B-148010, FEBRUARY 27, 1962, 41 COMP. GEN. 565

B-148010: Feb 27, 1962

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BIDS - DISCARDING ALL BIDS - READVERTISEMENT JUSTIFICATION COMPETITIVE SYSTEM - GENERALLY AN INVITATION WHICH DOES NOT REQUIRE THE BIDDERS TO SPECIFY THE ITEMS OF GOVERNMENT-OWNED TOOLING TO BE USED SO THAT THE TRANSPORTATION EXPENSE TO BE BORNE BY THE GOVERNMENT CANNOT BE ASCERTAINED FOR PURPOSES OF DETERMINING WHICH BID IS THE LOWEST IS A DEFICIENT INVITATION. ALL BIDS SHOULD BE REJECTED AND UNDER THE READVERTISEMENT THE INVITATION SHOULD STATE THE FACTORS UPON WHICH EVALUATION AND AWARD WILL BE MADE. IS A DEFICIENT INVITATION UNDER WHICH NO VALID AWARD CAN BE MADE. 1962: REFERENCE IS MADE TO LETTER DATED JANUARY 30. REFERENCE IS MADE TO LETTER DATED FEBRUARY 5. BIDS WERE REQUESTED FOR THE FURNISHING.

B-148010, FEBRUARY 27, 1962, 41 COMP. GEN. 565

BIDS - DISCARDING ALL BIDS - READVERTISEMENT JUSTIFICATION COMPETITIVE SYSTEM - GENERALLY AN INVITATION WHICH DOES NOT REQUIRE THE BIDDERS TO SPECIFY THE ITEMS OF GOVERNMENT-OWNED TOOLING TO BE USED SO THAT THE TRANSPORTATION EXPENSE TO BE BORNE BY THE GOVERNMENT CANNOT BE ASCERTAINED FOR PURPOSES OF DETERMINING WHICH BID IS THE LOWEST IS A DEFICIENT INVITATION, AND TO PERMIT THE BIDDERS TO SUPPLY THE INFORMATION ON THE GOVERNMENT-OWNED TOOLING WOULD IN EFFECT GIVE THE BIDDERS ANOTHER CHANCE AT BIDDING WHICH WOULD BE PREJUDICIAL TO THE COMPETITIVE BIDDING SYSTEM; THEREFORE, ALL BIDS SHOULD BE REJECTED AND UNDER THE READVERTISEMENT THE INVITATION SHOULD STATE THE FACTORS UPON WHICH EVALUATION AND AWARD WILL BE MADE. AN INVITATION WHICH DOES NOT REQUIRE BIDDERS TO SPECIFY THE QUANTITY, TYPE OR CONDITION OF THE SPECIAL TOOLING TO BE USED BY THE BIDDER TO SUPPLEMENT GOVERNMENT-OWNED TOOLING AVAILABLE AT NO COST, AND TO BECOME THE PROPERTY OF THE GOVERNMENT DOES NOT PERMIT BIDDERS TO COMPETE ON A COMMON BASIS AND, THEREFORE, IS A DEFICIENT INVITATION UNDER WHICH NO VALID AWARD CAN BE MADE.

TO THE SECRETARY OF THE NAVY, FEBRUARY 27, 1962:

REFERENCE IS MADE TO LETTER DATED JANUARY 30, 1962 (FILE REFERENCE R11.1), FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, FURNISHING A REPORT RELATIVE TO THE PROTEST OF KOLLSMAN INSTRUMENT CORPORATION TO THE AWARD TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. 600-642-62, ISSUED BY THE UNITED STATES NAVY PURCHASING OFFICE, WASHINGTON, D.C. ALSO, REFERENCE IS MADE TO LETTER DATED FEBRUARY 5, 1962 (FILE REFERENCE P1.1:1RMS:PAT), FROM THE OFFICER IN CHARGE, NAVY PURCHASING OFFICE, WASHINGTON, D.C., FORWARDING COPY OF LETTER OF JANUARY 15, 1962, FROM AMELCO, INC., LIKEWISE PROTESTING THE AWARD OF A CONTRACT UNDER THIS INVITATION TO ANY OTHER BIDDER THAN ITSELF.

