B-150379, DEC. 19, 1962

B-150379, DEC. 19, 1962

TO LITHO PRESS, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD MADE BY THE GOVERNMENT PRINTING OFFICE TO RICH PRINTING COMPANY UNDER INVITATION FOR BIDS COVERING PROGRAM NO. 304.

ON OCTOBER 9, 1962, THE GOVERNMENT PRINTING OFFICE ADVERTISED FOR PRICES ON THE PRODUCTION OF AIR FORCE TRAINING MANUALS, AND REVISIONS AND CHANGES TO EXISTING MANUALS FOR THE PERIOD BEGINNING WITH THE DATE OF AWARD AND ENDING AUGUST 31, 1963. THE INVITATION REQUIRED BIDDERS TO QUOTE ON 164 SEPARATE ITEMS. PAGES 8 AND 9 OF THE INVITATION PROVIDED THAT SHIPMENTS WERE TO BE F.O.B. CONTRACTOR'S CITY AND THAT IT WAS EXPECTED THAT SHIPMENTS WOULD BE ORDERED TO AS MANY AS 60 DESTINATIONS, APPROXIMATELY 10 OF WHICH WOULD BE BULK SHIPMENTS IN LARGE QUANTITIES. HOWEVER, IT APPEARS THAT THE LARGER PORTION OF THE BULK SHIPMENTS WOULD BE TO WASHINGTON, D.C. PAGES 10 THROUGH 13 SET FORTH THE "BASIS OF AWARD" IN PERTINENT PART, AS FOLLOWS:

"IT IS THE INTENTION OF THE GOVERNMENT TO MAKE MULTIPLE AWARDS SINCE IT IS BELIEVED NO ONE FIRM WILL BE ABLE TO MEET ALL THE REQUIREMENTS.

"IN ORDER TO ESTABLISH MULTIPLE AWARD CONTRACTS AND DETERMINE THE SEQUENCE OF BIDDERS, THE GOVERNMENT WILL APPLY THE PRICES QUOTED IN THE "SCHEDULE OF PRICES" TO THE UNITS OF PRODUCTION LISTED HEREINAFTER.

"THE UNITS OF PRODUCTION LISTED REPRESENT THE REQUIREMENTS FOR PRODUCTION DURING A SIX-MONTH PERIOD OF LAST YEAR'S CONTRACT. HOWEVER, THESE DO NOT CONSTITUTE, NOR ARE THEY TO BE CONSTRUED AS, A GUARANTEE OF THE VOLUME OF WORK WHICH MAY BE ORDERED UNDER THIS CONTRACT DURING A LIKE PERIOD OF TIME.

"BIDS WILL BE CONSIDERED IN THE AGGREGATE. THE BIDDER WHOSE PRICES, WHEN SO APPLIED, RESULT IN THE LOWEST AGGREGATE BID WILL BE DECLARED THE LOW BIDDER. THE SECOND LOW BIDDER, THIRD, ETC., IN THEIR ORDER WILL ALSO BE DETERMINED IN LIKE MANNER AND AWARDS MADE ACCORDINGLY.

"THE PUBLIC PRINTER RESERVES THE RIGHT TO REJECT ANY BID THAT CONTAINS PRICES FOR INDIVIDUAL ITEMS OF PRODUCTION (WHETHER OR NOT SUCH ITEMS ARE INCLUDED IN THE BASIS OF AWARD), THAT ARE INCONSISTENT OR UNREALISTIC IN REGARD TO OTHER PRICES IN THE SAME BID OR TO GOVERNMENT PRINTING OFFICE PRICES FOR THE SAME OPERATION IF, IN HIS OPINION, SUCH ACTION WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT.

"ALL THE NEEDS OF THE DEPARTMENT OF THE AIR FORCE REQUISITIONED ON THIS PROGRAM FROM THE GOVERNMENT PRINTING OFFICE WHICH ARE APPLICABLE TO THE PRODUCT OR PRODUCTS COVERED BY THESE SPECIFICATIONS, WILL BE OFFERED TO THE LOWEST BIDDER. IT IS IMPOSSIBLE TO DETERMINE THE EXACT REQUIREMENTS AND NEEDS OF THE GOVERNMENT RELATING TO THESE PRODUCTS; THEREFORE, THE OBLIGATION OF THE GOVERNMENT PRINTING OFFICE IN THE CASE OF OTHER THAN THE LOWEST BID WILL BE LIMITED TO THE QUANTITIES NEEDED IN EXCESS OF QUANTITIES ACCEPTED BY THE LOWEST BIDDER.'

