B-154995, OCT. 19, 1964

B-154995, OCT. 19, 1964

TO THE MAXWELL ELECTRONICS CORPORATION:

BY LETTER DATED AUGUST 27, 1964, WITH ENCLOSURES, YOU PROTESTED AGAINST THE AWARD OF A CONTRACT TO TRANS-AIRE ELECTRONICS, INC., BY THE GENERAL SERVICES ADMINISTRATION (GSA) UNDER SOLICITATION FOR OFFERS NO. FPNME-W- 29964/ME/-N-6-29-64, ISSUED ON JUNE 8, 1964, FOR 100,000 RADIO RECEIVERS AND SPARE PARTS FOR DELIVERY TO VIETNAM, F.A.S. VESSEL UNITED STATES PORT OF EXIT, UNDER A PURCHASE AUTHORIZATION ISSUED BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID).

IT APPEARS THAT YOU SUBMITTED THE LOWEST PROPOSAL BUT, ON THE BASIS OF INSPECTIONS OF YOUR PROTOTYPE RADIO, YOUR PROPOSAL WAS REJECTED BECAUSE IT FAILED TO MEET THE REQUIREMENTS OF THE SPECIFICATIONS. AWARD WAS THEREFORE MADE TO TRANS-AIRE ON AUGUST 14, 1964, AS THE LOWEST RESPONSIVE OFFEROR AFTER A CAREFUL EVALUATION OF ITS PROTOTYPE RADIO AND ITS FACILITIES. WE FIND NO LEGAL BASES TO QUESTION THIS AWARD.

THIS PROCUREMENT WAS NEGOTIATED UNDER THE AUTHORITY OF 41 U.S.C. 252 (C) (15) AS BEING OTHERWISE AUTHORIZED BY 22 U.S.C. 2393 AS IMPLEMENTED BY EXECUTIVE ORDER NO. 10784. THESE LATTER AUTHORITIES WAIVED THE STATUTORY REQUIREMENT THAT PURCHASES BE MADE BY FORMAL ADVERTISING PROCEDURES (41 U.S.C. 253). IN THE LIGHT OF THESE AUTHORITIES, THE FOLLOWING QUESTIONS RAISED BY YOU WITH RESPECT TO THIS PROCUREMENT ARE CONSIDERED BELOW.

"1. WHY WAS A QUALIFIED SUPPLIER WHO INTENDED TO MEET ALL CONTRACT REQUIREMENTS, AND TO SUPPLY EQUIPMENT USING 100 PERCENT AMERICAN PARTS BYPASSED IN ORDER TO AWARD A CONTRACT TO A HIGHER BIDDER AT A COST OF $16,000 TO THE GOVERNMENT?

"2. WHY WAS A CONSULTANT EMPLOYED TO WRITE SPECIFICATIONS AND EVALUATE PROTOTYPES WHEN QUALIFIED GOVERNMENT EMPLOYEES WERE AVAILABLE?

"3. WHAT ARE THE QUALIFICATIONS IN EXPERIENCE AND EDUCATION OF THE CONSULTANT EMPLOYED IN THIS PROCUREMENT? COULD HE POSSIBLY BE INVOLVED IN ANY CONFLICT OF INTEREST?

"4. WILL THE GOVERNMENT ACTUALLY RECEIVE TIMELY DELIVERY, FAS VESSEL, U.S. PORT OF EXIT AS SPECIFIED BY THE SOLICITATION OF RADIO SETS WHICH MEET ALL SPECIFICATION REQUIREMENTS AND WHICH ARE PRODUCED IN THE UNITED STATES WITH NO MORE THAN 10 PERCENT FOREIGN PARTS?

"5. DOES THE CONTRACT AS AWARDED TO TRANS-AIRE CONTAIN ALL TERMS AND CONDITIONS OF THE SOLICITATION EXACTLY AS THEY APPEARED IN THE SOLICITATION WHICH WAS DISTRIBUTED TO ALL BIDDERS?

"6. IS TRANS-AIRE ELECTRONICS ACTUALLY A MANUFACTURER WITH ADEQUATE FACILITIES TO PRODUCE RADIO SETS AT THE RATE OF 25,000 PER MONTH, OR ARE THEY MERELY A DEALER WITH NO MANUFACTURING EXPERIENCE OR FACILITIES?

