B-169002, MAY 8, 1970

B-169002: May 8, 1970

Additional Materials:

Contact:

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

 

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

IMPRACTICABLE TO OBTAIN- UNAVAILABILITY OF SPECIFICATIONS REQUIREMENT UNDER ARMY INVITATION FOR ALTERNATE QUANTITIES OF "H" KITS WHERE PROTESTANT WAS LOW BIDDER ON 1. ALLEGING REQUIREMENT WAS ACTUALLY FOR 1. 713 AND CONTRACT AWARDED WAS NOT SAME CONTRACT OFFERED ALL BIDDERS. PROTEST IS DENIED SINCE RECORD INDICATED PROCUREMENT OF ADD-ON QUANTITY OF 700 GOVERNMENT OWNED REBUILD SYSTEMS WAS COMPLETED BEFORE BID OPENING ON NEW SYSTEMS. 013 "H" KITS ON BASIS LOW BIDDER'S POSSESSION OF GOVERNMENT-OWNED EQUIPMENT PLACED HIM IN COMPETITIVELY ADVANTAGEOUS POSITION AND THAT CONTRACT AWARDED WAS NOT MOST ADVANTAGEOUS TO GOVERNMENT AS STATUTORILY REQUIRED. IS DENIED SINCE RENTAL RATES IN INVITATION SUBSTANTIALLY COMPORTED WITH RENTAL RATES IN CLAUSE PRESCRIBED BY ASPR 7-702.12 THEREBY SUBSTANTIALLY EQUALIZING ANY COMPETITIVE ADVANTAGE ACCRUING FROM USE OF GOVERNMENT PRODUCTION PROPERTY.

B-169002, MAY 8, 1970

CONTRACTS--NEGOTIATION--COMPETITION--IMPRACTICABLE TO OBTAIN- UNAVAILABILITY OF SPECIFICATIONS REQUIREMENT UNDER ARMY INVITATION FOR ALTERNATE QUANTITIES OF "H" KITS WHERE PROTESTANT WAS LOW BIDDER ON 1,713 SYSTEMS AND OBJECTS TO AWARD TO LOW BIDDER ON 1,013-QUANTITY BASIS AND SEPARATE NEGOTIATED PROCUREMENT OF REMAINDER, ALLEGING REQUIREMENT WAS ACTUALLY FOR 1,713 AND CONTRACT AWARDED WAS NOT SAME CONTRACT OFFERED ALL BIDDERS, PROTEST IS DENIED SINCE RECORD INDICATED PROCUREMENT OF ADD-ON QUANTITY OF 700 GOVERNMENT OWNED REBUILD SYSTEMS WAS COMPLETED BEFORE BID OPENING ON NEW SYSTEMS, BEING NEGOTIATED SEPARATELY BECAUSE GOVERNMENT LACKED NECESSARY TECHNICAL DATA PACKAGE RELATIVE THERETO, WHICH WOULD BE REQUIRED FOR COMPETITIVE PROCUREMENT. BIDS--COMPETITIVE SYSTEM--GOVERNMENT-OWNED EQUIPMENT USE PROTEST TO AWARD OF CONTRACT FOR 1,013 "H" KITS ON BASIS LOW BIDDER'S POSSESSION OF GOVERNMENT-OWNED EQUIPMENT PLACED HIM IN COMPETITIVELY ADVANTAGEOUS POSITION AND THAT CONTRACT AWARDED WAS NOT MOST ADVANTAGEOUS TO GOVERNMENT AS STATUTORILY REQUIRED, IS DENIED SINCE RENTAL RATES IN INVITATION SUBSTANTIALLY COMPORTED WITH RENTAL RATES IN CLAUSE PRESCRIBED BY ASPR 7-702.12 THEREBY SUBSTANTIALLY EQUALIZING ANY COMPETITIVE ADVANTAGE ACCRUING FROM USE OF GOVERNMENT PRODUCTION PROPERTY, AND RECORD EVIDENCED GOVERNMENT'S BEST INTEREST WOULD BE SERVED BY PROCURING 700 REBUILD KITS BY NEGOTIATION AND 1,013 NEW ONES BY ADVERTISEMENT. SEE COMP. GEN. DECS. CITED. BIDDERS--QUALIFICATIONS -DELIVERY CAPABILITIES-- STATE REGULATIONS, ETC. OBJECTION TO CONTRACT AWARD ON BASIS LOW BIDDER WAS NOT RESPONSIBLE UNDER ASPR 1-903.1 (II) INASMUCH AS STATE COURT ORDER RESTRAINING LOW BIDDER'S USE OF DRAWINGS AND INFORMATION WOULD RENDER CONTRACT PERFORMANCE DOUBTFUL, IS WITHOUT MERIT SINCE STATE AND LOCAL REQUIREMENTS MAY NOT BE REGARDED AS AFFECTING BIDDER'S ELIGIBILITY FOR GOVERNMENT CONTRACTS, AND ANY STATE COURT ACTION PREVENTING BIDDING ON GOVERNMENT CONTRACTS WOULD BE IN DEROGATION OF GOVERNMENT'S RIGHT TO SELECT ITS OWN CONTRACTORS AND WOULD TEND TO DISCOURAGE BIDDING AND RESTRICT FREE AND OPEN COMPETITION REQUIRED UNDER FEDERAL PROCUREMENT STATUTES. SEE COMP. GEN. DECS. AND CT. CASES CITED.

