B-169172, SEP 16, 1970, 50 COMP GEN 184

B-169172: Sep 16, 1970

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PROVIDED THE RIGHTS OF THE MANUFACTURER ARE NOT INFRINGED. THE PROTEST WAS SUPPLEMENTED BY LETTER FROM THE ATTORNEYS FOR JET AVION DATED MAY 5. THE ATTORNEYS FOR JET AVION POINT OUT THAT IN LATE 1968 AND EARLY 1969 JET AVION ACTUALLY WAS AWARDED CONTRACTS FOR EMERGENCY REQUIREMENTS OF 600 J-57 JET ENGINE CLAMPS AND 450 TF-33 JET ENGINE CLAMPS. WHICH CONTRACTS WERE SATISFACTORILY PERFORMED ALLEGEDLY AT PRICES BELOW THOSE CUSTOMARILY CHARGED BY PRATT AND WHITNEY. A COMPARATIVE ANALYSIS OF JET AVION AND PRATT AND WHITNEY TF-33 CLAMPS SELECTED AT RANDOM WAS CONDUCTED BY THE SAN ANTONIO AIR MATERIEL AREA (SAAMA) PROPULSION BRANCH AND THE DETERMINATION MADE THAT THE JET AVION TF-33 CLAMP WAS "EQUAL IF NOT SUPERIOR TO THE PWA CLAMP.".

B-169172, SEP 16, 1970, 50 COMP GEN 184

CONTRACTS - DATA, RIGHTS, ETC. - RESTRICTIVE DATA RIGHTS V PROCUREMENT METHODS THE "ENGINEERING-CRITICAL" DESIGNATION ASSIGNED BY AGREEMENT TO REPLACEMENT PARTS FOR ENGINES DEVELOPED AT COSTS SHARED BY THE MANUFACTURER AND GOVERNMENT TO PRECLUDE THE USE OF THE DATA FOR COMPETITIVE PURPOSES BECAUSE OF THE DIFFICULTY TO DETERMINE THE RIGHTS OF THE PARTIES, RELATING TO RESTRICTED DATA RIGHTS AND NOT TO PROCUREMENT METHODS, ADDITIONAL SOURCES OF SUPPLY MAY BE DEVELOPED BY INSTITUTING APPROPRIATE TESTS AND QUALIFICATION PROCEDURES, PROVIDED THE RIGHTS OF THE MANUFACTURER ARE NOT INFRINGED. PARAGRAPH 1-313 OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIRES THE COMPETITIVE PROCUREMENT OF SPARE PARTS, AND IT WOULD BE CONTRARY TO THE CONCEPT OF "MAXIMUM PRACTICAL COMPETITION" TO HOLD THAT AN "ENGINEERING-CRITICAL" ITEM MAY NOT BE PROCURED COMPETITIVELY WITHOUT REGARD TO THE WILLINGNESS AND ABILITY OF OTHER THAN THE SOLE-SOURCE SUPPLIER TO PRODUCE THE PARTS WITHOUT INFRINGEMENT OF THE PROPRIETARY RIGHTS.

TO THE SECRETARY OF THE AIR FORCE, SEPTEMBER 16, 1970:

BY LETTER DATED MAY 27, 1970, WITH ENCLOSURES, THE CHIEF CONTRACT PLACEMENT DIVISION, DIRECTORATE/PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF/SYSTEMS AND LOGISTICS, FURNISHED OUR OFFICE WITH A REPORT ON THE PROTEST BY THE JET AVION CORPORATION AGAINST THE SOLE SOURCE PROCUREMENT FROM THE ORIGINAL MANUFACTURER OF COMBUSTION CHAMBER CLAMPS USED AS REPLACEMENT PARTS IN PRATT AND WHITNEY J-57 (PRATT AND WHITNEY PART NO. 488125) AND TF-33 (PRATT AND WHITNEY PART NO. 488124) JET AIRPLANE ENGINES.

THE PROTEST WAS SUPPLEMENTED BY LETTER FROM THE ATTORNEYS FOR JET AVION DATED MAY 5, 1970, AMPLIFYING THE PROTEST TO COVER CONTRACTS FOR THE MODIFICATION OF EXISTING CLAMPS TO A NEW CONFIGURATION AND SPECIFICALLY PROTESTING AN EMERGENCY PROCUREMENT OF SUCH MODIFIED CLAMPS FROM A LICENSEE OF THE ORIGINAL MANUFACTURER.

