B-146292, SEP. 13, 1961
Highlights
TO THE SECRETARY OF DEFENSE: WE ARE ENCLOSING A COPY OF OUR DECISION OF TODAY TO THE SECRETARY OF THE ELGIN NATIONAL WATCH COMPANY. THE PROTEST IS BEING DENIED ON THE BASIS THAT THE BID OF THE ELGIN NATIONAL WATCH COMPANY WAS QUALIFIED BY AN EXCEPTION TAKEN TO THE ACCURACY TESTING REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS. OUR DECISION ALSO CONSIDERS A CONTENTION BY THAT COMPANY THAT IT IS UNFAIR FOR THE GOVERNMENT TO REQUIRE A SUCCESSFUL BIDDER TO PURCHASE JEWEL BEARINGS FROM THE TURTLE MOUNTAIN ORDNANCE PLANT. IT WAS ARGUED THAT OTHER BIDDERS ARE PLACED IN A DISADVANTAGEOUS POSITION SINCE THEY MUST RELY UPON BULOVA FOR INFORMATION TO FORMULATE THEIR PRICES. THAT BULOVA IS IN A POSITION TO CONTROL THE PRICES OF ITS COMPETITORS BY ESTABLISHING THE COST OF AN ESSENTIAL COMPONENT OF WATCHES WHICH THE GOVERNMENT PROPOSES TO PURCHASE.
B-146292, SEP. 13, 1961
TO THE SECRETARY OF DEFENSE:
WE ARE ENCLOSING A COPY OF OUR DECISION OF TODAY TO THE SECRETARY OF THE ELGIN NATIONAL WATCH COMPANY, DENYING THE PROTEST OF THAT COMPANY AGAINST A REJECTION OF ITS BID ON WRIST WATCHES AS DESCRIBED IN INVITATION FOR BIDS NO. ORD-36-038-61-M-432, ISSUED MAY 18, 1961, BY THE FRANKFORD ARSENAL.
THE PROTEST IS BEING DENIED ON THE BASIS THAT THE BID OF THE ELGIN NATIONAL WATCH COMPANY WAS QUALIFIED BY AN EXCEPTION TAKEN TO THE ACCURACY TESTING REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS. OUR DECISION ALSO CONSIDERS A CONTENTION BY THAT COMPANY THAT IT IS UNFAIR FOR THE GOVERNMENT TO REQUIRE A SUCCESSFUL BIDDER TO PURCHASE JEWEL BEARINGS FROM THE TURTLE MOUNTAIN ORDNANCE PLANT, ROLLA, NORTH DAKOTA, AND AT THE SAME TIME PERMIT THE PLANT OPERATOR, BULOVA WATCH COMPANY, INC., TO COMPETE WITH OTHER FIRMS ON A CONTRACT FOR FURNISHING WATCHES TO THE GOVERNMENT. IT WAS ARGUED THAT OTHER BIDDERS ARE PLACED IN A DISADVANTAGEOUS POSITION SINCE THEY MUST RELY UPON BULOVA FOR INFORMATION TO FORMULATE THEIR PRICES, THAT A DELAY IN FURNISHING SUCH INFORMATION COULD CAUSE DIFFICULTY IN BIDDING PROMPTLY AND EFFICIENTLY, AND THAT BULOVA IS IN A POSITION TO CONTROL THE PRICES OF ITS COMPETITORS BY ESTABLISHING THE COST OF AN ESSENTIAL COMPONENT OF WATCHES WHICH THE GOVERNMENT PROPOSES TO PURCHASE.
THE QUESTION AS TO THE REASONABLENESS OF THE PRICES QUOTED ON JEWEL BEARINGS TO PROSPECTIVE BIDDERS, INCLUDING THE SALES OFFICE OF BULOVA WATCH COMPANY, INC., WAS DISCUSSED AT A CONFERENCE HELD IN OUR OFFICE WITH REPRESENTATIVES OF BULOVA WATCH COMPANY, INC., AND THE GENERAL SERVICES ADMINISTRATION. IT APPEARS THAT THE PRICES QUOTED HERE WERE REASONABLE AND THAT THE DELAY IN FURNISHING THE QUOTATIONS IS ATTRIBUTABLE TO THE SHORT TIME ALLOWED IN THE INVITATION FOR THE SUBMISSION OF BIDS AND THE FACT THAT A CHANGE WAS MADE BY THE GOVERNMENT IN THE MAXIMUM QUANTITY OF WATCHES PROVIDED FOR ORIGINALLY IN THE INVITATION.
