B-164792, SEP. 22, 1969

B-164792, SEP. 22, 1969

BID PROTEST - NEGOTIATION - SOLE SOURCE DECISION DENYING PROTEST OF INSTRUCTOMATIC, INC., AGAINST NEGOTIATION OF SUPPLEMENTAL AGREEMENT TO CONTRACT OF ARMY WITH GENERAL ELECTRONICS LABORATORIES, INC. FOR NONCOMMERCIAL LABORATORIES AND LANGUAGE TAPE RECORDERS FOR DEFENSE LANGUAGE INSTITUTE. IN ABSENCE OF EVIDENCE OF ARBITRARY OR CAPRICIOUS ABUSE OF DISCRETION BY CONTRACTING OFFICER IN DETERMINATION TO NEGOTIATE WITH ONE FIRM FOR PROCUREMENT JUSTIFIED UNDER PUBLIC EXIGENCY EXCEPTION IN 10 U.S.C. 2304 (A) (2) FINDING WILL NOT BE QUESTIONED.

TO INSTRUCTOMATIC, INCORPORATED:

WE REFER TO YOUR LETTER DATED JULY 11, 1969, AND ENCLOSURE, PROTESTING AGAINST THE NEGOTIATION OF A SUPPLEMENTAL AGREEMENT TO CONTRACT NO. DAHC- 15-68-D-0383 BY THE DEPARTMENT OF THE ARMY WITH GENERAL ELECTRONICS LABORATORIES, INCORPORATED (GEL).

CONTRACT DAHC-15-68-D-0383 WAS AWARDED TO GEL BY THE DEFENSE SUPPLY SERVICE-WASHINGTON (DSS-W) ON JUNE 25, 1968, PURSUANT TO TWO-STEP FORMAL ADVERTISING. THE CONTRACT IS AN INDEFINITE QUANTITIES (MINIMUM, MAXIMUM) TYPE FOR THE PURCHASE OF SPECIAL NONCOMMERCIAL TYPE LANGUAGE LABORATORIES AND TAPE RECORDERS FOR THE DEFENSE LANGUAGE INSTITUTE (DLI), TO BE USED IN TRAINING MILITARY PERSONNEL IN FOREIGN LANGUAGES.

IN LATE MAY AND EARLY JUNE 1969, DLI FORWARDED TO DSS-W FIVE REQUISITIONS FOR LANGUAGE LABORATORY SYSTEMS AND SUPPORTING EQUIPMENT WITH JUSTIFICATIONS SUPPORTING THEIR PROCUREMENT BY NEGOTIATION. SUPPORT FOR NEGOTIATING THE PROCUREMENT WAS BASED ON PUBLIC EXIGENCY TO MEET URGENT REQUIREMENTS FOR: (1) REPLACEMENT OF ORDERS DIVERTED FROM MILITARY ASSISTANCE PROGRAM (MAP) COUNTRIES TO FILL PARTICULARLY URGENT VIETNAM REQUIREMENTS; (2) ACCELERATED LANGUAGE TRAINING PROGRAMS AT FORTS MEADE, SILL AND DEVENS, AND (3) CURRENT URGENT NEEDS FOR EQUIPMENT FOR USE IN REMOTE AREAS OF VIETNAM. ACCORDINGLY, ON JUNE 24, 1969, DSS-W NEGOTIATED A SUPPLEMENTAL AGREEMENT ON A SOLE-SOURCE BASIS WITH GEL TO MEET THE ABOVE REQUIREMENTS PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2034 (A) (2).

