B-153896, JUN. 10, 1964

B-153896: Jun 10, 1964

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TO CHICAGO PNEUMATIC TOOL COMPANY: REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 6. BIDS WERE REQUESTED ON INCREMENTAL QUANTITIES RANGING FROM A MINIMUM QUANTITY OF 18 SETS TO A MAXIMUM QUANTITY OF 72 SETS. BIDS WERE OPENED ON JANUARY 29. THREE BIDS WERE RECEIVED. 557 EACH FOR THE MINIMUM QUANTITY OF 18 UNITS WAS THE LOWEST BID RECEIVED. THE SPECIFICATION FOR THE ENGINE TO BE FURNISHED WITH THE GENERATOR SETS WAS SET OUT IN SECTION II OF EXHIBIT SMNRS 63-32. HAVE EACH HAD A MINIMUM OF 8000 HOURS ACCUMULATED SERVICE PRIOR TO BID OPENING. DOES NOT PROVE THAT THE ENGINE WAS CAPABLE OF CONTINUOUS OPERATION AT 720 R.P.M. COULD NOT HAVE HAD 8. WHEN THIS PROTEST WAS RECEIVED THE CONTRACTING OFFICER SOUGHT ADVICE FROM THE TECHNICAL PERSONNEL AT MCCLELLAN AIR FORCE BASE AND WAS ADVISED THAT THE AFFIDAVITS SUBMITTED BY EACH OF THE THREE BIDDERS WERE SATISFACTORY INSOFAR AS MEETING THE ENGINE REQUIREMENTS OF EXHIBIT SMNRS 63-32.

B-153896, JUN. 10, 1964

TO CHICAGO PNEUMATIC TOOL COMPANY:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 6, 1964, AND LETTERS OF APRIL 9 AND MAY 6 AND 12, 1964, FROM YOUR ATTORNEYS, PROTESTING THE CANCELLATION OF YOUR CONTRACT NO. AF 04/606/-13074.

ON DECEMBER 23, 1963, THE SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, CALIFORNIA, ISSUED AN INVITATION SOLICITING BIDS FOR FURNISHING AN INDEFINITE QUANTITY OF 500 K.W. DIESEL ENGINE GENERATOR SETS AND AUXILIARY EQUIPMENT, IN ACCORDANCE WITH EXHIBIT SMNRS 63-32, DATED DECEMBER 10, 1963, REVISED DECEMBER 26, 1963. BIDS WERE REQUESTED ON INCREMENTAL QUANTITIES RANGING FROM A MINIMUM QUANTITY OF 18 SETS TO A MAXIMUM QUANTITY OF 72 SETS, TO BE ORDERED BY THE GOVERNMENT AS REQUIRED DURING THE PERIOD OF 12 MONTHS FOLLOWING DATE OF AWARD OF CONTRACT.

BIDS WERE OPENED ON JANUARY 29, 1964. THREE BIDS WERE RECEIVED. YOUR BID IN THE AMOUNT OF $46,557 EACH FOR THE MINIMUM QUANTITY OF 18 UNITS WAS THE LOWEST BID RECEIVED. WHITE DIESEL ENGINE DIVISION, THE WHITE MOTOR COMPANY, SUBMITTED THE SECOND LOW BID OF $48,721 EACH FOR THE SAME QUANTITY.

THE SPECIFICATION FOR THE ENGINE TO BE FURNISHED WITH THE GENERATOR SETS WAS SET OUT IN SECTION II OF EXHIBIT SMNRS 63-32, PARAGRAPH 1C OF WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"* * * THE ENGINE, ITS COMPONENTS, AND ACCESSORIES SHALL BE THE STANDARD PRODUCT OF THE MANUFACTURER AND SHALL BE OF A TYPE, DESIGN AND FORM THAT, PRIOR TO THE OPENING BIDS, HAS HAD A MINIMUM OF 8000 HOURS ACCUMULATED SERVICE ON ONE INDIVIDUAL ENGINE, WITHOUT A MALFUNCTION CONSIDERED MAJOR IN THE OPINION OF THE CONTRACTING OFFICER. CERTIFICATION SHOWING CONFORMANCE TO THE ABOVE SPECIFIED MINIMUM ACCUMULATED SERVICE SHALL BE SUBMITTED TO THE CONTRACTING OFFICER AS PART OF THE BID PACKAGE. THIS CERTIFICATION SHALL INCLUDE MODEL NUMBER OF ENGINE, STATEMENT THAT ENGINE CONFORMS TO ALL REQUIREMENTS OF THE SPECIFICATION, AND A LIST OF INSTALLATIONS AND USERS OF THE ENGINE. * * *"

THE AFFIDAVIT SUBMITTED BY YOU WITH YOUR BID CERTIFIED THAT---

"* * * THE FOLLOWING ENGINES, OF TYPE, DESIGN AND FORM TO THOSE OFFERED IN RESPONSE TO BID INVITATION NO. 04-606-64-127, AND CONFORMING TO ALL REQUIREMENTS OF THE SPECIFICATIONS, HAVE EACH HAD A MINIMUM OF 8000 HOURS ACCUMULATED SERVICE PRIOR TO BID OPENING.

