B-167595, NOVEMBER 24, 1969, 49 COMP. GEN. 335

B-167595: Nov 24, 1969

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" ACCEPTANCE OF THE BID WAS PROPER. FOR AN UNBALANCED BID IS NOT AUTOMATICALLY PRECLUDED FROM CONSIDERATION IN THE ABSENCE OF EVIDENCE OF IRREGULARITY. THE CONTRACTING OFFICER PROPERLY HELD THAT BIDDERS WHO HAD FAILED TO IDENTIFY PRICE LISTS WERE BOUND BY THE LISTS INCLUDED IN THE INVITATION. THAT THE LOW BID WAS RESPONSIVE. NOTWITHSTANDING THE BIDDER DID NOT HAVE ON HAND AT THE TIME OF AWARD. THE CORRECTION OF MISLABELED PARTS WILL BE ADVANTAGEOUS TO THE GOVERNMENT. WILL NOT REQUEST A PART BY BRAND NAME TO OBTAIN THE HIGHER DISCOUNT. THE DETERMINATION BY THE CONTRACTING OFFICER NOT TO EXERCISE THE OPTION AND TO AWARD A NEW CONTRACT TO OTHER THAN THE INCUMBENT CONTRACTOR PRIOR TO THE RESOLUTION OF ITS PROTEST FILED WITH THE UNITED STATES GENERAL ACCOUNTING OFFICE WAS WITHIN THE AUTHORITY GRANTED UNDER PARAGRAPH 2-407.9(B)(2) AND (3) OF THE ARMED SERVICES PROCUREMENT REGULATION.

B-167595, NOVEMBER 24, 1969, 49 COMP. GEN. 335

BIDS -- UNBALANCED -- EVIDENCE UPON THE UNEQUIVOCAL CONFIRMATION OF AN APPARENT UNBALANCED LOW BID ON MOTOR VEHICLE PARTS AND ACCESSORIES THAT OFFERED DISCOUNTS OF 36 PERCENT ON "COMMON PARTS" AND 60 PERCENT ON "CAPTIVE PARTS," ACCEPTANCE OF THE BID WAS PROPER, FOR AN UNBALANCED BID IS NOT AUTOMATICALLY PRECLUDED FROM CONSIDERATION IN THE ABSENCE OF EVIDENCE OF IRREGULARITY, AND THE CONTRACTING OFFICER PROPERLY HELD THAT BIDDERS WHO HAD FAILED TO IDENTIFY PRICE LISTS WERE BOUND BY THE LISTS INCLUDED IN THE INVITATION, AND THAT THE LOW BID WAS RESPONSIVE, NOTWITHSTANDING THE BIDDER DID NOT HAVE ON HAND AT THE TIME OF AWARD, ALL THE PRICE LISTS TO WHICH COMMITTED UNDER THE CONTRACT. THE CORRECTION OF MISLABELED PARTS WILL BE ADVANTAGEOUS TO THE GOVERNMENT, WITHOUT SUBVERTING THE CONTRACT, AND THE GOVERNMENT IN KEEPING WITH THE SPIRIT OF THE CONTRACT, WILL NOT REQUEST A PART BY BRAND NAME TO OBTAIN THE HIGHER DISCOUNT. CONTRACTS -- PROTESTS -- AWARD APPROVED -- PRIOR TO RESOLUTION OF PROTEST WHERE AN AWARD OF A NEW CONTRACT WOULD COST THE GOVERNMENT SUBSTANTIALLY LESS THAN CONTINUING TO PROCURE MOTOR VEHICLE PARTS AND ACCESSORIES UNDER AN EXISTING CONTRACT BY EXERCISING THE CONTRACT OPTION, THE DETERMINATION BY THE CONTRACTING OFFICER NOT TO EXERCISE THE OPTION AND TO AWARD A NEW CONTRACT TO OTHER THAN THE INCUMBENT CONTRACTOR PRIOR TO THE RESOLUTION OF ITS PROTEST FILED WITH THE UNITED STATES GENERAL ACCOUNTING OFFICE WAS WITHIN THE AUTHORITY GRANTED UNDER PARAGRAPH 2-407.9(B)(2) AND (3) OF THE ARMED SERVICES PROCUREMENT REGULATION, PRESCRIBING THE CRITERIA FOR MAKING AN AWARD PRIOR TO A DETERMINATION ON A PREAWARD PROTEST, AND PARAGRAPH 1- 1505(C) OF THE REGULATION, PROVIDING CRITERIA FOR THE EXERCISE OF OPTIONS.

TO THE WHEELER BROS., INC., NOVEMBER 24, 1969:

WE REFER TO YOUR PROTEST BY TELEGRAM DATED JULY 30, 1969, AS SUPPLEMENTED BY BRIEFS AND CORRESPONDENCE SUBMITTED BY YOUR ATTORNEYS, AGAINST THE AWARD BY THE DEPARTMENT OF THE AIR FORCE OF CONTRACT FO8650 70-C-0035 TO MCCOTTER MOTORS, INC. (MCCOTTER) UNDER INVITATION FOR BIDS (IFB) FO3650-69 -B-0124, ISSUED JUNE 18, 1969, BY HEADQUARTERS, AIR FORCE EASTERN TEST RANGE (AFETR), PATRICK AIR FORCE BASE, FLORIDA. THE PROTEST ALSO ENCOMPASSES THE ADMINISTRATION AND PERFORMANCE OF THE CONTRACT.

THE CONTRACT COVERS THE REQUIREMENTS OF PATRICK AIR FORCE BASE, CAPE KENNEDY AIR FORCE STATION, AND HEADQUARTERS KENNEDY SPACE CENTER, FLORIDA, FOR COMMERCIAL PARTS AND ACCESSORIES FOR MOTOR VEHICLES AND OTHER EQUIPMENT SPECIFIED IN APPENDIXES A AND D TO THE IFB FROM DATE OF AWARD (AUGUST 4, 1969) THROUGH JULY 31, 1970. THE REQUIREMENTS FOR PATRICK AIR FORCE BASE AND CAPE KENNEDY AIR FORCE STATION ARE COMBINED UNDER PART VIII, AND THE REQUIREMENTS FOR HEADQUARTERS KENNEDY SPACE CENTER ARE COVERED BY PART IX. YOUR PROTEST CONCERNS ONLY PART VIII, WHICH WAS AWARDED TO MCCOTTER. (PART IX WAS AWARDED TO YOU.)

PART I OF THE IFB, RELATING TO SCOPE OF CONTRACT, PROVIDED THAT PRICE LISTED AND NON-PRICE-LISTED PARTS SHALL BE FURNISHED AS REQUIRED UNDER THE CONTRACT, AND PARTS FOR SUPPORT EQUIPMENT SHALL BE ONLY THOSE WHICH HAVE APPLICATION TO MOTOR VEHICLES.

PART III INCLUDED THE FOLLOWING PERTINENT DEFINITIONS:

(C) SUPPORT EQUIPMENT. EQUIPMENT UTILIZED IN THE GENERAL SUPPORT OF OPERATIONS. EXAMPLES ARE TOW BARS, AIRCRAFT STARTERS AND ENGINE HEATERS, CARGO LADDERS, OXYGEN CARTS, GENERATORS, ETC.

