B-164885, JAN. 15, 1969

B-164885, JAN. 15, 1969

TO MR. SECRETARY:

REFERENCE IS MADE TO THE W.E. SHIPLEY MACHINERY COMPANY PROTEST AGAINST THE AWARD MADE TO CINCINNATI MILLING AND GRINDING MACHINERY COMPANY, INCORPORATED, UNDER INVITATION FOR BIDS NO. N00600-68-B-0408 ISSUED BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C. THIS MATTER IS THE SUBJECT OF REPORTS DATED AUGUST 13 AND SEPTEMBER 23, 1968, FROM THE NAVAL SUPPLY SYSTEMS COMMAND.

THE INVITATION WAS ISSUED ON JANUARY 25, 1968, AND, AS AMENDED, CALLED FOR BIDS ON SEVEN (7) NUMERICALLY CONTROLLED ENGINE LATHES TO BE SUBMITTED BY MAY 28, 1968, IN ACCORDANCE WITH SPECIFICATION MIL-L 80053. PARAGRAPH 3.2 OF THE SPECIFICATION READS AS FOLLOWS:

"3.2 DESIGN. THE LATHE SHALL BE THE MANUFACTURER'S CURRENT COMMERCIAL MODEL CONSISTING ESSENTIALLY OF A BED, A SINGLE SPINDLE HEADSTOCK, A TOOL CARRIAGE, A TAILSTOCK AND A COMPLETE MACHINE CONTROL UNIT AS SPECIFIED HEREIN. THE MACHINE AND THE CONTROL UNIT SHALL BE DESIGNED AS ONE NUMERICALLY CONTROLLED SYSTEM PROVIDING THE PERFORMANCE FUNCTIONS SPECIFIED. THE SYSTEM SHALL BE COMPLETE AND READY FOR USE WHEN INSTALLED AND CONNECTED TO THE SPECIFIED POWER SUPPLY.' IN ADDITION, ON PAGE 25 OF THE INVITATION BIDDERS WERE REQUIRED TO STATE WHETHER OR NOT THEY WERE FURNISHING A STANDARD COMMERCIAL MODEL.

IT IS REPORTED THAT 5 BIDS WERE RECEIVED, WITH CINCINNATI AS THE LOW BIDDER AND SHIPLEY AS THE NEXT LOW BIDDER. A LETTER DATED MAY 24, 1968, WAS INCLUDED WITH THE CINCINNATI BID STATING THAT THE EQUIPMENT OFFERED WAS IN COMPLIANCE WITH THE REQUIRED SPECIFICATION, BUT DUE TO DIFFERENCES BETWEEN THE SPECIFICATION AND THE STANDARD MODEL OFFERED, CERTAIN MODIFICATIONS WERE NECESSARY AS LISTED IN THE LETTER. THE BIDDER PROPOSED TO ALLOW CREDITS IF DESIGNATED REQUIREMENTS WERE WAIVED.

ON JUNE 4 AND 5, 1968, SHIPLEY WROTE TO THE NAVY PURCHASING OFFICE CONTENDING THAT THE EQUIPMENT OFFERED BY THE LOW BIDDER DID NOT COMPLY WITH PARAGRAPH 3.2 OF THE SPECIFICATIONS BECAUSE OF THE MODIFICATIONS WHICH WERE REQUIRED. SHIPLEY CITED THE MODIFICATIONS MENTIONED BY THE LOW BIDDER PLUS CERTAIN OTHER MODIFICATIONS NOT MENTIONED IN THE MAY 24 LETTER, CONTENDING THAT THE MODEL WHICH THE LOW BIDDER OFFERED WAS A PROTOTYPE MODEL AND NOT A CURRENT COMMERCIAL MODEL AS REQUIRED BY PARAGRAPH 3.2.

