B-151709, JUN. 11, 1965

B-151709, JUN. 11, 1965

TO ERIE STRAYER COMPANY:

IN YOUR LETTER OF SEPTEMBER 20, 1963, AND IN MORE RECENT CORRESPONDENCE AND CONFERENCES, YOU HAVE ADVANCED VARIOUS REASONS WHY THIS OFFICE SHOULD RECONSIDER AND REVERSE ITS DECISION TO YOU OF AUGUST 7, 1963, IN WHICH WE HELD THAT THE COMPETITIVE DISADVANTAGE WHICH INURED TO YOUR FIRM, BECAUSE THE TERMS OF THE IFB IMPOSED ON BIDDERS WHO WERE NOT PRIOR PRODUCERS A REQUIREMENT OF TESTING AND OBTAINING APPROVAL OF A PREPRODUCTION MODEL, DOES NOT CONSTITUTE A SUFFICIENT BASIS FOR OBJECTING TO THE PROCUREMENT.

THE PROCUREMENT IN QUESTION WAS FOR FIVE TOWERS AND INSULATION KITS, CONSTRUCTED ACCORDING TO MILITARY SPECIFICATION MIL-T-9566B, AND WAS ISSUED BY GRIFFISS AIR FORCE BASE UNDER INVITATION FOR BIDS (IFB) 30 635- 63-484. THE CONTRACT WAS AWARDED ON OCTOBER 3, 1963, TO A FIRM WHOSE BID WAS EVALUATED IN ACCORDANCE WITH PROVISIONS IN THE INVITATION ON THE BASIS THAT APPROVAL OF THE PREPRODUCTION MODEL, OR "FIRST ARTICLE," WOULD BE WAIVED FOR PRIOR PRODUCERS.

ON NOVEMBER 4, 1963, THE AIR FORCE SUBMITTED TO US ITS REPORT ON YOUR REQUEST FOR RECONSIDERATION, AND AFTER STUDYING THIS REPORT, YOU SUBMITTED WITH A LETTER DATED NOVEMBER 16, 1963, A 48 PAGE BRIEF IN SUPPORT OF YOUR POSITION. THE TWO PRIMARY POINTS OF YOUR BRIEF ARE THAT THE GOVERNMENT BUYER, AMONG OTHER ALLEGEDLY IMPROPER ACTS, DELIBERATELY MISINFORMED YOU ABOUT PAST CONTRACT PRICES FOR SIMILAR TOWERS, AND THAT THE STANDARDS SET FORTH IN 42 COMP. GEN. 717, CITED IN OUR 1963 DECISION TO YOU AS B-151436, DATED JUNE 20, 1963, PROHIBIT REQUIRING FIRST ARTICLE APPROVAL FOR USE IN THE PROCUREMENT OF THESE TOWERS, THE DESIGN OF WHICH YOU ALLEGE IS RELATIVELY SIMPLE AND CIRCUMSCRIBED BY DETAILED SPECIFICATIONS.

IN YOUR BRIEF YOU REQUESTED A THOROUGH INVESTIGATION OF YOUR ALLEGATIONS WITH RESPECT TO IMPROPRIETIES BY AIR FORCE PERSONNEL. PURSUANT TO YOUR REQUEST, AN INVESTIGATION BY THE INSPECTOR GENERAL OF THE AIR FORCE WAS CONDUCTED, WHICH DISCOVERED NO EVIDENCE OF THE ALLEGED IMPROPRIETIES. FURTHER, SUCH IRREGULARITIES WERE DENIED BY THE PERSON CHARGED WITH HAVING COMMITTED THEM.

THE REPORTS SUBMITTED BY THE AIR FORCE IN RESPONSE TO YOUR LETTER AND BRIEF OF NOVEMBER 16, 1963, WERE DISCUSSED WITH A REPRESENTATIVE OF YOUR FIRM AT A CONFERENCE IN THIS OFFICE ON NOVEMBER 10, 1964, AT WHICH TIME YOUR REPRESENTATIVE STATED THAT HE WISHED TO OFFER ADDITIONAL EVIDENCE TO SUPPORT YOUR CONTENTION THAT THE "FIRST ARTICLE APPROVAL" CLAUSE IN THE IFB WAS NOT PROPER FOR USE IN THE PROCUREMENT OF THESE PARTICULAR TOWERS. HE ALSO STATED THAT HE WISHED TO DROP ALL OTHER ALLEGATIONS MADE WITH RESPECT TO YOUR PROTEST; BUT NONETHELESS HOPED TO INCLUDE PARENTHETICALLY WITH THE AFOREMENTIONED EVIDENCE CERTAIN MATTERS TO SUBSTANTIATE HIS ALLEGATIONS REGARDING IMPROPRIETIES COMMITTED BY AIR FORCE PERSONNEL.

