B-136026, JULY 21, 1958, 38 COMP. GEN. 44

B-136026: Jul 21, 1958

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CONTRACTS - NEGOTIATION - PUBLIC EXIGENCY - ADMINISTRATIVE PROCEDURES ACT HEARING A DETERMINATION TO WITHDRAW A PORTION OF THE EQUIPMENT COVERED IN A PREPROCUREMENT NOTICE FOR AN ADVERTISED PROCUREMENT AND TO NEGOTIATE CONTRACTS FOR SUCH PORTION BASED ON A CLASSIFICATION THAT THE EQUIPMENT WAS OF COMBAT NECESSITY. NEEDED AT ONCE WAS A PROPER DETERMINATION OF "PUBLIC EXIGENCY" WITHIN THE NEGOTIATION AUTHORITY IN 10 U.S.C. 2304 (A) (2) AND WAS ACCOMPLISHED UNDER PROPERLY DELEGATED AUTHORITY PURSUANT TO PRESCRIBED PROCEDURES. IN VIEW OF THE FACT THAT STATUTES REQUIRING ADVERTISING FOR GOVERNMENT SUPPLIES ARE SOLELY FOR THE BENEFIT OF THE GOVERNMENT AND DO NOT CONFER ANY ENFORCEABLE OR LITIGABLE RIGHTS ON PROSPECTIVE BIDDERS.

B-136026, JULY 21, 1958, 38 COMP. GEN. 44

CONTRACTS - NEGOTIATION - PUBLIC EXIGENCY - ADMINISTRATIVE PROCEDURES ACT HEARING A DETERMINATION TO WITHDRAW A PORTION OF THE EQUIPMENT COVERED IN A PREPROCUREMENT NOTICE FOR AN ADVERTISED PROCUREMENT AND TO NEGOTIATE CONTRACTS FOR SUCH PORTION BASED ON A CLASSIFICATION THAT THE EQUIPMENT WAS OF COMBAT NECESSITY, ESSENTIAL TO THE SAFETY OF AIRCRAFT, AND NEEDED AT ONCE WAS A PROPER DETERMINATION OF "PUBLIC EXIGENCY" WITHIN THE NEGOTIATION AUTHORITY IN 10 U.S.C. 2304 (A) (2) AND WAS ACCOMPLISHED UNDER PROPERLY DELEGATED AUTHORITY PURSUANT TO PRESCRIBED PROCEDURES. IN VIEW OF THE FACT THAT STATUTES REQUIRING ADVERTISING FOR GOVERNMENT SUPPLIES ARE SOLELY FOR THE BENEFIT OF THE GOVERNMENT AND DO NOT CONFER ANY ENFORCEABLE OR LITIGABLE RIGHTS ON PROSPECTIVE BIDDERS, THERE DOES NOT APPEAR TO BE ANY BASIS FOR CONSTRUING THE ADMINISTRATIVE PROCEDURES ACT AS ENTITLING PROSPECTIVE BIDDERS TO A HEARING BEFORE AN ADMINISTRATIVE AGENCY ON THE QUESTION OF WHETHER THE NEEDS OF THE AGENCY ARE TO BE PROCURED BY ADVERTISEMENT OR BY NEGOTIATION.

TO SHIPLEY, AKERMAN AND PICKETT, JULY 21, 1958:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED APRIL 30, 1958, WRITTEN IN BEHALF OF COSMOS INDUSTRIES, INC., AND PROTESTING AGAINST THE WITHDRAWAL ON MARCH 14, 1958, OF A PREPROCUREMENT NOTICE ISSUED UNDER IFB-33-600-58- 83 BY THE DEPARTMENT OF THE AIR FORCE.

