B-157421, JAN. 19, 1966

B-157421, JAN. 19, 1966

TO HONORABLE DAVID E. BELL, ADMINISTRATOR, AGENCY FOR INTERNATIONAL DEVELOPMENT:

WE REFER TO THE LETTER OF DECEMBER 9, 1965, WITH ENCLOSURES, FROM YOUR DEPUTY ADMINISTRATOR, REQUESTING THAT OUR OFFICE REVIEW THE TECHNICAL QUESTIONS INVOLVED IN A PROCUREMENT OF 65 DIESEL-ELECTRIC LOCOMOTIVES FOR THE KOREAN NATIONAL RAILROAD (KNR) PURSUANT TO A LOAN AGREEMENT BETWEEN THE AGENCY FOR INTERNATIONAL DEVELOPMENT AND THE REPUBLIC OF KOREA. THE PROCUREMENT HAS BEEN DIVIDED INTO THREE PARTS AND NO PROBLEMS HAVE BEEN ENCOUNTERED WITH PARTS I AND II. OUR DISCUSSION WILL BE LIMITED TO PART III--- THE PROCUREMENT OF 49DIESEL ELECTRIC LOCOMOTIVES OF 875 H.P. OR MORE WITH TWO MOTOR TRUCKS FOR GENERAL OPERATION.

THE RECORD INDICATES THAT KOREA PREVIOUSLY PURCHASED LOCOMOTIVES FROM THE GENERAL MOTORS CORPORATION. AID DECIDED THAT THE INSTANT PROCUREMENT SHOULD BE ON A COMPETITIVE BASIS AND SPECIFICATIONS WERE DRAFTED WITH THE INTENT OF ACHIEVING COMPETITION.

THE SPECIFICATIONS FOR PART III PROVIDED THAT:

"THE LOCOMOTIVES SHALL BE CONSTRUCTED ESSENTIALLY TO THE MANUFACTURER'S LATEST DESIGN EXCEPT AS INDICATED IN THIS SPECIFICATION AND SHALL BE IN REGULAR PRODUCTION SO AS TO ASSURE PROMPT AND CONTINUOUS SERVICE AND SUPPLY OF SPARE PARTS.'

THE SPECIFICATIONS FOR PART III GAVE DESCRIPTIVE AND PERFORMANCE REQUIREMENTS FOR THE LOCOMOTIVES. THE MODEL WAS DESCRIBED AS A "FOUR MOTOR, ROAD SWITCHING LOCOMOTIVE WITH AT LEAST 875 H.P. CONTINUOUS INPUT TO THE MAIN GENERATOR FOR TRACTION PURPOSES.'

THE SPECIFICATION FOR THE FOUR TRACTION MOTORS PROVIDED AS FOLLOWS:

"TRACTION MOTOR:

"THE FOUR TRACTION MOTORS TO BE EITHER GE. MODEL 752 OR GM. MODEL D67, DIRECT CURRENT, SERIES-WOUND, ENCLOSED TYPE, FORCE VENTILATED, DESIGNED FOR RUGGED USE AND LONG LIFE WITH AMPLE CAPACITY. INDIVIDUAL MOTOR FOR EACH DRIVING AXLE. SEALED LUBRICATED ROLLER OR BALL BEARINGS, FROM A WELL -KNOWN MAKER, TO BE USED. GEAR CASE TO BE LEAKPROOF FOR USE OF EXTREME PRESSURE GEAR GREASE OR OIL.'

INVITATION FOR BIDS IN CONNECTION WITH AID LOAN-5072-YP, WAS ISSUED ON JULY 30, 1965, BY THE OFFICE OF SUPPLY, GOVERNMENT OF THE REPUBLIC OF KOREA (OSROK). CLAUSE 19 (A) ON PAGE 8 OF THE INVITATION ENTITLED "CATALOGS AND BRAND NAMES" PROVIDED AS FOLLOWS:

"19. CATALOGS AND BRAND NAMES:

A. REFERENCE TO ANY MANUFACTURER'S BRAND NAMES AND CATALOG NUMBERS ARE INTENDED TO BE DESCRIPTIVE BUT NOT RESTRICTIVE AND ARE FOR THE SOLE PURPOSE OF INDICATING TO PROSPECTIVE BIDDERS, THE TYPE OR QUALITY OF ARTICLE WHICH WILL BE ACCEPTABLE. BIDS ON COMPARABLE ITEMS OFFERED UNDER BRAND NAMES WILL BE CONSIDERED, PROVIDED THAT THE BIDDER CLEARLY STATES WITH HIS BID (BY DESCRIPTIVE LITERATURE, ILLUSTRATION, ETC.) THE EXACT ARTICLES HE IS OFFERING AND HOW IT DIFFERS FROM THAT SPECIFIED.'

