B-164728, SEPT. 3, 1968

B-164728, SEPT. 3, 1968

TO MAXSON-MACON:

WE REFER TO YOUR TELEGRAM AND LETTER OF JUNE 28, 1968, PROTESTING AGAINST THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE ARMY UNDER REQUEST FOR PROPOSALS NO. DAAA25-68-R-0388 ON THE GROUNDS THAT WRITTEN OR ORAL DISCUSSIONS WERE NOT HELD WITH YOUR COMPANY AS REQUIRED BY PARAGRAPH 3- 805.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) ALTHOUGH SUCH NEGOTIATIONS OR DISCUSSIONS WERE HELD WITH OTHER COMPANIES SUBMITTING PROPOSALS.

THE FACTUAL BACKGROUND AGAINST WHICH YOUR PROTEST IS MADE IS SET FORTH IN A REPORT OF AUGUST 6, 1968, AND ATTACHED DOCUMENTS, FROM THE DEPARTMENT OF THE ARMY AND MAY BE SUMMARIZED AS FOLLOWS. THE SUBJECT REQUEST FOR PROPOSALS (RFP) WAS ISSUED ON JANUARY 26, 1968, AND, AS AMENDED, CALLED FOR VARIOUS QUANTITIES OF FUZES MT, XM592E1 AND MT, XM711 IN ACCORDANCE WITH REFERENCED SPECIFICATIONS. THE PROCUREMENT RATED AN ISSUE PRIORITY DESIGNATOR "02" AND WAS NEGOTIATED PURSUANT TO THE "PUBLIC EXIGENCY" AUTHORITY CONTAINED IN 10 U.S.C. 2304 (A) (2).

FIVE PROPOSALS WERE RECEIVED IN RESPONSE TO THE RFP AND WERE OPENED ON APRIL 30, 1968, AS FINALLY SCHEDULED. PROPOSALS WERE RECEIVED FROM HAMILTON WATCH COMPANY, AVIEN, INCORPORATED, ACRONETICS (GENERAL TIME), WESTON INSTRUMENTS, INCORPORATED AND MAXSON-MACON. UPON OPENING, IT APPEARED THAT YOUR FIRM AND WESTON INSTRUMENTS OFFERED THE LOWEST UNIT PRICES ON THE ITEMS SET FORTH IN THE RFP. THE CONTRACTING OFFICER DETERMINED TO SECURE COMPLETE PREAWARD SURVEYS ON MAXSON-MACON AND WESTON, WHO APPEARED POSSIBLY TO BE IN LINE FOR AN AWARD, SO AS TO EXPEDITE THE URGENT PROCUREMENT.

AS A RESULT OF A PREAWARD SURVEY, WESTON INSTRUMENTS, BY LETTER DATED JUNE 4, 1968, DECIDED TO WITHDRAW ITS PROPOSAL AFTER IT HAD MADE AN ADDITIONAL SURVEY OF ITS POTENTIAL VENDORS.

AT APPROXIMATELY THE SAME TIME, THE CONTRACTING OFFICER DETERMINED THAT NEGOTIATIONS SHOULD BE ENTERED INTO SINCE, HE STATES, VOLUNTARY PRICE REDUCTIONS WERE BEING SUBMITTED BY ONE OF THE OFFERORS, THE INITIAL PRICES OFFERED WERE CONSIDERED TO BE ON THE HIGH SIDE, AND IN VIEW OF THE SIZE OF THE PROCUREMENT, HE BELIEVED THAT SUBSTANTIAL SAVINGS COULD BE EFFECTUATED EVEN BY A SMALL REDUCTION IN UNIT PRICES. ACCORDINGLY, A LETTER DATED JUNE 5, 1968, WAS SENT TO THE FOUR OFFERORS REMAINING IN THE COMPETITION ALL OF WHOM, THE CONTRACTING OFFICER CONCLUDED, WERE IN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. THIS LETTER ESTABLISHED JUNE 11, 1968, AS THE FINAL DATE FOR RECEIPT OF REVISED OFFERS. ON JUNE 10, 1968, THE CONTRACTING OFFICER EXTENDED THE CLOSING DATE FOR RECEIPT OF REVISED OFFERS TO JUNE 14, 1968. TELETYPES ADVISING OF THIS EXTENSION WERE SENT TO GENERAL TIME, AVIEN AND HAMILTON WATCH. THIS EXTENSION WAS NOT OFFERED TO YOUR COMPANY BECAUSE, IN THE INTERIM BETWEEN JUNE 5 AND JUNE 10, THE CONTRACTING OFFICER HAD RECEIVED ADVANCE INFORMATION FROM DCASR-ATLANTA THAT MAXSON-MACON WAS NOT CONSIDERED TO BE A RESPONSIBLE OFFEROR. THIS INFORMATION CONCERNING MAXSON'S NONRESPONSIBILITY WAS CONFIRMED BY A FORMAL PREAWARD SURVEY REPORT DATED JUNE 18, 1968, WHICH INCLUDED A NEGATIVE PREAWARD SURVEY FROM DCASD-GE, GARDEN CITY, NEW YORK, ON YOUR PROPOSED SUBCONTRACTOR (BASIC ORDNANCE PRODUCTS COMPANY) FOR THE MOVEMENT ASSEMBLY WHICH THE CONTRACTING OFFICER POINTS OUT IS A CRITICAL COMPONENT OF THE FUZE.

