B-146508, NOV. 7, 1961

B-146508: Nov 7, 1961

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INC.: REFERENCE IS MADE TO YOUR LETTER OF JULY 21. INCREASE USE OPTION PLAN" IN A CURRENT CONTRACT YOU HAVE WITH THE WEATHER BUREAU RESULTING FROM THE ACCEPTANCE OF YOUR BID SUBMITTED IN RESPONSE TO AN INVITATION FOR BIDS ISSUED ON MARCH 24. YOUR BID WAS ACCEPTED ON JUNE 26. ANOTHER BIDDER WAS LOWER IN PRICE AS TO RECORDER RENTAL BUT IN CONSIDERING THE PAPER COSTS IN CONNECTION WITH RECORDER RENTAL THE TOTAL COSTS TO THE GOVERNMENT WERE ESTIMATED AS BEING IN EXCESS OF THE COSTS WHICH WOULD BE INCURRED IF YOUR BID WERE ACCEPTED. UNDER THE PROVISIONS OF 41 U.S.C. 252 (C) ALL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES ARE REQUIRED TO BE MADE BY ADVERTISING. THE REFERRED-TO SECTION 253 PROVIDES THAT WHEN ADVERTISING IS REQUIRED THE "INVITATION FOR BIDS SHALL PERMIT SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF PROPERTY AND SERVICES NECESSARY TO MEET THE REQUIREMENTS OF THE AGENCY CONCERNED.'.

B-146508, NOV. 7, 1961

TO ALDEN ELECTRONIC AND IMPULSE RECORDING EQUIPMENT COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JULY 21, 1961, CONCERNING THE INCLUSION OF A THREE-YEAR ,INCREASE USE OPTION PLAN" IN A CURRENT CONTRACT YOU HAVE WITH THE WEATHER BUREAU RESULTING FROM THE ACCEPTANCE OF YOUR BID SUBMITTED IN RESPONSE TO AN INVITATION FOR BIDS ISSUED ON MARCH 24, 1961, FOR THE RENTAL OF FACSIMILE RECORDERS FOR USE DURING THE PERIOD FROM JULY 1, 1961, THROUGH JUNE 30, 1962.

YOUR BID WAS ACCEPTED ON JUNE 26, 1961. ANOTHER BIDDER WAS LOWER IN PRICE AS TO RECORDER RENTAL BUT IN CONSIDERING THE PAPER COSTS IN CONNECTION WITH RECORDER RENTAL THE TOTAL COSTS TO THE GOVERNMENT WERE ESTIMATED AS BEING IN EXCESS OF THE COSTS WHICH WOULD BE INCURRED IF YOUR BID WERE ACCEPTED.

IN YOUR LETTER OF JULY 21, 1961, YOU STATE THAT IT WOULD BE ADVANTAGEOUS TO THE GOVERNMENT TO INCLUDE IN YOUR CONTRACT AN "INCREASE USE OPTION PLAN" WHICH HAD BEEN INCLUDED IN YOUR OFFER AND WHICH WOULD PERMIT THE WEATHER BUREAU TO EXTEND YOUR CONTRACT FOR TWO ADDITIONAL FISCAL YEARS AT THE SAME PRICE. YOU STATE THAT FOR THE PAST THREE YEARS THE USE OF THE "EXTENDED USE OPTION" PROVIDED THE WEATHER BUREAU WITH SAVINGS OF $900,000.

UNDER THE PROVISIONS OF 41 U.S.C. 252 (C) ALL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES ARE REQUIRED TO BE MADE BY ADVERTISING, AS PROVIDED IN SECTION 253 OF THE SAME TITLE OF THE CODE, EXCEPT THAT PURCHASES AND CONTRACTS MAY BE NEGOTIATED BY THE AGENCY HEAD WITHOUT ADVERTISING IN CERTAIN STATED EXCEPTIONS, NONE OF WHICH APPEARS TO BE APPLICABLE TO THE INSTANT CASE. THE REFERRED-TO SECTION 253 PROVIDES THAT WHEN ADVERTISING IS REQUIRED THE "INVITATION FOR BIDS SHALL PERMIT SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF PROPERTY AND SERVICES NECESSARY TO MEET THE REQUIREMENTS OF THE AGENCY CONCERNED.' THIS REQUIREMENT IS APPLICABLE TO THE DEPARTMENT OF COMMERCE BY REASON OF THE GENERAL DELEGATION BY THE ADMINISTRATOR OF GENERAL SERVICES TO EXECUTIVE AGENCIES OF AUTHORITY TO USE SAID SECTION 253 (SEE 24 F.R. 1921) AND WAS DESIGNED TO OBTAIN FOR THE GOVERNMENT THE MOST ADVANTAGEOUS PRICES RESULTING FROM THE WIDEST COMPETITION REASONABLE UNDER THE CIRCUMSTANCES OF THE PARTICULAR PROCUREMENT AND TO AFFORD ALL INTERESTED PARTIES AN EQUAL OPPORTUNITY TO COMPETE FOR THE PROCUREMENT.

WHILE THE INCLUSION OF THE EXTENDED USE OPTION MIGHT SAVE THE GOVERNMENT A CONSIDERABLE SUM OF MONEY IN THE RENTAL OF RECORDERS FOR TWO ADDITIONAL YEARS, THE FACT REMAINS THAT THE GOVERNMENT DID NOT OFFER PROSPECTIVE BIDDERS AN OPPORTUNITY TO OFFER SUCH AN OPTION FOR POSSIBLE EXERCISE BY THE GOVERNMENT. THERE IS, THEREFORE, NO LEGAL BASIS FOR MODIFICATION OF THE INSTANT CONTRACT TO INCLUDE THE EXTENDED USE OPTION CLAUSE.

YOU REFER TO A PROVISION CONTAINED IN THE INVITATION WHICH STATES THAT 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 THE TIME IT IS RECEIVED AND THEREAFTER MAY BE ACCEPTED. MODIFICATION TO ALLOW THE GOVERNMENT THE OPTION TO EXTEND A CONTRACT FOR TWO ADDITIONAL YEARS CANNOT BE REGARDED AS PROPER FOR ACCEPTANCE UNDER THE TERMS OF THE INVITATION. ORDINARILY, A SUCCESSFUL BIDDER CAN OFFER A REDUCTION IN HIS PRICE FOR THE CONTRACT PERIOD AFTER HE HAS BEEN AWARDED THE CONTRACT BUT, FOR REASONS STATED ABOVE, THE CONTRACTOR MAY NOT BE PLACED IN THE POSITION OF RECEIVING A CONTRACT FOR TWO ADDITIONAL YEARS WITHOUT ADVERTISING WHEN OTHER BIDDERS HAD NOT BEEN AFFORDED THE SAME OPPORTUNITY. WITH REGARD TO A PREVIOUS CONTRACT YOU HAD FOR THREE YEARS FOR THE SERVICE HERE INVOLVED, IT IS NOT CLEAR FROM THE RECORD WHETHER YOUR CONTRACT WAS FOR A THREE-YEAR PERIOD SUBJECT TO AN ANNUAL APPROPRIATION THEREFOR OR WHETHER THE INVITATION IN THAT CASE CONTAINED A PROVISION THAT THE GOVERNMENT COULD EXERCISE AN OPTION TO EXTEND THE CONTRACT FOR TWO ADDITIONAL YEARS. IN ANY EVENT, THE INSTANT CASE IS NOT ANALOGOUS TO THAT PRESENTED BY YOU UNDER THE CURRENT CONTRACT.