B-151577, JUL. 16, 1963

B-151577: Jul 16, 1963

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TO BAUM AND ARAN: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 15. THE CONTRACT WAS AWARDED PURSUANT TO INVITATION FOR BIDS NO. 64-3 UNDER WHICH THE FOLLOWING ESTIMATES WERE USED FOR BIDDING PURPOSES: 425 DAY TRIPS AND 15. WERE SUBMITTED BY MILLER'S AMBULANCE SERVICE. WERE $15 PER TRIP AND $0.39 PER MILE OF EXCESS ONE-WAY TRAVEL. YOU QUESTIONED THE ACCURACY OF THE GOVERNMENT'S QUANTITY ESTIMATES AND INDICATED THAT YOU HAVE BEEN INFORMED BY AN EMPLOYEE OF THE LONG BEACH HOSPITAL THAT THE SUCCESSFUL BIDDER WOULD NOT OPERATE UNDER A "CODE 3" PROCEDURE. YOU SUGGESTED THAT THE 5 PERCENT DISCOUNT OFFER SHOULD NOT HAVE BEEN CONSIDERED IN THE BID EVALUATIONS BECAUSE THAT FORM OF BILLING WAS NOT REQUESTED IN THE INVITATION AND BIDDERS WERE NOT ADVISED AS TO THE NUMBER OF DAYS NORMALLY REQUIRED BY THE HOSPITAL TO PAY INVOICES FOR AMBULANCE SERVICE.

B-151577, JUL. 16, 1963

TO BAUM AND ARAN:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 15, 1963, AND ENCLOSURE, PROTESTING ON BEHALF OF PARAMOUNT AMBULANCE, INC., PARAMOUNT, CALIFORNIA, THE AWARD OF CONTRACT NO. V5264P-722, DATED APRIL 8, 1963, TO MILLER'S AMBULANCE SERVICE, INC., GLENDALE, CALIFORNIA, COVERING THE FURNISHING OF AMBULANCE SERVICE TO BENEFICIARIES OF THE VETERANS ADMINISTRATION AS REQUIRED AND ORDERED BY THE VETERANS ADMINISTRATION HOSPITAL, LONG BEACH, CALIFORNIA, DURING THE PERIOD JULY 1, 1963, THROUGH JUNE 30, 1964.

THE CONTRACT WAS AWARDED PURSUANT TO INVITATION FOR BIDS NO. 64-3 UNDER WHICH THE FOLLOWING ESTIMATES WERE USED FOR BIDDING PURPOSES: 425 DAY TRIPS AND 15,000 MILES OF ONE-WAY TRAVEL BEYOND LOCAL ZONE LIMITS IN CONJUNCTION WITH SUCH TRIPS (SUBITEMS A AND B OF ITEM NO. 1); 104 NIGHT TRIPS AND 2,412 MILES OF ONE-WAY TRAVEL BEYOND LOCAL ZONE LIMITS WHEN MAKING NIGHT TRIPS (SUBITEMS A AND B OF ITEM NO. 2); AND THE FURNISHING OF OXYGEN TO 185 PATIENTS DURING THE AMBULANCE TRIPS.

THE TWO LOWEST BIDS, TOTALING THE RESPECTIVE AMOUNTS OF $15,428.80 AND $15,650.68, WERE SUBMITTED BY MILLER'S AMBULANCE SERVICE, INC., AND PARAMOUNT AMBULANCE, INC. FOR ITEMS NOS. 1 AND 2 THE RATES QUOTED BY PARAMOUNT AMBULANCE, INC., WERE $15 PER TRIP AND $0.39 PER MILE OF EXCESS ONE-WAY TRAVEL, AS COMPARED WITH THE RATES OF $16 PER TRIP AND $0.40 PER MILE QUOTED BY MILLER'S AMBULANCE SERVICE, INC. THE FACT THAT MILLER'S AMBULANCE SERVICE, INC., AGREED TO MAKE NO CHARGE FOR OXYGEN UNDER ITEM NO. 3 OF THE INVITATION, AND PARAMOUNT AMBULANCE, INC., QUOTED A RATE OF $5 AND A TOTAL PRICE OF $925 UNDER ITEM NO. 3, RESULTED IN MAKING THE GROSS BID OF MILLER'S AMBULANCE SERVICE, INC., LOWER THAN THE GROSS BID OF PARAMOUNT AMBULANCE, INC. YOUR CLIENT DID NOT OFFER ANY PROMPT DISCOUNT, BUT THE BID OF MILLER'S AMBULANCE SERVICE, INC., CONTAINED PROMPT PAYMENT DISCOUNT OFFERS OF 5 PERCENT FOR PAYMENT WITHIN 10 CALENDAR DAYS AND 1 PERCENT FOR PAYMENT WITHIN 20 CALENDAR DAYS.

