B-178379, B-178163, MAY 10, 1974, 53 COMP GEN 838

B-178163,B-178379: May 10, 1974

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CONTRACTS - NEGOTIATION - MODIFICATION OF CONTRACT - CHANGE WITHIN SCOPE OF CONTRACT AMENDMENT OF CONTRACT SHORTLY AFTER AWARD TO COVER A MORE EXPENSIVE SUPERIOR ARTICLE (WHICH HAD BEEN OFFERED AS AN ALTERNATE) THAN THE ONE ACCEPTED AT THE LOWEST OFFERED PRICE RAISES QUESTION WHETHER MAJOR PURPOSE OF PROCUREMENT SYSTEM WAS THWARTED BY THAT ACTION AND WHETHER CHANGE WAS WITHIN GENERAL SCOPE OF CONTRACT. CONTRACTS - SPECIFICATIONS - ADEQUACY - NEGOTIATED PROCUREMENT ALLEGATIONS OF FAVORITISM TO AWARDEE ON BASES THAT (1) DELIVERY SCHEDULE WAS UNNECESSARILY SHORT. (2) TECHNICAL SPECIFICATIONS WERE OVERLY RESTRICTIVE. (3) PROCURING ACTIVITY FAILED TO GIVE PROTESTER TIME TO RESPOND TO PROTEST BY ANOTHER OFFEROR ARE WITHOUT MERIT SINCE (1) THERE WAS URGENT NEED FOR ITEM.

B-178379, B-178163, MAY 10, 1974, 53 COMP GEN 838

CONTRACTS - NEGOTIATION - MODIFICATION OF CONTRACT - CHANGE WITHIN SCOPE OF CONTRACT AMENDMENT OF CONTRACT SHORTLY AFTER AWARD TO COVER A MORE EXPENSIVE SUPERIOR ARTICLE (WHICH HAD BEEN OFFERED AS AN ALTERNATE) THAN THE ONE ACCEPTED AT THE LOWEST OFFERED PRICE RAISES QUESTION WHETHER MAJOR PURPOSE OF PROCUREMENT SYSTEM WAS THWARTED BY THAT ACTION AND WHETHER CHANGE WAS WITHIN GENERAL SCOPE OF CONTRACT. CONTRACTS - SPECIFICATIONS - ADEQUACY - NEGOTIATED PROCUREMENT ALLEGATIONS OF FAVORITISM TO AWARDEE ON BASES THAT (1) DELIVERY SCHEDULE WAS UNNECESSARILY SHORT; (2) TECHNICAL SPECIFICATIONS WERE OVERLY RESTRICTIVE; AND (3) PROCURING ACTIVITY FAILED TO GIVE PROTESTER TIME TO RESPOND TO PROTEST BY ANOTHER OFFEROR ARE WITHOUT MERIT SINCE (1) THERE WAS URGENT NEED FOR ITEM; (2) ESTABLISHMENT OF SPECIFICATIONS IS RESPONSIBILITY OF PROCURING ACTIVITY; (3) ISSUES ARE QUESTIONS OF FACT AND ADMINISTRATIVE POSITION IS SUPPORTED BY A PREPONDERANCE OF THE EVIDENCE; AND (4) BECUASE PROTESTER FAILED TO SUPPLY INFORMATION TO DCASD TO REFUTE ALLEGATIONS BY OTHER OFFEROR THAT PROTESTER WAS NOT RESPONSIBLE.

IN THE MATTER OF THE A & J MANUFACTURING COMPANY, MAY 10, 1974:

A & J MANUFACTURING COMPANY (A & J) HAS PROTESTED THE AWARD BY THE NAVAL ELECTRONICS SUPPLY OFFICE (ESO) OF TWO CONTRACTS, NUMBERS N00126 73-C-0941 AND N00126-73-D-0075, TO GENERAL KINETICS, INC. (GKI). WHILE THE ISSUES UNDER BOTH CONTESTED CONTRACTS ARE SOMEWHAT SIMILAR, WE WILL TREAT EACH SEPARATELY.

CONTRACT 0941

IN THE LATTER PART OF DECEMBER 1972, REQUEST FOR PROPOSALS (RFP) N00126- 73-R-3N1453, WHICH RESULTED IN CONTRACT 0941, WAS ISSUED BY ESO AND CALLED FOR THE FURNISHING OF 12 TYPE CY 4516B/S SINGLE BAY ENVIRONMENTAL CABINETS TO BE MANUFACTURED IN ACCORDANCE WITH GKI PART NUMBER A3B75B312 OR EQUAL. CERTAIN SALIENT CHARACTERISTICS OF THE CABINET DEEMED TO BE ESSENTIAL TO SATISFY THE GOVERNMENT'S NEEDS WERE LISTED AS PART OF THE ITEM DESCRIPTION. A & J OFFERED A PRICE OF $1,600 PER UNIT, WHILE GKI OFFERED A PRICE OF $945 PER UNIT. GKI ALSO SUBMITTED AN ALTERNATE OFFER OF $2,575 PER UNIT FOR A MODIFIED AND BETTER QUALITY CABINET EXCEEDING THE DESCRIPTIVE REQUIREMENTS OUTLINED IN THE SOLICITATION. CONTRACT 0941 WAS FORMALLY AWARDED TO GKI ON JANUARY 3, 1973, ON THE BASIS OF IT FURNISHING THE $945 UNIT. HOWEVER, SUBSEQUENT TO AWARD GKI REQUESTED RECONSIDERATION OF ITS $2,575 UNIT. THE CONTRACTING OFFICER STATES THAT AFTER REVIEW OF THE UNIT'S TECHNICAL SPECIFICATIONS, IT WAS DETERMINED THAT IT WOULD BETTER SERVE THE GOVERNMENT'S NEEDS. CONSEQUENTLY, A TELEGRAPHIC AMENDMENT TO THE CONTRACT WAS ISSUED ON JANUARY 18, 1973, INCORPORATING THE ADDITIONAL TECHNICAL REQUIREMENTS AND INCREASING THE CONTRACT PRICE.

