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CONTRACTS - SPECIFICATIONS - QUALIFIED PRODUCTS A PROCUREMENT RESTRICTING ACCEPTABLE BIDS TO A QUALIFIED PRODUCT WHICH WAS PLACED ON THE QUALIFIED PRODUCTS LIST. AFTER ALL MANUFACTURERS KNOWN TO BE INTERESTED WERE CIRCULARIZED. AFTER THE ARTICLE WAS INCLUDED IN PUBLISHED PROCUREMENT SPECIFICATIONS DOES NOT RENDER AN AWARD ILLEGAL BECAUSE SOME OF THE BIDDERS WERE NOT ABLE TO QUALIFY THEIR PRODUCTS IN TIME FOR THE AWARD. WHERE AN ADMINISTRATIVE FINDING INDICATES THAT CERTAIN EQUIPMENT HAS A NONTOXIC EFFECT ON PERSONNEL AS REQUIRED BY THE PROCUREMENT SPECIFICATIONS AND A PROTESTING BIDDER CONTENDS THAT IT IS IMPOSSIBLE TO SUPPLY NONTOXIC EQUIPMENT THE MATTER IS A QUESTION OF FACT. IS PROPER IN VIEW OF EVIDENCE OF THE URGENCY OF THE PROCUREMENT AND THE NECESSITY FOR COORDINATING THE QUALIFIED PRODUCTS ITEM WITH AIRCRAFT PRODUCTION SCHEDULES.

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B-130412, JUNE 13, 1957, 36 COMP. GEN. 809

CONTRACTS - SPECIFICATIONS - QUALIFIED PRODUCTS A PROCUREMENT RESTRICTING ACCEPTABLE BIDS TO A QUALIFIED PRODUCT WHICH WAS PLACED ON THE QUALIFIED PRODUCTS LIST, AFTER ALL MANUFACTURERS KNOWN TO BE INTERESTED WERE CIRCULARIZED, AND AFTER THE ARTICLE WAS INCLUDED IN PUBLISHED PROCUREMENT SPECIFICATIONS DOES NOT RENDER AN AWARD ILLEGAL BECAUSE SOME OF THE BIDDERS WERE NOT ABLE TO QUALIFY THEIR PRODUCTS IN TIME FOR THE AWARD. WHERE AN ADMINISTRATIVE FINDING INDICATES THAT CERTAIN EQUIPMENT HAS A NONTOXIC EFFECT ON PERSONNEL AS REQUIRED BY THE PROCUREMENT SPECIFICATIONS AND A PROTESTING BIDDER CONTENDS THAT IT IS IMPOSSIBLE TO SUPPLY NONTOXIC EQUIPMENT THE MATTER IS A QUESTION OF FACT, AND, IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY, THE ADMINISTRATIVE FINDINGS MUST BE ACCEPTED. ALTHOUGH THE COST TO SMALL BUSINESS FIRMS IN QUALIFYING PRODUCTS TENDS TO RESTRICT COMPETITION, THE AUTHORITY IN 10 U.S.C. 2305 AND 41 U.S.C. 253, WHICH VESTS PROCUREMENT OFFICERS WITH DISCRETION IN THE DETERMINATION OF THE EXTENT OF COMPETITION, PERMITS THE USE OF A QUALIFIED PRODUCTS SYSTEM OF PROCUREMENT. THE ADDITION OF AN AIRCRAFT SAFETY ITEM TO THE QUALIFIED PRODUCTS LIST PURSUANT TO SECTION 2-502 (A) OF THE ARMED SERVICE PROCUREMENT REGULATIONS, WHICH MAKES DELIVERY TIME A FACTOR FOR INCLUSION OF ITEMS ON THE LIST, IS PROPER IN VIEW OF EVIDENCE OF THE URGENCY OF THE PROCUREMENT AND THE NECESSITY FOR COORDINATING THE QUALIFIED PRODUCTS ITEM WITH AIRCRAFT PRODUCTION SCHEDULES.

TO CARL L. SHIPLEY, JUNE 13, 1957:

YOUR LETTER OF JANUARY 18, 1957, WITH ENCLOSURES, AND FURTHER CORRESPONDENCE PROTESTS ON BEHALF OF HEYER PRODUCTS, INC. 471 CORTLANDT STREET, BELLEVILLE 9, NEW JERSEY, THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE AIR FORCE TO ANOTHER BIDDER FOR POWER SUPPLY UNITS PURSUANT TO INVITATION FOR BIDS NO. 33-600-57-96, ISSUED NOVEMBER 27, 1956.

