B-177949(1), JUN 15, 1973

B-177949(1): Jun 15, 1973

Additional Materials:

Contact:

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

 

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

DECISION THAT THE GOVERNMENT MAY LIMIT THE AWARD OF CONTRACTS TO APPROVED SUPPLIERS WHEN THERE IS INSUFFICIENT DATA TO PERMIT THE GOVERNMENT TO DRAFT SATISFACTORY SPECIFICATIONS AND WHERE ADEQUATE STEPS ARE TAKEN TO INSURE THAT THERE IS COMPLIANCE WITH THE REQUIREMENT OF 10 U.S.C. 2304(G) THAT NEGOTIATION BE COMPETITIVE TO THE MAXIMUM EXTENT POSSIBLE. PROPOSALS ARE BEING SOLICITED ONLY FROM (*SEE BELOW) AS SUPPLIERS PREVIOUSLY SUPPLYING THE IDENTICAL ITEM TO THE NAVY ELECTRONICS SUPPLY OFFICE OR PREVIOUSLY APPROVED BY COMPETENT GOVERNMENT TECHNICAL AUTHORITY FOR SUPPLYING THE IDENTICAL ITEM. SYNOPSIS OF THIS PROCUREMENT IN THE COMMERCE BUSINESS DAILY IS SOLELY FOR THIS PURPOSE. YOU COMMENT THAT THIS RESTRICTIVE PROCEDURE "IS HIGHLY DISCRIMINATORY AND STIFLES AND DISCOURAGES COMPETITIVE BIDDING AND IS CERTAINLY NOT IN THE BEST INTEREST OF THE GOVERNMENT.

B-177949(1), JUN 15, 1973

DECISION THAT THE GOVERNMENT MAY LIMIT THE AWARD OF CONTRACTS TO APPROVED SUPPLIERS WHEN THERE IS INSUFFICIENT DATA TO PERMIT THE GOVERNMENT TO DRAFT SATISFACTORY SPECIFICATIONS AND WHERE ADEQUATE STEPS ARE TAKEN TO INSURE THAT THERE IS COMPLIANCE WITH THE REQUIREMENT OF 10 U.S.C. 2304(G) THAT NEGOTIATION BE COMPETITIVE TO THE MAXIMUM EXTENT POSSIBLE.

TO TESLA ELECTRIC COMPANY:

IN LETTER OF APRIL 3, 1973, AND PRIOR CORRESPONDENCE, YOU QUESTIONED A NEW PURCHASING PROCEDURE WHEREBY THE NAVY ELECTRONICS SUPPLY OFFICE (ESO) INCLUDES A "LIMITED SOLICITATION" CLAUSE IN CERTAIN REQUESTS FOR PROPOSALS.

THE CLAUSE STATES:

BECAUSE OF THE STRINGENT TECHNICAL REQUIREMENTS OF THIS PROCUREMENT BUT INSUFFICIENCY OF GOVERNMENT TECHNICAL DATA PERTINENT THERETO, PROPOSALS ARE BEING SOLICITED ONLY FROM (*SEE BELOW) AS SUPPLIERS PREVIOUSLY SUPPLYING THE IDENTICAL ITEM TO THE NAVY ELECTRONICS SUPPLY OFFICE OR PREVIOUSLY APPROVED BY COMPETENT GOVERNMENT TECHNICAL AUTHORITY FOR SUPPLYING THE IDENTICAL ITEM. THE FOREGOING ALSO SERVES THE PURPOSE OF REFLECTING SUBCONTRACTING OPPORTUNITIES WHICH MAY OR MAY NOT BE AVAILABLE, AND SYNOPSIS OF THIS PROCUREMENT IN THE COMMERCE BUSINESS DAILY IS SOLELY FOR THIS PURPOSE.

YOU COMMENT THAT THIS RESTRICTIVE PROCEDURE "IS HIGHLY DISCRIMINATORY AND STIFLES AND DISCOURAGES COMPETITIVE BIDDING AND IS CERTAINLY NOT IN THE BEST INTEREST OF THE GOVERNMENT, WHO IS AT THE MERCY OF THE FEW CHOSEN SUPPLIERS." YOU CONCLUDE THAT THIS PRACTICE IS CONTRARY TO THE ARMED SERVICES PROCUREMENT ACT AND THE REGULATIONS (ASPR) PROMULGATED THEREUNDER.

ESO INCLUDES THE "LIMITED SOLICITATION" CLAUSE IN REQUESTS FOR PROPOSALS WHEN THE AUTHORITY FOR NEGOTIATION IS BASED ON 10 U.S.C. 2304(A)(10) AS IMPLEMENTED BY ASPR 3-210.2(XV). YOU STATE, HOWEVER, THAT WHILE NEGOTIATED PROCUREMENTS MAY BE AUTHORIZED, ASPR DOES NOT PROVIDE THE NAVY WITH THE AUTHORITY TO DIRECT THESE PROCUREMENTS TO ONLY A CERTAIN COMPANY OR COMPANIES.

