B-157172, JAN. 21, 1966, 45 COMP. GEN. 436

B-157172: Jan 21, 1966

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WHICH IS NOT REQUIRED OR IMPLIED BY THE INVITATION. WAS PROPERLY EXCLUDED BY THE CONTRACTING OFFICER. ISSUANCE OF INSTRUCTIONS TO THAT EFFECT ARE RECOMMENDED. THE MATTER WAS "RESOLVED" PRIOR TO AWARD WITHIN THE CONTEMPLATION OF PARAGRAPH 2-407.9. CANCELLATION OF THE CONTRACT AWARDED IS NEITHER JUSTIFIED NOR REQUIRED. 1966: REFERENCE IS MADE TO YOUR LETTER OF JULY 9. WAS SET FORTH UNDER ARTICLE 1 OF THE IFB. THAT PROVISION ADVISED BIDDERS SUCH DESTINATION WAS BEING USED ONLY FOR BID EVALUATION PURPOSES AND THAT "THE GOVERNMENT WILL ADD THE COST OF TRANSPORTATION OF SUPPLIES DETERMINING THE OVERALL COST OF THE SUPPLIES TO THE GOVERNMENT. SUCH PROCEDURE IS PRESCRIBED IN PARAGRAPH 1-1305.5 OF THE ARMED SERVICES PROCUREMENT REGULATION WHEN THE EXACT DESTINATION OF THE SUPPLIES BEING PURCHASED IS NOT KNOWN AT THE TIME BIDS ARE SOLICITED.

B-157172, JAN. 21, 1966, 45 COMP. GEN. 436

BIDS - EVALUATION - DELIVERY PROVISIONS - FREIGHT RATES - "FABRICATION IN -TRANSIT" PRIVILEGES. IN THE EVALUATION OF BIDS UNDER AN INVITATION FOR FABRICATED STEEL BRIDGE COMPONENTS, FOR SHIPMENT F.O.B. ORIGIN, MAXIMUM SHIPPING WEIGHT GUARANTEED, TO A TENTATIVE DESTINATION, THE EXACT DESTINATION BEING UNKNOWN, A PROCEDURE PRESCRIBED BY PARAGRAPH 1-1305.5 OF THE ARMED SERVICES PROCUREMENT REGULATION, THE CONSIDERATION AFTER BID OPENING OF A "FABRICATION-IN-TRANSIT" OFFER, A PROCEDURE PROVIDED IN PARAGRAPH 1 1308, WHICH IS NOT REQUIRED OR IMPLIED BY THE INVITATION, NOR CONFIRMED BY THE CUSTOM AND PRACTICE OF THE TRADE, WAS PROPERLY EXCLUDED BY THE CONTRACTING OFFICER, THE ACCEPTANCE OF THE OFFER MADE AFTER BID OPENING TO REDUCE TRANSPORTATION COSTS BY TRANSFERRING TRANSIT CREDITS AVAILABLE TO THE BIDDER WOULD BE INCONSISTENT WITH THE PRESERVATION AND MAINTENANCE OF THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM AND, ALTHOUGH NO IMPROPRIETY OCCURRED IN THE EVALUATION OF BIDS TO NEGATE THE VALIDITY OF THE AWARD MADE, TO ASSURE THAT THE GOVERNMENT RECEIVES THE BENEFIT OF AVAILABLE TRANSIT PRIVILEGES IN FUTURE PROCUREMENTS, ISSUANCE OF INSTRUCTIONS TO THAT EFFECT ARE RECOMMENDED. BIDS - EVALUATION - DELIVERY PROVISIONS - INFORMATION - AFTER BID OPENING BUT PRIOR TO AWARD ALTHOUGH THE COMMUNICATIONS RECEIVED FROM A BIDDER AFTER THE OPENING OF BIDS OFFERING PURSUANT TO PARAGRAPH 1-1308 OF THE ARMED SERVICES PROCUREMENT REGULATION "FABRICATION-IN-TRANSIT" PRIVILEGES MAY BE CONSTRUED AS A PROTEST MADE PRIOR TO AWARD AGAINST THE USE OF LOCAL FREIGHT RATES IN THE EVALUATION OF BIDS, THE BASIS OF THE PROTEST HAVING BEEN CONSIDERED PRIOR TO AWARD IN AN EVALUATION OF FREIGHT COSTS AND IN THE DETERMINATION THAT TRANSIT CREDITS ACCRUING TO A FABRICATOR OF STEEL MAY NOT PROPERLY BE USED IN COMPUTING TRANSPORTATION COSTS TO THE GOVERNMENT, THE MATTER WAS "RESOLVED" PRIOR TO AWARD WITHIN THE CONTEMPLATION OF PARAGRAPH 2-407.9, AND CANCELLATION OF THE CONTRACT AWARDED IS NEITHER JUSTIFIED NOR REQUIRED.

