B-143498, AUG. 24, 1960

B-143498: Aug 24, 1960

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TO TECHNICAL EQUIPMENT CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 12. AMONG THE OTHER CONCLUSIONS YOU HAVE REACHED CONCERNING THIS PROCUREMENT. THAT TECHNICAL EQUIPMENT WAS LOW BIDDER ON THE IDENTICAL ITEM UNDER INVITATION FOR BIDS NO. 05-611-60-2 ISSUED BY THE AIR FORCE ACADEMY ON JULY 13. THAT NO AWARD WAS MADE DUE TO A "FREEZING" OF FUNDS. A "DELAYS-DAMAGES" CLAUSE WAS INCLUDED. THIS RESERVATION WAS DEEMED TO BE ADMINISTRATIVELY NECESSARY BECAUSE THE EQUIPMENT WAS PART OF GOVERNMENT- FURNISHED MATERIAL TO BE SUPPLIED BY THE AIR FORCE TO THE CONTRACTOR ERECTING A HOSPITAL AT THE AIR FORCE ACADEMY. OFFERS WERE RECEIVED FROM THE R. YOUR PROPOSAL WAS A LETTER DATED MAY 16.

B-143498, AUG. 24, 1960

TO TECHNICAL EQUIPMENT CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 12, 1960, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS NO. 7351 ISSUED ON MAY 6, 1960, BY THE MILITARY MEDICAL SUPPLY AGENCY (MMSA), DEPARTMENT OF THE NAVY, FOR A MEDICAL X-RAY APPARATUS (GENERAL ELECTRIC COMPANY IMPERIAL II--- 500 MA MODEL 45-4 DIAGNOSTIC UNIT, OR EQUAL), AND COMPONENTS THEREFOR,FOR USE AT THE AIR FORCE ACADEMY.

YOU POINT OUT, AMONG THE OTHER CONCLUSIONS YOU HAVE REACHED CONCERNING THIS PROCUREMENT, THAT TECHNICAL EQUIPMENT WAS LOW BIDDER ON THE IDENTICAL ITEM UNDER INVITATION FOR BIDS NO. 05-611-60-2 ISSUED BY THE AIR FORCE ACADEMY ON JULY 13, 1959, BUT THAT NO AWARD WAS MADE DUE TO A "FREEZING" OF FUNDS. FURTHER, YOU ADVISE THAT THE ACADEMY DID OBTAIN ONE X-RAY UNIT FROM THE DEPOT SUBSEQUENT TO THE DETERMINATION NOT TO MAKE AN AWARD UNDER THE INVITATION.

THE REQUEST FOR PROPOSALS PROVIDED THAT OFFERS WOULD BE RECEIVED AT MMSA UNTIL THE CLOSE OF BUSINESS MAY 18, 1960, AND FURTHER STIPULATED THAT THE GOVERNMENT RESERVED THE RIGHT TO MAKE AWARD TO OTHER THAN THE LOW OFFEROR ON THE BASIS OF THE DELIVERY TIME OFFERED. TO EFFECT THIS RESERVATION, A "DELAYS-DAMAGES" CLAUSE WAS INCLUDED. THIS RESERVATION WAS DEEMED TO BE ADMINISTRATIVELY NECESSARY BECAUSE THE EQUIPMENT WAS PART OF GOVERNMENT- FURNISHED MATERIAL TO BE SUPPLIED BY THE AIR FORCE TO THE CONTRACTOR ERECTING A HOSPITAL AT THE AIR FORCE ACADEMY. THE TERMS OF SUCH CONSTRUCTION CONTRACT PROVIDED FOR THE DELIVERY OF THE X RAY APPARATUS BY THE GOVERNMENT TO THE PRIME CONTRACTOR BY JULY 1, 1960. FAILURE TO DO SO WOULD RELIEVE THE CONTRACTOR OF ITS OBLIGATION TO INSTALL THE UNIT WITH THE RESULTANT ADDITIONAL COST TO BE BORNE BY THE GOVERNMENT, CONSERVATIVELY ESTIMATED TO BE $1,500.

