B-129561, NOV. 23, 1956

B-129561: Nov 23, 1956

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COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 17. YOUR PROTEST IS BASED ON THE CONTENTION THAT. THEY HAVE FAILED TO PRODUCE THE FIRST ARTICLE ON THIS CONTRACT IN ACCORDANCE WITH THE SPECIFICATIONS. "2. IT IS APPARENTLY YOUR POSITION THAT THE KURZ AND ROOT CO. - "THE PROTESTANT IS SUBSTANTIALLY CORRECT WHEN IT SAYS THAT KURZ AND ROOT COMPANY EXPERIENCED SOME DIFFICULTY IN PRODUCING AN ACCEPTABLE "FIRST ARTICLE" UNDER AN EARLIER CONTRACT FOR TYPE MD-1 MOTOR GENERATORS. THE MD-1 WAS A HIGHLY COMPLEX ITEM. BOTH THE AIR FORCE AND THE CONTRACTOR HAVE GAINED VALUABLE EXPERIENCE AS THE RESULT OF THIS PROCUREMENT. THE NEW EFFICIENCY FACTOR IS: 55 PERCENT AT SINGLE PHASE AND 60 PERCENT AT MULTIPLE PHASE OPERATION.

B-129561, NOV. 23, 1956

TO ELECTRIC MACHINERY MFG. COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 17, 1956, PROTESTING THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. 09-603 56-501, TO THE LOW BIDDER, KURZ AND ROOT CO. OF APPLETON, WISCONSIN.

YOUR PROTEST IS BASED ON THE CONTENTION THAT---

"THE KURZ AND ROOT CO. RECEIVED CONTRACT AFO9-603-30946 IN RESPONSE TO IFB-324, ALSO BID BY ELECTRIC MACHINERY MFG. CO., COVERING 392 SIMILAR UNITS OF 5 KW CAPACITY, ON OR ABOUT NOVEMBER 1, 1954.

"1. IN APPROXIMATELY 2 YEARS TIME, THEY HAVE FAILED TO PRODUCE THE FIRST ARTICLE ON THIS CONTRACT IN ACCORDANCE WITH THE SPECIFICATIONS.

"2. THEIR FAILURE TO PRODUCE IN ACCORDANCE WITH THE SPECIFICATIONS TO WHICH THEY AGREED BY CONTRACT, DEMONSTRATES EITHER A LACK OF COMPETENCE OR A CASUAL ATTITUDE TOWARD THEIR CONTRACT OBLIGATIONS ON DELIVERY.'

YOU STATE FURTHER THAT "AWARD MUST BE MADE TO THE LOWEST RESPONSIVE BIDDER OFFERING IN FULL ACCORDANCE WITH THE SPECIFICATIONS EXCLUDING THE BID OF THE KURZ AND ROOT CO.' IT IS APPARENTLY YOUR POSITION THAT THE KURZ AND ROOT CO. BID SHOULD BE REJECTED BECAUSE OF THEIR FAILURE TO MAKE DELIVERIES IN ACCORDANCE WITH THE PRIOR CONTRACT.

IN RESPONSE TO OUR INEQUITY CONCERNING THE MATTER, THE SECRETARY OF THE AIR FORCE ADVISED US THAT---

"THE PROTESTANT IS SUBSTANTIALLY CORRECT WHEN IT SAYS THAT KURZ AND ROOT COMPANY EXPERIENCED SOME DIFFICULTY IN PRODUCING AN ACCEPTABLE "FIRST ARTICLE" UNDER AN EARLIER CONTRACT FOR TYPE MD-1 MOTOR GENERATORS. HOWEVER, THE AIR FORCE DOES NOT FEEL THAT THERE EVER EXISTED SUFFICIENT JUSTIFICATION TO INVOKE TERMINATION FOR DEFAULT PROCEDURES. THE MD-1 WAS A HIGHLY COMPLEX ITEM, NEVER BEFORE, TO OUR KNOWLEDGE, PRODUCED BY INDUSTRY. BOTH THE AIR FORCE AND THE CONTRACTOR HAVE GAINED VALUABLE EXPERIENCE AS THE RESULT OF THIS PROCUREMENT.

