B-165271, NOVEMBER 29, 1968, 48 COMP. GEN. 372

B-165271: Nov 29, 1968

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A SITUATION THAT IS NOT WITHIN THE FREE AND OPEN COMPETITION CONTEMPLATED BY 10 U.S.C. 2305. IS NOT CONSIDERED IMPROPER. 1968: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 16. AN ADMINISTRATIVE REPORT WAS FURNISHED ON OCTOBER 10. THE BASIC ISSUES OF THE CASE CONCERN THE QUESTIONS AS TO THE EFFECT AND PROPRIETY OF THE FOLLOWING PROVISIONS OF THE INVITATION: LIMITING OF BLOCK BIDDING (TEST) THIS SOLICITATION IS A TEST PROCUREMENT TO DETERMINE THE FEASIBILITY OF PROHIBITING COMPLEX OFFERS BROUGHT ABOUT BY TECHNIQUES OF BLOCK BIDS. THIS SOLICITATION IS SUBJECT TO THE FOLLOWING CLAUSE: QUANTITY LIMITATION PROHIBITIONS AWARD/S) SHALL BE BASED UPON THE LOWEST COST TO THE GOVERNMENT FOR THE ITEM OF THE SOLICITATION.

B-165271, NOVEMBER 29, 1968, 48 COMP. GEN. 372

BIDS - EVALUATION - COMPLEX COMBINATION BIDS BLOCK BIDDING ON CLOTHING AND TEXTILE PRODUCTS, A METHOD OF BIDDING THAT QUOTES SEVERAL BASIC UNIT PRICES FOR VARIOUS QUANTITY INCREMENTS OF THE SAME MATERIAL, HAVING THE EFFECT OF MAKING BID EVALUATION COMPLICATED AND UNNECESSARILY DELAYING THE AWARD OF A CONTRACT, A SITUATION THAT IS NOT WITHIN THE FREE AND OPEN COMPETITION CONTEMPLATED BY 10 U.S.C. 2305, THE USE OF AN INVITATION LIMITING EACH BIDDER TO ONE OFFER IN ORDER TO TEST THE FEASIBILITY OF PROHIBITING THE COMPLEX OFFERS BROUGHT ABOUT BY TECHNIQUES OF BLOCK BIDS, ALTERNATE BIDS, TIE IN BIDS, AND OTHER SUCH COMBINATION OF BIDS WHICH DELAY AWARDS, IS NOT CONSIDERED IMPROPER, NOR DOES THE INVITATION PRECLUDE THE AWARD OF A CONTRACT TO FIRMS SUBMITTING A BID AS A GROUP.

TO SAMUEL F. SCHWAG, NOVEMBER 29, 1968:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 16, 1968, AND TO PREVIOUS AND SUBSEQUENT CORRESPONDENCE, CONCERNING THE PROTEST MADE ON BEHALF OF TANENBAUM TEXTILE COMPANY, INCORPORATED, NEW YORK, NEW YORK, AGAINST THE ACCEPTANCE OF SEPARATE OFFERS FROM GROUPS OF BIDDERS, OR AFFILIATED COMPANIES, SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. DSA-100-69-B- 0274, ISSUED AUGUST 23, 1968, BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA, FOR THE MANUFACTURE AND DELIVERY, ON AN F.O.B. ORIGIN PRICE BASIS, OF 14,004,000 LINEAR YARDS OF CLOTH, WIND RESISTANT POPLIN (RIP-STOP) COTTON, 45 INCH WIDTH.

