B-153144, JUN. 4, 1964

B-153144: Jun 4, 1964

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THE PROTEST WAS DIRECTED AGAINST THE ALLEGED MISUSE OF CYRIL BATH'S PROPRIETARY DATA BY NABC THROUGH THE INCORPORATION OF SUCH DATA IN THE INVITATION FOR BIDS. ALSO TO THE FACT THAT THE AWARD WAS MADE TO A NONRESPONSIBLE BIDDER. IT APPEARS THAT THE MCDONNELL AIRCRAFT CORPORATION WAS INTERESTED IN ACQUIRING A STRETCH DRAW PRESS FROM CYRIL BATH FOR USE IN PERFORMING GOVERNMENT CONTRACTS. IT WAS DETERMINED TO PROCURE AND FURNISH THE PRESS TO MCDONNELL AS GOVERNMENT EQUIPMENT. SINCE DESCRIPTIVE AND TECHNICAL INFORMATION WAS REQUIRED BY NAEC FOR USE IN DRAFTING ADEQUATE SPECIFICATIONS FOR THE PROCUREMENT OF THIS PRESS ON A FORMAL ADVERTISED BASIS. WE ARE PLEASED TO OFFER THE FOLLOWING BATH STRETCH DRAW PRESS.

B-153144, JUN. 4, 1964

TO THE SECRETARY OF THE NAVY:

BY LETTER DATED JANUARY 31, 1964, THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, FURNISHED A REPORT WITH RESPECT TO THE PROTEST OF THE CYRIL BATH COMPANY AGAINST THE AWARD MADE BY THE NAVAL AIR ENGINEERING CENTER (NAEC) UNDER INVITATION FOR BIDS NO. 156-239-64 DATED SEPTEMBER 23, 1963. THE PROTEST WAS DIRECTED AGAINST THE ALLEGED MISUSE OF CYRIL BATH'S PROPRIETARY DATA BY NABC THROUGH THE INCORPORATION OF SUCH DATA IN THE INVITATION FOR BIDS, AND ALSO TO THE FACT THAT THE AWARD WAS MADE TO A NONRESPONSIBLE BIDDER.

IT APPEARS THAT THE MCDONNELL AIRCRAFT CORPORATION WAS INTERESTED IN ACQUIRING A STRETCH DRAW PRESS FROM CYRIL BATH FOR USE IN PERFORMING GOVERNMENT CONTRACTS. THEREAFTER, IT WAS DETERMINED TO PROCURE AND FURNISH THE PRESS TO MCDONNELL AS GOVERNMENT EQUIPMENT. SINCE DESCRIPTIVE AND TECHNICAL INFORMATION WAS REQUIRED BY NAEC FOR USE IN DRAFTING ADEQUATE SPECIFICATIONS FOR THE PROCUREMENT OF THIS PRESS ON A FORMAL ADVERTISED BASIS, MR. C. H. ENDRISS, PROCUREMENT SECTION SUPERVISOR AT THE BUREAU OF WEAPONS INDUSTRIAL OFFICE (BWIO), NAEC, TELEPHONED CYRIL BATH ON AUGUST 14, 1963, TO OBTAIN INFORMATION ON ITS STRETCH DRAW PRESS. LETTER DATED AUGUST 16, 1963, CYRIL BATH SUBMITTED "BATH QUOTATION NO. 41163" TO MR. ENDRISS IN PERTINENT PART AS OLLOWS:

"PER YOUR REQUEST, WE ARE PLEASED TO OFFER THE FOLLOWING BATH STRETCH DRAW PRESS, MODEL NO. S.D.P. 250/85 WITH A FORMING CAPACITY OF 84 INCHES BY 84 INCHES.'

"PRICE FOR ABOVE EQUIPMENT ..... $255,000.00

"DELIVERY: 6 TO 7 MONTHS.

"TERMS: NET 30 DAYS. ALL PRICES HEREIN QUOTED ARE F.O.B. OUR

PLANT, CLEVELAND, OHIO.

"NOTE: ALL PRICES QUOTED ARE FIRM FOR 30 DAYS.

"TRUSTING OUR QUOTATION WILL MEET WITH YOUR APPROVAL, * * *.'

