B-119776, AUGUST 19, 1954, 34 COMP. GEN. 79

B-119776: Aug 19, 1954

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STATED THE ABSOLUTE MINIMUM REQUIREMENTS OF THE FOREIGN COUNTY FOR WHICH THE PURCHASE WAS BEING MADE. 1954: FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 20. THE INVITATION IN QUESTION WAS ISSUED UNDER DATE OF JANUARY 25. IN THE INVITATION THERE WAS EXPRESSLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS AND TO ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID UNLESS QUALIFIED BY SPECIFIC LIMITATION OF THE BIDDER. A THIRD BID ON THOSE ITEMS WAS REJECTED AS NOT MEETING SPECIFICATIONS. THE ONLY BID ON ITEMS 6 AND 7 WAS SUBMITTED BY CATERPILLAR TRACTOR COMPANY. WHICH PRICE WAS LOWER THAN THE AGGREGATE OF ITS COMBINED UNIT PRICES BY AN AMOUNT IN EXCESS OF THE DIFFERENCE BETWEEN THE TWO BIDS ON ITEMS 4 AND 5.

B-119776, AUGUST 19, 1954, 34 COMP. GEN. 79

CONTRACTS - SPECIFICATIONS - RESTRICTIVE - PROPRIETARY ITEMS THE SPECIFICATIONS IN AN INVITATION FOR BIDS TO SUPPLY EQUIPMENT REQUISITIONED BY THE FOREIGN OPERATIONS ADMINISTRATION WHICH, CONTRARY TO THE BELIEF OF THE ADMINISTRATIVE OFFICIALS AT THE TIME OF ADVERTISING, CALLED FOR THE PROPRIETARY ITEMS OF A SINGLE MANUFACTURER, BUT STATED THE ABSOLUTE MINIMUM REQUIREMENTS OF THE FOREIGN COUNTY FOR WHICH THE PURCHASE WAS BEING MADE, NEED NOT BE REGARDED AS BEING UNDULY RESTRICTIVE SO AS TO RENDER THE INVITATION ILLEGAL.

ACTING COMPTROLLER GENERAL WEITZEL TO INTERNATIONAL HARVESTER EXPORT COMPANY, AUGUST 19, 1954:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 20, 1954, PROTESTING THE AWARD OF ITEMS 4, 5, 6 AND 7 UNDER FEDERAL SUPPLY SERVICE INVITATION NO. 4H-38713-R-2-15-54.

ACCORDING TO THE RECORDS OF THE FEDERAL SUPPLY SERVICE, THE INVITATION IN QUESTION WAS ISSUED UNDER DATE OF JANUARY 25, 1954, AND CALLED FOR SEALED BIDS TO BE OPENED ON FEBRUARY 15, 1954. IN THE INVITATION THERE WAS EXPRESSLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS AND TO ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID UNLESS QUALIFIED BY SPECIFIC LIMITATION OF THE BIDDER.

ITEM 4 OF THE SCHEDULE CALLED FOR FIX CRAWLER TRACTORS, WITH ONE EXTRA ENGINE AS ITEM 5; ITEM 6, SIX RUBBER-TIRED WHEEL TRACTORS, WITH SIX SEMITRAILER DUMP WAGONS SPECIFIED AS ITEM 7.

ON ITEMS 4 AND 5 (WHICH NECESSARILY HAD TO BE EVALUATED TOGETHER) THE PRICES QUOTED BY YOU, PLUS COSTS AND FREIGHT TO DESTINATION, AGGREGATED $73,556.78. THE UNIT PRICES OF CATERPILLAR TRACTOR COMPANY ON THE SAME ITEMS RESULTED IN A TOTAL COST OF THE GOVERNMENT OF $84,158.95. A THIRD BID ON THOSE ITEMS WAS REJECTED AS NOT MEETING SPECIFICATIONS.

