B-139978, SEP. 4, 1959

B-139978, SEP. 4, 1959

TO THE UNITED TYPEWRITER COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 22, 1959, WITH ENCLOSURES, PROTESTING THE REJECTION OF YOUR BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS, FSC GROUP 74, OFFICE MACHINES, PART V (REPAIR AND MAINTENANCE AND RECONDITIONING OF MANUAL TYPEWRITERS), ISSUED BY THE GENERAL SERVICES ADMINISTRATION UNDER DATE OF MARCH 11, 1959, FOR OPENING AT 11:30 A.M. ON APRIL 1, 1959.

AS A BASIS FOR YOUR PROTEST YOU ALLEGE THAT YOU WERE THE LOW BIDDER "TO SUPPLY THE SERVICES REQUESTED" AND THAT YOU COMPLIED WITH ALL OF THE STIPULATIONS SET FORTH IN THE INVITATION FOR BIDS. YOUR CONTENTION APPEARS TO BE THAT UNDER THE PROVISIONS OF PARAGRAPH 25 OF THE SPECIAL PROVISIONS THE COMPARISON OF BIDS THEREIN PROVIDED FOR SHOULD HAVE BEEN ON THE "AVERAGE OF ALL BIDS" RATHER THAN ON A "BIDDER'S OWN OVERHAUL PRICE," WHICH, IT APPEARS, YOU FEEL WAS APPLIED BY THE GENERAL SERVICES ADMINISTRATION IN THIS CASE. IN YOUR LETTER YOU DEALT WITH THIS MATTER AT CONSIDERABLE LENGTH AND YOU CONCLUDED BY INSISTING THAT YOU WERE ENTITLED TO AN AWARD OF 9 OF THE 33 AREAS SINCE, YOU ALLEGE, YOUR BID WAS THE LOWEST BID SUBMITTED IN RESPONSE TO THE INVITATION FOR THOSE AREAS.

IT MAY BE SAID AT THE OUTSET THAT THE DISCUSSION IN YOUR LETTER RESPECTING A COMPARISON OF THE BIDS RECEIVED IN THIS CASE APPEARS TO BE SOMEWHAT BESIDE THE POINT INVOLVED. WE SAY THIS BECAUSE THE RECORD SHOWS THAT YOU WERE THE LOW AGGREGATE BIDDER AND IT APPEARS THAT YOU WOULD HAVE BEEN AWARDED THE CONTRACT EXCEPT FOR THE FACT THAT YOUR BID FAILED TO MEET THE CRITERIA OF REASONABLENESS BASED ON THE RELATIONSHIP OF "PER HOUR" PRICES TO "OVERHAUL" PRICES. THAT FACT ALONE WAS THE BASIS FOR REJECTION OF YOUR BID.

AS INDICATED IN OUR LETTER OF JUNE 30, 1959, WE REQUESTED THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, TO FURNISH A REPORT CONCERNING THE MATTER OF YOUR PROTEST, AND A REPLY HAS NOW BEEN RECEIVED. AMONG THE PAPERS TRANSMITTED HERE WAS A COPY OF THE ABSTRACT OF BIDS SHOWING ALL BIDS RECEIVED IN RESPONSE TO THE INVITATION, AS WELL AS AN ADMINISTRATIVE STATEMENT SHOWING THE ACTION TAKEN THEREON. THE RECORD INDICATES THAT YOUR BID COVERED THE ITEMS LISTED FOR THE WASHINGTON, D.C. AREA AND CONTIGUOUS AREAS. THE ADMINISTRATIVE OFFICE REPORTS THAT YOUR LOW AGGREGATE BID OF $914.26 IN AREAS 7, 12, 27, 28, 30, 31, 32, AND 33 WAS REJECTED BECAUSE OF THE UNREASONABLE PRICES OFFERED IN THAT THE RATIO OF PER HOUR (ITEM 54-R-4350 AT $5.40) TO OVERHAUL (ITEM 54-R-4350-12A AT $13.20) IS 1 TO 2.44 AND IS, THEREFORE, GREATER THAN THE SPECIFIED RATIO SET FORTH IN PARAGRAPH 25 OF THE SPECIAL PROVISIONS FOR DETERMINING UNREASONABLE RATES.

THE RECORD INDICATES THAT PRIOR TO THE ISSUANCE OF THE INVITATION IN THIS CASE, THE PROVISIONS OF PARAGRAPH 25 WERE SUBMITTED FOR CONSIDERATION BY ALL PROSPECTIVE BIDDERS, INCLUDING YOUR COMPANY. IT WAS STATED IN THE GSA REPORT THAT YOUR MR. WOLOWITZ OBVIOUSLY UNDERSTOOD THE PROVISIONS OF THE CITED PARAGRAPH, THE PRECISE LANGUAGE HAVING BEEN EMPLOYED IN THE READVERTISEMENT LAST YEAR, AS WELL AS THIS YEAR'S INVITATION. THE CITED PARAGRAPH READS AS FOLLOWS:

"AGGREGATE AWARDS.--- ITEMS 54-R-4350 THROUGH 54-R-4350-15 (C) WILL BE AWARDED IN THE AGGREGATE. AWARD WILL BE MADE TO BIDDER QUOTING THE LOWEST AGGREGATE PRICE FOR THE COMPLETE GROUP OF ITEMS IN EACH SERVICE AREA, HOWEVER, THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY BID IF IT IS DETERMINED THAT THE PRICE QUOTED FOR ANY ONE ITEM WITHIN THE GROUP IS UNREASONABLE IN COMPARISON WITH THE AVERAGE PRICE BID WITHIN THE SERVICE AREA OR AREAS. A BID WILL BE CONSIDERED UNREASONABLE IF THE RATIO OF PER HOUR ITEM 54-R-4350 TO OVERHAUL ITEM 54-R-4350-15 (A) IS GREATER THAN 1 TO 3.5 (I.E., IF THE HOURLY RATE (ITEM 54-R-4350) EXCEEDS 28.57 PERCENT OF THE OVERHAUL PRICE (ITEM 54 R-4350-15 (A). IN ORDER TO RECEIVE CONSIDERATION FOR AWARD, IT WILL BE NECESSARY FOR EACH BIDDER TO STATE THE UNIT PRICE OF EACH ITEM WITHIN THE GROUP.

"THE FOLLOWING WEIGHTS PROPORTIONATE TO THE ESTIMATED REQUIREMENTS WILL BE APPLIED TO THE UNIT PRICE QUOTED FOR EACH ITEM WITHIN THE GROUP TO BE USED IN THE EVALUATION TO DETERMINE THE LOWEST AGGREGATE BID:

CHART

ITEM WEIGHT ITEM WEIGHT 54-R 4350---------------- 42 54-R-4350-15 (B) --- --- 4 54-R-4350 10------------- 10 54-R-4350-15 (C) ------ 2 54-R-4350-15 (A) -------- 42 "

THE GSA REPORT SUBMITTED IN RESPONSE TO OUR LETTER OF JUNE 30, 1959, DEALS WITH THE SEVERAL MATTERS REFERRED TO IN YOUR LETTER OF JUNE 22, 1959. THAT AGENCY REFERRED TO THE FACT THAT THE CITED PARAGRAPH 25 CONTAINS TWO PARTS THAT PERTAIN TO AN UNREASONABLE BID. THE FIRST DEALS WITH AN UNREASONABLE PRICE QUOTED FOR ANY ONE ITEM IN COMPARISON WITH THE AVERAGE PRICE BID WITHIN THE SAME AREA OR AREAS, WHILE THE SECOND PART SETS FORTH A CRITERIA OF UNREASONABLENESS BASED ON THE RELATIONSHIP OF "PER HOUR" PRICES TO "OVERHAUL" PRICES. IT WAS STATED IN THE REPORT THAT THE FORMER IS NECESSARY IN ORDER TO ELIMINATE UNUSUALLY HIGH BIDS ALTHOUGH THE RELATIONSHIP OF "PER HOUR" TO "OVERHAUL" IS WITHIN THE ESTABLISHED CRITERIA.

RESPECTING THE LATTER PART, THE ADMINISTRATIVE OFFICE REPORTS THAT THE INCLUSION OF SUCH PROVISION ELIMINATES UNUSUALLY HIGH PRICES FOR "PER HOUR" WORK AND EXTREMELY LOW PRICES FOR ,OVERHAUL" WORK, AND THAT THIS IS NECESSARY SINCE THE NEEDS OF EACH AGENCY ARE DIFFERENT AND TO DO OTHERWISE WOULD CAUSE THE AGENCY REQUIRING A GREATER PORTION OF "PER HOUR" WORK TO SUBSIDIZE THE AGENCY REQUIRING MORE "OVERHAUL" WORK. ALSO, THE ACCEPTANCE OF SUCH OUT OF PROPORTION BIDS PROMPTS CONTRACTORS TO ENCOURAGE MORE "PER HOUR" WORK INSTEAD OF "OVERHAUL" WORK.

RESPECTING YOUR CLAIM THAT THE AWARD IN THIS CASE WAS MADE TO A BIDDER WHOSE PRICE EXCEEDED THE INDICATED RATIO, THE GENERAL SERVICES ADMINISTRATION REPORTS THAT SUCH CONTENTION IS IN ERROR; THAT THE PRICE BID WAS $4 PER HOUR AND $14 FOR OVERHAUL, WHICH IS A RATIO OF PRECISELY 1 TO 3.5, AND THAT THE PERCENTAGE FIGURE OF 28.57 IS A ROUNDING OFF OF THE RATIO 1 TO 3.5.

THE GENERAL SERVICES ADMINISTRATION TAKES THE POSITION THAT THE USE OF PARAGRAPH 25 OF THE SPECIAL PROVISIONS IS NECESSARY TO PROTECT THE BEST INTERESTS OF THE GOVERNMENT, AND THAT AGENCY REPORTS THAT ITS PROVISIONS HAVE BEEN CONSISTENTLY APPLIED. SINCE, AS PREVIOUSLY STATED, YOUR BID COULD NOT BE ACCEPTED UNDER THE CRITERIA SET FORTH IN THE CITED PARAGRAPH, WE ARE OF THE VIEW THAT ITS REJECTION BY THE GENERAL SERVICES ADMINISTRATION WAS PROPER. THEREFORE, THERE IS NO ACTION WHICH OUR OFFICE MAY PROPERLY TAKE IN THIS MATTER.