"7. IS THE PLACE OF INSPECTION, AS INDICATED IN PARAGRAPH 12, PAGE 9 OF THE TRANS-AIRE CONTRACT, THE CONTRACTOR'S PLACE OF BUSINESS IN MINEOLA, NEW YORK? IF NOT, WHAT IS THE PLACE OF INSPECTION, AND IS THIS CONSISTENT WITH OTHER PROVISIONS OF THE CONTRACT?

"8. IS THE PRODUCTION POINT, AS INDICATED IN PARAGRAPH 13, PAGE 9 OF THE TRANS-AIRE CONTRACT, THE CONTRACTOR'S PLACE OF BUSINESS IN MINEOLA, NEW YORK? IF NOT, WHAT IS THE PRODUCTION POINT, AND IS IT WITHIN AID GEOGRAPHIC CODE 000 (UNITED STATES OF AMERICA, ITS POSSESSIONS, PUERTO RICO, AND THE TRUST TERRITORIES) AS REQUIRED BY THE CONTRACT?

"9. DOES THE RADIO SET TO BE SUPPLIED BY TRANS-AIRE MEET THE REQUIREMENTS OF THE SPECIFICATIONS, IN PARTICULAR THE REQUIREMENTS OF PARAGRAPHS 2.3.2, 3.8, 3.9, 3.10, 3.15, 3.16, 3.17, AND 4.3?

PAGE 5 OF THE INVITATION PROVIDED UNDER "METHOD OF AWARD" AS FOLLOWS:

"OFFERS WILL BE EVALUATED ON THE BASIS OF OVERALL COST TO THE GOVERNMENT DETERMINED BY ADDING TO THE PRICES QUOTED THE COST OF TRANSPORTATION FROM THE F.A.S. POINT SPECIFIED HEREIN BY THE OFFEROR TO THE FINAL DESTINATION, SAIGON, VIETNAM. WEIGHTS AND CUBIC MEASUREMENTS ARE FACTORS IN ARRIVING AT THE OVERALL COSTS. FAILURE TO STATE SUCH WEIGHTS AND MEASUREMENTS SHALL BE CAUSE FOR REJECTION OF THE OFFER.

"IF IT IS DETERMINED BY THE GOVERNMENT THAT THE MOST FAVORABLE PROPOSAL RECEIVED IN RESPONSE TO THIS REQUEST FOR PROPOSALS IS FAIR AND REASONABLY PRICED, AWARD MAY BE MADE TO THE CONCERN SUBMITTING SUCH PROPOSAL WITHOUT FURTHER NEGOTIATION. ACCORDINGLY, PROPOSALS SHOULD BE SUBMITTED ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT WHICH THE OFFEROR CAN INITIALLY SUBMIT TO THE GOVERNMENT.'

PARAGRAPH 5.1 OF THE SPECIFICATIONS ACCOMPANYING THE SOLICITATION FOR OFFERS PROVIDED:

"5.1 PRIOR TO AWARD OF CONTRACT, OFFERORS WILL BE REQUIRED TO SUPPLY A PROTOTYPE RADIO RECEIVER SET AND NECESSARY TEST FACILITIES TO DEMONSTRATE THAT THE PROPOSED EQUIPMENT MEETS SPECIFICATIONS. OFFERORS MUST BE PREPARED TO DEMONSTRATE A PROTOTYPE SET WITHIN TWO (2) WEEKS FROM A REQUEST FOR SUCH DEMONSTRATION AND TEST.'

AS YOU ARE AWARE, YOUR RADIO PROTOTYPES WERE REJECTED AS NOT MEETING THE FIRM REQUIREMENTS OF AID. THREE PROTOTYPES WERE INSPECTED AT YOUR PLANT BY AN AID CONSULTING ENGINEER WHO, AFTER INSPECTION AND ANALYSIS, DETERMINED THAT THEY FAILED TO MEET THE MINIMUM REQUIREMENTS OF THE SPECIFICATIONS. THE CONSULTING ENGINEER REPORTED TO AID THAT YOUR RADIO SET WAS BELOW THE MINIMUM ACCEPTABLE REQUIREMENT AND STATED:

"* * * THE OVERALL PICTURE THAT EMERGES IS THAT OF A UNIT WHICH BARELY MEETS THE SPECIFICATIONS IN A NUMBER OF RESPECTS AND WHICH FAILS TO MEET SPECIFICATIONS IN A SUFFICIENT NUMBER OF RESPECTS THAT THERE CAN BE NO DOUBT THAT THE SET IS BELOW THE DESIRED QUALITY LEVEL.'

