B-151273, JUL. 5, 1963

B-151273: Jul 5, 1963

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INC.: WE HAVE RECEIVED YOUR LETTER OF APRIL 11. THE RECORD ESTABLISHES THAT ONE PROTOTYPE AND 25 PRODUCTION UNITS OF THE VEHICLE NOW BEING PROCURED WERE PREVIOUSLY PURCHASED FROM THE FWD CORPORATION UNDER A 1960 RESEARCH AND DEVELOPMENT CONTRACT. 600 ENGINEERING DRAWINGS WERE OBTAINED UNDER THAT PRIOR CONTRACT. THE CONTRACTOR WAS NOT REQUIRED TO FURNISH DATA ON PROPRIETARY ITEMS. FOR WHICH ITEMS ENGINEERING DRAWINGS WERE NOT AVAILABLE. BIDDERS WERE ADVISED THAT IN REGARD TO THESE FOUR ITEMS NO "OR EQUAL" PRODUCTS WOULD BE ACCEPTABLE. YOU WOULD HAVE BEEN LOW BIDDER BY A 4 PERCENT MARGIN RATHER THAN HIGH BY 1 PERCENT. THE GOVERNMENT ADVERTISING STATUTES CONSISTENTLY HAVE BEEN HELD TO REQUIRE THAT EVERY EFFORT BE MADE BY THE PROCUREMENT AGENCIES OF THE GOVERNMENT TO STATE ADVERTISED SPECIFICATIONS IN TERMS THAT WILL PERMIT THE BROADEST FIELD OF COMPETITION. 32 COMP.

B-151273, JUL. 5, 1963

TO SPENCER-SAFFORD LOADCRAFT, INC.:

WE HAVE RECEIVED YOUR LETTER OF APRIL 11, 1963, PROTESTING THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE AIR FORCE FOR 39 AIRCRAFT FIRE FIGHTING TRUCKS, TO FOUR WHEEL DRIVE (FWD) CORPORATION, PURSUANT TO IFB-40-604-63- 2653.

THE RECORD ESTABLISHES THAT ONE PROTOTYPE AND 25 PRODUCTION UNITS OF THE VEHICLE NOW BEING PROCURED WERE PREVIOUSLY PURCHASED FROM THE FWD CORPORATION UNDER A 1960 RESEARCH AND DEVELOPMENT CONTRACT. ALTHOUGH 4,600 ENGINEERING DRAWINGS WERE OBTAINED UNDER THAT PRIOR CONTRACT, IN ORDER TO FACILITATE THE EMPLOYMENT IN SUBSEQUENT PROCUREMENTS OF COMPETITIVE ADVERTISING PROCEDURES, THE CONTRACTOR WAS NOT REQUIRED TO FURNISH DATA ON PROPRIETARY ITEMS. ACCORDINGLY, WHILE THE SPECIFICATIONS REQUIRED BIDDERS TO BUILD THE TRUCKS ACCORDING BOTH TO DESIGNATED MILITARY PERFORMANCE SPECIFICATIONS AND TO THE AFOREMENTIONED DRAWINGS, IT ALSO REQUIRED THE USE OF CONTINENTAL MOTORS S-6820 ENGINES, FWD AXLES, BUDD WHEELS, AND PRICER 183 TURBO MATIC TRANSMISSIONS, FOR WHICH ITEMS ENGINEERING DRAWINGS WERE NOT AVAILABLE. BIDDERS WERE ADVISED THAT IN REGARD TO THESE FOUR ITEMS NO "OR EQUAL" PRODUCTS WOULD BE ACCEPTABLE. YOU PROTEST AGAINST THE EXCLUSION OF THE ALLEGEDLY EQUAL AND LESS EXPENSIVE ROCKWELL STANDARD CORPORATION AXLE AND TRANSFER ASSEMBLIES, AND ALLEGE THAT HAD YOU NOT BEEN FORCED TO BASE YOUR BID PRICE ON THE USE OF FWD PRODUCTS, YOU WOULD HAVE BEEN LOW BIDDER BY A 4 PERCENT MARGIN RATHER THAN HIGH BY 1 PERCENT.

