B-154711, SEP. 23, 1964

B-154711, SEP. 23, 1964

TO COLUMBUS MILPAR AND MANUFACTURING COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 9, 1964, PROTESTING AGAINST THE AWARD OF A CONTRACT TO THE CELANESE CORPORATION OF AMERICA, UNDER INVITATION FOR BIDS NO. AMC (A/-11-173-64-135 ISSUED BY THE DEPARTMENT OF THE ARMY.

THE INVITATION WITH AMENDMENT NO. 1, WAS ISSUED ON JUNE 3, 1964, AND COVERS A QUANTITY OF ,130,655 EACH PROJECTILE, 4.2" ILLUMINATING, M335A1E1, LESS OBTURATING MECHANISM AND EXPELLING CHARGE ASSEMBLY.'

THE INVITATION AT PAGES 22 THROUGH 26 CONTAINED A CLAUSE ENTITLED "USE OF GOVERNMENT-OWNED PROPERTY," WHICH REQUIRED BIDDERS WHO PLANNED TO USE ANY ITEMS OF GOVERNMENT PROPERTY TO LIST SUCH ITEMS, THEIR ACQUISITION COST, AND AN EVALUATION FACTOR, BASED UPON SPECIFIED PERCENTAGES OF SUCH ACQUISITION COST, TO BE ADDED TO THE UNIT BID PRICE FOR BID EVALUATION PURPOSES. THE CLAUSE ALSO REQUIRED THE BIDDER TO IDENTIFY THE FACILITIES CONTRACT OR OTHER AGREEMENT UNDER WHICH USE OF SUCH PROPERTY WOULD BE AUTHORIZED, AND TO INDICATE WHETHER SUCH PROPERTY WAS IN THE BIDDER'S POSSESSION OR IN THE POSSESSION OF A SUBCONTRACTOR. BIDS WERE RECEIVED FROM 10 FIRMS AND OPENED ON JULY 7, THE APPARENT LOW BIDDER BEING AMCEL PROPULSION COMPANY, A DIVISION OF CELANESE CORPORATION OF AMERICA.

AMCEL'S BID INDICATED IT PROPOSED TO USE GOVERNMENT PROPERTY IN POSSESSION OF A SUBCONTRACTOR, CHAMBERLAIN CORPORATION, UNDER FACILITIES CONTRACT NO. DA-11-022-ORD-/P/-34, THE ACQUISITION COST OF WHICH WAS $564,804, TO BE EVALUATED AT $45,184 (8 PERCENT) OR $0.34582 PER UNIT. EVALUATED, AMCEL'S BID IS THE LOWEST OF 10 RECEIVED.

YOUR PROTEST AGAINST AWARD TO THAT FIRM IS BASED ON SEVERAL POINTS ENUMERATED AS FOLLOWS:

1. AMCEL'S BID IS CONDITIONED ON THE USE OF LEASED GOVERNMENT-OWNED EQUIPMENT.

2. THERE IS NO AUTHORIZED PROCEDURE FOR THE USE OF GOVERNMENT-OWNED EQUIPMENT (LEASED OR OTHERWISE) IN THE FORMAL ADVERTISED TYPE OF PROCUREMENT UNLESS THE SAME GOVERNMENT-OWNED EQUIPMENT IS ADVERTISED AND MADE AVAILABLE TO ALL OTHER BIDDERS ON EQUAL TERMS.

3. PERMITTING USE OF GOVERNMENT-OWNED EQUIPMENT IN THE INSTANT PROCUREMENT WOULD BE A DISCRIMINATING PROCEDURE SINCE THE FORTUNATE CONTRACTOR HOLDING SUBJECT GOVERNMENT FURNISHED EQUIPMENT VALUED AT MANY HUNDREDS OF THOUSANDS OF DOLLARS IS ONLY RESPONSIBLE TO REIMBURSE THE GOVERNMENT IN AN AMOUNT OF APPROXIMATELY 8 PERCENT OF TOTAL VALUE OF THIS EQUIPMENT, WHILE ALL OTHER BIDDERS WILL BE BOUND TO INVEST THE FULL AMOUNT FOR TOOLING AND EQUIPMENT.

4. AMCEL'S BID SHOULD THEREFORE BE EVALUATED BY ADDING TO IT THE GOVERNMENT'S ACQUISITION COST OF ANY GOVERNMENT-OWNED TOOLING OR EQUIPMENT IT PROPOSES TO USE.

5. THE USUAL CLAUSE USED IN FORMALLY ADVERTISED PROCUREMENTS ENTITLED "SPECIAL TOOLING ACQUIRED UNDER OTHER GOVERNMENT CONTRACTS" IS IN THE BEST INTEREST OF THE GOVERNMENT AND ALL OF ITS BIDDERS.

