B-163047, FEB. 26, 1968

B-163047, FEB. 26, 1968

BIDS - NEGOTIATION - SOLE-SOURCE DECISION TO DECITRON ELECTRONICS CORPORATION DENYING PROTEST AGAINST NEGOTIATED AWARD BY NAVAL SHIP SYSTEMS COMMAND FOR RANGE AZIMUTH INDICATORS. WHERE AFTER PRE-AWARD SURVEY PROTESTANT WAS DETERMINED INCAPABLE OF MEETING DELIVERY REQUIREMENTS AND SBA REFUSED TO ISSUE COC, PROCUREMENT WAS NEGOTIATED UNDER 10 U.S.C. 2304 (A) (14) FOR TECHNICAL OR SPECIALIZED EQUIPMENT URGENTLY NEEDED. PROTESTANT ALLEGES THAT FIRST ARTICLE TESTING TIME WAS TOO SHORT BUT CONTRACTING AGENCY SHOWS THAT ALTHOUGH TIGHT IT WAS FEASIBLE. CONCERNING CONTENTION THAT URGENT NEED WAS "ARTIFICIALLY CONTRIVED" , AGENCY'S FINDINGS THAT PROCUREMENT WAS URGENT TO MEET NEW CONSTRUCTION DATES AND REPLACEMENT NEEDS MUST BE REGARDED AS FINAL AND NOT SUBJECT TO LEGAL OBJECTION. THEREFORE PROTEST MUST BE DENIED.

TO DECITRON ELECTRONICS CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 6, 1967, AND SUPPORTING LETTER OF THE SAME DATE, PROTESTING AGAINST AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER REQUEST FOR PROPOSALS (RFP) N00024-68 R-3018/S), ISSUED BY THE NAVAL SHIP SYSTEMS COMMAND (NSSC).

THE RFP WAS ISSUED ON AUGUST 3, 1967, AND CALLED FOR FURNISHING OF334 AN/SPA-25 RANGE AZIMUTH INDICATORS, 97 DRA (DEAD RECKONING AUXILIARY) UNITS, ASSOCIATED REPAIR PARTS, SERVICES INCLUDING TRAINING AND TRAINING COURSES, ASSOCIATED TECHNICAL DATA AND REPORTS. THE AN/SPA-25 IS A FULLY TRANSISTORIZED REPEATER USED FOR INTERNAL AND EXTERNAL SHIPBOARD RADAR DISPLAY.

IT IS REPORTED THAT THIS PROCUREMENT WAS ORIGINALLY DIRECTED SOLELY TO MOTOROLA, INC., THE ONLY PRIOR PRODUCER, SINCE IT WAS THE OPINION OF THE PROCURING ACTIVITY THAT ONLY A PRIOR PRODUCER COULD DELIVER THE EQUIPMENT 12 MONTHS AFTER AWARD. THE RFP DID NOT PROVIDE FOR FIRST ARTICLE APPROVAL OF THE EQUIPMENT PRIOR TO PRODUCTION, SINCE THIS WAS NOT NECESSARY WITH MOTOROLA, WHICH HAD PREVIOUSLY FURNISHED ALMOST IDENTICAL UNITS. HOWEVER, AMENDMENT 0001 OF AUGUST 11, 1967, PROVIDED FOR FIRST ARTICLE APPROVAL FOR NONPRIOR PRODUCERS, CALLING FOR DELIVERY FOR TESTING OF TWO OF THE INDICATORS WITHIN 120 DAYS AFTER AWARD. TWO PROPOSALS WERE RECEIVED, ONE FROM MOTOROLA WHICH WAS RESPONSIVE, AND ONE FROM YOUR FIRM WHICH WAS NOT FULLY RESPONSIVE TO THE RFP REQUIREMENTS, BUT WHICH QUOTED A LOWER PRICE. AFTER BEING GIVEN AN OPPORTUNITY TO SUBMIT A RESPONSIVE PROPOSAL, YOUR FIRM SUBMITTED A RESPONSIVE PROPOSAL WHICH WAS STILL LOWER THAN MOTOROLA'S PROPOSAL. HOWEVER, AFTER A PREAWARD SURVEY, IT WAS DETERMINED THAT YOUR FIRM WAS NOT CAPABLE OF MEETING NAVY'S DELIVERY REQUIREMENTS. ACCORDANCE WITH APPLICABLE LAW AND REGULATIONS THE MATTER WAS SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION, WHICH REFUSED TO ISSUE YOUR FIRM A CERTIFICATE OF COMPETENCY (COC).

