B-144779, MARCH 16, 1961, 40 COMP. GEN. 518

B-144779, MARCH 16, 1961, 40 COMP. GEN. 518

CONTRACTS - BIDS - DISCOUNTS - EVALUATION AN OFFER OF A PRICE REDUCTION IN THE EVENT OF AN AWARD OF A SPECIFIED NUMBER OF ITEMS OF WORK SUBMITTED BY A BIDDER IN RESPONSE TO AN INVITATION WHICH DID NOT CONTAIN ANY PROVISION FOR ALTERNATE BIDS, BUT WHICH SPECIFIED THAT THE GOVERNMENT RESERVED THE RIGHT TO MAKE A SINGLE AWARD FOR ALL ITEMS OF WORK, IS NOT CONSIDERED AN ALTERNATE BID SO AS TO PRECLUDE CONSIDERATION OF SUCH A BID FOR AWARD. A CASH DISCOUNT OFFER WHEN THE INVITATION FOR SUPPLYING CERTAIN ITEMS FOR A MILITARY INSTALLATION DOES NOT CONTAIN ANY PROVISION FOR CONSIDERATION OF DISCOUNTS IS NOT AN ALTERNATE BID NOR A VARIANCE FROM THE REQUIREMENTS AND IS PROPERLY FOR CONSIDERATION IN THE EVALUATION OF THE BIDS; THE FACT THAT, UNDER SECTION 2-407.3 OF THE ARMED SERVICES PROCUREMENT REGULATION, A DETERMINATION AS TO THE MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNT IS REQUIRED PRIOR TO THE ISSUANCE OF AN INVITATION DOES NOT PRECLUDE CONSIDERATION OF A PROMPT PAYMENT DISCOUNT BID, BUT IS MERELY RECOGNITION OF THE PRACTICE OF BIDDERS FURNISHING SUPPLIES TO OFFER DISCOUNTS FOR PROMPT PAYMENT.

TO CHARLES SIMKIN AND SONS, INC., MARCH 16, 1961:

REFERENCE IS MADE TO THE LETTER OF JANUARY 6, 1961, FROM YOUR ATTORNEY, PROTESTING THE AWARD OF A CONTRACT NUMBERED AF 49 (642/-983 TO SCHWEIGERT, INC., PURSUANT TO INVITATION NO. IFB 49-642-61-21 ISSUED BY THE ANDREWS AIR FORCE BASE, MARYLAND, ON NOVEMBER 8, 1960.

THE INVITATION FOR BIDS REQUESTED BIDS ON NINE ITEMS OF WORK OF REMOVAL AND REPLACEMENT OF UNDERGROUND STEAM SUPPLY AND CONDENSATE LINES IN AREA 1 AT ANDREWS AIR FORCE BASE. THE GOVERNMENT RESERVED THE RIGHT TO MAKE A SINGLE AWARD TO THE LOWEST RESPONSIBLE BIDDER IN THE AGGREGATE, PRICE AND OTHER FACTORS CONSIDERED, FOR ANY NUMBER OF ITEMS LISTED AT THE CONVENIENCE OF THE GOVERNMENT. THE ITEMS, HOWEVER, WERE NOT TO BE TAKEN OUT OF PRIORITY ORDER BUT WERE TO START WITH ITEM ONE AND TERMINATE AT THE ITEM SELECTED. THE INVITATION FOR BIDS DID NOT CONTAIN ANY PROVISION WITH REGARD TO CASH DISCOUNT FOR PROMPT PAYMENT. THE TWO LOWEST BIDS FOR THE NINE ITEMS WERE THOSE SUBMITTED BY SCHWEIGERT, INC., WHO BID A TOTAL OF $41,510.48, AND BY YOUR COMPANY, WHICH BID A TOTAL OF $41,097. SCHWEIGERT, INC., HOWEVER, HAD INSERTED A PROVISION IN ITS BID AS FOLLOWS:

IN THE EVENT A MINIMUM OF EIGHT (8) BUILDINGS ARE AWARDED, CASH DISCOUNT OF $600.00 WILL BE GIVEN IF PAID WITHIN FIFTEEN (15) DAYS AFTER COMPLETION OF CONTRACT.

SINCE THE AWARD OF ALL THE ITEMS WAS MADE, IT WAS DETERMINED THAT SCHWEIGERT, INC., WAS THE LOW BIDDER WHEN THE DISCOUNT OF $600 WAS CONSIDERED. WHEN IT WAS DECIDED TO AWARD THE CONTRACT TO SCHWEIGERT, INC., YOU PROTESTED THE AWARD IN YOUR LETTER OF DECEMBER 27, 1960, TO THE CONTRACTING OFFICER ON THE GROUND THAT THE BID DOCUMENTS MADE NO PROVISION FOR CONSIDERING "ALTERNATIVE PROPOSALS.' IN THE LETTER OF JANUARY 6, 1961, FROM YOUR ATTORNEY IT IS AGAIN POINTED OUT THAT ALTERNATIVE BIDS WERE NOT FOR CONSIDERATION UNDER THE INSTANT INVITATION. IT IS CONTENDED ALSO THAT IT WAS IMPROPER TO CONSIDER A CASH DISCOUNT.

