B-172995, OCT 1, 1971

B-172995: Oct 1, 1971

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NOT OBJECT TO CANCELLATION OF A SOLICITATION WHERE OTHER THAN THE LOWEST OFFEROR IS THE ONLY OFFEROR QUALIFIED FOR FIRST ARTICLE WAIVER AND WHERE THE PROCUREMENT HAS BEEN DETERMINED TO BE OF SUCH IMPORTANCE AS TO REQUIRE A SOLE-SOURCE AWARD TO THE OFFEROR ENTITLED TO THE WAIVER. TO BACHAN AEROSPACE CORPORATION: WE HAVE CONSIDERED THE PROTEST MADE IN YOUR TELEGRAM OF MAY 19. THIS PROCUREMENT WAS BASED ON TWO MILITARY INTERDEPARTMENTAL PURCHASE REQUESTS (MIPR) FROM THE U.S. NO MANDATORY DELIVERY SCHEDULE WAS PLACED ON EITHER ORDER. AN ADVERTISED PROCUREMENT WAS INITIALLY CONTEMPLATED BY RIA BECAUSE NO MANDATORY DELIVERY SCHEDULE WAS PLACED ON EITHER OF THE TWO ORDERS NOTWITHSTANDING THEIR STATED URGENCY.

B-172995, OCT 1, 1971

BID PROTEST - SOLE-SOURCE PROCUREMENT - FIRST ARTICLE APPROVAL DENIAL OF PROTEST AGAINST THE CANCELLATION OF AN RFP ISSUED BY THE ROCK ISLAND ARSENAL, ROCK ISLAND, ILL., FOR MANUFACTURE OF THE XM 197 20 MM GUN HOUSINGS, AND AGAINST THE SUBSEQUENT SOLE-SOURCE AWARD OF A CONTRACT FOR THE SAME PARTS TO ANOTHER OFFEROR. WHILE ASPR 1-1903(A)(I)(B) FORBIDS CONSIDERATION OF DIFFERENCES IN DELIVERY SCHEDULES WHICH RESULT FROM WAIVER OF FIRST ARTICLE APPROVAL IN BID OR PROPOSAL EVALUATION, GAO RECOGNIZES THAT TIME OF DELIVERY CAN ASSUME OVERWHELMING IMPORTANCE IN URGENT PROCUREMENT SITUATIONS. GAO WOULD, THEREFORE, NOT OBJECT TO CANCELLATION OF A SOLICITATION WHERE OTHER THAN THE LOWEST OFFEROR IS THE ONLY OFFEROR QUALIFIED FOR FIRST ARTICLE WAIVER AND WHERE THE PROCUREMENT HAS BEEN DETERMINED TO BE OF SUCH IMPORTANCE AS TO REQUIRE A SOLE-SOURCE AWARD TO THE OFFEROR ENTITLED TO THE WAIVER.

TO BACHAN AEROSPACE CORPORATION:

WE HAVE CONSIDERED THE PROTEST MADE IN YOUR TELEGRAM OF MAY 19, 1971, AGAINST CANCELLATION OF REQUEST FOR PROPOSAL (RFP) DAAF01-71-R-0349, ISSUED BY THE ROCK ISLAND ARSENAL, ROCK ISLAND, ILLINOIS, FOR MANUFACTURE OF THE XM197 20MM GUN HOUSINGS, AND AGAINST THE SUBSEQUENT SOLE-SOURCE AWARD OF A CONTRACT FOR THE SAME PARTS TO ANOTHER OFFEROR.

THIS PROCUREMENT WAS BASED ON TWO MILITARY INTERDEPARTMENTAL PURCHASE REQUESTS (MIPR) FROM THE U.S. NAVY SHIPS PARTS CONTROL CENTER (SPCC) AT MECHANICSBURG, PENNSYLVANIA, TO THE ARMY WEAPONS COMMAND, ROCK ISLAND ARSENAL (RIA), ILLINOIS. MIPR N00104-1-ZW088, AUGUST 6, 1970, AND MIPR N00104-1-ZW208, AUGUST 20, 1970, PLACED ORDERS WITH FEDERAL STOCK NUMBERS FOR FIFTY AND TWENTY-TWO MACHINE GUN HOUSING ASSEMBLIES. THE TWO ORDERS CARRIED ISSUE PRIORITY DESIGNATORS 02 AND 03, RESPECTIVELY, SIGNIFYING URGENT REQUIREMENTS, BUT NO MANDATORY DELIVERY SCHEDULE WAS PLACED ON EITHER ORDER.

