B-159569, DECEMBER 19, 1966, 46 COMP. GEN. 578

B-159569: Dec 19, 1966

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WAS NOT PREJUDICIAL TO A BIDDER WHO DID NOT HAVE THE USE OF A GOVERNMENT PLANT AVAILABLE TO PRODUCE THE PROCUREMENT. EVEN THOUGH THERE IS NO EXCUSE FOR THE FAILURE OF THE CONTRACTING OFFICER TO ADVISE ALL BIDDERS THAT USE OF A GOVERNMENT-OWNED FACILITY WOULD BE PERMITTED. ETC. - EQUALIZATION OF COMPETITIVE ADVANTAGE ALTHOUGH THE COMPETITIVE ADVANTAGE TO BE GAINED BY A BIDDER FURNISHED OR PERMITTED TO USE GOVERNMENT PROPERTY OR FACILITIES WAS TO BE OFFSET. BIDDERS SHOULD HAVE BEEN ADVISED IN ADVANCE. EVEN THOUGH A BIDDER WAS NOT ADVISED OF THE OFFSETTING EVALUATION FACTORS THAT WOULD HAVE AFFECTED ITS ESTIMATE OF A COMPETITOR'S BID. THE BIDDING COMPETITION WAS NOT INVALID. THE ABOVE RFP WAS ISSUED ON DECEMBER 21.

B-159569, DECEMBER 19, 1966, 46 COMP. GEN. 578

BIDS - EVALUATION - GOVERNMENT EQUIPMENT, ETC. - FAILURE TO INDICATE USE THE ACCEPTANCE OF THE PROPOSAL MADE BY A BIDDER ON URGENTLY NEEDED PROCUREMENT DURING A PRESOLICITATION CONFERENCE TO USE THE RENT-FREE GOVERNMENT-OWNED FACILITY ALREADY IN ITS POSSESSION UNDER ANOTHER GOVERNMENT CONTRACT, WITHOUT AMENDING THE SOLICITATION TO INFORM BIDDERS THAT THE USE OF A GOVERNMENT-OWNED FACILITY WOULD BE PERMITTED, SUBJECT TO PARAGRAPH 13-402 OF THE ARMED SERVICES PROCUREMENT REGULATION REQUIRING AN EVALUATION FACTOR TO BE ESTABLISHED TO ELIMINATE THE COMPETITIVE ADVANTAGE FROM THE RENT-FREE USE OF GOVERNMENT PROPERTY, WAS NOT PREJUDICIAL TO A BIDDER WHO DID NOT HAVE THE USE OF A GOVERNMENT PLANT AVAILABLE TO PRODUCE THE PROCUREMENT, EVEN THOUGH THERE IS NO EXCUSE FOR THE FAILURE OF THE CONTRACTING OFFICER TO ADVISE ALL BIDDERS THAT USE OF A GOVERNMENT-OWNED FACILITY WOULD BE PERMITTED. BIDS - EVALUATE - GOVERNMENT EQUIPMENT, ETC. - EQUALIZATION OF COMPETITIVE ADVANTAGE ALTHOUGH THE COMPETITIVE ADVANTAGE TO BE GAINED BY A BIDDER FURNISHED OR PERMITTED TO USE GOVERNMENT PROPERTY OR FACILITIES WAS TO BE OFFSET, BIDDERS SHOULD HAVE BEEN ADVISED IN ADVANCE, PURSUANT TO SECTION 13-506 OF THE ARMED SERVICES PROCUREMENT REGULATION, OF THE OFFSETTING EVALUATION FACTORS SO THE FACTORS COULD BE TAKEN INTO ACCOUNT IN PREPARING BIDS. HOWEVER, EVEN THOUGH A BIDDER WAS NOT ADVISED OF THE OFFSETTING EVALUATION FACTORS THAT WOULD HAVE AFFECTED ITS ESTIMATE OF A COMPETITOR'S BID, THE BIDDING COMPETITION WAS NOT INVALID, THE FAILURE TO DISCLOSE THE OFFSETTING FACTORS NOT HAVING GIVEN THE SUCCESSFUL BIDDER AN IMPROPER COMPETITIVE ADVANTAGE.

