B-157470, JAN. 4, 1966, 45 COMP. GEN. 374

B-157470, JAN. 4, 1966, 45 COMP. GEN. 374

CONTRACTS - NEGOTIATION - ORAL SOLICITATIONS, ETC. - VALIDITY NOTWITHSTANDING THE FACT THAT THE NEGOTIATION OF A CONTRACT FOR URGENTLY NEEDED EQUIPMENT WITH A HIGH PRIORITY DESIGNATION WAS CONDUCTED ORALLY AND DID NOT CONFORM TO PARAGRAPH 3-501 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIREMENT THAT A REQUEST FOR EITHER PROPOSALS OR QUOTATIONS MUST BE IN WRITING, THE CONTRACT AWARD IS VALID, THE PUBLIC EXIGENCY BASIS FOR NEGOTIATION PURSUANT TO 10 U.S.C. 2304 (A) (2) AND PARAGRAPH 3-202.2 OF THE REGULATION, EVIDENCED BY THE HIGH PRIORITY OF THE EQUIPMENT, BRINGING THE PROCUREMENT WITHIN THE PURVIEW OF THE "APPROPRIATE CASE" EXEMPTION TO PARAGRAPH 3-501 (B) RESTRICTIONS ON ORAL SOLICITATIONS, AND THE OFFERS HAVING BEEN SUBMITTED IN GOOD FAITH IN RESPONSE TO AN ORAL SOLICITATION THAT GAVE ALL OFFERORS AN EQUAL OPPORTUNITY TO COMPETE ON AN EQUAL BASIS, THE AWARD TO THE LOW OFFEROR IS VALID AND IN THE BEST INTEREST OF THE GOVERNMENT; HOWEVER, INSTRUCTIONS OR REGULATIONS TO SERVE AS A GUIDE TO THE EXTENT TO WHICH DETERMINATIONS TO SOLICIT PROPOSALS ORALLY MAY BE BASED UPON A HIGH PRIORITY DESIGNATION ARE RECOMMENDED.

TO KECO INDUSTRIES, INC., JANUARY 4, 1966:

REFERENCE IS MADE TO YOUR CORRESPONDENCE OF AUGUST 11, AUGUST 23, AND SEPTEMBER 4, 1965, PROTESTING AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN AWARDING A NEGOTIATED CONTRACT TO THERM-AIR MANUFACTURING CO., INC., FOLLOWING ORAL SOLICITATION OF OFFERS TO FURNISH AIR-CONDITIONERS REQUISITIONED UNDER PURCHASE REQUESTS A22560 5187-1655 AND OTHERS.

THE PURCHASE REQUESTS IN QUESTION CONCERNED 48 SELF-CONTAINED AIR CONDITIONERS, DESCRIBED AS FOLLOWS:

CHART

(1) AIR CONDITIONER, COMPACT, SELF-CONTAINED, CAPACITY 9300

BTU-HR COOLING, 5000 BTU/HR ELECTRIC HEATING, 3 PHASE,

60 CYCLE, AC, 208 VOLT MOTOR, 4 WIRE, DIMENSIONS NOT TO EXCEED

43 INCHES HIGH, 14 1/4 INCHES WIDE, 9 INCHES DEEP, WT. APPROX.

112 LBS., THERM-AIR MODEL CEV-9A-60 OR EQUAL 36 EA.

(2) AIR CONDITIONER, COMPACT, SELF-CONTAINED, CAPACITY 9300

BTU/HR COOLING, 5000 BTU/HR ELECTRIC HEATING, 3 PHASE, 400

CYCLE, AC, 208 VOLT MOTOR, 4 WIRE, DIMENSIONS NOT TO EXCEED

43 INCHES HIGH, 14 1/2 INCHES WIDE, 9 INCHES DEEP, WT. APPROX.

112 LBS., THERM-AIR MODEL CEV-9A-400 OR EQUAL 12 EA.

YOUR COMPANY AND THREE OTHER SUPPLIERS WERE CONTACTED BY TELEPHONE ON JULY 16, 1965, AND ON JULY 21, 1965, YOUR TELEGRAM WAS RECEIVED BY THE CONTRACTING OFFICER, CONFIRMING YOUR VERBAL OFFER OF THE SAME DATE. YOUR FIRM QUOTED $1,950 EACH ON THE 60 CYCLE UNITS AND $2,145 EACH ON THE 400 CYCLE UNITS, AND OFFERED DELIVERY OF TWO OF EACH TYPE WITHIN 60 DAYS AFTER RECEIPT OF AWARD; THE BALANCE OF THE 400-CYCLE UNITS WITHIN 90 DAYS AFTER AWARD; AND THE BALANCE OF THE 60-CYCLE UNITS WITHIN 90-120 DAYS AFTER AWARD; F.O.B. CINCINNATI, OHIO.

