B-169470, JUN. 18, 1970

B-169470, JUN. 18, 1970

BIDDERS--QUALIFICATIONS--CAPACITY, ETC.--PLANT FACILITIES, ETC. NO LEGAL BASIS IS SEEN FOR QUESTIONING CONTRACTING OFFICER'S ACTION IN REJECTING PROTESTING LOW BIDDER'S PROPOSAL AND IN MAKING PARTIAL AWARD TO NEXT LOW RESPONSIVE, RESPONSIBLE OFFEROR. CONTRACTING OFFICER'S UNCERTAINTY REGARDING PROTESTANT'S ABILITY TO PERFORM SUBJECT CONTRACT CONSTITUTED JUSTIFICATION FOR DELAYING AWARD UNTIL PREAWARD SURVEY OF PROTESTANT'S FACILITIES HAD BEEN MADE, AND CONTRACTING OFFICER'S CONCLUSION THAT PROTESTANT DID NOT MEET ALL MINIMUM STANDARDS OF RESPONSIBLE CONTRACTOR PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION 1-903 WAS SUPPORTED BY INFORMATION IN SURVEY REPORT INDICATING THAT PROTESTANT WAS INCAPABLE OF MEETING CRITICAL INITIAL DELIVERY REQUIREMENT; CONTRACTING OFFICER THUS WAS REQUIRED TO DETERMINE PROTESTANT NONRESPONSIBLE. CONTRACTS--NEGOTIATION--SOLE SOURCE BASIS--NECESSITY THREE SOLE-SOURCE PROCUREMENTS OF "0" RINGS FOR 2.75 INCHES ROCKET MOTORS, WHICH WERE NEGOTIATED SUBSEQUENT TO LEGALLY SOUND DETERMINATION AND FINDINGS AUTHORIZING CONTRACT NEGOTIATION UNDER 10 U.S.C. 2304(A)(16) WITH 2 QUALIFIED SUPPLIERS, NOT INCLUDING PROTESTANT, ARE JUSTIFIED IN CIRCUMSTANCES, BECAUSE IN FIRST PROCUREMENT ONE SUPPLIER DEFAULTED AND DELIVERY SCHEDULE COULD BE MET ONLY BY CURRENT PRODUCER; IN SECOND PROCUREMENT IT WAS NECESSARY TO MAINTAIN CURRENT PRODUCER'S PRODUCTION CAPABILITY; AND THIRD PROCUREMENT ACTUALLY IS UNDER OPTION CLAUSE IN EXISTING CONTRACT AND ENTAILS URGENT DELIVERY REQUIREMENT. CONTRACTS-- NEGOTIATION--AWARDS--PRICE ONE FACTOR IN DETERMINATION WITH RESPECT TO $178,100 PRICE SAVING WHICH PROTESTING FIRM ASSERTS GOVERNMENT COULD HAVE REALIZED BY PROCURING 2.75 INCHES ROCKET MOTOR "0" RINGS FROM IT RATHER THAN FROM OTHER BIDDERS, RECORD INDICATES THAT PRICE DIFFERENTIAL WAS SUBSTANTIALLY UNDER THAT AMOUNT. IN ANY EVENT, PRICE IS BUT ONE FACTOR FOR CONSIDERATION IN NEGOTIATION OF CONTRACTS UNDER EXCEPTIONS TO ADVERTISED PROCUREMENTS PROVIDED IN 10 U.S.C. 2304(A), AND ON RECORD IT CANNOT BE CONCLUDED THAT DEPARTMENT OF ARMY'S ACTIONS WERE NOT IN BEST INTEREST OF UNITED STATES OR WERE NOT PROPER EXERCISES OF AUTHORITY GRANTED BY STATUTE AND IMPLEMENTED BY PROCUREMENT REGULATIONS.

