B-145746, JUN. 13, 1961

B-145746: Jun 13, 1961

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TO THE NUCLEAR SUPPLY AND SERVICE COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 1. BID PRICES WERE REQUIRED TO BE SUBMITTED ON AN F.O.B. ORIGIN BASIS AND IT WAS SPECIFIED THAT THE UNITS SHOULD BE PACKED FOR OVERSEAS SHIPMENT IN ACCORDANCE WITH BEST COMMERCIAL PRACTICE SUITABLE FOR WATER MOVEMENT. OR PLACED ON WHARF OF WATER CARRIER (WHERE MATERIAL WILL ORIGINATE WITHIN OR ADJACENT TO A PORT AREA AND IS ADAPTABLE TO WATER MOVEMENT). THREE BIDS WERE RECEIVED QUOTING UNIT PRICES OF $3. THE AWARD WAS MADE TO THE SECOND LOWEST BIDDER. IT IS YOUR CONTENTION THAT THE INVITATION CONTEMPLATED THAT THE UNITS WOULD BE FOR SHIPMENT BY SURFACE TRANSPORTATION AND THAT SHIPMENT BY AIR FREIGHT WOULD BE TO THE DISTINCT ADVANTAGE OF A HIGHER BIDDER.

B-145746, JUN. 13, 1961

TO THE NUCLEAR SUPPLY AND SERVICE COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 1, 1961, PROTESTING THE POSSIBLE AWARD OF A CONTRACT TO ANOTHER CONCERN UNDER INVITATION FOR BIDS NO. 600-705-61, ISSUED FEBRUARY 1, 1961, BY THE NAVY PURCHASING OFFICE, COVERING FOUR PORTABLE POWER SUPPLY UNITS INTENDED TO BE FURNISHED TO THE PEARL HARBOR NAVAL SHIPYARD.

BID PRICES WERE REQUIRED TO BE SUBMITTED ON AN F.O.B. ORIGIN BASIS AND IT WAS SPECIFIED THAT THE UNITS SHOULD BE PACKED FOR OVERSEAS SHIPMENT IN ACCORDANCE WITH BEST COMMERCIAL PRACTICE SUITABLE FOR WATER MOVEMENT. INDICATED IN YOUR LETTER, THE INVITATION STATED THAT THE ARTICLES SHALL BE FURNISHED FREE OF EXPENSE TO THE GOVERNMENT AND, AT THE GOVERNMENT'S OPTION, LOADED, BLOCKED AND BRACED ON BOARD CARRIER'S EQUIPMENT, AT THE FREIGHT STATION, OR PLACED ON WHARF OF WATER CARRIER (WHERE MATERIAL WILL ORIGINATE WITHIN OR ADJACENT TO A PORT AREA AND IS ADAPTABLE TO WATER MOVEMENT), AT OR NEAR CONTRACTOR'S PLANT.

THREE BIDS WERE RECEIVED QUOTING UNIT PRICES OF $3,889, $4,168 AND $4,500. YOUR FIRM QUOTED THE LOWEST PRICE BUT, UPON CONSIDERATION OF TRANSPORTATION COSTS WHICH THE GOVERNMENT WOULD INCUR IN MAKING DELIVERY OF THE UNITS TO HAWAII, THE AWARD WAS MADE TO THE SECOND LOWEST BIDDER, THE GLENN PACIFIC CORPORATION, OAKLAND, CALIFORNIA. THE CONTRACT DATED APRIL 26, 1961, WITH THAT COMPANY, PROVIDES FOR DELIVERY WITHIN 60 DAYS OF THE FOUR UNITS AT A PRICE OF $4,126 EACH, OR A TOTAL PRICE OF $16,584, LESS A DISCOUNT OF ONE-HALF OF 1 PERCENT FOR PAYMENT WITHIN 20 CALENDAR DAYS. IT ALSO PROVIDES THAT THE UNITS SHALL BE PACKED FOR AIR SHIPMENT.

