B-129638, NOV. 7, 1956

B-129638: Nov 7, 1956

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED OCTOBER 29. IT IS UNDERSTOOD THAT NO AWARD HAS YET BEEN MADE. PARAGRAPH 107.5 ON PAGE 21 OF THE BID SCHEDULE PROVIDES THAT "THE RIGHT IS RESERVED TO REJECT ANY BIDS SUBMITTED BY A COMPANY NOT LOCATED IN THE GEOGRAPHICAL AREA (CITY OF PHILADELPHIA) AND NOT HAVING AVAILABLE SUFFICIENT STOCK TO MEET THE DELIVERY REQUIREMENTS OF THE CITY OF PHILA.'. INCLUDED AMONG THE ITEMS ON WHICH QUOTATIONS WERE REQUESTED ARE ITEMS 1A THROUGH 6A FOR DIFFERENT QUANTITIES OF WHOLE FRESH HOMOGENIZED PASTEURIZED MILK. THE ABSTRACT OF BIDS SHOWS THAT 6 BIDS WERE RECEIVED FOR FURNISHING A PART OR ALL OF THESE ITEMS AND THAT THE BID OF GREENHILL DAIRIES.

B-129638, NOV. 7, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED OCTOBER 29, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIAL), IN EFFECT REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN BY YOUR DEPARTMENT IN CONNECTION WITH THE PROTEST BY SCHNADER, HARRISON, SEGAL AND LEWIS, ATTORNEYS FOR QUAKER MAID DAIRY PRODUCTS, INC., AGAINST THE PROPOSED REJECTION OF THAT CONCERN'S BID SUBMITTED IN RESPONSE TO INVITATION NO. 151-2001-57, ISSUED BY THE PHILADELPHIA NAVAL SHIPYARD FOR BIDS FOR FURNISHING DAIRY PRODUCTS FOR NAVY ACTIVITIES IN THE PHILADELPHIA AREA. IT IS UNDERSTOOD THAT NO AWARD HAS YET BEEN MADE.

THE INVITATION REQUESTED BIDS FOR FURNISHING DAIRY PRODUCTS, AS DESCRIBED UNDER SCHEDULES I AND II OF THE BID SCHEDULE, DURING THE PERIOD OCTOBER 1, TO DECEMBER 21, 1956, OR OCTOBER 1, 1956, TO MARCH 31, 1957, THE RIGHT BEING RESERVED TO MAKE AWARD ON EITHER BASIS. PARAGRAPH 107.5 ON PAGE 21 OF THE BID SCHEDULE PROVIDES THAT "THE RIGHT IS RESERVED TO REJECT ANY BIDS SUBMITTED BY A COMPANY NOT LOCATED IN THE GEOGRAPHICAL AREA (CITY OF PHILADELPHIA) AND NOT HAVING AVAILABLE SUFFICIENT STOCK TO MEET THE DELIVERY REQUIREMENTS OF THE CITY OF PHILA.'

INCLUDED AMONG THE ITEMS ON WHICH QUOTATIONS WERE REQUESTED ARE ITEMS 1A THROUGH 6A FOR DIFFERENT QUANTITIES OF WHOLE FRESH HOMOGENIZED PASTEURIZED MILK, TYPE III, IN VARIOUS KINDS AND SIZES OF CONTAINERS. THE ABSTRACT OF BIDS SHOWS THAT 6 BIDS WERE RECEIVED FOR FURNISHING A PART OR ALL OF THESE ITEMS AND THAT THE BID OF GREENHILL DAIRIES, INC., IS THE LOWEST RECEIVED ON ALL EXCEPT ITEM 3A, AS TO WHICH COOKLYN DAIRIES SUBMITTED THE LOWEST BID. IT IS STATED IN THE LETTER OF OCTOBER 29, 1956, THAT THE CONTRACTING OFFICER PROPOSES TO AWARD ITEMS 1A, 2A, 3A, 4A, 5A AND 6A TO GREENHILL DAIRIES, INC., HAVING DETERMINED THAT COOKLYN DAIRIES IS NOT A RESPONSIBLE INC., HAVING DETERMINED THAT COOKLYN DAIRIES IS NOT A REASONABLE BIDDER WITHIN THE MEANING OF ASPR 1-307 ON THE GROUND THAT IT HAS SOLD ITS PLANT AND ASSETS TO GREENHILL DAIRIES, INC. THE SECOND LOW BID ON ITEM 3A WAS SUBMITTED BY GREENHILL DAIRIES, INC.

