B-150652, JUL. 19, 1963

B-150652: Jul 19, 1963

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER DATED APRIL 18. THE FOUR LOWEST BIDS RECEIVED WERE AS FOLLOWS: TABLE BIDDER BID PRICE (INCLUDING APPLICABLE DUTY AND BUY AMERICAN DIFFERENTIAL) THE BRITISH ALUMINUM O. 684.12 * FOREIGN BID IN SUBMITTING BIDS EACH BIDDER WAS REQUIRED TO CERTIFY THAT EACH END PRODUCT. WAS A DOMESTIC SOURCE END PRODUCT AS DEFINED IN THE CONTRACT CLAUSE ENTITLED "BUY AMERICAN ACT. " AND THAT COMPONENTS OF UNKNOWN ORIGIN "HAVE BEEN CONSIDERED TO HAVE BEEN MINED. INDICATED THAT IT WAS BIDDING ON A DOMESTIC SOURCE AND PRODUCT. IT WAS STATED THAT THE "FOREIGN VALUE" ON THIS PRODUCT WAS ONLY ABOUT TWENTY PERCENT OF THE TOTAL VALUE. THUS HAVE ALL MANUFACTURING TAKE PLACE IN THE UNITED STATES.

B-150652, JUL. 19, 1963

TO LIEUTENANT GENERAL ANDREW T. MCNAMARA, DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED APRIL 18, 1963 (DSAH-G), WITH ENCLOSURES, FROM MR. ALBERT RABY, JR., ASSISTANT COUNSEL, SUBMITTING A REPORT CONCERNING THE PROTEST FILED BY ATLANTIC ALUMINUM AND METAL DISTRIBUTORS, INCORPORATED, 177 PAGE BOULEVARD, SPRINGFIELD, MASSACHUSETTS, AGAINST REJECTION OF ITS BID UNDER INVITATION FOR BIDS NO. DSA-5-63-150, ISSUED BY THE DEFENSE INDUSTRIAL SUPPLY CENTER UNDER DATE OF JULY 11, 1962, FOR THE FURNISHING OF A QUANTITY OF ALUMINUM SHEETS.

THE CITED INVITATION FOR BIDS REQUESTED BIDS FOR FURNISHING 31,668 POUNDS OF ALUMINUM ALLOY SHEETS, DELIVERIES TO BE MADE TO FIVE DESIGNATED DESTINATIONS. THE FOUR LOWEST BIDS RECEIVED WERE AS FOLLOWS:

TABLE BIDDER BID PRICE

(INCLUDING APPLICABLE DUTY AND BUY

AMERICAN DIFFERENTIAL) THE BRITISH ALUMINUM O., LTD. *$16,315.35 ATLANTIC ALUMINUM AND METAL DISTRIBUTORS, INC.

16,784.04 METIMPEX CORPORATION * 17,015.14 REYNOLDS METALS COMPANY 18,684.12

* FOREIGN BID

IN SUBMITTING BIDS EACH BIDDER WAS REQUIRED TO CERTIFY THAT EACH END PRODUCT, EXCEPT THE END PRODUCTS "EXCLUDED BELOW" (IN THE INVITATION FOR BIDS), WAS A DOMESTIC SOURCE END PRODUCT AS DEFINED IN THE CONTRACT CLAUSE ENTITLED "BUY AMERICAN ACT," AND THAT COMPONENTS OF UNKNOWN ORIGIN "HAVE BEEN CONSIDERED TO HAVE BEEN MINED, PROCESSED, OR MANUFACTURED OUTSIDE THE UNITED STATES.'

IN ITS BID SUBMITTED UNDER DATE OF JULY 27, 1962, ATLANTIC ALUMINUM AND METAL DISTRIBUTORS, INCORPORATED, INDICATED THAT IT WAS BIDDING ON A DOMESTIC SOURCE AND PRODUCT. FOLLOWING THE BID OPENING, THE CONTRACTING OFFICER CONTACTED ATLANTIC TO ASCERTAIN THE SOURCE OF THE MATERIAL WHICH THAT CONCERN BID UPON AND WHETHER THEY QUALIFIED AS DOMESTIC SOURCE AND PRODUCTS. BY LETTER DATED AUGUST 3, 1962, ATLANTIC ADVISED THAT IT INTENDED TO TAKE ALUMINUM INGOT MANUFACTURED IN THE UNITED STATES, PROCESS IT OVERSEAS INTO COILS AND THEN RETURN IT TO THE UNITED STATES FOR FABRICATION INTO FLAT SHEETS, MARKING AND PACKAGING. IT WAS STATED THAT THE "FOREIGN VALUE" ON THIS PRODUCT WAS ONLY ABOUT TWENTY PERCENT OF THE TOTAL VALUE.

