B-150191, MAR. 8, 1963

B-150191, MAR. 8, 1963

TO VIEWLEX, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 13, 1962, AND SUBSEQUENT CORRESPONDENCE, WITH ENCLOSURES, PROTESTING AGAINST PROPOSED AWARDS OF CONTRACTS UNDER INVITATIONS FOR BIDS NOS. 33-657-62 500 (IFB-500) AND 33- 657-62-501 (IFB-501) ISSUED BY THE DEPARTMENT OF THE AIR FORCE.

THE SUBJECT INVITATIONS FOR BIDS BOTH PROVIDED FOR A TOTAL SMALL BUSINESS SET-ASIDE. IFB-500 WAS ISSUED ON JULY 9, 1962, AND CALLED FOR BIDS ON A QUANTITY OF 70 LENS CONES, AERIAL CAMERA LA-131A1 (ITEM 1), TOGETHER WITH RUNNING SPARES AND SPARE PARTS, ITEM DESCRIPTION LIST, PRODUCTION DRAWINGS AND OPERATION, ORGANIZATION, AND MAINTENANCE LITERATURE (ITEMS 1A THROUGH 6). BID OPENING DATE ON IFB-500 WAS ORIGINALLY SCHEDULED AS AUGUST 9, 1962, BUT BY SUBSEQUENT AMENDMENTS THE DATE WAS EXTENDED TO OCTOBER 11, 1962.

IFB-501 WAS ALSO ISSUED ON JULY 9, 1962. IT CALLED FOR BIDS ON A QUANTITY OF 88 KA-30 STILL PICTURE CAMERAS (ITEM 1), TOGETHER WITH ITEM DESCRIPTION LIST, REVISION SHEETS FOR ITEM DESCRIPTION LIST, OPERATION AND ORGANIZATIONAL MAINTENANCE LITERATURE, FIELD AND DEPOT MAINTENANCE LITERATURE, REPAIR PARTS, MECHANICAL GAUGES, GAUGE CASES AND CASE DRAWINGS AND REVISED PRODUCTION DRAWINGS (ITEMS 2 THROUGH 8). THE BID OPENING DATE WAS ALSO EXTENDED BY AMENDMENTS FROM AN ORIGINAL DATE OF AUGUST 9, 1962, TO OCTOBER 26, 1962.

TWENTY-EIGHT SOURCES WERE SOLICITED ON IFB-500 AND SIX BIDS WERE RECEIVED AS FOLLOWS:

TABLE

THOMPSON OPTICAL ENGINEERING CO. $250,500

CHICAGO AERIAL INDUSTRIES, INC. 262,500

VIEWLEX, INC. 397,140

J. A. MAURER, INC. 522,200

CHARLES BESELER COMPANY 527,050

NORTHRIDGE RESEARCH, INC. 619,786

ALL SIX BIDDERS SELF-CERTIFIED THEMSELVES AS SMALL BUSINESS CONCERNS BY PLACING AN "X" IN THE APPROPRIATE BOX PROVIDED FOR SUCH PURPOSE ON THE FRONT PAGE OF THE INVITATION. THE AIR FORCE HAS REPORTED THAT THE LOW BID OF THOMPSON OPTICAL ENGINEERING COMPANY HAS BEEN DETERMINED TO BE NONRESPONSIVE BECAUSE IT FAILED TO BID ON ITEM 1A.

ON IFB-501, 41 SOURCES WERE SOLICITED AND 7 BIDS WERE RECEIVED AS FOLLOWS:

TABLE

HYCON MANUFACTURING COMPANY $ 650,716

CHICAGO AERIAL INDUSTRIES, INC. 709,284

THOMPSON OPTICAL ENGINEERING CO. 733,500

VIEWLEX, INC. 797,686

BILL JACK INDUSTRIES 835,000

J. A. MAURER, INC. 888,250

CHARLES BESELER COMPANY 1,225,700

AS IN THE CASE OF IFB-500, ALL BIDDERS ON IFB-501 SELF-CERTIFIED THEMSELVES AS SMALL BUSINESS CONCERNS. WITH RESPECT TO THIS INVITATION FOR BIDS THE CONTRACTING OFFICER HAS DETERMINED THAT THE BIDS OF HYCON MANUFACTURING COMPANY AND YOUR FIRM, VIEWLEX, ARE NONRESPONSIVE TO THE TERMS OF THE INVITATION. SPECIFICALLY, HYCON FAILED TO BID ON ITEM 7 WHICH CALLED FOR MECHANICAL GAUGES, GAUGE CASES AND GAUGE AND CASE DRAWINGS. IN ADDITION HYCON SUBMITTED A QUALIFYING LETTER DATED OCTOBER 25, 1962, AS A PART OF ITS BID. THAT LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"THE COST TO COMPLETE NECESSARY TESTING, INCLUDED IN THE TOTAL PRICE, IS IN THE AMOUNT OF $3,500.00. THIS PRICE IS BASED ON CONDUCTING VARIOUS PORTIONS OF THE TESTS SIMULTANEOUSLY ON THE TWO (2) SAMPLE UNITS.

"IT IS UNDERSTOOD THAT GOVERNMENT FURNISHED DRAWINGS WILL BE UTILIZED FOR THE MANUFACTURE OF THE SUBJECT EQUIPMENT AND THAT, UPON AWARD OF THIS CONTRACT TO HYCON MFG. COMPANY, THE GOVERNMENT WILL FURNISH A SET OF REPRODUCIBLE DRAWINGS TO ACCOMPLISH DESIGN AND MANUFACTURE. IT IS FURTHER UNDERSTOOD THAT ANY REVISION TO THE GOVERNMENT FURNISHED DRAWINGS TO BE ACCOMPLISHED BY HYCON, WILL BE SUBJECT TO SUBSEQUENT NEGOTIATION. THEREFORE, NO COSTS HAVE BEEN INCLUDED FOR THIS ITEM.'

YOUR BID WAS DETERMINED TO BE NONRESPONSIVE BECAUSE, AS WILL BE DISCUSSED LATER, YOUR RESPONSE ON ITEM 8 STATED "NOT PRESENTLY REQUIRED.'

WITH REFERENCES TO BOTH INVITATIONS FOR BIDS, CHICAGO AERIAL INDUSTRIES, INC. (CAI), WAS DETERMINED TO BE A NON-SMALL-BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION (SBA) ON NOVEMBER 2, 1962.

IN ITS REPORT TO US OF FEBRUARY 5, 1963, THE DEPARTMENT OF THE AIR FORCE STATES THAT IFB-500 WAS CANCELED BECAUSE AWARD COULD NOT BE MADE TO CAI SINCE IT WAS NO LONGER A SMALL BUSINESS CONCERN AND BECAUSE THE BID PRICES SUBMITTED BY THE OTHER BIDDERS WERE DEEMED TO BE UNREASONABLE. IT IS ALSO REPORTED THAT AERONAUTICAL SYSTEM DIVISION (THE PROCURING ACTIVITY, HEREAFTER REFERRED TO AS ASD) REQUESTED AUTHORITY FROM HEADQUARTERS, UNITED STATES AIR FORCE, TO NEGOTIATE ON A SOLE-SOURCE BASIS WITH CAI AT ITS BID PRICE UNDER IFB-500 IN ORDER TO MEET THE URGENT REQUIREMENTS OF THE ARMY FOR THE 6-INCH LENS CONES. NOTWITHSTANDING THE URGENT REQUIREMENTS FOR THE 6-INCH LENS CONES, THE AIR FORCE STATES THAT ALL PROCUREMENT ACTION HAS BEEN SUSPENDED PENDING FURTHER CLARIFICATION OF THE URGENCY FACTOR OR A DECISION ON THE PROTEST.

WITH RESPECT TO IFB-501, THE AIR FORCE'S FIRST REPORT TO US DATED DECEMBER 11, 1962, STATED THAT A FACILITY CAPABILITY REPORT WAS BEING PERFORMED ON THOMPSON OPTICAL TO DETERMINE THAT COMPANY'S RESPONSIBILITY. WE HAVE NOW BEEN INFORMED THAT A FAVORABLE FACILITY CAPABILITY REPORT ON THOMPSON OPTICAL HAS BEEN RECEIVED AND THAT THE AIR FORCE PROPOSES TO PROCEED WITH THE AWARD TO THAT FIRM.

THE PRINCIPAL LEGAL ISSUES RAISED BY YOUR PROTEST MAY BE STATED AS FOLLOWS. FIRST, YOU CONTEND THAT CAI SELF-CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN IN BOTH INVITATIONS FOR BIDS IN BAD FAITH HAD SUBMITTED UNREALISTICALLY LOW BIDS FOR THE PURPOSE OF UPSETTING THE SET-ASIDES. YOU POSE A QUESTION AS TO HOW CAI'S BID CAN BE USED TO JUSTIFY CANCELLATION OF A PROCUREMENT BECAUSE OF DISPARITY OF PRICES RECEIVED WHEN CAI'S BID, BEING ONE SUBMITTED BY A LARGE BUSINESS CONCERN, IS NOT RESPONSIVE TO THE INVITATION FOR BIDS. SECONDLY, YOU STATE THAT THERE MAY HAVE BEEN LATE BUT ACCEPTABLE BIDDERS ON ONE OR BOTH INVITATIONS FOR BIDS--- POSSIBLY THOMPSON OPTICAL AND NORTHRIDGE RESEARCH--- AND YOU WOULD LIKE TO KNOW WHO THEY WERE AND WHAT THEIR PRICES WERE. THIRDLY, YOU CHALLENGE THE AIR FORCE DETERMINATION THAT YOUR BID ON IFB-501 WAS NONRESPONSIVE. AND FOURTH, YOU CHALLENGE THE AIR FORCE POSITION THAT AN EMERGENCY NEED FOR THE LENS CONES EXISTS.

THESE FOUR ISSUES WILL BE DISCUSSED IN ORDER BELOW. IN SUPPORT OF YOUR CONTENTIONS IN REGARD TO THE SMALL BUSINESS STATUS OF CAI, YOU POINT OUT THAT CAI'S SMALL BUSINESS CERTIFICATE EXPIRED ON SEPTEMBER 11, 1962 (PRIOR TO BID OPENING), AND THAT SBA REFUSED TO ISSUE A NEW CERTIFICATE TO THAT CONCERN. YOU ALSO STATE THAT IN ANY EVENT THE SMALL BUSINESS CERTIFICATE GRANTED CAI DID NOT COVER LENS CONES BEING PROCURED UNDER IFB-500 AND CAI WAS AWARE OF THIS AS WAS THE CONTRACTING OFFICER. IN THIS CONNECTION YOU CITE A LETTER FROM YOU TO THE CONTRACTING OFFICER DATED JUNE 15, 1962, IN WHICH YOU NOTIFIED THE CONTRACTING OFFICER THAT CAI'S OUTSTANDING CERTIFICATE DID NOT COVER OPTICAL LENS AND LENS SYSTEMS. THAT LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"THE COMMERCE BUSINESS DAILY ISSUED JUNE 12, 1962, NO. PSA-3068, GIVES ADVANCE NOTICE OF YOUR REQUIREMENT FOR CAMERA, TYPE KA-30. THIS REQUIREMENT FOR THE COMPLETE CAMERA, WITH 6 INCH LENS, IS LISTED AS A SET- ASIDE FOR SMALL BUSINESS.

"THE COMMERCE BUSINESS DAILY ISSUED JUNE 7, 1962, NO. PSA-3065, PAGE 3, GIVES ADVANCE NOTICE OF YOUR REQUIREMENT FOR 70 LENS CONES, AERIAL CAMERA, LA-131A1, FOR THE KA-30 CAMERA SYSTEM. THE LENS CONE IS A 6 INCH FOCAL LENGTH AND IDENTICAL TO THE LENS SPECIFIED IN THE CAMERA PROCUREMENT. HOWEVER, THE LENS CONE IS LISTED AS A GENERAL PROCUREMENT AND HAS NOT BEEN DETERMINED TO BE A SET-ASIDE FOR SMALL BUSINESS.

"YOUR ATTENTION IS RESPECTFULLY DRAWN TO WHAT APPEARS TO BE AN ERROR. CERTAINLY IF THE ENTIRE CAMERA, I.E., BODY, CASSETTES, AND 6 INCH LENS CONE, CAN BE PROCURED FROM SMALL BUSINESS, THEN ONE OF THE COMPONENTS, IS, THE 6 INCH LENS CONE, SHOULD ALSO BE CAPABLE OF PROCUREMENT FROM SMALL BUSINESS.

