B-168596(1), JAN. 19, 1970

B-168596(1): Jan 19, 1970

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CANCELLATION OF AN INVITATION BECAUSE ADDENDUM SPECIFIED AWARD ON ITEM TO ITEM BASIS WAS SUBJECT TO DIFFERING INTERPRETATIONS AND THAT BIDDER'S INSTRUCTIONS DID NOT FORBID LUMP-SUM BIDS AS INTENDED MAY NOT BE REGARDED AS IMPROPER EXERCISE OF CONTRACTING OFFICER'S DISCRETION. FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 10. THE SUBJECT INVITATION WAS ISSUED ON OCTOBER 29. THE CONTRACT WILL BE AWARDED THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH ALL THE PROVISIONS OF THE INVITATION. PROVIDED THE BID PRICE IS REASONABLE AND IT IS TO THE INTEREST OF THE DISTRICT TO ACCEPT IT. THE PROCUREMENT OFFICER RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS AND TO WAIVE ANY INFORMALITY IN BIDS RECEIVED WHENEVER SUCH REJECTION OR WAIVER IS IN THE INTEREST OF THE DISTRICT. * * ADDENDUM NO. 1 TO THE INVITATION WAS ISSUED ON NOVEMBER 3.

B-168596(1), JAN. 19, 1970

BID PROTEST--ALL OR NONE--CANCELLATION AND READVERTISEMENT DECISION DENYING PROTEST OF SPRING CITY FOUNDRY CO. AGAINST CANCELLATION OF INVITATION FOR LAMP POSTS ISSUED BY DISTRICT OF COLUMBIA. CANCELLATION OF AN INVITATION BECAUSE ADDENDUM SPECIFIED AWARD ON ITEM TO ITEM BASIS WAS SUBJECT TO DIFFERING INTERPRETATIONS AND THAT BIDDER'S INSTRUCTIONS DID NOT FORBID LUMP-SUM BIDS AS INTENDED MAY NOT BE REGARDED AS IMPROPER EXERCISE OF CONTRACTING OFFICER'S DISCRETION.

TO SPRING CITY FOUNDRY CO.

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 10, 1969, AND SUBSEQUENT CORRESPONDENCE PROTESTING AGAINST THE CANCELLATION OF INVITATION FOR BIDS NO. 62-250-0-0192-R, ISSUED BY THE DISTRICT OF COLUMBIA GOVERNMENT.

THE SUBJECT INVITATION WAS ISSUED ON OCTOBER 29, 1969, REQUESTING BIDS FOR THE FURNISHING OF LAMP POSTS OF VARIOUS SIZES AND RELATED EQUIPMENT DESIGNATED AS ITEMS 1-A THROUGH 1-H AND 2, 3 AND 4.

PARAGRAPH 6 OF THE INSTRUCTIONS TO BIDDERS PROVIDED:

"6. BIDS FOR ALL OR PART:--UNLESS OTHERWISE SPECIFIED BY THE DISTRICT OR BY THE BIDDER, THE PROCUREMENT OFFICER RESERVES THE RIGHT TO MAKE AWARD ON ALL ITEMS, OR ON ANY OF THE ITEMS ACCORDING TO THE BEST INTERESTS OF THE DISTRICT. BIDDER MAY RESTRICT HIS BID TO CONSIDERATION IN THE AGGREGATE BY SO STATING, BUT SHOULD NAME A UNIT PRICE ON EACH ITEM BID UPON; ANY BID IN WHICH THE BIDDER NAMES A TOTAL PRICE FOR ALL THE ARTICLES WITHOUT QUOTING A PRICE ON EACH AND EVERY SEPARATE ITEM, MAY BE CONSIDERED INFORMAL."

