B-153727, APR. 10, 1964

B-153727: Apr 10, 1964

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HALL AND CASEY: REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 16 AND LETTER OF MARCH 17. THIS OFFER WAS REJECTED BECAUSE YUTAN SUPPLIED NO EVIDENCE. PROOF THAT THE COAL OFFERED WOULD MEET THESE STANDARDS WAS TO BE SUPPLIED BY ANALYTICAL RECORDS. AS FOLLOWS: "THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OFFER OF ANY ITEM WHICH: "* * * OFFERS COAL FROM A MINE WHERE * * * NO ANALYTICAL RECORDS ARE AVAILABLE CONCERNING COAL PRODUCED FROM SUCH MINES * * *.'. THE CONTRACTING OFFICER REPORTS THAT NO SUCH RECORDS WERE AVAILABLE. THAT NONE WERE SUPPLIED BY YUTAN. YUTAN WAS ADVISED OF THIS FACT SO THAT IT MIGHT TAKE ADDITIONAL SAMPLES FOR ANALYSIS. NO FURTHER REPORTS WERE FORTHCOMING FROM YUTAN.

B-153727, APR. 10, 1964

TO SCRIBNER, HALL AND CASEY:

REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 16 AND LETTER OF MARCH 17, 1964, PROTESTING THE REJECTION OF AN OFFER BY YUTAN CONSTRUCTION CO., INC., FOR A PORTION OF UNITED STATES ARMY AND AIR FORCE COAL REQUIREMENTS FOR FISCAL YEAR 1965, COVERED BY REQUEST FOR PROPOSALS (RFP) NO. DSA-6-64- N-152, ISSUED ON JANUARY 21, 1964, BY THE DEFENSE PETROLEUM SUPPLY CENTER. PURSUANT TO THIS RFP, YOUR CLIENT OFFERED TO SUPPLY BETWEEN 10,000 AND 50,000 TONS OF THE SPECIFIED COAL AT $5.95 A TON. THIS OFFER WAS REJECTED BECAUSE YUTAN SUPPLIED NO EVIDENCE, AS REQUIRED BY THE RFP, THAT ITS COAL WOULD MEET SPECIFICATIONS.

THE SPECIFICATIONS FOR ITEMS 3, 4, AND 5, THE ONLY ITEMS ON WHICH YUTAN SUBMITTED A BID, REQUIRED COAL MEETING PRECISE MINIMUM STANDARDS. PROOF THAT THE COAL OFFERED WOULD MEET THESE STANDARDS WAS TO BE SUPPLIED BY ANALYTICAL RECORDS. PARAGRAPH 19 OF THE TERMS AND CONDITIONS OF THE RFP PROVIDED, IN RELEVANT PART, AS FOLLOWS:

"THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OFFER OF ANY ITEM WHICH:

"* * * OFFERS COAL FROM A MINE WHERE * * * NO ANALYTICAL RECORDS ARE AVAILABLE CONCERNING COAL PRODUCED FROM SUCH MINES * * *.'

THE CONTRACTING OFFICER REPORTS THAT NO SUCH RECORDS WERE AVAILABLE, AND THAT NONE WERE SUPPLIED BY YUTAN, CONCERNING COAL FROM THE MINE PROPOSED TO BE USED BY YUTAN.

YOU REQUEST THAT AN AWARD ON A MINIMUM OF 20,000 TONS UNDER THE SUBJECT RFP BE WITHHELD FOR 45 DAYS IN ORDER TO PERMIT ANALYTICAL REPORTS FROM THE BUREAU OF MINES ON THE COAL YUTAN PROPOSES TO SUPPLY. IN SUPPORT OF THIS REQUEST, YOU ALLEGE THAT YUTAN SUBMITTED WITH ITS OFFER OF FEBRUARY 14 A LETTER WHICH ALLUDED TO THE QUOTED PORTION OF PARAGRAPH 19 AND WHICH REMINDED THE CONTRACTING OFFICER THAT, IN RESPONDING TO THE RFP FOR THE PREVIOUS YEAR'S COAL REQUIREMENTS, YUTAN HAD FORWARDED THE REQUIRED INFORMATION WITH RESPECT TO ITS MINING PROPERTIES. HOWEVER, A READING OF THE LETTER TO WHICH YOU REFER SHOWS THAT YUTAN DID NOT "ALLUDE" TO THE ABOVE PARAGRAPH 19, BUT MERELY ALLEGED THAT THE CONTRACTING OFFICER HAD "MAPS, PERMIT NUMBERS, AND OTHER INFORMATION REGARDING THE LOCATION AND DESCRIPTION OF OUR MINING PROPERTY.' IT MADE NO REFERENCE TO ANALYTICAL REPORTS.

