B-174968, DEC 7, 1972

B-174968, DEC 7, 1972

BID PROTEST - URGENCY OF NEED - SOLE-SOURCE AWARD DECISION DENYING THE PROTEST ON BEHALF OF VIRGINIA ELECTRONICS COMPANY, INC., AGAINST THE SOLE-SOURCE AWARD TO DENRO LABORATORIES, INC., OF A CONTRACT BY THE NAVAL SUPPLY CENTER, CHARLESTON, S.C. DUE TO THE URGENCY OF THE PROCUREMENT, THE "PUBLIC EXIGENCY" EXCEPTION OF 10 U.S.C. 2304(A)(2) ALLOWED FOR THE PROCUREMENT BY DIRECT NEGOTIATION WITH THE CONTRACTOR WHEN THE URGENCY OF THE DELIVERY PRECLUDES COMPETITIVE SOLICITATIONS. FURTHER, THE CONTRACTING OFFICER'S DETERMINATION OF BOTH THE URGENCY OF NEED AND DENRO'S INTIMATE FAMILIARITY WITH THE ITEMS JUSTIFIED THE AWARD ON A SOLE SOURCE BASIS. ALSO, THE "URGENCY ON NEED" STIPULATION IN ASPR 1-1003.1(C)(IV) PROVIDES THAT THE PROPOSED PROCUREMENT NEED NOT BE ADVERTISED IN THE "COMMERCE BUSINESS DAILY." PROTEST IS ACCORDINGLY DENIED.

TO FRIED, FRANK, HARRIS, SHRIVER AND KAMPELMAN:

WE REFER TO YOUR LETTERS DATED JANUARY 18, MARCH 17 AND MAY 17, 1972, WRITTEN ON BEHALF OF VIRGINIA ELECTRONICS COMPANY, INC. (VELCO), WHEREIN YOU PROTEST THE AWARD OF CONTRACT NO. N00612-72-C-0232, ISSUED BY THE NAVAL SUPPLY CENTER, CHARLESTON, SOUTH CAROLINA, TO DENRO LABORATORIES, INC. (DENRO), ON THE GROUND THAT SAID CONTRACT WAS UNLAWFULLY AWARDED ON A SOLE-SOURCE BASIS.

ON NOVEMBER 29, 1971, THE NAVAL ELECTRONICS SYSTEMS COMMAND, S. E. DIVISION, CHARLESTON, SOUTH CAROLINA, ISSUED AN URGENT PROCUREMENT REQUEST, BEARING AN 02 PRIORITY UNDER THE UNIFORM MATERIAL MOVEMENT AND ISSUE PRIORITY SYSTEM (UMMIPS), FOR 400 INSTANTANEOUS INTERPHONE OVERRIDE RESPONSE (IIOR) SWITCHING GROUPS, AND 80 MONITOR MICROPHONE INSULATION AMPLIFIERS TO THE NAVAL SUPPLY CENTER. THIS REQUEST INDICATED DELIVERY DATES OF MARCH 1, 1972, FOR 50 PERCENT OF THE MATERIAL AND MARCH 31, 1972, FOR THE REMAINING 50 PERCENT, AND THE PROCUREMENT REQUIRED THAT THE EXISTING INTERPHONE COMMUNICATION CHANNELS OF THE BASIC ANFSA-52(V) SYSTEM BE ADAPTED TO PROVIDE INSTANTANEOUS INTERPHONE OVERRIDE RESPONSE (IIOR) SO AS TO AFFORD INSTANTANEOUS COMMUNICATIONS BETWEEN AIR TRAFFIC CONTROLLERS HANDLING DIFFERENT SECTORS OF THE POSITIVE CONTROL AREAS.

IT IS YOUR CONTENTION, MADE ON BEHALF OF VELCO, THAT NAVY, BY NEGOTIATING THE CONTRACT ON A SOLE-SOURCE BASIS WITH DENRO, WHILE VELCO WAS CAPABLE OF PROVIDING THE CONTRACT ITEMS, ABUSED ITS AUTHORITY IN THAT IT IGNORED THE REQUIREMENTS FOR COMPETITION CONTAINED IN THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) (SEE ASPR 1-300.1; 1-302.2; 3 101; 3-102(C)). YOU MAINTAIN THAT SUCH ACTION WAS DONE DELIBERATELY AND WITH THE KNOWLEDGE THAT IT WAS VIOLATIVE OF THE REGULATORY REQUIREMENTS; AND THAT THE AWARD OF THE SUBJECT CONTRACT WAS THEREFORE A LEGAL NULLITY.

