B-173707, NOV 17, 1971

B-173707, NOV 17, 1971

BID PROTEST - DOUBLE PAYMENTS - WARRANTY PROVISIONS DECISION DENYING PROTEST BY THIRD LOW BIDDER AGAINST AWARD OF A CONTRACT TO PACIFIC AUTOMATION ENTERPRISES, LTD. (PAE), SECOND LOW BIDDER, UNDER AN RFP ISSUED BY THE ARMY PROCUREMENT AGENCY VIETNAM FOR MAINTENANCE AND REPAIR OF GOVERNMENT OWNED ADDRESSOGRAPH-MULTIGRAPH OFFICE MACHINES LOCATED THROUGHOUT THE REPUBLIC OF VIETNAM. WHILE PROTESTANT AS AGENT OF ADDRESSOGRAPH-MULTIGRAPH COMPANY IS REQUIRED TO INSTALL MACHINES ON A NO-COST BASIS AND PAE IS NOW ALSO REQUIRED TO INSTALL, AT NO ADDITIONAL CHARGE, OFFICE MACHINERY PURCHASED FOR MILITARY USE, THE PRACTICAL USE OF THIS SECTION OF THE INSTANT CONTRACT IS RESTRICTED TO RARE INSTANCES WHERE NEW EQUIPMENT NOT PURCHASED UNDER THE PRIOR CONTRACT MUST BE INSTALLED. THUS IT DOES NOT APPEAR THAT THE GOVERNMENT PAYS TWICE FOR THE SAME SERVICES. ALSO, ALTHOUGH ONE OF TWO WARRANTY PROVISIONS OF THE FIRST CONTRACT MAY BE WAIVED BY THE REQUIREMENT, IN THE INSTANT CONTRACT, FOR REPAIR WORK BY OTHER THAN PROTESTANT, THIS DOES NOT APPEAR TO BE PREJUDICIAL TO THE GOVERNMENT'S INTEREST WHERE THE SECOND CONTRACT PROVIDES FOR NO COST EMERGENCY REPAIRS OR "REMEDIAL MAINTENANCE" OF ALL MACHINES COVERED BY THE PREVIOUS CONTRACT INCLUDING ANY MACHINES UNDER WARRANTY. FOR THE ABOVE REASONS, THE PROTEST IS DENIED.

TO KIRKWOOD, KAPLAN, RUSSIN & VECCHI:

REFERENCE IS MADE TO YOUR LETTER OF JULY 21, 1971, TO THE U.S. ARMY PROCUREMENT AGENCY VIETNAM (USAPAV), A COPY OF WHICH WAS FURNISHED OUR OFFICE, PROTESTING ON BEHALF OF THE NATIONAL CASH REGISTER COMPANY, INC. (NCR), AGAINST AWARD OF A CONTRACT TO PACIFIC AUTOMATION ENTERPRISES, LTD. (PAE) UNDER REQUEST FOR PROPOSALS (RFP) NO. DAJB11-71 R-0228 (HEREAFTER 0228), ISSUED BY USAPAV.

RFP-0228, ISSUED ON APRIL 23, 1971, WAS FOR MAINTENANCE AND REPAIR OF GOVERNMENT OWNED ADDRESSOGRAPH-MULTIGRAPH OFFICE MACHINES LOCATED THROUGHOUT THE REPUBLIC OF VIETNAM (RVN) FOR THE PERIOD JULY 1, 1971, TO JUNE 30, 1972. A FIXED PRICE REQUIREMENTS TYPE CONTRACT WAS CONTEMPLATED.

OFFERS WERE RECEIVED FROM NCR AND PAE AS WELL AS A THIRD FIRM, SEATECH ASSOCIATES, INC. (SEA). SUBSEQUENT TO NEGOTIATIONS WITH ALL THREE FIRMS THE CONTRACTING OFFICER SOLICITED FIRM AND FINAL OFFERS FROM EACH FIRM. THE INITIAL AND FINAL OFFERS FROM EACH FIRM WERE AS FOLLOWS:

OFFEROR INITIAL OFFER FINAL OFFER

SEA $ 67,364.00 $ 40,076.00

PAE 71,752.40 52,133.52

NCR 260,553.00 101,922.00

FOLLOWING NEGOTIATIONS, SEA WAS DETERMINED TO BE NONRESPONSIBLE DUE TO A PRE-AWARD SURVEY FINDING THAT IT DID NOT POSSESS AN ADEQUATE POTENTIAL SOURCE OF LABOR TO SERVICE THE TOTAL PROSPECTIVE REQUIREMENT. AWARD OF CONTRACT NO. DAJB11-71-D-0354 (HEREAFTER 0354) WAS MADE TO PAE ON JUNE 30, 1971.

