B-160385, MAR. 6, 1967

B-160385, MAR. 6, 1967

TO VICTORY ELECTRONICS AND RESEARCH CORPORATION:

WE REFER TO YOUR LETTERS OF NOVEMBER 7, 1966, DECEMBER 1, 1966, AND JANUARY 12, 1967, PROTESTING THE ACTION OF THE DEPARTMENT OF THE NAVY IN CANCELLING REQUESTS FOR PROPOSALS NOO419-67-B-0043 AND NOO419-67-B 0044.

THE REFERENCED REQUESTS WERE ISSUED BY THE U.S. NAVAL ORDNANCE STATION, FOREST PARK, ILLINOIS, ON SEPTEMBER 14 AND 15, 1966, RESPECTIVELY, AND SOUGHT TO PROCURE SERVICES, FACILITIES AND MATERIAL REQUIRED TO REMOVE SILVER FROM VARYING AMOUNTS OF GOVERNMENT-OWNED SCRAP SILVER BATTERY CELLS. OFFERORS WERE REQUIRED TO PROPOSE A TREATMENT CHARGE PER NET AVOIRDUPOIS POUND OF GOVERNMENT-FURNISHED SCRAP BATTERIES. THE PROPOSALS WERE TO HAVE BEEN EVALUATED ON THE BASIS OF THE LOWEST TREATMENT CHARGE PER POUND.

YOUR PROTEST IS MADE PRIMARILY ON THE GROUND THAT THE CANCELLATIONS ARE GROSSLY UNJUSTIFIED AND WERE MADE WITHOUT A REASONABLE FOUNDATION. SINCE REQUIREMENTS FOR THE RECLAIMED SILVER STILL EXIST IT IS REQUESTED THAT THE CANCELLATIONS BE ABROGATED AND THAT THE BUYING ACTIVITY BE DIRECTED TO REINSTATE THE PROCUREMENTS.

THE DEPARTMENT OF THE NAVY REPORTED TO THIS OFFICE THAT THE PROCUREMENT WAS ORIGINALLY PROPOSED TO BE NEGOTIATED PURSUANT TO THE EXCEPTION TO THE FORMAL ADVERTISING REQUIREMENT PROVIDED IN 10 U.S.C. 2304 (A) (2), WHICH AUTHORIZES NEGOTIATION WHEN "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.' THE REPORT FURTHER STATES THAT SUBSEQUENT CHANGE IN CIRCUMSTANCES DECREASED THE URGENCY OF THE NAVY'S NEED FOR THE RECLAIMED SILVER, AND FOR THIS AND OTHER REASONS MENTIONED BELOW IT WAS DECIDED TO CANCEL THE SUBJECT PROCUREMENT, AS WELL AS OTHER LATER SOLICITATIONS.

WE ARE ADVISED THAT THE NAVY INTENDS TO RESOLICIT UNDER FORMAL ADVERTISING PROCEDURES, IF CIRCUMSTANCES PERMIT, FOR THE RECLAMATION OF SILVER AT SOME FUTURE DATE, WHICH CANNOT BE DETERMINED AT THIS TIME. IS FURTHER STATED BY THE NAVY THAT ITS DETERMINATION TO CANCEL RESULTED FROM SEVERAL ADDITIONAL CONSIDERATIONS POINTING TO THE NEED FOR A COMPREHENSIVE STUDY TO DETERMINE THE MOST FEASIBLE AND ECONOMICAL METHOD OF CONTRACTING FOR SILVER RECLAMATION. IN THIS REGARD THE NAVY REPORTS AS FOLLOWS:

"* * * THE DECISION TO REDETERMINE THE METHOD OF CONTRACTING WAS BASED ON SEVERAL CONSIDERATIONS, I.E. RECONSIDERATION OF THE METHOD OF PAYMENT, THE NEED FOR SEGREGATION OF MATERIAL INTO HOMOGENEOUS LOTS AND THE SELECTION OF GENERAL PROVISIONS AND AN EVALUATION PROCEDURE WHICH WOULD GUARANTEE THE BEST RETURN TO THE GOVERNMENT.

"SEGREGATION INTO HOMOGENEOUS LOTS WILL FACILITATE BIDDING AND EXPEDITE BID EVALUATIONS, AND MAY WELL RESULT IN CONTRACTS MORE FAVORABLE TO THE GOVERNMENT.'