THE RECORD FURNISHED IN THIS MATTER BY THE DEPARTMENT OF THE AIR FORCE INDICATES THAT A PREPROCUREMENT NOTICE COVERING A PROPOSED ADVERTISED PROCUREMENT OF 3,521 AM-476B/AIC-10 TRANSISTORIZED AMPLIFIERS AND A 30- PERCENT SPARE SUPPORT WAS DISTRIBUTED TO MANUFACTURERS OF SUCH EQUIPMENT ON JANUARY 30, 1958. PROCUREMENT OF THESE REQUIREMENTS ON AN ADVERTISED BASIS WAS PREDICTED UPON A DELIVERY SCHEDULE COMMENCING IN DECEMBER 1958, WHICH SCHEDULE WOULD HAVE PROVIDED ADEQUATE LEAD TIME TO PERMIT NEW SOURCES OF SUPPLY TO DESIGN THE ITEM, OBTAIN ENGINEERING APPROVAL, AND DELIVER PRODUCTION QUANTITIES WITHIN THE TIME REQUIRED. HOWEVER, ON FEBRUARY 16, 1958, THE COMMANDER, OKLAHOMA CITY AIR MATERIEL AREA, ADVISED HEADQUARTERS, AIR MATERIEL COMMAND, THAT PURCHASE REQUESTS HAD ALREADY BEEN PROCESSED WITH THE AIRCRAFT MANUFACTURER FOR WIRING CHANGES AND PARTS IN EXISTING B-52 AIRPLANES BEGINNING JULY 1, 1958, IN ACCORDANCE WITH PRIORITY RATINGS ESTABLISHED BY A SAFETY OF FLIGHT INSPECTION BOARD, AND THAT IT WOULD BE NECESSARY TO HAVE GOVERNMENT-FURNISHED AMPLIFIERS AVAILABLE AT THAT TIME. SUBSEQUENT CORRESPONDENCE RELATIVE TO ACTUAL NEEDS OF THE OKLAHOMA CITY AIR MATERIEL AREA DURING THE PERIOD FROM JULY THROUGH DECEMBER 1958, RESULTED IN A DETERMINATION THAT SUCH NEEDS WOULD BE MET BY DELIVERY OF 900 UNITS PER QUARTER DURING SUCH PERIOD. THE DETERMINATION TO NEGOTIATE THE PROCUREMENT OF 1,800 UNITS WAS BASED UPON THE FACT THAT THE M-2 PRIORITY ASSIGNED TO THE INSTALLATION OF THESE AMPLIFIERS MADE SUCH EQUIPMENT A COMBAT NECESSITY THE LACK OF WHICH WOULD CAUSE A HAZARDOUS CONDITION TO AIRCRAFT AND EQUIPMENT; THAT SUCH EQUIPMENT WAS NEEDED AT ONCE FOR THE PERFORMANCE OF THE OPERATIONAL MISSION OF THE AIRCRAFT; AND THAT THE PUBLIC EXIGENCY THEREFORE WOULD NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. SUCH DETERMINATION WAS DULY APPROVED ON APRIL 9, 1958, AND, AFTER NEGOTIATION WITH BOTH RADIO CORPORATION OF AMERICA AND WITH ANDREA RADIO CORPORATION, THE ONLY SUPPLIERS CAPABLE OF MEETING THE REVISED DELIVERY SCHEDULE, AN AWARD WAS MADE TO THE LATTER ON APRIL 10, 1958.

YOUR PROTEST AGAINST BOTH THE WITHDRAWAL OF THE PREPROCUREMENT NOTICE AND THE NEGOTIATED AWARD IS BASED UPON CONTENTIONS THAT THE DECISION TO NEGOTIATE WAS ARBITRARY AND CAPRICIOUS; UNSUPPORTED BY SUBSTANTIAL EVIDENCE; A VIOLATION OF THE STATUTORY REQUIREMENT (APPARENTLY 10 U.S.C. 2304 (A) ( THAT THE SECRETARY OF THE AIR FORCE MUST MAKE AN AFFIRMATIVE FINDING OF PUBLIC EXIGENCY BEFORE HE MAY AUTHORIZE NEGOTIATION; AND A VIOLATION OF THE PROVISIONS OF THE ADMINISTRATIVE PROCEDURES ACT, 5 U.S.C. 1009 (A) AND (C), WHICH GIVES AN INTERESTED PARTY A RIGHT TO HEARING, AND PROVIDES FOR JUDICIAL REVIEW.

WITH RESPECT TO YOUR ASSERTION THAT THE SECRETARY OF THE AIR FORCE IS REQUIRED TO MAKE AN AFFIRMATIVE FINDING OF "PUBLIC EXIGENCY" BEFORE A CONTRACT MAY BE NEGOTIATED UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (2), YOUR ATTENTION IS INVITED TO THE PROVISIONS OF 10 U.S.C. 2311, WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

THE HEAD OF AN AGENCY MAY DELEGATE, SUBJECT TO HIS DIRECTION, TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY, ANY POWER UNDER THIS CHAPTER EXCEPT THE POWER TO MAKE DETERMINATIONS AND DECISIONS UNDER CLAUSES (11/- (16) OF SECTION 2304 (A) OR SECTION 2307 (A) OF THIS TITLE.

THE AUTHORITY TO MAKE AN INDIVIDUAL DETERMINATION AND FINDING OF "PUBLIC EXIGENCY," SUBJECT TO SUCH ADMINISTRATIVE APPROVAL AS IS DEEMED NECESSARY BY THE CHIEF OF THE DIVISION, HAS BEEN DELEGATED BY THE SECRETARY TO CONTRACTING OFFICERS UNDER THE PROVISIONS OF SECTIONS 3 202.3 AND 3-306 OF THE AIR FORCE PROCUREMENT INSTRUCTIONS.