TO C & M RUBBER COMPANY:

WE REFER TO YOUR PROTEST BY LETTER DATED MARCH 31, 1970, AGAINST PROCEDURES EMPLOYED BY PICATINNY ARSENAL, DEPARTMENT OF THE ARMY, DOVER, NEW JERSEY, SINCE 1968 IN THE PROCUREMENT OF "0" RINGS FOR THE 2.75" ROCKET MOTOR. THE SUBSTANCE OF YOUR PROTEST IS THAT SUCH PROCEDURES HAVE DISCRIMINATED AGAINST YOU AND THAT BY PROCURING THE RINGS FROM YOU THE GOVERNMENT COULD HAVE SAVED AS MUCH AS $178,100 ON CERTAIN PROCUREMENTS.

THE DEPARTMENT OF THE ARMY HAS FURNISHED TO OUR OFFICE A DOCUMENTED REPORT IN THE MATTER, AND THERE ARE VARIANCES BETWEEN THE FACTS AS SET FORTH BY THE DEPARTMENT AND YOUR STATEMENT OF THE FACTS. IN THE CIRCUMSTANCES, UNLESS THERE IS SUFFICIENT EVIDENCE TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS OF THE FACTS AS REPORTED BY THE DEPARTMENT, WE SHALL ACCEPT THE DEPARTMENT'S REPORT AS CORRECT.

ON AUGUST 21, 1968, PICATINNY ISSUED REQUEST FOR PROPOSALS (RFP) DAAA21- 69-R-0058 SOLICITING OFFERS, ON A TOTAL SMALL BUSINESS SET ASIDE BASIS, FOR THE FURNISHING OF A BASIC QUANTITY OF SIX MILLION "0" RINGS, TO BE SHIPPED IN SPECIFIED INCREMENTS TO TWO DESTINATIONS ONCE A MONTH OVER A PERIOD COMMENCING JANUARY 30, 1969, AND TERMINATING IN DECEMBER 1969, AND AN OPTION QUANTITY OF 50 PERCENT. THE PROCUREMENT CARRIED AN SEA-02 PRIORITY DESIGNATOR, AND NEGOTIATION WAS AUTHORIZED UNDER 10 U.S.C. 2304(A)(16) RELATING TO PURCHASES IN THE INTEREST OF NATIONAL DEFENSE OR INDUSTRIAL MOBILIZATION, AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-216. EVALUATION PROVISIONS IN THE RFP INFORMED PROSPECTIVE OFFERORS THAT CAPACITY FOR PERFORMING THE PROPOSED CONTRACT AND ABILITY TO MEET THE DELIVERY SCHEDULE WOULD BE INCLUDED AMONG THE FACTORS CONSIDERED IN EVALUATION OF THE PROPOSALS.

ON SEPTEMBER 5, 1968, THE PROPOSALS WERE OPENED AS SCHEDULED. YOUR PROPOSAL, QUOTING A UNIT PRICE OF ?025, WAS LOWEST. THE PROPOSAL OF MINNESOTA RUBBER COMPANY (MINNESOTA), WITH A UNIT PRICE OF .045, WAS SECOND. THE THREE REMAINING PROPOSALS QUOTED UNIT PRICES OF ?05, ?051 AND ?065, RESPECTIVELY.

IN LIGHT OF THE VARIANCE OF APPROXIMATELY 50 PERCENT BETWEEN YOUR LOW PRICE AND THE OTHER PROPOSALS, AND FOR THE PURPOSE OF ASCERTAINING YOUR UNDERSTANDING OF THE TECHNICAL, INSPECTION AND QUALITY ASSURANCE REQUIREMENTS OF THE PROCUREMENT, PICATINNY INVITED YOU TO MEET WITH ITS REPRESENTATIVES ON OCTOBER 16, 1968, TO DISCUSS THE MATTER. AT THE MEETING, MENTION WAS MADE BY THE GOVERNMENT OF A POSSIBLE SPLIT AWARD IN VIEW OF THE URGENT NEED FOR THE RINGS, AND YOU WERE THEREFORE REQUESTED TO SUBMIT A PRICE ON A QUANTITY OF THREE MILLION RINGS. YOUR OFFER, WHICH WAS DATED OCTOBER 16, QUOTED A UNIT PRICE OF ?04 FOR THE SMALLER QUANTITY.

