B-152326, DEC. 6, 1963

B-152326, DEC. 6, 1963

TO ROSS, STARK, MATZKIN AND DAY:

BY LETTERS DATED AUGUST 19 AND 20, 1963, YOU PROTESTED, ON BEHALF OF THE SIERRA RESEARCH CORPORATION, AGAINST ANY CONTRACT AWARD OR USE OF APPROPRIATED FUNDS BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID)UNDER PROCUREMENT AUTHORIZATION 152-898-256-2006 COVERING RADAR EQUIPMENT FOR THE GOVERNMENT OF SPAIN.

IN RESPONSE TO ITEM 16 OF AID SMALL BUSINESS CIRCULAR NO. 62-179 DATED JULY 31, 1962, COVERING TERMINAL AREA/APPROACH CONTROL RADAR, SIERRA SUBMITTED AN OFFER TO SPAIN WHEREBY IT PROPOSED TO FURNISH MODIFICATIONS OF UNITED STATES-OWNED RADAR EQUIPMENT WHICH, IN SIERRA'S OPINION WOULD RESULT IN ACCEPTABLE INSTALLATIONS AT A LOWER COST THAN THE PRICE OF NEW EQUIPMENT. HOWEVER, SPAIN SPECIFICALLY REQUESTED IN THE CIRCULAR THAT THE EQUIPMENT MUST BE FACTORY NEW OR, IF SURPLUS, FAA CERTIFICATED. SIERRA REPRESENTED THAT THE TWO BASIC UNITS IT PROPOSED TO FURNISH, AS MODIFIED, WERE THEN WAREHOUSED AT ITS FACTORY; THAT THEY WERE EXCESS TO UNITED STATES REQUIREMENTS; AND THAT SUCH EQUIPMENT COULD BE SECURED FOR SPAIN BY THE UNITED STATES, UNDER ITS POLICY RELATING TO EXCESS PROPERTY, WITHOUT COST EXCEPT FOR SIERRA'S CHARGES FOR NECESSARY MODIFICATIONS. ALTHOUGH THIS OFFER SEEMED TO BE A CONVENIENT AND ECONOMIC METHOD OF PROVIDING TWO SPANISH AIRPORTS WITH TERMINAL/APPROACH RADAR EQUIPMENT, THE FURNISHING OF SUCH MODIFIED EQUIPMENT AS PROPOSED BY SIERRA WAS NOT RESPONSIVE TO THE SPECIFICATIONS AS SET FORTH IN ITEM 16 OF THE CIRCULAR.

AID DETERMINED, HOWEVER, UPON INQUIRY AND INVESTIGATION, THAT THE RADAR UNITS AT SIERRA'S FACTORY HAD NOT BEEN DECLARED EXCESS BY THE DEPARTMENT OF DEFENSE AND THAT, IF THEY WERE TO BE DECLARED EXCESS, OTHER AGENCIES HAD FIRST PRIORITY TO ACQUIRE THESE UNITS BEFORE AID COULD ACQUIRE THEM FOR SPAIN, ALSO, AID HAD DETERMINED THAT THE FOREIGN EXCHANGE POSITION OF SPAIN NO LONGER MITIGATED AGAINST ITS PROCUREMENT OF LARGE EQUIPMENT. FOR THAT REASON, SPAIN COULD NOT QUALIFY AS A RECIPIENT OF EXCESS PROPERTY ON A NO-COST BASIS.

DESPITE THE FOREGOING DETERMINATION, AID CONSIDERED THAT A WAIVER OF THIS POLICY WOULD BE JUSTIFIABLE IF A SATISFACTORY TRANSACTION COULD BE ARRANGED TO USE AVAILABLE EXCESS EQUIPMENT ECONOMICALLY. HENCE, SMALL BUSINESS CIRCULAR NO. 63-194 DATED MAY 27, 1963, WAS ISSUED TO PERMIT THE SUBMISSION OF OFFERS FOR MODIFICATION KITS TO CONVERT TWO EXCESS RADAR SYSTEMS LOCATED AT SIERRA'S FACTORY, TOGETHER WITH TECHNICAL SERVICES NECESSARY FOR THE INSTALLATION OF THE MODIFIED SYSTEM. SIERRA RESPONDED TO THE CIRCULAR AND OFFERED TO MODIFY THE TWO SYSTEMS LOCATED AT ITS FACTORY. IN THE MEANWHILE, HOWEVER, SPAIN DECIDED NOT TO ACQUIRE MODIFIED RADAR EQUIPMENT WHICH WAS EXCESS TO UNITED STATES REQUIREMENTS AND PROPOSED, INSTEAD, TO PROCURE ONE NEW SINGLE CHANNEL ASR-4 RADAR. HENCE, SIERRA'S OFFER WAS NOT ACCEPTED BY SPAIN SINCE, IN THAT COUNTRY'S OPINION, THE EQUIPMENT OFFERED WOULD NOT MEET ITS REQUIREMENTS.

