B-166819, JUL. 23, 1969

B-166819: Jul 23, 1969

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RECORD DOES NOT INDICATE THAT CONTRACTING OFFICER HAD ACTUAL KNOWLEDGE OF PRICE REDUCTION WHICH HAD BEEN OFFERED TO GENERAL SERVICES ADMINISTRATION PRIOR TO ISSUANCE OF PURCHASE ORDER AND THEREFORE THE LOWER PRICE WAS NOT REQUIRED TO BE CONSIDERED. WE HAVE ASCERTAINED THAT YOUR COMPANY'S FSS LIST PRICE FOR THE SMITH CORONA "SECRETARIAL 415" (THE MODEL MEETING THE ARMY'S REQUIREMENTS) WAS $378.67 PER MACHINE FOR ORDERS OF 25 TO 99 MACHINES. ORDERING AGENCIES WERE ADVISED THAT THE PRICE REDUCTION HAD AGAIN BEEN EXTENDED. A "PURCHASE REQUEST AND COMMITMENT" (DA FORM 14 115) WAS PREPARED BY THE SUPPLY DIVISION. WHICH WERE TO BE TURNED IN AND CREDITED AGAINST THE PURCHASE PRICE OF THE NEW TYPEWRITERS.

B-166819, JUL. 23, 1969

BID PROTEST - FEDERAL SUPPLY SCHEDULE - MODIFICATION DECISION TO SMITH-CORONA MARCHANT DENYING PROTEST AGAINST ISSUANCE OF PURCHASE ORDER UNDER FEDERAL SUPPLY SCHEDULE TO OLIVETTI-UNDERWOOD CORP. FOR 55 ELECTRIC TYPEWRITERS BY ARMY AT FORT BENJAMIN HARRISON ON BASIS THAT SMITH-CORONA HAD LOWER PRICE QUOTATION IN EFFECT AT TIME OF ORDER. RECORD DOES NOT INDICATE THAT CONTRACTING OFFICER HAD ACTUAL KNOWLEDGE OF PRICE REDUCTION WHICH HAD BEEN OFFERED TO GENERAL SERVICES ADMINISTRATION PRIOR TO ISSUANCE OF PURCHASE ORDER AND THEREFORE THE LOWER PRICE WAS NOT REQUIRED TO BE CONSIDERED.

TO SMITH-CORONA MARCHANT:

WE REFER AGAIN TO YOUR LETTER DATED APRIL 24, 1969, WITH ATTACHMENTS, PROTESTING THE ISSUANCE OF A PURCHASE ORDER UNDER THE FEDERAL SUPPLY SCHEDULE (FSS) TO OLIVETTI-UNDERWOOD CORPORATION FOR 55 ELECTRIC TYPEWRITERS BY THE PURCHASING AND CONTRACTING DIVISION, FORT BENJAMIN HARRISON, INDIANA.

WE HAVE ASCERTAINED THAT YOUR COMPANY'S FSS LIST PRICE FOR THE SMITH CORONA "SECRETARIAL 415" (THE MODEL MEETING THE ARMY'S REQUIREMENTS) WAS $378.67 PER MACHINE FOR ORDERS OF 25 TO 99 MACHINES, EFFECTIVE AUGUST 8, 1968, THROUGH JUNE 30, 1969. HOWEVER, ON JANUARY 7, 1969, THE GENERAL SERVICES ADMINISTRATION (GSA) ISSUED A "NOTICE TO ORDERING OFFICES" WHICH STATED THAT SMITH-CORONA MARCHANT (SCM) HAD REDUCED ITS PRICE ON THIS MODEL TO $329, EFFECTIVE DECEMBER 31, 1968, THROUGH MARCH 31, 1969. ANOTHER SUCH NOTICE, ISSUED APRIL 28, 1969, REVEALED THAT SCM HAD EXTENDED THE PRICE REDUCTION FOR THE FURTHER PERIOD OF APRIL 1, 1969, THROUGH MAY 16, 1969. BY A SIMILAR NOTICE, DATED MAY 21, 1969, ORDERING AGENCIES WERE ADVISED THAT THE PRICE REDUCTION HAD AGAIN BEEN EXTENDED, THIS TIME FROM MAY 17, 1969, THROUGH JUNE 30, 1969.

