B-171378, APR 28, 1971

B-171378: Apr 28, 1971

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PECK'S CHALLENGE TO THESE CONTRACTS WAS BASED ON THE FACT THAT THE ORIGINAL SPECIFICATIONS WERE CHANGED AFTER OPENING OF BIDS WHEN THE INADVISABILITY OF HAVING REPAIR AND RETREADING DONE BY DIFFERENT FIRMS WAS DECIDED UPON. THE AWARDS SHOULD NOT HAVE BEEN MADE. WHERE SPECIFICATIONS ARE CHANGED AFTER THE BIDS ARE OPENED. THE PROPER PROCEDURE IS TO REJECT ALL BIDS AND READVERTISE. KUNZIG: REFERENCE IS MADE TO A LETTER OF MARCH 1. THE SOLICITATION WAS ISSUED MARCH 10. BIDS FOR RETREADING WERE SOLICITED FOR FOUR SEPARATE GROUPS OF TIRE SIZES. BIDS FOR REPAIR WERE SOLICITED ON THE BASIS OF A SINGLE QUOTATION FOR EACH AREA FOR TIRE GROUPS 2. OFFERS WERE TO BE MADE ON THE BASIS OF PERCENTAGE DISCOUNTS FROM PREESTABLISHED PRICE SCHEDULES FOR EACH GROUP AND SERVICE AREA LISTED IN THE SOLICITATION.

B-171378, APR 28, 1971

BID PROTEST - CHANGE OF SPECIFICATIONS CONCERNING THE BID PROTEST OF PECK BROTHERS AGAINST THE AWARD OF CONTRACTS TO SHAUB ELLISEN AND SAM'S TIRE SERVICE UNDER AN IFB ISSUED BY THE AUBURN, WASHINGTON, REGIONAL OFFICE, GSA FOR RETREADING AND REPAIRING OF PNEUMATIC TIRES. PECK'S CHALLENGE TO THESE CONTRACTS WAS BASED ON THE FACT THAT THE ORIGINAL SPECIFICATIONS WERE CHANGED AFTER OPENING OF BIDS WHEN THE INADVISABILITY OF HAVING REPAIR AND RETREADING DONE BY DIFFERENT FIRMS WAS DECIDED UPON. THE AWARDS SHOULD NOT HAVE BEEN MADE. WHERE SPECIFICATIONS ARE CHANGED AFTER THE BIDS ARE OPENED; THE PROPER PROCEDURE IS TO REJECT ALL BIDS AND READVERTISE. HOWEVER, BECAUSE OF THE LAPSE OF TIME AND THE RELATIVE SHORT TIME LEFT BEFORE THE CONTRACTS EXPIRE, THE AWARD SHOULD NOT BE DISTURBED.

TO MR. KUNZIG:

REFERENCE IS MADE TO A LETTER OF MARCH 1, 1971, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, CONCERNING THE PROTEST OF PECK BROTHERS, (PECK) AGAINST AN AWARD UNDER SOLICITATION NO. SSPT-0683, ISSUED BY THE GENERAL SERVICES ADMINISTRATION FOR THE RETREADING AND REPAIRING OF PNEUMATIC TIRES FOR THE FORT LEWIS-MCCHORD AIR FORCE BASE SERVICE AREA.

THE SOLICITATION WAS ISSUED MARCH 10, 1970, BY THE AUBURN, WASHINGTON, REGIONAL OFFICE, TO SATISFY THE REQUIREMENTS FOR RETREADING AND REPAIR OF TIRES AT 52 SERVICE AREAS IN REGION 10 FOR THE PERIOD JUNE 1, 1970, OR DATE OF AWARD, IF LATER, THROUGH MAY 31, 1971. BIDS FOR RETREADING WERE SOLICITED FOR FOUR SEPARATE GROUPS OF TIRE SIZES. BIDS FOR REPAIR WERE SOLICITED ON THE BASIS OF A SINGLE QUOTATION FOR EACH AREA FOR TIRE GROUPS 2, 3, AND 4 COMBINED AS A SINGLE UNIT. OFFERS WERE TO BE MADE ON THE BASIS OF PERCENTAGE DISCOUNTS FROM PREESTABLISHED PRICE SCHEDULES FOR EACH GROUP AND SERVICE AREA LISTED IN THE SOLICITATION. BIDDERS WERE ADVISED ON PAGE 9 OF THE SOLICITATION THAT "AWARDS WILL BE MADE ON THE BASIS OF THE BEST SINGLE DISCOUNT OFFERED FROM THE LIST PRICES SHOWN *** FOR EACH GROUP AND EACH SERVICE AREA *** "

