B-170516, OCT. 22, 1970

B-170516: Oct 22, 1970

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SUCH NOTATION IS DEEMED A PRICE ESCALATION AND SUCH ITEMS SHOULD BE EVALUATED AT THE MAXIMUM POSSIBLE PRICE WHEN THE INVITATION FOR BIDS DOES NOT CONTAIN A PRICE ESCALATION CLAUSE. THE AWARD TO THE SUCCESSFUL BIDDER WILL NOT BE CANCELLED BECAUSE OF AN ERROR IN THE ESTIMATE OF THE NUMBER OF ITEMS USED OR ON ANNUAL BASIS FOR WHICH BIDS WERE SOUGHT AND THEREFORE THE PROTEST MUST BE DENIED. INC.: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 5. WHICH WAS ISSUED BY THE NAVAL REGIONAL PROCUREMENT OFFICE. UNDER THE IFB BIDS WERE REQUESTED FOR THE OPERATIONS AND SERVICES OF ALL PHASES OF GRAPHIC ARTS NECESSARY FOR TECHNICAL RESEARCH. THE GOVERNMENT WILL DETERMINE THE REASONABLENESS OF ALL TIME CHARGES. "8.

B-170516, OCT. 22, 1970

BID PROTEST - NEGOTIATIONS DENIAL OF PROTEST BY HIGH BIDDER AGAINST THE AWARD OF A CONTRACT TO SUPPLY RESEARCH AND MATERIAL FOR THE MANUFACTURE OF COLD TYPE COMPOSITION TO THE NAVAL REGIONAL PROCUREMENT OFFICE TO SPACE DATA SCIENCES. WHERE PROTESTANT QUALIFIES SUBMITTED PRICE BY A REFERENCE TO A HIGHER PRICE, SUCH NOTATION IS DEEMED A PRICE ESCALATION AND SUCH ITEMS SHOULD BE EVALUATED AT THE MAXIMUM POSSIBLE PRICE WHEN THE INVITATION FOR BIDS DOES NOT CONTAIN A PRICE ESCALATION CLAUSE. FURTHER, THE AWARD TO THE SUCCESSFUL BIDDER WILL NOT BE CANCELLED BECAUSE OF AN ERROR IN THE ESTIMATE OF THE NUMBER OF ITEMS USED OR ON ANNUAL BASIS FOR WHICH BIDS WERE SOUGHT AND THEREFORE THE PROTEST MUST BE DENIED.

TO ASSOCIATED TECHDATA, INC.:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 5, 1970, AND SUBSEQUENT CORRESPONDENCE CONCERNING YOUR PROTEST UNDER INVITATION FOR BIDS (IFB) NO. N66314-70-B-4813, WHICH WAS ISSUED BY THE NAVAL REGIONAL PROCUREMENT OFFICE, OAKLAND, CALIFORNIA. UNDER THE IFB BIDS WERE REQUESTED FOR THE OPERATIONS AND SERVICES OF ALL PHASES OF GRAPHIC ARTS NECESSARY FOR TECHNICAL RESEARCH, EDITING, WRITING, DESIGN ILLUSTRATIONS, ART, AIR-BRUSH RENDERING AND RE-TOUCH, LAYOUT AND FOR THE MANUFACTURE OF JUSTIFIED AND UNJUSTIFIED COLD TYPE COMPOSITION FROM AUGUST 1, 1970, THROUGH JULY 31, 1971, WITH AN OPTION TO EXTEND THE CONTRACT FOR AN ADDITIONAL YEAR.

THE IFB CONTAINED THE FOLLOWING PERTINENT PROVISIONS:

"2.1.13 TIME CHARGES

SUBJECT TO THE PROVISIONS OF THE DISPUTES CLAUSE, THE GOVERNMENT WILL DETERMINE THE REASONABLENESS OF ALL TIME CHARGES.

