B-169888, DEC. 14, 1970

B-169888: Dec 14, 1970

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BID PROTEST - RESPONSIBILITY - SMALL BUSINESS CONCERN ELIGIBILITY DENIAL OF PROTEST AGAINST AWARD TO LOW SMALL BUSINESS BIDDER FOR FURNISHING GRINDING MACHINES TO ARMY CHICAGO PROCUREMENT AGENCY UNDER TOTAL SMALL BUSINESS SET-ASIDE PROCUREMENT ON BASIS THAT SMALL BUSINESS CONCERN QUALIFIES FOR AWARD AND IS A RESPONSIBLE BIDDER. WHERE SMALL BUSINESS CONCERN IS MAKING A SIGNIFICANT CONTRIBUTION (50% OF THE CONTRACT PRICE) IN THE MANUFACTURE OF THE END ITEM. TO HALL-TOLEDO CORPORATION: REFERENCE IS MADE TO YOUR LETTERS OF MAY 22. THE REQUIREMENT WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY AS FOLLOWS: "FSN: 4910-449-7720 "GRINDING MACHINE WITH TECHNICAL DATA AS FOLLOWS: (1) GRINDING MACHINE.

B-169888, DEC. 14, 1970

BID PROTEST - RESPONSIBILITY - SMALL BUSINESS CONCERN ELIGIBILITY DENIAL OF PROTEST AGAINST AWARD TO LOW SMALL BUSINESS BIDDER FOR FURNISHING GRINDING MACHINES TO ARMY CHICAGO PROCUREMENT AGENCY UNDER TOTAL SMALL BUSINESS SET-ASIDE PROCUREMENT ON BASIS THAT SMALL BUSINESS CONCERN QUALIFIES FOR AWARD AND IS A RESPONSIBLE BIDDER. WHERE SMALL BUSINESS CONCERN IS MAKING A SIGNIFICANT CONTRIBUTION (50% OF THE CONTRACT PRICE) IN THE MANUFACTURE OF THE END ITEM, IT QUALIFIES AS AN ELIGIBLE BIDDER.

TO HALL-TOLEDO CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF MAY 22, JUNE 2, SEPTEMBER 1 AND 18, 1970, WITH ENCLOSURES, PROTESTING AGAINST THE POSSIBLE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER SOLICITATION IFB NO. DAAF01-70-B-0824 (HEREAFTER IFB 0824) ISSUED BY THE U.S. ARMY CHICAGO PROCUREMENT AGENCY (CHPA).

THE USING ACTIVITY, ROCK ISLAND ARSENAL (RIA), ISSUED PROCUREMENT/WORK DIRECTIVE (PRON) WG-9-39426-(01)-M5-A5 TO CHPA FOR THE PROCUREMENT OF FIFTEEN FLOOR MOUNTED, VALVE SEAT GRINDING MACHINES, FEDERAL SUPPLY NUMBER (FSN) 4910-449-7720. AS A RESULT THEREOF, THE CHPA ISSUED SOLICITATION NO. (IFB) DAAG11-69-C-5494 (HEREAFTER IFB 5494) ON JUNE 11, 1969, WITH A SCHEDULED OPENING DATE OF JULY 11, 1969, TO SEVEN POTENTIAL BIDDERS. THE REQUIREMENT WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY AS FOLLOWS:

"FSN: 4910-449-7720

"GRINDING MACHINE WITH TECHNICAL DATA AS FOLLOWS: (1) GRINDING MACHINE, FLOOR MOUNTED, VALVE SEAT, ELECTRIC, IN ACCORDANCE WITH ROCK ISLAND ARSENAL T&E-66 DATED 69 APRIL 17."

THE PROCUREMENT WAS TOTALLY SET ASIDE FOR SMALL BUSINESS PARTICIPATION. BY AMENDMENT NO. 0001 DATED JUNE 18, 1969, A DRAWING NUMBER WAS CORRECTED AND THE OPENING DATE EXTENDED TO JULY 28, 1969. ONLY TWO BIDS WERE RECEIVED IN RESPONSE TO THE SOLICITATION. HALL TOLEDO, THROUGH ITS WASHINGTON REPRESENTATIVE, GEORGE E. VIERECK AND COMPANY, INC. (VIERECK) SUBMITTED A BID OF $5291.00 PER UNIT, WHILE WRIGHT TOOL COMPANY (WRIGHT) SUBMITTED A BID OF $2810.14 PER UNIT. IN ITS BID WRIGHT REPRESENTED ITSELF TO BE "A SMALL BUSINESS CONCERN" AND "A MANUFACTURER OF THE SUPPLIES OFFERED" AND INDICATED NO PLACE OF PERFORMANCE OTHER THAN AT ITS OWN COMPANY. VIERECK REPRESENTED ITSELF TO BE A SMALL BUSINESS CONCERN AND A REGULAR DEALER IN THE SUPPLIES OFFERED AND THAT THE SUPPLIES "WILL NOT BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN" AND FURTHER INDICATED HALL-TOLEDO AS BEING THE MANUFACTURER. WE ARE ADVISED THAT VIERECK MEANT TO INDICATE THAT THE ITEM WOULD BE MANUFACTURED BY A SMALL BUSINESS CONCERN.

