B-169309, MAY 22, 1970, 49 COMP. GEN. 787

B-169309: May 22, 1970

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LOWEST BID NOT LOWEST COST THE LOW BID TO SUPPLY THE REQUIREMENTS FOR RADIO PROGRAM TAPE DUPLICATION AND DISTRIBUTION SERVICES THAT FURNISHED ONLY A FRACTION OF THE UNIT PRICES SOLICITED ON THE DISTRIBUTION SERVICES IS A NONRESPONSIVE BID. DID NOT ASSURE THE REASONABLE EXPECTATION THAT THE LOWEST EVALUATED BID WOULD RESULT IN THE LOWEST ACTUAL PERFORMANCE COST THAT IS REQUIRED UNDER 10 U.S.C. 2305(A) TO SECURE FULL AND FREE COMPETITION AND. APPROXIMATELY ONE 4-1/2-MINUTE PROGRAM WILL BE PRODUCED. APPROXIMATELY ONE 14-1/2-MINUTE PROGRAM WILL BE PRODUCED. 1 TO 4 MINUTES EACH WILL BE PRODUCED. D. EVERY THREE MONTHS 10 ONE-MINUTE INFORMATIONAL ANNOUNCEMENTS (NASA SPACE NOTES) WILL BE PRODUCED AND 1500 TEN-MINUTE PROGRAMS MUST BE DUPLICATED.

B-169309, MAY 22, 1970, 49 COMP. GEN. 787

BIDS -- EVALUATION -- METHOD OF EVALUATION DEFECTIVE, ETC. -- LOWEST BID NOT LOWEST COST THE LOW BID TO SUPPLY THE REQUIREMENTS FOR RADIO PROGRAM TAPE DUPLICATION AND DISTRIBUTION SERVICES THAT FURNISHED ONLY A FRACTION OF THE UNIT PRICES SOLICITED ON THE DISTRIBUTION SERVICES IS A NONRESPONSIVE BID, EVEN THOUGH THE ITEMS NOT PRICED HAD BEEN EXCLUDED FROM THE EVALUATION FORMULA AND COMPRISED ONLY 2 PERCENT OF THE CONTEMPLATED CONTRACT, FOR THE OMISSION LEFT THE CONTRACTING AGENCY WITHOUT ANY FIXED-UNIT PRICE COMMITMENT FOR A SUBSTANTIAL NUMBER OF POSSIBLE SERVICE COMBINATIONS. MOREOVER, THE BID EVALUATION FORMULA PROVIDED IN THE INVITATION SOLICITING A BASIC 1-YEAR CONTRACT TERM AND AN ADDITIONAL OPTION YEAR, PERMITTED THE SUBMISSION OF UNBALANCED BIDS, AND DID NOT ASSURE THE REASONABLE EXPECTATION THAT THE LOWEST EVALUATED BID WOULD RESULT IN THE LOWEST ACTUAL PERFORMANCE COST THAT IS REQUIRED UNDER 10 U.S.C. 2305(A) TO SECURE FULL AND FREE COMPETITION AND, THEREFORE, THE DEFECTIVE INVITATION SHOULD BE CANCELED.

THE ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, MAY 22, 1970:

BY LETTERS KDA-2 AND KDA DATED APRIL 1 AND APRIL 15, 1970, RESPECTIVELY, THE DIRECTOR OF PROCUREMENT FURNISHED OUR OFFICE WITH BASIC AND SUPPLEMENTAL REPORTS ON THE PROTESTS OF LION RECORDING SERVICES, INC., AND CAPITAL RECORDING COMPANY, INC., UNDER NASA HEADQUARTERS CONTRACTS DIVISION INVITATION FOR BIDS NO. DHC-5-10-7529K, ISSUED ON FEBRUARY 16, 1970. AWARD HAS BEEN WITHHELD PENDING RESOLUTION OF THE PROTESTS.

