B-170135, FEB 5, 1971

B-170135: Feb 5, 1971

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THAT MATCHED PAIRS OF TRANSISTORS WAS AN UNDESIRABLE FEATURE MAKING PROTESTANT'S BID UNACCEPTABLE. IS A MATTER OF JUDGMENT IN CONNECTION WITH WHICH THE GAO WILL NOT SUBSTITUTE ITS OWN VIEWS IN PLACE OF PROCURING AGENCY'S. PROCEEDING TO THE SECOND STEP OF THE PROCUREMENT WITHOUT NOTIFYING PROTESTANT THAT ITS PROPOSAL WAS UNACCEPTABLE WAS CLEARLY IMPROPER UNDER ASPR 2-503.1(F) BUT SUCH AN OMISSION HAS CONSISTENTLY BEEN HELD TO BE A PROCEDURAL MATTER WHICH DOES NOT GO TO THE ESSENCE OF THE PROCUREMENT. THE USE OF A TWO-STEP PROCUREMENT WAS JUSTIFIED BECAUSE THE ITEMS BEING PROCURED INVOLVED RADICAL DEPARTURES FROM ANY EXISTING OFF-THE SHELF ITEMS. N00039-70-R-0025(Q) WAS ISSUED ON APRIL 8. FOURTEEN PROPOSALS WERE TIMELY RECEIVED.

B-170135, FEB 5, 1971

BID PROTEST - BID RESPONSIVENESS - DEVIATIONS - TWO STEP PROCUREMENT DENIAL OF PROTEST OF VIRGINIA ELECTRONICS COMPANY, INC., AGAINST THE REJECTION OF ITS PROPOSAL BY THE NAVAL ELECTRONIC SYSTEMS COMMAND IN CONNECTION WITH A CONTRACT FOR THREE TYPES OF HIGH FREQUENCY BROAD BAND ANTENNA COUPLER GROUPS ISSUED UNDER A TWO-STEP PROCUREMENT AND AWARD TO AIKEN INDUSTRIES, LOW BIDDER. THAT MATCHED PAIRS OF TRANSISTORS WAS AN UNDESIRABLE FEATURE MAKING PROTESTANT'S BID UNACCEPTABLE, AND NOT CAPABLE OF BEING MADE ACCEPTABLE, IS A MATTER OF JUDGMENT IN CONNECTION WITH WHICH THE GAO WILL NOT SUBSTITUTE ITS OWN VIEWS IN PLACE OF PROCURING AGENCY'S. PROCEEDING TO THE SECOND STEP OF THE PROCUREMENT WITHOUT NOTIFYING PROTESTANT THAT ITS PROPOSAL WAS UNACCEPTABLE WAS CLEARLY IMPROPER UNDER ASPR 2-503.1(F) BUT SUCH AN OMISSION HAS CONSISTENTLY BEEN HELD TO BE A PROCEDURAL MATTER WHICH DOES NOT GO TO THE ESSENCE OF THE PROCUREMENT. THE USE OF A TWO-STEP PROCUREMENT WAS JUSTIFIED BECAUSE THE ITEMS BEING PROCURED INVOLVED RADICAL DEPARTURES FROM ANY EXISTING OFF-THE SHELF ITEMS.

TO STRASSER, SPIEGELBERG, FRIED, FRANK & KAMPELMAN:

WE REFER TO YOUR LETTERS OF JUNE 23, 1970, AUGUST 11, 1970, AND SEPTEMBER 23, 1970, RELATING TO YOUR PROTEST ON BEHALF OF VIRGINIA ELECTRONICS COMPANY, INC., HEREINAFTER REFERRED TO AS VELCO, UNDER A TWO-STEP PROCUREMENT RFP NO. N00039-70-R-0025(Q) AND IFB NO. N00039-70 B-0025.

