B-157148, JAN. 13, 1966, 45 COMP. GEN. 401

B-157148: Jan 13, 1966

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WHEN THE GOVERNMENT ELECTS TO MAINTAIN A LIVE SHIP AND IS NOT FURNISHED SERVICES FOR THE FULL PERIOD. EVEN THOUGH THE SHIP WAS BERTHED IN RENTED YARD FACILITIES AND THE REQUIRED SERVICES WERE NOT AVAILABLE AT ALL TIMES. THE CONTRACTOR IS CONSIDERED RESPONSIBLE. OR EXTENDED SERVICES FROM OTHER AREAS COULD HAVE BEEN BROUGHT IN HAD THE GOVERNMENT REQUESTED SERVICES FOR THE DURATION OF THE CONTRACT. 1966: REFERENCE IS MADE TO THE REPORT DATED JULY 22. P65- 112 WHICH WAS ISSUED BY THE MILITARY SEA TRANSPORTATION SERVICE (MSTS). WHICH WAS ISSUED ON JUNE 21. IT WAS CIRCULATED AMONG HOLDERS OF MSTS MASTER SHIP REPAIR CONTRACTS IN THE SAN FRANCISCO. WHICH WAS INCORPORATED INTO THE IFB. TWO BIDS WERE RECEIVED IN RESPONSE TO THE IFB.

B-157148, JAN. 13, 1966, 45 COMP. GEN. 401

BIDS - COMPETITIVE SYSTEM - EQUAL BIDDING BASIS FOR ALL BIDDERS UNDER AN INVITATION FOR SHIP REPAIRS THAT REQUIRES THE CONTRACTOR, IF REQUESTED, TO PROVIDE CERTAIN SERVICES FROM THE TIME THE SHIP ARRIVES IN THE CONTRACTOR'S YARD TO COMPLETION OF THE CONTRACT, THEREBY OBLIGING BIDDERS TO INCLUDE IN THE BID PRICE AN AMOUNT TO COVER THE COST OF THE SERVICES FOR THE ENTIRE REPAIR PERIOD, WHEN THE GOVERNMENT ELECTS TO MAINTAIN A LIVE SHIP AND IS NOT FURNISHED SERVICES FOR THE FULL PERIOD, THE CONTRACTOR BENEFITS TO THE EXTENT OF REDUCED COST AND BIDDERS UNINFORMED OF THE DEVIATION OF THE SERVICE PERIOD DID NOT COMPETE ON A COMMON BASIS; THEREFORE, IN FUTURE PROCUREMENTS THE SHORE SERVICE PROVISION SHOULD BE REVISED TO ASSURE THE GOVERNMENT SERVICES COMMENSURATE WITH PAYMENTS, AND EVEN THOUGH THE SHIP WAS BERTHED IN RENTED YARD FACILITIES AND THE REQUIRED SERVICES WERE NOT AVAILABLE AT ALL TIMES, THE CONTRACTOR IS CONSIDERED RESPONSIBLE, AS PORTABLE EQUIPMENT, OR EXTENDED SERVICES FROM OTHER AREAS COULD HAVE BEEN BROUGHT IN HAD THE GOVERNMENT REQUESTED SERVICES FOR THE DURATION OF THE CONTRACT.

TO THE SECRETARY OF THE NAVY, JANUARY 13, 1966:

REFERENCE IS MADE TO THE REPORT DATED JULY 22, 1965 (SER 434M7), AND ENCLOSURES FROM THE COUNSEL, MILITARY SEA TRANSPORTATION SERVICE, RELATIVE TO THE PROTEST OF THE TRIPLE "A" MACHINE SHOP, INC., AGAINST AN AWARD TO THE PACIFIC SHIP REPAIR COMPANY UNDER INVITATION FOR BIDS (IFB) NO. P65- 112 WHICH WAS ISSUED BY THE MILITARY SEA TRANSPORTATION SERVICE (MSTS), PACIFIC AREA.

THE IFB, WHICH WAS ISSUED ON JUNE 21, 1965, WITH OPENING SET FOR JUNE 22, 1965, COVERED VOYAGE REPAIRS TO THE USNS ELTINGE. IT WAS CIRCULATED AMONG HOLDERS OF MSTS MASTER SHIP REPAIR CONTRACTS IN THE SAN FRANCISCO, CALIFORNIA, AREA.

