B-176256, NOV 30, 1972

B-176256, NOV 30, 1972

BID PROTEST - APPROVED SOURCE - PROCUREMENT ACTIVITY'S TECHNICAL PROCEDURES DECISION CONCERNING THE PROTEST OF PHILADELPHIA SCIENTIFIC CONTROLS, INC., AGAINST THE AWARD OF A CONTRACT TO ANY FIRM OTHER THAN VAP AIR CORPORATION OR PHILADELPHIA SCIENTIFIC CONTROLS INC. UNDER AN RFP ISSUED BY TINKER AFB, OKLAHOMA. AN OFFEROR'S QUALIFICATION AS AN APPROVED SOURCE CAN BE ESTABLISHED BY EVIDENCE CONVINCING THE GOVERNMENT THAT IT IS CAPABLE OF MANUFACTURING THE ITEM SPECIFIED IN THE RFP. ONCE THE CONTRACTING OFFICER HAS DETERMINED, THROUGH EVIDENCE OF RESPONSIBILITY, THAT A PROSPECTIVE CONTRACTOR IS AN APPROVED SOURCE THE GAO WILL NOT REVERSE THAT DETERMINATION, UNLESS IT WAS AN ARBITRARY OR CAPRICIOUS DECISION. SEE 37 COMP. GEN. 789 (1958). ALSO, SINCE THE ESTABLISHMENT OF TECHNICAL PROCEDURES TO QUALIFY A PROSPECTIVE CONTRACTOR AS AN APPROVED SOURCE IS WITHIN THE AMBIT OF THE PROCUREMENT ACTIVITY, GAO LACKS THE TECHNICAL EXPERTISE, AND THUS IS WITHOUT AUTHORITY TO PASS ON THESE TECHNICAL PROCEDURES. ACCORDINGLY, THE PROTEST IS DENIED.

TO PHILADELPHIA SCIENTIFIC CONTROLS, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 13, 1972, AND SUPPLEMENTAL CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY FIRM OTHER THAN VAP AIR CORPORATION OR PHILADELPHIA SCIENTIFIC CONTROLS, INC. (PSC), UNDER REQUEST FOR PROPOSALS (RFP) F 34601-72-R C328, ISSUED AT TINKER AIR FORCE BASE, OKLAHOMA, ON MARCH 13, 1972.

THE RFP REQUESTED OFFERS FROM APPROVED SOURCES ON SUPPLYING 750 OIL TEMPERATURE CONTROLS. YOUR FIRM AND VAP AIR CORPORATION WERE THE ONLY APPROVED SOURCES AT THE TIME THE RFP WAS ISSUED. HOWEVER, PRIOR TO MARCH 28, 1972, THE SCHEDULED DATE FOR THE OPENING OF OFFERS, A THIRD FIRM, PSG INDUSTRIES, INC. (PSG), SUBMITTED AN OFFER AND WAS CONSIDERED BY THE PROCURING ACTIVITY TO BE A POTENTIAL NEW SUPPLIER FOR THE ITEM. PSG'S OFFER WAS THE LOWEST OF THE THREE OFFERS RECEIVED AND WE HAVE BEEN INFORMALLY ADVISED THAT AWARD WAS MADE TO THAT FIRM, IN ACCORDANCE WITH PARAGRAPH 2-407.8(B)(3) OF THE ARMED SERVICES PROCUREMENT REGULATION, ON OCTOBER 19, 1972.

THE INFORMATION TO OFFERORS (DD FORM 1707) OF THE RFP CONTAINED THE FOLLOWING NOTE:

"NOTE. ONLY THOSE SOURCES FOR THIS ITEM PREVIOUSLY APPROVED BY THE GOVERNMENT HAVE BEEN SOLICITED. THE TIME REQUIRED FOR APPROVAL OF A NEW SUPPLIER IS NORMALLY SUCH THAT AWARD CANNOT BE DELAYED PENDING APPROVAL OF THE NEW SOURCE. IF YOU HAVE NOT BEEN SOLICITED AND YOU CAN FURNISH PROOF OF YOUR PRIOR APPROVAL AS A SUPPLIER OF THIS ITEM, PLEASE NOTIFY THE PCO IN WRITING, FURNISHING SAID PROOF ALONG WITH YOUR REQUEST FOR A SOLICITATION. IF YOU ARE NOT AN APPROVED SUPPLIER FOR THIS ITEM AND AIR FORCE NEED DATES WILL NOT PERMIT THE DELAY IN AWARD COMMENSURATE WITH APPROVAL, YOU MAY BE CONSIDERED FOR APPROVAL ON FUTURE BUYS. IF YOU ARE INTERESTED IN FURNISHING THE PARTS IN THIS SOLICITATION ON FUTURE BUYS, DO NOT REQUEST THE SOLICITATION BUT CONTACT OCAMA/PPLE, TINKER AFB, OK. 73145 FOR SPECIFIC INFORMATION ON HOW TO BECOME APPROVED AS A SUPPLIER. PLEASE FURNISH SPECIFIC FSN AND/OR PART NUMBERS WHEN REQUESTING ABOVE INFORMATION."

IN YOUR LETTER DATED JUNE 20, 1972, YOU QUESTIONED THE PROCURING ACTIVITY AS TO WHETHER THE SAMPLE SUBMITTED BY PSG WITH ITS OFFER WAS A NEWLY MANUFACTURED AND TESTED ITEM. YOU STATED THAT SOME OF THE APPROVED COMPONENTS REQUIRED TO FABRICATE THE UNIT HAD NEVER BEEN PURCHASED BY PSG AND THE RELAYS WHICH PSG HAD PURCHASED FROM FREDERICK CONTROL DIVISION HAD NOT BEEN SHIPPED UNTIL APRIL 19, 1972, AT WHICH TIME ONLY YOUR FIRM AND VAP AIR CORPORATION WERE APPROVED SOURCES.

IN YOUR LETTER OF SEPTEMBER 19, 1972, TO THIS OFFICE, YOU ELABORATE ON THIS ALLEGATION STATING THAT THE CONTRACTING OFFICER HAD NO WAY OF KNOWING WHETHER PSG MANUFACTURED THE SAMPLE OR WHETHER THE ITEM WAS ACTUALLY MANUFACTURED BY YOUR FIRM OR VAP AIR. YOU STATE THAT PSG FAILED TO SUBMIT, PRIOR TO BID OPENING, A COMPLETE DRAWING PACKAGE WITH MATERIAL, DIMENSIONS AND TOLERANCES TOGETHER WITH CERTIFIED TEST DATA SHOWING ABILITY TO MEET THE NECESSARY SPECIFICATION REQUIREMENTS TOGETHER WITH A MINIMUM OF THREE NEWLY MANUFACTURED SAMPLES TO BE FURTHER TESTED BY THE GOVERNMENT. YOU CONTEND THAT THE CONTRACTING OFFICER ACTED IN AN ARBITRARY AND CAPRICIOUS MANNER AND COMPLETELY LACKED SUBSTANTIAL GROUNDS FOR HIS DECISION TO SEND PSG A SOLICITATION PACKAGE AND TO CONSIDER PSG AS A SUPPLIER FOR THIS SOLICITATION PRIOR TO THE DATE SET FOR THE OPENING OF OFFERS. YOU FURTHER STATE THAT THE CONTRACTING OFFICER'S BAD FAITH WAS ILLUSTRATED BY HIS COMPLETE DISREGARD OF THE INTENT OF THE SOLICITATION TO RESTRICT THE PROCUREMENT TO APPROVED SOURCES.

YOU ALSO REFER TO A LETTER DATED APRIL 14, 1972, IN WHICH THE PROCURING ACTIVITY REQUESTED COMPLETE EVIDENCE FROM PSG OF THAT FIRM'S ABILITY TO PRODUCE THE ITEM. YOU IMPLY THAT THE EVIDENCE REQUIRED OF PSG WAS NOT AS COMPLETE AS THE EVIDENCE REQUIRED FOR THE ACCEPTANCE OF YOUR FIRM AS AN APPROVED SOURCE. YOU SAY THERE WAS NOT SUFFICIENT TIME BETWEEN APRIL 24 AND MAY 2, 1972, WHEN PSG'S SAMPLES WERE WITH THE AIR FORCE'S ENGINEERING ACTIVITY, TO PERFORM THE TESTS WHICH YOUR UNIT HAD TO UNDERGO PRIOR TO YOUR FIRM'S ACCEPTANCE AS AN APPROVED COURSE.

