B-146688, OCT. 9, 1961

B-146688: Oct 9, 1961

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TO THE MARINE GYRO-COMPASS SERVICE: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16. YOU ADVISE THAT A REPORT FROM THE SMALL BUSINESS ADMINISTRATION WHICH INVESTIGATED THIS PROCUREMENT AT YOUR REQUEST INDICATED THAT THERE WAS NO VALID REASON TO DISQUALIFY YOU AND AWARD THE CONTRACT TO THE HIGHER BIDDER. WE ARE INFORMED THAT SINCE SPERRY RAND. IT WAS THE PRACTICE OF THE COAST GUARD TO NEGOTIATE ANNUAL TERM SERVICE CONTRACTS WITH SPERRY RAND UNDER 10 U.S.C. 2304 (A) (10). AN APPROPRIATE INVESTIGATION WAS CONDUCTED BY THE COAST GUARD OF YOUR CAPABILITIES AND FINANCIAL CONDITION. THE RESULTS INDICATED THAT YOU WERE FINANCIALLY SOUND. ONLY TWO UNFAVORABLE ITEMS WERE DEVELOPED: FIRST. IT WAS DETERMINED THAT UNDER THE CIRCUMSTANCES.

B-146688, OCT. 9, 1961

TO THE MARINE GYRO-COMPASS SERVICE:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16, 1961, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A NEGOTIATED CONTRACT TO THE SPERRY RANDCORPORATION UNDER REQUEST FOR QUOTATION NO. CG-51,728-A DATED MAY 3, 1961, BY THE U.S. COAST GUARD FOR PARTS AND REPAIR SERVICE TO SPERRY RAND EQUIPMENT AT 73 NAMED LOCATIONS AS REQUIRED AND ORDERED DURING THE PERIOD JULY 1, 1961, THROUGH JUNE 30, 1962.

YOU ADVISE THAT A REPORT FROM THE SMALL BUSINESS ADMINISTRATION WHICH INVESTIGATED THIS PROCUREMENT AT YOUR REQUEST INDICATED THAT THERE WAS NO VALID REASON TO DISQUALIFY YOU AND AWARD THE CONTRACT TO THE HIGHER BIDDER.

WE ARE INFORMED THAT SINCE SPERRY RAND, THE MANUFACTURER OF THE EQUIPMENT INVOLVED, MAINTAINED A NATIONWIDE SERVICE ORGANIZATION WITH RESIDENT LOCAL REPRESENTATIVES AVAILABLE ON 24-HOUR NOTICE AND THAT NO OTHER COMPANY PROVIDED A COMPARABLE SERVICE, IT WAS THE PRACTICE OF THE COAST GUARD TO NEGOTIATE ANNUAL TERM SERVICE CONTRACTS WITH SPERRY RAND UNDER 10 U.S.C. 2304 (A) (10). HOWEVER, IN JANUARY 1961 YOU REQUESTED TO BE PLACED ON THE COAST GUARD BIDDER'S LIST FOR GYRO COMPASS SERVICE IN THE AREA FROM BALTIMORE, MARYLAND, TO JACKSONVILLE, FLORIDA. UPON RECEIPT OF THIS REQUEST, AN APPROPRIATE INVESTIGATION WAS CONDUCTED BY THE COAST GUARD OF YOUR CAPABILITIES AND FINANCIAL CONDITION. THE RESULTS INDICATED THAT YOU WERE FINANCIALLY SOUND, HAD A GOOD REPUTATION, AND HAD THE NECESSARY EXPERIENCE TO PERFORM SATISFACTORY GYRO-COMPASS SERVICE. ONLY TWO UNFAVORABLE ITEMS WERE DEVELOPED: FIRST, THE SERVICING STAFF CONSISTED ENTIRELY OF THE TWO ENGINEERS WHO FORM YOUR PARTNERSHIP, RAISING A QUESTION AS TO HOW LARGE AN AREA TWO SERVICE ENGINEERS COULD COVER ON A 24 -HOUR BASIS; AND SECOND, THE STOCK OF SPARE PARTS ON HAND ($5,000) DID NOT APPEAR SUFFICIENT FOR ANY EXTENSIVE SERVICING. IT WAS DETERMINED THAT UNDER THE CIRCUMSTANCES, A QUOTATION SHOULD BE SOLICITED FROM YOUR FIRM ON THE ASSUMPTION THAT A CONTRACT MIGHT BE NEGOTIATED WITH YOU FOR AN AREA WHICH YOU WERE CAPABLE OF SERVICING AND THAT A SEPARATE CONTRACT COULD BE NEGOTIATED WITH SPERRY RAND COVERING THE REMAINDER OF THE 73 LOCATIONS.

