B-170712, DEC. 30, 1970

B-170712, DEC. 30, 1970

BID PROTEST - BIDDER RESPONSIBILITY DENIAL OF PROTEST OF NATCON CHEMICAL COMPANY, INC., AGAINST THE AWARD OF A NEGOTIATED CONTRACT FOR A QUANTITY OF CYANOCOBALMIN INJECTION, USP, 1000 MICROGRAMS PER CC, 10CC, ISSUED BY DEFENSE SUPPLY AGENCY TO VITARINE COMPANY. WHERE GOVERNMENT TESTS REVEALED THAT PROTESTANT'S CHEMICAL CONTAINED AN UNACCEPTABLE AMOUNT OF PARTICULATE MATTER, THEN BID WAS PROPERLY REJECTED. EVIDENCE OF OTHER TESTS THAT RESULTED IN FAVORABLE RESULTS FOR PROTESTANT'S SAMPLES MAY BE QUESTIONED ON THE BASIS THAT THEY DID NOT USE THE SPECIAL EQUIPMENT THE GOVERNMENT USED AND THE SAMPLES TESTED DID NOT COME FROM THE SAME LOT.

TO NATCON CHEMICAL COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF JULY 31, 1970, WHICH WAS FORWARDED TO OUR OFFICE FOR REVIEW, IN WHICH YOU PROTESTED AGAINST THE AWARD OF A CONTRACT TO ANOTHER CONCERN UNDER REQUEST FOR PROPOSALS (RFP) NO. DSA 120- 70-R-0946, ISSUED ON NOVEMBER 7, 1969, BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), DEFENSE SUPPLY AGENCY (DSA).

THE BASIS FOR YOUR PROTEST IS THAT THE PRICE IN YOUR OFFER WAS ABOUT ONE- HALF THE PRICE IN THE SUCCESSFUL OFFER; THAT YOUR SAMPLES WERE TESTED BY AN INDEPENDENT LABORATORY AND WERE FOUND TO BE UNQUALIFIEDLY SOUND AND THAT YOU HAD PREVIOUSLY FURNISHED THIS ITEM TO THE VETERANS ADMINISTRATION. ALSO, YOUR LETTER STATES THAT YOUR CONCERN WAS GIVEN A FAVORABLE RECOMMENDATION IN A PREAWARD SURVEY FOR THIS PROCUREMENT.

THE FACTS AND CIRCUMSTANCES SURROUNDING YOUR PROTEST WERE DEVELOPED THROUGH OUR OWN INVESTIGATION OF THIS MATTER. OUR REVIEW WHICH WAS PERFORMED AT DPSC, PHILADELPHIA, PENNSYLVANIA, INCLUDED (1) A REVIEW OF THE OFFICIAL PROCUREMENT FILE, (2) A REVIEW OF LABORATORY TEST REPORTS AND (3) A REVIEW OF DPSC'S POLICIES AND PROCEDURES WITH RESPECT TO THE PROCUREMENT OF DRUG ITEMS. IN ADDITION, OUR OFFICE HELD DISCUSSIONS WITH DPSC PROCUREMENT AND QUALITY ASSURANCE PERSONNEL, A REPRESENTATIVE FROM THE VETERANS ADMINISTRATION, THE FOOD AND DRUG ADMINISTRATION AND THE VICE PRESIDENT OF YOUR CONCERN.

THE ITEM WAS DESCRIBED IN THE RFP AS FOLLOWS:

"1 - 6 STOCK NO. 6505-687-4049 14400 BT

CYANOCOBALAMIN INJECTION, USP,

1000 MICROGRAMS PER CC, 10 CC." THE RFP STATED THAT PRICES WERE TO BE F.O.B. DESTINATION. THE DESIRED DELIVERY SCHEDULE PROVIDED FOR A CERTAIN QUANTITY TO BE DELIVERED BY FEBRUARY 1970, AND THE REMAINDER BY MAY 1970. THE RFP DID NOT SPECIFY A REQUIRED DELIVERY SCHEDULE.

THE CLOSING DATE IN THE RFP WAS NOVEMBER 25, 1969, AND FIVE VENDORS SUBMITTED PROPOSALS AS FOLLOWS:

VENDOR (NOTE A) UNIT PRICE TERMS DELIVERY 1. ELKINS-SINN, INC.

$.29 TO .295(B) 1% - 30 DAYS FEB. AND MAY 2. NATIONAL DRUG CO. .35 NET FEB. AND MAY 3. NATCON CHEMICAL CO. .36 NET FEB. AND MAY 4. GOTHAM PHARMACEUTICAL CO. .44 1% - 30 DAYS ALL IN MAY 5. VITARINE CO.

