B-162823, MAR. 12, 1968

B-162823: Mar 12, 1968

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IN ABSENCE OF EVIDENCE THAT CANCELLATION DETERMINATION WAS ARBITRARY OR CAPRICIOUS IT MUST BE UPHELD. THE ADMINISTRATIVE FINDING FOR NEGOTIATING THE PROCUREMENT IS FINAL AS A MATTER OF LAW UNDER 10 U.S.C. 2304 (A) AND LIKEWISE MAY NOT BE QUESTIONED. PROTEST IS DENIED. TO KLAGSBRUNN AND HANES: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 26. BIDS WERE REQUESTED UNDER ALTERNATE "A" FOR A TOTAL QUANTITY OF 2. THE CONSOLIDATED QUANTITIES FOR BOMB RACKS PER FISCAL YEAR AND FOR THE SPECIFIC AIRCRAFT ON WHICH THE RACKS WOULD BE USED WERE SET FORTH IN THE INVITATION AS FOLLOWS: FISCAL YEAR F-111 F-4 A-7D 1968 1. OFFERS WILL BE EVALUATED ON THE BASIS OF LOWEST OVERALL COST TO THE GOVERNMENT. IF THE MULTI-YEAR PRICE IS LOW.

B-162823, MAR. 12, 1968

BIDS - REJECTION AND NEGOTIATION - PROPRIETY DECISION DENYING PROTEST OF GUIDANCE TECHNOLOGY, INC., LOW BIDDER, THAT INVITATION FOR BOMB EJECTOR RACKS, ETC. FOR F-111 AND OTHER PLANES BE REINSTATED AND THAT PROCUREMENT BY AIR FORCE SYSTEMS COMMAND NOT BE NEGOTIATED. CANCELLATION OF A MULTI-YEAR PROCUREMENT INVITATION BECAUSE OF DESIGN CHANGES INCREASING PRICE BY 10 PERCENT AND BECAUSE OF REDUCTION IN REQUIREMENTS CONTRACTING OFFICER CAN NOT BE FAULTED FOR CANCELLATION ACTION. IN ABSENCE OF EVIDENCE THAT CANCELLATION DETERMINATION WAS ARBITRARY OR CAPRICIOUS IT MUST BE UPHELD. THE ADMINISTRATIVE FINDING FOR NEGOTIATING THE PROCUREMENT IS FINAL AS A MATTER OF LAW UNDER 10 U.S.C. 2304 (A) AND LIKEWISE MAY NOT BE QUESTIONED. ACCORDINGLY, PROTEST IS DENIED.

TO KLAGSBRUNN AND HANES:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 26, 1967, AS SUPPLEMENTED BY SUBSEQUENT CORRESPONDENCE, ON BEHALF OF GUIDANCE TECHNOLOGY, INC. (GTI), PROTESTING THE CANCELLATION OF INVITATION FOR BIDS NO. F33657-67-B- 1334, ISSUED BY THE AERONAUTICAL SYSTEMS DIVISION, AIR FORCE SYSTEMS COMMAND, WRIGHT-PATTERSON AIR FORCE BASE, OHIO. YOU REQUEST THAT THE CANCELED INVITATION BE REINSTATED, EITHER IN ITS ENTIRETY OR AT LEAST FOR AN IDENTIFIED PORTION OF THE REQUIREMENTS. YOU FURTHER PROTEST ANY ATTEMPT TO NEGOTIATE THE PROCUREMENT ON A SOLE SOURCE, OR ANY OTHER NEGOTIATED BASIS.

THE SUBJECT INVITATION, ISSUED ON MAY 24, 1967, SOLICITED BIDS ON 15 ITEMS OF MAU-12B/A BOMB EJECTOR RACKS, DATA AND SPARE PARTS. BIDS WERE REQUESTED UNDER ALTERNATE "A" FOR A TOTAL QUANTITY OF 2,953 UNITS TO SATISFY FISCAL YEAR 1968 REQUIREMENTS AND, UNDER ALTERNATE "B," FOR A TOTAL QUANTITY OF 10,301 UNITS TO SATISFY THE MULTIYEAR REQUIREMENTS FOR FISCAL YEARS 1968, 1969, 1970 AND 1971. THE CONSOLIDATED QUANTITIES FOR BOMB RACKS PER FISCAL YEAR AND FOR THE SPECIFIC AIRCRAFT ON WHICH THE RACKS WOULD BE USED WERE SET FORTH IN THE INVITATION AS FOLLOWS:

FISCAL YEAR F-111 F-4 A-7D

1968 1,438 718 797

1969 2,674 400 1,096

1970 2,338

1971 840

THE MULTIYEAR PROVISIONS ON PAGE 2 OF THE IFB SCHEDULE INCLUDED THE FOLLOWING PARAGRAPH RELATING TO BID EVALUATION IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-322.3/G):

"2. EVALUATION OF OFFERS:

"A. OFFERS WILL BE EVALUATED ON THE BASIS OF LOWEST OVERALL COST TO THE GOVERNMENT. IN COMPARING PRICES FOR THE ALTERNATE -A- AGAINST PRICES FOR THE ALTERNATE -B-, THE EVALUATED UNIT PRICE FOR EACH ITEM OF LOWEST EVALUATED OFFER RECEIVED ON ALTERNATE -A- SHALL BE MULTIPLIED BY THE TOTAL NUMBER OF UNITS OF THAT ITEM REQUIRED BY THE MULTI-YEAR ALTERNATIVE. THE SUM OF THESE PRODUCTS SHALL BE COMPARED AGAINST THE TOTAL EVALUATED PRICE OF THE LOWEST OFFER RECEIVED FOR ALL ITEMS UNDER THE ALTERNATE -B-. IF THE MULTI-YEAR PRICE IS LOW, AWARD SHALL BE MADE ON THAT AS IS; OTHERWISE, AWARD SHALL BE MADE ON THE BASIS OF ALTERNATE -A- SUBJECT TO THE FACTORS SET FORTH IN SUBPARAGRAPH B. BELOW. CANCELLATION CHARGES AS PROVIDED IN ALTERNATE -E- SHALL NOT BE AN EVALUATION FACTOR.

"B. IN ADDITION TO OTHER FACTORS, OFFERS WILL BE EVALUATED ON THE BASIS OF ADVANTAGES OR DISADVANTAGES TO THE GOVERNMENT THAT MIGHT RESULT FROM MAKING A SINGLE AWARD UNDER THE MULTI-YEAR ALTERNATIVE INSTEAD OF A SEPARATE AWARD UNDER ALTERNATE -A- FOR PROGRAM YEAR 1968 ONLY. FOR THE PURPOSE OF MAKING THIS EVALUATION, IT WILL BE ASSUMED THAT THE SUM OF $50 WOULD BE THE ADMINISTRATIVE COST TO THE GOVERNMENT FOR ISSUING AND ADMINISTERING ANY CONTRACT CONTEMPLATED BY THIS SOLICITATION, AND THAT THE SUM OF $50 PER AWARD WOULD BE THE ADMINISTRATIVE COST TO THE GOVERNMENT FOR ISSUING AND ADMINISTERING SEPARATE AWARDS FOR PROGRAM YEARS 1969, 1970 AND 1971 REQUIREMENTS RESPECTIVELY AT FUTURE DATES.'

BIDS WERE OPENED ON JULY 26, 1967. THE THREE LOWEST BIDS WERE AS FOLLOWS:

ALT.'A" (FY-68) ALT.'B" (FYS 68,

UNIT PRICE TOTAL 69, 70, 71) UNIT PRICE

BIDDER (2,953 UNITS) TOTAL (10,301 UNITS) GUIDANCE TECHNOLOGY, INC. $554.75 $1,638,176.75 $524.95 $5,407,509.95 LARCO ENGINEERING, INC. 565.00 1,668,445.00 490.00 5,047,490.00 OREGON TECHNICAL PRODUCTS 614.00 1,813,142.00 587.00 6,046,687.00

THE BID SUBMITTED BY LARCO ENGINEERING, INC., WAS DETERMINED TO BE NONRESPONSIVE BECAUSE OF ITS FAILURE TO SUBMIT CERTAIN REQUIRED TRANSPORTATION DATA WITH THE BID. GTI THUS BECAME THE LOW BIDDER ON BOTH ALTERNATES "A" AND "B" AND, SINCE ITS BID ON ALTERNATE "B" WAS LOWER, GTI WAS ELIGIBLE FOR AWARD OF THE MULTIYEAR QUANTITY, SUBJECT TO A FAVORABLE PREAWARD SURVEY. HOWEVER, NO AWARD WAS MADE BECAUSE THE INVITATION WAS CANCELED BY NOTICE TO THE BIDDERS DATED AUGUST 30, 1967, WHICH ADVISED THEM AS FOLLOWS: "INVITATION FOR BID F33657-67-B 1334 IS HEREBY CANCELLED IN ITS ENTIRETY DUE TO A DESIGN CHANGE IN THE MAU 12 B/A FOR THE F-111 AIRCRAFT AND A CANCELLATION IN REQUIREMENTS FOR THE A7D AIRCRAFT.'

