B-169994, AUG. 14, 1970

B-169994: Aug 14, 1970

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AWARD WAS MADE TO CATERPILLAR TRACTOR COMPANY ON BASIS OF SINGLE YEAR REQUIREMENT BUT ALLIS-CHALMER IS LOW ON OPTION QUANTITIES. THE LOWER BID MUST BE CONSIDERED IF SUBSTANTIAL ADDITIONAL QUANTITIES ARE REQUIRED UNDER THE OPTION. TO GENERAL HEDLUND: REFERENCE IS MADE TO THE PROTEST OF ALLIS-CHALMERS MANUFACTURING COMPANY UNDER SOLICITATION NO. THE SUBJECT INVITATION WAS ISSUED ON FEBRUARY 3. IT WAS PROVIDED THAT AWARD WOULD BE MADE EITHER ON THE SINGLE OR MULTI-YEAR BASIS. BIDS FROM ALLIS-CHALMERS AND CATERPILLAR TRACTOR COMPANY WERE OPENED ON MAY 7. THE BIDS WERE SUBMITTED ON AN F.O.B. ALLIS-CHALMERS PROTESTED CONTENDING THAT THE LOWER FREIGHT RATE ($2.36 PER HUNDRED WEIGHT) WAS PROPER FOR BOTH BIDDERS.

B-169994, AUG. 14, 1970

BID PROTEST -- SINGLE V MULTI-YEAR PROCUREMENT WHERE UNDER SOLICITATION FOR SINGLE AND MULTI-YEAR BIDS ON TRACTORS, AWARD WAS MADE TO CATERPILLAR TRACTOR COMPANY ON BASIS OF SINGLE YEAR REQUIREMENT BUT ALLIS-CHALMER IS LOW ON OPTION QUANTITIES, THE LOWER BID MUST BE CONSIDERED IF SUBSTANTIAL ADDITIONAL QUANTITIES ARE REQUIRED UNDER THE OPTION.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO THE PROTEST OF ALLIS-CHALMERS MANUFACTURING COMPANY UNDER SOLICITATION NO. DSA 700-70-B-1921, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER AT COLUMBUS, OHIO. (YOUR REFERENCE: DSAH G).

THE SUBJECT INVITATION WAS ISSUED ON FEBRUARY 3, 1970, AND AS AMENDED CALLED FOR SINGLE AND MULTI-YEAR BIDS ON TRACTORS. IT WAS PROVIDED THAT AWARD WOULD BE MADE EITHER ON THE SINGLE OR MULTI-YEAR BASIS, DEPENDING UPON WHICHEVER BASIS WOULD RESULT IN THE LOWEST EVALUATED UNIT COST. THE INVITATION ALSO PROVIDED FOR OPTION QUANTITIES BUT STATED THAT THE OPTION QUANTITIES WOULD NOT BE CONSIDERED IN THE EVALUATION OF BIDS UNLESS THE GOVERNMENT ELECTED TO EXERCISE THE OPTION AT THE TIME OF AWARD.

BIDS FROM ALLIS-CHALMERS AND CATERPILLAR TRACTOR COMPANY WERE OPENED ON MAY 7, 1970. THE BIDS WERE SUBMITTED ON AN F.O.B. ORIGIN BASIS, AND IN EVALUATING THESE BIDS YOUR AGENCY CONTEMPLATED USING DIFFERENT FREIGHT RATES, WITH A HIGHER RATE APPLICABLE IN THE CASE OF ALLIS CHALMERS. HOWEVER, ALLIS-CHALMERS PROTESTED CONTENDING THAT THE LOWER FREIGHT RATE ($2.36 PER HUNDRED WEIGHT) WAS PROPER FOR BOTH BIDDERS.

WHILE THE PROTEST WAS PENDING, YOUR AGENCY DETERMINED THAT AN IMMEDIATE AWARD MUST BE MADE DUE TO THE URGENCY OF THE PROCUREMENT. THE USER AGENCY (U. S. ARMY MOBILITY EQUIPMENT COMMAND) ADVISED THE CONTRACTING OFFICER THAT OPTION QUANTITIES WERE NOT REQUIRED AT THE PRESENT TIME. BIDS WERE THUS EVALUATED WITHOUT REGARD TO THE OPTION QUANTITIES, AND THE LOWEST UNIT PRICE TO THE GOVERNMENT RESULTED ON THE BASIS OF A SINGLE-YEAR AWARD TO CATERPILLAR. AS STATED IN THE ADMINISTRATIVE REPORT, THIS BID BY CATERPILLAR REMAINED LOW EVEN WITH THE APPLICATION OF THE $2.36 FREIGHT RATE TO BOTH ALLIS-CHALMERS AND CATERPILLAR. ACCORDINGLY, ON JUNE 25, 1970, A CONTRACT WAS AWARDED TO CATERPILLAR FOR THE SINGLE-YEAR REQUIREMENT (414 TRACTORS) WITHOUT EXERCISE OF THE OPTION.

ALLIS-CHALMERS DOES NOT CHALLENGE THIS AWARD. BUT IT DOES POINT OUT A FACTOR WHICH SHOULD BE CONSIDERED IN CONNECTION WITH THE POSSIBLE EXERCISE OF THE OPTION QUANTITIES. THE CONTRACT INCLUDES A 100-PERCENT OPTION PROVISION. IN QUOTING ON THIS QUANTITY CATERPILLAR INCREASED ITS UNIT PRICES WHILE ALLIS-CHALMERS APPLIED ITS BASIC BID PRICES TO THE OPTION, PROVIDING THE OPTION WAS EXERCISED PRIOR TO OCTOBER 1970 (THEREAFTER THE ALLIS-CHALMERS PRICES WERE ALSO SUBJECT TO INCREASES). THE FOLLOWING TABLE WILL ILLUSTRATE THE PRICES QUOTED PRIOR TO OCTOBER 1970:

BASIC UNITS OPTION UNITS

ALLIS-CHALMERS (334 UNITS) $35,981 $35,981 *

(80 UNITS) $36,261 $36,261 *

CATERPILLAR (334 UNITS) $35,600 $37,380

(80 UNITS) $34,630 $36,362

*OPTION PRICES INCREASE BY AT LEAST $1825 PER UNIT AFTER OCTOBER 1, 1970.

AS SHOWN IN THE ADMINISTRATIVE REPORT, TOTAL GOVERNMENT FREIGHT COST ON THE 414 ALLIS-CHALMERS UNITS ARE EVALUATED AT $593,542 OR $542,509, DEPENDING ON WHETHER A $2.67 CWT. OR $2.36 CWT. RATE IS APPLIED. EITHER CASE, THE ALLIS-CHALMERS OPTION PRICES ARE LOWER THAN THOSE QUOTED IN THE CATERPILLAR BID UNDER THE SINGLE-YEAR CONTRACT IF THE OPTION IS EXERCISED PRIOR TO OCTOBER 1970. WE THINK THIS MUST BE CONSIDERED IF THE USER SHOULD REQUIRE ANY SUBSTANTIAL ADDITIONAL QUANTITIES OF THESE UNITS PRIOR TO OCTOBER 1970.

ON THE QUESTION OF THE FREIGHT RATE APPLICABLE TO ALLIS-CHALMERS, WE SEE NO NEED TO RENDER AN OPINION AT THIS TIME.