B-177719, MAR 29, 1974, 53 COMP GEN 720

B-177719, MAR 29, 1974, 53 COMP GEN 720

CONTRACTS - FEDERAL SUPPLY SCHEDULE - REQUIREMENTS CONTRACTS - PRIMARY SOURCE V. MULTIPLE-AWARD CONTRACTORS WHEN THE GOVERNMENT IS OBLIGATED TO PURCHASE ITS NORMAL REQUIREMENTS OF FILM FROM A PRIMARY SOURCE FEDERAL SUPPLY SCHEDULE (FSS) CONTRACTOR, IF IT CAN BE SHOWN THAT HIGHER SPEED FILM WAS PURCHASED FROM A MULTIPLE AWARD FSS CONTRACTOR TO SATISFY NORMAL REQUIREMENTS WHICH COULD BE MET BY FILM SPECIFIED IN THE PRIMARY SOURCE FSS CONTRACT, THE PRIMARY SOURCE CONTRACTOR WOULD BE ENTITLED TO DAMAGES. HOWEVER, PURCHASE OF HIGH SPEED FILM FROM A MULTIPLE-AWARD FSS CONTRACTOR WAS NOT A BREACH OF CONTRACT WHERE THE RECORD SHOWS THAT THE PURCHASE WAS NECESSITATED BY THE REQUIREMENT FOR FILM THAT EXCEEDED THE SPECIFICATION CHARACTERISTICS OF FILM PROVIDED BY THE PRIMARY SOURCE FSS CONTRACTOR. CONTRACTS - FEDERAL SUPPLY SCHEDULE - PRIMARY SOURCE V. MULTIPLE AWARD CONTRACTS - OVERLAPPING REQUIREMENTS SINCE SOME OVERLAP EXISTS BETWEEN FILM LISTED ON A PRIMARY SOURCE FEDERAL SUPPLY SCHEDULE (FSS) CONTRACT AND MULTIPLE-AWARD FSS CONTRACT, IT IS RECOMMENDED THAT THE GENERAL SERVICES ADMINISTRATION REGULATIONS BE MODIFIED TO PROHIBIT THE USE OF THE MULTIPLE-AWARD FSS CONTRACT WHERE AGENCY NEEDS WOULD BE SATISFIED BY PURCHASE FROM THE PRIMARY SOURCE CONTRACTOR.

IN THE MATTER OF KALVAR CORPORATION, MARCH 29, 1974:

KALVAR CORPORATION (KALVAR) WAS AWARDED CONTRACT NO. GS-OOS-12756, COVERING THE FEDERAL SUPPLY SCHEDULE (FSS) REQUIREMENTS FOR VARIOUS TYPES OF VESICULAR MICROFILM UNDER FEDERAL SPECIFICATION L-F-320B, FOR THE PERIOD JULY 1, 1972, THROUGH JUNE 30, 1973. INSOFAR AS IS PERTINENT HERE, THE FEDERAL SPECIFICATION, AS AMENDED, CALLED FOR VARIOUS SENSITOMETRIC CHARACTERISTICS FOR THE FILM, INCLUDING A SPEED RATING RANGE OF 1.05 TO 1.45 FOR CLASS 2, SUBTYPE A FILM. THE SCOPE OF CONTRACT PROVISION IN THE SOLICITATION STATED THAT THE ENSUING CONTRACT WOULD COVER THE NORMAL SUPPLY REQUIREMENTS OF ALL DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS. THE SOLICITATION ALSO PROVIDED THAT THE FOLLOWING PROVISION WOULD BE INCLUDED IN THE RESULTANT FSS CONTRACT:

WHERE AN AGENCY REQUIRED, UNDER (A) OF THE SCOPE OF CONTRACT PROVISION (ALL DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS WITH CERTAIN EXCEPTIONS NOT PERTINENT HERE), TO USE THE CONTRACTS LISTED HEREIN, FINDS THAT THE SPECIFIC ARTICLES OR SERVICES CONTRACTED FOR WILL NOT MEET A SPECIAL REQUIREMENT, ARTICLES OR SERVICES HAVING THE SAME GENERAL CHARACTERISTICS NEEDED TO MEET THE SPECIAL REQUIREMENT MAY BE PROCURED: PROVIDED, THAT A PRIOR WRITTEN WAIVER OF THE REQUIREMENT FOR USING THIS SCHEDULE IS OBTAINED FROM THE GENERAL SERVICES ADMINISTRATION. REQUESTS FOR SUCH WAIVERS SHALL BE SUBMITTED TO THE COMMISSIONER, FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION, WASHINGTON, DC 20406, IN ACCORDANCE WITH SECTION 101-26.401-3 OF THE FEDERAL PROPERTY MANAGEMENT REGULATIONS AND ANY IMPLEMENTING REGULATIONS OF THE REQUESTING AGENCY.