BY A TELEGRAM DATED AUGUST 6, 1969, AND A LETTER DATED AUGUST 8, 1969, VIERECK PROTESTED TO THE CONTRACTING OFFICER AGAINST AWARD TO WRIGHT, ASSERTING THAT WRIGHT HAD NEVER MANUFACTURED OR MARKETED A MACHINE OF THE TYPE CALLED FOR BY THE SPECIFICATIONS AND, THUS, THE MACHINE OFFERED BY WRIGHT COULD NOT BE CONSIDERED A STANDARD MODEL AS REQUIRED BY THE SPECIFICATIONS. ADDITIONALLY, VIERECK QUESTIONED WHETHER WRIGHT'S MACHINE CONFORMED TO THE SPECIFICATIONS. FURTHER, THE POINT WAS RAISED THAT IF THE MACHINE OFFERED BY WRIGHT WAS TO BE MANUFACTURED BY SIOUX TOOL COMPANY (SIOUX), THE LATTER COMPANY DID NOT QUALIFY AS A SMALL BUSINESS CONCERN. IN A LETTER DATED AUGUST 29, 1969, WRIGHT REPLIED TO THE TECHNICAL QUESTIONS RAISED AND STATED THAT IT WAS UNAWARE AT THE TIME OF ITS BID THAT SIOUX DID NOT QUALIFY AS A SMALL BUSINESS CONCERN. ALSO, WRIGHT ALLEGED THAT RIA'S PURCHASE DESCRIPTION (T & E PD-66, DATED APRIL 17, 1969) WAS WRITTEN AROUND A HALL-TOLEDO MACHINE AND WAS RESTRICTIVE OF COMPETITION. AS A CONSEQUENCE OF VIERECK'S PROTEST, THE MATTER WAS REFERRED TO RIA FOR REVIEW WHICH RESULTED IN A TECHNICAL OPINION, DATED OCTOBER 2, 1969, THAT THE UNIT OFFERED BY WRIGHT WAS NOT ACCEPTABLE. THEREAFTER, THE CONTRACTING OFFICER AT CHPA CANCELLED IFB 5494, GIVING "REWRITE OF SPECIFICATIONS" AS THE REASON FOR THE CANCELLATION. RIA SUBSEQUENTLY PREPARED A REVISED PURCHASE DESCRIPTION, T & E PD-66A DATED DECEMBER 4, 1969, WHICH SUPERSEDED T & E PD-66 DATED APRIL 17, 1969.

SOLICITATION NO. DAAF01-70-B-0515 (HEREAFTER IFB 0515), COVERING THE SAME REQUIREMENT AS IFB 5494 UNDER THE REVISED PURCHASE DESCRIPTION, WAS ISSUED ON JANUARY 17, 1970, TO SEVENTEEN POTENTIAL BIDDERS AND WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY. THIS IFB WAS ALSO TOTALLY SET-ASIDE FOR SMALL BUSINESS PARTICIPATION. ON FEBRUARY 9, 1970, TWO DAYS PRIOR TO THE SCHEDULED OPENING, WRIGHT EXPRESSED OBJECTIONS TO THE SPECIFICATIONS AND THREATENED TO PROTEST UNLESS THE BID OPENING WAS DELAYED IN ORDER TO GIVE IT AN OPPORTUNITY TO SUBMIT ITS OBJECTIONS IN WRITING AND HAVE THEM ANSWERED. AMENDMENT NO. 0001 WAS ISSUED ON FEBRUARY 9, 1970, EXTENDING THE BID OPENING DATE TO MARCH 11, 1970. BY LETTER DATED FEBRUARY 14, 1970, WRIGHT ALLEGED THAT PURCHASE DESCRIPTION T & E PD-66A WAS SPECIFICALLY WRITTEN AROUND A HALL-TOLEDO MACHINE AND THAT THE PURCHASE DESCRIPTION WAS RESTRICTIVE OF COMPETITION.

IT WAS NOT UNTIL MARCH 24, 1970 (AMENDMENT NO. 0002 HAD EXTENDED THE BID OPENING DATE TO APRIL 10, 1970), THAT RIA FURNISHED THE CONTRACTING OFFICER A REVISED TECHNICAL DATA PACKAGE DESIGNATED T & E PD-68, DATED MARCH 12, 1970. RATHER THAN AGAIN AMEND THE IFB TO INCORPORATE THE NEW SPECIFICATION AND TO ADD AN ADDITIONAL QUANTITY OF FOUR MACHINES REQUIRED IN THE INTERIM, IT WAS DECIDED THAT THE BEST COURSE OF ACTION WOULD BE TO CANCEL IFB 0515 AND READVERTISE. THEREFORE, AMENDMENT NO. 0003 WAS ISSUED ON MARCH 31, 1970, "TO CANCEL IN ITS ENTIRETY SOLICITATION DAAF01-70-B- 0515, DUE TO REVISED SPECIFICATIONS." ON APRIL 21, 1970, IFB 0824 FOR NINETEEN GRINDING MACHINES IN ACCORDANCE WITH T & E PD-68 WAS ISSUED TO SIXTEEN PROSPECTIVE BIDDERS AND SYNOPSIZED IN THE COMMERCE BUSINESS DAILY AS A TOTAL SMALL BUSINESS SET ASIDE.

