B-175548, JUL 26, 1972

B-175548, JUL 26, 1972

BID PROTEST - NEGOTIATION VS. FAILURE TO EXERCISE OPTION - RESTRICTIVE DELIVERY SCHEDULES DENYING THE PROTEST OF CLIPPER INDUSTRIES, INC., AGAINST THE AWARD OF A NEGOTIATED CONTRACT TO BERKLEY MACHINE PRODUCTS, INC., FOR THE PRODUCTION OF DRIVE ASSEMBLIES UNDER AN RFP ISSUED BY THE ARMY-TANK AUTOMOTIVE COMMAND, AND THE FAILURE TO EXERCISE AN OPTION IN A THEN EXISTING CONTRACT WITH PROTESTANT. THERE WAS NO IMPROPRIETY IN THE GOVERNMENT'S PROCEEDING TO OBTAIN THE NEEDED DRIVE ASSEMBLIES BY NEGOTIATION RATHER THAN BY THE EXERCISE OF AN OPTION IN THE EXISTING CONTRACT WHEN THE NEED FOR EARLY DELIVERY WOULD MEAN THE IMPOSITION OF A PREMIUM OF ALMOST $114,000 UNDER THAT OPTION. FURTHER, THE ACCELERATED DELIVERY REQUIREMENTS CALLED FOR BY THE RFP WERE ADEQUATELY JUSTIFIED BY THE EXISTING SITUATION. ACCORDINGLY, THERE IS NO BASIS UPON WHICH TO QUESTION THE NEEDS OF THE PROCURING AGENCY.

TO CLIPPER INDUSTRIES, INCORPORATED:

WE REFER TO YOUR LETTER DATED MARCH 22, 1972, PROTESTING AGAINST THE AWARD OF A CONTRACT TO BERKLEY MACHINE PRODUCTS, INCORPORATED, LIVONIA, MICHIGAN, UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAE07-72-R-0038, AS AMENDED, ISSUED ON FEBRUARY 22, 1972, BY THE ARMY TANK-AUTOMOTIVE COMMAND, PROCUREMENT AND PRODUCTION DIRECTORATE, WARREN, MICHIGAN, FOR 688 FINAL DRIVE ASSEMBLIES.

THE SCHEDULED DATE FOR RECEIPT OF OFFERS WAS MARCH 6, 1972. BERKLEY WAS THE LOW OFFEROR, PROPOSING A UNIT PRICE OF $324.40. ALL OFFERORS PROPOSED TO MEET THE REQUIRED JUNE 30, 1972, DELIVERY DATE. AWARD OF A CONTRACT CONTAINING A 90-DAY OPTION FOR A 100 PERCENT QUANTITY INCREASE WAS MADE ON MARCH 10, 1972, TO BERKLEY IN THE AMOUNT OF $223,187.20.

THE PROCUREMENT WAS NEGOTIATED PURSUANT TO THE AUTHORITY IN 10 U.S.C. 2304(A)(2), WHICH PROVIDES FOR AN EXCEPTION TO THE FORMAL ADVERTISING REQUIREMENT WHERE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.

YOU CONTEND THAT IT WAS A SERIOUS IMPROPRIETY FOR THE CONTRACTING OFFICER TO EFFECT THE SUBJECT PROCUREMENT ON A NEGOTIATED BASIS RATHER THAN BY THE EXERCISE OF AN OPTION CONTAINED IN A THEN EXISTING CONTRACT WITH YOUR FIRM. THE EXISTING CONTRACT TO WHICH YOU REFER WAS AWARDED TO YOUR FIRM ON SEPTEMBER 29, 1971, FOR THE PRODUCTION OF 1,282 FINAL DRIVE ASSEMBLIES WITH FIRST DELIVERY TO BE MADE IN JULY 1972, AND CONTAINED AN OPTION CLAUSE PERMITTING THE GOVERNMENT TO INCREASE THE QUANTITY REQUIRED BY 100 PERCENT IF EXERCISED WITHIN 180 DAYS OF THE DATE OF AWARD. THE CLAUSE PROVIDED FOR DELIVERY OF OPTION UNITS IMMEDIATELY AFTER, AND AT THE SAME RATE AS, THE DELIVERY OF THE ITEMS ORIGINALLY REQUIRED. THEREFORE, ALTHOUGH THE OPTION FOR AN ADDITIONAL QUANTITY AT $321.00 PER UNIT WAS AVAILABLE, THE EARLIEST DELIVERY UNDER THIS CLAUSE, WITHOUT ADDITIONAL ACCELERATION, WOULD NOT BE BEFORE OCTOBER 1972. FOR EARLIER DELIVERY YOU REQUESTED A PREMIUM OF ALMOST $114,000.

THE SUBJECT PROCUREMENT WAS MOTIVATED BY THE REALIZATION IN FEBRUARY 1972, OF AN ADDITIONAL REQUIREMENT FOR 688 FINAL DRIVE ASSEMBLIES WITH MANDATORY DELIVERY BEFORE JUNE 30, 1972. DUE TO THE TIME CONSTRAINTS PLACED UPON THIS PROCUREMENT, THE UNIFORM MATERIAL MOVEMENT AND ISSUE PRIORITY SYSTEM (UMMIPS) PRIORITY DESIGNATOR OF 02, AND THE COMBAT NEED FOR THE ITEM, A PROPER DETERMINATION AND FINDINGS WAS MADE AUTHORIZING NEGOTIATION OF THE CONTRACT WITHOUT FORMAL ADVERTISING. PARAGRAPH 3 202.3 OF THE ARMED SERVICES PROCUREMENT REGULATION STATES THAT A DETERMINATION AND FINDINGS BY THE CONTRACTING OFFICER, JUSTIFYING USE OF THE PUBLIC EXIGENCY EXCEPTION TO FORMAL ADVERTISING UNDER THE AUTHORITY OF 10 U.S.C. 2304(A)(2), NEED ONLY STATE THE EXISTENCE OF A PRIORITY DESIGNATOR OF 1 THROUGH 6 IN ORDER TO JUSTIFY USE OF THAT EXCEPTION. FURTHER, FINDINGS IN SUPPORT OF A DETERMINATION TO NEGOTIATE UNDER THE PUBLIC EXIGENCY EXCEPTION ARE MADE FINAL BY 10 U.S.C. 2310(B), AND ARE THEREFORE NOT SUBJECT TO QUESTION BY OUR OFFICE. SEE 44 COMP. GEN. 590 (1965).

