B-163465, FEBRUARY 14, 1968, 47 COMP. GEN. 453

B-163465: Feb 14, 1968

Additional Materials:

Contact:

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

 

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

THE GENERAL RULE AGAINST THE ACCEPTANCE OF BIDS CONDITIONED UPON AWARD UNDER ANOTHER SEPARATE SOLICITATION IS NOT FOR APPLICATION WHEN BIDDERS ARE ADVISED OF THE ACCEPTABILITY OF ALTERNATE BIDS AND PARTICIPATE ON THIS BASIS. A NUMBER OF PROSPECTIVE BIDDERS POINTED OUT THAT UNDER CURRENT TECHNIQUES THE PRODUCTION OF NITROGEN GAS IS LEAST EXPENSIVE WHEN PRODUCED SIMULTANEOUSLY WITH LIQUID OXYGEN AND LIQUID NITROGEN. WILL BE EVALUATED * * *.'. STATES: "* * * BIDS BASED ON RECEIPT OF AN AWARD UNDER IFB F41608-68-B-2271 0001 WILL BE CONSIDERED NONRESPONSIVE.'. THIS DIFFERENCE BETWEEN THE TWO INVITATIONS IS EXPLAINED BY THE PRESENCE OF A 50 PERCENT SET-ASIDE FOR SMALL BUSINESSES IN INVITATION 2407.

B-163465, FEBRUARY 14, 1968, 47 COMP. GEN. 453

BIDS - EVALUATION - ALTERNATE BASES BIDDING - ACCEPTANCE TWO SOLICITATIONS, ONE FOR GASEOUS NITROGEN WHICH PERMITTED ALTERNATE BIDS CONDITIONED UPON RECEIPT OF AN AWARD UNDER ANOTHER SOLICITATION FOR LIQUID OXYGEN AND NITROGEN THAT RESTRICTED ALTERNATE BIDS DUE TO THE INCLUSION OF A SMALL BUSINESS SET-ASIDE, MAY BE CONSIDERED AS ONE FOR THE PURPOSE OF EVALUATING ALTERNATE BIDS. THE GENERAL RULE AGAINST THE ACCEPTANCE OF BIDS CONDITIONED UPON AWARD UNDER ANOTHER SEPARATE SOLICITATION IS NOT FOR APPLICATION WHEN BIDDERS ARE ADVISED OF THE ACCEPTABILITY OF ALTERNATE BIDS AND PARTICIPATE ON THIS BASIS. THEREFORE, THE LOW AGGREGATE ALTERNATE BID SUBMITTED BY A SMALL BUSINESS FIRM BEING MORE BENEFICIAL TO THE GOVERNMENT THAN THE COMBINATION OF ITEM BIDS UPON THE SAME QUANTITIES, AWARDS MAY BE MADE ON THE BASIS OF THE LOW AGGREGATE BID FOR THE GASEOUS NITROGEN AND A PORTION OF THE SMALL BUSINESS SET- ASIDE, AND TO THE LOW BIDDER UNDER EACH SEPARATE INVITATION FOR THE BALANCE OF THE SET-ASIDE.

TO THE SECRETARY OF THE AIR FORCE, FEBRUARY 14, 1968:

WE REFER TO THE LETTER OF JANUARY 31, 1968, FROM MR. AARON J. RACUSIN, DEPUTY ASSISTANT SECRETARY (PROCUREMENT), REQUESTING THIS OFFICE TO CONSIDER THE PROPRIETY OF A PROPOSED AWARD OF CERTAIN CONTRACTS FOR LIQUID OXYGEN, LIQUID NITROGEN AND GASEOUS NITROGEN BY THE DEPARTMENT OF THE AIR FORCE IN SUPPORT OF NATIONAL AERONAUTICS AND SPACE ADMINISTRATION PROGRAMS AT KENNEDY SPACE CENTER, FLORIDA.

SAN ANTONIO AIR MATERIEL AREA, KELLY AIR FORCE BASE, TEXAS, ISSUED THE TWO SOLICITATIONS IN QUESTION; ONE, INVITATION FOR BIDS NO. F41608 68-B- 2271 (2271 HEREAFTER) ON NOVEMBER 7, 1967, FOR FURNISHING KENNEDY SPACE CENTER'S ESTIMATED NEEDS FOR GASEOUS NITROGEN FOR EITHER A ONE YEAR OR FIVE-YEAR PERIOD, AND THE OTHER, INVITATION FOR BIDS NO. F41608 68-B-2407 (2407 HEREAFTER) ON NOVEMBER 14, 1967, FOR FURNISHING THE CENTER'S ESTIMATED REQUIREMENTS FOR LIQUID OXYGEN (LOX) AND LIQUID NITROGEN (LIN) FOR SIMILAR PERIODS.

