B-159593, FEB. 2, 1967

B-159593: Feb 2, 1967

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TO TOOMEY AND TOOMEY: REFERENCE IS MADE TO YOUR TELEGRAM DATED JUNE 30. THE PROCUREMENT ITEM IS A G-43) ( (G DIRECT CURRENT GENERATOR TO BE MANUFACTURED IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-G-14106A (SIG C) WITH AMENDMENT 5. THE REQUIRED QUANTITY IS 1. FOR WHICH ONE LOT OF REPAIR PARTS IS ALSO BEING PROCURED. 000 TO HAVE THE FIRST ARTICLE UNDER THE ARMY CONTRACT FULLY TESTED AND APPROVED. AS WAS YOUR UNDERSTANDING. YOU WERE NOT INFORMED OF THE REASON FOR SUCH DECISION EVEN UPON DIRECT INQUIRY OF THE CONTRACTING OFFICER. YOU CONTENDED THAT BUCKNELL WAS BEING TREATED UNJUSTLY. THAT AN AWARD TO VARO WOULD BE WITHOUT MERIT IF VARO WERE DELINQUENT AND NOT PRODUCING UNDER ITS 1965 CONTRACT.

B-159593, FEB. 2, 1967

TO TOOMEY AND TOOMEY:

REFERENCE IS MADE TO YOUR TELEGRAM DATED JUNE 30, 1966, AS SUPPLEMENTED BY YOUR LETTERS OF JULY 8 AND OCTOBER 6, 1966, PROTESTING, ON BEHALF OF BUCKNELL ENGINEERING COMPANY, INC. (BUCKNELL), AGAINST AWARD BY THE DEPARTMENT OF THE ARMY OF A CONTRACT TO VARO, INC. (VARO), UNDER REQUEST FOR PROPOSALS (RFP) NO. AMC/E/-36-039-66 11724-7, ISSUED APRIL 23, 1966, BY THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA.

THE PROCUREMENT ITEM IS A G-43) ( (G DIRECT CURRENT GENERATOR TO BE MANUFACTURED IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-G-14106A (SIG C) WITH AMENDMENT 5, DATED FEBRUARY 16, 1966, AND ARMY ELECTRONICS COMMAND DRAWINGS AS LISTED ON SC-DL-202175-B, WITH CERTAIN SPECIFIED EXCEPTIONS. THE REQUIRED QUANTITY IS 1,477 UNITS, FOR WHICH ONE LOT OF REPAIR PARTS IS ALSO BEING PROCURED.

IN YOUR LETTER OF JULY 8, YOU STATED THAT BUCKNELL, A SMALL BUSINESS CONCERN, HAD MANUFACTURED THE SAME EQUIPMENT UNDER THE SAME SPECIFICATIONS FOR THE ARMY; THAT BUCKNELL HAD INCURRED EXPENSES IN EXCESS OF $75,000 TO HAVE THE FIRST ARTICLE UNDER THE ARMY CONTRACT FULLY TESTED AND APPROVED; THAT VARO, INC., A LARGE BUSINESS CONCERN, HAD BEEN AWARDED A CONTRACT IN DECEMBER 1965 FOR THE SAME EQUIPMENT; AND THAT IF, AS WAS YOUR UNDERSTANDING, VARO HAD NOT YET PRODUCED AN ACCEPTABLE PROTOTYPE, VARO WOULD BE DELINQUENT UNDER ITS CONTRACT AND BUCKNELL WOULD BE THE ONLY COMPANY ELIGIBLE FOR WAIVER OF FIRST ARTICLE TESTING. YOU FURTHER STATED THAT WHILE YOU HAD BEEN INFORMED BY A REPRESENTATIVE OF THE CONTRACTING OFFICER THAT NO WAIVER OF FIRST ARTICLE WOULD BE GRANTED, YOU WERE NOT INFORMED OF THE REASON FOR SUCH DECISION EVEN UPON DIRECT INQUIRY OF THE CONTRACTING OFFICER. IN ADDITION, YOU STATED THAT NEITHER BUCKNELL'S PRICE NOR BUCKNELL'S REQUEST FOR WAIVER OF FIRST ARTICLE TESTING HAD BEEN QUESTIONED. ACCORDINGLY, YOU CONTENDED THAT BUCKNELL WAS BEING TREATED UNJUSTLY; THAT AN AWARD TO VARO WOULD BE WITHOUT MERIT IF VARO WERE DELINQUENT AND NOT PRODUCING UNDER ITS 1965 CONTRACT; AND THAT THE PROCEDURES EMPLOYED IN THE CONDUCT OF THE PROCUREMENT WERE SUCH AS TO DESTROY A COMPANY SUCH AS BUCKNELL AND TO "ENRICH CERTAIN BIG BUSINESSES THAT MIGHT HAVE MORE INFLUENTIAL POLITICAL OR LOBBYING INFLUENCE.'

IN A REPORT DATED AUGUST 1, 1966, A COPY OF WHICH WAS FURNISHED TO YOU, THE CONTRACTING OFFICER SET FORTH THE PERTINENT FACTS AND CIRCUMSTANCES INVOLVED IN THE PROCUREMENT, WHICH ARE DISCUSSED BELOW.