FOLLOWING THE MEETING, THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION DISTRICT IN DAYTON, OHIO (DCASD DAYTON) TO MAKE A PREAWARD SURVEY OF YOUR FACILITIES TO ENABLE THE CONTRACTING OFFICER TO MAKE THE DETERMINATION REQUIRED BY ASPR 1-902 AS TO YOUR RESPONSIBILITY, AND, AT THE REQUEST OF THE CONTRACTING OFFICER, YOU EXTENDED THE PERIOD FOR ACCEPTANCE OF YOUR PROPOSAL TO DECEMBER 15, 1968.

THE DCASD-DAYTON REPORT, WHICH WAS DATED NOVEMBER 14, 1968 (NINE DAYS AFTER THE EXPIRATION OF THE ORIGINAL ACCEPTANCE PERIOD ON YOUR PROPOSAL), MADE A RECOMMENDATION OF NO AWARD. IN THIS CONNECTION, THE REPORT STATED THAT YOU REQUIRED A MINIMUM OF 99 DAYS TO PRODUCE THE 500,000 UNITS REQUIRED TO BE DELIVERED ON JANUARY 30, 1969, AND THEREFORE COULD NOT MEET THIS REQUIREMENT INASMUCH AS ONLY 76 DAYS REMAINED BETWEEN THE REPORT DATE AND JANUARY 30.

ON THE BASIS OF THE INFORMATION IN THE DCASD REPORT, WHICH THE CONTRACTING OFFICER WAS REQUIRED TO CONSIDER UNDER THE PROVISIONS OF ASPR 1-905.4(A), THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATION ON NOVEMBER 20, 1968, THAT YOU WERE NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE PROCUREMENT. THE DETERMINATION FURTHER STATED, HOWEVER, THAT ONLY THREE MILLION UNITS WOULD BE AWARDED UNDER THE RFP TO THE LOWEST RESPONSIBLE BIDDER, MINNESOTA, AND A SECOND RFP, WITH A REVISED DELIVERY SCHEDULE, WOULD BE ISSUED FOR THE REMAINING UNITS. A COPY OF THE DETERMINATION, TOGETHER WITH A COPY OF THE PREAWARD SURVEY REPORT AND A LEGAL OPINION, WAS FURNISHED TO THE SMALL BUSINESS ADMINISTRATION, NEW YORK, NEW YORK. AWARD TO MINNESOTA WAS MADE ON NOVEMBER 22, AND NOTICE WAS GIVEN TO EACH OFFEROR BY LETTER DATED DECEMBER 10, WHICH STATED THAT THE OFFEROR WOULD BE INVITED TO PARTICIPATE IN THE SECOND PROCUREMENT.

IN RESPONSE TO AN INQUIRY IN YOUR BEHALF BY A MEMBER OF CONGRESS AS TO THE REASON FOR NONACCEPTANCE OF YOUR LOW PROPOSAL UNDER RFP DAAA21 69-R- 0058, PICATINNY EXPLAINED THAT THE JANUARY 30, 1969, DELIVERY, WHICH YOU WERE UNABLE TO MAKE, WAS ESSENTIAL TO MEET THE IMMEDIATE NEED OF THE GOVERNMENT TO CONTINUE UNINTERRUPTED OPERATIONS AT THE LOADING AND ASSEMBLY PLANTS FOR THE 2.75" ROCKET PROGRAM. THE CONGRESSMAN WAS ALSO INFORMED THAT YOU WOULD BE AMONG THE OFFERORS WHO WOULD BE SOLICITED FOR THE UNAWARDED PORTION OF THE PROCUREMENT REQUIREMENT UNDER THE NEW SOLICITATION WITH A REVISED DELIVERY SCHEDULE.

