B-160514, MAR. 30, 1967

B-160514, MAR. 30, 1967

TO AIR-A-PLANE CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 6, 1966, ENCLOSING A COPY OF YOUR TELEGRAM OF THE SAME DATE TO THE DEPARTMENT OF THE AIR FORCE, DIRECTORATE, PROCUREMENT AND PRODUCTION, SAN ANTONIO AIR MATERIAL AREA, KELLY AIR FORCE BASE, TEXAS, RELATIVE TO INVITATION FOR BIDS NO. F41608-67 -B-0427, ISSUED SEPTEMBER 12, 1966, COVERING A PROPOSED PROCUREMENT OF 23 UNITS OF TYPE A/M 32C-5 AIR CONDITIONERS FOR VARIOUS FIRST-LINE AIRCRAFT.

THE TELEGRAM SETS FORTH THAT YOU WOULD NOT PROTEST THE REJECTION OF YOUR "B" BID UNDER INVITATION NO. F41608-67-B-0427 BUT THAT, FOR REASONS STATED IN YOUR LETTER DATED NOVEMBER 4, 1966, TO THE PROCUREMENT OFFICE, YOU ARE IN TOTAL DISAGREEMENT WITH THE CONTRACTING OFFICER'S DECISION AND WOULD FILE A PROTEST WITH OUR OFFICE AGAINST THE ISSUANCE OF FUTURE INVITATIONS FOR BIDS IN THE SAME GENERAL FORMAT OF INVITATION NO. F41608-67-B-0427. IT WAS INDICATED AS YOUR OPINION THAT THE REFERENCED INVITATION FOR BIDS "IS ALIGNED WITH SOLE SOURCE PROCUREMENT AND IS THEREFORE CONTRARY TO THE DICTATES OF THE ASPR.'

THE REQUIRED AIR CONDITIONERS IN THIS CASE ARE TO BE IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-A-26624A (USAF), AS AMENDED, WITH KECO DRAWING DL 31500 AND DETAILED LISTINGS, AND WITH CERTAIN ORDNANCE AND AIR FORCE DRAWINGS. THE MILITARY SPECIFICATION REQUIRES PRE PRODUCTION (FIRST ARTICLE) TESTING TO ASSURE THAT A CONTRACTOR CAN FURNISH A PRODUCT THAT IS SATISFACTORY FOR ITS INTENDED USE, AND THE ENGINEERING CLEARANCE PERTAINING TO THE AIR CONDITIONERS PROVIDED FOR THE WAIVER OF PRE- PRODUCTION TESTING ON THE BASIS OF:

A. AWARD TO A FIRM CURRENTLY IN PRODUCTION OF THE SAME ARTICLES ON AN AIR FORCE CONTRACT WHO HAS RECEIVED FIRST ARTICLE APPROVAL UNDER THE CONTRACT PRESENTLY BEING PRODUCED; OR

B. FIRMS PREVIOUSLY GIVEN FIRST ARTICLE APPROVAL UNDER A COMPLETED CONTRACT WHO PROPOSE TO PRODUCE THE SAME ARTICLES, PROVIDED THAT NOT MORE THAN 12 MONTHS HAVE ELAPSED SINCE COMPLETION OF THE CONTRACT.