BY LETTER OF MARCH 7, 1973, A & J PROTESTED THE AWARD ALLEGING THAT (1) GKI WAS NOT THE LOW OFFEROR AND ITS (A & J'S) PRICE OF $1,600 PER UNIT WAS $975 PER UNIT LOWER THAN THAT OF GKI; (2) GKI WAS AWARDED THE CONTRACT ON A SOLE SOURCE BASIS WITHOUT A PUBLIC HEARING; (3) THE REAL REASON A & J WAS NOT AWARDED THE CONTRACT WAS ITS INABILITY TO MEET THE SOLICITATION'S OVERLY RESTRICTIVE DELIVERY SCHEDULE; AND (4) THE PROCUREMENT AS A WHOLE WAS CHARACTERIZED BY FAVORITISM TOWARDS GKI WHICH VIOLATED SECTION 1-113.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH STATES, IN PERTINENT PART:

ALL GOVERNMENTAL PERSONNEL ENGAGED IN PROCUREMENT AND RELATED ACTIVITIES SHALL CONDUCT BUSINESS DEALING WITH INDUSTRY IN A MANNER ABOVE REPROACH IN EVERY RESPECT. TRANSACTIONS RELATING TO EXPENDITURE OF PUBLIC FUNDS REQUIRE THE HIGHEST DEGREE OF PUBLIC TRUST TO PROTECT THE INTERESTS OF THE GOVERNMENT ***.

WE NOTE THAT A & J'S LETTER OF MARCH 7, 1973, PROTESTING THE AWARD OF CONTRACT 0941, WAS NOT FILED WITHIN THE TIME REQUIRED BY SECTION 20.2(A) OF VOLUME 4 OF THE CODE OF FEDERAL REGULATIONS (CFR). HOWEVER, WE WILL CONSIDER THE ISSUES RAISED THEREIN UNDER THE AUTHORITY OF 4 CFR 20.2(B) SINCE WE BELIEVE THEY INVOLVE SIGNIFICANT PROCUREMENT PROCEDURES.

A & J'S CONTENTION THAT GKI WAS NOT THE LOW OFFEROR IS BASED ON A COMPARISON OF A & J'S PRICE OF $1,600 PER UNIT AND GKI'S ALTERNATE UNIT PRICE OF $2,575 WHICH WAS SUBSTITUTED FOR GKI'S $945 UNIT AWARD PRICE BY AMENDMENT TO ITS CONTRACT. IT IS TRUE THAT UNDER THE CONTRACT "CHANGES" CLAUSE THE CONTRACTING OFFICER HAS THE RIGHT TO MAKE CHANGES TO THE SPECIFICATIONS WHICH ARE WITHIN THE GENERAL SCOPE OF THE CONTRACT AND TO ADJUST THE PRICE EQUITABLY IF THE COST OF PERFORMANCE IS AFFECTED. 176745, MAY 10, 1973. HOWEVER, THE COMPETITION TO BE ACHIEVED IN THE AWARD OF GOVERNMENT CONTRACTS MUST BE HELD TO THE WORK ACTUALLY TO BE PERFORMED. THUS, A CONTRACTING OFFICER MAY NOT AWARD A CONTRACT COMPLETED UNDER A GIVEN SPECIFICATION WITH THE INTENTION TO CHANGE TO A DIFFERENT SPECIFICATION AFTER AWARD. OTHERWISE, A MAJOR PURPOSE OF THE FEDERAL PROCUREMENT SYSTEM WOULD BE THWARTED. CF. 37 COMP. GEN. 524 (1958); 46 ID. 281 (1966).

THE SHORT PERIOD BETWEEN CONTRACT AWARD TO GKI AND THE AMENDMENT INEVITABLY GIVES RISE TO QUESTIONS CONCERNING THE POSSIBILITY THAT THE CHANGE WAS CONTEMPLATED PRIOR TO AWARD, PARTICULARLY SINCE THE ITEM CALLED FOR BY THE AMENDMENT HAD BEEN OFFERED AS A HIGHER PRICED ALTERNATE IN GKI'S PROPOSAL. WE ALSO QUESTION WHETHER THE SPECIFICATION CHANGE WAS WITHIN THE GENERAL SCOPE OF THE CONTRACT IN VIEW OF THE NEARLY THREEFOLD INCREASE IN PRICE. CF. 50 COMP. GEN. 540 (1971).

WHILE PRACTICAL CONSIDERATIONS FORECLOSE ANY CORRECTIVE ACTION, THE FACTS OF RECORD DO NOTHING TO INCREASE CONFIDENCE IN THE INTEGRITY OF THE PROCUREMENT SYSTEM. WE ARE, THEREFORE, POINTING OUT TO THE SECRETARY OF THE NAVY THE IMPORTANCE OF ANTICIPATING SPECIFICATION CHANGES OF THIS CHARACTER SO THAT THEY MIGHT BE CONSIDERED IN THE COMPETITION.

