B-159124, AUG. 1, 1966

B-159124: Aug 1, 1966

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO FAIRBANKS MORSE INC.: REFERENCE IS MADE TO YOUR LETTER OF MAY 4. BIDDERS WERE REQUIRED TO QUOTE UNDER ITEM NO. 1 A PRICE PER KILOWATT (KW) AND TO STATE UNDER ITEM NO. 2 THE RATED NET CAPACITY IN KWS PER UNIT BASED ON 60 CYCLE OPERATION AT 0.8 POWER FACTOR OF THE 4 SETS TO BE FURNISHED. AWARD WAS TO BE BASED ON ITEM NO. 1 MULTIPLIED BY ITEM NO. 2 TIMES 4. THE CONTRACTOR WARRANTS THAT AT THE TIME OF DELIVERY: "/II) ALL ITEMS OF EQUIPMENT ARE NEW. CURRENT PRODUCTION MODELS AND THAT CONSTRUCTION MATERIALS INCLUDING HARDWARE ARE NEW MATERIAL. " OF THE SPECIFICATION INCLUDES THE FOLLOWING PERTINENT LANGUAGE: "BIDS WILL BE ACCEPTED ONLY ON ENGINE MODELS ON WHICH THE MANUFACTURER CAN SUBSTANTIATE AT LEAST THE FOLLOWING MINIMUM AMOUNT OF OPERATING EXPERIENCE: "/1) TWO ENGINE-GENERATOR SETS.

B-159124, AUG. 1, 1966

TO FAIRBANKS MORSE INC.:

REFERENCE IS MADE TO YOUR LETTER OF MAY 4, 1966, AND RELATED CORRESPONDENCE, PROTESTING AGAINST THE AWARD BY THE DEPARTMENT OF THE NAVY OF A CONTRACT TO A. G. SCHOONMAKER COMPANY, INCORPORATED (SCHOONMAKER), UNDER INVITATION FOR BIDS (IFB) NO. 75776/65 REV., ISSUED FEBRUARY 4, 1966, BY THE BUREAU OF YARDS AND DOCKS (NOW DESIGNATED AS NAVAL FACILITIES ENGINEERING COMMAND), DAVISVILLE, RHODE ISLAND.

THE IFB SOLICITED BIDS TO FURNISH FOUR DIESEL ENGINE ELECTRIC GENERATOR SETS, IN COMPLIANCE WITH SPECIFICATION NAVDOCKS 75776/65 REV. BIDDERS WERE REQUIRED TO QUOTE UNDER ITEM NO. 1 A PRICE PER KILOWATT (KW) AND TO STATE UNDER ITEM NO. 2 THE RATED NET CAPACITY IN KWS PER UNIT BASED ON 60 CYCLE OPERATION AT 0.8 POWER FACTOR OF THE 4 SETS TO BE FURNISHED, AND AWARD WAS TO BE BASED ON ITEM NO. 1 MULTIPLIED BY ITEM NO. 2 TIMES 4.

PARAGRAPH 1A.16,"WARRANTY," OF THE SPECIFICATION READS, IN PERTINENT PART, AS FOLLOWS:

"A. NOTWITHSTANDING INSPECTION AND ACCEPTANCE BY THE GOVERNMENT OF MATERIAL AND/OR EQUIPMENT FURNISHED UNDER THE CONTRACT OR ANY PROVISION OF THIS CONTRACT CONCERNING THE CONCLUSIVENESS THEREOF, THE CONTRACTOR WARRANTS THAT AT THE TIME OF DELIVERY:

"/II) ALL ITEMS OF EQUIPMENT ARE NEW, UNUSED, CURRENT PRODUCTION MODELS AND THAT CONSTRUCTION MATERIALS INCLUDING HARDWARE ARE NEW MATERIAL; * *

PARAGRAPH 1A.19,"EXPERIENCE CLAUSE," OF THE SPECIFICATION INCLUDES THE FOLLOWING PERTINENT LANGUAGE:

"BIDS WILL BE ACCEPTED ONLY ON ENGINE MODELS ON WHICH THE MANUFACTURER CAN SUBSTANTIATE AT LEAST THE FOLLOWING MINIMUM AMOUNT OF OPERATING EXPERIENCE:

"/1) TWO ENGINE-GENERATOR SETS, EACH WITH A MINIMUM OF 5000 HOURS SUCCESSFUL OPERATION OVER A TWO YEAR PERIOD.

