B-176159, SEP 26, 1972

B-176159: Sep 26, 1972

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IT IS A FUNCTION OF THE CONTRACTING AGENCY TO DECIDE WHAT CHANGES ARE SUFFICIENT TO REQUIRE A REEXAMINATION AND TO DETERMINE FROM SUCH REEXAMINATION WHETHER A RETEST OF THE PRODUCT IS NECESSARY. DETERMINE THAT THE PRODUCT NEED NOT BE REMOVED FROM THE QPL EVEN WHEN RETESTING IS CONSIDERED NECESSARY. THIS DETERMINATION WILL NOT BE REVERSED UNLESS PROTESTANT CAN PRESENT A HIGH DEGREE OF PROOF OF THE EXISTENCE OF ARBITRARY AND CAPRICIOUS ACTION BY THE AGENCY. INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 6. AN ADVERTISEMENT WAS PLACED IN THE COMMERCE BUSINESS DAILY BY THE NAVAL AIR SYSTEMS COMMAND HEADQUARTERS SEEKING NEW SOURCES TO QUALIFY THEIR PRODUCTS FOR AN "ATTITUDE INDICATING SYSTEM.

B-176159, SEP 26, 1972

BID PROTEST - QUALIFIED PRODUCTS LIST - PRODUCT CHANGES DECISION DENYING THE PROTEST OF GUIDANCE TECHNOLOGY, INC., AGAINST THE AWARD OF A CONTRACT TO CONDOR PACIFIC INDUSTRIES UNDER AN IFB ISSUED BY THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PA., FOR THE PROCUREMENT OF AN ATTITUDE INDICATING SYSTEM. THE REGULATIONS PERMIT CERTAIN CHANGES IN A QUALIFIED PRODUCT AND NOT EVERY CHANGE IN MATERIAL OR PROCESSING REQUIRES REEXAMINATION, RETESTING OR REMOVAL OF THE ITEM FROM THE QPL. IT IS A FUNCTION OF THE CONTRACTING AGENCY TO DECIDE WHAT CHANGES ARE SUFFICIENT TO REQUIRE A REEXAMINATION AND TO DETERMINE FROM SUCH REEXAMINATION WHETHER A RETEST OF THE PRODUCT IS NECESSARY. HOWEVER, THE AGENCY MAY, ON ITS OWN TECHNICAL KNOWLEDGE AS TO THE SIGNIFICANCE OF THE PRODUCT CHANGES, DETERMINE THAT THE PRODUCT NEED NOT BE REMOVED FROM THE QPL EVEN WHEN RETESTING IS CONSIDERED NECESSARY. THIS DETERMINATION WILL NOT BE REVERSED UNLESS PROTESTANT CAN PRESENT A HIGH DEGREE OF PROOF OF THE EXISTENCE OF ARBITRARY AND CAPRICIOUS ACTION BY THE AGENCY.

TO GUIDANCE TECHNOLOGY, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 6, 1972, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO CONDOR PACIFIC INDUSTRIES OF CALIFORNIA, INC. (CONDOR), UNDER INVITATION FOR BIDS N00383-72-B-0897 (HEREAFTER IFB -0897), ISSUED BY THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA.

ON FEBRUARY 16, 1971, AN ADVERTISEMENT WAS PLACED IN THE COMMERCE BUSINESS DAILY BY THE NAVAL AIR SYSTEMS COMMAND HEADQUARTERS SEEKING NEW SOURCES TO QUALIFY THEIR PRODUCTS FOR AN "ATTITUDE INDICATING SYSTEM, REMOTE STANDBY, TWO INCH, IN ACCORD WITH MIL-A-22858AAS), AMENDMENT 3 OF APR. 1970." CONDOR SUBMITTED THREE INDICATORS TO THE NAVY FOR QUALIFICATION IN OCTOBER 1971. YOUR FIRM'S MODEL 689, PART NO. 44615, WAS PLACED ON THE QUALIFIED PRODUCTS LIST (QPL) ON OCTOBER 29, 1971. NOVEMBER 16, 1971, REQUEST FOR PROPOSAL N00383-72-R-0277 (HEREAFTER RFP - 0277) WAS ISSUED BY THE AVIATION SUPPLY OFFICE. HOWEVER, YOU STATE THAT THE BUYER WAS ADVISED ON FEBRUARY 9, 1972, THAT SINCE CONDOR'S INDICATOR WOULD SOON BE PLACED ON THE QPL, RFP -0277 WOULD BE CANCELLED AND IFBS WOULD BE ISSUED TO BOTH CONDOR AND YOUR FIRM. BY LETTER OF APRIL 4, 1972, CONDOR WAS NOTIFIED OF THE QUALIFICATION OF ITS INDICATOR (CONDOR PART NO. 11500) FOR INCLUSION ON THE QPL, AND ON APRIL 14, 1972, THE INDICATOR WAS PLACED ON THE QPL. RFP -0277 WAS ALSO CANCELLED ON APRIL 14, 1972.