IT IS YOUR CONTENTION THAT THE AWARD TO PAE RESULTS IN DOUBLE PAYMENT BY THE GOVERNMENT FOR AT LEAST SOME OF THE WORK COVERED BY THE CONTRACT. SPECIFICALLY, YOU STATE THAT CONTRACT 0354 REQUIRES PAE TO INSTALL, AT NO ADDITIONAL CHARGE, OFFICE MACHINERY PURCHASED FOR MILITARY USE IN VIETNAM, WHILE AT THE SAME TIME NCR, AS AN AGENT OF ADDRESSOGRAPH-MULTIGRAPH CO., IS ALSO REQUIRED TO INSTALL ADDRESSOGRAPH MULTIGRAPH MACHINES FURNISHED THE MILITARY IN VIETNAM UNDER BUSH CONTRACT NO. F62562-70-C-0102 (HEREAFTER 0102). YOU POINT OUT THAT BOTH CONTRACT NO. DAJB11-71-D-0228 (WE ASSUME YOU MEAN CONTRACT 0354 RATHER THAN DAJB11-71-D-0228, WHICH IS THE RFP NUMBER) AND BUSH CONTRACT 0102 ARE FIXED PRICE CONTRACTS AND IN COMPUTING THE CONTRACT PRICE IN EACH CASE, THE CONTRACTORS WOULD HAVE CALCULATED IN A FACTOR FOR INSTALLATION CHARGES. THEREFORE, YOU CONCLUDE, IT IS APPARENT THAT THERE IS A DOUBLE PAYMENT FOR THIS SERVICE.

ADDITIONALLY, YOU STATE THAT THE PERFORMANCE OF CONTRACT 0354 WILL LEAD TO IRREVOCABLE INJURY TO THE U.S. GOVERNMENT'S FINANCIAL INTEREST IN THAT THE PERFORMANCE BY PERSONS OTHER THAN AUTHORIZED FACTORY REPRESENTATIVES WILL VOID CERTAIN WARRANTIES ON THE EQUIPMENT.

REGARDING YOUR CONTENTION THAT THE GOVERNMENT IS PAYING DOUBLE FOR SOME OF THE WORK COVERED BY CONTRACT 0354, PARAGRAPH 0-2 OF BUSH CONTRACT 0102 PROVIDES FOR INSTALLATION OF MACHINES UNDER THAT CONTRACT ON A NO COST BASIS, PROVIDED THE LOCATION IS WITHIN 25 MILES OF THE OFFICES OF AN AUTHORIZED SUBSIDIARY OR AGENCY. IF THE REQUIRED INSTALLATION IS MORE THAN 25 MILES FROM SUCH OFFICES, THE AUTHORIZED SUBSIDIARY OR AGENT (NCR IN THE PRESENT CASE), WILL INSTALL THE MACHINES ON A NO COST BASIS, EXCEPT FOR TRANSPORTATION, BILLETING AND MESSING OF REQUIRED CONTRACTOR PERSONNEL. ALSO, UNDER SECTION F 2(E)(I) OF CONTRACT 0354 INSTALLATION OF NEW EQUIPMENT IS ON A NO COST BASIS. HOWEVER, NOTWITHSTANDING THE STATEMENT, IN BOTH CONTRACTS, THAT INSTALLATION IS ON A NO COST BASIS, IT WOULD APPEAR TO BE A REASONABLE ASSUMPTION THAT BOTH CONTRACTORS, NCR AND PAE, WOULD, IN THE PREPARATION OF THEIR BIDS OR PROPOSALS, CALCULATE IN A FACTOR FOR INSTALLATION CHARGES. THUS, IT COULD BE ARGUED THAT THE GOVERNMENT DOES INDIRECTLY PAY INSTALLATION COSTS.