AN ADMINISTRATIVE REPORT WAS FURNISHED ON OCTOBER 10, 1968, BY THE DEFENSE SUPPLY AGENCY ON THE PROTEST MADE ON BEHALF OF TANENBAUM TEXTILE COMPANY, INCORPORATED, AND ON A PROTEST MADE BY PRESTEX, INCORPORATED, NEW YORK, NEW YORK, RELATIVE TO THE SAME INVITATION FOR BIDS. THE BASIC ISSUES OF THE CASE CONCERN THE QUESTIONS AS TO THE EFFECT AND PROPRIETY OF THE FOLLOWING PROVISIONS OF THE INVITATION: LIMITING OF BLOCK BIDDING (TEST) THIS SOLICITATION IS A TEST PROCUREMENT TO DETERMINE THE FEASIBILITY OF PROHIBITING COMPLEX OFFERS BROUGHT ABOUT BY TECHNIQUES OF BLOCK BIDS, ALTERNATE BIDS, TIE-IN BIDS, AND OTHER SUCH COMBINATION OF BIDS WHICH DELAY AWARDS. CONSEQUENTLY, THIS SOLICITATION IS SUBJECT TO THE FOLLOWING CLAUSE: QUANTITY LIMITATION PROHIBITIONS AWARD/S) SHALL BE BASED UPON THE LOWEST COST TO THE GOVERNMENT FOR THE ITEM OF THE SOLICITATION. EACH OFFEROR IS LIMITED TO ONE OFFER FOR THE ITEM, WHICH WILL BE OFFERED AT AN FOB ORIGIN PRICE. OFFERORS MAY INDICATE A MAXIMUM AND/OR MINIMUM QUANTITY BID UPON FOR THE ITEM. OFFERORS SUBMITTING BLOCK BIDS, ALTERNATE BIDS, TIE-IN BIDS, OR ANY OTHER SUCH OFFER, IN WHICH MORE THAN ONE OFFER FOR THE ITEM IS MADE, WILL BE REJECTED AS NON RESPONSIVE.

IT WAS CONTENDED ON BEHALF OF TANENBAUM TEXTILE COMPANY, INCORPORATED, THAT 11 OF THE 23 BIDS RECEIVED IN THIS CASE WERE SUBMITTED BY FIRMS IN THREE BIDDING GROUPS, INCLUDING J.P. STEVENS AND COMPANY, INCORPORATED, NEW YORK, NEW YORK, PRESTEX, INCORPORATED, AND DAN RIVER MILLS, INCORPORATED, DANVILLE, VIRGINIA; AND THAT THE 11 BIDS SHOULD BE REJECTED AS NONRESPONSIVE BECAUSE THEY DO NOT CONFORM WITH THE INTENT AND PURPOSES OF THE QUANTITY LIMITATION PROHIBITIONS CLAUSE OF THE INVITATION. THE PROTEST OF PRESTEX, INCORPORATED, WAS BASED IN PART ON A BELIEF THAT YOUR CLIENT WAS ATTEMPTING TO INFLUENCE A CANCELLATION OF THE INVITATION BECAUSE IT HAD SUBMITTED A LATE BID. ALTHOUGH YOUR CLIENT'S BID WAS NOT RECEIVED BEFORE THE SCHEDULED TIME FOR OPENING OF BIDS ON SEPTEMBER 12, 1968, THE CONTRACTING OFFICER DETERMINED THAT THE BID COULD BE CONSIDERED WITH THE OTHER 22 BIDS SINCE SUFFICIENT EVIDENCE WAS PRESENTED TO SHOW THAT THE LATENESS OF YOUR CLIENT'S BID WAS DUE SOLELY TO A DELAY IN THE MAILS.

TWO SCHEDULES, A AND B, WERE PREPARED IN MAKING BID EVALUATIONS IN VIEW OF YOUR CLIENT'S PROTEST. SCHEDULE A LISTED THE THEN DETERMINED EIGHT LOWEST BIDS WITHOUT REGARD TO THE QUESTION WHETHER ANY BIDDER WAS IN THE CATEGORY OF A "GROUP" BIDDER. SCHEDULE B LISTED THE THEN DETERMINED EIGHT LOWEST BIDS SUBMITTED BY BIDDERS IN A NONGROUP CATEGORY. IF THE ORIGINAL SCHEDULE A EVALUATIONS WERE USED, THE BID OF YOUR CLIENT WOULD HAVE BEEN FOR FURTHER CONSIDERATION ON THE BASIS OF RECEIVING AN AWARD ON A QUANTITY OF 1,604,000 LINEAR YARDS OF CLOTH. IF THE SCHEDULE B EVALUATIONS WERE USED, YOUR CLIENT'S BID WOULD HAVE BEEN FOR CONSIDERATION ON THE BASIS OF RECEIVING AN AWARD, AS THE FIFTH LOWEST BIDDER, ON A QUANTITY OF 4,600,000 LINEAR YARDS OF CLOTH WHICH WAS THE QUANTITY BID ON BY YOUR CLIENT. HOWEVER, WITH REFERENCE TO THE SCHEDULE A EVALUATIONS, IT WAS SUBSEQUENTLY FOUND THAT A MISTAKE HAD BEEN MADE IN LISTING YOUR CLIENT AS THE EIGHTH LOWEST BIDDER AND YOUR CLIENT'S BID WAS DISPLACED BY THAT OF ISELIN- JEFFERSON COMPANY, INCORPORATED, NEW YORK, NEW YORK.