THERE ARE THEN SET FORTH UNITS OF PRODUCTION FOR THE VARIOUS ITEMS. SUCH UNITS OF PRODUCTION ARE REPORTED TO BE BASED UPON ACTUAL AMOUNTS INVOLVED UNDER 20 ORDERS PLACED UNDER THE PREVIOUS CONTRACT.

SEVEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE RECORD SHOWS THAT THE FOUR LOWEST BIDS RECEIVED, AFTER EVALUATION BY MULTIPLYING THE UNIT PRICES BY THE UNITS OF PRODUCTION AS PROVIDED UNDER THE "BASIS OF AWARD," ARE AS FOLLOWS:

TABLE

LITHO PRESS, INCORPORATED $41,024.12

RICH PRINTING COMPANY 41,098.80

DEMOCRAT PRINTING AND LITHO COMPANY 41,224.93

HURLEY COMPANY 43,901.67

SINCE THE SPECIFICATIONS PROVIDED FOR PRICES TO BE BASED ON SHIPMENT F.O.B. CONTRACTOR'S CITY, THE COST WAS COMPUTED FOR SHIPPING THE FINISHED MANUALS FROM THE BIDDER'S PLANT TO DESTINATION. IN THIS CONNECTION IT IS REPORTED THAT AT THE TIME OF PREPARING THE ORIGINAL SPECIFICATIONS FOR THIS PROGRAM IT WAS INTENDED THAT CONSIGNMENTS OF THE FINISHED WORK WOULD BE MADE TO AS MANY AS 60 DESTINATIONS, APPROXIMATELY 10 OF WHICH WOULD BE BULK SHIPMENTS AS STIPULATED IN THE INVITATION UNDER "SHIPPING.' HOWEVER, DURING THE LATTER PART OF THE PRIOR CONTRACT PERIOD IT WAS REQUIRED THAT ONLY ONE BULK SHIPMENT ON EACH ORDER BE MADE, WHICH WAS TO WASHINGTON, D.C., AND ONE MAIL SHIPMENT, WHICH WAS TO RANDOLPH AIR FORCE BASE, TEXAS. THEREFORE, SHIPPING COSTS WERE COMPUTED ON THE BASIS OF ONLY ONE BULK SHIPMENT TO WASHINGTON, D.C., AND ON THIS BASIS THE COST OF TRANSPORTATION TO THE GOVERNMENT WAS FIGURED FOR LITHO PRESS, INC., AT $4,688.63, RICH PRINTING COMPANY AT $3,025.84, DEMOCRAT PRINTING AND LITHOGRAPHING COMPANY AT $3,567.34, AND HURLEY COMPANY AT $3,705.43. SUCH SHIPPING COSTS WERE THEN ADDED TO THE TOTAL BID PRICES, AS EVALUATED IN ACCORDANCE WITH THE "BASIS OF AWARD.' THIS CHANGED THE SEQUENCE OF THE BIDS, AS FOLLOWS:

TABLE

RICH PRINTING COMPANY $44,124.64

DEMOCRAT PRINTING AND LITHO COMPANY 44,792.27

LITHO PRESS, INCORPORATED 45,712.75

HURLEY COMPANY 47,607.10

AWARD WAS MADE TO THE RICH PRINTING COMPANY AS THE LOW BIDDER ON THE ITEMS PLUS SHIPPING CHARGES TO WASHINGTON, D.C.

YOU PROTEST THE AWARD FOR THE REASONS THAT (1) THE BID OF RICH PRINTING COMPANY SHOULD HAVE BEEN REJECTED DUE TO INCONSISTENT AND UNREALISTIC BID PRICES ON VARIOUS ITEMS AND (2) THE GOVERNMENT IMPROPERLY INCLUDED SHIPPING COSTS IN THE EVALUATION OF THE BIDS.