TO GADSBY, MAGUIRE, HANNAH AND MERRIGAN, DECEMBER 19, 1966:

WE REFER TO YOUR LETTERS OF OCTOBER 6 AND 28, 1966, AS WELL AS TO THE OTHER CORRESPONDENCE SUBMITTED IN BEHALF OF YOUR CLIENT, AMERICAN LAFRANCE (ALF), DIVISION OF AUTOMATIC SPRINKLER CORPORATION, PROTESTING AGAINST THE AWARD MADE UNDER RFP NO. AMC/T) 23-195-156-66 ISSUED BY UNITED STATES ARMY MOBILITY EQUIPMENT COMMAND.

THE ABOVE RFP WAS ISSUED ON DECEMBER 21, 1965, FOR A QUANTITY OF 90 EACH 6000 POUND CAPACITY FORKLIFT TRUCKS MADE IN ACCORDANCE WITH A REFERENCED MILITARY SPECIFICATION. THIS SPECIFICATION CALLED FOR AN EXTENSIVE ENGINEERING EFFORT ON THE PART OF THE CONTRACTOR. THE RFP PROVIDED THAT NO GOVERNMENT-FURNISHED PROPERTY (GFP) OR SERVICES WOULD BE FURNISHED EXCEPT FOR 90 LOG BOOK BINDERS, 90 COTTON DUCK CASES AND 90 FIRE EXTINGUISHERS.

CLOSING DATE FOR RECEIPT OF PROPOSALS WAS ORIGINALLY SET FOR JANUARY 21, 1966, BUT THE DATE WAS EXTENDED UNDER VARIOUS AMENDMENTS TO THE RFP BECAUSE OF CHANGES IN THE SPECIFICATION REQUIREMENTS AND PENDING ANTICIPATED INCREASES IN THE NUMBER OF TRUCKS. UNDER AN AMENDMENT NO. 7 DATED APRIL 1, 1966, THE REQUIREMENT WAS FINALLY FIXED AT 789 TRUCKS AND THE CLOSING DATE FOR PROPOSALS WAS SET FOR APRIL 11, 1966. (AN AMENDMENT NO. 8 TO THE RFP DATED APRIL 4, 1966, DID NOT INCREASE THE 789 QUANTITY NOR CHANGE THE APRIL 11, 1966, CLOSING DATE.) ALL THESE AMENDMENTS WERE SENT TO ALL THE FIRMS ON THE APPLICABLE MAILING LIST.

ON APRIL 11, 1966, ONE PROPOSAL WAS RECEIVED; HOWEVER, THAT PROPOSAL WAS NOT CONSIDERED ACCEPTABLE. THE ARMY COMMAND FELT THAT A NEW APPROACH WAS NECESSARY. IT HAD AN URGENT NEED FOR THE VEHICLES BUT WAS FACED WITH THE FACT THAT THERE WERE NO KNOWN PROVEN PRODUCERS OF THE EQUIPMENT. THEREFORE, IT WAS DECIDED TO PROCEED UNDER THE SO CALLED "QUEEN BEE" CONCEPT; A PROTOTYPE OR PILOT MODEL WOULD BE MADE AVAILABLE TO INDUSTRY FOR DUPLICATION. ON APRIL 13, 1966, MESSAGE WAS SENT TO 11 POTENTIAL BIDDERS, INCLUDING ALF, ANNOUNCING A PRESOLICITATION CONFERENCE AT FORT LEE, VIRGINIA, FOR APRIL 22, 1966, WHERE THE PILOT MODEL WAS TO BE ON DISPLAY. CERTAIN DRAWINGS AND AN EARLIER VERSION OF THE PREVIOUSLY REQUIRED SPECIFICATION WERE CITED, BUT THE MESSAGE MADE CLEAR THAT THE PILOT MODEL WAS TO SERVE AS THE BASIC REQUIREMENT OF THE CONTRACT. THE PRESOLICITATION CONFERENCE WAS THEN RESCHEDULED BY A LATER MESSAGE TO APRIL 25, 1966.

