B-149328, SEP. 4, 1962

B-149328, SEP. 4, 1962

TO MR. O. E. SZEKELY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 29, 1962, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AN AWARD OF CONTRACT NO. DA-11 184- ENG-19828 TO THE JOHN R. HOLLINGSWORTH COMPANY PURSUANT TO INVITATION FOR BIDS NO. ENG-11-184-62-AF-639-JD.

AN EXAMINATION OF THE RECORD NOW BEFORE THIS OFFICE INDICATES THAT ON MAY 14, 1962, THE CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, ISSUED INVITATION FOR BIDS NO. ENG-11-184-62-AF-639-JD FOR THE FURNISHING OF A TOTAL OF 900 EACH 3 KW GASOLINE ENGINE DRIVEN GENERATOR SETS, TOGETHER WITH CERTAIN ITEMS OF REPAIR PARTS. BIDS WERE INVITED ON THE BASIS OF DELIVERY OF 899 GENERATOR SETS ,F.O.B. CARRIER'S EQUIPMENT WHARF OR FREIGHT STATION AT GOVERNMENT'S OPTION AT OR NEAR CONTRACTOR'S PLANT AT A SPECIFIED CITY OR SHIPPING POINT" AND ONE GENERATOR SET "F.O.B. RECEIVING DOCK, COLUMBUS GENERAL DEPOT, COLUMBUS, OHIO.' AMENDMENTS NUMBERED 1 AND 2 TO THIS INVITATION FOR BIDS WERE ISSUED ON JUNE 6 AND 7, 1962, RESPECTIVELY, EFFECTING CERTAIN CHANGES IN THE REPAIR PARTS LIST AND APPLICABLE SPECIFICATIONS. THE GOVERNMENT'S DESIRED DELIVERY SCHEDULE SET FORTH ON PAGE 34 OF THE INVITATION CALLED FOR DELIVERY OF THE 899 GENERATOR SETS IN QUANTITIES OF 150 EVERY 30 DAYS WITH THE LAST DELIVERY BEING 149 UNITS.

BIDS WERE OPENED ON JUNE 12, 1962, AND SEVEN BIDS WERE RECEIVED FROM THE EIGHTY PROSPECTIVE SUPPLIERS SOLICITED. THE JOHN R. HOLLINGSWORTH COMPANY AND YOUR CORPORATION SUBMITTED THE LOWEST RESPONSIVE AND RESPONSIBLE BIDS WITH RESPECT TO UNIT PRICES. PAGE 6 OF THE INVITATION LISTED THE FINAL DESTINATIONS FOR SUPPLIES THAT WOULD BE USED FOR THE PURPOSE OF EVALUATING BIDS, AND THE SPECIFIC DELIVERIES OF THE SUPPLIES TO THOSE DESTINATIONS BY MONTHLY INCREMENTS SHOWN IN THE PURCHASE REQUEST SHIPPING INSTRUCTIONS OF REQUEST OOC 23195-0000-1241-0850/62) WERE USED IN THE TRANSPORTATION EVALUATION. ON JUNE 15, 1962, YOUR CORPORATION FURNISHED LOADING AND RATE INFORMATION THAT WAS USED AS GUIDANCE FOR YOU IN THE TRANSPORTATION EVALUATION OF THE INVITATION. YOU ADVISED THAT 100 AND POSSIBLY 110 UNITS COULD BE LOADED IN A 40 FOOT CAR AND 60 TO 66 UNITS BY MOTOR TRUCK. APPLYING FREIGHT RATES OBTAINED FROM HEADQUARTERS, CENTRAL TRAFFIC REGION, AN EVALUATION OF THE BIDS PRODUCED THE FOLLOWING RESULTS:

CHART

SZEMCO, INC. JOHN R. HOLLINGSWORTH COMPANY

TOTAL COST OF 900 UNITS $643,050.00 $640,200.00

REPAIR PARTS 30,128.66 34,431.87

673,178.66 674,631.87

DISCOUNT OF 1/4 PERCENT 1,682.95 1/10 674.63

----------- PERCENT -----------

671,495.71 673,957.24

TOTAL FREIGHT COST 11,594.45 9,033.61

$683,090.16 $682,990.85

BASED UPON THE ABOVE CALCULATIONS, THE AWARD WAS MADE TO THE JOHN R. HOLLINGSWORTH COMPANY ON JUNE 28, 1962.

