Matter of: The Purdy Corporation File: B-255505 Date: March 4, 1994 94-1 CPD Para. 174
B-255505: Mar 4, 1994
PROCUREMENT Contractor Qualification Approved sources Alternate sources Approval Protest by an applicant for source approval against award of a sole-source contract requiring source approval is denied where. Protester could not have obtained approval in time to meet delivery schedule. PROCUREMENT Small Purchase Method Purchases Propriety Agency is not required to limit quantity of items purchased from an approved source on a sole-source basis to a level necessary to satisfy its needs awaiting protester's qualification as an approved source where record does not establish when. The protester will become an approved source. The item is classified as "flight critical" indicating that the agency may only purchase the plates from an approved source.
Matter of: The Purdy Corporation File: B-255505 Date: March 4, 1994 94-1 CPD Para. 174
PROCUREMENT Contractor Qualification Approved sources Alternate sources Approval Protest by an applicant for source approval against award of a sole-source contract requiring source approval is denied where, based on protester's calculations, protester could not have obtained approval in time to meet delivery schedule. PROCUREMENT Small Purchase Method Purchases Propriety Agency is not required to limit quantity of items purchased from an approved source on a sole-source basis to a level necessary to satisfy its needs awaiting protester's qualification as an approved source where record does not establish when, if ever, the protester will become an approved source.
We deny the protest.
This acquisition involves spare jet engine positioning plates which align and lock 94 stator turbine vanes in the engines of A-6/EA-6B aircraft. The item is classified as "flight critical" indicating that the agency may only purchase the plates from an approved source. At all times relevant to this protest, only PW had obtained source approval.
ASO publishes a document twice yearly known as a Competition Deficit Listing (CDL) which informs prospective offerors of critical parts which may be acquired in the future. Prior to the issuance of the RFQ, CDLs were issued in July 1992 and March 1993 announcing a prospective purchase in Fiscal Year 1994 of the engine positioning plates. Each CDL was preceded by a Commerce Business Daily (CBD) announcement informing prospective offerors how to obtain the CDL and containing the following warning:
"If you desire to become an approved source for a critical part, you should anticipate that source approval may take from 3 to 6 months. Therefore, consideration should be given to submitting a source approval request in response to a listing of such critical part in the [CDL] rather than waiting until a notice of an intention to issue a[n] . . . order or a solicitation is published in the CBD . . . ."
The instant requirement for 232 positioning plates (later modified to 389 plates) was synopsized in the CBD on May 11, 1993; prospective offerors were advised that an RFQ for the items, to close on or about June 23, would soon be issued. They were further advised: "if evaluation of a source approval request submitted hereunder cannot be processed in time and/or approval requirements preclude the ability to obtain subject items in time to meet the government's requirements, award of the subject requirement may continue based on Fleet support needs."
The RFQ, calling for delivery of all of the positioning plates in 370 days, was issued on May 26. On the same day, ASO received a source approval request from Purdy. Purdy and two other firms without source approval responded by the June 25 closing date. In response to a June 24 request by the contracting officer concerning the status of Purdy's source approval request, ASO's technical representatives advised him on July 2 that it would take a minimum of 270 days to complete a review and make a determination of approval or nonapproval. According to the agency, this would have placed the approval/disapproval date (assuming no deficiencies were found in the application package) in April 1994--a time when the agency's stock position of the flight critical items would have fallen to zero. Accordingly, a sole-source justification to negotiate with PW, the only approved source, was executed and a contract for 389 positioning plates, to be delivered between March 4 and July 2, 1994, was awarded to PW at a price higher than that quoted by Purdy, which had submitted the low-priced quotation in response to the RFQ.
Purdy protested the award in October 1993, following which the agency began to process Purdy's May 26 source approval request. In November 1993, ASO's technical representatives calculated estimated leadtimes for Purdy to obtain source approval, produce first article samples, complete first article testing, and produce deliverable items to be 720 days, which, according to the agency, would mean that Purdy (assuming no approval and first article problems) would not be able to begin deliveries until January 1996. The agency further calculated that the earliest delivery date Purdy could meet if its May 26 approval request had been immediately prioritized would be in November or December 1994.