THE SUBJECT INVITATION CALLED FOR "SERVICES, SUPPLIES, AND EQUIPMENT TO DUPLICATE, LABEL, PACK AND MAIL TAPED NASA HEADQUARTERS RADIO PROGRAMS, AND FOR THE PRODUCTION AND ASSOCIATED ACTIVITIES INVOLVED IN THE RADIO/AUDIO PRODUCTION FUNCTIONS OF THE NASA HEADQUARTERS." THE INVITATION CONTEMPLATED AN INDEFINITE QUANTITIES TYPE CONTRACT, AND STIPULATED MINIMUM AND MAXIMUM ORDERS FOR SUPPLIES AND SERVICES OF $5,000 AND $100,000.

THE INVITATION STATEMENT OF WORK DIVIDED THE REQUIRED DUTIES BETWEEN "PRODUCTION SERVICES" AND "DISTRIBUTION" AND REQUESTED PRICES UNDER THOSE HEADINGS FOR A BASIC 1-YEAR CONTRACT TERM AND AN ADDITIONAL OPTIONAL YEAR. THE INSTANT PROTESTS INVOLVE ONLY THE "DISTRIBUTION" PORTION OF THE INVITATION. PARAGRAPH 24 OF THE ADDITIONAL SOLICITATION INSTRUCTIONS AND CONDITIONS, ENTITLED "FREQUENCY OF REQUIREMENTS," STATED:

THE FOLLOWING REPRESENT THE ESTIMATED LEVELS OF VOLUME AND FREQUENCY OF NASA'S REGULAR AND CONTINUING PRODUCTION, DUPLICATION, PACKING, AND SHIPPING REQUIREMENTS.

A. EACH WEEK, APPROXIMATELY ONE 4-1/2-MINUTE PROGRAM WILL BE PRODUCED, AND APPROXIMATELY 2600 4-1/2-MINUTE PROGRAMS MUST BE DUPLICATED, LABEL, PACKED AND SHIPPED.

B. EACH MONTH, APPROXIMATELY ONE 14-1/2-MINUTE PROGRAM WILL BE PRODUCED, AND 1600 14-1/2-MINUTE PROGRAMS MUST BE DUPLICATED, LABELED AND SHIPPED.

C. PRIOR TO EACH MANNED SPACE FLIGHT, APPROXIMATELY 10 AUDIO NEWS FEATURES (INTERVIEWS), 1 TO 4 MINUTES EACH WILL BE PRODUCED, AND 1700 30- 45 MINUTE PROGRAMS MUST BE DUPLICATED, LABELED, PACKED, AND SHIPPED DURING THE SAME WEEK AS THE ABOVE 4-1/2 AND 14-1/2-MINUTE PROGRAMS.

D. EVERY THREE MONTHS 10 ONE-MINUTE INFORMATIONAL ANNOUNCEMENTS (NASA SPACE NOTES) WILL BE PRODUCED AND 1500 TEN-MINUTE PROGRAMS MUST BE DUPLICATED, LABELED, PACKED AND SHIPPED. THIS REQUIREMENT MAY, OR MAY NOT FALL WITHIN A WEEK IN WHICH B. AND C. ABOVE, WILL BE REQUIRED.

IN ADDITION TO THE REGULAR PROGRAM REQUIREMENTS CONTEMPLATED BY THE ABOVE QUOTED PARAGRAPH, BIDDERS WERE ADVISED IN THE "DISTRIBUTION" SECTION OF THE INVITATION THAT "THE CONTRACTOR SHALL ALSO PERFORM 'SPECIAL' DUPLICATION AND DISTRIBUTION REQUIREMENTS, AS SPECIAL EVENTS OCCUR."

THE INVITATION PROVIDED A MATRIX, CALLED "ATTACHMENT B," FOR PRICING THE DISTRIBUTION SERVICES. THE MATRIX SET OUT TAPE TIMES IN 1 MINUTE INCREMENTS FROM 0 TO 30 MINUTES, 5 MINUTE INCREMENTS FROM 30 TO 60 MINUTES, AND 10 MINUTE INCREMENTS FROM 60 TO 90 MINUTES. IT ALSO SET OUT 24 ORDER SIZES FOR THE VARIOUS TIME INCREMENTS RANGING FROM 1 TO 5 COPIES PER ORDER THROUGH 2000 PLUS COPIES PER ORDER. AN IDENTICAL PRICING DOCUMENT WAS INCLUDED FOR THE ADDITIONAL OPTIONAL YEAR. A TOTAL OF 1872 PRICES FOR THE BASIC AND OPTIONAL YEAR WERE REQUIRED TO BE STATED IN THE ATTACHMENT B MATRIX. A PROVISION PRECEDING THE MATRIX STATED, "THE CONTRACTOR SHALL BE REIMBURSED IN ACCORDANCE WITH THE RATES SPECIFIED BELOW."

