B-143405, MAR. 23, 1961

B-143405: Mar 23, 1961

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ESQUIRE: FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF MICROWAVE ELECTRONIC TUBE COMPANY. WITH THE EXCEPTION OF 47 WHICH WERE LISTED BY ITEM NUMBERS. WERE QUALIFIED PRODUCTS AND THAT AWARDS WITH RESPECT THERETO WOULD BE MADE ONLY FOR SUCH PRODUCTS AS HAD BEEN TESTED AND APPROVED PRIOR TO THE OPENING OF THE BIDS FOR INCLUSION IN QUALIFIED PRODUCTS LIST 1-28 (ASESA) AND AMENDMENTS THERETO. BIDS WERE RECEIVED FROM 39 FIRMS. ON THE BASIS OF THE METHOD OF BID EVALUATION SET FORTH IN THE INVITATION THE TOTAL ESTIMATED COST TO THE GOVERNMENT BY TAKING THE DISCOUNT AND MAKING ONE AWARD FOR ALL EIGHT ITEMS TO BOMAC WAS LESS THAN THE AGGREGATE COST TO THE GOVERNMENT OF SEPARATE CONTRACTS TO THE LOWEST BIDDERS ON THE INDIVIDUAL ITEMS.

B-143405, MAR. 23, 1961

TO WILLIAM C. TAYLOE, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF MICROWAVE ELECTRONIC TUBE COMPANY, INCORPORATED (METCO), AGAINST THE AWARD OF CONTRACT AF 33/604/-30074 TO BOMAC LABORATORIES, INCORPORATED (BOMAC), UNDER INVITATION FOR BIDS 33-604-60-752 ISSUED BY DAYTON AIR FORCE DEPOT, GENTILE AIR FORCE STATION, OHIO.

THE INVITATION REQUESTED BIDS FOR FURNISHING 235 ITEMS OF ELECTRON TUBES OF VARIOUS DESCRIPTIONS AND SPECIFICATIONS, IN CERTAIN ESTIMATED QUANTITIES, TO BE DELIVERED IN SUCH QUANTITIES AND AT SUCH TIMES AS THEY WOULD BE REQUIRED AND ORDERED BY THE GOVERNMENT DURING THE PERIOD OF ONE YEAR FROM DATE OF AWARD.

THE INVITATION STATED THAT ALL ITEMS, WITH THE EXCEPTION OF 47 WHICH WERE LISTED BY ITEM NUMBERS, WERE QUALIFIED PRODUCTS AND THAT AWARDS WITH RESPECT THERETO WOULD BE MADE ONLY FOR SUCH PRODUCTS AS HAD BEEN TESTED AND APPROVED PRIOR TO THE OPENING OF THE BIDS FOR INCLUSION IN QUALIFIED PRODUCTS LIST 1-28 (ASESA) AND AMENDMENTS THERETO.

BIDS WERE RECEIVED FROM 39 FIRMS, EACH OF WHICH COVERED INDIVIDUAL ITEMS OR GROUPS OF ITEMS. BOMAC SUBMITTED A BID ON ITEMS 5, 9, 10, 18, 19, 40, 50 AND 106 AND OFFERED A 10 PERCENT DISCOUNT FROM THE PRICES QUOTED ON THE INDIVIDUAL ITEMS IF AWARDED ALL ITEMS BID UPON. METCO SUBMITTED A BID ON ITEMS 18, 19, 40 AND 106. ON THE BASIS OF THE METHOD OF BID EVALUATION SET FORTH IN THE INVITATION THE TOTAL ESTIMATED COST TO THE GOVERNMENT BY TAKING THE DISCOUNT AND MAKING ONE AWARD FOR ALL EIGHT ITEMS TO BOMAC WAS LESS THAN THE AGGREGATE COST TO THE GOVERNMENT OF SEPARATE CONTRACTS TO THE LOWEST BIDDERS ON THE INDIVIDUAL ITEMS. ACCORDINGLY, THE AWARD WAS MADE TO BOMAC FOR ALL EIGHT ITEMS.

