B-129371, NOV. 7, 1956

B-129371, NOV. 7, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 27, 1956, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION RELATIVE TO THE PROTEST OF LUTHER TRANSFER AND STORAGE, INC., EL PASO, TEXAS, AGAINST THE AWARD OF CONTRACT NO. NRDA 41-014-AIV-1539 TO EL PASO MOVING AND STORAGE COMPANY UNDER INVITATION FOR BIDS NO. NRAIV-41-014-56-185.

THE INVITATION WAS ISSUED MAY 18, 1956, BY THE PURCHASING AND CONTRACT SECTION, FORT BLISS, TEXAS, AND, AS MODIFIED BY AMENDMENT NO. 2, DATED MAY 23, 1956, INVITED BIDS, TO BE OPENED JUNE 18, 1956, FOR FURNISHING FOUR ITEMS, DESIGNATED AS (1) PRE-STORAGE SERVICES, (2) STORAGE SERVICES, (3) POST STORAGE SERVICES, AND (4) WARDROBE SERVICES, IN CONNECTION WITH THE STORAGE OF HOUSEHOLD GOODS OF PERSONNEL OF THE DEPARTMENT OF THE ARMY WITHIN A FIVE-MILE RADIUS OF THE CORPORATE LIMITS OF EL PASO, TEXAS. THE FIRST ITEM, WHICH WAS BROKEN DOWN INTO SUBITEMS "A" AND ,B," COVERED PICKUP OF UNPACKED AND PREPACKED GOODS AT RESIDENCE AND DRAYAGE TO WAREHOUSE FACILITY. THE SECOND ITEM COVERED (A) HANDLING AS REQUIRED TO PLACE GOODS IN STORAGE FROM WAREHOUSE PLATFORM, PRESERVATION, WRAPPING, PACKING, CRATING AND MARKING FOR STORAGE IN ADDITION TO THAT ALREADY ACCOMPLISHED UNDER ITEM 1; (B) COST OF STORAGE, INCLUDING CHARGES FOR THE USE OF SPACE AND COSTS OF CARE AND PRESERVATION OF THE GOODS WHILE IN STORAGE; AND (C) LABOR AND EQUIPMENT REQUIRED TO REMOVE HOUSEHOLD GOODS FROM STORAGE AND PLACE ONTO WAREHOUSE PLATFORM, ETC. THE THIRD ITEM COVERED DRAYAGE FROM STORAGE FACILITY TO LOCATIONS WITHIN THE DESIGNATED AREA, UNLOADING, UNPACKING, ETC.

SPACES WERE PROVIDED OPPOSITE THE INDIVIDUAL ITEMS AND SUBDIVISIONS THEREOF FOR THE INSERTION OF THE UNIT PRICES (PER CWT IN THE CASE OF THE FIRST THREE ITEMS AND PER "EA" IN THE CASE OF THE FOURTH) FOR WHICH THE BIDDER PROPOSED TO RENDER THE PARTICULAR SERVICE, AS WELL AS SPACES FOR THE TOTAL AMOUNTS, BASED UPON THE ESTIMATED QUANTITIES SET FORTH IN THE INVITATION. THE WORDS "PER STORAGE MONTH" WERE SET FORTH IN CONNECTION WITH THE ESTIMATED QUANTITY FOR ITEM 2 (B), STORAGE SERVICES, AS INDICATING THE BASIS UPON WHICH THE UNIT CHARGE WAS TO BE STATED FOR THAT ITEM. THE SPECIAL PROVISIONS ATTACHED TO THE INVITATION PROVIDED THAT THE CONTRACT TO BE AWARDED WOULD TAKE EFFECT AS OF THE DATE OF EXECUTION AND CONTINUE UNTIL JUNE 30, 1957, AND MIGHT BE ANNUALLY RENEWED THEREAFTER AT THE OPTION OF THE GOVERNMENT, FOR A PERIOD EXTENDING TO JUNE 30, 1961, WITH CERTAIN EXCEPTIONS NOT PERTINENT HERE; AND THAT UPON TERMINATION OF THE CONTRACT, EITHER BY REASON OF EXPIRATION OF THE CONTRACT PERIOD, OR UNDER THE PROVISIONS FOR CANCELLATION UPON WRITTEN NOTICE BY THE CONTRACTOR, THE TERMS AND CONDITIONS OF THE CONTRACT, INCLUDING THE SCHEDULE OF SERVICES AND CHARGES, WERE TO REMAIN IN FORCE AND EFFECT FOR A PERIOD OF FOUR YEARS THEREAFTER.

