B-162538, AUG. 15, 1968

B-162538, AUG. 15, 1968

TO KECO INDUSTRIES, INC.:

WE REFER TO YOUR PROTEST DATED SEPTEMBER 14, 1967, AS SUPPLEMENTED BY SUBSEQUENT CORRESPONDENCE FROM YOU AND YOUR ATTORNEYS, CONCERNING THE AWARD AND ADMINISTRATION OF CONTRACT NO. F41608-67-C-1139, WHICH THE DEPARTMENT OF THE AIR FORCE AWARDED TO ACME INDUSTRIES, INC. (ACME), ON JULY 6, 1966, UNDER TWO-STEP FORMALLY ADVERTISED MULTI-YEAR PROCUREMENT PROCEDURES. THE PROCUREMENT, WHICH WAS RESTRICTED TO SMALL BUSINESS CONCERNS, COVERS THE DEPARTMENT'S REQUIREMENTS FOR THREE PROGRAM YEARS FOR MA-3 TYPE TRAILER MOUNTED MOBILE AIR CONDITIONERS.

THE SUBSTANCE OF YOUR PROTEST IS THAT IN THE FIRST STEP OF THE PROCUREMENT THE DEPARTMENT APPROVED CERTAIN DEVIATIONS FROM THE APPLICABLE MILITARY SPECIFICATION AT THE REQUEST OF ACME; THAT ACME'S TECHNICAL PROPOSAL INCORPORATING THE APPROVED DEVIATIONS WAS INCLUDED IN THE BID WHICH THE GOVERNMENT ACCEPTED FROM ACME IN THE SECOND STEP OF THE PROCUREMENT; AND THAT AFTER AWARD, WHEN IT BECAME EVIDENT THAT CHANGES IN ACME'S DESIGN WOULD BE NECESSARY IN ORDER TO PRODUCE AN ACCEPTABLE END ITEM, THE DEPARTMENT ISSUED VARIOUS CHANGE ORDERS UNDER THE CONTRACT WHICH PROVIDE FOR COMPENSATING ACME FOR ADDITIONAL EXPENSES ATTENDANT UPON SUCH CHANGES AND UNDER WHICH THE GOVERNMENT WILL ASSUME OTHER EXPENSES NOT CONTEMPLATED AT THE TIME OF AWARD.

THE CHANGES IN QUESTION RELATE TO THE USE OF TWO GOVERNMENT FURNISHED COMPONENTS, A COMPRESSOR AND A PACKETTE ENGINE, WHICH THE GOVERNMENT REQUIRED THE CONTRACTOR TO USE IN FABRICATING THE END ITEM. YOU CONTEND THAT THE BID PACKAGE INCLUDED PERTINENT INFORMATION ON THE PACKETTE ENGINE AND ACCESSORIES AND THAT THE COMPRESSOR IS A STANDARD COMMERCIALLY AVAILABLE COMPRESSOR ON WHICH ALL INFORMATION, WHICH YOU INDICATE YOU POSSESSED, WAS AVAILABLE IN TRADE CHANNELS. ACCORDINGLY, AND ON THE BASIS THAT ACME INITIATED THE SPECIFICATION DEVIATIONS WHICH PROVED TO BE UNWORKABLE, YOU CONTEND THAT ACME MUST BEAR THE COST OF THE CHANGES. ADDITION, YOU CONTEND THAT ACME, BY QUOTING AN UNUSUALLY LOW BID PRICE, VIOLATED THE PROHIBITION IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 -311 AGAINST THE PRACTICE OF "BUYING-IN" IN CONTEMPLATION OF RECOUPING INCREASED COSTS THROUGH CHANGE ORDERS.

AS SUMMARIZED IN YOUR COUNSEL'S LETTER DATED MARCH 20, 1968, YOUR ULTIMATE REQUEST IS THAT OUR OFFICE REQUIRE THE CONTRACTING OFFICER TO ADMINISTER THE CONTRACT IN STRICT ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE SOLICITATION AND AWARD; THAT PAYMENT TO ACME FOR THE QUESTIONED CHANGES BE HELD TO BE IMPROPER; AND THAT THE CONTRACTING OFFICER BE REQUIRED TO NEGOTIATE AND ISSUE CHANGE ORDERS TO RETURN THE PARTIES TO THE POSITION THEY ACCEPTED AT CONTRACT EXECUTION.

INASMUCH AS THIS REQUEST IS DIRECTED SOLELY TO THE ADMINISTRATION OF THE CONTRACT AND DEALS WITH MATTERS IN WHICH YOU HAVE NO DIRECT OR IMMEDIATE INTEREST, WE HAVE CONSIDERED IT PROPER TO DIRECT OUR DECISION THEREON TO THE ADMINISTRATIVE AGENCY, AND WE ENCLOSE HEREWITH A COPY OF OUR LETTER OF TODAY TO THE SECRETARY OF THE AIR FORCE CONCERNING THE QUESTIONS RAISED BY YOUR COMMUNICATIONS. TO THE EXTENT THAT YOUR PROTEST QUESTIONED THE PROPRIETY OF THE AWARD OF THE CONTRACT TO ACME, IT IS REJECTED, SINCE WE DO NOT FIND IN THE RECORD OF THE PROCUREMENT ANY BASIS FOR LEGAL OBJECTION TO ANY OF THE ACTIONS OF THE CONTRACTING OFFICER IN CONNECTION WITH THE AWARD.