METCO PROTESTS THE AWARD ON THE BASIS THAT BOMAC WAS THE ONLY QUALIFIED PRODUCER FOR ITEMS 5, 9 AND 10 AND, THEREFORE, WAS A SOLE SOURCE FOR THOSE ITEMS. IT IS CONCEDED THAT A NOTICE OF THE GOVERNMENT'S FORECAST OF TUBE REQUIREMENTS WAS SENT TO THE INDUSTRY PRIOR TO THE ISSUANCE OF THE INVITATION FOR BIDS INVOLVED AND THAT THE GOVERNMENT SIGNIFIED ITS INTENTION TO PURCHASE, AMONG OTHERS, THE TUBES LISTED. HOWEVER, IT IS ALLEGED THAT ON ACCOUNT OF THE NUMBER OF DIFFERENT TYPE TUBES CONTAINED IN THE FORECAST THERE WAS NOT SUFFICIENT TIME FOR ANY BIDDER TO OBTAIN QUALIFICATION APPROVAL TO BID ON ALL ITEMS, AND ALSO THAT THERE WAS NO WAY FOR BIDDERS TO KNOW WHICH ITEMS THE GOVERNMENT WOULD PURCHASE OR WHEN THE PURCHASE ACTION WOULD BE TAKEN. IN VIEW THEREOF, IT IS ALLEGED THAT THE INCLUSION OF "SOLE SOURCE" ITEMS IN THE INVITATION PERMITTED BOMAC TO QUOTE "INFLATED" PRICES FOR THOSE ITEMS ON WHICH IT HAD NO COMPETITION AND THAT A CONTRACT RESULTING FROM SUCH A METHOD OF BIDDING, WHICH PERMITS A BIDDER TO INCLUDE "SOLE SOURCE" ITEMS IN A GROUP BID, IS CONTRARY TO THE PUBLIC INTEREST.

THE PURCHASING ACTIVITY REPORTS THAT THEY WERE NOT AWARE THAT SOME OF THE ITEMS INCLUDED IN THE PROCUREMENT WERE AVAILABLE ONLY FROM ONE SOURCE. BOTH QPL 1-28 AND QPL 1-29 SHOWED AT LEAST TWO QUALIFIED SUPPLIERS FOR THE ITEMS, AND THIS WAS CONFIRMED BY A TELEPHONE CALL TO THE ARMED SERVICES ELECTRO-STANDARDS AGENCY, THE QUALIFYING AGENCY, PRIOR TO AND AGAIN AFTER AWARD. THE AIR FORCE REPORTS, HOWEVER, THAT IT SUBSEQUENTLY WAS ASCERTAINED, AS CONTENDED BY YOU, THAT THE SECOND SOURCE FOR ITEMS 5 AND 9 HAD DISCONTINUED MANUFACTURE OF THOSE ITEMS AND THAT THE SECOND SOURCE FOR ITEM 10 HAD NOT MADE THAT TUBE FOR SOME TIME AND DECLINED TO BID ON THIS PROCUREMENT, RESERVING ITS CAPACITY FOR FUTURE BUSINESS. THE SECOND SOURCE ON ITEM 10 HAD BID ON THAT ITEM UNDER A NAVY PROCUREMENT IN FEBRUARY 1959, BUT THE AWARD WENT TO BOMAC.

QUALIFIED PRODUCTS LIST 1-29 SHOWS THAT THE SECOND SOURCE FOR ITEMS 5 AND 9, SYLVANIA AT WOBURN, MASSACHUSETTS, WAS ALSO THE ONLY SOURCE OTHER THAN BOMAC ON ITEMS 19, 40 AND 106. HOWEVER, METCO APPARENTLY QUALIFIED FOR THESE ITEMS PRIOR TO BID OPENING AND SUBMITTED BIDS THEREON. THUS, IT IS EVIDENT THAT BOMAC COULD NOT BE ASSURED THAT METCO, OR SOME OTHER BIDDER, WOULD NOT QUALIFY FOR ITEMS 5 AND 9 OR FOR ANY PARTICULAR ITEM PRIOR TO BID OPENING.

