B-170803, JUN 24, 1971

B-170803, JUN 24, 1971

BID PROTEST - POST AWARD NEGOTIATIONS - PRICE INCREASE DECISION DENYING PROTEST OF RERAT MACHINE COMPANY AGAINST ANY INCREASE IN PRICE UNDER DEPARTMENT OF AIR FORCE CONTRACT WITH KENT ENGINEERING, INC., FOR FURNISHING OF HOOK POINTS FOR THE F-4 SERIES AIRCRAFT. ALTHOUGH PROTESTANT CLAIMS THAT KENT INTENTIONALLY BID LOW AND IS NOW ATTEMPTING TO NEGOTIATE A $440 PER UNIT INCREASE IN PRICE, THE ALLEGATION IS UNFOUNDED. THE PROCURING AGENCY REPORTS THAT THERE WILL BE NO PRICE INCREASE BEYOND THAT WHICH IS ALLOWED BY REGULATIONS AS AN EQUITABLE ADJUSTMENT NECESSITATED BY A CHANGE IN SPECIFICATIONS WHICH IS EXPECTED TO BE ONLY $5 PER UNIT.

TO RERAT MACHINE COMPANY:

WE REFER TO YOUR TELEGRAM OF APRIL 13, 1971, AS SUPPLEMENTED BY YOUR LETTER OF MAY 20, PROTESTING AGAINST ANY INCREASE IN PRICE UNDER DEPARTMENT OF THE AIR FORCE CONTRACT F42600-71-D-0382 WITH KENT ENGINEERING, INCORPORATED (KEI), FOR THE FURNISHING OF HOOK POINTS FOR THE F-4 SERIES AIRCRAFT.

KEI WAS AWARDED THE CONTRACT ON THE BASIS OF ITS LOW BID, QUOTING A UNIT PRICE OF $325, SUBMITTED IN RESPONSE TO IFB F42600-70-B-5064, ISSUED BY OGDEN AIR MATERIEL AREA, HILL AIR FORCE BASE, UTAH. A PROTEST BY YOU AGAINST ACCEPTANCE OF THE BID AS BEING TOO LOW IN PRICE FOR AN AMERICAN- MADE PRODUCT WAS DENIED BY OUR DECISION B-170803, NOVEMBER 3, 1970, FOR THE REASONS THEREIN STATED.

YOU NOW CLAIM THAT KEI IS NEGOTIATING WITH THE PROCURING ACTIVITY FOR A PRICE INCREASE TO APPROXIMATELY $440 PER UNIT AND THAT THE SPECIFICATIONS ARE TO BE RELAXED. YOU THEREFORE URGE THAT ANY PRICE INCREASE OR REDUCTION IN THE CONTRACT REQUIREMENTS WITHOUT A REDUCTION IN THE CONTRACT PRICE VIOLATES THE PROVISIONS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-311, RELATING TO "BUYING IN" ON A CONTRACT AT A LOW PRICE WITH INTENT TO RECOUP LOSSES AFTER AWARD UNDER CHANGE ORDERS OR FOLLOW-ON CONTRACTS.

THE CONTRACTING OFFICER REPORTS THAT ON MARCH 26, 1971, KEI REQUESTED A UNIT PRICE INCREASE PRIMARILY ON THE BASIS THAT THE COGNIZANT NAVY ENGINEER HAD MADE A CHANGE IN SPECIFICATION WHICH FORCED KEI TO EMPLOY A NEW FORGING SUPPLIER. ON APRIL 26, HOWEVER, GOVERNMENT REPRESENTATIVES CONFERRED WITH THE CONTRACTOR REGARDING THE MATTER OF THE CONTRACTOR'S INTERPRETATION OF TEST REQUIREMENTS REFERENCED ON THE FORGING DRAWINGS WITH THE RESULT THAT ONLY A MINOR CHANGE, WHICH IS IN THE BEST INTEREST OF THE GOVERNMENT, WILL BE EFFECTED. FURTHER, IT IS ANTICIPATED THAT THE CHANGE IN QUESTION WILL INVOLVE AN AMOUNT OF ONLY $5 PER UNIT.

THE CONTRACTING OFFICER FURTHER REPORTS THAT THE MAJOR CLAIM BY KEI DOES NOT APPEAR TO BE VALID; HOWEVER, KEI IS BEING AFFORDED AN OPPORTUNITY TO STATE ITS CLAIM IN WRITING SO THAT THE MATTER MAY BE EVALUATED BY THE CONTRACTING OFFICER.

AS TO ANY INCREASE IN PRICE, THE CONTRACTING OFFICER STATES THAT SUCH ACTION WILL BE TAKEN ONLY INCIDENT TO NEED FOR A CHANGE IN THE SPECIFICATIONS WHICH MERITS AN EQUITABLE ADJUSTMENT, IF AT ALL, ON A BILATERAL BASIS. NO INCREASE IN THE CONTRACT PRICE WHICH IS NOT AUTHORIZED BY LAW OR REGULATION, THE CONTRACTING OFFICER ADDS, IS CONTEMPLATED.

IN LIGHT OF THE FOREGOING, IT WOULD APPEAR THAT THERE HAS BEEN NO VIOLATION OF ASPR 1-311. YOUR PROTEST IS THEREFORE DENIED.