B-152723, DEC. 30, 1963

B-152723: Dec 30, 1963

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INCORPORATED: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 17. YOUR LETTER ASKS THAT YOU BE ADVISED BMY WILL BE REQUIRED TO PRODUCE THE SUPPLIES OFFERED UNDER ITS BIDS WITHOUT USE OF GOVERNMENT- OWNED SPECIAL TOOLING OR FACILITIES IN ITS POSSESSION OR IN THE POSSESSION OF ITS SUBCONTRACTORS. SUCH AUTHORIZATION WAS WITHDRAWN AND THE CONTRACTING ACTIVITY AND OTHER BIDDERS WERE ADVISED THAT USE OF GOVERNMENT-OWNED SPECIAL TOOLING UNDER THE INVITATIONS IN QUESTION WOULD NOT BE AUTHORIZED. BIDS WERE OPENED ON JULY 24. BIDS WERE EVALUATED ON THE BASIS OF NO AUTHORIZATION TO USE GOVERNMENT-OWNED SPECIAL TOOLING. 602.24 WERE AWARDED TO BMY AS THE LOW RESPONSIBLE BIDDER. 761 WOULD RESULT IF BMY WERE AUTHORIZED TO USE GOVERNMENT-OWNED TOOLING VALUED AT $216.

B-152723, DEC. 30, 1963

TO DUO-MATIC, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 17, 1963, RELATIVE TO THE USE OF GOVERNMENT-OWNED TOOLING AND FACILITIES IN THE PERFORMANCE OF CONTRACTS AWARDED TO BOWEN-MCLAUGHLIN-YORK, INC., (BMY) BY THE DEPARTMENT OF THE ARMY UNDER IFS NOS. ANC-20-113-63-1028/X) AND 1397/X).

YOUR LETTER ADVISES THAT THE DEPARTMENT, BY AMENDMENTS TO THE INVITATIONS FOR BIDS, IN ESSENCE DELETED ALL PERMISSIVE USE OF GOVERNMENT-OWNED TOOLING AND FACILITIES AND REQUESTED THE SUBMISSION OF BIDS COMPUTED ON THAT BASIS. NOTWITHSTANDING SUCH AMENDMENTS, BMY SUBMITTED LETTERS WITH ITS BIDS WHICH OFFERED REDUCTIONS IN ITS UNIT PRICES IF PERMISSION SHOULD BE GRANTED FOR RENT-FREE USE OF CERTAIN SPECIAL TOOLING IN THE POSSESSION OF BMY AND ITS SUBCONTRACTORS. IN VIEW OF THE AMENDMENTS TO THE INVITATIONS WHICH PRECLUDED CONSIDERATION OF BIDS BASED UPON USE OF SUCH SPECIAL TOOLING, YOUR LETTER ASKS THAT YOU BE ADVISED BMY WILL BE REQUIRED TO PRODUCE THE SUPPLIES OFFERED UNDER ITS BIDS WITHOUT USE OF GOVERNMENT- OWNED SPECIAL TOOLING OR FACILITIES IN ITS POSSESSION OR IN THE POSSESSION OF ITS SUBCONTRACTORS.

OUR REVIEW OF THE RECORDS OF THIS PROCUREMENT INDICATES THAT IFB 1397/X) REQUESTED BIDS UNDER ITEM 1 FOR 64 EACH, KIT, MODIFICATION, TOP DECK GRILLS FOR THE M48A3 VEHICLES, AND UNDER ITEM 2 FOR 37 EACH, OF THE SAME KIT FOR THE M67A2 VEHICLE. IFB 1028/X) REQUESTED BIDS ON 152 EACH OF THE SAME KIT FOR THE M103A2 VEHICLE. AS ORIGINALLY ISSUED BOTH INVITATIONS OFFERED THE USE OF GOVERNMENT-OWNED SPECIAL TOOLING IF A BIDDER OBTAINED AUTHORIZATION FOR SUCH USE FROM THE COGNIZANT CONTRACTING OFFICER PRIOR TO THE TIME OF BID OPENING. UPON APPLICATION TO THE COGNIZANT CONTRACTING OFFICER, BMY AND ONE OTHER BIDDER RECEIVED AUTHORIZATION TO USE CERTAIN GOVERNMENT-OWNED SPECIAL TOOLING. HOWEVER, ON JULY 19, 1963, SUCH AUTHORIZATION WAS WITHDRAWN AND THE CONTRACTING ACTIVITY AND OTHER BIDDERS WERE ADVISED THAT USE OF GOVERNMENT-OWNED SPECIAL TOOLING UNDER THE INVITATIONS IN QUESTION WOULD NOT BE AUTHORIZED. DUE TO THE URGENCY OF THE REQUIREMENT, BIDS WERE OPENED ON JULY 24, WITHOUT ANY OF THE BIDDERS HAVING OBTAINED AUTHORITY TO USE GOVERNMENT-OWNED SPECIAL TOOLING.

UNDER IFB 1397/X) BMY BID A UNIT PRICE OF $3,734.75 PER KIT, WHILE DUO- MATIC BID A UNIT PRICE OF $3,812.12. UNDER IFB 1028/X) BMY BID A UNIT PRICE OF $3,767.12 PER KIT, WHILE DUO-MATIC BID A UNIT PRICE OF $4,175.49 PER KIT. WITH ITS BIDS BMY SUBMITTED LETTERS WHICH OFFERED REDUCTIONS OF $252.02 IN ITS UNIT BID PRICE UNDER BOTH INVITATIONS IF THE GOVERNMENT WOULD "AUTHORIZE THE RENT-FREE USE OF THE SPECIAL TOOLING CURRENTLY IN EXISTENCE AND REQUIRED FOR THE MANUFACTURE OF THE KITS.' HOWEVER, BIDS WERE EVALUATED ON THE BASIS OF NO AUTHORIZATION TO USE GOVERNMENT-OWNED SPECIAL TOOLING, AND ON AUGUST 7 CONTRACTS IN THE AMOUNTS OF $377,209.75 AND $572,602.24 WERE AWARDED TO BMY AS THE LOW RESPONSIBLE BIDDER, BASED UPON ITS UNIT BID PRICES OF $3,734.75 AND $3,767.12.

