B-158783, JUN. 17, 1966

B-158783: Jun 17, 1966

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EMMERGLICK: REFERENCE IS MADE TO YOUR LETTERS DATED MARCH 23. BIDS WERE INVITED FOR DELIVERY OF MATERIAL EITHER F.O.B. FIVE BIDS WERE RECEIVED AS FOLLOWS: TABLE MITSUI AND COMPANY LIMITED. IF IT APPEARS THAT A MISTAKE WAS NOT MADE THAT A DETERMINATION BE MADE REGARDING THE DETAILS OF THE BELOW COST ASPECTS OF THE LOW BID AND THAT SUCH INFORMATION BE FURNISHED TO THE APPROPRIATE GOVERNMENTAL AUTHORITY PRIOR TO ANY AWARD OF THE PROCUREMENT. IT IS ADMINISTRATIVELY REPORTED THAT THE PROCURING AGENCY ENGINEER'S ESTIMATE FOR THE ENTIRE QUANTITY OF MATERIALS TO BE PURCHASED WAS$643. THE LOW BID SUBMITTED BY KAISER WAS DETERMINED TO BE RESPONSIVE SINCE IT MET ALL THE REQUIREMENTS OF THE INVITATION.

B-158783, JUN. 17, 1966

TO MR. LEONARD J. EMMERGLICK:

REFERENCE IS MADE TO YOUR LETTERS DATED MARCH 23, AND 31 AND APRIL 12, 1966, PROTESTING, ON BEHALF OF THE LUPTON MANUFACTURING COMPANY, ACCEPTANCE OF THE BID OF THE KAISER ALUMINUM AND CHEMICAL SALES UNDER DEPARTMENT OF THE INTERIOR, BONNEVILLE POWER ADMINISTRATION, INVITATION FOR BIDS NO. 280.

THE INVITATION, ISSUED ON DECEMBER 22, 1965, COVERED 466 TYPE 88Q, 85- FOOT TOWERS AND RELATED MAST EXTENSIONS FOR USE IN A 750 KV DIRECT- CURRENT TRANSMISSION LINE. BIDS WERE INVITED FOR DELIVERY OF MATERIAL EITHER F.O.B. DESTINATION, BEND, OREGON, IN 480 CALENDAR DAYS OR F.O.B. SHIPPING POINT IN 460 CALENDAR DAYS FROM DATE OF AWARD. FIVE BIDS WERE RECEIVED AS FOLLOWS:

TABLE

MITSUI AND COMPANY LIMITED, SEATTLE, WASH. $2,406,038.34

(SPECIFYING JAPAN SOURCE) F.O.B. BEND, OREGON

LUPTON MANUFACTURING CO., PHILADELPHIA, PA.

F.O.B. FACTORY (PHILADELPHIA) WITH FREIGHT 826,905.00

ALLOWED TO DESTINATION

PHELPS DODGE COPPER PRODUCTS CORPORATION,

NEW YORK, N.Y., F.O.B., BEND, OREGON 1,206,627.88

KAISER ALUMINUM AND CHEMICAL SALES, OAKLAND, CALIF.

F.O.B. BEND, OREGON 606,084.00

FENTRON INDUSTRIES, INC., SEATTLE, WASH.

