B-150527, FEBRUARY 15, 1963, 42 COMP. GEN. 415

B-150527: Feb 15, 1963

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ON THE BASIS THAT THE INVITATION REQUIRED AWARD TO BE MADE ON EACH LOT TO THE LOW BIDDER ON THAT SPECIFIC LOT WAS ERRONEOUS. FAILURE TO CONSIDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT (41 U.S.C. 253 (B) IN THE BID EVALUATION DEPRIVED THE GOVERNMENT OF THE PRICE ADVANTAGE THAT WOULD HAVE RESULTED FROM COMBINING LOTS TO MEET THE LOW BIDDER'S DOLLAR LIMITATION. THE PROPRIETY OF THE PAYMENTS MADE UNDER THE CONTRACTS AWARDED WILL NOT BE QUESTIONED AS THE EVALUATION OF BIDS UNDER THE ERRONEOUS INTERPRETATION THAT "AWARD WILL BE MADE OF EACH LOT TO THE LOWEST BIDDER ON THAT LOT AND BIDS ON COMBINATION OF LOTS WILL NOT BE CONSIDERED" WAS NOT INCONSISTENT WITH THE IMPLICATIONS OF PRIOR DECISIONS THAT ALL OR NONE BID LIMITATIONS ARE EFFECTIVE ABSENT A CONTRARY PROVISION IN THE INVITATION.

B-150527, FEBRUARY 15, 1963, 42 COMP. GEN. 415

BIDS - EVALUATION - SEPARABLE V. AGGREGATE ITEMS, PRICES, ETC. - EVALUATION FORMULA ERRONEOUS UNDER AN INVITATION FOR BIDS ON LOTS OF ASSORTED ITEMS TO BE EVALUATED "ON A LOT BASIS ONLY," WITH NO RESERVATION IN THE GOVERNMENT TO ACCEPT ANY ITEM OR GROUP OF ITEMS, THE REJECTION OF THE LOW BID ON 3 LOTS, CONDITIONED BY A MINIMUM ACCEPTABLE DOLLAR AMOUNT, ON THE BASIS THAT THE INVITATION REQUIRED AWARD TO BE MADE ON EACH LOT TO THE LOW BIDDER ON THAT SPECIFIC LOT WAS ERRONEOUS, AND FAILURE TO CONSIDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT (41 U.S.C. 253 (B) IN THE BID EVALUATION DEPRIVED THE GOVERNMENT OF THE PRICE ADVANTAGE THAT WOULD HAVE RESULTED FROM COMBINING LOTS TO MEET THE LOW BIDDER'S DOLLAR LIMITATION; HOWEVER, THE PROPRIETY OF THE PAYMENTS MADE UNDER THE CONTRACTS AWARDED WILL NOT BE QUESTIONED AS THE EVALUATION OF BIDS UNDER THE ERRONEOUS INTERPRETATION THAT "AWARD WILL BE MADE OF EACH LOT TO THE LOWEST BIDDER ON THAT LOT AND BIDS ON COMBINATION OF LOTS WILL NOT BE CONSIDERED" WAS NOT INCONSISTENT WITH THE IMPLICATIONS OF PRIOR DECISIONS THAT ALL OR NONE BID LIMITATIONS ARE EFFECTIVE ABSENT A CONTRARY PROVISION IN THE INVITATION, BUT FUTURE PROCUREMENTS SHOULD BE IN ACCORD WITH THIS DECISION.

TO THE COMMANDANT, UNITED STATES COAST GUARD, FEBRUARY 15, 1963:

WE HAVE RECEIVED A REPORT WITH LETTER OF JANUARY 17, 1963, YOUR REFERENCE FS-1, IN CONNECTION WITH A PROTEST BY THE METIMPEX CORPORATION AGAINST THE REJECTION OF ITS BID ON CERTAIN SUPPLIES IN RESPONSE TO INVITATION NO. 35B -1-63-B, ISSUED OCTOBER 23, 1962, BY THE COAST GUARD SUPPLY CENTER IN BROOKLYN, NEW YORK, FOR THE PROCUREMENT OF 27 LOTS OF BUOY CHAIN AND BRIDLES. IN THE AGGREGATE, THE INVITATION CALLED FOR 116 LINE ITEMS, EMBRACING 10 SIZES OF CHAIN AND 6 SIZES OF BRIDLES, AND EACH LOT REPRESENTED THE REQUIREMENTS OF A SINGLE COAST GUARD STATION OR BASE.