IN ACCORDANCE WITH THE FIRST ARTICLE APPROVAL REQUIREMENTS OF THE MILITARY SPECIFICATION, THE WAIVER CONDITIONS OF THE ENGINEERING CLEARANCE AND SECTIONS 1-1902 AND 1-1903 OF PART 19, ARMED SERVICES PROCUREMENT REGULATION (ASPR), INVITATION FOR BIDS NO. F41608-67-B-0427 CONTAINED PROVISIONS FOR PRE-PRODUCTION (FIRST ARTICLE) APPROVAL AND PERMITTED THE SUBMISSION OF BIDS ON THE BASIS OF FIRST ARTICLE APPROVAL REQUIRED (BID "A"), OR ON THE BASIS OF FIRST ARTICLE APPROVAL NOT REQUIRED (BID "B"). IT WAS PROVIDED IN EFFECT THAT THE FIRST ARTICLE APPROVAL, CONTRACTOR TESTING AND REPORTING REQUIREMENTS OF PARTS IV AND V OF SCHEDULE SECTION I WOULD BE APPLICABLE TO BIDDERS NOT MEETING EITHER ONE OF THE FOREGOING CONDITIONS FOR WAIVER OF SUCH REQUIREMENTS AND THAT THEY SHOULD SUBMIT ONLY "A" BIDS; BUT THAT BIDDERS WHO COULD MEET ONE OR BOTH OF THE SPECIFIED CONDITIONS FOR WAIVER OF FIRST ARTICLE APPROVAL WERE ELIGIBLE TO SUBMIT "B" BIDS.

THE BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE TO BE OPENED ON OCTOBER 13, 1966, AND THE INVITATION CONTAINED A NOTICE THAT THE PROPOSED PROCUREMENT OF THE 23 AIR CONDITIONERS HAD BEEN SET ASIDE FOR SMALL BUSINESS CONCERNS. TWENTY-SIX SOURCES WERE SOLICITED AND TWO BIDS WERE RECEIVED. THESE BIDS WERE SUBMITTED BY YOUR COMPANY AND KECO INDUSTRIES, INCORPORATED, CINCINNATI, OHIO. THAT COMPANY SUBMITTED A "B" BID UNDER WHICH A UNIT PRICE OF $17,000 WAS QUOTED. IT WAS INDICATED IN THE BID THAT KECO INDUSTRIES, INCORPORATED, HAD RECEIVED FIRST ARTICLE APPROVAL FOR PRODUCTION OF THE SAME TYPE OF EQUIPMENT UNDER AIR FORCE CONTRACT NO. AF 41/608/35335. YOU SUBMITTED AN "A" BID AND A "B" BID, QUOTING UNIT PRICES IN THE RESPECTIVE AMOUNTS OF $17,950 AND $16,500. AT PAGE 11 OF SCHEDULE SECTION I YOU INDICATED THAT YOU DID NOT QUALIFY UNDER THE TERMS OF THE INVITATION FOR WAIVER OF THE FIRST ARTICLE APPROVAL REQUIREMENTS. HOWEVER, IN A TELEGRAM REDUCING YOUR ORIGINAL BID PRICES PRIOR TO THE SCHEDULED TIME FOR OPENING OF BIDS, YOU STATED THAT "WE HAVE NOT PRODUCED THIS EXACT ITEM BEFORE, BUT HAVE PRODUCED MANY SIMILAR ITEMS.'

THE CONTRACTING OFFICER DETERMINED THAT YOU WERE NOT QUALIFIED AS A "B" BIDDER AND ASCERTAINED THAT THE CONTRACT CITED BY KECO INDUSTRIES, INCORPORATED, WAS ENTERED INTO ON JUNE 9, 1965, AND COMPLETED IN FEBRUARY 1966, OR LESS THAN 12 MONTHS BEFORE THE SCHEDULED BID OPENING DATE. SINCE THAT COMPANY'S "B" BID WAS LOWER THAN YOUR "A" BID, THE CONTRACT WAS AWARDED TO KECO INDUSTRIES, INCORPORATED, ON DECEMBER 14, 1966. YOUR PRIOR PROTEST AGAINST AN AWARD OTHER THAN TO YOUR COMPANY WAS REJECTED BY LETTER DATED NOVEMBER 30, 1966, IN WHICH YOU WERE ADVISED THAT THE AWARD WOULD BE MADE OTHER THAN TO YOUR COMPANY UNLESS WRITTEN NOTIFICATION OF PROTEST TO HIGHER AUTHORITY WAS RECEIVED BY DECEMBER 7, 1966.

