B-176276, DEC 14, 1972

B-176276, DEC 14, 1972

CONTRACTS - PRODUCT DEFICIENCIES AT DELIVERY - INADEQUATE PREAWARD SURVEY DECISION CONCERNING THE AWARD OF CONTRACTS TO DESERT LABORATORIES, INC., CENTURY HONE DIVISION, UNDER TWO IFB'S ISSUED BY THE U.S. NAVY PURCHASING OFFICE, WASHINGTON, D.C., FOR SINGLE SPINDLE, VERTICAL, AUTOMATIC, HONING MACHINES. THE DEFENSE CONTRACT ADMINISTRATION SERVICES HAS BEEN MADE AWARE OF THE PROBLEMS, AND DESERT LABS HAS AGREED TO MAKE THE NECESSARY CORRECTIONS TO COMPLY WITH THE CONTRACT REQUIREMENTS. SINCE DCAS HAS BEEN REQUESTED TO APPLY TIGHTER INSPECTION PARAMETERS TO PERFORMANCE INSPECTIONS, IT IS ANTICIPATED THAT FUTURE PREAWARD SURVEYS OF DESERT LABS WILL BE MORE RELIABLE.

TO BARNES DRILL COMPANY:

REFERENCE IS MADE TO YOUR LETTERS DATED JUNE 14 AND NOVEMBER 7, 1972, WITH ENCLOSURES, CONCERNING THE AWARD OF CONTRACTS TO DESERT LABORATORIES, INCORPORATED, CENTURY HONE DIVISION (DESERT LABS), UNDER INVITATION FOR BIDS (IFB) NOS. N00600-71-B-0293, ISSUED MARCH 29, 1971, AND N00600-72-B- 0102, ISSUED DECEMBER 14, 1971, BY THE UNITED STATES NAVY PURCHASING OFFICE, WASHINGTON, D. C.

YOU HAVE CONTENDED THAT DESERT LABS IS NOT CAPABLE OF MANUFACTURING THE MACHINE REQUIRED AND THAT THE MACHINE INSTALLED AT THE HUNTERS POINT NAVAL SHIPYARD UNDER THE CONTRACT AWARDED PURSUANT TO THE FIRST MENTIONED SOLICITATION DID NOT MEET THE SPECIFICATIONS.

BOTH IFBS WERE ISSUED FOR A SINGLE SPINDLE, VERTICAL, AUTOMATIC, HONING MACHINE. AWARD UNDER THE MARCH 1971 SOLICITATION WAS MADE TO DESERT LABS ON MAY 4, 1971. BETWEEN NOVEMBER 22 AND 24, 1971, GOVERNMENT PERSONNEL, INCLUDING THE DEFENSE CONTRACT ADMINISTRATION SERVICES (DCAS) QUALITY ASSURANCE REPRESENTATIVE, VISITED DESERT LABS IN ORDER TO MAKE A VISUAL INSPECTION AND WITNESS TESTS OF THE HONING MACHINE. IT HAS BEEN ADMINISTRATIVELY REPORTED THAT THERE WERE CERTAIN DISCREPANCIES NOTED AND THE TESTING WAS NOT COMPLETED. SUBSEQUENTLY, THE DISCREPANCIES WERE CORRECTED, THE TEST COMPLETED, AND THE MACHINE ACCEPTED IN DECEMBER 1971. UPON DELIVERY OF THE HONING MACHINE, THE PROCURING ACTIVITY TESTED IT AND COMPILED A LIST OF "26 DISCREPANCIES," OF WHICH "10 DISCREPANCIES" WERE CONSIDERED TO BE IN VIOLATION OF THE CONTRACT SPECIFICATIONS. THE OTHER "16 DISCREPANCIES" WERE NOT CONSIDERED VIOLATIONS OF THE CONTRACT'S REQUIREMENTS BECAUSE OF THE GENERAL NATURE OF SPECIFICATION MIL-H-80003A. IT IS REPORTED THAT THE CONTRACTOR HAS AGREED TO MAKE THE NECESSARY CORRECTIONS TO COMPLY WITH THE CONTRACT REQUIREMENTS.

AS A RESULT OF THE SITUATION WHICH DEVELOPED HERE, THE NAVY PURCHASING OFFICE, WASHINGTON, D. C., ORDERED A THOROUGH REVIEW AND NECESSARY REVISIONS TO THE SPECIFICATION IN ORDER THAT IT WILL MORE FULLY REFLECT THE MINIMUM NEEDS OF THE NAVY. FURTHER, SIGNIFICANT CHANGES ARE TO BE REPORTED TO THE DIRECTOR, DEFENSE INDUSTRIAL PLANT EQUIPMENT CENTER, IN ORDER THAT ALL OF THE SERVICES MAY BENEFIT FROM THE NPO FINDINGS. ALSO, THE DCAS OFFICE RESPONSIBLE FOR THE INITIAL INSPECTION AND ACCEPTANCE OF THE MACHINE HAS BEEN ADVISED OF THE SITUATION AND REQUESTED TO TIGHTEN UP ITS INSPECTION PROCEDURES.

YOU ALSO CONTEND THAT SINCE DESERT LABS IS NOT CAPABLE OF BUILDING HONING MACHINERY, A SIMILAR SITUATION WILL OCCUR UNDER A RECENTLY AWARDED CONTRACT TO DESERT LABS, UNDER IFB N006000-72-B-0102, ISSUED DECEMBER 14, 1971. PRIOR TO THE AWARD, THE CONTRACTING OFFICER REQUESTED THAT A PREAWARD SURVEY BE CONDUCTED. THE PREAWARD SURVEY WAS COMPLETED MARCH 10, 1972, AND AWARD TO DESERT LABS WAS RECOMMENDED. THE CONTRACTING OFFICER REVIEWED THE REPORT AND DETERMINED THAT DESERT LABS WAS RESPONSIBLE AND ENTITLED TO THE AWARD AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER.

THE PREAWARD SURVEY WAS CONDUCTED BY THE SAME DCAS OFFICE WHICH INITIALLY INSPECTED AND ACCEPTED THE MACHINE UNDER DESERT LABS' EARLIER CONTRACT AND ITS AFFIRMATIVE RECOMMENDATION WAS MADE PRIOR TO DISCOVERY OF THE "26 DISCREPANCIES." NOW THAT THE DCAS HAS BEEN APPRISED OF THE CURRENT SITUATION AND REQUESTED TO APPLY TIGHTER INSPECTION PARAMETERS TO PERFORMANCE INSPECTIONS, PARTICULARLY WITH RESPECT TO THE SUBJECT CONTRACT, IT IS ANTICIPATED THAT SUBSEQUENT PREAWARD SURVEYS OF DESERT LABS, AND OTHER PROSPECTIVE CONTRACTORS, WILL BE MORE RELIABLE.

WE THANK YOU FOR BRINGING THIS MATTER TO THE ATTENTION OF THIS OFFICE.