B-164501, DEC. 26, 1968

B-164501: Dec 26, 1968

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TO THE BENDIX CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 3. BIDS WERE OPENED ON MAY 29. THE LOW AND SECOND LOW BIDDERS WERE REJECTED AS NOT RESPONSIBLE AND NONRESPONSIVE. THIS OFFICE WAS ADVISED BY NAVY THAT ON THE BASIS OF A PREAWARD SURVEY REDFORD. HAD BEEN FOUND RESPONSIBLE AND AWARD WAS BEING MADE TO THAT COMPANY. BENDIX PROTESTED TO THE NAVY THAT IT WAS THE ONLY ACCEPTABLE BIDDER. REDFORD WAS DETERMINED RESPONSIBLE AND ON THAT BASIS THE PROTEST BY BENDIX WAS DENIED BY LETTER OF AUGUST 15. ESSENTIALLY THAT PROTEST WAS MADE ON THREE BASES. THAT REDFORD WAS LOW AS A RESULT OF AN INCORRECT EVALUATION OF BIDS DUE TO THE REQUIREMENT IN THE INVITATION FOR PRICING OF REPAIR PARTS AS AN INCLUDED CONTRACT ITEM.

B-164501, DEC. 26, 1968

TO THE BENDIX CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 3, 1968, PROTESTING THE CONTRACT AWARD MADE TO THE REDFORD CORPORATION BY THE DEPARTMENT OF THE NAVY UNDER INVITATION FOR BIDS NO. N00024-68-B-7580 FOR ULTRASONIC CLEANERS AND ON-BOARD REPAIR PARTS.

THE INVITATION FOR BIDS, ISSUED ON APRIL 29, 1968, CALLED FOR 28 ULTRASONIC CLEANERS UNDER ITEM 1 AND 28 SETS OF ON-BOARD REPAIR PARTS UNDER ITEM 2 ON AN "ALL OR NOTHING" BASIS. BIDS WERE OPENED ON MAY 29, 1968, AND THE LOW AND SECOND LOW BIDDERS WERE REJECTED AS NOT RESPONSIBLE AND NONRESPONSIVE, RESPECTIVELY. BY LETTER OF AUGUST 15, 1968, THIS OFFICE WAS ADVISED BY NAVY THAT ON THE BASIS OF A PREAWARD SURVEY REDFORD, THE THIRD LOW BIDDER, HAD BEEN FOUND RESPONSIBLE AND AWARD WAS BEING MADE TO THAT COMPANY.

ON JUNE 21, 1968, BENDIX PROTESTED TO THE NAVY THAT IT WAS THE ONLY ACCEPTABLE BIDDER. ALTHOUGH THE NAVY AGREED WITH THE BENDIX PROTEST RESPECTING OTHER BIDDERS, REDFORD WAS DETERMINED RESPONSIBLE AND ON THAT BASIS THE PROTEST BY BENDIX WAS DENIED BY LETTER OF AUGUST 15, 1968. BENDIX BY LETTER OF OCTOBER 3, 1968, INSTATED ITS PROTEST CONCERNING REDFORD WITH THIS OFFICE. ESSENTIALLY THAT PROTEST WAS MADE ON THREE BASES. FIRST, THAT REDFORD WAS LOW AS A RESULT OF AN INCORRECT EVALUATION OF BIDS DUE TO THE REQUIREMENT IN THE INVITATION FOR PRICING OF REPAIR PARTS AS AN INCLUDED CONTRACT ITEM. SECOND, THAT PERFORMANCE BY ANYONE OTHER THAN BENDIX, THE PREVIOUSLY APPROVED MANUFACTURER, WAS VIRTUALLY IMPOSSIBLE. THIRD, THAT REDFORD WAS NOT PROPERLY AND COMPLETELY EVALUATED INASMUCH AS ONLY COMPANIES WHICH HAD PREVIOUSLY SUPPLIED EQUIPMENT SHOULD BE ACCEPTABLE WHEREAS REDFORD HAD IN PAST EMPLOYED PIEZOELECTRIC TRANSDUCERS RATHER THAN THE REQUIRED MAGNETORESTRICTIVE TRANSDUCER.

