B-172107(1), JUL 19, 1971

B-172107(1): Jul 19, 1971

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BID PROTEST - EVALUATION OF BIDS - ADMINISTRATIVE COSTS DECISION HOLDING THAT NO CORRECTIVE ACTION IS NOW POSSIBLE ON THE AWARD OF A CONTRACT TO STATE ELECTRIC SUPPLY CO. IT WAS INAPPROPRIATE FOR THE CONTRACTING OFFICER TO CONSIDER THE ADMINISTRATIVE COSTS INCIDENT TO MULTIPLE AWARDS IN ARRIVING AT THE DETERMINATION THAT A SINGLE AWARD WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT BECAUSE SUCH FACTOR WAS NOT IDENTIFIED OR INCLUDED IN THE IFB PURSUANT TO FPR 1-2.201(20). INC.: REFERENCE IS MADE TO YOUR LETTER DATED MARCH 5. WAS ISSUED ON JANUARY 4. BIDS WERE OPENED ON JANUARY 25. IT IS REPORTED THAT THIRTEEN BIDS WERE RECEIVED. ON THE BASIS THAT YOUR FIRM SHOULD HAVE RECEIVED AN AWARD FOR ITEM 16 AS THE LOW RESPONSIVE BIDDER.

B-172107(1), JUL 19, 1971

BID PROTEST - EVALUATION OF BIDS - ADMINISTRATIVE COSTS DECISION HOLDING THAT NO CORRECTIVE ACTION IS NOW POSSIBLE ON THE AWARD OF A CONTRACT TO STATE ELECTRIC SUPPLY CO., INC., UNDER AN IFB ISSUED BY THE BUREAU OF INDIAN AFFAIRS, PLANT MANAGEMENT ENGINEERING CENTER, FOR SEVERAL ITEMS OF ELECTRICAL EQUIPMENT. IT WAS INAPPROPRIATE FOR THE CONTRACTING OFFICER TO CONSIDER THE ADMINISTRATIVE COSTS INCIDENT TO MULTIPLE AWARDS IN ARRIVING AT THE DETERMINATION THAT A SINGLE AWARD WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT BECAUSE SUCH FACTOR WAS NOT IDENTIFIED OR INCLUDED IN THE IFB PURSUANT TO FPR 1-2.201(20). FINAL PAYMENT HAS BEEN MADE ON THE SUBJECT CONTRACT, BUT THE DEPARTMENT OF THE INTERIOR HAS TAKEN STEPS TO PRECLUDE A RECURRENCE OF THE DEFICIENCY.

TO WHITE PLAINS ELECTRICAL SUPPLY CO., INC.:

REFERENCE IS MADE TO YOUR LETTER DATED MARCH 5, 1971, PROTESTING THE AWARD OF A CONTRACT FOR ITEM 16 TO STATE ELECTRIC SUPPLY CO., INC., ALBUQUERQUE, NEW MEXICO, UNDER INVITATION FOR BIDS (IFB) NO. PMEC-K55 71- 2, ISSUED BY THE BUREAU OF INDIAN AFFAIRS, PLANT MANAGEMENT ENGINEERING CENTER, DENVER, COLORADO.

THE SUBJECT INVITATION, A TOTAL SMALL BUSINESS SET-ASIDE, WAS ISSUED ON JANUARY 4, 1971, FOR 17 ITEMS OF ELECTRICAL EQUIPMENT AND MATERIAL FOR A PROJECT AT BRIGHAM CITY, UTAH. BIDS WERE OPENED ON JANUARY 25, 1971, AND IT IS REPORTED THAT THIRTEEN BIDS WERE RECEIVED. THE RECORD INDICATES THAT ON FEBRUARY 2, 1971, THE CONTRACTING OFFICER MADE AN AWARD TO STATE ELECTRIC SUPPLY CO., THE LOW AGGREGATE BIDDER. THE CONTRACT REQUIRED DELIVERY TO BE MADE NO EARLIER THAN FEBRUARY 22 NOR LATER THAN MARCH 15, 1971.

BY LETTER DATED MARCH 5, 1971, YOU PROTESTED THE AWARD FOR ITEM 16 TO STATE ELECTRIC SUPPLY CO. ON THE BASIS THAT YOUR FIRM SHOULD HAVE RECEIVED AN AWARD FOR ITEM 16 AS THE LOW RESPONSIVE BIDDER. YOU STATE THAT YOUR BID FOR ITEM 16 WAS $414.40 LESS THAN THE PRICE QUOTED BY STATE ELECTRIC SUPPLY CO.

BY LETTER OF APRIL 21, 1971, THE DEPARTMENT OF INTERIOR FURNISHED OUR OFFICE A REPORT SETTING FORTH THE BASIS FOR THE CONTRACTING OFFICER'S DECISION TO MAKE AN AWARD IN THE AGGREGATE. FOR PURPOSES OF EVALUATION, THE CONTRACTING OFFICER GROUPED THE INDIVIDUAL LOW BIDS AS FOLLOWS:

BIDDER ITEMS DISCOUNT TOTAL AFTER DISCOUNT

CALRON ELECTRIC SUPPLY 1,2,11

12,13 2%/30 $789.76

WESTWOOD WHOLESALE ELECTRIC

CO., INC. 3,8 2%/30 592.31

UNITED ELECTRIC SUPPLY CO. 4,5,6,7 2%/30 $554.88

STATE ELECTRIC SUPPLY CO., 9,10,14

INC. 15,17 2%/30 9,839.22

WHITE PLAINS ELECTRICAL

SUPPLY CO., INC. 16 1%/20 6,852.38

TOTAL OF ALL LOW BIDS $18,628.55

IT IS REPORTED THAT UNITED ELECTRIC SUPPLY COMPANY AND WHITEHEAD WHOLESALE ELECTRIC, INC., HAD SUBMITTED IDENTICAL BIDS FOR ITEM 7 IN THE AMOUNT OF $96.40, WHICH COULD HAVE RESULTED IN A SIXTH AWARD TO WHITEHEAD UNDER THE EQUAL LOW BID PROVISIONS OF SECTION 1-2.407-6 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR). STATE ELECTRIC SUPPLY CO. SUBMITTED THE LOW AGGREGATE BID WHICH WAS EVALUATED AT $19,133.85, OR $503.30 MORE THAN THE SUM OF THE INDIVIDUAL LOW BIDS AS EVALUATED BY THE CONTRACTING OFFICER.

