B-153564, MAY 4, 1964

B-153564, MAY 4, 1964

TO BULOVA WATCH COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 20, 1964, PROTESTING THE AWARD OF A CONTRACT TO BENRUS WATCH COMPANY UNDER REQUEST FOR PROPOSAL NO. AMC/A/36-038-64-490/NS), DATED FEBRUARY 7, 1964.

THE RECORD SHOWS THAT IT WAS DETERMINED BY REPRESENTATIVES OF THE AIR FORCE, NAVY AND ARMY, THAT SPECIFICATION MIL-W-3818A, DATED MARCH 12, 1956, REQUIRED REVISION TO ACCOMPLISH THE FOLLOWING RESULTS:

A. REDUCE THE VARIETY OF GRADES AND TYPES OF WATCHES.

B. ASSURE CONSISTENT QUALITY OF ITEMS.

C. ELIMINATE TESTING REQUIREMENTS OF ONE YEAR AND

SUBSTITUTE IN LIEU THEREOF A GUARANTEE PROVISION.

D. INCORPORATE A NEW CASE DESIGN.

ACCORDINGLY, THE SPECIFICATION WAS FORMALLY REVISED ON OCTOBER 17, 1962, AND IS IDENTIFIED AS MIL-W-3818B.

SUBSEQUENT TO THE APPROVAL OF SPECIFICATION MIL-W-3818B, ALL SOURCES ON THE PREVIOUS QUALIFIED PRODUCTS LIST, UNDER SPECIFICATION MIL-W 3818A, WERE INVITED BY LETTER DATED DECEMBER 6, 1962, TO MAKE APPLICATION FOR THE SUBMISSION OF THEIR PRODUCT OF FRANKFORD ARSENAL FOR QUALIFICATION TESTING. UPON RECEIPT AND APPROVAL OF THE APPLICATION AS REQUIRED BY PARAGRAPH 104 OF THE PAMPHLET ENTITLED "PROVISIONS GOVERNING QUALIFICATION," SAMPLES WOULD BE AUTHORIZED TO BE SUBMITTED. THREE FIRMS SUBMITTED APPLICATIONS AND SAMPLES DURING 1963, NAMELY, BENRUS WATCH CO., INC., LONGINES-WITTNAUER WATCH CO., AND MATBEY-TISSOT WATCH CO., INC.

HOWEVER, BENRUS WATCH CO., INC., WAS THE ONLY SOURCE THAT SUCCESSFULLY MET THE REQUIREMENTS FOR APPROVAL. THEREFORE, THAT FIRM WAS FORMALLY NOTIFIED ON SEPTEMBER 16, 1963, THAT THE SAMPLES SUBMITTED WERE APPROVED AND THAT ITS PRODUCT WAS LISTED ON THE QUALIFIED PRODUCTS LIST FOR SPECIFICATION MIL-F-3818B. THE OTHER TWO SOURCES WERE NOTIFIED BY LETTER OF NOVEMBER 21, 1963, THAT THEIR SAMPLES DID NOT MEET MINIMUM SPECIFICATION REQUIREMENTS.

ON THE BASIS OF MILITARY INTERDEPARTMENTAL PURCHASE REQUESTS FROM THE MARINE CORPS FOR A TOTAL OF 10,849 WATCHES, THE CONTRACTING OFFICER EXECUTED A DETERMINATION AND FINDINGS DATED FEBRUARY 2, 1964, AUTHORIZING NEGOTIATION UNDER THE PROVISIONS OF 10 U.S.C. 2304/A) (10) AND ASPR 3.210.2 PROMISED ON THE CIRCUMSTANCES REPORTED AS FOLLOWS:

"A. THIS WATCH IS A QUALIFIED PRODUCT AND THE TIME REQUIRED FOR TESTING WOULD UNDULY DELAY DELIVERIES.

"B. THE INTEREST OF THE GOVERNMENT REQUIRES ASSURANCE PRIOR TO AWARD THAT THE PRODUCT IS SATISFACTORY FOR ITS INTENDED USE AND NO OTHER MEANS OF QUALITY ASSURANCE IS AVAILABLE.

