B-140737, NOV. 3, 1959

B-140737: Nov 3, 1959

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MICROFILMING CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 4. WE HAVE ALSO RECEIVED A REPORT IN THIS MATTER FROM OUR CHICAGO REGIONAL OFFICE. THE SERVICES WERE TO BE FURNISHED AT SPECIFIED FIXED HOURLY RATES FOR LABOR. THAT IS TO SAY. THE COST OF MATERIAL WAS REIMBURSABLE ON THE BASIS OF ACTUAL COSTS. WERE CONSIDERED ELIGIBLE FOR FURTHER NEGOTIATION. THAT THIS WAS NOT A CEILING PRICE. A FINAL PROPOSAL WAS RECEIVED FROM WATLAND. SUMMARY OF THESE PROPOSALS IS AS FOLLOWS: CHART WATLAND U.S. WHILE THESE PROPOSALS WERE TO RESULT IN A TIME AND MATERIAL CONTRACT. THE FACTOR OF LABOR WAS OF PARAMOUNT CONSIDERATION. SINCE THE MATERIAL COSTS WERE REIMBURSABLE THE DEPARTMENT OF THE ARMY CONSIDERED SUCH COSTS AS ELIMINATED COMPLETELY SO FAR AS EVALUATION OF PROPOSALS WAS CONCERNED.

B-140737, NOV. 3, 1959

TO U.S. MICROFILMING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 4, 1959, WITH ENCLOSURES, RELATING TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE ARMY TO WATLAND, INC., PURSUANT TO PROPOSAL NO. PR-ABMA-ID-13-60. BRIEFLY STATED, YOUR PROTEST APPEARS TO BE BASED UPON THE FACT THAT ALTHOUGH YOU SUBMITTED A BID OF $236,826.05 FOR THE WORK INVOLVED, THE CHICAGO ORDNANCE DISTRICT AWARDED A CONTRACT TO WATLAND, INC., IN THE AMOUNT OF $262,567.74--- AN INCREASE OF $25,741.69 OVER YOUR BID PRICE.

AS STATED IN OUR LETTER OF SEPTEMBER 28, 1959, TO HONORABLE SIDNEY R. YATES, HOUSE OF REPRESENTATIVES, WE TOOK UP WITH THE DEPARTMENT OF THE ARMY THE MATTER OF YOUR PROTEST WITH THE REQUEST FOR A FULL REPORT OF THE FACTS. THE REPORT HAS NOW BEEN RECEIVED. WE HAVE ALSO RECEIVED A REPORT IN THIS MATTER FROM OUR CHICAGO REGIONAL OFFICE.

THE RECORD INDICATES THAT UNDER DATE OF JULY 14, 1959, THE ARMY BALLISTIC MISSILE AGENCY, U.S. ARMY ORDNANCE MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA, REQUESTED THE CHICAGO ORDNANCE DISTRICT, TOGETHER WITH NINE OTHER ORDNANCE DISTRICTS, TO SOLICIT PROPOSALS FROM TWENTY CONTRACTORS TO FURNISH THE PERSONNEL, EQUIPMENT, AND MATERIAL REQUIRED TO MICROFILM DRAWINGS AND OTHER DOCUMENTS AT THE ARMY BALLISTIC MISSILE AGENCY FOR THE TEN-MONTH PERIOD ENDING JUNE 30, 1960. THE SERVICES WERE TO BE FURNISHED AT SPECIFIED FIXED HOURLY RATES FOR LABOR, MONTHLY RENTALS FOR EQUIPMENT AND CONTRACTOR'S COST FOR MATERIALS, THAT IS TO SAY, THE COST OF MATERIAL WAS REIMBURSABLE ON THE BASIS OF ACTUAL COSTS. SIX CONTRACTORS RESPONDED TO THE PROPOSALS AND OF THAT NUMBER ONLY YOUR PROPOSAL AND THE PROPOSAL SUBMITTED BY WATLAND, INC., WERE CONSIDERED ELIGIBLE FOR FURTHER NEGOTIATION.

