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CLACK: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 10. IN YOUR LETTER YOU STATE THAT THE CORPORATION BY WHICH YOU ARE EMPLOYED. WAS THE LOW BIDDER UNDER THE ABOVE-CITED INVITATION BUT THAT THE INVITATION WAS SUBSEQUENTLY CANCELED AND THAT YOU BELIEVE THAT THE EQUIPMENT WOULD BE OBTAINED FROM THE PHILCO- FORD CORPORATION WHICH HAD NOT PARTICIPATED AS A BIDDER UNDER THE INVITATION. THE FIRST STEP WAS ISSUED ON APRIL 4. ALL SIX FIRMS WERE FOUND TO BE ACCEPTABLE AND WERE INVITED TO SUBMIT BIDS UNDER STEP TWO OF THE PROCUREMENT. FIVE OF THE ELIGIBLE FIRMS RESPONDED WITH BIDS WHICH WERE OPENED ON JUNE 21. IT SHOULD BE NOTED THAT THE ESTIMATED COST OF THE SINGLE-SYSTEM TELEMETRY RECEIVE/RECORD SYSTEM WAS $290.

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B-165302, DEC. 12, 1968

TO MR. SIDNEY R. CLACK:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 10, 1968, TO CONGRESSWOMAN EDITH GREEN CONCERNING THE CANCELLATION OF TWO-STEP INVITATION FOR BIDS NO. N00123-68-R-2072 INVOLVING A SINGLE TELEMETRY RECEIVE/RECORD SYSTEM.

IN YOUR LETTER YOU STATE THAT THE CORPORATION BY WHICH YOU ARE EMPLOYED, PROGRESS ELECTRONICS COMPANY OF OREGON, INC., WAS THE LOW BIDDER UNDER THE ABOVE-CITED INVITATION BUT THAT THE INVITATION WAS SUBSEQUENTLY CANCELED AND THAT YOU BELIEVE THAT THE EQUIPMENT WOULD BE OBTAINED FROM THE PHILCO- FORD CORPORATION WHICH HAD NOT PARTICIPATED AS A BIDDER UNDER THE INVITATION.

THE FIRST STEP WAS ISSUED ON APRIL 4, 1968, AS A REQUEST FOR TECHNICAL PROPOSALS TO 15 PROSPECTIVE OFFERORS, 6 OF WHICH SUBMITTED TECHNICAL PROPOSALS FOR CONSIDERATION. AFTER TECHNICAL EVALUATION, ALL SIX FIRMS WERE FOUND TO BE ACCEPTABLE AND WERE INVITED TO SUBMIT BIDS UNDER STEP TWO OF THE PROCUREMENT. FIVE OF THE ELIGIBLE FIRMS RESPONDED WITH BIDS WHICH WERE OPENED ON JUNE 21, 1968, AND PROGRESS ELECTRONICS SUBMITTED THE LOWEST BID IN THE AMOUNT OF $438,720. IT SHOULD BE NOTED THAT THE ESTIMATED COST OF THE SINGLE-SYSTEM TELEMETRY RECEIVE/RECORD SYSTEM WAS $290,000. THE PREAWARD SURVEY OF THE LOW BIDDER'S QUALIFICATIONS WAS COMPLETED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES ON JULY 18, 1968, AND A COMPLETE AWARD WAS RECOMMENDED. HOWEVER, BECAUSE OF INSUFFICIENT FUNDING AND BECAUSE RESULTS OF A CONTINUING SYSTEM ANALYSIS WERE FORTHCOMING, AWARD WAS HELD IN ABEYANCE FOR 3 WEEKS. DURING SUCH PERIOD, THE PACIFIC MISSILE RANGE ADVISED THE PROCUREMENT ACTIVITY THAT THE NEED EXISTED FOR A DUAL TELEMETRY RECEIVE/RECORD SYSTEM FOR INSTALLATION ON THE USNS WHEELING.

THEREAFTER, ON AUGUST 29, 1968, THE CONTRACTING OFFICER ADVISED ALL BIDDERS THAT THE INVITATION FOR BIDS HAD BEEN CANCELED DUE TO CHANGES IN PROGRAM REQUIREMENTS. SUCH CANCELLATION WAS IN ACCORDANCE WITH PARAGRAPH 2-404.1 (B) (II) AND (VIII) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES AS FOLLOWS:

"* * * INVITATIONS FOR BIDS MAY BE CANELED AFTER OPENING BUT PRIOR TO AWARD WHERE SUCH ACTION IS CONSISTENT WITH (A) ABOVE AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT--

"/II) SPECIFICATIONS HAVE BEEN REVISED;

"/VIII) FOR OTHER REASONS, CANCELLATION IS CLEARLY IN THE BEST INTEREST OF THE GOVERNMENT.' SEE, IN THIS REGARD, 47 COMP. GEN. 103, 106.

AT THE TIME IT WAS DETERMINED THAT A DUAL TELEMETRY SYSTEM RATHER THAN A SINGLE SYSTEM WAS REQUIRED FOR USE BY THE PACIFIC MISSILE RANGE, IT WAS DECIDED THAT THE MOST ECONOMICAL METHOD OF OBTAINING A DUAL SYSTEM WOULD BE BY EXERCISING AN OPTION UNDER AN EXISTING CONTRACT WITH THE PHILCO-FORD CORPORATION. THE CONTRACTING OFFICER REACHED THIS CONCLUSION AFTER CONSIDERING THAT THE COST OF PURCHASING ($438,720) AND MODIFYING THE PROGRESS ELECTRONICS SINGLE SYSTEM TO A DUAL SYSTEM ($429,525 -- ESTIMATED) WOULD TOTAL $868,245 AS COMPARED TO THE PHILCO FORD OPTION PRICE OF $540,361 FOR THE DUAL SYSTEM. THEREFORE, IT APPEARED TO BE IN THE INTERESTS OF THE GOVERNMENT TO EXERCISE ITS OPTION UNDER THE EXISTING CONTRACT WITH PHILCO-FORD CORPORATION FOR THE PROCUREMENT OF THE DESIRED DUAL SYSTEM AT A SAVINGS OVER THE SINGLE SYSTEM OFFERED BY PROGRESS ELECTRONICS.

WE RECOGNIZE THAT THE ADMINISTRATIVE DECISION TO PURCHASE A DUAL SYSTEM WAS MADE LATE IN THE PROCUREMENT CYCLE AND OPERATED TO THE DISADVANTAGE OF PROGRESS ELECTRONICS WHICH WAS OTHERWISE ENTITLED TO AN AWARD UNDER THE INVITATION THAT WAS ULTIMATELY CANCELED. WHILE IT MAY BE SAID THAT SUCH DECISION DEMONSTRATED POOR PROCUREMENT MANAGEMENT, WE CANNOT HOLD THAT THE CANCELLATION ACTION TAKEN PURSUANT TO 10 U.S.C. 2305 (C), THE INVITATION FOR BIDS, AND THE PROCUREMENT REGULATIONS WAS IMPROPER. SEE 17 COMP. GEN. 554, 559-560. NEITHER DO WE FIND ANY BASIS TO QUESTION THE PROCUREMENT OF THE DUAL SYSTEM FROM THE PHILCO-FORD CORPORATION.

ACCORDINGLY, YOUR PROTEST IS DENIED; HOWEVER, WE ARE BRINGING THE CIRCUMSTANCES OF THIS PROCUREMENT TO THE ATTENTION OF THE SECRETARY OF THE NAVY FOR REVIEW AND APPROPRIATE ACTION.

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