B-152866, FEB. 7, 1964

B-152866: Feb 7, 1964

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EUGENE DREXLER: REFERENCE IS MADE TO YOUR LETTERS DATED NOVEMBER 18. QUOTATIONS WERE REQUESTED ON SEVEN LOTS OF MAINTENANCE PARTS FOR GENERAL ELECTRIC MA-1 COMPASS SYSTEMS. NOTICE OF THE PROPOSED PROCUREMENT WAS PUBLISHED IN THE COMMERCE BUSINESS DAILY. DID NOT SUBMIT AN OFFER BUT OFFERS WERE RECEIVED FROM THE GENERAL ELECTRIC COMPANY AND H. THE LATTER COMPANY WAS REQUESTED TO FURNISH DATA IN THE FORM OF SPECIFICATIONS. THAT IT WAS IN THE PROCESS OF PREPARING ITS OWN DRAWINGS AND THAT "BY WORKING DIRECTLY FROM THE MODEL. WE WILL FURNISH THE MA-1 COMPASS SYSTEM COMPONENTS IDENTICAL TO THE GENERAL ELECTRIC COMPONENT PART NUMBERS. IT WAS CONTENDED IN YOUR LETTER DATED NOVEMBER 18. THAT NEITHER THE REQUEST FOR QUOTATIONS NOR THE SYNOPSIS PUBLISHED IN THE COMMERCE BUSINESS DAILY CONTAINED ANY INDICATION THAT A SOLE SOURCE PROCUREMENT WAS CONTEMPLATED.

B-152866, FEB. 7, 1964

TO MR. EUGENE DREXLER:

REFERENCE IS MADE TO YOUR LETTERS DATED NOVEMBER 18, 1963, AND JANUARY 14, 1964, CONCERNING THE PROTEST OF H. O. BOEHME, INC., NEW YORK, NEW YORK, A SMALL BUSINESS FIRM, AGAINST THE PROPOSED REJECTION OF ITS OFFER SUBMITTED IN RESPONSE TO REQUEST FOR QUOTATIONS NO. 383/518069/64Q, ISSUED BY THE NAVY AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA, ON AUGUST 27, 1963.

QUOTATIONS WERE REQUESTED ON SEVEN LOTS OF MAINTENANCE PARTS FOR GENERAL ELECTRIC MA-1 COMPASS SYSTEMS, CONSISTING OF 261 AMPLIFIERS, PART NO. 8KE8AD-5, 253 CONTROLLERS, PART NO. 8KE7AC-2, AND 279 DIRECTIONAL GYRO UNITS, PART NO. 8KD3AC-3. THE SCHEDULE OF THE REQUEST FOR QUOTATIONS PROVIDED THAT THE MAINTENANCE PARTS OFFERED SHOULD BE IN ACCORDANCE WITH THE GENERAL ELECTRIC COMPANY'S PART NUMBERS NOTED, AND MANUFACTURED AND TESTED IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-C-17858A, DATED SEPTEMBER 27, 1956, AND AMENDMENT 2, DATED AUGUST 28, 1957, WITH CERTAIN STATED EXCEPTIONS. NOTICE OF THE PROPOSED PROCUREMENT WAS PUBLISHED IN THE COMMERCE BUSINESS DAILY, INDICATING THAT THE NAVY HAD REQUESTED QUOTATIONS FROM THE GENERAL ELECTRIC COMPANY AND LEAR SIEGLER, INC., AND SUGGESTING THAT THOSE COMPANIES BE CONTRACTED BY SMALL BUSINESS CONCERNS AND OTHERS INTERESTED IN SUBCONTRACTING OPPORTUNITIES.

LEAR SIEGLER, INC., DID NOT SUBMIT AN OFFER BUT OFFERS WERE RECEIVED FROM THE GENERAL ELECTRIC COMPANY AND H. O. BOEHME, INC. THE LATTER COMPANY WAS REQUESTED TO FURNISH DATA IN THE FORM OF SPECIFICATIONS, PLANS, DRAWINGS, ETC., INTENDED FOR USE IN THE PRODUCTION OF THE REQUIRED MAINTENANCE PARTS. BOEHMS ADVISED THE NAVY AVIATION SUPPLY OFFICE THAT IT HAD ON HAND THE MOST CURRENT WORKING MODELS OF THE THREE COMPONENTS FOR THE MA-1 COMPASS SYSTEM, THAT IT WAS IN THE PROCESS OF PREPARING ITS OWN DRAWINGS AND THAT "BY WORKING DIRECTLY FROM THE MODEL, WE WILL FURNISH THE MA-1 COMPASS SYSTEM COMPONENTS IDENTICAL TO THE GENERAL ELECTRIC COMPONENT PART NUMBERS, AND IDENTICAL IN PERFORMANCE.'

