B-151192, MAY 17, 1963, 42 COMP. GEN. 640

B-151192, MAY 17, 1963, 42 COMP. GEN. 640

BIDS - ALTERNATIVE - BIDS AND PROPOSALS INVITED. DEPARTMENTS AND ESTABLISHMENTS - COMMERCIAL ACTIVITIES - GENERAL POLICY UNDER AN ADVERTISED PROCUREMENT INVITING BIDS FOR THE CONSTRUCTION OF A GOVERNMENT MICROWAVE RADIO SYSTEM AND NOTIFYING BIDDERS ALTERNATE PROPOSALS WERE BEING SOUGHT FOR SERVICES BASED ON PRIVATELY OWNED AND OPERATED FACILITIES, WITH RESERVATION TO THE GOVERNMENT OF THE RIGHT TO DECIDE AFTER SUBMISSION OF BIDS AND PROPOSALS WHICH ALTERNATIVE WILL BE SELECTED, AN AWARD TO OTHER THAN A COMMON CARRIER PROPOSING TO USE ITS OWN FACILITIES WOULD NOT CONTRAVENE 41 U.S.C. 253, REQUIRING AWARD UNDER AN ADVERTISED PROCUREMENT TO BE MADE TO THAT BIDDER WHOSE BID "WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED," THE TWO METHODS OF OPERATION CONSIDERED BEING MUTUALLY EXCLUSIVE ALTERNATIVES, AND THE SPECIFICATIONS RESERVING TO THE GOVERNMENT THE RIGHT TO DECIDE AFTER THE SUBMISSION OF BIDS WHICH ALTERNATIVE WILL BE SELECTED AND, THEREFORE, THE ADVERTISED PROCUREMENT PROVIDING FOR NEGOTIATION, THE EVALUATION OF ONE ALTERNATIVE AGAINST THE OTHER DOES NOT VIOLATE COMPETITIVE BIDDING PRINCIPLES AND AN AWARD TO THE LOW BIDDER ON THE CONSTRUCTION OF A GOVERNMENT MICROWAVE RADIO SYSTEM IS PROPER. THE PROVISIONS OF THE BUREAU OF THE BUDGET BULLETIN NO. 60-2 MERELY STATING THAT THE GENERAL POLICY OF THE EXECUTIVE BRANCH OF THE GOVERNMENT IS TO FAVOR THE PROCUREMENT OF GOVERNMENT NEEDS FROM PRIVATE ENTERPRISE DO NOT HAVE THE FORCE AND EFFECT OF LAW UNDER 40 U.S.C. 486; THEREFORE, THE PROVISIONS NOT BEING MANDATORY, THE PROPRIETY OF A DETERMINATION BY AN EXECUTIVE AGENCY TO OBTAIN SERVICES OR PRODUCTS UNDER CONTRACT WITH PRIVATE ENTERPRISE RATHER THAN THROUGH THE USE OF GOVERNMENT-OWNED FACILITIES IS NOT A MATTER PERMITTING OF A RULING IN TERMS OF LEGAL RIGHTS AND RESPONSIBILITIES, AND LACKING A LEGAL BASIS FOR OBJECTION TO THE PROPOSED ADMINISTRATIVE ACTION, THE POLICY QUESTION IS A MATTER FOR RESOLUTION WITHIN THE EXECUTIVE BRANCH.

TO THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, MAY 17, 1963:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 1, 1963, WITH ENCLOSURES, AND TO YOUR SUBSEQUENT LETTERS OF APRIL 16 AND 30, 1963, PROTESTING THE AWARD OF A CONTRACT TO OTHER THAN A COMMERCIAL CARRIER UNDER SPECIFICATIONS NO. 5853, ISSUED BY THE BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR, FOR A MICROWAVE RADIO SYSTEM ON THE COLORADO RIVER STORAGE PROJECT.