A NUMBER OF FIRMS, ALF INCLUDED, SENT REPRESENTATIVES TO THE APRIL 25 CONFERENCE. THE CONTRACTING OFFICER REPORTS THAT THE INDUSTRY PEOPLE AT THE CONFERENCE WERE ADVISED THAT THE ORIGINAL RFP WOULD BE USED IN ORDER TO AVOID ANY FURTHER ADMINISTRATIVE DELAYS AND THAT ANY CHANGES IN THE REQUIRED CLAUSES WOULD BE ISSUED UNDER RFP AMENDMENTS. THE URGENCY OF THE NEED WAS EXPLAINED, WITH THE EMPHASIS PLACED ON FINAL DELIVERY BY JUNE 30, 1967, IF POSSIBLE. ONE OF THE FIRMS IN ATTENDANCE AT THE CONFERENCE ASKED ABOUT THE USE OF GOVERNMENT PROPERTY IN THE HANDS OF A BIDDER. HERE THE RECORD IS IN DISPUTE. ACCORDING TO THE CONTRACTING OFFICER THE REPLY WAS TO THE EFFECT THAT "BIDDERS COULD SUBMIT PROPOSALS PREDICATED UPON THE USE OF GOVERNMENT OWNED PRODUCTION EQUIPMENT AND FACILITIES IN THEIR POSSESSION.' THE ALF REPRESENTATIVES RECALL THE MATTER DIFFERENTLY. THEY SAY THAT THE INQUIRY RELATED TO SPECIAL TOOLING AND THAT IN RESPONSE THE CONFEREES WERE TOLD THEY COULD BASE A PROPOSAL ON SUCH TOOLING IN THEIR POSSESSION. IT IS CONTENDED THAT NO REFERENCE WAS MADE BY ANYONE REGARDING THE USE OF GOVERNMENT FACILITIES.

IN ANY EVENT, A MAY 25, 1966, CLOSING DATE FOR PROPOSALS WAS SET. ALTHOUGH THE RFP WAS AMENDED THEREAFTER TO PROVIDE TECHNICAL AND OTHER ADMINISTRATIVE GUIDANCE, IT WAS NOT AMENDED TO PERMIT THE USE OF GOVERNMENT-OWNED FACILITIES NOT TO PROVIDE FOR AN EVALUATION BASED ON THE USE OF SUCH FACILITIES. BIDS WERE TO BE EVALUATED AS ORIGINALLY SPECIFIED ON THE BASIS OF "LOWEST OVER-ALL COST TO THE GOVERNMENT," AND THE CONTRACTOR WAS TO BE SELECTED IN ACCORDANCE WITH THE ,NEGOTIATIONS AND CONTRACT AWARD" CLAUSE. SEE PARAGRAPH 3-805.1 (V), ARMED SERVICES PROCUREMENT REGULATION.

YOU REPORT THAT AFTER ALF SUBMITTED ITS PROPOSAL IT HEARD THAT THE PROCURING AGENCY WAS CONDUCTING NEGOTIATIONS WITH CHRYSLER FOR THE PROCUREMENT BASED ON THE USE OF THE GOVERNMENT-OWNED DETROIT TANK PLANT IN WARREN, MICHIGAN. CHRYSLER WAS ALREADY USING THIS GOVERNMENT OWNED FACILITY IN CONNECTION WITH ANOTHER GOVERNMENT CONTRACT. ON MAY 27, 1966, ALF WIRED THE PROCURING AGENCY ASKING WHETHER ANY CONSIDERATION WAS BEING GIVEN TO THE USE OF GOVERNMENT-OWNED FACILITIES. ON JUNE 3, 1966, ALF WIRED THAT IT WOULD REDUCE ITS PRICE BY $1,200 PER UNIT. ON JUNE 7, 1966, ALF WIRED THAT IT WOULD MODIFY ITS PROPOSED DELIVERY SCHEDULE SO AS TO DELIVER ALL 789 UNITS BY JUNE 30, 1967. THE FIRST RESPONSE FROM THE CONTRACTING OFFICER WAS RECEIVED ON JUNE 8, 1966.

