B-128986, NOV. 1, 1956

B-128986: Nov 1, 1956

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INVITATION FOR BIDS NO. 09-603-56-398 WAS ISSUED BY THE DEPARTMENT OF THE AIR FORCE ON FEBRUARY 23. THE INVITATION PROVIDED: "SUPERSEDING PART NUMBERS: IT MAY BE THAT CERTAIN OF THE ABOVE PARTS HAVE BEEN RENDERED OBSOLETE BY GOVERNMENT APPROVED DESIGN CHANGES. IN THE EVENT BIDDER DETERMINES SUCH IS THE CASE. RESERVES THE RIGHT TO REJECT ANY BID WHICH DOES NOT OFFER AN ITEM IN ACCORDANCE WITH LATEST TWO BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION: SPECIALTIES. WAS LOW BIDDER AT $518.62 PER UNIT. ALL BIDS WERE THEREFORE REJECTED AND. THE PROCUREMENT WAS ACCOMPLISHED THROUGH NEGOTIATION OF A CONTRACT WITH TOPP AT A PRICE OF $502.25 PER UNIT LESS A DISCOUNT OF ONE-HALF OF ONE PERCENT TEN DAYS.

B-128986, NOV. 1, 1956

TO SPECIALTIES, INC.:

YOUR LETTER OF AUGUST 14, 1956, YOUR REFERENCE AL NO. 56/39, PROTESTS THE AWARD OF CONTRACT NO. AF 09/603/-31800, CLASS: 11B, TO TOPP INDUSTRIES, INC., LOS ANGELES, CALIFORNIA, FOR THE MANUFACTURE OF 250 COMPENSATORS.

INVITATION FOR BIDS NO. 09-603-56-398 WAS ISSUED BY THE DEPARTMENT OF THE AIR FORCE ON FEBRUARY 23, 1956, FOR COMPENSATORS AS SPARE AND REPLACEMENT PARTS FOR THE E-9 FIRE CONTROL SYSTEM MANUFACTURED BY HUGHES AIRCRAFT COMPANY. THE INVITATION, AS ULTIMATELY AMENDED, DESCRIBED THE ARTICLE TO BE PROCURED AS FOLLOWS:

CHART

"ITEM NO. SUPPLIES OR SERVICES QUANTITY UNIT

1 5200-203240 P/N 10100 COMPENSATOR - ANGLE 250 EA

OF ATTACK, TOPP INDUSTRIES, INC. OR

5200-203242 P/M SL22004 COMPENSATOR, ANGLE

OF ATTACK, SPECIALTIES, INC., APPL. TYPE

E9A FIRE CONTROL SYSTEM.'

IN ADDITION, THE INVITATION PROVIDED:

"SUPERSEDING PART NUMBERS: IT MAY BE THAT CERTAIN OF THE ABOVE PARTS HAVE BEEN RENDERED OBSOLETE BY GOVERNMENT APPROVED DESIGN CHANGES. IN THE EVENT BIDDER DETERMINES SUCH IS THE CASE, BID SHALL BE BASED UPON APPLYING THE GOVERNMENT APPROVED SUPERSEDING PART, CURRENT AS OF THE OPENING DATE OF THE INVITATION, AND SHALL IDENTIFY THE TERM BY THE REVISED PART NUMBER. THE GOVERNMENT, AT ITS OPTION, RESERVES THE RIGHT TO REJECT ANY BID WHICH DOES NOT OFFER AN ITEM IN ACCORDANCE WITH LATEST

TWO BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION: SPECIALTIES, INC., WAS LOW BIDDER AT $518.62 PER UNIT; TOPP INDUSTRIES BID $601.25 PER UNIT WITH A PROMPT PAYMENT DISCOUNT OF ONE-HALF OF ONE PERCENT. PRIOR TO AWARD ON THE BASIS OF THE INVITATION, THE DEPARTMENT OF THE AIR SUFFICIENT INFORMATION AGAINST WHICH BIDDERS COULD COMPETE ON AN EQUAL BASIS. ALL BIDS WERE THEREFORE REJECTED AND, UPON A DETERMINATION BY THE SECRETARY OF THE AIR FORCE IN ACCORDANCE WITH SECTION 2 (C) (14) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, THE PROCUREMENT WAS ACCOMPLISHED THROUGH NEGOTIATION OF A CONTRACT WITH TOPP AT A PRICE OF $502.25 PER UNIT LESS A DISCOUNT OF ONE-HALF OF ONE PERCENT TEN DAYS, OR A NET PRICE OF $499.74 PER UNIT, WHICH WAS $0.24 LESS THAN THE LOWEST PRICE QUOTED BY YOU DURING THE NEGOTIATION.