PARAGRAPH 6 (D) OF THE INVITATION PROVIDED THAT "OSROK RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS, WAIVE ANY DEFECTS IN BIDS RECEIVED OR CALL FOR A REBID AS THE BEST INTERESTS OF THE GOVERNMENT MAY REQUIRE.'

THE RECORD INDICATES THAT THE GENERAL ELECTRIC COMPANY WAS AWARE OF THE INSTANT SPECIFICATIONS BEFORE THE INVITATION WAS ISSUED AND THAT GE AT THAT TIME MADE SOME OBJECTION TO THE DESIGNATION IN THE SPECIFICATIONS OF MODEL GE-752 FOR THE TRACTION MOTORS.

GE'S BID STATED THAT THE 49 TRACTION MOTORS WOULD BE MODEL NUMBER GE- 761. THE BID FROM GENERAL MOTORS CORPORATION INDICATED THAT THE TRACTION MOTORS WOULD BE GM'S MODEL D-67, AS REQUIRED BY THE SPECIFICATIONS. GE'S BID FOR THE 49 LOCOMOTIVES IN PART III WAS ABOUT $250,000 LOWER THAN GM'S BID. THE RECORD INDICATES THAT ANOTHER MANUFACTURER OF LOCOMOTIVES, ALCO PRODUCTS, INCORPORATED, DID NOT SUBMIT A BID SINCE IT FELT THE SPECIFICATIONS WERE RESTRICTIVE. THERE IS SOME INDICATION THAT ALCO WOULD HAVE USED THE GE-761 TRACTION MOTOR FOR THE PART III REQUIREMENTS. IT IS NOT CLEAR WHETHER ALCO WOULD HAVE SUBMITTED A BID IF THE GE-761 MOTOR HAD BEEN SPECIFIED IN PART III.

GE CONTENDS THAT IT SHOULD RECEIVE AN AWARD FOR PART III AS THE LOW BIDDER. IN THIS CONNECTION GE ADVISED THAT ITS LOCOMOTIVE WITH THE GE 761 TRACTION MOTOR WILL MEET ALL OF THE PERFORMANCE REQUIREMENTS OF THE SPECIFICATIONS. THERE IS SOME QUESTION WHETHER GM COULD OR WOULD FURNISH A LOCOMOTIVE WITH A TRACTION MOTOR OTHER THAN THE D-67. THE RECORD INDICATES THAT GM MANUFACTURES A D-29 TRACTION MOTOR; HOWEVER, IT IS NOT CLEAR WHETHER THE D-29 WOULD BE RECOMMENDED FOR USE IN KOREA. IT IS GE'S POSITION THAT A READVERTISEMENT WOULD SERVE NO PURPOSE SINCE NEW BIDS FROM GE AND GM WOULD BE ON THE SAME ITEMS AS ALREADY BID.

GE ADVISES THAT THE INSTANT PROCUREMENT WOULD NOT BE COMPETITIVE IF GE WERE REQUIRED TO FURNISH A LOCOMOTIVE WITH A GE-752 TRACTION MOTOR BECAUSE OF THE COST THAT WOULD BE INCURRED IN MODIFYING GE'S STANDARD LOCOMOTIVE TO INCLUDE THE GE-752 TRACTION MOTOR. THE CONSULTING ENGINEERS HAVE DETERMINED THAT THE PERFORMANCE CHARACTERISTICS IN THE SPECIFICATIONS ARE ADEQUATE TO REQUIRE THE BIDDER TO FURNISH A SATISFACTORY TRACTION MOTOR AND THAT THE MODEL NUMBERS FOR THE TRACTION MOTORS IN PART III WERE SURPLUSAGE. THE CONSULTING ENGINEERS HAVE ALSO DETERMINED THAT GE'S LOCOMOTIVE WITH THE GE-761 TRACTION MOTOR WILL MEET THE OTHER REQUIREMENTS OF THE INSTANT SPECIFICATIONS.