BY LETTERS DATED SEPTEMBER 27 AND OCTOBER 11, 1956, MR. JEROME J. SHESTACK OF SCHNADER, HARRISON, SEGAL AND LEWIS GAVE LIEUTENANT COMMANDER BARTON, PHILADELPHIA NAVAL SHIPYARD, NOTICE OF A PROTEST AGAINST THE AWARD OF A CONTRACT TO GREENHILL DAIRIES, INC. THE PROTEST IS BASED UPON THE CONTENTION THAT AWARD SHOULD BE MADE TO QUAKER MAID DAIRY PRODUCTS, INC., RATHER THAN GREENHILL DAIRIES, INC. THE GROUNDS FOR THE PROTEST MAY BE SUMMARIZED AS FOLLOWS:

1. QUAKER MAID DAIRY PRODUCTS, INC., SUBMITTED THE LOWEST BID EXCEPT FOR ONE BIDDER (GREENHILL DAIRIES, INC.) WHICH IS LOCATED IN WILMINGTON, DELAWARE. A DAIRY LOCATED IN THAT CITY IS NOT LOCATED IN THE GEOGRAPHICAL AREA OF THE "CITY OF PHILADELPHIA" WITHIN THE MEANING OF THE ADVERTISED SPECIFICATIONS REFERRED TO ABOVE. QUAKER MAID DAIRY PRODUCTS, INC., BECAUSE OF ITS PRIOR SATISFACTORY SERVICE AS A SMALL BUSINESS IN MAKING DELIVERIES OF MILK TO NAVAL VESSELS AND BECAUSE OF ITS CLOSE PROXIMITY TO THE PHILADELPHIA NAVAL BASE, CAN DELIVER THE REQUIRED MILK MUCH QUICKER THAN A DAIRY LOCATED IN ANOTHER CITY IN A NEIGHBORING STATE. THE REQUIREMENTS OF THE PENNSYLVANIA MILK CONTROL LAWS ASSURE A STANDARD OF PURITY FROM A HEALTH STANDPOINT WHICH IS SUPERIOR TO THAT IN MANY NEIGHBORING JURISDICTIONS.

2. IF BIDS HAD BEEN SUBMITTED ON AN ANNUAL BASIS THE PRICES QUOTED WOULD HAVE BEEN LOWER. FOR THAT REASON THE SUGGESTION IS MADE THAT THE NAVY COULD OBTAIN AN EXTENSION OF THE PAST CONTRACTS AT LOWER PRICES AND THEN ASK FOR NEW BIDS OR AT LEAST FOR ADDITIONAL BIDS.

3. IF, AS UNDERSTOOD, COOKLYN DAIRIES, INC., HAD ENTERED INTO AN AGREEMENT TO SELL ITS ASSETS TO GREENHILL DAIRIES, INC., AT THE TIME THE BIDS WERE SUBMITTED, THE TWO BIDDERS SUBMITTED MULTIPLE BIDS. IF, ON THE OTHER HAND, THE ACQUISITION OF THE ASSETS OF COOKLYN BY GREENHILL HAD NOT BECOME FINAL AT THE TIME BIDS WERE SUBMITTED THEN BOTH BIDS MUST BE REGARDED AS SEPARATE BIDS. IN SUCH CASE, IF THE CONTRACT IS AWARDED TO GREENHILL, THE PROTESTANT STATES THAT HE UNDERSTANDS THAT BIDDER MAY ARRANGE TO HAVE COOKLYN DELIVER THE DAIRY PRODUCTS TO THE NAVY. IT IS CLAIMED THAT "THIS WOULD BE A METHOD OF MAKING AN AWARD TO COOKLYN DESPITE THE FACT THAT ITS BID WAS NOT LOW.'

AS TO WHETHER THE LOW BIDDER "LOCATED ACROSS THE RIVER FROM PHILADELPHIA IN WILMINGTON, DELAWARE" IS WITHIN THE AREA OF THE CITY OF PHILADELPHIA AS CONTEMPLATED BY THE ADVERTISED SPECIFICATIONS, THE INVITATION FOR BIDS MERELY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY BIDS SUBMITTED BY A COMPANY NOT LOCATED IN THE GEOGRAPHICAL AREA OF THE CITY AND NOT HAVING AVAILABLE SUFFICIENT STOCK TO MEET DELIVERY REQUIREMENTS IN THE CITY. THE INVITATION DOES NOT REQUIRE THE REJECTION OF THE BID SUBMITTED BY A BIDDER NOT WITHIN THE AREA, BUT LEAVES THE EXERCISE OF THAT RIGHT TO THE DISCRETION OF THE APPROPRIATE CONTRACTING OFFICIALS OF THE NAVY. IS UNDERSTOOD FROM THE RECORD"THAT THE CONTRACTING OFFICER HAS DETERMINED BY PREAWARD SURVEY THAT GREENHILL DAIRIES, INC., IS FULLY RESPONSIBLE AS TO CAPACITY AND CAPABILITY TO PERFORM A CONTRACT FOR THE ITEMS ON WHICH IT IS LOW.' THEREFORE, IF IT BE DETERMINED THAT THE LOW BIDDER MEETS THE ADVERTISED REQUIREMENTS, WE ARE NOT REQUIRED TO OBJECT TO THE ACCEPTANCE OF THAT BID SOLELY BECAUSE THE BIDDER MAY BE LOCATED IN THE STATE OF DELAWARE. IN THIS CONNECTION, IT IS TO BE NOTED THAT A SUBSTANTIAL PART OF THE REQUIRED DELIVERIES WILL BE TO POINTS AS FAR FROM PHILADELPHIA AS ATLANTIC CITY AND CAPE MAY, NEW JERSEY, WHICH WOULD MAKE THE STRICT INTERPRETATION CONTENDED FOR BY THE PROTESTING BIDDER UNDULY RESTRICTIVE.

