B-160549, MAR. 30, 1967

B-160549: Mar 30, 1967

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TO KELLETT AIRCRAFT CORPORATION: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF CONTRACTS TO CESSNA AIRCRAFT CORPORATION AND AERONCA. THESE TWO CONTRACTS WERE AWARDED ON DECEMBER 15. ALTHOUGH YOUR TELEGRAM OF PROTEST WAS RECEIVED ON DECEMBER 10. AFTER DETERMINING THAT DELIVERIES WOULD BE UNDULY DELAYED IF AWARD WAS NOT MADE BY DECEMBER 15. THE REQUEST FOR QUOTATIONS WAS ISSUED ON NOVEMBER 11 WITH A CLOSING DATE OF NOVEMBER 25. HAS BEEN APPROVED BY THE JOINT CHIEFS OF STAFF AND IS EXPECTED TO BE APPLICABLE IN THE NEAR FUTURE. 420 WAS INCREASED ON DECEMBER 8 TO A TOTAL QUANTITY OF 6. YOUR PROTEST IS BASED ON THE CONTENTION THAT YOU WERE UNFAIRLY DENIED AN OPPORTUNITY TO SUBMIT A PROPOSAL FOR THE SUBJECT PROCUREMENT EVEN THOUGH THE PROCURING ACTIVITY WAS AWARE OF YOUR INTEREST IN SO DOING.

B-160549, MAR. 30, 1967

TO KELLETT AIRCRAFT CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF CONTRACTS TO CESSNA AIRCRAFT CORPORATION AND AERONCA, INCORPORATED, BY THE UNITED STATES ARMY MUNITIONS COMMAND, PICATINNY ARSENAL, DOVER, NEW JERSEY, FOR XM-3 ANTI-PERSONNEL MINE DISPENSERS.

THESE TWO CONTRACTS WERE AWARDED ON DECEMBER 15, 1966, AFTER RECEIPT OF OFFERS SOLICITED ONLY FROM CESSNA AND AERONCA. ALTHOUGH YOUR TELEGRAM OF PROTEST WAS RECEIVED ON DECEMBER 10, THE CONTRACTING OFFICER PROCEEDED WITH THE AWARD AS AUTHORIZED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-407.9 (B) (3) (II), AFTER DETERMINING THAT DELIVERIES WOULD BE UNDULY DELAYED IF AWARD WAS NOT MADE BY DECEMBER 15.

THE REQUEST FOR QUOTATIONS WAS ISSUED ON NOVEMBER 11 WITH A CLOSING DATE OF NOVEMBER 25, AND CALLED FOR DELIVERIES TO BEGIN IN MARCH 1967 AND TO BE COMPLETED IN FEBRUARY 1968. THE CONTRACTS PROVIDE FOR DELIVERIES TO COMMENCE IN JUNE RATHER THAN MARCH AS THE ANTICIPATED MATERIAL PRIORITY DX RATING HAD NOT BEEN ASSIGNED AT THE TIME OF AWARD, BUT HAS BEEN APPROVED BY THE JOINT CHIEFS OF STAFF AND IS EXPECTED TO BE APPLICABLE IN THE NEAR FUTURE. THE ORIGINAL TOTAL QUANTITY OF 2,420 WAS INCREASED ON DECEMBER 8 TO A TOTAL QUANTITY OF 6,856, EACH CONTRACTOR RECEIVING AWARD FOR HALF OF THIS AMOUNT. CESSNA'S CONTRACT CALLS FOR A UNIT PRICE OF $705.91 FOR A TOTAL OF $854,151.10, AND AERONCA'S CONTRACT CALLS FOR A UNIT PRICE OF $877.57 FOR A TOTAL OF $1,061,859,70.