INCLUDED IN THIS "QUOTATION" WAS INFORMATION DEALING WITH DIMENSIONS, CAPACITIES AND THE SALIENT FEATURES COMPRISING THE CYRIL BATH PRESS. IS CLAIMED BY CYRIL BATH THAT SUCH INFORMATION WAS USED BY NAEC IN THE ABOVE-CITED INVITATION WITHOUT ITS CONSENT; THAT SUCH INFORMATION WAS PROPRIETARY TO IT; THAT SUCH INFORMATION WOULD NOT HAVE BEEN SUPPLIED HAD IT KNOWN THE TRUE FACTS; THAT ITS LETTER OF AUGUST 16 WAS A QUOTATION FURNISHED IN RESPONSE TO A REQUEST FOR PURCHASE ORDER INFORMATION; AND THAT SUCH INFORMATION WAS OBTAINED INVIOLATION OF THE PROVISIONS OF ASPR.

THE JANUARY 31, 1964, REPORT ADVISES THAT THE TELEPHONIC REQUEST OF AUGUST 14, 1963, WAS A NORMAL OPERATING PROCEDURE; THAT THE INFORMATION SUPPLIED BY CYRIL BATH WAS NOT RESTRICTED IN ANY WAY AND NO INDICATION WAS GIVEN THAT ANY OF THE INFORMATION WAS CONFIDENTIAL, PROPRIETARY OR PATENTED; THAT NO REQUEST FOR QUOTATION WAS REQUESTED OF CYRIL BATH BUT ONLY INFORMATION RELATING TO SPECIFICATION DEVELOPMENT INFORMATION AND BUDGETARY PURPOSES; AND THAT THE INFORMATION FURNISHED WAS NOT OF A PROPRIETARY CHARACTER.

THERE EXISTS, THEREFORE, DISPUTED QUESTIONS OF FACT WHICH WE ARE NOT IN A POSITION TO RESOLVE. HOWEVER, WE CANNOT HOLD THAT CYRIL BATH'S POSITION IS WHOLLY WITHOUT MERIT. WE DO NOT AGREE THAT TELEPHONIC SOLICITATIONS OF PROCUREMENT INFORMATION FROM INDUSTRY SHOULD CONSTITUTE A NORMAL OPERATING PROCEDURE. RATHER, ASPR 1-309 PRESCRIBES THE NORMAL PROCEDURE TO BE FOLLOWED AND PRESCRIBES SAFEGUARDS BOTH TO THE GOVERNMENT AND THE DONOR. THAT PROVISION READS:

"IT IS THE GENERAL POLICY OF THE DEPARTMENT OF DEFENSE TO SOLICIT BIDS, PROPOSALS OR QUOTATIONS ONLY WHERE THERE IS A DEFINITE INTENTION TO AWARD A CONTRACT OR PURCHASE ORDER. HOWEVER, IN SOME CASES SOLICITATION FOR INFORMATIONAL OR PLANNING PURPOSES MAY BE JUSTIFIED. INVITATIONS FOR BIDS AND REQUESTS FOR PROPOSALS WILL NOT BE USED FOR THIS PURPOSE. REQUESTS FOR QUOTATIONS MAY BE ISSUED FOR INFORMATIONAL OR PLANNING PURPOSES ONLY WITH PRIOR APPROVAL OF AN INDIVIDUAL AT A LEVEL HIGHER THAN THE CONTRACTING OFFICER. IN SUCH CASES, THE REQUEST FOR QUOTATION SHALL CLEARLY STATE ITS PURPOSE AND, IN ADDITION, THE FOLLOWING STATEMENT IN CAPITAL LETTERS SHALL BE PLACED ON THE FACE OF THE REQUEST: "THE GOVERNMENT DOES NOT INTEND TO AWARD A CONTRACT ON THE BASIS OF THIS REQUEST FOR QUOTATION, OR OTHERWISE PAY FOR THE INFORMATION SOLICITED.' THE FOREGOING DOES NOT PROHIBIT THE ALLOWANCE, IN ACCORDANCE WITH 15- 205.3, OF THE COST OF PREPARING SUCH QUOTATIONS.'

