B-129059, NOV. 30, 1956

B-129059: Nov 30, 1956

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 21. WAS THE SOLE SOURCE OF THE OSCILLOGRAPHS AND THE AUTHORITY OF THE CONTRACTING OFFICER TO DECLINE TO ACT IN ACCORDANCE WITH THAT DETERMINATION. IT WAS FOUND THAT CENTURY WAS THE SOLE BIDDER ON INVITATION NO. THAT" OF THE SIXTY- FIVE INVITEES TO WHOM IFB'S WERE MAILED TWENTY-FOUR DID NOT RESPOND AT ALL AND THAT FORTY RESPONDED TO THE EFFECT THAT THEY WERE UNABLE TO SUBMIT BIDS FOR VARIOUS REASONS. OR THAT THEY WERE UNABLE TO BID UPON THE SPECIFICATIONS OF THE IFB.'. THE DISSENTING VOTE WAS BASED UPON THE PREMISE THAT THE AWARD WOULD NOT REFLECT A SOUND BUSINESS DEAL. THE CENTURY BID WAS IN THE AMOUNT OF $539. THE GOVERNMENT'S ESTIMATED COST OF THE PROCUREMENT WAS $400.

B-129059, NOV. 30, 1956

TO CENTURY ELECTRONICS AND INSTRUMENTS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 21, 23, AND 31, 1956, WITH ENCLOSURES, AND SEPTEMBER 5, 1956, PROTESTING THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY UNDER INVITATION FOR BIDS NO. ORD 29-040-56-383, ISSUED APRIL 23, 1956, BY THE WHITE SANDS PROVING GROUND, NEW MEXICO, FOR THE PROCUREMENT OF 200 OSCILLOGRAPHS AND ASSOCIATED EQUIPMENT.

BRIEFLY STATED, YOU PROTEST AGAINST THE CANCELLATION OF THE SUBJECT INVITATION, THE NEGOTIATION WITH ANY OTHER PARTY OR PARTIES WITH RESPECT TO THE INITIAL REQUIREMENTS OF THE PROCUREMENT INVOLVED (50 OSCILLOGRAPHS) OR ANY ACTION INCONSISTENT WITH YOUR REQUEST THAT WE REVERSE THE ACTION OF THE DEPARTMENT OF THE ARMY AND REESTABLISH CENTURY'S POSITION "AS THE LOW BIDDER OR AS THE SOLE SOURCE" OF THE PROCUREMENT. IN CONNECTION WITH YOUR PROTEST, YOU PROPOUND CERTAIN QUESTIONS RELATIVE TO THE RIGHTS OF A LOW BIDDER TO THE AWARD OF A GOVERNMENT CONTRACT. ALSO, YOU INQUIRE INTO THE STATUS OF A DETERMINATION BY THE OFFICE OF THE CHIEF OF ORDNANCE THAT CENTURY ELECTRONICS AND INSTRUMENTS, INC., WAS THE SOLE SOURCE OF THE OSCILLOGRAPHS AND THE AUTHORITY OF THE CONTRACTING OFFICER TO DECLINE TO ACT IN ACCORDANCE WITH THAT DETERMINATION.

