B-161224, AUG. 9, 1967

B-161224, AUG. 9, 1967

BIDS - NEGOTIATION - SOLE SOURCE DECISION TO KECO INDUSTRIES, INC., PROTESTING AWARD BY ARMY MOBILITY EQUIPMENT COMMAND OF A CONTRACT FOR AIR CONDITIONERS TO THERMO KING CORP. ON SOLE SOURCE BASIS. ALTHOUGH DETERMINATION UNDER PUBLIC EXIGENCY EXCEPTION IN 10 U.S.C. 2304/A) (2) TO AWARD CONTRACT FOR AIR CONDITIONERS TO MANUFACTURER IN CURRENT PRODUCTION TO MEET SHORT DELIVERY TIME WAS NOT AN ARBITRARY OR CAPRICIOUS ABUSE OF CONTRACTING OFFICERS DETERMINATION, SINCE ONLY DIFFERENCE BETWEEN MODEL AWARDED ON SOLE SOURCE BASIS AND PROTESTANT'S MODEL IS IN TYPE OF MOTOR, MATTER IS CALLED TO ATTENTION OF SECY. OF THE ARMY TO ACCOMPLISH COMPETITIVE PROCUREMENT. WHILE FAILURE TO PUBLISH IN "COMMERCE BUSINESS DAILY" PROCUREMENT NOTICE DOES NOT AFFORD BASIS FOR DISTURBING AWARD THIS ALSO IS CALLED TO ATTENTION OF DEPT. LETTER TO SECY. OF THE ARMY.

TO MR. LARRY A. PULKRABEK, DIRECTOR, LEGAL DEPARTMENT, KECO INDUSTRIES, INC.:

BY TELEGRAMS OF APRIL 5 AND APRIL 7, 1967, AND LETTER OF APRIL 19, 1967, YOU PROTESTED THE AWARD BY THE UNITED STATES ARMY MOBILITY EQUIPMENT COMMAND OF CONTRACT DAAK01-67-C-1244 TO THE THERMO KING CORPORATION ON THE GROUND THAT THE AWARD WAS MADE ON A SOLE-SOURCE BASIS ALTHOUGH OTHER COMPANIES INCLUDING KECO HAVE PRODUCED SIMILAR EQUIPMENT.

THE CONTRACT IS FOR 744 AIR CONDITIONERS DESCRIBED AS FOLLOWS:

"AIR CONDITIONER, BASE MTD., SELF-CONTAINED, MULTI-PACKAGE TYPE, AIR COOLED, ELECTRIC MOTOR DRIVEN, 18,000 BTU/HR, IN ACCORDANCE WITH CLASS 1, 208 AND 120 V, AC, 60/50 CYCLE, 3 PHASE, MIL SPEC MIL-A-11210E DATED 18 AUG. 66.'

THE CONTRACT WAS NEGOTIATED ON A SOLE-SOURCE BASIS UNDER THE AUTHORITY OF 10 U.S.C. 2304/A) (2), THE PUBLIC EXIGENCY EXCEPTION TO FORMAL ADVERTISING. THE BASIS FOR NEGOTIATING WITH THERMO KING WAS THAT THE AIR CONDITIONERS HAD A PRIORITY DESIGNATOR OF 02 UNDER THE UNIFORM MATERIEL MOVEMENT AND ISSUE PRIORITY SYSTEM AND THERMO KING WAS DETERMINED TO BE THE ONLY PRODUCER ABLE TO MEET THE REQUIRED DELIVERY SCHEDULE BECAUSE IT WAS THE ONLY CURRENT PRODUCER AND, THEREFORE, THE ONLY PRODUCER NOT REQUIRING PREPRODUCTION OR "INITIAL PRODUCTION" TESTING.

YOU COMPLAIN THAT THE PROCUREMENT WAS NOT PUBLISHED IN THE COMMERCE BUSINESS DAILY, AS REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-1003.1, UNTIL AFTER AN AWARD HAD BEEN MADE. YOU STATE THAT THE FAILURE TO PUBLISH THE PROCUREMENT BEFORE AWARD DOES NOT COME WITHIN ANY OF THE EXCEPTIONS LISTED IN ASPR 1-1003.1/C). FURTHER, YOU STATE THAT KECO IS NOT ONLY A PRIOR PRODUCER OF THE 18,000 BTU AIR CONDITIONERS, BUT IS ALSO A "PLANNED PRODUCER" UNDER THE DEPARTMENT OF DEFENSE'S INDUSTRIAL MOBILIZATION PROGRAM. YOU MAINTAIN THAT THE CONTRACT DID NOT REQUIRE ANY DELIVERIES UNTIL JULY 1967 AND THAT KECO COULD HAVE DELIVERED BY THAT TIME IF IT HAD BEEN PROVIDED AN OPPORTUNITY TO SUBMIT A PROPOSAL AT THE SAME TIME AS THERMO KING. ACCORDINGLY, YOU REQUEST THAT THE CONTRACT AWARDED TO THERMO KING BE CANCELED AND THAT THE PROCUREMENT BE ADVERTISED OR AT LEAST NEGOTIATED ON A COMPETITIVE BASIS WITH THE SOLICITATION OF PROPOSALS FROM ALL PREVIOUS PRODUCERS OF THE 18,000 BTU AIR CONDITIONERS.