THE INVITATION PROVIDED AT PAGE 2:

QUALIFIED PRODUCTS: WITH RESPECT TO PRODUCTS REQUIRING QUALIFICATION, AWARDS WILL BE MADE ONLY FOR SUCH PRODUCTS AS HAVE, PRIOR TO THE TIME SET FOR OPENING OF BIDS, BEEN TESTED AND APPROVED FOR INCLUSION IN A BEEN SO LISTED BY THAT DATE. MANUFACTURERS ARE URGED TO COMMUNICATE WITH THE COMMANDING GENERAL, WRIGHT AIR DEVELOPMENT CENTER, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, ATTN: WCLEE, AND ARRANGE TO HAVE THE PRODUCTS THAT THEY PROPOSE TO OFFER TESTED FOR QUALIFICATION. MANUFACTURERS HAVING PRODUCTS NOT YET LISTED, BUT WHICH HAVE BEEN QUALIFIED OR APPROVED ARE REQUESTED TO SUBMIT EVIDENCE OF SUCH QUALIFICATION OR APPROVAL WITH THEIR BIDS, SO THAT THEIR BIDS MAY BE GIVEN CONSIDERATION.

ITEM NO. 1.1 OF THE INVITATION CALLED FOR 1,818 TYPE G-1 POWER SUPPLIES IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-P-7212A ( USAF) DATED MARCH 16, 1956. PARAGRAPH 3.1 OF THE SPECIFICATION PROVIDES:

THE POWER SUPPLY FURNISHED UNDER THE SPECIFICATION SHALL BE A PRODUCT WHICH HAS BEEN TESTED AND HAS PASSED THE QUALIFICATION TESTS HEREIN.

BIDS WERE RECEIVED FROM SIX BIDDERS ONLY TWO OF WHOM HAD QUALIFIED THEIR PRODUCTS IN ACCORDANCE WITH THE TERMS OF THE INVITATION AND THE SPECIFICATION. AWARD WAS MADE ON JANUARY 14, 1957, TO THE QUALIFIED BIDDER OFFERING THE LOWER PRICE, FEDERAL TELEPHONE AND RADIO COMPANY. YOUR PROTEST IS BASED ON SEVERAL POINTS WHICH ARE CONSIDERED INDIVIDUALLY BELOW.

YOU FIRST CONTEND THAT THE HEYER COMPANY RECEIVED NO NOTICE THAT IT WAS POSSIBLE TO APPLY FOR QUALIFICATION OF THE PRODUCTS UNTIL THE INVITATION FOR BID WAS ISSUED ON NOVEMBER 27, 1956. BIDS WERE SCHEDULED TO BE OPENED 30 DAYS LATER, AND IN THIS TIME INTERVAL QUALIFICATION OF A NEW PRODUCT WAS PHYSICALLY IMPOSSIBLE BECAUSE OF TESTING AND OTHER REQUIREMENTS. YOU POINT OUT THAT WHEN AN ITEM IS PLACED ON THE QUALIFIED PRODUCTS LIST, SECTION 2.503.1 OF THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES THAT " OPPORTUNITY SHALL BE GIVEN, AND MANUFACTURERS URGED, TO SUBMIT PRODUCTS FOR QUALIFICATION TESTS.' YOU FURTHER ALLEGE THAT SECTION 2.505 OF ASPR "REQUIRES THAT MANUFACTURERS HAVING PRODUCTS NOT LISTED SHOULD BE GIVEN CONSIDERATION AND AN OPPORTUNITY TO QUALIFY. THIS WAS NOT DONE.' YOU ALSO STATE THAT SECTION 2.505.2 "REQUIRES THAT BIDS BE SOLICITED FROM ALL KNOWN SOURCES OF SUPPLY. THIS WAS NOT DONE.'

THE ADMINISTRATIVE REPORT ON THE MATTER INDICATES THAT THE PREDECESSOR UNIT TO THE ITEM IN QUESTION WAS COVERED BY MILITARY SPECIFICATION MIL-P- 7212 ( USAF) ISSUED JULY 16, 1951. THAT UNIT WAS ALSO REQUIRED TO BE QUALIFIED. THE CURRENT SPECIFICATION WAS ISSUED, SUPERSEDING THE EARLIER ONE, AS A RESULT OF A DEVELOPMENT BY THE CHATHAM ELECTRONICS COMPANY SOMETIME PRIOR TO MARCH 1956. AFTER THE CURRENT SPECIFICATION WAS PUBLISHED, THE CHATHAM PRODUCT WAS QUALIFIED ON MAY 25, 1956. AT THAT TIME, ALL OTHER FIRMS WHO HAD PREVIOUSLY DISPLAYED AN INTEREST IN PRODUCING SUCH A PRODUCT WERE NOTIFIED THAT THE ITEM HAD BEEN MODIFIED AND AS MODIFIED ADDED TO THE QUALIFIED PRODUCTS LIST. THE ADMINISTRATIVE OFFICE CONTENDS THAT ALTHOUGH INDUSTRY IN GENERAL WAS NOT THEN CIRCULARIZED FOR THE SPECIAL PURPOSE OF ADVISING THEM OF THE INCLUSION OF SUCH ARTICLE ON THE QUALIFIED PRODUCTS LIST, THE FACT THAT SUCH INCLUSION WAS REPORTED IN THE OCTOBER 1, 1956, ISSUE OF THE " INDEX OF SPECIFICATIONS AND RELATED PUBLICATIONS USED BY THE UNITED STATES AIR FORCE," WHICH LISTS PRODUCTS INCLUDED ON THE QUALIFIED PRODUCTS LIST, IS AVAILABLE TO THE PUBLIC FROM THE GOVERNMENT PRINTING OFFICE, AND IS COMMONLY PURCHASED BY MANUFACTURERS OF SUCH PRODUCTS, INDICATES THAT THE INCLUSION OF THE ITEM ON A QUALIFIED PRODUCTS LIST COULD HAVE BEEN DETERMINED BY THE HEYER COMPANY LONG BEFORE NOVEMBER 27, 1956.