TO AMBAC INDUSTRIES, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF FEBRUARY 5 AND 6, 1970, AND TO YOUR TWO LETTERS DATED FEBRUARY 9, 1970, PROTESTING AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN AWARDING A CONTRACT TO THE BAUER ORDNANCE COMPANY UNDER INVITATION FOR BIDS (IFB) NO. DAAF03-70-B-0003.

THE INVITATION, ISSUED BY HEADQUARTERS U. S. ARMY WEAPONS COMMAND, ROCK ISLAND, ILLINOIS, REQUESTED BIDS TO BE OPENED OCTOBER 29, 1969, FOR FURNISHING UNDER ITEMS 0001 AND 0002, RESPECTIVELY, 600 EACH AND 413 EACH OF MODIFICATION KIT "H," CONVERSION, CUPOLA HYDRAULIC CONTROL FOR M114A1 VEHICLE, IN ACCORDANCE WITH APPLICABLE DRAWINGS AND SPECIFICATIONS AS SET FORTH THEREIN. BY AMENDMENT NO. 0003 DATED OCTOBER 9, 1969, THE INVITATION WAS AMENDED IN THE FOLLOWING MANNER:

"1. THE OPENING DATE OF THIS SOLICITATION IS HEREBY EXTENDED FROM 1969 OCTOBER 29, 3:00 PM CST TO 1969 NOVEMBER 19, 3:00 PM CST.

"2. THE QUANTITY OF ITEM NO. 0002 IS HEREBY AMENDED TO PROVIDE THE GOVERNMENT AN OPPORTUNITY TO SELECT FROM ALTERNATE QUANTITIES OF KIT 'H'. AFTER BID OPENING THE GOVERNMENT WILL DETERMINE THE ALTERNATE QUANTITY, EITHER A, B OR C OF ITEM NO. 0002 TO BE AWARDED ALONG WITH ITEM NO. 0001. ACCORDINGLY, PAGES 6 AND 7 OF SECTION I - SUPPLIES OR SERVICES OF THE BASIC SOLICITATION ARE DELETED AND THE ATTACHED PAGES NO. 6, 7 AND 7A ARE SUBSTITUTED IN LIEU THEREOF. AWARD OF ONLY ONE OF THE ALTERNATES, A, B, OR C UNDER ITEM NO. 0002 WILL BE MADE."

FOURTEEN BIDS WERE RECEIVED UNDER THE INVITATION AS AMENDED AND OPENED ON NOVEMBER 19, 1969. THE THREE LOWEST BIDS WERE AS FOLLOWS:

(600 (413 (863 (1113

UNITS) UNITS) UNITS) UNITS) CONTRACTOR 0001 0002-A 0002-B 0002-C INSO ELECTRONICS, INC. $1,811.00 $1,811.00 $1,717.00 $1,634.00 BAUER ORDNANCE CO. 1,980.00 1,980.00 1,980.00 1,980.00 AMERICAN BOSCH* 2,192.24 2,192.24 2,028.03 1,967.55

*IN THE EVENT ALTERNATE A EXERCISED - 0001 - $2,192.24.

IN THE EVENT ALTERNATE B EXERCISED - 0001 - 2,028.03.

IN THE EVENT ALTERNATE C EXERCISED - 0001 - 1,967.55.