FOLLOWING AWARD OF THESE CONTRACTS, AND SINCE A POTENTIAL SAVING OF $63,761 WOULD RESULT IF BMY WERE AUTHORIZED TO USE GOVERNMENT-OWNED TOOLING VALUED AT $216,519, FURTHER CONSIDERATION WAS GIVEN TO THE AVAILABILITY OF SUCH TOOLING FOR USE BY BMY. ON SEPTEMBER 19, 1963, THE COGNIZANT CONTRACTING OFFICER APPROVED SUCH USE SUBJECT TO THE FOLLOWING CONDITIONS:

1. NO INTERFERENCE WITH CHRYSLER'S PRODUCTION OF TANKS UNDER EXISTING CONTRACTS OR ANY MODIFICATION OF ITS RIGHTS UNDER SAID CONTRACTS.

2. THE CONSUMMATION OF AN APPROPRIATE AGREEMENT UNDER WHICH THE GOVERNMENT WOULD BE COMPENSATED FOR USE OF SUCH TOOLING.

SUBSEQUENT NEGOTIATIONS WITH BMY RESULTED IN DETERMINATIONS THAT TOOLING VALUED AT $143,676 LOCATED AT LEBANON FOUNDRY AND AT BMY'S PLANT COULD BE USED AND THAT THE CONTRACT PRICES SHOULD BE REDUCED IN A TOTAL AMOUNT OF $42,309.85 PER SUCH USE.

WITH RESPECT TO THE PROPRIETY OF AUTHORIZING USE OF SUCH TOOLING AFTER THE CONTRACTS WERE AWARDED TO BMY, IT SHOULD BE NOTED THAT 10 U.S.C. 2667 VESTS THE SECRETARIES OF THE MILITARY DEPARTMENTS WITH EXTREMELY BROAD DISCRETION RELATIVE TO WHETHER USE OF GOVERNMENT-OWNED PROPERTY SHOULD BE AUTHORIZED AND THE TERMS AND CONDITIONS OF SUCH USE. WHILE THE DISCRETION CONFERRED BY THE STATUTE HAS BEEN PRESCRIBED IN VARIOUS RESPECTS BY THE PROVISIONS OF SECTION XIII OF THE ARMED SERVICES PROCUREMENT REGULATION, OUR REVIEWS OF AUTHORIZATIONS TO USE GOVERNMENT-OWNED PROPERTY IN THE PERFORMANCE OF GOVERNMENT CONTRACTS ARE NECESSARILY LIMITED TO DETERMINING WHETHER SUCH AUTHORIZATIONS MAY HAVE RESULTED IN A COMPETITIVE ADVANTAGE TO THE USER AND WHETHER THE GOVERNMENT RECEIVES REASONABLE CONSIDERATION IN RETURN FOR SUCH USE. OUR REVIEW OF THE INSTANT PROCUREMENTS INDICATES THAT ALL BIDS WERE EVALUATED ON AN EQUAL BASIS AND THAT BMY WAS PROPERLY DETERMINED TO BE THE LOW RESPONSIBLE BIDDER. FURTHER THERE DOES NOT APPEAR TO BE ANY VALID BASIS FOR CONCLUDING THAT A DIFFERENT RESULT WOULD HAVE BEEN REACHED IF BIDS HAD BEEN SOLICITED AND EVALUATED ON THE BASIS OF RENT FREE USE OF GOVERNMENT-OWNED TOOLING. WE ARE THEREFORE UNABLE TO CONCLUDE THAT THE FAILURE TO AUTHORIZE USE OF GOVERNMENT-OWNED TOOLING BEFORE BID OPENING RESULTED IN A COMPETITIVE ADVANTAGE TO BMY OR WAS OTHERWISE PREJUDICIAL TO THE REMAINING BIDDERS.

IN VIEW OF THE FOREGOING, AND SINCE THE COMPUTATION OF THE CONSIDERATION FOR BMY'S USE OF TOOLING VALUED AT $143,676 APPEARS TO BE IN ACCORD WITH THE PROVISIONS OF SECTION XIII OF ASPR, WE SEE NO VALID BASIS ON WHICH AN OBJECTION TO SUCH USE MAY BE BASED. IN THIS CONNECTION, AND AS PRECEDENT FOR ITS ACTION IN THE INSTANT PROCUREMENTS, THE DEPARTMENT OF THE ARMY HAS ADVISED THAT SIMILAR AUTHORIZATION AFTER CONTRACT AWARD WAS GRANTED TO YOUR COMPANY TO UTILIZE GOVERNMENT-OWNED TOOLING AT LEBANON FOUNDRY AND CONTINENTAL FOUNDRY IN PRODUCING IDENTICAL KITS UNDER YOUR CONTRACT NO. DA -20-113 29735.

UNDER THE CIRCUMSTANCES WE MUST CONCLUDE THAT THE DEPARTMENT OF THE ARMY WAS ACTING WITHIN THE SCOPE OF ITS AUTHORITY IN AUTHORIZING USE OF GOVERNMENT-OWNED TOOLING BY BMY IN THE INSTANT PROCUREMENTS, AND YOUR PROTEST AGAINST SUCH USE MUST THEREFORE BE DENIED.