THE APPARENT PURPOSE OF THIS REGULATION IS TO AVOID THE VERY SITUATION WHICH GENERATED THIS PROTEST. WHILE CYRIL BATH MAY NOT HAVE BEEN UNAWARE OF THE IMPLICATIONS INVOLVED IN COMPLYING WITH THE TELEPHONIC REQUEST, WE FEEL THAT THERE WAS A FAILURE ON THE PART OF NAEC TO APPRISE CYRIL BATH OF THE INTENDED PURPOSE OF THE TELEPHONIC REQUEST. THIS TELEPHONIC PROCEDURE WHICH IS NOT SUBJECT TO THE CONTROLS PROVIDED IN ASPR 1-309 IS NOT IN KEEPING WITH SOUND PROCUREMENT PRACTICE SINCE IT IS VIRTUALLY IMPOSSIBLE TO DETERMINE THE RESPECTIVE MERITS OF A CONTROVERSY THAT MAY RESULT THEREFROM SUCH AS EXISTS HERE. IF IT IS CONSIDERED TO BE IN THE BEST INTERESTS OF THE PROCUREMENT AGENCY TO CONTINUE THIS PROCEDURE, WE SUGGEST THAT CONTEMPORANEOUS MEMORANDA BE PREPARED TO DOCUMENT THE TRANSACTIONS UNDER SUCH PROCEDURE.

TURNING NOW TO THE CLAIM OF CYRIL BATH THAT THE INFORMATION SUPPLIED IN RESPONSE TO THE TELEPHONIC REQUEST OF AUGUST 14, 1963, WAS PROPRIETARY INFORMATION AND SHOULD NOT HAVE BEEN MADE A PART OF INVITATION NO. 156-239 -64, WE MUST CONCLUDE THAT THE AWARD MADE TO SHERIDAN GRAY MAY NOT BE QUESTIONED ON THE BASIS THAT THE "PROPRIETARY" DATA OF CYRIL BATH WAS IMPROPERLY USED BY NAEC. CF. B-143711, DECEMBER 22, 1960, MAY 15, AND JUNE 21, 1961; 41 COMP. GEN. 151. HERE, THE DATA WAS INCLUDED, IN PART, IN THE INVITATION. THE FACT THAT CYRIL BATH SUBMITTED A BID BASED ON THE INVITATION ISSUED ON SEPTEMBER 23, 1963, INDICATES THAT THE FIRM HAD AMPLE OCCASION TO STUDY THE INVITATION WITH SUFFICIENT THOROUGHNESS TO PREPARE A BID FOR PUBLIC OPENING ON OCTOBER 30, 1963. NO EXCEPTION WAS TAKEN IN THE CYRIL BATH BID, OR PRIOR TO ITS SUBMISSION, WITH RESPECT TO THE INCLUSION OF ITS "PROPRIETARY" DATA. THERE IS NO INDICATION OF ANY PROTEST UNTIL IT APPEARED THAT SHERIDAN GRAY WAS THE LOW BIDDER. THE COURTS HAVE TAKEN THE POSITION THAT A PARTY TO MAINTAIN HIS PROPRIETARY RIGHT IN DATA MUST TAKE REASONABLE ACTION TO PREVENT OR SUPPRESS ITS UNAUTHORIZED USE. SEE, FOR EXAMPLE, FERROLINE CORP. V. GENERAL ANILINE AND FILM CORP., 207 F.2D 912, 924; GLOBE TICKET CO. V. INTERNATIONAL TICKET CO., 104 A.2D 92. HERE, IT APPEARS THAT CYRIL BATH MADE NO ATTEMPT TO PREVENT DISCLOSURE. IT FAILED TO AFFIRMATIVELY ADVISE NAEC OF ITS CLAIM OF PROPRIETARYSHIP AT THE TIME IT FURNISHED THE INFORMATION. INSTEAD, IT WAITED UNTIL THE RESULTS OF THE COMPETITION WERE KNOWN. WITHOUT ATTEMPTING TO DETERMINE THE ACTUAL STATUS OF THE CYRIL BATH INFORMATION, WE FIND NO LEGAL BASIS TO DISTURB THE SHERIDAN GRAY AWARD. CF. B-143711, SUPRA, WHERE A PROTESTANT TOOK PROMPT ACTION TO ASCERTAIN HIS LEGAL POSITION WITH RESPECT TO DATA INCLUDED IN AN INVITATION FOR BID AND IMMEDIATELY THEREAFTER BROUGHT TO THE ATTENTION OF THE PROCUREMENT AGENCY HIS CLAIM THAT THE DATA WAS PROPRIETARY. RESPECTING THE CLAIM THAT CYRIL BATH'S PATENTS WILL BE INFRINGED IF THE AWARD TO SHERIDAN GRAY BE ALLOWED TO STAND, IT IS SUFFICIENT TO CITE 38 COMP. GEN. 276 WHEREIN WE HELD THAT THE SPECIFIC AUTHORITY OF 28 U.S.C. 1498 AFFORDS AN ADEQUATE REMEDY TO VALID PATENT HOLDERS FOR ALLEGED INFRINGEMENTS ARISING OUT OF FORMALLY ADVERTISED CONTRACTS.

