B-167768, JAN. 21, 1970

B-167768, JAN. 21, 1970

BID PROTEST--TEST REQUIREMENTS--FACTORS OTHER THAN COST DECISION DENYING PROTEST OF GOULD-NATIONAL BATTERIES, INC. AGAINST NEGOTIATED AWARD TO GILL ELECTRIC, A TELEDYNE CO; FOR FURNISHING LEAD ACID STORAGE BATTERIES TO AVIATION SUPPLY OFFICE. A DETERMINATION NOT TO WAIVE A FIRST ARTICLE TESTING REQUIREMENT FOR A BIDDER BECAUSE THE ARTICLE WAS TO BE MANUFACTURED AT A DIFFERENT PLANT FROM THE PLANT WHERE EQUIPMENT HAD BEEN MANUFACTURED WAS WITHIN THE DISCRETION OF THE CONTRACTING OFFICER AND, IN ABSENCE OF ANY RECORD THAT DETERMINATION WAS ARBITRARY OR NOT BASED ON EVIDENCE IT WILL NOT BE DISTURBED.

TO GOULD-NATIONAL BATTERIES, INC.:

WE REFER TO YOUR TELEGRAM OF AUGUST 21, 1969, AND SUBSEQUENT CORRESPONDENCE PROTESTING AGAINST THE AWARD OF A CONTRACT TO GILL ELECTRIC, A TELEDYNE COMPANY, UNDER INVITATION FOR BIDS NO. N00383-69-B 0918, ISSUED ON FEBRUARY 20, 1969, BY THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT INVITATION REQUESTED BIDS FOR FURNISHING TWO ITEMS OF LEAD ACID STORAGE BATTERIES. ITEM 1 COVERED A REQUIREMENT OF 8,133 BATTERIES OF TYPE MS18045-42 AND ITEM 2 COVERED 2,067 BATTERIES OF TYPE MS18045-41, BOTH IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-B-8565F DATED SEPTEMBER 4, 1968, AND MILITARY STANDARD DRAWING NO. MS18045 (REVISION "R") DATED OCTOBER 1, 1968, AS MODIFIED BY THE TERMS OF THE INVITATION. THE ITEMS ARE TO BE DELIVERED AT VARIOUS LOCATIONS DESIGNATED IN THE INVITATION, AND THE INVITATION CONTAINED A 50 PERCENT OPTION FOR ADDITIONAL QUANTITIES OF BOTH ITEMS.

THE MILITARY SPECIFICATION REFERENCED IN THE INVITATION REQUIRES THAT ARTICLES FURNISHED THEREUNDER BE APPROVED FOR INCLUSION ON A QUALIFIED PRODUCTS LIST (QPL-8565-10). THE ADMINISTRATIVE REPORT INDICATES THAT SINCE ONLY GILL HAD QUALIFICATION APPROVAL AND NO OTHER MANUFACTURER'S BATTERIES WERE UNDERGOING QUALIFICATIONS TESTS, THE CONTRACTING OFFICER DETERMINED TO WAIVE THE QUALIFICATION TESTING REQUIREMENTS OF THE SPECIFICATION AND SUBSTITUTE A FIRST ARTICLE APPROVAL REQUIREMENT. THIS MODIFICATION WAS EFFECTED ON PAGE 15 OF THE INVITATION AS FOLLOWS:

"MODIFICATION TO MILITARY SPECIFICATION MIL-B-8565F:

"PARAGRAPH 4.2 QUALIFICATION TESTING - DELETE IN ITS ENTIRETY AND SUBSTITUTE THE FOLLOWING:

"A. 'FIRST ARTICLE TESTING' - FIRST ARTICLE TESTS ARE THOSE TESTS CONDUCTED ON AN ARTICLE WHICH IS REPRESENTATIVE OF THE PRODUCTION ARTICLES TO BE SUPPLIED UNDER CONTRACT FOR THE PURPOSE OF DETERMINING THAT THE ARTICLES MEET ALL APPLICABLE REQUIREMENTS. THE BATTERIES SHALL BE SUBJECTED TO THE TESTS OF PARAGRAPH 4.7.1 THROUGH 4.7.32 (WITH THE EXCEPTION OF 4.7.27) AND FIRST ARTICLE APPROVAL SHALL DEPEND UPON THE GOVERNMENT TESTING AGENCIES APPROVING THE PROCESS BY WHICH THE BATTERIES WERE PREPARED FOR LONG TERM STORAGE, AS WELL AS THE BATTERIES PASSING ALL REQUIRED TESTS.

"B. THE FIRST ARTICLE TEST SAMPLES SHALL NOT BE SUBMITTED UNTIL THEY HAVE BEEN CAREFULLY EXAMINED BY THE CONTRACTOR TO DETERMINE COMPLETE COMPLIANCE WITH THE APPLICABLE SPECIFICATION REQUIREMENTS OF THE CONTRACT AND UNTIL PRELIMINARY APPROVAL THEREOF HAS BEEN GRANTED BY THE COGNIZANT DCAS.

"C. REPORTS ON CONTRACTORS TESTS SHALL BE PREPARED IN ACCORDANCE WITH MILITARY STANDARD 831.

"D. ONE COPY OF THE TEST REPORT SHALL ACCOMPANY THE FIRST ARTICLE SAMPLES BEING SUBMITTED AND TWO COPIES OF THE REPORT SHALL BE FURNISHED TO THE CONTRACTING OFFICER.

NOTE: THE SAMPLES FURNISHED FOR FIRST ARTICLE TESTING ARE NOT TO BE INCLUDED IN THE CONTRACT QUANTITY.

