B-148407, MAY 3, 1962

B-148407: May 3, 1962

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TO THE HICKOK ELECTRICAL INSTRUMENT COMPANY: REFERENCE IS MADE TO YOUR LETTER OF MARCH 12. THE SECOND STEP WAS TO ISSUE A FORMAL INVITATION FOR BIDS TO ONLY THOSE FIRMS HAVING ACCEPTABLE DETAILED TECHNICAL PROPOSALS AND BID SAMPLES. THIS METHOD OF PROCUREMENT IS AUTHORIZED UNDER PARAGRAPH 2-501 TO 2-503.2 OF THE ARMED SERVICES PROCUREMENT REGULATION. BID SAMPLES WERE SUBMITTED BY YOU AND THREE OTHER FIRMS IN NOVEMBER 1961. EACH FIRM WAS PERMITTED TO "TROUBLE SHOOT" ITS PRODUCT IN THE AIR FORCE LABORATORY AND THUS ASSURE PROPER FUNCTIONING PRIOR TO RELEASING THE PRODUCT TO THE GOVERNMENT FOR TESTING. WAS ACCEPTED. YOUR BID SAMPLE AND THE BID SAMPLES OF THE LAVOIE AND HEWLETT-PACKARD FIRMS WERE DETERMINED TO BE DEFICIENT.

B-148407, MAY 3, 1962

TO THE HICKOK ELECTRICAL INSTRUMENT COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 12, 1962, PROTESTING THE REJECTION OF YOUR PROPOSAL SUBMITTED IN RESPONSE TO REQUEST FOR TECHNICAL PROPOSAL NO. MD-2-6625-83308 ISSUED BY THE DAYTON AIR FORCE DEPOT, DAYTON, OHIO.

ON SEPTEMBER 18, 1961, THE DAYTON AIR FORCE DEPOT ISSUED REQUEST FOR TECHNICAL PROPOSAL NO. MD-2-6625-83308, ADVISING BIDDERS THAT THE PROCUREMENT OF OSCILLOSCOPES AND ACCESSORIES AS DESCRIBED THEREIN WOULD BE ACCOMPLISHED IN TWO DISTINCT STEPS. STEP ONE WOULD CONSIST OF ,SOLICITATION, SUBMISSION AND EVALUATION OF DETAILED TECHNICAL PROPOSAL WITHOUT PRICING AND SOLICITATION, SUBMISSION, EVALUATION AND TESTING OF A BID SAMPLE FOR THE SAID OSCILLOSCOPE AND ACCESSORIES TO DETERMINE THE ACCEPTABILITY OF THE PRODUCT OFFERED.' THE SECOND STEP WAS TO ISSUE A FORMAL INVITATION FOR BIDS TO ONLY THOSE FIRMS HAVING ACCEPTABLE DETAILED TECHNICAL PROPOSALS AND BID SAMPLES. THIS METHOD OF PROCUREMENT IS AUTHORIZED UNDER PARAGRAPH 2-501 TO 2-503.2 OF THE ARMED SERVICES PROCUREMENT REGULATION. THE REQUEST FOR PROPOSAL ADVISED THAT FIRMS HAVING UNACCEPTABLE PROPOSALS AND SAMPLES WOULD BE SO NOTIFIED.

