B-150243, NOV. 30, 1962

B-150243, NOV. 30, 1962

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 6, 1962, FROM THE ACTING ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE EXTENT THAT PROMPT PAYMENT DISCOUNT SHOULD BE CONSIDERED IN THE EVALUATION OF THE PROPOSALS RECEIVED IN RESPONSE TO REQUEST FOR QUOTATIONS MIPR-09-603-2-4220-136, ISSUED BY THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA.

QUOTATIONS WERE REQUESTED TO BE RECEIVED BY JUNE 15, 1962, ON 9,616 LIFE PRESERVERS, TYPE LPU-1/P, COMPLETE WITH LIGHTS, DYE MARKERS, AND WHISTLES, TO BE DELIVERED TO WARNER-ROBINS AIR FORCE BASE, GEORGIA. ON PAGE 1 OF THE REQUEST FOR QUOTATIONS WERE SPACES FOR FIRMS TO OFFER DISCOUNTS FOR PROMPT PAYMENT WITHIN 10, 20 AND 30 CALENDAR DAYS. THERE WAS NOTHING FURTHER CONTAINED IN THE FORM WITH RESPECT TO THE EXTENT THAT PROMPT PAYMENT DISCOUNTS WOULD BE CONSIDERED IN THE EVALUATION OF THE PROPOSALS RECEIVED.

TWO QUOTATIONS WERE RECEIVED BY THE DUE DATE, ONE FROM THE GARRETT CORPORATION, AIR CRUISERS DIVISION (AIR CRUISERS), AND THE OTHER FROM THE SWITLIK PARACHUTE COMPANY, INCORPORATED (SWITLIK). DUE TO THE CHANGES REQUIRED IN THE SPECIFICATIONS THESE FIRMS WERE GIVEN THE OPPORTUNITY TO MODIFY THEIR ORIGINAL QUOTATIONS. THE FINAL PRICES ARE AS FOLLOWS:

TABLE

SUPPLIER UNIT PRICE TOTAL DISCOUNT AIR CRUISERS $27.17 $261,266.72 1 PERCENT 20 DAYS, NET 30 DAYS SWITLIK $27.23 $261,843.68 1 PERCENT 30 DAYS

IT WAS DETERMINED THAT THE PRICES RECEIVED WERE FAIR AND REASONABLE AND THEREFORE, IN ACCORDANCE WITH PROVISIONS OF ASPR 3-805.1 (V), NO FURTHER NEGOTIATION WAS REQUIRED AND AWARD WAS CONTEMPLATED ON THE BASIS OF THE "MOST FAVORABLE INITIAL PROPOSAL.' IN ACCORDANCE WITH THE ESTABLISHED PRACTICE AT THE AVIATION SUPPLY OFFICE, PARTICULARLY IN CONNECTION WITH ADVERTISED PROCUREMENTS, OF REQUIRING A MINIMUM DISCOUNT PERIOD OF 30 DAYS WHEN DESTINATION DELIVERY IS SPECIFIED, IT WAS CONSIDERED THAT THE SWITLIK PRICE, CONSIDERING THE 30-DAY DISCOUNT, WAS LOWER THAN AIR CRUISERS' PRICE, NOT CONSIDERING DISCOUNT, AND THEREFORE A NEGOTIATED FIXED PRICE CONTRACT WAS PREPARED AND SENT TO SWITLIK FOR SIGNATURE ON SEPTEMBER 27, 1962. HOWEVER, PRIOR TO THE EXECUTION BY THE CONTRACTING OFFICER OF THE CONTRACT TENDERED TO SWITLIK, AIR CRUISERS PROTESTED AN AWARD TO ANYONE OTHER THAN ITSELF FOR THE REASON THAT ITS PROPOSAL WAS THE LOWEST ON THE BASIS OF THE TERMS AND CONDITIONS SET FORTH IN THE REQUEST FOR QUOTATIONS.

SWITLIK WAS ADVISED OF THE PROTEST AGAINST THE POTENTIAL AWARD TO IT AND THE BASIS THEREOF. SWITLIK PROTESTS AN AWARD TO AIR CRUISERS ON THE BASIS OF PAST PRACTICES AND REGULATIONS. SWITLIK STATES THAT IN THE PAST IT HAD OFFERED A 1 PERCENT, 10-DAY DISCOUNT AND THEY WERE ADVISED THAT IN MOST CASES A 10-DAY PERIOD WAS INSUFFICIENT AND SUCH DISCOUNT WOULD NOT BE CONSIDERED IN THE EVALUATION OF BIDS FOR AWARD. SWITLIK REFERS TO IFB-383 -767-62, A FORMALLY ADVERTISED PROCUREMENT COVERING LIFE RAFTS TO BE DELIVERED TO THE SAME DESTINATION IN WHICH PARAGRAPH 7 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS WAS AMENDED BY PROVIDING THAT PROMPT PAYMENT DISCOUNTS OF LESS THAN 30 DAYS WOULD NOT BE CONSIDERED IN THE EVALUATION OF THE BIDS FOR AWARD PURPOSES. SWITLIK URGES THAT IF THE PAST PRACTICES OF HANDLING DISCOUNTS ARE NOT APPLICABLE THEN THE ENTIRE REQUEST FOR QUOTATIONS IS INVALID, SINCE IT DID NOT STATE WHAT DISCOUNT PERIODS WOULD BE CONSIDERED IN EVALUATING THE PROPOSALS AS REQUIRED BY PROVISIONS OF ASPR 2-407.3 (A), MADE GENERALLY APPLICABLE TO NEGOTIATED PROPOSALS BY ASPR 3-501 (B) (XXIV). ASPR 2-407.3 (A) PROVIDES THAT "PRIOR TO ISSUING AN INVITATION FOR BIDS (EXCEPT FOR CONSTRUCTION), A DETERMINATION SHALL BE MADE AS TO WHAT MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNTS WILL BE CONSIDERED IN THE EVALUATION OF BIDS, AND SUCH MINIMUM PERIOD SHALL BE STATED IN THE INVITATION FOR BIDS.'

