B-153899, SEP. 24, 1964

B-153899: Sep 24, 1964

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WAS NEGOTIATED UNDER REQUEST FOR PROPOSALS 01-601-64-1320 ISSUED ON JANUARY 23. SEVEN PROPOSALS WERE RECEIVED AND THE LOWEST UNIT PRICE. WAS ONLY SLIGHTLY UNDER THE $28.67 OFFERED BY DETROIT DIESEL ENGINE DIVISION. WAS SUBSTANTIALLY LESS THAN YOUR OWN PRICE OF $46.13 PER UNIT. CONCLUDING THAT CONSIDERABLY MORE THAN HALF THE COSTS OF THE PRODUCT IT PROPOSED TO FURNISH WERE DOMESTIC. IT BELIEVED IT WAS COMPLYING WITH THE BUY AMERICAN ACT. THE PRODUCT IT PROPOSED TO FURNISH WOULD RIGHTFULLY HAVE TO BE CONSIDERED FOREIGN MADE. THIS RESULTED IN THE CONTRACTOR'S RECONSIDERING THE SOURCES FROM WHICH IT WAS OBTAINING THE NECESSARY COMPONENTS AND CHANGING THE SOURCE OF ONE COMPONENT. TO A DOMESTIC SOURCE FOR WHICH THE CONTRACTOR WILL BE PAYING A PRICE OF $2.25 EACH.

B-153899, SEP. 24, 1964

TO STEWART AND STEVENSON SERVICES, INC.:

A REPORT HAS BEEN RECEIVED FROM THE DEPARTMENT OF THE AIR FORCE REGARDING YOUR PROTEST, BROUGHT TO THE ATTENTION OF OUR OFFICE BY TELEFAX OF APRIL 6, 1964, AND FOLLOW-UP LETTER DATED APRIL 9, 1964, AGAINST THE AWARD OF CONTRACT AF 01 (601) -55301 BY THE MOBILE AIR MATERIEL AREA, BROOKLEY AIR FORCE BASE, ALABAMA, ON MARCH 30, 1964, TO KORODY-COLYER CORPORATION. YOU ARGUE THAT THE AWARD OF THIS CONTRACT FOR A QUANTITY OF 467 FUEL INJECTORS, SOLICITED ON THE BASIS OF MANUFACTURER'S PART NUMBER DETROIT DIESEL 5228305 OR EQUAL, SHOULD BE CANCELLED BECAUSE (1) YOU ALLEGE THE CONTRACTOR INTENDS TO DELIVER A FOREIGN ITEM CONTRARY TO THE BUY AMERICAN ACT, 41 U.S.C. 10A THROUGH D, AND EXECUTIVE ORDER NO. 10582 DATED DECEMBER 17, 1954, 19 F.R. 8723, AND (2) YOU ASSERT THAT THE KORODY-COLYER PLUNGER, THE HEART OF THE FUELINJECTOR SYSTEM, DISQUALIFIES THE UNIT FROM BEING CONSIDERED THE EQUAL OF THE DETROIT DIESEL PART.

THE CONTRACT, IN THE FIXED AMOUNT OF $13,211.43, WAS NEGOTIATED UNDER REQUEST FOR PROPOSALS 01-601-64-1320 ISSUED ON JANUARY 23, 1964. SEVEN PROPOSALS WERE RECEIVED AND THE LOWEST UNIT PRICE, THAT OF KORODY-COLYER IN THE AMOUNT OF $28.29, WAS ONLY SLIGHTLY UNDER THE $28.67 OFFERED BY DETROIT DIESEL ENGINE DIVISION, GENERAL MOTORS CORPORATION, BUT WAS SUBSTANTIALLY LESS THAN YOUR OWN PRICE OF $46.13 PER UNIT.

THE SOLICITATION REQUIRED EACH PROPOSAL TO CONTAIN THE CERTIFICATE OF THE OFFEROR THAT EACH END PRODUCT PROPOSED FOR DELIVERY UNDER THE CONTRACT WOULD BE A DOMESTIC SOURCE END PRODUCT IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION 6-104.3. THE KORODY-COLYER CORPORATION SCHEDULED NO EXCLUDED ITEMS. FURTHERMORE THAT COMPANY PROPOSED TO FURNISH KORODY- COLYER CORPORATION PART NO. K5228305 AS COMPLETELY EQUAL TO AND INTERCHANGEABLE WITH DETROIT DIESEL PART NO.5228305.

