B-145031, APR. 7, 1962

B-145031: Apr 7, 1962

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THE EQUIPMENT IS TO BE INSTALLED FOR THE PURPOSE OF FURNISHING UNINTERRUPTED POWER TO VITAL COMMUNICATIONS EQUIPMENT IN THE EVENT OF A BREAK IN COMMERCIAL POWER. THE AGENCY DETERMINED THAT TECHNICAL DISCUSSIONS WERE NECESSARY BECAUSE TECHNICAL SPECIFICATIONS FOR A 200 KW U.P.S. (UNINTERRUPTED POWER SUPPLY) WERE NOT AVAILABLE AND NO KNOWN DOMESTIC MANUFACTURER HAD PREVIOUSLY FABRICATED A UNIT OF THIS CAPACITY. IT WAS DETERMINED THAT TECHNICAL DISCUSSIONS SHOULD BE HELD WITH THE FIRMS OF CONSOLIDATED DIESEL ELECTRIC CORPORATION AND R. CONTACT WAS FIRST MADE WITH CONSOLIDATED DIESEL ON AUGUST 5. THE FIRM WAS ASKED TO FURNISH THE AGENCY WITH INFORMATION AS TO ITS CAPABILITIES. THE LETTER GAVE WHAT WERE STATED TO BE FORM PRICES.

B-145031, APR. 7, 1962

TO CONSOLIDATED DIESEL ELECTRIC CORPORATION:

WE REFER TO YOUR LETTER OF FEBRUARY 8, 1961, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD BY THE CENTRAL INTELLIGENCE AGENCY OF A NEGOTIATED CONTRACT FOR TWO UNINTERRUPTED POWER SUPPLIES TO THE R. H. SHEPPARD COMPANY, INC., HANOVER, PENNSYLVANIA.

THE RECORD SHOWS THAT THE CENTRAL INTELLIGENCE AGENCY, INCIDENT TO THE CONSTRUCTION OF A NEW FACILITY AT LANGLEY, VIRGINIA (SCHEDULED FOR COMPLETION BY JULY 1, 1961), DEVELOPED A REQUIREMENT FOR ONE 30 KW AND ONE 200 KW UNINTERRUPTED POWER SOURCE FOR INSTALLATION AT THE NEW FACILITY. THE EQUIPMENT IS TO BE INSTALLED FOR THE PURPOSE OF FURNISHING UNINTERRUPTED POWER TO VITAL COMMUNICATIONS EQUIPMENT IN THE EVENT OF A BREAK IN COMMERCIAL POWER, WHICH WOULD RESULT IN SENSITIVE COMMUNICATION EQUIPMENT DROPPING OUT OF SYNCHRONIZATION AND WOULD CAUSE APPRECIABLE DELAYS IN THE HANDLING OF INTELLIGENCE TRAFFIC.

PERSONNEL OF THE AGENCY MADE AN EVALUATION OF VARIOUS MANUFACTURERS IN THE FIELD. ON THE BASIS OF THE EVALUATION, THE AGENCY DETERMINED THAT TECHNICAL DISCUSSIONS WERE NECESSARY BECAUSE TECHNICAL SPECIFICATIONS FOR A 200 KW U.P.S. (UNINTERRUPTED POWER SUPPLY) WERE NOT AVAILABLE AND NO KNOWN DOMESTIC MANUFACTURER HAD PREVIOUSLY FABRICATED A UNIT OF THIS CAPACITY. IT WAS DETERMINED THAT TECHNICAL DISCUSSIONS SHOULD BE HELD WITH THE FIRMS OF CONSOLIDATED DIESEL ELECTRIC CORPORATION AND R. H. SHEPPARD COMPANY, INC., AS THE SOURCES APPEARING MOST QUALIFIED TO FURNISH THE DESIRED EQUIPMENT.