.60 1/4% - 30 DAYS ALL IN MAY

(A) PROPOSED SUPPLIER OF THE CYANOCOBALAMIN INGREDIENT FOR ALL FIVE VENDORS WAS MERCK & CO., RAHWAY, NEW JERSEY.

(B) PRICE OF $.295 IS FOR 6,480 BOTTLES TO BE SHIPPED FROM DEFENSE DEPOT, TRACY, CALIFORNIA. THE NEGOTIATION AUTHORITY IN THIS CASE WAS 10 U.S.C. 2304(A)(7) AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-207 WHICH PROVIDES FOR AN EXCEPTION TO THE ADVERTISING REQUIREMENTS WHEN THE PURCHASE OR CONTRACT IS FOR MEDICINE OR MEDICAL SUPPLIES. ANOTHER REASON FOR NEGOTIATION OF THIS PROCUREMENT WAS THAT IT WAS A NEW ITEM IN THE MILITARY SUPPLY SYSTEM AND THIS WAS THE FIRST PURCHASE OF THE ITEM UNDER PURCHASE DESCRIPTION NO. 1, DATED OCTOBER 15, 1969.

ON NOVEMBER 26, 1969, THE QUALITY ASSURANCE BRANCH ADVISED THE CONTRACTING OFFICER THAT PREAWARD SURVEYS WERE NECESSARY FOR NATIONAL DRUG AND NATCON AND THAT PREAWARD SAMPLES WERE REQUIRED FROM EACH OF THE THREE LOWEST OFFERORS.

ON DECEMBER 3, 1969, THE CONTRACTING OFFICER REQUESTED ELKINS-SINN, THE LOW OFFEROR, TO SUBMIT CYANOCOBALAMIN SAMPLES. THE SAMPLES SUBMITTED BY ELKINS-SINN, WERE EXAMINED AND WERE FOUND TO CONTAIN PARTICULATE MATTER AND ON FEBRUARY 11, 1970, THE QUALITY ASSURANCE BRANCH IN A MEMORANDUM TO THE CONTRACTING OFFICER RECOMENDED THAT AWARD SHOULD NOT BE MADE TO ELKINS -SINN. ON JUNE 22, 1970, ELKINS-SINN WAS ADVISED THAT ITS OFFER WAS REJECTED SINCE ITS PREAWARD SAMPLES DID NOT COMPLY WITH THE SPECIFICATION REQUIREMENTS FOR PARTICULATION AND CLARITY OF SOLUTION.

ON JANUARY 27, 1970, THE CONTRACTING OFFICER REQUESTED PREAWARD SAMPLES FROM NATIONAL DRUG COMPANY, THE SECOND LOW OFFEROR, AND ON FEBRUARY 18, DPSC REQUESTED THE DEFENSE CONTRACT ADMINISTRATIVES SERVICES REGION (DCASR), PHILADELPHIA, PENNSYLVANIA, TO CONDUCT A PREAWARD SURVEY ON NATIONAL DRUG'S PLANT. THE PREAWARD SURVEY OF THIS CONCERN INDICATED DEFICIENCIES IN THE QUALITY CONTROL AND INSPECTION SYSTEM AND ON MARCH 23, THE QUALITY CONTROL ASSURANCE BRANCH RECOMMENDED TO THE CONTRACTING OFFICER THAT NO AWARD SHOULD BE MADE TO NATIONAL DRUG. IN VIEW OF THE NEGATIVE PREAWARD SURVEY FINDINGS, THE PREAWARD SAMPLES WERE NOT SUBJECTED TO LABORATORY TEST EVALUATION.

ON MARCH 10, 1970, THE CONTRACTING OFFICER REQUESTED THAT YOUR CONCERN, THE THIRD LOW OFFEROR, SUBMIT PREAWARD SAMPLES, AND ON MARCH 17, THE CONTRACTING OFFICER REQUESTED THAT DCASR MAKE A PREAWARD SURVEY OF YOUR CONCERN. THE FINDINGS OF THE PREAWARD SURVEY WERE THAT YOUR CONCERN COMPLIED WITH DPSC REQUIREMENTS WITH RESPECT TO PRODUCTION AND QUALITY ASSURANCE CAPABILITIES AND THE PREAWARD SURVEY TEAM RECOMMENDED COMPLETE AWARD TO YOUR CONCERN.

THE PREAWARD SAMPLES WERE SUBMITTED TO DPSC BY YOUR CONCERN ON MARCH 26, 1970, AND ON APRIL 23, THE LABORATORY TEST REPORT ON THESE SAMPLES WAS ISSUED WITH A FINDING THAT EACH OF THE SIX SAMPLES SUBMITTED BY YOUR CONCERN CONTAINED A SMALL AMOUNT OF FIBROUS OR FLAKY PARTICULATE MATTER. ON APRIL 27, THE QUALITY ASSURANCE BRANCH RECOMMENDED THAT AN AWARD SHOULD NOT BE MADE TO YOUR CONCERN. ON JUNE 22, YOUR CONCERN WAS ADVISED THAT YOUR OFFER WAS REJECTED AND YOU WERE ALSO ADVISED THAT VITARINE WAS THE SUCCESSFUL OFFEROR AT A UNIT PRICE OF $0.60.