WE LEARNED THROUGH CONTACT WITH YOUR REPRESENTATIVE THAT PRESSING BUSINESS MATTERS HAD PREVENTED HIM FROM SUBMITTING THE ABOVE MATERIALS AS PROMPTLY AS HE HAD EXPECTED TO. ON APRIL 5, 1965, WE WROTE YOUR REPRESENTATIVE THAT IN VIEW OF THE TIME WHICH HAD ELAPSED SINCE THE CONFERENCE OF NOVEMBER 10, 1964, IT WOULD BE NECESSARY TO DISPOSE OF THE PROTEST ON THE BASIS OF THE PRESENT RECORD UNLESS WITHIN THE NEXT TWO WEEKS WE RECEIVED THE LETTER HE HAD SAID HE INTENDED TO SUBMIT. SINCE WE DID NOT RECEIVE SUCH LETTER, WE HAVE PROCEEDED TO CONSIDER THE ISSUE OF WHETHER FIRST ARTICLE APPROVAL WAS PROPER IN THIS PROCUREMENT WITHOUT BENEFIT OF ANY EVIDENCE WHICH MAY EXIST BEYOND THE PRESENT RECORD.

THE FIRST ARTICLE APPROVAL CLAUSES OF THE IFB PROVIDE IN RELEVANT PART AS FOLLOWS:

"43 APPROVAL OF FIRST ARTICLE

"A.ONE (1) EACH FIRST ARTICLE OF ITEMS 1 AND 2 OF PARAGRAPH 37 SHALL BE SUBJECTED TO THE PREPRODUCTION TESTS SPECIFIED IN MIL-T-9566B. TESTING OF THE FIRST ARTICLES SHALL BE PERFORMED SIMULTANEOUSLY BY THE CONTRACTOR, AT THE CONTRACTOR'S PLANT AND WITNESSED BY AND/OR PARTICIPATED IN BY THE GOVERNMENT PROJECT ENGINEER OR BY SUCH INSPECTION PERSONNEL AS MAY BE DESIGNATED BY THE CONTRACTING OFFICER. IF THE CONTRACTOR LACKS TEST FACILITIES SATISFACTORY TO THE PROCURING ACTIVITY, SERVICES OF A TESTING LABORATORY ACCEPTABLE TO THE PROCURING ACTIVITY SHALL BE ENGAGED BY THE CONTRACTOR AT NO ADDITIONAL COST TO THE GOVERNMENT.

"G. BIDDERS WHO HAVE PREVIOUSLY FURNISHED TO THE GOVERNMENT THE ARTICLES REFERRED TO IN ITEMS 1 AND 2 ABOVE, AND WHO MEET THE CONDITIONS FOR WAIVER OF FIRST ARTICLE REQUIREMENT PER PARAGRAPH 59 HEREIN, SHALL SUBMIT BID ON BID "B" WHICH DOES NOT INCLUDE COMPLIANCE WITH THE ABOVE FIRST ARTICLE PROVISION.

"H. BIDS SUBMITTED UNDER BID "A" (FIRST ARTICLE APPROVAL REQUIRED) OR UNDER BID "B" (FIRST ARTICLE APPROVAL NOT REQUIRED) ARE EQUALLY ACCEPTABLE TO THE GOVERNMENT, AS APPLICABLE, AND AWARD WILL BE MADE THEREON WITH THE BEST INTEREST OF THE GOVERNMENT CONSIDERED.

"59 CONDITIONS FOR WAIVER OF FIRST ARTICLE REQUIREMENTS:

"FIRST ARTICLE REQUIREMENTS MAY BE WAIVED BY THE CONTRACTING OFFICER UNDER ANY OF THE FOLLOWING CONDITIONS:

"C. IF THE CONTRACT IS AWARDED TO A CONTRACTOR NOT PRESENTLY IN PRODUCTION OF THE ITEM, BUT WHO HAS PREVIOUSLY BEEN GIVEN FIRST ARTICLE APPROVAL, AND WHO PROPOSES TO REPRODUCE IDENTICAL ITEMS, USING THE SAME TOOLS, FACILITIES, DESIGN DATA AND COMPONENT TYPES PREVIOUSLY USED. WHEN MORE THAN 12 MONTHS HAVE ELAPSED SINCE THE COMPLETION OF A PRIOR CONTRACT, THIS CONDITION SHALL NOT APPLY AND FIRST ARTICLES WILL BE REQUIRED.'

