B-125178, SEP. 26, 1955

B-125178: Sep 26, 1955

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ESQUIRE: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 11. TWO BIDS WERE RECEIVED. WAS CONFRONTED WITH CHOOSING BETWEEN A ONE YEAR FIXED PRICE OFFER AND AN ALTERNATE FIVE YEAR VARYING PRICE OFFER. MORAGNE'S AVERAGE WOULD HAVE BEEN APPROXIMATELY 11 CENTS. THE AVERAGE WAS ONLY 7 CENTS. THE AVERAGE VALUE OF THE BID WAS 7 CENTS ALSO WHEN APPLIED TO ACTUAL MARKET PRICES OF HOGS DURING THE IMMEDIATELY PRECEDING 12 MONTHS. MORAGNE'S EMPLOYMENT OF UNIT PRICES NOT BASED UPON A CONSISTENT RELATIONSHIP TO MARKET PRICES WOULD HAVE GIVEN HIM NEARLY AN 11 CENTS AVERAGE IN COMPETING AGAINST OTHER ALTERNATE BIDS ON A PER MAN MONTH BASIS. IT IS READILY SEEN THAT SUCH AN UNBALANCED QUOTATION WAS. "OUT OF LINE" IN THE SENSE THAT IT WAS UNBALANCED AND PREVENTED A FAIR EVALUATION WITH OTHER QUOTATIONS BASED UPON MARKET PRICES OF HOGS.

B-125178, SEP. 26, 1955

TO CARL E. SANDERS, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 11, 1955, AND OTHER CORRESPONDENCE, PROTESTING, ON BEHALF OF MR. A. L. MORAGNE, AWARD OF THE CONTRACT FOR GARBAGE AT CAMP GORDON, AUGUSTA, GEORGIA, UNDER INVITATION NO. 09-057-S-55-16, DATED MAY 18, 1955, TO MR. H. F. ALLEN, SR.

THE INVITATION OFFERED GARBAGE SUITABLE FOR ANIMAL CONSUMPTION AND SOLICITED UNIT QUOTATIONS PER MAN MONTH FOR A PERIOD OF ONE YEAR AND, AS AN ALTERNATE, UNIT QUOTATIONS APPLICABLE ON THE BASIS OF VARYING MARKET PRICES OF HOGS FOR A PERIOD OF FIVE YEARS, EITHER PER MAN MONTH OR PER TON.

TWO BIDS WERE RECEIVED. MR. H. F. ALLEN, SR., QUOTED A FIXED UNIT PRICE OF 10.3 CENTS PER MAN MONTH FOR THE ONE-YEAR PERIOD. MR. MORAGNE QUOTED UNIT PRICES PER MAN MONTH FOR THE FIVE-YEAR PERIOD, AS FOLLOWS:

TABLE

MARKET PRICE OF HOGS PRICE PER MAN PER MONTH

4-9 CENTS PER POUND 3 CENTS

10-13 DO DO DO 4 DO

14-15 DO DO DO 8 DO

16-19 DO DO DO 6 DO

20-21 DO DO DO 8 DO

22-24 DO DO DO 12 DO

25 DO DO DO 25 DO

26 DO DO DO 26 DO

27-30 DO DO DO 3 DO

THE AWARDING OFFICE, AS A RESULT, WAS CONFRONTED WITH CHOOSING BETWEEN A ONE YEAR FIXED PRICE OFFER AND AN ALTERNATE FIVE YEAR VARYING PRICE OFFER. THE LATTER OBVIOUSLY DID NOT BEAR A CONSISTENT RELATIONSHIP TO THE MARKET PRICE OF HOGS. OVER THE PRICE RANGE STIPULATED FOR USE IN EVALUATING ALTERNATE BIDS, HAD MORE THAN ONE BEEN RECEIVED, FROM 14 THROUGH 26 CENTS, MR. MORAGNE'S AVERAGE WOULD HAVE BEEN APPROXIMATELY 11 CENTS. HOWEVER, OVER THE PRICE RANGE FOR COMPARISON WITH THE BASIC FIXED PRICE BID, FROM 4 THROUGH 30 CENTS, THE AVERAGE WAS ONLY 7 CENTS. THE AVERAGE VALUE OF THE BID WAS 7 CENTS ALSO WHEN APPLIED TO ACTUAL MARKET PRICES OF HOGS DURING THE IMMEDIATELY PRECEDING 12 MONTHS.

WHILE IT APPEARS THAT MR. MORAGNE'S EMPLOYMENT OF UNIT PRICES NOT BASED UPON A CONSISTENT RELATIONSHIP TO MARKET PRICES WOULD HAVE GIVEN HIM NEARLY AN 11 CENTS AVERAGE IN COMPETING AGAINST OTHER ALTERNATE BIDS ON A PER MAN MONTH BASIS, IT IS READILY SEEN THAT SUCH AN UNBALANCED QUOTATION WAS, AS ADMINISTRATIVELY REPORTED,"OUT OF LINE" IN THE SENSE THAT IT WAS UNBALANCED AND PREVENTED A FAIR EVALUATION WITH OTHER QUOTATIONS BASED UPON MARKET PRICES OF HOGS. HOWEVER, THE PROPRIETY OF THE BID IN THIS RESPECT IS NOT PARTICULARLY IMPORTANT HERE DUE TO THE FACT THAT NO OTHER QUOTATIONS WERE RECEIVED REQUIRING COMPARISON ON THAT BASIS. IN ANY EVENT, MR. MORAGNE'S AVERAGE OF 7 CENTS OVER THE ENTIRE RANGE COVERED BY HIS BID LEFT HIS OFFER CONSIDERABLY LOWER THAN MR. ALLEN'S FIXED PRICE BID OF 10.3 CENTS. ALL DETERMINATIONS CONCERNING AWARD WERE MADE AT THIRD ARM HEADQUARTERS, AND THAT OFFICE, CONSIDERING THE NATURE AND DETAILS OF THE MORAGNE BID, THE CURRENT PRICE OF HOGS, AND THE LACK OF ASSURANCE THAT THE MARKET PRICE WOULD GO HIGHER, HAS REPORTED THAT IT FELT AWARD OF A CONTRACT TO MR. MORAGNE "ON THE BASIS OF HIS BID WOULD HAVE BEEN DISADVANTAGEOUS TO THE UNITED STATES OVER A FIVE-YEAR PERIOD.'

AFTER CAREFUL STUDY OF YOUR PROTEST, THEREFORE, WE MUST CONCLUDE THAT MR. MORAGNE'S ALTERNATE BID RECEIVED FAIR CONSIDERATION AND THAT NO LEGAL BASIS EXISTS FOR QUESTIONING THE PROPRIETY, UNDER THE TERMS OF THE INVITATION AND THE BIDS RECEIVED, OF AWARDING THE CONTRACT FOR GARBAGE AT CAMP GORDON TO MR. ALLEN, SR. ..END :