B-145494, JUN. 16, 1961

B-145494: Jun 16, 1961

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TO WILMER AND BROUN: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 31. METHOD OF AWARD: "/A) AWARDS WILL BE MADE ON AN ITEM BY ITEM BASIS TO THE LOW RESPONSIVE BIDDER FOR DELIVERY TO ANY ONE OR MORE OF THE REGIONAL STORES DEPOTS. "/C) F.O.B. POINT OF ORIGIN PRICES WILL NOT BE CONSIDERED IN THE EVALUATION OF BIDS. AWARDS WILL BE MADE ON THE BASIS TO BIDDERS WHO ARE AWARDED CONTRACTS ON A DELIVERED BASIS WHEN THE PRICES OFFERED ARE CONSIDERED REASONABLE. THESE PRICES ARE REQUESTED TO DETERMINE WHETHER A PARTICULAR REQUIREMENT WOULD BE MOST ADVANTAGEOUS FOR PURCHASE ON THE BASIS OF DELIVERY TO DESTINATION BY THE CONTRACTOR. DELIVERY PRICES: PRICES ARE REQUESTED ON (1) AN ITEM BY ITEM BASIS DELIVERED TO THE STORES DEPOT SERVING THE REGIONAL AREAS SPECIFIED HEREIN.

B-145494, JUN. 16, 1961

TO WILMER AND BROUN:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 31, 1961, PROTESTING ON BEHALF OF STEELCASE, INCORPORATED, THE AWARD MADE TO HILLSIDE METAL PRODUCTS, INCORPORATED, FOR SEVERAL ITEMS OF STEEL FILING CABINETS BY THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE, NATIONAL BUYING DIVISION, UNDER INVITATION FOR BIDS NO. FN-1 H-26221-A-11-29-60.

THE INVITATION COVERED THE PROCUREMENT OF THE ANNUAL REQUIREMENTS OF THE GENERAL SERVICES ADMINISTRATION FOR A VARIETY OF STEEL FILING CABINETS AS ORDERED DURING THE PERIOD APRIL 1, 1961, THROUGH MARCH 31, 1962. PARAGRAPH 4 (A) (B) OF THE SPECIAL PROVISIONS OF THE INVITATION PROVIDED, WITH RESPECT TO FILING CABINETS, THAT PURCHASE ORDERS WOULD BE PLACED FOR NOT LESS THAN A MINIMUM OF 25 EACH OF A SINGLE ITEM OF A COMBINATION OF ITEMS.

THE INVITATION PROVIDED SCHEDULES FOR BIDDERS TO QUOTE UNIT PRICES FOR THE VARIOUS ITEMS ON AN F.O.B. DESTINATION BASIS TO EACH OF THE 10 SPECIFIED GSA REGIONAL STORES DEPOTS AND A UNIT PRICE ON AN F.O.B. ORIGIN BASIS. PARAGRAPHS 5 AND 6 OF THE INVITATION, AS ORIGINALLY ISSUED ON OCTOBER 17, 1960, PROVIDED:

"5. METHOD OF AWARD:

"/A) AWARDS WILL BE MADE ON AN ITEM BY ITEM BASIS TO THE LOW RESPONSIVE BIDDER FOR DELIVERY TO ANY ONE OR MORE OF THE REGIONAL STORES DEPOTS.

"/C) F.O.B. POINT OF ORIGIN PRICES WILL NOT BE CONSIDERED IN THE EVALUATION OF BIDS. HOWEVER, AWARDS WILL BE MADE ON THE BASIS TO BIDDERS WHO ARE AWARDED CONTRACTS ON A DELIVERED BASIS WHEN THE PRICES OFFERED ARE CONSIDERED REASONABLE. THESE PRICES ARE REQUESTED TO DETERMINE WHETHER A PARTICULAR REQUIREMENT WOULD BE MOST ADVANTAGEOUS FOR PURCHASE ON THE BASIS OF DELIVERY TO DESTINATION BY THE CONTRACTOR, OR SHIPMENT AT THE EXPENSE OF THE GOVERNMENT.