"WE REQUEST THAT YOU RECONSIDER IFB 33-657-62-500 FOR 70 6 INCH LENS CONES WITH A VIEW TOWARD SETTING THIS PROCUREMENT ASIDE FOR SMALL BUSINESS. IN A LETTER DATED SEPTEMBER 11, 1961 FROM SMALL BUSINESS ADMINISTRATION SIGNED BY WILLIAM L. PELLINGTON, ACTING DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS, ADDRESSED TO CHICAGO AERIAL INDUSTRIES, INC. IT WAS RULED THAT "OPTICAL LENS AND LENS SYSTEMS, LENS TEST EQUIPMENT, OPTICAL SIGHT HEADS, AND TELESCOPIC SIGHTS ARE CONSIDERED TO BE PRODUCED PRINCIPALLY BY MANUFACTURERS OF OPTICAL INSTRUMENTS AND LENSES. ACCORDING TO 1954 CENSUS OF MANUFACTURE DATA, OF 202 COMPANIES IN INDUSTRY 3831, INTO WHICH THESE PRODUCTS ARE CLASSIFIED, ONLY 5 HAD OVER 500 EMPLOYEES. YOUR REQUEST FOR CERTIFICATION FOR THOSE PRODUCTS IS, THEREFORE, DENIED.'"

IN LETTERS TO US DATED DECEMBER 11, 1962, AND FEBRUARY 5, 1963, THE DEPARTMENT OF THE AIR FORCE FORWARDED REPORTS AND RELATED DOCUMENTS WHICH OUTLINE THE BACKGROUND FACTS AND CIRCUMSTANCES ON THESE PROCUREMENTS. THE FOLLOWING INFORMATION, AS REPORTED BY THE DEPARTMENT OF THE AIR FORCE, APPLIES TO BOTH INVITATIONS FOR BIDS UNLESS OTHERWISE INDICATED. ON MAY 28, 1962, THE AIR FORCE INITIATED ACTION TO EFFECT THE PROCUREMENTS. THE TIME THESE PROCUREMENTS WERE MET ASIDE (JUNE 1, 1962) ASD AT WRIGHT- PATTERSON AIR FORCE BASE, OHIO, ADVISED THE SBA REPRESENTATIVE THAT CAI'S SMALL BUSINESS CERTIFICATE WAS DUE TO EXPIRE ON SEPTEMBER 11, 1962,AND FOR THAT REASON THE PROCUREMENTS SHOULD NOT BE SET ASIDE. THIS WAS DUE TO THE FACT THAT CAI WAS AT THE TIME THE INVITATIONS WERE TO BE ISSUED ONE OF THE TWO SMALL BUSINESS SOURCES (VIEWLEX BEING THE OTHER) WHICH HAD PREVIOUSLY FURNISHED EITHER IDENTICAL OR SIMILAR EQUIPMENT. AT THIS JUNCTURE THE LOCAL AIR FORCE SBA REPRESENTATIVE AT WRIGHT-PATTERSON STATED VERBALLY THAT KNOWLEDGE OF THIS CIRCUMSTANCE HAD BEEN PASSED ON TO THE WASHINGTON SBA OFFICE, AND THEIR CONCURRENCE WAS RECEIVED FOR THE SUBJECT SET- ASIDES. THE WRIGHT-PATTERSON SBA OFFICE WAS ALSO INFORMED BY THE WASHINGTON SBA THAT CAI WOULD EXPERIENCE NO DIFFICULTY IN BECOMING RECERTIFIED AS A SMALL BUSINESS CONCERN. ON THE BASIS OF THIS INFORMATION ASD AGREED TO THE TOTAL SMALL BUSINESS SET-ASIDES.

BY AN APPLICATION DATED JULY 26, 1962, CAI REQUESTED SBA TO RENEW ITS SMALL BUSINESS CERTIFICATE. THIS APPLICATION WAS RECEIVED BY THE SBA CHICAGO REGIONAL OFFICE ON JULY 27, 1962. BY LETTER DATED AUGUST 29, THE SBA CHICAGO REGIONAL OFFICE FORWARDED CAI'S APPLICATION TO SBA IN WASHINGTON WITH A RECOMMENDATION THAT FAVORABLE CONSIDERATION BE GIVEN. BY LETTER DATED OCTOBER 1, 1962, SBA INFORMED CAI THAT IT WOULD NO LONGER ISSUE SMALL BUSINESS CERTIFICATES. THAT LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"REFERENCE IS MADE TO YOUR APPLICATION FOR A SMALL BUSINESS CERTIFICATE.

"THE SMALL BUSINESS ADMINISTRATION (SBA) HAS DISCONTINUED ISSUING SMALL BUSINESS CERTIFICATES.

"INSTEAD, SBA WILL ACCEPT NEW PROCUREMENT SIZE STANDARDS ON AN INDUSTRY BASIS. A COPY OF THE PROPOSAL TO ADOPT INDUSTRY STANDARDS, WHICH WAS PUBLISHED IN THE FEDERAL REGISTER ON SEPTEMBER 26, 1962, IS ENCLOSED.

"WE ANTICIPATE PUBLISHING THE SPECIFIC STANDARDS IN THE LATTER PART OF NOVEMBER 1962. IF YOUR COMPANY MEETS THE ESTABLISHED STANDARD, IT MAY THEN SELF-CERTIFY THAT IT IS A SMALL BUSINESS FOR THE PURPOSE OF GOVERNMENT PROCUREMENTS.'

BIDS ON IFB-500 WERE OPENED ON OCTOBER 11, 1962. ON OCTOBER 15 THE AIR FORCE RECEIVED YOUR LETTER OF OCTOBER 12 IN WHICH YOU PROTESTED AGAINST AN AWARD TO CAI ON THE BASIS THAT CAI WAS NOT A SMALL BUSINESS CONCERN. AS A RESULT OF YOUR PROTEST, THE AIR FORCE REQUESTED SBA TO EFFECT A SIZE DETERMINATION ON CAI. IN RESPONSE TO THIS REQUEST, THE AIR FORCE SMALL BUSINESS REPRESENTATIVE AT WRIGHT-PATTERSON RECEIVED A TWX ON NOVEMBER 2 FROM SBA IN WASHINGTON WHICH STATED CAI WAS NOT A SMALL BUSINESS CONCERN. ALTHOUGH THE SIZE DETERMINATION REQUEST RESULTED FROM A PROTEST ON IFB-500 THE SBA DETERMINATION IS APPLICABLE TO IFB-501 AS WELL.

IN A LETTER DATED NOVEMBER 20, 1962, TO OUR OFFICE SBA REPORTS THAT A DETERMINATION ON CAI'S APPLICATION OF JULY 26, 1962, FOR RENEWAL OF ITS SMALL BUSINESS CERTIFICATE WAS NOT MADE BECAUSE OF NUMEROUS PROTESTS AGAINST CAI ALLEGING THAT (1) CAI SHOULD NOT BE ISSUED A SMALL BUSINESS CERTIFICATE, AND (2) A SMALL BUSINESS CERTIFICATE SHOULD NOT HAVE BEEN ISSUED FOR THE PRODUCTS FOR WHICH CAI REQUESTED CERTIFICATION. SBA WAS INVESTIGATING THESE CHARGES AND HAD NOT RESOLVED EITHER OF THE QUESTIONS AS OF SEPTEMBER 26, 1962, AT WHICH TIME THE ABOVE-REFERRED-TO NOTICE WAS PUBLISHED IN THE FEDERAL REGISTER ANNOUNCING THAT SMALL BUSINESS CERTIFICATES WOULD NO LONGER BE ISSUED. IN VIEW OF THIS NOTICE, SBA DISCONTINUED ITS INVESTIGATION. SBA'S REPORT FURTHER STATES THAT THE SMALL BUSINESS CERTIFICATE ISSUED TO CAI ON SEPTEMBER 11, 1961, COVERED AERIAL CAMERAS, AERIAL CAMERA FILM MAGAZINES, AERIAL CAMERA CONTROL SYSTEMS, AERIAL CAMERA VIEWFINDERS, AND SERVO POTENTIOMETER ASSEMBLIES. HOWEVER, A SMALL BUSINESS CERTIFICATE WAS DENIED FOR PRINTERS, DEVELOPERS AND PROCESSORS; TEST AND GROUND SUPPORT SYSTEMS FOR AERIAL CAMERAS AND AERIAL CAMERA SYSTEMS (ELECTRONIC TEST EQUIPMENT); OPTICAL LENS AND LENS SYSTEMS, LENS TEST EQUIPMENT, OPTICAL SIGHT HEADS AND TELESCOPIC SIGHTS (OPTICAL INSTRUMENTS AND LENSES); MAGNETIC AMPLIFIERS; PRECISION POTENTIOMETERS; THERMOCOUPLES; GYRO PICKOFFS; AERIAL SURVEYING; CARTOGRAPHIC AND MAPPING ERVICES; AND DATA DISPLAY SYSTEMS, OPTICAL GUIDANCE SYSTEMS, AND FIBER OPTICS. SBA FURTHER REPORTS THAT CAI'S SMALL BUSINESS CERTIFICATE DID NOT CERTIFY THAT COMPANY AS A SMALL BUSINESS FOR THE PURPOSE OF SELLING AERIAL CAMERA LENS CONES TO THE GOVERNMENT AND THAT, THEREFORE, SBA HAS NEVER CONSIDERED CAI AS A SMALL BUSINESS FOR THE PURPOSE OF BIDDING ON AERIAL CAMERA LENS CONES UNDER ITS REGULATIONS. THE REPORT FROM SBA CONCLUDES AS FOLLOWS:

"CHICAGO STATED (IN A LETTER TO THE CHAIRMAN OF THE HOUSE SELECT COMMITTEE ON SMALL BUSINESS) THAT ON JULY 11, 1962, IT RECEIVED IFB 33 657 -62-501 FOR KA-30 TYPE STILL PICTURE AERIAL CAMERAS. APPARENTLY, THE BIDS WERE TO BE SUBMITTED BY AUGUST 9, 1962. HOWEVER, THE PURCHASING AGENCY DID NOT OPEN THE BIDS UNTIL OCTOBER 26, 1962, MORE THAN A MONTH AFTER CHICAGO'S CERTIFICATE EXPIRED. AS YOU KNOW, THE OPENING OF BIDS AND AWARDING OF CONTRACTS ARE THE EXCLUSIVE RESPONSIBILITIES OF THE PURCHASING AGENCY. SINCE THE DATE OF AWARD OCCURRED OR WILL OCCUR AFTER THE EXPIRATION OF CHICAGO'S CERTIFICATE, IT COULD NOT QUALIFY AS A SMALL BUSINESS AT THE TIME OF AWARD. THE COMPTROLLER GENERAL FREQUENTLY HAS RULED THAT A COMPANY MUST BE A SMALL BUSINESS AT THE TIME OF AWARD. THIS RECENTLY WAS REITERATED IN HIS RULING B-149695, DATED OCTOBER 26, 1962.

"CHICAGO RECEIVED REQUEST FOR QUOTATION NO. R63-7043-WEPS ON SEPTEMBER 14, 1962, THREE DAYS AFTER ITS CERTIFICATE EXPIRED. APPARENTLY, CHICAGO SUBMITTED ITS BID FOR THIS PROCUREMENT AT A TIME WHEN IT KNEW OR SHOULD HAVE KNOWN THAT IT DID NOT QUALIFY AS A SMALL BUSINESS.'

REQUEST FOR QUOTATIONS NO. R63/7043/WEPS (RFQ-R63), MENTIONED ABOVE, RESULTED IN AN EVENTUAL AWARD OF A CONTRACT TO CAI FOR FURNISHING A QUANTITY OF 75 FILE COSSETTES, 100-FOOT, TYPE LA-135A, FOR USE WITH KA 46/KA-45A CAMERA, CHICAGO AERIAL INDUSTRIES' PART NUMBER 2137-2100 OR EQUAL. QUESTIONS CONCERNING THIS PARTICULAR NEGOTIATED PROCUREMENT WERE RAISED BY CAI IN A LETTER OF PROTEST TO US, WITH ENCLOSURE, DATED OCTOBER 26, 1962. CAI'S PROTEST CONCERNS THE ACTION OF SBA IN REFUSING TO MAKE A DETERMINATION AS TO CAI'S SIZE AND RENEWAL OF ITS SMALL BUSINESS CERTIFICATE. HOWEVER, SINCE THE LEGAL ISSUES INVOLVED IN CAI'S PROTEST WITH RESPECT TO THE REQUEST FOR QUOTATIONS, AS WELL AS THE TWO INVITATIONS FOR BIDS, ARE SUBSTANTIALLY RELATED ON THE QUESTION OF GOOD FAITH CERTIFICATION, ALL THREE PROCUREMENTS WILL BE CONSIDERED TOGETHER HERE.