F.O.B. TRUCKS, UNLOADING SITE, BEND, OREGON 1,035,549.00

YOU STATE THAT THE VARIANCE BETWEEN THE LOWEST BID BY KAISER AND THE SECOND LOWEST BID BY LUPTON AND THE PRESUMED VARIANCE BETWEEN THE KAISER BID AND THE TARGET PRICE FORMULATED BY THE PROCUREMENT AUTHORITY WARRANT A PRESUMPTION THAT A MISTAKE IN BID OCCURRED ON THE PART OF THE LOWEST BIDDER, KAISER. YOU STATE FURTHER THAT IF A MISTAKE DID NOT OCCUR IN THE KAISER BID, SAID BID REPRESENTS AN OFFER TO SELL BELOW COST WHICH RAISES A SERIOUS QUESTION AS TO THE POSSIBLE VIOLATION OF THE ANTITRUST LAWS. YOU REQUEST THAT AN INVESTIGATION BE INITIATED, INCLUDING A REQUEST FOR VERIFICATION FROM THE LOW BIDDER, KAISER, AND IF IT APPEARS THAT A MISTAKE WAS NOT MADE THAT A DETERMINATION BE MADE REGARDING THE DETAILS OF THE BELOW COST ASPECTS OF THE LOW BID AND THAT SUCH INFORMATION BE FURNISHED TO THE APPROPRIATE GOVERNMENTAL AUTHORITY PRIOR TO ANY AWARD OF THE PROCUREMENT, CITING, AMONG OTHER PROVISIONS OF LAW, SECTIONS 1, 2 AND 3 OF THE SHERMAN ACT; SECTION 3 OF THE ROBINSON-PATMAN ACT; SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT, AND 41 U.S.C. 252/D). IN ADDITION TO REFERENCE TO THE FEDERAL ANTITRUST LAW'S PROHIBITION OF SALES BELOW COSTS YOU CITE SPECIFIC STATE STATUTORY PROHIBITIONS AGAINST SUCH SALES.

IT IS ADMINISTRATIVELY REPORTED THAT THE PROCURING AGENCY ENGINEER'S ESTIMATE FOR THE ENTIRE QUANTITY OF MATERIALS TO BE PURCHASED WAS$643,852, BASED ON AN ESTIMATED WEIGHT OF 1,170,640 POUNDS TOTAL AT A RATE OF 55 CENTS PER POUND. AN INFORMAL SURVEY OF SEVERAL MAJOR SUPPLIERS FOR PRICES ON THIS TYPE OF MATERIAL HAD INDICATED PRIOR TO ISSUANCE OF INVITATIONS THAT A PRICE RANGE OF 42 CENTS TO 70 CENTS PER POUND COULD BE EXPECTED. THE LOW BID SUBMITTED BY KAISER WAS DETERMINED TO BE RESPONSIVE SINCE IT MET ALL THE REQUIREMENTS OF THE INVITATION. ITS TOTAL BID PRICE OF $606,084 IS LESS THAN 6 PERCENT LOWER THAN THE ENGINEER'S ESTIMATE. COMPUTATION, USING THE WEIGHT ON WHICH THE ENGINEER'S ESTIMATE WAS PREPARED, THE LOW BID AMOUNTS TO SLIGHTLY MORE THAN 51 CENTS PER POUND, WHICH IS WELL WITHIN THE EXPECTED PRICE RANGE OF 42 TO 70 CENTS PER POUND.

AS A RESULT OF THE CONCERN EXPRESSED BY A REPRESENTATIVE OF THE LUPTON COMPANY, PRIOR TO AWARD, THAT THE KAISER BID WAS ERRONEOUS, THE LOW BIDDER WAS REQUESTED TO CONFIRM ITS PRICE. THIS COMPANY ADVISED THE BONNEVILLE POWER ADMINISTRATION THAT IT HAD RECHECKED ITS CALCULATIONS, MEMBER SIZES, AND WEIGHT TAKE OFF, AS WELL AS ITS MATHEMATICS, AND THAT NO SIGNIFICANT DISCREPANCY WAS FOUND AND IT VERIFIED ITS BID IN THE TOTAL AMOUNT OF $606,084. THE QUESTION OF ERRONEOUS BID AGAIN RAISED BY YOUR BRIEF WOULD APPEAR, THEREFORE, TO HAVE BEEN REMOVED FROM THE FURTHER CONSIDERATION REQUIRED BY THE DECISIONS CITED BY YOU.

