B-148806, NOV. 1, 1963

B-148806, NOV. 1, 1963

TO AIR TECHNOLOGY CORPORATION: BY TELEGRAM DATED JULY 8, 1963, YOU PROTESTED AGAINST THE AWARD OF A CONTRACT TO THE GENERAL ELECTRIC COMPANY UNDER REQUEST FOR QUOTATIONS NOS. AMC-36-039-6312460-91 ISSUED BY THE ARMY ELECTRONICS MATERIEL AGENCY ON MARCH 7, 1963, FOR A DESIGN PLAN, HARDWARE, REPORTS, INSTRUCTION MANUAL, AND MANUFACTURER'S DRAWINGS IN THE FIELD OF NUCLEAR YIELD MEASURING EQUIPMENT. THE REASON ADVANCED FOR PROTESTING AGAINST SUCH AWARD IS STATED TO BE THAT GENERAL ELECTRIC'S SOLE VENTURE INTO THE FIELD INVOLVED HAS BEEN IN CONNECTION WITH CONTRACT AF 19/628/- 514, THE CIRCUMSTANCES OF WHICH ARE CHRONICLED IN THE MASSACHUSETTS SUPERIOR COURT EQUITY ACTION REFERRED TO IN THE CONGRESSIONAL RECORD OF APRIL 30, 1963, PAGES A2637 2638. YOU CONCLUDE THAT GENERAL ELECTRIC'S PERFORMANCE OF THAT CONTRACT BOTH AS TO COSTS AND DELIVERY DOES NOT JUSTIFY ANOTHER AWARD TO THAT COMPANY IN THE NUCLEAR YIELD MEASURING FIELD.

WITH RESPECT TO CONTRACT AF 19/628/-514, THE DEPARTMENT OF THE AIR FORCE, WHICH HAD TECHNICAL COGNIZANCE OF THE PROCUREMENT, HAS BEEN REQUESTED TO COMMENT ON GENERAL ELECTRIC'S PERFORMANCE AND COMPETENCY UNDER THIS CONTRACT. SINCE OUR OFFICE HAS NEITHER THE TECHNICAL STAFF NOR OTHER MEANS TO EVALUATE THE TECHNOLOGICAL COMPLEXITIES OF THIS CONTRACT, WE ARE OBLIGED TO ACCEPT AS CONCLUSIVE THE FOLLOWING REPORT FROM THE DEPARTMENT OF THE AIR FORCE.

"AIR FORCE CONTRACT, AF 19/628/-514, WITH THE GENERAL ELECTRIC COMPANY CALLED FOR DEVELOPMENT, FABRICATION, INSTALLATION AND TESTS OF A PROTOTYPE NUCLEAR DETONATION DETECTION AND REPORTING SYSTEM (NUDETS). THIS INCENTIVE TYPE CONTRACT WAS NEGOTIATED IN FEBRUARY 1962, AT AN ESTIMATED TARGET COST OF $1.8 MILLION. THE EFFORT WAS TO HAVE BEEN COMPLETED IN NINE MONTHS; HOWEVER, IN MID-1962 THE PROGRAM WAS REDIRECTED BY THE DEPARTMENT OF DEFENSE TO INCLUDE AND SATISFY NATIONAL MILITARY COMMAND SYSTEM (NMCS) NUCLEAR DETONATION REPORTING REQUIREMENTS. THE PURPOSE OF THIS REDIRECTION WAS TO INCREASE SYSTEM REPORTING ACCURACIES, THE NUMBER OF USERS AND DISPLAYS, AND THE GROUND/AIR REPORTING CAPABILITY. CORRESPONDINGLY, COSTS WERE INCREASED BY THE REQUIREMENT FOR ADDITIONAL COMMUNICATION CIRCUITS, ADDITIONAL EQUIPMENT HARDWARE, MORE COMPUTER PROGRAMMING, AND FURTHER RESEARCH AND DEVELOPMENT.