STEP ONE OF THE PROCUREMENT, RFP NO. N00039-70-R-0025(Q) WAS ISSUED ON APRIL 8, 1970, BY THE NAVAL ELECTRONIC SYSTEMS COMMAND CALLING FOR TECHNICAL PROPOSALS FOR THREE TYPES OF HIGH FREQUENCY BROAD BAND ANTENNA COUPLER GROUPS TO BE RECEIVED BY MAY 7, 1970, AND FOURTEEN PROPOSALS WERE TIMELY RECEIVED. THE CONTRACTING OFFICER DETERMINED THAT NINE OF THE PROPOSALS, INCLUDING THAT OF VELCO, WERE UNACCEPTABLE AND WERE NOT SUSCEPTIBLE OF BEING MADE ACCEPTABLE. THE CONTRACTING OFFICER FURTHER DETERMINED THAT THERE WERE SUFFICIENT ACCEPTABLE PROPOSALS TO PROVIDE ADEQUATE PRICE COMPETITION IN THE SECOND STEP OF THE PROCUREMENT. WITHOUT NOTIFYING THE UNSUCCESSFUL PROPOSERS AS PROVIDED IN ASPR 2-503.1(F), THE CONTRACTING OFFICER PROCEEDED TO STEP TWO OF THE PROCUREMENT AND ISSUED IFB NO. N00039-70-B-0025 ON JUNE 16, 1970, TO THE FIVE ACCEPTABLE PROPOSERS: AIKEN INDUSTRIES; NATIONAL RADIO CO., INC.; PICKARD & BURNS DIVISION OF LTV; LITTON SYSTEMS, INC.; AND WESTINGHOUSE CORPORATION.

BIDS WERE RECEIVED FROM FOUR OF THE FIVE COMPANIES WHICH RECEIVED THE SECOND STEP INVITATION FOR BIDS AND WERE OPENED ON JUNE 26, 1970. THE LOW BID WAS FROM AIKEN INDUSTRIES ON ALL THREE ITEMS.

IN YOUR PROTEST OF JUNE 23, 1970, ON BEHALF OF VELCO, YOU CONTENDED THAT THE MULTICOUPLERS CALLED FOR IN THE SUBJECT PROCUREMENT ARE SIMILAR IN DESIGN AND CONSTRUCTION TO MULTICOUPLERS THEN BEING PRODUCED BY VELCO UNDER ANOTHER CONTRACT WITH THE NAVAL ELECTRONIC SYSTEMS COMMAND. YOU STATED THAT IN ADDITION TO DESCRIPTIVE MATERIAL, VELCO SUBMITTED TEST RESULTS SHOWING ITS MODIFIED MULTICOUPLERS COULD MEET OR EXCEED ALL REQUIREMENTS FOR ALL THREE TYPES AND THEREFORE SHOULD HAVE BEEN CONSIDERED FULLY RESPONSIVE AND ACCEPTABLE. IN THE ALTERNATIVE, YOU SUBMITTED THAT EVEN IF VELCO'S PROPOSAL WERE UNACCEPTABLE, BUT REASONABLY SUSCEPTIBLE OF BEING MADE ACCEPTABLE, VELCO WAS ENTITLED AS A MATTER OF LAW TO AN OPPORTUNITY TO PROVIDE ADDITIONAL INFORMATION. AS A FURTHER ALTERNATIVE, YOU SUBMITTED THAT TWO-STEP PROCUREMENT WAS IMPROPER SINCE THE ITEMS REQUIRED WERE SIMILAR TO ITEMS IN PRODUCTION AND THE ITEMS CURRENTLY REQUIRED WERE CAPABLE OF BEING PROPERLY DESCRIBED FOR FORMAL ADVERTISING. UNDER YOUR FIRST TWO ARGUMENTS, YOU REQUESTED CANCELLATION OF STEP TWO OF THE PROCUREMENT, AND UNDER THE THIRD ARGUMENT YOU REQUESTED CANCELLATION OF THE ENTIRE SOLICITATION. YOU ALSO SUBMITTED A COMPARISON BETWEEN THE MULTICOUPLER BEING PRODUCED BY VELCO UNDER ANOTHER CONTRACT AND THE THREE TYPES SET FORTH IN THE CURRENT PROCUREMENT WHICH SHOWED COMPLIANCE WITH A NUMBER OF REQUIREMENTS BUT NOT WITH RESPECT TO INTERMODULATION, VOLTAGE RANGE, AND MEAN TIME BETWEEN FAILURES.

