B-119164, MAY 18, 1954, 33 COMP. GEN. 555

B-119164: May 18, 1954

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IT WAS PROPER. AFTER GOVERNMENT MADE DETERMINATION THAT CATEGORY B ITEMS WERE NOT NECESSARY. GENERALLY USED WHEN ITEMS IN BOTH CATEGORIES ARE REQUIRED. 1954: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MARCH 5. THERE APPEARS TO BE NO DISAGREEMENT BETWEEN YOU AND THE ADMINISTRATIVE OFFICE THAT IN THE ESTABLISHED PRACTICE OF THE MSTS CATEGORY A COMPRISES ITEMS WHICH ARE DEFINITELY PLANNED. WHILE CATEGORY B ITEMS ARE SUCH AS MAY OR MAY NOT BE ORDERED. IT WAS PROVIDED THAT " RECONDITIONED WINCHES MAY BE ACCEPTABLE WHEN APPROVED BY THE CONTRACTING OFFICER AND PROVIDED THE WINCHES ARE RECONDITIONED AND NEW WINCH GUARANTEE IS FURNISHED.'. IT WAS ASCERTAINED THAT THE LOWEST BID ON CATEGORY A.

B-119164, MAY 18, 1954, 33 COMP. GEN. 555

CONTRACTS - AWARDS - SEPARABLE OR AGGREGATE ITEM BASIS UNDER INVITATION FOR BIDS FOR INSTALLATION OF CARGO GEAR ON THREE VESSELS ACCORDING TO SPECIFICATIONS SET OUT IN FIVE ITEMS AND TWO CATEGORIES, DESIGNATED AS "A" AND "B" WHICH RESERVED TO GOVERNMENT OPTION TO AWARD CONTRACT UPON EITHER CATEGORY, IT WAS PROPER, AFTER GOVERNMENT MADE DETERMINATION THAT CATEGORY B ITEMS WERE NOT NECESSARY, TO EVALUATE BIDS ON BASIS OF CATEGORY A ITEMS ONLY INSTEAD OF METHOD OF EVALUATING BIDS ON THE AGGREGATE PRICE QUOTED FOR CATEGORIES A AND COMBINED, GENERALLY USED WHEN ITEMS IN BOTH CATEGORIES ARE REQUIRED.

ACTING COMPTROLLER GENERAL WEITZEL TO THE UNIONPORT MARINE CO. INC., MAY 18, 1954:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MARCH 5, 1954, PROTESTING THE AWARD BY THE MILITARY SEA TRANSPORTATION SERVICE OF A CONTRACT, UNDER INVITATION NO. A54-185, TO TODD SHIPYARDS.

A REPORT ON THE MATTER HAS BEEN RECEIVED FROM THE ADMINISTRATIVE OFFICE, TOGETHER WITH THE INVITATION, JOB ORDER, AND ASSOCIATED PAPERS, SHOWS THE FOLLOWING FACTS:

THE INVITATION CALLED FOR BIDS FOR INSTALLATION OF CARGO GEAR ON THREE VESSELS, ACCORDING TO SPECIFICATIONS SET OUT IN FIVE ITEMS AND TWO CATEGORIES, DESIGNATED AS "A" AND "B;, THERE APPEARS TO BE NO DISAGREEMENT BETWEEN YOU AND THE ADMINISTRATIVE OFFICE THAT IN THE ESTABLISHED PRACTICE OF THE MSTS CATEGORY A COMPRISES ITEMS WHICH ARE DEFINITELY PLANNED, AT THE TIME OF ISSUANCE OF THE INVITATION, TO BE PROCURED; WHILE CATEGORY B ITEMS ARE SUCH AS MAY OR MAY NOT BE ORDERED.

IN THE SUBJECT INVITATION CATEGORY A INCLUDED ITEM 1, INSTALLATION OF CARGO GEAR, AND ITEM 2, FURNISHING GENERAL SERVICES IN ACCORDANCE WITH STANDARD SPECIFICATIONS REFERRED TO, AND STEAM AND ELECTRIC CURRENT. UNDER ITEM 1 (B), WINCHES, IT WAS PROVIDED THAT " RECONDITIONED WINCHES MAY BE ACCEPTABLE WHEN APPROVED BY THE CONTRACTING OFFICER AND PROVIDED THE WINCHES ARE RECONDITIONED AND NEW WINCH GUARANTEE IS FURNISHED.' ITEM 3, IN CATEGORY B, CALLED FOR STATEMENT BY THE BIDDER OF THE ADDITIONAL PRICE AND ADDITIONAL TIME REQUIRED FOR FURNISHING NEW WINCHES IN LIEU OF RECONDITIONED WINCHES AS PERMITTED BY THE ABOVE- QUOTED SPECIFICATIONS.

