B-174371, APR 12, 1972

B-174371: Apr 12, 1972

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE ARMY ELECTRONICS COMMAND (ECOM) AND HIS DETERMINATION THAT FIRST ARTICLE TESTING WOULD PROTECT THE GOVERNMENT'S INTEREST WERE NOT UNREASONABLE. IS NOT AWARE OF ANY STATUTORY PROHIBITION AGAINST THE SUBMISSION OF AN UNPROFITABLE BID. THE PROTEST IS DENIED. SUCCESSFUL COMPLETION OF FIRST ARTICLE TESTING WAS REQUIRED OF THE OFFEROR RECEIVING THE AWARD. BECAUSE PURCHASE OF THESE ITEMS WAS CONSIDERED URGENT. THE FOLLOWING QUOTATIONS WERE RECEIVED AS A RESULT OF THE ORAL SOLICITATION OF OFFERS FROM THREE FIRMS ON SEPTEMBER 10. EACH OFFEROR WAS ORALLY REQUESTED TO NOTIFY THE PROCUREMENT OFFICE BY OCTOBER 7. WERE: FIRM UNIT PRICE COST FOR FIRST TOTAL PRICE ARTICLE TESTING MICROWAVE ASSOCIATES $49.06 $1.

B-174371, APR 12, 1972

BID PROTEST - ALLEGED NONRESPONSIBILITY - BELOW COST BID DECISION DENYING THE PROTEST OF MICRO-DYNAMICS, INC., AGAINST AWARD OF A CONTRACT TO MICROWAVE ASSOCIATES (MICOM) UNDER AN INQUIRY ISSUED BY THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO, FOR A QUANTITY OF ELECTRON TUBES. IN VIEW OF THE CONFLICTING INFORMATION CONCERNING MICOM'S ABILITY TO PRODUCE AN ACCEPTABLE TUBE, IT APPEARS THAT THE CONTRACTING OFFICER'S RELIANCE ON THE ADVICE OF THE REQUISITIONING ACTIVITY, THE ARMY ELECTRONICS COMMAND (ECOM) AND HIS DETERMINATION THAT FIRST ARTICLE TESTING WOULD PROTECT THE GOVERNMENT'S INTEREST WERE NOT UNREASONABLE. FURTHER, THE COMP. GEN. IS NOT AWARE OF ANY STATUTORY PROHIBITION AGAINST THE SUBMISSION OF AN UNPROFITABLE BID. B-171794, MAY 21, 1971. ACCORDINGLY, THE PROTEST IS DENIED.

TO MICRO-DYNAMICS, INC.:

WE REFER TO YOUR LETTER OF DECEMBER 22, 1971, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF CONTRACT NO. DSA900-72 C-2259 FOR TR-TYPE ELECTRON TUBES TO ANY OFFEROR OTHER THAN MICRO DYNAMICS, INC., UNDER INQUIRIES NOS. PR-S8780 AND PR-S8754, ISSUED BY THE DEFENSE ELECTRONICS SUPPLY CENTER (DESC), DAYTON, OHIO.

THE PROCUREMENT COVERED A TOTAL QUANTITY OF 932 ELECTRON TUBES, FSN 5960- 822-8875, TO BE MANUFACTURED IN ACCORDANCE WITH ARMY MISSILE COMMAND DRAWING NO. 9151022. SUCCESSFUL COMPLETION OF FIRST ARTICLE TESTING WAS REQUIRED OF THE OFFEROR RECEIVING THE AWARD. BECAUSE PURCHASE OF THESE ITEMS WAS CONSIDERED URGENT, THE CONTRACTING OFFICER UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(2) AND ARMED SERVICES PROCUREMENT REGULATION 3- 202.2(VI) DETERMINED TO NEGOTIATE THE PROCUREMENT. THE FOLLOWING QUOTATIONS WERE RECEIVED AS A RESULT OF THE ORAL SOLICITATION OF OFFERS FROM THREE FIRMS ON SEPTEMBER 10, 1971:

FIRM UNIT PRICE COST FOR FIRST ARTICLE TESTING

MICROWAVE ASSOCIATES $49.06 $1,200

VARIAN ASSOCIATES 77.50 5,792

MICRO-DYNAMICS, INC. 84.00 1,700 WITH LIFE TEST OR

1,000 WITHOUT LIFE TEST

SUBSEQUENTLY, EACH OFFEROR WAS ORALLY REQUESTED TO NOTIFY THE PROCUREMENT OFFICE BY OCTOBER 7, 1971, OF ANY FINAL REVISIONS TO ITS QUOTATION. FINAL QUOTATIONS, AS REVISED, WERE:

FIRM UNIT PRICE COST FOR FIRST TOTAL PRICE

ARTICLE TESTING

MICROWAVE ASSOCIATES $49.06 $1,200 $46,923.92

VARIAN ASSOCIATES 77.50 4,792 77,022.00

MICRO-DYNAMICS, INC. 84.00 1,700 79,988.00

MICRO-DYNAMICS OBJECTED TO THE PROCUREMENT OFFICE AGAINST ANY AWARD TO MICROWAVE, THE LOW OFFEROR, ON THE BASIS THAT MICROWAVE COULD NOT PRODUCE A TUBE WITH A 1,000 HOUR OPERATING LIFE AS REQUIRED BY THE SPECIFICATION. AFTER INQUIRING INTO THE VALIDITY OF THIS ALLEGATION, THE CONTRACTING OFFICER DETERMINED, NOTWITHSTANDING THE OBJECTION BY MICRO-DYNAMICS, TO MAKE AWARD TO MICROWAVE. AWARD WAS MADE ON OCTOBER 20, 1971. DETERMINATION THAT MICROWAVE WAS RESPONSIBLE WAS MADE WITHOUT CONDUCTING A PREAWARD SURVEY BECAUSE THE CONTRACTING OFFICER WAS FAMILIAR WITH THE APPARENTLY ADEQUATE PERFORMANCE OF THAT OFFEROR UNDER PREVIOUS CONTRACTS AWARDED IT BY DESC.

IT IS THE CONTENTION OF MICRO-DYNAMICS THAT THE DETERMINATION TO MAKE AWARD TO MICROWAVE WAS ARBITRARY AND CAPRICIOUS. THIS VIEW IS BASED UPON THE FOLLOWING FACTS. BOTH THE PROCUREMENT OFFICE AND THE UNITED STATES ARMY ELECTRONICS COMMAND (ECOM), THE ISSUER OF THE PURCHASE REQUEST, WERE MADE COGNIZANT BY MICRO-DYNAMICS OF TWO LETTERS ADDRESSED TO THE LATTER ACTIVITY BY THE MISSILE COMMAND (MICOM), THE USING ACTIVITY, WHICH INDICATED THE MICROWAVE TUBE TO BE INCAPABLE OF PROVIDING THE REQUIRED 1,000 HOURS OF OPERATION. FURTHER, THESE LETTERS ADVISED THAT MICROWAVE WAS NO LONGER CONSIDERED TO BE AN ACCEPTABLE SUPPLIER OF THESE TUBES AND THAT ONLY THE MICRO-DYNAMICS TUBE COULD MEET THE SPECIFICATION REQUIREMENTS. MICRO-DYNAMICS INFORMED THE PROCUREMENT OFFICE ALSO THAT MICROWAVE HAD ATTEMPTED TO DEVELOP A 1,000-HOUR TUBE WITHIN THE LAST 3 YEARS, BUT THAT THIS ATTEMPT HAD BEEN UNSUCCESSFUL. IT IS ALSO CONTENDED THAT SINCE MICROWAVE WAS PREVIOUSLY REQUIRED TO FURNISH ONLY A 500-HOUR TUBE UNDER A WAIVER OF THE 1,000-HOUR REQUIREMENT, THE INABILITY OF MICROWAVE TO PRODUCE A 1,000-HOUR TUBE IS FURTHER ESTABLISHED. FINALLY, MICRO DYNAMICS BELIEVES THAT THE SUBMISSION OF AN OFFER BY MICROWAVE UNDER THIS SOLICITATION WHICH WAS ALMOST 50 PERCENT BELOW THE PRICES CHARGED UNDER ITS PRIOR CONTRACTS FOR THE TUBE CONSTITUTED UNFAIR COMPETITION AND THAT FOR THIS REASON THE MICROWAVE OFFER SHOULD NOT HAVE BEEN CONSIDERED FOR AWARD. REGARDING THE SECOND LOW OFFER SUBMITTED BY VARIAN ASSOCIATES, IT IS CONTENDED THAT THIS OFFER SHOULD ALSO BE DISREGARDED BECAUSE THAT OFFEROR HAS NOT PERFORMED A LIFE TEST ON ITS TUBE OR THE NECESSARY SYSTEM EVALUATION TO DETERMINE IF THERE ARE ANY SYSTEM INTERFACE PROBLEMS. INASMUCH AS WE CONCLUDE BELOW THAT THE AWARD TO MICROWAVE IS NOT SUBJECT TO QUESTION, IT IS NOT NECESSARY THAT WE CONSIDER THE CONTENTIONS RAISED WITH RESPECT TO THE VARIAN PROPOSAL.

