B-162187, JAN. 9, 1969

B-162187, JAN. 9, 1969

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED MAY 28, 1968, AIR-OOC:GPQ/PML, WITH ENCLOSURES, FURNISHING A REPORT CONCERNING THE PROTEST OF RMF, INC., AGAINST AWARD OF CONTRACT NO. N00019-68-C-0345, ISSUED BY THE NAVAL AIR SYSTEMS COMMAND (NAVAIR), FOR THE PROCUREMENT OF 400 AERO 20A-1 EJECTOR BOMB RACKS WITH AN OPTION PROVISION FOR AN ADDITIONAL QUANTITY OF 286.

ESSENTIALLY, THE PROTEST BY RMF AGAINST THE AWARD DATED JANUARY 26, 1968, TO STANDARD ARMAMENT, INC., IS THAT RMF WAS NOT GIVEN AN OPPORTUNITY TO SUBMIT A PROPOSAL ON THE ORIGINAL QUANTITY OF 400 AND THE OPTION QUANTITY OF 286 REQUIRED DELIVERY SCHEDULES WHICH WERE IMPOSSIBLE FOR ANYONE OTHER THAN STANDARD TO MEET.

THE BACKGROUND OF THIS PROCUREMENT IS ADMINISTRATIVELY DESCRIBED IN PART AS FOLLOWS: THE LINOCHINE CORPORATION OF BROOKLYN, NEW YORK, WAS UNDER CONTRACT TO PRODUCE 886 OF THESE BOMB RACKS FOR THE NAVY. DUE TO LINOCHINE'S FAILURE TO DELIVER, A SHORTAGE OF THE BOMB RACKS BECAME EXTREMELY CRITICAL IN AUGUST 1967. WHEN IT BECAME APPARENT THAT LINOCHINE COULD NOT MAKE DELIVERIES, A QUANTITY OF 400 BOMB RACKS WAS AWARDED TO STANDARD ARMAMENT ON JANUARY 26, 1968, UNDER CONTRACT N00019-68-C-0345. STANDARD ARMAMENT WAS PRODUCING AERO 20A-1 EJECTOR BOMB RACKS FOR MCDONNELL-DOUGLAS CORPORATION AND WAS THE ONLY QUALIFIED COMPANY CURRENTLY PRODUCING THE URGENTLY NEEDED BOMB RACKS. THE CONTRACTING OFFICER AWARDED THIS CONTRACT WITHOUT FORMAL ADVERTISING AND ON A SOLE-SOURCE BASIS DUE TO THE EXTREME URGENCY OF THE PROCUREMENT. THE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS WAS MADE PURSUANT TO 10 U.S.C. 2304 (A) (2) AS IMPLEMENTED BY THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-202. THE BASIS FOR THE DETERMINATION IS SET FORTH IN THE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS OF JANUARY 17, 1968, WHICH STATES: "THESE BOMB RACKS ARE REQUIRED TO MEET URGENT U.S. NAVY REQUIREMENTS FOR COMBAT FORCES IN SOUTHEAST ASIA. DELIVERY IS REQUIRED DURING THE PERIOD MAY 1968 THROUGH AUGUST 1968. FAILURE TO PROVIDE THE BOMB RACKS IN ACCORDANCE WITH THE MANDATORY DELIVERY SCHEDULE WOULD DELAY MISSION READINESS OF A4 AIRCRAFT AND JEOPARDIZE SOUTHEAST ASIA OPERATIONS AND ENDANGER THE NATIONAL DEFENSE. "IT IS IMPRACTICABLE TO PROCURE THIS REQUIREMENT BY FORMAL ADVERTISING(OR EVEN NORMAL NEGOTIATION PROCEDURES) BECAUSE SUCH ACTION WOULD, EVEN IF CONDUCTED ON AN ACCELERATED BASIS, OCCASION AN UNACCEPTABLE DELAY OF AT LEAST NINETY (90) DAYS IN DELIVERY OF THE AFORESAID EQUIPMENT.'

THEREAFTER, THE LINOCHINE CORPORATION CONTRACT WAS TERMINATED FOR DEFAULT AND NAVAIR REQUIRED THE 286 BOMB RACKS, INCLUDED IN THE STANDARD ARMAMENT CONTRACT AS AN OPTION PROVISION, TO MEET CRITICAL FLEET REQUIREMENTS. THE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS DATED MARCH 11, 1968, RESTATES THE BASIS SET FORTH IN HIS JANUARY 17, 1968, DETERMINATION FOR THE OPTION REQUIREMENT. RMF PROTESTED TO NAVY PROCUREMENT OFFICIALS AGAINST THE PROPOSED EXERCISE OF THIS OPTION. IN ORDER TO PROVIDE RMF AN OPPORTUNITY TO PARTICIPATE IN THIS PROCUREMENT, A TELEGRAPHIC SOLICITATION WAS ISSUED ON MARCH 21, 1968, TO RMF AND STANDARD ARMAMENT FOR 286 BOMB RACKS. STANDARD ARMAMENT SUBMITTED AN OFFER AND RMF DID NOT RESPOND. HENCE, STANDARD ARMAMENT WAS AWARDED THE ADDITIONAL QUANTITY ON THE BASIS THAT IT WAS THE ONLY COMPANY THAT COULD MEET THE URGENT DELIVERY SCHEDULES.