THE PROTEST ALLEGES GENERALLY THAT AN "ENGINEERING CRITICAL" DESIGNATION APPLIED TO THE SUBJECT CLAMPS BY THE ORIGINAL MANUFACTURER UNDER AN EARLIER NAVY CONTRACT (CONTRACT NO. NOW 62-0773-I) SHOULD NOT BE REGARDED AS REQUIRING SOLE SOURCE PROCUREMENT SO LONG AS PARTS OFFERED BY OTHER MANUFACTURERS "MEET THE REQUISITE STANDARDS OF RELIABILITY," I.E., A SOURCE WHICH "HAS SATISFACTORILY MANUFACTURED THE PARTS IN THE PAST" OR "A SOURCE WHOSE ABILITY TO PROVIDE PARTS OF THE REQUISITE RELIABILITY AND INTERCHANGEABILITY CAN BE ASSURED BY MEANS OF DATA, TESTS, ETC." AS EVIDENCE THAT JET AVION MEETS THESE REQUIREMENTS AND THEREFORE SHOULD BE CONSIDERED AS A SOURCE FOR THE SUBJECT CLAMPS, THE ATTORNEYS FOR JET AVION POINT OUT THAT IN LATE 1968 AND EARLY 1969 JET AVION ACTUALLY WAS AWARDED CONTRACTS FOR EMERGENCY REQUIREMENTS OF 600 J-57 JET ENGINE CLAMPS AND 450 TF-33 JET ENGINE CLAMPS, WHICH CONTRACTS WERE SATISFACTORILY PERFORMED ALLEGEDLY AT PRICES BELOW THOSE CUSTOMARILY CHARGED BY PRATT AND WHITNEY.

THE ATTORNEYS ALSO STATE THAT FOLLOWING THESE AWARDS, A COMPARATIVE ANALYSIS OF JET AVION AND PRATT AND WHITNEY TF-33 CLAMPS SELECTED AT RANDOM WAS CONDUCTED BY THE SAN ANTONIO AIR MATERIEL AREA (SAAMA) PROPULSION BRANCH AND THE DETERMINATION MADE THAT THE JET AVION TF-33 CLAMP WAS "EQUAL IF NOT SUPERIOR TO THE PWA CLAMP." ALTHOUGH NO J-57 CLAMPS WERE TESTED, THE CHIEF, PROPULSION BRANCH, STATED THAT THE J-57 CLAMP "IS AN ALMOST IDENTICAL CLAMP" WHICH COULD BE EXPECTED TO BE "SIMILAR IN QUALITY" TO THE TF-33 CLAMP.

IN SPITE OF THE PRIOR CONTRACTS AND THE FAVORABLE ENGINEERING ANALYSIS BY THE SAAMA PROPULSION BRANCH, JET AVION WAS NOTIFIED ON JUNE 10, 1969, BY THE DIRECTOR, PROCUREMENT AND PRODUCTION, HEADQUARTERS, SAN ANTONIO AIR MATERIEL AREA, AS FOLLOWS:

PRATT AND WHITNEY PART NUMBERS 488124 AND 488125, COMBUSTION CHAMBER CLAMPS ARE PROCUREMENT METHOD CODED "ENGINEERING CRITICAL" BY THE NAVY AND PRATT AND WHITNEY IN ACCORDANCE WITH MIL-STD-789 AND USAF AND U.S. NAVY AGREEMENT RELATING TO THE IMPLEMENTATION OF THIS MILITARY STANDARD ON "PROCUREMENT METHOD CODING OF AERONAUTICS SPARE PARTS." SAAMA'S ENGINEERING STAFF CONCURS WITH THE "ENGINEERING CRITICAL" DESIGNATION APPLIED TO PWAS P/H'S 488124 AND 488125. ACCORDINGLY, UNTIL SUCH TIME AS YOUR FIRM IS LISTED AS AN APPROVED VENDOR SOURCE BY THE NAVY AND/OR PRATT AND WHITNEY AIRCRAFT, WE WILL BE UNABLE TO PROCURE REFERENCED CLAMPS FROM JET AVION CORPORATION.

THEREAFTER, PROCUREMENT RESPONSIBILITY FOR SPARE PARTS FOR THE J-57 AND TF-33 JET AIRCRAFT ENGINES WAS TRANSFERRED TO THE OKLAHOMA CITY AIR MATERIEL AREA (OCAMA). THAT ACTIVITY, BY LETTER DATED SEPTEMBER 11, 1969, ADVISED JET AVION THAT PROCUREMENT OF CRITICAL ITEMS COULD ONLY BE ACCOMPLISHED FROM SOURCES APPROVED BY THE ORIGINAL MANUFACTURER. THAT LETTER STATED, IN PERTINENT PART, AS FOLLOWS:

THESE CLAMPS HAVE BEEN DETERMINED TO BE CRITICAL ITEMS FROM AN ENGINE OPERATIONAL AND RELIABILITY STANDPOINT. THEREFORE, IT HAS BEEN DETERMINED THAT SUBJECT COMBUSTION CHAMBER CLAMP SHOULD BE PROCURED FROM ONLY THOSE SOURCES QUALIFIED AND APPROVED BY THE PRIME CONTRACTOR IN ACCORDANCE WITH ESTABLISHED POLICY REGULATING THE SOURCE CODING OF ENGINE SPARE PARTS. THIS RESPECT, THIS ITEM IS CODED 8AV (SOLE SOURCE FROM PRIME CONTRACTOR) ON THE CRITICAL PARTS LIST AS JOINTLY APPROVED BY THE PRIME CONTRACTOR AND THE U.S. NAVY. IT IS OCAMA'S DECISION TO ABIDE BY THIS CODING.

APPARENTLY AS A RESULT OF JET AVION'S INTEREST, A JOINT AIR FORCE NAVY AD HOC COMMITTEE WAS ESTABLISHED TO CONSIDER THE FEASIBILITY OF COMPETITIVE BREAKOUT OF SPARE PARTS, INCLUDING THE SUBJECT CLAMPS, FOR PRATT AND WHITNEY ENGINES. ALSO, WHILE PROCUREMENTS FOR THE PURCHASE AND MODIFICATION OF THE SUBJECT CLAMPS WERE PENDING AT THE TIME THE JET AVION PROTEST WAS FILED, AND WHILE THE PROTEST WAS INITIALLY DIRECTED AT OPENING UP THESE PROCUREMENTS TO COMPETITION, SUCH PROCUREMENTS HAVE SINCE BEEN MADE, ON THE BASIS OF URGENCY, ON A NONCOMPETITIVE BASIS BY THE PLACEMENT OF CONTRACTS WITH PRATT AND WHITNEY AND WITH LAWSON MANUFACTURING COMPANY, A SOURCE APPROVED BY PRATT AND WHITNEY, AND WE ARE ADVISED THAT NO ADDITIONAL PROCUREMENTS ARE PRESENTLY CONTEMPLATED.

A COMPLICATING FACTOR IS THAT THE CLAMPS ORIGINALLY PROCURED AND SUPPLIED IN 1968 AND 1969 BY JET AVION WERE NOT EQUIPPED WITH A HEAT SHIELD, WHILE THE CURRENT VERSION OF THE CLAMPS IS EQUIPPED WITH A "SNAP IN HEAT SHIELD." THIS CHANGE IN CONFIGURATION, INCIDENTALLY, IS ADVANCED BY THE COVER LETTER TO THE ADMINISTRATIVE REPORT AS THE SOLE BASIS FOR DENIAL OF THE JET AVION PROTEST ON THE GROUND THAT THE CURRENT VERSION OF THE HEAT SHIELD HAS NEVER BEEN FURNISHED BY JET AVION.

WHILE THE ABOVE-SUMMARIZED EVENTS MAY AFFECT THE INTERESTS OF JET AVION AS REGARDS ITS EFFORTS TO BECOME QUALIFIED BY THE AIR FORCE AS A SUPPLIER OR MODIFIER OF THE SUBJECT CLAMPS, THE ISSUE FOR OUR CONSIDERATION IS WHETHER COMPETITIVE PROCUREMENT OF SPARE PARTS DESIGNATED "ENGINEERING CRITICAL" BY THE AIR FORCE IS PERMISSIBLE WITHOUT THE NECESSITY OF REMOVING THAT DESIGNATION BY JOINT AIR FORCE NAVY ACTION SO LONG AS PARTS SUPPLIED BY SUPPLIERS OTHER THAN THOSE APPROVED BY THE ORIGINAL MANUFACTURER ARE ABLE TO PASS APPROPRIATE QUALIFICATION TESTS.