A PREAWARD SURVEY OF H. O. BOEHME, INC., INDICATED THAT THE COMPANY POSSESSED ADEQUATE FINANCES, ADEQUATE ENGINEERING FACILITIES, AND A QUALIFIED STAFF OF ENGINEERS AND TECHNICIANS; AND THAT THE COMPANY HAD A CONSIDERABLE AMOUNT OF EXPERIENCE IN THE GYRO MANUFACTURING FIELD. HOWEVER, THE NAVY AVIATION SUPPLY OFFICE EVENTUALLY DETERMINED THAT BOEHME'S OFFER SHOULD BE REJECTED AS NONRESPONSIVE AND THAT NEGOTIATIONS SHOULD BE CONDUCTED ONLY WITH THE GENERAL ELECTRIC COMPANY.

IT WAS CONTENDED IN YOUR LETTER DATED NOVEMBER 18, 1963, THAT NEITHER THE REQUEST FOR QUOTATIONS NOR THE SYNOPSIS PUBLISHED IN THE COMMERCE BUSINESS DAILY CONTAINED ANY INDICATION THAT A SOLE SOURCE PROCUREMENT WAS CONTEMPLATED; THAT, WHEN BOEHME CONFERRED WITH THE COGNIZANT NAVY OFFICIALS TO DETERMINE THE ADVISABILITY OF PREPARING AND SUBMITTING AN OFFER, NO STATEMENT WAS MADE BY ANY NAVY PERSONNEL THAT BOEHME COULD NOT QUALIFY AS A SUPPLIER BECAUSE IT HAD NOT PREVIOUSLY MANUFACTURED THE ITEMS, NOR THAT ONLY PREVIOUS SUPPLIERS COULD SO QUALIFY; THAT BOEHME WAS ADVISED THAT NO BLUEPRINTS OR DRAWINGS WERE AVAILABLE FOR MANUFACTURERS; BUT THAT BOEHME, AN EXPERT IN THE FIELD OF GYRO MANUFACTURING, CONCLUDED THAT ACTUAL WORKING MODELS OF THE COMPONENTS WOULD BE SUFFICIENT FOR ENGINEERING AND MANUFACTURING EQUIPMENT IDENTICAL TO THE GENERAL ELECTRIC COMPONENTS.

YOU CONTENDED THAT THE DESIRED COMPONENTS FOR THE MA-1 COMPASS SYSTEM WERE RELATIVELY SIMPLE DEVICES WHICH ANY FIRM KNOWLEDGEABLE IN GYROS COULD EASILY DUPLICATE; THAT THE "SUDDEN IMPOSITION" OF SPECIAL PRODUCT QUALIFICATIONS IS CONTRARY TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND STANDARD PROCUREMENT PRACTICES; THAT THE BASIS FOR REJECTING BOEHME'S OFFER WOULD IN FACT BE A DETERMINATION THAT BOEHME DOES NOT QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MINIMUM STANDARDS FOR DETERMINING RESPONSIBILITY AS PRESCRIBED BY ASPR 1-903.1 THROUGH 1-903.4; THAT ANY QUESTION AS TO BOEHME'S ABILITY TO MAKE ACCEPTABLE COMPONENTS WOULD RELATE TO ITS ,CAPACITY" WITHIN THE MEANING OF THAT TERM AS USED IN THE CERTIFICATE OF COMPETENCY PROVISIONS OF THE SMALL BUSINESS ACT AND THE IMPLEMENTING DEPARTMENT OF DEFENSE REGULATION, ASPR 1 -705.6; AND THAT BOEHME SHOULD BE GIVEN THE OPPORTUNITY AS A SMALL BUSINESS CONCERN OF ACQUIRING A SMALL BUSINESS CERTIFICATE OF COMPETENCY BEFORE FINAL REJECTION OF ITS OFFER.

