B-160899, APR. 10, 1967

B-160899: Apr 10, 1967

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INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 17. YOUR FIRM WAS THE APPARENT LOW BIDDER FOR 1. SHORTLY BEFORE THE SUBJECT PROCUREMENT WAS INITIATED THE GOVERNMENT HAD EXHAUSTED THE SOURCES OF 2 PLY MATERIAL. ON WHICH YOU WERE STILL ENGAGED. WHICH IS THE SUBJECT OF THIS PROTEST. HE MADE A WRITTEN DETERMINATION THAT THE CLOTH SPECIFICATION INCORPORATED INTO THIS IFB WAS INADEQUATE AND A REVISION WAS REQUIRED IN ORDER TO REFLECT THE CHANGED SITUATION. WOULD HAVE A DIRECT BEARING ON BID PRICES BECAUSE OF THE PRODUCTION RATE DIFFERENCES OF THE TWO FABRICS. YOUR PROTEST IS MADE ON THE GROUNDS THAT THE CANCELLATION WAS EFFECTED WITHOUT PRIOR NOTICE. THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS ENDANGERED.

B-160899, APR. 10, 1967

TO BANCROFT INDUSTRIES, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 17, 1967, AND CONFIRMING LETTER OF FEBRUARY 21, 1967, PROTESTING THE CANCELLATION AFTER BID OPENING OF INVITATION FOR BIDS (IFB) NO. DSA100-67-B-1041, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), PHILADELPHIA, PENNSYLVANIA, ON DECEMBER 5, 1966.

THE INVITATION CALLED FOR BIDS, TO BE OPENED DECEMBER 27, 1966, FOR A QUANTITY OF HOT WEATHER FIELD CAPS IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-C-43225. YOUR FIRM WAS THE APPARENT LOW BIDDER FOR 1,228,320 UNITS AT A PRICE OF $1.105 EACH, LESS DISCOUNT. THE INVITATION PROVIDED THAT THE GOVERNMENT WOULD FURNISH THE BASIC CLOTH FOR USE IN MANUFACTURING THE CAPS. THE SPECIFICATIONS FOR THE CLOTH CALLED FOR 2 PLY YARN; HOWEVER, SHORTLY BEFORE THE SUBJECT PROCUREMENT WAS INITIATED THE GOVERNMENT HAD EXHAUSTED THE SOURCES OF 2 PLY MATERIAL, AND A QUANTITY OF CLOTH MANUFACTURED FROM SINGLE PLY YARN HAD BEEN PURCHASED AND FURNISHED TO YOU UNDER A PRIOR CONTRACT, ON WHICH YOU WERE STILL ENGAGED. THE CANCELED INVITATION FOR HOT WEATHER CAPS, WHICH IS THE SUBJECT OF THIS PROTEST, FAILED TO TAKE ACCOUNT OF THE IMPOSSIBILITY OF OBTAINING THE SPECIFICATION MATERIAL THE GOVERNMENT WOULD BE OBLIGATED TO FURNISH.

WHEN THE CONTRACTING OFFICER BECAME AWARE, AFTER BID OPENING, THAT THE MATERIAL ON HAND DID NOT COMPLY WITH INVITATION SPECIFICATIONS, HE MADE A WRITTEN DETERMINATION THAT THE CLOTH SPECIFICATION INCORPORATED INTO THIS IFB WAS INADEQUATE AND A REVISION WAS REQUIRED IN ORDER TO REFLECT THE CHANGED SITUATION. HE ALSO DETERMINED THAT THE SPECIFICATION, AS REVISED, WOULD HAVE A DIRECT BEARING ON BID PRICES BECAUSE OF THE PRODUCTION RATE DIFFERENCES OF THE TWO FABRICS, AND IN VIEW THEREOF ON FEBRUARY 9, 1967, HE CANCELLED THE INVITATION IN ACCORDANCE WITH THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 404.1 (B) (I) (II).

YOUR PROTEST IS MADE ON THE GROUNDS THAT THE CANCELLATION WAS EFFECTED WITHOUT PRIOR NOTICE, THAT DISCLOSURE OF YOUR LOW BID GIVES AN ADVANTAGE TO YOUR COMPETITORS, AND THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS ENDANGERED. THEREFORE, YOU REQUEST THAT THE CONTRACTING OFFICER BE DIRECTED TO AWARD A CONTRACT TO YOUR FIRM UNDER THE ORIGINAL IRREGULAR INVITATION AND TO NEGOTIATE AN EQUITABLE PRICE ADJUSTMENT.

