B-157954, DEC. 15, 1965

B-157954, DEC. 15, 1965

TO THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO LETTER RECEIVED NOVEMBER 2, 1965, WITH ENCLOSURES, FILE NO. 6320, FROM THE CHIEF, BRANCH OF PROCUREMENT MANAGEMENT, DIVISION OF ADMINISTRATIVE SERVICES, REQUESTING AN ADVANCE DECISION AS TO WHETHER THIS OFFICE WILL OBJECT TO THE AWARD OF CONTRACTS FOR AIR TANKER SERVICES AS PROPOSED BY THE FOLLOWING ATTACHMENTS:

"1. DETERMINATIONS AND DECISIONS,"A STUDY OF FOREST SERVICE PROCEDURE FOR CONTRACTING AIR TANKER SERVICES AND A NEW POLICY FOR SUCH CONTRACTS.' THIS STUDY AND POLICY WAS APPROVED BY THE CHIEF OF THE FOREST SERVICE ON OCTOBER 7, 1964.

"2. PROCEDURES FOR IMPLEMENTING THE DETERMINATION AND DECISIONS.

"3. REQUEST FOR PROPOSALS.

"4. COPY OF PROPOSED CONTRACT.'

THE SUBMISSION LETTER STATES THAT THE STUDY WAS GIVEN WIDE CIRCULATION TO MEMBERS OF CONGRESS, AIR TANKER ASSOCIATIONS, AIR TANK OPERATORS AND OTHER GOVERNMENT AGENCIES. THE POLICY WAS NOT IMPLEMENTED BECAUSE FUNDS WERE NOT PROVIDED UNTIL FISCAL YEAR 1966 TO COVER THE MINIMUM GUARANTEE PROVIDED BY THE CONTRACT.

IT IS FURTHER STATED THAT IN THE CONGRESSIONAL COMMITTEE HEARINGS, THE COMMITTEE APPROVED THE DECISION TO CHANGE THE AERIAL TANKER HIRING SYSTEM TO NEGOTIATED CONTRACTS WITH GUARANTEED MINIMUMS. SINCE IMPLEMENTATION REQUIRED ADDITIONAL FUNDS NOT PROVIDED IN THE BUDGET, THE COMMITTEE RECOGNIZED THAT THE CHANGEOVER COULD NOT BE FULLY FINANCED AND ADDED AN ADDITIONAL AMOUNT FOR THIS PERIOD. THE PERTINENT APPROPRIATION WAS INCREASED BY $500,000 IN FISCAL YEAR 1966 FOR THIS PURPOSE.

IT IS STATED FURTHER THAT THE PRINCIPAL MATTER ON WHICH DECISION IS REQUESTED IS CONTAINED IN THE DRAFT OF PROCEDURES FOR EVALUATION OF PROPOSALS AND NEGOTIATING THE CONTRACT. THE POLICY DETERMINATION INDICATES THAT IT IS THE FOREST SERVICES PURPOSE TO ASSURE SELECTION OF THE BEST QUALIFIED CONTRACTOR. TO AID IN THIS STATED PURPOSE, THE PROCEDURES REQUIRE THAT THE CONTRACTOR FIRST DEMONSTRATE BY HIS PROPOSAL AND SUBSEQUENT INSPECTION BY THE FOREST SERVICE THAT HE IS QUALIFIED AND THAT PRICE DISCUSSIONS BE DEFERRED UNTIL QUALIFICATIONS HAVE BEEN ESTABLISHED.

