B-135732, APRIL 28, 1958, 37 COMP. GEN. 711

B-135732: Apr 28, 1958

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BIDS - EVALUATION - DISCOUNT PROVISIONS - DELIVERY TERM VARIANCE A PROMPT PAYMENT DISCOUNT OF ONE PERCENT TWENTY DAYS OFFERED IN RESPONSE TO AN INVITATION WHICH PROVIDES FOR INSPECTION AT THE CONTRACTOR'S PLANT AND ACCEPTANCE AT DESTINATION IS NOT FOR EVALUATION UNDER THE INVITATION DISCOUNT CONDITION WHICH SPECIFICALLY ESTABLISHES A MINIMUM ACCEPTABLE DISCOUNT PERIOD OF 30 DAYS ONLY WHEN PRELIMINARY INSPECTION IS AT THE POINT OF ORIGIN BUT DELIVERY. ACCEPTANCE ARE AT MULTIPLE POINTS OF DESTINATION. A PROMPT PAYMENT DISCOUNT OF ONE PERCENT TWENTY DAYS WHICH IS OFFERED IN RESPONSE TO AN INVITATION WHICH PERMITS DISCOUNTS TO BE INCLUDED IN THE BID EVALUATION PROVIDED THAT THE PERIOD OF THE OFFERED DISCOUNT IS SUFFICIENT TO PERMIT PAYMENT WITHIN SUCH PERIOD IN THE REGULAR COURSE OF BUSINESS UNDER THE DELIVERY.

B-135732, APRIL 28, 1958, 37 COMP. GEN. 711

BIDS - EVALUATION - DISCOUNT PROVISIONS - DELIVERY TERM VARIANCE A PROMPT PAYMENT DISCOUNT OF ONE PERCENT TWENTY DAYS OFFERED IN RESPONSE TO AN INVITATION WHICH PROVIDES FOR INSPECTION AT THE CONTRACTOR'S PLANT AND ACCEPTANCE AT DESTINATION IS NOT FOR EVALUATION UNDER THE INVITATION DISCOUNT CONDITION WHICH SPECIFICALLY ESTABLISHES A MINIMUM ACCEPTABLE DISCOUNT PERIOD OF 30 DAYS ONLY WHEN PRELIMINARY INSPECTION IS AT THE POINT OF ORIGIN BUT DELIVERY, FINAL INSPECTION, AND ACCEPTANCE ARE AT MULTIPLE POINTS OF DESTINATION. A PROMPT PAYMENT DISCOUNT OF ONE PERCENT TWENTY DAYS WHICH IS OFFERED IN RESPONSE TO AN INVITATION WHICH PERMITS DISCOUNTS TO BE INCLUDED IN THE BID EVALUATION PROVIDED THAT THE PERIOD OF THE OFFERED DISCOUNT IS SUFFICIENT TO PERMIT PAYMENT WITHIN SUCH PERIOD IN THE REGULAR COURSE OF BUSINESS UNDER THE DELIVERY, INSPECTION, AND PAYMENT PROVISIONS OF THE INVITATION WAS PROPERLY EXCLUDED FROM EVALUATION ON THE BASIS OF A FINDING BY THE CONTRACTING OFFICER THAT HE WAS UNABLE TO DETERMINE THE SUFFICIENCY OF THE DISCOUNT PERIOD.

TO CUMMINGS, SELLERS, REEVES, CONNER AND KENDALL, APRIL 28, 1958:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 7, 1958, WITH ENCLOSURES, PROTESTING, ON BEHALF OF MECHANICAL PRODUCTS, INC., AGAINST THE AWARD OF A CONTRACT BY THE AVIATION SUPPLY OFFICE, DEPARTMENT OF THE NAVY, UNDER INVITATION FOR BIDS NO. IFB-383-682-58 TO A BIDDER OTHER THAN YOUR CLIENT.