PARAGRAPH 26 OF THE ADDITIONAL SOLICITATION INSTRUCTIONS AND CONDITIONS, ENTITLED "EVALUATION OF BIDS," STATED THAT THE OPTION PRICES QUOTED BY BIDDERS WOULD BE CONSIDERED IN THE EVALUATION; THAT ANY BID "MATERIALLY UNBALANCED AS TO PRICES FOR BASIC AND OPTION QUANTITIES MAY BE REJECTED AS NON-RESPONSIVE;" AND THAT THE ESTIMATED REQUIREMENTS SET OUT IN THE EVALUATION SCHEDULES ARE ESTIMATES ONLY NOT TO BE INTERPRETED AS A "GUARANTEE OR REPRESENTATION AS TO ACTUAL QUANTITIES OF WORK THAT WILL BE ORDERED UNDER THE RESULTING CONTRACT." WITH RESPECT TO THE PRICES REQUIRED OF BIDDERS, PARAGRAPH 26 STATED THAT "BIDS SHOULD CONTAIN PRICES FOR ALL ITEMS AS SET FORTH IN ATTACHMENTS A AND B" (ATTACHMENT A REFERRING TO THE "PRODUCTION SERVICES" PORTION OF THE INVITATION).

ANNEXES 1 AND 2 WERE INCLUDED IN THE INVITATION FOR EVALUATION OF THE FIRST AND SECOND YEAR PRICES. THESE EVALUATION SCHEDULES CONTAINED ESTIMATED REQUIREMENTS BASED UPON PARAGRAPH 24, QUOTED ABOVE, AND ALSO CONTAINED RANDOM TIME AND SIZE OF ORDER INCREMENTS TO COVER ORDERS FOR "SPECIAL" DISTRIBUTION REQUIREMENTS. THE LATTER WAS DONE ON A RANDOM BASIS BECAUSE THE "SPECIAL" ORDERING REQUIREMENTS WOULD NOT COMPRISE A SIGNIFICANT PORTION OF THE DUPLICATION AND DISTRIBUTION SERVICES REQUIRED UNDER THE CONTRACT AND IT WAS NOT KNOWN WHICH OF THE VARIOUS TIME AND SIZE OF ORDER INCREMENTS WOULD ACTUALLY BE PURCHASED UNDER THE CONTRACT.

FOR EACH TIME AND SIZE OF ORDER INCREMENT LISTED IN THE EVALUATION SCHEDULES, THERE WAS AN ESTIMATE OF THE NUMBER OF TAPES THAT THE CONTRACTOR MIGHT BE CALLED UPON TO DUPLICATE DURING THE YEAR. THESE ESTIMATES, ENTITLED "BID COMPUTATION QUANTITIES," WERE TO BE MULTIPLIED BY THE UNIT PRICES QUOTED BY BIDDERS IN ORDER TO DETERMINE THE TOTAL PRICE FOR EACH ITEM. THE EVALUATION SCHEDULES FOR BASIC AND OPTION PORTIONS TOGETHER CONTAINED 76 ESTIMATED TOTAL PRICES, AS COMPARED TO THE 1872 UNIT PRICES REQUIRED OF BIDDERS IN THE ATTACHMENT B MATRIX. THE CONTRACTING OFFICER'S STATEMENT, WITH REGARD TO THE 38 ITEMS COMPRISING EACH EVALUATION SCHEDULE, STATES THAT "FIVE OF THESE 38 SELECTIONS REPRESENT APPROXIMATELY 98% OF NASA'S ANTICIPATED NEEDS." IT SHOULD BE MENTIONED, HOWEVER, THAT, WHILE THE "SPECIAL" SERVICES CONSTITUTE ONLY 2% OF ANTICIPATED NEEDS, THOSE SERVICES ARE ESSENTIAL IN ORDER TO ACHIEVE THE ENDS SOUGHT BY THE CONTRACT AS ONE OF THOSE ENDS IS THE PUBLICIZING OF SPECIAL EVENTS AS THEY OCCUR. THEREFORE, WHILE IT MAY BE THAT THE LENGTH AND NUMBER OF SPECIAL EVENT TAPES CANNOT BE FORECAST WITH ANY DEGREE OF ACCURACY, IT IS APPARENTLY ANTICIPATED THAT THERE WILL BE A NEED FOR THEM DURING THE CONTRACT TERM.

