B-180478, DEC 17, 1974, 54 COMP GEN 488

B-180478: Dec 17, 1974

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CONTRACTS - FEDERAL SUPPLY SCHEDULE - MANDATORY USE REQUIREMENT - WAIVER THE ITEM PROCURED BY THE NAVY ON A SOLE-SOURCE BASIS WAS "SIMILAR" TO THAT AVAILABLE THROUGH PROTESTER'S FEDERAL SUPPLY SCHEDULE (FSS) CONTRACT. THEREFORE THE NAVY SHOULD HAVE REQUESTED GENERAL SERVICES ADMINISTRATION TO WAIVE THE REQUIREMENT FOR USE OF THE FSS. CONTRACTS SPECIFICATIONS - FEDERAL SPECIFICATIONS - DEVIATION JUSTIFICATION THE NAVY DID NOT UNREASONABLY DEVIATE FROM FEDERAL SPECIFICATION W-R 175C/GEN BECAUSE NO MANUFACTURER HAD QUALIFIED THEREUNDER THE TYPE OF PRODUCT WHICH IN THE NAVY'S JUDGMENT WAS REQUIRED TO SATISFY ITS MINIMUM NEEDS. AMPEX'S PROTEST AGAINST THE PROPOSED AWARD WAS MOOTED BECAUSE THE PROCURING ACTIVITY LATER DETERMINED THAT ITS REQUIREMENTS COULD BE MET UNDER AMPEX'S FSS CONTRACT.

B-180478, DEC 17, 1974, 54 COMP GEN 488

CONTRACTS - FEDERAL SUPPLY SCHEDULE - MANDATORY USE REQUIREMENT - DEFENSE DEPARTMENT WITHOUT GENERAL SERVICES ADMINISTRATION (GSA) APPROVAL, THE NAVY LACKED AUTHORITY TO PROCURE REELS OF INSTRUMENTATION RECORDING TAPE VALUED IN EXCESS OF $5,000 AND OF A TYPE NOT COVERED BY A FEDERAL SUPPLY SCHEDULE (FSS) CONTRACT, BECAUSE THE FEDERAL PROPERTY MANAGEMENT REGULATIONS REQUIRE PROCUREMENTS IN THOSE CIRCUMSTANCES TO BE APPROVED BY GSA. CONTRACTS - FEDERAL SUPPLY SCHEDULE - MANDATORY USE REQUIREMENT - WAIVER THE ITEM PROCURED BY THE NAVY ON A SOLE-SOURCE BASIS WAS "SIMILAR" TO THAT AVAILABLE THROUGH PROTESTER'S FEDERAL SUPPLY SCHEDULE (FSS) CONTRACT, WITHIN THE MEANING OF 41 C.F.R. 101-26.401-3 (1973), AND THEREFORE THE NAVY SHOULD HAVE REQUESTED GENERAL SERVICES ADMINISTRATION TO WAIVE THE REQUIREMENT FOR USE OF THE FSS. CONTRACTS SPECIFICATIONS - FEDERAL SPECIFICATIONS - DEVIATION JUSTIFICATION THE NAVY DID NOT UNREASONABLY DEVIATE FROM FEDERAL SPECIFICATION W-R 175C/GEN BECAUSE NO MANUFACTURER HAD QUALIFIED THEREUNDER THE TYPE OF PRODUCT WHICH IN THE NAVY'S JUDGMENT WAS REQUIRED TO SATISFY ITS MINIMUM NEEDS.

IN THE MATTER OF AMPEX CORPORATION, DECEMBER 17, 1974:

AMPEX HAS PROTESTED TWO PROCUREMENT ACTIONS UNDERTAKEN BY SEPARATE ACTIVITIES OF THE NAVAL SUPPLY SYSTEMS COMMAND, ALLEGING THAT PROPOSED AND COMPLETED PURCHASES OF REELS OF MAGNETIC TAPE FROM MINNESOTA MINING AND MANUFACTURING COMPANY (3M) VIOLATE VARIOUS PROVISIONS OF THE FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR) (41 C.F.R. CH. 101 (1973)) REQUIRING THE PROCUREMENT OF THESE ITEMS FROM A FEDERAL SUPPLY SCHEDULE (FSS) CONTRACT HELD BY AMPEX.

AMPEX'S PROTEST AGAINST THE PROPOSED AWARD WAS MOOTED BECAUSE THE PROCURING ACTIVITY LATER DETERMINED THAT ITS REQUIREMENTS COULD BE MET UNDER AMPEX'S FSS CONTRACT.