THE ADMINISTRATIVE REPORT ALSO INDICATES THAT IN OCTOBER OF 1956, THE HEYER COMPANY WAS FURNISHED A COPY OF MCP FORM 139 REQUESTING AN INDICATION OF THEIR INTEREST IN RECEIVING A BID SET IN CONNECTION WITH THE PROCUREMENT OF THE UNIT IN QUESTION. THE HEYER COMPANY INDICATED IN THE USUAL MANNER ITS INTEREST IN RECEIVING A BID SET AND WAS FURNISHED SUCH SET, ALONG WITH 79 OTHER COMPANIES WHO ALSO INDICATED AN INTEREST IN THE PROCUREMENT.

THE ADMINISTRATIVE REPORT CONCEDES THAT THE INDUSTRY IN GENERAL SHOULD HAVE BEEN CIRCULARIZED WITH REGARD TO THE PLACEMENT OF THE ITEM ON THE QUALIFIED PRODUCTS LIST AT THE TIME THE COMPANIES WHICH HAD SHOWN AN INTEREST IN THE UNIT WERE CIRCULARIZED AND THAT THE FAILURE TO DO SO INDICATES A NECESSITY TO REVISE APPLICABLE REGULATIONS TO PRECLUDE A RECURRENCE. UNDER NORMAL CIRCUMSTANCES, IT IS STATED THAT ALL INTERESTED PRODUCERS WOULD HAVE BEEN ADVISED EITHER BY CIRCULARIZATION OR BY AN INVITATION FOR BIDS, IN SUFFICIENT TIME TO PERMIT QUALIFICATION WELL BEFORE THE DEADLINE. THE SHORT PERIOD BETWEEN THE ISSUANCE OF THE INVITATIONS AND BID CLOSING WAS DICTATED IN THIS INSTANCE BY THE URGENCY OF THE PROCUREMENT WHICH HAD TO BE SYNCHRONIZED WITH THE PRODUCTION OF THE AIRCRAFT IN WHICH THE ITEM WOULD BE USED.

SECTION 2.503.1 OF ASPR PROVIDES, IN ADDITION TO THE PORTION QUOTED ABOVE, THAT PUBLICITY SHALL BE GIVEN TO THE INTENTION TO PLACE A PRODUCT ON THE QUALIFIED PRODUCTS LIST AND TO THE FACT THAT ONLY SUCH PRODUCTS WHICH HAVE BEEN ACCEPTED FOR INCLUSION ON A QUALIFIED PRODUCTS LIST WILL BE CONSIDERED IN FUTURE AWARDS. SECTION 2-505 OF ASPR PROVIDES:

2-505 PROCUREMENT OF QUALIFIED PRODUCTS.

2-505.1 CONTRACTS ENTERED INTO BY FORMAL ADVERTISING.

WHENEVER PROCUREMENT OF QUALIFIED PRODUCTS BY A DEPARTMENT IS MADE PURSUANT TO FORMAL ADVERTISING IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION II, ONLY BIDS OFFERING PRODUCTS WHICH HAVE BEEN APPROVED OR QUALIFIED SHALL BE CONSIDERED IN MAKING AN AWARD. MANUFACTURERS HAVING PRODUCTS NOT LISTED BUT WHICH HAVE BEEN QUALIFIED OR APPROVED SHOULD BE GIVEN CONSIDERATION AND AN OPPORTUNITY TO OFFER EVIDENCE OF SUCH QUALIFICATION OR APPROVAL IN THE TIME INTERVAL BEFORE FINAL AWARD MUST BE MADE.

205.2 SOLICITATION OF BIDS. IN FORMALLY ADVERTISED PROCUREMENTS INVOLVING QUALIFIED PRODUCTS, THE FOLLOWING PROVISION SHALL BE INSERTED IN INVITATIONS FOR BIDS:

WITH RESPECT TO PRODUCTS REQUIRING QUALIFICATION, AWARDS WILL BE MADE ONLY FOR SUCH PRODUCTS AS HAVE, PRIOR TO THE TIME SET FOR OPENING OF BIDS, BEEN TESTED AND APPROVED FOR INCLUSION IN THE QUALIFIED PRODUCTS LIST (INSERT HERE THE TITLE OF THE APPLICABLE FEDERAL OR MILITARY QUALIFIED PRODUCTS LIST OR LISTS), WHETHER OR NOT SUCH PRODUCTS HAVE ACTUALLY BEEN SO LISTED BY THAT DATE. MANUFACTURERS ARE URGED TO COMMUNICATE WITH THE (INSERT HERE THE NAME AND ADDRESS OF THE APPLICABLE OFFICE) AND ARRANGE TO HAVE THE PRODUCTS THAT THEY PROPOSE TO OFFER TESTED FOR QUALIFICATION.