ON MARCH 26, 1969, A "PURCHASE REQUEST AND COMMITMENT" (DA FORM 14 115) WAS PREPARED BY THE SUPPLY DIVISION, FORT BENJAMIN HARRISON, COVERING 55 NONPORTABLE ELECTRIC TYPEWRITERS, STANDARD 86 CHARACTER KEYBOARD, ELITE TYPE, 13-INCH CARRIAGE LENGTH. THE FORM ALSO LISTED 55 USED TYPEWRITERS, OF SEVERAL DIFFERENT MODELS, WHICH WERE TO BE TURNED IN AND CREDITED AGAINST THE PURCHASE PRICE OF THE NEW TYPEWRITERS. DELIVERY, ACCORDING TO A TYPED NOTATION ON THE FIRST PAGE OF THE FORM, WAS TO BE MADE NO LATER THAN JUNE 9, 1969; HOWEVER, ON PAGE 2 THERE APPEARED THE HANDWRITTEN PHRASE: "TO BE DELIVERED BY 16 JUNE OR CANCEL.' IT IS NOT KNOWN WHEN OR BY WHOM THIS LATTER NOTATION WAS MADE.

THE PURCHASE REQUEST WAS RECEIVED FOR PROCESSING BY THE PURCHASING AND CONTRACTING DIVISION ON MARCH 27, 1969. IT WAS RECEIVED BY THE CONTRACTING OFFICER HIMSELF ON APRIL 2, 1969, AND IT IS REPORTED THAT WHEN IT WAS RECEIVED BY HIM, THE PURCHASE REQUEST BORE AN "EXPEDITE" MARKER, INDICATING TO HIM THAT THE EQUIPMENT WAS URGENTLY NEEDED.

IT IS FURTHER REPORTED THAT ON APRIL 4, 1969, AN SCM REPRESENTATIVE DEMONSTRATED TO PERSONNEL IN THE PURCHASING DIVISION THE SCM "SECRETARIAL 415.' HE ORALLY QUOTED A PRICE OF $329, EXHIBITING A PRICE LIST WHICH HAD EXPIRED ON MARCH 31, 1969. THE ARMY'S FILE ON THIS MATTER FURTHER REVEALS THAT, JUST PRIOR TO THIS VISIT FROM THE SCM SALES REPRESENTATIVE, A MRS. MURPHY OF THE PURCHASING STAFF HAD CALLED GSA "AND FOUND OUT NO AMENDMENT (TO THE FSS) HAD BEEN SIGNED.' THE CONTRACTING OFFICER'S "DETERMINATIONS AND FINDINGS" DATED MAY 28, 1968, RELATES: "THE PURCHASING AGENT WAS TOLD THAT THE PRICE OF $378.67 EACH WAS IN EFFECT BUT AN AMENDMENT WAS PROBABLE SOMETIME IN THE FUTURE.' THE SCM REPRESENTATIVE WAS THEREUPON INFORMED THAT HIS ORAL QUOTATION OF $329 SHOULD BE FURNISHED IN WRITING AND THAT IT WOULD THEN BE ACCEPTABLE. THE REPORT ADVISES, HOWEVER, THAT NO SUCH WRITTEN QUOTATION WAS EVER RECEIVED.

THE SCM VERSION OF WHAT TRANSPIRED ON AND AFTER APRIL 4, 1969, IS AS FOLLOWS, QUOTING FROM SCM'S APRIL 11 LETTER TO THE CONTRACTING OFFICER: "IN RESPONSE TO A CALL FROM OUR MR. GEROW IN INDIANAPOLIS, I CALLED YOUR BUYER, MRS. MURPHY, AND INFORMED HER THAT SCM WAS EXTENDING A SPECIAL PRICE REDUCTION ON THE MODEL TYPEWRITER OF THE TYPE REQUIRED FROM THE PREVIOUS PERIOD OF DECEMBER 28, 1968 THROUGH MARCH 31, 1969 TO BE IN EFFECT FROM APRIL 1, 1969 THROUGH MAY 16, 1969. * * * ,MRS. MURPHY INFORMED ME THAT SHE HAD TALKED TO GSA IN WASHINGTON (MR. ROTHGERY) AND HAD BEEN TOLD THE AMENDMENT EXTENDING THE PRICE REDUCTION HAD NOT BEEN APPROVED. I TELEPHONED HER AGAIN THE NEXT DAY AFTER TALKING WITH MRS. M. T. BRITT, BRANCH CHIEF OF THE OFFICE EQUIPMENT SECTION OF GENERAL SERVICES ADMINISTRATION, AND ASKED HER TO CALL MRS. BRITT OR MR. FARKAS TO VERIFY THAT THE REQUEST FOR AMENDMENT WAS RECEIVED AND UNDER FAVORABLE CONSIDERATION FOR AWARD WITHIN FIVE DAYS.'I ALSO ADVISED MRS. MURPHY THAT UNDER THE PRICE REDUCTION CLAUSE OF THE CONTRACT SHE IS OBLIGATED TO ACCEPT MY QUOTED PRICE AND THEN REPORT THE TRANSACTION TO GSA FOR ESTABLISHMENT OF A NEW AND LOWER PRICE. SHE ADVISED THAT SHE HAD NOTHING IN WRITING FROM GSA AND THE DELIVERY TIME OF THE PROCUREMENT WAS IMPORTANT AND THAT SHE WOULD REFER ME TO YOU. * * *"