THE RECORD SHOWS THAT SEVEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, AND THAT THE BIDS SUBMITTED BY LUTHER TRANSFER AND STORAGE, INC., AND EL PASO MOVING AND STORAGE COMPANY WERE AS FOLLOWS:

TABLE

LUTHER TRANSFER EL PASO MOVING

ITEM 1A $1.10 PER CWT $1.80 PER CWT

ITEM 1B .25 DO. DO. .50 DO. DO.

ITEM 2A .20 DO. DO. .35 DO. DO.

* ITEM 2B .50 DO. DO. .28 DO. DO.

ITEM 2C .10 DO. DO. .25 DO. DO.

ITEM 3 (NO BID SUB.) (NO BID SUB.)

ITEM 4 .50 EACH 2.50 EACH

*MONTHLY RATE FOR STORAGE

THE CONTRACT WAS AWARDED TO EL PASO MOVING AND STORAGE COMPANY FOR ALL OF THE ITEMS FOR WHICH IT HAD SUBMITTED A BID ON THE BASIS THAT ITS QUOTED CHARGES, WHEN CONSIDERED COLLECTIVELY, REPRESENTED THE LOWEST COST TO THE GOVERNMENT OF PROCURING THE SERVICES, IT HAVING BEEN CONCLUDED THAT IT WOULD BE MORE ECONOMICAL FOR THE GOVERNMENT IN ADMINISTERING THE CONTRACT FOR THE SEVERAL ITEMS OF SERVICE TO BE PROCURED FROM THE SAME CONTRACTOR. IN EVALUATING BIDS, THE PROCURING AGENCY ESTIMATED, ON THE BASIS OF EXPERIENCE FIGURES SUPPLIED BY THE FORT WORTH QUARTERMASTER DEPOT, THAT THE AVERAGE LENGTH OF STORAGE FOR THE HOUSEHOLD GOODS IN QUESTION WOULD BE AT LEAST 26 MONTHS, AND THAT THE AVERAGE SHIPMENT WOULD WEIGHT 3,157 POUNDS NET. ACCORDINGLY, THESE FACTORS WERE USED IN EVALUATING THE BIDS, WITH PARTICULAR REFERENCE TO THOSE HERE IN QUESTION, IN THE FOLLOWING MANNER:

TABLE

LUTHER TRANSFER

3157 LBS AT $1.10 CWT ITEM 1A EQUALS$ 34.73

3157 LBS AT .20 CWT ITEM 2AEQUALS 6.31

3157 LBS AT .50 CWT ITEM 2B TIMES 26 MO. EQUALS 410.41

3157 LBS AT .10 CWT ITEM 2C EQUALS 3.16

$454.61

WARDROBES AVERAGE 2 PER MOVEMENT OF

3157 LBS AT 50 CENTS EACH EQUALS 1.00

$455.61

EL PASO MOVING --------------

3157 LBS AT $1.80 CWT ITEM 1A EQUALS $ 56.83

3157 LBS AT .35 CWT ITEM 2A EQUALS 11.05

3157 LBS AT .28 CWT ITEM 2B TIMES 26 MO. EQUALS 229.83

3157 LBS AT .25 CWT ITEM 2C EQUALS 7.89

$305.60

WARDROBES AVERAGE 2 PER MOVEMENT OF

3157 LBS AT $2.50 EACH EQUALS 5.00

$310.60

WHILE THE CHARGES QUOTED FOR FURNISHING ITEM 1 (B) WERE NOT CONSIDERED IN THE ABOVE EVALUATIONS, APPARENTLY BECAUSE THE PARTICULAR SERVICE COULD NOT BE RELATED TO THE 3,157-POUND WEIGHT FACTOR, THE FAILURE TO CONSIDER SUCH CHARGES COULD NOT MATERIALLY CHANGE THE DISPARITY BETWEEN THE TWO BIDS.