THE DEPARTMENT OF THE NAVY FURNISHED THE FOLLOWING COMMENTS (NOT NECESSARILY IN THIS ORDER) ON THE BASES FOR THE PROTEST BY BENDIX:

"BENDIX'S (FIRST) GROUND OF PROTEST IS THAT THERE WAS AN INCORRECT EVALUATION OF BIDS IN THAT BENDIX'S BID ON THE EQUIPMENT WAS LOWER THAN REDFORD'S THOUGH HIGHER OVERALL DUE TO THE BENDIX PRICE FOR ON-BOARD REPAIR PARTS. IN THIS CONNECTION BENDIX CLAIMS THAT SINCE REDFORD HADN-T PREVIOUSLY SUPPLIED THE EQUIPMENT, IT WAS WITHOUT KNOWLEDGE OF THE REPAIR PARTS REQUIREMENT AND COULDN-T SUBMIT A REALISTIC PARTS PRICE, AND THUS THERE WASN-T A COMMON BASIS FOR EVALUATING PARTS. BENDIX PRESENTED A SIMILAR ARGUMENT IN ITS PRE-AWARD PROTEST TO THE CONTRACTING OFFICER BUT DID NOT ASSERT THAT BIDS SHOULD BE EVALUATED ON ADJUSTED EQUIPMENT PRICES, BUT ONLY THAT INCLUSION OF THE REPAIR PARTS REQUIREMENT PLACED BENDIX IN AN -EXTREMELY UNFORTUNATE POSITION.- WE FELT THIS ARGUMENT DID NOT WARRANT DISCUSSION IN OUR REPLY TO BENDIX BECAUSE (I) THE IFB WAS ON AN -ALL OR NOTHING- BASIS, SUBJECT TO WAIVER OF CERTAIN DATA ITEMS FOR THE PREVIOUS PRODUCER, SO THAT AN EVALUATION WHICH EXCLUDED REPAIR PARTS WAS NOT POSSIBLE UNDER THE TERMS OF THE IFB, AND (II) IT IS OBVIOUS THAT IF A NEW SUPPLIER IS IN A POSITION TO QUOTE A REALISTIC PRICE FOR THE CLEANER, HE CAN QUOTE A REALISTIC PRICE FOR REPAIR PARTS WHICH CORRESPOND TO PARTS USED IN THE CLEANER. * * *

* * * * * * * "TURNING IN MORE DETAIL TO BENDIX'S CLAIM THAT AS A PREVIOUS SUPPLIER IT ALONE KNEW THE EXACT PARTS NEEDED TO MEET THE ON- BOARD REPAIR PARTS REQUIREMENT, THE FOLLOWING FACTORS ARE FURNISHED FOR YOUR INFORMATION. THE SPECIFICATIONS CALL FOR ULTRASONIC CLEANERS OF SPECIFIED SIZE AND CONFIGURATION AND PERFORMANCE. WITHIN SUCH LIMITATIONS EQUIPMENTS VARYING IN DESIGN, INCLUDING PARTS AND COMPONENTS, YET EACH MEETING THE SPECIFICATION ARE POSSIBLE AND PRACTICABLE, SO OBVIOUSLY THE REPAIR PARTS WILL VARY WITH THE PARTICULAR DESIGN OF THE CLEANER. ACCORDINGLY, THE ON-BOARD REPAIR PARTS REQUIREMENT (SEE P. 8 OF THE IFB) WAS STATED IN TERMS OF A FORMULA OR GENERAL DESCRIPTION; FOR EXAMPLE, PROVIDE A SPARE FUSE FOR EACH TYPE OFFUSE USED IN THE EQUIPMENT, PROVIDE 24 SPARE RECIRCULATING FILTER ELEMENTS, PROVIDE A SPARE MAGNET IF A MAGNET IS USED IN THE EQUIPMENT, AND SO ON. FROM MANY YEARS THIS COMMAND HAS USED SIMILAR FORMULAE OR GENERAL DESCRIPTIONS FOR ON-BOARD REPAIR PARTS IN ITS SPECIFICATIONS AND PROCUREMENTS OF MECHANICAL/ELECTRICAL EQUIPMENT FOR SHIPBOARD USE, AND THEY HAVE PROVEN TO BE REALISTIC AND WORKABLE.

