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B-149186, JUL. 11, 1962

B-149186 Jul 11, 1962
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TO THE SECRETARY OF DEFENSE: WE ARE ENCLOSING A COPY OF OUR DECISION OF TODAY TO THE SECRETARY OF THE ARMY RELATIVE TO VARIOUS PROTESTS BY BIDDERS UNDER IFB NO. YOU WILL NOTE THAT THE TERMS OF GENERAL PROVISION NO. 33. ARE IDENTICAL WITH THOSE SET OUT IN THE SPECIAL TOOLING CLAUSE (INCLUDING THE FIRST ALTERNATE PARAGRAPH (K) ( PRESCRIBED FOR FIXED -PRICE SUPPLY CONTRACTS BY ASPR 13-504. IT IS OUR OPINION THAT. WHERE THE GOVERNMENT IS TO RECEIVE TITLE RIGHTS TO SPECIAL TOOLING UNDER A CONTRACT AWARDED AFTER FORMAL ADVERTISING. THE NATURE AND EXTENT OF SUCH RIGHTS WHICH WOULD BE OBTAINED BY ACCEPTANCE OF EACH BID IS A PROPER MATTER FOR CONSIDERATION IN DETERMINING THE LOW BID. IT IS OUR FURTHER OPINION THAT THE INCLUSION OF THE CLAUSE PRESCRIBED BY ASPR 13-504 IN AN INVITATION FOR BIDS MAKES IT IMPOSSIBLE TO EVALUATE BIDS ON THE BASIS OF PRICE ALONE.

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B-149186, JUL. 11, 1962

TO THE SECRETARY OF DEFENSE:

WE ARE ENCLOSING A COPY OF OUR DECISION OF TODAY TO THE SECRETARY OF THE ARMY RELATIVE TO VARIOUS PROTESTS BY BIDDERS UNDER IFB NO. CML-30 070-62- 155.

YOU WILL NOTE THAT THE TERMS OF GENERAL PROVISION NO. 33, AS INCLUDED IN THE INVITATION, ARE IDENTICAL WITH THOSE SET OUT IN THE SPECIAL TOOLING CLAUSE (INCLUDING THE FIRST ALTERNATE PARAGRAPH (K) ( PRESCRIBED FOR FIXED -PRICE SUPPLY CONTRACTS BY ASPR 13-504.

IT IS OUR OPINION THAT, WHERE THE GOVERNMENT IS TO RECEIVE TITLE RIGHTS TO SPECIAL TOOLING UNDER A CONTRACT AWARDED AFTER FORMAL ADVERTISING, THE NATURE AND EXTENT OF SUCH RIGHTS WHICH WOULD BE OBTAINED BY ACCEPTANCE OF EACH BID IS A PROPER MATTER FOR CONSIDERATION IN DETERMINING THE LOW BID.

IT IS OUR FURTHER OPINION THAT THE INCLUSION OF THE CLAUSE PRESCRIBED BY ASPR 13-504 IN AN INVITATION FOR BIDS MAKES IT IMPOSSIBLE TO EVALUATE BIDS ON THE BASIS OF PRICE ALONE, OR ON ANY OTHER ASCERTAINABLE EQUAL BASIS. THIS DISABILITY APPEARS TO ARISE FROM THE FOLLOWING PROVISIONS OF THE CLAUSE:

FIRST, PARAGRAPH (A) LIMITS THE DEFINITION OF SPECIAL TOOLING TO THAT WHICH IS "ACQUIRED OR MANUFACTURED BY THE CONTRACTOR FOR USE IN THE PERFORMANCE OF THIS CONTRACT" AND SPECIFICALLY EXCLUDES "ITEMS OF TOOLING OR EQUIPMENT HERETOFORE ACQUIRED BY THE CONTRACTOR, OR REPLACEMENTS THEREOF, WHETHER OR NOT ALTERED OR ADAPTED FOR USE IN THE PERFORMANCE OF THIS CONTRACT * * *.' THESE PROVISIONS WOULD APPEAR TO GIVE THE GOVERNMENT THE RIGHT, AT THE BID PRICE, TO ACQUIRE TITLE TO ALL SPECIAL TOOLING WHICH ONE BIDDER MUST ACQUIRE TO PERFORM THE CONTRACT. HOWEVER, THEY WOULD NOT GIVE THE GOVERNMENT SIMILAR RIGHTS AGAINST ANOTHER BIDDER WHO ALREADY POSSESSED THE NECESSARY SPECIAL TOOLING, OR WHO POSSESSED OTHER TOOLING WHICH COULD BE ALTERED OR ADAPTED FOR USE IN PERFORMANCE OF THE CONTRACT. SUCH BIDDERS THEREFORE WOULD NOT BE BIDDING ON AN EQUAL BASIS, NOR WOULD THE GOVERNMENT BE RECEIVING THE SAME RIGHTS BY AN AWARD TO THE SECOND BIDDER AS IT WOULD BY AN AWARD TO THE FIRST. FOR USE IN ADVERTISED PROCUREMENTS, IT WOULD THEREFORE APPEAR NECESSARY TO CORRECT THESE DEFECTS. THIS MIGHT BE ACCOMPLISHED BY AMENDING PARAGRAPH (A) SO AS TO INCLUDE ALL SPECIAL TOOLING USED IN PERFORMANCE OF THE CONTRACT AND TO EITHER INCLUDE OR EXCLUDE ALL OTHER TOOLING ALTERED OR ADAPTED FOR USE IN PERFORMANCE OF THE CONTRACT, IRRESPECTIVE OF THE TIME AT WHICH SUCH TOOLING WAS ACQUIRED.

SECOND, THE CLAUSE "THE FULL COST OF WHICH IS CHARGED TO SUCH SUBCONTRACT OR PURCHASE ORDER" IN PARAGRAPH (K) OF THE SPECIAL TOOLING CLAUSE WOULD APPEAR TO PRECLUDE EQUAL EVALUATION OF BIDS WITH RESPECT TO SUBCONTRACTOR ACQUIRED SPECIAL TOOLING. OBVIOUSLY, IT IS IMPOSSIBLE TO EVALUATE A BID IN WHICH THE BIDDER HAS INCLUDED THE FULL COST OF ALL SPECIAL TOOLING, AND UNDER WHICH THE GOVERNMENT MAY TAKE TITLE TO ALL SPECIAL TOOLING AT THE BID PRICE, AGAINST A BID UNDER WHICH IT IS INTENDED TO SUBCONTRACT ALL FABRICATION REQUIRING SPECIAL TOOLING AND IN WHICH THE SUBCONTRACTORS HAVE INCLUDED EITHER NO PART, OR ONLY AN UNSPECIFIED PORTION, OF THEIR SPECIAL TOOLING COSTS IN THEIR SUBCONTRACT PRICES. IT IS ALSO APPARENT THAT THE INCLUSION OF AN ADDITIONAL CLAUSE, SUCH AS PARAGRAPH 7 (A) OF THE SCHEDULE IN IFB NO. CML-30-070-62-155, DOES NOT OPERATE TO CORRECT THIS SITUATION.

IN VIEW OF THE URGENCY OF THE PROCUREMENT UNDER IFB NO. CML-30-070 62-155 AND THE LACK OF EVIDENCE THAT ANY OF THE SPECIAL CIRCUMSTANCES DESCRIBED ABOVE WERE PRESENT IN THIS PROCUREMENT, WE HAVE ADVISED THE SECRETARY OF THE ARMY AN AWARD MAY BE MADE UNDER THE INVITATION IF DESIRED. HOWEVER, WE RECOMMEND THAT IMMEDIATE CONSIDERATION BE GIVEN TO AMENDING ASPR 13-504 TO CORRECT THE DEFECTS DESCRIBED ABOVE, AND THAT USE OF THE CLAUSE PRESENTLY PRESCRIBED BE PROHIBITED IN ADVERTISED PROCUREMENTS PENDING SUCH REVISION.

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