B-172882, SEP 16, 1971

B-172882, SEP 16, 1971

BID PROTEST - EXERCISE OF OPTION - FIRST ARTICLE TESTING DENIAL OF PROTEST BY EPSCO, INC., AGAINST THE AWARD OF A CONTRACT TO RODALE ELECTRONICS, INC., TO SUPPLY CERTAIN AN/APN-141 RADAR ALTIMETER SETS TO THE U.S. NAVY AVIATION SUPPLY OFFICE, PHILADELPHIA, PA. THE "AWARD" CONSISTED OF THE EXERCISE OF AN OPTION ON AN EXISTING CONTRACT. PROTESTANT CONTENDS THAT THE OPTION SHOULD NOT HAVE BEEN USED BECAUSE THEIR COMPANY COULD HAVE FURNISHED THE ITEMS IN A TIMELY MANNER WITHOUT FIRST ARTICLE TESTING, CONTRARY TO THE FINDINGS OF THE CONTRACTING OFFICER. BASED ON THE RECORD PRESENTED HERE, THE COMP. GEN. CONCLUDES THAT THE CONTRACTING OFFICER'S DETERMINATION TO EXERCISE THE OPTION WITH RODALE WAS PROPER UNDER THE CRITERIA OF ASPR 1-1505.

TO EPSCO, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF MAY 4, 1971, PROTESTING AGAINST THE AWARD OF A CONTRACT TO RODALE ELECTRONICS, INC., TO SUPPLY CERTAIN AN/APN- 141 RADAR ALTIMETER SETS TO THE UNITED STATES NAVY AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA.

AT THE OUTSET, IT SHOULD BE POINTED OUT THAT THE "AWARD" AGAINST WHICH YOU PROTEST WAS NOT AN AWARD OF A CONTRACT INCIDENT TO A NEW SOLICITATION BUT RATHER REPRESENTED THE EXERCISE OF AN OPTION UNDER AN EXISTING CONTRACT ACCOMPLISHED BY MODIFICATION NO. P00013 TO CONTRACT NO. N00383-69 -C-0010. THIS CONTRACT IS A 4-YEAR, MULTIYEAR CONTRACT WHICH HAD BEEN AWARDED TO RODALE ON JULY 18, 1968, AS A RESULT OF INVITATION FOR BIDS NO. N00383-68-B-1026 UNDER WHICH BIDS WERE SOLICITED ON BOTH A SINGLE-YEAR AND MULTIYEAR BASIS.

THE EQUIPMENTS PROCURED BY MODIFICATION NO. P00013 TO THE RODALE CONTRACT CONSISTS OF THE NUMBER OF UNITS ADDED TO THE CONTRACT PURSUANT TO THE OPTION FOR INCREASED QUANTITY CLAUSE APPLICABLE TO THE FOURTH AND LAST YEAR OF THE MULTIYEAR CONTRACT, PLUS A SMALL ADDITIONAL NUMBER REPRESENTING REQUIREMENTS THAT WERE IN EXCESS OF THE QUANTITY AVAILABLE FOR AWARD UNDER THE OPTION CLAUSE. YOU CONTEND THAT THE OPTION SHOULD NOT HAVE BEEN EXERCISED WITH RODALE BECAUSE YOUR COMPANY COULD HAVE FURNISHED THE EQUIPMENTS IN A TIMELY MANNER WITHOUT FIRST ARTICLE TESTING, CONTRARY TO THE CONTENTION OF NAVY PROCUREMENT PERSONNEL THAT FIRST ARTICLE TESTING WOULD BE REQUIRED IN THE CASE OF EPSCO, THEREBY PRECLUDING EPSCO FROM MEETING URGENT DELIVERY REQUIREMENTS.

IT IS REPORTED BY THE PROCUREMENT ACTIVITY THAT PURSUANT TO PARAGRAPH 1- 1505 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AN INFORMAL EXAMINATION OF THE MARKET WAS MADE BY QUESTIONING EPSCO AS TO WHAT PRICES IT COULD OFFER IF THE PROCUREMENT WERE COMPETED, BOTH ON A FIRST ARTICLE TESTING AND WAIVER OF FIRST ARTICLE TESTING BASIS. IN THIS RESPECT, ASPR 1-1505 REQUIRES GENERALLY THAT BEFORE AN OPTION IS EXERCISED A DETERMINATION MUST BE MADE THAT OPTION EXERCISE, AS OPPOSED TO NEW PROCUREMENT, IS "MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED."

