED THAT ONLY CATEGORY H AND I TYPE DRAWING E-12 (E112) DATA WOULD BE PROCURED. THE AIR FORCE DID NOT REQUEST REPROCUREMENT DATA ON F34601-69-C-0331 IN VIEW OF ITT GILFILLAN'S REFUSAL TO QUOTE ON THE PREVIOUS ORDER SD41. ITEM 5 IS A NEW ITEM. THE AIR FORCE HAS NEVER PROCURED EITHER THIS ITEM OR THE DATA PERTAINING THERETO AND THEREFORE NO DATA EXISTS WITHIN THE AIR FORCE.

"THE PROTESTANT ALLEGES THAT THE OTHER OFFEROR DOES NOT HAVE ADEQUATE DATA TO COMPLETE THE REQUIREMENTS OF THE CONTRACT IF IT WERE TO BE AWARDED THE CONTRACT.

"COMMENT: STERLING LABORATORIES HAD FIRMLY CONTENDED AND STATED DURING VARIOUS MEETINGS BETWEEN THE AIR FORCE AND ITSELF THAT IT POSSESSED THE KNOWLEDGE NECESSARY AND HAD DATA TO MANUFACTURE THE EQUIPMENT. HOWEVER, DURING A 13 JAN 1970 MEETING BETWEEN OCAMA AND STERLING, REPRESENTATIVES DURING A 13 JAN 1970 MEETING BETWEEN OCAMA AND STERLING, REPRESENTATIVES OF THAT COMPANY ADMITTED THAT STERLING DID NOT HAVE ALL DATA NECESSARY AND REQUESTED FROM OCAMA AN INDEX TO THE DRAWINGS. DATA LISTS DL-172000-1, DL -177885, DL-177872 AND DL 1778879 WERE FURNISHED TO STERLING LAB. STERLING SUBSEQUENTLY REQUESTED ALL THE DRAWINGS LISTED ON THE ABOVE CITED DATA LISTS. IT IS TO BE NOTED THAT THESE DATA LISTS WERE FURNISHED ON ITT GILFILLAN CONTRACTS F04606-67-A-0587, ORDER SD41, AND F34601-69-C-0331. OCAMA, ON 22 JAN 1970, FURNISHED STERLING LABORATORIES 570 EACH CATEGORY H DRAWINGS WITH SPECIFIC NOTIFICATION THAT THE GOVERNMENT DID NOT CERTIFY TO COMPLETENESS OR THAT DATA FURNISHED WAS ADEQUATE FOR MANUFACTURING PURPOSES.

"THE PROTESTANT ALLEGES THAT IF THE DATA HAS BEEN SUPPLIED BY THE AIR FORCE, IT IS A VIOLATION OF ITT GILFILLAN'S TECHNICAL DATA RIGHTS AND ANY SUCH AWARD WOULD BE A CONTRAVENTION OF SAID RIGHTS.

"COMMENT: ALL DATA FURNISHED TO STERLING LABORATORIES, AS CITED IN B.(3) ABOVE, WAS VISUALLY CHECKED FOR THE PRESENCE OF ANY CONTRACTOR'S LIMITED RIGHTS LEGEND. OCAMA DID NOT FURNISH TO STERLING LABORATORIES ANY DRAWINGS WHICH HAD A LIMITED RIGHTS LEGEND.

"THE PROTESTANT STATES THAT ITT GILFILLAN PROPRIETARY ITEMS WERE DEVELOPED AT ITT EXPENSE AND ARE BEING SOLD ALL OVER THE WORLD AT A "STANDARD CATALOG PRICE". "COMMENT: INFORMATION AVAILABLE TO OCAMA INDICATES THAT THIS STATEMENT IS TRUE IN THE CASE OF ITEMS 1 AND 5. THE BEST OF THE AIR FORCE'S KNOWLEDGE, ITEMS 1 AND 5 ARE THE ONLY 'STANDARD CATALOG PRICED' ITEMS ON THE REQUEST FOR PROPOSAL. INFORMAL STATEMENTS FROM BOTH STERLING AND ITT GILFILLAN INDICATE THAT STERLING HAS REQUESTED AND RECEIVED A QUOTE ON ITEMS 1 AND 5 OF THE RFP FROM ITT GILFILLAN.

"THE PROTESTANT ALLEGES THAT IT IS TOTALLY INCONCEIVABLE HOW THE AIR FORCE COULD CONTEMPLATE AN AWARD TO THE OTHER OFFEROR UPON AN EVALUATION OF ITS ABILITY TO MEET DELIVERY REQUIREMENTS, AND FURNISHES A DELIVERY SCHEDULE FROM ITT'S VENDORS FOR NINE (9) PARTS IN SUPPORT OF THEIR POSITION.

"COMMENT: THE GOVERNMENT HAS A PRE-AWARD SURVEY SYSTEM TO DETERMINE IF A CONTRACTOR CAN MEET A REQUIRED DELIVERY SCHEDULE, HAS THE NECESSARY DATA AND PRODUCTION FACILITIES, AND IF HE HAS MADE THE NECESSARY PRELIMINARY CONTACTS WITH QUALIFIED VENDORS. A PRE-AWARD SURVEY WILL BE PERFORMED UPON THE APPARENT SUCCESSFUL OFFEROR FOR THIS PROCUREMENT PRIOR TO AWARD, WHETHER IT BE STERLING LABORATORIES OR ITT GILFILLAN.

"THE PROTESTANT STATES 'THAT ANY RESPONSIVE DELIVERY QUOTED BY ANOTHER OFFEROR WITHOUT HAVING ALREADY COMMENCED PERFORMANCE WOULD BE TOTALLY UNREALISTIC.'

"COMMENT: THIS POSITION REPRESENTS THE PROTESTANT'S VIEWS. THE VERIFICATION OF THE DELIVERY CAPABILITIES OF THE APPARENT SUCCESSFUL OFFEROR CAN AND WILL BE MADE DURING THE PRE-AWARD SURVEY.

"ITT GILFILLAN HAS, BY USING ITS OWN FUNDS, TAKEN UPON ITSELF THE ACTION NECESSARY TO MEET THE URGENT NEEDS OF THE AIR FORCE. THIS ACTION IS CONTINUING AND WILL ENABLE US TO MEET ANY ACCELERATED DELIVERY DESIRES. WE CAN START DELIVERY AS EARLY AS AUGUST 1970. THE AFORESAID ACTION WAS TAKEN WITH THE ENCOURAGEMENT OF THE AIR FORCE.

"COMMENT: THE CONTRACTING OFFICER HAS NEVER ENCOURAGED NOR IS HE AWARE OF ANY OTHER AIR FORCE PERSONNEL AT THIS HEADQUARTERS WHO HAVE ENCOURAGED ITT GILFILLAN TO PROCEED WITH ANY ENGINEERING OR PRODUCTION ACTION IN CONNECTION WITH THIS PROCUREMENT.