"6. DELIVERY PRICES: PRICES ARE REQUESTED ON (1) AN ITEM BY ITEM BASIS DELIVERED TO THE STORES DEPOT SERVING THE REGIONAL AREAS SPECIFIED HEREIN, AND (2) F.O.B. POINT OF ORIGIN. (PRICES F.O.B. POINT OF ORIGIN SHALL COVER DELIVERY TO ANY POINT WITHIN THE COMMERCIAL ZONE AREA OF THE SHIPPING POINT).'

PARAGRAPH 2 OF SPECIAL NOTICE NO. 1, ISSUED NOVEMBER 15, 1960, MODIFIED THE ABOVE-QUOTED PARAGRAPHS AS FOLLOWS:

"2. PARAGRAPH 5. METHOD OF AWARD. SUB-PARAGRAPH (A) SHALL BE DELETED IN ITS ENTIRETY AND THE FOLLOWING SUBSTITUTED THEREFOR:

(2) AWARDS WILL BE MADE ON AN ITEM BY ITEM BASIS TO THE LOW RESPONSIVE BIDDER QUOTING PRICES BASED ON L.C.L. DELIVERY TO ANY ONE OR MORE OF THE REGIONAL STORES DEPOTS.

PARAGRAPH 6--- FIRST LINE, AFTER (1) AN--- INSERT "LCL.'"

UPON OPENING OF THE BIDS RECEIVED IT WAS FOUND THAT THE BID OF HILLSIDE METAL PRODUCTS, INCORPORATED, ON ITEMS 6 THROUGH 15 WAS THE LOWEST RECEIVED TO ALL OF THE 10 DESTINATIONS WITH THE EXCEPTION OF REGION 5 (CHICAGO, ILLINOIS,) ON CERTAIN OF THE ITEMS. THE BID OF STEELCASE, INCORPORATED, WAS NOT LOW TO ANY OF THE DESTINATIONS FOR THE ITEMS BID UPON BUT IT WOULD BE LOW TO CERTAIN OF THE DESTINATIONS FOR SOME OF THE ITEMS IF HILLSIDE'S BID WERE CONSIDERED AS NOT BEING RESPONSIVE TO THE REQUIREMENTS OF THE INVITATION.

IT IS REPORTED THAT SUBSEQUENT TO THE OPENING OF BIDS, AND PRIOR TO AWARD, SEVERAL WRITTEN INQUIRIES WERE RECEIVED REFERRING TO THE "METHOD OF AWARD" PROVISION IN SPECIAL NOTICE NO. 1 AND URGING, IN EFFECT, THAT THE ONLY PROPER METHOD OF BIDDING WAS TO SET AN F.O.B. ORIGIN PRICE AND TO ADD TO IT L.C.L. FREIGHT RATES TO THE VARIOUS DESTINATIONS. THE GENERAL SERVICES ADMINISTRATION DENIED SUCH REQUESTS ON THE BASIS THAT THE LANGUAGE "L.C.L. DELIVERY" WAS INFORMATIONAL AND NOT MANDATORY AND MERELY SERVED AS A CAVEAT AS TO THE PROBABLE QUANTITIES INVOLVED. IT WAS STATED THAT THE SOLE PURPOSE OF THE PROVISION WAS TO ACQUAINT PROSPECTIVE BIDDERS WITH THE PROBABILITY THAT MOST DELIVERIES WOULD BE IN SMALL QUANTITIES AND THEREFORE RELATIVELY EXPENSIVE TO SHIP. THE BID OF HILLSIDE METAL PRODUCTS, INCORPORATED, ON THE ITEMS AND TO THE DESTINATIONS ON WHICH IT WAS LOW, WAS ACCEPTED ON MARCH 29, 1961.

