B-162438, FEB. 15, 1968

B-162438, FEB. 15, 1968

BIDS - TESTS - FIRST ARTICLE WAIVER DECISION TO SECY. OF NAVY RE AWARD TO TURNBULL ENTERPRISES, INC., AT HIGHER PRICE THAN FOR ALTERNATE BID OF LEONARD-MARINE INTERIORS ON BASIS OF FIRST ARTICLE WAIVER. WHERE ADMINISTRATIVE JUSTIFICATION ON WHICH COMP. GEN. DECISION WAS BASED WAS IN ERROR BECAUSE THERE WAS NO SPECIFICATION CHANGE JUSTIFYING DENIAL OF FIRST-ARTICLE TESTING, ADMINISTRATIVE DETERMINATION TO REJECT LOW BIDDER'S ALTERNATE BID REQUESTING FIRST ARTICLE WAIVER WAS NOT PROPER. WHEN UNDER A SIMILAR PROCUREMENT THE GOVT. WAIVED TESTS BECAUSE OF URGENCY, AND THE BIDDER SUBMITS A LOW ALTERNATE BID REQUESTING WAIVER IN ANOTHER PROCUREMENT THERE IS A PRIMA FACIE BASIS FOR WAIVER OF THE FIRST ARTICLE TESTING. SINCE ADMINISTRATIVE REPORT CASTS DOUBT AS TO RESPONSIBILITY OF PROTESTING BIDDER CORRECTIVE ACTION NEED NOT BE TAKEN.

TO MR. SECRETARY:

WE REFER TO THE REQUEST FOR RECONSIDERATION BY LEONARD MARINE INTERIORS OF OUR DECISION, B-162438 OF OCTOBER 18, 1967, WHEREIN WE DENIED LEONARD MARINE'S PROTEST AGAINST ANY AWARD TO A BIDDER OTHER THAN ITSELF ON THE BASIS OF ITS RIGHT TO FIRST ARTICLE WAIVER UNDER INVITATION FOR BIDS NO. N00104-67-B-2533. WE UNDERSTAND THAT AWARD WAS MADE TO TURNBULL ENTERPRISES, INC., IN THE AMOUNT OF $12,088.75 (FIRST ARTICLE REQUIRED) OR HIGHER THAN THE AMOUNT OF THE ALTERNATE BID OF LEONARD MARINE ($11,907.50) SUBMITTED ON THE BASIS OF FIRST ARTICLE WAIVER.

OUR DECISION OF OCTOBER 18, 1967, DENIED LEONARD MARINE'S PROTEST BECAUSE:

"WE HAVE BEEN ADVISED THAT THE MESS TABLES NOW UNDER PROCUREMENT ARE NOT IDENTICAL WITH THE TABLES PREVIOUSLY FURNISHED BUT ARE OF MODIFIED DESIGN FEATURING A NEW SLIDE ARRANGEMENT. FURTHER, THE RESPONSIBLE TECHNICAL PERSONNEL HAVE DETERMINED THIS DESIGN CHANGE IS OF SUFFICIENT IMPORTANCE THAT THE REQUIREMENT FOR FIRST ARTICLE TESTING CANNOT BE WAIVED. UNDER ASPR 1-1902 (2) (I) (B), A REQUIREMENT FOR FIRST ARTICLE APPROVAL TESTS MAY BE CONSIDERED APPROPRIATE WHEN THE PROCUREMENT ITEM HAS BEEN PREVIOUSLY FURNISHED BY THE CONTRACTOR TO THE GOVERNMENT BUT THERE HAVE BEEN SUBSEQUENT CHANGES IN PROCESSES OR SPECIFICATIONS. ACCORDINGLY, WE HAVE APPROVED THE REFUSAL OF A PROCURING AGENCY TO WAIVE FIRST ARTICLE APPROVAL WHERE SPECIFICATIONS HAVE BEEN CHANGED, AND THE TECHNICAL PERSONNEL DETERMINE SUCH FIRST ARTICLE TESTING APPROVAL NECESSARY TO GUARANTEE THAT THE EQUIPMENT PROCURED WILL PERFORM AS REQUIRED BY THE SPECIFICATIONS. B-159593, FEBRUARY 2, 1967, AND B-153175, JUNE 10, 1964.'

LEONARD MARINE HAS CONTENDED STRONGLY THAT THE ABOVE REFERRED-TO DESIGN CHANGE WAS NOT IN FACT MADE, AND THAT IT SHOULD HAVE RECEIVED AN AWARD BASED ON ITS ALTERNATE BID FOR WAIVER OF FIRST ARTICLE TESTING.