"ON 5 OCTOBER 1956, THE AIR FORCE AGREED TO A RELAXATION OF THE MD 1 TECHNICAL REQUIREMENT OF 70 PERCENT EFFICIENCY AT 100 PERCENT LOAD AS REQUIRED BY THE ORIGINAL SPECIFICATIONS, EXHIBIT WCL-705. THE NEW EFFICIENCY FACTOR IS: 55 PERCENT AT SINGLE PHASE AND 60 PERCENT AT MULTIPLE PHASE OPERATION. AS A RESULT OF THE RELAXATION OF THE EFFICIENCY CRITERIA, THE FIRST ARTICLE PRODUCED BY KURZ AND ROOT COMPANY FOR MD-1 MOTOR GENERATORS WAS ACCEPTED ON 5 OCTOBER 1956. NEGOTIATIONS ARE PRESENTLY BEING CONDUCTED LOOKING TO A REDUCTION IN CONTRACT PRICE IN CONSIDERATION OF THE RELAXED REQUIREMENT.

"INVITATION FOR BIDS 09-603-56-501 FOR TYPE MD-2 MOTOR GENERATORS, ISSUED 16 MAY 1956, WAS OPENED 15 JUNE 1956. KURZ AND ROOT COMPANY WAS THE LOW BIDDER. WRIGHT AIR DEVELOPMENT CENTER PERFORMED AN ENGINEERING EVALUATION OF ALL BIDS RECEIVED. THE KURZ AND ROOT BID WAS CONSIDERED ADEQUATE. THE MILWAUKEE AIR PROCUREMENT DISTRICT PERFORMED A FACILITY CAPABILITY SURVEY ON KURZ AND ROOT COMPANY WITH POSITIVE RESULTS. IN VIEW OF THE DIFFICULTIES EXPERIENCED IN THE MD-1 MOTOR GENERATOR PROCUREMENT, A RESURVEY WAS CONDUCTED BY THE OKLAHOMA AIR MATERIEL AREA AND THE ORIGINAL AFFIRMATIVE FACILITY CAPABILITY REPORT WAS CONFIRMED.

"IN CONSIDERATION OF THE FOREGOING, CONTRACT AF 09/603/32195, DATED 10 OCTOBER 1956, WAS AWARDED TO KURZ AND ROOT COMPANY, THE RESPONSIVE LOW BIDDER.'

IT IS FUNDAMENTAL THAT GOVERNMENT CONTRACTS ENTERED INTO AFTER ADVERTISING FOR BIDS NEED NOT BE AWARDED TO BIDDERS NOT QUALIFIED TO PERFORM THE NECESSARY SERVICES. O-BRIEN V. CARNEY, 6 F.SUPP. 761, 762. THE PUBLIC INTEREST REQUIRES THAT SUCH CONTRACTS BE AWARDED ONLY TO THE LOWEST RESPONSIBLE BIDDER IN EACH CASE. HIBBS V. ARENSBERG, 119 A. 727. AWARDS ARE REQUIRED BY 10 U.S.C. 2305 TO BE MADE "TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED.' IT HAS LONG BEEN HELD THAT THE LOW BID OF A RESPONSIBLE BIDDER MAY NOT BE REJECTED MERELY BECAUSE SUCH BIDDER HAS DEFAULTED UNDER A PRIOR SIMILAR CONTRACT. 27 COMP. GEN. 621, 625. A FORTIORI, IT FOLLOWS THAT THE LOW BID OF AN OTHERWISE RESPONSIBLE BIDDER MAY NOT BE REJECTED BECAUSE OF DELAYS UNDER PRIOR CONTRACTS WHERE THE ADMINISTRATIVE OFFICE DETERMINED THAT TERMINATION FOR DEFAULT WAS NOT JUSTIFIED.

THE DETERMINATION OF THE QUALIFICATIONS OF BIDDERS IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED AND IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR LACK OF REASONABLE FACTUAL BASIS FOR THE DETERMINATION, WE ARE NOT REQUIRED TO OBJECT TO THE ACTION TAKEN THEREON. SINCE THE DEPARTMENT OF THE AIR FORCE HAS DETERMINED, AFTER CAREFUL INVESTIGATION AND FULL CONSIDERATION OF ITS PRIOR RECORD, THAT THE LOW BIDDER IS RESPONSIBLE AND SINCE THERE IS NO INDICATION OF BAD FAITH OR LACK OF FACTS IN SUPPORT OF SUCH DETERMINATION, WE FIND NO BASIS FOR ..END