ON JUNE 8, 1966, THE CONTRACTING OFFICER ADVISED THE FOUR PROPOSERS THAT NEGOTIATIONS WOULD BE CLOSED AT 4:30 P.M., JUNE 10, 1966, AND THAT REVISIONS TO PROPOSALS TO INCLUDE UNIT PRICE AND DELIVERY MUST BE SUBMITTED BY THAT TIME. THE FINAL PRICES PROPOSED BY ALL SOURCES WERE AS FOLLOWS:

CHRYSLER CORPORATION $19,586,925

ALF $22,090,422

ANTHONY COMPANY $23,235,482

CONSOLIDATED DIESEL CO. $22,318,443 IT IS REPORTED THAT CHRYSLER HAD INCREASED ITS FINAL PROPOSAL DUE TO A REINSPECTION OF THE SAMPLE MODEL, WHEN IT DISCOVERED THAT CERTAIN ITEMS ON THE SAMPLE MODEL HAD NOT BEEN INCLUDED IN THE DRAWINGS.

THE CHRYSLER PROPOSAL OF MAY 25, 1966, WAS INDEED BASED UPON THE RENT- FREE USE OF A PORTION OF THE DETROIT TANK PLANT. THE FIRM FURNISHED A DESCRIPTION OF THE PROPERTY AND EQUIPMENT AT THE DETROIT TANK PLANT WHICH IT PROPOSED TO USE ON THE INSTANT CONTRACT, AND IT ADVISED THAT IT HAD REQUESTED APPROVAL FROM THE CONTRACTING OFFICER ON ITS EXISTING TANK PRODUCING CONTRACT TO USE THE DETROIT FACILITY ON THIS CONTRACT. CHRYSLER'S FINAL PROPOSAL DATED JUNE 9, 1966, INCLUDED A LETTER TO IT DATED JUNE 3, 1966, FROM THE COGNIZANT CONTRACTING OFFICER ON ITS TANK CONTRACT AUTHORIZING FREE USE OF A PORTION OF THE DETROIT FACILITY FOR THIS PROCUREMENT. IT APPEARS THAT THE CONTRACTING OFFICER WAS PERSUADED TO AUTHORIZE THIS USE BECAUSE OF AN URGENT NEED FOR THE FORKLIFT TRUCKS. THE USE WAS MADE SUBJECT TO THE PROVISIONS OF ASPR 13-402, THE EFFECT OF WHICH WAS TO REQUIRE THAT AN EVALUATION FACTOR BE ESTABLISHED IN ORDER TO ELIMINATE THE COMPETITIVE ADVANTAGE ARISING FROM RENT-FREE USE OF A GOVERNMENT-OWNED FACILITY.

AN EVALUATION WAS MADE OF THE CONTEMPLATED USE OF BUILDINGS, LAND AND PLANT EQUIPMENT AT THE DETROIT FACILITY, AND THE RESULTING EVALUATION FACTOR WAS DETERMINED TO BE $72,956. AFTER CONSIDERING FREIGHT, DISCOUNT AND RENT-FREE GOVERNMENT PRODUCTION AND RESEARCH PROPERTY, THE FOUR PROPOSALS WERE EVALUATED AS FOLLOWS:

CHRYSLER CORPRATION $20,378,149

ALF $22,918,714

ANTHONY CORPORATION $22,995,942

CONSOLIDATED DIESEL CO. $23,117,312 THE ARMY REPORTS THAT CONSOLIDATED DIESEL'S PROPOSAL WAS ALSO PREDICATED UPON THE RENT-FREE USE OF A GOVERNMENT INDUSTRIAL FACILITY, IN ITS CASE THE CHARLOTTE ORDNANCE MISSILE PLANT NEAR CHARLOTTE, NORTH CAROLINA. AN AWARD WAS MADE TO CHRYSLER EFFECTIVE JUNE 17, 1966.