BIDS WERE OPENED AS SCHEDULED ON APRIL 7, 1970. SHAUB-ELLISON (SHAUB) WAS THE LOW SUCCESSFUL BIDDER AT A 67 PERCENT DISCOUNT FOR RETREADING OF GROUPS 1, 2, AND 4 IN THE FORT LEWIS-MCCHORD AIR FORCE BASE SERVICE AREA. THE OFFERS FOR THE RETREADING WORK FOR GROUP 3 WERE RECEIVED FROM PECK AND SAM'S TIRE SERVICE (SAM'S) AT A 70.5 PERCENT DISCOUNT. THE TABULATION BELOW, TAKEN FROM THE ABSTRACT OF BIDS, ILLUSTRATES THE PERCENTAGE DISCOUNTS BY THE BIDDERS UPON WHICH EVALUATION OF BIDS WAS MADE:

GROUP PECK SAM'S SHAUB

RETREADING

1 55% 64% 67%

2 62% 64% 67%

3 70.5% 70.5% 67%

4 62% 50% 67%

REPAIRING

(2, 3, 4) 62% 50% 67%

THE CONTRACTING OFFICER RESOLVED THE TIE OFFERS FOR THE RETREADING WORK FOR GROUP 3 RECEIVED FROM PECK AND FROM SAM'S IN ACCORDANCE WITH THE PRIORITIES SET OUT AT FEDERAL PROCUREMENT REGULATIONS (FPR) SECTION 1- 2.407-6. SINCE SAM'S PRODUCTION PLANT WAS LOCATED IN TACOMA, WASHINGTON, WHICH HAD BEEN DESIGNATED BY THE DEPARTMENT OF LABOR AS AN AREA OF SUBSTANTIAL UNEMPLOYMENT, AWARD WAS MADE TO THAT FIRM ON JULY 20, 1970. PECK'S PLANT LOCATIONS, EUGENE AND PORTLAND, OREGON, WERE NOT LISTED AS AREAS OF UNEMPLOYMENT IN THE DEPARTMENT OF LABOR JUNE 1970 EDITING OF "AREA TRENDS IN EMPLOYMENT AND UNEMPLOYMENT."

ALTHOUGH SAM'S OFFERED A DISCOUNT OF 2 PERCENT 20 DAYS, AS OPPOSED TO PECK'S 2 PERCENT 30 DAY DISCOUNT, THE CONTRACTING OFFICER DID NOT CONSIDER THIS IN THE EVALUATION, BECAUSE FPR 1-2.407-3(B) STATES IN PART THAT, "IN EVALUATING EQUAL BIDS OFFERING DISCOUNTS MEETING THE MINIMUM DISCOUNT PERIOD REQUIRED BY THE INVITATION, A BID OFFERING A LONGER DISCOUNT PERIOD SHALL NOT BE CONSIDERED AS BEING MORE ADVANTAGEOUS TO THE GOVERNMENT."