BY LETTER OF DECEMBER 21, 1967, FROM THE DEPUTY COMMANDER, PURCHASING, THE FOLLOWING RESPONSE WAS MADE TO THESE CONTENTIONS: "* * * IN THAT LETTER (OCTOBER 20, 1967), THE PROTESTOR CONTENDS OR INFERS THAT THE CONTRACTING OFFICER WOULD MODIFY THE PROCUREMENT SPECIFICATIONS IN SOME MANNER OTHER THAN STATED IN THE SOLICITATION. ADDITIONALLY, THE PROTESTOR AFFIRMS THAT HIS BID WAS SUBMITTED -IN STRICT ACCORDANCE WITH THE ORIGINAL IFB.- WITH RESPECT TO THE FIRST, THE CONTRACTING OFFICER HAS NO INTENT TO MODIFY ANY OF THE PROCUREMENT SPECIFICATIONS. WITH RESPECT TO THE PROTESTOR'S STATEMENT THAT HIS BID WAS SUBMITTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS, NO EXCEPTION CAN BE TAKEN BY THE CONTRACTING OFFICER. HOWEVER, NEITHER OF THESE POINTS ARE IN QUESTION. THE QUESTION WHICH WAS ORIGINALLY RAISED BY LEONARD MARINE INTERIORS WAS WHETHER OR NOT THE GOVERNMENT SHOULD HAVE WAIVED THE REQUIREMENT FOR FIRST ARTICLE/S). IN THIS REGARD, THE BUSHIPS DRAWINGS REFERENCED IN THE SUBJECT PROCUREMENT HAVE AGAIN BEEN REVIEWED. THE STATEMENT MADE BY LEONARD MARINE INTERIORS THAT THE SLIDE ASSEMBLY IS NOT -NEW- IS FACTUALLY CORRECT. THE DESIGN OF THE SLIDE IS COMMON TO ALL SIZES OF CREWS MESS TABLES FABRICATED TO BUSHIPS DRAWING 805-1638930 REV.C, AND THUS, OUR STATEMENT THAT THIS PARTICULAR FEATURE WAS NEW WAS INCORRECT. NONETHELESS, OUR RESPONSIBLE TECHNICAL PERSONNEL HAVE REITERATED THAT FIRST ARTICLE/S) WOULD BE REQUIRED BY LEONARD MARINE INTERIORS AND IS PREDICATED ON THE FACT THAT LEONARD MARINE INTERIORS HAS NEVER SUBJECTED THE SPECIFIC 24 INCH X 42 INCH MESS TABLES TO FIRST ARTICLE/S) TESTING. MOREOVER, THERE ARE NO RECORDS WHICH INDICATE LEONARD MARINE INTERIORS AS EVER HAVING SUBJECTED ANY OF ITS SHIPBOARD CREWS MESS TABLES TO FIRST ARTICLE/S) TESTS. LEONARD MARINE INTERIORS HAS, AS HE STATES, FURNISHED MESS TABLES TO THE NAVY. LEONARD MARINE INTERIORS DID NOT FURNISH THESE MESS TABLES IN STRICT ACCORDANCE WITH THEIR CONTRACTUAL REQUIREMENTS WHICH REQUIRED AN ACCEPTABLE FIRST ARTICLE ITEM AND GOVERNMENT APPROVAL OF PRE PRODUCTION DRAWINGS. WHERE THE CONTRACT SPECIFICATIONS INCLUDED THESE REQUIREMENTS, AND SPECIFICALLY WITH REGARD TO CONTRACT N104-16643A, DATED 28 JUNE 1966, IT WAS NECESSARY FOR THE CONTRACTING OFFICER TO WAIVE SUCH SUBMISSIONS TO EXPEDITE DELIVERY. IN OTHER WORDS, LEONARD MARINE INTERIORS PROPOSED A WAIVER OF THE FIRST ARTICLE/S) TESTING ON THIS SOLICITATION ON THE STRENGTH OF HAVING PERFORMED ON A LIMITED NUMBER OF ORDERS FOR OTHER MESS TABLES, NONE OF WHICH HAD BEEN SUBJECTED TO THE REQUIRED TESTING. SINCE IT WAS DETERMINED THAT FIRST ARTICLE TESTING WOULD NOT BE WAIVED, BIDS WERE EVALUATED ACCORDINGLY AND LEONARD MARINE INTERIORS WAS NOT THE LOW OFFEROR. * * *"

