B-169205, MAY 22, 1970

B-169205, MAY 22, 1970

BIDS--MULTI-YEAR TWO-STEP PROCUREMENT EVALUATION UNDER SECOND STEP OF TWO-STEP, MULTI-YEAR (3) PROCUREMENT FOR GENERATOR SETS, ONLY IDENTICAL ITEMS APPEARING IN MULTI-YEAR REQUIREMENTS MUST BE PRICED SAME FOR REMAINING PROGRAM YEARS SINCE ARMED SERVICES PROCUREMENT REGULATION DOES NOT SPECIFICALLY REQUIRE PREPRODUCTION COSTS BE AMORTIZED OVER ALL PRODUCTION ITEMS AND NO PROHIBITION EXISTS AGAINST PREPRODUCTION MODEL TESTING ONE TIME COSTS, SEPARATELY DESCRIBED IN INVITATION FOR BIDS AS FIRST YEAR COSTS ONLY. FURTHERMORE, ANY INTENT OF INVITATION FOR BIDS REQUIRING ALL PREPRODUCTION COSTS BE AMORTIZED OVER ALL MULTI-YEAR PRODUCTION REQUIREMENTS IS REFUTED BY NONREPEATABLE SPECIAL PREPRODUCTION ITEMS DESCRIBED BY SEPARATE LINE ITEMS FOR SEPARATE PRICING ONLY IN FIRST PROGRAM YEAR REQUIREMENT. BIDS--TWO-STEP PROCUREMENT--MULTI-YEAR PROCUREMENT--UNIT PRICE SAME FOR ALL YEARS UNDER SECOND STEP OF TWO-STEP, MULTI-YEAR (3) PROCUREMENT FOR GENERATOR SETS, WHILE SOLICITATION MIGHT HAVE INTENDED PREPRODUCTION MODEL TESTING COSTS, INCLUDING COST OF CERTAIN ITEMS, TO BE AMORTIZED OVER PREPRODUCTION MODELS PLUS MULTI-YEAR PRODUCTION QUANTITIES, SUCH INTENT WAS NOT CLEARLY SET FORTH IN INVITATION FOR BIDS SINCE SIX DIFFERENT PRODUCTION MODELS ARE TO BE PRODUCED FROM ONLY FOUR PREPRODUCTION MODELS AND CONTRACTING OFFICER'S INTERPRETATION OF EVALUATION FACTOR H-9 WOULD RESULT IN AMORTIZATION OF TESTING COSTS FOR VARIOUS ITEMS OVER ONE OR TWO PROGRAM YEARS AND LIMIT QUANTITY OF PRODUCTION ITEMS FOR AMORTIZATION OF PREPRODUCTION TESTING COSTS IN SECOND AND THIRD PROGRAM YEARS. BIDS-- COMPETITIVE SYSTEM--EQUAL BIDDING BASIS FOR ALL BIDDERS--TWO-STEP PROCUREMENT UNDER SECOND STEP OF TWO-STEP, MULTI-YEAR (3) PROCUREMENT FOR GENERATOR SETS, EVEN THOUGH ONE BIDDER WAS RESPONSIVE, AWARD CANNOT BE MADE TO ANY BIDDER SINCE INVITATION FAILED TO PROVIDE CLEAR INSTRUCTIONS WHERE UNDER ALL BIDDERS WERE APPRISED PRIOR TO BID OPENING OF MANNER OF BID PRICE COMPUTATION FOR RESPONSIVENESS AND WHERE ONLY ONE BIDDER RECEIVES INFORMATION AFFECTING HIS BID PRICE, ALL ARE NOT COMPETING ON EQUAL BASIS. INVITATION FOR BIDS MUST BE CANCELED BECAUSE, IF RESPONSIVE BIDDER HAD BEEN NONRESPONSIVE TO INVITATION FOR BIDS AS WRITTEN, BASED ON CONTRACTING OFFICER'S INTERPRETATION, INFORMATION WOULD HAVE BEEN PREJUDICIAL TO HIM AND FINDING UNINFORMED BIDDER RESPONSIVE MAKES INFORMATION PREJUDICIAL TO INFORMED BIDDER. SEE COMP. GEN. DECS. CITED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED APRIL 10, 1970, FROM MR. F. X. MCKENNA, ASSISTANT GENERAL COUNSEL, UNITED STATES ARMY MATERIEL COMMAND, TRANSMITTING THE CONTRACTING OFFICER'S ADMINISTRATIVE REPORT, TOGETHER WITH ENCLOSURES, CONCERNING THE PROTEST OF THE BOGUE ELECTRIC MANUFACTURING COMPANY (BOGUE), AGAINST THE AWARD OF A CONTRACT TO THE A. G. SCHOONMAKER CO; INC. (SCHOONMAKER), UNDER INVITATION FOR BIDS NO. DAAK02-70-B-1225, ISSUED ON DECEMBER 19, 1969, BY THE ARMY MOBILITY EQUIPMENT RESEARCH AND DEVELOPMENT CENTER, FORT BELVOIR, VIRGINIA.

