B-150649, MAR. 29, 1963

B-150649: Mar 29, 1963

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TO THE NANOTEC CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAMS DATED JANUARY 16. THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON NOVEMBER 21. INCLUDING ITEM 3 WHICH WAS SET OUT IN THE INVITATION AS: . IT HAS BEEN REPORTED BY THE DEPARTMENT OF THE NAVY THAT IT HAS BEEN DETERMINED THAT AWARD WILL BE MADE FOR 182 UNITS OF EQUIPMENT UNDER THE NON-SET-ASIDE AND A SIMILAR NUMBER UNDER THE SET- ASIDE PORTION. ONLY THE NON-SET ASIDE PORTION IS INVOLVED AT THE PRESENT TIME. THE MAGNAVOX COMPANY ARE NONRESPONSIVE AND SHOULD BE REJECTED. IN REGARD TO THE MAGNAVOX COMPANY YOU STATE THAT MAGNAVOX'S BID ON ITEM 3 WAS SET DOWN AS "$7.44 PER LINE ITEM" WHEREAS IT IS YOUR CONTENTION THAT ITEM 3 CLEARLY CALLED FOR A BULK PRICE.

B-150649, MAR. 29, 1963

TO THE NANOTEC CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAMS DATED JANUARY 16, 1963, AND YOUR LETTER DATED FEBRUARY 13, 1963, PROTESTING AGAINST AWARD OF A CONTRACT TO EITHER THE MAGNAVOX COMPANY OR INSTRUMENTS FOR INDUSTRY, INC., UNDER INVITATION FOR BIDS NO. 600-505-63'S ISSUED BY THE DEPARTMENT OF THE NAVY.

THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON NOVEMBER 21, 1962, AND CALLED FOR "STEPLADDER" QUANTITIES OF AN/UPA-24) ( DECODOR GROUPS RANGING FROM 100 TO 350 UNITS OF EQUIPMENT (ITEM 2), TOGETHER WITH ANCILLARY ITEMS, INCLUDING ITEM 3 WHICH WAS SET OUT IN THE INVITATION AS: ,MIL-E- 17362D PROVISIONING TECHNICAL DOCUMENTATION FOR ITEM 2.' THE INVITATION ALSO COVERED AN IDENTICAL "STEPLADDER" QUANTITY TO BE AWARDED UNDER A LABOR SURPLUS AREA SET-ASIDE. IT HAS BEEN REPORTED BY THE DEPARTMENT OF THE NAVY THAT IT HAS BEEN DETERMINED THAT AWARD WILL BE MADE FOR 182 UNITS OF EQUIPMENT UNDER THE NON-SET-ASIDE AND A SIMILAR NUMBER UNDER THE SET- ASIDE PORTION. HOWEVER, ONLY THE NON-SET ASIDE PORTION IS INVOLVED AT THE PRESENT TIME.

IN YOUR LETTER OF FEBRUARY 13, 1963, YOU CONTEND THAT THE BIDS OF INSTRUMENTS FOR INDUSTRY, C., AND THE MAGNAVOX COMPANY ARE NONRESPONSIVE AND SHOULD BE REJECTED. SPECIFICALLY, YOU STATE THAT INSTRUMENTS FOR INDUSTRY, INC., OFFERED A 60-DAY ACCEPTANCE PERIOD WHEREAS THE INVITATION PROVIDED THAT BIDS OFFERING LESS THAN 90 DAYS FOR ACCEPTANCE WOULD BE CONSIDERED NONRESPONSIVE AND REJECTED. IN REGARD TO THE MAGNAVOX COMPANY YOU STATE THAT MAGNAVOX'S BID ON ITEM 3 WAS SET DOWN AS "$7.44 PER LINE ITEM" WHEREAS IT IS YOUR CONTENTION THAT ITEM 3 CLEARLY CALLED FOR A BULK PRICE. YOU FURTHER CONTEND THAT INASMUCH AS THE NUMBER OF LINE ITEMS REQUIRED FOR PROVISIONING DOCUMENTATION CANNOT BE DETERMINED PRIOR TO AWARD, THE TOTAL PRICE FOR ITEM 3 CANNOT BE ASCERTAINED AND, THEREFORE, THE BID IS NONRESPONSIVE.