YOU PROTEST THE ACTION TAKEN BY THE GENERAL SERVICES ADMINISTRATION ON THE BASIS THAT THE HILLSIDE BID WAS NOT RESPONSIVE TO THE REQUIREMENTS OF THE INVITATION IN THAT THE BID PRICES WERE BASED ON CARLOAD-LOT FREIGHT RATES INSTEAD OF THE SPECIFIED LESS-THAN CARLOAD RATES. IT IS STATED THAT THE BID FIGURES SHOW THAT THE DIFFERENCES BETWEEN CARLOAD RATES AND LESS- THAN-CARLOAD RATES WAS THE SOLE FACTOR IN MANY INSTANCES IN MAKING HILLSIDE'S QUOTED PRICES LOWER THAN THOSE OF STEELCASE AND THAT THEREFORE IT CANNOT BE REGARDED AS A MERE INFORMALITY OR MINOR IRREGULARITY WHICH THE GOVERNMENT HAS THE RIGHT TO WAIVE PURSUANT TO FPR 1-2.405. IT IS URGED THAT THE ONLY FAIR INTERPRETATION OF THE LANGUAGE OF THE INVITATION IS THAT AWARD CAN BE MADE ONLY TO A BIDDER ,QUOTING PRICES BASED ON L.C.L. DELIVERY" AND THAT NO ALTERNATIVE DELIVERY PRICE QUOTATION IS PERMITTED NOR CAN AN ALTERNATE REASONABLY BE INFERRED. IT IS STATED THAT THE EXPLANATION GIVEN BY GSA THAT THE LANGUAGE WAS INTENDED TO SERVE ONLY AS A CAVEAT OF THE PROBABLE QUANTITIES INVOLVED IN DELIVERIES DOES NOT FIND SUPPORT IN THE RECORD SINCE PARAGRAPH 4 OF THE ORIGINAL INVITATION POINTED OUT THAT MINIMUM ORDERS OF 25 UNITS COULD BE PLACED AND THAT, THEREFORE, SUCH PROVISION HAD ALREADY SERVED AS CAVEAT TO THE PROBABLE QUANTITIES INVOLVED IN DELIVERIES.

WE AGREE THAT THE LANGUAGE USED IN THE INVITATION MUST BE GIVEN ITS LITERAL AND COMMON SENSE INTERPRETATION AS URGED. HOWEVER, IN SO DOING THE PROVISIONS OF THE COMPLETE INSTRUMENT MUST BE CONSIDERED. TECHNICAL TERMS AND WORDS OF ART ARE GIVEN THEIR TECHNICAL MEANING UNLESS THE CONTEXT OR USAGE INDICATES A DIFFERENT MEANING. APPARENTLY THERE IS NO QUESTION BUT THAT TECHNICALLY THE WORDS "L.C.L. DELIVERY" MEAN LESS-THAN- CARLOAD AND REFER TO DELIVERY BY RAIL TRANSPORTATION.

UNDER THE TERMS OF THE INVITATION BIDDERS WERE REQUIRED TO QUOTE UNIT PRICES FOR EACH ITEM ON THE BASIS OF DELIVERY F.O.B. DESTINATION TO 10 SPECIFIED POINTS AND ONLY THESE PRICES WERE TO BE CONSIDERED IN THE EVALUATION OF THE BIDS FOR AWARD. SUCH PRICES WERE TO BE LUMP SUM PRICES AND NO SHOWING WAS REQUIRED TO INDICATE WHAT WAS CONSIDERED IN MAKING UP THE PRICES SUCH AS ORIGIN PRICE, TRANSPORTATION COST, PACKING, ETC. UNDER THE TERMS OF THE INVITATION, PARAGRAPH 6 (B) (4), THE CONTRACTOR WAS RESPONSIBLE FOR ANY LOSS OR DAMAGE TO SHIPMENTS OCCURRING BEFORE RECEIPT BY THE GOVERNMENT AT THE DESTINATIONS NAMED. THE METHOD BY WHICH DELIVERY TO THE DESTINATIONS IS ACCOMPLISHED, WHETHER BY RAIL, TRUCK (COMMON OR CONTRACT CARRIER) OR BY THE CONTRACTOR'S OWN EQUIPMENT, IS ENTIRELY UP TO THE CONTRACTOR AND IS OF NO CONCERN TO THE GOVERNMENT.