ADDITIONALLY, YOU ALLEGE THAT SINCE THE SUBJECT CONTRACT ONLY INVOLVES MINOR AND NONCOMPLEX MODIFICATIONS TO TWO AN/FSA-52 COMMUNICATION AND CONTROL GROUP SYSTEMS DEVELOPED BY VELCO AND RECENTLY DELIVERED TO THE NAVY, VELCO IS THE BEST QUALIFIED SOURCE TO PERFORM THE MODIFICATIONS, AND THE SOLE-SOURCE JUSTIFICATION IS THEREFORE A SHAM.

IT IS ALSO YOUR CONTENTION THAT THE WORK TO BE PERFORMED UNDER THE CONTRACT HAD NO CONNECTION WITH THE OA-7621 COMPONENT GROUP OR SUBSYSTEM, WITH WHICH THE NAVY MAINTAINS THE CONTRACTOR MUST BE FAMILIAR, AND THAT REFERENCE TO SAID COMPONENT GROUP ONLY ENTERED THE PICTURE AFTER YOUR PROTEST HAD BEEN SUBMITTED AND IS MERE CAMOUFLAGE INTENDED TO COVER THE COMPLETE LACK OF JUSTIFICATION FOR THE NAVY'S SOLE SOURCE AWARD TO DENRO. YOU BASE THIS ON THE FACT THAT IN JULY 1971, VELCO SUBMITTED A TECHNICAL PROPOSAL TO NAVELEX HQ IN RESPONSE TO RFP N00039-71-R-0142(S) FOR AN EXPANDED AND MODIFIED AN/FSA-52(V), WHICH INCLUDED THE IIOR MODIFICATION SUBSEQUENTLY PROCURED SOLE SOURCE FROM DENRO.

FINALLY, YOU CONTEND THAT NAVY ACTED ILLEGALLY BY REASON OF THE FACT THAT IT FAILED TO SYNOPSIZE ITS PROPOSED PROCUREMENT IN THE COMMERCE BUSINESS DAILY PRIOR TO AWARD, AS REQUIRED BY ASPR 1-1003.1 AND 1 1003.2.

THE DETERMINATIONS AND FINDINGS ISSUED BY THE CONTRACTING OFFICER ON DECEMBER 2, 1971, INDICATES THAT, DUE TO THE URGENCY OF THE PROCUREMENT, THE SUBJECT CONTRACT WAS NEGOTIATED UNDER THE "PUBLIC EXIGENCY" EXCEPTION OF 10 U.S.C. 2304(A)(2) AS IMPLEMENTED BY ASPR 3 202.2(VI), WHICH AUTHORIZES PROCUREMENT BY NEGOTIATION WHEN THE SOLICITATION CITES A UNIFORM MOVEMENT AND ISSUE PRIORITY SYSTEM DESIGNATOR OF 1 THROUGH 6. THIS INSTANCE, THE SOLICITATION WAS ASSIGNED A PRIORITY OF 02.

ALTHOUGH IT IS TRUE THAT THE ASPR REQUIRES COMPETITION, 10 U.S.C. 2304(G) PROVIDES:

"IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH RATES OR PRICES ARE NOT FIXED BY LAW OR REGULATION AND IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSALS, *** SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, ***."

THUS, COMPETITION IS REQUIRED ONLY WHERE TIME OF DELIVERY WILL PERMIT. -172542, JULY 2, 1971.

IN THE INSTANT CASE THE JUSTIFICATION FOR THE DETERMINATION BY THE CONTRACTING OFFICER THAT THE PROCUREMENT SHOULD BE ACCOMPLISHED ON A SOLE- SOURCE BASIS IS CONTAINED IN A REPORT DATED FEBRUARY 3, 1972, WHEREIN IT IS STATED:

"THERE WAS NOT SUFFICIENT TIME FOR THE NAVAL ELECTRONICS SYSTEMS COMMAND, SOUTHEAST DIV. TO DESIGN, TEST AND PREPARE FABRICATION DRAWINGS FOR A COMPETITIVE PROCUREMENT. THE PROJECT WOULD NORMALLY CALL FOR CONSIDERABLE DEVELOPMENT WORK IN ADAPTING THE EXISTING PRIVATE INTERPHONE CIRCUITRY OF THE AN/FSA-52(V) TO PROVIDE THE REQUIRED INSTANTANEOUS OVERRIDE FEATURE. WHEN ADDING ADDITIONAL CODES OF COMMUNICATIONS TO MULTI-CHANNEL, MULTI- POSITION COMMUNICATION SYSTEM SUCH AS THE AN/FSA-52(V), GREAT CARE MUST BE EXERCISED DURING THE DESIGN AND TESTING PHASES TO INSURE THAT SUFFICIENT ISOLATION IS MAINTAINED BETWEEN OPERATORS AND ASSOCIATED COMMUNICATION CHANNELS. A THOROUGH KNOWLEDGE OF THE BASIC SYSTEM IS REQUIRED TO PREVENT 'SNEAK' CIRCUITS WHICH COULD COUPLE VARIOUS COMMUNICATION CHANNELS TOGETHER WITH RESULTING INTERFERENCE TO ESSENTIAL COMMUNICATION BETWEEN AIRCRAFT AND GROUND CONTROLLERS. DENRO LABORATORIES, INC. WAS THE ONLY CONTRACTOR KNOWN TO ACTUALLY POSSESS THE NECESSARY CIRCUIT DESIGN AND SUFFICIENT BACKGROUND KNOWLEDGE OF THE AN/FSA-52(V) TO INSURE COMPATIBILITY WITH EXISTING CIRCUITRY. DENRO LABORATORIES, INC. HAD PREVIOUSLY DESIGNED, 'BREADBOARDED' AND TESTED THE NECESSARY CIRCUITRY TO INSURE RELIABILITY AND COMPATIBILITY WITH EXISTING AN/FSA-52(V) CIRCUITRY. NAVAL ELECTRONIC SYSTEMS COMMAND ESTIMATED THAT CIRCUIT DESIGN ENGINEERING BY ANOTHER CONTRACTOR WOULD ADD FORTY-FIVE (45) DAYS MINIMUM TO TOTAL EFFORT AND ADD ADDITIONAL COSTS."

THUS, THE CONTRACTING OFFICER BELIEVED THAT ONLY DENRO WOULD BE ABLE TO FULFILL THE OBJECTIVES OF THE CONTRACT WITHIN THE TIME FRAME ALLOTTED.

IN RESPONSE TO YOUR CONTENTION THAT THE OA-7621 WAS MERE CAMOUFLAGE AND ONLY ENTERED THE PICTURE AFTER YOUR PROTEST, YOU ARE REFERRED TO SECTION F, PARAGRAPH 3.3(C), OF THE SUBJECT CONTRACT, WHICH CLEARLY REQUIRES THAT THE IIOR PROVIDE "FULLY INTEGRATED AND SIMULTANEOUS OPERATION WITH THE EXISTING OA-7621(V)/FSA-52(V) LANDLINE SELECTOR AND DIAL CONSOLES. ADDITIONALLY, NAVY STATES IN ITS SUPPLEMENTAL REPORT DATED APRIL 4, 1972, THAT "SINCE THE IIOR SHARES THE SAME MICROPHONE, HEADPHONE AND RECORDING AMPLIFIERS WITH THE OA-7621, THE CIRCUITRY FOR BOTH MODES MUST BE COMPATIBLE. BOTH SYSTEMS ARE *** DIRECTLY CONNECTED TO EACH OTHER."

ALTHOUGH DENRO DID NOT DEVELOP AND MANUFACTURE THE OA-7621 SUBSYSTEM, AS ERRONEOUSLY STATED BY CAPTAIN MULL IN HIS REPORT OF FEBRUARY 3, 1972, IT WAS THE NAVY'S OPINION, AS STATED IN ITS SUPPLEMENTAL REPORT OF APRIL 4, 1972, THAT DENRO HAD GAINED INTIMATE FAMILIARITY WITH THE OA-7621 DURING THE PREPRODUCTION CHECK-OUT REQUIREMENT FOR ITS FIRST PROCUREMENT CONTRACT N00612-68-C-0030. ON THE OTHER HAND, NAVY FELT THAT SINCE VELCO'S CONTRIBUTION TO THE PROTOTYPE OA-7621 WAS LIMITED TO SUPPLYING A FEW MECHANISM ASSEMBLIES AND THE FABRICATION OF 3 UNITS NOT INVOLVED WITH THE INTERFACE BETWEEN THE AN/FSA-52 AND ITS OA-7621 SUBSYSTEM, IT DID NOT HAVE THE REQUISITE "INTIMATE FAMILIARITY" WITH THE SYSTEM TO ASSURE DEVELOPMENT AND DELIVERY WITHIN THE TIME ALLOTTED.