GM CONTENDS THAT THE MODEL NUMBERS FOR THE TRACTION MOTORS WERE KNOWINGLY AND DELIBERATELY INSERTED IN THE SPECIFICATIONS FOR THE PURPOSE OF DESIGNATING KNR'S NEEDS. IN THIS CONNECTION GM ADVISES THAT A LOCOMOTIVE WITH THE GE-752 OR THE D-67 TRACTION MOTORS WOULD HAVE CERTAIN ADVANTAGES OVER A LOCOMOTIVE WITH THE GE-761 TRACTION MOTOR AND THAT THESE ADVANTAGES ARE NEEDED BY KNR. ALSO, THAT THE OVERALL ADVANTAGES IN THE LOCOMOTIVE OFFERED BY GM MORE THAN OFFSETS THE DIFFERENCE IN PRICE IN THE BIDS FROM GE AND GM TO PART III. GM CONTENDS THAT IT SHOULD RECEIVE THE AWARD AS THE LOW RESPONSIVE BIDDER. GM IN ITS LETTER TO OUR OFFICE DATED JANUARY 6, 1966, HAS ALSO RAISED THE FOLLOWING POINTS WITH RESPECT TO GE'S BID:

"2. A WARRANTY CLAUSE AS SPECIFIED IN PARAGRAPH 12 OF THE INVITATION TO BID WAS NOT OFFERED.

"3. TRAINING FOR FOUR ENGINEERS FOR A PERIOD OF SIX MONTHS, AS STIPULATED IN THE INVITATION, WAS NOT OFFERED.

"4. IT DID NOT CERTIFY THAT THE CATERPILLAR MODEL D398 ENGINE WAS DESIGNED FOR LOCOMOTIVE USE AND HAS AN OVERHAUL PERIOD OF NOT LESS THAN EIGHT YEARS.

"5. DIRECTLY DRIVEN AUXILIARY GENERATORS AND AIR COMPRESSORS WERE NOT OFFERED.'

WE HAVE HELD THAT DETERMINATIONS REGARDING THE ACTUAL NEEDS OF A GOVERNMENT AGENCY AND THE DRAFTING OF SPECIFICATIONS TO FULFILL THOSE NEEDS IS PRIMARILY THE FUNCTION OF THE PROCURING ACTIVITY. WE HAVE PARTICULARLY ADOPTED THIS VIEW WHERE DETERMINATIONS REGARDING THE ACTUAL NEEDS OF A PROCURING ACTIVITY REQUIRE TECHNICAL EXPERTISE. SEE B-147913, APRIL 6, 1962, AND 40 COMP. GEN. 294, 297. WE HAVE HELD THAT THE PUBLIC ADVERTISING STATUTES REQUIRED THAT EVERY EFFORT BE MADE BY THE PROCURING AGENCIES OF THE GOVERNMENT TO STATE SPECIFICATIONS IN TERMS THAT WILL PERMIT THE BROADEST FIELD OF COMPETITION WITHIN THE NEEDS REASONABLY REQUIRED, NOT THE MAXIMUM DESIRED. SEE 41 COMP. GEN. 348 AND 32 ID. 384. CONSEQUENTLY, WE HAVE DIRECTED THE CANCELLATION OF AN INVITATION WHERE THE SPECIFICATIONS WERE UNDULY RESTRICTIVE OF COMPETITION FOR NO LEGITIMATE REASON. SEE B-156477, APRIL 29, 1965. WE HAVE STATED THAT WHERE ONE BIDDER TAKES EXCEPTION TO CERTAIN SPECIFICATION REQUIREMENTS UNDER CIRCUMSTANCES NOT EXTENDED TO ALL BIDDERS, IT IS CLEAR THAT A CONTRACT AWARDED ON THE BASIS OF SUCH A BID WOULD NOT BE THE CONTRACT AWARDED TO ALL BIDDERS. SEE B-148277, MAY 10, 1962. WE HAVE RECOGNIZED THAT CONTRACTING OFFICERS MAY WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS IN THE INTEREST OF THE GOVERNMENT; HOWEVER, THE INFORMALITIES AND MINOR REGULARITIES WHICH CAN BE WAIVED MAY NOT GO THE SUBSTANCE OF THE BID AND THUS PREJUDICE THE RIGHTS OF OTHER BIDDERS. SEE 30 COMP. GEN. 179; 40 ID. 458.

IN VIEW OF THE VARIOUS TECHNICAL ARGUMENTS WHICH HAVE BEEN PRESENTED, OUR OFFICE CANNOT SAY WHETHER KNR'S ACTUAL NEEDS REQUIRE A LOCOMOTIVE WITH THE LARGER TRACTION MOTORS (GE-752 OR D-67) OR WHETHER THE SMALLER TRACTION MOTOR (GE-761) WOULD MEET KNR'S ACTUAL NEEDS. IF KNR'S ACTUAL NEEDS WOULD REQUIRE THE D-67 OR GE-752 TRACTION MOTORS WE FEEL THAT THE AWARD SHOULD GO TO GM FOR THE REASON THAT GE'S BID WAS NONRESPONSIVE AND THE DEVIATIONS IN GE'S BID REGARDING THE TRACTION MOTORS COULD NOT BE WAIVED.

