B-162400, NOV. 17, 1967

B-162400, NOV. 17, 1967

BIDS - TESTS - WAIVER DECISION TO AQUA-CHEM, INC., DENYING PROTEST AGAINST AWARD OF NEGOTIATED CONTRACT TO P.X. ENGINEERING COMPANY FOR FURNISHING WATER DISTILLATION WRITS TO DEFENSE SUPPLY AGENCY. THE GRANTING OF A PERIOD OF 135 DAYS FOR SUBMISSION OF FIRST ARTICLE TEST REPORT IN LIEU OF 90 DAYS SPECIFIED IN SOLICITATION IS NOT VIEWED AS BEING PREJUDICIAL TO TWO PROTESTING BIDDERS SINCE EVALUATION OF BOTH SUCH BIDS WERE BASED ON WAIVER OF FIRST ARTICLE TEST REPORT REQUIREMENT. SINCE CONTRACTING OFFICER HAS MORE DISCRETION IN NEGOTIATED PROCUREMENTS THAN IN ADVERTISED PROCUREMENTS CONTRACTING OFFICER'S ACTION IN ALLOWING SUCCESSFUL BIDDER PERIOD OF 135 DAYS FOR SUBMISSION OF FIRST ARTICLE WAS NOT IMPROPER.

TO AQUA-CHEM, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF SEPTEMBER 14 AND LETTER DATED SEPTEMBER 15, 1967, WITH ENCLOSURES, PROTESTING THE AWARD OF CONTRACT NO. DSA-700-68-C-8029 TO THE P.X. ENGINEERING COMPANY, INC., ON A NEGOTIATED BASIS UNDER REQUEST FOR PROPOSALS (RFP) NO. DSA 700-67-R-9398, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, DEFENSE SUPPLY AGENCY, COLUMBUS, OHIO.

THIS RFP WAS ISSUED ON JUNE 5, 1967, TO 14 PROSPECTIVE CONTRACTORS FOR 20 WATER DISTILLATION UNITS, INCLUDING, AMONG OTHER ANCILLARY ITEMS, MANUALS RELATING TO THE WATER DISTILLATION UNITS. THE SOLICITATION DOCUMENT CONTAINED A PROVISION FOR SUBMISSION OF PREPRODUCTION SAMPLES WITH A RESERVATION OF THE GOVERNMENT'S RIGHT TO WAIVE THIS REQUIREMENT, AS REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-201 (B) (XIV). IN REGARD TO FIRST ARTICLE APPROVAL, THE SOLICITATION PROVIDED THAT THE TIME FOR SUBMISSION OF THE FIRST ARTICLE TEST REPORT WOULD BE WITHIN 90 DAYS AFTER DATE OF THE AWARD.

THREE PROPOSALS WERE RECEIVED AND EVALUATED BY DEFENSE CONSTRUCTION SUPPLY CENTER TECHNICAL PERSONNEL. THE P.X. ENGINEERING COMPANY, INC., OFFERED A UNIT PRICE OF $14,738 WITH NO CHARGE FOR COMMERCIAL PUBLICATIONS (ITEM 2) OR FOR PROVISIONING (ITEM 3). THE MECHANICAL EQUIPMENT COMPANY, INC., QUOTED A UNIT PRICE OF $15,940 FOR THE WATER DISTILLATION UNITS, A PRICE OF $750 FOR THE MANUALS AND A PRICE OF $500 FOR PROVISIONING, AND THE CORPORATION INDICATED THAT ITS PRICE OF $15,940 WOULD BE REDUCED BY $85 FOR EACH UNIT IF THE FIRST ARTICLE TESTING WERE WAIVED. YOUR FIRM OFFERED A UNIT PRICE OF $15,476 PLUS A CHARGE OF $625 FOR MANUALS (ITEM 2) AND A CHARGE OF $500 FOR PROVISIONING, ITEM 3. YOU INDICATED IN YOUR BID THAT IF THE FURNISHING OF THE PREPRODUCTION SAMPLE WERE WAIVED, THE F.O.B. ORIGIN PRICE WOULD BE REDUCED FROM $15,476 TO $14,685. BY TELEGRAM DATED JULY 12, 1967, THE CONTRACTING OFFICER INITIATED A SECOND ROUND OF NEGOTIATIONS WITH YOUR FIRM AND THE TWO OTHER OFFERORS. YOUR FIRM DID NOT VARY YOUR PRICE. MECHANICAL EQUIPMENT REDUCED ITS PRICE TO $15,040 PER UNIT. P.X. ENGINEERING OFFERED A 2 PERCENT DISCOUNT IF THE CONTRACT WAS AWARDED TO IT ON OR BEFORE JULY 31, 1967, AND IF THE TIME FOR SUBMISSION OF FIRST ARTICLE TEST REPORT WAS EXTENDED TO 135 DAYS.

