B-166435, JUL. 1, 1969

B-166435, JUL. 1, 1969

TO MR. SECRETARY:

BY LETTER DATED MAY 13, 1969, WITH ENCLOSURES, THE DEPUTY CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE, PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF (SYSTEMS AND LOGISTICS), FURNISHED A REPORT ON THE PROTEST OF THE AIR ELECTRONIX COMPANY AGAINST THE REJECTION OF ITS LOW OFFER OF $5,629 AND THE AWARD OF A CONTRACT TO THE CONSOLIDATED DIESEL ELECTRIC COMPANY UNDER REQUEST FOR PROPOSALS (RFP) NO. F04606-69 R-0144.

THE REQUEST FOR PROPOSALS WAS ISSUED ON OCTOBER 2, 1968, BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, MCCLELLAN AIR FORCE BASE, CALIFORNIA, FOR 26 ELECTRIC WIRING HARNESSES FOR MOTOR GENERATOR SETS. THE SCHEDULE REFERRED TO UNITED STATES AIR FORCE PART NUMBER 64K41983 102 AND INDICATED THAT DRAWING REVISION "A" APPLIES.

THE PURCHASE REQUEST WAS CODED "3H" UNDER AIR FORCE REGULATION 57-6 PROCEDURES (DSAM 4105.2) AS A PROCUREMENT WHICH MUST BE SATISFIED BY "PURCHASE FROM THE ORIGINAL MANUFACTURER BECAUSE DATA ARE INCOMPLETE OR INACCURATE.' IT IS REPORTED THAT THE CONTRACTING OFFICER PREPARED THE RFP AND SENT IT ONLY TO CONSOLIDATED DIESEL ELECTRIC COMPANY (HEREAFTER REFERRED TO AS CONSOLIDATED), THE MANUFACTURER OF THE MOTOR GENERATOR SETS ON WHICH THE HARNESSES WERE TO BE USED. SHORTLY AFTER THE INITIAL SOLICITATION WAS ISSUED, MR. MINICH, OWNER OF AIR ELECTRONIX COMPANY, REQUESTED A COPY OF THE RFP FROM THE BUYER. WE ARE ADVISED THAT AT THE TIME THE RFP WAS FURNISHED, THE BUYER STATED THAT ADEQUATE DATA WAS NOT AVAILABLE AND THAT NO DRAWING WAS GIVEN TO AIR ELECTRONIX.

ON SEPTEMBER 27, 1968, THE CONTRACTING OFFICER MADE THE FOLLOWING FINDING TO NEGOTIATE UNDER 10 U.S.C. 2304 (A) (10):

"2. I HEREBY FIND THAT THE USE OF FORMAL ADVERTISING, WOULD BE IMPRACTICABLE FOR THE FOLLOWING REASON:

"AVAILABLE DATA IS INCORRECT OR INADEQUATE AND CONSEQUENTLY WAS NOT FURNISHED. THEREFORE, IT IS IMPOSSIBLE TO DRAFT A SOLICITATION FOR BIDS, ADEQUATE SPECIFICATIONS, OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED SUPPLIES.'3. I HEREBY DETERMINE THAT THE PROCUREMENT IS FOR SUPPLIES FOR WHICH IT IS IMPRACTICABLE TO SECURE COMPETITION BY MEANS OF FORMAL ADVERTISING, AND THAT THE NEGOTIATION OF A CONTRACT FOR THESE SUPPLIES IS AUTHORIZED PURSUANT TO 10 U.S.C. 2304 (A) (10) AS CONTEMPLATED BY PARAGRAPH 3-210.2 (XIII) OF THE ARMED SERVICES PROCUREMENT REGULATION.'