A REPORT IN THE MATTER FROM THE DEPARTMENT OF THE ARMY STATES THAT UPON THE OPENING OF BIDS ON MAY 25, 1956, IT WAS FOUND THAT CENTURY WAS THE SOLE BIDDER ON INVITATION NO. ORD-29-040-56-383, AND THAT" OF THE SIXTY- FIVE INVITEES TO WHOM IFB'S WERE MAILED TWENTY-FOUR DID NOT RESPOND AT ALL AND THAT FORTY RESPONDED TO THE EFFECT THAT THEY WERE UNABLE TO SUBMIT BIDS FOR VARIOUS REASONS, SUCH AS, INABILITY TO COMPLY WITH DELIVERY DATES, THAT THEIR ITEM OF MANUFACTURE DID NOT CONFORM TO THE SPECIFICATIONS, OR THAT THEY WERE UNABLE TO BID UPON THE SPECIFICATIONS OF THE IFB.' ON MAY 29, AND SUBSEQUENT TO A PROTEST FROM MIDWESTERN INSTRUMENTS, TULSA, OKLAHOMA, THE BOARD OF AWARDS OF WHITE SANDS PROVING GROUND RECOMMENDED AWARD UNDER THE INVITATION TO CENTURY BY A VOTE OF THREE TO ONE. THE DISSENTING VOTE WAS BASED UPON THE PREMISE THAT THE AWARD WOULD NOT REFLECT A SOUND BUSINESS DEAL. THE CENTURY BID WAS IN THE AMOUNT OF $539,610.40; THE GOVERNMENT'S ESTIMATED COST OF THE PROCUREMENT WAS $400,000. MIDWESTERN HAD PROTESTED THE AWARD ON THE GROUNDS, INTER ALIA, THAT (1) NOTWITHSTANDING ITS FILING OF AN APPLICATION THEREFOR, IT WAS NOT INCLUDED IN THE LIST OF BIDDERS TO WHOM INVITATIONS WERE FURNISHED AND ONLY UNOFFICIALLY RECEIVED A COPY OF THE INVITATION THE DAY BEFORE THE BID OPENING, (2) ITS REQUEST FOR AN EXTENSION OF THE SCHEDULED TIME FOR OPENING OF BIDS IN ORDER TO PREPARE ITS BID HAD BEEN DENIED, (3) IT RANKED VERY CLOSE TO FIRST IN THE FIELD OF APPROXIMATELY TEN MANUFACTURERS OF BOTH COMPANIES MADE THEIR ORAL AND WRITTEN ARGUMENTS TO THE OFFICE OF THE OSCILLOGRAPHS IN THE UNITED STATES, AND (4) THE SPECIFICATIONS IN THE SUBJECT INVITATION WERE EXTREMELY RESTRICTIVE.

THE DEPARTMENT OF THE ARMY REPORTS THAT MIDWESTERN'S REQUEST FOR AN EXTENSION OF BID OPENING WAS DENIED IN VIEW OF THE NUMBER OF "APPARENT" RESPONSES TO THE INVITATION AND THE INADEQUACY OF THE TIME AVAILABLE TO NOTIFY INVITEES OF SUCH A POSTPONEMENT. HOWEVER, IN VIEW OF THE FACT THAT ONLY ONE BID WAS INCLUDED IN THE RESPONSES AND BECAUSE OF THE PROTEST BY MIDWESTERN, WHITE SANDS PROVING GROUND FORWARDED THE TELEGRAPHIC PROTEST OF MIDWESTERN TO THE OFFICE OF THE CHIEF OF ORDNANCE BY TELETYPE. IT IS REPORTED THAT BOTH CENTURY AND MIDWESTERN IMMEDIATELY LEARNED FROM THE CONTRACTING AND PURCHASING OFFICER AT WHITE SANDS OF THIS ACTION AND THEIR REPRESENTATIVES WERE GIVEN AN OPPORTUNITY TO MAKE THEIR APPEARANCES IN THE MATTER. BOTH COMPANIES MADE THEIR ORAL AND WRITTEN ARGUMENTS TO THE OFFICE OF THE CHIEF OF ORDNANCE.

WITH RESPECT TO ITS INVESTIGATION INTO MIDWESTERN'S PROTEST, THE DEPARTMENT CONCLUDED THAT, INASMUCH AS MIDWESTERN INADVERTENTLY HAD BEEN OMITTED FROM THE BIDDER'S MAILING LIST, THEIR REGULATIONS "WOULD PRECLUDE AN AWARD UPON THE IFB BY VIRTUE OF HAVING OMITTED TO USE STANDARD FORM 129 FILLED OUT BY MIDWESTERN IN THE COMPILATION OF THE BIDDERS LIST.' THE REPORT FURTHER STATES THAT:

"2. ALTHOUGH THE IFB WAS DISTRIBUTED TO SIXTY-FIVE INVITEES, MANY OF THESE INVITEES WERE NOT POTENTIAL SOURCES OF SUPPLY. FOR EXAMPLE, THE FIRST FIFTEEN NAMES APPEARING ON THE INITIAL LIST OF THIRTY-NINE INVITEES (TAB A) WAS TAKEN FROM PAGE D-118 OF THE JUNE 1955--- MID MONTH ELECTRONIC BUYERS GUIDE UNDER THE HEADING, OSCILLOGRAPH-CATHODE RAY RECORDING, MULTICHANNEL. THE OSCILLOGRAPH CALLED FOR BY THE IFB BEING A GALVANOMETER TYPE OSCILLOGRAPH, IT IS NOT PROBABLE THAT SUCH WOULD BE AVAILABLE FROM CATHODE RAY OSCILLOGRAPH MANUFACTURERS. A MORE LIKELY LIST OF POTENTIAL SUPPLIERS OF GALVANOMETER OSCILLOGRAPH SUPPLIERS COULD HAVE BEEN COMPILED FROM THE ELECTRONIC BUYERS GUIDE UNDER THE HEADING APPEARING ON PAGE D-119 OSCILLOGRAPH-RECORDING. THIS LATTER LIST INCLUDED MIDWESTERN INSTRUMENTS AND OTHERS THAT MIDWESTERN ALLEGE NOT TO HAVE BEEN EXTENDED INVITATIONS. IN VIEW OF THIS FACT IT CAN NOT BE UNEQUIVOCALLY STATED THAT THE BIDDERS LIST UTILIZED, NOTWITHSTANDING ITS SIZE, WOULD ACCOMPLISH THE OBJECTIVES OF THE GOVERNMENT IN COMPETITIVE BIDDING.'