IN ADDITION THE CONTRACTING OFFICER'S REPORT DATED JULY 31, 1970, MAKES THE FOLLOWING COMMENTS ON THE PROTEST OF ITTG RELATIVE TO RFP 2286:

"THE PROTESTANT ALLEGES THAT CERTAIN COMPONENTS (COVERS AND PLATES, PART NUMBERS GS132-001, GS132-002, GS132-003 AND GS132-004) SUBASSEMBLIES OF ITEM 7 AND THE LOG FTC AMPLIFIER, PART NUMBER 172030 1, AND ITS SUBASSEMBLIES, A SUBASSEMBLY OF ITEM 9 ARE PROPRIETARY ITEMS TO ITT GILFILLAN.

"COMMENT: THE CLAIMED PROPRIETARY STATUS OF THE COMPONENT PARTS (COVERS AND PLATES, PART NUMBERS GS132-001, GS132-002, GS132-003 AND GS132-004) UNDER ITEM 7 CANNOT BE VALIDATED OR VERIFIED AT THIS STAGE OF THE PROCUREMENT SINCE THEY ARE IN FACT COMPONENT PARTS OF A HIGHER ASSEMBLY.

"THE LOG FTC AMPLIFIER, PART NUMBER 172030-1 IS A SUBASSEMBLY OF PART NUMBER 100690-2, MOVING TARGET INDICATOR GROUP BEING PROCURED UNDER ITEM 9. SAID LOG FTC AMPLIFIER, PART NUMBER 172030-1 IS RECOGNIZED BY BOTH THE AIR FORCE AND THE OTHER OFFEROR AS BEING PROPRIETARY TO ITT GILFILLAN. INFORMAL STATEMENTS FROM BOTH STERLING LABORATORIES AND ITT GILFILLAN INDICATE THAT STERLING LABORATORIES HAS REQUESTED AND RECEIVED A QUOTE FROM ITT GILFILLAN FOR THE LOG FTC AMPLIFIER PART NUMBER 172030-1.

"THE CLAIMED PROPRIETARY STATUS OF THE SUBASSEMBLIES OF THE LOG FTC AMPLIFIER, PART NUMBER 172030-1 UNDER ITEM 9 CANNOT BE ASCERTAINED AT THIS TIME SINCE THE PROTESTANT DID NOT IDENTIFY BY PART NUMBER OR ANY OTHER MEANS OF IDENTIFICATION THE SUBASSEMBLIES OF THE LOG FTC AMPLIFIER TO WHICH HE WAS CLAIMING PROPRIETARY RIGHTS.

"IF FURTHER INVESTIGATION SHOULD REVEAL THAT THE COMPONENT PARTS OF ITEM 7, AS CITED, AND THE SUBASSEMBLIES OF THE LOG FTC AMPLIFIER SUBASSEMBLY UNDER ITEM 9 ARE IN FACT PROPRIETARY TO ITT GILFILLAN, THE AIR FORCE WILL AND SHALL RECOGNIZE THE SAID APPLICABLE PROPRIETARY RIGHTS.

"THE PROTESTANT STATES THAT ITT GILFILLAN PROPRIETARY ITEMS WERE DEVELOPED AT ITT EXPENSE AND ARE BEING SOLD ALL OVER THE WORLD AT A 'STANDARD CATALOG PRICE.'

"COMMENT: INFORMATION AVAILABLE TO OCAMA INDICATES THAT THIS STATEMENT IS TRUE IN THE CASE OF THE SUBASSEMBLY LOG FTC AMPLIFIER, PART NUMBER 172030- 1 UNDER ITEM 9. TO THE BEST OF THE AIR FORCE'S KNOWLEDGE, THE LOG FTC AMPLIFIER SUBASSEMBLY UNDER ITEM 9 IS THE ONLY 'STANDARD CATALOG PRICED' ITEM ON THE REQUEST FOR PROPOSAL. AS STATED IN PARAGRAPH A(1) ABOVE, STERLING LABORATORIES HAS REQUESTED AND RECEIVED A QUOTE FROM ITT GILFILLAN FOR SAID LOG FTC AMPLIFIER.

"THE PROTESTANT ALLEGES THAT THE DRAWINGS FOR ITEMS 7 AND 9 WERE DELIVERED TO THE GOVERNMENT UNDER PRIOR CONTRACTS FOR LOGISTIC PURPOSES ONLY AND NOT FOR REPROCUREMENT PURPOSES.

"COMMENT: THIS IS TRUE. THE DATA FOR ITEMS 7 AND 9 WAS PROCURED AGAINST ITT GILFILLAN CONTRACTS F04606-67-A-0587, ORDER SD41, AND F34601-69-C- 0331. REPROCUREMENT DATA WAS REQUESTED ON ORDER SD41, HOWEVER, ITT GILFILLAN WOULD NOT QUOTE AND IT WAS AGREED THAT ONLY CATEGORY H AND I TYPE DRAWINGS E-12 (E112) DATA WOULD BE PROCURED. THE AIR FORCE DID NOT REQUEST REPROCUREMENT DATA ON F34601-69-C-0331 IN VIEW OF ITT GILFILLAN'S REFUSAL TO QUOTE ON THE PREVIOUS ORDER SD41.

"THE PROTESTANT ALLEGES THAT ANY OTHER OFFEROR SHOULD NOT HAVE ADEQUATE DATA TO COMPLETE THE REQUIREMENTS OF THE CONTRACT.

"COMMENT: STERLING LABORATORIES STATED IN ITS 12 FEBRUARY 1970 MESSAGE 'STERLING POSSESSES SUFFICIENT DATA IN HOUSE TO SUBMIT A RESPONSIVE QUOTATION.'

"STERLING LABORATORIES ALSO STATED IN THEIR MESSAGE OF 16 APRIL 1970: 'WE CERTIFY THAT WE POSSESS THE LATEST DATA, FACILITIES, EQUIPMENT AND TECHNICAL COMPETENCE TO PERFORM AS A PRIME CONTRACTOR ON THESE ITEMS.'

"THE VALIDITY OF STERLING'S STATEMENTS WILL BE VERIFIED DURING A PREAWARD SURVEY THAT WILL BE CONDUCTED UPON STERLING LABORATORIES IF THEY ARE DETERMINED TO BE THE APPARENT SUCCESSFUL RESPONSIVE OFFEROR.

"THE PROTESTANT ALLEGES THAT IF THE DATA HAS BEEN SUPPLIED BY THE AIR FORCE, IT IS A VIOLATION OF ITT GILFILLAN'S TECHNICAL DATA RIGHTS AND ANY SUCH AWARD WOULD BE A CONTRAVENTION OF SAID RIGHTS.