THE ADMINISTRATIVE REPORT OF JULY 16, 1970, A COPY OF WHICH WAS FURNISHED TO YOU, STATED THAT THE DIRECTOR OF CONTRACTS DETERMINED, IN ACCORDANCE WITH ASPR 2-407.8, THAT THE MULTICOUPLERS WERE URGENTLY REQUIRED AND THAT PERFORMANCE WOULD BE UNDULY DELAYED BY FAILURE TO MAKE AWARD PROMPTLY. ACCORDINGLY, AWARD WAS MADE ON JUNE 30, 1970, TO AIKEN INDUSTRIES AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER. ON THE SAME DATE, THE CONTRACTING OFFICER SENT A LETTER TO VELCO OUTLINING TEN REASONS WHY ITS PROPOSAL WAS CATEGORIZED AS UNACCEPTABLE AS FOLLOWS:

"A. THE PROPOSAL WAS VAGUE IN THE AREAS OF OVERALL ENGINEERING APPROACH TO THE PROBLEM AND HOW SPECIFIC PERFORMANCE PARAMETERS WOULD BE MET.

B. MATCHED PAIRS OF TRANSISTORS ARE PROPOSED FOR THE RF AMPLIFIER WHICH IS IN VIOLATION OF PARA. 3.2.8 OF MIL-A-28729(EC). IN ADDITION THE PROPOSAL DOES NOT SPECIFICALLY STATE THAT PLASTIC INCAPSULATED TRANSISTORS WILL NOT BE USED.

C. THE PROPOSAL DOES NOT STATE THAT MATING CONNECTORS WILL BE SUPPLIED FOR THE INPUT AND OUTPUT CONNECTORS AS REQUIRED IN PARA. 3.2.15 OF MIL-A- 28729(EC).

D. THE REQUIREMENT FOR TEST POINTS IN PARA. 3.2.6 OF MIL-A-28729 WAS NOT ADDRESSED.

E. MATERIAL AND FINISH REQUIREMENTS OF PARA. 3.2.4 AND 3.2.14 OF MIL A- 28729(EC) WERE NOT ADDRESSED.

F. PARAGRAPHS 3.2.23 THRU 3.2.29 OF MIL-A-28729(EC) CONCERNING CIRCUIT CONSTRUCTION WERE NOT ADDRESSED.

G. ENVIRONMENTAL REQUIREMENTS OF PARAGRAPHS 3.4.1 THRU 3.4.4 OF MIL-A 28729 WERE NOT ADDRESSED.

H. IT IS ONLY VAGUELY IMPLIED THAT THE EXTERNAL CONSTRUCTION REQUIREMENTS OF PARAGRAPHS 3.2.17, 3.2.17.1, 3.2.17.4 AND 3.2.18 OF MIL A-28729(EC) WILL BE MET.

I. COMPLIANCE WITH REQUIREMENTS FOR THE PRIMARY POWER CONNECTOR OF PARA. 3.2.19 OF MIL-A-28729(EC) IS ONLY IMPLIED.

J. NO DEFINITE AND EXPLICIT COMPLIANCE WITH INTERMODULATION AND PHASE CORRELATION AS REQUIRED IN PARAGRAPHS 3.5.16 AND 3.5.18 OF MIL-A 28729(EC) IS STATED."