IT IS REPORTED THAT SINCE INSO ELECTRONICS WAS THE LOW BIDDER ON THE PROCUREMENT, A PREAWARD SURVEY OF THE FACILITIES OF THAT FIRM WAS CONDUCTED AND THAT ON THE BASIS OF SUCH SURVEY, IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT INSO WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR. IT IS REPORTED THAT PRIOR TO THE ABOVE PREAWARD SURVEY ACTION, THE PROJECT MANAGER HAD NOTIFIED HEADQUARTERS U. S. ARMY WEAPONS COMMAND, THAT A FIRM QUANTITY OF 1,013 NEW "H" MODIFICATION KITS SHOULD BE PROCURED UNDER IFB NO. -0003. ON FEBRUARY 5, 1970, CONTRACT NO. DAAF03-70 -C-0052 WAS AWARDED TO THE BAUER ORDNANCE COMPANY FOR FURNISHING 1,013 NEW "H" MODIFICATION KITS AT A UNIT PRICE OF $1,980 EACH AND FOR FURNISHING ONE LOT OF SPARE PARTS FOR A PRICE OF $133,370.11.

YOU STATE THAT IFB -0003, AS AMENDED, REQUESTED BIDS ON ALTERNATE QUANTITIES OF 1,013 AND 1,713 MODIFICATION KITS (H) CONSISTING OF VARIOUS COMPONENTS COMPRISING A GUN CONTROL SYSTEM FOR INSTALLATION ON THE M114 VEHICLE; THAT THE BAUER ORDNANCE COMPANY WAS THE LOW BIDDER ON THE QUANTITY OF 1,013 SYSTEMS AT $1,980 EACH AND THAT YOUR FIRM WAS THE LOW BIDDER ON THE QUANTITY OF 1,713 SYSTEMS AT $1,967.55 EACH; AND THAT INSTEAD OF MAKING AN AWARD UNDER THE IFB FOR 1,713 SYSTEMS, APPARENTLY THE ARMY, AFTER THE OPENING OF BIDS ON NOVEMBER 19, 1969, ENTERED INTO NEGOTIATIONS WITH BAUER FOR A CONTRACT UNDER WHICH BAUER WOULD FURNISH 700 SYSTEMS BY MODIFYING 700 OLD GOVERNMENT-OWNED SYSTEMS, WITH THE INTENTION OF THEN AWARDING BAUER A CONTRACT FOR ONLY 1,013 SYSTEMS UNDER IFB NO. - 0003.

IN YOUR BASIC LETTER OF FEBRUARY 9, 1970, FOUR REASONS ARE GIVEN AS TO WHY YOU BELIEVE THE ACTIONS TAKEN BY THE DEPARTMENT OF THE ARMY WERE CLEARLY DISCRIMINATORY AS TO YOUR FIRM.

THE FIRST REASON GIVEN BY YOU IS THAT CONTRARY TO THE LAWS AND REGULATIONS PERTAINING TO ADVERTISED PROCUREMENTS, THE CONTRACT TO BE AWARDED TO THE BAUER ORDNANCE COMPANY IS NOT THE SAME CONTRACT OFFERED TO ALL OTHER BIDDERS. YOU STATE THAT IN 1963 THE CADILLAC GAUGE COMPANY OF DETROIT, MICHIGAN, RECEIVED A CONTRACT FROM THE DEPARTMENT OF THE ARMY FOR DEVELOPING AND FURNISHING 1,200 GUN CONTROL SYSTEMS FOR THE M114 VEHICLE. YOU FURTHER ADVISE THAT SOME TIME THEREAFTER SOME EMPLOYEES OF CADILLAC LEFT THAT FIRM TO FORM THE BAUER ORDNANCE COMPANY AND THAT SUBSEQUENTLY THE ARMY NEGOTIATED A CONTRACT WITH BAUER TO DESIGN SOME MODIFICATIONS TO THE GUN CONTROL SYSTEMS PREVIOUSLY FURNISHED BY CADILLAC. YOU ALSO STATE THAT IN 1968 THE ARMY NEGOTIATED A CONTRACT WITH BAUER TO MODIFY 500 OF THE SYSTEMS PREVIOUSLY FURNISHED BY CADILLAC IN ACCORDANCE WITH THE REVISED DESIGN DEVELOPED BY BAUER.