THE BULOVA REPRESENTATIVES EXPLAINED THAT THERE ARE INVOLVED CERTAIN DIFFICULTIES IN THE COMPUTATION OF PROPER QUOTATIONS ON JEWEL BEARINGS, BY WATCH MANUFACTURERS AND THE FACT THAT THE TURTLE MOUNTAIN ORDNANCE DUE TO FACTORS SUCH AS VARIANCES BETWEEN THE NUMBER AND SIZE OF JEWELS USED BY WATCH MANUFACTURERS AND THE FACT THAT THE TURTLE MOUNTAIN ORDNANCE PLANT IS BEING OPERATED PRINCIPALLY ON A STAND-BY BASIS. THEY STATED THAT THE PLANT COULD NOT UNDERTAKE TO QUOTE ON JEWEL BEARINGS FOR WATCHES UNLESS PREVIOUSLY ADVISED AS TO THE QUANTITIES AND QUALITY DESIRED BY PROSPECTIVE PURCHASERS. IN OUR CONSIDERATION OF THIS MATTER IT HAS BEEN FOUND, HOWEVER, THAT THERE IS NO PROCEDURE ESTABLISHED FOR THE APPROVAL BY THE GOVERNMENT OF BULOVA'S PRICES ON JEWEL BEARINGS BEFORE SUBMISSION THEREOF TO PROSPECTIVE BIDDERS.
WE RECOGNIZE THAT IT HAS BEEN DETERMINED BY PROPER AUTHORITY THAT DOMESTIC JEWEL BEARING FACILITIES ARE BASIC TO THE DEFENSE ECONOMY. ALSO WE BELIEVE THAT BULOVA SHOULD NOT BE PROHIBITED FROM BIDDING ON A CONTRACT FOR FURNISHING WATCHES TO THE GOVERNMENT BUT IT IS APPARENT THAT BULOVA COULD HAVE SOME ADVANTAGE OVER OTHER BIDDERS WHEN THE INVITATION PROVIDES THAT ALL BIDDERS MUST SUBMIT PROPOSALS ON THE BASIS OF UTILIZING JEWEL BEARINGS MANUFACTURED AT THE TURTLE MOUNTAIN ORDNANCE PLANT. IN THIS CASE THE CIRCUMSTANCES SEEM TO JUSTIFY THE CONCLUSION THAT BULOVA HAS NOT TAKEN ADVANTAGE OF ITS POSITION AND THAT AN AWARD TO THAT COMPANY WOULD BE SUBSTANTIALLY IN ACCORDANCE WITH THE RULE THAT INVITATIONS AND SPECIFICATIONS MUST BE SUCH AS TO PERMIT COMPETITORS TO COMPETE ON A COMMON BASIS.
WE ARE NEVERTHELESS OF THE OPINION THAT, IN ORDER TO AVOID IN FUTURE CASES ANY SUGGESTION BY COMPETITORS OF BULOVA THAT THE GOVERNMENT HAS NOT ATTEMPTED TO PREVENT UNJUST FAVORITISM, COLLUSION OR FRAUD IN AWARDING CONTRACTS FOR THE PROCUREMENT OF WATCHES, THE CONTRACTING AGENCY SHOULD DETERMINE IN ADVANCE OF THE BID OPENING DATES WHETHER OR NOT THE PRICES QUOTED BY BULOVA ON JEWEL BEARINGS ARE REASONABLE FROM THE STANDPOINT OF COSTS PLUS A NORMAL ALLOWANCE FOR PROFIT. ALSO, WE BELIEVE THAT THE CONTRACTING AGENCY SHOULD MAKE AN ADVANCE DETERMINATION AS TO WHETHER OR NOT THE PRICES QUOTED TO EACH BIDDER COMPARE FAVORABLY WITH THOSE QUOTED TO ITS COMPETITORS, CONSIDERING VARIANCES IN THE NUMBER AND SIZE OF JEWEL BEARINGS USED IN THE BIDDERS' PRODUCTS.