B-157565, NOV. 10, 1965

B-157565: Nov 10, 1965

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THE INVITATION WAS ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER ON JULY 16. THE INVITATION WAS AMENDED TWICE TO INCREASE THE QUANTITY AND TO MAKE CERTAIN PROVISIONS APPLICABLE TO THE INCREASED QUANTITY. IN ACCORDANCE WITH PARAGRAPH 3.2 OF THE SPECIFICATIONS A PRE PRODUCTION SAMPLE WAS REQUIRED. THE BID PRICE BASED ON A WAIVER OF THE PREPRODUCTION SAMPLE WAS TO BE USED IN THE EVALUATION OF THE LOWEST BIDDER ONLY IN THE EVENT THAT THE GOVERNMENT DETERMINED AS TO A PARTICULAR BIDDER THAT THE PREPRODUCTION SAMPLE WOULD BE WAIVED. IN CASES WHERE THE PREPRODUCTION SAMPLE WAS NOT TO BE WAIVED. THE PRICE WITH PREPRODUCTION SAMPLE WAS TO BE USED. THE BIDS WERE RECEIVED AS FOLLOWS: CHART BOSTON KENT INGERSOLL ITEM PNEUMATICS AIR TOOL WORTHINGTON JOY MFG.

B-157565, NOV. 10, 1965

TO INGERSOLL-RAND COMPANY:

YOUR TELEGRAM DATED AUGUST 26, 1965, AND LETTER DATED AUGUST 30, 1965, PROTESTED THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. DSA-799-66 -0077 TO ANY OTHER BIDDER. THE INVITATION WAS ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER ON JULY 16, 1965, AND SOLICITED PRICES FOR THE PRODUCTION OF 42 PNEUMATIC ROCK DRILLS, WEIGHING 45 POUNDS EACH, IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-D-52121. THE INVITATION WAS AMENDED TWICE TO INCREASE THE QUANTITY AND TO MAKE CERTAIN PROVISIONS APPLICABLE TO THE INCREASED QUANTITY.

IN ACCORDANCE WITH PARAGRAPH 3.2 OF THE SPECIFICATIONS A PRE PRODUCTION SAMPLE WAS REQUIRED. HOWEVER, THE GOVERNMENT RESERVED THE RIGHT TO WAIVE THAT REQUIREMENT AS TO BIDDERS WHO SUBMITTED AN APPROVED PREPRODUCTION SAMPLE OF THE ITEM UNDER A PRIOR GOVERNMENT CONTRACT AND WHO FURNISHED WITH THEIR BID THE NAME AND ADDRESS OF THE GOVERNMENT AGENCY, THE CONTRACT NUMBER AND DATA INDICATING COMPLIANCE WITH ALL SPECIFIED TEST CONDITIONS REQUIRED BY THE PRESENT SPECIFICATIONS. THE BID PRICE BASED ON A WAIVER OF THE PREPRODUCTION SAMPLE WAS TO BE USED IN THE EVALUATION OF THE LOWEST BIDDER ONLY IN THE EVENT THAT THE GOVERNMENT DETERMINED AS TO A PARTICULAR BIDDER THAT THE PREPRODUCTION SAMPLE WOULD BE WAIVED. IN CASES WHERE THE PREPRODUCTION SAMPLE WAS NOT TO BE WAIVED, THE PRICE WITH PREPRODUCTION SAMPLE WAS TO BE USED.

THE BIDS WERE RECEIVED AS FOLLOWS:

CHART

BOSTON KENT INGERSOLL

ITEM PNEUMATICS AIR TOOL WORTHINGTON JOY MFG. RAND

1A W/SAMPLE $350.00 $406.00 $446.00 $634.10 $504.00

1A W/O SAMPLE 297.00 383.00 388.00 NO BID 331.00

IB W/SAMPLE 350.00 404.00 443.00 630.00 540.00

IB W/O SAMPLE 297.00 383.00 388.00 NO BID 331.00

2A W/SAMPLE 350.00 406.00 446.00 635.19 504.00

2A W/O SAMPLE - 383.00 388.00 NO BID 331.00

2B W/SAMPLE 350.00 406.00 446.00 634.14 504.00

2B W/O SAMPLE - 383.00 388.00 NO BID 331.00

3A W/SAMPLE - 406.00 446.00 638.40504.00

3A W/O SAMPLE - 383.00 388.00 NO BID 331.00

3B W/SAMPLE - 406.00 446.00 634.20 504.00

3B W/O SAMPLE - 383.00 388.00 NO BID 331.00

3C W/SAMPLE - 406.00 508.00 638.40 504.00

3C W/O SAMPLE - 383.00 388.00 NO BID 331.00

4 50.00 - INCLUDED - 1176.00

DISCOUNT TERMS 1/2 PERCENT

20 DAYS NET NET NET NET

BOSTON PNEUMATICS' BID FAILED TO ACKNOWLEDGE THE TWO AMENDMENTS TO THE INVITATION AND WAS HELD TO BE NONRESPONSIVE AND JOY MANUFACTURING COMPANY WAS NOT CONSIDERED BECAUSE OF ITS HIGH PRICE. KENT AIR TOOL HAD FURNISHED AN END ITEM UNDER THIS SPECIFICATION; HOWEVER, THAT CONTRACT DID NOT REQUIRE A PREPRODUCTION SAMPLE SO THAT NO TEST RESULTS WERE AVAILABLE. THEREFORE, KENT'S BID COULD BE EVALUATED ONLY AT THE HIGHER PRICE WHICH INCLUDED A PREPRODUCTION SAMPLE. ALTHOUGH YOU BID PRICES BOTH WITH AND WITHOUT PREPRODUCTION SAMPLES, YOU DID NOT INCLUDE THE INFORMATION CONCERNING PRIOR APPROVAL OF THE PREPRODUCTION SAMPLE, AND STATED FURTHER THAT PREPRODUCTION SAMPLES HAD NEVER BEEN SUBMITTED TO DEFENSE CONSTRUCTION SUPPLY CENTER. CONSEQUENTLY, YOUR BID COULD BE EVALUATED ONLY AT THE HIGHER PRICE WITH PREPRODUCTION SAMPLES. WORTHINGTON CORPORATION WAS A PRIOR PRODUCER UNDER A CONTRACT REQUIRING A PREPRODUCTION SAMPLE AND SUBMITTED THE NECESSARY DATA OF TEST APPROVAL, AND ITS BID WAS EVALUATED AT THE LOWER PRICE, EXCLUDING PREPRODUCTION SAMPLES. AS LOW RESPONSIVE BIDDER, WORTHINGTON WAS AWARDED THE CONTRACT ON AUGUST 23, 1965.

IT IS YOUR CONTENTION THAT ALL BIDS SHOULD BE EVALUATED ON A COMMON BASIS, I.E., ALL AT THE PRICE INCLUDING PREPRODUCTION SAMPLES OR ALL AT THE PRICE EXCLUDING PREPRODUCTION SAMPLES. TO DO OTHERWISE, YOU FEEL, IS A RESTRICTION UPON COMPETITION BY ALLOWING SOME BIDDERS AN ADVANTAGE OVER OTHERS. YOU FURTHER CONTEND THAT THE REQUIREMENT AND WAIVER THEREOF OF PREPRODUCTION SAMPLES IS TANTAMOUNT TO A QUALIFIED PRODUCTS LIST WHICH IS NOT PROVIDED FOR IN THE INVITATION FOR BIDS. FINALLY, YOU INDICATE THAT PREPRODUCTION SAMPLES IN THIS CASE WERE UNNECESSARY AS THE PRODUCT IS A WELL-KNOWN COMMERCIAL ITEM.

MAY WE FIRST POINT OUT THAT THE SITUATION IN THIS CASE DOES NOT RESULT IN A QUALIFIED PRODUCTS LIST AS SUGGESTED BY YOU. THE QUALIFIED PRODUCTS LIST RESTRICTS BIDDING TO THOSE MANUFACTURERS WHO HAVE HAD AN ITEM APPROVED AND PLACED UPON THE LIST PRIOR TO BID OPENING. HOWEVER, HERE ANY MANUFACTURER IS ENTITLED TO BID UPON THE PROCUREMENT. IN OTHER WORDS, UNDER THE QUALIFIED PRODUCTS LIST THE PREPRODUCTION COSTS ARE BORNE BY ALL PARTIES DESIRING TO BID AND ARE EXPENDED PRIOR TO CONTRACT AWARD, WHILE, IN THE CASE OF PREPRODUCTION SAMPLES, THE COST IS BORNE ONLY BY THE PARTY TO WHOM THE CONTRACT IS AWARDED.