YOU ALLEGE THAT AFTER THE BIDS WERE OPENED ON NOVEMBER 19, 1969, THE ARMY ENTERED INTO NEGOTIATIONS WITH BAUER FOR A CONTRACT UNDER WHICH IT WOULD MODIFY THE 700 OLD CADILLAC-PRODUCED SYSTEMS REMAINING IN ARMY INVENTORY TO THE NEW (BAUER) CONFIGURATION, WITH THE INTENTION OF AWARDING BAUER ANOTHER CONTRACT FOR 1,013 SYSTEMS UNDER IFB NO. -0003. YOU STATE, THEREFORE, THAT IT IS OBVIOUS THAT THERE IS A REQUIREMENT FOR 1,713 NEW GUN CONTROL SYSTEMS AND THAT THE ARMY WILL, IN EFFECT, MAKE AN AWARD TO BAUER FOR 1,713 SYSTEMS, EXCEPT THAT, FOR 700 OF THE SYSTEMS, BAUER WILL BE PROVIDED ADDITIONAL GOVERNMENT-FURNISHED PROPERTY. YOU CONTEND THAT AN AWARD OF 1,713 SYSTEMS TO BAUER ON THE BASIS OF SUPPLYING 700 OLD GOVERNMENT-FURNISHED SYSTEMS FOR MODIFICATION IS NOT THE SAME CONTRACT OFFERED TO ALL OTHER BIDDERS AND THAT THE FACT THAT THE AWARD WILL BE MADE IN THE FORM OF TWO CONTRACTUAL DOCUMENTS DOES NOT ALTER THE FACT THAT AN AWARD OF 1,713 SYSTEMS IS BEING MADE. YOU STATE THAT TO THE BEST OF YOUR KNOWLEDGE, THE ARMY OBTAINED FROM BAUER UNDER ITS INITIAL REDESIGN CONTRACT COMPLETE AND ADEQUATE DRAWINGS OF THE MODIFICATIONS TO BE MADE TO THE OLD CADILLAC-PRODUCED SYSTEMS AND THAT, THEREFORE, THERE IS NO REASON WHY OTHER BIDDERS COULD NOT HAVE BID ON THE MODIFICATION OF THE OLD SYSTEMS AS WELL AS BAUER.

THE DEPARTMENT OF THE ARMY REPORTS THAT LETTER CONTRACT DAAE07-68-C 1739, DATED MARCH 19, 1968, WAS ISSUED TO BAUER AND THAT IT REQUIRED THE CONTRACTOR TO MODIFY, REVISE, UPDATE, AND IMPROVE 500 GOVERNMENT OWNED POWER CONTROL ASSEMBLIES SO AS TO REFLECT THE OPERATIONAL CAPABILITIES OF BAUER DRAWING NO. X-13000. THE DEPARTMENT, HOWEVER, DENIES HAVING ENTERED INTO NEGOTIATIONS WITH BAUER AFTER THE OPENING ON NOVEMBER 19, 1969, OF BIDS RECEIVED UNDER IFB NO. -0003 FOR THE MODIFICATION OF AN ADDITIONAL 700 GOVERNMENT-OWNED POWER ASSEMBLIES. THE RECORD INDICATES THAT INITIAL PROCUREMENT ACTION TO NEGOTIATE AN ADD-ON QUANTITY OF 700 REBUILD SYSTEMS WAS INSTITUTED ON APPROXIMATELY OCTOBER 23, 1968, MORE THAN 1 YEAR BEFORE THE BID OPENING DATE IN QUESTION, AND THAT NEGOTIATIONS FOR THE 700 REBUILD SYSTEMS WERE COMPLETED ON NOVEMBER 12, 1969--7 DAYS BEFORE THE BID OPENING DATE FOR IFB -0003.

IT IS REPORTED THAT THE NEGOTIATIONS CONDUCTED WITH BAUER RELATIVE TO THE 700 REBUILD "H" KITS CONSTITUTED A SEPARATE AND DISTINCT PROCUREMENT; THAT THE GOVERNMENT WAS UNABLE TO EFFECT SUCH PROCUREMENT UNDER COMPETITIVE PROCEDURES SINCE THE GOVERNMENT WAS NOT IN POSSESSION OF A TECHNICAL DATA PACKAGE RELATIVE TO THE REBUILD OF "H" KITS. THE "H" KIT DRAWINGS POSSESSED BY THE GOVERNMENT REFLECTED ONLY MANUFACTURING STANDARDS AND DID NOT SATISFY THE DRAWING STANDARDS AND REQUIREMENTS FOR COMPETITIVE PROCUREMENT.

