B-160377, MAY 31, 1967

B-160377: May 31, 1967

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FRANK AND KEMPELMAN: REFERENCE IS MADE TO YOUR LETTERS OF NOVEMBER 7. PROPOSALS WERE REQUESTED FOR FURNISHING 24 DIFFERENTIALS. SOLICITATIONS WERE SENT TO EIGHT PROSPECTIVE OFFERORS AND TWO PROPOSALS WERE RECEIVED. AWARD WAS MADE TO MOTOQUIP ON SEPTEMBER 21. DELIVERIES UNDER THE CONTRACT WERE COMPLETED JANUARY 9. FINAL PAYMENT WAS MADE FEBRUARY 8. GENERAL PROVISION 39 WAS INCLUDED PURSUANT TO ASPR 1-1208 (D) AND READS AS FOLLOWS: "/A) IN THE EVENT THE BID OR PROPOSAL IS BASED ON FURNISHING ITEMS OR COMPONENTS WHICH ARE FORMER GOVERNMENT SURPLUS PROPERTY OR RESIDUAL INVENTORY RESULTING FROM TERMINATED GOVERNMENT CONTRACTS. MOTOQUIP FAILED TO STATE THAT IT WAS BASED ON FURNISHING FORMER GOVERNMENT SURPLUS PROPERTY.

B-160377, MAY 31, 1967

TO STRASSER, SPIEGELBERG, FRIED, FRANK AND KEMPELMAN:

REFERENCE IS MADE TO YOUR LETTERS OF NOVEMBER 7, 1966, JANUARY 24, 1967, AND APRIL 5, 1967, ON BEHALF OF MOTT HAVEN TRUCK PARTS, INC., PROTESTING AWARD TO MOTOQUIP, INC., UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAG25-67-R -0056, ISSUED BY THE DEPARTMENT OF THE ARMY, NEW YORK PROCUREMENT DETACHMENT.

PROPOSALS WERE REQUESTED FOR FURNISHING 24 DIFFERENTIALS, IDENTIFIED AS FOLLOWS: "ORD P/N: 7348211, OR ROCKWELL STANDARD CORP. P/N: A3800G397, OR P/N: 45320 VEHICLE APPLICATION: G150BA, G160DA AND G160EA GOVERNMENT GROUP: 1002 FSN: 2530-73418211.' SOLICITATIONS WERE SENT TO EIGHT PROSPECTIVE OFFERORS AND TWO PROPOSALS WERE RECEIVED, ONE FROM MOTOQUIP, INC., AT $1,240 EACH OR A TOTAL OF $29,760, AND THE OTHER FROM MOTT HAVEN TRUCK PARTS, INC., AT $1,285 EACH OR A TOTAL OF $30,840. AWARD WAS MADE TO MOTOQUIP ON SEPTEMBER 21, 1966, DELIVERIES UNDER THE CONTRACT WERE COMPLETED JANUARY 9, 1967, AND FINAL PAYMENT WAS MADE FEBRUARY 8, 1967.

YOUR PROTEST QUESTIONS MOTOQUIP'S RESPONSIBILITY AS WELL AS THE RESPONSIVENESS OF ITS PROPOSAL, IT BEING YOUR CONTENTION THAT FAILURE TO FURNISH WITH THE PROPOSAL THE INFORMATION CALLED FOR BY GENERAL PROVISION 39 OF THE RFP RENDERED THE PROPOSAL NONRESPONSIVE, AND ALSO MADE IT IMPOSSIBLE FOR THE CONTRACTING OFFICER TO MAKE A DETERMINATION OF RESPONSIBILITY. GENERAL PROVISION 39 WAS INCLUDED PURSUANT TO ASPR 1-1208 (D) AND READS AS FOLLOWS:

"/A) IN THE EVENT THE BID OR PROPOSAL IS BASED ON FURNISHING ITEMS OR COMPONENTS WHICH ARE FORMER GOVERNMENT SURPLUS PROPERTY OR RESIDUAL INVENTORY RESULTING FROM TERMINATED GOVERNMENT CONTRACTS, A COMPLETE DESCRIPTION OF THE ITEMS OR COMPONENTS, QUANTITY TO BE USED, NAME OF GOVERNMENT AGENCY FROM WHICH ACQUIRED, AND DATE OF ACQUISITION SHALL BE SET FORTH ON A SEPARATE SHEET TO BE ATTACHED TO BID OR PROPOSAL. NOTWITHSTANDING ANY INFORMATION PROVIDED IN ACCORDANCE WITH THIS PROVISION, ITEMS FURNISHED BY THE CONTRACTOR MUST COMPLY IN ALL RESPECTS WITH THE SPECIFICATIONS CONTAINED HEREIN.

