B-182814, APR 4, 1975, 54 COMP GEN 835

B-182814: Apr 4, 1975

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EQUIPMENT - AUTOMATIC DATA PROCESSING SYSTEMS - SUPPLIES - PROCUREMENT - LIMITATION FOR PRIOR GSA APPROVAL WHEN PROCUREMENT FOR AUTOMATIC DATA PROCESSING EQUIPMENT IS LESS THAN $50. EQUIPMENT - AUTOMATIC DATA PROCESSING SYSTEMS - SELECTION AND PURCHASE - WARRANTIES AND DAMAGES ALLEGATION THAT WARRANTY USED IN INVITATION FOR BIDS FOR AUTOMATIC DATA PROCESSING EQUIPMENT IS UNREASONABLE IN GENERAL BUSINESS PRACTICE IS REFUTED BY EXTENT OF COMPETITION THAT DID NOT EXCEPT TO WARRANTY REQUIREMENTS. THERE IS NO SANCTION FOR FAILURE TO COMPLY WITH SECTION 20.5. BLAND MAINTAINS THAT THE CONTRACTING OFFICER DID NOT HAVE THE AUTHORITY TO USE THE WARRANTY BECAUSE IT WAS (1) NONSTANDARD. THE CONTRACTOR WARRANTS TO THE GOVERNMENT THAT SUPPLIES DELIVERED UNDER THIS CONTRACT ARE MANUFACTURED.

B-182814, APR 4, 1975, 54 COMP GEN 835

EQUIPMENT - AUTOMATIC DATA PROCESSING SYSTEMS - SUPPLIES - PROCUREMENT - LIMITATION FOR PRIOR GSA APPROVAL WHEN PROCUREMENT FOR AUTOMATIC DATA PROCESSING EQUIPMENT IS LESS THAN $50,000, AGENCY NEED NOT GET PRIOR APPROVAL FROM GSA AND DELEGATION TO PROCURE CARRIES WITH IT DELEGATION TO DETERMINE ITS OWN REQUIREMENTS, INCLUDING TYPE AND EXTENT OF WARRANTY AS PROCUREMENT POLICY WITHIN OWN AGENCY DISCRETION. EQUIPMENT - AUTOMATIC DATA PROCESSING SYSTEMS - SELECTION AND PURCHASE - WARRANTIES AND DAMAGES ALLEGATION THAT WARRANTY USED IN INVITATION FOR BIDS FOR AUTOMATIC DATA PROCESSING EQUIPMENT IS UNREASONABLE IN GENERAL BUSINESS PRACTICE IS REFUTED BY EXTENT OF COMPETITION THAT DID NOT EXCEPT TO WARRANTY REQUIREMENTS. CONTRACTS - PROTESTS - PROCEDURES - INTERIM BID PROTEST PROCEDURES AND STANDARDS - COMPLIANCE REQUIREMENT GUIDELINE IN SECTION 20.5 OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS (4 CFR) REQUIRING THAT STATEMENT OF REASONS WHY REPORT ON PROTEST NOT FILED WITHIN 20 DAYS BE SIGNED BY APPROPRIATE OFFICER ABOVE CONTRACTING OFFICER'S LEVEL DOES NOT EXTEND TO ACTUAL REPORT AND, IN ANY EVENT, THERE IS NO SANCTION FOR FAILURE TO COMPLY WITH SECTION 20.5.

IN THE MATTER OF KENNETH R. BLAND, APRIL 4, 1975:

KENNETH R. BLAND (BLAND) PROTESTS AGAINST THE INCLUSION BY THE FEDERAL POWER COMMISSION (FPC) IN ITS INVITATION FOR BIDS (IFB) FP-9474 OF THE WARRANTY PROVISION APPLICABLE TO ITEM 001, 56 DISK PACKS, IBM TYPE 3336- 11, OR EQUIVALENT. BLAND MAINTAINS THAT THE CONTRACTING OFFICER DID NOT HAVE THE AUTHORITY TO USE THE WARRANTY BECAUSE IT WAS (1) NONSTANDARD; (2) OUTSIDE THE SCOPE OF THE FEDERAL PROCUREMENT REGULATIONS (FPR); (3) CONTRARY TO PRIOR COMPTROLLER GENERAL DECISIONS AND DECISIONS OF THE COURTS; AND (4) UNREASONABLE IN GENERAL BUSINESS PRACTICE.