ON APRIL 27, 1970, THE CONTRACTING OFFICER REQUESTED BOTH GOTHAM AND VITARINE, FOURTH AND FIFTH LOW OFFERORS, TO SUBMIT SIX SAMPLES EACH AND ON MAY 14, DCASR, NEW YORK, NEW YORK, WAS REQUESTED TO CONDUCT PREAWARD SURVEYS ON EACH OF THESE PROSPECTIVE CONTRACTORS. ON JUNE 15, THE QUALITY ASSURANCE BRANCH RECOMMENDED THAT NO AWARD BE MADE TO GOTHAM BECAUSE ALL SIX SAMPLES CONTAINED PARTICULATE MATTER AND BECAUSE OTHER RESPECTS OF THIS OFFEROR'S CAPACITY TO PRODUCE AN ACCEPTABLE ITEM WERE UNSATISFACTORY. THE QUALITY ASSURANCE BRANCH RECOMMENDED THAT AWARD BE MADE TO VITARINE SINCE THE PREAWARD SURVEY ON THIS CONCERN WAS FAVORABLE AND THE SAMPLES SUBMITTED BY THAT CONCERN CONFORMED TO THE SPECIFICATION REQUIREMENTS SET FORTH IN PURCHASE DESCRIPTION NO. 1, DATED OCTOBER 15, 1969.

THE CONTRACTING OFFICER DETERMINED THAT VITARINE'S PRICE WAS REASONABLE BASED ON A PREVIOUS PROCUREMENT AND THE GSA'S CATALOGUE PRICE. CONTRACT NO. DSA 20-70-C-3369, FOR DELIVERY OF 14,400 UNITS OF CYANOCOBALAMIN AT $0.60 PER UNIT WAS AWARDED TO VITARINE ON JUNE 22, 1970. DELIVERIES UNDER THE CONTRACT WERE MADE BETWEEN SEPTEMBER 1 AND SEPTEMBER 30, 1970.

DPSC PROCUREMENT OFFICIALS ADVISED OUR OFFICE THAT IT IS THE POLICY OF THAT ACTIVITY NOT TO PERMIT VENDORS TO SUBMIT SAMPLES MORE THAN ONCE NOR TO NEGOTIATE THE QUALITY ASPECTS OF SAMPLES. DPSC'S REASON FOR THIS POLICY IS THAT IT WOULD PROLONG THE PROCUREMENT PROCESS INDEFINITELY IF OFFERORS WERE PERMITTED TO RESUBMIT SAMPLES.

IN A PRIOR CASE WHICH INVOLVED A PROCUREMENT OF SERUM WE HELD THAT THE TESTS OF AN OFFEROR'S PREAWARD SAMPLES WERE A PROPER BASIS FOR DETERMINING THE OFFEROR'S RESPONSIBILITY EVEN THOUGH THE SOLICITATION DID NOT CONTAIN A PROVISION SPECIFICALLY REQUIRING THE SUBMISSION OF A PREAWARD SAMPLE. -168610, APRIL 7, 1970. IN A PROCUREMENT OF THIS NATURE, WE THINK IT IS APPROPRIATE THAT A PROSPECTIVE CONTRACTOR SHOULD DEMONSTRATE ITS ABILITY TO PERFORM THROUGH THE FURNISHING OF PREAWARD SAMPLES. SINCE YOUR SAMPLES INDICATED THAT YOUR CONCERN MIGHT NOT BE ABLE TO FURNISH A PRODUCT WHICH WAS SUFFICIENTLY FREE OF PARTICULATE MATTER, WE AGREE WITH THE PROCURING ACTIVITY THAT THERE WAS A QUESTION REGARDING YOUR ABILITY TO PERFORM. THIS QUESTION WAS NOT NECESSARILY RESOLVED BY THE FAVORABLE PREAWARD SURVEY RESULTS; CONSEQUENTLY, WE FIND THAT THE PROCURING ACTIVITY HAD A BASIS FOR ITS DETERMINATION NOT TO MAKE AN AWARD TO YOUR CONCERN.

YOUR OFFER CERTIFIED THAT YOU WERE A SMALL BUSINESS CONCERN. HOWEVER, THE MATTER OF YOUR CONCERN'S CAPACITY AND CREDIT WAS NOT SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION UNDER THE CERTIFICATE OF COMPETENCY PROCEDURES SINCE THIS PROCUREMENT WAS UNDER $10,000 AND PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-705.4(C), REFERRAL TO SBA IS DISCRETIONARY FOR AWARDS EXCEEDING $2,500, BUT NOT EXCEEDING $10,000. SEE B-170236, AUGUST 25, 1970, AND CASES CITED THEREIN.