ON THE BASIS OF THE REVISED SCHEDULE A BID EVALUATION, THE DEFENSE SUPPLY AGENCY FIRST DECIDED TO AUTHORIZE AWARDS TO BE MADE TO FOUR OF THE EIGHT LISTED COMPANIES FOR DELIVERY OF A TOTAL QUANTITY OF 5,700,000 LINEAR YARDS OF CLOTH SINCE THOSE BIDDERS WERE NOT IN A GROUP BIDDING CATEGORY. THERE REMAINED FOR CONSIDERATION THE QUESTION WHETHER ADDITIONAL AWARDS COVERING A TOTAL QUANTITY OF 8,304,000 LINEAR YARDS OF CLOTH SHOULD BE MADE TO SO-CALLED "GROUP" BIDDERS BEFORE A DECISION ON THE PROTEST OF YOUR CLIENT WAS RENDERED BY OUR OFFICE. ON NOVEMBER 12, 1968, WE WERE ADVISED INFORMALLY, IN ACCORDANCE WITH SECTION 2-407.9, ARMED SERVICES PROCUREMENT REGULATION, THAT AWARDS HAD BEEN AUTHORIZED TO BE MADE FOR DELIVERY OF THE 8,304,000 LINEAR YARDS OF CLOTH TO THE FOLLOWING FIRMS IN A "GROUP" BIDDING CATEGORY: J.P. STEVENS AND COMPANY, INCORPORATED (4,000,000 LINEAR YARDS); MARION MANUFACTURING COMPANY, MARION, NORTH CAROLINA (1,400,000 LINEAR YARDS); PRESTEX, INCORPORATED (1,300,000 LINEAR YARDS); AND ISELIN JEFFERSON COMPANY, INCORPORATED (1,604,000 LINEAR YARDS).

J.P. STEVENS AND COMPANY, INCORPORATED, REPRESENTED THE MARION MANUFACTURING COMPANY AS ITS SELLING AGENT AND J.P. STEVENS AND COMPANY, INCORPORATED, ALSO SUBMITTED A BID ON BEHALF OF THE THOMASTON COTTON MILLS, GRIFFIN DIVISION, GRIFFIN, GEORGIA, AS ITS SELLING AGENT. APPARENTLY THERE WAS NO BASIS FOR CONSIDERING THAT ANY BIDDER COULD NOT SUBMIT A BID FOR ITSELF AND FOR ANY OTHER CONCERN IN ACCORDANCE WITH A VALID SELLING AGENCY AGREEMENT. FOUR ADDITIONAL BIDS WERE SUBMITTED BY COMPANIES AFFILIATED WITH PRESTEX, INCORPORATED. ISELIN-JEFFERSON COMPANY, INCORPORATED, APPEARS TO BE A SUBSIDIARY OF DAN RIVER MILLS, INCORPORATED. THE PARENT COMPANY AND ANOTHER SUBSIDIARY DAN RIVER MILLS, INCORPORATED, SUBMITTED SEPARATE BIDS. THE DEFENSE SUPPLY AGENCY CONSIDERED THAT THERE EXISTED NO PROPER BASIS FOR THE REJECTION OF FOUR OF THE EIGHT LOWEST BIDS SOLELY BY REASON OF THE FACT THAT THE BIDDERS WERE WITHIN PARTICULAR GROUPS OF BIDDING CONCERNS.