IN ADDITION TO THESE TEN REASONS FOR REJECTING VELCO'S PROPOSAL, THE ADMINISTRATIVE REPORT POINTED OUT THAT THE SIDE BY SIDE COMPARISON OF THE SPECIFICATIONS OF THE CU-1382D MULTICOUPLER BEING PRODUCED BY VELCO UNDER ANOTHER CONTRACT WITH THE REQUIREMENTS OF THE THREE TYPES OF MULTICOUPLERS IN THIS PROCUREMENT, WHICH YOU SUBMITTED AS SHOWING COMPLIANCE, ACTUALLY SHOWED A LACK OF COMPLIANCE AND SHOWED THAT THE REQUIREMENTS OF THE PRESENT PROCUREMENT ARE CONSIDERABLY MORE RIGID AND ADVANCED. IN THE OPINION OF THE NAVAL ELECTRONIC SYSTEMS COMMAND, THE UPGRADING IN REQUIREMENTS CREATED A NEED FOR AN ENGINEERING APPROACH AMOUNTING TO A RADICAL REDESIGN WHICH IS DIFFICULT OF ACHIEVEMENT IN COMPARISON TO THE REQUIREMENTS OF THE PRODUCTION MODEL ON WHICH VELCO'S PROPOSAL WAS BASED. ALTHOUGH VELCO PRESENTED WITH ITS PROPOSAL CERTAIN TESTS RESULTS, WHICH IT STATED WERE OBTAINED FROM AN ENGINEERING MODEL BASED ON ITS CU-1382D MULTICOUPLER MODIFIED TO MEET THE REQUIREMENTS OF THE PRESENT PROCUREMENT, THE ADMINISTRATIVE REPORT STATED THAT DESPITE THE REQUIREMENTS AND CRITERIA FOR TECHNICAL DISSERTATION, WHICH REQUIRED STIPULATION OF COMPLETE PRELIMINARY DESIGN AND ENGINEERING APPROACHES, THE VELCO PROPOSAL WAS DEVOID OF CIRCUITRY WHICH WOULD ENABLE GOVERNMENT EVALUATORS TO DETERMINE THE BASES ON WHICH THE TEST RESULTS WERE OBTAINED. THE LACK OF CIRCUITRY ALSO PREVENTED THE EVALUATORS FROM DETERMINING WHETHER THE VELCO ENGINEERING APPROACH WOULD MEET THE REQUIREMENTS STATED IN THE APPLICABLE MILITARY SPECIFICATION.

YOUR RESPONSE TO THE ADMINISTRATIVE REPORT OF JULY 16, 1970, WHICH WAS SUBMITTED ON AUGUST 11, 1970, REPEATED THE THREE BASES OF PROTEST CONTAINED IN YOUR EARLIER LETTER AND IN ADDITION, CONTENDED THAT THE AWARD WAS IMPROPER IN THAT AIKEN DID NOT SUBMIT AN ACCEPTABLE TECHNICAL PROPOSAL, THAT AWARD TO AIKEN SHOULD NOT HAVE BEEN MADE BECAUSE NOTICE OF REJECTION OF VELCO'S PROPOSAL WAS NOT MADE PROMPTLY, AND WRITTEN NOTICE OF INTENTION TO PROCEED WITH AWARD PRIOR TO RESOLUTION OF YOUR PROTEST WAS NOT GIVEN. YOUR RESPONSE ALSO DISPUTED, POINT BY POINT, THE TEN REASONS GIVEN BY THE NAVY FOR REJECTION OF VELCO'S TECHNICAL PROPOSAL, STATING THAT SEVEN OF THE TEN POINTS RAISED NO REAL TECHNICAL ISSUES AND THERE WAS NO REASON TO BELIEVE THAT VELCO COULD NOT OR WOULD NOT COMPLY WITH THE SPECIFICATIONS.

THE SUPPLEMENTAL ADMINISTRATIVE REPORT OF AUGUST 26, 1970, DESCRIBED THE AIKEN PROPOSAL AS CONTAINING A LISTING AND DETAILED DESCRIPTION OF ALL COMPONENTS USED IN THE AMPLIFIER AND OUTPUT ISOLATOR CIRCUITS TOGETHER WITH SCHEMATICS FULLY OUTLINING THE BASIC PROPOSAL AND WAS, IN ALL RESPECTS, FULLY RESPONSIVE. THE NONSTANDARD PARTS AIKEN PROPOSED TO USE IN THE RF TRANSFORMERS WERE PERMITTED BY THE APPLICABLE SPECIFICATIONS AND WERE NOT CONSTRUED TO BE THE UNACCEPTABLE TYPE OF MATCHED PAIRS OF TRANSISTORS USED IN THE VELCO PROPOSAL.

