B-169343, AUG. 28, 1970

B-169343: Aug 28, 1970

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A PROCUREMENT UNDER AN OPTION THAT WAS MORE COSTLY BUT WHICH WAS DETERMINED TO BE IN INTEREST OF MAINTAINING THE MOBILIZATION BASE UNDER 10 U.S.C. 2304 (A)(16) WILL NOT BE QUESTIONED. THE DETERMINATION THAT PARTICULAR FIRM (KDI) A NEW FIRM WAS RESPONSIBLE IS MATTER WITHIN DISCRETION OF CONTRACTING OFFICER. FRANK & KAMPELMAN: FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF BRAD'S MACHINE PRODUCTS. THIS PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A)(16). WHICH PROVIDES IN PART THAT THE HEAD OF A MILITARY AGENCY MAY NEGOTIATE A PURCHASE OR CONTRACT IF HE DETERMINES THAT IT IS IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A PLANT. THE SUBJECT PROCUREMENT IS FOR A LARGE QUANTITY OF M524A5 FUZES.

B-169343, AUG. 28, 1970

BID PROTEST -- OPTION QUANTITIES DENIAL OF PROTEST AGAINST ALLEGED IMPROPRIETIES IN NEGOTIATED PROCUREMENT OF FUZES FOR 81MM AMMUNITION BY ARMY AMMUNITION PROCUREMENT AND SUPPLY AGENCY. A PROCUREMENT UNDER AN OPTION THAT WAS MORE COSTLY BUT WHICH WAS DETERMINED TO BE IN INTEREST OF MAINTAINING THE MOBILIZATION BASE UNDER 10 U.S.C. 2304 (A)(16) WILL NOT BE QUESTIONED. THE DETERMINATION THAT PARTICULAR FIRM (KDI) A NEW FIRM WAS RESPONSIBLE IS MATTER WITHIN DISCRETION OF CONTRACTING OFFICER.

TO STRASSER, SPIEGELBERG, FRIED, FRANK & KAMPELMAN:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF BRAD'S MACHINE PRODUCTS, INC., AGAINST WHAT YOU TERM SIGNIFICANT IMPROPRIETIES IN THE PROCUREMENT PROCEDURE BY THE UNITED STATES ARMY AMMUNITION PROCUREMENT AND SUPPLY AGENCY (APSA), JOLIET, ILLINOIS, UNDER REQUEST FOR PROPOSALS NO. DAAA09-70-R-0123.

THIS PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304(A)(16), WHICH PROVIDES IN PART THAT THE HEAD OF A MILITARY AGENCY MAY NEGOTIATE A PURCHASE OR CONTRACT IF HE DETERMINES THAT IT IS IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A PLANT, MINE OR OTHER FACILITY, OR A PRODUCER, MANUFACTURER OR OTHER SUPPLIER, AVAILABLE FOR FURNISHING PROPERTY OR SERVICES IN CASE OF A NATIONAL EMERGENCY OR THE INTEREST OF INDUSTRIAL MOBILIZATION IN CASE OF SUCH AN EMERGENCY.

THE SUBJECT PROCUREMENT IS FOR A LARGE QUANTITY OF M524A5 FUZES, A CRITICAL LONG LEAD-TIME COMPONENT FOR 81MM AMMUNITION. UNDER THE ORIGINAL PROCUREMENT PLAN FOR FISCAL YEAR 1970 REQUIREMENTS APPROXIMATELY 400,000 FUZES PER MONTH WERE TO BE PROCURED DURING THE PERIOD DECEMBER 1969 THROUGH NOVEMBER 1970. ON OCTOBER 2, 1969, AWARDS WERE MADE TO EIGHT BASE PRODUCERS FOR A QUANTITY OF 2,844,000 AT THE 400,000 PER MONTH RATE FROM NOVEMBER 1969 THROUGH JUNE 1970, AND 44,000 IN THE FIRST WEEK OF JULY 1970. AT THE TIME OF THESE AWARDS IT WAS CONTEMPLATED THAT OPTIONS IN THE CONTRACTS WOULD BE EXERCISED TO EXTEND PERFORMANCE THROUGH NOVEMBER 1970 WHEN SUFFICIENT FUNDS BECAME AVAILABLE. HOWEVER, BECAUSE OF AN INCREASE IN THE 81MM PROGRAM, THE PROCUREMENT PLAN FOR THE FUZES WAS CHANGED IN LATE OCTOBER 1969 TO PROVIDE FOR ACCELERATION OF THE RATE OF DELIVERY TO 550,000 UNITS PER MONTH THROUGH JUNE 1970 AND FOR SOLICITATION OF PROPOSALS FROM THE CURRENT PRODUCERS AND OTHER PROSPECTIVE PRODUCERS FOR THE BALANCE OF THE FY 70 PROGRAM, AT THE RATE OF 550,000 PER MONTH FOR THE PERIOD JULY 1970 THROUGH NOVEMBER 1970.

