B-155625, FEB. 1, 1965, 44 COMP. GEN. 437

B-155625: Feb 1, 1965

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

A STATEMENT IN A BID THAT PRICES INCLUDED 1 1/2 PERCENT OF THE ACQUISITION COST OF THE PROPERTY FOR FACILITY RENTAL DOES NOT QUALIFY THAT BID BY LIMITING THE RENTAL RATE TO 1 1/2 PERCENT IRRESPECTIVE OF THE MODERNIZATION OR THE INCREASE IN THE QUANTITY OF THE EQUIPMENT AND THE BID IS A RESPONSIVE BID. AS THE COMPETITIVE SITUATION OF ALL BIDDERS IS AUTOMATICALLY EQUALIZED WHEN EACH BIDDER ANTICIPATES AN OBLIGATION EITHER TO INCUR RENTAL CHARGES FOR GOVERNMENT OR PRIVATELY FURNISHED FACILITIES. BIDDERS SHOULD ASSUME THAT GOVERNMENT TOOLING IS NOT AVAILABLE AT THIS TIME. AN EQUITABLE ADJUSTMENT WILL BE MADE IN THE CONTRACT PRICE. IN SUCH EVENT THE BIDDER MAY USE SUCH GOVERNMENT PROPERTY AT THE RENTAL RATES STIPULATED IN SUCH FACILITIES CONTRACT OR OTHER AGREEMENT PROVIDED SUCH USE IS THEREBY AUTHORIZED.

B-155625, FEB. 1, 1965, 44 COMP. GEN. 437

BIDS - EVALUATION - GOVERNMENT EQUIPMENT, ETC. - RENTAL EVALUATION DETERMINATION - SEPARATE FACILITIES CONTRACT UNDER AN INVITATION FOR BIDS PROVIDING FOR THE INCLUSION OF RENT WHEN A BIDDER PLANS TO USE GOVERNMENT PROPERTY SUBJECT TO A SEPARATE FACILITIES CONTRACT AND WARNING THAT A NO CHARGE BASIS BID WOULD BE CONSIDERED NONRESPONSIVE, A STATEMENT IN A BID THAT PRICES INCLUDED 1 1/2 PERCENT OF THE ACQUISITION COST OF THE PROPERTY FOR FACILITY RENTAL DOES NOT QUALIFY THAT BID BY LIMITING THE RENTAL RATE TO 1 1/2 PERCENT IRRESPECTIVE OF THE MODERNIZATION OR THE INCREASE IN THE QUANTITY OF THE EQUIPMENT AND THE BID IS A RESPONSIVE BID, THE STATEMENT BEING ADVISORY THAT THE BIDDER EXPECTED TO INCUR A RENTAL COST, THE ANTICIPATED COST HAS NO BEARING ON THE EVALUATION OF BIDS FOR AWARD OF A COMPETITIVELY ADVERTISED FIXED-PRICE CONTRACT UNDER AN INVITATION PROVIDING THAT THE RENT-FREE USE OF FACILITIES WOULD RENDER A BID NONRESPONSIVE, AS THE COMPETITIVE SITUATION OF ALL BIDDERS IS AUTOMATICALLY EQUALIZED WHEN EACH BIDDER ANTICIPATES AN OBLIGATION EITHER TO INCUR RENTAL CHARGES FOR GOVERNMENT OR PRIVATELY FURNISHED FACILITIES, OR TO USE AND AMORTIZE ITS OWN EQUIPMENT.

TO THE GENERAL ELECTRIC COMPANY, FEBRUARY 1, 1965:

IN YOUR LETTER OF NOVEMBER 2, 1964, YOU PROTEST A PROPOSED AWARD OF A CONTRACT BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C., TO BENDIX CORPORATION PURSUANT TO THAT COMPANY'S LOW BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS (IFB) 600-145-65, FOR THE PURCHASE OF 30 KVA GENERATOR SYSTEMS.

PAGE EIGHT OF THE SUBJECT IFB CONTAINED THE FOLLOWING CLAUSE:

GOVERNMENT PROPERTY (SPECIAL TOOLING AND OTHER PROPERTY)

(A) IN PREPARING BIDS UNDER THIS INVITATION FOR BIDS, BIDDERS SHOULD ASSUME THAT GOVERNMENT TOOLING IS NOT AVAILABLE AT THIS TIME. HOWEVER, SHOULD IT BE MADE AVAILABLE AT A LATER DATE AND BE FURNISHED TO THE CONTRACTOR, AN EQUITABLE ADJUSTMENT WILL BE MADE IN THE CONTRACT PRICE.