YOU STATED THAT BOEHME WAS SOLICITED WITH FULL KNOWLEDGE WITHIN THE PROCURING OFFICE THAT IT WAS NOT A PREVIOUS SUPPLIER OF THE GENERAL ELECTRIC VERSION OF THE COMPONENTS; THAT, IN OFFERING THE IDENTICAL ITEMS REQUESTED, BOEHME CERTAINLY MET ALL TECHNICAL REQUIREMENTS; AND THAT, BEING THE LOWEST OFFEROR, BOEHME SHOULD, UNDER THE CIRCUMSTANCES, RECEIVE THE AWARD.

AFTER THE RECEIPT OF THE ADMINISTRATIVE REPORT ON THIS PROTEST, YOU WERE FURNISHED A COPY OF AN ADMINISTRATIVE DETERMINATION AND FINDINGS, SIGNED BY A CONTRACTING OFFICER OF THE NAVY AVIATION SUPPLY OFFICE AND CERTIFIED BY TECHNICAL PERSONNEL AS TO THE ACCURACY OF THE STATEMENT OF FACTS CONTAINED THEREIN. YOU WERE ALSO FURNISHED A COPY OF THE REPORT OF ANOTHER CONTRACTING OFFICER COMMENTING ON THE VARIOUS ALLEGATIONS AND CONTENTIONS MADE IN YOUR LETTER DATED NOVEMBER 18, 1963.

ON JANUARY 10, 1964, YOU VISITED THIS OFFICE ACCOMPANIED BY OFFICIALS OF H. O. BOEHME, INC., TO DISCUSS THE FACTS OF THE CASE WITH OUR REPRESENTATIVES. MODELS OF CERTAIN EQUIPMENTS WERE SHOWN TO OUR REPRESENTATIVES FOR THE PURPOSE OF INDICATING THAT THE MA-1 COMPASS SYSTEM COMPONENTS COULD BE DUPLICATED BY REVERSE ENGINEERING WITHOUT THE USE OF DETAILED DRAWINGS OF THE GENERAL ELECTRIC COMPANY. HOWEVER, IT WAS RECOGNIZED THAT THIS OFFICE IS NOT IN A POSITION TO DETERMINE WHETHER A REVERSE ENGINEERED PRODUCT WOULD BE EQUAL IN ALL MATERIAL RESPECTS TO A MANUFACTURED ITEM OF EQUIPMENT WHICH HAS BEEN PRODUCED IN ACCORDANCE WITH THE MANUFACTURER'S WORKING SPECIFICATIONS AND DRAWINGS PREVIOUSLY USED IN THE PRODUCTION OF SIMILAR ITEMS WHICH HAVE PASSED ALL NECESSARY PERFORMANCE TESTS. YOU REQUESTED A RULING BY THIS OFFICE THAT THE BOEHME OFFER WAS RESPONSIVE TO THE REQUEST FOR QUOTATIONS.

A RULING THAT THE OFFER WAS RESPONSIVE WOULD, IN YOUR OPINION, AFFORD A SUFFICIENT BASIS FOR REQUIRING THE DEPARTMENT OF THE NAVY TO ALLOW THE SMALL BUSINESS ADMINISTRATION A REASONABLE PERIOD OF TIME TO DECIDE WHETHER OR NOT TO ISSUE A CERTIFICATE OF COMPETENCY IN FAVOR OF YOUR CLIENT, WHICH CERTIFICATE WOULD BE CONTROLLING WITH RESPECT TO ANY QUESTION CONCERNING THE ELEMENTS OF CAPACITY AND CREDIT IN A DETERMINATION OF BOEHME'S RESPONSIBILITY. HOWEVER, IT IS TO BE NOTED THAT THE SMALL BUSINESS REFERRAL REQUIREMENTS OF ASPR 1-705.6, PARAGRAPH (B), RELATE ONLY TO "OTHERWISE ACCEPTABLE" BIDS OR PROPOSALS OF SMALL BUSINESS CONCERNS WHICH CONTRACTING OFFICERS PROPOSE TO REJECT SOLELY FOR THE REASON THAT THE BIDDERS OR OFFERORS HAVE BEEN FOUND TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT.