CONTACT WAS FIRST MADE WITH CONSOLIDATED DIESEL ON AUGUST 5, 1960. THE FIRM WAS ASKED TO FURNISH THE AGENCY WITH INFORMATION AS TO ITS CAPABILITIES, PROPOSED CONFIGURATION, OTHER TECHNICAL INFORMATION, PRICE AND AVAILABILITY OF EQUIPMENT. ENCLOSED WITH LETTER OF AUGUST 11, 1960, CONSOLIDATED DIESEL FURNISHED CIA WITH COPIES OF A BROCHURE WHICH DESCRIBED AND ILLUSTRATED CONSOLIDATED DIESEL'S UNINTERRUPTED POWER SUPPLY, AND THE WEIGHTS AND DIMENSIONS OF ITS U.P.S. UNITS. THE LETTER GAVE WHAT WERE STATED TO BE FORM PRICES, F.O.B. STAMFORD, CONNECTICUT, AS FOLLOWS:

TABLE

"150 KW, MODEL UPS 150-60 - $33,000

200 KW, MODEL UPS 200-60, 208 VOLTS - $55,700

200 KW, MODEL UPS 200-60, 480 VOLTS - $54,400"

THE FIRM INDICATED THAT IT HAD U.P.S. UNITS FROM 15 THROUGH 150 KW IN THE FIELD AND THAT IT WAS THE ONLY MANUFACTURER IN THE UNITED STATES WHO HAD ACTUALLY MANUFACTURED SUCH UNITS IN SIZES ABOVE 15 KW. A MEETING WAS HELD BETWEEN REPRESENTATIVES OF CIA AND MR. ELAKMAN OF CONSOLIDATED DIESEL ON NOVEMBER 4, 1960. IT IS REPORTED THAT AT THIS MEETING, MR. ELAKMAN PRESENTED ADDITIONAL TECHNICAL INFORMATION AND SUBMITTED PRICES AND DELIVERY DATES AS FOLLOWS:

TABLE

"200 KW MOTOR GENERATOR DELIVERY 9 TO 12 MONTHS PRICE $60,000.00

200 KW SYNCHRONOUS DELIVERY 9 TO 12 MONTHS PRICE $70,000.00"

ALTERNATOR UNIT

ALSO, INSTALLATION OF THE EQUIPMENT WAS DISCUSSED AS AN ADDITIONAL COST, AND MR. ELAKMAN STATED THAT CONSOLIDATED DIESEL DID NOT HAVE INSTALLATION PERSONNEL. IT IS ADDITIONALLY REPORTED THAT DURING THE PERIOD BETWEEN AUGUST AND THE TIME OF THE MEETING ON NOVEMBER 4, MR. ELAKMAN HAD INDICATED TO CIA THAT AT LEASTNINE MONTHS WOULD BE REQUIRED FOR DELIVERY AFTER RECEIPT BY THE COMPANY OF A CONTRACT OR LETTER OF INTENT.

BY LETTER DATED NOVEMBER 7, 1960, CONSOLIDATED DIESEL FORWARDED TO A CIA OFFICIAL A COPY OF DETAILED SPECIFICATIONS COVERING ITS MODEL U.P.S.-30-60 AND U.P.S.-200-60. CONSOLIDATED DIESEL WROTE THAT IT MIGHT BE POSSIBLE TO PROMISE A 7 MONTH DELIVERY ON THE 200 KW UNIT RATHER THAN THE 9 MONTH DELIVERY TIME PREVIOUSLY INDICATED.