PARAGRAPH 12 OF THE INSTRUCTIONS TO BIDDERS PROVIDED IN PERTINENT PART:

"12. AWARD OR REJECTION OF BIDS:--THE CONTRACT WILL BE AWARDED THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH ALL THE PROVISIONS OF THE INVITATION, PROVIDED THE BID PRICE IS REASONABLE AND IT IS TO THE INTEREST OF THE DISTRICT TO ACCEPT IT. THE PROCUREMENT OFFICER RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS AND TO WAIVE ANY INFORMALITY IN BIDS RECEIVED WHENEVER SUCH REJECTION OR WAIVER IS IN THE INTEREST OF THE DISTRICT. * *

ADDENDUM NO. 1 TO THE INVITATION WAS ISSUED ON NOVEMBER 3, 1969, WHICH AMONG OTHER THINGS, AMENDED THE INVITATION AS FOLLOWS:

"SPECIAL CONDITIONS: ADD: PAR. 15 - AWARD - AWARD WILL BE MADE ON AN ITEM BASIS."

WHEN BIDS WERE OPENED ON NOVEMBER 12, 1969, IT WAS REVEALED THAT YOUR COMPANY WAS THE LOW BIDDER ON ITEM 4, THE ONLY ITEM ON WHICH YOU BID. THREE OF THE REMAINING FOUR RESPONSIVE BIDDERS, AS DISTRIBUTORS OF UNION METALS COMPANY (UNION METALS), IN ADDITION TO QUOTING INDIVIDUAL PRICES ON EACH ITEM OF THE SCHEDULE, OFFERED LUMP SUM ALL OR NONE PRICES LOWER THAN THE AGGREGATE OF THEIR INDIVIDUAL PRICES FOR THE ITEMS. THE LOW LUMP SUM BID WAS $18,861.40 LOWER THAN THE LOWEST COMBINATION OF BIDS ON INDIVIDUAL ITEMS. NOTWITHSTANDING THIS RATHER SUBSTANTIAL POTENTIAL SAVING TO THE DISTRICT OF COLUMBIA GOVERNMENT, THE PROCUREMENT OFFICIALS THEREOF DECIDED, WITHOUT ADVISING THE BIDDERS, TO CANCEL THE INVITATION ON DECEMBER 3, 1969. ON DECEMBER 4, 1969, 3 SEPARATE INVITATIONS WERE ISSUED FOR THE COMPETITIVE ITEMS AND THE ITEMS WHICH HAVE HERETOFORE CONTAINED ITEMS OR PARTS APPARENTLY MANUFACTURED ONLY BY A SINGLE MANUFACTURER (UNION METALS).

THE BASIS OF YOUR PROTEST IS, IN SUMMARY, THAT ADDENDUM NO. 1 TO THE INVITATION PRECLUDED CONSIDERATION OF LUMP SUM BIDS, AND THAT PERMITTING SUCH BIDS PLACED YOUR COMPETITORS IN A MONOPOLY POSITION BY PUTTING THEM IN A POSITION TO OBTAIN ORDERS FOR COMPETITIVE ITEMS BY COMBINING SUCH ITEMS ON AN ALL OR NONE BASIS WITH OTHER ITEMS.

