B-170981, FEB 8, 1971

B-170981: Feb 8, 1971

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THAT PROTESTANT WAS IN PRODUCTION OF THE EXACT ITEM REQUIRED WHILE SUCCESSFUL PROPOSER WAS NOT. IS NOT SUPPORTED BY THE RECORD WHICH RATHER SHOWS THAT BOTH FIRMS WERE IN PRODUCTION OF INTERVALOMETERS WHICH MET THE REQUIREMENTS OF THE OLD SPECIFICATIONS BUT NOT THE CURRENT PROCUREMENT WHICH WAS THE FIRST UNDER NEW. BECAUSE BOTH FIRMS LACKED PRIOR PRODUCTION EXPERIENCE UNDER THE NEW SPECIFICATIONS IT DOES NOT APPEAR THAT PROTESTANT WAS IN ANY BETTER POSITION TO MEET THE PRODUCTION REQUIREMENT. NOTWITHSTANDING THAT IT MAY HAVE HAD TO PYRODYNE. THE SOLICITATION WAS ISSUED ON JULY 27. THE NEGOTIATION WAS UNDERTAKEN PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304(A)(2). FIVE FIRMS WERE SOLICITED AND THREE PROPOSALS WERE RECEIVED AS A RESULT OF THE SOLICITATION.

B-170981, FEB 8, 1971

BID PROTEST - NEW SPECIFICATIONS DENIAL OF PROTEST BY THE PYRODYNE, DIVISION OF WILLIAM WAHL CORP., AGAINST SOLICITATION BY THE U.S. ARMY AMMUNITION PROCUREMENT AND SUPPLY AGENCY FOR A QUANTITY OF INTERVALOMETERS AND AWARD TO LOW PROPOSER, LEDEX. THAT PROTESTANT WAS IN PRODUCTION OF THE EXACT ITEM REQUIRED WHILE SUCCESSFUL PROPOSER WAS NOT, IS NOT SUPPORTED BY THE RECORD WHICH RATHER SHOWS THAT BOTH FIRMS WERE IN PRODUCTION OF INTERVALOMETERS WHICH MET THE REQUIREMENTS OF THE OLD SPECIFICATIONS BUT NOT THE CURRENT PROCUREMENT WHICH WAS THE FIRST UNDER NEW, MORE STRINGENT SPECIFICATIONS. BECAUSE BOTH FIRMS LACKED PRIOR PRODUCTION EXPERIENCE UNDER THE NEW SPECIFICATIONS IT DOES NOT APPEAR THAT PROTESTANT WAS IN ANY BETTER POSITION TO MEET THE PRODUCTION REQUIREMENT, NOTWITHSTANDING THAT IT MAY HAVE HAD

TO PYRODYNE, DIVISION OF WILLIAM WAHL CORPORATION:

WE REFER TO YOUR LETTERS OF OCTOBER 2, 1970, AND NOVEMBER 17 AND 30, 1970, REGARDING YOUR PROTEST AGAINST AWARD TO ANOTHER FIRM UNDER REQUEST FOR PROPOSALS NO. DAAA09-71-R-0037 ISSUED BY THE U.S. ARMY AMMUNITION PROCUREMENT AND SUPPLY AGENCY, JOLIET, ILLINOIS.

THE SOLICITATION WAS ISSUED ON JULY 27, 1970. ITEM 1 REQUESTED PROPOSALS FOR 13,757 INTERVALOMETERS, F/LAU-3/A, FSN 1340-760-42260, TO MEET REQUIREMENTS OF SPECIFICATION OONEC-PD-1340-1, AND ITEM 3 CALLED FOR PROPOSALS FOR 1000 INTERVALOMETERS, F/LAU-68A/A. THE NEGOTIATION WAS UNDERTAKEN PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304(A)(2), AS IMPLEMENTED BY ASPR 3-202.2(VI), AFTER A DETERMINATION AND FINDING BY THE CONTRACTING OFFICER THAT THE PRIORITY DESIGNATION ASSIGNED TO THIS PROCUREMENT ESTABLISHED A PUBLIC EXIGENCY WHICH WOULD NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. FIVE FIRMS WERE SOLICITED AND THREE PROPOSALS WERE RECEIVED AS A RESULT OF THE SOLICITATION. THE LOW PROPOSAL WAS FOR A UNIT PRICE OF $21.43 FOR ITEM 1, BUT A PREAWARD SURVEY DETERMINED THE OFFEROR COULD NOT MEET THE DELIVERY TIME OF 15 DAYS FOR SUBMISSION OF FIRST ARTICLE SAMPLES AND IT WAS ELIMINATED FROM FURTHER CONSIDERATION. THE REMAINING TWO PROPOSALS FOR ITEM 1 WERE AS FOLLOWS:

INTERVALOMETER F/LAU-3/A

QUANTITY UNIT PRICE TOTAL PRICE

PYRODYNE 13,757 $30.82 EACH $423,990.74

LEDEX 13,757 $26.79 EACH$368,550.03

DIFFERENCE $55,440.71 PREAWARD SURVEYS OF LEDEX AND PYRODYNE SHOWED THAT BOTH COULD MEET THE DELIVERY REQUIREMENT AND THAT BOTH WERE RESPONSIBLE PROSPECTIVE CONTRACTORS. AWARD WAS MADE TO LEDEX FOR ITEM 1 ON SEPTEMBER 17, 1970. YOU WERE ADVISED OF THIS ACTION BY LETTER OF SAME DATE AND THE LETTER ALSO STATED THAT ITEM 3 WAS CANCELLED AND WOULD BE RESOLICITED IN THE NEAR FUTURE.

YOUR LETTER OF PROTEST OF OCTOBER 2, 1970, CONTAINED FOUR BASES FOR YOUR PROTEST AGAINST AWARD TO LEDEX, SUMMARIZED AS FOLLOWS:

1. YOU STATED THAT PYRODYNE DEVELOPED AND QUALIFIED AN INTERVALOMETER TO MEET THE REQUIREMENTS OF OONEC-PD-1340-1 WHILE LEDEX HAD NOT QUALIFIED A UNIT TO THESE REQUIREMENTS.

2. YOU ALLEGED THAT THE REQUIREMENT FOR SUBMISSION OF FIRST ARTICLE SAMPLES WITHIN 15 DAYS AFTER AWARD IS IMPRACTICAL UNLESS THE FIRM IS IN PRODUCTION OF THE ITEM. YOU STATED THAT PYRODYNE WAS IN PRODUCTION OF THE ITEM WHILE LEDEX WAS NOT.

3. YOU SUBMITTED THAT 15 DAYS WAS INSUFFICIENT TIME FOR TESTING THE FIRST ARTICLES AND SUGGESTED THAT FOUR WEEKS SHOULD BE CONSIDERED THE MINIMUM TIME FOR THE TESTS. YOU EXPRESSED YOUR BELIEF THAT THIS WOULD LEAD TO EXTENSION OF TIME FOR TESTING AND WAS UNFAIR TO PYRODYNE WHICH HAD TESTS CONDUCTED BY THE SPECIFIED LABORATORY AT ITS OWN EXPENSE PRIOR TO THE SOLICITATION.

4. YOU SUBMITTED THAT IT WOULD BE IMPOSSIBLE FOR LEDEX TO MEET THE DELIVERY SCHEDULE BUT THAT PYRODYNE COULD DO SO SINCE IT WAS ALREADY IN PRODUCTION OF THE ITEM.

YOU FURTHER SUBMITTED THAT THE GOVERNMENT HAD AN OBLIGATION TO YOU, AS A SMALL BUSINESS CONCERN WHICH HAS INVESTED IN THE DEVELOPMENT OF AN ADVANCED PRODUCT FOR THE BENEFIT OF THE GOVERNMENT, TO SET-ASIDE A PORTION OF THIS PROCUREMENT FOR YOU UNDER ANY CIRCUMSTANCE. YOU ALSO SUGGESTED THAT, TO BE FAIR, HALF OF THE PROCUREMENT SHOULD HAVE BEEN SET-ASIDE FOR SMALL BUSINESS CONCERNS.

WITH REGARD TO YOUR ASSERTION THAT YOU WERE IN PRODUCTION OF THE F/LAU- 3/A INTERVALOMETERS WHILE LEDEX WAS NOT, THE ADMINISTRATIVE REPORT DISCLOSES THAT BOTH YOUR FIRM AND LEDEX WERE PRODUCING THE ITEM TO MEET THE SPECIFICATIONS OF A FORMER, LESS STRINGENT SPECIFICATION, 68 WRNEBL- 1055-1, WHILE THE PRESENT SOLICITATION REQUIRES THE ITEM TO MEET NEWER, MORE STRINGENT STANDARDS DESIGNATED AS OONEC-PD-1340-1. THIS PROCUREMENT IS THE FIRST BUY OF THE F/LAU-3/A INTERVALOMETER USING THE NEW SPECIFICATION, AND THEREFORE NO MANUFACTURER WAS EXEMPT FROM SUBMITTING FIRST ARTICLE SAMPLES. IN VIEW THEREOF THE FACT THAT YOU HAD PAID FOR INDEPENDENT TESTING OF YOUR INTERVALOMETER PRIOR TO THIS PROCUREMENT HAD NO BEARING ON THIS REQUIREMENT.