2-505.3 CONTRACTS ENTERED INTO BY NEGOTIATION. NOTHING IN THIS PART 5 OF SECTION II SHALL BE CONSTRUED TO PROHIBIT REFERENCE TO QUALIFIED PRODUCTS LISTS FOR PROSPECTIVE SOURCES OF SUPPLIES IN CONNECTION WITH CONTRACTS ENTERED INTO BY NEGOTIATION PURSUANT TO SECTION III OF THIS REGULATION.

IT SHOULD BE NOTED THAT YOUR ALLEGATION THAT SECTION 2-505 REQUIRES THAT MANUFACTURERS HAVING NEW PRODUCTS NOT LISTED SHOULD BE GIVEN CONSIDERATION AND OPPORTUNITY TO QUALIFY MUST, UNDER THE PROVISIONS OF SECTION 2-505.1, BE MODIFIED TO INCLUDE MANUFACTURERS HAVING PRODUCTS NOT LISTED "BUT WHICH HAVE BEEN QUALIFIED OR APPROVED.' THERE IS NO INDICATION THAT THE HEYER COMPANY HAD SUCH A PRODUCT AT THE TIME THE INVITATION WAS ISSUED. ALSO, YOUR ALLEGATION THAT SECTION 2-505.2 REQUIRES THAT BIDS BE SOLICITED FROM ALL KNOWN SOURCES OF SUPPLY DOES NOT APPEAR TO BE SUPPORTED BY THE SPECIFIC WORDING OF THAT SECTION, QUOTED ABOVE.

AS TO THE REQUIREMENTS IMPOSED UPON THE AGENCY BY SECTION 2-503.1 OF ASPR, TO PUBLICIZE THE PLACING OF A PRODUCT ON THE QUALIFIED PRODUCTS LIST, THERE ARE FOR CONSIDERATION THE FACTS STATED ABOVE, THAT ALL MANUFACTURERS KNOWN TO BE INTERESTED WERE CIRCULARIZED AND THAT THE INCLUSION OF THE ITEM ON A QUALIFIED PRODUCTS LIST WAS NOTED IN A PUBLICATION NORMALLY RECEIVED BY THE MANUFACTURERS INTERESTED IN BIDDING, IN SUFFICIENT TIME TO QUALIFY THE PRODUCT AND TO BE ELIGIBLE FOR AWARD UNDER THE TERMS OF THE INVITATION.

WE FEEL STRONGLY THAT A PROCUREMENT TO BE EFFECTED THROUGH FORMAL ADVERTISING SHOULD BE GIVEN THE WIDEST PUBLICITY POSSIBLE IN ORDER TO INCREASE COMPETITIVE BIDDING. HOWEVER, IT IS RECOGNIZED THAT THE DESIRABILITY OF FULL PUBLICITY MUST BE QUALIFIED BY THE CIRCUMSTANCES SURROUNDING THE INDIVIDUAL CASE, AND THAT EFFECT MUST BE GIVEN TO BONA FIDE ADMINISTRATIVE DETERMINATIONS THAT THE EXIGENCIES OF A PARTICULAR PROCUREMENT PROGRAM ARE SUCH THAT THE DELAY INVOLVED IN OBTAINING MAXIMUM COMPETITION WOULD ADVERSELY AFFECT THE GOVERNMENT'S INTERESTS.

THEREFORE, WE HAVE HELD THAT AN AWARD IS VALID EVEN THOUGH THE INVITATION PURSUANT TO WHICH IT WAS MADE PERMITTED SO SHORT A PERIOD BETWEEN ISSUANCE AND BID OPENING THAT SOME BIDDERS WERE UNABLE TO SUBMIT BIDS WITHIN THE TIME ALLOWED. B-94494, MAY 24, 1950. EVEN THE FAILURE TO MAIL A COPY OF AN INVITATION TO A PROSPECTIVE BIDDER ON THE REGULAR MAILING LIST DOES NOT PROVIDE SUFFICIENT BASIS TO REQUIRE THE REJECTION OF ALL BIDS AND READVERTISEMENT OF THE PROCUREMENT. 34 COMP. GEN. 684. IT IS APPARENT FROM THE FOREGOING, THAT NEITHER THE LANGUAGE OF THE ARMED SERVICES PROCUREMENT REGULATION QUOTED ABOVE NOR THE PROCUREMENT STATUTES APPLICABLE IN THIS INSTANCE CAN BE INTERPRETED TO REQUIRE, AS YOU CONTEND, THAT ALL MANUFACTURERS OF A GIVEN PRODUCT MUST BE GIVEN THE OPPORTUNITY TO QUALIFY THEIR PRODUCTS PRIOR TO THE TIME AN AWARD IS MADE PURSUANT TO AN INVITATION RESTRICTING ACCEPTABLE BIDS TO QUALIFIED PRODUCTS. IN VIEW OF THE FACT THAT ALL MANUFACTURERS KNOWN TO BE INTERESTED WERE CIRCULARIZED, AND THAT THE ARTICLE WAS INCLUDED IN THE QUALIFIED PRODUCTS LIST AS PUBLISHED IN THE INDEX OF AIR FORCE SPECIFICATIONS, THERE APPEARS TO BE NO BASIS FOR CONCLUDING THAT THE CITED SECTIONS OF ASPR WERE VIOLATED, AND CERTAINLY NO JUSTIFICATION FOR CONCLUDING THAT THERE WAS A VIOLATION OF SUCH SIGNIFICANCE AS TO RENDER AN AWARD PURSUANT TO THE INVITATION ILLEGAL.

