B-153805, JUL. 23, 1964

B-153805: Jul 23, 1964

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TO GRAHAM JAMES AND ROLPH: REFERENCE IS MADE TO YOUR LETTERS OF APRIL 3 AND 9. THE 8 MOTOR-GENERATORS WERE REQUIRED TO BE COMPLETELY INSTALLED AND TESTED WITHIN 1. THE INTRODUCTION TO THE BIDDING SCHEDULE (PAGE "A") STIPULATES: "BIDS WILL BE CONSIDERED ON THE FOLLOWING SCHEDULE. NO BID WILL BE CONSIDERED FOR ONLY A PART OF THE SCHEDULE. NO BID WILL BE CONSIDERED WHICH DOES NOT INCLUDE THE REQUIRED DATA AND/OR INFORMATION. THAT IS NECESSARY FOR PROPER COMPARISON AND EVALUATION OF BIDS. " AND "EQUAL OPPORTUNITY CLAUSE" WHICH ARE A PART OF THE BIDDING SCHEDULE. "FIRM BIDS ARE INVITED AND BIDDERS SHOULD INDICATE IN THE FOLLOWING APPROPRIATE BLANK SPACES WHETHER THEIR BID IS FIRM OR WHETHER IT IS BASED ON THE "ADJUSTMENT FOR CHANGES IN COST" PROVISIONS INCLUDED AS PARAGRAPH B -13.

B-153805, JUL. 23, 1964

TO GRAHAM JAMES AND ROLPH:

REFERENCE IS MADE TO YOUR LETTERS OF APRIL 3 AND 9, 1964, WITH ENCLOSURES, PROTESTING ON BEHALF OF ELECTRIC POWER CONSTRUCTION COMPANY, SEATTLE, WASHINGTON, AGAINST THE AWARD OF A CONTRACT TO GENERAL ELECTRIC COMPANY UNDER INVITATION FOR BIDS NO. DS-6040 ISSUED NOVEMBER 29, 1963, BY DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, DENVER FEDERAL CENTER, DENVER, COLORADO.

THE INVITATION SOLICITED BIDS FOR FURNISHING, INSTALLING, AND TESTING 8 VERTICAL-SHAFT, HYDRAULIC-OPERATED, 2-SPEED, MULTIPLE-RATED, MOTOR- GENERATORS OF RATINGS PRESCRIBED THEREIN, TOGETHER WITH SPECIFIED SPARE PARTS, FOR THE SAN LUIS PUMPING-GENERATING PLANT, CENTRAL VALLEY PROJECT, CALIFORNIA. THE 8 MOTOR-GENERATORS WERE REQUIRED TO BE COMPLETELY INSTALLED AND TESTED WITHIN 1,280 CALENDAR DAYS AFTER RECEIPT OF NOTICE OF AWARD WITH THE FIRST INSTALLATION TO BE COMPLETED WITHIN 650 DAYS AND THE REMAINDER AT SPECIFIED INTERVALS THEREAFTER.

THE INTRODUCTION TO THE BIDDING SCHEDULE (PAGE "A") STIPULATES:

"BIDS WILL BE CONSIDERED ON THE FOLLOWING SCHEDULE, BUT NO BID WILL BE CONSIDERED FOR ONLY A PART OF THE SCHEDULE. FURTHER, NO BID WILL BE CONSIDERED WHICH DOES NOT INCLUDE THE REQUIRED DATA AND/OR INFORMATION, AS SPECIFIED AND AS LISTED HEREINAFTER, THAT IS NECESSARY FOR PROPER COMPARISON AND EVALUATION OF BIDS.

"BIDDERS MUST FILL IN THE BLANK SPACES UNDER "SPARE PARTS," "WARRANTED CHARACTERISTICS," ,DRAWINGS AND DATA TO BE FURNISHED BY BIDDERS," "REPRESENTATIONS BY BIDDERS PURSUANT TO THE ,BUY-AMERICAN" ACT," AND "EQUAL OPPORTUNITY CLAUSE" WHICH ARE A PART OF THE BIDDING SCHEDULE. FOR FACTORS TO BE USED IN COMPARISON OF BIDS, SEE PARAGRAPH B-6.