GTI CONTENDS THAT NO SIGNIFICANT DESIGN CHANGE WAS, IN FACT, CONTEMPLATED FOR THE F-111 AND, IN ANY EVENT, AN AWARD SHOULD HAVE BEEN MADE FOR THE QUANTITIES REQUIRED FOR THE UNCHANGED REQUIREMENTS FOR THE F-4E AIRCRAFT.

WE ARE ADVISED THAT SHORTLY BEFORE BID OPENING, THE CONTRACTING OFFICER RECEIVED ADVICE INDICATING POSSIBLE DESIGN CHANGES IN THE RACKS FOR THE F- 111. IT HAS BEEN REPORTED TO OUR OFFICE THAT CERTAIN ENGINEERING DESIGN CHANGES WOULD BE REQUIRED IN THE BOMB RACKS IN ORDER TO MEET THE HIGH TEMPERATURE REQUIREMENTS OF THE F-111. IT WAS DEFINITELY DETERMINED AT THAT TIME (AUGUST 1967) THAT THE PRESENT MAU 12B/A BOMB RACK SIDE PLATES WOULD REQUIRE A CHANGE FROM ALUMINUM TO STEEL. HOWEVER, THE EXACT DESIGN CHANGES IN OTHER AREAS COULD NOT BE DETERMINED PENDING A FURTHER DESIGN ANALYSIS OF THE F-111 PERFORMANCE CHARACTERISTICS AND FURTHER TESTING OF THE BOMB RACK TO VERIFY ITS STRUCTURAL INTEGRITY. HENCE, IT WAS DETERMINED BY BOTH THE ENGINEERING OFFICE HAVING COGNIZANCE OF THE BOMB RACK REQUIREMENTS AND THE PROCUREMENT OFFICE THAT ANY ADDITIONAL PROCUREMENT OF MAU-12B/A BOMB RACKS FOR THE F-111 SHOULD BE HELD TO AN ESSENTIAL MINIMUM PENDING ACCOMPLISHMENT OF ALL NECESSARY DESIGN CHANGES. IT IS REPORTED THAT AN ADDITIONAL, THOUGH NOT A DECISIVE, FACTOR CONSIDERED IN THE DETERMINATION TO CANCEL THE INVITATION WAS THE FACT THAT THE QUANTITY REQUIRED FOR THE FISCAL YEAR 1968 A7D REQUIREMENTS WAS DRASTICALLY REDUCED FROM 797 TO 37 UNITS.

ALTHOUGH THE COGNIZANT ENGINEERING AND PROCUREMENT ACTIVITIES WERE OF THE OPINION, AT THE TIME OF THE CANCELLATION, THAT DESIGN CHANGES THEN UNDER STUDY COULD BE COMPLETED WITHIN 90 DAYS AND A NEW MULTIYEAR PROCUREMENT INITIATED SOON THEREAFTER, THE ENGINEERING CHANGES HAVE NOT AS YET BEEN DEFINITIZED. WE ARE ADVISED THAT THE DELAY IN DEFINING THE NECESSARY DESIGN CHANGES WAS ATTRIBUTABLE TO THE NEED TO OBTAIN ADDITIONAL DATA FROM THE BOEING COMPANY ON THE SHORT RANGE ATTACK MISSILE (SRAM) TEST PROGRAM AND ADVICE FROM GENERAL DYNAMICS, THE F-111 PRIME CONTRACTOR, THAT IT WOULD CONDUCT ADDITIONAL TESTS ON THE BOMB RACKS. IT WAS ESTIMATED IN NOVEMBER 1967 THAT THE TEST EFFORT BY GENERAL DYNAMICS WOULD NOT BE COMPLETED FOR ANOTHER 60 OR 90 DAYS. BY THIS TIME, A CRITICAL NEED AROSE FOR THE PROCUREMENT OF AN ADDITIONAL QUANTITY OF THE BOMB RACKS IN ORDER TO ASSURE THE CONTINUATION OF DELIVERIES REQUIRED TO SUPPORT PLANNED AIRCRAFT PRODUCTION SCHEDULES. IT WAS THEREFORE DETERMINED DURING NOVEMBER 1967 THAT AN EMERGENCY PROCUREMENT OF THE BOMB RACKS WOULD HAVE TO BE MADE UNDER THE EXISTING SPECIFICATION FROM AN EXPERIENCED PRODUCER ON A COMPRESSED DELIVERY SCHEDULE IN ORDER TO MEET PRODUCTION AIRCRAFT REQUIREMENTS.

