B-147574, JAN. 5, 1962

B-147574: Jan 5, 1962

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO RHEEM MANUFACTURING COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 8. THE INVITATION WAS ISSUED BY THE MILITARY GENERAL SUPPLY AGENCY. AN EQUAL QUANTITY WAS SET ASIDE FOR PROCUREMENT FROM INTERESTED SMALL BUSINESS CONCERNS. AN AMENDMENT TO THE INVITATION WAS ISSUED ON SEPTEMBER 2. BIDS WERE OPENED AS SCHEDULED ON SEPTEMBER 15. THE LOW BIDDER WAS DETERMINED TO BE EVANS COOPERAGE COMPANY. 400 DRUMS UNDER ITEM NO. 1D WAS MADE TO THAT FIRM ON SEPTEMBER 30. AN EQUAL SET-ASIDE QUANTITY WAS AWARDED TO THE SAME FIRM ON OCTOBER 18. YOUR PROTEST IS DIRECTED TO THE FIRST OF THOSE AWARDS. ORIGIN BIDS ON ITEM NO. 1D IT WAS FOUND THAT THE BEST AVAILABLE RATE FOR EVANS COOPERAGE COMPANY.

B-147574, JAN. 5, 1962

TO RHEEM MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 8, 1961, PROTESTING THE REJECTION OF YOUR BID ON ITEM NO. 1D OF INVITATION FOR BIDS NO. QM/MGS/44-193-62-413, ISSUED AUGUST 30, 1961, AS AMENDED.

THE INVITATION WAS ISSUED BY THE MILITARY GENERAL SUPPLY AGENCY, RICHMOND QUARTERMASTER DEPOT, U.S. ARMY, RICHMOND, VIRGINIA, AND COVERED A PROPOSED PROCUREMENT OF 160,000 55-GALLON STEEL DRUMS AT "F.O.B. ORIGIN" PRICES. AN EQUAL QUANTITY WAS SET ASIDE FOR PROCUREMENT FROM INTERESTED SMALL BUSINESS CONCERNS. AN AMENDMENT TO THE INVITATION WAS ISSUED ON SEPTEMBER 2, 1961, TO PERMIT BIDDING ON THE BASIS OF SPECIFIED QUANTITIES DESIRED AT FIVE TENTATIVE DESTINATIONS. AMONG THE LISTED ITEMS IN THE AMENDMENT, ITEM NO. 1D COVERED 38,400 DRUMS FOR TENTATIVE DELIVERY TO SHREWSBURY, LOUISIANA.

BIDS WERE OPENED AS SCHEDULED ON SEPTEMBER 15, 1961. UPON EVALUATION OF THE BIDS FOR ITEM NO. 1D, THE LOW BIDDER WAS DETERMINED TO BE EVANS COOPERAGE COMPANY, INC., HARVEY, LOUISIANA. AWARD OF THE UNRESTRICTED QUANTITY OF 38,400 DRUMS UNDER ITEM NO. 1D WAS MADE TO THAT FIRM ON SEPTEMBER 30, 1961, AND AN EQUAL SET-ASIDE QUANTITY WAS AWARDED TO THE SAME FIRM ON OCTOBER 18, 1961. YOUR PROTEST IS DIRECTED TO THE FIRST OF THOSE AWARDS, BASED UPON A CONTENTION THAT THE CONTRACTING AGENCY ERRONEOUSLY APPLIED A HIGHER FREIGHT COST FACTOR THAN NECESSARY IN EVALUATING YOUR BID ON ITEM NO. 1D.