YOU CONTEND THAT INVITATION FOR BIDS NO. 09-603-56-398 DID CONTAIN AN ADEQUATE DESCRIPTION OF THE ITEMS TO BE PROCURED AND WAS THEREFORE NOT DEFECTIVE, AND CONSEQUENTLY, THAT THE CONTRACT SHOULD HAVE BEEN AWARDED TO THE LOWEST RESPONSIBLE BIDDER, SPECIALTIES, INC.

SECTION 3 OF THE ARMED SERVICES PROCUREMENT ACT PROVIDES IN PERTINENT PART IN RELATION TO PROCUREMENT THROUGH FORMAL ADVERTISING THAT "ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.' THE AUTHORITY IN THE AGENCY HEAD TO REJECT ALL BIDS IS EXTREMELY BROAD AND IN THE ABSENCE OF CLEAR PROOF OF ABUSE OF THE DISCRETION VESTED IN HIM WE WOULD NOT BE WARRANTED IN INTERFERING WITH ANY ACTION BASED ON SUCH A DETERMINATION. THE INCLUSION IN THE INVITATION OF THE PARAGRAPH QUOTED ABOVE, REQUIRING THE BIDDER TO FAMILIARIZE HIMSELF WITH ANY DESIGN CHANGES OR REVISED PART NUMBERS APPROVED BY THE GOVERNMENT UP TO THE TIME FOR OPENING OF BIDS, REGARDLESS OF ANY LACK OF NOTICE FROM THE GOVERNMENT, CERTAINLY CONSTITUTED ADEQUATE BASIS FOR THE ADMINISTRATIVE CONCLUSION THAT THE INVITATION DID NOT SET FORTH THE NEEDS OF THE GOVERNMENT WITH THE DEFINITENESS AND CERTAINTY REQUIRED BY LAW.

YOU NEXT CONTEND THAT YOU WERE NEVER NOTIFIED OF THE DISALLOWANCE OF YOUR PROTEST BY TELEGRAM OF JUNE 13, 1956. YOU STATE,"THE FAILURE TO NOTIFY SPECIALTIES OF THE DISALLOWANCE OF THE PROTEST IS IN VIOLATION OF AFPI 2- 407-/E) (2).' THE TELEGRAM PROTESTED ANY SUBSEQUENT AWARD WHICH MIGHT BE MADE TO TOPP INDUSTRIES PURSUANT TO NEGOTIATION. THE CITED INSTRUCTION RELATES ONLY TO PROTESTS OF AWARDS MADE THROUGH FORMAL ADVERTISING. THERE IS NO EQUIVALENT REQUIREMENT AS TO NOTIFICATION OF DISALLOWANCE OF PROTEST AGAINST A NEGOTIATED AWARD. FURTHER, AFPI 2-407-/F) PROVIDES THAT EACH BIDDER SHOULD BE NOTIFIED OF THE REJECTION OF ALL BIDS RELATING TO AN ADVERTISED PROCUREMENT. YOU WERE SO NOTIFIED BY TELEGRAM OF MAY 8, 1956.

IF IT IS DETERMINED THAT THE WITHDRAWAL OF THE INVITATION FOR BIDS WAS PROPER, YOU CONTEND THAT "THE ACTION OF THE CONTRACTING OFFICER IN MAKING THE AWARD TO TOPP INDUSTRIES UNDER A SO-CALLED NEGOTIATED PROCUREMENT WAS NOT IN KEEPING WITH EITHER THE LETTER OR THE INTENT OF THE ARMED SERVICES PROCUREMENT REGULATION.' THIS CHARGE APPEARS TO BE BASED ON THE ASSERTIONS THAT YOUR ORIGINAL BID PRICE WAS FAIR, THAT TOPP'S BID PRICE WAS "EXORBITANT," THAT SPECIALTIES WAS AT A DISADVANTAGE BECAUSE TOPP LEARNED THE AMOUNT OF ITS BID WHEN BIDS WERE OPENED, AND THAT SPECIALTIES WAS "FORCED" TO REDUCE ITS PRICE DURING THE COURSE OF NEGOTIATIONS TO A LESS THAN REASONABLE FIGURE. THIS LAST YOU STATE IS CONTRARY TO AFPI 3- 101.51 WHICH PROVIDES IN PART THAT ,CONTRACTING OFFICERS SHOULD NOT ATTEMPT TO FORCE CONTRACTORS TO ACCEPT A PRICE WHICH IS LESS THAN REASONABLE UNDER THE CIRCUMSTANCES.'