"PARAGRAPH 4.4.3.2 SAMPLING TESTS:

"A. ALL PRODUCTION SAMPLING TESTS SHALL BE PERFORMED AT NAD, CRANE. THE CONTRACTOR SHALL PERFORM NO PRODUCTION SAMPLING TESTS.

"B. SHIPMENT OF PRODUCTION BATTERIES SHALL NOT BE MADE UNTIL PRODUCTION SAMPLES FOR THE VARIOUS LOTS HAVE BEEN TESTED AND APPROVED IN ACCORDANCE WITH SPECIFICATION REQUIREMENTS. REFER TO PARA 4.4.3.2 OF MIL-B-8565F."

PARAGRAPH 172 OF THE INVITATION RESERVED THE RIGHT TO WAIVE FIRST ARTICLE TESTING REQUIREMENTS FOR THOSE BIDDERS WHO HAD PREVIOUSLY FURNISHED ARTICLES ACCEPTED BY THE GOVERNMENT THAT ARE IDENTICAL OR SIMILAR TO THOSE REQUIRED. ALSO, BIDDERS WERE ADVISED THEREIN TO PREPARE AND SUBMIT TWO BID PRICES FOR THE ARTICLES -- ONE BASED ON COMPLIANCE WITH FIRST ARTICLE TESTING REQUIREMENTS AND THE OTHER BASED ON A WAIVER OF SUCH REQUIREMENT. IN ACCORDANCE WITH PARAGRAPH 1-1906 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), PARAGRAPH 267 OF THE INVITATION CONTAINED THE CLAUSE ENTITLED "FIRST ARTICLE APPROVAL - GOVERNMENT TESTING (AUG. 1965)." THE ESTIMATED COST OF GOVERNMENT TESTING WAS STATED TO BE $2,760 AND PARAGRAPH 171 ADVISED BIDDERS THAT FOR EVALUATION PURPOSES SUCH AMOUNT WOULD BE ADDED TO THE BID PRICE OF ALL BIDDERS FOR WHOM FIRST ARTICLE APPROVAL WAS NOT WAIVED. MIL-B 8565F ALSO IMPOSES CERTAIN TESTING REQUIREMENTS TO DETERMINE THE ACCEPTABLE LIFE OF A BATTERY. OF RELEVANCE TO OUR CONSIDERATION HERE, PARAGRAPH 4.7.13 PROVIDES AS FOLLOWS:

"4.7.13 LIFE. - BATTERIES AND CELLS SHALL BE SUBJECTED TO CYCLES OF DISCHARGE AND CHARGE. EACH CYCLE SHALL CONSIST OF A 1-HOUR DISCHARGE, FOLLOWED BY A REST PERIOD OF 1 0.1 HOUR, FOLLOWED BY A CHARGE, FOLLOWED BY A REST PERIOD OF 4 0.2 HOURS FOR LIGHT DUTY BATTERIES AND CELLS AND 1 0.1 HOUR FOR ALL OTHERS. THE NUMBER OF CYCLES SHALL BE AS LISTED IN TABLE 6 UNLESS OTHERWISE SPECIFIED ON THE PROCUREMENT STANDARD.

TABLE 6 - LIFE TEST CYCLES

DUTY NUMBER OF CYCLES

LIGHT 45

MEDIUM 60

HEAVY 100

FOCUSING ON 60 CYCLES AS THE MINIMUM ACCEPTABLE LIFE FOR THE BATTERIES REQUESTED, THE INVITATION ALSO PERMITTED BIDDERS TO ELECT TO FURNISH ANY NUMBER OF CYCLES UP TO A PRACTICAL LIMITATION OF 120 CYCLES AND TO PREPARE THEIR BID PRICES ON THE BASIS OF THE NUMBER OF CYCLES SELECTED. EQUALIZE COMPETITION AMONG BIDDERS OFFERING BATTERIES WITH DIFFERENT CYCLES, EVALUATION WAS TO BE BASED ON THE LOWEST "PRICE PER CYCLE OFFERED." IN THE EVENT THAT BIDS REFLECTED AN IDENTICAL PRICE PER CYCLE, THE TIE WOULD BE BROKEN IN FAVOR OF THE BIDDER OFFERING THE GREATER NUMBER OF CYCLES.

TESTS ARE TO BE CONDUCTED TO DETERMINE WHETHER THE BATTERIES PROVIDE THE NUMBER OF CYCLES OFFERED AND, IN ACCORDANCE WITH A PRICE ADJUSTMENT FORMULA, THE PRICE WILL BE ADJUSTED EITHER UPWARD OR DOWNWARD BASED UPON THE EXTENT TO WHICH A SUCCESSFUL CONTRACTOR EXCEEDS OR FAILS TO FURNISH BATTERIES FEATURING THE NUMBER OF CYCLES SELECTED BY IT.

THE FOREGOING IS EXPRESSED IN THE INVITATION, IN PERTINENT PART, AS FOLLOWS:

"LIFE CYCLE - EVALUATION OF BIDS AND CONTRACT PRICE ADJUSTMENT

"A. THE MINIMUM ACCEPTABLE LIFE OF THE MEDIUM DUTY BATTERYSPECIFIED IN PARAGRAPH 4.7.13 OF SPECIFICATION MIL-B-8565F IS 60 CYCLES. HOWEVER, IT IS RECOGNIZED THAT THE ULTIMATE COST TO THE GOVERNMENT OF A BATTERY WHICH HAS THE CAPABILITY FOR A GREATER NUMBER OF CYCLES THAN ANOTHER MAY BE LOWER EVEN THOUGH OFFERED AT A HIGHER INITIAL PRICE. FURTHERMORE, THE GOVERNMENT RECEIVES AN ADDED BENEFIT IN THE RECEIPT OF BATTERIES WITH A CAPABILITY FOR A GREATER NUMBER OF CYCLES IN THAT THE COSTS ARE REDUCED BY VIRTUE OF FEWER REMOVALS AND REPLACEMENTS OF BATTERIES. ACCORDINGLY, THIS SOLICITATION (1) PROVIDES FOR BID EVALUATION ON THE BASIS OF 'PRICE PER CYCLE,' (2) ENCOURAGES THE OFFER OF BATTERIES WITH THE GREATEST NUMBER OF CYCLES THAT BIDDERS BELIEVE THEY CAN REASONABLY AND CONSISTENTLY PRODUCE, AND (3) ENCOURAGES THE PRODUCTION OF BATTERIES WITH A CAPABILITY FOR A GREATER NUMBER OF CYCLES THAN OFFERED. WHILE PREMIUM PAYMENTS ARE PROVIDED FOR THE PRODUCTION OF BATTERIES WITH A CYCLE CAPABILITY IN EXCESS OF THAT OFFERED, PROVISION IS ALSO MADE FOR PAYMENT ONLY FOR 'CYCLES RECEIVED' WITH DOWNWARD PRICE ADJUSTMENT FOR DELIVERY OF BATTERIES WITH LESS THAN THE CYCLE CAPABILITY OFFERED.

"B. EVALUATION OF BIDS. AWARD WILL BE MADE TO THE BIDDER WHOSE BID PRICE AND CYCLES OFFERED, AS EVALUATED, RESULT IN THE LOWEST 'BID PRICE PER CYCLE.' THE EVALUATED BID PRICE PER CYCLE WILL BE DETERMINED BY DIVIDING THE UNIT PRICE BID FOR A BATTERY BY THE NUMBER OF CYCLES OFFERED BY THE BIDDER FOR SUCH BATTERY. FOR EXAMPLE, WHERE A BIDDER BIDS A PRICE OF $40 PER BATTERY AND OFFERS THE DELIVERY OF AN '80-CYCLE' BATTERY, THE EVALUATED BID PRICE PER CYCLE SHALL BE ?50. AN '80-CYCLE' BATTERY IS A BATTERY THAT WILL SUCCESSFULLY CHARGE AND DISCHARGE 80 TIMES (EACH CHARGE AND DISCHARGE IS CONSIDERED ONE CYCLE). IN THE EVENT THERE ARE TWO OR MORE BIDS WHICH, AFTER EVALUATION, REFLECT AN IDENTICAL PRICE PER CYCLE, THE TIE BIDS WILL BE BROKEN IN FAVOR OF THE BIDDER OFFERING THE GREATER NUMBER OF CYCLES.

"WHERE THE UNIT BID PRICES SUBMITTED FOR ALL BATTERIES UNDER AN ITEM (E.G; BECAUSE OF A DIFFERENCE IN PRICE THAT MAY BE SUBMITTED FOR ARTICLES TO BE DELIVERED TO THE DIFFERENT DESTINATIONS SPECIFIED IN THE SUB-ITEMS) ARE NOT IDENTICAL, THE 'UNIT PRICE BID' FOR THE BATTERY REQUIRED BY SUCH ITEM SHALL, FOR THE PURPOSES SET FORTH IN THIS CLAUSE, BE DETERMINED BY DIVIDING THE TOTAL BID PRICE FOR ALL BATTERIES OF THE ITEM (THE TOTAL OF ALL BATTERIES SET FORTH IN EACH SUB ITEM) BY THE TOTAL NUMBER OF BATTERIES REQUIRED BY SUCH ITEM.

"C. CYCLES OFFERED. BIDDERS ARE REQUESTED TO INSERT IN THE SPACE PROVIDED BELOW THE NUMBER OF CYCLES OFFERED (HEREINAFTER SOMETIMES REFERRED TO AS CO):

NUMBER OF CYCLES OFFERED:

NOTE: FAILURE TO INSERT AN OFFERED NUMBER OF CYCLES ABOVE OR IN ANY OTHER PLACE IN THE BID, OR ATTACHMENT THERETO, SHALL BE DEEMED TO CONSTITUTE AN OFFER OF A BATTERY MEETING THE MINIMUM NUMBER OF ACCEPTABLE CYCLES (60 CYCLES) AS SPECIFIED IN MIL-B-8565F. THE MAXIMUM NUMBER OF CYCLES THAT WILL BE CONSIDERED IN THE EVALUATION OF BIDS HEREUNDER AND IN DETERMINING THE AMOUNT OF PRICE INCREASE THAT THE CONTRACTOR MAY BE ENTITLED TO BY VIRTUE OF ITS HAVING EXCEEDED THE NUMBER OF CYCLES OFFERED IS 120 CYCLES.

