B-177719, OCT 23, 1974

B-177719, OCT 23, 1974

1. GAO AFFIRMS B-177719, MARCH 29, 1974, 53 COMP. GEN. , HOLDING THAT GOVERNMENT DID NOT BREACH A PRIMARY SOURCE CONTRACT FOR FILM WHEN, PURSUANT TO A SPECIAL REQUIREMENT, IT PURCHASED ANOTHER SUPPLIER'S FILM WHICH EXCEEDED THE SPEED RATING OF THE PRIMARY SOURCE CONTRACTOR'S FILM. 2. DETERMINATION THAT AGENCY HAS REQUIREMENT OUTSIDE SCOPE OF PRIMARY SOURCE FSS CONTRACT IS PROPER WHEN BASED ON FACT THAT FILM PROVIDED UNDER PRIMARY SOURCE CONTRACT COULD NOT MEET REQUIREMENT OF AGENCY.

KALVAR CORPORATION:

COUNSEL FOR KALVAR CORPORATION (KALVAR) HAS REQUESTED RECONSIDERATION OF OUR DECISION IN MATTER OF KALVAR CORPORATION, B-177719, MARCH 29, 1974, 53 COMP. GEN. . IN THIS DECISION THE COMPTROLLER GENERAL HELD, INTER ALIA, THAT WHILE THE GOVERNMENT WAS OBLIGATED BY ITS PRIMARY SOURCE CONTRACT TO PURCHASE ITS NORMAL REQUIREMENTS FOR CERTAIN VESICULAR MICROFILM FROM KALVAR, THE PRIMARY SOURCE CONTRACTOR LISTED ON THE FEDERAL SUPPLY SCHEDULE (FSS), A BREACH OF CONTRACT WAS NOT ESTABLISHED BY THE PURCHASE OF A HIGHER SPEED MICROFILM FROM A MULTIPLE AWARD FSS CONTRACTOR. RECONSIDERATION OF THIS DECISION IS REQUESTED BY KALVAR ON THE BASIS THAT THE DECISION DID NOT GIVE PROPER EFFECT TO THE EVIDENCE OR TO THE GOVERNMENT'S LEGAL OBLIGATIONS UNDER THE KALVAR CONTRACT.

UPON RECONSIDERATION OF THE MATTER WE REMAIN PERSUADED THAT THE GOVERNMENT DID NOT BREACH ITS PRIMARY SOURCE CONTRACT WITH KALVAR WHEN, PURSUANT TO A SPECIAL REQUIREMENT, IT PURCHASED ANOTHER SUPPLIER'S FILM WHICH EXCEEDED THE SPEED RATING OF THE FILM KALVAR HAD BEEN FURNISHING UNDER ITS CONTRACT.

TO SUMMARIZE THE SITUATION BRIEFLY, KALVAR WAS AWARDED FSS CONTRACT NO. GS-00S-12756 COVERING NORMAL GOVERNMENT SUPPLY REQUIREMENTS FOR VARIOUS TYPES OF VESICULAR MICROFILM FOR FISCAL YEAR 1973. THE FEDERAL SPECIFICATION, L-F-320B, CONTROLLING THE SCOPE OF THE CONTRACT REQUIRED THE FILM TO MEET VARIOUS SENSITOMETRIC CHARACTERISTICS, INCLUDING A SPEED RATING OF 1.25 0.20 FOR THE TYPE IA2 FILM, THE TYPE FILM INVOLVED IN THIS DISPUTE. ON OCTOBER 19, 1972, THE IRS REQUESTED THAT THE GENERAL SERVICES ADMINISTRATION (GSA) ESTABLISH A FSS ARRANGEMENT FOR THE SUPPLY OF HIGHER SPEED-RATED KALVAR MIKROLITH 200 AND XIDEX HS-66 VESICULAR FILM. THE REQUEST RESULTED FROM THE USE AT IRS OF EQUIPMENT CAPABLE OF PROCESSING FILM AT 200 FEET PER MINUTE. IN THE PREVIOUS YEAR IRS HAD PURCHASED THE PRIMARY SOURCE CONTRACT FILM AND USED IT WITHOUT DIFFICULTY SINCE IN THAT YEAR MOST OF IRS'S EQUIPMENT WAS CAPABLE OF OPERATING AT A MAXIMUM SPEED OF 60 FEET PER MINUTE. BECAUSE OF THE NEW SPEED REQUIREMENTS OF THE LATE MODEL IRS EQUIPMENT, IRS ADVISED GSA THAT THE FILM PROVIDED BY KALVAR UNDER ITS PRIMARY SOURCE CONTRACT FOR FISCAL YEAR 1973 WAS NOT SUITABLE FOR USE ON ITS MACHINES SINCE THE CONTRACT FILM DID NOT PROVIDE A SATISFACTORILY SHARP AND CLEAR IMAGE WHEN THE MACHINES WERE OPERATING AT THEIR MAXIMUM SETTING. SUCH A DETERMINATION WAS MADE AS A RESULT OF TRIAL RUNS CONDUCTED BY IRS WITH THE CONTRACT FILM.