AT THE BASE OF THE PROBLEM IS THE NATURE AND LOCATION OF THE REQUIRED SERVICES AND THE NECESSITY FOR PROVIDING THEREFOR ON A BASIS FAIR TO BOTH THE GOVERNMENT AND THE AIR TANKER OPERATORS. IT IS STATED THAT AIR TANKERS FOR DROPPING RETARDANTS TO AID IN THE CONTROL OF FOREST AND RANGE FIRES, LIKE OTHER TYPES OF FIRE CONTROL EQUIPMENT, ARE NEEDED ONLY DURING THE ACTUAL FIRE EMERGENCY AND THE NEED IS HIGHLY UNPREDICTABLE AS TO LOCATION AND EXTENT OF USE. SINCE LOCATION AND EXTENT OF FUTURE FIRES CANNOT BE PREDICTED, IT IS ECONOMICALLY IMPRACTICABLE TO CONTRACT IN ADVANCE FOR THE MAXIMUM ANTICIPATED FIRE DEMAND. THEREFORE, ADVANCE CONTRACTING OF EQUIPMENT IS LIMITED TO STRATEGICALLY LOCATED "FIRST ATTACK" BASES AND TO THE QUANTITY AND TYPE OF EQUIPMENT AT SUCH BASES WHICH PAST HISTORY HAS DEMONSTRATED GIVES THE BEST COVERAGE. ADDITIONAL EQUIPMENT DEMANDS TO CONTROL LARGE FIRES ARE OBTAINED BY CONTRACTING ON THE OPEN MARKET WHERE AND TO WHATEVER EXTENT THE EMERGENCY SITUATION DEMANDS.

IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT INITIAL ATTACK AIR TANKER SERVICES SHOULD BE COVERED BY FORMAL CONTRACT PREPARED FOR SERVICEWIDE USE. IT WAS ALSO DETERMINED THAT THE PRIMARY OBJECTIVES OF SAFE, EFFECTIVE AIR TANKER SERVICE BY A STABILIZED INDUSTRY CANNOT BE ACHIEVED BY SOLICITING OPEN COMPETITIVE BIDS FOR THE CONTRACTS. IT IS FELT THAT EFFECTIVE AIR TANKER SERVICE, HOWEVER, IS NOT SUBJECT TO PRECISE SPECIFICATION, NOR CAN THE CAPABILITY OF A BIDDER TO DELIVER EFFECTIVE AIR TANKER SERVICE BE EVALUATED FROM A QUOTED UNIT PRICE. WHETHER BIDS ARE SOLICITED ON THE BASIS OF DOLLARS PER HOUR OF FLIGHT, GALLON-MILES OR TON- MILES OF RETARDANTS CARRIED OR ANY OTHER MANNER, THERE IS STATED TO BE NO PRACTICABLE METHOD OF COMPARING THE REAL VALUE OF THE SERVICE TO THE GOVERNMENT BY ANALYSIS OF UNIT PRICES QUOTED BY THE VARIOUS BIDDERS. FOREST SERVICE REQUIREMENTS ARE NOT SATISFIED WITH AN AIRPLANE WHICH CAN CARRY A GIVEN NUMBER OF GALLONS OF RETARDANT SLURRY AND A PILOT WHO CAN FLY IT TO A GIVEN SPOT, DUMP THE LOAD AND RETURN. UNLESS THE RETARDANT IS ACCURATELY DUMPED ON THE AREA OF THE FIRE WHERE IT IS MOST EFFECTIVE IN STOPPING THE FIRE THE ENTIRE TRIP IS OF NO VALUE TO THE GOVERNMENT. EITHER THE ORIGINAL PERFORMANCE IS EFFECTIVE OR IT IS USELESS.

MANY FACTORS MAKE IT IMPRACTICABLE TO WRITE BID SPECIFICATIONS IN A MANNER WHICH WILL PERMIT OPEN COMPETITION, COMPARISON AND EVALUATION OF BIDS ON AN EQUAL BASIS.

