B-159267, JUN. 30, 1966, 45 COMP. GEN. 849

B-159267: Jun 30, 1966

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THE LOW BID ON EACH PROCUREMENT LOT MAY BE ACCEPTED AS NO BIDDER SHOULD BE ALLOWED TO CIRCUMVENT THE OBVIOUS REQUIREMENT FOR ADVANCE USE AUTHORIZATION BY INDICATING NONE IS REQUIRED. 1966: REFERENCE IS MADE TO LETTER SER OOJ-38 OF MAY 24. THERE ARE TWO LOTS WITH FIVE BOATS IN EACH LOT THAT ARE BEING CONSIDERED FOR AWARD UNDER THE SUBJECT INVITATION. THE BIDS ON THE TWO LOTS ARE AS FOLLOWS: TABLE LOT IV LOT V PETERSON BUILDERS: PER UNIT $2. IT IS NOT ELIGIBLE FOR AN AWARD ON THE OTHER LOT. HE QUESTIONS WHETHER AN AWARD MAY BE MADE TO PETERSON SINCE IT WAS NOT RESPONSIVE TO THE INVITATION FOR BIDS. IDENTIFICATION OF THE FACILITIES CONTRACT OR OTHER INSTRUMENT UNDER WHICH THE PROPERTY IS HELD.

B-159267, JUN. 30, 1966, 45 COMP. GEN. 849

CONTRACTS - GOVERNMENT PROPERTY - UTILIZATION - PROCUREMENT PROCEDURE TO LOW BIDS ON TWO PROCUREMENT LOTS TO BE PURCHASED SEPARATELY, ONE BIDDER REPRESENTING GOVERNMENT-OWNED FACILITIES WOULD BE USED, BUT FAILING TO FURNISH THE WRITTEN USE AUTHORIZATION REQUIRED UNDER THE INVITATION, AND THE OTHER BIDDER NOT INDICATING USE OF GOVERNMENT FACILITIES, MAY BE ACCEPTED WITHOUT PREJUDICE TO THE ONLY OTHER BIDDER, WHO ALSO DID NOT FURNISH A USE AUTHORIZATION, THE BIDDERS NOT INDICATING USE OF GOVERNMENT FACILITIES ALTHOUGH TECHNICALLY NOT REQUIRED TO FURNISH A USE AUTHORIZATION, UNABLE TO ACCOMPLISH THE CONTRACT WITHOUT EMPLOYING MANUFACTURERS MAKING USE OF GOVERNMENT FACILITIES, COULD NOT ACCURATELY REPRESENT GOVERNMENT FACILITIES WOULD NOT BE USED, AND ALL BIDDERS EQUALLY DEFICIENT IN NOT HAVING FURNISHED AUTHORIZATION TO USE GOVERNMENT- FURNISHED PROPERTY, THE LOW BID ON EACH PROCUREMENT LOT MAY BE ACCEPTED AS NO BIDDER SHOULD BE ALLOWED TO CIRCUMVENT THE OBVIOUS REQUIREMENT FOR ADVANCE USE AUTHORIZATION BY INDICATING NONE IS REQUIRED.

TO THE SECRETARY OF THE NAVY, JUNE 30, 1966:

REFERENCE IS MADE TO LETTER SER OOJ-38 OF MAY 24, 1966, FROM THE DIRECTOR OF CONTRACTS, NAVAL SHIP SYSTEMS COMMAND, REQUESTING A DECISION WITH RESPECT TO BIDS RECEIVED UNDER INVITATION 1FB-600-751-66 B FOR THE CONSTRUCTION OF PGM GUNBOATS.

