B-171407(1), JUL 14, 1971

B-171407(1), JUL 14, 1971

BID PROTEST - NEGOTIATED CONTRACT - AMBIGUOUS ADVICE FAVORITISM CHARGED AFFIRMING PRIOR DECISION WHICH DENIED PROTEST AGAINST AWARD OF A CONTRACT TO GOODYEAR AEROSPACE CORPORATION UNDER A SOLICITATION ISSUED BY THE NAVAL WEAPONS CENTER, CHINA LAKE, FOR A QUANTITY OF WARHEADS. ALTHOUGH THE ADVICE PROTESTANT RECEIVED FROM THE NAVAL REGIONAL PROCUREMENT OFFICE DURING THE COURSE OF NEGOTIATIONS WAS AT LEAST AMBIGUOUS, THE COMP. GEN. CANNOT AGREE THAT IT NECESSARILY FOLLOWS THAT A CONTRACT MUST BE CANCELLED AS A RESULT OF RELIANCE ON THE AMBIGUITY IN THE ABSENCE OF EVIDENCE THAT THE BIDDER WAS MISLED TO ITS PREJUDICE. FURTHER, THERE IS NO PRESUMPTIVE ENTITLEMENT TO AWARD OF AN INITIAL PRODUCTION CONTRACT TO THE DEVELOPMENT CONTRACTOR (HYCOR); IN FACT PARAGRAPH (C) OF ASPR 3-108 STATES THAT THAT REGULATION IS "NOT TO BE CONSTRUED TO REQUIRE OR TO PREVENT COMPETITIVE BIDDING." CONCERNING THE CHARGE OF "BLATANT FAVORITISM" BY PERSONNEL AT THE NAVAL WEAPONS CENTER, A CONCLUSION BASED ON INFERENCE WOULD BE INAPPROPRIATE. FOR THE ABOVE REASONS, THE DECISION DENYING THE PROTEST IS AFFIRMED.

TO GOODWIN, PROCTER & HOAR:

WE REFER TO YOUR LETTER OF APRIL 26, 1971, ON BEHALF OF HYCOR, INC., REQUESTING RECONSIDERATION OF OUR DECISION B-171407 DATED APRIL 13, 1971, WHEREIN WE CONCLUDED THAT THE RECORD BEFORE US DID NOT REQUIRE OUR OFFICE TO DISTURB THE AWARD OF CONTRACT N00123-71-C-0563 TO GOODYEAR AEROSPACE CORPORATION (GAC).

YOUR LETTER QUESTIONS THE FACTUAL AND LEGAL GROUNDS OF OUR DECISION IN SEVERAL RESPECTS. EACH OF YOUR CONTENTIONS WILL BE TREATED AGAINST THE BACKGROUND OF OUR DECISION OF APRIL 13 AND OUR LETTER OF THE SAME DATE TO THE SECRETARY OF THE NAVY. WHEN NECESSARY FOR A COMPLETE DISCUSSION OF THE PARTICULAR ISSUE, THE FACTS SET FORTH IN THE DECISION AND LETTER WILL BE SUPPLEMENTED FROM THE RECORD PRESENTLY BEFORE OUR OFFICE.

FIRST, YOU MAINTAIN THAT IN VIEW OF OUR ACCEPTANCE OF HYCOR'S POSITION THAT IT WAS MISLED BY THE ADVICE OF THE NAVAL REGIONAL PROCUREMENT OFFICE, LOS ANGELES (NRPOLA), DURING THE COURSE OF NEGOTIATIONS TO SUBMIT ITS "NEW BEST PRICE AND DELIVERY," IT FOLLOWS THAT AWARD TO GAC WAS IMPROPER AND SHOULD BE RESCINDED. IN OUR LETTER TO THE SECRETARY OF THE NAVY, WE CONCLUDED THAT "IN THE CIRCUMSTANCES, HYCOR COULD HAVE BEEN MISLED, TO ITS PREJUDICE, BY THE REQUEST FOR A BEST PRICE AND DELIVERY SCHEDULE." AS YOU KNOW, NRPOLA HAS STEADFASTLY DENIED ANY INTENT TO REQUIRE DELIVERY OTHER THAN IN ACCORDANCE WITH THE NAVAL WEAPONS CENTER, CHINA LAKE REQUISITION, THAT IS, DELIVERY OF 100 UNITS BY JANUARY 11, 1971, AND THEREAFTER 300 UNITS PER MONTH UNTIL COMPLETE.

