B-169838, B-169839, JUL. 28, 1970

B-169838, B-169839, JUL. 28, 1970

BID PROTEST -- ADVERTISED V NEGOTIATED PROCUREMENT "BUY-IN" CLAUSE DECISION DENYING PROTEST OF INTERNATIONAL TELEPHONE AND TELEGRAPH CO. AGAINST ADVERTISED MULTI-YEAR PROCUREMENT OF IMAGE INTENSIFIER ASSEMBLIES BY ARMY ELECTRONICS COMMAND. IN VIEW OF AVAILABILITY OF COMPLETE SPECIFICATIONS AND FACT THAT FIVE BIDDERS WERE ABLE TO RESPOND, THE USE OF FORMAL ADVERTISING WAS BOTH FEASIBLE AND PRACTICAL. LIKEWISE THE USE OF MULTI-YEAR REQUIREMENTS DID NOT DECREASE COMPETITION. A CONTRACT NOTE WHICH PROVIDED THAT THE GOVERNMENT WOULD NOT BE RESPONSIBLE FOR DAMAGES OR EXTRA COSTS, OR DELAY RESULTING FROM INADEQUATE CHECK OF THE DRAWINGS MUST BE INTERPRETED AS PLACING A LIMIT ON PERIOD AFTER AWARD DURING WHICH BIDDERS ARE TO REVIEW THE DRAWINGS FOR DEFICIENCIES THAT MIGHT THERE AFTER PRECLUDE COMPLIANCE AND SINCE ALL BIDDERS WERE FREE TO MAKE ALLOWANCE IN THEIR BIDS FOR ANY COSTS RELATED TO SUCH REVIEW, BIDDERS HAD A COMMON BASIS FOR BIDDING. SINCE THERE IS NO INDICATION THAT ANY BIDDER "BOUGHT IN" BECAUSE OF THE NOTE AND THE PRICE RANGE OF ALL EXPERIENCED BIDDERS WAS CLOSE THE NOTE IS NOT SUBJECT TO OBJECTION.

TO VOM BAUR, COBURN, SIMMONS & TURTLE:

WE REFER TO YOUR LETTERS DATED MAY 18, 1970, AS SUPPLEMENTED BY SUBSEQUENT CORRESPONDENCE, PROTESTING ON BEHALF OF INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION, ELECTRON TUBE DIVISION (ITT), AGAINST AWARD TO ANY OTHER BIDDER OF CONTRACTS FOR THE FURNISHING OF 25MM AND 40MM IMAGE INTENSIFIER ASSEMBLIES. THE PROCUREMENT ACTIVITY IS THE UNITED STATES ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY; THE SOLICITATIONS ARE INVITATIONS FOR BIDS (IFB) DAAB07-70-B 0362, DATED APRIL 20, 1970, AND DAAB07-70-B-0363, DATED APRIL 22, 1970; AND THE PERIOD FOR SUBMISSION OF BIDS WAS APPROXIMATELY THREE WEEKS.

EACH IFB SOLICITED BIDS FOR A SINGLE-YEAR PROGRAM REQUIREMENT AND FOR MULTI-YEAR REQUIREMENTS FOR A TWO-YEAR PROGRAM. IFB B-0362 COVERED 25MM ASSEMBLIES, AND IFB B-0363 COVERED 40MM ASSEMBLIES, BOTH OF WHICH ARE TO BE PRODUCED IN ACCORDANCE WITH GOVERNMENT SPECIFICATIONS AND DRAWINGS CITED IN THE PURCHASE DESCRIPTIONS AND IN CONTRACT NOTE 18. ALL OF THE DRAWINGS AND CERTAIN OF THE SPECIFICATIONS WERE INCLUDED IN THE BID PACKAGE.

AS TO THE SPECIFICATIONS WHICH WERE NOT ATTACHED TO THE IFB, PARAGRAPH 32 OF THE BIDDING INSTRUCTIONS INFORMED BIDDERS THAT SPECIFICATIONS OTHER THAN COMMERCIAL SHOULD BE REQUESTED FROM THE UNITED STATES NAVAL PUBLICATION AND FORMS CENTER, PHILADELPHIA, PENNSYLVANIA. IN ADDITION, PARAGRAPH 34 OF THE BIDDING INSTRUCTIONS STATED THAT ALL TECHNICAL INFORMATION CALLS SHOULD BE MADE TO TWO DESIGNATED ARMY REPRESENTATIVES AT THE NIGHT VISION AND ILLUMINATION BRANCH, FORT BELVOIR, THE SAME ACTIVITY LISTED IN PARAGRAPH 35 AS THE POINT TO WHICH DRAWINGS WERE TO BE RETURNED BY FIRMS NOT SUBMITTING BIDS. PARAGRAPH 34 FURTHER STATED THAT CONTRACTUAL ADVICE COULD BE OBTAINED DURING THE SOLICITATION PERIOD FROM THE CONTRACT SPECIALIST AND THE CONTRACTING OFFICER AT FORT MONMOUTH. THE CONTRACT SPECIALIST'S NAME AND TELEPHONE NUMBER WERE ALSO SHOWN ON THE FACE OF THE IFB'S AS THE SOURCE OF INFORMATION ON THE PROCUREMENTS.

FIVE BIDS WERE RECEIVED ON EACH PROCUREMENT FROM THE 50 OR MORE SOURCES SOLICITED BY THE GOVERNMENT. FOUR OF SUCH SOURCES, OF WHOM ITT WAS ONE, BID ON BOTH PROCUREMENTS. TWO OTHER SOURCES EACH BID ON ONLY ONE OF THE PROCUREMENTS.

BASED ON TOTAL PRICE FOR MULTI-YEAR QUANTITIES, THE LOWEST BIDS WERE $3,299,793.84 BY VARO, INC. (VARO) UNDER IFB B-0362 AND $1,053,273.50 BY RCA CORPORATION, ELECTRONIC COMPONENTS DIVISION (RCA), UNDER IFB B 0363. ITT WAS SECOND UNDER IFB B-0362 WITH A PRICE OF $4,183,873.92 AND THIRD UNDER IFB B-0363 WITH A PRICE OF $1,132,635.

