B-150174, DEC. 27, 1962

B-150174, DEC. 27, 1962

TO STEINBERG BROTHERS, INCORPORATED:

WE HAVE YOUR LETTER OF DECEMBER 1, 1962, IN WHICH YOU REQUEST RECONSIDERATION OF OUR DECISION B-150174, DATED NOVEMBER 15, 1962. THAT DECISION WE CONCLUDED YOU WERE NOT ENTITLED TO AN AWARD ON THE SET- ASIDE PORTION OF A PROCUREMENT OF LEATHER HELMET LINER HEADBANDS AT PRICES HIGHER THAN THOSE AT WHICH AWARD WAS MADE TO YOU ON OVER 90 PERCENT OF THE NON-SET-ASIDE PORTION OF SUCH PROCUREMENT.

YOUR BID QUOTED AN AVERAGE UNIT PRICE OF $0.372 FOR APPROXIMATELY 92 PERCENT OF THE NON-SET-ASIDE PORTION AND $0.479 FOR THE REMAINDER. YOUR BID PRICES FOR THE FIRST 92 PERCENT WERE THE LOWEST RECEIVED AND WERE ACCEPTED FOR THIS QUANTITY. THE NEXT TWO LOWEST UNIT PRICES BID WERE $0.39 AND $0.423, BUT SINCE BOTH OF THESE BIDS WERE ON AN ALL-OR NONE BASIS THE REMAINING 8 PERCENT OF THE NON-SET-ASIDE PORTION WAS AWARDED TO ANOTHER BIDDER AT A UNIT PRICE OF $0.43. THE INVITATION PROVIDED THAT AWARD OF THE SET-ASIDE PORTION WOULD BE MADE AT THE HIGHEST UNIT PRICE FOR WHICH AWARD WAS MADE ON THE NON-SET-ASIDE PORTION, AND IT IS YOUR POSITION THAT YOU ARE THEREFORE ENTITLED TO AWARD OF YOUR SHARE OF THE SET-ASIDE (92 PERCENT) AT THE UNIT PRICE OF $0.43.

AS WE POINTED OUT IN THE DECISION OF NOVEMBER 15, 1962, THERE IS AN OVERRIDING STATUTORY LIMITATION ON THE PRICE WHICH MAY BE PAID UNDER CONTRACTS MADE FOR THE PURPOSE OF RELIEVING ECONOMIC DISLOCATIONS. SECTION 523 OF THE CURRENT DEFENSE APPROPRIATION ACT, P.L. 87-577, 76 STAT. 332, PROHIBITS THE PAYMENT OF A PRICE DIFFERENTIAL UNDER SUCH CONTRACTS. IT IS OUR VIEW THAT THIS STATUTORY LIMITATION, OF WHICH YOU ARE PRESUMED TO HAVE KNOWLEDGE, PRECLUDES EXPENDITURES UNDER ANY CONTRACT SET ASIDE FOR LABOR SURPLUS AREA CONCERNS AT PRICES IN EXCESS OF THOSE OBTAINABLE ON AN UNRESTRICTED OR NON-SET-ASIDE BASIS. SEE 40 COMP. GEN. 489, 490. CONSEQUENTLY, EVEN IF THE TERMS OF THE INVITATION OTHERWISE COULD BE CONSTRUED AS ENTITLING YOU TO AN AWARD OF 92 PERCENT OF THE SET- ASIDE PORTION OF THE INSTANT PROCUREMENT AT A UNIT PRICE OF $0.43, WE WOULD BE COMPELLED TO CONCLUDE THAT ANY CONTRACT CONSUMMATED ON THIS BASIS WOULD BE IN CONTRAVENTION OF THE PLAIN TERMS OF THE STATUTE AND THEREFORE NOT ENFORCEABLE AGAINST THE UNITED STATES IF IT RESULTED IN THE PAYMENT OF A PRICE DIFFERENTIAL.

YOU CONTEND THAT A UNIT PRICE OF $0.43 ON THE SET-ASIDE WOULD NOT CONSTITUTE A PRICE DIFFERENTIAL. THE CIRCUMSTANCES, AT LEAST PRIMA FACIE, WOULD APPEAR TO INDICATE OTHERWISE. IF THE BIDS RECEIVED HAD MADE IT EVIDENT THAT UNIT PRICES OF $0.43 OR HIGHER WOULD HAVE TO BE PAID FOR QUANTITIES IN EXCESS OF THE NON-SET-ASIDE PORTION THEN AWARD OF THE SET- ASIDE QUANTITY AT $0.43 WOULD NOT RESULT IN PAYMENT OF A PRICE DIFFERENTIAL. THE BIDS ACTUALLY RECEIVED DEMONSTRATE THAT THIS WAS NOT THE CASE AS OF THE TIME OF THE OPENING ON THE NON-SET-ASIDE QUANTITY SINCE TWO UNSUCCESSFUL BIDS WERE RECEIVED ON AN ALL-OR-NONE BASIS MIGHT HAVE BEEN PLACED AT A UNIT PRICE OF $0.39. IN THE EVENT THAT AN AWARD FOR THAT PORTION OF THE SET-ASIDE WHICH IS EQUIVALENT TO THE QUANTITY OF THE NON- SET-ASIDE CAN BE MADE AT $0.39 OR AT $0.423, IT IS OUR OPINION THAT AWARD OF THAT PORTION OF THE SET-ASIDE AT A HIGHER PRICE WOULD BE IN VIOLATION OF THE ABOVE LIMITATION OF THE DEFENSE APPROPRIATION ACT.

AS TO THE PORTION OF THE SET-ASIDE EXCEEDING THE NON-SET-ASIDE QUANTITY, WE WOULD NOT FEEL COMPELLED, IN VIEW OF THE ALL-OR-NONE RESTRICTION ON THE $0.39 AND $0.423 PRICES, TO OBJECT TO AN AWARD AT THE HIGH AWARD PRICE.