B-162182, NOV. 13, 1967

B-162182: Nov 13, 1967

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AMERICAN MAILING CORPORATION BUT DENYING PROTESTANT'S CONTENTION THAT BID SHOULD HAVE BEEN REFERRED TO SBA. ALTHOUGH BIDDER'S CONTENTION THAT REJECTION WAS IMPROPER SINCE BIDDER'S COMPETENCY WAS FOR DETERMINATION UNDER SBA. CERTIFICATE OF COMPETENCY PROCEDURE NEED NOT BE FOLLOWED BECAUSE CONTRACT PRICE WAS LESS THAN $10. APART FROM CONTENTION INVITATION WAS FOUND TO BE LEGALLY INSUFFICIENT BECAUSE BIDDERS WERE NOT ADVISED OF HOW SCOPE OF WORK PROVISION WAS TO BE EVALUATED. THEREFORE INVITATION WAS LEGALLY INSUFFICIENT TO SUPPORT VALID AWARD AND REQUIREMENTS TYPE CONTRACT MUST BE CANCELLED. MACY: REFERENCE IS MADE TO LETTERS DATED SEPTEMBER 7. "IT IS ESTIMATED THAT THE TOTAL VOLUME TO BE MAILED DURING THE PERIOD OF THIS CONTRACT WILL BE APPROXIMATELY 3.

B-162182, NOV. 13, 1967

BIDS - INVITATION DEFECTS DECISION TO CIVIL SERVICE COMMISSION REQUIRING CANCELLATION OF CONTRACT FOR MAILING SERVICES AWARDED TO SECOND LOW BIDDER, AMERICAN MAILING CORPORATION BUT DENYING PROTESTANT'S CONTENTION THAT BID SHOULD HAVE BEEN REFERRED TO SBA. ALTHOUGH BIDDER'S CONTENTION THAT REJECTION WAS IMPROPER SINCE BIDDER'S COMPETENCY WAS FOR DETERMINATION UNDER SBA, CERTIFICATE OF COMPETENCY PROCEDURE NEED NOT BE FOLLOWED BECAUSE CONTRACT PRICE WAS LESS THAN $10,000. HOWEVER, APART FROM CONTENTION INVITATION WAS FOUND TO BE LEGALLY INSUFFICIENT BECAUSE BIDDERS WERE NOT ADVISED OF HOW SCOPE OF WORK PROVISION WAS TO BE EVALUATED. FURTHER INVITATION FAILED TO SPECIFY MAXIMUM DAILY CAPABILITY. THEREFORE INVITATION WAS LEGALLY INSUFFICIENT TO SUPPORT VALID AWARD AND REQUIREMENTS TYPE CONTRACT MUST BE CANCELLED.

TO MR. MACY:

REFERENCE IS MADE TO LETTERS DATED SEPTEMBER 7, 26, AND OCTOBER 5, 1967, (YOUR REFERENCE GC:LEG 1, EFW:FZ), FROM YOUR GENERAL COUNSEL, REPORTING ON THE PROTEST OF DATA-MAIL, INC., AGAINST THE REJECTION OF ITS LOW BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. CS-06-68 MOF, AND THE SUBSEQUENT AWARD OF A CONTRACT THEREUNDER TO THE SECOND LOW BIDDER, AMERICAN MAILING CORPORATION.

THE INVITATION, ISSUED JUNE 19, 1967, REQUESTED BIDS RESPONSIVE TO THE NEEDS OF THE COMMISSION FOR CERTAIN MAILING SERVICES TO BE PERFORMED DURING FISCAL YEAR 1968 FROM SMALL BUSINESS CONCERNS LOCATED IN THE WASHINGTON, D.C., METROPOLITAN AREA.