ON OCTOBER 19, 1972, THE INTERNAL REVENUE SERVICE (IRS) SUBMITTED A REQUEST TO GSA TO ESTABLISH SCHEDULE ARRANGEMENTS FOR THE SUPPLY OF BOTH KALVAR MIKROLITH 200 VESICULAR FILM AND XIDEX HS-66 VESICULAR FILM FOR THE REMAINDER OF FISCAL YEAR 1973. THE REASON FOR THE REQUEST, AS STATED BY IRS, WAS THAT THE FSS CONTRACT FOR FISCAL YEAR 1973 LISTED FILM WHICH WOULD OPERATE AT A SPEED OF 60 FEET PER MINUTE WHEREAS IRS' EQUIPMENT OPERATED MOST EFFICIENTLY USING FILM WITH A SPEED OF 200 FEET PER MINUTE. IRS STATED THAT THE PRIOR FSS CONTRACT HAD LISTED FILM WHICH RAN AT BOTH 60 AND 200 FEET PER MINUTE AND THAT IRS WAS PRESENTLY PURCHASING "OFF SCHEDULE" TO MEET ITS REQUIREMENTS. IN ADDITION IRS INFORMALLY ADVISED GSA THAT THE FILM PROVIDED BY KALVAR UNDER ITS PRIMARY SOURCE SCHEDULE CONTRACT WAS NOT SUITABLE FOR USE ON LATE MODEL IRS MACHINES WHEN OPERATED AT THEIR MAXIMUM SETTING. SPECIFICALLY, IT WAS REPORTED THAT THE CONTRACT FILM DID NOT PROVIDE A SATISFACTORILY SHARP AND CLEAR IMAGE AT THE MAXIMUM SETTING. THIS DETERMINATION WAS MADE AS A RESULT OF TRIAL RUNS CONDUCTED BY IRS WITH THE CONTRACT FILM.

THEREAFTER, GSA'S TECHNICAL STAFF WAS REQUESTED TO VERIFY WHETHER THE KALVAR MIKROLITH 200 FILM AND THE XIDEX HS-66 FILM WERE OUTSIDE THE SCOPE OF SPECIFICATION L-F-320B. A MEMORANDUM DATED NOVEMBER 7, 1972, INDICATES THAT GSA'S TECHNICAL STAFF CONCLUDED THAT THE XIDEX HS-66 FILM AND KALVAR MIKROLITH 200 FILM WERE OUTSIDE THE SCOPE OF THE SPECIFICATION COVERED BY KALVAR'S FSS PRIMARY CONTRACT, BASED ON DATA SHEETS FURNISHED BY THESE FIRMS. THE DATA SHEETS SUBMITTED BY XIDEX INDICATED THAT ITS HS-66-FILM HAD A SPEED RATING OF 1.50 AND KALVAR'S DATA SHEETS SHOWED SPEED RATINGS OF 1.75 AND 2.00 FOR THE MIKROLITH 200 FILM. THE FINDING OF GSA'S TECHNICAL EXPERTS WAS THAT ALL OF THESE SPEED RATINGS FELL OUTSIDE OF THE SPEED RANGE OF 1.05 TO 1.45 IN THE SPECIFICATION L-F-320B, FOR CLASS 2, SUBTYPE A FILM.