YOU ALSO POINT OUT THAT ONLY APPROVED SOURCES HAD BEEN SOLICITED, AND YOU CONTEND THAT THE SOLICITATION HAD STATED THAT IF THE OFFEROR WAS NOT AN APPROVED SUPPLIER FOR THIS ITEM, THE AIR FORCE NEED DATES WOULD NOT PERMIT THE DELAY IN AWARD COMMENSURATE WITH APPROVAL, BUT THE OFFEROR WOULD BE CONSIDERED FOR APPROVAL ON FUTURE BUYS. YOU STATE THAT OFFERS BY YOUR FIRM WERE NOT CONSIDERED ON NUMEROUS OCCASIONS UNDER SOLICITATIONS CONTAINING THE SAME LANGUAGE.

LASTLY, YOU CONTEND THAT A CONFERENCE WAS HELD BETWEEN PSG AND THE CONTRACTING OFFICER PRIOR TO THE DATE THE OFFERS WERE SCHEDULED TO BE OPENED, AND THAT NEITHER OF THE OTHER PROSPECTIVE OFFERORS WAS OFFERED AN OPPORTUNITY TO MEET WITH THE CONTRACTING OFFICER PRIOR TO OPENING DAY.

REGARDING YOUR CONTENTION THAT THE SAMPLE SHOWN TO THE PROCUREMENT ACTIVITY BY PSG PRIOR TO THE OPENING DATE WAS NOT MANUFACTURED BY PSG, WE NOTE THAT YOU ALSO SAY THAT THE SAMPLE WAS NEVER EVALUATED BY THE AIR FORCE, NOR LEFT WITH THE AIR FORCE FOR TESTING, BUT WAS RETAINED BY PSG. SINCE IT DOES NOT APPEAR THAT THIS SAMPLE WAS ONE OF THOSE EVALUATED, OR WAS OTHERWISE ACTUALLY USED BY THE AIR FORCE AS A BASIS FOR ITS SUBSEQUENT APPROVAL OF PSG AS A NEW SOURCE FOR THE ITEM, WE DO NOT CONSIDER IT TO BE OF MATERIAL SIGNIFICANCE TO THE BASIC ISSUE OF PSG'S QUALIFICATIONS AS A NEW SUPPLIER, EVEN IF THE SAMPLE IN QUESTION WAS NOT MANUFACTURED BY PSG, AS YOU CONTEND.

CONCERNING THE QUALIFICATION OF APPROVED SOURCES, WE ARE ADVISED THAT IN ORDER TO QUALIFY AS AN APPROVED SOURCE THERE IS NO REQUIREMENT THAT THE OFFEROR BE A MANUFACTURER OF THE ITEM PRIOR TO THE TIME THE OFFERS ARE CONSIDERED, BUT ONLY THAT THE OFFEROR FURNISH SUFFICIENT EVIDENCE TO CONVINCE THE GOVERNMENT THAT IT IS CAPABLE OF MANUFACTURING THE ITEM. SINCE THIS IS A MATTER OF RESPONSIBILITY, THE EVIDENCE MAY BE FURNISHED AFTER THE OPENING DATE, AND THIS OFFICE HAS HELD THAT THE DETERMINATION OF RESPONSIBILITY OF PROSPECTIVE CONTRACTORS IS FOR THE DISCRETION AND JUDGMENT OF THE CONTRACTING OFFICER AND WILL NOT BE DISTURBED IN THE ABSENCE OF CONVINCING EVIDENCE THAT THE DETERMINATION HAD NO REASONABLE BASIS. 37 COMP. GEN. 798 (1958); 45 ID. 4 (1965).

BY LETTER OF MARCH 24, 1972, TRANSMITTING ITS PROPOSAL, PSG PRESENTED A RESUME OF ITS CAPABILITIES AND QUALIFICATIONS FOR SUPPLYING THE ITEM, WHICH INCLUDED THE FOLLOWING STATEMENT:

"TO ILLUSTRATE OUR CAPABILITIES, PSG INDUSTRIES HAS IN PRODUCTION 6 OF THE SUBJECT THERMOSTATS WHICH WILL BE COMPLETED AND FUNCTIONALLY TESTED. THE 3 UNITS WILL BE SUBMITTED TO YOU FOR YOUR EVALUATION BY APRIL 10, 1972.