UPON OPENING OF THE BIDS, ON FEBRUARY 18, 1954, IT WAS ASCERTAINED THAT THE LOWEST BID ON CATEGORY A, FOR ALL THREE SHIPS, WAS THAT OF TODD SHIPYARDS, $107,246, AND THE NEXT-LOW BID WAS $125,193 AS AGAINST YOUR THIRD-LOW BID OF $126,423. FOR ITEM 3, FURNISHING NEW WINCHES, TODD SHIPYARDS BID $41,430, AND STIPULATED 16 WEEKS' ADDITIONAL TIME; YOU BID $6,000 AND SPECIFIED A TOTAL TIME OF 70 DAYS FROM DATE OF AWARD, (THIRTY DAYS BEING SPECIFIED FOR THE BASIC WORK UNDER CATEGORY A). AT THAT TIME, YOUR REPRESENTATIVE, PRESUMABLY IN RESPONSE TO QUESTIONING BY THE OFFICER IN CHARGE, CONFIRMED YOUR BID AND FILED A WRITTEN STATEMENT THAT THE STATED DIFFERENTIAL FOR ITEM 3 WAS HONESTLY INTENDED TO BE NO MORE THAN $2,000 PER SHIP, OR $6,000, AS ENTERED IN THE BID. THEREAFTER, BY LETTERS DATED FEBRUARY 20 AND 21, YOU ENLARGED UPON THAT STATEMENT, WITH THE ADDITIONAL REPRESENTATION THAT YOUR CATEGORY A BID OF $126.432 WAS ACTUALLY FIGURED ON THE BASIS OF FURNISHING NEW WINCHES, AND THAT THE ADDITIONAL AMOUNT QUOTED ON ITEM 3 WAS INTENDED "MERELY AS A BUFFER AGAINST THE TIME ELEMENT IN SECURING THE WINCES.' YOU FURTHER OFFERED TO REDUCE YOUR BID BY $20,000 ON THE BASIS OF FURNISHING RECONDITIONED WINCHES. NO REPLY TO THAT OFFER APPEARS IN THE FILE RECEIVED HERE, BUT YOU HAVE NOT PROTESTED THE FAILURE OF THE CONTRACTING OFFICER TO ACCEPT THAT AMENDMENT, AND IT IS ASSUMED THAT YOU CONCEDE THAT ACCEPTANCE OF SUCH AMENDMENT AFTER BID OPENING WOULD HAVE BEEN HIGHLY IMPROPER.

ON THE ABSTRACT OF BIDS, THERE APPEARS THE FOLLOWING NOTATION:

THE CONTRACTING OFFICER HAS DETERMINED THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE THE AWARD BASED ON THE EVALUATION OF THE CATEGORY "A" ITEMS. THE LST'S ARE NECESSARY FOR SUMMER ARCTIC OPERATION AND WILL NOT PERMIT THE DELAY INCIDENT TO INSTALLING NEW WINCHES. THE VESSELS ARE TWELVE (12) YEARS OLD AND RECONDITIONED WINCHES WITH A NEW WINCH GUARANTEE WILL BE ADEQUATE PARTICULARLY INSOFAR AS IT MEANS A SAVING TO THE GOVERNMENT TO THE EXTENT OF APPROXIMATELY $20,000.

ON THE BASIS OF THAT DETERMINATION, AWARD WAS MADE TO TODD SHIPYARDS AS THE LOWEST RESPONSIBLE BIDDER.

YOUR CONTENTION IS THAT, UNDER THE REGULAR PRACTICE OF THE MSTS, BIDS SHOULD HAVE BEEN EVALUATED ON THE AGGREGATE PRICES QUOTED FOR CATEGORIES A AND B COMBINED. EVEN ON THAT BASIS, YOUR BID WOULD NOT HAVE BEEN THE LOWEST, SINCE THE NORFOLK SHIPBUILDING COMPANY SUBMITTED AN AGGREGATE PRICE OF $132,690, AGAINST YOURS OF $133,313, BUT YOU URGE THAT THE EARLIER DELIVERY OFFERED BY YOU MORE THAN OFFSET THE PRICE DIFFERENTIAL.