IN ADDITION TO THE DESTINATION PRICES THE INVITATION REQUIRED BIDDERS TO QUOTE AN F.O.B. ORIGIN PRICE FOR EACH ITEM AND TO SHOW THE SHIPPING WEIGHT OF THE ITEM AND THE NUMBER OF ITEMS THAT COULD BE LOADED IN A STANDARD 40- FOOT, 6-INCH FREIGHT CAR. SUCH PRICES WERE TO INCLUDE THE COST OF LOADING THE CABINETS ABOARD THE CARS. PARAGRAPH 5 (C) OF THE INVITATION, QUOTED ABOVE, SPECIFICALLY PROVIDED THAT SUCH F.O.B. ORIGIN PRICES WOULD NOT BE CONSIDERED IN EVALUATING THE BIDS BUT THAT AWARD WOULD BE MADE ON THIS BASIS TO BIDDERS WHO WERE AWARDED CONTRACTS ON A DELIVERED BASIS WHEN THE ORIGIN PRICES OFFERED WERE CONSIDERED REASONABLE. IT WAS SPECIFICALLY STATED THAT THE F.O.B. ORIGIN PRICES WERE SOLELY FOR THE PURPOSE OF DETERMINING WHETHER A PARTICULAR REQUIREMENT WOULD BE MOST ADVANTAGEOUS FOR PURCHASE ON THE BASIS OF DELIVERY TO DESTINATION BY THE CONTRACTOR OR SHIPMENT AT THE EXPENSE OF THE GOVERNMENT

THE ESTIMATED QUANTITIES UNDER THE VARIOUS ITEMS ARE SUBSTANTIAL. HOWEVER, THEY COVER A YEAR'S SUPPLY FOR USE THROUGHOUT THE COUNTRY AND ARE TO BE DELIVERED AS NEEDED DURING THE YEAR TO 10 REGIONAL DEPOTS. INDIVIDUAL ORDERS TO BE PLACED BY THE VARIOUS REGIONAL DEPOTS DURING THE YEAR GENERALLY WILL COVER RELATIVELY SMALL QUANTITIES, ALTHOUGH NO PURCHASE ORDER WILL BE PLACED FOR FILE CABINETS FOR A QUANTITY LESS THAN 25 OF A SINGLE ITEM OR A COMBINATION OF ITEMS. THUS UNDER THE TERMS OF THE INVITATION THE F.O.B. DESTINATION PRICES WERE OF NECESSITY REQUIRED TO BE BASED UPON SHIPMENTS OF RELATIVELY SMALL QUANTITIES. IN THE EVENT A LARGE QUANTITY WAS INVOLVED IN A PARTICULAR ORDER THE GOVERNMENT COULD EXERCISE ITS OPTION AND PLACE THE ORDER ON AN F.O.B. ORIGIN BASIS AND TAKE ADVANTAGE OF CARLOAD RATES.