THE RECORD FURNISHED IN THIS MATTER SHOWS THAT UNDER THE INVITATION, AS AMENDED, BIDS WERE REQUESTED FOR THE FURNISHING, F.O.B. ORIGIN, OF A TOTAL OF 72 IDENTICAL DRIFTMETERS, LISTED IN VARYING QUANTITIES UNDER ITEM NOS. 1 THROUGH 7 AND 12 OF THE INVITATION, AND FOR CERTAIN ANCILLARY ITEMS DESCRIBED THEREIN UNDER ITEM NOS. 8 THROUGH 11. THE INVITATION ALSO ADVISED BIDDERS THAT THE GOVERNMENT MIGHT INCREASE THE QUANTITY CALLED FOR UNDER ITEM NOS. 1 THROUGH 7 AND 12 BY A MAXIMUM OF 10 UNITS AND REQUESTED UNIT PRICE QUOTATIONS IN THE EVENT THE GOVERNMENT SUBSEQUENTLY EXERCISED THE OPTION TO PURCHASE ALL OR ANY PART OF THIS INCREASED QUANTITY. RESPONSE TO THE INVITATION, KOLLSMAN INSTRUMENT CORPORATION, IN ADDITION TO THE PRICES QUOTED ON THE ANCILLARY ITEMS, QUOTED A UNIT PRICE OF $2,615 FOR THE 71 DRIFTMETERS COVERED BY ITEM NOS. 1 THROUGH 6 AND 12, AS WELL AS FOR THE OPTIONAL QUANTITY OF 10 UNITS, BUT LEFT BLANK THE SPACE FOR SHOWING THE PRICE ON ITEM NO. 7 COVERING THE FURNISHING OF ONE DRIFTMETER.

THE QUESTION PRESENTED BY THE PROTESTS OF KOLLSMAN INSTRUMENT CORPORATION AND OF AMELCO, INC., IS WHETHER THE BID OF KOLLSMAN INSTRUMENT CORPORATION SHOULD BE REJECTED AS NONRESPONSIVE TO THE INVITATION OR WHETHER IT PROPERLY MAY BE CORRECTED TO INCLUDE THE ALLEGED INTENDED BID PRICE OF $2,615 ON ITEM NO. 7.

ON THE BASIS OF THE FACTS OF RECORD, WHICH PRESENT CONVINCING EVIDENCE, APPARENT FROM THE BID DOCUMENTS, OF THE PROBABILITY OF ERROR IN THE BID OF KOLLSMAN INSTRUMENT CORPORATION AND THAT IT HAD INTENDED TO QUOTE THE SAME UNIT PRICE OF $2,615 FOR THE ONE DRIFTMETER COVERED BY ITEM NO. 7 AS THAT QUOTED FOR THE 71 IDENTICAL DRIFTMETERS COVERED BY THE OTHER ITEMS OF THE INVITATION AND FOR THE OPTIONAL QUANTITY OF 10 ADDITIONAL DRIFTMETERS, IT IS OUR OPINION THAT THE BID MIGHT PROPERLY BE SO CORRECTED. THE TOTAL BID, AS CORRECTED, OF KOLLSMAN INSTRUMENT CORPORATION WOULD BE $210,662.80, OR $32,537.20 LESS THAN THE NEXT LOW BID OF AMELCO, INC., IN THE TOTAL AMOUNT OF $243,200. DETAILED DISCUSSION, HOWEVER, ON THE SPECIFIC QUESTION PRESENTED IN THIS CASE IS UNNECESSARY SINCE, SEPARATE AND APART THEREFROM, IT ALSO IS OUR OPINION THAT THE INVITATION FOR BIDS, FOR REASONS HEREINAFTER SET FORTH, IS LEGALLY DEFECTIVE AND, THEREFORE, NO VALID AWARD MAY BE MADE THEREUNDER TO ANY OF THE BIDDERS.

