B-171396, MAR 26, 1971

B-171396: Mar 26, 1971

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IS TO CONVERT THE FIRST DISCOUNT OFFERED TO A TRADE DISCOUNT AND PRESERVE THE SECOND AS A PROMPT PAYMENT DISCOUNT. THE CUMULATIVE RESULT OF THIS INTERPRETATION IS TO MAKE THE OFFER GOOD FOR A DISCOUNT OF 4-1/20%. IS NOT BINDING UPON THE COMP. WHEN THE PROPER INTERPRETATION OF CONTRACT SPECIFICATIONS IS AN ISSUE OF LAW. SO-SEW WAS AWARDED THE CONTRACT FOR THE MANUFACTURE OF MEN'S COATS FROM GOVERNMENT-FURNISHED MATERIAL ON THE BASIS OF ITS LOW BID UNDER INVITATION FOR BIDS (IFB) DSA100-69-B-2149. PREPARATION OF OFFERS (A) OFFERORS ARE EXPECTED TO EXAMINE THE DRAWINGS. FAILURE TO DO SO WILL BE AT THE OFFEROR'S RISK. "3. (A) NOTWITHSTANDING THE FACT THAT A BLANK IS PROVIDED WITHIN LESS THAN TWENTY (20) CALENDAR DAYS WILL NOT BE CONSIDERED IN EVALUATING OFFERS FOR AWARD.

B-171396, MAR 26, 1971

CONTRACTS - PROMPT PAYMENT DISCOUNT - CONVERSION TO TRADE DISCOUNT DECISION SUSTAINING ACTION OF DEFENSE PERSONNEL SUPPORT CENTER IN CONVERTING A PROMPT PAYMENT DISCOUNT INTO A TRADE DISCOUNT AND ADDITIONALLY CONSIDERING AS EFFECTIVE A SECOND PROMPT PAYMENT DISCOUNT UNDER A CONTRACT AWARDED TO SO-SEW STYLES, INC., FOR THE MANUFACTURE OF MEN'S COATS. CLAUSE 114.9 (DISCOUNT LIMITATION) IN THE SOLICITATION STATED THAT ANY DISCOUNT IN EXCESS OF TWO PERCENT SHALL BE CONSIDERED AS A TRADE DISCOUNT AVAILABLE TO THE GOVERNMENT AS A REDUCTION FROM THE PRICES QUOTED. THE EFFECT OF THIS CLAUSE ON A BID SPECIFYING A PROMPT PAYMENT DISCOUNT OF 2- 1/20% FOR 10 CALENDAR DAYS, 2% FOR 20 CALENDAR DAYS, IN THE ABSENCE OF ANY INTENT NOT TO ABIDE BY 114.9, IS TO CONVERT THE FIRST DISCOUNT OFFERED TO A TRADE DISCOUNT AND PRESERVE THE SECOND AS A PROMPT PAYMENT DISCOUNT. THE CUMULATIVE RESULT OF THIS INTERPRETATION IS TO MAKE THE OFFER GOOD FOR A DISCOUNT OF 4-1/20%. A CONTRARY CONCLUSION REACHED BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS IN CHIC DE PARIS HANDBAG COMPANY ASBCA NO. 14622, IS NOT BINDING UPON THE COMP. GEN. WHEN THE PROPER INTERPRETATION OF CONTRACT SPECIFICATIONS IS AN ISSUE OF LAW.

TO MR. BORDLEY:

WE REFER TO YOUR LETTER OF NOVEMBER 25, 1970, FORWARDING FOR CONSIDERATION AND DECISION BY OUR OFFICE, PURSUANT TO 3 GAO 27.3, A CLAIM BY SO-SEW STYLES, INC. (SO-SEW), IN THE AMOUNT OF $27,905.21, REPRESENTING A PROMPT PAYMENT DISCOUNT DEDUCTED BY THE GOVERNMENT FROM THE PRICE PAID TO SO-SEW UNDER CONTRACT DSA100-70-C-0644.