AN ADVERTISED PROCUREMENT WAS INITIALLY CONTEMPLATED BY RIA BECAUSE NO MANDATORY DELIVERY SCHEDULE WAS PLACED ON EITHER OF THE TWO ORDERS NOTWITHSTANDING THEIR STATED URGENCY. HOWEVER, IT WAS THEN DETERMINED THAT PROCUREMENT BY COMPETITIVE NEGOTIATION WAS PERMISSIBLE UNDER THE AUTHORITY OF PARAGRAPH 3-202 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PERMITS NEGOTIATION ON THE BASIS OF PUBLIC EXIGENCY WHERE ISSUE PRIORITY DESIGNATORS 1 THROUGH 6 ARE APPLICABLE TO THE PROPOSED PROCUREMENT. ACCORDINGLY, AFTER ISSUANCE OF A DETERMINATION AND FINDINGS AUTHORIZING NEGOTIATION ON THE BASIS OF PUBLIC EXIGENCY, RFP -0349 FOR 110 OF THE SUBJECT HOUSINGS, CONSISTING OF THE 72 HOUSINGS COVERED BY THE TWO MIPRS MENTIONED ABOVE AND AN ADDITIONAL 38 HOUSINGS COVERED BY A LATER MIPR CARRYING AN 03 ISSUE PRIORITY DESIGNATOR, WAS ISSUED.

THIS SOLICITATION REQUIRED THAT THE SUBASSEMBLIES BE DELIVERED TO RIA WITHIN 330 DAYS AFTER DATE OF FIRST ARTICLE APPROVAL, IF THE AWARD WAS MADE ON THE BASIS OF FIRST ARTICLE APPROVAL, OR 330 DAYS AFTER THE DATE OF AWARD IF THE CONTRACT WAS AWARDED WITHOUT THE REQUIREMENT THAT A FIRST ARTICLE BE APPROVED. IF A CONTRACTOR WAS REQUIRED TO SUBMIT A FIRST ARTICLE FOR APPROVAL, HE WAS REQUIRED TO DELIVER IT TO RIA WITHIN 180 DAYS OF THE DATE OF AWARD. THE SOLICITATION ALSO INCLUDED A CLAUSE WHICH ALLOWED THE SUCCESSFUL OFFEROR TO PROPOSE A LATER ALTERNATE DELIVERY SCHEDULE BUT THE AGENCY RESERVED THE RIGHT TO REJECT A DELIVERY SCHEDULE WHICH THE CONTRACTING OFFICER DETERMINED AT THE TIME OF AWARD TO BE UNREASONABLE OR DETRIMENTAL TO THE INTEREST OF THE GOVERNMENT.

PROPOSALS WERE RECEIVED FROM FOUR COMPANIES WHICH, AFTER CONFIRMATION AND CORRECTION, WERE AS FOLLOWS:

WITHOUT FIRST WITH FIRST

OFFEROR ARTICLE APPROVAL ARTICLE APPROVAL

BACHAN AEROSPACE

CORPORATION $1850.00 $1875.00

GENERAL ELECTRIC

COMPANY 2404.00 -

REMM COMPANY 2412.00 2467.00

SKYLINE INDUSTRIES INC. 2671.00 2767.00

BACHAN'S PROPOSAL ON FIRST ARTICLE APPROVAL BASIS AMOUNTED TO A TOTAL OF $206,250.00 AND ACCORDINGLY IT WAS DETERMINED TO BE THE LOW OFFEROR. GENERAL ELECTRIC COMPANY, THE ORIGINAL MANUFACTURER AND THE ONLY OFFEROR WHICH HAD PREVIOUSLY SUPPLIED THIS EQUIPMENT TO THE GOVERNMENT, WAS SECOND LOW AND WAS CURRENTLY MANUFACTURING THE EQUIPMENT UNDER CONTRACT NO. DAAG25-71-A-0031.

