B-151802, SEP. 19, 1963

B-151802: Sep 19, 1963

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WAS ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER. THE INVITATION WAS DIVIDED INTO 10 ITEMS. ITEMS 1 THROUGH 9 WERE TO BE DELIVERED F.O.B. WAS TO BE DELIVERED F.O.B. PAGE 3 OF THE INVITATION STATED THAT "BIDS ARE SOLICITED ON AN ALL OR NONE BASIS.'. PAGE 8 OF THE INVITATION STATED: "FAILURE TO INDICATE A MINIMUM QUANTITY WILL BE DEEMED AN OFFER TO ACCEPT AN AWARD FOR THE TOTAL QUANTITY LISTED. THE CLAUSE ON PAGE 3 WAS SPECIFICALLY INSERTED FOR THIS PROCUREMENT WHILE WE ARE INFORMED THAT THE LANGUAGE ON PAGE 8 IS STANDARDIZED LANGUAGE WHICH HAS APPEARED IN OTHER DEFENSE SUPPLY AGENCY PROCUREMENTS. IN RESPONSE TO THE INVITATION BIDS WERE RECEIVED FROM YALE AND TOWNE MANUFACTURING COMPANY. BIDS WERE OPENED ON FEBRUARY 27.

B-151802, SEP. 19, 1963

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

WE REFER TO YOUR LETTERS AND ENCLOSURES OF AUGUST 6, 1963, AND AUGUST 19, 1963, RELATIVE TO A PROTEST TO THIS OFFICE RECEIVED FROM YALE AND TOWNE MANUFACTURING COMPANY, 7801 OLD GEORGETOWN ROAD, WASHINGTON 14, D.C., DATED JUNE 14, 1963, CONCERNING THE AWARD OF CONTRACT NO. DSA 4-1909 DATED MARCH 29, 1963, TO THE PETTIBONE MULLIKEN CORPORATION.

ON JANUARY 28, 1963, INVITATION FOR BIDS NO. DSA 4-63-1516, WAS ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA, FOR THE PROCUREMENT OF 100 UNITS OF GASOLINE DRIVEN FORK LIFT TRUCKS OF VARIOUS WEIGHTS AND DESCRIPTION, AND ONE LOT OF COMBINED TECHNICAL DATA. THE INVITATION WAS DIVIDED INTO 10 ITEMS, AND ITEMS 1, 2, AND 7, OF THIS PROCUREMENT DESCRIBED FORK LIFT TRUCKS HAVING A WEIGHT OF 2,000 POUNDS EACH WHILE ITEMS 3, 4, 5, 6, 8, AND 9 DESCRIBED FORK LIFT TRUCKS WHICH VARIED IN WEIGHT FROM A MINIMUM OF 4,000 POUNDS TO A MAXIMUM OF 6,000 POUNDS. ITEMS 1 THROUGH 9 WERE TO BE DELIVERED F.O.B. ORIGIN WHILE ITEM 10 DESCRIBED AS COMBINED TECHNICAL DATA FOR PROVISIONING BASE EQUIPMENT IN ACCORDANCE WITH MIL-T-196 75C (S AND A),WAS TO BE DELIVERED F.O.B. DESTINATION. PAGE 3 OF THE INVITATION STATED THAT "BIDS ARE SOLICITED ON AN ALL OR NONE BASIS.' PAGE 8 OF THE INVITATION STATED:

"FAILURE TO INDICATE A MINIMUM QUANTITY WILL BE DEEMED AN OFFER TO ACCEPT AN AWARD FOR THE TOTAL QUANTITY LISTED, OR ANY PART THEREOF. IF THE BIDDER DESIRES TO BID ONLY ON AN ALL OR NONE BASIS FOR THE FULL QUANTITY OF ALL ITEMS IN THE SCHEDULE, HE SHOULD SO STATE.' THE CLAUSE ON PAGE 3 WAS SPECIFICALLY INSERTED FOR THIS PROCUREMENT WHILE WE ARE INFORMED THAT THE LANGUAGE ON PAGE 8 IS STANDARDIZED LANGUAGE WHICH HAS APPEARED IN OTHER DEFENSE SUPPLY AGENCY PROCUREMENTS.

