B-165715-2, FEBRUARY 27, 1969, 48 COMP. GEN. 563

B-165715-2: Feb 27, 1969

Additional Materials:

Contact:

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

 

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

1969: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 13. PROSPECTIVE BIDDERS WERE INFORMED THAT UNDER THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS THE GOVERNMENT WILL BE REQUIRED TO PURCHASE A MINIMUM QUANTITY OF 963 UNITS AND THAT THE PROSPECTIVE CONTRACTOR MAY BE OBLIGATED TO SUPPLY UP TO 3. BIDDERS WERE REQUESTED TO OFFER SEPARATE PRICES FOR THE SPECIFIED MINIMUM QUANTITY OF 963 UNITS FOR LEVEL C PACK AND LEVEL A PACK AND SEPARATE PRICES FOR LEVEL C PACK AND LEVEL A PACK FOR 2. BIDDERS WERE FURTHER ADVISED THAT: EVALUATION FOR PURPOSE OF AWARD WILL BE BASED ON THE MINIMUM QUANTITY PLUS ONE-HALF OF THE MAXIMUM LESS MINIMUM QUANTITY FURTHER BASED ON THE ASSUMPTION THAT 50 PERCENT OF ALL UNITS WILL BE LEVEL C PACK AND 50 PERCENT OF ALL UNITS WILL BE LEVEL A PACK.

B-165715-2, FEBRUARY 27, 1969, 48 COMP. GEN. 563

CONTRACTS - AMOUNTS - INDEFINITE - WHAT CONSTITUTES AN INVITATION FOR FLOODLIGHT SETS REQUIRING THE GOVERNMENT TO PURCHASE A MINIMUM OF 963 UNITS AND OBLIGATING A PROSPECTIVE CONTRACTOR TO SUPPLY UP TO 3,000 UNITS AND TO OFFER SEPARATE PRICES ON TWO DIFFERENT TYPES OF PACKING ON THE MINIMUM QUANTITY AND ON THE DIFFERENCE BETWEEN THE MINIMUM AND MAXIMUM QUANTITIES, OR 2,037 UNITS-- BIDS TO BE EVALUATED ON THE BASIS OF 50 PERCENT OF EACH TYPE PACKING-- MEETS THE REQUIREMENTS PRESCRIBED BY PARAGRAPH 3-409.3 OF THE ARMED SERVICES PROCUREMENT REGULATION FOR AN INDEFINITE QUANTITY PROCUREMENT, NOTWITHSTANDING THE FAILURE TO ADVERTISE THE EXACT NUMBER OF EACH TYPE PACKING TO BE PROCURED UNDER THE MINIMUM QUANTITY, THE REGULATION ONLY REQUIRING A STATEMENT OF MINIMUM AND MAXIMUM QUANTITIES OF THE ITEM TO BE PURCHASED AND NOT OF COLLATERAL ITEMS SUCH AS PACKING.

TO THE AMERICAN AIR FILTER COMPANY, INC., FEBRUARY 27, 1969:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 13, 1968, AND A LETTER DATED FEBRUARY 21, 1969, FROM EDWARD M. STEUTERMANN, ESQUIRE, OF YOUR LEGAL AND PATENT DEPARTMENT, PROTESTING THE AWARD OF A CONTRACT TO ANY BIDDER UNDER INVITATION FOR BIDS DSA-400-69-B-2420, ISSUED BY THE DEFENSE SUPPLY AGENCY, DEFENSE GENERAL SUPPLY CENTER.

THE INVITATION, OPENED NOVEMBER 22, 1968, SOLICITED BIDS FOR THE PURCHASE OF AN INDEFINITE QUANTITY OF PORTABLE, SELF CONTAINED NF-2 FLOODLIGHT SETS, FSN 6230-877-9172, TO BE MANUFACTURED IN ACCORDANCE WITH THE DRAWINGS AND SPECIFICATIONS REFERENCED AND ATTACHED THERETO. PROSPECTIVE BIDDERS WERE INFORMED THAT UNDER THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS THE GOVERNMENT WILL BE REQUIRED TO PURCHASE A MINIMUM QUANTITY OF 963 UNITS AND THAT THE PROSPECTIVE CONTRACTOR MAY BE OBLIGATED TO SUPPLY UP TO 3,000 UNITS.

BIDDERS WERE REQUESTED TO OFFER SEPARATE PRICES FOR THE SPECIFIED MINIMUM QUANTITY OF 963 UNITS FOR LEVEL C PACK AND LEVEL A PACK AND SEPARATE PRICES FOR LEVEL C PACK AND LEVEL A PACK FOR 2,037 UNITS, THE MAXIMUM QUANTITY OF 3,000 UNITS LESS THE MINIMUM QUANTITY, WHICH THE PROSPECTIVE CONTRACTOR WOULD BE OBLIGATED TO FURNISH IN EXCESS OF THE MINIMUM QUANTITY IF ORDERED DURING THE CONTRACT PERIOD. BIDDERS WERE FURTHER ADVISED THAT: EVALUATION FOR PURPOSE OF AWARD WILL BE BASED ON THE MINIMUM QUANTITY PLUS ONE-HALF OF THE MAXIMUM LESS MINIMUM QUANTITY FURTHER BASED ON THE ASSUMPTION THAT 50 PERCENT OF ALL UNITS WILL BE LEVEL C PACK AND 50 PERCENT OF ALL UNITS WILL BE LEVEL A PACK.