"8. LATE OFFERS AND MODIFICATIONS OR WITHDRAWALS

"(A) OFFERS AND MODIFICATIONS OF OFFERS (OR WITHDRAWALS THEREOF, IF THIS SOLICITATION IS ADVERTISED) RECEIVED AT THE OFFICE DESIGNATED IN THE SOLICITATION AFTER THE EXACT HOUR AND DATE SPECIFIED FOR RECEIPT WILL NOT BE CONSIDERED UNLESS: (1) THEY ARE RECEIVED BEFORE AWARD IS MADE; AND EITHER (2) THEY ARE SENT BY REGISTERED MAIL, OR BY CERTIFIED MAIL FOR WHICH AN OFFICIAL DATED POST OFFICE STAMP (POSTMARK) ON THE ORIGINAL RECEIPT FOR CERTIFIED MAIL HAS BEEN OBTAINED AND IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO DELAY IN THE MAILS FOR WHICH THE OFFEROR WAS NOT RESPONSIBLE; OR (3) IF SUBMITTED BY MAIL (OR BY TELEGRAM IF AUTHORIZED) IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO MISHANDLING BY THE GOVERNMENT AFTER RECEIPT AT THE GOVERNMENT INSTALLATION; PROVIDED, THAT TIMELY RECEIPT AT SUCH INSTALLATION IS ESTABLISHED UPON EXAMINATION OF AN APPROPRIATE DATE OR TIME STAMP (IF ANY) OF SUCH INSTALLATION, OR OF OTHER DOCUMENTARY EVIDENCE OF RECEIPT (IF READILY AVAILABLE) WITHIN THE CONTROL OF SUCH INSTALLATION OR OF THE POST OFFICE SERVING IT. HOWEVER, A MODIFICATION OF AN OFFER WHICH MAKES THE TERMS OF AN OTHERWISE SUCCESSFUL OFFER MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED AND MAY THEREAFTER BE ACCEPTED."

ITEM 25 OF THE SCHEDULE OF THE IFB SET FORTH A REQUIREMENT FOR "TITLE" AND "A" PAGES AS FOLLOWS: ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT PRICE 25. TITLE AND "A" PAGES AS FOLLOWS:

A. TITLE PAGE (MIL SPEC - TYPESET) 1)

JUSTIFIED 50 $

(PER UNIT) 2)

UNJUSTIFIED 50 $

(PER UNIT)

B. "A" PAGE (MIL SPEC - TYPESET) 1)

JUSTIFIED 2000 $

(PER UNIT) 2)

UNJUSTIFIED 2000 $

(PER UNIT)

C. TITLE PAGE (MIL SPEC - PHOTO COMPOSITION)

1) JUSTIFIED 50 $

(PER UNIT) 2)

UNJUSTIFIED 50 $

(PER UNIT)

D. "A" PAGE (MIL SPEC - IBM SELECTRIC

COMPOSER) 1) JUSTIFIED 500

$ (PER

UNIT) 2) UNJUSTIFIED 500 $

(PER

UNIT)

FOR SUB-ITEMS B(1), B(2) AND D(1), D(2) OF ITEM 25 YOU INSERTED UNIT PRICES OF $2.00 AND APPENDED ASTERISKS TO THOSE SUB-ITEMS WHICH REFERENCED THE FOLLOWING NOTATION:

"* MAXIMUM PRICE FOR FULL PAGE - $10.00 PARTIAL PAGES AT $10.00 PER ITEM WITH A $2.00 MINIMUM."

THE CONTRACTING OFFICER DETERMINED THAT SUCH NOTATION WAS A PRICE ESCALATION PROVISION AND CONCLUDED THAT THE SUB-ITEMS SHOULD THEREFORE BE EVALUATED AT THE MAXIMUM POSSIBLE PRICE OF $10.00 PER UNIT IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 407.4(A), QUOTED AS FOLLOWS:

"2-407.4 PRICE ESCALATION.

(A) WHERE AN INVITATION FOR BIDS DOES NOT CONTAIN A PRICE ESCALATION CLAUSE, BIDS RECEIVED, WHICH QUOTE A PRICE AND CONTAIN A PRICE ESCALATION PROVISION WITH A CEILING ABOVE WHICH THE PRICE WILL NOT ESCALATE, WILL BE EVALUATED ON THE MAXIMUM POSSIBLE ESCALATION OF THE QUOTED BASE PRICE. THE BID IS ELIGIBLE FOR AWARD, THE CONTRACTING OFFICER SHALL REQUEST THE BIDDER TO AGREE TO THE INCLUSION IN THE AWARD OF AN APPROVED ESCALATION CLAUSE SUBJECT TO THE SAME CEILING. IF THE BIDDER WILL NOT AGREE TO SUCH APPROVED CLAUSE, THE AWARD MAY BE MADE ON THE BASIS OF THE BID AS ORIGINALLY SUBMITTED. BIDS WHICH CONTAIN ESCALATION WITH NO CEILING SHALL BE REJECTED UNLESS A CLEAR BASIS FOR EVALUATION EXISTS."