AS YOU HAVE INDICATED, YOU WERE SOLICITED FOR A PROPOSAL UNDER RFP DAAA21 -69-R-0278, DATED DECEMBER 9, 1968. THE REQUIREMENT WAS FOR A BASIC QUANTITY OF TWO MILLION UNITS, TO BE DELIVERED IN EIGHT MONTHLY SHIPMENTS STARTING MAY 26, 1969, AND TERMINATING ON DECEMBER 24, 1969, AND AN OPTION QUANTITY OF ONE MILLION UNITS. YOU APPARENTLY HAD NO OBJECTION TO THE AWARD WHICH WAS MADE ON FEBRUARY 20, 1969, TO THE LOW OFFEROR, SILICONE RUBBER PRODUCTS, INC. (SILICONE), WHO QUOTED A UNIT PRICE OF ?033 AS OPPOSED TO YOUR UNIT PRICE OF ?04. BY WAY OF COMPARISON WITH THE EARLIER RFP, HOWEVER, YOU STRESS THAT THE AWARD WAS MADE WITHIN 48 DAYS AFTER THE OPENING OF THE PROPOSALS ON JANUARY 3, 1969. IN THIS REGARD, THE CONTRACTING OFFICER REPORTS THAT THE AWARD UNDER THE SECOND RFP WITHIN THE SHORTER PERIOD AFTER OPENING OF PROPOSALS WAS MADE POSSIBLE BY THE FACT THAT THE INFORMATION WHICH WAS AVAILABLE TO THE GOVERNMENT, INCLUDING AN AFFIRMATIVE PREAWARD SURVEY REPORT ON SILICONE, WAS SUFFICIENT TO SUPPORT A DETERMINATION THAT SILICONE WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR, WHEREAS, IN THE FIRST PROCUREMENT, EVEN AFTER DISCUSSING THE PROCUREMENT AND YOUR QUALIFICATIONS AT THE OCTOBER 16, 1968, MEETING AT PICATINNY, THE CONTRACTING OFFICER WAS NOT ENTIRELY CONVINCED THAT YOU HAD THE CAPABILITY TO PERFORM THE CONTRACT AND THEREFORE FELT A NEED FOR HAVING A PREAWARD SURVEY MADE OF YOUR CAPABILITY.

ASPR 1-904.1 REQUIRES THE CONTRACTING OFFICER, WITH CERTAIN EXCEPTIONS SET FORTH IN ASPR 1-904.2, WHICH ARE NOT PERTINENT HERE, TO MAKE AN AFFIRMATIVE PREAWARD DETERMINATION OF RESPONSIBILITY AS TO PROPOSED GOVERNMENT CONTRACTOR. ASPR 1-905.1 PLACES UPON THE CONTRACTING OFFICER IN THIS REGARD THE DUTY OF ACQUIRING SUFFICIENT INFORMATION TO SATISFY HIMSELF THAT THE PROSPECTIVE CONTRACTOR CURRENTLY MEETS THE MINIMUM STANDARDS OF RESPONSIBILITY SET FORTH IN ASPR 1-903, WHICH INCLUDE THE ABILITY TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY OR PERFORMANCE SCHEDULE, AND WHEN THE INFORMATION AVAILABLE IS NOT SUFFICIENT TO ENABLE THE CONTRACTING OFFICER TO MAKE SUCH DETERMINATION, ASPR 1-905.4(B) REQUIRES THAT A PREAWARD SURVEY BE MADE.