THE SUBSTANCE OF YOUR PROTEST IS (1) THAT NEGOTIATION PROCEDURES, WHICH THE ARMY ORIGINALLY PLANNED TO EMPLOY, SHOULD HAVE BEEN USED IN LIEU OF FORMAL ADVERTISING DUE TO THE SOPHISTICATED NATURE OF THE ITEMS AND, IN YOUR VIEW, THE ABSENCE OF ADEQUATE SPECIFICATIONS FOR THE PURPOSE OF FORMAL ADVERTISING; (2) THAT MULTI-YEAR PROCUREMENT IS IMPROPER BECAUSE COMPETITION IS DECREASED RATHER THAN INCREASED AS CONTEMPLATED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-322.1(B) AND THE PROCUREMENTS FAIL TO MEET THE REQUIREMENT OF ASPR 1 322.2(A)(III) FOR A KNOWN REQUIREMENT; (3) THAT CONTRACT NOTE 21 IN THE IFB, WHICH CALLS FOR REVIEW BY THE SUCCESSFUL BIDDERS OF A FULL SIZE SET OF DRAWINGS TO BE FURNISHED BY THE ARMY WITHIN 15 DAYS AFTER AWARD, BEFORE ORDERING MAJOR MATERIAL AND MAKING PRODUCTION COMMITMENTS, FOR DETECTION OF DEFECTS AND DEVIATIONS FROM THE SPECIFICATIONS AND WHICH AUTHORIZES RELATED CHANGES AND EQUITABLE ADJUSTMENTS UPON APPROVAL BY THE GOVERNMENT, RENDERS THE IFB'S FATALLY DEFECTIVE FOR VARIOUS REASONS DISCUSSED BELOW AND ALSO SUPPORTS YOUR POSITION THAT THE GOVERNMENT DOES NOT CONSIDER ITS OWN SPECIFICATIONS AND DRAWINGS TO BE ADEQUATE; (4) THAT VARIOUS GOVERNMENT DRAWINGS CITED IN THE IFB WERE NOT ACCESSIBLE TO BIDDERS; AND (5) THAT THE CONTRACTING OFFICER HAS TOO MUCH DISCRETION WITH REGARD TO WAIVER OF FIRST ARTICLE APPROVAL REQUIREMENTS.

ON THE ISSUE OF NEGOTIATION VERSUS ADVERTISING, YOU STATE THAT THE ASSEMBLIES HAVE BEEN CONSTANTLY UPGRADED DURING THE SIX YEARS THEY HAVE BEEN IN PRODUCTION; THAT EXCEPT FOR ONE SMALL ADVERTISED PROCUREMENT WHICH WAS AWARDED TO VARO, PROCUREMENTS HAVE BEEN NEGOTIATED; THAT ADVERTISING WILL ELIMINATE COMPETITION IN A SHORT TIME SINCE NO UNSUCCESSFUL BIDDER COULD BE EXPECTED TO MAINTAIN PRODUCTION CAPABILITY FOR OTHER THAN A SHORT PERIOD; AND THAT THE SUCCESSFUL BIDDERS WILL HAVE SUCH AN ADVANTAGE ON THE NEXT PROCUREMENT AS TO MAKE ANY PRICE COMPETITION ILLUSORY.

THE ARMY REPORTS THAT WHEN NOTICE OF THE GOVERNMENT'S INTENT TO NEGOTIATE THE PROCUREMENTS WAS PUBLISHED IN THE JANUARY 26, 1970, ISSUE OF THE COMMERCE BUSINESS DAILY, THE REQUIREMENTS WERE STATED TO INCLUDE AN AUTOMATIC BRIGHTNESS CONTROL (ABC) FEATURE IN EACH ASSEMBLY. (THE ABC, ALTHOUGH DEVELOPED BY ITT, VARO AND RCA, HAS NOT BEEN PROCURED TO DATE IN QUANTITY, EITHER ALONE OR INSTALLED IN THE ASSEMBLIES.)

DUE TO PROBLEMS WITH THE ABC, THE ARMY STATES, WHICH PRECLUDED DRAFTING OF AN ADEQUATE DESCRIPTION FOR COMPETITIVE PURPOSES AND ESTABLISHMENT OF CRITERIA FOR TESTING, THE ABC FEATURE WAS DELETED FROM THE PROCUREMENT REQUIREMENTS WITH THE RESULT THAT THE AVAILABLE DATA, CONSISTING OF SPECIFICATIONS AND DRAWINGS, WERE CONSIDERED BY THE ARMY TO BE ADEQUATE FOR ADVERTISED PROCUREMENT OF ITS NEEDS. ACCORDINGLY, THE ARMY DETERMINED THAT ADVERTISING WAS BOTH FEASIBLE AND PRACTICABLE AND THERFORE REQUIRED UNDER ASPR 2-102.1(A).

THE GOVERNING PROCUREMENT STATUTE, 10 U.S.C. 2304(A), PROVIDES FOR THE USE OF FORMAL ADVERTISING FOR THE PROCUREMENT OF PROPERTY OR SERVICES WHEN FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES. FURTHER, THE EXCEPTIONS LISTED IN THE STATUTE WHEREBY NEGOTIATION MAY BE EMPLOYED ARE TO BE INVOKED ONLY IF THE USE OF FORMAL ADVERTISING IS NOT FEASIBLE AND PRACTICABLE AND UNDER CERTAIN CONDITIONS. ASPR 2-102.1(A) IS CONSISTENT WITH THE STATUTE.

IN VIEW OF THE AVAILABILITY OF COMPLETE SPECIFICATIONS FOR THE ASSEMBLIES WITHOUT ABC AND OF THE EXISTENCE OF COMPETITION, AS EVIDENCED BY THE NUMBER OF PAST PRODUCERS AND INTERESTED FIRMS, WE CONCUR WITH THE POSITION OF THE ARMY THAT ADVERTISING WAS BOTH FEASIBLE AND PRACTICABLE AND THEREFORE REQUIRED BY THE PROCUREMENT STATUTE AND ASPR 2-102.1(A).