IN RESPONSE TO THE INVITATION BIDS WERE RECEIVED FROM YALE AND TOWNE MANUFACTURING COMPANY, YALE MATERIALS HANDLING DIVISION, 11000 ROOSEVELT BOULEVARD, PHILADELPHIA, PENNSYLVANIA; CLARK EQUIPMENT COMPANY, INDUSTRIAL TRUCK DIVISION, 24TH STREET, BATTLE CREEK, MICHIGAN; PETTIBONE MERCURY DIVISION, PETTIBONE-MULLIKEN CORPORATION, C/O COOPER AND MINICH, INCORPORATED, 8030 WOODMONT AVENUE, WASHINGTON 14, D.C. BIDS WERE OPENED ON FEBRUARY 27, 1963. CLARK EQUIPMENT COMPANY TOOK EXCEPTION TO THE LIQUIDATED DAMAGES CLAUSE CONTAINED ON PAGE 23 OF THE INVITATION, AND CLARK EQUIPMENT COMPANY INDICATED THAT 120 DAYS WOULD BE NECESSARY FOR DELIVERY OF PREPRODUCTION SAMPLES INSTEAD OF THE 105 DAYS SPECIFIED IN THE INVITATION. BECAUSE OF THESE EXCEPTIONS TO INVITATION REQUIREMENTS THE BID OF CLARK EQUIPMENT COMPANY WAS REJECTED AS NONRESPONSIVE.

YALE AND TOWNE QUOTED PRICES FOR ALL 10 ITEMS INVOLVED IN THIS PROCUREMENT, WHILE PETTIBONE INCORPORATED QUOTED PRICES FOR ITEMS 3, 4, 5, 6, 8, 9, AND 10 BUT NOT FOR ITEMS 1, 2, AND 7. ON MARCH 29, 1963, AWARD OF ITEMS 3, 4, 5, 6, 8, 9, AND 10 WAS MADE TO PETTIBONE AS THE LOW RESPONSIVE RESPONSIBLE BIDDER FOR THESE ITEMS. THE PRICES QUOTED IN PETTIBONE'S BID FOR ITEMS 3, 4, 5, 6, 8, 9, AND 10, TOTALED $431,730 WHILE THE TOTAL OF THE PRICES QUOTED IN THE YALE AND TOWNE BID FOR THESE SAME ITEMS WAS $606,501 OR $174,771 MORE THAN PETTIBONE. COMPARED ON AN ITEM BY ITEM BASIS THE PRICES QUOTED IN THE PETTIBONE BID WERE LOWER ON EACH ITEM THAN THE PRICES QUOTED IN THE BID SUBMITTED BY YALE AND TOWNE.

NOTWITHSTANDING THAT ONLY YALE AND TOWNE SUBMITTED A BID FOR ITEMS 1, 2, AND 7, NO AWARD FOR THESE ITEMS WAS MADE. IN THIS REGARD THE PRICES IN THE YALE AND TOWNE BID FOR ITEMS 1, 2, AND 7, WERE APPROXIMATELY $5,481 HIGHER THAN THE PRICES FOR WHICH THESE ITEMS COULD BE OBTAINED BY EXERCISING OPTIONS IN EXISTING CONTRACTS WITH ALLIS CHALMERS MANUFACTURING COMPANY. THE PRICES IN THE YALE AND TOWNE BID FOR EACH OF THE 2 UNITS DESCRIBED IN ITEM 1 WAS $3,908 AND $4,033 FOR EACH OF THE 2 UNITS DESCRIBED IN ITEM 2 WHILE THE ALLIS CHALMERS OPTION PRICE FOR THESE SAME ITEMS WAS $2,826 FOR EACH UNIT. THE OPTION PRICE WITH ALLIS CHALMERS FOR THE 1 UNIT DESCRIBED IN ITEM 7 WAS $3,349, WHILE THE PRICE FOR THIS SAME ITEM IN THE YALE AND TOWNE BID WAS $4,252. BASED ON THESE COMPARISONS THE CONTRACTING OFFICER FOUND THAT THE PRICES IN THE YALE AND TOWNE BID FOR ITEMS 1, 2, AND 7, WERE UNREASONABLE AND PURSUANT TO ASPR 2-404.1 (B) (VI) WHICH PROVIDES FOR CANCELLATION OF AN INVITATION AFTER OPENING IF ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE UNREASONABLE AS TO PRICE, THE INVITATION WAS CANCELLED FOR THESE THREE ITEMS. SINCE THE PRICES OF YALE AND TOWNE FOR THESE ITEMS WERE APPROXIMATELY 35 PERCENT HIGHER THAN THE OPTION PRICES OF ALLIS CHALMERS, THIS CONCLUSION SEEMS JUSTIFIED.