THE CONSIDERABLE PERIOD OF TIME INVOLVED IN OUR CONSIDERATION OF THIS PROTEST WAS DUE LARGELY TO OUR INABILITY TO OBTAIN FROM YOUR DEPARTMENT A COMPLETELY DOCUMENTED REPORT WHICH WAS RESPONSIVE TO THE ALLEGATIONS RAISED BY CYRIL BATH.

WITH REFERENCE TO THE ALLEGATION THAT SHERIDAN GRAY WAS A NONRESPONSIBLE BIDDER FOR THE PURPOSES OF THIS PROCUREMENT, AN EXAMINATION OF THE SHERIDAN GRAY BID REVEALS SEVERAL SIGNIFICANT ELEMENTS OF BID EVALUATION WHICH, AS FAR AS WE CAN DETERMINE, WERE EITHER NOT CONSIDERED OR RESOLVED PRIOR TO AWARD. THE BID AS SUBMITTED BY SHERIDAN GRAY INCORPORATED A PROPOSAL FOR DESIGN AND FABRICATION OF THE STRETCH DRAW PRESS IN ACCORDANCE WITH THE DESCRIPTIVE LITERATURE REQUIREMENTS OF THE INVITATION. PURSUANT TO ASPR 2-202.5, DESCRIPTIVE LITERATURE WAS REQUIRED TO BE FURNISHED IN ORDER TO "ESTABLISH FOR PURPOSES OF BID EVALUATION AND AWARD THE DETAILS OF THE PRODUCT THE BIDDER PROPOSES TO FURNISH * * *.' THE TERM "DESCRIPTIVE LITERATURE" EXCLUDES OTHER INFORMATION SUCH AS THAT FURNISHED IN CONNECTION WITH THE QUALIFICATIONS OF A BIDDER (ASPR 2-202.5 (A) ). THIS PROPOSAL SETTING FORTH THE DETAILS OF THE PRESS PROPOSED TO BE FURNISHED BY SHERIDAN GRAY WAS, IN FACT, A JOINT PROPOSAL SUBMITTED IN ASSOCIATION WITH LEAR SIEGLAR, INC., ASTRO STRUCTURES DIVISION. EXAMINATION OF THIS PROPOSAL CLEARLY ESTABLISHES THAT, BY ITS TERMS BOTH SHERIDAN GRAY AND ASTRO STRUCTURES WOULD JOINTLY PERFORM ANY RESULTING CONTRACT. FOR EXAMPLE, PAGE 1 OF THE PROPOSAL READ IN PART:

"SHERIDAN GRAY INCORPORATED IN ASSOCIATION WITH ASTRO STRUCTURES DIVISION OF LEAR SIEGLER, INCORPORATED, (FORMERLY HUFFORD DIVISION) IS PLEASED TO PRESENT THIS QUOTATION TO THE NAVAL AIR ENGINEERING CENTER, IN RESPONSE TO IFB-156-239-64, FOR THE DESIGN AND MANUFACTURE OF AN 85 TON STRETCH DRAW PRESS AS SHOWN IN FIGURE 1.

"1. INTRODUCTION

"1.1 ASTRO STRUCTURES AND SHERIDAN GRAY HAVE ELECTED TO SUBMIT THIS QUOTATION JOINTLY IN ORDER TO COMBINE THE EXTENSIVE EXPERIENCE AND PAST PERFORMANCE OF BOTH ORGANIZATIONS IN THE DESIGN, DEVELOPMENT AND MANUFACTURE OF STRETCH FORMING MACHINES.

"1.2 ASTRO STRUCTURES, AND SHERIDAN GRAY, HAVE COLLECTIVELY DESIGNED AND MANUFACTURED OVER 90 PERCENT OF ALL STRETCH FORMING MACHINES PRESENTLY IN USE IN THE FREE WORLD.'

PAGE 13 READ IN PART:

"* * * DESIGN REQUIREMENTS OUTLINED IN THE BUREAU OF NAVAL WEAPONS INDUSTRIAL OFFICE SPECIFICATION NUMBER 64-60 ARE WELL WITHIN THE PRESENT CAPABILITIES OF ASTRO STRUCTURES AND SHERIDAN GRAY, AS DEPICTED IN EXISTING MACHINES WHICH PERFORM SIMILAR STRETCH-DRAW OPERATIONS * * *.'