WITH RESPECT TO YOUR FIRST OBJECTION, THE INVITATION PROVIDES THAT THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY BID THAT CONTAINS PRICES FOR INDIVIDUAL ITEMS OF PRODUCTION (WHETHER OR NOT SUCH ITEMS ARE INCLUDED IN THE BASIS OF AWARD) THAT ARE INCONSISTENT OR UNREALISTIC IF SUCH ACTION WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. IT IS REPORTED THAT THE PRICES QUOTED BY RICH PRINTING COMPANY ON 29 ITEMS ARE INCONSISTENT OR UNREALISTIC, BUT THAT OF THIS NUMBER THE PRICES ON 22 OF THE ITEMS ARE UNREALISTICALLY LOW. AS TO THE REMAINING SEVEN ITEMS, TWO (III-4D/2) AND 4E (2) ( ARE LOWER THAN THE GOVERNMENT'S ESTIMATE; THREE ITEMS (III-1D (A) AND IV-2A (2) AND B (2) ( ARE A LITTLE HIGH; AND THERE ARE ONLY TWO ITEMS (III-2A (2) AND 3A (2) ( WHICH ARE UNREALISTICALLY HIGH. IT WAS CONSIDERED BY THE GOVERNMENT PRINTING OFFICE THAT THE UNREALISTICALLY HIGH PRICES ON THE TWO ITEMS WOULD NOT MATERIALLY AFFECT THE OVERALL COST TO THE GOVERNMENT, PARTICULARLY IN VIEW OF THE LOW PRICES ON THE MAJORITY OF THE ITEMS, AND THAT, THEREFORE, IT WOULD NOT BE IN THE INTEREST OF THE GOVERNMENT TO REJECT THE LOW BID OF RICH PRINTING COMPANY.

THE QUESTION WHETHER A BID SHOULD BE REJECTED AS NOT BEING IN THE INTEREST OF THE GOVERNMENT IS ONE PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICIALS. HOWEVER, A DETERMINATION TO REJECT IN A SITUATION AS HERE INVOLVED WOULD HAVE TO BE BASED UPON A FINDING THAT THE INCONSISTENT OR UNREALISTIC METHOD OF BIDDING MIGHT RESULT IN HIGHER COSTS TO THE GOVERNMENT OR MAKE IT IMPRACTICABLE TO DETERMINE WHAT THE PROBABLE COSTS WOULD BE UNDER SUCH A BID. AS HEREINBEFORE STATED IT WAS ADMINISTRATIVELY DETERMINED THAT RICH'S METHOD OF BIDDING WOULD NOT AFFECT THE OVERALL COST TO THE GOVERNMENT. THE CORRECTNESS OF SUCH DETERMINATION WOULD SEEM TO BE SUBSTANTIATED BY THE FACT THAT THE PRICES QUOTED WERE EVALUATED IN ACCORDANCE WITH THE "BASIS OF AWARD" BY MULTIPLYING SUCH PRICES BY THE ACTUAL QUANTITIES ORDERED (20 ORDERS) FOR A 6-MONTH PRIOR PERIOD, WHICH PERIOD IS APPROXIMATELY TWO-THIRDS OF THE PERIOD COVERED BY THE CONTRACT AWARDED TO RICH. APPARENTLY THERE IS NO REASON TO BELIEVE THAT THE ORDERS TO BE ISSUED UNDER THE INSTANT CONTRACT WOULD VARY ON AN OVERALL BASIS FROM THE ORDERS ACTUALLY ISSUED DURING THE PAST PERIOD. ACCORDINGLY, THERE APPEARS NO JUSTIFICATION FOR QUESTIONING THE ADMINISTRATIVE DETERMINATION THAT IT WOULD NOT BE IN THE INTEREST OF THE GOVERNMENT TO REJECT RICH'S BID.

YOUR SECOND OBJECTION RELATES TO THE INCLUSION OF SHIPPING COSTS TO THE GOVERNMENT IN THE EVALUATION OF THE BIDS. IT IS CONTENDED THAT SUCH COSTS WERE NOT CONSIDERED IN PRIOR SIMILAR AWARDS, THAT THE INVITATION DOES NOT PROVIDE FOR THE INCLUSION OF FREIGHT COSTS, AND THAT IN ANY EVENT THE BASIS USED FOR COMPUTING THE SHIPPING COSTS IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE INVITATION.