TO COVINGTON AND BURLING, JANUARY 21, 1966:

REFERENCE IS MADE TO YOUR LETTER OF JULY 9, 1965, AND SUBSEQUENT CORRESPONDENCE WRITTEN IN BEHALF OF ALLISON STEEL MANUFACTURING COMPANY AND PROTESTING AGAINST THE AWARD OF A CONTRACT FOR STEEL BRIDGE COMPONENTS TO ISAACSON IRON WORKS BY THE ARMY MOBILITY EQUIPMENT CENTER, ST. LOUIS, MISSOURI, UNDER IFB NO. AMC/T/23-195-65-370 ISSUED MAY 21, 1965.

THE INVITATION SOLICITED BIDS ON 16 ITEMS OF STEEL BRIDGE COMPONENTS IN VARIOUS QUANTITIES ON AN F.O.B. ORIGIN BASIS AND SPECIFIED THAT BIDS SUBMITTED ON A BASIS OTHER THAN F.O.B. ORIGIN WOULD BE REJECTED AS NONRESPONSIVE. ALTHOUGH THE TENTATIVE DESTINATION, ENGINEER MISSION PROPERTY OFFICER, SHARPE ARMY DEPOT, U.S. ARMY, LATHROP, CALIFORNIA, WAS SET FORTH UNDER ARTICLE 1 OF THE IFB, THAT PROVISION ADVISED BIDDERS SUCH DESTINATION WAS BEING USED ONLY FOR BID EVALUATION PURPOSES AND THAT "THE GOVERNMENT WILL ADD THE COST OF TRANSPORTATION OF SUPPLIES DETERMINING THE OVERALL COST OF THE SUPPLIES TO THE GOVERNMENT. FINAL SHIPPING INSTRUCTIONS TO BE FURNISHED AT A LATER DATE.' SUCH PROCEDURE IS PRESCRIBED IN PARAGRAPH 1-1305.5 OF THE ARMED SERVICES PROCUREMENT REGULATION WHEN THE EXACT DESTINATION OF THE SUPPLIES BEING PURCHASED IS NOT KNOWN AT THE TIME BIDS ARE SOLICITED, BUT THE GENERAL LOCATION OF THE DESTINATION, SUCH AS EAST COAST, MIDDLE WEST OR WEST COAST, IS KNOWN. UNDER ARTICLE 2 BIDDERS WERE REQUIRED TO STATE AND GUARANTEE A MAXIMUM SHIPPING WEIGHT AND THEREIN WERE FURTHER ADVISED THAT "EACH BID WILL BE EVALUATED TO THE DESTINATION SPECIFIED BY ADDING TO THE F.O.B. ORIGIN PRICE ALL TRANSPORTATION COSTS TO SAID DESTINATION. THE GUARANTEED MAXIMUM SHIPPING WEIGHTS (AND DIMENSIONS IF APPLICABLE) ARE REQUIRED FOR DETERMINATION OF TRANSPORTATION COSTS.'