SECONDLY, YOU POINT OUT THAT THE SPECIFICATION REQUIRES UNDER PARAGRAPH 3.5 THE USE OF SELENIUM RECTIFIERS AND THAT PARAGRAPH 3.5.1.1 OF THE SPECIFICATION PROVIDES THAT THE TRANSFORMER RECTIFIER UNIT SHALL NOT EMIT ACRID SMOKE THAT WOULD ADVERSELY AFFECT PERSONNEL IN THE EVENT OF AN INTERNAL FAULT OR OVERLOAD. YOU CONTEND THAT THE PROVISIONS OF THE SPECIFICATIONS QUOTED ABOVE ARE CONTRADICTORY OR INCONSISTENT AND THAT IT IS IMPOSSIBLE TO SUPPLY A SELENIUM RECTIFIER WHICH WOULD NOT GENERATE TOXIC OR ACRID SMOKE IN THE EVENT OF AN OVERLOAD OR BLOW-OUT. IN SUPPORT OF YOUR POSITION, YOU SUBMIT COPIES OF LETTERS FROM TWO PROSPECTIVE SUPPLIERS. THE ADMINISTRATIVE REPORT STATES THAT THE SELENIUM RECTIFIERS HAVE BEEN USED ON ALL B-36 AND B-52 AIRCRAFT MANUFACTURED TO DATE WITH NO ADVERSE EFFECT ON PERSONNEL. THE REPORT FURTHER STATES:

IT IS THE OPINION OF WRIGHT AIR DEVELOPMENT CENTER THAT THE REQUIREMENT FOR NON-TOXICITY IN SPECIFICATION MIL-P-7212A IS COMPATIBLE WITH THE USE OF SELENIUM RECTIFYING ELEMENTS IN THE TRANSFORMER RECTIFIER ASSEMBLIES. * * * THE WRIGHT AIR DEVELOPMENT CENTER LABORATORIES PERFORMED CONFIRMATORY TESTS TO DETERMINE THAT THE APPLICATION OF LARGER SELENIUM RECTIFIERS SUCH AS EMPLOYED IN TRANSFORMER RECTIFIERS LIKEWISE DID NOT CONSTITUTE A HEALTH HAZARD. TRANSFORMER RECTIFIERS WERE OPERATED TO DESTRUCTION AND SAMPLES OF THE PRODUCTS OF COMBUSTION ANALYZED. NO TRACES OF HYDROGEN SELENIDE, THE COMPOUND KNOWN TO BE A CAUSE OF TOXICITY, WERE FOUND.

WHETHER SELENIUM RECTIFIERS CAN BE USED WITHOUT THE POSSIBILITY OF EMITTING ACRID SMOKE THAT WOULD ADVERSELY AFFECT PERSONNEL IS A QUESTION OF FACT AND IN SUCH MATTERS WE HAVE NO ALTERNATIVE BUT TO ACCEPT THE ADMINISTRATIVE FINDINGS OF FACT, IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY. 3 COMP. GEN. 51; B-128917, OCTOBER 2, 1956.

YOUR LETTER FURTHER STATES THAT HEYER PROTESTS THE AWARD ON THE BASIS THAT THE ENTIRE QPL PROCEDURE CONTAINED IN ASPR VIOLATES SECTION 2 (B) OF THE ARMED SERVICES PROCUREMENT ACT, 10 U.S.C. 2301, WHICH REQUIRES THAT A FAIR PROPORTION OF PURCHASES BE PLACED WITH SMALL BUSINESS CONCERNS, AND THAT SUITABLE ADVANCE PUBLICITY BE GIVEN IN CONNECTION WITH ANY ADVERTISED PROCUREMENT; AND THAT IT ALSO VIOLATES SECTION 3 (C) OF THE ACT WHICH REQUIRES SUFFICIENT ADVANCE NOTICE TO PERMIT FULL AND FREE COMPETITION. YOUR LETTER FURTHER POINTS OUT THAT IN ORDER TO QUALIFY A PRODUCT WHICH MAY NEVER BE PROCURED A SMALL COMPANY MUST INVEST FIVE TO FIFTEEN THOUSAND DOLLARS AND THAT SPECIFICATIONS ARE AMENDED BY THE MILITARY SERVICES SO FREQUENTLY THAT THE "INVESTMENT IN QUALIFYING A PRODUCT IS LOST ALMOST AS SOON AS IT IS MADE.' FINALLY, YOU STATE THAT "THE QPL BY ITS VERY NATURE IS RESTRICTIVE AND INTERFERES WITH THE FULL AND FREE COMPETITION REQUIRED BY SECTION 3 (A) OF THE ARMED SERVICES PROCUREMENT ACT.' IN REGARD TO THE REQUIREMENT THAT A FAIR PROPORTION OF PURCHASES BE PLACED WITH SMALL BUSINESS CONCERNS, THE ADMINISTRATIVE REPORT STATES THAT DURING THE PERIOD JULY 1 THROUGH OCTOBER 31, 1956, THE AIR FORCE AWARDED CONTRACTS UNDER THE QUALIFIED PRODUCTS LIST PROCEDURE IN EXCESS OF $900,000 AND THAT ON THE BASIS OF PRICE MORE THAN 90 PERCENT OF THE PROCUREMENT WAS AWARDED TO SMALL BUSINESS.