BY THE CLOSING DATE OF OCTOBER 23, 1968, THE CONTRACTING OFFICER HAD RECEIVED TWO PROPOSALS COVERING THE 26 HARNESSES AS FOLLOWS:

CONSOLIDATED $6,851.26

AIR ELECTRONIX $5,629.00

SINCE AIR ELECTRONIX HAD SUBMITTED THE LOWEST PRICE, AND SINCE THE ABSENCE OF DATA RAISED A QUESTION OF ABILITY TO PERFORM, THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR) TO MAKE A PREAWARD SURVEY OF THIS FIRM. THE PREAWARD SURVEY FOUND THAT SINCE AIR ELECTRONIX HAD PRODUCED SIMILAR, THOUGH NOT IDENTICAL, HARNESSES SATISFACTORILY FOR THE GOVERNMENT, SUCH FIRM WAS CONSIDERED CAPABLE OF PERFORMING THE PROPOSED CONTRACT AND AWARD TO AIR ELECTRONIX WAS RECOMMENDED. THEREAFTER, THE CONTRACTING OFFICER REQUESTED DCASR TO REVIEW ITS PREAWARD SURVEY RECOMMENDATION IN VIEW OF THE PROCUREMENT CODE OF 3H. ON JANUARY 3, 1969, DCASR REAFFIRMED ITS PREVIOUS FINDINGS AND ADVISED:

"A. RE-EVALUATION OF BIDDER RELATIVE TO NOT HAVING PRODUCED THIS EXACT HARNESS ASSEMBLY INDICATES THAT NO PROBLEM WILL BE ENCOUNTERED IN THAT HE HAS PROVIDED LIKE HARNESS ASSEMBLIES FOR THE SAME EMU 11/U GENERATOR SET, THOUGH NOT THE EXACT ITEM.

"B. THE BIDDER IS IN POSSESSION OF USAF DRAWING, P/N 64K41983-102, SIZE K. THE SURVEYOR COULD NOT ATTEST TO COMPLETENESS OF THE DRAWINGS, STATUS OF LATEST AF REVISIONS, OR THE SOURCE FROM WHICH BIDDER ACQUIRED THEM.'

TECHNICAL PERSONNEL AT SACRAMENTO AIR MATERIEL AREA (SMAMA) HAD REVIEWED THE DRAWINGS IN THE POSSESSION OF AIR ELECTRONIX (NOT SUPPLIED BY THE AIR FORCE) AND FOUND THAT THEY WERE THE SAME INADEQUATE AIR FORCE DRAWINGS UPON WHICH THE 3H CODING WAS JUSTIFIED. THESE FACTS WERE BROUGHT TO THE ATTENTION OF DCASR WHICH NEVERTHELESS AGAIN REAFFIRMED ITS RECOMMENDATION OF AWARD TO AIR ELECTRONIX. ON FEBRUARY 17, 1969, THE SERVICE ENGINEERING DIVISION OF THE PROCUREMENT ACTIVITY CONFIRMED TO THE CONTRACTING OFFICER THAT THE DRAWING IN THE POSSESSION OF AIR ELECTRONIX WAS INCOMPLETE AND "IT MUST BE CONCLUDED THAT A GUARANTEED SERVICEABLE HARNESS CANNOT BE MANUFACTURED FROM EXISTING DATA.'

ACCORDINGLY, AWARD WAS MADE TO CONSOLIDATED ON MARCH 4, 1969, AT A UNIT PRICE OF $263.51 EACH OR $47.01 PER UNIT HIGHER THAN THE PRICE OFFERED BY AIR ELECTRONIX. THE LOCAL STAFF JUDGE ADVOCATE CONCURRED IN THIS ACTION.

BY LETTER DATED MARCH 12, 1969, AIR ELECTRONIX PROTESTED TO OUR OFFICE CONTENDING THAT THE AWARD WAS ILLEGAL; THAT IT BE CANCELLED; AND THAT AWARD BE MADE TO IT AS THE LOWEST RESPONSIBLE OFFEROR. AIR ELECTRONIX CONTENDS THAT THE PROCUREMENT OFFICE FAILED TO COMPLY WITH PARAGRAPH 3-102 (C) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES THAT NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT. THAT OFFEROR ALSO REFERS TO ASPR 3-805.1, AN IMPLEMENTATION OF THE COMPETITIVE NEGOTIATION REQUIREMENTS OF 10 U.S.C. 2304 (G), AND MAINTAINS THAT DISCUSSIONS SHOULD HAVE BEEN CONDUCTED WITH IT BEFORE PROCEEDING WITH AN AWARD TO CONSOLIDATED.

