B-175015(1), SEP 29, 1972

B-175015(1): Sep 29, 1972

Additional Materials:

Contact:

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

 

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

THE DECISION AS TO WHETHER THE FIRST ARTICLE TESTING REQUIREMENT SHOULD BE WAIVED IS FOR ADMINISTRATIVE DETERMINATION. THE CONTRACTING OFFICER'S DECISION TO WAIVE WILL STAND. THE FACT THAT THERE WAS A LONG DELAY IN THE AWARD DOES NOT EFFECT THIS DECISION. IF SUCH DELAY IS DUE TO FACTORS UNRELATED TO THE FIRST ARTICLE REQUIREMENT. THE SUBJECT INVITATION WAS A 50 PERCENT LABOR SURPLUS SET-ASIDE FOR A COMBINED QUANTITY OF 771 STORAGE BATTERY ASSEMBLIES FOR THE TOW MISSILE SYSTEM. ALL BATTERIES ARE TO BE IN ACCORDANCE WITH MISSILE INTERIM SPECIFICATION BB- 287 (XO-2)/TMIS-14052A. BIDS WERE RECEIVED FROM SIX FIRMS AND OPENED ON SEPTEMBER 22. THE TWO LOWEST BIDS WERE FOURDEE'S AT A UNIT PRICE OF $490.00 AND GULTON'S AT A UNIT PRICE OF $493.96.

B-175015(1), SEP 29, 1972

BID PROTEST - FIRST ARTICLE TESTING - WAIVER - AWARD DELAY DECISION DENYING THE PROTEST OF GULTON BATTERY CORPORATION AGAINST AWARD OF A CONTRACT TO FOURDEE, INC., UNDER AN IFB ISSUED BY THE ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALA., FOR STORAGE BATTERY ASSEMBLIES FOR THE TOW MISSILE SYSTEM. THE DECISION AS TO WHETHER THE FIRST ARTICLE TESTING REQUIREMENT SHOULD BE WAIVED IS FOR ADMINISTRATIVE DETERMINATION, AND IN THE ABSENCE OF A CLEAR SHOWING THAT THIS DISCRETIONARY POWER HAS BEEN OVERREACHED, THE CONTRACTING OFFICER'S DECISION TO WAIVE WILL STAND. THE FACT THAT THERE WAS A LONG DELAY IN THE AWARD DOES NOT EFFECT THIS DECISION, IF SUCH DELAY IS DUE TO FACTORS UNRELATED TO THE FIRST ARTICLE REQUIREMENT.

TO GULTON BATTERY CORPORATION:

WE REFER TO YOUR COMMUNICATION OF JANUARY 19, 1972, AND SUBSEQUENT CORRESPONDENCE PROTESTING AGAINST AWARD OF A CONTRACT TO FOURDEE, INCORPORATED, UNDER INVITATION FOR BIDS (IFB) DAAH01-72-B-0041, ISSUED ON AUGUST 23, 1971, BY THE ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA.

THE SUBJECT INVITATION WAS A 50 PERCENT LABOR SURPLUS SET-ASIDE FOR A COMBINED QUANTITY OF 771 STORAGE BATTERY ASSEMBLIES FOR THE TOW MISSILE SYSTEM. THE NON-SET-ASIDE PORTION CONTAINED A REQUIREMENT FOR 386 BATTERIES PLUS FOUR (4) FIRST ARTICLES AND THE SET-ASIDE PORTION CONTAINED A REQUIREMENT FOR 385 BATTERIES PLUS FOUR (4) FIRST ARTICLES. ALL BATTERIES ARE TO BE IN ACCORDANCE WITH MISSILE INTERIM SPECIFICATION BB- 287 (XO-2)/TMIS-14052A, DATED NOVEMBER 18, 1969).

