B-153581, JUN. 9, 1964

B-153581: Jun 9, 1964

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TO BURTON MANUFACTURING COMPANY: FURTHER REFERENCE IS MADE TO A COPY OF YOUR LETTER DATED FEBRUARY 24. AN ADDITIONAL IDENTICAL QUANTITY WAS SET ASIDE FOR NEGOTIATION WITH ELIGIBLE LABOR SURPLUS AREA CONCERNS. THE INVITATION FOR BIDS BASICALLY WAS SET UP IN LOTS I. WAS THE LOW BIDDER ON EACH LOT. THE CONTRACT WAS INCREASED BY $4. 608.23 BY REASON OF THE CORPORATION'S SUCCESSFUL NEGOTIATION FOR THE AWARD OF THAT PART OF THE PROCUREMENT THAT WAS SET ASIDE FOR ELIGIBLE LABOR SURPLUS AREA CONCERNS. YOUR PROTEST IS BASED ON THE CONTENTION THAT YOUR BID SHOULD HAVE BEEN CONSIDERED FOR AWARD OF CONTRACT FOR THE POWER SUPPLIES COVERED BY ITEM NO. 2 OF LOT I AND ITEM NO. 6 OF LOT II ON THE BASIS OF YOUR LOT UNIT PRICE BIDS OF $873 AND $872.

B-153581, JUN. 9, 1964

TO BURTON MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO A COPY OF YOUR LETTER DATED FEBRUARY 24, 1964, WITH ENCLOSURES, ADDRESSED TO THE UNITED STATES NAVY PURCHASING OFFICE PROTESTING CERTAIN FEATURES OF THE AWARD PROCEDURE FOLLOWED IN CONNECTION WITH DEPARTMENT OF THE NAVY INVITATION NO. 600 254-64.

BASED ON REQUIREMENTS OF THE BUREAU OF NAVAL WEAPONS AND THE DEPARTMENT OF THE AIR FORCE UNDER FOUR SEPARATE PROCUREMENT REQUESTS, THE UNITED STATES NAVY PURCHASING OFFICE, ON SEPTEMBER 26, 1963, ISSUED INVITATION NO. 600-254-64 FOR THE PROCUREMENT OF 2,184 GUIDED MISSILE LAUNCHERS WITH POWER SUPPLIES PLUS 260 LAUNCHERS ONLY. AN ADDITIONAL IDENTICAL QUANTITY WAS SET ASIDE FOR NEGOTIATION WITH ELIGIBLE LABOR SURPLUS AREA CONCERNS. THE INVITATION FOR BIDS BASICALLY WAS SET UP IN LOTS I, II, III AND VII REQUIRING THAT THE LAUNCHERS AND POWER SUPPLIES BE FURNISHED BY THE SAME COMPANY. THE DEPARTMENT OF THE NAVY CONTRACTING OFFICER REPORTS THAT UPON EVALUATION OF THE 35 BIDS RECEIVED IN RESPONSE TO THE INVITATION, VARO, INC., GARLAND, TEXAS, WAS THE LOW BIDDER ON EACH LOT, BASED BOTH ON FURNISHING GROUPS OF LOTS I, II AND III AND LOTS I, II, III AND VII. THEREFORE, THE DEPARTMENT OF THE NAVY AWARDED CONTRACT NO. N600/19/61910, TO VARO, INC., ON MARCH 19, 1964, IN THE ORIGINAL TOTAL AMOUNT OF $4,835,610.71 FOR LOTS I, II, III AND VII, INCLUDING CERTAIN OPTION LOTS AND, IT APPEARS THAT BY SUPPLEMENTAL AGREEMENT DATED MARCH 20, 1964, THE CONTRACT WAS INCREASED BY $4,826,608.23 BY REASON OF THE CORPORATION'S SUCCESSFUL NEGOTIATION FOR THE AWARD OF THAT PART OF THE PROCUREMENT THAT WAS SET ASIDE FOR ELIGIBLE LABOR SURPLUS AREA CONCERNS.

YOUR PROTEST IS BASED ON THE CONTENTION THAT YOUR BID SHOULD HAVE BEEN CONSIDERED FOR AWARD OF CONTRACT FOR THE POWER SUPPLIES COVERED BY ITEM NO. 2 OF LOT I AND ITEM NO. 6 OF LOT II ON THE BASIS OF YOUR LOT UNIT PRICE BIDS OF $873 AND $872, RESPECTIVELY, FOR THESE ITEMS. YOU STATE THAT THE POWER SUPPLIES ARE AUTONOMOUS UNITS, THAT PREVIOUSLY THEY HAVE BEEN PROCURED AS SEPARATE ITEMS, AND THAT SAVINGS TO THE GOVERNMENT COULD BE AS HIGH AS 16 PERCENT IF AWARD WERE MADE TO YOU FOR SUCH ITEMS.

INVITATION NO. 600-254-64 CONTAINED THE FOLLOWING PROVISION ON PAGE 1 OF THE SCHEDULE:

"AWARD WILL BE MADE BY LOT:

BIDS MAY BE SUBMITTED ON LOT I, OR LOT II, OR LOT III, OR LOT VII, OR ON ANY COMBINATION OF LOTS THEREOF. IN VIEW OF THE LARGE QUANTITIES OF EQUIPMENTS AND THE STRINGENT DELIVERY REQUIREMENTS, AWARD WILL BE MADE TO ONE OR MORE BIDDERS ON THE ABOVE BASIS WHICHEVER IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.'