IT IS PROPOSED THAT INITIAL ATTACK AIR TANKERS WILL BE COVERED BY CONTRACT THAT, TO BE USEFUL TO THE GOVERNMENT, WILL BE NEGOTIATED UNDER THE AUTHORITY OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, TITLE III, SECTION 302 (C) (10), WITH THE BEST QUALIFIED RESIDENT OPERATOR AT EACH INITIAL ATTACK AIR BASE. AT ANY BASE WHERE THERE IS MORE THAN ONE QUALIFIED RESIDENT OPERATOR, AND AT BASES WHERE THERE ARE NO QUALIFIED RESIDENT OPERATORS, COMPETITION WILL BE RESTRICTED TO OPERATORS KNOWN TO BE CAPABLE OF SAFE, DEPENDABLE AND EFFECTIVE PERFORMANCE. THE POLICY OF THE DEPARTMENT OF AGRICULTURE AND THE FOREST SERVICE FOR NEGOTIATING CONTRACTS IN EXCESS OF $2,500 IS DESIGNED TO ASSURE SELECTION OF THE BEST AVAILABLE CONTRACTOR AND TO SECURE A FAIR CONTRACT PRICE. A BOARD OF CONTRACT AWARDS OF THREE OR MORE MEMBERS IS ESTABLISHED IN EACH REGIONAL OFFICE. THE DUTIES OF THE BOARD ARE TO (1) SOLICIT PROPOSALS FROM INDIVIDUALS OR FIRMS CAPABLE OF UNDERTAKING THE CONTRACT, (2) REVIEW AND EVALUATE THE QUALIFICATIONS AND CAPABILITIES OF ALL PROSPECTIVE CONTRACTORS, (3) SELECT AND AUTHORIZE NEGOTIATION WITH THE BEST AVAILABLE PROSPECTIVE CONTRACTOR, AND (4) DETERMINE A REASONABLE CONTRACT PRICE FOR THE JOB TO BE DONE. THIS INFORMATION IS THEN FURNISHED THE CONTRACTING OFFICER WHO ACTUALLY NEGOTIATES THE CONTRACT.

IT IS CONTEMPLATED THAT PRIOR TO THE NEED FOR AIR TANKER SERVICES THE DIVISION OR BRANCH OF FIRE CONTROL WILL PREPARE A LISTING OF THE AIR BASES REQUIRING AIR TANKER SERVICES AND THE NUMBER AND TYPES OF AIR TANKERS AND FACILITIES REQUIRED AT EACH BASE. LISTS OF KNOWN AIR TANKER OPERATORS TO WHOM PROPOSALS WILL BE SENT SHALL BE PREPARED FOR EACH BASE.

IN REQUESTING PROPOSALS, IT IS FURTHER CONTEMPLATED THAT MAJOR AIR TANKER BASES WHERE A RESIDENT OPERATOR IS REQUIRED WILL BE DESIGNATED. RESIDENT OPERATOR IS DEFINED AS AN OPERATOR OR FIRM WHICH IS CURRENTLY IN A FIXED-BASE AVIATION BUSINESS AT A SPECIFIC AIRPORT WITH OFFICE, MAINTENANCE FACILITIES, OWNED AIR TANKER AIRCRAFT, EMPLOYEES, QUALIFIED PILOT/S) AND MECHANIC/S), AND HAS SPARE PARTS, TOOLS AND EQUIPMENT FOR TYPE OF AIRCRAFT OWNED. HE MUST HAVE APPROPRIATE FEDERAL AND STATE LICENSES AND ANY REQUIRED FRANCHISE OR LEASE WITH CITIES OR OTHER AIRPORT AUTHORITIES TO CONDUCT A COMMERCIAL OPERATION AT THE BASE SPECIFIED.

PROPOSALS WILL BE SOLICITED FROM ALL KNOWN PROSPECTIVE CONTRACTORS FOR A DESIGNATED BASE OR AREA. FACTORS TO BE USED IN EVALUATION WILL BE A PART OF THE PROSPECTUS WHICH WILL ADVISE THE OFFERORS THAT SELECTION OF A PROSPECTIVE CONTRACTOR WILL BE BASED ON STATED FACTORS WHICH WILL PROVIDE SERVICES OF THE GREATEST VALUE TO THE GOVERNMENT. THE FACTORS WILL INCLUDE BUT NOT NECESSARILY BE LIMITED TO THE FOLLOWING:

A. EXPERIENCE AND TRAINING OF PILOTS IN SUPPRESSION OF FOREST AND RANGE FIRES, ESPECIALLY IN THE AREA OF OPERATIONS FROM THE DESIGNATED BASE.