"COMMENT: STERLING LABORATORIES DID NOT REQUEST ANY DATA TO BE FURNISHED BY THE AIR FORCE UNDER RFP F34601-70-R-2286 AND THE AIR FORCE HAS FURNISHED NO DATA TO STERLING LABORATORIES UNDER RFP F34601-70-R 2286.

"HOWEVER IT IS ASSUMED THE PROTESTANT IS REFERRING TO DATA FURNISHED BY THE AIR FORCE TO STERLING LABORATORIES UNDER RFP F34601-70-R-2269 IN THAT THE LOG FTC AMPLIFIER, PART NUMBER 172030-1 IS A KIT COMPONENT UNDER ITEMS 1 AND 5 OF RFP F34601-70-R-2269 AND A SUBASSEMBLY UNDER ITEM 9 OF RFP F34601-70-R-2286 AND THAT THE COVERS AND PLATES, PART NUMBERS GS132-001, GS132-002, GS132-003, AND GS132-004 ARE KIT COMPONENTS UNDER ITEM 11 OF RFP F34601-70-R-2269 AND SUBASSEMBLIES UNDER ITEM 7 OF RFP F34601-70-R- 2286.

"STERLING LABORATORIES, UNDER RFP F34601-70-R-2269 REQUESTED AN INDEX TO THE DRAWINGS APPLICABLE TO THAT PROCUREMENT. DATA LISTS LD-172000 1, DL- 177885, DL-177872 AND DL-177879-1 WERE FURNISHED TO STERLING LABORATORIES. STERLING SUBSEQUENTLY REQUESTED ALL THE DRAWINGS LISTED ON THE ABOVE CITED DATA LISTS. IT IS TO BE NOTED THAT THESE DATA LISTS WERE FURNISHED ON ITT GILFILLAN CONTRACTS F04606-67-A-0587, ORDER SD41, AND F34601-69-C-0331. OCAMA, ON 22 JAN 1970, FURNISHED STERLING LAB 570 EACH CATEGORY H DRAWINGS WITH SPECIFIC NOTIFICATION THAT THE GOVERNMENT DID NOT CERTIFY TO COMPLETENESS OR THAT DATA FURNISHED WAS ADEQUATE FOR MANUFACTURING PURPOSES:

"ALL DATA FURNISHED TO STERLING LABORATORIES, AS CITED ABOVE, WAS VISUALLY CHECKED FOR THE PRESENCE OF ANY CONTRACTOR'S LIMITED RIGHTS LEGEND. OCAMA DID NOT FURNISH TO STERLING LABORATORIES ANY DRAWINGS WHICH HAD A LIMITED RIGHTS LEGEND.

"THE PROTESTANT ALLEGES THAT THE PROCUREMENT WAS INITIATED ON A SOLE SOURCE BASIS BECAUSE ONLY ITT GILFILLAN POSSESSED THE CAPABILITY AND RESPONSIBILITY TO SATISFY THE REQUIREMENTS.

"COMMENT: UPON RECEIPT OF THE REQUIREMENT, A SINGLE SOURCE JUSTIFICATION FOR PROCUREMENT FROM ITT GILFILLAN WAS PREPARED BASED UPON THE GOVERNMENT'S INABILITY TO DEVELOP A COMPLETE REPROCUREMENT DATA PACKAGE SUFFICIENT TO INSURE COMPETITIVE PROCUREMENT. THE AIR FORCE DID NOT POSSESS A COMPLETE REPROCUREMENT DATA PACKAGE FOR THIS EQUIPMENT ON 3 FEBRUARY 1970, AT THE TIME OF ISSUANCE OF THE REQUEST FOR PROPOSAL (RFP), NOR DOES IT NOW POSSESS A COMPLETE REPROCUREMENT DATA PACKAGE.

"THE PROTESTANT ALLEGES THAT THE SUPPLIES DESCRIBED IN AND REQUIRED BY THE SOLICITATION ARE IDENTIFIED BY REFERENCE TO THE CONTRACTOR'S PART NUMBER FOR RFP ITEMS 1, 3, 5, 7, 9, 11, AND 13.

"COMMENT: THIS IS TRUE. HOWEVER, IT HAS BEEN THE STANDARD PROCEDURE AND IT IS NOT CONSIDERED TO BE AGAINST REGULATIONS TO IDENTIFY REQUIREMENTS BY A CONTRACTOR'S PART NUMBER WHERE SUFFICIENT DATA IS NOT AVAILABLE TO ADEQUATELY DESCRIBE THE ITEMS.

"THE PROTESTANT ALLEGES THAT THE PROCUREMENT WAS THEN PLACED IN A COMPETITIVE CATEGORY UPON RECEIPT BY THE AIR FORCE OF AN UNSOLICITED PROPOSAL.

"COMMENT: STERLING LABORATORIES REQUESTED, BY ITS MESSAGE OF 12 FEBRUARY 1970, THAT IT BE PERMITTED TO QUOTE ON THE RFP. BASED UPON STERLING'S MESSAGE REQUEST AND ASPR 1-1002.1, STERLING WAS GIVEN COPIES OF THE REQUEST FOR PROPOSAL, TOGETHER WITH A LETTER STATING THAT BECAUSE OF THE LACK OF REPROCUREMENT DATA IT WAS UNLIKELY THAT ANY OTHER COMPANY COULD QUOTE. STERLING LABORATORIES, HOWEVER, DID QUOTE AND SUBMIT FIRM PRICES FOR THE REQUIREMENTS OF THE RFP.

"STERLING LABORATORIES, IN THEIR MESSAGE OF 12 FEBRUARY 1970, STATED:

"'WE UNDERSTAND THE ITEMS ON THE RFQ HAVE BEEN DETERMINED TO BE SOLE SOURCE. WE REQUEST OCAMA REVIEW THIS ACTION AS STERLING POSSESSES SUFFICIENT DATA IN HOUSE TO SUBMIT A RESPONSIVE QUOTATION. WE INVITE AN IN-PLANT REVIEW BY REPRESENTATIVES OF OCAMA TO ASCERTAIN OUR POSITION.'

"STERLING LABORATORIES, IN THEIR MESSAGE OF 16 APRIL 1970, STATED:

"'WE CERTIFY THAT WE POSSESS THE LATEST DATA, FACILITIES, EQUIPMENT AND TECHNICAL COMPETENCE TO PERFORM AS A PRIME CONTRACTOR ON THESE ITEMS.'

"THE GOVERNMENT, BASED UPON THE ABOVE QUOTED STATEMENTS OF STERLING LABORATORIES AS TO THEIR CAPABILITY AND THE PREMISE THAT THE SAID CAPABILITY OF STERLING LABORATORIES COULD AND WOULD BE VERIFIED BY A PRE- AWARD SURVEY DETERMINED THAT PRICE COMPETITION DID EXIST INASMUCH AS BOTH ITT GILFILLAN AND STERLING HAD QUOTED FIRM PRICES FOR THE REQUIREMENT WITHIN A COMPETITIVE PRICE RANGE. FURTHER THE GOVERNMENT IS NOT REQUIRED TO AWARD A CONTRACT ON A SOLE SOURCE BASIS MERELY BECAUSE THE ORIGINAL AUTHORITY TO NEGOTIATE WAS ESTABLISHED ON THAT BASIS, AND FURTHER DEVELOPMENTS INDICATE THAT THE SOLE SOURCE NATURE OF THE PROCUREMENT CAN BE QUESTIONED.