(H) COMMON PART. A PART THAT IS PRODUCED BY MORE THAN ONE MANUFACTURER THEREBY BECOMING AVAILABLE FROM MORE THAN ONE SOURCE OF SUPPLY IN THE COMPETITIVE COMMERCIAL REPLACEMENT PARTS SYSTEM. FOR EXAMPLE, IF A PARTICULAR PART FOR AN INTERNATIONAL VEHICLE MUST BE OBTAINED FROM INTERNATIONAL OR THEIR DEALERS, THE PART IS "CAPTIVE." HOWEVER, IF THE PART OR A SUBSTITUTE PART ALSO CAN BE OBTAINED FROM OTHER MANUFACTURERS OR DEALERS, THE PART IS "COMMON" REGARDLESS OF WHERE IT IS OBTAINED. A SEAL FOR A FORD VEHICLE WHICH CAN BE OBTAINED FROM SOURCES OTHER THAN THE FORD PARTS DISTRIBUTION SYSTEM IS "COMMON" EVEN THOUGH THE BOX IT COMES IN MAY BE MARKED "FOR FORD MODEL

YEAR ."

(I) CAPTIVE PART. A PART (1) MANUFACTURED OR CONTROLLED BY A SINGLE SOURCE AND AVAILABLE ONLY FROM THE MANUFACTURER OR HIS DEALERS AND (2) NOT AVAILABLE UNDER THE PROVISIONS OF PARAGRAPH (H) ABOVE. A COMMON PART REQUESTED BY THE GOVERNMENT BY BRAND NAME BECOMES A CAPTIVE PART.

(J) NON-PRICE-LISTED PART. ANY PART WHICH IS NOT INCLUDED IN THE PRICE LISTS INDEXED IN APPENDIX "B" OF THIS CONTRACT.

(O) CENTRALLY MANAGED PART. ANY PART CENTRALLY PROCURED, STOCKED, AND ISSUABLE BY OTHER GOVERNMENT AGENCIES; E.G., AF, DSA, ARMY, ETC.

PART IV, ENTITLED "PARTS AND SUPPLIES NOT TO BE FURNISHED," READS, IN PART, AS FOLLOWS:

(A) CENTRALLY MANAGED PARTS. THOSE PARTS AS DEFINED IN PART III, PARAGRAPH (O) ABOVE WILL NOT BE FURNISHED UNDER THIS CONTRACT EXCEPT (1) AT THE OPTION OF THE GOVERNMENT, AND THEN ONLY UPON THE WRITTEN AUTHORIZATION OF THE CENTRAL MANAGER OR HIS AUTHORIZED REPRESENTATIVE, OR (2) AS AUTHORIZED BELOW:

(A) DSA CENTRALLY MANAGED MOTOR VEHICLE PARTS WHEN THE LINE ITEM VALUE IS $10.00 OR LESS (STOCK LIST PRICE),

(B) GSA STORES ITEMS WHEN THE ORDER VALUE IS $25.00 OR LESS (STORES STOCK CATALOG PRICE),

(C) FEDERAL SUPPLY SCHEDULE ITEMS WHEN THE MINIMUM ORDER IS $50.00 OR AS OTHERWISE PROVIDED IN THE SCHEDULE (FSS PRICE),

(D) URGENT OR EMERGENCY REQUIREMENTS THAT CANNOT BE DELIVERED IN THE TIME REQUIRED THROUGH NORMAL SUPPLY CHANNELS.

PART V, ENTITLED "PRICE LISTS" READS, IN PART, AS FOLLOWS:

(A) APPENDIX "B" CONSISTS OF AN ALPHABETICAL INDEX OF PRICE LISTS APPROVED FOR USE UNDER THE CONTRACT. THE INDEX IDENTIFIES PRICE LISTS WHICH:

(1) EXCEPT FOR REBUILT PARTS ARE IN NATIONAL DISTRIBUTION;

(2) COVER NEW, REBUILT, AND EXCHANGE PARTS BY PARTS MANUFACTURERS, REBUILDERS, AND VEHICLE MANUFACTURERS;

(3) ARE CURRENT AS OF THE DATE OF THE SOLICITATION; AND

(4) PROVIDE ADEQUATE COVERAGE FOR THE VEHICLE FLEET LISTED IN APPENDIX "A" AND APPENDIX "D."

(B) IF AN OFFEROR DESIRES TO SUBMIT ADDITIONAL PRICE LISTS, HE IS ENCOURAGED TO DO SO; HOWEVER, IDENTIFICATION OF THESE LISTS MUST BE SUBMITTED TO ARRIVE AT THE OFFICE ISSUING THIS SOLICITATION AT LEAST TEN DAYS PRIOR TO THE DATE SCHEDULED FOR OPENING OF OFFERS. ANY ADDITIONAL PRICE LISTS THAT ARE APPROVED FOR USE BY THE GOVERNMENT WILL BE INCORPORATED IN THE CONSOLIDATED SCHEDULE BY ISSUANCE OF AN AMENDMENT TO THIS SOLICITATION. EACH OFFEROR, IN HIS OFFER, SHALL IDENTIFY THOSE PRICE LISTS FOUND IN APPENDIX "B," AS AMENDED, THAT HE PROPOSES TO USE DURING THE CONTRACT. FAILURE TO SHOW ADEQUATE PRICE LIST COVERAGE OF PARTS NECESSARY TO SUPPORT THE VEHICLES SPECIFIED IN APPENDIX "A" AND APPENDIX "D" SHALL BE CAUSE FOR REJECTION OF THE OFFER.

(C) ON THE EFFECTIVE DATE OF THE CONTRACT, THE CONTRACTOR SHALL HAVE IN THE ON-BASE STORE ONE COPY OF EACH SELECTED PARTS PRICE LIST CATALOG. EACH PARTS PRICE LIST SHALL BE CURRENT AS OF THE DATE OF AWARD OF THIS CONTRACT. THEREAFTER, ADDITIONAL REQUIRED LISTS MAY BE USED UPON MUTUAL AGREEMENT BETWEEN THE CONTRACTOR AND THE CONTRACTING OFFICER AND AS EVIDENCED BY APPROPRIATE CONTRACT MODIFICATION.

PART VIII SET FORTH SIX ITEMS OF MOTOR VEHICLE AND EQUIPMENT PARTS AND ACCESSORIES AND ONE ITEM COVERING OPERATION OF PARTS STORES DURING NONDUTY HOURS WHEN REQUIRED. DISCOUNTS WERE SOLICITED FROM THE LIST PRICE IN CONTRACT PRICE LISTS DESCRIBED IN APPENDIX B AND FOR PRICE LISTS OF MANUFACTURERS IDENTIFIED IN ITEM 4 OF PART VIII. ITEM 4, COVERING CAPTIVE PARTS WITH A GOVERNMENT ESTIMATE OF $892,426, LISTED NUMEROUS MANUFACTURERS AND PROVIDED SPACE FOR BIDDERS TO CHECK THE MANUFACTURERS WHOSE PRICE LISTS THEY INTENDED TO USE TO FURNISH THE REQUIRED CAPTIVE PARTS FOR THE VEHICLE FLEET LISTED IN APPENDIX A.

THE EVALUATION AND AWARD PROVISIONS OF PART VIII ADVISED BIDDERS, AMONG OTHER THINGS, THAT AWARD WOULD BE MADE ONLY TO THE RESPONSIVE AND RESPONSIBLE BIDDER HAVING THE LOWEST TOTAL ESTIMATED NET COST TO THE GOVERNMENT AS EVALUATED IN ACCORDANCE WITH THE IFB PROVISIONS. ADDITION, BIDDERS WERE ADVISED THAT RESPONSIVENESS WAS TO INCLUDE A DETERMINATION BY THE CONTRACTING OFFICER THAT PRICE LISTS SELECTED BY THE BIDDER, OTHER THAN THOSE IDENTIFIED AS MANDATORY UNDER ITEM 4 OF PART VIII, ADEQUATELY COVER PARTS NECESSARY TO SUPPORT THE VEHICLE SPECIFIED IN APPENDIX A.