THE PROPOSAL WHICH WAS PREPARED WITH COVERS AND INSERTS AND PRINTED MATERIAL OF ASTRO STRUCTURES CONTAINS REPRESENTATIONS AS TO THE FACILITIES, EQUIPMENT, PERSONNEL AND OTHER FACTORS THAT WILL BE FURNISHED BY ASTRO STRUCTURES. IN FACT, THE MOST SUBSTANTIAL PORTION OF THE PROPOSAL RELATES TO ASTRO STRUCTURES' CAPABILITIES AND A VERY MINOR PORTION RELATES TO SHERIDAN GRAY'S CAPABILITIES. WHILE THE BID AS SUBMITTED WAS NOT A JOINT BID, BUT WAS SUBMITTED ONLY BY SHERIDAN GRAY, IT IS EVIDENT THAT THE PREPONDERANCE OF DESCRIPTIVE LITERATURE WENT TO THE DETAILS OF THE ASTRO STRUCTURES' PRODUCT. A READING OF THE PROPOSAL WOULD LEAVE NO DOUBT AS TO THE ABILITY OF SHERIDAN GRAY TO FURNISH AN ACCEPTABLE PRODUCT IN JOINT VENTURE WITH ASTRO STRUCTURES. IN RESPONSE TO AN INFORMAL INQUIRY FOR ADDITIONAL INFORMATION, WE WERE ADVISED BY LETTER DATED MARCH 23, 1964, FROM NAEC THAT:

"2. THE TWO BIDS SUBMITTED UNDER THE INVITATION, ONE BY SHERIDAN GRAY, INC., AND ONE BY CYRIL BATH COMPANY WERE EVALUATED TO DETERMINE THAT THE BIDS WERE RESPONSIVE AND THAT THE TECHNICAL DESCRIPTIVE DATA SUBMITTED WAS ADEQUATE. IT WAS DETERMINED THAT THE LOW BID OF SHERIDAN-GRAY, INC., WAS RESPONSIVE AND THAT THE TECHNICAL DESCRIPTIVE DATA WAS ADEQUATE. THE DESCRIPTIVE LITERATURE ACCOMPANYING THE BID SUBMITTED BY SHERIDAN-GRAY, INC., INDICATED THAT IF AWARD WERE MADE TO SHERIDAN-GRAY BOTH SHERIDAN GRAY AND ASTRO STRUCTURES DIVISION OF LEAR SIEGLER, INC., WOULD PARTICIPATE IN THE DESIGN AND FABRICATION OF THE STRETCH DRAW PRESS.'

HOWEVER, WE HAVE ASCERTAINED FROM ASTRO STRUCTURES THAT, WHILE IT EARLIER HAD A DIFFERENT INTENTION, IT DID NOT IN FACT INTEND AT THE TIME THE BID WAS SUBMITTED TO PARTICIPATE IN THE PERFORMANCE OF THE SHERIDAN GRAY CONTRACT, EXCEPT FOR SOME ENGINEERING SERVICES WHICH IT SUBSEQUENTLY DID PERFORM TO THE VALUE OF $6,309.40. WHETHER SHERIDAN GRAY WOULD HAVE BEEN DETERMINED TO BE RESPONSIBLE HAD NAEC KNOWN OF ASTRO STRUCTURES' NONPARTICIPATION IN THE PROCUREMENT IS PROBLEMATICAL. BUT THE FORMAT OF THE SHERIDAN GRAY BID, ESPECIALLY THE RELIANCE PUT UPON ASTRO STRUCTURES' CAPABILITIES AS SET OUT IN THE DESCRIPTIVE LITERATURE, SHOULD HAVE PROMPTED NAEC TO INQUIRE INTO THE EXTENT, IF ANY, OF ASTRO STRUCTURES' PARTICIPATION. WE ARE IN NO POSITION TO SAY THAT SHERIDAN GRAY SHOULD NOT HAVE BEEN AWARDED THE CONTRACT WITHOUT ASTRO STRUCTURES AS A JOINT VENTURER, BUT WE DO BELIEVE THAT THE FOREGOING IS ILLUSTRATIVE OF FAULTY PROCUREMENT PROCEDURES. AT A MINIMUM, A THOROUGH EVALUATION SHOULD BE MADE WHERE, AS HERE, A BIDDER RESPONDS SINGLY BUT PROMISES PERFORMANCE IN JOINT VENTURE WITH ANOTHER FIRM WHICH IS NOT PARTICIPATING IN THE BIDDING. WE NOTED, ALSO, THAT THE REPORT OF JANUARY 31, 1964, DID NOT ADVISE THAT SHERIDAN GRAY WAS A RESPONSIBLE BIDDER UNDER THE CRITERIA PRESCRIBED BY ASPR 1-903 OR INCLUDE A COPY OF AN AFFIRMATIVE DETERMINATION REQUIRED BY ASPR 1-904.1 THAT SHERIDAN GRAY WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR. WE WERE ADVISED BY LETTER DATED MARCH 23, 1964, BY NAEC THAT:

"4. THERE EXISTED SOME DOUBTS IN MY MIND AND IN THE MINDS OF OTHER COGNIZANT NAEC PURCHASING PERSONNEL, AS TO THE FINANCIAL ABILITY OF SHERIDAN-GRAY TO CARRY OUT THE PROPOSED CONTRACT. FINANCIAL STATEMENTS SUBMITTED BY THIS FIRM DID NOT DISPEL THESE DOUBTS. ON REQUEST TO SHERIDAN-GRAY, INC. FOR ADDITIONAL INFORMATION AS TO HOW THE COMPANY PROPOSED TO OBTAIN NECESSARY FINANCIAL RESOURCES TO PERFORM THE CONTRACT, SHERIDAN-GRAY ADVISED THAT CONTRACT PERFORMANCE WOULD BE FINANCED THROUGH THE USE OF CORPORATE FUNDS OF SHERIDAN-GRAY, INC. AND LEAR SIEGLER, INC. REPRESENTATIVES OF LEAR SIEGLER, INC. ORALLY ADVISED NAEC PURCHASING PERSONNEL THAT LEAR SIEGLER DID INTEND TO ASSIST SHERIDAN-GRAY FINANCIALLY IN THE PERFORMANCE OF THE CONTRACT.

"5. IT WAS DETERMINED BY NAEC PURCHASING PERSONNEL PRIOR TO AWARD THAT UNDER THE ABOVE CIRCUMSTANCES SHERIDAN-GRAY, INC. HAD THE ABILITY TO OBTAIN SUCH FINANCIAL RESOURCES AS WOULD BE REQUIRED TO PERFORM THE CONTRACT, AND THAT SHERIDAN GRAY HAD THE ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE.'

ON APRIL 23, 1964, THE PRESIDENT OF ASTRO STRUCTURES ADVISED US THAT:

"* * * REPRESENTATIVES OF SHERIDAN-GRAY REQUESTED THAT ASTRO STRUCTURES ASSIST SHERIDAN-GRAY FINANCIALLY IN CONNECTION WITH PERFORMANCE OF THE CONTRACT. THIS REQUEST WAS DIRECTED TO ME AND I MADE IT VERY CLEAR TO SHERIDAN-GRAY THAT ASTRO STRUCTURES WOULD NOT, UNDER ANY CIRCUMSTANCES, FINANCE SHERIDAN-GRAY'S PERFORMANCE UNDER ANY CONTRACT THAT MIGHT BE AWARDED.'

WITH RESPECT TO THE LAST SENTENCE OF PARAGRAPH 4 OF THE NAEC LETTER, QUOTED ABOVE, WE WERE FURTHER ADVISED:

"THE ONLY PORTION OF THAT STATEMENT WHICH ASTRO STRUCTURES IS QUALIFIED OR ABLE TO COMMENT UPON IS THE LAST SENTENCE THEREOF WHEREIN IT IS STATED THAT REPRESENTATIVES OF ASTRO STRUCTURES ORALLY ADVISED NAVY PERSONNEL THAT ASTRO STRUCTURES INTENDED TO ASSIST SHERIDAN-GRAY FINANCIALLY IN PERFORMANCE OF THE CONTRACT. WE HAVE CONTACTED ALL REPRESENTATIVES OF ASTRO STRUCTURES WHO MIGHT CONCEIVABLY HAVE MADE SUCH A REMARK AND EACH OF THEM HAS ADVISED US THAT NO SUCH STATEMENT WAS MADE TO THE NAVY OR ANYONE ELSE. ALSO AS INDICATED ABOVE, ASTRO STRUCTURES SPECIFICALLY DECLINED TO ASSIST SHERIDAN-GRAY IN FINANCING PERFORMANCE OF THE CONTRACT.'