BID SAMPLES WERE SUBMITTED BY YOU AND THREE OTHER FIRMS IN NOVEMBER 1961. EACH FIRM WAS PERMITTED TO "TROUBLE SHOOT" ITS PRODUCT IN THE AIR FORCE LABORATORY AND THUS ASSURE PROPER FUNCTIONING PRIOR TO RELEASING THE PRODUCT TO THE GOVERNMENT FOR TESTING. AFTER THE INITIAL SUBMISSION AND EVALUATION, THE UNIT SUBMITTED BY TEKTRONIX, INC., WAS ACCEPTED. YOUR BID SAMPLE AND THE BID SAMPLES OF THE LAVOIE AND HEWLETT-PACKARD FIRMS WERE DETERMINED TO BE DEFICIENT. YOU WERE SO NOTIFIED BY THE CONTRACTING OFFICER IN HIS LETTER OF JANUARY 15, 1962, AND YOU WERE ADVISED THAT YOU WERE REQUIRED TO MAKE THE NECESSARY ADJUSTMENTS BY FEBRUARY 5, 1962. ALSO, YOU WERE ADVISED THAT "IF AFTER THIS SECOND SUBMISSION YOUR SAMPLE IS STILL TECHNICALLY UNACCEPTABLE, NO FURTHER OPPORTUNITY WILL BE GIVEN TO QUALIFY YOUR OSCILLOSCOPE UNDER THIS PROCUREMENT.' LAVOIE WAS APPRISED OF THE DEFICIENCIES IN ITS BID SAMPLE AND AFTER A SECOND SUBMISSION, ITS SAMPLE WAS ACCEPTED. HEWLETT-PACKARD DECIDED THAT IT WOULD NOT CHANGE THE DESIGN OF ITS UNIT TO MEET THE OBJECTIONS OF THE GOVERNMENT. PRIOR TO SUBMITTING YOUR SAMPLE AGAIN YOU USED ONE DAY "TO TROUBLE SHOOT" YOUR OSCILLOSCOPE TO ASSURE PROPER FUNCTIONING AND YOU WERE ALLOWED TO TAKE YOUR UNIT BACK TO YOUR PLANT FOR COMPLETE REWORK. HOWEVER, WHEN YOUR SAMPLE WAS TESTED FOR A SECOND TIME BY AIR FORCE PERSONNEL, IT WAS REJECTED AND IN A LETTER DATED MARCH 5, 1962, THE CONTRACTING OFFICER ADVISED YOU THAT---

"DURING THE PERFORMANCE OF THE VERTICAL RISETIME AND BANDWIDTH TEST, A FUSE BURNED OUT. REPLACEMENT FUSES WERE TRIED WHICH ALSO OPENED WHEN THE UNIT WAS TURNED ON. INVESTIGATION SHOWED THAT TWO SOLID STATE RECTIFIERS (SILICON DIODES) FAILED IN THE PLUS 350 VOLT SUPPLY OF THE 05A.'

ALSO, SUBSEQUENT TO THE FORMAL NOTICE OF REJECTION, YOU WERE ADVISED IN DISCUSSIONS WITH AIR FORCE PERSONNEL, THAT IT WAS NOTED DURING PERFORMANCE OF CERTAIN TESTS PRIOR TO FAILURE, THAT THE VERTICAL AMPLIFIER UNBALANCE EXCEEDED THE LIMITS SET FORTH IN THE SPECIFICATIONS AND THE CONTRACTING OFFICER STATES THAT "THIS CONDITION IS GENERALLY CAUSED BY DEFECTIVE TUBES.' ALSO, THE CONTRACTING OFFICER REPORTS THAT---

"IT IS APPARENT FROM THE LIST OF AFFECTED WEAPON SYSTEMS AND THE CITED NEED DATES THAT DELAY IN THE PROCUREMENT OF THIS EQUIPMENT WOULD HAVE AN ADVERSE EFFECT ON THE OVERALL PERFORMANCE OF THE AIR FORCE MISSION. CONSIDERATION OF THIS FACTOR, THE CONTRACTING OFFICER DETERMINED PRIOR TO THE SECOND SUBMISSION OF BID SAMPLES THAT LOGISTIC REQUIREMENTS WOULD NOT PERMIT THE DELAY INCIDENT TO TESTING AND EVALUATION OF BID SAMPLES BEYOND THE SECOND SUBMISSION.'