THE INVITATION IN QUESTION IS THE SECOND STEP OF A TWO-STEP FORMALLY ADVERTISED, MULTI-YEAR PROCUREMENT (3 YEARS) FOR VARIOUS QUANTITIES OF 15KW AND 30KW ENGINE DRIVEN GENERATOR SETS WITH CERTAIN REQUIRED DATA ITEMS AND SPECIFIED ANCILLARY MATERIALS AND COMPONENTS FOR THE PRODUCTION OF 24 PREPRODUCTION UNITS. THE INVITATION WAS ISSUED AS A SMALL BUSINESS TOTAL SET-ASIDE.

THREE FIRMS QUALIFIED UNDER STEP I, AND SUBMITTED THEIR BIDS FOR OPENING ON FEBRUARY 27, 1970. THEIR BIDS FOR THE TOTAL REQUIREMENTS WERE AS FOLLOWS:

SCHOONMAKER $31,705,988.00

BOGUE 32,275,784.00

LIBBY WELDING COMPANY, INC. 39,704,470.47

THE FOLLOWING IS A LISTING AND SUMMARY DESCRIPTION OF ALL LINE ITEMS COVERING GENERATORS SETS AS DESCRIBED UNDER THE IFB: FIRST PROGRAM YEAR ITEMS FSN NUMBERS 0015 15KW 50/60HZ 6115-118-1245 PREPRODUCTION MODEL 0016 15KW-400HZ " " 1244 PREPRODUCTION MODEL 0017 30KW 50/60HZ " " 1247 PREPRODUCTION MODEL 0018 30KW-400HZ " " 1248 PREPRODUCTION MODEL 0026

15KW 50/60HZ " " 1245 TACTICAL PRECISE ITEMS FSN NUMBERS 0027 15KW 400HZ 6115-118-1244 TACTICAL PRECISE 0028 30KW 50/60HZ " " 1247 TACTICAL PRECISE 0029 30KW 400HZ " " 1248 TACTICAL PRECISE SECOND PROGRAM YEAR 0077 15KW 50/60HZ " " 1241 TACTICAL UTILITY 0078 15KW 400HZ " " 1244 TACTICAL PRECISE 0079 30KW 50/60HZ " " 1240 TACTICAL UTILITY 0080 30KW 50/60HZ " " 1247 TACTICAL PRECISE THIRD PROGRAM YEAR 0085 15KW 50/60HZ " " 1241

TACTICAL UTILITY 0086 15KW 50/60HZ " " 1245 TACTICAL PRECISE 0087 15KW 400HZ " " 1244 TACTICAL PRECISE 0088 30KW 50/60HZ " " 1240 TACTICAL UTILITY BASED UPON THE FOREGOING, THESE GENERATOR SETS CAN BE GROUPED AS FOLLOWS: TYPE OF GENERATOR SET LINE ITEMS OF IFB * 15KW 50/60HZ PREPRODUCTION MODEL 0015 15KW 400HZ PREPRODUCTION MODEL 0016 30KW 50/60HZ PREPRODUCTION MODEL 0017 30KW 400HZ PREPRODUCTION MODEL 0018 15KW 50/60HZ TACTICAL PRECISE 0026, 0086 15KW 50/60HZ TACTICAL UTILITY 0077, 0085 15KW 400HZ TACTICAL PRECISE 0027, 0078, 0087 30KW 50/60HZ TACTICAL PRECISE 0028, 0080 30KW 50/60HZ TACTICAL UTILITY 0079, 0088 30KW 400HZ TACTICAL PRECISE

0029

* NOT INCLUDING OPTION ITEMS

IN KEEPING WITH THE REQUIREMENT OF SECTION 1-322.2 (C) (IV) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) THAT THE UNIT PRICE OF EACH ITEM IN THE MULTI-YEAR REQUIREMENT SHALL BE THE SAME FOR ALL PROGRAM YEARS, THE IFB, BY EVALUATION FACTOR H-9, STATED:

"SUBMISSION OF BID PRICES AND CONTRACT AWARD:

NOTWITHSTANDING PARAGRAPH 10 OF THE INSTRUCTIONS AND CONDITIONS, SOLICITATION AND OFFER, ONLY ONE AWARD SHALL BE MADE AS A RESULT OF THIS INVITATION FOR BIDS. IN THIS CONNECTION, IT IS TO BE EXPRESSLY UNDERSTOOD THAT, NOTWITHSTANDING THE PROVISIONS OF ASPR 1-322.2 (C) (II) (B) AND (III) (B) (I) A PRICE SHALL BE SUBMITTED ONLY FOR THE TOTAL REQUIREMENTS OF THE IFB. FURTHER, THE UNIT PRICE FOR EACH ITEM IN THE MULTI-YEAR REQUIREMENT OF ITEMS 0015 THRU 0032, 0077 THRU 0080 AND 0085 THRU 0088 SHALL BE THE SAME FOR ALL PROGRAM YEARS. ANY BID SUBMITTED FOR LESS THAN THE TOTAL REQUIREMENT SHALL BE REJECTED AS NONRESPONSIVE TO THIS INVITATION FOR BID."

