B-104300, JAN 2, 1952

B-104300: Jan 2, 1952

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OWNER: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT BY THE CONTRACTING OFFICER AT KEESLER AIR FORCE BASE. THE SUBSTANCE OF YOUR PROTEST IS THAT YOU WERE ADVISED BY G. THAT THE OPS "PRICES FOR FAT-BEARING AND OIL BEARING ANIMALS WASTE MATERIALS" WERE THE HIGHEST PRICES AT WHICH SUCH MATERIALS WERE DELIVERED TO A PURCHASER OF THE SAME CLASS DURING THE PERIOD FROM NOVEMBER 7. THAT BONES AND COOKED GREASE AND CRACKLINGS WERE PURCHASED BY YOUR COMPANY FROM THE KEESLER AIR FORCE BASE DURING THAT PERIOD AT $.01 PER POUND. THAT THIS PRICE SHOULD HAVE BEEN CONTINUED IN FORCE OR ALL BIDDERS ADVISED IN CLEAR AND UNMISTAKABLE LANGUAGE THAT THERE WAS NO LIMIT ON THE PRICE THEY COULD QUOTE FOR THE PURCHASE OF THE MATERIAL.

B-104300, JAN 2, 1952

PRECIS-UNAVAILABLE

DEDEAUX PACKING COMPANY, ATTENTION: L. A. DEDEAUX, OWNER:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT BY THE CONTRACTING OFFICER AT KEESLER AIR FORCE BASE, MISSISSIPPI, FOR THE SALE OF BONES AND AND RAW MEAT TRIMMINGS, INCLUDING CRACKLINGS AT THE BASE DURING THE FISCAL YEAR BEGINNING JULY 1, 1951, AND ENDING JUNE 30, 1952.

THE SUBSTANCE OF YOUR PROTEST IS THAT YOU WERE ADVISED BY G. RICE WILSON, BUSINESS SPECIALIST (FOODS), OFFICE OF PRICE STABILIZATION, JACKSON, MISSISSIPPI, THAT THE OPS "PRICES FOR FAT-BEARING AND OIL BEARING ANIMALS WASTE MATERIALS" WERE THE HIGHEST PRICES AT WHICH SUCH MATERIALS WERE DELIVERED TO A PURCHASER OF THE SAME CLASS DURING THE PERIOD FROM NOVEMBER 7, TO DECEMBER 7, 1950; THAT BONES AND COOKED GREASE AND CRACKLINGS WERE PURCHASED BY YOUR COMPANY FROM THE KEESLER AIR FORCE BASE DURING THAT PERIOD AT $.01 PER POUND; AND THAT THIS PRICE SHOULD HAVE BEEN CONTINUED IN FORCE OR ALL BIDDERS ADVISED IN CLEAR AND UNMISTAKABLE LANGUAGE THAT THERE WAS NO LIMIT ON THE PRICE THEY COULD QUOTE FOR THE PURCHASE OF THE MATERIAL.

IN RESPONSE TO REQUEST OF THIS OFFICE, THE DEPARTMENT OF THE AIR FORCE NOW HAS FURNISHED A COPY OF THE INVITATION FOR BIDS (INVITATION NUMBER 22- 002 S 51-9) ISSUED BY THE PURCHASING AND CONTRACTING OFFICE, KEESLER AFB, MISSISSIPPI, AN ABSTRACT OF THE BIDS RECEIVED, YOUR BID SUBMITTED IN RESPONSE TO THE INVITATION, AND A REPORT OF THE FACTS IN THE MATTER BY THE CONTRACTING OFFICER. BY THE INVITATION - ISSUED MAY 18, 1951 - THE CONTRACTING OFFICE REQUESTED BIDS FOR THE PURCHASE FROM THE BASE OF AN ESTIMATED QUANTITY OF 500,000 POUNDS OF BONES AND RAW MEAT TRIMMINGS INCLUDING CRACKLINGS DURING THE FISCAL YEAR REFFERED-TO ABOVE, THE BIDS RECEIVED TO BE OPENED AT 2:00 P.M. CST, JUNE 7, 1951. PROSPECTIVE BIDDERS WERE ADVISED UNDER PARAGRAPH 4, ENTITLED "CHANGES MADE IN GENERAL PROVISIONS", ON PAGE ONE OF THE INVITATION THAT CHANGES HAD BEEN MADE AS FOLLOWS:

"NO. 1 DELETED, SEE ALTERNATE & ADDITIONAL PROVISION NO. E(1); NO. 7 DELETED, SEE ALTERNATE & ADDITIONAL PROVISION NO. E(2); NOS. 8, 16, 17, 18 AND 21 ALSO DELETED."