AS TO YOUR CHARGE THAT THE PROPOSED ADVERTISED MULTI-YEAR AWARDS WILL DECREASE COMPETITION, THE RECORD SHOWS THAT IN ADDITION TO THE EARLIER ADVERTISED AWARD WHICH VARO RECEIVED (CONTRACT DA28-043-AMC-02400 (E)) FOR 40MM ASSEMBLIES, A NEGOTIATED TWO-YEAR, MULTI-YEAR CONTRACT FOR 25MM ASSEMBLIES WAS PREVIOUSLY AWARDED TO ITT (CONTRACT DAAB-07-68-C 0115). LIGHT OF THE FACT, THEREFORE, THAT THE CURRENT IFB'S EACH RESULTED IN THE RECEIPT OF FIVE BIDS, IT WOULD APPEAR THAT NEITHER THE USE OF FORMAL ADVERTISING NOR THE USE OF MULTI-YEAR PROCUREMENT PROCEDURES HAS SERVED TO DIMINISH COMPETITION FOR THE PROCUREMENT ITEMS. FURTHER, WE ARE UNABLE TO CONCLUDE FROM THE EVIDENCE OF RECORD THAT ANY DIFFERENT RESULT SHOULD BE EXPECTED BECAUSE OF THE USE OF ADVERTISED MULTI-YEAR PROCEDURES FOR THE TWO CURRENT PROCUREMENTS.

CONCERNING YOUR OTHER OBJECTIONS TO THE USE OF MULTI-YEAR CONTRACTS, THE ARMY CLAIMS THAT THE IFB'S GENERATED COMPETITION AND REPORTS THAT THE PRICES BID ARE THE "BEST PRICES EVER"; ACCORDINGLY, THE ARMY CONTENDS, BOTH THE REALISTIC COMPETITION AND LOWER PRICES CONTEMPLATED BY ASPR 1- 322.1(B)(2) AND (3) HAVE BEEN OBTAINED. ON THE BASIS OF THE RECORD BEFORE US, WE CONCUR WITH THE ARMY'S VIEWS IN THIS REGARD.

TURNING NOW TO YOUR COMPLAINT THAT THE MULTI-YEAR PROCUREMENT REGULATIONS HAVE BEEN VIOLATED BECAUSE THE ARMY HAS NOT SOLICITED A "KNOWN REQUIREMENT," AS PROVIDED IN ASPR 1-322.2(A)(III), YOU BASE SUCH COMPLAINT ON YOUR BELIEF THAT THE ARMY'S NEED IS NOT FOR THE ITEMS SOLICITED UNDER THE IFB'S BUT FOR ASSEMBLIES EQUIPPED WITH THE ABC FEATURE, AS DESCRIBED IN THE NEGOTIATED PROCUREMENT SYNOPSIS PUBLISHED IN JANUARY 1970 IN THE COMMERCE BUSINESS DAILY. FURTHER, YOU ASSERT THAT THE ARMY INTENDS TO RETROFIT THE ASSEMBLIES NOW BEING PROCURED WITH ABC, WHEREAS IT WOULD BE LESS EXPENSIVE FOR THE ARMY TO PROCURE THE ASSEMBLIES FROM ITT WITH THE ABC ALREADY INCORPORATED.

THE DEPARTMENT OF THE ARMY HAS INFORMALLY ADVISED OUR OFFICE THAT WHILE IT CONSIDERS ABC A DESIRABLE FEATURE, A NEED EXISTS FOR THE ASSEMBLIES AND THE DEPARTMENT MUST THEREFORE PROCURE THE ITEMS WITHOUT ABC UNTIL SUCH TIME AS A SPECIFICATION CAN BE PREPARED FOR COMPETITIVE PROCUREMENT OF THE ITEMS EQUIPPED WITH ABC. IN THIS CONNECTION, THE DEPARTMENT ADVISES THAT IN APPROXIMATELY ONE MONTH TESTS ARE TO BE COMMENCED ON CERTAIN ASSEMBLIES IN WHICH ABC HAS BEEN INCORPORATED, AND THE PERIOD OF TESTING IS EXPECTED TO REQUIRE FROM THREE TO SIX MONTHS. THE DEPARTMENT FURTHER ADVISES THAT IN THE EVENT THE TEST RESULTS ARE FAVORABLE, ACTION WILL BE TAKEN PROMPTLY TO DEVELOP A SPECIFICATION FOR THE ABC-FITTED ASSEMBLIES. THE DEPARTMENT ESTIMATES THAT MARCH 1971 IS THE EARLIEST DATE BY WHICH THE SPECIFICATION COULD BE COMPLETED AND THAT ALLOWING FOR PREPARATION OF A BID PACKAGE, BIDDING, EVALUATION AND AWARD, IT WOULD BE AT LEAST ONE YEAR FROM NOW, OR JULY 1971, BEFORE AWARD COULD BE MADE, AND THE CONTRACTOR WOULD REQUIRE FROM 12 TO 18 MONTHS PRODUCTION LEAD TIME.

WITH RESPECT TO RETROFITTING OF ASSEMBLIES IN STOCK WHICH ARE NOT EQUIPPED WITH ABC, THE DEPARTMENT STATES THAT SUCH ACTION IS PLANNED ONLY IF THE RESULTS OF THE FORTHCOMING TESTS OF FITTED ASSEMBLIES ARE FAVORABLE AND AFTER COMPETITIVE PROCUREMENT OF ABC KITS. IN THE CIRCUMSTANCES, WE BELIEVE THAT THE ASSEMBLIES WITHOUT ABC WHICH ARE TO BE PROCURED UNDER THE TWO IFB'S MAY PROPERLY BE REGARDED AS THE GOVERNMENT'S KNOWN REQUIREMENT FOR THE TWO-YEAR PERIOD COVERED BY THE MULTI-YEAR PROGRAM, AND WE THEREFORE ARE UNABLE TO CONCUR WITH YOUR VIEW THAT THERE HAS BEEN ANY VIOLATION OF THE MULTI-YEAR PROCUREMENT PROCEDURES PRESCRIBED BY ASPR 1- 322.

