B-135964, JUL. 8, 1958

B-135964: Jul 8, 1958

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INC.: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 29. EXCEPT THAT PROPPER'S OFFERED DISCOUNT PERIOD WAS 30 DAYS WHEREAS YOURS WAS 10 DAYS. IT WAS DETERMINED BY THE CONTRACTING ACTIVITY THAT PROPPER WAS THE LOW BIDDER BY VIRTUE OF ITS DISCOUNT AND AWARD WAS MADE TO IT FOR THE NON-SET-ASIDE PORTION. SINCE THE CONTRACTOR WAS THE LOWEST SMALL BUSINESS BIDDER ON THE NON-SET- ASIDE PORTION. YOU ALLEGE THAT THE AWARD ON THE SET-ASIDE PORTION WAS MADE IMPROPERLY SINCE YOU ARE A SMALL BUSINESS CONCERN AND THE PROCURING ACTIVITY NEVER ATTEMPTED TO NEGOTIATE WITH YOU. THE NAVY PROCUREMENT DIRECTIVES (NPD) AND THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) APPLY TO THE MILITARY MEDICAL SUPPLY AGENCY SINCE IT IS A MILITARY ACTIVITY UNDER THE JURISDICTION OF THE DEPARTMENT OF THE NAVY.

B-135964, JUL. 8, 1958

TO U.M.A., INC.:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 29, 1958, PROTESTING AGAINST THE AWARD OF A SMALL-BUSINESS-SET-ASIDE CONTRACT FOR ANEROID SPHYGMOMANOMETERS TO ANOTHER BIDDER WITHOUT FIRST NEGOTIATING WITH YOU.

MILITARY MEDICAL SUPPLY AGENCY INVITATION NO. 62851-132-58, DATED JANUARY 29, 1958, DIVIDED A PROCUREMENT OF ANEROID SPHYGMOMANOMETERS INTO A 2,580 UNIT SMALL-BUSINESS-SET-ASIDE PORTION AND INTO A 2,580 UNIT NON-SET-ASIDE PORTION. WITH REGARD TO THE SMALL-BUSINESS-SET ASIDE, THE INVITATION STATED:

"THE RIGHT TO PARTICIPATE IN NEGOTIATION FOR THE QUANTITIES SET ASIDE HEREUNDER SHALL BE CONDITIONED UPON THE SUBMISSION OF A BID OR PROPOSAL UPON THE QUANTITIES NOT SET ASIDE AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE WITH RESPECT TO SUCH QUANTITIES NOT SET ASIDE.'

YOU AND PROPPER MANUFACTURING COMPANY, INC., OFFERED TO SUPPLY THE SUBJECT EQUIPMENT AT THE SAME PRICE, I.E., $11.33 PER UNIT LESS A TWO PERCENT PROMPT PAYMENT DISCOUNT, EXCEPT THAT PROPPER'S OFFERED DISCOUNT PERIOD WAS 30 DAYS WHEREAS YOURS WAS 10 DAYS. IT WAS DETERMINED BY THE CONTRACTING ACTIVITY THAT PROPPER WAS THE LOW BIDDER BY VIRTUE OF ITS DISCOUNT AND AWARD WAS MADE TO IT FOR THE NON-SET-ASIDE PORTION. ALSO, SINCE THE CONTRACTOR WAS THE LOWEST SMALL BUSINESS BIDDER ON THE NON-SET- ASIDE PORTION, THE CONTRACTING ACTIVITY NEGOTIATED WITH IT FOR THE SET- ASIDE PORTION. THE CONTRACTOR VOLUNTARILY OFFERED TO SUPPLY THE EQUIPMENT ON THE SET-ASIDE PORTION AT $11.27 PER UNIT LESS A TWO PERCENT PROMPT PAYMENT DISCOUNT, 30 DAYS, AND THE CONTRACTING ACTIVITY ISSUED A CONTRACT FOR THE REDUCED PRICE.

YOU ALLEGE THAT THE AWARD ON THE SET-ASIDE PORTION WAS MADE IMPROPERLY SINCE YOU ARE A SMALL BUSINESS CONCERN AND THE PROCURING ACTIVITY NEVER ATTEMPTED TO NEGOTIATE WITH YOU.

THE NAVY PROCUREMENT DIRECTIVES (NPD) AND THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) APPLY TO THE MILITARY MEDICAL SUPPLY AGENCY SINCE IT IS A MILITARY ACTIVITY UNDER THE JURISDICTION OF THE DEPARTMENT OF THE NAVY, IN PARTICULAR, AND THE DEPARTMENT OF DEFENSE, IN GENERAL. ALTHOUGH NPD 34 -201.5I (2) REQUIRED THAT THE INVITATION FOR BID STATES:

"/B) THE RIGHT TO PARTICIPATE IN SUBSEQUENT NEGOTIATION FOR THE QUANTITY THUS SET ASIDE SHALL BE CONDITIONED UPON THE SUBMISSION OF A BID OR PROPOSAL UPON THE ITEMS IN THIS PROCUREMENT AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE,"

ASPR 1-706.6 (C), PUBLISHED IN THE FEDERAL REGISTER ON DECEMBER 30, 1957, REQUIRED, INSOFAR AS PERTINENT, THAT THE INVITATION CONTAIN SUBSTANTIALLY THE FOLLOWING NOTICE:

"NOTICE TO PROSPECTIVE BIDDERS OR OFFERORS

"/UNITS) OF THIS PROCUREMENT ARE TO BE AWARDED ONLY TO ONE OR MORE SMALL BUSINESS CONCERNS. NEGOTIATION FOR AWARD OF THE PORTION OF THIS PROCUREMENT SET-ASIDE FOR SMALL BUSINESS WILL BE CONDUCTED ONLY WITH RESPONSIBLE SMALL BUSINESS CONCERNS WHO SUBMIT RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION. NEGOTIATIONS SHALL BE CONDUCTED WITH SUCH SMALL BUSINESS CONCERNS IN ORDER OF THEIR BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION, BEGINNING WITH THE LOWEST RESPONSIVE BID OR INITIAL PROPOSAL. * * *"

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.

ON MARCH 20, 1958, PRIOR TO THE SUBJECT AWARD AND PROTEST, THE MILITARY MEDICAL SUPPLY AGENCY BEGAN INCLUDING IN ITS INVITATIONS THE CLAUSE SUGGESTED IN ASPR 1-706.6 (C). IN VIEW OF THIS ACTION, BIDDERS ON FUTURE PROCUREMENTS WILL BE FULLY ADVISED AS TO THE TERMS UNDER WHICH NEGOTIATION WILL BE CONDUCTED.

ALTHOUGH THE SUBJECT INVITATION DID NOT OUTLINE THE NEGOTIATING PROCEDURE THAT WOULD BE FOLLOWED, IT APPEARS THAT THE PROCEDURE ACTUALLY FOLLOWED BY THE CONTRACTING ACTIVITY IN NEGOTIATING THE SET ASIDE PORTION WAS IN COMPLIANCE WITH THE CITED NPD AND ASPR PROVISIONS AND THEREFORE, ALTHOUGH WE BELIEVE THAT ALL BIDDERS SHOULD HAVE BEEN BETTER INFORMED BY THE INVITATION AS TO THE NEGOTIATING PROCEDURE, WE ARE CONSTRAINED TO HOLD THAT NO LEGAL BASIS EXISTS FOR DISTURBING THE AWARD AS MADE, IN VIEW OF THE WIDE DISCRETION VESTED IN THE ADMINISTRATIVE ..END :