GSA THEN SOUGHT TO MAKE A DETERMINATION OF WHETHER THE MIKROLITH AND XIDEX HS-66 FILMS WERE OUTSIDE THE SCOPE OF THE SPECIFICATION GOVERNING THE PRIMARY SOURCE CONTRACT. GSA'S TECHNICAL STAFF CONCLUDED THAT BOTH FILMS REQUESTED BY IRS WERE OUTSIDE THE SCOPE OF THE SPECIFICATION. THEREUPON GSA REQUESTED KALVAR AND XIDEX TO SUBMIT OFFERS FOR THEIR RESPECTIVE HIGH SPEED FILM FOR LISTING ON A MULTIPLE-AWARD FSS. BOTH KALVAR AND XIDEX SUBMITTED OFFERS, AND GSA DETERMINED THAT THESE OFFERS WERE SUITABLE AND REASONABLE AND COMMITMENT DOCUMENTS WERE ISSUED BY GSA TO BOTH OFFERORS IN THE LATTER PART OF NOVEMBER 1972.

ON NOVEMBER 30, 1972, KALVAR REQUESTED THAT THE LISTING OF ITS MIKROLITH FILM BE CANCELED. KALVAR FURTHER ADVISED GSA THAT IT HAD CONDUCTED TESTS ON THE XIDEX HS-66 FILM IN ACCORDANCE WITH THE METHOD PROVIDED IN THE SPECIFICATION AND FOUND THAT XIDEX FILM HAD A SPEED RATING WITHIN THE "RANGE" OF SPEED RATINGS IN KALVAR'S PRIMARY SOURCE CONTRACT SPECIFICATIONS. GSA, HOWEVER, ON DECEMBER 18, 1972, AFFIRMED ITS DECISION THAT BOTH THE MIKROLITH AND XIDEX FILMS WERE OUTSIDE OF THE SPECIFICATION RANGE AND COULD BE LISTED ON THE NEGOTIATED MULTIPLE AWARD FSS. KALVAR THEN FILED A REQUEST FOR RELIEF WITH THE COMPTROLLER GENERAL.

KALVAR CONTENDED TO THIS OFFICE THAT THE SENSITOMETRIC CHARACTERISTICS OF THE XIDEX HS-66 FILM WERE WITHIN THE PARAMETERS OF ITS PRIMARY SOURCE FSS CONTRACT AND THAT BY LISTING THE XIDEX FILM ON THE MULTIPLE-AWARD FSS, GSA BREACHED THE PROVISION OF THE KALVAR CONTRACT WHICH STATED THAT THE NORMAL SUPPLY REQUIREMENTS OF THE AGENCIES WOULD BE PURCHASED FROM KALVAR. KALVAR ALSO URGED THAT THE GSA BREACH ENTITLED IT TO DAMAGES.

IN OUR PRIOR DECISION WE NOTED THAT GSA DID NOT HAVE THE IN-HOUSE TECHNICAL FACILITIES FOR TESTING MICROFILM. IT WAS KNOWN BY GSA, HOWEVER, THAT KALVAR'S SPECIFICATION FILM WAS NOT MEETING IRS'S REQUIREMENT FOR FILM WHICH WOULD FUNCTION EFFICIENTLY ON IRS MACHINES AT 200 FEET PER MINUTE, AND THAT KALVAR MIKROLITH 200 AND XIDEX HS-66 FILM HAD THE CAPABILITY, BASED ON SPEED RATINGS, OF MEETING THIS REQUIREMENT.