IFB -0897 WAS ISSUED ON APRIL 17, 1972, AS A 100 PERCENT SMALL BUSINESS SET-ASIDE. BIDS WERE REQUESTED ON VARYING STEPLADDER QUANTITIES FOR A REMOTE 2-INCH ATTITUDE INDICATOR (TYPE DESIGNATION 1D 1448A/A) TO BE MANUFACTURED AND TESTED IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-A- 22858AAS). ADDITIONALLY, THE INDICATOR TO BE FURNISHED WAS REQUIRED TO HAVE BEEN TESTED AND QUALIFIED FOR INCLUSION, AT THE TIME OF BID OPENING, ON THE APPLICABLE QPL. INVITATIONS WERE SENT TO YOUR FIRM AND CONDOR. INITIALLY BID OPENING WAS SCHEDULED FOR MAY 9, 1972, BUT THE OPENING WAS SUBSEQUENTLY EXTENDED TO MAY 22, 1972, AND FINALLY TO JUNE 2, 1972. BIDS WERE OPENED ON JUNE 2, 1972, AND THE FOLLOWING BIDS WERE RECEIVED:

ITEM 0001 ITEM 0002

COMPANY UNIT PRICE (LOT) EXTENSION

LINAIR INC. 125 EA. $ 942.00 $7,600.00$125,350.00

CONDOR PACIFIC 125 EA. 1,350.00 "NO CHARGE" 168,750.00

GUIDANCE

TECHNOLOGY, INC.

(GTI) 125 EA. 2,057.97 9,545.51 266,791.76

THE PRODUCT TO BE FURNISHED BY LINAIR WAS NOT QUALIFIED AND APPROVED FOR LISTING ON THE APPLICABLE QPL AND LINAIR'S BID WAS, THEREFORE, REJECTED. ON THE SAME DAY, JUNE 2, 1972, YOU PROTESTED TO THE CONTRACTING OFFICER AGAINST AWARD TO CONDOR. YOU ALLEGED THAT CONDOR COULD NOT PRODUCE THE ITEMS QUALIFIED IN PRODUCTION QUANTITIES SINCE CERTAIN GTI-DESIGNED PARTS IN THE ITEMS QUALIFIED WERE PURCHASED FROM SUPPLIERS AGAINST WHOM A COURT INJUNCTION HAD BEEN ISSUED ENJOINING THE SUPPLYING OF THESE PARTS TO CONDOR. BY TELEGRAM OF JUNE 6, 1972, YOU LODGED A PROTEST WITH THIS OFFICE. ALSO, IN A SUPPLEMENTARY BRIEF DATED JULY 11, 1972, YOU ALLEGED (1) THAT THE SYNCHRO CONTROL TRANSFORMERS (SINGER-KEARFOTT PART NUMBER CM01004800) USED IN CONDOR'S QUALIFYING UNITS DID NOT CONTAIN A BARRIER FILM COATING AS REQUIRED BY PARAGRAPH 3.3.16 OF THE SPECIFICATIONS; (2) THAT ANY PRODUCTION ITEM FURNISHED WOULD REQUIRE REQUALIFICATION SINCE THESE UNITS WOULD BE PRODUCED WITH DIFFERENT TOOLING, PROCESSING AND COMPONENT DESIGN THAN THAT UTILIZED BY CONDOR IN ITS QUALIFICATION; AND (3) THAT CONDOR HAS NO COMPONENT/PARTS DESIGN, TOOLINGS, OR DRAWINGS TO PROVIDE NECESSARY PRODUCTION CAPABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE.