THE BIDS WERE OPENED AS SCHEDULED ON MAY 21, 1970, AND AGAIN ONLY TWO BIDS WERE RECEIVED. HALL-TOLEDO SUBMITTED A BID OF $5,979 PER UNIT, AND WRIGHT SUBMITTED A BID OF $3020 PER UNIT. WRIGHT REPRESENTED IN ITS BID THAT IT WAS A SMALL BUSINESS CONCERN, THAT ALL SUPPLIES TO BE FURNISHED WOULD BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN, AND THAT IT WAS A MANUFACTURER OF THE SUPPLIES OFFERED. ADDITIONALLY, WRIGHT STATED THAT THE ITEMS WOULD BE MANUFACTURED AT, AND SHIPPED FROM, WRIGHT TOOL COMPANY, 1738 MAPLELAWN BLVD., TROY, MICHIGAN. HOWEVER, AS A RESULT OF A PREAWARD SURVEY OF WRIGHT CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION REGION (DCASR), DETROIT (PAS NO. 230206005, DATED JUNE 16, 1970), IT WAS DETERMINED THAT WRIGHT'S SOURCE FOR MATERIALS AND PURCHASED PARTS WAS SIOUX AND THAT WRIGHT INTENDED TO PURCHASE THE COMPLETE ASSEMBLED UNIT FROM SIOUX.

IN YOUR LETTERS OF MAY 22 AND JUNE 2, 1970, YOU ALLEGE THAT THE CONTRACTING OFFICER'S REJECTION OF HALL-TOLEDO'S BID UNDER IFB 5494 AFTER BIDS HAD BEEN OPENED AND AFTER A FORMAL PROTEST HAD BEEN FILED BY VIERECK, ITS REPRESENTATIVE, WAS GROSSLY ERRONEOUS AND HIGHLY PREJUDICIAL TO HALL- TOLEDO AND WAS BASED UPON NO COGENT REASON UNDER LAW OR REGULATIONS. YOU FURTHER STATE THAT WRIGHT, BY ITS OWN ADMISSION IN ITS LETTER OF AUGUST 29, 1969, DID NOT QUALIFY AS A SMALL BUSINESS CONCERN SINCE IT INTENDED TO FURNISH EQUIPMENT SUPPLIED BY A LARGE BUSINESS CONCERN, AND THAT INASMUCH AS SUCH EQUIPMENT DID NOT MEET THE REQUIRED SPECIFICATIONS THE PROCURING ACTIVITY SHOULD HAVE MADE THE AWARD TO HALL-TOLEDO, THE LOW RESPONSIVE BIDDER, RATHER THAN CANCELLING THE PROCUREMENT.

IN YOUR LETTER OF SEPTEMBER 1, WHICH WAS WRITTEN IN RESPONSE TO THE ADMINISTRATIVE REPORT OF JUNE 23, 1970, FURNISHED THIS OFFICE BY THE ARMY MATERIEL COMMAND, YOU REPEAT THE ABOVE MENTIONED ALLEGATIONS AND OFFER ADDITIONAL COMMENTS FOR THE PURPOSE OF REBUTTING STATEMENTS MADE IN THE REPORT. THE REPORT INCLUDES STATEMENTS THAT THE CANCELLATIONS OF IFB 5494 AND IFB 0515 WERE IN ACCORD WITH APPLICABLE PROCUREMENT REGULATIONS, AND THAT:

"(D) THE ISSUANCE OF IFB DAAF01-70-B-0824 UTILIZING T & E PD-68, IS IN ACCORD WITH APPLICABLE PROCUREMENT REGULATIONS, SINCE THE CURRENT PURCHASE DESCRIPTION SETS FORTH ONLY THE GOVERNMENT'S MINIMUM REQUIREMENTS AND, AS SUCH, DOES NOT PRECLUDE ANY COMPANY FROM COMPLYING THEREWITH."

YOU STATE THAT ALTHOUGH IFB 5494 HAD BEEN CANCELLED TO ALLOW WRIGHT TO REVISE ITS BID UNDER AMENDED SPECIFICATIONS, THE PROCURING ACTIVITY HAD ACCEPTED THE RECOMMENDATIONS SUBMITTED ONLY TWO DAYS PRIOR TO BID OPENING BY WRIGHT, WHO DOES NOT EVEN MANUFACTURE VALVE SEAT GRINDING EQUIPMENT, AND CANCELLED IFB 0515. FURTHER, YOU STATE THAT THE SPECIFICATIONS FOR IFB 0824 WERE REWRITTEN AROUND SIOUX EQUIPMENT AND HAD IN EFFECT CHANGED THE PURCHASE DESCRIPTION FROM A PRODUCTION MACHINE TO A HAND TOOL.

