B-145557, JUN. 16, 1961

B-145557, JUN. 16, 1961

TO R. H. SHEPPARD CO., INC.:

BY LETTERS DATED APRIL 12 AND MAY 29, 1961, YOU PROTESTED AGAINST THE ACTION OF THE CORPS OF ENGINEERS, WASHINGTON DISTRICT OFFICE, IN REJECTING YOUR UNINTERRUPTED POWER SOURCE BECAUSE OF INABILITY TO MEET THE REQUIREMENTS OF SECTION 43 OF THE U.S. ARMY SPECIFICATION NO. ENG 49-080- /NEG-61-25-/25) (, INCLUDED IN, AND MADE A PART OF, FIXED-PRICE CONTRACT NO. DA-49-080-ENG-5187 DATED DECEMBER 13, 1960, FOR THE CONSTRUCTION OF A COMLOGNET CENTER AT ANDREWS AIR FORCE BASE, MARYLAND.

THE RECORD SHOWS THAT THE GRUNLEY-WALSH CONSTRUCTION COMPANY, INC., PRIME CONTRACTORS ENTERED INTO A FIXED-PRICE SUBCONTRACT WITH HARRISON ELECTRICAL CONTRACTORS, INC., ON JANUARY 2, 1961, FOR THE ELECTRICAL WORK COVERED BY THE SPECIFICATIONS, INCLUDING, AMONG OTHERS, GENERATOR EQUIPMENT-DIESEL-ELECTRIC UNINTERRUPTED POWER SUPPLY UNITS UNDER SECTION 43 OF THE SPECIFICATIONS. ON JANUARY 13, 1961, CURTIS ENGINE AND EQUIPMENT CO., INC., A DEALER OF YOUR FIRM, OFFERED TO FURNISH TO HARRISON TWO DIESEL-ELECTRIC GENERATING UNITS, SHEPPARD "NO-BREAK," 150 KW., FOR $58,600. YOU FURNISHED THE ARCHITECT-ENGINEER, ON MARCH 14 OR 15, 1961, AN OUTLINE DIAGRAM OF A 150 KV.-A. UNINTERRUPTED POWER SOURCE, YOUR BULLETIN A-208, YOUR SPECIFICATION A-211 AND A SWAN DRAWING E-1620 ON THE POWER SOURCE PROPOSED TO BE INSTALLED UNDER THE ELECTRICAL SUBCONTRACT. THE CONTRACTING OFFICER INFORMED THE PRIME CONTRACTOR ON MARCH 22, 1961, THAT YOUR FIRM COULD NOT BE APPROVED AS A SUPPLIER, AS REQUIRED BY SECTION 43-03B. OF THE SPECIFICATIONS AND PARAGRAPHS 1 (C) AND 2 (A) OF THE ELECTRICAL SUBCONTRACT, BECAUSE OF YOUR FAILURE TO SUBMIT DESCRIPTIVE DATA, WIRING DIAGRAM, OR OPERATIONAL DATA ON A 150 KV.-A. UNIT. SECTION 43-06C. OF THE SPECIFICATIONS PROVIDED:

"C. SIMILAR UNINTERRUPTED POWER SUPPLY UNITS OF THE SAME TYPE SHALL HAVE BEEN PREVIOUSLY MANUFACTURED, INSTALLED, AND TESTED BY THE MANUFACTURER.'

ADDITIONAL DATA WAS SUBMITTED BY YOUR FIRM, BUT AFTER REVIEW, THE CONTRACTING OFFICER INFORMED THE PRIME CONTRACTOR ON APRIL 6, 1961, THAT HE DID NOT "FIND EVIDENCE THAT THE R. H. SHEPPARD COMPANY HAS PREVIOUSLY MANUFACTURED, TESTED AND PLACED INTO OPERATION A SIMILAR UNIT AS REQUIRED BY THE CONTRACT.'

THEREAFTER, ON APRIL 10, 1961, THE ELECTRICAL SUBCONTRACTOR ISSUED A PURCHASE ORDER TO THE CONSOLIDATED DIESEL ELECTRIC CORPORATION FOR TWO 150 KV.-A. UNINTERRUPTED POWER SOURCES FOR $70,268. THE CONTRACTING OFFICER HAS ADVISED US THAT THE DATA SUBMITTED BY CONSOLIDATED DIESEL SHOWS THAT THEY HAD PREVIOUSLY MANUFACTURED, INSTALLED, AND TESTED UNINTERRUPTED POWER SOURCE UNITS WITH AN OUTPUT OF 150 KW.

