B-181064, AUG 29, 1974

B-181064: Aug 29, 1974

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SOLE SOURCE NEGOTIATION IS NOT SUBJECT TO QUESTION BY GAO WHERE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS TO NEGOTIATE IS BASED UPON PROCUREMENT ASSIGNED PRIORITY DESIGNATOR 2 (ASPR 3-202.2(VI). THE PROTEST IS DENIED. THE PROCUREMENT WAS ASSIGNED A PRIORITY DESIGNATOR OF 2. FINDINGS IN SUPPORT OF A DETERMINATION TO NEGOTIATE UNDER THE PUBLIC EXIGENCY EXCEPTION ARE MADE FINAL BY 10 U.S.C. 2310(B). THIS OFFICE IS PRECLUDED FROM QUESTIONING THE LEGAL SUFFICIENCY OF SUCH FINDINGS. 52 COMP. HE IS VESTED WITH A CONSIDERABLE DEGREE OF DISCRETION TO DETERMINE THE AMOUNT OF COMPETITION CONSISTENT WITH THE EXIGENCY SITUATION. ALTHOUGH IT IS TRUE THAT EVEN IN A NEGOTIATED PROCUREMENT THE APPLICABLE STATUTE AND REGULATION REQUIRE COMPETITION.

B-181064, AUG 29, 1974

SOLE SOURCE NEGOTIATION IS NOT SUBJECT TO QUESTION BY GAO WHERE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS TO NEGOTIATE IS BASED UPON PROCUREMENT ASSIGNED PRIORITY DESIGNATOR 2 (ASPR 3-202.2(VI), AND RECORD SUPPORTS CONCLUSION THAT ONLY ONE SOURCE COULD MEET REQUIRED DELIVERY SECHEDULE. SEE COMP. GEN. DECISIONS CITED.

JANKE AND COMPANY, INCORPORATED:

JANKE AND COMPANY PROTESTS THE NAVAL AIR ENGINEERING CENTER'S (NAEC) NEGOTIATING A CONTRACT WITH TELEDYNE SPRAGUE ENGINEERING FOR 41 HYDRAULIC ELECTRIC DRIVEN TEST STANDS IDENTICAL TO THOSE FURNISHED BY TELEDYNE SPRAGUE UNDER A PRIOR CONTRACT. JANKE CONTENDS THAT NAEC'S URGENT NEED FOR THE TEST STANDS DID NOT JUSTIFY A SOLE SOURCE PROCUREMENT BY NEGOTIATION SINCE JANKE BELIEVES THAT IT AS WELL AS OTHER MANUFACTUREERS COULD PERFORM, WITHIN THE TIME REQUIRED, A CONTRACT AWARDED BY FORMAL ADVERTISING. FOR THE REASONS STATED BELOW, THE PROTEST IS DENIED.

THE DETERMINATION AND FINDINGS ISSUED BY THE CONTRACTING OFFICER ON MARCH 18, 1974, STATES THAT DUE TO THE URGENCY OF THE PROCUREMENT THE SUBJECT CONTRACT MAY BE NEGOTIATED UNDER THE "PUBLIC EXIGENCY" EXCEPTION OF 10 U.S.C. 2304(A)(2), AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-202.2(VI), WHICH AUTHORIZES PROCUREMENT BY NEGOTIATION WHEN THE PURCHASE REQUEST CITES A UNIFORM MOVEMENT AND ISSUE PRIORITY SYSTEM DESIGNATOR OF 1 THROUGH 6, INCLUSIVE. IN THIS INSTANCE, THE PROCUREMENT WAS ASSIGNED A PRIORITY DESIGNATOR OF 2. FINDINGS IN SUPPORT OF A DETERMINATION TO NEGOTIATE UNDER THE PUBLIC EXIGENCY EXCEPTION ARE MADE FINAL BY 10 U.S.C. 2310(B), AND THIS OFFICE IS PRECLUDED FROM QUESTIONING THE LEGAL SUFFICIENCY OF SUCH FINDINGS. 52 COMP. GEN. 57, 62 (1972). ALTHOUGH USE OF THE "PUBLIC EXIGENCY" EXCEPTION DOES NOT IN AND OF ITSELF CLOAK THE CONTRACTING OFFICER WITH AUTHORITY TO PROCURE ITEMS ON A NONCOMPETITIVE BASIS, HE IS VESTED WITH A CONSIDERABLE DEGREE OF DISCRETION TO DETERMINE THE AMOUNT OF COMPETITION CONSISTENT WITH THE EXIGENCY SITUATION. B-174968, DECEMBER 7, 1972; B-176919, APRIL 16, 1973.