REMAINING FOR CONSIDERATION IS THE PROPRIETY OF CONTRACT NO. N00383 74-C- 1877, AWARDED BY THE NAVY AVIATION SUPPLY OFFICE TO 3M FOR THE SUPPLY OF 2,352 REELS OF MAGNETIC TAPE. THE ITEMS FURNISHED CONSISTED OF INSTRUMENTATION RECORDING TAPE WOUND ON SEMI-PRECISION REELS WITH PHENOLIC HUBS FOR USE ON AN/AQH-1 AND AN/AQH-4(V) AIRBORNE RECORDERS IN CONJUNCTION WITH COMMUNICATION SYSTEMS OF P-3 AIRCRAFT.

AMPEX CONTENDS THAT IT SHOULD HAVE BEEN THE PRIMARY SOURCE FOR THIS PROCUREMENT, BECAUSE IT HOLDS A FSS CONTRACT FOR INSTRUMENTATION RECORDING TAPE. THE NAVY DOES NOT ASSERT THAT AMPEX'S TAPE WOULD NOT MEET ITS NEEDS. HOWEVER, THE NAVY OBSERVES THAT THE AMPEX REEL IS OF ALL-ALUMINUM CONSTRUCTION, AND IT REPORTS THAT IN THE PAST IT HAS EXPERIENCED MECHANICAL DISTORTION WITH ALUMINUM REELS IN THIS APPLICATION. THEREFORE AMPEX'S PRODUCT WAS NOT REGARDED AS MEETING THE NAVY'S NEEDS. WE ARE ADVISED THAT THE MECHANICAL DISTORTION WAS ELIMINATED THROUGH THE USE OF 3M'S PHENOLIC-HUB REEL, WHICH WAS PURCHASED NONCOMPETITIVELY SINCE THE ARTICLE WAS A 3M PART NUMBER MANUFACTURED TO THAT COMPANY'S SPECIFICATION.

FOR THE REASONS STATED BELOW, WE HAVE CONCLUDED THAT THIS REQUIREMENT SHOULD HAVE BEEN SUBMITTED TO THE GENERAL SERVICES ADMINISTRATION (GSA) FOR PURCHASE ACTION APPROVAL. WE BELIEVE THAT 3M'S PRODUCT WAS SUFFICIENTLY "SIMILAR" TO AMPEX'S, WITHIN THE CONTEXT OF THE FPMR, TO HAVE OBLIGATED THE NAVY TO REQUEST OF GSA THAT IT WAIVE THE REQUIREMENT FOR USE OF AMPEX'S FSS CONTRACT. THE PROCUREMENT WAS NOT SUBMITTED TO GSA NOR DID THE NAVY REQUEST A WAIVER. HOWEVER, SINCE DELIVERY OF AND PAYMENT FOR 3M'S PRODUCT TRANSPIRED DURING THE EARLY STAGES OF THE DEVELOPMENT OF THIS PROTEST, NO CORRECTIVE ACTION APPEARS FEASIBLE.

PROCUREMENT BY FEDERAL AGENCIES OF WIDE AND INTERMEDIATE BAND INSTRUMENTATION TAPE IS GOVERNED BY 41 C.F.R. SEC. 101-26.508 (1973). THIS REGULATION GENERALLY REQUIRES AGENCIES TO SATISFY THEIR NEEDS FOR INSTRUMENTATION TAPE THROUGH CONTRACTS (SUCH AS AMPEX'S) UNDER FEDERAL SUPPLY SCHEDULE FSC GROUP 58, PART V, SECTION C. 41 C.F.R. SEC. 101 26.508 -1 (1973). HOWEVER, A PHENOLIC-HUB REEL IS NOT AVAILABLE UNDER AMPEX'S FSS CONTRACT. IN THESE CIRCUMSTANCES, THE REGULATIONS PROVIDE:

REQUIREMENTS FOR *** INSTRUMENTATION TAPE (WIDE AND INTERMEDIATE BAND) NOT COVERED BY FEDERAL SUPPLY SCHEDULE CONTRACTS SHALL BE SUBMITTED TO GSA FOR PURCHASE ACTION IF THE DOLLAR VALUE OF THE REQUIREMENTS EXCEEDS OR IS ESTIMATED TO EXCEED *** $5,000 FOR INSTRUMENTATION TAPE (WIDE AND INTERMEDIATE BAND). HOWEVER, REGARDLESS OF THE AMOUNT INVOLVED ***, NO PURCHASE ACTION BY GSA OR AN AGENCY SHALL BE TAKEN UNLESS A WAIVER OF THE REQUIREMENT FOR USING TAPE AVAILABLE FROM FEDERAL SUPPLY SCHEDULE CONTRACTS HAS BEEN FURNISHED IN ACCORDANCE WITH SEC. 101-26.401-3. REQUESTS FOR WAIVERS SHALL BE SUBMITTED TO GSA. SUCH REQUESTS SHALL FULLY DESCRIBE THE TYPE OF TAPE REQUIRED AND STATE THE REASONS FEDERAL SUPPLY SCHEDULE ITEMS WILL NOT ADEQUATELY SERVE THE AGENCY'S NEEDS. GSA WILL NOTIFY THE REQUESTING AGENCY IN WRITING OF THE ACTION TAKEN ON SUCH REQUESTS. ***. 41 C.F.R. SEC. 101-26.508-2(B) (1973).