REGARDING THE PROPOSED USE OF THE CHARLOTTE ORDNANCE PLANT, YOU REPORT THAT THIS IDEA ORIGINATED WITH CONSOLIDATED DIESEL ITSELF. REPRESENTATIVE OF THE COMPANY WHO ATTENDED THE APRIL 25 MEETING HAS ADVISED YOU THAT THE PROPOSAL DID NOT DEVELOP FROM ANYTHING THE CONTRACTING OFFICER HAD SAID.

YOU STATE THAT IF ALF HAD KNOWN THAT A GOVERNMENT PLANT WAS GOING TO PLAY A SIGNIFICANT PART IN THE EVALUATION, IT COULD HAVE RESPONDED ACCORDINGLY AND REAPPRAISED ITS BID; ALF SAYS THAT THERE WERE MANY CONTINGENCIES WHICH WOULD HAVE BEEN REMOVED FROM ITS PRICING PROPOSAL AND THAT IF ITS PROPOSAL HAD BEEN BASED ON BEING FURNISHED A RELATIVELY MODERN GOVERNMENT PLANT EQUIVALENT TO THE DETROIT TANK PLANT, IT WOULD HAVE BEEN ABLE TO REDUCE ITS PRICE BY APPROXIMATELY $2,554,000, OR BELOW WHAT CHRYSLER QUOTED THE GOVERNMENT.

IT IS YOUR CONTENTION THAT IT WAS IMPROPER FOR THE ARMY TO NEGOTIATE WITH CHRYSLER ON THE PROPOSED USE OF A GOVERNMENT-OWNED FACILITY WITHOUT GIVING ADEQUATE NOTICE TO THE OTHER COMPETITORS THAT SUCH A PROPOSAL WAS BEING CONSIDERED AND WITHOUT GIVING THESE FIRMS AN OPPORTUNITY TO RECONSIDER THEIR PROPOSALS. YOU CONCLUDE THAT THE DISCUSSIONS WITH CHRYSLER WERE CONDUCTED IN VIOLATION OF THE STATUTORY REQUIREMENT OF 10 U.S.C. 2304 (G), THAT NEGOTIATIONS BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS SUBMITTING COMPETITIVE PROPOSALS.

THE ARMED SERVICES PROCUREMENT ACT PERMITS NEGOTIATED AWARDS TO BE MADE IN APPROPRIATE CASES WITHOUT WRITTEN OR ORAL DISCUSSIONS, BUT REQUIRES THAT IF NEGOTIATIONS (I.E., WRITTEN OR ORAL DISCUSSIONS) BE CONDUCTED WITH ONE OF THE OFFERORS, THEN NEGOTIATIONS SHALL ALSO BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. 10 U.S.C. 2304 (G). THE CONTRACTING OFFICER REPORTS THAT AFTER INITIAL PROPOSALS WERE RECEIVED ON MAY 25, 1966, ORAL DISCUSSIONS WERE CONDUCTED WITH CHRYSLER FOR THE PURPOSE OF ASCERTAINING THAT IT UNDERSTOOD THE TECHNICAL REQUIREMENT; THAT THESE DISCUSSIONS DID NOT AMOUNT TO A NEGOTIATION; RATHER THAT THE AWARD WAS MADE ON THE BASIS OF THE INITIAL PROPOSALS ALONE. WE DO NOT ACCEPT THIS ANALYSIS. ON JUNE 8, 1966, EACH OF THE FOUR COMPETITORS WAS INVITED BY THE CONTRACTING OFFICER TO SUBMIT A FINAL PROPOSAL. IT WAS STATED IN THIS COMMUNICATION THAT NEGOTIATIONS WOULD BE CLOSED BY JUNE 10, 1966. REGARD THIS AS A NEGOTIATION WITHIN THE MEANING OF THE ARMED SERVICES PROCUREMENT ACT. THE CONTRACTING OFFICER WAS CONDUCTING WRITTEN NEGOTIATIONS WITH EACH OF THE FOUR COMPETING FIRMS; EACH FIRM WAS GIVEN THE OPPORTUNITY TO SUBMIT A FINAL PROPOSAL. ALF USED THIS OPPORTUNITY TO LOWER ITS PRICE AND BETTER ITS DELIVERY, WHILE CHRYSLER INCREASED ITS PRICE TO CORRECT AN ERROR.

