B-163158, APR. 2, 1968

B-163158: Apr 2, 1968

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TO METALS ENGINEERING CORPORATION: REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 23. WHICH IS THE SUBJECT OF THIS PROTEST. THE TWO LOW OFFERORS FOR ITEM 4D WERE AS FOLLOWS: UNIT PRICE DISCOUNT NET UNIT PRICE BAIFIELD INDUSTRIES $58.4466 1/10 OF 1 PERCENT . 10 DAYS 57.3463 SINCE THE ABOVE PRICES ARE F.O.B. ORIGIN IT WAS NECESSARY TO ADD TRANSPORTATION COSTS IN EVALUATING THE OFFERS. THE FINS WERE TO BE SHIPPED 6 TO THE CARTON. THE EVALUATED COST OF SHIPMENT WAS BASED ON RAIL FREIGHT FROM CARROLLTON. WAS USED FROM CARROLLTON AND THAT "THIS RATE IS FOUND IN TCFB SECTION 22. 092 UNITS FROM BAIFIELD WAS THEREFORE $9. WAS USED. WHICH IS REPORTED TO BE . TOTAL COST UNDER MECO'S OFFER WAS THEREFORE $9.

B-163158, APR. 2, 1968

TO METALS ENGINEERING CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 23, 1967, AND JANUARY 8 AND 16, 1968, CONCERNING YOUR PROTEST OF AN AWARD BY THE U.S. NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA, UNDER REQUEST FOR PROPOSALS (RFP) N00104-68-R-0631.

THE ABOVE RFP SOLICITED OFFERS FOR VARIOUS QUANTITIES OF MK-15 BOMB FIN ASSEMBLIES. ITEM 4D, WHICH IS THE SUBJECT OF THIS PROTEST, CALLED FOR 160,092 UNITS F.O.B. ORIGIN, FOR SHIPMENT TO CONCORD, CALIFORNIA, TO BE DELIVERED IN EQUAL MONTHLY INCREMENTS OF 17,788 UNITS OVER A NINE-MONTH PERIOD BEGINNING FOUR MONTHS AFTER DATE OF AWARD. AMENDMENT NO. 6 TO THE RFP DATED NOVEMBER 7, 1967, ESTABLISHED NOVEMBER 15, 1967, AS THE FINAL DATE FOR RECEIPT OF OFFERS. THE TWO LOW OFFERORS FOR ITEM 4D WERE AS FOLLOWS:

UNIT PRICE DISCOUNT NET UNIT PRICE BAIFIELD INDUSTRIES $58.4466 1/10 OF 1 PERCENT -- 10 DAYS $58.3882 METALS ENGINEERING 57.49 1/4 OF 1 PERCENT -- 10 DAYS 57.3463 SINCE THE ABOVE PRICES ARE F.O.B. ORIGIN IT WAS NECESSARY TO ADD TRANSPORTATION COSTS IN EVALUATING THE OFFERS. THE FINS WERE TO BE SHIPPED 6 TO THE CARTON, WITH AN ESTABLISHED TOTAL WEIGHT OF 500 LBS., INCLUDING PACKAGING, OR 83.3 LBS. PER FIN, AND THE EVALUATED COST OF SHIPMENT WAS BASED ON RAIL FREIGHT FROM CARROLLTON, TEXAS (BAIFIELD)AND GREENEVILLE, TENNESSEE (METALS ENGINEERING (MECO) ). THE NAVY REPORTS THAT A RATE OF $2.53 PER CWT. WAS USED FROM CARROLLTON AND THAT "THIS RATE IS FOUND IN TCFB SECTION 22, QUOTATION 854, ICC 604, OF 20 APRIL 1967.' APPLICATION OF THIS RATE RESULTED IN A RATE PER UNIT OF $2.1083 OR A TOTAL UNIT PRICE OF $60.4965. THE TOTAL COST OF 160,092 UNITS FROM BAIFIELD WAS THEREFORE $9,685,005.68. FROM GREENEVILLE A RATE OF $4.21 PER CWT. WAS USED, WHICH IS REPORTED TO BE ,FOUND IN TCFB TARIFF 1-P, ITEM 7225, PART 1.' APPLICATION OF THIS RATE RESULTED IN A RATE PER UNIT OF $3.5083 OR A TOTAL UNIT PRICE OF $60.8546. TOTAL COST UNDER MECO'S OFFER WAS THEREFORE $9,742,334.62. SINCE THIS COMPUTATION SHOWS BAIFIELD TO BE LOW BY $57,328.94, AWARD WAS MADE TO BAIFIELD INDUSTRIES ON DECEMBER 18, 1967.