BIDS WERE RECEIVED FROM 3 OF THE 23 SOURCES SOLICITED. THE BIDDERS AND THEIR CORRECTED EVALUATED BID PRICES (ALL CONTAINED CORRECTABLE ARITHMETICAL ERRORS) ARE SET OUT BELOW:

LION RECORDING SERVICES, INC. $112,681.64

RODEL AUDIO SERVICES $120,231.00

CAPITAL RECORDING COMPANY, INC. $120,890.00

THE BID OF LION RECORDING SERVICES, INC., WAS INCOMPLETE IN THAT, WHILE PRICES WERE QUOTED FOR ALL ITEMS IN ATTACHMENT A ("PRODUCTION SERVICES") AND FOR THE ATTACHMENT B EVALUATION SCHEDULE DISCUSSED ABOVE (ANNEXES 1 AND 2), THE ATTACHMENT B MATRIX, EXCEPT FOR 16 OF THE 1872 UNIT PRICES REQUESTED, WAS NOT COMPLETED. ON THE GROUND THAT THIS OMISSION BY LION CONSTITUTED A MATERIAL DEVIATION FROM THE INVITATION TERMS, THE LION BID WAS REJECTED AS NONRESPONSIVE.

THIS ACTION WAS PROTESTED BY LION BY LETTER DATED MARCH 11, 1970. ADDITIONALLY, A PROTEST AGAINST AN AWARD TO RODEL WAS RECEIVED ON MARCH 16, 1970, FROM CAPITAL RECORDING COMPANY, INC., ON THE GROUND THAT THE RODEL BID WAS "UNBALANCED" CONTRARY TO THE INVITATION PROHIBITION AGAINST UNBALANCING QUOTED ABOVE. CAPITAL ALSO QUESTIONED THE INCLUSION IN THE "PRODUCTION" PORTION OF THE INVITATION OF SEVERAL ITEMS FOR WHICH NO PRICES ARE REQUIRED BECAUSE OF THE UNCERTAINTY WHETHER A NEED FOR THOSE ITEMS WOULD ARISE DURING THE CONTRACT TERM WITH REGARD TO WHICH THE INVITATION PROVIDES, WITH ONE EXCEPTION, THAT PRICES WILL BE NEGOTIATED IF AND WHEN THE NEED ARISES. FINALLY, CAPITAL COMPLAINS THAT THE SECOND YEAR OPTION PRICES SHOULD NOT PROPERLY HAVE BEEN CONSIDERED IN BID EVALUATION.

ON THE QUESTION OF THE UNBALANCING COMPLAINED OF BY CAPITAL, IT SHOULD BE STATED INITIALLY THAT THE INVITATION PROVISION WITH REGARD TO UNBALANCING REFERS TO UNBALANCING BETWEEN THE BASIC OR FIRST YEAR BID PRICES AND THOSE QUOTED FOR THE SECOND YEAR OPTION. INASMUCH AS RODEL QUOTED OPTION PRICES IDENTICAL TO THE PRICES QUOTED FOR THE BASIC PORTION OF THE BID, THE UNBALANCING PROVISION IN THE INVITATION IS NOT FOR APPLICATION.