THE PREAWARD SURVEY REPORT SHOWS THAT YOUR PROPOSED SUBCONTRACTOR HAD ONLY ONE ENGINEER AND THREE ADMINISTRATIVE EMPLOYEES WHEN SURVEYED. THE SUBCONTRACTOR ESTIMATED THAT THERE WOULD BE A NEED FOR 54 EMPLOYEES. THE MANPOWER REQUIREMENTS, IT WAS CONCLUDED, WOULD NOT BE AVAILABLE IN SUFFICIENT TIME TO MEET THE DEMANDS OF THE PROCUREMENT. MOREOVER, AT THE TIME OF THE SURVEY, THE PROPOSED SUBCONTRACTOR DID NOT HAVE THE REQUIRED EQUIPMENT ON HAND NEEDED TO PRODUCE THE END ITEM. THE REPORT STATES THAT WHILE THE SUBCONTRACTOR'S PRESIDENT INDICATED THAT THE NEEDED FACILITIES COULD EASILY BE OBTAINED AND INSTALLED IN TIME TO MEET THE PRODUCTION SCHEDULE, THERE WERE NO QUOTATIONS AVAILABLE FOR THE EQUIPMENT TO BE PURCHASED AND THE PRESIDENT'S STATEMENTS COULD NOT BE VERIFIED. ACCORDINGLY, THE AVAILABILITY OF EQUIPMENT IN TIME TO MEET THE DESIRED COMMITMENTS COULD NOT BE ASSURED. THE REPORT FURTHER NOTES THAT THE SUBCONTRACTOR HAD NO PREVIOUS PERFORMANCE RECORD IN THIS AREA AND A FURTHER CHECK INDICATED THAT IT HAD NOT PREVIOUSLY PERFORMED ON GOVERNMENT CONTRACTS. THE PREAWARD SURVEY TEAM ALSO RECOMMENDED "NO AWARD" ON THE BASIS OF SPECIFIED DEFICIENCIES IN THE SUBCONTRACTOR'S QUALITY ASSURANCE PROGRAM AND FACILITIES.

WHILE THESE EVENTS WERE TRANSPIRING, YOUR FIRM, IN A TELETYPE OF JUNE 11, 1968, STATED, IN RESPONSE TO THE CONTRACTING OFFICER'S LETTER OF JUNE 5, THAT "MAXSON-MACON ANTICIPATES NO CHANGES. ALL PRICES, TERMS, AND CONDITIONS REMAIN UNCHANGED.'