IN YOUR LETTER OF PROTEST YOU OUTLINE THE BACKGROUND OF THE PROCUREMENT OF OSCILLOSCOPES AND THE HIGH QUALITY OF OSCILLOSCOPES HERETOFORE FURNISHED BY YOU TO THE GOVERNMENT. ALSO YOU STATE THAT THE REJECTION IS BASED ONLY ON THE FAILURE OF TWO SILICON DIODES DURING TESTING AND NOT ON THE FAILURE OF THE UNIT TO MEET THE PERFORMANCE REQUIREMENTS OF THE SPECIFICATIONS; AND ALTHOUGH YOU HAVE USED THE HIGHEST QUALITY DIODES AND OTHER COMPONENTS IN THIS EQUIPMENT, NEITHER YOU NOR ANY OTHER COMPANY CAN PREVENT THE RANDOM FAILURE OF COMPONENTS. YOU STATE FURTHER THAT YOU ASKED FOR AN OPPORTUNITY TO REPLACE THE DEFECTIVE COMPONENT IN A MINIMUM OF TIME TO HAVE A PROPERLY OPERATING UNIT BUT WERE DENIED THIS OPPORTUNITY. YOU ASSERT THAT THERE WAS A FAILURE ON THE PART OF THE GOVERNMENT IN THAT THE PROCEDURE OUTLINED IN PARAGRAPHS NOS. 4.4.1.2, 4.4.1.3, 4.4.4, AND 4.7 OF THE SPECIFICATIONS WAS NOT FOLLOWED IN THE EVALUATION OF SAMPLES. IN THE SUMMARY OF YOUR PROTEST YOU POINT OUT THAT THE GOVERNMENT IS PLACING ITSELF IN THE POSITION WHERE IT COULD BE FORCED TO PAY CONSIDERABLY MORE FOR OSCILLOSCOPES THAN IT HAS PREVIOUSLY PAID FOR THE SAME TYPE OF EQUIPMENT.

REGARDING THE MATTER OF PRIOR PROCUREMENT OF OSCILLOSCOPES, THE CONTRACTING OFFICER REPORTS THAT WHILE THIS TYPE OF EQUIPMENT HAS BEEN PROCURED BY THE DAYTON AIR FORCE DEPOT SINCE 1956 AND DIFFICULTIES DUE TO COMPLEXITIES OF CIRCUITS WERE GRADUALLY BEING ELIMINATED, THE AIR FORCE HAS CONSISTENTLY UPGRADED THE PERFORMANCE SPECIFICATIONS ON EACH PROCUREMENT SINCE 1959. FOR THIS REASON IT WAS DECIDED THAT BID SAMPLES SHOULD BE REQUIRED FOR TESTING AND EVALUATION PRIOR TO AWARD OF A CONTRACT TO ASSURE THAT DEFICIENCIES REVEALED IN PREVIOUS PRODUCTION UNITS HERETOFORE SUPPLIED BY YOU AND ANOTHER FIRM WERE CORRECTED AND THAT ONLY INSTRUMENTS WITH HIGH QUALITY AND RELIABILITY WERE FURNISHED TO THE USING COMMANDS DUE TO THE CRITICAL WEAPON SYSTEMS INVOLVED.