AS TO YOUR OBJECTIONS TO CONTRACT NOTE 21, PARAGRAPH B THEREOF STATES THAT REVIEW OF THE ENGINEERING DRAWINGS IS FOR THE PURPOSE "OF DETERMINING, IDENTIFYING AND CORRECTING THE EXISTENCE OF ANY OMISSION, DISCREPANCY, ERROR OR DEFICIENCY IN DESIGN OR TECHNICAL DATA WHICH MAY PRECLUDE PRACTICAL MANUFACTURE OF ASSEMBLY, OR WHICH MAY PRECLUDE THE ATTAINMENT OF REQUIRED PERFORMANCE, AS SET FORTH IN THE SPECIFICATIONS." PARAGRAPH I OF NOTE 21, AS YOU HAVE NOTED, PROVIDES THAT THE GOVERNMENT WILL NOT BE RESPONSIBLE FOR DAMAGES, OR EXTRA COSTS, OR DELAY IN DELIVERY RESULTING FROM AN INADEQUATE CHECK OF THE DRAWINGS BY THE CONTRACTOR AND THAT ANY DRAWINGS HAVING ERRORS WHICH ARE NOT IDENTIFIED BY THE CONTRACTOR UNDER THE REQUIREMENTS OF PARAGRAPH G MUST BE CORRECTED BY THE CONTRACTOR AT HIS OWN EXPENSE. THESE PROVISIONS, IT IS NOTED, ARE IN ADDITION TO THE PROVISIONS OF ARTICLES 2 AND 3, STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS, WHICH ARE INCLUDED IN THE IFB, AND WHICH PLACE UPON PROSPECTIVE BIDDERS THE BURDEN OF EXAMINING DRAWINGS AND OTHER DOCUMENTS BEFORE BID PREPARATION AND SPECIFICALLY REQUIRE THAT REQUESTS FOR INTERPRETATION OF THE BID PAPERS, INCLUDING DRAWINGS, BE SUBMITTED IN WRITING IN SUFFICIENT TIME TO PERMIT REPLY BY THE GOVERNMENT BEFORE BID SUBMISSION.

YOUR OBJECTIONS TO THE USE OF CONTRACT NOTE 21, WHICH NO BIDDER QUESTIONED BEFORE BID OPENING AND WHICH ONLY ITT QUESTIONED AFTER BID OPENING, ARE TO THE EFFECT (1) THAT IT COULD BE READ AS EVIDENCING DOUBT ON THE PART OF THE GOVERNMENT AS TO THE CLARITY AND COMPLETENESS OF ITS OWN DRAWINGS; (2) THAT IT PERMITS BIDDERS REASONABLY TO HAVE WIDELY DIFFERENT ASSUMPTIONS ABOUT THE QUALITY OF THE DRAWINGS SUCH AS THE ASSUMPTION THAT A "BUY-IN" PRICE COULD BE RAISED SUBSTANTIALLY AFTER AWARD THROUGH EQUITABLE ADJUSTMENTS UNDER THE CLAUSE; (3) THAT IT PREVENTS PROPER BID EVALUATION SINCE A BIDDER MIGHT BID LOW WITH INTENT TO SEEK LARGE INCREASES AND THEREFORE MIGHT WELL BE THE HIGH BIDDER IN TERMS OF TRUE COST TO THE GOVERNMENT; (4) THAT IT MAKES FORMAL ADVERTISING ONLY THE FIRST STAGE IN NEGOTIATION OF A CONTRACT MEETING THE GOVERNMENT'S NEEDS IN VIEW OF THE POST-AWARD REVIEW AND EQUITABLE ADJUSTMENTS SO AUTHORIZED; AND (5) THAT IT DISCRIMINATES AGAINST FIRMS WITHOUT PRIOR PRODUCTION EXPERIENCE TO THE END THAT THEY WILL BE DETERRED FROM BIDDING IN THE BELIEF THAT THEY WILL BE UNABLE TO "CATCH ALL DEFECTS."

IN TAKING EXCEPTION TO YOUR CONTENTIONS REGARDING CONTRACT NOTE 21, THE ARMY STATES THAT USE OF THE NOTE DOES NOT CONSTITUTE AN ADMISSION ON THE PART OF THE GOVERNMENT THAT THE DRAWINGS ARE NOT CLEAR. RATHER, THE ARMY REFERS TO THE LANGUAGE OF PARAGRAPH B OF THE NOTE RESPECTING THE PURPOSE OF THE REVIEW AND URGES THAT IT IS IN ACCORD WITH SOUND PROCUREMENT PRACTICES SINCE REVIEW OF THE DRAWINGS BEFORE MATERIAL IS PURCHASED AND PRODUCTION COMMITMENTS ARE MADE WILL ENABLE THE CONTRACTOR TO DETECT AND REMEDY ANY OMISSIONS, ETC., AT THE COMMENCEMENT OF WORK RATHER THAN DURING PERFORMANCE OR AFTER MAKING COMMITMENTS WHEN CHANGES IN THE TECHNICAL REQUIREMENTS BECOME COSTLY AND DELAY DELIVERY. FURTHER, THE ARMY URGES THAT THE NOTE IS RECOGNITION THAT THERE IS RARELY A PERFECT SET OF DRAWINGS AND POINTS OUT THAT WHILE WITHOUT THE NOTE A BIDDER MIGHT AT ITS OWN ELECTION MAKE SUCH A REVIEW, THE NOTE WAS INTENDED TO MAKE THE REVIEW A REQUIREMENT. THE ARMY FURTHER URGES THAT THE CHANGES AUTHORIZED UNDER CONTRACT NOTE 21 ARE NO MORE THAN THE GOVERNMENT WOULD EFFECT UNDER THE CHANGES CLAUSE IN EACH IFB ABSENT SUCH A NOTE. IN ADDITION, THE ARMY STATES, IT DOES NOT ANTICIPATE ANY MAJOR CHANGES INCIDENT TO THE REQUIRED REVIEW.