B. SAFETY RECORD OF PILOTS, AIRCRAFT AND OPERATOR.

C. PLANT, MECHANICS AND MAINTENANCE FACILITIES OF OPERATOR AND THEIR LOCATION ON OR IN RELATION TO THE BASE.

D. AVAILABILITY OF REPLACEMENT PILOTS AND AIRCRAFT AND THEIR QUALIFICATIONS AND CONDITION.

E. FINANCIAL CAPABILITY.

EVALUATION OF PROPOSALS WILL BE MADE BY A CONTRACT AWARD BOARD. THE DUTIES OF THE BOARD ARE (1) REVIEW AND EVALUATE THE QUALIFICATIONS AND CAPABILITIES OF ALL PROSPECTIVE CONTRACTORS, (2) SELECT AND AUTHORIZE NEGOTIATION WITH THE BEST AVAILABLE PROSPECTIVE CONTRACTOR, AND (3) DETERMINE A REASONABLE CONTRACT PRICE FOR THE SERVICE REQUIRED.

FOR MAJOR BASES WHERE A RESIDENT OPERATOR IS REQUIRED AND THERE IS ONLY ONE QUALIFIED RESIDENT OPERATOR, THIS BECOMES A "SOLE SOURCE.' WHERE TWO OR MORE RESIDENT OPERATORS QUALIFY UNDER THE BOARD'S EVALUATION, PRICES WILL BE SECURED BY THE CONTRACTING OFFICER FROM EACH QUALIFIED OFFEROR AND AWARD MADE TO THE LOWEST QUALIFIED RESPONSIBLE OFFEROR.

FOR BASES DESIGNATED AS NOT HAVING OR REQUIRING A RESIDENT OPERATORS THE SUBMITTED PLAN PROPOSES THAT THE BOARD WILL SELECT THE OPERATOR BEST QUALIFIED UNDER THE FACTORS USED FOR EVALUATION. WHERE TWO OR MORE QUALIFY UNDER THE BOARD'S EVALUATION, PRICES WILL BE SECURED FROM EACH QUALIFIED OFFEROR AND AWARD MADE TO LOWEST RESPONSIBLE OFFEROR.

SECTION 302 (C) (10) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 252 (C) (10), PROVIDES THAT CONTRACTS MAY BE NEGOTIATED WITHOUT ADVERTISING IF FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO SECURE COMPETITION. THE HOUSE REPORT ON H.R. 4754, WHICH BECAME THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, STATES THAT SECTION 302 (A) (9) THEREOF (RENUMBERED 302 (C) (10) BY SECTION 2 OF PUBLIC LAW 85-800) SHOULD BE CONSTRUED LIBERALLY, AND THE SECTION PLACES UPON THE AGENCY CONCERNED THE MAXIMUM RESPONSIBILITY FOR DECISIONS AS TO WHERE IT IS IMPRACTICABLE TO SECURE COMPETITION.

THE BASIC OBJECTIVE OF PROCUREMENT BY THE CIVILIAN AGENCIES OF THE GOVERNMENT IS SET FORTH IN SECTION 1-1.301-1 OF THE FEDERAL PROCUREMENT REGULATIONS AS FOLLOWS:

"ALL PURCHASES AND CONTRACTS, WHETHER BY FORMAL ADVERTISING OR BY NEGOTIATION, SHALL BE MADE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICABLE EXTENT.'