INITIALLY, SINCE TWO PRIOR PRODUCERS, BUCKNELL AND VARO, WERE SMALL BUSINESS CONCERNS AT THE TIME THEY WERE AWARDED CONTRACTS FOR THE EQUIPMENT, CONSIDERATION WAS GIVEN TO PROCUREMENT ON A TOTAL SMALL BUSINESS SET-ASIDE BASIS. HOWEVER, BASED ON INFORMATION THAT VARO WAS NO LONGER SMALL BUSINESS AND ON THE PREVIOUS PROCUREMENT HISTORY OF THE ITEM SHOWING THAT THE RESPONSE FROM SMALL BUSINESS TO PRIOR SOLICITATIONS WAS NOT SUCH AS TO JUSTIFY A REASONABLE EXPECTATION OF RECEIPT OF BIDS OR PROPOSALS FROM A SUFFICIENT NUMBER OF SMALL BUSINESS CONCERNS SO THAT AN AWARD COULD BE MADE AT A REASONABLE PRICE, IT WAS DETERMINED THAT A TOTAL SMALL BUSINESS SET-ASIDE WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT. FURTHER, SINCE THE PROCUREMENT DID NOT MEET THE CRITERIA SET FORTH IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.6 FOR PARTIAL SMALL BUSINESS SET ASIDES, IN THAT THE REQUIRED QUANTITY WAS NOT CONSIDERED TO BE SEVERABLE INTO TWO OR MORE ECONOMIC PRODUCTION RUNS AND THERE WAS A REASONABLE EXPECTATION THAT ONLY TWO CONCERNS, ONE LARGE AND ONE SMALL, WOULD RESPOND TO THE SOLICITATION, A PARTIAL SET-ASIDE WAS RULED OUT. ACCORDINGLY, AND INASMUCH AS THE PROCUREMENT REQUEST CARRIED A PRIORITY DESIGNATOR "06," WHICH HAD BEEN UPGRADED TO "02" ON APRIL 16 DUE TO INCREASED URGENCY, IT WAS DETERMINED THAT NEGOTIATION PURSUANT TO THE PUBLIC EXIGENCY AUTHORITY IN 10 U.S.C. 2304 (A) (2) AND ASPR 3-202.2 (VI) WAS AUTHORIZED. THE DETERMINATION AND FINDINGS ISSUED BY THE CONTRACTING OFFICER ON APRIL 15, 1966, CITED PRIORITY DESIGNATOR 06 AS JUSTIFICATION FOR INVOKING THE PUBLIC EXIGENCY NEGOTIATION AUTHORITY.

ON PAGE 8 OF THE RFP, OFFERORS WERE PLACED ON NOTICE THAT BARGAINING WOULD BE KEPT TO THE MINIMUM REQUIRED TO ESTABLISH A FAIR AND REASONABLE PRICE; THAT THERE WAS A POSSIBILITY THAT AWARD WOULD BE MADE WITHOUT DISCUSSION OF THE INITIAL OFFERS WITH OFFERORS; AND THAT PROPOSALS THEREFORE SHOULD BE SUBMITTED OFFERING THE MOST FAVORABLE TERMS AND LOWEST PRICE INITIALLY.

PAGES 58 TO 61 OF THE RFP SCHEDULE CARRIED THE FIRST ARTICLE TESTING APPROVAL PROVISIONS PRESCRIBED BY ASPR 1-1906 (A). PAGE 57 OF THE RFP CARRIED A PROVISION FOR WAIVER OF FIRST ARTICLE TESTING, UNDER CERTAIN CONDITIONS, READING AS FOLLOWS:

"WAIVER OF FIRST ARTICLE TESTING

"THE GOVERNMENT RESERVES THE RIGHT, WITH RESPECT TO BIDDERS/OFFERORS WHO OFFER PRODUCTS PREVIOUSLY ACCEPTED OR TESTED BY THE GOVERNMENT, TO WAIVE THE REQUIREMENT FOR FIRST ARTICLE TESTS. BIDDERS/OFFERORS WHO OFFER SUCH PRODUCTS AND WISH TO RELY ON SUCH PREVIOUS ACCEPTANCE OR TEST MUST FURNISH WITH THEIR BIDS-OFFERS, EVIDENCE THAT PRIOR GOVERNMENT ACCEPTANCE OR APPROVAL IS APPLICABLE TO THE PRODUCT/S) PROPOSED TO BE FURNISHED HEREUNDER. BIDDERS/OFFERORS SHALL SET FORTH BELOW THE DECREASE IN UNIT PRICE AND EARLIER DELIVERY OFFERED IN EVENT OF SUCH WAIVER BY THE GOVERNMENT. IF THE GOVERNMENT ELECTS TO EXERCISE ITS RIGHT TO WAIVE FIRST ARTICLE TESTING, BIDS/OFFERS WILL BE EVALUATED ON THE BASIS OF THE DECREASED UNIT PRICE AND EARLIER DELIVERY SO OFFERED.'