ON THE BASIS OF THE RECORD BEFORE US WE CANNOT CONCLUDE THAT CAI SUBMITTED ITS BIDS ON THE TWO INVITATIONS FOR BIDS, OR THE REQUEST FOR QUOTATIONS, IN BAD FAITH. CAI'S SMALL BUSINESS CERTIFICATE EXPIRED ON SEPTEMBER 11, 1962, AND, THUS, IT LEGALLY CEASED BEING A SMALL BUSINESS CONCERN ON THIS DATE. CAI'S ACTUAL SIZE STATUS IS NOT, HOWEVER, THE QUESTION UNDER CONSIDERATION. THE QUESTION BEFORE US IS WHETHER, UNDER THE CIRCUMSTANCES PRESENT WHEN CAI SUBMITTED ITS BIDS, IT CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN IMPRUDENTLY OR IN BAD FAITH.

THE SUBJECT INVITATIONS FOR BIDS WERE ISSUED AT A TIME WHEN CAI'S CERTIFICATE WAS IN FULL FORCE AND EFFECT--- ON JULY 9, 1962. BOTH INVITATIONS FOR BIDS WERE SCHEDULED TO BE OPENED ON AUGUST 9, 1962, BUT BY SUBSEQUENT AMENDMENTS THE BID OPENING DATES WERE EXTENDED SO THAT BIDS ON IFB-500 WERE OPENED ON OCTOBER 11, 1962, AND ON IFB-501 ON OCTOBER 26, 1962. CAI MADE APPLICATION FOR RENEWAL OF ITS SMALL BUSINESS CERTIFICATE ON JULY 26, 1962, WELL IN ADVANCE OF THE EXPIRATION DATE OF ITS OUTSTANDING CERTIFICATE. THIS APPLICATION WAS FORWARDED BY THE SBA REGIONAL OFFICE TO SBA IN APPLICATION. ON SEPTEMBER 26, 1962, SBA PUBLISHED A NOTICE IN THE FEDERAL REGISTER ANNOUNCING THAT IT WOULD NO LONGER ISSUE SMALL BUSINESS CERTIFICATES. ON OCTOBER 1, 1962, SBA SENT CAI A LETTER, QUOTED SUPRA, IN WHICH CAI WAS INFORMED OF SBA'S NEW POLICY OF DISCONTINUING THE ISSUANCE OF SMALL BUSINESS CERTIFICATES. ADDITION, THIS LETTER STATED THAT SBA WOULD ADOPT NEW PROCUREMENT SIZE STANDARDS ON AN INDUSTRY BASIS. IT WAS ANTICIPATED THAT THESE STANDARDS WOULD BE PUBLISHED IN THE LATTER PART OF NOVEMBER 1962, AND CAI WAS INFORMED THAT IF IT WERE ABLE TO MEET THE ESTABLISHED STANDARD IT COULD THEN SELF-CERTIFY AS A SMALL BUSINESS CONCERN. (TO THIS DATE THESE STANDARDS HAVE NOT BEEN PUBLISHED AND WE HAVE BEEN INFORMED INFORMALLY THAT SBA NOW ANTICIPATES ISSUING THESE STANDARDS DURING THE FIRST WEEK OF APRIL.) WE THINK IT IS SIGNIFICANT THAT SBA DID NOT PASS ON CAI'S APPLICATION FOR RENEWAL OF ITS CERTIFICATE ON THE MERITS. MOREOVER, THE LETTER OF OCTOBER 1 FROM SBA DID NOT INFORM CAI THAT IT WAS CONSIDERED A LARGE BUSINESS. A SPECIFIC DETERMINATION BY SBA TO THAT EFFECT WAS NOT MADE UNTIL NOVEMBER 2, 1962, AFTER BIDS ON BOTH INVITATIONS FOR BIDS WERE OPENED. THE CONTRACTING OFFICER STATES THAT SINCE CAI HAD BEEN CERTIFIED AS A SMALL BUSINESS SINCE AUGUST 1957, IT COULD BE EASILY UNDERSTOOD THAT THE COMPANY WOULD MEET THE STANDARDS WHICH WOULD BE FORTHCOMING IN NOVEMBER 1962. WE ARE IN AGREEMENT WITH THIS STATEMENT. ON THE BASIS OF THE ABOVE CHRONOLOGY OF EVENTS, IN ADDITION TO THE FACT THAT CAI WAS NOT EXPRESSLY DETERMINED TO BE A LARGE BUSINESS AND SO INFORMED UNTIL NOVEMBER 2, 1962, WE THINK THAT CAI'S SELF-CERTIFICATION AS A SMALL BUSINESS CONCERN WAS NOT UNREASONABLE OR IMPRUDENTLY MADE (COMPARE 41 COMP. GEN. 47), EVEN THOUGH, IN FACT, ITS STATUS AT SUCH TIME WAS, BECAUSE OF THE EXPIRATION OF ITS CERTIFICATE, THAT OF A LARGE BUSINESS.

NOR DO WE REACH OUR CONCLUSION ON THIS MATTER WITHOUT CONSIDERATION OF YOUR CONTENTIONS, AND SBA'S CONCLUSION, THAT CAI'S SMALL BUSINESS CERTIFICATE DID NOT COVER THE LENS CONES BEING PROCURED UNDER IFB-500. ALSO TAKE NOTE OF YOUR LETTER OF JUNE 15, 1962, TO THE CONTRACTING OFFICER WHICH INFORMED HIM THAT CAI'S OUTSTANDING CERTIFICATE DID NOT COVER OPTICAL LENS AND LENS SYSTEMS. HOWEVER, WE DO NOT THINK THAT THESE FACTS ARE CONCLUSIVE ON THE QUESTION OF CAI'S PRUDENCE OR GOOD FAITH IN SUBMITTING ITS BID.

THE RECORD BEFORE US INDICATES THAT THERE IS CONSIDERABLE CONFUSION ON THE QUESTION AS TO WHETHER CAI'S CERTIFICATE COVERED THE LENS CONES SPECIFIED IN IFB-500, OR MORE SPECIFICALLY, WHETHER THE LENS CONES THERE SPECIFIED ARE, OR ARE NOT, OPTIONAL LENS OR LENS SYSTEMS. ON THE ONE HAND, YOU CONTEND THAT CAI'S CERTIFICATE DID NOT COVER THE LENS CONES AND ARE SUPPORTED IN THIS BY SBA'S REPORT TO US DATED NOVEMBER 20, 1962, WHEREIN IT IS STATED THAT "SBA HAS NEVER CONSIDERED CHICAGO AS A SMALL BUSINESS FOR THE PURPOSE OF BIDDING ON AERIAL CAMERA LENS CONES UNDER OUR REGULATIONS.' ON THE OTHER HAND, YOUR LETTER TO US DATED NOVEMBER 26, 1962, INDICATES THAT A LENS CONE CONSISTS OF MUCH MORE THAN A MERE LENS OR GLASS ELEMENT. YOU STATE ON PAGE 3 OF THAT LETTER THAT:

"* * * PACIFIC OPTICAL AND/OR CHICAGO AERIAL HAVE QUOTED APPROXIMATELY $2,300 FOR THE ELEMENTS (GLASS) ONLY. THERE IS AT LEAST $2,500 OF OTHER COMPONENTS REQUIRED TO MANUFACTURE A LENS CONE, IE, MOTORS, ELECTRONIC GEARS, CASTINGS, ETC. HOW REALISTIC CAN A BID FOR $3,750 FOR THE COMPLETE LENS CONE BE? "

FURTHERMORE, THE CONTRACTING OFFICER REPORTS THAT AT THE TIME IFB 500 WAS SET ASIDE (JUNE 1, 1962) BOTH THE AIR FORCE AND SBA CONCURRED THAT THE PROCUREMENT WAS FOR A COMPONENT OF AN AERIAL CAMERA AND WAS NOT FOR AN OPTICAL LENS OR LENS SYSTEM. INCIDENTALLY, IT IS NOTED THAT YOUR LETTER OF JUNE 15 TO THE CONTRACTING OFFICER AND YOUR LETTER OF FEBRUARY 13 TO US RECOGNIZE THAT THE LENS CONE IS A COMPONENT OF THE AERIAL CAMERA. THE CONTRACTING OFFICER REPORTS, AS PREVIOUSLY NOTED, THAT THE SET-ASIDE WAS BASED ON THE FACT THAT TWO SOURCES, CONSIDERED TO BE SMALL BUSINESS AT THE TIME THE INVITATIONS WERE TO BE ISSUED, HAD PREVIOUSLY FURNISHED EITHER IDENTICAL OR SIMILAR EQUIPMENT. THESE SOURCES WERE CAI AND VIEWLEX. (IT SHOULD BE NOTED THAT PARAGRAPH 1.706.5 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES, IN SUBSTANCE, THAT THE ENTIRE AMOUNT OF A PROCUREMENT SHALL BE SET ASIDE WHERE THERE IS A REASONABLE EXPECTATION THAT BIDS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES, AND THAT, ALTHOUGH PAST PROCUREMENT HISTORY OF THE ITEM OR SIMILAR ITEMS IS ALWAYS IMPORTANT, IT IS NOT THE ONLY CONTROLLING FACTOR WHICH SHOULD BE CONSIDERED IN DETERMINING WHETHER A REASONABLE EXPECTATION EXISTS.) THE CONTRACTING OFFICER'S REPORT FURTHER STATES:

"C. AT THE TIME THIS PROCUREMENT WAS SET-ASIDE, 1 JUNE 1962, ASWVCP ADVISED SBA THAT CHICAGO AERIAL'S SMALL BUSINESS CERTIFICATE WAS SLATED TO EXPIRE 11 SEPTEMBER 1962, AND IT WAS OUR FEELING THAT THE PROCUREMENT SHOULD NOT BE SET-ASIDE. IT WAS AT THIS JUNCTURE THAT THE LOCAL AF SBA REPRESENTATIVE AT WRIGHT-PATTERSON STATED VERBALLY THAT KNOWLEDGE OF THIS CIRCUMSTANCE HAD BEEN PASSED ON TO THE WASHINGTON SBA OFFICE AND THEIR CONCURRENCE WAS RECEIVED FOR THE SUBJECT SET ASIDE. THE WRIGHT-FIELD SBA OFFICE WAS ALSO INFORMED BY WASHINGTON SBA THAT CHICAGO AERIAL INDUSTRIES WOULD EXPERIENCE NO DIFFICULTY IN BECOMING RE-CERTIFIED AS A SMALL BUSINESS CONCERN.'

IF THE CONTRACTING OFFICER'S STATEMENT ABOVE IS ACCURATE, AND WE HAVE NO REASON TO DOUBT ITS ACCURACY, WE DO NOT UNDERSTAND WHY, IF SBA FELT THAT CAI'S CERTIFICATE DID NOT COVER LENS CONES, IT DID NOT, AT THE TIME THE SET-ASIDE WAS MADE, MAKE THIS FACT KNOWN TO THE CONTRACTING OFFICER. RATHER THAN DO THIS, HOWEVER, SBA CONCURRED IN THE SET-ASIDE WITH KNOWLEDGE THAT CAI WAS ONE OF THE TWO SOURCES WHICH THE CONTRACTING OFFICER CONTEMPLATED WOULD BID ON THE PROCUREMENT.

THE RECORD, AS ABOVE OUTLINED, DOES NOT ESTABLISH WHETHER CAI'S CERTIFICATE DID OR DID NOT COVER LENS CONES, BUT IT DOES SHOW THAT THERE IS CONSIDERABLE CONFUSION AND CONTRADICTION BETWEEN THE TWO AGENCIES CHARGED WITH THE RESPONSIBILITY OF DETERMINING THIS MATTER. IF THE AGENCIES WHICH HAVE PRIMARY RESPONSIBILITY IN THE AREA CANNOT AGREE ON WHAT CAI'S CERTIFICATE COVERS OR ON WHETHER A LENS CONE IS, OR IS NOT, AN OPTICAL LENS OR LENS SYSTEM, WE FIND IT DIFFICULT TO SEE HOW CAI CAN BE CHARGED WITH SUPERIOR KNOWLEDGE SO AS TO LEAD TO A CONCLUSION THAT ITS BIDS WERE SUBMITTED IN BAD FAITH.

