B-167208, SEP. 4, 1969

B-167208: Sep 4, 1969

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LOW BIDDER WHO OFFERED 20 DAY PROMPT PAYMENT DISCOUNT OF 8.2 PERCENT FOR FISCAL YEAR 1970 BUT WHO REDUCED DISCOUNT TO .1 PERCENT FOR OPTIONAL FISCAL YEARS 1971 AND 1972 THEREBY RESULTING IN HIGHER PRICE FOR OPTION YEARS MAY HAVE BID CONSIDERED RESPONSIVE UNDER THE SOLICITATION WHICH DID NOT REQUIRE EXTENSION OF THE SAME DISCOUNT RATES. PROTEST AGAINST AWARD IS DENIED. ON WHICH A RATE PER ROUND TRIP WAS REQUIRED. UNDER ALL ITEMS EXCEPT 6 AND 9 OVERTIME RATES WERE REQUIRED TO BE STATED FOR VARIOUS CLASSES OF EQUIPMENT AND PERSONNEL INVOLVED. THE TERMS OF EVALUATION AND BASIS OF AWARD WERE STATED AS FOLLOWS: "BIDS WILL BE EVALUATED AND AWARD OF A SINGLE CONTRACT WILL BE MADE TO THE RESPONSIVE BIDDER ON THE BASIS OF THE LOW AGGREGATE PRICE FOR ITEMS 1 THROUGH 8 AND 9 (A) EXCLUSIVE OF SUB-ITEMS FOR OVERTIME RATES.

B-167208, SEP. 4, 1969

BID PROTEST - DISCOUNTS DECISION DENYING PROTEST OF KAHOE SERVICE CO. OF VIRGINIA, INC., AGAINST AWARD OF CONTRACT TO KLATE HALT CO., LOW BIDDER, FOR FURNISHING TRANSPORTATION AND SUPPORT SERVICES TO NATIONAL AERONAUTICS AND SPACE ADMINISTRATION. LOW BIDDER WHO OFFERED 20 DAY PROMPT PAYMENT DISCOUNT OF 8.2 PERCENT FOR FISCAL YEAR 1970 BUT WHO REDUCED DISCOUNT TO .1 PERCENT FOR OPTIONAL FISCAL YEARS 1971 AND 1972 THEREBY RESULTING IN HIGHER PRICE FOR OPTION YEARS MAY HAVE BID CONSIDERED RESPONSIVE UNDER THE SOLICITATION WHICH DID NOT REQUIRE EXTENSION OF THE SAME DISCOUNT RATES. THEREFORE SINCE LOW BID DID NOT LIMIT OR MODIFY THE RIGHT RESERVED TO THE GOVERNMENT, PROTEST AGAINST AWARD IS DENIED.

TO COVINGTON AND BURLING:

WE REFER TO YOUR LETTER OF JUNE 11, 1969, PROTESTING ON BEHALF OF KAHOE SERVICE COMPANY OF VIRGINIA, INC., THE AWARD OF A CONTRACT TO KLATE HOLT COMPANY UNDER INVITATION FOR BIDS NO. L52-9938 ISSUED APRIL 7, 1969, BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, LANGLEY RESEARCH CENTER, HAMPTON, VIRGINIA.