IT IS REPORTED THAT SHIPPING COSTS WERE CONSIDERED AND APPLIED IN AWARDING PRIOR SIMILAR CONTRACTS AND THAT IT IS THE POLICY OF THE GOVERNMENT PRINTING OFFICE, WHETHER OR NOT SPECIFICALLY PROVIDED FOR IN THE SPECIFICATIONS, TO CONSIDER BOTH OUTGOING (BLANK STOCK) AND INCOMING (FINISHED PRODUCTION) SHIPPING COSTS IN DETERMINING THE OVERALL COST TO THE GOVERNMENT.

THE STATED POLICY OF THE GOVERNMENT PRINTING OFFICE TO INCLUDE IN THE EVALUATION OF BIDS THE SHIPPING COSTS TO BE INCURRED BY THE GOVERNMENT IS IN ACCORDANCE WITH THE TRADITIONAL POSITION OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT. FOR EXAMPLE, IT WAS STATED IN DECISION OF MARCH 9, 1931, 10 COMP. GEN. 402, 404, THAT "* * * IT MAY BE STATED AS A GENERAL RULE THAT THE COST OF DELIVERY OF EQUIPMENT, ETC., IS ALWAYS A MATTER FOR CONSIDERATION BY THE GOVERNMENT IN DETERMINING WHICH IS IN FACT THE LOWEST BID RECEIVED.' SEE ALSO 37 COMP. GEN. 162, PARAGRAPH 2-407.5 OF THE ARMED SERVICES PROCUREMENT REGULATION.

THE QUESTION THEN ARISES AS TO THE PROPRIETY OF THE ACTION IN COMPUTING SHIPPING COSTS ON THE BASIS OF ONLY ONE BULK SHIPMENT UNDER EACH ORDER TO WASHINGTON, D.C., WHEN THE INVITATION STATED THAT BULK SHIPMENTS MIGHT BE ORDERED TO APPROXIMATELY TEN DESTINATIONS--- UNSPECIFIED EXCEPT FOR WASHINGTON, D.C. GENERALLY AN INVITATION FOR BIDS WHICH PROVIDES FOR F.O.B. ORIGIN DELIVERY SHOULD SPECIFICALLY STATE THE DESTINATION OR DESTINATIONS TO BE USED FOR EVALUATION PURPOSES, OR TO WHICH DELIVERY IS TO BE MADE, PROVIDE FOR A GUARANTEED SHIPPING WEIGHT, AND ADVISE BIDDERS THAT SHIPPING COSTS WILL BE CONSIDERED IN THE EVALUATION OF THE BIDS. THE INSTANT CASE WEIGHT IS NOT A VARIABLE ITEM AND THE USE OF THE ACTUAL WEIGHT INVOLVED IN THE 20 PRIOR ORDERS AS THE BASIS FOR COMPUTATION OF SHIPPING COSTS WOULD NOT APPEAR OBJECTIONABLE. WHILE THE INVITATION FAILED TO SPECIFICALLY STATE THE DESTINATIONS TO WHICH BULK SHIPMENTS WOULD BE MADE OTHER THAN WASHINGTON, D.C., AND THE EVALUATION OF THE BIDS WAS ON THE BASIS OF ONLY ONE BULK SHIPMENT UNDER EACH ORDER TO WASHINGTON, D.C., WHICH IS THE ONLY PLACE WHERE IT IS CONTEMPLATED THAT BULK SHIPMENTS WILL BE REQUIRED UNDER THE CONTRACT INVOLVED, IT WOULD NOT APPEAR TO BE PREJUDICIAL TO THE VARIOUS BIDDERS, SINCE EVEN IF NO DESTINATION HAD BEEN NAMED SHIPPING COSTS WOULD HAVE BEEN REQUIRED TO BE CONSIDERED IN THE EVALUATION OF THE BIDS. FURTHERMORE, WASHINGTON, D.C., WAS THE ONLY DESTINATION ACTUALLY SPECIFIED IN THE INVITATION FOR BULK SHIPMENTS.

FOR THE FOREGOING REASONS WE DO NOT FIND ANY BASIS TO QUESTION THE ADMINISTRATIVE ACTION TAKEN IN THIS CASE.