B-155688, FEB. 17, 1965

B-155688: Feb 17, 1965

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 30 AND LETTER OF DECEMBER 8. THE INVITATION WAS ISSUED OCTOBER 20. BID "A" APPLIED TO CASES IN WHICH FIRST ARTICLE APPROVAL WAS NOT REQUIRED AND BID "B" APPLIED TO CASES IN WHICH SUCH APPROVAL WAS REQUIRED. - "BID A - (FIRST ARTICLES NOT REQUIRED) "BIDDERS WHO HAVE PREVIOUSLY FURNISHED TO THE GOVERNMENT FIRST ARTICLES. WHICH WERE APPROVED ARE NOT REQUIRED TO FURNISH FIRST ARTICLES. FURNISH WRITTEN PROOF WITH THEIR BID THAT FIRST ARTICLES WERE FURNISHED AND APPROVED. WITHOUT SUCH WRITTEN PROOF WILL BE CONSIDERED NON-RESPONSIVE AND THEIR BID WILL NOT BE CONSIDERED. SIGMA INSTRUMENTS IS CONSIDERED QUALIFIED AND 1ST ARTICLE TESTS ARE WAIVED.

B-155688, FEB. 17, 1965

TO ALMO INDUSTRIAL ELECTRONICS, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 30 AND LETTER OF DECEMBER 8, 1964, PROTESTING AGAINST THE ACTION OF THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO, IN REJECTING YOUR BID SUBMITTED IN RESPONSE TO INVITATION NO. DSA-9-65-214.

THE INVITATION WAS ISSUED OCTOBER 20, 1964, REQUESTING BIDS--- TO BE OPENED NOVEMBER 20, 1964--- FOR FURNISHING 2,014 ARMATURE RELAYS TO BE MANUFACTURED IN ACCORDANCE WITH THE GOVERNMENT'S PURCHASE DESCRIPTION. BID "A" APPLIED TO CASES IN WHICH FIRST ARTICLE APPROVAL WAS NOT REQUIRED AND BID "B" APPLIED TO CASES IN WHICH SUCH APPROVAL WAS REQUIRED. IN THIS CONNECTION THE INVITATION PROVIDED---

"BID A - (FIRST ARTICLES NOT REQUIRED)

"BIDDERS WHO HAVE PREVIOUSLY FURNISHED TO THE GOVERNMENT FIRST ARTICLES, FOR THIS ITEM, WHICH WERE APPROVED ARE NOT REQUIRED TO FURNISH FIRST ARTICLES. SUCH BIDDERS MAY SUBMIT A BID ON BID A, FIRST ARTICLE NOT REQUIRED, AND FURNISH WRITTEN PROOF WITH THEIR BID THAT FIRST ARTICLES WERE FURNISHED AND APPROVED. BIDS RECEIVED UNDER BID A, FIRST ARTICLES NOT REQUIRED, WITHOUT SUCH WRITTEN PROOF WILL BE CONSIDERED NON-RESPONSIVE AND THEIR BID WILL NOT BE CONSIDERED. FROM A TECHNICAL STANDPOINT, THE ORIGINAL SOURCE, SIGMA INSTRUMENTS IS CONSIDERED QUALIFIED AND 1ST ARTICLE TESTS ARE WAIVED.

"BID B - (FIRST ARTICLES REQUIRED)

"BIDDERS WHO HAVE NOT PREVIOUSLY FURNISHED TO THE GOVERNMENT THE ABOVE ITEM UNDER FIRST ARTICLES MUST UNDERGO FIRST ARTICLE APPROVAL TESTING AND SHALL SUBMIT THEIR BIDS UNDER BID B (FIRST ARTICLE APPROVAL REQUIRED).

"BIDS SUBMITTED UNDER BID B (FIRST ARTICLE APPROVAL REQUIRED) OR BID A (FIRST ARTICLE APPROVAL NOT REQUIRED) ARE EQUALLY ACCEPTABLE TO THE GOVERNMENT AS APPLICABLE AND AWARD WILL BE MADE THEREON WITH THE BEST INTEREST OF THE GOVERNMENT CONSIDERED.'

THE RECORD SHOWS THAT FOUR FIRMS SUBMITTED THE FOLLOWING BIDS:

TABLE BIDDER BID "A" BID "B"

(FIRST ARTICLES (FIRST ARTICLES

NOT REQUIRED) REQUIRED) ALMO INDUSTRIAL ELECTRONICS, INC. $16.10 $17.02 SIGMA INSTRUMENTS INC. 16.50 ----- ACSI ENGINEERING CO. ---- $22.00 HART MFG. CO.

