B-171011, JAN 27, 1971

B-171011, JAN 27, 1971

BID PROTEST - NEGOTIATIONS - BID CONDITIONED UPON ACCEPTANCE OF ANOTHER BID DENIAL OF PROTEST OF TYCO, INCORPORATED AGAINST THE AWARD OF A NEGOTIATED CONTRACT FOR VAN MAINTENANCE CONDENSERS ISSUED BY DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VA., TO FAIRCHILD-HILLER CORPORATION. IN CONSIDERING BIDS ON TWO RELATED BUT SEPARATE RFP'S THE CONTRACTING OFFICER MAY ACCEPT THE LOW PROPOSAL OF ONE FIRM (FAIRCHILD) ON ONE OF THE RFP'S EVEN THOUGH THE PROTESTANT'S PROPOSAL FOR THE COMBINED AWARD WOULD HAVE BEEN LOW, ESPECIALLY WHEN ONE OF THE PROCUREMENTS WAS URGENTLY REQUIRED AND THE AWARD OF THE SECOND WAS DELAYED PENDING A DETERMINATION OF PROTESTANT'S ELIGIBILITY FOR AWARD UNDER THE WALSH HEALY PUBLIC CONTRACTORS ACT 41 U.S.C. 35 ET SEQ.

TO TYCO, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 9, 1970, WITH ENCLOSURES, PROTESTING THE AWARD OF CONTRACT NO. DSA-400-71-C-1421 TO STRATOS DIVISION, FAIRCHILD-HILLER CORPORATION (FAIRCHILD). THE SUBJECT CONTRACT AWARDED ON SEPTEMBER 28, 1970, WAS NEGOTIATED UNDER REQUEST FOR PROPOSALS (RFP) NO. DSA-400-71-R-0659 (RFP -0659) ISSUED INITIALLY ON JULY 30, 1970, BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), RICHMOND, VIRGINIA.

YOU PROTEST ON TWO BASES. FIRST, THAT FAIRCHILD'S PRODUCT IS "OBVIOUSLY DEFECTIVE." SECOND, THAT YOUR ALTERNATIVE OFFER OF SEPTEMBER 15, BASED ON A CONCURRENT AWARD UNDER RFP NO. DSA-400-71-R 0106 FOR THE SAME KIND OF UNITS AS SOLICITED UNDER RFP -0659, CONSTITUTED THE LOWEST PROPOSAL.

BOTH RFP -0106 DATED JULY 14, 1970, AND RFP -0659 DATED JULY 30, 1970, WERE ISSUED FOR THE PROCUREMENT OF VAN MAINTENANCE CONDENSERS, FSN 4130- 774-5399, FAIRCHILD P/N 105897, TYCO P/N 2500-123D.

RFP -0106 WAS NEGOTIATED UNDER 10 U.S.C. 2304(A)(10), AS IMPLEMENTED BY PARAGRAPH 3-210.2(XIII) OF THE ARMED SERVICES PROCUREMENT REGULATION, BASED ON A DETERMINATION BY THE CONTRACTING OFFICER DATED JUNE 25, 1970. THE RFP ISSUED ON JULY 14 AND AMENDED ON JULY 21, 1970, INVITED OFFERS F.O.B. DESTINATION ON A TOTAL OF 59 VAN MAINTENANCE CONDENSERS. THE RFP CLOSED ON JULY 29, 1970. THE ONLY TIMELY OFFER RECEIVED WAS SUBMITTED BY YOUR FIRM IN THE AMOUNT OF $1,254 PER UNIT. ON AUGUST 11, FAIRCHILD SUBMITTED A LATE TELEGRAPHIC OFFER OF $997 PER UNIT. BY A LETTER DATED SEPTEMBER 3, 1970, FAIRCHILD FORMALLY PROTESTED THAT YOUR FIRM WAS NOT AN APPROVED SOURCE FOR THE CONDENSER TO BE PROCURED. FAIRCHILD ALLEGED THAT YOUR FIRM WAS INELIGIBLE FOR AWARD UNDER THE WALSH-HEALY PUBLIC CONTRACTS ACT, 41 U.S.C. 35, ET SEQ. ALTHOUGH THE DIRECTORATE OF SUPPLY OPERATIONS, DGSC, REQUESTED ACCELERATED DELIVERY TO FILL EXISTING BACKORDERS, NO AWARD HAS BEEN, AS YET, MADE UNDER RFP -0106 PRESUMABLY BECAUSE NO DETERMINATION HAS BEEN MADE TO DATE BY THE DEPARTMENT OF LABOR AS TO TYCO'S STATUS UNDER THE WALSH-HEALY ACT AS A REGULAR DEALER OR MANUFACTURER OF THE CONDENSERS.

