B-148756, JUN. 27, 1962

B-148756, JUN. 27, 1962

TO ALBERT BRICK, ESQUIRE:

WE REFER TO YOUR LETTER OF APRIL 23, 1962, PROTESTING, ON BEHALF OF PRISMO SAFETY CORPORATION, ANY AWARD BY THE DEFENSE INDUSTRIAL SUPPLY CENTER, DEFENSE SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, UNDER REQUISITION NO. 63077-182078-62.

YOU STATE THAT PRISMO SAFETY CORPORATION WAS TELEPHONICALLY REQUESTED TO SUBMIT A BID BY APRIL 5, 1962, ON 3,100 KITS OF STRIPING MATERIAL, EACH CONTAINING 5 GALLONS OF BINDER AND 50 POUNDS OF SPHERES. AFTER SUBMITTING A BID, YOUR CLIENT TRIED UNSUCCESSFULLY FROM APRIL 5 THROUGH APRIL 17 TO GET A TABULATION OF THE BIDS BUT WAS ADVISED THAT THE INFORMATION WOULD NOT BE AVAILABLE UNTIL AFTER AWARD. YOU PROTEST THE MANNER IN WHICH THESE AWARDS, WHICH WERE MADE TO TWO OTHER FIRMS, WERE HANDLED AND STATE YOUR CONTENTION THAT THE PROCUREMENT SHOULD HAVE FOLLOWED FORMAL BIDDING PROCEDURES OR, IN THE ALTERNATIVE, YOUR CLIENT SHOULD HAVE BEEN GIVEN THE OPPORTUNITY TO NEGOTIATE FURTHER.

THE DEFENSE SUPPLY AGENCY ADVISES IN A REPORT DATED MAY 23, 1962, THAT THE DEFENSE INDUSTRIAL SUPPLY CENTER ASSUMED SUPPLY RESPONSIBILITY FOR REFLECTORIZED TRAFFIC PAINT, USED FOR MARKING AIRFIELD RUNWAYS, ON FEBRUARY 1, 1962. PREVIOUS ESTIMATES OF ANNUAL DEMANDS FOR THIS ITEM AMOUNTED TO 2,961 KITS. SUBSEQUENT REQUIREMENTS DATA FROM THE AIR FORCE NECESSITATED AN UPWARD REVISION OF THE ESTIMATED ANNUAL DEMAND TO 18,445 KITS. DUE TO THE REVISION, THERE WAS AN IMMEDIATE SHORTAGE IN AVAILABLE STOCKS. AT THE TIME DISC RECEIVED REQUISITION NO. 63077-182078-62 ON MARCH 27, 1962, THERE WERE NO SUPPLIES OF THE ITEM ON HAND, EXPECTED RECEIPTS AMOUNTED TO 1,922 KITS AND OVERDUE ISSUE REQUIREMENTS EXISTED FOR 3,138 KITS. HEADQUARTERS, TACTICAL AIR COMMAND ADVISED THAT THE REFLECTORIZED PAINT IS PRESENTLY REQUIRED FOR MARKING RUNWAYS AT ALL TAC BASES AND FAILURE TO OBTAIN THE PAINT WHEN NEEDED CAN ADVERSELY AFFECT THE SAFETY OF ITS FLIGHT OPERATION.

THE CONTRACTING OFFICER FOUND THAT IN THE MOST RECENT PURCHASES OF PAINT OF THIS TYPE, DELIVERIES WERE MADE FROM 56 TO 111 DAYS AFTER THE DATE OF AWARD. IN ADDITION, THE AVERAGE ADMINISTRATIVE LEAD TIME IS 75 DAYS AND THE IRREDUCIBLE MINIMUM WOULD BE 35 DAYS FOR PREPARATION AND DISSEMINATION OF THE INVITATION, FOR RECEIVING, OPENING AND EVALUATING THE BIDS AND FOR ISSUING A NOTICE OF AWARD. THE CONTRACTING OFFICER THEREFORE MADE A DETERMINATION THAT THE TIME REQUIRED FOR FORMAL ADVERTISING WOULD HAVE EXTENDED THE DELIVERY DATE BEYOND THE URGENT DELIVERY DATE SPECIFIED BY THE REQUIRING ACTIVITY AND FOUND THAT THIS SITUATION MEETS THE REQUIREMENTS OF 10 U.S.C. 2304 (A) (2) WHICH PERMITS NEGOTIATION WHEN THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. BECAUSE OF THE URGENT NEED FOR THE ITEM AND THE FACT THAT IT CAN BE ACCURATELY DESCRIBED, QUOTATIONS WERE SOLICITED TELEPHONICALLY ON APRIL 3, 1962, FROM ALL FIVE KNOWN SOURCES OF SUPPLY, WITH CLOSING DATE FOR RECEIPT OF THE QUOTATIONS SET AT THE CLOSE OF BUSINESS ON APRIL 5, 1962. FOUR OF THE FIVE SOURCES SUBMITTED PROPOSALS AS FOLLOWS:

CHART

BALTIMORE

PAINT AND PRISMO ITEM

FLEX-O-LITECATAPHOTE CHEMICAL SAFETY

NO. QUANTITY DESTINATION MFG. CORP. CORP. CORP. CORP. ---- -------- -----

1A 200 NSC34.45 34.28 32.28 34.62 35.15

NORFOLK

VIRGINIA 1 B 100 BROOKLEY 34.90 33.83 31.83 37.14 36.00

AFB

ALABAMA 1 C 500 NSC 34.90 34.10 32.60 38.04 37.00

OAKLAND

CALIFORNIA 1 D 2,300 NSC 33.65 32.79 30.79 33.91 33.25

BAYONNE

NEW JERSEY TERMS 1/2 NET NET NET NET

PERCENT

30 DAYS DELIVERY 30 MAY 30 MAY 1/2 30 MAY 30 DAYS"

1962 1962 30 MAY 1962

1962

BALANCE

30 JUNE

THE ALTERNATE PROPOSAL OF CATAPHOTE CORPORATION MARKED BY THE ASTERISK OFFERED A LOWER PRICE FOR DELAYED DELIVERY OF ONE-HALF OF THE QUANTITIES BUT WAS NOT ACCEPTED DUE TO THE URGENCY OF THE REQUIREMENT.

THE CONTRACTING OFFICER FOUND THE LOW PROPOSALS TO BE LOWER THAN THE PRICE PAID IN THE MOST RECENT FORMALLY ADVERTISED PROCUREMENT AND THEREFORE CONSIDERED THE LOW PROPOSALS TO BE REASONABLE. CONTRACT NO. DSA -5-534 FOR ITEM 1A WAS AWARDED TO FLEX-O-LITE ON APRIL 19, 1962, AT A TOTAL CONTRACT PRICE OF $6,890. CONTRACT NO. DSA-5-389 FOR ITEM 1B, 1C AND 1D WAS AWARDED TO CATAPHOTE CORPORATION ON APRIL 20, 1962, AT A TOTAL CONTRACT PRICE OF $95,850.

IN THE OPINION OF THE CONTRACTING OFFICER, THE PROVISIONS OF PARAGRAPH 3- 805.1 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION DID NOT PERMIT RELEASE OF INFORMATION CONCERNING PRICES SUBMITTED BY THE OFFERORS PRIOR TO AWARD. UPON ISSUANCE OF THE AWARDS, THE UNSUCCESSFUL OFFERORS WERE NOTIFIED AND FURNISHED THE INFORMATION DESCRIBED IN ASPR 3-106 (A) REGARDING THE NUMBER OF FIRMS SOLICITED, THE NUMBER OF PROPOSALS RECEIVED, THE NAMES OF SUCCESSFUL OFFERORS AND THE TOTAL CONTRACT PRICES OF AWARDS MADE TO THEM.

YOUR PROTEST IS DIRECTED PRIMARILY AGAINST THE DECISION TO NEGOTIATE UNDER THE PUBLIC EXIGENCY EXCEPTION. OUR OFFICE HAS CONSIDERED A NUMBER OF CASES INVOLVING THE EXISTENCE OF A PUBLIC EXIGENCY WARRANTING NEGOTIATION RATHER THAN FORMAL ADVERTISING. SEE 38 COMP. GEN. 44; 34 COMP. GEN. 368; 27 COMP. GEN. 73. IN EACH OF THESE CASES THE MATTER HAS BEEN DETERMINED ON THE BASIS OF THE USE TO WHICH THE MATERIALS ARE TO BE PUT. IN THE PRESENT CASE, THE CONTRACTING OFFICER'S FINDINGS AND DETERMINATION TO NEGOTIATE UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (2) SET FORTH THE URGENT NEED FOR THE PAINT AND THE FACT THAT THE TIME REQUIRED FOR FORMAL ADVERTISING WOULD UNDULY DELAY THE PURCHASE AND RESULT IN FAILURE TO FURNISH ESSENTIAL MATERIAL WHICH IS REQUIRED BY, AND WHICH AFFECTS THE SAFETY OF, THE OPERATING FORCES OF THE MILITARY SERVICES. IS OUR OPINION THAT THE REASONS STATED CONSTITUTE ADEQUATE JUSTIFICATION FOR INVOKING THE PUBLIC EXIGENCY NEGOTIATING AUTHORITY.

