B-153901, JUNE. 16, 1964

B-153901, JUNE. 16, 1964

TO J. J. HACKETT AND COMPANY:

REFERENCE IS MADE TO YOUR LETTERS DATED APRIL 3 AND APRIL 17, 1964, ENCLOSING COPIES OF LETTERS ADDRESSED TO THE PUBLIC PRINTER PROTESTING THE ISSUANCE OF THE INVITATION FOR BIDS ON TABULATING CARDS G.P.O. NOS. 725- 493, 725-584, 725-627, 726-418, AND 726-419 BY THE GOVERNMENT PRINTING OFFICE. PROTEST IS ALSO MADE TO THE ISSUANCE OF THE INVITATION FOR BIDS ON TABULATING CARDS FOR THE AIR FORCE SYSTEMS COMMAND, G.P.O. JACKETS NOS. 725-802, 725-805, 725-806, AND 725-807 BY THE GOVERNMENT PRINTING OFFICE.

IN YOUR LETTERS TO THE PUBLIC PRINTER YOU POINT OUT THAT THERE IS AN EXISTING TERM CONTRACT FOR SQUARE CORNERED TABULATING CARDS AND SET FORTH MANY REASONS WHY, IN YOUR OPINION, THE PROCUREMENT OF ROUND CORNERED TABULATING CARDS IS IMPROPER. YOU STATE THAT ROUND CORNERS ARE NO MORE THAN A ,SALES GIMICK" CALCULATED TO ELIMINATE COMPETITION; THAT ROUND CORNER TABULATING CARDS INCREASE COSTS WITHOUT AN INCREASE IN EFFICIENCY; THAT THE EXISTING TERM CONTRACT REQUIRES DELIVERY AT DESTINATION TO BE INCLUDED IN THE QUOTED PRICES, BUT THAT THESE INTERIM PROCUREMENTS ARE F.O.B. ORIGIN; AND THAT THESE PROCUREMENTS VIOLATE THE "MANDATORY USE" AND "LOWEST PRICE" PROVISION OF THE TERM CONTRACT.

THE PUBLIC PRINTER REPORTS THAT SHORTLY BEFORE JANUARY 1, 1964, THE GOVERNMENT PRINTING OFFICE BECAME AWARE THAT TABULATING CARDS WITH ROUND CORNERS COULD BE PURCHASED. IT WAS DECIDED TO OBTAIN SOME ROUND CORNERED CARDS FOR EXPERIMENTATION. THE ELECTRONIC DATA PROCESSING SECTION USED THE CARDS ON SIX DIFFERENT TYPE MACHINES, AND THEY WERE PURPOSELY HANDLED WITH LESS CARE THAN USUAL TO DETERMINE WHETHER THEY COULD STAND ROUGH TREATMENT. IT WAS FOUND THAT THIS TYPE OF CARD WOULD ABSORB MORE ROUGH TREATMENT THAN THE STANDARD TYPE OF TABULATING CARD, AND IN TESTING IT WAS ALSO FOUND THAT THE ROUND CORNERS WOULD NOT BEND. THE TESTS WERE COMPLETED ABOUT JANUARY 21, 1964, AND THE ELECTRONIC DATA PROCESSING SECTION RECOMMENDED THAT ROUND CORNERED CARDS BE USED IN THAT SECTION ON ALL THEIR EQUIPMENT.