THE DELIVERY SCHEDULE SET FORTH IN THE INVITATION WAS BELIEVED INADEQUATE TO SATISFY THE GOVERNMENT'S URGENT DEFENSE NEEDS. IN THIS REGARD, THE INVITATION CONTAINED A "FIRST ARTICLE APPROVAL-CONTRACTOR TESTING" CLAUSE WHICH PROVIDED IN PART AS FOLLOWS:

"E. FIRST ARTICLE APPROVAL-CONTRACTOR TESTING (AUG. 1965)

"/A) THE FIRST ARTICLE IS 3 UNIT/S) OF LOT/ITEM 1 WHICH SHALL BE TESTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED OR REFERENCED IN THIS CONTRACT. AT LEAST 30 CALENDAR DAYS PRIOR TO THE BEGINNING OF FIRST ARTICLE APPROVAL TESTS, THE CONTRACTOR SHALL FURNISH WRITTEN NOTICE TO THE CONTRACTING OFFICER OF THE TIME AND LOCATION OF THE TESTING SO THAT THE GOVERNMENT MAY WITNESS SUCH TESTING IF IT SO ELECTS.

"/B) WITHIN 240 CALENDAR DAYS FROM THE DATE OF THIS CONTRACT, THE FIRST ARTICLES AND THE FIRST ARTICLE APPROVAL TEST REPORT SHALL BE FORWARDED TO ----- MARKED -FIRST ARTICLE: CONTRACT NO. ----------, LOT/ITEM NO. ------- ---.- THE CONTRACTING OFFICER SHALL, BY WRITTEN NOTICE TO THE CONTRACTOR WITHIN 15 CALENDAR DAYS AFTER RECEIPT OF SUCH TEST REPORT BY THE GOVERNMENT, APPROVE, CONDITIONALLY APPROVE, OR DISAPPROVE SUCH FIRST ARTICLE. THE NOTICE OF APPROVAL OR CONDITIONAL APPROVAL SHALL NOT RELIEVE THE CONTRACTOR FROM COMPLYING WITH ALL REQUIREMENTS OF THE SPECIFICATIONS AND ALL OTHER TERMS AND CONDITIONS OF THIS CONTRACT. A NOTICE OF CONDITIONAL APPROVAL SHALL STATE ANY FURTHER ACTION REQUIRED OF THE CONTRACTOR. A NOTICE OF DISAPPROVAL SHALL CITE REASONS THEREFOR.'

DELIVERY OF ITEMS 1 THROUGH 10 UNDER ALTERNATE "A" OF THE INVITATION WAS REQUIRED TO BE MADE IN ACCORDANCE WITH THE FOLLOWING SCHEDULE IFAN AWARD WAS MADE BY AUGUST 31, 1967:

1968 1969 JUNE JULY AUG. SEPT. OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY

50 100 150 200 200 250 300 350 350 350 350 303

THE TEST REPORT WAS REQUIRED TO BE SUBMITTED IN ACCORDANCE WITH SCHEDULE PROVISION "E" QUOTED ABOVE. IF AWARD OF A CONTRACT UNDER THE INVITATION HAD BEEN MADE TO GTI IN NOVEMBER 1967, THE URGENT DELIVERY REQUIREMENTS COULD NOT HAVE BEEN MET. AS A RESULT, REQUEST FOR PROPOSALS (RFP) F33657- 68-R-0513 WAS ISSUED ON DECEMBER 8, 1967, TO PROCURE THIS ESSENTIAL AND URGENT MINIMUM QUANTITY. THE AIR FORCE ADVISES US THAT THESE RACKS ARE REQUIRED TO SATISFY ESSENTIAL OPERATIONAL MISSION REQUIREMENTS, INCLUDING THOSE FOR SOUTHEAST ASIA. EVERY EFFORT WILL BE MADE TO ADAPT RACKS TO MEET F-111 OPERATIONAL REQUIREMENTS AS FURTHER TESTS IDENTIFY PROBLEM AREAS. FURTHER, WE ARE ADVISED THAT ANY RACKS PROCURED FOR THE F-111 MAY BE REALLOCATED TO THE F-4, A-7D AND F-105 REQUIREMENTS.