"FIRM BIDS ARE INVITED AND BIDDERS SHOULD INDICATE IN THE FOLLOWING APPROPRIATE BLANK SPACES WHETHER THEIR BID IS FIRM OR WHETHER IT IS BASED ON THE "ADJUSTMENT FOR CHANGES IN COST" PROVISIONS INCLUDED AS PARAGRAPH B -13.

TABLE

BID IS FIRM ........................................ --------------

BID IS BASED ON INCLUSION OF "ADJUSTMENT FOR

CHANGES IN COST" IN THE CONTRACT ................ -------------

"REGARDLESS OF WHICH OF THE ABOVE BLANK SPACES IS CHECKED, ALL BIDS WILL BE COMPARED ON AN EQUAL BASIS. IF THE BIDDER FAILS TO CHECK ONE OF THE ABOVE APPROPRIATE BLANK SPACES, THE BID WILL BE REGARDED AS A FIRM BID. IF AWARD IS MADE ON THE BASIS OF A FIRM BID, THE "ADJUSTMENT FOR CHANGES IN COST" PROVISION INCLUDED AS PARAGRAPH B-13 WILL NOT BE APPLICABLE.'

THE REFERENCED PARAGRAPH B-6 PROVIDES:

"B-6.COMPARISON OF BIDS

WHENEVER APPLICABLE, EQUALIZING ELEMENTS OR FACTORS NOT SPECIFICALLY MENTIONED OR PROVIDED FOR HEREIN, SUCH AS THE COST OF TRANSPORTATION, OR INSTALLATION, OF INSPECTION (INCLUDING SALARIES, TRAVEL, AND SUBSISTENCE EXPENSES), OR OF ANY OTHER ELEMENT OR FACTOR IN ADDITION TO THAT OF PRICE WHICH WOULD AFFECT THE FINAL COST TO THE GOVERNMENT, MAY BE TAKEN INTO CONSIDERATION IN MAKING AWARD OF CONTRACT.

"A. IN ADDITION TO THE FOREGOING, THE FOLLOWING SPECIFIC FACTORS WILL BE USED FOR THE PURPOSE OF COMPARISON OF BIDS:

(1) IN EVALUATING EFFICIENCY WARRANTIES FOR THE MOTOR-GENERATORS, ALL BIDS WILL BE CONSIDERED ON THE BASIS OF THE ACTUAL EFFICIENCIES WARRANTED (AT 100 PERCENT RATED OUTPUT AND RATED POWER FACTOR FOR EACH RATING), EXCEPT THAT BIDS WARRANTING AN EFFICIENCY LESS THAN THE FOLLOWING (AT 100 PERCENT RATED OUTPUT AND RATED POWER FACTOR), WILL NOT BE CONSIDERED (SEE PARAGRAPH B-17):

TABLE

WHEN OPERATING AS A GENERATOR AT 150 RPM ............ 97.4 PERCENT

WHEN OPERATING AS A GENERATOR AT 120 RPM ............ 95.7 PERCENT

WHEN OPERATING AS A MOTOR AT 150 RPM ................ 97.0 PERCENT

WHEN OPERATING AS A MOTOR AT 120 RPM ................ 94.9 PERCENT

FOR EACH 1/100 OF 1 PERCENT THE ACTUAL EFFICIENCY WARRANTED (AT 100 PERCENT RATED OUTPUT AND RATED POWER FACTOR) IS LESS THAN 100 PERCENT, THE FOLLOWING AMOUNTS, PER MOTOR-GENERATOR PER 1/100 OF 1 PERCENT, WILL BE ADDED TO THE PRICE BID FOR EACH OF THE FOUR WARRANTED OPERATING CONDITIONS AT 100 PERCENT RATED LOAD AND RATED POWER FACTOR:

TABLE

WHEN OPERATING AS A GENERATOR AT 150 RPM ...... ONE THOUSAND THREE

HUNDRED DOLLARS ($1,300)

PER UNIT PER 1/100 OF 1

PERCENT;

WHEN OPERATING AS A GENERATOR AT 120 RPM ...... SIX HUNDRED DOLLARS

($600) PER UNIT PER

1/100 OF 1 PERCENT

WHEN OPERATING AS A MOTOR AT 150 RPM .......... ONE THOUSAND NINE

HUNDRED DOLLARS ($1,900)

PER UNIT PER 1/100 OF 1

PERCENT; AND

WHEN OPERATING AS A MOTOR AT 120 RPM .......... EIGHT HUNDRED DOLLARS

($800) PER UNIT PER

1/100 OF 1 PERCENT.