"THE BIDDER MUST DEMONSTRATE TO THE SATISFACTION OF THE OFFICER IN CHARGE THAT HE IS THOROUGHLY EXPERIENCED IN THE DESIGN AND FABRICATION, OR MANUFACTURE OF SELF-CONTAINED, OIL DIESEL ELECTRIC GENERATING SETS OF COMPARABLE MAGNITUDE AND COMPLEXITY AS THOSE REQUIRED BY THE SPECIFICATIONS; THAT HE HAS PERFORMED SUCH WORK WITHIN THE PAST FIVE YEARS, AND MADE TIMELY DELIVERY OF SUCH UNITS. FAILURE TO SUBMIT DATA SATISFACTORILY DEMONSTRATING EXPERIENCE AS SET FORTH ABOVE, WILL BE CAUSE FOR REJECTION OF THE BID.'

ON FEBRUARY 25, THE ONLY BIDS RECEIVED, YOUR BID AND SCHOONMAKER'S BID, WERE OPENED AS SCHEDULED. SCHOONMAKER'S BID, QUOTING A PRICE OF $146.00 ON ITEM NO. 1 AND A RATED NET CAPACITY OF 1500 KWS PER UNIT ON ITEM NO. 2, EVALUATED AT $876,000, WAS LOWER THAN YOUR BID, QUOTING A PRICE OF $148.90 ON ITEM NO. 1 AND A RATED NET CAPACITY OF 2000 KWS PER UNIT ON ITEM NO. 2, EVALUATED AT $1,191,200.

PURSUANT TO A REQUIREMENT IN PARAGRAPH 1A.19,"EXPERIENCE CLAUSE," THAT BIDDERS SUBMIT WITHIN 7 DAYS OF BID OPENING A LIST OF INSTALLATIONS SUBSTANTIATING COMPLIANCE WITH THE MINIMUM OPERATING EXPERIENCE PROVISION, SCHOONMAKER FORWARDED TO THE PROCURING ACTIVITY BY LETTER DATED MARCH 2 A LIST OF INSTALLATIONS MADE FROM JUNE TO AUGUST 1963 OF SEVERAL MODEL S36- SW, GENERAL MOTORS CORPORATION (GMC), ELECTRO-MOTIVE DIVISION (EMD) DIESEL ENGINEERING SETS, EACH SET CONSISTING OF ONE ENGINE MODEL 16-567D-4 AND ONE GENERATOR MODEL, A 15. THE LIST ALSO SHOWED THAT ON EACH INSTALLATION, SCHOONMAKER HAD MORE THAN 5,000 HOURS SUCCESSFUL OPERATION AS OF MAY 21, 1965.

IN A LETTER DATED MARCH 8 TO THE PROCURING ACTIVITY, YOU PROTESTED THAT PRODUCTION OF THE MODEL 16-567D-4 ENGINE, WHICH YOU CONCEDED APPEARS TO MEET THE SPECIFICATION REQUIREMENTS, HAD BEEN REPORTED DISCONTINUED IN LATE 1965 OR BY JANUARY 1, 1966, AT THE LATEST. ACCORDINGLY, YOU STATED THAT YOU SUSPECTED THAT THE ENGINE OFFERED BY SCHOONMAKER WOULD BE THE GMC EMD MODEL 16-645, WHICH WAS INTRODUCED IN 1965 AND PUT INTO FULL SCALE PRODUCTION ON JANUARY 1, 1966, AND THAT SUCH ENGINE WOULD BE MODIFIED TO USE THE 567 CYLINDER LINER, PISTON AND HEAD ASSEMBLIES. YOU ENCLOSED A COPY OF A TRADE ARTICLE STATING THAT THE NEW MODEL 16-645, WHEN IN FULL PRODUCTION, WILL REPLACE THE MODEL 16-567. ACCORDINGLY, YOU CONTENDED, SCHOONMAKER CANNOT MEET THE TWO-YEAR OPERATING EXPERIENCE REQUIRED ON A MODIFIED 645 ENGINE.