"/B) EXCEPT AS DISCLOSED BY THE CONTRACTOR IN (A) ABOVE, NO PROPERTY OF THE TYPE DESCRIBED HEREIN SHALL BE FURNISHED UNDER THIS CONTRACT UNLESS APPROVED IN WRITING BY THE CONTRACTING OFFICER.'

IN SUBMITTING ITS PROPOSAL, MOTOQUIP FAILED TO STATE THAT IT WAS BASED ON FURNISHING FORMER GOVERNMENT SURPLUS PROPERTY. HOWEVER, AS ACKNOWLEDGED IN YOUR LETTER OF NOVEMBER 7, 1966, IT WAS APPARENT FROM THE PRICES QUOTED, AS WELL AS OTHER CIRCUMSTANCES MENTIONED BELOW, THAT THE PROPOSAL WAS BASED ON FURNISHING SURPLUS DIFFERENTIALS AND THE GOVERNMENT NEGOTIATOR, MR. A. M. PARZIALE, CORRECTLY SO DEDUCED. IN ORDER TO AVOID ANY MISUNDERSTANDING, HE CONTACTED THE PARTY WHO SIGNED MOTOQUIP'S PROPOSAL AND VERIFIED THAT IT WAS BASED ON FURNISHING FORMER GOVERNMENT SURPLUS. FROM INFORMATION AVAILABLE TO THE PROCURING AGENCY, IT APPEARED THAT THE ONLY POSSIBLE SOURCE OF DIFFERENTIALS WHICH WOULD NOT BE FORMER GOVERNMENT SURPLUS WAS ROCKWELL-STANDARD CORP., WHICH WAS SOLICITED BUT RESPONDED THAT IT WAS UNABLE TO QUOTE.

THE RECORD INDICATES THAT THESE DIFFERENTIALS WERE FOR USE IN GOVERNMENT VEHICLES MANUFACTURED ABOUT 1940, AND THE PREAWARD SURVEY STATES THAT THE DIFFERENTIALS AVAILABLE WERE MOST LIKELY ASSEMBLED SOMETIME IN 1943. STATED ABOVE, THE ONLY KNOWN POSSIBLE SOURCE OF NEW DIFFERENTIALS WAS ROCKWELL-STANDARD, THE ORIGINAL MANUFACTURER, WHICH WAS UNABLE TO QUOTE ON THEM, AND IT IS REPORTED THAT THE ESTIMATE OF COST STATED IN THE REQUISITION OR PROCUREMENT REQUEST WAS BASED ON A PREVIOUS PURCHASE OF SURPLUS ARTICLES. IT THUS IS CLEAR THAT THE GOVERNMENT WAS ON NOTICE OF THE FACT THAT ANY DIFFERENTIALS FURNISHED WOULD PROBABLY BE GOVERNMENT SURPLUS. IN THE CIRCUMSTANCES, THE CONCLUSION SEEMS JUSTIFIED THAT FAILURE TO FURNISH WITH THE PROPOSAL THE INFORMATION CALLED FOR BY GENERAL PROVISION 39 WAS NOT AN ADEQUATE GROUND FOR REFUSAL TO CONSIDER THE PROPOSAL, WHEN THE INFORMATION WAS FURNISHED IN THE COURSE OF PREAWARD NEGOTIATIONS AND INVESTIGATION. EVEN IF THE PROPOSAL AS SUBMITTED SHOULD BE REGARDED AS NONRESPONSIVE, WE ARE AWARE OF NO LAW OR REGULATION PROHIBITING MODIFICATION OF A PROPOSAL DURING NEGOTIATION.

WE BELIEVE THAT THE ACCEPTANCE OF MOTOQUIP'S PROPOSAL, AS ORIGINALLY SUBMITTED, WOULD HAVE OBLIGATED THE OFFEROR TO FURNISH DIFFERENTIALS EXACTLY AS DESCRIBED IN THE RFP. WHETHER THE FAILURE TO STATE THAT THE DIFFERENTIALS OFFERED WOULD BE FORMER GOVERNMENT SURPLUS WOULD HAVE OBLIGATED IT TO FURNISH NEW ITEMS MAY BE DEBATABLE, BUT IT DID NOT MAKE THE PROPOSAL NONRESPONSIVE.