THE ADMINISTRATIVE REPORT FURTHER SHOWS THAT LEDEX SUBMITTED ITS FIRST ARTICLE SAMPLE IN TIMELY FASHION TO THE DESIGNATED TESTING LABORATORY. THE TWENTY UNITS WERE FROM ITS PRODUCTION LOT AND WERE NOT PROTOTYPE UNITS. TESTS WERE CONDUCTED, WITHIN FIFTEEN DAYS OF RECEIPT OF THE SAMPLE, WHICH SHOWED CERTAIN FAILURES AND THE SAMPLE WAS DISAPPROVED. SUBMISSION OF AN ADDITIONAL TWENTY UNITS WAS REQUIRED AND FINAL FIRST ARTICLE APPROVAL WAS GIVEN ON NOVEMBER 13, 1970. THE REPORT AGREED WITH YOUR ASSERTION THAT FOUR WEEKS MAY BE THE TIME REQUIRED FOR TESTING UNDER ROUTINE CONDITIONS, BUT THIS CASE WAS NOT ROUTINE AND THE TESTS WERE CONDUCTED WITHIN THE SPECIFIED FIFTEEN DAY PERIOD.

WITH REGARD TO YOUR SUGGESTION CONCERNING A SMALL BUSINESS SET-ASIDE, IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THE SMALL QUANTITY AND SHORT DELIVERY SCHEDULE MADE IT IMPOSSIBLE TO SEVER THE REQUIREMENT INTO TWO OR MORE ECONOMIC PRODUCTION RUNS, AND IT WAS THEREFORE NOT FEASIBLE TO SET A PORTION OF THIS PROCUREMENT ASIDE FOR SMALL BUSINESS CONCERNS.

THE BASES FOR YOUR PROTEST, WHICH YOU NUMBERED 1, 2, 3 AND 4, ARE ALL PREDICATED ON YOUR ASSERTION THAT YOUR FIRM WAS IN PRODUCTION OF THE EXACT ITEM REQUIRED, WHILE LEDEX WAS NOT. THE RECORD DOES NOT SUPPORT YOUR ASSERTION, SINCE IT SHOWS THAT BOTH PYRODYNE AND LEDEX WERE IN PRODUCTION OF F/LAU-3/A INTERVALOMETERS TO MEET THE REQUIREMENTS OF THE OLD SPECIFICATION, WHEREAS THE CURRENT PROCUREMENT WAS THE FIRST TO USE THE NEW SPECIFICATION. SINCE BOTH FIRMS LACKED PRIOR PRODUCTION EXPERIENCE UNDER THE NEW SPECIFICATION, IT DOES NOT APPEAR THAT YOUR FIRM WAS IN ANY BETTER POSITION TO MEET THE PRODUCTION REQUIREMENTS OF THIS PROCUREMENT, EVEN THOUGH YOU MAY HAVE HAD A PROTOTYPE UNIT OR UNITS TESTED AT YOUR OWN EXPENSE TO MEET THE NEW SPECIFICATION. YOUR CONTENTION NUMBER 3, THAT 15 DAYS WAS INSUFFICIENT FOR TESTING THE FIRST ARTICLE SAMPLE, IS ALSO NEGATED BY THE FACTS OF RECORD WHICH SHOW THAT THE TESTING WAS ACCOMPLISHED WITHIN THE SPECIFIED PERIOD.

WE HAVE REVIEWED THE RESULTS OF THE PREAWARD SURVEY CONDUCTED AT LEDEX WAS A RESPONSIBLE CONTRACTOR. SUCH A DETERMINATION IS THE DUTY OF THE CONTRACTING OFFICER UNDER PROVISION OF ASPR 1-900, ET. SEQ., AND OUR OFFICE HAS HELD THAT IT WILL OFFER NO LEGAL OBJECTION TO A DETERMINATION OF RESPONSIBILITY IN THE ABSENCE OF BAD FAITH OR UNLESS THERE IS NO REASONABLE BASIS FOR THE DETERMINATION. 38 COMP. GEN. 131 (1958); 45 ID. 4 (1965). WE DO NOT REGARD THE SUBSEQUENT FACT THAT THE ORIGINAL FIRST ARTICLE SAMPLE WAS UNACCEPTABLE AS HAVING ANY BEARING ON THE GOOD FAITH OF THE CONTRACTING OFFICER IN MAKING HIS DETERMINATION. SUCH FAILURES ARE NOT UNUSUAL IN THE FIRST PRODUCTION RUN UNDER A NEW SPECIFICATION AND ARE, IN FACT, THE REASON FOR INCLUDING THE FIRST ARTICLE SAMPLE REQUIREMENT IN CONTRACTS OF THIS NATURE.