ITEM 1 OF SPECIFICATION NUMBER MSTSP 65-125, WHICH WAS INCORPORATED INTO THE IFB, READS AS FOLLOWS:

ITEM 1--- SERVICES (AS)

UPON ARRIVAL OF SHIP IN CONTRACTOR'S YARD, OR AS SOON THEREAFTER AS MUTUALLY AGREED BY CHIEF ENGINEER AND CONTRACTOR, THE CONTRACTOR SHALL PROVIDE THE FOLLOWING SERVICES

DC ELECTRIC POWER 1000 AMPS, 120/240 VOLTS

STEAM 5000 LBS. PER HR. AT 100 PSI

FRESH WATER 60 PSI

FLUSHING WATER 60 PSI

FIRE MAIN 100 PSI

AIR 500 CFM AT 100 PSI

ANY ADDITIONAL SERVICES REQUIRED, EITHER IN QUANTITY OR IN EXCESS OF TIME REQUIRED BY APPLICABLE SPECIFICATION ITEMS, SHALL BE FURNISHED ONLY UPON ISSUANCE OF A SPECIFICATION CHANGE ORDER. COST OF ANY ADDITIONAL SERVICES REQUIRED FOR CONTRACTOR'S CONVENIENCE SHALL BE BORNE BY THE CONTRACTOR.

SPECIAL NOTE NO. 9 OF THE IFB PROVIDES THAT ALL WORK EXCEPT SEA TRIALS SHALL BE COMPLETED BY :30 A.M., JULY 2, 1965.

TWO BIDS WERE RECEIVED IN RESPONSE TO THE IFB, ONE FROM TRIPLE "A" IN THE AMOUNT OF $179,000 AND THE OTHER FROM PACIFIC SHIP IN THE AMOUNT OF $176,000. AWARD WAS MADE TO THE LOW BIDDER, PACIFIC SHIP, ON JUNE 22, 1965.

THE RECORD SHOWS THAT THE ELTINGE WAS PLACED AT PACIFIC SHIP'S LEASED PIER 34 SOUTH ON THE MORNING OF JUNE 22, 1965, BECAUSE ITS REGULAR YARD WAS FILLED WITH OTHER WORK. IT REMAINED A LIVE SHIP UNTIL THE PLANT WAS SHUT DOWN AT 12 NOON ON JUNE 24, 1965. THE DEAD SHIP WAS TOWED TO PACIFIC SHIP'S LEASED PIER 38 NORTH WHERE SHORE SERVICES WERE UTILIZED UNTIL 4:30 P.M. ON JUNE 30 WHEN THE BOILERS WERE LIT OFF. IT REMAINED A LIVE SHIP THROUGH 6 A.M., JULY 2, 1965, WHEN ALL BASIC WORK WAS COMPLETED AND THE SHIP PROCEEDED TO SEA TRIALS.

THE PROTEST IS BASED ON TWO CONTENTIONS. FIRST, THAT THE LOW BIDDER, PACIFIC SHIP, WAS NOT A RESPONSIBLE BIDDER BECAUSE IT WAS NOT IN A POSITION FOR THE ENTIRE PERIOD OF CONTRACT PERFORMANCE TO FURNISH THE SERVICES CALLED FOR BY ITEM 1 OF THE SPECIFICATION. SECOND, THAT IF THE SERVICES WERE NOT INTENDED TO BE REQUIRED FOR THE ENTIRE PERIOD OF CONTRACT PERFORMANCE, THE CONTRACT WITH PACIFIC SHIP IS VOID BECAUSE THE IFB WAS NOT SUFFICIENTLY DEFINITE TO PERMIT FULL AND FREE COMPETITION. SUPPORT OF THE SECOND CONTENTION IT IS STATED THAT THE SERVICES UNDER CONSIDERATION ARE NEEDED BY THE SHIP AT ALL TIMES WHEN IT IS IN OPERATION AND THAT THEY ARE NEEDED DURING THE CONTRACT PERIOD TO MAINTAIN SATISFACTORY LIVING CONDITIONS ON BOARD THE SHIP; THAT, IN ORDER FOR THE SERVICES TO BE SUPPLIED BY THE SHIP, IT IS NECESSARY FOR THE SHIP'S PLANT TO BE KEPT IN CONTINUOUS OPERATION, WHICH INVOLVES ESTIMATED ADDITIONAL COST OF $400 TO $600 PER DAY TO THE GOVERNMENT; AND THAT FOR SUCH PERIODS AS THE CONTRACTOR IS RELIEVED OF FURNISHING THE SERVICES, HIS COST OF PERFORMING THE CONTRACT IS PROPORTIONATELY REDUCED.

WITH RESPECT TO THE FIRST CONTENTION, THE MSTS HAS ADVISED AS FOLLOWS:

PIERS IN SAN FRANCISCO ARE OWNED BY THE STATE AND ADMINISTERED BY THE STATE BOARD OF HARBOR COMMISSIONERS. BOTH TRIPLE "A" MACHINE SHIP, INC. AND PACIFIC SHIP REPAIR COMPANY HAVE ANNUAL LEASES ON SPECIFIED PIERS WHERE THEIR RESPECTIVE YARD FACILITIES ARE LOCATED. OTHER PIER FACILITIES ARE AVAILABLE FROM THE STATE FOR SHORT TERM USE ON A RENTAL BASIS.