YOU HAVE PROTESTED THIS AWARD FOR A NUMBER OF REASONS, AS ENUMERATED BELOW:

1. ACCORDING TO YOUR CALCULATIONS 19,075,642 LBS. OF GOVERNMENT PRODUCTS HAVE BEEN SHIPPED FROM GREENEVILLE, TENNESSEE, TO CALIFORNIA AND WASHINGTON AT A STANDARD COMMERCIAL RATE DURING THE PERIOD JUNE 21, 1966, THROUGH DECEMBER 21, 1967, AND IF A SECTION 22 RATE HAD BEEN OBTAINED BY THE GOVERNMENT A SAVING OF $104,916.03 WOULD HAVE RESULTED. IT IS THEREFORE YOUR OPINION THAT THE NEGLIGENCE OF THE GOVERNMENT IN NOT OBTAINING A SECTION 22 RATE SHOULD NOT PENALIZE MECO AND SUCH RATE SHOULD APPLY TO YOUR BID FOR EVALUATION PURPOSES.

2. THE RATE USED IN THE FREIGHT EVALUATION FROM CARROLLTON APPLIES TO A MINIMUM WEIGHT OF 42,000 LBS., WHEREAS THE RATE FROM GREENEVILLE IS BASED ON A 40,000 LB. MINIMUM, AND IT IS YOUR CONTENTION THAT RATES SHOULD HAVE BEEN BASED ON THE SAME WEIGHT FROM BOTH SHIPPING POINTS. IN THIS CONNECTION, YOU FURTHER CONTEND THAT THESE BOMB FINS WILL LOAD IN EXCESS OF 100,000 LBS. IN A STANDARD FREIGHT CAR AND THAT THIS WEIGHT SHOULD THEREFORE HAVE BEEN USED AS THE MINIMUM SHIPPING WEIGHT FOR EVALUATION, WHICH WOULD HAVE MADE MECO LOW. IN FACT, IT IS YOUR POSITION THAT EVALUATION ON ANY WEIGHT BASIS FROM 60,000 LBS. UP WOULD SHOW MECO TO BE LOW.

3. YOU POINT OUT THAT THE SECTION 22 QUOTATION FROM CARROLLTON IS SCHEDULED TO EXPIRE ON APRIL 19, 1968, AND SINCE DELIVERIES ARE NOT DUE TO START UNTIL AFTER THAT DATE, THIS RATE SHOULD NOT HAVE BEEN USED IN THE EVALUATION.

4. IT IS YOUR UNDERSTANDING THAT BAIFIELD INDUSTRIES DOES NOT HAVE A RAIL SIDING ADJACENT TO ITS FACILITY AND IS PRESENTLY SHIPPING "SNAKE-EYE" BOMB FINS BY "PIGGYBACK" TO CALIFORNIA AT A RATE OF $2.90 PER CWT. BASED ON A WEIGHT OF 50,000 LBS. MINIMUM. IT IS THEREFORE YOUR OPINION THAT, IF THIS IS THE EXISTING METHOD OF SHIPPING, THE SECTION 22 QUOTATION SHOULD NOT HAVE BEEN USED IN THE EVALUATION, SINCE IT DOES NOT APPLY TO THE BAIFIELD FACILITY. YOU ALSO SUBMIT FIGURES COMPARING BID PRICES BASED ON A FREIGHT RATE OF $2.90 FOR BAIFIELD AND $2.84 FOR MECO (BASED ON A MINIMUM CARLOAD OF 100,000 LBS.) AND YOU STATE THAT IF EVALUATION HAD BEEN ON THIS BASIS MECO WOULD HAVE BEEN THE RECIPIENT OF THE AWARD FOR ITEM 4D WITH A RESULTING SAVING TO THE GOVERNMENT OF $174,804.46.

5.FINALLY, YOU CONTEND THAT ONE OF THE REASONS FOR MAKING THIS A NEGOTIATED PROCUREMENT IS TO PERMIT THE GOVERNMENT TO MAKE ARRANGEMENTS WHICH ARE IN ITS BEST INTERESTS, AND IN VIEW OF THE POSSIBILITIES THAT A STRIKE, FIRE, CIVIL DISTURBANCE, ETC., COULD INTERRUPT THE GOVERNMENT'S TOTAL MANUFACTURING CAPABILITY, PLUS THE FACT THAT THERE WOULD BE A DEFINITE LIMIT TO PRODUCTION ACCELERATION IF NECESSARY, YOU BELIEVE THAT IT IS NOT IN THE BEST INTERESTS OF THE GOVERNMENT, THAT THE TOTAL PRODUCTION BE CONFINED TO ONE VENDOR AND YOU SUGGEST THAT THE NECESSARY ADDITIONAL PRODUCTION CAPABILITY COULD HAVE BEEN AVAILABLE TO THE GOVERNMENT AT NO ADDITIONAL COST HAD THE CONTRACT BEEN SHARED WITH MECO.

