B-170761, JAN 11, 1971

B-170761, JAN 11, 1971

BID PROTEST - NEGOTIATED CONTRACT DENIAL OF PROTEST BY AMERICAN DYNAMICS, INC., AGAINST AWARD OF A NEGOTIATED CONTRACT TO SUN ELECTRIC CORPORATION FOR PORTABLE HYDRAULIC TEST STANDS ISSUED BY SAN ANTONIO AIR MATERIEL AREA. WHERE PROTESTANT HAD BEEN AWARDED A REQUIREMENTS CONTRACT FOR TEST STANDS WHICH PROVIDED THAT DELIVERIES ON ORDERS ISSUED DURING PRODUCTION COULD NOT BE REQUIRED TO COMMENCE PRIOR TO 120 DAYS AFTER COMPLETION OF DELIVERY UNDER A PREVIOUS ORDER, AND AN EMERGENCY REQUIREMENT AROSE NECESSITATING A DELIVERY SCHEDULE OF 90 DAYS, IT WAS PROPER FOR THE CONTRACTING ACTIVITY TO CONDUCT NEGOTIATIONS WITH BOTH PROTESTANT, A SMALL BUSINESS FIRM CONDUCTING FIRST ITEM TESTING AND SUCCESSFUL OFFEROR, A LARGE BUSINESS CONCERN WHICH HAD PREVIOUSLY FURNISHED A SATISFACTORY UNIT, AND WHERE THE RECORD REVEALS AN EQUAL OPPORTUNITY TO SUBMIT FINAL OFFERS AND A REVISED DELIVERY SCHEDULE OF 160 DAYS (NECESSARY BECAUSE OF A NEGATIVE PREAWARD SURVEY INDICATING THAT NEITHER FIRM COULD MEET THE 90 DAY DELIVERY SCHEDULE) AND PROTESTANT AND SUN ELECTRIC'S FINAL OFFERS WERE RESPECTIVELY $18,468/UNIT AND $18,000/UNIT, THERE IS NO REASON TO UPSET THE AWARD TO THE LOW RESPONSIVE, RESPONSIBLE BIDDER, AND THE PROTEST IS DENIED.

TO AMERICAN DYNAMICS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 3, 1970, PROTESTING AGAINST THE AWARD OF A NEGOTIATED CONTRACT TO THE SUN ELECTRIC CORPORATION FOR FURNISHING 42 PORTABLE HYDRAULIC TEST STANDS, TYPE TTU228E, WHICH ARE IDENTICAL TO THOSE WHICH YOUR FIRM IS FABRICATING UNDER REQUIREMENTS CONTRACT NO. F41608-70-D-6149, WITH THE SAN ANTONIO AIR MATERIEL AREA, KELLY AIR FORCE BASE, TEXAS.

THE REQUIREMENTS CONTRACT CITED ABOVE WAS AWARDED TO YOUR FIRM ON DECEMBER 4, 1969, AND IT PROVIDED FOR ISSUANCE OF ORDERS OVER A PERIOD OF 1 YEAR IN QUANTITIES FROM A MINIMUM OF 30 TO A MAXIMUM OF 134 UNITS. DELIVERIES ON ORDERS ISSUED DURING PRODUCTION UNDER A PRECEDING ORDER COULD NOT BE REQUIRED TO COMMENCE PRIOR TO 120 DAYS AFTER COMPLETION OF THE DELIVERY UNDER THE PRECEDING ORDER. IN ADDITION, YOUR FIRM WAS NOT REQUIRED TO ACCEPT ANY ORDER REQUIRING DELIVERIES AFTER APPROXIMATELY JUNE 4, 1971. PART "X," PARAGRAPH (E) OF THAT CONTRACT PROVIDED AS FOLLOWS:

"(E) IF DELIVERY OF ANY QUANTITY OF AN ITEM COVERED BY THE CONTRACT IS REQUIRED BY REASON OF URGENCY PRIOR TO THE EARLIEST DATE THAT DELIVERY MAY BE SPECIFIED UNDER THIS CONTRACT AND IF THE CONTRACTOR WILL NOT ACCEPT AN ORDER PROVIDING FOR THE ACCELERATED DELIVERY, THE GOVERNMENT MAY PROCURE THIS REQUIREMENT FROM ANOTHER SOURCE."