"MODEL 89-CPS SERIAL NO. 67734 INSTALLED AT CHURCH FARM, MISSOURI STATE PRISON, JEFFERSON CITY, MISSOURI.

"MODEL 89A-CPS SERIAL NO. 71427 INSTALLED IN KOREA NYLON COMPANY, KOREA.

"MODEL 89A-CPS SERIAL NO. 71428 INSTALLED IN KOREA NYLON COMPANY, KOREA.'

WHITE MOTOR FILED A PROTEST WITH THE CONTRACTING OFFICER AGAINST AN AWARD TO YOUR FIRM, ALLEGING THAT YOU FURNISHED INCOMPLETE INFORMATION IN YOUR AFFIDAVIT AND FALSE STATEMENTS CONCERNING THE EXPERIENCE QUALIFICATION OF THE ENGINE YOU PROPOSED TO FURNISH WITH YOUR GENERATOR SETS. WHITE MOTOR POINTED OUT THAT THE ENGINE WITH SERIAL NO. 67734 INSTALLED AT THE MISSOURI STATE PRISON FARM HAS A FULL LOAD RATING OF 417 K.W. AND DOES NOT PROVE THAT THE ENGINE WAS CAPABLE OF CONTINUOUS OPERATION AT 720 R.P.M. AT THE RATED LOAD OF 500 K.W. ALSO, WHITE MOTOR POINTED OUT THAT THE ENGINES WITH SERIAL NOS. 71427 AND 71428 INSTALLED IN KOREA SHIPPED TO THE CUSTOMER FROM NEW YORK ON JUNE 18, 1963, AND COULD NOT HAVE HAD 8,000 HOURS OF SERVICE PRIOR TO THE OPENING OF BIDS.

WHEN THIS PROTEST WAS RECEIVED THE CONTRACTING OFFICER SOUGHT ADVICE FROM THE TECHNICAL PERSONNEL AT MCCLELLAN AIR FORCE BASE AND WAS ADVISED THAT THE AFFIDAVITS SUBMITTED BY EACH OF THE THREE BIDDERS WERE SATISFACTORY INSOFAR AS MEETING THE ENGINE REQUIREMENTS OF EXHIBIT SMNRS 63-32. THE CONTRACTING OFFICER THEN ARRANGED A MEETING WITH YOUR REPRESENTATIVES AND THE LOCAL STAFF JUDGE ADVOCATE TO AFFORD YOUR FIRM AN OPPORTUNITY TO EXPLAIN THE STATEMENTS IN YOUR AFFIDAVIT. IT WAS ADMITTED THAT THE AFFIDAVIT AS TO THE TWO ENGINES INSTALLED IN KOREA WAS IN ERROR INSOFAR AS THE 8,000-HOUR EXPERIENCE REQUIREMENT WAS CONCERNED. THE CONTRACTING OFFICER DISALLOWED THE PROTEST OF WHITE MOTOR AND AWARDED THE CONTRACT TO YOUR FIRM ON MARCH 18, 1964. ON MARCH 24, 1964, WHITE MOTOR FILED A PROTEST AGAINST THE AWARD WITH HEADQUARTERS UNITED STATES AIR FORCE (USAF). AS A RESULT OF A PRELIMINARY REVIEW OF THE PROCUREMENT, HEADQUARTERS USAF DETERMINED THAT THE PROPRIETY OF THE AWARD WAS QUESTIONABLE AND THAT THE PROTEST APPARENTLY HAD MERIT. ACCORDINGLY, ON MARCH 25, 1964, HEADQUARTERS USAF INSTRUCTED THE PROCURING ACTIVITY TO ADVISE YOUR FIRM OF THE NEW PROTEST AND PUT YOU ON NOTICE THAT ANY WORK PERFORMED ON THE CONTRACT WOULD BE AT YOUR OWN RISK. YOU WERE NOTIFIED ON MARCH 26, 1964, OF THIS MATTER. THE HEADQUARTERS USAF IN ITS REPORT OF APRIL 22, 1964, REPORTS THAT---