THE BRIEFS SUBMITTED BY JET AVION'S ATTORNEYS CITE DECISIONS OF OUR OFFICE, 10 U.S.C. 2304(G), ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 300.1, 3-101, AND 1-102(C), AS SETTING FORTH THE GENERAL REQUIREMENT THAT MAXIMUM PRACTICABLE COMPETITION SHOULD BE OBTAINED BY THE GOVERNMENT EVEN IN NEGOTIATED PROCUREMENTS FOR ITEMS WHERE IT IS DETERMINED THAT "BECAUSE OF SUCH FACTORS AS THE NEED FOR EXTREMELY HIGH RELIABILITY, (REPLACEMENT PARTS) ARE NOT SUSCEPTIBLE OF PROCUREMENT ON AN UNLIMITED COMPETITIVE BASIS." THE ATTORNEYS' BRIEFS ALSO CITE ASPR 1-313 AND THE DEPARTMENT OF DEFENSE HIGH DOLLAR SPARE PARTS BREAKOUT PROGRAM, CONTAINED IN AIR FORCE REGULATION (AFR) 57-6, SECTION 1-300.1 (MARCH 1969), AS CARRYING THAT GENERAL COMPETITIVE REQUIREMENT INTO THE AREA OF HIGH RELIABILITY SPARE PARTS. WE HAVE OFTEN STATED THAT, ABSENT SUFFICIENTLY DOCUMENTED REASONS, COMPETITION IN ALL ASPECTS OF GOVERNMENT PROCUREMENT IS THE DESIRED GOAL AND THAT CONTINUING VIGILANCE SHOULD BE EXERCISED IN AN EFFORT TO MAXIMIZE COMPETITION.

THE BRIEFS CONCLUDE THAT THE ONLY THING REQUIRED BY THE CITED AUTHORITIES AND THE NAVY-PRATT AND WHITNEY ENGINEERING CRITICALITY AGREEMENT JUSTIFYING COMPETITIVE PROCUREMENT EVEN OF "ENGINEERING CRITICAL" ITEMS IS THAT THE ITEMS MEET THE GOVERNING STANDARDS OF RELIABILITY WITHOUT THE USE OF RESTRICTED TECHNICAL DATA. AS EVIDENCE THAT THE JET AVION CLAMPS ACTUALLY MEET THE REQUIREMENTS, THE BRIEFS POINT TO THE PAST AIR FORCE PROCUREMENT OF JET AVION CLAMPS AND MAINTAIN THAT THIS EXPERIENCE PROVIDES A GOOD INDICATION THAT THE JET AVION CLAIMS WOULD SUCCESSFULLY PASS ANY AIR FORCE QUALIFICATION TESTS. ACCORDINGLY, THE BRIEFS REQUEST THAT THE AIR FORCE EITHER BE DIRECTED TO APPROVE JET AVION AS AN ADDITIONAL SOURCE FOR COMBUSTION CHAMBER CLAMPS OR, IN THE ALTERNATIVE, THAT TESTING OR QUALIFICATION PROCEDURES IMMEDIATELY BE INSTITUTED BY THE AIR FORCE.

THE AIR FORCE ADMINISTRATIVE REPORT, ON THE OTHER HAND, CITES AFR 57 6, PARAGRAPH 4-104.2, WHICH REQUIRES THAT THE DEPARTMENT OF DEFENSE PROCURING ACTIVITY ORIGINALLY ASSIGNING A PROCUREMENT METHOD CODE BE INTERROGATED BEFORE ASSIGNING A DIFFERENT CODE TO A GIVEN ITEM, AND STATES THAT "SUCH INTERROGATION ACTION WAS TAKEN THROUGH SAAMA MESSAGE 241325Z JUNE 1969 AND WAS CONFIRMED BY NAVAIRSYSCOMHQ MESSAGE 272112Z JUNE 1969." IN THIS REGARD, THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND FINDINGS ATTACHED TO THE AIR FORCE REPORT TAKES THE POSITION THAT A PROCUREMENT METHOD CODE OF 8AV PURPORTEDLY REQUIRING SOLE SOURCE PROCUREMENT FROM THE PRIME MANUFACTURER IN ACCORDANCE WITH AFR 57-6 HAS BEEN AND IS ASSIGNED TO THE SUBJECT CLAMPS BY JOINT NAVY-PRATT AND WHITNEY ACTION. THE REPORT ALSO MENTIONS A JULY 15, 1965, AGREEMENT BETWEEN AIR FORCE AND NAVY WITH REGARD TO PROCUREMENT METHOD CODING OF AERONAUTICAL REPLENISHMENT SPARE PARTS, APPARENTLY TO ABSOLVE THE AIR FORCE FROM RESPONSIBILITY IN CHANGING ANY PROCUREMENT METHOD CODES ASSIGNED TO COMBUSTION CHAMBER CLAMPS. THE REPORT ALSO CITES EXHIBIT H OF NAVY CONTRACT NOW 62-0773 WITH PRATT AND WHITNEY, WHICH EMBODIES THE AGREEMENT BETWEEN THE NAVY AND PRATT AND WHITNEY AS TO THE CRITERIA FOR ESTABLISHING ENGINEERING CRITICALITY, TO THE EFFECT THAT RESPONSIBILITY FOR THE DETERMINATION OF ENGINEERING CRITICALITY RESTS WITH PRATT AND WHITNEY WHICH DESIGNED THE ENGINES.