THE CONTRACTING OFFICER STATES THAT IN RESPONSE TO IDENTICAL SPECIFICATIONS DISTRIBUTED IN 1962, YUTAN SUBMITTED BUREAU OF MINES' ANALYSIS REPORTS ON ITS "H-BED" OF COAL, WHICH SHOWED THAT THE COAL SAMPLE DID NOT MEET THE GOVERNMENT'S MINIMUM STANDARDS AS SET OUT IN THE SPECIFICATIONS. IN A LETTER OF MARCH 9, 1962, YUTAN WAS ADVISED OF THIS FACT SO THAT IT MIGHT TAKE ADDITIONAL SAMPLES FOR ANALYSIS, BUT NO FURTHER REPORTS WERE FORTHCOMING FROM YUTAN. THE CONTRACTING OFFICER FURTHER REPORTS THAT DURING NEGOTIATIONS IN 1963, AGAIN UNDER THE SAME SPECIFICATIONS, THE APPARENT POOR QUALITY OF YUTAN'S PROPERTY WAS DISCUSSED WITH ITS REPRESENTATIVE, WHO WAS ASKED IF NEW COAL SAMPLES HAD BEEN OBTAINED. NO NEW SAMPLES HAD BEEN TAKEN AND NO NEW ANALYSIS REPORTS WERE SUBSEQUENTLY FURNISHED.

ON FEBRUARY 25, 1964, YUTAN WIRED THE CONTRACTING OFFICER TO INQUIRE WHETHER THERE WAS ANY QUESTION ABOUT ITS ABILITY TO PRODUCE THE QUALITY OF COAL GUARANTEED IN ITS PROPOSAL. THE CONTRACTING OFFICER REPLIED ON THE SAME DAY THAT THERE WAS NO RECORD OF BUREAU OF MINES' COAL ANALYSIS REPORTS WHICH COULD BE USED TO EVALUATE YUTAN'S OFFER AS REQUIRED BY PARAGRAPH 19 OF THE TERMS AND CONDITIONS OF THE RFP, AND THAT SUCH REPORTS SHOULD BE FURNISHED PROMPTLY, IF AVAILABLE. IN A LETTER OF MARCH 4, 1964, YUTAN FURNISHED TWO COAL ANALYSIS REPORTS BY THE BUREAU OF MINES ON A SAMPLE OF COAL TAKEN FROM PROPERTY ADJACENT TO ITS OWN. YOU ALLEGE THAT AN EMPLOYEE OF THE BUREAU OF MINES STATED THAT THESE TESTS WERE REPRESENTATIVE OF THE COAL ON YUTAN'S PROPERTY. HOWEVER, YOU HAVE FURNISHED NO SUPPORT FOR THIS STATEMENT, AND IN ANY EVENT THE CONTRACTING OFFICER STATES THAT IT IS ONLY CONJECTURE THAT THE QUALITY OF A SEAM OF COAL SAMPLED ON THE ADJACENT PROPERTY DOES NOT VARY AS IT ENTERS THE YUTAN PROPERTY. FURTHERMORE, THE CONTRACTING OFFICER REPORTS THAT THE BUREAU OF MINES' COAL ANALYSIS REPORTS SHOW THAT THE COAL SAMPLED ON THE ADJACENT PROPERTY DOES NOT MEET THE SPECIFICATIONS OF THE RFP.