RESPONDING TO THIS CONTENTION, SEVERAL NAVY REPRESENTATIVES, INCLUDING TECHNICAL PERSONNEL AND PROCUREMENT SPECIALISTS, VISITED THE CINCINNATI PLANT ON JUNE 27, 1968, TO DETERMINE HOW THE BIDDER PROPOSED TO MEET THE SPECIFICATIONS. THEY FOUND THAT THE BIDDER HAD A MODEL OF THE LATHE WHICH IT PROPOSED TO MODIFY TO MEET THE SPECIFICATIONS AND THAT THIS MODEL HAD BEEN DEVELOPED AND MARKETED BY THE COMPANY DURING THE PAST 2 YEARS. THEY CONCLUDED THAT THE BIDDER COULD PERFORM THE NECESSARY MODIFICATIONS AND WOULD BE ABLE TO MEET THE SPECIFICATIONS WITHIN THE REQUIRED TIME. BASED ON THIS REPORT, AWARD WAS MADE TO CINCINNATI ON JUNE 30, 1968, AT THE BID PRICE. ON JULY 16, 1968, SHIPLEY FILED A PROTEST WITH OUR OFFICE.

SHIPLEY REPORTS THAT THIS SPECIFICATION (MIL-L-80053) WAS ORIGINALLY DEVELOPED BY THE AIR FORCE AS 00-L-129, AND THAT THEY AND THE DEFENSE INDUSTRIAL PRODUCTION EQUIPMENT CENTER (DIPEC) INTERPRET PARAGRAPH 3.2 OF THE SPECIFICATIONS AS REQUIRING A MODEL WHICH HAS BEEN COMMERCIALLY AVAILABLE AND PROVEN FOR PRODUCTION FOR AT LEAST ITS ONE-YEAR WARRANTY PERIOD, THEREBY ASSURING THAT THE MODEL HAS BEEN COMPLETELY "DEBUGGED" AND THAT REPLACEMENT PARTS FOR SAID MODEL ARE AVAILABLE AS ON-SHELF ITEMS. STATES THAT A MODEL WHICH NEEDS EXTENSIVE MODIFICATIONS (ANY THING OVER 35 PERCENT) TO FIT WITHIN THE SPECIFICATION CANNOT QUALIFY UNDER PARAGRAPH 3.2 AS A "CURRENT COMMERCIAL MODEL.' ON THIS BASIS, SHIPLEY CONTENDS THAT THE LOW BIDDER'S MODEL DID NOT QUALIFY.

YOUR DEPARTMENT REPORTS THAT THE FOLLOWING MODIFICATIONS WILL HAVE TO BE MADE TO THE CINCINNATI MODEL:

"/1) CAMLOCK (D-1) SPINDLE NOSE IS REQUIRED. CONTRACTOR'S STANDARD MODEL IS A-1-8. (2) THE CONTRACTOR'S STANDARD CROSS SLIDE WILL HAVE TO BE LENGTHENED. (3) A LOW FEED RATE OF ONE-HUNDREDTH OF ONE INCH IS REQUIRED. CONTRACTOR'S STANDARD MODEL PROVIDES ONE-TENTH OF ONE INCH LOW FEED RATE. (4) STEADY REST CAPACITY FROM THREE-QUARTERS INCH TO TEN AND THREE-QUARTERS INCHES IS REQUIRED. CONTRACTOR'S STANDARD MODEL IS THREE- QUARTERS INCH TO THREE INCHES. (5) THREE-JAW FIFTEEN INCH AND FOUR-JAW EIGHTEEN INCH CHUCKS ARE REQUIRED. CONTRACTOR'S STANDARD MODEL IS PROVIDED WITH THREE AND FOUR-JAW TWELVE INCH DIAMETER CHUCKS. (6) EXTENDED LEAD THREADS TO TEN INCHES AND VARIABLE LEAD THREADING CAPABILITY IS REQUIRED. CONTRACTOR'S STANDARD MODEL DOES NOT PROVIDE THIS CAPABILITY. (7) FIVE DIGIT FEED FUNCTION IS REQUIRED. CONTRACTOR'S STANDARD MODEL HAS FOUR DIGIT. (8) A POST PROCESSOR FOR IBM 7094 COMPUTER IS REQUIRED. CONTRACTOR'S STANDARD MODEL HAS A POST PROCESSOR FOR IBM 360 COMPUTER.' WE ARE ADVISED THAT MODIFICATIONS (3), (6) AND (7) COULD BE CONSIDERED TO BE EXTENSIVE BUT ONLY IF THE CONTRACTOR MANUFACTURES THE CONTROL SYSTEM RATHER THAN PROVIDING AN AVAILABLE COMMERCIAL UNIT, AND THAT MODIFICATION (8) IS EXTENSIVE IN ANY EVENT. THUS, IF THE CONTRACTOR BUYS A COMMERCIAL CONTROL SYSTEM FOR THE LATHE, THEN ONLY MODIFICATION (8), INVOLVING THE COMPUTER, WOULD BE CONSIDERED EXTENSIVE. (HOWEVER, IT NOW APPEARS THAT THE CONTRACTOR MAY BE BUILDING THE CONTROL UNIT.)

