B-164389, JUL. 18, 1968

B-164389, JUL. 18, 1968

TO GENTEX CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 21, 1968, PROTESTING THE ADMINISTRATIVE ACTION TAKEN UNDER REQUEST FOR PROPOSALS (RFP) NO. DSA100-68-R-1403 ISSUED BY THE DEFENSE SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT RFP WAS ISSUED MARCH 13, 1968, AND CLOSED 2 P.M., E.S.T., APRIL 2, 1968. OFFERS WERE REQUESTED FOR THE MANUFACTURE AND DELIVERY OF 30,000 EACH VISOR, FLYING HELMETS, POLYCARBONATE, ON AN F.O.B. ORIGIN, FREIGHT PREPAID BASIS, UNDER THE MILITARY SPECIFICATION MIL-V-43511/GL) DATED JUNE 30, 1967, AND AMENDMENT 1 DATED SEPTEMBER 28, 1967, WITH DEVIATIONS AS INDICATED ON PAGES 8 AND 9 OF THE SOLICITATION. ITEMS1 TO 4 WERE FOR 15,000 EACH CLEAR AND ITEMS 5 TO 8 WERE FOR 15,000 EACH NEUTRAL GRAY FOR DELIVERY TO FOUR DESTINATIONS. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (10), AS IMPLEMENTED BY ASPR 3-210, SINCE IT WAS A PRODUCTION TEST CONTRACT TO ESTABLISH THE ADEQUACY OF THE SPECIFICATION FOR MASS PRODUCTION. TWENTY FIRMS WERE SOLICITED AND SIX OFFERS WERE RECEIVED.

THE SOLICITATION CONTAINED ON PAGE 5, CLAUSE 108.1, ENTITLED "PROVISIONS APPLICABLE TO PRODUCTION TEST RUN" AS FOLLOWS: "1. PURPOSE OF PROCUREMENT "THIS IS A PRODUCTION TEST PROCUREMENT AND IS FOR THE PURPOSE OF DETERMINING WHETHER THE VISOR, FLYING HELMET, POLYCARBONATE BEING PROCURED HEREIN CAN BE ECONOMICALLY MANUFACTURED IN QUANTITY PRODUCTION IN ACCORDANCE WITH ACCEPTED PRODUCTION PRACTICES AND THE REQUIREMENTS OF MIL- V-43511/GL) DTD 30 JUNE 67, AMEND. NO. 1 DTD 28 SPET 67 AND DEVIATIONS CITED ON PAGE/S) 8 AND 9. "2. AWARD OF CONTRACTS "THE GOVERNMENT RESERVES THE RIGHT, WHEREVER FEASIBLE, TO MAKE A MINIMUM OF THREE (3) AWARDS IN ORDER TO INSURE SUCCESSFUL COMPLETION OF THE PRODUCTION TEST WHEREBY NO ONE FIRM OR ITS SUBSIDIARIES AND AFFILIATES WILL BE AWARDED MORE THAN ONE CONTRACT. HOWEVER, ANY NUMBER OF AWARDS MAY BE MADE IF DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. BIDDERS ARE REQUESTED NOT TO INDICATE ANY MINIMUM QUANTITIES IN EXCESS OF 10,000 EACH (5,000 ITEMS 1-4) (5,000 ITEMS 5-8).' THE SOLICITATION ALSO CONTAINED ON PAGE 16, CLAUSE 108.2, ENTITLED "ENTRY INTO PLANT - PRODUCTION TEST RUN" AS FOLLOWS: "THE CONTRACTING OFFICER OR ANY GOVERNMENT PERSONNEL DESIGNATED BY HIM SHALL BE PERMITTED ENTRY INTO CONTRACTOR'S PLANT FOR THE PURPOSE OF OBSERVATION AND CONSULTATION DURING PERFORMANCE OF MANUFACTURING OPERATIONS.'