BIDS WERE RECEIVED FROM SIX FIRMS AND OPENED ON SEPTEMBER 22, 1971. THE TWO LOWEST BIDS WERE FOURDEE'S AT A UNIT PRICE OF $490.00 AND GULTON'S AT A UNIT PRICE OF $493.96. THEREFORE, IN THE ABSENCE OF THE APPLICATION OF THE FIRST ARTICLE TESTING REQUIREMENT, WHICH REPRESENTED AN ADDITIONAL ESTIMATED COST OF $12,800.00, FOURDEE WAS THE APPARENT LOW BIDDER.

AFTER THE BID OPENING, THE ARMY MISSILE COMMAND REQUESTED THE PRODUCT ASSURANCE DIRECTORATE TO FURNISH INFORMATION AS TO THE POSSIBILITY OF WAIVER OF FIRST ARTICLE TESTING ON BOTH FOURDEE AND GULTON SINCE BOTH FIRMS HAVE CURRENT CONTRACTS WITH THE ARMY MISSILE COMMAND FOR THE IDENTICAL BATTERY SOLICITED UNDER THE SUBJECT INVITATION. PARAGRAPH B 16 OF THE IFB PROVIDED SPACE FOR FIRST ARTICLE INFORMATION. NEITHER GULTON NOR FOURDEE PROVIDED ANY INFORMATION IN SUCH SPACE EVIDENCING QUALIFICATION FOR WAIVER OF FIRST ARTICLE TESTING. HOWEVER, A LETTER DATED SEPTEMBER 21, 1971, WHICH ACCOMPANIED GULTON'S BID, REQUESTED WAIVER OF FIRST ARTICLE TESTING SINCE GULTON HAD PROVIDED FIRST ARTICLE SAMPLES UNDER ITS CURRENT CONTRACT, THE FIRST ARTICLE TESTING WAS AT THAT TIME 90 PERCENT COMPLETE AND IT WAS EXPECTED THAT FIRST ARTICLE APPROVAL WOULD BE RECEIVED WITHIN TWO WEEKS. GULTON'S FIRST ARTICLE WAS RECEIVED JUNE 9, 1971, AND APPROVED OCTOBER 8, 1971; ON THAT BASIS THE FIRST ARTICLE TESTING REQUIREMENT WAS WAIVED FOR GULTON.

INFORMATION WAS ALSO RECEIVED THAT THE FIRST ARTICLE TESTING REQUIREMENT MIGHT BE WAIVED ON FOURDEE PROVIDED THE FIRST ARTICLE ON THEIR CURRENT CONTRACT WAS FOUND ACCEPTABLE. FOURDEE'S FIRST ARTICLE UNDER THE CURRENT CONTRACT WAS RECEIVED ON NOVEMBER 2, 1971, AND CONDITIONALLY ACCEPTED ON DECEMBER 29, 1971. NEITHER BIDDER HAD AN APPROVED FIRST ARTICLE AT THE TIME OF BID OPENING. THE CONTRACTING OFFICER REPORTED THAT DUE TO WORK LOAD -

"*** AN INORDINATE AMOUNT OF TIME WAS CONSUMED AND AWARD WAS OF NECESSITY HELD IN ABEYANCE. DURING THIS DELAY IT WAS DETERMINED THAT TESTS WERE SUBSTANTIALLY COMPLETE ON FOURDEE'S SAMPLES AND APPROVAL OF FOURDEE'S FIRST ARTICLE SAMPLE WAS INDICATED BY THE PRODUCT ASSURANCE DIRECTORATE. IT WAS DETERMINED THAT THE GOVERNMENT'S BEST INTEREST WOULD BE SERVED BY EXTENDING BID ACCEPTANCES PENDING THE FINAL OUTCOME OF THE FOURDEE FIRST ARTICLES WHICH WERE CONDITIONALLY APPROVED ON 29 DECEMBER 1971 BY THE PRODUCT ASSURANCE DIRECTORATE."

WITH THE WAIVER OF FIRST ARTICLE TESTING IN FAVOR OF BOTH FIRMS, FOURDEE REMAINED THE LOW BIDDER AND WAS AWARDED THE CONTRACT ON JANUARY 14, 1972.