LUTHER TRANSFER AND STORAGE, INC., IN PROTESTING THE AWARD OF THE CONTRACT TO EL PASO MOVING AND STORAGE COMPANY, CONTENDS THAT THE PROCURING AGENCY WENT OUTSIDE THE TERMS OF THE INVITATION IN EVALUATING BIDS ON THE BASIS THAT THE HOUSEHOLD GOODS REMAIN IN STORAGE FOR A PERIOD OF TIME AVERAGING 26 MONTHS, SINCE THE INVITATION CONTAINED NO INFORMATION REGARDING THE LENGTH OF TIME THE GOODS WOULD REMAIN IN STORAGE, AND IT DID NOT INDICATE THAT BID PRICES WITH RESPECT TO ITEM 2 (B) WOULD BE EVALUATED ON OTHER THAN THE STRAIGHT MONTHLY STORAGE RATE WHICH BIDDERS WERE INVITED TO QUOTE. MOREOVER, THE CONTRACTOR STATES THAT, PRIOR TO THE DATE SET FOR OPENING BIDS, THEY INQUIRED OF MR. R. L. DWYER, CIVILIAN CONTRACTING AND PURCHASING OFFICER, PURCHASING AND CONTRACT OFFICE, FORT BLISS (WHO WAS NOT, HOWEVER, THE GOVERNMENT OFFICIAL WHO MADE THE FINAL EVALUATION OF BIDS AND AWARDED THE CONTRACT), AS TO WHETHER OR NOT THE HOUSEHOLD GOODS WOULD BE IN STORAGE FOR ANY SPECIFIED LENGTH OF TIME, SINCE IT WOULD AFFECT THEIR BIDDING, BUT THE CONTRACTOR WAS INFORMED THAT THE ARMY HAD NO WAY OF KNOWING HOW LONG THE GOODS WOULD BE IN STORAGE, AND, HENCE, THE ONLY WAY BIDS ON STORAGE COULD BE REQUESTED WAS ON A 30-DAY STORAGE MONTH BASIS. ALSO, THE CONTRACTOR STATES THAT WHEN MR. DWYER WAS ASKED WHETHER THE CONTRACT WOULD BE LET TO THE LOW AGGREGATE BIDDER, HE REPLIED THAT THAT WAS EXACTLY THE WAY THE CONTRACT WOULD BE LET, AND THE CONTRACT WAS TO BE CONSIDERED ONLY ON A 30-DAY PER STORAGE MONTH BASIS. FURTHERMORE, THE CONTRACTOR STATES, THAT IMMEDIATELY AFTER THE OPENING OF BIDS, MR. DWYER, IN RESPONSE TO A SIMILAR QUESTION ASKED BY A REPRESENTATIVE OF THE EL PASO MOVING AND STORAGE COMPANY, STATED IN THE PRESENCE OF ALL THE BIDDERS WHO WERE ATTENDING THE LETTING THAT THE CONTRACT WOULD BE LET ON A 30-DAY "PER STORAGE MONTH BASIS," SINCE THE ARMY HAD NO WAY OF KNOWING HOW LONG THE GOODS WOULD BE IN STORAGE.

IN VIEW OF THE INFORMATION RELATIVE TO THE LENGTH OF TIME THE CONTRACT WAS TO RUN, AS SET FORTH ABOVE, THE PROTESTING BIDDER, AS WELL AS THE OTHER BIDDERS, MAY BE SAID TO HAVE HAD NOTICE THAT THE CONTRACT BEING LET, IN SO FAR AS CONCERNED ITEM 2 (B), WAS ONE FOR RECOGNIZING THAT THE LENGTH OF TIME THE HOUSEHOLD GOODS WERE TO REMAIN IN STORAGE COULD HAVE AN IMPORTANT BEARING UPON THE EVALUATION OF THEIR BID, REQUESTED INFORMATION ON THIS ASPECT OF THE PROCUREMENT. IN AN AFFIDAVIT EXECUTED UNDER DATE OF JULY 17, 1956, MR. DWYER MAKES THE FOLLOWING STATEMENT WITH REGARD TO INFORMATION GIVEN BIDDERS ON THE POINT INVOLVED PRIOR TO, AND AFTER, THE OPENING OF BIDS, AND WITH REGARD TO THE BID SUBMITTED BY LUTHER TRANSFER AND STORAGE, INC.:

"* * * IT IS NOT KNOWN WHAT FIRMS CALLED AND WHAT QUESTIONS WERE ASKED BY ANY PARTICULAR FIRM. WITH REGARD TO DURATION OF STORAGE AT LEAST ONE FIRM WAS ADVISED THAT I KNEW NO MORE THAN WHAT WAS STATED IN THE INVITATION. TOLD THAT FIRM THAT THE SPECIFICATIONS PROVIDED FOR POSSIBLE STORAGE FOR A FRACTION OF A MONTH AND ALSO FOR A PERIOD UP TO 5 YEARS. IN ANSWER TO A QUESTION AS TO THE METHOD FOR EVALUATING BIDS WITH REGARD TO TERM OF STORAGE, THE FIRM WAS ADVISED THAT NO ONE COULD PREDICT THE NUMBER OF LOTS OF GOODS OR THE WEIGHT OR DURATION OF STORAGE FOR ANY LOT. IN THE ABSENCE OF ANY DEFINITE INFORMATION, THE UNIT USED IN THE INVITATION "PER STORAGE MONTH" (ITEM 2B) WOULD PROBABLY BE USED IN EVALUATING THE BIDS. MY EXACT WORDS ARE NOT KNOWN AND IT WAS NOT FELT THAT THIS QUESTION WAS VITAL, IF EACH ITEM WERE BID AT A REASONABLE PRICE.

"SEVEN BIDS WERE OPENED, READ AND RECORDED AT THE APPOINTED TIME. AFTER BIDS WERE OPENED ONE BIDDER ASKED IF AWARD WOULD BE MADE BASED UPON A ONE MONTH PERIOD OF STORAGE. I TOLD THE QUESTIONER THAT IT WOULD, AND THAT AT LEAST ONE BIDDER HAD INQUIRED ABOUT THIS PRIOR TO THE BID OPENING. I ALSO TOLD THE ENTIRE GROUP OF BIDDERS THAT IT WOULD WOULD BE EVALUATED PRIOR TO MAKING AN AWARD. AT THIS TIME IN THE ADVISED THAT HE HAD JUST RETURNED FROM THE FORT WORTH DEPOT AND THAT THEIR EXPERIENCE HAD BEEN THAT THE AVERAGE DURATION OF STORAGE WAS FOR TWENTY-SIX MONTHS AND EACH LOT AVERAGED APPROXIMATELY 3500 LBS.

"AFTER THE BIDDERS WERE DISMISSED, A QUICK EVALUATION OF THE BIDS SHOWED THAT THE LUTHER TRANSFER AND STORAGE COMPANY BID APPROXIMATELY HALF THE COST ON ALL ITEMS EXCEPT THE RATE PER STORAGE MONTH. THOUGH THE ETHICS OF THIS METHOD OF BIDDING WAS NOT QUESTIONED, IT IMMEDIATELY BECAME APPARENT TO ME THAT IT WOULD NOT BE IN THE PUBLIC INTEREST TO AWARD A CONTRACT ON THE BASIS OF ONE MONTH'S STORAGE, WHERE FIGURES WERE APPARENTLY MANIPULATED TO PRODUCE AN EXAGGERATED ULT.'