SO-SEW WAS AWARDED THE CONTRACT FOR THE MANUFACTURE OF MEN'S COATS FROM GOVERNMENT-FURNISHED MATERIAL ON THE BASIS OF ITS LOW BID UNDER INVITATION FOR BIDS (IFB) DSA100-69-B-2149, ISSUED JUNE 24, 1969, BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), DEFENSE SUPPLY AGENCY (DSA), PHILADELPHIA, PENNSYLVANIA. THE IFB, STANDARD FORM 33, INCLUDED IN ITS TERMS STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS. PARAGRAPHS 2, 3 AND 9 OF STANDARD FORM 33A READ, IN PERTINENT PART, AS FOLLOWS:

"2. PREPARATION OF OFFERS

(A) OFFERORS ARE EXPECTED TO EXAMINE THE DRAWINGS, SPECIFICATIONS, SCHEDULE, AND ALL INSTRUCTIONS. FAILURE TO DO SO WILL BE AT THE OFFEROR'S RISK.

"3. EXPLANATION TO OFFERORS. ANY EXPLANATION DESIRED BY AN OFFEROR REGARDING THE MEANING OR INTERPRETATION OF THE SOLICITATION, DRAWINGS, FOR A TEN (10) DAY DISCOUNT, PROMPT PAYMENT DISCOUNTS OFFERED FOR PAYMENT SPECIFICATIONS, ETC., MUST BE REQUESTED IN WRITING AND WITH SUFFICIENT TIME ALLOWED FOR A REPLY TO REACH OFFERORS BEFORE THE SUBMISSION OF THEIR OFFERS. ***

"9. DISCOUNTS. (A) NOTWITHSTANDING THE FACT THAT A BLANK IS PROVIDED WITHIN LESS THAN TWENTY (20) CALENDAR DAYS WILL NOT BE CONSIDERED IN EVALUATING OFFERS FOR AWARD, UNLESS OTHERWISE SPECIFIED IN THE SOLICITATION. HOWEVER, OFFERED DISCOUNTS OF LESS THAN 20 DAYS WILL BE TAKEN IF PAYMENT IS MADE WITHIN THE DISCOUNT PERIOD, EVEN THOUGH NOT CONSIDERED IN THE EVALUATION OF OFFERS."

ON THE FACE OF STANDARD FORM 33, IN BLOCK 16, ENTITLED "DISCOUNT FOR PROMPT PAYMENT," SPACE WAS PROVIDED FOR ENTRY OF DISCOUNTS FOR PERIODS OF 10, 20 AND/OR 30 CALENDAR DAYS, AND FOR SUCH OTHER PERIOD AS MIGHT BE SPECIFIED BY THE BIDDER. THE BLOCK ALSO CARRIED THE NOTATION, "SEE CLAUSE 400.1.17."

CLAUSE 400.1.17 APPEARED ON PAGE 51 OF THE BID SCHEDULE TOGETHER WITH A RELATED CLAUSE NUMBERED 114.9. THE CLAUSES INCLUDED THE FOLLOWING PERTINENT LANGUAGE:

"(400.1.17) DISCOUNTS (1966 SEP)

IN ACCORDANCE WITH SUBPARAGRAPH (A) OF THE CLAUSE ENTITLED 'DISCOUNTS' IN THE SOLICITATION INSTRUCTIONS AND CONDITIONS (STANDARD FORM 33A) PROMPT PAYMENT DISCOUNTS WILL BE CONSIDERED IN THE EVALUATION OF OFFERS PROVIDED THE MINIMUM PERIOD FOR THE OFFERED DISCOUNT IS:

(I) 20 DAYS FROM DATE OF DELIVERY OF THE SUPPLIES TO CARRIER WHEN ACCEPTANCE IS AT POINT OF ORIGIN.

(II) 30 DAYS WHERE DELIVERY AND ACCEPTANCE ARE AT DESTINATION.

THE OFFERED DISCOUNT OF A SUCCESSFUL OFFEROR WILL FORM A PART OF THE AWARD WHETHER OR NOT SUCH DISCOUNT WAS CONSIDERED IN THE EVALUATION OF HIS OFFER AND SUCH DISCOUNT WILL BE TAKEN IF PAYMENT IS MADE WITHIN THE DISCOUNT PERIOD. SUBPARAGRAPH (B) OF THE CLAUSE ENTITLED 'DISCOUNTS' ON STANDARD FORM 33A, 'SOLICITATION INSTRUCTIONS AND CONDITIONS' IS AMENDED IN THE THIRD LINE BY DELETING 'DELIVERY AND ACCEPTANCE ARE' AND INSERTING 'ACCEPTANCE IS'.

