B-130216, APR. 4, 1957

B-130216, APR. 4, 1957

TO STRICKLER ENGINEERING CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE ACTION OF THE GENERAL SERVICES ADMINISTRATION IN REFUSING TO AWARD A CONTRACT TO YOU PURSUANT TO INVITATION NO. FN-3J-7341-N-11-13-56, SOLICITING TELEGRAPHIC OR LETTER BIDS ON FURNISHING GENERATOR UNITS FOR USE IN LAOS.

THE PROCUREMENT WAS INITIATED UPON A REQUEST ISSUED BY THE INTERNATIONAL COOPERATION ADMINISTRATION FOR FOUR NEW, OR COMPLETELY RECONDITIONED AND GUARANTEED, DIESEL ENGINE-DRIVEN GENERATING UNITS AS MORE FULLY DESCRIBED IN THE SOLICITATION. THE REQUEST SPECIFIED THAT ,EARLIEST DELIVERY IS TO BE OF THE ESSENCE AND SUPPLIER MUST STATE DELIVERY ON EACH COMPLETE UNIT F.O.B. PLANT, SUBJECT TO COMMERCIAL TESTS ON ENGINES, ALTERNATORS, EXCITERS AND SWITCHGEARS.' THE GENERAL SERVICES ADMINISTRATION SOLICITED BIDS BY TELEGRAM DATED NOVEMBER 2, 1956, WHICH INCORPORATED THE DESCRIPTIVE DATA INCLUDED IN THE REQUEST AND ALSO ADVISED BIDDERS THAT OFFERS TO FURNISH COMPLETELY RECONDITIONED AND GUARANTEED DIESEL ENGINE- DRIVEN GENERATING UNITS WOULD BE CONSIDERED BUT THAT THE GOVERNMENT RESERVED THE RIGHT TO PURCHASE EITHER NEW OR RECONDITIONED UNITS. THE REQUIREMENT WAS STATED AS FOR FOUR UNITS OF 500 KW EACH, BUT BIDDERS WERE ADVISED THAT THEY COULD SUBMIT PROPOSALS FOR ANY COMBINATION OF NOT MORE THAN SIX UNITS WHICH WOULD PRODUCE AN AGGREGATE MINIMUM OF 2000 KW. THE BIDDERS WERE ADVISED ALSO THAT "TIME OF DELIVERY SHALL BE OF THE ESSENCE IN MAKING AWARDS AND AWARD WILL BE MADE TO THE LOWEST BIDDER MEETING SPECIFICATIONS OFFERING THE EARLIEST DELIVERY TIME.'

THE RECORD SHOWS THAT BIDS WERE SOLICITED FROM ELEVEN SOURCES OF SUPPLY AND THAT NINE BIDS WERE RECEIVED. YOUR BID, WHICH WAS THE LOWEST AS TO PRICE, OFFERED TWO REMANUFACTURED UNITS OF 1000 KW EACH, F.A.S. BALTIMORE, CRATED FOR EXPORT, GUARANTEED FOR ONE YEAR, DELIVERY TO START IN 30 DAYS AND BE COMPLETED IN 60 TO 90 DAYS. "TERMS, 50 PERCENT WITH ORDER AND BALANCE AT TIME OF IPMENT.' THE NEXT LOWEST BIDDER OFFERED DELIVERY AS FOLLOWS:

UNITS AND DELIVERY OFFERED BY HEAT AND POWER CO., INC. WERE AS FOLLOWS:

ONE - 1000 KW UNIT WITHOUT SWITCH GEAR DELIVERED F.A.S. LOS ANGELES WITHIN THREE WEEKS

FIRST 600 KW UNIT WITHOUT SWITCH GEAR DELIVERED F.A.S. LOS ANGELES FOUR WEEKS

SECOND 600 KW UNIT WITHOUT SWITCH GEAR DELIVERED F.A.S. LOS ANGELES FIVE WEEKS

ALL SWITCH GEAR COMPLETE CAN BE FORWARDED WITHIN 10 WEEKS. IF NECESSARY, WE CAN SHIP THE SWITCH GEAR FOR ONE GENERATOR WITHIN FIVE WEEKS SO AS TO GET THE PLANT OPERATING.