ALTHOUGH IT IS TRUE THAT EVEN IN A NEGOTIATED PROCUREMENT THE APPLICABLE STATUTE AND REGULATION REQUIRE COMPETITION, 10 U.S.C. 2304(G) PROVIDES:

"IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH RATES OR PRICES ARE NOT FIXED BY LAW OR REGULATION AND IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSAL, *** SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, ***."

THUS, COMPETITION IS REQUIRED ONLY WHERE TIME OF DELIVERY WILL PERMIT. -176919, APRIL 16, 1973. IN THE CASE AT HAND, THE CONTRACTING OFFICER CONCLUDED THAT THE TIME REQUIRED FOR DELIVERY DID NOT PERMIT SUCH COMPETITION.

THE JUSTIFICATION FOR THE DETERMINATION BY THE CONTRACTING OFFICER THAT THE PROCUREMENT SHOULD BE NEGOTIATED ON A SOLE SOURCE BASIS IS CONTAINED IN A REPORT OF THE NAEC GROUND SUPPORT EQUIPMENT DEPARTMENT AND THE NAEC INDUSTRIAL DEPARTMENT, DATED MARCH 9, 1974, WHEREIN IT IS STATED IN PART:

"IT IS URGENTLY RECOMMENDED THAT A SOLE SOURCE PROCUREMENT BE MADE FOR 37 AHT-63 HYDRAULIC TEST STANDS FROM TELEDYNE SPRAGUE ENGINEERING OF GARDENA, CALIFORNIA FOR THE FOLLOWING REASONS:

"(A) NAVAIRSYCOMHQ BY NAVAL MSG (162353 JAN 74) HAS DIRECTED NAVAIRENGCEN TO PROCURE AHT-63 UNITS ASAP (PRIORITY 2).

"(B) COMNAVAIRPAC BY NAVAL MSG (072119 JAN 74) REQUESTED THAT NAVAIR INITIATE A PRIORITY 2 PROCUREMENT OF (37) AHT-63 HYDRAULIC TEST STANDS TO SUPPORT THE F-14 AIRCRAFT HYDRAULIC SYSTEMS.

"(C) THE AHT-63 HYDRAULIC TEST STANDS ARE URGENTLY REQUIRED BY THE FLEET TO SUPPORT THE F-14 AIRCRAFT ABOARD CVA'S.

"(D) CARRIER DEPLOYED F-14 AIRCRAFT WILL REQUIRE SUPPORT NO LATER THAN JANUARY 1975 THEREFORE PRODUCTION DELIVERIES MUST BE AVAILABLE ON OR BEFORE THIS DATE. WITHOUT HYDRAULIC GROUND SUPPORT THE F-14 AIRCRAFT CANNOT PERFORM ITS ASSIGNED MISSION.

"(E) SINCE TELEDYNE SPRAGUE ENGR. STILL HAS THE ASSEMBLY LINE PRODUCTION CAPABILITY THEY ARE IN THE BEST POSITION TO GIVE THE NAVY EARLY DELIVERY ON THE ABOVE UNITS.

"(F) IT IS NAVAIR'S AND NAEC POSITION THAT ANOTHER CONTRACTOR CANNOT POSSIBLY TOOL UP TO MEET THE ABOVE DELIVERY DATE.

"(G) A DATA PACKAGE INCORPORATING THE CHANGES (ENGINEERING CHANGE PROPOSAL-ECP) MADE DURING THE 1636 CONTRACT IS NOT AVAILABLE AND WILL REQUIRE APPROXIMATELY 4 MONTHS TO DEVELOP. PRODUCTION LEAD TIME IS ESTIMATED AT 5 TO 6 MONTHS THEREFORE ONLY UNDER A SOLE SOURCE PROCUREMENT CONTRACT WILL A CONTRACTOR BE ABLE TO MEET A DELIVERY DATE OF JANUARY 1975.

"(H) IN ADDITION, NAVAIRENGCEN IS CURRENTLY PROCESSING A TMCR TO OBTAIN A TECHNICAL MANUAL FROM TELEDYNE SPRAGUE ENGINEERING COVERING THE PRODUCTION UNITS PROCURED UNDER THE 1636 CONTRACT AND TO BUY SOFTWARE TO UPDATE THE EXISTING DATA PACKAGE BY INCORPORATING THE CHANGES MADE DURING THE 1636 CONTRACT."

ALTHOUGH THE FOREGOING MEMORANDUM MENTIONS 37 UNITS, THIS WAS SUBSEQUENTLY INCREASED TO 41. THEREFORE, THE CONTRACTING OFFICER CONCLUDED THAT ONLY TELEDYNE COULD PERFORM THE CONTRACT WITHIN THE REQUIRED TIME CONTRAINTS.