THE SECOND GROUND FOR YOUR PROTEST IS THAT BAUER IS NOT REALLY THE LOW BIDDER WHEN PRICE AND OTHER FACTORS ARE CONSIDERED. YOU STATE THAT IT WOULD COST THE ARMY A GREATER EXPENDITURE OF GOVERNMENT FUNDS TODAY BY AWARDING BAUER 1,013 SYSTEMS UNDER IFB NO. -0003, AND AWARDING BAUER 700 SYSTEMS AS A NEGOTIATED CONTRACT, THAN IT WOULD COST BY MAKING AN AWARD OF 1,713 SYSTEMS (BASIC QUANTITY OF 600 UNDER ITEM 0001 AND ALTERNATE QUANTITY "C" IN THE AMOUNT OF 1,113) TO YOUR FIRM. YOU CONTEND THAT BY AWARDING A CONTRACT TO YOUR FIRM FOR 1,713 NEW SYSTEMS UNDER INVITATION NO. -0003 THE GOVERNMENT WOULD HAVE SAVED $146,959.44.

IT IS REPORTED THAT THERE IS AN URGENT NEED FOR "H" KITS TO MEET THE ARMY'S M114/M114A1 REBUILD AND RETROFIT PROGRAM AND THAT SINCE AN EARLIER DELIVERY DATE COULD BE EXPECTED IN THE CASE OF REBUILD "H" KITS, CONTRACTING PERSONNEL DECIDED THAT THE INTERESTS OF THE GOVERNMENT WOULD BEST BE SERVED BY PROCURING 700 REBUILD "H" KITS BY NEGOTIATION WITH BAUER AND BY PROCURING 1,013 NEW "H" KITS UNDER IFB NO. -0003.

YOU STATE THAT SINCE BAUER HAS IN ITS POSSESSION A CONSIDERABLE AMOUNT OF GOVERNMENT-OWNED PRODUCTION TOOLING AND TEST EQUIPMENT AND FOR WHICH BAUER HAS INDICATED A REQUIREMENT, BAUER SUBMITTED WITH ITS BID A RENTAL CHARGE OF $45,711.50 FOR 1,013 KITS. YOU CONTEND THAT THE INHERENT AUTHORIZATION FOR BAUER TO USE GOVERNMENT-OWNED TOOLING WITH THE ADDITION FOR EVALUATION PURPOSES OF $45,000 TO $68,000 FOR RENT DID NOT IN FACT ELIMINATE THE COMPETITIVE ADVANTAGE ACCRUING TO BAUER. YOU STATE THAT, OBVIOUSLY, IF GOVERNMENT-OWNED TOOLING AND TEST EQUIPMENT WERE MADE AVAILABLE TO ALL THE BIDDERS, THE BID PRICES TO THE GOVERNMENT WOULD HAVE BEEN MUCH LOWER.

WITH RESPECT TO YOUR CONTENTION THAT ANY METHOD OF EVALUATING THE USE OF GOVERNMENT-OWNED EQUIPMENT, SHORT OF ADDING THE FULL ACQUISITION COST OF SUCH EQUIPMENT TO THE BID PRICE, WOULD BE DISCRIMINATORY IN THE INSTANT PROCUREMENT, ATTENTION IS INVITED TO THE FACT THAT THE EVALUATION RENTAL RATES SET OUT IN THE INVITATION CLAUSE COVERING THE USE AND EVALUATION OF GOVERNMENT-OWNED EQUIPMENT ARE IN SUBSTANTIAL AGREEMENT WITH THE RENTAL RATES IN THE CLAUSE PRESCRIBED BY PARAGRAPH 7 702.12 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

IN OUR DECISION B-151854 REPORTED AT 43 COMP. GEN. 327 (1963) AFTER DISCUSSING (FIRST) THE STATUTORY REQUIREMENT IN 10 U.S.C. 2305 (C) THAT ADVERTISED CONTRACTS BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID WILL BE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED; AND (SECOND) THE DEPARTMENT OF DEFENSE POLICY, AS SET OUT IN ASPR 13-407 (A) (3) (NOW 13-502), THAT A SUITABLE METHOD FOR ELIMINATING ANY COMPETITIVE ADVANTAGE SHALL BE EMPLOYED TO INSURE THAT A CONCERN POSSESSING GOVERNMENT FACILITIES WITHOUT CHARGE IS NOT THEREBY PLACED IN A FAVORED POSITION IN COMPETING FOR GOVERNMENT BUSINESS, WE CONCLUDED AS FOLLOWS:

"AS PREVIOUSLY INDICATED, THE PROVISIONS OF 10 U.S.C. 2305 (C) REQUIRE THE AWARD OF ADVERTISED CONTRACTS TO THAT RESPONSIBLE BIDDER WHOSE BID WILL RESULT IN THE MOST ADVANTAGEOUS CONTRACT FOR THE GOVERNMENT. ELEMENTS OF COST OR SAVINGS TO THE GOVERNMENT WHICH ARE NOT INCLUDED IN THE BID PRICES, SUCH AS COST OF TRANSPORTATION OF THE CONTRACT END ITEMS, OR COSTS IN CONNECTION WITH USE OF GOVERNMENT-OWNED EQUIPMENT, MAY PROPERLY BE CONSIDERED IN EVALUATING BID PRICES TO DETERMINE WHICH BID WILL RESULT IN THE MOST ADVANTAGEOUS CONTRACT. HOWEVER, IT IS OUR OPINION THAT ANY AMOUNTS WHICH ARE PROPERL FOR APPLICATION IN SUCH EVALUATION MUST BE FAIRLY REPRESENTATIVE ON AN ACTUAL OR ESTIMATED BASIS, OF TRUE COSTS OR SAVINGS TO THE GOVERNMENT.

"WHILE THE POLICY OF COMPLETE EQUALIZATION OF COMPETITIVE ADVANTAGE, TO WHICH THE ABOVE-REFERENCED PROVISIONS OF THE ASPR ARE DIRECTED, IS A DESIRABLE OBJECTIVE IN PROCUREMENTS INVOLVING THE USE OF GOVERNMENT OWNED EQUIPMENT, TO THE EXTENT THAT SUCH POLICY MAY CONFLICT WITH 10 U.S.C. 2305 (C), THE STATUTE MUST PREVAIL. IN THE INSTANT PROCUREMENT, IT IS APPARENT THAT ADDITIONAL COSTS FOR TRANSPORTING, MODIFYING, INSTALLING, ETC; THE INDUSTRIAL FACILITIES AND SPECIAL TOOLING LOCATED IN CONTINENTAL'S PLANT WOULD NECESSARILY RESULT IF AN AWARD WERE MADE TO ANY OTHER BIDDER WHO PROPOSED TO USE SUCH FACILITIES AND TOOLING, WHILE NO SUCH COSTS WOULD RESULT FROM AN AWARD TO CONTINENTAL. IT NECESSARILY FOLLOWS THAT IN EVALUATING BIDS FOR THE PURPOSE OF DETERMINING THE MOST ADVANTAGEOUS BID UNDER 10 U.S.C. 2305 (C), THESE CIRCUMSTANCES WERE REQUIRED TO BE CONSIDERED AND RECOGNIZED IN ANY BID EVALUATION PROCEDURE. THE METHOD OF EVALUATION ADOPTED IN THE INSTANT CASE (I.E; EXCLUDING ANY ADDITIONAL COSTS OF TRANSPORTING, MODIFYING, INSTALLING, ETC; FROM THE EVALUATION BY REQUIRING EACH BIDDER TO EITHER ABSORB THEM OR INCLUDE THEM IN HIS BID PRICE) WAS ONE METHOD OF ARRIVING AT EVALUATED BID PRICES WHICH WOULD REFLECT TRUE COST TO THE GOVERNMENT. CONVERSELY, IT IS OBVIOUS THAT IF THE INVITATION HAD ADVISED BIDDERS THAT THE GOVERNMENT WOULD ASSUME SUCH ADDITIONAL COSTS, A PROPER EVALUATION OF CONTINENTAL'S BID WOULD HAVE REQUIRED THE DEDUCTION OF AN AMOUNT REPRESENTING SUCH COSTS, IN EVALUATING CONTINENTAL'S BID. UNDER EITHER EVALUATION METHOD, IT IS APPARENT THAT WHILE THE LOW EVALUATED BID PRICE WOULD REPRESENT THE MOST ADVANTAGEOUS BID TO THE GOVERNMENT, A COMPETITIVE ADVANTAGE WOULD RESULT TO CONTINENTAL FROM ITS POSSESSION OF GOVERNMENT EQUIPMENT." THAT DECISION IS SIMILAR TO THE INSTANT CASE BECAUSE ONE OF THE BIDDERS IN THAT CASE WAS CURRENTLY MANUFACTURING AN ITEM WITH THE USE OF GOVERNMENT-OWNED SPECIAL TOOLING. IN THIS PROCUREMENT, THE COMPETITIVE ADVANTAGE TO BAUER ARISING FROM THE OPPORTUNITY TO USE GOVERNMENT-OWNED TOOLING ALREADY BEING USED BY IT IN CURRENT PRODUCTION IS SUBSTANTIALLY ELIMINATED BY THE RENTAL CHARGE OF $45,711.50. IN THIS REGARD, SEE ASPR 13-502 CONCERNING THE ELIMINATION OF COMPETITIVE ADVANTAGE WHEN THE USE OF GOVERNMENT PRODUCTION PROPERTY IS CONTEMPLATED. SEE, ALSO, OUR DECISION REPORTED AT 46 COMP. GEN. 578 (1966).