THE INVITATION PROVIDED AT PAGE 2 THAT AWARD WOULD BE MADE "ON LOT BASIS ONLY.' THE USUAL PROVISION FOUND ON THE REVERSE SIDE OF STANDARD FORM 33, RESERVING TO THE GOVERNMENT THE RIGHT TO ACCEPT ANY ITEM OR GROUP OF ITEMS UNLESS SPECIFICALLY LIMITED BY THE LANGUAGE OF THE BID, WAS OMITTED. THE METIMPEX BID, OFFERING SUPPLIES OF FOREIGN ORIGIN, WAS LOW ON ITEMS 19, 20 AND 22, EVEN TAKING INTO CONSIDERATION THE 12 PERCENT DIFFERENTIAL APPLICABLE PURSUANT TO THE BUY AMERICAN ACT, 41 U.S.C. 10A AND EXECUTIVE ORDER NO. 10582, AS AMENDED BY EXECUTIVE ORDER NO. 11051. THE TOTAL AMOUNT OF THE AWARD TO METIMPEX FOR THESE ITEMS WOULD HAVE BEEN $20,267.44, CONSIDERING APPLICABLE PROMPT PAYMENT DISCOUNTS. HOWEVER, THE COMPANY HAD CONDITIONED ITS BID BY PROVIDING THAT, WITH CERTAIN EXCEPTIONS NOT HERE APPLICABLE, THE MINIMUM ACCEPTABLE AMOUNT OF ANY AWARD WAS $25,000.

THE CONTRACTING OFFICER CONSTRUED THE PROVISION OF THE INVITATION QUOTED ABOVE TO MEAN THAT AWARD WAS REQUIRED TO BE MADE ON EACH LOT TO THE LOW BIDDER ON THAT SPECIFIC LOT. SINCE THE MINIMUM ACCEPTABLE DOLLAR AMOUNT PRECLUDED AWARD TO METIMPEX ON THE LOTS ON WHICH IT WAS LOW, THE BID WAS REJECTED ENTIRELY AND AWARD MADE ON THE VARIOUS LOTS TO SIX FIRMS ON DECEMBER 14, 1962, FOR DELIVERY NOT LATER THAN APRIL 15, 1963.

METIMPEX CONTENDS THAT IT SHOULD HAVE BEEN GIVEN AN AWARD FOR THE ITEMS ON WHICH IT WAS LOW, PLUS ITEM 18, ON WHICH IT WAS NOT LOW IF THE BUY AMERICAN DIFFERENTIAL IS INCLUDED, BECAUSE AWARD TO THE FIRM OF ALL FOUR LOTS, EVEN INCLUDING THE DIFFERENTIAL, WOULD PRODUCE A LOWER COST TO THE GOVERNMENT THAN ANY OTHER COMBINATION OF BIDS ON THOSE LOTS. THE CONTRACTING OFFICER CONCEDES THE VALIDITY OF THE CONCLUSION BUT CONTENDS THAT AWARD TO THE FIRM FOR ITEM 18 IS PRECLUDED BY THE INVITATION PROVISION FOR AWARD ON A LOT BASIS ONLY.

