B-164848, OCT. 15, 1968

B-164848: Oct 15, 1968

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE AWARD OF A CONTRACT ON AN "OR EQUAL" BASIS TO HY-GAIN ELECTRONICS CORPORATION TO PRODUCE THE TEN DESIRED ANTENNAS WAS IMPROPER IN THE ABSENCE OF AN "OR EQUAL" CLAUSE. WAS FORWARDED TO GRANGER WHEN ISSUED. THE MATTER WAS FORWARDED. YOU WERE SO ADVISED BY A LETTER OF THAT SAME DATE. CONCLUDED THAT THE ANTENNAS OFFERED BY HY GAIN WERE IDENTICAL TO THE SPECIFIED GRANGER ANTENNAS. WE ARE ADVISED THAT HY-GAIN IS PRESENTLY PERFORMING WORK UNDER THE CONTRACT AS AWARDED. GRANGER DID NOT HAVE AN ADEQUATE OPPORTUNITY TO COMPETE. YOU COULD HAVE OFFERED OTHER MORE COMPETITIVELY PRICED GRANGER MODELS DESIGNED AND MANUFACTURED TO LESS EXACTING STANDARDS BUT POSSESSING THE SAME ELECTRICAL PERFORMANCE CHARACTERISTICS.

B-164848, OCT. 15, 1968

TO GRANGER ASSOCIATES:

WE REFER TO YOUR TELEGRAM OF JULY 12, 1968, AND SUBSEQUENT COMMUNICATIONS, CONTENDING THAT BECAUSE REQUEST FOR PROPOSALS NO. DAAB05- 68-R-0846, ISSUED FEBRUARY 7, 1968, BY THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA, SPECIFIED ONLY THE NAMED GRANGER TRANSMITTING AND RECEIVING ANTENNA MODELS, THE AWARD OF A CONTRACT ON AN "OR EQUAL" BASIS TO HY-GAIN ELECTRONICS CORPORATION TO PRODUCE THE TEN DESIRED ANTENNAS WAS IMPROPER IN THE ABSENCE OF AN "OR EQUAL" CLAUSE.

A COPY OF THE SUBJECT SOLICITATION, BRIEFLY DESCRIBING THE REQUIRED ANTENNAS IN TERMS OF PERFORMANCE CHARACTERISTICS AND BY THE GRANGER NAME AND MODEL NUMBER, WAS FORWARDED TO GRANGER WHEN ISSUED. WHILE THE SOLICITATION DID NOT EXPRESSLY CONTEMPLATE THE CONSIDERATION OF OTHER PRODUCTS ON AN "OR EQUAL" BASIS, OR OTHERWISE, NEITHER DID IT EXPRESSLY LIMIT ACCEPTABILITY TO THE SPECIFIED GRANGER EQUIPMENT BY A SOLE-SOURCE RESTRICTION OR SIMILAR PROVISION.

HAVING BECOME AWARE OF THIS PROCUREMENT, HY-GAIN REQUESTED AND RECEIVED PERMISSION TO COMPETE FOR THE AWARD. THUS, ON THE CLOSING DATE FOR THE SUBMISSION OF ORIGINAL OFFERS, FEBRUARY 21, 1968, TWO FIRMS RESPONDED AS FOLLOWS:

TOTAL PRICE, HY-GAIN $99,000

TOTAL PRICE, GRANGER $114,530 THE CONTRACTING OFFICER'S TELEGRAM OF MARCH 26, 1968, ADVISED BOTH FIRMS THAT MARCH 28, 1968, WOULD BE THE FINAL DATE FOR THE SUBMISSION OF REVISED PROPOSALS. HY-GAIN RESPONDED BY REDUCING ITS PRICE TO $95,000, WHILE GRANGER STOOD ON ITS ORIGINAL OFFER.