THE RFP CALLED FOR OFFERS ON A TOTAL OF 2,376 BOMB RACKS TO SATISFY THE FOLLOWING FISCAL YEAR 1968 REQUIREMENTS: F-111, 1,402; F-4, 925; A7D, 37; PROJECT HARVEST REAPER, 12. DELIVERIES ARE REQUIRED TO BE MADE AS FOLLOWS: NOVEMBER 1968, 325; DECEMBER 1968 THROUGH MAY 1969, 329 MONTHLY AND BALANCE OF 77 IN JUNE 1969. THE AIR FORCE DETERMINED THAT ONLY FIRMS HAVING PREVIOUSLY MANUFACTURED AND PASSED PREPRODUCTION QUALIFICATION TESTS COULD MEET THE REQUIRED URGENT DELIVERY SCHEDULES. ACCORDINGLY, THE PROCUREMENT WAS NEGOTIATED UNDER THE PUBLIC EXIGENCY AUTHORITY OF 10 U.S.C. 2304 (A) (2), AND A BIDDERS' QUALIFICATION CLAUSE WAS INCORPORATED IN THE RFP WHICH PROVIDED THAT OFFERS WOULD BE ACCEPTED ONLY FROM FIRMS WHICH ARE CURRENTLY MANUFACTURING OR WHICH HAVE PREVIOUSLY MANUFACTURED MAU 12B/A BOMB RACKS.

PROPOSALS UNDER THE RFP WERE RECEIVED FROM OREGON TECHNICAL PRODUCTS, GRANTS PASS, CALIFORNIA, THE CURRENT PRODUCER, AND AIRCRAFT HYDROFORMING, GARDENA, CALIFORNIA, A PRIOR PRODUCER. GTI REQUESTED AND WAS FURNISHED A RFP, ALTHOUGH GTI DOES NOT QUALIFY UNDER THE QUALIFICATION CLAUSE AS A MANUFACTURER OF THE BOMB RACK.

IN A LETTER DATED FEBRUARY 7, 1968, TO OUR OFFICE, YOU STATE THAT:

"* * * THE INITIAL REASONS ASSIGNED BY THE AIR FORCE FOR ITS CANCELLATION -- SPECIFICATIONS CHANGES AND REDUCTIONS IN REQUIREMENTS WERE SHOWN TO BE INVALID BY THE RFP WHICH CALLED FOR RACKS TO THE SAME SPECIFICATION AND FOR FISCAL YEAR 1968 REQUIREMENTS, SUBSTANTIALLY IN THE SAME TOTAL QUANTITIES. THE SUBSEQUENT INSERTION OF THE EXPERIENCE QUALIFICATION- CLAUSE IN THE RFP AND BELATED CONTENTION THAT ONLY PRIOR MANUFACTURERS CAN MEET DELIVERY SCHEDULES SUGGEST A CONTINUING AVOIDANCE OF THE REAL ISSUE AND A REFUSAL TO ASSESS OBJECTIVELY THE CAPABILITY OF GTI BUT INSTEAD TO LIMIT COMPETITION TO TWO PRIOR MANUFACTURERS ONLY AT A $230,000 PRICE SACRIFICE TO THE TAXPAYERS. GTI IS FULLY CONVINCED THAT THE AIR FORCE'S BASIC CONCERN COULD BE FULLY SATISFIED BY A PRE-AWARD SURVEY AS GTI HAS BEEN REQUESTING. * * *"

IT IS PROVIDED IN 10 U.S.C. 2305 (C) THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. THE HEAD OF THE AGENCY MAY, UNDER 10 U.S.C. 2311, DELEGATE THE AUTHORITY TO MAKE SUCH A DETERMINATION TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY. THAT AUTHORITY HAS BEEN DELEGATED TO THE CONTRACTING OFFICER BY THE TERMS OF PARAGRAPH 2-404.1 (B) OF ASPR. THE AUTHORITY VESTED IN THE HEAD OF THE AGENCY, AND DELEGATED IN THIS INSTANCE TO THE CONTRACTING OFFICER, IS EXTREMELY BROAD AND WE HAVE CONSISTENTLY HELD THAT A DETERMINATION PURSUANT THERETO IS NOT SUBJECT TO REVIEW BY OUR OFFICE, EXCEPT POSSIBLY UPON A CLEAR SHOWING OF FRAUD OR BAD FAITH AMOUNTING TO FRAUD. B-118013, MARCH 31, 1954; B-128422, AUGUST 30, 1956.

