B-181146, NOV 21, 1974

B-181146: Nov 21, 1974

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PROTEST BASED UPON CONTENTION THAT REQUIREMENT FOR SOUND RECORDERS SHOULD HAVE BEEN FORMALLY ADVERTISED IS DENIED SINCE EQUIPMENT IS LISTED ON FEDERAL SUPPLY SCHEDULE AND PROCUREMENT THEREFROM IS MANDATORY PURSUANT TO ASPR 5-102.3. 2. USE OF REQUEST FOR QUOTATIONS TO DETERMINE FROM FEDERAL SUPPLY SCHEDULE SUPPLIERS EXCHANGE ALLOWANCE FOR EQUIPMENT TO BE REPLACED WAS PROPER SINCE ASPR 4-204(C)(3) AND 40 U.S.C. 481 AUTHORIZE EXCHANGE ALLOWANCE PROCEEDS TO BE APPLIED TOWARD PAYMENT OF ACQUISITION COST OF REPLACEMENT EQUIPMENT. 3. ALTHOUGH PROTESTER'S EQUIPMENT IS LISTED UNDER FEDERAL SUPPLY SCHEDULE CLASS 7450. IT WAS PROPER TO LIMIT COMPETITION TO OTHER SUPPLIERS UNDER SAME FSS CLASS 7450 BECAUSE IT WAS DETERMINED PURSUANT TO FPMR SECTION 101 -26.408-3 THAT PROTESTER'S MINI-CASSETT EQUIPMENT WOULD NOT MEET CERTAIN NEEDS OF AGENCY AS WOULD STANDARD CASSETTE EQUIPMENT OFFERED BY OTHER SUPPLIERS. 4.

B-181146, NOV 21, 1974

1. PROTEST BASED UPON CONTENTION THAT REQUIREMENT FOR SOUND RECORDERS SHOULD HAVE BEEN FORMALLY ADVERTISED IS DENIED SINCE EQUIPMENT IS LISTED ON FEDERAL SUPPLY SCHEDULE AND PROCUREMENT THEREFROM IS MANDATORY PURSUANT TO ASPR 5-102.3. 2. USE OF REQUEST FOR QUOTATIONS TO DETERMINE FROM FEDERAL SUPPLY SCHEDULE SUPPLIERS EXCHANGE ALLOWANCE FOR EQUIPMENT TO BE REPLACED WAS PROPER SINCE ASPR 4-204(C)(3) AND 40 U.S.C. 481 AUTHORIZE EXCHANGE ALLOWANCE PROCEEDS TO BE APPLIED TOWARD PAYMENT OF ACQUISITION COST OF REPLACEMENT EQUIPMENT. 3. ALTHOUGH PROTESTER'S EQUIPMENT IS LISTED UNDER FEDERAL SUPPLY SCHEDULE CLASS 7450, IT WAS PROPER TO LIMIT COMPETITION TO OTHER SUPPLIERS UNDER SAME FSS CLASS 7450 BECAUSE IT WAS DETERMINED PURSUANT TO FPMR SECTION 101 -26.408-3 THAT PROTESTER'S MINI-CASSETT EQUIPMENT WOULD NOT MEET CERTAIN NEEDS OF AGENCY AS WOULD STANDARD CASSETTE EQUIPMENT OFFERED BY OTHER SUPPLIERS. 4. PROTEST BASED UPON CONTENTION THAT "DOUBLE DISCOUNT" OFFERED BY FEDERAL SUPPLY SCHEDULE SUPPLIER WAS IMPROPER IS NOT SUPPORTED BY RECORD SINCE SUPPLIER'S FSS CONTRACT PROVIDES THAT SPECIAL EDUCATIONAL RECORD SINCE SUPPLIER'S FSS CONTRACT PROVIDES THAT SPECIAL EDUCATIONAL PRICE IS ALSO SUBJECT TO QUANTITY DISCOUNT. 5. PROTEST THAT PROCUREMENT OF SOUND RECORDERS SHOULD HAVE BEEN COMPETED IN OPEN MARKET RATHER THAN PURCHASED FROM FEDERAL SUPPLY SCHEDULE BASED UPON CONTENTION THAT THE PRICE IS IN EXCESS OF FSS MAXIMUM ORDER LIMITATION IS NOT VALID WHERE THE ORDER PLACED WITH FSS SUPPLIER DID NOT EXCEED MOL.

