A-85899, MAY 10, 1937, 16 COMP. GEN. 991

A-85899: May 10, 1937

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AWARD TO ANOTHER BIDDER ON THE BASIS OF NEGLIGIBLE DIFFERENCE IN BID PRICE AND ALLEGED SUPERIOR VALUE IS UNAUTHORIZED. PARTICULARLY WHERE THE SUPERIORITY ALLEGED IS BASED UPON MATTERS OF DOUBTFUL VALUE TO THE GOVERNMENT WITHOUT CONSIDERATION OF POSSIBLE OFFSETTING DISADVANTAGES. AS FOLLOWS: THERE IS PRESENTED FOR DECISION A CASE INVOLVING THE PURCHASE OF A 4-DOOR SEDAN FOR THE U.S. ALTHOUGH THE BID ON THE FIRST CAR IS LOW BY A VERY SMALL MARGIN. ACCORDING TO THE ABSTRACT THE LOW BID IS THAT OF THE NORTHWEST MOTOR COMPANY. THE SECOND LOW BID WAS OFFERED BY THE GENERAL MOTORS CORPORATION. IS $683.97 AND ITS TRADE-IN VALUE AFTER 1. 000 MILES IS $483.97. THE RETAIL PRICE OF THE PONTIAC CAR IS $925 AT THE DESTINATION.

A-85899, MAY 10, 1937, 16 COMP. GEN. 991

ADVERTISING - BIDS - ACCEPTANCE OF OTHER THAN LOWEST - ALLEGED SUPERIORITY OF PRODUCT OF HIGHER BIDDER WHERE AN AUTOMOBILE OFFERED BY A LOW BIDDER MEETS THE REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS AND THE NEEDS OF THE GOVERNMENT, AWARD TO ANOTHER BIDDER ON THE BASIS OF NEGLIGIBLE DIFFERENCE IN BID PRICE AND ALLEGED SUPERIOR VALUE IS UNAUTHORIZED, PARTICULARLY WHERE THE SUPERIORITY ALLEGED IS BASED UPON MATTERS OF DOUBTFUL VALUE TO THE GOVERNMENT WITHOUT CONSIDERATION OF POSSIBLE OFFSETTING DISADVANTAGES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, MAY 10, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 28, 1937, AS FOLLOWS:

THERE IS PRESENTED FOR DECISION A CASE INVOLVING THE PURCHASE OF A 4-DOOR SEDAN FOR THE U.S. GEOLOGICAL SURVEY, UNDER INVITATION U.S.D.I. 2180, OPENED IN THIS OFFICE FEBRUARY 17, 1937. THE ABSTRACT OF BIDS SHOWS TWO DESIRABLE BIDS, THE LOW BID ON A FORD 4-DOOR SEDAN AND THE SECOND LOW BID ON A PONTIAC 4-DOOR SEDAN. ALTHOUGH THE BID ON THE FIRST CAR IS LOW BY A VERY SMALL MARGIN, THE NEXT LOW BID APPEARS TO BE THE MOST ADVANTAGEOUS FOR THE GOVERNMENT.

ACCORDING TO THE ABSTRACT THE LOW BID IS THAT OF THE NORTHWEST MOTOR COMPANY, CHEVY CHASE, MARYLAND, OFFERING ONE FORD SEDAN, 4-DOOR, MODEL 74, WITH A 60-HORSEPOWER MOTOR, DELIVERED AT ST. LOUIS FOR $690.43, LESS TRADE -IN ALLOWANCE OF $400, NET $290.43, SUBJECT TO A 10 PERCENT DISCOUNT OF $29.04 FOR PAYMENT WITHIN 20 DAYS, MAKING THE TOTAL NET COST $271.39.

THE SECOND LOW BID WAS OFFERED BY THE GENERAL MOTORS CORPORATION, PONTIAC DIVISION, DETROIT, MICHIGAN, COVERING A 4-DOOR PONTIAC "6," MODEL 1937, WITH AN 85-HORSEPOWER MOTOR, DELIVERED AT ST. LOUIS, MISSOURI, FOR $672.47, LESS TRADE-IN ALLOWANCE $400, NET $272.47, OR IN OTHER WORDS $1.08 IN EXCESS OF THE LOW BID ON THE FORD CAR WITH A 60 HORSEPOWER MOTOR.

A FURTHER COMPARISON OF THE TWO CARS ON THE BASIS OF TRADE-IN VALUE AFTER 1,000 MILES AND FROM THE STANDPOINT OF RETAIL COST, SHOWS THE PONTIAC CAR TO BE BY FAR THE MOST ECONOMICAL PURCHASE. IN ACCORDANCE WITH INFORMATION RECEIVED FROM THE RESPECTIVE BIDDERS, THE RETAIL PRICE OF THE FORD CAR AT THE DESTINATION, ST. LOUIS, MISSOURI, IS $683.97 AND ITS TRADE-IN VALUE AFTER 1,000 MILES IS $483.97. THE RETAIL PRICE OF THE PONTIAC CAR IS $925 AT THE DESTINATION, ST. LOUIS, MISSOURI, WITH A TRADE-IN VALUE OF $675 AFTER 1,000 MILES. THIS COMPARISON GIVES THE PONTIAC A THEORETICAL TRADE- IN ADVANTAGE OF $191.03 OVER THE FORD.

