B-154610, FEB. 4, 1965

B-154610, FEB. 4, 1965

TO LIEUTENANT GENERAL WALLACE M. GREENE, JR., COMMANDANT, UNITED STATES MARINE CORPS:

WE HAVE RECEIVED LETTERS FROM MR. E. K. GUBIN, ATTORNEY FOR E. W. BLISS COMPANY, DATED OCTOBER 21, NOVEMBER 20, 24, 25 AND DECEMBER 30, 1964, IN WHICH HE PROTESTS THE INTENTION OF THE UNITED STATES MARINE CORPS TO PROCURE 12 M-21 ARRESTING GEAR SYSTEMS AND DRAWINGS THEREOF FROM VORTEC PRODUCTS COMPANY ON A SOLE-SOURCE BASIS, AND OF THEREAFTER PURCHASING THE REMAINDER OF THE TOTAL REQUIREMENT BY COMPETITIVE PROCUREMENT. BLISS CONTENDS THAT THE ENTIRE REQUIREMENT OF 41 SYSTEMS, THE BASIC PROTOTYPE FOR WHICH WAS MADE BY VORTEC UNDER AN EARLIER RESEARCH AND DEVELOPMENT CONTRACT, SHOULD BE PURCHASED COMPETITIVELY. THE REQUIREMENT IS A PART OF THE SHORT AIRFIELD TACTICAL SUPPORT (SATS) PROGRAM.

IN OUR DECISION, B-154610, DATED SEPTEMBER 11, 1964, WHERE THE BACKGROUND PERTINENT TO THE PROTEST IS MORE FULLY SET FORTH, WE CONSIDERED A PROPOSED TWO STEP ADVERTISED PROCUREMENT OF THE M-21 SYSTEMS BASICALLY AS DESIGNED BY VORTEC, BUT IN ACCORDANCE WITH CERTAIN LIMITED MODIFICATIONS PROPOSED BY BIDDERS DURING THE FIRST STEP OF THE PROCUREMENT IN ORDER TO ACHIEVE IMPROVEMENTS SPECIFIED BY THE NAVAL AIR ENGINEERING CENTER (NAEC), AN ACTIVITY OF THE DEPARTMENT OF THE NAVY WHICH RETAINED TECHNICAL COGNIZANCE OF THE PROCUREMENT. IN THAT DECISION WE UPHELD THE ADMINISTRATIVE DETERMINATIONS THAT DEFECTS IN AN INVITATION FOR BIDS (IFB), WHICH HAD BEEN ISSUED ON JUNE 15, 1964, AS THE SECOND STEP OF THE COMPETITIVELY ADVERTISED PROCUREMENT, JUSTIFIED REJECTION OF BIDS FROM BLISS AND VORTEC, THE ONLY TWO FIRMS WHOSE PREVIOUSLY SUBMITTED TECHNICAL PROPOSALS WERE DETERMINED IN THE FIRST STEP OF THE PROCUREMENT TO EVIDENCE THE CAPABILITY NEEDED TO MANUFACTURE THE SYSTEMS ACCORDING TO THE MODIFIED SPECIFICATIONS. HOWEVER, WE CONCLUDED BY SUGGESTING THAT SPECIAL CONSIDERATION BE GIVEN TO ASSURING THAT THE READVERTISED IFB, WHICH THE MARINE CORPS HAD ALREADY ISSUED WHILE WE WERE CONSIDERING THE PROTEST, WOULD NOT CONTAIN CERTAIN DEFECTS OF THE FIRST IFB. WE UNDERSTAND THAT BOTH THE INITIAL AND THE READVERTISED IFB HAVE BEEN CANCELLED BY THE MARINE CORPS.