APSA DECIDED ON NOVEMBER 12, 1969, TO ISSUE A REQUEST FOR QUOTATIONS TO THE BASE PRODUCERS TO ACCELERATE THE PRODUCTION RATE FROM 400,000 TO 550,000 PER MONTH FROM JANUARY 1970 THROUGH JUNE 1970, TO MEET LOAD PLANT REQUIREMENTS. IT WAS ALSO DECIDED THAT THE SUBJECT RFP WOULD BE ISSUED ON NOVEMBER 14, 1969, FOR A QUANTITY OF 2,200,000 UNITS AT THE RATE OF 550,000 UNITS PER MONTH, STARTING IN JULY 1970 AND RUNNING THROUGH OCTOBER 1970. NOTICE OF THE PROPOSED RFP WAS PUBLISHED IN THE COMMERCE BUSINESS DAILY ON NOVEMBER 13, 1969, WITH INFORMATION THAT THE RFP WOULD BE ISSUED ON NOVEMBER 14, 1969, WITH A CLOSING DATE OF DECEMBER 15, 1969. THE RFQ TO THE BASE PRODUCERS WAS ISSUED ON NOVEMBER 21, 1969. DUE TO A NEED TO MAKE CERTAIN CHANGES IN THE SPECIFICATIONS THE SUBJECT RFP WAS NOT ISSUED UNTIL DECEMBER 3, 1969, WITH A RANGE OF QUANTITIES OF 200,000, 300,000, 400,000 AND 600,000, AND CLOSING SET FOR JANUARY 5, 1970. BECAUSE OF A FURTHER CHANGE IN END ITEM DELIVERY SCHEDULES, IT WAS DETERMINED ON DECEMBER 15, 1969, THAT THE MONTHLY RATE OF DELIVERY SHOULD BE INCREASED TO 600,000 UNITS. HOWEVER, ON JANUARY 29, 1970, IT WAS DETERMINED THAT THE RATE OF DELIVERY SHOULD BE REDUCED TO 425,000 PER MONTH BEGINNING IN JULY THROUGH OCTOBER 1970. RFP'S WERE FURNISHED TO 108 FIRMS AND 19 RESPONSES WERE RECEIVED BY THE CLOSING DATE. ON JANUARY 7, 1970, ALL 19 FIRMS WERE NOTIFIED TO SUBMIT THEIR BEST AND FINAL OFFER BY JANUARY 14, LATER EXTENDED TO JANUARY 19, 1970. ALL 19 RESPONDED TIMELY.

ON JANUARY 22, 1970, THE CONTRACTING OFFICER REQUESTED PREAWARD SURVEYS ON BRAD'S, GENERAL TIME, KDI AND LEAR SIEGLER, WHO WERE THE LOW OFFERORS ON THE 600,000 RANGE AS OF JANUARY 19, 1970. ON FEBRUARY 2 AND 4, 1970, WOODSIDE PRECISIONIC DIVISION AND ACTION MANUFACTURING COMPANY, RESPECTIVELY, SUBMITTED REVISED PRICES WHICH WERE LATER REJECTED AS LATE MODIFICATIONS.

ON FEBRUARY 12, 1970, THE RFP WAS AMENDED BY AMENDMENT NO. 3, AND THE CLOSING DATE WAS EXTENDED TO FEBRUARY 19, 1970. THE AMENDMENT CHANGED THE DELIVERY SCHEDULE FROM FOUR TO SIX MONTHS; INCREASED THE RANGE OF QUANTITIES TO 300,000, 450,000, 600,000 AND 900,000; PROVIDED THAT ACCELERATED DELIVERIES WERE ACCEPTABLE; AND INCORPORATED THREE MANDATORY ENGINEERING ORDERS. ON THE SAME DATE A PREAWARD SURVEY OF WOODSIDE WAS REQUESTED. ALL 19 FIRMS RESPONDED TO THE AMENDMENT ON THE 19TH. THEREAFTER, THE CONTRACTING OFFICER SUBMITTED THE APSA PROCUREMENT DIVISION'S AWARD PLAN TO THE COMMANDING GENERAL, USAMUCOM, WHO APPROVED SAME ON MARCH 9, 1970. THE APSA BOARD OF AWARDS REVIEWED AND APPROVED THE PROCUREMENT PLAN ON MARCH 16, 1970. AWARDS WERE MADE ON MARCH 18, 1970, AS FOLLOWS:

QUANTITY RATE PER MONTH UNIT PRICE

KDI900,000 150,000 $3.24739

LEAR SIEGLER 600,000 100,000 4.57

WOODSIDE 450,000 75,000 4.676

I.D. 300,000 50,000 4.857 DELIVERIES ARE TO COMMENCE IN OCTOBER AND CONTINUE FOR SIX MONTHS. AS PART OF THE PROCUREMENT PLAN, OPTIONS IN THE CURRENT CONTRACTS WERE EXERCISED AS FOLLOWS:

QUANTITY UNIT PRICE

WILKINSON 150,000 $4.95

REDM 181,000 5.03

BULOVA 706,000 4.97

CANADIAN COMMERCIAL 211,000 5.10 THE OPTION AWARDS CALL FOR DELIVERIES TO CONTINUE THROUGH DECEMBER 1970. IT IS REPORTED THAT THESE QUANTITIES WERE AWARDED UNDER THE OPTIONS RATHER THAN THE RFP TO PROVIDE CONTINUITY OF PRODUCTION DURING JULY, AUGUST AND SEPTEMBER AND PROVIDE INSURANCE FOR PRODUCTION DURING THE START-UP PERIOD OF THE NEW PRODUCERS.

IT IS YOUR PRIMARY CONTENTION THAT THE ISSUANCE OF AMENDMENT NO. 3 WAS A "SHAM" TO PERMIT FURTHER CONSIDERATION OF WOODSIDE, WHOM YOU CONTEND HAD BEEN DETERMINED OUT OF THE COMPETITIVE RANGE AT THE TIME NEGOTIATIONS WERE CLOSED ON JANUARY 19, 1970. YOUR CONTENTION CONCERNING WOODSIDE IS BASED ON THE FACT THAT ALTHOUGH IT WAS A NEW PRODUCER OF THE ITEM NO PREAWARD SURVEY WAS REQUESTED AT THE TIME OF THE OTHER FOUR, BUT WAS REQUESTED AFTER RECEIPT OF ITS LATE MODIFICATION AND ON THE DATE THE AMENDMENT WAS ISSUED. FURTHERMORE, YOU CONTEND THAT WOODSIDE SHOULD NOT HAVE BEEN PERMITTED TO SUBMIT A REVISED PROPOSAL PURSUANT TO THE AMENDMENT SINCE UNDER ASPR 3-805.1(E) ONLY "PROSPECTIVE CONTRACTORS" ARE TO BE AFFORDED SUCH AN OPPORTUNITY. AS FURTHER EVIDENCE OF THE "SHAM," YOU CONTEND THAT THE ADDITIONAL QUANTITIES CALLED FOR UNDER THE AMENDMENT WERE USED AS THE BASIS FOR ITS ISSUANCE WITHOUT ANY INTENTION TO AWARD THEM UNDER THE RFP. IN THIS CONNECTION, YOU POINT OUT THAT THE QUANTITIES ACTUALLY AWARDED UNDER THE RFP WERE ALMOST IDENTICAL WITH THOSE SPECIFIED IN THE COMMERCE BUSINESS DAILY SYNOPSIS.