(2) COST OF APPLICABLE SPARE PARTS.

(3) THE ADDITIONAL COST TO THE GOVERNMENT OF FOREIGN INSPECTION SERVICE IN THE AMOUNT OF $50,000 WILL BE ADDED TO THE TOTAL PRICE BID FOR THE SCHEDULE FOR ALL BIDS INDICATING ON FORM 7-1612 ("REPRESENTATIONS BY BIDDERS PURSUANT TO THE "BUY-AMERICAN" ACT"), THAT THE ARTICLES, MATERIALS, AND SUPPLIES ARE NOT DOMESTIC SOURCE END PRODUCTS OR ARE DOMESTIC SOURCE END PRODUCTS CONTAINING COMPONENTS OF FOREIGN ORIGIN: PROVIDED, THAT WHERE THE BIDDER CHECKS THE BOX UNDER PARAGRAPH 1 OF THE FORM, BUT LISTS COMPONENTS OF FOREIGN ORIGIN UNDER PARAGRAPH 3 OF THE FORM, THE ABOVE FIGURE WILL BE REDUCED TO AN AMOUNT OBTAINED BY MULTIPLYING THE FIGURE BY THE PERCENT STATED BY THE BIDDER IN THE NEXT TO LAST SENTENCE OF PARAGRAPH 3 OF THIS FORM.

"B. FOR FOREIGN BIDS ONLY, THE FOLLOWING ADDITIONAL FACTORS WILL BE USED FOR THE PURPOSE OF COMPARISON OF BIDS:

(1) WHEN THE MATERIALS SHALL BE DETERMINED TO BE OF FOREIGN ORIGIN, 6 PERCENTUM OF THE BID PRICE FOR THE MATERIALS DELIVERED AT THE DESTINATION SHALL BE ADDED: PROVIDED, THAT COSTS OF ALL WORK OF INSTALLATION REQUIRED AT THE JOB SITE AFTER DELIVERY, WILL BE DEDUCTED BEFORE APPLYING THE 6 PERCENTUM. SUCH COSTS ARE HEREBY DETERMINED AS 10 PERCENTUM OF THE TOTAL BID PRICE.

(2) AN ADDITIONAL DIFFERENTIAL OF 6 PERCENTUM OF THE BID PRICE FOR THE MATERIALS DELIVERED AT THE DESTINATION, MAKING A TOTAL OF 12 PERCENTUM, WILL BE ADDED WHEN THE LOWEST RESPONSIVE BIDDER OFFERING DOMESTIC MATERIALS WILL PRODUCE SUBSTANTIALLY ALL SUCH MATERIALS IN LABOR SURPLUS AREAS AS DETERMINED BY THE SECRETARY OF LABOR.

C. THE NEED FOR PARTIAL OR PROGRESS PAYMENTS AS PERMITTED BY THE PAYMENT PROVISIONS OF THIS INVITATION WILL NOT BE TREATED AS A HANDICAP IN MAKING THE AWARD.'

ON PAGE "B" OF THE BIDDING SCHEDULE BIDDERS ARE REQUIRED TO STATE A LUMP- SUM PRICE FOR THE EIGHT UNITS INSTALLED AND TESTED, AND PROVISION IS MADE ON PAGE "C" FOR SHOWING THE TOTAL AMOUNT BID FOR THE SCHEDULE, COMPRISED OF THE PRICE OF THE EIGHT UNITS, THE PRICE OF THE APPLICABLE SPARE PARTS, AND THE AMOUNTS OF ALL PAYMENT AND PERFORMANCE BOND PREMIUMS. THE PROVISION CONCERNING THE SPARE PARTS NEEDED FOR THE MOTOR-GENERATORS IS SET FORTH ON PAGES "D" AND "E" OF THE SCHEDULE AND STATES IN PERTINENT PART "THE PRICES OF THE APPLICABLE SPARE PARTS WILL BE ADDED TO THE LUMP- SUM PRICE BID IN THE SCHEDULE FOR THE MOTOR GENERATORS IN COMPARING BIDS FOR AWARD OF CONTRACT.'