IN RESPONSE TO THE REQUEST FOR PROPOSALS, OFFERS WERE RECEIVED FROM THE R. P. KINCHELOE COMPANY, THE GENERAL ELECTRIC COMPANY, AND THE TECHNICAL EQUIPMENT CORPORATION. KINCHELOE'S PROPOSAL OFFERED A PRICE OF $21,287 AND PROVIDED FOR DELIVERY 60 DAYS AFTER RECEIPT OF THE ORDER. GENERAL ELECTRIC'S PROPOSAL DATED MAY 13, 1960, OFFERED A PRICE OF $22,586 AND DELIVERY DURING JUNE 1960. YOUR PROPOSAL DATED MAY 16, 1960, OFFERED A PRICE OF $19,774 AND THE FOLLOWING DELIVERY SCHEDULE:

"JULY 15, 1960

VERTICAL STEREO SHIFT ASSEMBLY: 60 DAYS

NOTE: DELIVERY SOMEWHAT DEPENDENT ON EXACT DATE OF AWARD.'

ATTACHED TO, AND MADE A PART OF, YOUR PROPOSAL WAS A LETTER DATED MAY 16, 1960, WHICH TOOK EXCEPTIONS TO SPECIFICATION REQUIREMENTS CONTAINED IN PARAGRAPHS 9 AND 17 OF ITEM 1.

ON MAY 23, 1960, MMSA FORWARDED YOUR LOW PROPOSAL AND THAT OF KINCHELOE TO THE AIR FORCE MEDICAL MATERIAL FIELD OFFICE, WHICH IN TURN FORWARDED THEM FOR EVALUATION TO THE REQUISITIONING ACTIVITY, THE U.S. AIR FORCE ACADEMY, COLORADO. ON JUNE 15, 1960, THE RESULTS OF THIS EVALUATION WERE RECEIVED BY MMSA. THE EVALUATION INDICATED THAT NEITHER PROPOSAL WAS ACCEPTABLE DUE TO THE OFFERED DELIVERY DATES, AND THAT SUCH BIDDERS WERE OFFERING EQUIPMENT THAT DID NOT CONFORM TO THE SPECIFICATIONS. ON THAT SAME DAY, YOU WERE CONTACTED BY TELEPHONE TO CONFIRM YOUR BEST DELIVERY TIME AND TO CALL ATTENTION TO THE APPLICABILITY OF THE "DELAYS-DAMAGES" PROVISION OF THE REQUEST FOR PROPOSALS. BY LETTER OF JUNE 17, 1960, YOU ADVISED THAT YOUR ESTIMATED DELIVERY WAS FIVE WEEKS FROM RECEIPT OF ORDER. SINCE TIME OF DELIVERY WAS OF THE ESSENCE, GENERAL ELECTRIC'S PROPOSAL WAS ACCEPTED ON JUNE 20, 1960, AT A PRICE OF $22,000, FOR DELIVERY BY JUNE 27, 1960, OR EARLIER, F.O.B. U.S. AIR FORCE ACADEMY, COLORADO. THE ACCEPTANCE SPECIFIED THAT AWARD WAS BASED ON TIME OF DELIVERY, AND THAT THE BASIS FOR COMPUTING LIQUIDATED DAMAGES, IN THE EVENT OF LATE DELIVERY, WOULD BE THE PRICE OFFERED BY YOUR FIRM. WE ARE ADVISED THAT GENERAL ELECTRIC COMPLETED DELIVERY TO THE AIR FORCE ACADEMY ON JUNE 24, 1960.

IN YOUR LETTER OF PROTEST, EIGHT CONCLUSIONS ARE REACHED RESPECTING THIS PROCUREMENT. WE SHALL CONSIDER THESE CONCLUSIONS IN THE ORDER PRESENTED:

"/1) AT THIS TIME, IT SEEMS DOUBTFUL THAT THE NO-AWARD ON THE ORIGINAL REQUEST ISSUED BY THE AIR FORCE ACADEMY WAS DUE COMPLETELY TO THE LACK OF FUNDS.'