MID-ATLANTIC INDUSTRIES, INC.:

ON APRIL 26, 1974, MID-ATLANTIC INDUSTRIES, INC., PROTESTED REQUEST FOR QUOTATIONS (RFQ) DADA1574-087-001-05(12), ISSUED APRIL 18, 1974, BY THE PURCHASING AND CONTRACTING BRANCH, WALTER REED ARMY MEDICAL CENTER, WASHINGTON, D.C. (MEDICAL CENTER). THE PROTESTER'S OFFICE PRODUCTS DIVISION IS A DISTRIBUTOR FOR NORELCO OFFICE EQUIPMENT. INITIALLY THIS PROTEST WAS BASED ON ALLEGATIONS THAT (A) THE SPECIFICATIONS UNDER THE RFQ WERE RESTRICTIVE, AND (B) THAT THE MEDICAL CENTER'S NEEDS SHOULD HAVE BEEN SOLICITED IN A FORMALLY ADVERTISED INVITATION FOR BIDS RATHER THAT UNDER THE REFERENCED RFQ.

THE RECORD BEFORE US INDICATES THAT ON MARCH 27, 1974, AN OFFICIAL OF THE MEDICAL CENTER SUBMITTED A PURCHASE REQUEST FOR VARIOUS DICTATING AND TRANSCRIBING EQUIPMENT FOR USE IN THAT FACILITY'S PROFESSIONAL SERVICES DIRECTORATE. ARMED SERVICES PROCUREMENT REGULATION (ASPR) 5 102.3 AND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, AS IMPLEMENTED BY 41 C.F.R. SEC. 101-25 AND 101-26 (1973), MANDATE THAT ALL DEPARTMENT OF DEFENSE AGENCIES USE GENERAL SERVICES ADMINISTRATION (GSA) CENTRALIZED PROCUREMENT FOR COMMONLY USED ITEMS, SUCH AS DICTATING AND TRANSCRIBING EQUIPMENT. FOLLOWING AN INFORMAL SURVEY OF DICTATING AND TRANSCRIBING EQUIPMENT AVAILABLE FROM GSA'S APPLICABLE FEDERAL SUPPLY SCHEDULE (FSS) CLASS 7450, THE ARMY DETERMINED THAT EITHER DICTAPHONE OR LANIER STANDARD CASSETTE EQUIPMENT WOULD FULFILL THE ESSENTIAL PERFORMANCE REQUIREMENTS OF THE ESSENTIAL PERFORMANCE REQUIREMENTS OF THE MEDICAL CENTER. ALTHOUGH NORELCO EQUIPMENT IS ALSO AVAILABLE UNDER CLASS 7450 OF THE FSS, THE ARMY DETERMINED THAT THE NORELCO MINI-CASSETTE EQUIPMENT WOULD NOT MEET THE ESSENTIAL NEEDS OF THE MEDICAL CENTER.

BASED ON THE NECESSITY OF DISPOSING OF 252 SIMILAR ITEMS PRESENTLY IN USE BY THE MEDICAL CENTER, THE ARMY DETERMINED THAT THE MOST ADVANTAGEOUS METHOD TO THE GOVERNMENT WOULD BE AN EXCHANGE OF EQUIPMENT ON A ONE FOR ONE BASIS FOR SIMILAR ITEMS. THUS, ON APRIL 18, 1974, THE MEDICAL CENTER ISSUED THE SUBJECT RFQ TO LOCAL DISTRIBUTORS OF DICTAPHONE AND LANIER EQUIPMENT. THE PURPOSE OF THE RFQ WAS TO DETERMINE WHETHER DICTAPHONE OR LANIER WOULD GRANT THE HIGHEST TRAD-IN FOR THE PRESENT EQUIPMENT.

CONCERNING THE PROTESTER'S ALLEGATION THAT THE MEDICAL CENTER'S REQUIREMENTS FOR TRANSCRIBING AND DICTATING EQUIPMENT SHOULD HAVE BEEN FORMALLY ADVERTISED, WE NOTE AS MENTIONED ABOVE THAT USE OF GSA'S FSS IS THE REQUIRED METHOD OF PROCUREMENT. FSS CLASS 7450 IS A MULTIPLE AWARD SCHEDULE OF SOUND RECORDERS (DISTATING MACHINES) AND CONTRACTS ENTERED INTO BY GSA WITH SEVERAL SUPPLIERS OF SUCH EQUIPMENT TO PROVIDE THE GOVERNMENT WITH THE LOWEST COST. THUS, FORMALLY ADVERTISING FOR ITEMS ALREADY ON THE FSS WOULD BE IN CONTRAVENTION OF ASPR 5-102.3 AND THE CONTRACTS BETWEEN GSA AND THE LISTED CONTRACTORS (INCLUDING NORELCO).