HOWEVER, IT DOES NOT NECESSARILY FOLLOW THAT THERE IS A DOUBLE PAYMENT FOR SUCH SERVICE, SINCE CONTRACT 0354 IS A REQUIREMENTS TYPE CONTRACT AND WE ARE ADVISED THAT NO MACHINE IS INSTALLED UNDER THAT CONTRACT UNTIL IT HAS BEEN ADDED TO THE "DENSITY LIST" (THIS LIST SHOWS THE NUMBER OF MACHINES, MODEL NUMBER, SERIAL NUMBER AND LOCATION OF MACHINES IN VIETNAM) OF THE CONTRACT BY MODIFICATION. ALSO, ACCORDING TO SECTION F-2(E)(I) OF THE CONTRACT A DULY-APPOINTED ORDERING-OFFICER MUST ISSUE AN ORDER DIRECTING INSTALLATION BEFORE THE MACHINE CAN BE INSTALLED. WE ARE FURTHER ADVISED THAT THE ADDITION OF A MACHINE TO THE DENSITY LIST, AND THE ISSUANCE OF AN ORDER DIRECTING INSTALLATION OF THE MACHINE, DOES NOT OCCUR IF THE MACHINE HAS ALREADY BEEN INSTALLED, OR SCHEDULED FOR INSTALLATION UNDER A BUSH CONTRACT. ACCORDING TO THE CONTRACTING OFFICER, THE SCOPE OF OPERATION OF SECTION F-2(E), WHICH DEALS WITH THE INSTALLATION OF NEW EQUIPMENT, IS AS A PRACTICAL MATTER RESTRICTED TO THOSE RARE INSTANCES WHERE NEW EQUIPMENT NOT PURCHASED UNDER A BUSH CONTRACT HAS TO BE INSTALLED, OR WHERE SUCH EQUIPMENT IS PURCHASED UNDER A BUSH CONTRACT BUT IT IS IMPOSSIBLE TO HAVE IT INSTALLED UNDER THE BUSH CONTRACT. THUS, IT DOES NOT APPEAR THAT THE GOVERNMENT PAYS TWICE FOR THE SAME SERVICE.

REGARDING YOUR CONTENTION THAT MAINTENANCE OF EQUIPMENT BY PERSONS OTHER THAN EMPLOYEES OF THE MANUFACTURER'S AUTHORIZED AGENT WILL VOID CERTAIN WARRANTIES, THERE ARE TWO WARRANTIES IN BUSH CONTRACT 0102. THE FIRST WARRANTY IS SET OUT IN PARAGRAPH K, OF THE AUTHORIZED PRICE LIST (APL) OF BUSH CONTRACT 0102, ENTITLED "CERTIFICATE OF CONFORMANCE". SUB-PARAGRAPH 1 OF PARAGRAPH K PROVIDES FOR A CERTIFICATION BY THE SUPPLIER OF THE EQUIPMENT THAT IT (THE SUPPLIER) HAS SHIPPED THE EQUIPMENT AND THE EQUIPMENT IS OF THE QUANTITY AND QUALITY CALLED FOR BY THE CONTRACT. SUB- PARAGRAPH 2 OF SECTION K STATES, IN PERTINENT PART, AS FOLLOWS:

"2. NOTWITHSTANDING ANY PROVISIONS OF THE CERTIFICATE REFERENCED ABOVE, *** THE LIABILITY OF THE SUPPLIER WITH RESPECT TO SUPPLIES ACCEPTED BY THE UNITED STATES GOVERNMENT UNDER THE PROVISIONS OF PARAGRAPH 1 ABOVE WILL, AFTER INSPECTION BY THE UNITED STATES GOVERNMENT OR AFTER THE EXPIRATION OF A REASONABLE TIME FOLLOWING DELIVERY TO THE UNITED STATES GOVERNMENT WITHIN WHICH INSPECTION MAY BE MADE, WHICHEVER OCCURS FIRST, BE LIMITED, EXCEPT AS TO SUPPLIES REJECTED UPON INSPECTION, TO LIABILITY FOR LATENT DEFECTS, FRAUD, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD."

THE ABOVE WARRANTY IS INDEPENDENT OF ANY INSTALLATION OR MAINTENANCE. VIEW THEREOF, WE FAIL TO UNDERSTAND HOW THE WARRANTY COULD BE WAIVED, EVEN THOUGH THE EQUIPMENT TO WHICH THE WARRANTY APPLIES MIGHT NOT BE INSTALLED OR MAINTAINED BY THE CONTRACTOR, ITS AUTHORIZED SUBSIDIARY OR AGENT.

IN REGARD TO THE SECOND WARRANTY, PARAGRAPH N OF BUSH CONTRACT 0102 PROVIDES AS FOLLOWS:

"N. WARRANTY

1. JAPAN:

A. ALL NECESSARY ADJUSTMENTS OF MACHINES PROCURED HEREUNDER, NOT OCCASIONED BY ACCIDENT OR MISUSE, SHALL BE MADE AT NO EXPENSE TO THE U.S. GOVERNMENT BY THE CONTRACTOR, ITS AUTHORIZED SUBSIDIARIES OR AGENTS (REF SECTION III) LOCATED NEAREST TO THE USING AGENCY DURING A 90-DAY PERIOD AFTER INSTALLATION FOR A-M COPIER, ADDRESSOGRAPH, AND DUPLICATOR MACHINES, AND A 30 DAY PERIOD FOR VARITYPER AND HEADLINER MACHINES. ALL MACHINES PROCURED HEREUNDER ARE GUARANTEED FOR A PERIOD OF ONE (1) YEAR COMMENCING EITHER ON THE DATE OF INSTALLATION OR 90 DAYS AFTER DELIVERY TO THE ORDERING ACTIVITY, WHICHEVER IS FIRST. DURING THE GUARANTEE PERIOD ALL BROKEN OR DEFECTIVE PARTS NOT CAUSED BY ACCIDENT OR MISUSE WILL BE REPLACED AT THE CONTRACTOR'S EXPENSE.

