B-140484, NOV. 30, 1959

B-140484: Nov 30, 1959

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TO THE NARDA HYDRAULICS CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 13. IT WAS STATED IN YOUR LETTER THAT THERE WAS A "BUILT-IN" DELINQUENCY IN THE INVITATION FOR BIDS ISSUED IN THIS CASE. THAT DELIVERY OF TEST REPORTS REQUESTED BY THE INVITATION FOR BIDS WAS IMPOSSIBLE USING A SINGLE UNIT. THAT YOU PROPOSED TO THE AIR FORCE FACILITY REVIEW TEAM THAT TWO PROTOTYPES WERE NECESSARY TO MEET PROTOTYPE AND PRODUCTION DELIVERY SCHEDULES. THIS PROPOSAL APPEARS TO HAVE BEEN REJECTED FOR THE REASON THAT IT WAS NOT IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS. IT WAS STATED FURTHER IN YOUR LETTER THAT THE AIR FORCE HAS PERMITTED THE CONTRACTOR TO DEVIATE FROM THE SPECIFICATIONS IN ORDER TO MEET DELIVERY REQUIREMENTS.

B-140484, NOV. 30, 1959

TO THE NARDA HYDRAULICS CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 13, 1959, WITH ENCLOSURES, PROTESTING THE AWARD OF A CONTRACT TO THE CONSOLIDATED DIESEL ELECTRIC CORPORATION PURSUANT TO INVITATION FOR BIDS NO. 09-603 59-538, ISSUED BY THE WARNER ROBINS AIR FORCE BASE, GEORGIA.

IT WAS STATED IN YOUR LETTER THAT THERE WAS A "BUILT-IN" DELINQUENCY IN THE INVITATION FOR BIDS ISSUED IN THIS CASE; THAT BECAUSE OF SUCH BUILT-IN DELINQUENCY YOU DID NOT REQUIRE A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION; THAT DELIVERY OF TEST REPORTS REQUESTED BY THE INVITATION FOR BIDS WAS IMPOSSIBLE USING A SINGLE UNIT, AND THAT YOU PROPOSED TO THE AIR FORCE FACILITY REVIEW TEAM THAT TWO PROTOTYPES WERE NECESSARY TO MEET PROTOTYPE AND PRODUCTION DELIVERY SCHEDULES. THIS PROPOSAL APPEARS TO HAVE BEEN REJECTED FOR THE REASON THAT IT WAS NOT IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS, ONLY ONE PROTOTYPE BEING PERMISSIBLE THEREUNDER. IT WAS STATED FURTHER IN YOUR LETTER THAT THE AIR FORCE HAS PERMITTED THE CONTRACTOR TO DEVIATE FROM THE SPECIFICATIONS IN ORDER TO MEET DELIVERY REQUIREMENTS, AND YOU ALLEGE THAT THIS IS IN DIRECT VIOLATION OF EQUAL OPPORTUNITY FOR PUBLIC BIDS TO BE GIVEN TO ALL COMPANIES.

THE CITED INVITATION, AS AMENDED, OPENED ON NOVEMBER 10, 1958, AND REQUESTED BIDS FOR FURNISHING 144 AIRCRAFT HYDRAULIC SYSTEM TEST STANDS, TOGETHER WITH SPARE PARTS AND RELATED ENGINEERING AND TECHNICAL DATA, TO BE MANUFACTURED IN ACCORDANCE WITH SPECIFICATION MIL-S-26877 (USAF) DATED MARCH 7, 1956, AND EXHIBITS 1, 2 AND 3. A TOTAL OF SEVENTEEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, THE THREE LOW BIDS BEING AS FOLLOWS:

TABLE

BIDDER TOTAL PRICE DISCOUNT

NARDA HYDRAULICS CORPORATION $1,149,984.00 1/2 PERCENT - 20

GREER HYDRAULICS, INC. 1,278,510.00 1 PERCENT - 10

CONSOLIDATED DIESEL ELECTRIC CORP. 1,290,750.00 1/8 OF 1 PERCENT

- 20

THE RECORD INDICATES THAT UPON EVALUATION OF THE BIDS RECEIVED, A FACILITY CAPABILITY REPORT WAS REQUESTED ON YOUR CONCERN SINCE YOU WERE THE APPARENT LOW BIDDER. A SURVEY TEAM VISITED YOUR PLANT ON NOVEMBER 18- 19-20, 1958, FOR THE PURPOSE OF ASCERTAINING WHETHER YOUR COMPANY HAD THE ABILITY TO PERFORM THE CONTRACT WORK IN ACCORDANCE WITH THE SPECIFICATIONS. IN RESPONSE TO QUESTIONS AS TO THE FINANCIAL RESOURCES OF YOUR COMPANY, WHICH WAS ORGANIZED ON SEPTEMBER 2, 1958, YOUR MR. HABERMAN STATED THAT FINANCIAL BACKING COULD BE OBTAINED FROM YOUR PARENT ORGANIZATION--- NARDA MICROWAVE CORPORATION. DR. J. MCGREGER, PRESIDENT OF THE PARENT COMPANY, WAS ADVISED THAT IT WOULD BE NECESSARY THAT AN INVESTMENT OF NEW MONEY OR A GUARANTEE BY MADE. DR. MCGREGOR REFUSED TO INVEST ADDITIONAL MONEY OR FURNISH A GUARANTEE UNTIL A CONTRACT WAS AWARDED. THIS CONDITION NOT BEING CONSIDERED SATISFACTORY BY THE DEPARTMENT OF THE AIR FORCE, YOUR BID WAS REJECTED ON THE BASIS OF THE NEGATIVE FACILITY CAPABILITY REPORT. NOTICE OF THE INTENTION TO REJECT WAS GIVEN TO THE SMALL BUSINESS ADMINISTRATION AS REQUIRED BY REGULATIONS AND NO ACTION WAS TAKEN BY THAT AGENCY.