THE INTERNATIONAL COOPERATION ADMINISTRATION FORWARDED TO THE GENERAL SERVICES ADMINISTRATION A MEMORANDUM FROM THE TUDOR ENGINEERING COMPANY, CONSULTING ENGINEERS FOR THAT ADMINISTRATION, RECOMMENDING THAT YOUR BID BE REJECTED ON THE GROUND THAT "ALL THE EQUIPMENT" OFFERED BY YOU WAS ,USED INCLUDING THE GENERATORS AND ALL THE ELECTRIC EQUIPMENT.' IT WAS STATED FURTHER THAT "IF THERE WERE AVAILABLE EXCELLENT ELECTRICIANS IN LAOS FOR CONTINUED MAINTENANCE OF ELECTRICAL EQUIPMENT WHILE IN OPERATION, THE CHOICE (IN THE INTEREST OF DOLLAR CAPITAL SAVING) MIGHT BE REASONABLE, BUT NO SUCH TECHNICAL SKILL IS AVAILABLE IN LAOS" AND THAT "THE GAIN IN DELIVERY TIME MIGHT ALL BE LOST IN TRYING TO PUT THE PLANT IN OPERATION AND IN KEEPING IT IN PROPER REPAIR TO CONTINUE OPERATION.' AS AN ALTERNATIVE TO PURCHASE OF ALL NEW UNITS, WHICH WOULD INVOLVE DELIVERY TIME OF FIVE MONTHS OR MORE, THE CONSULTANTS RECOMMENDED AWARD TO HEAT AND POWER COMPANY, INC. IN ORDER TO TAKE ADVANTAGE OF EARLIER DELIVERY. THE RECOMMENDATION ALSO WAS BASED UPON THE FACT THAT ALTHOUGH THE DIESEL ENGINES OFFERED BY THAT COMPANY WERE REMANUFACTURED, ALL GENERATORS AND ELECTRICAL EQUIPMENT WERE NEW, AND THE FURTHER FACT THAT 1000 KW UNITS AND THE TWO 600 KW UNITS OFFERED BY THAT BIDDER WERE A BETTER SELECTION THAN THE TWO 1000 KW UNITS OFFERED BY YOU, IN VIEW OF THE POSSIBILITY THAT IT MAY BECOME NECESSARY OR DESIRABLE TO RELOCATE THE EQUIPMENT AT DIFFERENT POINTS. ON THE BASIS OF THIS RECOMMENDATION AND FOLLOWING RECEIPT OF THE NECESSARY FIELD INSPECTION REPORTS AND FINANCIAL STATEMENTS WHICH REQUIRED ADDITIONAL TIME TO OBTAIN, A TELEGRAM OF ACCEPTANCE WAS SENT TO HEAT AND POWER COMPANY, INC. ADVISING THAT TIME OF DELIVERY WOULD BE COMPUTED FROM DATE OF THE TELEGRAPHIC NOTICE OF AWARD, AND A FORMAL CONTRACT WAS AWARDED TO THAT CONCERN ON DECEMBER 27, 1956.

IN YOUR LETTER OF DECEMBER 28, 1956, YOU PROTESTED ANY AWARD TO HEAT AND POWER COMPANY, INC. ON THE BASIS THAT THE EQUIPMENT OFFERED BY YOU WAS EQUAL IN QUALITY TO THE EQUIPMENT OFFERED BY THAT CONCERN AND THAT YOU COULD NOT SEE ANY JUSTIFICATION FOR SPENDING THE ADDITIONAL SUM OF $99,000 FOR A 20-DAY ADVANTAGE IN DELIVERY TIME. WITH REFERENCE TO YOUR STATEMENT THAT NEW REWOUND GENERATORS OFFERED BY THE HEAT AND POWER COMPANY, INC. ARE IN THE SAME CATEGORY AS REMANUFACTURED GENERATORS, THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, REPORTS THAT BASED UPON PRIOR PURCHASES OF A SIMILAR NATURE AND INFORMATION OBTAINED FROM INDUSTRY, IT WAS ESTABLISHED THAT NEW REWOUND GENERATORS NORMALLY COMMAND A SUBSTANTIALLY HIGHER MARKET PRICE THAN REMANUFACTURED UNITS OF THE SAME SIZE AND TYPE.

APART FROM THE FOREGOING, THE PROCUREMENT WAS NEGOTIATED UNDER AUTHORITY OF THE MUTUAL SECURITY ACT OF 1954, AS AMENDED, 68 STAT. 832, 861, SECTION 302 (C) (14) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 394, AS AMENDED, AND EXECUTIVE ORDERS NOS. 10519 OF MARCH 10, 1954, 10575 OF NOVEMBER 6, 1954, 10610 OF MAY 9, 1955, AND 10625 OF AUGUST 2, 1955. WHEN THE AUTHORITY TO NEGOTIATE A CONTRACT APPLIES AND IS USED, AS IN THIS CASE, THE TERMS AND CONDITIONS UPON WHICH BIDS ARE REQUESTED AND THE SELECTION OF A CONTRACTOR ARE MATTERS FOR DETERMINATION BY THE ADMINISTRATIVE OFFICE CONCERNED, IN THIS CASE THE GENERAL SERVICES ADMINISTRATION, IN THE EXERCISE OF ITS BEST JUDGMENT AS TO THE INTERESTS OF THE GOVERNMENT. IN SUCH A NEGOTIATED PROCUREMENT, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING ARE NOT FOR APPLICATION AND THE NEGOTIATING AUTHORITY LEGALLY MAY TAKE INTO CONSIDERATION NOT ONLY PRICE BUT ALL FACTORS DEEMED ESSENTIAL TO THE ACCOMPLISHMENT OF THE PROCUREMENT.

IN THE ABSENCE OF ANY INDICATION THAT THE ADMINISTRATIVE DISCRETION WAS IMPROPERLY EXERCISED, WE PERCEIVE NO LEGAL BASIS FOR OBJECTING TO THE AWARD AS MADE IN THIS INSTANCE.