UNDER THE DELIVERY PROVISIONS ON PAGE 22 OF THE RFP SCHEDULE, SUBMISSION OF THE FIRST ARTICLE TEST REPORT WAS REQUIRED WITHIN 120 DAYS AFTER DATE OF AWARD DOCUMENT, AND PRODUCTION UNITS WERE TO BE DELIVERED IN AN INITIAL QUANTITY OF 370 UNITS WITHIN 270 DAYS AFTER DATE OF AWARD DOCUMENT AND QUANTITIES OF 370 UNITS PER MONTH THEREAFTER UNTIL COMPLETE. OFFERORS WERE ADVISED THAT IN THE EVENT AN EARLIER DELIVERY SCHEDULE WAS OFFERED, THE GOVERNMENT RESERVED THE RIGHT TO MAKE AWARD EITHER IN ACCORDANCE WITH THE REQUIRED SCHEDULE OR THE OFFERED SCHEDULE.

OF THE 49 FIRMS WHICH WERE SOLICITED, ONLY BUCKNELL AND VARO SUBMITTED PROPOSALS. ON MAY 13, 1966, THE PROPOSALS WERE OPENED AS SCHEDULED. VARO QUOTED A TOTAL PRICE OF $342,664 LESS A DISCOUNT OF 1/2 PERCENT, 10 DAYS, AND PROPOSAL TO SUBMIT THE FIRST ARTICLE TEST REPORT WITHIN 120 DAYS AFTER DATE OF AWARD DOCUMENT AND TO MAKE DELIVERY ON THE BASIS OF AN INITIAL SHIPMENT OF 370 UNITS WITHIN 210 DAYS AFTER DATE OF AWARD DOCUMENT (OR 60 DAYS EARLIER THAN REQUIRED BY THE RFP) AND SHIPMENTS OF 370 UNITS PER MONTH THEREAFTER UNTIL COMPLETE. VARO STATED THAT IT WAS CURRENTLY MANUFACTURING THE GENERATOR UNDER ITS 1965 CONTRACT AND THEREFOR REQUESTED WAIVER OF FIRST ARTICLE TESTING, OFFERING, IN CONSIDERATION OF SUCH WAIVER, A UNIT PRICE REDUCTION OF $3 (FROM $232 TO $229) BUT NO IMPROVEMENT IN DELIVERY TERMS. BUCKNELL QUOTED A TOTAL PRICE OF $350,639.80, NET 30 DAYS, AND OFFERED DELIVERY IN ACCORDANCE WITH THE SCHEDULE REQUIRED BY THE RFP. BUCKNELL STATED THAT ITS PROPOSAL WAS BASED ON FURNISHING GENERATORS IDENTICAL TO THE GENERATORS PREVIOUSLY SUPPLIED ON CONTRACT NO. DA-36-039-AMC-03182 (E) AND THEREFORE ASKED FOR WAIVER OF FIRST ARTICLE TESTING, OFFERING AS CONSIDERATION FOR SUCH WAIVER, A UNIT PRICE REDUCTION OF $10.80 (FROM $237.40 TO $226.60) AND DELIVERY OF 370 UNITS PER MONTH COMMENCING 150 DAYS AFTER DATE OF AWARD DOCUMENT.

THE MATTER OF WHETHER FIRST ARTICLE TESTING COULD BE WAIVED WAS CONSIDERED BY THE PROCURING AGENCY ON THREE SEPARATE OCCASIONS. ON MAY 18, THE PROJECT ENGINEER INQUIRED OF THE PROCUREMENT AND PRODUCTION DIRECTORATE, FORT MONMOUTH, NEW JERSEY, WHETHER, SINCE BOTH VARO AND BUCKNELL WERE PRIOR PRODUCERS OF THE GENERATOR, A WAIVER COULD BE ISSUED. THE ANSWER WAS IN THE NEGATIVE FOR THE REASON THAT THE ITEM BEING PROCURED WAS NOT IDENTICAL TO THE EQUIPMENT PREVIOUSLY PROCURED FROM EITHER FIRM, IN VIEW OF THE EXCEPTIONS TO THE APPLICABLE DRAWINGS. ON JUNE 17 THE CONTRACTING OFFICER DISCUSSED THE MATTER WITH THE CHIEF, SHELTER FACILITIES AND ASSEMBLAGES BRANCH, WHOSE ENGINEERING STAFF HAS THE OVERALL TECHNICAL RESPONSIBILITY FOR THE EQUIPMENT, AND WAS ADVISED THAT WAIVER COULD NOT BE GRANTED BECAUSE OF THE SIGNIFICANT AND EXTENSIVE CHANGES IN THE ITEM AND THE ADDITION OF NEW PERFORMANCE REQUIREMENTS SUBSEQUENT TO THE PREVIOUS PROCUREMENT. A STATEMENT DATED JUNE 22, CONFIRMING SUCH ADVICE, READS, IN PART, AS FOLLOWS:

"THIS CONFIRMS * * * THAT THE REFERENCE WAIVER OF "FIRST ARTICLE APPROVAL" OR TESTING OF PREPRODUCTION SAMPLES, IS NOT RECOMMENDED OR APPROVED BY THIS BRANCH.

"THIS DECISION IS BASED ON THE FOLLOWING:

"A. VARO, INC. HAS NEVER PRODUCED SUBJECT EQUIPMENT AND NO SAMPLES OF THEIR MANUFACTURE HAVE AS YET BEEN TESTED OR APPROVED.