A COMPARISON OF THE SIX RESPONSIVE BIDS RECEIVED BY BID OPENING TIME ON JUNE 10, 1965, PLUS ARMY'S COMPUTATION OF THE TRANSPORTATION COSTS FROM SHIPPING POINTS OF ORIGIN TO LATHROP, CALIFORNIA, ON THE MAXIMUM WEIGHTS GUARANTEED BY THE BIDDERS IS AS FOLLOWS:

BIDDER BID PRICE FREIGHT TOTAL

ISAACSON IRON WORKS $1,352,050.64 $ 86,856.72 $1,438,907.36

ALLISON STEEL MFG. CO. 1,340,058.45 145,296.00 1,485,354.45

MURPHY PACIFIC

CORPORATION 1,517,313.00 20,804.00 1,538,153.00

BRISTOL STEEL & IRON

WORKS 1,492,124.84 229,467.00 1,721,591.84

UNITED STATES STEEL 1,526,249.42 229,621.42 1,755,870.84

MCDERMOTT STEEL

SPECIALTIES INC. 1,655,627.04242,955.21 1,898,582.25

ON JUNE 30, 1965, AWARD WAS MADE TO ISAACSON IRON WORKS AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER.

IN EVALUATING THE ALLISON BID ARMY COMPUTED THE TRANSPORTATION CHARGES AS $145,296 BASED ON AN APPLICATION OF LOCAL FREIGHT RATES TO ALLISON'S GUARANTEED MAXIMUM SHIPPING WEIGHT OF 10,090,000 POUNDS. WHILE WE FEEL THAT THE LOWEST AVAILABLE TRANSPORTATION RATE FROM PHOENIX TO SHARPE ARMY DEPOT ON THE FABRICATED STEEL BRIDGE COMPONENTS IS $1.28 1/2 PER HUNDREDWEIGHT (CONSISTING OF A COMBINATION OF RAIL RATES CONSTRUCTED OVER LOS ANGELES, CALIFORNIA) FOR A TOTAL FREIGHT CHARGE OF $129,656.50 ON THE GUARANTEED MAXIMUM WEIGHT, SUCH FACTOR DOES NOT CHANGE THE RELATIVE STANDINGS OF THE ALLISON AND THE ISAACSON BIDS. IT IS ALSO NOTED THAT THE FREIGHT CHARGES FOR THE ISAACSON BID, BASED ON A LOCAL FREIGHT RATE OF $0.85 PER CWT. AND ISAACSON'S GUARANTEED MAXIMUM WEIGHT OF 10,218,320 POUNDS, SHOULD BE $86,855.72 RATHER THAN $86,856.72 AS SHOWN BY THE ARMY.

IN YOUR PROTEST TO THIS OFFICE IT IS STATED THAT PROMPTLY AFTER THE BIDS WERE OPENED, AND BY SUBSEQUENT COMMUNICATIONS OF JUNE 14 AND 28, 1965, ALLISON POINTED OUT TO THE CONTRACTING OFFICER THE APPLICABILITY OF A "FABRICATION-IN-TRANSIT" CHARGE IN COMPUTING THE LOWEST COSTS TO THE GOVERNMENT FOR TRANSPORTING THE FABRICATED ITEMS FROM PHOENIX TO THE SPECIFIED DESTINATION, LATHROP, CALIFORNIA. YOU CONTEND THAT THE CONTRACTING OFFICER ERRED IN NOT EVALUATING ALLISON'S BID ON THE BASIS OF SUCH CHARGES IN ACCORDANCE WITH PARAGRAPH 1-1308 OF ASPR, WHICH REQUIRES CONSIDERATION OF ANY BENEFITS WHICH MAY ACCRUE TO THE GOVERNMENT THROUGH USE OF TRANSIT ARRANGEMENTS, AND ALSO BY NOT TREATING YOUR COMMUNICATIONS AS A PROTEST PRIOR TO AWARD AND FOLLOWING THE PROCEDURES PRESCRIBED UNDER ASPR 2-407.9.

