B-161895, DEC. 29, 1967

B-161895, DEC. 29, 1967

BIDS - BUY AMERICAN ACT DECISION TO JOHN N. DANIGGELIS ASSOCIATES RE PROTEST TO FOREIGN SOURCE PURCHASE OF UPHOLSTERY MATERIALS BY U.S. ARMY PROCUREMENT CENTER, FRANKFORT, GERMANY. BIDDER WHO OFFERS DOMESTIC ITEMS THAT DID NOT MEET MINIMUM REQUIREMENTS OF PROCUREMENT OF UPHOLSTERY MATERIALS FOR OVERSEAS AND WHO PROTESTS PURCHASE OF MATERIAL FROM FOREIGN SOURCE MUST HAVE PROTEST DENIED SINCE BUY AMERICAN ACT IS NOT APPLICABLE TO PROCUREMENT OF MATERIALS FOR USE OUTSIDE U.S., UNDER ASPR 6- 805.2 (A) (V) FOREIGN END PRODUCT MAY BE PROCURED IF DOMESTIC SUBSTITUTE IS NOT AVAILABLE WITHIN TIME, AND REJECTION OF PROTESTANT'S MATERIAL WAS NOT ARBITRARY OR CAPRICIOUS OR WITHOUT REASONABLE GROUNDS. FURTHER, PROCUREMENT WAS IN ACCORD WITH BALANCE OF PAYMENTS PROGRAM.

TO JOHN N. DANIGGELIS ASSOCIATES:

REFERENCE IS MADE TO A LETTER OF JUNE 21, 1967, ADDRESSED TO MAJOR GENERAL KYSER, WORMS, GERMANY, AND TO SUBSEQUENT COMMUNICATIONS ADDRESSED TO THIS OFFICE, IN CONNECTION WITH YOUR PROTEST OF A FOREIGN SOURCE PURCHASE OF UPHOLSTERY MATERIALS BY THE UNITED STATES ARMY PROCUREMENT CENTER, FRANKFURT, GERMANY, UNDER SOLICITATION NO. DAJA37 67-R-0634. THIS PROTEST WAS INITIATED AND HAS BEEN PURSUED BY MR. JOHN N. DANIGGELIS, JR., HEREINAFTER REFERRED TO ASMR. DANIGGELIS.

EIGHT PROPOSALS WERE SOLICITED BY TELEPHONE ON MAY 24, 1967, TO BE RECEIVED BY 5 P.M., MAY 31, 1967, FOR FURNISHING 29,150 RUNNING METERS OF UPHOLSTERY CLOTH, TYPE III, 130 CENTIMETERS WIDE, IMITATED EPINGLE, TO BE IN ACCORDANCE WITH SPECIFICATION PCF-C-2019A, DATED MARCH 12, 1965, CLASS III, FOR DELIVERY NOT LATER THAN JUNE 15, 1967, TO THREE DESIGNATED DESTINATIONS IN THE FEDERAL REPUBLIC OF GERMANY. THE ARMY REPORTS THAT, AFTER FOUR ATTEMPTS TO REACH MR. DANIGGELIS BY PHONE, A WIRE MESSAGE WITH FULL PARTICULARS WAS SENT TO YOUR CHICAGO OFFICE ON MAY 26, 1967, AND A COPY OF THE MESSAGE WAS ALSO MAILED TO YOUR KARLSRUHE ADDRESS. THREE FINAL PROPOSALS WERE RECEIVED, AS FOLLOWS:

1. HERBERT REICHEL, TEXTILWERK, OFFERED 22,750 METERS OF SPECIFICATION MATERIAL FROM STOCK AT $1.32 PER METER, AND 6,400 METERS OF A SUBSTITUTE CLOTH AT $1.30 PER METER.

2. YUGO-EXPORT OFFERED TO PRODUCE THE TOTAL QUANTITY IN ACCORDANCE WITH THE SPECIFICATIONS FOR DELIVERY BY SEPTEMBER 10, 1967, AT A PRICE OF $1.325 PER METER.