IN ITS REPORT OF JUNE 23 THE ARMY MATERIEL COMMAND ALSO STATED THAT THE SMALL BUSINESS SET-ASIDE ON IFB 0824 WAS RESTRICTIVE OF COMPETITION AND PRECLUDED THE GOVERNMENT FROM OBTAINING THE BEST POSSIBLE PRICE. CONSEQUENTLY, IT WAS RECOMMENDED THAT NO ACTION BE TAKEN UNTIL OUR OFFICE HAD RULED ON HALL-TOLEDO'S PROTEST, AND IT WAS PROPOSED THAT IFB 0824 BE CANCELLED IN ACCORDANCE WITH ASPR 2-404.1(B)(VI) BECAUSE THE ONLY ACCEPTABLE BID (HALL-TOLEDO'S) WAS AT AN UNREASONABLE PRICE; THAT THE SMALL BUSINESS SET-ASIDE BE REMOVED IN ACCORDANCE WITH ASPR 1 706.3(A) BECAUSE PROCUREMENT OF THE REQUIREMENT FROM A SMALL BUSINESS CONCERN (HALL -TOLEDO) AT AN UNREASONABLE PRICE WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST; AND THAT THE SUBJECT REQUIREMENT BE RESOLICITED ON AN UNRESTRICTED BASIS.

YOU DENIED THAT HALL-TOLEDO BID AN UNREASONABLE PRICE, POINTING OUT THAT UNDER A PREVIOUS CONTRACT (DAAF01-69-C-0314) NEGOTIATED IN 1968, HALL- TOLEDO AND THE GOVERNMENT HAD AGREED THAT A FAIR PRICE FOR THESE ITEMS WAS $5291.25, WHICH WAS THE SAME PRICE AS THAT OFFERED UNDER IFB 5494 AND THAT THE BID PRICE OF $5979 OFFERED UNDER IFB 0824 REPRESENTED ONLY A 6-1/2 PERCENT ANNUAL INCREASE. MOREOVER, YOU POINT OUT THAT AS FAR BACK AS 1957 HALL-TOLEDO OFFERED THESE SAME UNITS TO THE GOVERNMENT AT A PRICE OF $5489. IN CONCLUSION, YOU STATE, IN PERTINENT PART, THAT:

" *** HALL-TOLEDO HAS FILED TWO VALID PROTESTS ON IFB'S, BOTH TIMES IN WHICH IT HAS BEEN THE LOW RESPONSIVE BIDDER. BOTH OF THESE IFB'S RELATE TO PRODUCTION VALVE SEAT GRINDING EQUIPMENT FOR AIRCRAFT TYPE CYLINDERS - UNITS WHICH HALL-TOLEDO HAS SATISFACTORILY PRODUCED AND SOLD TO THE GOVERNMENT AND OTHERS FOR OVER 25 YEARS. WE BELIEVE IT IS ENTITLED TO BE AWARDED THE CONTRACT AS THE LOW RESPONSIVE BIDDER.

"THIS PROCUREMENT IS FOR PRODUCTION EQUIPMENT FOR WET GRINDING AIRCRAFT TYPE VALVE SEATS. HALL-TOLEDO HAS SUBMITTED THE LOW (AND ONLY) BID FOR SUCH PRODUCTION EQUIPMENT. THE PRICE IS WELL WITHIN THE AMOUNTS PAID BY THE GOVERNMENT OVER THE LAST 13 YEARS AT LEAST, AND IS NOT UNREASONABLE. TO COMPARE IT IN PRICE WITH A HAND GRINDER AND THEN SAY IT IS 'UNREASONABLE' IS UNREASONABLE IN ITSELF. FOR EXAMPLE, T & E PD-68 DATED MARCH 12, 1970 (UPON WHICH THE INSTANT PROCUREMENT IS BASED) PROVIDES IN PARAGRAPH 3.6.1 AS FOLLOWS:

'BASE. THE BASE OF THE GRINDING MACHINE SHALL BE A FLOOR MOUNTED, RIGID METAL STRUCTURE DESIGNED TO HOLD ALL COMPONENT PARTS OF THE MACHINE DURING OPERATION. IT SHALL SUPPORT ALL THE COMPONENTS OF THE GRINDING MACHINE WHILE UNDER LOAD AND IN OPERATION IN COMPLIANCE WITH THE REQUIREMENTS SPECIFIED HEREIN'.

"THIS IS A NORMAL REQUIREMENT FOR A PRODUCTION MACHINE. THIS IS THE MANNER IN WHICH HALL-TOLEDO'S MACHINE OPERATES.

"HOWEVER SIOUX'S MACHINE CONSISTS OF A HAND-HELD GRINDER AND A TUB. THERE IS NO PHYSICAL CONNECTION WHATSOEVER DURING OPERATION. UNDER NO STRETCH OF THE IMAGINATION DOES THE BASE SUPPORT THE COMPONENTS IN OPERATION. IT IS NOT A PRODUCTION MACHINE.

"MANY OTHER SPECIFICATIONS EXIST UNDER WHICH HAND GRINDERS CAN AND HAVE BEEN PURCHASED BY THE GOVERNMENT. BUT TO SAY THAT THE PRICE OF A PRODUCTION GRINDER IS UNREASONABLE WHEN COMPARED TO A HAND GRINDER IS AN IMPROPER COMPARISON. APPLES MUST BE COMPARED WITH APPLES - NOT ORANGES."