IN REFERENCE TO YOUR CONTENTION THAT THE FIRST INVITATION WAS IMPROPERLY CANCELLED BECAUSE ADDENDUM NO. 1 PROHIBITED LUMP SUM BIDDING, THE DISTRICT OF COLUMBIA PROCUREMENT OFFICER IN HIS LETTER OF DECEMBER 11, 1969, TO YOUR OFFICE AND IN HIS LETTER OF DECEMBER 22, 1969, TO OUR OFFICE EXPLAINS THE REASONS FOR THE CANCELLATION BY STATING, IN SUBSTANCE, THAT SINCE ADDENDUM NO. 1 DID NOT IN ANY WAY CONTRAVENE, ELIMINATE OR REFER TO PARAGRAPH 6 OF THE INSTRUCTIONS TO BIDDERS QUOTED ABOVE, THE DISTRICT DID NOT SPECIFICALLY FORBID BIDDERS, AS THEY HAD INTENDED TO DO, FROM REFLECTING A LUMP SUM CONSIDERATION IN THEIR TOTAL BID, AS EVIDENCED BY THE FACT THAT THREE BIDDERS BID IN THAT FASHION. IT WAS ALSO FELT THAT THE ABOVE CITED LANGUAGE CONTAINED IN ADDENDUM NO. 1, IN REFERRING TO "SPECIAL CONDITIONS" WAS SUBJECT TO DIFFERING INTERPRETATIONS, I.E; EITHER THE ADDITION OF A NEW PARAGRAPH 15 TO THE SPECIAL CONDITIONS, OR THAT IT WAS LANGUAGE TO BE ADDED TO PARAGRAPH 15 OF THE GENERAL CONDITIONS WHICH REFERRED TO CHANGE ORDERS. THEREFORE, IT WAS DETERMINED THAT THIS PART OF THE SPECIFICATIONS WAS DEFECTIVE. IT WAS ALSO STATED IN THE LETTER TO OUR OFFICE:

"* * * NOTWITHSTANDING THE OBVIOUS CONFUSION WHICH RESULTED FROM THE DEFECTIVE ADDENDUM NO. 1, I DO NOT FEEL THAT WITH THE DIFFERENCE IN PRICING BETWEEN THE COMBINATION OF THE LOWEST BID ON EACH ITEM AS COMPARED TO THE LOW 'LUMP SUM DISCOUNT' BID THAT I COULD CONSTRUE THAT THE LOW BID PRICES ON THE INDIVIDUAL ITEMS AS BEING 'REASONABLE' OR THAT SUCH AN AWARD WOULD BE 'IN THE BEST INTEREST OF THE DISTRICT OF COLUMBIA GOVERNMENT'."

THEN, IN EXPLANATION OF THE REASON FOR ISSUING THE NEW INVITATIONS IT WAS STATED:

"* * * WE ARE DOING THIS IN AN EFFORT TO RETAIN THE RATHER LIMITED COMPETITION WHICH EXISTS FOR THESE ITEMS. HOWEVER, THE PRINCIPAL VALUE OF COMPETITION IS ITS ABILITY TO GENERATE LOWER COST AND IF THIS EFFORT FAILS TO DO THIS BY PRODUCING BID PRICES AT LEAST AS LOW AS THE LOWEST 'LUMP SUM DISCOUNT' BID ON THE EARLIER ADVERTISEMENT, THEN MANY OF THE PROBLEMS INHERENT IN THE EARLIER BID OPENING WILL STILL BE WITH US, AND IN THE ABSENCE OF A FINDING BY THE ANTITRUST DIVISION OF THE DEPARTMENT OF JUSTICE, MY ONLY ALTERNATIVE WOULD BE TO RETURN TO THE METHOD OF ADVERTISING FOR BIDS WHEREIN WE PERMIT BIDDERS ON THESE MATERIALS TO BID 'ALL OR NONE' OR WITH A 'LUMP SUM DISCOUNT' OR IN ANY OTHER WAY WHICH WOULD BE MOST FAVORABLE TO THE DISTRICT."

