Switlik Parachute Company, Inc.

B-275539 Mar 03, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Was unobjectionable where requirement significantly increased since issuance of original solicitation. The agency should have made award to Switlik as the low offeror under the RFP. The RFP was issued on June 29. The RFP was subject to a qualified products list. This reduction was based on the agency's fiscal year 1997 budget execution process. Where a policy decision was made to eliminate the "safety level. Switlik's arguments are without merit. The increased quantity was based on a computer-generated calculation using the software program "Automated Item Manager Toolkit. The ROL was derived from historical data for the average demand over the lead time. This was multiplied by a total lead time of 3.8 quarters (2 quarters administrative lead time and 1.8 quarters production lead time) to arrive at an ROL of 985 units. View Decision Matter of: Switlik Parachute Company, Inc. File: B-275539 Date: March 3, 1997 * Redacted Decision DIGEST Attorneys DECISION Switlik Parachute Company, Inc. protests the cancellation of request for proposals (RFP) No. N00383-96-R-P612, issued by the Department of the Navy for anti-exposure hood assemblies, which provide insulated protection to military air crew members. Switlik argues that, rather than canceling the RFP, the agency should have made award to Switlik as the low offeror under the RFP. We deny the protest. The RFP was issued on June 29, 1996 for a total of 3,165 hood assemblies, with delivery of 2,327 units to Norfolk, Virginia (CLIN 0001AA) and 838 units to San Diego, California (CLIN 0001AB). The RFP was subject to a qualified products list, with only Mustang Engineering Tech Apparel and Switlik qualified to provide the item; it also required first article testing. On October 22, 1996, after receiving offers from Switlik (lowest price) and Mustang and twice extending the closing date, the Navy issued amendment No. 0003, which reduced the Norfolk quantity by 991, from 2,327 to 1,336 units (for a resulting total quantity on both line items of 2,174 units) and further gave offerors the opportunity to revise their prices. This reduction was based on the agency's fiscal year 1997 budget execution process, where a policy decision was made to eliminate the "safety level," a previously specified quantity of items in excess of the expected requirements, which served as a cushion to protect against stock outages during procurement lead time. In response to the amendment, Mustang did not submit a revised price. Switlik did raise its price for the Norfolk line item, which increased its total price, but its total price remained low. However, in evaluating the prices, the agency mistakenly calculated the firm's price on the basis of an increase for both line items; this caused Switlik's price to be higher than Mustang's. Unaware of the miscalculation, the agency made award to Mustang as the low, responsible offeror. After receiving notice of the award, Switlik brought the miscalculation to the agency's attention. In response, the agency terminated Mustang's contract for the convenience of the government and advised the offerors that there would be a new solicitation based on an increase in the required quantity. The agency reports that at the time of termination the requirement had increased by 528 units and has since increased by another 211 units, for a total increase of 739 units (to a total of 2,913 units). [1] Switlik questions the validity of the agency's assertion that the required quantity has increased, suggesting that the agency has manipulated certain inventory figures, and argues that, in any case, instead of resoliciting the Navy should make award to Switlik under the original RFP based on its low price, and obtain any needed additional quantity through a second procurement. Switlik's arguments are without merit. The record indicates that the Navy's legimate required quantity has materially increased. As shown on the agency's "item status report," dated January 14, 1997, the increased quantity was based on a computer-generated calculation using the software program "Automated Item Manager Toolkit," which consisted primarily of three variables--(1) reorder level (ROL), including safety level; (2) back orders; and (3) procurement lead time planned program requirements (PCLT/PPR). The ROL was derived from historical data for the average demand over the lead time. Specifically, the data input for this item consisted of a quarterly demand of 259.22 units (the record includes historical demand data); this was multiplied by a total lead time of 3.8 quarters (2 quarters administrative lead time and 1.8 quarters production lead time) to arrive at an ROL of 985 units. A safety level of 0 was provided for in the ROL calculation, reflecting the agency's policy as of the October 22 amendment.