SECTION 1-3.102 OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"DURING THE COURSE OF NEGOTIATIONS, DUE ATTENTION SHALL BE GIVEN TO THE FOLLOWING AND ANY OTHER APPROPRIATE FACTORS:

"/A) COMPARISON OF PRICES QUOTED AND CONSIDERATION OF OTHER PRICES FOR THE SAME OR SIMILAR PROPERTY OR SERVICES, WITH DUE REGARD TO PRODUCTION COSTS, INCLUDING EXTRA PAY SHIFT, MULTI-SHIFT AND OVERTIME COSTS, AND ANY OTHER FACTOR RELATING TO THE PRICE, SUCH AS PROFITS, COST OF TRANSPORTATION, AND CASH DISCOUNTS.

"/B) COMPARISON OF THE BUSINESS REPUTATION, CAPACITY, AND RESPONSIBILITY OF THE RESPECTIVE PERSONS OR FIRMS WHO SUBMIT OFFERS.

"/C) CONSIDERATION OF THE QUALITY OF THE PROPERTY OR SERVICES OFFERED, INCLUDING THE SAME OR SIMILAR PROPERTY OR SERVICES PREVIOUSLY FURNISHED, WITH DUE REGARD TO CONFORMANCE WITH SPECIFICATION REQUIREMENTS.'

SUBJECT TO THE ABOVE CRITERIA, THE PROPOSED PLAN CONTAINED IN THE DRAFT OF PROCEDURE FOR EVALUATION OF PROPOSALS AND NEGOTIATING THE CONTRACTS APPEARS TO BE FAIR AND REASONABLE AND WE DO NOT QUESTION THE AUTHORITY OR THE PROPRIETY OF ITS ESTABLISHMENT, PARTICULARLY IN VIEW OF THE DIFFICULTIES STATED TO HAVE BEEN EXPERIENCED IN FORMER ADVERTISEMENTS AND THE EFFECT AWARDS BASED UPON PRICE ALONE HAVE HAD ON THE STATE OF THE INDUSTRY. WE HAVE BEEN INFORMALLY ADVISED THAT THE TANKER ASSOCIATIONS IN THE AFFECTED AREAS OF THE COUNTRY ARE IN FAVOR OF THE PROPOSED CHANGES IN AWARDING TANKER CONTRACTS. IT IS READILY APPARENT THAT THE PROVISION FOR MINIMUM GUARANTEE UNDER SECTION 9 OF THE PROPOSED CONTRACT FORM WOULD FIND INDUSTRY FAVOR AND ENCOURAGE OPTIMUM RATHER THAN MINIMAL PERFORMANCE IN THE PECULIAR CIRCUMSTANCES OF THE CONTRACT WORK OUTLINED IN THE SUBMISSION. ALTHOUGH THE PROCEDURE MAY BE FOUND TO BE SOMEWHAT RESTRICTIVE OF COMPETITION AT SOME BASES, WE FEEL THAT IT IS NOT UNNECESSARILY RESTRICTIVE CONSIDERING THE CIRCUMSTANCES INVOLVED AND THE RECOGNIZED PROBABILITY THAT SOME EARLY ATTACK BASE AWARDS WILL BE NEGOTIATED ON A SOLE-SOURCE BASIS. WE HAVE CONSISTENTLY TAKEN THE POSITION THAT A WIDE DISCRETION IS VESTED IN ADMINISTRATIVE OFFICIALS IN NEGOTIATED PROCUREMENTS REQUIRING PRIMARILY THAT THE CONTRACTING OFFICIALS EXERCISE THEIR BEST JUDGMENT IN MAKING THE AWARD. B-149330, OCTOBER 10, 1962; B-149344, DECEMBER 26, 1962. IT HAS LONG BEEN REGARDED AS WITHIN THE PROVINCE OF THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO DETERMINE THE NEEDS AND TO DRAFT SPECIFICATIONS TO REFLECT THE NEEDS OF THE GOVERNMENT AND TO DETERMINE FACTUALLY WHETHER THOSE NEEDS WILL BE MET BY THE ARTICLES OFFERED. 17 COMP. GEN. 554. THE TERM "SPECIFICATIONS" IS HERE USED IN A BROAD SENSE TO EMBRACE NOT ONLY THE END PRODUCT BUT IN ADDITION ANY REQUIREMENT IMPOSED UPON THE BIDDER TO BECOME ELIGIBLE FOR AWARD AND, HAVING RECEIVED THE AWARD, TO OBTAIN AN ACQUITTANCE UNDER THE TERMS OF THE CONTRACT.

