B-145015, MAY 8, 1961

B-145015: May 8, 1961

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THE INVITATION WAS ISSUED ON DECEMBER 1. INVITATIONS WERE SENT TO A NUMBER OF PROSPECTIVE BIDDERS. BIDS WERE RECEIVED FROM R. RUSSELL WAS THE LOW BIDDER ON A BID OF $44. AWARD TO RESPONSIBLE BIDDER: "AWARD WILL BE MADE ONLY TO A RESPONSIBLE BIDDER. "RESPONSIBILITY WILL BE DETERMINED. BOTH BIDDERS WERE REQUESTED TO FURNISH EVIDENCE OF INSTALLATIONS HAVING SUCCESSFULLY USED IDENTICAL EQUIPMENT (EXCEPT FOR OUTPUT RATING) FOR A PERIOD OF TWO YEARS. A PRE-AWARD SURVEY WAS CONDUCTED ON THAT DATE BY STAFF MEMBERS FROM THE CORPS OF ENGINEERS. THIS WAS BASED ON THE OPINION THAT PARAGRAPH 4A OF THE SPECIFICATIONS DID NOT REQUIRE EVIDENCE BY THE BIDDER OF SUCCESSFUL INSTALLATION OF THE ENTIRE POWER UNIT BUT ONLY OF THE ITEMS OF EQUIPMENT COMPRISING THE ENTIRE UNIT.

B-145015, MAY 8, 1961

TO CONSOLIDATED DIESEL ELECTRIC CORPORATION:

WE REFER TO YOUR LETTER OF FEBRUARY 7, 1961, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. ENG-30-347-61-16.

THE INVITATION WAS ISSUED ON DECEMBER 1, 1960, BY THE ARMY ENGINEER DISTRICT, EASTERN OCEAN, CALLING FOR BIDS ON ITEM NO. 1A, TWO 60 KW UNINTERRUPTED POWER DIESEL GENERATORS, COMPLETE WITH ELECTRICAL SWITCHGEAR, AS SPECIFIED, AND ITEM NO. 1B, A PER DIEM RATE FOR A QUALIFIED REPRESENTATIVE OF THE DIESEL MANUFACTURER, GENERATOR MANUFACTURER AND SWITCHGEAR MANUFACTURER, TO SUPERVISE THE INSTALLATION AT THE JOB SITE, THULE AIR FORCE BASE, GREENLAND. INVITATIONS WERE SENT TO A NUMBER OF PROSPECTIVE BIDDERS. BY OPENING DATE, DECEMBER 15, 1960, BIDS WERE RECEIVED FROM R. G. RUSSELL COMPANY, INC., OF BOSTON, MASSACHUSETTS, AND CONSOLIDATED DIESEL ELECTRIC CORPORATION OF STAMFORD, CONNECTICUT. RUSSELL WAS THE LOW BIDDER ON A BID OF $44,000 FOR ITEM NO. 1A, AS COMPARED WITH CONSOLIDATED'S BID OF $53,798 (RUSSELL ALSO OFFERED A LOWER PER DIEM RATE ON ITEM NO. 1B).

PARAGRAPH 4 OF THE INVITATION SCHEDULE (CONTINUATION PAGE NO. 7), PROVIDED IN PART THAT:

"4. AWARD TO RESPONSIBLE BIDDER:

"AWARD WILL BE MADE ONLY TO A RESPONSIBLE BIDDER. A RESPONSIBLE BIDDER MUST BE A MANUFACTURER OR REGULAR DEALER OF THE SUPPLIES BID ON HAVING ADEQUATE FINANCIAL RESOURCES, TECHNICAL ABILITY AND INTEGRITY NECESSARY TO MEET DELIVERY COMMITMENTS AND OTHER CONTRACT REQUIREMENTS AND BE OTHERWISE QUALIFIED AND ELIGIBLE TO RECEIVE AN AWARD.

"RESPONSIBILITY WILL BE DETERMINED, PRIOR TO AWARD, BY THE CONTRACTING OFFICER, EITHER BY PERFORMING A PRE-AWARD SURVEY OR CONCLUSIONS BASED ON A PREVIOUS PRE-AWARD SURVEY AND/OR ANY PERFORMANCE DATA AVAILABLE.'

IN ADDITION, PARAGRAPH 4A, PAGE NO. 5 OF THE PROCUREMENT SPECIFICATIONS REQUIRED AS FOLLOWS:

"GENERAL REQUIREMENTS:

"A. STANDARD PRODUCTS: EQUIPMENT FORMING A PART OF THE UNINTERRUPTED POWER UNIT SHALL BE OF PROVEN DESIGN AND OF THE PRODUCT OF AN ORGANIZATION SUCCESSFULLY ENGAGED IN THE MANUFACTURE OF THE EQUIPMENT REQUIRED. THE MANUFACTURER SHALL PRODUCE EVIDENCE OF INSTALLATIONS HAVING SUCCESSFULLY USED EQUIPMENT IDENTICAL, EXCEPT FOR SIZE, FOR A PERIOD OF TWO YEARS.'