YOUR PROTEST IS BASED ON THE CONTENTION THAT YOU WERE UNFAIRLY DENIED AN OPPORTUNITY TO SUBMIT A PROPOSAL FOR THE SUBJECT PROCUREMENT EVEN THOUGH THE PROCURING ACTIVITY WAS AWARE OF YOUR INTEREST IN SO DOING. IN THIS CONNECTION, YOU POINT OUT THAT IN JULY OR AUGUST OF 1966 YOU WERE FURNISHED A SET OF PRINTS ON THE DISPENSER BY THE PROJECT MANAGER'S OFFICE AT PICATINNY TO DETERMINE WHETHER IT COULD BE PRODUCED ECONOMICALLY FOR THE GOVERNMENT; THAT ON OCTOBER 4 YOU HAD A TELEPHONE CONVERSATION WITH JAMES BRONSON OF THE PROCURING ACTIVITY AT JOLIET, ILLINOIS, DURING WHICH YOU REQUESTED AN OPPORTUNITY TO SUBMIT A PROPOSAL; THAT ON OCTOBER 18 YOU SUBMITTED AN UNSOLICITED PROPOSAL WHICH WAS IGNORED; THAT BY LETTERS DATED NOVEMBER 10 TO PICATINNY AND JOLIET YOU REQUESTED CONSIDERATION IN THE INTENDED PROCUREMENT OF THE DISPENSERS, AND CITED YOUR EXPERIENCE WITH THE XM-47 SYSTEM AS AN INDICATION OF YOUR CAPABILITIES, AND THAT ON DECEMBER 9 IN A TELEPHONE CONVERSATION WITH MR. BRONSON YOU APPRISED HIM OF YOUR UNSOLICITED PROPOSAL OF OCTOBER 18, WHICH SHOULD HAVE GIVEN HIM SUFFICIENT TIME TO LOCATE IT BEFORE THE AWARD. YOU HAVE ALSO REVIEWED YOUR EXPERIENCE WITH OTHER PHASES OF THE XM-47 SYSTEMS, OF WHICH THE XM-3 DISPENSER IS A PART, TO ESTABLISH YOUR CONTENTION THAT YOU SHOULD HAVE BEEN CONSIDERED CAPABLE OF HANDLING AT LEAST PART OF THIS PROCUREMENT WITHIN THE TIME REQUIRED.

THE CONTRACTING OFFICER REPORTS THAT BECAUSE PROCUREMENT OF THE DISPENSERS WAS ASSIGNED AN ISSUE PRIORITY DESIGNATOR 2, INDICATING AN URGENT NEED, THE DECISION WAS MADE TO SOLICIT PROPOSALS ON A NONCOMPETITIVE BASIS WITH A CLOSING DATE OF NOVEMBER 25 AND A TARGET DATE FOR AWARD OF DECEMBER 15 IN ORDER TO ASSURE COMMENCEMENT OF DELIVERIES IN MARCH AS REQUIRED. ALSO, THE DECISION WAS MADE TO LIMIT SOLICITATIONS TO CESSNA AND AERONCA, PRIOR PRODUCERS OF THE DISPENSERS, AS IT WAS FELT THAT TIMELY DELIVERY WOULD BE JEOPARDIZED BY A NEW PRODUCER OF THE ITEM. THE EXISTENCE OF THIS RISK WAS BASED ON KNOWLEDGE OF THE DIFFICULTIES EXPERIENCED BY BOTH CESSNA AND AERONCA IN MEETING DELIVERY SCHEDULES IN THEIR PRODUCTION EFFORTS. THE CONTRACTING OFFICER STATES THAT YOUR LETTER OF NOVEMBER 10, WHICH WAS RECEIVED ON NOVEMBER 15 OR FOUR DAYS AFTER THE REQUEST FOR PROPOSALS WENT OUT, WAS THE FIRST INDICATION THE PROCURING ACTIVITY HAD OF YOUR INTEREST IN THE PROCUREMENT. BECAUSE OF THE DECISION ALREADY MADE TO LIMIT SOLICITATIONS TO PRIOR PRODUCERS, NO ACTION WAS TAKEN TO SOLICIT YOU ON THE SUBJECT PROCUREMENT. HOWEVER, WE ARE ADVISED THAT YOU WERE PLACED ON THE BIDDERS LIST FOR FUTURE PROCUREMENTS OF THE DISPENSER AND, AS A MATTER OF FACT, YOU HAVE ADVISED US THAT YOU HAVE NOW BEEN ASKED TO BID ON A NEW REQUIREMENT.