WE HAVE REVIEWED THIS CONCLUSION IN LIGHT OF THE ENTIRE RECORD AND FIND NO BASIS FOR ALTERING OUR VIEW. BRIEFLY STATED, THE ADVICE TO HYCOR WAS AT BEST AMBIGUOUS AND IN AN ENVIRONMENT WHERE THE REQUIREMENT WAS URGENTLY NEEDED. IN THIS LIGHT, WE BELIEVE THAT HYCOR'S OFFER OF AN EARLIER DELIVERY OF A GREATER NUMBER OF UNITS WAS NOT UNREASONABLE. AMBIGUITIES IN THE EXPRESSION OF THE GOVERNMENT'S REQUIREMENTS, WHETHER THE SOLICITATION BE ORAL OR WRITTEN, ARE TO BE AVOIDED AT ALL COSTS, AND THIS WAS THE THRUST OF OUR COMMENTS TO THE SECRETARY. HOWEVER, WE CANNOT AGREE THAT IT NECESSARILY FOLLOWS THAT A CONTRACT MUST BE CANCELED AS A RESULT OF RELIANCE ON AN AMBIGUITY IN THE ABSENCE OF EVIDENCE THAT THE BIDDER OR OFFEROR, AS THE CASE MAY BE, WAS MISLED TO ITS PREJUDICE. MOREOVER, THERE IS NO SHOWING THAT HYCOR WAS PREJUDICED BY PROPOSING EARLIER DELIVERY OR, MORE PARTICULARLY, THAT ITS COMPETITIVE PRICE POSITION WAS AFFECTED.

YOU FURTHER CONTEND THAT OUR ASSESSMENT OF PARAGRAPH 3-108 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), WHICH IS CONCERNED WITH THE NEGOTIATION OF INITIAL PRODUCTION CONTRACTS FOR TECHNICAL OR SPECIALIZED MILITARY SUPPLIES, AND THE CONTRACTING OFFICER'S EXERCISE OF HIS DISCRETION THEREUNDER WERE ERRONEOUS.

WE NOTED IN OUR DECISION TO YOU THAT ASPR 3-108 PERMITS THE INITIAL PRODUCTION CONTRACT TO BE AWARDED TO ANOTHER SUPPLIER WHEN THE PRICE ADVANTAGE TO THE GOVERNMENT IS SO SUBSTANTIAL AS TO OUTWEIGH FACTORS FAVORING AN AWARD TO THE RESEARCH AND DEVELOPMENT CONTRACTOR AND CONCLUDED THEREIN THAT SINCE THERE WAS A SUBSTANTIAL PRICE DIFFERENCE ($168,950) BETWEEN THE HYCOR AND GAC OFFERS, THE DETERMINATION TO AWARD TO GAC DID NOT APPEAR TO BE WITHOUT A PROPER BASIS. AT THIS POINT, WE MUST EMPHASIZE THAT A DECISION TO PLACE THE INITIAL PRODUCTION CONTRACT WITH THE DEVELOPMENT CONTRACTOR IS DISCRETIONARY WITH THE CONTRACTING OFFICER. 50 COMP. GEN. (B-170268, NOVEMBER 9, 1970), WE MADE THE FOLLOWING OBSERVATION, PERTINENT HERE, IN RESPONSE TO THE CONTENTION OF A DEVELOPMENT CONTRACTOR THAT THE PROPOSED USE OF TWO STEP FORMAL ADVERTISING PROCEDURES BY THE NAVY WAS IMPROPER:

"THE COURTS HAVE RECOGNIZED THAT THE AUTHORITY OF THE GOVERNMENT TO PURCHASE IS BROAD AND COMPREHENSIVE, EXTENDING NOT ONLY TO THE SUBJECT MATTER OF THE PURCHASE BUT ALSO TO THE MODE OF PURCHASE. IN G. L. CHRISTIAN AND ASSOCIATES V UNITED STATES, 320 F. 2D 345 (1963), THE COURT OF CLAIMS STATED AT PAGE 348:

"' *** GENERAL LEGISLATION EMPOWERING, IN BROAD TERMS, A GOVERNMENT AGENCY TO PROCURE AND TO MAKE CONTRACTS NORMALLY COVERS ALL PHASES OF THAT PROCESS - FROM THE SOLICITATION OF BIDS OR PROPOSALS, TO THE MAKING OF THE CONTRACT, THROUGH ITS ADMINISTRATION AND PERFORMANCE, TO ITS COMPLETION OR TERMINATION. "THE POWER TO PURCHASE ON APPROPRIATE TERMS AND CONDITIONS IS, OF COURSE, INFERRED FROM EVERY POWER TO PURCHASE." PRIEBE & SONS V UNITED STATES, 332 U.S. 407, 413, 68 S. CT. 123, 127, 92 L.ED. 32 (1947). UNLESS THE CONGRESS HAS PROHIBITED THE AGENCY FROM ENTERING SOME PHASE OF THE CONTRACTUAL PROCESS FOR USING SOME OTHERWISE LAWFUL METHOD OF CONTRACTING), A GRANT OF WIDE AND GENERAL AUTHORITY TO CONTRACT AND PROCURE WILL EXTEND TO ALL REASONABLE PHASES AND METHODS. SEE KERN- LIMERICK, INC. V SCURLOCK, 347 U.S. 110, 114 FF., 74 S.CT. 403, 98 L.ED. 546 (1954); PUBLIC UTILITIES COMM. OF CALIFORNIA V UNITED STATES, 355 U.S. 534, 540-543, 78 S.CT. 446, 2 L.ED.2D 470 (1958); PAUL V UNITED STATES, 371 U.S. 245, 251-255, 261 263, 83 S.CT. 426, 9 L.ED.2D 292 (1963); UNITED STATES V PENN FOUNDRY & MFG. CO., INC., 337 U.S. 198, 214-216, 69 S.CT. 1009, 93 L.ED. 1308 (1949) (OPINION OF MR. JUSTICE DOUGLAS). ***'

"WE DO NOT AGREE WITH THE POSITION ADVANCED THAT BECAUSE OF WHEELABRATOR'S INVESTMENT OF TIME AND MONEY IN THE DEVELOPMENT OF A PORTABLE SHIP'S HULL SIDE BLAST-CLEANING UNIT, THE NAVY WAS REQUIRED, AS MATTER OF LAW, TO NEGOTIATE A PRODUCTION CONTRACT WITH IT TO THE EXCLUSION OF OTHER MANUFACTURERS OF SHIP'S HULL CLEANING MACHINES. UNDER THE PROCUREMENT STATUTE, COMPETITIVE BIDDING IS THE CORNERSTONE OF FEDERAL PROCUREMENT POLICY. UNITED STATES V WARNE, 190 F. SUPP. 645 (1960). NEGOTIATION IS A PERMISSIVE EXCEPTION TO COMPETITIVE ADVERTISING ONLY WHEN THE PREFERRED METHOD IS NOT FEASIBLE OR PRACTICABLE. AS REQUIRED BY ASPR 1-404, NO NEGOTIATED CONTRACT SHALL BE ENTERED INTO UNTIL THE DETERMINATIONS AND FINDINGS UNDER SECTION III, PARTS 3 AND 4, WITH RESPECT TO THE CIRCUMSTANCES JUSTIFYING NEGOTIATIONS AND WITH RESPECT TO ANY USE OF A SPECIAL METHOD OF CONTRACTING HAVE BEEN MADE."