AFTER FURTHER DEVELOPMENT OF THE MATTER BETWEEN THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, THE WHITE SANDS PROVING GROUND, AND THE REPRESENTATIVES OF THE OFFICE, CHIEF OF ORDNANCE, THE LATTER CONCLUDED THAT THE INVITATION COVERED SOLE SOURCE ITEMS WITH CENTURY AND, AS SUCH, IT WAS "NOT APPROPRIATE TO EFFECT THIS PROCUREMENT BY FORMAL ADVERTISING (SEE ASPR, APP 3-210 AND OPI 1-401.4C).' ARMED SERVICES PROCUREMENT REGULATION 3-210 PROVIDES, INTER ALIA, THAT PURSUANT TO THE AUTHORITY OF SECTION 2 (A) (10) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, AS REVISED AND CODIFIED (10 U.S.C. 2304 (C) (10) (, CONTRACTS MAY BE NEGOTIATED WITHOUT FORMAL ADVERTISING WHEN THE PROCUREMENT "CAN BE OBTAINED FROM ONLY ONE PERSON OR FIRM ("SOLE SOURCE OF SUPPLY").' HOWEVER, ASPR 3-210.3 REQUIRES THAT EVERY CONTRACT THAT "IS NEGOTIATED UNDER THE AUTHORITY OF THIS PARAGRAPH 3 210 SHALL BE ACCOMPANIED BY A SIGNED STATEMENT OF THE CONTRACTING OFFICER JUSTIFYING ITS USE, AND A COPY OF SUCH STATEMENT SHALL BE SENT TO THE GENERAL ACCOUNTING OFFICE WITH A COPY OF THE CONTRACT NEGOTIATED AND EXECUTED HEREUNDER.' LIKEWISE, ORDNANCE PROCUREMENT INSTRUCTION 1-401.4C PLACES THE RESPONSIBILITY FOR DETERMINING THAT THERE IS ONLY ONE SOURCE AVAILABLE FROM WHICH TO OBTAIN THE NEEDED MATERIAL UPON THE CONTRACTING OFFICER AND REQUIRES OF HIM A STATEMENT IN JUSTIFICATION OF THAT DETERMINATION. IN THIS CONNECTION, THE ADMINISTRATIVE REPORT IS AS FOLLOWS:

"G. CONGRESSIONAL LETTERS. IN NO WAY ANTICIPATING, AS SUBSEQUENT EVENTS PROVED, THAT THE CONTRACTING OFFICER AT WHITE SANDS PROVING GROUND WOULD CONSIDER THAT HE DID NOT POSSESS SUFFICIENT INFORMATION ON WHICH TO JUSTIFY THE SIGNED STATEMENT REQUIRED BY ASPR 3-210.3 TO USE THE EXCEPTION PROVIDED BY 10 U.S.C. 2304 (A) (10), THE OFFICE, CHIEF OF ORDNANCE ANSWERED SIMILAR INQUIRIES IN BEHALF OF CENTURY THAT HAD BEEN RECEIVED ON 11 JUNE 1956 FROM SENATOR DENNIS CHAVEZ AND CONGRESSMAN CARL ALBERT. THESE LETTERS WERE DATED 25 JULY 1956, COPY ATTACHED AS TAB NO. 2 TO CENTURY'S PROTEST, AND WERE BASED ON THE AFORE STATED CONCLUSIONS OF REPRESENTATIVES OF THE OFFICE, CHIEF OF ORDNANCE THAT THE PROCUREMENT TO BE REFLECTED BY THE IFB WOULD BE A SOLE SOURCE ITEM WITHIN THE EXCEPTION TO ADVERTISING AS PROVIDED IN 10 U.S.C. 2304 (A) (10), AND WHICH IT WAS ASSUMED THAT THE CONTRACTING OFFICER AT WHITE SANDS PROVING GROUND COULD SUPPORT.'