ON JUNE 19, 1972, THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD), VAN NUYS, CALIFORNIA, WAS REQUESTED TO CONDUCT A PREAWARD SURVEY OF CONDOR. DCASD COMPLETED ITS SURVEY OF CONDOR ON JUNE 28, 1972, AND RECOMMENDED COMPLETE AWARD BASED UPON A SATISFACTORY FINDING IN ALL AREAS INVESTIGATED. IT WAS CONCLUDED BY DCASD THAT CONDOR POSSESSED THE NECESSARY PLANT FACILITIES AND EQUIPMENT, TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, AND SOURCES OF SUPPLY TO TIMELY PERFORM THE CONTRACT CONTEMPLATED BY THE INVITATION.

TO FULLY UNDERSTAND THE BASIS FOR YOUR PROTEST, A RECITATION OF CERTAIN ADDITIONAL EVENTS LEADING UP TO THE PROTEST WOULD APPEAR TO BE IN ORDER AT THIS POINT. YOU ADVISED US THAT YOU DISCOVERED, SOME TIME IN DECEMBER 1971, THAT CONDOR WAS QUALIFYING ITS INDICATOR. YOU STATED THAT FOLLOWING A CHECK WITH YOUR SUPPLIERS IT BECAME OBVIOUS TO YOU THAT A SUBSTANTIAL PORTION OF THE COMPONENTS AND PARTS GOING INTO THE CONDOR UNIT WERE, IN FACT, BEING SUPPLIED FROM GTI-OWNED SPECIFICATIONS, DRAWINGS, PROCESSING TECHNIQUES, AND TOOLING, CLEARLY IN VIOLATION OF THE WRITTEN AGREEMENT BETWEEN YOUR FIRM AND ITS SUPPLIERS. CONSEQUENTLY, ON FEBRUARY 10, 1972, YOU FILED AN APPLICATION FOR A 21A "EXAMINATION AND ORDER THEREON" (A PROCEEDING UNDER 21A OF THE BANKRUPTCY ACT TO COMPEL WITNESSES TO APPEAR BEFORE THE COURT, OR BANKRUPTCY REFEREE, TO TESTIFY ON MATTERS RELATING TO BANKRUPTCY PROCEEDINGS UNDER THE ACT). AS A RESULT OF THESE PROCEEDINGS, THE COURT ISSUED A PERMANENT INJUNCTION ON APRIL 10, 1972, ORDERING TWELVE OF YOUR SUPPLIERS OF PARTS FOR YOUR REMOTE ATTITUDE INDICATOR AND THEIR AGENTS, ATTORNEYS AND SERVANTS TO REFRAIN FROM SUPPLYING OR DELIVERING ANY OF 24 SPECIFIED PARTS TO ANYONE OTHER THAN YOUR FIRM.

ON MAY 1, 1972, THE COURT APPOINTED AN INSTRUMENT EXPERT, MR. CARROLL F. LUTZ, TO EXAMINE THE CONDOR AND GTI UNITS AND TO REPORT HIS FINDINGS TO THE COURT. MR. LUTZ'S FINDINGS INDICATED THAT MANY OF THE PARTS USED IN CONDOR'S UNIT WERE THE SAME AS THOSE USED IN YOUR UNIT. AS A RESULT OF MR. LUTZ'S FINDINGS AND THE TESTIMONY BEFORE THE REFEREE IN BANKRUPTCY OF MR. ERNEST J. SMITH, A FORMER EMPLOYEE OF YOUR FIRM WHO IS CURRENTLY EMPLOYED BY CONDOR, YOU REQUESTED THAT CONDOR'S UNIT BE REMOVED FROM THE QPL. ALSO, ON MAY 31, 1972, YOUR FIRM INSTITUTED A SUIT IN THE SUPERIOR COURT OF CALIFORNIA AGAINST CONDOR AND ERNEST J. SMITH SEEKING MONEY DAMAGES FOR UNFAIR COMPETITION AND A PERMANENT INJUNCTION FOR (1) UNFAIR COMPETITION; (2) INDUCING BREACHES OF CONTRACT BY SUPPLIERS; (3) MISAPPROPRIATION OF TRADE SECRETS AND CONFIDENTIAL INFORMATION; AND (4) CONSPIRACY.