THE STIPULATION BY BIDDERS OF LIMITATIONS ON THE ACCEPTANCE OF ITEMS IN A BID TO VARIOUS COMBINATIONS OR MAXIMUM OR MINIMUM DOLLAR AMOUNTS IS NOT UNUSUAL IN GOVERNMENT PROCUREMENTS. AS WITH A RELATED FORM OF QUALIFIED BID, THE ALL OR NONE BID, WE HAVE CONSISTENTLY TAKEN THE POSITION THAT SUCH LIMITATIONS ARE EFFECTIVE IN THE ABSENCE OF A SPECIFIC PROVISION IN THE INVITATION TO THE CONTRARY. SEE 35 COMP. GEN. 383, 385. THE CONTRACTING OFFICER'S INTERPRETATION OF THE CITED LANGUAGE OF THE INVITATION IS THAT BY PROVIDING SPECIFICALLY FOR AWARD ON A LOT BASIS ONLY IT EFFECTIVELY PRECLUDES CONSIDERATION OF BIDS OTHERWISE THAN ON EACH INDIVIDUAL LOT AS A SEPARATE AND DISTINCT UNIT, WITHOUT REGARD TO ANY OTHER.

WHILE RECOGNIZING THE IMPLICATION IN THE LINE OF DECISIONS ABOVE REFERRED TO THAT QUALIFYING LIMITATIONS OR COMBINATION BIDS MAY BE PROHIBITED, WE MUST ALSO TAKE INTO CONSIDERATION THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, AS AMENDED, PURSUANT TO WHICH THE PROCUREMENT WAS UNDERTAKEN, WHICH PROVIDES (41 U.S.C. 253 (B) ( THAT AWARD SHALL BE MADE ON THE BASIS OF THE BID MOST ADVANTAGEOUS TO THE GOVERNMENT,"PRICE AND OTHER FACTORS CONSIDERED.' THIS HAS BEEN CONSISTENTLY INTERPRETED TO REQUIRE AWARD ON THE BASIS OF THE MOST FAVORABLE COST TO THE GOVERNMENT, ASSUMING THE RESPONSIVENESS OF THE BID AND THE RESPONSIBILITY OF THE BIDDER. SIMILARLY, IT HAS BEEN HELD THAT ONE OF THE CHIEF PURPOSES OF THE ADVERTISING STATUTES IS TO OBTAIN FOR THE GOVERNMENT THE BENEFITS FLOWING FROM FREE AND UNRESTRICTED COMPETITION. SEE UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461. IN THIS CONNECTION WE HAVE IN A LONG SERIES OF DECISIONS ADHERED TO THE PRINCIPLE THAT STIPULATIONS TENDING TO RESTRICT COMPETITION AND THEREFORE TO INCREASE THE COST OF PERFORMANCE ARE UNAUTHORIZED UNLESS REASONABLY REQUISITE TO THE ACCOMPLISHMENT OF THE LEGISLATIVE PURPOSES OF THE CONTRACT APPROPRIATION INVOLVED OR UNLESS SUCH STIPULATIONS ARE EXPRESSLY AUTHORIZED BY STATUTE. B-148930, JULY 2, 1962.

IN THE PRESENT INSTANCE, IT WOULD APPEAR THAT THE PRIMARY PURPOSE OF THE PROVISION FOR AWARD ,ON LOT BASIS ONLY" WAS TO PERMIT THE AWARD TO A SINGLE CONTRACTOR OF THE SUPPLIES NEEDED AT EACH OF THE 27 DESTINATIONS, THUS AVOIDING A MULTIPLICITY OF SHIPMENTS TO BE CHECKED IN AT INDIVIDUAL DESTINATIONS AND FACILITATING THE ADMINISTRATION OF THE CONTRACTS. HAD THE INVITATION CONTAINED THE PROVISIONS OF PARAGRAPH 8 (C) OF STANDARD FORM 33 "INSTRUCTIONS TO BIDDERS," RESERVING THE RIGHT TO MAKE AWARD ON ANY ITEM OR GROUP OF ITEMS, IT MIGHT HAVE BEEN NECESSARY TO EVALUATE SEPARATELY THE BIDS ON EACH OF THE 116 LINE ITEMS, WHICH MIGHT CONCEIVABLY HAVE RESULTED IN AWARDS REQUIRING DELIVERIES OF SINGLE ITEMS BY ONE CONTRACTOR TO AS MANY AS 27 DIFFERENT DESTINATIONS AND DELIVERIES TO A SINGLE DESTINATION BY A DIFFERENT CONTRACTOR OF EACH OF THE SEVERAL ITEMS NEEDED THERE.