A & J FURTHER CONTENDS THAT THE CONTRACT DELIVERY REQUIREMENTS WERE UNDULY RESTRICTIVE AND DESIGNED TO FAVOR GKI. WITH REGARD TO DELIVERY SCHEDULES, ASPR 1-305.2(A) PROVIDES:

*** DELIVERY AND PERFORMANCE SCHEDULES SHALL BE DESIGNED TO MEET THE REQUIREMENTS OF THE PARTICULAR PROCUREMENT, WITH DUE REGARD TO ALL RELEVANT FACTORS, AND MUST BE REALISTIC. DELIVERY AND PERFORMANCE SCHEDULES WHICH ARE UNREASONABLY TIGHT OR DIFFICULT OF ATTAINMENT ARE INIMICAL TO FULL COMPETITION, INCONSISTENT WITH SMALL BUSINESS POLICIES *** AND MAY RESULT IN HIGHER CONTRACT PRICES. THEREFORE, PRIOR TO ISSUING AN INVITATION FOR BIDS OR REQUEST FOR PROPOSALS, THE CONTRACTING OFFICER SHALL QUESTION ANY DELIVERY REQUIREMENT WHICH APPEARS UNREALISTIC, AND, IF NECESSARY, INITIATE ACTION TO MAKE APPROPRIATE ADJUSTMENTS, WITH DUE ATTENTION TO RELEVANT FACTORS SUCH AS *** THOSE LISTED BELOW:

(I) URGENCY OF NEED FOR SUPPLIES OR SERVICES ***

IN B-169370, AUGUST 12, 1970, WE HELD, WITH REGARD TO THE ESTABLISHMENT OF DELIVERY SCHEDULES, THAT:

*** OUR OFFICE HAS CONSISTENTLY HELD THAT ESTABLISHMENT OF SPECIFICATIONS TO REFLECT THE ACTUAL NEEDS OF THE GOVERNMENT IS PRIMARILY THE RESPONSIBILITY OF THE ADMINISTRATIVE AGENCY ***. IN THE INSTANT CASE, THE ADMINISTRATIVE REPORT SHOWS THAT THE SUPPLY STOCK OF THE AIRCRAFT BRAKE KITS WAS AT A CRITICAL LEVEL, AND THAT THE C-141 AIRCRAFT MIGHT BE GROUNDED IF ADDITIONAL SUPPLIES OF THE KITS WERE NOT OBTAINED AS EXPEDITIOUSLY AS POSSIBLE. SINCE IT APPEARS THAT THE SHORT DELIVERY REQUIREMENTS WERE BASED ON A BONA FIDE DETERMINATION OF THE ACTUAL NEEDS OF THE AIR FORCE IN THE PRESENT CASE, WE CANNOT CONCLUDE THAT THE DELIVERY SCHEDULE WAS UNDULY RESTRICTIVE UNDER THE CIRCUMSTANCES.

MOREOVER, WE HAVE ALSO STATED THAT:

IT IS WELL ESTABLISHED THAT THE GOVERNMENT DOES NOT VIOLATE EITHER THE LETTER OR THE SPIRIT OF THE COMPETITIVE BIDDING STATUTES MERELY BECAUSE ONLY ONE FIRM CAN SUPPLY ITS NEEDS, PROVIDED THE SPECIFICATIONS ARE REASONABLE AND NECESSARY FOR THE PURPOSE INTENDED. 45 COMP. GEN. 365 (1965).

IN THE INSTANT CASE, THE CONTRACTING OFFICER STATED:

*** PROPOSALS WERE SOLICITED FROM THE ONLY TWO SUPPLIERS PREVIOUSLY SUPPLYING THE ITEM TO THE GOVERNMENT AND DEEMED TO BE CAPABLE OF MEETING THE REQUIRED DELIVERY DATE OF 30 JANUARY 1973. SUCH REQUIRED DELIVERY WAS NECESSARY AS THE CABINETS WERE NEEDED AT THE NAVAL SHIPYARD, BREMERTON, WASHINGTON, BY 31 JANUARY 1973 FOR SHIP OVERHAUL. IN ORDER TO INSURE COMPLETION OF SUCH OVERHAUL BY ASSIGNED DEPLOYMENT DATES, A PRIORITY DESIGNATOR NUMBER 6 WAS ASSIGNED TO THE PROCUREMENT OF THE CABINETS.

ACCORDINGLY, WE CANNOT CONCLUDE THAT THE REASONS FOR THE TIGHT DELIVERY SCHEDULE WERE OTHER THAN BONA FIDE.

A & J'S LAST CONTENTION WITH REGARD TO CONTRACT 0941 WAS THAT THE NAVAL PROCUREMENT PERSONNEL BLATANTLY FAVORED GKI THROUGHOUT NEGOTIATIONS BY SETTING TIGHT DELIVERY SCHEDULES, INITIATING NEGOTIATIONS WITH GKI MORE THAN ONE MONTH PRIOR TO NEGOTIATING WITH A & J; AND REFUSING TO CONSIDER A & J'S OPEN-RACK CABINET DESIGN. THEREFORE, A & J ARGUES, BOTH ASPR 1- 113.1 AND 1-403 WERE VIOLATED, THE CONTRACT SHOULD BE TERMINATED, AND AWARD SHOULD BE MADE TO A & J.

A & J, HOWEVER, PROFFERS NO CONCRETE EVIDENCE OF FAVORITISM. THE REPORT OF THE CONTRACTING OFFICER STATES THAT A & J'S OPEN-RACK DESIGN WAS CONSIDERED AND REJECTED. MOREOVER, HE SPECIFICALLY STATED:

*** AS TO THE INFERENCE BY A & J THAT GOVERNMENT PERSONNEL DID NOT DEAL ON AN EQUAL BASIS WITH ALL ENTITIES COMPETING FOR THE QUESTIONED AWARD, NO INFORMATION WAS FURNISHED BY THIS OFFICE TO ANY UNAUTHORIZED PERSONS EITHER PRIOR TO THE ISSUANCE OF THE SOLICITATION OR DURING EVALUATION OF OFFERS. ALL COMPETING OFFERORS WERE TREATED ALIKE ON THE SAME IMPARTIAL BASIS.