Purdy alleges that the agency acted unreasonably in failing to promptly process its May 26 source approval request and in relying on a 270-day processing time to justify its sole-source acquisition in lieu of the 180-day time set forth in internal agency directives and agreed to by ASO in the settlement of the 1987 lawsuit. Purdy also objects to the agency's calculation of the 720-day time frame. Purdy calculates that the actual period necessary for qualification and production measured from May 26, 1993, would result in its being able to begin deliveries in May 1994 with production complete by January 1995.
Implicit in the requirement that an agency afford a potential offeror a reasonable opportunity to demonstrate that its product can meet source approval standards prior to award is an obligation to conduct its review of the source approval request in a reasonably prompt manner. ABA Indus., Inc., B-250186, Jan. 13, 1993, 93-1 CPD Para. 38. An agency is not, however, required to delay a procurement in order to provide a potential offeror with an opportunity to become approved. Id. Prospective offerors should generally seek qualification in advance and independent of any specific acquisition, and if they contribute to their failure to obtain source approval prior to award, we will deny their protests. Id.
We think Purdy contributed to its failure to obtain source approval here. The protester never pursued the earlier rejections of its 1985 source approval request. Moreover, Purdy was afforded opportunities to submit a request in July 1992 and March 1993 by the CDLs, which listed the positioning plates that ASO expected to purchase in Fiscal Year 1994 and invited prospective offerors to submit a timely source approval package. Purdy did not respond to those invitations. Instead, Purdy waited until after the procurement was synopsized to submit such an application.
In this regard, we note that, even if the agency had immediately begun processing Purdy's May 1993 request, according to Purdy's own calculations, Purdy could not have started delivery before May 1994, with deliveries concluding in January 1995. However, as is undisputed on the record, the agency's stock of the flight critical items would reach zero before May 1994. Thus, by the protester's own calculations, Purdy clearly would not have met the agency's needs for delivery prior to May.
Purdy also alleges that, even if the agency were justified in negotiating a sole-source contract with PW, the acquisition had to be limited to the number of plates actually required prior to the time that Purdy would qualify as an approved source. Purdy submits that the 379 plates pur- chased from PW far exceeds the level actually needed by ASO until the protester qualifies.
Where the record establishes that competition will exist in a reasonable and certain amount of time, an agency is required to limit the quantities it acquires on a noncompetitive basis to those needed to satisfy its requirements before the anticipated competitive environment develops. Ricoh Corp., 68 Comp.Gen. 531 (1989), 89-2 CPD Para. 3.
The circumstances of the Ricoh case are not present here. In Ricoh, the record established that the only firm eligible for award would be joined by other firms in less than 10 months. Here, however, the record does not establish when, if ever, Purdy will qualify as an approved source. While Purdy points to a 180-day time frame as the outside limit for its qualification, that time frame merely delineates when, assuming there are no problems in processing the protester's source approval application, a decision to approve or disapprove the application will be made. It does not automatically represent the time by which Purdy will have become qualified. On this record, there is no basis for determining when or whether Purdy will actually qualify as an approved source.
Under these circumstances, the agency had no basis for anticipating that Purdy would be qualified to compete with PW for the positioning plates at any given time and was therefore not required to limit its noncompetitive acquisition as Purdy suggests. Cf. Ricoh Corp., supra.
The protest is denied.
1. Purdy submitted an earlier source approval request for the item in question in 1985. That request was, among other requests, the subject of a 1987 lawsuit filed by the firm which was later settled. In that settlement, ASO agreed to process source approval requests within 180 days and report the status of such requests on a quarterly basis. To the extent that Purdy now argues that the agency violated the agreement with respect to its earlier application, we will not consider the allegation because, as the record shows, beginning in December 1988 and continuing quarterly since that time, Purdy has been advised that its earlier application had been disapproved and the protester never pursued the disapproval with ASO. Therefore, our analysis is limited to the application for source approval submitted in conjunction with this procurement since, as the agency points out, in May 1993, Purdy apparently assumed that it was required to submit a new application in light of the rejection of its earlier applications.
2. Purdy's predictions are not reliable because they are based on incorrectly adding a 180-day approval period and a 242-day production time following approval (from Purdy's offer) to arrive at a complete time to first delivery of 322 days. The correct total is 422 days. Thus, under Purdy's own theory, the protester could not make initial deliveries until August 1994 at the earliest if first article testing were waived. Also, although Purdy assumes that first article testing would be waived, this is unlikely given the flight critical nature of these items. See Arrow Gear Co., 68 Comp.Gen. 612 (1989), 89-2 CPD Para. 135.