B-170791, MAR 17, 1971

B-170791: Mar 17, 1971

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ALTHOUGH THE INSTANT SOLICITATION PROCEDURE INCLUDED SEVERAL DEFECTS: THERE WAS A LIMITATION ON MINIMUM QUANTITY. TO REYNOLDS METALS COMPANY: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 3. THE IFB WAS ISSUED AUGUST 3. THERE WAS A 3. SEVEN AMENDMENTS WERE ISSUED DURING THE PERIOD AUGUST 6. AMENDMENTS NOS. 000006 AND 000007 ARE THE ONLY AMENDMENTS PERTINENT TO THE PROTEST. THE AMENDMENT FURTHER PROVIDED THAT "THE RESULTING CONTRACTS WILL BE AWARDED ON THE BASIS OF THAT QUANTITY AND PRICE COMBINATION WHICH IS MOST ADVANTAGEOUS TO THE GOVERNMENT.". OFFERS WHICH ARE LESS THAN THE QTYS INDICATED WILL BE REJECTED AS NONRESPONSIVE.". 600 30 DECEMBER 1970 THE IFB WAS ISSUED TO EIGHT PROSPECTIVE OFFERORS.

B-170791, MAR 17, 1971

BID PROTEST DECISION DENYING PROTEST AGAINST AWARD OF A CONTRACT TO ALUMINUM COMPANY OF AMERICA UNDER IFB ISSUED BY THE DEPARTMENT OF THE NAVY, SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PA., FOR A TOTAL OF 9,136,200 POUND OF CHEMICAL ALUMINUM POWDER, INCLUDING A 3,000,000 POUND SMALL BUSINESS SET- ASIDE. ALTHOUGH THE INSTANT SOLICITATION PROCEDURE INCLUDED SEVERAL DEFECTS: THERE WAS A LIMITATION ON MINIMUM QUANTITY; THE ADMINISTRATIVE COSTS ADDED TO THE BASE AMOUNT FOR A SPLIT AWARD DID NOT NECESSITATE A SINGLE AWARD. THE MANNER OF SOLICITATION DID NOT ENABLE ALL BIDDERS TO BID EQUALLY; BUT, BECAUSE CONTRACT HAS BEEN SUBSTANTIVELY COMPLETED, THE PROTEST MUST BE DENIED.

TO REYNOLDS METALS COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 3, 1970, AND PRIOR CORRESPONDENCE FROM YOUR COMPANY, PROTESTING AWARD OF A CONTRACT UNDER INVITATION FOR BIDS (IFB) NO. N00104-70-B-2354, ISSUED BY THE DEPARTMENT OF THE NAVY, SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA.

THE IFB WAS ISSUED AUGUST 3, 1970, FOR A TOTAL OF 9,136,200 POUNDS OF CHEMICAL, ALUMINUM POWDER IN ACCORDANCE WITH SPECIFICATION MIL-A-512A, DATED MAY 22, 1961, AND INTERIM AMENDMENT 3 DATED NOVEMBER 14, 1967, TYPE 3, GRADE "F," CLASS 7. OF THE TOTAL AMOUNT, THERE WAS A 3,000,000 POUND SMALL BUSINESS SET-ASIDE. THE SCHEDULE OF DELIVERY, SECTION "D," CALLED FOR MONTHLY ALLOCATION FROM AUGUST TO NOVEMBER OF 1970 TO FOUR DIFFERENT AMMUNITION DEPOTS AND PLANTS, THE MAJOR PORTION OF THE NON SET-ASIDE AMOUNT, 6,026,987 POUNDS, BEING DESIGNATED FOR THE CORNHUSKER AMMUNITION PLANT, GRAND ISLAND, NEBRASKA. THE REQUIRED DELIVERY SCHEDULE AS FOLLOWS:

POUNDS DELIVERY DATE

1,534,200 AUGUST 1970

1,534,200 SEPTEMBER 1970

1,534,200 OCTOBER 1970

1,533,600 NOVEMBER 1970

SUBSEQUENTLY, SEVEN AMENDMENTS WERE ISSUED DURING THE PERIOD AUGUST 6, 1970, THROUGH SEPTEMBER 14, 1970. AMENDMENTS NOS. 000006 AND 000007 ARE THE ONLY AMENDMENTS PERTINENT TO THE PROTEST. AMENDMENT NO. 000006 PRESCRIBED A STEPLADDER FORM OF BIDDING ON (50 PERCENT AND 100 PERCENT OF THE TOTAL QUANTITY) EITHER F.O.B. ORIGIN OR DESTINATION. THE AMENDMENT FURTHER PROVIDED THAT "THE RESULTING CONTRACTS WILL BE AWARDED ON THE BASIS OF THAT QUANTITY AND PRICE COMBINATION WHICH IS MOST ADVANTAGEOUS TO THE GOVERNMENT." AMENDMENT NO. 000007, ISSUED IN CONFIRMATION OF SHIPS PARTS CONTROL CENTER MESSAGE OF SEPTEMBER 14, EXTENDED THE DATE OF RECEIPT OF OFFERS TO SEPTEMBER 22; CHANGED THE DELIVERY DATE SCHEDULE TO COMMENCE 2 DAYS EARLIER, OCTOBER 13; REITERATED THE PARTIAL SMALL BUSINESS SET- ASIDE; AND INCLUDED THE FOLLOWING LANGUAGE: "OFFERS MUST BE IN ACCORDANCE WITH THE QTYS AND DATES IN THE ABOVE DLVY SCHEDULE. OFFERS WHICH ARE LESS THAN THE QTYS INDICATED WILL BE REJECTED AS NONRESPONSIVE." FURTHER, THE AMENDMENT STATED THE DELIVERY SCHEDULE AS FOLLOWS:

50 PERCENT 100 PERCENT

(POUNDS) (POUNDS REQUIRED DELIVERY DATE

767,100 1,534,200 13 OCTOBER 1970

767,100 1,534,200 15 NOVEMBER 1970

767,100 1,534,200 15 DECEMBER 1970

766,800 1,533,600 30 DECEMBER 1970

THE IFB WAS ISSUED TO EIGHT PROSPECTIVE OFFERORS. FIVE OFFERS WERE RECEIVED AS FOLLOWS:

F.O.B. ORIGIN/ F.O.B. DESTINATION/

PER POUND PER POUND

REYNOLDS METALS COMPANY NO BID $0.2931

ALUMINUM COMPANY OF AMERICA NO BID 0.2986

U.S. BRONZE POWDERS, INC. $0.2916 0.3098

VALLEY METALLURGICAL PROCESSING CO., INC. 0.3059 0.3229

ALUMINUM CO. OF CANDA, LTD. NO BID 0.33 GRAND ISLAND,

NEBRASKA)

0.37 (MCALESTER,

OKLAHOMA) THE BIDS FROM REYNOLDS METALS COMPANY AND ALUMINUM CO. OF CANADA, LTD. WERE REJECTED AS NONRESPONSIVE TO THE QUANTITIES AND DELIVERY SCHEDULE. BY LETTER OF OCTOBER 26, 1970, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, WE WERE ADVISED THAT THE TOTAL NON-SET-ASIDE PORTION OF THE CONTRACT HAD BEEN AWARDED ON AN URGENCY BASIS ON OCTOBER 22, 1970 - NOTWITHSTANDING THE PROTEST - TO THE ALUMINUM COMPANY OF AMERICA IN THE AMOUNT OF $1,832,269.32 ($0.2986 PER POUND). LETTER OF NOVEMBER 20, 1970, ALSO FROM THE DEPUTY COMMANDER, PURCHASING, WE WERE INFORMED OF THE CONTRACTING OFFICER'S DETERMINATION, UNDER PARAGRAPH 2-407.8(B)(3) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), TO AWARD THE PARTIAL SMALL BUSINESS SET-ASIDE QUANTITY OF 3,000,000 POUNDS. WE HAVE BEEN ADVISED THAT THE SET-ASIDE AMOUNT WAS AWARDED TO THE ALUMINUM COMPANY OF AMERICA AT THE SAME PRICE PER POUND THAT IT QUOTED ON THE NON-SET-ASIDE QUANTITY.