IN REGARD TO EXERCISE OF THE OPTIONS UNDER THE BASE PRODUCERS' CONTRACTS, YOU CONTEND THAT THIS ACTION WAS CONTRARY TO THE REQUIREMENT OF ASPR 1- 505(C) THAT AN OPTION SHOULD BE EXERCISED ONLY IF IT IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, AND CONTEND THAT ONLY PRICE WAS PROPERLY FOR CONSIDERATION IN THIS INSTANCE. SINCE THE OPTION UNIT PRICES ARE MORE THAN THE UNIT PRICES UNDER THE RFP, YOU CONTEND THAT THE OPTION AWARDS WERE NOT THE MOST ADVANTAGEOUS AND CONTRARY TO THE REGULATION. FURTHERMORE, YOU CONTEND THAT THIS ACTION WAS CONTEMPLATED AT THE TIME THE QUANTITIES WERE INCREASED BY AMENDMENT OF THE RFP, AND TO WITHHOLD THE OPTION QUANTITIES FROM AWARD UNDER THE RFP WAS AN ACT OF BAD FAITH. ADDITIONALLY, YOU ARGUE THAT IF THE OPTION AWARDEES SUBMITTED OFFERS UNDER THE RFP WHICH WERE NOT COMPETITIVE AS TO PRICE BUT RECEIVED OPTION AWARDS, THE ARMY IS MAKING A MOCKERY OF THE COMPETITIVE SYSTEM. ON THE OTHER HAND, YOU ARGUE THAT IF THEY DID NOT SUBMIT OFFERS UNDER THE RFP IT APPEARS THEY RECEIVED PRIVILEGED PROCUREMENT INFORMATION FROM THE ARMY WHICH ALLOWED THEM TO RECEIVE THE OPTION AWARDS WITHOUT COMPETING.

YOU ALSO TAKE ISSUE WITH THE ARMY'S POSITION THAT EXERCISE OF THE OPTIONS WAS NECESSARY TO MAINTAIN CONTINUITY OF PRODUCTION, CONTENDING THAT THE ARMY'S ASSERTION THAT THE BASE PRODUCERS' CONTRACTS ARE TO BE COMPLETED THE FIRST WEEK OF JULY IS "FALSE." YOU POINT OUT THAT THE DETERMINATION TO MAKE AN OPTION AWARD TO REDM STATED THAT THEIR CONTRACT IS SCHEDULED FOR COMPLETION IN AUGUST AND DELIVERIES UNDER THE OPTION ARE TO COMMENCE IN THAT MONTH. YOU ALSO POINT OUT THAT THE ADDENDUM TO THE REDM DETERMINATION STATES THAT WILKINSON'S CONTRACT RUNS OUT IN SEPTEMBER. FURTHERMORE, YOU STATE THAT YOU HAVE REASON TO BELIEVE THAT SOME OF THE BASE PRODUCERS' CONTRACTS UNDER WHICH OPTIONS WERE NOT EXERCISED WILL CONTINUE BEYOND JULY. IN SUPPORT OF THIS POSITION, YOU POINT OUT THAT OTHERWISE THE LOADING PLANTS WILL SUFFER SERIOUS SHORTAGES IN AUGUST AND SEPTEMBER AS THE QUANTITIES TO BE DELIVERED UNDER THE OPTION AWARDS ARE FAR SHORT OF THE MINIMUM REQUIREMENT OF 325,000 PER MONTH. FURTHERMORE, IT IS YOUR CONTENTION THAT THE POTENTIAL GAP IN LOADING PLANT PRODUCTION, CITED AS A REASON FOR EXERCISING THE OPTIONS, IS OF THE ARMY'S OWN MAKING IN THAT THERE WAS NO BASIS FOR EXTENDING THE COMMENCEMENT OF DELIVERIES TWO MONTHS BEYOND THE DATE ORIGINALLY ESTABLISHED.

MOREOVER, YOU CONTEND THAT HAD AWARD BEEN MADE UNDER THE RFP FOR ALL OF THE REQUIREMENTS PRIOR TO AMENDMENT NO. 3, THERE WOULD HAVE BEEN NO POSSIBILITY OF A PRODUCTION GAP DEVELOPING AND THE COST TO THE GOVERNMENT WOULD HAVE BEEN LESS THAN THE COST UNDER THE NEW CONTRACTS AND EXERCISE OF THE OPTIONS. IN ADDITION, YOU CONTEND THAT HAD BRAD'S AND LEAR-SIEGLER RECEIVED AWARDS FOR THE OPTION QUANTITIES AT THEIR OFFER PRICES, THE COST TO THE GOVERNMENT WOULD HAVE BEEN MORE THAN $500,000 LESS THAN THE AWARDS MADE.

FINALLY, YOU CONTEND THAT THE AWARD TO KDI WAS IMPROPER AS KDI IS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR. YOUR BELIEF IN THIS REGARD IS BASED ON THE FACT THAT KDI IS A NEW PRODUCER OF THIS ITEM AND ITS PRICE IS SO LOW THAT IT INDICATES A LACK OF UNDERSTANDING OF THE PROCUREMENT REQUIREMENTS.