"THE COST INCREASE IDENTIFIED ONLY WITH THE ORIGINAL PROTOTYPE EFFORT COULD NOT BE ISOLATED; HOWEVER, THE BEST AIR FORCE ESTIMATE IS $1 MILLION. CAUSES FOR THIS INCREASE WERE THE TECHNICAL DIFFICULTIES ENCOUNTERED IN DESIGNING AND TESTING AND THE REQUIREMENTS FOR ADDITIONAL COMPUTER PROGRAMMING. IT IS FAIR TO SAY THAT THE TECHNICAL PROBLEMS ENCOUNTERED BY GENERAL ELECTRIC ARE COMMON TO THOSE BEING ENCOUNTERED BY OTHERS ENGAGED IN RESEARCH AND DEVELOPMENT IN THE FIELD OF NUCLEAR DETONATION DETECTION. IN OTHER WORDS, THE PROBLEMS ENCOUNTERED AND THE WORK REQUIRED FOR THEIR SOLUTION WOULD HAVE BEEN FACED BY ANY SUCCESSFUL BIDDER FOR THIS CONTRACT.

"GENERAL ELECTRIC COMPANY HAS DISPLAYED A TECHNICAL ABILITY TO DEVELOP A NUCLEAR DETECTION CAPABILITY. IN THIS CONNECTION, THE 477L SYSTEM EMPLOYS THREE TYPES OF DETECTORS (SENSORS): ELECTROMAGNETIC, SEISMIC AND OPTICAL. THE ELECTROMAGNETIC AND SEISMIC SENSORS WERE DESIGNED BY GENERAL ELECTRIC, THE OPTICAL SENSOR WAS DESIGNED BY A SUBCONTRACTOR, INTERNATIONAL TELEPHONE AND TELEGRAPH-KELLOG DIVISION. ALL THREE SENSORS HAVE SATISFACTORILY PASSED FACTORY TEST AND HAVE BEEN APPROVED BY THE AIR FORCE FOR INSTALLATION; HOWEVER, AIR FORCE SYSTEM TESTING IN THE FIELD HAS NOT YET BEEN COMPLETED.'

THE SUIT IN EQUITY YOU REFERRED TO INVOLVED LITIGATION BETWEEN YOUR COMPANY AND GENERAL ELECTRIC WHEREIN A SPECIAL MASTER APPOINTED BY THE COURT HAS RECOMMENDED THAT GENERAL ELECTRIC BE HELD LIABLE IN DAMAGES FOR ITS FAILURE TO PERMIT PARTICIPATION BY YOUR COMPANY AS A JOINT VENTURE, IN THE AIR FORCE 477L NUDETS PROJECT. OUR INFORMATION WITH RESPECT TO THIS SUIT OR ITS FINAL JUDGMENT IS LIMITED TO THAT CONTAINED IN THE CONGRESSIONAL RECORD. IN OUR OPINION, THIS LITIGATION, TO WHICH THE GOVERNMENT WAS NOT A PARTY, DOES NOT HAVE A DIRECT BEARING ON THE INSTANT PROCUREMENT WHICH WAS NEGOTIATED UNDER THE PROCEDURES PRESCRIBED BY THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) IMPLEMENTING 10 U.S.C. 2304 (A).