A PREAWARD SURVEY OF THE PLANT AND FACILITIES OF THE P.X. ENGINEERING WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICE REGION (DCASR), BOSTON, MASSACHUSETTS, AND THAT ACTIVITY BY REPORT DATED JULY 17, 1967, INDICATED THAT THE COMPANY HAD THE REQUIRED TECHNICAL ABILITY, PRODUCTION CAPABILITY, PLANT AND FACILITIES NECESSARY TO PERFORM THE PROPOSED CONTRACT. THE REPORT ALSO INDICATED THAT THE FIRM COULD SUPPLY THE REQUIRED MANUALS WITHIN 2 WEEKS AFTER DATE OF AWARD. HOWEVER, THE REPORT DID INDICATE THAT THE COMPANY COULD NOT COMPLY WITH THE REQUIREMENTS OF THE PROPOSED CONTRACT TO COMPLETE THE FIRST ARTICLE TEST REPORT WITHIN 90 DAYS AFTER DATE OF THE AWARD. THE RECORD INDICATES THAT FURTHER NEGOTIATIONS WITH RESPECT TO THE FURNISHING OF THE FIRST ARTICLE TEST REPORT WERE CONDUCTED WITH P.X. ENGINEERING AND IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE FIRST ARTICLE TEST REPORT COULD BE SUBMITTED BY P.X. ENGINEERING WITHIN 135 DAYS AFTER DATE OF THE AWARD WITHOUT JEOPARDIZING THE REQUIRED DELIVERY DATE OF 239 DAYS AFTER DATE OF THE AWARD.

BY LETTER DATED AUGUST 2, 1967, P.X. ENGINEERING WAIVED THE REQUIREMENT THAT THE AWARD BE MADE TO IT BY JULY 31, 1967, AND IT EXTENDED A 2 PERCENT TRADE DISCOUNT AS PART OF ITS PROPOSAL. THE DISCOUNT HAD THE EFFECT OF REDUCING THE FIRM'S UNIT PRICE FROM $14,738 TO $14,443.24. SINCE YOUR FIRM AND MECHANICAL EQUIPMENT HAD BOTH PREVIOUSLY SUPPLIED IDENTICAL UNITS, YOUR PROPOSAL AND THAT OF MECHANICAL EQUIPMENT WERE EVALUATED BASED ON WAIVING THE REQUIREMENTS OF THE FIRST ARTICLE TEST REPORT. ON AUGUST 24, 1967, A CONTRACT FOR FURNISHING THE WATER DISTILLATION UNITS WAS AWARDED TO P.X. ENGINEERING.

IN YOUR LETTER OF SEPTEMBER 15, 1967, THREE REASONS ARE GIVEN AS TO WHY YOU BELIEVE THAT THE AWARD MADE TO P.X. ENGINEERING SHOULD BE CANCELED AND THE CONTRACT AWARDED TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER.

THE FIRST REASON GIVEN BY YOU IS THAT P.X. ENGINEERING DOES NOT HAVE THE REQUIRED DESIGN OR ENGINEERING EXPERIENCE OR CAPABILITY TO MEET THE REQUIRED DELIVERY SCHEDULES. THE RECORD INDICATES THAT A PREAWARD SURVEY WAS CONDUCTED OF THE PLANT AND FACILITIES OF P.X. ENGINEERING AND THAT SUCH SURVEY INDICATED THAT THE FIRM HAD THE REQUIRED TECHNICAL ABILITY, PRODUCTION CAPABILITY, PLANT AND FACILITIES NECESSARY TO PERFORM THE PROPOSED CONTRACT. THE RECORD SHOWS THAT THE CONTRACTING OFFICER DETERMINED THAT P.X. ENGINEERING MET THE RESPONSIBILITY REQUIREMENTS OF PARAGRAPH 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND THAT SUCH DETERMINATION WAS BASED UPON A PREAWARD SURVEY CONDUCTED BY DCASR, BOSTON.

THIS OFFICE, AS WELL AS THE COURTS, HAS CONSISTENTLY HELD THAT THE QUESTION AS TO A BIDDER'S RESPONSIBILITY IS PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER. SEE 33 COMP. GEN. 549; 38 ID. 131; NIKLAUS V. MILLER, 66 N.W. 2D 824; KNISKA V. SPLAIN, 110 N.Y. S. 2D 267; BROWN V. PHOENIX, 272 P. 2D 358; MCNICHOLS V. DENVER, 274 P. 2D 317. THE RECORD HERE ESTABLISHES THAT THE NECESSARY DETERMINATION REQUIRED BY REGULATION AS TO THE RESPONSIBILITY OF P.X. ENGINEERING WAS MADE BY THE CONTRACTING OFFICER AND, IN THE ABSENCE OF EVIDENCE OF CAPRICIOUS OR ARBITRARY ACTION, WE ARE REQUIRED TO ACCEPT THE ADMINISTRATIVE DETERMINATION THAT SUCH FIRM WAS CAPABLE OF PERFORMING THE RESULTING CONTRACT.