IN VIEW OF THE ABOVE SUIT, THIS OFFICE WILL EXPRESS NO OPINION AND TAKE NO ACTION IN REGARD TO THOSE MATTERS WHICH ARE THE SUBJECT OF THAT SUIT. THUS, IT WOULD APPEAR THAT THE ONLY QUESTION REMAINING FOR THIS OFFICE TO ANSWER IS WHETHER CONDOR'S UNIT SHOULD BE REMOVED FROM THE QPL. IT IS THE POSITION OF THE PROCURING ACTIVITY THAT THE QUALIFICATION TESTING WAS PROPER AND THAT NO SIGNIFICANT MODIFICATION OF THE PRODUCT OR CHANGE OF MATERIAL PROCESS WILL OCCUR BETWEEN THE QUALIFICATION ITEMS AND THE PRODUCTION UNITS. THE CONTRACTING OFFICER STATES THAT THE LIST OF PARTS USED BY CONDOR FOR THE QUALIFICATION OF ITS UNIT WAS COMPARED BY THE AGENCY WITH THE LIST OF GTI PARTS AND SUPPLIERS WHICH WERE THE SUBJECT OF THE COURT ORDER. IT WAS CONCLUDED THAT ONLY SIX OF THE 24 PARTS SPECIFIED IN THE INJUNCTION, INVOLVING FIVE SUPPLIERS, WERE USED BY CONDOR, AND THAT THE CHANGE TO ALTERNATE SUPPLIERS BY CONDOR FOR THESE SIX PARTS WILL NOT INVOLVE A CRITICAL CHANGE IN DESIGN OR PROCESSING WHEN VIEWED IN CONNECTION WITH THE REQUIREMENTS OF THE SPECIFICATIONS AND THE DEFENSE STANDARDIZATION MANUAL 4120.3-M.

IN SUPPORT OF YOUR CONTENTION THAT CONDOR'S UNIT SHOULD BE REMOVED FROM THE QPL, YOU CITE SECTIONS 4-204.1B(6) AND 4-109 OF THE DEFENSE STANDARDIZATION MANUAL WHICH IS THE BASIC INSTRUCTION CONCERNING QUALIFIED PRODUCTS AND QUALIFICATION PROCEDURES. SECTION 4-204.1B(6) OF THE MANUAL STATES "*** WHEN A PRODUCT QUALIFIES, THE LETTER OF NOTIFICATION SHALL INCLUDE:

"B. THE FOLLOWING STATEMENTS THAT:

"(6) SUCH LISTING APPLIES ONLY TO PRODUCTS IDENTICAL TO THAT (THOSE) QUALIFIED. THE QUALIFYING ACTIVITY MUST BE ADVISED OF ANY CHANGE TO THE PRODUCT. FAILURE TO NOTIFY THE QUALIFYING ACTIVITY OF A CHANGE OF DESIGN IS CAUSE FOR REMOVAL FROM THE QPL REGARDLESS OF THE EXTENT OF THE DESIGN CHANGE."

SECTION 4-109 OF THE MANUAL FURTHER STATES:

"4-109 RE-EXAMINATION AND RETEST

RE-EXAMINATION OF A QUALIFIED PRODUCT SHALL BE REQUIRED BY THE PREPARING ACTIVITY UNDER ANY OF THE FOLLOWING CONDITIONS:

A. THE MANUFACTURER HAS MODIFIED THE PRODUCT OR CHANGED THE MATERIAL OR PROCESSING SUFFICIENTLY SO THAT THE VALIDITY OF PREVIOUS QUALIFICATION IS QUESTIONABLE."

ALSO, YOU POINT OUT THAT DEFENSE STANDARDIZATION PROGRAM (PROVISIONS GOVERNING QUALIFICATIONS) SD-6, SECTION 104(D)(4) STATES THAT EACH APPLICATION FOR QUALIFICATION SHALL CONTAIN A CERTIFICATION THAT THE APPLICANT WILL SUPPLY ITEMS FOR TEST WHICH ARE REPRESENTATIVE OF THE MANUFACTURER'S PRODUCTION.