IN THIS ASPECT, WE HAVE NO QUESTION AS TO THE PROPRIETY OF THE EXCEPTION TO THE STANDARD FORM PROVISION. HOWEVER, WE DO NOT BELIEVE THAT THE WORDS "AWARD WILL BE MADE ON LOT BASIS ONLY" ARE THE EQUIVALENT OF "AWARD WILL BE MADE OF EACH LOT TO THE LOWEST BIDDER ON THAT LOT AND BIDS ON COMBINATIONS OF LOTS WILL NOT BE CONSIDERED," AND WE FEEL THAT SUCH AN INTERPRETATION RAISES A SERIOUS QUESTION ASTO THE CONFORMANCE OF THE INVITATION AND AWARDS WITH THE REQUIREMENTS OF THE CITED STATUTE. IN OUR JUDGMENT A PROVISION REQUIRING EVALUATION ON THE BASIS OF BIDS ON EACH ITEM OR LOT WITHOUT REFERENCE TO ANY OTHERS TENDS TO LIMIT UNDULY THE GOVERNMENT'S RIGHT TO ACCEPT THE BEST PRICE OFFERED FOR THE ARTICLES TO BE PURCHASED AND THE AMOUNT OF COMPETITION WHICH OTHERWISE WOULD BE AVAILABLE. SOME INSTANCES MAY ARISE WHICH WOULD REQUIRE THIS KIND OF PROVISION TO PROTECT THE GOVERNMENT'S INTEREST. SEE, FOR EXAMPLE, B- 141739, APRIL 14, 1960. WE CAN FIND NO BASIS, HOWEVER, FOR CONCLUDING THAT SUCH FACTORS MIGHT HAVE BEEN PRESENT IN THE INSTANT PROCUREMENT OR THAT THEY ARE LIKELY TO ARISE IN THE MAJORITY OF CASES. SEE IN THIS CONNECTION 34 COMP. GEN. 79, 80. WE MUST THEREFORE CONCLUDE, IN THE ABSENCE OF CIRCUMSTANCES REASONABLY ESTABLISHING THAT THE INTEREST OF THE GOVERNMENT WOULD BE SERVED BY PROHIBITING THE SUBMISSION OF BIDS ON AN ALL OR NONE OR COMBINATION BASIS, THAT SUCH PROHIBITION UNDULY RESTRICTS COMPETITION AND IS CONTRARY TO THE PURPOSE OF THE STATUTES GOVERNING PUBLIC PROCUREMENT.

FOR THE REASONS STATED, THE CONTRACTING OFFICER'S FAILURE TO EVALUATE THE BIDS IN SUCH MANNER AS TO REALIZE FOR THE GOVERNMENT THE PRICE ADVANTAGE AVAILABLE UNDER THE METIMPEX BID WAS ERRONEOUS. HOWEVER, SINCE HIS INTERPRETATION OF THE PROVISION FOR BID EVALUATION ON A LOT BASIS ONLY WAS NOT INCONSISTENT WITH THE IMPLICATIONS OF SOME OF OUR PRIOR DECISIONS WITH RESPECT TO ALL OR NONE BIDS, AND IN VIEW OF THE LENGTH OF TIME WHICH HAS EXPIRED SINCE AWARD, WE WILL NOT QUESTION THE PROPRIETY OF PAYMENTS MADE UNDER THE CONTRACTS. FUTURE PROCUREMENTS SHOULD FOLLOW THE PRINCIPLES SET OUT ABOVE.

THE FILE ACCOMPANYING THE LETTER OF JANUARY 17, 1963, IS RETURNED AS REQUESTED.