UNDER SUCH PROVISIONS, THE CONTRACTING OFFICER'S UNCERTAINTY AFTER THE OCTOBER 16, 1968, MEETING, REGARDING YOUR ABILITY TO PERFORM THE CONTRACT WAS JUSTIFICATION FOR DELAYING AWARD UNTIL A PREAWARD SURVEY OF YOUR FACILITIES HAD BEEN MADE. FURTHER, THE INFORMATION IN THE SURVEY REPORT (WHICH HAS BEEN MADE AVAILABLE TO OUR OFFICE) INDICATING THAT YOU WERE NOT CAPABLE OF MEETING THE CRITICAL INITIAL DELIVERY REQUIREMENT WAS, IN OUR OPINION, SUFFICIENT TO SUPPORT THE CONCLUSION OF THE CONTRACTING OFFICER THAT, FOR PURPOSES OF THAT PARTICULAR PROCUREMENT, YOU DID NOT MEET ALL OF THE MINIMUM STANDARDS OF A RESPONSIBLE CONTRACTOR PRESCRIBED BY ASPR 1- 903. IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE CONTRACTING OFFICER HAD NO ALTERNATIVE BUT TO DETERMINE THAT YOU WERE NONRESPONSIBLE FOR THE PURPOSES OF THE PROCUREMENT IN QUESTION. ACCORDINGLY, WE SEE NO LEGAL BASIS TO QUESTION THE ACTION OF THE CONTRACTING OFFICER IN DECLINING TO ACCEPT YOUR PROPOSAL AND IN MAKING A PARTIAL AWARD TO MINNESOTA, THE NEXT LOW OFFEROR, WHO WAS DETERMINED TO BE BOTH RESPONSIVE AND RESPONSIBLE.

YOUR CURRENT PROTEST HAS BEEN PROMPTED BY THREE RECENT SOLE SOURCE PROCUREMENTS FROM MINNESOTA, WHICH HAVE BEEN NEGOTIATED UNDER 10 U.S.C. 2304(A)(16). YOU STATE THAT ON OCTOBER 29, 1969, THE COMMERCE BUSINESS DAILY CARRIED A NOTICE OF NEGOTIATIONS UNDER RFP DAAA21-70-R-0192 WITH MINNESOTA FOR THE PROCUREMENT OF 500,000 "0" RINGS, AND NO ADDITIONAL PROPOSALS WERE SOLICITED; THAT ON DECEMBER 1, 1969, THE COMMERCE BUSINESS DAILY CARRIED A NOTICE OF A SOLE SOURCE AWARD TO MINNESOTA FOR 3,755,000 "0" RINGS UNDER RFQ 70-R-0120, CONTRACT DAAA21-70-C-0265; AND THAT ON MARCH 5, 1970, THE COMMERCE BUSINESS DAILY INCLUDED A NOTICE THAT SOLE SOURCE AWARDS HAD BEEN MADE TO MINNESOTA FOR 1,650,000 "0" RINGS UNDER SOLICITATION 70-2-0179 AND (TO ANOTHER FIRM) FOR 2,400,000 RUBBER SEAL RINGS ALSO USED IN THE 2.75" ROCKET MOTOR.

YOU STATE THAT AFTER THE DECEMBER 1, 1969, NOTICE WAS PUBLISHED YOU COMMUNICATED WITH DCASD DAYTON AND INQUIRED OF THE SMALL BUSINESS SPECIALIST AS TO WHY YOU HAD NOT BEEN SOLICITED FOR THE REQUIREMENT AND THAT THE SPECIALIST, IN TURN, COMMUNICATED WITH THE SMALL BUSINESS SPECIALIST AT PICATINNY AND WAS ASSURED THAT YOU WOULD RECEIVE FUTURE SOLICITATIONS FOR THE "0" RINGS. YOU FURTHER STATE THAT AFTER THE MARCH NOTICE WAS PUBLISHED YOU AGAIN COMPLAINED TO THE DCASD DAYTON SMALL BUSINESS SPECIALIST, AND THE RESULTS WERE THE SAME AS IN THE CASE OF THE DECEMBER 1969 PROCUREMENT; I.E; THE PICATINNY SMALL BUSINESS SPECIALIST INFORMED THE DCASD DAYTON SPECIALIST THAT THE SOLE SOURCE AWARD TO MINNESOTA WAS JUSTIFIED ON THE BASIS OF URGENCY BUT YOU WOULD BE AFFORDED AN OPPORTUNITY TO COMPETE FOR AWARD OF FUTURE REQUIREMENTS.