SECTION 2-502 OF ASPR PROVIDES THAT:

A PRODUCT MAY BE INCLUDED IN A QUALIFIED PRODUCTS LIST ONLY WHEN ONE OF THE FOLLOWING CONDITIONS EXISTS:

(A) THE TIME REQUIRED FOR TESTING AFTER AWARD WOULD UNDULY DELAY DELIVERY OF THE SUPPLIES BEING PURCHASED.

(B) THE COST OF REPETITIVE TESTING WOULD BE EXCESSIVE;

(C) THE TESTS WOULD REQUIRE EXPENSIVE OR COMPLICATED TESTING APPARATUS NOT COMMONLY AVAILABLE;

(D) THE INTEREST OF THE GOVERNMENT REQUIRES ASSURANCE, PRIOR TO AWARD, THAT THE PRODUCT IS SATISFACTORY FOR ITS INTENDED USE;

(E) THE DETERMINATION OF ACCEPTABILITY WOULD REQUIRE PERFORMANCE DATA TO SUPPLEMENT TECHNICAL REQUIREMENTS CONTAINED IN THE SPECIFICATIONS.

THE ESTABLISHMENT OF QUALIFIED PRODUCTS LISTS AND THEIR UTILIZATION ARE ALSO GOVERNED BY DEFENSE SUPPLY MANAGEMENT AGENCY MANUAL FOR MILITARY QUALIFIED PRODUCTS LISTS, DSMA M4 ISSUED MARCH 1, 1953, BY THE OFFICE OF THE SECRETARY OF DEFENSE. A PROPOSED REVISION OF THE MANUAL WOULD ELIMINATE CONDITION (D) IN THE LIST ABOVE. THE REVISED DRAFT ALSO PROVIDES IN PARAGRAPH 1.2 THAT THE QUALIFICATION PROCEDURE "MUST NOT BE USED TO RESTRICT THE NUMBER OF SUPPLIERS," AND IN PARAGRAPH 2.3, THAT BEFORE PROPOSING QUALIFICATION, THE GOVERNMENTAL ACTIVITY SHALL DETERMINE THAT THERE IS NO OTHER APPLICABLE WAY TO OBTAIN EVIDENCE OF AVAILABILITY OF PRODUCTS HAVING THE REQUISITE UALITY; SUFFICIENT SOURCES ARE AVAILABLE AND WILLING TO SUBMIT THEIR PRODUCTS FOR QUALIFICATION; AND ADEQUATE TEST FACILITIES ARE AVAILABLE TO SUPPORT THE QUALIFICATION REQUIREMENTS. THE DRAFT PROVIDES FURTHER, IN PARAGRAPH 2.8.1, AS DOES SUBSTANTIALLY THE EXISTING MANUAL IN PARAGRAPH 6, THAT " THE COST OF PERFORMING QUALIFICATION TESTS WILL BE BORNE BY EITHER THE GOVERNMENT OR THE MANUFACTURER, OR WILL BE PRORATED BETWEEN THEM, AS DETERMINED BY THE QUALIFYING ACTIVITY.' THE REVISION, HOWEVER, OMITS THE FOLLOWING PROVISION OF THE CURRENT MANUAL (6B):

THE TESTS WILL BE CONDUCTED WITHOUT CHARGE TO THE MANUFACTURER WHERE IT IS IN THE BEST INTEREST OF THE GOVERNMENT NOT TO CHARGE THE MANUFACTURER FOR THE TEST. THIS WILL BE THE CASE WHENEVER THE NUMBER OF QUALIFICATION APPROVALS ISSUED IS SO SMALL THAT ADEQUATE COMPETITION HAS NOT BEEN DEVELOPED IN INDUSTRY, AND WHENEVER TESTING HAS NOT ESTABLISHED SOURCES OF SUPPLY SUFFICIENT TO ASSURE AVAILABILITY OF THE PRODUCT IN THE QUANTITY WHICH MAY BE NEEDED.

