B-176695, JAN 30, 1973

B-176695, JAN 30, 1973

BID PROTEST - SOLE-SOURCE AWARD - RENEWAL OPTIONS - PUBLIC EXIGENCY EXCEPTION DECISION CONCERNING THE DENIAL OF A PROTEST ON BEHALF OF API CORPORATION AGAINST THE AWARD OF A CONTRACT TO T. K. INTERNATIONAL, INC., UNDER AN RFP ISSUED BY THE OKLAHOMA CITY AIR MATERIEL AREA, TINKER AFB, OK. TKI'S POTENTIAL TO PRODUCE THE REPAIR WORK AND ITS KNOWN PAST PERFORMANCE, COUPLED WITH THE PROVEN INADEQUACY OF API'S PREVIOUS REPAIR WORK PROCEDURES, JUSTIFIED THE SOLE-SOURCE AWARD AS WELL AS THE CONTRACTING AGENCY'S FAILURE TO EXERCISE THE RENEWAL OPTION OF API'S PRIOR CONTRACT. ALSO, THE URGENCY TO REPAIR AIRCRAFT ENGINES IN ORDER TO FULFILL SOUTHEAST ASIA FLYING COMMITMENTS NECESSITATED THE PUBLIC EXIGENCY EXCEPTION OF 10 U.S.C. 2304(A)(2) WHICH PERMITS NEGOTIATION OF A CONTRACT WHEN THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. ACCORDINGLY, THE PROTEST IS DENIED.

TO PIERSON, BALL AND DOWD:

FURTHER REFERENCE IS MADE TO THE JULY 27, 1972, LETTER OF API CORPORATION AND TO YOUR SUBSEQUENT CORRESPONDENCE ON ITS BEHALF, PROTESTING THE AWARD OF A CONTRACT TO T. K. INTERNATIONAL, INCORPORATED (TKI), UNDER REQUEST FOR PROPOSALS (RFP) NO. F34601-72-R-C-625 ISSUED BY THE OKLAHOMA CITY AIR MATERIEL AREA (OCAMA), TINKER AIR FORCE BASE, OKLAHOMA.

THE CONTRACT, FOR THE REPAIR AND OVERHAUL OF J57 ENGINE INNER CASES, WAS NEGOTIATED SOLE SOURCE WITH TKI PURSUANT TO THE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS THAT THE PUBLIC EXIGENCY WOULD NOT PERMIT "THE DELAY INCIDENT TO FORMAL ADVERTISING OR COMPETITIVE NEGOTIATION."

API PROTESTS THE SOLE SOURCE AWARD, CLAIMING THAT IT WAS QUALIFIED FOR THE REPAIR WORK BY REASON OF HAVING PERFORMED THREE PRIOR CONTRACTS, AND QUESTIONING WHETHER TKI WAS A QUALIFIED SOURCE. API ALSO QUESTIONS TKI'S UNIT PRICE AS COMPARED TO ITS PRIOR CONTRACT PRICE AND QUESTIONS THE AIR FORCE'S FAILURE TO EXERCISE THE SECOND YEAR OPTION IN ITS CONTRACT. FINALLY, YOU QUESTION THE "PROPRIETY" OF THE USE OF THE PUBLIC EXIGENCY EXCEPTION AS THE BASIS FOR NONCOMPETITIVE NEGOTIATION IN THIS PROCUREMENT.

THE AIR FORCE REPORTS THAT API HAD PREVIOUSLY OVERHAULED J57 INNER CASES UTILIZING A WORK SPECIFICATION THAT REQUIRED REPAIR BY A NICRO BRAZE PROCESS, BUT THAT THIS PROCEDURE "LATER PROVED TO BE INADEQUATE AND PRODUCED DIFFICULTIES IN LATER ITEM PERFORMANCE." AS A RESULT, THE SPECIFICATION WAS REVISED TO REPLACE THE NICRO-BRAZE PROCESS WITH A MORE HEAT RESISTANT WELD METHOD. THE AIR FORCE FURTHER REPORTS THAT THERE WAS NO KNOWN QUALIFIED SOURCE FOR THE NEW METHOD, AND THAT BEFORE NEW SOURCES COULD BE QUALIFIED, "AN URGENT REQUIREMENT DEVELOPED DUE TO A SHORTAGE OF SERVICEABLE PARTS TO SUPPORT THE OCAMA ENGINE OVERHAUL LINE." TKI WAS THEN SELECTED AS A "TEMPORARY SOURCE *** ON THE BASIS OF THAT COMPANY'S POTENTIAL TO PRODUCE AND KNOWN PAST PERFORMANCE." THE AIR FORCE EXPLAINS THIS SELECTION AS FOLLOWS:

"*** THE PRIMARY DIFFICULTY WITH THE NEW SPECIFICATION WAS EXPECTED TO BE THE WELDING AND MACHINING OF THE VANE SLOTS WHICH HAVE TO BE PLACED PRECISELY WITH REFERENCE TO A CENTER POINT ON THE INNER CASE ITSELF. THOSE PARTS OF THIS TYPE REPAIRED PREVIOUSLY BY THE THREE KNOWN REPAIR SOURCES, THE AIR FORCE HAD EXPERIENCED DIFFICULTY WITH THE PARTS REPAIRED BY API AND ONE OTHER SOURCE BECAUSE OF THEIR MACHINING OF THE TYPE REQUIRED BY THE NEW SPECIFICATION. ON THE OTHER HAND, TKI HAD RECENTLY REPAIRED AN ALMOST IDENTICAL J57 INNER CASE (THERE ARE THREE SUCH ASSEMBLIES IN EACH ENGINE) BY COMPLETELY REPLACING THE OUTER BAND WITH ONE WHICH IT HAD FABRICATED FROM SCRATCH. SINCE TKI HAD SUCCESSFULLY MACHINED OUTER BANDS FROM SCRATCH, IT WAS ANTICIPATED THAT THEY WOULD HAVE NO DIFFICULTY WITH THE MACHINING REQUIRED BY THE NEW SPECIFICATION. CONSEQUENTLY, BASED ON THEIR POTENTIAL AND KNOWN PAST PERFORMANCE, IT WAS DETERMINED THAT T K INTERNATIONAL WAS THE ONLY SOURCE THAT COULD DELIVER THE REQUIRED REPAIRS WITHIN THE TIME REQUIREMENT IMPOSED BY THE PUBLIC EXIGENCY. ***"

THE CONTRACT WAS AWARDED ON JUNE 30, 1972, AND CALLED FOR DELIVERY OF THE OVERHAULED ITEMS WITHIN 30 DAYS OF THEIR RECEIPT BY THE CONTRACTOR. HOWEVER, THE WELD REPAIR PROCEDURE CALLED FOR BY THE CONTRACT PROVED TO BE "UNWORKABLE" ON THE CASES PREVIOUSLY REBUILT USING THE NICRO - BRAZE PROCEDURE AND THE CONTRACT WAS SUBSEQUENTLY MODIFIED TO PROVIDE FOR THE REMANUFACTURE OF THE OUTER BAND OF THE CASINGS BY MEANS OF A PROPRIETARY PROCESS USED BY TKI ON OTHER CASES. WE HAVE BEEN ADVISED THAT DELIVERIES UNDER THE MODIFIED CONTRACT WERE COMPLETED ON NOVEMBER 30, 1972.

10 U.S.C. 2304(A)(2) PERMITS NEGOTIATION OF A CONTRACT WHEN "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING." THE RECORD INDICATES THAT A PURCHASE REQUEST WITH A PRIORITY OF "URGENT" WAS GENERATED FOR THE J57 INNER CASES BECAUSE OF INCREASED DEMANDS CAUSED BY ESCALATION OF SOUTHEAST ASIA FLYING COMMITMENTS, AND THAT THE CONTRACTING OFFICER DETERMINED THAT DELAY IN DELIVERY WOULD RESULT IN THE GROUNDING OF AIRCRAFT NEEDED TO FULFILL MISSION REQUIREMENTS. FINDINGS IN SUPPORT OF A DETERMINATION TO NEGOTIATE UNDER THE PUBLIC EXIGENCY EXCEPTION ARE MADE FINAL BY 10 U.S.C. 2310(B), AND ARE NOT SUBJECT TO QUESTION BY OUR OFFICE.