WITH REFERENCE TO YOUR STATEMENT THAT THE REQUIRED INFORMATION WAS NOT FURNISHED AT ANY TIME PRIOR TO AWARD, YOUR ATTENTION IS AGAIN INVITED TO MOTOQUIP'S LETTER OF AUGUST 19, 1966, WHICH ADVISES THAT THE DIFFERENTIALS TO BE FURNISHED WILL BE UNUSED GOVERNMENT SURPLUS AND WERE PURCHASED FROM A SOURCE OTHER THAN THE FEDERAL GOVERNMENT. THIS WAS SUPPORTED BY A WRITTEN QUOTATION FROM MORRIS BROS., OFFERING TO FURNISH THE 24 DIFFERENTIALS AT A UNIT PRICE OF $995, WHICH AMOUNT MADE IT EVEN CLEARER THAT THE ITEMS WOULD BE GOVERNMENT SURPLUS. SINCE MOTOQUIP WAS NOT ACQUIRING THE ITEMS DIRECTLY FROM THE GOVERNMENT, IT DID NOT FURNISH INFORMATION AS TO THE DATE AND SOURCE OF ACQUISITION FROM THE GOVERNMENT, AND NO FURTHER INFORMATION WAS REQUESTED. SINCE MOTT HAVEN ALSO FAILED TO FURNISH THIS INFORMATION WITH RESPECT TO THE ARTICLES IT WAS OFFERING, WE FIND NOTHING PREJUDICIAL TO IT IN THE GOVERNMENT'S FAILURE TO REQUIRE ADDITIONAL INFORMATION FROM MOTOQUIP.

WE ARE UNABLE TO AGREE WITH YOUR CONTENTION THAT THE INFORMATION CALLED FOR BY GENERAL PROVISION 39 IS NECESSARY FOR A DETERMINATION OF RESPONSIBILITY OR THAT THE LANGUAGE NECESSARILY IMPLIES THAT ALL FORMER GOVERNMENT SURPLUS PROPERTY WILL BE AVAILABLE FOR INSPECTION PRIOR TO AWARD. YOU CONTEND THAT SAID INFORMATION IS NECESSARY TO ENABLE THE CONTRACTING OFFICER TO DETERMINE WHETHER THE OFFEROR HAS THE REQUISITE "COMPETENCE" TO DELIVER ACCEPTABLE ITEMS, ,COMPETENCE" AS USED BY YOU HAVING REFERENCE TO WHETHER THE OFFEROR HAS THE ITEMS IN HAND OR AN OPTION TO BUY SAME.

IN THE COURSE OF THE PREAWARD SURVEYS, FOUR ASSEMBLED UNITS AND ONE PARTIALLY DISASSEMBLED UNIT WERE VISUALLY INSPECTED AND FOUND TO BE UNUSED AND IN A GOOD STATE OF PRESERVATION. MOTOQUIP'S PERSONNEL AND FACILITIES WERE INVESTIGATED AND FOUND SATISFACTORY, AND ITS RECORD ON PRIOR GOVERNMENT CONTRACTS WAS FOUND TO BE GOOD. IN ADDITION, STATEMENTS WERE OBTAINED FROM MOTOQUIP'S SUPPLIER INDICATING THAT THE DIFFERENTIALS WERE AVAILABLE TO THE GOVERNMENT WITHIN THE CONTRACT SCHEDULE. ON THE BASIS OF THESE REPORTS THE CONTRACTING OFFICER MADE THE NECESSARY AFFIRMATIVE FINDING OF RESPONSIBILITY AND ACCEPTED THE MOTOQUIP PROPOSAL.

WE ARE NOT AWARE OF ANY REQUIREMENT THAT AN OFFEROR OF PROPERTY TO THE GOVERNMENT, SURPLUS OR OTHERWISE, MUST HAVE IT IN HIS POSSESSION OR AVAILABLE FOR INSPECTION PRIOR TO AWARD. SUBMISSION OF AN OFFER WITHOUT ANY ARRANGEMENTS OR ABILITY TO PERFORM IT MIGHT BE AN INDICATION OF LACK OF RESPONSIBILITY, BUT IT IS FOR THE CONTRACTING OFFICER TO DECIDE, IN THE EXERCISE OF HIS SOUND DISCRETION, WHETHER A PROSPECTIVE CONTRACTOR MEETS THE REQUIREMENT OF RESPONSIBILITY.

AS TO YOUR STATEMENT THAT THE NEW YORK PROCUREMENT DETACHMENT (NYPD) AND ALL OTHER GOVERNMENT PROCUREMENT AND INSPECTION OFFICES IN THE PAST HAVE REQUIRED MOTT HAVEN TO PRODUCE ALL UNITS FOR PREAWARD SURVEY INSPECTION WHEN BIDS WERE BASED ON THE FURNISHING OF FORMER GOVERNMENT SURPLUS PROPERTY, WE HAVE BEEN ADVISED BY THE ARMY MATERIAL COMMAND THAT, WITH REFERENCE TO NYPD, SUCH IS NOT THE CASE. EVEN IF THIS PRACTICE HAD BEEN FOLLOWED, WE DO NOT BELIEVE THAT IT SHOULD BE CONSIDERED AS HAVING BECOME NORMAL AND CUSTOMARY IN THE TRADE, OR THAT IT COULD CREATE ANY OBLIGATION ON ALL CONTRACTING OFFICERS TO APPLY THE SAME STANDARD AS A NECESSARY CRITERION OF RESPONSIBILITY.