TURNING NOW TO THE PROCUREMENT OF FILM CASSETTES UNDER RFQ-R63, THE CONTRACTING OFFICER REPORTS THAT THE PROCUREMENT WAS JOINTLY SET ASIDE 100 PERCENT BY ASD AND SBA ON SEPTEMBER 5, 1962. THE REQUEST FOR QUOTATIONS WAS ISSUED ON SEPTEMBER 7, 1962, AND SPECIFIED A CLOSING DATE OF OCTOBER 8, 1962. THIS PROCUREMENT WAS EXECUTED BY MEANS OF LIMITED SOURCE NEGOTIATION PURSUANT TO 10 U.S.C. 2304 (A) (10) ON THE BASIS THAT SPECIFICATIONS OR DRAWINGS WERE NOT AVAILABLE AND CAI AND VIEWLEX WERE THE ONLY KNOWN SUPPLIERS OF THIS TYPE OF EQUIPMENT.

THE FILE SUBMITTED TO OUR OFFICE SHOWS THAT CAI SUBMITTED ITS OFFER ON OCTOBER 4, 1962, AND CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN. OCTOBER 26, 1962, ASD REQUESTED THAT SBA WITHDRAW THE JOINT SMALL BUSINESS SET-ASIDE. SEE ASPR 1-706.3 (B) (1). SBA COMPLIED WITH THIS REQUEST AND IN PLACE OF THE TOTAL SET-ASIDE A 50 PERCENT SET-ASIDE WAS INSTITUTED. CAI QUOTED A PRICE OF $207 PER UNIT AND A TOTAL PRICE OF $15,525. VIEWLEX QUOTED A PRICE OF $368.98 PER UNIT AND A TOTAL PRICE OF $27,673.50.

ASPR 1-706.6 (C) (1) PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"/C) (1) AFTER THE AWARD PRICE FOR THE NON-SET-ASIDE PORTION HAS BEEN DETERMINED, NEGOTIATIONS MAY BE CONDUCTED FOR THE SET-ASIDE PORTION. PROCUREMENT OF THE SET-ASIDE PORTION SHALL IN ALL INSTANCES BE EFFECTED BY NEGOTIATION. NEGOTIATIONS SHALL BE CONDUCTED ONLY WITH THOSE BIDDERS OR OFFERORS WHO HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET- ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST AWARD MADE OR TO BE MADE ON THE NON-SET ASIDE PORTION AND WHO ARE DETERMINED TO BE RESPONSIBLE PROSPECTIVE CONTRACTORS FOR THE SET-ASIDE PORTION OF THE PROCUREMENT. * * *"

IN ACCORDANCE WITH THOSE ASPR PROVISIONS, SINCE VIEWLEX'S QUOTATION WAS NOT WITHIN THE QUALIFYING RANGE OF 120 PERCENT OF THE AWARD PRICE ON THE NON-SET-ASIDE PORTION, CAI WAS AWARDED BOTH PORTIONS UNDER CONTRACT AF 33 (657/-10160 DATED NOVEMBER 2, 1962.

IT SHOULD BE NOTED AT THE OUTSET THAT UPON DISSOLUTION OF THE TOTAL SET- ASIDE AND INSTITUTION OF THE 50 PERCENT SET-ASIDE, CAI'S STATUS WITH RESTRICTED TO OFFERS FROM SMALL BUSINESS CONCERNS. IN ANY EVENT, HOWEVER, MOST OF THE SAME CONSIDERATIONS WHICH COMPELLED OUR CONCLUSION AS TO THE GOOD FAITH CERTIFICATION OF CAI ON THE TWO INVITATIONS FOR BIDS COMPEL US TO CONCLUDE THAT CAI'S INITIAL CERTIFICATION ON THE REQUEST FOR QUOTATIONS WAS ALSO MADE IN GOOD FAITH. AT THE TIME THAT CAI SUBMITTED ITS QUOTATION (OCTOBER 4, 1962), IT HAD MERELY BEEN INFORMED, IN RESPONSE TO ITS APPLICATION FOR RENEWAL OF ITS CERTIFICATE, THAT SBA WOULD NO LONGER ISSUE SMALL BUSINESS CERTIFICATES. CAI'S APPLICATION FOR RENEWAL WAS NOT DENIED ON ITS MERITS, IF IT CAN BE SAID THAT IT WAS DENIED AT ALL, AND CAI WAS NOT INFORMED UNTIL NOVEMBER 2, 1962, THAT IT WAS NOT CONSIDERED TO BE A SMALL BUSINESS CONCERN. UNDER THESE CIRCUMSTANCES, WE CANNOT CONCLUDE THAT CAI'S DECISION TO SUBMIT A QUOTATION ON A SMALL BUSINESS RESTRICTED PROCUREMENT WAS UNREASONABLE OR THAT ITS SELF-CERTIFICATION WAS MADE IMPRUDENTLY OR IN BAD FAITH. IN REGARD TO THE QUESTION OF LATE BIDS, THE REPORT FROM THE AIR FORCE OF FEBRUARY 5, 1963, STATES THAT THE THOMPSON OPTICAL ENGINEERING COMPANY BID ON IFB-500 REACHED ASD AFTER THE FORMAL BID OPENING ON OCTOBER 11, 1962. FOLLOWING AN INVESTIGATION A DETERMINATION WAS MADE THAT THE BID HAD BEEN MAILED ON A TIMELY BASIS AND WAS PROPER FOR ACCEPTANCE. IT SHOULD BE NOTED THAT ANY QUESTIONS CONCERNING THOMPSON OPTICAL'S LATE BID ON IFB-500 ARE ACADEMIC SINCE ITS BID WAS DETERMINED TO BE NONRESPONSIVE FOR FAILURE TO BID ON ITEM 1A. TO THE NORTHRIDGE RESEARCH, C., BID ON IFB-500, THE AIR FORCE STATES THAT IT WAS OPENED AT THE FORMAL BID OPENING. THE AIR FORCE FURTHER REPORTS THAT NO LATE BIDS WERE RECEIVED ON IFB 501.

BEFORE CONSIDERING THE FINAL TWO GROUNDS UPON WHICH YOUR PROTEST IS BASED, IT WOULD BE APPROPRIATE TO FIRST CLARIFY THE IMPLICATIONS OF OUR CONCLUSIONS WITH RESPECT TO CAI'S BIDS ON THE INVITATIONS FOR BIDS.

SECTION 637 (B) (6), TITLE 15, U.S.C. PROVIDES, IN SUBSTANCE, THAT SBA IS EMPOWERED TO DETERMINE WITHIN ANY INDUSTRY THE CONCERNS WHICH ARE TO BE DESIGNATED SMALL BUSINESS CONCERNS. THAT SECTION FURTHER PROVIDES THAT OFFICES OF THE GOVERNMENT HAVING PROCUREMENT POWERS SHALL ACCEPT AS CONCLUSIVE SBA'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED SMALL BUSINESS CONCERNS. ON NOVEMBER 2, 1962, SBA SPECIFICALLY DETERMINED THAT CAI WAS NOT A SMALL BUSINESS CONCERN. IN VIEW OF THE PROVISIONS OF 15 U.S.C. 637 (B) (6) SUCH DETERMINATION IS CONCLUSIVE. CAI IS, THEREFORE, NOT ELIGIBLE FOR AWARDS ON IFB-500 AND IFB-501. HOWEVER, AS NOTED PREVIOUSLY, IFB-500 HAS BEEN CANCELLED BECAUSE THE PRICES SUBMITTED BY THOSE BIDDERS WHOSE PRICES WERE HIGHER THAN CAI WERE DEEMED TO BE UNREASONABLE.

ASPR 2-404.1 (B) (VI) PROVIDES AS FOLLOWS:

"/B) WHERE IT IS DETERMINED PRIOR TO AWARD BUT AFTER OPENING THAT THE REQUIREMENTS OF 1-1203 (RELATING TO THE AVAILABILITY AND IDENTIFICATION OF SPECIFICATIONS) HAVE NOT BEEN MET, THE INVITATION FOR BIDS SHALL BE CANCELED. INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHERE SUCH ACTION IS CONSISTENT WITH (A) ABOVE AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT---

"/VI) ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES;

YOU CONTEND THAT CAI'S BID ON IFB-500 SHOULD NOT BE USED TO JUSTIFY CANCELLATION OF A PROCUREMENT ON THE BASIS OF PRICE DISPARITY BECAUSE (1) CAI'S BID WAS UNREALISTICALLY LOW AND WAS SUBMITTED IN BAD FAITH, AND (2) CAI'S BID, BEING ONE SUBMITTED BY A LARGE BUSINESS CONCERN, IS NOT RESPONSIVE TO THE INVITATION FOR BIDS AND SHOULD BE IGNORED COMPLETELY.

AS ALREADY INDICATED, WE FEEL THAT CAI SUBMITTED ITS BID IN GOOD FAITH. AS TO YOUR CONTENTION THAT CAI'S BID WAS UNREALISTICALLY LOW, WE NOTE THAT CAI'S UNIT PRICE FOR THE LENS CONE IS $3,750. THOMPSON OPTICAL WHICH WAS RULED NONRESPONSIVE FOR FAILURE TO BID ON ITEM 1A (RUNNING SPARES FOR THE LENS CONE), WHICH WAS STATED SEPARATELY, SUBMITTED THE LOWEST UNIT PRICES OF $3,450. YOUR UNIT PRICE WAS $5,673.43 AND THE OTHER BIDDERS SUBMITTED THE FOLLOWING UNIT PRICES: CHARLES DESSLER COMPANY--- $7,185 (WHICH PRICE INCLUDED THE COMPANY'S BID ON ITEM 1A); J. A. MAURER, INC.--- $7,120 (WHICH PRICE INCLUDED THE CORPORATION'S BID ON ITEM 1A); AND NORTHRIDGE RESEARCH, INC.--- $8,756.38 (WHICH PRICE INCLUDED THE CORPORATION'S BID ON ITEM 4,"PRODUCTION DRAWINGS"). IN ADDITION, BY LETTER DATED JANUARY 18, 1963, FROM THE CHIEF, PROCUREMENT DIVISION, PROCUREMENT AND PRODUCTION OFFICE, ASD, WE HAVE BEEN ADVISED ON THIS ASPECT OF THE CASE AS FOLLOWS:

"5. THE FOLLOWING INFORMATION IS SUBMITTED IN RELATION TO THE UNIT PRICES OF LA-131A1 LENS CONES PREVIOUSLY PROCURED BY THE DEPARTMENT OF THE AIR FORCE:

"A. ON CONTRACT AF33/600/42647 THE COST OF THE LA-131A1 LENS CONE WAS AN UNIDENTIFIABLE PART OF THE TOTAL COST OF THE KA-46 CAMERA SYSTEM. DUE TO THE NUMEROUS ENGINEERING AND CONTRACTUAL CHANGES, AN EXACT COST FOR EITHER THE CAMERA SYSTEM OR THE LENS CONE CANNOT BE DETERMINED.

"B. ON CONTRACT AF33/600/43595, AWARDED UNDER IFB-33-600-61-244, THE CHICAGO AERIAL PRICE FOR THE LA-131A LENS CONE (26 AWAR LENS) WAS $3,736.00. PURSUANT TO PROVISIONS OF SUPPLEMENTAL AGREEMENT NO. 2 TO THE SAME CONTRACT, CHICAGO AERIAL SUPPLIED THE SIGNAL CORPS THE LA 131A1 LENS CONE (40 AWAR LENS) IN PLACE OF THE LOWER RESOLUTION LA-131A LENS CONE. THE LA-131A1 LENS CONE WAS REQUIRED TO BE IDENTICAL TO THOSE SUPPLIED ON CONTRACT AF33/600/42647, AND INTERCHANGEABLE WITH THOSE (LA-131A) SUPPLIED ON CONTRACT AF33/600/39101. THE ABOVE ACTION WAS ACCOMPLISHED BY CHICAGO AERIAL AT NO ADDITIONAL COST TO THE GOVERNMENT, ALLEGEDLY AS A PART OF PROMOTING THE NEED FOR THE HIGHER RESOLUTION LA-131A1 (40 AWAR) CONE.'