RFP -0659, THE SUBJECT OF YOUR PROTEST, WAS NEGOTIATED UNDER A DETERMINATION BY THE CONTRACTING OFFICER ON JULY 22, 1970, AND AMENDED ON SEPTEMBER 1 AND 4, THAT NEGOTIATION OF THE PROPOSED CONTRACT WILL BE EFFECTED PURSUANT TO THE PUBLIC EXIGENCY EXCEPTION OF 10 U.S.C. 2304(A)(2). THE INITIAL RFP WAS ISSUED ON JULY 30, 1970, AND THREE FIRMS WERE SOLICITED. THE RFP INVITED OFFERS F.O.B. DESTINATION (DIRECT DELIVERY) ON 6 VAN MAINTENANCE CONDENSERS OF THE SAME PART NUMBER OF BOTH FAIRCHILD AND YOUR FIRM AS THOSE SOLICITED UNDER RFP 0106. RFP AMENDMENTS 0001, 0002 AND 0003, IN PART, EXTENDED THE TIME OF CLOSING TO SEPTEMBER 15, ADDED AN ADDITIONAL QUANTITY OF 32 MAKING THE TOTAL UNITS SOLICITED 38, AND CHANGED THE DATE OF DELIVERY OF ALL ITEMS TO JANUARY 25, 1971, BASED ON AN ASSUMPTION THAT AWARD WOULD BE MADE BY SEPTEMBER 25.

THE RFP CLOSED ON SEPTEMBER 15, 1970, AT WHICH TIME TWO PROPOSALS WERE RECEIVED. YOUR FIRM NOT ONLY PROPOSED A UNIT PRICE OF $1,254, BUT ALSO PROPOSED A REDUCED UNIT PRICE OF $990 PROVIDED IT RECEIVED A CONCURRENT AWARD UNDER RFP -0106. YOUR FIRM PROPOSED TO DELIVER ONE UNIT 22 WEEKS AFTER AWARD OF THE CONTRACT AND FIVE UNITS A WEEK THEREAFTER WITH A SLIGHT ACCELERATION IF AWARD WAS MADE CONCURRENTLY WITH RFP -0106. FAIRCHILD OFFERED A UNIT PRICE OF $1,097 FOR THE 38 UNITS AND STATED THAT DELIVERY WOULD BE AT A RATE OF 10 UNITS EACH MONTH STARTING 12 WEEKS AFTER THE AWARD DATE. FAIRCHILD AGAIN OBJECTED TO THE INCLUSION OF YOUR FIRM AS AN APPROVED SOURCE OF SUPPLY FOR THIS UNIT. BY WIRES DATED SEPTEMBER 4 AND 10, FAIRCHILD STATED THAT FOR THE COMBINED QUANTITIES OF 38 AND 59 UNITS (RFP'S -0659 AND -0106, RESPECTIVELY), IT OFFERED A UNIT PRICE OF $997. THE CONTRACTING OFFICER WAS OF THE OPINION THAT THE AWARD SHOULD BE MADE ON THE BASIS OF THE LOW PROPOSAL ON RFP -0659 ALONE. CONSEQUENTLY, THE CONTRACTING OFFICER DETERMINED THAT THE ADDITIONAL PRICE REDUCTIONS OFFERED, WHICH WERE CONTINGENT UPON RECEIPT OF AWARDS UNDER BOTH RFP'S, COULD NOT BE CONSIDERED. FOLLOWING A FAVORABLE PREAWARD SURVEY ON FAIRCHILD, THE AWARD WAS MADE TO THAT FIRM BASED ON ITS UNIT PRICE OF $1,097 UNDER RFP -0659 ONLY ON SEPTEMBER 28, 1970.

IN YOUR LETTER OF OCTOBER 9, 1970, YOU CONTEND THAT YOU OFFERED A "SUPERIOR PRODUCT FOR $990.00 AGAINST FAIRCHILD'S $1,097.00. TYCO'S OFFER OF 15 SEPTEMBER 1970 WAS BASED ON A CONCURRENT AWARD WITH DSA-400 71-R- 0106 UPON WHICH TYCO HAS BEEN THE OBVIOUS LOW BIDDER SINCE 29 JULY 1970." YOU FURTHER CONTEND THAT DGSC HAS MADE NO EFFORT TO RENEGOTIATE OR TAKE ADVANTAGE OF YOUR LOWER OFFER OR TO SOLVE THE ADMINISTRATIVE DELAYS INVOLVING RFP -0106 AS TO WHICH THE SUBJECT COMBINED PROPOSAL IS RELATED.

ALTHOUGH YOUR ALTERNATE OFFER OF $990 PER UNIT FOR A COMBINED AWARD UNDER BOTH RFP'S IS LOWER THAN FAIRCHILD'S ALTERNATE OFFER OF $997 PER UNIT, FAIRCHILD'S PROPOSAL ON RFP -0659 ALONE IS $1,097 PER UNIT WHICH IS LOWER THAN YOUR FIRM'S SINGLE PROPOSAL OF $1,254 PER UNIT BASED ON AWARD OF RFP -0659 ONLY.