UNDER THE PROVISIONS OF 10 U.S.C. 2667 THE MILITARY DEPARTMENTS ARE AUTHORIZED TO LEASE GOVERNMENT-OWNED PROPERTY, WITH OR WITHOUT PAYMENT OF CASH RENTAL. PRIMARY REGULATIONS GOVERNING THE AVAILABILITY OF GOVERNMENT -OWNED PROPERTY FOR USE IN THE PERFORMANCE OF GOVERNMENT CONTRACTS AND THE MANNER IN WHICH RENTAL IS TO BE ESTABLISHED, OR EVALUATED AGAINST BIDS PROPOSING SUCH USE, HAVE BEEN ISSUED AS SECTION XIII OF THE ARMED SERVICES PROCUREMENT REGULATION. OF THIS REGULATION, IT WOULD APPEAR THAT PARAGRAPH 13-407 (A) (1) MAY BE MOST DIRECTLY RELATED TO YOUR PROTEST. WHILE THAT PARAGRAPH PROVIDES IN EFFECT THAT BIDS BASED UPON USE OF GOVERNMENT-OWNED PROPERTY SHALL BE CONSIDERED IN A FORMALLY ADVERTISED PROCUREMENT ONLY IF SUCH PROPERTY IS HELD UNDER A LEASE WHICH REQUIRES PAYMENT OF A CASH RENTAL, YOU ARE ADVISED THAT UNDER DATE OF APRIL 17, 1963, THE ASPR COMMITTEE GRANTED THE ARMY MATERIEL COMMAND A BLANKET DEVIATION EXTENDING FOR A PERIOD OF TWO YEARS FROM THE PROVISION OF ASPR 13-407 (A) (1). PURSUANT THERETO, ON APRIL 22, 1963, AMC ISSUED REGULATIONS ENTITLED "GUIDELINES FOR PROVISIONS, USE AND EVALUATION OF FACILITIES AND SPECIAL TOOLING.' THE AUTHORIZATION IN THE INSTANT PROCUREMENT, TO SUBMIT BIDS BASED UPON USE OF GOVERNMENT-OWNED PROPERTY WHICH IS NOT HELD UNDER A LEASE REQUIRING THE PAYMENT OF A CASH RENTAL, APPEARS TO BE IN ACCORD WITH THE PROVISIONS OF SUCH "GUIDELINES.'

WITH RESPECT TO YOUR CONTENTION THAT ANY METHOD OF EVALUATING USE OF GOVERNMENT-OWNED EQUIPMENT, SHORT OF ADDING THE FULL ACQUISITION COST OF SUCH EQUIPMENT TO THE BID PRICE, WOULD BE DISCRIMINATORY IN THE INSTANT PROCUREMENT, YOUR ATTENTION IS INVITED TO THE FACT THAT THE EVALUATION RENTAL RATES SET OUT IN THE INVITATION ARE IN SUBSTANTIAL AGREEMENT WITH THE RENTAL RATES PRESCRIBED BY ASPR 13-601, WHICH RATES ARE IN TURN IDENTICAL WITH THOSE PRESCRIBED BY THE OFFICE OF CIVIL AND DEFENSE MOBILIZATION IN DMO VII-4 FOR USE BY ALL AGENCIES OF THE GOVERNMENT. ADDITIONALLY, IT SHOULD BE NOTED THAT ASPR 13-407 (A) (3) PROVIDES AS FOLLOWS:

"/3) IN ORDER TO INSURE THAT A CONCERN POSSESSING GOVERNMENT FACILITIES WITHOUT CHARGE IS NOT THEREBY PLACED IN A FAVORED POSITION IN COMPETING FOR GOVERNMENT BUSINESS, EITHER AS A PRIME CONTRACTOR OR A SUBCONTRACTOR, WITH RELATION TO CONCERNS POSSESSING EITHER A LESSER AMOUNT OF GOVERNMENT FACILITIES OR THEIR OWN FACILITIES, A SUITABLE METHOD FOR ELIMINATING ANY COMPETITIVE PRICING ADVANTAGE SHALL BE EMPLOYED. THIS MAY BE ACCOMPLISHED (I) BY CHARGING A RENTAL IN A MANNER PRESCRIBED IN THIS SECTION XIII, OR (II) IN THE PRICE EVALUATION OF COMPETITIVE PROPOSALS, BY ADDING TO THE PROPOSED CONTRACT PRICE OF A CONCERN POSSESSING GOVERNMENT FACILITIES WITHOUT CHARGE AN EVALUATION FACTOR CONSISTING OF AN AMOUNT WHICH IT IS ESTIMATED WOULD EQUAL SUCH RENTAL CHARGE, OR (III) BY ANY OTHER AVAILABLE METHOD WHICH WILL GIVE EFFECT TO THE BASIC POLICY SET FORTH IN THIS PARAGRAPH 13-407 UNDER THE FACTS OF THE PARTICULAR CASE. * * *"

IN VIEW OF THE FOREGOING, WE SEE NO VALID BASIS FOR CONTENDING THAT BIDS BASED UPON USE OF GOVERNMENT-OWNED PROPERTY IN THE INSTANT PROCUREMENT WERE IMPROPER, OR THAT THE METHOD OF EVALUATION SET OUT IN THE INVITATION RESULTED IN AN UNFAIR COMPETITION ADVANTAGE SO AS TO BE IN VIOLATION OF APPLICABLE REGULATIONS.