YOUR RESPONSE TO THE SUPPLEMENTAL ADMINISTRATIVE REPORT, SUBMITTED ON SEPTEMBER 23, 1970, CONTENDED THAT THE TRANSISTORS PROPOSED BY VELCO SHOULD NOT HAVE BEEN CONSIDERED TO BE THE UNACCEPTABLE TYPE OF MATCHED PAIRS TRANSISTORS BUT SHOULD INSTEAD BE CONSIDERED AS AN ALLOWABLE TYPE OF NONSTANDARD TRANSISTORS. YOU FURTHER CONTEND THAT IF VELCO'S PROPOSED TRANSISTORS WERE DETERMINED TO BE MATCHED, THE SAME DEFINITION SHOULD APPLY TO AIKEN'S NONSTANDARD TRANSISTORS AND ITS PROPOSAL SHOULD ALSO BE CONSIDERED AS UNACCEPTABLE. YOU ALSO CONTENDED THAT THE THREE MULTICOUPLERS SHOULD NOT HAVE BEEN COMBINED IN THE SAME PROCUREMENT AND THAT THE TWO-STEP METHOD OF PROCUREMENT WAS INAPPROPRIATE.

IN CONNECTION WITH YOUR FIRST CONTENTION THAT VELCO'S TECHNICAL PROPOSAL WAS FULLY RESPONSIVE AND ACCEPTABLE, WE HAVE EXAMINED THE REQUEST FOR UNPRICED TECHNICAL PROPOSALS AS WELL AS THE APPLICABLE MILITARY STANDARDS. ALTHOUGH THERE IS NO SPECIFIC PROHIBITION AGAINST THE USE OF MATCHED PAIRS OF TRANSISTORS, PARAGRAPH 3.2.8 OF MIL-A 28729(EC) STATES THAT SEMICONDUCTOR DEVICES, I.E., TRANSISTORS, SHALL BE SELECTED FROM APPROVED TYPES IN ACCORDANCE WITH MIL-E-16400, WHICH MAKES NO PROVISION FOR USE OF MATCHED PAIRS. THEREFORE, MATCHED PAIRS OF TRANSISTORS ARE NONSTANDARD DEVICES FOR WHICH WRITTEN APPROVAL MUST BE REQUESTED AND RECEIVED FROM THE AGENCY CONCERNED, UNDER PARAGRAPH 3.4.31.2 OF MIL-E- 16400. SINCE THE NAVY HAS DETERMINED THAT THE USE OF MATCHED PAIRS OF TRANSISTORS IS UNDESIRABLE IN THIS CASE, THE WRITTEN APPROVAL WOULD NOT BE FORTHCOMING AND VELCO'S PROPOSED MULTICOUPLERS COULD NOT MEET THE PERFORMANCE STANDARDS SET FORTH IN THE REQUEST WITHOUT RADICAL REDESIGN OF THEIR CIRCUITRY TO ELIMINATE USE OF MATCHED PAIRS OF TRANSISTORS.

WE DO NOT PROPOSE TO SUBSTITUTE OUR JUDGMENT FOR THAT OF THE PROCURING AGENCY, IN THIS INSTANCE, ON THE UNDESIRABILITY OF USING MATCHED PAIRS OF TRANSISTORS AND THEREFORE WE FIND NO BASIS ON WHICH TO OBJECT TO THE NAVY'S DETERMINATION THAT VELCO'S PROPOSAL WAS NOT ACCEPTABLE AND WAS NOT SUSCEPTIBLE OF BEING MADE ACCEPTABLE. MOREOVER, SINCE VELCO'S PROPOSAL WAS UNACCEPTABLE IN THIS ONE SIGNIFICANT ELEMENT, WE DO NOT CONSIDER IT TO BE MATERIAL TO THE ISSUE OF ACCEPTABILITY WHETHER VELCO COULD, OR WOULD, CURE THE REMAINING DEFECTS IN ITS PROPOSAL, PARTICULARLY IN VIEW OF THE FACT THAT THE REQUEST ADVISED OFFERORS, IN ACCORDANCE WITH ASPR 2- 503.1(VII), TO SUBMIT PROPOSALS WHICH WERE FULLY AND CLEARLY ACCEPTABLE WITHOUT ADDITIONAL EXPLANATION OR INFORMATION. BY THE TERMS OF THE REQUEST AND THE ABOVE SECTION OF ASPR, THE GOVERNMENT WAS ENTITLED TO MAKE A FINAL DETERMINATION WHETHER A PROPOSAL WAS ACCEPTABLE OR UNACCEPTABLE SOLELY ON THE BASIS OF THE PROPOSAL AS SUBMITTED AND TO PROCEED DIRECTLY WITH THE SECOND STEP OF THIS PROCUREMENT WITHOUT REQUESTING OR PERMITTING THE SUBMISSION OF FURTHER INFORMATION FROM ANY OFFEROR.