THERM-AIR RESPONDED BY TELEGRAM OFFERING PRICES OF $1,915 EACH ON THE 60 CYCLE UNITS AND $1,980 EACH ON THE 400 CYCLE UNITS, WITH DELIVERY IN 6-12 WEEKS AND A FEW OF THE UNITS IN 6 WEEKS, AND FREIGHT ALLOWED TO DESTINATION.

YOUR FIRM AND THERM-AIR MANUFACTURING CO. WERE THE ONLY TWO FIRMS SUBMITTING OFFERS, AND ON JULY 27, 1965, CONTRACT NUMBER DA-15-010-AMC 2034 (M) WAS AWARDED TO THERM-AIR MANUFACTURING CO.

THE BASIS FOR YOUR PROTEST IS, IN GENERAL, THAT THE CONTRACTING OFFICER WAS REQUIRED BY THE PROVISIONS OF ASPR 3-501 (B) TO REQUEST EITHER PROPOSALS OR QUOTATIONS IN WRITING; THAT THE DOLLAR AMOUNT OF THE ITEMS BEING PROCURED WAS SUCH AS TO REQUIRE A WRITTEN SOLICITATION; AND THAT NEITHER THE NATURE OF THE ITEMS BEING PROCURED NOR THE URGENCY OF THE NEED FOR THE ITEMS WAS SUCH AS TO JUSTIFY THE ORAL SOLICITATION OF OFFERS.

THE RECORD INDICATES THAT THE PROCUREMENT BRANCH, LEXINGTON-BLUE GRASS ARMY DEPOT, RECEIVED A NUMBER OF SEPARATE PURCHASE REQUESTS DURING JULY 1965 COVERING 48 SELF-CONTAINED AIR-CONDITIONERS. THESE WERE TO BE USED IN S-144 SHELTERS AND WERE INTENDED FOR IMMEDIATE DELIVERY TO SOUTHEAST ASIA UNDER AN ISSUE PRIORITY DESIGNATOR 02.

ON JULY 16, 1965, INQUIRIES WERE MADE BY TELEPHONE TO THE TRANE COMPANY, LEXINGTON, KENTUCKY; KECO INDUSTRIES, INC., CINCINNATI, OHIO; PALL CORPORATION, LONG ISLAND CITY, NEW YORK; AND THERM-AIR MANUFACTURING COMPANY, INC., YORK, PENNSYLVANIA, REQUESTING PROPOSALS ON THESE ITEMS. WHILE DELIVERY WAS REQUIRED ON AUGUST 23, 1965, NONE OF THESE FIRMS WERE ABLE TO MEET THAT DATE. HOWEVER, THE FIRMS SOLICITED WERE ADVISED OF THE URGENT REQUIREMENT FOR THESE AIR CONDITIONERS; ALSO THAT DELIVERY COULD BE A DETERMINING FACTOR IN MAKING AN AWARD; THAT THE DELIVERY REQUIREMENT WAS BASED ON THE EARLIEST POSSIBLE SCHEDULE; AND THAT THE CLOSING DATE FOR RECEIVING PROPOSALS WAS 4:00 P.M. (EST) JULY 20, 1965. AS SET OUT ABOVE, ONLY YOUR COMPANY AND THERM-AIR SUBMITTED OFFERS. FOLLOWING EVALUATION OF SUCH OFFERS, THE CONTRACTING OFFICER ON JULY 26, 1965, PREPARED A DETERMINATION AND FINDING WHICH READS, IN PERTINENT PART, AS FOLLOWS:

C. THE PROCUREMENT BY NEGOTIATION OF THE ABOVE DESCRIBED PROPERTY IS JUSTIFIED BECAUSE:

(1) THE ITEMS DESCRIBED IN PARAGRAPH 1A HEREOF ARE REQUIRED BY MAINTENANCE DIRECTORATE FOR WORK ORDER NO. 6PZAF AND ARE FOR USE IN S 144 SHELTERS. THE NEED THEREFOR IS COMPELLING AND URGENT AND DELAY IN DELIVERY OF SAID EQUIPMENT WOULD SERIOUSLY INJURE THE GOVERNMENT.

(2) THE PURCHASE REQUEST CITES AN ISSUE PRIORITY OF "02," WHICH WAS ASSIGNED IN ACCORDANCE WITH THE UNIFORM MATERIEL ISSUE PRIORITY SYSTEM.