CONCERNING YOUR CONTENTION THAT THERE WAS NO COGENT REASON UNDER LAW OR REGULATION FOR THE REJECTION OF YOUR BID UNDER IFB 5494, IT MUST FIRST BE POINTED OUT THAT WRIGHT'S BID UNDER IFB 5494 WAS NOT RESPONSIVE SINCE RIA DETERMINED, BY LETTER OF OCTOBER 2, 1969, THAT THE EQUIPMENT OFFERED BY WRIGHT UNDER THAT IFB DID NOT CONFORM TO THE SPECIFICATIONS. WHILE YOU ALLEGE THAT THE ONLY RESPONSIVE BID WAS VIERECK'S, WE QUESTION THE RESPONSIVENESS OF VIERECK'S BID UNDER IFB 5494, SINCE VIERECK INDICATED IN ITS BID THAT THE SUPPLIES TO BE FURNISHED UNDER THE BID WOULD NOT BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN. IN ANY EVENT, WE CANNOT CONCLUDE FROM THE RECORD THAT THE SPECIFICATIONS FOR IFB 5494 ACCURATELY STATED THE GOVERNMENT'S MINIMUM NEEDS, AND THAT THE CANCELLATION FOR THE PURPOSE OF REVISING THE SPECIFICATIONS WAS IMPROPER. WE NOTE THAT THE SPECIFICATIONS WERE REVISED ON TWO SEPARATE OCCASIONS IN ATTEMPTS TO STATE ONLY THOSE MINIMUM NEEDS IN TERMS WHICH WOULD SECURE MAXIMUM COMPETITION FOR THE MACHINES. IN THIS REGARD, THIS OFFICE HAS HELD, IN B-168878, APRIL 27, 1970, THAT:

"IT FOLLOWS THAT SPECIFICATIONS WHICH ARE FOUND TO BE UNDULY RESTRICTIVE OF COMPETITION, ARE LEGALLY DEFECTIVE, AND THE PROPER COURSE TO FOLLOW IN THIS TYPE OF CASE IS TO READVERTISE ON THE BASIS OF SPECIFICATIONS WHICH SET OUT ONLY THE ACTUAL NEEDS OF THE GOVERNMENT, AND WHICH WILL THEREFORE PERMIT THE BROADEST FIELD OF COMPETITION. 33 COMP. GEN. 567 (1954)." ALSO, IN B-156956, JUNE 22, 1965, INVOLVING AN OFFER BY THE LOW BIDDER OF A DELIVERY SCHEDULE DIFFERENT FROM THAT SET OUT IN THE SPECIFICATIONS BUT WHICH WAS ACCEPTABLE TO THE USING ACTIVITY, WE HELD THAT IT WAS PROPER TO CANCEL THE INVITATION AND RADVERTISE, AND WE STATED, IN PERTINENT PART: "THE PROVISIONS OF THE NEW INVITATION BROADEN THE FIELD OF COMPETITION AND WILL PERMIT THE PREVIOUSLY LOW BIDDER TO SUBMIT A RESPONSIVE BID ON SUPPLYING THE ITEMS INVOLVED. IN THESE CIRCUMSTANCES, AND IN VIEW OF THE BROAD DISCRETION PLACED WITH THE ADMINISTRATIVE AGENCIES IN SUCH MATTERS, WE CANNOT CONCLUDE THAT THE REJECTION OF ALL BIDS UNDER THE ORIGINAL INVITATION WAS ARBITRARY OR CAPRICIOUS, OR THAT A CONTRACT AWARDED UNDER THE NEW INVITATION WILL BE INVALID, EVEN THOUGH AN AWARD OF A CONTRACT TO THE LOW RESPONSIVE AND RESPONSIBLE BIDDER UNDER THE ORIGINAL INVITATION MIGHT HAVE BEEN FOUND PROPER." WE, OF COURSE, REALIZE THAT TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS. MASSMAN CONSTRUCTION COMPANY V UNITED STATES, 102 CT. CL. 699, 719 (1945). HOWEVER, A REVISION OF SPECIFICATIONS TO STATE THE GOVERNMENT'S MINIMUM NEEDS AND SECURE MAXIMUM COMPETITION MUST BE REGARDED AS A COGENT REASON. IN 32 COMP. GEN. 384, 387 (1953) WE STATED:

"THE GOVERNMENT ADVERTISING STATUTES CONSISTENTLY HAVE BEEN HELD TO REQUIRE THAT EVERY EFFORT SHOULD BE MADE BY THE PROCUREMENT AGENCIES OF THE GOVERNMENT TO STATE ADVERTISED SPECIFICATIONS IN TERMS THAT WILL PERMIT THE BROADEST FIELD OF COMPETITION WITHIN THE MINIMUM NEEDS REQUIRED, NOT THE MAXIMUM DESIRED *** . THEREFORE, UNLESS IT CAN BE ESTABLISHED CONCLUSIVELY THAT THERE ARE NO OTHER MANUFACTURERS WHO CAN OR POSSIBLY COULD FURNISH (AN ITEM) MEETING THE MINIMUM NEEDS OF YOUR DEPARTMENT THE INSTANT PROCUREMENT SHOULD BE READVERTISED UNDER REVISED SPECIFICATIONS WHICH WOULD PERMIT OTHER BIDDERS SUFFICIENT LATITUDE TO MEET THE SPECIFIED REQUIREMENTS." ALSO, SEE 41 COMP. GEN. 348, 351 (1961) AND B-168878, APRIL 27, 1970.

