B-141267, FEBRUARY 2, 1960, 39 COMP. GEN. 553

B-141267: Feb 2, 1960

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- HAVE THE SAME RIGHT TO BE CONSIDERED IN NEGOTIATIONS FOR THE SET-ASIDE. THE ONLY WAY THEIR RIGHTS CAN BE FAIRLY PROTECTED IS THROUGH THE USE OF THE BIDDER LOT METHOD. 1960: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 8. NEGOTIATIONS FOR AWARD OF THIS SET-ASIDE PORTION WILL BE CONDUCTED ONLY WITH RESPONSIBLE SMALL BUSINESS CONCERNS WHO HAVE SUBMITTED RESPONSIBLE BIDS ON THE NON-SET ASIDE PORTION OF THE UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET- ASIDE PORTION. THE PARTIAL SET-ASIDE OF THIS PROCUREMENT FOR SMALL BUSINESS CONCERNS IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER. THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY.

B-141267, FEBRUARY 2, 1960, 39 COMP. GEN. 553

CONTRACTS - AWARDS - EQUAL OR TIE BIDS - SMALL BUSINESS SET-ASIDE WHERE TWO BIDDERS WHO QUALIFY AS SMALL BUSINESS CONCERNS SUBMIT EQUAL LOW BIDS ON THE NON-SET-ASIDE PORTION OF A PROCUREMENT AND, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 2-406.4, ONE HAS BEEN CHOSEN BY LOT FOR AWARD OF THE NON-SET-ASIDE PORTION, IN THE ABSENCE OF SIMILARLY PRESCRIBED PROCEDURES FOR THE AWARD ON THE SMALL BUSINESS SET ASIDE PORTION, BOTH BIDDERS--- NOT JUST THE ONE RECEIVING THE NON-SET ASIDE AWARD--- HAVE THE SAME RIGHT TO BE CONSIDERED IN NEGOTIATIONS FOR THE SET-ASIDE, AND THE ONLY WAY THEIR RIGHTS CAN BE FAIRLY PROTECTED IS THROUGH THE USE OF THE BIDDER LOT METHOD.

TO THE SECRETARY OF THE AIR FORCE, FEBRUARY 2, 1960:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 8, 1960, RELATIVE TO A PROCUREMENT UNDER INVITATION NO. IFB-40-604-60-298, MEMPHIS AIR FORCE DEPOT, MEMPHIS, TENNESSEE.

THE INVITATION, ISSUED OCTOBER 13, AND AMENDED OCTOBER 27, 1959, DIVIDED A PROCUREMENT OF FOAM LIQUID INTO SMALL BUSINESS SET-ASIDE AMOUNTS OF 150,000 GALLONS UNDER ITEM NO. 1 (TO BE FURNISHED IN 5 GALLON CONTAINERS) AND 101,805 GALLONS UNDER ITEM NO. 2 (TO BE FURNISHED IN 55-GALLON DRUMS) AND NON-SET-ASIDE AMOUNTS OF 150,000 GALLONS UNDER ITEM NO. 1 AND 99,605 GALLONS UNDER ITEM NO. 2. THE NOTICE OF SMALL BUSINESS SET-ASIDE ATTACHED TO THE INVITATION PROVIDED IN PARTS AS FOLLOWS:

150,000 ADDITIONAL GALLONS OF ITEM 1 AND 101,805 GALLONS OF ITEM 2, AS IDENTIFIED ELSEWHERE IN THE SCHEDULE, HAS BEEN SET-ASIDE FOR AWARD TO ONE OR MORE SMALL BUSINESS CONCERNS. NEGOTIATIONS FOR AWARD OF THIS SET-ASIDE PORTION WILL BE CONDUCTED ONLY WITH RESPONSIBLE SMALL BUSINESS CONCERNS WHO HAVE SUBMITTED RESPONSIBLE BIDS ON THE NON-SET ASIDE PORTION OF THE 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 THE ORDER OF THEIR BIDS ON THE NON-SET-ASIDE PORTION AT THE HIGHEST UNIT PRICE AWARDED FOR THE NON-SET-ASIDE PORTION. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT NOT TO CONSIDER TOKEN BIDS OR DEVICES DESIGNED TO SECURE AN UNFAIR ADVANTAGE OVER OTHER BIDDERS ELIGIBLE FOR THE SET-ASIDE PORTION. THE PARTIAL SET-ASIDE OF THIS PROCUREMENT FOR SMALL BUSINESS CONCERNS IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER, ALONE, OR IN CONJUNCTION WITH A REPRESENTATIVE OF THE SMALL BUSINESS ADMINISTRATION, THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, OR IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS.