UNDER DATE OF AUGUST 23, 1962, THE CONTRACTING OFFICER REQUESTED ATLANTIC TO FURNISH ADDITIONAL INFORMATION CONCERNING THE PROCESSES TO BE PERFORMED WITHIN THE UNITED STATES AND OVERSEAS AND THEIR RESPECTIVE COSTS. LETTERS DATED SEPTEMBER 4 AND OCTOBER 17, 1962, ATLANTIC FURNISHED THE DETAILS OF THE MANUFACTURING OPERATIONS AND COSTS, AS WELL AS THE TRANSPORTATION COSTS INVOLVED IN SHIPPING THE MATERIAL FROM ANTWERP, BELGIUM, TO EAST COAST PORTS OF THE UNITED STATES.

BY A LETTER DATED OCTOBER 2, 1962, ATLANTIC ADVISED THE INSPECTOR OF NAVAL MATERIAL THAT THE BARRY (BERRY) STEEL CORPORATION, ROSELLE, NEW JERSEY, WOULD CONVERT THE COILS INTO FLAT SHEETS AND CUT THEM TO LENGTH AND THEN SHIP THE FLAT SHEETS TO ATLANTIC'S PLANT IN SPRINGFIELD, MASSACHUSETTS, WHERE THEY WOULD BE PRESERVED, PACKAGED, INSPECTED AND SHIPPED.

THE DEFENSE INDUSTRIAL SUPPLY CENTER CONCLUDED THAT THE ITEM BID UPON BY ATLANTIC DID NOT QUALIFY AS A DOMESTIC SOURCE END PRODUCT. THE DEPUTY DIRECTOR, DEFENSE SUPPLY AGENCY, DETERMINED, PURSUANT TO THE PROVISIONS OF EXECUTIVE ORDER 10582, THAT THE BID OF THE LOW BIDDER, BRITISH ALUMINUM COMPANY, LTD., SHOULD BE REJECTED AND THAT THE BID OF THE LOWEST BIDDER OFFERING DOMESTIC MATERIAL--- APPARENTLY HAVING REFERENCE TO THE REYNOLDS METALS COMPANY--- SHOULD BE ACCEPTED FOR REASONS OF NATIONAL INTEREST.

THERE HAS SINCE BEEN RECEIVED FROM MR. RABY A FURTHER LETTER DATED MAY 29, 1963, TRANSMITTING A LETTER DATED MAY 3, 1963, FROM ATLANTIC TO THE DEFENSE INDUSTRIAL SUPPLY CENTER, WHEREIN THAT CONCERN REQUESTED THAT IT BE ALLOWED TO CHANGE ITS SUBCONTRACTOR AND INSPECTION POINT TO THE ANACONDA ALUMINUM COMPANY, TERRE HAUTE, INDIANA, AND THUS HAVE ALL MANUFACTURING TAKE PLACE IN THE UNITED STATES.

IN COMMENTING UPON THE REQUEST CONTAINED IN THE LETTER OF MAY 3, 1963, MR RABY REFERRED TO THE FACT THAT ON ITS FACE THE BID SUBMITTED BY ATLANTIC OFFERED A DOMESTIC PRODUCT WITHOUT EXCEPTION. HE POINTED OUT, HOWEVER, THAT THE DOMESTIC PLACE OF MANUFACTURE NAMED IN THE BID WAS THE BIDDER'S OWN PLANT AND WAS NOT THE TRUE PLACE OF MANUFACTURE; THAT IT WAS SUBSEQUENTLY ASCERTAINED THAT ATLANTIC CONTEMPLATED FURNISHING AN END ITEM MANUFACTURED IN THE UNITED STATES FROM COMPONENTS MANUFACTURED OUTSIDE THE UNITED STATES, AND THAT THIS RESULTED IN A DETERMINATION BY YOUR AGENCY, PURSUANT TO THE PROVISIONS OF ASPR 6-101 (D), THAT THE OFFERED PRODUCT WAS FOREIGN. IT WAS THEN SUGGESTED BY MR. RABY THAT IF A BIDDER CAN BE PERMITTED TO DEPART FROM HIS ORIGINAL INTENT BY SUBSEQUENTLY OFFERING A PRODUCT OF COMPLETELY DOMESTIC MANUFACTURE ON THE GROUND THAT HE IS MERELY SEEKING TO COMPLY WITH THE ORIGINAL OFFER AS REFLECTED ON THE FACE OF ITS BID, THIS WOULD RENDER UNNECESSARY FURTHER ACTION ON THE PROTEST NOW BEFORE OUR OFFICE.

