B-162501, DEC. 29, 1967

B-162501: Dec 29, 1967

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RESEARCH AND DEVELOPMENT STUDY OF NEW COOLING SYSTEM FOR AIRCRAFT BIDDER WHO WAS MANUFACTURER OF AIR CONDITINING EQUIPMENT AND WHO SUBMITTED LOW PROPOSAL FOR COOLING SYSTEM RESEARCH STUDY UNDER INVITATION WHICH CONTAINED OBJECTIVITY REQUIREMENT PRECLUDING AWARD TO SOURCES ENGAGED IN. OR PLANNING TO ENGAGE IN MANUFACTURE OF EQUIPMENT OF THE STUDY WAS PROPERLY AWARDED CONTRACT SINCE OBJECTIVITY PROVISION DID NOT PROHIBIT AWARD TO A MANUFACTURER OF AIR CONDITIONING. WAS DESIGNED TO PRECLUDE SUCCESSFUL CONTRACTOR FROM HAVING AS UNFAIR COMPETITIVE ADVANTAGE AS RESULT OF RESEARCH EFFORT. NAVAL SUPPLY SYSTEMS COMMAND ADVISES THAT QUESTIONABLE OBJECTIVITY REQUIREMENT WILL BE SUBSTITUTED IN FUTURE PROCUREMENTS BY ASPR APPROACH TO PROHIBIT RESEARCH AND DEVELOPMENT CONTRACTORS FROM PARTICIPATING IN COMPETITION FOR THE PRODUCTION CONTRACT.

B-162501, DEC. 29, 1967

BIDDERS - RESEARCH AND DEVELOPMENT CONTRACTS - OBJECTIVITY DETERMINATION DECISION TO BARBER-NICHOLS CONSULTING ENGINEERS RE PROTEST AGAINST AWARD TO AMERICAN AIR FILTER CO. UNDER NEGOTIATED PROCUREMENT FOR GROUND SUPPORT OPERATION FOR NAVAL AIR DEVELOPMENT CENTER. RESEARCH AND DEVELOPMENT STUDY OF NEW COOLING SYSTEM FOR AIRCRAFT BIDDER WHO WAS MANUFACTURER OF AIR CONDITINING EQUIPMENT AND WHO SUBMITTED LOW PROPOSAL FOR COOLING SYSTEM RESEARCH STUDY UNDER INVITATION WHICH CONTAINED OBJECTIVITY REQUIREMENT PRECLUDING AWARD TO SOURCES ENGAGED IN, OR PLANNING TO ENGAGE IN MANUFACTURE OF EQUIPMENT OF THE STUDY WAS PROPERLY AWARDED CONTRACT SINCE OBJECTIVITY PROVISION DID NOT PROHIBIT AWARD TO A MANUFACTURER OF AIR CONDITIONING, BUT WAS DESIGNED TO PRECLUDE SUCCESSFUL CONTRACTOR FROM HAVING AS UNFAIR COMPETITIVE ADVANTAGE AS RESULT OF RESEARCH EFFORT. FURTHER SUCCESSFUL OFFEROR STATED THAT IT DID NOT CONTEMPLATE MANUFACTURE OF SPECIFIC TYPES OF EQUIPMENT TO BE STUDIED. NAVAL SUPPLY SYSTEMS COMMAND ADVISES THAT QUESTIONABLE OBJECTIVITY REQUIREMENT WILL BE SUBSTITUTED IN FUTURE PROCUREMENTS BY ASPR APPROACH TO PROHIBIT RESEARCH AND DEVELOPMENT CONTRACTORS FROM PARTICIPATING IN COMPETITION FOR THE PRODUCTION CONTRACT.

TO BARBER-NICHOLS, CONSULTING ENGINEERS:

WE REFER TO YOUR LETTERS DATED SEPTEMBER 14 AND OCTOBER 6, 1967, PROTESTING AGAINST THE AWARD OF CONTRACT NO. N62269-68-Q-0002 TO THE AMERICAN AIR FILTER COMPANY UNDER REQUEST FOR QUOTATIONS (RFQ) N62269 68-Q -0002, ISSUED ON JULY 4, 1967, BY THE NAVAL AIR DEVELOPMENT CENTER, JOHNSVILLE, PENNSYLVANIA.