THE CONTRACTING OFFICER, ON THE OTHER HAND, POINTS TO ASPR 1-313 (A) WHICH PROVIDES THAT WHERE THE ASSURANCE AS TO THE REQUISITE SAFE, DEPENDABLE AND EFFECTIVE OPERATION OF EQUIPMENT CAN BE HAD ONLY IF THE PARTS ARE PROCURED FROM THE ORIGINAL MANUFACTURER OR HIS SUPPLIER, THE PROCUREMENT SHOULD BE RESTRICTED ACCORDINGLY AS IN THE CASES DESCRIBED IN ASPR 1-313 (C). ASPR 1-313 (C) PROVIDES THAT:

"PARTS * * * GENERALLY SHOULD BE PROCURED (EITHER DIRECTLY OR INDIRECTLY) ONLY FROM SOURCES THAT HAVE SATISFACTORILY MANUFACTURED OR FURNISHED SUCH PARTS IN THE PAST, UNLESS FULLY ADEQUATE DATA * * *, TEST RESULTS AND QUALITY ASSURANCE PROCEDURES, ARE AVAILABLE WITH THE RIGHT TO USE FOR PROCUREMENT PURPOSES * * * TO ASSURE THE REQUISITE RELIABILITY AND INTERCHANGEABILITY OF THE PARTS, AND PROCUREMENT ON A COMPETITIVE BASIS WOULD BE CONSISTENT WITH THE ASSURANCE DESCRIBED IN (A) ABOVE. * * *"

WE FIND NO REASON TO ASCRIBE TO THESE PROVISIONS A MANDATE TO EFFECT SOLE -SOURCE AWARDS REGARDLESS OF THE CAPABILITIES OF PRODUCERS WHO, FOR VARIOUS REASONS, HAD NOT SUPPLIED THE IDENTICAL PARTS IN THE PAST. OTHER WORDS, WE FEEL THAT THE ASSURANCES OF RELIABILITY AND INTERCHANGEABILITY OF SPARE PARTS MAY BE OBTAINED THROUGH COMPETITIVE NEGOTIATION PROCEDURES AS WELL AS FROM SOLE-SOURCE BUYS FROM THE CURRENT MANUFACTURER OF THE END ITEM.

ALTHOUGH WE ORDINARILY DO NOT QUESTION DETERMINATIONS MADE PURSUANT TO 10 U.S.C. 2310 (B) THAT FORMAL ADVERTISING WOULD NOT HAVE BEEN FEASIBLE AND PRACTICAL TO PROCURE THE NEEDED SUPPLIES, THE RECORD BEFORE US DOES NOT "CLEARLY AND CONVINCINGLY ESTABLISH" THAT THE SOLE SOURCE AWARD MADE HERE WAS PROPER UNDER THE CIRCUMSTANCES. COMPETITION AS ENVISAGED BY 10 U.S.C. 2304 (G) AND ASPR 1-300.1, 3-101, AND 3-102 (C) WAS NOT PRESENT HERE EVEN THOUGH THE OPPORTUNITY FOR MEANINGFUL COMPETITION WAS AVAILABLE UP TO THE DATE OF AWARD.

HAVING IN MIND THAT AIR ELECTRONIX WAS FOUND TO BE A CAPABLE EXPERIENCED PRODUCER OF HARNESS ASSEMBLIES BY DCASR WHICH, ON AT LEAST TWO OCCASIONS, RECOMMENDED COMPLETE AWARD TO THIS NEW PRODUCER, WE FEEL THAT NEGOTIATIONS WITH THAT OFFEROR, AS WELL AS WITH CONSOLIDATED, SHOULD HAVE BEEN CONDUCTED. THE RECORD SHOWS THAT MANY OF THE PROBLEMS INVOLVED IN THE DRAWING CITED IN THE RFP COULD HAVE BEEN RESOLVED BY REFERENCE TO A SAMPLE OF THE HARNESS. IN A LETTER DATED SEPTEMBER 3, 1968, OR 6 MONTHS BEFORE AWARD, THE ENGINEERING OFFICE ADVISED THE PROCUREMENT OFFICE AS OLLOWS:

"1. THE PRESENT DRAWING IS INADEQUATE FOR COMPETITIVE PROCUREMENT BECAUSE BEND AND BRANCH DIMENSIONS ARE LACKING AND BECAUSE THE REPRODUCIBLE DRAWING IS UNLIKELY TO BE THE SAME FULL SIZE AS THE MASTER DRAWING POSSESSED BY THE MANUFACTURER. FOR THIS REASON, THE DECISION WAS MADE ON 17 JULY 1968 TO CODE THE DATA 3H RATHER THAN 2G.