SECTION 1-1313.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES AS FOLLOWS:

"EVALUATION.

"TO AFFORD PROPER ANALYSIS AND CONSIDERATION OF TRANSPORTATION FACTORS, THE CONTRACTING OFFICER SHALL CONSIDER TRANSPORTATION RATES AND RELATED COSTS IN THE EVALUATION OF F.O.B. ORIGIN BIDS AND PROPOSALS. THE BEST AVAILABLE TRANSPORTATION RATES AND RELATED COSTS IN EFFECT OR TO BECOME EFFECTIVE PRIOR TO THE EXPECTED DATE OF INITIAL SHIPMENT AND ON FILE OR PUBLISHED AT THE DATE OF THE BID OPENING, SHALL BE USED IN THE EVALUATION. HOWEVER, TRANSPORTATION RATES AND RELATED COSTS FILED OR PUBLISHED AFTER THE BID OPENING, OR THE DATE PROPOSALS ARE DUE, SHALL NOT BE USED IN THE EVALUATION UNLESS THEY COVER TRAFFIC FOR WHICH NO APPLICABLE TRANSPORTATION RATE OR RELATED COST WAS IN EXISTENCE ON THE BID OPENING OR THE DATE PROPOSALS WERE DUE.'

YOUR OBJECTIONS WILL BE CONSIDERED IN THE ORDER PRESENTED ABOVE.

1. SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22, PERMITS CARRIAGE OF PROPERTY FREE OR AT REDUCED RATES FOR THE UNITED STATES. HOWEVER, THERE IS NO SET BASIS FOR DETERMINING WHEN AND IN WHAT MANNER A SECTION 22 RATE WILL BE OBTAINED. REQUEST THEREFOR IS SOMETIMES MADE BY THE GOVERNMENT, USUALLY BY THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE, AND WHETHER A REDUCED RATE IS ESTABLISHED IS STRICTLY UP TO THE CARRIERS. RATES OBTAINED IN THIS MANNER ARE DESIGNATED AS "NEGOTIATED.' OUR INFORMATION, HOWEVER, IS TO THE EFFECT THAT THE MAJORITY OF SECTION 22 RATES ARE SO-CALLED "VOLUNTARY" OFFERS BY THE CARRIERS AND THAT MANY OF THEM ARE TRIGGERED BY REQUESTS FROM SHIPPERS WHO WOULD BENEFIT THEREBY. CLEARLY IT WOULD BE TO THE GOVERNMENT'S ADVANTAGE TO HAVE A LOWER SECTION 22 RATE AVAILABLE FROM GREENEVILLE, BUT THERE IS NEVER ANY ASSURANCE THAT ONE WILL BE GRANTED AND NEGLIGENCE CAN HARDLY BE IMPUTED TO THE GOVERNMENT FOR FAILURE TO REQUEST ONE. THE PRESENT SITUATION POINTS UP THE IMPORTANCE TO MECO OF HAVING SUCH A RATE FROM GREENEVILLE, AND YOU MIGHT CONCEIVABLY HAVE HAD ONE ESTABLISHED PRIOR TO NOVEMBER 15, 1967, THE DATE OF EVALUATION, IF YOUR REQUEST TO SOUTHERN RAILWAY HAD BEEN MORE TIMELY SUBMITTED. THE GOVERNMENT CANNOT BE FAULTED FOR FAILURE TO FOLLOW A COURSE OF ACTION WHICH WAS EQUALLY AVAILABLE TO MECO AND DEFINITELY IN MECO'S INTEREST. SINCE THE ABOVE-QUOTED SECTION OF ASPR REQUIRES THAT THE RATE ON FILE OR PUBLISHED AT THE DATE OF BID OPENING BE USED IN THE EVALUATION, NO SUBSEQUENT RATE OFFERING COULD BE CONSIDERED. EVEN WITHOUT SUCH A REGULATORY REQUIREMENT WE HAVE HELD THAT THE USE OF RATES IN EFFECT AT THE TIME OF EVALUATION IS PROPER. SEE 35 COMP. GEN. 603.