THE RECORD BEFORE US INDICATES THAT THE ORIGINAL REQUEST BY THE OKLAHOMA CITY AIR MATERIEL AREA FOR AN IMPROVED DELIVERY SCHEDULE OVER THAT PROPOSED IN THE PROCUREMENT NOTICE WAS BASED UPON DELIVERIES AT THE RATE OF 900 UNITS PER MONTH FROM JULY THROUGH OCTOBER. HOWEVER, UPON REQUEST FOR VERIFICATION, IT WAS DETERMINED THAT ONLY 50 PERCENT OF THE REQUIREMENTS COULD BE SUPPORTED AS URGENT. ACCORDINGLY, AND IN VIEW OF INFORMATION THAT ONLY TWO MANUFACTURERS WOULD BE ABLE TO MAKE DELIVERIES PRIOR TO DECEMBER 1958, THE REQUIREMENTS SUBJECT TO NEGOTIATION WERE REDUCED TO 1,800 UNITS, WHILE THE REMAINING 1,721 UNITS REMAIN SUBJECT TO ADVERTISED PROCUREMENT UNDER THE ORIGINAL DELIVERY SCHEDULE.

AS INDICATED ABOVE, THE FINDINGS AND DETERMINATIONS OF PUBLIC EXIGENCY BY THE CONTRACTING OFFICER RECITED THE DETERMINATION OF THE B 52 SAFETY OF FLIGHT INSPECTION BOARD WITH RESPECT TO AUDIO FREQUENCY AMPLIFIERS IN THE INTERCOMMUNICATION SYSTEM AND INSTALLATION OF THESE AMPLIFIERS IN AN "URGENT ACTION" CATEGORY OF M-2 WHICH, ACCORDING TO AMC REGULATION 11-14, CLASSIFIED THE INCLUSION OF THESE AMPLIFIERS INTO THE SYSTEM AS A COMBAT NECESSITY, THE LACK OF WHICH WOULD CAUSE A HAZARDOUS CONDITION TO AIRCRAFT AND EQUIPMENT. BASED UPON SUCH INFORMATION THE CONTRACTING OFFICER CONCLUDED THAT THE PROCUREMENT WAS FOR ESSENTIAL EQUIPMENT NEEDED AT ONCE FOR PERFORMANCE OF THE OPERATIONAL MISSION OF THE AIRCRAFT AND PROPERLY FOR NEGOTIATION UNDER 10 U.S.C. 2304 (A) (2). SUCH FINDINGS WERE REVIEWED AND APPROVED BY THE DEPUTY CHIEF, AERONAUTICAL EQUIPMENT DIVISION, DIRECTORATE OF PROCUREMENT AND PRODUCTION.

ACCORDINGLY, IT WOULD APPEAR THAT THE DETERMINATION OF "PUBLIC EXIGENCY" WAS ACCOMPLISHED IN ACCORDANCE WITH THE PROCEDURES PRESCRIBED BY THE SECRETARY OF THE AIR FORCE AND, IN VIEW OF THE BASIS FOR SUCH DETERMINATION, WE ARE UNABLE, FROM THE RECORD PRESENTLY BEFORE US, TO AGREE WITH YOUR CONTENTION THAT THE DECISION TO NEGOTIATE A PORTION OF THIS PROCUREMENT WAS ARBITRARY, CAPRICIOUS, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

WITH RESPECT TO YOUR CONTENTION THAT THE ADMINISTRATIVE PROCEDURES ACT, 5 U.S.C. 1009 (A) AND (C), GIVES AN INTERESTED PARTY A RIGHT TO A HEARING AND PROVIDES FOR JUDICIAL REVIEW IN CASES OF THIS TYPE, YOUR ATTENTION IS INVITED TO THE FACT THAT STATUTES REQUIRING GOVERNMENT SUPPLIES TO BE PROCURED BY ADVERTISING FOR BIDS ARE SOLELY FOR THE BENEFIT OF THE GOVERNMENT AND CONFER NO ENFORCEABLE OR LITIGABLE RIGHTS UPON PROSPECTIVE BIDDERS. SEE PERKINS V. LUKENS STEEL CO., 310 U.S. 113 AND FOOTNOTE CASES CITED AT PAGES 126-127 THEREOF. WE ARE AWARE OF NO BASIS FOR CONSTRUING THE ADMINISTRATIVE PROCEDURES ACT, 5 U.S.C. 1001 NOTE, AS ENTITLING A PROSPECTIVE BIDDER TO A HEARING BEFORE AN ADMINISTRATIVE AGENCY ON THE QUESTION OF WHETHER THE NEEDS OF SUCH AGENCY MAY BE SUPPLIED BY ADVERTISING OR WHETHER NEGOTIATED PROCUREMENT IS NECESSARY UNDER AN EXCEPTION TO THE GENERAL ADVERTISING REQUIREMENT. WHETHER YOUR CLIENT IS ENTITLED TO JUDICIAL REVIEW IN THE INSTANT CASE CAN BE DETERMINED ONLY BY A COURT OF COMPETENT JURISDICTION AND WE THEREFORE EXPRESS NO OPINION ON THAT ASPECT OF YOUR PROTEST.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THERE IS NOT BASIS UPON WHICH THIS OFFICE WOULD BE JUSTIFIED IN OBJECTING TO THE ACTION OF THE AIR FORCE IN WITHDRAWING THE PREPROCUREMENT NOTICE IN QUESTION, OR TO THE DETERMINATION TO PROCURE 1,800 OF THE UNITS COVERED THEREIN ON A NEGOTIATED BASIS.