* * * * * * * "AS ANOTHER GROUND OF PROTEST, WHICH HAD PREVIOUSLY BEEN PRESENTED TO THE CONTRACTING OFFICER, BENDIX ASSERTS THAT IT IS VIRTUALLY IMPOSSIBLE FOR ANYONE OTHER THAN A PREVIOUS PRODUCER TO MEET THE DELIVERY SCHEDULE FOR PRODUCTION DELIVERIES BEGINNING SIX MONTHS AFTER DATE OF AWARD. IN THIS CONNECTION, BENDIX IS THE ONLY PRIOR PRODUCER OF THESE ULTRASONIC CLEANERS, AND THE IFB PROVIDED THAT THE FIRST ARTICLE (PREPRODUCTION) REQUIREMENTS AND CERTAIN DATA ITEMS (RELIABILITY ANALYSIS AND PREDICTION, MAINTAINABILITY TASK ANALYSIS, AND PHOTOLITHOGRAPHIC NEGATIVES OF THE TECHNICAL MANUAL) WOULD BE WAIVED FOR THE PRIOR PRODUCER. "BENDIX SUPPORTS THIS GROUND OF PROTEST BY OUTLINING THE VARIOUS STEPS THAT A NEW PRODUCER MUST GO THROUGH I.E. ... -DEVELOP PRELIMINARY MASTER PLANS, SUBMIT FOR APPROVAL, OBTAIN APPROVAL, PROCURE PARTS, BUILD THE FIRST ARTICLE, TEST THE MIL-SPEC REQUIREMENTS, SUBMIT THE FIRST ARTICLE TEST REPORT, OBTAIN APPROVAL AND THEN PROCURE PARTS AND BUILD SIX ADDITIONAL UNITS AND ACCOMPLISH ALL WITHIN A SIX-MONTH PERIOD.- BENDIX ASSERTS THAT THESE STEPS MUST BE PERFORMED SEQUENTIALLY AND IN VIEW OF THE LEAD TIME BEING EXPERIENCED FOR MILITARY SPECIFICATION COMPONENTS QUESTIONS WHETHER DELIVERY WILL BE MADE WITHIN THE SPECIFIED TIME PERIOD. FURTHER, BENDIX ASSUMES THAT THE PRE-AWARD SURVEY OF REDFORD WAS MADE WITHOUT FULL AWARENESS OF THE REQUIREMENTS FOR PRELIMINARY PLANS, USE OF MILITARY SPECIFICATION COMPONENTS AND THEIR LEAD TIMES, AND THE TIME INCREMENTS FOR APPROVAL AND TESTING. WE RECOGNIZE THAT BENDIX ALREADY HAD HIS PLANS AND, OF COURSE, WON-T HAVE TO GO THROUGH A FIRST ARTICLE CYCLE, BUT WE CERTAINLY DO NOT AGREE THAT NO ONE ELSE COULD MEET THE DELIVERY REQUIREMENT BEGINNING WITH 7 PRODUCTION UNITS SIX MONTHS AFTER DATE OF CONTRACT. "IN THE FIRST PLACE IT IS NOT NECESSARY TO COMPLETE EACH OF THE VARIOUS STEPS ABOVE LISTED BEFORE STARTING ON THE NEXT STEP. TRUE THE IFB AND THE CONTRACT PROVIDE THAT ANY MATERIALS ACQUIRED FOR, OR WORK DONE ON, THE SUPPLIES TO BE FURNISHED IN ADVANCE OF APPROVAL OF PRELIMINARY PLANS SHALL BE AT THE CONTRACTOR'S RISK. SIMILARLY, THE IFB AND CONTRACT PROVIDE THAT ANY MATERIALS ACQUIRED FOR, OR WORK DONE ON, PRODUCTION EQUIPMENT IN ADVANCE OF APPROVAL OF THE FIRST ARTICLE SHALL BE AT THE SOLE RISK OF THE CONTRACTOR. SUCH A RISK IS COMMONLY ACCEPTED BY CONTRACTORS AND REDFORD IS DOING SO IN THIS CASE, I.E. REDFORD IS ACQUIRING OR MAKING FIRM COMMITMENTS FOR COMPONENTS IN ADVANCE OF APPROVAL OF PRELIMINARY PLANS, AND HIS PRODUCTION PLAN INVOLVES BUILDING SIX UNITS CONCURRENTLY WITH THE FIRST ARTICLE. FURTHER, BENDIX'S ASSUMPTION THAT THE PRE-AWARD SURVEY WAS MADE WITHOUT FULL AWARENESS OF THE REQUIREMENTS IS WITHOUT FOUNDATION AND ERRONEOUS. "FROM THE ENCLOSED COPY OF THE PRE-AWARD SURVEY, YOU CAN READILY SEE THAT, AMONG OTHER MATTERS, THE SURVEY FOUND THAT REDFORD'S TECHNICAL CAPABILITY, PRODUCTION CAPABILITY AND ABILITY TO MEET REQUIRED SCHEDULE WERE SATISFACTORY. MORE SPECIFICALLY, THE SURVEY SHOWED THAT REDFORD WAS PROPOSING TO START PRODUCTION OF THE FIRST LOT OF SEVEN CLEANERS IN 60 DAYS, THAT PRODUCTION TIME OF 30 DAYS IS NORMAL, THAT REDFORD IS PRODUCING A SIMILAR COMMERCIAL CLEANER BUT WOULD HAVE TO REPLACE SOME COMMERCIAL COMPONENTS WITH PROPER SPECIFICATION MATERIAL, THAT ALL PURCHASED PARTS AND COMPONENTS WERE AVAILABLE ON SHORT LEAD TIMES WITH ONE EXCEPTION, THAT THIS EXCEPTION, BASED ON FIRM DELIVERY QUOTED BY THE VENDOR, WOULD NOT PRECLUDE TIMELY FIRST ARTICLE TESTING, THAT ABOUT 3 WEEKS WAS SUFFICIENT FOR TESTING AND PREPARATION OF THE FIRST ARTICLE TEST REPORT, AND THAT REDFORD HAD ALL NECESSARY TEST FACILITIES IN-HOUSE, EXCEPT SHOCK AND VIBRATION TEST STANDS WHICH WERE AVAILABLE IN THE LOCAL AREA. THE SURVEY CONCLUDES THAT REDFORD'S PRODUCTION PLAN MEETS THE REQUIRED DELIVERY SCHEDULE AND IS CONSIDERED TO BE REALISTIC AND FEASIBLE. THE SURVEY RECOMMENDS AWARD. "BENDIX ASSERTS AS (THE LAST) GROUND OF PROTEST THAT THERE WAS AN INCOMPLETE EVALUATION OF REDFORD. SHOWN IN OUR LETTER TO YOUR OFFICE OF 15 AUGUST 1968, THE SPECIFICATIONS REQUIRE THAT THE ULTRASONIC CLEANERS HAVE A MAGNETORESTRICTIVE TYPE TRANSDUCER AND BRANSON, THE SECOND LOW BIDDER, WAS NON-RESPONSIVE BECAUSE IT OFFERED A PIEZOELECTRIC TYPE TRANSDUCER. BENDIX CLAIMS THAT REDFORD'S LITERATURE STATES THAT ALL OF REDFORD'S SONIC CLEANERS EMPLOY PIEZOELECTRIC TRANSDUCERS. FROM THIS BENDIX CONCLUDES THAT REDFORD IS WITHOUT EXPERIENCE IN THE DESIGN AND CONSTRUCTION OF MAGNETORESTRICTIVE TRANSDUCERS AND FURTHER ASSERTS THAT THE DIFFERENCES IN THE TWO TYPES ARE SO SUBSTANTIAL THAT WITHOUT SUCH EXPERIENCE IT IS UNLIKELY THAT EQUIPMENT CAN BE BUILT WHICH WILL COMPLY WITH SPECIFICATION REQUIREMENTS. * * * "IT WOULD NOT SURPRISE US IF REDFORD'S COMMERCIAL ULTRASONIC CLEANERS USED PIEZOELECTRIC TYPE TRANSDUCERS. THIS TYPE IS LIGHTER AND CHEAPER TO PRODUCE THAN THE MAGNETORESTRICTIVE TYPE BUT IN OUR TECHNICAL JUDGMENT DOES NOT HAVE THE PROVEN RELIABILITY OF THE MAGNETORESTRICTIVE TYPE, WHICH ACCORDINGLY IS REQUIRED FOR CERTAIN APPLICATIONS, SUCH AS IN ULTRASONIC CLEANERS FOR USE ABOARD SUBMARINES. REDFORD LITERATURE THAT WE HAVE INDICATES REDFORD DOES HAVE EXPERIENCE WITH MAGNETORESTRICTIVE TYPE TRANSDUCERS. IN ANY EVENT REDFORD COULD SUBCONTRACT FOR THE TRANSDUCERS. IN FACT IT IS SUBCONTRACTING TO WESTINGHOUSE ELECTRIC CORPORATION FOR BOTH THE TRANSDUCER AND THE ULTRASONIC GENERATOR. WESTINGHOUSE, THE FOURTH LOW BIDDER, HAS NOT MADE THE PRECISE ULTRASONIC CLEANER THAT IS BEING PROCURED. HOWEVER WESTINGHOUSE HAS FURNISHED COMPARABLE ULTRASONIC CLEANERS WITH ULTRASONIC GENERATORS AND MAGNETORESTRICTIVE TRANSDUCERS TO THE NAVY FOR USE ON POLARIS SUBMARINES. THUS, THERE CAN BE NO QUESTION THATFULLY SATISFACTORY AND PROVEN GENERATORS AND TRANSDUCERS WILL BE PROVIDED. ACCORDINGLY, IT IS NOT NECESSARY TO TAKE UP BENDIX'S CONTENTION THAT, WITHOUT MAGNETORESTRICTIVE EXPERIENCE, IT IS UNLIKELY THAT EQUIPMENT CAN BE BUILT WHICH WILL COMPLY WITH THE SPECIFICATIONS.