PURSUANT TO 10 U.S.C. 2304 (A) (14), THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS) ISSUED DETERMINATION AND FINDINGS NO. 67- 1303, DATED JULY 5, 1967, JUSTIFYING THE PROPOSED NEGOTIATION OF A CONTRACT ON THE BASIS THAT THE PURCHASE IS FOR TECHNICAL OR SPECIALIZED PROPERTY REQUIRING AN EXTENDED PERIOD OF PREPARATION FOR MANUFACTURE, AND FOR WHICH FORMAL ADVERTISING AND COMPETITIVE BIDDING WOULD RESULT IN DUPLICATION OF PREPARATION WHICH WOULD UNDULY DELAY THE PROCUREMENT. PERTINENT PART THE ASSISTANT SECRETARY FOUND AND DETERMINED THAT:

"3. THE MANUFACTURE OF THIS RANGE AZIMUTH INDICATOR REQUIRES DETAILED KNOWLEDGE OF AND FAMILIARITY WITH THE PLANS AND SPECIFICATIONS. THESE RANGE AZIMUTH INDICATORS ARE URGENTLY REQUIRED TO MEET NEW CONSTRUCTION CPSS DATES AND TO MEET IMMEDIATE URGENT MAINTENANCE REPLACEMENT NEEDS OF THE ACTIVE FLEET. MOTOROLA, INC., HAS MANUFACTURED THE AN/SPA-25 AND HAS AN APPROVED PREPRODUCTION UNIT. MOTOROLA, DUE TO ITS PREVIOUS EXPERIENCE, IS IN A POSITION TO BEGIN DELIVERIES APPROXIMATELY 12 MONTHS AFTER AWARD AND CAN MEET SUBSTANTIALLY ALL OF THE REQUIRED DELIVERIES. ALTHOUGH DELIVERIES OF APPROXIMATELY 45 EQUIPMENTS COULD BE MET BY A TIMELY COMPETITIVE PROCUREMENT, SUCH QUANTITY AS A SEPARATE PROCUREMENT WOULD BE AN UNECONOMIC PRODUCTION QUANTITY DUE TO START-UP COSTS INCLUDING PREPRODUCTION COSTS. TO DESIGN, MANUFACTURE AND TEST A PREPRODUCTION UNIT ANY OTHER FIRM WOULD BE REQUIRED TO DUPLICATE PREPARATION COSTS AND WOULD REQUIRE A PERIOD OF TIME SUCH THAT IT COULD NOT MEET APPROXIMATELY 98 PERCENT OF THE DELIVERIES AND AWARD TO SUCH FIRM WOULD ACCORDINGLY UNDULY DELAY THE PROCUREMENT.'

IT IS YOUR CONTENTION THAT THE REQUIREMENT IMPOSED ON NONPRIOR PRODUCERS TO DELIVER TWO FIRST ARTICLES FOR GOVERNMENT APPROVAL WITHIN 120 DAYS OF AWARD WAS UNREASONABLE AND UNNECESSARY AND, THAT WAIVER OF THE FIRST ARTICLE REQUIREMENT, IN THE CASE OF MOTOROLA, WAS IMPROPER. FURTHER, YOU STATE THAT THE NAVY'S URGENT NEED FOR THE EQUIPMENT IS "ARTIFICIALLY CONTRIVED.'

