B-162998, MAY 7, 1968

B-162998, MAY 7, 1968

TO SIMMONDS PRECISION PRODUCTS, INC.:

WE REFER TO A TELEGRAM DATED NOVEMBER 28, 1967, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST ANY AWARD OF A CONTRACT TO CONSOLIDATED AIRBORNE SYSTEMS, INCORPORATED (CONAIR), UNDER UNITED STATES ARMY SOUTHWEST PROCUREMENT AGENCY (SPA), PASADENA, CALIFORNIA, REQUEST FOR PROPOSALS (RFP) NO. DAAG07-68-R-1182.

THE SOLICITATION WAS ISSUED ON OCTOBER 9, 1967, PURSUANT TO THE AUTHORITY CONTAINED IN 10 U.S.C. 2304 (A) (10) TO NEGOTIATE A CONTRACT "FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION.' THE RECORD CONTAINS DETERMINATIONS AND FINDINGS DATED OCTOBER 5, 1967, AUTHORIZING THE USE OF EXCEPTION 10 IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-210.2 (XV). UNDER 10 U.S.C. 2310 (B), THE FINDINGS IN SUPPORT OF THE DECISION TO NEGOTIATE A CONTRACT PURSUANT TO 10 U.S.C. 2304 (A) (10) ARE FINAL AS A MATTER OF LAW.

FIXED-PRICE PROPOSALS WERE REQUESTED FOR FURNISHING TWO COMPONENTS FOR USE IN THE BELL HELICOPTER COMPANY (BELL) UH-1 HELICOPTER FUEL GAUGE, WHICH ARE DESCRIBED IN THE SOLICITATION AS FOLLOWS:

"ITEM NO. QUANTITY

"1. GAGE, LIQUID QUANTITY 1,554

FSN: 6680-868-9811

MFG P/N 205-061-633-7 (BELL)

393004-01409 (SIMMONDS PRECISION)

"2. TRANSMITTER, LIQUID 215

FSN:6680-758-2816

MFG P/N 205-061-633-13 (BELL)

381057-06008 (SIMMONDS)"

POTENTIAL OFFERORS WERE ADVISED THAT THE COMPONENTS COULD BE FURNISHED IN ACCORDANCE WITH PARAGRAPH 45 OF THE SOLICITATION, ENTITLED "SUPPLIES ELIGIBLE FOR CONTRACT-AWARD CONSIDERATION," WHICH PROVIDES, IN PART, THAT:

"A. THIS SOLICITATION IS NOT ON AN -OR EQUAL- BASIS. HOWEVER, PROSPECTIVE CONTRACTORS MAY SUBMIT OFFERS ON SUPPLIES BEARING DIFFERENT PART NUMBERS FROM THOSE CITED IN THE SOLICITATION PROVIDED THAT IN ORDER FOR SUCH OFFERS TO BE RESPONSIVE, ALL OF THE FOLLOWING PREREQUISITES MUST BE MET:

"/I) THAT ON OR BEFORE THE TIME OF CONTRACT/S) AWARD/S) THE OFFERED SUPPLIES HAVE BEEN SUCCESSFULLY TESTED AND QUALIFIED FOR AIR APPLICATION BY A COMMERCIAL OR GOVERNMENTAL TESTING FACILITY;

"/II) THAT ON OR BEFORE TIME OF CONTRACT/S) AWARD/S) THE SUPPLIES AND THEIR TESTING AND QUALIFICATION THEREOF HAVE BEEN ACCEPTED BY THE GOVERNMENT OF THE PRIME MANUFACTURER AS ACCEPTABLE SUPPLIES AND ARE FULLY INTERCHANGEABLE WITH THE PART NUMBERS CITED IN THE SOLICITATION AND SUITABLE FOR THE INTENDED USE ON * UH-1 AIRCRAFT; AND

"/III) EVIDENCE OF SUCH PREQUALIFICATION AND ACCEPTANCE IS FURNISHED BY THE PROSPECTIVE CONTRACTOR AS A PART OF HIS OFFER ON OR BEFORE THE TIME OF CONTRACT/S) AWARD/S).'

