B-161213, JUN. 26, 1967

B-161213, JUN. 26, 1967

TO WILCOX ELECTRIC CO., INC.:

REFERENCE IS MADE TO YOUR TELEGRAM DATED APRIL 6, 1967, PROTESTING AGAINST ANY ACTION BY THE DEPARTMENT OF THE AIR FORCE TO INCREASE THE CONTRACT PRICE UNDER MULTI-YEAR CONTRACT NO. AF 34/601/-24082 FOR AN/GRT- 18 UHF TRANSMITTERS AWARDED BY THE OKLAHOMA CITY AIR MATERIEL AREA, TINKER AIR FORCE BASE, TO GRANGER ASSOCIATES, PALO ALTO,CALIFORNIA, ON SEPTEMBER 23, 1965.

IT IS REPORTED THAT THE INSTANT CONTRACT WAS AWARDED TO GRANGER ASSOCIATES AS THE LOW BIDDER IN THE SECOND STEP OF A TWO-STEP ADVERTISED PROCUREMENT. TWO ACCEPTABLE TECHNICAL PROPOSALS WERE RECEIVED; ONE FROM WILCOX ELECTRIC AND THE OTHER FROM GRANGER ASSOCIATES. THE UNIT PRICES BID BY THE TWO FIRMS ON A MULTI-YEAR BASIS WERE $1,089.40 BY GRANGER ASSOCIATES AND $1,348.55 BY WILCOX ELECTRIC. YOU SAY THAT "UNDER THE GUISE OF A CHANGE IN SCOPE" IT IS YOUR UNDERSTANDING THAT THE AIR FORCE IS PREPARED TO PAY APPROXIMATELY $1,700 PER UNIT FOR THIS EQUIPMENT.

BY LETTER DATED MAY 25, 1967, THE DEPARTMENT OF THE AIR FORCE HAS REPORTED TO US IN PART AS FOLLOWS:

"4. PURSUANT TO ADVICE OF TECHNICAL PERSONNEL, THE CONTRACTING OFFICER DID INITIATE CERTAIN CHANGES IN SPECIFICATIONS. THESE CHANGES, HOWEVER, WERE LOGICAL EXTENSIONS OF THE BASIC DESIGN TO PROVIDE IMPROVEMENTS IN THE MAINTENANCE, SAFETY, AND OPERATIONAL FLEXIBILITY OF THE PRODUCT. MOREOVER, MANY OF THESE CHANGES WERE NECESSARY TO OBTAIN A SATISFACTORY, USABLE END ITEM AND WOULD, THEREFORE, HAVE BEEN REQUIRED REGARDLESS OF WHICH CONTRACTOR RECEIVED THE AWARD. THUS, IT IS QUITE CLEAR THAT ALL CHANGES HAVE BEEN WITHIN THE SCOPE OF THE CONTRACT.

"5. THE FINAL CHANGES REQUIRED FOR THE PRODUCTION UNITS HAVE NOT YET BEEN DETERMINED, AND NO AMOUNT HAS BEEN EITHER TENTATIVELY OR FINALLY AGREED UPON AS CONSIDERATION FOR THE CHANGES IN SPECIFICATIONS. MOREOVER, THE CONTRACTING OFFICER HAS STATED THAT MANY OF THESE CHANGES PROBABLY WILL BE ACCOMPLISHED WITHOUT ANY CHANGE IN PRICE.'

FROM THE DOCUMENTATION FURNISHED WITH THE REPORT IT APPEARS THAT THE CONTRACTING OFFICER'S CONCLUSIONS THAT THE QUESTIONED CHANGES IN THE SPECIFICATIONS ARE NECESSARY OR DESIRABLE IN THE GOVERNMENT'S INTEREST, AND THAT SUCH CHANGES FALL WITHIN THE SCOPE OF THE CONTRACT, ARE BASED UPON THE ADVICE OF QUALIFIED AND COMPETENT TECHNICAL PERSONNEL. UNDER SUCH CIRCUMSTANCES, AND SINCE THE DETERMINATIONS DO NOT APPEAR TO HAVE BEEN ARBITRARY OR CAPRICIOUS, OR WITHOUT SUBSTANTIAL BASIS IN FACT, WE WILL NOT ATTEMPT TO SUBSTITUTE OUR JUDGMENT FOR THAT OF THE PROCURING ACTIVITY. 17 COMP. GEN. 554; 19 ID. 587; 35 ID. 174. IN ANY EVENT, OUR READING OF THE RECORD CONSIDERED AS NECESSARY EXTENSIONS AND DESIRABLE IMPROVEMENTS OF THE BASIC DESIGN, NOT IN CONTEMPLATION AT THE TIME OF CONTRACTING BUT NOT BEYOND THE SCOPE OF THE WORK FOR WHICH THE CONTRACT WAS ORIGINALLY MADE, AND WE WOULD BE INCLINED TO REACH THE SAME CONCLUSION AS THE PROCURING ACTIVITY.

PART XXV (10) OF THE CONTRACT INCORPORATES BY REFERENCE STANDARD FORM 32 (JUNE 1964); GENERAL PROVISIONS (SUPPLY CONTRACT), CLAUSE 2 OF WHICH IS THE STANDARD "CHANGES" CLAUSE. THIS CLAUSE RESERVES TO THE CONTRACTING OFFICER THE RIGHT TO MAKE CHANGES IN THE SPECIFICATIONS AS LONG AS SUCH CHANGES ARE WITHIN THE GENERAL SCOPE OF THE CONTRACT, AND IT GRANTS TO THE CONTRACTOR THE RIGHT TO AN EQUITABLE ADJUSTMENT IN PRICE IF SUCH CHANGE CAUSES AN INCREASE IN COST OF PERFORMANCE.

SINCE WE FIND NOTHING ILLEGAL OR IMPROPER IN THE ACTION HERETOFORE TAKEN BY THE DEPARTMENT OF THE AIR FORCE IN THIS INSTANCE, AND THERE IS NO SUGGESTION OR INDICATION THAT CHANGES TO BE MADE IN THE SPECIFICATIONS FOR THE PRODUCTION QUANTITY WILL GO BEYOND THE CHANGES HERETOFORE DIRECTED IN THE PROTOTYPES, WE FIND NO BASIS IN THE PRESENT RECORD FOR ANY ACTION BY OUR OFFICE IN THE MATTER.