B-130571, MAR. 11, 1957

B-130571: Mar 11, 1957

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WAS FOR 96. ORTHOPEDIC SUBMITTED A BID OF $0.95 PER UNIT WHILE ROSE DERRY'S BID WAS FOR $0.96 PER UNIT. MPA-30-287-MD-29925 WAS AWARDED TO ORTHOPEDIC ON DECEMBER 11. THE INVITATION PROVIDED ON PAGE 4 IN REGARD TO TIME OF DELIVERY AS FOLLOWS: "DELIVERIES ARE DESIRED WITHIN SIX MONTHS FROM DATE OF CONTRACT IF WITHIN NORMAL PRODUCTION CAPACITY AND AT NO ADDITIONAL COST TO THE GOVERNMENT. OFFERS OF LATER DELIVERIES WILL BE CONSIDERED. BIDDERS ARE REQUESTED TO GIVE PRODUCTION LEAD TIME FROM DATE OF CONTRACT. - THE DATE OR DATES OF DELIVERY SPECIFIED IN THE ATTACHED SCHEDULE ARE THOSE ON WHICH THE GOVERNMENT WISHES TO HAVE DELIVERY MADE. NO BID PROPOSING DELIVERY ON A LATER DATE OR DATES WILL BE REJECTED ON THAT GROUND UNLESS SUCH LATER DATE IS DEEMED UNRESPONSIVE TO THE NEEDS OF THE GOVERNMENT.

B-130571, MAR. 11, 1957

TO HAHN AND SUNDLUN:

YOUR LETTER OF FEBRUARY 4, 1957, RE: FILE 486, PRESENTS A PROTEST ON BEHALF OF THE ROSE-DERRY COMPANY AGAINST THE AWARD OF A CONTRACT TO ORTHOPEDIC EQUIPMENT COMPANY OF BOURBON, INDIANA, UNDER INVITATION FOR BIDS NO. MPA-30-287-MD-57-479.

THE INVITATION, ISSUED NOVEMBER 19, 1956, WAS FOR 96,000 CHEMICAL HEATING PADS. ORTHOPEDIC SUBMITTED A BID OF $0.95 PER UNIT WHILE ROSE DERRY'S BID WAS FOR $0.96 PER UNIT. ON THE BASIS OF THE DIFFERENCE IN PRICE, CONTRACT NO. MPA-30-287-MD-29925 WAS AWARDED TO ORTHOPEDIC ON DECEMBER 11, 1956.

THE INVITATION PROVIDED ON PAGE 4 IN REGARD TO TIME OF DELIVERY AS FOLLOWS:

"DELIVERIES ARE DESIRED WITHIN SIX MONTHS FROM DATE OF CONTRACT IF WITHIN NORMAL PRODUCTION CAPACITY AND AT NO ADDITIONAL COST TO THE GOVERNMENT. OFFERS OF LATER DELIVERIES WILL BE CONSIDERED. BIDDERS ARE REQUESTED TO GIVE PRODUCTION LEAD TIME FROM DATE OF CONTRACT, AND TO INDICATE MONTHLY DELIVERY SCHEDULE.'

PARAGRAPH 15 OF THE FURTHER TERMS AND CONDITIONS OF THE INVITATION PROVIDED:

"OFFER TO DELIVER ON LATER DATE/S).--- THE DATE OR DATES OF DELIVERY SPECIFIED IN THE ATTACHED SCHEDULE ARE THOSE ON WHICH THE GOVERNMENT WISHES TO HAVE DELIVERY MADE, BUT NO BID PROPOSING DELIVERY ON A LATER DATE OR DATES WILL BE REJECTED ON THAT GROUND UNLESS SUCH LATER DATE IS DEEMED UNRESPONSIVE TO THE NEEDS OF THE GOVERNMENT, AND BIDS OFFERING DELIVERY ON THE DATE REQUESTED AND ON A LATER DATE OR DATES AT A LOWER PRICE WILL BE CONSIDERED. EVERY BID WILL BE DEEMED TO OFFER DELIVERY ON THE DATE OR DATES SO SPECIFIED UNLESS SOME OTHER DATE OR DATES SHALL HAVE BEEN INSERTED BY THE BIDDER IN THE SCHEDULE ATTACHED TO ITS BID.'

