B-139604, JULY 13, 1959, 39 COMP. GEN. 17

B-139604: Jul 13, 1959

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CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - CONSIDERATION OF LOW BIDDERS UNDER SET-ASIDE UNDER AN INVITATION WHICH PROVIDES THAT NEGOTIATION FOR THE LABOR SURPLUS AREA AND SMALL BUSINESS CONCERN SET-ASIDE PORTIONS OF A PROCUREMENT SHALL BE CONDUCTED WITH CONCERNS WHICH HAVE NOT BEEN AWARDED UNDER THE NON-SET- ASIDE PORTION OF THE FULL QUANTITY WHICH THEY PROPOSED TO FURNISH. BOTH PROVISIONS ARE REQUIRED TO BE CONSTRUED TOGETHER SO THAT ELIGIBLE BIDDERS WHO OFFER THE MAXIMUM QUANTITY OF THE TOTAL PROCUREMENT ARE NOT TO BE ELIMINATED FROM CONSIDERATION FOR SET-ASIDE PORTION. 1959: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 13. WITH REGARD TO THE PORTION SET ASIDE FOR CONCERNS IN LABOR SURPLUS AREAS THE INVITATION STATED: NOTE B: " SET-ASIDES" FOR FIRMS IN LABOR SURPLUS ^AREAS: (C) TO QUALIFY FOR THE SET-ASIDE PORTION OF AN ITEM A CONCERN MUST SUBMIT A BID OR PROPOSAL ON THE NON-SET-ASIDE PORTION OF THAT ITEM WHICH IS NO GREATER THAN 120 PERCENT OF THE HIGHEST UNIT PRICE AWARDED ON SUCH NON-SET -ASIDE PORTION AND EITHER MUST BE A LABOR SURPLUS AREA CONCERN OR MUST BE A SMALL BUSINESS CONCERN.

B-139604, JULY 13, 1959, 39 COMP. GEN. 17

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - CONSIDERATION OF LOW BIDDERS UNDER SET-ASIDE UNDER AN INVITATION WHICH PROVIDES THAT NEGOTIATION FOR THE LABOR SURPLUS AREA AND SMALL BUSINESS CONCERN SET-ASIDE PORTIONS OF A PROCUREMENT SHALL BE CONDUCTED WITH CONCERNS WHICH HAVE NOT BEEN AWARDED UNDER THE NON-SET- ASIDE PORTION OF THE FULL QUANTITY WHICH THEY PROPOSED TO FURNISH, BUT WHICH ALSO PROVIDES THAT THE LABOR SURPLUS AREA AND SMALL BUSINESS CONCERNS SHOULD OFFER THE TOTAL QUANTITY FOR THE NON-SET-ASIDE AND THE SET -ASIDE PORTIONS, BOTH PROVISIONS ARE REQUIRED TO BE CONSTRUED TOGETHER SO THAT ELIGIBLE BIDDERS WHO OFFER THE MAXIMUM QUANTITY OF THE TOTAL PROCUREMENT ARE NOT TO BE ELIMINATED FROM CONSIDERATION FOR SET-ASIDE PORTION.

TO THE R. C. BENNETT BOX COMPANY, JULY 13, 1959:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 13, 1959, PROTESTING AGAINST THE PROPOSED AWARD OF THAT PORTION OF INVITATION NO. CML-30-070-59 -96 SET ASIDE FOR FIRMS IN LABOR SURPLUS AREAS TO A BIDDER OTHER THAN YOUR COMPANY.

THE REFERRED-TO INVITATION, ISSUED BY THE UNITED STATES ARMY CHEMICAL PROCUREMENT DISTRICT, NEW YORK, ON MARCH 6, 1959, DIVIDED A PROCUREMENT OF WOOD BOXES INTO A 60,120 UNIT LABOR SURPLUS AREA CONCERN AND SMALL BUSINESS CONCERN SET-ASIDE PORTION AND A 60,120 UNIT NON-SET ASIDE PORTION. WITH REGARD TO THE PORTION SET ASIDE FOR CONCERNS IN LABOR SURPLUS AREAS THE INVITATION STATED:

NOTE B: " SET-ASIDES" FOR FIRMS IN LABOR SURPLUS ^AREAS:

(C) TO QUALIFY FOR THE SET-ASIDE PORTION OF AN ITEM A CONCERN MUST SUBMIT A BID OR PROPOSAL ON THE NON-SET-ASIDE PORTION OF THAT ITEM WHICH IS NO GREATER THAN 120 PERCENT OF THE HIGHEST UNIT PRICE AWARDED ON SUCH NON-SET -ASIDE PORTION AND EITHER MUST BE A LABOR SURPLUS AREA CONCERN OR MUST BE A SMALL BUSINESS CONCERN. A LABOR SURPLUS CONCERN OR BUSINESS SHOULD OFFER THE TOTAL QUANTITY OF EACH ITEM (INCLUDING BOTH NON-SET-ASIDE AND SET-ASIDE QUANTITIES) WHICH IT PROPOSES TO FURNISH UNDER THIS SOLICITATION. A CONCERN WHICH DOES NOT QUALIFY AS A LABOR SURPLUS AREA CONCERN OR AS A SMALL BUSINESS CONCERN SHOULD LIMIT ITS OFFER TO THE NON- SET-ASIDE QUANTITY OF EACH TEM.