PART X, ENTITLED "PAYMENT," PROVIDED THAT PAYMENT FOR PARTS FURNISHED UNDER CONTRACT PRICE LISTS SHALL BE AT LIST PRICES SPECIFIED IN CONTRACT PRICE LISTS LESS DISCOUNTS OFFERED BY THE SUCCESSFUL BIDDER AND THAT PAYMENT FOR NON-PRICE-LISTED PARTS WILL BE COMPUTED AT NET INVOICE PARTS COST TO THE CONTRACTOR, PLUS THE SERVICE CHARGE SHOWN IN PART X FOR THE TOTAL DOLLAR VALUE (FOR PARTS ONLY), BEGINNING AT $100.01, PLUS TRANSPORTATION CHARGES AND APPLICABLE TAXES.

APPENDIX B, ENTITLED "SCHEDULE (INDEX) OF/PARTS PRICE LISTS," IS AN ALPHABETICAL LISTING OF MANUFACTURERS WITH A GENERAL DESCRIPTION OF THE PARTICULAR PARTS AVAILABLE FROM EACH MANUFACTURER (E.G., ARVIN INDUSTRIES- -MUFFLERS, TAILPIPES). A PARENTHETICAL NOTATION BENEATH THE TITLE OF APPENDIX B STATES THAT THE MOST CURRENT LIST WILL BE APPLICABLE. IFB AMENDMENT NO. 3, DATED JULY 24, INCORPORATED SEVERAL ADDITIONAL PRICE LISTS IN APPENDIX B PURSUANT TO PART V (B) OF THE IFB.

THREE BIDS WERE RECEIVED BY THE PROCURING ACTIVITY AND WERE OPENED ON JULY 25 AS SCHEDULED. BASED ON ESTIMATED NET COST TO THE GOVERNMENT, MCCOTTER WAS LOWEST AT $723,409; YOU WERE SECOND AT $1,027,415; AND B&D SUPPLY COMPANY (B&D) WAS THIRD AT $1,221,281. IN THE AREA OF DISCOUNTS MCCOTTER OFFERED 36 PERCENT ON COMMON PARTS, 25 PERCENT ON BOTH REBUILT PARTS AND REBUILT ENGINES, AND 60 PERCENT ON CAPTIVE PARTS; YOU OFFERED 58 PERCENT ON COMMON PARTS, 50 PERCENT ON REBUILT PARTS, 25 PERCENT ON REBUILT ENGINES, AND 30 PERCENT ON CAPTIVE PARTS; AND B&D OFFERED 33 PERCENT ON BOTH COMMON AND REBUILT PARTS, 18 PERCENT ON REBUILT ENGINES, AND NO DISCOUNT ON CAPTIVE PARTS. NO EXCEPTIONS WERE STATED BY ANY OF THE BIDDERS TO ANY OF THE PRICE LISTS INDEXED IN APPENDIX B AS AMENDED.

ON JULY 28, AT 8:00 A.M., THE CONTRACTING OFFICER COMMUNICATED WITH MCCOTTER BY TELEPHONE AND REQUESTED MCCOTTER TO VERIFY ITS BID IN VIEW OF THE 60-PERCENT DISCOUNT OFFERED ON CAPTIVE PARTS. AT THAT TIME MCCOTTER VERIFIED THE BID VERBALLY. WRITTEN CONFIRMATION OF THE BID WAS SUBSEQUENTLY RECEIVED BY THE CONTRACTING OFFICER IN A LETTER DATED JULY 28, IN WHICH MCCOTTER STATED THAT ALL DISCOUNTS LISTED IN ITS BID "ARE CORRECT AND VALID."

AT 4:15 P.M. ON JULY 28, THE CONTRACTING OFFICER RECEIVED A TELEPHONE CALL FROM YOU ADVISING OF YOUR INTENT TO FILE A PROTEST AGAINST AWARD TO MCCOTTER, AND ON JULY 29 YOUR TELEGRAM OF JULY 28 CONFIRMING YOUR VERBAL PROTEST WAS RECEIVED BY THE PROCURING ACTIVITY. BY TELEGRAM DATED JULY 29 THE CONTRACTING OFFICER ACKNOWLEDGED YOUR PROTEST; INFORMED YOU THAT THE PROCUREMENT WAS URGENT AND MUST BE AWARDED BY JULY 31, THE EXPIRATION DATE OF THE EXISTING CONTRACT; AND REQUESTED YOU TO ADVISE THE PROCURING ACTIVITY NO LATER THAN 9:00 A.M., JULY 30, OF THE BASIS FOR YOUR PROTEST.

A MEMORANDUM DATED JULY 28, 1969, RELATING TO INFORMATION RECEIVED BY THE CONTRACTING OFFICER REGARDING THE RESPONSIBILITY OF MCCOTTER, STATES THAT FAVORABLE REPORTS ON THE PERFORMANCE BY MCCOTTER OF SIMILAR CONTRACTS WERE RECEIVED FROM THREE SEPARATE AIR FORCE INSTALLATIONS IN FLORIDA. TWO OF THE REPORTS STATED THAT MCCOTTER HAD BEEN CITED FOR ITS OUTSTANDING PERFORMANCE.

ON JULY 30, THE CONTRACTING OFFICER RECEIVED A TELEGRAM DATED JULY 29 FROM YOU GIVING THE FOLLOWING REASONS FOR YOUR PROTEST:

1. THAT DISCOUNT OF 36 PERCENT FOR COMMON PARTS AND 60 PERCENT FOR CAPTIVE PARTS ARE UNBALANCED.

2. DISCOUNT OF 60 PERCENT ON CAPTIVE PARTS, PART VIII, ITEM 4, FROM REFERENCED PRICE LISTS IS NOT POSSIBLY AVAILABLE TO ANY BIDDER AND THEREFORE IMPOSSIBLE TO PASS ALONG TO THE GOVERNMENT. LOWEST BID, THEREFORE, IS OBVIOUSLY ERRONEOUS.

3. EXAMINATION OF LOWEST BID CLEARLY INDICATES MISTAKE OR IRRESPONSIBLE BID AND CONTRACTING OFFICER SHOULD REQUIRE LOWEST BIDDER TO VERIFY THE BID BY PRODUCING PRICE LISTS CITED IN PART VIII, ITEM 4 PRIOR TO AWARD OF CONTRACT TO DETERMINE RESPONSIBILITY OF BID.

(YOUR TELEGRAPHIC PROTEST DATED JULY 30 TO OUR OFFICE HAS THE SAME WORDING AS THE ABOVE TELEGRAM TO THE CONTRACTING OFFICER.)

AT THE REQUEST OF THE CONTRACTING OFFICER, REPRESENTATIVES OF THE PROCURING ACTIVITY AND OTHER CONCERNED AIR FORCE PERSONNEL MET WITH MCCOTTER'S REPRESENTATIVE ON JUNE 30 TO DISCUSS THE PROTEST IN VIEW OF YOUR ASSERTIONS OF MISTAKE. IN RESPONSE TO THE QUESTIONS, "DO YOU KNOW YOU COULD LOSE MONEY ON CAPTIVE ITEMS; DO YOU HAVE THE NECESSARY PRICE LISTS AND ARE YOU CORRECT IN YOUR DISCOUNTS OF 36 PERCENT AND 60 PERCENT?" MCCOTTER'S REPRESENTATIVE IS QUOTED AS FOLLOWS:

AGAIN, LET ME VERIFY THAT OUR BID AS SUBMITTED IS VALID AND IS AS WE INTENDED. WE HAVE BEEN IN THIS TYPE OF BUSINESS FOR 23 YEARS AND ARE OPERATING THREE OTHER STORES FOR THE AIR FORCE, AND, AS CAN BE VERIFIED BY THE GAO AND AUDIT STAFFS, VERY SUCCESSFULLY. THERE IS A POSSIBILITY OF LOSS ON CAPTIVE ITEMS; HOWEVER, WE DID NOT BID ON ONE PART, BUT THE WHOLE PACKAGE. WHERE WE LOSE ON CAPTIVE ITEMS WE WILL MORE THAN MAKE UP ON COMMON ITEMS. WE HAVE EVERY INTENTION OF MOVING AS MANY ITEMS AS POSSIBLE OUT OF THE CAPTIVE AREA AND INTO COMMON. WE HAVE ADEQUATE STAFF AND RESEARCH BOOKS TO CONVERT THESE ITEMS, ANY ITEM THAT IS CAPTIVE, AND WE DON'T HAVE A COPY OF THE PRICE LIST AT THE END OF THE TRANSITION PERIOD OF 30 DAYS, WE WILL FURNISH THE AIR FORCE A COPY OF OUR INVOICE FROM THE MANUFACTURER AND DISCOUNT IT AT 60 PERCENT. WE NOW HAVE IN OUR POSSESSION APPROXIMATELY 75 PERCENT TO 80 PERCENT OF THE LISTS IN QUESTION. THE ALLEGATION OF WHEELER BROS., INC. THAT 60 PERCENT DISCOUNT ON CAPTIVE PARTS IS NOT POSSIBLE IS INCORRECT. WE ARE AN ESTABLISHED FORD DEALER OPERATING A DEALERSHIP, IN ADDITION TO THREE PARTS STORES FOR THE AIR FORCE. WE DID IN EXCESS OF $3,000,000 IN SALES LAST YEAR AND THERE ARE A NUMBER OF SUPPLIERS WHO GIVE US A 60 PERCENT DISCOUNT OR BETTER.

ON JULY 31, THE PROCURING ACTIVITY, WHICH WAS APPARENTLY SATISFIED WITH MCCOTTER'S EXPLANATION OF ITS DISCOUNT ON CAPTIVE PARTS, REQUESTED APPROVAL OF IMMEDIATE AWARD TO MCCOTTER ON THE BASIS OF URGENCY FROM AIR FORCE SYSTEMS COMMAND (AFSC), ANDREWS AIR FORCE BASE, MARYLAND, AND OUR OFFICE WAS NOTIFIED OF THE INTENDED AWARD BY HEADQUARTERS UNITED STATES AIR FORCE ON THE SAME DATE. ON AUGUST 1, AFSC GRANTED THE REQUESTED APPROVAL, AND THE AWARD WAS EFFECTED ON AUGUST 4, AS PREVIOUSLY STATED. BY LETTER OF AUGUST 8, MCCOTTER ADVISED THE CONTRACTING OFFICER THAT THE PROCEDURE OF DISCOUNTING INVOICES FOR CAPTIVE PARTS AT 60 PERCENT WOULD BE USED ONLY UNTIL SUCH TIME AS THE PARTICULAR MANDATORY PRICE LIST HAS BEEN ACQUIRED. IN A REPORT DATED AUGUST 25, 1969, ON YOUR TELEGRAPHIC PROTEST, THE DEPARTMENT OF THE AIR FORCE SUSTAINED THE ACTION TAKEN BY THE PROCURING ACTIVITY. THE REPORT STATES THAT YOU IGNORE THE RIGHT OF OTHER BIDDERS TO KNOWINGLY QUOTE PRICES BELOW COST; THAT ALL BIDS WERE EVALUATED STRICTLY IN ACCORDANCE WITH THE IFB PROVISIONS; AND THAT THERE WAS ADEQUATE SUPPORT FOR THE CONTRACTING OFFICER'S DETERMINATION THAT MCCOTTER IS RESPONSIBLE. A LEGAL MEMORANDUM DATED AUGUST 13, 1969, FORWARDED WITH THE REPORT INCLUDES THE FOLLOWING PERTINENT STATEMENTS WITH RESPECT TO YOUR PROTEST: 2. THERE ARE THREE ALLEGATIONS IN THE PROTEST: (1) THAT THE APPARENT LOW BID IS UNBALANCED; (2) THAT IT IS ERRONEOUS, AND (3) THAT IT IS EITHER MISTAKEN OR IRRESPONSIBLE SO AS TO CALL INTO QUESTION THE APPARENT LOW BIDDER'S RESPONSIBILITY.

A. THE ALLEGATION OF UNBALANCE IS ADDRESSED TO THE TWO MAJOR ITEMS TO BE FURNISHED UNDER PART VIII OF THE CONTRACT CALLED COMMON PARTS AND CAPTIVE PARTS. THE CONTRACTOR OFFERS A DISCOUNT OF 36% ON COMMON AND 60% ON CAPTIVE PARTS. SINCE THE GOVERNMENT ESTIMATE ASSIGNS BY FAR THE GREATER DOLLAR VALUE TO CAPTIVE PARTS, IT IS APPARENT WHY THE PROTESTANT'S OFFER OF A 30% DISCOUNT ON CAPTIVE PARTS WAS NOT LOW. HOWEVER, THE GOVERNMENT HAS MADE NO REPRESENTATIONS REGARDING THE RESPECTIVE DOLLAR VALUES ASSIGNED TO CAPTIVE AND COMMON PARTS. AS PART I OF THE SCHEDULE MAKES CLEAR, THE GOVERNMENT'S ESTIMATES ARE BASED ON CALENDAR YEAR 1968 REQUIREMENTS. THE PROTEST DOES NOT INVOLVE THE ISSUE OF REQUIREMENTS BUT OF COST ESTIMATES. EACH BID NECESSARILY INVOLVED A CALCULATION AS TO THE RESPECTIVE QUANTITIES OF COMMON AND CAPTIVE PARTS INCLUDED IN THE ESTIMATED REQUIREMENTS. SINCE THERE IS AN UNDER TERMINABLE AMOUNT OF INTERCHANGEABILITY BETWEEN COMMON AND CAPTIVE PARTS, THE DISCOUNT ASSIGNED TO EACH IS OBVIOUSLY SPECULATIVE. BUT THAT IS IN THE NATURE OF FIXED PRICE BIDS AND IS ONE OF THE RISKS ASSUMED BY THE BIDDERS. THE CONTRACTOR'S BID WAS BASED ON THE ASSUMPTION THAT A SIGNIFICANT PORTION OF THE HIGHER DISCOUNT PARTS COULD BE FURNISHED AT THE LOWER DISCOUNT. THE PROTESTANT'S THEORY WAS THE REVERSE, BASED PRESUMABLY ON HIS EXPERIENCE WITH THE PREVIOUS CONTRACT. THE LATTER OVERLOOKS THE SIGNIFICANT CHANGES MADE IN THE CONTRACT FORMAT (DIRECTED BY AIR FORCE LOGISTICS COMMAND), AND THE FACT THAT AN AUTOMOTIVE PARTS INTERCHANGEABILITY MANUAL, NOT PREVIOUSLY AVAILABLE, WILL ENABLE THIS ACTIVITY TO MAKE GREATER USE OF ADDITIONAL SOURCES AND THEREBY OBTAIN THE COMMON PARTS DISCOUNT.

B. THE CONTRACTOR WAS GIVEN EVERY OPPORTUNITY TO REVIEW HIS BID FOR MISTAKES BUT HAS UNEQUIVOCALLY REAFFIRMED THE CORRECTNESS OF HIS ORIGINAL BID. THE STATEMENT THAT A DISCOUNT OF 60% ON CAPTIVE PARTS IS NOT AVAILABLE IS NOT UNCONDITIONALLY TRUE. IN ADDITION TO BEING A CAR DEALER, THE CONTRACTOR HAS SEVERAL OTHER AUTOMOTIVE PARTS CONTRACTS WITH THE GOVERNMENT AND IS IN A POSITION TO OBTAIN QUANTITY DISCOUNTS THAT MAY BE UNAVAILABLE TO OTHER BIDDERS. MOREOVER, IT DOES NOT FOLLOW THAT THE CONTRACTOR CANNOT GIVE THE GOVERNMENT A 60% DISCOUNT, WHATEVER HIS DISCOUNT ARRANGEMENT WITH THE MANUFACTURER. THE CONTRACTOR'S AUTHORIZED REPRESENTATIVE UNQUIVOCALLY ASSURED THE CONTRACTING OFFICER THAT HE STOOD BY HIS 60% DISCOUNT ON ALL CAPTIVE PARTS.