AFTER RECEIPT OF THE ABOVE ADVICE FROM THE TECHNICAL STAFF, GSA'S PURCHASING OFFICE REQUESTED KALVAR AND XIDEX TO SUBMIT OFFERS RELATING TO THE LISTING OF THEIR RESPECTIVE HIGH SPEED FILM ON A MULTIPLE-AWARD FSS, AND BOTH KALVAR AND XIDEX SUBMITTED OFFERS. GSA REPORTS THAT THE SPEED RATING WAS THE PRIMARY BASIS FOR ESTABLISHING LISTINGS ON THE MULTIPLE- AWARD FSS FOR THE HS-66 FILM AND THE MIKROLITH 200 FILM. GSA DETERMINED THAT THESE OFFERS WERE SUITABLE AND REASONABLE AS TO PRICE AND COMMITMENT DOCUMENTS WERE ISSUED BY GSA TO XIDEX AND KALVAR DURING THE LATTER PART OF NOVEMBER 1972. THE PRICE LISTED FOR THE XIDEX HS 66 FILM WAS LOWER THAN THE PRICE OF KALVAR'S FILM COVERED UNDER ITS PRIMARY FSS CONTRACT. FOLLOWING THE ESTABLISHMENT OF THESE COMMITMENTS, KALVAR BY TELEGRAM DATED NOVEMBER 30, 1972, REQUESTED THAT THE LISTING OF THE MIKROLITH 200 FILM BE CANCELED. BY LETTER OF DECEMBER 11, 1972, KALVAR ADVISED GSA THAT TESTS HAD BEEN CONDUCTED ON THE XIDEX HS-66 FILM IN ACCORDANCE WITH THE METHODS IN SPECIFICATION L F-320B, WHICH INDICATED THAT THIS FILM WAS WITHIN THE RANGE OF THE SPEED RATINGS IN KALVAR'S PRIMARY FSS CONTRACT. ON DECEMBER 18, 1972, GSA AFFIRMED ITS DECISION THAT BOTH THE XIDEX HS-66 FILM AND THE KALVAR MIKROLITH 200 FILM COULD BE LISTED ON NEGOTIATED MULTIPLE-AWARD FSS THROUGH JUNE 30, 1973, SINCE THE FILMS WERE OUTSIDE THE SCOPE OF SPECIFICATION L-F-320B.

KALVAR CONTENDS THAT THE CHARACTERISTICS OF THE XIDEX HS-66 FILM WERE WITHIN THE PARAMETERS OF ITS PRIMARY FSS CONTRACT AND THAT BY LISTING THE XIDEX HS-66 FILM ON THE MULTIPLE-AWARD FSS, GSA BREACHED THE PROVISION WHICH STATED THAT THE NORMAL SUPPLY REQUIREMENTS OF THE AGENCIES WOULD BE PURCHASED FROM KALVAR. IT IS URGED THAT GSA'S BREACH ENTITLES KALVAR TO DAMAGES.

THE ARGUMENTS MADE BY KALVAR IN SUPPORT OF ITS CLAIM AND GSA'S RESPONSES THERETO ARE SET FORTH BELOW AS FOLLOWS:

(1) KALVAR URGES THAT TESTS IT CONDUCTED ON THE XIDEX HS-66 FILM IN ACCORDANCE WITH THE FEDERAL SPECIFICATION ESTABLISHED THAT THE FILM WAS WITHIN THE SCOPE OF KALVAR'S PRIMARY FSS CONTRACT.

GSA HAS NOT FURNISHED OUR OFFICE WITH ANY ACTUAL TEST RESULTS SINCE AT THE TIME THAT THE XIDEX HS-66 FILM WAS LISTED ON THE MULTIPLE-AWARD FSS, GSA DID NOT HAVE THE FACILITIES TO MAKE SUCH TESTS. HOWEVER, GSA HAS FORWARDED A LETTER FROM XIDEX WHICH STATES THAT THE SAMPLE OF XIDEX HS-66 FILM WHICH KALVAR TESTED WAS NOT REPRESENTATIVE OF THE FILM ACTUALLY SENT TO THE IRS, AND THAT THE FILM IT FURNISHED IRS WAS 35 PERCENT FASTER THAN THE SAMPLES TESTED BY KALVAR. GSA HAS ALSO FORWARDED A MEMORANDUM PREPARED BY ITS TECHNICAL STAFF WHICH PROVIDES THE FOLLOWING ACCOUNT WITH RESPECT TO THE "DIFFUSION" METHOD OF TESTING IN SPECIFICATION L-F-320B (THE METHOD USED BY KALVAR IN TESTING THE SAMPLE OF XIDEX HS-66 FILM):

AS VARIOUS COMPANIES JOINED THE VESICULAR FILM MANUFACTURING FIELD, AND THE TECHNOLOGY ADVANCED, IT WAS PROGRESSIVELY FOUND THAT THAT METHOD (DIFFUSION) WAS LACKING IN ACCURACY AND REPRODUCIBILITY. BY VARYING THE EXPOSURE TIME, DEVELOPING TIME, TEMPERATURES, USING DIFFERENT INSTRUMENTATION IN THE FIELD OF SENSITOMETERS AND DENSITOMETERS DESIGNED FOR USE WITH SILVER FILM AND NOT SPECIFICALLY FOR THE VESICULAR TYPE, WIDE VARIATIONS IN SPEED COULD BE OBTAINED. HENCE, THE CONDITION OF LACK OF ACCURACY AND REPRODUCIBILITY IN THAT SYSTEM.

