B-170989, B-170990, NOV 17, 1971

B-170989,B-170990: Nov 17, 1971

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BIDS BASED ON WAIVER OF FIRST ARTICLE TESTING WERE NOT INVITED. THEY WERE CONSIDERED. WAIVER OF SUCH TESTING WAS AUTHORIZED ONLY FOR TRANE. KECO CONTENDS THAT REFUSAL TO WAIVE FIRST ARTICLE TESTING FOR ITS PRODUCT WAS AN ERROR. THE RECORD INDICATES THAT PROCURING AGENCY HAD REASON TO BELIEVE THAT COILS USED IN KECO'S PRODUCT FOR THIS PROCUREMENT WERE NOT THE SAME AS THOSE USED IN PREVIOUS PROCUREMENTS. SINCE THE COILS ARE SO IMPORTANT TO THE EFFICIENCY OF THE AIR CONDITIONING UNIT. IT CANNOT BE SAID THAT THE AIR FORCE WAS ARBITRARY. PROTESTS WERE MADE AGAINST AWARDS OF CONTRACTS TO TRANE COMPANY UNDER TWO SOLICITATIONS ISSUED ON JUNE 16. IF OUR DECISION IS UNFAVORABLE. THESE FINDINGS DO NOT CONSTITUTE A RESOLUTION OF KECO'S PROTEST SINCE THE COURT'S DECISION ON THE MOTION FOR A PRELIMINARY INJUNCTION IS NOT A DECISION ON THE MERITS OF THE CASE.

B-170989, B-170990, NOV 17, 1971

BID PROTEST - REFUSAL OF PROCURING AGENCY TO WAIVE FIRST ARTICLE TESTING DECISION DENYING PROTEST OF KECO INDUSTRIES, INC. AGAINST AWARD OF TWO CONTRACTS TO TRANE COMPANY UNDER RFPS ISSUED BY DEFENSE GENERAL SUPPLY CENTER, DEFENSE SUPPLY AGENCY, RICHMOND, VIRGINIA. CONTRACTS INVOLVED PROCUREMENT OF AIR CONDITIONING UNITS FOR THE MARINE CORPS AND AIR FORCE. BIDS BASED ON WAIVER OF FIRST ARTICLE TESTING WERE NOT INVITED, BUT AS BOTH TRANE AND KECO MADE SUCH BIDS IN ADDITION TO BIDS WITH FIRST ARTICLE TESTING, THEY WERE CONSIDERED. HOWEVER, WAIVER OF SUCH TESTING WAS AUTHORIZED ONLY FOR TRANE. KECO CONTENDS THAT REFUSAL TO WAIVE FIRST ARTICLE TESTING FOR ITS PRODUCT WAS AN ERROR. THE RECORD INDICATES THAT PROCURING AGENCY HAD REASON TO BELIEVE THAT COILS USED IN KECO'S PRODUCT FOR THIS PROCUREMENT WERE NOT THE SAME AS THOSE USED IN PREVIOUS PROCUREMENTS. SINCE THE COILS ARE SO IMPORTANT TO THE EFFICIENCY OF THE AIR CONDITIONING UNIT, IT CANNOT BE SAID THAT THE AIR FORCE WAS ARBITRARY, CAPRICIOUS OR IN BAD FAITH IN REFUSING TO WAIVE FIRST ARTICLE TESTING.

TO KECO INDUSTRIES, INCORPORATED:

BY LETTERS DATED OCTOBER 9, 1970, PROTESTS WERE MADE AGAINST AWARDS OF CONTRACTS TO TRANE COMPANY UNDER TWO SOLICITATIONS ISSUED ON JUNE 16, 1970, BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), DEFENSE SUPPLY AGENCY, RICHMOND, VIRGINIA.

ON OCTOBER 7, 1970, CONCURRENTLY WITH THE FILING OF THE PROTESTS HERE, COUNSEL FOR KECO HAD FILED A COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL ACTION NO. 2979-70, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, KECO INDUSTRIES, INC. V MELVIN R. LAIRD, SECRETARY OF DEFENSE, ET AL., TO ENJOIN DEFENDANTS FROM ACCEPTING ANY DELIVERIES OR MAKING ANY PAYMENTS AND TO DIRECT TRANE TO STOP ALL WORK UNDER THE CONTRACTS UNTIL SUCH TIME AS OUR OFFICE DECIDES THE PROTEST; AND IF OUR DECISION IS UNFAVORABLE, THE COMPLAINT REQUESTS THE COURT'S DECISION ON THE MERITS.

THE COURT HAS DENIED KECO'S MOTION FOR PRELIMINARY INJUNCTIVE RELIEF. KECO V UNITED STATES, 318 F. SUPP. 1361 (1970). IN CONNECTION WITH ITS CONSIDERATION OF KECO'S MOTION FOR A PRELIMINARY INJUNCTION THE COURT MADE CERTAIN FINDINGS. THESE FINDINGS DO NOT CONSTITUTE A RESOLUTION OF KECO'S PROTEST SINCE THE COURT'S DECISION ON THE MOTION FOR A PRELIMINARY INJUNCTION IS NOT A DECISION ON THE MERITS OF THE CASE. BENSON HOTEL CORP. V WOODS, 168 F. 2D 694 (8TH CIR. 1948) AND SOONER STATE DAIRIES, INC. V TOWNLEY'S DAIRY CO., 406 F. 2D 1328 (10 CIR. 1969). SEE ALSO MOORE'S FEDERAL PRACTICE, VOL. 1B, P 573 AND VOL. 7, PP 1640-1641 AND P 1703. THE COURT ITSELF RECOGNIZED IN THE KECO CASE, SUPRA, THAT THE MATTERS DISCUSSED IN ITS DECISION WERE PRESENTED AT AN EXPEDITED HEARING ON THE MOTION FOR A PRELIMINARY INJUNCTION AND, THEREFORE, THAT A DECLARATION OF THE RIGHTS OF THE PARTIES WOULD BE PREMATURE. THE PRESENT CASE IS STILL PENDING BEFORE THE DISTRICT COURT; HOWEVER, IN EFFECT IT IS BEING HELD IN ABEYANCE SINCE NEITHER PARTY HAS TAKEN ANY ACTION TO BRING THE CASE TO A HEARING ON THE MERITS. KECO'S COUNSEL AND THE DEPARTMENT OF JUSTICE HAVE APPARENTLY BEEN UNABLE TO REACH AN AGREEMENT WITH RESPECT TO KECO'S REQUEST THAT THE COURT SUIT BE DISMISSED WITHOUT PREJUDICE. VIEW OF THE STATUS OF KECO'S COURT ACTION WE THINK IT IS APPROPRIATE FOR OUR OFFICE TO CONSIDER THE MERITS OF KECO'S PROTEST AS REQUESTED BY COUNSEL.