UPON RECEIPT OF YOUR PROTEST ON APRIL 7, 1964, THE AIR FORCE OBTAINED A COST BREAKDOWN FROM THE CONTRACTOR TO DETERMINE WHETHER THE END PRODUCT PROPOSED FOR DELIVERY WOULD BE A DOMESTIC SOURCE END PRODUCT WITHIN THE MEANING OF SECTION 2 (A) OF THE AFOREMENTIONED EXECUTIVE ORDER AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION 6-101 (D). THE COST BREAKDOWN SUBMITTED INDICATED THAT THE CONTRACTOR PROPOSED TO USE COMPONENTS ACQUIRED FROM DOMESTIC SOURCES COSTING $7.5781 AND COMPONENTS FROM FOREIGN SOURCES COSTING $9.59 (INCLUDING IMPORT DUTY AND OCEAN FREIGHT). THE CONTRACTOR HAD CONSIDERED SUCH ITEMS AS DOMESTIC FREIGHT, DIRECT LABOR, OVERHEAD, PACKAGING AND PROFIT IN ITS OWN ESTIMATE OF DOMESTIC COSTS AND, CONCLUDING THAT CONSIDERABLY MORE THAN HALF THE COSTS OF THE PRODUCT IT PROPOSED TO FURNISH WERE DOMESTIC, IT BELIEVED IT WAS COMPLYING WITH THE BUY AMERICAN ACT. UPON RECEIPT OF THIS INFORMATION, THE AIR FORCE ADVISED THE CONTRACTOR THAT ON THE BASIS OF ITS OWN COST BREAKDOWN, THE PRODUCT IT PROPOSED TO FURNISH WOULD RIGHTFULLY HAVE TO BE CONSIDERED FOREIGN MADE. THIS RESULTED IN THE CONTRACTOR'S RECONSIDERING THE SOURCES FROM WHICH IT WAS OBTAINING THE NECESSARY COMPONENTS AND CHANGING THE SOURCE OF ONE COMPONENT, WHICH COST 83 CENTS EACH FROM A MANUFACTURER IN ITALY, TO A DOMESTIC SOURCE FOR WHICH THE CONTRACTOR WILL BE PAYING A PRICE OF $2.25 EACH.

THE QUESTION HAS BEEN RAISED WHETHER THIS CHANGE OF SUPPLIER BY THE CONTRACTOR IS PERMISSIBLE AND PROPER. IT SHOULD BE NOTED THAT THIS IS NOT A CHANGE IN THE CONTRACTOR'S BID OR CONTRACT. UNDER THE TERMS OF ITS BID KORODY-COLYER OFFERED, AND UPON ACCEPTANCE OF THE BID IT WAS LEGALLY OBLIGATED, TO FURNISH DOMESTIC END ITEMS WITHIN THE MEANING OF THE BUY AMERICAN ACT AS IMPLEMENTED BY EXECUTIVE ORDER 10582. ASSUMING THE ACCURACY OF THE NEW COMPONENT COST COMPUTATIONS THE END PRODUCT IS CLEARLY A DOMESTIC ITEM. SEE B-154022, MAY 26, 1964. WHETHER THE CONTRACTOR REALIZED THE FULL IMPLICATION OF WHAT IT OFFERED IN ITS BID OR NOT, THE FACT REMAINS THAT IT BECAME LEGALLY OBLIGATED, UPON ACCEPTANCE OF THE BID, TO FURNISH A DOMESTIC PRODUCT, AND COMPLIANCE WITH THAT OBLIGATION IS A MATTER OF CONTRACT ADMINISTRATION WHICH HAS NO EFFECT ON THE VALIDITY OF THE CONTRACT ITSELF. B-150652, JULY 19, 1963.