BY TELEGRAM DATED JUNE 29, 1962, YOUR CORPORATION PROTESTED THE AWARDING OF A CONTRACT OF ANOTHER BIDDER UNLESS FREIGHT DIFFERENTIAL REDUCED YOUR ADVANTAGE OF AGGREGATE COST, AND BY LETTERS OF JUNE 15, JUNE 21, JULY 3, JULY 6, AND MESSAGE OF JUNE 15, 1962, YOUR CORPORATION SUBMITTED FREIGHT RATE INFORMATION APPLICABLE TO SHIPMENTS FROM WEST PALM BEACH, FLORIDA. BY MESSAGE DATED JUNE 22, 1962, YOUR ATTENTION WAS CALLED TO AN APPARENT ERROR IN QUOTING A UNIT PRICE OF $1.00 FOR GOVERNORS, AND A QUESTION WAS PRESENTED TO YOU CONCERNING YOUR STATEMENT OF UNIT WEIGHT FOR EXPORT AND DOMESTIC PACKING AS 440 POUNDS, WHEREAS, OTHER BIDDERS SHOWED A DIFFERENTIAL OF 20 TO 60 POUNDS IN THE WEIGHTS OF THE TWO METHODS OF PACKING. HOWEVER, BY MESSAGE OF JUNE 24, 1962, YOU CONFIRMED YOUR BID AS FIRM.

IT IS ADMINISTRATIVELY REPORTED THAT IN REVIEWING THE PROTEST OF YOUR CORPORATION AND THE CORRESPONDENCE SUBMITTED BY YOU IT WAS APPARENT THAT THE TRANSPORTATION COSTS WERE THE CRUX OF THE MATTER AND THAT YOUR CORPORATION AND THE DEPARTMENT OF THE ARMY HAD USED A DIFFERENT BASIS OF EVALUATION IN DETERMINING THE LOW BID. APPARENTLY YOU ASSUMED THAT THE COMPLETE QUANTITIES WOULD BE DELIVERED TO THE VARIOUS DEPOTS LISTED UNDER NOTE 6 OF THE INVITATION AT THE SAME TIME. IN OTHER WORDS, 100 TO THE ATLANTA GENERAL DEPOT AND 75 TO THE MEMPHIS GENERAL DEPOT, ETC. HOWEVER, THE CONTRACTING OFFICIALS USED NOT ONLY THE DESTINATIONS SHOWN UNDER NOTE 6, BUT ALSO THE PURCHASE REQUEST SHIPPING INSTRUCTIONS AND THE DELIVERY SCHEDULE OF 150 SETS PER MONTH AS SHOWN IN THE INVITATION IN CALCULATING THE TRANSPORTATION COSTS. UNDER THE LATTER METHOD, THE DELIVERIES TO THE ATLANTA GENERAL DEPOT ARE TO BE MADE AS FOLLOWS: 75 SETS IN APRIL 1963, AND 25 SETS IN JUNE, 1963. LIKEWISE, DELIVERIES TO THE MEMPHIS GENERAL DEPOT WOULD BE 75 SETS IN MARCH, 1963, WHICH IS NO CHANGE FROM THAT WHICH YOU APPARENTLY ASSUMED. HOWEVER, SHIPMENTS TO THE SCHENECTADY GENERAL DEPOT WOULD BE 74 SETS IN FEBRUARY, 1963, 75 SETS IN MAY, 1963, 50 SETS IN JUNE, 1963 AND 25 SETS IN JULY, 1963, WHEN CONSIDERATION IS GIVEN TO THE PURCHASE REQUEST SHIPPING INSTRUCTIONS USED BY THE CONTRACTING OFFICIALS IN COMPUTING THE TRANSPORTATION COSTS. ON THE OTHER HAND, IT APPEARS THAT YOUR CORPORATION INFERRED FROM NOTE 6 OF THE INVITATION THAT ALL 224 SETS TO THE SCHENECTADY GENERAL DEPOT WOULD BE SHIPPED AT THE SAME TIME. THE SAME SITUATION IS TRUE OF OTHER DESTINATIONS.