FURTHERMORE, DESPITE CAPTAIN MULL'S REPORT THAT THE AWARD TO DENRO WAS JUSTIFIED DUE TO A PROPOSAL SUBMITTED TO NAVELEX HQ, IT IS THE NAVAL SYSTEMS COMMAND'S CONTENTION THAT NEITHER VELCO'S PROPOSAL OF JULY 1971, NOR THAT OF DENRO'S SUBMITTED TO NAVELEX HQ, WAS AVAILABLE TO THE PROCURING AGENCY'S PERSONNEL. RATHER, THOSE PERSONNEL WITNESSED AN UNSOLICITED PROPOSAL BY DENRO IN LATE 1970 IN WHICH DENRO ACTUALLY DEMONSTRATED A WORKING "BREADBOARD" MODEL OF IIOR CIRCUITRY UTILIZING SOLID STATE SWITCHING TECHNIQUES. THUS, AS FAR AS THEY KNEW, ONLY DENRO WAS CAPABLE OF COMPLETING THE CONTRACT IN A TIMELY MANNER.

ALTHOUGH USE OF THE "PUBLIC EXIGENCY" EXCEPTION DOES NOT IN AND OF ITSELF CLOAK THE CONTRACTING OFFICER WITH AUTHORITY TO PROCURE ITEMS ON A NONCOMPETITIVE BASIS, HE IS VESTED WITH A CONSIDERABLE AMOUNT OF DISCRETION TO DETERMINE THE AMOUNT OF COMPETITION CONSISTENT WITH THE EXIGENCY SITUATION. SEE B-174026, FEBRUARY 8, 1972; B-172542, JULY 2, 1971. FURTHERMORE, IT HAS BEEN THE CONSISTENT POLICY OF OUR OFFICE NOT TO QUESTION THE CONTRACTING OFFICER'S DECISION TO MAKE A SOLE SOURCE AWARD UNLESS IT IS CLEAR FROM THE WRITTEN RECORD THAT HE ACTED IN AN ARBITRARY OR CAPRICIOUS MANNER IN ABUSE OF THAT DISCRETION. B-174026, FEBRUARY 8, 1972; B-172542, JULY 2, 1971; B-166579, JULY 18, 1969; 44 COMP. GEN. 590 (1965).

IN THE INSTANT CASE THE RECORD ESTABLISHES THAT THE CONTRACTING OFFICER CONDUCTED NEGOTIATIONS ONLY WITH DENRO BECAUSE, WITH THE INFORMATION AVAILABLE TO HIM, HE BELIEVED ONLY DENRO COULD FULFILL THE OBJECTIVES OF THE PROCUREMENT WITHIN THE TIME PERMITTED. DESPITE THE INCONSISTENCIES BETWEEN CAPTAIN MULL'S STATEMENTS AND THOSE OF THE NAVAL SYSTEMS COMMAND, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER ACTED ARBITRARILY OR CAPRICIOUSLY IN AWARDING THE CONTRACT TO DENRO ON A SOLE SOURCE BASIS. SINCE WE ARE UNABLE TO SO CONCLUDE, WE SEE NO LEGAL BASIS UPON WHICH WE MAY OBJECT TO THE ADMINISTRATIVE DETERMINATION IN THIS MATTER. B-158924, OCTOBER 5, 1966.

WITH RESPECT TO YOUR STATEMENT THAT NAVY ACTED ILLEGALLY BY FAILING TO SYNOPSIZE ITS PROPOSED PROCUREMENT IN THE COMMERCE BUSINESS DAILY PRIOR TO AWARD, WE REFER YOU TO ASPR 1-1003.1(C)(IV) WHICH PROVIDES:

"(C) THE FOLLOWING NEED NOT BE PUBLICIZED IN THE SYNOPSIS ***:

(IV) PROCUREMENT (WHETHER ADVERTISED OR NEGOTIATED) WHICH IS OF SUCH URGENCY THAT THE GOVERNMENT WOULD BE SERIOUSLY INJURED BY THE DELAY INVOLVED IN PERMITTING THE DATE SET FOR RECEIPT OF BIDS, PROPOSALS, OR QUOTATIONS TO BE MORE THAN 15 CALENDAR DAYS FROM THE DATE OF TRANSMITTAL OF THE SYNOPSIS OR THE DATE OF ISSUANCE OF THE SOLICITATION, WHICHEVER IS EARLIER."

IN THIS CASE THE SOLICITATION WAS ISSUED AND NEGOTIATED ON DECEMBER 3, 1971, WITH FINAL NEGOTIATIONS BEING CONCLUDED ON DECEMBER 14, 1971. SINCE WE CANNOT CONTROVERT THE ADMINISTRATIVE POSITION AS TO THE URGENCY OF THE PROCUREMENT, YOUR ARGUMENT CANNOT BE SUSTAINED. SEE B 170542, DECEMBER 31, 1970. B-172958, SEPTEMBER 27, 1971.

IN VIEW OF THE FOREGOING, YOUR PROTEST MUST BE DENIED.