THE REPORTED FACTS, WHICH WE MUST ACCEPT AS CORRECT ABSENT EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THEIR CORRECTNESS, ESTABLISH THAT AT THE TIME THE INVITATION WAS CANCELED, IT WAS DETERMINED THAT DESIGN CHANGES WOULD BE REQUIRED IN THE BOMB RACKS IN ORDER TO MEET THE HIGH TEMPERATURE REQUIREMENTS OF THE F-111. THE AIR FORCE ADVISES THAT ALTHOUGH THE ONLY KNOWN DESIGN CHANGE REQUIRED WAS A CHANGE OF THE BOMB RACK SIDE PLATES FROM ALUMINUM TO STEEL, OTHER CHANGES WERE EXPECTED. THE COST OF THE SIDE PLATE CHANGE WAS FORECAST AS A 10 PERCENT INCREASE IN PRICE. ON AUGUST 22, 1967, THE PROCUREMENT OFFICE WAS ADVISED BY THE A7D AIRCRAFT PROJECT OFFICE THAT THE 797 RACKS SPECIFIED FOR THE A7D FISCAL YEAR 1968 REQUIREMENTS UNDER THE INVITATION WERE TO BE REDUCED FROM 797 TO 37 RACKS. IN VIEW OF THE PENDING DESIGN CHANGE IN RACKS FOR THE F-111 RESULTING IN DEFERRAL OF THE FISCAL YEAR 1968 QUANTITY OF 1,438 RACKS AND THE REDUCTION IN QUANTITY OF THE A7D FISCAL YEAR 1968 RACK REQUIREMENTS, THE INVITATION WAS CANCELED IN ITS ENTIRETY. ALTHOUGH AN AWARD POSSIBLY COULD HAVE BEEN MADE FOR THE REMAINING FISCAL YEAR 1968 REQUIREMENTS OF 718 RACKS FOR THE F-4 AND 37 FOR THE A7D, THE CONTRACTING OFFICER DETERMINED, BECAUSE OF THE REDUCTION IN REQUIREMENTS, THAT IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT, AS WELL AS THAT OF THE COMPETING BIDDERS, THAT THE INVITATION BE CANCELED. ON THE BASIS OF THE INFORMATION THEN BEFORE HIM, WE CANNOT FAULT THE CONTRACTING OFFICER FOR THE CANCELLATION ACTION TAKEN.

MOREOVER, WE FIND NO EVIDENCE THAT THE CONTRACTING OFFICER'S DECISION TO CANCEL THE INVITATION WAS ARBITRARY OR CAPRICIOUS. AND IT IS OUR OPINION, ON THE RECORD BEFORE US, THAT AT THE TIME THE INVITATION WAS CANCELED, THERE EXISTED COMPELLING AND COGENT REASONS FOR SUCH ACTION. SINCE WE FIND NO LEGAL BASIS TO DISTURB THE CANCELLATION ACTION, ANY AWARD THEREUNDER IS EFFECTIVELY PRECLUDED. TO ALL INTENTS AND PURPOSES, THE CANCELLATION OF THE INVITATION UNDER ASPR 2-404 EFFECTIVELY TERMINATED THE LEGAL EXISTENCE OF ALL BIDS SUBMITTED IN RESPONSE THERETO.

IN PARAGRAPH 10 (B) OF THE INVITATION INSTRUCTIONS AND CONDITIONS, BIDDERS WERE ADVISED SPECIFICALLY THAT THE GOVERNMENT RESERVED THE RIGHT TO REJECT ANY AND ALL OFFERS. EVEN IN THE ABSENCE OF SUCH RESERVATION, IT HAS BEEN HELD THAT A REQUEST FOR BIDS DOES NOT IMPORT AN OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED. O-BRIEN V CARNEY, 6 F.SUPP. 761, AND COLORADO PAV. CO. V MURPHY, 78 F.28. WE ARE FULLY AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR COGENT REASONS. B-153229, FEBRUARY 5, 1964. WHILE WE DO NOT LIGHTLY REGARD THE CANCELLATION OF INVITATIONS AFTER BIDS ARE OPENED, AT THE SAME TIME WE RECOGNIZE THE CONTRACTING OFFICER'S RIGHT AND DUTY TO TAKE CANCELLATION ACTION UPON RECEIPT OF ADVICE FROM THE TECHNICAL ACTIVITY THAT THE INVITATION AS ISSUED CONTAINED ENGINEERING DEFICIENCIES WHICH WERE BELIEVED TO SERIOUSLY INHIBIT THE COMBAT CAPABILITIES OF TACTICAL AIRCRAFT FOR USE IN SOUTHEAST ASIA.

