B-174270, FEB 10, 1972

B-174270, FEB 10, 1972

BID PROTEST - PRIOR QUALIFIED SOURCES ONLY CLAUSE DECISION DENYING PROTEST OF SARGENT-FLETCHER COMPANY AGAINST AWARD OF TWO CONTRACTS TO ATLAS FABRICATORS, INC., UNDER RFPS ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, OGDEN AIR MATERIEL AREA, HILL AFB, UTAH, FOR A PROCUREMENT OF NAPALM BOMBS. SINCE ATLAS HAD ACQUIRED THE COMPLETE MANUFACTURING ABILITY FOR THESE ITEMS FROM AMERICAN ELECTRIC, INC., A PRIOR APPROVED SOURCE, ITS ELIGIBILITY WAS NOT PRECLUDED BY THE "PRIOR QUALIFIED SOURCES ONLY" CLAUSE OF THE SOLICITATIONS. FURTHER, THE EVIDENCE INDICATES THAT TIME EXTENSIONS WERE MADE TO ADVISE EACH OFFEROR OF CHANGES IN SOLICITATION REQUIREMENTS AND NOT TO ALLOW ATLAS TO QUALIFY. THE PROTEST MUST BE DENIED SINCE PREFERENTIAL TREATMENT TO AN ESTABLISHED CONTRACTOR WOULD BE CONTRARY TO THE INTENTION OF 10 U.S.C. 2304(G) AND GIVING PROTESTANT AN OPPORTUNITY TO MEET ATLAS' OFFER WOULD CONSTITUTE THE AUCTION TECHNIQUE EXPRESSLY PROHIBITED BY ASPR 3 805.1(B).

TO SARGENT-FLETCHER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 1, 1971, REFERENCE CA-71 133, WITH ENCLOSURES, TO CONGRESSMAN CHARLES E. WIGGINS, IN CONNECTION WITH YOUR PROTEST AGAINST AWARD OF TWO CONTRACTS TO ATLAS FABRICATORS, INC. (ATLAS) UNDER RFPS F42600-71-R-3474 AND -3550, ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, OGDEN AIR MATERIEL AREA (OOAMA), HILL AIR FORCE BASE, UTAH. YOUR LETTER AND ACCOMPANYING ENCLOSURES WERE FORWARDED TO US BY CONGRESSMAN WIGGINS AND WILL BE TREATED AS A PROTEST FILED BEFORE THIS OFFICE.

THE ABOVE-REFERENCED SOLICITATIONS WERE ISSUED TO FULFILL REQUIREMENTS FOR BLU-32B/B AND BLU-27B/B NAPALM BOMBS. IN VIEW OF THE URGENCY OF THESE PROCUREMENTS, WHICH WERE NEGOTIATED UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(2), THE SOLICITATIONS WERE RESTRICTED TO "PRIOR QUALIFIED SOURCES ONLY" TO ELIMINATE THE NEED FOR FIRST ARTICLE TESTING AND QUALIFICATION. YOUR INITIAL CONTENTION IS THAT ATLAS WAS NOT ELIGIBLE TO PARTICIPATE IN THESE PROCUREMENTS BECAUSE IT WAS NOT A "PRIOR QUALIFIED SOURCE."

