B-169456, JUN. 11, 1970

B-169456: Jun 11, 1970

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SUPPLY POTENTIAL REJECTION OF BID FOR 1 YEAR REQUIREMENTS CONTRACT FOR PLASTIC PILLOW COVERS IS SUSTAINED. IT WOULD NOT HAVE BEEN OBLIGATED TO DELIVER GOVERNMENT'S STATED NEEDS AS REQUIRED IN SOLICITATION. WHOSE BID FOR REQUIREMENTS CONTRACT WAS REJECTED AS NONRESPONSIVE FOR FAILING TO COVER FULL ESTIMATED MONTHLY REQUIREMENT FOR ITEM INVOLVED. 000 IS ADVISED THAT. EVEN THOUGH GOVERNMENT WILL FAIL TO EFFECT MONETARY SAVING IN NOT AWARDING CONTRACT TO BIDDER. IT IS INFINITELY MORE IN PUBLIC INTEREST TO MAINTAIN ESTABLISHED PRINCIPLES OF FORMAL COMPETITIVE PROCUREMENT BY GOVERNMENT AGENCIES THAN FOR GOVERNMENT TO OBTAIN PECUNIARY ADVANTAGE IN PARTICULAR CASE BY VIOLATING RULES. CONTENDING SUBJECT SOLICITATION SHOULD HAVE BEEN READVERTISED.

B-169456, JUN. 11, 1970

CONTRACTS--REQUIREMENTS--SUPPLY POTENTIAL REJECTION OF BID FOR 1 YEAR REQUIREMENTS CONTRACT FOR PLASTIC PILLOW COVERS IS SUSTAINED, BECAUSE PROTESTANT'S BID FAILED TO COVER FULL ESTIMATED MONTHLY REQUIREMENT FOR ITEM INVOLVED, AND QUESTION OF MONTHLY SUPPLY POTENTIAL AFFECTS BIDDER'S ELIGIBILITY FOR AWARD AND MUST BE CONSIDERED MATTER OF BID'S RESPONSIVENESS. SOLICITATION SPECIFICALLY ADVISED BIDDERS OF NECESSITY FOR MEETING REQUIRED MONTHLY SUPPLY POTENTIAL, AND IF CONTRACT FOR ITEM INVOLVED HAD BEEN AWARDED TO PROTESTANT, IT WOULD NOT HAVE BEEN OBLIGATED TO DELIVER GOVERNMENT'S STATED NEEDS AS REQUIRED IN SOLICITATION. SEE COMP. GEN. DECS. CITED. BIDS--COMPETITIVE SYSTEM--COMPLIANCE REQUIREMENT--PECUNIARY ADVANTAGE REGARDLESS BIDDER, WHOSE BID FOR REQUIREMENTS CONTRACT WAS REJECTED AS NONRESPONSIVE FOR FAILING TO COVER FULL ESTIMATED MONTHLY REQUIREMENT FOR ITEM INVOLVED, WHO CONTENDS THAT REJECTION OF ITS BID COST GOVERNMENT OVER $2,000 IS ADVISED THAT, EVEN THOUGH GOVERNMENT WILL FAIL TO EFFECT MONETARY SAVING IN NOT AWARDING CONTRACT TO BIDDER, IT IS INFINITELY MORE IN PUBLIC INTEREST TO MAINTAIN ESTABLISHED PRINCIPLES OF FORMAL COMPETITIVE PROCUREMENT BY GOVERNMENT AGENCIES THAN FOR GOVERNMENT TO OBTAIN PECUNIARY ADVANTAGE IN PARTICULAR CASE BY VIOLATING RULES. SEE COMP. GEN. DECS. CITED. BIDS--DISCARDING ALL BIDS--COMPELLING REASONS ONLY REJECTED BIDDER, CONTENDING SUBJECT SOLICITATION SHOULD HAVE BEEN READVERTISED, IS ADVISED THAT INTEREST OF GOVERNMENT AND INTEGRITY OF COMPETITIVE BIDDING SYSTEM REQUIRE THAT AFTER BIDS ARE OPENED AND BIDDER'S PRICES DISCLOSED SOLICITATIONS SHOULD BE CANCELED ONLY FOR MOST COGENT AND COMPELLING REASONS. FACT THAT AWARD WAS NOT MADE UNTIL 4 MONTHS AFTER BID OPENING IS NOT CONSIDERED AS CONSTITUTING SUCH REASON, PARTICULARLY SINCE AGENCY REPORTS NO SIGNIFICANT CHANGE IN MARKET CONDITIONS AND COMPLAINING BIDDER TWICE VOLUNTARILY EXTENDED HIS BID ACCEPTANCE PERIOD. FURTHER, FACTS OF CASE ARE NOT COMPATIBLE WITH REASONS ENUMERATED BY FEDERAL PROCUREMENT REGULATIONS AS REQUIRING PROCUREMENT CANCELLATION. SEE 49 COMP. GEN. (B-168521, JAN. 7, 1970).