FOR THE FOREGOING REASONS, YOU REQUEST THAT OUR OFFICE DIRECT CANCELLATION OR TERMINATION FOR CONVENIENCE OF THE CONTRACTS AND OPTIONS TO THE EXTENT THAT AN AWARD CAN BE MADE TO BRAD'S.

ON THE RECORD BEFORE US, WE ARE UNABLE TO AGREE WITH YOUR CONTENTION THAT WOODSIDE WAS CONSIDERED OUT OF THE COMPETITIVE RANGE AS OF JANUARY 19, 1970, AND THAT THE ISSUANCE OF AMENDMENT NO. 3 WAS A "SHAM" TO PERMIT FURTHER CONSIDERATION OF ITS PROPOSAL AS A RESULT OF ITS LATE REVISION OF PRICES. THERE IS NOTHING IN THE RECORD TO INDICATE THAT ANY DETERMINATION WAS MADE PRIOR TO ISSUANCE OF THE AMENDMENT THAT WOODSIDE, OR ANY OF THE OTHER 18 OFFERORS, WAS OUT OF THE COMPETITIVE RANGE. TO THE CONTRARY, THE CONTRACTING OFFICER SAYS THAT SUBJECT TO DETERMINATIONS OF RESPONSIBILITY HE CONSIDERED ALL OF THE OFFERORS WITHIN A COMPETITIVE RANGE. PRIOR TO DETERMINATIONS OF RESPONSIBILITY, THE ONLY BASIS FOR DETERMINING COMPETITIVE RANGE WAS PRICE AND THERE IS NO INDICATION THAT THE PRICE OF ANY OFFEROR, INCLUDING THOSE HIGHER THAN WOODSIDE, WAS CONSIDERED TO BE SUCH AS TO PRECLUDE FURTHER NEGOTIATIONS. NO PREAWARD NOTICE OF UNACCEPTABLE OFFER PURSUANT TO ASPR 3-508.2 WAS GIVEN TO ANY OF THE 19 OFFERORS. WHILE ONLY FOUR PREAWARD SURVEYS WERE REQUESTED AFTER JANUARY 19, 1970, WE DO NOT BELIEVE THIS JUSTIFIES THE INFERENCE THAT ALL OTHER OFFERORS WERE CONSIDERED OUT OF THE RUNNING. IT WOULD NOT BE PRACTICAL TO REQUEST SURVEYS ON ALL OFFERORS BUT, AS THE CONTRACTING OFFICER SAYS, SINCE THERE WAS A POSSIBILITY OF ONE OR MORE NEGATIVE REPORTS WHICH WOULD NECESSITATE FURTHER SURVEYS AND PERHAPS FURTHER NEGOTIATIONS HE HAD NOT ELIMINATED ANY FROM CONSIDERATION.

