B-162487, JUN. 25, 1968

B-162487, JUN. 25, 1968

TO MINNESOTA MINING AND MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 12, 1968, REQUESTING A RECONSIDERATION OF OUR DECISION OF DECEMBER 29, 1967 (B-162487), IN WHICH WE UPHELD THE CANCELLATION OF ITEMS 11 THROUGH 22, GROUP 2, OF INVITATION FOR BIDS (IFB) F08650-67-B-0173, ISSUED BY AIR FORCE EASTERN TEST RANGE (ETR), PATRICK AIR FORCE BASE, FLORIDA.

YOUR FIRST CONTENTION IS THAT THE 24 PERCENT PRICE DIFFERENTIAL BETWEEN YOUR BID AND THAT OF THE MEMOREX CORPORATION CANNOT BE ATTRIBUTED TO THE FACT THAT YOU PROPOSED TO FURNISH A QUALIFIED PRODUCTS LIST (QPL) REEL. IN SUPPORT OF THIS CONTENTION YOU STATE THAT YOUR BID PRICE OF $36.92 PER REEL WAS $4.68 LOWER THAN THE PRICE QUOTED ON A PRIOR PROCUREMENT WHERE NO QPL REEL WAS REQUIRED. YOU FURTHER STATE THAT YOUR BID PRICE WAS WELL BELOW PREVIOUS BID PRICES OF MEMOREX, WHICH COMPANY DOES NOT NOW HAVE, NOR HAS IT EVER OFFERED, A QUALIFIED REEL. CONSEQUENTLY, IT IS YOUR VIEW THAT ASPR 2-404.1 (B) (V) WHICH GIVES THE CONTRACTING OFFICER AUTHORITY TO REJECT ALL BIDS, CANCEL THE INVITATION, AND READVERTISE WHEN IT IS BROUGHT TO HIS ATTENTION THAT THE NEEDS OF THE GOVERNMENT CAN BE SATISFIED BY A LESS EXPENSIVE ITEM DIFFERING FROM THAT ORIGINALLY ADVERTISED, IS NOT APPLICABLE IN THE PRESENT SITUATION.

A REVIEW OF THE RECORD, WHICH INCLUDES A SUPPLEMENTAL REPORT FROM THE CONTRACTING AGENCY CONTAINING ADDITIONAL INFORMATION, INDICATES THAT THE QPL REQUIREMENT HAS NO BEARING ON THE PRICE OF THE REEL OFFERED BY YOUR FIRM. HOWEVER, THE FACT REMAINS THAT YOUR BID PRICE WAS 24 PERCENT HIGHER THAN THAT OF MEMOREX, AND SINCE THE TAPES WERE TO BE MANUFACTURED TO THE SAME SPECIFICATIONS AS WERE USED IN PREVIOUS PROCUREMENTS, THE ASSUMPTION BY THE CONTRACTING OFFICER THAT YOUR HIGHER BID PRICE COULD BE ATTRIBUTED TO THE QPL REELS IS UNDERSTANDABLE.

WHILE IT IS TRUE THAT APPLICABLE REGULATIONS STATE THAT THE USE OF FEDERAL SPECIFICATIONS IS MANDATORY, SUCH REGULATIONS AUTHORIZE DEVIATIONS, AND THIS OFFICE HAS ON NUMEROUS OCCASIONS STATED THAT DEVIATIONS ARE PERMISSIBLE. 44 COMP. GEN. 27, 28; 43 COMP. GEN. 681; B- 159550, NOVEMBER 25, 1966, AND B-156373, AUGUST 25, 1965. IN THIS CONNECTION, SEE PARAGRAPH 1-1202 OF BOTH THE ARMED SERVICES PROCUREMENT REGULATION AND THE AIR FORCE PROCUREMENT INSTRUCTION. SEE ALSO PARAGRAPH 2-102 OF DEFENSE STANDARDIZATION MANUAL 4120.3-M, APRIL 1, 1966. THUS, IT SEEMS CLEAR THAT IN ORDER TO OBTAIN THE GOVERNMENT'S MINIMUM NEEDS IN A PARTICULAR CASE BOTH THE ARMED SERVICES PROCUREMENT REGULATION AND IMPLEMENTING PROCEDURES CONTEMPLATE THE GRANTING OF DEVIATIONS FROM FEDERAL SPECIFICATIONS AND THE PREPARATION OF SPECIFICATIONS WHICH INCLUDE NEW AND ADDITIONAL REQUIREMENTS OR SPECIFY AN OPTION. ACCORDINGLY, THERE REMAINS FOR CONSIDERATION WHETHER THE USE OF SUCH AUTHORITY WAS JUSTIFIED IN THE INSTANT CASE.

THE AIR FORCE HAS ADVISED THAT SUBSEQUENT TO BID OPENING, BUT PRIOR TO AWARD, THE TAPE OFFERED BY MEMOREX WAS TESTED AND IT WAS DETERMINED THAT WHILE THE TAPE MET SPECIFICATION REQUIREMENTS, IT DID NOT MEET THE ACTIVITY'S NEEDS, AND THAT THE SPECIFICATIONS WERE THEREFORE INADEQUATE IN THAT THEY FAILED TO PROVIDE FOR CRITERIA AND TESTS THAT WOULD REJECT TAPES CAUSING LOSS OF DATA THROUGH SHEDDING. IT WAS ON THIS BASIS THAT THE CONTRACTING OFFICER DETERMINED THAT THE SPECIFICATIONS NO LONGER SET FORTH THE MINIMUM NEEDS OF ETR, AND THAT THE REQUIREMENT SHOULD BE CANCELLED.

