B-157812, DEC. 13, 1965

B-157812: Dec 13, 1965

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THE DEFENSE COMMUNICATIONS AGENCY IS PRESENTLY ENGAGED IN PROCUREMENT OF TELEPHONE SWITCHING SERVICES FOR ITS CONTINENTAL UNITED STATES AUTOMATIC VOICE NETWORK (CONUS-AUTOVON). THESE SWITCHING CENTERS WILL BE INSTALLED. OPERATED BY COMMON CARRIERS WHICH WILL PROVIDE THE SERVICES TO THE GOVERNMENT. DCA'S BASIC POLICY WITH RESPECT TO THESE PROCUREMENTS IS AS FOLLOWS: "A. WHERE AN AUTOVON SWITCHING CENTER IS LOCATED IN THE SERVICE AREA OF A TELEPHONE COMPANY. WHERE SERVICE IS PROVIDED TO DOD SUBSCRIBERS IN THAT COMPANY'S SERVICE AREA. THE SWITCHING CENTER SERVICE WILL BE PROVIDED BY THAT COMPANY ON A SOLE SOURCE BASIS. THE PROPOSED SWITCHING CENTER IS LOCATED IN THE SERVICE AREA OF A TELEPHONE COMPANY WHERE THERE ARE NO KNOWN OR FORESEENDOD SUBSCRIBERS.

B-157812, DEC. 13, 1965

TO DRAKE AND PHILLIPS:

WE REFER TO YOUR LETTER OF OCTOBER 1, 1965, WITH ENCLOSURES, AND THE LETTER FROM THE BENTON RIDGE TELEPHONE COMPANY, BENTON RIDGE, OHIO, DATED NOVEMBER 5, 1965, IN CONNECTION WITH BENTON RIDGE'S PROTEST ON THE FURNISHING OF A SWITCHING CENTER AT TOLEDO JUNCTION, OHIO.

YOUR LETTER OF OCTOBER 1, 1965, CONTENDS THAT ONLY BENTON RIDGE CAN SUPPLY TELEPHONE SERVICE AT TOLEDO JUNCTION. IN SUPPORT OF THIS POSITION YOU CITE THE ACT OF MARCH 30, 1949, CH. 41, 63 STAT. 17, AS AMENDED BY THE ACT OF AUGUST 3, 1956, CH. 939, 70 STAT. 1012, 50 U.S.C. 491, WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"* * * IN PROCURING SUCH SERVICES, (SEMI-AUTOMATIC GROUND ENVIRONMENT SYSTEM) THE SECRETARY OF THE AIR FORCE SHALL UTILIZE TO THE FULLEST EXTENT PRACTICABLE THE FACILITIES AND CAPABILITIES OF COMMUNICATION COMMON CARRIERS, INCLUDING RURAL TELEPHONE COOPERATIVES, WITHIN THEIR RESPECTIVE SERVICE AREAS AND FOR POWER SUPPLY, SHALL UTILIZE TO THE FULLEST EXTENT PRACTICABLE, THE FACILITIES AND CAPABILITIES OF PUBLIC UTILITIES AND RURAL ELECTRIC COOPERATIVES WITHIN THEIR RESPECTIVE SERVICE AREAS. * * *"

YOU ADVISE THAT BENTON RIDGE HAS A CERTIFICATE FOR THE PERFORMANCE OF TELEPHONE SERVICES IN THE TOLEDO JUNCTION AREA.

THE DEFENSE COMMUNICATIONS AGENCY IS PRESENTLY ENGAGED IN PROCUREMENT OF TELEPHONE SWITCHING SERVICES FOR ITS CONTINENTAL UNITED STATES AUTOMATIC VOICE NETWORK (CONUS-AUTOVON). THESE SWITCHING CENTERS WILL BE INSTALLED, OWNED, AND OPERATED BY COMMON CARRIERS WHICH WILL PROVIDE THE SERVICES TO THE GOVERNMENT. DCA'S BASIC POLICY WITH RESPECT TO THESE PROCUREMENTS IS AS FOLLOWS:

"A. WHERE AN AUTOVON SWITCHING CENTER IS LOCATED IN THE SERVICE AREA OF A TELEPHONE COMPANY, AND WHERE SERVICE IS PROVIDED TO DOD SUBSCRIBERS IN THAT COMPANY'S SERVICE AREA, THE SWITCHING CENTER SERVICE WILL BE PROVIDED BY THAT COMPANY ON A SOLE SOURCE BASIS.