REQUEST FOR PROPOSALS NO. DSA-400-70-R-7921 (HEREAFTER 7921) CALLED FOR DELIVERY OF EIGHT AIR CONDITIONERS UNDER ITEMS 1 AND 2; ASSOCIATED ADAPTER KITS UNDER ITEMS 3-6; AND DATA UNDER ITEMS 7-13 TO FULFILL A MARINE CORPS REQUIREMENT. THE SOLICITATION WAS NEGOTIATED PURSUANT TO THE PUBLIC EXIGENCY EXCEPTION TO THE ADVERTISING REQUIREMENTS. THE AIR CONDITIONERS WERE DESCRIBED AS 36,000 BTU TO BE MANUFACTURED IN ACCORDANCE WITH MILITARY SPECIFICATIONS MIL-A-38345DUSAF) DATED FEBRUARY 26, 1970, AND SPECIFIED EXCEPTIONS CONTAINED IN THE RFP. THE SPECIFICATION DESIGNATED THE AIR CONDITIONER AS A/E 32C-24. OFFERORS WERE ADVISED THAT AWARD WOULD BE MADE ON THE BASIS OF THE LOWEST AGGREGATE COST TO THE GOVERNMENT.

THE RFP INFORMED OFFERORS THAT FIRST ARTICLE APPROVAL WAS REQUIRED FOR ITEMS 1 THROUGH 6 IN ACCORDANCE WITH THE PROVISIONS ON PAGE 74 OF THE RFP. IN ADDITION IT WAS SPECIFIED ON PAGE 59 OF THE RFP THAT FIRST ARTICLE TESTING FOR ITEMS 3 THROUGH 6 (ADAPTER KITS) WOULD BE CONDUCTED AT THE MARINE CORPS BASE, TWENTY-NINE PALMS, CALIFORNIA, IN FACILITIES TO BE MADE AVAILABLE BY THE MARINE CORPS.

FOUR TIMELY OFFERS WERE RECEIVED BY THE SPECIFIED CLOSING OF THE SOLICITATION ON AUGUST 3, 1970. THE PROPOSALS WERE EVALUATED AND IT WAS DETERMINED THAT ONLY THE PROPOSALS FROM TRANE COMPANY (TRANE) AND KECO INDUSTRIES (KECO) WERE WITHIN THE COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. THEREAFTER NEGOTIATIONS WERE CONDUCTED WITH TRANE AND KECO AND EACH WAS ADVISED THAT THE DEADLINE FOR SUBMITTING REVISED PRICES WAS 2:30 P.M., AUGUST 7, 1970. THE FIRM OFFERS SUBMITTED BY THE CLOSE OF NEGOTIATIONS ON AUGUST 7, 1970, WERE AS FOLLOWS:

TRANE KECO

WITH FIRST ARTICLE TESTING

REQUIRED ON AIR CONDITIONERS $65,163 $69,600

WITHOUT FIRST ARTICLE TESTING

REQUIRED ON AIR CONDITIONERS $61,163 $57,600

IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT A TELEGRAPHIC MODIFICATION FROM KECO REDUCING ITS TOTAL PRICE BY $5,250 WHICH WAS RECEIVED AFTER THE CLOSE OF NEGOTIATIONS COULD NOT BE CONSIDERED. TIMELINESS OF THE MODIFICATION IS NOT MATERIAL TO THE PRICE EVALUATION, SINCE EVEN IF KECO'S PRICE WAS REDUCED BY THE AMOUNT OF THE MODIFICATION, ITS PRICE WOULD BE LOW ONLY IF KECO WERE GRANTED OR TRANE WERE REFUSED A WAIVER OF FIRST ARTICLE TESTING.

THE RFP DID NOT CONTAIN A CLAUSE RESERVING TO THE GOVERNMENT THE RIGHT TO WAIVE FIRST ARTICLE TESTING. THE COVER LETTER TO KECO'S PROPOSAL INDICATED THAT KECO'S AIR CONDITIONERS HAD QUALIFIED FOR WAIVER OF FIRST ARTICLE TESTING UNDER CONTRACT NO. "F41608-68-C-7472" AND THE COVER LETTER TO TRANE'S PROPOSAL INDICATED ITS ARTICLES WERE QUALIFIED FOR WAIVER OF FIRST ARTICLE TESTING UNDER CONTRACT NO. "AF41608-68-C-7471." SINCE BOTH TRANE AND KECO HAD SUBMITTED ALTERNATIVE OFFERS BASED ON WAIVER OF FIRST ARTICLE TESTING, IT WAS DECIDED THAT SUCH ALTERNATIVE OFFERS SHOULD BE CONSIDERED.

FOLLOWING THE CLOSE OF NEGOTIATIONS, THE MARINE CORPS WAS ASKED BY LETTER OF AUGUST 21, 1970, FROM THE CONTRACTING OFFICER WHETHER FIRST ARTICLE TESTING OF AIR CONDITIONERS COULD BE WAIVED FOR TRANE AND KECO. BASED ON INFORMATION FURNISHED BY KELLY AIR FORCE BASE, THE MARINE CORPS INFORMED THE CONTRACTING OFFICER THAT FIRST ARTICLE TESTING FOR ITEM NOS. 1 AND 2 COULD BE WAIVED FOR TRANE BUT NOT FOR KECO AND THAT NO WAIVERS WERE AUTHORIZED FOR ITEM NOS. 7 THROUGH 13. PURSUANT TO A FAVORABLE RECOMMENDATION IN THE PRE-AWARD SURVEY, AWARD WAS MADE TO TRANE AS THE LOW OFFEROR ON SEPTEMBER 28, 1970.