BOGUE'S BASIC CONTENTION IS THAT SCHOONMAKER'S BID WAS NONRESPONSIVE TO THE REQUIREMENTS OF THE IFB QUOTED ABOVE BY REASON OF THEIR FAILURE TO QUOTE THE SAME UNIT PRICE FOR EACH ITEM IN THE MULTI-YEAR REQUIREMENT FOR ALL PROGRAM YEARS. THE CONTRACTING OFFICER AGREES, AND HAS THEREFORE DETERMINED THAT SCHOONMAKER'S BID IS NONRESPONSIVE AND HAS RECOMMENDED AN AWARD TO BOGUE.

SUMMARILY STATED, BOGUE ALLEGES THAT THE FOLLOWING UNITS WERE IDENTIFIED AS BEING IDENTICAL UNDER THE IFB AND, THEREFORE, REQUIRED THE SAME PRICING FOR EACH PROGRAM YEAR:

ITEM 0015 IS IDENTICAL WITH ITEMS 0026 AND 0086

ITEM 0016 IS IDENTICAL WITH ITEMS 0027, 0078, AND 0087

ITEM 0017 IS IDENTICAL WITH ITEMS 0028 AND 0080

ITEM 0018 IS IDENTICAL WITH ITEM 0029

THE RECORD DOES REFLECT THAT SCHOONMAKER'S BID PRICED PREPRODUCTION ITEMS 0015 THROUGH 0018 DIFFERENTLY FROM ANY OTHER LINE ITEM DESIGNATED AS MULTI -YEAR REQUIREMENTS, OTHERWISE THERE APPEARS TO BE NO QUESTION AS TO THE RESPONSIVENESS OF ITS BID.

SCHOONMAKER ARGUES THAT THE EXPRESS LANGUAGE OF THE IFB PERMITTED DISTINCTLY DIFFERENT PRICES FOR PREPRODUCTION UNITS 0015 THROUGH 0018 SINCE THESE ITEMS WERE SEPARATELY SET FORTH IN THE IFB AND WERE IN FACT SEPARATELY DESCRIBED SO AS TO ALLOW THEM TO BE PRICED DIFFERENTLY FROM ANY OF THE PRODUCTION ITEMS. SPECIFICALLY, SCHOONMAKER CONTENDS THAT CONSIDERATION MUST BE GIVEN TO LINE ITEMS 0011 THROUGH 0014 AND THE NOTES PERTAINING THERETO IN ARRIVING AT THE SPECIFIC PRICES FOR THE PREPRODUCTION MODELS, NOR CAN THE SPECIFIC DESCRIPTION OF THE PREPRODUCTION MODELS IN PARAGRAPH B-15 THROUGH B-18, OR THE PRODUCTION MODELS IN PARAGRAPH B-23 BE IGNORED.

LINE ITEMS 0011 THROUGH 0014, WITH APPLICABLE NOTES, AND LINE ITEMS 0019 THROUGH 0032 AS THEY APPEARED IN THE IFB UNDER "SECTION A - SUPPLIES OR SERVICES AND PRICES" ARE SET FORTH AS FOLLOWS:

UNIT TOTAL "ITEM SUPPLIES AND/OR SERVICES QTY PRICE PRICE (FIRST PROGRAM YEAR) 0011. PREPRODUCTION ASSEMBLIES OF THE 2 XXXX XXXX

SIZE 15 (15KW), MODE I (50/60HZ)

GENERATOR, REGULATOR-EXCITER

COMBINATION (SEE B-11) 0012. PREPRODUCTION ASSEMBLIES OF THE 2 XXXX XXXX

SIZE 15 (15KW), MODE II (400HZ)

GENERATOR, REGULATOR-EXCITER

COMBINATION (SEE B-12) 0013. PREPRODUCTION ASSEMBLIES OF THE 2 XXXX XXXX

SIZE 30 (30KW), MODE I (50/60HZ)

GENERATOR, REGULATOR-EXCITER

COMBINATION (SEE B-13) 0014. PREPRODUCTION ASSEMBLIES OF THE 2 XXXX XXXX

SIZE 30 (30KW), MODE II (400HZ)

GENERATOR, REGULATOR-EXCITER

COMBINATION (SEE B-14) NOTE: THE CONTRACTOR SHALL NOT SEPARATELY PRICE ITEMS 0011 THROUGH 0014. COSTS FOR THESE ITEMS SHALL BE INCLUDED IN THE PRICING OF ITEMS 0015, 0016, 0017 AND 0018 IN WHICH THEY ARE USED."