IN ITS REPORT TO US DATED FEBRUARY 28, 1963, THE DEPARTMENT OF THE NAVY STATES THAT A TOTAL OF 20 BIDS WAS RECEIVED IN RESPONSE TO THE INVITATION. THE FIVE LOW BIDDERS, AND YOUR BID, ON THE NON-SET-ASIDE PORTION FOR THE 182 UNITS OF EQUIPMENT PROPOSED TO BE AWARDED ARE AS FOLLOWS:

TABLE

ALL ITEMS

(LESS ITEM 3) ITEM 3 TOTAL 1. THE MAGNAVOX COMPANY $171,684.33 $ 7.44 $173,908.89

PER LINE ITEM 2. ORBITRONICS, INC. 178,885.53

600.00 179,485.53 3. INSTRUMENTS FOR

INDUSTRY, INC. 177,924.84 3,500.00 181,424.84 4. R H J CORPORATION

172,052.00 11,000.00 183,052.00 5. GULF AEROSPACE CORP. 183,430.06 970.00

184,400.06

NANOTEC CORPORATION 187,070.40 2,000.00 189,070.40

IN REGARD TO THE METHOD BY WHICH THE MAGNAVOX TOTAL BID OF $173,908.89 WAS COMPUTED, THE DEPARTMENT OF THE NAVY STATES THAT:

"* * * WE CONSIDER THE TERM "LINE ITEM" AS USED IN THIS BID TO MEAN EACH DIFFERENT ITEM IN THE LIST OF COMPONENT PARTS COMPRISING THE EQUIPMENT FOR WHICH PROVISIONING TECHNICAL DOCUMENTATION MIGHT BE REQUIRED. THERE ARE 299 DIFFERENT PARTS COMPRISING SUCH EQUIPMENT AND ABOUT 20 PERCENT OF THESE PARTS GENERALLY REQUIRE PROVISIONING TECHNICAL DOCUMENTATION. LINE WITH THE COMPTROLLER GENERAL'S DECISION OF 1 OCTOBER 1956 (B-127372) IN THE MATTER OF COPES-VULCAN DIVISION OF BLAW-KNOX COMPANY, THE BUREAU HAS USED, IN THE EVALUATION OF THIS BID, THE MAXIMUM NUMBER OF LINE ITEMS, 299. MULTIPLYING THIS NUMBER BY $7.44 RESULTS IN THE MAXIMUM POSSIBLE AMOUNT OF $2,224.56 FOR ITEM 3 IN THE MAGNAVOX BID. THIS IN TURN RESULTS IN THE TOTAL MAXIMUM POSSIBLE MAGNAVOX BID BEING $173,908.89, THE LOWEST TOTAL BID FOR 182 EQUIPMENTS. THE BUREAU THEREFORE PROPOSES TO AWARD THE NON-SET ASIDE PORTION TO THE MAGNAVOX COMPANY.'

IN THE DECISION CITED ABOVE BY THE DEPARTMENT OF THE NAVY (B 127372), PUBLISHED AT 36 COMP. GEN. 259, AN INVITATION ISSUED BY THE DEPARTMENT OF THE NAVY REQUIRED BIDDERS TO SUBMIT A PRICE ON ALL NECESSARY RADIOGRAPH PICTURES FOR CERTAIN CASTINGS TO BE SUPPLIED. THE QUANTITY OF RADIOGRAPHS THAT WOULD BE REQUIRED WAS SUBJECT TO THE CONTROL OF THE BIDDER BEING DEPENDENT UPON HIS CASTING DESIGN AND THE NUMBER OF CASTINGS REJECTED DURING MANUFACTURE. THE LOW BIDDER SUBMITTED A BID WHICH CONTAINED A STATEMENT READING AS FOLLOWS:

"* * * THE ABOVE PRICE INCLUDES RADIOGRAPHIC AND MAGNETIC PARTICLE INSPECTION OF THE COOLING WATER CONTROL VALVE BODY CASTING. OUR ACTUAL COST OF $22.50 PER VALVE CASTING INCLUDED BASED UPON AN ESTIMATE OF 3 PICTURES PER CASTING AT A COST OF $7.50 PER PICTURE. IN THE EVENT FEWER PICTURES ARE REQUIRED, THE COST WILL BE REDUCED ACCORDINGLY. THE SAME PLAN WILL ALSO APPLY IN THE EVENT PICTURES IN EXCESS OF THE ABOVE AMOUNT ARE REQUIRED.'

IN VIEW OF THIS STATEMENT THE DEPARTMENT OF THE NAVY DETERMINED THAT THE LOW BIDDER WAS NONRESPONSIVE ON THE BASIS THAT THE STATEMENT QUALIFIED THE BID AND WAS, IN EFFECT, A PRICE ESCALATION PROVISION WITHOUT ANY MAXIMUM LIMIT. THE CONTRACT WAS, THEREFORE, AWARDED TO THE THIRD LOW BIDDER. HELD THAT ALTHOUGH THE LOW BID CONTAINED A PRICE QUALIFICATION IN THE NATURE OF AN ESCALATION CLAUSE THIS, IN ITSELF, WOULD NOT BE SUFFICIENT TO PREVENT CONSIDERATION OF THE BID IF IT WERE POSSIBLE TO DETERMINE A DEFINITE NUMBER OF RADIOGRAPHS AS THE MAXIMUM WHICH COULD IN ANY EVENT BE REQUIRED. IN THAT EVENT THE BID WOULD BE FOR EVALUATION ON THE BASIS OF THE MAXIMUM ESCALATED PRICE. WE FURTHER HELD THAT THE LOW BID SHOULD NOT HAVE BEEN REJECTED AS NONRESPONSIVE UNLESS IT COULD BE SHOWN THAT THERE WAS A REAL AND NOT MERELY A THEORETICAL POSSIBILITY THAT THE NUMBER OF EXCESS RADIOGRAPHS COULD HAVE MADE THE PRICE PAYABLE UNDER THE LOW BID HIGHER THAN THAT PAYABLE UNDER THE NEXT ACCEPTABLE BID. SEE ALSO 35 COMP. GEN. 684.

EVEN IF WE ASSUME, AS YOU CONTEND, THAT THE SUBJECT INVITATION CALLED FOR A LUMP-SUM BID ON ITEM 3 WE BELIEVE THAT THE INSTANT CASE FALLS SQUARELY WITHIN THE RULE SET FORTH IN 36 COMP. GEN. 259. AS NOTED IN THE DEPARTMENT OF THE NAVY'S REPORT, THE MAXIMUM NUMBER OF LINE ITEMS (299) FOR WHICH PROVISIONING TECHNICAL DOCUMENTATION MIGHT BE REQUIRED WERE USED IN EVALUATING MAGNAVOX'S BID. UNDER THIS FORMULA MAGNAVOX'S MAXIMUM POSSIBLE PRICE FOR ITEM 3 IS $2,224.56. THIS IN TURN RESULTS IN A TOTAL MAXIMUM POSSIBLE MAGNAVOX BID OF $173,908.89 WHICH IS THE LOWEST TOTAL BID UNDER THE INVITATION FOR 182 UNITS OF EQUIPMENT. ACCORDINGLY, WE HAVE NO LEGAL BASIS FOR OBJECTING TO AN AWARD OF A CONTRACT TO MAGNAVOX FOR THE NON-SET-ASIDE PORTION OF THE INVITATION.

IN VIEW OF OUR CONCLUSION IN REGARD TO THE MAGNAVOX BID THE QUESTION AS TO THE RESPONSIVENESS OF THE BID SUBMITTED BY INSTRUMENTS FOR INDUSTRY, INC., IS ACADEMIC AND NEED NOT BE RESOLVED.