THE ONLY BID ON ITEMS 6 AND 7 WAS SUBMITTED BY CATERPILLAR TRACTOR COMPANY, WHOSE UNIT PRICES PRODUCED AN AGGREGATE COST OF $138,101.16. HOWEVER, THE CATERPILLAR TRACTOR COMPANY INCLUDED IN ITS BID A LUMP-SUM OFFER OF $182,157.32, F.O.B. FACTORY, FOR ITEMS 4, 5, 6 AND 7, IF AWARDED ALL THOSE ITEMS, WHICH PRICE WAS LOWER THAN THE AGGREGATE OF ITS COMBINED UNIT PRICES BY AN AMOUNT IN EXCESS OF THE DIFFERENCE BETWEEN THE TWO BIDS ON ITEMS 4 AND 5. SINCE THE CATERPILLAR TRACTOR COMPANY WAS THE ONLY BIDDER ON ITEMS 6 AND 7, THE ONLY CHOICE AVAILABLE TO THE GOVERNMENT, UNDER THE BIDS RECEIVED, WAS BETWEEN THE LUMP-SUM PRICE OF THAT COMPANY AND A COMBINATION OF YOUR PRICE ON ITEMS 4 AND 5 AND CATERPILLAR'S UNIT PRICES ON ITEMS 6 AND 7. THE LATTER COMBINATION WOULD HAVE PRODUCED AN OVERALL COST TO THE GOVERNMENT AT DESTINATION OF $7,917.13 IN EXCESS OF THE COST UNDER THE LUMP-SUM BID.

IT APPEARS THAT, CONTRARY TO THE BELIEF OF THE ADMINISTRATIVE OFFICIALS AT THE TIME OF ADVERTISING, THE CATERPILLAR TRACTOR COMPANY WAS THE ONLY MANUFACTURER OF TRACTORS AND WAGONS MEETING THE SPECIFICATIONS OF ITEMS 6 AND 7. IT IS YOUR CONTENTION THAT THOSE SPECIFICATIONS WERE RESTRICTIVE AND THAT THE MANUFACTURER ABLE TO MEET THEM WAS THEREBY PLACED IN A POSITION TO OFFER AN "ALL-OR-NOTHING" BID IN SUCH A WAY AS TO ALLOW FIGURES TO BE ADJUSTED TO FAVOR ONE GROUP OF ITEMS AGAINST ANOTHER.

WITH RESPECT TO THE RESTRICTIVE NATURE OF THE SPECIFICATIONS, IT IS INDICATED THAT THIS LIES SOLELY IN THE REQUIREMENT OF FOUR-WHEEL TRACTORS AND EXCLUSION OF TWO-WHEELED TRACTORS. THE REQUISITIONING AGENCY--- THE FOREIGN OPERATIONS ADMINISTRATION--- ADVISED THAT THE COUNTRY FOR WHICH THE PURCHASE WAS MADE INSISTED ON FOUR-WHEEL TRACTORS FOR THE REASON THAT THEY WOULD BE USED FOR PURPOSES OTHER THAN HAULING THE TRAILERS FOR WHICH THEY WERE PRIMARILY INTENDED, AND THAT TWO-WHEEL TRACTORS COULD NOT BE SO USED. UNDER THESE CIRCUMSTANCES, IT DOES NOT APPEAR THAT THE SPECIFICATIONS WERE MORE RESTRICTIVE THAN NECESSARY TO MEET THE GOVERNMENT'S MINIMUM REQUIREMENTS.