THE ACTION OF THE CONTRACTING OFFICER IN CALCULATING THE PRICE IN THIS MANNER CAUSED YOUR TOTAL BID TO BE EVALUATED AS THE HIGHEST OFFER RECEIVED AS FOLLOWS:

OFFEROR TOTAL DISCOUNT OFFERED NET TOTAL SPACE DATA SCIENCES

$126,215.90 0.50% - 20 DAYS $125,584.82 W. B. ASSOCIATES 132,490.75 1.50% - 10 DAYS 130,503.39 TECHNICOM 137,624.75 0.50% - 20 DAYS 136,936.63 PRIME PUBLICATIONS, INC. 148,162.25 1.00% - 20 DAYS 146,680.63 ASSOCIATED TECHDATA, INC. 156,999.80 0.50% - 10 DAYS 156,214.80

PURSUANT TO A DETERMINATION THAT SPACE DATA SCIENCES HAD SUBMITTED THE LOWEST RESPONSIVE BID FOR THE PROCUREMENT, AND SINCE THE CONCERN WAS OTHERWISE CONSIDERED A RESPONSIBLE CONTRACTOR, AN AWARD FOR THE REQUIREMENT WAS MADE TO THE COMPANY ON AUGUST 1, 1970.

YOU MAINTAIN THAT THE CONTRACTING OFFICER SHOULD HAVE EVALUATED ITEM 25 OF YOUR OFFER ON THE BASIS OF THE MINIMUM PRICE INDICATED THEREIN, SINCE YOU STATE THE PURPOSE OF THE APPENDED NOTATION, QUOTED ABOVE, WAS NOT TO CHANGE THE BASIC CHARGE FOR AN "A" PAGE BUT TO SUMMARIZE THE TIME WORK CHARGES FOR THE MATERIAL THAT WOULD BE ADDED TO THE "A" PAGE; THAT THE CONTRACTING OFFICER SHOULD HAVE PERMITTED YOU TO SUBMIT A MODIFICATION OF YOUR OFFER PURSUANT TO SOLICITATION INSTRUCTIONS AND CONDITIONS NO. 8(A) WHEN THE PROCURING ACTIVITY DECIDED TO EVALUATE YOUR OFFER FOR THESE ITEMS AT TEN DOLLARS PER UNIT; THAT THE CONTRACTING OFFICER'S METHOD OF EVALUATION IS INCONSISTENT WITH THE EVALUATION OF YOUR PRICES FOR THE IDENTICAL ITEMS UNDER THE 1969 FISCAL YEAR CONTRACT FOR THESE SERVICES; AND THAT THE ESTIMATED QUANTITIES OF THESE ITEMS ARE INACCURATE.

THE NAVY HAS CONFIRMED YOUR STATEMENT THAT AN ERROR WAS APPARENTLY MADE BY THE REQUISITIONING ACTIVITY IN ESTIMATING THE ANNUAL USAGE OF ITEMS 25B(1), B(2), D(1) AND D(2). BECAUSE OF THIS DISCREPANCY THE NAVY HAS ADVISED US THAT IT WILL NOT EXERCISE THE OPTION FOR EXTENDING THE CONTRACT FOR AN ADDITIONAL YEAR AND THAT PARTICULAR ATTENTION WILL BE GIVEN TO ACTUAL USAGE UNDER THE CURRENT CONTRACT IN PREPARING NEXT YEAR'S SOLICITATION. HOWEVER, THE NAVY STATES THAT YOU SHOULD HAVE BROUGHT THIS DISCREPANCY TO THE ATTENTION OF THE CONTRACTING OFFICER PRIOR TO BID OPENING SINCE YOU WERE THE INCUMBENT CONTRACTOR FOR THE ITEMS AND KNEW THAT THE ESTIMATED QUANTITIES WERE IN ERROR. IN VIEW THEREOF, AND INSOFAR AS THE DEPARTMENT CONSIDERS THAT THE AWARD TO SPACE DATA SCIENCES WAS MADE AT A REASONABLE PRICE, WE CANNOT CONCLUDE THAT THE AWARD SHOULD BE CANCELLED FOR THIS REASON.