ON JANUARY 31, 1963, A REQUEST FOR INFORMATION WAS SENT TO DGSA BY MINNEAPOLIS-MOLINE, A MANUFACTURER OF FORK LIFT TRUCKS, SPECIFICALLY INQUIRING IN REGARD TO THE "ALL OR NONE" PROVISION, WHETHER SUCH A BID WAS MANDATORY. ON FEBRUARY 1, 1963, DGSA INFORMED MINNEAPOLIS-MOLINE THAT THIS SOLICITATION WAS ON AN "ALL OR NONE" BASIS. IN REGARD TO THIS REPLY DGSA NOTED THAT MINNEAPOLIS-MOLINE DID NOT MANUFACTURE EITHER A 2,000 OR 6,000-POUND SOLID RUBBER TIRE TRUCK AND THEREFORE COULD NOT FULFILL AN "ALL OR NONE" REQUIREMENT. THEREAFTER, NO BID FROM MINNEAPOLIS-MOLINE WAS RECEIVED IN RESPONSE TO THIS INVITATION.

WE ARE INFORMED THAT THE "ALL OR NONE" PROVISION WAS INSERTED IN THIS INVITATION BECAUSE OF INSTRUCTIONS CONTAINED IN THE MILITARY INTERDEPARTMENTAL PURCHASE REQUEST WHICH STATES THAT IT IS ESSENTIAL FOR A PROCUREMENT OF THIS NATURE TO BE ON A SINGLE LOT BASIS. HOWEVER, ON FEBRUARY 28, 1963, AFTER THE OPENING OF BIDS, A TELEGRAM WAS RECEIVED FROM BUSANDA, DEPARTMENT OF THE NAVY, THE USING ACTIVITY IN THIS PROCUREMENT, INFORMING THE DIRECTORATE OF PROCUREMENT OF DGSA THAT AWARD IN THIS CASE SHOULD BE MADE ON THE FOLLOWING BASIS:

"FIRST OPTION ITEMS 1, 2 AND 7 COMPOSITE LOT: AND A COMPOSITE LOT OF ITEMS 3, 4, 5, 6, 8 AND 9.

SECOND OPTION COMPOSITE OF ALL ITEMS COMBINED. GOVT RESERVES RIGHT TO MAKE AWARD AT THE LOWEST COMPOSITE BID PRICE. BIDS SHOULD BE EVALUATED ACCORDINGLY"