IN DETERMINING THE BEST AVAILABLE TRANSPORTATION RATES TO UTILIZE IN EVALUATION OF THE F.O.B. ORIGIN BIDS ON ITEM NO. 1D IT WAS FOUND THAT THE BEST AVAILABLE RATE FOR EVANS COOPERAGE COMPANY, INC., WAS BY TRUCK AT A RATE OF $0.14 PER UNIT, AND THAT THE BEST AVAILABLE RATE FOR YOUR COMPANY WAS ALSO $0.14 PER UNIT, BASED UPON RAIL TRANSPORTATION ON 40-FOOT BOXCARS. THE UNIT DELIVERED COSTS FOR THE TWO BIDS, WITH THE USE OF THE $0.14 TRANSPORTATION RATE, WERE CONSIDERED AS AMOUNTING TO THE RESPECTIVE SUMS OF $7.215 AND $7.22.

YOU CONTEND THAT A FREIGHT COST OF ONLY $0.119 SHOULD HAVE BEEN ADDED TO YOUR UNIT PRICE, INSTEAD OF $0.14. THIS WOULD HAVE RESULTED IN MAKING YOUR BID LOWER THAN THAT OF EVANS COOPERAGE COMPANY, INC., FOR BID EVALUATION AND AWARD PURPOSES. THE $0.119 FIGURE IS COMPUTED ON THE BASIS OF MAKING SHIPMENT OF THE DRUMS IN 50-FOOT BOXCARS. YOU INDICATE THAT THE PUBLISHED TARIFF FOR THE USAGE OF EITHER 50-FOOT OR 40-FOOT BOXCARS IS $44.76 PER CAR, THAT THE GOVERNMENT'S COMPUTATION ASSUMED THE USE OF 40- FOOT CARS WHICH CUSTOMARILY CONTAIN A LOAD OF 300 DRUMS, AND THAT 375 UNITS COULD BE SHIPPED ON A 50-FOOT CAR. YOU ALSO INDICATE THAT, FROM PAST EXPERIENCE WITH RESPECT TO THE USAGE OF 50-FOOT BOXCARS AT YOUR NEW ORLEANS PLANT SITE, IT WAS REASONABLE TO EXPECT THAT 50-FOOT CARS WOULD BE AVAILABLE DURING THE PERIOD OF THE DELIVERY SCHEDULE SHOWN ON THE INVITATION FOR BIDS, AND YOU HAVE SUBMITTED LETTERS DATED OCTOBER 4 AND 24, 1961, FROM THE GENERAL MANAGER OF THE PUBLIC BELT RAILROAD COMMISSION, CITY OF NEW ORLEANS, GIVING ASSURANCES THAT APPROXIMATELY 100 EMPTY 50- FOOT BOXCARS WOULD BE PROVIDED OVER A PERIOD OF 30 DAYS AT THE RATE OF FIVE OR SIX CARS PER DAY WHEN YOU WERE READY TO MAKE SHIPMENTS UNDER THE GOVERNMENT'S ORDER IF PLACED WITH YOUR FIRM. HOWEVER, BEFORE AWARD, A GOVERNMENT REPRESENTATIVE WAS ADVISED BY THE SUPERINTENDENT OF TRANSPORTATION, PUBLIC BELT RAILROAD COMMISSION, CITY OF NEW ORLEANS, THAT 50-FOOT BOXCARS WERE SCARCE AND WERE ALWAYS IN DEMAND, AND THAT DELIVERY OF FIVE OR SIX 50-FOOT CARS PER DAY COULD NOT BE GUARANTEED.