IN PROTESTING THE CONTRACT AWARD TO MILLER'S AMBULANCE SERVICE, INC., YOU QUESTIONED THE ACCURACY OF THE GOVERNMENT'S QUANTITY ESTIMATES AND INDICATED THAT YOU HAVE BEEN INFORMED BY AN EMPLOYEE OF THE LONG BEACH HOSPITAL THAT THE SUCCESSFUL BIDDER WOULD NOT OPERATE UNDER A "CODE 3" PROCEDURE. YOU SUGGESTED THAT THE 5 PERCENT DISCOUNT OFFER SHOULD NOT HAVE BEEN CONSIDERED IN THE BID EVALUATIONS BECAUSE THAT FORM OF BILLING WAS NOT REQUESTED IN THE INVITATION AND BIDDERS WERE NOT ADVISED AS TO THE NUMBER OF DAYS NORMALLY REQUIRED BY THE HOSPITAL TO PAY INVOICES FOR AMBULANCE SERVICE. ALSO, YOU CONTENDED THAT CONSIDERATION OF A BID PROPOSING TO MAKE NO CHARGE FOR ONE ITEM WOULD BE UNFAIR TO OTHER BIDDERS AND THAT A CONTRACT AWARDED TO A CALIFORNIA CONCERN ON THE BASIS OF SUCH A BID WOULD VIOLATE THE LAWS OF THE STATE OF CALIFORNIA AND APPLICABLE FEDERAL STATUTES. YOU CITED SECTION 17043 OF THE BUSINESS AND PROFESSIONAL CODE OF THE STATE OF CALIFORNIA AND SECTION 45 OF TITLE 15, U.S.C. IN SUPPORT OF SUCH CONTENTIONS.

THE RECORD SHOWS THAT THE QUANTITY ESTIMATES USED IN THE BIDDING SCHEDULE OF THE INVITATION WERE APPROXIMATELY THE SAME AS THE QUANTITIES OF AMBULANCE SERVICES OBTAINED BY THE HOSPITAL DURING THE CALENDAR YEAR 1962, AS TO WHICH IT HAS BEEN REPORTED THAT 439 DAY TRIPS AND 104 NIGHT TRIPS WERE MADE, AND THAT SUCH TRIPS INVOLVED MILEAGE ALLOWANCES FOR A TOTAL OF 15,248 MILES OF ONE-WAY TRAVEL BEYOND LOCAL ZONE LIMITS. IT THEREFORE APPEARS THAT THE QUANTITY ESTIMATES WERE SUFFICIENTLY ACCURATE TO INSURE THE SUBMISSION OF FULLY COMPETITIVE BIDS FROM ALL INTERESTED CONCERNS.

WE UNDERSTAND THAT THE REFERENCED "CODE 3" PROCEDURE IS ONE PROVIDED BY LOCAL REGULATION GOVERNING THE OPERATION OF AMBULANCES UNDER EMERGENCY CONDITIONS WITH FULL SIREN AND RED LIGHTS, AND THAT THIS SERVICE IS PERFORMED WHEN ORDERED BY THE REQUESTING PHYSICIAN. ACCORDING TO INFORMATION RECEIVED FROM THE VETERANS ADMINISTRATION, MILLER'S AMBULANCE SERVICE, INC., HAS FURNISHED "CODE 3" SERVICE WHEN REQUESTED AND WILL CONTINUE TO DO SO; ALSO, THE LONG BEACH HOSPITAL HAS NEVER BEEN INFORMED BY ANYONE AT ANY TIME THAT MILLER'S AMBULANCE SERVICE, INC., WOULD NOT OPERATE UNDER A "CODE 3" PROCEDURE.