ON MARCH 24, YOU WERE ACCORDED A CONFERENCE WITH REPRESENTATIVES OF THE PROCURING ACTIVITY, AT WHICH YOUR PROTEST WAS DISCUSSED AND YOU WERE ADVISED THAT GMC HAD INFORMED THE PROCURING ACTIVITY THAT WHILE ITS MODEL 16-567D-4 ENGINE WAS NO LONGER IN PRODUCTION, ITS MODEL 16 567E, WHICH IS SUBSTANTIALLY THE SAME AS THE 16-567D-4, WOULD BE FURNISHED IN EVENT OF AWARD TO SCHOONMAKER. A SIMILAR CONFERENCE WAS ACCORDED YOU ON MARCH 25 WITH REPRESENTATIVES OF THE BUREAU OF YARDS AND DOCKS IN WASHINGTON, D.C. IN A LETTER DATED MARCH 29, YOU SUPPLEMENTED YOUR PROTEST, STATING THAT THE CRANKCASE IN THE MODEL 16 567E WAS DIFFERENT FROM THE CRANKCASE IN THE MODEL 16-567D-4, ON WHICH SCHOONMAKER'S EXPERIENCE WAS HAD, AND, THEREFORE, SCHOONMAKER'S BID IS NOT RESPONSIVE TO THE EXPERIENCE REQUIREMENT. ACCORDINGLY, YOU REQUESTED ANOTHER CONFERENCE WITH BUREAU REPRESENTATIVE IN WASHINGTON PRIOR TO ANY AWARD UNDER THE IFB.

BY LETTER DATED APRIL 13, THE PROCURING ACTIVITY ADVISED YOU THAT THE ENGINE OFFERED BY SCHOONMAKER CONFORMS TO THE SPECIFICATIONS AND THAT THE DATA ON EXPERIENCE WITH THE GMC ENGINE MODEL 16-567D-4 AND GENERATOR MODEL A-15 IS SUFFICIENT TO MEET THE SPECIFICATION EXPERIENCE REQUIREMENTS; THAT SCHOONMAKER, THEREFORE, HAD BEEN DETERMINED TO BE A RESPONSIBLE CONTRACTOR; AND THAT YOUR PROTEST WAS DENIED ACCORDINGLY. ON THE SAME DATE, THE CONTRACTING OFFICER AWARDED A CONTRACT TO SCHOONMAKER AT ITS BID PRICE OF $146 PER KW, TOTAL $876,000.

IN YOUR LETTER OF MAY 4, YOU REFER TO THE ENGINE OFFERED BY SCHOONMAKER AS A NEW MODEL ENGINE FOR WHICH THERE IS NO INSTALLATION APPROACHING 5,000 HOURS OF OPERATION AS IS REQUIRED UNDER THE SPECIFICATION EXPERIENCE CLAUSE. ACCORDINGLY, YOU CONTEND, THE FACT THAT SCHOONMAKER HAS OFFERED A RECORD OF EXPERIENCE ON A DIFFERENT ENGINE, A MODEL WHICH IS NO LONGER IN PRODUCTION, CONSTITUTES A PROPER BASIS FOR REJECTION OF SCHOONMAKER'S BID. THEREFORE, YOU REQUEST THAT OUR OFFICE OVERRULE THE ACTION TAKEN BY THE BUREAU OF YARDS AND DOCKS IN ISSUING AN AWARD TO SCHOONMAKER AND REQUIRE THAT SAID AWARD BE WITHDRAWN.

IN A REPORT DATED JUNE 22, 1966, THE DEPARTMENT OF THE NAVY MAKES THE FOLLOWING PERTINENT STATEMENTS:

"ON RECEIPT OF THE SCHOONMAKER SUBMITTAL THE OFFICER IN CHARGE OF THE CONTRACT INITIATED THE NORMAL RESPONSIBILITY CHECK WHICH INCLUDED A REVIEW OF THE CONTRACTOR EXPERIENCE REQUIREMENTS. AS A RESULT OF THIS CHECK IT WAS DETERMINED THAT ENGINE MODEL 16-567E WOULD BE FURNISHED. FURTHER, IT WAS DETERMINED THAT THE VARIATION BETWEEN THE "MODEL D" AND "MODEL E" WAS OF A MINOR NATURE AND THAT THE MAJOR MECHANISM OF THE ENGINE (E.G. CRANKSHAFT, PISTONS, RODS, BEARINGS, ETC.) IN THE ,MODEL E" WAS IDENTICAL TO THAT IN THE "MODEL D.' THE ONLY VARIATION IS THAT THE ENGINE BLOCK OF THE "MODEL E" IS MANUFACTURED THROUGH A DIFFERENT PROCEDURE THAN THE BLOCK OF THE "MODEL D.' IT WAS DETERMINED THAT MANY OF THE ENGINES MANUFACTURED THROUGH THIS PROCEDURE HAVE BEEN PLACED IN SERVICE BY BOTH GOVERNMENT AND COMMERCIAL USERS AND HAVE BEEN ACCEPTABLE IN EVERY INSTANCE.