THEREAFTER, THE CONTRACTING OFFICER REPORTS THE FOLLOWING EVENTS TOOK PLACE: "11. SUBSEQUENTLY, OBVIOUSLY AWARE THAT THEY WERE CONSIDERED NOT RESPONSIBLE BASED ON THE COMPLETE PREAWARD SURVEY, A REPRESENTATIVE OF MAXSON VERBALLY ADVISED THE NEGOTIATOR THAT THE FIRM WAS CONTEMPLATING THE PROCUREMENT OF A NEW PLANT IN CALIFORNIA TO MAKE THE ASSEMBLY MOVEMENT (NEGOTIATOR'S MEMO TO FILE, INCL NO. 26). ALSO, A TELETYPE DATED 19 JUNE 1968 (INCL NO. 27) WAS RECEIVED FROM MAXSON WHEREIN IT WAS STATED THAT THEY INTENDED TO ASSEMBLE AND TEST THE MOVEMENT AT THEIR PLANT, HAD QUOTES ON PARTS AND COMPONENTS TO MEET THE SCHEDULE AND COULD GET TEST EQUIPMENT TO TEST AND TUNE THE MOVEMENTS IN TIME TO MEET REQUIREMENTS. ANOTHER TELETYPE DATED 21 JUNE 1968 (INCL NO. 28) FURTHER CLARIFIED THE PRIOR TELETYPE ADVISING THAT BASIC ORDNANCE WOULD NOT BE THE MOVEMENT SUPPLIER, BUT THAT MAXSON WOULD PURCHASE AND MANUFACTURE MOVEMENT COMPONENTS AND ASSEMBLE AND TEST THE COMPLETE MOVEMENT AT THEIR OWN PLANT. THESE CONTRARY ACTIONS INDICATED THE INTENTION OF MAXSON ON THE PROCUREMENT OF THE MOVEMENT ASEEMBLY. THE CONTRACTING OFFICER DID NOT CONSIDER THE RECEIPT OF THESE TELETYPES A MATTER OF RESPONSIVENESS. ON THE CONTRARY, THE CONTRACTING OFFICER CONSIDERED THAT THESE TWO TELETYPES PERTAINED TO MAXSON'S RESPONSIBILITY, AND THEREFORE, WERE PERTINENT TO THE REVISED ZONE OF CONSIDERATION WHICH HAD BEEN ESTABLISHED (WHERE MAXSON WAS ELIMINATED FROM THE ZONE BECAUSE OF THEIR NONRESPONSIBILITY). HOWEVER, IN VIEW OF THE EXTREME URGENCY OF THE PROCUREMENT AND THE TIME THAT WOULD HAVE BEEN NECESSARY FOR A COMPLETE RESURVEY OF MAXSON TO MAKE THEM ELIGIBLE FOR THE ZONE OF CONSIDERATION (CONSIDERING THAT THE ORIGINAL SURVEY WAS REQUESTED ON 13 MAY 1968 AND THE CONTRACTING OFFICER WAS INFORMALLY ADVISED ON 8-9 JUNE AS TO MAXSON'S RESPONSIBILITY WITH THE FORMAL REPORT DATED 18 JUNE 1968) AND THE LACK OF NECESSITY FOR FURTHER NEGOTIATIONS, SINCE A FAIR AND REASONABLE PRICE HAD BEEN RECEIVED FROM THE PROPOSED AWARDEE (GENERAL TIME), AND THE VERY LITTLE LIKELIHOOD THAT A LOWER PRICE WOULD HAVE BEEN RECEIVED BY THE GOVERNMENT OR THAT FURTHER NEGOTIATIONS WOULD HAVE BEEN FRUITFUL, THE CONTRACTING OFFICER DECIDED THAT A RESURVEY WAS NOT FEASIBLE. IT IS NOTED THAT FURTHER NEGOTIATIONS WITH MAXSON (ASSUMING THEY WERE LATER DEEMED RESPONSIBLE) WOULD HAVE IN ALL PROBABILITY BEEN FRUITLESS AND PREJUDICIAL TO THAT FIRM CONSIDERING THE PRICE AT WHICH THE AWARD WAS MADE. THEREFORE, WITH THESE FACTORS IN MIND, THE CONTRACTING OFFICER CONSIDERED THESE TWO TELETYPES FROM MAXSON AND DETERMINED, IN VIEW OF THE CIRCUMSTANCES AND URGENCY OF THE PROCUREMENT, THAT NO RESURVEY OF MAXSON SHOULD BE UNDERTAKEN (INCL NO. 29) TO DETERMINE IF THEY SHOULD BE READMITTED TO THE ZONE OF CONSIDERATION AND FURTHER NEGOTIATIONS CONDUCTED. THIS DECISION WAS CONCURRED IN BY THE DIRECTOR OF PROCUREMENT AND PRODUCTION AT FRANKFORD ARSENAL.'

