BNUMBER:  B-277253; B-277253.4 
DATE:  September 17, 1997
TITLE: SmithKline Beecham Pharmaceuticals, B-277253; B-277253.4,
September 17, 1997
**********************************************************************

Matter of:SmithKline Beecham Pharmaceuticals

File:     B-277253; B-277253.4

Date:September 17, 1997

James P. Gallatin, Jr., Esq., Scott D. Chaplin, Esq., and James P. 
Hodges, Esq., Reed Smith Shaw & McClay, for the protester.
Joel R. Feidelman, Esq., Deneen J. Melander, Esq., and Nancy R. 
Wagner, Esq., Fried, Frank, Harris, Shriver & Jacobson, for Merck & 
Company, Inc., an intervenor.
J. Albert Calluso, Esq., Defense Logistics Agency, for the agency.
Andrew T. Pogany, Esq., and David A. Ashen, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that contracting agency should have employed an indefinite 
delivery/indefinite quantity contract with multiple award provision is 
denied where agency properly determined that a requirements contract 
with a single award provision reflected its needs and enhanced 
competition between the only two producers of the item being procured.

DECISION

SmithKline Beecham Pharmaceuticals protests the terms of request for 
proposals (RFP) No. SP0200-97-R-1700, issued by the Defense Logistics 
Agency (DLA) for adult hepatitis A vaccine.

We deny the protest.

The RFP, issued on May 12, 1997, contemplated the award of a single 
requirements contract, for an initial 1-year base period with 4 option 
years, to the offeror submitting the lowest priced, technically 
acceptable proposal.  The RFP specified by brand name the only two 
hepatitis A vaccines licensed in the United States--Havrix 
(manufactured by SmithKline) and Vaqta (manufactured by Merck & 
Company, Inc.).  The RFP instructed offerors to propose pricing for 
these two specified commercially available single-dose adult hepatitis 
A vaccines packaged in the following three ways:  a single dose 
syringe, a package of five single dose syringes, and a single dose 
vial.  Currently, the Department of Defense procures the hepatitis A 
vaccines through Distribution and Pricing Agreements (DAPA), which are 
similar to basic ordering agreements, with SmithKline and Merck. The 
RFP provides that, upon award of the contract, the successful 
offeror's DAPA will be modified to reflect the contract prices 
received under this solicitation and that the losing offeror's adult 
hepatitis A vaccine DAPA will be canceled for the duration of the 
contract.  Proposals from these two firms were received by June 20, 
1997, the amended closing date for receipt of initial proposals.

SmithKline principally protests as improper the agency's decision to 
award a single contract rather than multiple contracts to both firms.  
According to SmithKline, the agency has not complied with the 
requirements of the Competition in Contracting Act (CICA), 10 U.S.C.  sec.  
2304(a)(1)(A) (1994), to "obtain full and open competition through the 
use of competitive procedures in accordance with the requirements of 
[CICA] and the Federal Acquisition Regulation [FAR]."  SmithKline 
further contends that multiple awards are mandated here by FAR  sec.  
16.504(c), which requires that the contracting officer, "to the 
maximum extent practicable, give preference to making multiple awards 
of [indefinite delivery/indefinite quantity (IDIQ)] contracts under a 
single solicitation."

As noted above, however, the solicitation here did not contemplate 
award of an IDIQ contract, but instead contemplated award of a 
requirements contract.  As such, FAR  sec.  16.503, which is applicable to 
requirements contracts, is controlling here; that section provides no 
preference for multiple awards.  Further, although SmithKline asserts 
that the agency should have employed an IDIQ contract in the 
solicitation, rather than a requirements contract, the agency reports 
that it elected not to do so because it could not determine a "viable 
stated minimum [or] maximum" quantity that would be "flexible enough 
to accommodate the changing role of the military" since inoculation of 
"all active duty and selected reserve force military personnel" are 
required and the agency "could not predetermine the precise quantities 
of vaccine it would require in order to accomplish its task."  We note 
in this regard that FAR  sec.  16.504(a) requires the contracting agency to 
be able to specify minimum and maximum stated quantities as a 
condition for using IDIQ contracts.  In any case, FAR  sec.  16.504(c) does 
not mandate making multiple awards, but instead requires the 
contracting officer to "exercise sound business judgment" in 
determining whether multiple awards are appropriate.  Indeed, FAR  sec.  
16.504(c) states that multiple awards should not be made where, as 
here, the contracting officer determines that more favorable terms and 
conditions, including pricing, would be obtained if a single award is 
made.  Since there is no reason to believe that making multiple awards 
when there are only two competitors would result in terms and 
conditions, including pricing, as favorable as those that would be 
obtained if a single award were to be made, we find no basis to 
question the contracting officer's judgment in this regard.  Moreover, 
we see no evidence that the CICA requirement for full and open 
competition was violated by the agency's decision to employ a single 
award methodology--the protester was not precluded from competing, and 
a single award enhances competition between the only two firms that 
produce the vaccines.  Since the protester relies on FAR  sec.  16.504, 
which is inapposite to requirements contracts, and since we are 
unaware of any statute or regulation which requires a contracting 
agency to employ multiple awards in a solicitation for a requirements 
contract, we deny this ground of protest. 

SmithKline argues that the solicitation's limitation on the dosage 
strength (adult only) and the packaging of the product restricts 
competition.  In this regard, SmithKline states that it has an 
adolescent form of Havrix intended for use by individuals under the 
age of 19, which is currently priced at 44 percent less than the adult 
dosage price offered to the military, and has also developed an adult, 
multi-dose vial form of Havrix, currently awaiting FDA approval, which 
is likely to offer additional savings to the government and which 
should be considered in this procurement.  However, as noted by the 
agency, it already has existing DAPAs with manufacturers of the 
adolescent hepatitis A vaccine--including SmithKline--which will be 
unaffected by this procurement, and the agency simply has determined 
not to procure the adolescent vaccine at this time.  We know of no 
requirement that the agency procure adolescent vaccine for which it 
already has sources of supply simply because it has decided to procure 
the adult vaccine.  Further, in view of the fact that SmithKline's 
multi-dose vial form is not yet approved by the FDA, SmithKline's 
challenge to the agency's failure to include that vial form in the 
solicitation is also clearly without merit.
 
Finally, SmithKline, in its written comments, raises a number of 
additional arguments, including, for example, that the solicitation 
improperly equates the two vaccines as functionally equal and that the 
agency failed to obtain the required justification and approval for a 
competition restricted to only two manufacturers or to adequately 
document this type of brand name only solicitation.  These arguments 
are untimely, because they were raised after the June 20 closing date 
for receipt of initial proposals, 4 C.F.R.  sec.  21.2(a)(1) (1997), fail 
to suggest prejudice to SmithKline with respect to its ability to 
successfully compete for this requirement (as is the case with respect 
to the alleged lack of documentation limiting the competition to 
SmithKline and Merck), and/or are otherwise without merit.

The protest is denied.

Comptroller General
of the United States