THUS, IT APPEARS THAT CAI DID NOT SUBMIT THE LOWEST UNIT PRICE FOR THE LENS CONE IN THE PRESENT PROCUREMENT AND ALSO THAT THE PRICES OF THREE OF THE REMAINING FOUR BIDDERS WHO SUBMITTED HIGHER UNIT PRICES THAN CAI INCLUDED THE COST OF OTHER ITEMS AS A PART OF THEIR BIDS ON THE LENS CONE. FURTHERMORE, AS INDICATED IN THE LETTER OF JANUARY 18, 1963, FROM ASD, CAI ACTUALLY SUPPLIED THE AIR FORCE WITH LA-131A1 LENS CONES UNDER CONTRACT AF 33/600/-43595 AT A LOWER UNIT PRICE THAN THAT BID BY CAI ON IFB-500. IT THEREFORE APPEARS YOUR CONTENTION THAT CAI SUBMITTED AN UNREALISTICALLY LOW PRICE IS NOT BORNE OUT BY THE RECORD BEFORE US.

IN ANSWER TO YOUR CONTENTION THAT CAI'S BID ON IFB-500 WAS ONE FROM A LARGE BUSINESS CONCERN AND NOT RESPONSIVE TO THE INVITATION FOR BIDS AND THUS SHOULD BE IGNORED COMPLETELY IN DETERMINING THE QUESTION OF UNREASONABLE PRICES, WE DO NOT FIND THE REASONING BEHIND SUCH CONTENTION PERSUASIVE. YOUR CONTENTION MIGHT BE ACCEPTABLE IF IT COULD BE SHOWN THAT THE NONRESPONSIVENESS OF CAI'S BID WAS CAUSED BY A FAILURE TO BID ON SOME PROVISION IN THE INVITATION FOR BIDS INVOLVING A SIGNIFICANT ITEM OF COST IN RELATIONSHIP TO THE TOTAL PRICE BID, OR IF IT COULD BE SHOWN THAT THE NONRESPONSIVENESS WAS DUE TO AN OFFER TO FURNISH A PRODUCT SIGNIFICANTLY INFERIOR (AND FOR THAT REASON CHEAPER) THAN THAT CALLED FOR BY THE INVITATION FOR BIDS. HOWEVER, THAT IS NOT THE CASE HERE. CAI WAS NONRESPONSIVE SOLELY BECAUSE IT WAS DETERMINED TO BE A LARGE BUSINESS---A CONDITION WHICH DOES NOT IN AND OF ITSELF NECESSARILY HAVE A SIGNIFICANT INFLUENCE ON THE TOTAL PRICE BID.

ALTHOUGH WE RECOGNIZE (SEE 41 COMP. GEN. 306) THAT IT MAY BE PROPER TO PAY PREMIUM PRICES TO BIDDERS FOR THE PURPOSE OF CARRYING OUT THE SMALL BUSINESS POLICY, A POINT MAY BE REACHED WHERE SUCH PREMIUM BECOMES UNREASONABLE AND TOTALLY UNNECESSARY TO THE EFFECTIVE IMPLEMENTATION OF THIS POLICY. IN THE PRESENT CASE YOUR TOTAL BID EXCEEDED CAI'S BID ON IFB -500 BY $134,640. THIS AMOUNTS TO A DISPARITY IN PRICES OF APPROXIMATELY 34 PERCENT. IT SHOULD BE NOTED AT THIS POINT, ALTHOUGH IT IS NOT NECESSARY TO THE ANALYSIS HERE, THAT THE FEBRUARY 5 REPORT FROM THE AIR FORCE STATES THAT YOUR BID IS CONSIDERED TO BE NONRESPONSIVE ONIFB-500 AS WELL AS ON IFB-501. THIS SUBJECT WILL BE DISCUSSED LATER. WE WERE NOT PREVIOUSLY INFORMED OF THIS FACT APPARENTLY BECAUSE THE AIR FORCE FELT THAT THE DISPARITY OF $134,000 BETWEEN YOUR BID AND CAI'S WAS TOO GREAT IN ANY EVENT TO JUSTIFY AN AWARD TO YOUR COMPANY EVEN IF IT WERE ASSUMED THAT YOUR BID WAS RESPONSIVE. THE QUESTION OF WHETHER YOU WERE RESPONSIVE ON IFB 500 WAS, THUS, IMMATERIAL.

WE NEED NOT RULE, AND DO NOT, THAT A PRICE DISPARITY RESULTING IN A MINIMUM (THE FIGURE WOULD BE HIGHER BECAUSE OF THE RULING ON THE RESPONSIVENESS OF YOUR BID) PERCENTAGE DIFFERENCE OF 34 POINTS IS NECESSARILY AN UNREASONABLE PREMIUM SINCE MUCH DEPENDS UPON THE PARTICULAR FACTS AND CIRCUMSTANCES IN A SPECIFIC PROCUREMENT. THE PROCUREMENT AGENCY HAS CONSIDERABLE DISCRETION IN RESOLVING THIS QUESTION. SEE 10 U.S.C. 2305 (C) WHICH PROVIDES, INTER ALIA, THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. AS LONG AS THIS DISCRETION IS NOT ABUSED A DECISION TO REJECT ALL BIDS AS BEING IN THE PUBLIC INTEREST SHOULD NOT BE DISTURBED. ON THE BASIS OF THE PRESENT RECORD WE THINK THE AIR FORCE'S DECISION TO CANCEL IFB-500 BECAUSE OF UNREASONABLE PRICES WAS NOT ONLY PROPER AND IN ACCORDANCE WITH APPLICABLE REGULATIONS, BUT WAS ALSO IN THE BEST INTERESTS OF THE GOVERNMENT.

IN THIS CONNECTION, YOUR LETTER OF FEBRUARY 13, 1963, STATES, IN PERTINENT PART, THAT:

"THOMPSON'S BID ON IFB-501 IS FOR $733,500, OR $24,616 HIGHER THAN CHICAGO AERIAL. IT IS FOR CAMERAS WHICH INCLUDE THE IDENTICAL LENS CONE ON IFB-500, A COMPONENT OF THE CAMERA.

"ITEM 10 OF THE REPORT (AIR FORCE REPORT OF FEBRUARY 5, 1963) STATES "UNDER IFB 500, THE THOMPSON OPTICAL ENGINEERING COMPANY BID REACHED ASD AFTER THE FORMAL BID OPENING ON 11 OCTOBER 1962. FOLLOWING AN INVESTIGATION A DETERMINATION WAS MADE THAT THE BID HAS BEEN MAILED ON A TIMELY BASIS AND WAS PROPER FOR ACCEPTANCE.--- .'

"HOW CAN BID IFB-500 BE CANCELLED AND SCHEDULED FOR READVERTISEMENT BECAUSE BID PRICES SUBMITTED BY THE OTHER BIDDERS ARE UNREASONABLE ON A BID WHEREIN THOMPSON IS $12,000 LESS THAN THE LOWEST NON-ACCEPTABLE LARGE BUSINESS BIDDER, IE., CHICAGO AERIAL INDUSTRIES; AND AT THE SAME TIME AN AWARD MADE TO THOMPSON UNDER IFB-501 FOR AN AMOUNT THREE TIMES HIGHER, FOR A MORE COMPLEX ITEM INCLUDING THE COMPONENTS UNDER IFB-500 AND FOR MORE MONEY, SPECIFICALLY $24,616, AND YET NOT BE UNREASONABLE?

THE ABOVE-QUOTED PORTION OF YOUR LETTER INDICATES A MISUNDERSTANDING ON YOUR PART AS TO THE STATUS OF THOMPSON OPTICAL'S BIDS ON THE TWO INVITATIONS FOR BIDS. THIS MISUNDERSTANDING MAY HAVE BEEN CAUSED BY THE LANGUAGE USED IN THE AIR FORCE REPORT OF FEBRUARY 5, 1963. THE LANGUAGE REFERRED TO IS THAT PORTION WHICH READS IN REFERENCE TO IFB 500 THAT "FOLLOWING AN INVESTIGATION A DETERMINATION WAS MADE THAT THE BID HAS BEEN MAILED ON A TIMELY BASIS AND WAS PROPER FOR ACCEPTANCE.' IT IS APPARENT THAT WHAT THE AIR FORCE MEANT BY SUCH LANGUAGE IS THAT SINCE THE BID OF THOMPSON OPTICAL WAS TIMELY MAILED IT WAS PROPER TO OPEN AND CONSIDER IT BUT NOT THAT SUCH BID WAS PROPERLY ACCEPTABLE FOR AN AWARD. ONCE THOMPSON'S BID WAS OPENED AND CONSIDERED IT WAS REJECTED AS NONRESPONSIVE BECAUSE THE COMPANY HAD FAILED TO BID ON ITEM 1A OF THE INVITATION FOR BIDS. THOMPSON'S BID ON IFB-501 WAS RESPONSIVE. IN ADDITION, THOMPSON HAS BEEN FOUND TO BE A RESPONSIBLE BIDDER AND THE AIR FORCE PROPOSES TO MAKE AWARD TO THAT FIRM. IF IT IS YOUR CONTENTION THAT THOMPSON'S BID ON IFB-501 IS ALSO UNREASONABLY HIGH IN RELATION TO OTHER BIDS, WE CANNOT AGREE WITH YOU.

AS PREVIOUSLY NOTED, RYCON WAS RULED NONRESPONSIVE BECAUSE IT FAILED TO BID ON ITEM 7 OF THE INVITATION FOR BIDS WHICH CALLED FOR MECHANICAL GAUGES, GAUGE CASES AND GAUGE AND CASE DRAWINGS. RYCON ALSO FAILED TO INCLUDE ANY COST IN ITS BID FOR REVISION TO PRODUCTION DRAWINGS--- ITEM 8. RYCON'S TOTAL PRICE WAS $650,716 WHICH, BECAUSE OF ITS FAILURE TO BID ON TWO SIGNIFICANT ITEMS, IS UNDERSTATED. WHAT RYCON'S PRICES WOULD HAVE BEEN HAD IT INCLUDED BIDS ON ITEMS 7 AND 8 WE ARE UNABLE TO DETERMINE BUT IT IS ENOUGH TO NOTE THAT ITS TOTAL PRICE OF $650,716 WOULD HAVE BEEN GREATER HAD THAT PRICE INCLUDED BIDS ON THE TWO OMITTED ITEMS. IN ANY EVENT, THOMPSON OPTICAL'S BID EXCEEDED RYCON'S CLEARLY NONRESPONSIVE AND UNDERSTATED BID BY $82,784. THIS RESULTS IN A PRICE DISPARITY BETWEEN THE TWO BIDS OF APPROXIMATELY 12 PERCENT. WITH RESPECT TO THE DISPARITY BETWEEN CAI'S AND THOMPSON OPTICAL'S PRICES, THOMPSON'S BID OF $733,500 IS $24,216 MORE THAN THAT SUBMITTED BY CAI. THIS RESULTS IN A DISPARITY OF APPROXIMATELY 4 PERCENT. MOREOVER, AS YOU STATE, IFB-501 CALLS FOR A MORE COMPLEX ITEM THAN THAT CALLED FOR IN IFB-500. ON THOSE FACTS, WE CANNOT CONCLUDE THAT THE AIR FORCE'S PROPOSED ACTION OF AWARDING A CONTRACT ON IFB-501 TO THOMPSON OPTICAL IS EITHER OBJECTIONABLE OR AN ABUSE OF ADMINISTRATIVE DISCRETION.

WITH RESPECT TO THAT PORTION OF YOUR PROTEST CONCERNING THE NONRESPONSIVENESS OF YOUR BID ON IFB-501, BECAUSE OF YOUR RESPONSE TO ITEM 8, IT SHOULD BE STATED THAT, IN VIEW OF THE PROPOSED AWARD TO THOMPSON OPTICAL WHICH SUBMITTED A LOWER RESPONSIVE BID THAN YOU DID, THIS QUESTION IS ACADEMIC. HOWEVER, IN VIEW OF THE NATURE OF THE CHARGES YOU HAVE MADE AGAINST THE AIR FORCE WITH RESPECT TO THE METHODS UTILIZED AND THE REASONS FOR DETERMINING YOUR BID TO BE NONRESPONSIVE, A DISCUSSION OF THIS PORTION OF YOUR PROTEST SEEMS APPROPRIATE.