THE RECORD SHOWS THAT IN RESPONSE TO THE OBJECTION RAISED BY MICRO DYNAMICS, THE BUYER, ON BEHALF OF THE CONTRACTING OFFICER, SPOKE WITH MICOM PERSONNEL REGARDING THE ABILITY OF MICROWAVE TO PRODUCE THE TUBE DESIRED. AS A RESULT OF THESE CONVERSATIONS, MICOM FORWARDED COPIES OF SEVERAL LETTERS GERMANE TO THIS QUESTION. THESE INCLUDED THE TWO ABOVE MENTIONED MICOM LETTERS ADDRESSED TO ECOM, WHICH INDICATED THAT MICROWAVE TUBES WERE PROVIDING APPROXIMATELY ONLY 90 RADIATE HOURS AND 700 OPERATING HOURS OF LIFE, AND THAT MICRO-DYNAMICS WAS CONSIDERED TO BE THE ONLY SOURCE QUALIFIED TO SUPPLY 1,000-HOUR TUBES. THESE LETTERS FURTHER INDICATED THAT THE 1,000-HOUR LIFE REQUIREMENT HAD BEEN WAIVED IN OCTOBER 1970 BECAUSE THE MICROWAVE TUBE WAS NOT DESIGNED TO MEET THAT REQUIREMENT. SUBSEQUENT THERETO, THE CONTRACTING OFFICER WIRED ECOM ON SEPTEMBER 27, 1971, AND INQUIRED WHETHER THAT FACILITY HAD ANY OBJECTION TO AN AWARD TO MICROWAVE SUBJECT TO SUCCESSFUL COMPLETION OF FIRST ARTICLE TESTING. BECAUSE NO RESPONSE WAS RECEIVED BY THE TARGET DATE OF SEPTEMBER 30, THE BUYER TELEPHONED ECOM AND WAS TOLD THAT IT HAD NO OBJECTION TO AN AWARD TO MICROWAVE AND, FURTHER, THAT IT HAD NO REASON TO RECOMMEND A SOLE -SOURCE AWARD TO MICRO-DYNAMICS. IN THIS REGARD, WE HAVE BEEN INFORMALLY ADVISED THAT MICROWAVE HAS, IN FACT, SINCE PASSED FIRST ARTICLE TESTING, INCLUDING THE 1,000 HOUR LIFE TEST.

IT IS THE BELIEF OF THE CONTRACTING OFFICER THAT HE WAS OBLIGATED TO MAKE AWARD TO MICROWAVE AS LOW OFFEROR IN VIEW OF THE ADVICE GIVEN BY ECOM.

ALTHOUGH THE ACTUAL USING ACTIVITY FOR THE TUBES IN QUESTION WAS MICOM, THE REQUISTIONING ACTIVITY WAS ECOM. WE THEREFORE BELIEVE THAT THE CONTRACTING OFFICER PROPERLY RELIED ON ADVICE FROM ECOM FOR GUIDANCE IN DETERMINING WHETHER OR NOT AN AWARD TO MICROWAVE WOULD PROVIDE ASSURANCE THAT AN ACCEPTABLE TUBE COULD BE PRODUCED BY THAT OFFEROR. MOREOVER, WHILE THERE WAS CONFLICTING INFORMATION AS TO MICROWAVE'S ABILITY TO PRODUCE THE TUBE, THE CONTRACTING OFFICER'S DETERMINATION THAT FIRST ARTICLE TESTING WOULD PROTECT THE GOVERNMENT'S INTEREST WAS NOT UNREASONABLE. IN FACT, AS STATED ABOVE, MICROWAVE HAS PASSED FIRST ARTICLE TESTING.

CONCERNING YOUR CONTENTION THAT MICROWAVE'S EXTREMELY LOW PRICE CONSTITUTED UNFAIR COMPETITION, WE ARE AWARE OF NO LEGAL PRINCIPLE UPON WHICH AN AWARD MIGHT BE PRECLUDED OR DISTURBED MERELY BECAUSE IT IS MAINTAINED THAT THE SUCCESSFUL OFFEROR MAY HAVE SUBMITTED AN UNPROFITABLE LOW PRICE. B-171794, MAY 21, 1971. NEITHER ARE WE AWARE OF ANY AUTHORITY UNDER WHICH YOU COULD BE COMPENSATED FOR EXPENSES INCURRED IN DEVELOPING A 1,000 HOUR TUBE.

ACCORDINGLY, YOUR PROTEST IS DENIED.