B-165348, JAN. 16, 1969

B-165348: Jan 16, 1969

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TO CRYSTAL-X CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 26. THE FACESHEET OF THE INVITATION ADVISED BIDDERS THAT THE PROCUREMENT CONTAINED A PARTIAL SET-ASIDE FOR LABOR SURPLUS AREA CONCERNS AND THAT THE SET-ASIDE QUANTITIES WERE IDENTIFIED AS ITEMS 1AA AND 2AA IN THE INVITATION SCHEDULE. HCU-10C- DTD 11 DEC 1967. 1AA (THIS ITEM IS IDENTICAL 42. DATED 11 DEC 67. 2AA (THIS ITEM IS IDENTICAL 19. 384 EA TO 1 ITEM 2) LABOR SURPLUS SET-ASIDE) "PERCENTAGE OF REDUCTION IN PRICE BIDDER WILL ALLOW IF AWARDED ALL ITEMS BID UPON . (THIS IS IN ADDITION TO ANY CASH DISCOUNT OFFERED.)" PARAGRAPH 10 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS PROVIDED THAT THE CONTRACT WOULD BE AWARDED TO THE RESPONSIBLE OFFEROR WHOSE OFFER CONFORMING TO THE SOLICITATION WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT.

B-165348, JAN. 16, 1969

TO CRYSTAL-X CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 26, 1968, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER INVITATION FOR BIDS NO. F09603- 68-B-0467, ISSUED BY WARNER ROBINS AIR MATERIEL AREA, ROBINS AIR FORCE BASE, GEORGIA.

THE SUBJECT INVITATION, ISSUED ON APRIL 24, 1968, WITH AN AMENDED BID OPENING DATE OF JUNE 20, 1968, SOLICITED BIDS FOR TWO TYPES OF CARGO PROTECTION COVERS (COVER, POLYETHYLENE, PALLET, CARGO). THE FACESHEET OF THE INVITATION ADVISED BIDDERS THAT THE PROCUREMENT CONTAINED A PARTIAL SET-ASIDE FOR LABOR SURPLUS AREA CONCERNS AND THAT THE SET-ASIDE QUANTITIES WERE IDENTIFIED AS ITEMS 1AA AND 2AA IN THE INVITATION SCHEDULE. THE SCHEDULE PROVIDED AS FOLLOWS: "ITEM NR SUPPLIES OR SERVICES QUANTITY UNIT UNIT AMOUNT

PRICE -------------- ----------------------------------------------------

1 PR WR-8-14262 66,061 EA

1670-930-1480CT COVER,

POLYETHYLENE, PALLET,

CARGO, HCU-6/E. TYPE I

IN ACCORDANCE WITH PURCHASE

DESCRIPTION WRNE 1670-164A,

ENTITLED, -COVER,

POLYETHYLENE, PALLET, CARGO,

HCU-6/E, HCU-12/E,

AND HCU-10C- DTD 11 DEC 1967.

1AA (THIS ITEM IS IDENTICAL 42,852 EA

TO ITEM 1) LABOR SURPLUS

SET-ASIDE.

2 PR WR-8-14261 43,187 EA

1670 930 1481CT, COVER,

POLYETHYLENE, PALLET

CARGO, HCU-6E. TYPE

II IN ACCORDANCE WITH

PURCHASE DESCRIPTION

WRNE 1670-164A, ENTITLED,

-COVER, POLYETHYLENE,

PALLET, CARGO, HCU-6/E,

HCU-12/E AND HCU-10/C,

DATED 11 DEC 67.

2AA (THIS ITEM IS IDENTICAL 19,384 EA

TO 1 ITEM 2) LABOR SURPLUS

SET-ASIDE) "PERCENTAGE OF REDUCTION IN PRICE BIDDER WILL ALLOW IF AWARDED ALL ITEMS BID UPON -------------- PERCENT. (THIS IS IN ADDITION TO ANY CASH DISCOUNT OFFERED.)"