"* * * SUBSEQUENTLY, ON THE BASIS OF A COMPLETE REPORT RECEIVED FROM THE PROCURING ACTIVITY AND ADDITIONAL INFORMATION FURNISHED BY TECHNICAL PERSONNEL AT HEADQUARTERS USAF AND OTHER GOVERNMENT AGENCIES PROCURING SIMILAR GENERATOR SETS, HEADQUARTERS USAF DECIDED THAT THE BID OF CHICAGO PNEUMATIC WAS IN FACT NONRESPONSIVE TO THE REQUIREMENT OF THE SPECIFICATION DISCUSSED ABOVE. WE CONCLUDED THAT THE AWARD WHICH WAS MADE IMPROPERLY IN ACCEPTANCE OF A NONRESPONSIVE BID WAS NULL AND VOID. ON 2 APRIL 1964 WE REQUESTED THE PROCURING ACTIVITY TO CANCEL THE ILLEGAL AWARD AND AWARD THE CONTRACT TO WHITE MOTOR AS THE LOWEST RESPONSIVE BIDDER. THE CONTRACT AWARDED TO CHICAGO PNEUMATIC WAS CANCELLED ON 6 APRIL 1964. HOWEVER, IN VIEW OF THE PROTEST OF CHICAGO PNEUMATIC TO YOUR OFFICE, ACTION TO AWARD THE CONTRACT TO WHITE MOTOR HAS BEEN SUSPENDED PENDING YOUR DECISION ON THE PROTEST.'

IN SUPPORT OF YOUR CONTENTION THAT THE CANCELLATION OF YOUR CONTRACT IS "VOID AND OF NO EFFECT" IT IS POINTED OUT THAT THE CONTRACT WAS VALIDLY AWARDED BY THE CONTRACTING OFFICER AND HAS NOT BEEN VALIDLY "CANCELLED, TERMINATED OR OTHERWISE ABROGATED BY THE INDEPENDENT JUDGMENT OF THE CONTRACTING OFFICER" AND REFERENCE IS MADE TO THE CASE OF JOHN REINER AND COMPANY V. UNITED STATES, CT.CL.NO. 431-57, DECIDED DECEMBER 13, 1963, WHEREIN THE CONTRACTOR PREVAILED IN ITS SUIT FOR BREACH OF CONTRACT BECAUSE OF IMPROPER CANCELLATION. ALSO, IT IS STATED THAT THE EXPERIENCE REQUIREMENT IN THE SPECIFICATION IS A MATTER OF INTERPRETATION AND THE INTERPRETATION BY THE CONTRACTING OFFICER WAS IN LINE WITH THAT "MAINTAINED BY THE AIR FORCE PRIOR TO THE RETROACTIVE CHANGE IN POLICY.' IT IS STATED FURTHER THAT IF THERE IS AN INTERNAL CONFLICT IN THE PROCURING AGENCY AS TO THE MEANING OF THE INVITATION, THE MATTER SHOULD HAVE BEEN RESOLVED IN FAVOR OF YOUR FIRM AND THAT YOUR BID WAS RESPONSIVE TO THE INVITATION.

WITH REGARD TO THE CONTENTION THAT THE LANGUAGE IN THE SPECIFICATIONS APPLICABLE IN THIS CASE MUST BE CONSTRUED IN THE LIGHT OF THE LANGUAGE USED IN PRIOR PROCUREMENTS THE HEADQUARTERS USAF IN ITS REPORT TO OUR OFFICE BY LETTER OF APRIL 22, 1964, STATES IN PERTINENT PART AS FOLLOWS:

"9. WE HAVE REVIEWED THOROUGHLY THE ARGUMENTS ADVANCED BY THE ATTORNEYS OF CHICAGO PNEUMATIC IN SUPPORT OF THE PROTEST. AS BACKGROUND INFORMATION, THEY REFER TO A PRIOR PROCUREMENT OF GENERATORS IN 1960 BY THE ARMY CORPS OF ENGINEERS. THIS PRIOR PROCUREMENT IS CITED TO SHOW THAT A DIFFERENCE OF 10 PERCENT IN THE SIZE OF THE ENGINE BORE IS NOT CONSIDERED A SUBSTANTIAL CHANGE AND THAT WHITE MOTOR RECEIVED A CONTRACT FOR THIS PROCUREMENT IN SPITE OF THE FACT THAT THE BORE DIAMETER OF THE ENGINE THAT IT HAD QUALIFIED AS HAVING THE 8000 HOURS EXPERIENCE WAS NOT IDENTICAL TO THE BORE DIAMETER OF THE ENGINE FURNISHED UNDER THE CONTRACT. WHAT THEY FAILED TO CONSIDER, HOWEVER, IS THE FACT THAT THE SPECIFICATIONS FOR THIS PROCUREMENT WERE DIFFERENT FROM THOSE FOR THE PROCUREMENT IN QUESTION IN THAT THEY PROVIDED THAT THE ENGINE TO BE FURNISHED WAS REQUIRED TO HAVE PERFORMED 8000 HOURS OF SATISFACTORY OPERATION WITHIN A PERIOD OF TWO YEARS OR LESS WITHOUT SUBSTANTIAL CHANGE PRIOR TO THE OPENING OF BIDS. THE SPECIFICATIONS FOR THE PRIOR PROCUREMENT ALLOWED SOME CHANGE IN THE ENGINE POSSESSING THE QUALIFYING EXPERIENCE AS COMPARED WITH THE ENGINE BEING OFFERED, PROVIDED THE CHANGE WAS NOT CONSIDERED SUBSTANTIAL. THE INVITATION FOR BID WAS AMENDED TO STATE THAT A 10 PERCENT CHANGE IN THE CYLINDER BORE OR IN THE NUMBER OF CYLINDERS WAS NOT CONSIDERED A SUBSTANTIAL CHANGE FOR THAT PARTICULAR PROCUREMENT. IN THE INSTANT PROCUREMENT THE SPECIFICATION DOES NOT PERMIT ANY CHANGE IN THE ENGINE THAT HAS THE REQUIRED 8000 HOURS QUALIFYING EXPERIENCE. IN ADDITION, CHICAGO PNEUMATIC DOES NOT SHOW THAT THE ENGINE INSTALLED IN THE MISSOURI STATE PRISON HAS THE REQUIRED EXPERIENCE WHILE OPERATING WITH A 500 KW GENERATOR. THIS PRIOR PROCUREMENT BEING UNDER DIFFERENT SPECIFICATIONS AND UNDER DIFFERENT CONDITIONS, CANNOT BE USED TO SUPPORT THE ARGUMENT THAT THE DIFFERENCE IN THE SIZE OF THE ENGINE BORE IS NOT SIGNIFICANT AND MAY BE WAIVED.'

IT IS STRESSED IN THE LETTER OF MAY 6, 1964, FROM YOUR ATTORNEYS THAT PROSPECTIVE BIDDERS SHOULD HAVE BEEN ADVISED IF THERE WAS TO BE CHANGE IN THE INTERPRETATION OF THE EXPERIENCE REQUIREMENTS FROM THOSE CONSIDERED IN CONNECTION WITH A PRIOR PROCUREMENT UNDER INVITATION FOR BIDS ISSUED ON JULY 2, 1962, WHERE SIMILAR LANGUAGE WAS USED. IN REGARD TO THIS MATTER THE ADMINISTRATIVE OFFICE REPORT OF APRIL 22, 1964, STATES FURTHER THAT---

"10. A PROCUREMENT AT MCCLELLAN OF FOUR GENERATOR SETS IN 1962 WHICH RESULTED IN AN AWARD TO CHICAGO PNEUMATIC IS ALSO CITED IN SUPPORT OF THE PROTEST. WE HAVE REVIEWED THIS PRIOR PROCUREMENT AND FIND THAT THE SAME ERROR WAS MADE BY MCCLELLAN AIR FORCE BASE IN ACCEPTING THE BID OF CHICAGO PNEUMATIC AS RESPONSIVE TO THE SAME EXPERIENCE REQUIREMENT AS WAS MADE IN THE INSTANT PROCUREMENT. IN THAT CASE CHICAGO PNEUMATIC FURNISHED AN AFFIDAVIT WHICH LISTED FOUR SPECIFIC ENGINES MADEL 89A-CPS WHICH WERE IN USE IN CERTAIN LOCATIONS IN IRAN AND ECUADOR AS HAVING REQUIRED 8000 HOURS EXPERIENCE. HOWEVER, NO PROOF WAS OFFERED BY CHICAGO PNEUMATIC THAT ANY OF THESE FOUR ENGINES HAD ACTUALLY ACCUMULATED THE REQUIRED 8000 HOURS OF SERVICE AND IT IS SIGNIFICANT TO NOTE THAT IN FURNISHING AN AFFIDAVIT FOR THE INSTANT PROCUREMENT, CHICAGO PNEUMATIC DID NOT OFFER THE EXPERIENCE OF THESE ENGINES FOR QUALIFICATION PURPOSES. IT APPEARS THAT CHICAGO PNEUMATIC'S BID FOR THIS PRIOR PROCUREMENT WAS SIMILARLY NONRESPONSIVE TO THIS ENGINE QUALIFICATION REQUIREMENT AND SHOULD HAVE BEEN REJECTED. THIS CONTRACT WAS AWARDED IN 1962 AND HAS NOT BEEN FULLY PERFORMED. THEREFORE, IT IS NOW TOO LATE TO TAKE ANY CORRECTIVE ACTION. THE FOUR GENERATORS DELIVERED UNDER THIS CONTRACT WERE SHIPPED TO KOREA, BUT HAVE NOT YET BEEN INSTALLED. THEREFORE, WE HAVE NO EXPERIENCE AS TO THEIR PERFORMANCE.'