WHILE IT IS UNFORTUNATE THAT THE BIDDERS' PRICES WERE EXPOSED, THIS OFFICE STATED, IN B-168878, APRIL 27, 1970:

"WHILE IT IS REGRETTABLE THAT YOUR BID PRICE WAS EXPOSED, IT HAS BEEN OUR CONSISTENT POSITION THAT NEITHER SUCH EXPOSURE, NOR THE POSSIBILITY OF HIGHER BID PRICES ON THE RESOLICITATION, WOULD EITHER REQUIRE OR JUSTIFY AN AWARD BASED UPON RESTRICTIVE SPECIFICATIONS IF THE RESOLICITATION IS TO BE ACCOMPLISHED ON THE BASIS OF SPECIFICATIONS WHICH ARE DIFFERENT IN ANY MATERIAL RESPECT FROM THE SPECIFICATIONS ON WHICH THE EXPOSED BID PRICE WAS COMPUTED. SEE 41 COMP. GEN. 76 (1961); ID. 593 (1962); 46 COMP. GEN. 825 (1967)."

CONCERNING YOUR CONTENTION THAT YOUR PRICE UNDER IFB 0824 IS NOT UNREASONABLE, THE CONTRACTING OFFICER STATES THAT SHE DOES NOT CONSIDER HALL-TOLEDO'S BID PRICE UNDER THAT IFB TO BE EXCESSIVE IN COMPARISON TO THE ITEMS PURCHASED UNDER PREVIOUS AWARDS. HOWEVER, SHE POINTS OUT THAT THE REQUIREMENTS OF PURCHASE DESCRIPTION T & E PD-68 USED IN THE PRESENT SOLICITATION ARE LESS THAN THE REQUIREMENTS SPECIFIED IN THE PRIOR CONTRACTS. THUS, THE FACT THAT HALL-TOLEDO'S CURRENT BID IS IN LINE WITH PREVIOUS CONTRACTS ONLY INDICATES THAT THE PRICE IS REASONABLE FOR THE EQUIPMENT OFFERED, NOT THAT IT IS REASONABLE FOR THE MINIMUM TYPE EQUIPMENT WHICH WOULD BE ACCEPTABLE. THE CONTRACTING OFFICER IS NOT REQUIRED TO ACCEPT EQUIPMENT EXCEEDING ITS NEEDS WHERE IT APPEARS THAT EQUIPMENT WHICH MERELY MEETS THE GOVERNMENT'S MINIMUM NEEDS CAN BE OBTAINED ELSEWHERE AT A LOWER PRICE.

IN REGARD TO WHETHER WRIGHT INTENDS TO FURNISH GRINDING MACHINES MANUFACTURED BY A SMALL BUSINESS CONCERN, IFB 0824 CONTAINS THE CLAUSE PRESCRIBED BY ASPR 1-706.5(C), WHICH STATES IN PERTINENT PART:

"(A) RESTRICTION. OFFERS UNDER THIS PROCUREMENT ARE SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO ONE OR MORE SMALL BUSINESS CONCERNS.

"(B) DEFINITION. *** IN ADDITION TO MEETING THESE CRITERIA, A MANUFACTURER OR A REGULAR DEALER SUBMITTING OFFERS IN HIS OWN NAME MUST AGREE TO FURNISH IN THE PERFORMANCE OF THE CONTRACT END ITEMS MANUFACTURED OR PRODUCED IN THE UNITED STATES, ITS POSSESSIONS, OR PUERTO RICO, BY SMALL BUSINESS CONCERNS; *** ." WITH A LETTER TO THIS OFFICE DATED AUGUST 12, 1970, FROM WRIGHT'S ATTORNEY AN AFFIDAVIT FROM MR. MAURICE C. WRIGHT, THE SENIOR PARTNER, WAS FURNISHED WHICH STATES THAT WRIGHT'S BID UNDER IFB 0824 WAS BASED ON THE PREMISE THAT WRIGHT WOULD MANUFACTURE A MAJOR PORTION OF THE SUBJECT GRINDING MACHINES IN ACCORDANCE WITH THE TERMS OF IFB 0824 AND T & E PD-68. THE AFFIDAVIT FURTHER STATES:

"4. WRIGHT TOOL COMPANY WILL MANUFACTURE THE FOLLOWING:

A) THE COMPLETE WET GRINDING MACHINE CABINET, A WELDED STEEL FRAME AND ALL NECESSARY STEEL PANELS OF HEAVY GAUGE METAL, INSTALL COOLANT FILTER PUMP, PUMP MOTOR, SWITCHES, SHADED WORK LIGHT, COOLANT TANK, PLUMBING, DRAIN COCKS AND FULL ELECTRICAL WIRING.