THE CONTRACTING OFFICER, IN COMPLIANCE WITH THIS ASPR PROVISION, DETERMINED THAT EPSCO WOULD BE REQUIRED TO FURNISH A FIRST ARTICLE AND THAT THE DELIVERY SCHEDULE WHICH EPSCO WOULD THEREFORE BE ABLE TO OFFER WOULD NOT MEET THE URGENT NAVY REQUIREMENTS. IN THIS RESPECT, IT IS REPORTED THAT A PREVIOUS SOLICITATION ALLOWED 7 MONTHS FOR THE MANUFACTURE AND TESTING OF THE FIRST ARTICLE SAMPLES, 1 MONTH FOR GOVERNMENT REVIEW AND APPROVAL OF TEST REPORTS, AND 4 MONTHS' MANUFACTURING LEAD TIME FOR PRODUCTION ARTICLES. SINCE DELIVERY WAS REQUIRED TO BEGIN WITHIN 4 MONTHS, IT WAS APPARENT TO THE CONTRACTING OFFICER THAT A CONCERN WHICH WOULD BE REQUIRED TO COMPLY WITH FIRST ARTICLE TEST REQUIREMENTS WOULD NOT BE ABLE TO MEET THE DELIVERY REQUIREMENTS. ACCORDINGLY, NO FURTHER CONSIDERATION WAS GIVEN TO THE POSSIBILITY OF AN AWARD TO EPSCO, AND THEREAFTER PRICES FOR ALL REQUIREMENTS WERE NEGOTIATED WITH RODALE ON A FIRST ARTICLE WAIVER BASIS. AS A FURTHER JUSTIFICATION FOR OPTION EXERCISE AS OPPOSED TO ISSUANCE OF A NEW SOLICITATION, IT IS REPORTED THAT THE PRICE EPSCO INDICATED IT COULD OFFER FOR ARTICLES WITH FIRST ARTICLE TESTING WAS $402,855 AND $395,358 FOR ARTICLES WITHOUT FIRST ARTICLE TESTING, WHILE THE TOTAL PRICE NEGOTIATED WITH RODALE FOR ALL THE ADDITIONAL EQUIPMENTS PLUS THE SMALL OVERAGE WAS $376,358 BASED ON A WAIVER OF THE FIRST ARTICLE TESTING.

YOU CONTEND THAT THE FIRST ARTICLE TESTING REQUIREMENT SHOULD NOT HAVE BEEN CONSIDERED NECESSARY FOR EPSCO SINCE YOUR FIRM HAD ACQUIRED THE ASSETS OF LFE ELECTRONICS AND WAS IN THE PROCESS OF DELIVERING SPARE PARTS FOR THE AN/APN-141 SYSTEMS ON ANOTHER CONTRACT. WITH REGARD TO THIS CONTENTION, THE CONTRACTING OFFICER REPORTS AS FOLLOWS:

"3. THE ESSENCE OF THE EPSCO PROTEST IS THAT THE DETERMINATION THAT EPSCO WOULD BE REQUIRED TO COMPLY WITH FIRST ARTICLE TEST REQUIREMENTS WAS ERRONEOUS. THIS DETERMINATION WAS MADE NOTWITHSTANDING THAT EPSCO WAS THE PURCHASER OF THE ELECTRONICS DIVISION OF LFE, WHICH HAD PREVIOUSLY PRODUCED SIMILAR EQUIPMENTS, BECAUSE (1) LFE WAS OUT OF PRODUCTION NINE MONTHS, (2) A 'BURN-IN' TEST, THAT LFE HAD NEVER CONDUCTED IS NOW A REQUIREMENT OF THE SPECIFICATION FOR ALL EQUIPMENTS TO IMPROVE RELIABILITY AND WAS ADDED TO THIS SOLICITATION BY AMENDMENT NO. P00013 (THE BURN-IN TEST, WHICH IS SPECIFIED IN TEST PLAN 29 OF MIL STANDARD 781 AND WHICH CONSISTS OF THE CONTINUOUS OPERATION OF THE EQUIPMENTS FOR 50 CONSECUTIVE HOURS, IS DESIGNED TO DETECT FLAWS - RESULTING LARGELY FROM INADEQUATE QUALITY CONTROL - THAT MANIFEST THEMSELVES EARLY IN THE LIFE OF THE EQUIPMENTS - AND, THEREBY, TO REDUCE THE 'INFANT MORTALITY' RATE OF THE EQUIPMENTS. THIS TEST IS A REQUIREMENT OF RODALE CONTRACT N00383-69-C- 0010 AND IS BEING CONDUCTED BY RODALE IN THE PRODUCTION OF THE EQUIPMENTS UNDER SUCH CONTRACT), (3) THE ITEM IS A CRITICAL SAFETY OF FLIGHT ITEM, AND (4) PRODUCTION WOULD HAVE BEEN AT DIFFERENT FACILITIES AND, UNDOUBTEDLY, WITH DIFFERENT PERSONNEL. EPSCO COMMENTS THAT IT IS CURRENTLY IN PRODUCTION FOR SPARE PARTS FOR THE EQUIPMENTS IN QUESTION AND IS UNDER CONTRACT TO UPDATE PRIME EQUIPMENT AND SPECIAL SUPPORT EQUIPMENT. HOWEVER, THE SPARE PARTS EPSCO IS PRODUCING ARE PARTS THAT ARE IDENTICAL TO THE PARTS USED IN EQUIPMENTS NOT SUBJECTED TO RELIABILITY TESTS AND THE EPSCO CONTRACT UNDER WHICH EPSCO IS PRODUCING SPARE PARTS DOES NOT CONTAIN RELIABILITY TEST REQUIREMENTS. THERE IS, THEREFORE, NO ASSURANCE THAT, BECAUSE OF ITS PRODUCTION OF SPARE PARTS, THE END EQUIPMENTS THAT WOULD BE MANUFACTURED BY EPSCO WOULD MEET RELIABILITY TEST REQUIREMENTS. THE UPDATING OF PRIME EQUIPMENT AND SPECIAL SUPPORT MANUALS SIMILARLY WOULD NOT GIVE THE CONTRACTING OFFICER ASSURANCE THAT EQUIPMENT MANUFACTURED BY ESPCO WOULD MEET RELIABILITY TEST REQUIREMENTS. EPSCO'S COMMENT WITH RESPECT TO ITS REPAIR OF 'BLACK BOXES' FOR LOCKHEED, GRUMMAN, MCDONNELL-DOUGLAS, AND LTV IS NOT CONSIDERED PERTINENT, IF TRUE, SINCE AGAIN THE TESTING REQUIREMENTS FOR THE EQUIPMENTS HAVE, AS STATED ABOVE, BEEN CHANGED, AND SINCE ANY REPAIR PROGRAM WOULD INVOLVE REPAIR OF EQUIPMENTS NOT MANUFACTURED TO THE CURRENT SPECIFICATION REQUIREMENTS. FIRST ARTICLE TESTING BY EPSCO WOULD, THEREFORE, BE CONSIDERED ESSENTIAL."

BASED ON THE FOREGOING, WE CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION TO EXERCISE THE OPTION WITH RODALE WAS PROPER UNDER THE CRITERIA OF ASPR 1-1505. ALSO, WHILE YOU INDICATE THAT RODALE QUESTIONED THE SMALL BUSINESS STATUS OF EPSCO IN A PROTEST CONCERNING ANOTHER PROCUREMENT, THUS DELAYING EVENTUAL AWARD TO YOUR COMPANY IN THAT MATTER, THAT INCIDENT CONCERNED ANOTHER INVITATION FOR BIDS AND IS NOT RELEVANT TO THE PRESENT ISSUE.

AS YOU REQUESTED, WE ARE TRANSMITTING YOUR LETTER OF AUGUST 31, 1971, CONCERNING "BURN-IN" TESTS, TO THE DEPARTMENT OF THE NAVY FOR ITS CONSIDERATION IN FUTURE PROCUREMENTS.

FOR THE REASONS STATED, WE FIND NO BASIS TO INTERFERE WITH THE PROCUREMENT ACTIVITY'S DECISION TO EXERCISE ITS OPTION WITH RODALE. ACCORDINGLY, YOUR PROTEST IS DENIED.