THE FIRST BASIS FOR THE PROTEST BY BENDIX WHILE STATED AS OPPOSITION TO THE BID EVALUATION METHOD IS IN FACT AN ASSERTION THAT THE SPECIFICATIONS OF THE INVITATION WERE IMPROPERLY DRAFTED. OUR OFFICE HAS CONSISTENTLY RECOGNIZED THAT THE PROCUREMENT OFFICIALS HAVE THE INITIAL RESPONSIBILITY FOR DRAFTING SPECIFICATIONS IN SUCH TERMS AS WILL PERMIT THE BROADEST FIELD OF COMPETITION CONSISTENT WITH THE NEEDS OF THE GOVERNMENT. COMP. GEN. 554; 44 ID. 302. IN CASES SUCH AS THIS WHERE A DIFFERENCE IN OPINION ARISES AS TO THE ACTUAL NEEDS OF THE GOVERNMENT, WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THE CONTRACTING AGENCY'S UNLESS THERE IS CLEAR AND CONVINCING EVIDENCE THAT THE AGENCY OPINION IS IN ERROR. 40 COMP. GEN. 294. AS SET OUT ABOVE, WE THINK THE NAVY HAS SHOWN A CLEAR JUSTIFICATION AND REASONABLE MOTIVATION FOR INCLUDING THE ON-BOARD SPARE PARTS REQUIREMENT.