THE ONLY REMAINING PERTINENT EVALUATION FACTOR IN THIS PROCUREMENT WAS PRICE. THE DECISION OF THE CONTRACTING OFFICER TO MAKE AWARD TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER FOR ITEM 1, AT A PRICE $55,440.71 BELOW THE PRICE IN YOUR PROPOSAL, AFFORDS NO BASIS FOR ANY LEGAL OBJECTION TO THE AWARD.

THE CANCELLATION ON SEPTEMBER 17, 1970, OF THE REQUIREMENT FOR THE F/LAU- 68A/A INTERVALOMETERS CALLED FOR IN ITEM 3 AND THE SUBSEQUENT RESOLICITATION FOR THE ITEM ON SEPTEMBER 25, 1970, DOES NOT APPEAR TO HAVE PREJUDICED YOUR FIRM IN ANY MANNER SINCE YOU WERE ABLE TO SUBMIT A PROPOSAL UNDER THE RESOLICITATION. ALTHOUGH THERE WAS OBVIOUSLY SOME CONFUSION OF THE TWO TYPES OF INTERVALOMETERS IN THE LETTER OF NOVEMBER 10, 1970, FROM THE CONTRACTING OFFICER TO YOUR FIRM, AS YOU POINTED OUT IN YOUR LETTER OF NOVEMBER 17, 1970, TO OUR OFFICE, THERE WAS NO SUCH CONFUSION IN THE FORMAL PROCUREMENT DOCUMENTS OR IN THE ADMINISTRATIVE REPORT.

WITH REGARD TO YOUR CONTENTION THAT THE GOVERNMENT HAD AN OBLIGATION TO SET HALF OF THE PROCUREMENT ASIDE FOR SMALL BUSINESS CONCERNS, WE HAVE HAD OCCASION TO CONSIDER, IN OUR DECISION B-164555, SEPTEMBER 10, 1968, A SIMILAR CONTENTION FROM A SMALL BUSINESS WHICH DEVELOPED AT ITS OWN EXPENSE CERTAIN REFINEMENTS OF AN ITEM WHICH WERE ADOPTED FOR USE BY THE GOVERNMENT. IN THAT CASE WE STATED:

"OUR OFFICE HAS CONSISTENTLY RECOGNIZED THE ESTABLISHED POLICY THAT A FAIR PROPORTION OF PURCHASES OF SUPPLIES AND SERVICES BE PLACED WITH SMALL BUSINESS CONCERNS, WHICH IS IN KEEPING WITH THE NATIONAL POLICY AND THE SMALL BUSINESS ACT (15 U.S.C. 631 ET SEQ.) AS IMPLEMENTED BY FPR 1-1.706. THE DECISION, HOWEVER, AS TO WHETHER A CERTAIN PROCUREMENT SHOULD BE SET ASIDE IN WHOLE OR IN PART FOR SMALL BUSINESS CONCERNS IS WITHIN THE PROVINCE OF THE ADMINISTRATIVE AGENCY. NEITHER THE PROVISIONS CONTAINED IN THE FPR NOR THE PROVISIONS OF THE SMALL BUSINESS ACT MAKE IT MANDATORY THAT THERE BE SET ASIDE FOR SMALL BUSINESS ANY PARTICULAR PROCUREMENT. COMP. GEN. 657, 45 ID. 228, 41 ID. 351."

IN THE PRESENT CASE, THE IMPLEMENTING REGULATION IS FOUND IN ASPR 1 706.6, BUT THE SAME REASONING APPLIES. THE CONTRACTING OFFICER EXERCISED HIS DISCRETION IN DETERMINING THAT THE QUANTITY REQUIRED HERE WAS NOT SEVERABLE INTO TWO OR MORE ECONOMIC PRODUCTION RUNS, AND WE FIND NO BASIS FOR DISAGREEING WITH HIS DETERMINATION.

ACCORDINGLY, FOR THE REASONS STATED, YOUR PROTEST MUST BE DENIED.