2. SO LONG AS THE BOMB FINS WILL ACTUALLY MOVE AT A MINIMUM WEIGHT OF 42,000 LBS., THE HIGHER OF THE TWO MINIMUM CARLOAD WEIGHTS UPON WHICH THE RATES ARE BASED, THERE IS NO INEQUITY IN APPLYING THE TWO RATES FOR PURPOSES OF COMPARISON. SINCE YOU STATE THAT THESE BOMB FINS CAN LOAD IN EXCESS OF 100,000 LBS. PER CAR, THERE WOULD APPEAR TO BE NO DOUBT THAT THEY WILL LOAD AT LEAST AT 42,000 LBS. AND THE BASIS FOR EVALUATION WAS THEREFORE CORRECT. WITH REFERENCE TO YOUR CONTENTION THAT EVALUATION SHOULD HAVE BEEN ON THE BASIS OF 100,000 LBS. AND THAT YOUR OFFER WOULD BE LOW ON ANY BASIS FROM 60,000 LBS. UP, OUR RECORDS INDICATE THAT THE ONLY RATE APPLICABLE TO BOMB FIN ASSEMBLIES FROM GREENEVILLE ON NOVEMBER 15, 1967, WAS $4.21 PER CWT., BASED ON A 40,000 LB. MINIMUM, AS AUTHORIZED IN T.C.F.B. 1-P, I.C.C. 1751, ITEM 7225, PART I, AND THAT THE RATES WHICH FORM THE BASIS FOR YOUR CONTENTION AS TO SHIPMENTS OF 60,000 LBS. AND UP ARE RATES WHICH ARE FOUND IN ITEM 7225, PART 2, AND WHICH APPLY ON BOMB BODY PARTS, BUT ARE NOT APPLICABLE ON BOMB FIN ASSEMBLIES, SINCE T.C.F.B. 1-P IS SPECIFIC IN COMMODITY DESCRIPTIONS. IN ITS LETTER OF JANUARY 10, 1968, TO THIS OFFICE, SOUTHERN RAILWAY STATES THAT ITS INVESTIGATION DISCLOSES THAT THE BOMB FINS ARE CAPABLE OF LOADING IN EXCESS OF 80,000 LBS. AND THAT ON SHIPMENTS FROM GREENEVILLE IT WOULD BE WILLING TO PROTECT THE ITEM 7225, PART 2, TCFB TARIFF 1-P RATES AS APPLICABLE ON BOMB BODY PARTS. THE LETTER ALSO STATES THAT A REQUEST HAS BEEN FILED FOR THE ISSUANCE OF A SECTION 22 QUOTATION TO INCLUDE BOMB FIN ASSEMBLIES AT THE PART 2 RATES FROM GREENEVILLE TO CALIFORNIA. HOWEVER, NEITHER THE OFFER TO PROTECT NOR THE REQUEST FOR A SECTION 22 QUOTATION IS JUSTIFICATION FOR A RETROACTIVE EVALUATION AS OF NOVEMBER 15, 1967, AT ANY RATE OTHER THAN THAT IN EFFECT ON SAID DATE FOR BOMB FIN ASSEMBLIES.

3. AS TO THE FACT THAT THE SECTION 22 QUOTATION FROM CARROLLTON IS SCHEDULED TO EXPIRE ON APRIL 19, 1968, THE NAVY REPORTS THAT THIS RATE HAS BEEN IN EFFECT FOR A NUMBER OF YEARS AND IS ROUTINELY EXTENDED ON AN ANNUAL BASIS. FREIGHT RATES ARE ALWAYS SUBJECT TO CHANGE AND THERE IS NEVER ANY ASSURANCE THAT THE RATE USED IN EVALUATION WILL BE IN EFFECT ON THE DATE OF SHIPMENT. SINCE THE $2.53 RATE IS DEFINITELY SCHEDULED FOR EXPIRATION APRIL 19 UNLESS EXTENDED, IT MIGHT BE ARGUED THAT THE AWARD SHOULD HAVE BEEN CONDITIONED ON INDEMNIFYING THE GOVERNMENT AGAINST ANY ADDITIONAL FREIGHT COST DUE TO A FAILURE TO EXTEND THE RATE. IT IS IMPOSSIBLE, HOWEVER, TO ANTICIPATE ALL CONTINGENCIES AND THE CONTRACTING OFFICER IS CHARGEABLE ONLY WITH THE RESPONSIBILITY OF MAKING A REASONABLE EVALUATION IN THE EXISTING CIRCUMSTANCES. SINCE ASPR CALLS FOR USE OF THE RATE IN EFFECT ON THE DATE PROPOSALS ARE DUE, AND THE CONTRACTING OFFICER HAD NO REASON TO BELIEVE THAT ANOTHER EXTENSION OF THE $2.53 RATE WILL NOT OCCUR IN APRIL 1968, WE FIND NO BASIS FOR QUESTIONING USE OF THIS RATE IN EVALUATING BAIFIELD'S OFFER.