AS TO THE EFFECT OF THE NOTE ON THE BIDDING, THE ARMY CITES 48 COMP. GEN. 750 (1969) AS SUPPORT FOR THE PREMISE THAT BIDDERS ARE NOT PRECLUDED FROM BIDDING ON A COMMON BASIS; THAT THERE IS NO MORE DISADVANTAGE TO A NEW BIDDER RESULTING FROM THE NOTE THAN THERE WOULD BE IF RELIANCE WERE PLACED ON THE CONTRACT CHANGES CLAUSE ALONE; THAT "BUYING-IN" IS NOT ENCOURAGED BY THE NOTE SINCE USE OF THE MULTI-YEAR PROCEDURES WAS EMPLOYED TO AVOID SUCH PRACTICE; AND THAT THE NOTE DOES NOT LEAD TO A NEGOTIATED PROCUREMENT SINCE ABSENT THE NOTE THE CHANGES CLAUSE WOULD ACCOMPLISH THE SAME END. WITH SPECIFIC REFERENCE TO YOUR CLAIM THAT THE NOTE WOULD DETER NEW BIDDERS FROM COMPETING BECAUSE IT MAY BE CONSIDERED AS A WARNING OF DEFECTS IN THE DRAWINGS, THE ARMY ASSERTS THAT AN INEXPERIENCED BIDDER WOULD MOST LIKELY MAKE A CAREFUL REVIEW OF THE DRAWINGS AND SPECIFICATIONS IN PREPARING A BID AND THAT THE NOTE MAKES IT POSSIBLE FOR THE CONTRACTOR TO RECOVER THE EXPENSE OF SUCH REVIEW. IN THIS CONNECTION, SEE THE BID OF SCIENTIFIC RESEARCH INSTRUMENT COMPANY, WHICH QUOTED $1100 FOR THE REVIEW UNDER IFB B 0362.

IN REBUTTAL TO THE ARMY'S POSITION AS TO THE EFFECT OF THE NOTE ON BIDDING, YOU CLAIM THAT 48 COMP. GEN. 750 DOES NOT AFFORD A PRECEDENT FOR APPROVAL OF THE USE OF THE NOTE IN THE TWO CURRENT IFB'S. THE PROCUREMENT CONSIDERED IN 48 COMP. GEN. 750, YOU NOTE, WAS NEGOTIATED AND CALLED FOR A CONTINUOUS REVIEW OF THE DRAWINGS AND TECHNICAL DATA BY THE CONTRACTOR, NOT A ONE-TIME REVIEW IMMEDIATELY AFTER AWARD AS IS INVOLVED IN THE TWO INSTANT ADVERTISED PROCUREMENTS. ACCORDINGLY, YOU ASSERT, WHILE THE CONTRACTOR IN 48 COMP. GEN. 750 COULD FIND DEFECTS AT ANY TIME AND HAVE THEM COVERED BY AN ENGINEERING CHANGE PROPOSAL, THE CONTRACTORS IN THE TWO CURRENT PROCUREMENTS MUST ASSUME THE RISK OF ANY DEFECTS NOT DISCOVERED IN THE SHORT REVIEW PERIOD AFTER AWARD AND THEREFORE HAD MORE REASON TO ADD CONTINGENCIES TO THEIR BIDS FOR SUCH FACTOR THAN THE CONTRACTOR IN 48 COMP. GEN. 750.

REFERENCE TO 48 COMP. GEN. 750 REVEALS THAT NEGOTIATION WAS AUTHORIZED PURSUANT TO 10 U.S.C. 2304(A)(10) ON THE BASIS OF IMPOSSIBILITY OF DRAFTING ADEQUATE SPECIFICATIONS OR OTHER ADEQUATELY DETAILED DESCRIPTION OF THE PROCUREMENT ITEMS, AND THE CONTRACTING OFFICER'S DETERMINATION INDICATED THAT THE ITEMS (AIR CONDITIONERS) WERE TO BE FURTHER DEVELOPED BY THE CONTRACTOR, WHO WAS REQUIRED TO SUPPLY HIS ENGINEERING SERVICES BEFORE PRODUCTION OF THE ITEMS AND BEFORE ADEQUATE SPECIFICATIONS COULD BE OBTAINED. FURTHER, THE DECISION POINTED OUT THAT UNDER THE SOLICITATION THE CONTRACTOR WAS NOT REQUIRED TO RIGIDLY FOLLOW THE DRAWINGS AND SPECIFICATIONS BUT MIGHT DEPART FROM THEM IF HE COULD DEMONSTRATE AN INCOMPATIBILITY IN THE DESIGN OR TECHNICAL DATA AS A RESULT OF HIS EVALUATION OF THE TECHNICAL DATA PACKAGE, IN WHICH CASE HE WAS REQUIRED TO PROPOSE APPROPRIATE CORRECTIVE ACTION. ACCORDINGLY, WE STATED, THERE WAS NO IMPLIED WARRANTY BY THE GOVERNMENT THAT THE DRAWINGS AND SPECIFICATIONS FURNISHED WOULD BE ADEQUATE.

IN THE PRESENT PROCUREMENTS, PERFORMANCE IS REQUIRED IN ACCORDANCE WITH GOVERNMENT SPECIFICATIONS AND DRAWINGS DEVELOPED OVER A PERIOD OF SIX YEARS; THE GOVERNMENT UNEQUIVOCALLY STATES THAT THE SPECIFICATIONS ARE ADEQUATE; AND THE POST-AWARD REVIEW OF THE DRAWINGS IS LIMITED. ACCORDINGLY, WE CONCUR WITH YOUR POSITION THAT OUR DECISION AT 48 COMP. GEN. 750 IS NOT DECISIVE OF THE VALIDITY OF CONTRACT NOTE 21 IN THESE TWO IFB'S. AS YOU POINT OUT, WHEN THE GOVERNMENT REQUESTS PERFORMANCE IN ACCORDANCE WITH GOVERNMENT SPECIFICATIONS, THERE IS AN IMPLIED WARRANTY THAT IF THOSE SPECIFICATIONS ARE FOLLOWED, A SATISFACTORY PRODUCT WILL RESULT. UNITED STATES V SPEARIN, 248 U. S. 132 (1918). HOWEVER, WHERE THERE IS AN APPARENT CONFLICT BETWEEN GOVERNMENT DRAWINGS AND SPECIFICATIONS, OR WHEN THE CONTRACTOR DETECTS MAJOR DISCREPANCIES OR ERRORS IN THE GOVERNMENT SPECIFICATIONS OR DRAWINGS, IT IS INCUMBENT UPON THE CONTRACTOR TO BRING SUCH MATTERS TO THE ATTENTION OF THE GOVERNMENT, AND FAILURE TO DO SO IS AT HIS PERIL. BUT THIS OBLIGATION ON THE PART OF THE CONTRACTOR, ABSENT A CLEAR WARNING IN THE CONTRACT, DOES NOT NORMALLY REQUIRE HIM TO SEEK CLARIFICATION OF ANY AND ALL AMBIGUITIES, DOUBTS, OR POSSIBLE DIFFERENCES IN INTERPRETATION. WPC ENTERPRISES, INC. V UNITED STATES, 323 F. 2D 874 (1963); KRAUS V UNITED STATES, 366 F. 2D 975 (1966).