THUS, BY THE EXPRESS LANGUAGE OF THIS PROVISION BIDDERS WERE ADVISED THAT AWARD OF A CONTRACT UNDER THE INVITATION WAS TO BE ON A LOT BASIS ONLY AND, CONSEQUENTLY, THAT CONSIDERATION WOULD NOT BE GIVEN TO AWARDS OF ANY BIDS FOR AN INDIVIDUAL ITEM OR ITEMS. THE CONTRACTING OFFICER EXPLAINS THAT IT WAS NECESSARY TO SET THE INVITATION UP IN LOTS THAT REQUIRED THAT THE LAUNCHERS AND POWER SUPPLIES BE FURNISHED BY THE SAME COMPANY BECAUSE THE POWER SUPPLY IS ACTUALLY A COMPONENT OF THE LAUNCHER, IN THAT IT SUPPLIES THE POWER WHICH LAUNCHES THE MISSILE. THE COMPLETE UNIT MUST BE CHECKED, TESTED, DELIVERED AND INSTALLED IN THE AIRCRAFT AS A UNIT AND ONE SUPPLIER MUST BE RESPONSIBLE FOR THE OPERATION OF THE COMPLETE LAUNCHER SYSTEM. THE CONTRACTING OFFICER ADVISED FURTHER THAT IN PLANNING THE FORM OF THE INVITATION IT WAS DECIDED TO SET UP SEVERAL LOTS IN QUANTITIES SUBSTANTIAL ENOUGH TO GENERATE GOOD PRICING AND YET NOT SO LARGE AS TO EXCLUDE SMALL BUSINESS; ALSO, ANOTHER FACTOR REPORTED AS THE REASON FOR SETTING THE INVITATION UP ON A LOT BASIS WAS THAT IT HAD BEEN DETERMINED THAT A QUANTITY OF 688 WAS SO URGENTLY NEEDED BY THE AIR FORCE THAT AN EXTREMELY EARLY DELIVERY SCHEDULE WAS REQUIRED TO BE INSERTED FOR THAT QUANTITY--- LOT VII.

IT IS, OF COURSE, NOT WITHIN THE PROVINCE OF OUR OFFICE TO DRAFT SPECIFICATIONS FOR THE CONTRACTUAL NEEDS OF ADMINISTRATIVE DEPARTMENTS AND AGENCIES OF THE GOVERNMENT OR TO FORMULATE BASES UPON WHICH BID PRICES PROPERLY WILL BE CONSIDERED AND EVALUATED UNDER GIVEN INVITATIONS. THESE MATTERS FALL SQUARELY WITHIN THE FUNCTIONS OF THE DEPARTMENTS AND AGENCIES CONCERNED AND WHEN A SPECIFICATION LENDS ITSELF TO OPEN COMPETITION, AS REQUIRED BY APPLICABLE STATUTES, AND IT IS SHOWN THAT THE GOVERNMENT'S INTERESTS ARE FULLY PROTECTED OUR OFFICE WILL NOT INTERVENE. IN THIS REGARD, WE CAN FIND NO INDICATION THAT THE FORM OF THE INVITATION REQUIRING AWARD ON A LOT BASIS ONLY RESTRICTED OPEN COMPETITION IN ANY WAY AND, IN VIEW OF THE REASONS SET FORTH ABOVE, IT MUST BE CONCLUDED THAT THE DEPARTMENT OF THE NAVY WAS COMPLETELY JUSTIFIED IN LIMITING CONSIDERATION OF BIDS TOWARD AWARD ON A LOT BASIS ONLY.

WITH RESPECT TO YOUR CONTENTION THAT A SAVING OF AS MUCH AS 16 PERCENT COULD BE REALIZED BY THE GOVERNMENT IN AWARDING CONTRACTS UNDER THE INVITATION ON AN ITEM BASIS, THIS IS REFUTED BY THE DEPARTMENT OF THE NAVY'S REPORT. THE NAVY POINTS OUT THAT IF CONSIDERATION WOULD HAVE BEEN GIVEN TOWARD AWARD ON AN ITEM BASIS,BOTH THE LOW BID OF VARI, INC., AND THE SECOND LOW BID, ON THE LAUNCHERS--- ITEMS NOS. 1, 5 AND 5A--- WOULD HAVE BEEN ELIMINATED FROM CONSIDERATION SINCE BOTH OF THESE BIDS WERE BASED ON THE TOTAL QUANTITIES SHOWN IN SOME OR ALL OF LOTS 1, II, III AND VII. THIS BEING THE CASE, IT WOULD HAVE BEEN NECESSARY TO ACCEPT THE THIRD LOWEST BID RECEIVED, IF SUCH LOW BIDDER WOULD HAVE AGREED TO ACCEPT AWARD BY ITEM ONLY FOR THE LAUNCHERS, THE AMOUNT OF WHICH WHEN ADDED TO YOUR OWN BID FOR THE SEPARATE ITEMS NOS. 2 AND 6, WOULD HAVE RESULTED IN A TOTAL PRICE FOR LOTS I AND II OF $2,642,065.34. THE NAVY REPORT SHOWS THIS TOTAL TO BE SUBSTANTIALLY HIGHER THAN THE BID OF VARO, INC., OF $2,382,379 FOR THE COMPLETE LOTS I AND II.

FOR THE ABOVE REASONS, WE MUST CONCLUDE THAT THE FORM IN WHICH INVITATION NO. 600-254-64 WAS ISSUED, AND THE AWARD ACTION TAKEN BY THE DEPARTMENT OF THE NAVY THEREUNDER, IS NOT SUBJECT TO LEGAL OBJECTION.