B-139022, APRIL 17, 1959, 38 COMP. GEN. 708

B-139022: Apr 17, 1959

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ORIGIN BASIS BUT PROVIDES THAT EVALUATION WOULD BE ON THE BASIS OF BID PRICE PLUS GOVERNMENT TRANSPORTATION COSTS IS A RESPONSIVE BID TO THE DELIVERED PRICE INVITATION. EVEN THOUGH IT WAS INTENDED THAT THE GOVERNMENT RATHER THAN THE BIDDER WOULD COMPUTE THE TRANSPORTATION COSTS. IN PARAGRAPH 8 OF THE TERMS AND CONDITIONS IT WAS PROVIDED THAT THE CONTRACT WOULD BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT. IN THE SAME PARAGRAPH IT WAS ALSO PROVIDED THAT THE GOVERNMENT COULD REJECT ANY OR ALL BIDS AND WAIVE INFORMALITIES AND MINOR IRREGULARITIES. DELIVERY WILL BE (B) AT THE GOVERNMENT'S OPTION F.O.B. THE FINAL DESTINATION (S) WILL BE CONSIDERED TO BE AS FOLLOWS: OAKLAND ARMY TERMINAL.

B-139022, APRIL 17, 1959, 38 COMP. GEN. 708

BIDS - EVALUATION - DELIVERY PROVISIONS - F.O.B. DESTINATION BIDS V. F.O.B. ORIGIN A LOW F.O.B. DESTINATION BID SUBMITTED IN RESPONSE TO AN INVITATION WHICH REQUIRES PRICES TO BE QUOTED ON AN F.O.B. ORIGIN BASIS BUT PROVIDES THAT EVALUATION WOULD BE ON THE BASIS OF BID PRICE PLUS GOVERNMENT TRANSPORTATION COSTS IS A RESPONSIVE BID TO THE DELIVERED PRICE INVITATION, EVEN THOUGH IT WAS INTENDED THAT THE GOVERNMENT RATHER THAN THE BIDDER WOULD COMPUTE THE TRANSPORTATION COSTS, AND THE BID MAY BE CONSIDERED FOR AWARD WITHOUT PREJUDICING THE RIGHTS OF THE HIGHER BIDDERS WHO SUBMITTED F.O.B. ORIGIN BIDS.

TO THE SECRETARY OF THE ARMY, APRIL 17, 1959:

BY LETTER DATED MARCH 17, 1959, THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS) SUBMITTED FOR OUR DECISION A PROTEST BY THE UNITED STATES RUBBER COMPANY OF A PENDING AWARD ACTION PURSUANT TO INVITATION NO. ORD 104-015-59-105, ISSUED JANUARY 30, 1959.

UNDER THE REFERENCE INVITATION BENICIA ARSENAL, BENICIA, CALIFORNIA, SOLICITED BIDS FOR TIRE-CAPPING MATERIAL TO BE SUPPLIED IN THREE SIZES. IN PARAGRAPH 8 OF THE TERMS AND CONDITIONS IT WAS PROVIDED THAT THE CONTRACT WOULD BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. IN THE SAME PARAGRAPH IT WAS ALSO PROVIDED THAT THE GOVERNMENT COULD REJECT ANY OR ALL BIDS AND WAIVE INFORMALITIES AND MINOR IRREGULARITIES. PARAGRAPH 3 OF THE INVITATION FOR BIDS PROVIDED:

3. F.O.B. POINT. DELIVERY WILL BE

(B) AT THE GOVERNMENT'S OPTION F.O.B. CARRIER'S EQUIPMENT, WHARF OR FREIGHT STATION AT OR NEAR CONTRACTOR'S PLANT.

PARAGRAPH 10 PROVIDED:

10. DESTINATION

FOR THE PURPOSE OF EVALUATING BIDS (AND FOR NO OTHER PURPOSE), THE FINAL DESTINATION (S) WILL BE CONSIDERED TO BE AS FOLLOWS:

OAKLAND ARMY TERMINAL, OAKLAND, CALIFORNIA, OR LONG BEACH OUT PORT, LONG BEACH, CALIFORNIA.

ALSO, PARAGRAPH 11 (B.2) PROVIDED:

(2) EVALUATION OF BIDS WILL BE ON THE BASIS OF BID PRICE PLUS GOVERNMENT TRANSPORTATION COST FROM POINT OF ORIGIN TO THE DESTINATION NAMED HEREIN OR TO BE DETERMINED PRIOR TO THE AWARD OF THE CONTRACT.