THE ESSENCE OF YOUR PROTEST IS THAT FIRST ARTICLE TESTING SHOULD NOT HAVE BEEN WAIVED FOR FOURDEE AND THAT YOUR FIRM WHICH HAD PROPERLY RECEIVED A WAIVER SHOULD HAVE BEEN AWARDED THE CONTRACT AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER.

THE PROVISIONS OF THE IFB RELATING TO THE FIRST ARTICLE REQUIREMENT ARE SET FORTH BELOW:

"B-16 FIRST ARTICLE INFORMATION

"OFFERORS ARE ADVISED THAT THIS SOLICITATION REQUIRES APPROVAL TESTING OF FOUR (4) FIRST ARTICLES).

"FOR ITEMS FROM SUPPLIERS WHICH ARE IDENTICAL OR SIMILAR TO ITEMS PREVIOUSLY FURNISHED TO THE GOVERNMENT, WHICH WERE ACCEPTABLE IN ALL RESPECTS, FIRST ARTICLE MAY (X), WILL NOT ( ) BE WAIVED BY THE GOVERNMENT.

"OFFERORS HAVING EVIDENCE WHICH THEY BELIEVE TO SUBSTANTIATE A GOVERNMENT WAIVER OF THE FIRST ARTICLE REQUIREMENT SHOULD FURNISH THE FOLLOWING INFORMATION WITH THE OFFER:

CONTRACT NUMBER PART NUMBER DATE 1ST ARTICLE APPROVED

"D-3 FIRST ARTICLE APPROVAL. COSTS OF FIRST ARTICLE TESTING WILL (X) WILL NOT ( ) BE A FACTOR IN THE EVALUATION OF OFFERS. THE ESTIMATED COST OF SUCH TESTING IS $12,800.00. (THIS FIGURE IS FOR EVALUATION PURPOSES ONLY AND IS NOT A REPRESENTATION AS TO THE ACTUAL COST TO BE INCURRED BY THE SUCCESSFUL CONTRACTOR IF ADDITIONAL SAMPLES ARE REQUIRED AFTER REJECTION OF THE FIRST SAMPLE.)"

IN YOUR LETTER DATED FEBRUARY 25, 1972, YOU ELABORATED THE BASIS OF YOUR PROTEST AS FOLLOWS:

"1. WAIVER OF FIRST ARTICLE TESTING

"AS A RESULT OF A REVIEW OF THE BID DATA SUBMITTED BY FOURDEE AT THE BID OPENING ON 22 SEPTEMBER 1971, IT DISCLOSED THAT FOURDEE DID NOT REQUEST A WAIVER OF THE FIRST ARTICLE TESTING AS REQUIRED BY PARAGRAPH B16 OF IFB NO. DAAH01-72-B-0041. FOURDEE COULD NOT REQUEST SUCH A WAIVER AS NO FIRST ARTICLE HAD BEEN SUBMITTED BY FOURDEE ON ANY CONTRACT AS OF THE DATE OF THE BID OPENING. THEREAFTER, THE AWARD WAS HELD IN ABEYANCE UNTIL 14 JANUARY 1972, BY WHICH TIME THE FOURDEE FIRST ARTICLE ON THE PRIOR CONTRACT WAS CONDITIONALLY ACCEPTED AS OF 29 DECEMBER 1971.

"IN VIEW OF THE FOREGOING, APPARENTLY DISCUSSIONS TOOK PLACE DURING THE PERIOD FROM 22 SEPTEMBER 1971 TO 14 JANUARY 1972 WITH FOURDEE FOR THE PURPOSE OF THE INCLUSION OF THE FIRST ARTICLE WAIVER ASPECT AS OF 14 JANUARY 1972. THE CONDITIONS EXISTING AS OF THIS LATTER DATE WERE THEN MOVED BACK TO 22 SEPTEMBER 1971 FOR THE BENEFIT OF ONE PARTY ONLY, WITHOUT ANY SIMILAR DISCUSSIONS OR OPPORTUNITY FOR REVISION OF THE GULTON BATTERY CORPORATION BID SUBMITTED 22 SEPTEMBER 1971.

