B-167049-1, SEP. 3, 1969

B-167049-1: Sep 3, 1969

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ON BASIS THAT ONLY RELATIVELY SMALL QUANTITIES OF THE SETS ARE REQUIRED. THAT COST OF DEVELOPING COMPETITIVE PACKAGE WOULD EXCEED ANY SAVINGS FROM COMPETITION WILL NOT BE QUESTIONED. AS WAS HELD IN B-163382. TERM "TECHNICAL EQUIPMENT" IN 10 U.S.C. 2304 (A) (13) IS NOT RESTRICTED TO EQUIPMENT LISTED IN ASPR 3-108 AS MILITARY EQUIPMENT BUT IS SUFFICIENTLY BROAD TO INCLUDE MOST MECHANICAL EQUIPMENT USED FOR MILITARY OR DEFENSE PURPOSES. MARVIN GOLDMAN: REFERENCE IS MADE TO YOUR LETTER OF JUNE 30. THE BASIS FOR THE RESTRICTIONS WAS A DETERMINATION AND FINDINGS OF THE ASSISTANT SECRETARY OF THE NAVY ISSUED UNDER 10 U.S.C. 2304 (A) (13) TO THE EFFECT THAT THE EQUIPMENT OF THE NAMED COMPANIES WAS NECESSARY TO ASSURE STANDARDIZATION OF THE EQUIPMENT AND THE INTERCHANGEABILITY OF PARTS AND ENGINES.

B-167049-1, SEP. 3, 1969

BID PROTEST - SOLE-SOURCE STANDARDIZATION DECISION TO ROWAN-BMI CORPORATION DENYING PROTEST AGAINST SOLE SOURCE RESTRICTION IN DEFENSE SUPPLY AGENCY REQUEST FOR GENERATOR SETS TO LIBBY WELDING CO., INC. ADMINISTRATIVE DETERMINATION TO PROCURE GENERATOR SETS UNDER STANDARDIZATION AND INTERCHANGEABILITY PROVISIONS IN 10 U.S.C. 2304 (A) (13), ON BASIS THAT ONLY RELATIVELY SMALL QUANTITIES OF THE SETS ARE REQUIRED, THAT COST OF DEVELOPING COMPETITIVE PACKAGE WOULD EXCEED ANY SAVINGS FROM COMPETITION WILL NOT BE QUESTIONED. AS WAS HELD IN B-163382, MARCH 21, 1968, TERM "TECHNICAL EQUIPMENT" IN 10 U.S.C. 2304 (A) (13) IS NOT RESTRICTED TO EQUIPMENT LISTED IN ASPR 3-108 AS MILITARY EQUIPMENT BUT IS SUFFICIENTLY BROAD TO INCLUDE MOST MECHANICAL EQUIPMENT USED FOR MILITARY OR DEFENSE PURPOSES.

TO MR. MARVIN GOLDMAN:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 30, 1969, AND PREVIOUS CORRESPONDENCE, PROTESTING THE PROCUREMENT OF GENERATOR SETS FOR USE BY THE NAVY UNDER REQUESTS FOR PROPOSALS (RFP) DSA400-69-R-7033, -7056 AND - 7615, AND DSA700-69-R-6632, -A581Q AND -8133, ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), DEFENSE SUPPLY AGENCY (DSA).

DSA INTENDED THAT THE GENERATOR SETS IN RFP -7056 COVERING 500 KW SETS BE RESTRICTED TO THE EQUIPMENT PRODUCED BY STEWARD AND STEVENSON AND THAT THE SETS IN THE OTHER FIVE RFPS BE RESTRICTED TO GENERATORS PRODUCED BY LIBBY WELDING CO., INC. THE BASIS FOR THE RESTRICTIONS WAS A DETERMINATION AND FINDINGS OF THE ASSISTANT SECRETARY OF THE NAVY ISSUED UNDER 10 U.S.C. 2304 (A) (13) TO THE EFFECT THAT THE EQUIPMENT OF THE NAMED COMPANIES WAS NECESSARY TO ASSURE STANDARDIZATION OF THE EQUIPMENT AND THE INTERCHANGEABILITY OF PARTS AND ENGINES. HOWEVER, A NUMBER OF THE REQUESTS FOR PROPOSALS DID NOT INDICATE THAT THEY WERE RESTRICTED TO LIBBY WELDING AND THE SYNOPSIS IN THE COMMERCE BUSINESS DAILY SIMILARLY FAILED TO ADVISE OF THAT RESTRICTION. YOU REQUESTED AND OBTAINED SOME OF THESE REQUESTS FOR PROPOSALS AND SUBMITTED OFFERS. YOUR OFFERS WERE REJECTED IN FAVOR OF OFFERS FROM LIBBY WELDING BECAUSE OF THE STANDARDIZATION DETERMINATION.