IN SUPPORT OF YOUR CONTENTION, YOU ARGUE THAT UNDER THE TERMS OF THE INVITATION, BIDS WERE EXPRESSLY REQUIRED TO BE SUBMITTED ON ALL ITEMS AND CATEGORIES, AND THAT THEREFORE THE EVALUATION WAS ON THE BASIS DIFFERENT FROM THAT ON WHICH BIDS WERE REQUESTED OR COULD PROPERLY HAVE BEEN RECEIVED.

THIS OFFICE IS UNABLE TO PERCEIVE ANY MERIT IN THIS ARGUMENT. THE REASONS FOR REQUIRING BIDS ON ALL ITEMS WHICH MIGHT REASONABLY BE ANTICIPATED TO BE REQUIRED ARE OBVIOUS, SINCE ONCE THE OPERATION OF REFITTING A VESSEL HAS COMMENCED THERE WOULD ALMOST CERTAINLY BE INVOLVED A GREATER EXPENSE, TIME, AND CONFUSION IF IT HAD TO BE CARRIED ON BY DIFFERENT CONTRACTORS. BUT IT DOES NOT FOLLOW THAT THE GOVERNMENT, HAVING REQUIRED BIDS ON ALL ITEMS, HAD TO EVALUATE ON THE BASIS OF AGGREGATE PRICES FOR ALL ITEMS, EVEN WHEN IT HAD DEFINITELY DETERMINED THAT SOME OF THE ITEMS WOULD NOT BE ORDERED.

IT WAS PERFECTLY CLEAR FROM THE VERY NATURE OF ITEM 3 AND THE INSTRUCTIONS FOR BIDDING ON IT, QUITE ASIDE FROM THE ESTABLISHED USAGE OF CATEGORIES A AND B, THAT THE GOVERNMENT HAD RESERVED AN OPTION EITHER TO REQUIRE NEW WINCHES UNDER IT OR TO PERMIT RECONDITIONED WINCHES UNDER ITEM 1. IT IS CONCEDED BY THE ADMINISTRATIVE OFFICE THAT AWARDS ON THE BASIS OF AGGREGATE BIDS ON CATEGORIES A AND B COMBINED ARE THE GENERAL RULE, AND THE EXAMPLE USED IN YOUR MEMORANDUM WELL ILLUSTRATES WHY THIS SHOULD BE SO; THAT IS, WHERE IT CANNOT BE DETERMINED UNTIL WORK IS IN PROGRESS WHETHER CATEGORY B ITEMS ARE NECESSARY OR DESIRABLE. BUT THE SITUATION IN THIS INSTANCE WAS QUITE DIFFERENT; IT WAS ENTIRELY FEASIBLE AND PROPER TO DETERMINE IN ADVANCE OF AWARD WHETHER ITEM 3 WOULD BE USED, AND THE EXCLUSION OF BIDS FOR THAT ITEM FROM THE EVALUATION, AFTER DEFINITE DETERMINATION THAT IT WOULD NOT BE ORDERED, WAS AUTHORIZED BY PARAGRAPH 3 (B) AND THE EXCEPTION SET FORTH IN PARAGRAPH 3 (E) OF THE INSTRUCTIONS TO BIDDERS, INCORPORATED IN THE INVITATION BY REFERENCE, AND WAS COMPELLED BY THE DUTY OF THE ADMINISTRATIVE OFFICE, UNDER SECTION 3 (B) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 23, TO MAKE AWARD "TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE SPECIFICATIONS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.'

IT IS NOT UNDERSTOOD IN WHAT RESPECT THE ACTION TAKEN OR THE CONCLUSION HERE REACHED IS AT VARIANCE WITH ESTABLISHED RULES. BIDS WERE INVITED ON AN ABSOLUTELY EQUAL BASIS, FOR DOING A CERTAIN JOB, WITH AN EXTRA FOR A CERTAIN ADDITION WHICH MIGHT OR MIGHT NOT BE REQUIRED AT THE OPTION OF THE GOVERNMENT. WHEN IT WAS DETERMINED BY THE GOVERNMENT THAT THE OPTIONAL ADDITION WOULD NOT BE REQUIRED, AWARD WAS MADE TO THE LOWEST RESPONSIBLE BIDDER, ON THE BASIS OF PRICES QUOTED FOR THE WORK TO BE DONE. TO HAVE MADE THE AWARD TO SOME OTHER HIGHER BIDDER BECAUSE ITS PRICE WAS LOWER FOR THE JOB NOT TO BE DONE, WOULD HAVE BEEN, IN THE VIEW OF THIS OFFICE, AN ARBITRARY, ARTIFICIAL, AND LEGALLY UNJUSTIFIABLE ACTION.