IN A CONFERENCE HELD ON SEPTEMBER 18, 1964, AT THE REQUEST OF MARINE CORPS PROCUREMENT PERSONNEL, REPRESENTATIVES OF THIS OFFICE WERE ORALLY ADVISED THAT, IN VIEW OF THE URGENT NEED FOR THE ARRESTING GEAR SYSTEMS, THE PROCUREMENT WOULD HAVE TO BE NEGOTIATED RATHER THAN READVERTISED. WAS OUR BELIEF AN AGREEMENT WAS REACHED AT SUCH CONFERENCE THAT PROPERLY AUTHORIZED NEGOTIATIONS WOULD BE CONDUCTED WITH BOTH BLISS AND VORTEC, ESPECIALLY SINCE THE MARINE CORPS WOULD HAVE BEEN WILLING AT THAT TIME TO AWARD A CONTRACT ON THE BASIS OF EITHER OF THEIR TECHNICALLY ACCEPTABLE PROPOSALS. HOWEVER, WE WERE SUBSEQUENTLY ADVISED THAT ON OCTOBER 13, 1964, A MARINE CORPS SOLE SOURCE PROCUREMENT REVIEW BOARD RECOMMENDED THAT PROCUREMENT OF A PORTION OF THE ARRESTING GEAR SYSTEMS BE NEGOTIATED BECAUSE THE DEPARTMENT OF DEFENSE HAD ESTABLISHED A PRIORITY DESIGNATOR SIX FOR THE SYSTEMS IN ORDER TO MEET CLASSIFIED CONTINGENCY PLANS. SEE ASPR 3 202.2 (VI), WHICH AUTHORIZES NEGOTIATION WHERE THE PURCHASE REQUEST CITES A PRIORITY SIX UNDER THE UNIFORM MATERIAL ISSUE PRIORITY SYSTEM. WHY THIS URGENCY COULD NOT BE MET BY USING COMPETITIVE NEGOTIATIONS, RATHER THAN SOLE SOURCE NEGOTIATIONS WHICH WOULD EXCLUDE ONE OF THE TWO PREVIOUSLY QUALIFIED FIRMS, WAS NOT FULLY EXPLAINED, BUT APPARENTLY WAS RELATED TO THE FACT THAT, SHORTLY BEFORE THE SUBMISSION OF BIDS PURSUANT TO THE SECOND STEP OF THE INITIAL IFB AND MONTHS PRIOR TO OUR DECISION IN SEPTEMBER, VORTEC HAD SUBMITTED A SEPARATE TECHNICAL PROPOSAL PRESENTING A DESIGN FOR AN AUTOMATIC THROTTLE CONTROL FOR THE SYSTEMS. IN ADDITION, THE ORIGINAL TECHNICAL PROPOSAL ON WHICH VORTEC HAD SUBMITTED ITS BID WAS CONSIDERED SUPERIOR TO BLISS' BECAUSE OF CERTAIN UNSOLICITED PROPOSED IMPROVEMENTS INCLUDED THEREIN. THE REPORT ALSO STATED THAT VORTEC HAD CONTINUED TO WORK ON ITS DESIGN WHILE OUR DECISION OF SEPTEMBER 11 WAS PENDING.

BLISS ADVISED US THAT IT ALSO HAD DEVELOPED VARIOUS IMPROVEMENTS FOR THE M-21 SYSTEM, AS SPECIFIED FOR THE INITIAL PROCUREMENT, INCLUDING A PATENTED AUTOMATIC THROTTLE CONTROL WHICH COULD EASILY BE ADAPTED TO THE M -21 SYSTEMS. HOWEVER, BLISS ALSO ADVISED THAT IT HAD NOT INCLUDED SUCH IMPROVEMENTS IN ITS TECHNICAL PROPOSAL BECAUSE OF SPECIFIC ORAL ADVICE FROM NAEC TECHNICAL PERSONNEL THAT ITS PROPOSAL SHOULD BE CONFINED TO THE MEANS OF ACHIEVING ONLY THE DESIGN IMPROVEMENTS SPECIFICALLY REQUESTED. IN VIEW OF THESE ALLEGATIONS, AND OF BLISS' CONFIRMED ABILITY TO BUILD THE SYSTEMS ACCORDING TO THE ORIGINAL SPECIFICATIONS, AND SINCE THE REPORT WHICH THE MARINE CORPS SUBMITTED TO THIS OFFICE UNDER DATE OF NOVEMBER 10, 1964, NOWHERE INDICATED THAT THE MARINE CORPS OR NAEC HAD ASKED BLISS IF IT HAD, OR COULD, PROMPTLY PRODUCE DESIGN IMPROVEMENTS IN ADDITION TO THE ONES SPECIFIED IN THE INITIAL PROCUREMENT, WE ASKED IN OUR LETTER OF NOVEMBER 30, 1964, IF THE SOLICITATION OF COMPETITIVE PROPOSALS WAS NOW CONSIDERED PRACTICABLE, AND IF NOT, FOR AN ADDITIONAL REPORT SETTING FORTH THE REASONS FOR SUCH CONCLUSION.