KECO'S FIRST CONTENTION IS THAT THE DECISION NOT TO WAIVE FIRST ARTICLE TESTING FOR KECO WAS ARBITRARY, CAPRICIOUS AND NOT IN GOOD FAITH. OUR DECISION, B-162438, FEBRUARY 15, 1968, HAS BEEN CITED BY KECO'S COUNSEL IN SUPPORT OF THIS POSITION. KECO CONTENDS IT IS ENTITLED TO WAIVER OF FIRST ARTICLE TESTING ON THE BASIS OF THE INFORMATION AIR FORCE HAD AVAILABLE ON THE UNITS PREVIOUSLY FURNISHED UNDER THE CONTRACT CITED IN KECO'S COVER LETTER AND THE UNITS FURNISHED UNDER ITS SUBCONTRACT WITH GOODYEAR.

IN KELLY'S VIEW, KECO'S A/E 32C-24 AND 25 AIR CONDITIONERS, WHICH HAD BEEN TESTED AND FOUND ACCEPTABLE UNDER THE CONTRACT IDENTIFIED IN KECO'S PROPOSAL, DID NOT JUSTIFY A WAIVER SINCE AIR FORCE DETERMINED THAT KECO WOULD FIND IT NECESSARY TO USE DIFFERENT EVAPORATION AND CONDENSER COILS THAN HAD BEEN USED IN THE AIR CONDITIONERS WHICH HAD PREVIOUSLY BEEN SATISFACTORILY TESTED. THIS VIEW WAS BASED ON INFORMATION THAT MODINE MANUFACTURING COMPANY HAD DISCONTINUED MANUFACTURE OF THE "BRAZED ALUMINUM" COILS WHICH KECO HAD INCLUDED IN ITS UNITS PREVIOUSLY FURNISHED AND TESTED. IT WAS SURMISED THAT KECO WOULD HAVE TO USE THE COILS OF ANOTHER MANUFACTURER (BOHN) WHICH PRODUCED "FIN AND TUBE" TYPE COILS. KELLY CONCLUDED THAT KECO'S UNITS HAD NOT BEEN FULLY TESTED USING THESE COILS. THE AIR FORCE ADVISES THAT THE HEAT EXCHANGER IS ONE OF THE THREE MOST IMPORTANT PARTS OF THE AIR CONDITIONER SINCE THE CAPACITY OF THE AIR CONDITIONER IS DIRECTLY RELATED TO THE CAPACITY AND EFFICIENCY OF THE HEAT EXCHANGER. IN THE REPORTS TO OUR OFFICE THE TERMS "HEAT EXCHANGER" AND "EVAPORATOR AND CONDENSER COILS" HAVE BEEN USED INTERCHANGEABLY. CHANGES IN THE SIZE, STYLE OR TYPE OF HEAT EXCHANGER MAY AFFECT THE EFFICIENCY OF THE ENTIRE UNIT. THE AIR FORCE THEREFORE CONCLUDED THAT TESTING WOULD BE REQUIRED IN ORDER TO DETERMINE THE EFFICIENCY OF THE KECO AIR CONDITIONER USING THE BOHN "FIN AND TUBE" TYPE HEAT EXCHANGER.

THAT THE EVAPORATOR AND CONDENSER COILS HAVE A MATERIAL EFFECT ON THE OVERALL PERFORMANCE OF THE AIR CONDITIONING UNIT AS A SYSTEM SEEMS TO BE UNQUESTIONED. THERFORE, IT WAS REASONABLE FOR AIR FORCE TO CONCLUDE THAT TESTING OF KECO'S UNITS WAS NECESSARY TO ASCERTAIN WHETHER THE UNITS USING THE DIFFERENT COILS WOULD PERFORM IN AN ACCEPTABLE MANNER.

THERE IS NOTHING IN THE SPECIFICATIONS REQUIRING EITHER "MODINE" OR "BOHN" COILS; THEREFORE, KECO COULD HAVE USED EITHER. WHILE THERE WAS EVIDENCE THAT "MODINE" NO LONGER PRODUCED THE COILS WHICH KECO HAD USED IN ITS PREVIOUSLY TESTED UNITS, THE POSSIBILITY ALSO EXISTED THAT KECO HAD AN ADEQUATE NUMBER OF MODINE COILS ON HAND OR ON ORDER TO COVER THE INSTANT PROCUREMENT. WE THINK INFORMATION ON THIS POINT SHOULD HAVE BEEN SOUGHT FROM THE PARTIES DIRECTLY CONCERNED. HOWEVER, IN THE ABSENCE OF A SHOWING THAT KECO HAD AN ADEQUATE SUPPLY OF MODINE COILS FOR USE IN THIS PROCUREMENT WE CANNOT SAY THAT KECO WAS IN FACT PREJUDICED BY AIR FORCE'S FAILURE TO CONFIRM KECO'S USE OF BOHN COILS.

AIR FORCE CONCEDES THAT KECO FURNISHED UNITS USING BOHN "FIN AND TUBE" TYPE COILS UNDER A SUBCONTRACT WITH GOODYEAR AND THAT THESE UNITS WERE ACCEPTED AND APPROVED BY THE AIR FORCE. HOWEVER, AIR FORCE ADVISES THAT THIS ACCEPTANCE WAS LIMITED TO THE PARTICULAR WEAPONS SYSTEM ON WHICH THE UNITS WERE TO BE USED AND THAT THIS WAS NOT TO BE CONSIDERED AS TECHNICAL QUALIFICATION FOR THE SPECIFICATIONS APPLICABLE TO THE INSTANT PROCUREMENT IN THE ABSENCE OF FURTHER VALIDATION TESTING. IN THIS REGARD, AIR FORCE ADVISES THAT KECO WAS WELL AWARE AT THE TIME OF THIS PROCUREMENT THAT ADDITIONAL TESTING WAS REQUIRED WITH RESPECT TO THE UNITS FURNISHED UNDER THE GOODYEAR SUBCONTRACT SINCE WRIGHT-PATTERSON HAD ADVISED KECO TO WORK WITH SAAMA TO QUALIFY ITS UNITS FOR THE INSTANT SPECIFICATIONS. KECO'S UNITS USING THE BOHN COILS WERE TESTED IN LATE NOVEMBER AND EARLY DECEMBER 1970 AND THEREAFTER APPROVAL WAS GRANTED TO KECO.