UNDER ASPR 3-805.1(E) WHEN, DURING NEGOTIATIONS, A SUBSTANTIAL CHANGE OCCURS IN THE GOVERNMENT'S REQUIREMENTS OR A DECISION IS REACHED TO RELAX, INCREASE OR OTHERWISE MODIFY THE SCOPE OF THE WORK OR STATEMENT OF REQUIREMENTS, THE CONTRACTING OFFICER IS REQUIRED TO MAKE SUCH CHANGE OR MODIFICATION BY AMENDMENT AND FURNISH A COPY THEREOF TO EACH PROSPECTIVE CONTRACTOR. AS NOTED ABOVE, THE AMENDMENT CHANGED THE DELIVERY SCHEDULE FROM FOUR TO SIX MONTHS; INCREASED THE RANGE OF QUANTITIES TO 300,000, 450,000, 600,000 AND 900,000; PROVIDED FOR ACCELERATED DELIVERIES; AND INCORPORATED THREE MANDATORY ENGINEERING ORDERS. IN OUR VIEW THESE CHANGES WERE SUBSTANTIAL AND VALID REQUIREMENTS NECESSITATING AMENDMENT OF THE RFP. BOTH THE INCREASE IN QUANTITY IN THE FOUR RANGES AND THE EXTENDED DELIVERY SCHEDULE WERE, IN OUR OPINION, REASONABLY EXPECTED TO PRODUCE REDUCTIONS IN THE OFFERS AND JUSTIFIED SOLICITATION OF REVISED PROPOSALS. THE DOCUMENTS FURNISHED OUR OFFICE BY THE ARMY SHOW THAT THESE CHANGES IN THE RFP WERE NECESSARY TO MAKE THIS PROCUREMENT COMPATIBLE WITH CHANGES IN THE PROGRAM REQUIREMENTS FOR THE END ITEM AND LOADING PLANT SCHEDULES. FURTHERMORE, THESE DOCUMENTS SHOW THAT THE CHANGES BEGAN DEVELOPING ABOUT THE TIME NEGOTIATIONS CLOSED ON JANUARY 19, 1970, AND PRIOR TO RECEIPT OF WOODSIDE'S LATE MODIFICATION ON FEBRUARY 3, 1970. AT A JOINT MEETING ON JANUARY 22, 1970, ATTENDED BY REPRESENTATIVES FROM APSA, THE MUNITIONS COMMAND, AND THE ARMY MATERIEL COMMAND, FLUCTUATIONS IN THE END ITEM AND LOADING PLANT REQUIREMENTS AND FY 71 REQUIREMENTS AS THEY RELATED TO THE SUBJECT PROCUREMENT WERE DISCUSSED. ON FEBRUARY 3, 1970, THE COMMANDING GENERAL, USAMUCOM, ORDERED A HOLD ON THE PROCUREMENT DUE TO PROGRAM ADJUSTMENTS UNDER CONSIDERATION BY "HIGHER AUTHORITY" AND UNTIL A PROCUREMENT PLAN WAS DEFINITIZED. AT A FURTHER MEETING AT APSA ON FEBRUARY 12, 1970, THE CHANGES IN THE PROCUREMENT PLAN WERE FINALIZED AND THE DECISION TO AMEND THE RFP APPROVED. ON FEBRUARY 17, 1970, THE COMMANDING GENERAL, USAMUCOM, RESCINDED THE HOLD ON THE PROCUREMENT AND AUTHORIZED EXERCISE OF OPTIONS WITH PRESENT CONTRACTORS AS NECESSARY TO PROVIDE PROGRAM CONTINUITY. WE FIND NO INDICATION THAT THE AMENDMENT WAS ISSUED OTHER THAN FOR THE REASONS STATED.

AS INDICATED ABOVE, POSSIBLE EXERCISE OF THE OPTIONS IN THE BASE PRODUCERS' CONTRACTS WAS CONSIDERED AT THE TIME OF ISSUING THE AMENDMENT. THE RECORD SHOWS THAT THIS POSSIBILITY WAS CONSIDERED IN RECOGNITION OF THE FACT THAT DELAY IN AWARDS UNDER THE RFP BEYOND THE ORIGINALLY ANTICIPATED DATE OF JANUARY 15, 1970, WOULD RESULT IN A GAP IN CONTINUITY OF PRODUCTION. HOWEVER, IT DOES NOT APPEAR THAT AT THE TIME OF ISSUING THE AMENDMENT THERE WAS ANY INTENTION OF HOLDING BACK ANY QUANTITIES FROM AWARD UNDER THE RFP TO AWARD UNDER THE OPTIONS. FURTHERMORE, THE FIRST AUTHORIZATION CONCERNING AWARD OF THE OPTIONS CAME FROM THE CGUSAMUCOM ON FEBRUARY 13, 1970, AND RELATED TO PROGRAM CONTINUITY. THEREAFTER, THE MUCOM REQUESTED THAT APSA DEVISE A PROCUREMENT PLAN ASSURING THAT A PART OF THE CURRENT PRODUCTION BASE BE CARRIED THROUGH DECEMBER AT THE RATE OF APPROXIMATELY 300,000 UNITS A MONTH WITH THE REMAINDER BEING AWARDED UNDER THE RFP. APSA SUBMITTED ITS PROCUREMENT PLAN TO THE MUCOM ON MARCH 4, 1970, AND RECEIVED APPROVAL OF THE COMMANDING GENERAL ON MARCH 10, 1970. THE APSA BOARD OF AWARDS REVIEWED THE PLAN AND APPROVED IT ON MARCH 13, 1970. THE BOARD RECOGNIZED THAT THE MOST ECONOMICAL METHOD OF AWARD WOULD HAVE INCLUDED BRAD'S. HOWEVER, IT APPROVED THE MORE COSTLY PLAN IN ORDER THAT THERE WOULD BE SUFFICIENT QUANTITIES AVAILABLE TO MAKE THE OPTION AWARDS TO MAINTAIN CONTINUITY OF PRODUCTION AND RETAIN THE PROVEN BASE DURING START-UP OF THE NEW PRODUCERS. NEGOTIATIONS WITH THE BASE PRODUCERS RESULTED IN REDUCTION OF THE OPTION PRICES IN THEIR CONTRACTS. ALTHOUGH THE QUANTITIES AWARDED UNDER THE OPTIONS WERE NOT IDENTICAL TO THE RANGES SPECIFIED IN THE RFP, THE UNIT PRICES OF THE OPTION AWARDS WERE THE SAME AS THE PRICE OFFERED UNDER THE RFP IN THE CLOSEST APPLICABLE RANGE. IN THIS REGARD, WE HAVE HELD THAT WHERE IT IS IN THE INTEREST OF THE NATIONAL DEFENSE TO BROADEN OR MAINTAIN THE MOBILIZATION BASE UNDER 10 U.S.C. 2304(A)(16), WHICH WAS THE AUTHORITY FOR THIS PROCUREMENT, ANY ADDITIONAL COSTS INVOLVED PROPERLY MAY BE ASSUMED BY THE GOVERNMENT WITHOUT REGARD TO PRICES AVAILABLE FROM OTHER SOURCES. 42 COMP. GEN. 717 (1963).