IN SPECIFIC ANSWER TO YOUR INQUIRY AS TO THE STATUS OF THE DETERMINATION BY THE OFFICE OF THE CHIEF OF ORDNANCE RELATIVE TO CENTURY AS THE SOLE SOURCE OF OSCILLOGRAPHS, THE REPORT ADVISES HAT:

"I. FURTHER IFB SPECIFICATION DEVELOPMENTS. PENDING DETERMINATION OF THE CONTRACTING OFFICER AT WHITE SANDS PROVING GROUND AS TO WHETHER HE COULD JUSTIFY A CANCELLATION OF THE IFB AND PROCURE ON A SOLE SOURCE BASIS REPRESENTATIVES OF THE OFFICE, CHIEF OF ORDNANCE CONTINUED THEIR STUDY OF THE IFB SPECIFICATION. CONTINUED STUDY OF THE SPECIFICATION GIVES RISE TO STRONGER CONVICTION THAT EQUIPMENT OF THE CHARACTER OF THIS OSCILLOGRAPH CANNOT BE SPECIFIED WITH ANY DEGREE OF ASSURANCE THAT IT WILL BE SATISFACTORY FOR USE IN A MISSILE AND HENCE SHOULD BE PROCURED ON ENGINEERING JUDGMENT FOLLOWED BY ACTUAL FLIGHT TEST BEFORE ACCEPTANCE. MORE SPECIFICALLY THE SPECIFICATION WAS FOUND AS FOLLOWS:

"1. THAT THE MECHANICAL DEGRADATION FORCES OF SHOCK, CONSTANT ACCELERATION AND VIBRATION WERE NOT SPELLED OUT DEFINITELY.

"2. THAT THE BATTERIES CALLED FOR WERE IN REALITY PRIMARY BATTERIES, AND AS SUCH A PROCUREMENT RESPONSIBILITY OF THE CHIEF, SIGNAL OFFICER OF THE ARMY UNDER CURRENT REGULATIONS. MOREOVER, THESE BATTERIES AS PRICED BY CENTURY IN THE BREAK OUT PRICES OF THEIR LUMP SUM BID (SEE ITEM NO. 12 IN THEIR 26 MAY 1956 LETTER, THEIR TAB NO. 1 (E) ( WOULD COST THE GOVERNMENT APPROXIMATELY $26,000.00 MORE THAN IF PROCURED THROUGH SOURCES SPECIFIED BY ARMY REGULATIONS. THESE BATTERIES WERE ERRONEOUSLY INCLUDED IN THE IFB SPECIFICATION BY WHITE SANDS PROVING GROUND THROUGH AN UNDERSTANDABLE OVERSIGHT AND WILL HAVE TO BE REMOVED AS A REQUIREMENT OF THE SPECIFICATIONS.

"J. ADVICE TO WHITE SANDS PROVING GROUND. AS A RESULT OF THE DEVELOPMENT OF THESE FURTHER DEFICIENCIES IN THE IFB SPECIFICATION THE CONTRACTING OFFICER AT WHITE SANDS PROVING GROUND WAS ADVISED BY THE OFFICE, CHIEF OF ORDNANCE ON 14 AUGUST 1956 THAT THE ONLY ACTION THAT COULD BE SUPPORTED UNDER COMPTROLLER GENERAL DECISIONS (SEE 17 CG A 89734) (17 COMP. GEN. 554) AND REGULATIONS OF THE ARMY WOULD BE TO:

"1. CANCEL THE IFB;

"2. PROCURE IMMEDIATE OSCILLOGRAPH REQUIREMENTS TO SUPPORT SCHEDULED MISSILE FIRINGS BY NEGOTIATION;

"3. REFORM THE BASIS OF PROCUREMENT FOR OSCILLOGRAPH REQUIREMENTS BEYOND IMMEDIATE NEEDS; .E., READVERTISING, NEGOTIATION, OR QUALIFIED LIST PRODUCTS AS HE DETERMINED TO BE APPROPRIATE.