SECTION 2 (C) OF THE ARMED FORCES PROCUREMENT ACT PROVIDES:

"ALL PURCHASES AND CONTRACTS FOR SUPPLIES AND SERVICES SHALL BE MADE BY ADVERTISING, AS PROVIDED IN SECTION 3, EXCEPT THAT SUCH PURCHASES AND CONTRACTS MAY BE NEGOTIATED BY THE AGENCY HEAD WITHOUT ADVERTISING IF---

"/14) FOR SUPPLIES OF A TECHNICAL OR SPECIALIZED NATURE REQUIRING A SUBSTANTIAL INITIAL INVESTMENT OR AN EXTENDED PERIOD OF PREPARATION FOR MANUFACTURE, AS DETERMINED BY THE AGENCY HEAD, WHEN HE DETERMINES THAT ADVERTISING AND COMPETITIVE BIDDING MAY REQUIRE DUPLICATION OF INVESTMENT OR PREPARATION ALREADY MADE, OR WILL UNDULY DELAY PROCUREMENT OF SUCH SUPPLIES * * *.'

THE NEGOTIATED PROCUREMENT IN THIS CASE WAS AUTHORIZED UPON AN APPROPRIATE DETERMINATION BY THE SECRETARY OF THE AIR FORCE. THE CONTRACTING OFFICER'S AREA OF DISCRETION IS MUCH WIDER IN NEGOTIATED PROCUREMENT THAN IN PROCUREMENT THROUGH FORMAL ADVERTISING. IN THE PRESENT CASE IT APPEARS THAT THE AWARD WAS MADE AT THE BEST PRICE OFFERED TO THE GOVERNMENT BY A RESPONSIBLE BIDDER, AFTER REASONABLE OPPORTUNITY HAD BEEN AFFORDED THE ONLY OTHER INTERESTED BIDDER. UNDER SUCH CIRCUMSTANCES THERE APPEARS TO BE NO BASIS UPON WHICH WE WOULD BE JUSTIFIED IN INTERFERING WITH THE AWARD.

AS TO YOUR SPECIFIC CONTENTIONS, IT DOES NOT APPEAR THAT THE "EXORBITANCE" OF TOPP'S BID PRICE IN RESPONSE TO THE INVITATION WOULD AFFECT THE VALIDITY OF A NEGOTIATED AWARD. WHILE YOU STATE THAT YOU WERE "FORCED" TO REDUCE YOUR PRICE TO LESS THAN A REASONABLE FIGURE, IT MIGHT BE BETTER SAID THAT YOU WERE GIVEN THE OPPORTUNITY TO BETTER TOPP'S FIGURE, AS TO WHICH THERE IS NO SHOWING OF UNREASONABLENESS. IN VIEW OF THE CONTRACTING OFFICER'S DISCRETIONARY AUTHORITY IN NEGOTIATING, WE WOULD NOT ON THE BASIS OF THE PRESENT RECORD BE REQUIRED TO QUESTION THE CONTRACTING OFFICER'S INTERPRETATION OF WHAT IS "REASONABLE" UNDER AFPI 3- 101.51. AS TO YOUR CONTENTION THAT SPECIALTIES WAS AT A DISADVANTAGE BECAUSE TOPP LEARNED THE AMOUNT OF SPECIALTIES' BID WHEN BIDS WERE OPENED, IT MIGHT BE SAID THAT IN NEGOTIATION YOU HAD THE SAME OPPORTUNITY TO IMPROVE ON TOPP'S LOW OFFER THAT TOPP HAD IN RELATION TO YOUR OFFER. ANY CASE, THE FACT THAT YOUR PRICE HAD BEEN DISCLOSED UPON BID OPENING WOULD CERTAINLY NOT JUSTIFY THE INVALIDATION OF A NEGOTIATED PROCUREMENT ON THAT BASIS. ACCORDINGLY, YOUR PROTEST IS DENIED.