THE CONTRACTING OFFICER HAS ADVISED THAT PRIOR TO THE USE OF THE RESTRICTIVE CLAUSE IN ANY PROCUREMENT, COMPETENT GOVERNMENT TECHNICAL PERSONNEL MUST DETERMINE FOR THE RECORD THAT ITEMS IDENTICAL TO, AND INTERCHANGEABLE WITH, THE SPECIFIC PARTS NUMBERS COVERED BY THE VARIOUS REQUESTS FOR PROPOSALS ARE REQUIRED TO INSURE COMPLETE COMPATIBILITY WITH THE EQUIPMENT FOR WHICH SUCH ITEMS WILL BE USED AS REPLACEMENT PARTS. UNDER THESE CIRCUMSTANCES ASPR 1-313 AUTHORIZES PROCUREMENT FOR REPLACEMENT PARTS SOLELY FROM PREVIOUS SATISFACTORY SUPPLIERS IN INSTANCES WHEN ADEQUATE DATA IS NOT AVAILABLE. ASPR 1-313(A) PROVIDES:

ANY PART, SUBASSEMBLY OR COMPONENT (CALLED "PART" IN THIS SECTION) FOR MILITARY EQUIPMENT, TO BE USED FOR REPLENISHMENT OF STOCK, REPAIR, OR REPLACEMENT, MUST BE PROCURED SO AS TO ASSURE THE REQUISITE SAFE, DEPENDABLE, AND EFFECTIVE OPERATION OF THE EQUIPMENT. *** WHERE IT IS FEASIBLE TO DO SO WITHOUT IMPAIRING THIS ASSURANCE, PARTS SHOULD BE PROCURED ON A COMPETITIVE BASIS, AS IN THE KIND OF CASES DESCRIBED IN PARAGRAPH (B) OF THIS SECTION. HOWEVER, WHERE THIS ASSURANCE CAN BE HAD ONLY IF THE PARTS ARE PROCURED FROM THE ORIGINAL MANUFACTURER OF THE EQUIPMENT OR HIS SUPPLIER, THE PROCUREMENT SHOULD BE RESTRICTED ACCORDINGLY, AS IN THE KIND OF CASES DESCRIBED IN PARAGRAPH (C) OF THIS SECTION.

ASPR 1-313(C), IN PERTINENT PART, PROVIDES:

PARTS NOT WITHIN THE SCOPE OF PARAGRAPH (B) OF THIS SECTION GENERALLY SHOULD BE PROCURED (EITHER DIRECTLY OR INDIRECTLY) ONLY FROM SOURCES THAT HAVE SATISFACTORILY MANUFACTURED OR FURNISHED SUCH PARTS IN THE PAST, UNLESS FULLY ADEQUATE DATA (INCLUDING ANY NECESSARY DATA DEVELOPED AT PRIVATE EXPENSE), TEST RESULTS, AND QUALITY ASSURANCE PROCEDURES, ARE AVAILABLE WITH THE RIGHT TO USE FOR PROCUREMENT PURPOSES *** TO ASSURE THE REQUISITE RELIABILITY AND INTERCHANGEABILITY OF THE PARTS, *** THE EXACTING PERFORMANCE REQUIREMENTS OF SPECIALLY DESIGNED MILITARY EQUIPMENT MAY DEMAND THAT PARTS BE CLOSELY CONTROLLED AND HAVE PROVEN CAPABILITIES OF PRECISE INTEGRATION WITH THE SYSTEM IN WHICH THEY OPERATE, TO A DEGREE THAT PRECLUDES THE USE OF EVEN APPARENTLY IDENTICAL PARTS FROM NEW SOURCES, SINCE THE FUNCTIONING OF THE WHOLE MAY DEPEND ON LATENT CHARACTERISTICS OF EACH PART WHICH ARE NOT DEFINITELY KNOWN.

WHILE THE PROVISION IN THE REQUEST FOR PROPOSALS STATES THAT PROPOSALS ARE BEING SOLICITED ONLY FROM CERTAIN LISTED SUPPLIERS, THE PROVISION DOES NOT PROHIBIT SUBMISSION OF AND CONSIDERATION OF PROPOSALS FROM PREVIOUSLY UNAPPROVED SOURCES. IN ACCORDANCE WITH ASPR 1-1002.1, REQUESTS FOR PROPOSALS ARE FURNISHED TO UNSOLICITED SOURCES UPON REQUEST. FURTHER, IT IS REPRESENTED THAT WHERE PROPOSALS CAN BE EVALUATED AND APPROVED IN A TIMELY MANNER, FULL CONSIDERATION FOR AWARD IS GIVEN TO THEM. HOWEVER, AS YOU WERE INFORMED IN A LETTER FROM ESO, DATED OCTOBER 30, 1972, WHEN THE CONTRACTING OFFICER DETERMINES, ON A CASE-BY-CASE BASIS, THAT THE INTEREST OF NATIONAL DEFENSE WILL NOT PERMIT A DELAY IN THE CURRENT PROCUREMENT PENDING EVALUATION OF THE TECHNICAL DATA SUBMITTED, THE RESULTS OF THE EVALUATION ONLY WILL BE CONSIDERED ON FUTURE PROCUREMENTS OF THE ITEM.

OUR OFFICE HAS HELD THAT THE GOVERNMENT MAY LIMIT THE AWARD OF CONTRACTS TO APPROVED SUPPLIERS WHEN THERE IS INSUFFICIENT DATA TO PERMIT THE GOVERNMENT TO DRAFT SATISFACTORY SPECIFICATIONS AND WHERE ADEQUATE STEPS ARE TAKEN TO INSURE THAT THERE IS COMPLIANCE WITH THE REQUIREMENT OF 10 U.S.C. 2304(G) THAT NEGOTIATION BE COMPETITIVE TO THE MAXIMUM EXTENT POSSIBLE. 52 COMP. GEN. (B-177122, FEBRUARY 22, 1973).

IN VIEW OF THE FOREGOING, WE ARE UNABLE TO CONCLUDE THAT THE "LIMITED SOLICITATION" CLAUSE PROCEDURE IS IN VIOLATION OF LAW OR REGULATION.