[Protest of Navy Contract Award for Contamination Particle Counters]

B-170238, NOV. 16, 1970

BID PROTEST - SPLIT AWARD PROPRIETY SUSTAINING PROTEST OF LAW BROTHERS CONTRACTING CORPORATION AGAINST SPLIT AWARD TO LAW AND TO RITCHIE BROTHERS FOR INSTALLING EXHAUST SYSTEM ETC., IN TWO BUILDINGS AT CAMP DRUM, N.Y., AND ORDERING TERMINATION OF CONTRACT WITH RITCHIE. UNDER AN INVITATION THAT DID NOT RESERVE TO THE GOVERNMENT THE RIGHT TO REQUIRE BIDDERS TO ACCEPT SPLIT AWARDS ON AN ITEM TO ITEM BASIS AS DISTINGUISHED FROM A SCHEDULE BASIS, SPLIT AWARDS FOR SINGLE ITEM TO TWO BIDDERS ON THE ERRONEOUS ASSUMPTION THAT IT WAS MORE ADVANTAGEOUS TO THE GOVERNMENT WAS NOT PROPER. IN FUTURE IF IT IS DESIRED TO MAKE SPLIT AWARDS ON ITEM BASIS THE INVITATION SHOULD SPECIFICALLY SO PROVIDE. A BIDDER WHO SUBMITTED SEPARATE PRICES FOR EACH ITEM OF A TWO ITEM BID AND IN THE COLUMN "TOTAL BID, ITEMS 1 & 2," A DISCOUNTED PRICE WHICH WAS INTERPRETED AS A DISCREPANCY BECAUSE THE TWO ITEMS DID NOT REPRESENT THE ARITHMETIC SUM OF ITEMS HAD BID ERRONEOUSLY EVALUATED AND THEREFORE CONTRACT FOR ITEM TO OTHER THAN LOW BIDDER SHOULD BE TERMINATED AND WORK COVERED BY BOTH ITEMS AWARDED TO PROTESTANT.

TO MR. SECRETARY:

REFERENCE IS MADE TO THE LETTERS DATED AUGUST 11 AND SEPTEMBER 2, 1970, FURNISHING REPORTS ON THE PROTEST OF LAW BROTHERS CONTRACTING CORPORATION IN WHICH LAW BROTHERS PROTESTS A SPLIT AWARD UNDER INVITATION FOR BIDS (IFB) NO. DABB16-70-B-0038 ISSUED BY CAMP DRUM, WATERTOWN, NEW YORK.

THE INVITATION FOR BIDS WAS ISSUED ON MAY 13, 1970, FOR THE INSTALLATION OF AN EXHAUST SYSTEM, BUILDING INSULATION AND THE REPAIR OF MOTOR REPAIR SHOPS AT TWO SPECIFIC BUILDINGS AT CAMP DRUM, NEW YORK. TWENTY INVITATIONS WERE SENT AND THREE BIDS WERE RECEIVED, AS FOLLOWS:

ITEM 1 ITEM 2 TOTAL BID, BIDDER (BLDG. T-1172) (BLDG. T-1445) ITEMS 1 & 2 LAW BROTHERS $33,032 $43,568

$74,000 RITCHIE BROTHERS 30,900 45,500 76,400 G&T DEVEL. CO. 41,009 57,963 98,972

SHORTLY AFTER THE BID OPENING, THE CONTRACTING OFFICER NOTICED THAT THE ARITHMETIC SUM OF ITEMS 1 AND 2 IN LAW BROTHERS' BID WAS DIFFERENT THAN THE TOTAL PRICE OFFERED FOR ITEMS 1 AND 2. SINCE THERE WAS NO QUALIFICATION IN THE BID PACKAGE AND NO EXPLANATION AS TO THE DISCREPANCY, THE CONTRACTING OFFICER DETERMINED THAT THE UNIT PRICES CONTROLLED, ADDED LAW BROTHERS' UNIT PRICES FOR ITEMS 1 AND 2, AND CONCLUDED THAT THE TOTAL OF ITS BID WAS IN FACT $76,600.00 ($33,032 FOR ITEM 1 AND $43,568 FOR ITEM 2) RATHER THAN $74,000.00 AS LAW BROTHERS SET FORTH IN ITS BID. SINCE, TO MAKE SPLIT AWARDS WAS DETERMINED BY THE CONTRACTING OFFICER TO BE IN THE BEST INTEREST OF THE GOVERNMENT AND LESS COSTLY, THE CONTRACTING OFFICER AWARDED ITEM 1 TO RITCHIE BROTHERS IN THE AMOUNT OF $30,900.00 AND AWARDED ITEM 2 TO LAW BROTHERS IN THE AMOUNT OF $43,568.00. LAW BROTHERS PROTESTED ON THE GROUND THAT THE COST TO THE GOVERNMENT, AS AWARDED, WAS $74,468.00 WHEREAS IF BOTH ITEMS HAD BEEN AWARDED TO IT, THE COST TO THE GOVERNMENT WOULD HAVE BEEN ONLY $74,000.00. IN OTHER WORDS, AFTER THE BIDS WERE OPENED AND THE DISCREPANCY AS SET FORTH ABOVE WAS MADE KNOWN TO LAW BROTHERS, IT INFORMED THE CONTRACTING OFFICER THAT THE TOTAL PRICE OF $74,000.00 IN FACT REPRESENTED A DISCOUNT IF IT WAS AWARDED BOTH ITEMS. THUS, LAW BROTHERS CONTENDS THAT THE PRICE INSERTED IN ITS BID FOLLOWING "TOTAL BID, ITEMS 1 & 2" WAS NOT INTENDED TO REPRESENT THE ARITHMETIC SUM OF ITEMS 1 AND 2 BUT CONSTITUTED A PRICE INDEPENDENT OF THE PRICES SHOWN FOR ITEMS 1 AND 2. THE CONTRACTING OFFICER REJECTED LAW BROTHERS'"TOTAL BID, ITEMS 1 & 2" AS THAT APPEARED TO HER TO BE AN ALTERNATE BID, WHICH WAS NOT PERMITTED UNDER THE IFB, AND THE CONTRACTING OFFICER THEREAFTER DENIED LAW BROTHERS' PROTEST AGAINST SUCH REJECTION. AS A RESULT OF THOSE ACTIONS, LAW BROTHERS PROTESTED TO THIS OFFICE.