PARAGRAPH 10 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS PROVIDED THAT THE CONTRACT WOULD BE AWARDED TO THE RESPONSIBLE OFFEROR WHOSE OFFER CONFORMING TO THE SOLICITATION WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THE LABOR SURPLUS AREA SET-ASIDE CLAUSE PROVIDED THAT NEGOTIATIONS FOR AWARD OF THE SET-ASIDE PROTION WOULD BE CONDUCTED WITH RESPONSIBLE LABOR SURPLUS AREA AND SMALL BUSINESS CONCERNS WHICH HAVE SUBMITTED BIDS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST UNIT PRICE AT WHICH AN AWARD IS MADE ON THE NON-SET ASIDE PORTION. THE CLAUSE LISTED LABOR SURPLUS AREA PRIORITY GROUPS AND PROVIDED THAT, WITHIN EACH GROUP, NEGOTIATIONS WOULD BE IN THE ORDER OF BIDS ON THE NON-SET-ASIDE PORTION, THE SET-ASIDE PORTION TO BE AWARDED AT THE HIGHEST UNIT PRICE AWARDED ON THE NON-SET-ASIDE PORTION.

BIDS WERE RECEIVED FROM SIX COMPANIES. KEPNER PLASTICS FABRICATORS INC. AND CRYSTAL-X SUBMITTED THE LOWEST UNIT PRICES AS FOLLOWS:

ITEM 1ITEM 1AA ITEM 2 ITEM 2AA

------ -------- ------ -------- KEPNER $2.61 $2.61 $2.04 $2.04 CRYSTAL 2.7675 2.7675 2.0175 2.0175 IN ADDITION, IN RESPONSE TO THE SOLICITATION IN THE INVITATION FOR A PERCENTAGE OF REDUCTION IN PRICE IF AWARDED ALL ITEMS BID UPON, KEPNER OFFERED A 1/2-PERCENT PRICE REDUCTION AND CRYSTAL OFFERED A 1 PERCENT PRICE REDUCTION. BOTH BIDDERS ALSO OFFERED A 1- PERCENT, 20 CALENDAR DAYS, PROMPT PAYMENT DISCOUNT.

THE CONTRACTING AGENCY HAS INDICATED THAT SINCE THE PRICES FOR ITEMS 1AA AND 2AA WERE TO BE NEGOTIATED, IT WAS INTENDED THAT BIDS BE SUBMITTED ONLY ON ITEMS 1 AND 2 AND, THEREFORE, THE PERCENT PRICE REDUCTION WAS CONSIDERED TO APPLY ONLY TO ITEMS 1 AND 2. ON THE BASIS OF AWARDING ITEM 1 TO KEPNER AND ITEM 2 TO CRYSTAL, THE NET COST OF THE NON-SET-ASIDE PORTION WOULD HAVE BEEN $256,953.49. HOWEVER, BY AWARDING ITEMS 1 AND 2 TO KEPNER, THE CONTRACTING AGENCY CONSIDERED THAT IT COULD APPLY THE 1/2- PERCENT QUANTITY DISCOUNT AND BY VIRTUE OF THIS THE NET COST TO THE GOVERNMENT ON ITEMS 1 AND 2 BECAME $256,625.91 OR A SAVINGS OF $327.58. ACCORDINGLY, THE NON-SET-ASIDE PORTION OF THE PROCUREMENT, ITEMS 1 AND 2, WAS AWARDED TO KEPNER ON SEPTEMBER 20, 1968. IN THAT REGARD, THE GENERAL RULE IS THAT WHERE THE GOVERNMENT HAS RESERVED THE RIGHT TO AWARD ITEMS SEPARATELY OR IN THE AGGREGATE, AWARDS ARE PERMITTED TO BE MADE TO ONE OR MORE BIDDERS FOR ONE OR MORE ITEMS OR TO ONE BIDDER FOR ALL ITEMS, DEPENDING ON WHICH IS MORE IN THE INTEREST OF THE GOVERNMENT. 47 COMP. GEN. 233, 234.

YOU SUGGEST THAT AN AWARD SHOULD NOT HAVE BEEN MADE TO KEPNER BECAUSE ITS OFFER HAD EXPIRED AND, IN ANY EVENT, ITEM 2 SHOULD HAVE BEEN AWARDED TO CRYSTAL BECAUSE IT BID A LOWER PRICE THAN KEPNER ON THAT ITEM AND THE QUANTITY DISCOUNT WOULD NOT PREVAIL BECAUSE NO AWARD HAD BEEN MADE ON ITEMS 1AA AND 2AA.