BOTH BIDDERS WERE REQUESTED TO FURNISH EVIDENCE OF INSTALLATIONS HAVING SUCCESSFULLY USED IDENTICAL EQUIPMENT (EXCEPT FOR OUTPUT RATING) FOR A PERIOD OF TWO YEARS. IN RESPONSE, RUSSELL FURNISHED A LIST OF THE PRINCIPAL COMPONENTS IT PROPOSED TO USE.

ON DECEMBER 20, 1960, REPRESENTATIVES OF THE CONTRACTING OFFICE, THE CORPS OF ENGINEERS, NEW ENGLAND DIVISION, AND THE ARCHITECT-ENGINEER CONTRACTOR VISITED RUSSELL'S PLANT AND HELD A PRE-AWARD SURVEY CONFERENCE COVERING THE BIDDER'S QUALIFICATIONS. A PRE-AWARD SURVEY WAS CONDUCTED ON THAT DATE BY STAFF MEMBERS FROM THE CORPS OF ENGINEERS, NEW ENGLAND DIVISION. THE REPORT OF SAID PRE-AWARD SURVEY CONCLUDED THAT RUSSELL HAD THE FACILITIES AND CAPABILITIES TO SUCCESSFULLY PERFORM THE PROPOSED WORK. THE ENGINEERING DIVISION OF THE CONTRACTING OFFICE DETERMINED THAT RUSSELL MET THE TECHNICAL REQUIREMENTS AND THE REQUIREMENTS OF PARAGRAPH 4A OF SUCCESSFUL USAGE. THIS WAS BASED ON THE OPINION THAT PARAGRAPH 4A OF THE SPECIFICATIONS DID NOT REQUIRE EVIDENCE BY THE BIDDER OF SUCCESSFUL INSTALLATION OF THE ENTIRE POWER UNIT BUT ONLY OF THE ITEMS OF EQUIPMENT COMPRISING THE ENTIRE UNIT.

ON DECEMBER 23, 1960, CONTRACT NO. DA-30-347-ENG-380 WAS AWARDED TO R. G. RUSSELL AT AN ESTIMATED AMOUNT OF $47,000, FOR DELIVERY BY MAY 4, 1961. IT IS REPORTED THAT THE PRODUCT IS REQUIRED FOR A TOP PRIORITY DEFENSE PROJECT AND THAT THE DELIVERY DATE IS VITAL TO THE GOVERNMENT.

YOU SAY THAT THE REQUIRED UNIT IS NOT JUST A "GENERATOR SET," BUT REQUIRES SPECIAL SKILLS, EXPERIENCE AND KNOW-HOW TO MANUFACTURE. YOU CITE THE USE OF THE TERM "MANUFACTURER * * * OF THE SUPPLIES BID" APPEARING IN PARAGRAPH 4 OF THE INVITATION SCHEDULE, QUOTED ABOVE, AS SIGNIFYING THAT ONLY AN ESTABLISHED MANUFACTURER OF THE END PRODUCT COULD QUALIFY. ALSO, YOU SAY THAT PARAGRAPH 4A OF THE SPECIFICATIONS REQUIRES BIDDERS TO PROVE PRIOR INSTALLATIONS OF THE ENTIRE POWER UNIT RATHER THAN EVIDENCE MERELY THAT EACH OF THE SEPARATE ITEMS OF EQUIPMENT COMPRISING THE WHOLE UNIT HAVE BEEN IN SUCCESSFUL OPERATION FOR A TWO YEAR PERIOD. IT IS YOUR CONTENTION THAT RUSSELL DOES NOT QUALIFY AS A "MANUFACTURER" AND DOES NOT POSSESS THE REQUISITE EXPERIENCE OF PRIOR INSTALLATIONS OF THE WHOLE UNIT TO BE CONSIDERED AS AN ELIGIBLE BIDDER. BY AWARD TO RUSSELL, YOU ALLEGE THAT THE CONTRACTING OFFICER IS FINANCING THE DEVELOPMENT OF A NEW PRODUCT BY A CONTRACTOR UNESTABLISHED IN THE FIELD WHERE YOU ALREADY COMMERCIALLY OFFER THE PRODUCT.

WITH REGARD TO YOUR OBJECTION TO THE FINDING THAT R. G. RUSSELL QUALIFIES AS A SOURCE OF SUPPLY, PARAGRAPH 1-903.1 (1), ARMED SERVICES PROCUREMENT REGULATION, PROVIDES THAT A RESPONSIBLE PROSPECTIVE CONTRACTOR MUST BE A MANUFACTURER, CONSTRUCTION CONTRACTOR, OR REGULAR DEALER, AS DEFINED IN 1- 201.18 (ASPR). PARAGRAPH 1-201.18 PROVIDES IN PART AS FOLLOWS:

"/A) SOURCES OF SUPPLIES SHALL INCLUDE ONLY (I) MANUFACTURERS, (II) CONSTRUCTION CONTRACTORS, AND (III) REGULAR DEALERS.