YOU ALLEGE THAT THE NATURE AND QUANTITY OF MOST OF THE STEEL (WIDE FLANGE BEAMS) REQUIRED BY THE PROCUREMENT PRECLUDES IT FROM BEING IN THE INVENTORY OF ANY OF THE BIDDERS, AND THAT ALLISON, AS IN THE CASE OF ALL BIDDERS WEST OF CHICAGO, ILLINOIS, WOULD, AS A PRACTICAL MATTER, HAVE TO ACQUIRE SUCH STEEL FROM THE STEEL MILLS AT GARY, INDIANA. YOU FURTHER ALLEGE THAT UNDER SUCH CIRCUMSTANCES VALID TRANSIT PRIVILEGES EXIST WHICH, FOR A SMALL CHARGE OF 5 1/2 CENTS A HUNDRED POUNDS, PERMIT THE FABRICATION OF THE COMPONENTS AT PHOENIX ON THE THROUGH RATE TO LATHROP (WHICH IS THE SAME AS THE RATE TO PHOENIX) AND THAT THE GOVERNMENT'S RIGHT TO THE BENEFITS OF FABRICATION-IN-TRANSIT PRIVILEGES IS IMPLIED IN THE LANGUAGE OF THE IFB, AND IS CONFIRMED BY A WELL ESTABLISHED CUSTOM AND PRACTICE OF THE TRADE.

TRANSIT ARRANGEMENTS ARE BASED UPON THE FICTION THAT THE INBOUND AND OUTBOUND FREIGHT MOVEMENTS, WHILE IN FACT SEPARATE SHIPMENTS, ARE A CONTINUOUS THROUGH FREIGHT MOVEMENT FROM INITIAL POINT OF ORIGIN TO FINAL DESTINATION. CENTRAL R.R.CO. OF N.J. V. UNITED STATES, 257 U.S. 247, 257. WHILE THE TRANSFER OF OWNERSHIP TO THE UNITED STATES AT PHOENIX WOULD NOT ELIMINATE THE TRANSIT PRIVILEGE, IT DOES REMOVE ALL CONTROL OVER THE COMMODITY BY THE FABRICATOR BEYOND THE POINT OF FABRICATION, AND IT SHIFTS THE RESPONSIBILITY FOR ADDITIONAL FREIGHT CHARGES FROM THE FABRICATOR'S PLANT TO THE UNITED STATES. CUDAHY PACKING CO. V. BALTIMORE AND O.R.CO., 263 I.C.C. 503, 510.

AS A CONDITION PRECEDENT TO THE AVAILABILITY OF THE TRANSIT PRIVILEGE, PACIFIC SOUTH COAST FREIGHT TARIFF 264-I, I.C.C. 1750, WHICH SPECIFICALLY PERMITS TRANSFER OF OWNERSHIP OF CARLOAD FREIGHT AT THE TRANSIT (FABRICATION) POINT (ITEM 1130), REQUIRES THAT THE INBOUND FREIGHT BILLS COVERING SHIPMENTS FOR TRANSIT BE PRESENTED TO THE CARRIER AND RECORDED FOR TRANSIT WITHIN THIRTY (30) DAYS (ITEM 1010), AND THAT THE TRANSIT HOUSE (FABRICATOR) MAKE SWORN SEMIANNUAL STATEMENTS SHOWING THE NUMBER OF POUNDS OF THE TRANSIT COMMODITY ON HAND AND AN ITEMIZED LISTING OF FREIGHT BILLS AND TONNAGE CREDIT SLIPS (ITEM 1020). THE TRANSIT TARIFF ALSO REQUIRES THE SURRENDER OF VALID TRANSIT CREDITS BEFORE 5 P.M. ON THE SECOND DAY (EXCLUDING SATURDAYS, SUNDAYS, AND HOLIDAYS) FOLLOWING ISSUANCE OF INSTRUCTIONS FOR RESHIPMENT FROM THE TRANSIT STATION.