THE BID OF THE SECOND LOW BIDDER GREER HYDRAULICS, INC., WAS REJECTED AS NONRESPONSIVE, AND CONTRACT NO. AF-09 (603) 33737 WAS AWARDED TO THE CONSOLIDATED DIESEL CORPORATION UNDER DATE OF JANUARY 28, 1959.

RESPECTING YOUR STATEMENT THAT THE SPECIFICATIONS CONTAINED A BUILT IN DELINQUENCY, THE CONTRACTING OFFICER EXPRESSED THE OPINION THAT 150 DAYS DELIVERY FOR A FIRST ARTICLE IS ADEQUATE FOR AN ESTABLISHED AND EXPERIENCED FIRM, AND IT DOES NOT APPEAR THAT ANY OTHER BIDDER TOOK EXCEPTION TO THAT REQUIREMENT.

YOUR CLAIM THAT THE AIR FORCE HAS PERMITTED THE CONTRACTOR TO DEVIATE FROM THE SPECIFICATIONS TO MEET DELIVERY APPEARS TO RELATE TO A CHANGE ORDER ISSUED ON APRIL 7, 1959, UNDER THE CONTRACT OF JANUARY 28, 1959, AUTHORIZING THE USE OF TWO PROTOTYPES FOR TESTING IN LIEU OF ONE SPECIFIED IN THE SPECIFICATIONS. IT IS ALSO PROVIDED IN THE CHANGE ORDER, HOWEVER, THAT "USE OF A SECOND TEST UNIT WILL RESULT IN A DECREASE OF DELIVERY SCHEDULE FOR THE FIRST ARTICLE EQUAL TO THE AMOUNT OF TIME ALLOWED IN THE SPECIFICATIONS FOR THOSE TESTS WHICH ARE PERFORMED ON THE SECOND UNIT.' THE REDUCED DELIVERY TIME WAS SUFFICIENT CONSIDERATION TO SUPPORT THE CHANGE ORDER, AND IT DOES NOT APPEAR THAT THE CHANGE WAS EFFECTED IN ORDER TO PERMIT THE CONTRACTOR TO MEET AN OTHERWISE IMPOSSIBLE DELIVERY TIME, AS CHARGED BY YOU.

RESPECTING YOUR FURTHER STATEMENT THAT AS OF THE DATE OF YOUR LETTER THE CONTRACTOR WAS ALREADY OVER A MONTH LATE FOR THE ENTIRE PRODUCTION, WE ARE ADVISED THAT THE CONTRACT BECAME DELINQUENT AND THAT ON JULY 21, 1959, A "SHOW CAUSE" NOTICE WAS ISSUED TO THE CONTRACTOR. BY LETTER OF AUGUST 4, 1959, THE CONTRACTOR REPLIED TO THE EFFECT THAT THE DELINQUENCY WAS BROUGHT ABOUT BY CAUSES BEYOND ITS CONTROL THROUGH THE FAILURE OF ITS SUPPLIERS TO FURNISH CERTAIN COMPONENTS WHICH WOULD MEET THE SPECIFICATIONS. IN VIEW OF THE EXPLANATION THE CONTRACTING OFFICER HAS CONCLUDED THAT THE CONTRACTOR WILL NOT BE DEFAULTED AT THIS TIME. IN THIS CONNECTION, IT MAY BE POINTED OUT THAT THE ENTIRE PRODUCTION CONTRACT IS NOT SCHEDULED FOR COMPLETION UNTIL APPROXIMATELY JULY 2, 1960.

IT APPEARS FROM THE RECORD IN THIS CASE THAT YOUR PROPOSED USE OF TWO PROTOTYPES WAS NOT THE BASIS FOR REJECTION OF YOUR BID--- THE ACTUAL BASIS FOR SUCH REJECTION WAS THE NEGATIVE FACILITY CAPABILITY REPORT RECEIVED ON YOUR COMPANY. ACCORDINGLY, WE CONCLUDE THAT THE REJECTION OF YOUR BID WAS PROPER UNDER THE CIRCUMSTANCES.