B-130142, MAR. 22, 1957

B-130142, MAR. 22, 1957

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 14, 1957, WITH ENCLOSURES, FROM MR. DUDLEY C. SHARP, ASSISTANT SECRETARY OF THE AIR FORCE, FURNISHING A REPORT ON THE PROTEST OF THE PIASECKI AIRCRAFT CORPORATION AGAINST THE REJECTION OF ITS PROPOSAL FOR THE REPAIR AND OVERHAUL OF HELICOPTER BLADE ASSEMBLIES.

ALTHOUGH THE RECORD FURNISHED CONTAINS NO FINDING OR DETERMINATION JUSTIFYING THE NEGOTIATION PROCEDURE, IT IS UNDERSTOOD THAT IT WAS DETERMINED ADMINISTRATIVELY TO CONDUCT THE PROCUREMENT ON A NEGOTIATED BASIS UNDER AUTHORITY OF SECTION 2304 (A) (10) OF PUBLIC LAW 1028, 84TH CONGRESS, APPROVED AUGUST 10, 1956, WHICH AUTHORIZES THE HEAD OF THE DEPARTMENT TO NEGOTIATE CONTRACTS IF ,THE PURCHASE OR CONTRACT IS FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION.' REQUEST FOR PROPOSALS NO. 36-600-57-5020 WAS ISSUED AT THE HEADQUARTERS, MIDDLETOWN AIR MATERIEL AREA, UNITED STATES AIR FORCE, OLMSTED AIR FORCE BASE, PENNSYLVANIA, ON OCTOBER 2, 1956, REQUESTING PROPOSALS TO BE RECEIVED NO LATER THAN OCTOBER 17, 1956, FOR SUPPLIES AND SERVICES NECESSARY TO REPAIR AND/OR OVERHAUL A QUANTITY OF SETS OF FORWARD AND AFT BLADE ASSEMBLIES APPLICABLE TO N 21 AIRCRAFT, THE SERVICES TO BE PERFORMED IN ACCORDANCE WITH APPENDICES "A" AND "B" ATTACHED TO THE REQUEST FOR PROPOSALS. THE REQUEST FOR PROPOSALS, WHICH WAS DISTRIBUTED TO 15 POTENTIAL SOURCES OF SUPPLY ON OCTOBER 2, 1956, ADVISED THAT ALL PARTS AND MATERIALS REQUIRED IN THE PERFORMANCE OF THE CONTRACT TO BE AWARDED WOULD BE CONTRACTOR FURNISHED; THAT AN AWARD, IF ANY, WOULD BE MADE ON THE BASIS OF PRICE, DELIVERY AND ALL OTHER FACTORS CONSIDERED; AND THAT THE GOVERNMENT RESERVED THE RIGHT TO REJECT ANY OR ALL PROPOSALS SUBMITTED IN RESPONSE TO THE REQUEST.

THE ABSTRACT OF BIDS SHOWS THAT 3 PROPOSALS WERE RECEIVED AND THAT THE LOWEST WAS SUBMITTED BY THE PIASECKI AIRCRAFT CORPORATION. THIS PROPOSAL, HOWEVER, CONTAINED A QUALIFICATION STATED AS FOLLOWS:

"IT WILL BE NOTED THAT APPENDIX "B," PARAGRAPH 1-A, ENTITLED "CONTRACTOR FURNISHED PROPERTY" INDICATES THAT ALL PARTS AND MATERIALS REQUIRED IN PERFORMING THE TERMS OF THE CONTRACT WILL BE CONTRACTOR FURNISHED. THE CONTRACTOR TAKES EXCEPTION TO THAT PART OF APPENDIX "B," PARAGRAPH 1-A, THAT WOULD BE APPLICABLE TO THE PROCUREMENT OF PROPRIETARY ITEMS. THE CONTRACTOR REPRESENTS THAT HE WILL EXERT ALL EFFORTS TO PROCURE MATERIALS IN THIS CATEGORY, BUT WOULD LIKE TO POINT OUT THAT ON CERTAIN PROPRIETARY ITEMS WITH ONLY ONE SOURCE OF SUPPLY THAT THE GOVERNMENT CONTROLS PRODUCTION, OUTPUT AND PRIORITIES, AND IT WOULD BE IMPOSSIBLE FOR THE CONTRACTOR TO PROCURE THIS MATERIAL IF THE GOVERNMENT WAS UNABLE TO DO SO.'