AS YOU POINT OUT, THE RFF DID NOT OFFER THE USE OF A GOVERNMENT OWNED FACILITY FOR THIS CONTRACT. THE GOVERNMENT FURNISHED PROPERTY (GFP) CLAUSE SPECIFIED THAT NO PROPERTY OR SERVICE WOULD BE FURNISHED BY THE GOVERNMENT UNLESS OTHERWISE PROVIDED IN THE SOLICITATION. ALTHOUGH SEVERAL ITEMS OF GOVERNMENT-FURNISHED PROPERTY WERE LISTED AS AVAILABLE TO ALL BIDDERS, THE LIST DID NOT INCLUDE ANY GOVERNMENT OWNED FACILITY.

THE CONTRACTING OFFICER STATES THAT HE ADVISED BIDDERS AT THE APRIL 25 MEETING THAT THEY COULD PROPOSE TO USE GOVERNMENT-OWNED FACILITIES FOR THIS PROCUREMENT. YOU DENY THIS. IN ANY EVENT, BY MAY 27, 1966, 2 DAYS AFTER THE INITIAL PROPOSALS WERE RECEIVED, ALF SUSPECTED THAT THE USE OF A GOVERNMENT PLANT BY ONE OF THE BIDDERS WAS BEING CONSIDERED, AND ASKED THE CONTRACTING OFFICER WHETHER CONSIDERATION HAD BEEN GIVEN BY THE GOVERNMENT TO THE USE OF GOVERNMENT-OWNED FACILITIES. ON JUNE 3, 1966, HAVING RECEIVED NO RESPONSE TO THIS INQUIRY, ALF REDUCED ITS PRICE BY ALMOST $1 MILLION, AND ON JUNE 7, 1966, OFFERED BETTER DELIVERY. AT THIS POINT THE CONTRACTING OFFICER REQUESTED FINAL PROPOSALS TO BE SUBMITTED BY JUNE 10, 1966.

THE CONTRACTING OFFICER HAD BEEN ADVISED BY CHRYSLER IN ITS PROPOSAL LETTER OF MAY 24, 1966, THAT ITS PRICES WERE BASED UPON THE RENT-FREE USE OF A PORTION OF THE DETROIT TANK PLANT. IT IS OBVIOUS THAT IF CONSIDERATION WAS BEING GIVEN TO PERMITTING ANY BIDDER THE USE OF A GOVERNMENT-OWNED FACILITY, THE SOLICITATION SHOULD HAVE BEEN AMENDED TO INFORM ALL BIDDERS TO THIS EFFECT. SECTION 13-506 OF THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES THAT GENERALLY, WHERE GOVERNMENT PRODUCTION AND RESEARCH PROPERTY IS OFFERED FOR USE IN A COMPETITIVE PROCUREMENT, THE RENTAL CHARGES OR EQUIPMENT FACTORS TO BE USED TO ELIMINATE COMPETITIVE ADVANTAGE SHALL BE CLEARLY SHOWN IN THE SOLICITATION "TO INSURE THAT ALL PROSPECTIVE BIDDERS OR OFFERORS UNDERSTAND THE BASIS TO BE USED FOR SELECTION OF THE LOWEST BID OR PROPOSAL AND TAKE THESE FACTORS INTO ACCOUNT IN PREPARING THEIR BIDS OR PROPOSALS.' WE FIND NO EXCUSE FOR THE FAILURE ON THE PART OF THE CONTRACTING OFFICER TO ADVISE ALF AND ALL OTHER BIDDERS THAT USE OF A GOVERNMENT-OWNED FACILITY WOULD BE PERMITTED.