ALSO, YOUR DEPARTMENT ADVISES THAT THE SPECIFICATION (WHICH IS REPORTED TO HAVE BEEN PREPARED BY DIPEC) WAS NOT WRITTEN AROUND ANY ONE COMMERCIAL MODEL AND THAT NO HARDWARE NOW EXISTS WHICH MEETS THE SPECIFICATION REQUIREMENTS IN EVERY DETAIL WITHOUT MODIFICATION. (SHIPLEY DISPUTES THIS STATEMENT; THE COMPANY CLAIMS THAT IT IS PREPARING "FOR FINAL RUNOFF ON THREE (3) LATHES PURCHASED UNDER THE SAME SPECIFICATIONS * * * AND CONSIGNED TO MARE ISLAND AND HUNTERS POINT.' IT ALSO THINKS THAT THE OTHER COMPETITORS HAVE MET THE SPECIFICATION MANY TIMES. SEE THE LETTER DATED OCTOBER 8, 1968.)

IN ANY CASE, YOUR DEPARTMENT BELIEVES THAT THE INTERPRETATION PLACED ON PARAGRAPH 3.2 BY DIPEC AND BY SHIPLEY "GOES FAR BEYOND A REASONABLE READING OF THE LITERAL LANGUAGE" AND "IS AN ATTEMPT TO TRANSFORM WHAT IS ESSENTIALLY A FACTUAL MATTER OF A BIDDER'S RESPONSIBILITY INTO A LEGAL QUESTION OF BID RESPONSIVENESS.' IN VIEW OF THE FAVORABLE PRE-AWARD SURVEY CONDUCTED AT THE CINCINNATI PLANT, YOUR DEPARTMENT CONCLUDES THAT IT WAS PROPER TO MAKE AWARD TO THAT FIRM.

A NUMBER OF OUR DECISIONS ARE CITED BY YOUR DEPARTMENT TO SUPPORT THIS CONCLUSION. OUR ATTENTION IS INVITED TO B-160324 DATED APRIL 5, 1967, INVOLVING A 2-STEP PROCUREMENT BY NAVY WHERE WE SANCTIONED THE ACCEPTANCE OF A STEP 1 PROPOSAL OFFERING A PROTOTYPE MODEL UNDER SPECIFICATION LANGUAGE SIMILAR TO PARAGRAPH 3.2. THE SPECIFICATION PROVIDED AS FOLLOWS:

GENERAL:

"3.1 IT IS INTENDED THAT OFF-THE-SHELF COMMERCIALLY AVAILABLE EQUIPMENT WITH PROVEN RELIABILITY AND MAINTAINABILITY BE PROVIDED WITH SUCH MINOR MODIFICATIONS AS ARE REQUIRED TO MEET THE REQUIREMENTS ESTABLISHED HEREIN.' IT WAS REPORTED BY NAVY IN THAT CASE ALSO THAT NO COMMERCIALLY AVAILABLE EQUIPMENT WOULD MEET THE REQUIREMENTS OF THE SPECIFICATIONS WITHOUT "MINOR MODIFICATION" (AS REFLECTED BY THE SPECIFICATION ITSELF). WE CONCLUDED THAT SINCE THE NAVY TECHNICAL EVALUATORS WERE SATISFIED THAT THE EQUIPMENT IN QUESTION WOULD MEET THE REQUIREMENTS OF PROVEN RELIABILITY AND MAINTAINABILITY AND SINCE IT WAS REPORTED THAT ALL THE PROPOSALS WERE EVALUATED ON THE SAME BASIS IN REGARD TO THE CITED PARAGRAPH 3.1, WE WOULD NOT BE JUSTIFIED IN QUESTIONING EVALUATION OF THAT PROPOSAL.