THE WARRANTY PROVIDED:

A. IN ADDITION TO ANY OTHER WARRANTY PROVISIONS PERTAINING TO THE SOLICITATION, OFFER AND AWARD, A PROPOSAL, GSA TERM CONTRACT, OR ANY COMPANY'S COMMERCIAL WARRANTY, THE CONTRACTOR WARRANTS TO THE GOVERNMENT THAT SUPPLIES DELIVERED UNDER THIS CONTRACT ARE MANUFACTURED, INSPECTED AND TESTED TO THE SPECIFICATIONS OF THE ORIGINAL EQUIPMENT MANUFACTURER (OEM) OF THE ADP EQUIPMENT/ACCESSORY IDENTIFIED IN THE CONTRACT SCHEDULE, AND THAT ALL SUCH SUPPLIES ARE FREE FROM DEFECTS IN MATERIALS AND WORKMANSHIP. THIS WARRANTY SHALL RUN FOR 36 MONTHS FROM THE DATE THAT THE SUPPLIES ARE DELIVERED TO, AND RECEIPTED FOR, THE GOVERNMENT.

B. SHOULD ANY SUPPLY ITEM WARRANTED UNDER PARAGRAPH 1A ABOVE FAIL, OR BE FOUND BY THE GOVERNMENT TO BE DEFECTIVE, THE CONTRACTOR SHALL:

(1) REPLACE THE FAILED OR DEFECTIVE ITEM WITHIN 72 HOURS AFTER THE CONTRACTOR RECEIVES WRITTEN NOTICE OF SUCH FAILURE OR DEFECT; AND

(2) PROMPTLY REIMBURSE THE GOVERNMENT THE FULL AMOUNT OF ALL REASONABLE REPAIRS AND REPLACEMENTS TO OEM EQUIPMENT WHICH IS DAMAGED SOLELY AS A RESULT OF PROVEN FAILURE OF, OR DEFECT IN, CONTRACTOR'S SUPPLIES.

C. SHOULD ANY SUPPLY ITEM WARRANTED UNDER PARAGRAPH 1A ABOVE FAIL, OR BE FOUND BY THE GOVERNMENT TO BE DEFECTIVE, THE GOVERNMENT SHALL:

(1) DISPATCH WRITTEN NOTICE THEREOF TO THE CONTRACTOR WITHIN 72 HOURS AFTER THE FAILURE OR DEFECT IS FOUND;

(2) PROVIDE THE CONTRACTOR ACCESS TO THE SITE WHERE CONTRACTOR'S SUPPLIES ARE USED AND/OR STORED, DURING THE SPONSORING AGENCY'S NORMAL WORKING HOURS, FOR PURPOSE OF ON-SITE INSPECTIONS;

(3) EMPLOY AND USE CONTRACTOR'S SUPPLIES, AND ALL RELATED ADP EQUIPMENT/SUPPLIES, IN ACCORDANCE WITH MANUFACTURER'S INSTRUCTIONS AND ACCEPTED INDUSTRY PRACTICES (SHOULD FAILURE OF, OR DEFECT IN, CONTRACTOR'S SUPPLIES BE PROVEN TO BE CAUSED BY FAULTY EMPLOYMENT OR USE, OR BY EMPLOYEE NEGLIGENCE; THE GOVERNMENT WAIVES ITS WARRANTY RIGHTS THEREBY); AND

(4) MAKE NO CHANGES IN, OR ALTERATIONS TO, CONTRACTOR'S SUPPLIES.

D. SUBJECT TO REMEDIES UNDER THE GENERAL PROVISIONS CLAUSE HEREOF ENTITLED "DISPUTES," THE CONTRACTOR SHALL TIMELY AND EFFICIENTLY REPLACE SUPPLIES DETERMINED BY THE CONTRACTING OFFICER TO HAVE FAILED, OR TO BE DEFECTIVE. IF, AFTER REPLACEMENT, THE CONTRACTOR IS OF THE OPINION THAT THE SUPPLIES ARE NOT DEFECTIVE, AND/OR ARE NOT THE CAUSE OF DAMAGE TO OEM EQUIPMENT, THE CONTRACTOR SHALL, WITHIN 30 DAYS OF SUCH REPLACEMENT, NOTIFY THE CONTRACTING OFFICER, IN WRITING, AS TO THE CONTRACTOR'S FINDINGS AND ANY CLAIM FOR AN EQUITABLE ADJUSTMENT. UPON RECEIPT OF SUCH A WRITTEN NOTICE, THE CONTRACTING OFFICER SHALL, WITHIN 30 DAYS, MAKE A DETERMINATION WHETHER TO NEGOTIATE THE CONTRACTOR'S CLAIM, OR TO DENY THE CLAIM. THE CONTRACTING OFFICER SHALL TIMELY NOTIFY THE CONTRACTOR OF HIS DETERMINATIONS. IF THE DETERMINATION IS A DENIAL OF THE CLAIM, OR IF AN EQUITABLE ADJUSTMENT CANNOT BE AGREED UPON, THE CONTRACTOR MAY SEEK RELIEF UNDER THE "DISPUTES" PROVISION.

