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B-151723, AUG. 30, 1963

B-151723 Aug 30, 1963
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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 4. IT APPEARS TO BE YOUR CONTENTION THAT (1) THE PROCUREMENT SHOULD HAVE BEEN ACCOMPLISHED BY FORMAL ADVERTISING INSTEAD OF BY NEGOTIATION. (2) THE POMEROY SHIPPING COMPANY IS NOT IN A POSITION TO GIVE SPECIFIC PERFORMANCE ON A PAR WITH STARFIELD OF PANAMA BECAUSE AS OF APRIL 3. PROPOSALS WERE INVITED FROM SOME 400 PROSPECTIVE SOURCES. WERE RECEIVED. NEGOTIATIONS WERE UNDERTAKEN WITH EACH OF THE SIX OFFERORS. IT IS ALSO REPORTED THAT EACH OF THE SIX OFFERORS WAS GIVEN FOUR OPPORTUNITIES TO IMPROVE HIS BID. THAT THE FINAL OFFERS WERE REVIEWED BY THE CONTRACTING OFFICER. AFTER WHICH THE AWARD WAS MADE TO THE LOWEST BIDDER. WITH RESPECT TO YOUR CONTENTION THAT THIS PROCUREMENT ON A NEGOTIATED BASIS WAS IMPROPER.

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B-151723, AUG. 30, 1963

TO STARFIELD OF PANAMA, C.A. INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 4, 1963, PROTESTING AGAINST THE AWARD MADE UNDER NEGOTIATED PROCUREMENT M.S.T.S. INVITATION NO. 2 TO THE POMEROY SHIPPING COMPANY FOR HIRE OF LSM 418 UNDER DATE OF APRIL 3, 1963.

IN BRIEF, IT APPEARS TO BE YOUR CONTENTION THAT (1) THE PROCUREMENT SHOULD HAVE BEEN ACCOMPLISHED BY FORMAL ADVERTISING INSTEAD OF BY NEGOTIATION, AND (2) THE POMEROY SHIPPING COMPANY IS NOT IN A POSITION TO GIVE SPECIFIC PERFORMANCE ON A PAR WITH STARFIELD OF PANAMA BECAUSE AS OF APRIL 3, 1963, THEY HAD NEITHER THE PROPER VESSEL NOR THE PROPER EQUIPMENT.

AN EXAMINATION OF THE RECORD NOW BEFORE THIS OFFICE INDICATES THAT ON FEBRUARY 8, 1963, PROPOSALS WERE INVITED FROM SOME 400 PROSPECTIVE SOURCES, AND ONLY SIX RESPONSIVE OFFERS, INCLUDING THOSE OF THE POMEROY SHIPPING COMPANY AND YOUR CORPORATION, WERE RECEIVED. NEGOTIATIONS WERE UNDERTAKEN WITH EACH OF THE SIX OFFERORS; AND THE BASIS FOR EVALUATION INCLUDED NOT ONLY THE PRICE OFFERED BUT ALSO, AMONG OTHER FACTORS, FUEL CONSUMPTION AND TIME OF AVAILABILITY OF THE OFFERED VESSEL. BOTH THE POMEROY SHIPPING COMPANY AND YOUR CORPORATION ESTIMATED THAT YOUR RESPECTIVE VESSELS WOULD BE READY FOR SERVICE WITHIN APPROXIMATELY FIFTY DAYS AFTER AWARD. IT IS ALSO REPORTED THAT EACH OF THE SIX OFFERORS WAS GIVEN FOUR OPPORTUNITIES TO IMPROVE HIS BID; THAT THE FINAL OFFERS WERE REVIEWED BY THE CONTRACTING OFFICER, THE CONTRACT ADVISORY COMMITTEE OF THE MILITARY SEA TRANSPORTATION SERVICE, THE DEPUTY COMMANDER AND THE COMMANDER OF THE MILITARY SEA TRANSPORTATION SERVICE, AFTER WHICH THE AWARD WAS MADE TO THE LOWEST BIDDER--- THE POMEROY SHIPPING COMPANY.