IN HIS REPORT THE CONTRACTING OFFICER STATES THAT THE PERTINENT FACTS OF THIS CASE ARE AS FOLLOWS:

"1. ON 15 APR 1970, THE COGNIZANT INVENTORY MANAGER NOTIFIED THE PURCHASING OFFICE THAT AN EMERGENCY REQUIREMENT HAD GENERATED FOR 42 TYPE TTU-228E HYDRAULIC TEST STANDS. THE REQUIREMENT WAS TO BE PROCESSED IN ACCORDANCE WITH AFLCR 67-21 PROCEDURES. BY TELEPHONE THE BUYER ON 20 APR 1970, CONTACTED THE ONLY THEN APPROVED SOURCE FOR THESE TTU-228E STANDS TO OBTAIN A BUDGETARY PRICE AND DELIVERY SCHEDULE FOR PLANNING PURPOSES. LETTER DATED 20 APR 1970, SUN ELECTRIC CORPORATION RESPONDED WITH A FIRM PRICE AND DELIVERY QUOTATION. ON 19 MAY 1970, THE OFFICIAL EMERGENCY PURCHASE REQUEST WAS RECEIVED FOR THE 42 TEST STANDS. THE PURCHASE REQUEST SPECIFIED SUN ELECTRIC CORPORATION, CRYSTAL LAKE, IL AS THE ONLY APPROVED SOURCE AND REQUIRED DELIVERIES TO START IN AUG 1970. ONLY SUN ELECTRIC CORPORATION HAS PREVIOUSLY DELIVERED ACCEPTABLE TTU-228E TEST STANDS TO THE AIR FORCE.

"2. DUE TO THE EXISTENCE OF 'REQUIREMENTS' CONTRACT F41608-70-D-6149 AWARDED AMERICAN DYNAMICS, INC., 4 DEC 1969 AND THE FACT THAT FIRST ARTICLE TESTS WERE UNDERWAY IN MAY 1970, AMERICAN DYNAMICS, INC., WAS OFFERED THE 42 UNIT REQUIREMENT PER TERMS OF THE CONTRACT WITH A DELIVERY SCHEDULE STARTING IN 90 DAYS. THE OFFER WAS MADE BY PPIAM KELLY AFB, TWX DATED 26 MAY 1970. THEIR RESPONSE TO THIS OFFER WAS A PROPOSAL FOR $17,500.00 PER UNIT BY TWX OF 29 MAY 1970.

"3. BOTH AMERICAN DYNAMICS, INC., AND SUN ELECTRIC CORPORATION WERE SOLICITED WITH DELIVERY SCHEDULES STARTING 90 DAYS ARO. AMERICAN DYNAMICS, INC., WAS SOLICITED BY THE PPIAM TWX OF 26 MAY 1970 AND SUN ELECTRIC CORPORATION WAS SOLICITED BY TELEPHONE CONVERSATION OF 15 MAY 1970 BETWEEN THE BUYER AND M. W. GLENS/SUN ELECTRIC CORPORATION. SUN ELECTRIC CORPORATION RESPONDED WITH A LETTER DATED 18 MAY 1970 AND AMERICAN DYNAMICS, INC., RESPONDED WITH THEIR TWX OF 26 MAY 1970. NEGATIVE PREAWARD SURVEYS WERE SUBSEQUENTLY RECEIVED ON BOTH FIRMS AS NEITHER AMERICAN DYNAMICS, INC., NOR SUN ELECTRIC CORPORATION COULD MEET THE SPECIFIED DELIVERY SCHEDULE.

"4. THE DELIVERY SCHEDULE WAS THEN REVISED TO BEGIN 160 DAYS AFTER RECEIPT OF AN ORDER. THE EXTENSION TO 160 DAYS WAS MADE BECAUSE THE NEGATIVE PRE-AWARD SURVEYS ON BOTH FIRST REVEALED THAT BOTH COULD MEET SUCH A SCHEDULE. BY PPIAM TWX OF 20 JUL 1970, AMERICAN DYNAMICS, INC., WAS AGAIN OFFERED THE 42 TEST STANDS UNDER THE 'REQUIREMENTS' CONTRACT. BY TWX OF 3 AUG 1970, AMERICAN DYNAMICS, INC., RESPONDED WITH A PRICE QUOTE FOR $18,468.00 PER UNIT.

"5. BOTH SUN ELECTRIC CORPORATION AND AMERICAN DYNAMICS, INC., WERE SOLICITED ON THE SAME BASIS WITH DELIVERY SCHEDULE TO START 160 DAYS AFTER RECEIPT OF ORDER WITH NO FIRST ARTICLE TEST BEING REQUIRED OF EITHER FIRM. BOTH FIRMS WERE GIVEN AN OPPORTUNITY TO SUBMIT THEIR BEST AND FINAL PRICE. THE FINAL NEGOTIATED PRICE OF SUN ELECTRIC CORPORATION WAS $18,000.00 PER UNIT. THE FINAL NEGOTIATED PRICE OF AMERICAN DYNAMICS, INC., WAS $18,468.00. A NOTICE TO PROCEED WAS THEN GIVEN TO SUN ELECTRIC CORPORATION ON CONTRACT F34601-70-A-0079-SA08 ON 18 AUG 1970."

