A-84532, MAY 4, 1937, 16 COMP. GEN. 971

A-84532: May 4, 1937

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IS NOT ERRONEOUS BUT ALSO DESTRUCTIVE OF THE COMPETITION REQUIRED BY SECTION 3709. CONTAINS THE FOLLOWING: THE MATERIAL INCLUDED IN THE ITEMS LISTED BELOW IS FOR DELIVERY AT MCNEILL. BIDDER IS PRIVILEGED TO QUOTE EITHER F.O.B. WHERE QUOTATIONS ARE MADE F.O.B. POINT OF ORIGIN" THERE WAS INSERTED IN ITS BID A RIDER CONTAINING THE FOLLOWING PROVISION: IF SHIPMENT IS MADE ON GOVERNMENT BILL OF LADING TO BE FURNISHED BY THE PROCUREMENT OFFICER. WE WILL ALLOW THE COMMERCIAL CARLOAD FREIGHT FROM ALABAMA CITY TO MCNEILL. WILL EQUALIZE THE LOWEST DELIVERED COST TO THE PROCUREMENT OFFICE ACCOUNT OF LAND GRANT SAVINGS FROM ANY BIDDING POINT. WAS REQUESTED BY OFFICE LETTER OF AUGUST 25. THERE WAS RECEIVED THROUGH THE PROCUREMENT DIVISION.

A-84532, MAY 4, 1937, 16 COMP. GEN. 971

ADVERTISING - BIDS - EVALUATION - FREIGHT EQUALIZATION OFFER CONSTRUED AS OFFER TO EQUALIZE LOWEST BID PRICE THE INTERPRETATION OF A BIDDER'S FREIGHT EQUALIZATION OFFER AS ONE OFFERING TO MEET THE PRICE OF THE LOWEST BIDDER, AND AWARD ON THAT BASIS, IS NOT ERRONEOUS BUT ALSO DESTRUCTIVE OF THE COMPETITION REQUIRED BY SECTION 3709, REVISED STATUTES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, MAY 4, 1937:

THERE HAS COME TO MY ATTENTION CONTRACT NO. ER-TPS-62-4516, DATED APRIL 14, 1936, WITH THE GULF STATES STEEL CO., FOR FURNISHING AND DELIVERING CERTAIN STEEL AT MCNEILL, MISSISSIPPI.

THE INVITATION FOR BIDS ISSUED MARCH 31, 1936, CONTAINS THE FOLLOWING:

THE MATERIAL INCLUDED IN THE ITEMS LISTED BELOW IS FOR DELIVERY AT MCNEILL, MISSISSIPPI. BIDDER IS PRIVILEGED TO QUOTE EITHER F.O.B. DESTINATION ON EACH ITEM OR F.O.B. POINT OF ORIGIN ON ALTERNATE OF EACH ITEM, OR BOTH F.O.B. DESTINATION AND POINT OF ORIGIN. WHERE QUOTATIONS ARE MADE F.O.B. POINT OF ORIGIN, THE BIDDER MUST FURNISH ALL INFORMATION CALLED FOR ON THE LAST PAGE OF THIS INVITATION.

WHILE THE GULF STATE STEEL CO. FURNISHED NO QUOTATION "F.O.B. POINT OF ORIGIN" THERE WAS INSERTED IN ITS BID A RIDER CONTAINING THE FOLLOWING PROVISION:

IF SHIPMENT IS MADE ON GOVERNMENT BILL OF LADING TO BE FURNISHED BY THE PROCUREMENT OFFICER, WE WILL ALLOW THE COMMERCIAL CARLOAD FREIGHT FROM ALABAMA CITY TO MCNEILL, MISSISSIPPI, AT 37 CENTS PER 100 LBS. AND WILL EQUALIZE THE LOWEST DELIVERED COST TO THE PROCUREMENT OFFICE ACCOUNT OF LAND GRANT SAVINGS FROM ANY BIDDING POINT.

AND, IN VIEW THEREOF, THE STATE PROCUREMENT OFFICER, JACKSON, MISS., WAS REQUESTED BY OFFICE LETTER OF AUGUST 25, 1936, TO FURNISH A REPORT SHOWING THE AMOUNT OF EQUALIZATION MADE UNDER THIS PROVISION, TOGETHER WITH ALL BIDS RECEIVED. IN RESPONSE THERETO, THERE WAS RECEIVED THROUGH THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, COPY OF LETTER DATED SEPTEMBER 18, 1936, FROM THE STATE PROCUREMENT OFFICER, AS FOLLOWS:

ATTACHED IS A COPY OF A LETTER RECEIVED FROM THE GENERAL ACCOUNTING OFFICE, FILE: A-LEE-CE, REGARDING CONTRACT ER-TPS-62-4516.