"(114.9) DISCOUNT LIMITATION

IT IS UNDERSTOOD AND AGREED THAT, FOR THE PURPOSE OF PAYMENTS UNDER THIS CONTRACT, AN OFFER OF PROMPT PAYMENT DISCOUNT IN EXCESS OF TWO PERCENT SHALL BE CONSIDERED AS A TRADE OR SPECIAL DISCOUNT WHICH SHALL BE AVAILABLE TO THE GOVERNMENT AS A REDUCTION FROM THE PRICES QUOTED, WITHOUT REGARD TO WHETHER INVOICES ARE ACTUALLY PAID WITHIN THE DESIGNATED DISCOUNT PERIOD. OFFERORS WHO DESIRE TO DO SO MAY QUOTE CUSTOMARY TERMS OF DISCOUNT (NOT IN EXCESS OF TWO PERCENT), FOR PROMPT PAYMENT IN ADDITION TO ANY TRADE OR SPECIAL DISCOUNT AVAILABLE TO THE GOVERNMENT, PROVIDED SUCH DISCOUNTS ARE STATED SEPARATELY IN THEIR OFFERS. UNLESS SUCH TRADE OR SPECIAL DISCOUNTS ARE SEPARATELY STATED, THE OFFEROR AGREES THAT, WHEN THE DISCOUNT OFFERED EXCEEDS TWO PERCENT, THE ENTIRE DISCOUNT WILL BE CONSIDERED AS A TRADE OR SPECIAL DISCOUNT AND WILL NOT BE TREATED AS A DISCOUNT FOR PROMPT PAYMENT."

ON PAGE 52 OF THE BID SCHEDULE, CLAUSE 201.9, ENTITLED "CONDITIONS OF OFFER," STATED, AMONG OTHER THINGS, "UNLESS THE BIDDER SPECIFICALLY STATES OTHERWISE, BY SIGNING AND RETURNING A BID THE BIDDER AGREES TO BE BOUND BY ALL OF THE TERMS, CONDITIONS AND CLAUSES WHICH COMPRISE THE INVITATION, EXCLUSIVE OF ANY AMENDMENTS TO THE INVITATION, REGARDLESS OF WHETHER THE PAGE CONTAINING ANY SUCH TERM, CONDITION, OR CLAUSE (INCLUDING THIS PROVISION) IS OR IS NOT RETURNED BY THE BIDDER."

SO-SEW'S BID INCLUDED THE FOLLOWING ENTRIES IN BLOCK 16 ON THE FACE OF STANDARD FORM 33: 2-1/20% 10 CALENDAR DAYS; 2% 20 CALENDAR DAYS. NO TRADE DISCOUNT WAS LISTED IN THE BID, AND NO EXCEPTION WAS TAKEN BY SO-SEW TO ANY PROVISIONS OF THE IFB.

ON ITEM 1, ON WHICH AN AWARD WAS MADE TO SO-SEW, THE UNIT PRICES QUOTED WERE $13.73 FOR DELIVERY TO MECHANICSBURG, PENNSYLVANIA, AND $14.55 FOR DELIVERY TO OGDEN, UTAH. AFTER CONVERSION OF THE 2-1/20% DISCOUNT TO A TRADE DISCOUNT UNDER THE TERMS OF CLAUSE 114.9, THE UNIT PRICES WERE RESTATED AS $13.44854 AND $14.25173, RESPECTIVELY, SUBJECT TO A PROMPT PAYMENT DISCOUNT OF 2% 20 DAYS, AND NOTICE OF AWARD OF 50,000 UNITS AT EACH PRICE WAS ISSUED TO SO-SEW ON SEPTEMBER 30, 1969. IN VIEW OF THE APPLICATION TO ITS BID OF THE TWO DISCOUNTS TOTALING 4 1/20%, SO-SEW REQUESTED AN EVALUATION BY DPSC OF CLAUSE 114.9 OF THE IFB. THE CONTRACTING OFFICER'S RESPONSE, BY LETTER DATED OCTOBER 10, 1969, READS, IN PART, AS FOLLOWS:

"ON PAGE 1, BLOCK 16, OF YOUR OFFER ON IFB DSA100-69-B-2149, YOU OFFERED 2-1/20% - 10 CALENDAR DAYS AND 2% - 20 CALENDAR DAYS AS DISCOUNT FOR PROMPT PAYMENT. THE LAST SENTENCE OF CLAUSE 114.9 READS AS FOLLOWS:

'UNLESS SUCH TRADE OR SPECIAL DISCOUNTS ARE SEPARATELY STATED, THE OFFEROR AGREES THAT, WHEN THE DISCOUNT OFFERED EXCEEDS 2%, THE ENTIRE DISCOUNT WILL BE CONSIDERED AS A TRADE OR SPECIAL DISCOUNT AND WILL NOT BE TREATED AS A DISCOUNT FOR PROMPT PAYMENT.'

"ACCORDING TO THE ABOVE CLAUSE, BY INSERTING 2-1/20% - 10 CALENDAR DAYS ON YOUR OFFER, YOU AGREED TO WAIVE ALL THE PROVISIONS IN THE IFB RELATING TO DISCOUNTS FOR PROMPT PAYMENTS AND BID EVALUATION THERETO. THIS WAIVER IS RESTRICTED TO THAT SEGMENT OF THE OFFER, WHICH EXCEEDS 2% PROMPT PAYMENT DISCOUNT.

"THE CLAUSE CLEARLY STATES THAT PROMPT PAYMENT DISCOUNTS ABOVE 2% WILL BE CONSIDERED AS A TRADE OR SPECIAL DISCOUNT AND WILL, THEREFORE, COMPLETELY LOSE ITS IDENTIFICATION WITH PROMPT PAYMENT DISCOUNT. THE 2% - 20 CALENDAR DAYS OFFER WAS PROPERLY TREATED SEPARATELY, SINCE IT RETAINED ITS STATUS AS A PROMPT PAYMENT DISCOUNT, THEREFORE, THE GOVERNMENT PROPERLY ACCEPTED YOUR OFFER OF 2-1/20% - 10 CALENDAR DAYS TRADE OR SPECIAL DISCOUNT AND 2% - 20 CALENDAR DAYS PROMPT PAYMENT DISCOUNT, WHICH THE GOVERNMENT WILL HAVE TO EARN BY MAKING PAYMENTS WITHIN 20 DAYS.

"CLAUSE 114.9 AND ITS APPLICATION THEREOF IS PRESENTLY BEING REVIEWED BY THE GENERAL ACCOUNTING OFFICE ON A SIMILAR CASE. THE RESULTS OF THIS CASE WILL BE DISSEMINATED THROUGH NORMAL PUBLICATION CHANNELS."

BY LETTER DATED NOVEMBER 3, 1969, SO-SEW NOTIFIED THE CONTRACTING OFFICER THAT SO-SEW DID NOT AGREE WITH THE GOVERNMENT'S INTERPRETATION OF THE DISCOUNT LIMITATION CLAUSE BUT WOULD PROCEED WITH PRODUCTION SUBJECT TO RESERVATION OF SO-SEW'S RIGHTS IN THE MATTER.

THE INSTANT CLAIM, WHICH WAS FILED BY LETTER DATED APRIL 16, 1970, FROM SO-SEW'S ATTORNEY, COVERS THE 2% 20-DAY PROMPT PAYMENT DISCOUNT WHICH THE GOVERNMENT DEDUCTED FROM PAYMENTS TO SO-SEW IN ADDITION TO THE TRADE DISCOUNT OF 2-1/20%. AS AUTHORITY FOR ALLOWANCE OF THE CLAIM, SO-SEW'S ATTORNEY CITES CHIC DE PARIS HANDBAG COMPANY, ASBCA NO. 14622, FEBRUARY 20, 1970, IN WHICH THE ARMED SERVICES BOARD OF CONTRACT APPEALS ALLOWED A SIMILAR CLAIM NOTWITHSTANDING NOTICE BY THE BOARD THAT OUR OFFICE HAD PREVIOUSLY UPHELD DEDUCTION OF BOTH DISCOUNTS UNDER CLAUSE 114.9 IN OUR DECISIONS AT 49 COMP. GEN. 364 (1969) AND B-168469, JANUARY 13, 1970. DPSC WAS THE PROCURING ACTIVITY IN BOTH OF THOSE CASES, ALSO, AND THE BID SOLICITATIONS INCLUDED SUBSTANTIALLY THE SAME DISCOUNT CLAUSES AS ARE INVOLVED IN THIS PROCUREMENT.