THUS, MR. DWYER'S STATEMENT TO BIDDERS REGARDING THE ELIMINATION OF THE LENGTH OF THE STORAGE PERIOD AS A FACTOR IN EVALUATING BIDS, PRIOR TO THE OPENING OF BIDS, AT LEAST, APPEARS TO HAVE BEEN AN EXPRESSION OF HIS OPINION ON THE QUESTION, RATHER THAN A POSITIVE STATEMENT OF FACT. THE STATEMENT MADE AFTER BIDS WERE OPENED COULD HAVE NO LEGAL BEARING ON THE MATTER. IN ANY EVENT, THE RECORD INDICATES THAT MR. DWYER WAS WITHOUT ANY EXPRESS AUTHORITY TO GIVE BIDDERS ANY POSITIVE ASSURANCE THAT THE LENGTH OF THE STORAGE PERIOD WOULD NOT BE TAKEN INTO CONSIDERATION IN THE EVALUATION OF BIDS, AND, IN VIEW OF ITS OBVIOUS IMPORTANCE AS A FACTOR WITH RESPECT THERETO, THE AUTHORITY TO DO SO MAY NOT BE IMPLIED. MOREOVER, THE EQUITIES IN THE SITUATION APPEAR TO BE HEAVILY WEIGHTED IN FAVOR OF THE GOVERNMENT IN VIEW OF THE MANNER IN WHICH LUTHER TRANSFER AND STORAGE'S BID WAS SUBMITTED, WHICH, AS INDICATED ABOVE, WAS PRICED WITH RESPECT TO THE SEVERAL ITEMS IN SUCH A WAY TO TAKE FULL ADVANTAGE OF THE ASSUMED FACT THAT NO CONSIDERATION WOULD BE GIVEN TO THE LENGTH OF THE STORAGE PERIOD IN THE EVALUATION OF BIDS. RELATIVE THERETO, IT APPEARS FROM A MEMORANDUM DATED JULY 18, 1956, PREPARED BY THE STAFF JUDGE ADVOCATE AT FORT BLISS FOR THE PURCHASING AND CONTRACTING OFFICER WHO MADE THE AWARD, THAT THE GRANTING OF AN AWARD TO THE COMPANY HAVING THE LOWEST FIXED CHARGES OTHER THAN MONTHLY STORAGE RATES WOULD HAVE COST THE GOVERNMENT APPROXIMATELY $45,000 IN EXCESS OF THE AMOUNT WHICH WOULD BE DUE THE LOWEST OVERALL BIDDER, OR EL PASO.

IT IS UNFORTUNATE THAT THE PROCURING AGENCY WAS NOT IN A POSITION TO SUPPLY BIDDERS WITH EXPERIENCE FIGURES BEARING UPON THE LENGTH OF TIME THE HOUSEHOLD GOODS WOULD REMAIN IN STORAGE PRIOR TO THE SUBMISSION OF THEIR BIDS, SINCE IT WOULD MORE ACCURATELY HAVE REFLECTED THE NEEDS OF THE GOVERNMENT WITH RESPECT TO THE PROCUREMENT. NEVERTHELESS, THE BIDDERS WERE FREE TO MAKE THEIR OWN ESTIMATES, AND IT APPEARS FROM THE INFORMATION CONTAINED IN AN AFFIDAVIT EXECUTED BY COLONEL KENAN M. RAND, T.C., FORT BLISS, UNDER DATE OF JULY 17, 1956, THAT LUTHER TRANSFER AND STORAGE, INC., WAS IN A COMPARATIVELY FAVORABLE POSITION TO DO THIS. IN THE AFFIDAVIT, COLONEL RAND TATES: "LUTHER TRANSFER AND STORAGE, INC. HAVE HAD THE PACKING AND CRATING CONTRACT FOR HOUSEHOLD GOODS FOR THE FISCAL YEAR 1955 AND 1956 AT THE AAA AND QM CENTER, FORT BLISS, TEXAS. ALL HOUSEHOLD GOODS RECEIVED FOR NONTEMPORARY STORAGE WERE PACKED AND CRATED AND STENCILLED FOR MOVEMENT TO THE FORT WORTH QM DEPOT BY THIS FIRM, DURING THIS PERIOD. THIS FIRM WAS ALSO THE SUCCESSFUL BIDDER ON THE PACKING AND CRATING CONTRACT FOR THE FISCAL YEAR 1957. I PERSONALLY DISCUSSED WITH MR. GEORGE T. IRBY AND MR. H. T. LUTHER, OF LUTHER TRANSFER AND STORAGE, INC., ALL OF THE RAMIFICATIONS OF THE NEW STORAGE PROGRAM. REMEMBER PARTICULARLY REMAINING AT LEAST ONE HOUR AFTER NORMAL DUTY HOURS, IN THE PRESENCE OF MAJOR HEWITT, TALKING WITH MR. GEORGE IRBY, SPECIFICALLY DISCUSSING THE PROBABLE LENGTH OF TIME IN STORAGE AND ALSO THE VOLUME WE COULD EXPECT TO BE GENERATED AT FORT BLISS. IN TALKING WITH MR. IRBY ON THIS OCCASION, I SUGGESTED THAT HE WAS PROBABLY IN A BETTER POSITION TO PINPOINT THE VOLUME THAN MY OFFICE WOULD BE, INASMUCH AS HE HAS READILY AVAILABLE RECORDS THAT WOULD INDICATE THE EXACT WEIGHT OF ALL SHIPMENTS HE HAD PACKED AND MOVED TO THE FORT WORTH DEPOT. MR. IRBY AGREED AT THIS TIME THAT HE DID HAVE SUCH INFORMATION, AND THAT HE BELIEVED IT WOULD BE IN THE NEIGHBORHOOD OF 2 MILLION POUNDS PER YEAR. FURTHER DISCUSSED THE ANTICIPATED LENGTH OF TIME IN STORAGE AND THE CURRENT LENGTH OF TOURS OVERSEAS, INASMUCH AS THIS FACTOR DETERMINES THE AVERAGE LENGTH OF TIME THAT HOUSEHOLD GOODS WOULD BE HELD IN NONTEMPORARY STORAGE. ALL OF THE FINE POINTS AND VARIOUS REASONS WHY HOUSEHOLD GOODS WOULD BE MOVED OUT OF STORAGE PRIOR TO THE NORMAL LENGTH OF OVERSEAS TOUR OF DUTY, AND ALSO THE REASONS WHY HOUSEHOLD GOODS COULD REMAIN IN STORAGE BEYOND THE NORMAL TOUR OF OVERSEAS DUTY, WERE DISCUSSED. IT WAS MY OPINION AT THAT TIME, AND THIS WAS SHARED BY MR. IRBY, THAT PROBABLY THE AVERAGE LENGTH OF TIME THAT HOUSEHOLD GOODS WOULD BE IN STORAGE ON A NONTEMPORARY BASIS, UNDER THE NEW STORAGE PLAN, WOULD BE APPROXIMATELY THREE YEARS.