"B. THE EQUIPMENT WAS VERY RECENTLY PRODUCED BY BUCKNELL ENGINEERING COMPANY AND HAS NOT YET BEEN FIELD-TESTED.

"C. THE BUCKNELL EQUIPMENT DIFFERS IN SEVERAL RESPECTS FROM THE ONLY PREVIOUSLY PRODUCED, SIMILAR EQUIPMENT MANUFACTURED BY HOWARD INDUSTRIES, WHICH ARE THE ONLY ITEMS OF THIS EQUIPMENT WHICH HAVE BEEN FIELD-TESTED OVER A PERIOD OF YEARS. ONE OF THE MAJOR COMPONENTS OF THE EQUIPMENT PRODUCED BY BUCKNELL, THE ARMATURE ASSEMBLY, WAS MANUFACTURED UNDER AN ENTIRELY DIFFERENT PROCESS THAN EVER PREVIOUSLY USED FOR THIS ITEM.

"D. THE RECENT AMENDMENTS TO THE APPLICABLE SPECIFICATIONS FOR SUBJECT EQUIPMENT, UNDER WHICH THE REFERENCED NEW PROCUREMENT WILL BE PRODUCED, CONTAIN SOME REQUIREMENTS FOR WHICH THE BUCKNELL EQUIPMENTS WERE NOT FULLY TESTED.'

ON JUNE 25, THE CONTRACTING OFFICER ADDRESSED A MEMORANDUM TO THE CHIEF, SHELTER FACILITIES AND ASSEMBLAGES BRANCH, READING AS FOLLOWS:

"SUBJECT PRON FOR A QUANTITY OF 1477 EACH, OF WHICH 1194 EACH ARE FOR SOUTHEAST ASIA, HAS BEEN ASSIGNED A UMMIPS PRIORITY DESIGNATOR 02. DELIVERY OF 370 EACH IS REQUIRED DECEMBER 1966 AND 370 EACH PER MONTH THEREAFTER UNTIL COMPLETION.

"ALTHOUGH THE TWO PROPOSALS RECEIVED MEET THE DELIVERY SCHEDULE INDICATED IN THE SOLICITATION, ONLY THE PROPOSAL RECEIVED FROM BUCKNELL ENGINEERING COMPANY, INC. WILL ACTUALLY MEET THE DELIVERY SCHEDULE REQUIRED BY THE PRON.

"HOWEVER, BUCKNELL ENGINEERING COMPANY'S PROPOSAL IS PREDICATED UPON FURNISHING GENERATORS IDENTICAL WITH THOSE FURNISHED ON CONTRACT NO. DA-36 -039-AMC-03182 (E) AND WAIVER OF FIRST ARTICLE TESTING. THE WAIVER OF FIRST ARTICLE TESTING IS BASED UPON THE APPROVAL RECEIVED ON THE ABOVE CONTRACT.

"CONSEQUENTLY, IT IS REQUESTED THAT THE CONTRACTING OFFICER BE ADVISED WHETHER THE PROPOSAL SUBMITTED BY BUCKNELL ENGINEERING COMPANY BASED UPON THE ITEM PREVIOUSLY PRODUCED IS TECHNICALLY ACCEPTABLE.

"IN THE EVENT THE ITEM OFFERED BY BUCKNELL ENGINEERING COMPANY IS ACCEPTABLE, CAN THE FIRST ARTICLE TESTING BE WAIVED?

"A REPLY IS REQUESTED NO LATER THAN 28 JUNE 1966 SINCE AWARD MUST BE MADE BY 30 JUNE 1966.'

THE REPLY DATED JUNE 28, 1966, READS AS FOLLOWS:

"THIS BRANCH CANNOT RECOMMEND THE REFERENCED WAIVER TO BUCKNELL WITHOUT SOME ALTERNATE BASIS FOR PERFORMING ALL SPECIFIED TESTS ON SAMPLE UNITS DURING PRODUCTION AND WITHOUT AN ENFORCEABLE GUARANTEE COVERING PRESENTLY SPECIFIED EQUIPMENT PERFORMANCE AND DELIVERY.

"THIS POSITION IS JUSTIFIED BY THE FOLLOWING:

"INFORMATION OUTLINED IN COMMENT NO. 1, THIS BRANCH, 22 JUNE 66, TO YOUR OFFICE.

"BUCKNELL'S FAILURE TO PERFORM ON HIS PRESENT CONTRACT FOR SAME ITEM; HE NOT ONLY WAS BEHIND SCHEDULE ON EQUIPMENT DELIVERY (AS PREDICTED BY THE PROJECT ENGINEER FROM THIS HEADQUARTERS PRIOR TO START OF HIS PRESENT CONTRACT) BUT BUCKNELL HAS NOT YET COMPLIED WITH ALL REQUIREMENTS OF HIS PRESENT CONTRACT.

"BECAUSE OF LONG DELAYED DELIVERY (MORE THAN ONE YEAR BEHIND), BUCKNELL DRAWINGS COVERING EQUIPMENT ON PRESENT CONTRACT FOR SUBJECT GENERATOR ARE NOT YET APPROVED. THEREFORE, THESE DRAWINGS CANNOT BE USED FOR A NEW PROCUREMENT DOCUMENT.

