B-171105, B-171303, FEB 23, 1971

B-171105, B-171303, FEB 23, 1971

BID PROTEST - INACCURATE EVALUATION OF BIDS DECISION HOLDING THAT CONTRACTS AWARDED TO C&D BATTERIES, INC., AND GOULD, INC., TO PROVIDE 1,508 LEAD-ACID INDUSTRIAL STORAGE BATTERIES TO BE DELIVERED ON A MONTHLY BASIS TO 55 DESTINATIONS, WERE UNAUTHORIZED AND SHOULD BE TERMINATED. ON DISCOVERY THAT TRANSPORTATION COSTS WERE ADDED TO THE EVALUATION OF BIDS AND AWARD MADE TO THREE FIRMS ON A LOT BASIS AND A REVIEW OF THE ENTIRE EVALUATION PROCEDURE REVEALS THAT WEIGHTS AND RATES USED WERE INAPPLICABLE IN THE FIGURES SUBMITTED BY THE COMPANIES CONCERNED AND IN THE NAVY REEVALUATION, A CONCLUSION THAT AWARD WAS NOT MADE TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER AS REQUIRED BY 10 U.S.C. 2305(B), 37 COMP. GEN. 330 (1957), MUST RESULT IN A TERMINATION OF THE CONTRACTS BECAUSE THE INTEGRITY OF THE FORMAL ADVERTISING PROCUREMENT SYSTEM REQUIRES THE MAKING OF AWARDS IN STRICT CONFORMANCE WITH THE SOLICITATION DOCUMENTS AND THE USE OF ACCURATE FACTUAL DATA IN THE EVALUATION OF BIDS.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER OF NOVEMBER 23, 1970, WITH ATTACHMENTS, SUP 0232, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, IN CONNECTION WITH CONTRACT NO. N00600-71-C-0353, AWARDED TO GOULD, INCORPORATED, AND CONTRACT NO. N-0060-71-C-0354, AWARDED TO C & BATTERIES, INCORPORATED.

THE PROCUREMENT WAS ADVERTISED UNDER INVITATION FOR BIDS (IFB) NO. N00600 -71-B-0022, ISSUED AUGUST 14, 1970, BY THE UNITED STATES PURCHASING OFFICE, WASHINGTON NAVY YARD, WASHINGTON, D.C. THE REQUIREMENT COVERED 1508 LEAD-ACID INDUSTRIAL STORAGE BATTERIES AS REQUIRED BY BOTH ARMY AND NAVY ACTIVITIES. MONTHLY DELIVERIES WERE SCHEDULED TO 55 DESTINATIONS OVER A 15-MONTH PERIOD BEGINNING IN OCTOBER 1970. IN ADDITION, 11-FIRST ARTICLE TESTS WERE SCHEDULED IN WHICH 7 GOVERNMENT-FURNISHED FORK-LIFT TRUCKS WERE REQUIRED. THE PROCUREMENT WAS DIVIDED INTO 11 LOTS WITH EVALUATION AND AWARD TO BE MADE ON A LOT BASIS. BIDS WERE SOLICITED F.O.B. ORIGIN ONLY WITH EVALUATION OF TRANSPORTATION COSTS TO BE A FACTOR IN DETERMINING THE LOW BIDDER OR BIDDERS.

BIDS WERE OPENED ON SEPTEMBER 18, 1970. THE FOUR BIDS RECEIVED WERE FROM C & D BATTERIES DIVISION, ELTRA CORPORATION; EXIDE POWER SYSTEM DIVISION, ESB INCORPORATED; GOULD, INCORPORATED; AND K. W. BATTERY COMPANY.

EVALUATION OF BIDS WAS UNDERTAKEN IN THE FOLLOWING SEQUENCE:

A. UNIT PRICES WERE CONVERTED TO LOT PRICES.

B. THE COST OF FIRST ARTICLE TESTING WAS SUBTRACTED WHERE A WAIVER WAS GRANTED.

C. PROMPT PAYMENT DISCOUNTS WERE SUBTRACTED AS APPLICABLE.

D. TRANSPORTATION COSTS WERE ADDED. FOLLOWING THE EVALUATION OF TRANSPORTATION COSTS, AWARD WAS MADE ON A LOT BASIS ON OCTOBER 8, 1970, TO THE THREE LOW BIDDERS AS FOLLOWS:

GOULD, CONTRACT NO. 71-C-0353: LOTS VI, VII, IX, X, XI $1,028,386

C P D, CONTRACT NO. 71-C-0354: LOTS I, II, V, VIII 570,655

EXIDE, CONTRACT NO. 71-C-0355: LOTS III, IV 96,412

IN ADDITION TO INDIVIDUAL LOT PRICING, EXIDE OFFERED A SERIES OF VARYING DISCOUNTS ON CERTAIN COMBINATIONS OF LOTS. THE ONE DISCOUNT RELEVANT HERE IS THE OFFER OF A FIVE-PERCENT ACROSS THE BOARD REDUCTION IN PRICE IN THE EVENT OF AN AWARD OF ALL 11 LOTS. APPLICATION OF THIS FIVE-PERCENT DISCOUNT MADE THE OVERALL BID (ALL LOTS) OF EXIDE AS ORIGINALLY EVALUATED ONLY $1,154 GREATER THAN THE SUM OF THE INDIVIDUAL LOT AWARDS SET FORTH ABOVE.

EXIDE, CONTENDING THAT IT SHOULD HAVE BEEN EVALUATED LOW, REQUESTED AND WAS GRANTED AN OPPORTUNITY TO REVIEW THE ENTIRE EVALUATION PROCEDURE. VIEW OF EXIDE'S CONTENTION, THE CONTRACTING OFFICER THOROUGHLY REVIEWED THE EVALUATION AND DISCOVERED ERRORS IN THE PROJECTED TRANSPORTATION COSTS. THEREFORE, AND IN VIEW OF THE COMPLEXITY OF THE TRANSPORTATION EVALUATION AND THE SMALL DIFFERENCE ($1,154) IN EVALUATED PRICES, THE CONTRACTING OFFICER, ON OCTOBER 20, 1970, NOTIFIED GOULD AND C & D BATTERIES TO STOP WORK, AND UNDERTOOK A COMPLETELY NEW TRANSPORTATION EVALUATION USING A TEAM OF THREE NAVY TRANSPORTATION SPECIALISTS OBTAINED FROM OTHER COMMANDS. THE FINAL RESULT OF THE REEVALUATION INDICATED THAT THE TOTAL EVALUATED EXIDE BID PRICE ON ALL LOTS IS $713 LOWER THAN THE EVALUATED PRICE OF AWARD BY LOTS.

IT IS ADMINISTRATIVELY NOTED THAT THE TRANSPORTATION REEVALUATION DOES NOT NECESSARILY REFLECT THE COSTS INVOLVED WHEN THE VARIOUS LOTS OF BATTERIES ARE ACTUALLY SHIPPED UNDER THE CONTRACT. THE REPORT POINTS OUT THAT SOME TRANSPORTATION RATES MAY BE DIFFERENT BY THE TIME OF ACTUAL SHIPMENT; THAT THOSE PERSONS INVOLVED IN THE ACTUAL SHIPMENT MAY FIND WAYS TO CONSOLIDATE SHIPMENTS AND OTHERWISE REDUCE COSTS; AND THAT THE EVALUATIONS INVOLVED 8 PLACES OF ORIGIN, 55 DESTINATIONS AND OVER 2,000 DIFFERENT TRANSPORTATION RATES.

GOULD, INCORPORATED, AND C & D BATTERIES PROTESTED, BY TELEFAX COMMUNICATIONS TO OUR OFFICE, THE ISSUANCE BY THE CONTRACTING OFFICER OF THE STOP WORK ORDERS. GOULD MAINTAINS THAT THE STOP WORK ORDER IS NEITHER EXPRESSLY NOR IMPLIEDLY AUTHORIZED BY THE CONTRACT, AND THAT COSTS INCURRED UNDER THE CONTRACT EXCEED $45,000. THE HIGH COSTS RESULT FROM THE NECESSITY TO COMMENCE ALL PHASES OF PRODUCTION BECAUSE OF EARLY DELIVERIES REQUIRED UNDER THE CONTRACT.

SIMILARLY C & D BATTERIES MAINTAINS THAT IT WILL INCUR CONSIDERABLE COSTS IF ITS CONTRACT IS CANCELLED. C & D BATTERIES ALSO STATES THAT UPON ASKING THE NAVY PURCHASING OFFICE IF IT SHOULD ATTEMPT TO USE PRODUCTION MATERIAL IN FULFILLMENT OF ITS COMMERCIAL CONTRACTS OR HOLD THE PRODUCTION IN ABEYANCE PENDING DECISION, IT WAS ADVISED TO HOLD THE PRODUCTION. BOTH COMPANIES REQUESTED PERMISSION TO EXAMINE THE REEVALUATION OF TRANSPORTATION RATES AND TOTALS. EXIDE ALSO REQUESTED PERMISSION TO EXAMINE THE REEVALUATED RATES.