WE CANNOT BASE A FINDING OF FAVORTISM SOLELY ON INFERENCES AND ALLEGATION. RATHER, SUCH A FINDING MUST BE BASED UPON PRESENTATION OF CLEAR AND CONVINCING EVIDENCE. NO SUCH EVIDENCE HAS BEEN PRESENTED HERE, AND THE ADMINISTRATIVE POSITION IS SUPPORTED BY A PREPONDERANCE OF THE EVIDENCE.

ACCORDINGLY, WE FIND NO LEGAL OR FACTUAL BASIS TO SUPPORT THIS CLAIM AND A & J'S REQUEST FOR CANCELLATION OF CONTRACT 0941 IS DENIED.

CONTRACT 0075

AS MENTIONED EARLIER, A & J ALSO PROTESTED AGAINST THE AWARD OF CONTRACT 0075 TO GKI. RFP N00126-74-R-3N3106, WHICH RESULTED IN THE REFERENCED CONTRACT, WAS ISSUED ON DECEMBER 29, 1972, BY ESO AND REQUESTED PROPOSALS FOR THE FURNISHING OF 132 CABINETS "TYPE CY-4516B/S PER GENERAL KINETICS P/N A3B(5B312 OR EQUAL, G.K.I. DWG. M3000 APPLIES ***" AND 140 CABINETS "TYPE CY-4516 A/S PER GENERAL KINETICS P/N A3B72B312 OR EQUAL, G.K.I. DWG. M3000 APPLIES ***." THE SOLICITATION CALLED FOR DELIVERY OF 12 OF THE FIRST TYPE NO LATER THAN MARCH 10 AND 21 OF THE SECOND TYPE NO LATER THAN MARCH 15. HOWEVER, ON JANUARY 10, AFTER PROTEST BY A & J OF THE "BRAND- NAME OR EQUAL" NATURE OF THE PROCUREMENT, NAVY, IN AMENDMENT 001, SUBSTITUTED STANDARD MILITARY SPECIFICATIONS FOR THE BRAND-NAME OR EQUAL DESCRIPTION. ON JANUARY 26, THE SPECIFICATIONS WERE AGAIN CHANGED AND THE CLOSING DATE WAS EXTENDED. ON JANUARY 30, BOTH A & J AND GKI SUBMITTED FINAL PROPOSALS AS FOLLOWS:

ITEM WITH WITHOUT

NO. OFFEROR FIRST ARTICLE FIRST ARTICLE

0001 GKI $1,609.00 $1,351.00

A & J 1,200.00 1,200.00

0002 GKI 1,609.00 1,351.00

A & J 1,250.00 1,250.00

HOWEVER, CONTEMPORANEOUS WITH ITS OFFER, GKI LODGED A PREAWARD PROTEST (1) PROTESTING AWARD TO ANY OTHER SUPPLIER AND (2) QUESTIONING A & J'S ABILITY TO PERFORM IN COMPLIANCE WITH THE REQUIREMENTS OF THE SOLICITATION.

THE DEFENSE CONTRACT ADMINISTRATION SERVICE DISTRICT (DCASD) AT ANAHEIM, CALIFORNIA, CONDUCTED A PREAWARD SURVEY OF A & J'S CAPABILITIES. FEBRUARY 21, 1973, IT ISSUED A NEGATIVE RECOMMENDATION BASED ON THE FOLLOWING:

(1)A & J HAD AN UNSATISFACTORY PAST PERFORMANCE RECORD (LATE DELIVERY ON A PRIOR CONTRACT);

(2) A & J COULD NOT MEET THE REQUIRED DELIVERY SCHEDULE (BLOWER MOTOR ASSEMBLIES COULD NOT BE OBTAINED FROM A SUBCONTRACTOR IN A TIMELY FASHION AND THE PROPOSED SUBCONTRACTOR FOR FIRST ARTICLE TESTING HAD STATED SUCH TESTING WOULD BE DELAYED IN THE EVENT THE TEST FACILITY WAS NOT AVAILABLE WHEN REQUIRED); AND

(3) A & J'S FINANCIAL CONDITION WAS UNSATISFACTORY (A & J FAILED TO SUBMIT FINANCIAL STATEMENTS TO DCASD FOR EVALUATION EVEN THOUGH REPEATEDLY REQUESTED TO DO SO).

THE CONTRACTING OFFICER RECEIVED ORAL NOTIFICATION OF DCASD'S RECOMMENDATION ON FEBRUARY 16. BASED ON ITS REPORT, HE ISSUED A DETERMINATION AND FINDINGS (IN WHICH HE FOUND A & J TO BE NON RESPONSIBLE) AND MADE PRELIMINARY AWARD TO GKI. A & J SUBMITTED ITS LETTER OF PROTEST ON MARCH 7, 1973, ONE DAY AFTER THE DATE OF FORMAL CONTRACT AWARD.

A & J ALLEGES: (1) THAT THE TECHNICAL SPECIFICATIONS CONTAINED IN THE RFP, WHEN TAKEN TOGHETHER WITH THE TIGHT DELIVERY SCHEDULE, WERE UNDULY RESTRICTIVE OF COMPETITION AND WERE DELIBERATELY DESIGNED TO FAVOR GKI; (2) THAT GKI'S ABILITY TO MEET THE DELIVERY SCHEDULE (WHEN A & J COULD NOT) IS EVIDENCE THAT GKI HAD RECEIVED ADVANCE INFORMATION IN VIOLATION OF ASPR 1-104 AND 3-507.2; (3) THAT THE CONTRACTING OFFICER DENIED A & J DUE PROCESS OF LAW IN CONNECTION WITH HIS AWARD OF THE CONTRACT TO GKI; AND (4) THAT THESE FACTS WHEN VIEWED IN CONNECTION WITH THE SOLE SOURCE AWARD (IN MARCH 1973) OF CONTRACT N00123-73-C-1946 FOR ELECTRONIC EQUIPMENT INSTALLATION KITS TO GKI (WHICH KITS GO INTO THE CABINETS BEFORE INSTALLATION ON BOARD SHIPS) DEMONSTRATE THAT A "COLLUSIVE THREAD" EXISTED THROUGHOUT THE PROCUREMENT PROCESS AND THAT THE AWARD, MADE IN VIOLATION OF ASPR 1-113.1 AND 1-403 IS NULL AND VOID.