B. SERVICE UNDER THE GUARANTEE WILL BE RENDERED DURING REGULAR BUSINESS HOURS. SERVICE UNDER THE GUARANTEE DOES NOT EXTEND TO PRODUCTS DAMAGED BY ACCIDENT, BURGLARY, OR BY ABUSE OR NEGLECT OF PERSONS OTHER THAN THOSE AUTHORIZED TO REPRESENT THE CONTRACTOR, ITS SUBSIDIARIES OR AGENTS. LIKEWISE, THE GUARANTEE WILL NOT EXTEND TO CASES WHERE REPAIRS, ALTERATIONS OR ADDITIONS HAVE BEEN MADE BY PERSONS NOT AUTHORIZED TO REPRESENT THE CONTRACTOR, ITS SUBSIDIARIES OR AGENTS.

2. EX-JAPAN: WARRANTY PROVISIONS FOR MACHINES PROCURED HEREUNDER ARE THE SAME AS INDICATED IN SUB-PARAGRAPH N. 1, ABOVE, EXCEPT THAT SERVICE FOR MACHINES DELIVERED FOR USE MORE THAN 25 MILES FROM ESTABLISHED SERVICE OFFICES OF THE CONTRACTOR, ITS AUTHORIZED SUBSIDIARIES OR AGENTS (REF SECTION III) WILL BE AVAILABLE ONLY AT SUCH CITIES WHERE SUCH SERVICE OFFICES ARE MAINTAINED."

ADMITTEDLY, THE PROTECTION OF THE ABOVE WARRANTY WOULD UNDOUBTEDLY BE WAIVED BY PERFORMANCE UNDER CONTRACT 0354. HOWEVER, WE NOTE THAT THE WARRANTY PROVISIONS OF CONTRACT 0354 ARE BROADER IN SCOPE THAN THOSE SET OUT IN PARAGRAPH N, IN THAT THE CONTRACTOR UNDER CONTRACT 0354 IS OBLIGATED, PURSUANT TO SECTION F-2(E) OF THE CONTRACT, TO HONOR THE MANUFACTURER'S ORIGINAL WARRANTY THROUGHOUT THE PERIOD IT MAY BE APPLICABLE, AND TO ACCEPT THE NEW MACHINE UNDER THE SCHEDULED, OR "PREVENTIVE" MAINTENANCE TERMS OF CONTRACT 0354 THEREAFTER. ADDITIONALLY, SECTION F-2(B) PROVIDES FOR NO-COST EMERGENCY REPAIR, OR "REMEDIAL MAINTENANCE", AS TO ALL MACHINES COVERED BY CONTRACT 0354 INCLUDING ANY MACHINES UNDER WARRANTY. THUS, IT DOES NOT APPEAR THAT IT IS PREJUDICIAL TO THE GOVERNMENT'S INTEREST TO WAIVE THE WARRANTY PROVISIONS OF PARAGRAPH N.

ALSO, IT MUST BE POINTED OUT THAT THE PRICE IMPACT OF THE FACTORS RAISED BY YOUR PROTEST WOULD APPEAR TO BE FAR OUTWEIGHED BY THE COMPETITIVE BENEFIT, CLEARLY DEMONSTRATED BY THE BID PRICE DIFFERENTIAL, OBTAINED BY THE PRESENT SOLICITATION AND AWARD. THUS, WE ARE UNABLE TO CONCLUDE THAT THE GOVERNMENT'S FINANCIAL INTEREST IS IN ANYWAY INJURED BY THE AWARD OF CONTRACT 0354.

ADDITIONALLY, WE ARE OF THE VIEW THAT IF THE GOVERNMENT IS PRECLUDED FROM AWARDING REPAIR AND MAINTENANCE CONTRACTS TO ANY FIRM OTHER THAN THE SUPPLIER OF THE EQUIPMENT INVOLVED, OR ITS AGENTS, THE INEVITABLE RESULT WILL BE A PERPETUAL SOLE SOURCE PROCUREMENT OF THESE SERVICES, WHICH WOULD BE TO THE ULTIMATE FINANCIAL DETRIMENT OF THE GOVERNMENT.

FOR THE ABOVE REASONS, YOUR PROTEST MUST BE DENIED.