"IN ADDITION, IT IS DIFFICULT TO COMPREHEND HOW A CONDITIONAL ACCEPTANCE OF A FIRST ARTICLE SAMPLE FOR A PRIOR CONTRACT, NORMALLY INITIATED FOR THE PURPOSE OF EXPEDITING PRODUCTION AND DELIVERIES THEREUNDER, COULD BE USED AS ACCEPTABLE FIRST ARTICLE CRITERIA ON SUBSEQUENT CONTRACT CONTAINING A NO FAILURE PROVISION CLAUSE AS SET FORTH IN MIS-14052, PARAGRAPH 3.3.6 AND TABLE VII; WHEREAS THE GULTON BATTERY CORPORATION FIRST ARTICLE SAMPLES HAD TO MEET ALL OF THE REQUIREMENTS OF THE SPECIFICATION WITHOUT ANY CONDITIONS OR QUALIFICATIONS.

"IN SUMMARY, BOTH PARTIES TO THE FOREGOING AWARD WERE NOT TREATED ON AN EQUAL BASIS IN THE AREAS OF SUBMITTING A TIMELY PROPOSAL IN ALL RESPECTS, CONDUCTING NEGOTIATIONS WITH ONLY ONE PARTY TO THE AWARD, AND GIVING PREFERENTIAL WAIVER CONSIDERATIONS TO FOURDEE, WHICH IN EFFECT REDUCED THEIR PRICE SUBSEQUENT TO THE DATE OF THEIR SUBMISSION.

"2. PERFORMANCE STANDARDS

"IT IS TO BE NOTED THAT AS OF THIS DATE, FOURDEE HAS NEVER PRODUCED A COMPLETELY ACCEPTABLE BATTERY UNDER A PRIOR OR CURRENT CONTRACT. IN SPITE OF THIS LATTER SITUATION, BY THE AWARD OF THE SUBJECT PROTESTED CONTRACT, THE GOVERNMENT HAS MADE FOURDEE THE SOLE SOURCE OF A SUBSTANTIAL QUANTITY OF BATTERIES USED ON THE TOW MISSILE SYSTEM, WHICH IS AN IMPORTANT AND ESSENTIAL PROGRAM TO THE DEPARTMENT OF DEFENSE."

IN PAST PROCUREMENTS WE HAVE UPHELD WAIVER OF FIRST ARTICLE TESTING EVEN THOUGH THE INFORMATION FURNISHED IN THE BID DID NOT WARRANT WAIVER, WHERE THE CONTRACTING OFFICER WAS AWARE OF OTHER INFORMATION THAT DID JUSTIFY WAIVER OF FIRST ARTICLE TESTING. IN B-168557, JANUARY 23, 1970, INVOLVING AN ANALOGOUS SITUATION, A BIDDER LISTED A PRIOR CONTRACT AS WARRANTING A WAIVER. ALTHOUGH THE CONTRACTING OFFICER COULD NOT ACCEPT THE LISTED CONTRACT AS A BASIS FOR WAIVER, HE DID APPROVE THE WAIVER ON THE BASIS OF A DIFFERENT CONCURRENT CONTRACT SINCE HE WAS AWARE THAT THE PRODUCT ACTUALLY WAS TESTED AND QUALIFIED UNDER THE CONTRACT NOT LISTED BY THE BIDDER. IN APPROVING THIS ACTION WE STATED:

"*** THE RESPONSIBILITY FOR OBTAINING A WAIVER FROM THAT REQUIREMENT (FIRST ARTICLE) IS PLACED UPON THE PROSPECTIVE CONTRACTOR. WHERE A BIDDER FAILS TO PROVIDE SUFFICIENT INFORMATION PRIOR TO AWARD, WE WILL NOT OBJECT TO THE AGENCY'S REFUSAL TO WAIVE FIRST ARTICLE TESTING OR THE AWARD TO ANOTHER BIDDER. SEE B-155314, DECEMBER 2, 1964. SIMILARLY, WHERE THE ADMINISTRATIVE OFFICIALS AFTER REVIEWING ALL THE INFORMATION AVAILABLE HAVE DETERMINED TO WAIVE FIRST ARTICLE TESTING, THIS OFFICE WILL QUESTION THAT DECISION ONLY IF IT IS SHOWN TO BE ARBITRARY, CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. SEE 46 COMP. GEN. 123 (1966). AS A RESULT, WHILE THE BIDDER ASSUMES THE RISK IN FAILING TO PRESENT EVIDENCE WARRANTING A WAIVER, THE DETERMINATION WHETHER OR NOT TO GRANT SUCH A WAIVER RESTS SOLELY WITHIN THE DISCRETION OF THE PROCURING ACTIVITY.

"THAT THE GOVERNMENT, NOT THE BIDDER, HAS THE POWER TO WAIVE FIRST ARTICLE TESTING IS CLEAR FROM CLAUSE 2.107 (B-16) OF THE SOLICITATION AND FROM ASPR 1-1903. THE WEIGHT TO BE GIVEN INFORMATION OR EVEN WHAT INFORMATION IS TO BE CONSIDERED BY THE AGENCY IN DETERMINING WHETHER TO GRANT A WAIVER ALSO IS LEFT TO THE JUDGMENT OF THE OFFICIALS MAKING THE DETERMINATION. ASPR 1-1903(A)(II) STATES THE SOLICITATION SHALL PROVIDE FOR:

"'(II) THE SUBMISSION OF THE CONTRACT NUMBERS, IF ANY, UNDER WHICH IDENTICAL OR SIMILAR SUPPLIES WERE PREVIOUSLY ACCEPTED FROM THE BIDDER OR OFFEROR BY THE GOVERNMENT; ***"

THAT LANGUAGE CLEARLY ALLOWS A WAIVER EVEN THOUGH A PRIOR CONTRACT NUMBER DOES NOT EXIST AND ALSO ALLOWS A WAIVER ON THE BASIS OF CONTRACTS FOR SUPPLIES THE GOVERNMENT DETERMINES WERE SO SIMILAR IN NATURE AS TO WARRANT WAIVER. WE WOULD, THEREFORE, FIND IT UNTENABLE TO CONSTRUE THAT LANGUAGE AS PROHIBITING THE GOVERNMENT FROM WAIVING FIRST ARTICLE TESTING SIMPLY BECAUSE A BIDDER FAILED TO FURNISH A CONTRACT NUMBER.

"OUR CONCERN IN THESE PROCUREMENTS IS THAT ALL BIDDERS ARE PERMITTED TO COMPETE ON THE SAME BASIS, AS REQUIRED BY STATUTE. IN THIS INSTANCE ALL BIDDERS WERE ALLOWED TO SUBMIT ALTERNATE BIDS ON THE BASIS OF WAIVER OF FIRST ARTICLE TESTING BY THE GOVERNMENT. AS WE STATED, THE DECISION WHETHER SUCH WAIVER WILL BE GRANTED IS QUESTIONED BY US ONLY FOR LACK OF GOOD FAITH. ***"