BECAUSE THE CONTRACTING OFFICER DID NOT KNOW IF THE LOWER OFFER SATISFIED THE SPECIFICATIONS, THE MATTER WAS FORWARDED, ULTIMATELY, TO THE USING ACTIVITY IN VIETNAM FOR A TECHNICAL EVALUATION. THIS ACTIVITY, IN ITS LETTER OF JUNE 19, 1968, REPORTED THAT THE HY-GAIN ANTENNAS SATISFIED ITS REQUIREMENTS IN ALL RESPECTS. THE PHILADELPHIA PROCUREMENT DIVISION ENGINEER, IN A REPORT OF JUNE 25, 1968, ALSO RECOMMENDED ACCEPTANCE OF THE OFFERED HY-GAIN EQUIPMENT AS ESSENTIALLY EQUIVALENT TO THE NAMED GRANGER MODELS.

BASED ON THESE DETERMINATIONS, THE CONTRACTING OFFICER MADE AWARD TO HY- GAIN ON JUNE 29, 1968, AND YOU WERE SO ADVISED BY A LETTER OF THAT SAME DATE. AS A RESULT OF THE PROTEST ENTERED BY GRANGER AFTER THE AWARD ACTION, THE CONTRACTING OFFICER INITIATED A FURTHER EVALUATION OF THE HY- GAIN ANTENNAS BY THE ARMY ANTENNA TEAM. THIS TEAM, IN ITS REPORT OF AUGUST 15, 1968, CONCLUDED THAT THE ANTENNAS OFFERED BY HY GAIN WERE IDENTICAL TO THE SPECIFIED GRANGER ANTENNAS.

WE ARE ADVISED THAT HY-GAIN IS PRESENTLY PERFORMING WORK UNDER THE CONTRACT AS AWARDED.

YOU CONTEND THAT SINCE THE SOLICITATION IN QUESTION DID NOT CONTAIN AN "OR EQUAL" CLAUSE, OR LANGUAGE TO THAT EFFECT, GRANGER ASSUMED THAT ONLY ITS NAMED MODELS WOULD BE ACCEPTED IN FULFILLMENT OF THE GOVERNMENT'S NEEDS. YOU SUGGEST THAT BECAUSE OF THIS BELIEF, GRANGER DID NOT HAVE AN ADEQUATE OPPORTUNITY TO COMPETE, FOR HAD YOU BEEN AWARE OF THE FACT THAT ALTERNATES WOULD BE CONSIDERED, YOU COULD HAVE OFFERED OTHER MORE COMPETITIVELY PRICED GRANGER MODELS DESIGNED AND MANUFACTURED TO LESS EXACTING STANDARDS BUT POSSESSING THE SAME ELECTRICAL PERFORMANCE CHARACTERISTICS. SINCE THE OTHER GRANGER ANTENNAS ARE MORE COMPETITIVELY PRICED, YOU CONTEND THAT GRANGER WAS DENIED AN OPPORTUNITY TO COMPETE WHEN IT WAS NOT INFORMED THAT ANTENNAS OTHER THAN THOSE SPECIFIED BY NAME AND NUMBER WOULD BE ACCEPTED WHILE HY-GAIN NECESSARILY BID WITH FULL KNOWLEDGE THAT ALTERNATES WERE ACCEPTABLE. IN SUPPORT OF YOUR POSITION YOU CITE OUR DECISION, B 164242, OF JUNE 25, 1968, 47 COMP. GEN. -----, WHICH HELD THAT THE MANUFACTURER OF A SPECIFIED PRODUCT SHOULD BE GIVEN ANOTHER OPPORTUNITY TO MODIFY ITS PRICE UNDER CIRCUMSTANCES WHERE THE MANUFACTURER OF AN ALTERNATE PRODUCT WAS GIVEN SUCH AN OPPORTUNITY.

IN ADDITION, YOU ASSERT THAT BECAUSE THE DIFFERENCE IN FREIGHT COSTS BETWEEN THE PLACES OF MANUFACTURE, LINCOLN, NEBRASKA, FOR HY-GAIN, AND PALO ALTO, CALIFORNIA, FOR GRANGER, AND THE DESTINATION, VIETNAM, HAS NOT BEEN TAKEN INTO ACCOUNT, THE AWARD TO HY-GAIN DOES NOT REPRESENT THE LOWEST COST TO THE GOVERNMENT.

