B-156517, JUN. 14, 1965

B-156517, JUN. 14, 1965

TO MISSILE BATTERY DIVISION, THE ELECTRIC STORAGE BATTERY COMPANY:

THIS REFERS TO YOUR LETTER OF APRIL 22, 1965, WITH ENCLOSURES (REFERENCE: 64.224-65.76), PROTESTING THE DEPARTMENT OF THE NAVY'S DECISION TO REBID ITEM 1, MK-46 MOD 1 SILVER-ZINC TORPEDO PROPULSION BATTERY, OF INVITATION FOR BIDS NO. 600-278-65, OPENED ON DECEMBER 8, 1964.

THE GOVERNING SPECIFICATION FOR ITEM 1 (MIL-B-23394A/WEP) DATED 4 MARCH 1964, AS AMENDED 10 SEPTEMBER 1964) REQUIRED THAT THE BATTERY HAVE A DISCHARGE TIME OF 9.5 MINUTES WHEN SERIES CONNECTED AND 32 MINUTES WHEN PARALLEL CONNECTED. THE SPECIFICATION FURTHER PROVIDED AS FOLLOWS:

"6.2 IT IS THE DESIRE OF THE GOVERNMENT TO HAVE SUFFICIENT ADDITIONAL CAPACITY BUILT INTO THE BATTERY TO COMPENSATE FOR A VOLTAGE DROP WHICH IS USUALLY ENCOUNTERED WITHIN A FIVE YEAR STORAGE PERIOD. BATTERIES WHICH MEET THE HIGHER LIMITS OF VOLTAGE TOLERANCES SPECIFIED AND EXCEED THE DISCHARGE TIME LIMITS BY 15 PERCENT WILL BE CONSIDERED AS HIGHLY ACCEPTABLE.'

THE INVITATION PROVIDED THAT THE GOVERNMENT WOULD FURNISH SILVER TO THE CONTRACTOR. THE BIDDER WAS REQUIRED TO STATE IN HIS BID THE TOTAL NUMBER OF TROY OUNCES OF SILVER HE WOULD REQUIRE FROM THE GOVERNMENT, AND THE VALUE OF THIS AMOUNT OF SILVER (AT THE CURRENT MARKET PRICE OF $1.293) WAS TO BE ADDED TO THE BIDDER'S PRICE FOR PURPOSE OF BID EVALUATION.

A QUANTITY OF 974 BATTERIES WAS SPECIFIED FOR ITEM 1, AND 4 BIDS WERE RECEIVED ON THE ITEM (THE INVITATION COVERED 4 TYPES OF BATTERIES, ITEMS 1 THROUGH 4). BASED ON THE QUOTED UNIT PRICES ALONE, WHITTAKER CORPORATION WAS LOW AT $1,297, YOUR FIRM WAS SECOND LOW AT $1,321.75, YARDNEY ELECTRIC CORPORATION WAS THIRD LOW AT $1,419, AND THE EAGLE PICHER COMPANY WAS HIGH AT $1,476. HOWEVER, YOU INDICATED A REQUIREMENT FOR 499.9 OUNCES OF SILVER PER BATTERY, FOR A TOTAL GOVERNMENT FURNISHED SILVER COST OF $486,927, WHEREAS THE OTHER 3 BIDDERS INDICATED REQUIREMENTS OF 637.8, 645 AND 659 OUNCES OF SILVER PER BATTERY, AMOUNTING TO COSTS FOR SILVER OF $621,240, $628,230 AND $641,866, RESPECTIVELY. AS A RESULT, YOU WERE EVALUATED AS LOW BIDDER AT $1,923,795.95 (INCLUDING TRANSPORTATION), WHILE WHITTAKER WAS SECOND LOW AT $2,075,136.56.

