B-152801, FEB. 3, 1964

B-152801: Feb 3, 1964

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED DECEMBER 24. THE INVITATION FOR BIDS WAS ISSUED ON SEPTEMBER 13. THE PROCUREMENT WAS ALSO PARTIALLY SET ASIDE (50 PERCENT) FOR LABOR SURPLUS AREA CONCERNS. DIRECT SOLICITATION OF 19 BIDDERS WAS MADE BY FRANKFORD ARSENAL. INVITATIONS WERE DISTRIBUTED TO THE SEVERAL PROCUREMENT DISTRICTS AND DULY SYNOPSIZED. PRICES WERE REQUESTED ON A UNIT PRICE BASIS. FIVE BIDS WERE RECEIVED AND OPENED ON OCTOBER 3. THE FOLLOWING UNIT PRICES WERE RECEIVED: CHART F.O.B. OF TEXAS 17.53 15.89 THE LOW BID SUBMITTED BY CHAMBERLAIN CORPORATION IS BASED ON RENT FREE USE OF GOVERNMENT-OWNED TOOLING AND FACILITIES. WHICH WAS MADE A PART OF ITS BID.

B-152801, FEB. 3, 1964

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 24, 1963, WITH ENCLOSURES, FROM THE DIRECTOR OF PROCUREMENT AND PRODUCTION, HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, REQUESTING A DECISION ON THE PROPRIETY OF AN AWARD UNDER INVITATION FOR BIDS NO. AMC/A/36-038-64-160/0I), ISSUED BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE INVITATION FOR BIDS WAS ISSUED ON SEPTEMBER 13, 1963, AND CALLS FOR AN ESTIMATED MAXIMUM QUANTITY OF 108,150 EACH FORGINGS, STEEL, SHELL BODY, WITH A FIRM REQUIREMENT FOR A QUANTITY OF 46,300 FORGINGS. THE PROCUREMENT WAS ALSO PARTIALLY SET ASIDE (50 PERCENT) FOR LABOR SURPLUS AREA CONCERNS.

DIRECT SOLICITATION OF 19 BIDDERS WAS MADE BY FRANKFORD ARSENAL. ADDITION, INVITATIONS WERE DISTRIBUTED TO THE SEVERAL PROCUREMENT DISTRICTS AND DULY SYNOPSIZED. PRICES WERE REQUESTED ON A UNIT PRICE BASIS, BOTH F.O.B. CARRIER'S EQUIPMENT, WHARF OR FREIGHT STATION (AT THE GOVERNMENT'S OPTION) AT OR NEAR CONTRACTOR'S PLANT AND F.O.B. FRANKFORD ARSENAL. FIVE BIDS WERE RECEIVED AND OPENED ON OCTOBER 3, 1963. THE FOLLOWING UNIT PRICES WERE RECEIVED:

CHART

F.O.B. F.O.B.

BIDDER DESTINATION ORIGIN

CHAMBERLAIN CORPORATION $10.24 $9.98

BERWICK FORGE AND FABRICATING

CORP. (LESS 1/2 PERCENT DISCOUNT) 11.45 10.90

J. W. REX COMPANY 11.77 11.58

LANSDOWNE STEEL AND IRON COMPANY 12.39 12.19

AMERICAN MFG.CO. OF TEXAS 17.53 15.89

THE LOW BID SUBMITTED BY CHAMBERLAIN CORPORATION IS BASED ON RENT FREE USE OF GOVERNMENT-OWNED TOOLING AND FACILITIES. IN THAT CONNECTION A LETTER DATED OCTOBER 2, 1963, FROM CHAMBERLAIN CORPORATION, WHICH WAS MADE A PART OF ITS BID, STATES, IN PERTINENT PART, AS FOLLOWS:

"ATTACHED HEREWITH WE ARE PLEASED TO SUBMIT OUR PROPOSAL IN REPLY TO ABOVE INVITATION FOR BID.

"ENCLOSED, ALSO, PLEASE FIND A LIST OF GOVERNMENT-OWNED FACILITIES WHICH ARE PRESENTLY LOCATED IN THE SCRANTON ARMY AMMUNITION PLANT, WHICH WE WOULD PROPOSE TO USE FOR THE PRODUCTION OF THIS ITEM. THIS EQUIPMENT IS ASSIGNED FOR CHAMBERLAIN CORPORATION'S USE UNDER FACILITIES AND MAINTENANCE CONTRACT DA-36-034-AMC-0163A.