IN RESPONSE TO THE INVITATION, BIDS WERE SUBMITTED BY 11 FIRMS. EXCLUDING THE BID OF THE PACIFIC TIRE AND RUBBER COMPANY, THE UNITED STATES RUBBER COMPANY WAS LOW ON ITEM NO. 1, AND THE GENERAL TIRE AND RUBBER COMPANY WAS LOW ON ITEMS NOS. 2 AND 3. THE PACIFIC TIRE AND RUBBER COMPANY, WHICH HAD SUBMITTED AN "ALL OR NONE" BID, WAS LOW BIDDER ON THE 3 ITEMS AS A GROUP; HOWEVER, IT QUOTED PRICES F.O.B. OAKLAND ARMY TERMINAL, ONE OF THE DESTINATION POINTS, RATHER THAN F.O.B. ORIGIN AS CALLED FOR BY THE INVITATION.

THE UNITED STATES RUBBER COMPANY PROTESTS CONSIDERATION OF THE BID OF THE PACIFIC TIRE AND RUBBER COMPANY FOR THE REASON THAT THE LATTER'S BID IS NONRESPONSIVE, CITING 16 COMP. GEN. 21 AND ID. 149. THOSE DECISIONS HELD, IN EFFECT, THAT A BID ON A DELIVERED PRICE BASIS MAY NOT BE CONSIDERED UNDER AN INVITATION CALLING FOR PRICES F.O.B. POINT OF ORIGIN BECAUSE THERE WOULD NOT BE COMPETITION ON AN EQUAL BASIS AMONG BIDDERS AND SUCH ACTION WOULD NOT BE FAIR TO OTHER BIDDERS.

WE STATED IN OUR DECISION OF NOVEMBER 8, 1950, 30 COMP. GEN. 179, THAT THE ESSENTIAL DETERMINATION TO BE MADE IN DEVIATION CASES IS WHETHER THE DEVIATION INVOLVED GOES TO THE SUBSTANCE OF THE BID SO AS TO AFFECT EITHER THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES OFFERED AND THEREFORE WHETHER WAIVER OF THE DEVIATION WOULD BE PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS.

THE ADVERTISED SPECIFICATIONS IN THIS CASE ADVISED PROSPECTIVE BIDDERS OF THE ALTERNATIVE DESTINATIONS, AND THEY WERE INFORMED THAT THE EVALUATION OF BIDS WOULD BE ON THE BASIS OF BID PRICE PLUS GOVERNMENT TRANSPORTATION COSTS FROM POINT OF ORIGIN. IN SUBSTANCE, THEREFORE, THE INVITATION SPELLED OUT CLEARLY THAT DELIVERED PRICES WERE TO BE USED IN THE EVALUATION OF THE BIDS. WHILE IT IS TRUE THAT IT WAS INTENDED THAT THE GOVERNMENT RATHER THAN THE BIDDER WOULD COMPUTE THE DELIVERED PRICE, IT IS NO LESS TRUE THAT THE GOVERNMENT'S PRIMARY CONCERN ON THIS PHASE OF THE PROCUREMENT WAS TO OBTAIN THE BEST POSSIBLE DELIVERED PRICE.

IN ITS PROTEST THE UNITED STATES RUBBER COMPANY STATED THAT "INVARIABLY F.O.B. DESTINATION BIDS RESULT IN CONSIDERABLY LESS COST TO A CONTRACTOR DUE TO LESS HANDLING STORAGE AND THE POSSIBILITY OF DIRECT SHIPMENT FROM PRODUCTION TO CARRIERS EQUIPMENT.' ASSUMING THIS TO BE TRUE, WE ARE NOT PERSUADED THAT A CONTRACTOR CAN SELL GOODS AT A LOWER PRICE DELIVERED THAN HE CAN AT HIS FACTORY SITE, PARTICULARLY WHEN THE BIDDER'S PLANT IS LOCATED AT A CONSIDERABLE DISTANCE FROM THE DESIRED DESTINATION. IN THAT CONNECTION, IT IS NOTED THAT IN THIS PARTICULAR CASE EVEN IF THE COST OF TRANSPORTATION WERE ADDED TO THE DESTINATION BIDDER'S DELIVERED PRICE THE RESULTING PRICE WOULD STILL BE THE LOWEST DELIVERED COST TO THE GOVERNMENT.

ACCORDINGLY, SINCE THE DESTINATION BID IS LOWER THAN ANY ORIGIN BID, WE FAIL TO SEE HOW ANY BIDDER COULD BE PREJUDICED BY ACCEPTANCE OF THE DESTINATION BID AND IT IS CONCLUDED THAT THE BID OF THE PACIFIC TIRE AND RUBBER COMPANY MAY BE CONSIDERED IN MAKING AN AWARD OF A CONTRACT.