B-156660, OCT. 28, 1965

B-156660: Oct 28, 1965

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THIS PROCUREMENT WAS MADE PURSUANT TO THE FOREIGN ASSISTANCE ACT OF 1961. THE REQUIRED EQUIPMENT WAS SPECIFIED ON THE BASIS OF "BRAND NAME OR EQUIVALENT.'. THE THREE LOWEST PRICES WERE SUBMITTED BY GALION IRON WORKS AND MANUFACTURING COMPANY. THE BORROWER'S RECOMMENDATION REGARDING THE AWARD WAS FORWARDED TO AID FOR APPROVAL. IT WAS EXPLAINED THAT. CATERPILLAR'S BID WAS EVALUATED AT $18. WHILE YOUR BID WAS EVALUATED AT $19. YOU QUESTION WHETHER THE BORROWER INCLUDED IN ITS EVALUATION OF THE CATERPILLAR BID THE MECHANICAL REPAIR PARTS ASSOCIATED WITH THE CATERPILLAR MACHINE COMPARABLE TO THE HYDRAULIC REPAIR PARTS WHICH WERE EVALUATED WITH YOUR MACHINE. IT DOES APPEAR FROM THE RECORD THAT PARTS FOR THE MECHANICAL CONTROLS WERE NOT INCLUDED IN THE SPARE PARTS LIST FOR THE CATERPILLAR MACHINE.

B-156660, OCT. 28, 1965

TO HUBER CORPORATION:

THIS REFERS TO YOUR LETTER OF SEPTEMBER 17, 1965, AND THE PRIOR CORRESPONDENCE PROTESTING THE AWARD OF 28 HEAVY DUTY MOTORGRADERS TO THE CATERPILLAR TRACTOR COMPANY FOR THE IVORY COAST UNDER AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) PROGRAM LOAN AGREEMENT NO. 681-H-001.

THIS PROCUREMENT WAS MADE PURSUANT TO THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED. SEE 22 U.S.C. 2161-2165. THE LOAN AGREEMENT BETWEEN THE UNITED STATES AND THE BORROWER, THE GOVERNMENT OF THE IVORY COAST, DATED NOVEMBER 29, 1963, PROVIDED IN THE STANDARD PROVISIONS ANNEX, SECTION 100.2, THAT THE ITEMS COVERED BY THE AGREEMENT (VARIOUS ITEMS OF HIGHWAY MAINTENANCE EQUIPMENT) SHOULD BE PROCURED ON A FAIR COMPETITIVE BASIS, AND THAT REASONABLE PRICES SHOULD NORMALLY APPROXIMATE THE LOWEST COMPETITIVE PRICE, OPERATING COSTS, QUALITY, TIME AND COST OF DELIVERY, TERMS OF PAYMENT AND OTHER FACTORS CONSIDERED. THE BORROWER ISSUED AN "INVITATION TO BID" CALLING FOR BIDS NO LATER THAN OCTOBER 2, 1964. ARTICLE 2 OF THE GENERAL TERMS AND CONDITIONS OF THE INVITATION REQUIRED THAT THE MOTORGRADER EQUIPMENT BE GUARANTEED FOR A PERIOD OF 1,000 HOURS AND THAT DURING THIS PERIOD ALL REPAIRS DUE TO DEFECTS OF THE EQUIPMENT (ASIDE FROM REGULAR MAINTENANCE) BE AT THE EXPENSE OF THE SUPPLIER, INCLUDING ANY COSTS OF TRANSPORTING THE DEFECTIVE EQUIPMENT TO AND FROM ABIDJAN. ARTICLE 3 REQUIRED THAT BIDDERS LIST THE SPARE PARTS REQUIRED FOR THE FIRST GENERAL OVERHAUL OF THE MOTORGRADERS, STATING THAT COST OF PARTS WOULD BE A FACTOR IN EVALUATING THE BIDS. IN THIS CONNECTION, ARTICLE 7 OF THE INVITATION PROVIDED THAT AWARD WOULD BE MADE ON THE BASIS OF THE LOWEST BID PROVIDED THAT THE BID CONFORMED IN ALL DETAILS WITH THE REQUIREMENTS OF THE INVITATION AND THAT IT SATISFIED SPECIFICALLY:

"1 - RECOGNIZED QUALITY OF EQUIPMENT

2 - EARLIEST DELIVERY DATE POSSIBLE

3 - MANUFACTURER REPRESENTED IN IVORY COAST

4 - CONTINUOUS AFTER-SALE SERVICE IN IVORY COAST

5 - ADEQUATE SUPPLY OF SPARE PARTS IN IVORY COAST

6 - LOWEST POSSIBLE MAINTENANCE COSTS.'