REGARDING THE ARMY'S USE OF THE RFQ, WE NOTE THAT BOTH ASPR 4 204(C)(3), UNDER THE SECTION ENTITLED "EXCHANGE OR SALE OF PERSONAL PROPERTY", AND SECTION 201(C) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE ACT OF 1949, SUPRA, AS AMENDED (40 U.S.C. 481(C)), AUTHORIZE EXCHANGE ALLOWANCE PROCEEDS TO BE APPLIED IN WHOLE OR PART TO THE PAYMENT OF ACQUISITION COST OF THE REPLACEMENT EQUIPMENT. IN THESE CIRCUMSTANCES, AND BECAUSE THE PURPOSE OF THE RFQ WAS TO DETERMINE THE AMOUNT OF ALLOWANCE OFFERED BY THE FSS SUPPLIERS, WE FIND THE USE OF A RFQ TO HAVE BEEN REASONABLE AND PROPER.

THE MAJOR THRUST OF MID-ATLANTIC'S PROTEST CONCERNS WHAT IT CONSIDERS TO BE THE RESTRICTIVE NATURE OF THE MEDICAL CENTER'S PROCUREMENT. SPECIFICALLY, THE PROTESTER ALLEGES THAT THE MEDICAL CENTER'S DECISION TO CONSIDER ONLY STANDARD SIZE CASSETTE EQUIPMENT PRECLUDED MID ATLANTIC FROM OFFERING ITS NORELCO MINI-CASSETTE EQUIPMENT, WHICH IT IS CONTENDED WOULD MEET THE NEEDS OF THE AGENCY.

AS PREVIOUSLY NOTED, MULTIPLE AWARD FSS CLASS 7450 CONTAINS A GROUP OF SOUND RECORDERS. LISTING BOTH STANDARD SIZED AND MINI-CASSETTE EQUIPMENT. THE FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR), WHICH CONTROL ALL FSS PROCUREMENTS (41 C.F.R. SEC. 101-26.408-1, 2, AND 3 (1973)), CONTAIN IN PERTINENT PART THE FOLLOWING CONCERNING PURCHASES FROM A MULTIPLE AWARD SCHEDULE:

"SEC. 101-26.408-1 DESCRIPTION.

(A) MULTIPLE-AWARD FEDERAL SUPPLY SCHEDULES COVER CONTRACTS MADE WITH MORE THAN ONE SUPPLIER FOR COMPARABLE ITEMS AT EITHER THE SAME OR DIFFERENT PRICES FOR DELIVERY TO THE SAME GEOGRAPHICAL AREA. ***

"SEC. 101-26.408-2 PROCUREMENT AT LOWEST PRICE.

EACH PURCHASE OF MORE THAN $250 PER LINE ITEM MADE FROM A MULTIPLE AWARD SCHEDULE BY AGENCIES REQUIRED TO USE SUCH SCHEDULES SHALL BE MADE AT THE LOWEST DELIVERED PRICE AVAILABLE UNDER THE SCHEDULE UNLESS THE AGENCY FULLY JUSTIFIES THE PURCHASE OF A HIGHER PRICED ITEM. ***

SEC. 101-26.408-3 JUSTIFICATIONS.

(A) JUSTIFICATIONS OF PURCHASES MADE AT PRICES OTHER THAN THE LOWEST DELIVERED PRICE AVAILABLE SHOULD BE BASED ON SPECIFIC OR DEFINITIVE NEEDS WHICH ARE CLEARLY ASSOCIATED WITH THE ACHIEVEMENT OF PROBRAM OBJECTIVES.

(B) THE FOLLOWING EXAMPLES ILLUSTRATE FACTORS THAT MAY BE USED IN SUPPORT OF JUSTIFICATIONS, WHEN USED WITH ASSERTIONS THAT ARE FULLY SET FORTH AND DOCUMENTED.

(1) SPECIAL FEATURES OF ONE ITEM, NOT PROVIDED BY COMPARABLE ITEMS, ARE REQUIRED IN EFFECTIVE PROGRAM PERFORMANCE.