"D. LIFE CYCLE TESTS. TO DETERMINE WHETHER THE CONTRACTOR HAS PRODUCED A BATTERY MEETING THE OFFERED NUMBER OF CYCLES AND TO DETERMINE THE EXTENT OF PRICE ADJUSTMENT REQUIRED IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH F HEREOF, THE GOVERNMENT WILL PERFORM A LIFE CYCLE TEST ON ONE BATTERY OUT OF EACH PRODUCTION LOT IN ACCORDANCE WITH THE REQUIREMENTS OF PAR. 4.7.13 OF MIL-B-8565F. THE BATTERY TESTED HEREUNDER WILL BE IN ADDITION TO THE BATTERY TESTED IN ACCORDANCE WITH MIL-B-8565F TO DETERMINE ACCEPTABILITY OF A LOT. HOWEVER, FAILURE OF ANY BATTERY TESTED FOR PURPOSES OF THIS LIFE CYCLE CLAUSE TO MEET THE MINIMUM LIFE CYCLE REQUIREMENTS OF THE SPECIFICATION WILL BE CAUSE FOR REJECTION OF THE LOT NOTWITHSTANDING THAT THE OTHER BATTERY TESTED DOES MEET SUCH REQUIREMENTS. THE LIFE CYCLE TESTS WILL BE CONDUCTED ON A BATTERY FOR EACH LOT PRODUCED UNDER THIS CONTRACT TO DETERMINE THE CONTRACT PRICE ADJUSTMENT REQUIRED TO BE MADE AND THE ACCEPTABILITY OF THE LOT AND SHALL CONSIST OF A SERIES OF CHARGE AND DISCHARGES (CYCLES) OF THE BATTERY IN ACCORDANCE WITH MIL-B-8565F. THE NUMBER OF CYCLES WILL BE CONTINUED UNTIL 60 CYCLES HAVE BEEN ACHIEVED FOR THE BATTERY OF THE LOT BEING TESTED FOR LOT ACCEPTANCE, AND THE REMAINDER OF TESTS REQUIRED FOR LOT ACCEPTANCE UNDER MIL-B 8565F CONDUCTED. THE NUMBER OF CYCLES FOR THE OTHER BATTERY OF THE LOT WILL BE CONTINUED UNTIL FAILURE, TO DETERMINE THE CONTRACT PRICE ADJUSTMENT REQUIRED. THE CYCLES ACHIEVED SHALL BE THE TOTAL NUMBER OF CYCLES CONDUCTED UP TO BUT NOT INCLUDING FAILURE. FAILURE SHALL CONSIST OF THREE CONSECUTIVE CYCLES WHERE THE VOLTAGE FALLS BELOW THAT OF THE MINIMUM POTENTIAL (18 VOLTS) DURING DISCHARGE FOR NOMINAL 24 VOLT BATTERIES (TABLE 2 OF MIL-B-8565F).

"E. DETERMINATION OF CYCLES ACHIEVED. IF IT IS DETERMINED ON THE BASIS OF THE TEST DESCRIBED ABOVE THAT THE BATTERIES DELIVERED WILL NOT ACHIEVE THE NUMBER OF CYCLES OFFERED BY THE CONTRACTOR, THE TOTAL CONTRACT PRICE WILL BE ADJUSTED DOWNWARD PURSUANT TO THE PROVISIONS OF PARAGRAPH F(1) HEREOF BY MODIFICATION TO THIS CONTRACT. IF IT IS DETERMINED ON THE BASIS OF THE TEST DESCRIBED ABOVE THAT THE BATTERIES DELIVERED WILL EXCEED THE NUMBER OF CYCLES OFFERED BY THE CONTRACTOR, THE TOTAL CONTRACT PRICE WILL BE ADJUSTED UPWARDS PURSUANT TO THE PROVISIONS OF PARAGRAPH F(2) HEREOF BY MODIFICATION TO THIS CONTRACT. THE ACTUAL NUMBER OF CYCLES ACHIEVED BY THE BATTERY TESTED FOR THIS PURPOSE FROM EACH LOT WILL BE CONSIDERED THE NUMBER OF CYCLES ACHIEVED FOR ALL THE BATTERIES OF THAT LOT.

"F. CONTRACT PRICE ADJUSTMENT. THE TOTAL AMOUNT OF DOWNWARD OR UPWARD PRICE ADJUSTMENT REQUIRED HEREUNDER WILL BE DETERMINED IN THE FOLLOWING MANNER: (FORMULA FOLLOWS)"

OF THE 26 POTENTIAL SUPPLIERS SOLICITED, THREE BIDS WERE RECEIVED AND RECORDED ON THE MAY 22, 1969, BID OPENING DATE. THE CONTRACTING OFFICER'S ADMINISTRATIVE REPORT RELATES THE PROCESS USED IN EVALUATING THE BIDS SUBMITTED BY GOULD AND GILL AS FOLLOWS:

GOULD

"ITEM 1

TOTAL BID WITH FIRST ARTICLE - $752,397.27

GOVERNMENT'S COST FOR FIRST ARTICLE TEST - 1,380.00

$753,777.27

8133 BATTERIES X 100 CYCLES 813,300 CYCLES

$753,777.27 DIVIDED BY 813,300 CYCLES ?926 PER CYCLE

ITEM 2

TOTAL BID WITH FIRST ARTICLE - $171,503.08

GOVERNMENT'S COST FOR FIRST ARTICLE TEST - 1,380.00 $172,883.08

2067 BATTERIES X 100 CYCLES 206,700 CYCLES

$172,883.08 DIVIDED BY 206,700 CYCLES ?836 PER CYCLE"

GILL

"ITEM 1

TOTAL BID WITHOUT FIRST ARTICLE - $456,179.97

LESS DISCOUNT FOR PROMPT PAYMENT - 1% 30 DAYS 4,561.80

$451,618.17 8133 BATTERIES X 60 CYCLES 487,980 CYCLES

$451,618.17 DIVIDED BY 487,980 CYCLES ?925 PER CYCLE

ITEM 2

TOTAL BID WITHOUT FIRST ARTICLE $105,251.64

LESS DISCOUNT FOR PROMPT PAYMENT - 1% 30 DAYS 1,052.52

$104,199.12

2067 BATTERIES X 60 CYCLES 124,020 CYCLES

$104,199.12 DIVIDED BY 124,020 CYCLES ?840 PER CYCLE"

ALTHOUGH THE GOULD BID WAS LOW FOR ITEM 2, A QUALIFICATION IN A LETTER DATED MAY 19, 1969, TRANSMITTING ITS BID, PRECLUDED AN AWARD TO IT FOR ITEM 2 ALONE. THUS, TO DETERMINE THE LOWEST OVERALL PRICE FOR BOTH ITEMS, THE CONTRACTING OFFICER'S REPORT STATES THAT THE FOLLOWING COMPUTATION WAS MADE:

GOULD

"ITEM 1 - $753,777.27 FOR 813,300 CYCLES

" 2 - $172,883.08 " 206,700 "

$926,660.35 DIV. BY 1,020,000 " ?90849 PER CYCLE

GILL

"ITEM 1 - $451,618.17 FOR 487,980 CYCLES

" 2 - $104,199.12 " 124,020 "

$555,817.29 DIV. BY 612,000 " ?90819 PER CYCLE

ACCORDINGLY, GILL WAS DETERMINED TO BE THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER AND AWARD WAS MADE TO THAT FIRM ON AUGUST 20, 1969. HOWEVER, WE HAVE BEEN INFORMALLY ADVISED THAT A DECISION WAS MADE NOT TO EXERCISE THE 50-PERCENT OPTION FOR ADDITIONAL QUANTITIES BECAUSE OF THE CLOSE PRICING INVOLVED.

THE FIRST CONTENTION RAISED IN YOUR CORRESPONDENCE IS THAT THE CONTRACTING OFFICER'S DECISION NOT TO WAIVE FIRST ARTICLE TESTING REQUIREMENTS FOR YOUR FIRM WAS IMPROPER. THE BASES FOR YOUR REQUEST FOR A WAIVER OF THE TESTING REQUIREMENTS WERE STATED IN YOUR BID TRANSMITTAL LETTER OF MAY 19, 1969, IN PART, AS FOLLOWS:

"* * * THE BIDDER HAS SUPPLIED OR WILL SUPPLY THE GOVERNMENT WITH ARTICLES SIMILAR TO THOSE REQUIRED HEREIN EXCEPT FOR LIFE REQUIREMENTS AS FOLLOWS:

"TYPE MS-18045-42

"CONTRACT NO. DATE

N00019-67C-0561 JUNE 1967

N00383-69C-1380 OCTOBER 1968

N00383-69C-3482 MARCH 1969

TYPE MS-18045-41

N00383-67M-9435 JANUARY 1967

N00383-68M-F576 MAY 1968

"IT IS EXPECTED THAT BATTERIES OF REVISED DESIGN COMPLYING WITH THE LIFE PERFORMANCE REQUIREMENTS HEREIN WILL BE PRODUCED AND OFFERED FOR INSPECTION AT A NEW LOCATION WITH CERTAIN IMPROVED TOOLING, FACILITIES, ADDITIONAL SPACE AND QUALITY CONTROL. THE NEW LOCATION WOULD BE AT THE MANUFACTURER'S PLANT AT MONROE, MICHIGAN."

THE DECISION AS TO WHETHER FIRST ARTICLE TESTING REQUIREMENTS SHOULD BE WAIVED IS PRIMARILY FOR ADMINISTRATIVE RESOLUTION AND OUR OFFICE WILL NOT DISTURB THE CONTRACTING OFFICER'S EXERCISE OF DISCRETION UNLESS IT IS SHOWN TO BE ARBITRARY, CAPRICIOUS, OR WITHOUT A SUBSTANTIAL FACTUAL BASIS, AND WE CANNOT SAY THAT THE RECORD BEFORE US PRESENTS A BASIS FOR DISTURBING THE CONTRACTING OFFICER'S DETERMINATION. THE CONTRACTING OFFICER REFUSED TO WAIVE FIRST ARTICLE TESTING REQUIREMENTS PRIMARILY SINCE, AS STATED IN HIS LETTER OF AUGUST 20, 1969, TO YOUR FIRM:

"* * * YOUR BID STATES THAT THE BATTERIES YOU PROPOSE TO FURNISH, IF AWARDED THE CONTRACT PURSUANT TO THIS INVITATION, WOULD BE PRODUCED UTILIZING CERTAIN IMPROVED TOOLING AND WOULD BE MANUFACTURED AT A LOCATION DIFFERENT FROM WHERE THE PREVIOUS SIMILAR BATTERIES WERE MANUFACTURED * *

THERE HAS BEEN SOME DISPUTE AS TO WHETHER THE MONROE, MICHIGAN,PLANT IS A "NEW LOCATION," AS IT WAS DENOMINATED IN YOUR LETTER. IN THIS CONNECTION, THE CONTRACTING OFFICER'S INITIAL REPORT ADVISED US THAT THE "PLANT (AT MONROE, MICHIGAN) * * * IS OTHER THAN THE PLANT AT WHICH ITS BATTERIES HAD BEEN MANUFACTURED IN THE PAST (AT ST. PAUL, MINNESOTA)." YOU HAVE MAINTAINED THAT AIRCRAFT BATTERIES WERE PRODUCED AT THE MONROE, MICHIGAN, FACILITY FROM 1952 THROUGH 1967. THE CONTRACTING OFFICER'S SUPPLEMENTAL ADMINISTRATIVE REPORT ACKNOWLEDGES THAT ANY IMPLICATION THAT BATTERIES WERE NEVER MANUFACTURED AT THE MONROE, MICHIGAN, PLANT IS INCORRECT AND ADMITS THAT THE REFERENCE TO THE ST. PAUL, MINNESOTA, PLANT IS IN ERROR. WE ARE ADVISED THAT THE INITIAL ADVICE RESULTED FROM A MISREADING OF A TECHNICAL REPORT FROM THE TESTING FACILITY. IT IS ALSO POINTED OUT THAT THE LAST TWO CONTRACTS AWARDED TO YOUR FIRM WERE PERFORMED AT YOUR ZANESVILLE, OHIO, PLANT.