C. WHETHER THE BID WAS IRRESPONSIBLE GOES NOT TO RESPONSIVENESS BUT TO RESPONSIBILITY AND IS THEREFORE NOT A PROPER GROUND FOR PROTEST. REGARDS THE PRICE LISTS MENTIONED IN PART VIII, ITEM 4, PART V OF THE SCHEDULE MERELY REQUIRES THE CONTRACTOR TO HAVE ON HAND THOSE LISTS OR CATALOGS SELECTED BY HIM. THESE LISTS ARE RADILY AVAILABLE FROM COMMERCIAL ENTERPRISES. IT IS DIFFICULT TO BELIEVE THAT ANY ONE INTERESTED IN OBTAINING SUCH LISTS WOULD HAVE ANY DIFFICULTY IN DOING SO.

THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND FINDINGS READS, IN PART, AS FOLLOWS:

5. COMMENTS ON EACH ALLEGATION OF WHEELER BROS, INC. WIRE DATED 30 JULY 1969 ARE AS FOLLOWS:

A. WHILE THE DISCOUNTS OF 36% FOR COMMON PARTS AND 60% FOR CAPTIVE PARTS ARE UNUSUAL, THEY ARE FOR FROM BEING CONSIDERED UNBALANCED. WHEREAS, A CONTRACTOR MIGHT FEASIBLY LOSE ON SOME CAPTIVE ITEMS, IT IS JUST AS LIKELY THAT HE WILL MORE THAN MAKE UP ON THE COMMON ITEMS. A FORD DEALER AND DOES GET 60% DISCOUNT OR BETTER, IN SOME CASES, AND

B. THIS STATEMENT WAS COMPLETELY ABSOLVED, AS THE LOW BIDDER IS ALSO WOULD BE ABLE TO PASS THESE ALONG TO THE GOVERNMENT.

C. WHEELER BROS. INC. DID NOT EXAMINE THE LOWEST BID; THEY DID, HOWEVER, RECORD THE AMOUNT OF DISCOUNT, BUT WITHOUT KNOWLEDGE OF ENTIRE BID COULD NOT POSSIBLY COME UP WITH AN AMOUNT FOR LOW BIDDER OR MAKE A SUBSTANTIAL STATEMENT AS TO IRRESPONSIBILITY. THERE IS NO INCLUSION IN THE SOLICITATION THAT REQUIRES SUBMISSION OF PRICE SHEETS BEFORE AWARD.

6. MCCOTTER MOTORS, INC. APPEARS TO HAVE THE SAME INTERPRETATION OF THEIR OBLIGATIONS AS THE SOLICITATION SPECIFIED AND HAS NOT IMPOSED CONDITIONS WHICH MODIFY REQUIREMENTS OF THE SOLICITATION OR LIMIT THEIR LIABILITY TO THE GOVERNMENT. THE BID SUBMITTED BY MCCOTTER MOTORS, INC. DID NOT FALL WITHIN ANY CRITERIA INCLUDED IN ASPR 2-404.2.

IN THE BRIEFS FILED IN IMPLEMENTATION OF YOUR TELEGRAPHIC PROTEST, EXCEPTIONS ARE TAKEN TO THE DEPARTMENT'S REPORT OF AUGUST 25 AND TO THE SUPPORTING LEGAL MEMORANDUM AND STATEMENT OF THE CONTRACTING OFFICER. FURTHER, YOUR ATTORNEYS DRAW AN ANALOGY BETWEEN THE INSTANT PROCUREMENT AND A SIMILAR PROCUREMENT AT DOVER AIR FORCE BASE, DELAWARE, AND ACCORDINGLY URGE THAT THE ACTION IN THIS CASE BE THE SAME AS THE ACTIONS WHICH HAVE ALREADY BEEN TAKEN AND THE CURRENT ACTIONS PROPOSED BY THE DEPARTMENT IN THE DOVER CASE.

THE DOVER PROCUREMENT, WHICH WAS INITIATED UNDER AN IFB ISSUED DECEMBER 23, 1968, CONTEMPLATED A CONTRACT COVERING A PERIOD COMMENCING MARCH 1, 1969, OR DATE OF AWARD IF SUBSEQUENT, THROUGH FEBRUARY 28, 1970. BIDS WERE OPENED ON JANUARY 21, 1969, AND ON FEBRUARY 12 YOU PROTESTED TO OUR OFFICE AGAINST CONSIDERATION OF A PROMPT PAYMENT DISCOUNT IN EVALUATING A CERTAIN ITEM IN THE LOW BID, WHICH ALSO QUOTED DISCOUNTS OF 20 PERCENT ON COMMON PARTS AND 50 PERCENT ON CAPTIVE PARTS. PENDING RESOLUTION OF YOUR PROTEST, THE CONTRACTING OFFICER ELECTED TO EXTEND THE EXISTING CONTRACT BEYOND ITS FEBRUARY 28 EXPIRATION DATE UNDER AN OPTION IN THE CONTRACT. IN OUR DECISION B 166170, APRIL 4, 1969, WE DENIED YOUR PROTEST AND HELD THAT AWARD TO THE LOW BIDDER WOULD BE IN ACCORD WITH THE TERMS OF THE IFB AND THE PROCUREMENT STATUTE AND REGULATIONS. SUBSEQUENTLY, THE MILITARY AIRLIFT COMMAND (MAC) DECLINED APPROVAL OF THE AWARD AND DIRECTED THAT ALL BIDS BE REJECTED AND THE PROCUREMENT READVERTISED UNDER A NEW IFB. THE BASIS FOR THIS ACTION WAS THE ALLEGED FAILURE OF THE ORIGINAL IFB TO REQUIRE BIDDERS TO COMMIT THEMSELVES TO PRICE LISTS, THUS RENDERING THEIR TRADE DISCOUNTS OF NO SIGNIFICANT VALUE, AND THE ABSENCE OF A COMMON BASIS FOR BIDDING AND FOR THE EVALUATION OF THE BIDS. IN ADDITION, MAC STATED ITS VIEW THAT THE LOW BID WAS UNBALANCED IN LIGHT OF THE FACT THAT THE DISCOUNTS ON COMMON AND CAPTIVE PARTS ARE NOT IN LINE WITH PREVIOUSLY RECORDED DISCOUNTS ACCORDING TO STATISTICS COMPILED BY THE AIR FORCE LOGISTICS CENTER (AFLC).

THE LOW BIDDER ON THE DOVER PROCUREMENT HAS PROTESTED THE ACTION DIRECTED BY MAC, AND WE HAVE GIVEN CONSIDERATION TO ITS PROTEST CONCURRENTLY WITH CONSIDERATION OF YOUR PROTEST IN THE INSTANT PROCUREMENT. PENDING ISSUANCE OF OUR DECISION IN THE DOVER CASE, THE PREVIOUS CONTRACT HAS REMAINED IN EFFECT PURSUANT TO THE OPTION EXERCISED BY THE CONTRACTING OFFICER PRIOR TO FEBRUARY 28.