YOU PROTEST ON THE BASES THAT YOUR LOW OFFERS SHOULD NOT HAVE BEEN REJECTED AND THAT THE SOLICITATIONS DID NOT INDICATE THAT THE PROCUREMENTS WERE RESTRICTED TO ONE SOURCE. FURTHER, YOU PROTEST THE DETERMINATIONS TO STANDARDIZE TO THE REFERENCED MANUFACTURER BECAUSE IT ELIMINATED COMPETITION. YOU HAVE INDICATED THAT STANDARDIZATION TO THE REFERENCED COMPANIES IS NOT NECESSARY, SINCE THE GENERATOR SETS ARE LARGELY THE ASSEMBLY OF COMPONENTS MANUFACTURED BY DIFFERENT COMPANIES AND THAT STANDARDIZATION CAN BE ACHIEVED AND COMPETITION PRESERVED BY CONTROLLING THE SOURCE OF THE COMPONENTS RATHER THAN THE END ITEM. YOU POINT OUT THAT THE AIR FORCE EMPLOYS THE COMPONENT SOURCE CONTROL METHOD TO ACHIEVE STANDARDIZATION AND TO PRESERVE COMPETITION AT THE SAME TIME; THEREFORE, YOU SUGGEST THAT THE NAVY BE REQUIRED TO FOLLOW THE SAME PROCEDURE.

SECTION 2304 OF TITLE 10, U.S.C. PROVIDES:

"/A) PURCHASES OF AND CONTRACTS FOR PROPERTY OR SERVICES COVERED BY THIS CHAPTER SHALL BE MADE BY FORMAL ADVERTISING IN ALL CASES IN WHICH THE USE OF SUCH METHOD IS FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES. IF USE OF SUCH METHOD IS NOT FEASIBLE AND PRACTICABLE, THE HEAD OF THE AGENCY, SUBJECT TO THE REQUIREMENTS FOR DETERMINATIONS AND FINDINGS IN SECTION 2310, MAY NEGOTIATE SUCH A PURCHASE OR CONTRACT, IF--

"/13) THE PURCHASE OR CONTRACT IS FOR EQUIPMENT THAT HE DETERMINES TO BE TECHNICAL EQUIPMENT WHOSE STANDARDIZATION AND THE INTERCHANGEABILITY OF WHOSE PARTS ARE NECESSARY IN THE PUBLIC INTEREST AND WHOSE PROCUREMENT BY NEGOTIATION IS NECESSARY TO ASSURE THAT STANDARDIZATION AND INTERCHANGEABILITY; " SECTION 2310, REFERENCED ABOVE, PROVIDES THAT DETERMINATIONS MADE TO NEGOTIATE UNDER 10 U.S.C. 2304 (A) (13) ARE FINAL.

PARAGRAPH 3-213 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) CONTAINS THE REGULATIONS PERTAINING TO PROCUREMENT BY NEGOTIATION OF TECHNICAL EQUIPMENT REQUIRING STANDARDIZATION AND INTERCHANGEABILITY OF PARTS. PARAGRAPH 3-213.2 (A) PROVIDES THAT THE AUTHORITY OF ASPR 3-213 MAY BE USED FOR PROCURING ADDITIONAL UNITS AND REPLACEMENT ITEMS OF SPECIFIED MAKES AND MODELS OF TECHNICAL EQUIPMENT AND PARTS.

UNDER THE FOREGOING STATUTE, EACH AGENCY IS AUTHORIZED TO DETERMINE WHETHER PROCUREMENT BY NEGOTIATION IS NECESSARY TO ASSURE STANDARDIZATION AND INTERCHANGEABILITY AND UNDER THE ASPR THAT AUTHORITY MAY BE USED TO STANDARDIZE TO SPECIFIED MAKES AND MODELS OF TECHNICAL EQUIPMENT. ALSO, AS INDICATED ABOVE, THE DETERMINATION TO NEGOTIATE IS FINAL. SEE, ALSO, B -163382, MARCH 21, 1968, WHEREIN, IN RESPONSE TO A PROTEST FROM LIBBY WELDING CO., INC., AGAINST SOLE SOURCE NEGOTIATIONS WITH HOL-GAR MANUFACTURING CO., INC., ON THE GROUNDS THAT THE GENERATOR SETS COULD BE ASSEMBLED AND MANUFACTURED BY ANY COMPANY IN THE INDUSTRY, OUR OFFICE HELD THAT THE FACT THAT IT WAS FOUND NECESSARY TO LIMIT THE PROCUREMENT TO ONE MANUFACTURER IN ORDER TO ACHIEVE STANDARDIZATION AND INTERCHANGEABILITY DID NOT AFFORD A VALID BASIS FOR US TO OBJECT TO THE PROCUREMENT.

