B-142927, SEP. 12, 1960

B-142927, SEP. 12, 1960

TO CHRISTIE ELECTRIC CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 13, 1960, RELATIVE TO AN ALLEGED CANCELLATION OF CERTAIN ORDERS ISSUED TO THE SOLAR AIRCRAFT COMPANY, SAN DIEGO, CALIFORNIA, BY CONVAIR-ASTRONAUTICS, CONVAIR DIVISION OF THE GENERAL DYNAMICS CORPORATION, FOR POWER SUPPLY AND DISTRIBUTION UNITS REQUIRED IN THE PERFORMANCE OF AIR FORCE CONTRACT NO. AF 04/647/- 370.

IT APPEARS THAT YOUR FIRM HAD AN INTEREST IN THE PROPOSED PROCUREMENT SINCE YOU WERE AWARDED A SUBCONTRACT BY THE SOLAR AIRCRAFT COMPANY TO FURNISH RECTIFIER POWER SUPPLY PARTS FOR THE EQUIPMENT. YOUR LETTER STATES THAT YOU SHIPPED FOUR COMPLETED RECTIFIER POWER SUPPLIES ON SCHEDULE BUT THAT ON APRIL 7, 1960, THE AIR FORCE DIRECTED CONVAIR- ASTRONAUTICS TO CANCEL ORDERS WITH THE SOLAR AIRCRAFT COMPANY. YOU EXPRESS THE OPINION THAT THE INTENT OF THE ARMED SERVICES PROCUREMENT REGULATION MAY HAVE BEEN VIOLATED IN CONNECTION WITH THE DIRECTION TO CANCEL THE PARTICULAR ORDERS.

IT IS ALLEGED THAT THE SOLAR AIRCRAFT COMPANY WAS ASKED TO BID ON THE BEST POSSIBLE DELIVERY TIME RATHER THAN THE BEST POSSIBLE PRICE AND THAT IT OFFERED DELIVERY OF THE POWER SUPPLY AND DISTRIBUTION UNITS WITHIN 66 DAYS AS COMPARED WITH THE PRIME CONTRACTOR'S REQUIRED OR DESIRED DELIVERY TIME OF 30 DAYS. IT IS ALSO ALLEGED THAT BETWEEN JANUARY 28, 1960, AND FEBRUARY 5, 1960, PURCHASE ORDERS NOS. 113110 TO 113315, INCLUSIVE, WERE ISSUED VERBALLY TO THE SOLAR AIRCRAFT COMPANY, AND THAT YOU WERE INFORMED THAT, WHILE THAT COMPANY WAS NOT THE LOWEST BIDDER, IT HAD SUBMITTED AN ENGINEERING PROPOSAL WHICH WAS THE ONLY ONE ACCEPTABLE TO CONVAIR- ASTRONAUTICS ENGINEERING. IT IS FURTHER ALLEGED THAT ON OR ABOUT APRIL 8, 1960, AN ORDER WAS PLACED WITH KURZ AND ROOT AGAINST THE PRIME CONTRACTOR'S WISHES AND JUDGMENT AND THAT THE FIRM OF KURZ AND ROOT WAS ALLOWED OVERTIME PAY AND GIVEN 80 OR 90 DAYS FOR MAKING DELIVERY.

YOU SUGGEST THAT KURZ AND ROOT DID NOT HAVE AN ACCEPTABLE ENGINEERING PROPOSAL AND THAT IT WAS, IN EFFECT, GRANTED AN OPPORTUNITY TO DEVELOP A UNIT DURING A PERIOD OF APPROXIMATELY 170 TO 180 DAYS, WHEREAS THE SOLAR AIRCRAFT COMPANY WAS BIDDING ON 66-DAY DELIVERY BASED ON CONVAIR'S NEED AND, REGARDLESS OF PRICE, THE FIRM OF KURZ AND ROOT COULD NOT HAVE PRODUCED A UNIT IN ANYWHERE NEAR THAT TIME. IT IS CONTENDED THAT THE FIRM OF KURZ AND ROOT WAS GIVEN AN OPPORTUNITY TO REBID WITHOUT A SIMILAR OPPORTUNITY HAVING BEEN GRANTED TO THE SOLAR AIRCRAFT COMPANY; THAT THE PRICE OF THE UNITS FROM KURZ AND ROOT, PLUS CANCELLATION CHARGES, WILL EXCEED THE PRICE OF THE EQUIPMENT FROM THE SOLAR AIRCRAFT COMPANY; AND THAT THE ACTION TAKEN BY THE AIR FORCE HAD A VERY DETRIMENTAL EFFECT ON THE CHRISTIE ELECTRIC CORPORATION.