THE ORTHOPEDIC BID OFFERED DELIVERY OF THE 96,000 UNITS IN MONTHLY INSTALLMENTS OF 15,000 CH,"DELIVERY TO START IN 90 DAYS.' ROSE-DERRY'S BID PROVIDED FOR DELIVERY IN FOUR MONTHLY INSTALLMENTS OF 20,000 UNITS EACH BEGINNING 90 DAYS AFTER AWARD, AND A FINAL INSTALLMENT OF 16,000 UNITS 210 DAYS AFTER AWARD. YOUR PROTEST IS BASED IN PART UPON THE GROUNDS THAT "PRICE AND DELIVERY WERE CONSIDERED BY THE PROCURING AGENCY WITHOUT THE BIDDERS BEING GIVEN THE OPPORTUNITY OF STATING DIFFERENT PRICES FOR DIFFERENT DELIVERY SCHEDULES.' YOU FURTHER STATE:

"ROSE-DERRY COULD HAVE BID EVEN LOWER THAN ORTHOPEDIC ON A LONGER DELIVERY SCHEDULE. AT EIGHT MONTHS ROSE-DERRY COULD HAVE BID 93 CENTS; AND AT TEN MONTHS, 92 CENTS. HOWEVER, BECAUSE OF ITS LONG AND EXCLUSIVE EXPERIENCE IN MANUFACTURING THE ITEM FOR THE GOVERNMENT, ROSE-DERRY MAINTAINS A STOCKPILE OF THE RAW MATERIALS AND EQUIPMENT NEEDED FOR MANUFACTURE, AND THUS WAS AND IS ABLE TO OFFER SHORT DELIVERY SERVICE.'

IN CONNECTION WITH YOUR CONCLUSION THAT BIDDERS WERE NOT GIVEN AN OPPORTUNITY TO STATE DIFFERENT PRICES FOR DIFFERENT DELIVERY DATES, YOU CITE PARAGRAPH 1 (D) OF THE TERMS AND CONDITIONS OF THE INVITATION WHICH PROVIDES "ALTERNATE BIDS WILL NOT BE CONSIDERED UNLESS AUTHORIZED BY THE INVITATION.' APPARENTLY, YOU CONSIDERED THAT THE OFFER TO PROVIDE THE SUPPLIES ON ALTERNATE DATES AT ALTERNATE PRICES CONSTITUTES AN ALTERNATE BID UNDER PARAGRAPH 1 (D). WE HAVE HELD THAT AN ALTERNATE BID IS ONE WHICH IS NOT RESPONSIVE TO THE TERMS AND CONDITIONS OF THE INVITATION OR TO THE SPECIFICATIONS. 33 COMP. GEN. 499. ALTERNATE PRICES FOR ALTERNATE DELIVERY DATES WERE SPECIFICALLY INVITED UNDER THE PROVISION OF PARAGRAPH 15 TO THE EFFECT THAT BIDS WHICH OFFER DELIVERY ON THE DATE REQUESTED AND ON A LATER DATE, OR DATES, AT A LOWER PRICE WILL BE CONSIDERED.

YOU ALSO CONTEND THAT THE SPECIFICATIONS AND INVITATION WERE NOT SUFFICIENTLY DEFINITE TO ENABLE THE PREPARATION AND EVALUATION OF THE BIDS ON A COMMON BASIS. IN SUPPORT OF THIS CONTENTION YOU CITE THE LANGUAGE USED IN OUR DECISION, B-128405, AUGUST 3, 1956, TO THE EFFECT THAT WHERE A PROVISION IN AN INVITATION AS TO DELIVERY PERMITS THE PURCHASING AGENCY TO EVALUATE BIDS ON A BASIS DETERMINED AFTER THE BIDS ARE OPENED, SUCH PROCEDURE CAN HARDLY BE SAID TO EFFECTUATE THE PURPOSES OF THE STATUTES GOVERNING PUBLIC PROCUREMENT.