IN THE IMMEDIATE CASE, OUR OFFICE HAS BEEN ADVISED THAT THE NAVY'S DECISION TO STANDARDIZE UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (13) WAS BASED ON THE CONSIDERATION THAT RELATIVELY SMALL QUANTITIES OF THE GENERATOR SETS ARE REQUIRED FOR NAVY USE AND THAT THE COST OF DEVELOPING A COMPETITIVE PACKAGE (INCLUDING ADDITIONAL TESTS WHICH WOULD BE REQUIRED OF DIFFERENT MANUFACTURERS) FOR PROCUREMENT OF A SPECIFIC MODEL OF GENERATOR SET WOULD EXCEED ANY ANTICIPATED SAVINGS LIKELY FROM COMPETITION. FURTHER, ADVICE HAS BEEN FURNISHED THAT THE PRESENT SYSTEM OF STANDARDIZATION WILL BE TERMINATED IN THE NEAR FUTURE AND THAT, EFFECTIVE WITH FISCAL YEAR 1971 FUNDS, ALL SERVICES REQUIREMENTS WILL BE REPLACED WITH THE "DEPARTMENT OF DEFENSE DIESEL FAMILY" AND THAT ALL SERVICES WILL UTILIZE THE SAME SPECIFICATION.

WHILE COMPETITION FOR GOVERNMENT PROCUREMENT IS DESIRABLE, IN VIEW OF THE EXPLANATION OFFERED BY THE NAVY, AND AS AUTHORITY EXISTS FOR STANDARDIZING TO SPECIFIED MAKES AND MODELS OF TECHNICAL EQUIPMENT, THERE IS NO VALID LEGAL BASIS FOR OUR OFFICE TO OBJECT TO THE DETERMINATION TO STANDARDIZE TO PARTICULAR GENERATOR SETS.

DSA HAS ACKNOWLEDGED THAT THROUGH OVERSIGHT CERTAIN OF THE REQUESTS FOR PROPOSALS AND SYNOPSES IN THE COMMERCE BUSINESS DAILY DID NOT INDICATE THAT THE PROCUREMENTS WERE STANDARDIZED UNDER 10 U.S.C. 2304 (A) (13) AND THAT ONLY LIBBY WELDING WAS BEING SOLICITED. IN VIEW OF THE DETERMINATION TO STANDARDIZE, DSA NECESSARILY RESTRICTED THE AWARDS TO LIBBY WELDING. WHILE IT IS UNFORTUNATE THAT NEITHER THE REQUEST FOR PROPOSALS NOR THE SYNOPSIS INDICATED THE RESTRICTION, THE AWARD TO LIBBY WELDING DOES NOT APPEAR TO HAVE BEEN IMPROPER IN THE CIRCUMSTANCES. HOWEVER, DSA HAS ADVISED THAT STEPS HAVE BEEN TAKEN TO ASSURE THAT FUTURE SOLICITATIONS AND SYNOPSES MAKE CLEAR WHEN ONLY ONE OFFER IS BEING SOLICITED.

IN ADDITION TO YOUR PROTEST, YOU HAVE ASKED SEVERAL QUESTIONS AS FOLLOWS:

"I. WHEN IS THE -ADVERTISING IS NOT FEASIBLE- PROCUREMENT METHOD NOT ACCEPTABLE TO YOUR OFFICE?

"II. AT WHAT POINT IN TIME ARE PROCUREMENT ACTIVITIES RESPONSIBLE FOR THEIR LACK OF ADVANCED PLANNING?

"III. IS YOUR OFFICE SATISFIED THAT THE TAX PAYER IS GETTING THE BENEFIT OF TRUE COMPETITIVE BIDDING?

"IV. WHY IS THERE NO UNIFORM PROCUREMENT PROCEDURES? IF THE AIR FORCE CAN BUY IN A MANNER TO INSURE COMMONALITY, WHY CAN-T ALL SERVICES DO LIKEWISE?