THE ITEMS ARE TO CONFORM TO UNITED STATES ARMY AVIATION MATERIEL COMMAND (AVCOM) SOURCE CONTROLLED PROCUREMENT PACKAGE NO. 205-061-633, LETTER "B" DATED MAY 22, 1967. THESE SPECIFICATIONS WERE PREPARED BY BELL (BELL PROCUREMENT SPECIFICATION 205-061-633). PARAGRAPH 2.1 OF THIS SPECIFICATION INCORPORATES BY REFERENCE MILITARY SPECIFICATION MIL-G- 26988A/3/USAF DATED MAY 21, 1959,"TO THE EXTENT SPECIFIED HEREIN.' THE REFERENCED MIL SPECIFICATION SIMILARLY COVERS GENERAL REQUIREMENTS FOR TRANSISTORIZED TYPE FUEL QUANTITY GAUGES. PARAGRAPH 3.1 THEREOF IMPOSES A QUALIFICATION TEST REQUIREMENT AND UNDER PARAGRAPH 6.3 SATISFACTION OF THE TESTS FOR INCLUSION ON A QUALIFIED PRODUCTS LIST IS REQUIRED. THE AIR DEVELOPMENT CENTER, WRIGHT PATTERSON AIR FORCE BASE, OHIO, IS LISTED AS THE QUALIFYING ACTIVITY. IN CONTRAST TO MIL-G-26988A/3/USAF, THE AVCOM SPECIFICATION GENERALLY IMPOSES FEWER TEST REQUIREMENTS AND, IN THIS RESPECT, PARAGRAPH 3.1 QUALIFICATION PROVIDES THAT: "THE LIQUID QUANTITY GAGE OR ANY SUBSYSTEM FURNISHED UNDER THIS SPECIFICATION SHALL BE A PRODUCT WHICH HAS BEEN TESTED AND HAS PASSED THE QUALIFICATION TESTS HEREIN, AND WHICH MUST THEREAFTER OPERATE TO PURCHASER'S SATISFACTION WHEN INCORPORATED IN THE HELICOPTER FOR WHICH IT IS PROVIDED.'

WHILE ACCELERATED DELIVERY OF THE ITEMS IS STATED TO BE DESIRABLE AND ACCEPTABLE, PARAGRAPH 23.F OF THE SOLICITATION ADVISES THAT: "OFFERS WILL BE EVALUATED ON THE BASIS OF THE LOWEST OVERALL PRICE TO THE GOVERNMENT.' FURTHER, UNDER THE TIME OF DELIVERY PROVISIONS, DELIVERY PROPOSED BY OFFERORS IN EXCESS OF 300 DAYS AFTER RECEIPT OF A WRITTEN NOTICE OF AWARD WOULD BE CONSIDERED NONRESPONSIVE. THE GOVERNMENT'S STATED DESIRED DELIVERY SCHEDULE FOR THE ITEMS IS AS FOLLOWS:

(WITHIN THE NUMBER OF DAYS STATED

BELOW AFTER DATE OF RECEIPT OF A "ITEM NO. QUANTITY TIME WRITTEN NOTICE OF AWARD) ---------- ------- --------------------- -----------------

1 518 90 DAYS ARO

518 120 DAYS ARO

518 150 DAYS ARO

2 215 90 DAYS ARO"

IN ACCORDANCE WITH PARAGRAPH 10 (G) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS, THE GOVERNMENT RESERVED THE RIGHT TO MAKE AWARD ON THE BASIS OF INITIAL OFFERS RECEIVED WITHOUT FURTHER DISCUSSION, AND OFFERORS WERE CAUTIONED TO SUBMIT INITIAL PROPOSALS ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT.

THE RECENT PROCUREMENT HISTORY INVOLVING CONTRACTS ENTERED INTO BY SPA FOR ITEMS 1 AND 2 INDICATES THAT AWARDS HAVE BEEN MADE TO SIMMONDS WITHOUT COMPETITION. IN THIS REGARD, THE SIMMONDS PARTS NUMBERS REFERENCED IN THE INVITATION FOR ITEMS 1 AND 2 ARE COVERED BY PATENTS NOS. 23,493 (REISSUE) AND 3,050,999, RESPECTIVELY. WE ARE ADVISED THAT IN AN ATTEMPT TO BROADEN COMPETITION, SPA ISSUED SOLICITATIONS TO 15 POTENTIAL SOURCES.

BY THE OCTOBER 27, 1967, CLOSING DATE FOR RECEIPT OF PROPOSALS, ONLY SIMMONDS AND CONAIR RESPONDED. THEREAFTER, A PREAWARD SURVEY OF BOTH OFFERORS WAS CONDUCTED AND BOTH WERE DETERMINED BY THE CONTRACTING OFFICER TO BE RESPONSIBLE. AFTER ALL NECESSARY INFORMATION RELATING TO RESPONSIBILITY WAS AVAILABLE, A DECISION TO NEGOTIATE WAS MADE ON NOVEMBER 27, 1967. ON THAT DATE, THE CONTRACTING OFFICER INFORMED OFFERORS BY TELEPHONE THAT REVISIONS TO PRICE AND DELIVERY TERMS WOULD BE CONSIDERED, AND BY TWX OFFERORS WERE FURTHER ADVISED THAT:

"IN ACCORDANCE WITH ASPR 3-805.1 (B) THAT ANY REVISION TO YOUR PROPOSAL MUST BE SUBMITTED TO REACH THIS OFFICE NO LATER THAN 4:00 P.M., PST 29 NOVEMBER 1967/CMM TIME AND DATE ESTABLISHED FOR CLOSING OF FINAL NEGOTIATIONS.'