FOR THESE REASONS, YOU REQUEST THAT THE PRESENT CONTRACT AWARDED TO HY- GAIN BE CANCELED, AND NEGOTIATIONS ON A "OR EQUAL" BASIS BE INSTITUTED WITH ALL OFFERORS, IN ORDER TO AFFORD GRANGER AN OPPORTUNITY TO COMPETE ON AN EQUAL BASIS.

AS STATED ABOVE, THE SUBJECT SOLICITATION MAKES NO EXPRESS REFERENCE TO A SOLE-SOURCE RESTRICTION OR OTHER SUCH LIMITATION UPON ACCEPTABLE EQUIPMENT. IT DOES CONTAIN A NOTE, ON PAGE 8, STATING THAT THE GOVERNMENT DOES NOT POSSESS ADEQUATE SPECIFICATIONS, SO THAT OFFERORS MAY BE REQUIRED TO SUBMIT DATA DESCRIBING THE SPECIFIED EQUIPMENT TO PERMIT EVALUATION OF THEIR OFFERS. SINCE THE PRODUCT SPECIFIED BY BRAND NAME AND MODEL NUMBER PRESUMABLY SATISFIES THE GOVERNMENT'S REQUIREMENTS WITHOUT FURTHER EVALUATION, THIS NOTE MAKES SENSE ONLY IN THE CONTEXT OF A PROCUREMENT PERMITTING THE SUBMISSION OF OFFER ON AN "OR EQUAL" BASIS, WHICH OFFER MUST THEN BE EVALUATED AGAINST THE DESCRIPTION OF THE SPECIFIED PRODUCT. IN ANY EVENT, THIS OFFICE DOES NOT THINK IT IS IN THE GOVERNMENT'S INTEREST TO READ A SOLE-SOURCE RESTRICTION INTO A SOLICITATION WHICH DOES NOT CONTAIN EXPRESS LANGUAGE SO RESTRICTING COMPETITION. FOR THESE REASONS, WE CONCLUDE THAT THE CONTRACTING OFFICER PROPERLY PERMITTED HY- GAIN TO OFFER ITS ALTERNATE PRODUCT AS AN EQUAL TO THE SPECIFIED GRANGER ANTENNAS, EVEN IN THE ABSENCE OF "OR EQUAL" WORDING.

IT DOES NOT NECESSARILY FOLLOW FROM THE FACT THAT HY-GAIN HAS BEEN PROPERLY TREATED THAT GRANGER HAS NOT BEEN MISLED BY THE ACTIONS OF THE PROCURING ACTIVITY INTO THE BELIEF THE PROCUREMENT WAS SOLE SOURCE. HOWEVER, IN THIS CASE THE RECORD SHOWS THAT THE CONTRACTING OFFICER'S TELEGRAM OF MARCH 26, 1968, WAS DIRECTED TO BOTH GRANGER AND HY-GAIN, WITH THE NAMES AND ADDRESSES OF BOTH FIRMS APPEARING ON THE HEADING OF THE TELEGRAM. THIS DOUBLE ADDRESSING GAVE NOTICE TO GRANGER THAT HY GAIN WAS COMPETING FOR THE SUBJECT AWARD, AND GRANGER SHOULD HAVE ACTED ACCORDINGLY AT THAT TIME. INSTEAD, GRANGER CHOSE TO REMAIN SILENT UNTIL AFTER AWARD HAD BEEN MADE AND THE CONTRACT PRICE EXPOSED. IN THE CIRCUMSTANCES, WE ARE UNABLE TO AGREE WITH YOUR CONTENTION THAT GRANGER WAS DENIED AN OPPORTUNITY TO COMPETE ON AN EQUAL BASIS WITH ITS COMPETITORS.

