B-161918, DEC. 15, 1967

B-161918, DEC. 15, 1967

BIDS - NEGOTIATION - SOLE SOURCE DECISION DENYING PROTEST OF JULIE RESEARCH LABORATORIES, INC., AGAINST SOLE SOURCE PROCUREMENT TO JOHN FLUKE MFG. COMPANY FOR VOLTMETERS FOR NAVY. A CONTRACTING OFFICER'S DETERMINATION TO NEGOTIATE A CONTRACT FOR BRAND NAME EQUIPMENT WITH THE DEVELOPER UNDER 10 U.S.C. 2304 (A) (10) IS MADE FINAL UNDER 10 U.S.C. 2310 (B) AND CANNOT BE QUESTIONED BY COMP. GEN. HOWEVER, SINCE REVIEW OF PROTEST BY OFFEROR WHO BELIEVES HE CAN MANUFACTURE ARTICLE, PROCURING AGENCY HAS DETERMINED TO OBTAIN SMALLER QUANTITY URGENTLY NEEDED AND TO PROCURE BALANCE OF REQUIREMENTS UNDER COMPETITIVE NEGOTIATION.

TO MR. RICHARD STRUM:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 15, 1967, AND TO PREVIOUS CORRESPONDENCE FROM YOUR COMPANY, PROTESTING THE PROPOSED AWARD ON A SOLE- SOURCE BASIS OF A CONTRACT BY THE NAVAL SHIP SYSTEMS COMMAND TO THE JOHN FLUKE MFG. CO., INC., FOR 227 D.C. DIFFERENTIAL VOLTMETERS COVERED BY REQUEST FOR PROPOSALS N00024-67-R-3459 (S) DATED MARCH 22, 1967.

THE REQUEST FOR PROPOSALS, AS AMENDED, SOLICITED OFFERS TO FURNISH TO THE GOVERNMENT 227 CCUH-895A/AN D.C. DIFFERENTIAL VOLTMETERS. "CCUH" IS A MILITARY DESIGNATION FOR JOHN FLUKE MFG. CO. THE REFERENCE "895A/AN" IS FLUKE'S MODEL NUMBER ON THE VOLTMETER.

ESSENTIALLY, YOU PROTEST AGAINST AN AWARD TO FLUKE BECAUSE YOUR COMPANY WAS PROVIDED WITH THE REQUEST FOR PROPOSALS AND SUBMITTED IN RESPONSE THERETO A PROPOSAL SOME $100,000 LESS THAN FLUKE'S OFFER, AND BECAUSE YOUR COMPANY IS CAPABLE OF MANUFACTURING THE VOLTMETERS.

HOWEVER, IN THE ADMINISTRATIVE REPORT, A COPY OF WHICH WAS MADE AVAILABLE TO YOUR COMPANY FOR COMMENT, IT IS STATED THAT THE REQUEST FOR PROPOSALS WAS FURNISHED YOUR COMPANY BECAUSE YOU HAD REQUESTED IT, AND THAT THE CAPABILITY OF YOUR COMPANY IS NOT IN ISSUE BECAUSE, ALTHOUGH YOUR COMPANY IS PREPARED TO MANUFACTURE THE VOLTMETERS, THE NAVAL SHIP SYSTEMS COMMAND MAINTAINS THAT YOUR COMPANY DOES NOT HAVE A SPECIFICATION THAT IS SUFFICIENTLY DEFINITIVE TO INSURE THAT APPROPRIATE QUALITY CONTROLS WILL BE BUILT INTO THE VOLTMETERS. THUS, WHILE YOUR COMPANY HAS OFFERED TO MEET THE SPECIFICATION SHEET ISSUED BY FLUKE ON THE VOLTMETERS, THE COMMAND BELIEVES THAT SUCH OFFER WOULD NOT BE SUFFICIENT SINCE SUCH SHEET FAILS TO PROVIDE ADEQUATE ASSURANCE OF PRODUCT STABILITY WHICH THE COMMAND STATES IT MUST HAVE PRIOR TO CONTRACTING FOR THE VOLTMETERS. IN THAT CONNECTION, THE ADMINISTRATIVE REPORT STATES THAT FLUKE'S PRODUCT IS A TEST INSTRUMENT DEVELOPED BY FLUKE AT ITS OWN EXPENSE; THAT ALTHOUGH THE COMPANY ISSUES A SPECIFICATION SHEET, IT IS INCOMPLETE AND INADEQUATE FOR THE MANUFACTURE OF A COMPARABLE VOLTMETER. WE ARE FURTHER ADVISED THAT ONLY FLUKE HAS COMPLETE SPECIFICATIONS FOR THE VOLTMETER, AND THAT IT WOULD BE AN EXPENSIVE AND TIME-CONSUMING PROJECT FOR THE NAVY TO ATTEMPT TO DEVELOP SUCH A VOLTMETER SPECIFICATION.