DURING THE INTERVAL BETWEEN RECEIPT OF PROPOSALS AND THE DECISION TO NEGOTIATE, YOUR FIRM SUBMITTED TWO REVISIONS TO ITS INITIAL PROPOSAL. NOVEMBER 2, 1967, A MEETING REQUESTED BY SIMMONDS WAS HELD WITH THE CONTRACTING OFFICER. INSOFAR AS IS RELEVANT HERE, THE CONTRACTING OFFICER'S MEMORANDUM OF THE MEETING ADVISES THAT YOUR FIRM ASKED WHETHER REVISIONS COULD BE SUBMITTED IF IMPROVEMENTS IN PRICE AND DELIVERY TERMS WERE POSSIBLE. WITH RESPECT TO THE SUBSTANCE OF THE REPLY MADE, THE CONTRACTING OFFICER'S MEMORANDUM STATES AS FOLLOWS:

"9. I EXPLAINED * * * THAT UNDER THE TERMS OF OUR PROPOSAL THE GOVERNMENT HAD THE RIGHT TO MAKE AN AWARD WITHOUT ANY FURTHER CONTACT WITH THE OFFERORS OR, IF CONSIDERED NECESSARY, THE PROCUREMENT COULD BE OPENED UP FOR NEGOTIATION. I EXPLAINED THAT, AT THIS TIME, WITHOUT FURTHER EVALUATION, I COULD NOT SAY WHETHER THIS PROCUREMENT WOULD BE OPEN TO NEGOTIATION; HOWEVER, IF WE DECIDED TO DO SO, IT WAS PROPER TO NOTIFY ALL OFFERORS AT THE SAME TIME AND ESTABLISH A CLOSING DATE FOR REVISED PROPOSALS, AFTER WHICH TIME ANY SUBSEQUENT REVISIONS WOULD BE TREATED AS LATE PROPOSALS. * * * I ADVISED (THAT) SINCE THE GOVERNMENT HAD NOT OPENED UP NEGOTIATIONS, WE COULD ONLY RECEIVE ANY REVISIONS AND THEN ACT UPON THEM IN AN APPROPRIATE MANNER DEPENDING UPON THE DETERMINATION MADE AFTER FURTHER EVALUATION OF THE PROCUREMENT.'

BY TWX DATED NOVEMBER 7, 1967, YOU SUBMITTED A PRICE REVISION AND OFFERED AN ACCELERATED DELIVERY SCHEDULE FOR BOTH ITEMS, ADVISING THAT SUCH ACTION WAS POSSIBLE SINCE YOU PROPOSED TO COMBINE THIS PROCUREMENT WITH ANOTHER CONTRACT. SUBSEQUENTLY, ON NOVEMBER 13, 1967, YOUR FIRM FILED A PROTEST WITH THE CONTRACTING OFFICER AGAINST AWARD TO ANY OTHER OFFEROR AND SUBMITTED A FURTHER UNSOLICITED PRICE REDUCTION, SUGGESTING THAT SUCH REVISION WAS ATTRIBUTABLE TO THE PROPOSED INCORPORATION OF PRODUCT IMPROVEMENTS.

CONSIDERING NOW THE RESPONSES TO THE CONTRACTING OFFICER'S ADVICE THAT PROPOSAL REVISIONS WOULD BE CONSIDERED, CONAIR BY TWX DATED NOVEMBER 29, 1967, DECLINED TO FURTHER REVISE ITS INITIAL PROPOSAL. HOWEVER, YOUR FIRM BY TWX DATED NOVEMBER 29, 1967, AGAIN REDUCED ITS PRICE PROPOSAL AND PROPOSED A FURTHER ACCELERATION OF THE DELIVERY SCHEDULE FOR ITEM 1.

UPON EVALUATION OF THE PROPOSALS, SPA DETERMINED CONAIR TO BE THE LOW RESPONSIVE, RESPONSIBLE OFFEROR AND IT PROPOSES TO AWARD A CONTRACT TO THAT FIRM. IN ACCORDANCE WITH ASPR 2-407.9 (B) (2) AND (3), AWARD HAS BEEN WITH HELD PENDING OUR CONSIDERATION OF THE MATTER.