"A PRODUCTION SAMPLE OF SUBJECT GENERATOR FROM BUCKNELL CONTRACT REFERENCED IN PARAGRAPH 3 OF COMMENT NO. 1 WAS RECENTLY TESTED AT THIS HEADQUARTERS FOR ACOUSTIC NOISE. IT WAS FOUND THAT IT DID NOT MEET THE PRESENTLY SPECIFIED MAXIMUM LIMITS FOR THIS IMPORTANT REQUIREMENT.

"THE CURRENT SOLICITATION DESCRIBES AN ITEM DIFFERENT IN NUMEROUS DETAILS FROM THAT PRODUCED BY BUCKNELL ON THEIR CURRENT ORDER. THEREFORE, BUCKNELL'S PROPOSAL TO FURNISH THE ITEM FROM THEIR LAST ORDER IS NOT TECHNICALLY ACCEPTABLE.'

ON JUNE 28, EVALUATION OF THE PROPOSALS HAVING BEEN COMPLETED AND APPROVED, AWARD WAS MADE TO VARO ON THE BASIS OF ITS LOW PROPOSAL. ON THE SAME DATE, A NOTICE OF AWARD WAS ISSUED BY THE CONTRACTING OFFICER TO BUCKNELL ADVISING OF THE NUMBER OF PROPOSALS AND THE AWARD PRICE AND STATING THAT WAIVER OF FIRST ARTICLE TEST APPROVAL HAD NOT BEEN GRANTED TO VARO.

ON JUNE 30 MR. T. MURRAY TOOMEY OF YOUR FIRM INQUIRED ABOUT THE PROCUREMENT AND WAS ADVISED THAT AWARD HAD BEEN MADE TO VARO AT A UNIT PRICE OF $232 WITHOUT WAIVER OF FIRST ARTICLE TESTING; BUT IN REPLY TO AN INQUIRY BY MR. TOOMEY AS TO THE REASONS FOR NOT GRANTING SUCH WAIVER, THE CONTRACTING OFFICER ADVISED THAT DUE TO THE MANY EXIGENT PROCUREMENTS BEING PROCESSED HE WAS UNABLE TO DISCUSS THE MATTER ON THAT DAY BUT WOULD BE WILLING TO DISCUSS IT ON THE NEXT DAY OR AT ANY FUTURE TIME; HOWEVER, AT NO SUBSEQUENT TIME DID MR. TOOMEY ATTEMPT TO COMMUNICATE WITH THE CONTRACTING OFFICER. IN YOUR LETTER OF OCTOBER 6, COMMENTING ON THE CONTRACTING OFFICER'S REPORT, YOU STATED THAT YOUR POSITION REMAINED UNCHANGED; THAT BUCKNELL INSISTS THAT THE ITEM QUOTED ON WAS THE ITEM REQUESTED IN THE RFP; AND THAT AT NO TIME DURING THE PERIOD OF NEGOTIATION DID ANY REPRESENTATIVE OF THE GOVERNMENT EVER MENTION THAT BUCKNELL WAS QUOTING ON ANYTHING OTHER THAN THE ITEM REQUESTED IN THE RFP. YOU ASKED FOR A STATEMENT AS TO THE DIFFERENCES BETWEEN THE ITEM PREVIOUSLY FURNISHED BY BUCKNELL AND THE ITEM REQUIRED BY THE RFP, AND YOU CONTENDED THAT EVEN IF THE ITEMS DIFFERED THE CONTRACTING OFFICER HAD A DUTY TO CONFER WITH BUCKNELL ON SUCH DIFFERENCES. IN ADDITION, YOU ASSERTED THAT BUCKNELL HAD SUGGESTED MODIFICATIONS, INCLUDING ADDITIONAL TEST REQUIREMENTS, WHICH WERE INCORPORATED IN THE MILITARY SPECIFICATION AND REQUIRED UNDER THE RFP; THAT BUCKNELL HAD RECENTLY COMPLETED A SET OF DRAWINGS ON THE ITEM MANUFACTURED BY BUCKNELL; AND THAT SUCH DRAWINGS ARE THE IDENTICAL DRAWINGS FOR THE UNIT PROCURED UNDER THE RFP. FINALLY, YOU STATED THAT SINCE BUCKNELL OFFERED A DELIVERY SCHEDULE AT LEAST SIXTY DAYS BETTER THAN VARO'S DELIVERY SCHEDULE, THE GOVERNMENT WOULD HAVE SAVED BOTH TIME AND MONEY BY MAKING AWARD TO UCKNELL; THEREFORE, THE CONTRACTING OFFICER WAS NEGLIGENT IN NOT CONFERRING WITH BUCKNELL AND RESOLVING ANY DOUBTS ABOUT BUCKNELL'S QUOTATION AND SUCH ACTION WAS NOT IN THE BEST INTEREST OF ALL PARTIES CONCERNED.

