B-147091, SEP. 22, 1961

B-147091, SEP. 22, 1961

TO MR. D. E. WEATHERLY, JR., CONTRACTING OFFICER, BUREAU OF SHIPS, DEPARTMENT OF THE NAVY:

WE HAVE YOUR LETTER OF AUGUST 30, 1961, WITH ENCLOSURES, YOUR REFERENCE IFB 600-1019-61'S SER 159-17, REQUESTING OUR DETERMINATION AS TO THE PROPER DISPOSITION OF THE TWO LOW BIDS SUBMITTED PURSUANT TO THE CITED INVITATION. THE INVITATION WAS ISSUED MAY 18, 1961, OPENED JUNE 8, 1961, AND COVERS THE PROCUREMENT OF FROM 550 TO 650 MOBILE TRANSMITTER RECEIVERS, FROM 100 TO 150 FIXED STATION TRANSMITTER RECEIVERS, AND CERTAIN DATA AND SPARE PARTS. AN ADDITIONAL EQUAL QUANTITY OF ALL ITEMS WAS SET ASIDE FOR NEGOTIATED AWARD TO LABOR SURPLUS AREA CONCERNS.

THE INVITATION FOR BIDS CONTAINS THE FOLLOWING PROVISION:

"AWARD WILL BE MADE ONLY TO A BIDDER WHOSE COMMERCIAL EQUIVALENTS OF THE EQUIPMENTS DESCRIBED IN THIS INVITATION HAVE, PRIOR TO THE OPENING DATE OF BIDS, BEEN TYPE ACCEPTED BY THE FEDERAL COMMUNICATIONS COMMISSION FOR LICENSING UNDER RULES PARTS 10, 11 OR FOR LICENSING UNDER RULES PART 10, 11 OR 16 IN THE RADIO SERVICES OTHER THAN BROADCAST AND MANUFACTURED AND SOLD IN COMMERCIAL QUANTITIES. BIDDERS SHALL FURNISH WITH THEIR BIDS THE TYPE NUMBERS OF SUCH COMMERCIAL EQUIVALENTS WHICH ARE LISTED IN THE FCC "RADIO EQUIPMENT LIST, PART C, EQUIPMENT ACCEPTABLE FOR LICENSING IN THE RADIO SERVICES OTHER THAN BROADCAST," DATED 29 AUGUST 1960 AND SUPPLEMENT NO. 2 DATED 2 DECEMBER 1960 AND SUPPLEMENT NO. 3 DATED 19 DECEMBER 1960. IF SUCH COMMERCIAL EQUIVALENTS ARE NOT SO LISTED, BIDDERS SHALL FURNISH WITH THEIR BIDS EVIDENCE OF SUCH TYPE ACCEPTANCE BY THE FEDERAL COMMUNICATIONS COMMISSION AND EVIDENCE OF SALE TO THE COMMERCIAL MARKET.'

THIS PROVISION IMPOSES TWO REQUIREMENTS FOR ELIGIBILITY FOR AWARD. FIRST, A BIDDER MUST, PRIOR TO BID OPENING, HAVE HAD "COMMERCIAL EQUIVALENTS" OF THE TRANSMITTER RECEIVERS TYPE ACCEPTED BY THE FEDERAL COMMUNICATIONS COMMISSION FOR LICENSING UNDER ITS RULES; SECOND, A BIDDER'S TYPE ACCEPTED COMMERCIAL EQUIVALENTS MUST ALSO HAVE BEEN MANUFACTURED AND SOLD IN COMMERCIAL QUANTITIES PRIOR TO BID OPENING.

