B-159800, SEP. 22, 1966

B-159800: Sep 22, 1966

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TO CORDLEY AND HAYES: REFERENCE IS MADE TO YOUR COMPANY'S LETTER DATED JULY 28. PRICES WERE TO BE SUBMITTED ON AN F.O.B. FIRST ARTICLE APPROVAL TESTING WAS TO BE CONDUCTED BY THE CONTRACTOR AS REQUIRED BY PAGES 11. 12 AND 13 OF THE IFB WHICH SET FORTH AN APPROPRIATE PROVISION FOR WAIVER OF TESTING AS FOLLOWS: "WAIVER OF FIRST ARTICLE APPROVAL TESTS (DECREASED IN PRICE AND DELIVERY TIME) "THE GOVERNMENT RESERVES THE RIGHT TO WAIVE THE REQUIREMENT HEREIN FOR FIRST ARTICLE APPROVAL TESTS AS TO THOSE BIDDERS/OFFERORS OFFERING A PRODUCT WHICH HAS BEEN PREVIOUSLY FURNISHED BY THE BIDDER/OFFEROR AND HAVE BEEN ACCEPTED BY THE GOVERNMENT. MUST FURNISH EVIDENCE WITH THE BID/OFFER THAT PRIOR GOVERNMENT ACCEPTANCE IS PRESENTLY APPROPRIATE FOR THE PRODUCTS TO BE FURNISHED HERE UNDER BY INDICATING BELOW CONTRACT NUMBERS OF IDENTICAL OR SIMILAR SUPPLIES ACCEPTED BY THE GOVERNMENT.

B-159800, SEP. 22, 1966

TO CORDLEY AND HAYES:

REFERENCE IS MADE TO YOUR COMPANY'S LETTER DATED JULY 28, 1966, WITH ATTACHMENTS, PROTESTING AGAINST THE AWARD OF A CONTRACT TO HEAT EXCHANGERS, INC., BASED ON INVITATION FOR BIDS (IFB) DSA-400-66-B-5508 ISSUED MAY 6, 1966, BY THE DEFENSE SUPPLY AGENCY, DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA.

ITEM A OF SUBJECT INVITATION REQUESTED BIDS FOR 222 MECHANICALLY REFRIGERATED DRINKING-WATER COOLERS IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-C-24166 (SHIPS) DATED AUGUST 25, 1965, WITH CERTAIN DEVIATIONS. PRICES WERE TO BE SUBMITTED ON AN F.O.B. DESTINATION BASIS FOR EIGHT ENUMERATED LOCATIONS. FURTHER, FIRST ARTICLE APPROVAL TESTING WAS TO BE CONDUCTED BY THE CONTRACTOR AS REQUIRED BY PAGES 11,12 AND 13 OF THE IFB WHICH SET FORTH AN APPROPRIATE PROVISION FOR WAIVER OF TESTING AS FOLLOWS:

"WAIVER OF FIRST ARTICLE APPROVAL TESTS (DECREASED IN PRICE AND DELIVERY TIME)

"THE GOVERNMENT RESERVES THE RIGHT TO WAIVE THE REQUIREMENT HEREIN FOR FIRST ARTICLE APPROVAL TESTS AS TO THOSE BIDDERS/OFFERORS OFFERING A PRODUCT WHICH HAS BEEN PREVIOUSLY FURNISHED BY THE BIDDER/OFFEROR AND HAVE BEEN ACCEPTED BY THE GOVERNMENT. BIDDERS/OFFERORS OFFERING SUCH PRODUCTS, WHO WISH TO RELY ON SUCH PRIOR ACCEPTANCE BY THE GOVERNMENT, MUST FURNISH EVIDENCE WITH THE BID/OFFER THAT PRIOR GOVERNMENT ACCEPTANCE IS PRESENTLY APPROPRIATE FOR THE PRODUCTS TO BE FURNISHED HERE UNDER BY INDICATING BELOW CONTRACT NUMBERS OF IDENTICAL OR SIMILAR SUPPLIES ACCEPTED BY THE GOVERNMENT. BIDDERS/OFFERORS SHALL STATE IN THE SPACES PROVIDED BELOW THE DECREASE IN UNIT PRICES AND THEIR EARLIER DELIVERY SCHEDULE IN THE EVENT OF SUCH WAIVER BY THE GOVERNMENT. THE EARLIER DELIVERY SCHEDULE SHALL NOT BE A FACTOR IN EVALUATION FOR AWARD. WHEN THE GOVERNMENT DECIDES TO EXERCISE ITS RIGHT TO WAIVE FIRST ARTICLE APPROVAL TESTING, BIDS/OFFERS WILL BE EVALUATED ON THE BASIS OF THE DECREASED UNIT PRICE SO OFFERED.'