THE ADJUSTMENT FOR CHANGES IN COST PROVISION INCLUDED AS PARAGRAPH B 13 PRESCRIBES AN ESCALATION FORMULA, BASED ON MONTHLY PUBLICATIONS BY THE DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS, FOR ADJUSTING UPWARD OR DOWNWARD THE EARNINGS OF THE CONTRACTOR WHOSE BID WAS BASED ON INCLUSION OF SUCH PROVISION. IF OPERATION OF THE PROVISION SHOULD RESULT IN A REDUCTION IN THE TOTAL ORIGINAL CONTRACT PRICE EXCEEDING THE AMOUNT DUE THE CONTRACTOR ON THE FINAL PAYMENT, THE CONTRACTOR AND HIS SURETIES ARE MADE LIABLE THEREUNDER FOR REFUNDING THE AMOUNT OF SUCH EXCESS.

PARAGRAPH B-17 OF THE INVITATION PROVIDES FOR REDUCING THE CONTRACT PRICE OF EACH ACCEPTED MOTOR-GENERATOR FAILING TO MEET THE PERFORMANCE WARRANTY IN THE RESPECTIVE AMOUNT STATED IN SUBPARAGRAPH B-6A (1) FOR EACH 1/100 OF 1 PERCENT THAT THE ACTUAL EFFICIENCY AT ANY ONE OR MORE OF THE FOUR OPERATING CONDITIONS, AS DETERMINED BY TEST, IS LESS THAN THE WARRANTED EFFICIENCY AT 100 PERCENT RATED OUTPUT AND RATED POWER FACTOR FOR SUCH SPECIFIED OPERATING CONDITION.

SIX BIDDERS RESPONDED TO THE INVITATION. THREE FIRMS, INCLUDING ELECTRIC POWER CONSTRUCTION COMPANY, SUBMITTED FIRM BIDS WHILE GENERAL ELECTRIC COMPANY AND TWO OTHERS SUBMITTED BIDS BASED ON INCLUSION OF THE ESCALATION PROVISION. THE BIDS OF ELECTRIC POWER CONSTRUCTION COMPANY AND GENERAL ELECTRIC COMPANY, WITH WHICH WE ARE HERE CONCERNED, WERE EVALUATED AND COMPARED BY THE ADMINISTRATIVE OFFICE AS FOLLOWS:

TABLE

ELECTRIC POWER GENERAL ELECTRIC BID PRICE (INCLUDING SPARE PARTS)

F.O.B. DESTINATION $ 5,081,000.00 $ 8,961,349.00

EFFICIENCY: EACH UNIT AS GENERATOR--- 150 RPM, 97.4

PERCENT OR ABOVE 97.5 PERCENT 98.40 PERCENT AS GENERATOR--- 120 RPM, 95.7

PERCENT OR ABOVE 97.35 PERCENT 98.18 PERCENT AS MOTOR--- 150 RPM, 97.0 PERCENT

OR ABOVE 97.1 PERCENT 98.24 PERCENT AS MOTOR--- 120 RPM, 94.9 PERCENT

OR ABOVE 96.8 PERCENT 98.01 PERCENT TOTAL EVALUATION FOR EFFICIENCY ($10,328,000.00) ($6,486,400.00) DIFFERENCE IN EFFICIENCY EVALUATIONS

FOR COMPARISON 3,841,600.00 0.00 COST OF FOREIGN INSPECTION SERVICES 50,000.00 6 PERCENT DIFFERENTIAL ON FOREIGN

PRODUCTS 274,374.00 AMOUNT FOR COMPARISON 9,246,974.00 8,961,349.00

PURSUANT TO SUCH COMPARISON IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE LOW RESPONSIVE BID WAS SUBMITTED BY GENERAL ELECTRIC COMPANY AND THE CONTRACT WAS AWARDED TO THAT COMPANY ON MARCH 19, 1964.