AS AN ALTERNATE PROPOSED SOURCE FOR THE REQUIREMENT, THE R. H. SHEPPARD COMPANY WAS CONTACTED ON NOVEMBER 3, 1960, FOR THE PURPOSE OF OBTAINING INFORMATION ON ITS PRODUCTS AND ITS ABILITY TO PRODUCE A 200 KW U.P.S. A MEETING WAS HELD WITH CIA AT THE COMPANY PLANT ON NOVEMBER 8, WHERE THE FIRM PRESENTED ITS TECHNICAL CONCEPT OF THE REQUIREMENT, THE CONFIGURATION IT WOULD FURNISH, SIZE, APPROXIMATE WEIGHT, AND ITS CURRENT PRODUCTION ACTIVITIES. THE COMPANY STATED THAT IT WAS CAPABLE OF PERFORMING THE REQUIREMENT AT A PROPOSED FIGURE OF $48,000 FOR A 200 KW SYNCHRONOUS UNIT AND INSTALLATION AT ABOUT $5,000, AND $45,000 FOR A 200 KW MOTOR GENERATOR UNIT PLUS INSTALLATION AT APPROXIMATELY $5,000. DELIVERY TIME WAS QUOTED AS BEING APPROXIMATELY 90 TO 120 DAYS FOR EITHER UNIT. A FURTHER MEETING WAS HELD WITH R. H. SHEPPARD COMPANY IN WASHINGTON, D.C., ON NOVEMBER 18, 1960, TO CLARIFY DETAILS.

THE CONTRACT NEGOTIATOR ASSIGNED TO THIS PROCUREMENT, PRESENTED TO THE CIA "PROCUREMENT REVIEW COMMITTEE" A REQUEST FOR APPROVAL TO NEGOTIATE A FIXED PRICE CONTRACT WITH THE R. H. SHEPPARD COMPANY, INC. THE NEGOTIATOR REPORTED THAT CONSOLIDATED DIESEL AND R. H. SHEPPARD ARE THE ONLY TWO MANUFACTURERS CAPABLE OF MANUFACTURING THE REQUIRED EQUIPMENT; THAT CONSOLIDATED DIESEL SUBMITTED A SINGLE ENGINE CONFIGURATION WITH A DRIVE SHAFT COUPLING ENGINE TO FLYWHEEL AND GENERATOR FOR THE 200 KW UNIT WHICH WAS DEEMED DEFICIENT SINCE THE SHAFT WOULD REQUIRE PRECISE MACHINING AND ALIGNMENT, AND WITH ONLY ONE ENGINE, THE CHANCE OF BREAKDOWN OF THAT ONE ENGINE WOULD DEFEAT THE INFALLIBILITY OF THE STANDBY POWER SOURCE; THAT R. H. SHEPPARD PROPOSED A TWO ENGINE CONFIGURATION FOR THE 200 KW WITH BELT AND PULLEY DRIVES TO FLYWHEEL AND GENERATOR SO THAT IF ONE ENGINE FAILED, THE OTHER ENGINE COULD STILL DELIVER 60 PERCENT OF CAPACITY; THAT THE BELT AND PULLEY DRIVE SYSTEM WAS MORE FOOLPROOF THAN THE CONSOLIDATED DIESEL CONFIGURATION; AND THAT THE R. H. SHEPPARD COMPANY QUOTED PRICES OF $13,215 PLUS $3,000 INSTALLATION FOR THE 30 KW UNIT, DELIVERY BETWEEN 3 TO 4 MONTHS, AND $45,650 PLUS $4,500 INSTALLATION FOR THE 200 KW UNIT, WITH DELIVERY BY JULY 1961, AS COMPARED TO CONSOLIDATED DIESEL'S PRICES OF $15,000 PLUS INSTALLATION COST (DELIVERY IN 4 TO 5 MONTHS) FOR THE 30 KW UNIT, AND $60,000 EXCLUDING INSTALLATION COST (DELIVERY IN 9 TO 12 MONTHS) FOR THE 200 KW.

ON DECEMBER 19, 1960, THE PROCUREMENT REVIEW COMMITTED APPROVED THE REQUEST TO NEGOTIATE A PROPOSED CONTRACT WITH R. H. SHEPPARD COMPANY.