THE RECORD SHOWS THAT, BASED ON THE REQUIREMENT FOR A MICROWAVE COMMUNICATION SYSTEM FOR THE SUPERVISION AND CONTROL OF THE BUREAU'S POWER GENERATING AND TRANSMISSION FACILITIES IN THE FIVE-STATE AREA OF UTAH, WYOMING, COLORADO, ARIZONA AND NEW MEXICO, THE CITED SPECIFICATIONS INVITED BIDS FOR THE CONSTRUCTION OF A MICROWAVE SYSTEM WHICH, AFTER MAINTENANCE BY THE CONTRACTOR FOR A PERIOD OF 1 YEAR, WOULD BE GOVERNMENT- OWNED AND OPERATED. BIDDERS WERE NOTIFIED THEREUNDER THAT ALTERNATE PROPOSALS WERE INVITED TO FURNISH THE REQUIRED MICROWAVE SERVICES ON A FULL-TIME SERVICE BASIS WITH COMPANY OWNED, OPERATED AND MAINTAINED FACILITIES. THE SPECIFICATIONS FURTHER PROVIDED THAT---

THE GOVERNMENT RESERVES THE RIGHT TO AWARD A CONTRACT EITHER TO THE LOWEST ACCEPTABLE BIDDER FOR THE CONSTRUCTION OF A GOVERNMENT-OWNED SYSTEM UNDER THESE SPECIFICATIONS OR TO NEGOTIATE A CONTRACT WITH THE FIRM SUBMITTING THE MOST DESIRABLE PROPOSAL FOR THE FURNISHING OF A FULL-TIME SERVICE AS BEST SUITS THE INTERESTS OF THE GOVERNMENT.

THE EVALUATION FACTORS FOR CONSIDERATION IN COMPARING SERVICE-TYPE PROPOSALS WITH THE BIDS FOR A GOVERNMENT-OWNED SYSTEM WERE SET FORTHIN PARAGRAPH 40.B OF THE SPECIFICATIONS, AS AMENDED.

THE ABSTRACT OF BIDS SHOWS THAT OF THE SEVEN BIDS RECEIVED FOR CONSTRUCTION OF A GOVERNMENT-OWNED MICROWAVE SYSTEM, THE LOW BID OF $2,278,364 WAS SUBMITTED BY STROMBERG-CARLSON, A DIVISION OF GENERAL DYNAMICS CORPORATION. EVALUATION, ON THE BASIS OF THE FACTORS IN PARAGRAPH 40.B OF THE SPECIFICATIONS, OF STROMBERG-CARLSON'S BID AND YOUR SERVICE-TYPE PROPOSAL BY A TASK FORCE OF BUREAU ENGINEERS RESULTED IN AN ESTIMATED ANNUAL COST TO THE BUREAU OF $227,600, BASED ON A 50 YEAR PERIOD, FOR A GOVERNMENT-OWNED SYSTEM AS COMPARED TO A CORRESPONDING ESTIMATED ANNUAL COST TO THE BUREAU OF $405,800 FOR THE SAME PERIOD UNDER YOUR SERVICE-TYPE PROPOSAL. BASED ON THE INDICATED SUBSTANTIAL SAVINGS WHICH WILL RESULT FROM THE CONSTRUCTION OF A GOVERNMENT-OWNED AND OPERATED SYSTEM, IT IS ADMINISTRATIVELY PROPOSED TO MAKE AWARD ON THAT BASIS TO THE LOW BIDDER, STROMBERG-CARLSON. THAT A COMMON CARRIER WOULD BE CONTRARY TO SECTION 303 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT (41 U.S.C. 253) WHICH REQUIRES THAT AWARD UNDER ADVERTISED PROCUREMENTS BE MADE TO THAT RESPONSIBLE AND RESPONSIVE BIDDER WHOSE BID "WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED," AND (2) THAT SUCH AN AWARD WOULD BE CONTRARY TO BUREAU OF THE BUDGET BULLETIN NO. 60-2, WHICH YOU CLAIM HAS THE FORCE AND EFFECT OF LAW BY VIRTUE OF 40 U.S.C. 486.

