B-167696, JANUARY 20, 1970, 49 COMP. GEN. 437

B-167696: Jan 20, 1970

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EACH REQUISITION RECEIVED BY AN ORDERING ACTIVITY FROM A DEPOT IS AN INTERNAL DOCUMENT AND THE ORDERING OFFICE HAS THE RIGHT TO COMBINE TWO OR MORE REQUISITIONS. THE PROCURING ACTIVITY IS OBLIGED TO OBTAIN THE SUPPLIES UNDER A SEPARATE PROCUREMENT TO ENABLE THE GOVERNMENT TO EXPLORE THE POSSIBILITY OF SECURING LOWER PRICES FOR LARGER QUANTITIES. FUTURE PROCUREMENTS SHOULD STATE WHAT WILL CONSTITUTE AN ORDER WITHIN THE MAXIMUM LIMITATION CLAUSE OF THE CONTRACT. 1970: REFERENCE IS MADE TO YOUR LETTER. OR DATE OF AWARD WHICHEVER IS LATER. WILL APPLY UNIFORMLY TO ALL ITEMS IN THE SCHEDULE. (G) WHERE MAXIMUM DOLLAR LIMITATIONS ARE NOT ESTABLISHED FOR SINGLE ITEMS. THE ITEMS SCHEDULED TO BE PURCHASED UNDER THE ABOVE CITED IFB ARE LISTED AS 180 CARTONS OF THE IDENTICAL PAPER CALLED FOR BY YOUR REQUIREMENTS CONTRACT.

B-167696, JANUARY 20, 1970, 49 COMP. GEN. 437

CONTRACTS -- REQUIREMENTS -- MAXIMUM LIMITATIONS -- WHAT CONSTITUTES UNDER A GENERAL SERVICES ADMINISTRATION REQUIREMENTS CONTRACT FOR CARBONLESS TRANSFER PAPER THAT CONTAINED A $7,500 MAXIMUM ORDER LIMITATION, THE COMBINATION OF REQUISITIONS RECEIVED FROM DIFFERENT SUPPLY DEPOTS WITHIN THE SAME ZONE FOR THE SAME ITEM THAT EXCEEDS THE LIMITATION AND THE ISSUANCE OF A NEW PROCUREMENT, DOES NOT VIOLATE THE TERMS OF THE REQUIREMENTS CONTRACT. EACH REQUISITION RECEIVED BY AN ORDERING ACTIVITY FROM A DEPOT IS AN INTERNAL DOCUMENT AND THE ORDERING OFFICE HAS THE RIGHT TO COMBINE TWO OR MORE REQUISITIONS, AND SHOULD THE COMBINATION EXCEED THE DOLLAR LIMITATION, THE PROCURING ACTIVITY IS OBLIGED TO OBTAIN THE SUPPLIES UNDER A SEPARATE PROCUREMENT TO ENABLE THE GOVERNMENT TO EXPLORE THE POSSIBILITY OF SECURING LOWER PRICES FOR LARGER QUANTITIES, BUT FUTURE PROCUREMENTS SHOULD STATE WHAT WILL CONSTITUTE AN ORDER WITHIN THE MAXIMUM LIMITATION CLAUSE OF THE CONTRACT.

TO THE BARTON, DUER & KOCH PAPER COMPANY, JANUARY 20, 1970:

REFERENCE IS MADE TO YOUR LETTER, WITH ENCLOSURES, DATED AUGUST 11, 1969, IN WHICH YOU PROTESTED AGAINST THE ALLEGED CIRCUMVENTION OF THE GENERAL SERVICES ADMINISTRATION'S OBLIGATION TO COMPLY WITH THE TERMS OF YOUR REQUIREMENTS CONTRACT NO. GS-OOS-66381, BY THE ISSUANCE OF INVITATION FOR BIDS (IFB) NO. SFAIS-1-70, BY THE GENERAL SERVICES ADMINISTRATION (GSA), FEDERAL SUPPLY SERVICE, SAN FRANCISCO, CALIFORNIA.