TO THE FOREGOING, WE MUST ADD THAT IN THE CONTEXT OF NEGOTIATED PROCUREMENTS THE FEDERAL POLICY REQUIRING COMPETITION IS NOT DIMINISHED. IN THIS CONNECTION, 10 U.S.C. 2304(G) REQUIRES THAT:

" *** PROPOSALS, INCLUDING PRICE, SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, AND WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED."

CONSIDERING THE SPIRIT AND INTENT OF 10 U.S.C. 2304(G) IN LIGHT OF ASPR 3 -108, WE ARE NOT PERSUADED, AS YOU APPARENTLY URGE, THAT ASPR 3 108 CONFERS A PRESUMPTIVE ENTITLEMENT TO AWARD OF AN INITIAL PRODUCTION CONTRACT TO THE DEVELOPMENT CONTRACTOR. INDEED, ASPR 3-108(A) MAKES IT CLEAR THAT AT THE TIME OF PLACING THE INITIAL PRODUCTION CONTRACT, IT IS ESSENTIAL THAT THE GOVERNMENT BE FREE TO SELECT THE CONTRACTOR AS THE BEST INTEREST OF THE GOVERNMENT MAY DICTATE. MOREOVER, CONSISTENT WITH THE FOREGOING, WE CANNOT AGREE WITH YOUR APPARENT SUGGESTION THAT ASPR 3- 108(C) IMPOSES A DUTY ON THE CONTRACTING OFFICER TO NEGOTIATE ONLY WITH THE DEVELOPMENT CONTRACTOR AND TO TERMINATE THOSE NEGOTIATIONS ONLY WHEN A FAIR AND REASONABLE PRICE CANNOT BE ARRIVED AT. TO US, A READING OF ASPR 3 -108 IN ITS ENTIRETY LEAVES NO DOUBT THAT WHAT WOULD IN EFFECT BE A SOLE- SOURCE PROCUREMENT IS NOT CONTEMPLATED. INDEED, PARAGRAPH (C) SPECIFICALLY STATES THAT ASPR 3 108 IS "NOT TO BE CONSTRUED TO REQUIRE OR TO PREVENT COMPETITIVE PRICING."

HOWEVER, WE DID NOT INTEND TO SUGGEST IN OUR DECISION THAT A SUBSTANTIAL PRICE SAVINGS WAS THE ONLY FACTOR THAT SHOULD BE CONSIDERED IN DECIDING WHETHER TO AWARD TO ANOTHER SUPPLIER, NOR WAS OUR CONCLUSION PREDICATED ON THAT BASIS. DURING OUR INITIAL DEVELOPMENT OF THE CASE, WE INQUIRED WHETHER ASPR 3-108 WAS CONSIDERED IN DETERMINING TO AWARD. IN REPLY, WE RECEIVED A COPY OF MEMORANDUM DATED FEBRUARY 24, 1971, FROM THE OFFICER IN CHARGE, NRPOLA, TO THE COMMANDER, NAVAL SUPPLY SYSTEMS COMMAND, WHICH CONTAINS THE FOLLOWING PERTINENT EXCHANGE:

"B. QUESTION: IF AN ANALYSIS WAS MADE PURSUANT TO ASPR 3-108, WHO MADE IT?