YOU CONTEND THAT THE REQUIREMENT IN SECTION 43.06C. OF THE SPECIFICATION THAT MANUFACTURERS MUST HAVE PREVIOUSLY PRODUCED, INSTALLED AND TESTED A "SIMILAR" UNIT HAS BEEN CONSTRUED BY THE CONTRACTING OFFICER TO MEAN THAT A MANUFACTURER MUST HAVE PRODUCED AN "IDENTICAL" UNIT OF 150 KV.-A. AND, AS SUCH, IS UNDULY RESTRICTIVE OF COMPETITION. IN THAT CONNECTION, YOU POINT OUT THAT YOUR FIRM WAS AWARDED A CONTRACT IN DECEMBER 1960 BY THE CENTRAL INTELLIGENCE AGENCY FOR ONE 30 KW. AND ONE 200 KW. UNINTERRUPTED POWER SOURCE, CITING B 145031 DATED APRIL 7, 1961. YOU ALSO REFER TO B- 145015 OF MAY 8, 1961, WHERE WE DID NOT DISTURB AN AWARD OF A CONTRACT FOR TWO 60 KW. UNINTERRUPTED POWER SOURCES FROM A CONTRACTOR WHO HAD NOT PREVIOUSLY INSTALLED THE ENTIRE POWER UNIT BUT ONLY ITEMS OF THE EQUIPMENT COMPRISING THE ENTIRE UNIT. THE PROCUREMENT SPECIFICATIONS IN THAT CASE REQUIRED:

"A. STANDARD PRODUCTS: EQUIPMENT FORMING A PART OF THE UNINTERRUPTED POWER UNIT SHALL BE OF PROVEN DESIGN AND OF THE PRODUCT OF AN ORGANIZATION SUCCESSFULLY ENGAGED IN THE MANUFACTURE OF THE EQUIPMENT REQUIRED. THE MANUFACTURER SHALL PRODUCE EVIDENCE OF INSTALLATIONS HAVING SUCCESSFULLY USED EQUIPMENT IDENTICAL, EXCEPT FOR SIZE, FOR A PERIOD OF TWO YEARS.'

WHILE THERE IS SOME MERIT TO THE ARGUMENT THAT THE ADMINISTRATIVE INTERPRETATION OF THE WORD ,SIMILAR" IN SECTION 43.06C. TO MEAN "IDENTICAL" MAY HAVE RESTRICTED COMPETITION TO A DEGREE, THIS POINT NEED NOT BE DECIDED BY US INASMUCH AS YOUR PROTEST MUST BE DENIED ON OTHER GROUNDS. IN REACHING THIS CONCLUSION, WE DIRECT YOUR ATTENTION TO THE FACT THAT THE DECISIONS CITED ABOVE INVOLVED PROCUREMENT MADE DIRECTLY BY THE GOVERNMENT FROM THE RESPONDING OFFERORS AS DISTINGUISHED FROM A PROCUREMENT, AS HERE, MADE BY A FIXED-PRICE SUBCONTRACTOR TO A FIXED-PRICE PRIME GOVERNMENT CONTRACTOR.

THE PURCHASE ORDER ISSUED TO CONSOLIDATED DIESEL WAS IN THE NATURE OF A SUB-SUBCONTRACT. THE AWARD OF SUCH A CONTRACT BY A SUBCONTRACTOR TO A PRIME GOVERNMENT CONTRACTOR IS NOT SUBJECT TO THE LIMITATIONS IMPOSED ON GOVERNMENT CONTRACTING OFFICERS BY THE PRINCIPLES GOVERNING GOVERNMENT PROCUREMENT GENERALLY. THAT IS ESPECIALLY TRUE HERE WHERE PARAGRAPH 6 OF THE GENERAL CONDITIONS OF THE PRIME CONTRACT SPECIFICALLY PROVIDES THAT: "NOTHING CONTAINED IN THIS CONTRACT SHALL CREATE ANY CONTRACTUAL RELATION BETWEEN THE SUBCONTRACTOR AND THE GOVERNMENT.' THEREFORE, THE FAILURE TO AWARD YOUR FIRM THE PURCHASE ORDER WOULD NOT RENDER THE SUB-SUBCONTRACT WITH CONSOLIDATED DIESEL ILLEGAL IN THE SENSE THAT IT MAY HAVE CONTRAVENED EXISTING PROCUREMENT STATUTES AND REGULATIONS. THE RULE OF LAW APPLICABLE IN SITUATIONS SUCH AS HERE INVOLVED IS THAT SUBCONTRACTS OR AGREEMENTS TO FURNISH EQUIPMENT TO PRIME CONTRACTORS ENGAGED IN THE PERFORMANCE OF CONTRACTS WITH THE GOVERNMENT ORDINARILY DO NOT RESULT IN PRIVITY OF CONTRACT BETWEEN THE SUBCONTRACTORS AND THE UNITED STATES. 26 COMP. GEN. 303, 305. JOSEPH PETRIN ET AL. V. UNITED STATES, 90 CT.CL. 670; DONOVAN CONSTRUCTION CO. V. GENERAL ELECTRIC CO., 133 F.SUPP. 870

ACCORDINGLY, YOU ARE ADVISED THAT THERE IS NO LEGAL BASIS UPON WHICH OUR OFFICE MAY QUESTION THE AWARD OF THE PURCHASE ORDER TO THE CONSOLIDATED DIESEL ELECTRIC CORPORATION.