YOU POINT OUT THAT SINCE IT IS UNLIKELY THAT A STEEL FABRICATING CONTRACTOR WOULD PERMANENTLY MAINTAIN THE "SAME" JIGS AND FIXTURES USED IN THE PRIOR PRODUCTION OF THE TOWERS, THERE IS NO PROOF THAT A PRIOR PRODUCER WOULD OFFER AN ITEM IDENTICAL TO THAT PREVIOUSLY PRODUCED. THE AIR FORCE RESPONDS TO THIS BY ASSERTING THAT THE "CLEAR IMPORT" OF CLAUSE 59 IS TO REQUIRE THE PRIOR PRODUCER TO USE THE SAME TOOLS AND FACILITIES WHICH HE HAD USED TO MAKE THE JIGS AND FIXTURES WHICH HE HAD USED TO MAKE THE END ITEM. AT THE SAME TIME, THE AIR FORCE DOES NOT DENY YOUR ASSERTIONS THAT SUCH TOOLS AND FACILITIES ARE COMMON TO THE INDUSTRY, AND THAT THE ESSENTIAL INGREDIENT OF SATISFACTORY PERFORMANCE IS THE KNOW-HOW OF THE CONTRACTOR. INDEED, THE POSITION TAKEN BY THE CONTRACTING OFFICER CLEARLY INDICATES THAT THE PURPOSE OF THE REQUIREMENT FOR FIRST ARTICLE APPROVAL IN THIS CASE IS IMPRESSIVELY SIMILAR TO THAT GENERALLY SERVED BY A DETERMINATION OF RESPONSIBILITY.

THE CONTRACTING OFFICER STATES THAT THE WAIVER CLAUSE APPLIES TO CONTRACTORS WHO HAVE ,DEMONSTRATED THEIR ABILITY TO FURNISH AN ACCEPTABLE END ITEM," AND WHILE IT IS "A LOGICAL ASSUMPTION BY THE PROTESTOR" THAT "ANY EFFICIENT STEEL FABRICATOR CAN DUPLICATE THE ITEM, USING SHOP DRAWINGS, AS WELL AS THE ORIGINAL DESIGN FABRICATION," THE "GOVERNMENT CANNOT MERELY ASSUME THIS TO BE THE CASE. THE ONLY METHOD, THEREFORE, WHEREBY THE GOVERNMENT CAN BE ASSURED THAT THE ITEM IS IDENTICAL IS TO REQUIRE FIRST ARTICLE TEST OF THOSE CONTRACTORS WHO DO NOT MEET THE REQUIREMENT FOR WAIVER OF FIRST ARTICLE.' OTHERWISE, THERE WOULD BE NO ASSURANCE "THAT SUCH NEW PRODUCERS DID IN FACT FOLLOW THE DATA PROVIDED.' SINCE THE TOWERS WILL SUPPORT EXPENSIVE RADAR ANTENNAS,"A FIRST ARTICLE IS REQUIRED FROM ANY NEW PRODUCER NOTWITHSTANDING THE TYPE AND QUALITY OF THE SPECIFICATIONS AND DATA FURNISHED FOR FABRICATION.'

YOUR ALLEGATION THAT SPECIFICATIONS ARE DETAILED AND COMPLETE IS NOWHERE CONTRADICTED BY THE ADMINISTRATIVE REPORTS, AND OUR PERUSAL OF THE SPECIFICATIONS INDICATES THAT THEY CONTAIN CONSIDERABLE DETAIL. SINCE THE SPECIFICATIONS APPEAR TO BE DESCRIPTIVE AND INSTRUCTIVE, THE RISK OF A RESPONSIBLE CONTRACTOR BEING UNABLE TO "FOLLOW THE DATA" IS SMALL, UNLESS THOSE SPECIFICATIONS ARE FOR THE MANUFACTURE OF A DEMONSTRABLY COMPLEX ITEM WITH CRITICALLY UNUSUAL FEATURES WHICH ARE RELATIVELY NEW TO THE INDUSTRY EXPECTED TO PRODUCE IT. SEE B-153175, DATED JUNE 10, 1964 (43 COMP. GEN. 780), INVOLVING THE PROCUREMENT OF COMPLEX COUNTERMEASURES AND JAMMING EQUIPMENT WHICH COULD TOLERATE NO ALLOWANCE FOR ANY COMPROMISE WITH RELIABILITY AND CAPABILITY. WHERE THE SPECIFICATIONS INVOLVED ARE NOT CLEARLY OF THE NATURE DESCRIBED, IT HAS BEEN OUR POSITION THAT THE POSSIBILITY OF INEPT PERFORMANCE BY A COMPETENT FIRM IS AN UNAVOIDABLE RISK WHICH IS NOT NECESSARILY REMOVED BY THE CONTRACTOR BUILDING OR TESTING A PREPRODUCTION SAMPLE, BUT IS INHERENT IN THE PROCUREMENT OF EVEN THE SIMPLEST MANUFACTURED ITEM, AND DOES NOT JUSTIFY THE GOVERNMENT'S CREATING COMPETITIVE ADVANTAGES FOR SOME FIRMS BY THE IMPOSITION OF PREPRODUCTION SAMPLE REQUIREMENTS ON OTHERS. SEE 42 COMP. GEN. 717, WHERE WE MADE THE FOLLOWING OBSERVATIONS WITH RESPECT TO THE PROPRIETY OF USING FIRST ARTICLE APPROVAL REQUIREMENTS:

"ON THE OTHER HAND, THE DISPARITY BETWEEN PROSPECTIVE BIDDERS SHOULD NOT BE INCREASED BY THE IMPOSITION OF UNNECESSARY REQUIREMENTS SUCH AS PRELIMINARY SAMPLES OR TESTING NOT CLEARLY NECESSARY. WHERE THE SUBJECT OF THE PROCUREMENT IS COVERED BY COMPLETE AND DETAILED TECHNICAL SPECIFICATIONS AND NO CLEAR REASON APPEARS WHY AN EXPERIENCED MANUFACTURER IN THE PARTICULAR FIELD INVOLVED COULD NOT PRODUCE A SATISFACTORY ARTICLE THEREFROM, THE QUESTION OF AWARD WOULD APPEAR TO BE FOR SOLUTION PRIMARILY ON THE BASIS OF THE BIDDERS' OVERALL RESPONSIBILITY. IF, HOWEVER, THE TECHNICAL OR PERFORMANCE REQUIREMENTS ARE SO NOVEL OR EXACTING THAT ACCEPTABILITY OF THE PRODUCT CANNOT REASONABLY BE ANTICIPATED WITHOUT ACTUAL DEMONSTRATION OR TESTING, WE DO NOT FEEL THAT THE STATEMENT IN AN INVITATION FOR BIDS OF A REQUIREMENT THEREFOR, ALTHOUGH NOT EQUALLY APPLICABLE TO ALL BIDDERS, SHOULD BE CONSIDERED TO BE A VIOLATION OF COMPETITIVE BIDDING PRINCIPLES, SO LONG AS THE TERMS OF THE COMPETITION ARE CLEARLY SET FORTH.'

SINCE THE ADMINISTRATIVE REPORTS DO NOT SUGGEST THAT THE SPECIFICATIONS FOR THE SUBJECT TOWERS ARE IN ANY WAY NOVEL OR SO EXACTING AS TO TAX THE CAPABILITIES OF ANY EXPERIENCED AND CAPABLE FABRICATOR IN THE FIELD INVOLVED, IT WOULD APPEAR FAIR TO CONCLUDE THAT THAT ASSURANCE OF SATISFACTORY PERFORMANCE COULD HAVE BEEN AS WELL SUBSERVED BY CAREFUL INVESTIGATION OF A BIDDER'S RESPONSIBILITY AS BY A REQUIREMENT FOR FIRST ARTICLE APPROVAL. HOWEVER, IN VIEW OF THE FACT THAT THERE IS NO VIRTUE IN CANCELLING A CONTRACT LONG AGO COMPLETED IN GOOD FAITH BY A CONTRACTOR INNOCENT OF ANY IMPROPRIETY IN THE PROCUREMENT, WE CONSIDER IT UNNECESSARY TO FURTHER DEVELOP AND SPECIFICALLY DECIDE THE ACADEMIC QUESTION OF WHETHER THE PARTICULAR SPECIFICATIONS USED IN THIS PROCUREMENT WERE SO NOVEL OR EXACTING AS TO JUSTIFY THE USE OF FIRST ARTICLE APPROVAL REQUIREMENTS. NEVERTHELESS, THE RECORD IS SUFFICIENTLY COMPLETE TO CAUSE SERIOUS DOUBT THAT SUCH REQUIREMENTS WERE APPROPRIATE FOR USE IN THE INSTANT CASE, AND THE AIR FORCE WILL BE REQUESTED TO REVIEW ITS USE OF PREPRODUCTION SAMPLES IN THE PROCUREMENT OF THESE TOWERS AND TO DETERMINE IN ACCORDANCE WITH THE GUIDELINES SET FORTH IN THIS DECISION WHETHER OR NOT CONTINUED USE IS CLEARLY JUSTIFIED.