PARAGRAPH B OF THE SCOPE OF WORK PROVISION CONCERNING THE MAXIMUM ANTICIPATED NEEDS OF THE COMMISSION PROVIDED AS FOLLOWS. "IT IS ESTIMATED THAT THE TOTAL VOLUME TO BE MAILED DURING THE PERIOD OF THIS CONTRACT WILL BE APPROXIMATELY 3,000,000 PIECES, WITH MOST OF THE WORK RANGING FROM ONE TO FIVE INSERTS. THERE MAY BE OCCASION WHEN A MAILING OF 800,000 PIECES WILL HAVE TO BE COMPLETED WITHIN FOUR DAYS AFTER RECEIPT OF MATERIAL BY THE CONTRACTOR. THIS ESTIMATE DOES NOT CONSTITUTE A GUARANTEE OF WORK VOLUME TO BE OFFERED TO THE CONTRACTOR.'

ITEM NO. 1, ENTITLED,"MAILING SERVICES," REQUESTED BIDS ON THE BASIS OF THE COST PER THOUSAND FOR INSERTING ONE THROUGH EIGHT INSERTS INTO VARIOUS SIZE ENVELOPES. BIDDERS WERE REQUIRED TO STATE THEIR MAXIMUM DAILY INSERT CAPABILITY OR DAILY PRODUCTION CAPACITY (WITHOUT OVERTIME) WITH RESPECT TO EACH MAILING SERVICE OPERATION DETAILED IN THE INVITATION.

ITEM NO. 1E PROVIDED: "BURSTING: THE CONTRACTOR WILL PROVIDE THE BURSTING SERVICE REQUIRED TO BURST COMPUTER PRINT-OUT MATERIAL USUALLY BURSTED TO 8 INCHES X 10-1/2 INCHES. IT IS ESTIMATED THAT THE AMOUNT OF BURSTING REQUIRED WILL BE APPROXIMATELY 600,000 INDIVIDUAL PIECES DURING THE PERIOD OF THIS CONTRACT. THIS ESTIMATE DOES NOT CONSTITUTE A GUARANTEE OF THE AMOUNT OF THIS TYPE OF WORK TO BE OFFERED TO THE CONTRACTOR.

COST PER 1,000 FOR BURSTING M -------- "

SUBITEMS NOS. D, F, G, AND H OF ITEM 1 REQUESTED, RESPECTIVELY, UNIT PRICES FOR THE "COST PER THOUSAND" FOR LABELING, MISCELLANEOUS HAND OPERATIONS (TUCKING ENVELOPE FLAPS AND CLOSING ENVELOPES WITH A CLASP), MACHINE FOLDING, AND STAMPING "AIR MAIL" ON THE ENVELOPES.

THE INVITATION ALSO REQUIRED EACH BIDDER TO SUPPLY THE FOLLOWING INFORMATION:

"CONTRACTOR'S NORMAL WORKING HOURS:

A. MONDAY TO FRIDAY INCLUSIVE:

-------- A.M. TO -------- P.M.

B. SATURDAY: -------- A.M. TO -------- P.M.

C. FOR WORK PERFORMED OTHER THAN DURING THE ABOVE NORMAL WORKING HOURS, THE EXTRA CHARGE WILL BE -------- PER CENT OF THE PRICES SHOWN HEREIN IN ADDITION TO THE REGULAR PRICE.'

THE SPECIAL PROVISIONS OF THE INVITATION INFORMED BIDDERS AS FOLLOWS: "1. METHOD OF AWARD:

AWARD WILL BE MADE IN THE AGGREGATE FOR THE ENTIRE GROUP OF ITEMS INCLUDING ALL SUBITEMS SHOWN. TO RECEIVE CONSIDERATION, BIDDERS MUST BID ON ALL ITEMS AND SUBITEMS. AWARD WILL THEN BE MADE TO THE LOWEST AGGREGATE TOTAL.