YOUR PROTEST IS BASED ON THREE POINTS: FIRST, INSTRUCTOMATIC WAS NOT GIVEN AN OPPORTUNITY TO COMPETE FOR THE ADDITIONAL REQUIREMENTS EVEN THOUGH IT WAS THE ONLY OTHER TECHNICALLY QUALIFIED VENDOR FOR THE SUPPLIES UNDER THE ORIGINAL PROCUREMENT IN 1968; SECOND, IN YOUR OPINION THE ORIGINAL CONTRACT DID NOT ESTABLISH A MAXIMUM BEYOND WHICH A NEW PRICE MUST BE PERMITTED BUT LEAVES THE TOTAL QUANTITY TO BE ORDERED IN THE INDEFINITE AREA AND, THEREFORE, YOU ARE UNABLE TO SEE HOW THE CONTRACTOR COULD BE PERMITTED TO NEGOTIATE FOR AN ADDITIONAL PRICE WITHOUT BRINGING ABOUT A REBID; THIRD, THE ORIGINAL CONTRACT CALLED FOR NORMAL DELIVERY IN 120 DAYS. IT IS YOUR UNDERSTANDING THAT THE CONTRACTOR HAS BEEN ALLOWED TO EXTEND THESE DELIVERIES ON THE PUBLIC EXIGENCY ITEMS TO A PERIOD IN EXCESS OF THESE DELIVERY PERIODS. YOU CONTEND THAT SINCE INSTRUCTOMATIC COULD HAVE SUPPLIED THE ITEMS IN A PERIOD SUBSTANTIALLY LESS THAN 120 DAYS IT SHOULD HAVE BEEN GIVEN AN OPPORTUNITY TO COMPETE ON THE PROCUREMENT.

WITH RESPECT TO THE FIRST POINT, THE REPORT SUBMITTED TO US BY THE DEPARTMENT OF THE ARMY CONTAINS A "DETERMINATIONS AND FINDINGS" DATED JUNE 17, 1969, AS REQUIRED BY THE PROVISIONS OF 10 U.S.C. 2310 (B) (SUPP. IV), READING AS FOLLOWS: "1. I HEREBY FIND THAT:

"A. THE DEFENSE SUPPLY SERVICE-WASHINGTON PROPOSES TO PROCURE BY NEGOTIATION LANGUAGE INSTRUCTION EQUIPMENT AND ANCILLARY ITEMS THEREFOR FOR DEFENSE LANGUAGE INSTITUTE.

"B. THE ESTIMATED COST OF THE PROPOSED PROCUREMENT IS $249,841.00.

"C. PROCUREMENT BY NEGOTIATION OF THE ABOVE DESCRIBED PROPERTY IS JUSTIFIED BECAUSE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. THE EXIGENCY CONSISTS OF URGENT REQUIREMENTS FOR LANGUAGE EQUIPMENT BY VARIOUS DLI SUPPORTED LANGUAGE TRAINING ELEMENTS, SOME INVOLVING MAP AND SEA NEEDS. THE LIMITATIONS SET FORTH IN ASPR 3- 202.3 HAVE BEEN CONSIDERED AND SUPPORT NEGOTIATION OF THE PROPOSED PROCUREMENT.

"D. THE USE OF FORMAL ADVERTISING WOULD NOT BE FEASIBLE OR PRACTICABLE IN THIS INSTANCE BECAUSE THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO FORMAL ADVERTISING. ALSO, THE MOST EXPEDITIOUS METHOD OF OBTAINING THE REQUIRED ITEMS WOULD BE TO AMEND CONTRACT DAHC15 68 D 0383 WITH GENERAL ELECTRONIC LABORATORIES. UNDER THAT CONTRACT THERE IS AN EXISTING PRODUCTION CAPABILITY WHICH CAN BE UTILIZED WITH A MINIMUM OF DELAY; NO COMPARABLE CAPABILITY EXISTS ELSEWHERE.'2. UPON THE BASIS OF THE FINDING SET FORTH ABOVE, I HEREBY DETERMINE THAT THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENTAL TO FORMAL ADVERTISING.'3. SUBJECT TO THE AVAILABILITY OF FUNDS AND PROVIDING THAT THE ABOVE SERVICES HAVE OTHERWISE BEEN AUTHORIZED FOR PROCUREMENT THEY MAY, THEREFORE, BE PROCURED BY NEGOTIATION OF AN AMENDMENT TO CONTRACT NO. DAHC15 68 D 0383, PURSUANT TO 10 U.S.C. 2304 (A) (2) AND PARAGRAPH 3-202.2 OF THE ARMED SERVICES PROCUREMENT REGULATION.'