SINCE YOUR PROTEST IN THE INSTANT PROCUREMENT WAS FILED WITH OUR OFFICE BEFORE AWARD, YOUR ATTORNEYS URGE THAT, AS IN THE DOVER CASE, THE CONTRACTING OFFICER SHOULD HAVE EXTENDED THE EXISTING CONTRACT WITH YOU BEYOND ITS EXPIRATION DATE OF JULY 31, 1969, PENDING ISSUANCE OF OUR DECISION IN THE MATTER. FURTHER, YOUR ATTORNEYS ASSERT THAT IN LIGHT OF THE OPTION IN THE EXISTING CONTRACT, CONTINUITY OF SERVICE COULD HAVE BEEN ASSURED BY ITS EXERCISE; ACCORDINGLY, IT IS ASSERTED, THE STATEMENT OF THE CONTRACTING OFFICER THAT THERE WAS NEED FOR AWARD UNDER THE IFB IS WITHOUT MERIT.

ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-407.9(B)(2) AND (3), RELATING TO PROTESTS AGAINST AWARD, PERMITS AWARD PRIOR TO OUR DECISION ON A PREAWARD PROTEST FILED WITH OUR OFFICE, UPON APPROVAL OF PROPER AUTHORITY WITHIN THE CONTRACTING AGENCY AT A LEVEL HIGHER THAN THE CONTRACTING OFFICER, WHERE THE CONTRACTING OFFICER DETERMINES THAT (1) THE PROCUREMENT ITEMS ARE URGENTLY REQUIRED; (2) DELIVERY OR PERFORMANCE WILL BE UNDULLY DELAYED BY FAILURE TO MAKE AWARD PROMPTLY; OR (3) A PROMPT AWARD WILL OTHERWISE BE ADVANTAGEOUS TO THE GOVERNMENT.

ASPR 1-1505(C), RELATING TO OPTIONS, PROVIDES THAT OPTIONS SHOULD BE EXERCISED ONLY IF IT IS DETERMINED THAT (1) FUNDS ARE AVAILABLE; (2) THE REQUIREMENT COVERED BY THE OPTION FULFILLS AN EXISTING NEED OF THE GOVERNMENT; AND (3) THE EXERCISE OF THE OPTION IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

SUCH REGULATIONS CONTEMPLATE DECISIONS IN EACH PROCUREMENT BASED ON THE PARTICULAR CIRCUMSTANCES INVOLVED. ACCORDINGLY, A DECISION IN ONE PROCUREMENT DOES NOT GOVERN DISPOSITION OF A SIMILAR PROCUREMENT.

IN THE INSTANT CASE, THE GOVERNMENT ESTIMATE OF PARTS CONSUMPTION SET FORTH FOR EACH OF THE SIX PARTS ITEMS IN PART VIII, WHICH IS STATED TO BE BASED ON EXPENDITURES FOR THE PREVIOUS YEAR (UNDER THE CONTRACT WITH YOU WHICH EXPIRED ON JULY 31, 1969, ONE DAY AFTER YOUR PROTEST WAS FILED WITH OUR OFFICE), TOTALED $1,326,000. ALL THREE BIDS RECEIVED UNDER THE IFB WERE LOWER THAN THE GOVERNMENT TOTAL, WITH THE LARGEST DIFFERENTIAL, AMOUNTING TO MORE THAN $600,000, BEING BETWEEN MCCOTTER'S LOW NET PRICE OF $723,409 AND THE GOVERNMENT ESTIMATE. SUCH FACTORS CLEARLY INDICATE THAT AWARD UNDER THE IFB WOULD COST THE GOVERNMENT SUBSTANTIALLY LESS THAN CONTINUING PROCUREMENT UNDER THE EXISTING CONTRACT. IN THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT EITHER THE DETERMINATION BY THE CONTRACTING OFFICER AS TO THE MAKING OF AWARD TO THE LOW BIDDER BEFORE DECISION ON YOUR PROTEST BY OUR OFFICE, OR THAT AS TO DECLINING TO EXERCISE THE OPTION IN YOUR EXISTING CONTRACT, WAS NOT ADVANTAGEOUS TO THE GOVERNMENT, AND THEREFORE WE MUST REGARD THEM AS PROPERLY WITHIN THE AUTHORITY GRANTED TO THE CONTRACTING OFFICER BY THE PROCUREMENT REGULATIONS.

AS TO THE ACTION WHICH WAS TAKEN BY THE DOVER PROCURING OFFICE WITH RESPECT TO EXERCISE OF THE OPTION IN THE PREVIOUS YEAR'S CONTRACT, WE HAVE NO INFORMATION AS TO THE BASIS THEREOF. HOWEVER, WE HAVE NO REASON TO SUSPECT, AND YOU DO NOT CLAIM, THAT SUCH ACTION WAS TAKEN WITHOUT THE DETERMINATION REQUIRED BY ASPR 1-1505(C) THAT EXERCISE OF THE OPTION WAS MOST ADVANTAGEOUS TO THE GOVERNMENT PRICE AND OTHER FACTORS CONSIDERED.

ON THE MATTER OF THE DISCOUNTS OFFERED BY MCCOTTER, YOUR ATTORNEYS RAISE SEVERAL ISSUES. IN LINE WITH YOUR ORIGINAL CHARGE THAT THE BID IS UNBALANCED BECAUSE THE CAPTIVE PARTS DISCOUNT EXCEEDS THE COMMON PARTS DISCOUNT, YOUR ATTORNEYS CITE AS SUPPORT FOR YOUR POSITION THE VIEW OF MAC IN THE DOVER CASE THAT THE LOW BID OFFERING 20 PERCENT ON COMMON PARTS AND 50 PERCENT ON CAPTIVE PARTS IS UNBALANCED. ACCORDINGLY, YOUR ATTORNEYS URGE, THE MCCOTTER BID SHOULD HAVE BEEN REJECTED JUST AS MAC HAS DIRECTED IN THE DOVER CASE.

THE FACT THAT A BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE, NOR DOES SUCH FACTOR OF ITSELF INVALIDATE AN AWARD OF A CONTRACT TO SUCH BIDDER. AS WAS STATED BY THE COURT IN FRANK STAMATO & CO. V CITY OF NEW BRUNSWICK, 90 A. 2D. 34, 36 (1952), "THERE MUST BE PROOF OF COLLUSION OR OF FRAUDULENT CONDUCT ON THE PART OF SUCH BIDDER *** OR PROOF OF OTHER IRREGULARITY OF SUCH SUBSTANTIAL NATURE AS WILL OPERATE TO AFFECT FAIR AND COMPETITIVE BIDDING." THEREFORE, WHERE A BIDDER HAS CONFIRMED A BID WHICH APPEARS TO BE UNBALANCED AND THERE IS NO INDICATION THAT THE BID IS NOT AS INTENDED OR EVIDENCE OF ANY IRREGULARITY, WE HAVE HELD THAT THE BID MAY BE ACCEPTED IF IT IS OTHERWISE THE LOWEST ACCEPTABLE BID AND THE BIDDER IS RESPONSIBLE. 38 COMP. GEN. 572, 574 (1959); B-161928, AUGUST 8, 1967; B- 164736, DECEMBER 2, 1968, AFFIRMED JUNE 10, 1969. SEE, ALSO, OUR DECISION B 166170 OF TODAY (ON THE DOVER CASE) TO THE SECRETARY OF THE AIR FORCE.

IN VIEW OF THE INFORMATION OF RECORD THAT MCCOTTER MAY BE IN A POSITION TO OBTAIN A 60 PERCENT DISCOUNT ON CAPTIVE PARTS OTHER THAN FORD PARTS, AND OF THE UNEQUIVOCAL CONFIRMATION BY MCCOTTER OF ITS BID, IT IS OUR VIEW THAT THE ASSERTED UNBALANCING OF THE BID DOES NOT RENDER IT NONRESPONSIVE TO THE IFB NOR DOES IT AFFECT THE VALIDITY OF THE CONTRACT AWARDED TO MCCOTTER.