ITEM 8 OF IFB-501 WAS ADDED BY AMENDMENT NO. 6 DATED OCTOBER 5, 1962, AND CALLED FOR:

"REVISED PRODUCTION DRAWINGS IN ACCORDANCE WITH SPECIFICATION MIL-D 12464A, TO INCORPORATE THE EXCEPTION TO LENS RESOLUTION, SET FORTH IN PARAGRAPH 3.6.7.1 OF SPECIFICATION MIL-C-55120, AMENDMENTS 2 AND 3 THERETO, AS REVISED HEREIN.'

ON PAGE 8 OF THE INVITATION FOR BIDS SCHEDULE, FOLLOWING THE DESCRIPTION OF ITEM 5, APPEARS THE FOLLOWING NOTICE:

"DATA PRICING: (NOV. 1961)

"/A) BIDDERS ARE REQUESTED TO INSERT OPPOSITE THE DATA ITEMS THE PRICES OF SUCH DATA OR A SPECIFIC RESPONSE SUCH AS "NOT APPLICABLE," "NO CHARGE," "INCLUDED IN THE PRICE OF ITEMS ----------," "REVISIONS NOT PRESENTLY REQUIRED," ETC. IF A BIDDER FAILS TO PRICE OR ENTER A SPECIFIC RESPONSE TO A DATA ITEM REQUIRED TO BE FURNISHED (EXCEPTING REVISIONS FOR WHICH A PRICE IS TO BE NEGOTIATED LATER) IT WILL BE CONSIDERED THAT THE DATA IS BEING FURNISHED AT NO CHARGE.' YOUR BID ENTRY ON ITEM 8 STATED "NOT PRESENTLY REQUIRED.' THE SAME ENTRY WAS MADE BY YOU ON ITEM 2A. ON ITEMS 4 AND 5 YOUR RESPONSE WAS "NOT APPLICABLE.' THE INVITATION FOR BIDS PROVIDED THAT ON ITEMS 3, 6 AND 6A "NO ENTRY WILL BE MADE BY BIDDER.'

IN YOUR LETTER OF DECEMBER 21, 1962, YOU CONTEND THAT IF THE TERMINOLOGY "NOT PRESENTLY REQUIRED" OR "NOT APPLICABLE" MAKES YOU NONRESPONSIVE ON ONE ITEM THAN IT SHOULD MAKE YOU NONRESPONSIVE ON ALL ITEMS WHERE SUCH LANGUAGE IS USED. YOU STATE THAT ITEM 8 COVERS REVISED PRODUCTION DRAWINGS FURNISHED BY THE GOVERNMENT AND THAT THESE ARE ALSO SPECIFIED UNDER ITEM 3 AS REVISED PRODUCTION DRAWINGS WHICH ARE SUPPLIED AS GOVERNMENT-FURNISHED PROPERTY AND SO STATED IN THE INVITATION FOR BIDS. YOU NOTE THAT THE INVITATION FOR BIDS STATES ON PAGE 8 THAT BIDDERS ARE REQUESTED TO INSERT OPPOSITE THE DATA ITEMS THE PRICE AND IT REQUESTS SPECIFIC RESPONSES AND GIVES THE LANGUAGE OF SUCH RESPONSES--- "NOT APPLICABLE," "NO CHARGE," "REVISIONS NOT PRESENTLY UIRED," ETC. FURTHER, IT STATES THAT IF A BIDDER FAILS TO PRICE OR ENTER A SPECIFIC RESPONSE IT WILL BE CONSIDERED THAT THE DATA IS BEING FURNISHED AT NO CHARGE. FINALLY IT STATES THAT ,/EXCEPTING REVISIONS FOR WHICH A PRICE IS TO BE NEGOTIATED LATER).' YOU CONCLUDE THAT IF REVISIONS ARE REQUIRED THEN THEY COULD BE NEGOTIATED LATER AS STATED IN THE INVITATION FOR BIDS.

YOUR LETTER OF DECEMBER 21 ALSO DIRECTS OUR ATTENTION TO YOUR RESPONSES TO VARIOUS ITEMS ON IFB-500. ON ITEM 3A (REVISION SHEETS) YOU BID "NOT PRESENTLY REQUIRED; " ON ITEM 4 (REVISED PRODUCTION DRAWINGS) "NOT PRESENTLY REQUIRED; " AND ON ITEMS 5 AND 6 (LITERATURE) "NOT LICABLE.' YOU STATE THAT IF YOU ARE HELD NONRESPONSIVE ON IFB-501 FOR SUCH LANGUAGE WHY WERE YOU NOT RULED NONRESPONSIVE ON IFB-500 FOR IDENTICAL BIDDING.

FINALLY YOU NOTE THAT VIEWLEX WAS RECENTLY AWARDED CONTRACT NO. AF 33/657/-9862. THIS WAS BASED ON AN INVITATION FOR BIDS (NO. 33-657-62 529) ISSUED BY THE SAME CONTRACTING OFFICER WHO ISSUED INVITATIONS FOR BIDS 500 AND 501. YOU CONCLUDE:

"* * * THIS IFB CONTAINED THE SAME QUESTIONS, SPECIFICALLY ITEM 2B, ENGINEERING DATA REVISIONS, AND OUR ANSWER WAS "NOT PRESENTLY REQUIRED," AND ITEM 3, TECHNICAL DATA, AND OUR ANSWER WAS "NOT PRESENTLY REQUIRED.' THIS WAS ADJUDGED RESPONSIVE BECAUSE WE WERE AWARDED A CONTRACT.'

IN RESPONSE TO YOUR CONTENTIONS, THE AIR FORCE, IN ITS LETTER OF FEBRUARY 5, 1963, STATES IN PERTINENT PART, AS FOLLOWS:

"5.IN REGARD TO THE NONRESPONSIVENESS OF VIEWLEX'S BID UNDER IFB 501, ITEM 8 REQUIRES A QUOTATION BY PROSPECTIVE CONTRACTORS ON THE FOLLOWING: "REVISED PRODUCTION DRAWINGS IN ACCORDANCE WITH SPECIFICATION MIL-D-12464A TO INCORPORATE THE EXCEPTION TO LENS RESOLUTION SET FORTH IN PARAGRAPH 3.6.7.1 OF SPECIFICATION MIL-C 55120, AMENDMENTS 2 AND 3 THERETO, AS REVISED HEREIN.' THE NEED FOR THE AFOREMENTIONED REVISIONS IS CLEARLY DELINEATED IN IFB-501. THE CHANGE IN THE LENS REQUIREMENT FROM AN "AREA WEIGHTED AVERAGE RESOLUTION (AWAR) OF NO LESS THAN 26 LINES/MM.' TO AN "AREA WEIGHTED AVERAGE RESOLUTION (AWAR) OF OF THE LA-131A LENS CONE, AND REQUIRES A CORRESPONDING REVISION IN PRODUCTION DRAWINGS. IN LIGHT OF THE FACT THAT VIEWLEX BID STATED THAT THESE REVISED DRAWINGS WERE "NOT REQUIRED," THE CONTRACTING OFFICER, FOLLOWING COORDINATION WITH THE OFFICE OF THE STAFF JUDGE ADVOCATE, DETERMINED VIEWLEX, INC. TO BE NONRESPONSIVE.

"6. THE PRODUCTION DRAWINGS FURNISHED BY THE GOVERNMENT DO NOT INCORPORATE DRAWINGS FOR THE REQUIRED 40 AWAR LENS. THESE PRODUCTION DRAWINGS, SUPPLIED TO THE SIGNAL CORPS UNDER CONTRACT AF 33/600/-42279 BY VIEWLEX, INC., AND INCORPORATED IN IFBS 500 AND 501, CONTAIN DRAWINGS FOR THE 26/MM AWAR LENS, NOT THE 40/MM AWAR LENS. SINCE VIEWLEX FURNISHED THESE DRAWINGS THEY, ABOVE ALL, SHOULD BE AWARE OF THIS LENS CHANGE. APPEARS THAT THE CONTRACTOR IS CONFUSING DRAWING REVISIONS, THE PRICING OF WHICH IS REQUIRED BY BOTH IFBS, WITH DRAWING CHANGES THAT MAY BE REQUIRED IN THE EVENT OF EQUIPMENT DESIGN CHANGE DURING PRODUCTION. PROCEDURE FOR ACCOMPLISHING SUCH CHANGES ARE DELINEATED IN SCHEDULE "U" OF IFB 500, AND SCHEDULE "R" OF IFB 501. THE CONTRACTOR IS CORRECT WHEN HE STATES THAT THE SPECIFICATION SHALL GOVERN. IN THIS CASE THE SPECIFICATION REQUIRES BOTH A LENS MODIFICATION, AND A CORRESPONDING REVISION OF PRODUCTION DRAWINGS. BOTH OF THESE REQUIREMENTS ARE CLEARLY DELINEATED IN IFBS 500 AND 501.

"7. IN LIGHT OF THE FACT THAT VIEWLEX, IN RESPONSE TO ITEM 8, STATED THAT REVISIONS ARE "NOT REQUIRED" TO INCORPORATE THE CHANGES INHERENT IN THE LA -131A1 LENS CONE, THEIR BID IS CLEARLY NONRESPONSIVE. ONCE AGAIN THE CONTRACTOR HAS CONFUSED THE DRAWING REVISIONS REQUIRED BY ITEM 8 WITH DRAWING CHANGES THAT MAY BE REQUIRED IN THE EVENT OF EQUIPMENT DESIGN CHANGES DURING PRODUCTION. THE CONTRACTOR ALSO POINTED OUT THAT IF NO ENTRY IS MADE FOR ITEM 8 THE DATA IS CONSIDERED BY THE GOVERNMENT AS BEING FURNISHED AT NO CHARGE (SEE PAGE 8 OF IFB 501). THIS STATEMENT IS TRUE; HOWEVER, VIEWLEX ENTERED "NOT REQUIRED.'

"8. IN LIGHT OF THE FACTS RELATED ABOVE, VIEWLEX IS ALSO CONSIDERED NONRESPONSIVE ON IFB 500. DRAWING REVISIONS ARE CLEARLY IN ORDER DUE TO THE CHANGES TO ACCOMPLISH THE REQUIRED HIGHER RESOLUTION LENS. THIS CHANGE IN THE LENS, IN TURN, REQUIRES A REVISION IN THE PRODUCTION DRAWINGS THAT DEPICT THIS LENS.

"9. THE CONTRACTOR'S BID WAS DETERMINED TO BE RESPONSIVE FOR CONTRACT AF 33/657/-9862 DUE TO THE FACT THAT NO KNOWN REVISIONS WERE REQUIRED. AS A RESULT OF THIS FACT, THE RULING ISSUED BY THE CONTRACTING OFFICER UNDER AF -9862 IS NOT INCONSISTENT WITH THE RULINGS ON IFBS 500 AND 501. THE CIRCUMSTANCES ALONE, NOT THE RULES, HAVE CHANGES.

"11. ATTACHED ARE TWO DRAWINGS OF THE 6 INCH LENS ASSEMBLY, ONE BY VIEWLEX SM-D-412206 AND THE OTHER BY CHICAGO AERIAL 2677-110. THE CHANGES THE DIMENSIONS FOR DIAPHRAGM APERTURE ON THE VIEWLEX DRAWING. THIS IS ONLY ONE EXAMPLE OF MANY THAT WOULD HAVE TO BE MADE ON SUBASSEMBLY DRAWINGS.'