IN ESSENCE, THE PROVISION IMPOSES AN EXPERIENCE QUALIFICATION UNDER WHICH ANY BIDDER MUST HAVE PRODUCED AND SOLD IN COMMERCIAL QUANTITIES ARTICLES SIMILAR TO THOSE CALLED FOR BY THE INVITATION. IT MAY BE NOTED THAT THE PREVIOUS PRODUCTION AND SALE OF SIMILAR ARTICLES TO THE GOVERNMENT WOULD NOT NECESSARILY BE SUFFICIENT TO MEET THE REQUIREMENT OF THE INVITATION SINCE TYPE ACCEPTANCE BY FCC IS REQUIRED ONLY IN THE CASE OF TRANSMITTERS FOR COMMERCIAL USE. THE PROPRIETY OF INCLUSION IN AN INVITATION OF SPECIALIZED EXPERIENCE REQUIREMENTS IS FOR DETERMINATION IN THE FIRST INSTANCE BY THE PROCURING AGENCY, AND IN THE ABSENCE OF CONVINCING EVIDENCE THAT SUCH REQUIREMENTS ARE CLEARLY UNNECESSARY TO MEET THE NEEDS OF THE GOVERNMENT, OR ARE SO RESTRICTIVE AS TO UNDULY LIMIT COMPETITION, OUR OFFICE IS NOT INCLINED TO SUBSTITUTE ITS JUDGMENT FOR THAT OF THE PROCURING AGENCY. THE ISSUE, NEVERTHELESS, REMAINS ONE OF RESPONSIBILITY RATHER THAN OF RESPONSIVENESS, AND THE ULTIMATE QUESTION TO BE DECIDED IS NOT WHETHER THE SPECIALIZED EXPERIENCE REQUIREMENT HAS OR HAS NOT BEEN MET, BUT WHETHER, HAVING IN MIND ALL OF THE FACTORS WHICH ENTER INTO SUCH A DETERMINATION, A PARTICULAR BIDDER MAY BE REGARDED AS RESPONSIBLE. SEE 39 COMP. GEN. 173, 178, WHERE WE STATED:

"WHEN, AS IN THE PRESENT CASE, THERE APPEARS TO BE REASONABLE GROUND FOR DOUBT AS TO A LOW BIDDER'S LACK OF RESPONSIBILITY, EVEN THOUGH THE BIDDER MAY FAIL TO MEET SOME OF THE QUALIFICATIONS PRESCRIBED BY THE INVITATION, WE BELIEVE THAT REJECTION OF THE LOW BID AND AWARD TO ANY OTHER BIDDER SHOULD BE SUPPORTED BY A SPECIFIC DETERMINATION, BASED UPON CONSIDERATION OF THE QUALIFICATIONS OF THE PARTICULAR BIDDER, THAT THE LOW BIDDER WAS NOT A "RESPONSIBLE" BIDDER WITHIN THE MEANING OF THE STATUTE. IF SUCH A DETERMINATION CANNOT BE MADE, THE QUALIFICATIONS PRESCRIBED BY THE INVITATION MUST BE REGARDED AS UNREASONABLY RESTRICTIVE. IN THAT EVENT, IT WOULD APPEAR THAT THE INVITATION SHOULD BE CANCELED AND THE PROCUREMENT READVERTISED UNDER PROPER SPECIFICATION REQUIREMENTS.'

WE CANNOT SEE HOW THE PRODUCTION AND SALE OF SIMILAR ARTICLES IN THE COMMERCIAL MARKET GIVES ANY GREATER ASSURANCE OF RESPONSIBILITY THAN THE SALE OF SUCH ARTICLES TO THE GOVERNMENT OR IN ANY OTHER NONCOMMERCIAL MARKET. WE ALSO QUESTION THE REQUIREMENT THAT PREVIOUS SALES MUST HAVE BEEN IN "COMMERCIAL QUANTITIES.' WHILE IT MAY BE THAT THE PRODUCTION OF ONE PROTOTYPE OF AN ARTICLE DOES NOT GIVE ASSURANCE OF A BIDDER'S CAPABILITY TO PRODUCE DUPLICATES OF THAT ARTICLE SPEEDILY AND EFFICIENTLY, IT SEEMS CLEAR THAT THE QUESTION OF HIS ABILITY TO DO SO INVOLVES HIS COMPETENCE AND RESPONSIBILITY RATHER THAN THE CONFORMABILITY TO SPECIFICATION REQUIREMENTS OF THE ARTICLE HE OFFERS TO FURNISH. THIS ASPECT OF THE MATTER IS OF PARTICULAR SIGNIFICANCE IN THE CASE OF SMALL BUSINESS BIDDERS WHO MAY BE ELIGIBLE FOR A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION.