"2. REVISION -B- TO SUBJECT DRAWING IS IN PROCESS TO ADD DIMENSIONAL COORDINATE POINTS TO THE DRAWING FOR SCALE DETERMINATION. THIS HOWEVER, WILL NOT BE A CHANGE SUFFICIENT TO UPGRADE THE DRAWING TO COMPETITIVE STATUS.

"3. IT IS POSSIBLE TO GO COMPETITIVE IF THE DRAWING IS USED IN CONJUNCTION WITH A SAMPLE HARNESS. THEREFORE UNDER THIS CONDITION WE AGREE TO THE 2G CODE IN LIEU OF THE 3H CODE.

"4. WE RECOMMEND THAT THE SUCCESSFUL BIDDER BE REQUIRED TO PROVIDE UPDATING INFORMATION CONCERNING THE BEND RADII AND BRANCH TAKE OFF DIMENSIONS.'"-CODE 3H- MEANS -PURCHASE FROM ORIGINAL MANUFACTURER BECAUSE DATA ARE INCOMPLETE OR INACCURATE.- -CODE 2G- MEANS -OBTAIN COMPETITIVELY AS THE ITEM IS SUITABLE FOR ADVERTISING AND THE DATA PACKAGE IS COMPLETE.'

THE FACT THAT THIS PROCUREMENT WAS NEGOTIATED UNDER 10 U.S.C. 2304 (A) (10) DOES NOT ELIMINATE THE REQUIREMENT FOR NEGOTIATION WITH "ALL RESPONSIBLE OFFERORS" WHO, AS HERE, SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. ESSENTIALLY, THE ONLY MATTERS FOR NEGOTIATION THAT EXISTED AFTER RECEIPT AND EVALUATION OF PROPOSALS WERE THE TECHNICAL INADEQUACIES OF THE DRAWING. THIS PROBLEM, WE UNDERSTAND, COULD HAVE BEEN ELIMINATED THROUGH EXAMINATION OF THE SAMPLE HARNESS AND EXCHANGE OF MUTUAL UNDERSTANDINGS AS TO THE GOVERNMENT'S NEEDS. ALTHOUGH THE PROCUREMENT ACTIVITY ADVISED THAT "IT IS NOT OUR PRACTICE TO FURNISH OR MAKE AVAILABLE SAMPLE ITEMS FOR SOLICITATION PURPOSES. AFR 57-6 AND AFLC SUPPLEMENT THERETO ARE SILENT IN THIS RESPECT," WE NOTE THAT AFR 57-6 SPECIFICALLY PROVIDES FOR THE USE OF SAMPLES OR MODELS IF THE ITEM IS NOT COMPLEX.

WHILE WE CONCLUDE THAT THE NECESSARY INFORMATION WAS AVAILABLE TO THE PROCUREMENT AGENCY IN SUFFICIENT TIME FOR IT TO COMPLY WITH THE COMPETITIVE NEGOTIATION REQUIREMENTS OF 10 U.S.C. 2304 (G) AND ASPR 3 805 AND TO AVOID THE NONCOMPETITIVE ASPECTS OF THIS PROCUREMENT, WE DO NOT BELIEVE THAT THE GOVERNMENT'S INTERESTS REQUIRE CORRECTIVE ACTION AT THIS DATE. HOWEVER, WE SUGGEST THAT SIMILAR HIGH-DOLLAR SPARE PARTS PROCUREMENTS UNDER DSAM 4105.2 BE CAREFULLY SCREENED TO MINIMIZE RELIANCE ON SOLE-SOURCE NONCOMPETITIVE PROCUREMENTS.