ANSWER: THE ELEMENTS FOR SUCH AN ANALYSIS WERE TAKEN UNDER CONSIDERATION AND THE ANALYSIS MADE BY THE CONTRACTING OFFICER WITH THE ASSISTANCE OF NRPOLA COUNSEL AND BY THE OFFICER IN CHARGE. IT SHOULD BE BORNE IN MIND THAT AWARD OF INITIAL PRODUCTION CONTRACT TO THE DEVELOPMENT CONTRACTOR IS NOT A MANDATORY REQUIREMENT. THUS, IN 3 108(B) IT IS STATED THAT SUCH AN AWARD 'MAY BE IN THE BEST INTEREST OF THE GOVERNMENT'. FURTHERMORE, PARAGRAPH (C) OF THAT SECTION CLEARLY INDICATES THE POSSIBILITY OF AN AWARD TO ANOTHER SUPPLIER WHERE THE PRICE ADVANTAGE IS SO SUBSTANTIAL AS TO OUTWEIGH OTHER FACTORS. 'THIS PARAGRAPH 3-108 IS NOT TO BE CONSTRUED TO REQUIRE OR TO PREVENT COMPETITIVE PRICING.'

"C. QUESTION: WAS PRICE THE ONLY CRITERION WHICH PREVENTED HYCOR FROM GETTING THIS PROCUREMENT?

ANSWER: THAT IS TRUE."

A CONSIDERATION OF THESE "OTHER FACTORS," IN OUR VIEW, LEADS INEVITABLY TO A CONSIDERATION OF THE RESPONSIBILITY OF GAC (SEE ASPR 3 108(B)(I)(A)). WE AGREE WITH YOUR OBSERVATION THAT THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY IS SUBJECT TO REVIEW FOR LEGAL SUFFICIENCY, NOTWITHSTANDING THE FACT THAT HE BASES HIS JUDGMENT ON INFORMATION FURNISHED BY HIS TECHNICAL PERSONNEL. CF. SIMPSON ELECTRIC CO. V SEAMANS, 317 F. SUPP. 684 (1970). AND OUR CONCLUSION THAT THE CONTRACTING OFFICER'S DETERMINATION WAS NOT SUBJECT TO LEGAL OBJECTION WAS BASED ON A CONSIDERATION OF THE EVIDENCE PRESENTED TO HIM BY PERSONNEL AT THE NAVAL WEAPONS CENTER, CHINA LAKE.

AT THE CORE OF YOUR OBJECTION TO THE CONTRACTING OFFICER'S DETERMINATION THAT GAC WAS RESPONSIBLE IS THE ASSERTION OF "BLATANT FAVORITISM" BY THE PERSONNEL AT THE NAVAL WEAPONS CENTER, CHINA LAKE, WHICH DIRECTLY AFFECTED THE AWARD. AS STATED IN YOUR LETTER OF APRIL 26, 1971:

"FAVORITISM TO GOODYEAR. THERE IS NO DISPUTE IN THE RECORD OF THE FOLLOWING FACTS. ON OCTOBER 1, 1970, HAVING IN ITS POSSESSION DRAWINGS OF THE EX 84 MOD. O CHAFF WARHEAD BUT NO PRODUCTION EXPERIENCE WHATSOEVER, GOODYEAR REQUESTED PERMISSION TO BID ON THE CONTRACT. THE EX 84 WAS INTENDED TO REPLACE CHAFFROC, AN EARLIER GENERATION PRODUCT MANUFACTURED BY GOODYEAR, BUT WHOLLY DISSIMILAR IN ITS METHOD OF DISPENSING CHAFF. SINCE THE HYCOR REPRESENTATIVE WAS ALREADY EN ROUTE TO SIGN A SOLE SOURCE CONTRACT, APPROVAL OF GOODYEAR'S CAPABILITY TO PERFORM, UPON THE RECOMMENDATION OF PERSONNEL AT NAVAL WEAPONS CENTER, CHINA LAKE (NWCCL), WAS IMMEDIATELY GIVEN. BOTH CONTRACTORS WERE THEN INSTRUCTED TO SUBMIT BIDS BY OCTOBER 6. ON OCTOBER 8, 1970 THE CONTRACT WAS AWARDED TO GOODYEAR. BY OCTOBER 14 AND 15, 1970 NUMEROUS DESIGN CHANGES IN THE CHAFF WARHEAD HAD BEEN AUTHORIZED. GOODYEAR DID NOT MEET ITS DELIVERY SCHEDULE, AND WAS SUBJECT TO A STOP ORDER FOR A PERIOD OF TIME DUE TO SERIOUS PRODUCT DEFECTS IN ITS INITIAL DELIVERY.