TO WICKFORD PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 1, 1970, AND CONFIRMING LETTER DATED APRIL 7, 1970, WITH ENCLOSURES, PROTESTING THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. WA-A6-R-2123, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), FEDERAL SUPPLY SERVICE, REGION 3, WASHINGTON, D. C.

THE SOLICITATION, ISSUED ON NOVEMBER 14, 1969, INVITED BIDS FOR A REQUIREMENTS CONTRACT COVERING VARIOUS TYPES OF MEDICAL EQUIPMENT AND SUPPLIES FOR THE PERIOD FROM FEBRUARY 1, 1970, OR DATE OF AWARD, WHICHEVER WAS LATER, THROUGH JANUARY 31, 1971. PARAGRAPH 8 OF THE SOLICITATION INFORMED BIDDERS THAT BID PRICES COVERED DELIVERY TO THE VARIOUS GSA REGIONAL SUPPLY DEPOTS SPECIFIED IN THE CONTRACT WITHIN THREE SPECIFIC ZONES, ENCOMPASSING ALL GSA DEPOTS. PAGE 20 OF THE SOLICITATION CONTAINED THAT PORTION OF THE BID SCHEDULE WHICH SET FORTH GSA'S ESTIMATED PEAK MONTHLY REQUIREMENTS, INCLUDING A 12-MONTH ESTIMATE, FOR PLASTIC PILLOW COVERS, FEDERAL STOCK NUMBER 7210-958 9118, AND READS, WITH YOUR BID FIGURES INSERTED, AS FOLLOWS:

"ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT

40 ZONE I 1,428 BX 4,980 BX $5.10 $25,398.00

41 ZONE II 372 BX 2,712 BX5.20 14,102.40

42 ZONE III 396 BX 948 BX 5.35 5,071.80" PARAGRAPH 6 OF THE SOLICITATION ENTITLED "MONTHLY SUPPLY POTENTIAL," REFERRED BIDDERS TO THE ABOVE-QUOTED REQUIREMENT FOR PLASTIC PILLOW COVERS, AND CONTINUED, IN PERTINENT PART, AS FOLLOWS:

"MONTHLY SUPPLY POTENTIAL: SET FORTH IN THE SCHEDULE OF ITEMS ARE THE GOVERNMENT'S ESTIMATED REQUIREMENTS FOR THE PERIOD OF THIS CONTRACT AND ESTIMATED PEAK MONTHLY REQUIREMENTS FOR EACH ITEM COVERED BY THIS SOLICITATION. IN ORDER TO PRECLUDE THE PLACEMENT OF ORDERS WITH ANY CONTRACTOR IN EXCESS OF HIS PRODUCTION CAPACITY, OFFERORS ARE REQUESTED TO INDICATE, IN THE SPACES PROVIDED, THE TOTAL QUANTITY PER MONTH WHICH THEY ARE WILLING TO FURNISH OF ANY ITEM OR GROUP OF ITEMS INVOLVING THE USE OF THE SAME PRODUCTION FACILITIES. SINCE THE NUMBER OF ITEMS ON WHICH ANY OFFEROR MAY BE ELIGIBLE FOR AWARD CANNOT BE DETERMINED IN ADVANCE OF BID OPENING, OFFERORS ARE URGED, IN SETTING THEIR MONTHLY SUPPLY POTENTIALS, TO GROUP AS MANY ITEMS AS POSSIBLE. SUCH GROUPING WILL MAKE IT POSSIBLE FOR THE GOVERNMENT TO MAKE FULLEST USE OF THE PRODUCTION FACILITIES OF EACH OFFEROR. FOR EXAMPLE, IF AN OFFEROR'S PRODUCTION FACILITIES CAN BE USED TO PRODUCE ANY OF THE ITEMS COVERED BY THE INVITATION, THE OFFEROR MAY INSERT A SINGLE OVERALL LIMITATION ON THE QUANTITY HE CAN SUPPLY APPLICABLE TO ALL ITEMS."