THE ADMINISTRATIVE OFFICE HAS TAKEN THE POSITION THAT THE ONLY REALISTIC WAY TO COMPUTE THE RELATIVE TRANSPORTATION COSTS OF AN AWARD IS TO GIVE CONSIDERATION TO THE DESIRED DELIVERY SCHEDULE, THE MONTHLY DELIVERY REQUIREMENTS OF THE PURCHASE REQUEST SHIPPING INSTRUCTIONS, AND THE DESTINATIONS AS SHOWN IN NOTE 6 OF THE INVITATION. ACCORDINGLY, SUCH APPROACH WAS APPLIED IN EVALUATING THOSE COSTS BOTH TO YOUR BID AND THAT OF THE HOLLINGSWORTH COMPANY, AND ON THAT BASIS THE TRANSPORTATION COSTS ON YOUR BID WERE HIGHER THAN THE HOLLINGSWORTH BID BY $2,560.84. ADDING THE COST OF TRANSPORTATION TO THE TWO BIDS RESULTED IN A DIFFERENCE OF $99.31 IN FAVOR OF HOLLINGSWORTH AS THE LOW BIDDER.

NOTE 7, APPEARING ON PAGE 6 OF THE INVITATION, CALLING ATTENTION TO THE METHOD OF EVALUATION, READS AS FOLLOWS:

"BIDS RECEIVED UNDER THIS INVITATION WILL BE EVALUATED IN ACCORDANCE WITH PROVISION ENTITLED ,BID EVALUATION" APPEARING IN SPECIAL TERMS AND CONDITIONS OF THIS INVITATION.'

THE REFERRED-TO PROVISION, DESIGNATED AS PARAGRAPH 13 AND 38 OF THE INVITATION PROVIDES:

"BIDS WILL BE EVALUATED ON THE BASIS OF LOWEST OVER-ALL COST TO THE GOVERNMENT, CONSISTENT WITH REQUIREMENTS. WHEN BIDS ARE SUBMITTED ON AN F.O.B. ORIGIN BASIS THE MOST ECONOMICAL MODE OF COMMERCIAL TRANSPORTATION CONSISTENT WITH MILITARY REQUIREMENTS AND AS DETERMINED BY THE GOVERNMENT, BETWEEN THE BIDDER'S SHIPPING POINT AS SET FORTH BY THE BIDDER HEREIN AND THE DESIGNATED DESTINATION AS SET FORTH IN THIS INVITATION, WILL BE CONSIDERED IN DETERMINING THE LOWEST ESTIMATED COST TO THE GOVERNMENT.'

IN YOUR LETTER DATED JULY 28, 1962, WE NOTE THE FOLLOWING COMMENT:

"ASSUMING THAT THE EVALUATION FOR THE TWO BIDS IN QUESTION IS PROPER AND IT DEFINITELY INDICATES THAT WE CANNOT COMPETE TO THE ADVANTAGE OF THE GOVERNMENT, WE SHALL HAVE NO FURTHER COMMENTS, CRITICISM OR CONTROVERSY. HOWEVER, WE FEEL THAT WE ARE ENTITLED TO KNOW HOW THE EVALUATION WAS MADE IN ORDER THAT WE MAY FULLY UNDERSTAND BOTH THE MANNER IN WHICH IT IS EXHIBITED AND A KNOWLEDGE FOR FUTURE BIDS ON SIMILAR GENERATOR SETS. * *

BASED UPON THE METICULOUS CARE APPARENTLY EXERCISED BY THE CONTRACTING OFFICIALS IN ARRIVING AT THE RATES APPLICABLE TO THE SHIPMENTS CONSISTENT WITH REQUIREMENTS AS SPECIFIED IN THE ABOVE-QUOTED PARAGRAPH 13 OF THE INVITATION, IT IS OUR OPINION THAT THE RATES SO APPLIED WERE PROPER AS TO BOTH BIDDERS AND IN THE BEST INTEREST OF THE GOVERNMENT AS CONTEMPLATED BY THE INVITATION. ACCORDINGLY, WE BELIEVE YOU WILL AGREE THAT THERE IS NO BASIS FOR HOLDING THAT THE ..END :