AT THE SCHEDULED TIME FOR BID OPENING, JUNE 23, 1966, THE FIVE BIDS SUBMITTED WERE OPENED. YOUR BID WAS $259 PER UNIT FOR ITEM A WITH A UNIT REDUCTION OF $5 IF FIRST ARTICLE APPROVAL TESTS WERE WAIVED. THE LOW BID (IN THE ABSENCE OF A WAIVER) WAS SUBMITTED BY HEAT EXCHANGERS AT PRICES OF $257 FOR 145 UNITS (DESTINATIONS ON WEST COAST), $256 FOR 4 UNITS (DESTINATION RHODE ISLAND) AND $255 FOR THE REMAINING 73 UNITS (DESTINATIONS VIRGINIA AND SOUTH CAROLINA). A DECREASE IN PRICE OF $2 PER UNIT WAS OFFERED FOR WAIVER OF THE FIRST ARTICLE APPROVAL TESTING.

IT IS NOTED THAT ALTHOUGH YOUR BID CONTAINED AN OFFER TO REDUCE THE UNIT PRICE BY $5, IN THE EVENT OF THE WAIVER OF FIRST ARTICLE APPROVING TESTS, IT FAILED TO CITE ANY GOVERNMENT CONTRACT NUMBERS UNDER WHICH IDENTICAL OR SIMILAR SUPPLIES HAD BEEN ACCEPTED BY THE GOVERNMENT. HEAT EXCHANGERS LISTED A PRIOR CONTRACT, DSA 4-05D778 TR516 WHICH WAS PERFORMED UNDER SPECIFICATION MIL-R-1834D, AS FULFILLING THE REQUIREMENT FOR WAIVER IN ITS BID.

THE REQUEST FOR WAIVER BY HEAT EXCHANGERS WAS NOT GRANTED BY THE CONTRACTING OFFICER. THE BASIS FOR REFUSING ITS REQUEST WAS THAT THE FIRM HAD NEVER SUPPLIED THE ITEM UNDER THE APPLICABLE SPECIFICATION (MIL-C- 24166), AND TECHNICAL PERSONNEL AT THE CENTER DETERMINED THAT THE DIFFERENCES BETWEEN THAT SPECIFICATION AND (MIL-R-1834D) WERE TOO GREAT TO ALLOW PERFORMANCE UNDER THE LATTER SPECIFICATION TO CONSTITUTE A BASIS FOR WAIVER OF FIRST ARTICLE APPROVAL. YOUR REQUEST FOR WAIVER WAS ALSO DENIED SINCE YOUR BID FAILED TO CITE ANY PRIOR GOVERNMENT CONTRACTS UNDER WHICH THE SAME OR SIMILAR COOLERS HAD BEEN ACCEPTED. THE PROCURING AGENCY ALSO STATES THAT IT DID NOT KNOW OF ANY CONTRACTS YOU HAD COMPLETED UNDER WHICH MIL-C-24166 WAS USED. RECORDS SHOW A SIMILAR ITEM YOU PRODUCED WAS ACCEPTED BY THE GOVERNMENT WHICH UTILIZED THE UNACCEPTABLE SPECIFICATION, MIL-R-1834D. SINCE THE LOWEST BID RECEIVED WITHOUT A WAIVER OF TESTING WAS SUBMITTED BY HEAT EXCHANGERS, AWARD WAS MADE TO THAT FIRM ON JUNE 30, 1966.