SINCE THE DETERMINATION OF RESPONSIBILITY IS WITHIN THE PROPER AUTHORITY OF THE CONTRACTING AGENCY WE DO NOT UNDERTAKE TO QUESTION SUCH A DETERMINATION UNLESS IT APPEARS NOT TO HAVE BEEN MADE IN GOOD FAITH OR ON SUBSTANTIAL GROUNDS. IN THIS CASE WE FIND NO BASIS TO OBJECT TO THE CONTRACTING OFFICER'S FINDING.

YOU HAVE ALSO ALLEGED THAT THE ARMY IMPROPERLY NEGOTIATED THIS PROCUREMENT INSTEAD OF UTILIZING THE REQUIRED PROCEDURE OF FORMAL ADVERTISING. IT IS YOUR CONTENTION THAT THE AVAILABILITY OF THE PRIOR MANUFACTURER'S NAME AND PART NUMBER IS SUFFICIENT DATA FOR NYPD TO SOLICIT BIDS ON A "BRAND NAME OR EQUAL" BASIS, OR THAT AN ADEQUATELY DETAILED DESCRIPTION OF THE DIFFERENTIAL COULD HAVE BEEN PREPARED FROM MANUFACTURING DRAWINGS IN THE POSSESSION OF THE ARMY TANK AUTOMOTIVE CENTER (ATAC), WARREN, MICHIGAN. YOU SUBMIT FURTHER THAT THE DETERMINATION AND FINDINGS WHICH AUTHORIZED NEGOTIATION OF THE PROCUREMENT DOES NOT CONTAIN ANY FACTS OR INFORMATION WHICH SUPPORT THE ARMY CONCLUSION THAT IT WAS IMPOSSIBLE TO DRAFT ADEQUATE SPECIFICATIONS OR A DETAILED DESCRIPTION OF THE REQUIRED ITEM.

THE "DETERMINATION AND FINDINGS" AUTHORIZING NEGOTIATION OF THIS PROCUREMENT WAS DATED JULY 5, 1966, AND WAS MADE PURSUANT TO 10 U.S.C. 2304 (A) (10) AND ASPR 3-210.2 (XIII), WHICH PROVIDE FOR NEGOTIATION OF A CONTRACT IF FOR PROPERTY "FOR WHICH IT IS IMPRACTICABLE TO SECURE COMPETITION," ONE ILLUSTRATIVE CIRCUMSTANCE OF IMPRACTICABILITY BEING A CASE WHERE IT IS IMPOSSIBLE TO DRAFT, FOR A SOLICITATION OF BIDS, ADEQUATE SPECIFICATIONS OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED SUPPLIES. THE DECISION OF THE CONTRACTING OFFICER WAS BASED ON INFORMATION FURNISHED BY ATAC TO THE EFFECT THAT ENGINEERING SUPPORT COULD NOT BE FURNISHED, SINCE THE MASTER FILES AT ATAC HAD NO RECORD OF DRAWINGS FOR THE SUBJECT ITEM, AND THAT IT WAS THEREFORE IMPOSSIBLE TO DRAFT ADEQUATE SPECIFICATIONS OR A DETAILED DESCRIPTION OF THE REQUIRED ITEM WITHIN THE ALLOTTED TIME. THIS WAS THE ONLY INFORMATION AVAILABLE TO THE CONTRACTING OFFICER AND NO INFORMATION OR EVIDENCE HAS BEEN SUBMITTED TO ESTABLISH THAT SUCH DRAWINGS WERE IN THE POSSESSION OF ATAC. IN ANY EVENT, THE FINDING UPON WHICH THE DETERMINATION TO NEGOTIATE WAS BASED WAS MADE FINAL BY 10 U.S.C. 2310, AND EVEN IF WE SHOULD CONCLUDE THAT THE FINDING DID NOT SUPPORT THE DECISION TO NEGOTIATE WE WOULD NOT, IN VIEW OF THE FACT THAT THE ARTICLES HAVE BEEN DELIVERED AND PAID FOR, TAKE ANY ACTION WITH RESPECT TO THE CONTRACT.

FOR THE REASONS STATED YOUR PROTEST IS DENIED. HOWEVER, SINCE THE FINDINGS AND DETERMINATION TO NEGOTIATE INDICATE THAT THE POSSIBILITY OF ADVERTISING UNDER A "BRAND NAME OR EQUAL" SPECIFICATION WAS NOT GIVEN PROPER CONSIDERATION, WE ARE SUGGESTING TO THE SECRETARY OF THE ARMY THAT IN FUTURE SIMILAR PROCUREMENTS SUCH PROCEDURE SHOULD BE CONSIDERED.