"/B) AS USED IN (A) ABOVE:

"/I) A MANUFACTURER IS A PERSON OR FIRM---

"/A) WHO OWNS, OPERATES, OR MAINTAINS A FACTORY OR ESTABLISHMENT THAT PRODUCES ON THE PREMISES THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT OR OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS; OR

"/B) WHO, IF NEWLY ENTERING INTO A MANUFACTURING ACTIVITY OF THE TYPE DESCRIBED IN (A) ABOVE, HAS MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR MANUFACTURING SPACE, EQUIPMENT, AND PERSONNEL, TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR THE CONTRACT PERFORMANCE;

AND WHO, PRIOR TO BEING AWARDED A CONTRACT, SATISFIES THE CONTRACTING OFFICER THAT HE QUALIFIES UNDER PARAGRAPH (A) OR (B) ABOVE; "

DETERMINATION OF A BIDDER'S QUALIFICATIONS AS A MANUFACTURER OR REGULAR DEALER WITHIN THE MEANING OF THE REGULATIONS IS PRIMARILY THE RESPONSIBILITY OF THE CONTRACTING OFFICER, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR, WHICH HAS FINAL AUTHORITY. SEE 39 COMP. GEN. 254, B- 140186, SEPTEMBER 1, 1959. WE CANNOT THEREFORE QUESTION THE CONTRACTING OFFICER'S DETERMINATION THAT R. G. RUSSELL QUALIFIED AS A SOURCE OF SUPPLY FOR THE SUBJECT PROCUREMENT.

AS FOR THE USAGE REQUIREMENT CONTAINED IN PARAGRAPH 4A, IT STATED THERE THAT THE MANUFACTURER ,SHALL PRODUCE EVIDENCE OF INSTALLATIONS HAVING SUCCESSFULLY USED EQUIPMENT IDENTICAL, EXCEPT FOR SIZE, FOR A PERIOD OF TWO YEARS.' YOU CONTEND THAT EVIDENCE MUST BE PRODUCED OF WHOLE UNIT INSTALLATIONS RATHER THAN "COMPONENT" INSTALLATIONS, AS REQUIRED BY THE CONTRACTING OFFICE. WE FIND NO BASIS FOR OBJECTING TO THE ADMINISTRATIVE INTERPRETATION OF THE PARAGRAPH IN QUESTION. IF ON THE OTHER HAND THE INTERPRETATION URGED BY YOU SHOULD BE ADOPTED, THERE WOULD BE PRESENTED A SERIOUS QUESTION AS TO WHETHER THE REQUIREMENT WAS NOT UNREASONABLY RESTRICTIVE, IN VIEW OF THE DETERMINATION THAT THE RUSSELL COMPANY HAS ALL FACILITIES AND CAPABILITIES TO PERFORM THE WORK. SEE 39 COMP. GEN. 173.

CONCERNING THE UNINTERRUPTED POWER GENERATOR HERE PROCURED, THE CONTRACTING OFFICER STATES THAT BASED ON THE KNOWLEDGE OF HIS OWN TECHNICAL STAFF, AS WELL AS INFORMATION OBTAINED FROM OTHER MANUFACTURERS OF GENERATOR EQUIPMENT, HE FINDS THAT THE DIFFERENCE BETWEEN AN UNINTERRUPTED POWER GENERATOR UNIT AND A STANDARD GENERATOR UNIT IS NOT SO RADICAL AS YOU CONTEND. A THOROUGH INVESTIGATION WAS CONDUCTED OF THE RESPONSIBILITY OF THE LOW BIDDER TO PERFORM THE REQUIRED WORK. COGNIZANCE WAS TAKEN OF THE BIDDER'S FINANCIAL RESOURCES, ITS INTEGRITY, FITNESS, CAPACITY, AND ABILITY TO FULFILL CONTRACT REQUIREMENTS. THE INFORMATION WAS GATHERED THROUGH A SURVEY OF THE BIDDER'S PLANT, THROUGH CONVERSATIONS WITH THE BIDDER, AND THROUGH OTHER MEANS. IT WAS CONCLUDED THAT THE LOW BIDDER WAS QUALIFIED TO PERFORM THE WORK. UNDER YOUR INTERPRETATION OF PARAGRAPH 4A, BIDDERS WOULD BE REQUIRED TO PRODUCE EVIDENCE OF A TYPE OF PRIOR USAGE WHICH APPEARS TO BE UNNECESSARY TO THE NEEDS OF THE PROCUREMENT AND THEREFORE UNDULY RESTRICTIVE OF COMPETITION. IN VIEW OF THE FOREGOING, WE FIND THAT YOU HAVE PRESENTED NO LEGAL BASIS UPON WHICH WE COULD DISTURB THE AWARD MADE IN THIS CASE TO R. G. RUSSELL COMPANY, INC. ..END :