ON FEBRUARY 25, 1971, RIA REQUESTED THAT A PRE-AWARD SURVEY OF BACHAN BE MADE. ALTHOUGH THE PRE-AWARD SURVEY TEAM REPORTED THAT BACHAN HAD THE TECHNICAL EXPERTS, SKILLED EMPLOYEES, QUALIFIED SUPPLIERS, AND MACHINERY NECESSARY FOR PRODUCTION OF THE GUN HOUSINGS, IT DETERMINED THAT BACHAN WAS NOT ABLE TO SATISFY THE REQUIREMENT THAT IT DELIVER A FIRST ARTICLE FOR INSPECTION WITHIN 180 DAYS AFTER AWARD OF THE CONTRACT AND, THEREFORE, THE TEAM RECOMMENDED THAT NO AWARD BE MADE TO BACHAN. IN THIS REGARD, ALTHOUGH BACHAN TOOK NO EXCEPTION TO THE DELIVERY SCHEDULE IN ITS ORIGINAL OFFER, IN A LETTER OF MARCH 31, 1971, IT REQUESTED THAT AN ALTERNATE SCHEDULE PROVIDING FOR FIRST ARTICLE DELIVERY WITHIN 240 DAYS AFTER AWARD BE ALLOWED AND STATED THAT IT WOULD NOT CONTRACT UNLESS IT WERE AWARDED UNDER THE REQUESTED ALTERNATE DELIVERY SCHEDULE.

HOWEVER, THE DELIVERY SCHEDULE QUESTION BECAME MOOT ON ACCOUNT OF THE FOLLOWING DEVELOPMENTS. ON MARCH 31, 1971, RIA RECEIVED A TELEPHONE CALL FROM SPCC IN WHICH THE LATTER EXPLAINED ITS URGENT NEED FOR THE GUN HOUSINGS AND QUESTIONED THE NECESSITY FOR A COMPETITIVE CONTRACT UNDER THESE CIRCUMSTANCES. A NAVY OFFICIAL LATER RAISED THE SAME QUESTION WITH RIA AND REQUESTED THAT THE PROCUREMENT BE EXPEDITED BY NEGOTIATION OF A SOLE-SOURCE CONTRACT WITH GENERAL ELECTRIC, THE ONLY PREVIOUS SUPPLIER, ON THE GROUND THAT THE TIME REQUIRED FOR A FIRST ARTICLE SUBMISSION BY A NEW SUPPLIER, NOT REQUIRED FOR GENERAL ELECTRIC IN VIEW OF ITS CURRENT PRODUCTION, WOULD BE DETRIMENTAL TO THE INTERESTS OF THE GOVERNMENT. THEREFORE, THE CONTRACTING OFFICER ISSUED A DETERMINATION ON APRIL 14, 1971, DIRECTING CANCELLATION OF THE RFP. HE FURTHER DIRECTED THAT THE ORDER FOR THE EQUIPMENT BE NEGOTIATED WITH GENERAL ELECTRIC AT AN AMOUNT NOT TO EXCEED $264,440.00, OR $2404 PER UNIT, BECAUSE THAT COMPANY COULD BEST MEET THE URGENT DELIVERY REQUIREMENTS. AFTER THIS DECISION, TASK ORDER NO. 0035 TO CONTRACT NO. DAAG25-71-A-0035 WAS ISSUED TO GENERAL ELECTRIC COMPANY FOR DELIVERY OF ADDITIONAL GUN HOUSINGS UNDER ITS CURRENT CONTRACT. THE ORDER CALLED FOR DELIVERY OF 30 UNITS ON DECEMBER 31, 1971, 40 UNITS ON JANUARY 31, 1972, AND 40 UNITS ON FEBRUARY 29, 1972.

BACHAN INITIATED ITS PROTEST TO RIA ON MAY 10, 1971, IN CORRESPONDENCE WHICH RELATED THE HISTORY OF ITS PARTICIPATION IN THIS SOLICITATION. ALSO RAISED THE FOLLOWING FACTUAL ISSUES WHICH HAVE BEEN CLARIFIED BY THE ADMINISTRATIVE REPORT.