INITIALLY, YOU CONTEND IN YOUR LETTER OF NOVEMBER 28, 1967, THAT THE SOLICITATION SHOULD HAVE INCLUDED A PATENT INDEMNITY PROVISION IN ADDITION TO AN AUTHORIZATION AND CONSENT CLAUSE SINCE AN AWARD TO ANY OTHER OFFEROR WOULD INFRINGE YOUR PATENTS. IN THIS REGARD, YOU ORIGINALLY CONTENDED THAT AWARD TO CONAIR FOR ITEMS 1 AND 2 WOULD CLEARLY INFRINGE YOUR PATENTS NOS. 23,493 (REISSUE) AND 3,050,999. SUBSEQUENTLY, ON MARCH 11, 1968, THE COURT OF CLAIMS IN SIMMONDS PRECISION PRODUCTS, INC. V UNITED STATES (CT. CL. NOS. 462-59 AND 133 64), APPROVED A STIPULATED JUDGMENT IN FAVOR OF YOUR FIRM FOR INFRINGEMENT BY THE GOVERNMENT OF PATENT NO. 23,493 (REISSUE). BY VIRTUE OF THIS STIPULATION, THE GOVERNMENT HAS ACQUIRED A ROYALTY-FREE NONEXCLUSIVE LICENSE FOR FUTURE PRACTICE OF THE INVENTION COVERED BY THIS PATENT.

WHILE IT MUST NOW BE CONCEDED THAT THE CLAIMED INFRINGEMENT IS CONFINED TO PATENT NO. 3,050,999, THE QUESTION OF WHETHER THE COMPONENTS WHICH CONAIR PROPOSES TO FURNISH WOULD HAVE INFRINGED BOTH PATENTS IS NEVERTHELESS UNRESOLVED, AND THE ASSISTANT GENERAL COUNSEL (PATENTS), HEADQUARTERS ARMY MATERIEL COMMAND, IN A LETTER DATED FEBRUARY 1, 1968, ADVISES THAT "IT IS IMPOSSIBLE * * * TO PREDICT INFRINGEMENT WITH ANY DEGREE OF CERTAINTY.'

IN ANY EVENT, IT MUST BE NOTED THAT IN ACCORDANCE WITH ASPR 9-103.3 "A PATENT INDEMNITY CLAUSE IS NOT REQUIRED TO BE INCLUDED IN NEGOTIATED CONTRACTS, BUT MAY BE INCLUDED * * * AS AUTHORIZED IN 9-103 (II) (B).' ASPR 9-103 (II) (B) PERMITS THE INCLUSION OF AN INDEMNITY CLAUSE IN THE FOLLOWING CIRCUMSTANCES:

"IN THE CASE OF CONTRACTS TO BE AWARDED EITHER BY FORMAL ADVERTISING (SEE 2-407.8) OR NEGOTIATION, A PATENT OWNER CONTENDS THAT A PROSPECTIVE PROCUREMENT WOULD INFRINGE HIS PATENT AND THE LOW BIDDER OR OFFEROR IS WILLING TO INDEMNIFY THE GOVERNMENT AS TO SUCH PATENT EITHER (1) WITHOUT INCREASE IN PRICE ON THE BASIS THAT THE PATENT IS INVALID OR NOT INFRINGED, OR (2) FOR OTHER GOOD REASONS.'

BY LETTER DATED DECEMBER 21, 1967, CONAIR HAS DENIED INFRINGEMENT AND ADVISED SPA THAT "IT IS WILLING TO ACCEPT A PATENT INDEMNITY CLAUSE RUNNING IN FAVOR OF THE GOVERNMENT IN ANY AWARD MADE TO US UNDER THE SUBJECT RFP AT NO ADDITIONAL COST.' THE DIRECTOR OF PROCUREMENT AND PRODUCTION HAS ADVISED US THAT THE OFFER TO ACCEPT A PATENT INDEMNITY CLAUSE WOULD NOT BE OBJECTIONABLE.

UNDER THE PRESENT CIRCUMSTANCES AND IN LIGHT OF THE REGULATIONS QUOTED ABOVE, OUR OFFICE COULD INTERPOSE NO LEGAL OBJECTION TO EITHER THE INITIAL DECISION NOT TO INCLUDE A PATENT INDEMNITY PROVISION, OR TO THE PROPOSED INCLUSION OF THE CLAUSE IN ANY CONTRACT WHICH MAY BE AWARDED TO CONAIR UNDER THE RFP.