THE ABOVE SITUATION LED TO THE DEVELOPMENT OF THE "PROJECTION APPROACH" METHODOLOGY CURRENTLY IN THE REVISED SPECIFICATION, INTERIM L F-00320C, ENDORSED BY THE ENTIRE INDUSTRY, INCLUDING KALVAR (KALVAR PARTICIPATED IN THE DEVELOPMENT OF THAT METHOD AS PART OF THE INTER COMPANY EFFORT FOR A STANDARD). WORK IN THIS NEW MEASUREMENT PROCEDURE IS CONTINUING, AIMED AT IMPROVING, PERFECTING, AS TECHNOLOGY CONTINUALLY ADVANCES.

WITH SPECIFIC PARAMETERS PROVIDED BY THE MANUFACTURERS, INCREASED KNOWLEDGE IN ACCURATE CALIBRATION AND MODIFICATION OF PHOTOGRAPHIC MEASURING INSTRUMENTS, THE PROJECTION APPROACH PROMISES TO BE FAR MORE RELIABLE AND REPRODUCIBLE, THE REQUISITE FOR CONDUCIVENESS TO OBTAINING UNIFORMITY IN THE RESULTING TEST VALUES, BY INDUSTRY AS WELL AS GOVERNMENT.

KALVAR'S COMMENT WITH RESPECT TO THE ABOVE INFORMATION IS THAT IT IS "OPPORTUNISTIC" AND "AFTER THE FACT" AND SHOULD NOT BE CONSIDERED AT THIS TIME.

(2) KALVAR URGES THAT THE MARGIN BETWEEN THE UPPER LIMIT OF THE SPEED RATING (1.45) OF TYPE I, SUBTYPE A, CLASS 2 FILM IN THE FEDERAL SPECIFICATION IS SO CLOSE TO THE SPEED RATING OF THE XIDEX HS-66 FILM (1.50) THAT THE DIFFERENCE IS NOT SUFFICIENT TO ESTABLISH THAT THE XIDEX HS-66 FILM WAS OUTSIDE THE SCOPE OF KALVAR'S CONTRACT. TIED IN WITH THE ABOVE IS KALVAR'S ARGUMENT THAT BECAUSE OF THE "LOOSENESS" OF FEDERAL SPECIFICATION L-F-320B, FILM CAPABLE OF RUNNING ON DUPLICATING EQUIPMENT AT 200 FEET PER MINUTE WAS INCLUDED WITHIN THE EXCESSIVELY BROAD LIMITS OF THE REQUIRED SENSITOMETRIC CHARACTERISTICS. FOR THIS REASON KALVAR URGES THAT AS A MATTER OF FAIR ADMINISTRATION OF KALVAR'S PRIMARY SOURCE CONTRACT BY GSA, KALVAR SHOULD HAVE BEEN GIVEN THE OPPORTUNITY TO MEET THE REQUIREMENTS OF THE IRS UNDER ITS CONTRACT. KALVAR HAS ALSO REFERRED TO APPARENT INCONSISTENT TREATMENT IN FISCAL YEAR 1972 WHEN THE UPPER LIMIT FOR THE SPEED RATING IN THE SPECIFICATIONS WAS 1.25 (COMPARED TO A SPEED RATING OF 1.45 IN FISCAL YEAR 1973) AND GSA DID NOT PERMIT KALVAR TO LIST ITS MIKROLITH 200 FILM ON THE FSS SCHEDULE WHEN XIDEX HAD THE PRIMARY SOURCE CONTRACT. SEE B 174427, JULY 14, 1972 AND MARCH 9, 1973.