WE BELIEVE THE TWO CASES ARE DISTINGUISHABLE. PARAGRAPH 3.2 DEFINITELY CALLS FOR THE FURNISHING OF A COMMERCIAL MODEL, WHILE THE EARLIER PARAGRAPH WAS NOT SO CLEAR IN THIS RESPECT. MORE SIGNIFICANTLY, THE PRIOR PROCUREMENT WAS ADVERTISED UNDER THE 2-STEP PROCEDURE WHICH REQUIRES A TECHNICAL EVALUATION OF PROPOSALS. IT SHOULD BE NOTED THAT THE FIRST STEP OF SUCH PROCEDURE CONTEMPLATES THE EXAMINATION OF AND, TO A LIMITED EXTENT, NEGOTIATION ON, THE ITEM OFFERED PRECISELY BECAUSE A SPECIFICATION DEFINITE AND BROAD ENOUGH TO SUPPORT FORMAL ADVERTISING CANNOT OTHERWISE BE ACHIEVED. IN THE INSTANT CASE BIDDERS WERE NOT EVEN REQUESTED TO FURNISH DESCRIPTIVE LITERATURE AND, AS STATED ON PAGE 6 OF THE INVITATION, THE SPECIFICATION PRE-PRODUCTION SAMPLE REQUIREMENT WAS ELIMINATED, BUT THE BIDDERS WERE REQUIRED TO STATE WHETHER THEY WERE FURNISHING A STANDARD COMMERCIAL MODEL. IN THESE CIRCUMSTANCES, WE THINK IT IS REASONABLE TO READ SPECIFICATION PARAGRAPH 3.2 AS REQUIRING THE FURNISHING OF A COMMERCIAL MODEL.

AS STATED, YOUR DEPARTMENT BELIEVES THAT THIS INTERPRETATION OF PARAGRAPH 3.2 IS IN CONFLICT WITH OUR DECISIONS TO THE EFFECT THAT THE FACTUAL MATTER OF A BIDDER'S RESPONSIBILITY TO PERFORM THE CONTRACT MAY NOT BE TRANSFORMED INTO A LEGAL QUESTION OF BID RESPONSIVENESS MERELY BY THE INCLUSION OF A PROVISION IN THE INVITATION FOR BIDS. IN 39 COMP. GEN. 173, FOR EXAMPLE, WE ADVISED THAT EVEN THOUGH THE LOW BIDDER FAILED TO MEET SOME OF THE EXPERIENCE QUALIFICATIONS STATED IN THE INVITATION, THE BID SHOULD NOT BE REJECTED FOR THAT REASON IF THE BIDDER NEVERTHELESS COULD BE DETERMINED TO BE A RESPONSIBLE BIDDER. SEE ALSO 45 COMP. GEN. 4; 41 ID. 737.

