B-158705, JUN. 6, 1966

B-158705: Jun 6, 1966

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 7. A COPY OF WHICH WAS SENT TO THIS OFFICE. THIS PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (2). ON THE GROUND THAT THE PROCUREMENT WAS URGENTLY NEEDED IN VIET NAM. "PENEPRIME" IS A TRADE NAME DEVELOPED BY THE EMPIRE PETROLEUM COMPANY. THE PRODUCT IS MARKETED BY EMPIRE AND ITS LICENSEES. DSA-700-23952 WAS AWARDED TO SOUTHERN PETROLEUM COMPANY. IS PRESENTLY IN THE PROCESS OF BEING COMPLETED. YOU CONTEND THAT THE USE OF THE TRADE NAME "PENEPRIME" IN THE RFQ WITHOUT LISTING ITS SPECIFICATIONS OR PERMITTING THE SUBMISSION OF A SIMILAR PRODUCT UNDER THE USUAL "BRAND NAME OR EQUAL" LANGUAGE WAS IMPROPER. THAT THE "PENEPRIME" SPECIFICATIONS ARE NOT ONLY NOT PROTECTED BY ANY PATENTS.

B-158705, JUN. 6, 1966

TO EDGINGTON OIL REFINERIES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 7, 1966, TO BRIGADIER GENERAL ROBERT H. HERMAN AND VICE ADMIRAL JOSEPH M. LYLE, A COPY OF WHICH WAS SENT TO THIS OFFICE, PROTESTING AWARD OF A CONTRACT UNDER REQUEST FOR QUOTATIONS (RFQ) PR SC0700-6033-1253, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO.

THIS PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (2), THE PUBLIC EXIGENCY EXCEPTION TO THE FORMAL ADVERTISING STATUTES, ON THE GROUND THAT THE PROCUREMENT WAS URGENTLY NEEDED IN VIET NAM. THE RFQ CALLED FOR 4,911,400 GALLONS OF "PENEPRIME," A CUTBACK ASPHALT SOIL STABILIZER. "PENEPRIME" IS A TRADE NAME DEVELOPED BY THE EMPIRE PETROLEUM COMPANY, AND THE PRODUCT IS MARKETED BY EMPIRE AND ITS LICENSEES. CONTRACT NO. DSA-700-23952 WAS AWARDED TO SOUTHERN PETROLEUM COMPANY, INC., A LICENSEE OF EMPIRE PETROLEUM COMPANY, ON FEBRUARY 24, 1966, BEFORE RECEIPT OF YOUR PROTEST, AND IS PRESENTLY IN THE PROCESS OF BEING COMPLETED.

YOU CONTEND THAT THE USE OF THE TRADE NAME "PENEPRIME" IN THE RFQ WITHOUT LISTING ITS SPECIFICATIONS OR PERMITTING THE SUBMISSION OF A SIMILAR PRODUCT UNDER THE USUAL "BRAND NAME OR EQUAL" LANGUAGE WAS IMPROPER. YOU MAINTAIN THAT ANY OIL REFINERY ENGAGED IN ASPHALT PRODUCTION CAN MAKE A CUTBACK ASPHALT MEETING "PENEPRIME" SPECIFICATIONS, AND THAT THE "PENEPRIME" SPECIFICATIONS ARE NOT ONLY NOT PROTECTED BY ANY PATENTS, BUT ARE NOT PATENTABLE. YOU ALSO ALLEGE THAT WHILE YOU DO NOT KNOW THE PRICE AT WHICH THE CURRENT CONTRACT WAS LET, THE USUAL MARKUP OF "PENEPRIME" OVER THE OIL REFINER'S MANUFACTURING PRICE IS IN THE VICINITY OF 100 PERCENT, RESULTING IN A PROBABLE EXCESSIVE CHARGE TO THE GOVERNMENT. YOU THEREFORE REQUEST THAT THE PROCUREMENT BE CANCELED.