"THE CONTRACTING OFFICER WAS FURTHER INFORMED THAT NOTWITHSTANDING THE "SINGLE SOURCE" EXCEPTION SUGGESTED BY OFFICE, CHIEF OF ORDNANCE AS A BASIS FOR NEGOTIATION THAT UNDER THE CIRCUMSTANCES NO ADEQUATE SPECIFICATIONS EXISTED, WHICH WAS A SITUATION THAT ALSO FELL WITHIN THE EXCEPTION OF 10 U.S.C. 2304 (A) (10).

"K. CANCELLATION OF IFB. BY LETTER DATED 15 AUGUST 1956 THE CONTRACTING OFFICER AT WHITE SANDS PROVING GROUND CANCELED THE IFB. A COPY OF THIS LETTER IS ATTACHED TO CENTURY'S PROTEST AS TAB NO. 9 (A).'

THE REPORT FURTHER ADVISES THAT THE IMMEDIATE REQUIREMENTS REFERRED TO IN (2), ABOVE, WERE NEGOTIATED ON SEPTEMBER 17, 1956, WITH CENTURY.

RELATIVE TO YOUR INQUIRY AS TO THE RIGHTS OF A LOW BIDDER IN A SITUATION SUCH AS HERE INVOLVED, IT IS RECOGNIZED THAT TO REJECT BIDS AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 C.CLS. 699. HOWEVER, IN THIS CASE THE DEPARTMENT OF THE ARMY HAS CONCLUDED THAT THE CANCELLATION OF THE INVITATION, NEGOTIATION FOR THE MINIMUM IMMEDIATE NEEDS, AND READVERTISEMENT UNDER CHANGED SPECIFICATIONS FOR THE BALANCE IS IN THE BEST INTEREST OF THE GOVERNMENT. IN THE ABSENCE OF CLEAR PROOF OF ABUSE, THE DEPARTMENT HAS THAT DISCRETION. B-126211, JANUARY 9, 1956. AS TO THE CHANGED SPECIFICATIONS, THE DUTY AND RESPONSIBILITY OF DRAFTING SPECIFICATIONS IS PRIMARILY THAT OF THE ADMINISTRATIVE OFFICE REQUIRING THE MATERIALS OR EQUIPMENT. OUR DUTY AND RESPONSIBILITY IN THAT RESPECT IS TO DETERMINE THE QUESTION AS TO WHETHER SUCH SPECIFICATIONS ARE UNDULY RESTRICTIVE OF COMPETITION OR OTHERWISE UNAUTHORIZED--- THIS QUESTION BEING ONE THAT GOES TO THE LEGALITY OF CONTRACTS AND THE USES OF APPROPRIATED MONEYS. 17 COMP. GEN. 554, 18 ID. 285, 579; 19 ID. 673; 21 ID. 1132, 1136. IT IS NOT WITHIN OUR JURISDICTION TO DIRECT THE AWARD OF A CONTRACT TO ANY PARTICULAR BIDDER. MOREOVER, IN ADDITION TO THE SPECIFIC PROVISION IN INVITATION NO. ORD-29-040-56-383 RESERVING THE RIGHT IN THE GOVERNMENT CONTRACTING OFFICER TO REJECT ANY AND ALL BIDS, THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND THE COURTS HAVE HELD REPEATEDLY THAT, IRRESPECTIVE OF ANY SUCH RESERVATION, A REQUEST FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED, INCLUDING THE LOWEST CORRECT BID. 17 COMP. GEN. 554; 26 ID. 49; 31 ID. 20; 34 ID. 633; O-BRIEN V. CARNEY, 6 F.SUPP. 761; SCOTT V. UNITED STATES, 44 C.CLS. 524; COLORADO PAVING CO. V. MURPHY, 78 F. 28. THAT PRINCIPLE IS PREDICATED UPON THE SOUND LEGAL CONCLUSION OF THE COURTS THAT THE LAWS RELATING TO PROCUREMENT MATTERS WERE ENACTED FOR THE BENEFIT OF THE GOVERNMENT AND NOT FOR THE BIDDER. AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75; PERKINS V. LUKENS STEEL CO., 310 U.S. 113, 126; FRIEND V. LEE, 221 F.2D 96. ACCORDINGLY, IN VIEW OF THE ADMINISTRATIVE REPORT AND INASMUCH AS IT IS A MATTER OF ADMINISTRATIVE DISCRETION TO REJECT BIDS AND READVERTISE FOR NEW BIDS, THERE IS NO LEGAL BASIS UPON WHICH WE MAY OBJECT TO THE ACTION OF THE DEPARTMENT OF THE ARMY.