THERE ARE TWO LOTS WITH FIVE BOATS IN EACH LOT THAT ARE BEING CONSIDERED FOR AWARD UNDER THE SUBJECT INVITATION. THE BIDS ON THE TWO LOTS ARE AS FOLLOWS:

TABLE

LOT IV LOT V PETERSON BUILDERS:

PER UNIT $2,867,708 $2,859,708

TOTAL 14,338,540 14,288,540 TACOMA BOAT BUILDING:

PER UNIT 2,943,563 NO BID

TOTAL 15,392,650 15,392,650 BETHLEHEM STEEL CORP.:

PER UNIT 3,078,530 3,078,530

TOTAL L5,392,650 L5,392,650 UNDER THE TERMS OF THE INVITATION, IF A BIDDER RECEIVES AN AWARD FOR ONE LOT, IT IS NOT ELIGIBLE FOR AN AWARD ON THE OTHER LOT. THE DIRECTOR OF CONTRACTS THEREFORE PROPOSES MAKING AN AWARD TO PETERSON ON LOT V AND TACOMA ON LOT IV. HOWEVER, HE QUESTIONS WHETHER AN AWARD MAY BE MADE TO PETERSON SINCE IT WAS NOT RESPONSIVE TO THE INVITATION FOR BIDS. IN THAT CONNECTION, PARAGRAPH 13 OF THE "INFORMATION AND INSTRUCTION TO BIDDERS" PROVIDED:

(A) THIS INVITATION DOES NOT AUTHORIZE THE USE, IN PERFORMING THE WORK BID UNDER THIS INVITATION, OF ANY GOVERNMENT PROPERTY EXCEPT THOSE ITEMS, IF ANY, OF GOVERNMENT-FURNISHED PROPERTY SPECIFIED IN THE PRO FORMA CONTRACT ATTACHED HERETO. IF THE BIDDER REQUIRES THE USE, IN PERFORMING THE WORK BID UPON UNDER THIS INVITATION, OF ANY OTHER ITEMS OF GOVERNMENT PROPERTY IN THE BIDDER'S POSSESSION OR OTHERWISE, UNDER A FACILITIES CONTRACT OR OTHER AGREEMENT INDEPENDENT OF THIS INVITATION, THEN THE BIDDER SHALL SO STATE BY SUBMITTING THE FOLLOWING WITH THE BID:

(I) A LIST OF DESCRIPTION OF ALL GOVERNMENT PRODUCTION PROPERTY IN POSSESSION OF THE BIDDER AND HIS SUBCONTRACTORS ON A RENT-FREE BASIS UNDER OTHER CONTRACTS;

(II) WITH RESPECT TO SUCH PROPERTY ALREADY IN POSSESSION OF THE BIDDER AND HIS PROPOSED SUBCONTRACTORS, IDENTIFICATION OF THE FACILITIES CONTRACT OR OTHER INSTRUMENT UNDER WHICH THE PROPERTY IS HELD, AND THE WRITTEN PERMISSION OF THE CONTRACTING OFFICER HAVING COGNIZANCE OF THE PROPERTY FOR USE OF THAT PROPERTY;

(III) THE MONTHS DURING WHICH SUCH PROPERTY WILL BE AVAILABLE FOR USE, WHICH SHALL INCLUDE THE FIRST, LAST, AND ALL INTERVENING MONTHS, AND WITH RESPECT TO ANY SUCH PROPERTY WHICH WILL BE USED CONCURRENTLY IN PERFORMANCE OF TWO OR MORE CONTRACTS, THE AMOUNTS OF THE RESPECTIVE USES IN SUFFICIENT DETAIL TO SUPPORT THE PRORATION REQUIRED BY ASPR 13 502.3 (B); AND

(IV) THE AMOUNT OF RENT WHICH WOULD OTHERWISE BE CHARGED FOR SUCH USE, COMPUTED IN ACCORDANCE WITH ASPR 13-404.

IF THE BIDDER DOES NOT SPECIFY IN HIS BID THAT SUCH GOVERNMENT PROPERTY SHALL BE USED FOR THIS PROCUREMENT, THEN HIS BID SHALL BE CONSIDERED AS NOT REQUIRING THE USE OF ANY GOVERNMENT PROPERTY EXCEPT GOVERNMENT- FURNISHED PROPERTY, IF ANY, SPECIFIED IN THE PRO FORMA CONTRACT ATTACHED HERETO.