(B) OTHER GOVERNMENT PROPERTY. IF THE BIDDER PLANS TO USE, IN PERFORMING THE WORK BID UPON, ANY ITEMS OF GOVERNMENT PROPERTY OTHER THAN GOVERNMENT- OWNED SPECIAL TOOLING AS SPECIFIED IN PARAGRAPH (A) ABOVE IN THE BIDDER'S POSSESSION UNDER A FACILITIES CONTRACT OR OTHER AGREEMENT WITH THE GOVERNMENT INDEPENDENT OF THIS INVITATION FOR BID, THE BIDDER SHALL SO INDICATE BY CHECKING THE FOLLOWING BOX. IN SUCH EVENT THE BIDDER MAY USE SUCH GOVERNMENT PROPERTY AT THE RENTAL RATES STIPULATED IN SUCH FACILITIES CONTRACT OR OTHER AGREEMENT PROVIDED SUCH USE IS THEREBY AUTHORIZED; AND THE BIDDER AGREES, UPON REQUEST OF THE CONTRACTING OFFICER, TO SUBMIT EVIDENCE THAT A FACILITIES CONTRACT OR OTHER SEPARATE AGREEMENT WITH THE GOVERNMENT AUTHORIZES THE BIDDER TO USE EACH ITEM OF SUCH GOVERNMENT PROPERTY FOR PERFORMING THE WORK BID UPON. HOWEVER, BIDS SUBMITTED CONTINGENT UPON USE OF SUCH GOVERNMENT PROPERTY ON A NO CHARGE BASIS WILL BE CONSIDERED NONRESPONSIVE.

YOUR COMPANY AND BENDIX CHECKED THE BOX WHICH APPEARS IN PARAGRAPH (B) ABOVE. IN ADDITION BENDIX ALSO PLACED ASTERISKS BESIDE ITS BID PRICES, AND AT THE BOTTOM OF EACH PAGE ON WHICH THE PRICES APPEARED, ANOTHER ASTERISK WITH AN EXPLANATORY STATEMENT THAT THE QUOTED PRICES INCLUDE 1 1/2 PERCENT OR 1.5 PERCENT FOR FACILITY RENTAL.

THE ADMINISTRATIVE REPORT ON THIS MATTER ENCLOSED FACILITIES CONTRACT NOW -6330U BETWEEN BENDIX AND THE BUREAU OF NAVAL WEAPONS, WHICH AUTHORIZES BENDIX TO USE THE FACILITIES WHICH ARE THE SUBJECT OF THAT CONTRACT IN THE PERFORMANCE OF OTHER CONTRACTS WITH THE GOVERNMENT, PROVIDED THAT THE CONTRACTOR PAY A MONTHLY RENTAL IN AN AMOUNT DETERMINED ACCORDING TO A FORMULA SET FORTH IN THE FACILITIES CONTRACT. PURSUANT TO THIS FACILITIES CONTRACT, BENDIX AGREED TO SUBMIT WITH ITS BID FOR THE SUBJECT AND SIMILAR CONTRACTS A STATEMENT WHICH, ALONG WITH OTHER INFORMATION, CONTAINED THE ADVICE THAT THE ESTIMATED RENTAL CHARGE UNDER THE FACILITIES CONTRACT WAS INCLUDED IN ITS BID PRICE. THE REPORT STATES THAT THE PROPERTY TERMINATION DIRECTOR, OFFICE OF THE INSPECTOR OF NAVAL MATERIAL, NEWARK, NEW JERSEY. WHO IS RESPONSIBLE FOR THE ADMINISTRATION OF FACILITIES CONTRACT NOW-6330U, HAS CONFIRMED THAT THE RENTAL RATE REQUIRED BY THE FORMULA IS TO BE COMPUTED BY USING 1 1/2 PERCENT OF THE ACQUISITION COST OF THE FACILITIES AS A FACTOR.

YOU CONTEND THAT THE STATEMENT "INCLUDES 1 1/2 PERCENT FOR FACILITY RENTAL" RENDERED BENDIX'S BID NONRESPONSIVE BECAUSE IT QUALIFIED THE BID BY STATING, IN EFFECT, THAT BENDIX WOULD PAY NO MORE THAN A 1 1/2 PERCENT RENTAL EVEN IF A SUBSEQUENT MODERNIZATION OF OR INCREASE IN THE QUANTITY OF FACILITIES CAUSED THE RENTAL RATE UNDER THE FACILITIES CONTRACT TO INCREASE. IN ADDITION, YOU ARGUE THAT THE ALLEGED LIMITATION OF 1 1/2 PERCENT ON THE RENTAL BENDIX WOULD PAY PURSUANT TO THE FACILITIES CONTRACT WAS AMBIGUOUS AND, IF ERRONEOUS, WOULD PERMIT IT TO ARGUE THAT ITS BID PRICE ON THE SUBJECT IFB OUGHT TO BE INCREASED TO INCLUDE THE EXTRA RENTAL, OR DECREASED TO REFLECT EITHER THE EXTRA AMOUNT IT WOULD HAVE TO PAY UNDER THE FACILITIES CONTRACT OR THE EXCESSIVE AMOUNT IT HAD ALREADY INCLUDED IN ITS BID PRICE. FINALLY, YOU SUGGEST THAT THE PURCHASING ACTIVITY MAY HAVE FAILED TO EVALUATE BIDS WITHOUT REGARD TO THE RENTAL RATES, WHICH YOU ALLEGE IS REQUIRED BY OUR DECISION B-153687, DATED JULY 7, 1964, IN CASES WHERE THE RENTAL RATE MAY BE A FACTOR IN DETERMINING WHO SHOULD BE AWARDED THE CONTRACT. IT SHOULD BE NOTED THAT THE CITED DECISION CONSIDERED THE EVALUATION OF BIDS SUBMITTED IN RESPONSE TO AN INVITATION WHICH, UNLIKE THE SUBJECT ONE, PERMITTED THE USE OF RENT-FREE FACILITIES, BUT REQUIRED EVALUATION OF BIDS ON THAT BASIS BY THE ADDITION OF A RENTAL EQUIVALENT TO REMOVE THE COMPETITIVE ADVANTAGE WHICH MIGHT OTHERWISE OCCUR IN BID EVALUATION, AND RESERVED THE RIGHT TO DISREGARD SUCH EQUALIZING FACTOR IN EVALUATION IF AWARD ON THAT BASIS WOULD RESULT IN SUBSTANTIALLY GREATER COSTS OT THE GOVERNMENT.