THE PROCEDURE OF WHICH YOU COMPLAIN IS NOT NOVEL AND HAS BEEN CONSIDERED BY THIS OFFICE IN PRIOR CASES. WE RECOGNIZE THE RESTRICTIVE NATURE OF THE WAIVER OF PREPRODUCTION SAMPLES AS TO SOME BIDDERS BUT NOT TO OTHERS. WHILE IT IS TRUE THAT ALL BIDDERS SHOULD HAVE EQUAL OPPORTUNITY TO BID ON A COMMON BASIS, UNITED STATES V. BOOKRIDGE FARM, OPPORTUNITY TO BID ON A COMMON BASIS, UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461, WE FEEL THAT THE INTEREST OF THE GOVERNMENT IS PARAMOUNT TO THAT OF BIDDERS, 42 COMP. GEN. 717. ALSO SEE 36 COMP. GEN. 809, WHERE WE UPHELD THE USE OF A QUALIFIED PRODUCTS LIST, AND 40 COMP. GEN. 35, WHERE WE SUSTAINED THE USE OF THE TWO-STEP PROCUREMENT PROCEDURE. PREPRODUCTION SAMPLES ARE USED WHERE THE SPECIFICATIONS ARE NOT OF SUFFICIENT DETAIL SO AS TO INSURE THAT ALL ARTICLES PRODUCED IN ACCORDANCE THEREWITH WILL BE OF SIMILAR QUALITY AND PRIOR TESTING IS NECESSARY TO INSURE THE PRODUCTION OF ITEMS WHICH WILL PERFORM PROPERLY. GENERALLY, THE INITIAL CONTRACT FOR THE PRODUCTION OF AN ITEM INCLUDES THE COST OF PREPRODUCTION ARTICLES AND THE COST IS BORNE WHOLLY OR IN PART BY THE GOVERNMENT. THERE IS NO LOGICAL BASIS FOR THE GOVERNMENT TO CONTINUE TO BEAR THE SAME COST ON EACH PROCUREMENT OF THE SAME ARTICLE. ARMED SERVICES PROCUREMENT REGULATION 2-201 (B) (XIV), IN EFFECT AT THE TIME OF THE ISSUANCE OF THE INVITATION, SPECIFICALLY PROVIDED FOR THE WAIVER OF THE REQUIREMENT FOR PREPRODUCTION SAMPLES IN THE CASE OF BIDDERS WHO PREVIOUSLY PRODUCED THE ARTICLE. WE HAVE HELD THAT IN CASES WHERE THE REQUIREMENT IS WAIVED, BIDS MAY BE EVALUATED ON THE BASIS OF THE PRICE WITH WAIVER. 42 COMP. GEN. 717; B-140361, NOVEMBER 10, 1959. RECOGNIZING THE DISPARITY BETWEEN PRIOR AND NEW PRODUCERS AND IN AN EFFORT TO GAIN NEW SOURCES OF PRODUCTION AT MORE COMPETITIVE PRICES, THE GOVERNMENT OFTEN INSERTS EQUALIZATION FACTORS INTO NEW INVITATIONS FOR BIDS. FOR EXAMPLE, IN 41 COMP. GEN. 788, WE APPROVED A REQUIREMENT THAT A PRIOR PRODUCER BE HELD TO AN EARLIER DELIVERY SCHEDULE THAN THAT REQUIRED FOR A NEW PRODUCER. SUCH EQUALIZATION FACTORS, HOWEVER, ARE NOT COMPELLED. WE HAVE FOUND THAT IN MANY CASES, EVEN WITHOUT EQUALIZATION FACTORS, NEW PRODUCER IS WILLING TO ABSORB THE PREPRODUCTION COSTS IN AN EFFORT TO GET ITS FIRST CONTRACT FOR THE ARTICLE AND ENTER THE COMPETITIVE FIELD. IT IS OUR OPINION THAT THE PROCEDURE FOLLOWED IN THIS CASE IS THE MEDIAN BETWEEN PROTECTING THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM AND OBTAINING THE LOWEST COST TO THE GOVERNMENT. ACCORDINGLY, SINCE YOU HAVE NOT PREVIOUSLY PRODUCED THIS ARTICLE UNDER A CONTRACT REQUIRING PREPRODUCTION SAMPLES, YOUR BID MUST BE EVALUATED ON THE BASIS OF FURNISHING PREPRODUCTION SAMPLES.

AS TO YOUR CONTENTION THAT THIS ITEM IS A REGULAR COMMERCIAL ITEM AND THAT A PREPRODUCTION SAMPLE IS UNNECESSARY, WE HAVE CONSISTENTLY HELD THAT THE DRAFTING OF PROPER SPECIFICATIONS WHICH REFLECT THE NEEDS OF THE GOVERNMENT AND THE DETERMINATION OF WHETHER OR NOT ARTICLES OFFERED BY BIDDERS MEET THOSE SPECIFICATIONS IS THE RESPONSIBILITY OF THE ADMINISTRATIVE AGENCY. 17 COMP. GEN. 554 AND 36 ED. 251. MILITARY SPECIFICATION MIL-D-52121 HAS BEEN APPROVED BY THE DEPARTMENT OF DEFENSE AND IS MANDATORY FOR USE BY THE MILITARY DEPARTMENTS. IT REQUIRES THE FURNISHING OF A PREPRODUCTION SAMPLE AND THIS OFFICE WILL NOT QUESTION THE APPROPRIATENESS OF SUCH DETERMINATION. 42 COMP. GEN. 717.