B-157207, DEC. 28, 1965, 45 COMP. GEN. 365

B-157207: Dec 28, 1965

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THAT ONLY ONE OF SEVERAL BIDDERS RECEIVING EQUIPMENT APPROVAL HAD MET THE RELIABILITY APPROVAL REQUIREMENT IS NOT A BASIS FOR HOLDING THE SPECIFICATIONS RESTRICTIVE. EVIDENCE CONFIRMING THE SPECIFICATIONS WERE REASONABLE AND NECESSARY TO THE PURPOSE OF THE PROCUREMENT. WERE BASED UPON A BONA FIDE DETERMINATION OF PRESENT NEEDS UNDER EXISTING CONDITIONS. THE ACTION TAKEN WILL NOT BE DISTURBED. MAY NOT BE WAIVED AS A MINOR DEVIATION THAT IS NOT PREJUDICIAL TO OTHER BIDDERS. 1965: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 8. THAT THE SPECIFICATIONS IN THE INVITATION ARE RESTRICTIVE IN THAT THE ONLY INSTRUMENT CAPABLE OF MEETING THE PREPRODUCTION RELIABILITY APPROVAL REQUIREMENTS OF THE INVITATION IS THAT OF THE MANUFACTURER.

B-157207, DEC. 28, 1965, 45 COMP. GEN. 365

CONTRACTS - SPECIFICATIONS - RESTRICTIVE - ABILITY TO MEET REQUIREMENTS THE FACT THAT THE LOW BIDDER IN ORDER TO MEET DELIVERY SCHEDULES COULD NOT SATISFY THE INVITATION REQUIREMENTS FOR PREPRODUCTION RELIABILITY APPROVAL OR FIRST ARTICLE APPROVAL, WAIVER OF EITHER REQUIREMENT OR BOTH BEING PROVIDED IF APPROVAL HAD BEEN RECENTLY ACCOMPLISHED, AND THAT ONLY ONE OF SEVERAL BIDDERS RECEIVING EQUIPMENT APPROVAL HAD MET THE RELIABILITY APPROVAL REQUIREMENT IS NOT A BASIS FOR HOLDING THE SPECIFICATIONS RESTRICTIVE, OR THAT BECAUSE ONLY ONE FIRM COULD SUPPLY THE GOVERNMENT'S NEEDS THE SPIRIT OR LETTER OF THE COMPETITIVE SYSTEM HAD BEEN VIOLATED, EVIDENCE CONFIRMING THE SPECIFICATIONS WERE REASONABLE AND NECESSARY TO THE PURPOSE OF THE PROCUREMENT, AND THAT THE TESTING REQUIREMENTS, DESIGNED TO INCREASE COMPETITION, WERE BASED UPON A BONA FIDE DETERMINATION OF PRESENT NEEDS UNDER EXISTING CONDITIONS, AND ABSENT A SHOWING OF BAD FAITH OR ABUSE OF DISCRETION BY THE PROCUREMENT OFFICIALS, THE ACTION TAKEN WILL NOT BE DISTURBED, AND THE DEVIATION FROM THE TESTING REQUIREMENTS, AFFECTING QUALITY, QUANTITY, OR PRICE OF THE EQUIPMENT OFFERED, MAY NOT BE WAIVED AS A MINOR DEVIATION THAT IS NOT PREJUDICIAL TO OTHER BIDDERS.