WITH REGARD TO YOUR FIRST QUESTION, WHILE ADVERTISING IS REQUIRED AS A GENERAL RULE, 10 U.S.C. 2304 (A) PERMITS EXCEPTIONS IN CERTAIN ENUMERATED INSTANCES WHEN DETERMINATIONS MAY BE MADE TO NEGOTIATE IF THE USE OF THE ADVERTISING METHOD IS NOT FEASIBLE AND PRACTICABLE. SUCH DETERMINATIONS ARE RESERVED FOR THE CONTRACTING AGENCIES AND IN CERTAIN ENUMERATED INSTANCES INCLUDING, 2304 (A) (13), ARE FINAL AND BINDING UPON OUR OFFICE. SEE 10 U.S.C. 2310. HOWEVER, IN SOME FEW SITUATIONS WE HAVE QUESTIONED THE USE OF NEGOTIATION AUTHORITY WHERE THE LEGAL CRITERIA FOR USE OF THE EXCEPTIONS TO THE ADVERTISING STATUTES HAVE NOT BEEN MET. COMP. GEN. 74; ID. 551; 38 ID. 276, 46 ID. 631. IN THE INSTANT CASE, THE STATUTORY AUTHORITY TO NEGOTIATE ON A RESTRICTED BASIS IS SUPPORTED BY THE RECORD.

YOUR SECOND QUESTION IS NOT SUSCEPTIBLE TO A DEFINITIVE REPLY SINCE PROCUREMENT ADVANCE PLANNING INVOLVES MANY DIFFERENT, AND DIFFICULT, CONSIDERATIONS DEPENDENT UPON THE COMPLEXITIES OF THE END PRODUCT SOUGHT AND THE URGENCY OF THE NEED. THE RESPONSIBILITY FOR ASSURING THAT THE PROCUREMENT NEEDS OF THE GOVERNMENT ARE TIMELY ANTICIPATED IS THAT OF THE AGENCY INVOLVED UNDER THE POLICIES EXPRESSED IN ASPR 1-2100 THROUGH 1- 2102.

WITH RESPECT TO YOUR THIRD QUESTION, THE GOVERNMENT OBVIOUSLY CANNOT HAVE THE BENEFIT OF COMPETITIVE BIDDING WHEN A PROCUREMENT IS RESTRICTED TO A SINGLE SOURCE. HOWEVER, THAT DOES NOT MEAN THAT RESTRICTION TO A SINGLE SOURCE IS ALWAYS DETRIMENTAL TO THE TAXPAYERS. CONCEIVABLY, THERE CAN BE SITUATIONS WHERE THE COST OF MAINTAINING AND STORING NUMEROUS ARTICLES OF THE SAME KIND, BUT MADE BY DIFFERENT MANUFACTURERS, CAN OVERRIDE THE SAVINGS ACHIEVED BY COMPETITIVE PROCUREMENT. WHETHER COMPETITIVE PROCUREMENT IS GOOD OR BAD, DEPENDS UPON THE FACTS AND CIRCUMSTANCES IN EACH CASE. BY PROVIDING FOR STANDARDIZATION PURSUANT TO THE NEGOTIATION AUTHORITY OF 10 U.S.C. 2304 (A) (13) AND THE STANDARDIZATION REQUIREMENT OF 10 U.S.C. 2451, CONGRESS HAS RECOGNIZED THAT FINANCIAL SAVINGS AND ADMINISTRATION BENEFITS CAN RESULT FROM STANDARDIZING EQUIPMENT IN CERTAIN CASES AND THE DEPARTMENT OF DEFENSE HAS PROVIDED PROCEDURES TO ACCOMPLISH THOSE PURPOSES.

WITH REGARD TO YOUR FOURTH QUESTION, THERE ARE UNIFORM PROCUREMENT PROCEDURES. HOWEVER, THE LAW AND REGULATIONS WHICH PROVIDE THOSE PROCEDURES (SEE THE REFERENCES ABOVE) VEST A CERTAIN AMOUNT OF DISCRETION IN THE MILITARY PROCUREMENT AGENCIES. THEREFORE, IT IS POSSIBLE FOR AGENCIES TO PROCURE IN SOMEWHAT DISSIMILAR MANNERS. IT IS POSSIBLE ON THE ONE HAND FOR A PARTICULAR AGENCY WHICH USES EQUIPMENTS TO MEET ITS NEEDS TO PROCURE SUCH EQUIPMENTS ON A COMPETITIVE BASIS TO ACHIEVE COMMONALITY, AND ANOTHER SERVICE TO PROCURE SIMILAR BUT NOT IDENTICAL EQUIPMENTS ON A RESTRICTED BASIS TO ACHIEVE THE SAME RESULT. THE METHOD SELECTED WILL DEPEND IN A GOOD MEASURE UPON VARIOUS FACTORS PECULIAR TO THE PARTICULAR AGENCY. IN ANY EVENT, IT APPEARS THAT BEGINNING WITH FISCAL YEAR 1971, THERE WILL BE A COMMON SPECIFICATION FOR ALL THE SERVICES. HOPEFULLY, THIS WILL CORRECT THE DISSIMILARITY TO WHICH YOU HAVE REFERENCE.