WE CAN FIND NO REASON WHY THE SIGNIFICANCE OF THE STATEMENT,"INCLUDES 1 1/2 PERCENT FOR FACILITY RENTAL," SHOULD BE ENLARGED TO MEAN THAT THE PRICE QUOTED WAS CONTINGENT UPON THAT RENTAL AND WOULD BE SUBJECT TO ADJUSTMENT IF THE RENTAL RATE UNDER THE FACILITIES CONTRACT SHOULD BE CHANGED. ON THE CONTRARY, IT IS EVIDENT THAT THE BENDIX STATEMENT WAS INSERTED ONLY BY REASON OF THE PROVISION IN THE FACILITIES CONTRACT, BUT NOT IN THE SUBJECT IFB, WHEREBY BENDIX AGREED TO INCLUDE IN ANY BID CONTEMPLATING USE OF THE FACILITIES A STATEMENT SHOWING THAT THE PRICE QUOTED THEREIN WAS INCLUSIVE OF ESTIMATED RENTAL CHARGES UNDER THE SEPARATE FACILITIES CONTRACT. IN ANY EVENT, THE STATEMENT APPEARS TO DO NO MORE THAN ADVISE THE CONTRACTING OFFICER THAT THE BIDDER'S PRICE WAS COMPUTED ON ITS UNDERSTANDING THAT IN PERFORMANCE OF THE CONTRACT IT EXPECTED TO INCUR A CERTAIN RENTAL COST FOR THE GOVERNMENT FACILITIES IT PROPOSED TO USE, AND WAS NOT BIDDING ON A NO CHARGE BASIS. WHETHER OR NOT THE BIDDER WOULD IN FACT INCUR THAT COST, OR ANY OTHER COSTS HE MIGHT HAVE SAID HE ANTICIPATED, WOULD HAVE NO BEARING ON THE EVALUATION OF BIDS FOR THE AWARD OF A COMPETITIVELY ADVERTISED FIXED-PRICE CONTRACT, WHERE, AS HERE, A PROVISION OF THE IFB RENDERS NONRESPONSIVE ANY BID DEPENDENT UPON RENT-FREE USE OF GOVERNMENT FACILITIES. CF. B-153687, SUPRA, AND B- 155552, DATED JANUARY 21, 1965, 44 COMP. GEN. 412. THE IRRELEVANCE OF THE RENTAL COST IN THESE CIRCUMSTANCES IS APPARENT BECAUSE THE USE OF A RENTAL FACTOR IN EVALUATING BIDS IS DESIRABLE ONLY WHERE A COMPETITIVE ADVANTAGE MAY BE GAINED FROM THE RENT-FREE USE OF FACILITIES, AND DOES NOT ARISE WHERE THE COMPETITIVE SITUATION OF ALL BIDDERS IS AUTOMATICALLY EQUALIZED IN THE SENSE THAT EACH OF THEM MUST ANTICIPATE AN OBLIGATION EITHER TO INCUR RENTAL CHARGES FOR GOVERNMENT OR PRIVATELY FURNISHED FACILITIES, OR TO USE AND AMORTIZE ITS OWN EQUIPMENT.

IT APPEARS THAT ALL OF YOUR ARGUMENTS ARE BASED ON THE PREMISE THAT THE SUBJECT STATEMENT IN BENDIX'S BID, REGARDING THE RENTAL CHARGE ESTABLISHED IN A SEPARATE FACILITIES CONTRACT, COULD EITHER AFFECT THE EVALUATION OF SUCH BID, OR CONSTITUTE A QUALIFICATION MAKING ITS PRICE CONTINGENT UPON CONTINUATION OF THE SAME CHARGE. FOR THE REASONS STATED ABOVE, WE HAVE REJECTED THAT PREMISE, AND THEREFORE, MUST REJECT YOUR PROTEST AGAINST THE PROPOSED AWARD FOR 30 KVA GENERATOR SYSTEMS.