ASSUMING THAT THE IMPOSITION OF TESTING REQUIREMENT WAS PROPER HERE (AND THIS IS NOT DISPUTED), A CONSIDERATION OF THE CIRCUMSTANCES OCCURRING AT A PROSPECTIVE CONTRACTOR'S PROPOSED PLACE OF MANUFACTURE AFTER THE TIME THAT IT LAST PRODUCED AND FURNISHED UNDER CONTRACT AN ITEM SIMILAR OR IDENTICAL TO THE ITEM TO BE PROCURED IS CERTAINLY RELEVANT IN DETERMINING WHETHER WAIVER OF FIRST ARTICLE SHOULD BE GRANTED. HERE, THE CONTRACTING OFFICER PLACES DECISIVE EMPHASIS ON THE MODIFICATION TO THE FACILITIES AND THE ADDITION OF IMPROVED TOOLING, WHICH HE ADVISES LED HIM TO THE CONCLUSION THAT YOUR FIRM WAS, IN EFFECT, A NEW SUPPLIER. YOU SUGGEST THAT PLANT MODERNIZATION REFLECTED IN THE ALLEGEDLY NEW AND IMPROVED TOOLING SHOULD REDUCE THE RISK TO THE GOVERNMENT. WE CANNOT AGREE. THE CONTRACTING OFFICER IN THE EXERCISE OF HIS DISCRETION MAY PROPERLY TEST THE VALIDITY OF THIS OBSERVATION BY DECLINING TO WAIVE FIRST ARTICLE APPROVAL, ESPECIALLY SINCE THE PURPOSE OF FIRST ARTICLE TESTING IS TO MINIMIZE THE RISK THAT THE PRODUCT WILL NOT FULLY CONFORM TO THE GOVERNMENT'S ADVERTISED THE SERVICE LIFE OF THE BATTERY IS MADE AN EVALUATION FACTOR, THERE SPECIFICATIONS. MOREOVER, THERE IS, IN OUR VIEW, ANOTHER SIGNIFICANT FACTOR WHICH THE CONTRACTING OFFICER ONLY ADVERTED TO IN HIS REPORT WHEN HE NOTED THAT YOUR FIRM WAS NOT ON THE QPL, THAT IS, WHERE THE SERVICE LIFE OF THE BATTERY IS MADE AN EVALUATION FACTOR, THERE WOULD SEEM TO BE EVEN MORE REASON TO DECLINE TO WAIVE A FIRST ARTICLE APPROVAL REQUIREMENT WHEN THE BIDDER HAS NOT FURNISHED AN ITEM WITH THE PROPOSED SERVICE LIFE. CF. B-163829, MAY 21, 1968.

YOU NEXT CONTEND THAT THE PRICE PER CYCLE EVALUATION FACTOR FAILS TO COMPLETELY REFLECT THE SAVINGS THAT MAY BE ACHIEVED BY AN AWARD TO A BIDDER OFFERING 100-CYCLE BATTERIES AS OPPOSED TO A BIDDER OFFERING60 CYCLES. AT THIS POINT, IT SHOULD BE EMPHASIZED THAT YOU HAVE NOT QUESTIONED THE VALIDITY OF THE PRICE PER CYCLE EVALUATION FACTOR. IN THIS CONNECTION, WE REQUESTED THE ADVICE OF THE PROCURING ACTIVITY AS TO THE VALIDITY OF THE FACTOR AND RECEIVED THE FOLLOWING REPLY FROM THE CONTRACTING OFFICER:

"* * * COGNIZANT TECHNICAL PERSONNEL HAVE ADVISED THAT THEY CONSIDER THERE IS A DIRECT CORRELATION BETWEEN THE CYCLES OFFERED AND USEFUL LIFE OF A BATTERY. THE FOLLOWING TECHNICAL ANALYSIS OF THE EXTENT OF CORRELATION FOLLOWS:

"'THE LEAD ACID STORAGE BATTERY HAS INHERENT IN ITS DESIGN AND OPERATION GROUPINGS OF FLAT PLATES ARRANGED TO ALTERNATELY FACE EACH OTHER AND THUS PROVIDE LARGE SURFACES PROVIDING THE CHEMICAL REACTIONS WHICH PRODUCE THE ELECTRICAL CURRENTS. THE PRODUCTION OF THESE ELECTRICAL CURRENTS OF NECESSITY ARE ACCOMPANIED WITH CHEMICAL EXCHANGES BETWEEN THE ADJACENT PLATES. ALL THE CHEMICAL CHANGES UTILIZE THE ACIDIC LIQUID BETWEEN THEM AS THE CARRIER FOR THOSE CHEMICAL CHANGES. A DISCHARGE OF THE BATTERY MAKES A CHEMICAL CHANGE IN THESE PLATES IN ONE DIRECTION UNTIL THIS CHANGE CAN NO LONGER OCCUR AND THUS ELECTRICAL POWER IS NO LONGER AVAILABLE FROM THE BATTERY. THE BATTERY IS THEN SAID TO BE DISCHARGED. THIS IS NOT THE END OF THE LIFE OF THE BATTERY. APPROPRIATE ELECTRICAL CURRENTS INTRODUCED IN THE REVERSE DIRECTION FORCE A REVERSAL OF THE PREVIOUS CHEMICAL REACTIONS AND RESTORE THE ADJACENT PLATES TO THEIR APPROXIMATE ORIGINAL CONDITION. THIS PROCESS, WHEN COMPLETED, RECHARGES THE BATTERY TO ITS ABILITY TO PRODUCE ELECTRICAL POWER AGAIN.