THE FACTS OF THE CASE, AS REPORTED BY THE DEPARTMENT OF THE AIR FORCE, SHOW THAT, IN RESPONSE TO COMPETITIVE QUOTATIONS SOLICITED BY CONVAIR, FOUR BIDS WERE RECEIVED IN THE AMOUNTS OF $125,288, $164,983, $178,467 AND $279,702.60 ON 34 UNITS. THE LOW BID WAS SUBMITTED BY KURZ AND ROOT AND THE HIGH BID WAS SUBMITTED BY THE SOLAR AIRCRAFT COMPANY. CONVAIR NEGOTIATED SOLAR'S PROPOSAL DOWNWARD TO $266,400.46. ALSO, NEGOTIATIONS WERE ENTERED INTO WITH KURZ AND ROOT TO DETERMINE PREMIUM OVERTIME TO EXPEDITE DELIVERY OF 12 UNITS TO SATISFY SCHEDULE REQUIREMENTS. THE COST FOR EXPEDITING SUCH UNITS WAS NEGOTIATED AT $15,458, MAKING THE TOTAL ACQUISITION COST UNDER THE BID OF KURZ AND ROOT AMOUNT TO $140,746. THE PRIME CONTRACTOR PROPOSED THAT THE AWARD BE MADE TO SOLAR BUT, AFTER CAREFUL CONSIDERATION BY THE AIR FORCE PERSONNEL, IT WAS DETERMINED THAT THE KURZ AND ROOT UNIT WAS TECHNICALLY ADEQUATE AND THAT SUCH FIRM WAS CAPABLE OF ACCOMPLISHING PERFORMANCE IN ACCORDANCE WITH REQUIREMENTS. CONVAIR WAS INSTRUCTED TO PLACE THE ORDER WITH THE LOW BIDDER. HOWEVER, CONVAIR HAD AWARDED, WITHOUT THE APPROVAL OF THE AIR FORCE, THREE PURCHASE ORDERS NOS. 113310, 113312 AND 113314. WITH REFERENCE TO THE OTHER ORDERS CITED IN YOUR LETTER, PURCHASE ORDERS NOS. 113311 AND 113313 WERE NEVER AWARDED VERBALLY OR OTHERWISE TO THE SOLAR AIRCRAFT COMPANY, AND PURCHASE ORDER NO. 113315 HAS NO CONNECTION WITH THE PROCUREMENT HERE INVOLVED.

QUOTATIONS WERE REQUESTED ON THE BASIS OF THE MOST ADVANTAGEOUS PRICE, ALTHOUGH TIME OF DELIVERY WAS ALSO A MATTER TO CONSIDER IN MAKING AN AWARD. KURZ AND ROOT WERE NOT AFFORDED AN OPPORTUNITY TO REBID ON THE REQUIREMENT AND THE AIR FORCE DID NOT DIRECT THE PRIME CONTRACTOR TO CANCEL ORDERS FOR POWER SUPPLY AND DISTRIBUTION UNITS PLACED WITH THE SOLAR AIRCRAFT COMPANY. HOWEVER, THE AIR FORCE ADVISED THE PRIME CONTRACTOR THAT ANY EXCESS COST INCURRED FOR PROCUREMENT OF UNITS IN EXCESS OF REQUIREMENTS MIGHT BE SUBJECT TO DISALLOWANCE. CONVAIR- ASTRONAUTICS WAS NOT IN ACCORD WITH THE DECISION TO AWARD THE SUBCONTRACT TO THE LOWEST BIDDER BUT THE CONVAIR MANAGEMENT SUBSEQUENTLY INDICATED CONCURRENCE WITH SUCH SELECTION. THE AWARD TO KURZ AND ROOT WILL RESULT IN A SAVING TO THE GOVERNMENT OF $125,654.46 WHEN COMPARED TO THE SOLAR AIRCRAFT COMPANY'S BID OF $266,400.46 AND IT IS NOT APPARENT THAT THE GOVERNMENT WILL BE REQUIRED TO REIMBURSE CONVAIR FOR CANCELLATION CHARGES. THE KURZ AND ROOT PROPOSAL WAS EVALUATED AND CONSIDERED ACCEPTABLE BY SEVERAL AIR FORCE ACTIVITIES AND, IN ADDITION, THE AIR FORCE DETERMINED THAT THE NEGOTIATED KURZ AND ROOT DELIVERY SCHEDULE WOULD ADEQUATELY FULFILL OPERATIONAL REQUIREMENTS.

WE FIND NO SUBSTANTIAL BASIS FOR CONSIDERING THAT THE OFFICIALS OF THE DEPARTMENT OF THE AIR FORCE ACTED ARBITRARILY IN THE MATTER OR THAT THE FIRM OF KURZ AND ROOT WAS GIVEN AN UNFAIR ADVANTAGE BECAUSE IT MAY HAVE ORIGINALLY PROPOSED A LATER DELIVERY DATE THAN THAT SPECIFIED IN THE BID OF THE SOLAR AIRCRAFT COMPANY. ALL BIDDERS WERE GIVEN THE SAME OPPORTUNITY TO STATE THEIR BEST PRICES AND DELIVERY DATES IN THEIR ORIGINAL PROPOSALS, AND, IN OUR OPINION, IT WAS THE PRIMARY RESPONSIBILITY OF THE OTHER BIDDERS TO PROPOSE ALTERNATE PRICES DURING THE COURSE OF THE NEGOTIATION PROCEEDINGS IF THEY BELIEVED THAT THEY COULD OFFER LOWER PRICES WITH DELIVERY CONDITIONS DIFFERENT FROM THOSE SPECIFIED IN THEIR INITIAL PROPOSALS. IN THIS CONNECTION, FROM A LEGAL STANDPOINT, THERE MAY NOT BE DISREGARDED THE FACT THAT THIS WAS NOT A GOVERNMENT ADVERTISED PROCUREMENT AND THEREFORE IT WAS NOT SUBJECT TO THE RULE THAT BIDS MAY NOT BE CHANGED AFTER OPENING.

ACCORDINGLY, YOU ARE ADVISED THAT FURTHER ACTION BY OUR OFFICE IN THE MATTER DOES NOT APPEAR TO BE REQUIRED AND WE ARE CONSIDERING THE CASE CLOSED.