ON MARCH 29, 1963, PURSUANT TO THESE INSTRUCTIONS, AWARD ON A COMPOSITE LOT BASIS FOR ITEMS 3, 4, 5, 6, 8, 9, AND AS LOW BIDDER FOR ITEM 10 WAS MADE TO PETTIBONE-MULLIKEN CORPORATION. ON MAY 22, 1963, YALE AND TOWNE BY LETTER TO DGSA, QUESTIONED THE AWARD OF THE ABOVE ITEMS TO PETTIBONE. ON JUNE 4, 1963, DGSA RESPONDED TO THE YALE AND TOWNE INQUIRY AND INFORMED THIS BIDDER THAT IN VIEW OF THE LANGUAGE CONTAINED ON PAGE 3 AND PAGE 8 OF THE INVITATION, AWARD ON AN OTHER THAN "ALL OR NONE" BASIS WAS NOT PRECLUDED, AND THAT NO AWARD WAS MADE FOR ITEMS 1, 2, AND 7, PURSUANT TO ASPR 2-404.1 (B) (VI), SINCE THE PRICES FOR THESE ITEMS WERE UNREASONABLE. ON JUNE 14, 1963, YALE AND TOWNE SENT A PROTEST TO THIS OFFICE ALLEGING THAT THE AWARD MADE TO PETTIBONE ON A BASIS OTHER THAN "ALL OR NONE" WAS IMPROPER.

FROM A REVIEW OF THIS INVITATION WE FIND THAT THE AWARD AS MADE WAS NOT PRECLUDED BY THE TERMS OF THE INVITATION, AND WAS NOT ERRONEOUS. HOWEVER, IN VIEW OF THE FACTS AND CIRCUMSTANCES PRESENTED, THERE IS A SERIOUS QUESTION AS TO WHETHER THERE WAS OPEN AND FREE COMPETITION AS REQUIRED IN ADVERTISED PROCUREMENTS BY THE STATUTES AND REGULATIONS. WITHOUT DOUBT THIS INVITATION WAS AMBIGUOUS AND PROPERLY SHOULD HAVE BEEN CANCELLED BEFORE AWARD PARTICULARLY UPON RECEIPT OF THE TELEGRAM FROM BUSANDA, AND THE PROCUREMENT READVERTISED WITH THE INVITATION SPECIFICALLY STATING THE BASIS FOR THE EVALUATION OF BIDS. YOU ARE ADVISED THAT IN FUTURE PROCUREMENTS THE INTEGRITY OF THE BID SYSTEM REQUIRES SUCH ACTION. HOWEVER, SINCE THIS OFFICE CAN ONLY SPECULATE AS TO THE REASONS WHY NO BID WAS RECEIVED FROM MINNEAPOLIS-MOLINE, AND CAN ONLY SPECULATE AS TO HOW MANY ADDITIONAL BIDS WOULD HAVE BEEN RECEIVED IF THE INVITATION HAD CLEARLY STATED THE BASIS OF EVALUATION, WE DO NOT FIND CONCLUSIVE EVIDENCE THAT ANY BIDDER WAS MISLED OR PREVENTED FROM SUBMITTING A BID. CLEARLY YALE AND TOWNE WAS NOT MISLED, SINCE EVEN IF A FINDING WERE MADE THAT BIDS WERE REQUIRED ON AN "ALL OR NONE" BASIS, YALE AND TOWNE WOULD NOT BE ELIGIBLE FOR AWARD AS THE PRICES FOR ITEMS 1, 2, AND 7 WERE DETERMINED TO BE UNREASONABLE, THEREBY PRECLUDING THAT CONCERN FROM AN AWARD OF ALL TEN ITEMS. FOR ITEMS 3, 4, 5, 6, 8, 9, AND 10, THE PRICES OF YALE AND TOWNE WERE HIGHER ON AN INDIVIDUAL OR AGGREGATE BASIS THAN THE PRICES IN THE PETTIBONE BID, AND THE AWARD AS MADE WAS TO A BIDDER WHOSE PRICES WERE REASONABLE WHO APPARENTLY ACCEPTED THE AWARD IN GOOD FAITH. IN THESE CIRCUMSTANCES, WE DO NOT BELIEVE THE CANCELLATION OF THE AWARD AS MADE WOULD BE JUSTIFIED OR BE IN THE BEST INTERESTS OF THE UNITED STATES.

ACCORDINGLY, THE REQUEST BY YALE AND TOWNE FOR CANCELLATION OF THE AWARD MADE TO PETTIBONE IS ..END :