THE INSTANT PROCUREMENT FALLS WITHIN THIS DEFINITION SINCE IT IS FOR INSTRUMENTATION TAPE OF A VALUE IN EXCESS OF $5,000 AND OF A TYPE (PHENOLIC HUB) NOT COVERED BY A FEDERAL SUPPLY SCHEDULE CONTRACT. FOLLOWS THAT THIS REQUIREMENT SHOULD HAVE BEEN SUBMITTED TO GSA FOR PURCHASE ACTION.

THE ABOVE-QUOTE PROVISION PROVIDES THAT GSA OR AN AGENCY CANNOT UNDERTAKE A SEPARATE PURCHASE ACTION UNLESS A WAIVER OF THE REQUIREMENT FROM USING TAPE AVAILABLE FROM FSS CONTRACTS HAS BEEN FURNISHED IN ACCORDANCE WITH 41 C.F.R. SEC. 101-26.401-3 (1973). THE LATTER SECTION ENUNCIATES A GENERAL POLICY THAT FEDERAL AGENCIES SHOULD PROCURE FROM FSS CONTRACTS IN LIEU OF PROCURING "SIMILAR" ITEMS FROM OTHER SOURCES IF THE FSS ITEM WILL "ADEQUATELY SERVE THE FUNCTIONAL END-USE PURPOSE." HOWEVER, WHEN AN AGENCY DETERMINES THAT ITEMS AVAILABLE FROM FSS CONTRACTS WILL NOT SERVE THE REQUIRED FUNCTIONAL END-USE PURPOSE, THE AGENCY IS TO REQUEST FROM GSA A WAIVER OF THE REQUIREMENT TO USE THE FSS.

THE NAVY CONTENDS THAT IT WAS UNDER NO OBLIGATION TO REQUEST A WAIVER FROM GSA BECAUSE 3M'S PRODUCT WAS NOT "SIMILAR" TO AMPEX'S. WE DO NOT THINK THIS POSITION IS SUPPORTED BY THE RECORD IN LIGHT OF THE PURPOSE OF 41 C.F.R. SEC. 101-26.401-3 (1973).

THE MOST CLOSELY COMPARABLE ITEM AVAILABLE UNDER AMPEX'S FSS CONTRACT NO. GS-00S-23765 WAS FEDERAL STOCK NO. 5835-995-7518, GENERALLY DESCRIBED AS TAPE, INSTRUMENTATION TYPE, STANDARD RESOLUTION, 1.0 MIL THICK BY 1 INCH WIDE BY 3600 FEET LONG, POLYESTER BACKING, WOUND ON A STRAIGHT-FLANGE ALUMINUM PRECISION REEL 10 1/2 INCHES IN DIAMETER, WITH A 3-INCH CENTER HOLE. APPARENTLY THE AMPEX AND 3M TAPES ARE COMPARABLE, AND THE MAJOR RESPECT IN WHICH THE REELS DIFFER IS THAT 3M'S REEL IS CONSTRUCTED WITH A PHENOLIC HUB. THUS, IN MANY RESPECTS, THE TWO PRODUCTS RESEMBLE ONE ANOTHER.

THE NAVY INSISTS THAT THE USE OF A PHENOLIC HUB IS A PREREQUISITE TO SATISFACTORY PERFORMANCE IN THIS PARTICULAR APPLICATION. THAT IS A TECHNICAL ISSUE WHICH WE SHALL NOT DECIDE. IN ANY EVENT, WE DO NOT THINK IT DISPOSITIVE OF THE QUESTION OF WHETHER THE PRODUCTS ARE "SIMILAR" WITHIN THE MEANING OF 41 C.F.R. SEC. 101-26.401-3 (1973).