WITH RESPECT TO THE OBSERVATION IN YOUR LETTER OF NOVEMBER 28, 1967, THAT THE PRESENCE OF A PATENT INDEMNITY PROVISION WOULD "NORMALLY RAISE A COMPETITOR'S PRICE BY FIVE PERCENT," IT MAY BE GENERALLY ACKNOWLEDGED THAT SUCH PROVISION CONCEIVABLY COULD INCREASE CONTRACT COSTS. HOWEVER, IT IS CLEAR THAT THERE IS NO BASIS FOR CONSIDERING SUCH PERCENTAGE FACTOR IN THE EVALUATION OF PROPOSALS. SEE OUR DECISION 45 COMP. GEN. 13, 16. IN THAT CASE, WE REJECTED THE CONTENTION THAT POSSIBLE PATENT INFRINGEMENT LIABILITY MUST BE CONSIDERED IN EVALUATION IF PATENT INDEMNITY IS NOT PROVIDED FOR THE FOLLOWING REASONS:

"* * * THE MATTER OF INFRINGEMENT AND THE ULTIMATE FIXING OF A REASONABLE COMPENSATION THEREFOR IS FOR ULTIMATE RESOLUTION BY THE COURT OF CLAIMS AS PROVIDED BY 28 U.S.C. 1498, WITH THE POSSIBLE EXCEPTION OF AN ADMINISTRATIVE SETTLEMENT UNDER THE AUTHORITY OF 10 U.S.C. 2386. UNTIL A SETTLEMENT IS REACHED THE MATTER IS SPECULATIVE. IN THAT CONNECTION SEE B -141459, MARCH 29, 1962, WHEREIN OUR OFFICE HELD THAT IT WAS NOT NECESSARY TO INCLUDE A REASONABLE AMOUNT OF DAMAGES FOR PATENT INFRINGEMENT IN THE LOW BID SINCE THERE HAD BEEN NO SHOWING OF ANY LIABILITY ON THE PART OF THE GOVERNMENT FOR REASONABLE COMPENSATION UNDER 28 U.S.C. 1498 IN CONNECTION WITH PREVIOUS PURCHASES MADE UNDER LIKE CIRCUMSTANCES. * * *" YOU NEXT CONTEND THAT THE CONDUCT OF SPA DURING THIS PROCUREMENT CONSTITUTES AN AUCTION TECHNIQUE PROHIBITED BY ASPR 3-805.1 (B). SUPPORT OF THIS CONTENTION, IT IS ARGUED IN YOUR LETTER OF NOVEMBER 28, 1967, THAT: "UNDER THE CIRCUMSTANCES, THE GOVERNMENT SHOULD HAVE EITHER ACCEPTED THE MOST FAVORABLE INITIAL PROPOSAL WITHOUT DISCUSSION, WHICH WOULD RESULT IN A FAIR AND REASONABLE PRICE UNDER ASPR 3-805.1 (V), OR TRULY NEGOTIATED A FAIR AND REASONABLE PRICE (BASED ON COST BREAKDOWNS, ETC.) UNDER ASPR 3-805.1 (B). BY DOING NEITHER, BUT TAKING A THIRD ROUTE OF ALLOWING US TO UNILATERALLY AMEND OUR PROPOSAL WITHOUT NEGOTIATIONS, THE GOVERNMENT, IN EFFECT, HAS BEEN ENGAGING IN A SUB SILENTIO AUCTION TECHNIQUE. "OUR PRICES ARE NOW BELOW WHAT WOULD BE NORMALLY FAIR AND REASONABLE. HOWEVER, WE AGAIN FEEL FORCED TO REDUCE OUR PRICE WITHOUT HAVING HAD THE OPPORTUNITY OF NEGOTIATING A FAIR AND REASONABLE PRICE WITH THE GOVERNMENT. THEY WILL NOT TALK TO US ABOUT PRICES. THIS PROCEDURE IS TANTAMOUNT TO AN OPEN INVITATION FOR BIDS WHEREIN AS MANY LOW BIDS ARE ACCEPTABLE AS A VENDOR WISHES, WITHOUT NEGOTIATIONS, UNTIL THE GOVERNMENT DECIDES TO CUT IT OFF. SUCH IS NOT THE INTENT OF ASPR 3-805.1.'