ON PAGE 3 OF THE LETTER OF MAY 6, IT IS STATED THAT THE WORDS "WITHOUT MAJOR MALFUNCTION" IN THE PRESENT INVITATION FOR BIDS AND THE 1962 INVITATION FOR BIDS SERVE THE SAME FUNCTION AS THE WORDS "WITHOUT SUBSTANTIAL CHANGE" IN THE INVITATION USED IN THE 1960 PROCUREMENT. THE 1960 PROCUREMENT WAS MADE ON THE BASIS OF AN INVITATION WHICH PROVIDED IN PART AS FOLLOWS:

"* * * EACH ENGINE SHALL BE THE STANDARD PRODUCT OF THE MANUFACTURER, COMPLETE WITH ALL DEVICES NORMALLY FURNISHED AND SHALL BE, WITHOUT SUBSTANTIAL CHANGE, OF A TYPE, DESIGN AND FORM WHICH HAS HAD AT LEAST 8,000 HOURS OF SATISFACTORY OPERATION IN AN INDEPENDENT STATIONARY POWER PLANT, WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES, UNDER TYPICAL LOAD CONDITIONS ACCUMULATED DURING A PERIOD OF TWO YEARS OR LESS OF SERVICE PRIOR TO THE OPENING OF BIDS. THE 8,000 HOURS OF OPERATION SHALL HAVE BEEN ACCOMPLISHED AT THE SAME OR FASTER ENGINE SPEED AS THAT OF THE ENGINES PROPOSED FOR THIS INSTALLATION. THE WORDS "SUBSTANTIAL CHANGE" SHALL MEAN A CHANGE IN RATING OF MORE THAN 10 PERCENT AND/OR MAJOR REVISIONS OF ENGINE COMPONENTS SUCH AS BEARINGS, CRANKSHAFT, COUNTERWEIGHTS, CAMSHAFT, PISTONS, CYLINDER LINERS, CYLINDER HEADS AND ALSO REVISION OF COOLING AND LUBRICATING SYSTEMS OF THE ENGINES. A CHANGE IN CYLINDER BORE OF NOT MORE THAN 10 PERCENT OR A DECREASE IN THE NUMBER OF CYLINDERS IS NOT CONSIDERED A SUBSTANTIAL CHANGE FOR THE PURPOSE OF EVALUATION OF BIDS UNDER THIS INVITATION FOR BIDS. * * *"

COMPARING THE WORDS "8000 HOURS OF SATISFACTORY OPERATION" WHICH WERE REPLACED BY THE WORDS ,8000 HOURS ACCUMULATED SERVICE WITHOUT A MALFUNCTION CONSIDERED MAJOR IN THE OPINION OF THE CONTRACTING OFFICER" WE AGREE WITH THE ADMINISTRATIVE DETERMINATION THAT THE SPECIFICATION IN THE INSTANT PROCUREMENT DOES NOT PERMIT ANY CHANGE IN THE ENGINE WHICH HAS THE REQUIRED 8,000 HOURS QUALIFYING EXPERIENCE.

THE REASON FOR THE DEPARTMENT'S LIMITATION OF PERMISSIBLE DEVIATION BETWEEN PROCUREMENT SPECIFICATIONS AND UNITS SUBMITTED BY BIDDERS AS HAVING PROVEN EXPERIENCE IS WELL SET OUT IN PARAGRAPH 11 OF ITS LETTER OF APRIL 22, 1964, AS FOLLOWS:

"11. THIS DEPARTMENT AS WELL AS OTHER DEPARTMENTS OF THE GOVERNMENT HAVE EXPERIENCED SERIOUS FAILURES WITH DIESEL ENGINES FOR ELECTRIC POWER GENERATORS. CONSIDERABLE STUDY AND EFFORT HAS GONE INTO THE PREPARATION OF SPECIFICATIONS FOR DIESEL ENGINE GENERATORS AND FOR ESTABLISHING STANDARDS AND CRITERIA THAT WILL ASSURE THAT THE GOVERNMENT IN BUYING THESE LARGE GENERATOR SETS OBTAINS A COMMERCIAL ITEM WHICH HAS PROVED ITS RELIABILITY IN THE COMMERCIAL MARKET. GREAT SIGNIFICANCE IS THEREFORE ATTACHED TO THE REQUIREMENT IN THIS SPECIFICATION THAT THE DIESEL ENGINE FURNISHED WITH THE GENERATOR SET SHALL HAVE ACCUMULATED THE 8000 HOURS OF SERVICE WITHOUT MAJOR MALFUNCTION. THIS REQUIREMENT DOES NOT MEAN THAT AN ENGINE SIMILAR TO THE ONE BEING FURNISHED SHALL HAVE HAD THAT QUALIFYING EXPERIENCE. MEANS THAT THE ENGINE FOR THE GENERATOR BEING FURNISHED SHALL BE THE SAME IDENTICAL ENGINE THAT HAS PROVED ITSELF TO BE RELIABLE. THE GOVERNMENT FEELS THAT INDUSTRY SHOULD ASSUME THE COST AND RISK OF PROVING THAT THE ENGINE IT OFFERS TO SELL TO THE GOVERNMENT IS RELIABLE AND WILL GIVE SATISFACTORY SERVICE. THIS POLICY IS UNDERSTOOD AND ACCEPTED BY INDUSTRY. WE BELIEVE THAT CHICAGO PNEUMATIC IS FULLY AWARE OF THAT POLICY AND EITHER KNEW OR SHOULD HAVE KNOW THAT THE CERTIFICATION IT OFFERED WAS NOT CORRECT. IN OUR OPINION, THE LANGUAGE OF THE SPECIFICATION SHOWS CLEARLY THAT THIS REQUIREMENT APPLIES TO THE SPECIFIC ENGINE BEING FURNISHED TO THE GOVERNMENT AND NOT TO A SIMILAR ENGINE. THIS IS SHOWN BY READING AS A WHOLE PARAGRAPH II-1C OF THE EXHIBIT. IT STATES THAT THE CERTIFICATION SHALL INCLUDE THE MODEL NUMBER OF THE ENGINE AND A STATEMENT THAT THE ENGINE CONFORMS TO ALL THE REQUIREMENTS OF THE SPECIFICATION. YOUR ATTENTION IS SPECIFICALLY INVITED TO A LETTER FROM THE DEPUTY CHIEF, ENGINEERING DIVISION, DIRECTORATE OF CIVIL ENGINEERING, HEADQUARTERS USAF, DATED 2 APRIL 1964, WHICH STATES IN PERTINENT PART AS FOLLOWS:

"WE ARE OF THE STUDIED OPINION THAT THE WORDING OF PARAGRAPH 1C OF SECTION II OF SUBJECT EXHIBIT CLEARLY INDICATES THAT THE REQUIREMENT OF 8000 HOURS EXPERIENCE IN A TWO YEAR PERIOD OF TIME SHALL BE ACCUMULATED ON A GENERATING SET CAPABLE OF PRODUCING 500 KW.

"THIS IS SUPPORTED BY THE FACT THAT IT IS STATED IN THIS SAME PARAGRAPH THAT THE ENGINE SHALL CONFORM TO ALL PROVISIONS OF REFERENCED SPECIFICATION, THAT THE ENGINE SHALL BE DERATED FOR USE AT 6500 FEET ABOVE SEA LEVEL AND SHALL INCLUDE PROPER ALLOWANCE IN THE NET ENGINE RATING FOR ADDITIONAL POWER REQUIREMENTS OF ACCESSORIES. THIS INDICATES CLEARLY THAT A DEFINITE OUTPUT RATING IS A PART OF THIS SPECIFICATION. THE RATING OF 500 KW IS A PART OF THE SUBJECT OF REFERENCED EXHIBIT "500 KW POWER STATION EQUIPMENT" AND IS FURTHER SPECIFIED IN PARAGRAPH 1A OF SECTION I IN THE BODY OF THE DOCUMENT.'"