A BRIEF DISCUSSION OF THE DEVELOPMENT OF THE TERM "ENGINEERING CRITICAL" IS NECESSARY. IN A BRIEFING PRESENTED IN APRIL 1970 BY THE DEPARTMENT OF THE NAVY TO AIR FORCE REPRESENTATIVES, THE MEANING AND INTENDED EFFECT OF THAT TERM FROM THE NAVY'S POINT OF VIEW WAS DISCUSSED. THIS BRIEFING WAS ALSO PRESENTED TO A REPRESENTATIVE OF OUR OFFICE AND A COPY OF THE BRIEFING PAPER HAS BEEN FURNISHED OUR OFFICE FOR ITS USE IN RESOLVING THE PROTEST. THE BRIEFING PAPER STATED, INITIALLY, THAT PAST ENGINE DEVELOPMENT AND CONTINUING ENGINEERING COSTS FOR PRATT AND WHITNEY ENGINES HAD BEEN FINANCED PARTIALLY BY THE COMPANY AND PARTIALLY BY THE GOVERNMENT, AND THAT THE INTERMIX OF THESE DEVELOPMENTAL COSTS MADE THE DETERMINATION OF RIGHTS IN DATA, NECESSITATED BY LATER ATTEMPTS AT COMPETITIVE BREAKOUT OF SPARE PARTS FOR REPLENISHMENT PROCUREMENT, VIRTUALLY IMPOSSIBLE. THIS FACT LED TO THE NEGOTIATION OF AN AGREEMENT BETWEEN PRATT AND WHITNEY AND THE NAVY, WHICH PROVIDED THAT DATA RELATING TO PARTS DESIGNATED BY AGREEMENT TO BE "ENGINEERING CRITICAL" WOULD BEAR A RESTRICTIVE LEGEND PRECLUDING THE GOVERNMENT FROM USING SUCH DATA FOR COMPETITIVE PROCUREMENT PURPOSES, WITHOUT MAKING A DETERMINATION THAT THE DATA WAS DEVELOPED AT PRIVATE EXPENSE AND, HENCE, ITS USE IS RESTRICTED.

THE BRIEFING PAPER FURTHER STATED THAT THE PRATT AND WHITNEY-NAVY AGREEMENT WAS CONTAINED IN CONTRACTS INVOLVING JET ENGINE PARTS FROM PRATT AND WHITNEY FROM 1962 UNTIL JANUARY 1968, AT WHICH TIME MIL-STD 789 BECAME EFFECTIVE. MIL-STD-789, ACCORDING TO THE NAVY, PROVIDED FOR FULL GOVERNMENT FUNDING OF DEVELOPMENT AND CONTINUING ENGINEERING COSTS AND THE INCORPORATION OF STANDARD RIGHTS IN DATA CLAUSES (REQUIRING DEVELOPMENT AT PRIVATE EXPENSE TO JUSTIFY THE CONVEYANCE TO THE GOVERNMENT OF ONLY LIMITED RIGHTS IN DATA) IN PRATT AND WHITNEY CONTRACTS. THE NAVY FURTHER STATES THAT MIL-STD-789 ESTABLISHED THE PROCEDURES FOR ASSIGNING PROCUREMENT METHOD CODES, THE CRITERIA FOR WHICH ARE SIMILAR TO THOSE USED IN DETERMINING THE ENGINEERING CRITICALITY OF A PART, BUT THAT, CONTRARY TO THE AIR FORCE POSITION, THE PARTS HAVE NOT BEEN CODED UNDER MIL-STD-789 BECAUSE THE ENGINEERING CRITICALITY CRITERIA ARE STILL APPLICABLE.

THE IMPORT OF THE NAVY BRIEFING PAPER IS THAT ALTHOUGH THE DETERMINATION OF ENGINEERING CRITICALITY IS BASED ON "MANUFACTURING CONSIDERATIONS," THE TERM "ENGINEERING CRITICAL" RELATES SOLELY TO THE DISSEMINATION OR THE NONDISSEMINATION OF MANUFACTURING DATA AND NOT TO THE SOURCES FROM WHICH PARTS ARE TO BE PROCURED. IN THIS REGARD, THE BRIEFING PAPER STATED:

THE MAJOR THRUST OF THE JET AVION PROTEST APPEARS TO BE THAT IT IS POSSIBLE FOR AN ACTIVITY SUCH AS THAT COMPANY TO DEVELOP THE DATA AND CAPABILITY NECESSARY TO PRODUCE "ENGINEERING CRITICAL" PARTS EQUIVALENT TO THOSE FURNISHED BY THE PRIME ENGINE CONTRACTOR. THE NAVY DOES NOT DENY SUCH A POSSIBILITY AND HAS SO INDICATED IN A LETTER FROM NAVAIR TO AFLC (AIR FORCE LOGISTICS COMMAND) DATED 23 MAY 1967. *** .