UNIT TOTAL "ITEM SUPPLIES AND/OR SERVICES QTY PRICE PRICE 0019. WINTERIZATION KITS, FUEL BURNING, 12

FOR ITEMS 0015 AND 0016 (SEE B-19) 0020. WINTERIZATION KITS, FUEL BURNING, 12

FOR ITEMS 0017 AND 0018 (SEE B-19) 0021. WINTERIZATION KITS, ELECTRIC, FOR 12

ITEMS 0015 AND 0016 (SEE B-20) 0022. WINTERIZATION KITS, ELECTRIC, FOR 12

ITEMS 0017 AND 0018 (SEE B-20) 0023. LOAD BANKS FOR 15 KW GENERATOR 6

SETS, ITEMS 0015 AND 0016 (SEE B-21) 0024. LOAD BANKS FOR 30 KW GENERATOR 6

SETS, ITEMS 0017 AND 0018 (SEE B-21) 0025. REMOTE CONTROL BOXES FOR ITEMS 24

0015, 0016, 0017 AND 0018 (SEE B-22) 0026. GENERATOR SETS, 15 KW, 50/60HZ, 313

TACTICAL PRECISE (SEE B-23),

MEP 103A, FSN 6115-118-1245

PRESERVATION, PACKING AND

PACKAGING, LEVEL A, PRICE PER

UNIT ONLY $ 0027. GENERATOR SETS, 15 KW, 400HZ, 40

TACTICAL PRECISE (SEE B-23),

MEP 113A, FSN 6115-118-1244

PRESERVATION, PACKING AND

PACKAGING, LEVEL A, PRICE PER

UNIT ONLY $ 0028. GENERATOR SETS, 30 KW, 315

50/60HZ, TACTICAL PRECISE

(SEE B-23), MEP 104A, FSN

6115-118-1247

PRESERVATION, PACKING AND

PACKAGING, LEVEL A, PRICE PER UNIT ONLY $ 0029. GENERATOR SETS, 30 KW, 400HZ,

1

TACTICAL PRECISE (SEE B-23),

MEP 114A, FSN 6115-118-1248

PRESERVATION, PACKING AND

PACKAGING, LEVEL A, PRICE PER

UNIT ONLY $ 0030. WINTERIZATION KITS, FUEL 2

BURNING, FOR 30 KW GENERATOR

SETS (SEE B-19)

PRESERVATION, PACKING AND

PACKAGING, LEVEL A, PRICE PER

UNIT ONLY $ 0031. WINTERIZATION KITS, ELECTRIC, 2

FOR 30 KW GENERATOR SETS (SEE

B-20)

PRESERVATION, PACKING AND

PACKAGING, LEVEL A, PRICE PER

UNIT ONLY $ 0032. LOAD BANKS FOR 30 KW GENERATOR

SETS (SEE B-21)"

AS CAN BE SEEN FROM THE ABOVE-LISTED LINE ITEMS, THE ONLY ITEMS IN THE GROUPING COVERING THE FIRST YEAR'S BUY THAT WERE REPEATED IN GROUPINGS FOR THE SECOND AND THIRD PROGRAM YEAR BUYS WERE ITEMS 0026 THROUGH 0029. THUS, SCHOONMAKER CONTENDS:

"THEREFORE, BY REASON OF THE FACT THAT A SUBSTANTIAL NUMBER OF LINE ITEMS IN THE GROUPING FOR THE FIRST YEAR BUY WERE IN FACT SOLELY FOR INCORPORATION AND USE IN PREPRODUCTION TESTING, AND WERE NOT REPEATED IN FOLLOWING YEARS BUT SEPARATELY PRICED FOR ONLY THE FIRST YEAR'S BUY WITH NO PORTION OF THEIR COSTS AMORTIZED OVER ANY OTHER ITEMS, IT WAS REASONABLE FOR SCHOONMAKER TO CONSIDER THAT ITEMS 0015 THROUGH 0018, WHICH WERE LIKEWISE INCLUDED IN THE SAME GROUPING UNDER H-9, COULD ALSO BE SEPARATELY PRICED."

THE CONTRACTING OFFICER HAS RESPONDED TO THESE ARGUMENTS AT PAGES 3 AND 4 OF THE ADMINISTRATIVE REPORT BY STATING IN PERTINENT PART:

"IN SUPPORT OF THIS POSITION THEY HAVE CALLED ATTENTION TO THE REQUIREMENTS OF B-15 THROUGH 18 APPLICABLE TO LINE ITEMS 0015 THROUGH 0018 AS BEING TOTALLY DIFFERENT FROM THE REQUIREMENTS AND DESCRIPTION FOR LINE ITEMS 0026, 0027, 0028, 0029, 0078, 0080, 0086, AND 0087 AS SET OUT IN B- 23. THIS POSITION IS OBVIOUSLY ERRONEOUS. THE LINE ITEM DESCRIPTION FOR ITEMS 0015 THROUGH 0018 AND SPECIFICIALLY IDENTIFIED BY FEDERAL STOCK NUMBERS WHICH IS THE SAME IDENTIFICATION USED IN ALL PROGRAM YEARS FOR THESE ITEMS. THIS ALONE SHOULD HAVE BEEN SUFFICIENT TO ADVISE THE CONTRACTOR THAT THE PREPRODUCTION MODELS WERE THE SAME AS THE PRODUCTION MODELS. IN ADDITION, EVALUATION FACTOR H-9 SPECIFICALLY IDENTIFIES ITEMS 0015 THROUGH 0018 AS PART OF THE MULTI-YEAR BUY AND REQUIRES THE SAME PRICE FOR THESE ITEMS IN OTHER LINE ITEMS FOR THE FIRST, SECOND, AND THIRD PROGRAM YEARS.

