B-156448, JUL. 9, 1965

B-156448, JUL. 9, 1965

TO ACTECH CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE REJECTION OF YOUR PROPOSAL, AND THE PROPOSED AWARD OF A CONTRACT TO THE GENERAL ELECTRIC COMPANY, BY THE UNITED STATES NAVY AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA, UNDER REQUEST FOR QUOTATION NO. PR 19-65 5011 WEPS/89A.

THE SUBJECT REQUEST WAS ISSUED ON FEBRUARY 23, 1965, UPON REQUISITION OF THE BUREAU OF NAVAL WEAPONS FOR FURNISHING VARIOUS QUANTITIES OF THE COMPONENTS OF THE GENERAL ELECTRIC COMPANY (GE) MA-1 COMPASS SYSTEM FOR A- 64, SH-3A, CH 46A, CH 53A AND VHIE AIRCRAFT, WITH ALL ITEMS BEING THE FOLLOWING GE PARTS AND NUMBERS:

TABLE

AMPLIFIER 8KE8AD-5

DIRECTIONAL GYRO 8KD3AC-3

CONTROLLER 8KE7AC-2

THE ONLY COMPANY SOLICITED WAS GE, WHICH WAS THE DEVELOPER AND ONLY PREVIOUS SUPPLIER OF THESE ITEMS FOR THE SPECIFIED AIRCRAFT. HOWEVER, NOTICE OF THE PROCUREMENT WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY WITH THE INFORMATION THAT THE AVAILABLE DATA ON THE ITEMS WAS NOT SUFFICIENT TO PROVIDE ALL NECESSARY MANUFACTURING AND CONSTRUCTION DETAIL, AND THAT FIRMS INTERESTED IN SUBCONTRACTING OPPORTUNITIES SHOULD MAKE CONTACT WITH "THE FIRM LISTED" ---GE. THE ONLY PROPOSAL RECEIVED FROM A COMPANY OTHER THAN GE WAS YOUR UNSOLICITED QUOTATION WHICH WAS LOWER THAN GE-S. YOU WERE ADVISED BY LETTER DATED MARCH 30, 1965, FROM THE CONTRACTING OFFICER THAT YOUR PROPOSAL COULD NOT BE CONSIDERED BECAUSE SUFFICIENT DATA WAS NOT AVAILABLE TO EVALUATE QUOTATIONS FROM SUPPLIERS OTHER THAN GE.

YOU PROTEST REJECTION OF YOUR BID ON THE BASIS THAT WITH THE SPECIFICATIONS, INSTRUCTION AND TEST MANUALS, AND A COMPLETE MA-1 COMPASS SYSTEM IN YOUR POSSESSION IT IS "POSSIBLE FOR OUR COMPANY TO PRODUCE THIS SYSTEM IDENTICALLY AS CALLED FOR IN THE BID" AND, CONTRARY TO THE CONTRACTING OFFICER'S POSITION, YOUR PROPOSAL CAN BE EVALUATED WITH THE AID OF MILITARY SPECIFICATION MIL-C-17858B AND INSTRUCTION MANUALS. YOU ALSO POINT TO THE PROCUREMENT OF AT/TRM-3 RADIO TEST SETS BY FORMAL ADVERTISING ACCORDING TO SPECIFICATIONS AS SUPPORT FOR YOUR FURTHER CONTENTION THAT A "SOLE SOURCE" NEGOTIATION OF THE SUBJECT REQUIREMENT IS NOT JUSTIFIED. A FURTHER POINT IS MADE OF THE FACT THAT YOU ARE A SMALL BUSINESS FIRM AND A CERTIFICATE OF COMPETENCY WAS NOT REQUESTED BY ASO FROM THE SMALL BUSINESS ADMINISTRATION. THESE MATTERS WILL BE CONSIDERED BELOW.

UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (10) PURCHASES AND CONTRACTS MAY BE NEGOTIATED IF IT IS IMPRACTICABLE TO OBTAIN COMPETITION. IMPLEMENTING THIS AUTHORITY, ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-210.2 SETS FORTH ILLUSTRATIVE CIRCUMSTANCES UNDER WHICH THE AUTHORITY TO NEGOTIATE MAY BE USED. UNDER SUBPARAGRAPH (I) CONTRACTS MAY BE NEGOTIATED WHERE THE SUPPLIES CAN BE OBTAINED FROM ONLY ONE PERSON OR FIRM (SOLE SOURCE OF SUPPLY) AND UNDER SUBPARAGRAPH (XIII) NEGOTIATION IS PERMITTED WHEN IT IS IMPOSSIBLE TO DRAFT, FOR SOLICITATION OF BIDS, ADEQUATE SPECIFICATIONS OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED SUPPLIES. IN COMPLIANCE WITH ASPR 3-306 (A), THE CONTRACTING OFFICER IN THE INSTANT PROCUREMENT MADE THE FOLLOWING DETERMINATION AND FINDINGS:

"DETERMINATION AND FINDINGS

PR 19-65-5077 WEPS/89

"REQN. NO. PR 19-65-5011 WEPS/89 EST. AMT.$1,074,760.00

"NEGOTIATION OF INDIVIDUAL CONTRACT FOR

SUPPLIES OR SERVICES FOR WHICH IT IS

IMPRACTICABLE TO SECURE COMPETITION.

"STATEMENT

"UPON THE BASIS OF THE FOLLOWING FINDINGS AND DETERMINATION, THE PROPOSED CONTRACT MAY BE NEGOTIATED WITHOUT FORMAL ADVERTISING PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (10) AS IMPLEMENTED BY PARAGRAPH 3-210.2 (I) OF THE ARMED SERVICES PROCUREMENT REGULATION.

"FINDINGS

"THE PROPOSED CONTRACT PROVIDES FOR THE FURNISHING OF MAJOR COMPONENT ITEMS FOR THE GENERAL ELECTRIC MA-1 COMPASS SYSTEM USED IN VARIOUS AIRCRAFT.

"THE COMPASS SYSTEM WAS DESIGNED BY THE GENERAL ELECTRIC CO. TO PROVIDE DIRECTIONAL INFORMATION AND CONTROL TO REMOTE INDICATORS, RADAR AND NAVIGATIONAL EQUIPMENT, AUTO-PILOT SYSTEMS, BOMB DIRECTORS, AND AUTOMATIC APPROACH EQUIPMENT.

"IT IS IMPRACTICABLE TO FORMALLY ADVERTISE THIS REQUIREMENT SINCE ONLY THE CONTRACTOR NAMED ABOVE POSSESSES COMPLETE MANUFACTURING DATA AND IS SUFFICIENTLY FAMILIAR WITH THE DESIGN AND ENGINEERING DETAILS TO PRODUCE ACCEPTABLE ITEMS.

"THE PRICE IS NOT FIXED BY LAW OR REGULATION.

"DETERMINATION

"THE USE OF A NEGOTIATED CONTRACT, WITHOUT FORMAL ADVERTISING, IS JUSTIFIED BECAUSE IT IS IMPRACTICABLE TO SECURE COMPETITION FOR THE MATERIAL TO BE OBTAINED HEREUNDER, THIS BEING OBTAINABLE FROM THE ABOVE NAMED CONTRACTOR, WHICH IS THE SOLE SOURCE OF SUPPLY.'

WE ARE ADVISED THAT THE ABOVE DETERMINATION TO NEGOTIATE ONLY WITH GE WAS REVIEWED AND APPROVED BY THE ASO CONTRACT REVIEW BOARD IN ACCORDANCE WITH DEPARTMENTAL PROCEDURE.

WITH REGARD TO YOUR CONTENTION THAT YOU CAN PRODUCE A SYSTEM "IDENTICAL" TO THE GE SYSTEM, THE CONTRACTING OFFICER HAS REPLIED:

"* * * ASO HOLDS THAT A SYSTEM AS COMPLEX AS THE MA-1 CANNOT, AS A PRACTICAL MATTER, BE MANUFACTURED AND TESTED WITHOUT DETAILED MANUFACTURING DRAWINGS, AND ACTECH'S MERE PROMISE THAT IT CAN DUPLICATE THE GE COMPASS HELD BY IT BY REVERSE ENGINEERING CANNOT FORM THE BASIS FOR A CONTRACT WHERE THE NAVY DOES NOT HAVE DATA TO EVALUATE THAT PROMISE OR THE ABILITY TO DETERMINE THAT THE ITEM HAS BEEN DUPLICATED. * * *"

FURTHERMORE, IT IS ASO'S POSITION THAT, EVEN ASSUMING YOU COULD EVENTUALLY DUPLICATE THE GE SYSTEM SPECIFIED WITHOUT THE DATA ASO FEELS IS NECESSARY, THE NAVY WOULD STILL BE UNABLE TO DETERMINE WHETHER PERFORMANCE WAS IN FACT EQUAL TO THE GE SYSTEM, AND WHETHER YOUR COMPONENTS WOULD BE INTERCHANGEABLE WITH EXISTING GE SYSTEMS, WITHOUT EXTREMELY EXPENSIVE AND TIME CONSUMING EVALUATION TESTS, INCLUDING FLIGHT TESTS. IT IS ALSO POINTED OUT THAT TIME IS IMPORTANT AS THIS EQUIPMENT IS NEEDED FOR USE AS GOVERNMENT-FURNISHED EQUIPMENT IN THE PRODUCTION OF AIRCRAFT UNDER A CONTRACT SCHEDULED FOR AWARD IN JUNE 1965.