IN THIS REGARD, YOU REFER TO OUR LETTER TO THE SECRETARY OF THE AIR FORCE, B-165179, B-165800, OCTOBER 10, 1969, WHEREIN WE STATED, IN PERTINENT PART, AS FOLLOWS:

"*** HERETOFORE, WHERE A QUALIFIED PRODUCTS CONTRACTOR HAS CHANGED PLACE OF MANUFACTURE OF THE QUALIFIED PRODUCT, CHANGED MACHINES OR PROCESS, OR CHANGED KEY PERSONNEL, HE HAS BEEN REQUIRED TO REQUALIFY THE PRODUCT FOR RETENTION ON THE QUALIFIED PRODUCTS LIST. HERE THE ELLINOR CORPORATION AFTER QUALIFICATION OF ITS PRODUCT OBTAINED NEW MACHINERY AND MANUFACTURED HONEYCOMB FOR THE TWO TARGETS UNDER A PROCESS DIFFERENT FROM THAT USED FOR THE QUALIFICATION TOW TARGETS. ALTHOUGH THE PRODUCTION TARGETS EQUALLED OR BETTERED THE CONTRACT SPECIFICATIONS, THEY HAD NOT BEEN SUBJECT TO QUALIFICATION TESTING. THIS RESULTED IN A DECIDED WEAKENING OF THE QUALIFIED PRODUCTS SYSTEM, AND COULD IN TIME RENDER THE SYSTEM MEANINGLESS. ***"

AS YOU POINT OUT, SECTION 4-109 OF THE MANUAL REQUIRES REEXAMINATION WHERE THERE IS SUFFICIENT MODIFICATION OF THE PRODUCT OR CHANGE IN MATERIAL OR PROCESSING SO AS TO MAKE THE VALIDITY OF THE PREVIOUS QUALIFICATION QUESTIONABLE. HOWEVER, THERE REMAINS THE QUESTION OF WHO HAS THE PRIMARY RESPONSIBILITY FOR DECIDING WHAT MODIFICATIONS OR CHANGES ARE SUFFICIENT TO REQUIRE A REEXAMINATION. SECTION 4-109 FURTHER STATES:

"RETEST WILL BE REQUIRED, AS NECESSARY, BASED ON THE DETERMINATION FROM EXAMINATION OF DATA. THE PREPARING ACTIVITY WILL DETERMINE, BASED UPON THE EXTENT OF SPECIFICATION OR PRODUCT CHANGES AND OTHER AVAILABLE DATA, WHETHER PRODUCTS ARE TO BE REMOVED FROM THE QPL UNTIL RETESTED OR WHETHER SUCH ACTION IS TO BE DELAYED PENDING THE OUTCOME OF THE TESTS OR RECEIPT OF ADDITIONAL DATA, AS APPROPRIATE. IF IT IS DETERMINED THAT THE PRODUCTS SHOULD REMAIN ON THE QPL, A MAXIMUM TIME LIMIT WILL BE ESTABLISHED FOR SUBMISSION OF THE SAMPLES OR TEST DATA, AS APPLICABLE, BEFORE REMOVAL."

THUS, IT APPEARS THAT NOT ONLY IS IT THE FUNCTION OF THE AGENCY TO DECIDE WHAT MODIFICATIONS OR CHANGES ARE SUFFICIENT TO REQUIRE A REEXAMINATION AND TO DETERMINE FROM SUCH REEXAMINATION WHETHER A RETEST IS NECESSARY, BUT THE AGENCY MAY, BASED ON ITS TECHNICAL JUDGMENT AS TO THE SIGNIFICANCE OF THE CHANGES, DETERMINE THAT REMOVAL OF THE PRODUCT FROM THE QPL IS NOT REQUIRED EVEN WHEN RETESTING IS CONSIDERED TO BE NECESSARY.