FINALLY, THE REQUIRED EQUIPMENT WAS SPECIFIED ON THE BASIS OF "BRAND NAME OR EQUIVALENT.' THE SPECIFICATION CALLED FOR A CATERPILLAR MOTORGRADER NO. 12-115 HP OR EQUIVALENT, WITH MECHANICAL OR HYDRAULIC CONTROLS.

FIVE SUPPLIERS SUBMITTED BIDS ON THE HEAVY DUTY MOTORGRADERS, EACH BIDDING ON ITS OWN MACHINE. THE THREE LOWEST PRICES WERE SUBMITTED BY GALION IRON WORKS AND MANUFACTURING COMPANY, AT $15,399 PER UNIT (HEAVY DUTY CUMMINS MOTOR), YOUR FIRM (HUBER-WARCO) AT $16,000, AND CATERPILLAR TRACTOR COMPANY AT $16,979. THE BORROWER ADDED THE PRICE OF THE SPARE PARTS TO EACH BID AND ALSO INCLUDED IN THE EVALUATION A COST FACTOR FOR MAINTENANCE BASED ON HISTORIC RECORDS OF MAINTENANCE COSTS, AND CONCLUDED THAT CATERPILLAR HAD SUBMITTED THE MOST ADVANTAGEOUS BID AND THAT IT SHOULD RECEIVE THE AWARD.

THE BORROWER'S RECOMMENDATION REGARDING THE AWARD WAS FORWARDED TO AID FOR APPROVAL. BY LETTER OF AUGUST 30, 1965, AID ADVISED YOUR FIRM THAT IT HAD APPROVED THE BORROWER'S RECOMMENDATION. IT WAS EXPLAINED THAT, INCLUDING SPARE PARTS, CATERPILLAR'S BID WAS EVALUATED AT $18,984, WHILE YOUR BID WAS EVALUATED AT $19,683.90; AND THAT, IN ADDITION, YOUR STANDARD WARRANTY HAD ACCOMPANIED YOUR BID, WHICH, CONTRARY TO THE WARRANTY REQUIRED BY THE INVITATION (ARTICLE 2), EXEMPTED THE COST OF LABOR IN MAKING REPAIRS TO DEFECTIVE PARTS AND ALSO EXCLUDED THE COST OF TRANSPORTATION INVOLVED IN SHIPPING THE DEFECTIVE PARTS TO THE FACTORY.

YOU QUESTION WHETHER THE BORROWER INCLUDED IN ITS EVALUATION OF THE CATERPILLAR BID THE MECHANICAL REPAIR PARTS ASSOCIATED WITH THE CATERPILLAR MACHINE COMPARABLE TO THE HYDRAULIC REPAIR PARTS WHICH WERE EVALUATED WITH YOUR MACHINE. IT DOES APPEAR FROM THE RECORD THAT PARTS FOR THE MECHANICAL CONTROLS WERE NOT INCLUDED IN THE SPARE PARTS LIST FOR THE CATERPILLAR MACHINE. BE THAT AS IT MAY, WE FIND THAT YOUR BID WAS NONRESPONSIVE TO THE INVITATION BECAUSE OF YOUR WARRANTY PROVISION.

YOU CONTEND THAT YOUR WARRANTY APPLIES JUST BETWEEN YOU AND YOUR DISTRIBUTOR AND HAS NO RELATION TO YOUR BID. WE CANNOT AGREE, SINCE YOUR WARRANTY WAS INCLUDED ALONG WITH THE BID. IT IS CLEAR THAT THE WARRANTY DOES CONSTITUTE AN EXCEPTION TO THE BIDDING REQUIREMENTS. THUS, EVEN IF BIDS WERE CONSIDERED ON THE BASIS OF THE MACHINE PRICE ALONE, YOUR BID WAS NONRESPONSIVE TO THE INVITATION, AND WAS PROPERLY REJECTED. ACCORDINGLY YOUR PROTEST IS DENIED.