THE INVITATION SOLICITED BIDS ON NINE SEPARATE ITEMS OF TRANSPORTATION AND SUPPORT SERVICES AT THE CENTER FOR A PERIOD OF ONE YEAR COMMENCING JULY 15, 1969. EACH ITEM CALLED FOR THE QUOTATION OF A MONTHLY RATE, EXCEPT ITEM 6, ON WHICH A RATE PER ROUND TRIP WAS REQUIRED. UNDER ALL ITEMS EXCEPT 6 AND 9 OVERTIME RATES WERE REQUIRED TO BE STATED FOR VARIOUS CLASSES OF EQUIPMENT AND PERSONNEL INVOLVED. ITEM 9 INCLUDED TWO ALTERNATE SERVICES, AND CALLED FOR MONTHLY RATES TO BE QUOTED ON EACH. THE TERMS OF EVALUATION AND BASIS OF AWARD WERE STATED AS FOLLOWS: "BIDS WILL BE EVALUATED AND AWARD OF A SINGLE CONTRACT WILL BE MADE TO THE RESPONSIVE BIDDER ON THE BASIS OF THE LOW AGGREGATE PRICE FOR ITEMS 1 THROUGH 8 AND 9 (A) EXCLUSIVE OF SUB-ITEMS FOR OVERTIME RATES, OR ON THE BASIS OF THE LOW AGGREGATE TOTAL COST FOR ITEMS 1 THROUGH 8 AND 9 (B) EXCLUSIVE OF SUB-ITEMS FOR OVERTIME RATES, FOR THE PERIODS OF PERFORMANCE SPECIFIED. AWARD OF ITEMS 1 THROUGH 8 AND 9 (B) IS PREFERRED AND WILL BE AWARDED IF APPROVED BY NASA HEADQUARTERS AND IF SUFFICIENT FUNDS ARE AVAILABLE, IF NOT ITEMS 1 THROUGH 8 AND 9 (A) WILL BE AWARDED. FOR THE PURPOSE OF THIS EVALUATION A TOTAL OF 52 ROUND-TRIPS WILL BE THE BASIS OF COMPUTATION FOR ITEM 6. ALL OTHER ITEMS AND SUB-ITEMS WILL NOT BE INCLUDED IN THE EVALUATION AND THE GOVERNMENT RESERVES THE RIGHT TO ACCEPT, REJECT, OR SUBSTITUTE FOR THEM PRICES NEGOTIATED WITH THE BIDDER PRIOR TO AWARD.' YOUR PROTEST INVOLVES THE FOLLOWING PROVISIONS OF THE INVITATION: "OPTION TO EXTEND SERVICES (FEBRUARY 1965): THE GOVERNMENT MAY REQUIRE THE CONTRACTOR TO CONTINUE TO PERFORM ANY OR ALL ITEMS OF SERVICES UNDER THIS CONTRACT WITHIN THE LIMITS STATED IN THE SCHEDULE. THE CONTRACTING OFFICER MAY EXERCISE THIS OPTION, AT ANY TIME WITHIN THE PERIOD SPECIFIED IN THE SCHEDULE, BY GIVING WRITTEN NOTICE TO THE CONTRACTOR. THE RATES SET FORTH IN THE SCHEDULE SHALL APPLY TO ANY EXTENSION MADE PURSUANT TO THIS OPTION PROVISION.'ADDITIONAL YEAR SERVICES: INASMUCH AS THE SERVICES REQUIRED HEREUNDER CAN ONLY BE CONTRACTED FOR ON AN ANNUAL BASIS OR PORTION THEREOF, AND THE SUCCESSFUL BIDDER UPON AWARD OF THE CONTRACT WILL BE REQUIRED TO FURNISH COSTLY EQUIPMENT TO PERFORM SATISFACTORILY, THERE IS INCLUDED HEREIN OPTION PROVISIONS FOR TWO (2) ADDITIONAL YEARS BEYOND THE INITIAL YEAR'S SERVICES. EXERCISE OF THE OPTION IS DEPENDENT UPON: AVAILABILITY OF FUNDS; THE SERVICES FULFILL AN EXISTING NEED OF THE GOVERNMENT AT THE TIME OF EXERCISE; AND THE EXERCISE OF THE OPTION IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THE NOTICE OF RENEWAL (EXERCISE OF OPTION) SHALL BE SIGNED BY THE CONTRACTING OFFICER AND MAILED TO THE CONTRACTOR ON OR BEFORE JUNE 1, 1970 FOR THE FIRST OPTION PERIOD, AND ON OR BEFORE JUNE 1, 1971 FOR THE SECOND OPTION PERIOD.'

THREE BIDS WERE RECEIVED AND EVALUATED ON THE BASIS OF THE PRICES SHOWN FOR FISCAL YEAR 1970. THE BID OF KLATE HOLT OFFERING A 20-DAY PROMPT PAYMENT DISCOUNT OF 8.2 PERCENT FOR THAT YEAR WAS DETERMINED TO BE LOW AT THE EVALUATED PRICE OF $799,612.63, AND A SINGLE YEAR CONTRACT FOR FISCAL YEAR 1970 WAS AWARDED TO THAT FIRM. THE KAHOE BID OFFERING A 1/4 PERCENT 20-DAY PROMPT PAYMENT DISCOUNT FOR FISCAL YEAR 1970 AND EACH OF THE TWO OPTION YEARS WAS SECOND LOW AT $853,363.96.