(B) BIDS REQUIRING OR OTHERWISE CONDITIONED UPON THE USE OF GOVERNMENT PROPERTY SHALL BE CONSIDERED NON-RESPONSIVE AND SHALL BE REJECTED, UNLESS AT THE TIME OF BID OPENING THE BIDDER HAS THE RIGHT TO USE SUCH PROPERTY ON THE WORK BID UPON. FURTHER, THE BID FORM CONTAINED A REPRESENTATION AS FOLLOWS:

FACILITIES REPRESENTATION: THE BIDDER REPRESENTS THAT IT --------- WILL, ---------- WILL NOT REQUIRE THE USE OF GOVERNMENT-OWNED FACILITIES IN THE PERFORMANCE OF THE WORK REQUIRED UNDER THIS PROCUREMENT. IF GOVERNMENT- OWNED FACILITIES ARE REQUIRED THE BIDDER SHALL SUBMIT THE INFORMATION REQUIRED BY PARAGRAPH 13 OF THE "INFORMATION AND INSTRUCTIONS TO BIDDER.'

PETERSON PLACED AN "X" IN THE FACILITIES REPRESENTATION PROVISION SO AS TO INDICATE THAT IT WILL REQUIRE THE USE OF GOVERNMENT-OWNED FACILITIES IN THE PERFORMANCE OF THE WORK BID UPON. ALSO, ACCOMPANYING ITS BID WAS THE FOLLOWING STIPULATION:

IN ACCORDANCE WITH PARAGRAPH 13 OF "INFORMATION AND INSTRUCTION TO BIDDERS," PETERSON BUILDERS HEREBY STIPULATES THAT IT'S PRICES ARE BASED ON RENT FREE USE OF GOVERNMENT PROPERTY AT THE GENERAL ELECTRIC PLANT TO BE USED IN THE MANUFACTURE OF THE GAS TURBINE, IF THIS BRAND IS SELECTED.

THE BID DID NOT OTHERWISE FURNISH THE INFORMATION REQUIRED BY PARAGRAPH 13.

DESPITE THE ABSENCE OF THE INFORMATION REQUIRED BY PARAGRAPH 13 AND THE OBVIOUS NONRESPONSIVENESS OF THE BID IN THE CIRCUMSTANCES, IT IS RECOMMENDED THAT AN AWARD TO PETERSON BE AUTHORIZED SINCE IT IS REPORTED THAT NONE OF THE BIDDERS WILL BE ABLE TO ACCOMPLISH THE CONTRACT WITHOUT THE USE OF ONE OF TWO MANUFACTURERS OF GAS TURBINES, EACH OF WHOM WILL REQUIRE THE USE OF GOVERNMENT FACILITIES TO PRODUCE THE TURBINES. IT IS STATED THAT TACOMA AND BETHLEHEM HAVE BOTH CONFIRMED SINCE THE BID OPENING THAT THEY INTENDED TO USE GENERAL ELECTRIC TURBINES. IT IS STATED FURTHER THAT, FOR ALL PRACTICAL PURPOSES, THOSE ARE THE TURBINES WHICH WOULD BE USED BECAUSE THEY ARE OF SUBSTANTIALLY LOWER COST. IT IS ESTIMATED THAT THE RENTAL WHICH WOULD BE CHARGED BY THE GOVERNMENT FOR THE USE OF THE FACILITIES INVOLVED IN THE MANUFACTURE OF THE GENERAL ELECTRIC TURBINES FOR FIVE SHIPS WOULD NOT EXCEED A TOTAL OF $30,000. IT IS POINTED OUT THAT IF THE AMOUNT WERE ADDED TO THE PETERSON BID, IT WOULD STILL BE THE LOW BIDDER BY MORE THAN ONE MILLION DOLLARS. IT IS UNDERSTOOD THAT EVEN IF THE OTHER MANUFACTURER OF TURBINES WAS SELECTED THE RENTAL THAT WOULD BE CHARGED FOR THE USE OF GOVERNMENT FACILITIES WOULD NOT BE SIGNIFICANTLY DIFFERENT.