TO ECCO ELECTRONIC COMPONENTS CORP., DECEMBER 28, 1965:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 8, 1965, WITH ENCLOSURES, PROTESTING THE PRACTICES EMPLOYED BY THE AIR FORCE UNDER INVITATION FOR BIDS NO. IFB 33-657-65-181. YOUR LETTER OF JULY 8, 1965, ADDRESSED TO THE SMALL BUSINESS ADMINISTRATION, COPY TO THIS OFFICE WITH COVERING LETTER OF SAME DATE, SET FORTH, IN EFFECT, THAT THE SPECIFICATIONS IN THE INVITATION ARE RESTRICTIVE IN THAT THE ONLY INSTRUMENT CAPABLE OF MEETING THE PREPRODUCTION RELIABILITY APPROVAL REQUIREMENTS OF THE INVITATION IS THAT OF THE MANUFACTURER. YOU STATE FURTHER THAT AN EXAMINATION OF THE TIME PHASE PROGRAM DEVELOPED BY YOU COVERING THE DELIVERY REQUIREMENTS OF ALL ITEMS ON THIS BID WILL SHOW THAT YOU INTERPRETED THE REQUIREMENTS OF THREE TIMES THE MTBF (MEAN TIME BETWEEN FAILURES) AS BEING NORMALIZED TEST TIME RATHER THAN A REQUIREMENT FOR EACH INDIVIDUAL PIECE OF EQUIPMENT. YOU ALSO STATE THAT SINCE SEVEN UNITS OF EACH EQUIPMENT HAD TO BE TESTED FOR RELIABILITY THAT THREE TIMES THE MTBF WOULD BE ACCUMULATED ON THE BASIS OF THE TOTAL TIME FOR SEVEN UNITS RATHER THAN THREE TIMES THE MTBF FOR EACH UNIT. IT WAS YOUR CONCLUSION THAT UNDER THIS INTERPRETATION OF THE DEMONSTRATION RELIABILITY TEST PROGRAM YOU COULD NOT MEET THE CONTRACTUAL REQUIREMENT FOR TESTING.

THE DEPARTMENT OF THE AIR FORCE ADVISES THAT INVITATION FOR BIDS NO. IFB 33-657-65-181 SOLICITED BIDS FOR THE FURNISHING OF THREE TYPES OF RADIO RECEIVERS, THE APPLICABLE SPARE PARTS AND DATA. THE INVITATION PROVIDED FOR BIDDING ON THE BASIS OF PREPRODUCTION RELIABILITY APPROVAL, FIRST ARTICLE APPROVAL AND THE WAIVER OF EITHER OR BOTH OF THOSE APPROVALS IF RECENTLY ACCOMPLISHED. BIDS WERE ASKED EITHER ON BOTH ALTERNATE "A" (FUNDED REQUIREMENTS--- FY 65) AND "B" (MULTI-YEAR PROCUREMENT--- FY 65 AND FY 66) IN THEIR ENTIRETY, OR ON ALTERNATE "A" ALONE, AND WERE TO BE EVALUATED ON THE BASIS OF LOWEST OVERALL COST TO THE GOVERNMENT. THREE FIRMS SUBMITTED BIDS. YOUR COMPANY, THE LOW BIDDER, WAS DETERMINED TO BE NONRESPONSIBLE AND THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION. YOU, HOWEVER, DECLINED TO FILE FOR A CERTIFICATE OF COMPETENCY AND AWARD WAS MADE ON JULY 26, 1965, TO THE SECOND LOW BIDDER, SPARTON CORPORATION, SPARTON ELECTRONICS DIVISION, JACKSON, MICHIGAN, IN THE AMOUNT OF $545,421.44.

UPON PREAWARD SURVEY OF YOUR FACILITIES FOR THE FACILITIES CAPABILITY REPORT VARIOUS MAJOR PROBLEMS WERE FOUND. WHILE PREPRODUCTION RELIABILITY TESTING WAS TO BE COMPLETED WITHIN 180 DAYS AFTER RECEIPT OF AWARD, YOUR PLANNING SHOWED PREPRODUCTION RELIABILITY TESTING STARTING IN THE 17TH WEEK AND COMPLETED IN 3 WEEKS. YOU MADE THIS DETERMINATION BASED ON AN ASSUMPTION THAT TIME COULD BE ACCUMULATED ON ALL SEVEN UNITS TESTED TO REACH A TOTAL OF 3 MTBF'S (1,800 HOURS). A REVIEW OF THE SPECIFICATIONS MIL-R-26667, PARAGRAPH 4.5.1, AND ASWV-R 1, PARAGRAPH VI, WHICH PROVIDE THE PERTINENT REQUIREMENTS, SHOWED THAT YOUR ASSUMPTION OF TEST TIME WAS INCORRECT. EACH UNIT MUST BE OPERATED FOR 3 MTBF'S (1,800 HOURS). BASED ON THE REQUIRED 18 HOURS ON MINUS 6 HOURS OFF CYCLE, THE TESTING WOULD REQUIRE OVER 14 WEEKS FOR COMPLETION. UPON RECEIPT OF THIS ADVICE YOU AGREED THAT YOU HAD MADE AN ERROR AND AGREED THAT 14 PLUS WEEKS WOULD BE NECESSARY TO PERFORM THE REQUIRED TESTING. YOU FURTHER STATED THAT YOU COULD NOT COMPLY WITH THE REQUIREMENT SCHEDULE IN THIS RESPECT, AS STATED IN THE INVITATION.