"'EACH TIME A BATTERY IS DISCHARGED, SOME OF THE CHEMICALLY ACTIVE MATERIAL OF EACH PLATE IS LOST PERMANENTLY EITHER CHEMICALLY OR PHYSICALLY. THESE LOSSES ARE ALSO TRUE EACH TIME THE BATTERY IS RECHARGED. THE CHEMICAL LOSSES DUE TO DISCHARGING AND CHARGING ACTIVITIES ARE WELL DOCUMENTED IN THE TECHNICAL LITERATURE. THE MECHANICAL LOSSES ARE THE DISLODGING OF SMALL PARTICLES OF ACTIVE PLATE MATERIALS FROM THE PLATE HOLDING THIS MATERIAL AND DROPPING TO THE BOTTOM OF THE BATTERY. SUCH LOSS OF ACTIVE PLATE MATERIAL REDUCES THE CAPACITY OF THE BATTERY TO BE CHARGED AND SUBSEQUENT LOSS OF CAPACITY IN PRODUCING ELECTRIC CURRENTS. THE ABOVE PROCESS OF BATTERY DETERIORATION IS A CONTINUOUS ONE AND CUMULATIVE WITH EACH CHARGE DISCHARGE CYCLE. THE DESIGN AND CARE EXERCISED IN THE BATTERY'S MANUFACTURE BASICALLY DETERMINE THE RATE OF THIS CUMULATIVE DETERIORATION, AND THUS IN TURN THE TOTAL END USE UTILITY OF A BATTERY. THE NUMBER OF TIMES A BATTERY CAN SURVIVE A COMPLETE CYCLE OF DISCHARGE AND CHARGE HAS BEEN THE ENGINEERING MEASURE OF FIELD LIFE OF A STORAGE BATTERY FOR AT LEAST 50 YEARS. THIS HAS BEEN NORMAL PRACTICE IN THE AUTOMOTIVE AS WELL AS THE AIRCRAFT INDUSTRIES. THERE HAS BEEN NO OTHER ACCEPTED METHOD AVAILABLE TO MEASURE LIFE OF THESE BATTERIES. ACTUAL AIRCRAFT USE OF A BATTERY REQUIRES THAT THE BATTERY GO THROUGH ALTERNATE ELECTRICAL DISCHARGE AND CHARGE ACTIONS. WHEN THE USE DEVELOPS MORE DISCHARGE TOTAL THAN CHARGE TOTALS, THE BATTERY SOON HAS TO BE RECHARGED TO REMAIN USEFUL. THIS CONTINUES UNTIL A RECHARGE DOES NOT BRING THE BATTERY BACK TO ITS ACCEPTABLE CAPACITY LEVELS. THUS, FIELD USE CORRELATES CLOSELY TO THE DISCHARGE-CHARGE TEST UNDER MIL-B-8565 WHICH ESTABLISHES THE NUMBER OF CYCLES THE BATTERY WILL BE CAPABLE OF. WHEN A BATTERY CAN NO LONGER ACCEPT A RECHARGE IN THE FIELD IT IS, IN THE GREATER MAJORITY OF CASES, FOR THE SAME PHYSICAL AND CHEMICAL REASONS THAT THAT SAME BATTERY REACHES THE END OF ITS LIFE DURING THE DISCHARGE-CHARGE CYCLE TEST UNDER THE SPECIFICATION. THUS IT CAN BE ANTICIPATED THAT A 100 CYCLE BATTERY WILL GENERALLY LAST TWICE AS LONG IN FIELD OPERATION THAN A 50 CYCLE BATTERY. THIS OPINION IS SUPPORTED BY STRONG ENGINEERING EVIDENCE OVER MANY YEARS, AND IS THE PRESENT ACCEPTED PREMISE FOR THE ENTIRE INDUSTRY TODAY.'"

OUR OFFICE HAS RECOGNIZED THAT IT IS IN THE GOVERNMENT'S INTEREST TO CONSIDER FACTORS RELATING TO THE TOTAL COST OF AN ITEM DURING ITS LIFE, AS OPPOSED TO A CONSIDERATION OF ACQUISITION COST ONLY AND, IN ABSENCE OF EVIDENCE INDICATING THAT THE PRICE PER CYCLE EVALUATION FACTOR IS NOT MEANINGFUL, WE WOULD INTERPOSE NO OBJECTION ON THE GROUND THAT THE FORMULA IS AN IMPROPER EXPRESSION OF THE GOVERNMENT'S MINIMUM NEEDS. NOR MAY WE CONCLUDE ON THE PRESENT RECORD THAT THE FORMULA PLACES AN UNWARRANTED RESTRICTION ON COMPETITION. HOWEVER, AS WE NOTED IN B-151177, JUNE 17, 1963, THE PRIMARY OBSTACLE TO THE USE OF SUCH FACTORS AS EVALUATION CRITERIA IS THAT THEY MUST BE SET FORTH WITH THE PRECISION AND ACCURACY REQUIRED BY THE FORMAL ADVERTISING PROCEDURES. HERE, THERE APPEARS TO BE NO BASIS FOR CONCLUDING THAT THE PRICE PER CYCLE EVALUATION FACTOR IS NOT STATED "WITH SUFFICIENT CLARITY AND EXACTNESS TO INFORM EACH BIDDER PRIOR TO BID OPENING * * * OF OBJECTIVELY DETERMINABLE FACTORS FROM WHICH THE BIDDER MAY ESTIMATE WITHIN REASONABLE LIMITS THE EFFECT OF THE APPLICATION OF SUCH EVALUATION FACTOR ON HIS BID IN RELATION TO OTHER POSSIBLE BIDS." 36 COMP. GEN. 380, 385 (1956). AS YOU RECOGNIZE, THE PRICE PER CYCLE FORMULA DOES NOT TAKE INTO CONSIDERATION SUCH SAVINGS AS MAY RESULT FROM LOWER MAINTENANCE COSTS, LESS FREQUENT REMOVAL AND LOWER REPLACEMENT COSTS OF HIGHER-LIFE CYCLE BATTERIES. THESE ADDITIONAL FACTORS WERE NOT RECOGNIZED IN THE INVITATION BECAUSE THE SAVINGS, IF ANY, COULD NOT BE ASCERTAINED. THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT ADVISES THAT CONSIDERATION WILL BE GIVEN TO INCLUDING SUCH ADDITIONAL EVALUATION FACTORS IN FUTURE PROCUREMENTS. WE AGREE THAT IT WOULD BE IN THE GOVERNMENT'S INTEREST TO CONSIDER THESE ELEMENTS; HOWEVER, UNLESS THE SAVINGS REPRESENTED BY THESE FACTORS CAN BE QUANTIFIED WITH REASONABLE CERTAINTY, THEIR USE FOR EVALUATION PURPOSES WOULD NOT BE PERMISSIBLE. MOREOVER, FOR EXAMPLE, WHERE THE DIFFERENCE IN CYCLES OFFERED IS MINIMAL, WE DO NOT BELIEVE THAT ANY USEFUL PURPOSE WOULD BE SERVED BY APPLYING ANY FRACTION OR PERCENTAGE OF THE SAVINGS WHICH MIGHT RESULT FROM THE USE OF A 100-CYCLE BATTERY AS OPPOSED TO A 50-CYCLE BATTERY IN THE EVALUATION PROCESS.