IN YOUR LETTER OF SEPTEMBER 3, 1970, YOU PRESENT SIX QUESTIONS FOR OUR CONSIDERATION.

INITIALLY, YOU QUESTION THE FAILURE OF THE PROCUREMENT ACTIVITY TO AWARD A CONTRACT TO YOUR FIRM FOR THE 42 TEST STANDS ON THE BASIS OF YOUR INITIAL QUOTATION OF $17,500 PER UNIT. UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-902, A CONTRACT MAY BE AWARDED TO A RESPONSIBLE PROSPECTIVE CONTRACTOR ONLY, THAT IS, ONE WHO MUST BE ABLE TO COMPLY WITH THE REQUIRED DELIVERY SCHEDULE. SINCE A NEGATIVE PREAWARD SURVEY ESTABLISHED THAT YOUR FIRM COULD NOT MEET THE REQUIRED DELIVERY SCHEDULE OF 90 DAYS AFTER RECEIPT OF ORDER, NO AWARD COULD BE MADE UNDER YOUR INITIAL QUOTATION OF $17,500 PER UNIT.

SECOND, YOU QUESTION WHY YOUR CORPORATION, A SMALL BUSINESS FIRM, WAS NOT GRANTED A PREFERENCE OVER SUN ELECTRIC CORPORATION, A LARGE BUSINESS CONCERN, IN THE AWARDING OF THE 42 UNITS. IT IS REPORTED THAT THE INSTANT REQUIREMENT WAS NOT SET ASIDE FOR SMALL BUSINESS BECAUSE THE SHORT DELIVERY TIME OF 90 DAYS LIMITED POTENTIAL SOURCES OF SUPPLY. IT ALSO IS REPORTED THAT THE ONLY TWO FIRMS WHO COULD POSSIBLY MEET THE REQUIRED DELIVERY SCHEDULE WERE YOUR CORPORATION, A SMALL BUSINESS CONCERN, WHICH WAS THEN PERFORMING FIRST ARTICLE TESTING, AND SUN ELECTRIC, A LARGE BUSINESS CONCERN, WHICH HAD PREVIOUSLY FURNISHED A SATISFACTORY UNIT.

THIRD, YOU MAINTAIN THAT SINCE YOUR FIRM WAS IN CURRENT PRODUCTION OF THE REQUIRED UNIT UNDER THE REQUIREMENTS CONTRACT AND SINCE SUN ELECTRIC WAS NOT IN PRODUCTION OF SUCH UNIT, YOUR FIRM SHOULD HAVE BEEN AWARDED A CONTRACT FOR THE 42 UNITS. HOWEVER, WE ARE ADVISED THAT YOUR FIRM DID NOT HAVE AN APPROVED TTU228E TEST STAND; THAT YOUR FIRM HAD NOT COMPLIED WITH THE REQUIREMENT OF YOUR REQUIREMENTS CONTRACT THAT THE FIRST ARTICLE TESTING BE COMPLETED AND THE TEST REPORT SUBMITTED TO THE KELLY AIR FORCE BASE BY SEPTEMBER 14, 1970; AND THAT A "SHOW CAUSE" LETTER WAS ISSUED TO YOUR FIRM ON SEPTEMBER 17, 1970. IN VIEW OF THE FACT THAT YOUR FIRM HAD NOT PRODUCED AN ACCEPTABLE UNIT AT THE TIME YOUR FIRM WAS ORIGINALLY SOLICITED, YOU WERE NOT AN ACCEPTABLE SOURCE OF SUPPLY.