IN RESPONSE TO THE REQUEST FOR QUOTATION, YOU OFFERED ON MAY 17, 1961, TO PERFORM THE REQUIRED SERVICES AT SEVEN LOCATIONS FROM CURTIS BAY, MARYLAND, TO CHARLESTON, SOUTH CAROLINA, AT CERTAIN RATES AND PARTS PRICES. HOWEVER, YOU FAILED TO SHOW, AS REQUIRED ON PAGE 4 OF THE REQUEST FOR QUOTATION, THE F.O.B. POINT OF ORIGIN FOR PARTS OR WHEN DELIVERY WOULD BE MADE AFTER RECEIPT OF ORDER. YOUR QUOTATION WAS EVALUATED AGAINST THE OTHER QUOTATION RECEIVED FROM SPERRY RAND AND IT WAS ADMINISTRATIVELY DETERMINED, PRICE AND OTHER FACTORS CONSIDERED, THAT IT WAS MOST ADVANTAGEOUS TO AWARD A SINGLE CONTRACT FOR ALL 73 SERVICE LOCATIONS TO SPERRY RAND. AWARD OF CONTRACT NO. TCG-41769 WAS MADE TO SPERRY RAND ON JUNE 14, 1961. THIS DETERMINATION WAS BASED ON THE FOLLOWING CONSIDERATIONS AS REPORTED BY THE COAST GUARD:

"REPAIR PARTS ARE ESSENTIAL TO SERVICE AND REPAIR OF ALL EQUIPMENT COVERED BY THE CONTRACT. WITHOUT IMMEDIATE ACCESS TO AN ADEQUATE SUPPLY OF PARTS THE SERVICE ENGINEER CANNOT PERFORM REPAIRS IN THE USUALLY LIMITED TIME AVAILABLE DUE TO THE OPERATIONAL DUTIES OF THE COAST GUARD VESSELS CONCERNED. WITH SUCH A SMALL INVENTORY OF REPAIR PARTS IN STOCK, MARINE GYRO-COMPASS SERVICE WOULD HAVE TO PROCURE NEEDED PARTS FROM THE SPERRY RAND FACTORY. SPERRY RAND HAS A LARGE FIELD INVENTORY OF PARTS BUT DOES NOT MAKE THEM AVAILABLE TO SERVICE COMPETITORS.

"ALTHOUGH SOME OF THE MARINE GYRO-COMPASS SERVICE PARTS WERE LOWER PRICED, AGAIN IT MUST BE ASSUMED THAT WHEN THEIR PRESENT LIMITED STOCK IS EXHAUSTED IT WILL BE NECESSARY FOR THEM TO ORDER PARTS FROM THE SPERRY RAND FACTORY, SO THAT IT IS DOUBTFUL WHETHER THEY CAN MAINTAIN THE PRICES QUOTED WITHOUT SUFFERING A LOSS.

"REGARDING THE PRICES QUOTED BY MARINE GYRO-COMPASS SERVICE FOR ENGINEER'S TIME AT HOURLY AND/OR DAILY RATES, IT APPEARS THAT THE HOME LOCATION FROM WHICH THE ENGINEER MUST DEPART AND TO WHICH HE RETURNS, "PORTAL-TO-PORTAL" MUST BE CONSIDERED IN DETERMINING WHAT IS THE LOWEST PRICE. SPERRY RAND LISTED HOME LOCATIONS OF ENGINEERS SERVICING THE VARIOUS AREAS, WHEREAS IT MUST BE ASSUMED THAT BOTH OF MARINE GYRO COMPASS SERVICE ENGINEERS WILL TRAVEL FROM AND RETURN TO NORFOLK, VIRGINIA. OBVIOUSLY, A SPERRY ENGINEER FROM BALTIMORE, MARYLAND, SERVICING A SHIP AT CURTIS BAY, MARYLAND, WILL SPEND MUCH LESS TIME TRAVELING AND THUS MORE TIME ON THE JOB DURING AN EIGHT-HOUR PERIOD QUOTED THAN A MARINE GYRO- COMPASS SERVICE ENGINEER CALLED TO CURTIS BAY FROM NORFOLK, VIRGINIA.'

IN A NEGOTIATED PROCUREMENT, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ARE NOT APPLICABLE AND THE NEGOTIATION AUTHORITY MAY LEGALLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE ACCOMPLISHMENT OF THE PROCUREMENT. BONA FIDE DETERMINATIONS UNDER THE NEGOTIATION AUTHORITY (10 U.S.C. 2304 (A) ( LEGALLY MAY NOT BE QUESTIONED WHEN REASONABLE GROUNDS FOR SUCH DETERMINATION EXIST. IT CAN BE SEEN HERE THAT THE AWARD OF A CONTRACT TO SPERRY RAND FOR ALL THE 73 SERVICE LOCATIONS BENEFITED THE COAST GUARD IN THAT THEY WERE ASSURED OF PROMPT PART AND REPAIR SERVICES WITH RESULTING SAVINGS IN THE CONTRACT SERVICE RATES.

IN THE ABSENCE OF ANY EVIDENCE THAT IT WOULD HAVE BEEN MORE ADVANTAGEOUS TO THE COAST GUARD TO MAKE A SPLIT AWARD WITH ATTENDANT INCREASED ADMINISTRATIVE TIME AND COSTS, WE FIND NO BASIS TO QUESTION THE AWARD MADE TO THE SPERRY RAND CORPORATION.