(D) THE PRICES OFFERED SHALL APPLY ON TO THE NON-SET-ASIDE PORTION. AWARDS FOR THE SET-ASIDE PORTION OF ANY ITEM SHALL BE OFFERED AT THE HIGHEST UNIT PRICE AWARDED ON THE NON-SET-ASIDE PORTION OF THAT ITEM.

(D) AFTER AWARDS HAVE BEEN MADE ON THE NON-SET-ASIDE QUANTITIES OF THIS PROCUREMENT, NEGOTIATIONS WILL BE CONDUCTED WITH QUALIFIED CONCERNS IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1: SMALL BUSINESS CONCERNS WHICH ARE ALSO LABOR SURPLUS

CONCERNS.

GROUP 2: OTHER LABOR SURPLUS AREA CONCERNS.

GROUP 3: SMALL BUSINESS CONCERNS NOT INCLUDED IN GROUP 1.

NEGOTIATIONS SHALL BE CONDUCTED, WITHIN EACH OF THE ABOVE GROUPS, WITH CONCERNS (WHICH HAVE NOT BEEN AWARDED UNDER THE NON-SET-ASIDE PORTION THE FULL QUANTITY WHICH THEY PROPOSED TO FURNISH) IN THE ORDER OF THEIR BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION, BEGINNING WITH THE LOWEST RESPONSIVE BID OR INITIAL PROPOSAL ON WHICH AN AWARD FOR THE ENTIRE QUANTITY OFFERED HAS NOT BEEN MADE. AS TO EACH BID OR PROPOSAL, NEGOTIATION FOR THE SET-ASIDE PORTION SHALL BE FOR A QUANTITY NOT IN EXCESS OF (I) THE TOTAL QUANTITY PROPOSED TO BE FURNISHED LESS (II) THE QUANTITY, IF ANY, AWARDED UNDER THE NON-SET-ASIDE PORTION. FOR THE PURPOSE OF SUCH NEGOTIATIONS, WHEN A CONCERN HAS OFFERED INCREMENTS AT DIFFERENT PRICES, EACH INCREMENT WILL BE CONSIDERED AS A SEPARATE BID OR PROPOSAL.

FORTY-NINE BIDDERS WERE SOLICITED AND SEVENTEEN BIDS WERE RECEIVED. THE OZARK BOX AND CRATING COMPANY, CLARKSVILLE, ARKANSAS, WAS THE LOWEST RESPONSIVE BIDDER ON THE NON-SET-ASIDE PORTION AND WAS AWARDED THE CONTRACT THEREFOR AT A TOTAL CONTRACT PRICE OF $33,667.20 ON MAY 13, 1959.

THE RECORD INDICATES THAT AFTER THE BID OPENING YOU ADVISED THE PROCURING AGENCY THAT YOU WERE AWARE OF THE FACT THAT YOU WERE THE NEXT LOWEST BIDDER ON THE NON-SET-ASIDE PORTION OF THE INVITATION; THAT SINCE THE OZARK BOX AND CRATING COMPANY, THE SUCCESSFUL BIDDER ON THE NON-SET-ASIDE PORTION OF THE INVITATION, WOULD BE RECEIVING AN AWARD FOR THE ENTIRE QUANTITY OF THE NON-SET-ASIDE PORTION, YOU AND THE SMALL BUSINESS ADMINISTRATION WERE OF THE OPINION THAT UNDER THE PROVISIONS OF PARAGRAPH 2 OF SECTION (D) OF NOTE B OF THE INVITATION THAT COMPANY WAS ELIMINATED FROM PARTICIPATING IN THE QUANTITY SET ASIDE FOR LABOR SURPLUS CONCERNS; AND THAT, THEREFORE, YOU, AS THE SECOND LOWEST BIDDER ON THE NON-SET-ASIDE PORTION OF THE INVITATION, WERE ENTITLED TO THE FIRST PRIORITY TO NEGOTIATE FOR THE SET-ASIDE PORTION IMMEDIATELY AFTER AWARD OF THE NON-SET -ASIDE PORTION. IN RESPONSE THE CONTRACTING OFFICER ADVISED YOU BY LETTER DATED MAY 8, 1959, THAT YOU HAD CORRECTLY STATED THE CONTENT OF THE REGULATION WHICH PROVIDES THAT IF A BIDDER IS AWARDED THE FULL QUANTITY HE PROPOSED TO OFFER ON BOTH THE SET-ASIDE AND THE NON-SET-ASIDE PORTION, AN AWARD UNDER EITHER OR IN COMBINATION CANNOT EXCEED THE QUANTITY HE PROPOSED. THE CONTRACTING OFFICER FURTHER ADVISED YOU THAT IN THE PRESENT CASE THE OZARK BOX AND CRATING COMPANY DID NOT LIMIT THE TOTAL QUANTITY IT OFFERED TO FURNISH THE GOVERNMENT SINCE IT OFFERED TO SUPPLY BOTH THE NON- SET-ASIDE AND THE SET-ASIDE QUANTITIES AND THAT, THEREFORE, PURSUANT TO THE REGULATIONS, HE MUST NEGOTIATE FIRST WITH THE COMPANY FOR THE SET- ASIDE PORTION. IN THE TELEGRAM OF MAY 13, 1959, TO OUR OFFICE YOU PROTESTED THIS INTERPRETATION PLACED ON THE PROVISIONS OF NOTE B BY THE CONTRACTING OFFICER.