THE INVITATION REQUESTED BIDS, TO BE OPENED ON MARCH 24, 1958, FOR FURNISHING A QUANTITY OF CIRCUIT BREAKERS, DELIVERY TO BE MADE IN SPECIFIED QUANTITIES TO VARIOUS NAVAL ACTIVITIES LISTED IN THE SCHEDULE. BIDDERS WERE ADVISED ON PAGE 12 OF THE INVITATION THAT INSPECTION WOULD BE MADE AT THE CONTRACTOR'S PLANT AND THAT ACCEPTANCE WOULD BE MADE AT DESTINATION BY THE RECEIVING ACTIVITY. NAVY S AND A FORM 111 ENTITLED " ADDITIONAL CONTRACT PROVISIONS" WAS INCORPORATED AS A PART OF THE INVITATION. PARAGRAPH 35 THEREOF," DISCOUNTS," AMENDED THE TERMS AND CONDITIONS OF THE INVITATION RESPECTING DISCOUNTS AS FOLLOWS:

(C) PROMPT PAYMENT DISCOUNTS WILL BE CONSIDERED IN THE EVALUATION OF BIDS, PROVIDED THE MINIMUM PERIOD OF THE OFFERED DISCOUNT IS 10 DAYS WHEN DELIVERY AND ACCEPTANCE ARE AT POINT OF ORIGIN; 20 DAYS WHEN PRELIMINARY INSPECTION IS AT POINT OF ORIGIN BUT DELIVERY, FINAL INSPECTION AND ACCEPTANCE ARE AT A SINGLE POINT OF DESTINATION; AND 30 DAYS WHEN PRELIMINARY INSPECTION IS AT POINT OF ORIGIN BUT DELIVERY, FINAL INSPECTION AND ACCEPTANCE ARE AT MULTIPLE POINTS OF DESTINATION, OR WHEN COMPLETE INSPECTION, DELIVERY AND ACCEPTANCE ARE AT ONE OR MORE POINTS OF DESTINATION. THE OFFERED DISCOUNT OF A SUCCESSFUL BIDDER WILL FORM A PART OF THE AWARD, WHETHER OR NOT SUCH DISCOUNT WAS CONSIDERED IN THE EVALUATION OF HIS BID, AND SUCH DISCOUNT WILL BE TAKEN IF PAYMENT IS MADE WITHIN THE DISCOUNT PERIOD.

THE TWO LOWEST BIDS RECEIVED WERE THOSE OF THE WOOD ELECTRIC CO., INC., FOR $2.49 EACH, AND MECHANICAL PRODUCTS, INC., FOR $2.50 EACH, LESS DISCOUNT OF 1 PERCENT, 20 DAYS. HENCE, IF THE BID OF MECHANICAL PRODUCTS, INC., IS EVALUATED ON THE BASIS OF THE OFFERED DISCOUNT, IT OBVIOUSLY IS THE LOW BID; BUT IF THE DISCOUNT IS IGNORED THE BID OF WOOD ELECTRIC CO., INC., IS THE LOWEST. WHILE THE INVITATION ON PAGE 12 PROVIDES FOR INSPECTION AT THE CONTRACTOR'S PLANT AND ACCEPTANCE AT DESTINATION, IT DOES NOT SPECIFICALLY PROVIDE FOR "PRELIMINARY INSPECTION AT POINT OF ORIGIN" OR ,FINAL INSPECTION AT MULTIPLE POINTS OF DESTINATION" AS SET FORTH IN PARAGRAPH 35, ABOVE, RESPECTING THE EVALUATION OF DISCOUNTS UNDER SUCH CONDITIONS IF FOR 30 DAYS. HOWEVER, IT IS THE BELIEF OF THE CONTRACTING OFFICER THAT SUCH CRITERIA OF BID EVALUATION SHOULD BE APPLIED HERE SINCE THERE IS AN INSPECTION AT THE CONTRACTOR'S PLANT AND, SUBSEQUENT TO DELIVERY, ANOTHER LIMITED INSPECTION AT DESTINATION TO DETERMINE THE QUANTITY AND CONDITION OF THE CIRCUIT BREAKERS UPON ARRIVAL PRIOR TO FINAL ACCEPTANCE. IN VIEW THEREOF, HE SUGGESTS THAT OUR DECISION B-131248, APRIL 24, 1957, IS SUBSTANTIALLY SIMILAR TO THE PRESENT MATTER.

