B-156778, SEP. 9, 1965

B-156778, SEP. 9, 1965

TO KURZ AND ROOT COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 13, AND LETTER OF MAY 14, 1965, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS NO. 04- 606-65-138 AFTER OPENING AND THE NEGOTIATION OF A SOLE-SOURCE CONTRACT FULFILLING PART OF THE REQUIREMENT WITH A HIGHER BIDDER, STEWART AND STEVENSON SERVICES, INCORPORATED.

THE INVITATION, ISSUED FEBRUARY 12 AND OPENED APRIL 5, 1965, BY THE SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, CALIFORNIA, COVERED AN ORDER FOR A MINIMUM QUANTITY OF 57 AND A MAXIMUM QUANTITY OF 370 UNITS OF A FAMILY OF FOUR SIZES OF DIESEL ENGINE DRIVEN GENERATOR SETS, INCLUDING SPARE PARTS, DATA, SPECIAL TOOLING AND TEST EQUIPMENT, IN ACCORDANCE WITH A RECENTLY DEVELOPED MILITARY SPECIFICATION. THE ADVERTISEMENT PROVIDED FOR DELIVERY OF FIRST ARTICLES 120 DAYS AFTER AWARD FOLLOWED BY PRODUCTION QUANTITIES 30, 60, AND 90 DAYS THEREAFTER. OF THE SEVEN RESPONSIVE BIDS TENDERED YOUR TOTAL EVALUATED PRICE OF $3,723,863.50 WAS THE LOWEST RECEIVED, FOLLOWED BY THE BIDS OF BMI EQUIPMENT COMPANY, BOGUE ELECTRIC MANUFACTURING COMPANY, AND STEWARD AND STEVENSON SERVICES, INCORPORATED, IN THAT ORDER.

WE ARE ADVISED BY THE AIR FORCE THAT, AFTER BID OPENING AND DURING THE EVALUATION PROCESS, AN URGENT NEED AROSE TO HAVE THE PURCHASE REQUEST FULFILLED SOONER THAN EXPECTED WHICH NECESSITATED A SPEED-UP IN THE DELIVERY SCHEDULE OF THE ITEMS BEING PROCURED. A CRITICAL REQUIREMENT DEVELOPED TO HAVE 67 OF THE UNITS DELIVERED TO SOUTHEAST ASIA BY SEPTEMBER 15, 1965. THE DELIVERY PROVISIONS SCHEDULED IN THE INVITATION WERE RENDERED OBSOLETE SINCE, HAD AWARD BEEN CONSUMMATED PURSUANT THERETO, DELIVERIES UNDER THE CONTRACT WOULD NOT HAVE BEGUN UNTIL OCTOBER 1965, AND QUANTITIES SUFFICIENT TO SATISFY THE SOUTHEAST ASIAN REQUISITION WOULD NOT HAVE BEEN DELIVERED IN THIS COUNTRY UNTIL DECEMBER 1965.

FACED WITH AN ACCELERATED DELIVERY REQUIREMENT, AND CONSCIOUS OF THE FACT THAT TIME WAS NOW OF THE ESSENCE, THE CONTRACTING OFFICER DETERMINED THAT TIMELY ARRIVAL OF THE UNITS IN SOUTHEAST ASIA NECESSITATED A DOMESTIC DELIVERY DATE NO LATER THAN AUGUST 5 AND THAT, THEREFORE, THE EVENTUAL CONTRACTOR WOULD HAVE TO BE CAPABLE OF DELIVERING WITHIN 80 TO 90 DAYS FROM THE DATE OF AWARD. ACCORDING TO THE REPORT BEFORE US SUPPLIERS NOT POSSESSING ENGINES IN THEIR INVENTORIES INCUR A LEAD TIME OF SOME 120 DAYS TO ACQUIRE THEM. USING THE EXPERIENCE AND INFORMATION WITH RESPECT TO THE BIDDERS' RESOURCES GATHERED UNDER IFB NO. 04-606-65-138, AND FROM PERFORMANCE DATA UNDER OTHER CONTRACTS BETWEEN SACRAMENTO AIR MATERIEL AREA AND THE VARIOUS BIDDERS, THE CONTRACTING OFFICER CONCLUDED THAT NEITHER YOUR COMPANY, BMI, NOR BOGUE ELECTRIC HAD A QUANTITY OF ENGINES AND GENERATORS ON HAND AND READILY AVAILABLE FOR IMMEDIATE PRODUCTION SUFFICIENT TO MEET THE ACCELERATED DELIVERY SCHEDULE OF THE GOVERNMENT.