"THE OTHER 3 UNITS WILL BE SUBJECTED TO QUALIFICATION TESTING BY PSG INDUSTRIES AND WILL BE SUBMITTED TO YOU BY JUNE 22, 1972, ALONG WITH THE FULLY DOCUMENTED TEST REPORT. THIS TESTING WILL BE DONE AT NO COST TO THE GOVERNMENT.

"THE LENGTH OF QUALIFICATION TESTING CAN BE REDUCED BY 40 DAYS IF WE ARE ALLOWED TO PERFORM THE FUNGUS TEST AND HUMIDITY TEST ON ONE UNIT AND RUN THE OTHER TESTS ON THE REMAINING 2 UNITS. WE WILL ALSO BE PERFORMING QUALIFICATION TESTS ON THE OTHER DASH NUMBER THERMOSTAT, WHICH IS CALLED OUT IN LOCKHEED DWG. 695539 (-02), THE ONLY DIFFERENCE IS IN THE SET POINT. THEREFORE, WE WILL ACTUALLY BE RUNNING 6 UNITS THROUGH QUALIFICATION TESTS.

"IF FUNGUS AND HUMIDITY TESTS ARE RUN SEPARATELY, 3 QUALIFICATION TESTED UNITS CAN BE PROVIDED BY 15 MAY, 1972. TWO HUNDRED FIFTY (250) PRODUCTION UNITS CAN BE DELIVERED 77 DAYS AFTER RECEIPT OF ORDER.

"BASED ON THE ABOVE, AND ASSUMING 30 DAYS FOR AIR FORCE EVALUATION, THREE QUALIFICATION UNITS CAN BE PROVIDED BY 15 MAY, AND EVALUATION COMPLETE BY 15 JUNE, 250 PRODUCTION UNITS CAN BE DELIVERED BY THE END OF AUGUST WHICH CORRESPONDS TO THE REQUIRED DELIVERY IN THE SOLICITATION, IE, 120 DAYS ASSUMING AN APRIL AWARD DATE. (SEE ATTACHED PRODUCTION AND TESTING SCHEDULE)"

CONTRARY TO YOUR CONTENTION, THE PROCUREMENT WAS NOT RESTRICTED TO APPROVED SOURCES IN EXISTENCE PRIOR TO THE DATE SET FOR THE OPENING OF OFFERS. WHILE THE NOTE IN THE INFORMATION TO OFFERORS PROVIDED THAT ONLY THOSE SOURCES FOR THE ITEM PREVIOUSLY APPROVED BY THE GOVERNMENT HAD BEEN SOLICITED, IT FURTHER STATED THAT IF THE OFFEROR WAS NOT AN APPROVED SUPPLIER FOR THE ITEM AND THE AIR FORCE NEED DATES WOULD NOT PERMIT THE DELAY IN AWARD COMMENSURATE WITH APPROVAL, THE OFFEROR COULD BE CONSIDERED ON FUTURE BUYS. THE AIR FORCE DETERMINED THAT ITS NEED DATE WAS SUCH THAT A PROMPT AWARD OF THE CONTRACT WAS NOT REQUIRED, AND SINCE IT APPEARED THAT PSG COULD SUBMIT SAMPLES FOR TESTING WITHIN A REASONABLE TIME, IT WAS DECIDED THAT AWARD COULD BE DELAYED PENDING A DETERMINATION AS TO WHETHER PSG QUALIFIED AS A NEW SOURCE FOR THE ITEM. IN THIS CONNECTION, IT IS REPORTED THAT A DECISION, BASED ON THE AIR FORCE NEED DATE FOR THE ITEM, IS MADE EACH TIME A POTENTIAL NEW SUPPLIER WISHES TO BECOME QUALIFIED FOR A CURRENT PROCUREMENT OF AN ITEM WITH A RESTRICTIVE PROCUREMENT METHOD CODE.