THE DECISION TO EVALUATE YOUR BID ON THE BASIS OF SHIPMENT ON 40 FOOT BOXCARS WAS REACHED BY THE CONTRACTING OFFICER AFTER CAREFUL CONSIDERATION AND COORDINATION WITH LIEUTENANT COLONEL C. A. BOWMAN, TRANSPORTATION OFFICER AT THE MILITARY GENERAL SUPPLY AGENCY. INQUIRIES WERE MADE TO TWO RAIL CARRIERS SERVING THE NEW ORLEANS AREA CONCERNING THE AVAILABILITY OF 50-FOOT BOXCARS. THE INFORMATION RECEIVED FROM BOTH CARRIERS WAS THAT 50- FOOT CARS WERE IN SHORT SUPPLY AND IN GREAT DEMAND, AND NEITHER CARRIER WOULD GIVE ANY ASSURANCE THAT THIS SIZE CAR WOULD BE AVAILABLE AT ANY PARTICULAR TIME WHEN REQUIRED BY THE SHIPPER. IN THE CASE OF A PRIOR CONTRACT BETWEEN YOUR COMPANY AND THE GOVERNMENT IT WAS FOUND THAT IN MAY AND JUNE 1961 YOU ORDERED 47 CARS OF THAT SIZE AND RECEIVED 36 CARS AND THAT SHIPMENTS UNDER THE CONTRACT WERE COMPLETED WITH THE USE OF 40-FOOT CARS.

FURTHER, THE RECORDS OF THE TRANSPORTATION OFFICE DISCLOSED THAT ON ALL PREVIOUS OCCASIONS, WHERE MOVEMENT BY RAIL IN THE NEW ORLEANS AREA WAS A FACTOR FOR BID EVALUATION PURPOSES, BIDS WERE EVALUATED ON THE BASIS OF USING 40-FOOT CARS. COLONEL BOWMAN HAS STATED WITH REFERENCE TO THIS CASE, WHICH WOULD HAVE INVOLVED SWITCHING MOVEMENTS, THAT 50 FOOT BOXCARS ARE GENERALLY IN SHORT SUPPLY THROUGHOUT THE COUNTRY; THAT THE ASSOCIATION OF AMERICAN RAILROADS CANNOT ISSUE A SERVICE ORDER IN FAVOR OF A SHIPPER WITHOUT DISCRIMINATORY ACTION BY THE INTERSTATE COMMERCE COMMISSION; THAT NEITHER AT THIS TIME NOR AT THE TIME OF MOVING OF FREIGHT WOULD THE GOVERNMENT, AS SHIPPER, PLACE A REQUEST FOR 50-FOOT CARS WITH THE ASSOCIATION OF AMERICAN RAILROADS FOR "THIS COMMODITY" FOR A SWITCH MOVE; AND THAT, AS A MATTER OF POLICY, THE ASSOCIATION OF AMERICAN RAILROADS COULD WITHDRAW SERVICE ORDERS IN FAVOR OF A PARTICULAR AREA IF IT LEARNED THAT THE 50-FOOT CARS WERE BEING USED IN SWITCH MOVES RATHER THAN LINE HAUL. IN HIS OPINION, NO ONE, SHIPPER OR CARRIER, CAN GUARANTEE OR ASSURE FIVE MONTHS OR MORE IN THE FUTURE THE AVAILABILITY OF EQUIPMENT THAT IS IN SUCH GREAT DEMAND AS ARE 50-FOOT BOXCARS, AND COLONEL BOWMAN STATED THAT THE CAR SERVICE SECTION, ASSOCIATION OF AMERICAN RAILROADS, AGREES WITH THIS BELIEF.

IN VIEW OF THE FOREGOING, IT IS APPARENT THAT THE ULTIMATE FREIGHT COST TO THE GOVERNMENT ON SHIPMENTS AGGREGATING 38,400 55-GALLON STEEL DRUMS FROM YOUR NEW ORLEANS PLANT COULD NOT HAVE BEEN DEFINITELY ASCERTAINED AT THE TIME OF MAKING AN AWARD ON ITEM NO. 1D, AND THAT IT WOULD NOT HAVE BEEN FAIR TO OTHER BIDDERS TO APPLY A LOWER TRANSPORTATION RATE THAN $0.14 PER UNIT IN EVALUATING YOUR BID. ACCORDINGLY, WE PERCEIVE NO LEGAL BASIS FOR TAKING EXCEPTION TO THE AWARD AS MADE TO EVANS COOPERAGE COMPANY, INC; AND YOUR PROTEST IN THE MATTER MUST BE DENIED.