WHEN THE INSTANT PROCUREMENTS WERE PUBLICIZED IN THE COMMERCE BUSINESS DAILY "SYNOPSIS OF U.S. GOVERNMENT PROPOSED PROCUREMENT, SALES AND CONTRACT AWARDS", ATLAS INFORMED OOAMA THAT IT HAD ACQUIRED THE COMPLETE MANUFACTURING CAPABILITY FOR THESE ITEMS FROM AMERICAN ELECTRIC, INC. (AMERICAN), A PRIOR APPROVED SOURCE. ATLAS PRESENTED EVIDENCE THAT IT HAD ACQUIRED ALL OF AMERICAN'S MACHINERY, EQUIPMENT, TOOLING, FIXTURES, AND TEST AND INSPECTION EQUIPMENT FOR THE MANUFACTURE, FILLING AND ACCEPTANCE OF THE BOMBS. ADDITIONALLY, ATLAS EMPLOYED THE TECHNICAL AND SUPERVISORY PERSONNEL FORMERLY UTILIZED BY AMERICAN FOR THESE ITEMS. ATLAS ALSO OBSERVED THAT SINCE 1964 IT HAD BEEN THE MAJOR COMPONENT SUBCONTRACTOR FOR ALL THE BLU 27 AND BLU 32 BOMBS PRODUCED BY AMERICAN. IN VIEW THEREOF, ON JULY 21, 1971, OOAMA CERTIFIED ATLAS AS A "QUALIFIED PRODUCER OF BLU-27B/B FILLED, BLU-27B/B EMPTY, AND BLU 32B/B FILLED" BOMBS. UNDER THE PRESENT RECORD, WE SEE NO VALID LEGAL BASIS FOR OBJECTION TO THE AIR FORCE DETERMINATION THAT ATLAS WAS ELIGIBLE FOR AWARD OF THE CONTRACTS.

ALTERNATIVELY, YOU SUGGEST THAT EXTENSIONS OF TIME FOR RESPONDING TO THE SOLICITATIONS WERE MADE FOR THE PURPOSE OF PERMITTING ATLAS TO BECOME A QUALIFIED SOURCE. RFP-3474 WAS ISSUED ON JUNE 10, 1971, WITH A DATE FOR RECEIPT OF PROPOSALS OF JULY 9, 1971. BY LETTER OF JULY 1, 1971, YOU CONFIRMED A PRIOR TELEPHONE CONVERSATION IN WHICH YOU ADVISED THE PROCURING ACTIVITY OF SEVERAL ERRORS IN THE SOLICITATION SPECIFICATIONS. AMENDMENT 0001 TO THE SOLICITATION WAS ISSUED, EXTENDING THE DATE FOR RECEIPT OF PROPOSALS INDEFINITELY. AMENDMENT 0002, ISSUED ON JULY 15, REVISED THE SPECIFICATION DRAWINGS TO CORRECT THE ERRORS WHICH YOU HAD OBSERVED, AND ESTABLISHED JULY 22 AS THE CLOSING DATE FOR RECEIPT OF PROPOSALS. AS INDICATED ABOVE, ATLAS HAD BEEN CERTIFIED AS A QUALIFIED SOURCE ON JULY 21. BY TELEGRAPHIC AMENDMENT OF AUGUST 10, WHICH REVISED SEVERAL OF THE SOLICITATION PROVISIONS, OFFERORS WERE REQUIRED TO SUBMIT REVISED PROPOSALS BY AUGUST 20. NEGOTIATIONS WERE REOPENED ON AUGUST 27 BY ANOTHER TELEGRAPHIC MESSAGE IN WHICH THE QUANTITY, DELIVERY SCHEDULE AND OTHER SOLICITATION TERMS WERE REVISED, AND WHICH REQUESTED REVISED PROPOSALS BY SEPTEMBER 7. ON SEPTEMBER 2, OFFERORS WERE ADVISED OF FURTHER REVISIONS TO THE QUANTITY, DELIVERY SCHEDULE AND CERTAIN OTHER PROVISIONS, AND WERE REQUESTED TO SUBMIT REVISED PROPOSALS "ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT" BY SEPTEMBER 13, 1971.