IT IS REPORTED IN THE LETTER OF FEBRUARY 14, 1957, THAT ALTHOUGH PIASECKI WAS PREVIOUSLY AWARDED CONTRACT NO. AF 36/600/-3333 FOR THE FISCAL YEAR 1956, WHICH COVERED SUBSTANTIALLY THE SAME WORK AS THE INSTANT PROCUREMENT, THAT CONTRACT PROVIDED THAT THE GOVERNMENT AND NOT THE CONTRACTOR WOULD FURNISH THE PARTS AND MATERIALS REQUIRED. IN THE PERFORMANCE OF THAT CONTRACT PIASECKI WAS UNABLE TO OBTAIN CERTAIN PARTS AND MATERIALS, AND THE GOVERNMENT'S STOCK OF THE ITEMS WAS TOO LOW TO ENABLE IT TO FULFILL ITS OBLIGATION TO FURNISH THE PARTS TO PIASECKI. A RESULT, A SUBSTANTIAL NUMBER OF BLADES WERE RETURNED TO THE GOVERNMENT WITHOUT THE NECESSARY OVERHAUL, GIVING RISE TO A CONDITION OF URGENCY IN THE MATTER OF OBTAINING THE OVERHAUL AND REPAIR OF THE BLADES. CONSIDERATION OF THESE FACTS AFTER RECEIPT OF THE PIASECKI PROPOSAL RESULTED IN A DETERMINATION THAT THE REQUIREMENT THAT ALL PARTS BE FURNISHED BY THE CONTRACTOR MUST BE ADHERED TO. NEGOTIATIONS WERE THEN CONDUCTED WITH THE NEXT LOW PROPOSER, THE PARSONS CORPORATION, WHICH REDUCED ITS QUOTED PRICE BY SOME $19,445.58 WITH THE RESULT THAT ITS OVERALL PRICE IS NOW SUBSTANTIALLY EQUAL TO THAT QUOTED BY PIASECKI. VIEW OF SUCH FACTS THE RECOMMENDATION IS MADE IN THE LETTER OF FEBRUARY 14 THAT THE PROTEST OF PIASECKI BE DENIED AND THAT THE AIR FORCE PROCEED TO AWARD THE CONTRACT TO THE PARSONS CORPORATION AS PLANNED.

IN THE LETTER OF PROTEST, REFERENCES ARE MADE BY PIASECKI TO CERTAIN FORGING DIES AND TECHNICAL INFORMATION NECESSARY TO THE PRODUCTION OF CERTAIN OF THE REQUIRED PARTS, WHICH ARE SAID TO BE OWNED BY THE GOVERNMENT, BUT IN THE POSSESSION OF AN AFFILIATE OF THE PARSONS CORPORATION, WHICH IS THUS IN THE POSITION OF A SOLE SOURCE. THESE REFERENCES ARE NOT CONSIDERED PERTINENT BY THE CONTRACTING OFFICER BECAUSE THE REQUEST FOR PROPOSALS WOULD OBLIGATE THE SUCCESSFUL BIDDER TO FURNISH ALL PARTS AND MATERIALS NECESSARY TO THE PERFORMANCE OF THE CONTRACT TO BE AWARDED. THE FACTS ALLEGED WOULD APPEAR TO SUPPORT THE NEGOTIATION PROCEDURE ON THE BASIS OF IMPRACTICABILITY OF OBTAINING COMPETITION, BUT ARE NOT CONSISTENT WITH THE STATED OPINION OF THE CONTRACTING OFFICER THAT HE HAD BELIEVED THAT THE SERVICES WERE COMPETITIVE IN NATURE AND THAT SPARE PARTS COULD BE OBTAINED TO EFFECT THE REPAIRS. IT IS UNDERSTOOD FROM YOUR REPORT, HOWEVER, THAT AS A RESULT OF REVIEW OF THIS PROCUREMENT IT HAS BEEN RECOMMENDED THAT THE GOVERNMENT'S STOCK OF THE CRITICAL PARTS BE REPLENISHED WITH A VIEW TO OBTAINING COMPETITION AND MORE FAVORABLE PRICES FOR THE OVERHAULING SERVICES IN THE FUTURE.