"C. AMPLE SOLICITATION AND OPPORTUNITY WAS AFFORDED THE CLOCK AND WATCH INDUSTRIES, RESULTING IN ONLY ONE QUALIFIED PRODUCT, NAMELY, BENRUS WATCH CO.'

THE REQUEST FOR PROPOSAL WAS ISSUED ON FEBRUARY 7, 1964, WITH A CLOSING DATE OF FEBRUARY 24, 1964, TO BENRUS WATCH COMPANY, AS A SOLE SOURCE PREMISED ON THE FACTS SHOWN ABOVE. BENRUS QUOTED A UNIT PRICE OF $28.28 EACH FOR A QUANTITY OF 10,849 WRIST WATCHES OR A TOTAL COST OF $306,809.72. ON FEBRUARY 20, 1964, AN AMENDMENT WAS ISSUED EXTENDING THE CLOSING DATE TO FEBRUARY 27, 1964. THE PROCUREMENT ACTION WAS SYNOPSIZED, FOR SUBCONTRACTING ONLY, IN THE COMMERCE BUSINESS DAILY DATED FEBRUARY 17, 1964. AT YOUR REQUEST, YOU WERE FURNISHED A COPY OF THE REQUEST FOR PROPOSAL ON FEBRUARY 13, 1964.

YOU ALLEGE, IN EFFECT, THAT FRANKFORD ARSENAL IS ATTEMPTING TO CIRCUMVENT CURRENT REGULATIONS IN THE AREA OF COMPETITION AND METHOD OF PROCUREMENT AND HAS FAILED TO CLARIFY AMBIGUITIES IN THE SPECIFICATION, PARTICULARLY WITH REFERENCE TO THE GUARANTEE PROVISION AS SET FORTH IN PARAGRAPH 3.21 OF SPECIFICATION MIL-W-3818B, DATED OCTOBER 17, 1962.

YOU ALLEGE SPECIFICALLY THAT FRANKFORD ARSENAL, WITH KNOWLEDGE OF YOUR INTEREST IN THE PROCUREMENT OF BACK-TYPE WATCHES, CIRCUMVENTED PROCUREMENT REGULATIONS BY NOT OBTAINING COMPETITION.

THE RECORD SHOWS YOU WERE AFFORDED AMPLE TIME TO SUBMIT YOUR PRODUCT FOR QUALIFICATION TESTING AND POSSIBLE INCLUSION ON THE QUALIFIED PRODUCTS LIST. HOWEVER, YOU DID NOT SUBMIT YOUR PRODUCT UNTIL FEBRUARY 13, 1964, A LAPSE OF 14 MONTHS FROM THE DATE APPLICATIONS WERE ORIGINALLY REQUESTED. THE PRODUCT YOU SUBMITTED WAS REJECTED ON MARCH 11, 1964, FOR THE REASON THAT IT FAILED THE SHOCK TEST PERFORMANCE PRESCRIBED IN PARAGRAPH 4.8.9 OF SPECIFICATION MIL-W 3818B IN THAT OVER A PERIOD OF 20 HOURS THE WATCH GAINED 1 HOUR AND 22 MINUTES. THIS FAILURE WAS CONSIDERED A SUFFICIENT CAUSE TO REJECT YOUR PRODUCT AS NOT QUALIFYING FOR INCLUSION ON THE QUALIFIED PRODUCTS LIST. SINCE ONLY ONE OF THREE OTHER SOURCES WHICH SUBMITTED THEIR PRODUCT FOR QUALIFICATION TESTING SUBMITTED A PRODUCT WHICH PASSED ALL THE REQUIREMENTS OF MIL-W-3818B AND WAS APPROVED FOR INCLUSION ON THE QUALIFIED PRODUCTS LIST, THE DETERMINATION BY THE CONTRACTING OFFICER THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION, AND THAT A CONTRACT SHOULD BE NEGOTIATED WITH BENRUS, APPEARS TO HAVE BEEN PROPER.

