B-145683, MAY 9, 1961

B-145683, MAY 9, 1961

TO HONORABLE L. H. HEWITT, COMMISSIONER, INTERNATIONAL BOUNDARY AND WATER COMMISSION:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 18, 1961, REQUESTING A DECISION REGARDING THE PROPRIETY OF INSERTING CERTAIN PROVISIONS IN FUTURE INVITATIONS FOR BIDS FOR FURNISHING HEAVY DUTY EQUIPMENT TO YOUR COMMISSION.

IT IS STATED THAT FOR THE PAST SEVERAL YEARS YOUR AGENCY HAS EXPERIENCED LONG AND COSTLY DELAYS IN PROCURING REPAIR PARTS FOR CERTAIN BRANDS OF HEAVY DUTY EQUIPMENT SUCH AS TRACTORS, MOTOR GRADERS, TRACTOR SHOVELS AND TOURNADOZERS. IN MOST CASES, THE DELAYS RESULT FROM INABILITY OF THE LOCAL MANUFACTURER'S REPRESENTATIVE TO FILL PARTS ORDERS. FREQUENTLY ALL OR A LARGE PART OF YOUR REQUIREMENTS ARE BEING BACK ORDERED FROM DISTRICT SUPPLY SOURCES OR FROM THE FACTORY. AS A RESULT OF THIS PRACTICE, YOUR AGENCY HAS BEEN FORCED TO STOCK CRITICAL ITEMS OF PARTS IN ORDER TO AVOID LENGTHY SHUTDOWNS. ALTHOUGH THIS ACTION HAS HELPED IN AVOIDING SOME DELAYS, IT HAS NOT SOLVED YOUR PROBLEM SINCE YOU CANNOT ANTICIPATE ALL EMERGENCIES. ALSO, THIS ACTION INCREASES YOUR WAREHOUSE INVENTORIES AND WORKLOAD UNNECESSARILY.

YOU FEEL THAT YOUR PROBLEM COULD BE ELIMINATED IF YOUR PURCHASES OF THE HEAVY DUTY EQUIPMENT INVOLVED WERE LIMITED TO THOSE MANUFACTURERS WHO ACTUALLY MAINTAIN ADEQUATE STOCKS OF REPAIR PARTS IN THE TRADE AREA WHERE THE EQUIPMENT IS TO BE USED. INSOFAR AS REPRESENTATION IN YOUR LOCAL TRADE AREAS IS CONCERNED, YOU STATE THAT THERE ARE AT LEAST THREE OR FOUR MANUFACTURERS WHO MAINTAIN ADEQUATE STOCKS OF REPAIR PARTS IN THE TWO AREAS WHERE YOU OPERATE.

YOU REQUEST ADVICE AS TO WHETHER YOU MAY PROVIDE IN YOUR FUTURE ADVERTISEMENTS FOR HEAVY DUTY EQUIPMENT (1) THAT AWARD OF CONTRACT BE CONTINGENT UPON THE MANUFACTURER MAINTAINING ADEQUATE STOCKS OF REPAIR PARTS IN THE TRADE AREA WHERE THE EQUIPMENT IS TO BE USED AND (2) THAT SUCH PARTS FACILITIES BE AVAILABLE AT THE TIME OF BIDDING AND NOT BE DEPENDENT ON PROMISES OF THE MANUFACTURER TO ESTABLISH SUCH SERVICE IN CASE THAT HE IS THE LOW BIDDER.

THE QUESTION OF WHAT SUPPLIES AND SERVICES MEET THE NEEDS OF YOUR AGENCY IS PRIMARILY FOR YOUR DETERMINATION. SUCH A DETERMINATION ORDINARILY WILL NOT BE QUESTIONED BY OUR OFFICE OR THE COURTS IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR COMPLETE DISREGARD OF THE FACTS. IF, AS YOU INDICATE, LONG COSTLY DELAYS IN THE USE OF THE EQUIPMENT CAN BE AVOIDED BY REQUIRING THE SUCCESSFUL BIDDER TO BE IN A POSITION TO FURNISH REPLACEMENT PARTS PROMPTLY FOR THE EQUIPMENT THAT HE PROPOSES TO FURNISH, WE DO NOT PERCEIVE ANY OBJECTION TO THE REQUIREMENT IN THE INVITATION THAT THE AWARD OF THE CONTRACT WOULD BE CONTINGENT UPON THE MANUFACTURER MAINTAINING ADEQUATE STOCKS OF REPAIR PARTS IN THE TRADE AREA WHERE THE EQUIPMENT IS TO BE USED, ESPECIALLY WHERE AS IN THIS CASE THE COMPETITIVE CHARACTER OF THE PROCUREMENT IS NOT CHANGED SINCE YOU STATE THAT THREE OR FOUR MANUFACTURERS CAN MEET THIS REQUIREMENT. ALSO, WE DO NOT SEE ANY OBJECTION TO THE REQUIREMENT THAT THE PARTS FACILITIES BE AVAILABLE AT THE TIME OF BIDDING AND THAT A PROMISE OF THE BIDDER TO ESTABLISH SUCH FACILITIES IF HE IS THE LOW BIDDER WILL NOT SUFFICE SINCE THE GOVERNMENT COULD NOT BE FULLY COMPENSATED FOR THE FAILURE OF THE CONTRACTOR TO ESTABLISH SUCH FACILITIES AFTER THE GOVERNMENT HAS BEEN USING THE EQUIPMENT.