AFTER BID OPENING, THE PROCURING OFFICIALS BECAME CONCERNED THAT THE INITIAL DISCHARGE PERIODS SPECIFIED FOR ITEM 1 OF 9.5 MINUTES AND 32 MINUTES WERE INADEQUATE. A MINIMUM RUNNING TIME OF 9 MINUTES FOR SERIES CONNECTED BATTERIES WAS NEEDED. THE BATTERIES WERE BEING PROCURED IN THE EXPECTATION THAT THEY WOULD HAVE A SHELF LIFE OF 5 YEARS (AS INDICATED IN PARAGRAPH 6.2 OF THE SPECIFICATION). REPORTS MADE TO NAVY AFTER BID OPENING INDICATED THAT A 10 PERCENT REDUCTION IN DISCHARGE TIME COULD BE EXPECTED OVER A FIVE-YEAR PERIOD. IT BECAME EVIDENT THAT THE SPECIFICATION WOULD HAVE TO BE CHANGED TO PROVIDE FOR A DISCHARGE TIME OF 10.5 MINUTES (SERIES CONNECTED) AND 36 MINUTES (PARALLEL CONNECTED). FURTHER, NAVY FOUND THAT IT WOULD NEED AN ADDITIONAL QUANTITY OF THE ITEM.

THE PROCURING OFFICIALS WERE UNDECIDED WHETHER TO READVERTISE ITEM 1 UNDER REVISED SPECIFICATIONS OR TO MAKE AWARD ON THE ITEM AND EFFECT THE SPECIFICATION CHANGES THROUGH CONTRACT MODIFICATIONS. ONE OF THE OTHER BIDDERS (YARDNEY ELECTRIC CORPORATION, WHO WAS THE PRIOR CONTRACTOR FOR THE ITEM) CONTENDED THAT ITS BID IN FACT HAD BEEN PREDICATED UPON FURNISHING A BATTERY WHICH THE DESIRED DISCHARGE TIME, AS EXPRESSED IN PARAGRAPH 6.2 OF THE SPECIFICATION, AND THAT ITS BID (OR POSSIBLY ONE OF THE OTHER 2 HIGHER BIDS) MIGHT HAVE BEEN LOWIF IT HAD NOT ATTEMPTED TO MEET NAVY'S ACTUAL NEEDS AS TO DISCHARGE TIME. ON THE OTHER HAND, YOU PROPOSED THAT NAVY MAKE AWARD TO YOUR FIRM AT THE BID PRICE OF $1,321.75 PER UNIT, INCREASING BY CONTRACT MODIFICATION THE AMOUNT OF SILVER WHICH WOULD BE REQUIRED PER BATTERY. (YOU ESTIMATED THAT 534,736 TROY OUNCES OF SILVER, OR ABOUT 549 OUNCES PER BATTERY, WOULD SERVE TO ACCOMMODATE A 10.5 AND 36 MINUTE DISCHARGE TIME FOR THE 974 UNITS.) HOWEVER, NAVY DECIDED TO READVERTISE THE REVISED ITEM 1 REQUIREMENT. INVITATION FOR BIDS NO. 600- 676-65 WAS ISSUED ON MARCH 26, 1965, FOR 1,496 UNITS. MEANWHILE, AWARDS WERE MADE TO THE LOW BIDDERS UNDER THE ORIGINAL INVITATION ON ITEMS 2, 3 AND 4.

UNDER THE READVERTISED INVITATION THE 9.5 AND 32 MINUTE DISCHARGE TIMES HAVE BEEN CHANGED TO 10.5 AND 36 MINUTES, RESPECTIVELY. THERE IS A NEW REQUIREMENT THAT EACH BATTERY SHALL CONTAIN A MINIMUM OF 700 TROY OUNCES OF SILVER AND THAT THE GOVERNMENT SHALL FURNISH THE CONTRACTOR WITH A SET QUANTITY OF 1,085,800 TROY OUNCES OF SILVER. ALSO, PARAGRAPH 6.2 OF THE SPECIFICATION HAS BEEN ELIMINATED. UNDER THIS INVITATION THE COST OF SILVER IS NOT EVALUATED FOR PURPOSE OF AWARD. CERTAIN OTHER CHANGES HAVE BEEN MADE, BUT THE DECISION TO READVERTISE IS EXPLAINED BY THE CONTRACTING OFFICER AS FOLLOWS:

"1. THIS OFFICE CONCURS IN THE PROTESTANT'S CONTENTION THAT THE EFFECT OF THE AMOUNT OF SILVER REQUESTED BY A BIDDER, UPON THE RESPONSIVENESS OF THE BID IS NOT A RELEVANT ISSUE IN THIS CASE. THE RESPONSIVENESS OF ELECTRIC STORAGE BATTERY COMPANY'S LOW BID ON ITEM 1 WAS NEVER IN QUESTION. NOR DID THE ABILITY OF ESB TO PRODUCE BATTERIES IN ACCORDANCE WITH THE SPECIFICATION FOR ITEM 1 EVER BECOME AN ISSUE. THE GOVERNING FACTORS IN THE DECISION OF THIS OFFICE TO RE ADVERTISE ITEM 1 WERE: (1) THE BATTERY DISCHARGE TIME REQUIRED BY THE SPECIFICATION WAS FOUND, AFTER BID OPENING, TO BE INADEQUATE TO MEET THE NAVY'S NEEDS, AND (2) THE NECESSARY INCREASE IN DISCHARGE TIME WAS DETERMINED TO BE A SUBSTANTIAL CHANGE IN THE REQUIREMENT SINCE IT AFFECTED THE PRICE AND THE QUALITY OF THE BATTERY.

"4. SINCE THE ADEQUACY OF THE SPECIFICATIONS COVERING ITEMS 2, 3, AND 4 OF THE IFB WAS NOT IN QUESTION, NO JUSTIFICATION EXISTED FOR NOT AWARDING THESE ITEMS.'

YOU RECOGNIZE THAT ASPR 2-404.1/II) SUPPORTS THE REJECTION OF BIDS WHERE THE SPECIFICATIONS ,HAVE BEEN REVISED.' BUT YOU CONTEND THAT THE INCREASED REQUIREMENT FOR SILVER DOES NOT AFFECT THE BIDDING NOR PREJUDICE THE BIDDERS. WE DO NOT AGREE. UNDER THE ORIGINAL INVITATION EACH BIDDER WAS FREE TO DECIDE HOW MUCH SILVER HE WOULD REQUIRE FROM THE GOVERNMENT. YOU HAVE SUGGESTED THAT A BIDDER COULD HAVE REQUESTED NO GOVERNMENT- FURNISHED SILVER, INCORPORATING THE VALUE OF SILVER IN HIS UNIT PRICE, AND YET HAVE SUBMITTED A LEGAL AND RESPONSIVE BID. IN ANY EVENT, THE CONTRACTOR WAS TO BE RESPONSIBLE FOR DECIDING HOW MUCH SILVER WOULD BE USED IN EACH BATTERY. NAVY WISHES TO SHIFT THIS RESPONSIBILITY FROM THE CONTRACTOR TO THE GOVERNMENT. IT NOW FINDS THAT EACH BATTERY MUST CONTAIN AT LEAST 700 TROY OUNCES OF SILVER IN ORDER TO PERFORM AS REQUIRED. UNDER YOUR BID NAVY IS ASSURED ONLY OF RECEIVING A BATTERY CONTAINING APPROXIMATELY 500 TROY OUNCES OF SILVER. YOU CALCULATE THAT ONLY 534,736 OUNCES NEED BE ADDED TO 974 OF YOUR UNITS TO ACCOMMODATE THE 10.5 AND 36 MINUTE DISCHARGE PERIODS. HOWEVER, NAVY WOULD PRESUMABLY FIND IT NECESSARY TO ADD 200 TROY OUNCES OF SILVER PER BATTERY AT GOVERNMENT EXPENSE. UNDER THE WHITTAKER BID ONLY ABOUT 63 TROY OUNCES OF SILVER WOULD HAVE TO BE ADDED (700 LESS 736.8, THE QUANTITY LISTED BY THE BIDDER) TO A BATTERY WHICH WAS OFFERED AT A PRICE ACTUALLY LOWER THAN YOURS ($1,297, AS COMPARED TO YOUR PRICE OF $1,321.75). IT IS EVIDENT THAT YOUR BID CAN NO LONGER BE CONSIDERED LOW UNDER THE REVISED REQUIREMENTS. ACCORDINGLY, WE CONCLUDE THAT READVERTISEMENT WAS PROPER.

ALTHOUGH NAVY HAD CONSIDERED THE POSSIBILITY OF MAKING AN AWARD TO YOUR FIRM, IT DOES NOT APPEAR THAT THE DEPARTMENT INTENDED TO MISLEAD YOU REGARDING THE STATUS OF THE PROCUREMENT.