IN REGARD TO ITS FIRST ALLEGATION A & J STATES THAT THE AMENDMENT TO THE SOLICITATION DELETING THE "BRAND NAME OR EQUAL" PRODUCT DESCRIPTION ACTUALLY PRESERVED THE TECHNICAL ADVANTAGE ORIGINALLY GIVEN GKI BY USE OF THAT DESCRIPTION SINCE THE TECHNICAL SPECIFICATIONS REMAINED SUBSTANTIALLY THE SAME DESPITE THE AMENDMENT AND THIS COUPLED WITH THE TIGHT DELIVERY SCHEDULE PRECLUDED A & J FROM EFFECTIVELY COMPETING FOR THE AWARD.

ASPR 1-304.2(B) PERMITS THE USE OF BRAND NAME OR EQUAL DESCRIPTIONS WHEN "THE GOVERNMENT DESIRES TO PURCHASE PRIVATELY DEVELOPED ITEMS BUT DOES NOT HAVE THE NECESSARY DATA WITH UNLIMITED RIGHTS FOR USE IN A SPECIFICATION FOR COMPETITIVE PROCUREMENT." IN THE INSTANT CASE, GKI HAD BEEN THE NAVY'S PRIMARY SUPPLIER OF SINGLE BAY CABINETS. THE EXISTING SPECIFICATION MIL-C-24056 WAS NOT WELL DEFINED AND WAS IN THE PROCESS OF BEING REWRITTEN; HENCE, A BRAND NAME OR EQUAL DESCRIPTION WAS USED INITIALLY. TO MAKE THE PROCUREMENT MORE COMPETITIVE, NAVY DELETED THE BRAND NAME OR EQUAL DESCRIPTION AND REPLACED IT WITH A MODIFIED VERSION OF THE STANDARD SPECIFICATIONS. THE CONTRACTING OFFICER ASSERTS THAT THE SPECIFICATION DESCRIPTION CONTAINED IN THE SOLICITATION WAS NOT CONFINED TO PRODUCTS OF GKI. FURTHER, IN HIS LETTER OF JULY 13, 1973, THE COMMANDER, NAVAL SHIPS SYSTEMS COMMAND STATED THAT:

F. THE ADDITIONAL TECHNICAL REQUIREMENTS PROVIDED ESO WERE ITEMS THAT WERE UNDER CONSIDERATION AT THE TIME FOR INCLUSION IN THE RE-WRITE OF THE SPECIFICATION ON ENVIRONMENTAL CABINETS. THESE ITEMS WERE WORKED OUT AND AGREED TO BY THE NAVAL ELECTRONICS SYSTEMS COMMAND WHO HAD THE RESPONSIBILITY FOR REWRITING THE SUBJECT SPECIFICATION. THE NEW SPECIFICATION (ISSUED JUNE 18, 1973) (MIL-C-28794 (EC)) DOES CONTAIN MANY OF THE SAME REQUIREMENTS IDENTIFIED TO ESO ***.

WE HAVE CONSISTENTLY HELD THAT THE ESTABLISHMENT OF SPECIFICATIONS REFLECTING THE ACTUAL NEEDS OF THE GOVERNMENT IS PRIMARILY THE RESPONSIBILITY OF THE ADMINISTRATIVE AGENCY, AND OUR OFFICE WILL NOT QUESTION THE DETERMINATION OF THE AGENCY IN THIS REGARD IN THE ABSENCE OF EVIDENCE OF A LACK OF A REASONABLE BASIS FOR THE DETERMINATION. THUS, IN THE INSTANT CASE, THE SOLICITATION'S SPECIFICATIONS APPEAR TO HAVE BEEN BASED ON A BONA FIDE DETERMINATION OF NAVY'S NEEDS. FURTHERMORE, NAVY DID NOT ARBITRARILY REJECT A & J'S ALTERNATE "OPEN RACK DESIGN." IN HIS LETTER OF JULY 13, 1973, THE COMMANDER OF NAVAL SUPPLY SYSTEMS COMMAND STATED:

E. NAVSHIPS DID CONSIDER THE USE OF OPEN MODULAR RACK DESIGN AS AN ALTERNATE TO CY-4516 CABINET BUT FOUND IT TO BE AN UNACCEPTABLE ALTERNATIVE. THE ELECTRONIC ENVIRONMENTAL CABINET PERMITS HIGH DENSITY INSTALLATION OF ELECTRONIC EQUIPMENT AND STILL PROVIDES ADEQUATE COOLING THROUGH THE USE OF AN INTERNAL BLOWER ASSEMBLY. THE COMMUNICATIONS PACKAGE BEING INSTALLED ON DDG2 CLASS SHIPS VIA SHIPALT DDG2-312 IS A HIGH DENSITY INSTALLATION OF WALL TO WALL EQUIPMENT REQUIRING THE USE OF ENVIRONMENTAL CABINETS. NAVSHIPS REVIEW REVEALED THAT THE HIGH DENSITY AND ADEQUATE COOLING REQUIREMENTS COULD NOT BE ACHIEVED WITH THE OPEN RACK DESIGN.