WE HAVE CONSISTENTLY HELD THAT THE PREPARATION AND ESTABLISHMENT OF SPECIFICATIONS TO REFLECT THE NEEDS OF THE GOVERNMENT IS THE RESPONSIBILITY OF THE PROCUREMENT AGENCY. 38 COMP. GEN. 190; 17 ID. 554. WE HAVE ALSO HELD THAT BONA FIDE DETERMINATIONS AS TO RESPONSIVENESS OF BIDS AND RESPONSIBILITY OF BIDDERS ARE MATTERS PRIMARILY FOR ADMINISTRATIVE DETERMINATION AND MAY BE QUESTIONED BY OUR OFFICE ONLY WHERE THEY ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. 37 COMP. GEN. 757. WE FIND NO LACK OF SUCH EVIDENCE IN THIS INSTANCE. ITEM 8 OF IFB-501 AND ITEM 4 OF IFB-500 BOTH CALLED FOR BIDS ON REVISED PRODUCTION DRAWINGS. WHILE IT IS TRUE THAT THE DATA PRICING CLAUSE IN BOTH INVITATIONS FOR BIDS STATED THAT IF A BIDDER FAILED TO ENTER A PRICE OR SPECIFIC RESPONSE TO A DATA ITEM, IT WOULD BE CONSIDERED THAT THE DATA WAS BEING FURNISHED AT NO CHARGE, SUCH PROVISION IS NOT APPLICABLE TO YOUR BIDS SINCE RATHER THAN ENTER NOTHING ON THESE ITEMS (WHICH WOULD HAVE INDICATED THAT YOU DID INTEND TO FURNISH THE REVISED PRODUCTION DRAWINGS AT NO ADDITIONAL COST) YOU RESPONDED WITH THE WORDS "NOT PRESENTLY REQUIRED" WHICH INDICATED AN INTENT NOT TO FURNISH THE DRAWINGS. SINCE THESE DRAWINGS WERE, IN FACT, NECESSARY WE AGREE WITH THE AIR FORCE'S DETERMINATION THAT YOUR BIDS ON BOTH INVITATIONS FOR BIDS WERE NONRESPONSIVE.

WE HAVE EXAMINED THE BIDS SUBMITTED BY THE OTHER BIDDERS ON BOTH INVITATIONS FOR BIDS AND, CONTRARY TO THE IMPLICATIONS RAISED IN YOUR LETTER OF DECEMBER 21, 1962, HAVE FOUND NOTHING IN THE RECORD BEFORE US WHICH INDICATES THAT THE AIR FORCE APPLIED DIFFERENT STANDARDS IN EVALUATING YOUR BIDS THAN IT DID IN EVALUATING THE BIDS OF THE OTHER BIDDERS. ON IFB-500 THOMPSON OPTICAL WAS RULED NONRESPONSIVE BECAUSE IT FAILED TO BID ON ITEM 1A (RUNNING SPERES). CAI SUBMITTED RESPONSIVE ENTRIES OF "NO CHARGE" ON ITEMS 1A, 3A, 4 AND 6 BUT WAS RULED NONRESPONSIVE BECAUSE OF ITS SIZE. AT THE ORIGINAL EVALUATION NO DETERMINATION AS TO RESPONSIVENESS WAS MADE ON YOUR BID APPARENTLY BECAUSE TO EVEN CONSIDER YOUR BID FOR AWARD WOULD HAVE MEANT PAYING A PREMIUM OF $134,640 WHICH IN THE AIR FORCE'S OPINION WAS TOO GREAT. ON IFB-501 RYCON'S BID WAS RULED NONRESPONSIVE FOR FAILURE TO ENTER A RESPONSE TO ITEM 7 (MECHANICAL GAUGES, GAUGE CASES AND CASE DRAWINGS). CAI SUBMITTED RESPONSIVE ENTRIES OF "NO CHARGE" ON ITEMS 2A, 4, 5 AND 8 BUT WAS RULED NONRESPONSIVE BECAUSE OF ITS SIZE. THOMPSON OPTICAL'S BID WAS RESPONSIVE IN ALL RESPECTS. TO OUR KNOWLEDGE NO OTHER DETERMINATIONS AS TO RESPONSIVENESS HAVE BEEN MADE ON THE OTHER BIDS SUBMITTED OBVIOUSLY BECAUSE FROM THE VERY BEGINNING THESE BIDS WERE NOT IN THE RUNNING FROM A PRICE STANDPOINT.

WITH RESPECT TO THE QUESTION WHETHER AN EMERGENCY NEED EXISTS FOR THE LENS CONES WHICH WOULD JUSTIFY THEIR PROCUREMENT BY NEGOTIATION, YOU CONTEND IN YOUR LETTER OF NOVEMBER 28, 1962, THAT NO REAL EMERGENCY EXISTS. ALTHOUGH YOU RECOGNIZE THAT THERE MAY NOT BE SUFFICIENT 6-INCH LENS CONES FOR EACH CAMERA, THERE ARE MORE THAN ENOUGH 3-INCH LENS CONES AVAILABLE AND THAT THE LATTER LENS CONES ARE IN STOCK IN THE TOBYHANNA AND SACRAMENTO WAREHOUSES. YOU STATE THAT THE CAMERAS ARE FOR SPECIFIC USE IN THE MOHAWK PROGRAM AND SUFFICIENT CAMERAS FOR EVERY MOHAWK AIRCRAFT AVAILABLE TO DATE IS IN EXISTENCE. FINALLY YOU STATE THAT THERE MAY BE A NEED FOR 6-INCH LENS CONES FOR TRAINING PURPOSES AND IF THIS IS ACTUALLY SO, IT WOULD BE VERY SIMPLE TO SUBSTITUTE 3-INCH FOR 6-INCH LENS CONES IN THE TRAINING PROGRAM THEREBY RELEASING THE 6-INCH CONES FOR FIELD USE.

THE AIR FORCE, AS PREVIOUSLY NOTED, HAS SUSPENDED ALL PROCUREMENT ACTION ON THE LENS CONES PENDING FURTHER CLARIFICATION OF THE URGENCY QUESTION. AS OF THIS DATE WE HAVE NOT BEEN INFORMED WHETHER A FINAL DETERMINATION ON THIS QUESTION HAS BEEN MADE. IT SHOULD BE NOTED AT THE OUTSET THAT THE PRIMARY RESPONSIBILITY FOR DETERMINING THE LEGITIMATE NEEDS OF THE AIR FORCE RESTS WITH THE AIR FORCE. THIS DETERMINATION CANNOT BE DICTATED BY SUPPLIERS OF THE GOVERNMENT'S NEEDS. THE DECISION OF WHETHER ITS NEEDS FOR THE 6-INCH LENS CONES CAN BE SATISFIED BY SUBSTITUTION OF AVAILABLE 3- INCH LENS CONES, IF SUCH LENS CONES ARE IN FACT AVAILABLE, ALSO RESTS WITH THE AIR FORCE SINCE IT ALONE IS IN A POSITION TO KNOW THE PURPOSE FOR WHICH THE LARGER LENS CONES ARE NEEDED AND WHETHER THIS PURPOSE CAN BE FULFILLED BY SUBSTITUTION OF THE SMALLER CONES. SO LONG AS THE SUBJECT PROCUREMENT IS MADE WITHIN THE LIMITS OF APPROPRIATED FUNDS AND WITHIN THE BOUNDS OF APPLICABLE PROCUREMENT LAW OUR OFFICE IS WITHOUT AUTHORITY TO EITHER OBJECT TO THE AIR FORCE'S DECISION AS TO THE TYPE OR QUANTITY OF EQUIPMENT NEEDED TO FULFILL LEGITIMATE REQUIREMENTS OR TO SUBSTITUTE OUR JUDGMENT ON THE MATTER FOR THAT OF THE AIR FORCE.

ALTHOUGH OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT WHENEVER PRACTICABLE PROCUREMENT OF THE GOVERNMENT'S NEEDS SHOULD BE ACCOMPLISHED THROUGH FORMAL ADVERTISING PROCEDURES, WE RECOGNIZE THAT THERE MAY BE SOUND REASONS FOR PROCURING GOODS BY NEGOTIATION. THESE REASONS WERE ALSO RECOGNIZED BY THE CONGRESS WHEN IT ENACTED THE ARMED SERVICES PROCUREMENT ACT OF 1947, 10 U.S.C. 2301, ET SEQ. THIS ACT SPECIFIES 17 SPECIFIC CASES WHERE NEGOTIATION IS AUTHORIZED. SEE 10 U.S.C. 2304 (A) (1/-/17). ONE OF THESE CASES IS WHERE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. 10 U.S.C. 2304 (A) (2). SHOULD A PUBLIC EXIGENCY, IN FACT, EXIST AND THE AIR FORCE MAKES A PROPER DETERMINATION IN ACCORDANCE WITH THE PROVISIONS OF ASPR 3-202.2 THAT THE NEED FOR THE LENS CONES IS "COMPELLING AND OF UNUSUAL URGENCY" OUR OFFICE WOULD HAVE NO LEGAL BASIS FOR OBJECTING TO PROCUREMENT ON A NEGOTIATED BASIS. ON THE OTHER HAND, IF TIME PERMITS, WE THINK THE AIR FORCE SHOULD ACCOMPLISH THE PROCUREMENT BY MEANS OF THE NEGOTIATION PROCEDURES SPECIFIED IN 10 U.S.C. 2304 (A) (15) OR BY UNRESTRICTED FORMAL ADVERTISING SINCE THE ONLY JUSTIFICATION FOR NEGOTIATION WITH CAI ALONE THAT HAS BEEN TENDERED TO OUR OFFICE IS EXIGENCY. THE AIR FORCE, BY LETTER OF TODAY, IS BEING INFORMED OF OUR CONCLUSIONS IN THIS REGARD.

YOUR LETTERS OF FEBRUARY 13 AND 14, 1963, RAISE ONE ADDITIONAL QUESTION CONCERNING A NEGOTIATED CONTRACT WITH CAI FOR DELIVERY OF 67KA-45A CAMERA SYSTEMS. WITH YOUR LETTER OF FEBRUARY 13 YOU ENCLOSED A COPY OF A LETTER ADDRESSED TO YOU DATED FEBRUARY 6, 1963, FROM CONGRESSMAN ABRAHAM J. MULTER WHICH DETAILS SOME OF THE CIRCUMSTANCES SURROUNDING THE PROCUREMENT. THE ENCLOSED LETTER FROM CONGRESSMAN MULTER STATES, IN PERTINENT PART, AS FOLLOWS:

"THE DEPARTMENT OF THE AIR FORCE HAS ADVISED ME AS FOLLOWS:

" "THE CONTRACT WAS FOR 67 CAMERA SYSTEMS FOR STILL PICTURES, TYPE KA-45A FOR AERIAL RECONNAISSANCE. THE REQUIREMENT WAS INITIATED BY THE TACTICAL AIR COMMAND AND URGENT NEED FOR THE EQUIPMENT WAS PERSONALLY EMPHASIZED BY BRIG.GEN. M. C. SMITH, HEADQUARTERS USAF, TO GEN. RUEGG OF AERIAL SYSTEMS DIVISION ON NOVEMBER 2, 1962, BY TELEPHONE, TWX MESSAGE OF NOVEMBER 6 STATES: ,THIS IS TO REITERATE THE NECESSITY FOR ACCELERATING PROCUREMENT OF KA-45A CAMERAS ON A MAXIMUM CONTRACTOR EFFORT BASIS. ACCELERATED DELIVERY SCHEDULES ARE NECESSARY TO MAKE THESE CAMERAS AVAILABLE TO TAC (TACTICAL AIR COMMAND) AS SOON AS POSSIBLE.' THIS PROCUREMENT WAS NEGOTIATED ON A SOLE SOURCE BASIS PURSUANT TO PROVISIONS OF PUBLIC EXIGENCY WITH CHICAGO AERIAL INDUSTRIES, INC. THIS COMPANY IS THE ONLY SUPPLIER OF KA-45A CAMERAS AND THE ONLY SOURCE CAPABLE OF SUPPORTING THE URGENT DELIVERY REQUIREMENT. " "ALL OF THE KA-45A CAMERAS REQUIRED BY THE AIR FORCE WERE DELIVERED WITHIN 90 DAYS AFTER ISSUANCE OF THE CONTRACT. INITIAL DELIVERY OF 27 CAMERAS WAS COMPLETED BY NOVEMBER 17, 1962. IT IS PERTINENT TO NOTE THAT THE KA-45A CAMERA IS SUBSTANTIALLY DIFFERENT FROM THE KA-30 CAMERA EQUIPMENT BEING PROCURED BY THE ARMY UNDER I.F.B. -- 500 AND--- 501. THE EA-30 CAMERA SYSTEM INCORPORATES AN IN BETWEEN THE LENS SHUTTER. THE KA-45A CAMERA SYSTEM, ON THE OTHER HAND, HAS A FOCAL PLANE SHUTTER, PATENTS UPON WHICH ARE CURRENTLY PENDING. CHICAGO AERIAL INDUSTRIES HAS INDEPENDENTLY DEVELOPED THE FOCAL PLANE SHUTTER AND IS THE SOLE SOURCE OF MANUFACTURE.'"