WITH REGARD TO THE CONSIDERATION OF THE SECOND YEAR OPTION PORTION OF THE INVITATION IN BID EVALUATION, IT IS OBSERVED THAT THE EVALUATION OF OPTIONS CLAUSE SET OUT IN THE INSTANT INVITATION IS IDENTICAL TO THE ONE SET OUT AT ARMED SERVICES PROCUREMENT REGULATION 1-1504(D)(II), WHICH PERMITS SUCH EVALUATION IN ORDER TO PRECLUDE "BUY IN" BIDDING, I.E., THE SUBMISSION OF UNREALISTICALLY LOW PRICES FOR THE BASIC PORTION COUPLED WITH UNREALISTICALLY HIGH PRICES FOR THE OPTION PORTION. ALSO, THE MENTION OF ITEMS FOR WHICH NO PRICES ARE REQUESTED WOULD NOT APPEAR TO BE PREJUDICIAL AS SUCH MENTION IN EFFECT MERELY ADVISES BIDDERS OF THE POSSIBILITY OF A LATER CONTRACT MODIFICATION IF THE NEED FOR THOSE ITEMS ARISES.

WITH RESPECT TO THE LION BID, WE BELIEVE THAT THE CONTRACTING OFFICER WAS CORRECT IN REJECTING IT AS NONRESPONSIVE. THE INVITATION CONTEMPLATED A REQUIREMENTS CONTRACT IN WHICH THE UNIT PRICES FOR THE TAPES WOULD DEPEND UPON THE NUMBER OF MINUTES OF TAPE AND THE QUANTITY ORDERED EACH TIME. THIS REGARD, AS NOTED ABOVE, THE INVITATION ADVISED BIDDERS TO BID ON ALL ITEMS IN THE MATRIX AND THAT THE CONTRACTOR WOULD BE REIMBURSED IN ACCORDANCE WITH THE RATES QUOTED IN THE MATRIX. BY NOT QUOTING PRICES AS REQUIRED, LION LEFT THE CONTRACTING AGENCY WITHOUT ANY FIXED-UNIT PRICE COMMITMENT FOR ALMOST 1,800 OUT OF THE 1,872 COMBINATIONS UPON WHICH PRICES WERE SOLICITED.

AS INDICATED ABOVE, THE SELECTION FOR THE SPECIAL SERVICES IN THE BID EVALUATION SHEETS WAS MADE ON A RANDOM BASIS WITH NO REAL ASSURANCE THAT THE NUMBER OF MINUTES OF TAPE OR THE NUMBER OF COPIES OF TAPE PER ORDER SELECTED FOR EVALUATION WOULD BE THE SAME UNDER THE CONTRACT. IT IS CONCEIVABLE THAT THE NUMBER OF MINUTES OF TAPE AND THE NUMBER OF COPIES PER ORDER FOR SPECIAL SERVICES UNDER THE CONTRACT COULD VARY FROM THE NUMBERS INCLUDED IN THE EVALUATION SHEETS, IN WHICH EVENT COMBINATIONS MIGHT BE REQUIRED FOR WHICH NO PRICE WAS STATED. THUS, THERE IS A REAL LIKELIHOOD THAT SEVERAL THOUSAND TAPES MAY BE ORDERED IN THE SPECIAL CATEGORY IF THE EVALUATION SCHEDULES ARE FOLLOWED, AND THESE MAY COME WITHIN ANY OF THE NUMEROUS COMBINATIONS OF TAPE TIMES AND SIZE OF ORDERS INCLUDED IN THE MATRIX, BUT NOT IN THE EVALUATION SCHEDULES. FURTHER, IT SHOULD BE NOTED THAT, WHILE THE "FREQUENCY OF REQUIREMENTS" PROVISION WITH RESPECT TO THE REGULAR DISTRIBUTION ESTIMATED THAT APPROXIMATELY 1,600 14- 1/2-MINUTE PROGRAMS WOULD HAVE TO BE DUPLICATED EACH MONTH, THE EVALUATION SHEETS DID NOT PROVIDE FOR EVALUATION ON THAT CATEGORY, BUT RATHER UPON A CATEGORY OF 1,001 TO 1,500 COPIES PER ORDER TO COVER THE 19,200 COPIES THAT IT WAS ESTIMATED MIGHT BE REQUIRED IN THE COURSE OF A YEAR.

THE TOTAL ESTIMATED QUANTITY ON EACH EVALUATION SHEET FOR THE FIVE COMBINATIONS SAID TO REPRESENT 98 PERCENT OF THE AGENCY'S NEEDS IS 165,600 UNITS. THE 19,200 UNITS FOR WHICH THERE ARE NO PRICES FOR 1,600 COPIES PER ORDER REPRESENTS MORE THAN 11 PERCENT OF THAT TOTAL.

