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B-148720, JUN. 27, 1962

B-148720 Jun 27, 1962
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- AFTER BIDS RECEIVED IN RESPONSE TO INVITATION NO. 600-621-62 WERE PUBLICLY OPENED. WE HELD THAT THE 12 PERCENT FACTOR PRESCRIBED BYASPR 6 104.4 (B) FOR EVALUATING BIDS OFFERING FOREIGN PRODUCTS WHEN THE LOW DOMESTIC BIDDER IS A LABOR SURPLUS AREA CONCERN MAY BE USED IN DETERMINING THE REASONABLENESS OF THE LOW DOMESTIC BID. IF THE USUAL 6 PERCENT DIFFERENTIAL WERE APPLIED. THE CONTENTION RAISED THAT THE INFORMATION FURNISHED BY FARREL BIRMINGHAM CONSTITUTED A LATE BID MODIFICATION WHICH COULD NOT BE CONSIDERED UNDER LONG-STANDING PRINCIPLES APPLICABLE TO COMPETITIVE ADVERTISING WAS FULLY CONSIDERED IN OUR PREVIOUS DECISIONS. WE ARE UNABLE TO AGREE THAT SUCH SOLICITATION OF INFORMATION CONSTITUTED A "BID MODIFICATION" FATAL TO THE RESPONSIVENESS OF FARREL-BIRMINGHAM'S BID.

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B-148720, JUN. 27, 1962

TO JACKSON, NASH, BROPHY, BARRINGER AND BROOKS:

BY LETTER DATED JUNE 14, 1962, YOU REQUEST RECONSIDERATION OF OUR DECISIONS OF MAY 7, AND JUNE 4, 1962, WHEREIN WE HELD THAT INFORMATION FURNISHED BY FARREL-BIRMINGHAM, INC.--- THE LOW DOMESTIC BIDDER--- AFTER BIDS RECEIVED IN RESPONSE TO INVITATION NO. 600-621-62 WERE PUBLICLY OPENED, CONCERNING ITS INTENTION TO PERFORM A SUFFICIENT PORTION OF THE WORK IN LABOR SURPLUS AREAS COULD BE USED IN ASCERTAINING THE BUY AMERICAN ACT EVALUATION FACTOR TO BE USED IN DETERMINING THE ELIGIBILITY OF THE LOW FOREIGN PRODUCTS BID SUBMITTED BY KURT ORBAN COMPANY, INC.

SPECIFICALLY, WE HELD THAT THE 12 PERCENT FACTOR PRESCRIBED BYASPR 6 104.4 (B) FOR EVALUATING BIDS OFFERING FOREIGN PRODUCTS WHEN THE LOW DOMESTIC BIDDER IS A LABOR SURPLUS AREA CONCERN MAY BE USED IN DETERMINING THE REASONABLENESS OF THE LOW DOMESTIC BID. THE NET EFFECT OF THIS WOULD BE TO MAKE FARREL-BIRMINGHAM THE LOWEST ACCEPTABLE BIDDER, WHEREAS, IF THE USUAL 6 PERCENT DIFFERENTIAL WERE APPLIED, KURT ORBAN WOULD BE THE LOWEST ACCEPTABLE BIDDER.

THE CONTENTION RAISED THAT THE INFORMATION FURNISHED BY FARREL BIRMINGHAM CONSTITUTED A LATE BID MODIFICATION WHICH COULD NOT BE CONSIDERED UNDER LONG-STANDING PRINCIPLES APPLICABLE TO COMPETITIVE ADVERTISING WAS FULLY CONSIDERED IN OUR PREVIOUS DECISIONS. WE ARE UNABLE TO AGREE THAT SUCH SOLICITATION OF INFORMATION CONSTITUTED A "BID MODIFICATION" FATAL TO THE RESPONSIVENESS OF FARREL-BIRMINGHAM'S BID. THE PREFERENCE APPLICABLE TO DOMESTIC, AS DISTINGUISHED FROM FOREIGN, BIDS IS ESTABLISHED BY LAW AND REGULATION AND IS GENERALLY AN OBJECTIVE CRITERIA REQUIRED TO BE OBSERVED BY CONTRACTING AGENCIES WITHOUT ANY EXERCISE OF DISCRETION.

INSOFAR AS PERTINENT HERE ASPR 6-104.4 PROVIDES:

"/B) EXCEPT AS PROVIDED IN (D) BELOW, BIDS AND PROPOSALS SHALL BE EVALUATED SO AS TO GIVE PREFERENCE TO DOMESTIC BIDS. FOR THE PURPOSE OF EVALUATION, A FACTOR OF 6 PERCENT OF EACH FOREIGN BID (WHICH DOES NOT OFFER A CANADIAN END PRODUCT) SHALL BE ADDED TO THAT FOREIGN BID, EXCEPT THAT WHERE THE FIRM SUBMITTING THE LOW ACCEPTABLE DOMESTIC BID IS A SMALL BUSINESS CONCERN, OR A LABOR SURPLUS AREA CONCERN, OR BOTH- -

(I) THE PROPOSED AWARD SHALL BE SUBMITTED TO THE SECRETARY IF REQUIRED PURSUANT TO (C) BELOW, OR

"/II) IF NOT REQUIRED TO BE SUBMITTED UNDER (C) BELOW, THEN A FACTOR OF 12 PERCENT (IN LIEU OF THE 6 PERCENT FACTOR, OF EACH SUCH FOREIGN BID SHALL BE ADDED TO THAT FOREIGN BID, EXCEPT THAT WHERE SMALL PURCHASE PROCEDURES (SEE SECTION III, PART 6) ARE USED, THE 6 PERCENT FACTOR SHALL APPLY.