THE MAY 23, 1967, LETTER WAS PROMPTED BY A COMPLAINT ON THE PART OF PRATT AND WHITNEY THAT THE AIR FORCE HAD COMPETITIVELY PROCURED CERTAIN "ENGINEERING CRITICAL" PARTS. THAT LETTER STATED, IN PERTINENT PART:

*** THE TERMS OF THE "ENGINEERING CRITICAL" AGREEMENT DO NOT GOVERN THE METHOD OF PARTS PROCUREMENT BY THE GOVERNMENT. RATHER, THE AUTHORITY OF THE GOVERNMENT TO USE TECHNICAL DATA IS GOVERNED. THEREFORE, PARTS DESIGNATED "ENGINEERING CRITICAL" CAN BE PURCHASED COMPETITIVELY BY THE GOVERNMENT, BUT THE TECHNICAL DATA BEARING LEGENDS ESTABLISHING THE PART INVOLVED AS "ENGINEERING CRITICAL" MAY NOT BE EMPLOYED BY THE GOVERNMENT IN EFFECTING SUCH PURCHASE. ***. FURTHER EVIDENCE OF THE NAVY POSITION IS FOUND IN NAVAIRSYSCOMHQ MESSAGE OF 272112Z JUNE 1969, WHICH IS RELIED ON BY THE AIR FORCE AS EVIDENCE OF THE INITIAL ASSIGNMENT OF A NONCOMPETITIVE PROCUREMENT METHOD CODE AND THE SUBSEQUENT CONFIRMATION OF THAT ASSIGNMENT BY NAVY. AS WILL BE NOTED FROM A PERTINENT QUOTATION FROM THAT MESSAGE, IT DOES NOT PROVIDE JUSTIFICATION FOR NONCOMPETITIVE PROCUREMENT, BUT RATHER STATES GUIDELINES TO BE FOLLOWED FOR COMPETITIVE PROCUREMENT. PART THAT MESSAGE READS:

IN ACCORDANCE WITH REF B (THE MAY 27, 1967, LETTER FROM NAVAIR TO AFLC QUOTED ABOVE) ANY ACTIVITY PROCURING PARTS DEPICTED ON DRAWINGS BEARING AN ENGINEERING CRITICAL LEGEND (1) MUST DETERMINE PARTS AVAILABLE FROM ALTERNATE SOURCES NOT SET FORTH ON SAID DRAWING WILL PERFORM IN SERVICE OPERATION AS WELL AS SAME PARTS PROCURED FROM DESIGN ACTIVITY, (2) NOT USE DESIGN ACTIVITY ENGINEERING TECHNICAL DATA INCLUDING DOCUMENTATION REFERENCED THEREON FOR SOLICITATION OF BIDS OR IN OTHER PROCUREMENT ACTIONS SO LONG AS PART IS DESIGNATED "ENGINEERING CRITICAL" AND (3) TAKE INTO ACCOUNT OTHER FACTORS SET FORTH IN REF B.

WE BELIEVE THAT IT WOULD BE CONTRARY TO THE CONCEPT OF "MAXIMUM PRACTICAL COMPETITION" TO HOLD THAT "ENGINEERING CRITICAL" ITEMS MAY NOT BE PROCURED COMPETITIVELY BECAUSE OF THE PRATT AND WHITNEY-NAVY AGREEMENT OR THE ASSIGNMENT OF A CERTAIN "PROCUREMENT METHOD CODE" WITHOUT REGARD TO THE WILLINGNESS AND THE ABILITY OF JET AVION OR OTHER SOURCES TO PRODUCE THE ITEMS WITHOUT THE INVASION OF CONTRACT OR PROPRIETARY RIGHTS. THE POSITION OF OUR OFFICE WITH REGARD TO THE PROCUREMENT OF HIGH RELIABILITY SPARE PARTS AND THE IMPORT OF ASPR 1 313 (REQUIRING COMPETITIVE PROCUREMENT OF SPARE PARTS EXCEPT WHERE ADEQUATE UNLIMITED RIGHTS DATA, TEST RESULTS AND QUALITY ASSURANCE PROCEDURES ARE NOT AVAILABLE) IS SUCCINCTLY SET FORTH IN B-166435, JULY 1, 1969, WHEREIN IT IS STATED:

WE FIND NO REASON TO ASCRIBE TO THESE PROVISIONS (ASPR 1-313) 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. IN 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.