CONCERNING YOUR ALLEGATION THAT THE NOTATION WHICH YOU APPENDED TO THE SUB-ITEMS IN QUESTION SHOULD NOT HAVE BEEN CONSIDERED AS AN ESCALATION OF THE BASIC PRICE OF AN "A" PAGE, IT IS THE WELL ESTABLISHED POSITION OF OUR OFFICE THAT QUESTIONS INVOLVING THE INTERPRETATION OF A BID MUST BE DETERMINED BY EXAMINATION OF THE BID ITSELF WITHOUT REFERENCE TO EXTRANEOUS EXPLANATIONS SUBMITTED BY THE BIDDER AFTER BID OPENING. COMP. GEN. 221 (1965). ALLOWING CONSIDERATION OF SUCH EXPLANATIONS WOULD CONFER ON THE BIDDER THE OPTION OF ACCEPTING AN AWARD BY PRESENTING AN INTERPRETATION OF THE MATTER IN QUESTION WHICH WOULD MAKE HIS BID THE LOWEST, RESPONSIVE OFFER FOR THE PROCUREMENT, OR ELECTING NOT TO PRESENT SUCH INTERPRETATION AND AVOIDING ELIGIBILITY FOR AWARD. CONSIDERATION OF SUCH EXPLANATIONS WOULD BE MANIFESTLY UNFAIR TO THOSE BIDDERS WHO DID NOT SEEK TO CLARIFY THEIR OFFERS AFTER BID OPENING. IN VIEW THEREOF, WE MUST DETERMINE THE LEGAL EFFECT OF THE NOTE WHICH YOU APPENDED TO ITEM 25 BY RESTRICTING OUR ANALYSIS TO THE CONTENTS OF YOUR BID.

WE NOTE THAT THE ASTERISKS WHICH YOU APPENDED TO THE SUB-ITEMS IN QUESTION ARE POSITIONED TO THE RIGHT OF THE UNIT PRICES FOR THESE ITEMS AND ARE CROSS-REFERENCED TO OTHER ASTERISKS PRECEDING THE NOTATIONS AT THE BOTTOM OF PAGES SIXTEEN AND SEVENTEEN. IN THIS PERSPECTIVE THE DATA CONTAINED IN THE NOTATIONS MUST BE EVALUATED IN DETERMINING THE ULTIMATE UNIT PRICES FOR THE SUB ITEMS. WE BELIEVE SUCH CONCLUSION IS NECESSITATED WHETHER AN "A" PAGE IS CONSIDERED THE "LIST OF EFFECTIVE PAGES" AS YOU ALLEGE OR IS CONSIDERED MERELY AN A SIZED PAGE AS AN EMPLOYEE OF THE REQUISITIONING ACTIVITY CONTENDS.

THE NOTATIONS STATE THAT THE MAXIMUM PRICE FOR AN "A" PAGE IS TEN DOLLARS. SINCE SUCH STATEMENT OBVIOUSLY QUALIFIES THE TWO DOLLAR UNIT PRICE WHICH YOU INSERTED IN THE BLANK SPACES AFTER THE SUB-ITEMS, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER UNREASONABLY DETERMINED THAT THE NOTATION SHOULD BE CONSIDERED A PRICE ESCALATION PROVISION AND THAT YOUR BID FOR THE ITEMS SHOULD BE EVALUATED AT TEN DOLLARS RATHER THAN TWO DOLLARS IN ACCORDANCE WITH THE QUOTED ASPR PROVISION.

WHILE YOU MAINTAIN THAT THE NOTATION MERELY SUMMARIZES THE TIME WORK CHARGES WHICH YOU SET FORTH IN ITEM 29 OF YOUR BID, AND THAT YOU DID NOT INTEND TO LIST ANY ADDITIONAL CHARGES FOR A BASIC "A" PAGE BY INSERTING SUCH QUALIFICATIONS, WE CANNOT CONCLUDE THAT SUCH INTENT IS CLEAR FROM THE FACE OF YOUR BID. IF THIS WAS YOUR INTENT, WE BELIEVE YOU SHOULD HAVE CROSS-REFERENCED ITEM 29 WITH SUCH NOTATION AND INSERTED A SPECIFIC STATEMENT THAT THE PRICING DATA INSERTED IN THE NOTATION WOULD NOT AFFECT THE UNIT PRICE FOR THE "A" PAGES.