RECENTLY, IN 45 COMP. GEN. 572, OUR OFFICE POINTED OUT THAT IT HAS FOLLOWED IN A LONG LINE OF DECISIONS A RULE THAT THE FAILURE OF A BIDDER TO HAVE WRITTEN AUTHORIZATION TO USE GOVERNMENT-FURNISHED PROPERTY PRIOR TO THE OPENING OF BIDS AS REQUIRED BY THE INVITATION FOR BIDS IS A MATERIAL DEVIATION WHICH RENDERS THE BID NONRESPONSIVE, THAT THE REGULATIONS PERMITTING WAIVER OF INFORMALITIES ARE NOT FOR APPLICATION AND THAT THE SITUATION MAY NOT BE REMEDIED BY A SUBSEQUENTLY ISSUED WRITTEN AUTHORIZATION.

MOREOVER, WHILE WE RECOGNIZE THAT BOTH TACOMA AND BETHLEHEM DID NOT INDICATE THAT THEY WERE GOING TO USE GOVERNMENT-FURNISHED FACILITIES IN THE PERFORMANCE OF THE CONTRACT AND THEREFORE TECHNICALLY DID NOT HAVE TO FURNISH AN AUTHORIZATION TO USE THE FACILITIES AT THE TIME OF BIDDING, IT APPEARS THAT AS A MATTER OF FACT NO BIDDER COULD ACCURATELY REPRESENT THAT GOVERNMENT FACILITIES WOULD NOT BE USED, SINCE ANY BIDDER WOULD HAVE TO EMPLOY A COMPANY UTILIZING GOVERNMENT FACILITIES. THEREFORE, IT APPEARS THAT TACOMA AND BETHLEHEM WERE, IN THE FINAL ANALYSIS, JUST AS DEFICIENT AS PETERSON IN NOT HAVING FURNISHED WITH THEIR BIDS AN AUTHORIZATION TO USE GOVERNMENT FACILITIES. WE DO NOT BELIEVE THAT ANY BIDDER SHOULD BE ALLOWED TO CIRCUMVENT THE REQUIREMENTS FOR ADVANCE AUTHORIZATION BY INDICATING IN ITS METHOD OF BIDDING THAT NONE IS REQUIRED WHEN SUCH AN INDICATION OBVIOUSLY IS ERRONEOUS. UNDER THE CIRCUMSTANCES OF THIS CASE, IF AWARDS WERE MADE TO PETERSON AND TACOMA AS PROPOSED, IT DOES NOT APPEAR THAT BETHLEHEM, WHICH IS THE ONLY OTHER BIDDER FOR THE PROCUREMENT, WOULD BE PREJUDICED, SINCE THAT BIDDER WAS JUST AS DEFICIENT AS THE OTHER BIDDERS IN FAILING TO FURNISH THE AUTHORIZATION TO USE GOVERNMENT PROPERTY. WHILE PETERSON'S BID IS BASED ON RENT-FREE USE OF THE PROPERTY INVOLVED, IT IS NOT APPARENT THAT IT HAS GAINED ANY ADVANTAGE OVER THE OTHER BIDDERS, SINCE WITH THE APPLICATION OF A USE CHARGE IT REMAINS SIGNIFICANTLY LOWER THAN THE OTHER BIDDERS. ALTHOUGH BETHLEHEM MAY HAVE INCLUDED A COST FACTOR IN ITS BID PRICE TO COVER THE CONTINGENCY THAT IT MIGHT HAVE TO BEAR A RENTAL CHARGE, IN VIEW OF THE SMALL AMOUNT OF THE ESTIMATED RENTAL IT SEEMS UNLIKELY THAT IT WOULD HAVE BEEN THE LOW BIDDER IF A COST FACTOR WAS NOT INCLUDED.

ACCORDINGLY, OUR OFFICE WILL NOT OBJECT IF THE BIDS ARE ACCEPTED AS PROPOSED. SEE, IN THAT CONNECTION, B-153613, MAY 6, 1964, WHERE OUR OFFICE PERMITTED AN AWARD TO A NONRESPONSIVE LOW BIDDER WHO EXCEEDED AN ADMINISTRATIVE COST LIMITATION, WHICH WAS REQUIRED TO BE ADHERED TO BY THE INVITATION, WHEN ALL THE OTHER BIDDERS EXCEEDED EITHER THE ADMINISTRATIVE OR APPLICABLE STATUTORY LIMITATION.