B-164187, JUL. 31, 1968

B-164187, JUL. 31, 1968

TO CARTRIDGE ACTUATED DEVICES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 29, 1968, WITH ENCLOSURES, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE CANCELLATION OF REQUEST FOR PROPOSALS (RFP) NO. N00419-68-R-0150 AND AN ALLEGED SUBSEQUENT AWARD OF A CONTRACT BY THE NAVAL ORDNANCE STATION, FOREST PARK, ILLINOIS, TO THE CONAX CORPORATION UNDER THE CITED RFP. YOUR PROTEST IS BASED ON THE BELIEF THAT, AFTER CANCELLATION OF THE RFP, THE PROCUREMENT AGENCY PROCEEDED TO AWARD A CONTRACT FOR THE SAME SUPPLIES TO CONAX AT A PRICE WHICH WAS OVER $34,000 IN EXCESS OF THAT OFFERED BY YOU UNDER THE RFP.

WE ARE ADVISED THAT ON OCTOBER 19, 1967, THE PROCUREMENT OFFICE RECEIVED FOUR PURCHASE REQUESTS CALLING FOR PROCUREMENT OF THE FOLLOWING:

ITEM QUANTITY VALVE, EXPLOSIVE ACTUATED 260 FITTING INLET 780 PACKING PREFORMED 1,560 TRIGGER ASSEMBLY

780

THEREAFTER, RFP NO. N00419-68-R-0057, COVERING THE ABOVE ITEMS, WAS ISSUED ON NOVEMBER 17, 1967. THESE ITEMS WERE REQUIRED AS SPARE PARTS FOR FLEET SUPPORT AND, IN ORDER TO ASSURE INTERCHANGEABILITY AND PROPER FUNCTIONING IN THE MK 16 TORPEDO AND TO MINIMIZE PRODUCTION DELAYS, IT WAS ESSENTIAL THAT PROCUREMENT BE MADE FROM THE CONAX CORPORATION -- THE PREVIOUS PRODUCTION SOURCE. PROCUREMENT FROM A SOURCE OTHER THAN CONAX WOULD HAVE INVOLVED THE PROCUREMENT OF FIRST ARTICLES AND THE DELAY INCIDENT TO SUCH PROCEDURE. BECAUSE OF THESE CIRCUMSTANCES, A DETERMINATION AND FINDINGS WAS ISSUED BY THE CONTRACTING OFFICER ON FEBRUARY 29, 1968, TO NEGOTIATE A CONTRACT WITH CONAX AS A SOLE SOURCE UNDER THE AUTHORITY OF 10 U.S.C. 2304 (A) (10) AND ASPR 3-210.2 (XV) WHICH PERMITS THE NEGOTIATION OF A CONTRACT:

"WHEN THE CONTEMPLATED PROCUREMENT IS FOR PARTS OR COMPONENTS BEING PROCURED AS REPLACEMENT PARTS IN SUPPORT OF EQUIPMENT SPECIALLY DESIGNED BY THE MANUFACTURER, WHERE DATA AVAILABLE IS NOT ADEQUATE TO ASSURE THAT THE PART OR COMPONENT WILL PERFORM THE SAME FUNCTION IN THE EQUIPMENT AS THE PART OR COMPONENT IT IS TO REPLACE; " SUBSEQUENTLY, PURSUANT TO RFP N00419-68-R-0057, AND IN RESPONSE TO A PROPOSAL SUBMITTED BY CONAX, CONTRACT NO. N00419-68-C-0318 WAS AWARDED TO CONAX ON FEBRUARY 29, 1968. UPON REVIEW OF THE CONTRACTING OFFICER'S DETERMINATION AND FINDINGS AND THE SUPPORTING RECORD, WE BELIEVE THAT HIS DETERMINATION "CLEARLY AND CONVINCINGLY" ESTABLISHES THAT ,FORMAL ADVERTISING WOULD NOT HAVE BEEN FEASIBLE AND PRACTICABLE" AS REQUIRED BY 10 U.S.C. 2310 (B). THEREFORE, UNDER THE CITED STATUTE WE ARE REQUIRED TO ACCORD FINALITY TO SUCH DETERMINATION TO NEGOTIATE A CONTRACT ON A SOLE-SOURCE BASIS.