IT IS SIGNIFICANT TO NOTE THAT THE FAILURE TO TEST THE PREVIOUS FIRST ARTICLE UNDER CONTRACT NO. N104-16643A WAS NOT ATTRIBUTABLE TO LEONARD MARINE BUT TO A WAIVER OF TESTING BY THE CONTRACTING OFFICER BECAUSE OF THE URGENCY OF THE PROCUREMENT. NEITHER IS THERE ANY INDICATION THAT THE MESS TABLES FURNISHED UNDER THAT CONTRACT WERE DEFICIENT OR OTHERWISE NOT IN ACCORDANCE WITH SPECIFICATIONS. ESSENTIALLY THEN, LEONARD MARINE HAS BEEN PENALIZED INSOFAR AS THE SUBJECT PROCUREMENT IS CONCERNED BECAUSE THERE HAD BEEN NO FIRST ARTICLE TESTING OF MESS TABLES UNDER THE PREVIOUS CONTRACT WHICH WAS REQUIRED BUT WAIVED FOR THE BENEFIT OF THE GOVERNMENT. WE THEREFORE BELIEVE THAT NO OBJECTIVE EVALUATION WAS MADE OF LEONARD MARINE'S ALTERNATE BID UNDER THE SUBJECT INVITATION FOR WAIVER OF FIRST ARTICLE TESTING. MOREOVER, IT IS CLEAR THAT THE PRIOR ADMINISTRATIVE JUSTIFICATION -- UPON WHICH OUR OCTOBER 18, 1967, DECISION WAS BASED - FOR REFUSING TO GRANT A WAIVER ON THE BASIS OF SPECIFICATION CHANGE WAS IN ERROR AND THEREFORE DID NOT SUPPORT THE DETERMINATION TO DENY WAIVER. HAVE HELD THAT THE ADMINISTRATIVE DECISION WHETHER PREPRODUCTION SAMPLES OR FIRST ARTICLES MAY BE WAIVED AS TO A PARTICULAR BIDDER IS A PROCUREMENT RESPONSIBILITY WHICH WE WILL NOT DISTURB UNLESS THE DETERMINATION REFUSING WAIVER IS SHOWN TO BE ARBITRARY, CAPRICIOUS, OR WITHOUT SUBSTANTIAL BASIS IN FACT. 46 COMP. GEN. 123, 127. WE CANNOT CONCLUDE HERE THAT THE DETERMINATION MADE WITH RESPECT TO LEONARD MARINE'S LOW ALTERNATE BID WHICH REQUESTED FIRST ARTICLE WAIVER MET THE ABOVE CRITERIA OF ADMINISTRATIVE RESPONSIBILITY.

ASPR 1-1902 (A) (I) PROVIDES THAT FIRST ARTICLE APPROVAL TESTS ARE PARTICULARLY APPROPRIATE WHEN:

"/I) THE INTEREST OF THE GOVERNMENT REQUIRES ASSURANCE THAT A PRODUCT IS SATISFACTORY FOR ITS INTENDED USE WHEN THE PRODUCT --

"/B) HAS BEEN PREVIOUSLY FURNISHED BY THE CONTRACTOR TO THE GOVERNMENT BUT THERE HAVE BEEN SUBSEQUENT CHANGES IN PROCESSES OR SPECIFICATIONS * *

ASPR 1-1903 (A) PROVIDES, IN EFFECT, FOR WAIVER BY THE GOVERNMENT OF FIRST ARTICLE APPROVAL ,WHERE SUPPLIES IDENTICAL OR SIMILAR TO THOSE CALLED FOR HAVE BEEN PREVIOUSLY FURNISHED BY THE BIDDER OR OFFEROR AND HAVE BEEN ACCEPTED BY THE GOVERNMENT.'

THE RECORD NOW BEFORE US REASONABLY ESTABLISHES A PRIMA FACIE BASIS FOR WAIVER OF FIRST ARTICLE TESTING IN THE CASE OF LEONARD MARINE'S ALTERNATE BID. GENERALLY, THE INITIAL CONTRACT FOR THE PRODUCTION OF AN ITEM INCLUDES THE COST OF PREPRODUCTION OR FIRST ARTICLES AND THE COST IS BORNE WHOLLY OR IN PART BY THE GOVERNMENT. THERE IS NO LOGICAL REASON FOR THE GOVERNMENT TO BEAR THE SAME COST ON EACH PROCUREMENT OF THE SAME OR SIMILAR ARTICLE. SINCE THE SUBJECT INVITATION SPECIFICALLY PROVIDED FOR WAIVER, A PROPER EVALUATION SHOULD HAVE BEEN MADE OF THE LOWER ALTERNATE BID SUBMITTED BY LEONARD MARINE ON THE BASIS OF FIRST ARTICLE WAIVER.

HOWEVER, SINCE THE REPORT OF DECEMBER 21, 1967, CASTS DOUBT ON THE RESPONSIBILITY OF LEONARD MARINE IN CONNECTION WITH A SIMILAR PROCUREMENT (CONSIDERED BY OUR OFFICE IN B-162665 OF DECEMBER 19, 1967), WE CONCLUDE THAT NO CORRECTIVE ACTION IS REQUIRED AS TO THE AWARD MADE UNDER THE SUBJECT INVITATION. WE RECOMMEND THAT THIS DECISION BE BROUGHT TO THE ATTENTION OF RESPONSIBLE PROCUREMENT OFFICIALS.