B-153567, MAY 14, 1964

B-153567: May 14, 1964

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TO JOY MANUFACTURING COMPANY: REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 24. THE LOW BID ON THE FIRST PROGRAM YEAR REQUIREMENT WAS SUBMITTED BY JOY MANUFACTURING COMPANY. THE LOW BID ON THE MULTI YEAR REQUIREMENT WAS SUBMITTED BY INGERSOLL-RAND COMPANY. WAS THAT OF INGERSOLL-RAND ON THE MULTI-YEAR REQUIREMENTS. THAT THE AWARDING OF THE PROCUREMENT HERE INVOLVED WAS BASED ON A METHOD OF EVALUATION OTHER THAN THAT CLEARLY STATED IN THE INVITATION FOR BIDS. YOU ARE ENTITLED AS LOW BIDDER ON ALTERNATE BID A TO AWARD OF THE REQUIREMENTS FOR ALTERNATE BID A OR B. IT SHOULD BE POINTED OUT IN REGARD TO THE CANCELLATION COST FACTOR THAT PARAGRAPH 1-322.3 (B) OF ASPR CLEARLY PROVIDES THAT CANCELLATION COSTS WILL NOT BE A FACTOR FOR EVALUATION.

B-153567, MAY 14, 1964

TO JOY MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 24, 1964, AND LETTER OF APRIL 6, 1964, PROTESTING THE PROPOSED AWARD OF CONTRACT TO INGERSOLL-RAND COMPANY UNDER INVITATION FOR BIDS NO. AMC/A/-18-035-64 276.

THE SUBJECT INVITATION CALLING FOR BIDS ON A RECIPROCATING COMPRESSOR, 50 CFM, INVOLVED A MULTI-YEAR PROCUREMENT. THE FIRST PROGRAM YEAR REQUIREMENT CALLS FOR 118 ITEMS, AND THE MULTI-YEAR REQUIREMENT, COVERING A 3-YEAR PROGRAM CALLS FOR A TOTAL OF 319 ITEMS. THE LOW BID ON THE FIRST PROGRAM YEAR REQUIREMENT WAS SUBMITTED BY JOY MANUFACTURING COMPANY, AND THE LOW BID ON THE MULTI YEAR REQUIREMENT WAS SUBMITTED BY INGERSOLL-RAND COMPANY. IN THIS RESPECT THE INVITATION SET FORTH VARIOUS INSTRUCTIONS CONCERNING SUBMISSION OF BIDS ON THE FIRST PROGRAM YEAR REQUIREMENT (ALTERNATE A), AND ON THE MULTI-YEAR REQUIREMENT (ALTERNATE B); SET FORTH THE CANCELLATION CHARGES TO APPLY IN THE EVENT OF A CANCELLATION UNDER THE MULTI-YEAR REQUIREMENT; AND ALSO BASED ON SECTION 1-322.3 (E) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THE INVITATION STATED (IN PARAGRAPH 5E OF PAGE 6) AS FOLLOWS:

"COMPARISON OF ALTERNATE "A" BID (FIRST YEAR REQUIREMENT) PRICES AGAINST ALTERNATE "B" (MULTI-YEAR REQUIREMENTS) PRICES.

ITEM 1: FOR PURPOSE ONLY OF COMPARING PRICES FOR THE FIRST PROGRAM YEAR REQUIREMENTS (ALTERNATE BID A) AGAINST PRICES FOR MULTI-YEAR REQUIREMENTS (ALTERNATE BID B), THE EVALUATED UNIT PRICE FOR ITEM 1, ALTERNATE BID A, OF THE LOWEST EVALUATED BID RECEIVED FOR THE FIRST PROGRAM YEAR ALTERNATIVE SHALL BE MULTIPLIED BY THE TOTAL NUMBER OF UNITS (312) OF ITEM, ALTERNATE BID B. THE PRODUCT SHALL BE COMPARED AGAINST THE TOTAL EVALUATED PRICE RECEIVED UNDER THE MULTI-YEAR ALTERNATIVE.'

ALSO, PARAGRAPH 6 OF THE INVITATION SCHEDULE PROVIDED AS FOLLOWS:

"THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD FOR EITHER A SINGLE YEAR REQUIREMENT, ALTERNATE BID A, OR THE MULTI-YEAR REQUIREMENTS, ALTERNATE BID B.'

IN THIS CONNECTION, THE ADMINISTRATIVE OFFICE HAS FURNISHED OUR OFFICE A COMPUTATION WHICH COMPARES THE LOW BID UNDER ALTERNATE A WITH THE LOW BID UNDER ALTERNATE B, FOLLOWING THE EVALUATION INSTRUCTIONS SET FORTH IN THE INVITATION. THIS COMPARISON DEMONSTRATES THAT THE LOWEST BID RECEIVED, AFTER EVALUATING AND COMPARING THE BIDS UNDER EACH ALTERNATE BASIS, WAS THAT OF INGERSOLL-RAND ON THE MULTI-YEAR REQUIREMENTS.