THE RFQ, WHICH WAS FURNISHED TO 40 SOURCES OF SUPPLY, SOLICITED TECHNICAL AND PRICE PROPOSALS ON A FIXED-PRICE BASIS FOR FURNISHING SERVICES AND MATERIAL NECESSARY TO PERFORM A RESEARCH AND DEVELOPMENT ENGINEERING STUDY TO DETERMINE THE SUITABILITY OF NEW COOLING SYSTEMS AS REPLACEMENTS FOR "MOBILE, LIQUID-CYCLE AND AIR CYCLE, COOLING EQUIPMENT" PRESENTLY USED IN AIRCRAFT GROUND SUPPORT OPERATIONS. THE RFQ ANTICIPATED THAT THE SUCCESSFUL CONTRACTOR WOULD DEVOTE APPROXIMATELY 2,000 MAN-HOURS OF EFFORT TO THE STUDY WITHIN A REQUIRED COMPLETION DATE OF 6 MONTHS AFTER AWARD OF A CONTRACT. THE SCOPE OF THE STUDY WAS STATED IN SECTION 2.0., PARAGRAPH B.1, IN PART, AS FOLLOWS: "B. INVESTIGATION REQUIRED

1. IT IS DESIRED THAT AN ENGINEERING STUDY BE CONDUCTED TO EXPLORE AT LEAST THREE CONCEPTS FOR MOBILE AIR CONDITIONERS FOR GROUND SUPPORT OF AIRCRAFT. THE SYSTEMS TO BE CONSIDERED SHALL BE A THERMOELECTRIC SYSTEM, A LIQUID NITROGEN SYSTEM AND A HEAT POWERED AIR CONDITIONER SIMILAR TO THAT UNDER DEVELOPMENT BY CONDUCTRON CORPORATION, NORTRIDGE, CALIFORNIA. THE STUDIES NEED NOT AND SHALL NOT BE LIMITED TO THESE THREE SYSTEMS IF INVESTIGATION REVEALS THAT MORE PROMISING APPROACHES EXIST.'

PARAGRAPH 7.2 OF THE RFQ REQUESTED OFFERORS TO FURNISH A DETAILED CAPABILITIES REPORT ,STRESSING FAMILIARITY WITH AIR CONDITIONING EQUIPMENT," AND FURTHER ADVISED, AS FOLLOWS: ,CAPABILITIES REPORT "IN VIEW OF THE LIMITED TIME FOR THIS STUDY IT IS MANDATORY THAT PROSPECTIVE CONTRACTORS HAVE AVAILABLE TECHNICALLY QUALIFIED PERSONNEL WHOSE BACKGROUND AND EXPERIENCE IS IN THE DESIGN AND DEVELOPMENT OF AIR CONDITIONING EQUIPMENT. ADDITIONALLY, TO SATISFY THE REQUIREMENTS OF THE STUDY, THE CONTRACTOR MUST HAVE BACKGROUND AND READY ACCESS TO TYPICAL DESIGN AND PERFORMANCE DATA REQUIRED TO DO THE STUDY. HOWEVER, CONTRACTORS INTERESTED IN PERFORMANCE OF THIS STUDY SHALL NOT PRESENTLY, OR IN THE IMMEDIATE FUTURE BE ENGAGED OR PLAN TO BE ENGAGED IN THE MANUFACTURE OR SALE OF ANY OF THE EQUIPMENT WHICH FORM A PART OF THIS STUDY. THIS PROVISION IS TO ASSURE OBJECTIVITY IN EVALUATING A DEVELOPMENT WHICH MAY BE INCONSISTENT WITH CURRENTLY VESTED INTERESTS.'

BY AUGUST 8, 1967, THE DATE FIXED FOR RECEIPT OF PROPOSALS, FIVE SOURCES RESPONDED, AS FOLLOWS: AMERICAN AIR FILTER COMPANY, INC. $21,870 BARBER- NICHOLS

22,754 MERRIDIAN ENGINEERING, INC. 27,843 TAMPA BAY ENGINEERING CO.

33,500 BATTELLE MEMORIAL INSTITUTE 42,240

AFTER EVALUATION, ALL PROPOSALS WERE DETERMINED TO BE TECHNICALLY ACCEPTABLE, AND ON AUGUST 21, 1967, THE CONTRACT WAS AWARDED TO THE AMERICAN AIR FILTER COMPANY, INC. AS THE LOW RESPONSIVE, RESPONSIBLE OFFEROR.

YOU CONTEND THAT THE AWARD MADE TO THE AMERICAN AIR FILTER COMPANY WAS IMPROPER BECAUSE THE COMPANY WAS "NON-RESPONSIVE" TO THE "OBJECTIVITY" LIMITATION CONTAINED IN PARAGRAPH 7.2. IN SUPPORT OF THIS ALLEGATION, YOU POINT OUT THAT THE AMERICAN AIR FILTER COMPANY COMMERCIALLY MANUFACTURES A PORTABLE AIR CONDITIONING UNIT, AND IS CURRENTLY A GOVERNMENT SUPPLIER OF AIR CONDITIONING EQUIPMENT.