THE CONDITIONS OF THE TRANSIT TARIFF MUST BE OBSERVED BEFORE THE TRANSIT PRIVILEGE CAN BE EXERCISED. LAKE CHARLES RICE MILLING CO. OF LOUISIANA V. BRIMSTONE R.ANDC.CO., 197 I.C.C. 1, 13; TRANSIT ON VEGETABLE OILS IN SOUTHERN TERRITORY, 197 I.C.C. 705, 712; THAXTER AND CO. V. DIRECTOR GENERAL, 168 I.C.C. 30, 32. TO BRING THESESHIPMENTS WITHIN THE SCOPE OF THE TRANSIT ARRANGEMENT, STRICT COMPLIANCE WITH ALL OF THE PROVISIONS OF THE TRANSIT TARIFF IS REQUIRED. SMITH AND SCOTT, INC. V. ATCHISON, T.ANDS.F.RY.CO., 192 I.C.C. 593, 598; HILL GRAIN CO. V. ATCHISON, ANDS.F.RY.CO., 206 I.C.C. 265, 267. AND THE BURDEN OF ESTABLISHING SUCH COMPLIANCE IS ON THE SHIPPER, NOT THE CARRIER. FOLDING FURNITURE WORKS, INC. V. MINNEAPOLIS, ST.P.ANDS.S.M.RY.CO., 227 I.C.C. 159, 161.

IN ADDITION TO THE ABOVE FACTORS, THE USE OF FABRICATION-IN-TRANSIT CHARGES IN THE EVALUATION OF THE BIDS WOULD BE DEPENDENT UPON EXPLICIT INFORMATION BY BIDDERS AS TO THE EXTENT AND SOURCES OF ALL THE BASIC MATERIALS TO BE PROCURED FOR FABRICATION. SUCH ESSENTIAL INFORMATION WAS NEITHER REQUESTED IN THE IFB NOR FURNISHED WITH ANY OF THE BIDS, INCLUDING THAT OF ALLISON. IN THIS CONNECTION, IT IS NOTED THAT YOUR SUBSEQUENT COMMUNICATIONS WITH THIS OFFICE SHOW THAT TRANSIT PRIVILEGES WOULD NOT HAVE BEEN AVAILABLE TO THE GOVERNMENT ON ALL OF THE MATERIALS PROPOSED TO BE PROCURED BY ALLISON, SINCE A PORTION OF ALLISON'S BASIC STEEL WAS TO COME FROM LOS ANGELES, CALIFORNIA.

CONTRARY TO YOUR CONTENTION WE DO NOT AGREE THAT A GOVERNMENT RIGHT TO THE BENEFITS OF FABRICATION-IN-TRANSIT PRIVILEGES IS IMPLICIT IN THE LANGUAGE OF THE IFB, NOR DOES THE RECORD BEFORE US CONCLUSIVELY ESTABLISH THAT IT IS AN INVARIABLE CUSTOM AND PRACTICE OF THE INDUSTRY FOR FABRICATORS TO PASS SUCH BENEFITS ON TO A PURCHASER IN THE ABSENCE OF A SPECIFIC AGREEMENT TO DO SO. AS STATED ABOVE, THE IFB PROVIDED THAT THE GOVERNMENT WOULD DETERMINE THE TRANSPORTATION COSTS AND NO MENTION IS MADE THEREIN AS TO HOW SUCH COSTS WOULD BE DETERMINED. THE IFB IS TOTALLY DEVOID OF ANY REFERENCE OR SUGGESTION THAT TRANSIT ARRANGEMENTS WOULD BE USED IN THE EVALUATION PROCESS, AND SINCE INFORMATION ESSENTIAL FOR CONSIDERATION OF SUCH FACTOR WAS NOT REQUESTED THEREIN WE DO NOT BELIEVE IT MAY REASONABLY BE CONCLUDED THAT ANY RIGHT ON THE PART OF THE GOVERNMENT TO THE BENEFITS OF FABRICATION-IN-TRANSIT PRIVILEGES IS IMPLICIT IN THE LANGUAGE OF THE IFB. CONVERSELY, IT WOULD APPEAR THAT TRANSIT CREDITS ARE A VALUABLE ASSET WHICH MAY BE OFFERED OR USED IN VARYING CIRCUMSTANCES TO THE HOLDER'S ADVANTAGE AND, IN THE SITUATION HERE CONCERNED, THE DECISION AS TO WHETHER ANY TRANSIT CREDITS OBTAINED BY THE CONTRACTOR AS A RESULT OF ITS PROCUREMENT OF THE BASIC STEEL SHOULD BE APPLIED TO THE GOVERNMENT'S SUBSEQUENT SHIPMENT OF THE FABRICATED ITEMS WOULD BE A MATTER SOLELY WITHIN THE DISCRETION OF THE CONTRACTOR, RATHER THAN ANY SPECIFIC LEGAL RIGHT ACCRUING TO THE GOVERNMENT UPON AWARD OF THE CONTRACT. IN VIEW THEREOF, AND SINCE NO OFFER WAS MADE IN ANY OF THE BIDS TO REDUCE THE GOVERNMENT'S TRANSPORTATION COSTS BY TRANSFERRING TO THE GOVERNMENT ALL, OR A SPECIFIED PORTION OF, ANY TRANSIT CREDITS WHICH MIGHT BE AVAILABLE TO THE CONTRACTOR, WE PERCEIVE NO LEGAL BASIS ON WHICH SUCH BENEFITS COULD PROPERLY HAVE BEEN CONSIDERED BY THE CONTRACTING OFFICER IN EVALUATING THE BIDS. SINCE THE FIRST INDICATION BY ALLISON THAT TRANSIT BENEFITS WOULD ACCRUE TO THE GOVERNMENT BY AN AWARD TO THAT FIRM WAS AFTER THE TIME OF BID OPENING, SUCH FACTOR WAS PROPERLY EXCLUDED FROM THE EVALUATION PROCESS IN ACCORD WITH DECISIONS OF THIS OFFICE WHICH HAVE CONSISTENTLY HELD THAT THE PRESERVATION AND MAINTENANCE OF THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM DICTATES THAT NO BIDDER WILL HAVE THE OPPORTUNITY AFTER THE OPENING OF BIDS TO ACT IN A MANNER THAT WOULD BE UNFAIR OR DETRIMENTAL TO OTHER BIDDERS.