ON APRIL 9, THE CONTRACTING OFFICER WAS CALLED BY MR. MUEHLEIB AT 10:40 A.M.THE CONTRACTING OFFICER'S MEMORANDUM OF TELEPHONE CONVERSATION STATES IN PART:

"* * * HE STATED THAT THEY HAVE A CHANGE IN PRICE IN CHANNELS TO GSA TO REDUCE THE COST OF THE SCM TYPEWRITER.

"I ADVISED MR. MUEHLEIB THAT SINCE WE HAD NOT RECEIVED THE OFFICIAL CONTRACT CHANGE WE COULD NOT DELAY THE AWARD AND HAD AWARDED TO THE LOWEST RESPONSIBLE BIDDER. * * *"

AT THIS TIME, THE SCM REPRESENTATIVE INDICATED HIS INTENT TO FILE A PROTEST. THE PURCHASE ORDER ISSUED TO OLIVETTI-UNDERWOOD FOR 55 TYPEWRITERS AT $339.70 EACH WAS DATED APRIL 9 AND HAD BEEN PICKED UP AT THE CONTRACTING OFFICE BY THAT COMPANY'S SALES REPRESENTATIVE AT THE BEGINNING OF BUSINESS ON APRIL 9.

IN A TELEPHONE CALL ON APRIL 10 FROM MR. BERNARD FARKAS, CHIEF OF THE OFFICE MACHINE SECTION, GSA, THE CONTRACTING OFFICER WAS ADVISED THAT SCM HAD LOWERED THE PRICE OF ITS TYPEWRITER TO $329. THE SAME DAY SCM SENT A TELEGRAM OF PROTEST TO THE CONTRACTING OFFICER FOLLOWED BY A DETAILED LETTER ON APRIL 11. IN A LETTER DATED APRIL 16 THE CONTRACTING OFFICER DENIED THE PROTEST.

WITH RESPECT TO THE SCM CONTENTION THAT THE GOVERNMENT WAS OBLIGATED TO ACCEPT ITS ORAL QUOTATION OF $329 UNDER THE PRICE REDUCTION CLAUSE OF THE FSS CONTRACT, THE CONTRACTING OFFICER'S STATEMENT OF FACTS INCLUDES THE FOLLOWING: "* * * (WE HAVE RECEIVED ORAL QUOTATIONS FROM SALES REPRESENTATIVES IN THE PAST WHICH WERE LATER REFUTED AND CAUSED A CONSIDERABLE AMOUNT OF ADMINISTRATIVE EXPENSE) * * *" THE PARAGRAPH ENTITLED "PRICE REDUCTIONS TO A FEDERAL AGENCY" PROVIDES IN PART:

"/A) IF DURING THE LIFE OF THIS FEDERAL SUPPLY SCHEDULE CONTRACT, ANY FEDERAL AGENCY CITES THIS CONTRACT AS THE CONTRACT UNDER WHICH ITS ORDER IS PLACED AND THE CONTRACTOR SELLS TO THAT AGENCY AT REDUCED PRICE ANY ARTICLE OR SERVICE COVERED BY THE CONTRACT AND THE QUANTITY INVOLVED FALLS WITHIN THE APPLICABLE MAXIMUM ORDER LIMITATION SET FORTH IN THE CONTRACT, EQUIVALENT PRICE REDUCTIONS BASED ON SIMILAR QUANTITIES AND/OR CONSIDERATIONS SHALL APPLY TO HIS FEDERAL SUPPLY SCHEDULE CONTRACT. SUCH PRICE REDUCTIONS SHALL BE EFFECTIVE AT THE SAME TIME THE SALE AT REDUCED PRICE IS MADE TO ANY FEDERAL AGENCY. THE CONTRACTOR SHALL THEREAFTER FOR THE DURATION OF THE CONTRACT PERIOD INVOICE ALL ORDERING OFFICES AT SUCH REDUCED PRICE, INDICATING ON THE INVOICE THAT THE REDUCTION IS PURSUANT TO THIS CLAUSE IN HIS FEDERAL SUPPLY SCHEDULE CONTRACT. * * *