BY LETTER OF SEPTEMBER 10, 1970, YOU HAVE CONTENDED THAT THE SOLICITATION, AS AMENDED UP TO THAT DATE, DID NOT MEET THE REQUIREMENTS OF STANDARD FORM 33A OR ASPR 2-201(A) SEC. CIV) PROVIDING FOR NOTICE IN THE IFB WHEN LESS THAN THE ADVERTISED QUANTITIES WILL NOT BE ACCEPTED AND THAT CLAUSE 6.73 DID NOT FULFILL THE NECESSARY REQUISITES. YOU FURTHER ALLEGED THAT THE RESTRICTIONS ON AWARD FOR LESS THAN FULL QUANTITIES ARE INCONSONANT WITH THE POLICY OF "FREE AND FULL COMPETITION" AS STATED IN 10 U.S.C. 2305(A), WHICH ASPR IMPLEMENTS. ADDITIONALLY, YOU CITE AMENDMENT NO. 000006, PROVIDING FOR STEPLADDER BIDS, AS REEMPHASIZING THE BASIC PROPOSITION THAT AWARD SHOULD BE MADE "ON THE BASIS OF THAT QUANTITY AND PRICE COMBINATION WHICH IS MOST ADVANTAGEOUS TO THE GOVERNMENT." THEREFORE, YOU OBJECT TO ANY AWARD BASED ON OR MADE AFTER REJECTION OF YOUR BID AS NONRESPONSIVE FOR OFFERING A QUANTITY LESS THAN THAT STATED IN THE IFB.

FROM THE RECORD AND YOUR CORRESPONDENCE, IT APPEARS THE DEPARTMENT OF THE NAVY ADVISED YOU BEFORE SUBMISSION OF YOUR BID, AND REITERATED THE SAME IN THE ADMINISTRATIVE REPORT, THAT CLAUSE 6.73 BY IMPLICATION SUPPLIED THE NECESSARY NOTIFICATION DICTATED BY ASPR. THE NAVY REFERRED SPECIFICALLY TO THE STATEMENT THAT "OFFERS OFFERING DELIVERY OF A QUANTITY UNDER SUCH TERMS OR CONDITIONS THAT DELIVERY WILL NOT CLEARLY FALL WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED BELOW WILL BE CONSIDERED NONRESPONSIVE AND WILL BE REJECTED."

ASPR 2-201(A) SEC. CIV) STATES, "IF NO AWARD WILL BE MADE FOR LESS THAN THE FULL QUANTITIES ADVERTISED, A STATEMENT TO THAT EFFECT" MUST BE INCLUDED IN THE IFB. STANDARD FORM 33A, CLAUSE 10(C) PROVIDES CONVERSELY THAT "UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED UNLESS THE OFFEROR SPECIFIES OTHERWISE IN HIS OFFER." THE OBVIOUS INTENT OF ASPR AND STANDARD FORM 33A IS THAT CLEAR LANGUAGE, NOT MERELY NOTICE BY IMPLICATION, WOULD BE INSERTED IN THE IFB THAT BIDS FOR LESS THAN THE ADVERTISED QUANTITIES WOULD NOT BE ACCEPTED. CLAUSE 6.73 PLAINLY CONCERNS ITSELF WITH CONFORMITY TO THE TIME OF DELIVERY AS OPPOSED TO QUANTITIES TO BE DELIVERED. ONLY BY THE MOST STRAINED INTERPRETATION WOULD ANY OTHER UNDERSTANDING BE DERIVED FROM CLAUSE 6.73. THEREFORE, THE CLAUSE DOES NOT COMPLY WITH THE PROVISIONS OF ASPR AND CLAUSE 10(C).

HOWEVER, THE DEFINITENESS REQUIRED BY ASPR AND CLAUSE 10(C) IS CONTAINED IN AMENDMENT NO. 000007. THE AMENDMENT STATES IN SECTION 2B: "OFFERS MUST BE IN ACCORDANCE WITH THE QTYS AND DATES IN THE ABOVE DLVY SCHEDULE. OFFERS WHICH ARE LESS THAN THE QTYS INDICATED WILL BE REJECTED AS NONRESPONSIVE." THIS STATEMENT ALERTED BIDDERS TO THE RIGIDITY OF THE QUANTITY REQUIREMENT. YOUR BID, HAVING ACKNOWLEDGED AMENDMENT NO. 000007, AND NOT HAVING CONFORMED TO SECTION 2B, MUST BE CONSIDERED NONRESPONSIVE.