WITH THE PERMISSION OF HIGHER AUTHORITY OBTAINED PURSUANT TO AIR FORCE PROCUREMENT INSTRUCTION 2-404.1, THE CONTRACTING OFFICER, ON MAY 7, NOTIFIED ALL BIDDERS OF HIS DETERMINATION TO CANCEL THE INVITATION CONSISTENT WITH THE RIGHT TO REJECT ANY OR ALL BIDS RESERVED TO THE GOVERNMENT AT PARAGRAPH 8 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION. A FINDING OF PUBLIC EXIGENCY AND DETERMINATION TO NEGOTIATE THE CONTRACT WAS EXECUTED IN ACCORDANCE WITH APPLICABLE STATUTES AND REGULATIONS. A DOCUMENT, OF THE SAME DATE, ENTITLED "SELECTED SOURCE FINDINGS" CONTAINS THE FOLLOWING SIGNIFICANT STATEMENT:

" * * * STEWART AND STEVENSON SERVICES, INCORPORATED, IS THE ONLY KNOWN SOURCE THAT MAINTAINS IN INVENTORY QUANTITIES OF ENGINES, GENERATORS, GOVERNORS AND OTHER MAJOR COMPONENTS WHICH ARE ESSENTIAL TO MEET A 90-DAY DELIVERY SCHEDULE.'

HENCE, BY TELEGRAM OF MAY 7, AND WITHOUT FURTHER DELAY, A LETTER CONTRACT WAS AWARDED TO STEWART AND STEVENSON SERVICES, INCORPORATED, IN COMPLIANCE WITH THE PROCEDURES STIPULATED FOR USE IN EMERGENCY SITUATIONS AT SECTION 3-408 OF THE ARMED SERVICES PROCUREMENT REGULATION. THE CONTRACT COVERS THE MINIMUM QUANTITY OF 57 MENTIONED IN THE INVITATION WITH AN OPTION IN THE GOVERNMENT TO PURCHASE A QUANTITY OF UP TO 50 PERCENT OF THE ORIGINAL ORDER AT THE PRICE STATED IN THE STEWART AND STEVENSON BID ON THE CANCELLED INVITATION.

IN CANCELLING THE INVITATION THE CONTRACTING OFFICER WAS MERELY EXERCISING THE AUTHORITY OF THE SECRETARY OF THE AIR FORCE SET FORTH AT 10 U.S.C. 2305 (C) TO REJECT ALL BIDS IN THE PUBLIC INTEREST. SEE THE DELEGATION OF AUTHORITY AT ARMED SERVICES PROCUREMENT REGULATION 2 404.1 (B) (VIII). A LOW BIDDER DOES NOT ACQUIRE AN ABSOLUTE RIGHT TO AWARD OF PUBLIC BUSINESS; RATHER THE PUBLIC INTEREST IS OF PRIMARY CONSIDERATION IN THE LETTING OF CONTRACTS. 26 COMP. GEN. 49, 50. IT CONSISTENTLY HAS BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT THE OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED. COLORADO PAVING COMPANY V. MURPHY, 78 F. 28 (1897); O-BRIEN V. CARNEY, 6 F.SUPP. 761 (1934); SEE ALSO OUR DECISIONS AT 42 COMP. GEN. 467, 474; 37 ID. 760; 17 ID. 554, 559. THE EXERCISE OF THE ADMINISTRATIVE AUTHORITY TO REJECT ALL BIDS IS NOT ORDINARILY SUBJECT TO REVIEW BY THE COURTS OR OUR OFFICE. HARNEY V. DURKEE, 237 P.2D 561 (1951), 31 ALR 2D 469; CHAMPION COATED PAPER COMPANY V. JOINT COMMITTEE ON PRINTING OF CONGRESS, 47 APP.D.C. 141 (1917); 41 COMP. GEN. 709, 711; 40 ID. 352, 356; 37 ID. 12, 13.

WE DO NOT AGREE WITH YOUR CONTENTION THAT NO GENUINE PUBLIC EXIGENCY WARRANTING CANCELLATION OF THE INVITATION EXISTED IN THIS CASE. STATEMENT OF EXIGENCY IN THE RECORD BEFORE US CERTIFIES THAT THE HEAVY DUTY GENERATOR SETS BEING PROCURED WILL BE INSTALLED IN CRITICAL COMMUNICATIONS, NAVIGATIONAL AID, AND GROUND CONTROLLED APPROACH FACILITIES AT PACIFIC INSTALLATIONS DIRECTLY SUPPORTING THE AMERICAN FORCES OPERATING IN VIET NAM. IT IS ALSO ASSERTED THAT:

"IF THE ON SITE DELIVERY DATE OF 15 SEPTEMBER 1965 IS NOT MET, IT WILL ENDANGER VITAL COMMUNICATIONS AFFECTING THE NATIONAL DEFENSE, ABORT TACTICAL OR STRATEGIC MISSIONS, AND CAUSE POSSIBLE LOSS OF LIFE, DUE TO IMPROPER FUNCTIONING OF NAVIGATIONAL AID AND INSTRUMENT LANDING DEVICES POWERED BY THESE GENERATOR SETS.'