OFFERORS WERE SPECIFICALLY ADVISED TO SUBMIT PROPOSALS ON THE MOST FAVORABLE TERMS AND, AS YOU RECOGNIZE, THE GOVERNMENT COULD PROPERLY AWARD A CONTRACT ON AN INITIAL PROPOSAL BASIS WITHOUT DISCUSSIONS IF ACCEPTANCE WOULD RESULT IN FAIR AND REASONABLE PRICES. THIS AUTHORITY IS FOUND IN 10 U.S.C. 2304 (G), WHICH PROVIDES AS FOLLOWS:

"/G) IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH RATES OR PRICES ARE NOT FIXED BY LAW OR REGULATION AND IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, AND WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED: PROVIDED, HOWEVER, THAT THE REQUIREMENTS OF THIS SUBSECTION WITH RESPECT TO WRITTEN OR ORAL DISCUSSIONS NEED NOT BE APPLIED TO PROCUREMENTS IN IMPLEMENTATION OF AUTHORIZED SET-ASIDE PROGRAMS OR TO PROCUREMENTS WHERE IT CAN BE CLEARLY DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION OR ACCURATE PRIOR COST EXPERIENCE WITH THE PRODUCT, THAT ACCEPTANCE OF AN INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN FAIR AND REASONABLE PRICES AND WHERE THE REQUEST FOR PROPOSALS NOTIFIES ALL OFFERORS OF THE POSSIBILITY THAT AWARD MAY BE MADE WITHOUT DISCUSSION.'

AT THE TIME OF THE NOVEMBER 3, 1967, CONFERENCE, NO DECISION TO EXERCISE THIS STATUTORY DISCRETIONARY AUTHORITY HAD BEEN MADE. FURTHER, THE CONTRACTING OFFICER'S STATEMENT RELATIVE TO THE SUBMISSION OF REVISIONS WAS CLEARLY CONDITIONAL, AND WE THEREFORE DO NOT BELIEVE THAT THE STATEMENT WAS INCONSISTENT WITH THE RESERVED RIGHT TO MAKE AWARD ON AN INITIAL PROPOSAL BASIS. THE CONTRACTING OFFICER MAINTAINS THAT THE FIRST TWO REVISIONS SUBMITTED WERE NOT SOLICITED, AND YOU HAVE CHARACTERIZED THEM AS "UNILATERAL.'

WHILE IT WOULD HAVE BEEN MORE APPROPRIATE AS A MATTER OF PROCUREMENT PRACTICE HAD THE CONTRACTING OFFICER REFERRED TO THE LATE PROPOSALS AND MODIFICATION PROVISIONS OF THE SOLICITATION, IT IS OUR OPINION THAT THE CONTRACTING OFFICER'S ADVICE MUST BE VIEWED AS A DESCRIPTION OF THE OPTIONS AVAILABLE TO HIM UNDER THE APPLICABLE REGULATIONS. ACCORDINGLY, WE DO NOT BELIEVE THAT SUCH ADVICE INITIATED AN IRREGULAR NEGOTIATION TECHNIQUE.

WITH RESPECT TO THE ADMINISTRATIVE DECISION ON NOVEMBER 27, 1967, TO OPEN NEGOTIATIONS FOR THE PURPOSE OF ACCEPTING PRICE AND DELIVERY REVISIONS, IT IS CLEAR THAT THE OPPORTUNITIES EXTENDED TO OFFERORS TO SUBMIT PROPOSAL REVISIONS CANNOT WITHOUT MORE BE CONSIDERED PROHIBITED AUCTION TECHNIQUES. INDEED, AS WE OBSERVED IN B-158028, FEBRUARY 14, 1966:

"* * * IT IS DIFFICULT FOR US TO UNDERSTAND HOW THE NEGOTIATION TECHNIQUES OF ASPR, SECTION III, PART 8, COULD BE EFFECTIVELY IMPLEMENTED SO AS TO ASSURE MAXIMUM PRICE COMPETITION WITHOUT AFFORDING EACH RESPONSIBLE, COMPETITIVE OFFEROR AN OPPORTUNITY TO SUBMIT PRICE . REVISIONS; AND A REQUEST FOR PRICE REVISIONS IN THAT CONTEXT CERTAINLY COULD IMPLY THAT A PARTICULAR OFFEROR'S PRICE IS EXCESSIVE OR HIGHER THAN SOME OTHER OFFER.'

MOST SIGNIFICANTLY, YOU HAVE NOT SUGGESTED THAT THE CONTRACTING OFFICER RELEASED ANY INFORMATION AS TO THE EXISTENCE, NUMBER, IDENTITY, OR COMPETITIVE POSITION OF OTHER OFFERORS, AND THERE IS NOTHING IN THE RECORD TO INDICATE A DEPARTURE FROM THE REQUIREMENTS OF ASPR FOR PROTECTING THE CONFIDENTIALITY OF PROCUREMENT INFORMATION. UNDER LIKE CIRCUMSTANCES, WE HAVE REJECTED THE CONTENTION THAT A CONTRACTING OFFICER HAD ENGAGED IN AN AUCTION TECHNIQUE BY SIMPLY PERMITTING PROPOSAL REVISIONS BY ESTABLISHING A NEW CLOSING DATE AFTER RECEIVING TWO UNSOLICITED PRICE REVISIONS DISPLACING THE PROTESTANT'S INITIALLY LOW PROPOSAL. B-160675, MARCH 10, 1967.