2. UPON THE BASIS OF THE FINDING SET FORTH ABOVE, I HEREBY DETERMINE THAT 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 PURSUANT TO 10 U.S.C. 2304 (A) (2) AND PARAGRAPH 3-202.2 (VI) OF THE ARMED SERVICES PROCUREMENT REGULATION.

4. IT HAS BEEN DETERMINED THAT THIS IS THE BEST METHOD OF PROCUREMENT.

ON JULY 27, 1965, THE CONTRACTING OFFICER INSTRUCTED A SUBORDINATE TO NOTIFY THERM-AIR MANUFACTURING COMPANY, INC., BY TELEPHONE OF AN AWARD FOR 36 EACH AIR-CONDITIONERS, MODEL CEV-9A-60, AT A UNIT COST OF $1,915 AND 12 EACH AIR-CONDITIONERS, MODEL CEV-9A-400, AT A UNIT COST OF $1,980. THE TOTAL CONTRACT PRICE WAS $92,700 AND DELIVERY WAS TO BE MADE AS FOLLOWS: MODEL CEV-9A-60--- 2 EACH--- SEPTEMBER 10, 1965, AND 34 EACH--- OCTOBER 22, 1965. THIS PROCUREMENT WAS PLACED BY TELEPHONE BY THE SUBORDINATE AT 8:30 A.M. (EST) ON JULY 27, 1965.

THE DETERMINATION OF THE CONTRACTING OFFICER TO RESORT TO VERBAL NEGOTIATION APPEARS TO HAVE BEEN BASED ON THE URGENCY OF REQUIREMENTS, AND WAS BELIEVED TO BE IN ACCORDANCE WITH THE GUIDANCE PROVIDED IN A LETTER OF MARCH 8, 1965, FROM THE ASSISTANT SECRETARY OF THE ARMY (IANDL) TO THE COMMANDING GENERAL, USAMC, SUBJECT: "URGENT PROCUREMENT IN SUPPORT OF OPERATIONS IN SOUTH VIET NAM AND THAILAND.'

DUE TO AN INADVERTENCE, IT WAS NOT UNTIL SEPTEMBER 15 THAT HEADQUARTERS, USAMC, WAS AWARE OF THE GOVERNMENT'S FAILURE TO ISSUE A FORMAL NOTICE OF AWARD TO THERM-AIR. WHILE THERM-AIR REFUSED TO UNDERTAKE FURTHER PERFORMANCE UNLESS A FORMAL CONTRACT AWARD WAS MADE AND A COPY OF THE CONTRACT SUBMITTED TO THE FIRM, IT DID INDICATE THAT AS SOON AS THE SITUATION WAS CORRECTED IT WAS PREPARED TO PERFORM IN ACCORDANCE WITH THE TERMS OF ITS WRITTEN PROPOSAL, EXCEPT FOR PARTIAL DELIVERIES ON FOUR (4) UNITS WHICH WOULD BE DELAYED; FINAL DELIVERY WOULD REMAIN UNCHANGED. SINCE THE PUBLIC EXIGENCY UNDER WHICH THE PROCUREMENT WAS NEGOTIATED STILL EXISTED, THE CONTRACTING OFFICER REQUESTED AUTHORITY TO FORMALIZE ORAL TRANSACTIONS WITH THERM-AIR AND TO MAKE AN IMMEDIATE AWARD. SUCH AUTHORITY WAS GRANTED, VERBALLY, ON SEPTEMBER 27, 1965, AND CONFIRMED BY DIRECTION OF THE ASSISTANT SECRETARY OF THE ARMY (I AND L).

ADDITIONALLY, UNDER DATE OF SEPTEMBER 27 THE CONTRACTING OFFICER EXECUTED A SECOND DETERMINATION AND FINDING WHICH READS, IN PERTINENT PART, AS FOLLOWS:

C. THE PROCUREMENT BY NEGOTIATION OF THE ABOVE DESCRIBED PROPERTY IS JUSTIFIED BECAUSE:

(1) THE ITEMS DESCRIBED IN PARAGRAPH 1A HEREOF ARE REQUIRED BY MAINTENANCE DIRECTORATE FOR WORK ORDER NO. 6PZAF AND ARE FOR USE IN S 144 SHELTERS FOR THE PURPOSE OF IMMEDIATE DELIVERY 30 SOUTHEAST ASIA (VIET NAM).

(2) THE AWARD WILL BE MADE TO THERM-AIR MANUFACTURING CO., INC. IMMEDIATELY. THE REASON FOR THIS ACTION IS THE CURRENT PUBLIC EXIGENCY WHICH STILL EXISTS REQUIRES IMMEDIATE DELIVERY NOT LATER THAN 22 OCTOBER 1965.