WE DO NOT THINK THAT THE RATIONALE OF THAT DECISION IS FOR APPLICATION HERE. THE BID INVOLVED IN THAT DECISION OFFERED A DISCOUNT PREDICATED UPON PAYMENT WITHIN 20 DAYS FOR SUPPLIES TO BE FURNISHED TO WIDELY SEPARATED NAVAL ACTIVITIES WITH INSPECTION AT THE PLACE OF MANUFACTURE, SUBJECT TO FINAL INSPECTION AND ACCEPTANCE AT DESTINATION. WE HELD THAT SUCH A BID PROPERLY WAS REJECTED UNDER THE EVALUATION CRITERIA IN PARAGRAPH 35 SINCE IT DID NOT OFFER A 30-DAY DISCOUNT PERIOD. CF. 37 COMP. GEN. 162.

THE TERMS OF THE INSTANT INVITATION RESPECTING INSPECTION AND ACCEPTANCE RENDER THE BID EVALUATION CRITERIA OF PARAGRAPH 35 INAPPLICABLE SINCE THE MINIMUM ACCEPTABLE PERIOD FOR DISCOUNT IS 30 DAYS ONLY WHEN PRELIMINARY INSPECTION IS AT POINT OF ORIGIN BUT DELIVERY, FINAL INSPECTION, AND ACCEPTANCE ARE AT MULTIPLE POINTS OF DESTINATION. SEE 37 COMP. GEN. 162. WE, THEREFORE, ARE OF THE OPINION THAT THE PROVISIONS OF PARAGRAPH 7 OF THE TERMS AND CONDITIONS MUST BE REGARDED AS CONTROLLING IN DETERMINING THE ACCEPTABILITY OF THE BID OF MECHANICAL PRODUCTS, INC., IN THE FORM TENDERED. UNDER THAT PARAGRAPH IT IS PROVIDED THAT DISCOUNTS ARE TO BE "INCLUDED IN THE EVALUATION OF BIDS, PROVIDED THE PERIOD OF THE OFFERED DISCOUNT IS SUFFICIENT TO PERMIT PAYMENT WITHIN SUCH PERIOD IN THE REGULAR COURSE OF BUSINESS UNDER THE DELIVERY, INSPECTION AND PAYMENT PROVISIONS OF THE INVITATION AND BID.' TIME IS COMPUTED UNDER THAT PARAGRAPH FROM THE DATE OF DELIVERY AT DESTINATION WHEN, AS IN THIS CASE, DELIVERY AND ACCEPTANCE IS AT POINT OF DESTINATION, OR FROM THE DATE CORRECT INVOICE IS RECEIVED, WHICHEVER IS THE LATER.

THE CONTRACTING OFFICER HAS REPORTED THAT, IN EVALUATING THE BID OF MECHANICAL PRODUCTS, INC., UNDER PARAGRAPH 7 (A) OF THE TERMS AND CONDITIONS OF THE INVITATION, HE IS UNABLE TO DETERMINE THAT A 20-DAY DISCOUNT PERIOD IS SUFFICIENT TO PERMIT PAYMENT IN THE REGULAR COURSE OF BUSINESS. IN VIEW OF THIS FINDING--- AND NOTHING HAS BEEN PRESENTED WHICH WOULD CONCLUSIVELY ESTABLISH THAT THE GOVERNMENT COULD, IN FACT, ACCOMPLISH PAYMENT WITHIN THE 20-DAY DISCOUNT PERIOD OFFERED--- WE MUST CONCLUDE THAT NO LEGAL BASIS EXISTS FOR CONSIDERING THE 20-DAY DISCOUNT OFFERED BY MECHANICAL PRODUCTS, INC., IN EVALUATING BIDS RECEIVED UNDER THE SUBJECT INVITATION FOR BIDS.