B-155672, FEB. 5, 1965

B-155672: Feb 5, 1965

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 24. PURSUANT TO REQUEST FOR QUOTATIONS (RFQ) DSA-2-5463 FOR THE REASON THAT AWARD WAS NOT MADE TO THE LOWEST RESPONSIBLE BIDDER. QUOTATIONS WERE SOLICITED EITHER WITH OR WITHOUT PROVISION FOR PATENT INDEMNITY. THE FOUR OFFERS RECEIVED IN RESPONSE THERETO WERE AS FOLLOWS: CHART FIRM PRICE CONDITIONS ZENITH LABS. $2.42 WITHOUT PATENT INDEMNITY. COMPANY DESTINATION THE LOW OFFER OF ZENITH LABORATORIES WAS WITHDRAWN BY TELEGRAM DATED NOVEMBER 4. WAS REJECTED BECAUSE THAT FIRM WAS SUSPENDED ON JUNE 24. THE ONLY OFFERS REMAINING FOR CONSIDERATION WERE YOURS AND PFIZER-S. WHICH WAS PROMULGATED PURSUANT TO. INASMUCH AS PFIZER'S QUOTATION WAS FOR A DOMESTIC SOURCE END PRODUCT.

B-155672, FEB. 5, 1965

TO SUCCESS CHEMICAL COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 24, 1964, PROTESTING AGAINST AWARD OF A CONTRACT TO CHARLES PFIZER AND COMPANY, PURSUANT TO REQUEST FOR QUOTATIONS (RFQ) DSA-2-5463 FOR THE REASON THAT AWARD WAS NOT MADE TO THE LOWEST RESPONSIBLE BIDDER.

THIS REQUEST, ISSUED MAY 13, 1964, BY THE DEFENSE MEDICAL SUPPLY CENTER, BROOKLYN, NEW YORK, SOLICITED QUOTATIONS FOR FURNISHING 41,760 BOTTLES OF OXYTETRACYLINE TABLETS. QUOTATIONS WERE SOLICITED EITHER WITH OR WITHOUT PROVISION FOR PATENT INDEMNITY, AND ON THE BASIS OF F.O.B. ORIGIN OR F.O.B. DESTINATION, OR BOTH. THE FOUR OFFERS RECEIVED IN RESPONSE THERETO WERE AS FOLLOWS:

CHART

FIRM PRICE CONDITIONS

ZENITH LABS. $2.42 WITHOUT PATENT INDEMNITY, F.O.B.

(FOR 24,000 ORIGIN

UNITS ONLY)

PIERREL, S.P.A. 2.49-2.59 DO. DO. DO. DO.

PER UNIT

SUCCESS CHEMICAL 3.97, PER DO. DO. DO. DO.

COMPANY UNIT, 1/4 PERCENT

PROMPT PAYMENT DISCOUNT

CHAS. PFIZER AND 5.95 PER UNIT WITH PATENT INDEMNITY, F.O.B.

COMPANY DESTINATION

THE LOW OFFER OF ZENITH LABORATORIES WAS WITHDRAWN BY TELEGRAM DATED NOVEMBER 4, 1964. THE SECOND LOW OFFER OF PIERREL, S.P.A., WAS REJECTED BECAUSE THAT FIRM WAS SUSPENDED ON JUNE 24, 1964, FROM FURTHER DEALINGS WITH THE GOVERNMENT PURSUANT TO PARAGRAPH 1-601.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). THEREFORE, THE ONLY OFFERS REMAINING FOR CONSIDERATION WERE YOURS AND PFIZER-S.

THE RFQ INCORPORATED THE BUY AMERICAN CERTIFICATE PRESCRIBED BY ASPR 6- 104.3, WHICH WAS PROMULGATED PURSUANT TO, AND IN COMPLIANCE WITH, THE ACT OF MARCH 3, 1933, AS AMENDED, 41 U.S.C. 10A-10D, COMMONLY REFERRED TO AS THE BUY AMERICAN ACT, AND EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954. IN EXECUTING SUCH CERTIFICATE, YOU INDICATED THAT YOUR "OXYTETRACYLINE HCL BULK" COULD NOT BE CLASSIFIED AS "A DOMESTIC SOURCE END PRODUCT" WITHIN THE MEANING OF THAT TERM AS USED IN THE CERTIFICATE. INASMUCH AS PFIZER'S QUOTATION WAS FOR A DOMESTIC SOURCE END PRODUCT, YOUR PROPOSAL WAS ADJUSTED AS PRESCRIBED BY ASPR 6-104.4/B), AS FOLLOWS:

CHART

NET PRICE $3.960100

DUTY .196875

FREIGHT .009000

$4.165975

6 PERCENT DIFFERENTIAL .249959

WEIGHTED PRICE $4.415934

NET PRICE $3.96010

FREIGHT $ .00900

$3.96910

50 PERCENT DIFFERENTIAL 1.98455

WEIGHTED PRICE $5.95365

SINCE THE CITED REGULATION REQUIRED THE USE FOR EVALUATION OF THE HIGHER OF THE WEIGHTED PRICES, WHICH RESULTED IN A GREATER EVALUATED PRICE THAN THE PRICE OFFERED BY PFIZER, ACCEPTANCE OF THE LATTER'S OFFER WOULD HAVE BEEN PROPER. HOWEVER, BECAUSE THE DIFFERENCE IN PRICE WAS SO SMALL IT WAS DECIDED TO CONDUCT FURTHER NEGOTIATIONS WITH BOTH FIRMS. THE RECORD DISCLOSES THAT IN THE COURSE OF FURTHER NEGOTIATIONS, YOU ULTIMATELY QUOTED A UNIT PRICE OF $3.77, LESS 1/4 PERCENT PROMPT PAYMENT DISCOUNT, AS COMPARED TO PFIZER'S FINAL OFFER OF $5.28 PER UNIT. ADJUSTMENT OF YOUR OFFER PURSUANT TO THE PROVISIONS OF ASPR 6-104.4/B) RESULTED IN THE FOLLOWING PRICES:

CHART

NET PRICE $3.760575

FREIGHT .009000

DUTY .196875

$3.966450

6 PERCENT DIFFERENTIAL .237987

WEIGHTED PRICE $4.204437

NET PRICE $3.7605750

FREIGHT .0090000

$3.7695750

50 PERCENT DIFFERENTIAL 1.8847875

WEIGHTED PRICE $5.6543625

SINCE PFIZER'S FINAL OFFER WAS THE LOWEST AFTER MAKING THE ABOVE ADJUSTMENT, NEGOTIATED CONTRACT NO. DSA-2-11309 WAS CONSUMMATED WITH THAT FIRM FOR 41,760 UNITS AT A UNIT PRICE OF $5.28 FOR A TOTAL CONTRACT PRICE OF $220,492.80. IT SHOULD ALSO BE NOTED THAT PFIZER'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR WAS DETERMINED AFFIRMATIVELY ON THE BASIS OF SATISFACTORY PERFORMANCE AS THE PRINCIPAL SUPPLIER OF THIS ITEM IN THE PAST.

YOUR PROTEST IS BASED ON THE CONTENTION THAT AWARD WAS NOT MADE TO THE LOWEST RESPONSIBLE BIDDER. YOU HAVE NOT SUGGESTED THAT PFIZER IS NOT QUALIFIED AS A RESPONSIBLE CONTRACTOR, AND THERE IS NO BASIS FOR OUR OFFICE TO TAKE EXCEPTION TO THE ADMINISTRATIVE DETERMINATION THAT SAID FIRM IS RESPONSIBLE. AS TO WHETHER AWARD WAS MADE TO THE LOWEST BIDDER, WHILE YOUR OFFER, BOTH AS ORIGINALLY SUBMITTED AND AS ULTIMATELY NEGOTIATED, WAS LOWER, IT WAS REQUIRED BY REGULATION TO BE EVALUATED BY ADDITION OF A DIFFERENTIAL PRESCRIBED FOR BIDS ON FOREIGN PRODUCTS. THE BUY AMERICAN ACT, PREVIOUSLY CITED, PROVIDES THAT "NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND UNLESS THE HEAD OF THE DEPARTMENT OR INDEPENDENT ESTABLISHMENT CONCERNED SHALL DETERMINE IT TO BE INCONSISTENT WITH THE PUBLIC INTEREST, OR THE COST TO BE UNREASONABLE, * * * ONLY SUCH MANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS HAVE BEEN MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM ARTICLES, MATERIALS, OR SUPPLIES MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES, SHALL BE ACQUIRED FOR PUBLIC USE.' THIS ACT, AS IMPLEMENTED BY EXECUTIVE ORDER NO. 10582, DECEMBER 17, 1954, WAS DESIGNED TO ACCORD PREFERENTIAL TREATMENT TO DOMESTIC PRODUCERS AND MANUFACTURERS IN THE CASE OF PURCHASES BY FEDERAL AGENCIES AND ESTABLISHMENTS. ONE EXCEPTION TO THE REQUIREMENT THAT PURCHASES BE MADE FROM DOMESTIC PRODUCERS AND MANUFACTURERS IS WHERE THE HEAD OF THE DEPARTMENT OR AGENCY CONCERNED DETERMINES THAT THE COST OF DOMESTIC SUPPLIES OR MATERIALS WOULD BE UNREASONABLE. SINCE THE ACT DOES NOT SPECIFY HOW, OR TO WHAT EXTENT, THE COST OF A CONTEMPLATED PURCHASE SHALL BE DETERMINED TO BE, OR CONSIDERED TO BE, UNREASONABLE, EXECUTIVE ORDER NO. 10582 PROVIDES GUIDANCE FOR MAKING SUCH DETERMINATIONS ON A UNIFORM BASIS. PURSUANT TO THE BUY AMERICAN ACT AND THE ABOVE IMPLEMENTING EXECUTIVE ORDER, ASPR 6- 104.4 PRESCRIBES THE FORMULA FOR DETERMINING THE REASONABLENESS OF THE DOMESTIC BID OR PROPOSAL WITH RELATION TO THE FOREIGN BID OR PROPOSAL. IS THEREIN PROVIDED, IN PERTINENT PART, THAT ,EACH FOREIGN BID * * * SHALL BE ADJUSTED FOR PURPOSES OF EVALUATION EITHER BY EXCLUDING ANY DUTY FROM THE FOREIGN BID AND ADDING 50 PERCENT OF THE BID (EXCLUSIVE OF DUTY) TO THE REMAINDER, OR BY ADDING TO THE FOREIGN BID (INCLUSIVE OF DUTY) A FACTOR OF 6 PERCENT OF THAT BID, WHICHEVER RESULTS IN THE GREATER EVALUATED PRICE.'

AS ILLUSTRATED ABOVE, THE METHOD OF EVALUATION PRESCRIBED BY THE PROVISION QUOTED WAS PRECISELY THE METHOD FOLLOWED IN EVALUATING YOUR OFFER. SINCE THIS PROCEDURE RESULTED IN THE PFIZER OFFER BEING EVALUATED AT A PRICE LOWER THAN YOURS, AWARD OF THE SUBJECT CONTRACT WAS PROPERLY MADE TO PFIZER. YOUR PROTEST MUST THEREFORE BE DENIED.