THE INVITATION FOR BIDS CONTAINS THE FOLLOWING CLAUSE UNDER THE HEADING " SPECIAL PRODUCTION TOOLING TO BE FURNISHED CONTRACTOR: "

A LARGE AMOUNT OF SPECIAL PRODUCTION TOOLING USABLE IN THE MANUFACTURE OF THE DRIFTMETERS IS OWNED BY THE GOVERNMENT AND CAN BE FURNISHED TO THE SUCCESSFUL BIDDER FOR USE BY HIM AT NO COST. A LIST OF THIS SPECIAL PRODUCTION TOOLING AND A SET OF TOOL CARDS DESCRIBING THE TOOLS ARE AVAILABLE FOR REVIEW AT THE U.S. NAVAL AVIONICS FACILITY, INDIANAPOLIS, IND., WHERE A MODEL OF THE DRIFTMETER IS ALSO ON DISPLAY (SEE THE SECTION ENTITLED MODEL DISPLAY). THE TOOLING ITSELF IS AT THE NAVAL AIR STATION, ALAMEDA, CALIFORNIA AND IS AVAILABLE THERE FOR INSPECTION BY PROSPECTIVE BIDDERS. TIME FOR VIEWING THIS TOOLING MAY BE SCHEDULED BY THE COMMANDING OFFICER, U.S. NAVAL AIR STATION, ALAMEDA, CALIFORNIA, BY CALLING MR. C. EICKMEYER AT LAKEHURST 3-2200, EXT. 4124 OR 4609.

IMPORTANT

THE PRICES BID SHALL BE NET PRICES ARRIVED AT BY GIVING CREDIT FOR THE VALUE OF THE USE OF THE SPECIAL PRODUCTION TOOLING. IN YOUR CALCULATIONS DISREGARD TRANSPORTATION COSTS OF SUCH TOOLING FROM ALAMEDA TO YOUR PLANT AND RETURN TO ALAMEDA AS SUCH COSTS WILL BE BORNE BY THE GOVERNMENT.

THE PURPOSE UNDERLYING THE GENERAL POLICY OF THE DEPARTMENT OF DEFENSE, AS SET FORTH IN PARAGRAPH 13-102 OF THE ARMED SERVICES PROCUREMENT REGULATION, OF MAKING GOVERNMENT-OWNED SPECIAL TOOLING, OR OTHER TYPES OF MATERIAL, AVAILABLE TO THE CONTRACTOR IS, AMONG OTHER REASONS, TO EXPEDITE PRODUCTION AND TO REDUCE THE GOVERNMENT'S COST, WHICH OTHERWISE WOULD BE REFLECTED IN THE CONTRACT PRICE, IF THE CONTRACTOR WERE REQUIRED TO PROCURE THIS MATERIAL FROM PRIVATE SOURCES. WE ARE IN FULL AGREEMENT WITH THIS OBJECTIVE AND DO NOT QUESTION THE PROPRIETY OF THE DECISION IN THIS CASE THAT ALL OR ANY PART OF THE LARGE AMOUNT OF GOVERNMENT-OWNED SPECIAL TOOLING ON HAND AT ALAMEDA, CALIFORNIA, IS TO BE MADE AVAILABLE TO THE SUCCESSFUL BIDDER FOR USE BY HIM AT NO COST, INCLUDING TRANSPORTATION COSTS OF PACKING AND SHIPPING THE TOOLING TO AND FROM HIS PLANT. WE HAVE BEEN INFORMALLY ADVISED THAT EACH OF THE SEVEN BIDDERS RESPONDING TO THE INVITATION EXAMINED THE TOOLING FOR THE PURPOSE OF DETERMINING THE QUANTITY, TYPE AND CONDITION THEREOF AND, OBVIOUSLY, THE BIDDERS' QUOTATIONS HAVE OR SHOULD HAVE REFLECTED THEIR REDUCED COSTS IN NOT HAVING TO INCUR THE COST OF ACQUIRING THIS TOOLING ESSENTIAL TO THE MANUFACTURE OF THE REQUIRED DRIFTMETERS. THE BIDDERS, HOWEVER, WERE NOT REQUIRED TO INDICATE THE ITEMS OF GOVERNMENT-OWNED SPECIAL TOOLING PROPOSED TO BE USED AND THIS INFORMATION DOES NOT APPEAR TO HAVE BEEN SHOWN BY THE BIDDERS. UNDER THESE CONDITIONS, THE SUCCESSFUL BIDDER, AFTER AWARD, HAS COMPLETE FREEDOM OF CHOICE UNDER THE TERMS OF THE INVITATION TO DIRECT THE GOVERNMENT SHIPMENT OF ALL OR ANY PART OF THE SPECIAL TOOLING ON HAND.