IN AN ADMINISTRATIVE REPORT DATED DECEMBER 22, 1964, THE MARINE CORPS TAKES THE POSITION THAT, IN VIEW OF THE URGENCY ASSOCIATED WITH THIS PROCUREMENT, IT IS IN THE GOVERNMENT'S BEST INTEREST TO PURCHASE THE SYSTEMS FROM THE FIRM WHICH CAN PRODUCE THEM ACCORDING TO THE MOST ADVANCED DESIGN IN THE SHORTEST POSSIBLE TIME. IT IS STATED THAT SINCE VORTEC DEVELOPED THE BASIC M-21 SYSTEM AND IS THEREFORE MOST FAMILIAR WITH IT, AND SINCE VORTEC POSSESSES A DESIGN FAR MORE ADVANCED THAN BLISS-, VORTEC CAN PRODUCE THE MOST ADVANCED ITEMS IN THE SHORTEST POSSIBLE TIME. THE CONCLUSION THAT VORTEC'S DESIGN IS MORE ADVANCED APPEARS TO BE BASED UPON STATEMENTS FROM NAEC TECHNICAL PERSONNEL, ENCLOSED WITH THE REPORT, TO THE EFFECT THAT VORTEC CONTINUED TO DEVELOP THE M-21 SYSTEMS, PARTIALLY ON GOVERNMENT FUNDS, AFTER THE ORIGINAL TECHNICAL PROPOSALS HAD BEEN EVALUATED, AND AS A RESULT OF SUCH DEVELOPMENT IMPROVED THE DESIGN IN WAYS NOT IDENTIFIED BY THE STATEMENTS. NO REFERENCE IS MADE IN THE REPORT OR THE ENCLOSED STATEMENTS TO IMPROVEMENTS VORTEC WAS SAID TO HAVE GRATUITOUSLY INCLUDED IN ITS STEP I TECHNICAL PROPOSAL, WHICH PRESUMABLY HAD BEEN CONSIDERED WHEN NAEC ORIGINALLY DETERMINED THAT THE TECHNICAL PROPOSAL SUBMITTED BY BLISS ALSO MET THE GOVERNMENT'S ACTUAL NEEDS. MOREOVER, NAEC STATES THAT VORTEC'S DESIGN FOR AN AUTOMATIC THROTTLE CONTROL HAS NOT BEEN FORMALLY CONSIDERED, AND WE THEREFORE ASSUME THAT THE AUTOMATIC THROTTLE CONTROL IS NOT REGARDED AS AN ESSENTIAL ELEMENT OF THE JUSTIFICATION FOR A SOLE-SOURCE PROCUREMENT FROM VORTEC.