WHEN THE RFP CLOSED ON APRIL 2, 1968, SIX OFFERS, INCLUDING YOURS, HAD BEEN RECEIVED. THEREAFTER, NEGOTIATIONS WERE CONDUCTED WITH ALL THE OFFERORS EXCEPT THE SIERRA ENGINEERING COMPANY, THE HIGH OFFEROR, WHOSE PRICE WAS DETERMINED TO BE OUT OF THE RANGE OF CONSIDERATION. THE CONTRACTING OFFICER REFUSED TO CONSIDER AWARDING YOUR CORPORATION A CONTRACT BECAUSE YOU REQUIRED THAT THE ENTRY-INTO-PLANT CLAUSE BE DELETED FROM ANY CONTRACT WHICH MIGHT BE AWARDED. YOU REFUSED TO AGREE TO THE CLAUSE ON THE GROUND THAT YOUR PRIVATE TECHNICAL DATA MIGHT BE DISCLOSED. THE OTHER FOUR OFFERORS WERE AWARDED CONTRACTS ON MAY 1, 1968, FOR 7,500 EACH OF THE VISORS.

IN YOUR LETTER OF MAY 21, YOU STATE THAT THE AWARDS MADE SHOULD BE CANCELED AS NOT BEING IN THE BEST INTEREST OF THE GOVERNMENT. YOU CONTEND THAT THE ISSUANCE OF FIXED-PRICE SUPPLY CONTRACTS FOR THE MANUFACTURE OF PRODUCTS OF WHICH THE QUALITY ASSURANCE SPECIFICATIONS ARE NOT PROVEN IS IN VIOLATION OF THE ARMED SERVICES PROCUREMENT REGULATION AS WELL AS DEFENSE PROCUREMENT CIRCULARS 6, 12, 20, 24 AND 60. YOU ALSO CONTEND THAT YOUR PROPOSAL SHOULD HAVE BEEN CONSIDERED NOTWITHSTANDING THE LIMITATION YOU PLACED UPON THE RIGHT OF ENTRY INTO YOUR PLANT.

REGARDING YOUR CONTENTION THAT YOUR UNWILLINGNESS TO COMPLY WITH THE RIGHT-OF-ENTRY CLAUSE SHOULD NOT PRECLUDE THE AWARD OF A CONTRACT TO YOU THE CONTRACTING OFFICER REPORTS THAT THE WAIVER OF THE CLAUSE WOULD BE ADVERSE TO THE INTEREST OF THE GOVERNMENT. THE CONTRACTING OFFICER POINTS OUT THAT THE SPECIFICATION WAS DEVELOPED THROUGH A RESEARCH AND ENGINEERING CONTRACT. SINCE SPECIFICATION MIL-V-43511/GL) IS UNTRIED AND, THEREFORE, ITS ADEQUACY IS UNKNOWN, THE INSTANT PRODUCTION CONTRACTS WERE ENTERED INTO FOR THE PURPOSE OF DETERMINING WHETHER THE REQUIREMENTS OF THE SPECIFICATION CAN BE MET UNDER MASS PRODUCTION CONDITIONS. TO INSURE THAT THE NEEDS OF THE GOVERNMENT ARE BEING MET, THE CONTRACTING OFFICER STATES THAT IT IS CONSIDERED ESSENTIAL THAT GOVERNMENT PERSONNEL HAVE ACCESS TO THOSE AREAS OF A CONTRACTOR'S PLANT WHERE THE ITEM IS BEING MANUFACTURED IN ORDER THAT ALL FACETS OF PRODUCTION MAY BE OBSERVED. ALSO STATES THAT IF THE GOVERNMENT WAS LIMITED TO THE EXAMINATION AND TESTING OF THE END PRODUCT IT WOULD DEFEAT THE PURPOSE OF THE TEST WHICH IS CONSIDERED TO BE OF PRIME IMPORTANCE. IN ADDITION, THE CONTRACTING OFFICER REPORTS THAT THE GOVERNMENT PERSONNEL WHO VISIT PLANTS OF CONTRACTORS AND OBSERVE PRODUCTION TECHNIQUES AND PROCESSES MAINTAIN THESE IN THE STRICTEST OF CONFIDENCE, AND NO INFORMATION IS DISCLOSED TO OTHER CONTRACTORS.