GENERALLY, THE POLICIES, PROCEDURES AND GUIDELINES PERTAINING TO THE GOVERNMENT-WIDE MANAGEMENT OF AUTOMATED DATA SERVICES, INCLUDING PROCUREMENT AND CONTRACTING, ARE FOUND AT TITLE 41 OF THE CODE OF FEDERAL REGULATIONS (C.F.R.), CHAPTER 101, FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR) PART 101-32. SUBPART 101-32.4 SETS FORTH THE POLICY GOVERNING PROCUREMENT OF ALL AUTOMATIC DATA PROCESSING EQUIPMENT (ADPE). ADPE IS DEFINED AT FPMR 101-32.402-1 TO MEAN -

*** GENERAL PURPOSE COMMERCIALLY AVAILABLE, MASS PRODUCED AUTOMATIC DATA PROCESSING COMPONENTS AND THE EQUIPMENT SYSTEMS CREATED FROM THEM, REGARDLESS OF USE, SIZE, CAPACITY, OR PRICE, THAT ARE DESIGNED TO BE APPLIED TO THE SOLUTION OR PROCESSING OF A VARIETY OF PROBLEMS OR APPLICATIONS AND ARE NOT SPECIFICALLY DESIGNED (NOT CONFIGURED) FOR ANY SPECIFIC APPLICATION. ***

WE UNDERSTAND THAT DISK PACKS ARE CONSIDERED ADPE WITHIN THE MEANING OF THIS SECTION.

FPMR 101-32.403-1 PROVIDES AS PERTINENT:

*** AGENCIES MAY PROCURE ADPE WITHOUT PRIOR GSA APPROVAL PROVIDED:

(C) THE VALUE OF THE PROCUREMENT DOES NOT EXCEED $50,000. THIS SHALL EXCLUDE ATTENDANT MAINTENANCE COSTS IF PURCHASE IS THE METHOD OF ACQUISITION. ***

FROM THE FOREGOING, FPC WAS JUSTIFIED IN CONDUCTING ITS OWN PROCUREMENT FOR THE ADPE UNDER ITS OWN TERMS SINCE THE AWARD PRICE WAS $44,800. SEE FPMR 101-32.001.

IT IS CONTENDED THAT THIS WARRANTY VIOLATES PRIOR DECISIONS OF THE COMPTROLLER GENERAL AND THE COURTS. IN 51 COMP. GEN. 609 (1972) OUR OFFICE CONSIDERED THE MATTER OF THE EXTENT TO WHICH THE GENERAL SERVICES ADMINISTRATION (GSA), UNDER ITS AUTHORITY TO ISSUE GOVERNMENT WIDE GUIDELINES FOR ADPE PROCUREMENTS (SEE 40 U.S.C. SEC. 486(C)), COULD REQUIRE WARRANTIES. THERE WE STATED:

ALTHOUGH WE HAVE RESERVATIONS IN THE MATTER, IT MUST BE RECOGNIZED THAT THE POSITION TAKEN BY GSA REGARDING IMPLIED WARRANTIES AND CONSEQUENTIAL DAMAGES IS A MATTER OF PROCUREMENT POLICY. WE ARE AWARE OF NO STATUTORY OR REGULATORY PROVISION WHICH REQUIRES GSA TO DISCLAIM IMPLIED WARRANTIES AND EXCLUDE CONSEQUENTIAL DAMAGES, OR TO ASSUME SOME INTERMEDIATE POSITION ON THE EXTENT TO WHICH IT WOULD HOLD ITS CONTRACTORS LIABLE FOR CONSEQUENTIAL DAMAGES. AS A MATTER OF POLICY, THEREFORE, THE POSITION TAKEN BY GSA IS WITHIN ITS DISCRETION AND, DESPITE OUR RESERVATIONS, NOT APPROPRIATE FOR A RULING BY OUR OFFICE IN THE CONTEXT OF A BID PROTEST. WE ARE NOT AWARE OF ANY VALID LEGAL BASIS ON WHICH WE COULD PROPERLY INTERPOSE A LEGAL OBJECTION TO THE AWARD OF CONTRACTS UNDER THE INSTANT SOLICITATION. ***

IN VIEW OF THE RESTRICTION GSA PLACES UPON ITSELF TO INTERPOSE ITS VIEWS IN THE FORMULATION OF ITS REQUIREMENTS BY A PROCURING AGENCY (FPMR 101- 32.001), AND THE DELEGATION OF AUTHORITY TO AGENCIES TO PROCURE ADPE WITHOUT PRIOR GSA APPROVAL (FPMR 101-32.403-1 (C)), IT IS OUR OPINION THAT THE DISCRETION TO FORMULATE ITS OWN POLICY WITH REGARD TO TYPE AND EXTENT OF WARRANTY IS ALSO DELEGATED TO THE PROCURING AGENCIES. THEREFORE, WE VIEW FPC'S ACTIONS AS WITHIN ITS DISCRETIONARY AUTHORITY AND CONSISTENT WITH OUR VIEWS ON THE MATTER.