THE NAVY AVIATION SUPPLY OFFICE HAS TAKEN THE POSITION THAT A SOLE SOURCE PROCUREMENT WAS ORIGINALLY CONTEMPLATED AND THAT THE ONLY COMPANY SOLICITED WAS THE GENERAL ELECTRIC COMPANY. IT RECOGNIZES THE FACT THAT A REQUEST FOR QUOTATIONS WAS FURNISHED TO LEAR SIEGLER, INC., BUT REPORTS THAT THIS WAS DONE BECAUSE THAT FIRM WAS IN THE PROCESS OF DEVELOPING COMPONENTS FOR THE MA-1 COMPASS SYSTEM WHICH WERE TO BE TESTED BY THE BUREAU OF NAVAL WEAPONS. THE NAVY AVIATION SUPPLY OFFICE SPECIFICALLY DENIES THAT AN OFFER WAS SOLICITED FROM H. O. BOEHME, INC., AND IT HAS INDICATED THAT AT THE TIME OF COMPLYING WITH BOEHME'S REQUEST FOR A COPY OF THE REQUEST FOR QUOTATIONS BOEHME WAS ADVISED THAT IT WAS CONSIDERED UNLIKELY THAT OFFERS RECEIVED FROM COMPANIES OTHER THAN THE GENERAL ELECTRIC COMPANY COULD BE GIVEN FAVORABLE CONSIDERATION. ACCORDING TO THE CONTRACTING OFFICER'S REPORT, BOEHME WAS INFORMED THAT THIS CONCLUSION WAS BASED UPON THE FOLLOWING FACTORS: (1) THE NAVY DID NOT HAVE DATA ADEQUATE TO SOLICIT COMPETITIVE QUOTATIONS; (2) THE NAVY HAD NO WAY TO TEST UNITS WHICH MIGHT BE TENDERED BY BOEHME TO DETERMINE THEIR INTERCHANGEABILITY WITH THE GENERAL ELECTRIC UNITS; (3) THE NAVY WOULD BE UNABLE TO EVALUATE DATA THAT BOEHME MIGHT SUBMIT WITH A QUOTATION; AND (4) THE DELIVERY SCHEDULE WAS CRITICAL.

THE RECORD OTHERWISE INDICATES THAT THE NAVY AVIATION SUPPLY OFFICE HAD BEEN UNSUCCESSFUL IN ATTEMPTS TO PURCHASE A "DATA PACKAGE" FROM THE GENERAL ELECTRIC COMPANY THAT WOULD BE ADEQUATE FOR COMPETITIVE PROCUREMENT PURPOSES; AND THAT IT IS THE OPINION OF THAT OFFICE THAT ONLY EXTREMELY EXPENSIVE AND TIME-CONSUMING EVALUATION TESTS, INCLUDING FLIGHT TESTS, COULD PROVIDE THE NECESSARY ASSURANCE THAT PARTS MANUFACTURED BY H. O. BOEHME, INC., BY REVERSE ENGINEERING PROCESSES, WOULD MEET THE NAVY'S REQUIREMENTS.

IT IS THE CONTENTION OF THE NAVY AVIATION SUPPLY OFFICE THAT A SOLE SOURCE PROCUREMENT IN THIS CASE IS AUTHORIZED UNDER THE PROVISIONS OF SECTIONS 1-313, 3-210 AND 3-214, ASPR; AND THAT, SINCE THE NAVY HAS THE RIGHT TO INSIST UPON GENERAL ELECTRIC PARTS MANUFACTURED BY THE GENERAL ELECTRIC COMPANY, THE QUESTION OF BOEHME'S CAPACITY HAS NOT BEEN REACHED AND NO NEED TO SOLICIT A SMALL BUSINESS CERTIFICATE OF COMPETENCY EXISTS. IT IS REPORTED THAT, WHILE BOEHME MAY WELL SATISFY ALL CAPACITY AND CREDIT REQUIREMENTS OF A GOVERNMENT SUPPLIER,"ASO DOES NOT AGREE THAT BOEHME IS OFFERING THE PRODUCT REQUESTED.'