REGARDING OUR DECISION OF OCTOBER 10, 1969 (B-165179, 165800), WHICH WAS THE SUBJECT OF OUR LETTER OF THAT DATE TO THE SECRETARY OF THE AIR FORCE, IT SHOULD BE NOTED THAT WHILE WE WERE PERSUADED THAT THE QUALIFICATION UNIT AND THE PRODUCTION UNIT WERE DISSIMILAR, WE STILL RECOGNIZED THAT UNDER THE PERTINENT REGULATIONS THE COMPANY, HAVING BEEN PLACED ON THE QPL, WAS ELIGIBLE TO SUBMIT BIDS OR PROPOSALS ON PROCUREMENTS OF THAT ITEM UNTIL REMOVED FROM THE LIST. IN ADDITION, UPON RECONSIDERATION OF THAT DECISION ON DECEMBER 16, 1969, WE MADE THE FOLLOWING COMMENTS:

"WE BELIEVE THAT AWARD AND ACCEPTABLE PERFORMANCE UNDER A FORMALLY ADVERTISED QPL PROCUREMENT REQUIRE 3 THINGS:(1) THAT THE PRODUCT OFFERED BY THE BIDDER MUST BE ON THE QPL OR HAVE BEEN CERTIFIED FOR PLACEMENT THEREON AT THE TIME OF BID OPENING, (2) THAT THE CONTRACTOR MUST FURNISH AN ITEM WHICH IS ON THE QPL AT THE TIME OF PERFORMANCE AND (3) WHICH SATISFIES THE CONTRACT SPECIFICATIONS. WE DO NOT CONSTRUE THE QPL REGULATIONS TO REQUIRE THAT THE QPL ITEM WHICH QUALIFIED THE CONTRACTOR TO BID MUST BE THE SAME ITEM FURNISHED UNDER THE CONTRACT. CF. 41 COMP. GEN. 124 (1961). THE AIR FORCE HAS CONCLUDED, BASED ON INSPECTIONS, ACTUAL USE OF THE PRODUCT AND FACING/CORE PEEL TESTS PERFORMED IN ACCORDANCE WITH MIL -T-9918A, THAT THE PRODUCT BEING FURNISHED BY ELLINOR UNDER EXISTING CONTRACTS WOULD QUALIFY FOR INCLUSION ON THE QPL. IT APPEARS REASONABLE TO ASSUME, THEREFORE, THAT PRIOR TO PERFORMANCE ON CURRENT CONTRACTS ELLINOR COULD HAVE QUALIFIED FOR INCLUSION ON THE QPL A TOW TARGET USING THE HONEYCOMB CURRENTLY BEING FURNISHED (ASSUMING, AGAIN, THAT IT IN FACT DIFFERS FROM THE PRODUCT WHICH WAS QUALIFIED). APPARENTLY THIS WAS NOT DONE BECAUSE BOTH ELLINOR AND THE AIR FORCE CONSIDERED THAT THE ITEM BEING FURNISHED UNDER CONTRACT WAS ALREADY ON THE QPL. THEREFORE, EVEN ASSUMING THE FACTS ALLEGED BY PANCOA, ANY DEFICIENCIES IN ELLINOR'S PERFORMANCE OR QUALIFICATION ARE OF FORM RATHER THAN OF SUBSTANCE AND DO NOT JUSTIFY ANY ACTION ON THE PART OF OUR OFFICE WITH RESPECT TO PAST OR EXISTING CONTRACTS." THUS, IT IS CLEAR THAT THE REGULATIONS PERMIT CERTAIN CHANGES IN THE QUALIFIED PRODUCT AND THAT NOT EVERY CHANGE IN MATERIAL OR PROCESSING REQUIRES REEXAMINATION, RETESTING OR REMOVAL OF THE ITEM FROM THE QPL.

HERE, THE NAVY, IN THE DISCHARGE OF ITS RESPONSIBILITIES FOR MAKING A TECHNICAL ANALYSIS OF THE PROPOSED CHANGE IN SUPPLIERS FOR THE SIX PARTS, HAS CONCLUDED THAT THE USE OF THOSE PARTS FROM THE ALTERNATE SUPPLIERS WILL NOT RESULT IN A SIGNIFICANT DIFFERENCE BETWEEN THE QUALIFICATION AND THE PRODUCTION UNITS.

