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.