IT IS YOUR CONTENTION THAT THE INVITATION CONTEMPLATED THAT THE UNITS WOULD BE FOR SHIPMENT BY SURFACE TRANSPORTATION AND THAT SHIPMENT BY AIR FREIGHT WOULD BE TO THE DISTINCT ADVANTAGE OF A HIGHER BIDDER. YOU SUGGEST THAT THE INCREASED COSTS INVOLVED IN USING AIR FREIGHT WOULD BE CLOSE TO $4,000. YOU STATE THAT THE USE OF A FREIGHT MODE NOT CALLED FOR IN THE INVITATION CONSTITUTES A MATERIAL DEVIATION OF THE TERMS OF THE INVITATION AND IS BEING DONE DELIBERATELY TO EVADE THE PURPOSE AND INTENT OF ADVERTISED BIDDING. IT IS ALLEGED THAT YOU WERE ADVISED OF AN URGENT NEED FOR TWO OF THE FOUR UNITS AND THAT YOU OFFERED TO REDUCE YOUR DELIVERY TIME FROM 90 TO 60 DAYS WHICH WOULD MORE THAN OFFSET ANY TIME ADVANTAGE OF AIR FREIGHT, SINCE RAIL FREIGHT IS ONLY 7 DAYS TO THE WEST COAST. IT IS ARGUED THAT AN URGENT NEED FOR TWO UNITS WOULD NOT JUSTIFY AIR FREIGHT FOR FOUR UNITS, AND THAT YOU COULD HAVE REDUCED THE DIFFERENTIAL IN COST OF AIR FREIGHT BY MODIFICATION OF YOUR BID IN ACCORDANCE WITH THE CLAUSE IN THE INVITATION RELATING TO LATE BIDS AND MODIFICATIONS OR WITHDRAWALS, WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"* * * HOWEVER, A MODIFICATION WHICH IS RECEIVED FROM AN OTHERWISE SUCCESSFUL BIDDER AND WHICH MAKES THE TERMS OF THE BID MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED AND MAY THEREAFTER BE ACCEPTED.'

BASED UPON A DETERMINATION THAT THE EQUIPMENT SHOULD BE SHIPPED BY AIR TRANSPORTATION, THE CONTRACTING OFFICER EVALUATED THE TWO LOWEST BIDS IN THE FOLLOWING MANNER:

TABLE

NUCLEAR GLENN

------- ----- BID PRICE, LESS DISCOUNT

$15,504.15 $16,588.64 AIR FREIGHT COST 2,895.60

1,691.58

---------- ---------- TOTAL DELIVERED COST

$18,399.75 $18,280.22

THE CONTRACTING OFFICER HAS REPORTED THAT, IF THE BIDS HAD BEEN EVALUATED ON THE BASIS OF USING SURFACE TRANSPORTATION, THE ASSUMED DELIVERED COSTS WOULD HAVE BEEN DETERMINED AS $17,092.59 AND $17,334.72, WITH THE FORMER AMOUNT REPRESENTING COSTS TO THE GOVERNMENT IN THE EVENT OF ACCEPTANCE OF YOUR BID. IT HAS BEEN NOTED THAT YOUR NET TOTAL PRICES SHOULD HAVE BEEN CONSIDERED FOR BID EVALUATION PURPOSES AS $15,517.11, INSTEAD OF $15,504.15, SINCE THE INVITATION SPECIFIED A MINIMUM OF 20 CALENDAR DAYS FOR ALLOWANCE UNDER PROMPT PAYMENT DISCOUNT OFFERS AND YOUR TERMS WERE: ONE-THIRD OF 1 PERCENT, 10 CALENDAR DAYS, AND ONE-FOURTH OF 1 PERCENT, 20 CALENDAR DAYS.

THE CONTRACTING OFFICER HAS TAKEN THE POSITION THAT THE CITED PLACE OF DELIVERY CLAUSE IN THE INVITATION WAS ONLY FOR THE PURPOSE OF HELPING THE NAVAL INSPECTOR TO DETERMINE THE PROPER SHIPPING POINT FOR ISSUING A GOVERNMENT BILL OF LADING TO THE BEST ADVANTAGE OF THE GOVERNMENT. IT IS HIS OPINION THAT THE CLAUSE IN NO WAY LIMITS THE GOVERNMENT'S RIGHT OR OBLIGATION TO ADD TO EACH BID IN EVALUATION THE PROPER AMOUNT OF CONTEMPLATED TRANSPORTATION COSTS, REGARDLESS OF THE METHOD OF TRANSPORTATION.

THERE IS NO EVIDENCE OF ANY DELIBERATE ATTEMPT TO EVADE THE PURPOSE AND INTENT OF ADVERTISED BIDDING PRINCIPLES IN THE MAKING OF THE AWARD TO THE GLENN PACIFIC CORPORATION. THE RECORD SHOWS THAT THE NAVY PURCHASING OFFICE WAS NOT AWARE AT THE TIME OF OPENING THE BIDS, FEBRUARY 23, 1961, OF ANY NECESSITY FOR USING AIR TRANSPORTATION IN MAKING DELIVERY OF THE FOUR POWER UNITS TO THE PEARL HARBOR NAVAL SHIPYARD. AIR TRANSPORTATION WAS REQUESTED IN A TELEGRAM DATED MARCH 23, 1961, FROM THE PEARL HARBOR NAVAL SHIPYARD, AND IN A LETTER DATED APRIL 15, 1961, FROM THE NAVAL ENGINEERING EXPERIMENT STATION, ANNAPOLIS, MARYLAND. IN NEITHER INSTANCE WAS ANY REFERENCE MADE TO PARTIAL SHIPMENT, ALTHOUGH THE TELEGRAM OF MARCH 23 INDICATED THAT THE SINGLE UNIT ON HAND WAS OUT OF SERVICE AND WAS, IN ANY EVENT, INSUFFICIENT TO HANDLE TWO SHIPS UNDER REPAIR SIMULTANEOUSLY. IT APPEARS, IN THE PARTICULAR CIRCUMSTANCES, THAT THE NAVY PURCHASING OFFICE WAS JUSTIFIED IN ARRANGING TO EXPEDITE DELIVERY BY AIR FREIGHT ON ALL FOUR UNITS UNDER THE CONTRACT TO BE AWARDED UNDER INVITATION NO. 600- 705-61.