WE BELIEVE IT IS SIGNIFICANT THAT THE LANGUAGE OF ADDENDUM NO. 1 DID NOT STATE THAT BIDS WOULD BE EVALUATED ONLY ITEM BY ITEM AND BY NO OTHER METHOD. INDEED, PARAGRAPH 6 OF THE INSTRUCTIONS TO BIDDERS RESERVED TO THE DISTRICT THE RIGHT TO ACCEPT ANY GROUP OF ITEMS OF ANY BID, UNLESS THE DISTRICT OR THE BIDDER PROVIDED OTHERWISE BY SPECIFIC LIMITATIONS. IT IS WELL ESTABLISHED THAT AN "ALL OR NONE" BID MAY PROPERLY BE CONSIDERED FOR AWARD IN THE ABSENCE OF A SPECIFIC PROVISION IN THE INVITATION TO THE CONTRARY. 35 COMP. GEN. 383, 385 (1956). LIKEWISE, A LUMP SUM DOLLAR PROPOSAL HAS NEVER BEEN CONSIDERED IMPROPER IN ITSELF. 47 COMP. GEN. 658 (1968), AND CASES CITED THEREIN, A COPY OF WHICH IS ENCLOSED. FURTHERMORE, IF THE INSTANT INVITATION WAS CONSTRUED TO CONTAIN A PROVISION REQUIRING EVALUATION ON THE BASIS OF BIDS ON EACH ITEM WITHOUT REFERENCE TO ANY OTHERS, SUCH PROVISION MIGHT BE CONSIDERED UNDULY RESTRICTIVE OF COMPETITION AND CONTRARY TO THE PURPOSE OF THE STATUTES GOVERNING PUBLIC PROCUREMENT. 42 COMP. GEN. 415 (1963). IN THIS REGARD, WHILE IT MAY BE THAT ONLY ONE MANUFACTURER IS CAPABLE OF PRODUCING ALL OF THE ITEMS INVOLVED, IT WOULD APPEAR THAT THERE IS ACTIVE COMPETITION AMONG ITS DISTRIBUTORS. WE THEREFORE QUESTION THE DECISION OF THE PROCUREMENT OFFICER NOT TO CONSIDER THE LUMP SUM BIDS FOR EVALUATION PURPOSES. HOWEVER, WE RECOGNIZE THAT WIDE DISCRETION IS AFFORDED CONTRACTING OFFICIALS IN SUCH MATTERS, AND THEREFORE IT CANNOT NOW BE SAID THAT THE CHOICE HE MADE WAS A CLEAR ABUSE OF HIS DISCRETION, OR WAS NOT PROPER, OR THAT ANY OTHER COURSE OF ACTION WOULD HAVE BEEN MORE IN THE PUBLIC INTEREST. WE THINK THE DISTRICT OFFICIALS HAVE MADE A GOOD FAITH ATTEMPT TO PRODUCE THE MAXIMUM OF COMPETITION ON THE MOST EVEN TERMS BY ITS ISSUANCE OF THE NEW INVITATIONS.

CONCERNING YOUR ARGUMENT THAT CERTAIN OF THE BIDDERS MAY HAVE VIOLATED THE FEDERAL ANTITRUST LAWS, WE HAD OCCASION TO CONSIDER A SIMILAR CONTENTION IN OUR DECISION B-163477, APRIL 12, 1968 (COPY ENCLOSED), TO THE ATTORNEYS FOR GAR-LET MANUFACTURING CO; INC; WHEREIN WE HELD THAT THIS WAS A MATTER FOR DETERMINATION BY THE FEDERAL TRADE COMISSION AND/OR THE DEPARTMENT OF JUSTICE. WE CAN PERCEIVE OF NO VALID REASON FOR TAKING A DIFFERENT POSITION AT THIS TIME, ESPECIALLY SINCE WE UNDERSTAND THAT THE DEPARTMENT OF JUSTICE IS CONTINUING ITS INVESTIGATIONS OF THE MATTER. ACCORDINGLY, UNTIL SUCH TIME AS IT MAY BE FOUND THAT THERE ARE ANTITRUST VIOLATIONS SURROUNDING THE PROCUREMENT OF THESE ITEMS, WE FEEL THAT FUTURE PROCUREMENTS SHOULD FOLLOW THE PRINCIPLES SET OUT ABOVE, SO AS TO ASSURE TO THE DISTRICT THE BEST OBTAINABLE PRICES.

IN VIEW OF THE FOREGOING, WE FIND NO PROPER LEGAL BASIS FOR OBJECTING TO THE ACTION TAKEN BY THE DISTRICT OF COLUMBIA GOVERNMENT, AND YOUR PROTEST IS THEREFORE DENIED.