YOUR CONTRACT GAVE THE GOVERNMENT THE OPTION TO ORDER ADDITIONAL QUANTITIES. HOWEVER, THE GOVERNMENT IS NOT REQUIRED TO EXERCISE THE OPTION IF ADDITIONAL QUANTITIES ARE NEEDED. IN THAT CONNECTION, SEE ASPR 1-1505(C)(III) WHICH PROVIDES THAT OPTIONS ARE TO BE EXERCISED ONLY IF THAT IS THE ACTION MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THE AUTHORITY GRANTED BY 10 U.S.C. 2304(A)(2), TO NEGOTIATE A PROCUREMENT BECAUSE OF THE CRITICAL IMPORTANCE OF EARLY DELIVERY CONTEMPLATES THE POSSIBILITY OF AN AWARD TO AN OFFEROR WHO OFFERS THE BEST DELIVERY SCHEDULE, EVEN IF HE HAS NOT OFFERED THE BEST PRICE. SEE 46 COMP. GEN. 22 (1966) AND B-165871, MARCH 13, 1969.

YOU NEXT CONTEND THAT THE DELIVERY SCHEDULE REQUIRED UNDER THE SUBJECT RFP WAS UNDULY RESTRICTIVE. IN THIS REGARD, IT IS SIGNIFICANT TO NOTE, AS INDICATED ABOVE, THAT ALL THREE CONTRACTORS SOLICITED, INCLUDING CLIPPER INDUSTRIES, SUBMITTED BIDS PROPOSING TO MEET THE REQUIRED DELIVERY SCHEDULE. THE ARMY MATERIEL COMMAND HAS EXPLAINED THE RELATIVELY TIGHT DELIVERY REQUIREMENTS IN THEIR ADMINISTRATIVE REPORT TO US AS RESULTING FROM THE UNREDUCED HIGH WASHOUT RATE ATTRIBUTED TO HOUSING FAILURES AND BATTLE DAMAGE, UNANTICIPATED PURCHASE REQUESTS FROM SEVERAL FOREIGN NATIONS AND A ZERO INVENTORY. THESE CONSIDERATIONS COUPLED WITH THE ADDITIONAL REQUIREMENT FOR 688 FINAL DRIVE ASSEMBLIES RECEIVED BY USATACOM WITH MANDATORY DELIVERY IN JUNE 1972 (SEE ABOVE), WERE REFLECTED BY THE ASSIGNMENT OF THE PRIORITY DESIGNATOR OF 02. WE BELIEVE THAT THESE CONSIDERATIONS EXPLAIN THE DELIVERY REQUIREMENTS CALLED FOR BY THE RFP, AND WE THEREFORE FIND NO BASIS UPON WHICH TO QUESTION THE NEEDS OF THE PROCURING AGENCY.

YOU FURTHER CONTEND THAT IT WAS A SERIOUS IMPROPRIETY FOR THE CONTRACTING OFFICER NOT TO THOROUGHLY INVESTIGATE THE ABILITY OF BERKLEY MACHINE PRODUCTS, INCORPORATED, TO MEET THE DELIVERY REQUIREMENTS. HOWEVER, THE RECORD DISCLOSES THAT A PRE-AWARD SURVEY WAS CONDUCTED BY DCASR, DETROIT, MICHIGAN, WHICH CONCLUDED THAT BERKLEY COULD BE EXPECTED TO MEET THE DELIVERY REQUIREMENTS AND THEREFORE RECOMMENDED AWARD BE MADE TO BERKLEY. WHETHER BERKLEY COULD MEET THE DELIVERY REQUIREMENTS IS A MATTER OF RESPONSIBILITY TO BE DETERMINED BY THE CONTRACTING OFFICER, AND WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR HIS UNLESS AND UNTIL IT IS SHOWN BY CONVINCING EVIDENCE THAT SUCH DETERMINATION IS ARBITRARY, OR NOT BASED ON SUBSTANTIAL EVIDENCE. 43 COMP. GEN. 257, 258 (1963); 38 ID. 778 (1959). IN VIEW OF THE ABOVE, WE FIND NO BASIS UPON WHICH TO QUESTION THE ACTION OF THE CONTRACTING OFFICER IN VIEWING BERKLEY AS CAPABLE OF FULFILLING THE DELIVERY REQUIREMENTS.

FINALLY, YOU CHALLENGE THE PROPRIETY OF SATISFYING FURTHER NEEDS FOR FINAL DRIVE ASSEMBLIES THROUGH THE EXERCISE OF AN OPTION CONTAINED IN THE CONTRACT AWARDED TO BERKLEY. OUR OFFICE HAS BEEN INFORMED THAT THE OPTION WAS NOT EXERCISED PRIOR TO ITS EXPIRATION.

IN VIEW OF THE FOREGOING, WE FIND NO LEGAL OBJECTION TO THE AWARD. ACCORDINGLY, YOUR PROTEST IS DENIED.