THE CONTRACTING OFFICER HAS INDICATED THAT THE NAVY PURCHASING OFFICE HAS NO RECORD OF ANY COMMUNICATION WITH YOUR COMPANY, EITHER ORALLY OR BY LETTER, CONCERNING THE ALLEGED OFFER TO REDUCE YOUR DELIVERY TIME FROM 90 TO 60 DAYS. ASSUMING THAT THE TWO BIDS WERE PROPERLY EVALUATED ON THE BASIS OF USING AIR TRANSPORTATION, YOU WOULD NOT HAVE QUALIFIED AS THE "OTHERWISE SUCCESSFUL BIDDER," AND THE CONTRACTING OFFICER COULD NOT HAVE CONSIDERED AN OFFER TO REDUCE YOUR DELIVERY TIME OR TO REDUCE YOUR BID PRICE TO ALLOW ANY FREIGHT COST DIFFERENTIAL. THE GENERAL RULE IS THAT BIDS MAY NOT BE CHANGED AFTER OPENING AND THAT ONLY THE OTHERWISE SUCCESSFUL BIDDER CAN BE PERMITTED TO OFFER MORE FAVORABLE TERMS THAN SHOWN ON ITS PROPOSAL AT THE TIME OF OPENING BIDS.

IN OUR OPINION, THE GOVERNMENT WAS NOT BOUND TO MAKE AN AWARD ON THE BASIS OF THE LOWEST DELIVERED COST BY RAIL OR TRUCK AND WATER SHIPMENT, WHEN DETERMINED THAT AIR TRANSPORTATION WOULD BE IN THE GOVERNMENT'S BEST INTEREST. WHETHER OR NOT THE CHOICE OF AIR FREIGHT OPERATED TO THE ADVANTAGE OF A PARTICULAR BIDDER IS IMMATERIAL TO THE QUESTION AS TO THE LEGALITY OF THE AWARD WHICH WAS MADE, SINCE ALL BIDDERS WERE ON AN EQUAL FOOTING INSOFAR AS THERE IS CONCERNED THE BASIC REQUIREMENT THAT ONLY F.O.B. ORIGIN PRICES BE QUOTED.

BIDDERS ON PROPOSED GOVERNMENT CONTRACTS ARE EXPECTED TO QUOTE THEIR BEST PRICES AND THE ADVERTISING STATUTES REQUIRE AN AWARD TO BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION FOR BIDS AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. WE MUST ASSUME THAT YOU QUOTED YOUR BEST F.O.B. ORIGIN PRICE AND THAT YOUR BID PRICE WOULD NOT HAVE BEEN REDUCED IF THE INVITATION HAD REFERRED TO THE POSSIBILITY THAT THE GOVERNMENT MIGHT DECIDE, BEFORE MAKING THE AWARD, TO USE AIR TRANSPORTATION IN SHIPPING THE UNITS TO HAWAII.

THE NAVY DEVIATED FROM THE INVITATION ONLY WITH RESPECT TO THE FACT THAT A DIFFERENT METHOD OF PACKING IS REQUIRED UNDER THE CONTRACT AWARDED TO THE GLENN PACIFIC CORPORATION. APPARENTLY THE SUCCESSFUL BIDDER HAD AGREED TO REDUCE ITS UNIT BID PRICE BY $22 AND ITS TOTAL PRICE BY $88 BECAUSE OF EXPECTED SAVINGS IN PACKING COSTS. HOWEVER, SINCE IT IS OBVIOUS THAT THIS DEVIATION FROM THE TERMS OF THE INVITATION DID NOT AFFECT THE RELATIVE STANDING OF THE TWO LOWEST BIDDERS, CONSIDERING THAT THE $22 UNIT PRICE ADJUSTMENT WAS EVIDENTLY BASED UPON REALISTIC COST ESTIMATES, WE DO NOT FEEL REQUIRED TO TAKE ANY EXCEPTION TO THE AWARD.

IN ADDITION TO THE FOREGOING, THE NAVY CONDUCTED AN INVESTIGATION OF YOUR FACILITIES AND POSSIBLE SUBCONTRACT COMMITMENTS AND IT WAS DETERMINED IN THE REPORT OF INVESTIGATION THAT YOU WOULD NOT HAVE QUALIFIED AS A RESPONSIBLE BIDDER UNDER INVITATION NO. 600-705-61.