YOUR LETTER DATED JANUARY 14, 1964, CONSISTS PRIMARILY OF A RESTATEMENT OF YOUR PREVIOUS ALLEGATIONS AND CONTENTIONS. HOWEVER, IT WAS ARGUED THAT THE EVIDENCE OVERWHELMINGLY REFUTES THE POSITION OF THE NAVY AVIATION SUPPLY OFFICE THAT A SOLE SOURCE PROCUREMENT WAS ORIGINALLY INTENDED. YOU STATED THAT SUCH INTENT IS NOT MANIFESTED BY THE ACTIONS OF THE PROCURING AGENCY AND THE REQUISITIONING AGENCY (BUREAU OF NAVAL WEAPONS). YOU RAISED A QUESTION AS TO WHETHER THE DETERMINATION AND FINDINGS OF THE CONTRACTING OFFICER RECEIVED THE APPROPRIATE PRIOR REVIEW AS REQUIRED BY ASPR 3-102 (C), AND STATED: (1) THAT THE SYNOPSIS PUBLISHED IN THE COMMERCE BUSINESS DAILY DID NOT STATE THAT THE PROCUREMENT WAS "SOLE SOURCE; " (2) THAT THE SYNOPSIS STATED THAT ANOTHER COMPANY, LEAR SIEGLER, INC., WAS SOLICITED; AND (3) THAT THERE IS NO REFERENCE TO STANDARDIZATION OR INTERCHANGEABILITY IN THE "ADVERTISEMENT" WHICH WOULD JUSTIFY A SECRETARIAL DETERMINATION AND FINDING FOR SOLE SOURCE, NOR IS THERE ANY SUCH DETERMINATION.

UNDER THE PROVISIONS OF 10 U.S.C. 2310 (B), AS AMENDED BY P.L. 87 653, THE FINDINGS IN THIS CASE ARE ACCORDED FINALITY, AND ARE THEREFOR NOT SUBJECT TO QUESTION BY US.

SOLICITATION OF LEAR SIEGLER, INC., MAY BE INCONSISTENT WITH THE ALLEGED ORIGINAL INTENTION ON THE PART OF THE NAVY AVIATION SUPPLY OFFICE TO PURCHASE THE DESIRED EQUIPMENT FROM THE GENERAL ELECTRIC COMPANY AS A SOLE SOURCE. HOWEVER, IT IS OUR OPINION THAT NEITHER THE SYNOPSIS PUBLISHED IN THE COMMERCE BUSINESS DAILY NOR THE INFORMATION SHOWN IN THE REQUEST FOR QUOTATIONS REASONABLY MAY BE REGARDED AS SHOWING A CLEAR INTENTION TO NEGOTIATE WITH ANY FIRM WHICH HAD NOT PREVIOUSLY MANUFACTURED THE PARTICULAR MAINTENANCE PARTS OR PARTS IDENTICAL THERETO WHICH HAD BEEN FULLY TESTED AND FOUND TO MEET THE NAVY'S REQUIREMENTS.

IN ANY EVENT, WHETHER THE ACTION TAKEN BY NAVY IN ISSUING A RFQ TO LEAR SIEGLER AND TO BOEHME IS OR IS NOT INCONSISTENT WITH A SOLE SOURCE PROCUREMENT FROM GENERAL ELECTRIC, THE FACT REMAINS THAT THE PROCUREMENT WAS FOR REPLACEMENT COMPONENTS TO BE USED IN EXISTING INSTALLED MA-1 COMPASS SYSTEMS MANUFACTURED BY GENERAL ELECTRIC. WE FIND NO REASON TO DISAGREE WITH THE ADMINISTRATIVE POSITION THAT COMPONENTS MANUFACTURED BY REVERSE ENGINEERING CANNOT, BECAUSE OF SUCH FACTORS AS CRITICAL MANUFACTURING TOLERANCES AND QUALITY CONTROL LEVEL, BE ACCEPTED AS IDENTICAL TO COMPONENTS MANUFACTURED BY GENERAL ELECTRIC WITHOUT EXTENSIVE FLIGHT TESTING, ESTIMATED TO REQUIRE FROM SIX TO EIGHT MONTHS.

IT MAY WELL BE THAT IF A CONTINUING NEED FOR THESE COMPONENTS EXISTS, CONSIDERATION SHOULD BE GIVEN TO THE ESTABLISHMENT OF A QUALIFIED PRODUCTS LIST FOR THEM WHICH WOULD PERMIT THE NECESSARY TESTING FOR INTERCHANGEABILITY AND FLIGHT PERFORMANCE. HOWEVER, UNDER THE EXISTING CIRCUMSTANCES, INCLUDING THE NEED FOR EARLY DELIVERY OF TESTED COMPONENTS, WE CANNOT SAY THAT THE BOEHME PROPOSAL MUST BE CONSIDERED RESPONSIVE, AND ITS PROTEST IS THEREFORE DENIED.