IT APPEARS TO BE YOUR VIEW THAT THE STATEMENT IN OUR DECISION OF DECEMBER 29, 1967, TO THE EFFECT THAT UNQUALIFIED REELS HAD PROVEN SATISFACTORY, WAS LACKING IN SOUND BUSINESS JUDGMENT SINCE SUCH PAST PROCUREMENTS MAY NOT REFLECT THE CURRENT NEEDS AND REQUIREMENTS OF THE AIR FORCE FOR HAVING ONLY QPL ITEMS, AND SINCE THE PROCUREMENT OF QPL PRODUCTS WHEN A QPL DOES EXIST AS PART OF THE FEDERAL SPECIFICATIONS IS A POLICY MORE CONDUCIVE TO EFFICIENT AND EFFECTIVE GOVERNMENT PROCUREMENT. IN VIEW OF THE FACT THAT THE STATEMENT IN OUR REPORT WAS BASED UPON AN AIR FORCE REPORT TO OUR OFFICE IT WOULD APPEAR TO ACCURATELY REFLECT ACTUAL NEEDS AND REQUIREMENTS, AS DETERMINED BY THE AIR FORCE. IN ANY EVENT, THE SOUNDNESS OF BUSINESS JUDGMENTS AND AGENCY POLICIES ARE NOT MATTERS FOR CONSIDERATION IN REVIEWING THE LEGAL CONCLUSIONS SET OUT IN OUR DECISION OF DECEMBER 29, 1967.

YOU ALSO TAKE ISSUE WITH THE CONTRACTING OFFICER'S DECISION TO CANCEL ITEMS 11 THROUGH 22, GROUP 2, OF IFB F08650-67-B-0173, STATING YOUR BELIEF THAT THE GROUNDS CITED FOR THE CANCELLATION ARE BASED ON ALLEGED FACTS WHICH ARE NOT CONSISTENT WITH SUBSEQUENT ACTION BY ETR. YOU CITE, AS AN EXAMPLE OF THIS INCONSISTENCY, THE FACT THAT SUBSEQUENT TO THE CANCELLATION ETR PROCURED QUANTITIES OF THE SAME ITEM, USING THE SAME SPECIFICATIONS REQUIRING A QPL REEL.

WHILE ETR HAS SUBSEQUENTLY PROCURED QUANTITIES OF THE SAME ITEM ON WHICH YOUR FIRM BID, THE AIR FORCE ADVISES THAT SUCH PROCUREMENTS WERE NOT ACCOMPLISHED UNDER THE SAME SPECIFICATION. SOLICITATION F08650-68 R-0032 AND CONTRACT F08650-68-C-0138, IN ADDITION TO THE FEDERAL SPECIFICATION, SPECIFIED MINNESOTA MINING AND MANUFACTURING COMPANY PRODUCT 888, NOT BECAUSE OF THE REELS, BUT BECAUSE THE TAPE WAS THE ONLY PRODUCT MEETING THE GOVERNMENT'S NEEDS. CONTRACT F08650-68-C 0162, IN ADDITION TO THE FEDERAL SPECIFICATION, ALSO INCLUDED AIR FORCE EASTERN TEST RANGE SPECIFICATION ETR-008. THE FACT THAT YOUR FIRM OFFERED THE SAME PRODUCT ON DIFFERENT SOLICITATIONS DOES NOT NECESSARILY MEAN THE PRODUCT WAS PURCHASED UNDER THE SAME SPECIFICATIONS. THE ORIGINAL SPECIFICATIONS WERE, IN FACT REVISED AFTER CANCELLATION, SINCE ANY PRODUCT SUCH AS MEMOREX'S TAPE, WHICH MET ONLY THE SPECIFICATION REQUIREMENTS, AND NOTHING MORE, WOULD NOT MEET THE GOVERNMENT'S NEEDS. SUBSEQUENT GOVERNMENT PROCUREMENTS WERE NOT BASED ON EITHER QPL REELS OR QPL TAPES BUT WERE BASED ON THE FACT THAT 3M WAS A SOLE SOURCE SUPPLIER FOR THE ONLY TAPE WHICH WOULD MEET THE SPECIFIC NEEDS OF ETR. THE RECORD FURTHER INDICATES THAT THE FACT THAT YOUR REEL WAS QUALIFIED HAD NO BEARING ON ITS COST, AND IT WAS THEREFORE CONSIDERED TO BE TO THE ADVANTAGE OF THE GOVERNMENT TO OBTAIN A QUALIFIED REEL IF IT COULD DO SO WITHOUT ADDITIONAL COST OR THE NECESSITY OF OBTAINING A WAIVER OF THE QUALIFICATION REQUIREMENT.

FOR THE FOREGOING REASONS, WE FIND NO LEGAL OBJECTION TO THE CONTRACTING OFFICER'S CANCELLATION OF ITEMS 11 THROUGH 22 OF IFB F08650-67-B-0173. ACCORDINGLY, OUR DECISION OF DECEMBER 29, 1967, IS SUSTAINED.