OUR CONCLUSION IN THIS REGARD ACCORDS WITH THE DECISION OF THIS OFFICE YOU SUGGEST SUPPORTS YOUR POSITION, B-164242, SUPRA, BECAUSE IN THAT CASE THE MANUFACTURER, WHOSE EQUIPMENT WAS SPECIFIED IN A SOLICITATION WHICH DID NOT CONTAIN AN "OR EQUAL" CLAUSE, PROTESTED HIS EXCLUSION FROM FURTHER NEGOTIATIONS PRIOR TO AWARD. THIS OFFICE WOULD NORMALLY BE MORE FAVORABLY DISPOSED TO TAKE ACTION ON A REQUEST FOR FURTHER NEGOTIATION PRIOR TO AWARD THAN IT WOULD BE AFTER, BECAUSE THE REOPENING OF NEGOTIATIONS AT THE EARLIER STAGE IS NOT SO DISRUPTIVE OF THE PROCUREMENT PROCESS AS AFTER AWARD WHEN THE GOVERNMENT IS BOUND INTO A CONTRACTUAL RELATIONSHIP WITH ONE OF THE PARTIES. THEN TOO, IN THE CASE YOU CITE, THE PROTESTING PARTY HAD BEEN EXCLUDED FROM A PORTION OF THE NEGOTIATIONS. HERE, THE LAST ROUND OF NEGOTIATIONS WAS CONDUCTED ON AN EQUAL BASIS, WHEN THE CONTRACTING OFFICER SENT BOTH FIRMS NOTIFICATION THAT MARCH 28, 1968, WOULD BE THE CLOSING DATE FOR MODIFICATIONS. THE SUBSEQUENT COMMUNICATIONS BETWEEN HY-GAIN AND THE GOVERNMENT HAVE BEEN FOR THE PURPOSE OF ESTABLISHING THE SUITABILITY OF THE EQUIPMENT AS ORIGINALLY OFFERED BY HY-GAIN, AND NOT TO MODIFY THE EQUIPMENT, ITS PRICE, OR ANY OTHER TERM OF THE CONTRACT. IN LIGHT OF THE ABOVE, WE BELIEVE THE CASE AT HAND IS COMPARABLE TO B-149962 OF DECEMBER 26, 1962, WHERE WE HELD THAT THE FAILURE OF THE PROCURING ACTIVITY TO SPECIFICALLY NOTIFY THE OFFEROR WHOSE PRODUCT THE SOLICITATION SPECIFIED THAT OTHER PRODUCTS WERE ACCEPTABLE WAS NOT PREJUDICIAL TO ITS INTERESTS DESPITE THE ABSENCE OF "OR EQUAL" LANGUAGE IN THE SOLICITATION.

IN ADDITION, YOU STATE THAT IF PERMITTED AN OPPORTUNITY TO ENTER INTO NEGOTIATIONS ON THE SAME BASIS AS THAT OFFERED HY-GAIN, GRANGER WOULD OFFER ITS ALTERNATE ANTENNAS, WHICH ARE SIMILAR, BUT NOT AS GOOD AS THE SPECIFIED GRANGER MODELS. THIS OFFER IS NOT FOR CONSIDERATION IN ANY EVENT, FOR IT ASSUMES THAT THE PURCHASED HY-GAIN ANTENNAS ARE ONLY SIMILAR TO, BUT NOT THE EQUAL OF THE SPECIFIED GRANGER ANTENNAS. THE SEVERAL TECHNICAL EVALUATIONS NOTED EARLIER SUPPORT THE DETERMINATION THAT THE HY- GAIN ANTENNAS ARE THE EQUAL OF THE SPECIFIED GRANGER MODELS IN EVERY MATERIAL RESPECT.

AS TO THE FREIGHT RATES, THE ARMY REPORT TO THIS OFFICE ADVISES THAT THE DISCREPANCY BETWEEN THE OFFERED PRICES WAS SO LARGE THAT DIFFERENCES IN FREIGHT COSTS COULD NOT EFFECT THE RELATIVE STANDING OF THE OFFERORS.

FOR THE ABOVE REASONS, WE ARE OF THE OPINION THAT THE ACTION COMPLAINED OF, THE OPENING OF COMPETITION TO HY-GAIN DURING THIS PROCUREMENT, WAS IN ACCORDANCE WITH THE APPLICABLE REGULATIONS AND THE PAST DECISIONS OF THIS OFFICE. ACCORDINGLY, YOUR PROTEST IS DENIED.