NASA PROCUREMENT REGULATION 2.405 PROVIDES FOR THE WAIVER OF DEFECTS IN BIDS WHEN THEIR SIGNIFICANCE AS TO PRICE, QUANTITY, QUALITY OR DELIVERY IS TRIVIAL OR NEGLIGIBLE WHEN CONTRASTED WITH THE TOTAL COST OR SCOPE OF THE SUPPLIES OR SERVICES BEING PROCURED. HOWEVER, AS DEMONSTRATED ABOVE, THE OMISSION IN THE LION BID AFFECTS A SUBSTANTIAL QUANTITY OF THE TAPES WHICH, IT IS CONTEMPLATED, WILL BE PURCHASED. WITH RESPECT TO THE ORDERS FOR THE SPECIAL SERVICES NOT INCLUDED IN THE EVALUATION SCHEDULES, SEE 40 COMP. GEN. 321 (1960) WHERE THERE WAS UPHELD THE RESPONSIVENESS OF A BID OMITTING A PRICE FOR ONE ISOLATED AND INCONSEQUENTIAL ITEM NOT INCLUDED IN THE BID EVALUATION FOR A REQUIREMENT CONTRACT. HOWEVER, IN THAT DECISION, WE INDICATED THAT WE HAD SERIOUS RESERVATIONS THAT A BID OMITTING PRICES FOR ALL ITEMS EXCLUDED FROM EVALUATION WOULD BE RESPONSIVE.

ANOTHER QUESTION FOR RESOLUTION IS WHETHER THE EVALUATION METHOD USED IN THE INVITATION COMPORTS WITH THE STATUTORY AND REGULATORY REQUIREMENT FOR FREE AND OPEN COMPETITION. IN THIS REGARD 10 U.S.C. 2305(A) REQUIRES THAT "SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY AND SERVICES NEEDED BY THE AGENCY CONCERNED." IMPLICIT IN THIS STATUTORY PROVISION IS, WE THINK, THE REQUIREMENT THAT IN AN INDEFINITE QUANTITY PROCUREMENT CARE BE TAKEN TO ASSURE THAT ANY BID EVALUATION BASIS BE DESIGNED SO AS TO ASSURE THAT A REASONABLE EXPECTATION EXISTS THAT AN AWARD TO THE LOWEST EVALUATED BIDDER WILL RESULT IN THE LOWEST COST TO THE GOVERNMENT IN ACTUAL PERFORMANCE.

THUS, OUR OFFICE HAS HELD AN EVALUATION BASIS WHICH ENCOURAGES THE SUBMISSION OF UNBALANCED BIDS, I.E., "BIDS BASED ON SPECULATION AS TO WHICH ITEMS ARE PURCHASED MORE FREQUENTLY OR IN GREATER QUANTITY THAN OTHERS," IS INAPPROPRIATE. 44 COMP. GEN. 392, 396 (1965). IN THIS VEIN, WE HAVE SUSTAINED THE CANCELLATION OF AN INVITATION WHERE THE EVALUATION BASIS EMPLOYED WOULD HAVE RESULTED IN PAYING HIGHER PRICES TO THE LOW BIDDER AS EVALUATED THAN WOULD HAVE BEEN SECURED FROM THE EVALUATED SECOND LOW BIDDER. B-162389, DECEMBER 19, 1967. 44 COMP. GEN. 392, CITED ABOVE, INVOLVED A CONTRACT FOR VARIOUS PRINTING SERVICES IN WHICH PRICES WERE REQUIRED FOR 328 BID ITEMS BUT INSTEAD OF STATING ESTIMATED QUANTITIES FOR THOSE ITEMS, THE INVITATION ADVISED BIDDERS THAT A MODEL PRINTING JOB COMPRISED OF ONLY A FEW OF THE PRICED ITEMS AND NOT PROVIDED TO BIDDERS WOULD BE USED FOR EVALUATION. WHILE THE PRIMARY REASON FOR FINDING THE INVITATION FAULTY IN THAT CASE WAS THE FACT THAT BIDDERS WERE NOT SUFFICIENTLY ADVISED OF THE EVALUATION BASES, A SECONDARY, AND IN OUR OPINION EQUALLY IMPORTANT, REASON FOR DIRECTING THAT THE INVITATION BE CANCELED WAS THAT "THERE WOULD BE NO ASSURANCE THAT AWARD WOULD BE MADE TO THE LOWEST AGGREGATE BIDDER SINCE A BIDDER COULD BE LOW ON THE BASIS OF THE 'MODEL JOB' EVALUATION AND YET BE HIGH IN THE AGGREGATE."