WE QUESTION WHETHER THE POSITION TAKEN BY THE MARINE CORPS IN ITS DECEMBER 22 REPORT IS RESPONSIVE TO THE QUESTION AT ISSUE. THE REPORT EXPLAINS THE BASIS FOR CONCLUDING THAT THE IMPROVED VORTEC DESIGN IS MORE ADVANCED THAN THE ONE VORTEC SUBMITTED WITH ITS ORIGINAL TECHNICAL PROPOSAL, BUT IT LEAVES UNEXPLAINED THE BASIS FOR CONCLUDING THAT THE IMPROVED VORTEC DESIGN WAS ,FAR MORE ADVANCED" THAN ANY IMPROVED DESIGN WHICH BLISS MAY HAVE DEVELOPED BEFORE OR SINCE SUBMITTING ITS ORIGINAL PROPOSAL. BLISS DOES NOT TAKE EXCEPTION TO THE FACT THAT VORTEC CAN PROBABLY BUILD THE M-21 SYSTEMS WITH NEW VORTEC IMPROVEMENTS FASTER THAN BLISS CAN. BLISS DOES ASSERT, HOWEVER, THAT IT ALSO HAS GAINED ADDITIONAL KNOWLEDGE AND EXPERIENCE SINCE ITS ORIGINAL TECHNICAL PROPOSAL WAS EVALUATED AND ACCEPTED, AND HAS DEVELOPED CERTAIN IMPROVEMENTS WHICH MAY NOT BE INCORPORATED INTO THE SYSTEMS IF THE CONTRACT IS AWARDED TO ANOTHER COMPANY. BLISS ASSERTS THAT ITS BID ON THE ADVERTISED PROCUREMENT SHOWED THE SAME DESIRED DELIVERY SCHEDULE AS VORTEC-S, AND CONTENDS THAT IT CAN NOW INCORPORATE ITS IMPROVEMENTS INTO THE SYSTEMS AS QUICKLY AS OTHER MANUFACTURERS CAN INCORPORATE THEIR IMPROVEMENTS.

WE BELIEVE IT IS CLEAR THAT THE MERITS OF BLISS' POSITION DEPENDS TO A CONSIDERABLE DEGREE UPON WHETHER ITS ALLEGED IMPROVEMENTS ARE IN FACT MORE DESIRABLE THAN THOSE PROPOSED BY VORTEC. THE RESPONSE OF NAEC'S TECHNICAL PERSONNEL TO BLISS' OUTLINE OF ALLEGED IMPROVEMENTS, WHICH WAS FORWARDED TO THE MARINE CORPS ALONG WITH OUR NOVEMBER 30 REQUEST FOR AN ADDITIONAL REPORT, WAS GENERALLY FAVORABLE AND INCLUDED THE OBSERVATION THAT SOME OF THE IDEAS WERE WORTH PURSUING FURTHER AS FUTURE DEVELOPMENTS.

THIS OFFICE DOES NOT POSSESS EITHER THE FAMILIARITY WITH THE USINGACTIVITY'S NEEDS OR THE TECHNICAL COMPETENCE WHICH IS NECESSARY TO DETERMINE WHICH OF THE TWO COMPETITORS CAN MODIFY THE BASIC SYSTEM IN SUCH A MANNER AND IN ACCORDANCE WITH A PRODUCTION SCHEDULE WHICH IS RELATIVELY MORE DESIRABLE TO THE MARINE CORPS. WE ARE CERTAIN THAT THIS COMPETENCE AND FAMILIARITY IS AVAILABLE TO THE MARINE CORPS, BUT WE ARE AT A LOSS TO UNDERSTAND HOW SUCH A DETERMINATION COULD HAVE BEEN MADE WITHOUT AFFORDING BOTH BLISS AND VORTEC AN OPPORTUNITY TO SUBMIT IMPROVED DESIGNS, AND WITHOUT A COMPARATIVE EVALUATION OF THE RELATIVE MERITS OF SUCH IMPROVED DESIGNS.