ESSENTIALLY, IT IS YOUR CONTENTION THAT THE INVITATION IS AMBIGUOUS AND THAT FIRM BIDS AND THOSE BASED ON THE ADJUSTMENT PROVISIONS WERE NOT "COMPARED ON AN EQUAL BASIS" AS PROMISED IN THE INTRODUCTORY PORTION OF THE BIDDING SCHEDULE. YOU ASSERT THAT "AN ESCALATION FORECAST," APPARENTLY SUCH AS THAT PROPOSED BY YOUR CLIENT BASED ON PAST COST INCREASES FOR SUCH MATERIAL AND LABOR, SHOULD BE APPLIED TO AND INCLUDED IN GENERAL ELECTRIC COMPANY'S BID AS CONTEMPLATED BY THE FEDERAL PROCUREMENT REGULATIONS WHEN THE TWO DIFFERENT TYPES OF BIDS ARE SUBMITTED. YOU ALSO CONTEND THAT GENERAL ELECTRIC COMPANY'S BID SHOULD HAVE BEEN REJECTED AS NONRESPONSIVE BECAUSE ITS BID WARRANTED OBVIOUSLY UNREALISTIC EFFICIENCY RATINGS FOR ITS MOTOR-GENERATORS, WHICH RATINGS ARE IMPOSSIBLE TO ACHIEVE UNDER THE CLASSIC LOSS CURVE TO WHICH ALL MOTOR- GENERATORS WILL CONFORM. THIS, YOU CONTEND, ARTIFICIALLY LOWERED ITS BID BY REDUCING THE AMOUNTS ADDED FOR EFFICIENCY LOSS.

FOR THE FOREGOING REASONS YOU STATE THAT THE AWARD SHOULD BE VOIDED AND THE PROCUREMENT READVERTISED IN A MANNER WHICH CLEARLY INDICATES THE FACTORS WHICH WILL BE CONSIDERED IN EVALUATION SO AS TO ALLOW COMPETITION ON AN EQUAL BASIS.

IT IS PROVIDED IN 41 U.S.C. 253 (B), AS INCORPORATED IN PARAGRAPH 8 (B)OF THE TERMS AND CONDITIONS OF THE INVITATION, THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. IT HAS BEEN CONSISTENTLY HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND BY THE COURTS THAT SUCH AUTHORITY VESTED IN THE ADMINISTRATIVE AGENCIES IS EXTREMELY BROAD. WE THEREFORE DO NOT QUESTION AN ADMINISTRATIVE DETERMINATION TO REJECT, OR NOT TO REJECT, ALL BIDS IN A GIVEN CASE UNLESS REQUIRED TO DO SO BY COGENT OR COMPELLING REASONS. THE DRAFTING OF SPECIFICATIONS FOR THE CONTRACTUAL NEEDS OF DEPARTMENTS AND AGENCIES OF THE GOVERNMENT AND THE PRESCRIPTION OF THE TERMS AND CONDITIONS UNDER WHICH BIDS WILL BE SOLICITED AND CONTRACTS AWARDED ARE MATTERS FALLING SQUARELY WITHIN THE FUNCTIONS OF THE DEPARTMENTS AND AGENCIES CONCERNED, AND WHEN AN INVITATION LENDS ITSELF TO FULL AND OPEN COMPETITION FOR THE GOVERNMENT'S REQUIREMENTS AND IT IS SHOWN BY ALL THE FACTS AND CIRCUMSTANCES THAT BIDDERS HAVE RECEIVED FAIR AND IMPARTIAL TREATMENT IN ACCORDANCE WITH ITS SPECIFIC TERMS, THERE IS NO BASIS ON WHICH OUR OFFICE MAY OBJECT TO AN AWARD THEREON. IN THIS CONNECTION, GENERALLY, IT IS STATED IN SECTION 1-2.404-1 (A) OF THE FEDERAL PROCUREMENT REGULATIONS THAT ,PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT, AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION * * *.' SECTION 1-2.104-3, FEDERAL PROCUREMENT REGULATIONS, PROVIDES THAT WHERE THE CONTRACTING OFFICER, ON THE BASIS OF HIS KNOWLEDGE OF THE MARKET OR PREVIOUS ADVERTISEMENTS FOR LIKE ITEMS, EXPECTS THAT A REQUIREMENT FOR FIRM FIXED-PRICE BIDS WILL UNNECESSARILY RESTRICT COMPETITION OR UNREASONABLY INCREASE BID PRICES, INVITATIONS FOR BIDS MAY INCLUDE AN ESCALATION CLAUSE. CONTRARY TO THE INTERPRETATION WHICH YOU PLACE ON THAT AND OTHER SELECTED PROVISIONS OF THE REGULATIONS, WE FIND NOTHING THEREIN WHICH WE FEEL MAY REASONABLY BE CONSTRUED AS EITHER CONTEMPLATING THE APPLICATION OF AN "ESCALATION FORECAST," OR SUGGESTING A BASIS FOR COMPUTING SUCH A FORECAST FOR EVALUATION PURPOSES, TO BIDS MADE ON THE BASIS OF AN ESCALATION PROVISION IN AN INVITATION WHICH PERMITS BIDS ON EITHER AN ESCALATED OR A FIXED-PRICE BASIS. NOR CAN WE AGREE THAT THE INVITATION IN THIS INSTANCE WAS AMBIGUOUS OR THAT THE BIDS WERE NOT EVALUATED AND COMPARED IN ACCORDANCE WITH ITS EXPRESS TERMS.