WHILE IT IS STATED BY THE ADMINISTRATIVE OFFICE THAT ITEMS 6 AND 7 WOULD NOT HAVE BEEN INCLUDED IN THE INVITATION IF IT HAD BEEN REALIZED THAT THEY WERE IN EFFECT PROPRIETARY ITEMS OF A SINGLE MANUFACTURER, THE INCLUSION OF THOSE ITEMS, UNDER THE TERMS OF THE INVITATION PERMITTING THE GOVERNMENT TO ACCEPT ANY ITEM OR GROUP OF ITEMS, CANNOT BE SAID TO HAVE RENDERED THE INVITATION ILLEGAL. IT IS ALLEGED BY YOU THAT THE UNIT PRICES QUOTED ON ITEMS 6 AND 7 WERE IN EXCESS OF EXISTING RETAIL LIST PRICES, BUT THE ADMINISTRATIVE OFFICE REPORTS THAT IT FOUND UPON INVESTIGATION THAT THE PUBLISHED LIST PRICES DID NOT INCLUDE CERTAIN EXTRAS REQUIRED BY THE SPECIFICATIONS, OR THE COST OF PREPARATION FOR EXPORT, AND THAT THE UNIT PRICES WERE IN FACT, AFTER ALLOWANCE FOR THOSE ITEMS, SLIGHTLY UNDER LIST.

THERE IS NO INFORMATION OF RECORD AS TO THE LIST PRICES OF THE ARTICLES OFFERED BY CATERPILLAR TRACTOR COMPANY UNDER ITEMS 4 AND 5 BUT IT SEEMS REASONABLE TO ASSUME THAT THEY ALSO WERE OFFERED AT APPROXIMATELY THE LIST PRICES. THAT COMPANY'S PROPOSAL THEREFORE APPEARS TO HAVE BEEN THAT THE GOVERNMENT COULD HAVE ANY INDIVIDUAL ITEMS IT DESIRED AT REGULAR PRICES OR ALL THE ITEMS AS A LOT AT SOME EIGHT PERCENT BELOW LIST. THIS IS NOT AN "ALL OR NOTHING" BID, BUT A NOT UNCOMMON METHOD OF QUOTING, WHICH HAS NEVER BEEN CONSIDERED AS IMPROPER IN ITSELF. NO DOUBT THE FACT THAT THAT COMPANY WAS THE ONLY SUPPLIER IN A POSITION TO BID ON ONE OF THE ITEMS PUT IT IN A MORE ADVANTAGEOUS POSITION THAN OTHER PROSPECTIVE BIDDERS ON THE OTHER ITEMS, BUT THE GOVERNMENT IS NOT UNDER ANY OBLIGATION TO INQUIRE INTO ALL THE UNDERLYING FACTORS WHICH MAY PERMIT OR INDUCE ONE BIDDER TO OFFER LOWER PRICES THAN ANOTHER.

IT MAY BE CONCEDED THAT SEPARATE INVITATIONS FOR THE DIFFERENT ITEMS REQUIRED, OR INVITATIONS FOR SOME AND NEGOTIATION FOR OTHERS, MIGHT HAVE BEEN MORE EFFECTIVE IN PRODUCING THE MAXIMUM OF COMPETITION ON THE MOST EVEN TERMS. AS STATED, HOWEVER, THE FAILURE TO PROCEED IN THAT MANNER WAS THE RESULT OF A MISUNDERSTANDING OR MISTAKE OF FACT BY THE PURCHASING AGENCY AND WAS NOT CONTRARY TO ANY SPECIFIC REQUIREMENT BY LAW. HAVING PROCEEDED AS IT DID TO THE POINT OF BID OPENING, THE ADMINISTRATIVE OFFICE WAS FACED WITH THE PROBLEM OF WHETHER TO REJECT ALL BIDS AND START OVER, OR TO AWARD ITEMS 4 AND 5 TO YOU AND NEGOTIATE FOR ITEMS 6 AND 7, OR TO AWARD THE ENTIRE GROUP OF ITEMS TO THE CATERPILLAR TRACTOR COMPANY. CANNOT NOW BE SAID THAT THE CHOICE IT MADE WAS NOT PROPER OR THAT ANY OTHER COURSE OF ACTION WOULD HAVE BEEN MORE IN THE INTEREST OF THE GOVERNMENT.

UNDER THE CIRCUMSTANCES, I FIND NO PROPER BASIS FOR ANY ACTION BY THIS OFFICE.