---- 16.22 YOUR FIRM, A DEALER, OFFERED AN ITEM MANUFACTURED BY THE HART MANUFACTURING COMPANY.

ON PAGE 1 OF THE BID SCHEDULE YOU INSERTED THE FOLLOWING NOTE:

"WE ARE CURRENTLY FURNISHING 1640 RELAYS, HART P/N P1-018 (SIGMA 72A0Z160TS-TCP) ON ARMY ELECTRONICS COMMAND ORDER FR-36-039-H5 03648/E), CONTRACT DA-36-039-AMC-05720/E) AND 1050 RELAYS, HART P/N P1 012G (SIGMA 72A04Z-160-TG-TCP) PLUS 1779 RELAYS, HART P/N P1-018 ON ECOM ORDER FR-36- 039-H5-03649/E), CONTRACT DA-36-039-AMC-05721/E). P/N P1-018 IS IDENTICAL TO THE ITEM TO BE FURNISHED HEREUNDER EXCEPT FOR THE REQUIREMENT FOR GROUNDING PIN 5 TO THE RELAY CASE. A SAMPLE OF THIS RELAY WAS SUBMITTED TO THE FT. MONMOUTH LABORATORIES OF THE ARMY ELECTRONICS COMMAND FOR PRE- AWARD EVALUATION. WE ARE, THEREFORE, OF THE OPINION THAT THE HART RELAY MUST BE CONSIDERED FOR AWARD UNDER BID A OF THIS PROCUREMENT AS WELL AS THE SIGMA INSTRUMENTS RELAY.'

IT IS REPORTED THAT UPON EVALUATION OF THE BIDS IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT YOUR FIRM HAD NOT COMPLIED WITH THE INVITATION FOR BIDS TERMS OF FIRST ARTICLE WAIVER WHICH REQUIRED THE SUBMISSION OF SATISFACTORY EVIDENCE THAT THE REQUIRED UNIT HAD PREVIOUSLY BEEN FURNISHED UNDER A CONTRACT REQUIRING FIRST ARTICLES AND THAT YOUR FIRM'S BID ON THE BID "A" PORTION WAS, THEREFORE, NOT RESPONSIVE TO THE INVITATION FOR BIDS.

IN YOUR LETTER OF DECEMBER 8, 1964, YOU STATE:

"OUR VIEWS IN THIS MATTER ARE AS FOLLOWS:

"1. THE BASIS FOR SIGMA INSTRUMENTS, INC.'S QUALIFICATION TO PRODUCE AN ITEM WHICH HAD NEVER BEFORE BEEN PROCURED WAS NOT STATED IN THE INVITATION. WE ASSUMED THAT THE WAIVER FOR SIGMA MUST REST UPON THE FACT THAT THEY HAD FURNISHED THEIR COMMERCIAL VERSION OF THE REQUIRED RELAY ON PREVIOUS PROCUREMENTS. SINCE WE ARE CURRENTLY SUPPLYING HART RELAYS EQUAL TO THE SIGMA UNIT TO ANOTHER MILITARY AGENCY, WE FEEL THAT WE ARE ENTITLED TO THE SAME CONSIDERATION.

"2. IF, IN FACT, THE SIGMA WAIVER IS BASED UPON PRIOR TESTING OF THEIR RELAYS AGAINST THE REQUIREMENTS OF THE AIR FORCE PURCHASE DESCRIPTION, THIS INTRODUCES PREJUDICIAL TREATMENT OF ONE MANUFACTURER TO THE DETRIMENT OF HIS COMPETITORS. IN ADDITION, IN FOUR OR FIVE CASES DURING THE SPRING OF 1964, HART SERIES P RELAYS OFFERED AS EQUIVALENTS TO SIGMA SERIES 72 RELAYS WERE REJECTED ON THE GROUND THAT TIME DID NOT PERMIT ADEQUATE EVALUATION OF THE HART ITEM. AS A RESULT, HART MANUFACTURING CO. WAS INVITED TO SUBMIT THIRTEEN SAMPLES TOGETHER WITH TEST DATA TO THE AIR FORCE LOGISTICS COMMAND, WRIGHT-PATTERSON AIR FORCE BASE, ATTN: SOMES SO THAT PROPER CONSIDERATION COULD BE GIVEN TO THEIR RELAYS ON FUTURE PROCUREMENTS. THESE SAMPLES WERE SUBMITTED AT NO CHARGE SOME SIX MONTHS AGO: EQUAL TREATMENT COULD EASILY HAVE BEEN AFFORDED THE HART UNIT BY COMPLETING THE TESTING WHICH WE BELIEVE WAS BEGUN SINCE THAT TIME.