MOREOVER, WE CANNOT ACCEPT A & J'S CONTENTION THAT THE DELIVERY SCHEDULE, IN VIEW OF THE "ADDITIONAL TECHNICAL REQUIREMENTS" WAS UNREASONABLE OR THAT IT WAS DESIGNED TO INSURE "THAT NO MANUFACTURER OTHER THAN GENERAL KINETICS COULD POSSIBLY MEET THE DELIVERY SCHEDULE ***." WE HOLD THIS VIEW DESPITE A & J'S ASSERTION THAT THE "ADDITIONAL TECHNICAL REQUIREMENTS" REQUIRED A SPECIAL BLOWER MOTOR WHICH IS NOT OF THE TYPE A MANUFACTURER WOULD NORMALLY KEEP IN INVENTORY BUT RATHER ONE WHICH MUST BE SPECIALLY PROCURED AND SUCH PROCUREMENT REQUIRES CONSIDERABLE LEAD TIME.

AS HERETOFORE STATED, IT IS THE RESPONSIBILITY OF THE PROCURING AGENCY TO ESTABLISH TECHNICAL SPECIFICATIONS AND DELIVERY SCHEDULES FOR A GIVEN PROCUREMENT. IN THE INSTANT PROCUREMENT, LOTS OF 12 CABINETS WERE REQUIRED FOR DELIVERY TO LONG BEACH NAVAL SHIPYARD BY MARCH 10 AND APRIL 15 FOR INSTALLATION RESPECTIVELY, ABOARD THE USS ROBINSON AND USS TOWERS. SINCE WE FIND NO EVIDENCE OF RECORD TO OVERCOME THE PRESUMPTION OF REASONABLENESS INHERENT IN THE AGENCY'S DETERMINATION, WE CANNOT FIND THAT EITHER THE TECHNICAL SPECIFICATIONS OR DELIVERY SCHEDULES WERE BASED ON OTHER THAN A LEGITIMATE DETERMINATION OF GOVERNMENT NEED. NOR CAN WE FIND, BASED ON THE EVIDENCE BEFORE US, THAT THE SOLE REASON GKI COULD MEET THE DELIVERY SCHEDULE WAS THAT IT HAD RECEIVED ADVANCE INFORMATION.

A & J NEXT ALLEGES THAT IT WAS DENIED DUE PROCESS IN CONNECTION WITH THE AWARD OF THE CONTRACT TO GKI. SPECIFICALLY IT STATES THAT THE CONTRACT WAS AWARDED WITHOUT GIVING IT AN OPPORTUNITY TO ANSWER ALLEGATIONS CONCERNING ITS RESPONSIBILITY AND THAT IT WAS DENIED ACCESS IN VIOLATION OF THE FREEDOM OF INFORMATION ACT, TO THAT INFORMATION WHICH WAS THE BASIS FOR THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY.

ON FEBRUARY 6, IN A SUPPLEMENT TO ITS LETTER OF PROTEST FILED ON JANUARY 30, GKI CONTESTED A & J'S ABILITY TO PERFORM IN ACCORDANCE WITH THE REQUIREMENTS OF THE SOLICITATION. A & J STATES IN ITS LETTER OF APRIL 11, 1973, THAT IT WAS NOTIFIED, BY A LETTER DATED FEBRUARY 13, OF GKI'S PROTEST AND TOLD THAT IT COULD SUBMIT VIEWS AND RELEVANT INFORMATION CONCERNING ITS PROTEST TO BOTH THE CONTRACTING OFFICER AND GAO. THE COMMUNIQUE SPECIFICALLY STATED THAT: "SUCH DATA SHOULD REACH THE CONTRACTING OFFICER PRIOR TO 20 FEBRUARY 1973" - A TIME PERIOD REASONABLE, GIVEN THE EXIGENCIES OF THE PROCUREMENT, WITHIN THE MEANING OF ASPR 1- 905(B).

A & J'S LETTER OF FEBRUARY 14, RESPONDING TO GKI'S ALLEGATIONS, DID LITTLE MORE THAN MAKE A GENERAL DENIAL OF GKI'S ALLEGATIONS AND GIVE ASSURANCE OF COMPLIANCE WITH THE SPECIFICATIONS. WHILE A & J STATED IN ITS FEBRUARY 14 LETTER THAT IT HAD ARRANGED FINANCIAL RESOURCES MORE THAN ADEQUATE TO PERFORM THE CONTRACT, THE DCASD PREAWARD SURVEY, CONDUCTED DURING THE SAME PERIOD, INDICATES THAT A & J WAS REQUESTED TO SUBMIT A CASH FLOW PROJECTION, BUT FAILED TO DO SO AND THAT A & J DID NOT ATTEMPT TO CLARIFY ITS FINANCIAL CAPABILITIES WITH THE DCASD FINANCIAL TEAM. A & J'S ONLY WRITTEN COMMUNICATION WITH DCASD CONSISTED OF A LETTER DATED FEBRUARY 16 WHICH STATED "UPON BEING AWARDED A DOD CONTRACT, ALL REQUIREMENTS AND SPECIFICATIONS OF MIL-C 45662A AND MIL-I-45208A (RELATING TO QUALITY CONTROL PROCEDURES) WILL BE MET BY A & J MANUFACTURING COMPANY."

ON FEBRUARY 16, DCASD ORALLY NOTIFIED THE CONTRACTING OFFICER THAT A & J COULD NOT MEET THE DELIVERY REQUIREMENTS AND WOULD RECEIVE A NEGATIVE RECOMMENDATION. ON THAT SAME DATE THE CONTRACTING OFFICER DETERMINED A & J TO BE NONRESPONSIBLE. A & J CITES THIS PROCEDURE AS BEING UNFAIR SINCE AWARD WAS MADE PRIOR TO THE EXPIRATION OF ITS ANSWERING TIME.