BY LETTER DATED JANUARY 11, 1967, THE DEPARTMENT OF THE ARMY HAS FORWARDED TO OUR OFFICE A COPY OF A MEMORANDUM DATED DECEMBER 22, 1966, FROM THE TECHNICAL EXPERTS WHO EVALUATED BUCKNELL'S PROPOSAL, WHICH READS, IN PART, AS FOLLOWS:

"DIFFERENCES IN GENERATOR, D.C. C-43) (/G FURNISHED BY BUCKNELL REQUIRED UNDER UNDER DA 36-039-AMC-03182 (E) RFP AMC (E) 36-039-66-11724-7

A. GENERATOR ARMATURE ASSEMBLY

DWG SM-D-202340 REDRAWN BY BUCKNELL TO ACCOMMODATE HIS MFG. SET-UP (1) REVERSED SEQUENCE OF THE (1) LV WINDING FIRST IN SLOTS.

HV AND LV WINDINGS. HV HV WINDING SECOND IN SLOTS.

WINDING FIRST IN SLOTS.

LV WINDING SECOND IN SLOTS. (2) BEARINGS:

NEW DEPARTURE,

CAT NO. 99038X1E. (2) BEARINGS: NORMA HOFFMAN,

NO. C98KK-F4-675 (3) COMMUTATOR SLOTS, WIDTH:

HV EQUALS .010 (SM-B-202346) (3) COMMUTATOR SLOTS, WIDTH: LV EQUALS .045 (SM-B-202345)

.020 (BOTH HV AND LV).

(4) BANDS RETAIN OUTER (HV) (4) ELIMINATED BANDS AROUND WINDINGS AGAINST

OUTER WINDINGS FOR HOLDING CENTRIFUGAL FORCE.

AGAINST CENTRIFUGAL FORCES. (5) CHANGED METHOD OF BALANCING. (6) CHANGED METHOD OF INSULATION.

B. YOKE, MAGNET FRAME

DWG SM-B-202374 (1) MATERIAL: (1) MATERIAL:

ARMCO MAGNETIC INGOT IRON, MAGNETIC SEAMLESS TUBING.

HOT ROLLED, WELDED SHEET. BRIGHT ANNEALED - ROCKWELL

3/8 INCH THICK. B-70.

40,000 PSI TENSILE (MIN). (2) INSIDE DIA: 3.862/3.864. 20,000 PSI YIELD (MIN).

ELONGATION IN 2 INCH

EQUALS 40 PERCENT (MIN). (3) PROTECTIVE FINISH: CAD THICKNESS .6177

PLATE, TYPE II, CLASS - 3. (APPROX 5/8 INCH).

(2) INSIDE DIA: 3.850/3.852 (4) NO MAGNETIC PROPERTIES (3) PROTECTIVE FINISH:

LISTED COPPER PLATE

.0002 TO .0003 THICK.

IRIDITE DIP.

(4) MAGNETIC PROPERTIES (AFTER

ANNEALING) SPECIFIED IN

DETAIL IN TABLE OF SIX

VALUES.

C. ARMATURE LAMINATIONS

DWG SM-B-202347 AND SM-C-202342 (1) DELETED NOTCH IN BORE. (1) REQUIRES LOCATING NOTCH

IN BORE. (2) BORE DIA .8485).8490 (2) BORE DIA .8503).8500 (3) MATERIAL: FORMICA, (3)MATERIAL: FIBRE-GREY,

INDUSTRIAL GRADE S-52. VULCANIZED, GRADE "C.' (4) EXTREME OF POLE TIP: .052 (4) EXTREME OF POLE TIP:

DIA. .050 DIA. (5) LAMINATION OD: 2.570 (5) LAMINATION OD: 2.450

D. BRUSH, LOW VOLTAGE

DWG SM-B-202388

MATERIAL: MATERIAL:

STANDARD CARBON NO. M-8A. PURE CARBON CO. NO. 309 L.

(CONTAINS 89 PERCENT METAL). (CONTAINS 75 PERCENT METAL).

SUBSTITUTION MADE BY BUCKNELL

WITHOUT APPROVAL.

E. GENERATOR DRIVE ASSEMBLY

DWG SM-D-202233

ALLOWED USE OF FLUID LUBRICATING SPECIFIES ONLY GREASE FOR

OIL MIXED WITH GREASE FOR LUBRICATION OF THE INTERNAL

LUBRICATING INTERNAL WORKING WORKING PARTS.

PARTS. (SEE PARA 4 BELOW)

F. ACOUSTIC NOISE

SPEC PARA 3.9 AND 4.8

ALLOWS: ALLOWS:

MAX OF 64 DB IN ROOM MAX MAX OF 60 DB IN ROOM MAX

OF 40 DB. (SEE PARA 5 AND 40 DB. (TIGHTENED

6 BELOW). REQUIREMENT)

G. BOUNCE TEST

SPEC PARA 3.15 AND 4.9

NOT PERFORMED FIRM REQUIREMENT FOR

H. ALTITUDE TEST

SPEC PARA 3.14.2 (D) AND 4.7

OPERATIONAL TEST IN AMBIENT FIRM REQUIREMENT TO

REPRESENTING 10,000 FT ELEVATION, PERFORM OPERATIONAL TEST

NOT PERFORMED. IN AMBIENT REPRESENTING

10,000 FT ELEVATION.