THE MATTER WAS DISCUSSED WITH YOU ON OCTOBER 24, 1968, AT WHICH TIME YOU WERE FURNISHED COPIES OF THE BASIC REPORT OF THE DEFENSE SUPPLY AGENCY AND AN ACCOMPANYING REPORT OF THE CONTRACTING OFFICER. IT WAS UNDERSTOOD THAT EVIDENCE WOULD BE SUBMITTED, IF YOUR CLIENT AGREED, TO SHOW THE BASIS UPON WHICH IT WAS BELIEVED THAT CONSIDERATION OF CERTAIN OF THE SO-CALLED "GROUP" BIDS WOULD BE PREJUDICIAL TO OR UNFAIR TO YOUR CLIENT. COMPUTATIONS WERE FURNISHED DURING A SUBSEQUENT MEETING WITH YOU AND YOUR CLIENT ON NOVEMBER 5, 1968, INDICATING THAT, IF TANENBAUM TEXTILE COMPANY, INCORPORATED, AND SOME OF ITS ASSOCIATES HAD SUBMITTED SEPARATE BIDS, ONE OF THE SEPARATE BIDS UNDOUBTEDLY WOULD HAVE CONTAINED A QUOTATION FOR A SMALLER QUANTITY THAN 4,600,000 LINEAR YARDS OF CLOTH WHICH WAS LESS THAN THE PRICE QUOTED BY PRESTEX, INCORPORATED, ON 1,300,000 YARDS OF CLOTH. IT WAS ARGUED THAT, IF THE CONTRACTING OFFICER HAD PLACED ALL BIDDERS ON NOTICE WITH RESPECT TO INQUIRIES MADE BY PRESTEX, INCORPORATED, J.P. STEVENS AND COMPANY, INCORPORATED, AND ANOTHER COMPANY, TANENBAUM TEXTILE COMPANY, INCORPORATED, IN ALL PROBABILITY, WOULD HAVE ARRANGED WITH ITS ASSOCIATED FIRMS TO SUBMIT SEPARATE BIDS.

SINCE THIS IS A TEST CASE, CONSIDERATION WAS GIVEN DURING THE MEETING ON NOVEMBER 5, 1968, TO THE POSSIBILITY THAT YOUR CLIENT MIGHT DECIDE TO ACCEPT AN AWARD COVERING 1,604,000 LINEAR YARDS OF CLOTH. A CONFERENCE WAS ARRANGED FOR A DISCUSSION OF THE MATTER BY YOU AND YOUR CLIENT WITH A REPRESENTATIVE OF THE DEFENSE SUPPLY AGENCY, PARTICULARLY SINCE AT THAT TIME THERE EXISTED A QUESTION WHETHER YOUR CLIENT'S BID WAS THE EIGHTH LOWEST. WE ARE ADVISED THAT, DURING OR AFTER THE DISCUSSION WITH THE DEFENSE SUPPLY AGENCY REPRESENTATIVE, IT WAS DEFINITELY ASCERTAINED THAT ISELIN-JEFFERSON COMPANY, INCORPORATED, HAD SUBMITTED THE EIGHTH LOWEST BID. THE DEFENSE SUPPLY AGENCY THEN CONSIDERED THAT NO AWARD COULD BE MADE TO YOUR CLIENT UNDER THE INVITATION.

THE CONTRACTING OFFICER'S REPORT SETS FORTH THAT EVALUATIONS OF BLOCK BIDS, ALTERNATE BIDS AND TIE-IN BIDS ON GOVERNMENT PROCUREMENTS OF CLOTHING AND TEXTILES HAVE BEEN VERY COMPLICATED AND AWARDS HAVE BEEN UNNECESSARILY DELAYED. AS AN EXAMPLE OF THE COMPLEX TYPES OF OFFERS RECEIVED IN THOSE CASES, THERE WAS SUBMITTED AN ABSTRACT OF BIDS PREPARED ON A PREVIOUS INVITATION AS TO WHICH 13 CONCERNS REPORTEDLY SUBMITTED 56 SEPARATE QUOTATIONS. SO FAR AS CONCERNS THE PRACTICE OF BLOCK BIDDING, WHICH IS OF PRIMARY IMPORTANCE IN THIS CASE, IT IS NOTED THAT THE FIRST BIDDER LISTED IN THE ABSTRACT PREPARED ON THE PREVIOUS INVITATION QUOTED SEVEN BASIC UNIT PRICES ON THE SAME MATERIAL FOR VARIOUS QUANTITY INCREMENTS APPARENTLY LISTED BY ITSELF, WITH THE PRICE FOR THE FIRST OFFERED QUANTITY INCREMENT BEING LOWER THAN THE PRICE FOR THE SECOND OFFERED QUANTITY INCREMENT, AND THE PRICE FOR EACH SUCCEEDING OFFERED QUANTITY INCREMENT BEING HIGHER THAN THE PREVIOUSLY STATED PRICE.