IN A LETTER DATED MAY 22, 1959, YOU STATED THAT THE FIRST PARAGRAPH OF SECTION (D) OF NOTE B PROVIDED THAT "THE PRICES OFFERED SHALL APPLY ONLY TO THE NON-SET-ASIDE PORTION" AND THAT BIDS ON THE SET-ASIDE PORTION WERE NOT REQUESTED.

YOUR PROTEST APPEARS TO BE BASED PRIMARILY ON THE PARENTHETICAL PHRASE "* * * (WHICH HAVE NOT BEEN AWARDED UNDER THE NON-SET-ASIDE PORTION THE FULL QUANTITY WHICH THEY PROPOSED TO FURNISH)" APPEARING IN THE LAST HALF OF THE SECOND PARAGRAPH OF SECTION (D) OF NOTE B OF THE INVITATION. IN ITS REPORT THE ADMINISTRATIVE OFFICE STATES THAT THE REFERRED-TO PARENTHETICAL PHRASE MUST BE READ TOGETHER WITH THAT PORTION OF SECTION (C) OF THE CLAUSE WHICH PROVIDES THAT THERE SHOULD BE OFFERED "* * * THE TOTAL QUANTITY OF EACH ITEM (INCLUDING BOTH NON SET-ASIDE AND SET-ASIDE QUANTITIES) * * *.'

WHILE THE LANGUAGE OF THE SECOND PARAGRAPH OF SECTION (D) OF NOTE B OF THE INVITATION STANDING ALONE MIGHT BE SUBJECT TO THE INTERPRETATION CONTENDED FOR BY YOU, WE AGREE WITH THE ADMINISTRATIVE OFFICE THAT THE INTENT AND MEANING OF THE INVITATION ARE NOT TO BE DETERMINED BY THE CONSIDERATION OF AN ISOLATED SECTION OR PROVISION THEREOF BY ITSELF, BUT THAT THE INVITATION MUST BE CONSIDERED IN ITS ENTIRETY AND EACH PROVISION MUST BE CONSTRUED IN ITS RELATIONSHIP TO OTHER PROVISIONS AND IN THE LIGHT OF THE GENERAL PURPOSE INTENDED TO BE ACCOMPLISHED. WE THINK, THEREFORE, THAT THE INVITATION PROPERLY CONSTRUED WOULD REQUIRE THAT ELIGIBLE BIDDERS SPECIFY THE MAXIMUM QUANTITY OF THE TOTAL PROCUREMENT, COMPRISED OF THE NON-SET-ASIDE AND SET-ASIDE QUANTITIES, WHICH THEY WOULD BE WILLING TO FURNISH; THAT NEGOTIATIONS BE CONDUCTED FIRST WITH THE ELIGIBLE BIDDER WHOSE PRICE WAS THE LOWEST IN THE NON SET-ASIDE AWARD; AND THAT NO SET- ASIDE CONTRACT BE ENTERED INTO WITH A BIDDER FOR A QUANTITY, WHEN ADDED TO THE NON-SET-ASIDE QUANTITY AWARDED TO HIM, IS IN EXCESS OF THE TOTAL AMOUNT THE BIDDER SIGNIFIED HE WOULD BE WILLING TO FURNISH. APPLYING THIS CONSTRUCTION, IT IS OUR VIEW THAT SINCE THE OZARK BOX AND CRATING COMPANY INDICATED ITS WILLINGNESS TO FURNISH THE TOTAL PROCUREMENT AND, SINCE IT WAS THE LOW BIDDER ON THE NON-SET-ASIDE PORTION AND QUALIFIED AS A SMALL BUSINESS CONCERN LOCATED IN A LABOR SURPLUS AREA, THE GOVERNMENT MUST NEGOTIATE FIRST WITH THAT COMPANY FOR THE SET-ASIDE PORTION.