IN LIGHT OF YOUR EXPERIENCE, YOU CHARGE THAT YOU HAVE BEEN DISCRIMINATED AGAINST IN THE PROCUREMENT OF THE "0" RINGS. IN ADDITION, YOU CLAIM THAT HAD PICATINNY PURCHASED FROM YOU, AT YOUR UNIT PRICE OF ?025, THE NEARLY NINE MILLION RINGS, WHICH WERE INVOLVED IN ALL OF THE ABOVE PROCUREMENTS, THE GOVERNMENT WOULD HAVE REALIZED A SAVING OF $178,100. ACCORDINGLY, YOU URGE THAT THE LATEST PROCUREMENT BE SET ASIDE.

EFFECTIVE WITH THE FISCAL YEAR 1970, (I.E; COMMENCING JULY 1, 1969) THE DEPARTMENT OF DEFENSE INAUGURATED A POLICY OF PROCURING REQUIREMENTS FOR THE 2.75" ROCKET PROGRAM IN TWO INCREMENTS, EACH COVERING PRODUCTION FOR A SIX-MONTH PERIOD, IN PLACE OF THE PREVIOUSLY EMPLOYED POLICY OF PROCURING REQUIREMENTS FOR A FULL 12-MONTH PROGRAM. IN ADDITION, THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS) ISSUED A CLASS DETERMINATION AND FINDINGS (D & F) DATED JUNE 27, 1969, AUTHORIZING NEGOTIATION OF CONTRACTS UNDER 10 U.S.C. 2304(A)(16) WITH QUALIFIED SELECTED SUPPLIERS OF CERTAIN ITEMS FOR THE 2.75" ROCKET SYSTEM. THE SOURCES LISTED FOR THE "0" RINGS WERE MINNESOTA AND SILICONE, AND FOR THE SEAL RINGS THE DESIGNATED SOURCES WERE JASPER RUBBER PRODUCTS, INC. (JASPER) AND MINISINK RUBBER COMPANY, INC. (MINISINK). WHILE THE INFORMATION WHICH WAS INCLUDED IN THE D & F IS OF A CLASSIFIED NATURE AND THEREFORE MAY NOT BE DISCLOSED PUBLICLY, YOU MAY BE ASSURED THAT WE HAVE EXAMINED THE D & F AND THE SUPPORTING DOCUMENTATION, AND IN OUR VIEW THE D & F COMPLIES WITH THE PROVISIONS OF THE PROCUREMENT STATUTE, 10 U.S.C. 2304(A)(16) AND ASPR 3 216, 3-301 AND 3-305. IN THE CIRCUMSTANCES, WE SEE NO LEGAL BASIS TO QUESTION THE D & F, TO WHICH FINALITY IS ACCORDED BY 10 U.S.C. 2310.

AS TO THE 1969 AND 1970 PROCUREMENTS OF THE "0" RINGS, RFP DAAA21-70 R- 0192, DATED OCTOBER 23, 1969, AS AMENDED, CALLED FOR DELIVERY OF THE ENTIRE QUANTITY OF 500,000 UNITS IN DECEMBER 1969; RFP DAAA21-70-R 0120, DATED AUGUST 28, 1969, AND THE RELATED CONTRACT DAAA21-70-C-0265, DATED NOVEMBER 17, 1969, REQUIRED DELIVERIES OF A TOTAL BASIC QUANTITY OF 3,755,000 UNITS IN VARYING INCREMENTS DURING EACH MONTH OF A SIX MONTH PERIOD COMMENCING ON OR BEFORE JANUARY 30, 1970, AND TERMINATING ON OR BEFORE JUNE 30, 1970; AND RFQ DAAA21-70-Q-0179 CALLS FOR A TOTAL QUANTITY OF 1,650,000 UNITS FOR DELIVERY EACH MONTH AT THE RATE OF 275,000 UNITS COMMENCING JULY 15, 1970.