IT SEEMS TO US THAT SOME CONFUSION EXISTS WITH REGARD TO THE PROCUREMENT BY THE AIR FORCE OF ENGINE PARTS DESIGNATED "ENGINEERING CRITICAL" BY THE NAVY. THE AIR FORCE POSITION SEEMS TO BE THAT NO ENGINEERING CRITICAL PARTS MAY BE COMPETITIVELY PROCURED WITHOUT AUTHORIZATION BY THE NAVY OR APPROVAL OF ALTERNATE PART SOURCES BY PRATT AND WHITNEY. IN THIS RESPECT, BASED ON OUR REVIEW, IT APPEARS THAT THE AIR FORCE REQUESTED NAVY CONCURRENCE FOR THE COMPETITIVE PROCUREMENT OF THE SUBJECT CLAMPS BUT SUCH REQUEST WAS DENIED. THE NAVY TAKES THE POSITION THAT ENGINEERING CRITICALITY RELATES ONLY TO RIGHTS IN DATA AND THAT SO LONG AS RESTRICTED DATA IS NOT RELEASED AND ASSURANCES THAT DATA IN THE HANDS OF A PROPOSED ALTERNATE SOURCE WAS NOT PIRATED OR OBTAINED, NO IMPEDIMENT TO COMPETITIVE PROCUREMENT OF "ENGINEERING CRITICAL" PARTS EXISTS. THIS WAS THE IMPORT OF THE NAVY MESSAGE, ABOVE QUOTED, WHICH WAS RELIED ON BY THE AIR FORCE TO JUSTIFY CONTINUED SOLE SOURCE PROCUREMENT.

FURTHER, THE AIR FORCE MAINTAINS THAT A PROCUREMENT METHOD CODE OF 8 AV HAS BEEN ASSIGNED TO THE PARTS IN QUESTION APPARENTLY BY THE NAVY WHILE JET AVION'S ATTORNEYS POINT OUT THE CODE "8", UNDER MIL-STD-789, RELATES MERELY TO A CONTRACTOR RECOMMENDED CODE AS OPPOSED TO A PROCUREMENT METHOD CODE. THE NAVY'S POSITION, HOWEVER, AS STATED IN ITS JUNE 27, 1970, MESSAGE QUOTED ABOVE, IS THAT PROCUREMENT METHOD CODING AS SUCH WAS NOT UTILIZED IN THIS INSTANCE BECAUSE THE STANDARD USED WAS ONE OF "ENGINEERING CRITICALITY," A STANDARD SIMILAR TO BUT NOT IDENTICAL TO THE ONE USED IN PROCUREMENT METHOD CODING.

FINALLY, WHILE MAINTAINING THAT NAVY PROCUREMENT METHOD CODING AND THE ABSENCE OF NAVY APPROVAL OF COMPETITIVE PROCUREMENT REQUIRE THE CONTINUED SOLE SOURCE PROCUREMENT BY THE AIR FORCE, THE AIR FORCE CONCEDES THAT COMPETITIVE PROCUREMENT OF "ENGINEERING CRITICAL" PARTS IS FEASIBLE WHERE OTHER QUALIFIED SOURCES EXIST. THUS, THE CONTRACTING OFFICER'S STATEMENT DATED MAY 15, 1970, ADVISES:

WE ACKNOWLEDGE THAT FACT THAT SOME CRITICAL ITEMS CAN BE COMPETED, HOWEVER, THESE ARE ITEMS WHERE OTHER QUALIFIED APPROVED SOURCES ARE KNOWN.

*** HOWEVER, WITH TWO OR MORE APPROVED SOURCES, ENGINEERING CRITICAL ITEMS COULD BE COMPETITIVE.

IN OUR VIEW, THE IMPLICATION OF THESE STATEMENTS IS THAT ALTERNATE SOURCE QUALIFICATION IS NOT AN AIR FORCE RESPONSIBILITY.

FURTHER, INDICATIONS OF THE AIR FORCE'S POSITION AS TO THE COMPETITIVE CHARACTER OF THESE CLAMPS MAY BE FOUND IN AFLC/MCP MESSAGES OF MARCH 27 AND APRIL 3, 1970, WHEREIN THESE STATEMENTS APPEAR:

*** PERTAINING TO SOLE SOURCE PROCUREMENT OF TF-33/J-57 ENGINE COMBUSTION CHAMBER CLAMPS. REFERENCE IS MADE TO MESSAGES ON SUBJECT MATTER, MCPP 131703Z MAR 70 AND AFSPPL 171736Z MAR 70. IN THE ABSENCE OF INFORMATION REQUESTED BY THIS HQ SOLE SOURCE PROCUREMENT OF THE ITEM DOES NOT APPEAR TO BE JUSTIFIED. YOU ARE AUTHORIZED TO COMPETE THE PRESENT URGENT REQUIREMENT OF 1291 EACH BETWEEN PRATT AND WHITNEY AND JET AVION.