THE REFERRED-TO PARAGRAPHS 16 AND 17 OF THE "GENERAL PROVISIONS" WHICH WERE SHOWN TO HAVE BEEN DELETED PROVIDED FOR A "PRICE ADJUSTMENT" AND FOR "COMPLIANCE WITH OPA AND WBP ORDERS AND REGULATIONS, ETC.", RESPECTIVELY. ALSO, PARAGRAPH 21 REQUIRING EACH BIDDER TO FURNISH A CERTIFICATE OF COMPLIANCE WITH OPA REGULATIONS WAS IN THE INVITATION FOR BIDS, BUT WAS SHOWN TO HAVE BEEN DELETED BEFORE BIDS WERE SOLICITED. THE ONLY PROVISION IN THE INVITATION RELATIVE TO CHANGES IN MAXIMUM PRICES WHICH WAS NOT DELETED BEFORE THE INVITATION WAS ISSUED WAS PARAGRAPH C. (6), ENTITLED "CHANGES IN MAXIMUM PRICES", OF THE ALTERNATE AND ADDITIONAL PROVISIONS, WHICH PROVIDES THAT IN THE EVENT THE SCHEDULE OF MAXIMUM PRICES PRESCRIBED BY THE OFFICE OF PRICE ADMINISTRATION OR SIMILAR AUTHORITY COVERING ANY OF THE ITEMS SOLD UNDER THE CONTRACT ENTERED INTO PURSUANT TO THE INVITATION SHOULD BE CHANGED DURING THE LIFE OF THE CONTRACT, THE PRICES TO BE PAID THEREAFTER BY THE PURCHASER WOULD BE INCREASED OR DECREASED BY A PERCENTAGE EQUIVALENT TO THE PERCENTAGE OF INCREASE OR DECREASE IN THE MAXIMUM PRICE FOR SUCH ITEMS.

THE ABSTRACT OF BIDS SHOWS THAT THREE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. YOUR BID, QUOTING A PRICE OF ONE CENT PER POUND, APPEARS TO HAVE BEEN SUPPLEMENTED BY A LETTER QUOTING A PRICE OF $.0355 PER POUND FOR ANY MISCELLANEOUS GREASE THAT MIGHT BE AVAILABLE. THE OTHER TWO BIDS WERE IN THE AMOUNTS OF $.0226 AND $.03 PER POUND. THE CONTRACTING OFFICER REPORTED THAT A CONTRACT WAS AWARDED TO THE GULF SOAP CORPORATION ON JUNE 12, 1951, ON THE BASIS OF ITS BID OF $.03 PER POUND. THE REPORT OF THE CONTRACTING OFFICER IS, IN PERTINENT PART, AS FOLLOWS:

"THREE PERTINENT FACTS PRECLUDED FAVORABLE CONSIDERATION OF THIS PROTEST.

"1. THE PROTEST WAS FILED SOME 19 DAYS AFTER OPENING DATE AND 14 DAYS AFTER ACCEPTANCE AND AWARD BY THE GOVERNMENT TO THE HIGHEST BIDDER.

"2. THE INVITATION, BID AND ACCEPTANCE ISSUED ON WAR DEPARTMENT CONTRACT FORM 26 DID NOT RESTRICT OR LIMIT DEDEAUX OR ANY OTHER BIDDER AS TO THE PRICE TO BE BID AS GENERAL PROVISION 17, PAGE 3 OF THE INVITATION, WAS DELETED.

"3. THE INVITATION DID NOT REQUIRE A SIGNED CERTIFICATE AS TO MAXIMUM PRICE COMPLIANCE AS GENERAL PROVISION 21, PAGE 3 OF THE INVITATION, WAS ALSO DELETED.