THE RECORD SHOWS THAT SILICONE, WHO WAS REQUIRED TO MAKE SHIPMENTS COMMENCING IN MAY 1969 UNDER ITS CONTRACT, MADE NO SHIPMENTS. ACCORDINGLY, SILICONE WAS DECLARED IN DEFAULT, AND ITS CONTRACT WAS SUBSEQUENTLY TERMINATED.

THE CONTRACTING OFFICER STATES THAT IN NEGOTIATING ON A SOLE SOURCE BASIS WITH MINNESOTA FOR THE REQUIREMENT COVERED BY RFP DAAA21-70-R 0192, HE MADE A DETERMINATION THAT THE DELIVERY SCHEDULE COULD BE MET ONLY BY THE CURRENT PRODUCER. IN LIGHT OF THE FACT THAT DELIVERY WAS REQUIRED IN DECEMBER 1969, OR WITHIN ONLY TWO MONTHS AFTER THE RFP WAS ISSUED AND THAT ONLY MINNESOTA WAS IN PRODUCTION, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS IMPROPER. AS TO THE REQUIREMENT COVERED BY RFP DAAA21-70-R-0120, ISSUED AUGUST 28, 1969, THE CONTRACTING OFFICER STATES THAT THE SOLE SOURCE NEGOTIATION OF CONTRACT DAAA21-70-C- 0265 ON NOVEMBER 17, 1969, WITH MINNESOTA WAS PREDICATED UPON THE THEORY THAT IT WAS NECESSARY TO MAINTAIN THE PRODUCTION CAPABILITY OF MINNESOTA AND THAT, AS THE CURRENT PRODUCER, MINNESOTA WAS BEST ABLE TO MEET THE MANDATORY DELIVERY SCHEDULE COMMENCING IN JANUARY 1970. SINCE SUCH ACTION IS IN KEEPING WITH THE AUTHORITY CONTAINED IN THE D & F ISSUED BY THE ASSISTANT SECRETARY OF THE ARMY UNDER THE PROVISIONS OF 10 U.S.C. 2304(A)(16) AND ASPR 3-216, WE SEE NO LEGAL BASIS TO QUESTION THE AWARD OF CONTRACT DAAA21-70-C-0265 TO MINNESOTA. WITH REGARD TO THE REQUIREMENT COVERED BY RFQ DAAA21-70-Q-0179, THE RECORD SHOWS THAT THIS QUANTITY IS TO BE PROCURED, NOT AS A SEPARATE PURCHASE, BUT UNDER THE OPTION CLAUSE IN MINNESOTA'S CURRENT CONTRACT (DAAA21-70-C-0265); THAT URGENCY REQUIRES THAT DELIVERIES COMMENCE IN JULY 1970 AND EXTEND THROUGH DECEMBER 1970; AND THAT WITH THE ELIMINATION OF SILICONE, BY REASON OF ITS DEFAULT AND CONTRACT TERMINATION, AS A SECONDARY SOURCE FOR THE RINGS, A CRITICAL SHORTAGE OF THE ITEM WILL DEVELOP AT THE LOADING PLANTS UNLESS DELIVERIES ARE MADE AS SCHEDULED. THE RECORD FURTHER SHOWS THAT THIS INFORMATION WAS CONVEYED IN TELEPHONE CONVERSATIONS OF MARCH 6, 1970, BY PICATINNY, TO BOTH THE DCASD DAYTON REPRESENTATIVE AND A REPRESENTATIVE OF THE SMALL BUSINESS ADMINISTRATION IN NEW YORK CITY, WHO HAD INQUIRED IN YOUR BEHALF, AND IT WAS UNDERSTOOD BY PICATINNY THAT YOU WOULD BE INFORMED ACCORDINGLY. THERE IS NO INDICATION OF RECORD THAT THERE HAS BEEN ANY SUBSEQUENT PROCUREMENT OF THE "0" RINGS. ACCORDINGLY, WE MUST ASSUME THAT PICATINNY INTENDS TO KEEP ITS WORD ABOUT SOLICITING YOU FOR FUTURE REQUIREMENTS OF THE ITEM.