YOU CONTEND THAT NO PUBLIC EXIGENCY EXISTED HERE WHICH SUPPORTS A NEGOTIATED PROCUREMENT. THE PROCUREMENT AUTHORITY CITED FOR THE NEGOTIATION IS 10 U.S.C. 2304 (A) (2) AND ASPR 3-202.2 (III). UNDER SUBPARAGRAPH (III), CONTRACTS OR PURCHASES MAY BE NEGOTIATED FOR "ESSENTIAL EQUIPMENT FOR * * * AIRCRAFT GROUNDED OR ABOUT TO BE GROUNDED, WHEN SUCH EQUIPMENT * * * IS NEEDED AT ONCE FOR THE PERFORMANCE OF THE OPERATIONAL MISSION OF SUCH AIRCRAFT.' THE CONTRACTING OFFICER'S DETERMINATIONS AND FINDINGS IN THIS REGARD DATED NOVEMBER 1, 1967, FOUND THAT THE USE OF FORMAL ADVERTISING WOULD BE IMPRACTICABLE BECAUSE:

"A. UNITS FOR PROJECT HARVEST REAPER AND PRIORITY BRICKBAT WITH A UMMIPS PRIORITY DESIGNATOR 02 REQUIRE IMMEDIATE DELIVERY.

"B. THE F-111 A7D, AND F-4E AIRCRAFT REQUIRE DELIVERY OF RACKS NOV 1968 THROUGH JUL 1969. THIS DELIVERY CANNOT BE MET BY UTILIZING NORMAL ADVERTISING METHODS SINCE INITIAL DELIVERIES UTILIZING A NEW CONTRACTOR WOULD TAKE AT LEAST TWENTY-ONE (21) MONTHS. THE LACK OF THE MAU-12B/A BOMB RACK WOULD IMPAIR THE MISSION SUPPORT CAPABILITIES OF THE ABOVE AIRCRAFT AND SERIOUSLY AFFECT OUR WAR EFFORT.'

THE PROCUREMENT STATUTE AUTHORIZES THE ABANDONMENT OF FORMAL ADVERTISING PROCEDURES AT ANY STAGE IN ORDER TO HASTEN THE FULFILLMENT OF THE GOVERNMENT'S REQUIREMENTS BY MEANS OF NEGOTIATION WHEN THE USE OF FORMAL ADVERTISING HAS CEASED TO BE EITHER FEASIBLE OR PRACTICABLE BECAUSE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT THERETO. 10 U.S.C. 2304 (A) (2). THE LEGISLATIVE HISTORY OF THE ACT REVEALS A CONGRESSIONAL PURPOSE TO HAVE THE EXIGENCY PROVISION AVAILED OF WHENEVER UNUSUAL URGENCY REQUIRES AN IMMEDIATE PURCHASE IRRESPECTIVE OF WHETHER THAT URGENCY COULD OR SHOULD HAVE BEEN FORESEEN. SEE SENATE REPORT NO. 571, 80TH CONGRESS, 1ST SESSION, ON H.R. 1366 WHICH WAS ENACTED AS THE ARMED SERVICES PROCUREMENT ACT OF 1947. ALTHOUGH ASPR 3-202 LIMITS THE USE OF THE PUBLIC EXIGENCY EXCEPTION TO SITUATIONS WHERE THE AGENCY'S MISSIONS WOULD BE SERIOUSLY PREJUDICED IF THE SUPPLIES WERE NOT FURNISHED BY A CERTAIN DATE, IT PERMITS NEGOTIATION WHEN THE SUPPLIES CAN NOT BE PROCURED BY THAT CERTAIN DATE BY MEANS OF FORMAL ADVERTISING.

AN ADMINISTRATIVE FINDING TO MAKE AWARD UNDER THE NEGOTIATING AUTHORITY OF 10 U.S.C. 2304 (A) (2) IS FINAL AS A MATTER OF LAW. SEE 10 U.S.C. 2310 (B), AS AMENDED BY PUBLIC LAW 87-653, APPROVED SEPTEMBER 10, 1962, 76 STAT. 529. SEE, ALSO, B-153037, MAY 11, 1964, 45 COMP. GEN. 374, 378.