FOR REASONS SET OUT BELOW, WE MUST CONCLUDE THAT THE EVALUATION FORMULA AS CONTAINED IN ANNEXES 1 AND 2 PERMITTED UNBALANCING OF BIDS TO THE EXTENT THAT THERE IS DOUBT THAT AN AWARD TO RODEL WOULD RESULT IN THE LOWEST ULTIMATE COST TO THE GOVERNMENT. AS INDICATED ABOVE, ANNEXES 1 AND 2, IN ADDITION TO SETTING OUT ESTIMATED QUANTITIES FOR THE FIVE FREQUENTLY ORDERED ITEMS MENTIONED IN THE CONTRACTING OFFICER'S STATEMENT, ALSO SET OUT ESTIMATED QUANTITIES FOR 33 ITEMS IN EACH ANNEX REPRESENTING RANDOM EXAMPLES FROM THE ATTACHMENT B MATRIX OF THE VARIOUS TIME AND SIZE OF ORDER INCREMENTS FOR INFREQUENTLY ORDERED, OR "SPECIAL" ITEMS. THERE IS NO INDICATION IN THE FILE FURNISHED US OR IN THE INVITATION THAT THE 33 INFREQUENT OR "SPECIAL" ITEMS FOR WHICH ESTIMATED QUANTITIES ARE SET OUT IN THE ANNEX 1 AND 2 EVALUATION SCHEDULES WILL ACTUALLY BE ORDERED OR THAT THEY WILL BE ORDERED ANY MORE FREQUENTLY THAN THE COMBINATIONS IN THE ATTACHMENT B MATRIX FOR WHICH NO PRICES ARE QUOTED ON THE EVALUATION SCHEDULES. IN FACT, WE HAVE BEEN INFORMALLY ADVISED THAT WHILE 33 COMBINATIONS WERE INCLUDED IN THE EVALUATION SCHEDULES IN ORDER TO PROVIDE SOME REPRESENTATION FOR PURPOSES OF EVALUATION OF THE "SPECIAL" COMBINATIONS TO BE ORDERED FROM TIME TO TIME UNDER THE CONTRACT, THEIR INCLUSION IN THE EVALUATION SCHEDULE IS NOT AN INDICATION THAT THEY WILL IN FACT BE ORDERED IN PREFERENCE TO OTHER ITEMS NOT SO INCLUDED.