ON DECEMBER 30, 1960, CONTRACT NO. XG-2337/1/17304 WAS EXECUTED WITH THE R. H. SHEPPARD CO., INC., FOR 30 KW AND 200 KW UNATTENDED, UNINTERRUPTED POWER SUPPLY INSTALLED, AT A FIXED PRICE OF $65,380. PURSUANT TO THE PROCUREMENT, THE CONTRACTING OFFICER REPORTED UNDER DATE OF JANUARY 4, 1961, HIS FINDINGS THAT R. H. SHEPPARD WAS THE BEST AVAILABLE SOURCE KNOWN FOR THE DESIRED EQUIPMENT AND SERVICES ON THE BASIS OF DESIGN, ABILITY TO PERFORM, AND ABILITY TO MEET THE CRITICAL DELIVERY AND INSTALLATION DEADLINE OF JUNE 1 AND JUNE 30, 1961, RESPECTIVELY. HE DETERMINED THAT THE PROPOSED PROCUREMENT WAS FOR SUPPLIES AND SERVICES FOR WHICH IT WAS IMPRACTICABLE TO SECURE COMPETITION, AND THAT NEGOTIATION OF THE PROCUREMENT WAS AUTHORIZED PURSUANT TO SECTION 3 (A), PUBLIC LAW 110, WHICH STATES AS FOLLOWS:

"IN THE PERFORMANCE OF ITS FUNCTIONS THE CENTRAL INTELLIGENCE AGENCY IS AUTHORIZED TO EXERCISE THE AUTHORITIES CONTAINED IN SECTIONS 2 (C) * * * (10), * * * AND SECTIONS 3, 4, 5, 6, AND 10 * * * OF THE ARMED SERVICES PROCUREMENT ACT OF 1947 * * *.'

SECTION 2C (10) OF THE ASPA AS AMENDED (10 U.S.C. 2304 (A) (10) ( CONTAINS AUTHORITY TO NEGOTIATE WHEN IT IS DETERMINED THAT "THE PURCHASE OR CONTRACT IS FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION.'

NEGOTIATION WAS UNDERTAKEN PURSUANT TO AN ADMINISTRATIVE DETERMINATION THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION FOR THIS PROCUREMENT. PARAGRAPH 3-210.2 OF ASPR (THE DEPARTMENT OF DEFENSE REGULATIONS IMPLEMENTING THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT ACT). LISTS CIRCUMSTANCES IN WHICH IT MAY BE DETERMINED THAT IS IS IMPRACTICABLE TO OBTAIN COMPETITION. AMONG SUCH CIRCUMSTANCES ARE: "/XIII) WHEN IT IS IMPOSSIBLE TO DRAFT, FOR A SOLICITATION OF BIDS, ADEQUATE SPECIFICATIONS OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED SUPPLIES OR SERVICES; " AND (1) "WHEN SUPPLIES OR SERVICES CAN BE OBTAINED FROM ONLY ONE PERSON OR FIRM ("SOLE SOURCE OF SUPPLY").' SINCE THESE DETERMINATIONS ARE BASED ON FINDINGS OF FACTS WE HAVE HELD THAT THEY WILL NOT BE ACCEPTED BY THIS OFFICE WHERE THE FACTS ARE OBVIOUSLY NOT IN ACCORD. 37 COMP. GEN. 72.

NEGOTIATION RATHER THAN ADVERTISED PROCUREMENT WAS UNDERTAKEN HERE FOR THE REASON THAT TECHNICAL SPECIFICATIONS WERE NOT AVAILABLE FOR A 200 KW U.P.S. SINCE NO KNOW DOMESTIC MANUFACTURER HAD PREVIOUSLY FABRICATED A UNIT OF THIS CAPACITY. IT APPEARS THAT WHILE YOU HAVE PREVIOUSLY INSTALLED COMPARABLE U.P.S. UNITS OF SIZES UP TO 150 KW, YOU HAVE NOT INSTALLED ANY 200 KW UNITS. ON THESE FACTS WE DO NOT QUESTION THE ADMINISTRATIVE DECISION TO NEGOTIATE. IN THIS REGARD WE NOTE THAT YOU HAVE NOT RAISED OBJECTION TO THE USE OF NEGOTIATING AUTHORITY BUT RATHER TO THE CONDUCT OF THE NEGOTIATION.