3. ALL THE ABOVE REPRESENT ONLY A PARTIAL LIST OF DIFFERENCES. ADDITIONAL TECHNICAL DIFFERENCE ARE INVOLVED IN LIST OF 153 DRAWINGS REVISED, AND 13 COMPLETELY REDRAWN BY BUCKNELL. NONE OF THESE BUCKNELL DRAWINGS ARE IN THE SYSTEM. THEY WERE SUBMITTED MORE THAN A YEAR BEHIND SCHEDULE AND ARE NOT YET APPROVED OR AVAILABLE FOR USE AS PROCUREMENT DOCUMENTS.

4. ALL BUCKNELL UNITS IN DEPOT STOCKS WERE FOUND TO LEAK FLUID LUBRICATING OIL FROM THE GEAR CASE INTO THE GENERATOR HOUSING AFTER A PERIOD OF STORAGE. THIS REQUIRED A DEPOT MODIFICATION PROJECT TO OPEN ALL CASES, REMOVE THE OIL, CLEAN THE INTERIOR PARTS AND REPACK WITH GREASE ONLY.

5. USE OF THE FLUID OIL MIXTURE WITH GREASE WAS AN AID TO ACOUSTIC NOISE REDUCTION AND OPERATION EFFICIENCY INCREASE. ADEQUATE TESTING IS NECESSARY TO DETERMINE THAT ANY NEW AND SIMILAR BUCKNELL UNITS ARE CAPABLE OF MEETING SPECIFIED REQUIREMENTS WITHOUT THE BENEFIT OF THE REFERENCED FLUID OIL MIXTURE.

6. TESTS ON 2 BUCKNELL UNITS AT THIS FACILITY INDICATE THESE UNITS, LUBRICATED WITH GREASE ONLY AS SPECIFIED FOR THE REFERENCED NEW PROCUREMENT, WILL NOT MEET THE MORE STRINGENT REQUIREMENTS COVERING ACOUSTIC NOISE IN THE REFERENCED NEW PROCUREMENT. WITH SUBJECT EQUIPMENT, THIS NOISE FACTOR IS NOW UNDERSTOOD TO BE A CRITICAL ITEM BECAUSE OF OPERATIONAL CONDITIONS WHERE THEY WILL BE USED IN SERVICE.'

UNDER ASPR 1-1902 (A) (I) (B), A REQUIREMENT FOR FIRST ARTICLE APPROVAL TESTS (THE TERM "FIRST ARTICLE" BEING DEFINED IN ASPR 1-1901 (A) AS INCLUDING PREPRODUCTION MODELS) MAY BE CONSIDERED APPROPRIATE WHEN THE PROCUREMENT ITEM HAS BEEN PREVIOUSLY FURNISHED BY THE CONTRACTOR TO THE GOVERNMENT BUT THERE HAVE BEEN SUBSEQUENT CHANGES IN PROCESSES OR SPECIFICATIONS, OR PRODUCTION HAS BEEN DISCONTINUED FOR AN EXTENDED PERIOD OF TIME. IN THIS CONNECTION, WE HAVE UPHELD THE REFUSAL OF A PROCURING AGENCY TO WAIVE A PREPRODUCTION SAMPLE EVALUATION AND APPROVAL REQUIREMENT IN AN INVITATION FOR BIDS AS TO TWO PRIOR PRODUCERS WHERE THE PROCUREMENT INVOLVED HIGHLY TECHNICAL EQUIPMENT, SPECIFICATION CHANGES HAD BEEN MADE IN THE EQUIPMENT SUBSEQUENT TO THE TIME THAT THE PROTESTING BIDDER HAD PRODUCED SAMPLES, AND THE AGENCY'S TECHNICAL PERSONNEL HAD DETERMINED THAT THE PREPRODUCTION SAMPLES WERE NECESSARY TO GUARANTEE THAT THE EQUIPMENT PURCHASED WOULD PERFORM AS REQUIRED IN ACTUAL OPERATION. B-153175, JUNE 10, 1964.

IN THE LIGHT OF THE INFORMATION CONTAINED IN THE MEMORANDUM QUOTED ABOVE, WE ARE UNABLE TO CONCLUDE THAT THERE WAS NOT A SUFFICIENT BASIS FOR THE ADMINISTRATIVE DETERMINATION THAT THE CIRCUMSTANCES IN THIS CASE DID NOT WARRANT WAIVER OF FIRST ARTICLE TESTING APPROVAL AS TO BUCKNELL. FURTHER, SINCE THE DIFFERENCES BETWEEN THE PROCUREMENT ITEM AND THE ITEM PRODUCED BY BUCKNELL ARE CONSIDERED SIGNIFICANT BY THE PROCURING AGENCY'S TECHNICAL PERSONNEL, WE FIND NO LEGAL BASIS TO QUESTION THE ADMINISTRATIVE DETERMINATION THAT BUCKNELL'S PROPOSAL WAS TECHNICALLY UNACCEPTABLE UNDER THE RFP.