MOREOVER, THE CONTRACTING OFFICER'S DECISIONS TO CONSIDER YOUR REVISIONS WERE CERTAINLY NOT PREJUDICIAL TO YOUR FIRM, AND CONAIR WAS ACCORDED A SIMILAR OPPORTUNITY TO REVISE ITS PROPOSAL. SEE OUR DECISIONS B-161782, NOVEMBER 21, 1967; 47 COMP. GEN. -----, AND B 161448, FEBRUARY 7, 1968, WHEREIN WE CONSIDERED THE RELATIONSHIP BETWEEN THE PROVISIONS OF ASPR 3- 506 FOR THE REJECTION OF LATE PROPOSALS AND MODIFICATIONS AND THE INITIATION OF NEGOTIATIONS IN ACCORDANCE WITH 10 U.S.C. 2304 (G).

YOU NEXT CONTEND IN LETTERS OF MARCH 7, MARCH 13 AND APRIL 17, 1968, THAT CONAIR DID NOT COMPLY WITH THE PREQUALIFICATION REQUIREMENTS AND, IN ACCORDANCE WITH PARAGRAPH 45, MAY NOT BE CONSIDERED FOR AWARD. IT IS MAINTAINED, IN THIS RESPECT, THAT MIL-G-26988A/3/USAF (AND ITS ASSOCIATED QPL) INCORPORATED IN THE AVCOM SPECIFICATIONS IS CONTROLLING AND MANDATORY FOR USE BY THE ARMY INSOFAR AS QUALIFICATION IS CONCERNED, AND THAT CONAIR HAS NOT COMPLETED THE QUALIFICATION TESTS REQUIRED BY THIS SPECIFICATION. YOU ALSO ALLEGE THAT CONAIR HAS NOT COMPLIED WITH THE QUALIFICATION REQUIREMENTS OF THE AVCOM SPECIFICATION ITSELF, AND THAT ANY DEVIATION PERMITTED PURSUANT TO PARAGRAPH 6.3 OF THAT SPECIFICATION IS ILLEGAL. YOUR FIRM, ON THE OTHER HAND, HAS QUALIFIED TO BOTH SPECIFICATIONS.

WE ARE ADVISED BY THE PROCURING ACTIVITY THAT MIL-G-26988A/3/USAF IS A "LIMITED COORDINATED" SPECIFICATION, NOT CONCURRED IN BY THE DEPARTMENT OF THE ARMY, AND ACCORDINGLY ITS USE IS NOT MANDATORY. SEE ALSO ASPR 1-1202 (A) (II). FURTHER, WE ARE ADVISED THAT THE REQUIREMENTS OF MIL-G- 26988A/3/USAF EXCEED THE MINIMUM NEEDS OF THE ARMY. IN THIS CONNECTION, THE RECORD INCLUDES A COMMUNICATION DATED APRIL 9, 1968, FROM THE COMMANDING GENERAL, AVCOM, CONTAINING A TECHNICAL COMPARISON OF THE AVCOM SPECIFICATION AND MIL-G 26988A/3/USAF IN SUPPORT OF THE CONTRACTING OFFICER'S ADVICE, AS FOLLOWS: "2. A COMPARISON OF THE SPECIFICATIONS REVEAL:

A. MIL-G-26988 REQUIRES A TOTALIZER.

B. MIL-G-26988 REQUIRES INDICATOR LIGHTING.

C. MIL-G-26988 REQUIRES SUBSTANTIALLY MORE ACCEPTANCE TESTING THAN THE AVCOM SPECIFICATION. SEE SAMPLING PLAN B, PARA 4.2.2.2. DIFFERENCE BETWEEN THE UH-1 AND AIR FORCE AIRCRAFT SUCH AS LENGTH AND VOLUME OF UH-1 FUSELAGE, LIMITED AMOUNTS OF AVIONICS IN UH-1 HELICOPTER, THE LOW SERVICE CEILING OF UH-1 HELICOPTER AND THE ABSENCE OF PRESSURIZATION AND TEMPERATURE CONTROLS ON UH-1 REDUCES THE NECESSITY OF VERIFYING THE QUALIFICATION TEST AT EACH PROCUREMENT. "3. THE MAINTENANCE HISTORY OF THE GAGE REVEALS THAT THE FAILURE RATE IN UH-1 ACFT IS NEGLIGIBLE.'

IN VIEW OF THE FOREGOING, NO LEGAL BASIS IS PRESENTED FOR AN OBJECTION TO SPA'S USE OF THE AVCOM SPECIFICATION.