"THE INVITATION FOR BIDS AS FILED BY DEDEAUX CARRIES THE SIGNATURE OF L. A. DEDEAUX ON PAGE 3, ON WHICH THE DELETIONS OF CEILING PRICE AND MAXIMUM PRICE COMPLIANCE APPEAR AND EVIDENCE DEDEAUX'S ACKNOWLEDGMENT AND APPARENT UNDERSTANDING OF THESE DELETIONS.

"THE GOVERNMENT'S ACCEPTANCE OF GULF SOAP CORPORATION'S PROPOSAL WAS SOME 6 DAYS LATER THAN THE DATE OF AMENDMENT 8 TO CEILING PRICE REGULATION 6 OF THE OFFICE OF PRICE STABILIZATION, WHICH AMENDMENT GAVE THE ARMED SERVICES THE OPINION OF DETERMINING THEIR CEILING PRICE FOR FOOD WASTE, OF WHICH BONES AND MEAT TRIMMINGS (INCLUDING CRACKLINGS) IS A PART THEREOF.

"DEDEAUX WAS NOT THE AWARDEE AS HIS BID WAS THE LOWEST OF 3 BIDS RECEIVED. DEDEAUX, BY HIS OWN CHOICE, DID NOT AVAIL HIMSELF OF THE OPPORTUNITY TO DISCUSS APPLICABILITY OF CEILING PRICES WITH THE CONTRACTING OFFICER PRIOR TO SIGNING THE BID NOR DID HE TAKE INTO CONSIDERATION IN HIS BID THE FACT THAT CEILING PRICES WERE DELETED FROM THE INVITATION FOR BID BY DELETION OF GENERAL PROVISION 17 THEREOF. DEDEAUX IN HIS TELEGRAM TO THE COMPTROLLER GENERAL, INCLOSURE 11, HERETO, ON PAGE 4 OF THAT TELEGRAM, LINES 1 THROUGH 4, ADMITS HIMSELF THAT THE ARMED SERVICES HAVE THE RIGHT TO AWARD TO THE HIGHEST BIDDER BUT NOT EFFECTIVE UNTIL THE 11TH OF JUNE. THE FACT THAT THIS AWARD WAS NOT MADE BY THE GOVERNMENT ON OR PRIOR TO THE 11TH OF JUNE BUT WAS ACTUALLY AWARDED ON THE 12TH OF JUNE, PLACES DEDEAUX IN A POSITION OF ADMITTING THAT THE AWARD ON THAT DATE WAS IN LINE WITH AMENDMENT 8 TO CEILING PRICE 6 OF OFFICE OF PRICE STABILIZATION. FURTHER, THAT THE CHANGES IN THE MAXIMUM PRICE QUOTED IN DEDEAUX'S LETTER, PAGE 2, DATED 7 JULY 1961, INCLOSURE 16 HERETO, HAS NO EFFECT IN THE BIDDING BUT ONLY TO THE CHANGES IN PRICE AS IS STATED THEREIN, ' CHANGED DURING THE LIFE OF THE CONTRACT ", AND WOULD ONLY HAVE BEARING THEREFORE ON THE CONTRACT AS VERSUS NONE ON THE BIDDING OR AWARD."

IT APPEARS THAT YOUR CONFUSION OR MISUNDERSTANDING IN THIS MATTER WAS DUE TO YOUR RELIANCE UPON THE INFORMATION FURNISHED BY MR. WILSON IN THE OFFICE OF PRICE STABILIZATION, JACKSON, MISSISSIPPI, RATHER THAN UPON THE INFORMATION CONTAINED IN THE INVITATION FOR BIDS. BY LETTER DATED JUNE 26, 1951, MR. WILSON ADVISED YOU THAT BY AMENDMENT 8 TO CEILING PRICE REGULATION 6, DATED JUNE 6, 1951, A NEW SECTION 15, TO BECOME EFFECTIVE JUNE 11, 1951, HAD BEEN SUBSTITUTED FOR THE OLD SECTION 15, REFERRED TO IN HIS LETTER OF MARCH 22, 1951, TO YOU, AND ON THE BASIS OF WHICH IT APPEARS YOU COMPUTED YOUR BID. THE NEW SECTION 15 WHICH APPARENTLY WAS NOT BROUGHT TO YOUR ATTENTION BY MR. WILSON UNTIL AFTER THE CONTRACT WAS AWARDED TO THE GULF SOAP CORPORATION PROVIDED AN ALTERNATE METHOD BY WHICH AGENCIES OF THE UNITED STATES GOVERNMENT MIGHT DETERMINE THEIR CEILING PRICES FOR FUTURE SALES BY ADOPTING THOSE OF THEIR MOST CLOSELY COMPETITIVE SELLER. IT THUS APPEARS THAT YOU DID NOT BECOME AWARE OF THE CHANGE IN THE OPS REGULATION UNTIL AFTER THE CONTRACT WAS AWARDED TO THE GULF SOAP CORPORATION.