SECTION 3 (A) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 23, WHICH HAS BEEN CODIFIED AS 10 U.S.C. 2305, PROVIDES, IN PERTINENT PART, IN REGARD TO FORMAL ADVERTISEMENTS FOR BIDS:

THE SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY AND SERVICES NEEDED BY THE AGENCY CONCERNED.

THE ANALYSIS OF THIS SECTION OF THE ACT PROVIDED BY THE DEPARTMENT OF THE NAVY WHICH INITIATED THE LEGISLATION STATES:

THE PURPOSE OF ADVERTISING IS TO SECURE FOR THE GOVERNMENT THE BENEFITS OF FULL AND FREE COMPETITION AMONG ITS SUPPLIERS. IT IS PROVIDED BY SUBSECTION 3 (A) THAT ADVERTISEMENTS SHALL BE OF SUCH DURATION, SCOPE, AND FORM AS TO ACHIEVE THAT PURPOSE. CERTAINLY, VARIANCES IN THE NATURE OF THE AGENCY'S REQUIREMENTS AFFECT THE EXTENT TO WHICH THE REQUIREMENTS NEED BE ADVERTISED, AND THE AGENCY CONCERNED IS IN THE BEST POSITION TO DETERMINE WHETHER OR NOT IT IS ATTAINING THE BENEFITS OF FREE AND FULL COMPETITION. ( ITALICS SUPPLIED.)

(REPRINT OF THE DEPARTMENTAL LETTER OF JANUARY 13, 1947, PRINTED BY SUBCOMMITTEE NO. 6 OF THE COMMITTEE ON ARMED SERVICES OF THE HOUSE OF REPRESENTATIVES, 80TH CONGRESS, AT PAGE 32)

SECTION 303 (A) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 395, 41 U.S.C. 253, IS IDENTICAL TO SECTION 3 (A) OF THE ARMED SERVICES PROCUREMENT ACT. HOUSE REPORT NO. 670, 81ST CONGRESS, TO ACCOMPANY H.R. 7454, STATES, AT PAGE 6:

TITLE III EXTENDS TO THE GENERAL SERVICES AGENCY THE PRINCIPLES OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, WITH APPROPRIATE MODIFICATIONS PRINCIPALLY DESIGNED TO ELIMINATE PROVISIONS APPLICABLE PRIMARILY TO THE MILITARY.

AT PAGE 23 THE REPORT STATES IN REGARD TO SECTION 303 (A):

THIS SECTION WOULD ESTABLISH BROAD STANDARDS FOR ADVERTISING, RESERVING APPROPRIATE DISCRETION IN THE AGENCY. IT IS CONSIDERED BOTH UNNECESSARY AND UNWISE TO PRESCRIBE DETAILED AND RESTRICTIVE REQUIREMENTS, AND IT IS BELIEVED THAT SUCH MATTERS SHOULD BE LEFT TO BE DEALT WITH BY REGULATION. THIS SECTION PROVIDED THAT ADVERTISING SHOULD BE SO CONDUCTED AS TO SECURE SUCH A FULL AND FREE COMPETITION AS IS CONSISTENT WITH PROCUREMENT OF TYPES OF SUPPLIES AND MATERIAL NEEDED.

STATEMENTS IDENTICAL TO THOSE QUOTED ABOVE ARE ALSO FOUND AT PAGES 5 AND 25 OF SENATE REPORT NO. 475, 81ST CONGRESS.

TO THE EXTENT THAT THE COST OF QUALIFYING A PRODUCT IS SIGNIFICANT, AND IS REQUIRED TO BE BORNE BY THE PROSPECTIVE SUPPLIER, THE REQUIREMENT THAT PRODUCTS BE "QUALIFIED" BEFORE BIDS WILL BE CONSIDERED FOR AWARD CLEARLY TENDS TO RESTRICT COMPETITION, PARTICULARLY AS TO SMALL BUSINESS FIRMS, SINCE IT MAY BE ASSUMED THAT A SMALL FIRM CANNOT READILY AFFORD TO INVEST SUBSTANTIAL AMOUNTS OF MONEY TO QUALIFY PRODUCTS ON THE MERE POSSIBILITY THAT IT BE AWARDED A CONTRACT. HOWEVER, IN VIEW OF THE QUOTED PROVISION IN 10 U.S.C. 2305, AND THE LEGISLATIVE HISTORY OF THAT PROVISION AND OF THE IDENTICAL PROVISION IN THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, UNDER WHICH THE INDIVIDUAL AGENCIES ARE VESTED WITH A REASONABLE DEGREE OF DISCRETION TO DETERMINE THE EXTENT OF COMPETITION WHICH MAY BE REQUIRED CONSISTENT WITH THE NEEDS OF THE AGENCY, WE DO NOT FEEL THAT WE WOULD BE JUSTIFIED IN QUESTIONING THE QUALIFIED PRODUCTS SYSTEM AS A PROPER METHOD OF PROCUREMENT. IT SHOULD BE NOTED IN THIS REGARD THAT LEGITIMATE RESTRICTIONS ON COMPETITION IN GOVERNMENT PROCUREMENT HAVE BEEN DETERMINED TO BE VALID WHEN THE NEEDS OF THE AGENCY REQUIRE IT. SEE, FOR EXAMPLE, 35 COMP. GEN. 161; 26 COMP. GEN. 676; AND 20 COMP. GEN. 862, 865, RESTRICTING AWARDS TO BIDDERS MEETING MINIMUM EXPERIENCE REQUIREMENTS IN THE PARTICULAR FIELD STATED IN THE INVITATION FOR BIDS.