WE HAVE HELD THAT BIDDERS CANNOT COMPETE ON AN EQUAL BASIS AS REQUIRED BY LAW UNLESS THEY KNOW IN ADVANCE THE BASIS ON WHICH THEIR BIDS WILL BE EVALUATED. THE BASIS OF EVALUATION WHICH MUST BE MADE KNOWN IN ADVANCE TO THE BIDDERS SHOULD AT THE MINIMUM BE STATED WITH SUFFICIENT CLARITY TO INFORM EACH BIDDER PRIOR TO BID OPENING OF FACTORS WHICH CAN BE ASCERTAINED BY THE BIDDER PRIOR TO BID PREPARATION FROM WHICH HE MAY ESTIMATE WITHIN REASONABLE LIMITS THE EFFECT OF THE APPLICATION OF SUCH EVALUATION FACTOR ON HIS BID IN RELATION TO OTHER POSSIBLE BIDS. 36 COMP. GEN. 380.

THE DECISION OF AUGUST 3, 1956, INVOLVED CONSIDERATION OF AN INVITATION CONTAINING A "DESIRED" DELIVERY SCHEDULE. IN ADDITION, THE INVITATION PROVIDED THAT BIDS PROPOSING TO EXTEND THE DESIRED DELIVERY BY MORE THAN 60 DAYS COULD BE REJECTED FOR THAT REASON. OUR DECISION WAS BASED ON THE FACT THAT, ALTHOUGH NO REQUIRED DELIVERY SCHEDULE WAS STATED, THE PROVISION RESERVING THE RIGHT TO REJECT BIDS OFFERING DELIVERY MORE THAN 60 DAYS LONGER THAN THE DESIRED DELIVERY SCHEDULE COULD PROPERLY BE INTERPRETED TO INDICATE THAT TIME WAS OF THE ESSENCE. BECAUSE OF SUCH PROVISION, BIDDERS WERE AT A LOSS TO KNOW WHETHER TO BID ON THE BASIS OF SHORT DELIVERY TIME OR LOW COST OR SOME COMPROMISE BETWEEN THE TWO.

IN THE PRESENT CASE, THE QUOTED PROVISION WHICH APPEARS ON PAGE 4 OF THE INVITATION STATES A DESIRED DELIVERY SCHEDULE "IF WITHIN NORMAL PRODUCTION CAPACITY AND AT NO ADDITIONAL COST TO THE GOVERNMENT.' THUS, THERE IS A CLEAR IMPLICATION THAT PRICE SHOULD NOT BE SACRIFICED TO MEET OR APPROXIMATE THE DESIRED DELIVERY SCHEDULE. WE AGREE THAT THE PROVISION IN PARAGRAPH 15, QUOTED ABOVE, INDICATING THAT BIDS MIGHT BE REJECTED IF THE DELIVERY SCHEDULE "IS DEEMED UNRESPONSIVE TO THE NEEDS OF THE GOVERNMENT" MIGHT BE INTERPRETED TO PROVIDE A BASIS FOR EVALUATION NOT WITHIN THE RULE SET OUT ABOVE. IT APPEARS, HOWEVER, THAT THIS PROVISION READ IN CONJUNCTION WITH THAT PORTION OF THE PROVISION FROM PAGE 4 OF THE INVITATION WHICH IS DISCUSSED EARLIER IN THIS PARAGRAPH, SHOULD PROPERLY BE INTERPRETED TO RESERVE THE RIGHT TO REJECT BIDS ON ACCOUNT OF PROPOSED DELIVERY SCHEDULES ONLY WHEN THE SCHEDULES ARE SO FAR BEHIND THE DESIRED SCHEDULE THAT THE AVAILABILITY OF THE APPROPRIATION MAY BE AFFECTED, OR FOR SIMILAR REASONS. THEREFORE, WHILE THE PROVISION IN PARAGRAPH 15 MIGHT BE SOMEWHAT MISLEADING, WE CANNOT SAY THAT IT IS SO ERRONEOUS AS TO RENDER A CONTRACT AWARDED PURSUANT TO THE INVITATION ILLEGAL OR TO REQUIRE ITS CANCELLATION. WE ARE WRITING TO THE SECRETARY OF THE NAVY TO RECOMMEND CORRECTION OF THE LANGUAGE OF THE INVITATION TO AVOID ANY POSSIBLE MISUNDERSTANDING IN SUBSEQUENT PROCUREMENTS.