"THE PROTESTANT ALLEGES THE AIR FORCE'S PRESENT ATTITUDE IS NOT TO RESPECT ITT GILFILLAN PROPRIETARY RIGHTS.

"COMMENT: THE CONTRACTING OFFICER IS NOT AWARE OF ANY INSTANCE IN WHICH THE PROPRIETARY RIGHTS OR ANY OTHER RIGHTS OF ITT GILFILLAN HAVE BEEN ABRIDGED OR NOT RESPECTED ON THIS PROCUREMENT OR ANY OTHER PROCUREMENT. THE AIR FORCE HAS AND WILL CONTINUE TO PROTECT ANY AND ALL RIGHTS OF ALL THE PARTIES IN CONNECTION WITH ANY TRANSACTIONS IT MIGHT HAVE WITH INDUSTRY."

SINCE THE REPORTS STATE FLATLY THAT ALL DATA FURNISHED TO STERLING WAS VISUALLY CHECKED FOR THE PRESENCE OF ANY CONTRACTOR'S "LIMITED RIGHTS" LEGEND AND NO DRAWINGS WHICH HAD A LIMITED RIGHTS LEGEND WERE FURNISHED TO STERLING, THE QUESTION WHETHER THE GOVERNMENT MADE ITTG PROPRIETARY DRAWINGS AVAILABLE TO STERLING IS FACTUAL IN NATURE. IN DISPUTES AS TO FACTS, WE ACCEPT AS PRIME FACIE CORRECT THE AGENCY'S POSITION. 40 COMP. GEN. 178 (1960). IT IS, MOREOVER, OUR OPINION THAT NO VIOLATION OF PROPRIETARY RIGHTS IS APPARENT ON THIS RECORD. TO THE CONTRARY, THE EVIDENCE INDICATES THAT STERLING ACKNOWLEDGES ITTG'S PROPRIETARY RIGHTS IN THE LOG FTC AMPLIFIER AND HAS QUOTES FROM ITTG FOR FURNISHING THIS CATALOG ITEM. FURTHERMORE, THERE IS NOTHING IN THE RECORD TO INDICATE THAT IF STERLING WERE TO FURNISH THE COMPONENTS THROUGH "REVERSE ENGINEERING," THAT IT GAINED ITS KNOWLEDGE OTHER THAN BY MEANS OF LEGITIMATE PROCESSES RATHER THAN BY RECEIPT FROM THE GOVERNMENT OF CONFIDENTIAL DRAWINGS.

WE CONCUR WITH THE CONTRACTING OFFICER THAT THE QUESTION WHETHER STERLING CAN OR CAN NOT MEET THE DELIVERY DATE AS PROVIDED IN THE AMENDED RFP 2269, AND RFP 2286, ARE MATTERS DEALING WITH STERLING'S RESPONSIBILITY AS TO WHICH THE CONTRACTING OFFICER MUST MAKE THE FACTUAL DETERMINATION, AND, HERE AGAIN, WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER UNLESS AND UNTIL IT IS SHOWN BY CONVINCING EVIDENCE THAT SUCH DETERMINATION IS ARBITRARY, OR NOT BASED ON SUBSTANTIAL EVIDENCE. 43 COMP. GEN. 257, 258; 38 ID 778. IN VIEW OF THE ABOVE, WE FIND NO BASIS UPON WHICH TO QUESTION THE ACTIONS OF THE CONTRACTING OFFICER AND ITTG'S PROTESTS ON THESE ISSUES ARE DENIED.

STERLING'S PROTEST UNDER RFQ 2269, AS STATED PREVIOUSLY, PRECEDED THE REOPENING OF NEGOTIATIONS BY AMENDMENT 002 DATED JUNE 24, 1970, WHICH FIXED A FINAL CUT-OFF DATE OF JULY 6, 1970, LATER EXTENDED TO JULY 15, 1970, BY AMENDMENT 003, DATED JULY 2, 1970. THE CONTRACTING OFFICER'S REPORT DATED JULY 11, 1970, CONTAINS LENGTHY RESPONSES TO STERLING'S ALLEGATIONS ABOUT UNTIMELY ANSWERING OF STERLING'S CORRESPONDENCE AND REQUESTS FOR DRAWINGS AND DATA WHICH WE DO NOT RESTATE HERE SINCE IT HAS BEEN ESTABLISHED BY THE PRE-AWARD SURVEY CONDUCTED ON STERLING, WITH A RETURN DATE OF JULY 30, 1970, THAT THEY HAVE SUFFICIENT DATA TO MANUFACTURE THE SUBJECT PROCUREMENT EXCEPT FOR DIRECT PURCHASE OF PROPRIETARY ITEMS. BOTH STERLING AND ITTG HAVE BEEN EXTENDED THE OPPORTUNITY BY OUR OFFICE TO RESPOND TO THE CONTRACTING OFFICER'S REPORTS. AS A RESULT OF RESPONSES THERETO, WE THINK THE NUMEROUS POINTS RAISED BY STERLING CAN BE RESOLVED BY THE DETERMINATION OF TWO GROUNDS FOR ITS PROTEST NAMELY, THE FAILURE TO TECHNICALLY CONSIDER STERLING'S LOG FTC OFFERED INITIALLY UNDER THE PROPOSAL SUBMITTED FEBRUARY 4, 1970, AND THE RESTRICTION OF COMPETITION BY INCLUSION OF KNOWN SOLE SOURCE ITEMS IN THE LIST OF COMPONENTS FORMING THE END ITEMS. STERLING, IN SUPPORT THEREOF ASSERTS THAT THE GOVERNMENT, BY REFUSING TO MAKE A SPLIT AWARD OF THE PROPRIETARY AND NON-PROPRIETARY ITEMS, IS NOT REALIZING THE SAVINGS THAT COULD BE HAD BY COMBINING THE ITTG LOG FTC AMPLIFIERS REQUIRED UNDER ITEMS 1 AND 5 OF RFP 2269 WITH THOSE QUANTITIES REQUIRED UNDER ITEM 9 OF RFP 2286, SINCE THE CATALOG PRICES OFFERED BY ITTG ON RFP 2269 ARE ON THE BASIS OF PRICES FOR QUANTITIES OF 50 TO 99, WHICH ARE LOWER, WHILE ON RFP 2286 PRICES ARE OFFERED ON THE BASIS OF QUANTITIES OF FROM 1 TO 5 WHICH ARE HIGHER. IT IS ALLEGED BY STERLING THAT THERE IS NO "INPUT" OR "OUTPUT" OF LABOR TO THE END ITEM ON THESE COMPONENTS OTHER THAN CODING AND PACKAGING. BOTH ITTG AND STERLING STATE THAT THE LOG FTC AMPLIFIERS ARE ESSENTIALLY THE SAME UNDER BOTH PROPOSALS.