THE DECEMBER 22 REPORT STATES IN EFFECT THAT PROCUREMENT FROM ANY FIRM OTHER THAN VORTEC IS NO LONGER CONSISTENT WITH THE REQUIREMENTS OF THE SUPPLIES TO BE PROCURED. HOWEVER, IT SHOULD BE NOTED THAT THE PRIORITY SIX URGENCY DESIGNATION WAS ASSIGNED TO THIS PROCUREMENT PRIOR TO INITIATION OF THE ORIGINAL PROCUREMENT ON A TWO-STEP ADVERTISED BASIS, AND THAT OVER ONE MONTH ELAPSED BETWEEN SEPTEMBER 11, 1964, THE DATE OF THE ORIGINAL DECISION FROM THIS OFFICE, AND OCTOBER 13, 1964, WHEN THE SOLE SOURCE BOARD APPARENTLY DECIDED THAT THE MARINE CORPS SHOULD NO LONGER BE INTERESTED IN BLISS' DESIGN BECAUSE THE BOARD APPROVED OF UNSOLICITED ADDITIONAL MODIFICATIONS DESIGNED AND SUBMITTED BY VORTEC. WE FIND NO REASON WHY, AT THE VERY LEAST, THE MARINE CORPS SHOULD NOT HAVE USED THIS MONTH TO INQUIRE WHETHER BLISS, LIKE VORTEC, HAD DEVELOPED ANY ADDITIONAL IMPROVEMENTS WHICH HAD NOT BEEN INCORPORATED IN ITS TECHNICAL PROPOSAL FOR THE ORIGINAL TWO-STEP ADVERTISEMENT, INSTEAD OF USING IT, AS APPEARS TO BE THE CASE, FOR THE PURPOSE OF CONSIDERING REASONS FOR NOT SO INQUIRING. VIEW OF THE FOREGOING, IT WOULD APPEAR THAT ANY PRESENT IMPRACTICABILITY OF NEGOTIATING FOR THIS PROCUREMENT ON ANY BASIS OTHER THAN SOLE-SOURCE MAY BE ATTRIBUTABLE TO DELAYS RESULTING FROM DEFECTIVELY WRITTEN IFBS, INACCURATE OR INCOMPLETE ADMINISTRATIVE REPORTS, AND THE FAILURE OF COGNIZANT ADMINISTRATIVE PERSONNEL, AFTER THE IFBS WERE CANCELLED, TO EXPLORE ANY COMPETITIVE ADVANTAGES WHICH MIGHT HAVE BEEN OBTAINED BY DISCUSSING WITH BLISS, THE FEASIBILITY OF HAVING BLISS PROMPTLY SUBMIT ANY ADDITIONAL DESIGN IMPROVEMENTS IT MAY HAVE BEEN WORKING ON, AND OF PRODUCING SUCH ITEMS ACCORDING TO A DELIVERY SCHEDULE COMPATIBLE WITH THE URGENT NEED FOR SAME.

WE UNDERSTAND THAT THE URGENCY OF THE NEED FOR THE ITEMS HERE INVOLVED MAY HAVE BEEN SIGNIFICANTLY INCREASED BY VIRTUE OF RECENT WORLD EVENTS. IN VIEW THEREOF, AND SINCE WE ARE UNWILLING TO TAKE ANY ACTION WHICH MIGHT CONTRIBUTE TO FURTHER DELAYING THE PROCUREMENT OF THE SUBJECT SYSTEMS, WE ARE NOT DISPOSED TO OBJECT TO THE SOLE-SOURCE PROCUREMENT OF 12 M-21 SYSTEMS FOR VORTEC. ACCORDINGLY, THE PROTEST BY BLISS IS DENIED. HOWEVER, IN VIEW OF THE MANNER IN WHICH THIS PROCUREMENT HAS BEEN CONDUCTED, WE MUST RECOMMEND THAT YOUR AGENCY IMMEDIATELY TAKE ALL ACTIONS WHICH MAY BE NECESSARY TO ASSURE THE COMPETITIVE PROCUREMENT OF FUTURE ANTICIPATED NEEDS FOR THE M-21 ARRESTING GEAR SYSTEMS.

WE ARE FORWARDING A COPY OF THIS DECISION TO THE MILITARY OPERATIONS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, HOUSE OF REPRESENTATIVES, FOR ITS INFORMATION. AS YOU KNOW, THIS SUBCOMMITTEE HAS PREVIOUSLY EXPRESSED AN INTEREST IN THE PROCUREMENT METHODS USED TO PURCHASE OTHER EQUIPMENT FOR THE SATS PROGRAM.