THE ABOVE DECISIONS RECOGNIZE THAT, WHILE THE GOVERNMENT IMPLIEDLY WARRANTS THAT IF ITS SPECIFICATIONS ARE FOLLOWED BY A CONTRACTOR A SATISFACTORY PRODUCT WILL RESULT, A CONTRACTOR MAY NEVERTHELESS ASSUME THE RISK OF PERFORMANCE UNDER GOVERNMENT SPECIFICATIONS. THEREFORE, THE MERE FACT THAT A PROVISION SUCH AS CONTRACT NOTE 21 COULD BE CONSTRUED AS SHIFTING TO A CONTRACTOR THE ASSUMPTION OF RISK OF DEFICIENCIES IN GOVERNMENT SPECIFICATIONS AND DRAWINGS WOULD NOT OF ITSELF RENDER THE ADVERTISED TERMS OF THE CONTRACT SOLICITATION INVALID. SEE 48 COMP. GEN. 90 (1968) RELATING TO CONSTRUCTION CONTRACTS. RATHER, THE DECISIVE FACTOR IS WHETHER MORE THAN ONE REASONABLE INTERPRETATION COULD BE PLACED ON SUCH A PROVISION IN THE SOLICITATION THEREBY GIVING RISE TO DIFFERENT INTERPRETATIONS BY BIDDERS AND RESULTING FAILURE TO BID ON A COMMON BASIS AS REQUIRED BY THE PROCUREMENT STATUTE AND REGULATIONS.

THE LANGUAGE OF CONTRACT NOTE 21, IN OUR VIEW, IS CLEAR AND LENDS ITSELF TO BUT ONE REASONABLE INTERPRETATION. THE PROVISION SIMPLY PLACES A LIMITATION ON THE PERIOD AFTER AWARD DURING WHICH BIDDERS ARE TO REVIEW THE FULL SIZE DRAWINGS TO DETECT ANY DEFICIENCIES WHICH MIGHT PRECLUDE COMPLIANCE WITH THE GOVERNMENT SPECIFICATIONS, AND THEREAFTER TRANSFERS TO THE CONTRACTORS THE RISK OF ANY DEFICIENCIES WHICH THE CONTRACTORS SHOULD HAVE DISCOVERED DURING THE REVIEW PERIOD. RATHER THAN MAKE POSSIBLE MASSIVE CHANGES, AS YOU URGE, THE LIMITED REVIEW PERIOD SHOULD HAVE THE EFFECT OF CURTAILING NUMEROUS REQUESTS FOR CHANGES WHICH MIGHT ORDINARILY BE MADE DURING THE PROGRAM PERIOD OF TWO YEARS. ACCORDINGLY, AND SINCE ALL BIDDERS WERE FREE TO MAKE ALLOWANCE IN THEIR BIDS FOR ANY COSTS RELATED TO SUCH REVIEW, WE BELIEVE THAT BIDDING MUST BE CONSIDERED TO HAVE BEEN ON A COMMON BASIS.

WE SEE NO INDICATION OF RECORD THAT ANY BIDDER "BOUGHT IN" BECAUSE OF CONTRACT NOTE 21. THE FIRST THREE BIDS ON EACH PROCUREMENT, WHICH WERE SUBMITTED BY VARO, ITT AND RCA, ALL EXPERIENCED BIDDERS, WERE RELATIVELY CLOSE IN PRICE, AND THE OTHER TWO BIDS WERE SOMEWHAT HIGHER.

AS TO POSSIBLE DISCOURAGEMENT OF INEXPERIENCED FIRMS, THE ITEMS ARE SOPHISTICATED, AS YOU HAVE NOTED. IT WAS THEREFORE TO BE EXPECTED THAT ONLY FIRMS WHICH WERE KNOWLEDGEABLE AND CONSIDERED THEMSELVES CAPABLE OF PRODUCING THE ITEMS WOULD BE WILLING TO UNDERTAKE TO BID. FURTHER, IT IS SIGNIFICANT THAT DURING THE THREE WEEKS ALLOWED FOR THE SUBMISSION OF BIDS, NO BIDDER, EXPERIENCED OR INEXPERIENCED, SOUGHT ANY INTERPRETATION OF CONTRACT NOTE 21. ACCORDINGLY, WE DO NOT BELIEVE THAT THE RECORD SUPPORTS THE CONTENTION THAT NEW PRODUCERS WERE DETERRED FROM BIDDING UNDER THE IFB'S AS ISSUED.

NOR DO WE VIEW CONTRACT NOTE 21 AS MAKING EVALUATION OF BIDS IMPOSSIBLE, OR BELIEVE THAT IT MAY LEAD TO A NEGOTIATED CONTRACT, FOR THE CHANGES WHICH MAY BE EFFECTED UNDER THE PROVISION, AS THE ARMY HAS POINTED OUT, COULD BE AUTHORIZED UNDER THE STANDARD CONTRACT CHANGES CLAUSE ABSENT THE NOTE. BIDDERS, THEREFORE, HAD NO REASON TO EXPECT THAT ANY ADDITIONAL CHANGES MIGHT BE POSSIBLE; RATHER, THEY WERE ALL ON NOTICE THAT ANY NECESSARY CHANGES IN THE DRAWINGS WOULD BE EFFECTED AS SOON AS POSSIBLE AFTER AWARD, WHEREAS OTHER CHANGES COULD BE MADE OVER A LONGER PERIOD. ACCORDINGLY, AND IN LIGHT OF THE ARMY'S STATEMENT THAT NO MAJOR CHANGES ARE ANTICIPATED UNDER NOTE 21, WE ARE UNABLE TO CONCUR WITH YOUR ASSERTION THAT THE BIDS COULD NOT BE PROPERLY EVALUATED, OR THAT AWARD ON THE BASIS OF THE BIDS RECEIVED CANNOT REASONABLY BE EXPECTED TO RESULT IN THE LOWEST FIXED-PRICE CONTRACTS FROM RESPONSIVE AND RESPONSIBLE BIDDERS, AS CONTEMPLATED BY THE PROCUREMENT STATUTE.

