B-145362, OCT. 25, 1961

B-145362, OCT. 25, 1961

TO GREER HYDRAULICS, INCORPORATED:

REFERENCE IS MADE TO LETTER OF JULY 28, 1961, FROM DAVID FROMSON, ATTORNEY, AND TO YOUR LETTER OF JULY 17, 1961, AS WELL AS PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO THE SUN ELECTRIC CORPORATION, BY THE DEPARTMENT OF THE AIR FORCE UNDER INVITATION FOR BIDS NO. 01-601-61-869, ISSUED BY BROOKLEY AIR FORCE BASE. IT IS YOUR CONTENTION, AND THAT OF YOUR ATTORNEY, IN SUBSTANCE, THAT THE SUBJECT PROCUREMENT WAS CONTRARY TO LAW AND APPLICABLE REGULATIONS AND THAT THE CONTRACT SHOULD BE CANCELLED. IN LETTER OF JULY 11, 1961, YOUR ATTORNEY URGES THAT THE PROCUREMENT SHOULD BE READVERTISED OR, IN THE ALTERNATIVE, THAT A CONTRACT SHOULD BE NEGOTIATED WITH YOU UNDER THE AMENDED SPECIFICATIONS, INCLUDING A 30 HORSEPOWER MOTOR, FOR WHICH YOU ARE WILLING TO UNDERTAKE PERFORMANCE AT A UNIT PRICE OF $8,700.

THE RECORD DISCLOSES THAT BY THE INVITATION INVOLVED BIDS WERE SOUGHT, UNDER A TWO STAGE PROCUREMENT PROCEDURE, TO FURNISH A QUANTITY OF HYDRAULIC TEST STANDS. SEVENTEEN PREVIOUSLY QUALIFIED BIDDERS RESPONDED, THE LOWEST OFFER HAVING BEEN SUBMITTED BY THE SUN ELECTRIC CORPORATION PURSUANT TO WHICH CONTRACT NO. AF 01 (601) 33560 WAS AWARDED ON DECEMBER 23, 1960. SUBSEQUENT TO RECEIPT OF THE BIDS THE PURCHASING OFFICE WAS ADVISED THROUGH THE DIRECTORATE OF MATERIEL MANAGEMENT THAT THE USING FACILITIES WOULD REQUIRE A CHANGE IN THE TEST STANDS AS A RESULT OF THE TYPE OF PUMPS BEING INSTALLED IN NEWLY DESIGNED AIRCRAFT. THE NECESSARY ALTERATIONS INCLUDED AN INCREASE IN THE CAPACITY OF THE MOTOR FROM 20 HORSEPOWER TO 30 HORSEPOWER, TOGETHER WITH CERTAIN OTHER MODIFICATIONS OF THE UNIT NECESSITATED BY THE LARGER MOTOR.

UPON RECEIPT OF THE DIRECTIVE WHICH INCREASED THE CAPABILITY REQUIREMENTS DEEMED NECESSARY FOR THE PROPOSED TEST STAND, THE CONTRACTING OFFICIALS WERE CONFRONTED WITH THE QUESTION WHETHER THE EXISTING INVITATION SHOULD BE CANCELLED AND A NEW PROCUREMENT UNDERTAKEN, OR A SUPPLEMENTAL AGREEMENT BE NEGOTIATED WITH THE LOW BIDDER. THE MATTER WAS REFERRED TO THE STAFF JUDGE ADVOCATE, HEADQUARTERS, AIR MATERIEL COMMAND, AND IT WAS RECOMMENDED THAT THE TECHNICAL CHANGES REQUIRED BE INCORPORATED IN A SUPPLEMENTAL AGREEMENT WITH SUN ELECTRIC CORPORATION. IT IS CONCEDED THAT THE INCREASE IN SIZE OF THE MOTOR CONSTITUTES A CHANGE IN A MAJOR COMPONENT OF THE TEST UNIT WITH A CORRESPONDING INCREASE IN THE COST OF THE END PRODUCT. HOWEVER, IT WAS ASCERTAINED THAT THE HEAVIER MOTOR WAS A STANDARD COMMERCIAL ITEM AVAILABLE IN A STABILIZED MARKET DOMINATED BY SUBSTANTIAL COMPETITION IN THE INDUSTRY AND, THAT AS A CONSEQUENCE THE AMENDED SPECIFICATIONS SHOULD NOT, AND PROBABLY WOULD NOT AFFECT THE RELATIVE STANDING OF THE BASIC QUOTATIONS SUBMITTED IN RESPONSE TO THE ORIGINAL SPECIFICATIONS. IN THAT CONNECTION ARTICLE 2 OF STANDARD FORM NO. 32, WHICH WAS INCORPORATED BY REFERENCE INTO THE BIDDING DOCUMENTS RESERVED TO THE GOVERNMENT THE RIGHT TO "MAKE CHANGES IN THE DRAWINGS OR SPECIFICATIONS" WITH AN APPROPRIATE INCREASE OR DECREASE IN PRICE. VIEW OF THESE FACTS AND CITED PROVISION, AND HAVING REGARD FOR THE FACT THE EQUIPMENT WAS URGENTLY NEEDED, PROCUREMENT PERSONNEL ELECTED TO AMEND THE ORIGINAL SPECIFICATIONS AS BEING IN THE BEST INTERESTS OF THE AIR FORCE.

WE AGREE WITH YOUR CONTENTION THAT THE ACTION TAKEN WAS NOT PROPER,AND IT IS NOW RECOGNIZED BY THE AIR FORCE THAT THE PROCUREMENT SHOULD HAVE BEEN READVERTISED. HOWEVER, IT SEEMS TO US THERE WAS A REASONABLE BASIS FOR THE ADMINISTRATIVE CONCLUSION THAT THE CHANGE FROM A 20 HORSEPOWER TO A 30 HORSEPOWER MOTOR WOULD NOT HAVE AFFECTED THE RELATIVE STANDING OF BIDDERS IF BIDS HAD ORIGINALLY BEEN SOLICITED ON THE MORE POWERFUL MOTOR. WE HAVE FOUND NO EVIDENCE OF BAD FAITH OR PERSONAL PREJUDICE IN THE ADMINISTRATIVE DETERMINATION NOT TO READVERTISE. AFTER CONSIDERATION OF ALL ASPECTS OF THE MATTER, IT IS OUR CONCLUSION THAT IT WOULD NOT BE IN THE BEST INTERESTS OF THE UNITED STATES TO DIRECT CANCELLATION OF THE AWARD MADE.