IT IS WELL SETTLED THAT, AS A GENERAL RULE, BIDDERS MAY NOT VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED, SINCE THIS WOULD NULLIFY THE ENTIRE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. SEE, 17 COMP. GEN. 554. THE REASON FOR THE RULE IS, OF COURSE, TO PUT ALL BIDDERS ON AN EQUAL BASIS, AND TO PREVENT ANY BIDDER FROM OBTAINING THE ADVANTAGE IT WOULD HAVE BY BEING PERMITTED TO BID AFTER THE OTHER BIDS ARE KNOWN. IT THUS APPEARS THAT THE QUESTION FOR CONSIDERATION IN THIS CASE IS WHETHER THE ACCEPTANCE OF ATLANTIC'S BID ON THE BASIS SUGGESTED IN THE LETTER OF MAY 3, 1963, WOULD BE CONTRARY TO THE ABOVE-STATED RULE, OR PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS.

IN A DECISION DATED JANUARY 19, 1960, B-141357--- PUBLISHED AT 39 COMP. GEN. 531--- OUR OFFICE HAD UNDER CONSIDERATION A SITUATION WHERE A LOW BIDDER FAILED TO FURNISH THE NAME AND ADDRESS OF THE MANUFACTURER WHICH IT PROPOSED TO UTILIZE IN FURNISHING A QUANTITY OF NEWSPRINT PAPER. SUBSEQUENT TO THE BID OPENING THE BIDDER ADVISED THE CONTRACTING OFFICER THAT A CANADIAN COMPANY WOULD MANUFACTURE THE NEWSPRINT PAPER. UPON BEING ADVISED THAT THE PROCURING AGENCY WAS CONTEMPLATING AN AWARD OF A CONTRACT TO ANOTHER BIDDER FOR FURNISHING DOMESTIC NEWSPRINT, AND BECAUSE A SIX PERCENT DIFFERENTIAL WAS REQUIRED TO BE ADDED TO THE BID PRICE OF A FOREIGN PRODUCT--- THE RESULT BEING THAT THE BID WAS NO LONGER FOR ACCEPTANCE--- THE BIDDER THEN ADVISED THE CONTRACTING OFFICER THAT THE NEWSPRINT WOULD BE SUPPLIED FROM A DOMESTIC MANUFACTURER.

THE INVITATION FOR BIDS SPECIFICALLY REQUIRED BIDDERS TO SUBMIT INFORMATION AS TO SOURCE OF SUPPLY, ETC., AND, IF A DEALER AND THE QUOTATION WAS IN EXCESS OF $10,000, TO SUBMIT THE NAME AND ADDRESS OF THE MANUFACTURER. IT WILL BE SEEN THAT IN THAT CASE ALL BIDDERS WERE PLACED ON NOTICE THAT PRODUCTS OF DOMESTIC MANUFACTURE MUST BE FURNISHED UNLESS IT WAS DETERMINED BY THE GOVERNMENT THAT THE BID OR OFFERED PRICE OF THE MATERIALS OF DOMESTIC ORIGIN WAS UNREASONABLE. IT WAS STATED IN OUR DECISION THAT IN THE EVALUATION OF THE BIDS SUBMITTED, IT WAS ESSENTIAL THAT IT BE KNOWN, UPON OPENING, WHETHER DOMESTIC OR FOREIGN NEWSPRINT WAS BEING OFFERED, THIS BEING NECESSARY IN ORDER THAT THERE MIGHT BE APPLIED THE PERCENTAGE DIFFERENTIAL PROVIDED FOR IN EXECUTIVE ORDER NO. 10582 TO DETERMINE THE REASONABLENESS OF BIDS OFFERING DOMESTIC NEWSPRINT AS OPPOSED TO BIDS OFFERING FOREIGN NEWSPRINT.