THE ACCOUNTING AND FINANCE OFFICER, DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, ATLANTA, MAINTAINS THAT THE CHIC DE PARIS DECISION DOES NOT APPLY IN THIS CASE; THAT THE CASE FALLS WITHIN 49 COMP. GEN. 364 (1969); AND THAT BOTH DISCOUNTS WERE PROPERLY TAKEN BY THE GOVERNMENT. CONVERSELY, YOU EXPRESS THE VIEW THAT THE COURT OF CLAIMS WOULD FOLLOW THE ASBCA DECISION IN CHIC DE PARIS IN DISPOSING OF THE INSTANT CLAIM BY SO- SEW.

REFERENCE TO ASBCA NO. 14622 SHOWS THAT THE BOARD ASSUMED JURISDICTION OVER THE DISCOUNT REFUND CLAIM PURSUANT TO THE CONTRACT DISPUTES CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 7-103.12(A), WHICH READS, IN PERTINENT PART, AS FOLLOWS:

"DISPUTES (1958 JAN)

(A) EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER, WHO SHALL REDUCE HIS DECISION TO WRITING AND MAIL OR OTHERWISE FURNISH A COPY THEREOF TO THE CONTRACTOR. ***

(B) THIS 'DISPUTES' CLAUSE DOES NOT PRECLUDE CONSIDERATION OF LAW QUESTIONS IN CONNECTION WITH DECISIONS PROVIDED FOR IN PARAGRAPH (A) ABOVE: PROVIDED, THAT NOTHING IN THIS CONTRACT SHALL BE CONSTRUED AS MAKING FINAL THE DECISION OF ANY ADMINISTRATIVE OFFICIAL, REPRESENTATIVE, OR BOARD ON QUESTION OF LAW." PARAGRAPH (B) OF THE CLAUSE IS CONSISTENT WITH 41 U.S.C. 321, 322, WHICH PRECLUDES INCLUSION IN ANY CONTRACT OF A PROVISION MAKING FINAL AN ADMINISTRATIVE DECISION ON A QUESTION OF LAW.

THE FACTS SET FORTH IN THE CHIC DE PARIS DECISION INDICATE THAT THE BID SOLICITATION INCLUDED CLAUSES IDENTICAL TO CLAUSES 114.9 AND 201.9 IN THE SO-SEW CONTRACT CASE. FURTHER, THERE IS NO SHOWING THAT THE SUCCESSFUL BIDDER MADE ANY COMPLAINT AGAINST THE SOLICITATION OR AGAINST THE NOTICE OF AWARD UNTIL SOME THREE MONTHS AFTER THE CONTRACT HAD BEEN EXECUTED. THE BOARD, HOWEVER, WHILE DECIDING THAT A DISCOUNT IN EXCESS OF 2%, EVEN THOUGH RELATED TO PAYMENT WITHIN A PERIOD OF 20 DAYS, WAS PROPERLY CONVERTED BY DPSC TO A TRADE DISCOUNT, RULED THAT A DISCOUNT OF 2% 30 DAYS DID NOT APPLY. IN THIS CONNECTION, THE BOARD STATED:

"HOWEVER, APPELLANT'S BID DOES NOT MANIFEST AN INTENT TO OFFER ITS PROMPT PAYMENT DISCOUNTS CUMULATIVELY NOR CAN WE READ THE DISCOUNTS LIMITATION CLAUSE AS REQUIRING OR PRODUCING THIS RESULT. THE BID FORMS INVITE ALTERNATIVE PROMPT PAYMENT DISCOUNT OFFERS AND DO NOT PROVIDE ANY SPACE FOR A SPECIAL OR TRADE DISCOUNT OFFER. THE REFERENCED CLAUSE CONVERTS EXCESSIVE PROMPT PAYMENT DISCOUNTS INTO FIXED SPECIAL DISCOUNT BUT DOES NOT SPECIFICALLY STATE THAT AN ALTERNATIVE AND NON-EXCESSIVE PROMPT PAYMENT DISCOUNT SHALL REMAIN IN FORCE CONTRARY TO THE OBVIOUS INTENT OF THE OFFEROR AND ONE WHICH A REASONABLE OFFEREE MUST HAVE UNDERSTOOD AS INTENDED. SEE PATTERSON, THE INTERPRETATION AND CONSTRUCTION OF CONTRACTS, 64 COL. L. REV. 833 (1964).

"THE APPEAL IS ACCORDINGLY UPHELD IN PART AND DENIED IN PART. THE GOVERNMENT CORRECTLY REDUCED APPELLANT'S UNIT PRICE BY 3% IN COMPUTING THE CONTRACT PRICE. IT IS NOT ENTITLED TO A FURTHER PROMPT PAYMENT DISCOUNT." NO OTHER AUTHORITY, JUDICIAL OR LEGAL, WAS CITED BY THE BOARD IN ITS DECISION.

IN 49 COMP. GEN. 364, WE CONSIDERED A PROTEST AGAINST AWARD TO A BIDDER WHO WAS LOWEST ONLY UPON CONSIDERATION OF TWO PROMPT PAYMENT DISCOUNTS, ONE OF WHICH WAS CONVERTED TO A TRADE DISCOUNT UNDER CLAUSE 114.9. COMPETING BIDDER CONTENDED THAT THE CONVERTED DISCOUNT OF 2.1% 10 DAYS SHOULD HAVE BEEN DISREGARDED BY DPSC IN THE EVALUATION OF BIDS BECAUSE (1) PROMPT PAYMENT DISCOUNTS FOR LESS THAN 20 DAYS WERE NOT TO BE CONSIDERED UNDER THE TERMS OF THE IFB: (2) IT IS UNKNOWN IN THE GARMENT INDUSTRY FOR BIDDERS TO OFFER TRADE DISCOUNTS; (3) BIDDERS WHO OFFER PROMPT PAYMENT DISCOUNTS FOR VARYING PERIODS DO NOT INTEND THIS TO BE A CUMULATIVE OFFER BUT INDEPENDENT OFFERS FOR EACH PERIOD; AND (4) THE LOW BID DID NOT STATE THAT THE 2.1% DISCOUNT WAS OFFERED SEPARATELY AS A SEPARATE TRADE DISCOUNT SO AS TO WARRANT CONSIDERATION AS SUCH UNDER CLAUSE 114.9.

OUR DECISION IN THE ABOVE CASE POINTED OUT, AT PAGE 367, THAT THE 10 DAY DISCOUNT OF 2.1% WAS NOT CONSIDERED AS A PROMPT PAYMENT DISCOUNT BUT AS A TRADE DISCOUNT, AND THERE WAS NO ACCUMULATION OF PROMPT PAYMENT DISCOUNTS CONSIDERED IN THE EVALUATION OF THE BIDS. AS TO THE BIDDER'S INTENT IN STATING PROMPT PAYMENT DISCOUNTS FOR VARYING PERIODS, WE STATED, AT PAGE 368, THAT IT IS THE BIDDER'S MANIFEST INTENT, NOT ITS SUBJECTIVE INTENT, WHICH IS CONTROLLING, AND THAT THE INTENT IS TO BE DERIVED FROM THE BIDDER'S WRITTEN RESPONSE TO THE INVITATION TERMS AND CONDITIONS INCLUDING THE DISCOUNT LIMITATION CLAUSE. 3 CORBIN ON CONTRACTS SECS 538, PAGE 57 (1960). IN THIS CONNECTION, WE STATED: "WHILE A BIDDER MAY OFFER A DISCOUNT FOR PAYMENT IN VARYING PERIODS, THE DISCOUNT LIMITATION CLAUSE IS QUITE SPECIFIC THAT IF ANY OF THESE DISCOUNTS EXCEED 2 PERCENT AND A TRADE DISCOUNT IS NOT SEPARATELY STATED, SUCH DISCOUNT SO OFFERED SHALL BE CONSIDERED A TRADE OR SPECIAL DISCOUNT. A BIDDER WHO SUBMITS AN OFFER SUBJECT TO THE INVITATION DISCOUNT LIMITATION CLAUSE MAY NOT THEREAFTER CONTEND SUCCESSFULLY THAT IT SUBJECTIVELY INTENDED A RESULT CONTRARY TO THE EXPRESS WORDING OF THE CLAUSE." AS TO THE NEED TO STATE A TRADE DISCOUNT SEPARATELY, WE STATED:

"YOUR CONTENTION THAT A BIDDER CAN QUOTE BOTH A TRADE DISCOUNT AND A PROMPT PAYMENT ONLY IF THE TRADE DISCOUNT IS SEPARATELY STATED IS NOT TENABLE SINCE IT FAILS TO GIVE EFFECT TO THE PLAIN LANGUAGE OF THE DISCOUNT LIMITATION CLAUSE. THE CLAUSE PROVIDES, IN PERTINENT PART, 'UNLESS SUCH TRADE OR SPECIAL DISCOUNTS ARE SEPARATELY STATED, THE OFFEROR AGREES THAT, WHEN THE DISCOUNT OFFERED EXCEEDS TWO PERCENT, THE ENTIRE DISCOUNT WILL BE CONSIDERED AS A TRADE OR SPECIAL DISCOUNT AND WILL NOT BE TREATED AS A DISCOUNT FOR PROMPT PAYMENT.'

"UNDER THIS PROVISION, METZ OFFER MET THE CRITERIA CONCERNING TRADE DISCOUNTS WHEN IT DID NOT SEPARATELY STATE A TRADE DISCOUNT, AND WHEN IT OFFERED A PROMPT PAYMENT DISCOUNT IN EXCESS OF 2 PERCENT. THERE IS NO OBLIGATION ON THE PART OF THE GOVERNMENT TO RECOGNIZE A 10-DAY PROMPT PAYMENT DISCOUNT ONLY AS A PROMPT PAYMENT DISCOUNT IN THE PRESENCE OF THE CLEAR WORDING OF THE CLAUSE WHICH CONVERTS SUCH PROMPT PAYMENT DISCOUNTS TO A TRADE DISCOUNT WHEN IT IS IN EXCESS OF 2 PERCENT."

THE CIRCUMSTANCES WHICH WERE INVOLVED IN B-168469, SUPRA, WERE SIMILAR TO THE CIRCUMSTANCES CONSIDERED IN 49 COMP. GEN. 364. THE PROTESTING BIDDER CONTENDED THAT CONSIDERATION OF A CONVERTED 10-DAY PROMPT PAYMENT DISCOUNT OF 2-1/30% WAS UNFAIR TO THE PROTESTOR, WHO OFFERED A 2% 10-DAY PROMPT PAYMENT DISCOUNT. OUR DECISION POINTED OUT THAT WHILE THE IFB PRECLUDED EVALUATION OF PROMPT PAYMENT DISCOUNTS FOR LESS THAN 20 DAYS, THE 2-1/30% DISCOUNT IN THE LOW BID WAS NOT CONSIDERED AS A PROMPT PAYMENT DISCOUNT BUT AS A TRADE DISCOUNT UNDER THE EXPRESS PROVISIONS OF THE DISCOUNT LIMITATION CLAUSE. (THERE WAS NO PROVISION IN THE IFB FOR CONVERTING ANY DISCOUNT NOT OVER 2% TO A TRADE DISCOUNT.) ACCORDINGLY, WE UPHELD THE EVALUATION OF THE LOW BID ON THE BASIS OF A 2-1/30% TRADE DISCOUNT AND A 2% 20-DAY PROMPT PAYMENT DISCOUNT.