WHILE THE PUBLIC EXIGENCY EXCEPTION TO FORMAL ADVERTISING SET FORTH IN 10 U.S.C. 2304 (A) (2) DOES NOT IN AND OF ITSELF AUTHORIZE PROCUREMENT ON A SOLE-SOURCE BASIS, THE VALID USE OF THAT EXCEPTION RESERVES A CONSIDERABLE AMOUNT OF DISCRETION IN THE CONTRACTING OFFICER TO DETERMINE THE EXTENT OF NEGOTIATION (I.E. COMPETITION) CONSISTENT WITH THE EXIGENCY OF THE SITUATION. 44 COMP. GEN. 590, 593; B-163099, APRIL 19, 1968. WE CANNOT CONCLUDE THAT THERE WAS AN ARBITRARY OR CAPRICIOUS ABUSE OF DISCRETION IN THE CONTRACTING OFFICER'S DETERMINATION TO CONDUCT NEGOTIATIONS SOLELY WITH GEL.

THE CONTRACTING OFFICER HAS FOUND THAT THE MOST EXPEDITIOUS METHOD OF OBTAINING THE REQUIRED ITEMS WAS TO AMEND CONTRACT DAHC15-68-D-0383 WITH GEL. HE FURTHER FOUND THAT UNDER THIS CONTRACT THERE WAS AN EXISTING PRODUCTION CAPABILITY THAT COULD BE UTILIZED WITH A MINIMUM OF DELAY AND THAT NO COMPARABLE CAPABILITY EXISTED ELSEWHERE. WHILE WE FIND NO BASIS IN THE RECORD TO QUESTION THESE FINDINGS, IT SHOULD BE NOTED THAT IN ANY EVENT A DETERMINATION AND FINDINGS UNDER THE PUBLIC EXIGENCY EXCEPTION IS MADE FINAL BY 10 U.S.C. 2310 (B) AND, THEREFORE, CANNOT BE QUESTIONED BY OUR OFFICE.

WITH RESPECT TO THE SECOND POINT ABOVE, THE BASIC CONTRACT WITH GEL IS AN INDEFINITE QUANTITIES TYPE CONTRACT WHICH (A) ESTABLISHES MAXIMUM QUANTITIES BEYOND WHICH THE CONTRACTOR IS NOT REQUIRED TO ACCEPT ORDERS AND (B) SETS MAXIMUM QUANTITIES THAT THE CONTRACTOR CAN BE REQUIRED TO DELIVER IN ANY GIVEN MONTH. DSS-W REPORTS THAT IN THE INSTANT PROCUREMENT, GEL INSISTED THAT ITS PRODUCTION COSTS HAD RISEN TO THE POINT THAT IT COULD NOT ACCEPT ANY ORDERS OVER AND ABOVE WHAT IT WAS REQUIRED TO ACCEPT BY THE CONTRACT WITHOUT AN UPWARD REVISION OF CONTRACT PRICE. IS FURTHER REPORTED THAT IN ORDER TO OBTAIN THESE URGENT ESSENTIAL REQUIREMENTS IT WAS, THEREFORE, NECESSARY TO NEGOTIATE REVISED PRICES FOR THOSE ITEMS ORDERED IN EXCESS OF THE BASIC CONTRACT LIMITS.

FINALLY, WITH RESPECT TO THE THIRD POINT IT APPEARS THAT YOUR UNDERSTANDING REGARDING AN EXTENSION OF DELIVERIES ON THE PUBLIC EXIGENCY ITEMS IS INCORRECT SINCE THE DELIVERY TERMS SPECIFIED IN THE BASIC CONTRACT WITH GEL WERE NOT CHANGED ON THESE ITEMS.

IN VIEW OF THE FOREGOING, NO BASIS EXISTS FOR OUR OFFICE TO DISTURB THE SUPPLEMENTAL AGREEMENT WITH GEL AND YOUR PROTEST IS DENIED.