RELYING ON THE KALVAR AND XIDEX LITERATURE THE GSA TECHNICAL STAFF DETERMINED THAT THE MIKROLITH 200 SPEED RATING WAS 1.75 WHILE THAT FOR XIDEX HS-66 WAS 1.50, BOTH BEYOND THE SPEED RATING OF 1.25

0.20 PRESCRIBED BY THE SPECIFICATION. ALTHOUGH THE FINDING WITH REGARD TO HS-66 FILM WAS DISPUTED BY KALVAR ON THE GROUND THAT ITS OWN TESTS SHOWED THAT HS-66 FILM WAS WITHIN THE SPECIFICATION, THE GSA STAFF FELT THAT WIDELY VARIED TEST RESULTS COULD BE OBTAINED BY VARYING THE EXPOSURE TIME, DEVELOPING TIME AND THE TYPE OF INSTRUMENTATION INVOLVED. ACCORDINGLY, KALVAR'S ASSERTION THAT IT TESTED XIDEX HS-66 AND FOUND THAT IT WAS SLOWER THAN 1.45 WAS NOT DEEMED CONTROLLING BY GSA, ESPECIALLY IN THE LIGHT OF A LETTER FROM THE DIRECTOR OF RESEARCH FOR XIDEX TO THE EFFECT THAT THE XIDEX FILM PROVIDED TO IRS WAS 35 PERCENT FASTER THAN THAT WHICH KALVAR HAD TESTED. CONSIDERING THAT THE KALVAR SPECIFICATION FILM DID NOT MEET IRS'S REQUIREMENT AND THAT MIKROLITH 200 AND HS-66 WOULD MEET IRS'S REQUIREMENT, GSA DETERMINED THAT IRS'S NEED FOR FILM COULD ONLY BE SATISFIED BY FILM WITH A SPEED RATING WHICH EXCEEDED THE SPECIFICATION RANGE.

WE RECOGNIZED THAT KALVAR WOULD BE ENTITLED TO DAMAGES IF IT COULD BE SHOWN THAT AN AGENCY PURCHASED THE XIDEX FILM DURING THE TERM OF KALVAR'S PRIMARY SOURCE FSS CONTRACT WHEN THE FILM LISTED ON KALVAR'S FSS CONTRACT WAS ADEQUATE TO MEET THE AGENCY'S REQUIREMENTS. HOWEVER WE CONCLUDED THAT THE RECORD DID NOT SUPPORT A FINDING THAT IRS'S PURCHASE OF HS-66 FILM CONSTITUTED A BREACH OF THE PRIMARY SOURCE CONTRACT.

IN ITS REQUEST FOR RECONSIDERATION, KALVAR CONTENDS THAT IT COULD HAVE MET IRS'S NEEDS DURING FISCAL YEAR 1973 WITH SPECIFICATION FILM, IF ONLY GSA HAD GIVEN IT THE OPPORTUNITY TO DO SO. IN SUPPORT OF THIS CONTENTION KALVAR NOTES THAT ITS CONTRACT FILM COULD HAVE BEEN INCREASED IN SPEED BY 50 PERCENT AND STILL HAVE BEEN WITHIN THE SPECIFICATION FOR ITS PRIMARY SOURCE CONTRACT. THIS IS POSSIBLE, KALVAR CLAIMS, BECAUSE ITS CONTRACT FILM HAD A SPEED RATING OF 1.20 TO 1.30 WHILE THE SPECIFICATION PRESCRIBED AN ACCEPTABLE "RANGE" OF 1.05 TO 1.45 FOR THAT CLASS OF FILM. KALVAR FURTHER STATES THAT IN FISCAL YEAR 1974 IT SUPPLIED FILM TO IRS, ALTHOUGH UNDER A DIFFERENT SPECIFICATION, AND THERE WERE NO COMPLAINTS CONCERNING THIS FILM. YET, KALVAR CLAIMS, WHEN THE 1974 FILM IS MEASURED IN ACCORDANCE WITH THE 1973 SPECIFICATION, IT HAS A SPEED RATING OF 1.36 TO 1.45.