"THERE CAN BE NO DISPUTE WITH THE PROPOSITION THAT GOODYEAR IS PRESUMED TO HAVE ENTERED THE BIDDING WITH A GOOD FAITH INTENT TO PERFORM ACCORDING TO ITS BID, AND THAT ON OCTOBER 8, 1970 WHEN AWARDED THE CONTRACT, IT HAD EVERY INTENTION OF MEETING THE DELIVERY SCHEDULE. THIS PROPOSITION MUST THEN BE SQUARED WITH THE FACT THAT ONE WEEK LATER (WITH AN INTERVENING WEEKEND) GOODYEAR HAD BEEN GRANTED SUBSTANTIAL RELIEF FROM THE DESIGN SPECIFICATIONS UPON WHICH THE CONTRACTORS BID.

"IN SUMMARY, IT IS CONTENDED THAT UNDER NO REASONABLE EVALUATION OF THE EVIDENCE CAN IT BE SAID THAT THE NAVY MADE A GOOD FAITH MISTAKE IN EVALUATING GOODYEAR'S COMPETENCY, AND THEN MOVED TO CORRECT IT, SINCE ONE WEEK WAS IN NO WAY SUFFICIENT TIME FOR SUCH A MISTAKE TO HAVE BECOME APPARENT. THE INESCAPABLE INFERENCE COMPELLED BY THE FACTS IS THAT GOODYEAR MADE A BID WHICH IT KNEW IT COULD NOT HONOR, HAVING THE ASSURANCE OF PERSONNEL AT NWCCL THAT AMELIORATING CHANGES WOULD BE ALLOWED. THIS CONDITION EFFECTIVELY ELIMINATED HYCOR, WHICH IN PRACTICAL EFFECT WAS BIDDING ON THE MORE TECHNICALLY DEMANDING SPECIFICATIONS WHICH IT HAD DEVELOPED WITH NWCCL."

AS YOU RECOGNIZE, THE ALLEGATIONS OF FAVORITISM HAVE BEEN VIGOROUSLY AND CONSISTENTLY DISPUTED IN THE VARIOUS ADMINISTRATIVE REPORTS TO OUR OFFICE. IN ADDITION, WE REQUESTED THAT THE REGIONAL COUNSEL, NRPOLA, CONTACT GAC FOR COMMENT. THE REGIONAL COUNSEL RECEIVED THE FOLLOWING REPLIES FROM THE GENERAL MANAGER OF GAC TO THE QUESTIONS ASKED:

"Q-1. AT THE TIME OF OR PRIOR TO SUBMITTING ITS BEST AND FINAL PROPOSAL, HAD GOODYEAR AEROSPACE CORPORATION ANY REASON TO BELIEVE THAT IT WOULD RECEIVE WAIVERS OR RELAXATIONS OF THE SPECIFICATIONS OR DRAWINGS IT WAS BIDDING ON?

"A-1. NO, BUT LET ME ELABORATE. WE DID SEE SOME OBVIOUS MISTAKES IN THE DRAWINGS AND WE HAD EXPECTED TO REQUEST CORRECTION OF THESE MISTAKES. "Q- 2. AT ANY TIME PRIOR TO SUBMITTAL OF ITS FINAL PROPOSAL HAD GOODYEAR BEEN PROMISED BY ANYONE ON BEHALF OF OR REPRESENTING THE GOVERNMENT THAT THE SPECIFICATIONS OR DRAWINGS WOULD BE WAIVED OR RELAXED OR CHANGED IN ANY WAY SO AS TO REDUCE THE COST OF PERFORMANCE IN COMPLIANCE WITH CONTRACT REQUIREMENTS?

"A-2. ABSOLUTELY NOT.