************** ******* ******* "3. THE LOCATION OF THE CONTRACTOR'S PREMISES WHERE THIS WORK IS TO BE DONE MUST BE IN THE WASHINGTON, D.C. METROPOLITAN AREA. "4. EQUIPMENT AND EMPLOYEES:

A. THE CONTRACTOR MUST HAVE ALL EQUIPMENT NECESSARY TO FULFILL THE REQUIREMENTS OF THIS INVITATION TO BID. EQUIPMENT MUST BE ON HIS METROPOLITAN AREA (D.C.) PREMISES AS OF THE DATE OF AWARD. ALL BIDDERS MUST ATTACH A LIST OF ALL EQUIPMENT TO BE USED ON THIS CONTRACT. THE LIST SHALL CONTAIN THE MAKE, MODEL AND YEAR. THE BIDDERS MUST IDENTIFY OWNED EQUIPMENT AND LEASED EQUIPMENT. THE CONTRACTING OFFICER WILL MAKE THE FINAL DECISION ON THE ADEQUACY OF THE BIDDERS' EQUIPMENT TO BE USED IN PERFORMANCE OF THIS CONTRACT.

B. NUMBER OF EMPLOYEES:

FULL TIME -------- PART TIME -------- "5. GOVERNMENT INSPECTION:

THE GOVERNMENT MAY INSPECT THE FACILITIES AND EQUIPMENT OF THE BIDDERS SUBSEQUENT TO BID OPENING AND PRIOR TO THE MAKING OF AN AWARD TO ASSURE THAT ADEQUATE FACILITIES ARE AVAILABLE TO PERFORM WITHIN THE INTENT OF THIS INVITATION TO BID. ANY INSPECTION MADE BY THE GOVERNMENT SHALL BE FINAL. THE CIVIL SERVICE COMMISSION FURTHER RESERVES THE RIGHT TO INSPECT DURING ANY TIME THAT COMMISSION WORK IS IN PROCESS.

******* ******* ******* ******* "7. ALL INFORMATION REQUESTED HEREIN MUST BE PROVIDED BY THE BIDDER. INCOMPLETE BIDS MAY BE CONSIDERED NON- RESPONSIVE.'

THE "STATEMENT AND CERTIFICATE OF AWARD" SIGNED BY THE CHIEF, OFFICE SERVICES DIVISION READS IN PART AS FOLLOWS:"ABSTRACT OF BIDS:

"BIDS WERE SOLICITED FROM FIVE DEALERS FOR MAILING SERVICE FOR FISCAL YEAR 1968 WITH THE FOLLOWING RESULTS:

AGGREGATE PRICE OF

ENTIRE GROUP OF ITEMS.

STAR MAILING SER. NO RESPONSE

WALTER S. QUINN NO RESPONSE

MAILING SER. OF WASH. $351.55

AMERICAN MAILING CORP. 245.65

DATA-MAIL, INC. 236.00 "IT WAS DETERMINED THAT THE BID OF DATA-MAIL, INC. DID NOT QUALIFY AS RESPONSIBLE BECAUSE OF THE LACK OF FACILITIES, EQUIPMENT AND PRODUCTION CAPABILITIES TO PERFORM THE WORK AS OUTLINED IN THE INVITATION, IN ACCORDANCE WITH THE FEDERAL PROCUREMENT REGULATIONS PARAGRAPH 1-1.310-5. "AMERICAN MAILING CORP. WAS ACCEPTED AS LOWEST SUCCESSFUL BID RECEIVED FROM 3 DEALERS.'

IN ACCORDANCE WITH THE FOREGOING, THE CONTRACT WAS AWARDED TO AMERICAN MAILING CORPORATION ON JULY 27, 1967, AS THE LOWEST RESPONSIBLE BIDDER.