WITH RESPECT TO YOUR CONTENTION THAT THIS PROCUREMENT ON A NEGOTIATED BASIS WAS IMPROPER, WE ARE ADVISED THAT SINCE THE USE OF FORMAL ADVERTISING IS IMPRACTICAL FOR SHIP CHARTERING, SUCH CHARTERING HAS INVARIABLY BEEN ACCOMPLISHED BY NEGOTIATION; AND ALL INVITATIONS FOR OFFERS FOR CHARTER IN THE PAST, AS IN THIS PROCUREMENT, HAVE SO SPECIFIED. AND, IN THIS CONNECTION, WE MIGHT POINT OUT THAT SINCE THIS APPEARS TO BE A REPLACEMENT PROCUREMENT--- THE PREVIOUS CONTRACTOR HAVING DEFAULTED--- AND SINCE THE DEFAULTING CONTRACTOR IS BEING HELD RESPONSIBLE FOR ANY DAMAGES SUSTAINED BY THE GOVERNMENT BY REASON OF THE BREACH, IT HAS BEEN OUR VIEW THAT IN SUCH SITUATIONS THE ADVERTISING STATUTES DO NOT APPLY. SEE B-150973, MARCH 18, 1963, WHICH WILL BE PUBLISHED IN 42 COMP. GEN. FURTHERMORE, THE CONTRACTING OFFICER MADE THE NECESSARY FINDINGS AND DETERMINATIONS JUSTIFYING NEGOTIATION UNDER THE AUTHORITY OF SECTION 3- 210.2 (XI) OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH READS, IN PERTINENT PART, AS FOLLOWS:

"WHEN THE CONTEMPLATED PROCUREMENT IS FOR COMMERCIAL TRANSPORTATION, INCLUDING TIME, SPACE, TRIP, AND VOYAGE CHARTERS, EXCEPT FOR SUCH TRANSPORTATION SERVICES AS ARE FURNISHED BY COMMON CARRIERS * * *; "

THE STATUTORY AUTHORITY EXCEPTING THIS PROCUREMENT FROM FORMAL ADVERTISING IS 10 UNITED STATES CODE, 2304 (A) (10), WHICH PROVIDES:

"THE PURCHASE OR CONTRACT IS FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION; "

AND IT SHOULD BE NOTED THAT PARAGRAPH 2310 (B) OF THE CODE, AS AMENDED BY PUBLIC LAW 87-653, ALSO PROVIDES THAT SUCH FINDINGS SHALL BE FINAL.