YOU CHALLENGE THE NAVY TO PRODUCE A TECHNICAL EVALUATION BY A QUALIFIED ENGINEER FULLY SUPPORTING ITS CONCLUSION AND, IN EFFECT, YOU CONTEND THAT THE CONCLUSION CONSTITUTES AN ARBITRARY ACTION BY THE NAVY. IN KECO INDUSTRIES, INC. V. UNITED STATES, 192 CT. CL. 773, 784 (1970) THE COURT STATED, IN PERTINENT PART:

"IT MUST BE POINTED OUT THAT THE STANDARD OF PROOF TO BE APPLIED IN CASES WHERE ARBITRARY AND CAPRICIOUS ACTION IS CHARGED SHOULD BE A HIGH ONE. FINAL DECISIONS SHOULD BE BASED ON THE PARTICULAR CIRCUMSTANCES OF EACH CASE. IT WILL REMAIN FOR PLAINTIFF TO MEET THIS HIGH STANDARD BY PROVING TO THE COMMISSIONER THAT SUCH ARBITRARY AND CAPRICIOUS ACTION AS ALLEGED DID IN FACT EXIST."

FROM OUR REVIEW OF THE RECORD, INCLUDING THE MATERIAL FURNISHED IN SUPPORT OF YOUR CONTENTIONS, WE ARE UNABLE TO CONCLUDE THAT NAVY'S REFUSAL TO REMOVE CONDOR'S UNIT FROM THE QPL WAS ARBITRARY UNDER THE STANDARD SET OUT IN THE KECO CASE. SEE B-175396, AUGUST 18, 1972.

REGARDING YOUR ALLEGATION THAT THE BEARINGS USED IN CONDOR'S QUALIFYING UNITS DID NOT CONTAIN A BARRIER FILM COATING AS REQUIRED BY THE SPECIFICATIONS, CONDOR DISPUTES THIS CONTENTION. CONDOR STATES THAT THE NAVY REPRESENTATIVE FROM CRANE, INDIANA, WHO INSPECTED CONDOR'S QUALIFICATION INDICATORS AT CONDOR'S PLANT, CAN CONFIRM THE DOCUMENTATION AND CERTIFICATION OF THE BARRIER FILM COATING ON THE BEARINGS AND BY WHOM SUCH BARRIER COATING WAS SUPPLIED. IT IS ALSO THE PROCURING ACTIVITY'S POSITION THAT CONDOR'S QUALIFICATION UNITS DID, IN FACT, CONTAIN BARRIER FILM COATED BEARINGS. IN THIS CONNECTION THE NAVAL AIR SYSTEMS COMMAND FURNISHED THIS OFFICE WITH COPIES OF CONDOR'S PURCHASE ORDER FOR THE COATING OF THE BEARINGS USED IN THE QUALIFICATION UNITS AND THE BEARING COMPANY'S INVOICE OF AUGUST 17, 1971, SHOWING THE BEARINGS AS HAVING BEEN BARRIER FILM COATED. WHILE YOU STATE THAT THE AUGUST 17 INVOICE CLEARLY SHOWS THAT THE BEARINGS FILM COATED WERE OTHER THAN THE BEARINGS UTILIZED IN THE CONTROL MOTORS AND SYNCHRO CONTROL TRANSFORMERS OF CONDOR'S QUALIFICATION UNITS, YOU DO NOT EXPLAIN THE MANNER IN WHICH THIS IS CLEARLY SHOWN THEREIN. YOU REFER ONLY TO HAVING HAD DISCUSSIONS WITH A MEMBER OF THE BEARING COMPANY WHICH YOU SAY "INDICATED" THAT THE COMPANY DID NOT BARRIER FILM COAT CONDOR BEARINGS WHICH CONTAINED SHIELDS, AND THE BEARINGS UTILIZED IN THE CONTROL MOTORS AND TRANSFORMERS ARE SHIELDED BEARINGS. WE DO NOT CONSIDER THIS REPORTED UNDERSTANDING DERIVED FROM YOUR CONVERSATIONS CONSTITUTED SUFFICIENT EVIDENCE TO OVERCOME THE ADMINISTRATIVE POSITION, AND ESTABLISH THAT THE BEARINGS USED IN THE QUALIFICATION UNITS WERE NOT, IN FACT, BARRIER FILM COATED.

FOR THE ABOVE REASONS, YOUR PROTEST IS DENIED.