WE ARE ADVISED THAT THE TEXAS INSTRUMENTS CORPORATION HAD SUBMITTED A PRICE OF $197,768 FOR A COMPLETE ASR-4 RADAR SYSTEM WHICH NOT ONLY FULLY MET THE SPANISH REQUIREMENTS BUT ALSO WAS COMPATIBLE WITH A SYSTEM PURCHASED BY THE FEDERAL AVIATION AGENCY FOR INSTALLATION AT THE MADRID AIRPORT. ALSO, WE ARE INFORMED THAT AN EXPENDITURE OF $142,615 PER UNIT FOR MODIFIED EXCESS EQUIPMENT PROPOSED BY SIERRA COULD NOT BE JUSTIFIED WHEN WHOLLY COMPATIBLE NEW EQUIPMENT COULD BE PURCHASED FOR $197,768.

THE GOVERNMENT OF SPAIN AS RECIPIENT OF ASSISTANCE PROVIDED BY THE UNITED STATES THROUGH AID IS RESPONSIBLE FOR DETERMINING ITS OWN REQUIREMENTS WITHIN BASIC GROUND RULES ESTABLISHED BY THE AGENCY. IT APPEARS THAT SPAIN AFTER CONSIDERABLE NEGOTIATION WITH SIERRA CONCLUDED THAT THE EQUIPMENT OFFERED DID NOT MEET ITS REQUIREMENTS AT A PRICE OR UNDER CONDITIONS WHICH WOULD MAKE THE TRANSACTION SUFFICIENTLY ATTRACTIVE TO ACCEPT LESSER OR UNCERTAIN PERFORMANCE VALUES.

IN VIEW OF THE DIFFICULTY OF ASSURING EITHER SPAIN OR SIERRA THAT ACCEPTABLE EXCESS EQUIPMENT WOULD BE AVAILABLE FOR CONVERSION AND THE NECESSITY, IF SUCH EQUIPMENT WERE READILY AVAILABLE, OF RELAXING THE AID POLICY AGAINST SUPPLYING SUCH EQUIPMENT TO SPAIN ON A NO-COST BASIS, THE DECISION BY SPAIN TO CEASE NEGOTIATIONS WITH SIERRA AND TO PURCHASE NEW EQUIPMENT ESPECIALLY TAILORED TO ITS REQUIREMENTS APPEARED TO BE ENTIRELY APPROPRIATE.

THE RECORD BEFORE US SHOWS THAT THE EQUIPMENT OFFERED BY SIERRA WAS UNACCEPTABLE TO SPAIN WHICH IN ITS SOVEREIGN CAPACITY DETERMINED THAT ONLY NEW RADAR EQUIPMENT WOULD MEET ITS NEEDS. SINCE THIS TYPE OF PROCUREMENT IS NOT SUBJECT TO THE GENERAL RULES APPLICABLE TO PROCUREMENTS BY THE DEPARTMENTS AND AGENCIES OF THE UNITED STATES, NO PROPER BASIS EXISTS FOR HOLDING THAT THE ACTIONS TAKEN HERE WERE IMPROPER.

CONCERNING YOUR REQUEST FOR REIMBURSEMENT TO SIERRA FOR ITS COSTS INCURRED IN RESPONDING TO THIS PROCUREMENT, YOU ARE ADVISED THAT THERE IS NO LEGAL BASIS TO ALLOW SUCH A CLAIM FOR BID PREPARATION COSTS WHERE THE RECORD IS DEVOID OF ANY INDICATION THAT SIERRA'S PROPOSAL WAS ARBITRARILY AND WILFULLY DISREGARDED IN FAVOR OF A PREFERRED BIDDER. SEE HEYER PRODUCTS COMPANY V. UNITED STATES, 140 F.SUPP. 409. ..END :