THEREFORE, WHILE THE QUALIFIED PRODUCTS LIST INVOLVES AN ELEMENT OF RESTRICTION ON FULL AND FREE COMPETITION, THE PROCEDURES AND SAFEGUARDS PRESCRIBED BY THE ARMED SERVICES PROCUREMENT REGULATION AND THE DEFENSE SUPPLY MANAGEMENT AGENCY MANUAL ARE WITHIN THE PROPER BOUNDS OF THE DISCRETION CONFERRED BY LAW UPON THE PROCURING AGENCIES.

FINALLY, YOU PROTEST THE AWARD ON THE GROUNDS THAT IT DID NOT COMPLY WITH THE QUALIFIED PRODUCTS PROVISIONS OF ASPR. YOU CITE, FOR EXAMPLE, SECTION 2-501 OF ASPR WHICH LIMITS THE USE OF THE PROCEDURE TO THOSE INSTANCES WHERE IT HAS BEEN SHOWN TO BE NECESSARY IN LIGHT OF EXISTING PERFORMANCE REQUIREMENTS TO OBTAIN PRODUCTS OF REQUISITE QUALITY. YOU FURTHER STATE THAT THE PROCUREMENT DOES NOT MEET THE REQUIREMENTS OF SECTION 2-502 OF ASPR WHICH ARE QUOTED ABOVE IN THAT TIME IS NOT OF THE ESSENCE SINCE THE CONTRACT HAS A DELIVERY SCHEDULE RUNNING INTO 1958, TESTING COSTS ARE NOT EXCESSIVE NOR IS COMPLICATED APPARATUS REQUIRED, AND THE GOVERNMENT'S INTEREST IN SATISFACTORINESS CAN BE MET THROUGH THE USE OF FIRST ARTICLE APPROVAL.

THE ADMINISTRATIVE REPORT STATES THAT THE UNIT PROCURED UNDER THE CONTRACT IS A SAFETY OF FLIGHT ITEM USED IN VITAL AIRCRAFT PROGRAMS; THAT THE COMPLEXITY OF THE PROBLEM OF PRODUCING A SATISFACTORY ITEM IS INDICATED BY THE UNSUCCESSFUL EFFORTS OF COMPETENT PRODUCERS OVER EXTENDED PERIODS OF TIME TO QUALIFY; THAT THE URGENCY INVOLVED IN THE PROCUREMENT WAS SUCH THAT EVEN THE POSSIBILITY OF DELAY COULD NOT BE TOLERATED; AND THEREFORE THAT THE PROCUREMENT WAS WITHIN THE PROVISIONS OF SECTION 2- 502.

WITH REGARD TO THE POSSIBILITY OF PROCURING THE ITEM ON THE BASIS OF FIRST ARTICLE APPROVAL, THE ADMINISTRATIVE REPORT STATES THAT THERE WERE SEVERAL IMPORTANT FACTORS WHICH TENDED TO PREVENT THE USE OF THIS METHOD. FIRST, THE PROBLEM OF PRODUCING THE ITEM WAS, AS INDICATED ABOVE, COMPLEX. FURTHER, THE REPORT CONTINUES, THE AIR FORCE HAS FOUND IN THE PROCUREMENT OF SIMILAR ITEMS THAT THE SUCCESSFUL BIDDER EXPERIENCED GREAT DIFFICULTY IN PRODUCING AN ACCEPTABLE FIRST ARTICLE WITHIN THE TIME REQUIRED.

IN VIEW OF THE FACT THAT THE ITEM UNDER PROCUREMENT IS A SAFETY OF FLIGHT ITEM, AND CONSIDERING ALSO THE NECESSITY OF COORDINATING THE PROCUREMENT WITH AIRCRAFT PRODUCTION SCHEDULES, AND THE URGENCY OF THE PROCUREMENT, IT APPEARS THAT THE PRODUCT COULD PROPERLY BE PLACED ON A QUALIFIED PRODUCTS LIST UNDER SECTION 2-502 (A) OF ASPR. NO PURPOSE WOULD BE SERVED BY ATTEMPTING TO DETERMINE ITS ELIGIBILITY UNDER ANY OF THE OTHER CRITERIA.

FOR THE FOREGOING REASONS, WE PERCEIVE NO BASIS FOR HOLDING THAT THE CONTRACT AWARDED PURSUANT TO INVITATION FOR BIDS NO. 33-600-57-96 IS LEGALLY INVALID.

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