WHAT CONSTITUTES A PERMISSIBLE DEVIATION BETWEEN PROCUREMENT SPECIFICATIONS AND ENGINES POINTED OUT BY BIDDERS AS HAVING PROVEN EXPERIENCE IS NOT A QUESTION OF LAW OR INTERPRETATION OF THE LANGUAGE OF THE INVITATION. IN THE FINAL ANALYSIS THE MATTER RESOLVES ITSELF INTO A TECHNICAL QUESTION AS TO WHETHER THE EXPERIENCE OF A PARTICULAR ENGINE MEETS THE REQUIREMENT OF THE SPECIFICATIONS IN THAT IT REQUIRES THE DETERMINATION AS TO WHETHER CERTAIN DEVIATIONS THAT EXIST BETWEEN THE ENGINE REFERRED TO AS MEETING THE 8,000-HOUR OPERATION TEST AND THE ENGINE REQUIRED TO BE DELIVERED ARE MINOR AND "ACCEPTABLE.' THIS MATTER IS REFERRED TO IN A MEMORANDUM OF APRIL 15, 1964, FROM THE DEPUTY CHIEF, ENGINEERING DIVISION, DIRECTORATE OF CIVIL ENGINEERING, HEADQUARTERS USAF, IN PART AS FOLLOWS:

"2. AN EXPERIENCE REQUIREMENT CAREFULLY AND CLEARLY SPELLED OUT IS CONSIDERED TO BE ONE OF THE MOST IMPORTANT SINGLE ITEMS NECESSARY IN PROCUREMENT SPECIFICATIONS FOR DIESEL ENGINE DRIVEN GENERATORS.

"3. TORSIONAL VIBRATION, THERMAL SHOCK, THE COOLING SYSTEM, THE LUBRICATION SYSTEM, INSULATING VALUES AND CAPABILITY TO MAINTAIN FREQUENCY WITHIN DESIRED LIMITS ARE ALL ITEMS THAT ARE EVALUATED AND PROVEN BY OPERATING EXPERIENCE. WHILE CAREFUL DESIGN WILL ELIMINATE MANY PROBLEMS THE PROOF LIES IN THE OPERATION EXPERIENCE.

"4. THE DEGREE OF PERMISSIBLE DEVIATION BETWEEN PROCUREMENT SPECIFICATIONS AND UNITS SUBMITTED BY BIDDERS AS HAVING PROVEN EXPERIENCE HAS BEEN RAISED MANY TIMES. THE COLOR OF PAINT, SIZE OF STEEL SKID, ELEVATION ABOVE SEA LEVEL HAVE BEEN CONSIDERED TO BE ITEMS WHEREIN DEVIATIONS ARE ACCEPTABLE. HOWEVER, OPERATION AT A LOWER CAPACITY, CHANGE IN NUMBER OF CYLINDERS, THE BORE DIAMETER, LENGTH OF STROKE, GOVERNING SYSTEM, COOLING SYSTEM AND METHOD OF EXCITATION ARE ALL ITEMS CONSIDERED TO BE UNACCEPTABLE DEVIATIONS WHICH COULD RESULT IN A FAILURE TO MEET POWER PRODUCTION REQUIREMENTS.'

THE REASONS FOR THE CANCELLATION OF YOUR CONTRACT ARE SET FORTH IN PARAGRAPH 12 OF THE DEPARTMENT'S LETTER OF APRIL 22, 1964, AS FOLLOWS:

"12. IT IS OUR POSITION THAT THE ENGINE INSTALLED AT THE MISSOURI STATE PRISON FARM CANNOT BE ACCEPTED AS MEETING THE REQUIREMENTS OF PARAGRAPH 11 -1C. THAT ENGINE HAS ONLY 606 H.P. CAPACITY AND CANNOT BE USED TO OPERATE A 500 KW GENERATOR. IT ACTUALLY OPERATED ONLY A 417 KW GENERATOR AND AT THE MOST COULD GENERATE ONLY 420 KW. INCIDENTALLY THIS ENGINE SUFFERED A MAJOR MALFUNCTION AFTER 2450 HOURS AND ALTHOUGH IT OPERATED THEREAFTER FOR MORE THAN 8000 ADDITIONAL HOURS WITH A MAJOR MALFUNCTION IT HAS NOW SUFFERED A MOST SERIOUS MALFUNCTION, NAMELY, A BROKEN CRANK SHAFT. WHEN THE CONTRACTING OFFICER ACCEPTED THE EXPERIENCE OF THIS ENGINE AS MEETING THE REQUIREMENT OF THE SPECIFICATIONS, HE ACTED IN SERIOUS ERROR AND THE AWARD DID NOT RESULT IN A VALID AND BINDING CONTRACT. THERE WAS NO ASSURANCE UNDER SUCH CONTRACT THAT THE GOVERNMENT WOULD BE FURNISHED DIESEL ENGINE GENERATOR SETS OF A PROVEN RELIABLE QUALITY. TO CONTINUE WITH SUCH CONTRACT WOULD FORCE THE GOVERNMENT TO ASSUME THE RISK OF ACQUIRING GENERATORS FOR SHIPMENT AND INSTALLATION IN OVERSEAS LOCATIONS WITH NO ASSURANCE THAT THEY WILL OPERATE SATISFACTORILY. THE SPECIFICATION WAS DESIGNED TO PRECLUDE SUCH A SITUATION.'