YOU POINT OUT THAT THE RFP FOR FISCAL YEAR 1965 REQUIREMENTS WAS ISSUED APPROXIMATELY TWO MONTHS PRIOR TO THE TIME WHEN EARLIER ANNUAL PROCUREMENTS WERE INITIATED. YOU CONTEND THAT THE EARLY RELEASE OF THIS YEAR'S RFP DID NOT PERMIT YUTAN THE TIME NECESSARY TO OBTAIN THE NEW ANALYTICAL REPORTS IT FULLY EXPECTED TO. HOWEVER, WE NOTE THAT ALTHOUGH THE RFP WAS ISSUED ON JANUARY 21, YUTAN MADE NO ATTEMPT TO OBTAIN THESE OR ANY OTHER REPORTS UNTIL WELL AFTER THE RFPS HAD BEEN RECEIVED AND OPENED ON FEBRUARY 18. THIS APPARENT LACK OF DILIGENCE TAKES ON ADDED SIGNIFICANCE WHEN CONSIDERED IN THE CONTEXT OF THE NEGOTIATIONS FOR THE TWO PRECEDING CONTRACTS, AND LEAVES ROOM FOR DOUBT AS TO THE CORRECTNESS OF THE ASSERTION THAT, BUT FOR THE EARLIER ISSUANCE OF THIS YEAR'S RFP, YOUR CLIENT WILLINGLY WOULD HAVE OBTAINED TIMELY AND RESPONSIVE ANALYTICAL REPORTS.

AS TO THE REASON FOR THE EARLY RELEASE OF THE RFP, IT IS STATED THAT THE COAL CONTRACTORS FOR THE PREVIOUS YEAR'S REQUIREMENTS HAD SUGGESTED THAT THE ISSUANCE OF RFPS IN JANUARY SHOULD RESULT IN SLIGHTLY LOWER PRICES, BECAUSE SUCH ISSUANCE WOULD FACILITATE THE AWARD OF CONTRACTS IN THE EARLY SPRING, THEREBY PERMITTING CONTRACTORS TO MORE EFFICIENTLY UTILIZE THE MANPOWER AND MACHINERY NEEDED IN THE STRIP-MINE TYPE OF OPERATION PREVALENT IN ALASKA.

WITH RESPECT TO YOUR CONTENTION THAT IT WOULD BEST SERVE THE INTEREST OF THE GOVERNMENT TO WITHHOLD AWARD OF 20,000 TONS OF A GROSS ESTIMATED REQUIREMENT OF 358,700 TONS OF COAL, PENDING THE SUBMISSION OF A FAVORABLE ANALYTICAL REPORT ON THE COAL YUTAN WISHES TO SUPPLY AT $5.95 A TON, THE CONTRACTING OFFICER REPORTS THAT ON THE BASIS OF THE PROPOSALS RECEIVED THE GOVERNMENT COULD NOT OBTAIN THE LOWEST OVERALL COST BY AWARD OF A CONTRACT FOR 20,000 TONS TO YUTAN AT A PRICE EVEN REMOTELY CLOSE TO $5.95. HOWEVER, THE CONTRACTING OFFICER STATES THAT HE MAY BE ABLE TO AWARD A CONTRACT TO YUTAN FOR ITS MINIMUM OFFER OF 10,000 TONS, AT A PRICE IN THE NEIGHBORHOOD OF $5.95 A TON, CONTINGENT UPON THERE BEING NO SIGNIFICANT CHANGE IN ESTIMATED REQUIREMENTS OR OFFERED PRICES OR OFFERED QUANTITIES, AND UPON THE CONDITION THAT YUTAN SUPPLIES A REPORT INDICATING THAT COAL MEETING THE SPECIFICATIONS CAN BE EXTRACTED FROM THE MINES DESIGNATED BY YUTAN. AT THE PRESENT TIME, SUCH AN AWARD WOULD APPEAR TO RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT, AND THE CONTRACTING OFFICER STATES THAT IT WOULD HELP TO PROVIDE AN ALTERNATE SOURCE OF SUPPLY.

FROM THE FOREGOING, WE FIND NO LEGAL BASIS TO OBJECT TO AWARDS OF CONTRACTS BEING MADE AS ..END :