B-155820, MAR. 30, 1965, 44 COMP. GEN. 590

B-155820: Mar 30, 1965

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CONTRACTS - NEGOTIATION - COMPETITION - ADEQUATE THE ACTION OF A CONTRACTING OFFICER IN CANCELING AN INVITATION FOR ROCKET WARHEADS ON THE BASIS THAT THE SHORT DELIVERY SCHEDULE COULD NOT BE MET AND THAT THE PROCUREMENT WAS OF AN EXIGENT NATURE AND IN NEGOTIATING WITH ONLY ONE OF THE FIRMS ORIGINALLY SOLICITED BECAUSE IT WAS THE ONLY FIRM THAT POSSESSED THE NECESSARY EXPERIENCE FOR MASS PRODUCTION IS AN ACTION WITHIN THE CONSIDERABLE RANGE OF DISCRETION VESTED IN THE CONTRACTING OFFICER UNDER THE "PUBLIC EXIGENCY" JUSTIFICATION FOR NEGOTIATION UNDER 10 U.S.C. 2304/G) AND. THE DECISION TO LIMIT NEGOTIATION IS NOT SUBJECT TO OBJECTION. 1965: FURTHER REFERENCE IS MADE TO YOUR LETTER AND TELEGRAM DATED DECEMBER 21 AND 22.

B-155820, MAR. 30, 1965, 44 COMP. GEN. 590

CONTRACTS - NEGOTIATION - COMPETITION - ADEQUATE THE ACTION OF A CONTRACTING OFFICER IN CANCELING AN INVITATION FOR ROCKET WARHEADS ON THE BASIS THAT THE SHORT DELIVERY SCHEDULE COULD NOT BE MET AND THAT THE PROCUREMENT WAS OF AN EXIGENT NATURE AND IN NEGOTIATING WITH ONLY ONE OF THE FIRMS ORIGINALLY SOLICITED BECAUSE IT WAS THE ONLY FIRM THAT POSSESSED THE NECESSARY EXPERIENCE FOR MASS PRODUCTION IS AN ACTION WITHIN THE CONSIDERABLE RANGE OF DISCRETION VESTED IN THE CONTRACTING OFFICER UNDER THE "PUBLIC EXIGENCY" JUSTIFICATION FOR NEGOTIATION UNDER 10 U.S.C. 2304/G) AND, THEREFORE, THE DECISION TO LIMIT NEGOTIATION IS NOT SUBJECT TO OBJECTION.

TO THE AIRPORT MACHINING CORPORATION, MARCH 30, 1965:

FURTHER REFERENCE IS MADE TO YOUR LETTER AND TELEGRAM DATED DECEMBER 21 AND 22, 1964, RESPECTIVELY, PROTESTING AGAINST CANCELLATION OF INVITATION FOR BIDS (IFB) AMC/A/-11-173-65-41 AND THE SUBSEQUENT NEGOTIATION AND AWARD OF A CONTRACT TO ANOTHER COMPANY FOR THE REQUIREMENT.

THE INVITATION WAS ISSUED NOVEMBER 16, 1964, BY THE AMMUNITION PROCUREMENT AND SUPPLY AGENCY (APSA), UNITED STATES ARMY, FOR FURNISHING 429,000 2.75 INCH XM 151 ROCKET WARHEADS. BID OPENING WAS SCHEDULED FOR DECEMBER 1, 1964, WITH DELIVERIES TO BEGIN IN FEBRUARY 1965. THE ORIGINAL REQUEST FOR THIS PROCUREMENT WAS FROM THE AIR FORCE FOR 206,000 WARHEADS AND WAS ASSIGNED PRIORITY DESIGNATOR CODE NO. 02 WHICH IS THE SECOND HIGHEST PRIORITY ESTABLISHED UNDER THE UNIFORM MATERIAL MOVEMENT AND ISSUE PRIORITY SYSTEM PROMULGATED BY DEPARTMENT OF DEFENSE INSTRUCTION 4410.6, AUGUST 20, 1964. A REQUEST FOR 223,000 WARHEADS WITH THE SAME PRIORITY CODE WAS RECEIVED FROM THE ARMY PRIOR TO ISSUANCE OF THE IFB AND WAS THEREFORE INCLUDED THEREIN. PROCUREMENT OF THE REQUIREMENT BY FORMAL ADVERTISING WAS APPROVED BY THE APSA PURCHASE ASSIGNMENT BOARD. THE BOARD RECOGNIZED THAT AN INITIAL FEBRUARY DELIVERY SCHEDULE WAS "UNREALISTIC.' HOWEVER, IT APPROVED PROCUREMENT BY FORMAL ADVERTISING, EVEN THOUGH THE SOLICITATION WAS LIMITED TO FIFTEEN DAYS BECAUSE OF THE PRIORITY CODE ASSIGNED, SINCE A PRE-INVITATION NOTICE HAD BEEN DISTRIBUTED TO FOURTEEN POTENTIAL BIDDERS AND A TECHNICAL DATA PACKAGE HAD BEEN DISTRIBUTED AT A PRE-BIDDING CONFERENCE.