WITH REGARD TO THE ISSUE OF ACCESSIBILITY OF THE DRAWINGS CITED IN THE IFB'S, YOU CLAIM THAT YOU WERE SUPPLIED WITH REVISIONS OF THE DRAWINGS WHICH PREDATED THE REVISIONS CITED IN THE IFB'S AND THAT YOUR EFFORTS TO OBTAIN THE PROPER REVISIONS FROM THE NAVAL PUBLICATIONS AND FORMS CENTER IN PHILADELPHIA WERE NOT SUCCESSFUL. YOU THEREFORE CONTEND THAT THE REQUIREMENTS OF ASPR 1-1203 RELATING TO AVAILABILITY AND IDENTIFICATION OF SPECIFICATIONS, STANDARDS, PLANS, AND DRAWINGS HAVE NOT BEEN MET AND THAT CANCELLATION OF THE IFB'S IS THEREFORE REQUIRED BY ASPR 2-404.1(B).

ASPR 1-1203.1 REQUIRES THAT SOLICITATIONS BE ACCOMPANIED BY THE APPLICABLE SPECIFICATIONS, STANDARDS, PLANS, DRAWINGS, AND OTHER PERTINENT BID DOCUMENTS, OR STATE WHERE SUCH DOCUMENTS MAY BE OBTAINED OR EXAMINED IN ACCORDANCE WITH ASPR 1-1203.2 AND 3. ASPR 1-1203.2 RELATING TO SPECIFICATIONS AND STANDARDS LISTED IN THE DEPARTMENT OF DEFENSE INDEX OF SPECIFICATIONS AND STANDARDS (DODISS), PROVIDES THAT SUCH ITEMS WILL NOT NORMALLY BE FURNISHED WITH A SOLICITATION BUT A PROVISION DIRECTING REQUESTS TO THE NAVAL PUBLICATIONS AND FORMS CENTER, PHILADELPHIA, FOR UNCLASSIFIED FEDERAL, MILITARY, AND OTHER SPECIFICATIONS (EXCLUDING COMMERCIAL) AND ADVISING THAT COMMERCIAL SPECIFICATIONS AND STANDARDS SHOULD BE REQUESTED FROM THE PUBLISHERS SHALL BE INCLUDED IN THE SOLICITATION. AS TO SPECIFICATIONS AND STANDARDS NOT LISTED IN DODISS, AND PLANS, DRAWINGS, AND OTHER PERTINENT DOCUMENTS WHICH ARE NOT FURNISHED WITH THE SOLICITATION, ASPR 1-1203.3 REQUIRES THAT THE SOLICITATION INCLUDE A PROVISION GIVING THE NAME AND ADDRESS OF THE ACTIVITY AT WHICH COPIES OF SUCH ITEMS MAY BE OBTAINED OR A PROVISION SPECIFYING LOCATIONS AT WHICH COPIES THEREOF MAY BE EXAMINED.

THE DEPARTMENT OF THE ARMY, WHOSE STATEMENT OF THE FACTS WE MUST ACCEPT AS CORRECT IN THE ABSENCE OF EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF ITS CORRECTNESS, REPORTS THAT SOME BIDDERS WERE MISTAKENLY FURNISHED WRONG REVISIONS OF DRAWINGS OF THE 25MM ASSEMBLIES ADVERTISED IN IFB B-0362; THAT THE REVISIONS WERE PROPERLY CITED IN THE IFB, HOWEVER; AND THAT THE DIFFERENCES BETWEEN THE REVISIONS IN QUESTION WERE NOT SIGNIFICANT. NO SUCH MISTAKE, THE ARMY STATES, WAS MADE WITH RESPECT TO THE DRAWINGS FOR THE 40MM ASSEMBLIES ADVERTISED IN IFB B-0363.

AS TO ITT'S ATTEMPT TO OBTAIN THE PROPER DRAWING REVISIONS FROM THE NAVAL PUBLICATIONS AND FORMS CENTER, THE ARMY POINTS OUT THAT THIS ACTIVITY WAS DESIGNATED, IN LINE WITH ASPR 1-1203.2, AS THE SOURCE OF INFORMATION ON SPECIFICATIONS AND STANDARDS, WHICH DO NOT ENCOMPASS DRAWINGS; THAT THE DRAWINGS COULD HAVE BEEN OBTAINED FROM THE NIGHT VISION AND ILLUMINATING BRANCH AT FORT BELVOIR, THE PLACE LISTED IN BIDDING INSTRUCTION NOTE 34 AS THE SOURCE OF TECHNICAL INFORMATION; AND THAT A TELEPHONE CALL TO THE CONTRACTING OFFICER COULD HAVE LED TO CORRECTION OF THE MISTAKE AND, IF NECESSARY, TO EXTENSION OF THE BID OPENING DATE. FOR THE RECORD, THE ARMY STATES, NO BIDDER REQUESTED CORRECT REVISIONS OF THE 25MM DRAWINGS FROM FORT BELVOIR, AND THE ARMY ATTRIBUTES THIS FACTOR TO THE ABILITY OF BIDDERS TO DETERMINE, FROM THE 40MM ASSEMBLY DRAWINGS FURNISHED WITH IFB B -0363, THE REVISIONS WITH RESPECT TO THE 25MM ASSEMBLY, BOTH ASSEMBLIES BEING SIMILAR.

INASMUCH AS THE ARMY INTENDED TO PROVIDE ALL BIDDERS WITH THE PROPER DRAWINGS, THERE WAS NO NEED TO INSERT ANY PROVISION IN THE IFB'S REGARDING THE AVAILABILITY OF DRAWINGS FROM ANY SOURCE OTHER THAN THE PROCURING ACTIVITY. ASPR 1-1203.3. ACCORDINGLY, THE PROVISIONS RELATING TO AVAILABILITY OF THE SPECIFICATIONS AND STANDARDS WHICH WERE NOT INCLUDED IN THE BID PAPERS WERE ALL THAT WAS REQUIRED TO BE STATED IN THE IFB, AND WE THEREFORE FIND NO BASIS FOR THE VIEW THAT THERE HAS BEEN A VIOLATION BY THE ARMY OF ASPR 1-1203.