A. COMPETE THE CLAMP BETWEEN P&W, JET AVION AND ANY OTHER KNOWN SOURCE ABLE TO SUPPLY QUALIFIED ITEMS OF THIS NATURE.

B. IF CONTRACT IS TO BE AWARDED TO ANY SOURCE OTHER THAN P&W YOU WILL BE REQUIRED TO CONTRACT FOR 1ST ARTICLE TEST AND QUALIFICATION. THE TEST YOU OUTLINE IN YOUR MESSAGE CITED ABOVE AS PHASE I & PHASE IIB IS TO BE THE TEST ACCOMPLISHED. INASMUCH AS THE C-141 FLEET IS AVERAGING APPROXIMATELY 200 HRS A MONTH IT IS BELIEVED THAT THRU THE USE OF A LEAD-THE-FORCE AIRCRAFT THE TEST CAN BE COMPLETED IN APPROXIMATELY 6 WKS. THIS HEADQUARTERS WILL NOT CONDONE THE EXPENDITURE OF $264,000 AND APPROXIMATELY 6 MONTHS FOR TESTING BY P&W AS ADVOCATED IN YOUR MESSAGE AS THE PREFERRED METHOD OF ACCOMPLISHING THE SUBSTANTIATION TEST. *** THE FOREGOING IS BASED UPON THE FOLLOWING ASSUMPTIONS & FACTS.

C. PET AVION IS FAA CERTIFIED AND HAS PREVIOUSLY SUPPLIED CLAMPS TO THE AIR FORCE AND MOST MAJOR AIRLINES THROUGHOUT THE WORLD.

D. PREVIOUS AF (SAAMA) ENGINEERING EVALUATION EVEN THOUGH LIMITED VERIFIED THE JET AVION CLAMP TO BE EQUAL TO OR SUPERIOR IN QUALITY TO THE P&W CLAMP AND ACTUAL USAGE EXPERIENCE HAS NEVER INDICATED OTHERWISE TO OUR KNOWLEDGE.

F. THE NAVY HAS AGREED THAT THE GOVERNMENT HAS THE RIGHT TO COMPETE THE CLAMP SO LONG AS WE DO NOT USE THE P&W LIMITED RIGHTS DATA FOR REPROCUREMENT PURPOSES. THIS DOES NOT PRECLUDE THE USE OF THE DATA WITHIN THE GOVERNMENT FOR QUALIFICATION AND TESTING PURPOSES.

THE FOREGOING HIGHLIGHTS THE FACT THAT THE DESIGNATION "ENGINEERING CRITICAL" HAS PERPETUATED A SOLE SOURCE POSITION WITHOUT CLEAR JUSTIFICATION THEREFOR. HOWEVER, AS THE CONCEPT OF ENGINEERING CRITICALITY WAS CONCEIVED AND ADMINISTERED BY THE NAVY, WE THINK THAT THE NAVY'S OPINION OF ITS EFFECT ON THE LIMITATION OF COMPETITION MUST BE GIVEN WEIGHT. ACCORDINGLY, IN VIEW OF THE REPORTED POSITION OF THE NAVY, THAT ENGINEERING CRITICALITY RELATES TO RESTRICTED DATA RIGHTS AS OPPOSED TO PROCUREMENT METHOD, WE CAN SEE NO PRESENT IMPEDIMENT TO QUALIFICATION BY THE AIR FORCE OF ADDITIONAL SOURCES OF SUPPLY FOR THE SUBJECT CLAMPS BY APPROPRIATE TEST AND QUALIFICATION PROCEDURES, PROVIDED PRATT AND WHITNEY'S DATA RIGHTS ARE NOT INFRINGED IN ANY SUBSEQUENT PROCUREMENT ACTION.

WE RECOMMEND, THEREFORE, THAT A QUALIFICATION TEST PROGRAM BE INSTITUTED BY THE AIR FORCE TO MEASURE THE ACCEPTABILITY OF CLAMPS TENDERED BY ALTERNATE SOURCES SINCE WE CONCLUDE FROM THE RECORD THAT THE EXISTENCE OF AN ENGINEERING CRITICALITY DESIGNATION DOES NOT, IN AND OF ITSELF, PRECLUDE THE QUALIFICATION OF ALTERNATE SOURCES OF SUPPLY.