WHETHER OR NOT TO GRANT FIRST ARTICLE TESTING IS PRIMARILY AN ADMINISTRATIVE DETERMINATION WHICH WILL NOT BE QUESTIONED UNLESS SHOWN TO BE ARBITRARY, CAPRICIOUS, OR NOT IN GOOD FAITH. SEE 46 COMP. GEN. 123, 127 (1966) AND B-162438, FEBRUARY 15, 1968. PURSUANT TO OUR REVIEW WE DO NOT FIND THAT THE REFUSAL TO WAIVE FIRST ARTICLE TESTING WAS ARBITRARY, CAPRICIOUS, OR NOT IN GOOD FAITH.

IN B-162438, FEBRUARY 15, 1968, CITED BY KECO'S COUNSEL, ITEMS HAD BEEN FURNISHED AND ACCEPTED BY THE GOVERNMENT UNDER A CONTRACT WHICH REQUIRED TESTING OF THE ITEMS; HOWEVER, THE TESTING REQUIREMENT HAD BEEN WAIVED FOR THE BENEFIT OF THE GOVERNMENT BECAUSE OF URGENCY. SUBSEQUENTLY, ON A SOLICITATION FOR SUBSTANTIALLY SIMILAR ITEMS, THE PRIOR CONTRACTOR SUBMITTED AN ALTERNATE BID BASED ON WAIVER OF FIRST ARTICLE TESTING. ALTHOUGH THAT ALTERNATE BID WAS LOW, THE PROCURING ACTIVITY REFUSED TO WAIVE FIRST ARTICLE TESTING IN THE MISTAKEN BELIEF THAT THE ITEMS UNDER THE CURRENT SOLICITATION WERE DIFFERENT FROM THOSE FURNISHED UNDER THE EARLIER CONTRACT. WHEN THIS ERROR WAS POINTED OUT THE AGENCY SOUGHT TO JUSTIFY ITS ACTION ON THE BASIS THAT THE ITEMS FURNISHED UNDER THE PRIOR CONTRACT HAD NOT BEEN TESTED BECAUSE OF URGENCY. WE DECLINED TO TAKE ACTION AGAINST THE AWARD TO ANOTHER BIDDER WHICH HAD ALREADY BEEN MADE BECAUSE OF A SUBSTANTIAL QUESTION CONCERNING THE PRIOR PRODUCER'S RESPONSIBILITY. BY WAY OF DICTA, HOWEVER, WE NOTED THAT THE PRIOR CONTRACTOR HAD MADE OUT A PRIMA FACIE CASE FOR FIRST ARTICLE WAIVER WHERE THERE WOULD HAVE BEEN A FIRST ARTICLE TEST UNDER THE PRIOR CONTRACT BUT FOR WAIVER OF THE REQUIREMENT BY THE CONTRACTING OFFICER FOR THE GOVERNMENT'S OWN PURPOSES. WE THINK IT IS ALSO APPROPRIATE TO NOTE THAT THE CITED DECISION WAS CONCERNED WITH SHIPBOARD MESS TABLES WHICH ARE RELATIVELY SIMPLE ITEMS COMPARED TO THE AIR CONDITIONING UNITS INVOLVED IN THE PROCUREMENTS AT ISSUE. FOR THE FOREGOING REASONS, WE DO NOT BELIEVE THAT THE CITED DECISION IS CONTROLLING IN THIS CASE.

KECO ALSO CONTENDS THAT IF KECO HAD BEEN AFFORDED THE SAME STANDARD FOR QUALIFYING FOR WAIVER OF FIRST ARTICLE TESTING AS TRANE - "SIMILARITY TO A DIFFERENT UNIT" - KECO ALSO WOULD HAVE QUALIFIED FOR WAIVER OF FIRST ARTICLE TESTING.

A LETTER DATED APRIL 8, 1971, FROM KELLY TO DGSC GIVES A DETAILED RESPONSE TO THE ABOVE CONTENTION AS FOLLOWS:

"3. THESE AIR CONDITIONERS ARE PACKAGED AS A COMPLETE UNIT, WHICH INCLUDES HERMETIC, COMPRESSOR, EVAPORATOR, CONDENSER, ELECTRIC STRIP HEATERS AND A FULL SET OF CONTROLS. THE UNIT IS COMPLETELY SELF CONTAINED AND PROVIDES COOLING, HEATING, VENTILATION, FILTERING AND DEHUMIDIFICATION FROM A SINGLE COMPACT CABINET. THE STANDARD FAMILY OF AIR CONDITIONERS CONSISTS OF THE A/E32C-17, -18, -23, -24, -25, -26, 27, AND -30.

"4. THE AIR CONDITIONERS HAVE BEEN DESIGNED FOR MAXIMUM INTERCHANGEABILITY OF COMPONENTS AND THE STANDARDIZATION OF COMPONENT PARTS. EXCEPT FOR THE 60 AND 400-CYCLE COMPRESSOR AND FAN MOTORS, THE AIR CONDITIONERS ARE IDENTICAL AND USE BASICALLY THE SAME COMPONENTS. COMPONENT PARTS CAN BE INTERCHANGEABLE BETWEEN UNITS OF THE SAME SIZE AND ALSO BETWEEN UNITS OF DIFFERENT SIZE.