"B. IF, HOWEVER, THE PROPOSED SWITCHING CENTER IS LOCATED IN THE SERVICE AREA OF A TELEPHONE COMPANY WHERE THERE ARE NO KNOWN OR FORESEENDOD SUBSCRIBERS, AND TWO COMPANIES CLAIM THE RIGHT TO PROVIDE SERVICE, A POSITIVE RULING BY THE APPROPRIATE PUBLIC SERVICE COMMISSION WILL BE REQUESTED AND, IF GIVEN, WILL BE FOLLOWED. IN THE ABSENCE OF A DEFINITIVE RULING BY THE COMMISSION THAT ONE CARRIER EXCLUSIVELY IS AUTHORIZED TO PROVIDE THE SERVICE, COMPETITIVE PROCUREMENT WILL BE LIED.'

WITH RESPECT TO THE SWITCHING CENTER AT TOLEDO JUNCTION, DCA ADVISES THAT THE TRUNK ROUTES IN AND OUT OF THIS AREA MERELY TRANSMIT BENTON RIDGE'S TERRITORY AND THAT THERE WILL BE NO BREAKOUT OF CIRCUITRY IN THE BENTON RIDGE AREA. IT IS DCA'S POSITION THAT THERE WILL BE NO LOCAL SERVICE TO THE 275 SUBSCRIBERS OF BENTON RIDGE AND THAT NONE IS FORESEEN.

ON DECEMBER 15, 1964, DCA SUBMITTED THIS MATTER TO THE OHIO PUBLIC UTILITIES COMMISSION FOR A RULING WHETHER IN THE CIRCUMSTANCES PRESENTED, BENTON RIDGE WOULD HAVE THE EXCLUSIVE RIGHT TO FURNISH THE SWITCHING CENTER AT TOLEDO JUNCTION. BY LETTER OF FEBRUARY 9, 1965, THE OHIO PUBLIC UTILITIES COMMISSION ADVISED DCA THAT THE COMMISSION WAS NOT AUTHORIZED TO MAKE A FORMAL DETERMINATION IN THE ABSENCE OF A FORMAL APPLICATION BY AN INTERESTED PARTY. DCA WAS FURTHER ADVISED THAT NO SUCH APPLICATION WAS PENDING.

ON SEPTEMBER 12, 1964, DCA BROUGHT A SITUATION WHICH IS SIMILAR TO THE INSTANT MATTER TO THE ATTENTION OF THE FEDERAL COMMUNICATIONS COMMISSION. BY LETTER OF SEPTEMBER 30, 1964, THE FEDERAL COMMUNICATIONS COMMISSION ADVISED DCA AS FOLLOWS:

"* * * AND, WHILE THE FACT THAT THE SWITCHING CENTER IS TO BE LOCATED IN THE LOCAL OPERATING TERRITORY OF A PARTICULAR TELEPHONE COMPANY WOULD NOT BE A CONTROLLING FACTOR IN THE SELECTION OF THE COMPANY TO CONSTRUCT AND OPERATE THE CENTER, THIS WOULD NOT PREVENT THE NORMAL APPLICATION OF YOUR POLICY OF MAKING MAXIMUM USE OF ALL COMMON CARRIERS IN THE DEVELOPMENT AND OPERATION OF THE SYSTEM.'