THIS DEPARTMENT IS FULLY AWARE OF THE FACT THAT THE GOVERNMENT SHOULD ACCEPT THAT BID MEETING ALL THE ADVERTISED SPECIFICATIONS, AND WHICH IS THE LOWEST COST TO THE GOVERNMENT. BUT IN THIS INSTANCE IT IS FELT THAT THE MATTER SHOULD FIRST BE REFERRED TO YOUR OFFICE FOR YOUR REVIEW AND COMMENTS, AS IT SEEMS AN INJUSTICE TO THE GOVERNMENT TO BE COMPELLED, AS IN THIS INSTANCE, TO ADHERE TO ESTABLISHED PRACTICE WHEN A FAR SUPERIOR AUTOMOBILE CAN BE OBTAINED AT A VERY SLIGHT INCREASE IN COST.

THE RULE APPLICABLE TO PURCHASES AND THE AWARD OF CONTRACTS FOR THE NEEDS OF THE GOVERNMENT IS CORRECTLY STATED IN THE FIRST SENTENCE OF YOUR FINAL PARAGRAPH, AND IS TOO WELL RECOGNIZED TO REQUIRE CITATIONS IN ITS SUPPORT. THE ADVERTISED SPECIFICATIONS SHOULD STATE CLEARLY AND FAIRLY THE MINIMUM REQUIREMENTS OF THE GOVERNMENT FOR THE PURPOSE TO BE SERVED AND THE LOWEST BID OFFERING EQUIPMENT MEETING SUCH MINIMUM REQUIREMENTS IS FOR ACCEPTANCE, IF OTHERWISE PROPER. THE FACT THAT EQUIPMENT POSSIBLY SUPERIOR MAY BE OFFERED AT A COMPARABLY HIGHER PRICE -- EVEN THOUGH IN A PARTICULAR INSTANCE THE DIFFERENCE MAY BE NEGLIGIBLE--- IS NOT SUFFICIENT TO JUSTIFY A DEPARTURE FROM THAT RULE, THE QUESTION BEING ONE OF FACT AND NOT DEGREE. AND THIS IS TRUE EVEN IF IT BE ASSUMED THAT IN AN ISOLATED INSTANCE SOME SLIGHT SAVING MIGHT RESULT FROM ACCEPTANCE OF A HIGHER BID. AS HAS BEEN POINTED OUT IN DECISIONS OF THIS OFFICE, A SAVING MADE IN SOME INSTANCE MAY ULTIMATELY PROVE TO BE AN EXPENSIVE ECONOMY. 13 COMP. GEN. 284-9.

IT IS APPARENT FROM YOUR LETTER THAT THE FORD SEDAN, MODEL 74, WITH ITS 60-HORSEPOWER MOTOR, MEETS THE REQUIREMENTS OF THE SPECIFICATIONS; THERE IS NO CLAIM THAT THE PONTIAC VEHICLE WOULD BE MORE ECONOMICAL OR EVEN EQUALLY AS ECONOMICAL FROM THE STANDPOINT OF OPERATION; AND IT MAY WELL BE THAT THE AUTOMOBILE OFFERED BY THE LOW BIDDER WILL PROVE MORE SATISFACTORY AND ECONOMICAL FOR THE NEEDS OF THE GOVERNMENT IN THE PARTICULAR SERVICE TO BE PERFORMED THAN WOULD THE HIGHER-PRICED VEHICLE.

IT IS, OF COURSE, NOT THE PRACTICE OF THE GOVERNMENT TO DISPOSE OF PASSENGER-CARRYING VEHICLES ON A TRADE-IN ALLOWANCE AT THE END OF 1,000 MILES OF TRAVEL, EXCEPT POSSIBLY UNDER EXCEPTIONAL AND EXTRAORDINARY CONDITIONS RENDERING SUCH A COURSE NECESSARY. THEREFORE, IT DOES NOT APPEAR THAT THE "THEORETICAL TRADE-IN ADVANTAGE" WHICH YOU SUGGEST IS A MATTER FOR CONSIDERATION IN THE PRESENT INSTANCE.

SINCE IT APPEARS THAT THE AUTOMOBILE OFFERED BY THE LOW BIDDER MEETS THE REQUIREMENTS OF THE SPECIFICATIONS AND THE NEEDS OF THE GOVERNMENT, YOU ARE ADVISED THAT, UPON THE FACTS PRESENTED, APPROPRIATED MONEYS WOULD NOT BE AVAILABLE FOR PAYMENT UNDER A CONTRACT AWARDED TO OTHER THAN SUCH LOW BIDDER.