"Q-3. IN HYCOR'S PROTEST LETTER DATED NOVEMBER 25, 1970, IT IS STATED ON PAGES 6 AND 7 THAT 'ALMOST IMMEDIATELY AFTER THE AWARD OF THE CONTRACT THE GOVERNMENT AND GOODYEAR COMMENCED MODIFICATIONS OF DESIGN SPECIFICATIONS AND TOLERANCES. THE INESCAPABLE INFERENCE ARISES THAT SOME AGENCIES OF THE GOVERNMENT KNEW OR HAD REASON TO KNOW IN ADVANCE THAT GOODYEAR WAS PLANNING TO CONSTRUCT A SUBSTANTIALLY INFERIOR UNIT. HYCOR WAS NOT A PARTY TO THIS PLANNED FORGIVENESS OF REQUIRED QUALITY CONTROL.' WAS GOODYEAR AWARE AT ANY TIME OF ANY 'PLANNED FORGIVENESS OF REQUIRED QUALITY CONTROL'?

"A-3. NO.

"Q-4. OR A PARTY TO ANY SUCH PLANNED FORGIVENESS?

"A-4. NO."

RESOLUTION OF THE ALLEGATIONS RAISED INVOLVES QUESTIONS OF CREDIBILITY, THE RESOLUTION OF WHICH OUR OFFICE IS UNABLE TO UNDERTAKE UNDER OUR PRESENT BID PROTEST PROCEDURES. MOREOVER, IN VIEW OF THE SERIOUSNESS OF THE CHARGE, A CONCLUSION BASED ON INFERENCE WOULD BE INAPPROPRIATE. ACCORDINGLY, WE MUST DEFER TO THE ADMINISTRATIVE VERSION OF THE CIRCUMSTANCES. THUS, WE CANNOT CONCLUDE AS A MATTER OF LAW THAT THE CONTRACTING OFFICER ABUSED HIS DISCRETION IN APPLYING ASPR 3-108 OR IN DETERMINING THAT GAC WAS A RESPONSIBLE CONTRACTOR.

IT IS APPROPRIATE AT THIS POINT TO COMMENT ON OUR EXPRESSION OF OPINION IN THE LETTER TO THE SECRETARY THAT THE PROCUREMENT ACTIVITY HAD INSUFFICIENT TECHNICAL DATA AND MANUFACTURING-TYPE DRAWINGS TO SUPPORT A TRULY COMPETITIVE PROCUREMENT. THE MEMORANDUM OF MAY 25, 1971, FROM THE OFFICER IN CHARGE TO THE COMMANDER, NAVAL SUPPLY SYSTEMS COMMAND, HAS EMPHASIZED IN RESPONSE THAT EVERY EFFORT WAS MADE TO INSURE THAT THE DRAWINGS AND TECHNICAL DATA MADE AVAILABLE TO GAC AND HYCOR WERE SIMILAR AND THAT THE PACKAGES WERE IN FACT SIMILAR. FURTHER, IT IS STATED THAT IN VIEW OF THE URGENCY, IT WOULD HAVE BEEN IMPOSSIBLE TO HAVE PREPARED A DATA PACKAGE AT THE TECHNICAL ACTIVITY FOR SIMULTANEOUS SUBMISSION TO BOTH OFFERORS. THE FACT THAT BOTH GAC AND HYCOR WERE IN THE POSSESSION OF SIMILAR DATA PACKAGES PRECLUDES THE OBJECTION THAT COMPETITION WAS NOT ON A COMMON BASIS, AND YOU HAVE NOT SO ARGUED. NEVERTHELESS, THE CONTRACTING OFFICE HAD NO ASSURANCE PRIOR TO AWARD THAT THE DATA PACKAGES WERE, IN FACT, SUBSTANTIVELY SIMILAR. THIS CIRCUMSTANCE ALONE IS SUFFICIENT TO SUPPORT OUR PRIOR OBSERVATION THAT THE DATA PACKAGES WERE NOT SUFFICIENT FOR A TRULY COMPETITIVE PROCUREMENT, ALTHOUGH IT WOULD NOT SUSTAIN A LEGAL OBJECTION TO THE AWARD. WE HAVE NOT IGNORED, AS THE CITED MEMORANDUM SUGGESTS, THE URGENCY SURROUNDING THE PROCUREMENT; IT IS OUR OPINION THAT GIVEN THE URGENCY OF THE PROCUREMENT, GREATER ATTENTION COULD STILL HAVE BEEN GIVEN TO PROPER PROCUREMENT PROCEDURES.