THE BIDDING INSTRUCTIONS PRECEDING THE SCHEDULE ITEMIZATION REQUIRED THE QUOTING OF A DEFINITE PRICE FOR THE MOTOR-GENERATORS AND SPARE PARTS, TO BE DESIGNATED BY THE BIDDER EITHER AS A FIRM PRICE OR AS SUBJECT TO THE ADJUSTMENT PROVISIONS, AND STATED IN UNAMBIGUOUS LANGUAGE THAT "ALL BIDS WILL BE COMPARED ON AN EQUAL BASIS," IRRESPECTIVE OF WHETHER THE BID WAS FIRM OR WHETHER IT WAS BASED ON THE ESCALATION PROVISION. ATTENTION WAS ALSO DIRECTED TO PARAGRAPH B 6 FOR A STATEMENT OF OTHER FACTORS TO BE CONSIDERED IN EVALUATION, AND THE PRICE BID FOR THE SCHEDULE IS CONSISTENTLY SHOWN IN PARAGRAPH B-6 AS THE FACTOR TO WHICH OTHER FACTORS SPECIFIED IN THAT PARAGRAPH WOULD BE ADDED FOR EVALUATION AND COMPARISON PURPOSES.

AS RELATED IN YOUR LETTER OF APRIL 3, WE HAVE STATED (36 COMP. GEN. 380, 385) THAT THE BASIS OF EVALUATION WHICH MUST BE KNOWN IN ADVANCE TO THE BIDDERS SHOULD BE AS CLEAR, PRECISE AND EXACT AS POSSIBLE, AND IDEALLY, IT SHOULD BE CAPABLE OF BEING STATED AS A MATHEMATICAL EQUATION. SUBSTANCE, THAT IS THE SITUATION HERE INVOLVED. THE FACTORS TO BE USED IN THE EVALUATION, SUCH AS PRICES BID FOR THE MOTOR GENERATORS AND SPARE PARTS PLUS THE PERCENTAGE THEREOF TO BE ADDED FOR FOREIGN PRODUCTS, AND THE AMOUNT TO BE ADDED FOR FOREIGN INSPECTION SERVICES, WERE EXPLICITLY SET FORTH IN THE APPROPRIATE PROVISION OF THE INVITATION, TOGETHER WITH A PRECISE METHOD FOR EVALUATING THE EFFICIENCY WARRANTIES FOR THE MOTOR- GENERATORS, THUS PERMITTING A REASONABLE MATHEMATICAL COMPUTATION OF EACH BID FOR EVALUATION PURPOSES.