"5. THE A/E32C-24 AIR CONDITIONER HAS A NOMINAL COOLING CAPACITY OF 40,000 BTU/HOUR AND ELECTRICAL INPUT POWER CHARACTERISTICS OF 208 VOLTS/3- PHASE/60-CYCLE, WHEREAS THE A/E32C-25 AIR CONDITIONER HAS A NOMINAL COOLING CAPACITY OF 40,000 BTU/HOUR AND ELECTRICAL INPUT POWER CHARACTERISTICS OF 208 VOLTS/3-PHASE/400-CYCLE. "6. THE AIR FORCE PROCURED 168 A/E32C-25 AIR CONDITIONERS WITH BRAZED ALUMINUM HEAT EXCHANGERS UNDER PRODUCTION CONTRACT F41608-35638, 30 JUN 1965. UNDER THIS CONTRACT, THE TRANE COMPANY PERFORMED ALL, REPEAT ALL, PREPRODUCTION TESTS AS SPECIFIED IN THE GOVERNING SPECIFICATIONS OF THE A/E32C-25 AIR CONDITIONER. THE PREPRODUCTION AIR CONDITIONER WITH THE BRAZED ALUMINUM HEAT EXCHANGERS AND TEST REPORT WERE APPROVED BY ASD/ASNMS-10. THE HEAT EXCHANGERS, AS REFERENCED IN THIS TEXT, ARE THE EVAPORATOR AND CONDENSER COILS. "7. LATER, THE AIR FORCE PROCURED 28 A/E32C-25 AIR CONDITIONERS WITH FIN AND TUBE HEAT EXCHANGERS UNDER PRODUCTION CONTRACT F41608-68-C- 7471, 20 DEC 1967. UNDER THIS CONTRACT, THE TRANE COMPANY PERFORMED THE GREATER PART OF THE PREPRODUCTION TESTS AS SPECIFIED IN THE GOVERNING SPECIFICATION FOR THE A/E32C-25 AIR CONDITIONER. THE ONLY PREPRODUCTION TESTS NOT PERFORMED AS SPECIFIED IN THE GOVERNING SPECIFICATIONS WERE THE 'ENDURANCE TEST,' (800 HOURS) (PARAGRAPH 4.6.3.2), "TILTED POSITION TEST,' (PARAGRAPH 4.6.7) AND CERTAIN PARTS OF THE 'ENVIRONMENTAL TESTS,' (PARAGRAPH 4.6.4), WHICH WERE THE LOW PRESSURE TEST, LOW TEMPERATURE TEST, AND HIGH TEMPERATURE TEST. THESE TESTS WERE WAIVED BY ASD/ASNME-10 BECAUSE OF SIMILARITY TO THE A/E32C-25 AIR CONDITIONER PERFORMED UNDER PRODUCTION CONTRACT F41608-35638, 30 JUN 1965. THERFORE, IT SHOULD BE NOTED THAT THE TRANE COMPANY HAD TO REQUALIFY THE A/E32C-25 AIR CONDITIONER USING THE FIN AND TUBE HEAT EXCHANGERS. THESE TESTS WERE PERFORMED BECAUSE THE HEAT EXCHANGERS ARE CONSIDERED MAIN COMPONENTS OF THE AIR CONDITIONER. THE PREPRODUCTION TESTS IDENTIFIED IN THIS PARAGRAPH WERE NOT PERFORMED ON THE A/E32C-25 AIR CONDITIONER UNDER CONTRACT F41608- 68-C-7471. THESE TESTS PROVED SATISFACTORY UNDER CONTRACT F41608-35638; THEREFORE, THESE TESTS WERE NOT PERFORMED AGAIN FOR REQUALIFICATION JUST BECAUSE OF A SUBSTITUTION FROM 'BRAZED ALUMINUM' TO 'FIN AND TUBE' HEAT EXCHANGERS. THE PREPRODUCTION AIR CONDITIONER WITH THE FIN AND TUBE HEAT EXCHANGERS AND TEST REPORT WERE APPROVED BY ASD/ASNMS-10, 21 MAR 1969.

"8. THE TRANE COMPANY CONTRACT F33657-68-C-0048 WAS A $1 CONTRACT ENTERED WITH ASD/ASNMS-10 TO PERFORM PREPRODUCTION TESTS AS SPECIFIED IN THE GOVERNING SPECIFICATION FOR THE STANDARD FAMILY OF LIGHTWEIGHT MILITARY AIR CONDITIONERS ON TRANE UNITS THAT HAD NEVER BEEN PROCURED BY THE AIR FORCE. THE CONTRACT ALSO INCLUDED PROVISIONS TO TEST ALTERNATE COMPONENTS THAT COULD BE USED IN THE STANDARD FAMILY OF AIR CONDITIONERS AND PROVISIONS TO REVISE THE TRANE COMPANY REPORCUREMENT PACKAGE TO REFLECT THE LATEST AIR FORCE SPECIFICATION REQUIREMENTS. UNDER THIS CONTRACT, THE TRANE COMPANY IS ABLE TO SUBMIT TEST RESULTS TO THE COGNIZANT ENGINEER' FOR APPROVAL/DISAPPROVAL AND FURNISH REVISED REPROCUREMENT PACKAGE DATA TO THE AIR FORCE FOR APPROVAL AND ALSO FOR FUTURE PROCUREMENT OF THE AIR CONDITIONERS. UNDER THIS CONTRACT, THE TRANE COMPANY PERFORMED THE GREATER PART OF THE PREPRODUCTION TESTS AS SPECIFIED IN THE GOVERNING SPECIFICATION FOR THE A/E32C-24 AIR CONDITIONER. THE PREPRODUCTION TESTS THAT WERE NOT PERFORMED AS OUTLINED IN PARAGRAPH 7 ABOVE FOR THE A/E32C-25 WERE NOT PERFORMED FOR THE A/E32C-24 AIR CONDITIONER. THE REASON FOR NOT PERFORMING THESE TESTS IS THAT THE TESTS PERFORMED ON THE A/E32C-25 UNDER CONTRACT F41608-35638 WERE CONSIDERED ADEQUATE FOR APPROVAL PURPOSES OF THE A/E32C-24 SINCE THE TWO MODELS WERE CONSIDERED IDENTICAL EXCEPT FOR THE ELECTRICAL INPUT POWER CHARACTERISTICS (SEE PARAGRAPH 5).