ON PAGE 5 OF YOUR LETTER, YOU ALSO STATE:

"IT IS FURTHER SUBMITTED THAT THE AWARD OF THE CONTRACT TO ORTHOPEDIC UNDER THE CIRCUMSTANCES STATED HEREIN WAS ARBITRARY AND CAPRICIOUS UNDER PARAGRAPH 8 (A) (QUOTED HEREINABOVE) OF THE TERMS AND CONDITIONS OF THE INVITATION. OBVIOUSLY, UNDER THAT CLAUSE, THE REQUISITIONING AGENCY HAD DISCRETION IN THE AWARDING OF THE CONTRACT. NOT TO AWARD THE CONTRACT TO THE COMPANY WHICH HAD BEEN THE GOVERNMENT'S SOLE SUPPLIER IN COMPETITIVE BIDDING OVER A TWELVE YEAR PERIOD, AND TO INSTEAD AWARD IT TO A COMPANY WHICH HAD NEVER BEFORE PRODUCED THE ITEM, WHICH BID ONLY 1 CENT LESS (AND THAT PRICE IS HIGHER THAN ROSE-DERRY IF THE GOVERNMENT TAKES ROSE-DERRY'S 2 PERCENT DISCOUNT AND ORTHOPEDIC DOES NOT OFFER A SIMILAR DISCOUNT), AND WHICH CAN ONLY PROMISE A DELIVERY SCHEDULE AT LATER DATES THAN ROSE-DERRY WAS AN ABUSE OF DISCRETION SUFFICIENT TO BE BOTH ARBITRARY AND CAPRICIOUS. THIS CONCLUSION IS EMPHASIZED WHEN IT IS UNDERSTOOD THAT THE CHEMICAL HEATING PAD TO BE PRODUCED IS AN UNCOMMON ITEM, REQUIRING PARTICULAR SKILL AND KNOW-HOW TO SUCCESSFULLY MANUFACTURE. IT IS NOT AN ITEM WHICH A VARIETY OF MANUFACTURERS CAN FABRICATE EASILY AND EQUALLY IN QUANTITY AND QUALITY.'

PARAGRAPH 8 (A) TO WHICH REFERENCE IS MADE PROVIDES:

"THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.'

SINCE ORTHOPEDIC'S BID ALSO PROVIDED A 2 PERCENT PROMPT PAYMENT DISCOUNT, ITS BID IS LOW. FURTHER, NO QUESTION HAS BEEN RAISED AS TO THE RESPONSIBILITY OF THE LOW BIDDER AND WE ARE AWARE OF NO BASIS ON WHICH SUCH QUESTION MIGHT BE RAISED. IT HAS CONSISTENTLY BEEN HELD THAT THE PUBLIC INTEREST REQUIRES THAT THE AWARD OF A CONTRACT AFTER ADVERTISING BE MADE ONLY TO THE LOWEST RESPONSIBLE BIDDER, AND THE FACT THAT A BIDDER OTHER THAN THE LOWEST HAS PROVIDED SATISFACTORY PERFORMANCE UNDER PRIOR CONTRACTS PROVIDES NO BASIS FOR AN EXCEPTION TO THE REQUIREMENT. 33 COMP. GEN. 265; 30 COMP. GEN. 235.

ACCORDINGLY, WE PERCEIVE NO LEGAL BASIS FOR DIRECTING CANCELLATION OF THE AWARD OF THE CONTRACT TO ORTHOPEDIC.