4. THE NAVY REPORT CONFIRMS YOUR UNDERSTANDING THAT BAIFIELD DOES NOT HAVE A RAIL SIDING ADJACENT TO ITS FACILITY. HOWEVER, PAGE 8 OF THE SOLICITATION CONTAINS THE FOLLOWING PROVISION, WHICH BECOMES A PART OF ANY RESULTING CONTRACTS: "6-44 PLACE OF DELIVERY: ORIGIN (A) THE ARTICLES TO BE FURNISHED HEREUNDER SHALL BE DELIVERED, FREE OF EXPENSE TO THE GOVERNMENT AND AT THE GOVERNMENT'S OPTION, (1) LOADED, BLOCKED, AND BRACED ON BOARD CARRIER'S EQUIPMENT, (11) AT THE FREIGHT STATION, OR (111) PLACED ON WHARF OF WATER CARRIER (WHERE MATERIAL WILL ORIGINATE WITHIN OR ADJACENT TO A PORT AREA AND IS ADAPTABLE TO WATER MOVEMENT).' THERE IS A FURTHER PROVISION UNDER 6-44 (C) THAT "THE METHOD OF SHIPMENT SHALL BE SPECIFIED BY THE GOVERNMENT WHEN MATERIAL IS READY FOR SHIPMENT.' UNDER THE QUOTED PROVISIONS THE CONTRACTOR WOULD BE RESPONSIBLE FOR MOVEMENT TO THE FREIGHT STATION FREE OF EXPENSE TO THE GOVERNMENT, AND THESE PROVISIONS, COUPLED WITH ASPR 1.1313-1, MAKE IT THE RESPONSIBILITY OF THE PURCHASING AGENCY TO INSURE NOT ONLY THAT THE BEST AVAILABLE TRANSPORTATION RATES ARE USED IN THE EVALUATION, BUT ALSO THAT SHIPMENT IS ACTUALLY MADE AT THE MINIMUM RATES. IF A MORE COSTLY METHOD OF SHIPMENT IS USED, UNLESS REQUESTED BY THE GOVERNMENT AND IN THE GOVERNMENT'S INTEREST, THE ADDITIONAL COST MUST BE COLLECTED FROM THE CONTRACTOR. THIS IS A MATTER OF CONTRACT ADMINISTRATION, BUT SINCE YOU HAVE RAISED THE QUESTION WE WILL CALL IT TO THE ATTENTION OF THE DEPARTMENT OF THE NAVY BEFORE CLOSING OUR FILE. HOWEVER, FOR THE PURPOSES OF THE PRESENT PROTEST, EVALUATION OF BAIFIELD'S OFFER EVEN AT THE RATE OF $2.90 PER CWT. WOULD NOT CHANGE THE PICTURE. THE DIFFERENCE BETWEEN $2.90 AND $2.53 IS $0.37 PER CWT. APPLYING THIS TO THE CONTRACT WEIGHT OF 13,341,000 LBS. GIVES A TOTAL ADDITIONAL FREIGHT COST OF $49,361.70. SINCE THE EVALUATED DIFFERENCE BETWEEN THE TWO LOW OFFERS WAS $57,328.94, BAIFIELD WOULD STILL BE LOW.

5. IT IS NOT CLEAR HOW SPLITTING THE AWARD WOULD HAVE BEEN "AT NO ADDITIONAL COST," SINCE BAIFIELD'S OFFER WAS LOWER. HOWEVER, WE FIND NO PROVISION IN THE SOLICITATION FOR SPLITTING THE AWARD AND IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE MOBILIZATION BASE COULD BE EFFECTIVELY MAINTAINED BY AWARDING THE ENTIRE CONTRACT TO A SINGLE PRODUCER. A PARTIAL AWARD TO MECO WAS THEREFORE NOT IN ORDER. FOR THE REASONS STATED WE FIND NO LEGAL BASIS FOR QUESTIONING THE AWARD OF ITEM 4D TO BAIFIELD AND YOUR PROTEST IS THEREFORE DENIED.