THE THIRD BASIS FOR YOUR PROTEST IS THAT BAUER IS NOT A "RESPONSIBLE" BIDDER AS THAT TERM IS USED IN PROCUREMENT LAWS AND REGULATIONS REQUIRING THAT CONTRACTS BE AWARDED TO ONLY RESPONSIBLE PROSPECTIVE CONTRACTORS. YOU SPECIFICALLY REFER TO THE PROVISIONS OF ASPR 1-903.1 (II) WHICH PROVIDE THAT A PROSPECTIVE CONTRACTOR MUST BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY OR PERFORMANCE SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS, COMMERCIAL AS WELL AS GOVERNMENTAL. YOU STATE THAT ON JULY 10, 1969, THE CADILLAC GAUGE COMPANY OBTAINED FROM THE CIRCUIT COURT FOR MACOMB COUNTY, MICHIGAN, AN ORDER RESTRAINING BAUER FROM USING CERTAIN DRAWINGS AND INFORMATION OBTAINED BY PRESENT BAUER OFFICIALS WHILE PREVIOUSLY EMPLOYED BY CADILLAC AND PROHIBITING BAUER FROM ENTERING OR GIVING BIDS ON GOVERNMENT CONTRACTS RELATIVE TO THE GUN CONTROL SYSTEM FOR THE M114 VEHICLE. YOU ALLEGE THAT THE FOREGOING COURT ORDER CASTS DOUBT UPON THE ABILITY OF BAUER TO PERFORM THE CONTRACT IN QUESTION.

IT IS WELL ESTABLISHED THAT STATE AND LOCAL REQUIREMENTS MAY NOT BE REGARDED AS CONTROLLING THE ELIGIBILITY OF BIDDERS TO OBTAIN GOVERNMENT CONTRACTS. ANY ACTION ON THE PART OF A STATE COURT PREVENTING COMPETITIVE BIDDING ON GOVERNMENT CONTRACTS (CF. PAUL V. UNITED STATES, 371 U.S. 245 (1963)), OR PREVENTING A CONTRACTOR FROM CARRYING OUT GOVERNMENT WORK WOULD BE IN DEROGATION OF THE GOVERNMENT'S RIGHT TO SELECT CONTRACTORS OF ITS OWN CHOOSING AND UNDOUBTEDLY WOULD TEND TO DISCOURAGE BIDDING AND RESTRICT THE FREE AND OPEN COMPETITION TO WHICH THE GOVERNMENT IS ENTITLED AND WHICH UNDER THE FEDERAL STATUTES IS REQUIRED IN CONNECTION WITH THE AWARD OF CONTRACTS FOR SUPPLIES AND SERVICES. SEE UNITED STATES V. GEORGIA PUBLIC SERVICE COMMISSION, 371 U.S. 285 (1963); 19 COMP. GEN. 735 (1940); 36 ID. 218 (1956); B-165274, MAY 8, 1969.