WITH RESPECT TO THE CONSIDERATION OF PROMPT PAYMENT DISCOUNT OFFERS, ALL BIDDERS WERE INVITED TO QUOTE THEIR BEST PAYMENT TERMS IN THE SPACE PROVIDED IN THE INVITATION FOR SUCH PURPOSE. THE GOVERNMENT DOES NOT REQUIRE BIDDERS TO SUBMIT PROMPT PAYMENT DISCOUNT OFFERS BUT CONSIDERATION OF SUCH OFFERS WHEN MADE, IS AN ESSENTIAL LEGAL REQUIREMENT IN THE EVALUATION OF BIDS WHEN IT IS DETERMINED THAT THE STATED DISCOUNT TERMS MAY REASONABLY BE COMPLIED WITH. HOWEVER, THE QUESTION RAISED CONCERNING THE 5-PERCENT DISCOUNT OFFER IN THIS CASE APPEARS TO BE MERELY ACADEMIC, SINCE THE GROSS BID OF MILLER'S AMBULANCE SERVICE, INC., WAS LOWER THAN THAT OF YOUR COMPANY OR OF ANY OTHER BIDDER.

THE CITED STATUTE OF THE STATE OF CALIFORNIA, WHICH YOU QUOTE, PROHIBITS THE SALE OF ANY ARTICLE OR PRODUCT AT LESS THAN THE COST THEREOF TO THE VENDOR, OR THE GIVING AWAY OF ANY ARTICLE OR PRODUCT FOR THE PURPOSE OF INJURING COMPETITORS OR DESTROYING COMPETITION. A COMPARABLE PROVISION OF LAW IS INCLUDED IN SECTION 13A OF TITLE 15, U.S.C. WHICH MAKES IT UNLAWFUL FOR ANY PERSON ENGAGED IN COMMERCE, IN THE COURSE OF SUCH COMMERCE,"TO SELL, OR CONTRACT TO SELL, GOODS IN ANY PART OF THE UNITED STATES AT PRICES LOWER THAN THOSE EXACTED BY SAID PERSON ELSEWHERE IN THE UNITED STATES FOR THE PURPOSE OF DESTROYING COMPETITION, OR ELIMINATING A COMPETITOR IN SUCH PART OF THE UNITED STATES.'

IT HAS BEEN HELD THAT SECTION 13 OF TITLE 15, U.S.C. DOES NOT APPLY TO GOVERNMENT CONTRACTS. SEE GENERAL SHALE PRODUCTS CORP. V. STRUCK CONST. CO., 37 F.SUPP. 598, AFFIRMED, 132 F.2D 425, CERTIORARI DENIED, 318 U.S. 780. WE BELIEVE THAT THE SAME RULE WOULD BE FOR APPLICATION WITH RESPECT TO UNFAIR METHODS OF COMPETITION IN COMMERCE WHICH ARE DECLARED UNLAWFUL UNDER SECTION 45 OF TITLE 15, UNITED STATES CODE. IT IS RECOGNIZED, OF COURSE, THAT ANY ALLEGED VIOLATIONS OF STATE AND FEDERAL LAWS CONCERNING BUSINESS PRACTICES WOULD BE PRIMARILY FOR DETERMINATION BY THE FEDERAL AND STATE OFFICIALS CHARGED WITH THE RESPONSIBILITY FOR ENFORCING THOSE LAWS.

WHEN BIDDING ON A PROPOSED CONTRACT WITH THE UNITED STATES IT IS NOT UNUSUAL FOR A BIDDER TO AGREE TO FURNISH ONE OR MORE ITEMS OF THE INVITATION FOR BIDS WITHOUT COST TO THE GOVERNMENT. IN OUR OPINION, SUCH A BID SHOULD BE EVALUATED AND CONSIDERED WITH OTHER BIDS RECEIVED IN RESPONSE TO THE INVITATION SO THAT THE CONTRACT AWARD WILL BE MADE, AS REQUIRED BY THE ADVERTISING STATUTES OF THE UNITED STATES, TO THE LOWEST RESPONSIBLE AND RESPONSIVE BIDDER.

ACCORDINGLY, THE PROTEST MADE TO OUR OFFICE CONCERNING THE CONTRACT AWARD TO MILLER'S AMBULANCE ..END :