"THE USE OF THIS EQUIPMENT HAS BEEN AUTHORIZED BY THE RESPONSIBLE AGENCY, THE PHILADELPHIA PROCUREMENT DISTRICT. THE USE OF THIS EQUIPMENT WILL NOT INTERFERE WITH ANY EXISTING COMMITMENTS. THIS PROPOSAL IS SUBMITTED ON THE BASIS OF RENT FREE USE OF FACILITIES LISTED ON ATTACHED FORM 257A.'

THE FILE SUBMITTED BY THE DIRECTOR OF PROCUREMENT AND PRODUCTION CONTAINS A COPY OF A TELETYPE MESSAGE DATED OCTOBER 4, 1963, FROM MR. HARRY FRUMAN, CONTRACTING OFFICER, PHILADELPHIA PROCUREMENT DISTRICT, TO CHAMBERLAIN CORPORATION AUTHORIZING THE CORPORATION TO---

"* * * UTILIZE ON A NO CHARGE BASIS, GOVERNMENT-OWNED FACILITIES AND SPECIAL TOOLING NECESSARY FOR THE PRODUCTION PERIOD REQUIRED TO COMPLETE PERFORMANCE OF ANY AWARD RESULTING FROM IFB-AMC (A/-36-038-64 160 (OX) ISSUED BY FRANKFORD ARSENAL. * * *"

PAGE 6 OF THE INVITATION CONTAINS THE FOLLOWING PROVISIONS:

"PARAGRAPH 5 OF THE TERMS AND CONDITIONS IS DELETED AND THE FOLLOWING SUBSTITUTED:

"USE AGREEMENTS--- GOVERNMENT OWNED PROPERTY. ALL BIDDERS OR POTENTIAL SUBCONTRACTORS AT ANY LEVEL OR TIER WHO INTEND TO USE, FOR THE MANUFACTURE OF ANY PART OF THE END ITEM OR ITEMS BEING PROCURED UNDER THIS INVITATION FOR BID, GOVERNMENT-OWNED SPECIAL TOOLING AND/OR FACILITIES WHICH ARE CURRENTLY IN THEIR POSSESSION, IN LAYAWAY, OR ASSIGNED TO THEM UNDER THE INDUSTRIAL READINESS PROGRAM, ARE CAUTIONED THAT USE AGREEMENTS REQUIRING THEM TO PAY A FAIR RENTAL VALUE FOR THE USE OF SUCH SPECIAL TOOLING AND/OR FACILITIES MUST BE CONSUMMATED WITH THE COGNIZANT DISTRICT OR AGENCY PRIOR TO THE OPENING DATE OF THIS BID.

"EVIDENCE OF SUCH USE AGREEMENTS AND A LIST OF SUCH SPECIAL TOOLING AND/OR FACILITIES BE FURNISHED BY THE BIDDER WITH HIS BID OR BY APPROPRIATE MODIFICATION OF HIS BID RECEIVED PRIOR TO OPENING.

"UNLESS THE FOREGOING HAS BEEN ACCOMPLISHED, USE OF GOVERNMENT-OWNED SPECIAL TOOLING AND/OR FACILITIES INVOLVED WILL NOT BE AUTHORIZED, AND ANY BID PROPOSING SUCH USE WILL BE CONSIDERED NON-RESPONSIVE.'