ON THOSE OCCASIONS MENTIONED BY YOU, WHEN YOUR OFFERS WERE NOT CONSIDERED UNDER SOLICITATIONS CONTAINING THE SAME NOTE IN THE INFORMATION TO OFFERORS, THE RECORD CONTAINS NO INDICATION THAT THE AIR FORCE'S NEED DATES WERE SUCH IN THOSE PROCUREMENTS THAT AWARD COULD BE DELAYED PENDING APPROVAL OF YOUR FIRM AS A NEW SOURCE.

REGARDING YOUR CONTENTION THAT PSG FAILED TO SUBMIT PRIOR TO OPENING DAY A COMPLETE DRAWING PACKAGE, AS WELL AS CERTIFIED TEST DATA SHOWING ITS ABILITY TO MEET THE NECESSARY SPECIFICATION REQUIREMENTS, TOGETHER WITH A MINIMUM OF THREE NEWLY MANUFACTURED SAMPLES TO BE FURTHER TESTED BY THE GOVERNMENT, SINCE THIS MATERIAL WAS TO BE USED IN DETERMINING THE CAPABILITIES OF PSG, A MATTER OF RESPONSIBILITY, THERE IS NO REQUIREMENT, AS STATED ABOVE, THAT THE MATERIAL HAD TO BE SUBMITTED PRIOR TO OPENING DAY.

THE RECORD INDICATES THAT ON APRIL 24, 1972, THREE PSG UNITS, ALONG WITH COPIES OF PURCHASE ORDERS AND RECEIPTS OF MATERIALS USED IN THE FABRICATION OF THE THREE UNITS, WERE FORWARDED BY THE AIR FORCE TO ITS ENGINEERING ACTIVITY FOR TESTING AND INSPECTION. THE CONCLUSIONS OF THE ENGINEERING ACTIVITY, AS REPORTED BY THE ELECTRO-MECHANICAL INVESTMENTS SECTION ON MAY 2, 1972, WERE AS FOLLOWS:

"SINCE THE TEMPERATURE CONTROLS WERE FABRICATED WITH THE SAME MANUFACTURER'S PART NUMBER RELAY AND THERMOSTAT AS WE QUALIFIED 23 SEPTEMBER 1970 WE PASSED THE FIRST ARTICLES FOR THE PERFORMANCE TEST SPECIFIED BY LOCKHEED AIRCRAFT COMPANY DRAWING 695539 ON THE BASIS OF SIMILARITY. AS FOR FORM, FIT, AND FUNCTION T/SGT JACK K BALLARD AT DYESS AFB TESTED AND SUBMITTED DATA WHICH SHOWS ALL THREE OIL TEMPERATURE CONTROLS SUCCESSFULLY PASSED.

"THEREFORE, BASED ON THE ABOVE ACTIONS, WE APPROVE PSG INDUSTRIES INC, P/N 5-09192 FOR PROCUREMENT."

THE ESTABLISHMENT OF PROCEDURES TO QUALIFY A SOURCE TO MANUFACTURE A PART TO ANOTHER MANUFACTURER'S SPECIFICATION, AS IN THE PRESENT CASE, IS WITHIN THE AMBIT OF THE EXPERTISE OF THE COGNIZANT TECHNICAL ACTIVITY. THUS, THE ACTIVITY ASSIGNED RESPONSIBILITY FOR PROCUREMENT OF THE ITEM IN THE PRESENT CASE MAY DETERMINE THOSE CRITERIA NECESSARY TO INSURE THE SAFETY, DEPENDABILITY AND INTERCHANGEABILITY OF THE PART ON AN AD HOC BASIS. WHILE THE TESTING PROCEDURES WHICH YOU ALLEGE THAT YOUR UNIT WAS SUBJECTED TO PRIOR TO THE APPROVAL OF YOUR FIRM AS A QUALIFIED SOURCE MIGHT HAVE BEEN MORE RIGOROUS THAN THOSE TO WHICH THE PSG UNIT WAS SUBJECTED, IT APPEARS THAT ANY SUCH INEQUALITY IN TESTING MAY HAVE BEEN ATTRIBUTABLE TO THE FACT (AS STATED IN THE ABOVE ENGINEERING REPORT) THAT THE PSG UNIT WAS PASSED FOR THE PERFORMANCE TEST ON THE BASIS OF THAT UNIT'S SIMILARITY IN CERTAIN RESPECTS TO A PREVIOUSLY QUALIFIED UNIT. IN THIS SITUATION, THE COGNIZANT TECHNICAL ACTIVITY IS CHARGED WITH THE RESPONSIBILITY OF DETERMINING THE AMOUNT OF TESTING NECESSARY, IF ANY, TO ASSURE THAT A POTENTIAL NEW SUPPLIER COULD PRODUCE AN ACCEPTABLE UNIT. IN THE PRESENT CASE FURTHER ASSURANCE OF PSG'S PRODUCTION CAPABILITIES WAS ACHIEVED BY A PREAWARD SURVEY. SINCE OUR OFFICE IS NOT EQUIPPED TO CONSIDER THE TECHNICAL SUFFICIENCY OF SUCH ENGINEERING DETERMINATIONS, AND SINCE SUCH DETERMINATIONS ARE MATTERS PRIMARILY OF ADMINISTRATIVE DISCRETION, WE WILL NOT SUBSTITUTE OUR OPINION FOR THAT OF THE TECHNICAL ACTIVITY ASSIGNED THE DUTY TO OVERSEE PART ACCEPTABILITY. SEE B-172901, B 173039, B-173087, OCTOBER 14, 1971.