THE GOVERNMENT ADVERTISING STATUTES CONSISTENTLY HAVE BEEN HELD TO REQUIRE THAT EVERY EFFORT BE MADE BY THE PROCUREMENT AGENCIES OF THE GOVERNMENT TO STATE ADVERTISED SPECIFICATIONS IN TERMS THAT WILL PERMIT THE BROADEST FIELD OF COMPETITION. 32 COMP. GEN. 384, 387. RECENTLY OUR OFFICE HAD OCCASION TO CONSIDER THE APPLICABILITY OF THIS REQUIREMENT TO A PROCUREMENT INVOLVING AN ITEM OF CONSIDERABLE COMPLEXITY AND EXPENSE. SEE 39 COMP. GEN. 101, B-138859, DATED AUGUST 18, 1959, AND B-138859, DATED NOVEMBER 17, 1959. IN THOSE DECISIONS, ALTHOUGH WE RECOGNIZED THAT IT MIGHT BE DIFFICULT AND EXPENSIVE TO TEST ALLEGEDLY EQUAL ITEMS, WE REAFFIRMED OUR BELIEF IN THE NEED FOR AN "OR EQUAL" CLAUSE IN SPECIFICATIONS BASED IN PART UPON A CERTAIN BRAND NAME, AND HELD THAT THE AF SHOULD NOT EMPLOY SPECIFICATIONS FOR SNOWPLOWS WHICH REQUIRED THE USE OF A PARTICULAR COMPANY'S DRIVE SYSTEM, UNLESS IT HAD DETERMINED THAT NO OTHER SYSTEM MET ITS NEEDS EQUALLY WELL. NONETHELESS, WE RECOGNIZED THAT THE QUESTION OF WHETHER SPECIFICATIONS WHICH EXCLUDED PRODUCTS SAID TO BE EQUAL TO THE SOLICITED ITEMS WERE UNDULY RESTRICTIVE OF COMPETITION IS ONE OF DEGREE, REQUIRING FOR ITS RESOLUTION THE CONSIDERATION OF MANY DIVERSE FACTORS. CF. 33 COMP. GEN. 595. THEREFORE, WE OBSERVED "THAT NO GENERAL RULE OF LAW CAN BE ESTABLISHED FOR APPLICATION IN THIS KIND OF SITUATION BUT RATHER THAT THE QUESTION MUST BE DECIDED ON A CASE BY CASE BASIS.'

IN THE INSTANT CASE, IT SHOULD BE NOTED THAT THE ORIGINAL PROTOTYPE OF THE FIRE FIGHTING TRUCK WAS SUBJECTED TO COMPLETE MOBILITY TESTING AT ABERDEEN PROVING GROUNDS AND ENVIRONMENTAL TESTS IN TEMPERATURES RANGING FROM MINUS 65 DEGREES TO PLUS 125 DEGREES F. THE ABERDEEN MOBILITY TEST INCLUDED 4,000 MILES OF OPERATION OVER HIGHWAY, GRAVEL, BELGIAN BLOCK, SAND DUNES, STEEP CLIMBS, AND ACCELERATION COURSES. THE COST OF THIS TESTING WAS APPROXIMATELY $60,000 AND REQUIRED APPROXIMATELY SIXTY (60) DAYS. WE ARE ADVISED BY THE AIR FORCE THAT IT COULD MAKE NO SUBSTITUTIONS FOR ANY ONE OF THE FOUR BRAND NAME ITEMS OF THE POWER TRAIN, INCLUDING THE AXLES, WITHOUT REPEATING THESE EXPENSIVE AND TIME-CONSUMING TESTS ON A PROTOTYPE VEHICLE EMPLOYING THE SUBSTITUTE ITEM.

THE AIR FORCE ADVISES US THAT THE NEED FOR MAINTENANCE AND FOR LOGISTIC SUPPORT ASSUMES INCREASED IMPORTANCE OVER THE SAME TYPE OF SUPPORT NEEDED FOR SNOWPLOWS. THE SIGNIFICANCE OF THIS DISPARITY IS APPARENT NOT ONLY FROM THE EMERGENCY NATURE OF THE NEED INTENDED TO BE SERVED BY THE FIRE FIGHTING TRUCKS, BUT ALSO FROM THE FACT THAT IN THE CASE OF SNOWPLOWS THE AIR FORCE AT LEAST ENJOYS A SUMMER RESPITE DURING WHICH THE VEHICLES MAY BE REHABILITATED, AND CAN THEREFORE AFFORD THE 30 DAYS WHICH ORDINARILY WILL ELAPSE BETWEEN THE REQUISITION AND THE DELIVERY OF MAJOR STANDARD SPARE PARTS FROM A GIVEN MANUFACTURER. IT CANNOT AFFORD THIS AMOUNT OF DOWN TIME FOR THE SUBJECT FIRE FIGHTING TRUCKS, AND IS REQUIRED TO KEEP CRITICAL SPARE PARTS AT EACH USING BASE FOR EMERGENCY EMPLOYMENT. THEREFORE, WE ARE ADVISED, EXPENDITURES IN THIS AND THE ONE PRIOR PROCUREMENT FOR SPARE PARTS WILL TOTAL ROUGHLY ONE MILLION DOLLARS. FOR EACH NEW SPARE PART, THE COST OF STOCK LISTING, TECHNICAL ORDERS AND STORAGE BINS WILL APPROXIMATE $1,000. IT THUS APPEARS THAT THE NEED FOR INTERCHANGEABILITY OF PARTS AND LOGISTIC SUPPORT FOR THESE FIRE FIGHTING TRUCKS IS OF SUCH CRITICAL SIGNIFICANCE AS TO JUSTIFY THE DEGREE OF RESTRICTION IMPOSED BY THE REQUIREMENT FOR FWD AXLES ONLY. IT MAY ALSO BE OBSERVED THAT THE NEED FOR INTERCHANGEABILITY OF PARTS IS JUSTIFICATION FOR NEGOTIATION. SEE 10 U.S.C. 2304 (A) (13) AND ASPR 3-213.