ON THE BASIS OF NEGOTIATION BETWEEN YOUR CONCERN AND THE CHICAGO ORDNANCE DISTRICT, YOU SUBMITTED A PROPOSAL UNDER DATE OF AUGUST 31, 1959, IN THE ESTIMATED AMOUNT OF $236,826.05, IT BEING INDICATED, HOWEVER, THAT THIS WAS NOT A CEILING PRICE. A FINAL PROPOSAL WAS RECEIVED FROM WATLAND, INC., ON AUGUST 26, 1959, IN THE AMOUNT OF $262,567.74, AND ON AUGUST 31, 1959, WATLAND, INC., AGREED TO ACCEPT THAT AMOUNT AS A CEILING PRICE. SUMMARY OF THESE PROPOSALS IS AS FOLLOWS:

CHART

WATLAND U.S. MICROFILMING

HOURLY CHARGE INCLUDING BURDEN

AND PROFIT (1) $178,187.54 $192,733.55

EQUIPMENT RENTALS 3,000.00 3,850.00

MATERIALS AT COST 81,380.20 40,242.50

$262,567.74 $236,826.05

(1) BASED ON 52,000 HOURS FOR REGULAR TIME AND 5,200 HOURS FOR OVERTIME.

WHILE THESE PROPOSALS WERE TO RESULT IN A TIME AND MATERIAL CONTRACT, THE FACTOR OF LABOR WAS OF PARAMOUNT CONSIDERATION. SINCE THE MATERIAL COSTS WERE REIMBURSABLE THE DEPARTMENT OF THE ARMY CONSIDERED SUCH COSTS AS ELIMINATED COMPLETELY SO FAR AS EVALUATION OF PROPOSALS WAS CONCERNED, OR AT LEAST CONSIDERED AS IDENTICAL FOR ALL OFFERORS. IN OTHER WORDS, MATERIAL COST WAS NOT A FACTOR IN DETERMINING THE FINAL LOW OFFER.

IN CONNECTION WITH YOUR PROTEST, IT MAY BE POINTED OUT THAT THE RECORD IN THIS CASE INDICATES THAT YOUR CONCERN CONSISTENTLY QUOTED ON 24 PERSONNEL AND $40,242.50 FOR MATERIAL, AND IT WAS NOT UNTIL YOU SUBMITTED YOUR FINAL PROPOSAL ON AUGUST 31, 1959, THAT YOU CHANGED TO 30 PERSONNEL. IN YOUR FINAL PROPOSAL YOU INCREASED YOUR LABOR COSTS BY $65,850.88. THIS INCREASE COVERED THE ADDITIONAL SIX PERSONNEL AS WELL AS AN OVERALL INCREASE IN HOURLY RATES. A COMPARISON BETWEEN THE BASIC LABOR RATES AND COMPOSITE RATES OF BOTH YOUR CONCERN AND WATLAND, INC., INDICATES THAT THE LATTER'S PROPOSAL WAS $4.73 PER HOUR CHEAPER, ON A COMPOSITE BASIS ($93.52 TO $98.25), FOR REGULAR TIME, AND $36.88 PER HOUR CHEAPER ($129.44 TO $92.56) FOR OVERTIME. A COMPARISON OF THE TWO FINAL REVISED PROPOSALS READS AS FOLLOWS:

CHART

WATLAND U.S. MICROFILMING TOTAL PRICE

$262,567.74 $236,826.05 INCLUDES MATERIAL AT 81,380.20 40,242.50

----------- ------------ FIGURE FOR COMPARISON

$181,187.54 $196,583.55

181,187.54

----------- U.S. MICROFILMING'S PROPOSAL HIGHER BY $ 15,396.01

IT WILL BE SEEN FROM WHAT HAS BEEN SET FORTH ABOVE THAT THE BASIS FOR EVALUATION OF THE PROPOSALS WAS NOT THE DIFFERENCE BETWEEN YOUR BID PRICE OF $236,826.05 AND THE BID PRICE OF $262,567.74 SUBMITTED BY WATLAND, INC. THE ABOVE TABULATION SHOWS THAT UPON A COMPARISON OF THE LABOR COSTS INVOLVED--- TOTAL BID LESS MATERIAL COST--- YOUR BID WAS HIGHER BY $15,396.01 THAN THE BID SUBMITTED BY WATLAND, INC. THAT WAS THE BASIC FACT ON WHICH THE CONTRACT WAS AWARDED IN THIS CASE. THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY APPEARS TO HAVE BEEN IN ACCORDANCE WITH STATUTORY AND PROCUREMENT REGULATIONS, AND THE CONTRACT APPEARS TO HAVE BEEN PROPERLY AWARDED BY ACCEPTANCE OF THE LOWEST EVALUATED PROPOSAL.