ALTHOUGH YOU HAVE CONTENDED IN THE ALTERNATIVE THAT EVEN IF VELCO'S PROPOSAL WERE UNACCEPTABLE, BUT REASONABLY SUSCEPTIBLE OF BEING MADE ACCEPTABLE, VELCO WAS ENTITLED AS A MATTER OF LAW TO AN OPPORTUNITY TO BE ALLOWED TO PROVIDE SUCH ADDITIONAL INFORMATION, THE FINDING THAT VELCO'S PROPOSAL WAS UNACCEPTABLE AND NOT REASONABLY SUSCEPTIBLE OF BEING MADE ACCEPTABLE WAS A FACTUAL DETERMINATION WITHIN THE ADMINISTRATIVE DISCRETION OF THE CONTRACTING AGENCY, AND SUCH A DETERMINATION PRECLUDED FURTHER PARTICIPATION BY VELCO IN THIS PROCUREMENT. IN ANY EVENT, THE FACT THAT VELCO HAD PREVIOUSLY PRODUCED SIMILAR EQUIPMENT TO LESS STRINGENT SPECIFICATIONS COULD NOT GIVE RISE TO A VESTED RIGHT TO PARTICIPATE IN BOTH STEPS OF THIS PROCUREMENT WHEN NO ACCEPTABLE PROPOSAL WAS SUBMITTED BY VELCO IN THE FIRST STEP, SINCE EACH PROCUREMENT MUST BE CONSIDERED SEPARATELY ON THE BASIS OF THE SPECIFICATIONS SET FORTH IN EACH INSTANCE.

IN THIS CONNECTION, THE NAVY'S DETERMINATION THAT THERE WERE SUFFICIENT ACCEPTABLE PROPOSALS RECEIVED IN THE FIRST STEP TO PROVIDE ADEQUATE PRICE COMPETITION IN THE SECOND STEP IS A JUDGMENT DECISION WHICH IS ADEQUATELY SUPPORTED BY THE RECORD IN THIS CASE, AND WE ARE THEREFORE UNABLE TO AGREE WITH YOUR POSITION ON THIS POINT.

YOUR CONTENTION THAT THE NAVY ACTED IMPROPERLY IN PROCEEDING TO THE SECOND STEP OF THE PROCUREMENT WITHOUT NOTIFYING VELCO THAT ITS PROPOSAL WAS UNACCEPTABLE IS WELL-FOUNDED. ASPR 2-503.1(F) INCLUDES PROMPT NOTIFICATION TO AN OFFEROR THAT A TECHNICAL PROPOSAL IS UNACCEPTABLE AS PART OF STEP ONE, AND ASPR 2-503.2 PROVIDES FOR CONDUCTING A FORMALLY ADVERTISED PROCUREMENT FROM THE ACCEPTABLE PROPOSERS UPON COMPLETION OF STEP ONE. HOWEVER, IN THE DECISIONS OF OUR OFFICE ON THIS POINT WHICH YOU CITED (B-164774, AUGUST 12, 1968; B 149055, JULY 18, 1962; AND B-165457, MARCH 18, 1969) WE HAVE TREATED THE FAILURE OF A CONTRACTING OFFICER TO GIVE PROMPT NOTIFICATION OF AN UNACCEPTABLE PROPOSAL UNDER PART ONE OF A TWO-STEP FORMALLY ADVERTISED PROCUREMENT AS A PROCEDURAL MATTER WHICH DOES NOT GO TO THE ESSENCE OF THE PROCUREMENT. THE FAILURE TO GIVE PROMPT NOTICE CANNOT RENDER AN UNACCEPTABLE PROPOSAL ACCEPTABLE NOR CAN IT VITIATE THE ACCEPTABILITY OF THOSE PROPOSALS WHICH ARE IN ACCORDANCE WITH THE SPECIFICATIONS.