YOUR FIRST GROUND OF PROTEST IS NECESSARILY PREDICATED ON THE ASSUMPTION THAT THE GOVERNMENT IS OBLIGATED TO MAKE AWARD UNDER SPECIFICATIONS NO. 5853 TO THE BIDDER OR PROPOSER SUBMITTING THE LOWEST PRICE, REGARDLESS OF WHETHER THAT PRICE IS FOR GOVERNMENT OR PRIVATE OWNERSHIP AND OPERATION. WE FIND NO BASIS FOR SUCH AN ASSUMPTION. THE TWO METHODS OF OPERATION ARE MUTUALLY EXCLUSIVE ALTERNATES, AND THE SPECIFICATIONS SPECIFICALLY RESERVE TO THE GOVERNMENT THE RIGHT TO DECIDE AFTER THE SUBMISSION OF BIDS AND PROPOSALS WHICH ALTERNATIVE IT WILL SELECT. WHILE IT IS TRUE THAT PARAGRAPH 40.B OF THE SPECIFICATIONS LISTS THE FACTORS WHICH WILL BE CONSIDERED BY THE GOVERNMENT IN DECIDING WHETHER TO SELECT A GOVERNMENT OR A PRIVATELY OPERATED SYSTEM, IT IS CLEAR THAT THIS INFORMATION WAS FURNISHED ONLY FOR THE INFORMATION OF PROSPECTIVE CONTRACTORS AND CANNOT OPERATE TO DESTROY THE EXPRESSLY RESERVED RIGHT OF SELECTION BETWEEN THE TWO SYSTEMS. INDEED, EVEN IF THE ENTIRE SPECIFICATION WERE TO BE CONSIDERED AS AN ADVERTISED PROCUREMENT, WHICH ITS TERMS SHOW IT NOT TO BE BECAUSE OF THE PROVISION FOR NEGOTIATION OF A CONTRACT IF THE PRIVATE OPERATION ALTERNATIVE IS CHOSEN, BIDS ON ONE ALTERNATIVE COULD NOT PROPERLY BE EVALUATED AGAINST BIDS ON THE OTHER, SINCE THIS WOULD VIOLATE ONE OF THE FUNDAMENTAL PRINCIPLES OF ADVERTISED COMPETITIVE BIDDING, NAMELY, THAT ALL BIDDERS MUST BID ON THE SAME THING. IN SUCH A SITUATION, BIDDERS WOULD BE COMPETING ONLY WITH OTHER BIDDERS ON THE SAME ALTERNATIVE. SEE ATTORNEY GENERAL EX REL. COOK V. DETROIT, 26 MICH. 263, 96 ALR714-716.

WE COME NOW TO YOUR SECOND GROUND OF PROTEST, WHICH IS, IN EFFECT, THAT THE GOVERNMENT IS REQUIRED BY REASON OF BOB BULLETIN NO. 60-2 TO CONTRACT ON THE BASIS OF PRIVATE OWNERSHIP AND OPERATION. WE MAY SAY THAT WE FIND NO SUPPORT FOR YOUR CONTENTION THAT 40 U.S.C. 486, SECTION 205 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, GIVES THE BULLETIN THE FORCE AND EFFECT OF LAW. HOWEVER, EVEN IF THIS WERE SO, THE TERMS OF THE BULLETIN ARE NOT, AS YOU IMPLIEDLY CONTEND, MANDATORY IN SITUATIONS SUCH AS HERE INVOLVED. PARAGRAPH 2 THEREOF STATES IT TO BE THE GENERAL POLICY OF THE EXECUTIVE BRANCH OF THE GOVERNMENT TO FAVOR PROCUREMENT OF ITS NEEDS FROM PRIVATE ENTERPRISE. THUS, THE PROPRIETY OF A DETERMINATION BY AN EXECUTIVE AGENCY AS TO WHETHER SERVICES OR PRODUCTS SHOULD BE OBTAINED UNDER CONTRACT WITH PRIVATE ENTERPRISE OR THROUGH THE USE OF GOVERNMENT- OWNED FACILITIES IS NOT A MATTER PERMITTING OF A RULING IN TERMS OF LEGAL RIGHTS AND RESPONSIBILITIES. WE THEREFORE FIND NO LEGAL BASIS FOR OBJECTION TO THE PROPOSED ADMINISTRATIVE ACTION, AND WE MUST DECLINE TO RULE UPON THE POLICY QUESTION INVOLVED, WHICH WE DEEM TO BE A MATTER FOR RESOLUTION WITHIN THE EXECUTIVE BRANCH.