THE REPORT SUBMITTED TO THIS OFFICE BY THE DEFENSE SUPPLY AGENCY AGREES WITH YOUR CONTENTION THAT NO PATENT HAS BEEN ISSUED FOR THE SPECIFICATIONS USED IN MANUFACTURING "PENEPRIME," BUT POINTS OUT THAT PATENT NO. 3,216,336 HAS BEEN ISSUED ON THE USE TO BE MADE OF "PENEPRIME" OR A SIMILAR PRODUCT. THE REPORT ALSO STATES THAT EXTENSIVE TESTING HAS SHOWN THAT "PENEPRIME" HAS PENETRATING AND CURING CHARACTERISTICS NOT POSSESSED BY OTHER CUTBACK ASPHALT PRODUCTS; THAT ,PENEPRIME" WAS THE ONLY CUTBACK ASPHALT PRODUCT WHICH WAS KNOWN TO MEET THE NEEDS OF THE SUBJECT PROCUREMENT AT THE TIME THE RFQ WAS ISSUED; AND THAT WHILE OTHER PRODUCERS COULD PROBABLY DEVELOP SPECIFICATIONS EQUAL TO THOSE OF "PENEPRIME," THERE WAS NO GUARANTEE THAT ANOTHER PRODUCT PURPORTING TO MEET "PENEPRIME" SPECIFICATIONS WOULD PERFORM SATISFACTORILY AND THERE WAS NOT SUFFICIENT TIME FOR DEVELOPMENT OF ADEQUATE SPECIFICATIONS BY OTHER PRODUCERS OR FOR TESTING "OR EQUAL" PRODUCTS DUE TO THE URGENT NEED FOR THIS PROCUREMENT IN VIET NAM. AS AN EXAMPLE OF THE DIFFICULTY OF MEETING "PENEPRIME" SPECIFICATIONS, THE REPORT STATES THAT OUT OF 250 TO 300 CRUDE PETROLEUMS TESTED BY EMPIRE PETROLEUM COMPANY, ONLY 18 TO 20 WERE FOUND SUITABLE FOR USE IN PRODUCING "PENEPRIME," AND THAT PRODUCERS UNABLE TO ACQUIRE THE PROPER CRUDES WOULD BE UNABLE TO MEET "PENEPRIME" SPECIFICATIONS. THE REPORT ADVISES, HOWEVER, THAT THE SPECIFICATIONS FOR ,PENEPRIME" WERE REVISED ON MARCH 21, 1966, AND THAT A RECOMMENDATION HAS BEEN MADE THAT FUTURE PROCUREMENTS BE ON A COMPETITIVE BASIS, USING THE NEW SPECIFICATIONS WITHOUT REFERRING TO ,PENEPRIME" BY NAME, AND PROVIDING FOR TESTING OF EACH BATCH OF MATERIAL SUPPLIED TO INSURE CONFORMANCE TO THE SPECIFICATIONS.

WE CAN FIND NO REASON TO DISAGREE WITH THE HANDLING OF THIS PROCUREMENT. WHILE PARAGRAPH 1-1206 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) REQUIRES GENERALLY THAT PURCHASE DESCRIPTIONS SHOULD NOT UNNECESSARILY RESTRICT COMPETITION, AND THAT "OR EQUAL" LANGUAGE SHOULD GENERALLY BE USED IN THOSE CASES WHERE IT IS NECESSARY TO USE A PURCHASE DESCRIPTION RATHER THAN DETAILED SPECIFICATIONS, ASPR 1 1206.1 (B) PROVIDES THAT "THE WORDS "OR EQUAL" SHOULD NOT BE ADDED WHEN IT HAS BEEN DETERMINED * * * THAT ONLY A PARTICULAR PRODUCT MEETS THE ESSENTIAL REQUIREMENTS OF THE GOVERNMENT.' WE FEEL THAT IT HAS BEEN CLEARLY SHOWN THAT AT THE TIME THE RFQ WAS ISSUED,"PENEPRIME" WAS THE ONLY KNOWN PRODUCT WHICH WOULD FULFILL THE GOVERNMENT'S NEEDS. AS INDICATED ABOVE, TIME DID NOT PERMIT DEVELOPMENT AND TESTING OF SIMILAR PRODUCTS FOR THIS PARTICULAR PROCUREMENT, AND "PENEPRIME" WAS THEREFORE SPECIFIED, ALTHOUGH FUTURE PROCUREMENTS WILL ATTEMPT TO BROADEN COMPETITION BY REMOVING THE TRADE NAME RESTRICTION.

THE RECORD REVEALS THAT EIGHT FIRMS SUBMITTED QUOTATIONS IN RESPONSE TO THE RFQ, WITH UNIT PRICES RANGING FROM $0.1895 TO $0.3510. WHILE ALL FIRMS SUBMITTING QUOTATIONS WERE NECESSARILY EMPIRE LICENSEES, WE FEEL THAT SUFFICIENT COMPETITION WAS PROVIDED TO ASSURE THAT THE PRICE PAID BY THE GOVERNMENT WAS REASONABLE. ALSO, IT HAS CONSISTENTLY BEEN HELD BY THIS OFFICE THAT THERE IS NO REQUIREMENT ON THE PART OF THE GOVERNMENT TO PROCURE SUPPLIES AT THE LOWEST POSSIBLE PRICE WHERE SUPPLIES OFFERED AT THE LOWEST PRICE DO NOT MEET THE LEGITIMATE NEEDS OF THE GOVERNMENT.

WE THEREFORE CONCLUDE THAT THE RFQ RESTRICTING THE PROCUREMENT TO THE TRADE NAME "PENEPRIME" ..END :