YOU STATE IN YOUR LETTER OF DECEMBER 13 THAT INASMUCH AS BIDDERS WERE NOT ADVISED OF THE NUMBER OF LEVEL A PACK UNITS IN THE MINIMUM QUANTITY WHICH WOULD BE PURCHASED, BIDDERS WERE REQUIRED TO INCLUDE IN THEIR BID PRICES A "BEST GUESS" CONTINGENCY FACTOR TO COVER THE GREATER COSTS OF PRODUCING A FEW LEVEL A PACK UNITS AS OPPOSED TO PRODUCING A LARGER NUMBER OF LEVEL A PACK UNITS. YOU ALSO CONTEND THAT DIFFERENT BIDDERS WERE FORCED TO SELECT DIFFERENT PRICING STRATEGIES BECAUSE THE AMBIGUOUS LANGUAGE OF THE INVITATION LED TO DIFFERENT INTERPRETATIONS OF THE INTENT OF THE CONTRACTING OFFICIALS WITH REFERENCE TO THE NUMBER OF LEVEL A PACK UNITS THAT MIGHT ULTIMATELY BE PURCHASED IN THE MINIMUM QUANTITY.

THE LETTER OF FEBRUARY 21, 1969, FURTHER EXPLAINS THE BASES OF YOUR PROTEST AND ADOPTS BY REFERENCE THE ARGUMENT PRESENTED BY THE ATTORNEYS FOR CAL-WEST ELECTRIC, INC., THAT THE INVITATION FOR BIDS WAS FATALLY DEFECTIVE BECAUSE THE TOTAL SPECIFIED QUANTITY OF 3,000 UNITS COULD NOT POSSIBLY BE ORDERED FROM THE CONTRACTOR WITHIN THE TERM OF THE CONTRACT. SPECIFICALLY, YOUR ATTORNEY STATES THAT THE INVITATION FAILED TO MEET THE REQUIREMENTS OF AN INDEFINITE QUANTITY PROCUREMENT. IN THIS REGARD, ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-409.3 PROVIDES, IN PERTINENT PART, THAT:

INDEFINITE QUANTITY CONTRACTS.

(A) DESCRIPTION. THIS TYPE OF CONTRACT PROVIDES FOR THE FURNISHING OF AN INDEFINITE QUANTITY, WITHIN STATED LIMITS, OF SPECIFIC SUPPLIES OR SERVICES, DURING A SPECIFIED CONTRACT PERIOD, WITH DELIVERIES TO BE SCHEDULED BY THE TIMELY PLACEMENT OF ORDERS UPON THE CONTRACTOR BY ACTIVITIES DESIGNATED EITHER SPECIFICALLY OR BY CLASS. DEPENDING ON THE SITUATION, THE CONTRACT MAY PROVIDE FOR (I) FIRM FIXED PRICES; (II) PRICE ESCALATION; OR (III) PRICE REDETERMINATION. THE CONTRACT SHALL PROVIDE THAT DURING THE CONTRACT PERIOD THE GOVERNMENT SHALL ORDER A STATED MINIMUM QUANTITY OF THE SUPPLIES OR SERVICES AND THAT THE CONTRACTOR SHALL FURNISH SUCH STATED MINIMUM AND, IF AND AS ORDERED, ANY ADDITIONAL QUANTITIES NOT EXCEEDING A STATED MAXIMUM WHICH SHOULD BE AS REALISTIC AS POSSIBLE. THE MAXIMUM MAY BE OBTAINED FROM THE RECORDS OF PREVIOUS REQUIREMENTS AND CONSUMPTION, OR BY OTHER MEANS. TO ASSURE THAT THE CONTRACT IS BINDING, THE MINIMUM MUST BE MORE THAN A NOMINAL QUANTITY; YET IT SHOULD NOT EXCEED THE AMOUNT WHICH THE GOVERNMENT IS FAIRLY CERTAIN TO ORDER. * * *

IN ADDITION, THERE IS CITED FOR OUR CONSIDERATION ASPR 2-201 (B) (II) WHICH PROVIDES THAT WHERE APPLICABLE THE INVITATION FOR BIDS SHALL STATE "THE QUANTITY OF SUPPLIES OR SERVICES TO BE SUPPLIED UNDER EACH ITEM, AND ANY PROVISION FOR EXTENT OF QUANTITY VARIATION (SEE 1 325).' HOWEVER, IT IS CLEAR, FROM THE INDEFINITE NATURE OF THIS PROCUREMENT, THAT THIS REQUIREMENT FOR DEFINITE QUANTITIES IS NOT APPLICABLE.