(2) AN ACTUAL NEED EXISTS FOR SPECIAL CHARACTERISTICS TO ACCOMPLISH IDENTIFIED TAKS. (3) IT IS ESSENTIAL THAT THE ITEM SELECTED BE COMPATIBLE WITH ITEMS OR SYSTEMS ALREADY EXISTING WITHIN USING OFFICES.

(4) TRADE-IN CONSIDERATIONS FAVOR A HIGHER PRICED ITEM AND PRODUCE THE LOWEST NET COST. ***"

IN THIS CONNECTION, OFFICIALS OF THE MEDICAL CENTER ISSUED A WRITTEN JUSTIFICATION FOR THE PURCHASE OF THE STANDARD SIZED CASSETTE EQUIPMENT FROM EITHER LANIER OR DICTAPHONE, RATHER THAN NORELCO MINI-CASSETTE EQUIPMENT. IN ESSENCE, THE JUSTIFICATION POINTS OUT REASONS WHY THE MIN- CASSETTE EQUIPMENT DOES NOT MEET THE ESSENTIAL PERFROMANCE REQUIREMENTS OF THE MEDICAL CENTER. IT IS STATED IN PART THAT MINI CASSETTES DO NOT PLAY NECESSARY EDUCATIONAL STANDARD SIZED CASSETTES' THAT THE COSTS ASSOCIATED WITH SECURITY FOR THE MINI-CASSETTE EQUIPMENT IS PROHIBITIVE; THAT THE SHORTER RECORDING TIME AVAILABLE ON THE MINI CASSETTE WOULD NOT BE ADEQUATE FOR RECORDING MANY CONFERENCES. ALTHOUGH THE PROTESTER DISPUTES SOME PORTIONS OF THE MEDICAL CENTER'S JUSTIFICATION FOR PROCURING ONLY STANDARD SIZED RECORDERS, IT HAS NOT PROVIDED EVIDENCE SUFFICIENT TO ESTABLISH THE INVALIDITY OF THE FOREGOING REASONS. THEREFORE, BASED ON THE RECORD BEFORE US, WE FIND THAT THE JUSTIFICATION SATISFIES THE REQUIREMENTS OF FPMR 101-26.408 3. 47 COMP. GEN. 135 (1967).

MID-ATLANTIC ALSO ALLEGES THAT PRICES OFFERED BY DICTAPHONE ON THE FSS MAY BE DIFFERENT THAN THOSE BEING OFFERED THE MEDICAL CENTER. IN THIS REGARD, THE PROTESTER CLAIMS THAT A "DOUBLE DISCOUNT" RATE (ONE BASED ON VOLUME AND ONE BASED ON THE MEDICAL CENTER'S STATUS AS AN EDUCATIONAL FACILITY) BEING OFFERED BY DICTAPHONE "*** IN FACT PLACES DICTAPHONE IN A COMPETITIVE POSITION THAT BLOCKS OUT ALL OTHER VENDORS IN TERMS OF THE GSA SCHEDULE IN COMPETING FOR THIS BUSINESS." FROM OUR REVIEW OF THE TERMS OF DICTAPHONE'S FSS CONTRACT, IT APPEARS THAT THE SPECIAL EDUCATIONAL PRICE QUOTED ON PAGE 12 IS SUBJECT TO THE QUANTITY DISCOUNT QUOTED ON PAGE 1. FURTHERMORE, THE MEDICAL CENTER HAS FURNISHED UNCONTROVERTED INFORMATION WHICH, IN OUR VIEW, SUPPORTS ITS POSITION CONCERNING ELIGIBILITY FOR THE SPECIAL EDUCATION PRICE.

FINALLY, THE PROTESTER ALLEGES THAT THE PROCUREMENT SHOULD HAVE BEEN COMPETED BECAUSE THE NEEDS OF THE ARMY WILL BE OVER THE FSS MAXIMUM ORDER LIMITATION OF $75,000. IN THIS REGARD, THE ARMY HAS ADVISED THIS OFFICE THAT ALTHOUGH A LARGER ORDER WAS INITIALLY CONTEMPLATED, THE ACTUAL ORDER PLACED WITH DICTAPHONE IS FAR LESS THAN THE STATED MAXIMUM ORDER LIMITATION.

IN VIEW OF THE FOREGOING, THE PROTEST IS DENIED.