BASED ON THE FOREGOING, IT IS OUR VIEW THAT NO BID UNDER THE PRESENT INVITATION MAY BE REJECTED SOLELY ON THE GROUND OF FAILURE TO MEET THE REQUIREMENT FOR PREVIOUS MANUFACTURE AND SALE IN COMMERCIAL QUANTITIES OF "COMMERCIAL EQUIVALENTS" OF THE EQUIPMENTS DESIRED. IN THE CASE OF SUCH BIDDERS, WE BELIEVE A DETERMINATION AS TO THEIR RESPONSIBILITY MUST BE MADE PURSUANT TO ASPR 1-902.

WE COME NOW TO THE OTHER EXPERIENCE QUALIFICATION IMPOSED BY THE INVITATION, THAT IS, TYPE ACCEPTANCE BY FCC. IT SHOULD BE NOTED AT THE OUTSET THAT FCC TYPE ACCEPTANCE IS OBTAINABLE WHETHER THE TRANSMITTER IS COMBINED WITH A RECEIVER OR NOT. HENCE, THE REQUIREMENT THAT COMMERCIAL COUNTERPARTS OF THE TRANSMITTER RECEIVERS CALLED FOR BY THE INVITATION MUST HAVE BEEN TYPE ACCEPTED BY FCC IS MEANINGLESS SO FAR AS THE RECEIVERS ARE CONCERNED. A BROADER QUESTION IS INVOLVED WHEN WE CONSIDER THE PREREQUISITE OF FCC TYPE ACCEPTANCE OF THE TRANSMITTER PORTIONS OF THE EQUIPMENTS. AS HAS HERETOFORE BEEN INDICATED, PRIOR FCC TYPE ACCEPTANCE IS REQUIRED ONLY FOR COMMERCIAL AND NOT FOR GOVERNMENTAL USE OF A TRANSMITTER. WE DO NOT KNOW OF ANY VALID REASONS WHY PREVIOUS SATISFACTORY PRODUCTION OF COMPARABLE TRANSMITTERS FOR THE GOVERNMENT SHOULD NOT EQUALLY BE CONSIDERED AS QUALIFYING A BIDDER WHETHER HE HAS OR HAS NOT RECEIVED TYPE ACCEPTANCE BY FCC.