EXCEPT FOR THOSE CASES FORWARDED TO THE SECRETARY PURSUANT TO (C) BELOW, AWARD SHALL BE MADE TO THE LOW ACCEPTABLE BIDDER. WHEN MORE THAN ONE LINE ITEM IS OFFERED IN RESPONSE TO AN INVITATION FOR BIDS OR REQUEST FOR PROPOSALS, THE APPROPRIATE FACTOR SHALL BE APPLIED ON AN ITEM-BY-ITEM BASIS, EXCEPT THAT THE FACTOR MAY BE APPLIED TO ANY GROUP OF ITEMS AS TO WHICH THE INVITATION FOR BIDS OR REQUEST FOR PROPOSALS SPECIFICALLY PROVIDES THAT AWARD MAY BE MADE ON A PARTICULAR GROUP OF ITEMS.

"/C) (1) NOTWITHSTANDING THAT THE LOW ACCEPTABLE BID OR PROPOSAL AS TO ANY ITEM OR GROUP OF ITEMS UNDER (B) ABOVE MAY BE A FOREIGN BID, PROPOSED AWARDS SHALL BE SUBMITTED, IN ACCORDANCE WITH DEPARTMENTAL PROCEDURES, TO THE SECRETARY CONCERNED FOR DECISION WHERE ALL ACCEPTABLE DOMESTIC BIDS EXCEED THE LOW ACCEPTABLE FOREIGN BID PLUS 6 PERCENT (DETERMINED IN ACCORDANCE WITH (B) ABOVE) AND THE SUM OF ANY LOW ACCEPTABLE DOMESTIC BID FROM ANY SINGLE (I) SMALL BUSINESS CONCERN OR (II) LABOR SURPLUS AREA CONCERN, EXCEEDS $100,000; PROVIDED, THAT THIS SUBPARAGRAPH (C) (1) SHALL NOT APPLY WHERE THE LOW FOREIGN BID OFFERS A CANADIAN END PRODUCT.

"/2) PROPOSED AWARDS SHALL BE SUBMITTED, IN ACCORDANCE WITH DEPARTMENTAL PROCEDURES, TO THE SECRETARY CONCERNED FOR DECISION WHERE:

"/I) REJECTION OF AN ACCEPTABLE LOW FOREIGN BID IS CONSIDERED NECESSARY TO PROTECT ESSENTIAL NATIONAL SECURITY INTERESTS, SUCH AS MAINTENANCE OF A MOBILIZATION BASE; OR

"/II) REJECTION OF ANY BID OR PROPOSAL FOR OTHER REASONS OF THE NATIONAL INTEREST IS CONSIDERED NECESSARY.

PRIOR TO FINAL ACTION, CASES WITHIN THIS SUBPARAGRAPH (2) SHALL BE REFERRED BY THE SECRETARY CONCERNED TO THE ASSISTANT SECRETARY OF DEFENSE (SUPPLY AND LOGISTICS).'

UNDER THESE PROVISIONS OF THE REGULATION, AUTOMATIC APPLICATION OF THE ADDITIONAL 6 PERCENT DIFFERENTIAL IS NOT REQUIRED WHERE THE LOW DOMESTIC BIDDER IS A LABOR SURPLUS AREA CONCERN AND WHERE THE LOW BID FROM SUCH CONCERN EXCEEDS $100,000. HOWEVER, THE SECRETARY IS NOT PRECLUDED, IN HIS CONSIDERATION OF THE ACCEPTABILITY OF THE DOMESTIC BID, FROM APPLYING THE ADDITIONAL 6 PERCENT DIFFERENTIAL TO THE BID OFFERING FOREIGN PRODUCTS. IN THIS CONNECTION, WE NOTE THAT THE PROCUREMENT ACTIVITY CONTEMPLATES SUBMITTING THE MATTER TO THE SECRETARY OF THE NAVY FOR DECISION UNDER NAVY PROCUREMENT DIRECTIVES 6 104.4C (ASPR 6-104 (C) ).

WE DO NOT FIND ANY COMPELLING REASON FOR REJECTION OF ALL BIDS AND A SUBSEQUENT READVERTISEMENT. THE COURT OF CLAIMS STATES IN MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699, 719:

"TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.'

THIS RULE IS RECOGNIZED IN PARAGRAPH 2-404.1 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH STATES: "THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION.' NOTHING HAS COME TO OUR ATTENTION WHICH WOULD COMPEL THE PROCUREMENT AGENCY TO TAKE SUCH ACTIONS OR WHICH WOULD REQUIRE US TO RECOMMEND THAT SUCH ACTIONS BE TAKEN.

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