REGARDING YOUR CONTENTION THAT ALLISON'S COMMUNICATIONS OF JUNE 14 AND 28, 1965, TO THE PROCURING ACTIVITY SHOULD HAVE BEEN HANDLED AS A PROTEST PRIOR TO AWARD UNDER THE PROCEDURES PRESCRIBED BY ASPR 2-407.9, IT IS NOTED THAT IN ALLISON'S LETTER OF JUNE 14 YOU ADVISED THE ACTIVITY IN PART AS FOLLOWS:

THIS WILL CONFIRM OUR MEETING OF JUNE 11TH, IN WHICH WE ADVISED THAT ACCORDING TO OUR CALCULATIONS AT LEAST, WE WERE THE APPARENT LOW BIDDER ON THE ABOVE PROJECT ON AN F.O.B. ORIGIN BASIS.

WE WENT ON TO POINT OUT THAT WE WISH TO BE SURE THAT WHEN OUR FREIGHT CHARGES FROM PHOENIX, ARIZONA, TO LATHROP, CALIFORNIA WERE EVALUATED, THAT OUR FABRICATE IN TRANSIT PRIVILEGES WOULD BE TAKEN INTO CONSIDERATION. BASED ON ITEM 3610, PARAGRAPH A, AND ITEM 3900-A, SUPPLEMENT 23 TO PACIFIC SOUTH COAST FREIGHT BUREAU, TARIFF 264-1 ICC 1750, OUR FREIGHT RATE INTO LATHROP WOULD BE $ .055/CWT.

IN ITS TELEGRAM OF JUNE 28 ALLISON ADVISED THE MOBILITY EQUIPMENT CENTER THAT, REGARDING ITS EVALUATION OF FREIGHT CHARGES FOR COMMUNICATION BRIDGE COMPONENTS AND YOUR FABRICATION-IN-TRANSIT PRIVILEGES INTO SHARPE GENERAL DEPOT, YOU WISHED TO CALL THE CENTER'S ATTENTION TO ASPR 1-1308 PERTAINING TO CONSIDERATION OF BENEFITS AFFORDED BY TRANSIT ARRANGEMENTS WHICH PARAGRAPH YOU QUOTED IN FULL.