BID OPENING OCCURRED ON DECEMBER 4, 1969, AND IT APPEARED THAT YOUR COMPANY BID ONLY ON THE PLASTIC PILLOW COVER REQUIREMENT OFFERING A MONTHLY SUPPLY POTENTIAL OF 1,000 BOXES FOR ITEM NO. 40, 500 BOXES FOR ITEM NO. 41, AND 500 BOXES FOR ITEM NO. 42, AT UNIT PRICES OF $5.10, $5.20, AND $5.35 PER BOX, RESPECTIVELY. FOLLOWING TWO EXTENSIONS OF THE BID ACCEPTANCE PERIOD, ORIGINALLY DUE TO EXPIRE ON FEBRUARY 2, 1970, YOUR COMPANY RECEIVED AWARDS OF CONTRACTS ON ITEMS 41 AND 42, ON MARCH 23, 1970. HOWEVER, YOUR BID ON ITEM 40 WAS REJECTED AS NONRESPONSIVE AND AWARD WAS MADE TO ANOTHER BIDDER SINCE YOUR OFFERED MONTHLY SUPPLY POTENTIAL WAS LESS THAN THE GOVERNMENT'S LISTED REQUIREMENTS FOR THAT ITEM.

YOUR COMPANY ACKNOWLEDGES THE FAILURE OF ITS BID TO COVER THE FULL ESTIMATED MONTHLY REQUIREMENT FOR ITEM NO. 40, BUT ALLEGES THAT ITS OFFERED MONTHLY SUPPLY POTENTIAL SUBMITTED AS "ROUND FIGURES" FOR ALL THREE ITEMS FALLS ONLY 196 BOXES SHORT OF GOVERNMENT REQUIREMENTS. THEREFORE, YOU URGE, " *** WHILE THIS IS AN INFINITISIMAL SUM, THE PROCUREMENT OFFICER HAS TAKEN ADVANTAGE OF THIS TECHNICALITY AND AT THE SAME TIME LOST TO THE GOVERNMENT OVER $2,000.00." IN ADDITION, YOUR COMPANY WOULD LIKE A RULING WHETHER A BID DOCUMENT CALLING FOR AN AWARD PER ITEM BASIS MEANS THE STOCK NUMBERED ITEMS OR INDIVIDUALLY NUMBERED BID SCHEDULE ITEMS, WHICH, ALTHOUGH LISTED SEPARATELY FOR DELIVERY TO DIFFERENT DESTINATIONS, CONSTITUTE THE SAME ITEM. IN CONCLUSION, YOU STATE THAT THE SOLICITATION SHOULD HAVE BEEN READVERTISED DUE TO THE PARTICULAR NATURE OF THE REQUIREMENTS AND THE ALMOST 4-MONTH DELAY BETWEEN BID OPENING AND AWARD.

WITH RESPECT TO YOUR COMPANY'S LAST CONTENTION, WE HAVE CONSISTENTLY HELD THAT THE INTEREST OF THE GOVERNMENT AND INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRE THAT, AFTER BIDS ARE OPENED AND BIDDERS' PRICES DISCLOSED, SOLICITATIONS SHOULD BE CANCELLED ONLY FOR THE MOST COGENT AND COMPELLING REASONS. SEE B-168521, JANUARY 7, 1970, AND CASES CITED THEREIN. CONTINUING IN THIS VEIN, FEDERAL PROCUREMENT REGULATIONS 1-2.404 -1 ENUMERATES SEVERAL REASONS WHICH WOULD REQUIRE CANCELLATION AND REBIDDING OF A PROCUREMENT, NONE OF WHICH IS COMPATIBLE WITH THE FACTS AND CIRCUMSTANCES OF THIS CASE. WE DO NOT CONSIDER THE FACT THAT AWARDS UNDER A SOLICITATION ARE NOT MADE UNTIL APPROXIMATELY 4 MONTHS AFTER BID OPENING, PARTICULARLY WHERE THE AGENCY REPORTS NO SIGNIFICANT CHANGE IN MARKET CONDITIONS AND THE COMPLAINING BIDDER HAS ON TWO OCCASIONS VOLUNTARILY EXTENDED HIS BID ACCEPTANCE PERIOD, REPRESENTS A COGENT OR COMPELLING REASON FOR CANCELLATION AND READVERTISING OF A SOLICITATION.