YOU FURTHER CONTEND THAT FOURDEE DID NOT QUALIFY FOR A WAIVER BECAUSE IT FAILED TO MEET THE ACCEPTABLE QUALITY LEVEL (AQL) APPLICABLE TO THE GOVERNING SPECIFICATION. IN THIS CONNECTION THE ADMINISTRATIVE REPORT STATES THAT FOURDEE'S FIRST ARTICLES PASSED ALL TESTS EXCEPT FOR INTERNAL RESISTANCE AT -25F BUT THIS FAILURE WAS NOT CONSIDERED TO BE CAUSE FOR DISAPPROVAL. WE DO NOT CONSTRUE THE LANGUAGE IN ARTICLE B 16, "WHICH WERE ACCEPTABLE IN ALL RESPECTS," TO MEAN THAT THE WAIVER COULD BE GRANTED ONLY ON A PRE-PRODUCTION ITEM EXAMINED UNDER ANOTHER CONTRACT AND FOUND TO BE WITHOUT ANY DEFICIENCY. RATHER, WE BELIEVE THE LANGUAGE MUST BE CONSTRUED SIMPLY TO MEAN THAT THE FIRST ARTICLE MUST REASONABLY BE REGARDED AS ACCEPTABLE BY THE PROCURING ACTIVITY. AS INDICATED IN THE CITED DECISION THE ADMINISTRATIVE GRANT OF A WAIVER IS QUESTIONED BY US ONLY ON THE BASIS OF BAD FAITH AND MAY BE BASED ON CONTRACTS FOR SUPPLIES DETERMINED TO BE SO SIMILAR IN NATURE AS TO WARRANT WAIVER. WE FIND NO SUCH BAD FAITH IN THIS CASE.

YOU HAVE FURTHER SUGGESTED THAT DISCUSSIONS APPARENTLY TOOK PLACE DURING THE PERIOD FROM SEPTEMBER 22, 1971, TO JANUARY 14, 1972, WITH FOURDEE FOR THE PURPOSE OF THE INCLUSION OF THE FIRST ARTICLE WAIVER. IN RESPONSE TO THIS CHARGE THE CONTRACTING OFFICER HAS STATED:

"C. NO DISCUSSIONS TOOK PLACE BETWEEN FOURDEE AND MICOM FOR THE PURPOSE OF REVISING THE FIRST ARTICLE REQUIREMENTS AND ACCORDINGLY NO REVISIONS TO THE ORIGINAL BIDS FROM EITHER BIDDER WERE DISCUSSED AND NO REVISIONS HAVE BEEN MADE BY EITHER BIDDER. ***

"1. DISCUSSIONS:

DISCUSSIONS BETWEEN FOURDEE, INCORPORATED AND PROCUREMENT PERSONNEL WERE LIMITED TO REQUESTING AN EXTENSION OF ACCEPTANCE TIME FOR THE CONTRACTOR AND STATEMENTS TO THE FACT THAT THE PROCUREMENT WAS BEING EVALUATED ON INQUIRY FROM THE CONTRACTOR AS TO STATUS. THE SAME DISCUSSIONS WERE CONDUCTED WITH THE PROTESTANT."

WE FIND NO BASIS UPON WHICH TO TAKE ISSUE WITH THIS REPLY.

THE DECISION AS TO WHETHER FIRST ARTICLE REQUIREMENT SHOULD BE WAIVED IS PRIMARILY FOR ADMINISTRATIVE RESOLUTION. IN THE ABSENCE OF A CLEAR SHOWING THAT THE DISCRETION INHERENT IN AN ADMINISTRATIVE DETERMINATION OF THIS NATURE HAS BEEN OVERREACHED, OUR OFFICE WILL NOT DISTURB THE CONTRACTING OFFICER'S DECISION. WE WOULD HAVE SOME QUESTION CONCERNING THE UNDUE DELAY OF AN AWARD FOR THE SOLE PURPOSE OF PERMITTING A BIDDER TO QUALIFY FOR WAIVER OF THE FIRST ARTICLE REQUIREMENT. IN THIS CASE, HOWEVER, THE ADMINISTRATIVE REPORT STATES THAT THE DELAY IN THE AWARD WAS DUE TO FACTORS UNRELATED TO THE FIRST ARTICLE ISSUE. THEREFORE, WE DO NOT QUESTION THE ACTION IN THIS INSTANCE.

FOR THE FOREGOING REASONS, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE PROCURING ACTIVITY'S AWARD OF THE CONTRACT TO FOURDEE. ACCORDINGLY, YOUR PROTEST IS DENIED.