PARAGRAPH 7.2, QUOTED ABOVE, REPRESENTED AN EFFORT ON THE PART OF THE PROCUREMENT AGENCY TO INSURE OBJECTIVITY ON THE PART OF THE SUCCESSFUL OFFEROR BY DENYING ELIGIBILITY FOR AWARD TO THOSE SOURCES ENGAGED IN, OR PLANNING TO ENGAGE IN, THE MANUFACTURE OR SALE OF "ANY OF THE EQUIPMENT WHICH FORM A PART OF THIS STUDY.' IT WAS THE PROCUREMENT AGENCY'S POSITION THAT THIS LANGUAGE WAS NOT INTENDED TO PROHIBIT MANUFACTURERS FROM PARTICIPATING IN THE COMPETITION. THE TECHNICAL REPRESENTATIVE OF THE AGENCY HAS ADVISED THAT THE PRIMARY PURPOSE OF THE STUDY WAS TO INVESTIGATE THE THREE CONCEPTS ENUMERATED IN SECTION 2.0., PARAGRAPH B.1, BUT THAT IT WAS NOT DESIRABLE TO RESTRICT THE SCOPE OF THE INVESTIGATION IF OTHER PROMISING APPROACHES WERE INDICATED DURING THE COURSE OF THE STUDY. IN THIS LATTER REGARD, THE AGENCY HAS ADVISED: "IF THE STUDY EXTENDED INTO AIR CONDITIONING EQUIPMENT PRESENTLY EXISTING, AND POSSIBLY TO EQUIPMENT SIMILAR TO THAT MANUFACTURED BY AMERICAN AIR FILTER CO., INC., IT WOULD MERELY BE TO DETERMINE SUCH EQUIPMENT'S ELIGIBILITY FOR REPLACEMENT, AND WOULD BE ANCILLARY TO THE MAJOR THRUST OF THE CONTRACT.'

TURNING TO THE EVALUATION OF THE AMERICAN AIR FILTER COMPANY PROPOSAL UNDER THE PROVISION IN PARAGRAPH 7.2, THE PROCUREMENT AGENCY DETERMINED THAT THE COMPANY WOULD SATISFY THE REQUIREMENTS OF "OBJECTIVITY" IN RELATION TO THE PRIMARY SCOPE OF THE STUDY ON THE BASIS OF THE REPRESENTATIONS MADE IN ITS PROPOSAL, AS FOLLOWS: "THE BASIC REQUIREMENT OF THE PROPOSED PROGRAM IS TO DEFINE, EVALUATE, AND COMPARE THE INHERENT ADVANTAGES AND DISADVANTAGES OF VARIOUS CONCEPTUAL METHODS OF PROVIDING THE AIR CONDITIONING FOR BOTH SHIPBOARD AND SHORE-BASED GROUND SUPPORT OF NAVAL AIRCRAFT. CONSIDERATION OF AIR CYCLE AND/OR VAPOR CYCLE SYSTEMS IS TO BE SPECIFICALLY EXCLUDED FROM THIS STUDY, EXCEPT TO THE EXTENT THAT THE SYSTEMS TO BE STUDIED ARE TO BE CONSIDERED AS POTENTIAL REPLACEMENTS FOR SUCH EQUIPMENT AS IS CURRENTLY IN USE FOR THE SUBJECT APPLICATIONS.

* * * * * * * "* * * THIS COMPANY'S COMPLETE OBJECTIVITY WITH RESPECT TO THE PROPOSED PROGRAM IS ASSURED BY THE FACT THAT AAF HAS NOT MANUFACTURED EQUIPMENT OF THE SPECIFIC TYPES TO BE STUDIED, NOR DOES AAF PLAN TO MANUFACTURE OR MARKET SUCH EQUIPMENT IN THE IMMEDIATE FUTURE.'

WHETHER THE AMERICAN AIR FILTER COMPANY HAS DEMONSTRATED TECHNICAL COMPLIANCE WITH PARAGRAPH 7.2, OR WHETHER IT HAS THE POTENTIALITY TO PERFORM THE RESEARCH ENGINEERING STUDY IN AN OBJECTIVE MANNER, ARE MATTERS OF JUDGMENT PARTICULARLY WITHIN THE COGNIZANCE OF THE PROCUREMENT AGENCY AS TO WHICH WE WILL NOT SUBSTITUTE OUR JUDGMENT IN THE ABSENCE OF CONVINCING EVIDENCE ESTABLISHING A RESULT CONTRARY TO THE ADMINISTRATIVE POSITION.