3. JOHN N. DANIGGELIS ASSOCIATES, BY LETTER OF MAY 31, 1967, OFFERED 8 DIFFERENT STYLES OF CLOTH, 2 AT $2.60 PER METER, 3 AT$2.75, AND 1 EACH AT $3.05, $3.40 AND $3.50, ALL OF WHICH WERE STATED TO BE IN ACCORDANCE WITH MILITARY AND FEDERAL SPECIFICATIONS, AS WELL AS PCF C-2019A. IN A FOLLOW- UP LETTER DATED JUNE 4, 1967, MR. DANIGGELIS STATED THAT A BUSH (BUY UNITED STATES HERE) CONTRACT HAD BEEN NEGOTIATED ON SOME OF THE SAME STYLE NUMBERS SUBMITTED UNDER HIS ORIGINAL PROPOSAL. SHORTLY AFTER RECEIPT OF THIS LETTER THE CONTRACTING OFFICER RECEIVED SAMPLE SWATCHES OF THE $3.05, $3.40, AND $3.50 CLOTH, BUT SAMPLES OF THE $2.60 AND $2.75 CLOTH WERE NOT SUBMITTED.

THE CONTRACTING OFFICER STATES THAT YOUR OFFER WAS NOT CONSIDERED FOR AWARD OF CONTRACT BECAUSE, UPON VISUAL INSPECTION, THE ENGINEERING DIVISION DETERMINED THAT THE SAMPLES OF MATERIAL OFFERED DID NOT MEET MINIMUM REQUIREMENTS. THIS DETERMINATION WAS LATER CONFIRMED BY LABORATORY TESTS AS SET FORTH BELOW. UPON RECEIPT OF ADVICE FROM THE REQUIRING AGENCY THAT THE SUBSTITUTE OFFERED BY REICHEL WAS NOT SUITABLE AND COULD NOT BE ACCEPTED, AN AWARD FOR THE SPECIFICATION MATERIAL WAS MADE TO REICHEL ON JUNE 9, 1967, FOR THE REDUCED QUANTITY OF 22,750 METERS AT $1.32 PER METER, CONTRACT NO. DAJA37-67-C-0788. DELIVERY WAS MADE BY JUNE 15 AND PAYMENTS MADE UNDER THE CONTRACT WERE OFFSET BY SPECIAL BARTER FUNDS MADE AVAILABLE BY THE COMMODITY CREDIT CORPORATION.

YOUR BASIC COMPLAINT APPEARS TO BE THAT THE PURCHASE OF THIS MATERIAL FROM A FOREIGN SOURCE WAS NOT LEGAL IN THAT IT WAS NOT IN ACCORD WITH EXISTING STATUTES AND REGULATIONS AND THAT THE PURCHASE SHOULD HAVE BEEN MADE FROM YOU AS A DOMESTIC CONCERN, REGARDLESS OF PRICE, QUALITY OR ANY OTHER CONSIDERATION. YOU ALSO QUESTION THE TIMING OF THE PROCUREMENT AND CONTEND THAT THE NEED FOR THE MATERIAL WAS KNOWN SUFFICIENTLY IN ADVANCE TO MAKE THE FOREIGN PURCHASE UNNECESSARY. YOU FURTHER ALLEGE THAT THE MATERIAL OFFERED BY YOU MET THE SPECIFICATION AND THAT, FAILING AWARD UNDER YOUR PROPOSAL, THE MATERIAL SHOULD HAVE BEEN PROCURED UNDER YOU BUSH AUTHORIZED PRICE LIST (APL), CONTRACT NO. F61546-67-C-0245, FOR THE PERIOD FROM JUNE 6, 1967, THE DATE OF APPROVAL BY THE DEPARTMENT OF THE AIR FORCE, THROUGH MAY 31, 1968.