YOUR CONTRACT COVERS THE FURNISHING OF FSC CLASS 7530--CARBONLESS TRANSFER PAPER, TO FULFILL REQUIREMENTS FOR THE PRODUCT FOR GSA SUPPLY DEPOTS IN ZONE 4 (BELL, CALIFORNIA; STOCKTON, CALIFORNIA; AUBURN, WASHINGTON) FROM MARCH 1, 1969, OR DATE OF AWARD WHICHEVER IS LATER, THROUGH FEBRUARY 28, 1970. PARAGRAPH 3 OF THE CONTRACT'S SPECIAL PROVISIONS RESTRICTED THE MAXIMUM QUANTITY OF ITEMS TO BE ORDERED OR FURNISHED UNDER THE CONTRACT AS FOLLOWS:

THE TOTAL DOLLAR VALUE OF ANY ORDER PLACED UNDER THIS CONTRACT SHALL NOT EXCEED $7,500.00.

THE CONTRACTOR AGREES NOT TO ACCEPT OR FULFILL ANY ORDERS IN VIOLATION OF THIS PROVISION. VIOLATION MAY RESULT IN TERMINATION OF THE CONTRACT PURSUANT TO THE CLAUSE OF THE GENERAL PROVISIONS ENTITLED DEFAULT.

PARAGRAPH 41 CFR 5A-73.112(F) AND (G) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDE FOR MAXIMUM ORDER LIMITATIONS AS FOLLOWS:

(F) WHERE THE MAXIMUM ORDER LIMITATIONS, BOTH AS TO TOTAL VALUE OF ORDERS, AND SINGLE ITEMS, WILL APPLY UNIFORMLY TO ALL ITEMS IN THE SCHEDULE, THE FOLLOWING PROVISIONS SHALL BE USED:

MAXIMUM ORDER LIMITATION

THE TOTAL DOLLAR VALUE OF ANY ORDER PLACED UNDER THIS CONTRACT SHALL NOT EXCEED $------------: PROVIDED, THAT THE DOLLAR VALUE FOR ANY SINGLE ITEM ORDERED, WHETHER ORDERED SEPARATELY OR IN COMBINATION WITH OTHER ITEMS, SHALL NOT EXCEED $------------. THE CONTRACTOR AGREES NOT TO ACCEPT OR FULFILL ANY ORDERS IN VIOLATION OF THIS PROVISION. VIOLATION MAY RESULT IN TERMINATION OF THE CONTRACT PURSUANT TO THE CLAUSE OF THE GENERAL PROVISIONS ENTITLED DEFAULT.

(G) WHERE MAXIMUM DOLLAR LIMITATIONS ARE NOT ESTABLISHED FOR SINGLE ITEMS, THE PROVISION IN (F), ABOVE, SHALL BE USED WITHOUT THE PROVISO IN THE FIRST SENTENCE.

THE ITEMS SCHEDULED TO BE PURCHASED UNDER THE ABOVE CITED IFB ARE LISTED AS 180 CARTONS OF THE IDENTICAL PAPER CALLED FOR BY YOUR REQUIREMENTS CONTRACT, FOR THE GSA SUPPLY FACILITY AT STOCKTON, CALIFORNIA, AND 180 CARTONS OF THE SAME PAPER FOR THE GSA SUPPLY FACILITY AT BELL, CALIFORNIA. AT YOUR CONTRACT PRICE OF $39.52 PER CARTON DELIVERED IN ZONE 4, THE COST OF THE 180 CARTONS FOR EACH DEPOT WOULD BE $7,113.60, OR A TOTAL OF $14,227.20 FOR THE TOTAL QUANTITY FOR WHICH BIDS ARE SOLICITED.

YOU ARGUE THAT THESE REQUIREMENTS SHOULD BE FULFILLED THROUGH ORDERS EXECUTED BY GSA PURSUANT TO YOUR PRESENT CONTRACT. IT IS YOUR CONTENTION THAT TWO ORDERS WILL BE ISSUED BY GSA, SAN FRANCISCO, EACH OF WHICH WILL BE LESS THAN YOUR DOLLAR LIMITATION, AND THAT THIS IS A VIOLATION OF YOUR CONTRACT. YOU ARGUE THAT YOUR INTERPRETATION AND PAST GOVERNMENT INTERPRETATION OF AN ORDER, AS USED IN PARAGRAPH 3 OF YOUR CONTRACT, AS QUOTED ABOVE, MEANS ONE ITEM, ORDERED AT ONE TIME, FOR SHIPMENT AT ONE TIME, TO ONE DESTINATION.