SUBSEQUENT TO ISSUANCE OF THE IFB, A SURVEY OF INDUSTRIAL FACILITIES BY THE UNITED STATES ARMY MUNITIONS COMMAND (USAMUCOM) INDICATED THAT, WITH AWARD ANTICIPATED IN MID-TO-LATE DECEMBER, IT WOULD NOT BE FEASIBLE TO EXPECT DELIVERY OF THE FINISHED QUANTITIES SCHEDULED FOR FEBRUARY. THEREFORE, USAMUCOM PROPOSED THAT A SUFFICIENT QUANTITY OF CASTINGS BE DELIVERED DURING DECEMBER FOR MACHINING BY THE GOVERNMENT'S FRANKFORD ARSENAL TO MEET THE FEBRUARY REQUIREMENTS. AT THIS POINT, THE CONTRACTING OFFICER, IN CONJUNCTION WITH THE COGNIZANT PROCUREMENT OFFICERS OF USAMUCOM AND APSA, DETERMINED THAT BECAUSE IT WAS NOT POSSIBLE EITHER TO MEET THE DELIVERY SCHEDULE AS CALLED FOR IN THE IFB OR TO AMEND THE IFB TO OBTAIN CASTINGS FOR FRANKFORD ARSENAL IN DECEMBER, AND BECAUSE OF THE EXIGENT NATURE OF THE PROCUREMENT, THE INTERESTS OF THE GOVERNMENT WOULD BEST BE SERVED BY CANCELLATION OF THE IFB, AS PROVIDED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 208, AND NEGOTIATION OF THE REQUIREMENT PURSUANT TO THE PROVISIONS OF 10 U.S.C. 2304/A) (2) AND ASPR 3-202.2/VI). SUCH DETERMINATION, DATED NOVEMBER 23, 1964, IS AS FOLLOWS:

1. I HEREBY FIND THAT:

A. THE AMMUNITION PROCUREMENT AND SUPPLY AGENCY PROPOSES TO PROCURE BY NEGOTIATION 429,000 EACH WARHEAD 2.75 INCH ROCKET XM151 WITH OPTIONAL QUANTITIES NOT TO EXCEED 50 PERCENT OF ANY GIVEN CONTRACT QUANTITY.

B. THE ESTIMATED COST OF THE PROPOSED PROCUREMENT IS $5,066,000.00.

C. THE PROCUREMENT BY NEGOTIATION OF THE ABOVE DESCRIBED PROPERTY IS JUSTIFIED BECAUSE AN ISSUE PRIORITY DESIGNATOR CODE NUMBER 02 HAS BEEN ASSIGNED TO THIS PROCUREMENT AND THE PROPERTY CANNOT BE PROCURED BY FORMAL ADVERTISING IN TIME TO MEET THE ASSIGNED DELIVERY DATE.

D. THE USE OF FORMAL ADVERTISING FOR PROCUREMENT OF THE ABOVE DESCRIBED PROPERTY IS IMPRACTICABLE BECAUSE FORMAL ADVERTISING WILL NOT ASSURE DELIVERY OF THIS PRODUCT IN TIME TO MEET THE REQUIREMENTS OF THE REQUISITIONER.

2. UPON THE BASIS OF THE FINDINGS SET FORTH ABOVE, I HEREBY DETERMINE THAT THIS PROCUREMENT IS FOR PROPERTY FOR WHICH THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.

3. SUBJECT TO THE AVAILABILITY OF FUNDS AND PROVIDING THAT THE ABOVE PROPERTY HAS OTHERWISE BEEN AUTHORIZED FOR PROCUREMENT, IT MAY, THEREFORE, BE PROCURED BY NEGOTIATION FOR A PERIOD OF 30 DAYS FROM THE DATE HEREOF PURSUANT TO 10 U.S.C. 2304/A) (2) AND PARAGRAPH 3 202.2/VI) OF THE ARMED SERVICES PROCUREMENT REGULATION.