WHILE WE DO NOT UNDERSTAND THAT YOU HAVE ANY INTEREST IN COMPETING FOR PROCUREMENT OF THE SEAL RINGS, YOU ARE ADVISED THAT THE REQUIREMENT WHICH IS TO BE PROCURED FROM JASPER, AS WITH THE LATEST "0" RINGS PROCUREMENT FROM MINNESOTA, COMES UNDER THE OPTION PROVISIONS OF AN EXISTING CONTRACT WHICH WAS PROPERLY NEGOTIATED PURSUANT TO THE PROVISIONS OF THE PROCUREMENT STATUTE AND REGULATIONS. YOU ARE FURTHER ADVISED THAT MINISINK, THE OTHER QUALIFIED SOURCE SPECIFIED IN THE D & F, WAS SOLICITED ALONG WITH JASPER FOR THE BASIC CONTRACT BUT FAILED TO SUBMIT AN OFFER; ACCORDINGLY, JASPER WAS THE ONLY DESIGNATED QUALIFIED SOURCE WHO WAS WILLING TO UNDERTAKE THE PROCUREMENT.

WITH RESPECT TO THE PRICE SAVING OF $178,100 WHICH YOU ASSERT THE GOVERNMENT COULD HAVE REALIZED BY PROCURING ALL OF THE ABOVE "0" RING REQUIREMENTS FROM YOU, THE RECORD INDICATES THAT THE UNIT PRICE OF ?025 ON WHICH YOU BASE YOUR COMPUTATION WAS OFFERED BY YOU ONLY ON THE QUANTITY OF SIX MILLION UNITS ORIGINALLY SPECIFIED IN THE AUGUST 1968 SOLICITATION. NO SINGLE ONE OF THE ABOVE PROCUREMENTS APPROXIMATED THAT QUANTITY, AND THE PRICE OF ?04 PER UNIT WHICH YOU SUBSEQUENTLY OFFERED ON QUANTITIES OF THREE MILLION UNITS AND TWO MILLION UNITS WAS BUT ONE-HALF CENT PER UNIT LOWER THAN THE PRICE OF ?045 PER UNIT QUOTED BY MINNESOTA UNDER THE AUGUST 1968 AND AUGUST 1969 SOLICITATIONS. FOR THE THREE MILLION UNITS WHICH WERE COVERED BY CONTRACT DAAA21-69-C-0293 WITH MINNESOTA, THE PRICE DIFFERENTIAL WOULD HAVE BEEN $15,000, AND FOR THE QUANTITY OF 3,755,000 AWARDED UNDER CONTRACT DAAA21-70-C-0265 THE DIFFERENTIAL WOULD HAVE BEEN $18,775. IN ANY EVENT PRICE IS BUT ONE FACTOR FOR CONSIDERATION IN THE NEGOTIATION OF CONTRACTS UNDER THE EXCEPTIONS TO ADVERTISED PROCUREMENTS PROVIDED IN 10 U.S.C. 2304(A), AND ON THE RECORD BEFORE OUR OFFICE WE ARE UNABLE TO CONCLUDE THAT THE ACTIONS TAKEN BY THE DEPARTMENT OF THE ARMY WERE NOT IN THE BEST INTEREST OF THE UNITED STATES OR WERE NOT PROPER EXERCISES OF THE AUTHORITY GRANTED BY THE STATUTE, AS IMPLEMENTED BY THE PROCUREMENT REGULATIONS.