IT IS CLEAR THAT THE PROVISIONS OF THE SOLICITATION SPECIFICALLY ADVISED BIDDERS OF THE NECESSITY FOR MEETING THE REQUIRED MONTHLY SUPPLY POTENTIAL. IN THIS REGARD, PARAGRAPH 6, ON PAGE 8 OF THE SOLICITATION STATES IN PERTINENT PART AS FOLLOWS:

"THE OFFEROR SHALL, IF AWARDED A CONTRACT FOR THE ITEMS) INVOLVED, BE REQUIRED TO ACCEPT ALL ORDERS RECEIVED BY HIM DURING ANY ONE (1) CALENDAR MONTH, THE TOTAL OF WHICH DOES NOT EXCEED HIS STATED MONTHLY SUPPLY POTENTIAL. THE SUCCESSFUL OFFEROR (CONTRACTOR) MAY, WITH RESPECT TO ANY ITEMS), REFUSE TO ACCEPT ORDERS, OR PORTIONS THEREOF, RECEIVED DURING ANY ONE (1) CALENDAR MONTH WHICH EXCEED HIS STATED MONTHLY SUPPLY POTENTIAL; PROVIDED, THAT SUCH REFUSAL TO ACCEPT IS COMMUNICATED TO THE OFFICE ISSUING SUCH ORDERS WITHIN FIVE (5) DAYS OF RECEIPT OF THE ORDER BY THE CONTRACTOR; FURTHER, THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER THAT HE HAS REACHED HIS STATED MONTHLY SUPPLY POTENTIAL AND THAT HE WILL NOT ACCEPT ADDITIONAL ORDERS FOR THAT MONTH. FAILURE TO COMMUNICATE THE REFUSAL TO ACCEPT TO THE OFFICE ISSUING THE ORDER WITHIN THE TIME REQUIRED SHALL BE DEEMED TO BE ACCEPTANCE OF THE ORDER BY THE CONTRACTOR. SHIPMENT OF ALL ORDERS, OR PORTIONS THEREOF, IN EXCESS OF THE CONTRACTOR'S STATED MONTHLY SUPPLY POTENTIAL WHICH HAVE BEEN ACCEPTED, OR DEEMED TO HAVE BEEN ACCEPTED, BY THE CONTRACTOR SHALL BE MADE THE SAME NUMBER OF DAYS AS IS REQUIRED FOR THOSE ORDERS NOT IN EXCESS OF THE STATED MONTHLY SUPPLY POTENTIAL. THE CONTRACTOR SHALL NOT ACCEPT ANY OF THESE ORDERS AGAINST HIS MONTHLY SUPPLY POTENTIAL FOR THE SUCCEEDING MONTH. ORDERS, OR PORTIONS THEREOF, WHICH HAVE BEEN PROPERLY REFUSED BY THE CONTRACTOR SHALL BE PROCURED OUTSIDE OF THIS CONTRACT WITHOUT PREJUDICE TO THE CONTRACTOR." ALSO, PARAGRAPH 5, DEALING WITH THE METHOD OF AWARD, READS AS FOLLOWS:

"5. METHOD OF AWARD: AWARDS WILL BE MADE, ITEM-BY-ITEM, ON THE BASIS OF THE GOVERNMENT'S ESTIMATED PEAK MONTHLY REQUIREMENTS TO THE LOW RESPONSIVE OFFERORS UP TO THEIR STATED MONTHLY SUPPLY POTENTIALS. WITHIN THE LIMITS PRESCRIBED BY THE OFFEROR, THE GOVERNMENT WILL APPLY OFFEROR'S MONTHLY SUPPLY POTENTIALS TO ANY ITEMS BID UPON, AS THE GOVERNMENT'S INTERESTS REQUIRE. IN ORDER TO QUALIFY FOR AN AWARD, AN OFFEROR MUST OFFER A MONTHLY SUPPLY POTENTIAL TO COVER THE GOVERNMENT'S REQUIREMENTS ON AT LEAST ONE LINE ITEM. INDIVIDUAL ITEM QUANTITIES WILL NOT BE SUBDIVIDED FOR AWARD PURPOSES."