WHILE 10 U.S.C. 2304(G) REQUIRES THAT PROPOSALS SHOULD BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES, IT IS REPORTED IN THIS CASE THAT NO SOURCE HAD EVER PRODUCED IN ACCORDANCE WITH THE NEW SPECIFICATION, THAT TWO PREVIOUS SOURCES HAD SOME DIFFICULTY WITH THE TYPE OF MACHINING REQUIRED UNDER THE NEW SPECIFICATION, BUT THAT A THIRD PRIOR SOURCE, TKI, HAD NOT EXPERIENCED SUCH DIFFICULTY. ALTHOUGH YOU ASSERT THAT API WAS QUALIFIED BY ITS PRIOR EXPERIENCE WHILE TKI WAS NOT, WE MUST DEFER TO THE AIR FORCE'S CONTRARY CONCLUSION IN THE ABSENCE OF CONVINCING EVIDENCE IN SUPPORT OF YOUR ASSERTION. 44 COMP. GEN. 590 (1965); B-172630, NOVEMBER 17, 1971. IN THESE CIRCUMSTANCES, WE DO NOT BELIEVE THAT THE CONTRACTING OFFICER'S DECISION TO NEGOTIATE ONLY WITH TKI WAS ARBITRARY OR CAPRICIOUS.

FROM THE ADMINISTRATIVE DESCRIPTION OF THE DIFFERENCES IN THE METHODS EMPLOYED IN THE REPAIRS UNDER API'S PRIOR CONTRACT AND THOSE USED BY TKI, IT DOES NOT APPEAR THAT A COMPARISON OF THE UNIT PRICES IS FEASIBLE OR MEANINGFUL. WITH RESPECT TO API'S CONTENTION CONCERNING EXERCISE OF THE OPTION IN ITS PRIOR CONTRACT, THE AIR FORCE REPORTS THAT THE FULL QUANTITY OF WORK PROJECTED TO BE REQUIRED DURING THE SECOND YEAR OF THAT CONTRACT WAS PERFORMED DURING THE FIRST YEAR AND THE OPTION HAD EXPIRED PRIOR TO AWARD OF THE CONTRACT TO TKI.

WITH REGARD TO YOUR QUESTIONING OF THE PROPRIETY OF USING THE PUBLIC EXIGENCY EXCEPTION, WE NOTE THAT THERE WAS DELAY IN THIS PROCUREMENT. THE SOLICITATION WAS ISSUED ON APRIL 12, 1972, BUT AWARD WAS NOT MADE TO TKI UNTIL JUNE 30, 1972. TKI THEN DISCOVERED THAT PERFORMANCE WAS NOT POSSIBLE IN ACCORDANCE WITH CONTRACT SPECIFICATIONS, WHICH RESULTED IN A CONTRACT MODIFICATION DATED AUGUST 31, 1972. DELIVERY WAS NOT COMPLETED UNTIL NOVEMBER 30, 1972. WHILE THE DELAY IN AWARDING THE CONTRACT IS NOT EXPLAINED, THE FILE DOES INDICATE THAT AWARD WAS ANTICIPATED BY AN EARLIER DATE AND THAT THE EXIGENCY EXISTED BOTH AT THE TIME OF AWARD AND AT THE TIME THE DECISION WAS MADE TO NEGOTIATE ONLY WITH TKI. OUR REVIEW OF THE CONTRACT MODIFICATION INDICATES THAT A NEW PROCEDURE, PROPRIETARY TO TKI, WAS SPECIFIED THEREIN FOR THE REPAIR OF CERTAIN J57 INNER CASES AND WAS NOT MERELY A TIME EXTENSION FOR TKI AS YOU SUGGEST.

ALTHOUGH THE DELAYS ENCOUNTERED IN THIS PROCUREMENT MAY HAVE AFFORDED SUFFICIENT TIME TO QUALIFY OTHER SOURCES AS YOU CONTEND WE DO NOT BELIEVE THIS PROVIDES A BASIS FOR OUR OBJECTING TO THE AWARD OR TO THE CONTRACT MODIFICATION BECAUSE, AT THE TIME, THE ACTIONS TAKEN APPEAR TO HAVE BEEN REASONABLE. HOWEVER, IT IS REPORTED THAT FUTURE PROCUREMENTS WILL BE ON A COMPETITIVE BASIS IF QUALIFIED SOURCES ARE AVAILABLE. THE AIR FORCE STATES THAT "OCAMA HAS INITIATED EFFORTS TO QUALIFY REPAIR SOURCES FOR THIS NEW PROCEDURE" AND THAT 14 FIRMS "INCLUDING API HAVE EXPRESSED AN INTEREST IN BECOMING QUALIFIED."

FOR THE REASONS DISCUSSED ABOVE, YOUR PROTEST IS DENIED.