AT A PRE-BID CONFERENCE HELD AT KENNEDY SPACE CENTER, A NUMBER OF PROSPECTIVE BIDDERS POINTED OUT THAT UNDER CURRENT TECHNIQUES THE PRODUCTION OF NITROGEN GAS IS LEAST EXPENSIVE WHEN PRODUCED SIMULTANEOUSLY WITH LIQUID OXYGEN AND LIQUID NITROGEN. THESE MANUFACTURERS THEREFORE REQUESTED THAT THEY BE PERMITTED TO SUBMIT ALTERNATE BIDS CONDITIONING THEIR PRICE UPON RECEIPT OF AWARDS UNDER BOTH INVITATIONS.

IN AN APPARENT ACCOMMODATION TO THIS SUGGESTION, INVITATION 2271, FOR GASEOUS NITROGEN, SCHEDULE SECTION I, PART IVA, PROVIDES:

"ALTERNATE BIDS UNDER THIS IFB, CONDITIONED UPON RECEIPT OF AN AWARD UNDER IFB F41608-68-B-2407, WILL BE EVALUATED * * *.'

THE OTHER SOLICITATION, 2407, FOR LOX AND LIN, AT SCHEDULE SECTION I, PART IIA (2) (D), STATES:

"* * * BIDS BASED ON RECEIPT OF AN AWARD UNDER IFB F41608-68-B-2271 0001 WILL BE CONSIDERED NONRESPONSIVE.'

THIS DIFFERENCE BETWEEN THE TWO INVITATIONS IS EXPLAINED BY THE PRESENCE OF A 50 PERCENT SET-ASIDE FOR SMALL BUSINESSES IN INVITATION 2407, FOR IF BIDDERS WERE PERMITTED TO OFFER ALTERNATE PRICES UNDER THIS INVITATION, A QUESTION WOULD ARISE WHETHER BIDDERS UPON THE SET ASIDE PORTION WERE REQUIRED TO MATCH THE ORIGINAL BID PRICES OR THE ALTERNATE BID PRICES.

AT THE EXTENDED BID OPENING DATE FOR BOTH INVITATIONS, DECEMBER 8, 1967, THE CONTRACTING OFFICER DETERMINED THAT ALL QUANTITIES, UNDER BOTH INVITATIONS, EXCEPT FOR THE SET-ASIDE PORTION, SHOULD BE AWARDED TO LINDE DIVISION OF UNION CARBIDE CORPORATION (LINDE), A LARGE BUSINESS ORGANIZATION. THIS RECOMMENDATION WAS BASED UPON LINDE'S OFFER TO SUPPLY THE ENTIRE NEEDS OF LIN AND LOX UNDER INVITATION 2407 AT PRICES SUBSTANTIALLY BELOW THOSE OF ANY OTHER BIDDER, TO THE EXTENT THAT NO SMALL BUSINESS BIDDER QUALIFIED FOR NEGOTIATION OF THE SET ASIDE PORTION UNDER THE 120 PERCENT CRITERION. BIG THREE INDUSTRIAL AND GAS EQUIPMENT (BIG THREE), A SMALL BUSINESS, BID A HIGHER PRICE UPON APPROXIMATELY ONE-SIXTH OF THE GOVERNMENT'S ESTIMATED NEEDS FOR LOX AND LIN.

SIMILARLY, UNDER INVITATION 2271, LINDE OFFERED TO SUPPLY ALL OF THE CENTER'S ESTIMATED NEEDS FOR GASEOUS NITROGEN AT A PRICE LOWER THAN THE UNQUALIFIED BID OF ANY OTHER BIDDER.

BIG THREE OFFERED AN ALTERNATE BID UNDER INVITATION 2271, CONDITIONED UPON RECEIPT OF AN AWARD FOR LIN AND LOX UNDER INVITATION 2407, WHICH OFFERED TO SUPPLY THE GOVERNMENT'S ENTIRE ESTIMATED NEED FOR GASEOUS NITROGEN AT A PRICE MUCH LOWER THAN LINDE'S ALTERNATE BID PRICE UNDER INVITATION 2271.