CONCERNING THE REQUIREMENT THAT NONPRIOR PRODUCERS SUBMIT FIRST ARTICLE EQUIPMENT FOR APPROVAL WITHIN 120 DAYS AFTER AWARD, WE ARE ADVISED THAT THIS REQUIREMENT IS NECESSARY BECAUSE OF THE 12 MONTH DELIVERY REQUIREMENT. IN THE NAVY'S JUDGMENT, AT LEAST FIVE MONTHS WOULD BE REQUIRED FOR A PROSPECTIVE CONTRACTOR TO BEGIN TO DELIVER PRODUCTION EQUIPMENT AFTER HE HAD FABRICATED THE FIRST ARTICLE EQUIPMENTS AND SECURED GOVERNMENT APPROVAL THEREOF. THUS IT WAS NECESSARY THAT THE FIRST ARTICLES BE SUBMITTED FOR APPROVAL WITHIN 120 DAYS, WHICH, WITH THE 90 DAYS REQUIRED FOR THE GOVERNMENT'S APPROVAL ACTION, COULD BRING THE CONTRACTOR UP TO SEVEN MONTHS AFTER CONTRACT BEFORE HE COULD BEGIN HIS PRODUCTION RUN. IT IS THE NAVY'S OPINION THAT THE 120 DAY SCHEDULE FOR FABRICATION AND TESTING OF THE REQUIRED TWO FIRST ARTICLE EQUIPMENTS, WHILE ADMITTEDLY TIGHT, WAS FEASIBLE, AND THIS OFFICE IS NOT IN A POSITION TO QUESTION THESE TECHNICAL JUDGMENTS MADE BY THE PROCURING ACTIVITY. SEE B-158299, JUNE 6, 1966.

CONCERNING YOUR CONTENTION THAT WAIVER OF THE FIRST ARTICLE APPROVAL REQUIREMENT FOR MOTOROLA WAS IMPROPER, ASPR 1-1903 (A) PROVIDES FOR THE WAIVER OF FIRST ARTICLE APPROVAL WHERE SUPPLIES ,IDENTICAL OR SIMILAR TO" THOSE CALLED FOR HAVE BEEN PREVIOUSLY FURNISHED BY THE OFFEROR AND ACCEPTED BY THE GOVERNMENT. ACCORDING TO THE NAVY, THE EQUIPMENT PREVIOUSLY OFFERED BY MOTOROLA WAS "SIMILAR" IF NOT "IDENTICAL" TO THE EQUIPMENT TO BE PROCURED UNDER THE PRESENT PROCUREMENT. THIS FACT WOULD APPEAR TO BE BORNE OUT BY THE STATEMENT IN THE DETERMINATION AND FINDINGS THAT MOTOROLA HAS MANUFACTURED THE AN/SPA-25 AND HAS AN APPROVED PREPRODUCTION UNIT.

CONCERNING YOUR CONTENTION THAT NAVY'S URGENT NEED FOR THE EQUIPMENT IS "ARTIFICIALLY TRIVED," SINCE 10 U.S.C. 2310 EXPRESSLY PROVIDES THAT DETERMINATION AND FINDINGS MADE PURSUANT TO 10 U.S.C. 2304 (A) (14) ARE FINAL, THE FINDINGS MADE BY THE ASSISTANT SECRETARY ON JULY 5, 1967, THAT THE EQUIPMENT BEING PROCURED WAS URGENTLY REQUIRED TO MEET NEW CONSTRUCTION DATES AND TO MEET IMMEDIATE URGENT MAINTENANCE REPLACEMENT NEEDS OF THE ACTIVE FLEET, MUST BE REGARDED BY OUR OFFICE AS FINAL AND NOT SUBJECT TO LEGAL OBJECTION. SEE B-142524, JUNE 23, 1960; B-143428, OCTOBER 20, 1960; B-145674, SEPTEMBER 14, 1961; B 159250, JUNE 27, 1966.