IT APPEARS THAT THE "GROUP" BIDDERS IN THIS CASE BELIEVED THAT THEY WERE ELIGIBLE TO SUBMIT SEPARATE BIDS, QUOTING ONLY ONE PRICE ON THE TOTAL QUANTITY WHICH EACH FIRM WAS CAPABLE OF FURNISHING AND PROPOSED TO DELIVER. J.P. STEVENS AND COMPANY, INCORPORATED, PRESTEX, INCORPORATED, AND ANOTHER COMPANY MADE CERTAIN INQUIRIES IN REGARD TO THE MATTER OF SUBMITTING SEPARATE BIDS BY CLOSELY RELATED FIRMS WHICH HAD PREVIOUSLY ENGAGED IN THE PRACTICE OF BLOCK BIDDING. THE CONTRACTING OFFICER ADVISED THEM, IN EFFECT, THAT EACH BIDDER SHOULD SUBMIT ONLY ONE OFFER AND THAT HE WAS NOT IN A POSITION TO ADVISE ANY COMPANY HOW TO SUBMIT ANY SUCH OFFER.

SECTION 2305 OF TITLE 10, U.S.C. PROVIDES IN PART THAT SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FREE AND OPEN COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY AND THE SERVICES NEEDED BY THE AGENCY CONCERNED; AND THAT AWARDS SHALL BE MADE WITH REASONABLE PROMPTNESS BY GIVING WRITTEN NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED.

IT DOES NOT APPEAR THAT WE WOULD BE WARRANTED IN TAKING THE POSITION THAT THE TESTING OF THE PROHIBITION AGAINST BLOCK BIDDING AS A POSSIBLE MEANS OF ENABLING THE DEFENSE PERSONNEL SUPPORT CENTER TO MAKE MORE TIMELY AWARDS WOULD BE IMPROPER, SINCE 10 U.S.C. 2305 CONTEMPLATES THAT AWARDS BE MADE WITH REASONABLE PROMPTNESS AND IT IS APPARENT THAT THE SUBMISSION OF BLOCK BIDS IN THE PAST ON GOVERNMENT PROCUREMENTS OF CLOTHING AND TEXTILE PRODUCTS HAS HAD THE EFFECT OF CAUSING UNREASONABLE DELAYS IN THE MAKING OF CONTRACT AWARDS. ALSO, THE FACT THAT THE PRACTICE OF BLOCK BIDDING MAY HAVE AFFORDED CERTAIN COMPANIES, SUCH AS TANENBAUM TEXTILE COMPANY, INCORPORATED, AN OPPORTUNITY TO QUOTE LESS THAN AN AVERAGE PRICE ON RELATIVELY SMALL QUANTITIES OF TEXTILES AS COMPARED WITH THE TOTAL QUANTITY BID ON, WOULD NOT APPEAR NECESSARILY TO JUSTIFY A CONCLUSION THAT IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO ALLOW THE PRACTICE OF BLOCK BIDDING TO BE CONTINUED IN THESE CASES.

WITH RESPECT TO THE INQUIRIES MADE BY CERTAIN COMPANIES PRIOR TO THE SCHEDULED TIME FOR OPENING OF BIDS, IT DOES NOT APPEAR THAT THE PARTICULAR INQUIRIES AND THE CONTRACTING OFFICER'S RESPONSE THERETO WERE SUCH AS TO HAVE REQUIRED EITHER THE ISSUANCE OF AN AMENDMENT TO THE INVITATION FOR BIDS OR A DISCUSSION WITH OR ADVICE TO EACH COMPANY WHICH WAS KNOWN TO HAVE RECEIVED A COPY OF THE INVITATION FOR BIDS.

AS YOU AND YOUR CLIENT WERE ADVISED DURING THE CONFERENCE ON NOVEMBER 5, 1968, THERE HAS BEEN DISCUSSED WITH A REPRESENTATIVE OF THE DEFENSE SUPPLY AGENCY THE POSSIBILITY THAT, IN FUTURE PROCUREMENTS OF TEXTILES OR CLOTHING, THE INVITATIONS MIGHT REASONABLY PERMIT THE QUOTATION OF SEPARATE PRICES ON QUANTITIES OFFERED WITHIN THE RANGES OF QUANTITY INCREMENTS SPECIFIED BY THE GOVERNMENT UNDER SEPARATE ITEMS OF THE BIDDING SCHEDULES. HOWEVER, WE FIND NO BASIS FOR CONCLUDING THAT THE INVITATION FOR BIDS HERE INVOLVED SHOULD HAVE BEEN CANCELED OR THAT AWARDS COULD NOT PROPERLY BE MADE TO THE SO-CALLED "GROUP" BIDDING CONCERNS.

ACCORDINGLY, THE PROTEST SUBMITTED TO OUR OFFICE ON BEHALF OF TANENBAUM TEXTILE COMPANY, INCORPORATED, MUST BE, AND IS, HEREBY DENIED.