THE ORIGINAL INVITATION COVERING THE ITEM WAS NOT WITHIN THE COGNIZANCE OF THE DEPARTMENT OF THE NAVY NOR WAS IT THE NAVY'S RESPONSIBILITY. THE RESPONSIBILITY OF THE DEPARTMENT OF THE NAVY COMMENCED WITH THE RECEIPT OF THE AIR FORCE ACADEMY'S REQUEST TO PURCHASE THIS EQUIPMENT, SO THAT ANY EVENTS PRECEDING THIS PROCUREMENT ARE NOT FOR CONSIDERATION HERE IN DETERMINING THE VALIDITY OF YOUR PROTEST.

"/2) AN ATTEMPT WAS MADE TO PURCHASE THE ONE X-RAY UNIT WITHOUT KNOWLEDGE OF LOCAL BIDDERS.'

WE BELIEVE THAT THIS ANTECEDENT EVENT IS NOT MATERIAL HERE.

"/3) PROPOSAL NO. 7351 ISSUED BY THE MILITARY MEDICAL SUPPLY AGENCY, BROOKLYN, DID NOT PERMIT THE CUSTOMARY 15 DAYS FROM DATE OF ISSUE TO OPENING DATE.'

SECTION 56023-7 (B) OF THE BUREAU OF SUPPLIES AND ACCOUNTS MANUAL SPECIFICALLY PERMITS A PROCURING ACTIVITY TO LIMIT THE TIME FOR SUBMITTING PROPOSALS TO PERIODS LESS THAN THIRTY DAYS IN CASES OF EMERGENCY, SUCH AS HERE, WHERE TIME OF DELIVERY IS OF THE ESSENCE.

"/4) THE JUNE DELIVERY REQUESTED IN THE INVITATION IS UNREASONABLE AND NOT PRACTICAL FOR THE TYPE OF EQUIPMENT REQUESTED.'

EVEN CONCEDING THAT THE DELIVERY TIME REQUESTED WAS SOMEWHAT SHORT, IT CANNOT BE CONSIDERED UNREASONABLE IN VIEW OF THE FACT THAT THE GOVERNMENT WAS SUCCESSFUL IN OBTAINING EXACTLY WHAT IT DESIRED AT THE TIME IT NEEDED IT.HERE, IT WAS NECESSARY FOR THE AIR FORCE ACADEMY TO HAVE THE X-RAY APPARATUS AVAILABLE FOR THE PRIME CONSTRUCTION CONTRACTOR BY JULY 1, 1960.

"/5) THE $2,226.00 BID PRICE DIFFERENTIAL WOULD SEEM TO BE A WASTE OF FUNDS FOR A TWO WEEK PERIOD, IN VIEW OF THE FACT THAT OUR INFORMATION STATES THAT HOSPITAL COMPLETION IS NOT SCHEDULED UNTIL AUGUST OR SEPTEMBER.'

AS SHOWN BY THE FACTS, AND AS EXPLAINED IN THE PRECEDING PARAGRAPH, THE DATE OF THE COMPLETION OF THE HOSPITAL HAD NO RELATION TO THE DATE THE X- RAY APPARATUS WAS REQUIRED. THE AIR FORCE HAD ESTIMATED THAT IT WOULD COST AT LEAST $1,500 EXTRA FOR INSTALLATION IF THE UNIT WERE NOT DELIVERED TO THE PRIME CONTRACTOR BY JULY 1, 1960.

"/6) AGAIN, DURING THE NEGOTIATION OF THE PROPOSAL, NO COMPETENCY CERTIFICATE WAS REQUESTED FROM THE SMALL BUSINESS ADMINISTRATION.'

UNDER SECTION 1-705.6 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION, A CONTRACTING OFFICER IS REQUIRED TO REFER A DETERMINATION OF NONRESPONSIBILITY OF A SMALL BUSINESS BIDDER TO THE SMALL BUSINESS ADMINISTRATION IF SUCH NONRESPONSIBILITY HAS REFERENCE TO THE BIDDER'S CAPACITY, FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED. CLEARLY, THAT REQUIREMENT IS NOT APPLICABLE HERE WHERE YOUR FIRM WAS NOT RESPONSIVE EITHER TO THE TECHNICAL OR TIME OF DELIVERY REQUIREMENTS OF THE REQUEST FOR PROPOSALS.