GSA CONCEDES THAT THERE WERE PROBLEMS WITH THE SPECIFICATIONS FOR FISCAL YEAR 1973 AND WE HAVE BEEN ADVISED THAT GSA AS WELL AS INDUSTRY HAS BEEN WORKING ON IMPROVING THE SPECIFICATION. GSA HAS FURTHER ADVISED THAT IT HAD TO RELY TO A LARGE DEGREE ON INFORMATION FURNISHED BY THE USER AGENCIES AS WELL AS THE SUPPLIERS IN MAKING THE TYPE OF DETERMINATION REQUIRED IN THIS CASE SINCE GSA DID NOT HAVE THE NECESSARY FACILITIES TO MAKE INDEPENDENT TESTS. IN THIS REGARD, ONCE IRS ADVISED THAT IT NEEDED FASTER FILM THAN THAT BEING FURNISHED UNDER KALVAR'S CONTRACT, AND THE AVAILABLE INFORMATION SUPPORTED THAT THE FILM REQUESTED BY IRS HAD A HIGHER SPEED RATING THAN THAT SPECIFIED IN KALVAR'S PRIMARY SOURCE FSS CONTRACT, GSA CONCLUDED THAT A MULTIPLE AWARD FSS LISTING WAS APPROPRIATE SINCE KALVAR WOULD NOT BE OBLIGATED TO FURNISH THE FASTER FILM REQUIRED BY IRS. WITH RESPECT TO THE ALLEGED PRIOR INCONSISTENT TREATMENT OF KALVAR, GSA HAS ADVISED THAT KALVAR'S MIKROLITH 200 FILM WAS NOT LISTED IN FISCAL YEAR 1972 SINCE THE FILM BEING FURNISHED UNDER THE FSS CONTRACT WAS FOUND TO COMPLY WITH AND ACTUALLY EXCEED THE REQUIREMENTS OF THE FEDERAL SPECIFICATION FOR THAT YEAR. THIS CONCLUSION WAS BASED ON THE FACT THAT NO COMPLAINTS HAD BEEN RECEIVED FROM USER AGENCIES THAT THE FILM WHICH WAS BEING FURNISHED BY XIDEX, THE FSS CONTRACTOR FOR THAT YEAR, DID NOT MEET THEIR REQUIREMENTS. GSA HAS CONCLUDED THAT A DIFFERENT SITUATION EXISTED IN FISCAL YEAR 1973, IN VIEW OF IRS' REQUEST OF OCTOBER 19, 1972.

(3) KALVAR HAS REFERRED TO A LETTER FROM IRS DATED JUNE 5, 1973, TO GSA AND CONTENDS THAT THE VARIOUS ADDITIONS TO THE SPECIFICATION PROPOSED IN THE LETTER WERE NOT NECESSARY SINCE THOSE CHARACTERISTICS WERE ALREADY INCLUDED IN THE APPLICABLE SPECIFICATION. KALVAR URGES THAT IRS' LETTER OF JUNE 5, 1973, SHOULD BE CONSIDERED AS AN EXAMPLE OF THE TYPE OF DETAIL THAT CAN BE FURNISHED BY AN AGENCY WHICH IS NOT SATISFIED WITH A SPECIFICATION FOR VESICULAR FILM. IT ASKS US TO COMPARE THE JUNE 5, 1973 LETTER FROM IRS, WITH THAT OF OCTOBER 19, 1972, WHICH MERELY REFERRED TO THE SPEED RATING BUT DID NOT REFER TO THE OTHER CHARACTERISTICS THAT IRS NEEDED. KALVAR ARGUES THAT THE OCTOBER 19 LETTER DID NOT ADEQUATELY DEFINE IRS' REQUIREMENTS.

GSA STATES THAT THE JUNE 5 IRS LETTER WAS SOLICITED BY GSA TO OBTAIN ITS VIEWS ON THE REVISION OF THE SPECIFICATION FOR THE FISCAL YEAR 1975 REQUIREMENTS AND THAT THE LETTER HAS LITTLE, IF ANYTHING, TO DO WITH THE ISSUES IN THIS CASE.

(4) KALVAR ARGUES THAT THE PROVISION IN ITS PRIMARY SOURCE FSS CONTRACT REQUIRING AGENCIES TO OBTAIN A WAIVER FROM GSA IN ORDER TO PROCURE SPECIAL REQUIREMENTS WAS THE ONLY PROCEDURE THAT COULD BE USED IN THE EVENT THAT AN AGENCY'S REQUIREMENTS COULD NOT BE SATISFIED UNDER KALVAR'S FSS CONTRACT. IN THIS REGARD KALVAR HAS REFERRED TO VARIOUS SECTIONS OF THE FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR) AND HAS URGED THAT BY LISTING XIDEX ON THE MULTIPLE-AWARD FSS WITH PRICES BELOW KALVAR'S FSS CONTRACT, GSA "UNDERCUT" KALVAR'S FSS CONTRACT, THEREBY GIVING XIDEX "TWO BITES AT THE APPLE." IN SUPPORT OF THIS ASSERTION, KALVAR HAS SUBMITTED SELECTED PAGES FROM XIDEX' FORM S-1 WHICH WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION INDICATING THAT XIDEX AND KALVAR HAVE BEEN ENGAGED IN A PRICE WAR WITH RESPECT TO "PHOTOGRAPHIC HEAT FILM."