IT IS STATED IN YOUR LETTER THAT ANNUAL REQUIREMENTS FOR SIMILAR TRANSMITTER RECEIVERS HAVE BEEN PROCURED SINCE 1956 UNDER INVITATIONS CONTAINING A REQUIREMENT FOR FCC TYPE ACCEPTANCE, BUT WITHOUT THE PRESENT REQUIREMENT FOR MANUFACTURE AND SALE IN COMMERCIAL QUANTITIES. THIS LATTER REQUIREMENT, IT IS STATED, WAS ADDED BECAUSE OF AN UNFORTUNATE EXPERIENCE IN 1959-60 WITH A SUPPLIER WHO HAD THE REQUIRED FCC TYPE ACCEPTANCE BUT WHO HAD NOT SOLD SUCH ARTICLES ON THE OPEN MARKET. THEREFORE APPEARS TO BE YOUR VIEW THAT FCC TYPE ACCEPTANCE ALONE IS NOT SUFFICIENT TO INSURE THE DESIRED QUALITY. ON THE BASIS OF INFORMAL ADVICE FROM THE FEDERAL COMMUNICATIONS COMMISSION CONCERNING THE REQUIREMENTS FOR ISSUANCE OF TYPE ACCEPTANCES, WE CAN UNDERSTAND WHY THIS MAY BE SO. YOUR LETTER STATES THAT FCC TYPE ACCEPTANCE NORMALLY REQUIRES THE BUILDING AND TESTING OF A MODEL. IT IS OUR UNDERSTANDING THAT THIS IS NOT NECESSARY IN ALL CASES, AND THAT FCC TYPE ACCEPTANCE WAS GRANTED THE LOW BIDDER UNDER THE PRESENT INVITATION BEFORE IT HAD BUILT ANY MODEL. THERE ARE FURTHER OBJECTIONS TO THE USE OF FCC TYPE ACCEPTANCE AS A PREREQUISITE TO AWARD. IT IS CLEAR FROM THE LANGUAGE OF THE EXPERIENCE QUALIFICATION THAT IT WAS CONTEMPLATED BY THE NAVY THAT SEPARATE FCC TYPE ACCEPTANCE WOULD BE NECESSARY FOR THE MOBILE TRANSMITTERS AND THE FIXED STATION TRANSMITTERS. AWARD WAS TO BE MADE ONLY TO A BIDDER WHOSE COMMERCIAL EQUIVALENTS OF THE EQUIPMENTS DESCRIBED HAD BEEN TYPE ACCEPTED, AND BIDDERS WERE REQUIRED TO FURNISH THE TYPE NUMBERS OF SUCH COMMERCIAL EQUIVALENTS WHICH WERE LISTED BY FCC. THE USE OF THE PLURAL NUMBER THROUGHOUT INDICATES CLEARLY AN EXPECTATION THAT SEPARATE TYPE ACCEPTANCES WOULD BE NECESSARY FOR THE MOBILE AND FIXED TRANSMITTERS. HOWEVER, IT IS OUR UNDERSTANDING THAT TYPE ACCEPTANCE BY FCC MAKES NO DISTINCTION BETWEEN MOBILE AND FIXED STATION TRANSMITTERS. THE LOW BIDDER IN THE PRESENT CASE HAD RECEIVED FCC TYPE ACCEPTANCE FOR ONLY ONE MODEL WHICH COULD BE CONSIDERED COMPARABLE TO EITHER THE MOBILE OR FIXED STATION EQUIPMENTS CALLED FOR BY THE INVITATION, BUT WE UNDERSTAND IT MIGHT BE POSSIBLE FOR HIM TO PRODUCE BOTH MOBILE AND FIXED STATION TRANSMITTERS UNDER THAT TYPE ACCEPTANCE WHICH WOULD BE COMMERCIAL EQUIVALENTS OF THOSE TO BE PROCURED.

WE REALIZE THAT SOME OF THE OBJECTIONS WE HAVE STATED TO THE USE OF THE INSTANT EXPERIENCE QUALIFICATION CLAUSE HAVE, SO FAR AS WE KNOW, NO IMMEDIATE APPLICABILITY TO THE PRESENT PROCUREMENT. THEREFORE, ALTHOUGH WE DO QUESTION THE PROPRIETY OF THE REQUIREMENT FOR PREVIOUS MANUFACTURE AND SALE IN COMMERCIAL QUANTITIES OF COMMERCIAL EQUIVALENTS OF THE EQUIPMENTS TO BE PROCURED, WE ARE NOT DISPOSED TO QUESTION THE VALIDITY, IN THE PRESENT CASE, OF THE REQUIREMENT FOR FCC TYPE ACCEPTANCE OF A COMMERCIAL EQUIVALENT OR EQUIVALENTS OF SUCH EQUIPMENTS. HOWEVER, WE BELIEVE THE QUESTION WHETHER THE ONE FCC TYPE ACCEPTANCE RELIED UPON BY THE LOW BIDDER IS BROAD ENOUGH TO PERMIT THE PRODUCTION OF COMMERCIAL EQUIVALENTS OF BOTH THE MOBILE AND FIXED STATION TRANSMITTER CALLED FOR BY THE INVITATION MUST BE ANSWERED BY THE FEDERAL COMMUNICATIONS COMMISSION. THE RESPONSIVENESS OR NONRESPONSIVENESS OF HIS BID DEPENDS, IT SEEMS TO US, ON THE ANSWER TO THIS QUESTION.