ON THE BASIS OF THE CONSULTANT'S REPORT, AID ADVISED GSA ON AUGUST 10, 1964, THAT YOUR OFFER NEED NOT BE CONSIDERED SINCE THE PROTOTYPE OFFERED DID NOT MEET THE SPECIFICATIONS. WE FIND NO LEGAL BASES TO QUESTION THIS DETERMINATION OR THE AWARD THEREAFTER MADE TO THE LOWEST RESPONSIVE OFFEROR.

IN NEGOTIATED PROCUREMENTS, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ARE NOT APPLICABLE AND THE NEGOTIATION AUTHORITY MAY LEGALLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE ACCOMPLISHMENT OF THE PROCUREMENT. SEE B-130216, DATED APRIL 4, 1957, AND B-146688, DATED OCTOBER 9, 1961. THE FACT THAT MORE WEIGHT IS GIVEN TO EVALUATION FACTORS OTHER THAN COST DOES NOT IN ITSELF RENDER ILLEGAL AN AWARD OF A CONTRACT MADE ON THAT BASIS. SEE 40 COMP. GEN. 508. THE QUESTION OF WHETHER DETERMINATIONS MADE HERE ARE CORRECT IS NOT ORDINARILY CONSIDERED TO BE WITHIN THE JURISDICTION OF THIS OFFICE. IN OUR DECISION B-139830, DATED AUGUST 19, 1959, WE MADE THE FOLLOWING OBSERVATION:

"THIS OFFICE HAS NEITHER AN ENGINEERING STAFF NOR A TESTING LABORATORY TO EVALUATE THE TECHNICAL ASPECTS OF SPECIFICATIONS. MOREOVER, IN DISPUTES OF FACT BETWEEN A PROTESTANT AND A GOVERNMENT AGENCY, WE USUALLY ARE REQUIRED TO ACCEPT THE ADMINISTRATIVE REPORT AS CORRECT. WHETHER A PARTICULAR BID IS RESPONSIVE TO THE TECHNICAL DETAILS OF THE SPECIFICATIONS IS NOT A MATTER, ORDINARILY, FOR OUR DETERMINATION. * *

IN THIS REGARD, WE HELD IN OUR DECISION B-143389, DATED AUGUST 26, 1960, AS FOLLOWS:

"THE QUESTION AS TO THE ACTION, IF ANY, WHICH OUR OFFICE SHOULD TAKE IN CASES INVOLVING THE EVALUATION OF TECHNICAL REQUIREMENTS OF SPECIFICATIONS, ETC., HAS BEEN THE SUBJECT OF A NUMBER OF DECISIONS BY OUR OFFICE. YOUR PROTEST IS BASED UPON SUCH AN EVALUATION. OF NECESSITY, OUR OFFICE HAS ESTABLISHED A RULE GOVERNING SUCH SITUATIONS. IN A DECISION DATED JANUARY 8, 1938, TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, PUBLISHED AT 17 COMP. GEN. 554, 557, WE SET FORTH THE FOLLOWING RULE WHICH WE CONSIDER TO BE CONTROLLING IN THE INSTANT MATTER:

" "IT IS THE PROVINCE OF ADMINISTRATIVE OFFICERS TO DRAFT PROPER SPECIFICATIONS NECESSARY TO SUBMIT FAIR COMPETITIVE BIDDING PROPOSED CONTRACTS TO SUPPLY GOVERNMENTAL NEEDS, AND TO DETERMINE FACTUALLY WHETHER ARTICLES OFFERED MEET THOSE SPECIFICATIONS. * * *" "