HOWEVER, WE FAIL TO SEE HOW ALF WAS SUBSTANTIALLY PREJUDICED AS ALLEGED. ALF DOES NOT CLAIM TO HAVE HAD A GOVRNMENT PLANT IN ITS POSSESSION WHICH IT COULD HAVE USED IN THIS PROCUREMENT. SO FAR AS THE RECORD SHOWS, THERE WAS NO GOVERNMENT PLANT WHICH COULD HAVE BEEN MADE AVAILABLE TO ALF. HAVE SEEN THAT CHRYSLER WAS PERMITTED TO USE THE DETROIT TANK PLANT BECAUSE IT WAS ALREADY IN POSSESION OF THAT PLANT UNDER ANOTHER CONTRACT. IN THIS CONNECTION, IT IS OUR UNDERSTANDING THAT THE ARMY WOULD NOT HAVE AUTHORIZED THE USE OF THE DETROIT FACILITY BY ANY FIRM OTHER THAN CHRYSLER, BECAUSE OF THE PROBLEMS INHERENT IN PLANT OCCUPANCY BY MORE THAN ONE PRODUCER. SEE B 155891, MARCH 22, 1965. THUS ALF COULD NOT HAVE BASED ITS OWN BID ON THE USE OF GOVERNMENT FACILITIES EVEN IF THE RFP HAD BEEN AMENDED AS IT SHOULD HAVE BEEN. NOR DOES ALF CLAIM THAT THE AMOUNT ADDED TO CHRYSLER'S PROPOSAL AS A RENTAL FACTOR TO OFFSET THE COMPETITIVE ADVANTAGE OF USING A PORTION OF THE DETROIT TANK PLANT WAS INADEQUATE. THE RENTAL FACTOR EVALUATED AGAINST CHRYSLER'S PROPOSAL AMOUNTED TO APPROXIMATELY $73,000. THE CONTRACTING OFFICER REPORTS THAT THE BOARD OF REAL ESTATE AGENTS (REALTORS), DETROIT, MICHIGAN, WAS TELEPHONED TO DETERMINE THE COMMERCIAL RATE FOR PROPERTY COMPARABLE TO THE DETROIT TANK PLANT, AND THE RATE THEY QUOTED WAS SOMEWHAT LESS THAN THE RATE ACTUALLY USED.

THE REMAINING ARGUMENT ALF MAKES IS THAT IT WAS AT A COMPETITIVE DISADVANTAGE IN NOT KNOWING THAT CHRYSLER'S BID MIGHT BE BASED ON USE OF THE DETROIT TANK PLANT. WE BELIEVE THIS ARGUMENT DESERVES ANALYSIS AND COMMENT. WE AGREE THAT BIDDING SHOULD BE ON THE SAME BASIS, SO FAR AS WHAT EACH BIDDER WILL HAVE TO FURNISH IS CONCERNED (SUBJECT TO CERTAIN EXCEPTIONS, E.G., WAIVER OF TESTS FOR PRIOR PRODUCERS); WE AGREE FURTHER THAT IF, AS IN THIS CASE, ONE BIDDER IS TO BE FURNISHED OR PERMITTED TO USE GOVERNMENT PROPERTY OR FACILITIES, THE COMPETITIVE ADVANTAGE GAINED THEREBY SHOULD BE OFFSET. WE AGREE ALSO WITH THE PRINCIPLE STATED IN ASPR 13-506 THAT BIDDERS SHOULD BE ADVISED IN ADVANCE OF SUCH OFFSETTING EVALUATION FACTORS IN ORDER THAT THEY MAY TAKE SUCH FACTORS INTO ACCOUNT IN PREPARING THEIR OWN BIDS. WE RECOGNIZE THAT BIDDERS MAY PREDICATE THE AMOUNT OF THEIR BIDS TO SOME EXTENT ON THEIR ESTIMATES OF WHAT COMPETITORS MAY BID RATHER THAN ON THE BASIS OF THEIR OWN COSTS. THE ALF CONTENTION IS THAT THE INSTANT COMPETITION WAS FAULTY FOR THIS LAST REASON, NAMELY, THAT IT DID NOT HAVE KNOWLEDGE OF A FACTOR WHICH WOULD HAVE AFFECTED ITS ESTIMATE OF HOW CHRYSLER MIGHT BID.