CONCERNING YOUR OBJECTION AGAINST THE FAILURE TO PROVIDE BIDDERS WITH PRIOR NOTICE OF THE CANCELLATION, WE KNOW OF NO STATUTORY OR REGULATORY REQUIREMENT FOR SUCH NOTICE. WE NOTE HOWEVER, THAT ASPR 2 404.3, REQUIRES THE CONTRACTING OFFICER TO NOTIFY EACH BIDDER THAT ALL BIDS HAVE BEEN REJECTED, STATING THE REASON FOR SUCH ACTION. THE RECORD CLEARLY INDICATES THAT ALL BIDDERS IN THIS PROCUREMENT WERE SO ADVISED BY NIGHT LETTER DATED FEBRUARY 9, 1967.

CONCERNING YOUR OBJECTION TO THE CANCELLATION ON THE GROUNDS THAT YOUR BID HAS BEEN EXPOSED AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS ENDANGERED, IT APPEARS FROM THE RECORD THAT THE REASON FOR CANCELLING THE INVITATION WAS FULLY KNOWN TO YOU BY REASON OF YOUR PRIOR CONTRACT, DSA100-3717, UNDER WHICH YOU WERE FURNISHED SINGLE PLY MATERIAL BECAUSE THE GOVERNMENT'S SUPPLY OF 2 PLY MATERIAL BECAME EXHAUSTED. THE EFFECTS OF SUBSTITUTING THE NONSPECIFICATION MATERIAL ARE REPORTED AS FOLLOWS:

"BY LETTER DATED 25 JANUARY 1967 (ENCL 6), BANCROFT COMPLAINED VEHEMENTLY ABOUT THE SINGLE PLY GOVERNMENT MATERIAL. BANCROFT STATED THAT THE MATERIAL WAS LACKING IN BODY OR FINISH; HAD ENTIRELY TOO MUCH STRETCH; WOULD NOT HOLD ITS SHAPE; AND WAS PUCKERING. BANCROFT STATED THAT THE MATERIAL WAS SLOWING DOWN PRODUCTION TO A GREAT DEGREE AND WAS OF SUCH A NATURE AS TO HAMPER EMPLOYEES HANDLING THE CUT PARTS. IN CONCLUSION, BANCROFT STATED THE FOLLOWING:

"IN SUMMARY, IT IS THE OPINION OF THE MANAGEMENT OF BANCROFT INDUSTRIES THAT UNDER NORMAL PRODUCTION CONDITIONS, AN ACCEPTABLE END ITEM CANNOT BE MADE FROM THE 60 INCHES GOVERNMENT FURNISHED PROPERTY.'

ON THE MORNING OF 26 JANUARY 1967, THE THEN CONTRACTING OFFICER, GEORGE ELEVANT, CALLED BERNARD WEINSTEIN, VICE PRESIDENT OF BANCROFT, REGARDING DIFFICULTIES BEING EXPERIENCED WITH THE SINGLE PLY MATERIAL ON CONTRACT DSA-3717. (SEE MEMO FOR RECORD DATED 26 JANUARY 1967 ATTACHED AS ENCL 7). MR. WEINSTEIN INFORMED MR. ELEVANT THAT DIFFICULTIES WITH THE SINGLE PLY GOVERNMENT MATERIAL HAD CAUSED A DECREASE IN PRODUCTION FROM APPROXIMATELY 11,000 UNITS PER DAY TO AS LOW AS 3,400 UNITS PER DAY. MR. WEINSTEIN WAS REQUESTED TO SUBMIT COMPONENT PARTS FOR EVALUATION.

"LATER ON IN THE AFTERNOON, A TWX DATED 26 JANUARY 1967 (ENCL 8) WAS RECEIVED FROM BANCROFT INFORMING THE CONTRACTING OFFICER THAT, BECAUSE OF THE GOVERNMENT FURNISHED MATERIAL, ITS EFFICIENCY HAD DROPPED TO A POINT WHERE IT MUST STOP PRODUCING AND THAT BANCROFT WOULD COMMENCE PRODUCTION WHEN PROBLEMS WERE RESOLVED.

"ON 31 JANUARY 1967, THE THEN CONTRACTING OFFICER VISITED THE BANCROFT PLANT ACCOMPANIED BY PRODUCTION AND TECHNICAL ADVISORS. UPON THEIR RETURN, THEY CONFIRMED THAT THE SINGLE-PLY MATERIAL WAS DIFFICULT TO HANDLE AND RESULTED IN A LOSS OF PRODUCTION EFFICIENCY. THE EXACT LOSS COULD NOT BE READILY ASCERTAINED SINCE IT WAS ALSO PARTIALLY DUE TO THE NORMAL SLOWDOWN EFFECT OF SEWING OPERATORS SWITCHING FROM 2-PLY TO SINGLE- PLY MATERIAL.