IN 38 COMP. GEN. 171, A DECISION INVOLVING THE USE OF PUBLIC EXIGENCY NEGOTIATING AUTHORITY UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 252 (C) (2), WE STATED WE WOULD NOT OBJECT TO NEGOTIATED PURCHASES FOR STOCK REPLENISHMENT UNDER CONDITIONS OF EXCEPTIONALLY HEAVY AND SUDDEN DEMANDS BUT CONSIDERATION SHOULD BE GIVEN TO NEGOTIATING FOR ONLY SUCH QUANTITIES AS WOULD REASONABLY BE EXPECTED TO BE REQUIRED BEFORE ADDITIONAL DELIVERIES COULD BE OBTAINED BY ADVERTISING. THIS PRINCIPLE IS EQUALLY APPLICABLE TO THE SIMILAR NEGOTIATING AUTHORITY UNDER 10 U.S.C. 2304 (A) (2). IN VIEW OF THE UPWARD REVISION OF THE ESTIMATED ANNUAL DEMAND FROM 2,961 TO 18,445 KITS OF REFLECTORIZED PAINT, THE PURCHASE OF 3,100 KITS REPRESENTS ONLY THE IMMEDIATE NEEDS FOR APPROXIMATELY TWO MONTHS AND LEAVES THE REMAINDER OF THE YEAR'S SUPPLY TO BE PURCHASED WITHOUT REFERENCE TO THE PUBLIC EXIGENCY NEGOTIATING AUTHORITY IN ACCORDANCE WITH OUR RECOMMENDATION IN THE CITED CASE.

ALTHOUGH YOUR PROTEST IS DIRECTED PRIMARILY AGAINST THE USE OF NEGOTIATION, YOU ALSO STATE THAT YOUR CLIENT FEELS THAT EVEN IF NEGOTIATION IS PROPER, HE SHOULD HAVE BEEN GIVEN FURTHER OPPORTUNITY TO NEGOTIATE. UNDER THE PROVISIONS OF ASPR 3-805.1 (A) (V) FURTHER NEGOTIATION WITH OFFERORS AFTER RECEIPT OF INITIAL PROPOSALS IS NOT REQUIRED WHEN IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR PRIOR COST EXPERIENCE THAT ACCEPTANCE OF THE LOWEST INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN A FAIR AND REASONABLE PRICE. THE PRESENT PROCUREMENT MEETS BOTH THE COMPETITION AND THE PRIOR COST REQUIREMENTS IN THAT FOUR OF THE FIVE KNOWN SUPPLIERS RESPONDED TO THE SOLICITATION AND THE LOWEST PRICES OFFERED WERE LOWER THAN THE PRICES IN THE MOST RECENT ADVERTISED PROCUREMENT. THE SECTION CONTAINS A FURTHER PROVISION THAT IN SUCH CASES, ALL OFFERORS SHALL BE NOTIFIED THAT AWARD MAY BE MADE WITHOUT DISCUSSION SO THAT OFFERORS WILL SUBMIT THEIR MOST FAVORABLE TERMS INITIALLY. WE DO NOT HAVE A TRANSCRIPT OF THE TELEPHONE SOLICITATIONS IN THIS CASE BUT WE DO NOT REGARD THE EXACT WORDS USED TO BE DISPOSITIVE OF THIS ISSUE. THE USE OF TELEPHONE SOLICITATION AND THE SETTING OF A CLOSING DATE TWO DAYS LATER, TOGETHER WITH A DELIVERY DATE OF THIRTY DAYS, ARE NOT CIRCUMSTANCES WHICH WOULD LEAD A SUPPLIER TO THINK THAT AN EXTENDED ROUND OF NEGOTIATIONS IS CONTEMPLATED. IN A SITUATION SUCH AS THIS, WE DO NOT CONSIDER IT REASONABLE FOR A SUPPLIER TO WITHHOLD HIS BEST OFFER IN THE HOPE OF FURTHER NEGOTIATIONS. WE THEREFORE FIND NO VALID BASIS FOR A PROTEST AGAINST ACCEPTANCE OF THE BEST INITIAL OFFERS WHICH WERE OBTAINED THROUGH ADEQUATE COMPETITION AND WERE REASONABLE IN PRICE.

IN CONNECTION WITH THE CONTRACTING OFFICER'S RELEASE OF INFORMATION ONLY AFTER AWARD, IT MUST BR REMEMBERED THAT THIS PROCUREMENT WAS NEGOTIATED UNDER AN EXCEPTION CONTAINED IN THE ADVERTISING STATUTES AND THE RULES OF FORMAL ADVERTISING DO NOT APPLY. THE DISCLOSURE OF ONE OFFEROR'S PRICE TO ANOTHER CONSTITUTES AN AUCTION TECHNIQUE WHICH ASPR 3-805.1 (B) STATES MUST BE AVOIDED. THE REGULATION FURTHER PROVIDES THAT AFTER RECEIPT OF FINAL OFFERS (WHICH ARE ALSO THE INITIAL OFFERS IN THIS CASE) NO INFORMATION WILL BE FURNISHED TO ANY OFFEROR UNTIL AWARD HAS BEEN MADE. THE CONTRACTING OFFICER'S ACTIONS IN WITHHOLDING INFORMATION UNTIL AWARD WERE IN ACCORDANCE WITH REGULATION AND AFFORD NO BASIS FOR PROTEST.

FOR THE REASONS STATED, YOUR PROTEST AGAINST THE MANNER IN WHICH THIS PROCUREMENT WAS HANDLED MUST BE DENIED.