IN VIEW OF THE ABOVE PROVISIONS DEALING WITH USE AGREEMENTS ON GOVERNMENT -OWNED PROPERTY, THE CONTRACTING OFFICER REQUESTS OUR DECISION AS TO THE RESPONSIVENESS OF CHAMBERLAIN CORPORATION'S BID CONDITIONED, AS IT IS, ON THE RENT-FREE USE OF FACILITIES. THE CONTRACTING OFFICER CONTENDS THAT THE USE AGREEMENT PROVISIONS IN THE INVITATION ARE VITAL AND SUBSTANTIVE CONDITIONS ESSENTIAL TO BID PRICE EVALUATION ON A COMPARABLE AND PUBLICLY STATED BASIS. WE ARE IN AGREEMENT WITH THE CONTRACTING OFFICER'S VIEWS IN THE MATTER. ONE OF THE CARDINAL RULES OF THE COMPETITIVE BIDDING SYSTEM REQUIRES THAT BIDDERS MUST BE GIVEN THE OPPORTUNITY TO COMPETE ON A COMMON BASIS AND THAT THE BIDS RECEIVED MUST BE EVALUATED ON A COMMON BASIS. IS CLEAR THAT THE CHAMBERLAIN CORPORATION'S BID, BY SPECIFYING RENT-FREE USE OF FACILITIES, FAILS TO CONFORM TO THE USE AGREEMENT PROVISIONS OF THE INVITATION WHICH OBVIOUSLY WERE INCLUDED IN THE INVITATION FOR THE PURPOSE OF EQUALIZING THE COMPETITIVE POSITION AMONG BIDDERS WHICH HAVE, AND THOSE WHICH DO NOT HAVE, GOVERNMENT-OWNED FACILITIES AT THEIR DISPOSAL. THE CONDITION IMPOSED BY CHAMBERLAIN PRECLUDES THE CONTRACTING OFFICER FROM PERFORMING A BID EVALUATION WHICH WOULD EQUATE ALL BIDDERS AS REQUIRED BY THE LAW GOVERNING FORMALLY ADVERTISED PROCUREMENTS. ACCEPTANCE OF THE CHAMBERLAIN CORPORATION'S BID WOULD BE PREJUDICIAL TO OTHER BIDDERS AND WE MUST CONCLUDE, THEREFORE, THAT SUCH BID SHOULD BE REJECTED AS NONRESPONSIVE TO THE TERMS OF THE INVITATION. 40 COMP. GEN. 701.

THE FACT THAT THE CHAMBERLAIN CORPORATION WAS AUTHORIZED BY MR. FRUMAN TO USE GOVERNMENT FACILITIES ON A RENT-FREE BASIS DOES NOT, IN OUR OPINION, CONSTITUTE A BASIS FOR A CONCLUSION DIFFERENT THAN THAT STATED ABOVE. THE CONTRACTING OFFICER REPORTS THAT, IN HIS OPINION, THE CHAMBERLAIN CORPORATION COULD NOT HAVE BEEN CONFUSED OR MISLED IN ITS BID PREPARATION BY THE AUTHORIZATION CONTAINED IN MR. FRUMAN'S TELETYPE MESSAGE. POINTS OUT THAT THE CHAMBERLAIN CORPORATION IS NOT INEXPERIENCED IN BIDDING ON GOVERNMENT PROCUREMENTS. ALSO, HE NOTES THAT A REPRESENTATIVE OF THE CORPORATION, PRIOR TO BID OPENING, WAS MADE AWARE BY THE FRANKFORD ARSENAL CONTRACTING OFFICE OF THE USE AGREEMENT PROVISION IN THE INVITATION THAT REQUIRES BIDDERS INTENDING TO USE GOVERNMENT-OWNED PROPERTY IN THEIR POSSESSION TO PAY A RENTAL CHARGE. MOREOVER, ASIDE FROM THESE CONSIDERATIONS, WE THINK THAT VALID PROVISIONS IN INVITATIONS FOR BIDS CANNOT BE SUPERSEDED OR ABROGATED BY AUTHORIZATIONS IN DEROGATION OF THOSE PROVISIONS ISSUED BY CONTRACTING OFFICERS, SUCH AS MR. FRUMAN IN THIS INSTANCE, WHO ARE WITHOUT JURISDICTION AND AUTHORITY OVER THE PROCUREMENT INVOLVED. IF SUCH ACTION WERE PERMITTED CONFUSION AND CHAOS WOULD BE INTRODUCED INTO THE PROCUREMENT PROCESS.

IN VIEW OF OUR CONCLUSIONS ABOVE, IT IS UNNECESSARY TO CONSIDER THE QUESTION RAISED BY THE CONTRACTING OFFICER AS TO WHETHER THE CHAMBERLAIN CORPORATION, AS A GOVERNMENT-OWNED, CONTRACTOR-OPERATED PLANT, QUALIFIES AS A BONA FIDE MANUFACTURER WHEN COMPETING AGAINST MANUFACTURERS WITHIN THE MEANING OF PARAGRAPH 12-603.1 OF THE ARMED SERVICES PROCUREMENT REGULATION UNDER AN ADVERTISED PROCUREMENT.