THE ANALOGY YOU ATTEMPT TO DRAW BETWEEN THE PROCUREMENT OF AN/TRM-3 RADIO SETS AND THE PRESENT PROCUREMENT IS DISPUTED BY ASO. IT IS POINTED OUT THAT SUCH A COMPARISON IS NOT VALID AS THE FORMER EQUIPMENT IS GROUND SUPPORT TEST EQUIPMENT AND CANNOT BE COMPARED IN TERMS OF CRITICALITY WITH AIRBORNE NAVIGATIONAL EQUIPMENT SUCH AS THE MA-1. ALSO, THE AN/TRM-3 IS A COMMERCIAL ITEM NOT EMBODYING THE HIGHLY SPECIALIZED MILITARY FEATURES OF THE MA-1, AND IT IS NOT REQUIRED TO BE INTERCHANGEABLE WITH EXISTING EQUIPMENT AS IS THE MA-1.

THE JUSTIFICATION ADVANCED BY THE NAVY FOR NEGOTIATION--- THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION--- DEPENDS UPON THE EXISTENCE OF SPECIFIED FACTUAL SITUATIONS, TWO OF WHICH WERE CITED HERETOFORE AS BEING SET OUT IN ASPR 3-210.2 (I) AND (XIII). WE HAVE CONSISTENTLY RECOGNIZED THAT IT IS THE PRIMARY RESPONSIBILITY AND RIGHT OF THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO DETERMINE, AS HERE, THE EXISTENCE OF FACTS AS THE BASIS OF ADMINISTRATIVE ACTION. UNLESS SUCH DETERMINATION IS ARBITRARY OR CAPRICIOUS, OR LACKS A REASONABLE BASIS THEREFOR, WE MAY NOT PROPERLY SUBSTITUTE OUR JUDGMENT FOR THAT OF THE ADMINISTRATIVE OFFICERS. IN THE CIRCUMSTANCES HERE REPORTED, SOLICITATION WAS LIMITED TO GE BECAUSE NO OTHER SOURCE OF SUPPLY WAS KNOWN TO ASO AND BECAUSE DATA TO DRAFT ADEQUATE SPECIFICATIONS AND EVALUATE QUOTATIONS FROM OTHER SOURCES WAS NOT AVAILABLE. ALTHOUGH YOU HAVE TAKEN ISSUE WITH THESE DETERMINATIONS, WE FEEL THAT THE FACTS OF RECORD REASONABLY SUPPORT THEM. MOREOVER, IT IS A WELL ESTABLISHED PRINCIPLE OF OUR OFFICE TO ACCEPT THE ADMINISTRATIVE DETERMINATION ON DISPUTED QUESTIONS OF FACT, PARTICULARLY WHERE, AS HERE, THEY INVOLVE MATTERS OF A TECHNICAL NATURE. IN THIS CONNECTION, SEE 10 U.S.C. 2310 (B), AS AMENDED, WHICH SPECIFICALLY PROVIDES THAT THE FINDINGS SUPPORTING DETERMINATIONS TO NEGOTIATE UNDER 10 U.S.C. 2304 (A) (10) SHALL BE FINAL. THEREFORE, WE SEE NO LEGAL BASIS UPON WHICH WE MAY PROPERLY OBJECT TO THE ABOVE ADMINISTRATIVE DETERMINATIONS.

