B-150063, NOV. 28, 1962

B-150063: Nov 28, 1962

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TO THE MINNESOTA MINING AND MANUFACTURING COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 5. YOU PROTEST THE AWARD ON THE BASIS THAT THE INVITATION FOR BIDS WAS IMPROPER FOR TWO REASONS. D AND E WERE TO BE MULTIPLIED BY 1. BY RESTRICTING THE GOVERNMENT'S RIGHT TO ISSUE ORDERS UNDER CERTAIN SMALL QUANTITY INCREMENTS BUT NEVERTHELESS REQUIRING QUOTATIONS THEREON WHICH WERE TO BE CONSIDERED IN THE EVALUATION OF THE BIDS. THE SUFLEX CORPORATION WAS THE LOW BIDDER ON ALL ITEMS. ELECTRICAL SPECIALTIES COMPANY WAS THE SECOND LOW BIDDER. AWARD WAS MADE TO SUFLEX CORPORATION ON SEPTEMBER 20. THE AMOUNT OF THE CONTRACT IS ESTIMATED TO BE $5. SUFLEX CORPORATION QUOTED WHAT APPARENTLY ARE TOKEN PRICES IN ALL INSTANCES ON THE QUANTITY INCREMENTS ON WHICH THE GOVERNMENT WAS PREVENTED FROM ISSUING ORDERS BY REASON OF THE REQUIREMENT THAT EACH ORDER COVER A FULL REEL.

B-150063, NOV. 28, 1962

TO THE MINNESOTA MINING AND MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 5, 1962, PROTESTING ON BEHALF OF YOUR REGULAR DISTRIBUTOR, ELECTRICAL SPECIALTIES, INCORPORATED, DAYTON, OHIO, THE AWARD MADE TO SUFLEX CORPORATION UNDER INVITATION FOR BIDS NO. 33-604-62-816, ISSUED BY THE DAYTON AIR FORCE DEPOT.

YOU PROTEST THE AWARD ON THE BASIS THAT THE INVITATION FOR BIDS WAS IMPROPER FOR TWO REASONS. FIRST, THE WEIGHTED AVERAGE SYSTEM PROVIDED IN THE INVITATION FOR DETERMINING THE LOW BIDDER ON EACH ITEM PERMITTED BIDDING TO BE ADJUSTED TO SECURE THE LOWEST WEIGHTED ITEM AVERAGE BY USING AN EXTREMELY LOW UNIT PRICE IN ONE OR MORE QUANTITY INCREMENTS, AND SECOND, THE REQUIREMENT THAT THE GOVERNMENT ORDER A FULL REEL OF MATERIAL PRECLUDED ISSUANCE OF ORDERS UNDER CERTAIN INCREMENTS.

THE INVITATION REQUESTED BIDS ON 198 ITEMS OF SYNTHETIC RESIN COMPOSITION ELECTRICAL INSULATION MATERIAL FOR THE PURPOSE OF AWARDING A "REQUIREMENTS" TYPE CONTRACT UNDER WHICH ORDERS WOULD BE PLACED FROM DATE OF AWARD UNTIL FEBRUARY 28, 1963. PARAGRAPH 22 OF THE TERMS AND CONDITIONS ON PAGE C OF THE INVITATION REQUIRED BIDDERS TO BID IN THE FOLLOWING QUANTITY INCREMENTS UNDER EACH ITEM:

TABLE

INCREMENT A - 100 THROUGH 199 FEET

INCREMENT B - 200 THROUGH 499 FEET

INCREMENT C - 500 THROUGH 999 FEET

INCREMENT D - 1,000 THROUGH 9,999 FEET

INCREMENT E - 10,000 FEET AND UP

PARAGRAPH 23 OF THE TERMS AND CONDITIONS ON PAGE D OF THE INVITATION ESTABLISHED A WEIGHTED AVERAGE METHOD OF EVALUATION OF THE BIDS TO DETERMINE THE LOW BIDDER ON EACH ITEM FOR AWARD PURPOSES. THE BID PRICES ON INCREMENTS A, B, C, D AND E WERE TO BE MULTIPLIED BY 1, 2, 3, 4 AND 5, RESPECTIVELY, THE RESULTS SO OBTAINED ADDED, AND THEN THIS TOTAL DIVIDED BY 15.