IT IS REPORTED THAT THE VOLTMETER IS USED TO MEASURE VOLTAGES IN COUNTERMEASURE SET TRAVELING WAVE TUBES WHICH OPERATE AT VERY HIGH VOLTAGES AND COST ABOUT $1,500 EACH. THE COUNTERMEASURE SET IS AN ELECTRONIC WARFARE EQUIPMENT IN SERVICE IN THE ACTIVE FLEET. THE EFFECTIVENESS OF THE SET DEPENDS UPON THE ABILITY TO MAKE HIGHLY ACCURATE MEASUREMENTS OF D.C. VOLTAGES IN THE TRAVELING WAVE TUBES TO ASSURE CORRECT OPERATING VOLTAGES WHICH ARE ESSENTIAL FOR PEAK PERFORMANCE OF THE SET AS WELL AS FOR LONG LIFE OF THE TUBES. THE REPORT STATES THAT TO MAKE THE NECESSARY MEASUREMENTS THE NAVY HAS HAD TO USE INADEQUATE INSTRUMENTATION AND INTERIM TECHNIQUES WHICH ARE UNDULY DIFFICULT AND DANGEROUS TO USE AND RESULT IN SHORTENED TUBE LIFE WITH INSTANCES OF TUBE DESTRUCTION AND DEGRADED PERFORMANCE OF THE COUNTERMEASURE SET. HOWEVER, IN 1966, FLUKE ADVISED THE NAVY THAT IT HAD DEVELOPED AN INSTRUMENT WHICH WOULD SOLVE ITS PROBLEM. THE NAVAL RESEARCH LABORATORY PURCHASED A VOLTMETER, MODEL 895A/AN, AND TESTED IT ON COUNTERMEASURE SETS IN THE LABORATORY AND ON SHIPS AND IT HAS PROVENTO BE THE ANSWER TO THE PROBLEM OF OBTAINING PEAK PERFORMANCE FROM THE COUNTERMEASURE SETS.

AS A RESULT OF THE FOREGOING, THE CONTRACTING OFFICER MADE A FORMAL DETERMINATION THAT THE CONTRACT SHOULD BE NEGOTIATED ON A SOLE-SOURCE BASIS UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (10). THE BASIS FOR THE DETERMINATION IS SET FORTH IN THE CONTRACTING OFFICER'S DETERMINATION AND FINDING OF DECEMBER 20, 1966, WHICH STATES: "THE PROPERTY TO BE PROCURED IS A STURDY SOLID STATE POTENTIOMETRIC DIFFERENTIAL VOLTMETER USED TO ALIGN AND ADJUST EXTREMELY CRITICAL CIRCUITS OF THE AN/ULQ6B. IT FULFILLS CERTAIN STRINGENT AS WELL AS GENERAL FLEET REQUIREMENTS FOR PRECISE DC DIFFERENTIAL MEASUREMENTS. THE VOLTMETER TO BE PROCURED IS A COMMERCIAL PRODUCT OF THE JOHN FLUKE MANUFACTURING COMPANY. THERE IS NO OTHER COMMERCIAL OR MILITARY EQUIVALENT OF, OR OTHER AVAILABLE SOURCE FOR A VOLTMETER WHICH WILL FULLY MEET THE TECHNICAL REQUIREMENTS OF THIS PROCUREMENT. ACCORDINGLY, THE JOHN FLUKE MANUFACTURING COMPANY IS THE ONLY SOURCE OF SUPPLY.'

AFTER RECEIPT OF THE INITIAL NAVAL SHIP SYSTEMS COMMAND REPORT, THIS MATTER WAS DISCUSSED INFORMALLY WITH THE CHIEF OF THE ELECTRICITY DIVISION, BUREAU OF STANDARDS, WHO SUGGESTED THAT A PERFORMANCE-TYPE SPECIFICATION COULD BE PREPARED FROM TEST DATA GENERATED FROM THE EVALUATION OF THE FLUKE VOLTMETERS. IN VIEW OF SUCH ADVICE, OUR OFFICE QUESTIONED THE COMMAND AS TO THE BONA FIDES OF THE SOLE-SOURCE DETERMINATION.

THE COMMAND REPLIED IN A SUPPLEMENTAL REPORT THAT THE TEST DATA RESULTING FROM THE OPERATIONAL EVALUATION MERELY DISCLOSED THAT THE EQUIPMENT WAS SUITABLE FOR ITS INTENDED PURPOSE AND THAT THE DATA WAS NOT SUITABLE FOR USE IN PREPARATION OF A SPECIFICATION FOR COMPETITIVE PROCUREMENT. THE COMMAND STATED THAT THE TESTS CONDUCTED IN CONNECTION WITH AN OPERATIONAL EVALUATION OF A PARTICULAR EQUIPMENT ARE ENTIRELY DIFFERENT FROM THOSE NECESSARY TO ASSURE FULL COMPLIANCE WITH THE TECHNICAL REQUIREMENTS OF AN ADEQUATE EQUIPMENT SPECIFICATION. IT REEMPHASIZED THAT THE PREPARATION OF AN ADEQUATE SPECIFICATION FOR COMPETITIVE PROCUREMENT WOULD TAKE AN INORDINATE AMOUNT OF TIME AND WOULD UNDULY DELAY THE PROCUREMENT. STATED FURTHER THAT THE TECHNICAL MANPOWER TO ASSIGN TO SUCH ACTIVITY COULD BE ASSIGNED ONLY AT THE EXPENSE OF INCURRING DELAYS TO OTHER MORE PRESSING NEEDS.