IN REGARD TO THE CONTENTION THAT INDEPENDENT LABORATORY TESTING FOUND NO FLAKY AND FIBROUS MATERIAL, OUR INVESTIGATION FOUND NO EVIDENCE THAT ANY INDEPENDENT LABORATORY TESTS WERE PERFORMED ON THE SAME LOT FROM WHICH SAMPLES WERE SUBMITTED TO DPSC UNDER THE INSTANT RFP. OUR INVESTIGATION REVEALED THAT THE INDEPENDENT LABORATORY TESTS REFERRED TO IN YOUR LETTER OF JULY 31, 1970, WERE ON TWO SAMPLES SUBMITTED BY YOUR CONCERN IN CONNECTION WITH A PROCUREMENT OF AMINOPHYLLINE INJECTION UNDER RFP NO. DSA -120-70-R-1404. THE TEST REPORT PREPARED BY THE INDEPENDENT LABORATORY REFERRED ONLY TO THE ASSAY WHICH IS AN ANALYSIS OF THE PROPORTION OF CHEMICAL INGREDIENTS CONTAINED IN SAMPLES. THERE WAS NO INDICATION OF ANY TESTS HAVING BEEN MADE WITH RESPECT TO THE EXISTENCE OF PARTICULATE MATTER. THE REPORT ALSO SHOWED THAT THE AMINOPHYLLINE CONTENT IN ONE OF THE TWO TEST SAMPLES SUBMITTED BY YOUR CONCERN EXCEEDED THE MAXIMUM TOLERANCE STANDARD SET FORTH IN THE PHARMACOPOEIA OF THE UNITED STATES (U.S.P.) APPARENTLY AN AVERAGE OF YOUR TWO SAMPLES FELL JUST WITHIN THE PRESCRIBED TOLERANCE OF THE STANDARD AND APPARENTLY THIS IS THE BASIS FOR YOUR ASSERTION THAT YOUR SAMPLES CONFORMED TO THE SPECIFICATION REQUIREMENT FOR THAT PROCUREMENT.

THE DPSC LABORATORY TESTING PROCEDURES REQUIRE THAT EACH AND EVERY SAMPLE CONFORM TO THE STANDARD SET FORTH IN THE U.S.P. SINCE ONE OF YOUR SAMPLES EXCEEDED THE ESTABLISHED TOLERANCE, AND BECAUSE SOME PARTICULATE MATTER WAS FOUND IN SOME OF THE AMINOPHYLLINE SAMPLES, OUR OFFICE WAS ADVISED THAT YOUR CONCERN WAS REJECTED AS A PROPOSED SUPPLIER UNDER THAT RFP.

WITH RESPECT TO THE LABORATORY REPORTS ON THE TESTS ON PRODUCTS FURNISHED BY YOUR CONCERN TO THE VETERANS ADMINISTRATION PURSUANT TO TWO PURCHASE ORDERS WHICH WERE AWARDED TO A SUBSIDIARY OF YOUR COMPANY MENTIONED IN YOUR LETTER OF JULY 31, 1970, OUR REVIEW DID NOT DISCLOSE THAT ANY TESTS FOR "CLARITY" HAD BEEN MADE. OUR OFFICE WAS ADVISED THAT THE TESTING FOR THE VA WAS PERFORMED BY THE DIVISION OF NUTRITION LABORATORIES, FOOD AND DRUG ADMINISTRATION (FDA). THE "CLARITY" TESTING WAS DISCUSSED WITH THE FDA SUPERVISORY CHEMIST WHO PERFORMED THE TESTS ON YOUR CONCERN'S PRODUCTS WHICH WERE FURNISHED TO THE VA AND OUR OFFICE WAS ADVISED THAT FDA DOES NOT PERFORM ANY SPECIAL TESTS TO DETERMINE IF THE "CLARITY" REQUIREMENT HAS BEEN SATISFIED BUT THAT FDA RELIES ON THE ALERTNESS OF ITS ANALYSTS TO DETECT THE PRESENCE OF ANY FOREIGN OR UNDISSOLVED MATTER. OUR OFFICE WAS FURTHER ADVISED THAT FDA DOES NOT HAVE ANY SPECIAL EQUIPMENT SUCH AS THE "EIGHT BOX" USED BY DPSC TO DETECT PARTICULATE MATTER. WE DO NOT CONSIDER THAT THESE TESTS ESTABLISH THAT YOUR CONCERN COULD PRODUCE AN ACCEPTABLE PRODUCT FOR THIS PROCUREMENT.

FOR THESE REASONS YOUR PROTEST IS DENIED.