ITEM 5.1 OF THE INVITATION REQUIRES THE CONTRACTOR TO PERFORM MAINTAINABILITY ANALYSIS AND COMPLETE THE EXHIBIT OF GENERAL DYNAMICSDOCUMENT FZM-12-098. THE SURVEY REPORT REVEALED THAT YOU DID NOT HAVE THE EXHIBIT, WERE NOT AWARE OF ITS REQUIREMENTS AND DID NOT PROVIDE ANY PLANNING IN THIS AREA. THE CONCLUSION OF THE PREAWARD SURVEY WAS THAT YOUR COMPANY COULD NOT MEET THE REQUIREMENTS OF THE INVITATION IN THE ALLOTTED TIME.

THE REQUIRED DELIVERY SCHEDULES SET FORTH IN THE INVITATION WERE BASED ON THE MAXIMUM TIME THAT THE AIR FORCE COULD PRUDENTLY ALLOW FOR THE DELIVERY OF SUCH EQUIPMENTS AND MEET REQUIRED PRODUCTION SCHEDULES FOR FIRST LINE MILITARY AIRCRAFT INCLUDING THE F-111A. WHEN THE INVITATION WAS ISSUED ON FEBRUARY 17, 1965, AN AWARD WAS CONTEMPLATED BY APRIL 1965 TO MEET PRODUCTION REQUIREMENTS IN JANUARY 1966. A SHORTAGE OF NINE SETS WAS ESTIMATED FOR JANUARY 1966. IT WAS DETERMINED THAT AN ADDITIONAL SHORTAGE OF 37 UNITS WOULD DEVELOP DURING THE MONTH OF JANUARY IN THE EVENT THE GOVERNMENT REQUIRED 30 DAYS TO ACCOMPLISH GOVERNMENT PREPRODUCTION AND/OR FIRST ARTICLE APPROVALS. EACH ADDITIONAL MONTH'S DELAY IN PRODUCTION DELIVERIES OF THE EQUIPMENT WOULD INCREASE THE NEGATIVE POSITION IN THE PRODUCTION SCHEDULES. THE AIRCRAFT DELIVERY SCHEDULES DICTATED A CLOSE DELIVERY REQUIREMENT BUT IN THE ABSENCE OF EMERGENCY CONDITIONS PROCUREMENT OF THESE SYSTEMS BY SELECTED SOURCE NEGOTIATION WAS PRECLUDED PARTICULARLY WHERE SOURCES WERE AVAILABLE FOR COMPETITIVE SOLICITATION. IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT THERE ARE PRESENTLY THREE QUALIFIED MANUFACTURERS WHO COULD MEET THE DELIVERY TERMS OF THE INVITATION--- COLLINS RADIO COMPANY, CEDAR RAPIDS, IOWA; SPARTON CORPORATION, SPARTON ELECTRONICS DIVISION, JACKSON, MICHIGAN; AND BABCOCK ELECTRONICS CORPORATION, COSTA MESA, CALIFORNIA. ALL OF THESE COMPANIES HAVE PREVIOUSLY BEEN AWARDED CONTRACTS FOR THESE EQUIPMENTS AS A RESULT OF FORMAL ADVERTISED PROCUREMENT.