FURTHERMORE, IN REGARD TO YOUR STATEMENT THAT SUCH NOTATION WAS INSERTED MERELY AS A CONVENIENCE FOR THE GOVERNMENT TO PRECISELY FIX THE TIME WORK CHARGES FOR "A" PAGES SO THAT THERE WOULD NOT BE ANY DISPUTE OVER THE CHARGES FOR THESE PAGES, AND TO ENABLE THE GOVERNMENT TO TAKE ADVANTAGE OF YOUR PROMPT PAYMENT DISCOUNT, SECTION 2.1.13 OF THE IFB SPECIFICALLY RESERVED THE RIGHT OF THE GOVERNMENT TO QUESTION THE REASONABLENESS OF TIME CHARGES. IN THIS PERSPECTIVE YOUR EXTRANEOUS EXPLANATION OF THE PURPOSE OF THIS INSERTION WOULD HAVE TO BE VIEWED AS AN ATTEMPT TO NEGATE SECTION 2.1.13 AND WOULD THEREFORE RAISE A SERIOUS QUESTION AS TO THE ACCEPTABILITY OF YOUR BID, IF OUR OFFICE WAS PERMITTED TO CONSIDER SUCH EXPLANATION IN INTERPRETING YOUR BID.

CONCERNING YOUR ALLEGATION THAT THE CONTRACTING OFFICER SHOULD HAVE ALLOWED YOU TO SUBMIT A MODIFICATION OF YOUR OFFER PURSUANT TO SOLICITATION INSTRUCTION NO. 8(A), QUOTED ABOVE, SUCH CLAUSE PERMITS THE PROCURING ACTIVITY TO CONSIDER A MODIFICATION OF AN OFFER SUBMITTED BY THE OTHERWISE SUCCESSFUL BIDDER. SINCE YOUR CONCERN WAS NOT THE OTHERWISE SUCCESSFUL BIDDER AFTER YOUR BID FOR THE "A" PAGES WAS PROPERLY EVALUATED AT TEN DOLLARS PER UNIT UNDER THE PROCUREMENT, THE CONTRACTING OFFICER COULD NOT CONSIDER ANY MODIFICATION WHICH YOU SUBMITTED AFTER BID OPENING.

CONCERNING YOUR ALLEGATION THAT YOUR BID FOR THE IDENTICAL SUB-ITEMS WAS EVALUATED IN A DIFFERENT MANNER UNDER LAST YEAR'S CONTRACT FOR THIS REQUIREMENT, THE CONTRACTING OFFICER HAS FORWARDED A COPY OF CONTRACT NO. N00228-69-B-1091. EXAMINATION OF ITEMS 9B AND 9D OF THAT AGREEMENT REVEALS THAT YOU BID AS FOLLOWS: ITEM SUPPLIES/ QUANTITY UNIT UNIT PRICE AMOUNT NO. SERVICES

9. B. "A" PAGE (MIL SPEC -

TYPESET)

1) JUSTIFIED 6,000 UNIT $10.00 $60,000.00

(PER UNIT)

2) UNJUSTIFIED 6,000 UNIT $10.00 $60,000.00

* * * * * D. "A" PAGE (MIL

SPEC -

IBM SELECTRIC

COMPOSER)

1) JUSTIFIED 2,500 UNIT$10.00 $25,000.00

2) UNJUSTIFIED 2,500 UNIT $10.00 $25,000.00

(PER UNIT) MAXIMUM PRICE FOR FULL PAGE -- PARTIAL PAGES AT $0.01/ITEM WITH $2.00 MINIMUM."

WE ASSUME THAT YOUR BID WAS EVALUATED ON THE BASIS OF TEN DOLLARS PER UNIT SINCE THIS WAS THE MAXIMUM PRICE WHICH YOU INDICATED FOR THESE UNITS. ACCORDINGLY, WE CANNOT CONCLUDE THAT SUCH EVALUATION IS INCONSISTENT WITH THE EVALUATION OF YOUR BID IN THE SUBJECT CASE WHERE THE ITEMS IN QUESTION ARE ALSO BEING PRICED AT THE MAXIMUM COST INDICATED IN YOUR OFFER. FOR THE REASONS SET FORTH ABOVE YOUR PROTEST MUST BE DENIED.