ONE OF THE PROBLEMS INHERENT IN THE SITUATION PRESENTED, AS WE SEE IT, IS TO ESTABLISH THE RESPONSIBILITY OF THE PROPONENT BEFORE HE IS REQUESTED TO SUBMIT A PRICE LEADING TO FURTHER CONSIDERATION OF NEGOTIATION. WE HAVE HELD THAT, AS A GENERAL RULE, THE RESPONSIBILITY OF A BIDDER IS A MATTER FOR DETERMINATION BY THE CONTRACTING AGENCY, AND OUR OFFICE WILL NOT QUESTION SUCH DETERMINATION UNLESS IT IS ARBITRARY, CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. 37 COMP. GEN. 430; 38 ID. 131. WE HAVE NO OBJECTION TO THE USE OF THE PREQUALIFICATION PROCEDURE CONTEMPLATED TO BE EFFECTED BY THE FIRST STEP OF THE PROPOSAL AS A MEANS TO ADMINISTRATIVELY DETERMINE THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS GENERALLY. COMP. GEN. 676. IT IS STATED IN THE SUBMISSION THAT NEGOTIATION PROCEDURES SHALL COMPLY WITH PART 1-3 OF THE FEDERAL PROCUREMENT REGULATIONS AND THIS OFFICE WOULD HAVE NO OBJECTION IF THE PROPOSED PROCUREMENTS ARE CONSUMMATED UNDER A REQUEST FOR PROPOSALS AND CONTRACTS AWARDED BY NEGOTIATION UNDER THE EXCEPTION TO FORMAL ADVERTISEMENT SET FORTH, IMPRACTICABILITY OF SECURING COMPETITION, ARISING FROM INCAPABILITY OF DESCRIPTION AND PARTICULARIZATION BY SPECIFICATION. FPR SEC. 1-3.210 (13).

IT HAS BEEN INFORMALLY ASCERTAINED THAT IT IS THE INTENTION OF THE FOREST SERVICE TO FOLLOW THE REQUIREMENTS OF THE SMALL BUSINESS ACT WHERE APPLICABLE AND IT IS AGREED THAT WHERE THE BIDDER IS A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY IS SUBJECT, SO FAR AS CONCERNS CAPACITY AND CREDIT, TO THE AUTHORITY OF THAT ADMINISTRATION UNDER SECTION 8 (B) (7) OF THE ACT, PUBLIC LAW 85-536, 15 U.S.C. 637 (B) (7), TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE CAPACITY AND CREDIT OF A SMALL BUSINESS TO PERFORM A SPECIFIC CONTRACT. SEE B 135444, B-135504, OCTOBER 9, 1958; AND B-152757, JULY 15, 1964.

IT IS TO BE UNDERSTOOD THAT THIS CONCURRENCE IN THE INAUGURATION OF THE PROPOSED PROCEDURE IS WITHOUT PREJUDICE TO ANY RIGHTS OF OUR OFFICE TO TAKE ACTION OR RAISE QUESTIONS WITH RESPECT TO ANY MATTERS WHICH MAY ARISE FROM OR IN CONNECTION WITH THE APPLICATION OR ADMINISTRATION OF SUCH PROCEDURES, OR THE EXTENSION OF SUCH PROCEDURES TO OTHER FIELDS OF PROCUREMENT.