"9. SINCE THE A/E32C-24 AND A/E32C-25 AIR CONDITIONERS ARE IDENTICAL (SEE PARAGRAPH 5), THE PREPRODUCTION TEST RESULTS FOR THE A/E32C-24 AIR CONDITIONER UNDER CONTRACT F33657-68-C-0048 AND THE A/E32C-25 AIR CONDITIONER UNDER CONTRACT F41608-68-C-7471 WERE INCLUDED IN THE TRANE COMPANY TEST REPORT SUBMITTED TO ASD/ASNMS-10 FOR APPROVAL. AS MENTIONED ABOVE IN PARAGRAPH 7, ASD/ASNMS-10 APPROVED THE A/E32C-25 AIR CONDITIONER WITH THE FIN AND TUBE HEAT EXCHANGERS ON 21 MAR 1971; THIS APPROVAL ALSO INCLUDED THE A/E32C-24 AIR CONDITIONER WITH THE FIN AND TUBE HEAT EXCHANGERS."

THE ABOVE QUOTATION INDICATES THAT TRANE HAD TO REQUALIFY ITS A/E32C 25 AIR CONDITIONERS USING FIN AND TUBE HEAT EXCHANGERS. THIS IS CONSISTENT WITH THE POSITION THAT KECO'S UNITS USING FIN AND TUBE HEAT EXCHANGERS WOULD ALSO HAVE TO REQUALIFY. THE REASON NOT ALL THE TESTS WERE PERFORMED ON THE A/E32C-24 WAS BECAUSE OF ITS SIMILARITY TO THE A/E32C-25 UNIT WHICH HAD QUALIFIED. WE HAVE FOUND NO BASIS TO QUESTION THE ADMINISTRATIVE POSITION ON THIS ISSUE.

BY LETTER DATED SEPTEMBER 3, 1971, COUNSEL FOR KECO FORWARDED KECO'S MEMORANDUM DATED AUGUST 31, 1970. THE MEMORANDUM ARGUES THAT THE GOVERNMENT HAS TAKEN INCONSISTENT POSITIONS REGARDING WAIVER OF FIRST ARTICLE TESTING SINCE THE MARINE CORPS REFUSED TO WAIVE FIRST ARTICLE TESTING AFTER THE AIR FORCE HAD GRANTED SUCH WAIVER ON A SIMILAR AIR CONDITIONER. WE HAVE BEEN ADVISED THAT THE MARINE CORPS AND AIR FORCE POSITION ARE NOT NECESSARILY INCONSISTENT SINCE THE AIR FORCE WAIVED FIRST ARTICLE TESTING BECAUSE THE ITEMS WERE URGENTLY NEEDED BUT SUCH URGENCY WAS NOT PRESENT WITH RESPECT TO THE MARINE CORPS' CONTRACT. MOREOVER, KECO'S MEMORANDUM CONCERNS WAIVER OF FIRST ARTICLE TESTING UNDER SUBSEQUENT CONTRACTS CALLING FOR TESTING. WE DO NOT BELIEVE IT IS RELEVANT TO THE ISSUE OF WHETHER FIRST ARTICLE TESTING WAIVER SHOULD HAVE BEEN CONSIDERED IN THE EVALUATION PROCESS FOR EARLIER PROCUREMENTS.

FOR THESE REASONS WE FIND NO BASIS TO DISTURB THE AWARD TO TRANE UNDER SOLICITATION -7921.

REQUEST FOR PROPOSALS NO. DSA-400-70-R-7922 (-7922) WAS FOR 60 UNITS, 36,000 BTU AIR CONDITIONERS, PLUS ADAPTER KITS AND VARIOUS DATA ITEMS. THE AIR CONDITIONERS, IDENTIFIED AS A/E32C-25, WERE TO BE MANUFACTURED IN ACCORDANCE WITH MILITARY SPECIFICATIONS MIL-A-38346D, DATED JANUARY 20, 1970. SPECIFIED EXCEPTIONS TO THE SPECIFICATIONS WERE CONTAINED ON PAGE 69 OF THE RFP.

PAGE 80 OF THE RFP REQUIRED FIRST ARTICLE APPROVAL. THE COVER LETTER TO TRANE'S PROPOSAL DATED JULY 30, 1970, STATED THAT THE A/E32C-25 AIR CONDITIONER PROPOSED BY TRANE HAS BEEN FULLY QUALIFIED UNDER GOVERNMENT CONTRACT "AF41608-68-C-7471." THE COVER LETTER TO KECO'S PROPOSAL DATED JULY 31, 1970, STATED THAT KECO HAD QUALIFIED ITS CONFIGURATION OF THE AIR CONDITIONER OFFERED IN RESPONSE TO THIS SOLICITATION UNDER CONTRACT "F41608-68-C-7472, AND THAT KECO WOULD USE FULLY QUALIFIED COMPONENTS IN ITS CONFIGURATION. UPON EVALUATION IT WAS FOUND THAT ONLY THE PROPOSALS FROM TRANE AND KECO WERE ACCEPTABLE AND NEGOTIATIONS WERE CONDUCTED WITH THESE TWO OFFERORS. EACH OF THE OFFERORS WAS ADVISED THAT FINAL OFFERS HAD TO BE RECEIVED BY 2:30 P.M., AUGUST 7, 1970. THE FINAL OFFERS SUBMITTED BY THE DEADLINE WERE AS FOLLOWS:

TRANE KECO DIFFERENCE

WITH FIRST ARTICLE TESTING

REQUIRED ON ITEMS 1 AND 2 $309,508 $378,550 $69,042

WITH FIRST ARTICLE TESTING

WAIVED ON ITEMS 1 AND 2 $305,713 $364,750 $59,037

A TELEGRAPHIC MODIFICATION REDUCING KECO'S PRICE BY $21,550 WAS TIME STAMPED BY THE DGSC COMMUNICATIONS CENTER AT 3:12 P.M., AUGUST 7, 1970, WHICH WAS FORTY-TWO MINUTES AFTER THE SCHEDULED TIME FOR CLOSE OF NEGOTIATIONS. THE CONTRACTING OFFICER CONSIDERED THAT THE TIME STAMP ON THE TELEGRAM REPRESENTED THE TIME THE TELEGRAM WAS RECEIVED IN THE DGSC COMMUNICATIONS CENTER; CONSEQUENTLY, THE CONTRACTING OFFICER DETERMINED THAT KECO'S TELEGRAM WAS NOT TIMELY AND COULD NOT BE CONSIDERED. TELEGRAM DATED AUGUST 14, 1970, FURTHER REDUCED KECO'S UNIT PRICE WHETHER OR NOT FIRST ARTICLE TESTING WAS WAIVED. THIS TELEGRAM WAS ALSO REJECTED BY THE CONTRACTING OFFICER AS A LATE TELEGRAPHIC MODIFICATION. A TELEGRAM DATED SEPTEMBER 29, 1970, RECEIVED AFTER AWARD, WHICH REDUCED KECO'S PRICE WAS ALSO REJECTED AS A LATE TELEGRAPHIC MODIFICATION.