ALTHOUGH THE CONTRACTING OFFICER MAY IN FACT HAVE HAD THE INTENTION TO PROVIDE FOR SPLIT AWARDS IF SHE THOUGHT THAT THEY WERE IN THE BEST INTEREST OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, THE GENERAL PROVISIONS OF THE IFB AS ISSUED PRECLUDED THIS. IN SECTION 10(C) OF STANDARD FORM 22, THE GENERAL PROVISIONS APPEAR TO PERMIT THE CONTRACTING OFFICER TO MAKE SPLIT AWARDS. THE SUBSECTION STATES:

"(C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR COMBINATION OF ITEMS OF A BID. ... " HOWEVER, SECTION 4 OF STANDARD FORM 20 STATES AS FOLLOWS:

"4. GOVERNMENT'S PRIVILEGE IN MAKING AWARDS. (ASPR 2-201(B)(X1))

"THE GOVERNMENT FURTHER RESERVES THE RIGHT TO MAKE AWARD OF ANY OR ALL SCHEDULES OF ANY BID, UNLESS THE BIDDER QUALIFIES SUCH BID BY SPECIFIC LIMITATION; ALSO TO MAKE AWARD TO THE BIDDER WHOSE AGGREGATE BID ON ANY COMBINATION OF BID SCHEDULES IS LOW. FOR THE PURPOSE OF THIS INVITATION FOR BIDS, THE WORD 'ITEM' AS USED IN PARAGRAPH 10(C) OF SF 22 SHALL BE CONSIDERED TO MEAN 'SCHEDULE.'"

SINCE THERE WAS ONLY ONE SCHEDULE INCLUDED IN THE IFB IT IS APPARENT THAT THE IFB DID NOT RESERVE TO THE GOVERNMENT THE RIGHT TO REQUIRE BIDDERS TO ACCEPT SPLIT AWARDS ON AN ITEM BY ITEM BASIS. IT THEREFORE FOLLOWS THAT THE CONTRACTING OFFICER WAS WITHOUT AUTHORITY TO MAKE AWARDS TO BOTH LAW BROTHERS AND RITCHIE BROTHERS. IT IS SUGGESTED THAT IF IN ANY FUTURE CASE IT IS DESIRED TO MAKE SPLIT AWARDS ON AN ITEM BASIS, AS DISTINGUISHED FROM A SCHEDULE BASIS, THE INVITATION FOR BIDS SHOULD SPECIFICALLY SO PROVIDE.

ON THE QUESTION OF WHICH BIDDER SHOULD HAVE RECEIVED AN AWARD FOR BOTH ITEMS, IT IS OUR OPINION THAT THE PRICE OF $74,000 SUBMITTED BY LAW BROTHERS REASONABLY MAY BE CONSIDERED AS A DISCOUNTED PRICE BASED UPON RECEIPT OF AN AWARD COVERING THE WORK UNDER BOTH ITEMS 1 AND 2. IN THIS CONNECTION, WE ARE PERSUADED BY THE FACT THAT THE IFB MUST BE CONSTRUED AS A REQUEST FOR BIDS ON WHICH TO BASE AN AWARD ON A SCHEDULE, RATHER THAN AN ITEM, BASIS; BY THE FACT THAT THE SCHEDULE BID PRICE WAS REQUESTED IN TERMS OF "TOTAL BID, ITEMS 1 & 2" RATHER THAN "TOTAL, ITEMS 1 & 2"; AND BY THE FACT THAT THE PRICE OF $74,000 IN THE SCHEDULE BID LOGICALLY SHOULD NOT BE CONSTRUED AS A TOTAL FIGURE RESULTING FROM AN ERROR IN THE ADDITION OF THE ITEMS 1 AND 2 BID PRICES.

IN VIEW OF THE FOREGOING, AND OF OUR UNDERSTANDING THAT THERE HAS BEEN NO PERFORMANCE UNDER THE CONTRACT AWARDED TO RITCHIE BROTHERS, WE BELIEVE THAT CONTRACT SHOULD BE TERMINATED AND AN AWARD FOR THE WORK COVERED BY BOTH ITEMS 1 AND 2 SHOULD BE MADE TO LAW BROTHERS AS THE LOW BIDDER AT ITS BID PRICE OF $74,000.

THE ENCLOSURES RECEIVED WITH THE ADMINISTRATIVE REPORT DATED AUGUST 11, 1970 ARE RETURNED.