B-159718, JAN. 25, 1967

B-159718: Jan 25, 1967

Additional Materials:

Contact:

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

 

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

TO TRAID CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM DATED JULY 20. IT IS REPORTED THAT AT THE TIME THIS PROCUREMENT REQUIREMENT WAS INITIATED. THERE WAS A CRITICAL SHORTAGE OF GUN CAMERA MAGAZINES LB4B. THESE DEVICES WERE THEN NECESSARY TO MAINTAIN EFFECTIVE OPERATIONAL RECONNAISSANCE IN SOUTHEAST ASIA. NEGOTIATED CONTRACT PROCEDURES WERE FOLLOWED INSTEAD OF FORMAL ADVERTISING PURSUANT TO THE PUBLIC EXIGENCY PROVISION OF 10 U.S.C. 2304 (A) (2). PROMPT DELIVERY WAS TO BE THE PRIMARY CONCERN IN AWARDING THE CONTRACT. OGDEN AIR MATERIEL AREA PURCHASE REQUEST 00-6-32461 WAS RECEIVED BY THE BUYING OFFICE AT AERONAUTICAL SYSTEMS DIVISION ON MAY 16. THE PURCHASE REQUEST WAS MARKED "URGENT SEA" AND LISTED TRAID CORPORATION AND SDS DATA SYSTEMS AS POTENTIAL SOURCES.

B-159718, JAN. 25, 1967

TO TRAID CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM DATED JULY 20, 1966, PROTESTING AGAINST THE AWARD OF A CONTRACT TO SDS DATA SYSTEMS (SDS) UNDER REQUEST FOR PROPOSALS ASD 32461-RPA ISSUED BY THE AERONAUTICAL SYSTEMS DIVISION (ASD), WRIGHT-PATTERSON AIR FORCE BASE, OHIO, FOR 1,150 UNITS OF LB4BFILM MAGAZINES.

IT IS REPORTED THAT AT THE TIME THIS PROCUREMENT REQUIREMENT WAS INITIATED, THERE WAS A CRITICAL SHORTAGE OF GUN CAMERA MAGAZINES LB4B. THESE DEVICES WERE THEN NECESSARY TO MAINTAIN EFFECTIVE OPERATIONAL RECONNAISSANCE IN SOUTHEAST ASIA. IN ORDER TO AVOID ANY DELAY, NEGOTIATED CONTRACT PROCEDURES WERE FOLLOWED INSTEAD OF FORMAL ADVERTISING PURSUANT TO THE PUBLIC EXIGENCY PROVISION OF 10 U.S.C. 2304 (A) (2). PROMPT DELIVERY WAS TO BE THE PRIMARY CONCERN IN AWARDING THE CONTRACT.

OGDEN AIR MATERIEL AREA PURCHASE REQUEST 00-6-32461 WAS RECEIVED BY THE BUYING OFFICE AT AERONAUTICAL SYSTEMS DIVISION ON MAY 16, 1966. THE PURCHASE REQUEST WAS MARKED "URGENT SEA" AND LISTED TRAID CORPORATION AND SDS DATA SYSTEMS AS POTENTIAL SOURCES. A PROCUREMENT PLAN WAS PREPARED ON MAY 16, 1966, READING IN PART AS FOLLOWS:

"3. IT IS PROPOSED THAT THIS PROCUREMENT WILL BE EFFECTED BY MEANS OF SOLE SOURCE NEGOTIATION PURSUANT TO THE PROVISIONS OF 10 U.S.C. 2304 (A) (2) AS CONTEMPLATED BY PARAGRAPH 302.2 (III) (SIC) (3-202.2 (III) ( OF THE ARMED FORCES PROCUREMENT REGULATION. SINCE THE REQUIRED PARTS ARE URGENTLY NEEDED AND SDS IS THE DEVELOPER AND ONLY KNOWN MANUFACTURER FOR SAME, IT IS PROPOSED THAT PROCUREMENT WILL BE EFFECTED BY PLACEMENT OF AN UNPRICED ORDER AGAINST B.O.A. AFO4 (606) 15079 WITH THAT COMPANY.'

ON MAY 17, 1966, THE ORIGINATOR OF THE PURCHASE REQUEST REQUESTED SOLE- SOURCE PROCUREMENT FROM SDS DATA SYSTEMS "IN ORDER TO MEET ESTABLISHED DEADLINE DATES.' THIS COMMUNICATION HAD THE EFFECT OF AMENDING THE PURCHASE ORDER TO SPECIFY SDS DATA SYSTEMS AS THE SOLE SOURCE. IN THIS CONNECTION IT MAY BE OBSERVED THAT TRAID AT ONE TIME HAD BEEN A DISTRIBUTOR OF THE SDS MAGAZINE. HENCE THE COMMUNICATION TO THE BUYING OFFICER DID NOT SEEM MATERIAL TO HIM SINCE HE MISTAKENLY BELIEVED THAT SDS DATA SYSTEMS WAS THE ONLY KNOWN MANUFACTURER OF THE ITEM DESIRED. WITH THE ABOVE BACKGROUND THE PROCUREMENT WAS SYNOPSIZED FOR PUBLICATION IN THE JUNE 16, 1966, ISSUE OF THE UNITED STATES DEPARTMENT OF COMMERCE DAILY. THE SYNOPSIS STATED THAT THE PROCUREMENT WAS TO BE NEGOTIATED WITH SDS DATA SYSTEMS BY ORDER AGAINST BASIC ORDERING AGREEMENT AFO4 (606) 15079. THE SYNOPSIS FURTHER INDICATED THAT THE NOTICE WAS FOR INFORMATION PURPOSES ONLY AND THAT REQUESTS FOR PROPOSALS WERE NOT AVAILABLE.