THE AWARD IN THIS CASE, AS IN THE CASE OF ALL FORMALLY ADVERTISED PROCUREMENTS, MUST BE MADE, IN CONFORMITY WITH THE STATUTORY REQUIREMENTS SET FORTH IN 10 U.S.C. 2305 (B), TO THAT RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THE INVITATION,"WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED.' THE IMPORTANCE OF THE TRANSPORTATION FACTOR IN DETERMINING WHICH BID IS IN FACT THE MOST ADVANTAGEOUS TO THE UNITED STATES, ALL FACTORS CONSIDERED, IS EMPHASIZED IN PARAGRAPH 1-1301 OF THE ARMED SERVICES PROCUREMENT REGULATION. WHILE CONSIDERATION THEREIN IS GIVEN PRIMARILY TO THE COST ELEMENT INVOLVED IN TRANSPORTING SUPPLIES OR END ITEMS PROCURED UNDER CONTRACTS, WHERE, AS HERE, GOVERNMENT-OWNED MATERIAL IS TO BE TRANSPORTED AT GOVERNMENT EXPENSE THE COST THEREOF, OBVIOUSLY, MUST ALSO BE CONSIDERED IN ANY EVALUATION OF BIDS IN DETERMINING WHICH BID IS IN FACT THE LOWEST BID RECEIVED.

THE BASIS FOR EVALUATION OF BIDS TO COVER THE COST TO THE GOVERNMENT OF TRANSPORTING THE DRIFTMETERS F.O.B. ORIGIN TO DESTINATION IS PROPERLY SET FORTH IN THE INVITATION. NO PROVISION, HOWEVER, IS INCLUDED THEREIN AS TO THE EVALUATION FACTOR FOR USE IN COVERING THE COST TO THE GOVERNMENT OF TRANSPORTING THE GOVERNMENT-OWNED SPECIAL TOOLING FROM ITS PRESENT LOCATION AT ALAMEDA, CALIFORNIA, TO AND FROM EACH BIDDER'S PLANT. IN THE ABSENCE OF SUCH A PROVISION IT IS NOT PERCEIVED HOW DETERMINATION MAY NOW PROPERLY BE MADE AS TO WHICH BID IS IN FACT THE LOWEST RECEIVED. IN THIS CONNECTION, IN RESPONSE TO OUR INFORMAL INQUIRY, REPRESENTATIVES OF YOUR DEPARTMENT HAVE ADVISED THAT, DEPENDING ON THE TYPE, WEIGHT AND QUANTITY OF THE GOVERNMENT-OWNED SPECIAL TOOLING WHICH MIGHT BE REQUESTED BY THE LOW BIDDER, KOLLSMAN INSTRUMENT CORPORATION, ELMHURST, NEW YORK, AND BY THE SECOND LOW BIDDER, AMELCO, INC., LOS ANGELES, CALIFORNIA, THE TRANSPORTATION COST THEREOF COULD WELL EXCEED THE DIFFERENCE IN THE AMOUNT OF THEIR BIDS. WHILE RECOGNIZING THAT, FOR THE PURPOSE OF ASCERTAINING THE APPROXIMATE TRANSPORTATION COST INVOLVED, BIDDERS MIGHT NOW BE REQUESTED FOR INFORMATION AS TO THE GOVERNMENT-OWNED SPECIAL TOOLING TO BE REQUIRED, SINCE SUCH ACTION WOULD IN EFFECT GIVE BIDDERS ANOTHER CHANCE IN THE BIDDING, CONTRARY TO THE FORBIDDEN "TWO BITES AT THE APPLE," IT WOULD BE PREJUDICIAL TO THE PURPOSES OF THE COMPETITIVE BIDDING SYSTEM AND THUS UNAUTHORIZED. SEE 38 COMP. GEN. 532.