IN THE ABSENCE OF A FORMAL DEFINITIVE RULING BY A PUBLIC SERVICE COMMISSION THAT BENTON RIDGE HAD THE EXCLUSIVE RIGHT TO FURNISH THE PROPOSED SWITCHING CENTER AT TOLEDO JUNCTION AND SINCE THERE WOULD BE NO LOCAL SERVICE, DCA DECIDED THAT BENTON RIDGE'S RIGHTS UNDER ITS CERTIFICATE OF CONVENIENCE AND NECESSITY WOULD NOT BE VIOLATED BY SOLICITING THE AMERICAN TELEPHONE AND TELEGRAPH COMPANY (AT AND T) TO PROVIDE THE INSTANT SWITCHING CENTER. ALSO, DCA DETERMINED THAT 50 U.S.C. 491, QUOTED ABOVE, DID NOT SPECIFICALLY PRECLUDE DCA'S ACTION IN THIS MATTER. CONSEQUENTLY, IN ACCORDANCE WITH ESTABLISHED POLICY, DCA DECIDED THAT BOTH BENTON RIDGE AND AT AND T SHOULD BE SOLICITED FOR PROVIDING THE PROPOSED SWITCHING CENTER.

PURSUANT TO OUR REVIEW OF 50 U.S.C. 491 WE FIND NOTHING THEREIN WHICH WOULD SPECIFICALLY PRECLUDE DCA'S DETERMINATION TO UTILIZE COMPETITIVE NEGOTIATION IN THE INSTANT PROCUREMENT. IN VIEW OFDCA'S ADVICE THAT THERE WILL BE NO LOCAL SERVICE AT TOLEDO JUNCTION, AND IN THE ABSENCE OF A SPECIFIC FORMAL RULING BY A PUBLIC UTILITIES COMMISSION THAT BENTON RIDGE HAS THE EXCLUSIVE RIGHT TO FURNISH THE SWITCHING SERVICES AT TOLEDO JUNCTION, WE HAVE NO BASIS FOR DETERMINING THAT DCA IS VIOLATING BENTON RIDGE'S RIGHTS UNDER ITS CERTIFICATE OF CONVENIENCE AND NECESSITY. THESE CIRCUMSTANCES WE FEEL THAT DCA'S ACTION IN THE INSTANT PROCUREMENT WOULD BE IN ACCORDANCE WITH THE GENERAL POLICY REGARDING NEGOTIATION SET FORTH IN ARMED SERVICES PROCUREMENT REGULATION SECTION 3-102 (C) WHICH PROVIDES THAT NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT.

BY LETTER OF NOVEMBER 5, 1965, BENTON RIDGE RAISED THE QUESTION WHETHER WESTERN ELECTRIC COMPANY'S PROPOSAL FOR THE SUPPLYING OF ELECTRONIC SWITCHING SYSTEM NO. 1 EQUIPMENT WAS RESPONSIVE TO THE REQUEST FOR PROPOSALS. SPECIFICALLY, BENTON RIDGE ADVISED THAT WESTERN ELECTRIC WOULD NOT MEET THE "NON-BLOCKING" REQUIREMENTS OF PARAGRAPH 2.1.4 AND PARAGRAPH 2.3.7 OF APPENDIX A OF THE SPECIFICATIONS. DCA HAS ADVISED THAT PARAGRAPH 2.3.7 OF APPENDIX A OF THE SPECIFICATIONS STATES AS FOLLOWS:

"* * * "THE NON-BLOCKING REQUIREMENT MAY BE SATISFIED BY PROVIDING A NON- BLOCKING SWITCHING MATRIX, OR BY OTHER ALTERNATE METHODS ACCEPTABLE TO THE GOVERNMENT WHICH ESSENTIALLY MEET THE LEVEL OF PERFORMANCE ASSOCIATED WITH A NON-BLOCKING MATRIX.' * * *"

WITH RESPECT TO EVALUATION OF PROPOSALS FOR SWITCHING MACHINES, DCA USES THE FOLLOWING PROCEDURE:

"THE DEGREE TO WHICH A SWITCHING MACHINE MEETS REQUIREMENTS OF DCA SPECIFICATIONS IS DETERMINED BY THE TECHNICAL EVALUATION PANEL AND FORMS BASIS FOR RECOMMENDATIONS TO CONTRACTING OFFICER. CONCURRENTLY THE COST EVALUATION PANEL SUBMITS RECOMMENDATIONS TO CONTRACTING OFFICER, WHO THEREUPON RECOMMENDS THE PROPOSAL OFFERING THE GREATEST ADVANTAGE TO GOVERNMENT TO A REVIEW BOARD AT HEADQUARTERS, DCA. THE REVIEW BOARD STUDIES THE COST AND TECHNICAL EVALUATION TOGETHER WITH RECOMMENDATIONS OF CONTRACTING OFFICER AND SUBMITS ITS FINDINGS TO THE DIRECTOR, DCA WHO MAKES THE FINAL DECISION. * * *"

DCA HAS DETERMINED THAT NONE OF THE PROPOSED SWITCHING MACHINES HAVE FULLY MET ALL OF THE DETAILED REQUIREMENTS OF THE SPECIFICATIONS. WITH RESPECT TO THE ELECTRONIC SWITCHING SYSTEM NO. 1 PROPOSED BY WESTERN ELECTRIC, DCA HAS DETERMINED THAT THESE CAN BE MADE ESSENTIALLY ,NON- BLOCKING" (WITH A PROBABILITY OF 1: 100,000) IN 1968 BY AN EXTENDED PATH HUNTING TECHNIQUE" IN LIEU OF A NON-BLOCKING MATRIX. DCA HAS DECIDED NOT TO DISQUALIFY ANY OF THE PROPOSALS TO PROVIDE AUTOVON SERVICE AT TOLEDO JUNCTION UNTIL THE EVALUATION PURSUANT TO THE PROCEDURE, QUOTED ABOVE, HAS BEEN COMPLETED, REVIEWED AND APPROVED.

IN NEGOTIATED PROCUREMENTS, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ARE NOT APPLICABLE AND THE NEGOTIATION AUTHORITY MAY LEGALLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE ACCOMPLISHMENT OF THE PROCUREMENT. SEE B-154995, OCTOBER 19, 1964, TO MAXWELL ELECTRONICS CORPORATION. WE FEEL THE FOLLOWING STATEMENTS FROM OUR DECISION B-143389, AUGUST 26, 1960, WOULD BE APPLICABLE TO THE INSTANT MATTER:

"THE QUESTION AS TO THE ACTION, IF ANY, WHICH OUR OFFICE SHOULD TAKE IN CASES INVOLVING THE EVALUATION OF TECHNICAL REQUIREMENTS OF SPECIFICATIONS, ETC., HAS BEEN THE SUBJECT OF A NUMBER OF DECISIONS BY OUR OFFICE. YOUR PROTEST IS BASED UPON SUCH AN EVALUATION. OF NECESSITY, OUR OFFICE HAS ESTABLISHED A RULE GOVERNING SUCH SITUATIONS. IN A DECISION DATED JANUARY 8, 1938, TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, PUBLISHED AT 17 COMP. GEN. 554, 557, WE SET FORTH THE FOLLOWING RULE WHICH WE CONSIDER TO BE CONTROLLING IN THE INSTANT MATTER:

" "IT IS IN THE PROVINCE OF ADMINISTRATIVE OFFICERS TO DRAFT PROPER SPECIFICATIONS NECESSARY TO SUBMIT FOR FAIR COMPETITIVE BIDDING PROPOSED CONTRACTS TO SUPPLY GOVERNMENTAL NEEDS, AND TO DETERMINE FACTUALLY WHETHER ARTICLES OFFERED MEET THOSE SPECIFICATIONS. * * *" "

IN VIEW OF THE RECORD PRESENTED AND OUR HOLDINGS, CITED ABOVE, AND THE PROVISION IN THE SPECIFICATIONS THAT ALTERNATE METHODS WOULD BE ACCEPTABLE WE FIND THAT BENTON RIDGE'S CONTENTIONS IN THE LETTER OF NOVEMBER 5, 1965, WOULD NOT BE A BASIS FOR OUR OFFICE TO QUESTION THE EVALUATION OF THE PROPOSALS SUBMITTED FOR THE INSTANT PROCUREMENT.