RFP-3550, ISSUED ON JUNE 23, 1971, ESTABLISHED JULY 22 AS THE CLOSING DATE FOR RECEIPT OF PROPOSALS. ATLAS WAS CERTIFIED TO BE A QUALIFIED PRODUCER BEFORE THE CLOSING DATE. AMENDMENT 0001 TO THE RFP, DATED JULY 15, MADE DRAWING AND PACKAGING REVISIONS, BUT DID NOT EXTEND THE PROPOSAL DUE DATE. BY TELEGRAM OF AUGUST 10, OFFERORS WERE ADVISED OF CERTAIN REVISIONS TO THE SOLICITATION AND WERE REQUESTED TO SUBMIT REVISED PROPOSALS "ON THE MOST FAVORABLE TERMS FROM A PRICE AND TECHNICAL STANDPOINT" BY AUGUST 20, 1971.

THE CHRONOLOGY OF THESE PROCUREMENTS SHOWS THAT THE AMENDMENTS TO THE SOLICITATIONS, AND THE EXTENSIONS OF TIME FOR SUBMISSION OF BEST AND FINAL OFFERS, WERE MADE TO ADVISE EACH OFFEROR OF CHANGES IN SOLICITATION REQUIREMENTS, NOT FOR THE PURPOSE OF ALLOWING ATLAS TO QUALIFY. THEREFORE, WE MUST REJECT YOUR SECOND CONTENTION.

YOU NEXT MAINTAIN:

"IN THESE TIMES OF DECREASED MILITARY SPENDING, IT APPEARS REASONABLE THAT ASSISTANCE WOULD BE RENDERED TO FIRMS WHO HAVE OUTSTANDING RECORDS AS REGARDS PRICE, QUALITY, AND DELIVERY, ENABLING THEM TO CONTINUE IN BUSINESS. UNLESS THERE IS A SIZABLE ECONOMIC DIFFERENTIAL, IT DOES NOT APPEAR REASONABLE THAT THE PROCUREMENT ACTIVITIES WOULD PERMIT ANY UNTRIED SOURCES TO ENTER THE FIELD."

WE DO NOT BELIEVE IT IS ENTIRELY ACCURATE TO CHARACTERIZE ATLAS AS AN "UNTRIED" SOURCE IN VIEW OF ITS HISTORY AS A SUBCONTRACTOR AND ITS ACQUISITION OF EQUIPMENT AND PERSONNEL FROM AMERICAN. MOREOVER, THE CONCEPT THAT ESTABLISHED CONTRACTORS SHOULD BE PROTECTED FROM THE EFFECTS OF COMPETITION IS CONTRARY TO THE MANDATE OF 10 U.S.C. 2304(G) THAT:

"IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 *** PROPOSALS, INCLUDING PRICE, SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED *** ."

IN IMPLEMENTATION THEREOF, ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3 -102(C) PROVIDES IN PART: "NEGOTIATED PROCUREMENTS SHALL BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICABLE EXTENT." ASPR 3-202.2 STATES THAT WHEN NEGOTIATING UNDER THE "PUBLIC EXIGENCY" AUTHORITY, " *** COMPETITION TO THE MAXIMUM EXTENT PRACTICABLE, WITHIN THE TIME ALLOWED, SHALL BE OBTAINED." IN VIEW OF THESE STATUTORY AND REGULATORY PROVISIONS, ONCE ATLAS WAS DETERMINED TO BE A QUALIFIED SOURCE, TO HAVE EXCLUDED IT FROM THESE PROCUREMENTS WOULD HAVE BEEN OF MOST QUESTIONABLE PROPRIETY.

AS TO THE SIZE OF THE "ECONOMIC DIFFERENTIAL" IN OFFERS, ATLAS' EVALUATED OFFER UNDER RFP-3474 WAS $590,499.39 LOWER THAN YOURS, AND ITS EVALUATED OFFER UNDER RFP-3550 WAS $6,078.70 LOWER THAN YOURS. WE THEREFORE FIND NO MERIT IN YOUR CONTENTION THAT THE PRICE DIFFERENTIALS DID NOT JUSTIFY THE AWARDS TO ATLAS.