WHILE WE AGREE THAT THE NAVY'S NOTIFICATION OF VELCO'S REJECTION WAS LESS THAN PROMPT, WE ARE NOT PERSUADED THAT VELCO SUFFERED ANY PREJUDICE AS A RESULT OF THE DELAY, SINCE IT WAS ULTIMATELY ADVISED OF THE REJECTION AND THE REASONS FOR THE ACTION AND HAD SUBMITTED ITS PROTEST PRIOR TO RECEIPT OF SUCH NOTICE OR AWARD OF A CONTRACT. IN THE RELATED MATTER OF THE NAVY'S FAILURE TO GIVE VELCO WRITTEN NOTICE OF ITS INTENTION TO PROCEED WITH AN AWARD WHILE THE PROTEST WAS PENDING, WE DO NOT REGARD SUCH FAILURE AS HAVING ANY EFFECT ON THE VALIDITY OF THE AWARD SINCE VELCO HAD ACTUAL KNOWLEDGE OF THIS FACT AS A RESULT OF ITS CONVERSATION WITH THE PROCURING AGENCY ON THE DAY FOLLOWING AWARD. IT DOES NOT APPEAR THAT VELCO WOULD HAVE BEEN IN ANY DIFFERENT POSITION BY RECEIVING SUCH WRITTEN NOTICE, EITHER BEFORE OR AFTER AWARD. WE HAVE, HOWEVER, RECOMMENDED BY SEPARATE LETTER TO THE SECRETARY OF THE NAVY THAT IMMEDIATE STEPS BE TAKEN TO ELIMINATE THIS RECURRING PROBLEM OF FAILURE TO GIVE PROMPT NOTICE IN FUTURE TWO-STEP PROCUREMENTS.

YOUR CONTENTION THAT TWO-STEP FORMAL ADVERTISING IS INAPPROPRIATE IN THIS INSTANCE MUST BE CONSIDERED IN CONNECTION WITH THE ASPR PROVISIONS REGARDING THIS TYPE OF PROCUREMENT. ASPR 2-501 DESCRIBES TWO-STEP FORMAL ADVERTISING AS A METHOD OF PROCUREMENT DESIGNED TO EXPAND THE USE AND OBTAIN THE BENEFITS OF FORMAL ADVERTISING WHERE INADEQUATE SPECIFICATIONS PRECLUDE THE USE OF CONVENTIONAL ADVERTISING AND STATES IT IS ESPECIALLY USEFUL IN PROCUREMENTS REQUIRING TECHNICAL PROPOSALS, ESPECIALLY THOSE FOR COMPLEX ITEMS. ASPR 2-502 SETS FORTH THE CONDITIONS FOR USE AND REQUIRES THE PRESENCE OF FIVE CONDITIONS AS FOLLOWS:

"2-502 CONDITIONS FOR USE.

(A) TWO-STEP FORMAL ADVERTISING SHALL BE USED IN PREFERENCE TO NEGOTIATION WHEN ALL OF THE FOLLOWING CONDITIONS ARE PRESENT, UNLESS OTHER FACTORS REQUIRE THE USE OF NEGOTIATION, E.G., 3-213;

(I) AVAILABLE SPECIFICATIONS OR PURCHASE DESCRIPTIONS ARE NOT SUFFICIENTLY DEFINITE OR COMPLETE OR MAY BE TOO RESTRICTIVE, AND THE LISTING OF THE SALIENT CHARACTERISTICS IN A 'BRAND NAME OR EQUAL' DESCRIPTION WOULD LIKEWISE BE TOO RESTRICTIVE, TO PERMIT FULL AND FREE COMPETITION WITHOUT TECHNICAL EVALUATION, AND ANY NECESSARY DISCUSSION, OF THE TECHNICAL ASPECTS OF THE REQUIREMENT TO INSURE MUTUAL UNDERSTANDING BETWEEN EACH SOURCE AND THE GOVERNMENT;

