B-135873, JUL. 29, 1958

B-135873: Jul 29, 1958

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TO SIDRAN OF DALLAS: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 15. 750 UNITS DELIVERED TO THE SAME DEPOT WAS $10.25 PER UNIT LESS A FIVE PERCENT PROMPT PAYMENT DISCOUNT. THE AWARD WAS MADE TO YOU FOR THAT PART OF THE NON-SET-ASIDE PORTION. 000 EACH IS BEING RESERVED FOR SMALL BUSINESS UNDER A PARTIAL SMALL BUSINESS SET- ASIDE. "NEGOTIATION FOR AWARD OF THE EXEMPTED PORTION OF THIS PROCUREMENT WILL BE CONDUCTED ONLY WITH RESPONSIBLE SMALL FIRMS WHO SUBMIT RESPONSIVE BIDS ON THE ADVERTISED PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE. THE AWARD FOR THE SET- ASIDE PORTION WAS MADE AT THE UNIT PRICE OF THE NON-SET-ASIDE PORTION. THAT BIDDER WAS OTHER THAN LOW BIDDER AND ITS ALTERNATE UNIT PRICE FOR ALL 175.

B-135873, JUL. 29, 1958

TO SIDRAN OF DALLAS:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 15, 1958, PROTESTING THE AWARD OF A SMALL-BUSINESS-SET-ASIDE CONTRACT FOR MEN'S COATED NYLON RAINCOATS TO ANOTHER BIDDER WITHOUT NEGOTIATING WITH YOU.

MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY INVITATION NO. QM/CTM/36 243- 58-175, DATED OCTOBER 8, 1957, DIVIDED A PROCUREMENT OF MEN'S COATED NYLON RAINCOATS INTO A 175,000 UNIT SMALL-BUSINESS-SET-ASIDE PORTION AND A 175,000 UNIT NON-SET-ASIDE PORTION. THE INVITATION DIVIDED THE NON-SET- ASIDE PORTION INTO FOUR PARTS AND SOLICITED BIDS FOR 43,750 UNITS DELIVERED F.O.B. DESTINATION TO EACH OF THE FOLLOWING LOCATIONS:

TABLE

A. MEMPHIS GENERAL DEPOT

B. UTAH GENERAL DEPOT

C. NEW CUMBERLAND GENERAL DEPOT

D. ATLANTA GENERAL DEPOT

IN RESPONSE TO THE INVITATION, ALBERT TURNER AND CO., INC., HAD OFFERED TO DELIVER 43,750 RAINCOATS TO THE UTAH GENERAL DEPOT AS $10 PER UNIT LESS A TWO PERCENT PROMPT PAYMENT DISCOUNT, 20 DAYS, TOTALING $428,750. SINCE YOUR BID FOR 43,750 UNITS DELIVERED TO THE SAME DEPOT WAS $10.25 PER UNIT LESS A FIVE PERCENT PROMPT PAYMENT DISCOUNT, 20 DAYS, TOTALING $426,015.63, THE AWARD WAS MADE TO YOU FOR THAT PART OF THE NON-SET-ASIDE PORTION.

WITH REGARD TO THE SMALL-BUSINESS-SET-ASIDE, IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.6 (C) AND ARMY PROCUREMENT PROCEDURE (APP) 30-714C (1) (A), THE INVITATION STATED:

"PARTIAL SMALL BUSINESS SET-ASIDE: AN ADDITIONAL QUANTITY OF 175,000 EACH IS BEING RESERVED FOR SMALL BUSINESS UNDER A PARTIAL SMALL BUSINESS SET- ASIDE.

"NEGOTIATION FOR AWARD OF THE EXEMPTED PORTION OF THIS PROCUREMENT WILL BE CONDUCTED ONLY WITH RESPONSIBLE SMALL FIRMS WHO SUBMIT RESPONSIVE BIDS ON THE ADVERTISED PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE. NEGOTIATIONS SHALL PROCEED AMONG SMALL BUSINESS CONCERNS BEGINNING WITH THE BIDDER OR OFFEROR WHO SUBMITTED THE LOWEST RESPONSIVE BID OR PROPOSAL IN CONNECTION WITH THE UNRESERVED PROCUREMENT.'