YOUR LETTER OF NOVEMBER 4, 1966, WHICH IS REFERRED TO IN YOUR TELEGRAM OF DECEMBER 6, 1966, INCLUDES THE FOLLOWING STATEMENTS IN SUPPORT OF YOUR CONTENTION AT SUCH TIME THAT YOUR "B" BID SHOULD BE ACCEPTED:

"1. AIR-A-PLANE CORPORATION SUBMITTED THE LOW UNIT AND TOTAL PRICE ON BID ITEM 1A AND ALSO THE LOW UNIT AND TOTAL PRICE ON BID ITEM 1B.

"2. AIR-A-PLANE CORPORATION STANDS ON ITS RIGHTS TO BID ITEM 1B AND HAVE ITS BID ON THAT ITEM ACCEPTED ON THE BASIS THAT FIRST ARTICLE APPROVAL MAY BE WAIVED SINCE SIMILAR SUPPLIES WERE PREVIOUSLY ACCEPTED FROM AIR-A-PLANE CORPORATION BY THE GOVERNMENT AND SINCE AIR-A-PLANE CORPORATION IS CONSTANTLY, EVERY DAY AND DAY AFTER DAY, IN THIS PARTICULAR FIELD OF PRODUCTION AND IS TOTALLY COMPETENT IN THAT FIELD. (REFERENCE: ASPR 1 FEBRUARY 1966 REVISION. 15, PAGE 198. 156)

"3. ANY REJECTION OF AIR-A-PLANE CORPORATION'S BID ON ITEM 1B MAKES THE I.F.B. A SOLE SOURCE REQUEST FOR PROPOSAL SINCE NOBODY BUT THE OTHER BIDDER COULD POSSIBLY BID THE ITEM.

"4. THE ACCEPTANCE OF A TOTALLY QUALIFIED BID FROM A COMPETENT SUPPLIER RETAINS COMPETITION FOR THE BENEFIT OF THE GOVERNMENT AND THE PROCUREMENT SYSTEM.

"5. THE ACCEPTANCE OF AIR-A-PLANE CORPORATION'S LOW BID GAINS FOR THE GOVERNMENT A QUALIFIED SUPPLIER AS A SECOND SOURCE FOR AN IMPORTANT PIECE OF MILITARY EQUIPMENT.

"6. THE ACCEPTANCE OF AIR-A-PLANE CORPORATION'S PROPOSAL GIVES THE GOVERNMENT THE BENEFIT OF THE ADVANCING STATE OF THE ART OF MOBILE AIR CONDITIONING SINCE AIR-A-PLANE CORPORATION IS ONE OF THE OUTSTANDING LEADERS OF THAT FIELD.

"7. THE ACCEPTANCE OF AIR-A-PLANE CORPORATION'S BID SAVES THE GOVERNMENT $11,500.00, AND WITH THE SEVEN HUNDRED SEVENTY-THREE (773) COMPLETELY DETAILED PLANS AND SPECIFICATIONS PROVIDED WITH THE I.F.B., MAINTAINS STANDARDIZATION OF EQUIPMENT.

"8. THE AWARD OF THE CONTRACT TO AIR-A-PLANE CORPORATION RETAINS THIS PROJECT ON AIR FORCE ADMINISTRATIVE LEVEL.'