B) THE WET GRINDING MACHINE CABINET WILL BE CAPABLE OF RETAINING THE APPLICABLE AIRCRAFT TYPE REMOVABLE CYLINDER WITH COMBINED HEAD IN ACCORDANCE WITH FIGURE 1 IN T&E PD-68 AND BE CAPABLE OF PERFORMING ALL TESTS APPLICABLE TO THE SPECIFICATIONS.

C) THE CABINET WILL BE PAINTED OUR STANDARD COMMERCIAL GRAY COLOR.

"5. WRIGHT TOOL COMPANY WILL PURCHASE A BASIC UNASSEMBLED FLEXIBLE DRIVE SHAFT FROM THE SS WHITE CO. WE WILL MANUFACTURE AND MACHINE OTHER APPLICABLE COMPONENTS NECESSARY FOR FINAL ASSEMBLY OF THE FLEXIBLE DRIVE SHAFT AS FOLLOWS:

1/2" FEMALE ADAPTOR FOR FLEX SHAFT.

1/2" MALE ADAPTOR FOR FLEX SHAFT.

TAPERED PINS FOR FEMALE ADAPTOR.

TAPERED PINS FOR MALE ADAPTOR.

SPECIAL BUSING FOR 1/2" MALE ADAPTOR.

"WE WILL THEN ASSEMBLE FLEXIBLE SHAFT COMPONENTS SUCH AS ROTATING SHAFT TO CASING, BEARINGS, ADAPTORS, ROLL PINS, ETC. TEST EACH UNIT.

"6. THE FOLLOWING ITEMS WILL BE MANUFACTURED BY WRIGHT TOOL COMPANY OR PURCHASED FROM SMALL BUSINESS:

1 #M132-G SURFACE GAUGE

1 NAME PLATE TO IDENTIFY TYPE COOLANT (FOR WET GRINDER)

2 8 X 10 PHOTOGRAPHS OF UNIT.

2 HANDBOOK OF INSTRUCTION AND PARTS LIST.

1 OIL SEAL (FOR DRESSER)

1 TENSION SPRING (FOR DRESSER)

1 BRASS PLUG ADAPTOR (FOR DRESSER)

1 BALL BEARING (FOR MAJOR REPAIR KIT)

1 PINION (FOR MAJOR REPAIR KIT)

1 SPRING (FOR MAJOR REPAIR KIT)

1 TUBE OF LUBRICANT (FOR MAJOR REPAIR KIT)

1 BALL BEARING (FOR MINOR REPAIR KIT)

1 SPRING (FOR MINOR REPAIR KIT)

1 TUBE OF LUBRICANT (FOR MINOR REPAIR KIT)

1 SLIDE BAR (FOR DRESSER)

1 SPRING (FOR DRESSER)

1 BRASS PLUG ADAPTOR (FOR DRESSER)

2 MOTOR BRUSH & SPRING ASSY. (FOR ELECT DRIVER)

2 " " CAPS (FOR ELECT DRIVER)

4 " " HOLDERS (FOR ELECT DRIVER)

50 EA. 2 1/4" DIA GRINDING WHEELS

50 EA. 2 3/8" " " "

50 EA. 2 1/2" " " "

IN A SUPPLEMENTAL REPORT OF OCTOBER 20, 1970, THE ARMY MATERIEL COMMAND REPORTED THAT UPON RECEIPT OF COPIES OF THE LETTER FROM WRIGHT'S ATTORNEY AND THE SUPPORTING AFFIDAVIT, THE CONTRACTING OFFICER REQUESTED DCASR, DETROIT, TO FURNISH THE DOCUMENTATION SUBSTANTIATING THE INFORMATION CONTAINED IN PREAWARD SURVEY NO. 230206005 REGARDING WRIGHT'S PROPOSED METHOD OF PRODUCTION AND PLACE OF MANUFACTURE OF THE EQUIPMENT OFFERED UNDER IFB 0824. BY TELEGRAM OF AUGUST 18, 1970, DCASR STATED, IN PART:

" *** IT IS OUR UNDERSTANDING THAT THE BIDDER PROPOSES TO PURCHASE COMPLETE THE ITEMS (19 EACH, GRINDING MACHINES) ON THIS PROPOSED PROCUREMENT. MR. WRIGHT INFORMED US AT THE TIME OF THE SUBJECT SURVEY THAT ASSEMBLY OF THESE UNITS WOULD BE PERFORMED BY SIOUX TOOL COMPANY *** " BASED ON THE FOREGOING, AND A SUBSEQUENT TELEPHONE CONVERSATION, THE CONTRACTING OFFICER LEARNED THAT NO WRITTEN DOCUMENTATION EXISTS TO SUPPORT THE ADVICE PREVIOUSLY FURNISHED BY DCASR AND RELIED UPON BY THE CONTRACTING OFFICER IN ARRIVING AT HER CONCLUSION AND RECOMMENDATION CONTAINED IN THE ORIGINAL ADMINISTRATIVE REPORT THAT WRIGHT'S BID WAS NOT ACCEPTABLE.