YOUR OBJECTION APPEARS TO BE THAT CIA NEVER FORMALIZED THEIR REQUIREMENTS TO YOU IN ANY CONCRETE MANNER SO THAT YOU COULD SUBMIT A FIRM OFFER. PRECISELY, YOU SAY THAT NOT A SINGLE SHEET OF PAPER WAS EVER ISSUED BY THE AGENCY ALTHOUGH YOU HAD BEEN LED TO BELIEVE THAT SOME FORMAL ,REQUEST FOR QUOTATION" WOULD BE FORTHCOMING.

THE CONDUCTING OF NEGOTIATIONS BY CONTRACTING OFFICIALS OF THE GOVERNMENT TO EFFECTUATE A GOVERNMENT PROCUREMENT IS A MATTER PRIMARILY LEFT TO SOUND ADMINISTRATIVE DISCRETION AND THE RULES GOVERNING FORMALLY ADVERTISED COMPETITIVE BIDDING DO NOT NECESSARILY APPLY. BROADLY SPEAKING, NEGOTIATION SHOULD BE CONDUCTED TO THE BEST ADVANTAGE OF THE GOVERNMENT AND THE CONTRACT SHOULD BE PLACED WITH THE OFFEROR MAKING THE BEST FINAL PROPOSAL. 38 COMP. GEN. 861. IT APPEARS FROM YOUR LETTERS OF AUGUST 11 AND NOVEMBER 7, 1960, THAT COPIES OF YOUR BROCHURE AND DETAILED SPECIFICATIONS COVERING U.P.S. WERE SUBMITTED TO CIA, AS WELL AS PROPOSED PRICES AND DELIVERY DATES. FROM THE INFORMATION AVAILABLE TO CIA ON YOUR PRODUCT AND THE PRODUCT PROPOSED BY SHEPPARD, THE CONTRACTING OFFICIALS DETERMINED THAT THE LATTER FIRM MET ITS REQUIREMENTS, INCLUDING THE CRITICAL DELIVERY AND INSTALLATION DEADLINE, WHILE YOUR PROPOSAL DID NOT WARRANT FURTHER NEGOTIATION. IN THIS RESPECT, CIA REPORTS THAT IN LINE WITH ESTABLISHED POLICIES, IT DID NOT CONSIDER IT PROPER TO DIVULGE INFORMATION TECHNICAL OR OTHERWISE TO EITHER COMPANY PERTAINING TO ANY PROPOSALS OF ITS COMPETITORS. CONSIDERING THE BROAD DISCRETION PLACED WITH THE ADMINISTRATIVE AUTHORITY TO CONDUCT NEGOTIATIONS AS IT DEEMS IN THE BEST INTERESTS OF THE GOVERNMENT, WE MUST DEFER HERE TO THE APPROVAL GIVEN ON DECEMBER 19, 1960, BY THE "PROCUREMENT REVIEW COMMITTEE" OF CIA TO NEGOTIATE WITH R. H. SHEPPARD AS A SOLE SOURCE OF SUPPLY.

YOU ALSO OBJECT TO THE AWARD ON THE BASIS THAT SHEPPARD HAS HAD NO PRIOR INSTALLATIONS OF COMPARABLE U.P.S. UNITS, AND IS NOT A QUALIFIED SOURCE. HOWEVER, DETERMINATION REGARDING THE QUALIFICATIONS OF A PROPOSED CONTRACTOR TO PERFORM THE CONTRACT REQUIREMENTS IS A FUNCTION PRIMARILY OF THE CONTRACTING OFFICIALS CONCERNED AND, IN THE ABSENCE OF A SHOWING OF BAD FAITH OR A LACK OF SUBSTANTIAL BASIS FOR THE DETERMINATION, THIS OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT IN PLACE OF THE ADMINISTRATIVE JUDGMENT. 37 COMP. GEN. 798. SINCE THE CHOICE OF THE CONTRACTOR IN THIS INSTANCE APPEARS TO HAVE BEEN MADE AFTER A CAREFUL REVIEW OF ITS CAPABILITIES, WE CONCLUDE THAT THE AWARD OF A NEGOTIATED CONTRACT TO R. H. SHEPPARD COMPANY WAS PROPERLY MADE.