AN ANALYSIS OF THE PRICES QUOTED BY RODEL IN THE ATTACHMENT B MATRIX REVEALS THAT SIGNIFICANTLY LOWER PRICES ARE OFFERED FOR TIME INCREMENTS OF ATTACHMENT B MATRIX COMBINATIONS INCLUDED IN THE EVALUATION SCHEDULE AS OPPOSED TO PRICES OFFERED FOR TIME INCREMENTS OF THE SAME SIZE ORDER NOT INCLUDED IN THE EVALUATION SCHEDULE. FOR EXAMPLE, FOR AN ORDER OF 601 TO 700 COPIES OF AN 18 TO 19 MINUTE PROGRAM, A NONEVALUATED ITEM, THE RODEL UNIT PRICE IS $0.58 AND THE RODEL UNIT PRICE FOR 601 TO 700 COPIES OF A 20 TO 21 MINUTE PROGRAM, ALSO A NONEVALUATED ITEM, IS $0.62. THE RODEL UNIT PRICE FOR 601 TO 700 COPIES OF A 19 TO 20 MINUTE PROGRAM, AN EVALUATED ITEM WITH AN ESTIMATED NUMBER OF ORDERS OF 650, HOWEVER, IS $0.18. THE CAPITAL UNIT PRICES FOR 601 TO 700 COPIES SHOW A PRICE PROGRESSION AS THE TIME INCREMENTS INCREASE IN THAT ITS PRICES ARE $0.25 FOR THE 18 TO 19 AND 19 TO 20 MINUTE PROGRAMS AND $0.30 FOR THE 20 TO 21 MINUTE PROGRAMS. SIMILARLY, RODEL UNIT PRICES FOR 801 TO 900 COPIES OF A NONEVALUATED 28 TO 29 MINUTE PROGRAM, AN EVALUATED 29 TO 30 MINUTE PROGRAM, AND A NONEVALUATED 30 TO 35 MINUTE PROGRAM RUN $0.60, $0.22, AND $0.62, RESPECTIVELY, WHILE CAPITAL'S PRICES ARE $0.30, $0.30, AND $0.40. IF THE RODEL UNIT PRICES TO BE EVALUATED FOR THE TWO EXAMPLES SET OUT ABOVE WERE COMPUTED ON THE BASIS OF THE LOWEST PRICE FOR THE NONEVALUATED PROGRAM LENGTHS IMMEDIATELY PRECEDING AND SUCCEEDING THE ITEM TO BE EVALUATED, THE EVALUATED RODEL BID PRICE WOULD BE INCREASED BY SOME $583. IF WE SIMILARLY COMPARE THE RODEL PRICES QUOTED ON THE MATRIX FOR EACH COMBINATION JUST ABOVE OR JUST BELOW THE COMBINATION PROVIDED FOR EVALUATION IN THE ANNEX, THE EVALUATED RODEL PRICE WOULD BE INCREASED BY MORE THAN $1,000. IN OTHER WORDS, IF THE GOVERNMENT'S NEEDS WITH REGARD TO PROGRAM LENGTH OF INFREQUENT, OR "SPECIAL," PROGRAMS WERE TO VARY BY AS LITTLE AS ONE MINUTE FROM THE PROGRAM LENGTHS RANDOMLY PICKED FOR EVALUATION, AND IF THE EVALUATION ESTIMATES OF THE NUMBER OF ORDERS FOR THOSE ITEMS PROVED ACCURATE, THE GOVERNMENT'S COST WOULD BE INCREASED BY MORE THAN $1,000. INASMUCH AS ONLY THE AMOUNT OF $659 SEPARATES THE RODEL AND CAPITAL BIDS AND THE INFREQUENT SERVICES WERE SELECTED FROM THE MATRIX FOR THE EVALUATION SCHEDULE ON A RANDOM BASIS WHICH WOULD NOT NECESSARILY CONFORM TO THE ACTUAL REQUIREMENTS, WE CONCLUDE THAT THE EVALUATION SCHEDULE DOES NOT PROVIDE REASONABLE ASSURANCE THAT THE EVALUATED LOW BIDDER WILL ACTUALLY PROVIDE THE GOVERNMENT WITH THE LOWEST ULTIMATE PRICE.

IN REACHING THIS CONCLUSION, WE ARE NOT UNMINDFUL OF THE FACT THAT PURCHASE ORDERS FOR "SPECIAL" ITEMS UNDER THE CURRENT CONTRACT TOTALED APPROXIMATELY $400 LAST YEAR AND THAT THE CONTRACTING OFFICER HAS REPORTED THAT THE AMOUNT TO BE ORDERED UNDER THE INSTANT INVITATION NEXT YEAR WILL PROBABLY BE SLIGHTLY LESS. HOWEVER, IF THAT IS A CORRECT STATEMENT, THEN THE EVALUATION SCHEDULE WOULD BE FURTHER DEFECTIVE FOR FAILING TO PROVIDE A PROPER ESTIMATE, SINCE, AT THE BID PRICES LISTED BY RODEL, THE COST OF THE INFREQUENT SERVICES TOTALS SOME $1,200.

IN VIEW OF THE FOREGOING, THE INVITATION SHOULD BE CANCELED AS NOT COMPLYING WITH 10 U.S.C. 2305(A).

AS REQUESTED, THE FILE IS RETURNED HEREWITH.