FOR THAT REASON AND AS THE CHANGE WAS NOT PROMULGATED UNTIL JUNE 6, 1951, AND DID NOT BECOME EFFECTIVE UNTIL JUNE 11, 1951, THE DATE PRIOR TO AWARD, THIS OFFICE AGREES THAT THE DEPARTMENT OF THE AIR FORCE WELL MIGHT HAVE REJECTED ALL BIDS AND READVERTISED ITS NEEDS IN THE MATTER SETTING FORTH IN THE READVERTISEMENT CLEARLY AND SIMPLY THE EFFECT, IF ANY, OF PRICE CEILING UPON THE CONDITIONS OF BIDDING AND UPON THE TERMS AND CONDITIONS OF THE CONTRACT TO BE ENTERED INTO ON THE BASIS OF SUCH CONDITIONS. HOWEVER, AS THE AWARD WAS MADE IN ACCORDANCE WITH THE INVITATION FOR BIDS AS CHANGED BY THE DELETION OF CERTAIN PERTINENT PROVISIONS RELATING TO COMPLIANCE WITH OPS PRICE CEILING AND WAS NOT IN VIOLATION OF THE OPS REGULATION IN EFFECT AT THAT TIME, IT DOES NOT APPEARS THAT THIS OFFICE WOULD BE LEGALLY JUSTIFIED IN HOLDING THAT THE AWARD SHOULD BE CANCELLED. SEE O'BRIEN V. CARNEY, 6 F. SUPP. 761.

IN THIS CONNECTION IT SHOULD BE POINTED OUT THAT YOU COULD HAVE REQUESTED CLARIFICATION OF THE PROVISIONS OF THE INVITATION FOR BIDS WHEN YOU FOUND THAT CERTAIN PERTINENT PROVISIONS HAD BEEN DELETED AND THAT THE OTHER TWO BIDDERS DID NOT LIMIT THEIR BIDS TO $.01 PER POUND BUT RATHER QUOTED PRICES ON THE BASIS THAT BIDDERS WERE NOT SO LIMITED. THE CONTRACTING OFFICER REPORTS THAT PARAGRAPH 17 OF THE GENERAL PROVISIONS REQUIRING THE PURCHASER TO WARRANT AND REPRESENT THAT HE WOULD COMPLY WITH THE OPS AND WPB ORDERS AND REGULATIONS WAS DELETED PRIOR TO THE SOLICITATION OF BIDS IN ORDER THAT THE HIGHEST BID MIGHT BE ACCEPTED WITH THE UNDERSTANDING THAT, IF NECESSARY, THE PRICE QUOTED BY THE SUCCESSFUL BIDDER MIGHT BE ADJUSTED DOWNWARD IN THE EVENT A MAXIMUM CEILING PRICE BECAME EFFECTIVE ON THE EFFECTIVE DATE OF THE CONTRACT, OR DURING ITS LIFE, THEREBY ASSURING THE DEPARTMENT OF THE AIR FORCE OF THE HIGHEST POSSIBLE RETURN ON THE TRANSACTION.

ACCORDINGLY, ON THE RECORD PRESENTLY BEFORE THIS OFFICE, IT MUST BE HELD THAT THE ACTION OF THE DEPARTMENT OF THE AIR FORCE IN MAKING THE AWARD WAS NOT SO ERRONEOUS AS TO REQUIRE THIS OFFICE TO WITHHOLD APPROVAL OF OTHERWISE PROPER PAYMENTS UNDER THE CONTRACT.