BLAND HAS NOT CITED, NOR ARE WE AWARE OF ANY COURT DECISIONS TO THE CONTRARY. IN THIS REGARD, WE ARE AWARE OF NO STANDARD WARRANTY PROVISION IN EITHER THE FPMR OR FPR THAT IS EXPRESSLY APPLICABLE TO ADPE PROCUREMENTS. IT FOLLOWS THAT SINCE THERE IS NO STANDARD WARRANTY PROVISION, ANY PROVISION USED WILL OF NECESSITY BE A NONSTANDARD WARRANTY PROVISION WHICH IS WITHIN FPC'S DISCRETION.

BLAND'S NEXT SUBSTANTIVE ARGUMENT IS THAT THE WARRANTY IS UNREASONABLE IN GENERAL BUSINESS PRACTICE. WE NOTE THAT OF THE SIX BIDDERS THAT SUBMITTED PRICES FOR ITEM 001, ONLY ONE EXCEPTED TO THE WARRANTY PROVISION. WHILE BLAND CHOSE NOT TO BID, WE ARE NOT PERSUADED, IN LIGHT OF THE COMPETITION PRESENT HERE, THAT THE WARRANTY IS UNREASONABLE.

FINALLY, BLAND NOTES THAT THE DECEMBER 20, 1974, REPORT FROM FPC, SUBMITTED BY THE CONTRACTING OFFICER, APPEARS NOT TO CONFORM WITH SECTION 20.5 OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS (4 C.F.R. PART 20 (1974)). THIS SECTION PROVIDES THAT:

WITHIN 20 DAYS AFTER RECEIPT BY THE AGENCY OF THE COMPLETE STATEMENT OF PROTEST, IT SHALL SUBMIT TO THE OFFICE OF THE GENERAL COUNSEL, GENERAL ACCOUNTING OFFICE A REPORT ON THE PROTEST OR A WRITTEN STATEMENT BY AN AGENCY OFFICIAL AT AN APPROPRIATE LEVEL (FN1) ABOVE THAT OF THE CONTRACTING OFFICER SETTING FORTH THE REASONS FOR THE DELAY AND THE EXPECTED DATE OF SUBMISSION OF THE REPORT.

BLAND INTERPRETS THIS SECTION, REQUIRING THAT THE REPORT BY THE AGENCY BE SUBMITTED BY AN AGENCY OFFICIAL AT AN APPROPRIATE LEVEL ABOVE THAT OF CONTRACTING OFFICER, TO MEAN THAT WE SHOULD NOT CONSIDER THE REPORT. DO NOT ACCORD A SIMILAR INTERPRETATION. THIS SECTION ONLY REQUIRES THAT WHEN THE DELAY IN SUBMITTING A REPORT ON A PROTEST WILL EXCEED THE 20-DAY TIME FRAME, THE WRITTEN STATEMENT SETTING FORTH THE REASONS FOR DELAY AND EXPECTED DATE OF SUBMISSION OF THE REPORT SHOULD BE MADE AT AN APPROPRIATE LEVEL ABOVE THE CONTRACTING OFFICER. THIS INSTRUCTION DOES NOT ATTACH TO THE ACTUAL REPORT AS WELL. EVEN IF IT DID, OUR OFFICE RECOGNIZES THE LIMITATION ON OUR AUTHORITY TO IMPOSE TIME LIMITS ON CONTRACTING AGENCIES. SEE PREAMBLE TO 4 C.F.R. PART 20. A FAILURE BY THE AGENCY TO MEET THE GUIDELINE STATED IN SECTION 20.5 WILL NOT RESULT IN SANCTIONS BEING IMPOSED ON THE AGENCY IN THE FORM BLAND REQUESTS. MATTER OF JAMES J. MADDEN, INC., B-181580, NOVEMBER 26, 1974; B-177557, JULY 23, 1973.

THE PROTEST IS DENIED.

FN1 TO BE DETERMINED BY AGREEMENT BETWEEN THE AGENCY AND THE COMPTROLLER GENERAL ON AN AGENCY-BY-AGENCY BASIS.