IT IS REPORTED THAT UPON RECEIPT OF AIR CRUISERS' PROTEST THE ORIGINAL DECISION NOT TO CONSIDER THE 20-DAY DISCOUNT OFFERED BY AIR CRUISERS WAS REEXAMINED AND INQUIRIES WERE DIRECTED TO THE FINANCE OFFICE, WARNER- ROBINS AIR FORCE BASE, WHICH IS TO BE THE PAYING OFFICE AND TO WHICH BASE THE MATERIAL IS TO BE DELIVERED. IT WAS ESTABLISHED THAT INVOICES ON SUCH MATERIAL WOULD NORMALLY BE PAID WITHIN THE 20 DAY DISCOUNT PERIOD OFFERED BY AIR CRUISERS. IN VIEW THEREOF, AND SINCE THE REQUEST FOR QUOTATIONS DID NOT SPECIFY ANY MINIMUM DISCOUNT PERIOD, THE CONTRACTING OFFICER NOW CONSIDERS THAT THE DISCOUNT OFFERED BY AIR CRUISERS SHOULD BE CONSIDERED IN THE EVALUATION OF THE QUOTATIONS, AND AWARD SHOULD BE MADE TO AIR CRUISERS AS THE SUPPLIER OFFERING THE LOWEST PRICE.

WE AGREE WITH THE CONTRACTING OFFICER'S LATER DETERMINATION. SINCE IT HAS BEEN DETERMINED FROM THE FINANCE OFFICE, WHICH WILL MAKE THE PAYMENTS, THAT SUCH INVOICES WOULD NORMALLY BE PAID WITHIN THE 20-DAY PERIOD ALLOWED BY AIR CRUISERS, THERE CAN BE NO QUESTION BUT THAT AIR CRUISERS' OFFER IS IN FACT THE LOWEST. THE REQUEST FOR QUOTATIONS HERE INVOLVED, REGARDLESS OF PAST PRACTICE, BY NOT SPECIFYING A MINIMUM PERIOD, AT LEAST IMPLIED THAT ANY ONE OF THE THREE DISCOUNT PERIODS PROVIDED ON THE STANDARD FORM WOULD BE CONSIDERED IN THE EVALUATION OF THE PROPOSALS. THE ONLY REASON FOR MODIFYING THE TERMS AND CONDITIONS OF THE STANDARD FORMS BY STATING A MINIMUM PERIOD IN INVITATIONS FOR BIDS OR REQUESTS FOR QUOTATIONS, AS REQUIRED BY ASPR 2 407-3 (A), IS THAT PAYMENT CANNOT BE MADE WITHIN ONE OR MORE OF THE PERIODS PROVIDED ON THE STANDARD FORM. THIS IS NECESSARY IN ORDER THAT BIDDERS MAY BE AWARE OF THE FACTS AT THE TIME THEIR BIDS OR PROPOSALS ARE PREPARED, AND TO AVOID ANY CHARGE OF FAVORITISM IN MAKING AWARDS BY BEING REQUIRED TO MAKE THIS DETERMINATION AFTER THE PRICES QUOTED ARE DISCLOSED. SEE DECISION TO YOU OF JANUARY 9, 1962, B-147636. IN THE PRESENT CASE, IF A DETERMINATION HAD BEEN MADE, IT WOULD NOT HAVE PRECLUDED CONSIDERATION OF A 20-DAY DISCOUNT.

FOR THE FOREGOING REASONS, AND SINCE IT HAS BEEN DETERMINED THAT THE AWARD SHOULD BE MADE ON THE BASIS OF THE "MOST FAVORABLE INITIAL PROPOSAL" PURSUANT TO ASPR 3-805 (1) (A) (V), WE ARE OF THE OPINION THAT THE AWARD SHOULD BE MADE TO AIR CRUISERS AS RECOMMENDED BY THE CONTRACTING OFFICER.

THE PAPERS, WITH THE EXCEPTION OF THE STATEMENT OF FACTS BY THE CONTRACTING OFFICER, ARE RETURNED.