IN PARAGRAPH 6 OF PIASECKI'S LETTER OF PROTEST IT IS STATED THAT THE SAME QUALIFYING STATEMENT HAD BEEN USED IN PREVIOUS PROPOSALS AND THAT NO OBJECTION WAS INTERPOSED TO ITS USE. INASMUCH AS THE PREVIOUS PROPOSALS WERE PROCUREMENTS IN WHICH THE GOVERNMENT AGREED TO FURNISH THE NECESSARY PARTS, THE QUALIFICATION DOES NOT APPEAR TO HAVE BEEN PERTINENT IN THOSE PROCUREMENTS.

UNDER AIR FORCE PROCUREMENT INSTRUCTION 3-101.53 (H), CONTRACTING OFFICERS OF THE DEPARTMENT OF THE AIR FORCE ARE AT LIBERTY TO CONDUCT FURTHER NEGOTIATIONS AS CONTEMPLATED BY ASPR 3-101 WITH ANY OR ALL CONCERNS SUBMITTING PROPOSALS, AND IT IS EXPRESSLY PROVIDED THAT "CONTRARY TO FORMAL ADVERTISING PROCEDURES, WHEN THE PURCHASE IS BEING NEGOTIATED, THERE IS NO RESTRICTION ON CHANGES IN PRICE OR OTHER TERMS OF A PROPOSAL AT ANY TIME PRIOR TO AWARD.' IN CONSONANCE WITH THESE REGULATIONS, WE BELIEVE THAT IT IS THE DUTY OF CONTRACTING OFFICIALS OF THE DEPARTMENT OF THE AIR FORCE TO CONDUCT NEGOTIATIONS FOR A CONTRACT TO THE BEST ADVANTAGE OF THE GOVERNMENT AND TO PLACE THE CONTRACT WITH THE SUPPLIER MAKING THE BEST FINAL PROPOSAL, AND WE DO NOT CONCUR IN THE VIEW THAT ANY EXCEPTION STATED BY A PROPOSER TO A PROVISION OF THE REQUEST FOR PROPOSALS AUTOMATICALLY ELIMINATES THAT PROPOSER FROM FURTHER NEGOTIATIONS. HOWEVER, WHILE NO ACTION WAS TAKEN TO NEGOTIATE WITH PIASECKI, WITHIN THE SPIRIT AND OBVIOUS INTENT OF THE APPLICABLE REGULATIONS, TO ELIMINATE THE QUALIFYING STATEMENT IN ITS PROPOSAL OR TO MAKE ANY OTHER CHANGES WHICH MIGHT OPERATE TO THE ADVANTAGE OF THE GOVERNMENT, IT DOES NOT APPEAR THAT ANY USEFUL PURPOSE WOULD HAVE BEEN SERVED BY SUCH NEGOTIATION IN THIS INSTANCE, SINCE IT APPEARS THAT IT IS NOT IN A POSITION TO OBTAIN THE PARTS NEEDED FOR PERFORMANCE OF THE CONTRACT WHICH HAD BEEN AWARDED TO IT FOR THE PRIOR YEAR.

UPON THE RECORD FURNISHED, AND SINCE THE NEGOTIATING AUTHORITY VESTS WIDE DISCRETION IN THE ADMINISTRATIVE OFFICIALS AND IS NOT SUBJECT TO THE STRICT RULES APPLICABLE IN THE CASE OF PUBLIC ADVERTISING AND THE COMPETITIVE BIDDING PROCEDURE, WE FIND NO BASIS FOR OBJECTION TO THE AWARD PROPOSED TO BE MADE BY YOUR DEPARTMENT.