THE APPLICABLE PROCUREMENT STATUTE, 10 U.S.C. 2304, REQUIRES THE USE OF FORMAL ADVERTISING FOR THE PROCUREMENT OF PROPERTY AND SERVICES, WITH CERTAIN EXCEPTIONS IN WHICH NEGOTIATION MAY BE EMPLOYED, INCLUDING CASES IN WHICH THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. IN IMPLEMENTATION OF THE STATUTE THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-102.1 (A) REQUIRES PROCUREMENT BY FORMAL ADVERTISING WHENEVER FEASIBLE AND PRACTICABLE EVEN THOUGH THE CONDITIONS AND CIRCUMSTANCES MIGHT OTHERWISE JUSTIFY NEGOTIATION. IN 39 COMP. GEN. 94, A CASE IN WHICH THE PUBLIC EXIGENCY EXCEPTION WAS ERRONEOUSLY EMPLOYED, THIS OFFICE STATED THAT WE COULD INTERPOSE NO VALID OBJECTION TO A SUBSEQUENT DECISION TO CANCEL THE SOLICITATIONS AND FORMALLY ADVERTISE. IN THE PRESENT CASE, EVEN IF IT IS ASSUMED THAT THE PUBLIC EXIGENCY EXCEPTION WAS PROPERLY INVOKED, THE NAVY'S PRESENT POSITION IS THAT ITS NEED FOR THE RECLAIMED SILVER HAS CHANGED. UNDER THE CIRCUMSTANCES THERE IS NO LONGER A PUBLIC EXIGENCY AND THE PROPRIETY OF THE DECISION TO CANCEL THE PROCUREMENT AND DISCONTINUE NEGOTIATIONS CANNOT BE QUESTIONED.

CONCERNING THE NAVY'S FAILURE TO RESOLICIT BIDS OR PROPOSALS FOR THE RECLAMATION OF SILVER AT THIS TIME, THE ABOVE QUOTED PORTION OF NAVY'S REPORT INDICATES THE EXISTENCE OF REASONS WHICH APPEAR TO JUSTIFY THE THOROUGH STUDY OF THE PROCUREMENTS REPORTEDLY BEING CONDUCTED BY THE NAVY. SINCE WE HAVE CONCLUDED THAT NAVY WAS JUSTIFIED IN CANCELLING THE ORIGINAL NEGOTIATED PROCUREMENTS WE FIND NO REASON FOR OBJECTING TO THE RESTUDY WHICH HAS BEEN DETERMINED BY THE NAVY TO BE IN THE GOVERNMENT'S BEST INTEREST. WE CANNOT AGREE WITH YOUR OBJECTION THAT CHANGES IN THE MANNER OF PAYMENT CANNOT BE CONSIDERED IN RETROSPECT WHERE THE REQUIREMENTS STILL EXIST, SINCE THE GOVERNMENT'S NEEDS AND THE TIME AND METHOD AND TERMS FOR SUPPLYING THEM ARE FOR DETERMINATION BY THE ADMINISTRATIVE AGENCY CONCERNED.

IN YOUR LETTER OF JANUARY 12 YOU QUESTION THE PRUDENCE OF SEPARATING THE BATTERIES INTO HOMOGENEOUS LOTS AND YOU ESTIMATE THAT GREATER EXPENDITURES WILL BE MADE THAN REVENUES RECOVERED BY THIS EFFORT. THIS IS, AS INDICATED ABOVE, A MATTER FOR CONSIDERATION BY THE NAVY IN THE FIRST INSTANCE, AND WE DO NOT FEEL THAT WE COULD PROPERLY UNDERTAKE TO DICTATE THEIR CONCLUSIONS. IN THE EVENT YOU DISAGREE WITH THE PROPRIETY OF THE TERMS OR METHOD OF SOLICITATION WHICH ARE FINALLY ADOPTED BY THE NAVY, YOU MAY THEN STATE YOUR OBJECTIONS TO THIS OFFICE AND REQUEST OUR REVIEW.

YOUR LETTER OF NOVEMBER 7, 1966, OFFERS THE FOLLOWING ADDITIONAL OBJECTIONS:

"EQUALLY IMPORTANT, CANCELLATION OF SOLICITATIONS AFTER OFFERS HAVE BEEN EXPOSED AND WHILE REQUIREMENTS STILL EXISTS, IS IN DIRECT CONFLICT WITH D.O.D. POLICY, AND IN THIS CASE EXTREMELY PREJUDICIAL TO A SMALL BUSINESS CONCERN.'

THIS OFFICE IS UNAWARE OF ANY FACTS WHICH INDICATE THAT THE PROPOSAL OF ANY OFFEROR IN THE CANCELED PROCUREMENTS HAS BEEN REVEALED TO UNAUTHORIZED PERSONNEL, AND IN VIEW OF THE PROVISION IN ASPR 3-507.2 (A), PROHIBITING THE DISCLOSURE OF INFORMATION CONTAINED IN PROPOSALS, WE MUST ASSUME THAT THE REGULATION WAS FULLY COMPLIED WITH, THERE BEING NO EVIDENCE TO THE CONTRARY. EVEN IF PRICE QUOTATIONS HAD BEEN EXPOSED, IT SEEMS UNLIKELY THAT SUCH EXPOSURE WOULD BE MATERIALLY PREJUDICIAL, IF THE PROCUREMENT IS TO BE MADE ON ENTIRELY DIFFERENT TERMS AND CONDITIONS AND AT A SUBSTANTIALLY LATER TIME.