THE INITIAL ADMINISTRATIVE REPORT DATED JULY 11, 1970, INCLUDED THE FOLLOWING STATEMENTS REGARDING THE REJECTION OF STERLING'S LOG FTC:

"OCAMA REASONS FOR DETERMINING THE STERLING LOG FTC WAS 'NOT ACCEPTABLE' ARE AS FOLLOWS:

"1. TECHNICAL DATA WOULD HAVE TO BE PROCURED FOR THE ITEM ITSELF PLUS REVISION OF EXISTING TECHNICAL MANUALS.

"2. COMPLETE PROVISIONING DATA WOULD HAVE TO BE PROCURED.

"3. ENGINEERING DATA WOULD HAVE TO BE PROCURED.

"OCAMA'S REQUIREMENT FOR A LOG FTC ASSEMBLY IS FOR AN IDENTICAL ITEM PRESENTLY IN THE INVENTORY AND PRESENTLY INSTALLED IN 30 GCA/RAPCONS. INTRODUCTION OF ANOTHER PART NUMBERED ITEM INTO THE INVENTORY PRESENTS ADDITIONAL INDEFINITE LOGISTIC SUPPORT IMPACT. TWO DIFFERENTLY CONFIGURED ITEMS ALSO REQUIRE A LARGER SPARE PARTS INVENTORY WHICH WOULD REQUIRE ADDITIONAL INVENTORY MANAGEMENT ACTIONS AND INCREASED COSTS. STERLING INDICATES THEY POINTED OUT AT THE 4 MARCH 70 MEETING THAT THE LOG FTC ASSEMBLY WAS NOT CONSIDERED A PART OF THE BASE LINE MODIFICATION AND THAT THESE SAME ASSEMBLIES ARE BEING PROCURED ON RFP 2286. FACTUALLY THE 4 KITS BEING PROCURED ON RFP 2269, BY PART NUMBER, ARE NOT BEING PROCURED ON RFP 2286. THERE ARE NO COMMON PART NUMBERS BEING PROCURED ON THESE TWO RFPS. HOWEVER ITEM 9 OF RFP 2286 IS A NEXT HIGHER ASSEMBLY WHICH DOES CONTAIN AS A COMPONENT, THE LOG FTC ASSEMBLY."

WHILE THE RECORD WOULD INDICATE THAT STERLING ACCEPTED THIS DETERMINATION AND THEREAFTER OFFERED THE ITTG LOG FTC AMPLIFIERS, WHICH WERE INCLUDED IN THE TOTAL PROCUREMENT PRICE, BUT REFLECTED AS ITTG CATALOG PRICES, WE THINK THAT THE CONTRACTING OFFICER'S EXPLANATION DOES NOT ANSWER THE POINT OF PROTEST BY STERLING. STERLING, IT APPEARS, BASES ITS PROTEST ON THE PRICE AND COMPETITIVENESS OF ITS LOG FTC AMPLIFIER AS A COMPONENT OFFERED AS AN INDIVIDUAL ITEM. ON THIS BASIS WE BELIEVE THAT EFFORTS SHOULD HAVE BEEN MADE TO DETERMINE WHETHER OR NOT STERLINGS' LOG FTC AMPLIFIER WAS TECHNICALLY ACCEPTABLE, ESPECIALLY SINCE STERLING'S UNIT PRICE WAS SUBSTANTIALLY LOWER THAN THE ITTG CATALOG PRICE AND STERLING OFFERED TO FURNISH TO THE GOVERNMENT UNLIMITED RIGHTS ON THE DESIGN OF THE ALLEGEDLY COMPLETE INTERCHANGEABLE AND APPROVED LOG FTC AMPLIFIER.

THE ADMINISTRATIVE REPORT DOES NOT STATE THE REASON WHY THERE WAS NO TECHNICAL EVALUATION. IT STATES ONLY THAT AT THE TIME, FEBRUARY 4, 1970, OF THE ALTERNATE OFFER, THE SOLICITATION WAS STILL DETERMINED TO BE A NON- COMPETITIVE SOLE-SOURCE PROCUREMENT, AND THAT COST SAVINGS INDICATED BY STERLING WOULD NOT MATERIALIZE BECAUSE DATA WOULD HAVE TO BE PROCURED AS INDICATED ABOVE. THE RECORD DOES NOT INDICATE THAT ANY COST EFFECTIVENESS STUDY WAS MADE.

BOTH 10 U.S.C. 2304(G) AND ASPR 3-805.1(A) GENERALLY REQUIRE DISCUSSIONS WITH OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. "OTHER FACTORS" HAVE BEEN HELD TO INCLUDE THE TECHNICAL ACCEPTABILITY OF PROPOSALS. 46 COMP. GEN. 606 (1967). IN OUR OPINION, A PROPOSAL MUST BE REGARDED AS BEING WITHIN A COMPETITIVE RANGE UNLESS IT IS SO TECHNICALLY DEFICIENT OR OUT OF LINE IN PRICE AS TO PRECLUDE FURTHER MEANINGFUL NEGOTIATIONS. THE RECORD DOES NOT EVIDENCE THAT STERLING'S OFFER WAS NOT IN THE COMPETITIVE RANGE PRICE WISE AS APPARENTLY NO EVALUATION WAS MADE CONCERNING THE COST OF PROVISIONING AND ENGINEERING DATA NOR DOES THE RECORD REFLECT THAT THE TIME ELEMENT WAS A CONTROLLING FACTOR. WHILE WE DO NOT CONCLUDE THAT THE CONTRACTING OFFICER'S DECISION WAS CLEARLY ARBITRARY OR CAPRICIOUS, SINCE STERLING HAS BEEN DETERMINED TO POSSESS THE CAPACITY TO PRODUCE THE IDENTICAL ITEMS, WE BELIEVE THAT AN AFFIRMATIVE EFFORT SHOULD HAVE BEEN MADE TO ASCERTAIN, AND OBTAIN, THE PRECISE INFORMATION NEEDED TO ESTABLISH THE ACCEPTABILITY OR UNACCEPTABILITY OF THE PROPOSAL FROM BOTH A TECHNICAL AND OVERALL COST BENEFIT BASIS.