GSA STATES ITS POSITION CONCERNING THE MAXIMUM ORDER LIMITATION AS FOLLOWS:

THE FACT THAT THE SAN FRANCISCO OFFICE RECEIVED TWO REQUISITIONS FOR THE ITEM INVOLVED IS, OF COURSE, IMMATERIAL TO THE OBLIGATIONS OF THE PARTIES STATED ABOVE. EACH REQUISITION IS AN INTERNAL DOCUMENT STATING THE NEEDS OF A GOVERNMENT DEPOT AND IS NOT "ANY ORDER PLACED UNDER THIS CONTRACT." THIS PHRASE REFERS TO AN ORDER WHICH IS ISSUED BY THE GOVERNMENT TO THE CONTRACTOR. CONSEQUENTLY, THE DETERMINATIVE FACTOR IS THE SIZE OF THE ORDER THAT THE GOVERNMENT WOULD HAVE HAD TO PLACE WITH BARTON IN ORDER TO SATISFY ITS KNOWN NEEDS AT THE TIME THAT THE ORDER WAS PLACED. INDICATED IN MR. LEE'S (CONTRACTING OFFICER) LETTER TO BARTON (ENCLOSURE 3), THAT WOULD HAVE GENERATED AN ORDER OF $14,227.20. SINCE SUCH AN ORDER WOULD EXCEED THE $7,500 LIMITATION THE GOVERNMENT NOT ONLY WAS NOT REQUIRED TO PLACE THE ORDER WITH BARTON BUT BARTON, UNDER THE TERMS OF CLAUSE 3, WAS BARRED FROM FILLING AN ORDER OF THAT SIZE.

UNDER THE CONTRACT PROVISION FIXING THE MAXIMUM LIMITATION ON THE DOLLAR VALUE OF ANY ORDER PLACED UNDER THE CONTRACT, THE MEANING GIVEN TO THE TERM AN "ORDER" BECOMES CONTROLLING IN THIS INSTANCE. IN THIS REGARD, WE MUST AGREE WITH GSA'S POSITION THAT A REQUISITION RECEIVED BY A GSA ORDERING ACTIVITY FROM A DEPOT IS AN INTERNAL DOCUMENT, AND THAT THE ORDERING OFFICE HAS THE RIGHT TO COMBINE TWO OR MORE REQUISITIONS FROM DIFFERENT SUPPLY DEPOTS WITHIN THE SAME ZONE FOR THE SAME ITEM, AND ISSUE A SINGLE ORDER THEREFOR TO A CONTRACTOR. YOUR DEFINITION OF AN ORDER AS "ONE ITEM, ORDERED AT ONE TIME, FOR SHIPMENT AT ONE TIME, TO ONE DESTINATION," WOULD PREVENT AN ORDERING ACTIVITY FROM CONSOLIDATING REQUIREMENTS OF USING ACTIVITIES, CONTRARY TO THE APPARENT INTENT OF GSA BULLETIN FPMR E-50, WHICH REQUIRES CONSOLIDATION OF REQUIREMENTS SO AS TO TAKE ADVANTAGE OF PRICE SAVINGS AVAILABLE THROUGH SEPARATE PROCUREMENT OF QUANTITIES WHICH EXCEED THE MAXIMUM ORDER LIMITATIONS. IN FACT, THE PURPOSE OF PLACING A MAXIMUM LIMITATION CLAUSE IN REQUIREMENTS CONTRACTS IS TO ENABLE THE GOVERNMENT TO EXPLORE THE POSSIBILITIES OF SECURING LOWER PRICES FOR LARGER QUANTITIES EXCEEDING THE LIMITATION (41 CFR SEC. 5A- 73.112(A)), AND WHERE A MAXIMUM LIMITATION HAS BEEN PLACED ON THE DOLLAR AMOUNT OF EACH ORDER, THE QUESTION RESULTS IN EACH INSTANCE AS TO WHETHER THE DOLLAR AMOUNT OF THE ITEMS TO BE PURCHASED, KNOWN AT THE TIME THE ORDER IS READY TO BE PLACED, EXCEEDS THE MAXIMUM ORDER LIMITATION AS STATED IN THE REQUIREMENTS CONTRACT. CF. B-31026, JANUARY 18, 1943. SO, AN ORDER MAY NOT BE PLACED BY THE ORDERING ACTIVITY NOR MAY AN ORDER BE ACCEPTED BY THE CONTRACTOR.