THE ARMY REPORTS THAT THE LAST REQUIREMENTS CONTRACT FOR UPHOLSTERY MATERIAL EXECUTED PRIOR TO THE SUBJECT PROCUREMENT WAS AWARDED BY THE FRANKFURT PROCUREMENT CENTER TO YUGO-EXPORT CORPORATION (YUGO GOVERNMENT AGENCY) FOR A 12 MONTH PERIOD ENDING NOVEMBER 15, 1966. SINCE THIS CONTRACT WAS EXPIRING AND IT APPEARED FROM MESSAGE DA782762 OF SEPTEMBER 19, 1966, FROM THE OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY, INSTALLATIONS AND LOGISTICS (/OASA) (IANDL/), TO CGUSACOMZEUR, ORLEANS, FRANCE, THAT CONTINUED OFF-SHORE PURCHASES FROM FOREIGN SOURCES WOULD PROBABLY NOT BE AUTHORIZED, HEADQUARTERS, U.S. ARMY COMMUNICATIONS ZONE (COMZ), BY MESSAGE OF OCTOBER 17, 1966, CONTACTED GENERAL SERVICES ADMINISTRATION (GSA), FEDERAL SUPPLY SERVICE REGION NO. 2, NEW YORK CITY, REQUESTING ADVICE ON LEAD TIME REQUIRED BY GSA TO SUPPLY UPHOLSTERY CLOTH FOR ARMY, EUROPE, REQUIREMENTS. THIS MESSAGE WAS DISPATCHED AFTER CONSULTATION WITH THE DIRECTOR, GSA CUSTOMER SERVICE OFFICE, EUROPE, WHO ESTIMATED THAT IT WOULD REQUIRE 7 TO 8 MONTHS TO ESTABLISH GSA SUPPLY BY CONTRACT. FOLLOWING CONSULTATIONS ON SAMPLES, SPECIFICATIONS, LEAD TIME, ETC., SAMPLES OF AVAILABLE CLOTH WERE FURNISHED BY GSA ON OR ABOUT DECEMBER 10, 966, SELECTIONS WERE MADE, AND THE SAMPLES WERE RETURNED TO THE GSA EUROPEAN REPRESENTATIVE ON OR ABOUT JANUARY 3, 1967. AT THAT TIME THE SCHEDULE FOR SOLICITATION AND OPENING OF BIDS, AWARD, ETC., INDICATED THAT DELIVERIES COULD NOT BE MADE UNTIL THE LATTER PART OF AUGUST.

THE ARMY FURTHER REPORTS THAT ON JANUARY 1, 1967, AS A RESULT OF A REVIEW BY THE FRANKFURT PROCUREMENT CENTER OF CURRENT STOCKS OF UPHOLSTERY MATERIAL DUE IN AND ON HAND, IT WAS LEARNED THAT THREE MAINTENANCE SHOPS HAD LESS THAN 40 DAYS SUPPLY ON HAND. DELIVERIES SCHEDULED FOR ARRIVAL AT OTHER SHOPS WERE RESCHEDULED FOR DELIVERY TO THE THREE SHORT SHOPS, AND MATERIALS ON HAND WERE SHIFTED BETWEEN SHOPTSTO INSURE A CONTINUITY OF OPERATION IN ALL SHOPS. AN OVER-ALL SHORTAGE OF APPROXIMATELY 30,000 METERS EXISTED. BASED ON THIS SHORTAGE AND THE ABOVE INFORMATION THAT IT WOULD PROBABLY REQUIRE 7 TO 8 MONTHS TO ESTABLISH NEW SUPPLY LINES FROM GSA CONTRACT SOURCES, A REQUEST WAS SUBMITTED ON JANUARY 18, 1967, TO THE COMMANDING GENERAL, COMZ, EUROPE, THAT THE FRANKFURT PROCUREMENT CENTER BE GRANTED ONE-TIME AUTHORITY TO EFFECT A PROCUREMENT OF 29,150 METERS OF CLOTH FROM HERBERT REICHEL, TEXTILWERK, A FORMER GOVERNMENT CONTRACTOR. THIS REQUEST WAS FORWARDED BY COMZ TO THE SECRETARY OF THE ARMY, RECOMMENDING APPROVAL, AND WAS APPROVED BY 2ND INDORSEMENT (IND.) OF FEBRUARY 18, 1967,"BY DIRECTION OF THE ASSISTANT SECRETARY OF THE ARMY(INSTALLATIONS AND LOGISTICS)," CITING AS AUTHORITY SECTION 6 805.2 (A) (V) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES AS FOLLOWS: "6-805.2 (A) * * * PROCUREMENTS OF FOREIGN END PRODUCTS * * * FOR USE OUTSIDE THE U.S. MAY BE MADE ONLY IN THE FOLLOWING CASES:

* * * * * * * "/V) NONAVAILABILITY IN THE UNITED STATES: PROCUREMENTS AS TO WHICH IT IS DETERMINED IN ADVANCE BY THE INDIVIDUALS DESIGNATED IN (B) BELOW THAT (1) THE REQUIREMENTS CAN ONLY BE FILLED BY FOREIGN END PRODUCTS OR SERVICES, AND (2) THAT IT IS NOT FEASIBLE TO FOREGO FILLING THE REQUIREMENT OR TO PROVIDE A UNITED STATES SUBSTITUTE FOR IT.' THE INDIVIDUAL DESIGNATED IN ASPR 6-805.2 (B) (1) (A) (I) TO MAKE THE REQUIRED DETERMINATION IS THE "COMMANDING GENERAL, U.S. ARMY, COMMUNICATIONS ZONE, EUROPE.' PURSUANT TO THE ABOVE AND BASED ON SUPPORTING INFORMATION CONTAINED IN 3RD AND 4TH IND. TO THE BASIC COMMUNICATION, MAJOR GENERAL R. C. KYSER MADE A "FINDINGS AND DETERMINATION" DATED APRIL 20, 1967, APPROVING THE FOREIGN PURCHASE OF APPROXIMATELY 30,000 METERS OF UPHOLSTERY CLOTH IN THE ESTIMATED AMOUNT OF $68,000, AND READING AS FOLLOWS:

"FINDINGS AND DETERMINATION

"1. PURSUANT TO PARAGRAPH 6-805.2 (B), (1) (A) (I) OF THE ARMED SERVICES PROCUREMENT REGULATIONS, I HAVE BEEN DESIGNATED APPROVING AUTHORITY FOR PROCUREMENT REQUIREMENTS NOT IN EXCESS OF $1,000,000 WHICH CAN ONLY BE FILLED FROM FOREIGN SOURCES. I FIND THAT IT IS NOT FEASIBLE AT THIS TIME TO FOREGO FILLING A USAREUR REQUIREMENT OR TO PROVIDE A UNITED STATES SUBSTITUTE THEREFOR, IN THE CASE OF PROCUREMENT FOR IMMEDIATE OPERATIONAL REQUIREMENTS FOR SUPPLIES, NAMELY UPHOLSTERY CLOTH, IN THE ESTIMATED AMOUNT OF $68,000.00 FOR WHICH UNITED STATES SOURCES ARE NOT CONSIDERED PRACTICABLE. THIS FINDING IS BASED UPON THE FOLLOWING CONSIDERATIONS:

"A. THE REQUIREMENT FOR UPHOLSTERY CLOTH IS GENERATED, AS A RESULT OF FRELOC WHICH INCREASED THE NEED FOR SUCH CLOTH, AND ALSO AS A RESULT OF THE INABILITY TO ESTABLISH A SOURCE OF SUPPLY IN CONUS WITHIN THE REQUIRED TIME OR TO SECURE ANY US SUBSTITUTE WITHIN THE REQUIRED TIME.

"B. THE REQUIREMENT CANNOT BE FOREGONE BECAUSE OF THE CONTINUED AND INCREASED NEED OF FURNITURE FOR MILITARY AND OTHER PERSONNEL OF USAREUR, AND THE PROVISION OF SUCH CLOTH TO MAKE SUCH FURNITURE USABLE. THE REQUIREMENT IS FIRMLY ESSENTIAL TO MILITARY OPERATIONS.