AS A RESULT OF EVALUATION OF THE PROPOSALS SUBMITTED BY THE CLOSING DATE OF JULY 15, 1970, THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR) TO MAKE A PREAWARD SURVEY OF STERLING. THE PREAWARD SURVEY FOUND THAT STERLING WAS CONSIDERED CAPABLE OF PERFORMING THE PROPOSED CONTRACT BUT DID NOT RECOMMEND AWARD BASED UPON DOUBT OF ITS MEETING THE DELIVERY SCHEDULE. IN THIS REGARD, FACTORS 13 AND 14 OF THE PREAWARD SURVEY ENTITLED "ABILITY TO MEET REQUIRED SCHEDULE & OTHERS", WERE CONSIDERED UNSATISFACTORY, AND STATED AS FOLLOWS:

"DETAILED REVIEW OF CRITICAL LONG LEAD TIME ITEMS IDENTIFIED FIVE ITEMS FALLING WITHIN THIS AREA. BIDDER PROVIDED QUOTES ON THESE ITEMS RANGING FROM FOUR WEEKS TO SEVEN MONTHS ARO. THE RFP WHICH RESULTED IN THE PROPOSAL OF STERLING LABS INCLUDES A MODIFICATION WHICH REQUIRES DELIVERY OF FOUR UNITS IN OCTOBER 1970. AT THE TIME OF PERFORMANCE OF THIS PAS THE PROCUREMENT CONTRACTING OFFICER'S MILESTONE CHART CONTEMPLATED AWARD ON 4 SEPTEMBER 1970; FROM THAT DATE TO 30 OCTOBER 1970, THE LATEST DATE THAT TIMELY DELIVERY COULD BE MADE, ALLOWS ONLY 58 DAYS. THE MICRO MEGA PARAMETRIC AMPLIFIER WAS QUOTED AT 90 DAYS ARO; HOWEVER, MICRO MEGA STATED THAT THIS TIME COULD BE REDUCED AT PREMIUM RATES. STERLING STATED THAT THEY WERE PREPARED TO PROCURE AT A PREMIUM. MICRO MEGA ALSO REPORTED THAT RELIEF FROM THEIR QUOTE TO ANOTHER USER WOULD RELEASE CAPABILITY FOR MORE TIMELY PRODUCTION. THE LOG-FTC AMPLIFIER REMAINS AS THE ONLY IMPEDIMENT TO A RECOMMENDATION FOR COMPLETE AWARD. THIS IS A PROPRIETARY ITEM TO ITT GILFILLAN WHO HAS QUOTED STERLING 7 MONTHS DELIVERY EVEN THOUGH THIS IS A CATALOG ITEM IN CONTINUOUS PRODUCTION.

FOR THIS REASON THE TEAM HESITATES TO SUBMIT A 'NO AWARD' RECOMMENDATION. IF THE PROBLEM RELATIVE TO THE RESPONSIBILITY FOR ACQUISITION OF THE LOG-FTC AMPLIFIER CAN BE RESOLVED, THIS TEAM'S RECOMMENDATION WOULD BE 'UNQUALIFIED AFFIRMATIVE'. FAILURE TO RESOLVE THIS PROBLEM WILL RESULT IN A CONTINGENCY WHICH IS TANTAMOUNT TO A NEGATIVE RECOMMENDATION.

2. CONSIDERING THE PROJECTED TIMES OF ACQUISITION OF THE LOG-FTC AMPLIFIER, THE OCAMA ASSISTANCE TEAM SUBMITS A QUALIFIED RECOMMENDATION."

IN AN APPARENT EFFORT TO BREAK-OUT THE PROPRIETARY LOG FTC THE RECORD SHOWS THAT ON AUGUST 18, 1970, HEADQUARTERS AIR FORCE LOGISTICS COMMAND, SUBMITTED THE FOLLOWING FINDINGS AND DETERMINATIONS TO THE ASSISTANT SECRETARY OF THE AIR FORCE ON THE EFFECTS ON DELIVERY IF A CONTRACT AWARD WAS MADE TO STERLING. THE FOLLOWING FINDINGS ARE PREMISED ON THE EMPHATIC STATEMENT BY ITTG THAT IT WOULD NOT DELIVER THE LOG FTC TO THE AIR FORCE AS A SEPARATE ITEM IN LESS THAN SEVEN MONTHS, ITTG, HOWEVER, IF AWARDED THE CONTRACTS WOULD MAKE DELIVERY AS SCHEDULED:

"EFFECT OF SPLIT AWARD ON AIR FORCE REQUIREMENTS

"1. DELIVERY REQUIREMENTS SPECIFIED IN THE RFP ARE BASED ON AN AFCS INSTALLATION PLAN CALLING FOR 100 % PROGRAM COMPLETION DURING FY 71. SPLIT AWARD (LOG-FTC TO ITT GILFILLAN AND OTHER ITEMS TO STERLING) WILL NOT MEET THE DELIVERY REQUIREMENTS NECESSARY TO PERMIT SCHEDULED INSTALLATION IN ACCORDANCE WITH THIS PLAN. IF A SPLIT AWARD WERE MADE, THE PACING FACTOR IN THE INSTALLATION PLAN WOULD BE THE LOG-FTC AMPLIFIER. BASED UPON A CONTEMPLATED AWARD DATE OF 15 SEPTEMBER 1970, THE DATE PROPOSALS EXPIRE, THE EARLIEST POSSIBLE DELIVERY OF THIS KIT WOULD BE APRIL 1971 SINCE ITT GILFILLAN HAS TAKEN THE POSITION THAT IF PROCURED SEPARATELY, DELIVERY WOULD BE SEVEN MONTHS AFTER RECEIPT OF ORDER. THIS POSITION WAS CONFIRMED DURING THE PRE-AWARD SURVEY CONDUCTED ON ITT GILFILLAN. GILFILLAN'S POSITION OF THIS ORDER, WOULD BE USED TO FILL BACK ORDERS OF OTHER CUSTOMERS, AND THAT THE AIR FORCE WOULD WAIT SEVEN MONTHS ARO, THE SAME AS OTHER CUSTOMERS.

"2. IN ADDITION, THE PRE-AWARD SURVEY CONDUCTED ON STERLING REPORTED THAT STERLING COULD NOT MEET THE REQUIRED DELIVERY SCHEDULE FOR THE MOVING TARGET INDICATOR AND THE GATED PARAMETRIC AMPLIFIER SINCE CERTAIN VENDOR PARTS AND COMPONENTS OF THESE ITEMS FOR STERLING HAD DELIVERIES QUOTED OF UP TO 90 DAYS AFTER RECEIPT OF ORDER. WITH ANY CONTEMPLATED AWARD DATE POSSIBLE NOW, STERLING COULD NOT MEET THE REQUIRED OCTOBER DELIVERIES FOR THESE KITS.