(II) DEFINITE CRITERIA EXIST FOR EVALUATING TECHNICAL PROPOSALS, SUCH AS DESIGN, MANUFACTURING, TESTING, AND PERFORMANCE REQUIREMENTS, AND SPECIAL REQUIREMENTS FOR OPERATIONAL SUITABILITY AND EASE OF MAINTENANCE;

(III) MORE THAN ONE TECHNICALLY QUALIFIED SOURCE IS EXPECTED TO BE AVAILABLE;

(IV) SUFFICIENT TIME WILL BE AVAILABLE FOR USE OF THE TWO-STEP METHOD; AND

(V) A FIRM FIXED-PRICE CONTRACT OR A FIXED-PRICE CONTRACT WITH ESCALATION WILL BE USED.

IN VIEW OF NAVY'S ADVICE THAT THE ITEMS BEING PROCURED INVOLVE RADICAL DEPARTURES FROM ANY EXISTING OFF-THE-SHELF ITEMS, WE BELIEVE ALL OF THE REQUIRED CONDITIONS SET OUT ABOVE ARE PRESENT IN THIS CASE. WE THEREFORE SEE NO BASIS ON WHICH TO OBJECT TO THE ADMINISTRATIVE DECISION TO USE TWO- STEP FORMAL ADVERTISING.

WITH RESPECT TO YOUR OBJECTION TO THE NAVY'S DETERMINATION TO PURCHASE ALL THREE TYPES OF MULTICOUPLERS COVERED BY THIS CONTRACT FROM ONE MANUFACTURER WHEN VELCO WAS ALREADY PRODUCING MULTICOUPLERS SIMILAR TO TYPES I AND II, IT MUST BE NOTED THAT VELCO'S MULTICOUPLERS, ALTHOUGH SIMILAR IN FUNCTION AND PERFORMANCE, INVOLVE THE USE OF MATCHED PAIRS OF TRANSISTORS, WHICH USAGE WAS DETERMINED TO BE UNACCEPTABLE FOR THIS REQUIREMENT. IN VIEW THEREOF, AND SINCE A PROTEST ON THIS BASIS SHOULD PROPERLY BE FILED PRIOR TO PARTICIPATION IN STEP ONE OF THE PROCUREMENT, WE SEE NO VALID BASIS TO JUSTIFY CANCELLATION OF THE CONTRACT AWARDED.

YOUR REMAINING CONTENTION IS THAT, IF USE OF MATCHED PAIRS OF TRANSISTORS RENDERED VELCO'S PROPOSAL UNACCEPTABLE, AIKEN'S PROPOSAL SHOULD ALSO HAVE BEEN CONSIDERED UNACCEPTABLE SINCE AIKEN ALSO PROPOSED TO USE NONSTANDARD PARTS. WE HAVE EXAMINED THE DOCUMENTS SUBMITTED WITH THE ADMINISTRATIVE REPORTS AS WELL AS THE APPLICABLE MILITARY SPECIFICATIONS AND APPENDIX A OF AIKEN'S PROPOSAL WHICH LISTS THE PARTS TO BE USED AND WE FIND NO SUPPORT FOR YOUR CONTENTION. WHILE IT IS TRUE, AS YOU CONTEND, THAT MATCHED PAIRS OF TRANSISTORS ARE NONSTANDARD PARTS, IT DOES NOT LOGICALLY FOLLOW THAT ALL NONSTANDARD PARTS MUST BE MATCHED PAIRS OF TRANSISTORS. IN THESE CIRCUMSTANCES, WE ARE NOT DISPOSED TO OBJECT TO THE NAVY'S DECISION THAT VELCO'S NONSTANDARD PARTS ARE UNACCEPTABLE WHILE AIKEN'S ARE ACCEPTABLE.

ACCORDINGLY, FOR THE REASONS STATED, YOUR PROTEST AGAINST REJECTION OF VELCO'S TECHNICAL ..END :