IN YOUR LETTER OF JULY 28, 1966, TO THE DEFENSE SUPPLY AGENCY (CARBON COPY TO THIS OFFICE) YOU DO NOT APPEAR TO QUESTION THE CONTRACTING OFFICER'S ACTION IN NOT WAIVING FIRST ARTICLE APPROVAL TESTS ON YOUR PRODUCT, BUT INSTEAD YOU PROTEST THE INCLUSION OF THE WAIVER PROVISION IN THE INVITATION AS AN IRREGULAR PROCEDURE UNDER THE CIRCUMSTANCES AS YOU UNDERSTAND THEM TO BE. YOU STATE THE BASIS OF YOUR PROTEST IN THAT LETTER AS FOLLOWS:

"WE RESPECTFULLY QUOTE THE FOLLOWING FROM THE THIRD PARAGRAPH OF YOUR LETTER (JULY 22, 1966):

"... SINCE THIS WAS THE FIRST PROCUREMENT OF THIS ITEM BY THIS CENTER UNDER SPECIFICATION MIL-C-24166, PRIOR PROCUREMENTS HAVING BEEN EFFECTED IN ACCORDANCE WITH MIL-R-1834D DATED 12 JUNE 1957, IT WAS DETERMINED BY THE CONTRACTING OFFICER IN CONJUNCTION WITH TECHNICAL PERSONNEL THAT FIRST ARTICLE APPROVAL TESTS WOULD NOT BE WAIVED FOR EITHER YOUR FIRM OR HEAT EXCHANGERS.'

"THIS IS PRECISELY THE FOUNDATION OF OUR PROTEST. IF IT WAS THE DETERMINATION OF THE CONTRACTING OFFICER AND THE TECHNICAL PERSONNEL THAT THE FIRST ARTICLE WOULD NOT BE WAIVED, THE PARAGRAPH INVITING A REDUCED PRICE IN LIEU OF A PREPRODUCTION SAMPLE SHOULD NOT HAVE BEEN INCLUDED IN THE INVITATION. WE CONSIDER THIS AN IRREGULAR PROCEDURE FOR THESE REASONS

WE ARE IN COMPLETE AGREEMENT WITH YOUR CONTENTION THAT IF IT HAD BEEN ADMINISTRATIVELY PREDETERMINED NOT TO WAIVE FIRST ARTICLE APPROVAL TESTS, THE REQUEST FOR A BID BASED ON SUCH A WAIVER SHOULD NOT HAVE BEEN INCLUDED IN THE INVITATION. WHILE IT IS READILY APPARENT FROM THE ABOVE-QUOTED PORTION OF THE CENTER'S LETTER OF JULY 22 THAT ONE COULD REASONABLY CONCLUDE THAT A PRIOR DETERMINATION NOT TO WAIVE TESTING HAD BEEN MADE, SUCH DOES NOT APPEAR TO HAVE BEEN THE ACTUAL SITUATION.

IN THE CONTRACTING OFFICER'S ADMINISTRATIVE REPORT WHICH HAS BEEN FURNISHED THIS OFFICE, IT IS STATED THAT, WHILE THE LETTER OF JULY 22TO YOU POINTED OUT THAT THIS WAS THE FIRST PROCUREMENT BY THE CENTER UNDER MIL-C-24166, THE BASIS OF THE REFUSAL TO WAIVE THE FIRST ARTICLE APPROVAL TESTING FOR YOUR BID WAS EXPLAINED FULLY IN THAT LETTER. THE CONTRACTING OFFICER'S FURTHER EXPLANATION OF HIS ACTIONS IN THE MATTER IS AS FOLLOWS:

"THE REQUIREMENT FOR FIRST ARTICLE APPROVAL TESTS WAS ESTABLISHED TO ASSURE THE CONTRACTOR'S ADHERENCE TO SPECIFICATION REQUIREMENTS AND DELIVERY OF ITEMS WHICH WOULD BE SUBJECTED TO EXTENSIVE AND VIGOROUS SHIPBOARD CONDITIONS OF VIBRATION, MOVEMENT, AND SHOCK. THE WAIVER PORTION OF THE "FIRST ARTICLE APPROVAL - CONTRACTOR TESTING" PROVISION RESERVED TO THE GOVERNMENT THE RIGHT TO WAIVE THE REQUIREMENT AS TO THOSE BIDDERS OFFERING A PRODUCT WHICH HAD BEEN PREVIOUSLY FURNISHED BY THE BIDDER AND ACCEPTED BY THE GOVERNMENT. THE CONTRACTING OFFICER UNDER THE SOLICITATION IN QUESTION HAD NOT PREDETERMINED THAT NO WAIVER OF THE REQUIRED FIRST ARTICLE APPROVAL TESTS WOULD BE GRANTED. ALTHOUGH SUBJECT INVITATION WAS THE FIRST SOLICITATION ISSUED BY THIS CENTER UNDER SPECIFICATION MIL-C-24166, PRIOR PROCUREMENTS OF THE ITEM HAVING BEEN EFFECTED IN ACCORDANCE WITH SPECIFICATION MIL-R-1834D, THIS WOULD NOT PRECLUDE A BIDDER FROM REQUESTING A WAIVER OF THE FIRST ARTICLE APPROVAL TESTS BASED ON SOME OTHER GOVERNMENT AGENCY'S ACCEPTANCE OF IDENTICAL OR SIMILAR SUPPLIES UNDER A PRIOR CONTRACT UTILIZING SPECIFICATION MIL-C- 24166. HOWEVER, AS WAS REQUIRED BY THE "WAIVER OF FIRST ARTICLE APPROVAL TESTS" CLAUSE OF THE INVITATION, THE BIDDER SEEKING THE WAIVER WAS OBLIGATED TO IDENTIFY THE PRIOR CONTRACTS IN ORDER THAT THE PROCUREMENT AGENCY INVOLVED MAY VERIFY THE PRIOR ACCEPTANCE OF THE GOVERNMENT. IN THE ABSENCE OF IDENTIFICATION OF THE PRIOR CONTRACTS BY THE BIDDER INVOLVED, THIS CENTER IS UNABLE TO EVALUATE THE BIDDER'S REQUEST FOR A WAIVER EXCEPT THROUGH KNOWN PRIOR CONTRACTS WITH THIS CENTER. THE PROTESTING BIDDER DID NOT FURNISH THE REQUIRED INFORMATION CONCERNING PRIOR ACCEPTANCE OF AN IDENTICAL OR SIMILAR ITEM BY THE GOVERNMENT, NOR DOES THIS CENTER HAVE ANY RECORD OF A PRIOR ACCEPTANCE OF THE FIRM'S PRODUCT UNDER THE CURRENT SPECIFICATION, MIL-C-24166. ALTHOUGH CORDLEY HAD PRODUCED THE ITEM UNDER THE SUPERSEDED SPECIFICATION, MIL-R-1834D, THE ADDITIONAL AND MODIFIED REQUIREMENTS PROVIDED FOR BY THE CURRENT SPECIFICATION, MIL-C-24166, WERE SO SUBSTANTIAL AS TO REQUIRE NEW APPROVAL TESTS OF THE ITEMS. CONSEQUENTLY, ITS BID COULD BE EVALUATED ONLY AT THE HIGHER PRICE WITH FIRST ARTICLE APPROVAL TESTS.'

THE CLAUSE FOR WAIVER OF FIRST ARTICLE APPROVAL TESTS APPEARS TO BE IN ACCORD WITH THE PROVISION OF ASPR 1-1903, AND SINCE IT DOES NOT APPEAR IT WAS PREDETERMINED THAT NO WAIVER OF THE REQUIRED FIRST ARTICLE APPROVAL TESTING WOULD BE GRANTED, WE DO NOT FIND THAT INCLUSION OF THE CLAUSE IN THE INVITATION WAS IMPROPER, NOR DO WE PERCEIVE ANY LEGAL BASIS FOR QUESTIONING THE ..END :