B-158095, FEB. 9, 1966

B-158095: Feb 9, 1966

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TO THE FOWLER CONSTRUCTION COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 22. DISCOUNTS FOR PAYMENTS MADE WITHIN TWENTY AND THIRTY DAYS ARE SOLICITED AND WILL BE INCLUDED IN THE EVALUATION OF BIDS. BECAME LOW WHEN THEIR PROFFERED DISCOUNT WAS CONSIDERED AND. AWARD OF THE CONTRACT WAS MADE TO THEM. YOU CONTEND THAT "IT IS A DEPARTURE FROM PROCEDURE NOT PERMITTED BY REGULATION" TO EVALUATE DISCOUNT PROVISIONS IN DETERMINING THE BIDDER ENTITLED TO AN AWARD ON A CONSTRUCTION CONTRACT. IT IS YOUR ASSERTION THAT 32 CFR. IT WILL BE NOTED THAT THE ABOVE SECTION DOES NOT PROHIBIT THE INCLUSION OF DISCOUNT PROVISIONS IN AN INVITATION FOR BIDS ON CONSTRUCTION CONTRACTS (STANDARD FORM 21).

B-158095, FEB. 9, 1966

TO THE FOWLER CONSTRUCTION COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 22, 1965, PROTESTING THE CONSIDERATION OF A PROMPT PAYMENT DISCOUNT IN CONNECTION WITH THE AWARD OF CONTRACT NBY-60126 FOR CONSTRUCTION OF THE GROUP OPERATIONS AND TRAINING BUILDING, AIR NATIONAL GUARD, AT THE DULUTH INTERNATIONAL AIRPORT, DULUTH, MINNESOTA.

THE INVITATION FOR BIDS, ISSUED SEPTEMBER 3, 1965, AND OPENED OCTOBER 14, 1965, CONTAINED THE FOLLOWING ACCOMPANYING SPECIFICATION:

"SECTION 1C. BIDS.

"1C.4 DISCOUNTS. DISCOUNTS FOR PAYMENTS MADE WITHIN TWENTY AND THIRTY DAYS ARE SOLICITED AND WILL BE INCLUDED IN THE EVALUATION OF BIDS.

OF THE SIX BIDS RECEIVED AND OPENED AS SCHEDULED, THREE OFFERED A PROMPT PAYMENT DISCOUNT AND THREE, INCLUDING YOURS, DID NOT. THE BID OF J. R. JENSEN AND SON, INCORPORATED, BECAME LOW WHEN THEIR PROFFERED DISCOUNT WAS CONSIDERED AND, ACCORDINGLY, AWARD OF THE CONTRACT WAS MADE TO THEM.

IN YOUR LETTER OF NOVEMBER 22, 1965, YOU CONTEND THAT "IT IS A DEPARTURE FROM PROCEDURE NOT PERMITTED BY REGULATION" TO EVALUATE DISCOUNT PROVISIONS IN DETERMINING THE BIDDER ENTITLED TO AN AWARD ON A CONSTRUCTION CONTRACT. IT IS YOUR ASSERTION THAT 32 CFR, CHAPTER 1, SUBPART B, SECTION 2.201 (38) (B) PROVIDES THAT DISCOUNT PROVISIONS SHALL NOT BE MADE PART OF THE INVITATION FOR BIDS ON CONSTRUCTION CONTRACTS. THIS SECTION, WHICH PERTAINS TO THE PREPARATION OF AN INVITATION FOR BIDS AND THE APPLICABLE INFORMATION TO BE CONTAINED THEREIN, PROVIDES:

"WHEN USING STANDARD FORM 30 * * * A BRIEF DESCRIPTION OF THE ITEM BEING PROCURED * * *.

"/B) FOR SUPPLY AND SERVICE CONTRACTS, EXCLUDING CONSTRUCTION, THE INVITATION FOR BIDS SHALL CONTAIN THE FOLLOWING * * *.

"/1) DISCOUNT PROVISIONS * * *.'

IT WILL BE NOTED THAT THE ABOVE SECTION DOES NOT PROHIBIT THE INCLUSION OF DISCOUNT PROVISIONS IN AN INVITATION FOR BIDS ON CONSTRUCTION CONTRACTS (STANDARD FORM 21), BUT RATHER PROVIDES THAT AN INVITATION FOR BIDS ON SUPPLY AND SERVICE CONTRACTS (STANDARD FORM 30) MUST CONTAIN A PROVISION FOR DISCOUNT. IN OTHER WORDS, THE PHRASE "EXCLUDING CONSTRUCTION" MEANS THAT THERE IS NO MANDATORY REQUIREMENT THAT A DISCOUNT PROVISION BE INCLUDED IN A CONSTRUCTION CONTRACT.

IN FURTHER SUPPORT OF YOUR CONTENTION, YOU ALSO CITED 32 CFR, SECTION 2.407-3 (A) (ASPR 2-407.3), WHICH PROVIDES:

"PRIOR TO ISSUING AN INVITATION FOR BIDS (EXCEPT FOR CONSTRUCTION), A DETERMINATION SHALL BE MADE AS TO WHAT MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNTS WILL BE CONSIDERED IN THE EVALUATION OF BIDS, AND SUCH MINIMUM PERIODS SHALL BE STATED IN THE INVITATION FOR BIDS. * * *"

YOU SUBMIT THAT "TO INCLUDE A COMPUTATION OF DISCOUNT PROVISIONS IN DETERMINING THE BIDDER ENTITLED TO AN AWARD" WOULD BE AN ERROR BECAUSE OF THIS REGULATION.

IN DECISION OF MARCH 16, 1961, B-144779, 40 COMP. GEN. 581, COPY ENCLOSED, IT WAS HELD THAT THE ABOVE PROVISION DOES NOT REQUIRE THE CONCLUSION THAT A DISCOUNT OFFERED IN A BID FOR CONSTRUCTION WORK SHOULD BE IGNORED. THE PROVISION IS RECOGNITION OF THE PRACTICE OF BIDDERS FURNISHING SUPPLIES TO OFFER DISCOUNTS FOR PROMPT PAYMENT. WHILE SUCH PRACTICE HAS BEEN MADE MANDATORY IN SUPPLY AND SERVICE CONTRACTS, THERE IS NOTHING IN THE REGULATIONS WHICH PROHIBITS THE INCLUSION OF DISCOUNT PROVISION IN AN INVITATION FOR BIDS ON A CONSTRUCTION CONTRACT.

IN VIEW OF THE FOREGOING, AND SINCE THE INVITATION FOR BIDS HERE INVOLVED SPECIFICALLY PROVIDED THAT PROMPT PAYMENT DISCOUNTS WOULD BE CONSIDERED IN THE EVALUATION OF BIDS, WE FIND NO BASIS TO QUESTION THE ADMINISTRATIVE ACTION TAKEN, AND, THEREFORE, YOUR PROTEST MUST BE DENIED.