IN THIS CONNECTION, WE DISCOVERED IN OUR RECONSIDERATION OF THE RECORD THAT GAC BASED ITS PROPOSAL ON THE RENT-FREE USE OF CERTAIN GOVERNMENT PRODUCTION AND RESEARCH PROPERTY. IN RESPONSE TO OUR INQUIRY, WE WERE INFORMALLY ADVISED THAT NO FORMAL ANALYSIS PURSUANT TO ASPR 13-501, ET SEQ., TO ELIMINATE GAC'S COMPETITIVE ADVANTAGE WAS MADE. WE WERE FURTHER ADVISED, HOWEVER, THAT THE CONTRACTING OFFICER CONSIDERED THE QUESTION BY IMPLICATION SINCE THE USE OF THE GOVERNMENT PROPERTY INVOLVED A TRANSFER OF ACCOUNTABILITY, AND THAT HE CONSIDERED THAT ANY RESULTING EVALUATION FACTOR WOULD BE INSIGNIFICANT; THAT GAC IN PREPARING ITS PROPOSAL HAD PROJECTED THE USE OF TOOLING AND FACILITIES AT 3,154 HOURS AT A RATE OF $2.89 PER HOUR FOR AN APPROXIMATE TOTAL OF $9,116; AND THAT TO DATE THE USE HAS BEEN LESS THAN ANTICIPATED. WHILE THE FAILURE TO FORMALLY UNDERTAKE THE ANALYSIS REQUIRED BY ASPR DOES NOT PRESENT A BASIS FOR DISTURBING THE AWARD, IT REPRESENTS POOR PROCUREMENT PROCEDURES THAT, IN OUR VIEW, CANNOT BE JUSTIFIED BY RECOURSE TO THE URGENCY OF THE REQUIREMENT.

CONCERNING THE SIGNIFICANCE OF THE WAIVERS GRANTED GAC AFTER AWARD, THERE IS A FURTHER DISPUTE, TECHNICAL IN NATURE, AS TO THE IMPACT OF THE WAIVERS ON PERFORMANCE OF THE WARHEAD AND ON THE COST. REPRESENTATIVES OF OUR OFFICE DID MEET WITH REPRESENTATIVES OF THE NAVAL RESEARCH LABORATORY, WASHINGTON, D.C., TO DISCUSS THE SIGNIFICANCE OF THE CONTRACT CHANGES. WHILE THEY QUESTIONED THE WISDOM OF MODIFICATIONS TO A SUCCESSFUL PRODUCT, THEY INDICATED THAT BECAUSE OF THE COMPLEXITY OF THE WARHEAD, TEST RESULTS WERE THE ONLY CERTAIN METHOD OF ASSESSING THE EFFECT OF CHANGES IN THE DESIGN OF THE WARHEAD ON ITS PERFORMANCE. HERE, WE MUST INTERJECT THAT THE TEST RESULTS REPORTED TO OUR OFFICE BY NRPOLA SUGGEST APPROXIMATELY THE SAME FAILURE RATE FOR THE GAC WARHEADS AND THE WARHEADS FURNISHED BY HYCOR UNDER ITS OPERATION AND EVALUATION CONTRACT. THE RECORD, THEREFORE, PRESENTS NO BASIS FOR OUR OFFICE TO ADOPT HYCOR'S VIEW OF THE MATERIALITY OF THE CHANGES.

FOR THE FOREGOING REASONS, OUR DECISION OF APRIL 13 IS AFFIRMED.