"/C) EACH FEDERAL AGENCY WHICH, DURING THE LIFE OF A CONTRACT INCLUDED IN THIS SCHEDULE, CITES THAT CONTRACT AS THE CONTRACT UNDER WHICH ITS ORDER IS PLACED AND OBTAINS A REDUCED PRICE FROM THE CONTRACTOR (OTHER THAN A REDUCED PRICE GRANTED TO THE CONTRACTOR'S CUSTOMERS GENERALLY) FOR ANY ARTICLE OR SERVICE COVERED BY THE CONTRACT AND THE QUANTITY INVOLVED FALLS WITHIN THE APPLICABLE MAXIMUM ORDER LIMITATION OF THE CONTRACT SHALL, WITHIN TEN DAYS, NOTIFY THE CONTRACTING OFFICER OF SUCH PURCHASE.'

WE FIND NOTHING IN THIS PROVISION WHICH MIGHT IMPORT AN OBLIGATION ON THE GOVERNMENT TO ISSUE A PURCHASE ORDER PURSUANT TO AN ORAL PRICE QUOTATION FROM AN FSS CONTRACTOR WHICH IS LESS THAN THE PRICE LISTED IN FSS PUBLICATIONS. WE BELIEVE THAT THE CONTRACTING OFFICER, BY DELAYING ISSUANCE OF THE PURCHASE ORDER FOR 4 FULL DAYS, AFFORDED SCM A REASONABLE OPPORTUNITY TO SUPPLY THE WRITTEN QUOTATION WHICH HAD BEEN REQUESTED. SINCE HE HAD RECEIVED NO WRITTEN CONFIRMATION OF THE ORAL QUOTATION OF APRIL 4, HE HAD A SUFFICIENT BASIS TO DISREGARD THAT ORAL QUOTATION AND PLACE THE ORDER WITH OLIVETTI-UNDERWOOD.

THERE IS A FURTHER QUESTION CONCERNING THE TIME WHEN THE ORDERING OFFICE FIRST LEARNED OF SCM'S AMENDMENT OF ITS FSS PRICE FOR THE "SECRETARIAL 415.' IT IS CLEAR FROM THE ABOVE-RELATED FACTS THAT THE CONTRACTING OFFICER HAD OFFICIAL NOTICE OF THE PRICE REDUCTION ON APRIL 10, 1969.

THE MODIFICATION IN SCM'S FSS CONTRACT (GS-OOS-76483) WAS MADE PURSUANT TO SCM'S LETTER TO GSA DATED APRIL 7, 1969. WE HAVE BEEN INFORMALLY ADVISED BY GSA THAT SCM'S LETTER WAS RECEIVED BY GSA THE SAME DAY. THE MODIFICATION WAS SIGNED BY MR. FARKAS ON APRIL 10, 1969, THE SAME DAY ON WHICH HE ADVISED THE CONTRACTING OFFICER OF THE REDUCTION. THERE IS NOTHING IN THE ADMINISTRATIVE FILE WHICH INDICATES ANY CONTACT BETWEEN GSA AND THE ARMY CONTRACTING PERSONNEL IN THE INTERVAL BETWEEN RECEIPT OF THE APRIL 7 LETTER AND ISSUANCE OF THE PURCHASE ORDER ON APRIL 9. IN YOUR LETTER OF APRIL 11 YOU STATE THAT ON APRIL 8, AFTER TALKING TO MRS. M. T. BRITT, BRANCH CHIEF OF GSA'S OFFICE EQUIPMENT SECTION, YOU CALLED MRS. MURPHY OF THE PURCHASING DIVISION AND ASKED HER TO CALL GSA "TO VERIFY THAT THE REQUEST FOR AMENDMENT WAS RECEIVED.' THE AGENCY'S FILE DOES NOT CONTAIN ANYTHING WHICH WOULD EITHER SUBSTANTIATE OR CONTRADICT YOUR ASSERTION. IN ANY EVENT, YOUR SUGGESTION APPEARS TO HAVE GONE UNHEEDED. OF COURSE, HAD GSA BEEN CONTACTED ON APRIL 8, THE CONTRACTING PERSONNEL WOULD HAVE HAD ACTUAL NOTICE OF RECEIPT OF THE AMENDMENT. IN B-148889, AUGUST 8, 1962, COPY ENCLOSED, IT WAS HELD THAT WHERE THE CONTRACTING AGENCY HAD ACTUAL KNOWLEDGE PRIOR TO ISSUANCE OF A PURCHASE ORDER, OF A PRICE REDUCTION WHICH HAD BEEN OFFERED BY LETTER TO GSA, THE PRICE REDUCTION WAS REQUIRED TO BE CONSIDERED BY THE AGENCY. SUCH IS NOT THE CASE HERE.