IN RESPONSE TO THE INVITATION, MACANDREWS AND FORBES COMPANY SUBMITTED A BID OF $1.22 PER GALLON ON ITEM NO. 1 AND $1.085 PER GALLON ON ITEM NO. 2. AWARD WAS MADE ON ITEM NO. 2 TO A LOWER BIDDER. ON ITEM NO. 1, AWARD WAS MADE TO NATIONAL FOAM SYSTEMS, INC., WHICH HAD SUBMITTED A BID EQUAL TO THE BID OF MACANDREWS AND FORBES COMPANY ON THAT ITEM AND WHICH HAD BEEN CHOSEN BY LOT FOR THE AWARD IN ACCORDANCE WITH APPLICABLE REGULATIONS. IT APPEARS THAT BOTH MACANDREWS AND FORBES COMPANY AND NATIONAL FOAM SYSTEMS, INC., QUALIFY AS SMALL BUSINESS CONCERNS. MACANDREWS AND FORBES COMPANY CONTENDS THAT THE PROCUREMENT OFFICER SHOULD AWARD THE SET-ASIDE PORTION UNDER ITEM NO. 1 TO IT BY NEGOTIATION INSTEAD OF CONSIDERING BOTH LOW BIDDERS FOR NEGOTIATION AND SUBJECTING THAT COMPANY TO THE UNCERTAINTY OF AN AWARD BY LOT WITH RESPECT TO THE SET- ASIDE PORTION.

ARMED SERVICES PROCUREMENT REGULATION 2-406.4 PROVIDES GENERALLY THAT IN CASE OF TWO OR MORE EQUAL LOW BIDS "AWARD SHALL BE MADE BY A DRAWING BY LOT.' HOWEVER, THERE IS NO PROVISION OF STATUTE OR REGULATION PRESCRIBING THE PROCEDURE FOR MAKING AN AWARD COVERING A SMALL BUSINESS SET-ASIDE WHERE TWO OR MORE LOW BIDS ON THE NON-SET ASIDE PORTION ARE EQUAL IN ALL RESPECTS, AS IN THE INSTANT MATTER. IT IS BELIEVED THAT, IN THE ABSENCE OF SUCH A CONTROLLING PROVISION, CONSIDERATION OF BOTH OF THE EQUAL LOW BIDDERS FOR NEGOTIATION AND DETERMINATION BY LOT, AS CONTEMPLATED BY THE CONTRACTING OFFICER IN THE INSTANT MATTER, IS PROPER AND IN CONFORMITY WITH EXISTING REGULATIONS. UNLESS CONTROLLED BY PRESCRIBED PROCEDURES, THERE IS NOT APPARENT ANY SATISFACTORY BASIS FOR ARBITRARILY ELIMINATING ONE OR MORE EQUAL LOW BIDDERS FROM CONSIDERATION FOR AWARD OF THE SET- ASIDE PORTION. BOTH BIDDERS, HAVING SUBMITTED BIDS WHICH ARE EQUAL IN EVERY RESPECT, HAVE AN EQUAL RIGHT TO BE CONSIDERED THE LOWEST RESPONSIVE BIDDER FOR SET ASIDE PURPOSES AS WELL AS FOR NON-SET-ASIDE PURPOSES AND, IN OUR OPINION, THE ONLY WAY THEIR RIGHTS IN THIS REGARD CAN BE FAIRLY PROTECTED IS THROUGH THE USE OF THE LOT SYSTEM.

IT IS THEREFORE OUR OPINION THAT THE COMPANY TO BE GIVEN PRIORITY CONSIDERATION IN NEGOTIATING AND SET-ASIDE CONTRACT SHOULD BE DETERMINED BY LOT IN THE SAME MANNER AS WAS THE LOWEST RESPONSIVE BIDDER FOR THE AWARD OF THE NON-SET-ASIDE CONTRACT.