THE REPORT SUBMITTED TO OUR OFFICE BY THE ARMY MATERIEL COMMAND (AMC) POINTS OUT THAT SPECIFICATION MIL-A-11210E LISTS 3 SEPARATE 18,000 BTU AIR CONDITIONERS AND THAT THE UNIT BEING PROCURED FROM THERMO KING IS LISTED AS "CLASS 1" WHILE THE UNIT FOR WHICH KECO IS A "PLANNED PRODUCER" IS LISTED AS "CLASS 2.' THE REPORT FURTHER STATES THAT THAT THE TWO UNITS HAVE TWO DIFFERENT FEDERAL STOCK NUMBERS AND THAT "WHILE THE SAME SPECIFICATION AND BASIC DRAWINGS ARE APPLICABLE TO BOTH UNITS, THERE ARE DIFFERENCES IN ELECTRICAL CHARACTERISTICS.'

ACCORDINGLY, SINCE THERMO KING WAS IN CURRENT PRODUCTION UNDER ANOTHER CONTRACT FOR THE SAME UNITS AND SINCE THERE WERE NO OTHER CURRENT PRODUCERS OF "CLASS 1" AIR CONDITIONERS, THE DETERMINATION WAS MADE THAT THE EARLIEST DELIVERY COULD BE OBTAINED FROM THERMO KING BECAUSE IT WAS THE ONLY PRODUCER FOR WHICH NORMALLY REQUIRED TESTING COULD BE WAIVED. PREPRODUCTION TESTING IN THIS INSTANCE WOULD TAKE APPROXIMATELY 6 MONTHS PRIMARILY BECAUSE OF A REQUIREMENT FOR A ,SERVICE LIFE TEST" OF 3,000 HOURS. IN ADDITION, AMC REGULATIONS REQUIRE INITIAL PRODUCTION TESTING BY THE ARMY TEST AND EVALUATION COMMAND (TECOM). THE TECOM TESTING WOULD TAKE AN ESTIMATED ADDITIONAL 4 MONTHS.

THE THERMO KING CONTRACT CALLS FOR DELIVERIES COMMENCING IN MAY 1967 AND CONCLUDING IN NOVEMBER 1967. THE EARLIEST DELIVERY WHICH COULD BE EXPECTED FROM ANOTHER PRODUCER AFTER PREPRODUCTION TESTING, ACCORDING TO THE REPORT, WOULD COMMENCE IN DECEMBER 1967 AND CONCLUDE IN MARCH 1968, WITH FINAL RELEASE AFTER TECOM TESTING, IN APRIL 1968.

IN A LETTER DATED JUNE 16, 1967, YOUR WASHINGTON REPRESENTATIVE CONTENDED THAT THE REQUIRED TESTS COULD HAVE BEEN WAIVED FOR KECO AS WELL AS FOR THERMO KING IN VIEW OF KECO'S PRODUCTION OF ESSENTIALLY SIMILAR UNITS IN THE PAST FOR THE NAVY. THE REFERENCE TO "SIMILAR UNITS" APPARENTLY IS TO OTHER THAN "CLASS 1" UNITS. IN THIS CONNECTION, THE CONTRACTING OFFICER DETERMINED THAT THERMO KING WAS THE ONLY PRODUCER FOR WHICH TESTS COULD BE WAIVED BECAUSE IT WAS THE ONLY ONE IN CURRENT PRODUCTION OF THE "CLASS 1" AIR CONDITIONER AND WAS THE ONLY PRODUCER WHICH HAD RECENTLY COMPLETED THE SPECIFIC TESTS REQUIRED BY THE ARMY MOBILITY EQUIPMENT COMMAND FOR THESE UNITS. THE DETERMINATION OF WHETHER SPECIFICATIONS SHOULD REQUIRE ARTICLES TO BE PROCURED TO MEET CERTAIN TESTS IS ESSENTIALLY AN ADMINISTRATIVE FUNCTION NOT ORDINARILY QUESTIONED BY OUR OFFICE. SINCE YOUR COMPANY HAD ONLY RECENTLY PRODUCED "CLASS 2" EQUIPMENT FOR THE NAVY, THE DETERMINATION OF THE CONTRACTING OFFICER THAT TESTING COULD BE WAIVED ONLY FOR THERMO KING DOES NOT APPEAR TO HAVE BEEN AN IMPROPER EXERCISE OF ADMINISTRATIVE DISCRETION.