4. THE ABOVE DETERMINATION APPLIES TO AN APPROVED PROGRAM FOR FISCAL YEAR 1965.

AFTER CANCELLATION OF THE IFB, APSA WAS DIRECTED BY USAMUCOM ON NOVEMBER 21, 1964, TO NEGOTIATE WITH ALBION MALLEABLE IRON COMPANY FOR 125,000 CASTINGS TO BE FURNISHED FRANKFORD ARSENAL BEGINNING IN DECEMBER, AND FOR 304,000 COMPLETE WARHEADS, WITH DELIVERIES COMMENCING IN FEBRUARY. AS A RESULT OF NEGOTIATION, CONTRACT DA-11 173-AMC-306/A) WAS CONSUMMATED WITH ALBION ON DECEMBER 4, 1964. WE ARE ADVISED THAT THE INITIAL DELIVERIES OF CASTINGS SCHEDULED FOR DECEMBER WERE ACCOMPLISHED ON TIME.

YOUR PROTEST HAS RAISED TWO QUESTIONS REGARDING THIS PROCUREMENT. FIRST FOR CONSIDERATION IS THE PROPRIETY OF THE DETERMINATION TO CANCEL THE INVITATION AND NEGOTIATE. AS WE HAVE ALREADY NOTED, THE JUSTIFICATION CITED FOR NEGOTIATING THE CONTRACT RATHER THAN EMPLOYING COMPETITIVE BIDDING PROCEDURES WAS THAT THE PUBLIC EXIGENCY WOULD NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. NEGOTIATING ON THIS BASIS IS AUTHORIZED BY 10 U.S.C. 2304/A) (2). IMPLEMENTING THIS PROVISION IS ASPR 3-202.2/VI), WHICH PROVIDES THAT ONE CIRCUMSTANCE WHERE THE AUTHORITY TO NEGOTIATE MAY BE EXERCISED IS WHERE THE PURCHASE REQUEST CITES AN ISSUE PRIORITY DESIGNATOR 1/01) THROUGH 6/06), INCLUSIVE, UNDER THE UNIFORM MATERIAL (MOVEMENT AND) ISSUE PRIORITY SYSTEM, AND ASPR 3-202.3 THEREFORE PROVIDES THAT THE DETERMINATION AND FINDINGS OF THE CONTRACTING OFFICER JUSTIFYING NEGOTIATION REQUIRED BY THAT PARAGRAPH NEED ONLY CITE THE APPROPRIATE PRIORITY DESIGNATOR AS JUSTIFICATION WHETHER SUCH CITATION, STANDING ABOVE, WOULD SATISFY THE REQUIREMENTS OF 10 U.S.C. 2310/B) FOR WRITTEN FINDINGS "CLEARLY AND CONVINCINGLY" ESTABLISHING THE IMPRACTICABILITY OF ADVERTISING, THE FINDINGS IN THIS INSTANCE APPEAR TO BE ADEQUATE AND WE HAVE NO BASIS FOR OBJECTION THERETO. SEE 38 COMP. GEN. 44.

THE REMAINING QUESTION PRESENTED BY YOUR PROTEST RELATES TO THE DECISION TO LIMIT NEGOTIATIONS TO ONE FIRM, ALBION MALLEABLE IRON COMPANY. IN THIS CONNECTION, THE CONTRACTING OFFICER HAS STATED THE FOLLOWING IN A REPORT TO OUR OFFICE:

C. NEGOTIATIONS WERE LIMITED TO THE ABOVE SOURCE FOR THE FOLLOWING REASONS:

(1) A PRIORITY DESIGNATOR CODE NUMBER 02 HAS BEEN ASSIGNED TO THIS PROCUREMENT WHICH REQUIRED DELIVERIES COMMENCING IN DECEMBER 1964. THIS IS THE HIGHEST PRIORITY THAT CAN BE ASSIGNED A PROCUREMENT REQUIREMENT DURING PEACETIME.

(2) THIS REQUIREMENT NECESSITATED SELECTING A SOURCE THAT HAS HAD CONSIDERABLE EXPERIENCE IN PRODUCING ITEMS FOR PEARLITIC MALLEABLE IRON, WITH THE ADDITIONAL MACHINING CAPABILITY WHICH WOULD SUPPORT IMMEDIATE MASS PRODUCTION TO MAINTAIN A SCHEDULE OF 60,000 CASTINGS PER MONTH PLUS THE MACHINING CAPABILITY OF 40,000 FINISHED ITEMS PER MONTH. THE ONLY SOURCE THAT IS KNOWN TO THE GOVERNMENT CAPABLE OF MEETING THESE REQUIREMENTS IS THE CONTRACTOR SELECTED FOR THE AWARD.