WITH RESPECT TO MCCOTTER'S STATEMENTS REGARDING ITS INTENT TO MOVE AS MANY ITEMS AS POSSIBLE FROM THE CAPTIVE AREA INTO THE COMMON, YOUR ATTORNEYS CONTEND THAT SUCH ACTION WILL SUBVERT THE CONTRACT AND REDUCE THE 60 PERCENT BID DISCOUNT ON CAPTIVE PARTS TO A SHAM. TO PERMIT MCCOTTER TO TAKE SUCH ACTION AT ITS OWN DISCRETION, IT IS ARGUED, RAISES THE QUESTION WHETHER THE CONTRACTING OFFICER IS SERVING THE GOVERNMENT OR THE CONTRACTOR. FURTHER, IT IS URGED THAT THE CONTRACTING OFFICER SHOULD EXERCISE THE RIGHT RESERVED BY THE GOVERNMENT IN PART VIIII) TO REQUEST PARTS BY BRAND NAME AND THEREBY MAKE THEM CAPTIVE AND SUBJECT TO THE 60 PERCENT DISCOUNT.

THE PROCURING ACTIVITY STATES THAT THE DETERMINATION WHETHER A PART IS CAPTIVE OR COMMON WILL BE MADE BY THE CONTRACTING OFFICER AND HIS LEGAL ADVISOR BASED ON THE CONTRACT DEFINITIONS AND THE AUTOMOTIVE PARTS INTERCHANGEABILITY MANUAL WHICH IS NOW AVAILABLE FOR USE BY THE PROCURING ACTIVITY. THIS PROCEDURE, IT IS INDICATED, IS INTENDED TO PRECLUDE A SITUATION ENCOUNTERED IN THE PAST, IN WHICH CLASSIFICATION OF PARTS WAS LEFT TO THE CONTRACTOR'S DISCRETION WITH THE RESULT THAT MANY HIGH DISCOUNT PARTS WERE CONVERTED TO CAPTIVE PARTS AND SOLD TO THE GOVERNMENT AT NO DISCOUNT AND AN IMBALANCE WAS THEREBY CREATED BETWEEN COMMON AND CAPTIVE PARTS. IT IS THIS IMBALANCE WHICH THE NEW IFB IS INTENDED TO AVOID. CONCEDING THAT BY REQUESTING A PART BY BRAND NAME THE GOVERNMENT COULD IN THEORY OBTAIN THE HIGHER DISCOUNT ON ANY PART UNDER THE CONTRACT, THE PROCURING ACTIVITY NEVERTHELESS STATES THAT SUCH A SWEEPING REVISION OF THE CONTRACT FORMAT WAS NOT INTENDED AND SHOULD NOT BE READ INTO PART IIII). RATHER, IT IS STATED, SUCH PROVISION EVIDENCES THE GOVERNMENT'S INTENT NOT TO BE BOUND BY PAST PRACTICE AND AN EFFORT BY THE GOVERNMENT TO ESTABLISH BY THE CONTRACT LANGUAGE THE CORRECT DESIGNATION OF EACH PART. "ANY OTHER CONSTRUCTION," IT IS STATED, "WOULD CONSTITUTE AN OVERREACHING ON THE PART OF THE GOVERNMENT AS TO AMOUNT TO FRAUD. IF THE GOVERNMENT DECIDED THAT BY VIRTUE OF THE QUOTED LANGUAGE, IT COULD PIN THE LABEL OF 'CAPTIVE' PART ON WHAT IS UNIVERSALLY CONSIDERED A 'COMMON' PART, THEREBY BOOSTING THE DISCOUNT AVAILABLE TO IT, SUCH PRACTICE WOULD NOT BE WITHIN THE SPIRIT AND INTENT OF THE AGREEMENT, ALTHOUGH ARGUABLY WITHIN ITS LETTER."

TO THE EXTENT THAT THE PROPER ADMINISTRATION OF THE CONTRACT AND THE FACTS OF EACH CASE PERMIT REVERSAL OF A PREVIOUS INCORRECT PART LABEL, IT IS STATED, THE GOVERNMENT WILL ABIDE BY THE FACTS AND MAY BE SAID TO ENCOURAGE INTERCHANGEABILITY. SUCH ACTION, IT IS ASSERTED, WILL BE ADVANTAGEOUS TO THE GOVERNMENT, FIRST, BECAUSE IT WILL RESULT IN LOWER COSTS, AS HAS ALREADY BEEN INDICATED BY THE SUBSTANTIAL SAVINGS OBTAINED DURING THE FIRST TWO MONTHS OF THE MCCOTTER CONTRACT AND SECOND, BECAUSE IT WILL RESTORE THE PROPER NOMENCLATURE TO THE PREVIOUSLY MISLABELED PARTS. ACCORDINGLY, IT IS REPORTED, WHILE THERE MAY BE CONVERSION FROM HIGH TO LOW DISCOUNT PARTS, SUCH ACTION WILL NOT BE DONE IN SUBVERSION OF THE CONTRACT BUT WILL BE MADE ONLY BECAUSE THE PARTS WERE ERRONEOUSLY LABELED IN THE PAST; HOWEVER, NO PART THAT IS TRULY "CAPTIVE," AS DEFINED IN THE CONTRACT, WILL BE CHANGED TO "COMMON."

AS TO THE ADMINISTRATION OF THE CONTRACT, THE PROCURING ACTIVITY STATES THAT THE CONTRACTOR WILL BE RIGIDLY HELD TO THE MOST PUNCTILIOUS OBSERVANCE OF THE CONTRACT REQUIREMENTS; FURTHER, THERE IS NO EVIDENCE THAT THE CONTRACTING OFFICER HAS PERMITTED, OR EVER WILL PERMIT, THE CONTRACTOR TO REFUSE TO FILL ANY ORDERS OR PERMIT A SHAM COMPLIANCE WITH THE CONTRACT.

ANOTHER FACTOR ON WHICH YOUR ATTORNEYS RAISE SEVERAL QUESTIONS IS THE PRICE LISTS WHICH ARE TO BE USED UNDER THE CONTRACT. ALTHOUGH THE RECORD DOES NOT EVIDENCE THAT ANY QUESTION WAS RAISED BY YOU OR BY ANY OTHER BIDDER BEFORE BID OPENING AS TO THE IFB PROVISIONS RELATING TO THE FURNISHING AND USE OF PRICE LISTS, YOUR ATTORNEYS NOW CONTEND THAT THE IFB IS DEFECTIVE BECAUSE IT DOES NOT REQUIRE BIDDERS TO COMMIT THEMSELVES TO ANY PRICE LISTS. IN THIS CONNECTION, YOUR ATTORNEYS AGAIN CITE THE DOVER PROCUREMENT, WHICH THE MILITARY AIRLIFT COMMAND CONSIDERS TO BE DEFECTIVE AS STATED ABOVE. YOUR ATTENTION IS DIRECTED, HOWEVER TO OUR DECISION OF TODAY, B-166170, TO THE SECRETARY OF THE AIR FORCE, STATING OUR CONCLUSION THAT THE DOVER IFB REQUIRES THE USE OF ALL OF THE PRICE LISTS INCORPORATED IN THE IFB. A COPY OF THE DECISION IS ENCLOSED.