WHILE IT IS REGRETTABLE THAT ITT WAS APPARENTLY AMONG THOSE BIDDERS WHO WERE MISTAKENLY FURNISHED REVISIONS TO THE 25MM ASSEMBLY DRAWINGS OTHER THAN THE REVISIONS CITED IN IFB B-0362, THERE IS NO INDICATION IN THE RECORD THAT THE ARMY ACTED IN BAD FAITH. FURTHER, THE CONTRACTING OFFICER, WHOSE NAME AND TELEPHONE NUMBER WERE GIVEN IN BIDDING INSTRUCTIONS NOTE 34 AS A SOURCE OF CONTRACTUAL ADVICE, HAS STATED THAT HAD HE RECEIVED A TELEPHONE CALL FROM ITT, HE WOULD HAVE EXTENDED THE BID SUBMISSION PERIOD IF APPROPRIATE. MORE IMPORTANT, THERE IS NO INDICATION THAT ITT'S BID WAS RENDERED NONRESPONSIVE BECAUSE OF ITS INABILITY TO OBTAIN THE PROPER REVISIONS TO THE DRAWINGS. ACCORDINGLY, AND IN LIGHT OF THE ARMY'S STATEMENTS ABOUT THE SIMILARITY OF THE TWO ASSEMBLIES AND RESOLUTION OF ANY DIFFERENCES BY COMPARISON OF THE 25MM ASSEMBLY DRAWINGS WITH THE 40MM ASSEMBLY DRAWINGS, AND IN THE ABSENCE OF ANY COMPLAINT BY ANY OF THE OTHER BIDDERS OR SOLICITED SOURCES REGARDING THE DRAWINGS, IT IS OUR VIEW THAT THE MISTAKE IN CONNECTION WITH THE FURNISHING OF THE WRONG DRAWINGS FOR THE 25MM ASSEMBLIES IN SOME OF THE IFB B-0362 BID PACKAGES WOULD NOT JUSTIFY DISCARDING OF ALL OF THE BIDS UNDER EITHER OR BOTH OF THE IFB'S, OR RESOLICITATION OF THE REQUIREMENTS.

WITH REGARD TO THE IFB PROVISIONS FOR WAIVER OF FIRST ARTICLE TESTING, YOU ASSERT THAT THE SENTENCE, "WAIVER OF FIRST ARTICLE TESTING SHALL BE SOLELY AT THE DISCRETION OF THE CONTRACTING OFFICER," VESTS THE CONTRACTING OFFICER WITH UNLIMITED DISCRETION AND THEREFORE WARRANTS A FINDING THAT THE FULL AND FREE COMPETITION REQUIRED BY 10 U.S.C. 2305(B) HAS BEEN PRECLUDED. FOR EXAMPLE, YOU STATE THAT IN A SITUATION IN WHICH TWO EXPERIENCED BIDDERS QUOTE PRICES BOTH WITH AND WITHOUT WAIVER, WITH ONE BEING LOW WITH WAIVER AND THE OTHER WITHOUT, THE CONTRACTING OFFICER COULD CHOOSE BETWEEN THE BIDDERS FOR ANY REASON OR FOR NO REASON AT ALL. IN ADDITION, WITH SPECIFIC REFERENCE TO INEXPERIENCED BIDDERS, YOU STATE THAT THE PROSPECT OF SELECTION BY THE CONTRACTING OFFICER OF AN EXPERIENCED BIDDER WHO WAS LOW ONLY UPON WAIVER WOULD BE DISCOURAGING TO AN INEXPERIENCED BIDDER WHOSE PRICE WAS LOW IF NO SUCH WAIVER WERE GRANTED. AS TO THE CONTRACTING OFFICER'S ROLE IN CONNECTION WITH THE WAIVER OF FIRST ARTICLE APPROVAL, THE ARMY STATES THAT THE CONTRACTING OFFICER CONSULTS WITH THE ENGINEERING STAFF AND ACTS UPON THE ADVICE OF SUCH PERSONNEL IN DETERMINING WHETHER OR NOT TO WAIVE FIRST ARTICLE TESTING, THE DECISION BEING PREMISED ON THE BASIS OF THE BEST INTERESTS OF THE GOVERNMENT. IN THE CIRCUMSTANCES, THERE DOES NOT APPEAR TO BE SUPPORT FOR A CONCLUSION THAT THE CONTRACTING OFFICER'S DISCRETION WILL BE UNLIMITED.

AS TO THE EFFECT OF THE WAIVER PROCEDURE ON INEXPERIENCED BIDDERS, IT HAS LONG BEEN RECOGNIZED THAT A PRIOR PRODUCER THEREBY GAINS AN ADVANTAGE OVER NONPRODUCERS. HOWEVER, THE GOVERNMENT'S INTERESTS ARE SERVED THEREBY INASMUCH AS THE GOVERNMENT SHOULD NOT BE COMPELLED TO PAY FOR WHAT IT DOES NOT NEED. 42 COMP. GEN. 717, 720 (1963). FURTHER, THE THREAT OF COMPETITION TENDS TO LOWER PRICES OF EXISTING PRODUCERS. B-160209, JANUARY 11, 1967.

ON THE RECORD BEFORE US, WE ARE UNABLE TO CONCLUDE THAT THE FIRST ARTICLE TEST WAIVER PROVISIONS WERE NOT PROPERLY EMPLOYED IN THESE TWO PROCUREMENTS.

IN SUMMARY, WE SEE NO LEGAL JUSTIFICATION FOR CANCELLATION OF THE INVITATIONS FOR BIDS AND RESOLICITATION OF THE PROCUREMENT NEEDS ON A NEGOTIATED BASIS. ACCORDINGLY, WE FIND NO LEGAL BASIS FOR OBJECTION TO AWARDS BY THE DEPARTMENT OF THE ARMY TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDERS UNDER THE RESPECTIVE INVITATIONS FOR BIDS, AND YOUR PROTEST IS THEREFORE DENIED.