"SCHOONMAKER CONTENDS THAT THEIR BID, WHICH SEPARATELY AND DIFFERENTLY PRICES ITEMS 0015 THROUGH 0018 FROM OTHER LIKE LINE ITEMS IN THE MULTI- YEAR BUY, WAS JUSTIFIED BY THE IFB BECAUSE THE COST OF ITEMS 0011 THROUGH 0014 WERE SPECIFICALLY DIRECTED TO BE INCLUDED IN THE COSTS OF ITEMS 0015 THROUGH 0018. HOWEVER, THIS POSITION FAILS TO ACKNOWLEDGE THAT ITEMS 0015 THROUGH 0018 WERE BY EVALUATION FACTOR H-9, DIRECTED TO BE PRICED THE SAME ON A PER-UNIT BASIS FOR ALL PROGRAM YEARS. IN OTHER WORDS, THE REFERENCE NOTE ON PAGE 14 IS NOT CONTRADICTORY TO H-9, ON THE CONTRARY, H-9 REQUIRES THE PRICE OF ITEMS 0015 THROUGH 0018, INCLUDING THE COSTS ASSOCIATED WITH ITEMS 0011 THROUGH 0014, TO BE THE SAME FOR THESE ITEMS THROUGHOUT THE MULTI-YEAR BUY. THIS AGAIN, CLEARLY INDICATES THE INTENT AND THE DESIRE OF THE GOVERNMENT TO HAVE THE PREPRODUCTION, AND ALL OTHER NONRECURRING COSTS ASSOCIATED WITH THE DESIGN TESTING OF THE PREPRODUCTION MODEL, TO BE AMORTIZED OVER THE MULTI-YEAR BUY."

APPARENTLY IN KEEPING WITH THE CONTRACTING OFFICER'S REFERENCE TO THE "INTENT" OF H-9 REQUIRING THAT NONRECURRING COSTS ASSOCIATED WITH THE PREPRODUCTION MODELS SHOULD BE AMORTIZED OVER THE MULTI-YEAR TERM, HE ADVISED BOGUE ON FEBRUARY 18, 1970, BY TELEGRAM AS FOLLOWS:

"1. REFERENCE IS MADE TO YOUR TELEGRAM DATED 16 FEBRUARY 1970.

2. THE ARMED SERVICES PROCUREMENT REGULATIONS PROVIDE THAT WHEN THE PROCURING OFFICE DETERMINES IT TO BE IN THE BEST INTEREST OF THE GOVERNMENT, NONRECURRING COSTS FOR TWO-STEP, MULTI-YEAR CONTRACTS MAY BE PRORATED OVER ALL DELIVERABLE CONTRACT LINE ITEMS OF ALL PROGRAM YEARS. THUS, IT IS NECESSARY THAT PRICING FOR LIKE ITEMS (IDENTIFIED BY FSN) BE THE SAME.

3. THE SUCCESSFUL CONTRACTOR WILL RECEIVE PAYMENT FOR NONRECURRING COSTS AS HE DELIVERS CONTRACT SCHEDULE ITEMS. APPROXIMATELY SEVENTY (70) PERCENT OF SCHEDULED LINE ITEMS WILL HAVE BEEN DELIVERED AT THE END OF THE SECOND PROGRAM YEAR." THE ABOVE QUOTED TELEGRAM WAS NOT DISCUSSED IN THE ADMINISTRATIVE REPORT, BUT WAS FURNISHED OUR OFFICE BY BOGUE IN ITS LETTER OF APRIL 6, 1970. FOLLOWING DISCUSSIONS BETWEEN STAFF MEMBERS OF OUR MUTUAL OFFICES, THE CONTRACT NEGOTIATOR SUBMITTED A WRITTEN STATEMENT ADVISING IN PART AS FOLLOWS:

"THE UNDERSIGNED DISCUSSED THE BOGUE TELEGRAM AND THE PROPOSED ANSWER WITH THE CONTRACTING OFFICER. AFTER REVIEWING THE PROPOSED ANSWER AND ASPR PARAGRAPH 2-208, IT WAS DETERMINED THAT BOGUE ELECTRIC WAS NOT RECEIVING ANY ADDITIONAL INFORMATION WHICH WOULD PLACE THEM IN A MORE FAVORABLE POSITION. IT WAS DETERMINED THAT THE BIDDER HAD ASKED IF HIS INTERPRETATION OF THE INTENT WAS CORRECT AND THIS PART WAS ONLY CONFIRMED." CONSEQUENTLY, NO AMENDMENT WAS ISSUED EXPLAINING SUCH INSTRUCTIONS.