IN REGARD TO YOUR POINTS NOS. 1 AND 2, IT IS APPARENT THAT YOU COULD NOT HAVE QUALIFIED AS A B" BIDDER UNDER INVITATION FOR BIDS NO. F41608-67-B- 0427. YOU CLEARLY INDICATED IN YOUR BID THAT YOU COULD NOT MEET EITHER ONE OF THE TWO SPECIFIED CONDITIONS FOR WAIVER OF THE FIRST ARTICLE APPROVAL REQUIREMENTS, AND THE CONTRACTING OFFICER HAS REPORTED THAT NO EVIDENCE WAS SUBMITTED AFTER BID OPENING TO SHOW THAT THE ITEMS PREVIOUSLY PURCHASED BY THE GOVERNMENT FROM YOUR COMPANY WERE IDENTICAL OR SIMILAR TO THOSE CALLED FOR IN THE INVITATION FOR BIDS. THAT IS A BASIC CONDITION OF THE CITED FEBRUARY 1, 1966, REVISION 15 TO THE ASPR (PART 19-FIRST ARTICLE APPROVAL) FOR WAIVER OF PRE-PRODUCTION (FIRST ARTICLE) APPROVAL REQUIREMENTS IN CASES WHERE THERE IS A DIRECT RELATIONSHIP BETWEEN THE ARTICLES PROPOSED TO BE PURCHASED AND ARTICLES CURRENTLY BEING PRODUCED OR PREVIOUSLY PRODUCED UNDER OTHER CONTRACTS OF THE MILITARY DEPARTMENTS.

THE CONTRACTING OFFICER DOES NOT QUESTION YOUR ABILITY TO PRODUCE AIR CONDITIONERS IN ACCORDANCE WITH THE ADVERTISED SPECIFICATION AND DRAWINGS. HOWEVER, IT APPEARS THAT THE CONTRACTING OFFICER REASONABLY COULD NOT HAVE DETERMINED THAT YOU WERE ELIGIBLE TO SUBMIT A "B" BID.

TO THE EXTENT THAT YOU CONSIDER THE REMAINING POINTS OF THE LETTER DATED NOVEMBER 4, 1966, TO BE A PROPER BASIS FOR YOUR PROTEST AGAINST THE ISSUANCE OF FUTURE INVITATIONS FOR BIDS IN THE SAME GENERAL FORMAT OF INVITATION NO. F41608-67-B-0427, YOU ARE ADVISED THAT OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT PROVISIONS FOR PRE-PRODUCTION TESTS MAY PROPERLY BE INCLUDED IN INVITATIONS FOR BIDS AND CONTRACTS, BASED UPON REASONABLE DETERMINATIONS THAT IT WOULD BE IN THE INTEREST OF THE GOVERNMENT TO REQUIRE SUCH TESTS.

HOWEVER, OUR OFFICE RECOGNIZED THAT, WHERE THE PRODUCT INVOLVED HAS PREVIOUSLY BEEN PRODUCED SATISFACTORILY BY ONE OR MORE FIRMS UNDER CONTRACTS REQUIRING APPROVAL OF PRE-PRODUCTION UNITS, A CONTRACT MAY, IF CERTAIN NECESSARY CONDITIONS ARE MET, BE AWARDED TO SUCH A PREVIOUS SUPPLIER ON THE BASIS THAT PRE-PRODUCTION TESTS WOULD NOT BE REQUIRED. SEE 42 COMP. GEN. 717, WHEREIN THERE WAS APPROVED A PROPOSED AWARD OF A CONTRACT TO A PREVIOUS SUPPLIER WHOSE TOTAL BID PRICE WAS APPROXIMATELY $600 MORE THAN THE TOTAL PRICE OF THE OTHER BIDDER, BUT THE PREVIOUS SUPPLIER HAD INCLUDED IN ITS BID THE SUM OF $1,370 TO COVER THE FURNISHING OF TWO PRE-PRODUCTION UNITS WHICH WOULD NOT BE USABLE AFTER TESTING.

WITH RESPECT TO THE COMPETITIVE ADVANTAGE WHICH A PREVIOUS SUPPLIER WOULD HAVE IN A SITUATION OF THAT NATURE, THE ABOVE DECISION OF OUR OFFICE STATES, IN PERTINENT PART, AS FOLLOWS:

"IN APPROPRIATE CIRCUMSTANCES, THE GOVERNMENT MAY INTRODUCE FACTORS TENDING TO OFFSET OR EQUALIZE TO SOME EXTENT THE COMPETITIVE ADVANTAGES OF PRODUCERS, AS WAS DONE IN THE CASES MENTIONED ABOVE WHERE DIFFERENT DELIVERY TIMES WERE PROVIDED; HOWEVER, AS WAS HELD IN B-140361 OF FEBRUARY 3, 1960, THERE IS NO REQUIREMENT THAT ANY SUCH EQUALIZING FACTORS OR HANDICAPS BE PROVIDED.