SOME FIRMS HAVING MSTS MASTER SHIP REPAIR CONTRACTS RELY ENTIRELY UPON THE USE OF PIERS ON A SHORT TERM RENTAL BASIS. MSTS MAKES NO DISTINCTION BETWEEN THOSE FIRMS HAVING LONG TERM LEASES AND THOSE HAVING PIERS ON A SHORT TERM RENTAL BASIS AND REQUIRES THE SAME FIRE AND SAFETY STANDARDS FOR ALL FACILITIES USED BY CONTRACTORS.

IT HAS NOT BEEN THE PRACTICE OF THE MILITARY SEA TRANSPORTATION SERVICE, PACIFIC AREA TO LIMIT BIDDING ON AVAILABILITIES TO CONTRACTORS WHO HAVE THEIR OWN YARDS. SUCH A LIMITATION WOULD MATERIALLY REDUCE COMPETITION. SUCH FIRMS AS SERVICE ENGINEERING CO., FRANKLIN MACHINE WORKS AND WEST WINDS, INC., ARE NOT PRECLUDED FROM BIDDING MERELY BECAUSE THE PLACE FOR PERFORMANCE OF WORK IS SPECIFIED AS THE "CONTRACTOR'S YARD OR WORKS.' TEMPORARY LEASEHOLD ON A PIER IS ACCEPTABLE PROVIDING SERVICES SPECIFIED CAN BE PROVIDED.

VERY FEW STATE PIERS, IF ANY AT ALL, HAVE THE SERVICES WHICH ARE NORMALLY SPECIFIED BY MSTS, AVAILABLE AS AN INSTALLED FEATURE. IT IS UNDERSTOOD THAT THESE SERVICES MUST BE IMPORTED THROUGH PORTABLE EQUIPMENT OR EXTENSIONS FROM AREAS WHERE THE SERVICES ARE AVAILABLE. AFTER A BID AWARD, THE CONTRACTOR IS GIVEN A REASONABLE TIME TO PROCURE THE PIER AND THE SERVICES, AND IF THESE CAN BE MADE AVAILABLE, THE SHIP IS DELIVERED.

SINCE THIS ISSUE WAS RAISED, USNS ELTINGE HAS BEEN REPAIRED AND COMPLETED AT PACIFIC SHIP REPAIR, INC., AND SERVICES AS SPECIFIED IN THE CONTRACT WERE IN FACT ORDERED AND FURNISHED BY THE CONTRACTOR FOR A PERIOD OF APPROXIMATELY FIVE DAYS PRIOR TO ORDERING THE SERVICES. THE CONTRACTOR STATED THAT HE WOULD BE ABLE TO SUPPLY SAME WITHIN FORTY MINUTES OF THE SERVICES BEING ORDERED AND FOR THE PURPOSES OF THE GOVERNMENT--- FORTY MINUTES IS CONSIDERED TO BE A REASONABLE TIME.

IN VIEW OF THE FOREGOING IT APPEARS THAT THE SERVICES IN QUESTION COULD HAVE BEEN FURNISHED THROUGH THE IMPORTATION OF PORTABLE EQUIPMENT OR EXTENSIONS FROM OTHER AREAS IF THEY HAD BEEN REQUIRED AT THE TIME THE ELTINGE WAS BERTHED AT PIER 34 SOUTH, AND THAT THE REASON THEY WERE NOT SUPPLIED AT THAT TIME WAS BECAUSE THEY WERE NOT REQUESTED BY THE MSTS AND NOT BECAUSE THEY WERE NOT AVAILABLE. UNDER SUCH CIRCUMSTANCES WE ARE UNABLE TO CONCLUDE THAT PACIFIC SHIP WAS NOT A RESPONSIBLE BIDDER UNDER THE IFB IN QUESTION.

WITH RESPECT TO THE SECOND CONTENTION, THE CONTRACTING OFFICER ADVISES THAT IT WAS NEVER THE INTENT OF THE SPECIFICATION TO HAVE SERVICES SUPPLIED FOR THE ENTIRE DURATION OF THE CONTRACT, BUT THAT IT WAS MERELY INTENDED THESE SERVICES BE AVAILABLE AT ANY OR ALL TIMES, SINCE NO ONE KNEW PRIOR TO THE COMMENCEMENT OF THE WORK JUST WHEN THE SERVICES WOULD BE REQUIRED. HE FURTHER SAYS THAT THE QUESTIONED LANGUAGE IN ITEM 1 IS PLACED IN APPLICABLE CONTRACTS AS A RESULT OF EXPERIENCE WHICH DICTATES THAT BOTH PARTIES SHOULD BE IN ACCORD AS TO WHEN THE SERVICES WILL BE REQUIRED; THAT THIS IS NECESSARY, SINCE THE SHIP MAY DESIRE TO SHUT DOWN AT TIMES WHEN SUCH A SHUT-DOWN WOULD INTERFERE WITH THE CONTRACTOR'S SCHEDULED TESTING OF WORK WHICH MIGHT REQUIRE MORE SERVICES THAN THOSE SPECIFIED IN THE SERVICES ITEM; AND THAT CONVERSELY, THE CONTRACTOR MIGHT DESIRE A SHUT-DOWN AT TIMES WHEN THE SHIP IS NOT IN A POSITION TO SHUT DOWN IMMEDIATELY.