IN YOUR LETTER OF FEBRUARY 13 YOU STATE THAT FOR THE PURPOSE OF AVOIDING THE SLIGHTEST CONFUSION YOU ARE WILLING TO ASSUME THAT ONLY CAI MAKES A CAMERA WITH A FOCAL PLANE SHUTTER. YOU ARE ALSO WILLING TO ASSUME THAT THE USING AND PROCURING AGENCIES HAD CHECKED YOUR COMPANY AND OTHERS AND WERE AWARE THAT ONLY CAI MADE THE KA-30 CAMERA (DESIGNATED KA-45A) WITH A FOCAL PLANE SHUTTER. HOWEVER, YOU FEEL THAT THE INFORMATION CONTAINED IN CONGRESSMAN MULTER'S LETTER TO YOU EVIDENCES A "PREARRANGED DEAL" BETWEEN THE AIR FORCE AND CAI. YOU POINT TO THE FACT THAT DELIVERY OF 27 CAMERAS WAS COMPLETED WITHIN 15 DAYS AND THAT 40 MORE CAMERAS, FOR A TOTAL OF 67, WERE DELIVERED WITHIN 90 DAYS. YOU CONCLUDE THAT "ASSUMING CHICAGO AERIAL TO HAVE WORKED AROUND THE CLOCK THE ENTIRE FIFTEEN DAYS INCLUDING THE FOUR SATURDAYS AND SUNDAYS, WE MAKE THE FLAT UNEQUIVOCAL STATEMENT THAT THESE CAMERAS COULD NOT HAVE BEEN MANUFACTURED WITHIN THAT TIME.'

IN YOUR LETTER OF FEBRUARY 14 YOU STATE THAT A STATEMENT HAS BEEN MADE THAT THE AIR FORCE NEEDED CAMERAS ON A CRASH PROGRAM AND OBTAINED THESE FROM CAI BY BORROWING OR USING EQUIPMENT ON A NAVY CONTRACT WHICH WOULD SUBSEQUENTLY BE REPLACED TO THE NAVY. YOUR LETTER FURTHER STATES, IN PERTINENT PART, THAT:

"* * * THE ONLY CONTRACT WE KNOW OF FOR FOCAL PLANE CAMERAS IS CONTRACT NO. AF 33/600/42647. THIS WAS AWARDED TO CHICAGO AERIAL INDUSTRIES AT A PRICE OF APPROXIMATELY $9985 EACH. THIS PRICE INCLUDED 250 FOOT CASSETTES. IT WAS FOR A CAMERA DESIGNATED KA-46. WE ARE TOLD THAT THE KA -45 CAMERA IS IDENTICAL EXCEPT THAT IT USES A 100 FOOT CASSETTE. IF THE IMMEDIATE NEED OF THE AIR FORCE WAS COVERED BY USING EQUIPMENT UNDER CONTRACT NO. AF 33/600/42647, THEN WHAT HAPPENED TO THE PROMISED DELIVERIES TO THE NAVY UNDER THIS CONTRACT? CONTRACT NO. AF 33/600/42647 WAS AWARDED IN THE EARLY PART OF 1961 AND SPECIFIED A 90 DAY DELIVERY OF PROTOTYPE WITH PRODUCTION TO FOLLOW ONE MONTH THEREAFTER AND COMPLETION WITHIN 5 MONTHS. ALLOWING FOR DELAYS IN APPROVAL AND CHANGES IT WOULD CERTAINLY APPEAR THAT THIS CONTRACT WOULD HAVE BEEN COMPLETED LONG BEFORE ANY EQUIPMENT WAS AVAILABLE FOR ANY EMERGENCY OR CRASH PROGRAM. IF THIS IS NOT THE CONTRACT AGAINST WHICH THE BORROWING FOR THE EMERGENCY WAS ACCOMPLISHED THEN WHAT CONTRACT WAS IT? WE KNOW OF NO OTHER CONTRACT. WERE NOT INVITED TO BID ON ANY OTHER CONTRACT. HAVE WE NOW DISCOVERED ANOTHER INSTANCE OF A NEGOTIATED SOLE-SOURCE CONTRACT PLACED WITH CHICAGO AERIAL INDUSTRIES?

YOUR LETTER FURTHER ALLEGES THAT YOU HAVE BEEN ADVISED ON EXCELLENT AUTHORITY THAT BOTH THE NAVY AND AIR FORCE HAVE STOPPED DELIVERIES OF THE KA-45 CAMERA DUE TO POOR QUALITY AND YOUR INFORMATION INDICATES THAT CAI MADE CHANGES WITHOUT CONSULTATION OR APPROVAL AND THAT THE CAMERAS WILL NOT PASS INSPECTION.

BY LETTER OF FEBRUARY 18, 1963, THE AIR FORCE REPORTS THAT THE REASON WHY CAMERAS WERE DELIVERED IN SUCH A SHORT PERIOD OF TIME WAS THAT A QUANTITY OF 175 KA-45 CAMERA SYSTEMS (THE KA-45A INCORPORATES MINOR MODIFICATIONS) WAS BEING PRODUCED FOR THE DEPARTMENT OF THE NAVY UNDER CONTRACT AF 33/600/-42647 BY CAI. ON NOVEMBER 2, 1962, IN ORDER FOR THE AIR FORCE TO MEET EMERGENCY REQUIREMENTS GENERATED BY THE CUBAN SITUATION, THE DEPARTMENT OF THE NAVY AGREED TO DIVERT A QUANTITY OF KA-45A CAMERA SYSTEMS FROM CONTRACT 42647. THIS DIVERSION WAS USED TO FULFILL A PART OF THE AIR FORCE REQUIREMENTS. WE HAVE BEEN INFORMED INFORMALLY BY THE AIR FORCE THAT THE CONTRACT FOR 67 CAMERA SYSTEMS REFERRED TO IN THE FIRST PARAGRAPH OF CONGRESSMAN MULTER'S LETTER WAS AF 33/657/-10259. THE AIR FORCE REPORTS THAT THIS CONTRACT WAS PLACED, IN PART, FOR THE PURPOSE OF REIMBURSING THE NAVY FOR BORROWED CAMERA SYSTEMS UNDER CONTRACT 42647. THE COST OF THE 67 CAMERAS WILL BE CHARGED TO CONTRACT 10259.

THE FOLLOWING INFORMATION HAS BEEN SUBMITTED BY THE AIR FORCE IN REGARD TO THE HISTORY OF CONTRACT AF 33/600/-42647. SEE ALSO OUR LETTER TO YOU DATED OCTOBER 4, 1961 (B-146246). CONTRACT 42647 WAS AWARDED TO CAI ON FEBRUARY 17, 1961. THE SCOPE OF THE INITIAL CONTRACT ENCOMPASSED A QUANTITY OF 150 EACH KA-46 CAMERAS, WITH ACCOMPANYING 250-FOOT CASSETTES, AT A UNIT PRICE OF $8,888. PURSUANT TO SUPPLEMENTAL AGREEMENT NO. 2, DATED JUNE 22, 1961, THE QUANTITY OF 150 KA-46 CAMERAS WAS REDUCED TO 50, AND A QUANTITY OF 175 KA-45 CAMERAS WITH 250-FOOT CASSETTES WAS PROCURED IN ACCORDANCE WITH ENGINEERING CHANGE PROPOSALS SUBMITTED BY THE CONTRACTOR. THE LATTER KA-45 CAMERA WAS INDEPENDENTLY DEVELOPED BY CAI AT THEIR OWN EXPENSE AND INCORPORATES A FOCAL PLANE SHUTTER DECK, PATENTS UPON WHICH ARE CURRENTLY PENDING, AND IS SUBSTANTIALLY DIFFERENT FROM THE KA-46 CAMERA SYSTEM. BOTH THE KA-46 AND THE KA-45 CAMERAS ARE, HOWEVER, CAPABLE OF UTILIZING THE 100 OR 250-FOOT CASSETTES.

IT IS ALSO REPORTED THAT DELIVERY OF 50 KA-46 CAMERAS UNDER CONTRACT 42647 WAS COMPLETED AS REQUIRED AND SUBMISSION OF PREPRODUCTION SAMPLES ON THE KA-45 WAS ALSO COMPLETED AS REQUIRED, WITHIN SIX MONTHS AFTER RECEIPT OF SUPPLEMENTAL AGREEMENT NO. 2. FIRST ARTICLE APPROVAL OF THE KA-45 CAMERA WAS ACCORDED CAI ON JULY 17, 1962. THE DELAY WAS OCCASIONED BY A "PECULIAR (LIGHT BANDING) PROBLEM" ARISING FROM THIS PREVIOUSLY UNPROVEN APPLICATION OF THE FOCAL PLANE SHUTTER TECHNIQUE TO THE INVOLVED NAVY LOW LEVEL, HIGH SPEED RECONNAISSANCE MISSION. EXTENSIVE TESTS AND REWORK WERE ACCOMPLISHED BY THE DEPARTMENT OF THE NAVY AND THE CONTRACTOR AT NO INCREASE IN CONTRACT PRICE, AND A FINAL CORRECTIVE

THE AIR FORCE FURTHER REPORTS THAT INITIAL PARTIAL SHIPMENTS OF KA 45 CAMERAS WERE MADE ON NOVEMBER 6, 1962. A QUANTITY OF IN PROCESS CAMERAS AND PARTS WERE AVAILABLE AT THE TIME OF THE URGENT AIR FORCE REQUIREMENT (OCCASIONED BY THE CUBAN CRISIS) FOR DIVERSION FROM CONTRACT 4426477 TO CONTRACT AF 33/657/-10259, WHILE STILL MAINTAINING THE FORMER CONTRACT SCHEDULE.

WITH REFERENCE TO YOUR STATEMENTS REGARDING SHIPMENT STOPPAGES ON CONTRACT 42647 THE AIR FORCE REPORTS THAT THE DEPARTMENT OF THE NAVY HAD RECEIVED A QUANTITY OF 90 KA-45 CAMERAS FROM CAI. THE SHIPMENT FOR THE BALANCE OF 85 SYSTEMS WAS STOPPED ON JANUARY 14, 1963, PENDING CORRECTION OF A PROBLEM RELATED TO "GLARE.' THE "GLARE" APPEARED ON THE FORMAT OF THE FILM WHEN PICTURES WERE TAKEN AT HIGH SHUTTER SPEEDS AND AT CORRESPONDING WIDE APERTURE OPENINGS. APPROXIMATELY 5 PERCENT OF THE MISSIONS ARE AFFECTED. THIS DEFECT, WHICH APPEARED ONLY DURING IN FLIGHT OPERATIONAL USE SUBSEQUENT TO INSPECTION AND ACCEPTANCE, HAS BEEN CORRECTED BY CAI ON PRODUCTION AND ON DELIVERED EQUIPMENT AT NO INCREASE IN THE CONTRACT PRICE. (IT IS STATED THAT OFFICIAL WORD WAS RECEIVED ON FEBRUARY 20, 1963, FROM THE DEPARTMENT OF THE NAVY THAT THE REQUIRED "FIX" HAS BEEN ACCOMPLISHED BY CAI.)

FINALLY WITH REGARD TO YOUR STATEMENT THAT CAI MADE CHANGES WITHOUT CONSULTATION OR APPROVAL, THE AIR FORCE SUGGESTS THAT IF YOU HAVE SUPPORTING FACTS TO SUBSTANTIATE YOUR CHARGES, THEY SHOULD BE SUBMITTED SO THAT THE MATTER CAN BE INVESTIGATED.

WITH RESPECT TO YOUR REQUEST THAT OUR OFFICE JOIN YOU IN A PROPOSED SUIT AGAINST THE GOVERNMENT ON YOUR PROTEST IN THE COURT OF CLAIMS, WE MUST ADVISE THAT EVEN IF WE FELT THAT YOUR POSITION IN THIS MATTER HAD MERIT,WHICH ON THE BASIS OF THE RECORD BEFORE US WE DO NOT, OUR OFFICE IS WITHOUT AUTHORITY TO JOIN CLAIMANTS IN LAW SUITS FILED AGAINST THE GOVERNMENT.

IN VIEW OF THE FOREGOING ANALYSIS AND CONCLUSIONS WITH RESPECT TO THE ISSUES RAISED IN YOUR PROTEST, WE MUST ADVISE THAT OUR OFFICE HAS NO LEGAL BASIS FOR OBJECTING TO THE DEPARTMENT OF THE AIR FORCE'S CANCELLATION OF IFB-500 OR TO ITS DETERMINATION TO AWARD A CONTRACT TO THOMPSON OPTICAL ON IFB-501.