"3. IT HAS BEEN THE PRACTICE OF THE DEFENSE ELECTRONICS SUPPLY CENTER TO SOLICIT BIDS INVOLVING FIRST ARTICLE APPROVAL TESTING ON THE FOLLOWING BASIS:

"BIDS SUBMITTED UNDER BID B (FIRST ARTICLE APPROVAL REQUIRED) OR BID A (FIRST ARTICLE APPROVAL NOT REQUIRED) ARE EQUALLY ACCEPTABLE TO THE GOVERNMENT AS APPLICABLE AND AWARD WILL BE MADE THEREON WITH THE BEST INTEREST OF THE GOVERNMENT CONSIDERED.' SUPERFICIAL CONSIDERATION OF THIS STATEMENT WOULD LEAD ONE TO BELIEVE THAT THIS IS MOST COMMENDABLE AND FURTHERS THE DEPARTMENT OF DEFENSE POLICY TO ENCOURAGE NEW SOURCES FOR MILITARY MATERIAL THEREBY FOSTERING INCREASED COMPETITION.

ACTUALLY, HOWEVER, THE ESTABLISHED SOURCES FOR THE REQUIRED ITEM HAS A "BUILT-IN" ADVANTAGE IN THAT HIS OFFER UNDER BID A WILL BE COMPARED TO THAT OF A COMPETITOR WHO MUST ABSORB THE COST OF TESTING IN ORDER TO ATTEMPT TO COMPETE FAVORABLY UNDER BID B. THE ARMED SERVICES PROCUREMENT REGULATION REQUIRES THE REJECTION OF ANY BID IN WHICH THE BIDDER SETS FORTH CONDITIONS THE ACCEPTANCE OF WHICH BY THE GOVERNMENT WOULD BE PREJUDICIAL TO THE OTHER BIDDERS. (ASPR 2-404.2 (D) ). HOW THEN CAN WE JUSTIFY THE INEQUITY CREATED BY THIS PROCUREMENT AGENCY'S TREATMENT OF PREPRODUCTION SAMPLE REQUIREMENTS FAVORING ONE BIDDER TO THE DETRIMENT OF OTHERS. IT SHOULD BE CLEAR THAT BIDS MUST CONFORM TO IDENTICAL REQUIREMENTS IN ORDER TO BE COMPARABLE. DETERMINATION OF LOW BID INCLUDING TEST REQUIREMENTS MUST BE MADE FIRST. THEN A DECISION COULD BE MADE AS TO WHETHER OR NOT THE GOVERNMENT WISHES TO WAIVE TEST REQUIREMENTS FOR THE LOW BIDDER. IF SO, A PRICE REDUCTION UNDER THE CHANGES ARTICLE WOULD BE IN ORDER. IT IS UNFORTUNATE THAT ASPR 2-201/B) (XIV) IGNORES THE QUESTION OF COSTS COMPLETELY.

"WE PROTEST, THEREFORE, THE REJECTION OF OUR LOW BID ON THE GROUND THAT WE "DO NOT QUALIFY AND THAT FIRST ARTICLE TESTS ARE NOT WAIVED" WHEN PREFERENTIAL SPECIAL TREATMENT IS ARBITRARILY GIVEN TO SIGMA INSTRUMENTS, INC. BY SPECIFICALLY WAIVING THE FIRST ARTICLE TESTING REQUIREMENTS FOR SIGMA ALONE. CERTAINLY, BOTH ALMO AND SIGMA SHOULD BE TREATED ALIKE AND THE WAIVER OF FIRST ARTICLE TESTS SHOULD BE APPLIED TO OUR BID. OTHERWISE, CONTRARY TO LAW AND TO THE DETRIMENT OF THE GOVERNMENT, THE BIDS ARE ACTUALLY RESTRICTED TO ONE BIDDER ONLY, NAMELY, SIGMA INSTRUMENTS, INC.'