THE RMF PROTEST DATED MARCH 11, 1968, CONTENDS THAT, AS A RECENT PRODUCER OF THE BOMB RACKS ON THE BIDDERS LIST, IT SHOULD HAVE BEEN SOLICITED TO SUBMIT A QUOTE ON THE 400 QUANTITY. THE RMF PROTEST DATED MARCH 27, 1968, ALLEGES THAT THE DELIVERY SCHEDULE FOR THE OPTION QUANTITIES WAS TAILORED TO MEET REQUIREMENTS WHICH COULD ONLY BE MET BY STANDARD ARMAMENT.

THE RECORD BEFORE OUR OFFICE INDICATES AN INTEREST BY RMF, A PRIOR PRODUCER, IN FURNISHING THESE ITEMS AS EARLY AS JULY 25, 1967, WHEN A WIRE REQUEST FOR AN OPPORTUNITY TO PRESENT A PROPOSAL WAS MADE TO CAPTAIN HARVEY OF NAVAIR. AGAIN, ON JANUARY 26, 1968, IN A TELEGRAM TO THE SECRETARY OF THE NAVY, RMF INDICATED ITS ABILITY AND DESIRE TO PRODUCE THESE BOMB RACKS.

SUBSEQUENT TO THE RECEIPT OF THE ADMINISTRATIVE REPORT, OUR OFFICE DEVELOPED THE FOLLOWING INFORMATION CONCERNING THE PROCUREMENT OF THE 20A- 1 BOMB RACKS. DOUGLAS AIRCRAFT CORPORATION (DOUGLAS), NOW A DIVISION OF MCDONNELL-DOUGLAS CORPORATION, HAD ORIGINALLY DESIGNED AND DEVELOPED THE BOMB RACKS UNDER GOVERNMENT CONTRACT AND MANUFACTURED THEM AS CONTRACTOR- FURNISHED EQUIPMENT PRIOR TO 1962. DUE TO THE CRITICAL SHORTAGE, NAVAIR DIRECTED DOUGLAS TO FURNISH 200 BOMB RACKS. IN OCTOBER 1967, DOUGLAS SOLICITED QUOTATIONS FROM STANDARD ARMAMENT AND THE HOWMET CORPORATION, WHICH HAD ACQUIRED LOUD COMPANY, A PRIOR PRODUCER. HEWMET DECLINED TO QUOTE DUE TO THE UNAVAILABILITY OF MACHINING CAPACITY. RMF CONTACTED THE NAVY PLANT REPRESENTATIVE OFFICE AT DOUGLAS REQUESTING IT BE CONSIDERED AS A SUPPLIER FOR THE IMPENDING 200-UNIT PROCUREMENT AND WAS ADVISED TO CONTACT DOUGLAS PURCHASING DEPARTMENT; HOWEVER, THE RECORD DOES NOT SHOW THAT RMF CONTACTED APPROPRIATE DOUGLAS OFFICIALS. DOUGLAS AWARDED A PURCHASE ORDER TO STANDARD ARMAMENT ON NOVEMBER 15, 1967, FOR MANUFACTURE AND DELIVERY OF 200 NEW AERO 20A-1 BOMB RACKS. THE TECHNICAL DATA TO BE USED BY STANDARD ARMAMENT WAS FURNISHED BY NAVAIR TO DOUGLAS IN OCTOBER 1967. THE PACKAGE WAS DATED JULY 24, 1963, AND RMF, INC., WAS IDENTIFIED THEREON. DELIVERY OF THE 200 UNITS WAS COMPLETED IN JULY 1968, AS SCHEDULED. ALSO, THE AWARDED 400 UNITS WERE DELIVERED BY JULY 31, 1968, AS REQUIRED. WHEN THE NAVY EXERCISED ITS OPTION AND PURCHASED 286 ADDITIONAL UNITS, THE AGREEMENT PROVIDED FOR DELIVERY OF 100 UNITS IN JULY AND AUGUST 1968 AND 86 UNITS IN SEPTEMBER 1968. LATER THE NAVY REVISED THE DELIVERY SCHEDULE SO THAT DELIVERIES WOULD BEGIN IN AUGUST 1968 AFTER COMPLETION OF DELIVERY OF THE 400 UNITS.

AS STATED ABOVE, THE CONTRACTING OFFICER'S REASON FOR NEGOTIATING THE CONTRACT FOR THE 400 UNITS 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. 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 DOES NOT COUNTENANCE UTILIZATION OF THIS PROCEDURE TO DISCRIMINATE AGAINST A FIRM BY DENYING IT AN OPPORTUNITY TO COMPETE FOR A PROCUREMENT. 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 CURRENT PRODUCER. SINCE STANDARD ARMAMENT WAS IN PRODUCTION OF THE RACKS AND THERE HAS NOT BEEN POINTED OUT TO US ANY VALID REASON WHY THE AWARD OF THE 400 UNITS DID NOT RESULT IN A BINDING AND SUBSISTING CONTRACT, WE ARE CONSTRAINED TO ADVISE THE PROTESTANT OF OUR INABILITY TO REDRESS THE COMPANY'S GRIEVANCES IN THE MATTER. NEVERTHELESS, WE MUST ADVISE YOU THAT OUR OFFICE WOULD BE COMPELLED TO OBJECT TO ANY FURTHER FAILURE ON THE PART OF AGENCIES OF YOUR DEPARTMENT TO SOLICIT RMF IN CONNECTION WITH THE PROCUREMENT OF FURTHER REQUIREMENTS OF THE AERO 20A-1 EJECTOR BOMB RACKS.