UPON LEARNING OF THE AFOREMENTIONED TELEGRAM, SCHOONMAKER'S ATTORNEY STATED:

"THE CONTRACTING OFFICER'S INSTRUCTIONS TO BOGUE CONCERNING PRICING OF ITEMS HAVING THE SAME FSNS ARE NOT SET FORTH OR EVEN REMOTELY SUGGESTED BY THE IFB. THE IFB STATES NOTHING WHATSOEVER ABOUT IDENTICAL ITEMS BEING IDENTIFIABLE BY FSNS. THEREFORE, WITHOUT HAVING THE BENEFIT OF THE CONTRACTING OFFICER'S SPECIAL PRICING INSTRUCTIONS, SCHOONMAKER HAD NO BASIS TO CONSIDER THAT PRICING HAD TO BE THE SAME FOR ALL ITEMS HAVING THE SAME FSNS IN ORDER TO BE RESPONSIVE. * * * MOREOVER, THE CONTRACTING OFFICER'S INSTRUCTIONS WERE MANIFESTLY ERRONEOUS AND CONTRADICTORY TO THE EXPRESS MEANING OF THE IFB, SINCE HE TOTALLY DISREGARDED THE UNEQUIVOCABLY CLEAR LANGUAGE OF THE NOTE AT THE TOP OF PAGE 14 AND THE DISTINCTIVE FEATURES SET FORTH FOR THE PREPRODUCTION MODELS UNDER SECTION B."

"TO FOLLOW THE ARMY'S REASONING TO ANY LOGICAL AND CONSISTENT CONCLUSION WOULD HAVE REQUIRED ITEMS 0019 THROUGH 0025 AND ITEMS 0030 THROUGH 0032 TO HAVE BEEN INCLUDED ALSO IN THE PRICE FOR ITEMS 0015 THROUGH 0018 AND THEREAFTER BE AMORTIZED OVER PRODUCTION MODELS IN ACCORDANCE WITH THE METHOD THE CONTRACTING OFFICER TRIES TO HAVE US BELIEVE IS THE INTENT OF THE IFB FOR PRICING ITEMS 0011 THROUGH 0014." THUS THE PRINCIPAL QUESTIONS TO BE ANSWERED BY THIS PROTEST ARE:

1. DID THE EXPRESS LANGUAGE OF THE INVITATION PERMIT SCHOONMAKER TO SUBMIT SEPARATE PRICES FOR PREPRODUCTION MODELS UNDER ITEMS 0015 THROUGH 0018, SO AS TO MAKE ITS BID RESPONSIVE TO THE TERMS THEREOF?

2. DID THE CONTRACTING OFFICER'S PRICING INSTRUCTIONS GIVEN ONLY TO BOGUE PRIOR TO BID OPENING PREJUDICE ANY OF THE BIDDERS SO AS TO REQUIRE CANCELLATION AND READVERTISEMENT OF THIS IFB?

WE THINK BOTH QUESTIONS MUST BE ANSWERED IN THE AFFIRMATIVE.

WHILE IT MIGHT HAVE BEEN THE INTENT OF THE SOLICITATION THAT THE PREPRODUCTION MODEL TESTING COSTS, INCLUDING THE COSTS FOR ITEMS 0011 THROUGH 0014, SHOULD HAVE BEEN AMORTIZED OVER THE PREPRODUCTION MODELS PLUS MULTI-YEAR PRODUCTION QQUANTITIES, IT IS OUR OPINION THAT SUCH INTENT WAS NOT CLEARLY SET FORTH IN THE INVITATION, AND TO THAT EXTENT THE IFB WAS AMBIGOUS. MOREOVER, WE THINK THE ARGUMENTS OF SCHOONMAKER ARE PERSUASIVE TO REACHING A CONCLUSION THAT ITS BID WAS RESPONSIVE TO THE TERMS OF THE INVITATION AS WRITTEN. THERE ARE SIX DIFFERENT PRODUCTION MODELS THAT ARE TO BE PRODUCED FROM ONLY FOUR PREPRODUCTION MODELS. THUS THE CONTRACTING OFFICER'S INTERPRETATION OF PARAGRAPH H-9 WOULD RESULT IN AMORTIZATION OF TESTING COSTS FOR ITEM 0015 OVER ONLY TWO PROGRAM YEARS, I.E; ITEMS 0026 AND 0086, THE FIRST AND THIRD PROGRAM YEAR; AMORTIZATION OF TESTING COSTS FOR ITEM 0017 IS OVER THE FIRST AND SECOND PROGRAM YEARS FOR ITEMS 0028 AND 0080; AMORTIZATION FOR ITEM 0018 IS OVER ONLY ONE PRODUCTION GENERATOR, I.E; ITEM 0029 APPEARING IN ONLY THE FIRST PROGRAM YEAR. ALSO, SUCH AN INTERPRETATION LIMITS THE QUANTITY OF PRODUCTION ITEMS OVER WHICH PREPRODUCTION TESTING COSTS ARE TO BE AMORTIZED BY NOT INCLUDING PRODUCTION ITEMS 0077 AND 0079 APPEARING IN THE SECOND YEAR AND PRODUCTION ITEMS 0085 AND 0088 APPEARING IN THE THIRD PROGRAM YEAR.