"IN ORDER TO PERMIT RESUMPTION OF PRODUCTION AND TO MINIMIZE POTENTIAL CLAIMS, MR. ELEVANT HAD AUTHORIZED BANCROFT TO CHANGE FROM SINGLE-PLY GOVERNMENT FURNISHED MATERIAL (GFM) TO 2-PLY CONTRACTOR FURNISHED MATERIAL (CFM) FOR THE SWEATBAND (WHICH WAS ONE OF THE MORE TROUBLESOME AREAS) AT AN ADDITIONAL COST TO THE GOVERNMENT * * *.

SUBSEQUENT TO THE CANCELLATION OF I/B 1041, THE UNDERSIGNED CONTRACTING OFFICER CONSULTED WITH HIS TECHNICAL, PRODUCTION AND ENGINEERING STAFF IN ORDER TO DETERMINE WHETHER AN ACCEPTABLE CAP COULD BE MANUFACTURED FROM THE SINGLE PLY MATERIAL. AFTER RECEIVING ADVICE, THE UNDERSIGNED CONTRACTING OFFICER DETERMINED THAT THE SINGLE PLY MATERIAL COULD BE USED TO MANUFACTURE THE HOT WEATHER CAP, WITH THE EXCEPTION OF THE SWEATBAND WHICH APPARENTLY IS BEVELLING AFTER FOLDING AND STITCHING, MAKING IT DIFFICULT FOR OPERATORS TO SEW IN THE CAP WITH REASONABLE SPEED.

"WITH THE REISSUANCE OF A NEW INVITATION, THE UNDERSIGNED CONTRACTING OFFICER PROPOSES TO CONDUCT A PRE-BID CONFERENCE IN ACCORDANCE WITH ASPR 2 -207 AND 3-504 TO FULLY INFORM POTENTIAL BIDDERS OF THE PRODUCTION RATE DIFFERENCES OF THE TWO FABRICS. THE NEW INVITATION WILL INCLUDE THE NECESSARY DEVIATION SHOWING THAT THE GFM IS SINGLE PLY. IT WILL ALSO CHANGE THE MATERIAL FOR THE SWEATBAND FROM GFM SINGLE PLY TO CFM 2 PLY. IN MAKING PLANT SURVEYS UNDER THE NEW INVITATION, THE APPROPRIATE DEFENSE CONTRACT ADMINISTRATIVE SERVICES (DCAS) OFFICES WILL BE ALERTED TO THE DIFFERENCES IN PRODUCTION EFFICIENCY BETWEEN THE SINGLE AND THE 2 PLY MATERIAL SO THAT REALISTIC PRODUCTION CAPACITY OF LOW BIDDERS CAN BE DETERMINED.'

IN THESE CIRCUMSTANCES, IT DOES NOT APPEAR THAT PRICES OFFERED FOR PRODUCING THE CAPS FROM 2 PLY MATERIAL AS SPECIFIED IN THE INVITATION, WOULD FURNISH ANY INDICATION AS TO WHAT PRICES MIGHT BE QUOTED FOR CAPS USING THE SINGLE-PLY CLOTH, AND WE THEREFORE SEE NO BASIS FOR CONSIDERING THE EXPOSURE OF YOUR BID AS PREJUDICIAL IN ANY WAY TO YOUR INTERESTS. THE OTHER HAND, TO MAKE AWARD TO YOU ON YOUR BID, KNOWING THAT THE GOVERNMENT COULD NOT COMPLY WITH ITS OBLIGATION AND WOULD HAVE TO NEGOTIATE A CHANGE OF SPECIFICATIONS AS WELL AS OF PRICE, WOULD BE VIOLATIVE OF BASIC PRINCIPLES OF COMPETITIVE BIDDING.

THIS OFFICE HAS RECOGNIZED THAT THE AUTHORITY VESTED IN THE CONTRACTING OFFICER TO REJECT ANY OR ALL BIDS AND READVERTISE IS EXTREMELY BROAD. SEE 39 COMP. GEN. 396, 399. ORDINARILY SUCH ACTION WILL NOT BE QUESTIONED BY THIS OFFICE WHERE THERE IS COMPLIANCE WITH THE REGULATORY REQUIREMENT FOR A "COMPELLING REASON" JUSTIFYING CANCELLATION. SEE ASPR 2-404.1 (A). THE INSTANT CASE, SINCE THE SPECIFICATIONS ORIGINALLY USED COULD NOT BE COMPLIED WITH AND AWARD OF A CONTRACT THEREON WOULD HAVE OBLIGATED THE GOVERNMENT TO AN IMPOSSIBLE UNDERTAKING, NOT ONLY DID COMPELLING REASONS EXIST FOR CANCELLING THE INVITATION BUT NO OTHER COURSE OF ACTION WOULD APPEAR TO HAVE BEEN APPROPRIATE.