THE CONTRACTING OFFICER CONCLUDED THAT A BIDDER MUST BE QUALIFIED FOR AN AWARD UNDER INVITATION 2407 ALONE, WITHOUT RESPECT TO THE TERMS OF INVITATION 2271, BEFORE ITS ALTERNATE BID UNDER 2271 COULD BE CONSIDERED FOR AWARD. ACCORDINGLY, HE RECOMMENDED AWARD OF THE ENTIRE ESTIMATED QUANTITIES, EXCEPT FOR THE SET-ASIDE PORTION OF INVITATION 2407, TO LINDE, THE LOW BIDDER ON EACH INVITATION TAKEN SEPARATELY. IF THIS RECOMMENDATION WERE FOLLOWED, AWARDS IN THE FOLLOWING AMOUNTS WOULD RESULT:

IFB 2407 - ENTIRE UNRESTRICTED QUANTITY TO LINDE AT$ 5,075,895

IFB 2271 - ENTIRE QUANTITY TO LINDE AT 9,207,450

TOTAL COST TO GOVERNMENT $14,283,345

THE LETTER OF JANUARY 31, 1968, FROM THE DEPUTY ASSISTANT SECRETARY (PROCUREMENT) PROPOSES A DIFFERENT METHOD OF MAKING AWARDS UNDER THESE INVITATIONS. BY CONSIDERING THE TWO INVITATIONS AS ESSENTIALLY ONE, FOR THE PURPOSE OF EVALUATING THE ALTERNATE BIDS, IT IS PROPOSED TO MAKE AWARDS TO BIG THREE UNDER INVITATION 2271 FOR THE ENTIRE ESTIMATED NEEDS OF GASEOUS NITROGEN AT ITS SUBSTANTIALLY LOWER ALTERNATE BID PRICE, AND ALSO FOR THAT PORTION OF THE GOVERNMENT'S ESTIMATED NEEDS OF LIN AND LOX UPON WHICH BIG THREE BID UNDER INVITATION 2407. THE REMAINDER OF THE GOVERNMENT REQUIREMENTS UNDER 2407 WOULD BE AWARDED TO LINDE. UNDER THIS SUGGESTED METHOD OF AWARD, CONTRACTS WOULD BE AWARDED AS FOLLOWS:IFB 2407 APPROX. 1/6 UNRESTRICTED QUANTITY TO BIG THREE AT $ 1,375,283 IFB 2407 APPROX. 5/6 UNRESTRICTED QUANTITY TO LINDE AT 4,081,313 IFB 2271 ENTIRE QUANTITY TO BIG THREE AT 5,798,205

TOTAL COST TO GOVERNMENT $11,254,801

UNDER EITHER THIS PROPOSAL OR UNDER THE CONTRACTING OFFICER'S RECOMMENDATION, THE SET-ASIDE PORTION MUST BE CANCELLED AND RESOLICITED.

THE ABOVE FIGURES INDICATE THAT IF THE GOVERNMENT IS PERMITTED TO MAKE THE PROPOSED AWARDS TO BIG THREE, OVER THREE MILLION DOLLARS WILL BE SAVED IN THIS PROCUREMENT. FOR THIS SAVING TO BE CONSIDERED, THESE TWO INVITATIONS MUST BE TREATED AS ONE SOLICITATION FOR THE PURPOSE OF EVALUATING THE ALTERNATE BIDS, DESPITE THE FACT THEY ARE TWO PHYSICALLY DISTINCT INVITATION PACKAGES.

WE ARE OF THE OPINION THAT THE PROVISION OF INVITATION 2271 ADVISING BIDDERS THAT ALTERNATE BIDS "CONDITIONED UPON RECEIPT OF AN AWARD UNDER (2407)" WOULD BE EVALUATED DOES NOT EXPRESSLY LIMIT CONSIDERATION OF ALTERNATE BIDS TO ONLY THOSE BIDDERS WHO QUALIFIED FOR AN AWARD INDEPENDENTLY UNDER INVITATION 2407. THIS BEING SO, WE SEE NO REASON TO IMPLY SUCH A LIMITATION. THE TELEGRAPHIC AMENDMENT OF NOVEMBER 29, 1967, FURNISHES EVIDENCE OF AN INTENTION TO CONSIDER THESE INVITATIONS AS ONE SOLICITATION, IN EFFECT. THIS TELEGRAM BEGINS: "THIS MESSAGE IN FOUR PARTS. PART ONE. THIS MESSAGE IS AMENDMENT F41608-68-B-2407-0004 TO IFB F41608-B-2407 CALLING FOR LOX/LIN AND AMENDMENT F41608-68-B-2271-0004 TO IFB F41608-68-B-2271 CALLING FOR GAS NITROGEN FOR KENNEDY SPACE CENTER FLORIDA OPENING 130 PM CST 8 DEC 1967. * * *"

WE BELIEVE SUCH INDICATION OF THE INTENT OF THE PROCURING ACTIVITY TO TREAT THIS AS ONE SOLICITATION TAKES PRECEDENCE OVER SUCH A MATTER OF FORM AS THE FACT TWO SEPARATE INVITATIONS WERE USED.