THE ASPR DOES NOT SPECIFICALLY REQUIRE THAT PREPRODUCTION COSTS BE AMORTIZED OVER ALL PRODUCTION ITEMS, AND THERE IS NO EXPRESS PROHIBITION AGAINST ONE TIME COSTS, WHICH ARE ASSOCIATED WITH THE TESTING OF PREPRODUCTION MODELS AND SEPARATELY DESCRIBED AND IDENTIFIED IN THE IFB, AS FIRST YEAR COSTS ONLY. SINCE ALL OF THE ITEMS IN ITEMS 0015 THROUGH 0032 ARE NOT IDENTICAL WITH OTHER ITEMS, AND ARE NOT REPEATABLE ITEMS, AND SINCE ONLY ITEMS 0026 THROUGH 0029 ARE MULTI-YEAR UNITS, WE ARE UNABLE TO DISAGREE WITH SCHOONMAKER'S INTERPRETATION OF PARAGRAPH H-9 THAT ONLY THOSE IDENTICAL ITEMS APPEARING IN THE MULTI YEAR REQUIREMENTS OF ITEMS 0015 THROUGH 0032 MUST BE PRICED THE SAME FOR THE REMAINING PROGRAM YEARS.

FROM OUR REVIEW OF THE RECORD, IT IS CLEAR THAT IN ADDITION TO REQUIRING THAT THE COST OF ITEMS 0011 THROUGH 0014 MUST BE INCLUDED IN THE PRICE OF THE PREPRODUCTION MODELS BY REASON OF THE NOTE APPEARING AT THE TOP OF PAGE 14 OF THE IFB, THE PREPRODUCTION MODELS ALSO HAD TO INCORPORATE FEATURES DESCRIBED UNDER SECTION B FOR EACH OF THE PREPRODUCTION LINE ITEMS. SUCH FEATURES INCLUDED THE INCORPORATION OF WINTERIZATION KITS, DESCRIBED UNDER LINE ITEMS 0019, 0020, 0021, AND 0022; LOAD BANKS DESCRIBED BY LINE ITEMS 0023 AND 0024; REMOTE CONTROL BOXES DESCRIBED BY LINE ITEM 0025; AND INCORPORATION OF A GOVERNMENT FURNISHED TIME DELAY RELAY. IT IS OUR OPINION THAT THESE FEATURES MAKE PREPRODUCTION ITEMS 0015 THROUGH 0018 PHYSICALLY AND ELECTRICALLY DIFFERENT IN NATURE FROM PRODUCTION MODELS. AS SUCH THEY ARE NOT IN FACT REPEATABLE IN THE MULTI- YEAR PROGRAM, BUT ARE SPECIAL PREPRODUCTION ITEMS DESCRIBED BY SEPARATE LINE ITEMS TO BE SEPARATELY PRICED ONLY IN THE FIRST PROGRAM YEAR REQUIREMENT. BY REASONS OF THESE FACTS, TO INTERPRET THE IFB AS SUGGESTED BY THE CONTRACTING OFFICER SO AS TO REQUIRE THE COSTS FOR ITEMS 0011 THROUGH 0014 TO BE AMORTIZED OVER PRODUCTION UNITS, BUT NOT THE COSTS FOR ITEMS 0019 THROUGH 0025 AND ITEMS 0030 THROUGH 0032 STRAINS THE MEANING OF THE IFB AND REFUTES ANY "INTENT," AS INDICATED AT PAGE 4 OF THE ADMINISTRATIVE REPORT QUOTED ABOVE, TO REQUIRE THAT ALL PREPRODUCTION COSTS ARE TO BE AMORTIZED OVER ALL MULTI-YEAR PRODUCTION REQUIREMENTS.

WHILE WE ARE THEREFORE UNABLE TO AGREE THAT SCHOONMAKER'S BID WAS NONRESPONSIVE, WE ARE ALSO OF THE OPINION THAT AN AWARD CANNOT BE MADE TO EITHER BIDDER, SINCE THE INVITATION FAILED TO PROVIDE CLEAR AND OBJECTIVE INSTRUCTIONS WHEREUNDER ALL BIDDERS WERE APPRISED, IN ADVANCE OF THE BID OPENING, OF THE MANNER IN WHICH BID PRICES WERE TO BE COMPUTED IN ORDER TO BE RESPONSIVE AND ELIGIBLE FOR AWARD. OTHERWISE, BIDDERS COULD NOT COMPETE ON AN EQUAL BASIS AS REQUIRED BY LAW. 36 COMP. GEN. 380 (1956). WHILE WE HAVE HELD THAT THE INVITATION ITSELF MUST BE CONSIDERED AS CONTROLLING THE BASIS UPON WHICH BIDS WILL BE EVALUATED, NOTWITHSTANDING THAT SOME BIDDERS MAY HAVE HAD REASON TO BELIEVE THAT BIDS WOULD BE EVALUATED IN A MANNER CONTRARY TO THE ONE STATED IN THE INVITATION, 38 COMP. GEN. 550 (1959), WHERE AS HERE, ONE BIDDER (BOGUE) RECEIVES INFORMATION AFFECTING HIS BID PRICE WHICH IS NOT MADE KNOWN TO OTHER BIDDERS, ALL BIDDERS ARE NOT COMPETING ON AN EQUAL BASIS. PURSUANT TO THE REQUIREMENTS OF ASPR 2-208 (C), PARAGRAPH 3 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS STATED IN PERTINENT PART:

"* * * ANY INFORMATION GIVEN TO A PROSPECTIVE OFFEROR CONCERNING A SOLICITATION WILL BE FURNISHED TO ALL PROSPECTIVE OFFERORS AS AN AMENDMENT OF THE SOLICITATION, IF SUCH INFORMATION IS NECESSARY TO OFFERORS IN SUBMITTING OFFERS ON THE SOLICITATION OR IF THE LACK OF SUCH INFORMATION WOULD BE PREJUDICIAL TO UNINFORMED OFFEROR."

NOTWITHSTANDING THE CONCLUSION THAT MAY HAVE BEEN REACHED IN ANSWER TO THE QUESTION CONCERNING SCHOONMAKER'S RESPONSIVENESS, THE CONTRACTING OFFICER'S TELEGRAM OF FEBRUARY 18, 1970, WOULD BE PREJUDICIAL TO EITHER SCHOONMAKER OR BOGUE. THAT IS TO SAY, HAD WE FOUND SCHOONMAKER'S BID NONRESPONSIVE, BASED ON THE CONTRACTING OFFICER'S INTERPRETATION OF THE INVITATION, THE TELEGRAM WOULD HAVE BEEN PREJUDICIAL TO SCHOONMAKER, AND FINDING AS WE HAVE THAT SCHOONMAKER'S BID IS RESPONSIVE TO THE TERM OF THE IFB AS WRITTEN, MAKES THE TELEGRAM PREJUDICIAL TO BOGUE. WHILE BOGUE WAS THE PARTY THAT WAS INFORMED OF THE CONTRACTING OFFICER'S INTERPRETATION OF THE IFB, SUCH INTERPRETATION WAS CLEARLY ERRONEOUS BECAUSE NOWHERE IN THE INVITATION CAN THERE BE FOUND A REQUIREMENT THAT THE PRICING FOR LINE ITEMS (IDENTIFIED BY FSN) BE THE SAME. THERE WERE SOME 814 PRODUCTION UNITS CARRYING DIFFERENT FSN NUMBERS. (ITEMS 0077 AND 0085 CARRYING FSN NO. 6155-118-1241 AND ITEMS 0079 AND 0088 CARRYING FSN NO. 6115-118 1240) FROM THE FSN NUMBER OF THE PREPRODUCTION MODELS, WHICH BY THE CONTRACTING OFFICER'S OWN INTERPRETATION NONE OF THE COSTS FOR WHICH WERE TO BE AMORTIZED OVER THE PRODUCTS MODELS MENTIONED ABOVE.

WE RECOGNIZE THE UNDESIRABILITY OF REJECTING BIDS AFTER OPENING AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE. AS WE HAVE OFTEN STATED, SUCH A COURSE OF ACTION IS DETRIMENTAL TO THE SYSTEM OF SEALED BIDDING AND SHOULD BE AVOIDED WHEREVER POSSIBLE. ONE IMPORTANT FACTOR IN DECIDING WHETHER TO CANCEL A DEFECTIVE INVITATION AND READVERTISE IS WHETHER ANY BIDDER HAS BEEN PREJUDICED BY THE DEFECT. HERE WE HAVE FOUND THAT BOGUE HAS BEEN PREJUDICED. WE HAVE ALSO CONSISTENTLY MAINTAINED THAT THE PUBLIC INTEREST IS FOR PRIMARY CONSIDERATION IN AWARDING A CONTRACT. THIS PRINCIPLE IS EXPRESSLY EMBODIED IN 10 U.S.C. 2305 (C) WHICH AUTHORIZES REJECTION OF ALL BIDS UPON DETERMINATION THAT SUCH ACTION IS IN THE PUBLIC INTEREST. WE HAVE THEREFORE RECOGNIZED THE PROPRIETY OF SUCH ACTION IN NUMEROUS INSTANCES, INCLUDING THOSE IN WHICH IT IS DESIRED TO PROCURE UNDER DIFFERENT TERMS THAN THOSE ON WHICH BIDS WERE ORIGINALLY SOLICITED. SEE 37 COMP. GEN. 12 (1957). 40 COMP. GEN. 352 (1960).

IN THE PRESENT PROCUREMENT WE MUST THEREFORE CONCLUDE THAT THE INVITATION MUST BE CANCELLED, AND NEW BIDS SOLICITED FROM THE THREE FIRMS QUALIFYING UNDER THE FIRST STEP, WITH SUCH MODIFICATIONS OR AMENDMENTS TO THE INVITATION AS MAY BE NECESSARY TO CLEARLY REFLECT WHICH ITEMS ARE TO BE AMORTIZED OVER ALL PROGRAM YEARS, AND THUS ARE TO BE PRICED THE SAME.