WE HAVE NO INDEPENDENT INFORMATION AS TO WHY THE SPECIFICATIONS WERE WRITTEN BY A CONSULTANT. BUT BE THAT AS IT MAY, THE SPECIFICATIONS WERE INCORPORATED INTO THE SOLICITATION OF OFFERS AND THEY CONSTITUTED THE MEASUREMENT OF THE GOVERNMENT'S REQUIREMENTS. WE KNOW OF NO VALID REASON TO DENY TO THE GOVERNMENT PROCUREMENT AGENCIES THE RIGHT TO EMPLOY EXPERTS IN THE ANALYSIS AND INSPECTION OF PRODUCTS OFFERED TO IT UNDER TECHNICAL SPECIFICATIONS. THE MEANS WHEREBY THE PROCUREMENT AGENCY DISCHARGES ITS RESPONSIBILITIES IN PREPARING SPECIFICATIONS AND IN EVALUATING OFFERS THEREUNDER ARE NOT SUBJECT TO QUESTION BY OUR OFFICE UNLESS SUCH MEANS ARE IN CONTRAVENTION OF LAW OR CONTRARY TO SOUND PROCUREMENT PRACTICES. ARE UNABLE TO CONCLUDE THAT THE USE OF A CONSULTANT HERE IN ANY WAY PREJUDICED THE RIGHTS OF OTHER OFFERORS. A READING OF THE CONSULTANT'S REPORT OF EVALUATION WOULD SEEM TO ESTABLISH HIS QUALIFICATIONS AS A COMPETENT RADIO ENGINEER. WE ASSUME THAT AID EXERCISED PRUDENT JUDGMENT IN EMPLOYING THE CONSULTANT AND WE HAVE NO REASON TO QUESTION THAT JUDGMENT. IF YOU HAVE ANY INFORMATION THAT THE CONSULTANT WAS INVOLVED IN A CONFLICT OF INTERESTS, WE WOULD SUGGEST THAT THIS BE MADE KNOWN TO GSA AND/OR THE DEPARTMENT OF JUSTICE.

CONCERNING YOUR QUESTION NO. 4, WE NOTE THAT AWARD WAS MADE TO TRANS-AIRE ON AUGUST 14, 1964. SINCE INITIAL DELIVERY IS SCHEDULED 90 DAYS AFTER NOTICE OF AWARD, OR ABOUT NOVEMBER 12, YOUR QUESTION IS PREMATURE. REGARDING AUTHENTICATION OF "SOURCE," EACH INVOICE UNDER THE CONTRACT WOULD BEAR THE FOLLOWING CERTIFICATION:

"I (WE) HEREBY CERTIFY THAT THE "SOURCE" (AS DEFINED BY AID REGULATION 1) OF THE COMMODITIES LISTED ON THE ATTACHED INVOICE OR INVOICED HEREIN IS AS SHOWN BELOW AND IN BLOCK 3 OF AID FORM 280 AND THAT SUCH INVOICED COMMODITIES WERE MINED, GROWN OR PRODUCED IN A COUNTRY OR COUNTRIES COVERED BY AID GEOGRAPHICAL CODE - (INSERT THE GEOGRAPHIC CODE NUMBER SPECIFIED BY THE IMPORTER).

"I (WE) FURTHER CERTIFY THAT, TO THE BEST OF MY (OUR) INFORMATION AND BELIEF, WITH RESPECT TO ANY PRODUCED COMMODITY INVOICED, THE COST OF COMPONENTS (DELIVERED TO POINT OF PRODUCTION) IMPORTED FROM FREE WORLD COUNTRIES OTHER THAN COUNTRIES COVERED BY AID GEOGRAPHIC CODE - (INSERT THE GEOGRAPHIC CODE NUMBER SPECIFIED BY THE IMPORTER) DOES NOT EXCEED IN TOTAL COST 10 PERCENT OF THE LOWEST PRICE (EXCLUDING THE COST OF OCEAN TRANSPORTATION AND MARINE INSURANCE) AT WHICH I (WE) MAKE THE COMMODITY AVAILABLE FOR EXPORT, AND THAT THE PRODUCED COMMODITY DOES NOT CONTAIN ANY COMPONENTS IMPORTED FROM COUNTRIES NOT ELIGIBLE UNDER GEOGRAPHIC CODE 899 OR PROHIBITED BY FAC OR CAC REGULATIONS.

"I (WE) UNDERSTAND THAT A FALSE CERTIFICATION MADE HEREIN MAY BE PUNISHABLE BY LAW.

"SOURCE OF COMMODITIES ------------------------------------------

"AUTHORIZED SIGNATURE OF SUPPLIER -------------------------------

"TITLE ------------------------------ DATE ----------------------.'