WE RECOGNIZE THAT, GENERALLY, CONDITIONAL BIDS MAY NOT BE CONSIDERED. COMP. GEN. 663, B-132611, SEPTEMBER 10, 1957. THE CASE AT HAND IS DISTINGUISHABLE BECAUSE THE JOINING OF THE TWO SOLICITATIONS UNDER THE ALTERNATE BID WAS EXPRESSLY PERMITTED BY THE TERMS OF THE SOLICITATION, SO THAT ALL BIDDERS WERE GIVEN AN OPPORTUNITY TO PARTICIPATE ON THIS BASIS. FOR THIS REASON, THE GENERAL RULE AGAINST THE ACCEPTANCE OF BIDS CONDITIONED UPON AWARD UNDER ANOTHER SEPARATE SOLICITATION IS NOT FOR APPLICATION.

IN B-133879, DECEMBER 3, 1957, THIS OFFICE APPROVED BY IMPLICATION THE USE OF CONDITIONAL BIDS UNDER CIRCUMSTANCES WHERE ALL BIDDERS WERE ADVISED OF THE ACCEPTABILITY OF SUCH BIDS, BY PERMITTING AN AWARD UNDER THE ARRANGEMENT, ALTHOUGH THE PROPRIETY OF CONDITIONAL BIDS WAS NOT IN ISSUE.

WE THEREFORE BELIEVE THE USE OF ALTERNATE CONTINGENT BIDS IS PERMISSIBLE IN CASES WHERE THE SOLICITATIONS ARE DRAFTED TO SO APPRISE PROSPECTIVE BIDDERS.

ONCE IT IS DETERMINED THAT AN ALTERNATE BID UNDER INVITATION 2271, CONTINGENT UPON RECEIPT OF AN AWARD UNDER INVITATION 2407, IS FOR CONSIDERATION, WE BELIEVE THAT, BARRING LANGUAGE TO THE CONTRARY IN THE SOLICITATION, THE CONTRACTING AGENCY SHOULD BE PERMITTED ITS USUAL DISCRETION IN MAKING THOSE AWARDS WHICH IT DETERMINES TO BE IN THE BEST INTERESTS OF THE GOVERNMENT. SEE CLAUSE 10, STANDARD FORM 33A OF JULY 1966, INCLUDED WITH THE INVITATION.

THERE APPEARS TO BE NO QUESTION BUT THAT BIG THREE'S ALTERNATE BID CONFORMED TO THE TERMS OF THE INVITATION, AND WE HAVE STATED ABOVE THAT UNDER THE CIRCUMSTANCES OF THIS CASE, THE TWO SEPARATE SOLICITATIONS CAN BE CONSIDERED AS ONE FOR PURPOSES OF EVALUATING THE ALTERNATE BIDS. THIS BEING THE CASE, WE SEE NO REASON WHY THE CONTRACTING AGENCY CANNOT EXERCISE ITS DISCRETION TO MAKE AWARD ON THE BASIS OF A LOW AGGREGATE BID, BIG THREE'S ALTERNATE BID UNDER INVITATION 2271, RATHER THAN UPON THE BASIS OF LOW ITEM BIDS, LINDE'S LOW BIDS UNDER EACH SEPARATE INVITATION, WHEN, AS HERE, THE LOW AGGREGATE BID IS MORE BENEFICIAL TO THE GOVERNMENT THAN THE COMBINATION OF ITEM BIDS UPON THE SAME QUANTITIES. 42 COMP. GEN. 415, 41 COMP. GEN. 455. B-149470, SEPTEMBER 24, 1962, B-152221 (1), DECEMBER 4, 1963.

ACCORDINGLY, THIS OFFICE HAS NO LEGAL OBJECTION TO THE PROPOSED AWARDS TO BIG THREE AND LINDE UNDER THE SUBJECT SOLICITATION.