THE GENERAL RULE, WHERE THE GOVERNMENT HAS RESERVED THE RIGHT TO AWARD ITEMS SEPARATELY OR IN THE AGGREGATE, IS THAT AWARDS ARE PERMITTED TO BE MADE TO ONE OR MORE BIDDERS FOR ONE OR MORE ITEMS OR TO ONE BIDDER FOR ALL ITEMS, DEPENDING ON WHICH IS MORE IN THE INTEREST OF THE GOVERNMENT. 149085, AUGUST 28, 1962.

IN THIS INSTANCE, THE CONTRACTING OFFICER FELT AN AGGREGATE AWARD WAS IN THE BEST INTEREST OF THE GOVERNMENT IN THAT THE COST OF ADMINISTERING SIX CONTRACTS WOULD EXCEED ANY SAVINGS WHICH WOULD RESULT FROM MAKING MULTIPLE AWARDS. IN THIS REGARD, THE CONTRACTING OFFICER ESTIMATED THE COST OF ADMINISTERING A SUPPLY CONTRACT TO BE $120 BASED ON APPROXIMATELY 18 - 20 HOURS OF TIME AT AN AVERAGE OF $6 PER HOUR IN SALARY AND MISCELLANEOUS COSTS. THUS, THE COST OF ADMINISTERING SIX CONTRACTS WAS ESTIMATED TO BE $720 OR $600 MORE THAN THE COST OF ADMINISTERING ONE CONTRACT AT $120. THE $600 ADDED COST OF ADMINISTERING MULTIPLE CONTRACTS EXCEEDED THE $505.30 SAVINGS WHICH WOULD HAVE RESULTED FROM MAKING MULTIPLE AWARDS. THEREFORE, THE CONTRACTING OFFICER DETERMINED THAT IT WOULD BE TO THE ADVANTAGE OF THE GOVERNMENT TO MAKE ONE AWARD IN LIEU OF A MULTIPLE AWARD. ACCORDINGLY, AWARD OF ALL ITEMS WAS MADE TO STATE ELECTRIC SUPPLY CO., THE LOWEST AGGREGATE BIDDER, ON FEBRUARY 2, 1971.

FPR SEC. 1-2.407-5 MENTIONS SEVERAL FACTORS, IN ADDITION TO PRICE, WHICH MAY BE CONSIDERED IN EVALUATING BIDS. ONE OF THESE FACTORS IS "ADVANTAGES OR DISADVANTAGES TO THE GOVERNMENT THAT MIGHT RESULT FROM MAKING MORE THAN ONE AWARD." UNDER THIS AUTHORIZATION, IT IS SOMETIMES PROVIDED IN INVITATIONS FOR BIDS THAT THE ADDED COST OF ADMINISTRATION OF ADDITIONAL CONTRACTS, IN A STATED DOLLAR AMOUNT, WILL BE CONSIDERED IN DETERMINING WHETHER TO MAKE SEPARATE CONTRACTS FOR DIFFERENT ITEMS. HOWEVER, NO SUCH PROVISION WAS INCLUDED IN THE SUBJECT INVITATION. FPR SEC. 1-2.201(20) PROVIDES AS FOLLOWS: "IF GOVERNMENT COSTS OR EXPENDITURES OTHER THAN BID PRICES ARE TO BE CONSIDERED IN THE EVALUATION OF BIDS, SUCH FACTORS MUST BE IDENTIFIED AND INCLUDED."

CONSIDERATIONS OF CENTRALIZED MANAGEMENT AND ADMINISTRATION JUSTIFY AN AGGREGATE AWARD AT A HIGHER PRICE ONLY WHEN THE HIGHER COST IS OFFSET BY ADMINISTRATIVE SAVINGS. HOWEVER, IN THOSE CIRCUMSTANCES, THE INVITATION MUST PROVIDE FOR SUCH AWARD AND ESTABLISH THE ADMINISTRATIVE COST SAVING TO BE USED IN BID EVALUATION. SEE 47 COMP. GEN. 233, 234 (1967). THAT WAS NOT DONE IN THIS CASE AND IT WAS THEREFORE INAPPROPRIATE TO CONSIDER THE ADMINISTRATIVE COSTS IN THE EVALUATION OF BIDS FOR AWARD.

FINAL PAYMENT UNDER THE AWARDED CONTRACT WAS MADE ON MARCH 17, 1971. THEREFORE, THERE IS NO CORRECTIVE ACTION THAT OUR OFFICE MAY TAKE IN THE MATTER. HOWEVER, THE DEPARTMENT OF THE INTERIOR RECOGNIZED THE DEFICIENCY IN THE PROCUREMENT AND HAS ADVISED US THAT INSTRUCTIONS WOULD BE ISSUED TO PRECLUDE A RECURRENCE OF THE SITUATION IN THE FUTURE.