THE AIR FORCE HAS RECOMMENDED THAT ACTION BE TAKEN TO REMOVE SYLVANIA FROM THE QUALIFIED PRODUCTS LIST FOR ITEMS THEY ARE NO LONGER QUALIFIED FOR, AND THAT THE PROCUREMENT AGENCY ASCERTAIN PRIOR TO ANY FUTURE PROCUREMENT ACTION WHETHER THE SECOND SOURCE FOR ITEM 10 INTENDS TO BID. IT IS REPORTED THAT METCO IS NOW QUALIFYING AS A SOURCE FOR ITEM 9. THE AIR FORCE REPORTS THAT IT IS NOT ITS POLICY TO INCLUDE SOLE SOURCE ITEMS IN ADVERTISED PROCUREMENTS, WHEN IT IS CONVINCED THAT THERE ARE NO OTHER POTENTIAL SUPPLIERS, IN THE HOPE THAT OTHER SUPPLIERS WILL BE ABLE TO QUALIFY PRIOR TO THE DATE OF THE OPENING OF BIDS.

WITH RESPECT TO THE ALLEGED UNREASONABLE PRICE QUOTED BY BOMAC ON THE SOLE SOURCE ITEMS 5, 9 AND 10, IT IS REPORTED THAT THERE IS NO RECORD OF AIR FORCE PROCUREMENTS ON ITEMS 5 AND 9, BUT THE PREVIOUS PROCUREMENT FOR ITEM 10 PRODUCED BIDS FROM BOMAC AND MICROWAVE ASSOCIATES AND AWARD WAS MADE TO BOMAC AS THE LOW BIDDER. IN SUPPORT OF THE ALLEGATION WITH RESPECT TO UNREASONABLE PRICE FOR ITEM 9, YOU REFER TO THE NAVY PROCUREMENT OF JUNE 1958 FOR 477 TUBES AT A UNIT PRICE OF $42.50, AND A LATER PROCUREMENT BY THE NAVY IN JUNE 1959 FOR QUANTITIES OF UP TO 1,000 TUBES ON AN OPEN BASIS FOR A UNIT PRICE OF $47.50. NO EVIDENCE OTHER THAN SUCH COMPARISON HAS BEEN SUBMITTED THAT THE PRICE OF $61.65 PER UNIT QUOTED BY BOMAC UNDER THE INSTANT INVITATION FOR ITEM 9 IS UNREASONABLE. THE QUANTITY ESTIMATED TO BE REQUIRED DURING THE ONE-YEAR PERIOD COVERED BY THE INSTANT CONTRACT IS ONLY 360 UNITS, WHEREAS THE 1959 PURCHASE WAS SUBSTANTIALLY LARGER AND THE 1958 PURCHASE WAS FOR A LARGER AND DEFINITE QUANTITY. IT IS ALSO REPORTED THAT THE PRICE OF $30.89 QUOTED BY BOMAC FOR ITEM 5 IS $13.11 PER UNIT LESS THAN THE LAST PREVIOUS NAVY PROCUREMENT OF RECORD (JANUARY 1959) AND THAT THE BID PRICE OF $29.07 FOR ITEM 10 IN $1.93 PER UNIT LESS THAN THE LAST AIR FORCE PROCUREMENT OF RECORD (FEBRUARY 1959).

UNDER THE FACTS AND CIRCUMSTANCES SET FORTH ABOVE, WE DO NOT FEEL JUSTIFIED IN QUESTIONING THE AWARD TO BOMAC. WE DO AGREE THAT, AS A MATTER OF SOUND PROCUREMENT POLICY, A SOLE SOURCE ITEM SHOULD NOT BE INCLUDED IN AN ADVERTISED PROCUREMENT IF THIS PERMITS THE SOLE SOURCE SUPPLIER TO TAKE ADVANTAGE OF HIS POSITION BY A GROUP BID ON SOLE SOURCE AND NON-SOLE SOURCE ITEMS. AS HEREIN ABOVE STATED, THE AIR FORCE REPORTS THAT IT IS NOT ITS POLICY KNOWINGLY TO DO SO. ..END :