THE PROPER INTERPRETATION OF CONTRACT SPECIFICATIONS IS AN ISSUE OF LAW, AND THE DECISION OF AN ADMINISTRATIVE APPEALS BOARD ON SUCH A QUESTION THEREFORE LACKS FINALITY, BLANCHARD V UNITED STATES, 347 F. 2D 268 (1965), AND OUR OFFICE IS NOT BOUND TO AGREE WITH OR FOLLOW DECISIONS OF THE CONTRACT APPEALS BOARDS ON QUESTIONS OF LAW.

THE INTENT AND MEANING OF AN INVITATION FOR BIDS ARE NOT TO BE DETERMINED BY THE CONSIDERATION OF AN ISOLATED SECTION OR PROVISION THEREOF BY ITSELF BUT FROM CONSIDERATION OF THE INVITATION IN ITS ENTIRETY, AND EACH PROVISION MUST BE CONSTRUED IN ITS RELATIONSHIP TO OTHER PROVISIONS AND IN THE LIGHT OF THE GENERAL PURPOSE INTENDED TO BE ACCOMPLISHED. 39 COMP. GEN. 17, 19 (1959); 50 COMP. GEN. (B-168633, DECEMBER 29, 1970). AS IN THE CASE OF CONTRACTS, INVITATIONS FOR BIDS SHOULD BE INTERPRETED SO AS TO GIVE MEANING TO EACH PART. 39 COMP. GEN. 247 (1959); B-169838, B-169839, OCTOBER 30, 1970.

UNDER PARAGRAPH 9(A), STANDARD FORM 33A, AS SUPPLEMENTED BY CLAUSE 400.1.17, PAGE 51 OF THE IFB, WHICH ESTABLISHED 20 DAYS AS THE MINIMUM PERIOD FOR EVALUATION OF PROMPT PAYMENT DISCOUNTS, THE 2-1/20% DISCOUNT WHICH SO-SEW OFFERED FOR PAYMENT WITHIN 10 DAYS WOULD NORMALLY HAVE BEEN DISREGARDED IN THE EVALUATION OF SO-SEW'S BID. HOWEVER, SINCE CLAUSE 114.9 EXPRESSLY PROVIDED FOR CONVERSION TO A TRADE OR SPECIAL DISCOUNT OF ANY PROMPT PAYMENT DISCOUNT IN EXCESS OF 2% ABSENT ANY SEPARATE OFFER OF A TRADE OR SPECIAL DISCOUNT IN A BID, THE 2-1/20% DISCOUNT WAS AUTOMATICALLY CONVERTED TO A TRADE DISCOUNT AND WAS NO LONGER A PROMPT PAYMENT DISCOUNT. THE EFFECT OF SUCH CONVERSION WAS TO LEAVE FOR CONSIDERATION AS A PROMPT PAYMENT DISCOUNT UNDER ASPR 2 407.3(A) ONLY THE 2% 20-DAY DISCOUNT. THERE WAS, THEREFORE, NO ACCUMULATION OF PROMPT PAYMENT DISCOUNTS.

IF SO-SEW'S INTENT WAS NOT TO ABIDE BY THE TERMS OF CLAUSE 114.9, IT WAS NOT EVIDENT FROM THE BID, NOR WAS IT OTHERWISE BROUGHT TO THE ATTENTION OF THE GOVERNMENT BEFORE BID OPENING, AS CONTEMPLATED BY CLAUSE 201.9 PAGE 52 OF THE IFB, REGARDING CONDITIONS OF OFFER.

IN THE CIRCUMSTANCES, WE FIND NO LEGAL OBJECTION TO THE ACTION OF DPSC IN DEDUCTING FROM SO-SEW'S BID PRICE THE 2-1/20% DISCOUNT AS A TRADE DISCOUNT AND THE ADDITIONAL 2% DISCOUNT AS A PROMPT PAYMENT DISCOUNT UPON PAYMENT WITHIN THE STATED PERIOD. ACCORDINGLY, THERE IS NO AUTHORITY FOR PAYMENT OF THE CLAIM.

THE FILE WHICH WAS FORWARDED WITH YOUR LETTER IS RETURNED.

A COPY OF THIS DECISION IS BEING FORWARDED BY OUR LETTER OF TODAY, COPY ENCLOSED, TO SO-SEW'S ..END :