THE PRESENT INABILITY OF THE PROCURING ACTIVITY TO DETERMINE AND PARTICULARIZE THE SAVINGS TO THE GOVERNMENT AS A RESULT OF THE PROCUREMENT OF HIGHER-LIFE CYCLE BATTERIES IS, WE BELIEVE, THE SOURCE OF YOUR FINAL CONTENTION THAT A CORRECT APPLICATION OF THE "PRICE PER CYCLE EVALUATION" FACTOR WOULD HAVE RESULTED IN A DETERMINATION THAT TIE BIDS WERE SUBMITTED, WITH THE RESULT THAT AWARD WOULD HAVE BEEN MADE TO YOUR FIRM. SPECIFICALLY, YOU URGE THAT THE DIVISION OF THE TOTAL PRICE OFFERED BY THE TOTAL NUMBER OF CYCLES OFFERED SHOULD HAVE BEEN TERMINATED AFTER TWO DECIMAL PLACES. IN SUPPORT OF THIS POSITION, YOU DRAW ATTENTION TO THE INVITATION'S HYPOTHETICAL APPLICATION OF THE EVALUATION FACTOR AND APPARENTLY SUGGEST THAT IT EVIDENCES AN INTENT TO SO RESTRICT THE COMPUTATION. THE EXAMPLE STATES THAT WHERE--

"* * * A BIDDER BIDS A PRICE OF $40 PER BATTERY AND OFFERS THE DELIVERY OF AN '80-CYCLE' BATTERY, THE EVALUATED BID PRICE PER CYCLE SHALL BE ?50. * * *" TO US, THIS HYPOTHETICAL APPLICATION MERELY ILLUSTRATES THE APPLICATION OF THE PRICE PER CYCLE EVALUATION FACTOR. MOREOVER, EVEN IF THE EXAMPLE HAD BEEN STRUCTURED TO DEMONSTRATE THE RESOLUTION OF A TIE BID IN FAVOR OF THE BIDDER OFFERING THE GREATER NUMBER OF CYCLES, IT WOULD ONLY UNDERSCORE THE FACT THAT THE BIDS WERE MATHEMATICALLY EQUAL. EQUALITY IN ALL RESPECTS IS ESSENTIAL TO THE EXISTENCE OF TIE OR IDENTICAL BIDS. SEE, GENERALLY, 37 COMP. GEN. 330 (1957); 34 COMP. GEN. 451 (1955); 15 COMP. GEN. 766 (1936). THAT THE PRICE PER CYCLE EVALUATION FACTOR ARTICULATED, INSOFAR AS IT WAS PRACTICABLE, AN "OTHER FACTOR"--USABLE LIFE --RATHER THAN PRICE ALONE, AFFORDS NO BASIS FOR IMPORTING A TIE, PARTICULARLY WHEN SUCH FACTOR IS THE VEHICLE FOR HARMONIZING DIFFERENT BID PRICES TO DETERMINE THE LOWEST COST TO THE GOVERNMENT. MOREOVER, ALTHOUGH THE ISSUE IS NOT BEFORE US, IT SHOULD BE NOTED THAT IF THE BIDS WERE IDENTICAL, WE WOULD BE CONSTRAINED TO VIEW THE INVITATION'S PROCEDURE FOR RESOLVING TIE BIDS IN LIGHT OF THE APPLICABLE PROVISIONS OF ASPR 2-407.6 FOR BREAKING "TIE" BIDS.

THE ORDER OF PRIORITY SET FORTH IN THIS SECTION EXPRESSES A DEPARTMENTAL PROCUREMENT POLICY CONSISTENT WITH OUR DECISIONS IN THE AREA. 47 COMP. GEN. 664, 666 (1968), AND CASES CITED THEREIN. IN THE FACE OF THIS POLICY, THERE WOULD APPEAR TO BE NO SATISFACTORY BASIS FOR, AT A MINIMUM, FAILING TO FIRST DETERMINE THE APPLICABILITY OF THE PRIORITIES SET FORTH IN ASPR 2-407.6.

FOR THE FOREGOING REASONS, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE PROCURING ACTIVITY'S AWARD OF THE CONTRACT TO GILL. ACCORDINGLY, YOUR PROTEST IS DENIED.