IT IS REPORTED THAT ON JUNE 28, 1966, THE BUYER RECEIVED A TELEPHONE CALL FROM MR. ROBERT KING OF YOUR COMPANY RELATIVE TO THE PROCUREMENT OF THE LB4B MAGAZINES AND THAT MR. KING ADVISED THAT TRAID COULD MAKE DELIVERY OF THE MAGAZINES AT AN EARLIER DATE AND AT A LOWER PRICE THAN SDS DATA SYSTEMS.

ON JUNE 30, 1966, THE PURCHASE REQUEST INITIATOR, OGDEN AIR MATERIEL AREA, REQUESTED THAT TRAID OR ANY OTHER MANUFACTURER THAT COULD SUPPLY AN "OR EQUAL" ITEM BE CONSIDERED AS A POSSIBLE SUPPLIER. THE URGENCY OF THE REQUIREMENT WAS RETAINED. ON JULY 5, 1966, THE INSTRUCTIONS WERE CHANGED AGAIN AND THE BUYING OFFICE WAS REQUESTED TO SOLICIT SDS DATA SYSTEMS AND TRAID ONLY.

CONFRONTED WITH THE LATEST INSTRUCTION, THE BUYER AT AERONAUTICAL SYSTEMS DIVISION SOUGHT VERIFICATION FROM OGDEN AIR MATERIEL AREA WHETHER TRAID COULD BE CONSIDERED TECHNICALLY QUALIFIED TO FURNISH THE REQUIRED MAGAZINES. IN ADDITION THE BUYER REQUESTED A COPY OF A TECHNICAL REPORT ISSUED AT THE OGDEN AIR MATERIEL AREA ON MARCH 7, 1966, WHICH, A TRAID REPRESENTATIVE STATED, FOUND THAT COMPONENTS MANUFACTURED BY LEITZ CORPORATION LIMITED WERE THE SAME OR EQUAL TO THOSE OF THE SDS DATA SYSTEMS PRODUCT. HOWEVER, A COPY OF SUCH REPORT WAS NOT LOCATED AND FURNISHED TO THE BUYER UNTIL AFTER THE PURCHASE ORDER WAS ISSUED.

MR. KING WAS ALSO REQUESTED BY THE BUYER TO FURNISH A COPY OF THE MARCH 7, 1966, LETTER BUT FAILED TO DO SO ALTHOUGH HE HAD INDICATED THAT HE HAD A COPY OF THE LETTER.

IT IS FURTHER REPORTED THAT THE CONTRACTING OFFICER, FEELING HE COULD NO LONGER DELAY THE PROCUREMENT, ON JULY 7, 1966, ENTERED INTO AN UNPRICED ORDER AS-66-1 TO BASIC ORDERING AGREEMENT AF04 (606) 15079 WITH SDS DATA SYSTEMS. IN REACHING HIS DECISION, IT IS STATED THAT THE CONTRACTING OFFICER WAS PARTICULARLY PROMPTED BY THE FACT THAT INFORMAL INQUIRIES AS TO DELIVERY INDICATED THAT SDS DATA SYSTEMS' PROPOSED DELIVERY SCHEDULE WAS BETTER THAN THAT OFFERED BY TRAID EVEN IF THE LATTER HAD A TECHNICALLY QUALIFIED PRODUCT. THE REPORT STATES THAT:

"THE COMPARATIVE PROPOSALS BEFORE AWARD ON WHICH THE BUYER RELIED WERE AS FOLLOWS:

TABLE

"SDS TRAID CORP. ----------- --------------------------------------------

AUG NONE 1966 AUG 50 1966

SEP 3 1966 SEP 50 1966

OCT 100 1966 OCT NONE 1966

NOV 400 1966 NOV NONE 1966

DEC 400 1966 DEC 100 1966

JAN BALANCE 1967 JAN 200 1967

FEB 200 1967

ESTIMATED PRICE $154.20/UNIT MAR 200 1967

APR 200 1967

MAY BALANCE 1967

ESTIMATED PRICE $123.00/UNIT"

THE ADMINISTRATIVE REPORT CONTINUES:

"8. IN AUGUST, THE 7 MARCH 1966 REPORT FINALLY REACHED ASD. BECAUSE OF TRAID'S CONTINUED PROTESTS, THE NEGOTIATED AWARD TO SDS WAS REVIEWED BY HEADQUARTERS, AIR FORCE SYSTEMS COMMAND (AFSC). ALTHOUGH THIS REVIEW INDICATED THAT TRAID HAD SUBMITTED A LOWER INITIAL COST PROPOSAL AND WAS POSSIBLY QUALIFIED, DELIVERY SCHEDULES RESUBMITTED BY TRAID AND SDS IN AUGUST AT THE REQUEST OF THE AIR FORCE, SUPPORTED THE INFORMAL DELIVERY PROPOSALS THAT HAD BEEN MADE PRIOR TO AWARD. THE RESULTS OF THIS POST- AWARD SURVEY ON DELIVERY AND PRICE WERE AS FOLLOW:

TABLE

TRAID SDS

DELIVERY DATE UNITS DELIVERY DATE UNITS

1 OCT 66 100 SEP 66 3

10 JAN 67 100 10 OCT 66 100

FEB 67 300 30 NOV 66 400

MAR 67 300 31 DEC 66 400

APR 67 300 JAN 67 247

MAY 67 50

"9. THE UNIT PRICES QUOTED WERE $118.05 BY TRAID AND $153.01 BY SDS. BOTH PRICE QUOTES WOULD BE SUBJECT TO NEGOTIATIONS. * * * ALTHOUGH TRAID'S INITIAL PROPOSAL WAS AGAIN LOWER, IT IS OBVIOUS THAT TRAID'S DELIVERY CAPABILITY WAS AGAIN SIGNIFICANTLY INFERIOR TO THAT OF SDS. UNDER SDS'S PROPOSAL, DELIVERY OF ALL UNITS WOULD BE COMPLETED BY JANUARY 1967. THE SUPERIOR DELIVERY SCHEDULE OF SDS IS PRESENTLY BEING INCORPORATED IN THE ORDER AS-66-1.

"10. IN VIEW OF THE LOWER INITIAL COST PROPOSAL BY TRAID, THIS POST-AWARD SURVEY ALSO WAS CONDUCTED WITH A VIEW TO DETERMINING THE FEASIBILITY OF TERMINATING 350 UNITS FROM THE SDS ORDER SINCE THESE WERE NOT SO CRITICALLY NEEDED. THEREFORE, TRAID WAS ASKED TO QUOTE ON INCREMENTAL QUANTITIES SO THAT ASD COULD EVALUATE WHETHER A PARTIAL AWARD WOULD BE FEASIBLE. TRAID DID NOT COMPLY WITH THIS REQUEST AND QUOTED A PRICE ONLY ON THE TOTAL QUANTITY OF 1,150 UNITS.'

UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (2) PURCHASES AND CONTRACTS MAY BE NEGOTIATED IF THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. IMPLEMENTING THAT AUTHORITY, ARMED SERVICES PROCUREMENT REGULATION 3-202.2 SETS FORTH ILLUSTRATIVE CIRCUMSTANCES UNDER WHICH THE AUTHORITY TO NEGOTIATE MAY BE USED. UNDER SUBPARAGRAPH (III) CONTRACTS OR PURCHASES MAY BE NEGOTIATED FOR "ESSENTIAL EQUIPMENT FOR * * * AIRCRAFT GROUNDED OR ABOUT TO BE GROUNDED, WHEN SUCH EQUIPMENT * * * IS NEEDED AT ONCE FOR THE PERFORMANCE OF THE OPERATIONAL MISSION OF SUCH AIRCRAFT.' PURSUANT TO ASPR 3-202.3 THE CONTRACTING OFFICER IN THE INSTANT PROCUREMENT MADE THE REQUIRED DETERMINATION AND FINDING THAT THE GUN CAMERA MAGAZINE SHOULD BE PROCURED BY NEGOTIATION FOR REASONS OF URGENCY.

IN THE CIRCUMSTANCES HERE REPORTED, IT APPEARS THAT WHEN APPRISED THAT TRAID MAY HAVE HAD A TECHNICALLY QUALIFIED PRODUCT (MANUFACTURED BY LEITZ CORPORATION LIMITED), THE CONTRACTING OFFICER ATTEMPTED TO VERIFY THIS AND INFORMALLY OBTAINED FROM TRAID A PROPOSED DELIVERY SCHEDULE. SINCE TRAID'S PROPOSED DELIVERY SCHEDULE, EVEN ASSUMING IT COULD FURNISH A QUALIFIED PRODUCT, WOULD NOT HAVE SATISFIED THE URGENT NATURE OF THE PROCUREMENT, WE FIND NO BASIS TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION TO PLACE THE ORDER WITH SDS DATA SYSTEMS. ACCORDINGLY, YOUR PROTEST MUST BE DENIED.

YOUR PROTEST OF THE NEGOTIATION ON A SOLE-SOURCE BASIS WITH SDS DATA SYSTEMS BY THE DEPARTMENT OF THE AIR FORCE FOR THE PROCUREMENT OF GUN CAMERA SYSTEM UNITS AND COMPONENTS UNDER BASIC ORDERING AGREEMENT AF04/606/15079 IS UNDERGOING INDEPENDENT CONSIDERATION AT THE PRESENT TIME AND WILL BE THE SUBJECT OF A SEPARATE DECISION UNDER OUR FILE NO. B- 160291.