B-126313, FEB. 10, 1956

B-126313: Feb 10, 1956

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TO PENNSYLVANIA TESTING LABORATORY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 5. BIDS WERE REQUESTED BY WRIGHT AIR DEVELOPMENT CENTER. WERE MADE A PART OF THE GENERAL PROVISIONS OF THE INVITATION. YOU ATTACHED THE FOLLOWING STATEMENT: "THIS PROPOSAL IS SUBMITTED ON THE EXPRESS CONDITION THAT THE EQUIPMENT LAYOUTS AND DESIGNS DISCLOSED HEREIN. ARE THE SOLE AND EXCLUSIVE PROPERTY OF PENNSYLVANIA TESTING LABORATORY. YOUR STATEMENT RESTRICTING THE USE AND REPRODUCTION OF THE EQUIPMENT LAYOUTS AND DESIGNS WAS CONSIDERED BY THE CONTRACTING AGENCY AS BEING NON- CONFORMING TO THE INVITATION. YOUR BID WAS REJECTED AND AWARD WAS MADE TO SYSTEMS DEVELOPMENT. YOU QUESTION THE PROPRIETY OF THE DETERMINATION OF THE CONTRACTING AGENCY TO MEET ITS NEEDS BY MEANS OF SEALED PROPOSALS RATHER THAN BY THE NEGOTIATION PROCESS WHEREBY ALL INTERESTED BIDDERS WOULD HAVE BEEN REQUIRED TO FURNISH COST ESTIMATES.

B-126313, FEB. 10, 1956

TO PENNSYLVANIA TESTING LABORATORY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 5, 1955, AS SUPPLEMENTED BY LETTER OF JANUARY 6, 1956, PROTESTING THE ACTION OF THE DEPARTMENT OF THE AIR FORCE IN MAKING AWARD OF A CONTRACT TO ANOTHER BIDDER FOR FURNISHING CERTAIN EQUIPMENT PURSUANT TO BID INVITATION 33-616- 56-3.

BY THE REFERRED-TO INVITATION, ISSUED JULY 7, 1955, BIDS WERE REQUESTED BY WRIGHT AIR DEVELOPMENT CENTER, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, FOR FURNISHING AND INSTALLING ONE AUTOMATIC LIFE TEST RACK AND DATA RECORDING SYSTEM FOR ELECTRON TUBES AND TRANSITORS, IN ACCORDANCE WITH EXHIBIT WCRE-54-33A, DATED JUNE 29, 1955. BY AMENDMENT NO. 3 TO THE INVITATION FOR BIDS, DATED AUGUST 16, 1955, CLAUSES 36, 37 AND 38, ENTITLED PATENT RIGHTS, COPYRIGHTS AND REPRODUCTION AND USE OF TECHNICAL DATA, RESPECTIVELY, WERE MADE A PART OF THE GENERAL PROVISIONS OF THE INVITATION. CLAUSE 38 PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"38 REPRODUCTION AND USE OF TECHNICAL DATA. THE CONTRACTOR AGREES TO AND DOES HEREBY GRANT TO THE GOVERNMENT ...... THE RIGHT TO REPRODUCE, USE, AND DISCLOSE FOR GOVERNMENTAL PURPOSES ..... ALL OR ANY PART OF THE REPORTS, DRAWINGS, BLUEPRINTS, DATA, AND TECHNICAL INFORMATION SPECIFIED TO BE DELIVERED BY THE CONTRACTOR TO THE GOVERNMENT UNDER THIS CONTRACT

IN SUBMITTING YOUR BID, YOU ATTACHED THE FOLLOWING STATEMENT:

"THIS PROPOSAL IS SUBMITTED ON THE EXPRESS CONDITION THAT THE EQUIPMENT LAYOUTS AND DESIGNS DISCLOSED HEREIN, AND ON THE ATTACHED DRAWINGS, ARE THE SOLE AND EXCLUSIVE PROPERTY OF PENNSYLVANIA TESTING LABORATORY, INC., AND ANY OFFER TO SELL DOES NOT INCLUDE RIGHTS TO REPRODUCE ANY PART THEREOF FOR ANY PURPOSE OTHER THAN NORMAL REPLACEMENT AND MODIFICATION. ANY EXCEPTION TO THIS CONDITION MUST BE GRANTED IN WRITING BY PENNSYLVANIA TESTING LABORATORY, INC.'

BECAUSE OF THE PROVISIONS OF CLAUSE 38 OF THE GENERAL PROVISIONS, SUPRA, YOUR STATEMENT RESTRICTING THE USE AND REPRODUCTION OF THE EQUIPMENT LAYOUTS AND DESIGNS WAS CONSIDERED BY THE CONTRACTING AGENCY AS BEING NON- CONFORMING TO THE INVITATION. CONSEQUENTLY, YOUR BID WAS REJECTED AND AWARD WAS MADE TO SYSTEMS DEVELOPMENT, INC., AS THE LOWEST RESPONSIBLE BIDDER.