YOU HAVE FURTHER CONTENDED THAT AMENDMENT NO. 000007 RESTRICTS COMPETITION IN THAT IT EFFECTS A SINGLE AWARD OF A LARGE SCALE REQUIREMENT. THAT IS NOT CORRECT SINCE THE INVITATION, AS AMENDED, PROVIDED FOR MULTIPLE AWARDS IF THE COMBINATION OF 50-PERCENT BIDS WERE MORE ADVANTAGEOUS TO THE GOVERNMENT THAN AN AWARD ON A 100-PERCENT BASIS. OUR OFFICE HAS CONSISTENTLY UPHELD THE REQUIREMENTS OF A GIVEN PROCUREMENT ESTABLISHED BY A PROCURING AGENCY ABSENT A DISREGARD FOR THE ACTUAL NEEDS OF THE GOVERNMENT. B-169370, AUGUST 12, 1970; B 170077(2), SEPTEMBER 23, 1970. WE HAVE FURTHER HELD THAT THE GOVERNMENT DOES NOT VIOLATE EITHER THE LETTER OR THE SPIRIT OF THE COMPETITIVE BIDDING STATUTES MERELY BECAUSE SOME BIDDER IS UNABLE TO SUPPLY THE GOVERNMENT'S NEEDS, PROVIDED THE SPECIFICATIONS ARE REASONABLE AND NECESSARY FOR THE PURPOSE INTENDED. 45 COMP. GEN. 365 (1965); 34 COMP. GEN. 336 (1955). THUS THE AWARD BASIS SPECIFIED IN THE AMENDED INVITATION MIGHT BE JUSTIFIED ON THE BASIS THE SPECIFICATIONS WERE REASONABLE AND NECESSARY FOR THE PURPOSE INTENDED. HOWEVER, WE ARE UNABLE TO FIND SUCH JUSTIFICATION. BY LETTER DATED DECEMBER 24, 1970, A SUPPLEMENTAL REPORT WAS FURNISHED OUR OFFICE WITH RESPECT TO THE CONTRACTING OFFICER'S DETERMINATION TO PROCEED WITH AWARD UNDER PROTEST, AND THREE REASONS WERE ADVANCED FOR NOT ALLOWING BIDS BASED UPON LESS THAN THE STEPLADDER QUANTITIES.

FIRST, THE CONTRACTING OFFICER DETERMINED THAT A LIMITATION TO A MINIMUM QUANTITY WOULD NOT HAVE AN ADVERSE EFFECT ON COMPETITION BECAUSE THE PROCUREMENT WAS CONSIDERED RELATIVELY SMALL AND THE PRESCRIBED QUANTITIES WERE DEEMED THE MINIMUM RATES ECONOMICALLY FEASIBLE. HOWEVER, WE HAVE HELD THAT A DETERMINATION BY A GOVERNMENT OFFICIAL AS TO THE QUANTITIES WHICH COULD BE MOST ECONOMICALLY HANDLED BY BIDDERS GENERALLY PROVIDES NO BASIS FOR PROHIBITING OFFERS BASED ON QUANTITIES OTHER THAN THOSE PRESCRIBED SINCE SUCH A DETERMINATION IS BEST LEFT TO THE INDIVIDUAL JUDGMENT OF BIDDERS. 49 COMP. GEN. 244 (1969); 47 COMP. GEN. 236 (1967).