THE CONTRACTING OFFICER DETERMINED THAT EVEN IF FIRST ARTICLE TESTING WERE WAIVED FOR KECO, TRANE'S PROPOSAL WOULD STILL BE LOW. IN VIEW OF THIS, THE CONTRACTING OFFICER ASKED THE MARINE CORPS ON AUGUST 21, 1970, WHETHER FIRST ARTICLE TESTING FOR ITEMS ONE AND TWO COULD BE WAIVED FOR TRANE ONLY. ON SEPTEMBER 9, 1970, THE CONTRACTING OFFICER RECEIVED AN AFFIRMATIVE REPLY FROM THE MARINE CORPS REGARDING THE WAIVER OF FIRST ARTICLE TESTING FOR TRANE. AWARD WAS MADE TO TRANE AS THE LOW OFFEROR ON SEPTEMBER 28, 1970, FOLLOWING A FAVORABLE RECOMMENDATION IN THE PREAWARD SURVEY.

THE FIRST ISSUE CONCERNS WHETHER KECO'S MODIFICATIONS RECEIVED BY THE CONTRACTING OFFICER AFTER THE SPECIFIED TIME FOR CLOSE OF NEGOTIATIONS ON AUGUST 7 SHOULD HAVE BEEN CONSIDERED. COUNSEL'S MEMORANDUM OF FACT AND LAW URGES THAT KECO'S TELEGRAPHIC MODIFICATION OF AUGUST 7 WAS CONSIDERED LATE DUE TO "SLOPPY TIME-STAMPING PRACTICES OF ITS MESSAGE CENTER," AND DSA'S FAILURE TO NOTIFY KECO PRIOR TO AWARD OF THE CONTRACT THAT THE TELEGRAM OF AUGUST 7 WAS CONSIDERED LATE, VIOLATED ASPR 3-506(D) AND (G) SINCE KECO WAS DEPRIVED OF THE OPPORTUNITY OF ESTABLISHING THAT ITS MODIFICATION WAS TIMELY.

IT IS THE ADMINISTRATIVE POSITION, BASED ON OTHER TELEGRAMS RECEIVED AT THE DGSC COMMUNICATIONS CENTER ALMOST SIMULTANEOUSLY WITH KECO'S APRIL 7 MESSAGE, THAT THERE WAS ONLY A REMOTE POSSIBILITY THAT THE MESSAGE WAS RECEIVED BY THE CENTER PRIOR TO 3:12 P.M.

ASPR 3-506(D) PROVIDES THAT EXCEPT WHERE ONLY ONE PROPOSAL IS RECEIVED, ALL LATE OFFERORS SHALL BE PROMPTLY NOTIFIED THAT THEIR PROPOSALS WERE RECEIVED LATE AND WILL BE EVALUATED BUT NOT CONSIDERED UNLESS THE SECRETARY DETERMINES THAT THE LATE PROPOSAL IS OF EXTREME IMPORTANCE TO THE GOVERNMENT OR THE PROPOSAL COULD BE CONSIDERED UNDER THE RULES APPLICABLE TO LATE BIDS. ASPR 3-506(G) DEFINES "LATE" MODIFICATIONS AND FURTHER STATES THAT A MODIFICATION RECEIVED FROM AN OTHERWISE SUCCESSFUL OFFEROR WHICH IS FAVORABLE TO THE GOVERNMENT SHALL BE CONSIDERED AT ANY TIME THAT THE MODIFICATION IS RECEIVED. WE DO NOT BELIEVE THE ISSUE WARRANTS FURTHER CONSIDERATION SINCE KECO WOULD NOT HAVE BEEN LOW EVEN IF THE PRICE REDUCTION IN THE TELEGRAM OF AUGUST 7 HAD BEEN CONSIDERED AND FIRST ARTICLE TESTING HAD BEEN WAIVED FOR KECO AND DENIED TO TRANE.

ON AUGUST 21, 1970, TRANE'S REPRESENTATIVES MET WITH THE CONTRACTING OFFICER AND THE MARINE CORPS REPRESENTATIVES, PURSUANT TO TRANE'S REQUEST IN ITS PROPOSAL, FOR THE PURPOSE OF DISCUSSING AN INSULATION REQUIREMENT FOR CERTAIN DUCT WORK SINCE TRANE'S REDUCTION OF $30 PER UNIT FOR ITEMS 3 AND 4 IN ITS OFFER OF AUGUST 7, 1970, ASSUMED THAT INSULATION OF THE TRANSITIONAL DUCT WORK WAS NOT REQUIRED.

KECO'S COUNSEL ARGUES THAT THE ABOVE MEETING WITH TRANE CONSTITUTED NEGOTIATIONS AND IN THIS REGARD THE FOLLOWING CONTENTIONS ARE MADE:

(1) THERE IS A REQUIREMENT THAT THERE BE A COMMON CUT-OFF OF NEGOTIATIONS AND A NUMBER OF CASES HAVE BEEN CITED IN GENERAL SUPPORT OF THIS PROPOSITION. SPECIFICALLY, KECO'S COUNSEL HAS CITED B-170751, SEPTEMBER 23, 1970, FOR THE POINT THAT THE AUGUST 21 MEETING WITH TRANE CONSTITUTED NEGOTIATIONS.

(2) SINCE NEGOTIATIONS WERE CONDUCTED WITH TRANE AFTER THE CUT-OFF OF NEGOTIATIONS ALL OF KECO'S MODIFICATIONS RECEIVED AFTER THE CUT-OFF ON APRIL 7 SHOULD HAVE BEEN CONSIDERED SINCE THE MEETING WITH TRANE CONSTITUTED A REOPENING OF NEGOTIATIONS.