"C. THE AMOUNT OF CLOTH TO BE PROCURED IS ONLY THE MINIMUM NEEDED UNTIL A NEW SUPPLY LINE IS FIRMLY ESTABLISHED.

"2. BASED ON THE FOREGOING FINDINGS AND CONSIDERATIONS, I HEREBY DETERMINE THAT REQUIREMENTS FOR THESE SUPPLIES IN EUROPE CAN ONLY BE FILLED BY FOREIGN SUPPLIES, AT THIS TIME, AND APPROVE THE PROCUREMENT THEREOF PROVIDED IT IS NOT IN EXCESS OF THE ESTIMATED AMOUNT OF PARAGRAPH 1 ABOVE, AND PROVIDED FURTHER THE PROCUREMENT IS OTHERWISE AUTHORIZED AND FUNDS ARE AVAILABLE THEREFORE.'

THE ABOVE QUANTITY AND ESTIMATED DOLLAR AMOUNT INDICATE THAT A PRICE OF APPROXIMATELY $2.25 A METER WAS ANTICIPATED, AND WHILE IT APPEARS THAT THE "DETERMINATION" WAS AMPLE JUSTIFICATION FOR A SOLE-SOURCE PURCHASE OF THE REQUIRED MATERIAL FROM REICHEL, ADDITIONAL PROPOSALS WERE SOLICITED IN ORDER TO INSURE THAT THE GOVERNMENT MADE THE BEST POSSIBLE DEAL. THIS ACTION HAD THE DESIRED EFFECT SINCE THE INITIAL QUOTATION FROM REICHEL WAS SUBSTNATIALLY HIGHER THAN THE FINAL NEGOTIATED PRICE OF $1.32.

THE BUY AMERICAN ACT, TO WHICH REFERENCE IS MADE BY MR. DANIGGELIS, LIMITS THE ACQUISITION OF ARTICLES, MATERIALS AND SUPPLIES FOR PUBLIC USE TO THOSE WHICH HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES, OR WHICH HAVE BEEN MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM SUCH U.S. MINED OR PRODUCED ITEMS (41 U.S.C. 10A). HOWEVER, THE CITED ACT SPECIFICALLY PROVIDES THAT IT SHALL NOT APPLY WITH RESPECT TO ARTICLES, MATERIALS OR SUPPLIES FOR USE OUTSIDE THE UNITED STATES, AND IT IS THEREFORE NOT APPLICABLE TO THE PROCUREMENT IN QUESTION.

AS TO THE APPLICATION OF ASPR 6-805.2 (A) (V), IT IS BELIEVED THAT A REASONABLE INTERPRETATION THEREOF REQUIRES THE CONCLUSION THAT A FOREIGN END PRODUCT MAY BE PRODUCED IF A SATISFACTORY UNITED STATES SUBSTITUTE CANNOT BE ACQUIRED WITHIN THE NECESSARY TIME FRAME. THE SEQUENCE OF EVENTS RECITED ABOVE DOES NOT, IN OUR OPINION, INDICATE THAT THERE WAS ANY UNDUE DELAY IN APPRAISING THE NEED FOR THE PROMPT INTERIM DELIVERY OF MATERIAL TO KEEP THE UPHOLSTERY SHOPS OPERATING, OR IN EFFECTING THE PROCUREMENT. NOR DOES IT APPEAR THAT IT WAS FEASIBLE TO FOREGO FILLING THE REQUIREMENT OR TO PROVIDE A UNITED STATES SUBSTITUTE SINCE YOUR FIRM WAS APPARENTLY THE ONLY AVAILABLE SOURCE FOR DOMESTIC MATERIAL AND IT WAS FOUND THAT THE MATERIAL OFFERED BY YOU DID NOT MEET THE MINIMUM REQUIREMENTS.