IN SUPPORT OF THE VARIOUS CONTENTIONS, REFERENCE IS MADE TO SECTIONS 2- 301 AND 2-403 (C) OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH DEAL WITH THE MATTER OF RESPONSIVENESS OF BIDS AND NONRESPONSIVE BIDS. YOU REGARD THE PROVISIONS IN THE SCHWEIGERT BID AS AN ALTERNATE BID AND IT IS STATED THAT "INSERTION OF AN ALTERNATIVE BID BASED ON THE AWARD OF ALL THE ITEMS, IN VIOLATION OF THE BID INSTRUCTIONS, WAS UNFAIR TO THE COMPETING CONTRACTORS.' ALSO, REFERENCE IS MADE TO SECTION 2-407.3 OF ASPR WHICH PROVIDES IN PART AS FOLLOWS:

(A) PRIOR TO ISSUING AN INVITATION FOR BIDS (EXCEPT FOR CONSTRUCTION), A DETERMINATION SHALL BE MADE AS TO WHAT MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNTS WILL BE CONSIDERED IN THE EVALUATION OF BIDS, AND SUCH MINIMUM PERIOD SHALL BE STATED IN THE INVITATION FOR BIDS.

WITH REGARD TO THE QUESTION AS TO WHETHER THE SCHWEIGERT BID IS TO BE REGARDED AS AN ALTERNATE BID, OUR OFFICE HAS HELD THAT AN AWARD OF ALL LOTS TO ONE BIDDER, WHERE NO MORE ADVANTAGEOUS PRICE MAY BE OBTAINED OTHERWISE, IS NOT OBJECTIONABLE. SEE 35 COMP. GEN. 383 AND 33 ID. 499. THE REDUCTION OF $600 OFFERED BY SCHWEIGERT IF AWARDED EIGHT ITEMS CANNOT BE CONSIDERED AS AN ALTERNATE BID SO AS TO PRECLUDE CONSIDERATION IN MAKING AWARD, ESPECIALLY SINCE THE GOVERNMENT RESERVED THE RIGHT TO MAKE A SINGLE AWARD. COMPARE 36 COMP. GEN. 177.

WITH REGARD TO THE QUESTION OF CONSIDERING THE PROVISIONS IN SCHWEIGERT'S BID SOLELY FROM THE STANDPOINT OF BEING A DISCOUNT FOR PROMPT PAYMENT, YOU DO NOT CONTEND THAT A CASH DISCOUNT FOR PROMPT PAYMENT COULD NOT IN ANY EVENT BE CONSIDERED IN EVALUATING BIDS, BUT IT IS YOUR CONTENTION THAT SINCE BIDDERS WERE NOT INVITED TO QUOTE DISCOUNTS SUCH DISCOUNTS COULD NOT BE CONSIDERED IN EVALUATING BIDS. IN 35 COMP. GEN. 684 WE CONSIDERED THE CASE OF A BID WHICH HAD INCORPORATED THEREIN A PRICE ESCALATION PROVISION. THERE WAS NOTHING IN THE INVITATION FOR BIDS IN THAT CASE WHICH STATED THAT SUCH A PROVISION WOULD BE CONSIDERED BUT IT WAS CONCLUDED THAT SINCE THE PRICE BID, INCLUDING THE UPWARD ESCALATION, WOULD STILL BE THE LOWEST BID, THE BID COULD BE CONSIDERED FOR AWARD. FOR LIKE REASONS, A PROVISION FOR REDUCTION IN PRICE SUCH AS A CASH DISCOUNT SHOULD BE CONSIDERED IN EVALUATING BIDS EVEN THOUGH THERE WAS NO PROVISION IN THE INVITATION IN REGARD TO CASH DISCOUNTS. THE OFFERING OF A CASH DISCOUNT WHEN NONE IS REQUESTED IS NOT AN ALTERNATE BID NOR A VARIANCE FROM THE SPECIFICATIONS ANY MORE THAN IS A FAILURE TO OFFER A DISCOUNT WHEN A DISCOUNT IS REQUESTED. THE FACT THAT THE ARMED SERVICES PROCUREMENT REGULATION REQUIRES THAT "1PRIOR TO ISSUING AN INVITATION FOR BIDS (EXCEPT FOR CONSTRUCTION)" A DETERMINATION IS TO BE MADE WITH REGARD TO THE MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNTS DOES NOT REQUIRE THE CONCLUSION THAT A DISCOUNT OFFERED IN A BID FOR CONSTRUCTION WORK MAY NOT BE CONSIDERED. RATHER IT MAY BE REGARDED AS A RECOGNITION OF THE COMMONLY ACCEPTED FACT THAT IT IS A PRACTICE OF BIDDERS IN SUBMITTING BIDS FOR FURNISHING SUPPLIES TO OFFER DISCOUNTS FOR PROMPT PAYMENT WHEREAS IN SUBMITTING BIDS FOR CONSTRUCTION WORK IT HAS NOT BEEN THE GENERAL PRACTICE OF BIDDERS TO OFFER CASH DISCOUNTS.

IT HAS BEEN INFORMALLY ASCERTAINED FROM REPRESENTATIVES OF THE DEPARTMENT OF THE AIR FORCE THAT UNLESS UNFORESEEN CIRCUMSTANCES INTERVENE THE TIME ALLOWED BY SCHWEIGERT WILL BE AMPLE FOR THE GOVERNMENT TO AVAIL ITSELF OF THE DISCOUNT IN MAKING PAYMENT FOR THE CONTRACT WORK.

IN VIEW OF THE FOREGOING, OUR OFFICE FINDS NO PROPER BASIS FOR CANCELING THE AWARD OF THE CONTRACT TO SCHWEIGERT, INC., UNDER THE INSTANT INVITATION.