IN OUR OPINION THE PROVISION IN PARAGRAPH 7.2 DID NOT ABSOLUTELY PROHIBIT THE AWARD OF THE RESEARCH AND DEVELOPMENT CONTRACT TO A MANUFACTURER OF AIR CONDITIONING EQUIPMENT. THE PROHIBITION EXCLUDED THOSE MANUFACTURERS OR VENDORS PRESENTLY PRODUCING OR SELLING, OR PLANNING TO PRODUCE OR SELL, EQUIPMENTS OF THE SPECIFIC TYPES UNDER INVESTIGATION AND STUDY. HOWEVER, WE DO NOT BELIEVE THAT THIS PROHIBITION HAD THE EFFECT OF LIMITING THE SOLICITATION TO NON MANUFACTURERS OF EQUIPMENT, SUCH AS YOUR FIRM. THE SUCCESSFUL OFFEROR STATED IN ITS PROPOSAL THAT ITS MANUFACTURING OF EQUIPMENTS, PRESENT OR FORESEEABLE, DID NOT CONTEMPLATE, NOR INVOLVE, THE SPECIFIC TYPES OF EQUIPMENTS TO BE STUDIED. IT MAY BE CONCLUDED, THEREFORE, THAT THE SUBJECT PROVISION DID NOT FORECLOSE THE AMERICAN AIR FILTER COMPANY FROM EITHER PARTICIPATING UNDER THE RFQ OR FROM RECEIVING AN AWARD THEREUNDER.

THE PROCUREMENT AGENCY HAS RECOGNIZED THAT THE PROVISION IN PARAGRAPH 7.2, ABOVE, MAY BE REGARDED AS QUESTIONABLE IN THE LIGHT OF THE PHILOSOPHY EXPRESSED IN DEPARTMENT OF DEFENSE DIRECTIVE NO. 5500.10 (ASPR, APPENDIX G) CONCERNING THE AVOIDANCE OF ORGANIZATIONAL CONFLICTS OF INTEREST. THE DIRECTIVE, AS INCORPORATED IN THE APPENDIX TO ASPR, HAS PROMULGATED RULES TO AVOID ORGANIZATIONAL CONFLICTS OF INTERESTS BY PREVENTING CONFLICTING RULES WHICH MIGHT BIAS A CONTRACTOR'S JUDGMENT, AND BY PREVENTING UNFAIR COMPETITIVE ADVANTAGE. REDUCED TO ITS PRIMARY, ESSENTIAL OBJECTIVE, THESE RULES SEEK TO PRECLUDE THE INVOLVEMENT OF A RESEARCH AND DEVELOPMENT CONTRACTOR IN THE FOLLOW-ON PROCUREMENT OF THE TANGIBLE RESULTS OR EQUIPMENTS, ETC., FLOWING FROM THE RESEARCH AND DEVELOPMENT EFFORT. THUS, THE ASPR APPROACH TO POTENTIAL ORGANIZATIONAL CONFLICT OF INTERESTS IS NOT TO PRECLUDE THE PARTICIPATION OF CURRENT PRODUCERS OF EQUIPMENTS IN A RESEARCH AND DEVELOPMENT PROCUREMENT SUBSTANTIALLY INVOLVING SIMILAR EQUIPMENTS, BUT TO PROHIBIT THE SUCCESSFUL CONTRACTOR IN THE RESEARCH AND DEVELOPMENT EFFORT--WHO HAS GAINED AN UNAVOIDABLE COMPETITIVE ADVANTAGE-- FROM PARTICIPATING IN THE COMPETITION FOR THE PRODUCTION CONTRACT.

WE ARE ADVISED THAT THE NAVAL SUPPLY SYSTEMS COMMAND WILL CONSIDER THE ASPR APPROACH, RATHER THAN THE APPROACH EXEMPLIFIED BY PARAGRAPH 7.2 OF THE RFQ, IN FUTURE RESEARCH AND DEVELOPMENT PROCUREMENTS.

IN VIEW OF THE FOREGOING, AND SINCE THE AMERICAN AIR FILTER COMPANY WAS NOT PRECLUDED FROM PARTICIPATING IN THE COMPETITION UNDER THE RFQ, WE FIND NO LEGAL BASIS TO QUESTION THE AWARD MADE TO IT. ACCORDINGLY, YOUR PROTEST IS DENIED.