SINCE THE ONLY PROVISION IN THE INVITATION AS TO QUANTITIES THAT MIGHT BE INVOLVED IN PARTICULAR DELIVERIES WAS PARAGRAPH 4, IT APPARENTLY WAS DECIDED WHEN ISSUING SPECIAL NOTICE NO. 1 TO THE INVITATION TO PROVIDE AN ADDITIONAL WARNING TO BIDDERS THAT THE F.O.B. DESTINATION PRICES WOULD INVOLVE RELATIVELY SMALL QUANTITIES WITH CONSEQUENT HIGHER DELIVERY COSTS. ALTHOUGH THE WORDING CHOSEN FOR SUCH WARNING MAY NOW BE SEEN NOT TO HAVE BEEN THE BEST, THE WORDS "L.C.L. DELIVERY" WERE USED IN A BROAD SENSE, MEANING DELIVERIES OF RELATIVELY SMALL QUANTITIES. SUCH MEANING OF THE WORDS IS CONSISTENT WITH THE OTHER PROVISIONS OF THE INVITATION THAT THE PRICES WERE DESTINATION PRICES AND THAT THE MEANS BY WHICH THE BIDDER ACCOMPLISHED DELIVERIES OF THE FILING CABINETS TO DESTINATION WERE ENTIRELY UP TO IT. FOR THE GOVERNMENT TO HAVE REQUIRED THE LUMP SUM DESTINATION PRICES TO BE BASED UPON ORIGIN PRICES WITH THE ADDITION OF "L.C.L. RATES" WOULD NOT HAVE BEEN REALISTIC AND WOULD NOT HAVE SERVED ANY USEFUL PURPOSE. IT WOULD UNDOUBTEDLY HAVE INCREASED BID PRICES AND COST TO THE GOVERNMENT AS BIDDERS UNDOUBTEDLY COULD DELIVER THE FILING CABINETS TO AT LEAST SOME OF THE DESTINATIONS SUBSTANTIALLY CHEAPER BY TRUCK, EITHER BY COMMON CARRIER OR BY THEIR OWN EQUIPMENT. FURTHERMORE, SOME OF THE BIDDERS MIGHT HAVE OTHER GOODS WHICH WERE TO BE DELIVERED TO THE SAME DESTINATIONS AND WHICH COULD BE COMBINED FOR DELIVERY PURPOSES. ALSO, IF "L.C.L. RATES" WERE REQUIRED TO BE QUOTED THERE WOULD HAVE BEEN NO REAL USEFUL PURPOSE IN REQUESTING DESTINATION PRICES. MOREOVER, IT IS DOUBTFUL WHETHER THE INVITATION COULD BE REGARDED AS PROPER IF SO INTERPRETED.

IT IS REPORTED THAT YOUR CONTENTION THAT ALL BIDDERS, OTHER THAN HILLSIDE, QUOTED ON THE BASIS OF "L.C.L. RATES" IS NOT CORRECT, IF THE DIFFERENCE BETWEEN THE F.O.B. ORIGIN AND DESTINATION PRICES IS THE DETERMINING FACTOR. IT IS REPORTED THAT SUCH DIFFERENCES BETWEEN THE ORIGIN AND DESTINATION PRICES IN MANY INSTANCES REPRESENT OTHER THAN "L.C.L. RATES.' IN FACT, THE RECORD SHOWS THAT ONE OF THE BIDDERS EVEN QUOTED A LOWER DELIVERED PRICE TO REGION 3 THAN ITS ORIGIN PRICE ON ITEMS 8 AND 9.

IT IS UNFORTUNATE THAT STEELCASE MAY HAVE BEEN MISLED BY THE LANGUAGE USED IN SPECIAL NOTICE NO. 1, PARTICULARLY IF IT IS A FACT THAT IT COULD, AND WOULD, OTHERWISE HAVE QUOTED LOWER DESTINATION PRICES. HOWEVER, IT IS OUR OPINION THAT STEELCASE SHOULD NOT HAVE BEEN SO MISLED, OR AT LEAST IT SHOULD HAVE HAD SUFFICIENT DOUBT FROM THE VARIOUS PROVISIONS OF THE INVITATION TO WARRANT INQUIRY BEFORE BIDDING AS TO THE INTENT OF THE WORDS. IN THIS CONNECTION, STEELCASE APPARENTLY MUST HAVE THOUGHT ITS INTERPRETATION WAS UNUSUAL, OR HAVE HAD DOUBTS AS TO THE INTENT OR MEANING OF THE WORDS, AS IT INSERTED "L.C.L.' ALONGSIDE ITS BID ON THE ITEMS AND STATED IN LETTER DATED DECEMBER 29, 1960, ACCOMPANYING ITS BID, THAT ALL UNIT PRICES FOR THE INDIVIDUAL REGIONS HAD BEEN PLACED ON L.C.L. SHIPMENTS AS INSTRUCTED.

IN VIEW OF THE FOREGOING, WE FIND NO BASIS TO OBJECT TO THE ADMINISTRATIVE ACTION TAKEN IN THE MATTER.