THE SPECIFIC AREAS IN WHICH THE SAMPLES OF YOUR MATERIAL FAILED TO MEET THE SPECIFICATION REQUIREMENTS WERE DETERMINED BY THE CONTRACTING OFFICER TO BE AS FOLLOWS:

"A. THE MATERIAL CONSISTED OF A PLAIN WEAVE INSTEAD OF IMITATION EPINGLE, WHICH IS A MATERIAL COMPOSED OF AN EXTREMELY TIGHT WEAVE WITH LOOPS CONTAINING FILLER THREAD.

"B. THREAD COUNT OF MATERIAL WAS APPROXIMATELY 10 PERCENT OF THE SPECIFICATION REQUIREMENT WHICH CONSTITUTED A FAILURE OF APPROXIMATELY 90 PERCENT.

"C. THE SIZING OF MATERIAL (STIFFENING) EXCEEDED THE ALLOWABLE SPECIFICATION MAXIMUM.

"D. MATERIAL LOOSELY WOVEN. SERVICEABILITY EXTREMELY POOR COMPARED TO THE SPECIFICATION MATERIAL.' THIS DETERMINATION WAS BASED ON LABORATORY TESTS OF THE QUALITY ASSURANCE DIVISION, FRANKFURT PROCUREMENT CENTER.

WITH REFERENCE TO YOUR BUSH CONTRACT, THE PURPOSE OF THE BUSH PROGRAM, AS SET FORTH IN PARAGRAPH 6-850.1 OF THE AIR FORCE PROCUREMENT INSTRUCTION (AFPI) (REV. 77) (28 APR. 67) IS TO: ,/I) ASSIST IN CARRYING OUT THE FULL INTENT AND PURPOSE OF THE DOD BALANCE OF PAYMENTS PROGRAM THROUGH THE PURCHASE OF US END PRODUCTS, (II) REDUCE ADMINISTRATIVE COSTS BY CENTRALIZATION OF CONTRACT PLACEMENT WHERE PRACTICABLE, (III) EFFECT COST SAVINGS THROUGH FAVORABLE PRICES AND LESS COST FOR DELIVERY TO AN OVERSEA DESTINATION, AND (IV) PROVIDE A READILY AVAILABLE SOURCE OF SUPPLY IN OVERSEA AREAS FOR US END PRODUCTS.' THIS PROGRAM IS BASED ON A CONCEPT OF PROCURING COMMERCIAL TYPE END PRODUCTS, MANUFACTURED IN THE UNITED STATES, FROM FIRMS OR SALES AGENTS (BOTH DOMESTIC AND FOREIGN) PREFERABLY LOCATED IN FOREIGN COUNTRIES. THE AGREEMENTS ARE NEGOTIATED AND EXECUTED BY UNITED STATES AIR FORCE OVERSEAS MAJOR COMMAND ORGANIZATIONS AND INCLUDE AN AUTHORIZED PRICE LIST (APL) AGAINST WHICH ORDERS MAY BE PLACED BY ANY OVERSEAS U.S. GOVERNMENT AGENCY. THE APL'S ARE SIMILAR TO FEDERAL SUPPLY SCHEDULES (ALTHOUGH OF MORE LIMITED AVAILABILITY) AND ARE GIVEN WIDE DISTRIBUTION AMONG OVERSEAS PROCURING ACTIVITIES. THESE CONTRACTS NORMALLY ARE EXECUTED FOR A PERIOD OF ONE YEAR AND ARE OF THE INDEFINITE QUANTITY TYPE. YOUR CONTRACT SPECIFIES A MINIMUM QUANTITY OF $3,990 AND A MAXIMUM OF $100,000, BUT PROVIDES THAT THE UNITED STATES GOVERNMENT IS UNDER NO OBLIGATION TO ORDER ANY SUPPLIES OTHER THAN THE MINIMUM QUANTITY, WHICH HAS BEEN ORDERED, AND THAT THE CONTRACTOR IS NOT ENTITLED TO MAKE ANY DEMANDS OR CLAIMS FOR COMPENSATION AS A RESULT OF THE GOVERNMENT NOT ORDERING OTHER THAN THE MINIMUM QUANTITY. ADDITIONALLY, WE ARE ADVISED BY THE AIR FORCE THAT AT THE TIME YOUR CONTRACT WAS EXECUTED (WHICH WAS AFTER PROPOSALS HAD ALREADY BEEN SUBMITTED UNDER THE ARMY SOLICITATION) THERE WERE NO CRITERIA IN THE NATURE OF SPECIFICATIONS WHICH HAD TO BE MET IN ORDER TO SECURE THE CONTRACT. IN THIS CONNECTION, TESTS WERE ALSO CONDUCTED BY THE FRANKFURT PROCUREMENT CENTER ON SAMPLES OF THE CLOTH OFFERED UNDER YOUR BUSH CONTRACT. THE LABORATORY REPORTS SHOW THAT SUCH SAMPLES FAILED TO MEET THE REQUIREMENTS OF SPECIFICATION PCF-C-2019A, AND THAT THEY LIKEWISE FAILED TO MEET THE REQUIREMENTS OF FEDERAL SPECIFICATION CCC-F-66A, DATED MAY 18, 1953. BUSH CONTRACTING IS NOW COVERED BY AIR FORCE CIRCULAR NO. 17 DATED AUGUST 30, 1967, AND THE AIR FORCE ADVISES THAT CURRENT POLICY IS TO REQUIRE THAT ARTICLES MEET FEDERAL AND MILITARY SPECIFICATIONS WHERE APPLICABLE.