YOU FURTHER STATE IN YOUR LETTER OF PROTEST:

"BOTH OF THE ABOVE DISCUSSED PROCUREMENTS WERE NEGOTIATED PROCUREMENTS (AS OPPOSED TO ADVERTISED BIDS), THEREBY GIVING THE PROCURING ACTIVITIES CONSIDERABLE LATITUDE IN THEIR NEGOTIATIONS WITH BIDDERS. AS AN OLD AND PRESUMABLY VALUED SUPPLIER WE FEEL THAT (WE) SHOULD HAVE BEEN GIVEN PART, IF NOT ALL, OF THE BUSINESS AVAILABLE, PARTICULARLY SINCE WE CURRENTLY ARE IN ACTIVE PRODUCTION ON IDENTICAL ITEMS. FURTHER, FOR APPROXIMATELY 20 YEARS WE HAVE BEEN PART OF THE DEFENSE DEPARTMENT'S 'MOBILIZATION PRODUCTION PLANNING PROGRAM.' *** "

THE INSTANT PROCUREMENTS WERE NEGOTIATED UNDER 10 U.S.C. 2304(A)(2), AND SINCE THEY CONTEMPLATED THE AWARD OF FIXED-PRICE CONTRACTS FOR ITEMS OF SUPPLY FOR WHICH COMPLETE SPECIFICATIONS WERE AVAILABLE, COMPETITION THEREUNDER WAS LIMITED TO PRICE. UNDER THESE CIRCUMSTANCES, UPON A DETERMINATION THAT ATLAS WAS THE LOW RESPONSIBLE OFFEROR, WE ARE AWARE OF NO PROPER BASIS WHEREBY YOUR FIRM COULD HAVE BEEN "GIVEN" OR AWARDED A PORTION OR ALL OF THE REQUIREMENT. SEE 50 COMP. GEN. 67, 71 (1970).

IN THIS CONNECTION, IT SHOULD BE NOTED THAT PARTICIPATION IN THE "MOBILIZATION PRODUCTION PLANNING PROGRAM" DOES NOT ASSURE AN OFFEROR THAT HE SHALL BE AWARDED A CONTRACT AS A RESULT OF A COMPETITIVELY NEGOTIATED PROCUREMENT. NEGOTIATION SOLELY WITH YOUR FIRM FOR THE PURPOSE OF MAINTAINING IT IN PRODUCTION AS A PART OF THE INDUSTRIAL MOBILIZATION BASE IS AUTHORIZED BY 10 U.S.C. 2304(A)(16). THE INSTANT PROCUREMENTS, HOWEVER, WERE NOT NEGOTIATED PURSUANT TO THAT AUTHORITY AND WE ARE ADVISED BY THE DEPARTMENT OF THE AIR FORCE THAT THERE WAS NO REQUIREMENT AT THE TIME OF SOLICITATION OR AWARD FOR A DUAL MOBILIZATION BASE FOR THESE ITEMS.

YOUR FINAL ARGUMENT IS THAT DESPITE THE RELATIVELY SMALL DIFFERENTIAL IN OFFERS UNDER RFP-3550, " *** NO ATTEMPT WAS MADE TO NEGOTIATE WITH US, THEREBY GIVING THE GOVERNMENT A SECOND SOURCE AT NO CHARGE *** ." OUR REVIEW OF THESE PROCUREMENTS SHOWS THAT BOTH OFFERORS WERE GIVEN MULTIPLE OPPORTUNITIES FOR REVISIONS OF THEIR OFFERS AND IN EACH PROCUREMENT WERE CLEARLY ADVISED TO SUBMIT THEIR "MOST FAVORABLE TERMS." THE IMPLICATION THAT YOUR FIRM SHOULD HAVE BEEN ADVISED OF AND PERMITTED TO MEET ATLAS' OFFER MUST BE REJECTED, SINCE THAT PROCEDURE WOULD HAVE CONSTITUTED AN AUCTION TECHNIQUE PROHIBITED BY ASPR 3 805.1(B).

ACCORDINGLY, YOUR PROTEST IS DENIED.