ALTHOUGH SHAUB WAS THE LOW BIDDER ON THE REPAIR WORK FOR GROUP 3, IT WAS DECIDED NOT TO MAKE AWARDS FOR THE REPAIR ITEMS UNDER THE SOLICITATION IN THOSE INSTANCES WHERE THE LOW BIDDER ON REPAIRS WAS NOT THE SAME FIRM AS THE LOW BIDDER ON THE RETREADING WORK. THE ADMINISTRATIVE REPORT EXPLAINS THAT "AT SOME TIME PRIOR TO MAKING AWARDS THE CONTRACTING PERSONNEL BECAME AWARE THAT SEPARATE AWARDS FOR THE REPAIR SERVICE WOULD RESULT IN AN IMPRACTICAL AND UNECONOMICAL SITUATION." WITH RESPECT TO THE INSTANT SITUATION, IT WAS FORESEEN THAT IF AWARD WERE MADE TO SAM'S AND SHAUB AS THE LOW BIDDERS, SOME TIRES WOULD HAVE TO BE SHIPPED FROM SAM'S TO SHAUB FOR REPAIR WORK, AND THEN RETURNED TO SAM'S FOR THE RETREADING WORK. UNDER THE CIRCUMSTANCES THE USING AGENCIES WERE ADVISED TO NEGOTIATE THE PURCHASE OF REPAIRS FROM CONTRACTORS ON AN OPEN MARKET BASIS. WITH RESPECT TO THE FORT LEWIS-MCCHORD AIR FORCE BASE SERVICE AREA CONTRACTS, THE CONTRACTING OFFICER PROCEEDED TO ADD THE REPAIR SERVICES BY AMENDING THE EXISTING RETREADING CONTRACTS WITH SAM'S AND SHAUB. IN THE CASE OF SAM'S THE DISCOUNT PRICE FOR REPAIR WAS RAISED TO 62 PERCENT FROM THE CONTRACTOR'S ORIGINAL BID DISCOUNT RATE OF 50 PERCENT, WHILE SHAUB'S ORIGINAL BID OF 67 PERCENT WAS ADOPTED AS THE DISCOUNT RATE FOR ITS REPAIR WORK FOR GROUPS 2 AND 4. THESE CONTRACT AMENDMENTS WERE MADE EFFECTIVE AUGUST 26, 1970.

IT IS ACKNOWLEDGED BY YOUR COUNSEL THAT THE PROCEDURE UTILIZED IN THIS SITUATION WAS UNUSUAL AND THAT THE PARTICULAR PROBLEM WHICH AROSE WITH REGARD TO THE MAKING OF SEPARATE AWARDS FOR RETREADING AND REPAIR SHOULD HAVE BEEN FORESEEN AT THE INCEPTION OF THE CONTRACTING PROCESS. IT IS FURTHER ACKNOWLEDGED BY COUNSEL THAT WHEN THE AWARD PROBLEM WAS FINALLY RECOGNIZED AFTER BID OPENING, THE MATTER SHOULD HAVE BEEN RESOLVED BY CANCELLATION OF THE SOLICITATION AND READVERTISEMENT OF THE REQUIREMENT; BUT THAT IN ANY CASE IT WAS IMPROPER TO RESOLVE THE PROBLEM THROUGH THE USE OF THE CHANGES CLAUSE. NEVERTHELESS, HE CONCLUDES, "THE FACT IS THAT PECK WOULD NOT HAVE BEEN THE LOW SUCCESSFUL BIDDER ON A COMBINED BID FOR RETREADING OF GROUP 3 TIRES AND REPAIR WORK, ABSENT A WEIGHTING OF THE BIDS, WHICH WAS NOT MENTIONED IN THE METHOD OF AWARD PARAGRAPH." COUNSEL INDICATES THAT ON A WEIGHTED BID BASIS (WITH REPAIR WORK PROBABLY ESTIMATED AT 20 PERCENT OF THE TOTAL ESTIMATED CONTRACT WORK), PECK MIGHT HAVE RECEIVED AN AWARD; HOWEVER, HE POINTS OUT THAT THE SOLICITATION WAS NOT STATED ON A WEIGHTED BASIS AND THAT THE PRESENT CONTRACTOR IS PERFORMING SATISFACTORILY ON A CONTRACT DUE TO EXPIRE MAY 31, 1971. BASED ON THE FOREGOING, HE BELIEVES THAT THE AWARD TO SAM'S SHOULD NOT BE DISTURBED. WE ARE ALSO ADVISED THAT THE PERSONNEL RESPONSIBLE FOR THIS PROCUREMENT HAVE BEEN INSTRUCTED TO REVIEW FUTURE REQUIREMENTS FOR THESE TIRE SERVICES SO THAT RETREADING AND REPAIRING WILL BE COMBINED WHERE THE SITUATION MERITS SUCH TREATMENT.