IT IS REPORTED ADMINISTRATIVELY THAT THE SPECIFICATIONS DESCRIBED ALUMINUM TRANSMISSION LINE TOWERS HAVING A GENERAL OUTLINE AND A SPECIFIED HEIGHT. THE SPECIFICATIONS INCLUDED THE CONDUCTOR SPACING AND THE LOAD CHARACTERISTICS REQUIRED OF THE STRUCTURES. BIDDERS WERE REQUIRED TO DEVELOP THEIR OWN SPECIFIC DESIGNS FOR THE CONSIDERATION OF THE GOVERNMENT. THIS PERMITTED BIDDERS TO EXERCISE THEIR KNOWLEDGE OF ENGINEERING CHARACTERISTICS OF VARIOUS SHAPES AND TYPES OF MATERIAL FABRICATION. THE DESIGN PROPOSED BY THE LOW BIDDER WAS DETERMINED TO BE SATISFACTORY AND AWARD WAS MADE ON THE INVITATION TO KAISER ON MARCH 22, 1966, IN THE AMOUNT OF $605,326.39. A DEDUCTION OF $757.61 WAS TAKEN BY THE GOVERNMENT IN EXERCISING ITS OPTION NOT TO REQUIRE A PERFORMANCE BOND OF THE CONTRACTOR.

UNDER PARAGRAPH 8/A) OF THE BIDDING INSTRUCTIONS, TERMS AND CONDITIONS OF THE INVITATION, THE CONTRACT WAS REQUIRED TO BE AWARDED TO "THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' A "RESPONSIBLE" BIDDER IS ONE WHO MEETS THE CRITERIA PRESCRIBED BY SECTION 1-1.310-5, FEDERAL PROCUREMENT REGULATIONS (FPR).

OUR EXAMINATION OF SECTIONS 1, 2 AND 3 OF THE SHERMAN ACT, 15 U.S.C., SECS. 1, 2 AND 3; SECTION 3 OF THE ROBINSON-PATMAN ACT, 15 U.S.C. 13A; SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT, 15 U.S.C. 45 AND THE PROVISIONS OF 41 U.S.C. 252 (D), CONSIDERED TOGETHER WITH THE PROTEST AND THE ADMINISTRATIVE REPORT REVEALS NOTHING WHICH WOULD PRECLUDE AWARD OF A GOVERNMENT CONTRACT TO THE LOW BIDDER IN THIS INSTANCE. FURTHER, NOTHING IS SET FORTH IN THE CITED CODE PROVISIONS WHICH AUTHORIZES OR REQUIRES THIS OFFICE TO CONDUCT THE TYPE OF INVESTIGATION OR TO MAKE A DETERMINATION REGARDING THE DETAILS OF THE ALLEGED BELOW COST ASPECTS OF THE LOW BID IN CONNECTION WITH A BID PROTEST, AS REQUESTED BY YOU. PROVISIONS FOR ENFORCING SUCH VIOLATIONS OF THE ANTITRUST LAWS AS ALLEGED IN YOUR BRIEF, AND REDRESS THEREFOR, ARE PROVIDED IN SECTIONS 4, 15 AND 21 OF TITLE 15, U.S. CODE, AMONG OTHERS. STILL FURTHER, NEITHER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 41 U.S.C. 251, ET SEQ., NOR THE PROCUREMENT REGULATIONS ISSUED THEREUNDER PROHIBIT AWARDS EVEN TO BIDDERS WHO HAVE BEEN CHARGED WITH, OR ARE BEING INVESTIGATED FOR, ALLEGED VIOLATIONS OF THE ANTITRUST LAWS. THAT IS, IN THE ABSENCE OF CONVICTION UNDER THE FEDERAL ANTITRUST STATUTES AND RESULTING DEBARMENT, THERE WOULD APPEAR TO BE NO LEGAL OR PROPER BASIS FOR DENYING A CONTRACT TO A LOW BIDDER FOR THIS REASON. SEE 1-1.605 OF THE FEDERAL PROCUREMENT REGULATIONS.

ACCORDINGLY, THE LOW BID HAVING BEEN CONFIRMED BY THE BIDDER AND ITS PRICE HAVING BEEN FOUND TO BE WITHIN THE EXPECTED RANGE MEASURED BY THE ADMINISTRATIVE ESTIMATE FOR THE WORK AND MATERIALS, WE FIND NO LEGAL BASIS FOR QUESTIONING THE AWARD MADE UNDER THE INVITATION AND YOUR PROTEST IS DENIED.