THE RECORD CONTAINS NO INDICATION THAT KORODY-COLYER'S MISUNDERSTANDING OF THE RULES FOR DETERMINING DOMESTIC BIDS OR PROPOSALS UNDER THE BUY AMERICAN ACT AS IMPLEMENTED IN ANY WAY RESULTED FROM BAD FAITH. NOR IS THERE ANY QUESTION THAT IT WAS, IS AND HAS ALWAYS BEEN THE CONTRACTOR'S OBLIGATION TO DELIVER A DOMESTIC ITEM IN ACCORDANCE WITH THE STATUTORY PREFERENCE FOR PRODUCTS MANUFACTURED ALL OR SUBSTANTIALLY ALL IN THE UNITED STATES. THE AIR FORCE IS OBTAINING A CERTIFIED COPY OF THE PURCHASE ORDER ISSUED BY KORODY-COLYER TO THE DOMESTIC SUPPLIER IN ORDER TO ASSURE THAT ONLY DOMESTIC ITEMS ARE DELIVERED UNDER THE CONTRACT.

THE SECOND QUESTION RAISED BY YOUR PROTEST HAS TO DO WITH WHETHER KORODY- COLYER PART NO. K5228305 IS EQUAL TO AND INTERCHANGEABLE WITH DETROIT DIESEL PART NO. 5228305. YOU CONTEND THE KORODY-COLYER PLUNGER IS INFERIOR TO THE DETROIT DIESEL PART AND SUBMIT THE FOLLOWING RESULTS OF AN ANALYSIS RUN ON THE TWO PLUNGERS BY AN INDEPENDENT RESEARCH ORGANIZATION:

TABLE

G.M. KORODY-COLYER

MATERIAL SPECIFICATIONS SPECIFICATIONS

CARBON .16-.21 PERCENT .36 PERCENT

MANGANESE .36-.70 PERCENT .27 PERCENT

PHOSPHORUS .035 PERCENT MAX .011 PERCENT

SULPHUR .025 PERCENT MAX .027 PERCENT

SILICON .50 PERCENT MAX .90 PERCENT

NICKEL .08 PERCENT

CHROMIUM 4.00-6.00 PERCENT 5.15 PERCENT

MOLYBDENUM .40-.60 PERCENT 1.34 PERCENT

IT IS YOUR CONCLUSION, BASED ON THESE TEST RESULTS, THAT THE KORODY COLYER INJECTOR WILL GIVE INFERIOR SERVICE WITH RESPECT TO FUEL CONSUMPTION, ENGINE LIFE, AND THE ABILITY OF THE ENGINE TO CARRY LOAD AND PERFORM SATISFACTORILY.

WE ARE INFORMED THAT AIR FORCE TECHNICAL PERSONNEL HAVE REVIEWED THIS MATERIAL ANALYSIS AND HAVE DETERMINED THAT IT IS IMPOSSIBLE TO PREDICT WHAT EFFECT THE DIFFERENCES IN THESE PARTICULAR MATERIALS WOULD HAVE WITH RESPECT TO WEAR AND TEAR ON THE PLUNGER. THEY HAVE FURTHER DETERMINED THAT THE KOREDY-COLYER PRODUCT IS EQUAL TO, INTERCHANGEABLE WITH, AND WILL PERFORM THE SAME FUNCTION AS, THE BRAND NAME ITEM.

IT IS WELL ESTABLISHED THAT THE DETERMINATION WHETHER ITEMS OFFERED COMPLY WITH SPECIFICATIONS IS PRIMARILY THE RESPONSIBILITY OF THE ADMINISTRATIVE OFFICE INVOLVED. 38 COMP. GEN. 71, 75; 36 ID. 251, 252; 35 ID. 174, 179; 17 ID. 554. IN VIEW OF THIS RULE IT MUST BE CONCLUDED THAT KORODY-COLYER PART NO. K5228305 IS EQUAL TO AND INTERCHANGEABLE WITH DETROIT DIESEL PART NO. 5228305.

THEREFORE, WE FIND NO BASIS TO QUESTION THE PROPRIETY OF THE AWARD OR THE VALIDITY OF THE RESULTING CONTRACT.