TURNING NOW TO RFP -0150, THE PROCUREMENT AGENCY REPORTS THAT IT WAS PLANNED TO DEVELOP A SECOND SOURCE AS TO THE BALANCE OF THE ITEMS REQUIRED OTHER THAN THOSE PROCURED FROM CONAX. THE CONTRACTING OFFICER, ON JANUARY 9, 1968, MADE THE FOLLOWING DETERMINATION AND FINDINGS:

"THE PROPOSED CONTRACT PROVIDES FOR THE FURNISHING OF 260 EACH, VALVE EXPLOSIVE, ACTUATED, 773255; 780 EACH, FITTING INLET, 773256-2; 1560 PACKING PREFORMED, 773256-3; 780 EACH, TRIGGER ASSEMBLY, 773256 4. THESE UNITS ARE REQUIRED FOR THE PRODUCTION OF THE MK 16 MOD 8 TORPEDO.

"THESE PARTS ARE SPECIALIZED SUPPLIES PREVIOUSLY MANUFACTURED BY ONLY ONE COMPANY. IT IS NOW DESIRED TO SOLICIT OTHER COMPANIES WHICH HAVE PERTINENT ENGINEERING SKILLS AND EXPERIENCE, TOOLING AND EQUIPMENT ESSENTIAL TO ECONOMICAL AND TIMELY MANUFACTURE, TO COMPETE FOR THESE SUPPLIES WITH THE PRESENT SOLE SOURCE. HOWEVER TO AWARD THIS PROCUREMENT TO THE LOWEST BIDDER, AFTER ADVERTISING FOR SEALED BIDS, MIGHT RESULT IN AN AWARD EITHER TO A PROSPECTIVE CONTRACTOR WHO HAS UNWISELY MADE A LOW BID, THEREBY POSSIBLY DELAYING THE ULTIMATE PRODUCTION OF THE ITEM AND WITH NO ASSURANCE THAT IT WOULD EVER BE PRODUCED PROPERLY, OR TO THE EXISTING SOLE SOURCE WHOSE BID, ALTHOUGH SHADING ALL OTHER BIDS, MIGHT INCLUDE SOME OR ALL OF THE COSTS OF TOOLING AND OTHER PREPARATION PREVIOUSLY INCURRED, THUS ALLOWING HIM AN UNREASONABLE PROFIT. FOR THESE REASONS THE USE OF FORMAL ADVERTISING IS IMPRACTICABLE. ON THE OTHER HAND, BY UTILIZING THE PROCEDURES OF COMPETITIVE NEGOTIATED PROCUREMENT, REALISTIC AND EFFECTIVE PRICE COMPETITION COULD BE OBTAINED. ALSO, SUCH PROCEDURES WOULD PROVIDE ADEQUATE PRICE AND COST ANALYSES WHICH WOULD PREVENT SUCH SHADING OF A BID AND WOULD GIVE THE GREATEST ASSURANCE THAT SUPPLIES MEETING THE REQUIREMENTS OF THE SPECIFICATION WILL BE TIMELY DELIVERED AND AT THE BEST PRICE TO THE GOVERNMENT.

"DETERMINATION

"THE USE OF A NEGOTIATED CONTRACT WITHOUT FORMAL ADVERTISING IS JUSTIFIED BECAUSE COMPETITION IS SOUGHT FOR SUPPLIES PREVIOUSLY PURCHASED SOLE SOURCE.'

THEREAFTER, RFP -0150 WAS ISSUED ON JANUARY 31, 1968, TO SEVERAL POTENTIAL SUPPLIERS, INCLUDING YOUR FIRM. AFTER RECEIPT OF PROPOSALS, YOUR FIRM WAS DETERMINED TO BE THE LOW OFFEROR, AND A PREAWARD SURVEY WAS CONDUCTED OF YOUR CAPABILITIES TO PERFORM THE CONTEMPLATED CONTRACT. INITIALLY, A NEGATIVE AWARD RECOMMENDATION WAS MADE ON MARCH 14, 1968, BECAUSE OF COMPROMISING SAFETY FACTORS AT YOUR PLANT. HOWEVER, FOLLOWING A REQUEST FOR REEVALUATION OF SUCH RECOMMENDATION, THE CONTRACT ADMINISTRATION OFFICE SUPERSEDED THE PREVIOUS NEGATIVE RECOMMENDATION AND ON APRIL 5, 1968, AFFIRMATIVELY RECOMMENDED THAT AWARD BE MADE TO YOUR FIRM.

PRIOR TO FURTHER ACTION ON THE PROCUREMENT, THE CONTRACTING OFFICER WAS ADVISED THAT MAJOR AREAS OF THE SPECIFICATIONS INVOLVED WERE INADEQUATE AND AMBIGUOUS AND, FOR THIS REASON, NO AWARD SHOULD BE MADE TO ANY SOURCE OTHER THAN ONE WHICH HAD DEMONSTRATED ITS CAPABILITY TO MANUFACTURE THE ITEMS SATISFACTORILY. IN THIS RESPECT, IT WAS REPORTED THAT THE FOLLOWING MAJOR AREAS OF THE SPECIFICATIONS WERE INADEQUATE AND AMBIGUOUS:

"A. INLET FITTINGS, 773255-2 AND 773256-2. THE -BREAK-OFF- CAPS ON THESE FITTINGS HAVE NO DIMENSIONAL DEFINITION.