THE SECOND GROUND FOR YOUR PROTEST IS THAT P.X. ENGINEERING CANNOT FURNISH THE REQUIRED MANUALS WITHIN THE REQUIRED TIME. IN THIS CONNECTION, THE PREAWARD SURVEY INDICATES THAT P.X. ENGINEERING POSSESSED THE CAPABILITY TO FURNISH THE REQUIRED MANUALS WITHIN 2 WEEKS.

THE THIRD BASIS FOR YOUR PROTEST IS THAT P.X. ENGINEERING WAS GIVEN A MORE LENIENT SCHEDULE FOR THE SUBMISSION OF THE FIRST ARTICLE TEST REPORT, THAT IS, THE CORPORATION WAS GRANTED AN EXTENSION FOR DELIVERY OF THE TEST REPORT FROM 90 DAYS TO 135 DAYS. YOU STATE THAT NO OTHER BIDDERS THAT SUBMITTED A BID IN RESPONSE TO THE SUBJECT SOLICITATION WERE ADVISED OF THIS REVISION TO THE SPECIFICATION REQUIREMENTS PRIOR TO CLOSING DATE FOR RECEIPT OF PROPOSALS OR PRIOR TO DATE OF AWARD; THAT BY GRANTING THIS MORE LENIENT DELIVERY SCHEDULE EXCLUSIVELY TO P.X. ENGINEERING THE CONTRACTING OFFICER, IN EFFECT, REDUCED THE NUMBER OF BIDDERS REQUESTED TO QUOTE TO SUCH REVISED SPECIFICATIONS TO ONLY ONE, AND THAT SUCH UNILATERAL DISCRIMINATORY PRACTICE IN GIVING THESE ADVANTAGEOUS TERMS TO ONE BIDDER, P.X. ENGINEERING, ENABLED THAT ONE BIDDER TO SUPPLY A PURPORTEDLY LOW BID. YOU CONTEND THAT HAD THE SAME RELAXED TERMS AS TO SUBMISSION OF FIRST ARTICLE TEST REPORT BEEN GIVEN TO YOUR FIRM YOU WOULD HAVE SUBMITTED A LOWER PRICE THAN THE PRICE AT WHICH AN AWARD WAS MADE TO P.X. ENGINEERING.

WE ARE OF THE OPINION THAT THE GRANTING OF A PERIOD OF 135 DAYS FOR SUBMISSION OF FIRST ARTICLE TEST REPORT BY P.X. ENGINEERING IN LIEUOF 90 DAYS SPECIFIED BY THE SOLICITATION CANNOT BE VIEWED AS BEING PREJUDICIAL TO YOUR FIRM AND THE ONLY OTHER UNSUCCESSFUL BIDDER, MECHANICAL EQUIPMENT, SINCE THE EVALUATIONS OF BOTH YOUR BIDS WERE BASED ON THE WAIVER OF THE FIRST ARTICLE TEST REPORT REQUIREMENT. SINCE YOUR FIRM WAS ENTITLED TO A WAIVER OF THE FIRST ARTICLE TEST REPORT REQUIREMENT BECAUSE OF YOUR HAVING PREVIOUSLY FURNISHED THE IDENTICAL ITEM AND SINCE THE RECORD INDICATES THAT YOUR FIRM OFFERED A LOWER PRICE IF THE FIRST ARTICLE TESTING WAS WAIVED, IT IS NOT APPARENT HOW YOU WOULD HAVE GAINED A COMPETITIVE ADVANTAGE IF THE TIME FOR SUBMISSION OF THE FIRST ARTICLE TEST REPORT WAS CHANGED FOR THE BENEFIT OF ALL BIDDERS FROM 90 DAYS TO 135 DAYS. FURTHERMORE, SINCE A CONTRACTING OFFICER HAS MORE DISCRETION IN NEGOTIATED PROCUREMENTS THAN IN ADVERTISED PROCUREMENTS, WE BELIEVE THAT THE CONTRACT IN OFFICER'S ACTION IN ALLOWING P.X. ENGINEERING A PERIOD OF 135 DAYS FOR SUBMISSION OF THE FIRST ARTICLE TEST REPORT WAS NOT IMPROPER, PARTICULARLY IN VIEW OF THE FACT THE RECORD INDICATES THAT SUCH EXTENSION OF TIME DID NOT JEOPARDIZE THE DATE SPECIFIED FOR DELIVERY OF THE PRODUCTION UNITS.

FOR THE REASONS OUTLINED ABOVE, WE CAN PERCEIVE NO LEGAL JUSTIFICATION FOR DISTURBING THE AWARD TO P.X. ENGINEERING COMPANY, INC. ..END :