EACH OF THE THREE COMPANIES CONCERNED HAS BEEN FURNISHED A COPY OF THE REEVALUATION OF TRANSPORTATION CHARGES MADE BY THE NAVY TRANSPORTATION SPECIALISTS. EACH OF THE COMPANIES CONTESTED THE RATES AND COMPUTATIONS OF THE NAVY SPECIALISTS AND SUBMITTED HERE ITS OWN COMPUTATIONS FOR COMPARISON WHICH RESULT IN TRANSPORTATION EVALUATION MOST FAVORABLE TO THE COMPANY SUBMITTING THE COMPUTATIONS. EXIDE HAS ALLEGED ERRORS IN THE GOULD AND C & D BATTERIES COMPUTATIONS WHICH WOULD RESULT IN AN EVALUATED BID ENTITLING EXIDE TO AN AWARD ON ALL 11 LOTS. ON THE OTHER HAND, THE GOULD AND C & D BATTERIES COMPUTATIONS, WITH RATES REFERENCED TO APPROPRIATE TARIFFS, RESULT IN ENTITLEMENT TO AWARDS AS ORIGINALLY MADE.

IN ACCORDANCE WITH GOVERNMENT POLICY AND UNDER THE SPECIFIC TERMS OF THE IFB, PROJECTED TRANSPORTATION COSTS WERE INCLUDED IN THE EVALUATION OF BIDS. CORRECT TRANSPORTATION RATES FROM THE SEVERAL POINTS OF ORIGIN TO THE MANY POINTS OF DESTINATION WERE OF PARAMOUNT IMPORTANCE PARTICULARLY IN VIEW OF THE CLOSE DIFFERENCES IN EVALUATED BIDS.

BECAUSE OF THE DIFFERENCES OF OPINION AS TO THE CORRECT RATES, WE HAVE HAD OUR TRANSPORTATION RATE ANALYSTS EXAMINE THE DOCUMENTS SUBMITTED BY THE COMPANIES, AND THE DOCUMENTS OF RECORD HERE IN ORDER TO VERIFY THE RATES AND CHARGES SHOWN.

FROM OUR OWN INDEPENDENT EXAMINATION, WE HAVE FOUND MANY RATES AND WEIGHTS USED WHICH WERE INAPPLICABLE TO THE PROJECTED SHIPMENTS, NOT ONLY IN THE FIGURES SUBMITTED BY THE COMPANIES CONCERNED BUT IN THE NAVY REEVALUATION FIGURES AS WELL. HOWEVER, THE RESULT OF THE RECOMPUTATION SHOWS THAT THE EXIDE BID ON ALL LOTS PLUS TRANSPORTATION CHARGES IS LESS THAN THE TOTAL OF THE DIVIDED LOT BIDS PLUS TRANSPORTATION CHARGES, ALTHOUGH THE DIFFERENCE IS LESS THAN COMPUTED BY THE NAVY ANALYSTS. HENCE, WE MUST CONCLUDE THAT AWARD WAS NOT MADE TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER AS REQUIRED BY 10 U.S.C. 2305(B), 37 COMP. GEN. 330 (1957). THEREFORE, THE AWARDS TO C & D AND GOULD WERE UNAUTHORIZED AND SHOULD BE TERMINATED. IN THE CIRCUMSTANCES THE TERMINATION FOR CONVENIENCE PROVISIONS OF THE CONTRACTS MAY PROPERLY BE INVOKED. 170230, JANUARY 28, 1971. IN SETTLING ON THE PRECISE TERMS OF THE TERMINATIONS, THE COST TO THE GOVERNMENT IS A SUBJECT OF LEGITIMATE CONSIDERATION. IN THIS CONNECTION WE NOTE THAT EXIDE HAS INDICATED IN ITS LETTER OF DECEMBER 18, 1970, TO US, ITS WILLINGNESS TO CONSIDER WAYS OF MINIMIZING THE TERMINATION COSTS.

WE ARE NOT UNMINDFUL OF THE POSSIBLE COSTS RESULTING FROM THE CANCELLATION OF CONTRACTS, BUT THE INTEGRITY OF THE FORMAL ADVERTISING PROCUREMENT SYSTEM REQUIRES THE MAKING OF AWARDS IN STRICT CONFORMANCE WITH THE SOLICITATION DOCUMENTS AND THE USE OF ACCURATE FACTUAL DATA IN THE EVALUATION OF BIDS.