ASPR 1-905.4(B) PROVIDES THAT:

A PRE-AWARD SURVEY SHALL BE REQUIRED WHEN THE INFORMATION AVAILABLE TO THE PURCHASING OFFICE *** IS NOT SUFFICIENT TO ENABLE THE CONTRACTING OFFICER TO MAKE A DETERMINATION REGARDING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR ***.

ASPR 1-905.1 PROVIDES THAT:

(A) BEFORE MAKING A DETERMINATION OF RESPONSIBILITY *** THE CONTRACTING OFFICER SHALL HAVE IN HIS POSSESSION OR OBTAIN INFORMATION SUFFICIENT TO SATISFY HIMSELF THAT A PROSPECTIVE CONTRACTOR CURRENTLY MEETS THE MINIMUM STANDARDS SET FORTH IN 1-903 *** (AND)

(C) *** WHEN A CONTRACT ADMINISTRATION OFFICE IS REQUESTED TO PERFORM A PRE-AWARD SURVEY AND IT HAS BEEN NOTIFIED OF THE EXISTENCE OF UNFAVORABLE INFORMATION RELATIVE TO THE CONTRACTOR, IT SHALL OBTAIN THE DETAILS INCLUDING FULL SUPPORTING INFORMATION *** THE PURCHASING OFFICE SHALL GIVE FULL CONSIDERATION TO SUCH ADVICE IN DETERMINING WHETHER AWARD SHOULD BE MADE.

THE RECORD INDICATES THAT DCASD, ANAHEIM, CALIFORNIA, ATTEMPTED TO GATHER ALL DATA RELATING TO A & J'S CAPABILITIES AND THAT A & J FAILED TO SUPPLY REQUESTED FINANCIAL INFORMATION. WHILE A & J REPLIES, IN EFFECT, THAT ITS FAILURE WAS DUE TO THE FACT THAT AWARD WAS MADE PRIOR TO THE EXPIRATION OF ITS ANSWERING TIME, WE FIND NO EVIDENCE TO SHOW THAT A & J ATTEMPTED TO SUPPLY THIS INFORMATION TO DCASD DURING THE PERIOD BETWEEN FEBRUARY 16 AND FEBRUARY 20.

IN HIS DETERMINATION AND FINDINGS, THE CONTRACTING OFFICER CLEARLY BASED HIS DECISION ON THE DCASD REPORT. MOREOVER, THE PROVISIONS OF 4 CFR 20.4 PERMIT THE MAKING OF AN AWARD PRIOR TO THE DISPOSITION OF A PROTEST, IF THE ITEMS BEING PROCURED ARE URGENTLY REQUIRED, THE AWARD HAS BEEN APPROVED AT A LEVEL ABOVE THAT OF CONTRACTING OFFICER, AND A NOTICE OF INTENT HAS BEEN FURNISHED THE COMPTROLLER GENERAL. IN THE PRESENT CASE, THE DETERMINATION AND FINDINGS WAS SIGNED BY THE COMMANDING OFFICER, NAVAL ELECTRONICS SUPPLY OFFICE, AND WAS SENT TO GAO SHORTLY THEREAFTER. THUS, ALTHOUGH A & J'S ANSWERING TIME WAS SHORTENED, WE CANNOT FIND THAT A & J WAS DENIED AN OPPORTUNITY TO BE HEARD.

BY LETTER OF JANUARY 18, 1974, A & J FORWARDED TO THIS OFFICE A COPY OF A DEFENSE SUPPLY AGENCY INTER-OFFICE MEMORANDUM DATED FEBRUARY 20, 1973, WRITTEN BY WHAT APPEARS TO BE A MEMBER OF THE PREAWARD SURVEY TEAM, OR AT LEAST SOMEONE WHO PARTICIPATED IN THE SURVEY. THIS MEMORANDUM STATES THAT THE SURVEY INDICATED THAT A & J HAS ADEQUATE TECHNICAL CAPABILITIES FOR THE FABRICATION OF THE RFP REQUIRED CABINETS AND IS FULLY AWARE OF THE TECHNICAL PROBLEMS INVOLVED. THE MEMBER ALSO EXPRESSED THE VIEW THAT THE CABINET DESIGN PROPOSED BY A & J WAS SUPERIOR TO THAT CALLED FOR BY THE RFP. HE FURTHER STATED THAT IN HIS OPINION THE FUNCTIONAL REQUIREMENTS REFLECTED IN MIL-C-24056C AND THOSE LISTED AS "ADDITIONAL REQUIREMENTS" IN THE BID PACKAGE ARE UNREALISTIC AND CONFLICTING.

IT SHOULD BE POINTED OUT THAT THE PREAWARD SURVEY FOUND A & J'S TECHNICAL CAPABILITY TO BE SATISFACTORY BUT, AS INDICATED ABOVE, BASED ITS "NO AWARD" RECOMMENDATION ON ITS UNSATISFACTORY FINDINGS IN CONNECTION WITH A & J'S FINANCIAL CAPABILITY, PERFORMANCE RECORD AND ABILITY TO MEET THE REQUIRED SCHEDULE.