SECOND, IT IS STATED THAT ACCEPTANCE OF PARTIAL QUANTITIES WOULD INCREASE THE NUMBER OF HANDLERS AND DELIVERIES RESULTING IN AN INCREASE OF HANDLING AND ADMINISTRATIVE COSTS. CONSIDERATION OF CENTRALIZED MANAGEMENT AND ADMINISTRATION JUSTIFIES AN AGGREGATE AWARD AT A HIGHER PRICE ONLY WHEN THE HIGHER COST IS OFFSET BY ADMINISTRATIVE SAVINGS AND EVEN IN THOSE CIRCUMSTANCES THE INVITATION MUST PROVIDE FOR SUCH AWARD AND ESTABLISH THE ADMINISTRATIVE COST SAVING TO BE USED IN BID EVALUATION. 47 COMP. GEN. 233 (1967). IN THE PRESENT CASE, COMPARING THE UNIT PRICE UPON WHICH THE AWARD WAS MADE WITH THE UNIT PRICE REYNOLDS METALS COMPANY BID, IT APPEARS THAT REYNOLDS' OFFER WAS $12,013.10 LOWER FOR 2,184,200 POUNDS OF CHEMICAL ALUMINUM POWDER. THIS AMOUNT WOULD APPEAR TO BE MORE THAN SUFFICIENT TO OFFSET ANY ADMINISTRATIVE COSTS THAT MIGHT BE OCCASIONED BY MULTIPLE AWARDS. IN THAT CONNECTION, IT IS NOTED THAT ASPR 2-201(A) SEC. DIII) PROVIDES A CLAUSE THAT SHOULD BE USED IN AN INVITATION WHEN A CONTRACTING OFFICER DETERMINES IT IS NECESSARY TO CONSIDER THE ADVANTAGES OR DISADVANTAGES TO THE GOVERNMENT THAT MIGHT RESULT FROM MAKING A MULTIPLE AWARD. THAT CLAUSE PROVIDES THAT FOR THE PURPOSE OF EVALUATION, THE ADMINISTRATIVE COST FOR A MULTIPLE AWARD WILL BE ASSUMED TO BE $50. THUS EVEN IF SPLIT AWARDS WOULD DICTATE AN INCREASE IN HANDLING AND ADMINISTRATIVE COSTS, IT SEEMS UNLIKELY THAT AMOUNT WOULD NECESSITATE OR JUSTIFY A SINGLE AWARD.

THIRD, THE DEPARTMENT OF THE NAVY CONTENDS THAT ITS MANNER OF SOLICITATION ENABLES ALL BIDDERS TO BID EQUALLY AND THAT PARTIAL AWARDS WOULD CREATE A PROBLEM IN AWARDING THE BALANCE OF THE QUANTITY NECESSARY SINCE BIDDERS ARE GENERALLY RELUCTANT TO RECEIVE AWARDS FOR SMALL REMAINING QUANTITIES. WHETHER SUCH PROBLEM WILL ARISE IN ACTUAL PRACTICE REMAINS TO BE SEEN. FURTHER, EQUALITY IN BIDDING IS ACHIEVED BY PERMITTING ALL BIDDERS THE SAME OPPORTUNITY TO OFFER THE GOVERNMENT ANY QUANTITY UP TO THE MAXIMUM QUANTITY. IN ANY EVENT, WHERE THE GOVERNMENT IS UNABLE TO OBTAIN ALL OF ITS NEEDS ON A MULTIPLE AWARD BASIS, IT MAY MAKE A SINGLE AWARD TO SATISFY ITS NEEDS UNDER PARAGRAPH 10(A) OF STANDARD FORM 33A, WHICH PROVIDES THE CONTRACTING OFFICER IS ENTITLED TO MAKE AN AWARD THAT IS "MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED." A DETERMINATION OF WHAT IS MOST ADVANTAGEOUS TO THE GOVERNMENT CAN BE MADE AFTER THE EXAMINATION OF BIDS.

IN THE CIRCUMSTANCES, THERE DOES NOT APPEAR TO BE AN ADEQUATE JUSTIFICATION FOR PRECLUDING BIDDERS FROM OFFERING TO SUPPLY LESS THAN THE TOTAL QUANTITIES NEEDED. THEREFORE, BIDS SHOULD NOT HAVE BEEN REQUESTED ON SUCH A RESTRICTIVE BASIS. THIS MATTER IS BEING BROUGHT TO THE ATTENTION OF THE SECRETARY OF THE NAVY IN ORDER THAT STEPS MAY BE TAKEN TO PRECLUDE A RECURRENCE OF THE SITUATION IN THE FUTURE.

YOUR PROTEST IS THEREFORE DENIED.