WITH REGARD TO YOUR STATEMENT THAT YOU USED ONLY THE HIGHEST QUALITY DIODES AND OTHER COMPONENTS, THE CONTRACTING OFFICER STATES THAT COMPONENT FAILURES CAN BE CONTROLLED THROUGH A DEFINITIVE RELIABILITY PROGRAM AND RIGID QUALITY CONTROL PROCEDURES. ALSO, HE STATES THAT IT IS NOT UNREASONABLE TO REQUIRE THAT THE BID SAMPLE FUNCTION PROPERLY IN EVERY RESPECT DURING TESTING AND THAT THIS IS NOT IMPOSSIBLE OF ASCERTAINMENT, AS LAVOIE AND TEKTRONIX HAD PROVEN. AS TO THE MATTER OF "RANDOM FAILURES" OF THE COMPONENTS, WE ORDINARILY ACCEPT THE JUDGMENT OF TECHNICAL AGENTS OF THE GOVERNMENT, AS STATED ABOVE, THAT SUCH FAILURES CAN BE CONTROLLED ESPECIALLY WHERE, AS IN THIS CASE, THE SELECTION OF COMPONENTS HAS BEEN LEFT TO THE BIDDER. SEE IN THIS CONNECTION 40 COMP. GEN. 514, 517. FURTHER TESTING OF YOUR BID SAMPLE IN VIEW OF THE FAILURE OF COMPONENTS WAS NOT FEASIBLE AND WHERE THE QUALITY AND RELIABILITY OF A UNIT IS DIRECTLY RELATED TO THE QUALITY AND RELIABILITY OF THE COMPONENTS FORMING A PART OF THE UNIT, THERE IS A NECESSITY FOR FIXING A TIME LIMIT FOR TERMINATION AND EVALUATION IN THESE TWO-STEP PROCUREMENTS. WHILE IT IS UNDERSTANDABLE THAT PROSPECTIVE BIDDERS MIGHT DESIRE TO NEGOTIATE WITHOUT LIMITATION UNTIL AN ACCEPTABLE PROPOSAL CAN BE SUBMITTED, WE HAVE RECOGNIZED THE RIGHT OF A PROCURING AGENCY TO SET A TIME LIMIT IN THESE MATTERS. SEE 40 COMP. GEN. 35; ID. 40. THERE IS NO SHOWING THAT THE OTHER BIDDERS WERE AFFORDED ANY OPPORTUNITY THAT YOU WERE DENIED. ALTHOUGH YOU STATE THAT A MINIMUM AMOUNT OF TIME WOULD HAVE BEEN REQUIRED TO REPLACE THE DEFECTIVE DIODES AND RETURN YOUR UNIT TO PROPER FUNCTIONING, THERE WAS NO ASSURANCE THAT ACCEPTANCE WOULD HAVE BEEN INEVITABLE THEREAFTER ESPECIALLY SINCE, AS HEREINBEFORE STATED, THE AIR FORCE ENGINEER HAD NOTED THAT THE VERTICAL AMPLIFIER UNBALANCE EXCEEDED THE LIMITS SET FORTH IN THE SPECIFICATIONS.

WITH REGARD TO THE APPLICABILITY OF THE CITED PARAGRAPHS OF THE SPECIFICATIONS, THE CONTRACTING OFFICER STATES THAT THESE PARAGRAPHS ARE NOT A PART OF THE SPECIFICATION FOR THE OSCILLOSCOPE BUT ARE A PART OF THE "ACCEPTANCE TEST" REQUIREMENTS FOR PRE-AMPLIFIERS.

AS TO YOUR CONTENTION THAT YOUR ELIMINATION AS A BIDDER WILL RESULT IN PRICE INCREASES OVER THOSE PREVIOUSLY PAID FOR THE SAME TYPE EQUIPMENT, THE CONTRACTING OFFICER CONSIDERS THIS A MATTER OF CONJECTURE SINCE THERE HAS BEEN NO PREVIOUS PROCUREMENT UNDER THE SPECIFICATIONS HERE INVOLVED. FURTHER, THE CONTRACTING OFFICER CAN CANCEL THE INVITATION FOR BIDS AND NEGOTIATE PRICES WITH ACCEPTABLE SOURCES IF ALL PRICES BID ARE CONSIDERED UNREASONABLE. ALSO, HE STATES THAT IT IS NO LONGER PLANNED TO ESTABLISH A REQUIREMENTS CONTRACT AS A RESULT OF THIS PROCUREMENT DUE TO THE LIMITED NUMBER OF ACCEPTABLE SUPPLIERS, THEIR LIMITED PRODUCTION CAPABILITIES, THE ACCELERATED RATE OF INCREASE IN AIR FORCE REQUIREMENTS, AND THE SHORT LEAD TIME FOR DELIVERY.

IN VIEW OF THE FOREGOING WE DO NOT FIND ANY BASIS FOR OBJECTING TO THE ACTION TAKEN IN THIS MATTER.