WE ARE GIVEN NO DEFINITION OF "SIMILAR" AS IT IS USED IN THAT PROVISION, WHICH IS BROAD IN SCOPE AND CLEARLY INTENDED TO PRECLUDE THE EROSION OF THE FSS SYSTEM WHICH WOULD OCCUR IF AGENCIES WERE PERMITTED TO PROCURE SIMILAR ITEMS DIRECTLY FROM COMMERCIAL SOURCES. WE THEREFORE BELIEVE THAT THE "SIMILARITY" OF ITEMS SHOULD BE VIEWED FROM A BROAD RATHER THAN A NARROW PERSPECTIVE. "SCHEDULE" AND "NON SCHEDULE" ITEMS MAY BEAR SUFFICIENT SIMILARITY TO EACH OTHER THAT, IN THE INTEREST OF ENFORCING THE FSS SYSTEM, AN AGENCY PROPOSING TO USE THE "NON-SCHEDULE" ITEM SHOULD BE REQUIRED TO SEEK A WAIVER FROM THE REQUIREMENT TO USE THE "SCHEDULE" ITEM, AND YET STILL COULD OBTAIN THAT WAIVER UPON A SHOWING THAT THE "SCHEDULE" ITEM DID NOT MEET THE AGENCY'S MINIMUM NEEDS. IN SHORT, OUR VIEW THAT THE SIMILARITY BETWEEN AMPEX AND 3M PRODUCTS SHOULD HAVE PROMPTED THE NAVY TO REQUEST A WAIVER WOULD NOT PRECLUDE GSA FROM ULTIMATELY GRANTING THE WAIVER ON THE BASIS THAT THE AMPEX PRODUCT DOES NOT ADEQUATELY SERVE THE REQUIRED FUNCTIONAL END-USE PURPOSE.

EVEN IF WE AGREED WITH THE NAVY'S POSITION THAT THE AMPEX AND 3M PRODUCTS ARE DISSIMILAR, HOWEVER, THAT WOULD NOT ALTER OUR VIEW THAT THE NAVY LACKED THE AUTHORITY TO CONDUCT THIS PROCUREMENT. IT IS UNEQUIVOCALLY STATED IN 41 C.F.R. SEC. 101-26.508-2(B) (1973) THAT REQUIREMENTS IN EXCESS OF $5,000 FOR WIDE AND INTERMEDIATE BAND INSTRUMENTATION TAPE "NOT COVERED" BY FEDERAL SUPPLY SCHEDULE CONTRACTS "SHALL BE SUBMITTED TO GSA FOR PURCHASE ACTION." GSA IS THEN CHARGED WITH THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A SIMILAR ARTICLE AVAILABLE FROM A FEDERAL SUPPLY SCHEDULE CONTRACTOR WOULD SATISFY THE USING AGENCY'S NEEDS. THEREFORE, THE BASIC AUTHORITY FOR PROCURING THIS COMMODITY RESTS WITH GSA AND THE "SIMILARITY" ISSUE RELATES ONLY TO THE SOURCE FROM WHICH THOSE NEEDS ARE TO BE SATISFIED.

AMPEX ALSO ARGUES THAT THIS SOLE-SOURCE PROCUREMENT OF REELS MADE TO A COMMERCIAL SPECIFICATION WAS AN UNAUTHRIZED DEVIATION FROM THE REQUIREMENT TO UTILIZE FEDERAL SPECIFICATION W-R-175C, THE CURRENT GENERAL SPECIFICATION FOR REELS AND HUBS FOR MAGNETIC RECORDING TAPE. AMPEX ASSERTS THAT IT PRODUCES METALLIC HUB REELS QUALIFIED TO THIS "PERFORMANCE" SPECIFICATION; THAT THE SPECIFICATION DOES NOT "REQUIRE" THE USE OF PHENOLIC HUB REELS; AND THAT THE SPECIFICATION IS MANDATORY FOR USE BY THE NAVY IN THE ABSENCE OF A DETERMINATION THAT THE SPECIFICATION IS INAPPLICABLE. ARMED SERVICES PROCUREMENT REGULATION SEC. 1-1202(A)(I) (1974 ED.).

WE HAVE CAREFULLY EXAMINED FEDERAL SPECIFICATIONS W-R-175C/GEN, MAY 15, 1973, AND W-R-175/3C, MAY 15, 1973, WHICH ACCOMPANIES IT. THERE ARE ESSENTIALLY FOUR OBSERVATIONS WHICH WE HAVE ABOUT THEM.