HOWEVER, ON THE REOCRD, THE FACT REMAINS THAT A & J'S DESIGN WAS REJECTED BY NAVSHIPS, PRESUMABLY ON THE BASIS OF COMPETENT ADVICE. AS PREVIOUSLY POINTED OUT, OUR OFFICE HAS TAKEN THE POSITION THAT THE ESTABLISHMENT OF SPECIFICATIONS WHICH REFLECT THE MINIMUM NEEDS OF THE GOVERNMENT AND THE DETERMINATION OF WHETHER PRODUCTS OFFERED MEET THE SPECIFICATIONS ARE MATTERS PRIMARILY FOR DETERMINATION BY THE ADMINISTRATIVE AGENCY, 44 COMP. GEN. 302, 304 (1964); 38 ID. 190, 191 (1958). IN THE PRESENT CASE, WHILE THERE MAY HAVE BEEN SOME TECHNICAL DISAGREEMENTS IN REGARD TO THE MERITS OF A & J'S CABINET, AS OPPOSED TO THE CABINET CALLED FOR BY THE RFP, WE HAVE NO REASON TO BELIEVE THAT THE PROCURING ACTIVITY'S DECISION TO PROCURE THE CABINET CALLED FOR BY THE RFP, RATHER THAN A & J'S CABINET, WAS IMPROPER.

A & J ALSO POINTS OUT IN ITS LETTER OF JANUARY 18, 1974, THAT SOME OF GKI'S CABINETS DELIVERED UNDER CONTRACT 0075 DID NOT MEET SPECIFICATION REQUIREMENTS. IN THIS REGARD, WE HAVE HELD THAT IT IS THE RESPONSIBILITY OF THE CONTRACTING AGENCY AND NOT THIS OFFICE TO ENSURE THAT GKI COMPLIES WITH THE TERMS OF THE CONTRACT, I.E., FURNISH SUPPLIES WHICH CONFORM TO THE SPECIFICATION REQUIREMENTS. B-179505, MARCH 8, 1974; B-177876, JULY 19, 1973.

WITH REGARD TO A & J'S FURTHER CONTENTION THAT THE NAVY ELECTRONICS SUPPLY OFFICE WITHHELD INFORMATION RELEVANT TO ITS DISQUALIFICATION IN VIOLATION OF THE FREEDOM OF INFORMATION ACT, THE RESOLUTION OF THAT ISSUE IS BEYOND THE JURISDICTION OF OUR OFFICE. DISPUTES CONCERNING THE RIGHT TO RECEIVE AGENCY INFORMATION ARE MATTERS OF ADMINISTRATIVE PROCEDURE COGNIZABLE UNDER AGENCY REGULATIONS, SUBJECT TO REVIEW BY THE COURTS UNDER 5 U.S.C. 552.

FINALLY, A & J ALLEGES THAT A "COLLUSIVE THREAD" EXISTED THROUGHOUT THE PROCUREMENT, AND THAT IT BECOMES PARTICULARLY APPARENT WHEN ONE VIEWS THE PROCUREMENT OF THE ELECTRONIC EQUIPMENT CABINETS (CONTRACT 0075) AND OF THE EQUIPMENT INSTALLATION KITS (CONTRACT NO. N00123-73 1946) AS A SINGLE PROCESS. A & J CONTENDS THAT THE NET EFFECT OF AWARDING CONTRACT 1946 TO GKI WAS "*** TO EXTEND THE DELIVERY DATE OF THE FIRST TWENTY-FOUR CABINETS REQUIRED FORTY-ONE DAYS *** (AND, THAT HAD) THE ADDITIONAL FORTY-ONE DAYS ALLOWED BY THIS CONTRACT BEEN INCLUDED IN THE SCHEDULE FOR THE CABINET PROCUREMENT, A & J MANUFACTURING WOULD HAVE BEEN ABLE TO PROCURE THE BLOWER MOTORS AND MEET THE CONTRACT DELIVERY SCHEDULE DESPITE THEIR SCARCITY."

IN HIS RESPONSE TO A & J'S PROTEST OF THE AWARD OF CONTRACT N00123-73 C- 1946, THE CONTRACTING OFFICER STATES:

IT IS DIFFICULT TO TRACE THE LOGIC OF THE PROTESTOR CONCERNING THE ALLEGED 41 DAY EXTENSION IN DELIVERY THAT IT IMAGINES WAS THE RESULT (AND PRESUMABLY THE ORIGINAL INTENTION) OF THE SEPARATION OF THE PROCUREMENTS OF THE ENVIRONMENTAL CABINETS AND THE INSTALLATION KITS. INITIALLY, THE PROTESTOR STATES THAT THE PROCUREMENTS CANNOT BE LOGICALLY SEPARATED. FACT, IT IS ALMOST MANDATORY THAT SUCH PROCUREMENTS ARE SEPARABLE, BASED UPON THE INTENDED USE OF THE CABINETS. THE CABINETS HOLD SEVERAL UNITS OF ELECTRONIC EQUIPMENT EACH. THE INSTALLATION KITS ARE INDIVIDUALLY DESIGNED TO COMPORT WITH THE SPECIFIC EQUIPMENT TO BE INSTALLED. EACH VESSEL WILL HAVE A DIFFERENT CONFIGURATION OF ELECTRONIC EQUIPMENT TO BE INSTALLED IN THE CABINETS. CONSEQUENTLY, EACH SET OF INSTALLATION KITS MUST BE ORDERED AFTER THE NEEDS OF THE SPECIFIC VESSEL INVOLVED HAVE BEEN DETERMINED.

THERE WAS NO RELAXATION OF DELIVERY REQUIREMENTS IN THE BASIC CABINET CONTRACTS CAUSED BY THE ADDITIONAL CONTRACTUAL REQUIREMENTS UNDER THE INSTALLATION KITS CONTRACT. THE ONLY CHANGE MADE TO THOSE PRIOR CONTRACTS WAS A REQUIREMENT TO HAVE THE CABINETS "SHIPPED IN PLACE" SO THAT THEY COULD BE PROVIDED AS GFE (GOVERNMENT FURNISHED EQUIPMENT).

ACCORDINGLY, A & J'S PROTESTS ARE DENIED.