"IN APRIL OF 1956, MR. H. T. LUTHER AND MR. GEORGE IRBY CAME TO MY OFFICE IN CONNECTION WITH DAMAGE TO GENERAL BENDER'S HOUSEHOLD GOODS THAT HAD BEEN CAUSED BY IMPROPER PACKING AND CRATING ACCOMPLISHED BY THEIR FIRM. AGAIN THIS WAS AT THE CLOSE OF THE BUSINESS DAY; AND MR. IRBY AND MR. LUTHER, IN ADDITION TO DISCUSSING THE DAMAGE TO GENERAL BENDER'S PROPERTY, DISCUSSED IN DETAIL WITH ME, IN THE PRESENCE OF MAJOR HEWITT, FOR OVER HALF AN HOUR, THE NEW PROGRAM FOR NONTEMPORARY STORAGE OF HOUSEHOLD GOODS IN COMMERCIAL FACILITIES. AGAIN AT THAT TIME, IT WAS REITERATED AND CONCURRED IN BY BOTH MR. LUTHER AND MR. IRBY THAT THE VOLUME OF THEIR PACKING AND CRATING CONTRACT WOULD BE MATERIALLY REDUCED WHEN THE NEW STORAGE PROGRAM WAS INITIATED. THEY BOTH AGREED THAT A THREE-YEAR PERIOD OF STORAGE WAS A SOUND BASIS TO BE USED IN ESTIMATING THE AVERAGE LENGTH OF TIME IN STORAGE UNDER THIS PROGRAM. INASMUCH AS LUTHER TRANSFER AND STORAGE, INC. WAS CONSTRUCTING A NEW WAREHOUSE, THEY WERE MOST INTERESTED IN WHEN THE BIDS WOULD BE OPENED, AND WHETHER OR NOT THEIR WAREHOUSE WOULD BE COMPLETED IN TIME TO BID ON THE STORAGE.'

UNDER ALL OF THE CIRCUMSTANCES, AS SET FORTH ABOVE, YOU ARE ADVISED THAT WE FIND NO BASIS FOR QUESTIONING THE PROPRIETY OF THE AWARD OF THE CONTRACT TO EL PASO MOVING AND STORAGE COMPANY, WHICH APPEARS TO HAVE BEEN IN THE BEST INTERESTS OF THE GOVERNMENT.