IT IS REPORTED THAT THE SUBJECT INVITATION CALLS FOR THE FURNISHING OF A RELAY IN ACCORDANCE WITH A PURCHASE DESCRIPTION WHICH WAS WRITTEN ONLY AFTER CONSIDERABLE RESEARCH AND THE TESTING UNDER FIELD CONDITIONS OVER A SUBSTANTIAL PERIOD OF TIME OF THE COMMERCIAL ITEM OF A SPECIFIC MANUFACTURER, THE SIGMA INSTRUMENTS, INC., AND THAT THE PURCHASE DESCRIPTION ALLOWS THE USE OF ADVERTISED PROCUREMENTS WHERE NEGOTIATION PREVIOUSLY WAS UTILIZED AND OPENS TO COMPETITION THE PROCUREMENT OF AN ITEM WHICH PREVIOUSLY HAS BEEN BOUGHT FROM ONLY ONE MANUFACTURER. WE ARE OF THE OPINION THAT UNTIL THE PRODUCTS OFFERED BY THE NEW SOURCES OF SUPPLY ARE SHOWN TO BE CAPABLE OF MEETING RIGID GOVERNMENT STANDARDS, THE FIRST ARTICLE OR PREPRODUCTION SAMPLE PROVISION IN THIS INVITATION FOR BIDS EXCLUDING SIGMA INSTRUMENTS, INC., FROM THE REQUIREMENT OF FURNISHING SAMPLES BUT MAKING OTHER MANUFACTURERS DO SO IS ADVANTAGEOUS TO THE GOVERNMENT AND, THEREFORE, JUSTIFIED. CF. 41 COMP. GEN. 788. SEE B- 145714 DATED JUNE 21, 1961, AND B-153511 DATED APRIL 14, 1964.

IT IS REPORTED THAT THE CONTRACTS CITED IN THE NOTE IN YOUR BID WERE AWARDED IN EACH INSTANCE UNDER AN INVITATION FOR BIDS WHICH USED A "BRAND NAME OR EQUAL" NOMENCLATURE. THE INVITATION IN QUESTION DOES NOT CALL FOR A "BRAND NAME OR EQUAL" ITEM BUT FOR AN ITEM IDENTICAL TO THAT DESCRIBED IN THE PURCHASE DESCRIPTION. IT IS NOTED THAT IN YOUR NOTE YOU POINT OUT THE FACT THAT HART PART P1-018 OFFERED BY YOUR FIRM DOES NOT HAVE A PIN 5 GROUNDED TO THE RELAY CASE AS REQUIRED BY THE PURCHASE DESCRIPTION. THE RECORD INDICATES THAT YOUR SUPPLIER, HART MANUFACTURING COMPANY, BID ONLY ON THE FURNISHING OF FIRST ARTICLES, THUS INDICATING THAT HART DID NOT CONSIDER ITS ITEM ELIGIBLE FOR FIRST ARTICLE WAIVER. SINCE YOUR FIRM OFFERED A PART MANUFACTURED BY HART IT IS NOT APPARENT HOW YOU COULD CONSIDER THE PART OFFERED BY YOU ELIGIBLE FOR FIRST ARTICLE WAIVER.

IN REGARD TO YOUR STATEMENT THAT YOUR SUPPLIER, HART, SUBMITTED 13 SAMPLES OF RELAYS TOGETHER WITH CERTAIN TEST DATA TO AIR FORCE LOGISTICS COMMAND "SO THAT PROPER CONSIDERATION COULD BE GIVEN TO THEIR RELAYS ON FUTURE PROCUREMENTS," IT IS REPORTED THAT IT WAS ADMINISTRATIVELY DETERMINED NOT TO TEST THE SAMPLES SUBMITTED BY HART BUT TO ISSUE THE SUBJECT INVITATION SO THAT OTHER MANUFACTURERS, IN ADDITION TO HART, COULD QUALIFY THEIR PRODUCTS UNDER THE FIRST ARTICLE PROVISION OF THE INVITATION. AS TO YOUR STATEMENT THAT THE EXCLUSION OF SIGMA INSTRUMENTS, INC., FROM FIRST ARTICLE TESTING AMOUNTS TO "PREJUDICIAL TREATMENT OF ONE MANUFACTURER TO THE DETRIMENT OF HIS COMPETITORS," IT DOES NOT APPEAR THAT IN THE PRESENT CASE SUCH EXCLUSION WILL BENEFIT SIGMA INSTRUMENTS, INC., SINCE IT IS REPORTED THAT THE CONTRACTING OFFICE IS CONTEMPLATING MAKING AN AWARD TO YOUR SUPPLIER, HART, UNDER BID "B" (FIRST ARTICLE REQUIRED) OF THE INVITATION.

IT IS OUR VIEW THAT YOUR BID UNDER BID "A" WAS NOT RESPONSIVE, SINCE YOUR FIRM HAD NOT PREVIOUSLY FURNISHED TO THE GOVERNMENT FIRST ARTICLES OF THIS ITEM WHICH HAVE BEEN APPROVED AS REQUIRED BY THE TERMS OF THE INVITATION. THEREFORE, UNDER THE TERMS OF THE INVITATION, THE SUBMISSION BY YOU OF A BID UNDER BID "A" WAS NOT AUTHORIZED.