DESPITE THE FACT THAT THE INVITATION CONTAINED NO PROVISION FOR CONSIDERATION OF ESCALATION FACTORS IN COMPARISON OF BIDS, YOU STATE THAT YOUR CLIENT INTERPRETED THE MEANING OF THE TERM ,EQUAL BASIS" AS USED IN THE INTRODUCTION TO THE BIDDING SCHEDULE AS REQUIRING SOME FORM OF COMPUTATION OF ESCALATION FACTORS FOR THOSE BIDS WHICH WERE BASED ON THE COST ADJUSTMENT PROVISION. THE ADMINISTRATIVE OFFICE REPORTS IN THAT CONNECTION THAT THIS IS THE FIRST TIME ANY MISINTERPRETATION HAS BEEN INDICATED BY A BIDDER CONCERNING THE MEANING OF THE TERM WHICH HAS BEEN USED IN SIMILAR INVITATIONS FOR NEARLY TEN YEARS. WE HAVE ALSO BEEN ADVISED THAT INVITATIONS PROVIDING FOR EQUAL EVALUATION OF THE BASE ESCALATED PRICE AGAINST FIRM FIXED PRICE IN SUBMITTED BIDS HAVE BEEN IN USE BY SOME AGENCIES FOR EVEN LONGER PERIODS. THE QUESTION OF WHETHER BOTH FIRM BIDS AND BIDS BASED ON AN ESCALATION CLAUSE SHOULD BE INCLUDED IN A PARTICULAR INVITATION FOR BIDS IS PRIMARILY A MATTER FOR ADMINISTRATIVE DETERMINATION, AND IN THIS CASE IT APPEARS THAT IN ORDER TO OBTAIN THE BROADEST POSSIBLE FIELD OF COMPETITION BIDDERS WERE GIVEN THE OPTION OF BIDDING ON EITHER BASIS. THE INVITATION ADVISED THE BIDDERS THAT THE BIDS RECEIVED, WHETHER FIRM OR SUBJECT TO ESCALATION, WOULD BE COMPARED ON THE BASIS OF THE BID PRICES SHOWN ON THE SCHEDULE IN ADDITION TO THE OTHER FACTORS SPECIFIED IN PARAGRAPH B-6, AND THE BIDS RECEIVED WERE EVALUATED AND AWARD WAS MADE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE INVITATION.

ACCORDINGLY, IN VIEW OF THE LONG-STANDING PRACTICE OF THE DEPARTMENT OF THE INTERIOR AND OTHER AGENCIES IN USING, ON SUCH INVITATIONS, THE EVALUATION METHOD HERE EMPLOYED; THE ABSENCE OF ANY SPECIFIC REGULATORY PROHIBITION AGAINST EVALUATION UNDER THE METHOD USED; AND AS WE HAVE IN PRIOR DECISIONS APPROVED SUCH METHOD OF EVALUATION, WE DO NOT FEEL THAT USE OF THE SAME FACTORS IN EVALUATING BOTH THE ESCALATED AND THE FIXED- PRICE BIDS AS PRESCRIBED IN THE INVITATION PRESENTS AN ADEQUATE REASON UNDER THE CIRCUMSTANCES FOR OUR INTERVENTION IN THE MATTER.

CONCERNING YOUR CONTENTION THAT THE EFFICIENCIES WARRANTED BY GENERAL ELECTRIC COMPANY FOR ITS MOTOR-GENERATORS ARE IMPOSSIBLE OF ACHIEVEMENT AND THEREFORE PRECLUDE A COMPARISON OF THE BIDS ON AN EQUAL BASIS, THE DEPARTMENT OF INTERIOR REPORTS AS FOLLOWS:

"THESE 2-SPEED, MULTIPLE-RATED, MOTOR-GENERATORS ARE THE FIRST EVER PURCHASED BY THE BUREAU OF RECLAMATION, AND SO FAR AS CAN BE DETERMINED, ARE THE FIRST OF THIS TYPE TO BE MANUFACTURED HAVING SUCH HIGH HORSEPOWER AND KVA RATINGS. IT IS, THEREFORE, NOT POSSIBLE TO DEFINITELY STATE WHAT EFFICIENCIES CAN BE REACHED BY MANUFACTURERS. THE TYPE OF MOTOR- GENERATORS OFFERED BY THE GENERAL ELECTRIC COMPANY IS INHERENTLY CONSIDERABLY MORE EFFICIENT THAN THE TYPE OFFERED BY ELECTRIC POWER CONSTRUCTION COMPANY. THE GENERAL ELECTRIC DESIGN IS BASED UPON TWO COMPLETE ROTORS AND TWO COMPLETE STATORS (ONE SET FOR EACH SPEED FOR ONE MOTOR-GENERATOR). WHILE CONSIDERABLY MORE EXPENSIVE TO BUILD, THE GENERAL ELECTRIC EQUIPMENT IS BASED UPON CONVENTIONAL TESTED DESIGNS. THE ELECTRIC POWER CONSTRUCTION COMPANY PROPOSAL OFFERED A SINGLE ROTOR AND A SINGLE STATOR FOR EACH MOTOR GENERATOR WITH PROVISION FOR RECONNECTING WINDINGS TO MEET THE REQUIRED CHANGE IN SPEED. ITS DESIGN COMPROMISES EFFICIENCY TO ACCOMMODATE BOTH SPEEDS, WITH THE RESULT THAT NEITHER SPEED CAN ATTAIN A VERY HIGH EFFICIENCY.

"THE CONTRACTING OFFICER HAS STATED THAT INFORMATION SUBMITTED BY GENERAL ELECTRIC COMPANY WITH ITS BID INDICATES THAT THE EQUIPMENT OFFERED MEETS ALL REQUIREMENTS OF THE BID INVITATION AND THE WARRANTED EFFICIENCIES DO NOT APPEAR TO BE IMPOSSIBLE OF ACHIEVEMENT ALTHOUGH THEY ARE HIGH.'

OBVIOUSLY, THE ADMINISTRATIVE OFFICE DOES NOT AGREE WITH YOUR CONTENTIONS AS TO THE PERFORMANCE POSSIBILITIES OF THE GENERAL ELECTRIC COMPANY PRODUCT. WHETHER A BID IS RESPONSIVE TO THE TECHNICAL SPECIFICATIONS OF AN INVITATION IS NOT A MATTER ORDINARILY FOR OUR DETERMINATION. THIS OFFICE HAS NEITHER AN ENGINEERING STAFF NOR TESTING FACILITIES TO EVALUATE THE TECHNICAL ASPECTS OF SPECIFICATIONS OR BIDS, AND IN DISPUTES OF FACT BETWEEN A BIDDER AND A GOVERNMENT AGENCY CONCERNING SUCH MATTERS, WE MUST ACCEPT THE ADMINISTRATIVE REPORT IN THE ABSENCE OF CLEAR EVIDENCE TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF. THAT IS PARTICULARLY TRUE HERE, WHERE THE CONTRACT WAS AWARDED TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER AS REQUIRED BY 41 U.S.C. 253 (B). FURTHER, IT IS NOTED THAT YOU DO NOT CONTEND THAT THE GENERAL ELECTRIC COMPANY MOTOR-GENERATORS WILL NOT MEET THE MINIMUM EFFICIENCIES SHOWN IN THE INVITATION, NOR THAT THE INTERESTS OF THE GOVERNMENT ARE NOT PROTECTED AGAINST POSSIBLE FAILURES TO ATTAIN THE PERFORMANCES WARRANTED IN THE COMPANY'S BID BY CORRESPONDING REDUCTIONS IN THE CONTRACT PRICE THROUGH OPERATION OF PARAGRAPH B-17 OF THE INVITATION. SUCH PARAGRAPH CLEARLY CONTEMPLATES SITUATIONS WHERE THE CONTRACTOR'S EQUIPMENT IS UNABLE TO MEET THE PERFORMANCE WARRANTY AND PROVIDES FOR PRICE ADJUSTMENT IN THAT EVENT.

FOR THE FOREGOING REASONS AND SINCE THE BIDS WERE EVALUATED IN ACCORDANCE WITH THE TERMS WHICH WE FEEL ARE CLEARLY STATED IN THE INVITATION, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE AWARD OF THE CONTRACT TO GENERAL ELECTRIC COMPANY.