WE REALIZE THE ABOVE INTERPRETATION OF AN ORDER PLACES MUCH DISCRETION IN THE HANDS OF THE PROCURING ACTIVITY, BUT UNTIL WE ARE SHOWN THAT THE CONSOLIDATION OF REQUIREMENTS OF SEVERAL DEPOTS INTO SINGLE ORDERS IS IN VIOLATION OF YOUR CONTRACT, CONTROLLING REGULATIONS OR DIRECTIVES, OR WAS MADE IN BAD FAITH, WE DO NOT FEEL THAT WE SHOULD LIMIT THE AGENCY'S AUTHORITY TO CONSOLIDATE REQUISITIONS FROM SUPPLY DEPOTS WITHIN A ZONE. TO HOLD THAT THE AGENCY MUST ISSUE A SEPARATE ORDER FOR EACH SUPPLY DEPOT REQUISITION, WHILE REQUISITIONS FOR THE SAME ITEM FROM OTHER DEPOTS WITHIN THE SAME ZONE ARE PENDING, WOULD GREATLY MINIMIZE THE EFFECTIVENESS OF THE MAXIMUM ORDER LIMITATION CLAUSE SET FORTH IN 41 CFR 5A-73.112(F), CITED ABOVE.

YOUR CONTENTION THAT TWO ORDERS WILL BE ISSUED BY GSA SAN FRANCISCO IN THE NEW SOLICITATION, EACH LESS THAN YOUR DOLLAR LIMITATION, IGNORES THE FACT THAT AN ORDER CANNOT BE PLACED UNDER YOUR CONTRACT EXCEEDING THE MAXIMUM ORDER LIMITATIONS SET FORTH THEREIN. THE SUBSEQUENT QUESTION OF THE METHOD OF PROCEEDING UNDER A NEW PROCUREMENT CANNOT AFFECT THE DETERMINATION THAT A NEW PROCUREMENT OF SOME TYPE IS REQUIRED, IF THE ORDERING ACTIVITY DESIRES TO PROCURE THE GOODS. THE FACT THAT THE ENTIRE QUANTITY TO BE PROCURED WILL NOT BE DELIVERED TO A SINGLE DESTINATION DOES NOT, IN OUR OPINION, PREVENT THE ENTIRE TRANSACTION FROM BEING A SINGLE CONTRACT UNDER THE IFB OR A SINGLE ORDER UNDER YOUR CONTRACT.

SINCE THE REQUIREMENTS OF THE TWO GSA SUPPLY FACILITIES, WHEN CONSOLIDATED, EXCEEDED $7,500 AND THE MAXIMUM ORDER LIMITATION CLAUSE OF YOUR CONTRACT STATED THE TOTAL DOLLAR VALUE OF ANY ORDER PLACED UNDER THE CONTRACT COULD NOT EXCEED THIS AMOUNT, WE MUST AGREE WITH THE PROCURING ACTIVITY THAT THE CONTRACTING OFFICER HAD NO CHOICE BUT TO SEEK THE SUPPLIES UNDER A SEPARATE PROCUREMENT. HOWEVER, INASMUCH AS IT APPEARS FROM OUR REVIEW THAT THE DIFFERENCE BETWEEN YOU AND THE PROCURING ACTIVITY ARE PRIMARILY THE RESULT OF A MISUNDERSTANDING OF THE REQUIREMENTS OF YOUR CONTRACT, WE ARE RECOMMENDING TO THE ADMINISTRATOR OF GSA THAT IN FUTURE SIMILAR PROCUREMENTS EFFORTS SHOULD BE MADE TO FURNISH MORE DEFINITIVE STATEMENTS IN THE IFB CONCERNING WHAT WILL CONSTITUTE AN ORDER WITHIN THE MAXIMUM LIMITATION CLAUSE OF THE CONTRACT.

FOR THE REASONS STATED WE FIND NO LEGAL OBJECTION TO THE ACTION OF GSA IN SOLICITING BIDS FOR THE REQUIREMENTS IN QUESTION, AND YOUR PROTEST IS THEREFORE DENIED.