IF THIS WERE A DIRECT FEDERAL PROCUREMENT AND KNR'S ACTUAL NEEDS DID NOT REQUIRE THE LARGER TRACTION MOTOR WE WOULD HOLD THAT THE SPECIFICATIONS WERE UNDULY RESTRICTIVE OF COMPETITION AND THAT THE INVITATION SHOULD BE CANCELLED AND THE PROCUREMENT READVERTISED. IN A DIRECT FEDERAL PROCUREMENT WE WOULD ALSO CONSIDER WHETHER THE GE-761 TRACTION MOTOR WERE EQUAL TO THE GE-752 MOTOR, AND IF THE DESCRIPTIVE DATA WITH GE'S BID ESTABLISHED THAT THE TWO TRACTION MOTORS WERE EQUAL, GE'S BID WOULD BE ACCEPTABLE. SEE B-148288, JUNE 1, 1962. ON THE BASIS OF THE RECORD PRESENTED, HOWEVER, IT DOES NOT APPEAR THAT THE GE 752 AND THE GE-761 TRACTION MOTORS ARE EQUAL.

IN OUR REVIEW OF PROCUREMENTS BY FOREIGN GOVERNMENTS PURSUANT TO LOAN AGREEMENTS WITH AID, WE HAVE HELD THAT THE GENERAL RULES APPLICABLE TO PROCUREMENTS BY THE DEPARTMENTS AND AGENCIES OF THE UNITED STATES DO NOT APPLY. SEE B-152326, DECEMBER 6, 1963, AND B 149843, NOVEMBER 5, 1962. AS STATED ABOVE, WE BELIEVE READVERTISEMENT WOULD BE INDICATED UNDER THE RULES APPLICABLE TO DIRECT FEDERAL PROCUREMENT IF KNR'S ACTUAL NEEDS DO NOT REQUIRE THE LARGER TRACTION MOTOR AND THIS COURSE OF ACTION IS CLEARLY POSSIBLE IN THE PRESENT CASE.

IT IS CONTENDED BY GE THAT A READVERTISEMENT WOULD BE UNFAIR TO IT SINCE BOTH IT AND GM WOULD OFFER THE SAME PRODUCTS ON WHICH BIDS HAVE ALREADY BEEN MADE. THERE IS NO QUESTION BUT THAT A READVERTISEMENT IS ALWAYS PREJUDICIAL TO THE ORIGINAL LOW BIDDER. IF KNR'S ACTUAL NEEDS DO NOT REQUIRE THE LARGER TRACTION MOTOR, AND IF IT WERE CERTAIN THAT REBIDS WOULD BE MADE ONLY BY GE AND GM AND THAT THOSE BIDS WOULD BE ON THE IDENTICAL PRODUCTS ALREADY OFFERED, WE BELIEVE YOUR AGENCY WOULD BE JUSTIFIED IN WAIVING THE DEVIATION IN THE PRESENT GE BID.

WITH RESPECT TO THE OBJECTIONS RAISED BY GM IN CONNECTION WITH GE'S BID, THESE OBJECTIONS WOULD REQUIRE CONSIDERATION ONLY IF YOUR AGENCY, IN ACCORDANCE WITH THE GUIDE LINES INDICATED, DETERMINED THAT THE AWARD SHOULD GO TO GE. WITH RESPECT TO POINTS 2 AND 3 OF GM'S OBJECTIONS, QUOTED ABOVE, IT HAS NOT BEEN SHOWN THAT GE TOOK A SPECIFIC OBJECTIONS, QUOTED ABOVE, IT HAS NOT BEEN SHOWN THAT GE TOOK A SPECIFIC EXCEPTION TO THE WARRANTY PROVISION OR TO THE TRAINING REQUIREMENT. ALSO, IT HAS NOT BEEN SHOWN THAT THE INVITATION REQUIRED THE BIDDER SPECIFICALLY TO MENTION THESE REQUIREMENTS IN THE BID. CONSEQUENTLY, IT WOULD SEEM THAT THE ACCEPTANCE OF GE'S BID WOULD NOT BE PRECLUDED ON THE BASIS OF POINTS 2 AND 3 EVEN IN A DIRECT FEDERAL PROCUREMENT. IN REGARD TO POINTS 4 AND 5 OF GM'S OBJECTIONS TO GE'S BID, YOUR AGENCY HAS TAKEN THE POSITION THAT THESE ARE NOT MATERIAL DEVIATIONS TO THE SPECIFICATIONS. ON THE BASIS OF THE RECORD WE CANNOT MAKE ANY FINAL DETERMINATION IN THIS REGARD. HOWEVER, IF IT SHOULD BE DETERMINED THAT THE AWARD SHOULD GO TO GE, WE FEEL THAT THESE POINTS SHOULD RECEIVE FURTHER CONSIDERATION.