WE HAVE HELD THAT A BID WHICH IS CONDITIONED UPON ACCEPTANCE OF ANOTHER BID UNDER A DIFFERENT INVITATION OR THE CONSIDERATION OF A DISCOUNT WHICH IS CONTINGENT UPON AWARDS UNDER MORE THAN ONE SOLICITATION SHOULD NOT BE CONSIDERED WHERE THE SOLICITATIONS ARE NOT CROSS-REFERENCED EVEN THOUGH THE SUBJECT MATTER OF THE SOLICITATIONS MIGHT BE THE SAME OR CLOSELY RELATED. SEE 8 COMP. GEN. 663 (1929); 37 ID. 186 (1957). HOWEVER, THE RULE ENUNCIATED IN THE ABOVE-CITED DECISIONS, WHICH WERE CONCERNED WITH PROCUREMENTS BY FORMAL ADVERTISEMENT, IS NOT ORDINARILY APPLICABLE IN THE CASE OF NEGOTIATED PROCUREMENTS. IN B-169259, AUGUST 18, 1970, WE DID NOT QUESTION THE CONSIDERATION OF A COMBINED PROPOSAL IN CONNECTION WITH TWO SOMEWHAT RELATED NEGOTIATED PROCUREMENTS WHERE IT WAS SHOWN THAT SUCH COMBINED PROPOSAL IN NO WAY FOSTERED UNEQUAL COMPETITION.

THE CONSIDERATION OF THE COMBINED PROPOSAL WAS NOT POSSIBLE HERE BECAUSE THE AWARD OF A CONTRACT UNDER RFP -0659, BEARING A PRIORITY DESIGNATOR, COULD NOT HAVE BEEN DELAYED PENDING RESOLUTION OF YOUR STATUS UNDER THE WALSH-HEALY ACT FOR PURPOSES OF RFP -0106. IN ANY EVENT, NO AWARD HAS BEEN MADE UNDER THIS RFP. THE DEFENSE SUPPLY AGENCY INFORMS US THAT OF THE 38 CONDENSERS TO BE PROCURED UNDER RFP 0659, THE 18 UNITS FOR DIRECT DELIVERY ARE URGENTLY REQUIRED AND, IN ADDITION, DGSC REQUESTED ACCELERATED DELIVERY FOR THE 20 UNITS DESTINED FOR STOCK TO FILL EXISTING BACKORDERS AS THE ITEM WAS IN A CRITICAL SUPPLY POSITION.

IN VIEW OF THE FOREGOING, WE CANNOT SAY THAT THE CONTRACTING OFFICER WAS IN ERROR IN ACCEPTING THE LOW PROPOSAL OFFERED BY FAIRCHILD UNDER RFP - 0659 WITHOUT REGARD TO ITS COMBINED PROPOSAL UNDER BOTH RFP'S. IT WAS UNFORTUNATE THAT THE GOVERNMENT WAS UNABLE TO TAKE ADVANTAGE OF THE COMBINED OFFER SUBMITTED BY YOUR FIRM; HOWEVER, THE CRITICAL NEED FOR THE CONDENSERS PRECLUDED THE CONSIDERATION OF SUCH OFFERS WHICH WOULD HAVE NECESSITATED DELAY UNTIL THE WALSH-HEALY PROTEST INVOLVING RFP 0106 WAS RESOLVED.

IN REGARD TO YOUR CONTENTION THAT FAIRCHILD'S PRODUCT IS "OBVIOUSLY DEFECTIVE," THE DEFENSE SUPPLY AGENCY INFORMS US THAT THE NAVAL AIR SYSTEMS COMMAND FURNISHED YOUR FIRM WITH INFORMATION ON APRIL 24, 1970, TO THE EFFECT THAT EARLIER DEFECTS IN FAIRCHILD'S UNIT HAVE BEEN SATISFACTORILY CORRECTED. WE ARE FURTHER INFORMED BY THE DEFENSE SUPPLY AGENCY THAT SINCE LATE 1967 NO FURTHER UNSATISFACTORY EQUIPMENT REPORTS CONCERNING THE UNIT HAVE BEEN RECEIVED.

YOUR LETTER OF DECEMBER 29, 1970, WITH ENCLOSURES, REQUESTS, IN EFFECT, THAT OUR OFFICE FURNISH YOU WITH A COPY OF THE PREAWARD SURVEYS ON FAIRCHILD-HILLER. BY LETTER DATED NOVEMBER 23, 1970, FROM THE DEPUTY DIRECTOR, DEFENSE SUPPLY AGENCY, YOUR REQUEST WAS REFUSED SINCE THE DOCUMENTS WERE EXEMPT FROM RELEASE TO THE PUBLIC UNDER 5 U.S.C. 552(B)(3), (4) AND (5) AS BEING PRIVILEGED OR CONFIDENTIAL BUSINESS DATA. ALTHOUGH YOU STATE THAT YOUR REQUEST IS MODIFIED TO LEAVE OUT "FINANCIAL PORTIONS" OF THE REPORTS, WE HAVE NO AUTHORITY TO COMPLY WITH YOUR REQUEST INASMUCH AS THE REPORTS ORIGINATED WITHIN THE DEPARTMENT OF DEFENSE AND ARE WITHIN THAT DEPARTMENT'S CONTROL AND CUSTODY. SEE ASPR 1-907 AND ASPR APPENDIX "L".

IN THE CIRCUMSTANCES, OUR OFFICE HAS NO ALTERNATIVE BUT TO DENY YOUR PROTEST.