UPON THE BASIS OF THE FORGOING FACTS IT WAS HELD IN THE DECISION OF JANUARY 19, 1960, THAT THE BID OF THE LOW BIDDER SHOULD NOT BE CONSIDERED FOR AWARD. WE QUOTE BELOW A PARAGRAPH FROM THE DECISION, WHEREIN WERE SET FORTH THE REASONS FOR OUR HOLDING IN THAT CASE, AS FOLLOWS:

"TO PERMIT A BIDDER AFTER BIDS ARE PUBLICLY OPENED AND PRICES DISCLOSED TO OBTAIN AND NAME A SOURCE OF MANUFACTURE IN SITUATIONS SUCH AS INVOLVED IN THIS CASE IS MANIFESTLY UNFAIR TO OTHER BIDDERS WHO SUBMITTED BIDS UPON THE BASIS OF A NAMED SOURCE OF MANUFACTURE. IT GIVES TO A BIDDER WHO WITHHELD OR FAILED TO FURNISH THE NAME OF HIS SOURCE OF MANUFACTURE UNTIL AFTER BIDS ARE OPENED AND PRICES DISCLOSED A DISTINCT ADVANTAGE OVER OTHER BIDDERS IN THAT HE CAN SELECT EITHER A DOMESTIC OR FOREIGN SOURCE DEPENDING UPON THE RANGE OF BID PRICES DISCLOSED, WITH THE RESULT THAT THE BIDDER CAN CONTROL HIS RELATIVE STANDING AMONG THE BIDDERS, AS WAS DONE BY YOU IN THIS CASE. THIS, WE THINK, WOULD BE PREJUDICIAL TO THE OPEN AND COMPETITIVE CHARACTER OF THE ADVERTISING PROCEDURES AND WOULD PERMIT BIDDERS THE WIDEST LATITUDE IN SELECTING THE MOST ADVANTAGEOUS SOURCE OF MANUFACTURE TO THE DETRIMENT OF THOSE BIDDERS WHO INITIALLY COMPLIED WITH THE INVITATION REQUIREMENT.'

IN OUR OPINION, THE QUOTED DECISION OF JANUARY 19, 1960, IS NOT DECISIVE OF THE QUESTION INVOLVED HEREIN, SINCE UNDER THE FACTS INVOLVED THE CASES ARE CLEARLY DISTINGUISHABLE. THE RECORD INDICATES THAT ATLANTIC SUBMITTED ITS BID UNDER THE BELIEF THAT, ALTHOUGH IT CONTEMPLATED CERTAIN PROCESSING OVERSEAS, THE PRODUCT DELIVERED WOULD BE DOMESTIC WITHIN THE MEANING OF THE BUY AMERICAN ACT. IT WAS ONLY AFTER AN INVESTIGATION AND DETERMINATION BY YOUR AGENCY THAT THE PRODUCT OFFERED WAS OF FOREIGN ORIGIN THAT IT WAS PROPOSED TO REJECT THE BID. WE FIND IT UNNECESSARY TO DECIDE WHETHER THE PRODUCT PROPOSED TO BE FURNISHED BY ATLANTIC SHOULD BE CONSIDERED A FOREIGN OR DOMESTIC PRODUCT.

IT IS CLEAR THAT SEVERAL FACTORS WERE PRESENT IN THE PRIOR CASE THAT ARE NOT INVOLVED IN THE INSTANT MATTER, SUCH AS THE PERCENTAGE DIFFERENTIAL TO BE APPLIED IN THE EVALUATION OF THE BIDS. THERE IS NO QUESTION AS TO ATLANTIC'S SELECTING THE MOST ADVANTAGEOUS SOURCE OF MANUFACTURE TO THE DETRIMENT OF OTHER BIDDERS. WE SAY THIS BECAUSE ATLANTIC OFFERED BY ITS BID AS SUBMITTED--- AND WOULD HAVE BEEN OBLIGATED UPON ACCEPTANCE THEREOF- -- TO FURNISH A DOMESTIC PRODUCT WITH NO EXCEPTION. THAT OFFER STILL STANDS, AND THE PRIMARY OBLIGATION WHICH WOULD RESULT FROM ITS ACCEPTANCE IS NOT MATERIALLY AFFECTED BY THE MODIFICATION SUGGESTED BY THE LETTER OF MAY 3, 1963, WHICH WOULD ONLY INVOLVE A CHANGE IN THE INSPECTION POINT. IT IS NOT SEEN WHEREIN THE PRESENT ACCEPTANCE OF ATLANTIC'S BID WOULD BE A VIOLATION OF THE STATED RULE OR IN ANY WAY PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS. IT IS THEREFORE OUR VIEW THAT ATLANTIC'S BID MAY BE CONSIDERED FOR AWARD, AND THE PROPOSED CHANGE OF PLACE OF MANUFACTURE BE ACCEPTED IF NOT OTHERWISE OBJECTIONABLE.