"3. OTHER FACTORS TO BE CONSIDERED IN THE EVENT OF A SPLIT AWARD ARE OPERATIONAL DELAYS, FLIGHT SAFETY HAZARDS, ADDITIONAL COSTS, AND PROBLEMS OF LOGISTIC SUPPORT. A SPLIT AWARD WOULD RESULT IN A SIX MONTHS DELAY IN INSTALLATION OF THE MODIFICATION IN 27 GCA SYSTEMS. THE USING COMMAND HAS STATED THE MODIFICATION PROGRAM IS URGENT IN ORDER TO MINIMIZE A SAFETY OF FLIGHT CONDITION BECAUSE OF INHERENT DEFICIENCIES EXISTING IN THE GCA SYSTEMS. SINCE ADVERSE FLYING CONDITIONS ARE MORE PREVALENT DURING THE WINTER MONTHS BECAUSE OF SEVERE WEATHER CONDITIONS, IT IS IMPORTANT THAT THE MODIFICATION BEGIN AS QUICKLY AS POSSIBLE. SIGNIFICANT IMPROVEMENTS HAVE BEEN EXPERIENCED THROUGH THE INSTALLATION OF THIS MODIFICATION AND THE LONGER THE DELAY, THE LONGER THE CORRESPONDING EXPOSURE TO POSSIBLY AVOIDABLE AIRCRAFT ACCIDENTS.

"4. FINALLY, A SPLIT AWARD WOULD RESULT IN ADDITIONAL COSTS TO THE AIR FORCE NOT REFLECTED IN BID PRICES NOR CONSIDERED IN THE COMPARATIVE EVALUATION OF THE BID PRICES. THESE ADDITIONAL COSTS INCLUDE AN ESTIMATED $36,000 FOR FIELD INSTALLATION IN FOUR SYSTEMS WHICH WOULD NOT BE ACCOMPLISHED DURING CYCLIC IRAN; $65,000 FOR DATA CHANGES IN TOS, MANUALS, ETC., TO REFLECT INTERCHANGEABILITY; AN UNKNOWN DOWNSTREAM COST FOR LOGISTIC SUPPORT OF TWO SEPARATE MANUFACTURERS' ITEMS; AND AN INCREASE OF $17,000 DIFFERENCE IN BID PRICE FOR THE TOTAL LOG-FTC ITEMS IF PROCURED SEPARATELY FROM ITT GILFILLAN. TOTAL ADDITIONAL COSTS WOULD BE AN ESTIMATED $118,000."

"EFFECT OF CONTRACT AWARD TO STERLING OR SPLIT AWARD

"1. OPERATIONAL DELAYS --- DELIVERY REQUIREMENTS SPECIFIED IN THIS RFP ARE BASED ON AN AFCS INSTALLATION PLAN WHICH CALLS FOR 100 % PROGRAM COMPLETION DURING FY 71. AWARD OF THIS PROCUREMENT TO STERLING LABORATORIES WOULD DELAY KIT INSTALLATION OF THE COMPLETE MODIFICATION (3 KITS) ON 27 GCA SYSTEMS BY SIX (6) MONTHS. THIS IS ASSUMING THAT CONTRACT AWARD WOULD BE MADE BY 15 SEPTEMBER 1970, THE DATE CURRENT PROPOSALS EXPIRE. THE PRESENT INSTALLATION SCHEDULE, AS REFLECTED IN EXHIBIT 1, CALLS FOR SIX INSTALLATIONS TO BE COMPLETED DURING THE CYCLIC IRAN AT SACRAMENTO AIR MATERIEL AREA AND THE BALANCE BY FIELD TEAM AT A MAXIMUM RATE OF FOUR PER MONTH.

"A SPLIT AWARD, I.E. THE LOG-FTC KIT TO ITT GILFILLAN AND THE MOVING TARGET INDICATOR AND GATED PARAMETRIC AMPLIFIER TO STERLING WOULD RESULT IN THE SAME SLIPPAGE SINCE DELIVERY OF THE LOG-FTC AMPLIFIERS, IF PROCURED SEPARATELY, HAS BEEN STATED BY ITT GILFILLAN AS SEVEN MONTHS AFTER RECEIPT OF ORDER. THIS MEANS THE EARLIEST POSSIBLE DELIVERY WOULD BE APRIL 1971. DELIVERY OF THE LOG-FTC AMPLIFIER KIT WOULD BE THE PACING FACTOR IN THE INSTALLATION PLAN. FURTHERMORE IF AN AWARD TO STERLING OR A SPLIT AWARD WERE MADE, STERLING STILL COULD NOT MEET OCTOBER DELIVERY REQUIREMENTS ON THE MOVING TARGET INDICATOR OR PARAMETRIC AMPLIFIER BECAUSE OF 90-DAY AFTER RECEIPT OF ORDER QUOTES ON CERTAIN VENDOR PARTS FOR THESE ITEMS. AWARD OF THE TOTAL PROCUREMENT TO ITT GILFILLAN WOULD ALLOW INSTALLATIONS TO BEGIN IN OCTOBER AND BE 100 % COMPLETE DURING FY 71.

"2. SAFETY --- THE USING COMMAND HAS STATED THAT THE INSTALLATION OF THIS MODIFICATION IS URGENT AND WILL IMPROVE A SAFETY OF FLIGHT CONDITION IN THAT INHERENT DEFICIENCIES EXISTING IN THE GCA RADARS HAVE PREVENTED ADEQUATE RADAR DISPLAY RESULTING FROM ADVERSE WEATHER CONDITIONS, CLUTTER, AND BLIND SPEEDS. SINCE ADVERSE FLYING CONDITIONS ARE MORE PREVALENT DURING THE WINTER MONTHS BECAUSE OF SEVERE WEATHER CONDITIONS, IT IS IMPORTANT THAT THE MODIFICATION START AS QUICKLY AS POSSIBLE. SIGNIFICANT IMPROVEMENTS HAVE BEEN EXPERIENCED THROUGH THE INSTALLATION OF THIS MODIFICATION AND THE GREATER THE DELAY, THE GREATER THE CORRESPONDING EXPOSURE TO AIRCRAFT ACCIDENTS. IF THE AWARD WERE TO STERLING, WE WOULD HAVE A POTENTIAL 27 AIR BASES EXPOSED TO THIS HAZARD FOR AN ADDITIONAL SIX MONTHS."