ADDITIONALLY, WE HAVE BEEN ADVISED THAT EVEN EXCLUDING THE ON-BOARD SPARE PARTS REQUIREMENT BENDIX'S BID WOULD HAVE BEEN LOWER THAN REDFORD'S ONLY UPON WAIVER BY THE GOVERNMENT OF THE USE CHARGE UNDER A FACILITIES CONTRACT WHICH WOULD BE CONTRARY TO ARMED SERVICES PROCUREMENT REGULATION 13-501 ET SEQ.

THE SECOND AND THIRD BASES FOR THE PROTEST BY BENDIX INVOLVE THE SAME ISSUE, THE RESPONSIBILITY OF REDFORD. BENDIX DID NOT TAKE ISSUE WITH THE RESPONSIVENESS OF THE BID BY REDFORD AND REDFORD DID NOT IN FACT QUALIFY ITS BID. RATHER BENDIX QUESTIONED WHETHER REDFORD COULD ACTUALLY FURNISH AN ULTRASONIC CLEANER WITH A MAGNETORESTRICTIVE TRANSDUCER WITHIN THE REQUIRED DELIVERY PERIOD. THIS OFFICE HAS STEADFASTLY TAKEN THE POSITION THAT THE QUESTION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE AGENCY AND WILL NOT BE QUESTIONED BY US IN THE ABSENCE OF A SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS FOR THE DETERMINATION. 39 COMP. GEN. 468; 37 ID. 430; AND B-1599338 NOVEMBER 16, 1966. IN VIEW OF THE PREAWARD SURVEY CONDUCTED AND THE FACTS SET OUT IN THE ADMINISTRATIVE REPORT AS QUOTED, WE DO NOT FIND ANY SUCH EVIDENCE IN THIS PROCUREMENT.