THIS OBVIOUS DISCREPANCY RELATING TO THE FINANCIAL CAPACITY OF SHERIDAN GRAY WAS INFORMALLY BROUGHT TO THE ATTENTION OF NAEC ON APRIL 28, 1964. BY LETTER DATED APRIL 30, 1964, NAEC ADVISES AS FOLLOWS:

"WITH RESPECT TO THE FINANCIAL ABILITY OF SHERIDAN-GRAY, INC., MR. J. MANCINI, THE SUPERVISOR OF THE PURCHASING SECTION IN CHARGE OF THIS PROCUREMENT, HAS ADVISED ME THAT THE STATEMENTS MADE IN PARAGRAPHS 4 AND 5 OF HIS MEMORANDUM DATED 23 MARCH 1964 WHICH I FORWARDED TO YOU WITH MY LETTER OF 23 MARCH 1964 (SUBJECT TO THE CORRECTION SHOWN IN MY LETTER DATED 24 MARCH 1964) ARE TRUE AND CORRECT. MR. MANCINI HAS ALSO ADVISED ME THAT HE CANNOT RECALL THE NAME OF THE LEAR SIEGLER, INC. REPRESENTATIVE WHO ORALLY ADVISED MR. MANCINI THAT LEAR SIEGLER DID INTEND TO ASSIST SHERIDAN-GRAY FINANCIALLY IN THE PERFORMANCE OF THE CONTRACT, BUT THAT SUCH ADVICE WAS GIVEN PERSONALLY TO MR. MANCINI IN A TELEPHONE CONVERSATION. THERE IS ENCLOSED FOR YOUR FILE A COPY OF A TELEGRAM RECEIVED BY NAEC ON 24 DECEMBER 1964 (1963) IN WHICH SHERIDAN GRAY ADVISED THAT CONTRACT PERFORMANCE WOULD BE FINANCED THROUGH THE USE OF CORPORATE FUNDS OF SHERIDAN GRAY, INC. AND LEAR SIEGLER, INC. MR. MANCINI HAS STATED TO ME THAT HIS BELIEF THAT SHERIDAN GRAY, INC. COULD OBTAIN FINANCIAL ASSISTANCE, IF NEEDED, FROM LEAR SIEGLER, INC. WAS A STRONG FACTOR IN RESOLVING THE DOUBT ENTERTAINED BY MR. MANCINI WITH RESPECT TO THE FINANCIAL ABILITY OF SHERIDAN GRAY, INC. TO PERFORM IF THE CONTRACT WERE AWARDED TO THAT COMPANY.'

ENCLOSED WITH THAT LETTER IS A COPY OF SDP FORM 222, STATEMENT OF FUND AVAILABILITY AND RESPONSIBILITY OF PROSPECTIVE CONTRACTOR, DATED DECEMBER 24, 1963, WHICH CONSTITUTES THE DETERMINATION OF RESPONSIBILITY OF SHERIDAN GRAY UNDER ASPR 1-904.1.

IN VIEW OF THE ABOVE-CITED FACTS, IT IS APPARENT THAT THE FINANCIAL RESPONSIBILITY OF SHERIDAN GRAY WAS NOT ESTABLISHED PRIOR TO AWARD. IN A PROCUREMENT OF THIS SIZE, WE BELIEVE THAT THE DETERMINATION OF RESPONSIBILITY SHOULD BE SUBSTANTIATED BY WRITTEN RELIABLE COMMITMENTS OF FINANCIAL ASSISTANCE AND THAT, AS A MINIMUM, WHERE DOUBT EXISTS AS TO CERTAIN ELEMENTS OF RESPONSIBILITY, PREAWARD SURVEYS SHOULD BE CONDUCTED AS PROVIDED IN ASPR 1-905.4.

WHILE WE CANNOT NOW CONCLUDE THAT THE AWARD AS MADE WAS LEGALLY OBJECTIONABLE, WE RECOMMEND THAT APPROPRIATE MEASURES BE TAKEN TO PREVENT A RECURRENCE OF THE ADMINISTRATIVE ACTIONS TAKEN HERE.

THE ATTACHMENTS TO THE CONTRACTING OFFICER'S STATEMENT OF FACTS ARE ..END