ATTACHED IS A CERTIFIED COPY OF ABSTRACT OF BIDS, FORM S.P.O. 1, LISTING THE QUOTATIONS OF ALL BIDDERS TOGETHER WITH WEIGHTS AND SHIPPING POINTS. THE LOWEST DELIVERED COST TO THE GOVERNMENT ON THIS INVITATION WAS THE QUOTATION SUBMITTED BY JOSEPH T. RYERSON AND SON. THE HIGHWAY MATERIALS COMPANY, CONNORS STEEL COMPANY, CAHN BROS. AND RYDER, LACLEDE STEEL COMPANY, GULF STATES STEEL COMPANY AND COSCO PRODUCTS COMPANY AGREED TO EQUALIZE THE LOWEST DELIVERED COST TO THE GOVERNMENT THEREBY PLACING ALL SUCH BIDS ON AN EQUAL BASIS AND AWARD WAS MADE BY LOT TO THE GULF STATES STEEL COMPANY. THEY WERE REQUIRED TO ABSORB AND A DEDUCTION OF $71.16 WAS MADE. PLEASE TRANSMIT A COPY OF THIS LETTER TO THE GENERAL ACCOUNTING OFFICE TOGETHER WITH THE ABSTRACT OF BIDS.

THE BIDS RECEIVED UNDER THE INVITATION WERE NOT FURNISHED AS REQUESTED, BUT IN VIEW OF THE STATEMENT MADE BY THE STATE PROCUREMENT OFFICER IN HIS LETTER OF SEPTEMBER 18, 1936, QUOTED ABOVE, IT IS ASSUMED THAT THE BIDDERS REFERRED TO THEREIN INSERTED IN THEIR BIDS A PROVISION SIMILAR TO THAT OF THE GULF STATES STEEL CO., REFERRED TO ABOVE.

IT APPEARS THAT THE REQUEST FOR BIDS IN THIS CASE WAS IN ACCORDANCE WITH DECISIONS OF THIS OFFICE. 10 COMP. GEN. 402; 16 ID. 697, 729. HOWEVER, AWARD OF THE CONTRACT WAS NOT MADE BY THE CONTRACTING OFFICER IN ACCORDANCE WITH THE ADVERTISEMENT BUT WAS MADE ON THE BASIS OF AN EQUALIZATION OFFER OF THE CONTRACTOR AND THE OTHER BIDDERS REFERRED TO IN THE LETTER OF SEPTEMBER 18, 1936, SUPRA. WHILE DECISIONS OF THIS OFFICE HAVE HELD THAT SPECIFICATIONS SHOULD PERMIT BIDDERS TO EQUALIZE LAND-GRANT RATES AVAILABLE TO THE UNITED STATES, 16 COMP. GEN. 272, AND THAT BIDS SHOULD BE CONSIDERED PROPOSING TO EQUALIZE THE LOWEST NET RATE AVAILABLE TO THE GOVERNMENT, EVEN WHEN SUCH RATE INVOLVES NO LAND-GRANT DEDUCTION, 15 COMP. GEN. 1045, THE AWARD WAS NOT MADE IN THIS CASE AS THE RESULT OF EQUALIZATION OF FREIGHT RATES. ALTHOUGH THE OFFER OF THE GULF STATES STEEL CO., AS WELL AS THAT OF SEVERAL OF THE OTHER BIDDERS, WAS IN ACCORDANCE WITH THE TWO DECISIONS LAST CITED, THE CONTRACTING OFFICER APPARENTLY MISCONSTRUED SAID OFFER. THAT IS TO SAY, WHILE THE PROVISION INSERTED WAS APPARENTLY INTENDED AS AN OFFER TO EQUALIZE LAND-GRANT RATES, THE SAID PROVISION APPEARS TO HAVE BEEN CONSTRUED BY THE CONTRACTING OFFICER AS AN OFFER TO EQUALIZE "THE LOWEST DELIVERED COST TO THE GOVERNMENT.' EVEN HAD THIS BEEN THE OFFER MADE BY THE BIDDERS WHO INSERTED THE REFERRED TO PROVISION IN THEIR BIDS, SUCH OFFER WAS NOT FOR CONSIDERATION IN MAKING THE AWARD. A-82002, FEBRUARY 19, 1937. THE REASON FOR THIS IS READILY APPARENT. AS CONSTRUED BY THE CONTRACTING OFFICER, THE BIDDERS WHO INSERTED THE EQUALIZATION OFFER IN THEIR BIDS, IN EFFECT, ALTHOUGH QUOTING A CERTAIN PRICE THEREIN, OFFERED TO FURNISH THE REQUIRED MATERIAL AT THE DELIVERED PRICE QUOTED BY THE LOWEST BIDDER. OTHER WORDS, UNDER THE INTERPRETATION PLACED ON THE OFFER BY THE CONTRACTING OFFICER, SUCH OFFER WAS NOT ONE TO EQUALIZE FREIGHT RATES WHETHER LAND GRANT OR OTHERWISE, BUT WAS MERELY AN OFFER BY THE BIDDERS TO MEET THE PRICE OF THE LOWEST BIDDER, REGARDLESS OF THE BASIS ON WHICH THAT PRICE WAS ARRIVED AT. THUS, THERE WAS NOT COMPETITION AS REQUIRED BY SECTION 3709, REVISED STATUTES.

WHILE THIS PARTICULAR CONTRACT WILL NOT BE FURTHER QUESTIONED BECAUSE OF THE ERRONEOUS EQUALIZATION, THE MATTER IS CALLED TO YOUR ATTENTION IN ORDER THAT THE PROPER ADMINISTRATIVE ACTION MAY BE TAKEN TO CORRECT THE PROCEDURE FOLLOWED IN THIS CASE.