ON THE RECORD WE ARE UNABLE TO AGREE WITH MR. DANIGGELIS' CONTENTION THAT THE ARMY PROCUREMENT WAS DISCRIMINATORY AGAINST THE MATERIAL COVERED BY YOUR BUSH CONTRACT. WE HAVE ALWAYS RECOGNIZED THAT THE DRAFTING OF SPECIFICATIONS AND DETERMINATION OF THE MINIMUM NEEDS OF THE GOVERNMENT ARE THE FUNCTIONS OF THE ADMINISTRATIVE AGENCIES, AND WE FIND NO INDICATION THAT THE SPECIFICATIONS USED IN THIS INSTANCE WERE BASED UPON ANYTHING OTHER THAN THE BONA FIDE DESIRE OF THE ARMY TO PROCURE MATERIAL HAVING CHARACTERISTICS WHICH IT REASONABLY CONSIDERED NECESSARY TO MEET THE EMERGENCY NEEDS WHICH THE PROCUREMENT WAS INTENDED TO FILL. AT THE TIME THE PROCUREMENT WAS INSTITUTED YOUR BUSH CONTRACT HAD NOT EVEN BEEN EXECUTED; WHEN IT WAS, IT CONTAINED NO SPECIFICATIONS INDICATING THE CHARACTERISTICS OF THE MATERIAL COVERED BY IT; AND BY OFFERING THE SAME MATERIAL IN YOUR PROPOSAL TO THE ARMY YOU HAD THE BENEFIT OF HAVING IT CONSIDERED FOR THE ESTABLISHED NEEDS.

EVEN IF SOME OF YOUR MATERIAL HAD MET THE SPECIFICATION, IT WOULD HAVE BEEN NECESSARY TO REFER THE MATTER TO THE SECRETARY OF DEFENSE FOR A DETERMINATION AS TO WHETHER THE DIFFERENCE BETWEEN THE DOMESTIC AND FOREIGN COST WAS SO LARGE AS TO MAKE PROCUREMENT OF FOREIGN END PRODUCTS ,CLEARLY DESIRABLE" (ASPR 6-805.2 (A) (XI) ). THE CITED PROVISION OF ASPR REQUIRES SUCH REFERENCE, IF THE DIFFERENCE EXCEEDS 50 PERCENT OF THE FOREIGN COST, AND THE DIFFERENCES BETWEEN YOUR PRICES ON MATERIALS FOR WHICH YOU SUBMITTED SAMPLES, INCLUDING BUSH, RANGED FROM 131 PERCENT ($3.05) TO 218 PERCENT ($4.20) OF THE FOREIGN COST ($1.32). ACTUALLY THE PERCENTAGE DIFFERENCE ON THE PRICES OF THE BUSH MATERIALS WAS SLIGHTLY LARGER, SINCE THE UNIT PRICES WERE ON DIFFERENT BASES, THE BUSH PRICES BEING PER LINEAR YARD FOR MATERIAL 54 INCHES WIDE (1,944 SQUARE INCHES), WHEREAS THIS SOLICITATION CALLED FOR PRICES PER RUNNING (LINEAR) METER (39.37 INCHES) FOR MATERIAL 130 CENTIMETERS (51.181 INCHES) WIDE (2,015 SQUARE INCHES).