IN ADDITION TO THE ABOVE-NOTED DEFICIENCY IN THE INVITATION, THERE IS ANOTHER QUESTIONABLE FEATURE THEREOF WHICH MERITS CONSIDERATION. THE INVITATION REQUESTS UNDER ITEM NO. 11 THE QUOTATION OF A PRICE ON THAT SPECIAL TOOLING REQUIRED BY THE BIDDER TO SUPPLEMENT THE GOVERNMENT-OWNED TOOLING AVAILABLE TO THE SUCCESSFUL BIDDER AT NO COST, AND PROVIDES THAT THE SPECIAL TOOLING SO ACQUIRED IS TO BECOME THE PROPERTY OF THE GOVERNMENT. THE BIDS RECEIVED ON THIS ITEM RANGED FROM " NO CHARGE" TO $180,000. NOTWITHSTANDING THE FACT THAT THIS ADDITIONAL SPECIAL TOOLING, EVEN AFTER USE BY THE CONTRACTOR, WOULD UNDOUBTEDLY BE OF VALUE TO THE GOVERNMENT, IF ONLY SCRAP VALUE, THE INVITATION CONTAINS NO PROVISION, FOR USE IN EVALUATING BIDS, REQUIRING BIDDERS TO STATE IN THEIR BIDS THE QUANTITY, TYPE OR CONDITION OF THE ADDITIONAL SPECIAL TOOLING PROPOSED TO BE PROCURED.

UNDER A PREVIOUS INVITATION FOR BIDS INVOLVING AN ALMOST IDENTICAL PROVISION, THE DEPARTMENT OF THE NAVY, RECOGNIZING THE IMPROPRIETY OF THE AWARD MADE THEREUNDER, RESCINDED THE AWARD AND READVERTISED ITS REQUIREMENTS UNDER A NEW AND PROPERLY REVISED INVITATION. IN OUR DECISION OF DECEMBER 28, 1959, B-141323, TO THE THEN SECRETARY OF THE NAVY, UPHOLDING THE CORRECTNESS OF THE ACTION TAKEN BY YOUR DEPARTMENT, WE STATED, IN PART, THAT:

THE ORIGINAL INVITATION IN OUR OPINION WAS LEGALLY DEFECTIVE IN THAT IT WAS AMBIGUOUS AND INDEFINITE AND DID NOT PERMIT BIDDERS TO COMPETE ON A COMMON BASIS. IT FOLLOWS, THEREFORE, THAT NO VALID AWARD COULD BE MADE ON THE BASIS OF THE INVITATION.

THE ACTION TAKEN BY YOUR DEPARTMENT ON THE INVITATION FOR BIDS THERE INVOLVED AND THE VIEWS EXPRESSED THEREON BY THIS OFFICE APPEAR EQUALLY APPLICABLE HERE.

ACCORDINGLY, IT IS OUR VIEW, BASED ON THE INDICATED DEFICIENCIES IN THE INVITATION FOR BIDS HERE INVOLVED, THAT ALL BIDS SHOULD BE REJECTED AND, UNDER ANY READVERTISING FOR BIDS, THAT PROCUREMENT BE EFFECTED UNDER A PROPERLY REVISED INVITATION CLEARLY SETTING FORTH THE REQUIRED FACTORS UPON WHICH EVALUATION AND AWARD WILL BE MADE.