FIRST, THESE SPECIFICATIONS ENUMERATE THE MATERIALS, METHOD OF CONSTRUCTION, DIMENSIONS AND PERMISSIBLE TOLERANCE OF MAGNETIC TAPE REELS SO THOROUGHLY THAT WE REGARD THEM MORE AS DESIGN THAN PERFROMANCE SPECIFICATIONS. SECOND, PARAGRAPH 6.2 OF W-R-175C ADVISES PURCHASERS TO "SELECT THE PREFERRED OPTIONS PERMITTED HEREIN" INCLUDING "REEL AND HUB CLASSIFICATION." THIRD, PARAGRAPH 3.3 OF W-R-175C PROVIDES THAT:

*** REELS AND HUBS SUPPLIED UNDER THIS SPECIFICATION SHALL BE PRODUCTS WHICH HAVE BEEN TESTED, AND PASSED THE QUALIFICATION TESTS PRESCRIBED HEREIN, AND HAVE BEEN LISTED ON OR APPROVED FOR LISTING ON THE APPLICABLE QUALIFIED PRODUCTS LIST ***.

FOURTH, AND VERY IMPORTANTLY, PARAGRAPHS 4.2 AND 4.3 OF W-R-175/3C MAKE IT CLEAR THAT QUALIFICATION OF THE METALLIC HUB REEL SAMPLE DOES NOT CONSTITUTE QUALIFICATION FOR METALLIC REELS WITH PHENOLIC HUBS, AND VICE VERSA.

THE QUALIFIED PRODUCTS LIST FURNISHED US BY THE NAVY INDICATES THAT SEVERAL MANUFACTURERS, INCLUDING AMPEX, HAVE QUALIFIED METALLIC HUB REELS. HOWEVER, NONE HAS QUALIFIED A METALLIC REEL WITH A PHENOLIC HUB, WHICH AS WE HAVE SEEN ABOVE IS AN ENTIRELY DISTINCT MATTER.

THE NAVY FIRST OBSERVES THAT PARAGRAPH 6.2 OF W-R-175C PROVIDES IT WITH THE OPTION OF DESIGNATING THE TYPE OF REEL AND HUB TO BE FURNISHED. THE NAVY WOULD NOT SELECT A METALLIC HUB REEL BECAUSE OF UNSATISFACTORY PERFORMANCE BY SUCH REELS FURNISHED UNDER A PRIOR FEDERAL SPECIFICATION. ON THE OTHER HAND, A PHENOLIC HUB REEL COULD NOT BE PROCURED UNDER W-R- 175C SINCE NO MANUFACTURER HAS QUALIFIED SUCH A REEL TO THAT SPECIFICATION. THEREFORE, THE NAVY HAS DETERMINED THAT W-R-175C IS INAPPLICABLE TO THIS PARTICULAR USE, AND IT HAS SATISFIED ITS REQUIREMENTS THROUGH THE PURCHASE OF THE 3M REEL.

WE HAVE OBSERVED IN A PRIOR AND SOMEWHAT SIMILAR SITUATION THAT:

*** SINCE DETERMINATIONS AS TO WHETHER AN EXISTING FEDERAL SPECIFICATION WILL MEET THE ACTUAL NEEDS OF THE GOVERNMENT IN A PARTICULAR SITUATION AND THE DRAFTING OF APPROPRIATE CONTRACT SPECIFICATIONS TO REFLECT THOSE NEEDS ARE PRIMARILY THE RESPONSIBILITY OF THE AGENCY CONCERNED, THIS OFFICE CANNOT CONCLUDE THAT THE DETERMINATION THAT THE PARTICULAR NEEDS OF THE PROCURING ACTIVITY JUSTIFIED A DEVIATION FROM THE FEDERAL SPECIFICATION WAS ARBITRARY OR CAPRICIOUS. 44 COMP. GEN. 27, 31 (1964).

WE BELIEVE THE SAME CONCLUSION IS WARRANTED IN THE INSTANT CASE.

WITH REGARD TO FUTURE PROCUREMENTS TO SATISFY THIS NEED, ASPR SEC. 1 1202(D) (1974 ED.) AND 41 C.F.R. SECS. 101-29.205-1 AND -2 (1973) GENERALLY PLACE UPON THE AGENCY AUTHORIZING A DEVIATION FROM A FEDERAL SPECIFICATION AN OBLIGATION TO RECOMMEND APPROPRIATE REVISIONS OR AMENDMENTS THERETO. IT IS OUR UNDERSTANDING THAT NAVY TECHNICAL PERSONNEL HAVE BEEN REQUESTED TO REVIEW FEDERAL SPECIFICATION W-R-175C TO DETERMINE WHAT CHANGES MAY BE MADE THERETO TO ENABLE ITS USE IN FUTURE PROCUREMENTS. HOWEVER, FOR THE REASONS STATED ABOVE, WE DO NOT PROPOSE TO DISTURB THE INSTANT PROCUREMENT.