ALTHOUGH THE PRICE LIST PROVISIONS IN THIS IFB DIFFER TO SOME DEGREE FROM THE CORRESPONDING PROVISIONS IN THE DOVER IFB, WHICH HAS BUT ONE SET OF PRICE LISTS, WE ARE COMPELLED TO REACH A SIMILAR CONCLUSION IN THIS PROCUREMENT. PART V REQUIRED BIDDERS TO IDENTIFY IN THEIR BIDS THOSE APPENDIX B PRICE LISTS WHICH THEY PROPOSED TO USE DURING THE CONTRACT, AND ITEM 4 OF PART VIII REQUIRED BIDDERS TO CHECK OFF THE NAMES OF THE MANUFACTURERS OF CAPTIVE PARTS WHOSE PRICE LISTS WOULD BE USED TO FURNISH CAPTIVE PARTS AS REQUIRED UNDER THE CONTRACT. SUCH PROVISIONS, IN OUR VIEW, REQUIRE COMMITMENT TO SPECIFIC PRICE LISTS.

AS TO THE APPENDIX B PRICE LISTS, WE ARE ADVISED BY THE AIR FORCE THAT NO BIDDER CHECKED OFF ANY OF THE PRICE LISTS EITHER IN THE ORIGINAL APPENDIX OR IN THE SUPPLEMENT ADDED BY THE AMENDMENT WHICH ALL BIDDERS ACKNOWLEDGED. IN THE CIRCUMSTANCES, THE PROCURING ACTIVITY STATES, ALL THREE BIDS WERE REGARDED AS INDICATING AGREEMENT TO BE BOUND BY ALL OF THE APPENDIX B PRICE LISTS. WHILE WE BELIEVE THAT BOTH PART V AND THE LANGUAGE IN PART VIII, RELATING TO RESPONSIVENESS OF BIDS, CONTEMPLATED A SPECIFIC STATEMENT IN EACH BID AS TO THE APPENDIX B PRICE LISTS WHICH WERE TO BE USED IN PERFORMING THE CONTRACT, WE ARE UNABLE TO CONCLUDE THAT THE PROCURING ACTIVITY'S INTERPRETATION OF THE BIDS (WHICH WOULD APPEAR TO HAVE BEEN THE INTERPRETATION OF ALL THE BIDDERS AS WELL), WAS UNREASONABLE. NOR DO WE BELIEVE THAT ANY UNFAIRNESS MAY BE CLAIMED BY YOU OR B&D SINCE NO BIDDER COMPLIED WITH THE REQUIREMENT OF PART V.

AS TO COMMITMENT TO THE ITEM 4 CAPTIVE PARTS PRICE LISTS IN PART VIII, YOUR ATTORNEYS CONTEND THAT AGREEMENT TO USE THE PRICE LIST OF A STATED MANUFACTURER DOES NOT NECESSARILY COMMIT A BIDDER TO ANY PARTICULAR LIST OF THE MANUFACTURER AND IN THIS CASE COULD LEAD TO FAILURE TO SUPPLY THE BULK OF THE PARTS FROM THE STATED MANUFACTURERS AS CAPTIVE PARTS. BY WAY OF EXAMPLE, YOUR ATTORNEYS STATE THAT MCCOTTER IS USING S-K WAYNE TOOLS PRICE LIST FOR WAYNE PARTS; A CATERPILLER SUPPLEMENT FOR CATERPILLAR PARTS; A THEW-LORAIN SUPPLEMENT FOR THEW-LORAIN PARTS; AND CHICAGO PNEUMATIC AIR TOOLS AND AUTO EQUIPMENT PRICE LIST SP-3029-16 FOR CHICAGO PNEUMATIC PARTS. IN ADDITION, YOUR ATTORNEYS CITE NINE SUPPLY ORDERS AGAINST CHICAGO PNEUMATIC WHICH IT IS CLAIMED MCCOTTER HAS REFUSED TO ACCEPT.

THE CONTRACTING OFFICER REPORTS THAT IN ADDITION TO THE PRICE LISTS WHICH ARE IDENTIFIED BY YOUR ATTORNEYS AS BEING USED BY MCCOTTER, THERE ARE ON FILE PRICE LISTS FOR WAYNE SWEEPERS, CATERPILLAR AND THEW-LORAIN WHICH ARE BEING USED AS REQUIRED BY THE CONTRACT. FURTHER, THE CONTRACTING OFFICER HAS VERIFIED WITH CHICAGO PNEUMATIC THAT IT IS FURNISHING TO MCCOTTER A PRICE LIST FOR EACH UNIT ACCORDING TO SERIAL NUMBER, AS EACH REQUIREMENT IS RECEIVED FROM MCCOTTER, A PROCEDURE WHICH HAS BEEN ARRANGED BECAUSE OF THE BULK OF CHICAGO PNEUMATIC'S COMPLETE PRICE LIST.

WITH RESPECT TO THE REFUSAL BY MCCOTTER TO ACCEPT NINE ORDERS FOR CHICAGO PNEUMATIC ITEMS, THE CONTRACTING OFFICER REPORTS THAT SUCH ORDERS WERE FOR STATIONARY EQUIPMENT, WHICH ARE NOT PARTS FOR SUPPORT EQUIPMENT HAVING APPLICATION TO MOTOR VEHICLES, AS CONTEMPLATED BY PART I OF THE IFB. ACCORDINGLY, THE CONTRACTING OFFICER VIEWS MCCOTTER'S REFUSAL AS A RIGHT. WE CONCUR WITH SUCH VIEW, WITH THE OBSERVATION THAT, SINCE THE CONTRACT DOES NOT COVER STATIONARY EQUIPMENT, THE ORDERS SHOULD NOT HAVE BEEN PLACED UNDER THE CONTRACT IN THE FIRST INSTANCE.

AS TO MCCOTTER'S FAILURE TO HAVE ON HAND AT THE TIME OF AWARD ALL OF THE PRICE LISTS TO WHICH IT COMMITTED ITSELF UNDER THE CONTRACT, OBVIOUSLY SUCH REQUIREMENT WAS NOT TO BE MET UNTIL AFTER BID OPENING. ACCORDINGLY, NONCOMPLIANCE THEREWITH DOES NOT AFFORD A BASIS FOR DECLARING THE MCCOTTER BID NONRESPONSIVE BUT RELATES TO PERFORMANCE OF THE CONTRACT. FURTHER, WHILE MCCOTTER MAY BE TARDY IN MEETING SUCH REQUIREMENT, THERE IS NO EVIDENCE THAT IN SUBMITTING ITS BID MCCOTTER ACTED IN OTHER THAN GOOD FAITH IN OFFERING TO USE THE PRICE LISTS OF THOSE MANUFACTURERS IN THE CAPTIVE PARTS LIST WHOSE NAMES MCCOTTER CHECKED IN ITS BID. IN ADDITION, MCCOTTER HAS STATED IN ITS LETTER OF AUGUST 8 THAT THE USE OF INVOICES DISCOUNTED AT 60 PERCENT FOR THOSE CAPTIVE PARTS FOR WHICH MCCOTTER DOES NOT HAVE PRICE LISTS IS BUT A TEMPORARY MEASURE, TO BE DISCONTINUED AS SOON AS THE PARTICULAR PRICE LISTS ARE AVAILABLE.

IN LIGHT OF THE FOREGOING, WE ARE UNABLE TO CONCLUDE THAT THE IFB WAS DEFECTIVE WITH RESPECT TO COMMITMENT TO PRICE LISTS AND BID EVALUATION. FURTHER, WE LIKEWISE ARE UNABLE TO FIND SUPPORT FOR THE ARGUMENT THAT MCCOTTER HAS SOUGHT TO EVADE THE PRICE LIST FURNISHING REQUIREMENT OF THE CONTRACT.

FOR THE REASONS STATED, WE SEE NO LEGAL BASIS FOR CANCELLATION OF THE AWARD TO MCCOTTER. ACCORDINGLY, YOUR PROTEST IS DENIED.