"IT IS NOTED THAT THE FAIRBANKS-MORSE PROTEST PLACES HEAVY EMPHASIS ON RECENT TRADE ARTICLES INDICATING THAT THE GENERAL MOTORS ENGINE MODEL 16- 567 IS BEING REPLACED BY A NEW ENGINE MODEL 16-645. IT WOULD APPEAR THAT FAIRBANKS-MORSE IS ASSUMING THAT THE NEW MODEL 16-645 WILL BE FURNISHED UNDER THE CONTRACT. THIS IS NOT THE FACT. AS NOTED ABOVE, SCHOONMAKER IS FURNISHING A GENERAL MOTORS MODEL 16-567 AND THIS MODEL IS IN CURRENT PRODUCTION.

"ON THE BASIS OF THE FOREGOING, IT WAS DETERMINED THAT THE ENGINE WHICH WOULD BE FURNISHED BY SCHOONMAKER UNDER THE CONTRACT, DOES FULLY COMPLY WITH ALL OF THE REQUIREMENTS OF THE SPECIFICATION. WITH REGARD TO THE KEY POINTS OF THE FAIRBANKS-MORSE PROTEST; THE ENGINE MEETS THE MINIMUM OF 5,000 HOURS OF SUCCESSFUL OPERATION OVER A TWO YEAR PERIOD AND IT IS A CURRENT PRODUCTION MODEL.'

FROM THE STATEMENT OF FACTS REPORTED BY THE DEPARTMENT OF THE NAVY, WHICH OUR OFFICE MUST ACCEPT AS CORRECT ABSENT SUFFICIENT EVIDENCE TO OVERCOME THE PRESUMPTION OF ITS CORRECTNESS, IT IS APPARENT THAT SCHOONMAKER HAS OFFERED TO SUPPLY A GMC MODEL 16-567E ENGINE WHICH THE DEPARTMENT OF THE NAVY REGARDS AS SUBSTANTIALLY THE SAME AS THE MODEL 16-567D-4 ENGINE ON WHICH SCHOONMAKER HAS HAD THE REQUIRED OPERATING EXPERIENCE; THAT THE MODEL 16-567E IS IN CURRENT PRODUCTION; AND THAT THE MODEL 16-567E COMPLIES FULLY WITH ALL OF THE REQUIREMENTS OF THE SPECIFICATION. IN SUCH CIRCUMSTANCES, WE FAIL TO SEE A PROPER LEGAL BASIS TO QUESTION THE VALIDITY OF THE AWARD TO SCHOONMAKER, WHOSE BID EVALUATED AT $876,000 WAS APPROXIMATELY $315,000 LOWER THAN YOUR BID EVALUATED AT $1,191,200, AND YOUR PROTEST IS THEREFORE DENIED.

CONCERNING YOUR STATEMENT THAT THE AWARD WAS MADE NOTWITHSTANDING YOUR PROTEST, YOU ARE ADVISED THAT ARMED SERVICES PROCUREMENT REGULATION 2- 407.9 (B), RELATING TO PROTESTS BEFORE AWARD, VESTS IN THE CONTRACTING AGENCY DISCRETION TO SOLICIT ADVICE FROM OUR OFFICE ON PROTESTS FILED WITH THE AGENCY AND FURTHER PROVIDES THAT EVEN WHERE A PROTEST IS LODGED DIRECTLY WITH OUR OFFICE, THAT AWARD NEED NOT BE WITHHELD PENDING FINAL DISPOSITION BY OUR OFFICE BUT NOTICE OF INTENT TO MAKE AWARD IN SUCH CIRCUMSTANCES SHALL BE FURNISHED TO OUR OFFICE. SINCE YOUR PROTEST LETTERS OF MARCH 8 AND 29 WERE ADDRESSED TO THE CONTRACTING AGENCY AND THERE WAS NO REQUEST BY YOU THAT THE MATTER BE REFERRED TO OUR OFFICE FOR CONSIDERATION, IT WAS WITHIN THE DISCRETION OF THE CONTRACTING OFFICER TO DISPOSE OF YOUR PROTEST WITHOUT REFERENCE TO OUR OFFICE. ACCORDINGLY, THE DENIAL OF YOUR PROTEST BY THE CONTRACTING AGENCY'SLETTER OF APRIL 13 WAS IN ACCORD WITH THE PROCUREMENT REGULATION, AND, THE PROTEST HAVING BEEN PROPERLY DISPOSED OF, THE CONTRACTING AGENCY WAS AT LIBERTY TO PROCEED WITH THE AWARD. THEREFORE, WE ARE UNABLE TO CONCLUDE THAT THE ACTION OF THE PROCURING ACTIVITY WAS IMPROPER.