BY LETTER DATED AUGUST 1, 1967, DATA-MAIL ALLEGED THAT THE CONTRACTING OFFICER'S REJECTION OF ITS BID WAS IMPROPER SINCE THE MATTER OF A SMALL BUSINESS BIDDER'S COMPETENCY TO PERFORM A GIVEN CONTRACT WAS FOR DETERMINATION BY THE SMALL BUSINESS ADMINISTRATION (SBA) WHERE THE PROCUREMENT AGENCY DETERMINED THAT SUCH BIDDER LACKS THE CAPACITY AND CREDIT TO PERFORM THE CONTRACT. SEE FEDERAL PROCUREMENT REGULATIONS (FPR) SECTION 1-1.708. UNDER THE CITED REGULATION, THE CONTRACTING OFFICER WAS AUTHORIZED TO REJECT DATA MAIL'S BID ON THE BASIS OF NONRESPONSIBILITY. SEE FPR 1-1.708-2 (3) WHICH PROVIDES THAT THE CERTIFICATE OF COMPETENCY PROCEDURE NEED NOT BE FOLLOWED IF THE CONTEMPLATED CONTRACT PRICE IS MORE THAN $2,500 BUT LESS THAN $10,000, AS IN THE PRESENT CASE.

HOWEVER, SEPARATE AND APART FROM THE ABOVE CONTENTION IS THE QUESTION WHETHER THE INVITATION FOR BIDS WAS LEGALLY SUFFICIENT TO SUPPORT A VALID AWARD. UPON REVIEW, WE CONCLUDE THAT THE QUESTION MUST BE ANSWERED IN THE NEGATIVE.

IT APPEARS FROM THE RECORD AND THE INVITATION ITSELF THAT THE RESPONSIVENESS OF BIDDERS WAS DETERMINED BY THEIR STATED MINIMUM INSERT CAPABILITIES, BY THEIR LISTS OF AVAILABLE EQUIPMENTS, AND BY THEIR STATEMENTS OF NORMAL WORKING HOURS. THESE FACTORS WERE THEN RELATED, IN EVALUATION, TO THE SCOPE OF WORK PROVISION THAT "THERE MAY BE OCCASION WHEN A MAILING OF 800,000 PIECES WILL HAVE TO BE COMPLETED WITHIN FOUR DAYS.' HOWEVER, WE FIND NOTHING IN THE INVITATION WHICH ADVISED BIDDERS OF HOW THE ABOVE FACTORS WOULD BE APPLIED IN EVALUATION OR, MORE IMPORTANTLY, THAT SUCH FACTORS BORE A DIRECT, SUBSTANTIAL RELATIONSHIP TO THE SCOPE OF WORK PROVISION. THE SCOPE OF WORK PROVISION, QUOTED ABOVE, WAS MERELY AN ESTIMATE OF PROBABLE VOLUME WHICH WAS NOT STATED TO BE THE PRIME EVALUATION FACTOR OR ONE WHICH WAS THE COMMON DENOMINATOR OF OTHER EVALUATION FACTORS WHICH WERE SIMILARLY UNREVEALED TO BIDDERS.

THE INVITATION FAILED ALSO TO SPECIFY THE PURPOSE FOR REQUIRING A RESPONSE TO THE "MAXIMUM" DAILY INSERT CAPABILITY. "MAXIMUM" CAPABILITY WAS NOT RELATED TO THE ESTIMATES OF VOLUME IN THE SCOPE OF WORK PROVISION OR TO WHAT WAS EXPECTED OF BIDDERS ON A DAILY BASIS (THAT IS, A 6, 8, 10 HOUR, ETC., WORKDAY WITHOUT OVERTIME CHARGEABLE TO THE GOVERNMENT). THE INTENT BEHIND THE PROVISION REGARDING "CONTRACTOR'S NORMAL WORKING HOURS" IS NOT CLEAR. THE KEY WORK APPEARS TO BE "NORMAL" BUT WHAT MAY BE NORMAL IN A BIDDER'S COMMERCIAL ACTIVITY WOULD NOT NECESSARILY BE NORMAL" WHEN RESPONDING TO AN INVITATION WHICH CONTAINED CONNOTATIONS OF VERY HEAVY WORKLOADS (800,000 INSERTS) TO BE ACCOMPLISHED WITHIN "4 DAYS.' WHETHER 800,000 INSERTS WITHIN 4 DAYS HAD TO BE ACCOMPLISHED WITHIN 4 NORMAL WORKDAYS OR WITHIN 4 CALENDAR DAYS, INCLUDING OVERTIME AT GOVERNMENT EXPENSE, IS UNCERTAIN. THIS IS ESPECIALLY SIGNIFICANT WHEN THERE IS CONSIDERED THE FACT THAT THE 800,000 INSERTS MAY INCLUDE INSERTIONS INTO DIFFERENT SIZES OF ENVELOPES OF FROM ONE TO EIGHT INSERTS.