IN HIS LETTER OF NOVEMBER 18, 1967, MR. DANIGGELIS REFERS TO COPIES OF CERTAIN TEST REPORTS BY A COMMERCIAL LABORATORY BEING SENT UNDER SEPARATE COVER. THESE REPORTS WERE LATER DELIVERED IN PERSON BY MR. DANIGGELIS AND ARE STATED TO COVER THE FIVE FABRICS OFFERED UNDER YOUR BUSH CONTRACT, TWO FABRICS NOT PREVIOUSLY OFFERED OR IDENTIFIED, AND TWO FABRICS IDENTIFIED ONLY AS ,YUGOSLAVIAN OR GERMAN.' THE REPORTS STATE FURTHER THAT ALL TESTS WERE "MADE ACCORDING TO METHODS OUTLINED IN FEDERAL SPECIFICATION CCC-F- 66A AND AMENDMENT 3, ALSO FEDERAL SPECIFICATION CCC-T-1916," BUT NEITHER THE LETTER OF NOVEMBER 18 NOR THE REPORTS STATE THAT THE SAMPLES MEET EITHER THE FEDERAL SPECIFICATION OR THE SPECIFICATION CITED IN THIS PROCUREMENT, PCF-C 2019A. THERE IS THUS NO BASIS ON WHICH WE COULD DISREGARD THE FRANKFURT TEST REPORTS. MR. DANIGGELIS' LETTER STRESSES THAT THE COMMERCIAL REPORTS REFLECT LONGER WEARING QUANTITIES IN SOME OF YOUR BUSH CONTRACT MATERIALS THAN IN THE "EUROPEAN" MATERIALS TESTED, BUT NO EVIDENCE HAS BEEN SUBMITTED AS TO THE QUALITY OF THE SO-CALLED "EUROPEAN" MATERIALS, AND THERE IS NO INDICATION THAT THEY WOULD MEET THE REQUIREMENTS OF PCF-C-2019A OR THAT THEY ARE REPRESENTATIVE OF THE MATERIAL PURCHASED FROM REICHEL. ON THE BASIS OF THE FACTS REPORTED ABOVE, IT WOULD APPEAR THAT THERE WAS REASONABLE JUSTIFICATION, IN THE EMERGENT CIRCUMSTANCES EXISTING, FOR NEGOTIATION OF A SOLE SOURCE PURCHASE FROM REICHEL.

FOR THE REASONS STATED, WE CONCLUDE THAT THIS PROCUREMENT WAS MADE IN GOOD FAITH; THAT IT WAS IN ACCORD WITH THE BALANCE OF PAYMENTS PROGRAM; THAT IT DID NOT VIOLATE ANY STATUTE OR REGULATION; AND THAT THE REJECTION OF YOUR MATERIAL WAS NOT ARBITRARY OR CAPRICIOUS OR WITHOUT REASONABLE GROUNDS. IT FURTHER APPEARS THAT THE GOVERNMENT SECURED AN ADEQUATE RETURN FOR ITS EXPENDITURE, WITHOUT ADVERSE EFFECT ON THE FLOW OF UNITED STATES GOLD. YOUR PROTEST IS THEREFORE DENIED.