OUR OFFICE MUST NECESSARILY RELY ON THE DETERMINATION MADE BY THE ADMINISTRATIVE OFFICE ON MATTERS INVOLVING TECHNICAL KNOWLEDGE. ACCORDINGLY, WE MUST ACCEPT THE DETERMINATION MADE IN THIS CASE AT A HIGHER LEVEL WITHIN THE DEPARTMENT.

ALTHOUGH IT IS CONTENDED ON PAGE 9 OF THE LETTER OF MAY 6, 1964, AND YOUR LATER LETTER OF MAY 12, THAT THIS INVOLVES THE QUESTION OF THE ABILITY OF YOUR FIRM TO PERFORM, WE CANNOT AGREE WITH THIS CONTENTION. THE PRIMARY QUESTION IS WHETHER YOUR PRODUCT (ENGINE WITH 8,000-HOUR EXPERIENCE) QUALIFIES AS A PRODUCT TO BE PROCURED UNDER THE INVITATION. THE QUESTION IS NOT THE RESPONSIBILITY OF THE BIDDER AS SUCH. IT IS GENERALLY ADMITTED THAT BOTH WHITE MOTOR AND YOUR FIRM HAVE SUFFICIENT EXPERIENCE TO PRODUCE THE ITEMS TO BE PROCURED AND THUS THIS CASE IS TO BE DISTINGUISHED FROM CASES WHICH PERTAIN TO THE QUALIFICATION OF A BIDDER REFERRED TO IN THE LETTER OF MAY 6, 1964. ALSO, WHILE IT IS STATED ON PAGE 13 OF THE LETTER OF MAY 6, 1964, THAT WHERE SPECIFICATIONS HAVE SEVERELY NARROWED THE FIELD OF COMPETITIVE BIDDERS, OUR OFFICE HAS DECLARED THEM INVALID, THE DECISIONS REFERRED TO DO NOT RULE OUT ANY AND ALL RESTRICTIVE SPECIFICATIONS WHERE SUCH RESTRICTIONS SERVE A USEFUL OR NECESSARY PURPOSE IN MEETING THE NEEDS OF THE GOVERNMENT. WE FEEL THAT THE NEED FOR THE RESTRICTIVE SPECIFICATION IN THIS INSTANCE HAS BEEN FULLY JUSTIFIED BY THE DEPARTMENT IN PARAGRAPH 11 OF ITS LETTER OF APRIL 22, 1964, QUOTED HEREINABOVE.

AS TO YOUR REFERENCE TO THE REINER CASE DECIDED RECENTLY BY THE COURT OF CLAIMS, IT IS NOT BELIEVED THAT THE FACTS IN THAT CASE PARALLEL THE FACTS HERE SINCE THAT CASE INVOLVED A MATTER NOT CONCERNED WITH THE FAILURE OF THE SUCCESSFUL BIDDER TO OFFER A PRODUCT QUALIFIED BY MEETING THE EXPERIENCE REQUIREMENTS OF THE INVITATION, AS IN THIS CASE, BUT SIMPLY A MATTER WHERE OUR OFFICE HAD DETERMINED THAT THE AWARD WAS IMPROPER BECAUSE THE INVITATION HAD NOT ADEQUATELY INFORMED BIDDERS AS TO HOW THEY SHOULD BID WITH RESPECT TO DELIVERY DATES. REGARDLESS OF THIS, HOWEVER, THE FACT REMAINS THAT THE ADMINISTRATIVE OFFICIALS AT THE HIGHER LEVEL IN THE DEPARTMENT HAVE DECIDED THAT THE NEEDS OF THE GOVERNMENT WILL BE BETTER SERVED BY INSISTING THAT, FOR ALL PRACTICAL PURPOSES, THE ENGINES TO BE FURNISHED ARE THE IDENTICAL ONES THAT HAVE PROVED THEIR RELIABILITY IN THE COMMERCIAL MARKET AND, THEREFORE, THE DEVIATIONS BETWEEN THE "EXPERIENCED" ENGINES AND THOSE TO BE FURNISHED SHOULD BE RELATIVELY MINOR IN NATURE.