WE FURTHER NOTE THAT BIDDERS WERE TO RESPOND TO FIVE CATEGORIES OF EITHER INSERT OF PRODUCTION CAPACITY WITHOUT ADVICE AS TO WHETHER THE AGGREGATE TOTALS OF THOSE CAPACITIES WHEN EXTENDED FOR 4 DAYS WOULD OR WOULD NOT BE RELATED TO THE 800,000 VOLUME ESTIMATE.

IT IS PROVIDED AT 41 U.S.C. 253 (A), IN PART, THAT "INVITATIONS FOR BIDS SHALL PERMIT SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF PROPERTY AND SERVICES NECESSARY TO MEET THE REQUIREMENTS OF THE AGENCY CONCERNED.' THE PURPOSE OF THE STATUTE REQUIRING THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE BIDDER AFTER ADVERTISING IS TO GIVE ALL PERSONS EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS, AND TO SECURE FOR THE GOVERNMENT THE BENEFITS WHICH FLOW FROM FREE AND UNRESTRICTED COMPETITION. SEE UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461. TO PERMIT BIDDERS TO COMPETE ON EQUAL TERMS, THE INVITATION MUST BE SUFFICIENTLY DEFINITE TO PERMIT THE PREPARATION AND EVALUATION OF BIDS ON A COMMON BASIS, AND IT IS AXIOMATIC THAT BIDDERS CANNOT COMPETE ON AN EQUAL BASIS AS REQUIRED BY LAW UNLESS THEY KNOW OF AND COMPUTE THEIR BIDS IN ACCORDANCE WITH THE OBJECTIVE FACTORS COMPRISING THE BASES UPON WHICH THEIR BIDS WILL BE EVALUATED.

IN 36 COMP. GEN. 380, 385, WE HELD IN THIS REGARD AS FOLLOWS: "THE BASIS' OF EVALUATION WHICH MUST BE MADE KNOWN IN ADVANCE TO THE BIDDERS SHOULD BE AS CLEAR, PRECISE AND EXACT AS POSSIBLE. IDEALLY, IT SHOULD BE CAPABLE OF BEING STATED AS A MATHEMATICAL EQUATION. IN MANY CASES, HOWEVER, THAT IS NOT POSSIBLE. AT THE MINIMUM, THE -BASIS' MUST BE STATED WITH SUFFICIENT CLARITY AND EXACTNESS TO INFORM EACH BIDDER PRIOR TO BID OPENING, NO MATTER HOW VARIED THE ACCEPTABLE RESPONSES, OF OBJECTIVELY DETERMINABLE FACTORS FROM WHICH THE BIDDER MAY ESTIMATE WITHIN REASONABLE LIMITS THE EFFECT OF THE APPLICATION OF SUCH EVALUATION FACTOR ON HIS BID IN RELATION TO OTHER POSSIBLE BIDS. BY THE TERM -OBJECTIVELY DETERMINABLE FACTORS' WE MEAN FACTORS WHICH ARE MADE KNOWN TO OR WHICH CAN BE ASCERTAINED BY THE BIDDER AT THE TIME HIS BID IS BEING PREPARED. FACTORS WHICH ARE BASED ENTIRELY OR LARGELY ON A SUBJECTIVE DETERMINATION TO BE ANNOUNCED BY REPRESENTATIVES OF THE CONTRACTING AGENCY AT THE TIME OF OR SUBSEQUENT TO THE OPENING OF BIDS VIOLATE THE PRINCIPLE FOR THE REASON THAT THEY ARE NOT DETERMINABLE BY THE BIDDER AT THE TIME HIS BID IS BEING PREPARED.'