WE DO NOT BELIEVE THAT A BIDDING COMPETITION IS NECESSARILY RENDERED INVALID BECAUSE ONE OR MORE BIDDERS ARE NOT ADVISED OF FACTORS, SUCH AS THOSE INVOLVED IN THE PRESENT CASE, WHICH HAVE NO EFFECT ON THE UNADVISED BIDDERS' COSTS. FOR EXAMPLE, ONE BIDDER MAY BE RENTING OR LEASING GOVERNMENT-OWNED TOOLING OR FACILITIES ON AN UNRESTRICTED USE BASIS. KNOW OF NO REASON WHY A FAILURE TO DISCLOSE THIS FACT SHOULD AFFECT THE VALIDITY OF A SUBSEQUENT BIDDING COMPETITION. WE SEE NO ESSENTIAL DIFFERENCE BETWEEN THAT SITUATION AND THE PRESENT CASE. IN BOTH INSTANCES THE GOVERNMENT-OWNED PROPERTY COULD BE USED ONLY BY THE BIDDER IN POSSESSION. IN ONE CASE RENTAL PAYMENTS ARE ALREADY FIXED BY CONTRACT; IN THE OTHER THEY WERE DETERMINED AND APPLIED FOR EVALUATION PURPOSES. WHILE WE AGREE THAT THE BASIS FOR THE THEORETICAL "RENTAL" TO BE ADDED TO CHRYSLER'S PROPOSAL SHOULD HAVE BEEN DISCLOSED TO ALL BIDDERS, WE DO NOT SEE HOW THE FAILURE TO DO SO GAVE CHRYSLER AN IMPROPER COMPETITIVE ADVANTAGE UNLESS IT SHOULD BE ARGUED, WHICH IT IS NOT, THAT SUCH "RENTAL" WAS TOO LOW.

ALF'S ORIGINAL BID WAS $23,037,222. IT REDUCED THIS BY NEARLY $1 MILLION TO $22,090,422, AND IS NOW CONTENDING, IN EFFECT, THAT IT MIGHT HAVE OFFERED AN ADDITIONAL REDUCTION OF SOME $2.5 MILLION IF IT HAD BEEN AWARE OF THE FACT THAT CHRYSLER MIGHT BID ON THE BASIS OF "RENTING" SOME $75,000 WORTH OF THE DETROIT TANK PLANT. CHRYSLER'S USE OR NONUSE OF THAT PLANT, OF COURSE, HAD NO EFFECT WHATEVER ON ALF'S OWN COSTS, NOR DOES ALF CONTEND THAT THE USE OF THE DETROIT PLANT WOULD RESULT IN DECREASING CHRYSLER'S COSTS BY ANY MORE THAN THE THEORETICAL "RENTAL" OF $75,000 WHICH WAS ADDED TO ITS PROPOSAL. ALF'S OWN COSTS PRESUMABLY WOULD BE THE SAME UNDER ITS ORIGINAL PROPOSAL AND UNDER THE $3.5 MILLION LOWER PROPOSAL IT NOW SAYS IT MIGHT HAVE SUBMITTED. WE FAIL TO SEE HOW KNOWLEDGE ON THE PART OF ALF THAT CHRYSLER MIGHT USE A PORTION OF THE DETROIT TANK PLANT COULD POSSIBLY MAKE A DIFFERENCE OF $2.5 MILLION IN ALF'S OWN BID.

ON THE FACTUAL SITUATION PRESENTED, WE MUST CONCLUDE THAT SUCH COMPETITIVE DISADVANTAGE, IF ANY, AS ALF MAY HAVE SUFFERED AS A RESULT OF THE ADMITTED IMPERFECTIONS IN THE PROCUREMENT PROCEDURE DID NOT AFFECT THE RESULTS OF THE COMPETITION, AND WE MUST DECLINE TO DISTURB THE AWARD MADE.