IT IS, OF COURSE, WITHIN THE PROVINCE OF THE ADMINISTRATIVE OFFICERS TO DRAFT PROPER SPECIFICATIONS WHICH REFLECT THE NEEDS OF THE GOVERNMENT. THERE IS NO REQUIREMENT THAT THE GOVERNMENT ENTER INTO A CONTRACT WITHOUT REFERENCE TO THE PARTICULAR NEEDS TO BE SERVED; NOR IS THE GOVERNMENT TO BE PLACED IN THE POSITION OF ALLOWING PROPOSED CONTRACTORS TO DICTATE THE TERMS ON WHICH THEY WILL CONTRACT WITH THE GOVERNMENT. 36 COMP. GEN. 251. IN VIEW THEREOF, WE AGREE WITH THE ADMINISTRATIVE OFFICE THAT YOUR REFUSAL TO INCLUDE THE ABOVE-QUOTED CLAUSE 108.2 IN ANY CONTRACT AWARDED TO YOU JUSTIFIED THE REJECTION OF YOUR PROPOSAL.

REGARDING THE USE OF A FIXED-PRICE CONTRACT THE RECORD SHOWS THAT THE SPECIFICATION WAS DEVELOPED THROUGH A RESEARCH AND ENGINEERING CONTRACT. THE CONTRACTING OFFICER STATES THAT IT IS KNOWN THAT AN END ITEM CONFORMING TO THE SPECIFICATION CAN BE PRODUCED AND THAT THE TEST CONTRACT IS TO PROVE THE ABILITY OF INDUSTRY TO MANUFACTURE THE ITEM IN ACCORDANCE WITH THE SPECIFICATION USING AVAILABLE MASS PRODUCTION TECHNIQUES. ALSO STATES THAT NO DEVELOPMENT AND PRODUCTION UNCERTAINTIES REMAIN AFTER COMPLETION OF THE RESEARCH AND ENGINEERING PHASE.

SECTION 2306 OF TITLE 10, U.S.C. PROVIDES THAT THE HEAD OF AN AGENCY MAY, IN NEGOTIATING CONTRACTS UNDER SECTION 2304 OF SAID TITLE, MAKE ANY KIND OF CONTRACT THAT HE CONSIDERS WILL PROMOTE THE BEST INTERESTS OF THE UNITED STATES. ASPR 3-402 (B) PROVIDES THAT THE FIRM FIXED-PRICE CONTRACT SHALL BE USED WHENEVER POSSIBLE AND ASPR 3-404.2 (B) PROVIDES THAT A FIXED -PRICE CONTRACT IS SUITABLE WHERE REASONABLY DEFINITE DESIGN OR PERFORMANCE SPECIFICATIONS ARE AVAILABLE. SINCE DEFINITE SPECIFICATIONS WERE AVAILABLE WE THINK THAT IN THE LIGHT OF THE LAW AND REGULATIONS THE CONTRACTING OFFICER PROPERLY ENTERED INTO FIRM FIXED-PRICE CONTRACTS. THE DEFENSE PROCUREMENT CIRCULARS AND ASPR 9-202.1 CITED BY YOU CONTAIN THE DEPARTMENT OF DEFENSE POLICY WITH RESPECT TO THE ACQUISITION OF TECHNICAL DATA BY THE MILITARY AGENCIES. IN THE INSTANT CASE, THE ENTRY INTO THE PLANT BY THE CONTRACTING OFFICER OR HIS REPRESENTATIVE TO INSURE THAT THE SPECIFICATION REQUIREMENTS ARE PROPER AND ATTAINABLE, UTILIZING CURRENTLY ACCEPTED INDUSTRY PRACTICES, WOULD NOT RESULT IN THE ACQUISITION OF ANY DATA. CONSEQUENTLY, WE SEE NO BASIS FOR CONCLUDING THAT THE CLAUSE VIOLATES THE CITED DEFENSE CIRCULARS OR ARMED SERVICES PROCUREMENT REGULATION.