THE STATEMENTS IN THE PROTESTANT'S LETTERS THAT QUAKER MAID DAIRY PRODUCTS, INC., IS LOCATED IN CLOSE PROXIMITY TO THE NAVAL ESTABLISHMENT TO BE SERVED AND THAT THE BIDDER HAS RENDERED SATISFACTORY SERVICE UNDER PRIOR CONTRACTS, AS WELL AS THE STATEMENT THAT THE PENNSYLVANIA MILK CONTROL LAWS ASSURE A HIGHER STANDARD OF PURITY, MAY NOT BE ACCEPTED AS BEING OF SUFFICIENT MERIT TO JUSTIFY OBJECTING TO THE PROPOSED AWARD. APPEARS THAT THE CONTRACTING OFFICER HAS DETERMINED THAT GREENHILL DAIRIES, INC., IS QUALIFIED AND ABLE TO COMPLY FULLY WITH THE ADVERTISED REQUIREMENTS. A RECORD OF SATISFACTORY PERFORMANCE OF PRIOR CONTRACTS AND THE OTHER MATTERS ALLEGED IN SUPPORT OF THE PROTEST ARE LAUDABLE BUT MAY NOT BE ACCEPTED AS A SUFFICIENT BASIS FOR REJECTING A LOWER BID FROM ANOTHER QUALIFIED AND RESPONSIBLE BIDDER.

THE STATEMENT THAT BIDS SHOULD HAVE BEEN INVITED ON ANNUAL BASIS INVOLVES A MATTER PROPERTY DETERMINABLE BY THE EXERCISE OF SOUND ADMINISTRATIVE DISCRETION. IT IS STATED IN THE LETTER OF OCTOBER 29, 1956, THAT THE SHIPYARD DECIDED THAT LOCAL CONDITIONS WERE SUCH THAT CONTRACTING ON AN ANNUAL BASIS WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT. IT IS REPORTED THAT THIS IS TYPICAL OF THE SITUATION EXISTING AT MOST NAVY ACTIVITIES WHICH CONTRACT FOR DAIRY PRODUCTS. IT IS ADMITTED, HOWEVER, THAT "IN VIEW OF QUAKER MAID'S STATEMENTS, THE SHIPYARD WILL BE REQUESTED TO REVIEW THE SITUATION AS TO FUTURE CONTRACTING, GIVING FULL CONSIDERATION TO THE STABILITY OF PRICES FOR DAIRY PRODUCTS IN THE AREA.'

WITH REFERENCE TO THE STATEMENTS CONCERNING MULTIPLE BIDDING AND POSSIBLE PERFORMANCE OF THE SERVICES COVERED BY THE INVITATION IN THIS CASE BY COOKLYN THERE WAS FORWARDED WITH THE LETTER OF OCTOBER 29, 1956, A COPY OF A BILL OF SALE DATED SEPTEMBER 28, 1956, BY THE TERMS OF WHICH COOKLYN DAIRIES, INC., SOLD AND TRANSFERRED ALL ITS ASSETS, BUILDINGS AND IMPROVEMENTS TO GREENHILL DAIRIES, INC. THIS SALE HAD NOT BEEN CONSUMMATED ON SEPTEMBER 14, 1956, THE BID OPENING DATE, AND WE SEE NO REASON TO REGARD THE TRANSACTION AS HAVING ADVERSELY AFFECTED THE BIDDING OF EITHER BIDDER OR THE INTERESTS OF ANY OTHER BIDDERS.

ACCORDINGLY, SINCE IT DOES NOT APPEAR THAT ANY OF THE ADMINISTRATIVE DETERMINATIONS INVOLVED WERE ARBITRARY OR UNREASONABLE, WE FIND NO GROUND FOR OBJECTING TO THE PROPOSED AWARD OF THE CONTRACT IN THIS CASE AND THE PROTESTING BIDDER'S ATTORNEY IS BEING SO ADVISED. IT IS SUGGESTED, HOWEVER, THAT CONSIDERATION BE GIVEN TO THE POSSIBILITY OF MAKING AWARD OF ITEM 3A ON THE BID OF COOKLYN DAIRIES, ON THE THEORY THAT THE OUTSTANDING OBLIGATION ARISING FROM ITS BID PASSED TO GREENHILL DAIRIES UNDER THE SALE OF THE BUSINESS OF COOKLYN.

THE ENCLOSURES WITH THE LETTER OF OCTOBER 29, 1956, EXCEPT THE MEMORANDUM FROM THE COUNSEL, BUREAU OF SUPPLIES AND ACCOUNTS, ARE RETURNED HEREWITH.