COMPLIANCE WITH THE SPECIFICATIONS, DELIVERY AND SOURCE CERTIFICATION TERMS ARE MATTERS OF CONTRACT ADMINISTRATION WHICH ARE THE RESPONSIBILITY OF GSA AND NOT OF OUR OFFICE.

ON THE RECORD BEFORE US, THE CONTRACT AWARDED TO TRANS-AIRE WAS THE CONTRACT OFFERED TO COMPETING OFFERORS. WHETHER THIS CONTRACT MAY BE CHANGED BY AMENDMENT IS ALSO FOR GSA COGNIZANCE. OF COURSE, CONTRACTING AGENCIES HAVE THE PREROGATIVE TO AMEND CONTRACTS IN THE INTERESTS OF THE GOVERNMENT. SEE SECTION 1-7.101.2, FEDERAL PROCUREMENT REGULATIONS.

TRANS-AIRE CERTIFIED ON THE FACE OF ITS OFFER THAT IT WAS A "MANUFACTURER" OF THE SUPPLIES BID UPON, AND ALSO ADVISED THAT IT WOULD FURNISH THE RADIOS IN STRICT ACCORDANCE WITH THE SPECIFICATIONS. WE ARE ADVISED THAT A CAREFUL ENGINEERING EVALUATION WAS MADE OF TRANS-AIRE'S FACILITIES AND THAT THEREAFTER AWARD WAS MADE TO IT. IT WOULD THUS APPEAR THAT GSA DETERMINED THAT TRANS-AIRE WAS A CAPABLE MANUFACTURER WHICH WOULD MEET THE REQUIREMENTS OF THE SOLICITATION.

UNDER THE TERMS OF THE SOLICITATION, THE PLACE OF INSPECTION OF THE CONTRACT ITEMS AND THE PRODUCTION POINT OF THE ITEMS WERE TO BE IDENTIFIED. TRANS-AIRE STATED THAT ITS PLACE OF INSPECTION WAS 393 SAGAMORE AVENUE, MINEOLA, NEW YORK, AND ITS PLACE OF PRODUCTION AS ITS PLANT IN "NEW YORK, USA.' SINCE AN EVALUATION WAS MADE OF TRANS-AIRE FACILITIES PRIOR TO AWARD, IT WOULD APPEAR THAT THESE LOCATIONS ARE ACCEPTABLE TO THE GOVERNMENT. TRANS-AIRE IS REQUIRED UNDER ITS CONTRACT TO EXECUTE A "SOURCE" CERTIFICATE IN SUPPORT OF ITS REQUEST FOR PAYMENT THAT THE RADIOS WERE PRODUCED IN THE UNITED STATES AND THAT THE COST OF COMPONENTS (DELIVERED TO POINT OF PRODUCTION) IMPORTED FROM FREE-WORLD COUNTRIES DOES NOT EXCEED IN TOTAL COST 10 PERCENT OF THE LOWEST PRICE (LESS TRANSPORTATION) OF THE RADIOS AVAILABLE OFFERED FOR EXPORT. THIS CERTIFICATION PROCEDURE SHOULD AFFORD SUFFICIENT ASSURANCES WITH RESPECT TO A POINT OF PRODUCTION WITHIN THE UNITED STATES.

ON THE RECORD BEFORE US, WE HAVE NO BASIS TO CONCLUDE THAT THE RADIOS TO BE FURNISHED BY TRANS-AIRE WILL DEVIATE FROM THE SPECIFICATIONS IN MATERIAL RESPECTS. COMPLIANCE WITH THE SPECIFICATIONS IS A MATTER PARTICULARLY FOR DETERMINATION BY THE PROCUREMENT AGENCY. WHETHER TRANS- AIRE WILL PERFORM IN A MATTER ACCEPTABLE TO BOTH GSA AND AID IS FOR THOSE AGENCIES TO ASCERTAIN; OUR INTEREST IN THE PROCUREMENT IS LIMITED TO THE QUESTION WHETHER THE CONTRACT AWARDED REPRESENTS A VALID AND BINDING OBLIGATION OF THE GOVERNMENT. UPON REVIEW, WE MUST CONCLUDE THAT THE CONTRACT AS AWARDED IS NOT SUBJECT TO QUESTION BY OUR OFFICE.