AS A RESULT OF THE TESTS IT WAS DECIDED THAT ADDITIONAL ROUND CORNERED CARDS WOULD BE PURCHASED FOR USE IN GOVERNMENT PRINTING OFFICE OPERATIONS. SINCE ROUND CORNERS WERE NOT COVERED BY THE TERM CONTRACT FOR TABULATING CARDS, SPECIFICATIONS WERE PREPARED FOR FIVE JACKETS AND MAILED TO A NUMBER OF SUPPLIERS IN ORDER TO OBTAIN COMPETITIVE BIDS. THE BIDS WERE OPENED ON APRIL 10, 1964, AND THE ONLY BID RECEIVED WAS FROM THE IBM CORPORATION. SEVERAL OTHER SUPPLIERS RETURNED THE BID FORMS WITH THE STATEMENT "NO BID.' AWARD WAS MADE TO IBM AND AN ORDER WAS FORWARDED TO THAT COMPANY. IT IS FURTHER REPORTED THAT AN ADDITIONAL 500,008 ROUND CORNERED TABULATING CARDS WERE NEEDED BY THE ELECTRONIC DATA PROCESSING SECTION, AND REQUISITIONS HAD ALSO BEEN RECEIVED FROM THE AIR FORCE SYSTEMS FOR FOUR DIFFERENT ITEMS OF TABULATING CARDS WITH ROUND CORNERS. SPECIFICATIONS WERE PREPARED FOR THE GOVERNMENT PRINTING OFFICE REQUIREMENT AND FOR THE FOUR AIR FORCE SYSTEMS COMMAND REQUIREMENTS AND INVITATIONS TO BID WERE ISSUED ON APRIL 2, 1964, WITH BID OPENING ON APRIL 14, 1964. THREE BIDS WERE RECEIVED IN RESPONSE TO THESE INVITATIONS AND IBM CORPORATION SUBMITTED THE LOWEST BID. AWARD WAS MADE TO IBM CORPORATION. THE STATED REASON FOR NOT MAKING THIS PURCHASE UNDER THE TERM CONTRACT FOR TABULATING CARDS WAS THE FACT THAT ROUND CORNERED CARDS WERE REQUIRED WHICH ARE NOT COVERED BY THE TERM CONTRACT. IN THIS CONNECTION IT IS OBSERVED THAT THE TERM CONTRACT FOR TABULATING CARDS PROVIDES THAT "NEGOTIATION FOR ITEMS OR FEATURES NOT PROVIDED HEREIN IS PROHIBITED.'

THE REPORT CONTINUES THAT INQUIRIES WERE RECEIVED FROM OTHER FEDERAL AGENCIES WHICH USE THE TABULATING CARD CONTRACT AS TO WHETHER OR NOT THEY COULD PURCHASE THE ROUND CORNERED CARDS UNDER THE TERM CONTRACT. AS A CONSEQUENCE OF THESE INQUIRIES, AND SINCE PURCHASE BY NEGOTIATION WAS PROHIBITED UNDER THE CONTRACT, IT WAS DECIDED TO ISSUE A SUPPLEMENT (NO. 2, DATED APRIL 6, 1964) PROVIDING THAT "ORDERING AGENCIES, AFTER ABSTRACTING AND DETERMINING THE LOW CONTRACTOR WHO WILL ACCEPT A PARTICULAR ORDER, MAY REQUEST THAT LOW CONTRACTOR TO FURNISH THE TABULATING CARDS, ROUND CORNERED, AT NO ADDITIONAL COST. IF THE CONTRACTOR REFUSES, THE ORDERING AGENCY MUST ACCEPT THE CARDS WITH SQUARE CORNERS FROM THAT CONTRACTOR OR OBTAIN THE ROUND CORNER CARDS BY OTHER MEANS THAN THIS CONTRACT.' THIS SUPPLEMENT WAS FORWARDED TO ALL CONTRACTORS ON THE TERM CONTRACT FOR TABULATING CARDS, BUT NOT TO THE SEVERAL AGENCIES. WE ARE ADVISED THAT UPON REFLECTION IT WAS DETERMINED THAT IT WAS NOT IN THE BEST INTERESTS OF THE GOVERNMENT TO AMEND THE CONTRACT IN THIS MANNER SINCE ROUND CORNERS ARE NOT COVERED BY THE SPECIFICATIONS, AND THAT ALL CONTRACTORS ARE BEING NOTIFIED OF THE CANCELLATION OF THE AMENDMENT (NO. 2). THE CONTRACTORS WILL ALSO BE NOTIFIED THAT THE NEXT TERM CONTRACT WILL HAVE PROVISION FOR AN ITEM OF ROUND CORNERED CARDS.