AWARD OF THE CONTRACT WAS MADE ON JUNE 26 TO GENERAL TIME CORPORATION AT A TOTAL PRICE OF $4,469,846.54 FOR ALL ITEMS.

YOUR PROTEST, AS NOTED PREVIOUSLY, IS GROUNDED ON THE CONTENTION THAT THE PROVISIONS OF ASPR 3-805.1 WERE VIOLATED SINCE WRITTEN OR ORAL DISCUSSIONS WERE NOT HELD WITH YOUR COMPANY ALTHOUGH SUCH NEGOTIATIONS WERE HELD WITH OTHER COMPANIES SUBMITTING OFFERS. THE DEPARTMENT OF THE ARMY TAKES THE POSITION THAT ASPR 3-805.1 DOES NOT REQUIRE NEGOTIATIONS WITH OFFERORS FOUND TO BE NONRESPONSIBLE.

IN 47 COMP. GEN. 373, A CONTRACTING OFFICER, AFTER THE RECEIPT OF INITIAL PROPOSALS, REFUSED TO NEGOTIATE WITH AN OFFEROR WHOSE PRICE WAS WITHIN A COMPETITIVE RANGE BUT WHO HAD BEEN FOUND NONRESPONSIBLE. THERE, AS HERE, THE PROCUREMENT WAS ASSIGNED AN "02" PRIORITY DESIGNATOR INDICATING AN URGENT REQUIREMENT FOR THE SUPPLIES. WE HELD, IN EFFECT, THAT THE CONTRACTING OFFICER WAS, UNDER THE CIRCUMSTANCES, NOT REQUIRED TO CONDUCT NEGOTIATIONS WITH THE NONRESPONSIBLE OFFEROR. WE BELIEVE THE SAME CONCLUSION MUST BE REACHED HERE.

IN THE INSTANT CASE, YOUR COMPANY WAS DECLARED NONRESPONSIBLE ON THE BASIS THAT YOUR PROPOSED SUBCONTRACTOR FOR A CRITICAL COMPONENT OF THE FUZE COULD NOT, FOR VARIOUS REASONS, MEET THE REQUIRED DELIVERY SCHEDULE. WE HAVE REVIEWED THE INFORMATION RELIED UPON BY THE CONTRACTING OFFICER IN MAKING HIS DETERMINATION OF NONRESPONSIBILITY AND FIND NO BASIS UPON WHICH WE WOULD BE JUSTIFIED IN CONCLUDING THAT IT WAS NOT BASED ON SUBSTANTIAL EVIDENCE OR WAS MADE IN BAD FAITH. SEE 47 COMP. GEN. 373, 376. THE DEPARTMENT OF THE ARMY REPORTS THAT CONSIDERATION WAS GIVEN TO YOUR TELETYPES OF JUNE 19 AND 21 ADVISING OF YOUR INTENTION TO TAKE OVER THE MANUFACTURE, ASSEMBLY AND TESTING OF THE MOVEMENT COMPONENT, BUT UNDER ALL THE CIRCUMSTANCES, INCLUDING THE URGENCY OF THE PROCUREMENT, IT WAS NOT CONSIDERED FEASIBLE TO RESURVEY MAXSON-MACON BASED ON THE NEW INFORMATION AND TO POSSIBLY REOPEN NEGOTIATIONS. AS TO THE MATTER OF URGENCY, WE THINK IT IS APPROPRIATE TO POINT OUT THAT ONE OF THE EXCEPTIONS TO THE REQUIREMENT TO CONDUCT NEGOTIATIONS WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE AT ASPR 3-805.1 IS IF THE TIME OF DELIVERY WILL NOT PERMIT SUCH DISCUSSIONS.

ON THE RECORD BEFORE US, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER'S ACTION IN THIS RESPECT, BASED AS IT WAS ON CONSIDERATIONS OF URGENCY, WAS IMPROPER. IT SHOULD BE NOTED, HOWEVER, THAT WE DO NOT REACH, AND EXPRESS NO OPINION, ON THE LARGER QUESTION WHETHER A CONTRACTING OFFICER MUST, OR SHOULD, NEGOTIATE WITH AN OFFEROR (OTHERWISE WITHIN A COMPETITIVE RANGE), WHO IS FOUND TO BE NONRESPONSIBLE FOR SOME DEFICIENCY THAT CAN BE EASILY AND TIMELY REMEDIED.