SINCE THE INVITATION FAILED TO PROVIDE AN OBJECTIVE BASIS OF BID EVALUATION WHEREUNDER BIDDERS WERE APPRISED, IN ADVANCE OF THE BID OPENING, OF THE FACTORS WHICH WOULD BE DETERMINATIVE OF AN AWARD, THE INVITATION MUST BE CONSIDERED AS LEGALLY INSUFFICIENT TO SUPPORT A VALID AWARD.

MOREOVER, IT HAS COME TO OUR ATTENTION THAT THE CURRENT CONTRACTOR POSSESSES NO "BURSTING" EQUIPMENT, AND THEREFORE, CANNOT PERFORM THE BURSTING OPERATIONS ADVERTISED UNDER THE INVITATION. WE NOTE IN THIS REGARD THAT THESE SERVICES PROPERLY MAY NOT BE SUBCONTRACTED UNDER THE TERMS OF THE CONTRACT. THE ADMINISTRATIVE REPORT OF SEPTEMBER 7 STATES IN THIS REGARD THAT "THE COMMISSION ANTICIPATED A MUCH GREATER VOLUME OF - INSERTING AND MAILING- THAN OF -BURSTING-; ACCORDINGLY, THE INSERTING AND MAILING CAPACITY WAS CONSIDERED THE DETERMINATIVE FACTOR.' WE ASSUME FROM THIS THAT THE AWARD DEVIATED FROM ONE OF THE ADVERTISED SPECIFICATIONS BECAUSE OF THE CONTEMPLATED CONTRACTOR'S INABILITY TO PERFORM UNDER THAT SPECIFICATION. IN THIS REGARD, WE HELD IN 46 COMP. GEN. 275, 277 AS FOLLOWS:

"ONE OF THE CHIEF PURPOSES OF THE STATUTES REQUIRING THE USE OF THE COMPETITIVE BIDDING SYSTEM IS TO GIVE ALL PERSONS AN EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS, THAT IS, TO COMPETE ON A COMMON BASIS. UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461. COMPETING BIDDERS HAVE A RIGHT TO ASSUME THAT SPECIFICATION REQUIREMENTS CONTAINED IN THE INVITATION ARE ESSENTIAL TO THE GOVERNMENT AND THAT THOSE REQUIREMENTS WILL NOT BE WAIVED BY THE CONTRACTING AGENCY IN FAVOR OF ONE BIDDER SINCE TO DO SO WOULD PLACE THE BIDDERS ON AN UNEQUAL FOOTING. WHERE A CHANGE IN THE SPECIFICATIONS IS SOUGHT TO BE IMPOSED OR AGREED TO AS THE RESULT SOLELY OF ACTION BY ONE OR BOTH OF THE PARTIES, AWARD ON THE BASIS OF THE CHANGED SPECIFICATIONS CONTRAVENES THE ESTABLISHED PRINCIPLES OF COMPETITIVE BIDDING. 40 COMP. GEN. 55. IN PRESTEX, SUPRA, THE COURT RULED THAT THE CONTRACT THERE AWARDED WAS INVALID BECAUSE IT WAS AWARDED ON OTHER THAN THE ADVERTISED SPECIFICATIONS.' ACCORDINGLY, THE REQUIREMENTS-TYPE CONTRACT AWARDED TO THE AMERICAN MAILING CORPORATION SHOULD BE CANCELED AS SOON AS PRACTICABLE.