THEREFORE, TO PERMIT FULL COMPETITION CONSISTENT WITH THE REQUIREMENTS IT WAS NECESSARY TO SOLICIT THE THREE FIRMS WHICH HAD PREVIOUSLY RECEIVED CONTRACTS FOR THIS TYPE OF EQUIPMENT. ONE OF THESE PRIOR CONTRACTORS HAS RECEIVED BOTH APPROVALS FOR EACH EQUIPMENT. THE OTHER TWO PRIOR CONTRACTS HAVE RECEIVED PREPRODUCTION RELIABILITY APPROVALS FOR THIS EQUIPMENT FROM THE GOVERNMENT. THE INCLUSION OF THE PROVISION AUTHORIZING BIDS ON THE BASIS OF BOTH PREPRODUCTION RELIABILITY APPROVAL AND FIRST ARTICLE APPROVAL WAS DESIGNED TO INCREASE THE SCOPE OF COMPETITION BY PERMITTING ADDITIONAL INTERESTED FIRMS, WITH ADEQUATE CAPABILITY TO PERFORM THE WORK, TO BID ON THIS PROCUREMENT. THE INVITATION REQUIRED DELIVERY OF PRODUCTION ITEMS WITHIN 120 DAYS AFTER RECEIPT OF AWARD IF THE BID WAS BASED ON PRIOR GOVERNMENT APPROVALS OF PREPRODUCTION RELIABILITY AND FIRST ARTICLE. THE MAXIMUM REQUIRED DELIVERY SCHEDULE OF 240 DAYS WAS ESTABLISHED FOR DELIVERY OF PRODUCTION ITEMS REQUIRING BOTH OF THESE APPROVALS AFTER AWARD. UNDER THE LATTER SCHEDULE DELIVERY OF THE ARTICLE FOR PREPRODUCTION TESTING WAS REQUIRED WITHIN 180 DAYS AFTER AWARD. THE ADMINISTRATIVE OFFICE ADVISED THAT IT IS POSSIBLE TO ACCOMPLISH THE PREPRODUCTION RELIABILITY TESTING IN 100 OF THESE 180 DAYS. THIS TESTING REQUIREMENT MAY NOT BE WAIVED AS IT IS ESSENTIAL TO THE AIR FORCE TO ASSURE THAT EQUIPMENT DELIVERED WILL PERFORM FOR THE REQUIRED MINIMUM LENGTH OF TIME.

WE HAVE CONSISTENTLY HELD THAT THE ESTABLISHMENT OF SPECIFICATIONS REFLECTING THE ACTUAL NEEDS OF THE GOVERNMENT IS PRIMARILY THE RESPONSIBILITY OF THE ADMINISTRATIVE AGENCY. IT HAS ALSO BEEN HELD THAT THE ADVERTISING STATUTES REQUIRE THAT EVERY EFFORT BE MADE TO DRAW SPECIFICATIONS IN SUCH TERMS AS WILL PERMIT THE BROADEST FIELD OF COMPETITION CONSISTENT WITH THE GOVERNMENT'S ACTUAL NEEDS. IT IS WELL ESTABLISHED THAT THE GOVERNMENT DOES NOT VIOLATE EITHER THE LETTER OR THE SPIRIT OF THE COMPETITIVE BIDDING STATUTES MERELY BECAUSE ONLY ONE FIRM CAN SUPPLY ITS NEEDS, PROVIDED THE SPECIFICATIONS ARE REASONABLE AND NECESSARY FOR THE PURPOSE INTENDED. 34 COMP. GEN. 336. AS TO THIS PROCUREMENT WE FIND NO ADEQUATE BASIS FOR HOLDING THAT THE TESTING REQUIREMENTS, AS APPLIED, WERE NOT BASED UPON A BONA FIDEDETERMINATION OF THE PRESENT NEEDS OF THE AIR FORCE UNDER EXISTING CONDITIONS. THE EXERCISE OF SUCH DETERMINATION IS VESTED IN THE PROCUREMENT OFFICIALS INVOLVED IN EACH CASE AND, IN THE ABSENCE OF BAD FAITH, IS NOT SUBJECT TO REVIEW. CLEARLY, IN THE ORDERLY CONDUCT OF ITS BUSINESS THE GOVERNMENT MAY NOT BE PLACED IN THE POSITION OF HAVING TO SHARE SUCH DISCRETIONARY AUTHORITY WITH ONE OF ITS POTENTIAL SUPPLIERS. IN THESE CIRCUMSTANCES ACCEPTANCE OF YOUR BID COULD ONLY HAVE BEEN ACCOMPLISHED BY A WAIVER OF THE REQUIREMENTS SET OUT IN THE INVITATION. WHILE IT IS TRUE THAT MINOR DEVIATIONS MAY BE WAIVED, OUR OFFICE HAS CONSISTENTLY HELD THAT DEVIATIONS WHICH AFFECT THE QUALITY, QUANTITY OR PRICE OF ARTICLES OFFERED, SO AS TO BE PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS, ARE MAJOR DEVIATIONS WHICH MAY NOT BE WAIVED. 30 COMP. GEN. 179; 17 ID. 554.

SINCE WE HAVE FOUND NO EVIDENCE OF BAD FAITH OR ABUSE OF DISCRETION IN THE SUBJECT PROCUREMENTS THE ACTION TAKEN BY THE PROCUREMENT OFFICIALS WILL NOT BE DISTURBED AND YOUR PROTEST IS DENIED.