IT IS TRUE AS YOU STATE THAT THE ADMINISTRATIVE REPORT CONTAINS CONFLICTING STATEMENTS AS TO WHEN THE REDM AND WILKINSON CONTRACTS END. IT IS CLEAR, HOWEVER, THAT THE WILKINSON CONTRACT EXTENDS BEYOND THE FIRST WEEK IN JULY SINCE THE ADDENDUM TO THE JUSTIFICATION FOR EXERCISE OF THE OPTION UNDER ITS CONTRACT SAYS THAT IT ENDS IN SEPTEMBER AND CALLS FOR DELIVERIES TO BEGIN ON OR BEFORE OCTOBER 31, 1970. IT APPEARS FROM THE REDM JUSTIFICATION THAT ITS CONTRACT EXTENDS BEYOND THE FIRST WEEK OF JULY AS DELIVERIES ARE TO COMMENCE ON AUGUST 31, 1970. HOWEVER, THE JUSTIFICATIONS FOR AWARD OF THE OPTIONS UNDER THE OTHER TWO CONTRACTS PROVIDE FOR DELIVERIES TO BEGIN ON JULY 31, 1970. ALSO, WE NOTE THAT IN A CHART, WHICH YOU WERE DENIED ACCESS TO BY THE ARMY, SHOWING THE SEQUENCE OF FY 70 DELIVERIES THE WILKINSON CONTRACT IS THE ONLY ONE OF THE BASE PRODUCERS' CONTRACTS WHICH EXTENDS BEYOND JULY 1970. WHILE IT APPEARS THAT THE POTENTIAL PRODUCTION GAP WAS NOT AS GREAT AS STATED ELSEWHERE IN THE ADMINISTRATIVE REPORT, IT ALSO APPEARS THAT THERE WOULD HAVE BEEN A LOSS OF CONTINUITY OF PRODUCTION IF THE OPTIONS HAD NOT BEEN EXERCISED. FURTHERMORE, THERE WAS THE NECESSITY OF RETAINING SOME OF THE BASE PRODUCERS IN PRODUCTION DURING THE STARTUP PERIOD OF THE NEW PRODUCERS.

YOUR FINAL CONTENTION CONCERNS KDI'S RESPONSIBILITY. THE CONTRACTING OFFICER RECEIVED AN AFFIRMATIVE PREAWARD SURVEY ON KDI. THE SURVEY WAS MADE WITH KNOWLEDGE OF KDI'S UNIT PRICE. PURSUANT TO ASPR 1-904.1 THE CONTRACTING OFFICER DETERMINED THAT KDI WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MEANING OF ASPR 1-902 AND 1-903. SINCE THE DETERMINATION OF AN OFFEROR'S RESPONSIBILITY IS A MATTER WITHIN THE DISCRETION OF THE CONTRACTING OFFICER, THERE IS NO BASIS FOR OUR OFFICE TO QUESTION HIS DETERMINATION IN THIS REGARD IN THE ABSENCE OF AN ABUSE OF THE DISCRETION PERMITTED. 46 COMP. GEN. 371 (1966).

IN VIEW OF THE FOREGOING, THERE IS NO BASIS FOR OUR OFFICE TO TAKE EXCEPTION TO THE AWARDS AS MADE.