ESSENTIALLY, YOUR PROTEST IS BOTTOMED ON THE CONTENTION THAT THE KLATE HOLT BID WAS NONRESPONSIVE IN THAT IT OFFERED A 20-DAY PROMPT PAYMENT DISCOUNT OF 8.2 PERCENT FOR FISCAL YEAR 1970 BUT REDUCED THE DISCOUNT RATE TO .1 PERCENT FOR THE OPTIONAL FISCAL YEARS OF 1971 AND 1972, WHICH RESULTED IN HIGHER PRICES BEING OFFERED FOR THE TWO OPTION YEARS. YOU SAY THAT BIDDERS WERE REQUIRED BY THE TERMS AND INTENT OF THE INVITATION TO OFFER THE SAME PRICE FOR EACH OF THE THREE YEARS, AND THAT SUCH A VARIANCE IN THE PROMPT PAYMENT DISCOUNT MAY NOT BE UTILIZED TO DEPRIVE THE GOVERNMENT OF ITS RIGHT UNDER THE ABOVE CONTRACT PROVISIONS TO EXTEND THE CONTRACT FOR THE TWO ADDITIONAL YEARS AT THE SAME PRICE AS THE FIRST YEAR. IN SUPPORT OF YOUR POSITION YOU CITE PARAGRAPH 2.404-2 (B) OF THE NASA PROCUREMENT REGULATION REQUIRING THE REJECTION (AS NONRESPONSIVE) OF THOSE BIDS IMPOSING CONDITIONS WHICH MODIFY REQUIREMENTS OF THE INVITATION. EXAMPLE (V) UNDER THAT PARAGRAPH DEPICTS BIDS IN WHICH THE BIDDER LIMITS THE RIGHTS OF THE GOVERNMENT UNDER ANY CONTRACT CLAUSE.

IT SEEMS EVIDENT THAT THE RIGHT, OR OPTION, OF THE GOVERNMENT TO HAVE THE SERVICES EXTENDED BEYOND THE INITIAL YEAR MUST BE FOUND IN THE EXPRESS PROVISIONS OF THE INVITATION, AND A BID COULD NOT BE REJECTED AS NONRESPONSIVE FOR REDUCING THE DISCOUNT FOR THE OPTION YEARS UNLESS SUCH REDUCTION WAS CONTRARY TO, OR MODIFIED, A SPECIFIC REQUIREMENT OF THE SOLICITATION. HERE THE PERTINENT PROVISIONS OF THE SOLICITATION CONFER UPON THE GOVERNMENT THE OPTION TO EXTEND THE SERVICES FOR TWO ONE-YEAR PERIODS, AT "THE RATES SET FORTH IN THE SCHEDULE.' THE MATTER OF DISCOUNT FOR PROMPT PAYMENT IS NOT REFERRED TO IN THOSE PROVISIONS, AND IS NOT A PART OF THE SCHEDULE OF RATES. ALTHOUGH WE AGREE WITH YOUR CONTENTION THAT THE LOWER RATE OF PROMPT PAYMENT DISCOUNT OFFERED FOR THE OPTION YEARS WOULD DECREASE THE AMOUNT WHICH THE GOVERNMENT COULD SAVE BY PROMPT PAYMENTS, AND THEREBY WOULD HAVE THE EFFECT OF INCREASING THE AMOUNT WHICH WOULD BE PAID BY AN EXERCISE OF THE OPTION PROVISIONS, WE BELIEVE THAT THE ONLY RIGHT RESERVED BY THE GOVERNMENT UNDER THE OPTION PROVISION OF THE INVITATION IS TO EXTEND THE VARIOUS SERVICES AT RATES NO HIGHER THAN THOSE RATES SHOWN IN THE SCHEDULE FOR SUCH SERVICES, AND THAT THE OPTION TERMS DO NOT CLEARLY REQUIRE THE EXTENSION OF THE SAME DISCOUNT TERMS. KLATE HOLT'S BID DOES NOT THEREFORE MODIFY OR LIMIT THE RIGHT RESERVED TO THE GOVERNMENT.

INASMUCH AS NO RESTRICTION OF THE APPLICABLE DISCOUNT WAS SET OUT IN THE SOLICITATION, THAT FACTOR IS NOT MATERIAL TO THE RESPONSIVENESS OF THE KLATE HOLT BID.

IN VIEW OF THE FOREGOING, YOUR PROTEST AGAINST THE AWARD OF THE SUBJECT CONTRACT TO KLATE HOLT COMPANY IS DENIED.