IN ADDITION, PARAGRAPH 1 OF THE SOLICITATION DISCUSSING THE SCOPE OF THE CONTRACT STATED THAT:

" *** THE CONTRACTOR IS OBLIGATED TO DELIVER HEREUNDER ALL SUCH QUANTITIES AS MAY BE ORDERED FROM TIME TO TIME. *** ."

WE HAVE HAD OCCASION TO CONSIDER THE NATURE OF A DEVIATION FROM SOLICITATION REQUIREMENTS INVOLVING MONTHLY SUPPLY POTENTIAL CLAUSES SIMILAR TO THE CLAUSE INVOLVED IN THIS CASE. IN B-165254, NOVEMBER 7, 1968, WE HELD THAT " *** THE QUESTION OF MONTHLY SUPPLY POTENTIAL AFFECTS A BIDDER'S ELIGIBILITY FOR AWARD ON VARIOUS ITEMS AND MUST BE CONSIDERED A MATTER OF RESPONSIVENESS OF THE BID." SEE, ALSO, 45 COMP. GEN. 611, 612 (1966), 46 COMP. GEN. 856, 859 (1967) AND B-167242, SEPTEMBER 4, 1969. THEREFORE, WE CONCUR WITH THE AGENCY'S ACTIONS IN REJECTING YOUR BID ON ITEM NO. 40 AS NONRESPONSIVE SINCE YOUR BID OFFERED A MONTHLY SUPPLY POTENTIAL OF 1,000 BOXES, 428 BOXES LESS THAN THE GSA REQUIREMENTS. IF A CONTRACT HAD BEEN AWARDED TO YOUR COMPANY ON ITEM 40, IT WOULD NOT HAVE BEEN OBLIGATED TO DELIVER THE GOVERNMENT'S STATED NEEDS AS REQUIRED IN THE SOLICITATION.

YOUR COMPANY WISHES A RULING ON THE DEFINITION OF THE "AWARD PER ITEM" CLAUSE IN THIS SOLICITATION. A REVIEW OF THE SOLICITATION REVEALS THAT NO REASONABLE INTERPRETATION OTHER THAN THAT MADE BY THE CONTRACTING OFFICER IS POSSIBLE. SPECIFICALLY, THE BID SCHEDULE, PREVIOUSLY QUOTED, DESIGNATES THE TITLE OF COLUMN ONE AS "ITEM NO." ACCORDING TO THE DICTATES OF PARAGRAPH 5 OF THE SOLICITATION, AWARD WAS TO BE MADE ON AN "ITEM-BY-ITEM" BASIS. THE PLASTIC PILLOW COVERS BEING PROCURED WERE FOR DELIVERY AT DIFFERENT DESTINATIONS GROUPED INTO ZONES THROUGHOUT THE COUNTRY. IT WOULD BE UNREASONABLE TO ASSUME THAT AWARD ON AN ITEM BASIS, UNDER THE PARTICULAR PROVISIONS OF THIS SOLICITATION, MEANT THE STOCK NUMBERED ITEM. IF YOUR INTERPRETATION OF THE SOLICITATION WERE CORRECT, YOUR ENTIRE BID FOR THE PLASTIC PILLOW COVERS COULD HAVE BEEN REJECTED AS NONRESPONSIVE, SINCE, ADMITTEDLY, YOUR BID OFFERS 196 BOXES LESS THAN THE TOTAL GOVERNMENT REQUIREMENTS FOR THE THREE ITEMS.

EVEN THOUGH GSA WILL FAIL TO EFFECT A MONETARY SAVING IN NOT AWARDING YOUR COMPANY THE CONTRACT UNDER ITEM NO. 40, WE HAVE HELD THAT IT IS INFINITELY MORE IN THE PUBLIC INTEREST TO MAINTAIN THE ESTABLISHED PRINCIPLES OF FORMAL COMPETITIVE PROCUREMENT BY GOVERNMENT AGENCIES THAN FOR THE GOVERNMENT TO OBTAIN A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES. B-167787, NOVEMBER 4, 1969, AND CASES CITED THEREIN; B-167242, SUPRA. ..END :