BACHAN STATED THAT AT THE CONCLUSION OF THE PRE-AWARD SURVEY THE EXPERTS FROM RIA AND THE DEFENSE SUPPLY AGENCY "INDICATED TO BACHAN PERSONNEL THAT A SATISFACTORY SURVEY WAS CONDUCTED AND THAT ALL QUESTIONS RELATIVE TO BACHAN'S ABILITIES WERE ANSWERED SATISFACTORILY," BUT THAT TWO WEEKS AFTER THE SURVEY HAD BEEN COMPLETED, BACHAN RECEIVED A POSTCARD INFORMING IT THAT THE SOLICITATION FOR THE SUBASSEMBLIES HAD BEEN CANCELLED WITHOUT ANY EXPLANATION. BACHAN PROTESTED ITS FAILURE TO RECEIVE AN AWARD IN VIEW OF THE ALLEGEDLY FAVORABLE PRE-AWARD SURVEY. BACHAN RELATED FURTHER THAT UPON RECEIPT OF NOTICE THAT THE RFP HAD BEEN CANCELLED ITS ASSISTANT SALES MANAGER CALLED RIA TO ASK WHY THE SOLICITATION WAS CANCELLED. BACHAN ALLEGED THAT AN RIA EMPLOYEE EXPLAINED THAT THE PROCUREMENT SHOULD NOT HAVE BEEN COMPETITIVELY SOLICITED AND THAT THE ORIGINAL MANUFACTURER OF THE EQUIPMENT HAD ALL RIGHTS TO SUPPLY SPARE PARTS ON AN EXCLUSIVE BASIS. HOWEVER, IN A SIGNED STATEMENT, THAT EMPLOYEE LATER EXPLAINED TO THE CONTRACTING OFFICER THAT HE TOLD BACHAN ONLY THAT DELIVERY OF THE EQUIPMENT WAS SO IMPORTANT THAT THE PROCUREMENT COULD NOT BE DELAYED FOR THE AMOUNT OF TIME REQUIRED FOR APPROVAL OF A FIRST ARTICLE AND THAT THE EQUIPMENT WOULD PROBABLY BE ORDERED FROM THE ORIGINAL SUPPLIER ON A WAIVER OF THE FIRST ARTICLE APPROVAL BASIS. THE CONTRACTING OFFICER REPORTS THAT HE SOUGHT IN VAIN TO DISCOVER THE EMPLOYEE WHO TOLD BACHAN THAT GENERAL ELECTRIC HAD EXCLUSIVE RIGHTS. RIA ALSO ASSURED BACHAN THAT NO BIDDER HAS EXCLUSIVE RIGHTS TO FURNISH SPARE PARTS FOR THE XM197 20MM MACHINE GUN AND THAT BACHAN WILL RECEIVE IFBS AND RFPS FOR FUTURE COMPETITIVE PROCUREMENTS. AS A MATTER OF FACT, IT IS REPORTED THAT BACHAN RECEIVED A SOLICITATION AND SUBMITTED AN OFFER UNDER A LATER PROCUREMENT OF THE SAME ITEMS AS ARE HERE INVOLVED.

CONCERNING BACHAN'S QUESTION AS TO WHY IT DID NOT RECEIVE AN AWARD ON RFP -0349 AFTER A FAVORABLE REPORT HAD BEEN MADE CONCERNING ITS ABILITY TO MANUFACTURE THE GUN HOUSINGS, AS INDICATED ABOVE, IT IS REPORTED THAT ALTHOUGH THE PRE-AWARD SURVEY OF BACHAN WAS REQUESTED BECAUSE IT WAS THE LOW OFFEROR IN THE ORIGINAL SOLICITATION AND THAT THE PRE-AWARD SURVEY TEAM CONCLUDED THAT BACHAN WAS CAPABLE OF PERFORMING THE CONTRACT, THE FINAL RECOMMENDATION OF THE SURVEY TEAM WAS THAT THE AWARD SHOULD NOT BE MADE TO BACHAN BECAUSE IT WAS NOT ABLE TO DELIVER A FIRST ARTICLE WITHIN THE CONTRACT SCHEDULE.

WITH RESPECT TO THE CANCELLATION OF RFP -0349 AND THE LATER SOLE SOURCE AWARD TO GENERAL ELECTRIC, ASPR 1-1903(A)(I)(B) FORBIDS CONSIDERATION OF DIFFERENCES IN DELIVERY SCHEDULES WHICH RESULT FROM WAIVER OF FIRST ARTICLE APPROVAL IN BID OR PROPOSAL EVALUATION. HOWEVER, OUR OFFICE RECOGNIZES THAT TIME OF DELIVERY CAN ASSUME OVERWHELMING IMPORTANCE IN URGENT PROCUREMENT SITUATIONS. WE WOULD, THEREFORE, NOT OBJECT TO THE CANCELLATION OF A SOLICITATION WHERE OTHER THAN THE LOWEST OFFEROR IS THE ONLY OFFEROR QUALIFIED FOR FIRST ARTICLE WAIVER AND WHERE THE PROCUREMENT HAS BEEN DETERMINED TO BE OF SUCH URGENCY AS TO REQUIRE A SOLE-SOURCE AWARD TO THE OFFEROR ENTITLED TO FIRST ARTICLE WAIVER. SEE, IN THIS REGARD, 49 COMP. GEN. 639 (1970).

ACCORDINGLY, ON THE RECORD, WE MUST CONCLUDE THAT THE CANCELLATION OF RFP -0349 AND THE SOLE-SOURCE AWARD TO GENERAL ELECTRIC IS NOT SUBJECT TO QUESTION BY OUR OFFICE.