IN YOUR LETTER OF SEPTEMBER 25, 1972, YOU SAY THAT SINCE THE ENGINEERING ACTIVITY BASED ITS APPROVAL OF PSG ON THE USE OF THE SAME MANUFACTURER'S RELAY AND THERMOSTAT AS WAS USED BY THE QUALIFIED MANUFACTURER, THE APPROVAL IS ERRONEOUS. THE REASON ADVANCED FOR YOUR STATEMENT IS THAT THE QUALIFIED MANUFACTURER FOR THE THERMOSTAT IS YOUR FIRM AND ITS QUALIFIED VENDOR IS RELIABLE INSTRUMENT COMPANY, NEITHER OF WHOM HAS EVER SOLD THE THERMOSTAT TO PSG. HOWEVER, WE NOTE THAT PSG, IN ITS LETTER OF MARCH 24, APPEARS TO ALLEGE DESIGN OWNERSHIP OF WHAT SEEMS TO BE THE THERMOSTAT IN QUESTION. IN YOUR LETTER OF SEPTEMBER 25, 1972, YOU INDICATE THAT A SEPARATE CIVIL ACTION IS BEING TAKEN PRIMARILY FOR THE DRAWINGS OF THIS DEVICE, WHICH YOU STATE IS THE PROPERTY OF YOUR FIRM. SINCE THE MATTER IS THE SUBJECT OF PENDING LITIGATION, IT WOULD BE INAPPROPRIATE FOR US TO COMMENT THEREON OR TO INVESTIGATE THE FACTUAL BASIS OF STATEMENTS TO BE ESTABLISHED IN THE LEGAL PROCEEDINGS. HOWEVER, WE DO NOT BELIEVE THE FOREGOING CIRCUMSTANCES PROVIDE AN ADEQUATE BASIS FOR THIS OFFICE TO QUESTION THE ENGINEERING ACTIVITY'S APPROVAL OF PSG FOR THE PROCUREMENT. CONCERNING YOUR ALLEGATION THAT A CONFERENCE WAS HELD BETWEEN PSG AND THE CONTRACTING OFFICER PRIOR TO THE DATE THE OFFERS WERE SCHEDULED TO BE OPENED, AND THAT YOU WERE NOT OFFERED A SIMILAR OPPORTUNITY TO MEET WITH THE CONTRACTING OFFICER, IN LIGHT OF THE FACT THAT YOUR FIRM WAS ALREADY A QUALIFIED SOURCE WE FAIL TO SEE HOW YOU WERE PREJUDICED IN SUCH RESPECT. ALSO, THE SOLICITATION CLEARLY ADVISED PROSPECTIVE OFFERORS OF THE PARTY TO CALL FOR INFORMATION, AND THERE IS NO INDICATION THAT YOU REQUESTED ADDITIONAL INFORMATION, OR A CONFERENCE WITH THE CONTRACTING OFFICER, AND THAT SUCH REQUESTS WERE DENIED.

FOR THE ABOVE REASONS, YOUR PROTEST IS DENIED.