CONCERNING YOUR ALLEGATION THAT THE POMEROY SHIPPING COMPANY IS NOT IN A POSITION TO PERFORM ON A PAR WITH YOUR CORPORATION, THE RECORD BEFORE US INDICATES THAT THE CONTRACT EXECUTED BY POMEROY REQUIRED THE TENDERING OF A NAMED VESSEL, MV GULFSTREAM, WITH NO SUBSTITUTION PERMITTED. IT ALSO PROVIDES THAT PRIOR TO ACCEPTANCE FOR SERVICE, THE VESSEL MUST BE PRESENTED FOR SPEED TRIALS AND GENERAL SURVEY. IT IS REPORTED THAT PRIOR TO AWARD THE POMEROY SHIPPING COMPANY WAS SURVEYED BY THE BRANCH OFFICE OF THE INSPECTOR OF NAVAL MATERIAL, CLEARWATER, FLORIDA; AND IT WAS CONCLUDED THAT THE COMPANY HAD SATISFACTORY CAPABILITY FOR PERFORMANCE OF THE CONTRACT. THE BRANCH OFFICE ALSO CONCLUDED THAT THE COMPANY HAD THE NECESSARY MANAGEMENT, EXPERIENCE, FINANCIAL RESOURCES, PERFORMANCE CAPABILITIES, AND SHIP AVAILABILITY. IN ADDITION, THE RECORD INDICATES THAT THE QUALIFICATIONS OF THE SHIP'S OFFICERS WERE SUBMITTED TO AND REVIEWED BY THE MILITARY SEA TRANSPORTATION SERVICE. THE SERVICE ALSO REVIEWED TENDERS FROM VARIOUS SHIP REPAIR YARDS FOR THE REQUIRED CONVERSION WITH SPECIFICATIONS OF THE WORK TO BE ACCOMPLISHED, WHICH INDICATED THAT THE COMPANY HAD EXPENDED A VERY SUBSTANTIAL SUM OF MONEY FOR THE CONVERSION OF THE SHIP. IN ADDITION, JOHN AND MARY POMEROY WERE REQUIRED TO GIVE, AND HAVE GIVEN, A PERSONAL GUARANTY OF PERFORMANCE, WHICH IS IN ADDITION TO THE GUARANTY FROM THE SHIPPING COMPANY, A CORPORATION; AND, IN THIS CONNECTION, CERTIFIED PUBLIC ACCOUNTANTS HAVE SUBMITTED A FINANCIAL STATEMENT SHOWING THE NET WORTH OF JOHN AND MARY POMEROY TO BE FAR IN EXCESS OF ANY POTENTIAL LIABILITY. AS TO THE SATISFACTORY PERFORMANCE OF THE TENDERED VESSEL, THE ADMINISTRATIVE OFFICE STATES AS FOLLOWS:

"IT IS OF COURSE IMPOSSIBLE TO PREDICT WITH CERTAINTY THE STANDARD OF PERFORMANCE UNDER ANY CONTRACT. IT HAS BEEN PARTICULARLY DIFFICULT TO LOCATE AND CHARTER A SHIP CAPABLE OF ACCOMPLISHING THE OBJECTIVES OF THIS CONTRACT. A PREVIOUS CONTRACTOR, * * * DEFAULTED AND WILL BE HELD RESPONSIBLE FOR ANY DAMAGE SUSTAINED BY THE GOVERNMENT BY REASON OF THAT BREACH.'

THEREFORE, IN THE LIGHT OF THIS BACKGROUND OF DIFFICULTIES--- WHICH DIFFICULTIES HAVE BEEN DOCUMENTED IN THE RECORD--- THE STEPS HEREINABOVE MENTIONED WERE TAKEN BY THE MILITARY SEA TRANSPORTATION SERVICE TO INSURE AS COMPLETELY AS POSSIBLE SATISFACTORY PERFORMANCE OF THE PRESENT CONTRACT.

AND, FINALLY, CONCERNING YOUR ALLEGATION THAT THE SUCCESSFUL BIDDER'S STATEMENT OF FUEL CONSUMPTION WAS GROSSLY ERRONEOUS, THE ADMINISTRATIVE OFFICE ADVISES AS FOLLOWS:

"IT IS IMMATERIAL TO THIS AWARD WHETHER THE CONTRACTOR'S ESTIMATE OF FUEL CONSUMPTION IS CORRECT. THE AWARD WAS BASED ON THE BID ESTIMATE, WHICH IN TURN BECAUSE A WARRANTY OF THE EXECUTED CONTRACT. THE COST OF ANY FUEL USED IN EXCESS OF THE WARRANTED QUANTITY WOULD BE DEDUCTED FROM CHARTER HIRE PAID TO THE VESSEL.'

BASED UPON THE FOREGOING, THEREFORE, IT MUST BE CONCLUDED THAT YOUR PROTEST FURNISHES NO PROPER BASIS ON WHICH WE WOULD BE JUSTIFIED IN HOLDING THAT THE ADMINISTRATIVE ACTION WAS ILLEGAL OR IMPROPER.

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