A NOTATION ON PAGE 2 OF THE SCHEDULE PROVIDED THAT NO ORDER WOULD BE PLACED FOR LESS THAN A FULL REEL OF MATERIAL TO BE DELIVERED TO EACH DESTINATION. THE INVITATION IDENTIFIED REEL SIZES AS: 1,000 FEET FOR ITEMS 1 THROUGH 36, 500 FEET FOR ITEMS 37 THROUGH 90, 200 FEET FOR ITEMS 91 THROUGH 132, AND 100 FEET FOR ITEMS 133 THROUGH 198.

THUS THE REQUIREMENT TO ORDER A FULL REEL OF MATERIAL UNDER EACH ITEM OF EACH ORDER WOULD PRECLUDE THE GOVERNMENT FROM ISSUING ANY ORDERS IN THE THREE LOWEST QUANTITY INCREMENTS OF ITEMS 1 THROUGH 36, THE TWO LOWEST QUANTITY INCREMENTS OF ITEMS 37 THROUGH 90, AND THE LOWEST QUANTITY INCREMENT OF ITEMS 91 THROUGH 132. THE REEL SIZE HAS NO BEARING ON THE RIGHT OF THE GOVERNMENT TO ISSUE ORDERS FOR ITEMS 133 THROUGH 198, SINCE THE REEL SIZE OF 100 FEET FALLS WITHIN THE LOWEST QUANTITY INCREMENT.

BY RESTRICTING THE GOVERNMENT'S RIGHT TO ISSUE ORDERS UNDER CERTAIN SMALL QUANTITY INCREMENTS BUT NEVERTHELESS REQUIRING QUOTATIONS THEREON WHICH WERE TO BE CONSIDERED IN THE EVALUATION OF THE BIDS, THE INVITATION PERMITTED A SITUATION WHEREBY BIDDERS COULD QUOTE A LOW PRICE ON SUCH SMALL QUANTITY INCREMENTS AND OBTAIN AN ADVANTAGE IN THE EVALUATION OF THE BIDS WITHOUT BEING REQUIRED TO FURNISH MATERIAL FOR THE PRICES SO BID.

THE ABSTRACT OF BIDS BEFORE US SHOWS THE PRICES QUOTED ON ALL ITEMS FOR ONLY THREE OF THE SIX BIDS RECEIVED IN RESPONSE TO THE INVITATION. ON THE BASIS OF THE BID EVALUATION METHOD SPECIFIED IN THE INVITATION, THE SUFLEX CORPORATION WAS THE LOW BIDDER ON ALL ITEMS. ELECTRICAL SPECIALTIES COMPANY WAS THE SECOND LOW BIDDER. AWARD WAS MADE TO SUFLEX CORPORATION ON SEPTEMBER 20, 1962. THE AMOUNT OF THE CONTRACT IS ESTIMATED TO BE $5,245.20.