"B. TRIGGER ASSEMBLIES, 773255-4 AND 773256-4. THE CONFIGURATION OF THESE ASSEMBLIES ARE NOT DEFINED, AND THE EXPLOSIVE FORCE IS COMPLETELY UNCONTROLLED.

"C. THE FEATURES OF A AND B (-BREAK-OFF- CAP AND EXPLOSIVE FORCE) MUST BE CO-ORDINATED TO INSURE RELIABLE OPERATION WHEN AN INTERCHANGE OF THE VALVE COMPONENTS TAKES PLACE. A VALVE MAY OPERATE SATISFACTORILY AS A UNIT AND STILL NOT INCORPORATE THE NECESSARY CHARACTERISTICS TO PERMIT A MIX OF COMPONENTS FROM DIFFERENT SOURCES.

"D. CONDITIONS AND DIRECTION OF PRESSURE TESTS ARE NOT DEFINED. THIS COULD ALLOW TESTING UNDER CONDITIONS THAT WILL YIELD NO OBJECTIVE EVIDENCE OF THE VALVE CAPABILITY.

"E. TRIGGER ASSEMBLY, 773255-5 AND ITS MATING SEAT IS NOT DEFINED. PERFORMANCE REQUIREMENTS FOR THE CLOSING OF THIS OUTLET IS SPECIFIED.'

IN VIEW OF THE FOREGOING INFORMATION, THE CONTRACTING OFFICER CANCELED RFP -0150 ON APRIL 22, 1968. THIS CANCELLATION WAS EFFECTED PURSUANT TO PARAGRAPH 10 (B) OF THE INSTRUCTIONS AND CONDITIONS OF THE RFP WHEREIN THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ANY OR ALL OFFERS RECEIVED UNDER THE RFP.

IN YOUR PROTEST, YOU APPARENTLY ASSUMED THAT THE AWARD OF THE CITED CONTRACT TO CONAX, AS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY OF APRIL 25, 1968, WAS MADE UNDER RFP -0150 WHICH WAS CANCELED AND UNDER WHICH YOU WERE THE LOW OFFEROR. HOWEVER, THIS AWARD TO CONAX WAS MADE UNDER RFP - 0057 ON A SOLE-SOURCE BASIS, AS DISCUSSED ABOVE. IN THIS CONNECTION, IT SHOULD BE NOTED THAT SUCH AWARD WAS MADE TO CONAX ON FEBRUARY 29, 1968, WHILE THE AFFIRMATIVE REPORT ON THE PREAWARD SURVEY ON YOUR FIRM UNDER RFP -0150 WAS NOT RECEIVED BY THE CONTRACTING OFFICER UNTIL APRIL 5, 1968. TO THE DELAY IN SYNOPSIS IN THE COMMERCE BUSINESS DAILY, THE PROCUREMENT OFFICE OBSERVES THAT IT REQUESTED PUBLICATION OF THE SYNOPSIS OF THE AWARD OF THE SOLE-SOURCE CONTRACT TO CONAX ON MARCH 25, 1968, BUT THAT SUCH SYNOPSIS WAS NOT PUBLISHED UNTIL APRIL 25, 1968. WHILE THIS DELAY IN PUBLICATION MAY HAVE CONTRIBUTED TO YOUR MISUNDERSTANDING, SUCH DELAY WAS BEYOND THE CONTROL OF THE CONTRACTING OFFICER. HOWEVER, FOR YOUR INFORMATION, WE HAVE BEEN ADVISED BY THE PROCUREMENT AGENCY THAT IT IS ANTICIPATED THAT DESIGN PARAMETERS WILL BE INCORPORATED IN FUTURE SPECIFICATIONS FOR THE SUPPLIES TO PROVIDE DOCUMENTATION WHICH SHOULD ELIMINATE THE SOLE-SOURCE SITUATION CURRENTLY PREVAILING, AND THAT YOUR FIRM WILL BE INVITED TO PARTICIPATE IN ANY PROCUREMENT ACTION WHICH MAY BE GENERATED FOLLOWING SUCH DESIGN DOCUMENTATION.

IN VIEW OF THE FOREGOING, WE FIND NO LEGAL BASIS TO OBJECT TO THE ADMINISTRATIVE ACTIONS TAKEN. THEREFORE, YOUR PROTEST IS DENIED.