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

IT IS NOT WITHIN THE PROVINCE OF OUR OFFICE TO QUESTION THE METHODS OF PROCUREMENT EMPLOYED BY THE VARIOUS ADMINISTRATIVE AGENCIES SO LONG AS SUCH METHODS ARE NOT CONTRARY TO ANY SPECIFIC REQUIREMENTS OF LAW. IN ITS REPORT ON THE MATTER OF YOUR PROTEST, THE DEPARTMENT OF THE AIR FORCE STATES THAT THE DECISION OF THE CONTRACTING OFFICER TO ADVERTISE INSTEAD OF NEGOTIATING THE CONTRACT IN THIS CASE WAS MADE PURSUANT TO DEPARTMENT OF DEFENSE POLICY TO USE THE FORMAL ADVERTISING METHOD OF PROCUREMENT TO THE GREATEST PRACTICABLE EXTENT IN PREFERENCE TO NEGOTIATION AUTHORIZED UNDER THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21. THIS POLICY IS FULLY IN ACCORD WITH THE TERMS OF THE ACT ITSELF, UNDER WHICH FORMAL ADVERTISING IS THE RULE AND NEGOTIATION IS PERMITTED ONLY UNDER SPECIFIED CONDITIONS. THAT THE SPECIFICATIONS WERE ADEQUATE APPEARS TO BE EVIDENCED BY THE FACT THAT SIX COMPANIES SUBMITTED RESPONSIVE BIDS. THE USE OF SPECIFICATIONS STATING THE NEEDS OF THE GOVERNMENT IN TERMS OF PERFORMANCE RATHER THAN IN CONSTRUCTION DETAILS IS IN NO WAY IMPROPER.

REGARDING YOUR CONTENTION AS TO THE MEANS BY WHICH THE AIR FORCE SECURED THE INFORMATION AND DATA WHICH RESULTED IN THE ADOPTION OF THE SPECIFICATIONS AS SET FORTH IN EXHIBIT WCRE-54-33A, IT IS REPORTED BY THE DEPARTMENT OF THE AIR FORCE THAT---

"AIR FORCE ENGINEERS COMMENCED WORK ON THIS PROJECT AND THE EXHIBIT IN 1953, LONG BEFORE THEY CONTACTED PENNSYLVANIA TESTING LABORATORY. THE CONCEPTS SET FORTH IN THE EXHIBIT WERE NOT ORIGINAL TO THIS COMPANY. FACT, THE AIR FORCE CONTACTED SEVERAL OTHER COMPANIES WHO HAD SIMILAR IDEAS AND THE EXHIBIT AS FINALLY ISSUED DID NOT INCORPORATE INFORMATION PROPRIETARY EITHER TO THE PENNSYLVANIA TESTING LABORATORY OR TO ANY OTHER COMPANY.'

WE AGREE WITH THE POSITION TAKEN BY THE CONTRACTING AGENCY THAT THE STATEMENT ATTACHED TO YOUR BID, BEING IN CONFLICT WITH THE PROVISIONS OF CLAUSES 37 AND 38, PARTICULARLY THE LATTER, CONSTITUTED A MAJOR DEVIATION FROM THE TERMS OF THE INVITATION WHICH COULD NOT BE WAIVED WITHOUT PREJUDICE TO OTHER BIDDERS. THE DEVIATION WENT BEYOND THE MEANING YOU NOW ATTRIBUTE TO IT AND WAS SO MATERIAL AS TO AFFECT THE PRICE SINCE IT IS ENTIRELY CONCEIVABLE THAT OTHER BIDDERS MIGHT HAVE SUBMITTED LOWER BIDS HAD THEY BEEN PERMITTED TO INCLUDE IN THEIR BIDS A PROVISION RESTRICTING THE USE BY THE GOVERNMENT OF THEIR EQUIPMENT LAYOUTS, DESIGNS AND DRAWINGS. IN ADDITION, THE DEVIATION HAD THE EFFECT OF PREVENTING THE GOVERNMENT FROM SECURING CERTAIN SPECIFIC RIGHTS CONTEMPLATED BY THE INVITATION.

WHILE CONTRACTING OFFICERS NECESSARILY ARE VESTED WITH A CERTAIN AMOUNT OF DISCRETION IN SUCH MATTERS, IT HAS BEEN CONSISTENTLY HELD THAT DEFICIENCIES OR DEVIATIONS MAY BE WAIVED ONLY IF THEY DO NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO OTHER BIDDERS. 30 COMP. GEN. 179. FURTHERMORE, IT IS A RECOGNIZED RULE THAT A CONTRACT AWARDED TO A SUCCESSFUL BIDDER MUST BE THE CONTRACT OFFERED TO ALL BIDDERS. IN THE PRESENT CASE THE CONTRACTING AGENCY REJECTED YOUR BID AS NOT BEING RESPONSIVE TO THE INVITATION. THE EXPLANATION FOR SUCH ADMINISTRATIVE ACTION APPEARING TO BE REASONABLE, OUR OFFICE WOULD NOT BE JUSTIFIED IN HOLDING THAT THE AWARD TO SYSTEMS DEVELOPMENT, INC., WAS ILLEGAL.