WHILE THE INTENT OF THE PROVISIONS OF ITEM 1 OF THE SPECIFICATION MAY WELL BE AS INDICATED ABOVE BY THE CONTRACTING OFFICER, IT IS OUR OPINION THAT THE LANGUAGE OF ITEM 1 CLEARLY AND UNAMBIGUOUSLY IMPOSED UPON THE CONTRACTOR THE OBLIGATION TO SUPPLY THE ENUMERATED SERVICES FROM THE TIME OF THE SHIP'S ARRIVAL IN THE CONTRACTOR'S YARD TO THE COMPLETION OF THE CONTRACT WORK, IF THE CONTRACTOR HAD BEEN REQUESTED TO DO SO BY YOUR DEPARTMENT. IN VIEW THEREOF, IT IS OUR FURTHER OPINION THAT BIDDERS MUST REASONABLY BE EXPECTED TO HAVE GUARDED AGAINST THIS POSSIBILITY BY INCLUDING A SUFFICIENT AMOUNT IN THEIR BID PRICES TO COVER THE FULL COST OF SUCH SERVICES. IT FOLLOWS THAT, TO THE EXTENT THE GOVERNMENT ELECTED TO MAINTAIN A LIVE SHIP, THE GOVERNMENT FAILED TO RECEIVE SERVICES FOR WHICH A CHARGE WAS INCLUDED IN THE CONTRACT PRICE. IT IS AXIOMATIC THAT THERE CAN BE NO EFFECTIVE COMPETITION UNLESS BIDDERS ARE COMPETING ON A COMMON BASIS, AND THAT THERE CAN BE NO INTELLIGENT BIDDING FOR A CONTRACT UNLESS ALL BIDDERS KNOW WHAT THE CONTRACT REQUIREMENTS WILL BE. IF BIDDERS ARE REQUIRED TO OFFER THE SERVICES IN QUESTION WITHOUT REFERENCE TO THE DURATION OF THE PERIOD IN WHICH THEY MAY BE REQUIRED TO SUPPLY SUCH SERVICES, A PROPER BASIS IS LACKING FOR BIDDERS TO KNOW WHAT THEY ARE BIDDING FOR OR AGAINST.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT USE OF THE LANGUAGE INCLUDED IN ITEM 1 OF THE SPECIFICATION WOULD BE PROPER ONLY IN CASES WHERE IT IS CONTEMPLATED THAT THE CONTRACTOR WILL BE REQUIRED TO FURNISH THE SERVICES ENUMERATED IN ITEM 1 FOR ALL, OR SUBSTANTIALLY ALL, OF THE CONTRACT PERIOD. WHILE WE SEE NO BASIS FOR CORRECTIVE ACTION ON THE CONTRACT COVERING REPAIRS TO THE USNS ELTINGE, IT IS SUGGESTED THAT, FOR FUTURE PROCUREMENTS IN WHICH IT IS ANTICIPATED THE CONTRACTOR WILL NOT BE CALLED UPON TO PROVIDE ITEM 1 SERVICES FOR ALL, OR SUBSTANTIALLY ALL, OF THE CONTRACT PERIOD, CONSIDERATION BE GIVEN TO REVISING THE SHORE SERVICES PROVISION IN A MANNER WHICH WILL ASSURE THAT THE GOVERNMENT PAYMENTS FOR SUCH SERVICES ARE COMMENSURATE WITH THEIR USE. IT WOULD APPEAR THAT THIS MIGHT BE ACCOMPLISHED, AMONG OTHER METHODS, BY ADVISING BIDDERS OF THE ESTIMATED OR MAXIMUM PERIOD DURING WHICH THE GOVERNMENT WILL REQUIRE SHORE SERVICES, OR IF SUCH AN ESTIMATE IS IMPRACTICABLE, BY ADVISING BIDDERS THAT COMPENSATION FOR SHORE SERVICES REQUIRED BY THE GOVERNMENT WILL BE ACCOMPLISHED AT A STATED RATE BY AMENDMENT OF THE CONTRACT PRICE ON THE BASIS OF ACTUAL USE.

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