WE AGREE WITH THE CONCLUSIONS REACHED BY YOUR COUNSEL WITH REGARD TO HOW THE PROCUREMENT SHOULD HAVE BEEN HANDLED. WHEN THE SPECIFICATIONS ARE CHANGED AFTER BID OPENING THE PROPER PROCEDURE, NORMALLY, IS TO REJECT ALL BIDS AND READVERTISE. 37 COMP. GEN. 524 (1958); 49 COMP. GEN. 584 (1970). FURTHER, AN ADVERTISEMENT FOR A REQUIREMENTS CONTRACT SHOULD INCLUDE THE BEST ESTIMATE OF FORECAST NEEDS TO PERMIT THE PREPARATION AND EVALUATION OF BIDS ON TERMS PREDICATED TO PRODUCE THE LOWEST COST TO THE GOVERNMENT. 47 COMP. GEN. 272 (1967); 48 COMP. GEN. 62 (1968).

IN ADDITION, ACCORDING TO MR. PECK, PERSONNEL AT THE PROCURING INSTALLATION WERE ADVISED OF THE DESIRABILITY OF A COMBINED AWARD FOR RECAP AND REPAIR ON APRIL 13, 1970, IN A LETTER FROM PECK TO THE CONTRACTING OFFICER, AND THAT THE SAME POINT WAS RAISED AGAIN BY PECK WITH THE CONTRACTING OFFICER IN A LETTER DATED JUNE 8, 1970. MR. PECK FURTHER REPORTS IN A LETTER DATED NOVEMBER 18, 1970, THAT HE AND HIS FATHER SPOKE TO THE CONTRACTING OFFICER ABOUT THIS PROBLEM SOMETIME DURING THE WEEK OF JULY 15TH AND THAT THEY WERE:

"TOLD AT THIS TIME THAT THE REPAIRS WOULD BE AWARDED TO THE LOWEST BIDDER AND THE RECAPS TO THE LOWEST BIDDER. *** AT THIS POINT WE ASKED IF THEY WERE NOT GOING TO MAKE AN AWARD ON THE COMBINATION OF THE LOWEST COMBINED BID, WOULD THEY CONTACT US BEFORE AN AWARD WAS SENT OUT. (THE CONTRACTING OFFICER) AGREED TO DO THIS. HOWEVER, AN AWARD WAS MADE ON A DIFFERENT BASIS, AND THEY DID NOT CONTACT US AS THEY HAD AGREED TO DO."

WE HAVE NOT BEEN FURNISHED WITH A STATEMENT FROM THE CONTRACTING OFFICER AND THEREFORE ARE NOT IN A POSITION TO KNOW WHETHER HE WOULD AGREE WITH PECK'S STATEMENTS. HOWEVER, THE ADMINISTRATIVE FILE DOES SHOW THAT THE REVIEW COMMITTEE'S REPORT (ENCLOSURE 12) REFLECTING THE DECISION NOT TO AWARD SOME REPAIR ITEMS WAS DATED JULY 9, 1970, OR JUST PRIOR TO THE TIME THAT MR. PECK STATES HE INQUIRED ABOUT THE AWARD STATUS OF THE REPAIR ITEMS. WE DO NOT QUESTION THE CONTRACTING OFFICER'S GOOD FAITH IN THE MATTER. A DIFFICULT SITUATION AROSE AND WE BELIEVE THE CONTRACTING OFFICER ACTED IN A MANNER WHICH HE CONSIDERED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. BUT WE BELIEVE THAT IN ALL FAIRNESS MR. PECK SHOULD HAVE BEEN ADVISED OF THE ACTION DECIDED UPON.

BECAUSE OF THE TIME LAPSE AND THE RELATIVELY SHORT TIME LEFT BEFORE THE CONTRACT EXPIRES, WE CONCLUDE THAT THE AWARD AS MADE SHOULD NOT BE DISTURBED.