JANKE POINTS OUT THAT UNDER THE PRIOR CONTRACT ALL ITEMS HAD TO BE IDENTICAL; THAT ALL ENGINEERING CHANGE PROPOSALS (ECPS) HAD TO BE COMPLETED PRIOR TO ANY PRODUCTION UNITS BEING SHIPPED; PRIOR TO ANY PRODUCTION UNITS BEING SHIPPED; AND THAT THE ECPS HAD TO BE APPROVED BY NAEC AND INCORPORATED IN THE APPLICABLE DRAWINGS AND SPECIFICATION UNDER MILITARY STANDARD - 481. THEREFORE, JANKE, TAKES EXCEPTION TO THE NAVY'S POSITION THAT IT WOULD HAVE TAKEN 4 MONTHS TO INCORPORATE THE ECPS AND PREPARE A DATA PACKAGE SUFFICIENT FOR COMPETITION. THUS, IT IS JANK'S CONTENTION THAT RATHER THAN NEGOTIATE SOLE SOURCE WITH TELEDYNE, THE NAVY SHOULD HAVE PROCEEDED UNDER ONE OF THE FOLLOWING TWO ALTERNATIVES:

"(A) A BID COULD BE ADVERTISED STIPULATING THAT A PRODUCTION MODEL WAS AVAILABLE FOR REVIEW BY ALL PROSPECTIVE BIDDERS, AND THAT SUCH PRODUCTION MODEL DID NOT AGREE ENTIRELY WITH THE NAEC DRAWING PACKAGE.

"(B) A BID ADVERTISEMENT, COMPLETE WITH AN APPENDIX A, CONSISTING OF ALL ECPS GENERATED. THE RESPONSIBILITY WOULD BE ON THE BIDDER TO INCORPORATED SUCH ECPS INTO HIS PRICING AND/OR ENGINEERING EFFORT."

AS THE FIRST ALTERNATIVE, THE NAVY REPORTS THAT DUE TO FUNDING RESTRAINTS ALL AVAILABLE UNITS WERE BEING USED BY FLEET ACTIVITIES AND THEREFORE A PRODUCTION MODEL WAS NOT AVAILABLE FOR INSPECTION BY BIDDERS. AS TO THE SECOND ALTERNATIVE, THE NAVY STATES THAT AN APPENDIX WOULD NOT HAVE DESCRIBED ALL THE CHANGES MADE TO THE TELEDYNE SPRAGUE UNITS. THIS SITUATION AROSE BECAUSE TELEDYNE SPRAGUE FOUND THAT WHEN SOME OF THE VENDOR COMPONENTS FOR THE TEST STANDS ARRIVED FOR ASSEMBLY AT THE PLANT THEY DID NOT REPRESENT THE COMPONENTS ORDERED FOR FORM AND FIT. BECAUSE OF THE URGENT NEED FOR THE TEST STANDS, THE NAVY APPROVED INSTALLATION OF THESE NONCONFORMING COMPONENTS, WHICH TOOK LESS TIME THAN REORDERING AND WAITING FOR DELIVERY OF CONFORMING COMPONENTS. UPON RECEIVING THE NONCONFORMING COMPONENTS, IT WAS NECESSARY TO QUICKLY CHANGE THE MOUNTING LOCATION AND PIPING AND THESE CHANGES WERE NOT ALWAYS RECORDED. THE NAVY STATES THAT RECEIVING THE DETAILS OF THE CHANGES IN ORDER TO LIST THEM IN AN APPENDIX, AND THEN ISSUING AN INVITATION FOR BIDS WOULD HAVE TAKEN CONSIDERABLE TIME AND WOULD HAVE MADE IT IMPOSSIBLE TO MEET AN EQUIPMENT DELIVERY DATE OF JANUARY 1975.

AS SHOWN FROM THE FACTS OUTLINED ABOVE, THE RECORD ESTABLISHED THAT THE CONTRACTING OFFICER CONDUCTED NEGOTIATIONS ONLY WITH TELEDYNE BECAUSE HE DETERMINED ON THE BASIS OF THE INFORMATION FURNISHED HIM THAT ONLY TELEDYNE COULD FULFILL THE OBJECTIVES OF THE PROCUREMENT WITHIN THE TIME PERMITTED. IT HAS BEEN THE CONSISTENT POLICY OF OUR OFFICE NOT TO QUESTION THE CONTRACTING OFFICER'S DECISION TO MAKE A SOLE SOURCE AWARD UNLESS IT IS CLEAR FROM THE WRITTEN RECORD THAT HE ACTED IN AN UNREASONABLE MANNER IN ABUSE OF HIS DISCRETION. B-174026, FEBRUARY 8, 1972; B-174968 DECEMBER 7, 1972. WE ARE UNABLE TO CONCLUDE FROM THE RECORD THAT THE CONTRACTING OFFICER ACTED UNREASONABLY IN NEGOTIATING WITH TELEDYNE SPRAGUE ON A SOLE SOURCE BASIS.