YOUR ATTORNEY CONTENDS THAT THE LEVEL A PORTION OF THE BASIC QUANTITY (963 UNITS) IS FOR TWO SEPARATE AND DISTINCT ITEMS; I.E., THE PROCUREMENT ITEM AND LEVEL A PACKAGES. IN SUPPORT THEREOF, HE STATES THAT THE LEVEL A PACKAGES COST APPROXIMATELY $275 EACH AND AVERAGE ABOUT 13 PERCENT OF THE TOTAL COST OF THE COMBINED LEVEL A PACKAGE AND PROCUREMENT ITEM. IT IS THEREFORE YOUR ATTORNEY'S POSITION THAT THE FAILURE OF THE INVITATION TO SPECIFY A REASONABLE MINIMUM AND MAXIMUM NUMBER OF LEVEL A PACKAGES AS REQUIRED UNDER THE REGULATION GOVERNING INDEFINITE QUANTITY PROCUREMENTS, SUPRA, DISTINCT FROM THE NUMBER OF PROCUREMENT ITEMS TO BE PURCHASED, RENDERS THE INVITATION FOR BIDS FATALLY DEFECTIVE.

THE PROCUREMENT ACTIVITY HAS ADVISED THAT IT IS EXPECTED THAT SOME CONTINGENCIES FOR THE SPECIFIED LEVEL PACKS ARE INEVITABLE WHEN INDEFINITE QUANTITIES ARE BEING PROCURED. THE PROCUREMENT ACTIVITY STATED THAT AT THE TIME OF BID OPENING IT WAS NOT KNOWN HOW MANY LEVEL A PACK UNITS WILL BE INCLUDED IN THE MINIMUM ORDER OF 963 UNITS AND THAT THE FINAL DECISION WILL NOT BE MADE UNTIL AWARD IS MADE. THE PURPOSE FOR SOLICITING LEVEL A PACK BID PRICES, AS OPPOSED TO LEVEL C PACK BID PRICES, WAS TO SEPARATELY IDENTIFY THE COST OF LEVEL A PACK FROM THE ITEM PRICE WHETHER THE ITEM WAS ULTIMATELY INTENDED TO BE PACKED LEVEL C OR LEVEL A.

MOREOVER, IN OUR OPINION, THE REQUIREMENTS OF ASPR 3-409.3 WERE ADEQUATELY MET BY THE INCLUSION IN THE INVITATION FOR BIDS OF THE MINIMUM (963) AND MAXIMUM (3,000) NUMBER OF UNITS TO BE PURCHASED THEREUNDER.

IT APPEARS TO US THAT NO BIDDER COULD PROPERLY HAVE ASSUMED THAT ANY PARTICULAR PORTION OF THE MINIMUM PURCHASE WOULD BE LEVEL A PACK OR LEVEL C PACK SINCE ALL PROSPECTIVE BIDDERS WERE MERELY ADVISED THAT FOR ALL QUANTITIES, INCLUDING THE MINIMUM, EVALUATION WAS TO BE MADE ON THE BASIS OF 50 PERCENT OF EACH LEVEL PACK. THE "BEST GUESS" CONTINGENCY FACTOR COMPRISING AN ELEMENT OF PRICING STRATEGY IS ALWAYS A FACTOR WHICH MUST BE CONSIDERED AND WEIGHED AS A RISK OF DOING BUSINESS ON A COMPETITIVE BASIS ESPECIALLY WHERE, AS HERE, THE EXACT NUMBER OF EACH LEVEL PACK UNITS TO BE PURCHASED (963 UNITS) IS UNKNOWN. HOWEVER, SINCE UNIT PRICES WERE REQUESTED FOR THE 963 UNITS ON BOTH A LEVEL A AND LEVEL C PACK BASIS, WE CANNOT SEE ANY PREJUDICE TO BIDDERS RESULTING FROM A FAILURE TO ADVERTISE THE EXACT NUMBER OF EACH LEVEL PACK TO BE PROCURED UNDER THE MINIMUM QUANTITY.

ACCORDINGLY, AND IN VIEW OF THE FACT THAT A REVIEW OF THE PRICES RECEIVED FOR LEVEL A PACK FROM THE LOWEST BIDDERS FOR THE MINIMUM AND OPTIONAL QUANTITIES, WHEN COMPARED WITH YOUR BID, DOES NOT INDICATE THAT OTHER BIDDERS WERE MISLED IN ANY WAY BY THE TERMS OF THE INVITATION, WE FIND NO BASIS TO QUESTION THE LEGAL SUFFICIENCY OF THE SUBJECT INVITATION FOR BIDS. ACCORDINGLY, YOUR PROTEST IS DENIED.

THERE IS ENCLOSED FOR YOUR INFORMATION A COPY OF OUR DECISION OF TODAY TO CAL-WEST DISPOSING OF THE OTHER BASES OF YOUR PROTEST.