(3) THE PURCHASE REQUESTS CITE AN ISSUE PRIORITY OF "02," WHICH WAS ASSIGNED IN ACCORDANCE WITH THE UNIFORM MATERIEL ISSUE PRIORITY SYSTEM.

2. UPON THE BASIS OF THE FINDINGS SET FORTH ABOVE, THERE IS AN URGENT REQUIREMENT FOR THE DELIVERY OF THESE ITEMS, WITHIN THE TIME SPECIFIED AND THE GOVERNMENT CANNOT PERMIT THE DELAYS WHICH WOULD RESULT IF FORMAL NEGOTIATIONS FOR THESE ITEMS WERE INITIATED WITH BOTH KECO INDUSTRIES, INC. AND THERM-AIR MANUFACTURING CO., INC. IN ADDITION, KECO, THE ONLY OTHER CONTRACTOR THAT QUOTED, IS CURRENTLY PERFORMING UNDER A PREVIOUS CONTRACT FOR DELIVERY OF 8 400 CYCLE AIR CONDITIONERS WHICH WERE DUE 29 JULY 1965, AND AS OF 27 SEPTEMBER 1965 COMPLETE PERFORMANCE THEREUNDER HAS NOT YET BEEN MADE. AS A RESULT, THE UNDERSIGNED IS OF THE OPINION THAT KECO IS IN NO POSITION, BASED ON PAST PERFORMANCE, TO DELIVER THE ITEMS IN ACCORDANCE WITH THE SPECIFICATIONS WITHIN THE REQUIRED PERFORMANCE DATE.

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 PURSUANT TO 10 U.S.C. 2304 (A) (2) AND PARAGRAPH 3-202.2 (VI) OF THE ARMED SERVICES PROCUREMENT REGULATION.

4. IT HAS BEEN DETERMINED THAT THIS IS THE BEST METHOD OF PROCUREMENT.

ACCORDINGLY, ON SEPTEMBER 28, 1965, A FORMAL NOTICE OF ACCEPTANCE OF PROPOSAL WAS ISSUED TO THERM-AIR ACCEPTING THAT FIRM'S PREVIOUS WRITTEN PROPOSAL, RETAINING THE ORIGINAL FINAL DELIVERY SCHEDULE. ON SEPTEMBER 29, 1965, A SUPPLEMENTAL AGREEMENT WAS EXECUTED CHANGING ONLY THE INTERIM DELIVERY SCHEDULE FOR FOUR UNITS.

WITH RESPECT TO THE AUTHORITY TO NEGOTIATE ON THE BASIS OF A PUBLIC EXIGENCY ASPR 3-202.2 PROVIDES IN PART THAT:

* * * IN ORDER FOR THE AUTHORITY OF THIS PARAGRAPH TO BE USED, THE NEED MUST BE COMPELLING AND OF UNUSUAL URGENCY, AS WHEN THE GOVERNMENT WOULD BE SERIOUSLY INJURED FINANCIALLY OR OTHERWISE, IF THE SUPPLIES OR SERVICES WERE NOT FURNISHED BY A CERTAIN DATE, AND WHEN THEY COULD NOT BE PROCURED BY THAT DATE BY MEANS OF FORMAL ADVERTISING. * * * THE FOLLOWING ARE ILLUSTRATIVE OF CIRCUMSTANCES WITH RESPECT TO WHICH THIS AUTHORITY MAY BE USED:

* * * (VI) PURCHASE REQUEST CITING AN ISSUE PRIORITY DESIGNATOR 1 THROUGH 6 INCLUSIVE UNDER THE UNIFORM MATERIEL ISSUE PRIORITY SYSTEM * * *

SINCE AN "02" ISSUE PRIORITY DESIGNATOR WAS ASSIGNED TO THE ITEMS INVOLVED IN THE INSTANT PROCUREMENT, WE ARE OF THE VIEW THAT THE CONTRACTING OFFICER PROPERLY INVOKED THE NEGOTIATION AUTHORITY OF ASPR 3- 202. IT IS IMPORTANT, WE BELIEVE, TO BEAR THIS IN MIND IN CONSIDERING THE RESULTING QUESTION OF WHETHER IT WAS NECESSARY TO ISSUE A WRITTEN REQUEST FOR PROPOSALS OR QUOTATIONS BEFORE A VALID CONTRACT COULD BE NEGOTIATED.