CONCERNING THE INSTANT PROCUREMENT, IT APPEARS THAT 60 POSSIBLE SOURCES OF SUPPLY WERE SOLICITED AND 9 OFFERS WERE RECEIVED AND EVALUATED BY THE PROCUREMENT AGENCY. PROPOSALS RANGED FROM A LOW OF $92,019 TO A HIGH OF $365,608. SINCE THIS PROCUREMENT WAS FOR RESEARCH AND DEVELOPMENT WORK, EVALUATION FOR AWARD WAS CONDUCTED PURSUANT TO ASPR 4-205.4 WHICH PROVIDES THE AWARD GENERALLY WILL BE MADE TO THOSE ORGANIZATIONS WHICH HAVE THE HIGHEST COMPETENCE IN THE SPECIFIC FIELD OF SCIENCE OR TECHNOLOGY. WHILE PRICE IS A FACTOR FOR EVALUATION, IT IS NOT NECESSARILY THE MAJOR CONSIDERATION IN MAKING AN AWARD FOR A RESEARCH AND DEVELOPMENT CONTRACT. IN THIS PROCUREMENT, A COMPREHENSIVE TECHNICAL EVALUATION WAS PERFORMED AND TECHNICAL MERIT RATINGS WERE ASSIGNED TO EACH PROPOSAL. THE PROPOSAL SELECTED AS BEING THE ONE WHICH PROVIDED THE GREATEST POSSIBILITY OF SUCCESS WAS THAT OF GENERAL ELECTRIC WHICH PROVIDED FOR A TOTAL COST OF $128,738, INCLUDING A FIXED FEE OF $9,200. ALTHOUGH THE PROPOSAL OF YOUR COMPANY WAS WITHIN THE ACCEPTABLE TECHNICAL RANGE, THE TOTAL COST-PLUS A-F -XED-FEE OFFERED BY YOUR COMPANY OF $197,859 WAS ABOUT 50 PERCENT HIGHER THAN GENERAL ELECTRIC-S. THE PROCUREMENT AGENCY DETERMINED THAT GENERAL ELECTRIC'S TECHNICAL APPROACH WAS SUPERIOR TO ALL OTHER OFFERORS, AND THAT ITS RECOMMENDATION TO INCOPORATE A SEISMIC SENSOR WAS THE BEST SOLUTION TO THE PROBLEM. NO OTHER OFFEROR PERESENTED THIS TECHNICAL APPROACH.

WE ARE ADVISED THAT THE TECHNICAL BASES FOR NOT AWARDING THIS COST TYPE RESEARCH AND DEVELOPMENT CONTRACT TO YOUR COMPANY WERE:

"A. AN ACOUSTIC BACK-UP CAN FAIL AT TIMES FOR LOW YIELDS AT MAXIMUM RANGE WHEN STRONG WINDS BLOW IN THE DIRECTION OF THE ONCOMING SHOCK WAVE.

"B. THE ALARM CRITERIA SHOULD DEPEND UPON THE CO-INCIDENT DETECTION OF TWO OR MORE PHENOMENA THAT ARE MOST LIKELY TO BE DETECTED. THE ACOUSTIC PULSE AND THE OPTICAL PULSE WHICH MAY OR MAY NOT BE DETECTED DEPENDING UPON METEOROLOGICAL CONDITIONS AND THE LOCAL ENVIRONMENT CANNOT BE UTILIZED IN THE CREDENCE LOGIC. THEY DID NOT INCLUDE SEISMIC FOR CREDENCE WHICH IS CONSIDERED A NECESSARY CONDITION TOGETHER WITH EM FOR THE YIELD- RANGE REQUIREMENTS.

"4. ASPR 3-805.2 STATES THAT IN COST-REIMBURSEMENT TYPE CONTRACTS ". . . THE PRIMARY CONSIDERATION IN DETERMINING TO WHOM THE AWARD SHALL BE MADE IS: WHICH CONTRACTOR CAN PERFORM THE CONTRACT IN A MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT.' IT WAS THE CONTRACTING OFFICER'S JUDGMENT THAT THIS PROCUREMENT COULD BEST BE PERFORMED BY GENERAL ELECTRIC COMPANY.

"6. IT IS NOTED THAT LETTER FROM AIR TECHNOLOGY STATES THAT ". . . THE AIR FORCE DOES NOT HAVE A SYSTEM . . .' (REFERRING TO SYSTEM 477L). INFORMATION AVAILABLE TO THIS OFFICE INDICATES THAT THE FIRST SITE OF THE 477L SYSTEM HAS COMPLETED CATEGORY I TESTING * * *.'

FOR THE REASONS STATED ABOVE, WE AGREE THAT THE AWARD AS MADE WAS PROPER. ACCORDINGLY, YOUR PROTEST IS DENIED.