THERE IS ONE FURTHER QUESTION RAISED BY YOUR PROTEST FOR CONSIDERATION AND THAT RELATES TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD HAVE BEEN REQUESTED ON YOUR FIRM FROM SBA BEFORE REJECTION OF YOUR PROPOSAL. ENACTMENT OF SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637 (B) (7), CONGRESS HAS SEEN FIT TO LIMIT THE AUTHORITY OF ADMINISTRATIVE OFFICERS TO MAKE FINAL DETERMINATIONS OF RESPONSIBILITY OF SMALL BUSINESS BIDDERS BY PROVIDING THAT WHERE A SMALL BUSINESS CONCERN IS CERTIFIED BY SBA TO BE A COMPETENT GOVERNMENT CONTRACTOR WITH RESPECT TO CAPACITY AND CREDIT, THE PROCURING OFFICERS OF THE GOVERNMENT MUST ACCEPT SUCH CERTIFICATION AS CONCLUSIVE. HOWEVER, THIS LIMITATION ON THE ADMINISTRATIVE AUTHORITY RELATES ONLY TO DETERMINATIONS OF "CAPACITY AND CREDIT.' IN THIS CONNECTION, IT SHOULD BE NOTED THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-705.6, PARAGRAPH (B), IN RECOGNITION OF THE SBA AUTHORITY, REQUIRES REFERRAL TO SBA OF ONLY "OTHERWISE ACCEPTABLE" BIDS OR PROPOSALS OF SMALL BUSINESS CONCERNS WHICH CONTRACTING OFFICERS PROPOSE TO REJECT SOLELY FOR THE REASON THAT THE BIDDERS OR OFFERORS HAVE BEEN FOUND TO BE NONRESPONSIBLE AS TO CAPACITY AND CREDIT. IN THE INSTANT CASE IT IS THE ADMINISTRATIVE POSITION, IN EFFECT, THAT REJECTION OF YOUR PROPOSAL IS NOT FOR REASONS OF CAPACITY OR CREDIT, BUT BECAUSE YOUR PROPOSAL IS NONRESPONSIVE TO THE REQUIREMENTS OF THE REQUEST FOR QUOTATIONS. IN OTHER WORDS, IT IS ASO'S CONTENTION THAT SINCE A SOLE SOURCE PROCUREMENT IS AUTHORIZED UNDER ASPR 3-210.2 IT HAS THE RIGHT TO INSIST UPON GE COMPONENTS, MANUFACTURED BY GE, AND THAT YOU DID NOT OFFER THE PRODUCT REQUESTED. SINCE WE HAVE FOUND THAT THE DETERMINATION TO NEGOTIATE ON A SOLE SOURCE BASIS WITH GE FOR THE SPECIFIED GE SYSTEMS AND COMPONENTS IS IN ACCORD WITH APPLICABLE LAW AND REGULATION, WE MUST AGREE WITH THE ADMINISTRATIVE POSITION THAT, IN THE CIRCUMSTANCES HERETOFORE RELATED, AN OFFER TO FURNISH SOMETHING OTHER THAN THE SPECIFIC SYSTEM AND COMPONENTS NAMED MAY BE CONSIDERED NONRESPONSIVE, AND THAT YOUR PROPOSAL THEREFORE WAS NOT AN "OTHERWISE ACCEPTABLE" PROPOSAL REQUIRING A DETERMINATION OF YOUR "CAPACITY" BY SBA.

WITH RESPECT TO THE COPY OF IFB-383-1080-65 WHICH YOU TRANSMITTED UNDER DATE OF JUNE 29, 1965, WITH A REQUEST THAT WE CONSIDER THE FACT THAT MA-1 COMPASS SYSTEMS COMPONENTS ARE TO BE PROCURED THEREUNDER BY USING GOVERNMENT-FURNISHED DRAWINGS AND TECHNICAL MANUALS, IT WOULD APPEAR THAT SUCH COMPONENTS ARE BEING PROCURED FOR USE IN MA-1 COMPASS SYSTEMS DEVELOPED BY LEAR SIEGLER, AND THAT SUCH COMPONENTS ARE NOT INTERCHANGEABLE WITH THE SYSTEMS DEVELOPED BY GE. IT WOULD THEREFORE APPEAR THAT THE AVAILABILITY OF DRAWINGS AND MANUALS COVERING SUCH COMPONENTS WOULD HAVE NO BEARING ON WHETHER COMPONENTS FOR THE GE SYSTEM CAN BE PROCURED COMPETITIVELY. AS REQUESTED, THE ENCLOSURES RECEIVED WITH YOUR CORRESPONDENCE OF JUNE 29 ARE RETURNED.

ACCORDINGLY, WE SEE NO BASIS UPON WHICH WE MAY PROPERLY OBJECT TO THE ADMINISTRATIVE ACTION IN REJECTING YOUR PROPOSAL AND IN PROPOSING TO MAKE AN AWARD TO GENERAL ELECTRIC COMPANY, AND YOUR PROTEST MUST THEREFORE BE DENIED.