THE REPORT CONCLUDES THAT:

"THIS OFFICE CONSIDERS ROUND CORNERING OF CARDS TO BE A TECHNOLOGICAL ADVANCE IN THE STATE OF THE ART OF MANUFACTURING CARDS THAT OFFERS DEFINITE ADVANTAGES TO THE USERS IN CERTAIN APPLICATIONS. THIS CONTENTION IS BASED ON VARIOUS TESTS CONDUCTED BY THIS OFFICE AND OTHER AGENCIES WHICH HAVE SHOWN CONCLUSIVELY THAT ESPECIALLY WHEN CARDS ARE PROCESSED MORE THAN ONCE THROUGH HIGH SPEED EQUIPMENT, THE INCIDENTS OF MISFEEDING DUE TO "DOG-EARED" CARDS, IS CONSIDERABLY LESS WITH ROUND CORNERED CARDS THAN WITH SQUARE CORNERED CARDS. OTHER TESTS HAVE SHOWN ALSO THAT THE INSERTION OF CARDS INTO ENVELOPES (SUCH AS THE CASE WITH ADDRESS CARDS ON AUTOMATIC EQUIPMENT) IS FACILITATED CONSIDERABLY WHEN ROUND CORNER CARDS ARE UTILIZED. WE HAVE NO DOUBT THAT THE COST OF ROUND CORNERING WILL RESULT IN A SLIGHT INCREASE IN THE COST OF CARDS, HOWEVER, THE COST OF THE CARDS IS INSIGNIFICANT WHEN COMPARED TO THE TOTAL OVERALL COST OF ELECTRONIC DATA PROCESSING PROGRAMS AND THE TIME SAVED BY THE ELIMINATION OF ERRORS MORE THAN COMPENSATES FOR ANY INCREASE COST FOR CARDS THAT SERVE TO REDUCE SUCH ERRORS.'

THE PREPARATION OF SPECIFICATIONS FOR THE PROCUREMENT OF SUPPLIES OR SERVICES IS PRIMARILY THE RESPONSIBILITY OF THE PROCURING ADMINISTRATIVE AGENCY. IN THIS CONNECTION, THERE IS NECESSARILY CONSIDERABLE SCOPE FOR THE EXERCISE OF SOUND ADMINISTRATIVE DISCRETION AND, IN THE ABSENCE OF A CLEAR INDICATION OF ABUSE OF THAT DISCRETION, WE DO NOT UNDERTAKE TO INTERFERE WITH THE ADMINISTRATIVE ACTION TAKEN. THERE IS NOTHING IN THE RECORD TO INDICATE ANY ABUSE OF DISCRETION ON THE PART OF THE PROCURING AGENCY IN THE PRESENT MATTER OR THAT IT WAS MOTIVATED BY ANY DESIRE OTHER THAN TO OBTAIN FOR THE GOVERNMENT TABULATING CARDS WHICH WILL BEST SUIT ITS NEEDS, ALL FACTS CONSIDERED. WHETHER THE SELECTION OF ONE TYPE OF TABULATING CARD OVER ANOTHER OR SELECTION OF BOTH TYPES WILL BEST SERVE THE GOVERNMENT'S INTEREST IS NOT A MATTER FOR OUR DETERMINATION, BUT WITH RESPECT TO THE LEGALITY OF SUCH ACTION IN THIS CASE THERE CAN BE NO DOUBT.

CAREFUL CONSIDERATION HAS BEEN GIVEN TO YOUR PROTEST AND WE FIND NO LEGAL OR OTHER BASIS FOR QUESTIONING THE ADMINISTRATIVE ACTION IN THIS CASE.