YOUR FIRM CONTENDS IN TELEGRAM OF FEBRUARY 24 AND LETTER OF APRIL 6, 1964, THAT THE AWARDING OF THE PROCUREMENT HERE INVOLVED WAS BASED ON A METHOD OF EVALUATION OTHER THAN THAT CLEARLY STATED IN THE INVITATION FOR BIDS. TO THIS END, YOU AVER AS A FACTOR FOR CONSIDERATION, THAT CANCELLATION COSTS INVOLVED IN THE CONTRACT MUST BE ADDED TO THE MULTI- YEAR BIDS FOR PURPOSES OF EVALUATION AND THAT JOY'S CANCELLATION COSTS UNDER THE MULTI-YEAR BID WOULD BE LOWER THAN THAT OF INGERSOLL-RAND. YOU STATE THAT THE SUBJECT INVITATION SCHEDULE DID NOT CONTAIN A STATEMENT TO THE EFFECT THAT CANCELLATION CHARGES "SHALL NOT BE A FACTOR FOR EVALUATION" AND THIS LED THE JOY COMPANY, AND POSSIBLY OTHER BIDDERS, TO BELIEVE THAT SUCH CHARGES WOULD BE CONSIDERED IN EVALUATING A BID PRICE FOR AWARD, AND THEREFORE, SOME BIDDERS WOULD BE INCLINED TO REDUCE THE PRICE DIFFERENTIAL BETWEEN THEIR UNIT PRICES FOR ALTERNATE BIDS A AND B, SO AS TO MINIMIZE THE CANCELLATION CHARGES TO BE ADDED TO THEIR BASIC BID PRICES FOR EVALUATION PURPOSES.

YOU FURTHER CONTEND THAT BASED ON THE EVALUATION CRITERIA SET FORTH IN THE INVITATION SCHEDULE, YOU ARE ENTITLED AS LOW BIDDER ON ALTERNATE BID A TO AWARD OF THE REQUIREMENTS FOR ALTERNATE BID A OR B, SUBJECT TO THE GOVERNMENT'S RESERVATION OF RIGHT TO MAKE AWARD ON EITHER BASIS. TO THIS END, YOU SUBMIT THAT IT WOULD BE ENTIRELY JUSTIFIABLE FOR THE CONTRACTING OFFICER TO AWARD THE SINGLE-YEAR REQUIREMENT (ALTERNATE BID A) TO YOUR COMPANY.

IN THE FIRST INSTANCE, IT SHOULD BE POINTED OUT IN REGARD TO THE CANCELLATION COST FACTOR THAT PARAGRAPH 1-322.3 (B) OF ASPR CLEARLY PROVIDES THAT CANCELLATION COSTS WILL NOT BE A FACTOR FOR EVALUATION. THEREFORE IT WILL BE SEEN THAT THERE IS NO JUSTIFICATION TO BASE AN AWARD ON THE LOWEST OF POSSIBLE CANCELLATION CHARGES AS BEING A MAJOR FACTOR, RATHER THAN ON THE LOWEST OVER-ALL BID AFTER CONSIDERATION OF ALL FACTORS PROPERLY FOR EVALUATION. YOU APPARENTLY FEEL THAT SINCE PARAGRAPH 1-322.3 (B) OF ASPR WAS NOT SPECIFICALLY QUOTED IN THE INVITATION SCHEDULE, YOU HAD A RIGHT TO BELIEVE THAT CANCELLATION COSTS WOULD BE A FACTOR FOR CONSIDERATION. IN THIS RESPECT YOU ARE ADVISED THAT THE PROVISIONS OF ASPR HAVE THE FORCE AND EFFECT OF LAW AND ARE BINDING ON YOU IN THE PREPARATION OF YOUR BID. SEE G. L. CHRISTIAN AND ASSOCIATES V. UNITED STATES, 320 F.2D 345. INSOFAR AS YOUR BELIEF THAT THE AWARD MUST BE MADE TO THE LOW BIDDER ON THE FIRST PROGRAM YOUR REQUIREMENTS (EITHER AT ALTERNATE BID A OR B), REGARDLESS OF WHETHER THE LOWEST OVER-ALL BID WAS RECEIVED ON ALTERNATE B FROM SOME OTHER BIDDER, YOU ARE ADVISED THAT NOTHING IN THE INVITATION OR IN ASPR SUPPORTS SUCH VIEW, AND IT APPEARS TO US THAT IF SUCH INTERPRETATION WAS ADOPTED THE USE OF THE MULTI-YEAR PROCUREMENT PROCEDURE WOULD SERVE NO USEFUL PURPOSE. SEE B-152766, APRIL 3, 1964.

FOR THE FOREGOING REASONS, WE PERCEIVE NO LEGAL OBJECTION TO THE PROPOSED AWARD TO THE INGERSOLL-RAND COMPANY AND ACCORDINGLY YOUR PROTEST MUST BE DENIED.