AS STATED ABOVE, AN 02 PRIORITY DESIGNATOR WAS ASSIGNED TO THIS PROCUREMENT. ASPR 3-202.3 STATES THAT A DETERMINATION AND FINDINGS AUTHORIZING NEGOTIATION NEED ONLY STATE THE EXISTENCE OF A PRIORITY DESIGNATOR OF 1 THROUGH 6 IN ORDER TO JUSTIFY USE OF THE PUBLIC EXIGENCY EXCEPTION. FURTHER, A DETERMINATION AND FINDING UNDER THAT EXCEPTION IS MADE FINAL BY 10 U.S.C. 2310/B), AND IS THEREFORE NOT SUBJECT TO QUESTION BY OUR OFFICE. WHILE THE PUBLIC EXIGENCY EXCEPTION DOES NOT, IN AND OF ITSELF, AUTHORIZE SOLE-SOURCE PROCUREMENT, THE VALID USE OF THAT EXCEPTION RESERVES A CONSIDERABLE AMOUNT OF DISCRETION IN THE CONTRACTING OFFICER, AND THIS OFFICE WILL NOT OVERTURN THE CONTRACTING OFFICER'S DECISION TO MAKE A SOLE-SOURCE AWARD UNLESS IT IS CLEAR THAT HE HAS ABUSED THE DISCRETION VESTED IN HIM IN AN ARBITRARY OR CAPRICIOUS MANNER. SEE 44 COMP. GEN. 590; B 158134, MARCH 3, 1966. IT IS OUR OPINION THAT THERE WAS NO ARBITRARY OR CAPRICIOUS ABUSE OF DISCRETION IN THE CONTRACTING OFFICER'S DETERMINATION TO MAKE A SOLE-SOURCE AWARD TO THERMO KING.

WITH REGARD TO THE FAILURE TO LIST THE INSTANT PROCUREMENT IN THE COMMERCE BUSINESS DAILY BEFORE AWARD WAS MADE, AS REQUIRED BY ASPR 1 1003.1, THE AMC REPORT STATES THAT THE INITIAL REASON GIVEN FOR NOT SYNOPSIZING WAS THAT THE DATE SET FOR RECEIPT OF PROPOSALS WAS TO BE LESS THAN 15 DAYS FROM THE DATE OF ISSUANCE OF THE SOLICITATION, AND THE FAILURE TO SYNOPSIZE THEREFORE CAME UNDER EXCEPTION (IV) TO THE LISTING REQUIREMENT CONTAINED IN ASPR 1-1003.1/C). HOWEVER, IT WAS LATER DETERMINED THAT MORE THAN 15 DAYS DID, IN FACT, ELAPSE BETWEEN THE DATE OF ISSUANCE OF THE SOLICITATION AND THE DATE SET FOR RECEIPT OF PROPOSALS. THE AMC REPORT CONCEDES THAT THE PROCUREMENT SHOULD HAVE BEEN SYNOPSIZED, BUT CONCLUDES THAT SYNOPSIS WOULD NOT HAVE CHANGED THE NATURE OF THE SOLE- SOURCE AWARD TO THERMO KING BECAUSE IT WAS THE ONLY PRODUCER CAPABLE OF MEETING THE REQUIRED DELIVERY SCHEDULE. WE THEREFORE CONCLUDE THAT THE FAILURE TO SYNOPSIZE THE PROCUREMENT IN THIS CASE DOES NOT PROVIDE ANY BASIS FOR DISTURBING THE AWARD TO THERMO KING.

IN ACCORDANCE WITH THE FOREGOING CONSIDERATIONS, YOUR PROTEST MUST BE DENIED. HOWEVER, IT IS NOTED THAT OTHER SOLE-SOURCE AWARDS FOR THE SUBJECT AIR CONDITIONERS HAVE BEEN MADE TO THERMO KING IN THE PAST, APPARENTLY ON THE SAME BASIS AS EXISTS IN THE PRESENT CASE, WHILE OTHER FIRMS, INCLUDING KECO, ADMITTEDLY ARE COMPETENT TO PRODUCE "CLASS 1" AIR CONDITIONERS ONCE NECESSARY TESTING HAS BEEN COMPLETED. FURTHER, IT IS NOTED THAT THE ONLY DIFFERENCE BETWEEN THE UNIT FOR WHICH KECO IS A "PLANNED PRODUCER" AND THE ONE WHICH IS THE SUBJECT OF THE INSTANT CONTRACT IS ONE CONCERNING "ELECTRICAL CHARACTERISTICS," WHICH WE UNDERSTAND TO MEAN SIMPLY A DIFFERENCE IN THE TYPE OF ELECTRIC MOTOR EMPLOYED TO DRIVE THE AIR CONDITIONING UNIT. IN VIEW OF THIS AND THE STATED PURPOSE OF THE PROCUREMENT STATUTES AND REGULATIONS THAT MAXIMUM PRACTICABLE COMPETITION BE OBTAINED, WE ARE BRINGING THE MATTER TO THE ATTENTION OF THE SECRETARY OF THE ARMY WITH THE RECOMMENDATION THAT THE NECESSARY STEPS BE TAKEN TO ACCOMPLISH COMPETITIVE PROCUREMENTS OF THE ,CLASS 1" 18,000 BTU AIR CONDITIONERS IN THE FUTURE. ADDITIONALLY, WE ARE RECOMMENDING THAT IN FUTURE PROCUREMENTS THERE BE STRICTER ADHERENCE TO THE ASPR 1-1003.1 SYNOPSIS REQUIREMENT.