B-129565, MAR. 5, 1957

B-129565: Mar 5, 1957

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ESQUIRE: REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF MECHANICAL PRODUCTS. THE VARIOUS ADMINISTRATIVE REPORTS ON THE PROTEST WERE MADE AVAILABLE FOR YOUR EXAMINATION AND COMMENT AND IN YOUR LETTER OF FEBRUARY 13. WRITTEN AFTER THE REPORTS WERE EXAMINED BY YOU. IT WAS STATED THAT ALTHOUGH YOU DID NOT BELIEVE IT NECESSARY TO FILE ADDITIONAL EVIDENCE IN SUPPORT OF THE PROTEST. IT WAS YOUR VIEW THAT THE METHOD OF EVALUATING THE BIDS SET FORTH IN THE INVITATION WAS UNREALISTIC. BIDDERS WERE REQUESTED TO QUOTE UNIT PRICES ON EACH TYPE OF CIRCUIT BREAKER AND TO STATE QUANTITY DISCOUNTS ON THE FOLLOWING QUANTITIES AND DELIVERY SCHEDULES: TABLE QUANTITY 100-499 DELIVERY WITHIN 60 DAYS DO. 500-999 DO.

B-129565, MAR. 5, 1957

TO MERRILL ARMOUR, ESQUIRE:

REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF MECHANICAL PRODUCTS, INC., AGAINST THE PROPOSED AWARD OF A CONTRACT TO ANOTHER BIDDER FOR CIRCUIT BREAKERS AS DESCRIBED IN INVITATION NO. 33-604-57-48 ISSUED AUGUST 29, 1956, AT THE DAYTON AIR FORCE DEPOT, GENTILE AIR FORCE STATION, DAYTON, OHIO.

THE VARIOUS ADMINISTRATIVE REPORTS ON THE PROTEST WERE MADE AVAILABLE FOR YOUR EXAMINATION AND COMMENT AND IN YOUR LETTER OF FEBRUARY 13, 1957, WRITTEN AFTER THE REPORTS WERE EXAMINED BY YOU, IT WAS STATED THAT ALTHOUGH YOU DID NOT BELIEVE IT NECESSARY TO FILE ADDITIONAL EVIDENCE IN SUPPORT OF THE PROTEST, IT WAS YOUR VIEW THAT THE METHOD OF EVALUATING THE BIDS SET FORTH IN THE INVITATION WAS UNREALISTIC. YOU SUGGEST THAT ALL BIDS RECEIVED BE REJECTED AND THAT THE NEEDS TO BE MET BE READVERTISED.

THE INVITATION REQUESTED BIDS FOR FURNISHING ALL OF THE REQUIREMENTS OF THE ISSUING ESTABLISHMENT FOR SEVEN TYPES OF CIRCUIT BREAKERS, FOR THE PERIOD OF ONE YEAR, ON CALLS TO BE ISSUED FROM TIME TO TIME BY THE CONTRACTING OFFICER AS NEEDS DEVELOPED. THE GOVERNMENT RESERVED THE RIGHT TO ISSUE CALLS FOR QUANTITIES OF 100 OR MORE, AND BIDDERS WERE REQUESTED TO QUOTE UNIT PRICES ON EACH TYPE OF CIRCUIT BREAKER AND TO STATE QUANTITY DISCOUNTS ON THE FOLLOWING QUANTITIES AND DELIVERY SCHEDULES:

TABLE

QUANTITY 100-499 DELIVERY WITHIN 60 DAYS

DO. 500-999 DO. DO. 90 DO.

DO. 1,000-4,999 DO. DO. 120 DO.

DO. 5,000-9,999 DO. DO. 180 DO.

DO. 10,000 OR MORE DO. DO. 240 DO.

PARAGRAPH 6 OF THE BID SCHEDULE PROVIDES THAT BIDS WILL BE EVALUATED ON AN ITEM BASIS BY ADDING THE DISCOUNTS UNDER PARAGRAPH 5 AND DIVIDING THE TOTAL SUM BY 5 FOR AN AVERAGE AND APPLYING THIS AVERAGE DISCOUNT TO THE LIST PRICE OF EACH OF THE SEVEN TYPES, AND FURTHER APPLYING THE PROMPT PAYMENT DISCOUNT, IF ANY, TO THE RESULTING UNIT PRICE. IT IS ASLO PROVIDED THAT AWARDS WILL BE MADE ON AN ITEM BASIS.