FOURTH, YOU POINT OUT THAT YOUR COMPANY IS THE ONLY QUALIFIED SOURCE OF SUPPLY THAT HAS PERFORMED AND CERTIFIED THE REQUIRED ENVIRONMENTAL TESTING PORTIONS IN ACCORDANCE WITH THE LATEST SPECIFICATION MIL-T 38381BUSAF), AMENDMENT NO. 1 DATED JUNE 30, 1967, AS MODIFIED BY YOUR CONTRACT; THAT YOU HAVE COMPLETED 50 PERCENT OF THE ENDURANCE REQUIREMENT AS CALLED FOR IN MIL-T-38381B; AND THAT YOU EXPECT TO COMPLETE 1,000 HOURS OF ENDURANCE TESTING THE LAST WEEK OF SEPTEMBER 1970. YOU STATE THAT TO THE BEST OF YOUR KNOWLEDGE NO MANUFACTURER HAS TO THIS DAY QUALIFIED UNDER THE 1,000 HOURS ENDURANCE TEST REQUIREMENT. HOWEVER, THE DEPARTMENT OF THE AIR FORCE STATES THAT YOUR FIRM CANNOT BE CONSIDERED A QUALIFIED SOURCE OF SUPPLY FOR THE TYPE TTU228E TEST STAND UNTIL FIRST ARTICLE TESTING HAS BEEN COMPLETED BY YOUR FIRM AND APPROVED AS REQUIRED BY YOUR CONTRACT. MOREOVER, IT HAS BEEN DETERMINED THAT SUN ELECTRIC IS THE ONLY PRODUCER WHICH HAS PRODUCED AN ACCEPTABLE UNIT IN ACCORDANCE WITH THE CURRENT SPECIFICATION AND IS THEREFORE ENTITLED TO WAIVER OF FIRST ARTICLE TESTING. SEE ASPR 1-1902(A) AND 1-1903(A).

FIFTH, YOU COMPLAIN THAT YOUR FIRM WAS NOT ADVISED BY THE AIR FORCE THAT THE 42 TEST STANDS WERE BEING PROCURED UNDER OPEN (COMPETITIVE) PROCEDURES. WE ARE NOT AWARE OF ANY REQUIREMENT IN THE LAW OR REGULATIONS THAT PROSPECTIVE CONTRACTORS BE SO ADVISED. THE LAW DOES REQUIRE THAT NEGOTIATED PROCUREMENTS BE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICAL EXTENT, AND WE THINK THAT THE MESSAGES SENT TO YOUR COMPANY BY THE PROCUREMENT ACTIVITY, WHICH SPECIFICALLY AFFORDED YOUR COMPANY THE OPPORTUNITY TO OFFER A "FIRM" PRICE AND A "BEST AND FINAL" PRICE ON THE TEST STANDS, EMPLOYED LANGUAGE WHICH WOULD INDICATE TO AN OFFEROR THAT THE STANDS WERE BEING PROCURED COMPETITIVELY.

FINALLY, YOU CONTEND THAT BY AWARDING THE CONTRACT FOR THE 42 TEST STANDS TO A FIRM OTHER THAN YOUR CORPORATION, ADDITIONAL MONIES OVER AND ABOVE THE UNIT COST OF THE TEST STAND WILL BE REQUIRED BY THE GOVERNMENT FOR THE 1,000 HOURS OF ENDURANCE TESTING AND THE ENVIRONMENTAL TEST. IN THIS CONNECTION, THE AIR FORCE POINTS OUT THAT NO ADDITIONAL COSTS INCIDENT TO THE ENDURANCE AND ENVIRONMENTAL TESTS WILL BE INCURRED BY THE GOVERNMENT BECAUSE THE SOLICITATION COVERING THE 42 TEST STANDS DOES NOT REQUIRE SUCH TESTS.

THE RECORD SHOWS THAT THE DELIVERY SCHEDULE WAS REVISED TO PROVIDE FOR A DELIVERY DATE OF 160 DAYS AFTER RECEIPT OF ORDER RATHER THAN 90 DAYS, AND THAT YOUR FIRM AND SUN ELECTRIC WERE AGAIN SOLICITED BY TELEGRAM DATED AUGUST 6, 1970, ON THE BASIS OF THE RELAXED DELIVERY SCHEDULE. BOTH YOU AND SUN ELECTRIC WERE REQUESTED IN THE TELEGRAMS TO SUBMIT YOUR BEST AND FINAL PRICE ON THE 42 TEST STANDS. THE FINAL NEGOTIATED PRICE OF YOUR FIRM WAS $18,468 PER UNIT, WHEREAS THE FINAL NEGOTIATED PRICE OF SUN ELECTRIC WAS $18,000 PER UNIT. IT IS REPORTED THAT ON AUGUST 18, 1970, CONTRACT NO. F34601-70-A-0079-SA08 FOR FURNISHING 42 TEST STANDS WAS AWARDED TO SUN ELECTRIC. WE ARE OF THE OPINION THAT THE RECORD ESTABLISHES THAT YOUR FIRM WAS GIVEN AN EQUAL OPPORTUNITY TO SUBMIT YOUR BEST AND FINAL OFFER UNDER THE SOLICITATION COVERING THE 42 TEST STANDS.

FOR THE REASONS SET FORTH ABOVE, YOUR PROTEST IS DENIED.