BUT A DISTINCTION MUST BE MADE BETWEEN THOSE PROVISIONS IN INVITATIONS FOR BIDS WHICH IMPOSE EXPERIENCE QUALIFICATIONS ON BIDDERS AND PROVISIONS PERTAINING TO PRODUCT QUALIFICATION. A SMALL BUSINESS BIDDER FAILING TO QUALIFY UNDER AN EXPERIENCE QUALIFICATION CLAUSE MAY STILL QUALIFY FOR THE AWARD UNDER THE CERTIFICATE OF COMPETENCY (COC) PROCEDURE. 40 COMP. GEN. 106. ON THE OTHER HAND, THE COC PROCEDURE IS NOT APPLICABLE TO THE QUALIFICATION OF A PRODUCT FOR A QUALIFIED PRODUCTS LIST (SEE 46 COMP. GEN. 465, 474) OR FOR BIDDING ON A 2-STEP PROCUREMENT. IN THESE SITUATIONS PRODUCT QUALIFICATION IS REGARDED AS A MATTER OF BID RESPONSIVENESS. BOTH THE QUALIFIED PRODUCTS PROCEDURE AND THE 2-STEP PROCEDURE REQUIRE BIDDERS TO QUALIFY THEIR PRODUCTS PRIOR TO BIDDING, AND WE APPROVED THE USE OF THESE PROCEDURES ON THE BASIS THAT THEY ARE NEEDED TO ASSURE THAT THE GOVERNMENT WILL OBTAIN A PRODUCT OF REQUISITE QUALITY. SEE 40 COMP. GEN. 38 (2-STEP PROCEDURE) AND 36 ID. 806 (QUALIFIED PRODUCTS PROCEDURE). PARAGRAPH 3.2 IS INTENDED TO SERVE A SIMILAR PURPOSE. CONCLUDE THAT COMPLIANCE WITH PARAGRAPH 3.2 SHOULD BE CONSIDERED A MATTER OF BID RESPONSIVENESS RATHER THAN BIDDER RESPONSIBILITY. B-165292, NOVEMBER 6, 1968.

IT IS ALSO STATED THAT IT WAS PROPER TO WAIVE PARAGRAPH 3.2 IN VIEW OF THE FAVORABLE PRE-AWARD SURVEY AT THE LOW BIDDER'S PLANT. YOUR PROCURING OFFICIALS FEEL THAT PARAGRAPH 3.2 SERVED NO REAL PURPOSE IN THIS CASE AND, THEREFORE, WAS NOT A MATERIAL REQUIREMENT OF THE SPECIFICATION. SEVERAL OF OUR DECISIONS ARE CITED FOR THIS PROPOSITION. THESE DECISIONS HOLD THAT A BID NEED NOT BE REJECTED BECAUSE OF THE FAILURE TO COMPLY WITH A REQUIREMENT OF THE SOLICITATION WHICH IS NOT MATERIAL. 41 COMP. GEN. 366; 40 ID. 435; 39 ID. 595; 36 ID. 376. THUS, IN 41 COMP. GEN. 366, WE ADVISED THE PROCURING AGENCY THAT IT SHOULD NOT REJECT A BIDDER FOR FAILING TO SUBMIT DESCRIPTIVE DATA AS REQUIRED BY THE INVITATION IF IN FACT THE INVITATION SPECIFICATIONS WERE SUFFICIENTLY COMPREHENSIVE SO THAT DESCRIPTIVE DATA WAS NOT REALLY NECESSARY IN THE FIRST PLACE. SIMILARLY, IN 40 COMP. GEN. 435, WE CONCLUDED THAT A NOTATION IN THE BID TO THE EFFECT THAT THE IDENTICAL PRODUCT REQUIRED UNDER THE TERMS OF THE INVITATION HAD BEEN FURNISHED TO THE AGENCY UNDER A PRIOR CONTRACT OVERCAME THE FAILURE TO SUBMIT DESCRIPTIVE DATA.