THE WOOD ELECTRIC COMPANY QUOTED A UNIT PRICE OF $3.14 OPPOSITE EACH OF THE SEVEN ITEMS BUT OFFERED NO DISCOUNT. SPENCER THERMOSTAT DIVISION OF METALS AND CONTROLS CORPORATION QUOTED A UNIT PRICE OF $3.14 FOR EACH OF THE FIRST 3 ITEMS, A UNIT PRICE OF $3.16 FOR ITEM 4, A UNIT PRICE OF $3.26 FOR EACH OF ITEMS 5 AND 6, AND A UNIT PRICE OF $3.46 FOR ITEM NO. 7, WITH NO QUANTITY DISCOUNT. MECHANICAL PRODUCTS, INC., DID NOT LIST A UNIT PRICE FOR EACH OF THE SEVEN ITEMS AS REQUESTED BUT QUOTED QUANTITY PRICES OF $3.27, $3.23, $3.19, $3.16 AND $3.16 FOR THE FIVE QUANTITY CLASSIFICATIONS, WITHOUT REGARD TO TYPE, LESS A DISCOUNT FOR PROMPT PAYMENT. IN EVALUATING THIS BID THE DEPARTMENT OF THE AIR FORCE ADDED THE FIVE UNIT PRICE QUOTATIONS TO OBTAIN A TOTAL OF $16.01 AND DIVIDED THIS TOTAL BY 5 TO OBTAIN AN AVERAGE UNIT PRICE OF $3.202. FROM THIS WAS DEDUCTED THE PROMPT PAYMENT DISCOUNT ALLOWED BY THE BIDDER FOR PAYMENT WITHIN 10 DAYS, LEAVING A NET UNIT PRICE OF $3.1780 FOR COMPARISON WITH THE OTHER BIDS. SO, WHILE YOUR BID WAS NOT STATED IN THE MANNER PROVIDED FOR BY THE INVITATION, THE EVALUATED FIGURE APPEARS TO BE IN CONFORMITY WITH WHAT WAS INTENDED AND FULLY COMPARABLE WITH THE OTHER BIDS.

THE DEPARTMENT OF THE AIR FORCE REPORTS THAT CONSIDERATION OF TRANSPORTATION TO DESTINATION DOES NOT CHANGE THE RELATIVE STANDING OF THE BIDS, AND THAT ON THE BASIS OF THE EVALUATION PRESCRIBED IN THE INVITATION, THE CONTRACT SHOULD BE AWARDED TO THE WOOD ELECTRIC COMPANY, THE LOWEST BIDDER ON ALL ITEMS EXCEPT THE FIRST THREE, AS TO WHICH THE BID IS TIED WITH THE BID OF SPENCER THERMOSTAT. IT IS YOUR CONTENTION THAT THE PRESCRIBED METHOD OF EVALUATION IS ARBITRARY AND UNREALISTIC, IN THAT IT FAILS TO GIVE PROPER RECOGNITION TO THE FACT THAT, ON THE BASIS OF THE PRIOR YEAR'S EXPERIENCE, BY FAR THE GREATER PART OF THE ITEMS ORDERED WOULD PROBABLY BE IN THE LARGER QUANTITIES, AS TO WHICH YOUR PRICES ARE LOWEST.

WHEN CONSIDERING BIDS OF THIS CHARACTER IT IS PROPER, WHERE POSSIBLE, TO TAKE INTO CONSIDERATION THE ANTICIPATED NEEDS OF THE PARTICULAR GOVERNMENT ESTABLISHMENT, AND ORDINARILY IN THE ABSENCE OF A BETTER BASIS THE BEST ESTIMATE WOULD SEEM TO BE THAT BASED UPON THE REQUIREMENTS FOR PAST PERIODS. THE DEPARTMENT OF THE AIR FORCE REPORTS, HOWEVER, THAT AT THE TIME BIDS WERE INVITED IT DID NOT HAVE ACCURATE ESTIMATES OF THE QUANTITIES OF THE DIFFERENT TYPES OF THE CIRCUIT BREAKERS TO BE REQUIRED UNDER THE CONTRACT TO BE AWARDED IN THIS CASE AND WAS UNABLE TO ANTICIPATE THAT THE REQUIREMENTS WOULD BE AT ALL COMPARABLE TO THOSE OF THE PRIOR YEAR. IN A LATER REPORT, IT IS STATED THAT, ALTHOUGH THE CALLS MADE UNDER THE PRIOR CONTRACT AMOUNTED TO A TOTAL OF $500,000, IT NOW HAS BEEN DETERMINED THAT THE ANTICIPATED NEEDS FOR THE CURRENT YEAR, AS OF JANUARY 31, ARE APPROXIMATELY $35,000. IT THUS SEEMS CLEAR THAT USE OF THE PRIOR YEAR'S EXPERIENCE AS A BASIS FOR EVALUATION WOULD BE NO MORE REALISTIC THAN THE METHOD PRESCRIBED BY THE INVITATION, AND WE THEREFORE FIND NO BASIS FOR OBJECTING TO THE ACTION OF THE ADMINISTRATIVE OFFICE IN THE MATTER.