WITH RESPECT TO THE CONTENTION THAT CONAIR HAS NOT QUALIFIED TO THE AVCOM SPECIFICATION AS REQUIRED BY PARAGRAPH 45 OF THE SOLICITATION, THE CONTRACTING OFFICER BY COMMUNICATION OF FEBRUARY 16, 1968, TO HEADQUARTERS UNITED STATES ARMY MATERIEL COMMAND, ADVISED AS FOLLOWS: "2. ON 9 NOVEMBER 67, MR. TED C. HALL, CHIEF, ENGINEERING DIVISION, US ARMY AVIATION BELL PLANT ACTIVITY, ACTING UNDER THE AUTHORITY OF THE CONTRACTING OFFICER, CONTRACT DA 23-204-AMC-03501/T) WITH BELL HELICPOTER COMPANY, FORT WORTH TEXAS, DID ACCEPT AND APPROVE FOR THE GOVERNMENT CONSOLIDATED AIRBORNE SYSTEMS PART NUMBER PAA424. "3. ON 14 NOVEMBER 67, MR. HALL, AGAIN ACTING UNDER THE ABOVE-CITED AUTHORITY DID ACCEPT AND APPROVE FOR THE GOVERNMENT CONSOLIDATED AIRBORNE SYSTEMS PART NUMBER DSF419. "4. ACCEPTANCE AND APPROVAL IN BOTH CASES IS IN ACCORDANCE WITH THE REQUIREMENTS OF PARA 45.A. (I) AND (II) OF RFP DAAG07-68-R-1182 ISSUED BY THE US ARMY SOUTHWEST PROCUREMENT AGENCY. "5. THE GOVERNMENT'S ACCEPTANCE AND APPROVAL OF PARTS CITED ABOVE WAS AND IS BASED UPON THE COMPLETION OF PREQUALIFICATION TESTS AND BELL HELICOPTER'S RECOMMENDATION THAT THE GOVERNMENT ACCEPT, AS FULLY QUALIFYING, THE CONSOLIDATED AIRBORNE SYSTEMS PART NUMBERS PAA424 AND DSF419 IN ACCORDANCE WITH THE PERTINENT TERMS OF THE RFP CITED, AND THE SPECIFICATIONS INCLUDED THEREIN.'

FURTHER, WE UNDERSTAND THAT FULL COMPLIANCE WITH ALL ASPECTS OF THE TEST REQUIREMENTS WAS OBTAINED, AND THAT NO WAIVER UNDER PARAGRAPH 6.3 OF THE AVCOM SPECIFICATION WAS GRANTED. TURNING TO THE QUESTION OF WHETHER THE QUALIFICATION OF CONAIR TO THE AVCOM SPECIFICATION WAS PREJUDICIAL TO YOUR FIRM, WE AGREE, AS YOU CONTEND, THAT THE PREQUALIFICATION REQUIREMENT IMPOSED HERE "GOES TO THE ESSENCE OF THE PROCUREMENT.' 45 COMP. GEN. 71, 75. HOWEVER, THERE IS NO BASIS FOR OUR OFFICE TO QUESTION THE TECHNICAL DETERMINATION BY COGNIZANT AGENCY PERSONNEL THAT CONAIR HAS QUALIFIED WITHOUT EXCEPTION TO THE TEST REQUIREMENTS. 17 COMP. GEN. 554. MOST IMPORTANTLY, WE ARE ADVISED THAT ALTHOUGH THE AVCOM SPECIFICATION INVOLVED HERE CONTAINS REVISIONS IT IS IDENTICAL IN ALL MATERIAL RESPECTS TO THE SPECIFICATION UTILIZED BY SPA IN PRIOR PROCUREMENTS FOR WHICH AWARD WAS MADE TO YOUR FIRM, AND TO WHICH YOU QUALIFED.

THEREFORE, AND SINCE UNDER THE CIRCUMSTANCES THE QUALIFICATION OF AN ADDITIONAL SOURCE TO THE AVCOM SPECIFICATION MUST BE VIEWED AS A PERMISSIBLE INCREASE IN COMPETITION, THE FACT OF THE QUALIFICATION OF CONAIR CANNOT BE CONSIDERED PREJUDICIAL TO YOUR FIRM. CF. 40 COMP. GEN. 352.

FOR THE FOREGOING REASONS, AND AFTER CONSIDERATION OF YOUR OTHER OBJECTIONS, OUR OFFICE WILL NOT OBJECT TO FAVORABLE CONSIDERATION OF THE CONAIR OFFER UNDER THE SUBJECT REQUEST FOR PROPOSALS. ACCORDINGLY, YOUR PROTEST IS DENIED.