PARAGRAPH 3-501 (B) OF THE ASPR STATES IN PART:

(B) GENERALLY, REQUESTS FOR PROPOSALS OR QUOTATIONS SHALL BE IN WRITING. HOWEVER, IN APPROPRIATE CASES, SUCH AS THE PROCUREMENT OF PERISHABLE SUBSISTENCE, PROPOSALS OR QUOTATIONS MAY BE SOLICITED ORALLY. * * *

SINCE THE LANGUAGE OF PARAGRAPH 3-501 (B) CLEARLY CONTEMPLATES AN ORAL SOLICITATION IN APPROPRIATE CASES, THE SOLE QUESTION PRESENTED BY YOUR PROTEST APPEARS TO BE WHETHER THE INSTANT PROCUREMENT MAY BE CONSIDERED AN "APPROPRIATE CASE" UNDER THE REGULATION. IN OUR VIEW, OFFERS WHICH ARE SUBMITTED IN GOOD FAITH IN RESPONSE TO AN ORAL SOLICITATION NEED NOT BE REJECTED IF ALL OFFERORS WERE GIVEN AN EQUAL OPPORTUNITY TO COMPETE ON AN EQUAL BASIS, AND AN AWARD BASED UPON SUCH OFFERS WOULD CLEARLY BE IN THE INTEREST OF THE GOVERNMENT.

IN THE INSTANT CASE THE RECORD CONTAINS NOTHING TO INDICATE THAT ALL OFFERORS WERE NOT SOLICITED IN THE SAME MANNER. IT THEREFORE DOES NOT APPEAR THAT YOUR COMPANY WAS PLACED AT A COMPETITIVE DISADVANTAGE BY THE ORAL SOLICITATION OF OFFERS, AND WE DO NOT CONSTRUE YOUR PROTEST AS CONTENDING THAT WAS THE CASE.

WITH RESPECT TO WHETHER ACCEPTANCE OF THERM-AIR'S OFFER WAS IN THE BEST INTEREST OF THE GOVERNMENT, WE ARE PERSUADED BY THAT PORTION OF THE CONTRACTING OFFICER'S DETERMINATION AND FINDING OF SEPTEMBER 27 WHICH CONCLUDES THAT YOUR COMPANY "IS IN NO POSITION, BASED ON PAST PERFORMANCE, TO DELIVER THE ITEMS IN ACCORDANCE WITH THE SPECIFICATIONS WITHIN THE REQUESTED PERFORMANCE DATE.' SEE 44 COMP. GEN. 590.

UNDER THE PROVISIONS OF 10 U.S.C. 2310 (B) IT WOULD APPEAR THAT THIS OFFICE IS OBLIGED TO ACCEPT SUCH FINDINGS IN THE ABSENCE OF CONCLUSIVE EVIDENCE TO THE CONTRARY. IN VIEW THEREOF, IT WOULD NOT APPEAR THAT ANY DIFFERENT RESULT, INSOFAR AS YOUR COMPETITIVE POSITION IS CONCERNED, WOULD HAVE RESULTED FROM A WRITTEN SOLICITATION OF OFFERS, OR THAT ANY MATERIAL BENEFIT TO EITHER YOUR COMPANY OR THE GOVERNMENT COULD REASONABLY HAVE BEEN EXPECTED TO RESULT FROM REJECTION OF THE OFFERS RECEIVED IN RESPONSE TO THE ORAL SOLICITATION.

ACCORDINGLY, WE MUST CONCLUDE THAT THERE IS NO ADEQUATE BASIS UPON WHICH TO QUESTION THE VALIDITY OF THE CONTRACT AWARDED TO THERM-AIR, AND YOUR PROTEST AGAINST SUCH AWARD MUST THEREFORE BE DENIED.

SINCE OUR CONCLUSION IS BASED UPON THE PARTICULAR FACTS IN THIS PROCUREMENT, IT IS NOT TO BE CONSTRUED AS HOLDING THAT ORAL SOLICITATION OF OFFERS IS CONTEMPLATED UNDER THE PRESENT PROCUREMENT REGULATIONS SOLELY BECAUSE A HIGH ISSUE PRIORITY DESIGNATOR HAS BEEN ASSIGNED TO THE REQUIREMENT. WE ARE THEREFORE RECOMMENDING THAT THE SECRETARY OF DEFENSE GIVE CONSIDERATION TO THE EXTENT TO WHICH DETERMINATIONS TO SOLICIT PROPOSALS ORALLY MAY BE BASED UPON THE FACT THAT A HIGH ISSUE PRIORITY DESIGNATOR HAS BEEN ASSIGNED TO THE REQUIREMENT, AND TO THE ISSUANCE OF DEFINITIVE INSTRUCTIONS OR REGULATIONS ON THIS MATTER FOR THE GUIDANCE OF THE PROCURING DEPARTMENTS AND AGENCIES.