IN YOUR LETTER OF DECEMBER 21, 1967, YOU STATE THAT THE "OFFEROR'S QUALIFICATION CLAUSE" WAS IMPROPERLY INCLUDED IN THE RFP. THIS CLAUSE IS CONTAINED IN THE SCHEDULE OF THE RFP AND PROVIDES AS FOLLOWS:

"SUCCESSFUL AND TIMELY PRODUCTION OF THE ITEMS CALLED FOR BY THIS RFP REQUIRES EXPERIENCE IN THE MANUFACTURE OF MAU-12A/A OR MAU-12B/A BOMB RACKS. THEREFORE, OFFERS TO FABRICATE AND FURNISH THE EQUIPMENT SPECIFIED HEREIN WILL BE ACCEPTED ONLY FROM FIRMS WHO ARE CURRENTLY OR WHO HAVE PREVIOUSLY MANUFACTURED MAU-12A/A OR MAU-12B/A BOMB RACKS MEETING SPECIFICATION/DRAWING REQUIREMENTS. OFFERORS SHALL SUBMIT EVIDENCE WITH THEIR QUOTATION THAT THEY HAVE SUCCESSFULLY MANUFACTURED THE ABOVE ITEMS; THIS INFORMATION SHOULD INCLUDE IDENTIFICATION OF CONTRACTS SUCCESSFULLY PERFORMED, SPECIFICATIONS/DRAWINGS USED BY NUMBER AND DATE, QUANTITY MANUFACTURED, AND IF NO CURRENT CONTRACTS ARE BEING PERFORMED EVIDENCE THAT THE OFFEROR STILL HAS THE NECESSARY FACILITIES, EQUIPMENT, TOOLING AND PERSONNEL. THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OFFER WHICH DOES NOT COMPLY WITH THE ABOVE REQUIREMENTS.'

WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS ADVANCED IN YOUR LETTER BUT WE FIND NO BASIS TO QUESTION THE INCLUSION OF THE CLAUSE. IN THIS CASE, THE USE OF THE "OFFEROR'S QUALIFICATION CLAUSE" WAS ADMINISTRATIVELY JUSTIFIED IN ORDER TO ASSURE THE TIMELY DELIVERY OF THE ITEMS BECAUSE THE PURCHASE OF THE BOMB RACKS FROM OTHER THAN EXPERIENCED MANUFACTURERS WOULD INVOLVE SUBSTANTIAL ADDITIONAL PERIODS OF TIME FOR DELIVERY. THE REPORTED URGENCY OF THE PROCUREMENT MADE IT IMPERATIVE THAT EXISTING SUPPLIERS BE UTILIZED TO MEET THE ACCELERATED DELIVERY SCHEDULES WHICH, IN THE CONSIDERED OPINION OF THE RESPONSIBLE PROCUREMENT AGENCY COULD NOT BE MET BY NEW PRODUCERS. SEE B-147866, FEBRUARY 16, 1962, WHERE OUR OFFICE OFFERED NO OBJECTION TO THE PROCUREMENT OF URGENTLY NEEDED EQUIPMENT BY NEGOTIATING ONLY WITH PROVEN SOURCES OF SUPPLY.

IT IS REPORTED THAT DUE TO THE COMPLEXITY OF THIS BOMB RACK, THE AIR FORCE HAS EXPERIENCED CONSIDERABLE DIFFICULTY WITH EACH NEW SUPPLIER ATTEMPTING TO PRODUCE THIS RACK FOR THE FIRST TIME TO THE SPECIFICATIONS AND DELIVERY SCHEDULES REQUIRED. FOR THIS REASON, THE AIR FORCE HAS DECIDED TO PLACE THIS RACK ON THE QUALIFIED PRODUCTS LIST (QPL). APPROVAL FOR SUCH QPL LISTING WAS OBTAINED ON DECEMBER 4, 1967. ALL INTERESTED SOURCES WILL BE GIVEN THE OPPORTUNITY TO QUALIFY THEIR PRODUCTS FOR INCLUSION IN THE QPL AND COMPETE FOR FUTURE PROCUREMENTS. THE BIDDERS' QUALIFICATION CLAUSE WILL BE USED IN ANY FUTURE PROCUREMENT THAT MAY BE NECESSARY PRIOR TO THE ESTABLISHMENT OF THE QPL.

FOR THE REASONS STATED ABOVE, PARTICULARLY THE LEGAL FINALITY ACCORDED TO THIS NEGOTIATION OF AN URGENTLY NEEDED PROCUREMENT, WE FIND NO SUBSTANTIAL BASIS TO DISAGREE WITH THE ACTIONS TAKEN BY THE PROCUREMENT ACTIVITY.