"ON THE OTHER HAND, THE DISPARITY BETWEEN PROSPECTIVE BIDDERS SHOULD NOT BE INCREASED BY THE IMPOSITION OF UNNECESSARY REQUIREMENTS SUCH AS PRELIMINARY SAMPLES OR TESTING NOT CLEARLY NECESSARY. WHERE THE SUBJECT OF THE PROCUREMENT IS COVERED BY COMPLETE AND DETAILED TECHNICAL SPECIFICATIONS AND NO CLEAR REASON APPEARS WHY AN EXPERIENCED MANUFACTURER IN THE PARTICULAR FIELD INVOLVED COULD NOT PRODUCE A SATISFACTORY ARTICLE THEREFROM, THE QUESTION OF AWARD WOULD APPEAR TO BE FOR SOLUTION PRIMARILY ON THE BASIS OF THE BIDDERS' OVERALL RESPONSIBILITY. IF, HOWEVER, THE TECHNICAL OR PERFORMANCE REQUIREMENTS ARE SO NOVEL OR EXACTING THAT ACCEPTABILITY OF THE PRODUCT CANNOT REASONABLY BE ANTICIPATED WITHOUT ACTUAL DEMONSTRATION OR TESTING, WE DO NOT FEEL THAT THE STATEMENT IN AN INVITATION FOR BIDS OF A REQUIREMENT THEREFOR, ALTHOUGH NOT EQUALLY APPLICABLE TO ALL BIDDERS, SHOULD BE CONSIDERED TO BE A VIOLATION OF COMPETITIVE BIDDING PRINCIPLES, SO LONG AS THE TERMS OF THE COMPETITION ARE CLEARLY SET FORTH.'

IT IS OUR OPINION THAT INVITATION FOR BIDS NO. F41608-67-B-0427 PROVIDED AN ADEQUATE BASIS FOR COMPETITION DESPITE THE FACT THAT THE PRIOR PRODUCER OF AIR CONDITIONERS MEETING THE REQUIREMENTS OF THE ADVERTISED SPECIFICATION AND DRAWINGS HAD A COMPETITIVE ADVANTAGE OVER ANY COMPANY WHICH COULD NOT QUALIFY FOR THE SUBMISSION OF A "B" BID.

WE DO NOT AGREE WITH YOUR CHARACTERIZATION OF THE TERMS OF THE INVITATION AS BEING "ALIGNED WITH SOLE SOURCE PROCUREMENT.' IN ANY EVENT, THERE DOES NOT APPEAR TO BE ANY SATISFACTORY SUBSTITUTE FOR THE SOLICITATION OF ALTERNATIVE BIDS WHERE, AS HERE, THE PRODUCT INVOLVED IS IDENTICAL OR SIMILAR TO ARTICLES PREVIOUSLY FURNISHED TO THE GOVERNMENT WITHIN A COMPARATIVELY RECENT TIME; OR WHERE A GOVERNMENT CONTRACTOR CURRENTLY IN PRODUCTION OF THE SAME ARTICLES HAS RECEIVED FIRST ARTICLE APPROVAL.

ACCORDINGLY, WE FIND NO BASIS FOR QUESTIONING THE REASONABLENESS OF THE FIRST ARTICLE PROVISIONS OF PART 19 ASPR, OR FOR RECOMMENDING TO THE DEPARTMENT OF THE AIR FORCE THAT THE FORMAT OF INVITATION NO. F41608-67-B- 0427 SHOULD NOT BE USED IN FUTURE INVITATIONS FOR BIDS. YOUR PROTEST TO OUR OFFICE IN THE MATTER IS THEREFORE DENIED.