THE CONTRACTING OFFICER ADVISES THAT AT THE AUGUST 21, 1970 MEETING, TRANE DID NOT DO ANYTHING MORE THAN EXPLAIN THE BASIS FOR CERTAIN COST REDUCTIONS CONTAINED IN ITS REVISED OFFER OF AUGUST 7, 1970. THE SUPPLEMENTAL REPORT OF THE CONTRACTING OFFICER DATED FEBRUARY 25, 1971, STATES THAT SUBSEQUENT TO AWARD IT HAS BEEN REVEALED THAT ONE OF A NUMBER OF DRAWINGS CONTAINED IN THE TECHNICAL PROPOSAL INITIALLY SUBMITTED WITH TRANE'S OFFER CONTAINED A NOTATION REFERRING TO INSULATION FOR THE TRANSITIONAL DUCTS. HOWEVER, THE CONTRACTING OFFICER STATES THAT HE WAS NOT AWARE OF THIS AT THE TIME OF THE MEETING WITH TRANE ON AUGUST 21, 1970, SINCE THE SOLICITATION DID NOT REQUIRE SUCH INSULATION AND WHILE TRANE'S PROPOSAL HAD BEEN REVIEWED AND ACCEPTED BY THE MARINE CORPS, THE PROPOSAL HAD NOT AS YET BEEN SUBJECTED TO A DETAILED TECHNICAL ANALYSIS.

THE TERM "NEGOTIATION" GENERALLY IMPLIES A SERIES OF OFFERS AND COUNTEROFFERS UNTIL A MUTUALLY SATISFACTORY AGREEMENT IS CONCLUDED BY THE PARTIES. 45 COMP. GEN. 417, 427 (1966). OUR DECISION, B-164688, OCTOBER 2, 1968, STATED AS FOLLOWS:

" *** WHILE 'NEGOTIATION' GENERALLY IMPLIES A SERIES OF OFFERS AND COUNTEROFFERS UNTIL A MUTUALLY SATISFACTORY AGREEMENT IS CONCLUDED BY THE PARTIES (45 COMP. GEN. 417, 427), SUCH A MEANING IS NOT DENOTED IN THE ABOVE STATUTORY PROVISIONS, AND IT DOES NOT APPEAR THAT A SERIES OF OFFERS AND COUNTEROFFERS IS ESSENTIAL TO COMPLIANCE WITH THE REQUIREMENTS OF THOSE PROVISIONS. *** "

IN B-167643, NOVEMBER 14, 1969, WE STATED THAT THE DISCUSSIONS CONTEMPLATED BY THE STATUTE RELATE TO PROPOSALS WITHIN THE COMPETITIVE RANGE BUT NOT TO DISCUSSIONS RELATING TO AN OFFEROR'S RESPONSIBILITY OR THE ABILITY TO PERFORM. IN B-170751, SEPTEMBER 23, 1970, 50 COMP. GEN. , CITED BY KECO'S COUNSEL, ONE OF THE OFFERORS FAILED TO ACKNOWLEDGE AN ADDENDUM WHICH CHANGED THE SPECIFICATIONS AND THEREBY AFFECTED THE PRICE. THIS OFFEROR ORALLY ACKNOWLEDGED THE AMENDMENT SUBSEQUENT TO THE CLOSING TIME FOR RECEIPT OF PROPOSALS. IN THE WRITTEN CONFIRMATION OF THE ORAL ACKNOWLEDGEMENT REQUESTED BY THE PROCURING ACTIVITY, THE OFFEROR CONFIRMED THAT THE PRICE OFFERED WAS BASED ON THE SPECIFICATIONS AS CHANGED BY THE AMENDMENT. IT WAS HELD THAT THIS EXCHANGE CONSTITUTED NEGOTIATIONS AND THAT AWARD COULD NO LONGER BE MADE ON THE BASIS OF THE INITIAL PROPOSALS. THE MEETING WITH TRANE ON AUGUST 21, 1970, WAS INTENDED ONLY AS AN OPPORTUNITY FOR TRANE TO EXPLAIN ITS PRICE REDUCTIONS AND WAS IN FACT SO LIMITED. PRESUMABLY THERE WAS NO OPPORTUNITY FOR TRANE TO MAKE ANY CHANGE IN ITS PROPOSAL OR FOR THE GOVERNMENT REPRESENTATIVES TO EFFECT ANY CHANGE IN THE SOLICITATION PROVISIONS. THEREFORE, WE DO NOT BELIEVE THAT THE MEETING CONSTITUTES A BASIS FOR INVALIDATING THE AWARD.

A HANDWRITTEN NOTATION ON A MEMORANDUM OF NEGOTIATION DATED SEPTEMBER 21, 1970, PREPARED BY A PROCUREMENT OFFICIAL, STATES THAT TRANE WAS REQUESTED TO REDUCE ITS PRICE FOR THE OPTION QUANTITIES AND THAT THIS REQUEST WAS DENIED BY TRANE. KECO'S COUNSEL ASSERTS THAT THIS CONSTITUTED NEGOTIATIONS AFTER THE SCHEDULED CUT-OFF OF NEGOTIATIONS THEREBY INVALIDATING THE AWARD. THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT STATES THAT THE AUTHOR OF THE NOTATION HAS ADVISED THAT TO THE BEST OF HIS RECOLLECTION THE DISCUSSION WITH TRANE RELATING TO THE OPTION QUANTITIES OCCURRED PRIOR TO THE CLOSE OF NEGOTIATIONS; AND THAT THE HANDWRITTEN NOTATION WAS MADE SUBSEQUENTLY SINCE THE INFORMATION RELATING TO THE DISCUSSION OF OPTION QUANTITIES WAS INADVERTENTLY OMITTED AT THE TIME OF TYPING THE MEMORANDUM OF NEGOTIATION. SINCE, IN ANY EVENT THE OPTION QUANTITIES WERE NOT TO BE INCLUDED IN THE EVALUATION OF PROPOSALS, WE DO NOT THINK THAT THE HANDWRITTEN NOTATION CONSTITUTES A BASIS FOR INVALIDATING THE AWARD TO TRANE UNDER -7922.

FOR THESE REASONS, KECO'S PROTESTS ARE DENIED.