GSA STATES THAT IT HAS THE AUTHORITY TO LIST ARTICLES ON A MULTIPLE AWARD SCHEDULE AND THAT IT WAS PROPER TO EXERCISE THIS AUTHORITY PURSUANT TO IRS' REQUEST IN THE CIRCUMSTANCES OF THIS CASE. GSA HAS CONFIRMED THAT THE PRICE OF XIDEX HS-66 FILM WAS LOWER THAN THE PRICE OF THE CLOSEST COMPARABLE FILM LISTED ON KALVAR'S PRIMARY SOURCE FSS CONTRACT. GSA HAS NOT DENIED THAT THERE WAS SOME OVERLAP BETWEEN THE FILM LISTED ON KALVAR'S FSS CONTRACT AND THE XIDEX HS-66 FILM IN THAT THE XIDEX HS-66 FILM WAS CAPABLE OF BEING USED AT LOWER SPEEDS IN LIEU OF THE FILM LISTED ON KALVAR'S PRIMARY SOURCE FSS CONTRACT. IT IS GSA'S VIEW THAT IT WOULD NOT BE PROPER FOR AN AGENCY TO PURCHASE THE XIDEX HS-66 FILM LISTED ON THE MULTIPLE-AWARD FSS SCHEDULE MERELY TO TAKE ADVANTAGE OF THE LOWER PRICE OF THAT FILM WHERE THE FILM LISTED ON KALVAR'S PRIMARY SOURCE CONTRACT WAS ADEQUATE TO MEET THE REQUIREMENTS AND THE XIDEX FILM EXCEEDED ITS REQUIREMENTS. GSA HAS ADVISED THAT IT DID NOT MONITOR WHETHER AGENCIES ENGAGED IN SUCH PRACTICES. OUR OFFICE HAS CONTACTED REPRESENTATIVES OF THE IRS AND THE SOCIAL SECURITY ADMINISTRATION (SSA), THE PRIMARY USERS OF THE HIGH SPEED TYPE OF FILM UNDER CONSIDERATION. THE IRS REPRESENTATIVE ADVISED THAT THE SPEED OF THE FILM THAT AN AGENCY MIGHT REQUIRE DEPENDS ON SUCH FACTORS AS THE SPEED CAPABILITY OF THE MACHINE WHICH WOULD PROCESS THE FILM, THE LIGHT LEVEL OF THE EQUIPMENT, AND THE DEVELOPING DRUM TEMPERATURE. WE WERE FURTHER ADVISED THAT THE KALMAR MIKROLITH 200 FILM AND THE XIDEX HS-66 FILM WERE THE ONLY TWO TYPES OF FILM KNOWN TO THE IRS THAT HAD THE CAPABILITY OF MEETING ITS NEEDS AND THAT THIS DETERMINATION WAS BASED PRIMARILY ON THE SPEED RATING OF THESE TWO FILMS. THE SSA ADVISED THAT ITS NEEDS WERE MET BY FILM PURCHASED FROM KALVAR'S PRIMARY SOURCE CONTRACT AND THAT SUCH FILM COULD BE SATISFACTORILY OPERATED ON SSA'S EQUIPMENT AT A SPEED OF 200 FEET PER MINUTE.

KALVAR'S COUNSEL WAS INFORMALLY ADVISED OF THE SUBSTANCE OF OUR CONVERSATIONS WITH THE IRS AND THE SSA REPRESENTATIVES, AND HE URGED THAT THE ADVICE FROM SSA SUPPORTS ITS POSITION. WITH RESPECT TO IRS, COUNSEL FOR KALVAR REITERATED THE PRIOR ARGUMENTS THAT KALVAR WAS NEVER GIVEN THE OPPORTUNITY TO MEET IRS' NEEDS AND THAT THE FILM IN THE UPPER SPEED LIMITS OF ITS FSS CONTRACT WOULD HAVE BEEN ADEQUATE TO MEET IRS' NEEDS IF KALVAR HAD BEEN ADVISED OF THE SPECIFIC NATURE OF THE REQUIREMENTS.