"/7) ASSUMING THAT AN AWARD WAS MADE, EVEN BY TELEGRAM OR TELEPHONE, ON JUNE 20, 1960, IT IS VERY PROBABLE THAT UNLESS SPECIAL SHIPPING ARRANGEMENTS COULD BE MADE THAT THE EQUIPMENT WOULD NOT REACH THE AIR FORCE ACADEMY DURING THE MONTH OF JUNE.'

CONCERNING CONCLUSION NO. 7, IT IS SUFFICIENT TO POINT OUT THAT DELIVERY OF THE EQUIPMENT WAS ACCOMPLISHED BY THE CONTRACTOR THREE DAYS BEFORE THE CONTRACT DELIVERY DATE OF JUNE 27, 1960.

"/8) WITH ONLY 12 DAYS PERMITTED TO SUBMIT A BID, IT SEEMS THAT 33 DAYS EVALUATION TIME IS EXCESSIVE AND NOT TO THE ADVANTAGE OF MOST BIDDERS. THIS IS PARTICULARLY TRUE SINCE JUNE DELIVERY IS CLAIMED TO BE OF UTMOST IMPORTANCE.'

THE TIME TAKEN FOR EVALUATION CANNOT BE CONSIDERED EXCESSIVE IN THE LIGHT OF THE COMPLEX NATURE OF THE EQUIPMENT BEING PURCHASED, AND IN VIEW OF THE NECESSITY OF SENDING THE VARIOUS PROPOSALS RECEIVED TO THE AIR FORCE ACADEMY FOR EVALUATION. ALSO, THE 33 DAYS EXPENDED FOR EVALUATION HAD NO EFFECT ON YOUR PROPOSAL SINCE THE EARLIEST DATE YOU OFFERED DELIVERY WAS JULY 15, 1960.

CONCERNING YOUR FAILURE TO OFFER X-RAY EQUIPMENT MEETING ALL THE SPECIFICATION REQUIREMENTS, WE HAVE CONSISTENTLY ADHERED TO THE PROPOSITION THAT THE DETERMINATION AS TO WHETHER A CERTAIN TYPE OF EQUIPMENT OFFERED BY A BIDDER MEETS THE ADVERTISED SPECIFICATIONS IS A MATTER PRIMARILY FOR ADMINISTRATIVE DETERMINATION AND, IN THE ABSENCE OF A SHOWING OF BAD FAITH OR COMPLETE DISREGARD OF THE FACTS, WE WOULD NOT BE WARRANTED IN HOLDING THAT THE ACTION TAKEN WAS ILLEGAL.

MOREOVER, IT HAS LONG BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT THE UNITED STATES IS NOT REQUIRED TO PURCHASE EQUIPMENT OR SUPPLIES MERELY BECAUSE THEY ARE OFFERED AT THE LOWEST PRICE WHEN, IN THE CONSIDERED JUDGMENT OF THE CONTRACTING AGENCY, THE ACTUAL NEEDS OF THE GOVERNMENT WOULD NOT BE SERVED THEREBY. AS TO THIS PROCUREMENT, WE SEE NO REASON FOR HOLDING THAT THE REQUIREMENTS STATED WERE NOT BASED UPON A BONA FIDE DETERMINATION OF THE NEEDS OF THE GOVERNMENT. THE EXERCISE OF SUCH DISCRETION IS VESTED IN THE PROCUREMENT OFFICIALS OF THE GOVERNMENT AND, IN THE ABSENCE OF BAD FAITH, IS NOT SUBJECT TO REVIEW.

IN THE CIRCUMSTANCES, IT MUST BE CONCLUDED THAT YOUR PROTEST FURNISHES NO PROPER BASIS ON WHICH WE WOULD BE JUSTIFIED IN QUESTIONING THE ACTION TAKEN BY THE MILITARY MEDICAL SUPPLY AGENCY.