AN EXAMINATION OF THE BIDS RECEIVED ON THE 198 ITEMS SHOWS THAT ELECTRICAL SPECIALTIES COMPANY (THE SECOND LOW BIDDER) AND THE THIRD LOW BIDDER QUOTED THE SAME PRICES ON ALL QUANTITY INCREMENTS OF ALL ITEMS. SUFLEX CORPORATION QUOTED WHAT APPARENTLY ARE TOKEN PRICES IN ALL INSTANCES ON THE QUANTITY INCREMENTS ON WHICH THE GOVERNMENT WAS PREVENTED FROM ISSUING ORDERS BY REASON OF THE REQUIREMENT THAT EACH ORDER COVER A FULL REEL. BY SUCH BIDDING SUFLEX OBTAINED AN ADVANTAGE IN THE EVALUATION OF THE BIDS. ALSO, ON CERTAIN OF THE LOWER QUANTITY INCREMENTS, UNDER WHICH ORDERS COULD BE PLACED, SUFLEX QUOTED LOWER PRICES THAN WERE QUOTED FOR LARGER QUANTITY INCREMENTS OF THE SAME ITEM. WITH RESPECT TO THE LATTER, HOWEVER, PARAGRAPH D. OF THE CLAUSE ENTITLED "CALLS," ON PAGE 16 OF THE SCHEDULE OF THE INVITATION, PRECLUDES THE BIDDER FROM OBTAINING ANY ADVANTAGE FROM ANY MANIPULATION WHICH IS PREJUDICIAL TO OTHER BIDDERS OR DETRIMENTAL TO THE GOVERNMENT.

SAID PARAGRAPH D. PERMITS THE GOVERNMENT TO ISSUE ORDERS IN THE QUANTITY INCREMENTS WHICH IS MOST ADVANTAGEOUS TO THE GOVERNMENT, REGARDLESS OF THE QUANTITY ACTUALLY INVOLVED, SUBJECT TO OTHER RESTRICTIONS AS TO MINIMUM ORDERS SUCH AS THE REQUIREMENT IN PARAGRAPH C. OF THE CLAUSE ENTITLED "CALLS," ON PAGE 16 OF THE SCHEDULE, THAT NO ORDER FOR LESS THAN $50 WILL BE ISSUED AND THE REQUIREMENT THAT A FULL REEL OF MATERIAL WILL BE ORDERED.

WHILE SUFLEX UNDOUBTEDLY DID OBTAIN AN ADVANTAGE BY ITS METHOD OF BIDDING UNDER THIS INVITATION BY QUOTING TOKEN PRICES IN THOSE QUANTITY INCREMENTS WHERE NO ORDERS COULD BE PLACED, NEVERTHELESS AN EXAMINATION OF THE BIDS RECEIVED SHOWS THAT SUFLEX FAILED TO DERIVE AN OVERALL ADVANTAGE BY SUCH METHOD OF BIDDING, SINCE SUFLEX WOULD HAVE BEEN LOW ON ALL ITEMS, EXCEPT ITEMS 31 THROUGH 36, UNDER ANY METHOD OF VALUATION.

WE HAVE BEEN ADVISED THAT FUTURE SIMILAR INVITATIONS FOR BIDS WILL BE SO DRAWN THAT BIDDERS WILL BID ONLY ON QUANTITY INCREMENTS UNDER WHICH ORDERS CAN BE PLACED.

IN VIEW OF THE FOREGOING WE DO NOT BELIEVE IT TO BE IN THE INTEREST OF THE GOVERNMENT, OR REQUIRED IN THE INTEREST OF OTHER BIDDERS, TO CANCEL THE AWARD MADE TO SUFLEX CORPORATION UNDER THE INSTANT INVITATION, SINCE (1) THE INVITATION PERMITTED SUFLEX TO BID IN THE MANNER IN WHICH IT DID; (2) SUFLEX ACTUALLY DERIVED NO OVERALL ADVANTAGE BY ITS METHOD OF BIDDING; (3) THE CONTRACT COVERS A LARGE NUMBER OF ITEMS, IS RATHER SMALL IN TOTAL AMOUNT, AND IS ONLY EFFECTIVE UNTIL FEBRUARY 28, 1963; AND (4) THE CONTRACT AS AWARDED IS DEFINITELY IN THE INTEREST OF THE GOVERNMENT. ACCORDINGLY, YOUR PROTEST AGAINST THE AWARD MADE TO SUFLEX CORPORATION IS DENIED.