AS TO YOUR STATEMENT THAT THE CONTRACTING OFFICER WAS NEGLIGENT "IN NOT GOING BACK TO BUCKNELL AND CLEARING UP ANY DOUBT THAT HE MIGHT HAVE HAD CONCERNING BUCKNELL'S QUOTATION," WE MUST CONCLUDE THAT HIS ACTION IN MAKING AWARD ON THE LOWEST PROPOSAL RECEIVED WITHOUT FURTHER NEGOTIATION OR DISCUSSION WAS AUTHORIZED BY THE PERTINENT STATUTE AND REGULATIONS. UNDER 10 U.S.C. 2304 (G), THE REQUIREMENT THAT WRITTEN OR ORAL DISCUSSIONS BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500, WITH CERTAIN EXCEPTIONS NOT HERE PERTINENT, NEED NOT BE APPLIED TO PROCUREMENTS WHERE IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT, THAT ACCEPTANCE OF AN INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN FAIR AND REASONABLE PRICES, AND WHERE THE REQUEST FOR PROPOSALS NOTIFIES ALL OFFERORS OF THE POSSIBILITY THAT AWARD MAY BE MADE WITHOUT DISCUSSION. ASPR 3-805.1 (A), WHICH IS CONSISTENT WITH THE STATUTORY PROVISION, READS, IN PERTINENT PART, AS FOLLOWS:

"3-805 SELECTION OF OFFERORS FOR NEGOTIATION AND AWARD.

"3-805.1 GENERAL

"/A) AFTER RECEIPT OF INITIAL PROPOSALS, WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED, EXCEPT THAT THIS REQUIREMENT NEED NOT NECESSARILY BE APPLIED TO:

"/V) PROCUREMENTS IN WHICH IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT OR SERVICE THAT ACCEPTANCE OF THE MOST FAVORABLE INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN A FAIR AND REASONABLE PRICE. (PROVIDED, HOWEVER, THAT IN SUCH PROCUREMENTS, THE REQUEST FOR PROPOSALS SHALL NOTIFY ALL OFFERORS OF THE POSSIBILITY THAT AWARD MAY BE MADE WITHOUT DISCUSSION OF PROPOSALS RECEIVED AND HENCE, THAT PROPOSALS SHOULD BE SUBMITTED INITIALLY ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT WHICH THE OFFEROR CAN SUBMIT TO THE GOVERNMENT. ANY CASE WHERE THERE IS UNCERTAINTY AS TO THE PRICING OR TECHNICAL ASPECTS OF ANY PROPOSALS, THE CONTRACTING OFFICER SHALL NOT MAKE AWARD WITHOUT FURTHER EXPLORATION AND DISCUSSION PRIOR TO AWARD. ALSO, WHEN THE PROPOSAL MOST ADVANTAGEOUS TO THE GOVERNMENT INVOLVES A MATERIAL DEPARTURE FROM THE STATED REQUIREMENTS, CONSIDERATION SHALL BE GIVEN TO OFFERING THE OTHER FIRMS WHICH SUBMITTED PROPOSALS AN OPPORTUNITY TO SUBMIT NEW PROPOSALS ON A TECHNICAL BASIS WHICH IS COMPARABLE TO THAT OF THE MOST ADVANTAGEOUS PROPOSAL, PROVIDED THAT THIS CAN BE DONE WITHOUT REVEALING TO THE OTHER FIRMS ANY INFORMATION WHICH IS ENTITLED TO PROTECTION UNDER 3- 507.1 PARAGRAPH 10 (G) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS (STANDARD FORM 33A) ADVISES OFFERORS THAT THE MOST FAVORABLE INITIAL PROPOSAL MAY BE ACCEPTED WITHOUT DISCUSSION.'

INASMUCH AS THE RFP INCLUDED NOTICE OF THE POSSIBILITY OF AWARD WITHOUT DISCUSSIONS, AND THERE APPEARS TO HAVE BEEN NO QUESTION AS TO THE REASONABLENESS OF THE PRICES QUOTED, AWARD ON THE BASIS OF THE LOW OFFER WAS IN ORDER AND SINCE BUCKNELL'S REQUEST FOR WAIVER OF FIRST ARTICLE TESTING WAS REFUSED, VARO'S WAS THE LOW OFFER.

THE ADMINISTRATIVE EXPLANATION CONCERNING ITS DECISION TO OPEN THE PROCUREMENT TO LARGE BUSINESS CONCERNS AS WELL AS SMALL BUSINESS CONCERNS, RATHER THAN TO RESTRICT IT TO SMALL BUSINESS CONCERNS, IS IN OUR OPINION, REASONABLE AND EVIDENCE NO PREJUDICE AGAINST SMALL BUSINESS. IN ADDITION, THE ADMINISTRATIVE JUDGMENT REGARDING THE EXPECTED RESPONSE OF SMALL BUSINESS CONCERNS WAS APPARENTLY CONFIRMED BY THE FACT THAT ONLY ONE SUCH FIRM, BUCKNELL, SUBMITTED A PROPOSAL. IN THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THERE WAS ANY IMPROPRIETY IN THE CONDUCT OF THE PROCUREMENT. ACCORDINGLY, WE FIND NO LEGAL BASIS TO QUESTION THE VALIDITY OF THE AWARD TO VARO, AND, THEREFORE, WE MUST DENY YOUR PROTEST.