THE ABOVE-QUOTED CONSIDERATIONS RELATE DIRECTLY TO THE NONCOMPETITIVE ASPECTS OF THE PROCUREMENT, WHICH RAISES THE SECOND LEGAL ISSUE. PARAGRAPH 3-102(C) OF ASPR PROVIDES:

"(C) NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT. WHEN A PROPOSED PROCUREMENT APPEARS TO BE NECESSARILY NONCOMPETITIVE, THE PURCHASING ACTIVITY IS RESPONSIBLE NOT ONLY FOR ASSURING THAT COMPETITIVE PROCUREMENT IS NOT FEASIBLE, BUT ALSO FOR ACTING WHENEVER POSSIBLE TO AVOID THE NEED FOR SUBSEQUENT NONCOMPETITIVE PROCUREMENTS. THIS ACTION SHOULD INCLUDE BOTH EXAMINATION OF THE REASON FOR THE PROCUREMENT BEING NONCOMPETITIVE AND STEPS TO FOSTER COMPETITIVE CONDITIONS FOR SUBSEQUENT PROCUREMENTS, PARTICULARLY AS TO THE AVAILABILITY OF COMPLETE AND ACCURATE DATA, REASONABLENESS OF DELIVERY REQUIREMENTS (1-305.2(A)), AND POSSIBLE BREAKOUT OF COMPONENTS FOR COMPETITIVE PROCUREMENT. EXCEPT FOR PROCUREMENT OF ELECTRIC POWER OR ENERGY, GAS (NATURAL OR MANUFACTURED), WATER, OR OTHER UTILITY SERVICES, AND PROCUREMENT OF EDUCATIONAL SERVICES FROM NONPROFIT INSTITUTIONS, CONTRACTS IN EXCESS OF $10,000 SHALL NOT BE NEGOTIATED ON A NONCOMPETITIVE BASIS WITHOUT PRIOR REVIEW AT A LEVEL HIGHER THAN THE CONTRACTING OFFICER TO ASSURE COMPLIANCE WITH THIS SUBPARAGRAPH." IT SEEMS CLEAR THAT NOTWITHSTANDING THE ATTEMPT BY THE CONTRACTING OFFICER TO COMPETE THIS PROCUREMENT, ANY AWARD MADE TO ITTG WILL BE NONCOMPETITIVE. IT IS EQUALLY CLEAR THAT THERE WAS COMPETITION AVAILABLE WITH RESPECT TO THE GREAT MAJORITY OF THE ITEMS BEING PROCURED. IT FURTHER APPEARS FROM THE RECORD BEFORE US THAT STERLING'S INTEREST IN COMPETING WITH ITTG WAS KNOWN TO THE PROCUREMENT OFFICIALS WELL IN ADVANCE OF THESE SOLICITATIONS. COMPETITION COULD HAVE BEEN ASSURED IF THE LOG FTC AMPLIFIERS HAD BEEN PROCURED ON A SEPARATE SOLICITATION. BY THIS EXPEDIENT, THE MANDATE AND POLICY OF THE ABOVE-QUOTED ASPR PROVISION COULD HAVE BEEN FULFILLED.

THE CONTRACTING OFFICER, IN HIS SUPPLEMENTAL REPORT DATED AUGUST 18, 1970, CONCLUDES THAT AN AWARD OF A CONTRACT TO STERLING ON RFP 2269 WOULD BE AN AWARD TO A NONRESPONSIBLE CONTRACTOR FROM A DELIVERY STANDPOINT FOR ALL ITEMS, BASED UPON A LOW OFFER WHICH, FROM A "REAL COST" STANDPOINT WOULD RESULT IN A SAVING TO THE GOVERNMENT OF LESS THAN $66,000. CONCLUSION, IT IS STATED:

"A. THE INCLUSION OF THE LOG-FTC ASSEMBLIES IN THE SOLICITATION AND IN ANY RESULTING CONTRACT IS NOT INCONSISTENT WITH GOOD PROCUREMENT PRACTICE AND AT NO TIME WAS IT INTENDED TO EXCLUDE COMPETITION.

"B. THERE IS NO VALID REASON FOR A SPLIT AWARD, OR THE WITHDRAWAL OF THE LOG-FTC ASSEMBLIES FROM THE SOLICITATION, AT THIS TIME IN VIEW OF THE PRE- AWARD SURVEY REPORT STATING THAT STERLING CANNOT MEET THE REQUIRED DELIVERY OF ITEMS 11 AND 14.

"C. TOTAL AWARD TO STERLING, BASED UPON THE SOLICITATION AS AMENDED, BEST AND FINAL OFFERS AND PRE-AWARD SURVEYS, WITHOUT RESOLICITATION AND RESULTING DELAY WOULD BE INCONSISTENT WITH ASPR 3-805, AND ASPR 1 903.1(II). TO REFORM THE SOLICITATION TO ACCOMMODATE THE PROTESTOR WOULD BE PREJUDICIAL TO OTHER OFFERORS."

WE THINK THE CONTRACTING OFFICER'S REPORT OF AUGUST 18, 1970, IGNORES THE BASIC PROBLEM INHERENT IN ATTEMPTING TO SECURE COMPETITION UNDER ANY SOLICITATION WHICH REQUIRES THE USE OF COMPONENTS OBTAINABLE ONLY FROM ONE OF THE PROSPECTIVE OFFERORS UNDER THE SOLICITATION. IT WAS APPARENT IN THE PRESENT CASES FROM THE BEGINNING THAT ITTG WOULD COMPETE FOR THE PROCUREMENTS. IT SHOULD HAVE BEEN EQUALLY APPARENT THAT THE REQUIREMENT FOR FURNISHING THE LOG FTC MANUFACTURED BY ITTG AS AN ESSENTIAL COMPONENT WOULD EFFECTIVELY PRECLUDE COMPETITION (ILLEGIBLE) ANY OTHER SOURCE UNLESS ITTG WOULD MAKE THAT COMPONENT AVAILABLE TO OTHERS AT A REASONABLE PRICE AND IN TIME TO MEET THE DELIVERY REQUIREMENTS OF THE PROCUREMENTS.

WHEN IT BECAME APPARENT THAT ITTG WOULD NOT MAKE ITS LOG FTC AVAILABLE TO COMPETITORS UNDER TERMS NECESSARY TO ENABLE THEM TO COMPETE, IT SHOULD HAVE BEEN RECOGNIZED THAT THE PROCUREMENT WAS IN FACT NO LONGER COMPETITIVE UNLESS SOME MEANS COULD BE FOUND TO PROVIDE THE LOG FTC AS GOVERNMENT-FURNISHED PROPERTY. APPARENTLY, AS OF THE PRESENT, THIS IS NOT POSSIBLE WITHIN THE TIME FRAME AVAILABLE FOR DELIVERY OF URGENTLY NEEDED ITEMS.

WE BELIEVE THAT UNDER THE CIRCUMSTANCES, THERE SHOULD BE A REEVALUATION OF THE NEED FOR THE ITEMS BEING PROCURED. AS TO THOSE ITEMS OBTAINABLE ONLY FROM ITTG WITHIN THE TIME NOW REQUIRED, A SOLE SOURCE PROCUREMENT SHOULD BE MADE. THOSE ITEMS AS TO WHICH TIME PERMITS COMPETITION, EITHER BY BREAKING OUT PROPRIETARY COMPONENTS TO BE FURNISHED BY THE GOVERNMENT OR THROUGH THEIR TIMELY AVAILABILITY FROM THE PROPRIETOR, SHOULD BE RECOMPETED.