THE ADMINISTRATIVE AGENCY DENIES ANY KNOWLEDGE OF YOUR INTEREST IN PRODUCING XM-3 DISPENSERS UNTIL RECEIPT OF YOUR LETTER OF NOVEMBER 10. THEY HAVE MADE NO RESPONSE TO YOUR STATEMENT CONCERNING ACQUISITION OF THE DRAWINGS IN JULY OR AUGUST. WITH REGARD TO YOUR CONVERSATION OF OCTOBER 4, 1966, WITH MR. BRONSON, HE STATES THAT HE DOES NOT RECALL THE SPECIFIC CONVERSATION BUT ACKNOWLEDGES THAT HE RECEIVES MANY CALLS FROM PEOPLE CONCERNING VARIOUS PROCUREMENTS. HE STATES THAT IN THE NORMAL COURSE OF HANDLING SUCH CALLS, HE ADVISES CALLERS TO SUBMIT A LETTER REQUESTING THAT THEIR NAME BE PUT ON THE BIDDERS LIST. HOWEVER, IF THE PROCUREMENT IS "ON THE STREET" HE ACTS ON THE TELEPHONE REQUEST IF THE CIRCUMSTANCES PERMIT. WITH REGARD TO YOUR UNSOLICITED PROPOSAL OF OCTOBER 18, 1966, BOTH THE OFFICES AT PICATINNY AND JOLIET DENY ANY KNOWLEDGE OF IT. ALTHOUGH IT IS UNFORTUNATE THAT THERE IS AN AREA OF DISAGREEMENT ON SOME OF THE FACTS WHICH OUR OFFICE IS UNABLE TO RESOLVE, WE DO NOT BELIEVE THIS AFFECTS THE VALIDITY OF THE AWARDS.

AS STATED ABOVE, THE CONTRACTING OFFICER'S REASON FOR NEGOTIATING THESE CONTRACTS RATHER THAN EMPLOYING COMPETITIVE BIDDING PROCEDURES WAS THE URGENCY OF THE REQUIREMENT. THE AUTHORITY CITED FOR AWARD OF THE CONTRACTS IS 10 U.S.C. 2304 (A) (2), WHICH AUTHORIZES NEGOTIATION OF CONTRACTS FOR THE PURCHASE OF SUPPLIES WHERE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. ASPR 3-202.2 (VI), IMPLEMENTING THE ABOVE STATUTORY AUTHORITY, PROVIDES THAT ONE CIRCUMSTANCE JUSTIFYING NEGOTIATION IS WHERE AS HERE, THE PROCUREMENT HAS BEEN ASSIGNED AN ISSUE PRIORITY DESIGNATOR 2 UNDER THE UNIFORM MATERIAL MOVEMENT AND ISSUE PRIORITY SYSTEM. HOWEVER, 10 U.S.C. 2304 (G) AND ASPR 3-202.2 REQUIRE THAT EVEN WHERE AUTHORITY EXISTS TO NEGOTIATE, PROPOSALS SHOULD BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES TO BE PROCURED.

IT HAS BEEN OUR POSITION THAT THE "PUBLIC EXIGENCY" JUSTIFICATION FOR NEGOTIATION CLOTHES THE CONTRACTING OFFICER WITH A CONSIDERABLE DEGREE OF DISCRETION IN DETERMINING THE EXTENT OF NEGOTIATION. UNLESS THERE IS EVIDENCE OF ABUSE OF THE DISCRETION PERMITTED, OUR OFFICE MAY NOT PROPERLY OBJECT TO AN ADMINISTRATIVE DECISION TO LIMIT NEGOTIATIONS TO SELECTED SOURCES. 44 COMP. GEN. 590. OF COURSE, OUR OFFICE WOULD NOT COUNTENANCE UTILIZATION OF THIS PROCEDURE TO DISCRIMINATE AGAINST A FIRM BY DENYING IT AN OPPORTUNITY TO COMPETE FOR A PROCUREMENT. HOWEVER, IN THE INSTANT CASE, WE DO NOT BELIEVE THE EVIDENCE WOULD JUSTIFY OUR CONCLUDING THAT THE CONTRACTING OFFICER WAS MOTIVATED BY OTHER THAN A BONA FIDE BELIEF, WITH A REASONABLE BASIS THEREFOR, THAT THE BEST ASSURANCE OF TIMELY DELIVERY WOULD BE WITH A PRIOR PRODUCER. SINCE HIS DECISION TO LIMIT NEGOTIATIONS TO CESSNA AND AERONCA APPEARS TO HAVE BEEN BASED ON A BONA FIDE BELIEF THAT THEY WERE THE ONLY QUALIFIED SOURCES CAPABLE OF MEETING THE EXIGENCY OF THE SITUATION, WE MUST CONCLUDE THAT THERE WAS A PROPER EXERCISE OF DISCRETION AND THE AWARDS ARE VALID UNDER THE AUTHORITY CITED.