WE DO NOT THINK IT NECESSARY TO ANALYZE THE CITED CASES IN ANY DETAIL. SUFFICE IT TO SAY THAT COLLECTIVELY THEY STAND FOR THE PROPOSITION THAT DESCRIPTIVE DATA MAY BE MADE AN ELEMENT OF RESPONSIVENESS WHEN IT WOULD SERVE THE PURPOSE OF DETERMINING WHAT THE BIDDER PROPOSES TO URNISH; BUT IF THE SPECIFICATIONS ARE SO DETAILED AS TO LEAVE NO LEEWAY (41 COMP. GEN. 366), OR IF THE ITEM OFFERED IS SATISFACTORILY DESCRIBED BY REFERENCE IN THE BID TO ITEMS UNDER A PRIOR PROCUREMENT (40 COMP. GEN. 435), OR IF THE INFORMATION CAN BE DERIVED FROM STANDARD COMPUTATIONS BASED ON DATA INCLUDED IN THE BID (39 COMP. GEN. 595), THEN LITERAL COMPLIANCE WITH THE DESCRIPTIVE DATA PROVISION IS NOT REQUIRED. THE OTHER CASE CITED, 36 COMP. GEN. 376, REPRESENTS THE INITIATION OF A FIRM RULE ON DESCRIPTIVE DATA. THE SIGNIFICANT POINT IS THAT WHERE THE DESCRIPTIVE DATA GOES TO THE PRECISE NATURE OF THE ITEM TO BE FURNISHED, THE REQUIREMENT FOR THE DATA IS A MATTER OF RESPONSIVENESS AND MUST BE ENFORCED IN SUBSTANCE.

THE REQUIREMENT FOR A COMMERCIAL MODEL CLEARLY GOES TO RESPONSIVENESS SINCE IT DESCRIBES THE NATURE OF THE PRODUCT TO BE FURNISHED. WE HAVE ALREADY CITED OUR CASES SUPPORTING THIS PROPOSITION. ISSUES OF RESPONSIVENESS MUST, OF COURSE, BE DECIDED ON THE BASIS OF THE BID AS OF THE TIME OF OPENING. THE LETTER DATED MAY 24, 1968, WHICH WAS SUBMITTED WITH, AND MUST BE CONSIDERED PART OF, THE CINCINNATI BID, STATES: "AS STANDARD EQUIPMENT WITH THE CINCINNATI N/C TURNING CENTER, WE OFFER THE IBM APT OR ADAPT 360 POST PROCESSOR. THIS POST PROCESSOR IS WRITTEN IN FORTRAN IV. THE USE OF AN IBM 7090-94 POST PROCESSOR IS CONSIDERED A LESS EFFICIENT AND MORE RESTRICTIVE PROCESSOR FOR USE ON A COMPUTER WHICH IS BEING PHASED OUT BY IBM. FOR THIS REASON WE DO NOT SUPPLY A POST PROCESSOR FOR AN IBM 7090-94 COMPUTER AS STANDARD EQUIPMENT. IN CONTRAST, THE IBM 360 APT PROCESSOR IS ADAPTABLE TO THE IBM MORE ADVANCED UNIVERSAL MODEL 360 COMPUTER. OUR BID PRICE INCLUDES THE POST PROCESSOR FOR AN IBM 7090 94. PLEASE NOTE THE CREDIT THAT WILL BE ISSUED AGAINST THE TOTAL BID PRICE, SHOULD THIS REQUIREMENT BE WAIVED FOR ALL 7 ITEMS BID.'

AS NOTED ABOVE, IT IS CONCEDED THAT THE SUBSTITUTION OF POST PROCESSORS CONSTITUTES AN EXTENSIVE MODIFICATION. ON THAT BASIS, AND WITHOUT REFERENCE TO THE OTHER CHANGES PROPOSED IN THE LETTER OF MAY 24, 1968, TO ACHIEVE COMPLIANCE WITH THE SPECIFICATION, WE DO NOT SEE HOW THE CINCINNATI BID MEETS THE REQUIREMENT FOR A "CURRENT COMMERCIAL MODEL.' A MATTER OF RESPONSIVENESS THE REQUIREMENT MAY NOT BE WAIVED ON THE BASIS OF A FAVORABLE PRE-AWARD SURVEY OR ANY OTHER FACTOR NOT A PART OF THE BID AT THE TIME OF OPENING.

THE ONLY PRACTICAL COURSE OF ACTION FOR THE GOVERNMENT AT THIS POINT IS TO PERMIT THE CONTRACT TO STAND. AS STATED IN OUR LETTER OF TODAY TO SHIPLEY (COPY ENCLOSED), WE DO NOT INTEND TO DISTURB THE AWARD. HOWEVER, ACTION SHOULD BE TAKEN TO INSURE AGAINST RECURRENCE OF THIS SITUATION.