ALONG WITH ITS BID REFERRED TO ABOVE, ALBERT TURNER AND CO., INC., IN THE ALTERNATIVE, HAD OFFERED TO SUPPLY ALL 175,000 UNITS ON THE NON SET-ASIDE PORTION AT $9.50 PER UNIT LESS A THREE PERCENT PROMPT PAYMENT DISCOUNT, 20 DAYS. IN SETTING UP THE ORDER OF APPROACHING BIDDERS FOR NEGOTIATION OF THE SET-ASIDE PORTION FOR THE UTAH GENERAL DEPOT, THE MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY CONSIDERED THE ALTERNATE BID OF ALBERT TURNER AND CO., INC., AS THE LOWEST RESPONSIVE BID RECEIVED ON THE UTAH NON-SET- ASIDE PORTION ON THE THEORY THAT ITS BID OF $9.50 PER UNIT FOR 175,000 UNITS INCLUDED THE QUANTITY PROVIDED IN THE INVITATION FOR THE UTAH DESTINATION.

ASPR 1-706.6 (D) (I) AND APP 30-714C (1) (C) (I) PROVIDE THAT, WHEN THE PROCUREMENT OF THE NON-SET-ASIDE PORTION HAS RESULTED IN ONE CONTRACT ONLY, ANY AWARDS FOR THE SET-ASIDE PORTION SHALL BE MADE AT THE UNIT PRICE OF THE NON-SET-ASIDE PORTION. THE SUCCESSOR CONTRACTING OFFICER HAS REPORTED THAT IN ACCORDANCE WITH THESE REGULATIONS, SINCE THE AWARD FOR THE UTAH DESTINATION RESULTED IN ONE CONTRACT ONLY, THE AWARD FOR THE SET- ASIDE PORTION WAS MADE AT THE UNIT PRICE OF THE NON-SET-ASIDE PORTION, I.E., $10.25 PER UNIT LESS A FIVE PERCENT PROMPT PAYMENT DISCOUNT, 20 DAYS.

IN OUR OPINION, THE CONTRACTING ACTIVITY FAILED TO EXERCISE GOOD JUDGMENT AND SOUND DISCRETION WHEN IT AWARDED THE UTAH SET-ASIDE PORTION TO ALBERT TURNER AND CO., INC., SINCE, CLEARLY, UPON A COMPLETE EVALUATION OF THE UTAH NON-SET-ASIDE PORTION, THAT BIDDER WAS OTHER THAN LOW BIDDER AND ITS ALTERNATE UNIT PRICE FOR ALL 175,000 NON SET-ASIDE UNITS COULD NOT PROPERLY HAVE BEEN CONSIDERED AS RESPONSIVE TO THE UTAH PORTION ALONE. HOWEVER, BY AN ADMINISTRATIVE DECISION, THE SUBJECT PROCUREMENT WAS NEGOTIATED UNDER AUTHORITY OF 10 U.S.C. 2304 (A) 17 AND 15 U.S.C. 643. SECTION 2302, TITLE 10, U.S.C., DEFINES THE TERM "NEGOTIATE" AS MEANING TO "MAKE WITHOUT FORMAL ADVERTISING.' THEREFORE, WHERE NEGOTIATION IS AUTHORIZED BY SECTION 2304 (A), THE EXTENT AND METHOD OF NEGOTIATION IS LEFT ENTIRELY TO THE ADMINISTRATIVE AGENCY, AND THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING ARE NOT APPLICABLE. ALTHOUGH IT IS OUR VIEW THAT THE CONTRACTING OFFICIALS SHOULD CONDUCT THE NEGOTIATION WITH ALL POTENTIAL SUPPLIERS QUALIFYING FOR THE NEGOTIATION, THE DEFENSE ESTABLISHMENT HAS CHOSEN TO ADOPT THE POLICY STATED IN THE REGULATIONS ABOVE REFERRED TO AND WE ARE NOT IN A POSITION TO OBJECT TO THE IMPOSITION OF SUCH A NEGOTIATING RESTRICTION FROM A LEGAL STANDPOINT.

THE DEPARTMENT OF THE ARMY HAS REPORTED THAT IT IS TAKING STEPS TO CLARIFY ASPR 1-706.6 (D) AND APP 30-714C. IT IS ANTICIPATED THAT THIS WILL HELP TO PRECLUDE A RECURRENCE OF THE PRESENT SITUATION.

THE DEPARTMENT HAS STATED THAT IT APPEARS IN THE BEST INTERESTS OF THE GOVERNMENT TO ALLOW THE AWARD TO ALBERT TURNER AND CO., INC., TO STAND. IN VIEW OF THE WIDE DISCRETION VESTED IN THE ADMINISTRATIVE OFFICIALS, WE ARE CONSTRAINED TO HOLD THAT NO LEGAL BASIS EXISTS FOR DISTURBING THE AWARD AS MADE.