THE RECORD INDICATES THAT PRIOR TO THE ISSUANCE OF IFB -0003, THE CONTRACTING OFFICER WAS AWARE OF THE INJUNCTION ISSUED BY THE CIRCUIT COURT OF MICHIGAN AGAINST BAUER AND THAT HE SOUGHT THE ADVICE OF HIGHER AUTHORITY AS TO WHETHER THE IFB SHOULD BE ISSUED. WE ARE OF THE OPINION THAT THE INJUNCTION IN QUESTION MAY NOT BE REGARDED AS AFFECTING THE ELIGIBILITY OF BAUER FOR AWARD OF THE SUBJECT CONTRACT.

THE FOURTH GROUND FOR YOUR PROTEST IS THAT EVEN IF BAUER WERE CONSIDERED TO BE THE LOWEST RESPONSIBLE BIDDER, AN AWARD TO BAUER WOULD BE CONTRARY TO CERTAIN DECISIONS OF OUR OFFICE REGARDING THE PROTECTION OF THE INTEGRITY OF THE BIDDING SYSTEM BECAUSE OF CERTAIN APPARENT DISCUSSIONS AND PRICING ACTIONS OCCURING AFTER THE OPENING OF BIDS UNDER IFB -0003. YOU CONTEND THAT BY PERMITTING BAUER TO SUBMIT AND NEGOTIATE A PRICE FOR THE ADDITIONAL 700 REBUILD SYSTEMS AFTER ALL BIDS FOR 1,713 SYSTEMS WERE OPENED UNDER IFB -0003, BAUER, IN EFFECT, WAS GIVEN A SECOND OPPORTUNITY TO UNDERBID THE LOW BIDDER FOR 1,713 SYSTEMS, CITING 43 COMP. GEN. 591 (1964) AND B-167769, SEPTEMBER 30, 1969, 49 COMP. GEN. . HOWEVER, THOSE CASES HAVE NO APPLICATION HERE WHERE THE AWARD AS MADE CONFORMED TO THE ADVERTISED REQUIREMENTS AS TO QUANTITIES AND SPECIFICATIONS. MOREOVER, THERE IS NOT INVOLVED HERE ANY QUESTION AS TO THE GOVERNMENT'S MINIMUM NEEDS OR WHETHER "IDENTICAL" SUPPLIES WERE BEING CONCURRENTLY PROCURED. HENCE, WE CANNOT SAY THAT THE ACTIONS TAKEN BY THE PROCURING ACTIVITIES IN THIS CASE WERE PREJUDICIAL TO THE COMPETITIVE BIDDING SYSTEM WHEREUNDER NEW "H" KITS WERE BEING PROCURED AS DISTINGUISHED FROM THE NEGOTIATED URGENT PROCUREMENT OF REBUILT "H" KITS.

IN YOUR SUPPLEMENTAL LETTER OF FEBRUARY 9, 1970, YOU ALLEGE THAT THE CONTRACTING OFFICER MADE THE AWARD TO BAUER UNDER IFB -0003 AFTER RECEIVING YOUR ORAL PROTEST IN CONTRAVENTION OF ASPR 2-407.9. THE ABOVE ASPR PROVISION HAS BEEN RENUMBERED ASPR 2-407.8 BY ASPR REVISION 6 DATED DECEMBER 6, 1969.

THE ARMY WEAPONS COMMAND DENIES RECEIVING AN ORAL PROTEST FROM YOUR FIRM PRIOR TO AWARDING CONTRACT NO. DAAF03-70-C-0052 TO BAUER. WE ARE ADVISED THAT YOUR MR. GRANINGER INDICATED AN INTENTION TO FILE A PROTEST WITH THE PROCUREMENT ACTIVITY OR WITH OUR OFFICE. WE HAVE EXAMINED THE ADMINISTRATIVE RECORD AND WE FAIL TO FIND ANY EVIDENCE SUPPORTING YOUR ALLEGATION THAT YOUR FIRM ORALLY PROTESTED TO THE PROCURING ACTIVITY SO AS TO REQUIRE APPLICATION OF THE PROCEDURES PRESCRIBED BY ASPR 2-407.8. WHILE YOUR FIRM MANY HAVE INDICATED AN INTENT TO FILE AN ORAL PROTEST, IT APPEARS THAT YOU FAILED TO TAKE ANY AFFIRMATIVE ACTION TOWARDS THE SUBMISSION OF SUCH A PROTEST PRIOR TO THE AWARD OF SUCH CONTRACT.