YOU OBJECT TO THE FACT THAT FWD HAS REFUSED TO SELL ITS AXLE TO PROSPECTIVE BIDDERS UNLESS ITS TRANSFER ASSEMBLY AND COLLECTOR GEAR BOX WERE ALSO PURCHASED. IT APPEARS THAT SEVERAL MANUFACTURERS,INCLUDING THE ONE ON WHOSE PRODUCT YOU WISHED TO BASE YOUR BID, TIE THE SALE OF THEIR TRANSFER ASSEMBLIES TO THE SALE OF THEIR AXLES. FWD HAS CARRIED THIS ARRANGEMENT ONE STEP FURTHER BY INCLUDING ITS GEAR BOX ASSEMBLY, ALLEGEDLY ON THE GROUNDS THAT BOTH ASSEMBLIES ARE SO INTRICATELY CONNECTED WITH ITS AXLES THAT IT COULD NOT GUARANTEE AND THEREFORE WOULD NOT SELL ITS AXLES WITHOUT THE ASSEMBLIES. THIS, OF COURSE, RAISES THE QUESTION WHETHER A BIDDER WHO IS THE SOLE SUPPLIER OF ONE OR MORE ITEMS, WHICH REPRESENT OVER 10 PERCENT OF THE COST OF THE PROCUREMENT, HAS BEEN AFFORDED AN OPPORTUNITY OF QUOTED PRICES WITHOUT FEAR OF REAL COMPETITION. IN VIEW OF WHAT WE HAVE ALREADY SAID, THE ANSWER TO BOTH THIS ISSUE AND THAT REGARDING THE ABSENCE OF AN "OR EQUAL" CLAUSE DEPENDS UPON WHETHER OR NOT THE RECORD CONTAINS AFFIRMATIVE EVIDENCE THAT THE PRICE SUBMITTED BY THE LOW BIDDER IS REASONABLE.

THE RECORD SHOWS THAT ON THE DATE BIDS WERE OPENED THE AIR FORCE HAD COMPLETED AN AUDIT IN THE COURSE OF PERFORMING A PRICE REDETERMINATION UNDER THE PRIOR CONTRACT WITH FWD FOR THE SUBJECT FIRE FIGHTING TRUCKS, WHICH AUDIT INDICATED THAT THE PRICES BID BY FWD WERE REASONABLE. THE AUDIT SHOWED THAT THE UNIT COST FOR THE LAST 19 OF THE 25 VEHICLES WAS OVER $99,000. THE UNIT PRICE OF $97,726, NOW BID BY FWD IN THE INSTANT PROCUREMENT, PRESUMABLY INCLUDES NOT ONLY COST BUT A REASONABLE ANTICIPATED PROFIT, WHICH WILL REQUIRE FWD TO MAKE COST REDUCTIONS BY APPLICATION OF ITS PRIOR EXPERIENCES. HAD FWD'S BID BEEN LOW BUT NOT REASONABLE, THE AIR FORCE COULD HAVE AND ASSURES US IT WOULD HAVE REJECTED ALL BIDS AND NEGOTIATED WITH FWD FOR A DOWNWARD REVISION OF ITS PRICE.

IN VIEW OF THE FACTS AND CIRCUMSTANCES SET FORTH ABOVE, WE CONCLUDE ON THE RECORD BEFORE US THAT IT DOES NOT APPEAR TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO OBJECT TO THE AWARD OF THIS PARTICULAR CONTRACT TO FWD.