BIDS WERE OPENED JUNE 20, 1968. THE OFFER PROVIDED 90 DAYS FOR ACCEPTANCE. THUS, BIDS WERE AVAILABLE FOR ACCEPTANCE THROUGH SEPTEMBER 18, 1968. THE RECORD SHOWS THAT KEPNER EXTENDED THE ACCEPTANCE TIME FOR ITS BID BY 30 DAYS IN A TELEGRAM RECEIVED SEPTEMBER 18, 1968, BY THE CONTRACTING AGENCY. ASPR 2-404.1 (C) PROVIDES FOR CONTRACTING OFFICES OBTAINING TIME EXTENSIONS OF BID ACCEPTANCE PERIODS PRIOR TO EXPIRATION OF BIDS WHERE AWARD MAY BE DELAYED BEYOND THE ORIGINAL ACCEPTANCE PERIOD. A RESULT, KEPNER'S BID WAS AVAILABLE FOR ACCEPTANCE AFTER THE EXPIRATION OF THE ORIGINAL 90-DAY ACCEPTANCE PERIOD.

AS INDICATED ABOVE, THE QUANTITY DISCOUNT WAS INTERPRETED BY THE ADMINISTRATIVE OFFICE AS APPLYING TO ITEMS 1 AND 2 ONLY SINCE THOSE WERE THE ONLY ITEMS UPON WHICH A BID WAS REQUIRED, THE PRICES FOR ITEMS 1AA AND 2AA, THE SET-ASIDE ITEMS, TO BE FIXED BY THE AWARD PRICES ON THE NON-SET- ASIDE. IN THAT CONNECTION, ASPR 1-706.6 (D) (1) PROVIDES THAT A BIDDER OR OFFEROR ENTITLED TO RECEIVE THE AWARD FOR QUANTITIES OF AN ITEM UNDER THE NON-SET-ASIDE PORTION AND WHO ACCEPTS THE AWARD OF ADDITIONAL QUANTITIES UNDER THE SET-ASIDE PORTION SHALL NOT BE REQUESTED TO ACCEPT A LOWER PRICE BECAUSE OF THE INCREASED QUANTITIES OF THE AWARD, NOR SHALL NEGOTIATION BE CONDUCTED WITH A VIEW TO OBTAINING SUCH A LOWER PRICE BASED SOLELY UPON RECEIPT OF AWARD OF BOTH PORTIONS OF THE PROCUREMENT. THUS, AN INTERPRETATION REQUIRING THE REDUCTION TO APPLY WHERE BOTH THE SET-ASIDE AND NON-SET ASIDE ARE TO BE AWARDED TO A SINGLE OFFEROR WOULD BE INCONSISTENT WITH THE PROHIBITION AGAINST SUCH PRACTICE IN THE ARMED SERVICES PROCUREMENT REGULATION.

ON SEPTEMBER 26, 1968, THE SET-ASIDE PORTION WAS ADDED TO THE INITIAL AWARD TO KEPNER BY SUPPLEMENTAL AGREEMENT. EVEN IF YOUR INTERPRETATION THAT THE QUANTITY DISCOUNT APPLIED ONLY IF ALL FOUR ITEMS WERE ACCEPTED, ACCORDING TO OUR CALCULATIONS, KEPNER WOULD STILL HAVE BEEN THE LOWEST OFFEROR ON THAT BASIS. ACCORDINGLY, SINCE ALL THE ITEMS WERE AWARDED TO KEPNER IN ANY EVENT, IT DOES NOT APPEAR THAT CRYSTAL HAS A VALID ARGUMENT AND THE PROTEST IS ACCORDINGLY DENIED. HOWEVER, TO PRECLUDE ANY MISUNDERSTANDING IN THE FUTURE AS TO THE APPLICATION OF THE SOLICITED QUANTITY DISCOUNT, OUR OFFICE IS RECOMMENDING TO THE SECRETARY OF THE AIR FORCE THAT FUTURE BID SCHEDULES BE MORE SPECIFIC AS TO THE ITEMS TO BE BID UPON AND THE APPLICATION OF THE QUANTITY DISCOUNT PROVISION.