IN LIGHT OF THE APPARENT CONFLICT BETWEEN WRIGHT'S AFFIDAVIT AND THE INFORMATION CONTAINED IN THE PREAWARD SURVEY THE CONTRACTING OFFICER CONCLUDED THAT HER ORIGINAL CONCLUSION AND RECOMMENDATION MUST BE ALTERED. SHE POINTS OUT THAT WRIGHT'S BID REPRESENTED THAT IT WAS THE MANUFACTURER OF THE SUPPLIES OFFERED; THAT THE ITEMS WOULD BE MANUFACTURED AT AND SHIPPED FROM WRIGHT TOOL COMPANY, 1738 MAPLELAWN BLVD., TROY, MICHIGAN; AND THAT MORE THAN 50 PERCENT OF THE COSTS OF THE CONTRACT PRICE WOULD BE INCURRED IN THE TROY, MICHIGAN, AREA. IN VIEW OF THE FACT THAT THE ONLY INFORMATION INDICATING THAT WRIGHT IS NOT THE MANUFACTURER OF THE SUPPLIES OFFERED IS CONTAINED IN THE PREAWARD SURVEY, WHICH LACKED DOCUMENTATION AND IS IN DISPUTE, THE CONTRACTING OFFICER CONCLUDED THAT THERE WAS A DISTINCT POSSIBILITY THAT WRIGHT'S INTENDED METHOD OF SUPPLY WAS NOT THOROUGHLY INVESTIGATED DURING THE SUBJECT PREAWARD SURVEY. SHE FURTHER CONCLUDED THAT AS A RESULT OF THE INVESTIGATION OR AS A RESULT OF A MISUNDERSTANDING BY DCASR PERSONNEL, THE PREAWARD SURVEY DOES NOT CORRECTLY REFLECT WRIGHT'S INTENT. ACCORDINGLY, THE CONTRACTING OFFICER HAS DETERMINED THAT WRIGHT IS THE MANUFACTURER OF THE SUPPLIES OFFERED AND IS ELIGIBLE FOR THE AWARD IF IT IS OTHERWISE RESPONSIBLE.

IT IS THE POSITION OF THIS OFFICE THAT SO LONG AS THE SMALL BUSINESS FIRM MAKES SOME SIGNIFICANT CONTRIBUTION TO THE MANUFACTURE OR PRODUCTION OF THE CONTRACT END ITEM, THE CONTRACTUAL REQUIREMENT THAT THE END ITEM BE MANUFACTURED OR PRODUCED BY SMALL BUSINESS CONCERNS HAS BEEN MET. SEE 49 COMP. GEN. 41, 43 (1969) AND 39 COMP. GEN. 435 (1959). THUS, IN THE PRESENT CASE, SINCE THERE HAS BEEN NO QUESTION RAISED AS TO THE SMALL BUSINESS STATUS OF WRIGHT AND THE RECORD CLEARLY ESTABLISHES THAT WRIGHT IS MAKING A SIGNIFICANT CONTRIBUTION IN THE MANUFACTURE OF THE END ITEM, IT IS APPARENT THAT WRIGHT IS OFFERING END ITEMS MANUFACTURED BY A SMALL BUSINESS CONCERN AND IS ELIGIBLE IN SUCH RESPECT FOR AWARD UNDER IFB 0824. WE ARE ADVISED THAT IN ORDER TO ASCERTAIN WHETHER WRIGHT IS A RESPONSIBLE BIDDER, DCASR IS BEING REQUESTED TO CONDUCT ANOTHER PREAWARD SURVEY.

REGARDING YOUR ALLEGATION THAT THE MACHINES OFFERED BY WRIGHT WILL NOT MEET THE SPECIFICATIONS, IT APPEARS THAT YOUR ALLEGATION IS BASED UPON A MISUNDERSTANDING AS TO THE EXTENT THAT WRIGHT WILL UTILIZE SIOUX PRODUCTS IN ITS MANUFACTURE OF THE END ITEMS WHICH IT PROPOSES TO FURNISH. IN ANY EVENT, WRIGHT HAS NOT TAKEN ANY EXCEPTIONS TO THE TECHNICAL SPECIFICATIONS, AND A DETERMINATION AS TO WHETHER THE EQUIPMENT WHICH IS EVENTUALLY MANUFACTURED ACTUALLY MEETS THE SPECIFICATIONS CANNOT BE MADE UNTIL SUCH EQUIPMENT IS PRESENTED FOR ACCEPTANCE. ACCORDINGLY, WRIGHT'S STATEMENT THAT IT WILL MANUFACTURE THE GRINDING MACHINES ACCORDING TO THE SPECIFICATIONS MUST BE ACCEPTED AT THIS TIME. OF COURSE, IF AT THE TIME OF DELIVERY THE GOVERNMENT DETERMINES THAT THE MACHINES DO NOT MEET THE SPECIFICATIONS, THEY NEED NOT BE ACCEPTED.

FOR THE ABOVE REASONS, YOUR PROTEST MUST BE DENIED.