YOU FURTHER ALLEGE THAT THE PROPOSED PROCUREMENT SHOULD BE CANCELLED AND THAT THE GOVERNMENT SHOULD PROCEED ON AN ADVERTISED PROCUREMENT TO ASSURE ADEQUATE COMPETITION.

AS INDICATED ABOVE, COMPETITION COULD NOT BE ATTAINED BECAUSE ONLY ONE SOURCE WAS ON THE QUALIFIED PRODUCTS LIST AT THE TIME OF THE INITIATION OF THE PROCUREMENT ACTION, AND SO FAR AS WE ARE ADVISED NO OTHER PRODUCT HAS SINCE BEEN QUALIFIED. IN OUR DECISION OF AUGUST 9, 1961, 41 COMP. GEN. 93, IT WAS HELD THAT WHERE THERE IS ONLY A SINGLE SOURCE LISTED ON THE QUALIFIED PRODUCTS LIST, THE PROPER METHOD OF PROCUREMENT IS NEGOTIATION IN LIEU OF FORMAL ADVERTISING. WE SEE NO VALID BASIS UPON WHICH A DIFFERENT CONCLUSION MAY BE REACHED IN THE INSTANT CASE.

IN ADDITION, YOU ALLEGE THAT THE GUARANTEE PROVISION OF PARAGRAPH 3.21 OF MIL-W-38188 IS UNREASONABLE IN THAT IT REQUIRES THE CONTRACTOR TO BE LIABLE FOR THE REPAIR OF WATCHES THAT FAIL TO MEET ALL SPECIFICATIONS FOR A PERIOD OF TWO YEARS, AFTER ACCEPTANCE BY THE GOVERNMENT, WITHOUT ANY LIMITATION OF REPAIR RESPONSIBILITY WHATSOEVER.

SINCE THE THREE SOURCES THAT SUBMITTED THEIR PRODUCTS FOR TESTING DID NOT TAKE ANY EXCEPTION, OR REQUIRE INTERPRETATION AS TO THE GUARANTEE PROVISION IN THE SPECIFICATION, IT APPEARS THAT THOSE FIRMS WERE READY TO MEET SUCH PROVISION AND THAT THE PROVISION WAS CONSIDERED REASONABLE. ANY EVENT IT DOES NOT APPEAR THAT THE GUARANTEE PROVISION IS GERMANE TO YOUR PROTEST OR TO YOUR FAILURE TO HAVE A WATCH APPROVED FOR INCLUSION ON THE LIST.

AS TO THE ALLEGATION THAT BENRUS WATCH COMPANY IS NOT A MANUFACTURER OF WATCHES BUT ONLY IMPORTS CASES AND SELLS WATCH MOVEMENTS FROM FOREIGN SOURCES, WE ARE ADVISED THAT BENRUS POSSESSES MANUFACTURING FACILITIES IN THE UNITED STATES AND SWITZERLAND WHICH ARE UTILIZED IN THE PRODUCTION AND ASSEMBLY OF WATCHES AND, THEREFORE, QUALIFIES AS A MANUFACTURER UNDER ASPR 12-603.1. THE BENRUS PROPOSAL SHOWS THAT IT IMPORTS THE MOVEMENT AND DIAL SETTING, DIAL STEM AND SPRING BARS, AND THAT THE CASE, CROWN, ATTACHMENTS, PACKING MATERIAL AND JEWEL BEARINGS (TURTLE MOUNTAIN ORDNANCE PLANT) ARE ALL DOMESTICALLY PRODUCED. ITS COST DATA INDICATES THAT THE COST OF THE DOMESTIC COMPONENTS IS CONSIDERABLY IN EXCESS OF 50 PERCENT OF THE COST OF ALL COMPONENTS, AND THEREFORE THE ITEM MUST BE CONSIDERED A DOMESTIC SOURCE AND PRODUCT UNDER ASPR 6-101 (D).

IN THE CIRCUMSTANCES WE FIND NO VALID BASIS FOR YOUR PROTEST, AND IT IS THEREFORE DENIED.