(3) OTHER POSSIBLE SOURCES WERE NOT CONSIDERED BECAUSE, BASED ON ENGINEERING STUDIES INVOLVING PREPRODUCTION LEAD TIME FOR ITEMS OF THIS NATURE, A REASONABLE ESTIMATE IS THAT IT WOULD TAKE ANYWHERE FROM 16 TO 26 WEEKS TO DEVELOP CAPABILITY OF MAKING THE ITEM IN THE MASSIVE QUANTITIES REQUIRED AND IN THE TIME DESIRED. THE ESTIMATE OF LEAD TIME (16-26 WEEKS) IS COMPLETELY COMPATIBLE WITH OUR PAST EXPERIENCE ON SIMILAR ITEMS. THEREFORE, THE PRIORITY THAT IS ESTABLISHED FOR THIS ITEM AND THE QUANTITY DELIVERIES NEEDED IN THE SHORT PERIOD OF TIME PRECLUDED ANY EXPERIMENTATION AND/OR EDUCATION OF NEW FIRMS TO MASS PRODUCE THIS ITEM.

IN SUPPORT OF THE DETERMINATION TO NEGOTIATE WITH ALBION ALONE, WE HAVE BEEN ADVISED THAT OF THE SIXTEEN FIRMS SOLICITED BY THE ORIGINAL INVITATION FOR BIDS ONLY FIVE HAD EXPRESSED ANY INTEREST, TWO FIRMS KNOWN TO BE QUALIFIED HAVING INDICATED THAT THEY WOULD NOT HAVE AVAILABLE CAPACITY TO UNDERTAKE THE WORK REQUIRED. OF THE FIVE INDICATING INTEREST ONE HAD APPARENTLY LOST INTEREST AFTER RECEIVING THE BID PACKAGE, AND TWO HAD BEEN INTERESTED ONLY IN SUBCONTRACTING. ALBION WAS DETERMINED TO BE THE ONLY ONE OF THOSE FIRMS WHICH POSSESSED EXPERIENCE IN THE MASS PRODUCTION OF SIMILAR ITEMS CAST FROM PEARLITIC MALLEABLE IRON. AS TO YOUR FIRM, IT IS REPORTED THAT WHILE YOU HAD BEEN SATISFACTORILY PROCESSING SMALL TEST QUANTITIES OF THE ITEM FOR RESEARCH AND DEVELOPMENT ACTIVITIES, REVIEW OF YOUR OPERATION DURING THE COURSE OF THAT WORK SHOWED THAT YOU EMPLOYED ONLY SOME EIGHT TO TEN PRODUCTION PERSONNEL, AND FOR THAT REASON IT WAS NOT BELIEVED YOU COULD BE SERIOUSLY CONSIDERED FOR THE REQUIREMENT OF SOME 400,000 WARHEADS IN LESS THAN A 1 YEAR TIME SPAN.

WHILE THE APPLICABLE STATUTE (10 U.S.C. 2304/G) ( REQUIRES THAT EVEN WHERE AUTHORITY EXISTS TO NEGOTIATE PROCUREMENTS, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, THE ,PUBLIC EXIGENCY" JUSTIFICATION FOR NEGOTIATION IMBUES THE CONTRACTING OFFICER WITH A CONSIDERABLE RANGE OF DISCRETION IN DETERMINING THE EXTENT OF NEGOTIATION CONSISTENT WITH THE EXIGENCY OF THE SITUATION. IN THE ABSENCE OF EVIDENCE INDICATING AN ARBITRARY OR CAPRICIOUS EXERCISE OF THE DISCRETION PERMITTED, OUR OFFICE IS NOT REQUIRED TO OBJECT THERETO. SINCE THE DECISION TO LIMIT NEGOTIATIONS TO ALBION INDICATES A REASONABLE BASIS THEREFOR, IN THE LIGHT OF THE INFORMATION IN HAND AT THE TIME, WE SEE NO BASIS UPON WHICH WE MAY PROPERLY OBJECT.

WE THEREFORE CONCLUDE THAT THE CONTRACT AWARD TO ALBION MAY NOT BE DISTURBED AND YOUR PROTEST MUST BE, AND IS, DENIED.