WHILE WE ARE INCLINED TO AGREE WITH YOUR VIEW THAT SUCH A COMMUNICATION MAY REASONABLY BE CONSTRUED AS A PROTEST AGAINST THE USE OF LOCAL FREIGHT RATES IN THE EVALUATION OF YOUR BID, WE DO NOT AGREE THAT THE CONTRACTING OFFICER'S ACTIONS IN CONNECTION THEREWITH AFFECTED THE VALIDITY OF THE CONTRACT AWARDED TO ISAACSON. IN THIS CONNECTION, IT SHOULD BE NOTED THAT ASPR 2-407.9 (A), CITED BY YOU, PROVIDES THAT "CONTRACTING OFFICERS" SHALL CONSIDER PROTESTS OR OBJECTIONS TO THE AWARD OF A CONTRACT WHETHER SUBMITTED BEFORE, OR AFTER AWARD, AND, WHEN A PROTEST HAS NOT BEEN LODGED DIRECTLY WITH THE COMPTROLLER GENERAL, SUBPARAGRAPH (B) (2) ONLY REQUIRES THAT THE VIEWS OF HIS OFFICE BE OBTAINED BEFORE AWARD "WHENEVER SUCH ACTION IS CONSIDERED TO BE APPROPRIATE.' ALTHOUGH SUBPARAGRAPH 2-407.9 (B) (3) PROVIDES THAT WHERE A WRITTEN PROTEST AGAINST THE MAKING OF AN AWARD IS RECEIVED, AWARD SHALL NOT BE MADE "UNTIL THE MATTER IS RESOLVED" (WITH EXCEPTIONS NOT HERE INVOLVED), THAT PROVISION DOES NOT SPECIFY A PARTICULAR LEVEL AT WHICH SUCH DETERMINATION IS TO BE MADE. THE RECORD SHOWS THAT THE BASIS OF YOUR PROTEST WAS CONSIDERED BEFORE AWARD IN AN EVALUATION OF FREIGHT COSTS BY CENTER OFFICIALS AT A MEETING HELD ON JUNE 25, 1965, AND ATTENDED BY THE LEGAL OFFICER, TRANSPORTATION OFFICER, CONTRACT SPECIALIST, DEPUTY CHIEF, PROCUREMENT DIVISION AND THE CHIEF, SECTION C, CONSTRUCTION AND COMBAT EQUIPMENT BRANCH. IT WAS THE UNANIMOUS OPINION OF THOSE IN ATTENDANCE THAT TRANSIT CREDITS WHICH MIGHT ACCRUE TO A FABRICATOR BY REASON OF ITS PURCHASE OF THE BASIC STEEL AT GARY, INDIANA, WERE NOT PROPERLY FOR CONSIDERATION IN COMPUTING THE GOVERNMENT'S TRANSPORTATION COSTS. IRRESPECTIVE OF WHETHER SUCH OPINION WAS BASED UPON A PROPER ANALYSIS OF THE CIRCUMSTANCES UNDER WHICH TRANSIT PRIVILEGES COULD BE MADE AVAILABLE TO THE GOVERNMENT, WE MUST CONCLUDE THAT THE MATTER WAS "RESOLVED" PRIOR TO AWARD, WITHIN THE CONTEMPLATION OF ASPR 2- 407.9.

ACCORDINGLY, WE DO NOT PERCEIVE SUCH IMPROPRIETY IN THE EVALUATION AND AWARD ACTIONS AS WOULD NEGATE THE APPARENT VALIDITY OF THE AWARD MADE TO ISAACSON IRON WORKS AND EITHER JUSTIFY OR REQUIRE CANCELLATION OF THE CONTRACT.

WHILE YOUR PROTEST MUST THEREFORE BE DENIED, WE HAVE ADVISED THE SECRETARY OF THE ARMY AND THE SECRETARY OF DEFENSE TO CONSIDER THE ISSUANCE OF APPROPRIATE INSTRUCTIONS WHICH WILL ASSURE THAT THE GOVERNMENT WILL RECEIVE THE BENEFIT OF TRANSIT PRIVILEGES IN ALL FUTURE PROCUREMENTS WHERE SUCH PRIVILEGES CAN BE MADE AVAILABLE TO THE GOVERNMENT.