BASED ON A REVIEW OF THE TERMS OF KALVAR'S CONTRACT WE BELIEVE IT IS CLEAR THAT THE GOVERNMENT WAS OBLIGATED TO PURCHASE ALL ITS NORMAL REQUIREMENTS OF THE FILM LISTED ON THAT CONTRACT FROM KALVAR. IT WAS ON THE BASIS OF THIS OBLIGATION THAT THE VARIOUS FIRMS COMPETED FOR THE PRIMARY FSS CONTRACT AND THIS OBLIGATION WAS FIRM FOR THE FISCAL YEAR COVERED BY THE CONTRACT. THEREFORE, KALVAR WOULD BE ENTITLED TO DAMAGES IF IT CAN BE SHOWN THAT AN AGENCY PURCHASED THE XIDEX HS-66 FILM DURING THE TERM OF KALVAR'S PRIMARY SOURCE FSS CONTRACT AND THAT THE FILM LISTED ON KALVAR'S FSS CONTRACT WAS ADEQUATE TO MEET THE AGENCY'S REQUIREMENTS. THE ONLY INSTANCE PRESENTLY BEFORE OUR OFFICE WHERE AN AGENCY APPARENTLY PURCHASED THE XIDEX HS-66 FILM INVOLVES THE ABOVE-CITED PURCHASES BY IRS. HOWEVER, THE RECORD PRESENTED DOES NOT SUPPORT THE CONCLUSION THAT IRS' PURCHASE OF XIDEX HS-66 FILM CONSTITUTED A BREACH OF KALVAR'S PRIMARY SOURCE FSS CONTRACT SINCE IT HAS BEEN REPORTED THAT IRS' EQUIPMENT REQUIRED FILM THAT EXCEEDED THE SPEED RATING OF THE FILM LISTED ON KALVAR'S FSS CONTRACT.

MOREOVER, SINCE IRS HAD NEED FOR FILM WITH A HIGHER SPEED RATING THAN KALVAR WAS FURNISHING, IRS COULD HAVE OBTAINED A WAIVER AND INDEPENDENTLY PROCURED FOR THIS NEED ON A COMPETITIVE BASIS. WE DO NOT THINK KALVAR'S CONTRACT GAVE IT THE RIGHT TO UPGRADE ITS CONTRACT FILM TO MEET ADDITIONAL GOVERNMENT REQUIREMENTS. IN SUCH CIRCUMSTANCES THE WAIVER PROVISIONS CANNOT REASONABLY BE CONSTRUED AS HAVING PRECLUDED GSA FROM MEETING ADDITIONAL REQUIREMENTS THROUGH A MULTIPLE-AWARD FSS.

HOWEVER, SINCE IT HAS NOT BEEN DISPUTED THAT THERE WAS SOME OVERLAP BETWEEN THE FILM LISTED ON KALVAR'S FSS CONTRACT AND THE XIDEX HS-66 FILM, IT IS QUESTIONABLE WHETHER GSA SHOULD HAVE RELINQUISHED THE CONTROL IT MIGHT OTHERWISE HAVE HAD UNDER THE WAIVER PROCEDURE WITHOUT ESTABLISHING SAFEGUARD FOR PREVENTING POSSIBLE MISUSE OF THE MULTIPLE AWARD FSS. ACCORDINGLY, WE THINK THE FPMR SHOULD BE MODIFIED TO EXPRESSLY PRECLUDE THE PURCHASE OF ITEMS LISTED ON A MULTIPLE-AWARD FSS IN ANY CASE WHERE ANOTHER ITEM WHICH IS LISTED UNDER PRIMARY SOURCE FSS CONTRACT WILL SATISFY THE REQUIREMENT. WHILE THIS PROBLEM MAY NOT RECUR IN THE PURCHASE OF FILM SINCE GSA IS WORKING TO IMPROVE THE SPECIFICATIONS AND IS ACQUIRING INDEPENDENT TEST FACILITIES, THE SUGGESTED MODIFICATION WOULD PROVIDE PROTECTION SHOULD A SIMILAR PROBLEM ARISE IN CONNECTION WITH OTHER REQUIREMENTS WHERE MORE THAN ONE LISTED ITEM SERVES THE REQUIRED FUNCTIONAL PURPOSE.