KALVAR URGES THAT UNDER ITS PRIMARY SOURCE CONTRACT THE GOVERNMENT HAD AN OBLIGATION TO PROVIDE KALVAR WITH AN OPPORTUNITY TO MEET IRS'S NEEDS PRIOR TO INSTITUTING THE MULTIPLE-AWARD FSS. INDEED, KALVAR ARGUES THAT ANY OTHER INTERPRETATION OF ITS PRIMARY SOURCE CONTRACT WOULD BE UNREASONABLE AND WOULD UNDERMINE THE INTEGRITY OF THE PRIMARY SOURCE CONCEPT BY DENYING THE PRIMARY SOURCE CONTRACTOR A CHANCE TO MEET THE GOVERNMENT'S REQUIREMENTS WITH SPECIFICATION FILM.

WE DO NOT AGREE WITH KALVAR'S INTERPRETATION OF ITS CONTRACT. UNDER SECTION 3.2.7 OF THE CONTRACT SPECIFICATION, KALVAR WAS REQUIRED TO FURNISH FILM WITH A SPEED RATING OF "1.25 0.20." NONE OF THE PARTIES HAS SUGGESTED THAT UNDER SECTION 3.2.7 A CONTRACTOR WAS REQUIRED TO FURNISH A FILM WHICH SPANNED THE ENTIRE RANGE OF SPEED FROM 1.05 TO 1.45. SIMILARLY WE DO NOT INTERPRET 3.2.7 AS REQUIRING A CONTRACTOR TO FURNISH A NUMBER OF FILMS IN ORDER TO COVER THE ENTIRE RANGE. RATHER, WE READ THIS SPECIFICATION AS IMPOSING A REQUIREMENT FOR FILM HAVING A SPEED RATING OF 1.25 WITH A PERMISSIBLE TOLERANCE OF 0.20. IN OUR OPINION A CONTRACTOR FURNISHING FILM WITH A RATING OF 1.20 TO 1.30 WOULD MEET THE SPECIFICATION REQUIREMENT, AND THE GOVERNMENT COULD NOT REQUIRE SUCH A CONTRACTOR TO FURNISH "FASTER" FILM IN ORDER TO MEET A SPECIAL NEED OF A USER AGENCY. IN THE ABSENCE OF A RIGHT ON THE PART OF THE GOVERNMENT TO REQUIRE THE CONTRACTOR TO FURNISH "FASTER" FILM, THE GOVERNMENT WOULD HAVE NO OBLIGATION TO ORDER "FASTER" FILM FROM THE PRIMARY SOURCE CONTRACTOR, CONSISTENT WITH THE LEGAL DOCTRINE OF MUTUALITY OF OBLIGATION. SEE GENERALLY 3 WILLISTON, CONTRACTS SEC. 105A.

CONCERNING THE INTEGRITY OF THE PRIMARY SOURCE CONCEPT, WE NOTE THAT THE PRIMARY SOURCE CONTRACTOR WAS FREE TO SELECT A FILM WITHIN THE LIMITS PERMITTED BY THE SPECIFICATION WHICH THE CONTRACTOR FELT COULD BEST SERVE THE NEEDS OF THE USING AGENCIES. APPARENTLY KALVAR'S CHOICE OF FILM WAS SUFFICIENTLY RESPONSIVE TO THE INDIVIDUAL NEEDS OF THE VARIOUS AGENCIES SO THAT ONLY ONE USING AGENCY WAS UNABLE TO USE THE FILM PROVIDED. RECOGNIZED IN OUR PRIOR DECISION, THE GOVERNMENT WOULD BE LIABLE FOR DAMAGES TO KALVAR IF IT WERE SHOWN THAT AN AGENCY PURCHASED FILM LISTED ON THE MULTIPLE-AWARD SCHEDULE, WHEN THE FILM FURNISHED UNDER KALVAR'S PRIMARY SOURCE CONTRACT WOULD HAVE MET THAT AGENCY'S NEEDS. UNDER THE CIRCUMSTANCES WE DO NOT BELIEVE THAT THE PRIMARY SOURCE CONCEPT WAS UNDERMINED BY GSA'S ACTIONS IN THIS CASE.

ACCORDINGLY, THE DECISION OF MARCH 29, 1974, IS AFFIRMED.