BNUMBER:  B-280953 
DATE:  December 11, 1998
TITLE: Electro Design Manufacturing, Inc., B-280953, December 11,
1998
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Matter of:Electro Design Manufacturing, Inc.

File:     B-280953

Date:December 11, 1998

Robert H. Koehler, Esq., and Christy G. Slade, Esq., Patton Boggs, for 
the protester.
Maj. Cynthia Mabry, JAGC, Vera Meza, Esq., and Nancy L. Holzwanger, 
Esq., Department of the Army, for the agency.
Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Combination of system requirements in single acquisition is 
unobjectionable where procurement involves a foreign military sale and 
the foreign customer on whose behalf the procurement is being 
conducted has requested that all system components be acquired under a 
consolidated procurement. 

DECISION

Electro Design Manufacturing, Inc. (EDM) protests the terms of request 
for proposals (RFP) No. DAAH01-98-R-0403, issued by the U.S Army 
Aviation & Missile Command in connection with a foreign military sales 
(FMS) acquisition of TOW 2 Launcher Systems and associated auxiliary 
equipment for Taiwan.  EDM complains that the solicitation improperly 
combines the primary components of the TOW 2 Launcher System.   

We deny the protest.

On July 31, 1998, the Army issued RFP No. DAAH01-98-R-0403 seeking 
proposals for specified quantities of the components which comprise 
the TOW 2 Launcher
Systems which are to be provided to Taiwan under the FMS program.  The 
Launcher Systems are comprised of two primary components:  the 
launcher and the night vision sight equipment.[1] 
 
On September 2, EDM filed this protest asserting that combining the 
two system components into a single acquisition improperly restricts 
competition,[2] and therefore violates the Competition in Contracting 
Act of 1984 (CICA), 10 U.S.C.  sec.  2305(a)(1) (1994) and the Small 
Business Act, as amended, 15 U.S.C.A.  sec.  631, 632, 644 (West Supp. 
1998).[3]  

This procurement is being conducted under the Arms Export Control Act, 
as amended, which authorizes the Department of Defense to enter into 
contracts for purposes of resale to foreign countries or international 
organizations.  22 U.S.C.  sec.  2751-2799aa (1994).  Although CICA 
generally requires agencies to obtain full and open competition in 
conducting acquisitions, that statute contains an express exemption 
for procurements in which the "written directions of a foreign 
government reimbursing the agency for the cost of the procurement of 
the property or services for such government, have the effect of 
requiring the use of procedures other than competitive procedures."  
10 U.S.C.  sec.  2304(c)(4).  

In responding to EDM's protest, the agency defended the procurement on 
various bases, without making clear in its administrative report the 
specific expressed preference of the Taiwan authorities in this 
matter.  Accordingly, on October 22, by Notice sent to counsel for all 
parties, this Office requested the Army to provide input from Taiwan 
authorities regarding the combination of the system components.  By 
letter dated October 27, Taiwan authorities stated:  

     Please be advised that our Army prefers that the procurement be 
     conducted as a consolidated package with a single manufacturer or 
     group of manufacturers that can provide an entire system, rather 
     than individual companies that can each provide a separate part 
     of the procurement.  The reasons for this preference are that we 
     prefer to deal with a single manufacturer or group of 
     manufacturers for purposes of time saving, accountability, 
     quality control and overall coordination throughout the product 
     life cycle.

Congress has specifically authorized the use of other than full and 
open competitive procedures based on the written directions of an FMS 
customer, 10 U.S.C.  sec.  2304(c)(4), and our Office has held that this 
statutory authority provides a valid basis for an agency to conduct a 
sole-source procurement following a written request from the FMS 
customer.[4]  Goddard Indus., Inc., B-275643, Mar. 11, 1997, 97-1 CPD  para.  
104 at 2; Pilkington Aerospace, Inc., B-260397, June 19, 1995, 95-2 
CPD  para.  122 at 2-3; Optic-Electronic Corp., B-235885, Oct. 6, 1989, 89-2 
CPD  para.  326 at 2-3.  In responding to the agency report, EDM asserts 
that, "The request of [Taiwan] is not a proper justification in these 
circumstances because Taiwan did not officially direct a sole source."  
EDM Comments on Agency Report at 11.  In short, EDM's comments assert 
that, although Taiwan could have properly directed a sole-source 
procurement, any other less restrictive request is improper.  EDM's 
argument is without merit.

As pointed out above, CICA authorizes procuring agencies to 
accommodate written directions from FMS customers which "have the 
effect of requiring the use of procedures other than competitive 
procedures."  10 U.S.C.  sec.  2304(c)(4).  Here, the FMS customer has 
requested that the system components be acquired in a single 
procurement.  Accordingly, while the combination of requirements may 
result in less than full and open competition, that request and result 
are explicitly permitted.[5]

The protest is denied.

Comptroller General 
of the United States

1. Other auxiliary equipment within the Launcher Systems includes a 
vehicle power conditioner modification kit, a post amplifier test set, 
a boresight collimator test set, and a battery charger.

2. Solicitations which combine multiple requirements have the 
potential for restricting competition by excluding firms that can 
furnish only a portion of the combined requirements.  See, e.g., 
National Customer Eng'g, B-251135, Mar. 11, 1993, 93-1 CPD  para.  225 at 
4-5.  

3. In addition to asserting that the two primary components should be 
separately acquired, EDM maintains that these separate acquisitions 
should be conducted as small business set-asides.  Since we find the 
agency's combination of the components unobjectionable, this issue is 
not for consideration.

4. The record shows that EDM has been the recipient of such 
sole-source contracts.

5. On the basis of the FMS customer's request that the procurement be 
conducted as a single acquisition, we similarly conclude that the 
solicitation does not violate the provisions of the Small Business 
Act, as amended.  That Act establishes certain limits on the 
consolidation of contract requirements "to the maximum extent 
practicable." 15 U.S.C.A.  sec.  631(j), 644(e)(1).  In our view, a 
situation such as that presented here, where the FMS customer requests 
that the contract requirements be combined, falls outside of the Act's 
limitations.