SUBSEQUENTLY, THE STAFF OF THE SENATE SELECT COMMITTEE ON SMALL BUSINESS MET WITH NAVY REPRESENTATIVES AND THE CHIEF OF THE ELECTRICITY DIVISION, BUREAU OF STANDARDS. THESE OFFICIALS WERE INTERROGATED ON THE FEASIBILITY OF PREPARING SPECIFICATIONS FOR A COMPETITIVE PROCUREMENT OF THE VOLTMETERS. THE CHIEF OF THE ELECTRICITY DIVISION MAINTAINED THAT SPECIFICATIONS ADEQUATE FOR COMPETITION COULD BE PREPARED IN 1 DAY. THE NAVY REPRESENTATIVES, HOWEVER, PERSISTED IN THE VIEW THAT IT WOULD REQUIRE SIGNIFICANTLY MORE TIME.

THEREAFTER, A COPY OF THE TRANSCRIPT OF THE MEETING WAS FURNISHED TO THE ASSISTANT SECRETARY OF THE NAVY, INSTALLATIONS AND LOGISTICS, FOR HIS CONSIDERATION. AFTER A REVIEW OF THE MATTER, THE ASSISTANT SECRETARY ADVISED THE COMMITTEE THAT THE NAVY HAD DECIDED TO DIVIDE THE 227-UNIT PROCUREMENT INTO TWO SEGMENTS. DUE TO AN URGENT NEED FOR INSTRUMENTS FOR VIETNAM, THE NAVY DETERMINED THAT IT WOULD AWARD A CONTRACT TO THE JOHN FLUKE MFG. CO. FOR 114 UNITS. IT FURTHER DETERMINED TO OBTAIN THE REMAINING 113 UNITS UNDER COMPETITIVE NEGOTIATION WHEREUNDER YOUR COMPANY WILL HAVE AN OPPORTUNITY TO PARTICIPATE IN THE PROCUREMENT. OFFERORS FOR THIS SECOND SEGMENT WILL HAVE 90 DAYS FROM THE DATE OF THE SOLICITATION TO SUBMIT MODELS FOR TESTING WHICH WILL BE COMPLETED WITHIN 75 DAYS AFTER THE DATE FOR SUBMISSION OF MODELS. AWARD FOR THE SECOND SEGMENT WILL BE MADE TO THAT LOW RESPONSIBLE OFFEROR WHOSE EQUIPMENT HAS BEEN DEMONSTRATED BY TESTS TO SATISFACTORILY MEET THE GOVERNMENT'S NEEDS.

WHERE A CONTRACTING OFFICER HAS MADE A FORMAL DETERMINATION THAT A CONTRACT SHOULD BE NEGOTIATED ON A SOLE-SOURCE BASIS UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (10), SUCH A DETERMINATION IS FINAL UNDER 10 U.S.C. 2310 (B). ACCORDINGLY, WHEN SUCH A DETERMINATION HAS BEEN MADE THE PROCUREMENT IS NOT SUBJECT TO LEGAL QUESTION BY OUR OFFICE. HOWEVER, INASMUCH AS THE NAVY HAS NOW INDICATED THAT IT INTENDS TO PROCURE APPROXIMATELY ONE-HALF OF THE INSTRUMENTS BY COMPETITIVE NEGOTIATION, IT APPEARS THAT THE DEPARTMENT HAS CONCEDED, IN EFFECT, THAT THE PROCUREMENT WAS AMENABLE TO COMPETITION. IT IS UNFORTUNATE, THEREFORE, THAT, BECAUSE OF THE DELAY BY THE NAVY, THE PROCUREMENT HAS, AT LEAST IN PART, BECOME SO URGENT THAT IT CANNOT BE DELAYED FOR COMPETITION. HOWEVER, IN VIEW OF THE FINALITY WHICH MUST BE ACCORDED TO ANY NEW DETERMINATION TO NEGOTIATE A PROCUREMENT UNDER 10 U.S.C. 2304 (A) (10), OR ON THE BASIS OF "PUBLIC EXIGENCY," 10 U.S.C. 2304 (A) (2), LIKEWISE MADE FINAL BY 10 U.S.C. 2310 (B), OUR OFFICE IS PRECLUDED FROM FURTHER LEGAL ACTION WITH REFERENCE TO THIS PROCUREMENT.