THE FACT THAT A PRE-AWARD SURVEY WAS BEING RUN ON YOUR FACILITIES AT THE TIME BIDS WERE REJECTED AMPLY DEMONSTRATES THAT THE DEPARTMENT WAS ACTING IN GOOD FAITH AND FULLY INTENDED TO MAKE AWARD UNDER THE INVITATION UNTIL DELIVERY WAS ACCELERATED.

THE LAW AUTHORIZES THE ABANDONMENT OF FORMAL ADVERTISING PROCEDURES AT ANY STAGE IN ORDER TO HASTEN THE FULFILLMENT OF THE GOVERNMENT'S REQUIREMENTS BY MEANS OF NEGOTIATION WHEN THE USE OF FORMAL ADVERTISING HAS CEASED TO BE EITHER FEASIBLE OR PRACTICABLE BECAUSE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT THERETO. SEE SECTION 2 (C) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21, AS AMENDED, 10 U.S.C. 2304 (A) (2). THE LEGISLATIVE HISTORY OF THE ACT REVEALS A CONGRESSIONAL PURPOSE TO HAVE THE PROVISION AVAILED OF WHENEVER UNUSUAL URGENCY REQUIRES AN IMMEDIATE PURCHASE IRRESPECTIVE OF WHETHER THAT URGENCY COULD OR SHOULD HAVE BEEN FORESEEN. 2 U.S.C. CONGR. SERVICE, 1948, PAGE 1054. ALTHOUGH ARMED SERVICES PROCUREMENT REGULATION 3-202 LIMITS THE USE OF THE PUBLIC EXIGENCY EXCEPTION TO CASES WHERE THE GOVERNMENT WOULD BE SERIOUSLY INJURED IF THE SUPPLIES OR SERVICES WERE NOT FURNISHED BY A CERTAIN DATE, IT PERMITS ITS USE WHEN THEY COULD NOT BE PROCURED BY THAT DATE BY MEANS OF FORMAL ADVERTISING.

OUR OFFICE HAS HELD THE FACTS SUFFICIENT TO ESTABLISH THE EXISTENCE OF A GENUINE PUBLIC EXIGENCY ON NUMEROUS OCCASIONS. FOR EXAMPLE, IN 38 COMP. GEN. 44, CONCERNING A PROCUREMENT BY THE AIR FORCE OF TRANSISTORIZED AMPLIFIERS, WE UPHELD A DETERMINATION TO ABANDON THE USE OF FORMAL ADVERTISING BECAUSE OF AN UNEXPECTED ACCELERATION IN THE DELIVERY REQUIREMENT AND FOUND NEGOTIATION OF THE REQUIREMENT ON THE GROUND OF PUBLIC EXIGENCY TO BE PROPER WHERE THE EQUIPMENT WAS INDISPENSABLE TO THE PERFORMANCE OF THE OPERATIONAL MISSION OF AIRCRAFT AND WAS INDISPUTABLY NEEDED AT ONCE.

SIMILARLY, AND IN VIEW OF THE CIRCUMSTANCES HERE INVOLVED, WE CANNOT CONCLUDE THAT THE DETERMINATION OF THE CONTRACTING OFFICER THAT THE PUBLIC EXIGENCY DID NOT PERMIT THE ADDITIONAL DELAY REQUIRED FOR THE SOLICITATION OF COMPETITION TO SUPPLY THE EQUIPMENT WAS UNREASONABLE. FAILURE OF THE AGENCY TO REQUEST A PROPOSAL FROM YOU COMPANY WITHIN THE CONTEXT OF THE NEGOTIATED PROCUREMENT CONSTITUTED A VALID EXERCISE OF SOUND BUSINESS DISCRETION CONSISTENT, UNDER THE CIRCUMSTANCES, WITH APPLICABLE STATUTES AND REGULATIONS AND NOT SUBJECT TO REVIEW BY EITHER OUR OFFICE OR THE COURTS. FRIEND V. LEE, 221 F.2D 96, 100 (1955).

FOR THE REASONS STATED ABOVE, YOUR PROTEST AFFORDS NO BASIS FOR QUESTIONING THE AWARD TO STEWART AND STEVENSON SERVICES, INCORPORATED,AND MUST THEREFORE BE DENIED.